Default Cases

What should plaintiff do so that judgment be made against defendant? 1. Plaintiff files a motion to declare defendant Samaco in default. 2. Court hears motion and issues an order of default on Samaco.

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http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/144568.htm

FIRST DIVISION GUILLERMA S. SABLAS, joined by her husband, PASCUAL LUMANAS, Petitioners, Present:

G.R. No. 144568

PUNO, C.J., Chairperson, SANDOVAL-GUTIERREZ,* -versusCORONA, AZCUNA and GARCIA, JJ. ESTERLITA S. SABLAS and RODULFO S. SABLAS, Respondents.

Promulgated: July 3, 2007

x-------------------------------------------x DECISION CORONA, J.: This case traces its roots to a complaint for judicial partition, inventory and accounting filed by respondents Esterlita S. Sablas and Rodulfo S. Sablas against petitioner spouses Pascual Lumanas and Guillerma S. Sablas in the Regional Trial Court of Baybay, Leyte, Branch 14* on October 1, 1999.* Petitioner spouses were served with summons and a copy of the complaint on October 6, 1999. On October 21, 1999, they filed a motion for extension of time requesting an additional period of 15 days, or until November 5, 1999, to file their answer. However, they were able to file it only on November 8, 1999. While the **

On Leave. Presided by Judge Cristina T. Pontejos.  The case was docketed as Civil Case No. B-1999-10-24. 

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trial court observed that the answer was filed out of time, it admitted the pleading because no motion to declare petitioner spouses in default was filed.* The following day, November 9, 1999, respondents filed a motion to declare petitioner spouses in default.* It was denied by the trial court in an order dated December 6, 1999.* Respondents moved for reconsideration but it was also denied.* Thereafter, they challenged the December 6, 1999 order in the Court of Appeals in a petition for certiorari* alleging that the admission of the answer by the trial court was contrary to the rules of procedure and constituted grave abuse of discretion amounting to lack of jurisdiction. In a decision dated July 17, 2000,* the appellate court ruled that the trial court committed grave abuse of discretion because, pursuant to Section 3, Rule 9 of the Rules of Court, the trial court had no recourse but to declare petitioner spouses in default when they failed to file their answer on or before November 5, 1999. Thus, the Court of Appeals granted the petition, vacated the December 6, 1999 order and remanded the case to the trial court for reception of plaintiffs evidence. Aggrieved, petitioner spouses (defendants in the trial court) now assail the July 17, 2000 decision of the Court of Appeals in this petition for review on certiorari.* Petitioner spouses contend that the Court of Appeals decision was not in accord with the rules of procedure as it misconstrued Section 3, Rule 9 of the Rules of Court and was in contravention of jurisprudence. We agree.



Order dated November 9, 1999. Rollo, p. 52. The answer was served on respondents counsel by registered mail and respondents alleged that they were unaware that petitioner spouses already answered the complaint.  Rollo, p. 24.  Resolution dated January 11, 2000. Id., pp. 25-26.  Under Rule 65 of the Rules of Court. The case was docketed as CA-G.R. SP No. 57397.  Penned by Associate Justice Andres B. Reyes, Jr. and concurred in by Associate Justices Quirino D. AbadSantos, Jr. (retired) and Romeo A. Brawner (retired) of the Third Division of the Court of Appeals. Rollo, pp. 63-67.  Under Rule 45 of the Rules of Court. 

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WHERE THERE IS NO MOTION, THERE CAN BE NO DECLARATION OF DEFAULT The elements of a valid declaration of default are: 1. the court has validly acquired jurisdiction over the person of the defending party either by service of summons or voluntary appearance;* 2. the defending party failed to file the answer within the time allowed therefor and 3. a motion to declare the defending party in default has been filed by the claiming party with notice to the defending party. An order of default can be made only upon motion of the claiming party. * It can be properly issued against the defending party who failed to file the answer within the prescribed period only if the claiming party files a motion to that effect with notice to the defending party. In this connection, Section 3, Rule 9 of the Rules of Court provides: SEC. 3. Default: Declaration of. If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. x x x. (emphasis supplied) Three requirements must be complied with before the court can declare the defending party in default: (1) the claiming party must file a motion asking the court to declare the defending party in default; (2) the defending party must be notified of the motion to declare him in default and (3) the claiming party must prove that the defending party has failed to answer within the period provided by the Rules of Court.* The rule on default requires the filing of a motion and notice of such motion to the defending party. It is not enough that the defendant fails to answer the complaint within the reglementary period.* The trial court cannot motu proprio 

Laus v. Court of Appeals, G.R. No. 101256, 08 March 1993, 219 SCRA 688. Mediserv, Inc. v. China Banking Corporation, G.R. No. 140755, 17 April 2001, 356 SCRA 616.  De los Santos v. Carpio, G.R. No. 153696, 11 September 2006, 501 SCRA 390 .  Id. 

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declare a defendant in default* as the rules leave it up to the claiming party to protect his or its interests. The trial court should not under any circumstances act as counsel of the claiming party.

WHERE THERE IS NO DECLARATION OF DEFAULT, ANSWER MAY BE ADMITTED EVEN IF FILED OUT OF TIME It is within the sound discretion of the trial court to permit the defendant to file his answer and to be heard on the merits even after the reglementary period for filing the answer expires.* The Rules of Court provides for discretion on the part of the trial court not only to extend the time for filing an answer but also to allow an answer to be filed after the reglementary period.* Thus, the appellate court erred when it ruled that the trial court had no recourse but to declare petitioner spouses in default when they failed to file their answer on or before November 5, 1999. The rule is that the defendants answer should be admitted where it is filed before a declaration of default and no prejudice is caused to the plaintiff. * Where the answer is filed beyond the reglementary period but before the defendant is declared in default and there is no showing that defendant intends to delay the case, the answer should be admitted.*



Viacrusis v. Estenzo, 115 Phil. 556 (1962); Trajano v. Cruz, G.R. No. L-47070, 29 December 1977, 80 SCRA 712.  De Dios v. Court of Appeals, G.R. No. 80491, 12 August 1992, 212 SCRA 519.  Regalado, Florenz, REMEDIAL LAW COMPENDIUM, vol. I, 6th Revised edition; Section 11, Rule 11, Rules of Court provides: Sec. 11. Extension of time to plead. Upon motion and on such terms as may be just, the court may extend the time to plead provided in these Rules. The court may also, upon like terms, allow an answer or other pleading to be filed after the time fixed by these Rules.  Trajano v. Cruz, supra.  Cathay Pacific Airways, Ltd. v. Hon. Romillo, Jr., 225 Phil. 397 (1986).

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Therefore, the trial court correctly admitted the answer of petitioner spouses even if it was filed out of time because, at the time of its filing, they were not yet declared in default nor was a motion to declare them in default ever filed. Neither was there a showing that petitioner spouses intended to delay the case. WHERE ANSWER HAS BEEN FILED, THERE CAN BE NO DECLARATION OF DEFAULT ANYMORE Since the trial court already admitted the answer, it was correct in denying the subsequent motion of respondents to declare petitioner spouses in default. In Cathay Pacific Airways, Ltd. v. Hon. Romillo, Jr.,* the Court ruled that it was error to declare the defending party in default after the answer was filed. The Court was in fact even more emphatic in Indiana Aerospace University v. Commission on Higher Education:* it was grave abuse of discretion to declare a defending party in default despite the latters filing of an answer. The policy of the law is to have every litigants case tried on the merits as much as possible. Hence, judgments by default are frowned upon. * A case is best decided when all contending parties are able to ventilate their respective claims, present their arguments and adduce evidence in support thereof. The parties are thus given the chance to be heard fully and the demands of due process are subserved. Moreover, it is only amidst such an atmosphere that accurate factual findings and correct legal conclusions can be reached by the courts. Accordingly, the petition is hereby GRANTED. The July 17, 2000 decision of the Court of Appeals in CA-G.R. SP No. 57397 is REVERSED and SET ASIDE and the December 6, 1999 order of the Regional Trial Court of Baybay, Leyte, Branch 14 is REINSTATED. The case is REMANDED to the trial court for further proceedings. SO ORDERED. RENATO C. CORONA   

Id. G.R. No. 139371, 04 April 2001, 356 SCRA 367. Cathay Pacific Airways, Ltd. v. Romillo, Jr., supra.

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Associate Justice

WE

CONCUR:

REYNATO S. PUNO Chief Justice Chairperson

(On Leave) ANGELINA SANDOVAL-GUTIERREZ ADOLFO S. AZCUNA Associate Justice Associate Justice

CANCIO C. GARCIA Associate Justice

CE RT IFICAT IO N Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO Chief Justice

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http://sc.judiciary.gov.ph/jurisprudence/2008/september2008/170943.htm

FIRST DIVISION PEDRO T. SANTOS, JR.,

G.R. No. 170943

Petitioner, Present: PUNO, C.J., Chairperson, CARPIO, -versus-

CORONA, AZCUNA and LEONARDO-DE CASTRO, JJ.

PNOC EXPLORATION CORPORATION, Respondent.

Promulgated: September 23, 2008

x---------------------------------------------------x DECISION CORONA, J.:

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This is a petition for review* of the September 22, 2005 decision* and December 29, 2005 resolution* of the Court of Appeals in CA-G.R. SP No. 82482. On December 23, 2002, respondent PNOC Exploration Corporation filed a complaint for a sum of money against petitioner Pedro T. Santos, Jr. in the Regional Trial Court of Pasig City, Branch 167. The complaint, docketed as Civil Case No. 69262, sought to collect the amount of P698,502.10 representing petitioners unpaid balance of the car loan* advanced to him by respondent when he was still a member of its board of directors. Personal service of summons to petitioner failed because he could not be located in his last known address despite earnest efforts to do so. Subsequently, on respondents motion, the trial court allowed service of summons by publication. Respondent caused the publication of the summons in Remate, a newspaper of general circulation in the Philippines, on May 20, 2003. Thereafter, respondent submitted the affidavit of publication of the advertising manager of Remate* and an affidavit of service of respondents employee* to the effect that he sent a copy of the summons by registered mail to petitioners last known address. When petitioner failed to file his answer within the prescribed period, respondent moved that the case be set for the reception of its evidence ex parte. The trial court granted the motion in an order dated September 11, 2003.



Under Rule 45 of the Rules of Court. Penned by Associate Justice Santiago Javier Ranada (retired) and concurred by Associate Justices Roberto A. Barrios (deceased) and Mario L. Guaria III of the Eighth Division of the Court of Appeals. Rollo, pp. 20-25.  Id., p. 27.  The car loan was originally for P966,000 which was used to procure a Honda CRV for petitioner. The said loan was evidenced by a promissory note and further secured by a chattel mortgage on the vehicle. One of the conditions of the promissory note was that, in case of separation from the service, any unpaid balance shall immediately be paid in full. (See May 19, 2004 Regional Trial Court decision, rollo, pp. 82-83.)  Allan Paul A. Plaza.  Vincent Panganiban. 

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Respondent proceeded with the ex parte presentation and formal offer of its evidence. Thereafter, the case was deemed submitted for decision on October 15, 2003. On October 28, 2003, petitioner filed an Omnibus Motion for Reconsideration and to Admit Attached Answer. He sought reconsideration of the September 11, 2003 order, alleging that the affidavit of service submitted by respondent failed to comply with Section 19, Rule 14 of the Rules of Court as it was not executed by the clerk of court. He also claimed that he was denied due process as he was not notified of the September 11, 2003 order. He prayed that respondents evidence ex parte be stricken off the records and that his answer be admitted. Respondent naturally opposed the motion. It insisted that it complied with the rules on service by publication. Moreover, pursuant to the September 11, 2003 order, petitioner was already deemed in default for failure to file an answer within the prescribed period. In an order dated February 6, 2004, the trial court denied petitioners motion for reconsideration of the September 11, 2003 order. It held that the rules did not require the affidavit of complementary service by registered mail to be executed by the clerk of court. It also ruled that due process was observed as a copy of the September 11, 2003 order was actually mailed to petitioner at his last known address. It also denied the motion to admit petitioners answer because the same was filed way beyond the reglementary period. Aggrieved, petitioner assailed the September 11, 2003 and February 6, 2004 orders of the trial court in the Court of Appeals via a petition for certiorari. He contended that the orders were issued with grave abuse of discretion. He imputed the following errors to the trial court: taking cognizance of the case despite lack of jurisdiction due to improper service of summons; failing to furnish him with copies of its orders and processes, particularly the September 11, 2003 order, and upholding technicality over equity and justice.

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During the pendency of the petition in the Court of Appeals, the trial court rendered its decision in Civil Case No. 69262. It ordered petitioner to pay P698,502.10 plus legal interest and costs of suit.* Meanwhile, on September 22, 2005, the Court of Appeals rendered its decision* sustaining the September 11, 2003 and February 6, 2004 orders of the trial court and dismissing the petition. It denied reconsideration. * Thus, this petition. Petitioner essentially reiterates the grounds he raised in the Court of Appeals, namely, lack of jurisdiction over his person due to improper service of summons, failure of the trial court to furnish him with copies of its orders and processes including the September 11, 2003 order and preference for technicality rather than justice and equity. In particular, he claims that the rule on service by publication under Section 14, Rule 14 of the Rules of Court applies only to actions in rem, not actions in personam like a complaint for a sum of money. He also contends that the affidavit of service of a copy of the summons should have been prepared by the clerk of court, not respondents messenger. The petition lacks merit.

PROPRIETYOF SERVICE BY PUBLICATION

Section 14, Rule 14 (on Summons) of the Rules of Court provides:



See May 19, 2004 Regional Trial Court decision, rollo, pp. 82-83. Petitioners motion for reconsideration of the said decision remains pending.  Supra note 2. 

Supra note 3.

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SEC. 14. Service upon defendant whose identity or whereabouts are unknown. In any action where the defendant is designated as an unknown owner, or the like, or whenever his whereabouts are unknown and cannot be ascertained by diligent inquiry, service may, by leave of court, be effected upon him by publication in a newspaper of general circulation and in such places and for such times as the court may order. (emphasis supplied) Since petitioner could not be personally served with summons despite diligent efforts to locate his whereabouts, respondent sought and was granted leave of court to effect service of summons upon him by publication in a newspaper of general circulation. Thus, petitioner was properly served with summons by publication. Petitioner invokes the distinction between an action in rem and an action in personam and claims that substituted service may be availed of only in an action in rem. Petitioner is wrong. The in rem/in personam distinction was significant under the old rule because it was silent as to the kind of action to which the rule was applicable.* Because of this silence, the Court limited the application of the old rule to in rem actions only.* This has been changed. The present rule expressly states that it applies [i]n any action where the defendant is designated as an unknown owner, or the like, or whenever his whereabouts are unknown and cannot be ascertained by diligent inquiry. Thus, it now applies to any action, whether in personam, in rem or quasi in rem.*



The predecessor of this provision was Section 16, Rule 14 of the 1964 Rules of Procedure which provided: SEC. 16. Service upon an unknown defendant. Whenever the defendant is designated as an unknown owner, or the like, or whenever the address of a defendant is unknown and cannot be ascertained by diligent inquiry, service may, by leave of court, be effected upon him by publication in a newspaper of general circulation and in such places and for such time as the court may order.  Consolidated Plywood Industries, Inc. v. Breva, G.R. No. L-82811, 18 October 1988, 166 SCRA 519; Asiavest Limited v. Court of Appeals, 357 Phil. 536 (1998); Valmonte v. Court of Appeals, 322 Phil. 96 (1996).  See Herrera, Oscar M., REMEDIAL LAW, vol. I, pp. 699 and 702.

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Regarding the matter of the affidavit of service, the relevant portion of Section 19,* Rule 14 of the Rules of Court simply speaks of the following: an affidavit showing the deposit of a copy of the summons and order for publication in the post office, postage prepaid, directed to the defendant by registered mail to his last known address.

Service of summons by publication is proved by the affidavit of the printer, his foreman or principal clerk, or of the editor, business or advertising manager of the newspaper which published the summons. The service of summons by publication is complemented by service of summons by registered mail to the defendants last known address. This complementary service is evidenced by an affidavit showing the deposit of a copy of the summons and order for publication in the post office, postage prepaid, directed to the defendant by registered mail to his last known address. The rules, however, do not require that the affidavit of complementary service be executed by the clerk of court. While the trial court ordinarily does the mailing of copies of its orders and processes, the duty to make the complementary service by registered mail is imposed on the party who resorts to service by publication. Moreover, even assuming that the service of summons was defective, the trial court acquired jurisdiction over the person of petitioner by his own voluntary appearance in the action against him. In this connection, Section 20, Rule 14 of the Rules of Court states: SEC. 20. Voluntary appearance. The defendants voluntary appearance in the action shall be equivalent to service of 

The provision states: SEC. 19. Proof of service by publication. If the service has been made by publication, service may be proved by the affidavit of the printer, his foreman or principal clerk, or of the editor, business or advertising manager, to which affidavit a copy of the publication shall be attached, and by an affidavit showing the deposit of a copy of the summons and order for publication in the post office, postage prepaid, directed to the defendant by registered mail to his last known address.

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summons. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance. (emphasis supplied) Petitioner voluntarily appeared in the action when he filed the Omnibus Motion for Reconsideration and to Admit Attached Answer. * This was equivalent to service of summons and vested the trial court with jurisdiction over the person of petitioner.

E NTITLE M ENTTO NOTICE OF PROCEEDINGS The trial court allowed respondent to present its evidence ex parte on account of petitioners failure to file his answer within the prescribed period. Petitioner assails this action on the part of the trial court as well as the said courts failure to furnish him with copies of orders and processes issued in the course of the proceedings. The effects of a defendants failure to file an answer within the time allowed therefor are governed by Sections 3 and 4, Rule 9 (on Effect of Failure to Plead) of the Rules of Court: SEC. 3. Default; declaration of. If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court. 

Herrera, supra note 12 citing Europa v. Intermediate Appellate Court, G.R. No. 72827, 18 July 1989, 175 SCRA 394.

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SEC. 4. Effect of order of default. A party in default shall be entitled to notice of subsequent proceedings but not to take part in the trial. (emphasis supplied)

If the defendant fails to file his answer on time, he may be declared in default upon motion of the plaintiff with notice to the said defendant. In case he is declared in default, the court shall proceed to render judgment granting the plaintiff such relief as his pleading may warrant, unless the court in its discretion requires the plaintiff to submit evidence. The defaulting defendant may not take part in the trial but shall be entitled to notice of subsequent proceedings. In this case, even petitioner himself does not dispute that he failed to file his answer on time. That was in fact why he had to file an Omnibus Motion for Reconsideration and to Admit Attached Answer. But respondent moved only for the ex parte presentation of evidence, not for the declaration of petitioner in default. In its February 6, 2004 order, the trial court stated: The disputed Order of September 11, 2003 allowing the presentation of evidence ex-parte precisely ordered that despite and notwithstanding service of summons by publication, no answer has been filed with the Court within the required period and/or forthcoming.[] Effectively[,] that was a finding that the defendant [that is, herein petitioner] was in default for failure to file an answer or any responsive pleading within the period fixed in the publication as precisely the defendant [could not] be found and for which reason, service of summons by publication was ordered. It is simply illogical to notify the defendant of the Order of September 11, 2003 simply on account of the reality that he was no longer residing and/or found on his last known address and his whereabouts unknown thus the publication of the summons. In other words, it was reasonable to expect that the defendant will not receive any notice or order in his last known address. Hence, [it was] impractical to send any notice or order to him. Nonetheless, the record[s] will bear out that a copy of 15

the order of September 11, 2003 was mailed to the defendant at his last known address but it was not claimed. (emphasis supplied)

As is readily apparent, the September 11, 2003 order did not limit itself to permitting respondent to present its evidence ex parte but in effect issued an order of default. But the trial court could not validly do that as an order of default can be made only upon motion of the claiming party. * Since no motion to declare petitioner in default was filed, no default order should have been issued. To pursue the matter to its logical conclusion, if a party declared in default is entitled to notice of subsequent proceedings, all the more should a party who has not been declared in default be entitled to such notice. But what happens if the residence or whereabouts of the defending party is not known or he cannot be located? In such a case, there is obviously no way notice can be sent to him and the notice requirement cannot apply to him. The law does not require that the impossible be done.* Nemo tenetur ad impossibile. The law obliges no one to perform an impossibility.* Laws and rules must be interpreted in a way that they are in accordance with logic, common sense, reason and practicality.* Hence, even if petitioner was not validly declared in default, he could not reasonably demand that copies of orders and processes be furnished him. Be that as it may, a copy of the September 11, 2003 order was nonetheless still mailed to petitioner at his last known address but it was unclaimed.

CORRECTNESSOF NON-ADMISSION OF ANSWER



Mediserv, Inc. v. China Banking Corporation, 408 Phil. 745 (2001). Akbayan-Youth v. Commission on Elections, 407 Phil. 618 (2001).

  

Id. Id.

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Petitioner failed to file his answer within the required period. Indeed, he would not have moved for the admission of his answer had he filed it on time. Considering that the answer was belatedly filed, the trial court did not abuse its discretion in denying its admission. Petitioners plea for equity must fail in the face of the clear and express language of the rules of procedure and of the September 11, 2003 order regarding the period for filing the answer. Equity is available only in the absence of law, not as its replacement.* Equity may be applied only in the absence of rules of procedure, never in contravention thereof. WHEREFORE, the petition is hereby DENIED. Costs against petitioner.

SO ORDERED.

RENATO C. CORONA Associate Justice

W E C O N C U R:

REYNATO S. PUNO Chief Justice 

Heirs of Spouses de la Cruz v. Heirs of Quintos, Sr., 434 Phil. 708 (2002) citing Tupas v. Court of Appeals, G.R. No. 89571, 06 February 1991, 193 SCRA 597.

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Chairperson

ANTONIO T. CARPIO ADOLFO S. AZCUNA Associate Justice Associate Justice

TERESITA J. LEONARDO-DE CASTRO Associate Justice

CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO Chief Justice

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Republic of the Philippines Supreme Court Manila FIRST DIVISION EUGENIO BASBAS, TEOFILO

G.R. No. 172660

ARAS, RUFINO ARAS, GERVACIO BASBAS, ISMAEL ARAS, EUGENIO ARAS, SIMFRONIO ARAS,

Present:

FELICIANO ARAS, ROSITA ARAS, EUGENIO BASBAS, JR.

CORONA, C. J., Chairperson,

and SPOUSES PABLITO

LEONARDO-DE CASTRO,

BASARTE and MARCELINA

BRION,⃰

BASBAS BASARTE,

DEL CASTILLO, and

Petitioners,

VILLARAMA, JR., JJ.

- versus BEATA SAYSON and

Promulgated:

ROBERTO SAYSON, JR., ⃰⃰

⃰⃰

In lieu of Associate Justice Lucas P. Bersamin per Raffle dated August 8, 2011.

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Respondents.

August 24, 2011

x------------------------------------------------------------------x DECISION DEL CASTILLO, J.: Petitioners seek to prevent the revival of a judgment rendered in favor of the respondents more than two decades back. This Petition for Review on Certiorari assails the February 17, 2004 Decision*of the Court of Appeals (CA) in CA-G.R. CV No. 72385 which denied the appeal filed before it and affirmed in toto the May 21, 2001 Order* of the Regional Trial Court of Ormoc City, Branch 35. Also assailed is the April 19, 2006 Resolution * denying the Motion for Reconsideration thereto. Factual Antecedents On September 2, 1976, respondent Beata Sayson (Beata) and her husband Roberto Sayson, Sr. (Roberto Sr.) filed a Petition for Registration of an agricultural land located in Cagbatang, Balagtas, Matag-ob, Leyte docketed as Land Registration Case No. 0-177. The said application was opposed by the Republic of the Philippines and herein petitioners Eugenio Basbas (Eugenio Sr.), Teofilo Aras (Teofilo) and Rufino Aras (Rufino). On March 22, 1979, the Court of First Instance (CFI) of Leyte, Branch V (Ormoc City) rendered a Decision adjudicating to the spouses Sayson said agricultural land and approving its registration under their names.*



  

CA rollo, pp. 102-109; penned by Associate Justice Elvi John S. Asuncion and concurred in by Associate Justices Godardo A. Jacinto and Lucas P. Bersamin (now a Member of this Court). Records, pp. 440-442; penned by Judge Fortunito L. Madrona. CA rollo, p. 121. See first page of CA Decision dated July 24, 1985 in CA-G.R. No. 66541, records, p. 8.

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The oppositors filed their appeal to the CA docketed as CA-G.R. No. 66541. In a Decision* dated July 24, 1985, the appellate court affirmed in toto the Decision of the CFI. This CA Decision became final and executory on August 21, 1985 * and, accordingly, a Writ of Possession was issued on November 21, 1985, which was never implemented. The following year or on September 17, 1986, Original Certificate of Title (OCT) No. 2496* was issued to the spouses Sayson pursuant to the March 22, 1979 CFI Decision. An Alias Writ of Possession was issued on April 6, 1989 but this could also not be implemented in view of the refusal of Eugenio Sr. and his son Eugenio Basbas, Jr. (Eugenio Jr.). Claiming that the land they occupied is not the same land subject of the CFI Decision,* they demanded that a relocation survey be conducted. Hence, a relocation survey was conducted by order of the Regional Trial Court (RTC), Branch 12, Ormoc City.* In an Order* dated September 13, 1989, the RTC approved the Commissioners Report* on the relocation survey and ordered the original oppositors, petitioners Eugenio Sr., Teofilo and Rufino, as well as their co-petitioners herein Gervacio Basbas (Gervacio), Ismael Aras (Ismael), Eugenio Aras (Eugenio), Simfronio Aras (Simfronio), Feliciano Aras (Feliciano), Rosita Aras (Rosita) and Eugenio Jr. to vacate the subject property, viz: [R]espondents are directed to vacate the portion of Lot No. 1, Psu-08000235 covered by OCT No. 2496 and subject of the final decree of registration which, [up to the] present, said respondents are still possessing pursuant to the final and executory judgment of the Court of Appeals and as particularly defined in the Commissioners report submitted on August 3, 1989 x x x.



     

Id. at 8-13; penned by Associate Justice Leonor Ines Luciano and concurred in by Presiding Justice Ramon G. Gaviola, Jr., and Associate Justices Edgardo P. Caguioa and Ma. Rosario Quetulio-Losa. See Entry of Judgment, id. at 14. Id. at 15. See the (Sheriffs) Progress Report, id. at 16-17. See RTC Order dated June 16, 1989, id. at 18. Id. at 21-22. Id. at 19-20.

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Respondents are reminded that under Rule 71 of the New Rules of Court, failure on their part to so obey this order may make them liable for contempt of this Court. SO ORDERED.*

Gervacio, Ismael, Eugenio, Simfronio, Feliciano, Rosita and Eugenio Jr., although not oppositors in CA-G.R. No. 66541, were likewise ordered to vacate the property in view of the following pronouncement in the RTCs September 13, 1989 Order: It appearing from the records that respondents Eugenio Basbas, Teofilo Aras, Gervacio Basbas, Rufino Aras, Ismael Aras, Eugenio Aras, Simfronio Aras, Feliciano Aras, Rosita Aras and Eugenio Basbas[,] Jr. are parties to the present case, they having been the principal oppositors to the petition filed by the applicants as shown in the records, pages 34, 35 and 36, Vol. 1 x x x* (Emphasis supplied.)

This September 13, 1989 Order was, however, not implemented within the fiveyear period from the time it became final.* Hence, respondent Beata and her son Roberto Sayson, Jr. (Roberto Jr.), as successor-in-interest of the late Roberto Sr., filed on August 18, 1995 a Complaint for Revival of Judgment* before the RTC of Ormoc City, Branch 12,* docketed as Civil Case No. 3312-0. Impleaded as defendants were Eugenio Sr., Teofilo, Rufino, Gervacio, Ismael, Eugenio, Simfronio, Feliciano, Rosita, and Eugenio Jr. Petitioner-spouses Pablito Basarte and Marcelina Basbas-Sabarte* (spouses Basarte), who, although not identified in the September 13, 1989 Order as principal oppositors in   

  

Id. at 22. Id. at 21. RULES OF COURT, Rule 39, Sec. 6 provides: Sec. 6. Execution by motion or by independent action. A final and executory judgment or order may be executed on motion within five (5) years from the date of its entry. After the lapse of such time, and before it is barred by the statute of limitations, a judgment may be enforced by action. x x x. Records, pp. 1-7. The case was later transferred to Branch 35 of RTC, Ormoc City per Order dated September 22, 1997, id. at 80. Later amended to read as Basarte per Order dated July 3, 1998, id. at 120.

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the land registration case, were likewise impleaded as defendants since they also allegedly harvested, processed, and sold the coconuts found in the subject property. Upon receipt of summons, Gervacio, Rufino, Ismael, Eugenio, Feliciano, Rosita and Eugenio Jr. filed a Motion to Dismiss * on the ground that the Complaint states no cause of action. This was, however, denied * so the same set of petitioners, except for Feliciano, filed an Answer with Counterclaim.* In their Answer with counterclaim, said petitioners admitted the allegations in paragraphs 4, 5, 6, 7, 8, 9, 10, 11 and 12 of respondents Complaint which state that: xxxx 4. On March 22, 1979, the Honorable Judge Numeriano Estenzo rendered a decision in the above-mentioned Land Registration [c]ase in favor of the petitioners x x x and against the oppositors, the dispositive portion of said decision reads: WHEREFORE, decision is hereby rendered x x x [and] the land described under Plan PSU-08-000235 dated September 10, 1973 of Geodetic Engineer Nestorio Encenzo already APPROVED by the Acting Regional Director on June 27, 1974 is hereby adjudicated and registered in the names of the Spouses ROBERTO SAYSON and BEATA O. SAYSON, of legal ages, Filipinos, spouses and residents of Campokpok, Tabango, Leyte, Philippines and as soon as this decision becomes final, let a decree of registration be issued by the Land Registration Commission. SO ORDERED. (x x x)

  

Id. at 30-32. See the RTCs Order dated May 9, 1997, id. at 49-50. Id. at 73-77.

23

5. From the above decision the oppositors (defendants herein) appealed; 6. On July 24, 1985, the Honorable Court of Appeals rendered its decision, the dispositive portion [of which] reads: WHEREFORE, PREMISES CONSIDERED, finding no merit in this appeal the decision appealed from is hereby AFFIRMED in toto. SO ORDERED. and the said decision has become final and executory on August 21, 1985 per Entry of Judgment issued by the Court of Appeals x x x. 7. That consequently, on September 17, 1986 an Original Certificate of Title No. N-2496 was issued in the names of Roberto Sayson and Beata O. Sayson, pursuant to Decree No. N-191615, by the Register of Deeds for the Province of Leyte; 8. That on motion, the Honorable Court, on November 21, 1985, issued a Writ of Possession which for some reason or [another] was not satisfied, so that the Honorable Court, on April 7, 1989 acting on an exparte motion dated April 6, 1989 directed the issuance of an Alias Writ of Possession; 9. That the Deputy Sheriff of this Court, Mr. Placid[o] Cayco tendered the Alias Writ of Possession to the oppositors, particularly to Mr. Eugenio Basbas, Sr. and Eugenio Basbas, Jr. who, as the Deputy Sheriff stated in his Progress Report dated May 18, 1989 did not believe and obey the CFI Decision and the decision of the Court of Appeals and x x x [t]hey demanded a relocation survey to determine the exact location of applicants 24

(complainant[s] herein) property described in the alias writ of possession. x x x; 10.That on June 16, 1989, the Honorable Court, acting on the Progress Report of Deputy Sheriff Placido Cayco, issued an Order on even date appointing Geodetic Engineer Jose A. Tahil as Court Commissioner specifically to relocate Lot No. 1, Plan Psu-08-000235, LRC No. 0-177, Land Reg. Record No. N51830 x x x This Order was dictated in open court in the presence of Mr. Eugenio Basbas, Sr. and Eugenio Basbas, Jr. who had both objected to the Writ of Possession, and their counsel Atty. Evargisto Escalon, and Attorney Demetrio D. Sarit, counsel for the applicants. x x x 11. That pursuant to the [O]rder dated June 16, 1989 x x x the Court assigned Commissioner, Engr. Jose A. Tahil, submitted his report stating that the job assigned to the commissioner was already fully and peacefully accomplished; that his findings [show] that all points are existing and intact on the field except x x x corner 3 of said lot x x x which at present [is] already defined and indicated on the ground. The commissioner also attached a Sketch Plan of the land to his report. x x x 12.That, finally, the Honorable Court, on September 13, 1989 issued an Order approving the Commissioners Report and further stated: [R]espondents (defendants herein) are directed to vacate the portion of Lot No. 1, Psu-08-000235 covered by OCT No. 2496 and subject of final decree of registration which, until [the] present, said respondents are still possessing, pursuant to the final and executory judgment of the Court of Appeals and as particularly [defined] in the Commissioners Report submitted on August 3, 1989 x x x

25

Respondents are reminded that under Rule 71 of the New Rules of Court, failure on their part to so obey this Order may make them liable for contempt of this Court.*

However, petitioners admitted but denied in part: 1) paragraphs 2 and 3, insofar as they alleged that they were all oppositors to the land registration case when only Eugenio Sr., Teofilo and Rufino were the oppositors therein; and 2) paragraph 14, with respect to the allegation on the retirement of the Deputy Sheriff and the heart condition of the Clerk of Court, for lack of sufficient knowledge and information sufficient to form a belief thereon. On the other hand, they specifically denied: 1) paragraph 13, on the ground that they have the right of ownership and/or possession over the subject property; and 2) paragraph 15, on the ground that the property they are cultivating is owned by them, hence, respondents cannot suffer losses and damages. Paragraphs 2, 3, 13, 14 and 15 alluded to in the foregoing are as follows: 2. All the defendants named above are x x x of legal age and are residents of Balagtas, Matag-ob, Leyte where they may be served summons and other court processes; while defendant-spouses Pablito Basarte and Marcelina Basbas Basarte were not named as among the oppositors in the land registration case whose decision is herein sought to be revived, said 

Id. at 2-5.

26

spouses are nonetheless participating in the harvest, processing and sale of the coconuts with the other defendants named above; 3. Plaintiffs Beata Sayson and her late husband, Roberto Sayson are petitioners in Land Registration Case No. 0-177 for the registration of a parcel of agricultural land situated in Barrio Balagtas, Matag-ob, Leyte, filed on September 2, 1976 with the then Court of First Instance of Leyte, Branch V, Ormoc City. The above-named defendants, namely: Eugenio Basbas, Teofilo Aras, Gervacio Basbas, Rufino Aras, Ismael Aras, Eugenio Aras, Simfronio Aras, Feliciano Aras, Rosita Aras and Eugenio Basbas, Jr. were oppositors to the application;* xxxx 13.That despite this admonition in the [September 13, 1989] [O]rder that they could be cited for contempt of Court, the respondents, defendants herein, had continuously defied the same and this notwithstanding the fact that it was upon their own demands and insistence that a relocation survey be made on the premises subject of this case before they would obey the alias writ of possession x x x and that the finding[s] of the Court[-]appointed Commissioner Engr. Jose A. Tahil show that the oppositors-respondents did [encroach] on the land of plaintiffs herein; 14.That this [September 13, 1989] Order however was not implemented thru a Writ of Execution within the five-year period from the time the Order became final because of the retirement of Deputy Sheriff Placido Cayco and by reason also of the fact that the then Clerk of Court, Atty. Constantino A. Trias, Jr. who was also the ex-officio Provincial Sheriff was not physically fit to hike thru the mountains and hills of Brgy. Balagtas where the property and the defendants therein reside due to his heart condition; 15.That despite their knowledge of the Court[s] [September 13, 1989] Order, the same [having been] dictated in open court, the respondents 

Id. at 1-2

27

had continued to occupy the land of the plaintiffs and for more than five (5) years since this Order for them to vacate the land in question was issued, they had harvested the coconuts growing thereon and such other produce of the land herein involved. And until the decision of the Court of Appeals is executed, plaintiff will continue to suffer losses and damages by reason of defendants unlawful occupation and possession and their continued harvesting of the produce of this land of the herein plaintiffs.*

By way of special and affirmative defenses, said petitioners contended that the Order sought to be revived is not the judgment contemplated under Section 6, Rule 39 of the Rules of Court, hence the action for revival of judgment is improper. Also, except for Rufino, petitioners averred that they cannot be made parties to the complaint for revival of judgment as they were not parties to the land registration case. They thus believed that the September 13, 1989 Order sought to be revived is not binding upon them and hence, the complaint states no cause of action with respect to them. As to the counterclaim, petitioners prayed that respondents pay them moral and exemplary damages, attorneys fees and litigation expenses. Pre-trial conference was thereafter set* but since not all petitioners were served with summons, this was reset and alias summons was issued and served upon Simfronio and the spouses Basarte.* Upon receipt of summons, Simfronio adopted the Answer with Counterclaim of Gervacio, Rufino, Ismael, Eugenio, Feliciano, Rosita and Eugenio Jr. * while the spouses Basarte filed a Motion to Dismiss * on the ground of lack of cause of action. As said motion was also denied,* the spouses Basarte later filed a Manifestation* that they were also adopting the Answer with Counterclaim filed by Gervacio and the others.

  

   

Id. at 5-6. See Notice of Pre-Trial, id. at 85. See Orders dated March 9, 1998 & May 20, 1998, id. at 102 & 112 respectively; Alias Summons dated June 1, 1998, id. at 113; and Officers Return, id. at 115. See also the Summons served to the spouses Basarte, id. at 148, and the Officers Return thereof, id. at 147, after the spouses surname was amended to read as spouses Basarte instead as Sabarte. See Simfronios Manifestation and Second Manifestation, id. at 116-119. Id. at 149-151. See RTC Order dated February 9, 1999, id. at 186. Id. at 253.

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During the pre-trial conference on July 14, 1999, the RTC issued an Order * which provides in part, viz: In todays pre-trial conference, manifestations and countermanifestations were exchanged. All the parties and their counsels are present. x x x [P]laintiffs counsel presented a Special Power of Attorney by Beata Sayson but the Court observed that same was not duly acknowledged before the Philippine Consulate or Embassy in Canada. However, this matter is not so important[.] [W]hen the Court tried to dig and discuss with the parties on their real positions, it turned out that the plaintiffs are seeking revival of the previous final judgment, the original parties of which were Eugenio Basbas, Teofilo Aras and Rufino Aras. Eugenio and Teofilo are all dead, leaving Rufino Aras alive. It is quite complicated considering that in this action, the plaintiffs relied on the Order of this Court penned by the previous judge dated September 13, 1989 which was made after or consequent to the final judgment aforementioned, wherein the names of the other defendants were mentioned in the body thereof. After considering the merits of the various contentions, the Court is of the view that the complaint had to limit itself to the names of the original parties appearing in the original judgment now being sought for revival. The interest of the plaintiffs in seeking implementation or execution of the judgment sought to be revived which would involve the other defendants can be taken when the judgment shall have been revived. In this connection therefore and as part of the matters to be made part in the pre-trial conference, in the exercise of the authority granted to it by law, this Court directs the plaintiffs to make the necessary amendment and/or to submit a manifestation first to this Court on the point above raised regarding amendment of the designation of the parties having in mind the objection of the defendants who manifested that should there be an amendment, this counter-claim shall be disregarded since they were brought in unnecessarily in this kind of action. Plaintiffs therefore are given a period of ten (10) days from today within which to submit the requisite manifestation furnishing copy thereof 

Id. at 215-216.

29

to the defendant who upon receipt shall also be given a period of ten (10) days within which this Court will make the necessary resolution before allowing any amendment. Hold the pre-trial conference in abeyance. SO ORDERED. * (Emphasis supplied.)

In their Manifestation with Prayer,* respondents informed the RTC about the death of Eugenio Sr. and Teofilo who were oppositors in the land registration case and the substitution by their heirs, namely, Gervacio, Marcelina Basbas Basarte,* and Eugenio Jr. for Eugenio Sr. and Ismael, Vicente, Ligaya Aras (Ligaya), Rosendo Aras (Rosendo) and Daina Aras (Daina) for Teofilo. Respondents prayed that their manifestation be considered for the purpose of determining the proper parties to the case. Despite petitioners Counter-Manifestation,* the RTC issued the following Order* on May 15, 1999: The Manifestation of plaintiffs and the Counter-Manifestation of defendants having already been submitted and duly noted, the Court hereby directs that henceforth in the denomination of this case, the names of the original parties, Eugenio Basbas and Teofilo Aras (in Land Registration Case No. 0-177) shall still remain to be so stated as defendants for purposes of the present case but with additional names of their respective heirs to be included and stated immediately after each name as heirs in substitution, namely: for Eugenio Basbas 1) Gervacio Basbas, 2) Marcelina Basbas Basarte, and 3) Eugenio Basbas, Jr.; and for Teofilo Aras 1) Ismael Aras, 2) Vicente Aras, 3) Ligaya Aras, 4) Rosendo Aras, and 5) Daina Aras.

    

Id. Id. at 231-233. One of the Spouses Basarte. Records, pp. 237-239. Id. at 250.

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Since from the records, only Gervacio Basbas, Eugenio Basbas, Jr. and Ismael Aras were duly served with summons, the Branch Clerk of Court is hereby directed to serve summons on the other heirs, namely: Marcelina Basbas Basarte, Vicente Aras, Ligaya Aras, Rosendo Aras, and Daina Aras. x x x x*

After summons were served, Vicente, Rosendo, Ligaya and Daina were, however, declared in default for not filing any responsive pleading. * On February 2, 2001, the RTC issued a Pre-Trial Order* where the controverted stipulations and issues to be tried, among others, were enumerated as follows: Controverted Stipulations: 1. That defendants are not enjoying the produce of the land because there are period[s] wherein the fruits were subject of theft and the same is now pending at the Municipal Trial Court of Matag-ob; 2. That [even] before the start of the original case, the original defendants referring to the late Eugenio Basbas, Sr. and Teofilo Aras, [and] Rufino Aras were occupying the property and they were succeeded by the respective heirs of the deceased Eugenio Basbas, Sr. and Teofilo Aras [sic]; 3. That plaintiff Teofilo Aras, Sr. has a daughter named Fedeliza Aras; Issues

 



Id. See 1st page of Pre-Trial Order, id. at 348. The Rufino Aras declared in default in said Pre-Trial Order is actually Rosendo Aras. Rufino filed his Answer together with Gervacio and the others. Id. at 348-350.

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1. Whether x x x the plaintiffs are entitled to revival of judgment in the earlier [land registration] case; 2. Whether x x x the defendants except for defendant Rufino Aras are the proper parties in the present action; 3. Whether x x x the complaint states a cause of action; 4. Whether x x x defendants are entitled to their counterclaim, and; 5. Whether judgment on the pleadings is allowed or is tenable.*

Respondents subsequently filed an Omnibus Motion for Judgment on the Pleadings and/or Summary Judgment.* They contended that since petitioners Answer failed to tender an issue, they having expressly admitted the material allegations in the complaint, particularly paragraphs 4 to 12, a judgment on the pleadings or summary judgment is proper. Petitioners filed an Opposition Re: Omnibus Motion for Judgment on the Pleadings and/or Summary Judgment and Memorandum Re: Failure of Plaintiff Beata Sayson to Appear in the Pre-trial Conference. * They argued that the case cannot be decided based on the pleadings nor through summary judgment considering that the controverted stipulations and issues defined in the Pre-Trial Order must be proven by evidence. In addition, they questioned the Special Power of Attorney (SPA) executed by Beata in Canada empowering her son Roberto Jr. to appear on her behalf in the pre-trial conference. They argued that since said SPA has not been authenticated by a Philippine Consulate official, it is not sufficient authorization and hence, Beata cannot be considered to have attended the pre-trial conference. The case must, therefore, be dismissed insofar as she is concerned. Ruling of the Regional Trial Court   

Id. at 349. Id. at 377-382. Id. at 435-439.

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In resolving respondents Omnibus Motion for Judgment on the Pleadings and/or Summary Judgment, the RTC found that petitioners Answer does not essentially tender an issue since the material allegations of the Complaint were admitted. Hence, said court issued an Order* dated May 21, 2001, the dispositive portion of which reads: Wherefore, finding merit in the motion, judgment is hereby rendered for and in favor of the plaintiffs and against the defendants ordering the revival of the decision of the Court of Appeals promulgated on July 24, 1985 affirming the decree of registration of this Court in the decision of the Land Registration Case No. 0-177 dated March 22, 1979, and of the final Order of this Court dated September 13, 1989 and upon finality of this Order, ordering the issuance of Writ of Possession for the lot made subject of the decision. Without pronouncement as to costs. SO ORDERED.*

Petitioners thus filed a Notice of Appeal * which was approved in an Order dated June 06, 2001.* Ruling of the Court of Appeals Finding no merit in the appeal, the CA denied the same in a Decision * dated February 17, 2004. It noted that petitioners Answer admitted almost all of the allegations in respondents complaint. Hence, the RTC committed no reversible error when it granted respondents Motion for Judgment on the Pleadings and/or Summary Judgment. The appellate court likewise found untenable the issue as regards the failure of the complaint to state a cause of action. To the appellate court, petitioners refusal to vacate the subject     

Id. at 440-442 Id. at 442. Id. at 445. Id. at 450. Supra note 1.

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property despite the final and executory Decision of the CA in the land registration case and the September 13, 1989 Order of the RTC for them to vacate the same, clearly support respondents cause of action against them. Also contrary to petitioners posture, the September 13, 1989 Order is a final order as it finally disposed of the controversy between the parties in the land registration case. The CA likewise found the SPA executed by Beata in favor of Roberto Jr. as valid, hence, she was duly represented during the pre-trial conference. The dispositive portion of said CA Decision reads: WHEREFORE, premises considered, the present appeal is DENIED. The May 21, 2001 Decision of the Regional Trial Court of Ormoc City, Branch 35 is AFFIRMED. SO ORDERED.*

Their Motion for Reconsideration* having been denied in a Resolution* dated April 19, 2006, petitioners are now before this Court through the present Petition for Review on Certiorari. Issues Petitioners impute upon the CA the following errors: 1. The Honorable Court of Appeals clearly committed serious errors of law in its decision and Resolution dated February 17, 2004 and April 19, 2006 when it affirmed the Order of the Regional Trial Court dated May 21, 2001 and declared that no reversible error was committed by the Regional Trial Court of Ormoc City in granting respondents motion for judgment on the pleadings and/or summary judgment;

  

CA rollo, p. 93. Id. at 95-101. Supra note 3.

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2. The Honorable Court of Appeals clearly committed serious errors of law in its Decision and Resolution dated February 17, 2004 and April 19, 2006 when it affirmed the Order of the Regional Trial Court of Ormoc City dated May 21, 2001 and declared that petitioners argument that respondents complaint failed to state a cause of action has no merit. 3. The Honorable Court of Appeals clearly committed serious errors of law when it affirmed the Order of the Regional Trial Court of Ormoc City which ordered the revival of the Judgment of this Court of Appeals in CAG.R. No. 66541 entitled Beata Sayson and Roberto Sayson vs. Eugenio Basbas, et al., despite the fact that this was not the judgment sought to be revived in Civil Case No. 3312-0; 4. The Honorable Court of Appeals clearly committed serious errors of law in ruling that the duly notarized Special Power of Attorney in favor of Roberto Sayson[,] Jr. is valid and the latter is authorized to represent his mother, Beata Sayson[,] which is contrary to the ruling in the case of ANGELITA LOPEZ, represented by PRISCILLA L. TY vs. COURT OF APPEALS, REGIONAL TRIAL COURT OF QUEZON CITY x x x (G.R. No. 77008, December 29, 1987).* The Parties Arguments Petitioners insist that a judgment on the pleadings or a summary judgment is not proper in this case since the controverted stipulations and the first three issues enumerated in the pre-trial order involve facts which must be threshed out during trial. They also claim that the Complaint for Revival of Judgment states no cause of action because the September 13, 1989 Order which it sought to revive is not the judgment contemplated under Section 6, Rule 39 of the Rules of Court and, therefore, cannot be the subject of such an action. Moreover, they argue that the CA Decision in the land registration case should not have been revived as same was not prayed for in the Complaint for Revival of Judgment. Lastly, petitioners assail the SPA which authorized Roberto Jr. to represent his mother, Beata, during the pre-trial conference, it not having been authenticated by a Philippine consulate officer in Canada where it was executed. Citing Lopez v. Court of Appeals,* they contend that said document cannot be admitted in 

Rollo, p. 19.

35

evidence and hence, Beata was not duly represented during said pre-trial conference. The case, therefore, should have been dismissed insofar as she is concerned. For their part, respondents point out that the RTCs basis in granting the Motion for Judgment on the Pleadings and/or Summary Judgment was petitioners admission of practically all the material allegations in the complaint. They aver that Section 1, Rule 34 of the Rules of Court clearly provides that where an answer fails to tender an issue or otherwise admits the material allegations of the adverse partys pleading, the court may, on motion of that party, direct judgment on the pleadings. Also, the test for a motion for summary judgment is whether the pleadings, affidavits or exhibits in support of the motion are sufficient to overcome the opposing papers and to justify a finding as a matter of law that there is no defense to the action or the claim is clearly meritorious. And since, as found by the CA, petitioners Answer did not tender an issue and that there is no defense to the action, the grant of the Motion for Judgment on the Pleadings and/or Summary Judgment was appropriate. Respondents likewise contend that if their prayer in the Complaint is taken in its proper context, it can be deduced that what they were really seeking is the implementation of the CA Decision dated July 24, 1985 and the orders ancillary thereto. With respect to the SPA, they submit that the law does not require that a power of attorney be notarized. Moreover, Section 4, Rule 18 of the Rules of Court simply requires that a representative appear fully authorized in writing. It does not specify a particular form of authority. Our Ruling There is no merit in the petition. I. 

The instant case is proper for the rendition of a summary judgment.

240 Phil. 811 (1987); In this case, an SPA was executed abroad by the real party in interest in favor of a representative here in the Philippines to initiate an action for ejectment. Finding said SPA to be without the authentication of an officer in the foreign service of the Philippines stationed in that foreign country pursuant to Sec. 25, Rule 132 of the old Rules of Court (now Sec. 24, Rule 132 of the Revised Rules of Court, see footnote 63), this Court declared the same as not admissible in evidence. Hence, the litigation was considered not commenced by the real party-in-interest or by one duly authorized to do so, making the entire proceedings before the lower courts null and void.

36

Petitioners principally assail the CAs affirmance of the RTCs Order granting respondents Motion for Judgment on the Pleadings and/or Summary Judgment. In Tan v. De la Vega,* citing Narra Integrated Corporation v. Court of Appeals,* the court distinguished summary judgment from judgment on the pleadings, viz: The existence or appearance of ostensible issues in the pleadings, on the one hand, and their sham or fictitious character, on the other, are what distinguish a proper case for summary judgment from one for a judgment on the pleadings. In a proper case for judgment on the pleadings, there is no ostensible issue at all because of the failure of the defending partys answer to raise an issue. On the other hand, in the case of a summary judgment, issues apparently exist i.e. facts are asserted in the complaint regarding which there is as yet no admission, disavowal or qualification; or specific denials or affirmative defenses are in truth set out in the answer but the issues thus arising from the pleadings are sham, fictitious or not genuine, as shown by affidavits, depositions, or admissions. x x x. Simply stated, what distinguishes a judgment on the pleadings from a summary judgment is the presence of issues in the Answer to the Complaint. When the Answer fails to tender any issue, that is, if it does not deny the material allegations in the complaint or admits said material allegations of the adverse partys pleadings by admitting the truthfulness thereof and/or omitting to deal with them at all, a judgment on the pleadings is appropriate.* On the other hand, when the Answer specifically denies the material averments of the complaint or asserts affirmative defenses, or in other words raises an issue, a summary judgment is proper provided that the issue raised is not genuine. A genuine issue means an issue of fact which calls for the presentation of evidence, as distinguished from an issue which is fictitious or contrived or which does not constitute a genuine issue for trial.* a) Judgment on the pleadings is not proper because petitioners Answer tendered issues. In this case, we note that while petitioners Answer to respondents Complaint practically admitted all the material allegations therein, it nevertheless asserts the affirmative defenses that the action for revival of judgment is not the proper action and    

G.R. No. 168809, March 10, 2006, 484 SCRA 538, 550-551. 398 Phil. 733,740 (2000). Tan v. De la Vega, supra note 52 at 545. Wood Technology Corporation v. Equitable Banking Corporation, 492 Phil.106, 116 (2005).

37

that petitioners are not the proper parties. As issues obviously arise from these affirmative defenses, a judgment on the pleadings is clearly improper in this case. However, before we consider this case appropriate for the rendition of summary judgment, an examination of the issues raised, that is, whether they are genuine issues or not, should first be made. b) The issues raised are not genuine issues, hence rendition of summary judgment is proper. To resolve the issues of whether a revival of judgment is the proper action and whether respondents are the proper parties thereto, the RTC merely needed to examine the following: 1) the RTC Order dated September 13, 1989, to determine whether same is a judgment or final order contemplated under Section 6, Rule 39 of the Rules of Court; and, 2) the pleadings of the parties and pertinent portions of the records * showing, among others, who among the respondents were oppositors to the land registration case, the heirs of such oppositors and the present occupants of the property. Plainly, these issues could be readily resolved based on the facts established by the pleadings. A full-blown trial on these issues will only entail waste of time and resources as they are clearly not genuine issues requiring presentation of evidence. Petitioners aver that the RTC should not have granted respondents Motion for Judgment on the Pleadings and/or Summary Judgment because of the controverted stipulations and the first three issues enumerated in the Pre-trial Order, which, according to them, require the presentation of evidence. These stipulations and issues, however, when examined, basically boil down to questions relating to the propriety of the action resorted to by respondents, which is revival of judgment, and to the proper parties thereto the same questions which we have earlier declared as not constituting genuine issues. In sum, this Court holds that the instant case is proper for the rendition of a summary judgment, hence, the CA committed no error in affirming the May 21, 2001 Order of the RTC granting respondents Motion for Judgment on the Pleadings and/or Summary Judgment. II.

The Complaint states a cause of action. Petitioners contend that the complaint states no cause of action since the



Particularly the (1) Complaint, records, pp. 1-7; (2) Answer, id. at 73-77; (3) respondents Manifestation with Prayer, id. at 231-233; and (4) petitioners Counter-Manifestation, id. at 237-239.

38

September 13, 1989 Order sought to be revived is not the judgment contemplated under Section 6, Rule 39 of the Rules of Court. They also aver that the RTC erred when it ordered the revival not only of the September 13, 1989 Order but also of the July 24, 1985 CA Decision, when what was prayed for in the complaint was only the revival of the former. This Court, however, agrees with respondents that these matters have already been sufficiently addressed by the RTC in its Order of May 9, 1997 * and we quote with approval, viz: The body of the Complaint as well as the prayer mentioned about the executory decision of the Court of Appeals promulgated on July 24, 1985 that had to be finally implemented. So it appears to this Court that the Complaint does not alone invoke or use as subject thereof the Order of this Court which would implement the decision or judgment regarding the land in question. The Rules of Court referring to the execution of judgment, particularly Rule 39, Sec. 6, provides a mechanism by which the judgment that had not been enforced within five (5) years from the date of its entry or from the date the said judgment has become final and executory could be enforced. In fact, the rule states: judgment may be enforced by action. So in this Complaint, what is sought is the enforcement of a judgment and the Order of this Court dated September 13, 1989 is part of the process to enforce that judgment. To the mind of the Court, therefore, the Complaint sufficiently states a cause of action.* III.

Any perceived defect in the SPA would not serve to bar the case from proceeding.

Anent the SPA, we find that given the particular circumstances in the case at bar, an SPA is not even necessary such that its efficacy or the lack of it would not in any way preclude the case from proceeding. This is because upon Roberto Sr.s death, Roberto Jr., in succession of his father, became a co-owner of the subject property together with his mother, Beata. As a co-owner, he may, by himself alone, bring an action for the recovery of the co-owned property pursuant to the well-settled principle that in a co-ownership, coowners may bring actions for the recovery of co-owned property without the necessity of  

Id. at 49-50. Id. at 49.

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joining all the other co-owners as co-plaintiffs because the suit is presumed to have been filed for the benefit of his co-owners.* While we note that the present action for revival of judgment is not an action for recovery, the September 13, 1989 Order sought to be revived herein ordered the petitioners, among others, to vacate the subject property pursuant to the final and executory judgment of the CA affirming the CFIs adjudication of the same in favor of respondents. This Order was issued after the failure to enforce the writ of execution and alias writ of execution due to petitioners refusal to vacate the property. To this Courts mind, respondents purpose in instituting the present action is not only to have the CA Decision in the land registration case finally implemented but ultimately, to recover possession thereof from petitioners. This action is therefore one which Roberto Jr., as coowner, can bring and prosecute alone, on his own behalf and on behalf of his co-owner, Beata. Hence, a dismissal of the case with respect to Beata pursuant to Sec. 5,* Rule 18 of the Rules of Court will be futile as the case could nevertheless be continued by Roberto Jr. in behalf of the two of them. WHEREFORE, the Petition for Review on Certiorari is DENIED and the assailed Decision of the Court of Appeals dated February 17, 2004 and Resolution dated April 19, 2006 in CA-G.R. CV No. 72385 are AFFIRMED. SO ORDERED. MARIANO C. DEL CASTILLO Associate Justice WE CONCUR: RENATO C. CORONA Chief Justice Chairperson





Carandang v. Heirs of De Guzman, G.R. No. 160347, November 29, 2006, 508 SCRA 469, 487 citing Baloloy v. Hular, 481 Phil. 398, (2004) and Adlawan v. Adlawan, G.R. No. 161916, January 20, 2006, 479 SCRA 275, 283. Sec. 5. Effect of failure to appear. The failure of the plaintiff to appear when so required pursuant to the next preceding section shall be caused for dismissal of the action. The dismissal shall be with prejudice, unless otherwise ordered by the court. x x x.

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TERESITA J. LEONARDO-DE CASTRO Associate Justice

ARTURO D. BRION Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice

C E R T I F I CAT I O N Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

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Partial default in a case with multiple defendants Posted on March 18, 2016April 15, 2017 by Lawyers in the Philippines What if, in a case filed against multiple defendants, one defendant does not file his Answer but his co-defendants file theirs? Can a defendant who failed to file his own Answer be declared in default even if Answers were filed by his co-defendants? Yes. The applicable rule is Section 3 of Rule 9 of the Rules of Court. At the outset, it must be seen that the rules on Default in Section 3 of Rule 9 provide for two distinct and discrete stages of action. The first stage of action pertains to the finding that a defendant is in default and the consequent declaration by the Court. With regard to this stage, the first paragraph of Section 3, Rule 9, provides thus: “Sec. 3. Default; declaration of. — If the defending party fails to answer within the time allowed therefore, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default.” The first stage thus concludes with the declaration that a defending party is in default. The second stage of action pertains to the conduct of the case after the declaration in default. The ordinary consequence upon a defendant after he is found in default is provided in paragraph (a) of Section 3, Rule 9, thus: “(a) Effect of order of default. – A party in default is entitled to notice of subsequent proceedings, but not to take part in the trial.” There is a critical distinction between the first stage of action, a defendant’s being declared in default, and the second stage of action, the consequences thereof, i.e. the conduct of the case after such a declaration. While both pertain to default, they are not identical. It is clear that paragraph (c) of Section 3, Rule 9 also refers to the second stage.

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“(c) Effect of partial default. — When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented.” Paragraph (c) only provides for the manner in which the trial will be conducted in a case where a defendant filed no Answer although his co-defendants did. The paragraph provides only that the case will be tried upon the Answers filed by the responsive defendants. Nowhere does it state that the Rule on default does not apply. It is not an exception to a defendant being declared in default. The defendant who does not file an Answer is to be declared in default. This is the Rule and paragraph (c) of Section 3, Rule 9 is no exception to it. Said provision, in fact, recognizes a situation where one defendant among several is in default. This is clear from paragraph (c)’s own heading, “Effect of partial default”. That very heading recognizes that default exists within the set. This recognition can only be upon the Court’s declaration of default pursuant to the first paragraph of Section 3 of Rule 9. Paragraph (c) of Section 3, Rule 9 thus provides for the manner of the trial’s conduct in a situation where one party among several, but not all, were declared in default pursuant to the first paragraph of Section 3, Rule 9. It contemplates the existence of default in one of the defendants. It is, therefore, not an exception to the rule on default, but a consequence. A contrary interpretation would allow a defendant in willful default to nevertheless present evidence contrary to the Rules’ explicit provision. This would render in vain the provisions for the Rule on Default and defeat the Rules of Court’s objective of securing a just, speedy and inexpensive disposition of every action and proceeding.[1] Jurisprudence is in full support of this view. The Supreme Court has ruled upon Section 3 (c) of Rule 9 in the case of PINLAC, ET AL. vs. COURT OF APPEALS, ET AL., G.R. No. 91486, 19 January 2001. There the Supreme Court affirmed that when a party does not file an Answer, although his co-defendants do so, default is availing against the former. The Supreme Court ruled: “(c) Effect of partial default. — When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented.” 43

In fact, the court a quo enumerated in the Partial Decision those who filed responsive pleadings. Considering that petitioners in their complaint stated a common cause of action against all the named respondents, the court a quo should have heard the case as against all respondents, the defaulted respondents included. However, the trial court, unmindful of the above-quoted rule, proceeded to receive evidence ex parte only against the defaulted respondents. The trial court’s disposition is not only violative of the rules but also a clear negation of the defaulted respondents’ limited rights. Whatever defense and evidence the non-defaulted respondents may present which would be applicable to the situation of the defaulted respondents should inure to the benefit of the latter. The nullification of OCT 614 adversely affected the answering respondents for they all share the same mother title. In effect, the court a quo pre-judged the case even against the answering respondents, for how could OCT 614, the mother title, be valid for one set of respondents and null and void for the other respondents? In fine, the Partial Decision was procedurally flawed. [Boldfacing supplied] Pinlac vs. Court of Appeals affirms that a declaration of partial default is in order in these cicumstances. For, under Pinlac, that a Complaint states a common cause of action against all the named defendants means only that the Honorable Court should hear the case and receive evidence against all defendants, the defaulted defendant included. But, as Pinlac vs. Court of Appeals makes clear, Section 3 (c) of Rule 9 does not mean that a delinquent defendant — whose co-defendants did file their Answers — cannot be declared in default. He still should be declared in default for having failed to file an Answer within the time given by the Rules. He does remain entitled to the limited rights of a defendant in default, but to no more than those. Although such defenses and evidence as the non-defaulted co-defendant may present which would be applicable to the situation of the defaulted defendant could inure to his benefit, being in default, the latter should be so declared. And so the defaulted defendant shall remain entitled to notice of subsequent proceedings, but he cannot take part in the trial.[2] The Supreme Court again explained in depth the governing rules in a situation of partial default under Section 3 (c) of Rule 9 in the case of REMIGIA GRAGEDA ET AL., vs. HON. NIMFA C. GOMEZ, ET AL., G.R. No. 169536, 21 September 2007: 44

Stated differently, in all instances where a common cause of action is alleged against several defendants, some of whom answer and the others do not, the latter or those in default acquire a vested right not only to own the defense interposed in the answer of their co-defendant or co-defendants not in default but also to expect a result of the litigation totally common with them in kind and in amount whether favorable or unfavorable. The substantive unity of the plaintiffs cause against all the defendants is carried through to its adjective phase as ineluctably demanded by the homogeneity and indivisibility of justice itself. Indeed, since the singleness of the cause of action also inevitably implies that all the defendants are indispensable parties, the court’s power to act is integral and cannot be split such that it cannot relieve any of them and at the same time render judgment against the rest. Considering the tenor of the section in question, it is to be assumed that when any defendant allows himself to be declared in default knowing that his co-defendant has already answered, he does so trusting in the assurance implicit in the rule that his default is in essence a mere formality that deprives him of no more than the right to take part in the trial and that the court would deem anything done by or for the answering defendant as done by or for him. The presumption is that otherwise he would not have seen to it that he would not be in default. Of course, he has to suffer the consequences of whatever the answering defendant may do or fail to do, regardless of possible adverse consequences, but if the complaint has to be dismissed in so far as the answering defendant is concerned, it becomes his inalienable right that the same be dismissed also as to him. It does not matter that the dismissal is upon the evidence presented by the plaintiff or upon the latter’s mere desistance, for in both contingencies, the lack of sufficient legal basis must be the cause. x x x. The primary question which a Motion To Declare Defendant In Default hinges on is whether or not the defendant failed to Answer within the time given him. The question of whether or not his co-defendant had filed an Answer is relevant only as to the second stage, the manner of how trial will subsequently be conducted. It has no bearing on the first stage, the declaration of the delinquent party’s default. The application of the Rules in such a case are therefore clear. The Rules on partial default are as they were laid out in the same case of Grageda vs. Hon. Gomez: The effects, therefore, of a failure to file a separate Answer when other codefendants (against whom a common cause of action was alleged) had already filed theirs, are limited to the following: 45

1. While the non-answering defendants may be declared in default, the court would still try the case against them on the assumption that they are deemed to have adopted the Answer of the answering defendants; and 2. If declared in default, the defaulting party is deprived of no more than the right to take part in the trial. Consequently, the result of the litigation, whether favorable or unfavorable, shall affect and bind the defaulting party and the answering defendant with equal force and effect.

[1]

Section 6, Rule 1 of the Rules of Court.

[2]

Section 3 (a), Rule 9 of the Rules of Court.

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(Motion to Declare Defendant in Default) (CAPTION) MOTION (TO DECLARE DEFENDANT IN DEFAULT) Plaintiff, by counsel and unto this Honorable Court, respectfully states 1.The records of the Honorable Court show that Defendant was served with copy of the summons and of the complaint, together with annexes thereto on _____________; 2.Upon verification however, the records show that Defendant _____________ has failed to file his Answer within the reglementary period specified by the Rules of Court despite the service of the summons and the complaint; 3.As such, it is respectfully prayed that Defendant _____________ be declared in default pursuant to the Rules of Court and that the Honorable Court proceed to render judgment as the complaint may warrant.

PRAY E R WHEREFORE, it is respectfully prayed that Defendant _____________ be declared in default pursuant to the Rules of Court and that the Honorable Court proceed to render judgment as the complaint may warrant. Other relief just and equitable are likewise prayed for. _____________, Philippines, __Date__. (COUNSEL) (NOTICE OF HEARING) (EXPLANATION) COPY FURNISHED: 47

OPPOSING COUNSEL

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FIRST DIVISION

ERLINDA GAJUDO, FERNANDO G.R. No. 151098 GAJUDO, JR., ESTELITA GAJUDO, BALTAZAR GAJUDO and DANILO Present: ARAHAN CHUA, Petitioners, Panganiban, CJ, Chairman, Ynares-Santiago, - versus - Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ Promulgated: TRADERS ROYAL BANK,[1] Respondent. March 21, 2006 x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - -- x DECISION PANGANIBAN, CJ: T he mere fact that a defendant is declared in default does not automatically result in the grant of the prayers of the plaintiff. To win, the latter must still present the same quantum of evidence that would be required if the defendant were still 49

present. A party that defaults is not deprived of its rights, except the right to be heard and to present evidence to the trial court. If the evidence presented does not support a judgment for the plaintiff, the complaint should be dismissed, even if the defendant may not have been heard or allowed to present any countervailing evidence. The Case Before us is a Petition for Review[2] under Rule 45 of the Rules of Court, assailing the June 29, 2001 Decision[3] and December 6, 2001 Resolution[4] of the Court of Appeals (CA) in CA-GR CV No. 43889. The CA disposed as follows: UPON THE VIEW WE TAKE OF THIS CASE, THUS, the partial judgment appealed from, must be, as it hereby is, VACATED and SET ASIDE, and another one entered DISMISSING the complaint at bench. Without costs.[5]

The assailed Resolution denied petitioners Motion for Reconsideration [6] for lack of merit. The Facts The CA narrated the facts as follows: [Petitioners] filed a complaint before the Regional Trial Court of Quezon City, Branch 90, against [respondent] Traders Royal Bank, the City Sheriff of Quezon City and the Register of Deeds of Quezon City. Docketed thereat as Civil Case No. Q-41203, the complaint sought the annulment of the extra-judicial foreclosure and auction sale made by [the] city sheriff of Quezon City of a parcel of land covered by TCT No. 16711 of the Register of Deeds of Quezon City, 50

the conventional redemption thereof, and prayed for damages and the issuance of a writ of preliminary injunction. The complaint alleged that in mid 1977[, Petitioner] Danilo Chua obtained a loan from [respondent] bank in the amount of P75,000.00 secured by a real estate mortgage over a parcel of land covered by TCT No. 16711, and owned in common by the [petitioners]; that when the loan was not paid, [respondent] bank commenced extra-judicial foreclosure proceedings on the property; that the auction sale of the property was set on 10 June 1981, but was reset to 31 August 1981, on [Petitioner Chuas] request, which, however, was made without the knowledge and conformity of the other [petitioners]; that on the re-scheduled auction sale, [the] Sheriff of Quezon City sold the property to the [respondent] bank, the highest bidder therein, for the sum of P24,911.30; that the auction sale was tainted with irregularity because, amongst others, the bid price was shockingly or unconscionably, low; that the other [petitioners] failed to redeem the property due to their lack of knowledge of their right of redemption, and want of sufficient education; that, although the period of redemption had long expired, [Petitioner] Chua offered to buy back, and [respondent] bank also agreed to sell back, the foreclosed property, on the understanding that Chua would pay [respondent] bank the amount of P40,135.53, representing the sum that the bank paid at the auction sale, plus interest; that [Petitioner] Chua made an initial payment thereon in the amount of P4,000.00, covered by Interbank Check No. 09173938, dated 16 February 1984, duly receipted by [respondent] bank; that, in a sudden change of position, [respondent] bank wrote Chua, on 20 February 1984, asking that he could repurchase the property, but based on the current market value thereof; and that sometime later, or on 22 March 1984, [respondent] bank wrote Chua anew, requiring him to tender a new offer to counter the offer made thereon by another buyer. Traversing [petitioners] complaint, [respondent] bank, upon 05 July 1984, filed its answer with counterclaim, thereunder asserting that the foreclosure sale of the mortgaged property was done in accordance with law; and that the bid price was neither unconscionable, nor shockingly low; that [petitioners] slept on their 51

rights when they failed to redeem the property within the one year statutory period; and that [respondent] bank, in offering to sell the property to [Petitioner] Chua on the basis of its current market price, was acting conformably with law, and with legitimate banking practice and regulations. Pre-trial having been concluded, the parties entered upon trial, which dragged/lengthened to several months due to postponements. Upon 11 June 1988, however, a big conflagration hit the City Hall of Quezon City, which destroyed, amongst other things, the records of the case. After the records were reconstituted, [petitioners] discovered that the foreclosed property was sold by [respondent] bank to the Ceroferr Realty Corporation, and that the notice of lis pendens annotated on the certificate of title of the foreclosed property, had already been cancelled. Accordingly, [petitioners], with leave of court, amended their complaint, but the Trial Court dismissed the case without prejudice due to [petitioners] failure to pay additional filing fees. So, upon 11 June 1990, [petitioners] re-filed the complaint with the same Court, whereat it was docketed as Civil Case No. 90-5749, and assigned to Branch 98: the amended complaint substantially reproduced the allegations of the original complaint. But [petitioners] this time impleaded as additional defendants the Ceroferr Realty Corporation and/or Cesar Roque, and Lorna Roque, and included an additional cause of action, to wit: that said new defendants conspired with [respondent] bank in [canceling] the notice of lis pendens by falsifying a letter sent to and filed with the office of the Register of Deeds of Quezon City, purportedly for the cancellation of said notice. Summons was served on [respondent] bank on 26 September 1990, per Sheriffs Return dated 08 October 1990. Supposing that all the defendants had filed their answer, [petitioners] filed, on 23 October 1991, a motion to set case for pre-trial, which motion was, however, denied by the Trial Court in its Order of25 October 1991, on the ground that [respondent] bank has not yet filed its answer. On 13 November 1991[, petitioners] filed a motion for reconsideration, 52

thereunder alleging that they received by registered mail, on 19 October 1990, a copy of [respondent] banks answer with counterclaim, dated 04 October 1990, which copy was attached to the motion. In its Order of 14 November 1991, the trial Court denied for lack of merit, the motion for reconsideration, therein holding that the answer with counterclaim filed by [respondent] bank referred to another civil case pending before Branch 90 of the same Court. For this reason, [petitioners] filed on 02 December 1991 a motion to declare [respondent] bank in default, thereunder alleging that no answer has been filed despite the service of summons on it on 26 September 1990. On 13 December 1991, the Trial Court declared the motion submitted for resolution upon submission by [petitioners] of proof of service of the motion on [respondent] bank. Thus, on 16 January 1992, upon proof that [petitioners] had indeed served [respondent] bank with a copy of said motion, the Trial Court issued an Order of default against [respondent] bank. Upon 01 December 1992, on [petitioners] motion, they were by the Court allowed to present evidence ex parte on 07 January 1993, insofar as [respondent] bank was concerned. Thereafter, or on 08 February 1993, the Trial Court rendered the new questioned partial decision.[7] Aggrieved, [respondent] bank filed a motion to set aside [the] partial decision by default against Traders Royal Bank and admit [respondent] Traders Royal Banks x x x Answer with counterclaim: thereunder it averred, amongst others, that the erroneous filing of said answer was due to an honest mistake of the typist and inadvertence of its counsel.

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The [trial court] thumbed down the motion in its Order of 26 July 1993.[8]

Respondent bank appealed the Partial Decision[9] to the CA. During the pendency of that appeal, Ceroferr Realty Corporation and/or Cesar and/or Lorna Roque filed a Manifestation with Motion[10] asking the CA to discharge them as parties, because the case against them had already been dismissed on the basis of their Compromise Agreement[11] with petitioners. On May 14, 1996, the CA issued a Resolution[12] granting Ceroferr et al.s Manifestation with Motion to discharge movants as parties to the appeal. The Court, though, deferred resolution of the matters raised in the Comment[13] of respondent bank. The latter contended that the Partial Decision had been novated by the Compromise Agreement, whose effect of res judicata had rendered that Decision functus officio. Ruling of the Court of Appeals The CA ruled in favor of respondent bank. Deemed, however, to have rested on shaky ground was the latters Motion to Set Aside Partial Decision by Default Against Traders Royal Bank and Admit Defendant Traders Royal Banks Answer. [14] The reasons offered by the bank for failing to file an answer were considered by the appellate court to be at once specious, shallow and sophistical and can hardly be dignified as a mistake or excusable negligence, which ordinary prudence could not have guarded against.[15] In particular, the CA ruled that the erroneous docket number placed on the Answer filed before the trial court was not an excusable negligence by the banks counsel. The latter had a bounden duty to be scrupulously careful in reviewing pleadings. Also, there were several opportunities to discover and rectify the mistake, but these were not taken. Moreover, the banks Motion to Set Aside the Partial Decision and to Admit [the] Answer was not accompanied by an affidavit of merit. These mistakes and the inexcusable negligence committed by respondents lawyer were binding on the bank. On the issue of whether petitioners had convincingly established their right to relief, the appellate court held that there was no ground to invalidate the 54

foreclosure sale of the mortgaged property. First, under Section 3 of Act No. 3135, an extrajudicial foreclosure sale did not require personal notice to the mortgagor. Second, there was no allegation or proof of noncompliance with the publication requirement and the public posting of the notice of sale, provided under Act No. 3135, as amended. Third, there was no showing of inadequacy of price as no competent evidence was presented to show the real market value of the land sold or the readiness of another buyer to offer a price higher than that at which the property had been sold. Moreover, petitioners failed to prove that the bank had agreed to sell the property back to them. After pointing out that the redemption period had long expired, respondents written communications to Petitioner Chua only showed, at most, that the former had made a proposal for the latter to buy back the property at the current market price; and that Petitioner Chua was requested to make an offer to repurchase the property, because another buyer had already made an offer to buy it. On the other hand, respondent noted that the Interbank check for P4,000 was for deposit only. Thus, there was no showing that the check had been issued to cover part of the repurchase price. The appellate court also held that the Compromise Agreement had not resulted in the novation of the Partial Decision, because the two were not incompatible. In fact, the bank was not even a party to the Agreement. Petitioners recognition of Ceroferrs title to the mortgaged property was intended to preclude future litigation against it. Hence this Petition.[16] Issues In their Memorandum, petitioners raise the following issues: 1. Whether or not the Respondent Court of Appeals erred in failing to apply the provisions of Section 3, Rule 9 of the 1997 Rules of Civil Procedure [and in applying instead] the rule on 55

preponderance of evidence under Section 1, Rule 133 of the Rules of Court. 2. Whether or not the respondent appellate court failed to apply the conventional redemption rule provided for under Article 1601 of the New Civil Code. 3. Whether or not this Honorable Court can exercise its judicial prerogative to evaluate the findings of facts.[17]

The first issue is one of law and may be taken up by the Court without hindrance, pursuant to Section 1 of Rule 45 of the Rules of Court. [18] The second and the third issues, however, would entail an evaluation of the factual findings of the appellate court, a function ordinarily not assumed by this Court, unless in some excepted cases. The Court will thus rule on the first issue before addressing the second and the third issues jointly. The Courts Ruling The Petition has no merit. First Issue: Quantum of Proof

Petitioners challenge the CA Decision for applying Section 3 of Rule 9 of the Rules of Court, rather than Section 1 of Rule 133 of the same Rules. In essence, petitioners argue that the quantum of evidence for judgments flowing from a default order under Section 3 of Rule 9 is not the same as that provided for in Section 1 of Rule 133. 56

For ease of discussion, these two rules will be reproduced below, starting with Section 3 of Rule 9 of the Rules of Court: Sec. 3. Default; declaration of. If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court. (a) Effect of order of default. A party in default shall be entitled to notice of subsequent proceedings but not to take part in the trial. (b) Relief from order of default. A party declared in default may at any time after notice thereof and before judgment file a motion under oath to set aside the order of default upon proper showing that his failure to answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense.In such case, the order of default may be set aside on such terms and conditions as the judge may impose in the interest of justice.

(c) Effect of partial default. When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented.

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(d) Extent of relief to be awarded. A judgment rendered against a party in default shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages. (e) Where no defaults allowed. If the defending party in an action for annulment or declaration of nullity of marriage or for legal separation fails to answer, the court shall order the prosecuting attorney to investigate whether or nor a collusion between the parties exists, and if there is no collusion, to intervene for the State in order to see to it that the evidence submitted is not fabricated.

We now quote Section 1 of Rule 133:

SECTION 1. Preponderance of evidence, how determined. In civil cases, the party having the burden of proof must establish his case by a preponderance of evidence. In determining where the preponderance or superior weight of evidence on the issues involved lies, the court may consider all the facts and circumstances of the case, the witnesses manner of testifying, their intelligence, their means and opportunity of knowing the facts to which they are testifying, the nature of the facts to which they testify, the probability or improbability of their testimony, their interest or want of interest, and also their personal credibility so far as the same may legitimately appear upon the trial. The court may also consider the number of witnesses, though the preponderance is not necessarily with the greater number.

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Between the two rules, there is no incompatibility that would preclude the application of either one of them. To begin with, Section 3 of Rule 9 governs the procedure which the trial court is directed to take when a defendant fails to file an answer. According to this provision, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, subject to the courts discretion on whether to require the presentation of evidence ex parte. The same provision also sets down guidelines on the nature and extent of the relief that may be granted. In particular, the courts judgment shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages. As in other civil cases, basic is the rule that the party making allegations has the burden of proving them by a preponderance of evidence. [19] Moreover, parties must rely on the strength of their own evidence, not upon the weakness of the defense offered by their opponent.[20] This principle holds true, especially when the latter has had no opportunity to present evidence because of a default order. Needless to say, the extent of the relief that may be granted can only be as much as has been alleged and proved[21] with preponderant evidence required under Section 1 of Rule 133. Regarding judgments by default, it was explained in Pascua v. Florendo[22] that complainants are not automatically entitled to the relief prayed for, once the defendants are declared in default. Favorable relief can be granted only after the court has ascertained that the relief is warranted by the evidence offered and the facts proven by the presenting party. In Pascua, this Court ruled that x x x it would be meaningless to require presentation of evidence if every time the other party is declared in default, a decision would automatically be rendered in favor of the non-defaulting party and exactly according to the tenor of his prayer. This is not contemplated by the Rules nor is it sanctioned by the due process clause.[23]

The import of a judgment by default was further clarified in Lim Tanhu v. Ramolete.[24] The following disquisition is most instructive: 59

Unequivocal, in the literal sense, as these provisions [referring to the subject of default then under Rule 18 of the old Rules of Civil Procedure] are, they do not readily convey the full import of what they contemplate. To begin with, contrary to the immediate notion that can be drawn from their language, these provisions are not to be understood as meaning that default or the failure of the defendant to answer should be interpreted as an admission by the said defendant that the plaintiffs cause of action find support in the law or that plaintiff is entitled to the relief prayed for. x x x. xxxxxxxxx Being declared in default does not constitute a waiver of rights except that of being heard and of presenting evidence in the trial court. x x x. In other words, a defaulted defendant is not actually thrown out of court. While in a sense it may be said that by defaulting he leaves himself at the mercy of the court, the rules see to it that any judgment against him must be in accordance with law. The evidence to support the plaintiffs cause is, of course, presented in his absence, but the court is not supposed to admit that which is basically incompetent. Although the defendant would not be in a position to object, elementary justice requires that only legal evidence should be considered against him. If the evidence presented should not be sufficient to justify a judgment for the plaintiff, the complaint must be dismissed. And if an unfavorable judgment should be justifiable, it cannot exceed in amount or be different in kind from what is prayed for in the complaint.[25]

In sum, while petitioners were allowed to present evidence ex parte under Section 3 of Rule 9, they were not excused from establishing their claims for damages by the required quantum of proof under Section 1 of Rule 133. Stated differently, any advantage they may have gained from the ex parte presentation of 60

evidence does not lower the degree of proof required. Clearly then, there is no incompatibility between the two rules. Second and Third Issues: Review of the Evidence

Petitioners urge this Court to depart from the general rule that the lower courts findings of fact are not reviewable in a petition for review. [26] In support of their plea, they cite the conflicting findings of the trial and the appellate courts, as well as the alleged conjectures and surmises made by the CA in arriving at its Decision. Indeed, the differences between the findings of the two courts a quo, leading to entirely disparate dispositions, is reason enough for this Court to review the evidence in this case.[27] Whether the CA indulged in surmises and conjectures when it issued the assailed Decision will thus be determined. At the outset, it behooves this Court to clarify the CAs impression that no evidence was presented in the case which might have contributed to petitioners challenge to its Decision. The appellate courts observation was based on the notation by the lower courts clerk of court that there were no separate folders for exhibits and transcripts, because there was no actual hearing conducted in this case.[28] True, there was no hearing conducted between petitioners and respondent, precisely because the latter had been declared in default, and petitioners had therefore been ordered to present their evidence ex parte. But the absence of a hearing did not mean that no evidence was presented. The Partial Decision dated February 8, 1993, in fact clearly enumerated the pieces of evidence adduced by petitioners during the ex parte presentation on January 7, 1993. The documentary evidence they presented consisted of the following: 1. A copy of respondent banks Petition for the extrajudicial foreclosure and auction sale of the mortgaged parcel of land[29]

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2. The Certificate of Sale that was a consequence of the foreclosure sale[30] 3. A Statement of Account dated February 15, 1984, showing Petitioner Chuas outstanding debt in the amount of P40,135.53[31] 4. A copy of the Interbank check dated February 16, 1984, in the amount of P4,000[32] 5. The Official Receipt issued by the bank acknowledging the check[33] 6. The banks letter dated February 20, 1984, advising Petitioner Chua of the sale of the property at an extrajudicial public auction; the lapse of the period of redemption; and an invitation to purchase the property at its current market price[34] 7. Another letter from the bank dated March 22, 1984, inviting Petitioner Chua to submit, within five days, an offer to buy the same property, which another buyer had offered to buy[35] 8. A copy of the Notice of Lis Pendens, the filing of which was done after that of the Amended Complaint[36] 9. A copy of the title showing the inscription of the Notice of Lis Pendens[37] 10. A copy of the Absolute Deed of Sale to Cerrofer[38] 11. A copy of a letter dated August 29, 1986, made and signed by petitioners counsel, requesting the cancellation of the Notice of Lis Pendens[39] 12. A copy of a page of the Memorandum of Encumbrance from TCT No. (314341) 7778/T-39[40] 62

Having clarified this matter, we proceed to review the facts. Petitioners do not deny that the one-year period for legal redemption had already lapsed when respondent bank supposedly offered to sell the property in question. The records clearly show that the Certificate of Sale following the extrajudicial public auction of the property was registered on June 21, 1982, the date from which the legal redemption period was to be reckoned. [41] Petitioners insist, though, that they had the right to repurchase the property through conventional redemption, as provided under Article 1601 of the Civil Code, worded as follows: ART. 1601. Conventional redemption shall take place when the vendor reserves the right to repurchase the thing sold, with the obligation to comply with the provisions of Article 1616 and other stipulations which may have been agreed upon. It is true that the one-year period of redemption provided in Act No. 3135, as amended -- the law under which the property here was sold in a foreclosure sale -is only directory and, as such can be extended by agreement of the parties. [42] However, it has also been held that for legal redemption to be converted into conventional redemption, two requisites must be established: 1) voluntary agreement of the parties to extend the redemption period; and 2) the debtors commitment to pay the redemption price on a fixed date.[43] Thus, assuming that an offer was made to Petitioner Chua to buy back the property after the lapse of the period of legal redemption, petitioners needed to show that the parties had agreed to extend the period, and that Petitioner Chua had committed to pay the redemption price on a fixed date.

The letters sent by the bank to Petitioner Chua on February 20 and March 22, 1984, do not convincingly show that the parties arrived at a firm agreement for the repurchase of the property. What can be gleaned from the February 20 letter is that Petitioner Chua proposed to pay the redemption price for the property, but that the bank refused to accede to his request, because the one-year redemption period had already lapsed.[44] The bank, though, had offered to sell back the property to him at the current market value. Indeed, an examination of his earlier letter of February 17, 1984, readily reveals that he expressed willingness to settle his account with 63

the bank, but that his present financial situation precludes [him] from effecting an immediate settlement x x x.[45]

On the other hand, the letter dated March 22, 1984, clearly states that x x x the Bank rejected [his] request to redeem said property due to [the] lapse of [the] one (1) year legal redemption period.[46] Nonetheless, he was [invited] to submit an offer to buy the same property in five (5) days from receipt [of the letter]. [47] Petitioner Chua was also informed that the bank had received an offer to purchase the foreclosed property. As to the P4,000 check enclosed in his proposal dated February 17, 1984, as a token of his good faith, he was advised that the amount was still outstanding in the books of the bank and could be claimed by him if he thought the invitation was not feasible.

More important, there was no showing that petitioners had committed to pay the redemption price on a fixed date. True, Petitioner Chua had attempted to establish a previous agreement to repurchase the property for less than its fair market value. He had submitted in evidence a Statement of Account[48] dated February 15, 1984, showing a balance of P40,135.53; the Interbank check dated February 16, 1984 , for P4,000, which was deposited to the account of respondent bank;[49] and the Official Receipt for the check.[50]

Granting that these documents evinced an agreement, petitioners were still unable to establish a firm commitment on their part to pay the redemption price on a fixed date. On the contrary, the February 17 letter of Petitioner Chua to the bank clearly manifested that he was not capable of paying the account immediately. For this reason, he proposed to pay in three or four installments without a specification of dates for the payments, but with a plea for a reduction of the interest charges. That proposal was rejected.

Indeed, other than the Interbank check marked for deposit by respondent bank, no other evidence was presented to establish that petitioners had offered to pay the alleged redemption price of P40,135.53 on a fixed date. For that matter, petitioners have not shown that they tendered payment of the balance and/or consigned the payment to the court, in order to fulfill their part of the purported agreement. These remedies are available to an aggrieved debtor under Article 1256 64

of the Civil Code,[51] when the creditor unjustly refuses to accept the payment of an obligation.

The next question that presents itself for resolution is the propriety of the CAs ruling vacating the Partial Decision of the regional trial court (RTC) and dismissing the case. To recall, the RTC had resolved to withhold a ruling on petitioners right to redeem conventionally and/or order the reconveyance of the property in question, pending a determination of the validity of the sale to Cerrofer Realty Corporation and Spouses Cesar and Lorna Roque. The trial court, however, granted the prayer for damages against respondent bank. The RTC ruled as follows: The evidence presented by [petitioners] in so far as the cause of action against [respondent] Traders Royal Bank is concerned are preponderant to support the claims of the [petitioners]. However, in view of the fact that the property subject matter of this case has already been conveyed to defendant Cerrofer Realty Corporation thus the issue as to whether or not the said conveyance or sale is valid is sill pending between the [petitioners] and [respondents] Cerrofer Realty Corporation and Cesar Roque and Lorna Roque. Hence, this Court resolves to grant the prayer for damages against Traders Royal Bank. The claims of the [petitioners] as against [respondent] Traders Royal Bank having been established and proved by evidence, judgment is hereby rendered ordering [respondent] Traders Royal Bank to pay [petitioners] actual damage or the market value of the land in question in the sum of P500,000.00; the sum of P70,000.00 as compensatory damages; the sum of P200,000.00 to the heirs of [petitioner] Danilo Chua; and attorneys fees in the sum of P30,000.00. [52]

In the light of the pending issue as to the validity of the sale of the property to the third parties (Cerrofer Realty Corporation and Spouses Roque), the trial 65

court properly withheld judgment on the matter and thus left the prayer for damages as the sole issue for resolution. To adjudge damages, paragraph (d) of Section 3 of Rule 9 of the Rules of Court provides that a judgment against a party in default shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages. The proscription against the award of unliquidated damages is significant, because it means that the damages to be awarded must be proved convincingly, in accordance with the quantum of evidence required in civil cases. Unfortunately for petitioners, the grant of damages was not sufficiently supported by the evidence for the following reasons. First, petitioners were not deprived of their property without cause. As correctly pointed out by the CA, Act No. 3135, as amended, does not require personal notice to the mortgagor.[53] In the present case, there has been no allegation -- much less, proof -- of noncompliance with the requirement of publication and public posting of the notice of sale, as required by ct No. 3135. Neither has there been competent evidence to show that the price paid at the foreclosure sale was inadequate.[54] To be sure, there was no ground to invalidate the sale. Second, as previously stated, petitioners have not convincingly established their right to damages on the basis of the purported agreement to repurchase.Without reiterating our prior discussion on this point, we stress that entitlement to actual and compensatory damages must be proved even under Section 3 of Rule 9 of the Rules of Court. The same is true with regard to awards for moral damages and attorneys fees, which were also granted by the trial court. In sum, petitioners have failed to convince this Court of the cogency of their position, notwithstanding the advantage they enjoyed in presenting their evidence ex parte. Not in every case of default by the defendant is the complainant entitled to win automatically.

66

WHEREFORE, this Petition is hereby DENIED and the assailed Decision and Resolution AFFIRMED. Costs against petitioners. SO ORDERED.

ARTEMIO V. PANGANIBAN Chief Justice Chairman, First Division

WECONCUR:

CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ Associate Justice Associate Justice

ROMEO J. CALLEJO, SR. MINITA V. CHICO-NAZARIO Associate Justice Associate Justice

CERTIFICATION

67

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN Chief Justice

[1]

The Court of Appeals was included in the Petition as a respondent. However, the CA was omitted by this Court from the title of the case, because it need not be impleaded in petitions for review, under Section 4 of Rule 45 of the Rules of Court.

[2]

Rollo, pp. 9-27. Penned by Justice Renato C. Dacudao and concurred in by Justices Romeo J. Callejo Sr. (then chairperson of the Special Thirteenth Division and now a member of this Court) and Alicia L. Santos (acting member). Id., pp. 29-39. [4] Id., p. 41. [5] CA Decision, p. 11; id., p. 39. [6] CA rollo, pp. 145-152. [7] The dispositive portion of the Partial Decision reads as follows: [3]

The claims of the [petitioners] as against [Respondent] Traders Royal Bank having been established and proved by evidence, judgment is hereby rendered ordering [Respondent] Traders Royal Bank to pay [petitioners] actual damage or the market value of the land in question in the sum of P500,000.00; the sum of P70,000.00 as compensatory damages; the sum of P200,000.00 to the heirs of [Petitioner] Danilo Chua; and attorneys fees in the sum of P30,000.00. (Partial Decision dated February 8, 1993, p. 2; records, p. 173). 68

[8]

CA Decision, pp. 2-5; rollo, pp. 30-33. Records, pp. 172-173. [10] CA rollo, pp. 37-41. [11] Contained in the RTC Decision dated October 28, 1993; records, pp. 263-264. [12] CA Rollo, pp. 84-87. [13] Records, pp. 75-82. [14] Id., pp. 176-183. [15] CA Decision, p. 7; rollo, p. 35. [16] The Petition was deemed submitted for decision on March 29, 2005, upon the Courts receipt of respondents 4-page Memorandum, signed by Atty. Diosdado B. Jimenez of Gonzales Sinense Jimenez & Associates. Petitioners Memorandum, signed by Atty. Sergio F. Angeles of Angeles & Associates, was received by the Court on May 15, 2003. [17] Petitioners Memorandum, pp. 10-17; rollo, pp. 98-105. [18] Section 1 of Rule 45 of the Rules of Court provides that x x x. The petition shall raise only questions of law which must be distinctly set forth. [9]

[19]

Saguid v. Court of Appeals, 451 Phil. 825, June 10, 2003; Ocampo v. Ocampo, 427 SCRA 545, April 14, 2004; Catapusan v. Court of Appeals, 332 Phil. 586, November 21, 1996. Section 1 of Rule 131 of the Rules of Court provides: SECTION 1. Burden of proof. Burden of proof is the duty of a party to present evidence on the facts in issue necessary to establish his claim or defense by the amount of evidence required by law. [20] Saguid v. CA, ibid. (citing Heirs of Anastacio Fabela v. CA, 362 SCRA 531, August 9, 2001). [21] Regalado, Remedial Law Compendium, Vol. 1, 7th rev. ed. (1999), p. 169. See also P. T. Cerna Corporation v. CA, 221 SCRA 19, 25, April 6, 1993. [22] 220 Phil. 588, April 30, 1985 cited in Luxuria Homes, Inc. v. CA, 361 Phil. 989, January 28, 1999. [23] Pascua v. Florendo, supra, pp. 595-596, per Gutierrez, Jr., J. [24] 66 SCRA 425, August 29, 1975. See also Heirs of Anastacio Fabela v. CA, supra at note 20. [25] Id., pp. 452-453, per Barredo, J. [26] Vibram Manufacturing Corporation v. Manila Electric Company, 466 SCRA 178, August 9, 2005; Rubiato v. Heirs of Jovito Rubiato, 464 SCRA 296, July 28, 2005; Republic v. CA, 328 Phil. 238, July 12, 1996;Baricuatro Jr. v. Court of Appeals, 382 Phil. 15, 24, February 9, 2000. 69

[27]

Manila Banking Corp. v. Silverio, 466 SCRA 438, August 11, 2005; Yason v. Arciaga, 449 SCRA 458, January 28, 2005; Menchavez v. Torres Jr. 449 SCRA 380, January 26, 2005. [28] CA Decision, p. 9; rollo, p. 37. [29] Records, pp. 9-12. [30] Id., pp. 13-14. [31] Id., p. 15. [32] Id., p. 16. [33] Id., p. 17. [34] Id., p. 18. [35] Id., p. 19. [36] Id., pp. 20-21. [37] Id., pp. 22-23. [38] Id., pp. 24-26. [39] Id., p. 27. [40] Id., p. 28. [41] Union Bank of the Philippines v. CA, 412 Phil. 64, June 25, 2001; Castro v. Bague, 359 SCRA 28, June 20, 2001; Ysmael v. CA, 376 Phil. 323, November 16, 1999. Section 28 of Rule 39 of the Rules of Court provides that legal redemption should be made at any time within one (1) year from the date of the registration of the certificate of sale x x x. [42] Ibaan Rural Bank, Inc. v. Court of Appeals, 378 Phil. 707, 713, December 17, 1999; Lazo v. Republic Surety & Insurance Co., Inc., 31 SCRA 329, January 30, 1970. [43] Landrito v. Court of Appeals, 466 SCRA 107, August 9, 2005 (citing Lazo v. Republic Surety & Insurance Co., Inc., supra); Ibaan Rural Bank, Inc. v. Court of Appeals, supra. [44] Records, p. 18. [45] Id., p. 195. [46] Id., p. 19. [47] Ibid. [48] Id., p. 15. [49] Id., p. 16. [50] Id., p. 17. [51] ART. 1256. If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor shall be released from responsibility by the consignation of the thing or sum due. x x x. [52] Partial Decision, p. 2; records, p. 173. [53] Section 3 of Act No. 3135, as amended, provides as follows: 70

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. (See also Ardiente v. Provincial Sheriff, 436 SCRA 655, August 17, 2004) [54] This fact would have been shown by presenting evidence that another bidder had offered to pay a higher price for the property during the bidding.

71

Republic of the Philippines Supreme Court Manila FIRST DIVISION HEIRS OF FRANCISCA MEDRANO, namely YOLANDA R. MEDRANO, ALFONSO R. MEDRANO, JR., EDITA M. ALFARO, MARITES M. PALENTINOS, and GIOVANNI MEDRANO, represented by their legal representative, Marites MedranoPalentinos, Petitioners,

G.R. No. 165770

Present: CORONA, C. J., Chairperson, LEONARDO-DE CASTRO, BERSAMIN,* DEL CASTILLO, and PEREZ, JJ.

- versus ESTANISLAO DE VERA, Promulgated: Respondent. August 9, 2010 x--------------------------------------------------------x DECISION DEL CASTILLO, J. In cases where the subject property is transferred by the defendant during the pendency of the litigation, the interest of the transferee pendente lite cannot be considered independent of the interest of his transferors. If the transferee files an answer while the transferor is declared in default, the case should be tried on the basis of the transferees answer and with the participation of the transferee. This Petition for Review on Certiorari[1] assails the June 25, 2004 Decision[2] of the Court of Appeals (CA) in CA-G.R. SP No. 80053, which contained the following dispositive portion:

72

WHEREFORE, premises considered, the petition is hereby GRANTED and this Court orders that the case be remanded to the court a quo for further trial. SO ORDERED.[3] Likewise assailed is the appellate courts October 6, 2004 Resolution [4] denying petitioners Motion for Reconsideration. Factual Antecedents This case concerns a 463-square meter parcel of land[5] covered by Transfer Certificate of Title (TCT) No. 41860 in the name of Flaviana De Gracia (Flaviana). In 1980, Flaviana died[6]intestate, leaving her half-sisters Hilaria Martin-Paguyo (Hilaria) and Elena MartinAlvarado (Elena) as her compulsory heirs. In September 1982, Hilaria and Elena, by virtue of a private document denominated Tapno Maamoan ti Sangalobongan,[7] waived all their hereditary rights to Flavianas land in favor of Francisca Medrano (Medrano). It stated that the waiver was done in favor of Medrano in consideration of the expenses that she incurred for Flavianas medication, hospitalization, wake and burial. In the same year, Medrano built her concrete bungalow on the land in question without any objection from Hilaria and Elena or from their children. When Hilaria and Elena died, some of their children affirmed the contents of the private document executed by their deceased mothers. To that end, they executed separate Deeds of Confirmation of Private Document and Renunciation of Rights in favor of Medrano. [8] They likewise affirmed in said documents that Medrano had been occupying and possessing the subject property as owner since September 1982. Due to the refusal of the other children[9] to sign a similar renunciation, Medrano filed a Complaint[10] on April 27, 2001 for quieting of title, reconveyance, reformation of instrument, and/or partition with damages against Pelagia M. Paguyo-Diaz (Pelagia), Faustina Paguyo-Asumio (Faustina), Jesus Paguyo (Jesus), Veneranda Paguyo-Abrenica, Emilio a.k.a. Antonio Alvarado, Francisca Alvarado-Diaz (Francisca) and Estrellita Alvarado-Cordero (Estrellita). The case was docketed as Civil Case No. U-7316 and raffled to Branch 48 of the Regional Trial Court (RTC) of Urdaneta, 73

Pangasinan. Medrano then caused the annotation of a notice of lis pendens on TCT No. 41860[11] on May 3, 2001. Summons upon the original complaint was duly served upon Pelagia and Estrellita .[12] On August 29, 2001, Medrano filed an Amended Complaint [13] impleading the widow and children of Antonio Alvarado, in view of the latters death. [14] Summons upon the amended complaint was served upon the other defendants, [15] but no longer served upon Pelagia and Estrellita. On April 2, 2002, respondent Estanislao D. De Vera (De Vera) filed an Answer with Counterclaim.[16] De Vera presented himself as the real party-in-interest on the ground that some of the named defendants (Faustina, Pelagia, Francisca, Elena KongcoAlvarado, Jesus, and Estrellita) had executed a Deed of Renunciation of Rights [17] in his favor on March 23, 2002. He maintained that the Tapno Maamoan ti Sangalobongan that was executed by the defendants predecessors in favor of Medrano was null and void for want of consideration. Thus, while some children affirmed the renunciation of their deceased mothers rights in the lot in favor of Medrano, the other children renounced their hereditary rights in favor of De Vera. Medrano filed a Motion to Expunge Answer with Counterclaim of Estanislao D. De Vera and to Declare Defendants in Default.[18] She argued that respondent De Vera had no personality to answer the complaint since he was not authorized by the named defendants to answer in their behalf. In an Order,[19] dated July 30, 2002, the trial court disagreed with Medranos argument and admitted De Veras Answer with Counterclaim. The trial court opined that De Vera did not need a special power of attorney from the defendants because he did not answer the complaint in their behalf. De Vera made a voluntary appearance in the case as the transferee of the defendants rights to the subject property. The trial court further explained that when the presence of other parties is required for granting complete relief, the court shall order them to be brought in as defendants. While it was unsure whether De Vera was an indispensable party to the case, the trial court opined that at the very least he was a necessary party for granting complete relief. It thus held that the admission of De Veras Answer with Counterclaim is proper in order to avoid multiplicity of suits. [20] In the same Order, the court declared the named defendants in default for not answering the complaint despite valid service of summons. Thus, it appears that the court a quo treated the named defendants and De Vera as distinct and separate parties.

74

Medranos response to the aforesaid order was two-fold. With regard to the order declaring the named defendants in default, Medrano filed on February 13, 2003 a Motion to Set Reception of Evidence Before the Branch Clerk of Court. [21] She argued that she could present evidence ex parte against the defaulting defendants on the ground that she presented alternative causes of action against them in her complaint. Her cause of action on the basis of acquisitive prescription can be raised solely against the defaulting original defendants.[22] She thus prayed to be allowed to present evidence ex parte with respect to her claim of acquisitive prescription against the defaulting defendants. As for the order admitting De Veras Answer with Counterclaim, Medrano filed on February 21, 2003 a Motion for Reconsideration of Order dated July 30, 2002.[23] She asked the court to order De Vera to file a pleading-in-intervention so that he could be properly named as a defendant in the case. In an Order[24] dated March 6, 2003, the trial court resolved to grant Medranos Motion to Set Reception of Evidence. It ordered the conduct of ex parte presentation of evidence on the same day and the continuation thereof to proceed on March 10, 2003. Thus, Medrano presented her evidence ex parte on the set dates. On March 10, 2003, the case was submitted for resolution.[25] Given the courts standing order which admitted De Veras Answer with Counterclaim, De Vera filed a Motion to Set the Case for Preliminary Conference on March 27, 2003.[26] The trial court resolved petitioners and De Veras respective pending motions in its March 31, 2003 Order.[27] The trial court granted Medranos motion and set aside its Order which admitted De Veras Answer with Counterclaim. Citing Rule 19 of the Rules of Court, the court ordered De Vera to file a pleading-in-intervention so that he could be recognized as a party-defendant. As a necessary consequence to this ruling, the trial court denied De Veras motion to set the case for preliminary conference for prematurity. De Vera did not comply with the courts order despite service upon his lawyer, Atty. Simplicio M. Sevilleja, on April 2, 2003. Ruling of the Regional Trial Court The RTC rendered its Decision[28] on April 21, 2003. It ruled that ownership over the titled property has vested in petitioners by virtue of good faith possession for more than 10 years; thus, it was no longer necessary to compel the defendants - heirs of Hilaria and Elena - to execute an instrument to confirm Medranos rightful ownership over the land.

75

The trial court likewise held that the private document denominated as Tapno Maamoan Ti Sangalobongan sufficiently conveyed to Medrano the subject property. The court held that the conveyance was done in consideration of the various expenses that Medrano incurred for Flavianas benefit. While the court conceded that the parcel of land was not adequately described in the Tapno Maamoan ti Sangalobongan, its location, metes and bounds were nonetheless confirmed by the defendants siblings in their respective deeds of confirmation. The dispositive portion of the Decision reads, in toto: WHEREFORE, judgment is hereby rendered: (1)

Declaring [Medrano], substituted by her heirs, as the rightful and lawful owner of the land covered by T.C.T. No. 41860;[29]

(2)

Ordering the Register of Deeds of Tayug, Pangasinan to cancel T.C.T. No. 41860 and to issue another Transfer Certificate of Title in the name of [Medrano];

All other claims are hereby denied for lack of merit. SO ORDERED.[30] De Vera filed a Motion for Reconsideration[31] arguing that he was an indispensable party who was not given an opportunity to present his evidence in the case. He also maintained that Medrano was not the owner of the property, but a mere administratrix of the land as evidenced by the records in SP Proc. No. 137577.[32] De Veras motion was denied[33] for lack of merit on July 22, 2003. The court noted that De Vera had no legal personality to file a motion for reconsideration because he did not file a pleading-in-intervention. The trial court explained it would have allowed De Vera to present his evidence in the case had he complied with the courts order to file a pleading-in-intervention. On September 10, 2003, De Vera filed a Manifestation[34] informing the trial court of his intention to file a petition for certiorari and mandamus before the CA, pursuant to Rule 41, Section 1, second paragraph and Rule 65 of the Rules of Court. On October 7, 2003, petitioners filed a Motion for Entry of Judgment and Execution[35] before the trial court. They also filed a Counter-Manifestation[36] to De 76

Veras Manifestation.Petitioners insisted that De Vera, as a transferee pendente lite, was bound by the final judgment or decree rendered against his transferors. Even assuming that De Vera had a right to appeal, the period therefor had already lapsed on August 12, 2003. In its Order[37] dated December 10, 2003, the court a quo maintained that De Vera was not a party to the suit, hence his appeal would not stay the finality and execution of judgment. Thus the trial court ordered the entry of judgment in Civil Case No. U7316. The writ of execution was issued on December 12, 2003. De Vera sought reconsideration[38] of the above order but the same was denied [39] on the basis that De Vera had no personality to assail any order, resolution, or decision of the trial court in Civil Case No. U-7316. The Register of Deeds of Tayug, Pangasinan complied with the writ by canceling TCT No. 41860 in the name of Flaviana De Gracia and issuing TCT No. 65635 in the names of petitioners[40] on April 19, 2004. Proceedings before the Court of Appeals De Vera argued in his Petition for Certiorari and Mandamus[41] before the CA that the trial court erred in declaring the defendants in default and sought a writ compelling the trial court to try the case anew. He insisted that he stepped into the shoes of the defendants with regard to the subject property by virtue of the quitclaim that the defendants executed in his favor. Thus, the trial court should have considered the defendants as properly substituted by De Vera when he filed his Answer. The standing order of the trial court with regard to De Vera at the time that it allowed Medrano to present her evidence was to admit De Veras Answer with Counterclaim. Thus, De Vera argued that it was improper for the trial court to have allowed Medrano to present her evidence ex parte because it had yet to rule on whether De Vera had personality to participate in the proceedings. Ruling of the Court of Appeals The appellate court agreed with De Vera. The CA noted that the ex parte presentation of evidence took place on March 6 and 10, 2003; while the Motion to Expunge Answer and Require Filing of Pleading-in-Intervention was granted much later on March 31, 2003. The CA held that the trial court gravely abused its discretion by allowing Medrano to present her evidence ex parte while De Veras personality to participate in the case still 77

remained unresolved. The premature ex parte presentation of evidence rendered a pleading-in-intervention moot and academic. The CA pointed out that the trial court should have exercised its authority to order the substitution of the original defendants instead of requiring De Vera to file a pleading-inintervention. This is allowed under Rule 3, Section 19 of the Rules of Court. Since a transferee pendente lite is a proper party[42] to the case, the court can order his outright substitution for the original defendants. The CA further held that De Veras failure to file the necessary pleading-in-intervention was a technical defect that could have been easily cured. The trial court could have settled the controversy completely on its merits had it admitted De Veras Answer with Counterclaim. Not affording De Vera his right to adduce evidence is not only a manifest grave abuse of discretion amounting to lack or excess of jurisdiction but also runs counter to the avowed policy of avoiding multiplicity of suits. The appellate court then ordered the case remanded to the trial court to afford De Vera an opportunity to present his evidence. Petitioners filed a Motion for Reconsideration,[43] which motion was denied[44] for lack of merit on October 6, 2004. Issues I Whether De Vera could participate in Civil Case No. U-7316 without filing a motion to intervene II Whether De Vera is bound by the judgment against his transferors III Whether it was proper for the CA to take cognizance of respondents Petition for Certiorari and Mandamus Our Ruling We sustain the CAs ruling that the trial court gravely abused its discretion in refusing to allow De Vera to participate in the case and requiring him to file a motion to intervene. 78

The trial court misjudged De Veras interest in Civil Case No. U-7316. It held that De Veras right to participate in the case was independent of the named defendants. Because of its ruling that De Vera had an independent interest, the trial court considered his interest as separate from Medranos claims against the named defendants, and allowed the latter to be tried separately. Thus, it admitted De Veras Answer with Counterclaim but declared the named defendants in default and allowed the ex parte presentation of evidence by Medrano against the named defendants. The trial courts approach is seriously flawed because De Veras interest is not independent of or severable from the interest of the named defendants. De Vera is a transferee pendente lite of the named defendants (by virtue of the Deed of Renunciation of Rights that was executed in his favor during the pendency of Civil Case No. U-7316). His rights were derived from the named defendants and, as transferee pendente lite, he would be bound by any judgment against his transferors under the rules of res judicata.[45] Thus, De Veras interest cannot be considered and tried separately from the interest of the named defendants. It was therefore wrong for the trial court to have tried Medranos case against the named defendants (by allowing Medrano to present evidence ex parte against them) after it had already admitted De Veras answer. What the trial court should have done is to treat De Vera (as transferee pendente lite) as having been joined as a party-defendant, and to try the case on the basis of the answer De Vera had filed and with De Veras participation. As transferee pendente lite, De Vera may be allowed to join the original defendants under Rule 3, Section 19: SEC. 19. Transfer of interest. In case of any transfer of interest, the action may be continued by or against the original party, unless the court upon motion directs the person to whom the interest is transferred to be substituted in the action or joined with the original party. (Emphasis supplied) The above provision gives the trial court discretion to allow or disallow the substitution or joinder by the transferee. Discretion is permitted because, in general, the transferees interest is deemed by law as adequately represented and protected by the participation of his transferors in the case. There may be no need for the transferee pendente lite to be substituted or joined in the case because, in legal contemplation, he is not really denied protection as his interest is one and the same as his transferors, who are already parties to the case.[46] 79

While the rule allows for discretion, the paramount consideration for the exercise thereof should be the protection of the parties interests and their rights to due process. In the instant case, the circumstances demanded that the trial court exercise its discretion in favor of allowing De Vera to join in the action and participate in the trial. It will be remembered that the trial court had already admitted De Veras answer when it declared the original defendants in default. As there was a transferee pendente lite whose answer had already been admitted, the trial court should have tried the case on the basis of that answer, based on Rule 9, Section 3(c): Effect of partial default. When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented. Thus, the default of the original defendants should not result in the ex parte presentation of evidence because De Vera (a transferee pendente lite who may thus be joined as defendant under Rule 3, Section 19) filed an answer. The trial court should have tried the case based on De Veras answer, which answer is deemed to have been adopted by the non-answering defendants.[47] To proceed with the ex parte presentation of evidence against the named defendants after De Veras answer had been admitted would not only be a violation of Rule 9, Section 3(c), but would also be a gross disregard of De Veras right to due process. This is because the ex parte presentation of evidence would result in a default judgment which would bind not just the defaulting defendants, but also De Vera, precisely because he is a transferee pendente lite.[48] This would result in an anomaly wherein De Vera would be bound by a default judgment even if he had filed an answer and expressed a desire to participate in the case. We note that under Rule 3, Section 19, the substitution or joinder of the transferee is upon motion, and De Vera did not file any motion for substitution or joinder. However, this technical flaw may be disregarded for the fact remains that the court had already admitted his answer and such answer was on record when the ex parte presentation of evidence was allowed by the court. Because De Veras answer had already been admitted, the court should not have allowed the ex parte presentation of evidence.

80

We are not persuaded by petitioners insistence that De Vera could not have participated in the case because he did not file a motion to intervene. The purpose of intervention is to enable a stranger to an action to become a party in order for him to protect his interest and for the court to settle all conflicting claims. Intervention is allowed to avoid multiplicity of suits more than on due process considerations. The intervenor can choose not to participate in the case and he will not be bound by the judgment. In this case, De Vera is not a stranger to the action but a transferee pendente lite. As mentioned, a transferee pendente lite is deemed joined in the pending action from the moment when the transfer of interest is perfected.[49] His participation in the case should have been allowed by due process considerations.[50] We likewise adopt with approval the appellate courts observation that De Veras failure to file a pleading-in-intervention will not change the long foregone violation of his right to due process. The ex parte presentation of evidence had already been terminated when the trial court required De Vera to file his pleading-in-intervention. Even if he complied with the order to file a pleading-in-intervention, the damage had already been done. The precipitate course of action taken by the trial court rendered compliance with its order moot. Given the Courts finding that the ex parte presentation of evidence constituted a violation of due process rights, the trial courts judgment by default cannot bind De Vera. A void judgment cannot attain finality and its execution has no basis in law. The case should be remanded to the trial court for trial based on De Veras answer and with his participation. Certiorari petition before the CA proper Petitioners point out that De Vera admitted receiving the trial courts Order denying his motion for reconsideration on July 28, 2003. Thus he only had until August 12, 2003 to file an appeal of the decision. Having lost his right to appeal by allowing the period therefor to lapse, respondent has also lost his right to file a petition for certiorari before the CA. A special civil action for certiorari is not a substitute for the lost remedy of appeal. Respondent argues that a Rule 65 certiorari petition before the CA is proper because an ordinary appeal would not have been speedy and adequate remedy to properly relieve him from the injurious effects of the trial courts orders. We agree with respondent that ordinary appeal was not an adequate remedy under the circumstances of the case. An appeal seeks to correct errors of judgment committed by a court, which has jurisdiction over the person and the subject matter of the dispute. In the 81

instant case, the trial court maintained that it had no jurisdiction over De Vera because it did not consider him a party to the case. Its stance is that De Vera, as a non-party to the case, could not participate therein, much less assail any of the orders, resolutions, or judgments of the trial court. An appeal would have been an illusory remedy in this situation because his notice of appeal would have certainly been denied on the ground that he is not a party to the case. On the other hand, certiorari is an extraordinary remedy for the correction of errors of jurisdiction. It is proper if the court acted without or in grave abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal or any plain, speedy, and adequate remedy in law. Given the circumstance that the final decision in Civil Case No. U-7316 prejudices De Veras rights despite the fact that he was not recognized as a party thereto and was not allowed to assail any portion thereof, De Veras remedy was to annul the trial court proceedings on the ground that it was conducted with grave abuse of discretion amounting to lack of jurisdiction. With such annulment, the trial court should hear the case anew with De Vera fully participating therein. WHEREFORE, the petition is DENIED. The June 25, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 80053 and its October 6, 2004 Resolution are AFFIRMED. Costs against petitioners. SO ORDERED. MARIANO C. DEL CASTILLO Associate Justice WE CONCUR:

RENATO C. CORONA Chief Justice Chairperson

TERESITA J. LEONARDO-DE CASTRO Associate Justice

LUCAS P. BERSAMIN Associate Justice 82

JOSE PORTUGAL PEREZ Associate Justice

C E R T I F I CAT I O N Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Chief Justice

*

In lieu of Associate Justice Presbitero J. Velasco, Jr., per Special Order No. 876 dated August 2, 2010. [1] Rollo, pp. 14-56. [2] CA rollo, pp. 152-160; penned by Associate Justice Eugenio S. Labitoria and concurred in by Associate Justices Jose L. Sabio, Jr. and Jose C. Mendoza (now a Member of this Court). [3] Id. at 160. [4] Id. at 205-206. [5] Located at Roxas St., cor. Cerezo St, Barangay Guiset Norte, San Manuel, Pangasinan.

83

[6]

Flaviana De Gracia died on February 14, 1980 per Certificate of Death, records, p. 10. [7] Exhibit C, Folder of Exhibits. [8] Two of Hilarias children, Victorio and Miguel Paguyo, executed the Deed of Confirmation on September 23, 1998, Exhibit D, Folder of Exhibits; while four of Elenas children, Elet, Francisco, Dolores, and Felipe, executed their own Deed of Confirmation on January 26, 2000, Exhibit E, Folder of Exhibits. [9] Pelagia Diaz, Faustina Asumio, Jesus Paguyo, Veneranda Abrenica, Emilio a.ka. Antonio Alvarado, Francisca Diaz, and Estrellita Cordero. [10] Records, pp. 2-8 with Annexes. [11] Entry No. 196296, rollo, p. 103. [12] Records, p. 32. [13] Id. at 136-146. [14] Ex-Parte Notice of Death and Motion to Amend Complaint, id. at 134-135. [15] Id. at 170 and 197. [16] Id. at188-194. [17] Id. at 192-193. [18] Id. at 206-208. Dated July 1, 2002 and filed on July 9, 2002. [19] Id. at 225-226; penned by Judge Alicia B. Gonzales-Decano. [20] Id. at 226. [21] Id. at 230-231. [22] Id. at 231. [23] Id. at 233-234. [24] Id. at 237. [25] Id. at 239. Meanwhile, Francisca Medrano died and her daughter Edith M. Alfaro was entered as her legal representative (Id. at 248). [26] Id. at 247. [27] Id. at 249-250. [28] Id. at 254-262. [29] See Order dated December 11, 2003, id. at 390. [30] Id. at 262. [31] Id. at 269-271. [32] Id. at 275-276. [33] Id. at 285-286. [34] Id. at 289. [35] Id. at 297-299. [36] Id. at 306-307. [37] Id. at 386-387. [38] Id. at 397-399. [39] Order dated May 13, 2004; id. at 415. 84

[40]

Id. at 428-429. Filed on October 23, 2003. Entitled Pelagia M. Paguyo-Diaz, Jesus M. Paguyo, Faustina M. Paguyo-Asumio, Franscisca M. Alvarado-Diaz, Elena KongcoAlvarado, and Estrellita M. Alvarado-Cordero, substituted by Estanislao de Vera v. Regional Trial Court, First Judicial Region, Branch 48, Urdaneta City, Pangasinan, Heirs of Francisca R. Medrano, namely: Alfonso Medrano, Jr., Editha M. Alfaro, Marites M. Palentinos, and Giovani Medrano, represented by their legal representative, Editha M. Alfaro. CA rollo, pp. 10-27. [42] Heirs of Francisco Guballa, Sr. v. Court of Appeals, G.R. Nos. L-78223 and L79403, December 19, 1988, 168 SCRA 518, 534. [43] CA rollo, pp. 165-184. [44] Id. at 205-206. [45] RULES OF COURT, Rule 39, Section 47(b). [46] Santiago Land Development Corporation v. Court of Appeals, 334 Phil. 741, 748 (1997), and its Resolution in 342 Phil. 643, 649 (1997). [47] See Heirs of Mamerto Manguiat v. Court of Appeals, G.R. Nos. 150768 and 160176, August 20, 2008, 562, SCRA 422, 432-433. See also Grageda v. Gomez, G.R. No. 169536, September 21, 2007, 533 SCRA 677, 692-693. [48] RULES OF COURT, Rule 39, Section 47(b). [49] Santiago Land Development Corporation v. Court of Appeals, supra note 46 at 748. [50] See also Dela Cruz v. Joaquin, G.R. No. 162788, July 28, 2005, 464 SCRA 576, 584, which states: The rule on the substitution of parties was crafted to protect every partys right to due process. x x x [N]o adjudication can be made against the successor of the deceased if the fundamental right to a day in court is denied. The Court has nullified not only trial proceedings conducted without the appearance of the legal representatives of the deceased, but also the resulting judgments. [41]

85

THIRD DIVISION JOSE R. MARTINEZ, G. R. No. 160895 Petitioner, Present: QUISUMBING, - versus - Chairperson, CARPIO, CARPIO MORALES, TINGA, and REPUBLIC OF THE PHILIPPINES, VELASCO, JR., JJ. Respondents. Promulgated: October 30, 2006 x---------------------------------------------------------------------------------x DECISION TINGA, J.: The central issue presented in this Petition for Review is whether an order of general default issued by a trial court in a land registration case bars the Republic of the Philippines, through the Office of the Solicitor General, from interposing an appeal from the trial courts subsequent decision in favor of the applicant. The antecedent facts follow.

On 24 February 1999, petitioner Jose R. Martinez (Martinez) filed a petition for the registration in his name of three (3) parcels of land included in the Cortes, Surigao del Sur Cadastre. The lots, individually identified as Lot No. 464-A, Lot No. 464-B, and Lot No. 370, Cad No. 597, collectively comprised around 3,700 square meters. Martinezalleged that he had purchased lots in 1952 from his uncle, 86

whose predecessors-in-interest were traceable up to the 1870s. It was claimed that Martinez had remained in continuous possession of the lots; that the lots had remained unencumbered; and that they became private property through prescription pursuant to Section 48(b) of Commonwealth Act No. 141. Martinez further claimed that he had been constrained to initiate the proceedings because the Director of the Land Management Services had failed to do so despite the completion of the cadastral survey of Cortes, Surigao del Sur.[1] The case was docketed as Land Registration Case No. N-30 and raffled to the Regional Trial Court (RTC) of Surigao del Sur, Branch 27. The Office of the Solicitor General (OSG) was furnished a copy of the petition. The trial court set the case for hearing and directed the publication of the corresponding Notice of Hearing in the Official Gazette. On 30 September 1999, the OSG, in behalf of the Republic of the Philippines, opposed the petition on the grounds that appellees possession was not in accordance with Section 48(b) of Commonwealth Act No. 141; that his muniments of title were insufficient to prove bona-fide acquisition and possession of the subject parcels; and that the properties formed part of the public domain and thus not susceptible to private appropriation.[2] Despite the opposition filed by the OSG, the RTC issued an order of general default, even against the Republic of the Philippines, on 29 March 2000. This ensued when during the hearing of even date, no party appeared before the Court to oppose Martinezs petition.[3] Afterwards, the trial court proceeded to receive Martinezs oral and documentary evidence in support of his petition. On 1 August 2000, the RTC rendered a Decision[4]concluding that Martinez and his predecessors-in-interest had been for over 100 years in possession characterized as continuous, open, public, and in the concept of an owner. The RTC thus decreed the registration of the three (3) lots in the name of Martinez. From this Decision, the OSG filed a Notice of Appeal dated 28 August 2000, which was approved by the RTC. However, after the records had been transmitted to the Court of Appeals, the RTC received a letter dated 21 February 2001[6] from the Land Registration Authority (LRA) stating that only Lot Nos. 464A and 464-B were referred to in the Notice of Hearing published in the Official Gazette; and that Lot No. 370, Cad No. 597 had been deliberately omitted due to the lack of an approved survey plan for that property. Accordingly, the LRA manifested that this lot should not have been adjudicated to Martinez for lack of [5]

87

jurisdiction. This letter was referred by the RTC to the Court of Appeals for appropriate action.[7] On 10 October 2003, the Court of Appeals promulgated the assailed Decision,[8] reversing the RTC and instead ordering the dismissal of the petition for registration. In light of the opposition filed by the OSG, the appellate court found the evidence presented by Martinez as insufficient to support the registration of the subject lots. The Court of Appeals concluded that the oral evidence presented by Martinez merely consisted of general declarations of ownership, without alluding to specific acts of ownership performed by him or his predecessors-ininterest. It likewise debunked the documentary evidence presented by Martinez, adjudging the same as either inadmissible or ineffective to establish proof of ownership. No motion for reconsideration appears to have been filed with the Court of Appeals by Martinez, who instead directly assailed its Decision before this Court through the present petition. We cannot help but observe that the petition, eight (8) pages in all, was apparently prepared with all deliberate effort to attain nothing more but the perfunctory. The arguments raised center almost exclusively on the claim that the OSG no longer had personality to oppose the petition, or appeal its allowance by the RTC, following the order of general default. Starkly put, the [OSG] has no personality to raise any issue at all under the circumstances pointed out hereinabove.[9] Otherwise, it is content in alleging that [Martinez] presented sufficient and persuasive proof to substantiate the fact that his title to Lot Nos. 464A and 464-B is worth the confirmation he seeks to be done in this registration case; [10] and that the RTC had since issued a new Order dated 1 September 2003, confirming Martinezs title over Lot No. 370. In its Comment dated 24 May 2004,[11] the OSG raises several substantial points, including the fact that it had duly opposed Martinezs application for registration before the RTC; that jurisprudence and the Rules of Court acknowledge that a party in default is not precluded from appealing the unfavorable judgment; that the RTC had no jurisdiction over Lot No. 370 since its technical description was not published in the Official Gazette; and that as found by the Court of Appeals the evidence presented by Martinez is insufficient for registering the lots in his name.[12] Despite an order from the Court requiring him to file a Reply to the Comment, counsel for Martinez declined to do so, explaining, among others, that he felt he would only be taxing the collective patience of this 88

[Court] if he merely repeats x x x what petitioner had succinctly stated x x x on pages four (4) to seven (7) of his said petition. Counsel for petitioner was accordingly fined by the Court.[13] The Courts patience is taxed less by redundant pleadings than by insubstantial arguments. The inability of Martinez to offer an effective rebuttal to the arguments of the OSG further debilitates what is an already weak petition. The central question, as posed by Martinez, is whether the OSG could have still appealed the RTC decision after it had been declared in default. The OSG argues that a party in default is not precluded from filing an appeal, citing Metropolitan Bank & Trust Co. v. Court of Appeals,[14] and asserts that [t]he Rules of Court expressly provides that a party who has been declared in default may appeal from the judgment rendered against him.[15] There is error in that latter, unequivocal averment, though one which does not deter from the ultimate correctness of the general postulate that a party declared in default is allowed to pose an appeal. Elaboration is in order. We note at the onset that the OSG does not impute before this Court that the RTC acted improperly in declaring public respondent in default, even though an opposition had been filed to Martinezs petition. Under Section 26 of Presidential Decree No. 1529, as amended, the order of default may be issued [i]f no person appears and answers within the time allowed. The RTC appears to have issued the order of general default simply on the premise that no oppositor appeared before it on the hearing of 29 March 2000. But it cannot be denied that the OSG had already duly filed its Opposition to Martinezs petition long before the said hearing. As we held in Director of Lands v. Santiago:[16] [The] opposition or answer, which is based on substantial grounds, having been formally filed, it was improper for the respondent Judge taking cognizance of such registration case to declare the oppositor in default simply because he failed to appear on the day set for the initial healing. The pertinent provision of law which states: "If no person appears and answers within the time allowed, the court may at once upon motion of the applicant, no reason to the contrary appearing, order a general default to be recorded . . . ," cannot be interpreted to mean that the court can just disregard the answer before it, which has long been filed, for such an interpretation would be nothing less than illogical, unwarranted, and unjust. Had the law intended that failure of the oppositor to appear on the date of the 89

initial hearing would be a ground for default despite his having filed an answer, it would have been so stated in unmistakable terms, considering the serious consequences of an order of default. Especially in this case where the greater public interest is involved as the land sought to be registered is alleged to be public land, the respondent Judge should have received the applicant's evidence and set another date for the reception of the oppositor's evidence. The oppositor in the Court below and petitioner herein should have been accorded ample opportunity to establish the government's claim.[17] Strangely, the OSG did not challenge the propriety of the default order, whether in its appeal before the Court of Appeals or in its petition before this Court. It would thus be improper for the Court to make a pronouncement on the validity of the default order since the same has not been put into issue. Nonetheless, we can, with comfort, proceed from same apparent premise of the OSG that the default order was proper or regular. The juridical utility of a declaration of default cannot be disputed. By forgoing the need for adversarial proceedings, it affords the opportunity for the speedy resolution of cases even as it penalizes parties who fail to give regard or obedience to the judicial processes. The extent to which a party in default loses standing in court has been the subject of considerable jurisprudential debate. Way back in 1920, in Velez v. Ramas,[18] we declared that the defaulting defendant loses his standing in court, he not being entitled to the service of notices in the case, nor to appear in the suit in any way. He cannot adduce evidence; nor can he be heard at the final hearing. [19] These restrictions were controversially expanded in Lim Toco v. Go Fay, [20] decided in 1948, where a divided Court pronounced that a defendant in default had no right to appeal the judgment rendered by the trial court, except where a motion to set aside the order of default had been filed. This, despite the point raised by Justice Perfecto in dissent that there was no provision in the then Rules of Court or any law depriving a defaulted defendant of the right to be heard on appeal.[21] The enactment of the 1964 Rules of Court incontestably countermanded the Lim Toco ruling. Section 2, Rule 41 therein expressly stated that [a] party who has been declared in default may likewise appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition for relief to set aside the order of default has been presented by him in accordance with Rule 38.[22] By clearly specifying that the right to appeal was available even if no 90

petition for relief to set aside the order of default had been filed, the then fresh Rules clearly rendered the Lim Toco ruling as moot. Another provision in the 1964 Rules concerning the effect of an order of default acknowledged that a party declared in default shall not be entitled to notice of subsequent proceedings, nor to take part in the trial. [23] Though it might be argued that appellate proceedings fall part of the trial since there is no final termination of the case as of then, the clear intent of the 1964 Rules was to nonetheless allow the defaulted defendant to file an appeal from the trial court decision. Indeed, jurisprudence applying the 1964 Rules was unhesitant to affirm a defaulted defendants right to appeal, as guaranteed under Section 2 of Rule 41, even as Lim Toco was not explicitly abandoned. In the 1965 case of Antonio, et al. v. Jacinto,[24] the Court acknowledged that the prior necessity of a ruling setting aside the order of default however, was changed by the Revised Rules of Court. Under Rule 41, section 2, paragraph 3, a party who has been declared in default may likewise appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition for relief to set aside the order of default has been presented by him in accordance with Rule 38.[25] It was further qualified in Matute v. Court of Appeals[26] that the new availability of a defaulted defendants right to appeal did not preclude a defendant who has been illegally declared in default from pursuing a more speedy and efficacious remedy, like a petition for certiorari to have the judgment by default set aside as a nullity.[27] In Tanhu v. Ramolete,[28] the Court cited with approval the commentaries of Chief Justice Moran, expressing the reformulated doctrine that following Lim Toco, a defaulted defendant cannot adduce evidence; nor can he be heard at the final hearing, although

[under Section 2, Rule 41,] he may appeal the judgment rendered against him on the merits.[29] Thus, for around thirty-odd years, there was no cause to doubt that a defaulted defendant had the right to appeal the adverse decision of the trial court even without seeking to set aside the order of default. Then, in 1997, the Rules of Civil Procedure were amended, providing for a new Section 2, Rule 41. The new provision reads: 91

SECTION 1. Subject of appeal.An appeal may be taken from a judgment or final order that completely disposes of the case, or of a particular matter therein when declared by these Rules to be appealable. No appeal may be taken from: (a) An order denying a motion for new trial or reconsideration; (b) An order denying a petition for relief or any similar motion seeking relief from judgment; (c) An interlocutory order; (d) An order disallowing or dismissing an appeal; (e) An order denying a motion to set aside a judgment by consent, confession or compromise on the ground of fraud, mistake or duress, or any other ground vitiating consent; (f) An order of execution; (g) A judgment or final order for or against or one or more of several parties or in separate claims, counterclaims, cross-claims and third-party complaints, while the main case is pending, unless the court allows an appeal therefrom; and

(h) An order dismissing an action without prejudice. In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate special civil action under Rule 65. Evidently, the prior warrant that a defaulted defendant had the right to appeal was removed from Section 2, Rule 41. On the other hand, Section 3 of Rule 9 of 92

the 1997 Rules incorporated the particular effects on the parties of an order of default: Sec. 3. Default; declaration of.If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court. (a) Effect of order of default.A party in default shall be entitled to notice of subsequent proceedings but shall not take part in the trial. (b) Relief from order of default.A party declared in default may any time after notice thereof and before judgment file a motion under oath to set aside the order of default upon proper showing that his failure to answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense. In such case, the order of default may be set aside on such terms and conditions as the judge may impose in the interest of justice. (c) Effect of partial default.When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented.

(d) Extent of relief to be awarded.A judgment rendered against a party in default shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages. xxx 93

It cannot be escaped that the old provision expressly guaranteeing the right of a defendant declared in default to appeal the adverse decision was not replicated in the 1997 Rules of Civil Procedure. Should this be taken as a sign that under the 1997 Rules a defaulted defendant no longer has the right to appeal the trial court decision, or that the Lim Toco doctrine has been reinstated? If post-1997 jurisprudence and the published commentaries to the 1997 Rules were taken as an indication, the answer should be in the negative. The right of a defaulted defendant to appeal remains extant. By 1997, the doctrinal rule concerning the remedies of a party declared in default had evolved into a fairly comprehensive restatement as offered in Lina v. Court of Appeals:[30] a) The defendant in default may, at any time after discovery thereof and before judgment, file a motion, under oath, to set aside the order of default on the ground that his failure to answer was due to fraud, accident, mistake or excusable neglect, and that he has meritorious defenses; (Sec 3, Rule 18) b) If the judgment has already been rendered when the defendant discovered the default, but before the same has become final and executory, he may file a motion for new trial under Section 1(a) of Rule 37; c) If the defendant discovered the default after the judgment has become final and executory, he may file a petition for relief under Section 2 of Rule 38; and d) He may also appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition to set aside the order of default has been presented by him. (Sec. 2, Rule 41) [31]

The fourth remedy, that of appeal, is anchored on Section 2, Rule 41 of the 1964 Rules. Yet even after that provisions deletion under the 1997 Rules, the Court did not hesitate to expressly rely again on the Lina doctrine, including the pronouncement that a defaulted defendant may appeal from the judgment rendered against him. This can be seen in the cases of Indiana Aerospace University v. 94

Commission on Higher Education,[32] Tan v. Dumarpa,[33] and Crisologo v. Globe Telecom, Inc.[34] Annotated textbooks on the 1997 Rules of Civil Procedure similarly acknowledge that even under the new rules, a defaulted defendant retains the right to appeal as previously confirmed under the old Section 2, Rule 41. In his textbook on Civil Procedure, Justice Francisco answers the question What are the remedies available to a defending party in default? with a reiteration of the Lina doctrine, including the remedy that a defaulted defendant may also appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition to set aside the order of default has been presented by him. [35] Justice Regalado also restates the Lina rule in his textbook on Civil Procedure, opining that the remedies enumerated therein, even if under the former Rules of Procedure, would hold true under the present amended Rules.[36] Former Court of Appeals Justice Herrerra likewise reiterates the Lina doctrine, though with the caveat that an appeal from an order denying a petition for relief from judgment was no longer appealable under Section 1, Rule 41 of the 1997 Rules.[37] Herrera further adds: Section 2, paragraph [2] of the former Rule 41, which allows an appeal from a denial of a petition for relief, was deleted from the present Rule, and confined appeals to cases from a final judgment or final order that completely disposes of the case, or of a particular matter therein, when declared by these rules to be appealable. A judgment by default may be considered as one that completely disposes of the case.[38] We are hard-pressed to find a published view that the enactment of the 1997 Rules of Civil Procedure accordingly withdrew the right, previously granted under the 1964 Rules, of a defaulted defendant to appeal the judgment by default against him. Neither is there any provision under the 1997 Rules which expressly denies the defaulted defendant such a right. If it is perplexing why the 1997 Rules deleted the previous authorization under the old Section 2, Rule 41 (on subject of appeal), it is perhaps worth noting that its counterpart provision in the 1997 Rules, now Section 1, Rule 41, is different in orientation even as it also covers subject of appeal. Unlike in the old provision, the bulk of the new provision is devoted to enumerating the various rulings from which no appeal may be taken, and nowhere therein is a judgment by default included. A declaration therein that a defaulted defendant may still appeal the judgment by default would have seemed out of place. 95

Yet even if it were to assume the doubtful proposition that this contested right of appeal finds no anchor in the 1997 Rules, the doctrine still exists, applying the principle of stare decisis. Jurisprudence applying the 1997 Rules has continued to acknowledge the Lina doctrine which embodies this right to appeal as among the remedies of a defendant, and no argument in this petition persuades the Court to rule otherwise. In Rural Bank of Sta. Catalina v. Land Bank of the Philippines,[39] the Court, through Justice Callejo, Sr., again provided a comprehensive restatement of the remedies of the defending party declared in default, which we adopt for purposes of this decision: It bears stressing that a defending party declared in default loses his standing in court and his right to adduce evidence and to present his defense. He, however, has the right to appeal from the judgment by default and assail said judgment on the ground, inter alia, that the amount of the judgment is excessive or is different in kind from that prayed for, or that the plaintiff failed to prove the material allegations of his complaint, or that the decision is contrary to law. Such party declared in default is proscribed from seeking a modification or reversal of the assailed decision on the basis of the evidence submitted by him in the Court of Appeals, for if it were otherwise, he would thereby be allowed to regain his right to adduce evidence, a right which he lost in the trial court when he was declared in default, and which he failed to have vacated. In this case, the petitioner sought the modification of the decision of the trial court based on the evidence submitted by it only in the Court of Appeals.[40] If it cannot be made any clearer, we hold that a defendant party declared in default retains the right to appeal from the judgment by default on the ground that the plaintiff failed to prove the material allegations of the complaint, or that the decision is contrary to law, even without need of the prior filing of a motion to set aside the order of default. We reaffirm that the Lim Toco doctrine, denying such right to appeal unless the order of default has been set aside, was no longer controlling in this jurisdiction upon the effectivity of the 1964 Rules of Court, and up to this day. Turning to the other issues, we affirm the conclusion of the Court of Appeals that Martinez failed to adduce the evidence needed to secure the registration of the subject lots in his name. 96

It should be noted that the OSG, in appealing the case to the Court of Appeals, did not introduce any new evidence, but simply pointed to the insufficiency of the evidence presented by Martinez before the trial court. The Court of Appeals was careful to point out that the case against Martinez was established not by the OSGs evidence, but by petitioners own insufficient evidence. We adopt with approval the following findings arrived at by the Court of Appeals, thus: The burden of proof in land registration cases is incumbent on the applicant who must show that he is the real and absolute owner in fee simple of the land applied for. Unless the applicant succeeds in showing by clear and convincing evidence that the property involved was acquired by him or his ancestors by any of the means provided for the proper acquisition of public lands, the rule is settled that the property must be held to be a part of the public domain. The applicant must, therefore, present competent and persuasive proof to substantiate his claim. He may not rely on general statements, or mere conclusions of law other than factual evidence of possession and title. Considered in the light of the opposition filed by the Office of the Solicitor General, we find the evidence adduced by appellee, on the whole, insufficient to support the registration of the subject parcels in his name. To prove the provenance of the land, for one, all that appellee proffered by way of oral evidence is the following cursory testimony during his direct examination, viz: xxxx Q You mentioned that you are the owner of these three (3) parcels of land. How did you begin the ownership of the same? A I bought it from my uncles Julian Martinez and Juan Martinez. xxxx Q x x x x Who took possession of these parcels of land from then on? A I took possession, sir Q As owner? A Yes, as owner. 97

Q Up to the present who is in possession as owner of these parcels of land? A I took possession. Q Before Julian Martinez and Juan Martinez sold these parcels of land before you took possession who were the owners and in possession of these? A Hilarion Martinez, the father of my predecessors-in-interest and also my grandfather. xxxx

Court: Q Of your own knowledge[,] where [sic] did your grandfather Hilarion Martinez acquire these lands? A According to my grandfather he bought that land from a certain Juan Casano in the year 1870s[,] I think. xxxx Q By the way[,] when did your grandfather Hilarion Martinez die? A Either in 1920 or 1921. Q Since you said your immediate predecessors-in-interest Julian Martinez and Juan Martinez inherited the same from your grandfather. Can you say it the same that your predecessors-ininterest were the owners and possessors of the same since 1921 up to the time they sold the land to you in 1952? A Yes, sir. xxxx In the dreary tradition of most land registration cases, appellee has apparently taken the absence of representation for appellant at the hearing of his petition as license to be perfunctory in the presentation of his evidence. Actual possession of land, 98

however, consists in the manifestation of acts of dominion over it of such a nature as a party would naturally exercise over his own property. It is not enough for an applicant to declare himself or his predecessors-in-interest the possessors and owners of the land for which registration is sought. He must present specific acts of ownership to substantiate the claim and cannot just offer general statements which are mere conclusions of law requiring evidentiary support and substantiation. The record shows that appellee did not fare any better with the documentary evidence he adduced before the trial court. The October 20, 1952 Deed of Sale by which appellee claims to have purchased the subject parcels from his uncle, Julian Martinez, was not translated from the vernacular in which it was executed and, by said token, was inadmissible in evidence. Having submitted a white print copy of the survey plan for Lot Nos. 464-A and 464-B, appellee also submitted the tracing cloth plan for Lot No. 370 which does not, however, appear to be approved by the Director of Lands. In much the same manner that the submission of the original tracing cloth plan is a mandatory statutory requirement which cannot be waived, the rule is settled that a survey plan not approved by the Director of Lands is not admissible in evidence.[41] These findings of the Court of Appeals, arrived at after a sufficiently extensive evaluation of the evidence, stand in contrast to that contained in the RTC decision, encapsulated in a one-paragraph prcis of the factual allegations of Martinez concerning how he acquired possession of the subject properties. The Court of Appeals, of course, is an appropriate trier of facts, and a comparison between the findings of fact of the Court of Appeals and that of the RTC clearly demonstrates that it was the appellate court which reached a more thorough and considered evaluation of the evidence. As correctly held by the Court of Appeals, the burden of proof expected of the petitioner in a land registration case has not been matched in this case. WHEREFORE, the petition is DISMISSED. Costs against petitioner. SO ORDERED. 99

DANTE O. TINGA Associate Justice

WE CONCUR:

LEONARDO A. QUISUMBING Associate Justice Chairperson

ANTONIO T. CARPIO CONCHITA CARPIO MORALES Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR. Associate Justice

ATTESTATION I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

100

LEONARDO A. QUISUMBING Associate Justice Chairperson, Third Division CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairmans Attestation, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN Chief Justice

[1]

Records, pp. 1-4.

[2]

Id. at 108-108a.

[3]

Id. at 161.

[4]

Id. at 229-230.

[5]

Id. at 239.

[6]

CA rollo, p. 17.

[7]

Id. at 19.

[8]

Rollo, pp. 12-20.

[9]

Id. at 9.

[10]

[11]

Id. at 9-10.

Id. at 30-45.

101

[12]

Id. at 37-42.

[13]

Id. at 49.

[14]

G.R. No. 110147, 17 April 2001, 356 SCRA 563.

[15]

Rollo, p. 38, citing Oriental Media Inc. v. Court of Appeals, 250 SCRA

[16]

No. L-41278, 15 April 1988, 160 SCRA 186.

[17]

Id. at 191.

[18]

40 Phil. 787 (1920).

[19]

Id. at 792.

[20]

80 Phil. 166 (1948).

[21]

Id. at 176; J. Perfecto, dissenting.

[22]

See 1964 RULES OF COURT, Rule 41, Sec. 2. The entire provision

647.

reads: SEC. 2. Judgments or orders subject to appeal.Only final judgments or orders shall be subject to appeal. No interlocutory or incidental judgment or order shall stay the progress of an action, nor shall it be the subject of appeal until final judgment or order is rendered for one party or the other. A judgment denying relief under Rule 38 is subject to appeal, and in the course thereof, a party may also assail the judgment on the merits, upon the ground that it is not supported by the evidence or it is contrary to law. A party who has been declared in default may likewise appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition for relief to set aside the order of default has been presented by him in accordance with Rule 38. [Emphasis supplied.] 102

[23]

See 1964 RULES OF COURT, Rule 18, Sec. 2. Except when the party in default files a motion to set aside the order of default, in which even he shall be entitled to notice of all further proceedings regardless of whether the order of default is set aside or not. See also 1964 RULES OF CIVIL PROCEDURE, Rule 13, Sec. 9. [24]

121 Phil. 1128 (1965).

[25]

Id. at 1131.

[26]

136 Phil. 157 (1969).

[27]

Id. at 190.

[28]

160 Phil. 1101 (1976).

[29]

Id. at 1128.

[30]

No. L-63397, 9 April 1985, 135 SCRA 637.

[31]

Id. at 642. See also Tiburcio v. Castro, No. L-58997, 28 May 1988, 161 SCRA 583; Dulos v. Court of Appeals, G.R. No. 87917, 7 August 1990, 188 SCRA 413; Ramnani v. Court of Appeals, G.R. No. 101789, 28 April 1993, 221 SCRA 582; [32]

G.R. No. 139371, 4 April 2001, 356 SCRA 367.

[33]

G.R. No. 138777, 22 September 2004, 438 SCRA 659.

[34]

G.R. No. 167631, 16 December 2005, 478 SCRA 433, 439.

[35]

R.J. FRANCISCO, CIVIL PROCEDURE: RULES 1-22 (2001 ed.), at

340. [36]

F. REGALADO, REMEDIAL LAW COMPENDIUM, Vol. 1 (2001 ed.), pp. 173-174. [37]

O. HERRERA, REMEDIAL LAW (2000 ed.), pp. 570-571. 103

[38]

Id. at 572; emphasis supplied. The quoted text actually reads, Section 2, paragraph 3 of the former Rule 41 which allows an appeal from a denial of a petition for relief x x x. However, it is Section 2, paragraph 2, and not paragraph 3, which stated that [a] judgment denying relief under Rule 38 is subject to appeal x x x. We consider the error to be clerical in nature. [39]

G.R. No. 148019, 26 July 2004, 435 SCRA 183.

[40]

Id. at 190-191.

[41]

Rollo, pp. 17-20.

104

FIRST DIVISION

[G.R. No. 91486. January 19, 2001]

ALBERTO G. PINLAC, ATTY. ERIBERTO H. DECENA, RODOLFO F. REYES, FELIPE BRIONES, JUANITO METILLA, JR., FELIPE A. FLORES, HERMINIO ELEVADO, NARCISO S. SIMEROS, petitioners, vs. COURT OF APPEALS, ATTY. CORAZON A. MERRERA, ATTY. JEAN MAKASIAR-PUNO, SERGIO ACABAN, represented by Atty. Ramon Gerona, ATTY. ROGELIO VELASCO, MARTINA S. NONA, OVIDEO MEJICA, ALFREDO ITALIA, MARIANO GUEVARRA, JESUS YUJUICO, DOMINADOR RIVERA, SATURNINA SALES, represented by Atty. Consolacion SalesDemontano, FRED CHUA, SONIA SY CHUA, LAWRENCE CHUA, CAROLINA C. RUBIO, represented by Tessie Sebastian, GEORGE G. GUERRERO, BEATRIZ TANTOCO, represented by Filomena Cervantes, ATTY. MARCELA CELESTINO-GARCIA, FEDERICO GARCIA, ILDEFONSO MORALES, LEONCIA VELASCO, OCRAVIO F. LINA, ANA MARIA JARAMILLO, ESTRELLA BASA, JOSE ESTEVA, JR., CIRILO GONZALES, VILLY TOBIAS, MIGUEL DELA PAZ, RUBEN GUILLERMO, FAUSTO YADAO, represented by Jeremias Panlilio, RICARDO YAP, ROSAURO/PATRICK MARQUEZ, represented by Emmanuel Marquez, MODESTA FABRIG and MAXIMINO SALCEDA, MELIA LATOMBO, TERESITA PANGILINAN-RIVERO, ARCH. DANILO C. DE CASTRO, JOSE S. LEDESMA, JAIME P. ANG, VEICENTE P. ANG, MAURO U. GABRIEL, ATTY. VIRGINIA GOMEZ, GIL S. BONILLA, LOURDES BLANCO, represented by Catalina Blanco, JOSEFA SANCHEZ and ROSALINA VILLEGAS, represented by Heidi Bobis, SHIRLEY BUCAG, QUIRINA O. TUVERA, represented by Wilfredo Orejuros, GREGORIO AVENTINO, represented by Enrico Aventino, LEONARDO L. NICOLAS, NICOMEDES PENARANDA, FRANCISCA MEDRANO, OFELIA IGNACIO, ROSENDO ABUBO, represented by Santos Chavez, SOLEDAD BAUTISTA DE COLUMNA, represented by Zenaida Valle, MARQUITA/ SEBASTIAN LOPEZ, represented by Emmanuel Marquez, DELIA DORION, GERARDO L. SANTIAGO, FIDEL PANGANIBAN, represented by Manuel dela Roca, 105

MATEO and OFELIA INOVEJAS, REMEDIOS C. DOVAS, represented by Josefa Capistrano, DOMINGO ALTAMIRANO and SPOUSES ROLANDO ALTAMIRANO and MINERVA FETALVERO, BEATRIZ RINGPIS, ROSARIO DE MATA, RUFINA CRUZ, represented by JOSEFA MANABAT, SPOUSES ANITA SALONGACAPAGCUAN and MAYNARD CAPAGCUAN, DISCORA YATCO, represented by VICTORINA Y. FIRME, and CONSUELO YATCO, GENEROSA MEDINA VDA. DE NOGUERA, represented by ATTY. RAYMUNDO M. NOGUERA, BEATRIZ SALANDANAN and LOURDES ALONTE-VASQUEZ, PEDRO COSIO and VICTORINA CARINO, RUTH C. ZARATE, PRECIOSISIMA V. YAPCHULAY, BASILISA B. YAPCHULAY, OFELIA B. YAPCHULAY, FELISA B. YAPCHULAY, FE B. YAPCHULAY, WILMA B. YAPCHULAY, FELIX B. YAPCHULAY, MARIANO B. YAPCHULAY, GEN. ALFREDO LIM, and other registered OWNERS OF VILAR-MALOLES (VILMA) SUBDIVISION, respondents. DECISION YNARES-SANTIAGO, J.: The instant case springs from a contentious and protracted dispute over a sizeable piece of real property situated in what is now known as Old Balara, Sitio Veterans, Barrio Payatas and Silangan, all of Quezon City. There are numerous claimants, titled and untitled alike, each either pressing to own a piece of it, or striving to protect ones right as a titled owner. Petitioners herein are World War II veterans, their dependents and successorsin-interest. Together, they filed a class suit primarily for Quieting of Title before the Regional Trial Court of Quezon City, Branch 83, where it was docketed as Civil Case No. Q-35672. In particular, petitioners claimed that the real property, which has an aggregate area of 502 hectares, were part of forest lands belonging to the government; that they and their predecessors-in-interest have occupied said property continuously, adversely, and exclusively for more than thirty (30) years; and that they have accordingly filed applications for land titling in their respective names with the appropriate government agency. While petitioners claim that the land in dispute was part of the public domain, they named as respondents several persons and corporations who are titled owners of subdivided parcels of land within the subject property. One of those so impleaded as a party-respondent was the Vil-Ma Maloles Subdivision (hereinafter, Vil-Ma). The individual lot owners of the said subdivision, however, were not 106

specifically named. Since personal service of summons could not be effected on Vil-Ma and some of the other named respondents, petitioners moved for leave of court to serve summons by publication which was granted. Accordingly, the summons was published in the Metropolitan Newsweek, a periodical edited and published in the City of Caloocan and Malolos, Bulacan.[1] Some of the named respondents filed their respective responsive pleadings, while the others, including Vil-Ma, failed to answer, and were thus declared in default. Consequently, petitioners were allowed to present evidence ex parte against the defaulted respondents. The court a quo found the following facts to be conclusive: (T)hat the case involves three parcel of lands, to wit: Lot 1 & 2 situated at the Old Balara, Diliman, Quezon City and Lot 3 situated at Sitio Veterans, Barrio Payatas and Silangan, Quezon City containing an aggregate area of 502 hectares more or less; that Lot 1 is covered by TCT No. 5690 in the name of defaulted respondent Jose V. Bagtas, which title emanated from TCT No. 48546 in the name of Emiliana Vda. De Vera Cruz which contains an actual area of only 294.6 sq. meters, but, when said TCT No. 5690 was issued the same was illegally and fraudulently expanded to cover 23.5767 hectares through fraudulent resurveys without proper judicial proceedings; that on said illegally expanded area of TCT No. 5690 in the name of respondent Jose V. Bagtas, more than 363 transfer certificates of title were subsequently issued including those belonging to some of the defaulted respondents thereof; that TCT No. 5690 contains no technical description on its face; that Lot 2 is covered by TCT No. 3548 in the name of Eustacio Maloles married to Soledad Villegas and Vicente B. Vilar doing business under the name and style of defaulted respondent Vilma Maloles Subdivision Inc., which title was derived from TCT No. 33531 in the name of Oscar L. Uy which in turn came from TCT No. 26285 in the name of Maria Lim which was immediately derived from OCT No. 614 which contains no technical description on its face, that TCT No. 3548 likewise contains no technical description on its face; that however, on the face of TCT No. 33531 of Oscar L. Uy from which TCT No. 3548 of defaulted respondent Vilma Maloles Subdivision Inc., was derived, it appears that said TCT No. 33531 was cancelled by another title, TCT No. 1713 and not by TCT No. 3548, the supposed derivative thereof, which title, from the foregoing facts, seems to have come from nowhere considering that no document could be produced by the representative of the Register of Deeds of Pasig, relative to the origin of the aforesaid title and which register of deeds has jurisdiction over the same; that from this spurious and fraudulent TCT No. 3548 which contains no technical description on its face, numerous TCTs were subsequently issued, some of which belong to the 107

defaulted respondents hereof, that despite the issuance has not been cancelled by the Register of Deeds of Quezon City; that Lot 3 was originally covered by OCT No. 333 from which 846 questionable TCTs emanated and issued by the Register of Deeds of Quezon City perpetrated and made possible by the illegal expansion of the actual area thereof from 4,574 Sq. Meters, more or less, to 407,3875 (sic) hectares without proper judicial proceedings; that as an example of the fraud perpetrated by respondents, TCT No. 26205 covers a lot situated at Barrio Ermitao, San Juan del Monte, TCT No. 26287 covers a lot located at Barrio Talipapa, Novaliches, TCT No. 33531 covers a lot located at the District of Cubao. TCT No. 47705 covers a lot situated at Barrio San Francisco, San Juan, TCT No. 133770 covers a lot located at San Bartolome, Caloocan City, TCT No. 45741 covers a lot located at San Francisco del Monte, San Juan, TCT No. 45636 covers a lot located at the municipality of San Juan, TCT No. 19-6370 covers a lot located at Kamuning District, TCT No. 188447 covers a lot located at San Francisco del Monte with a different mother title, OCT No. 515, TCT No. (22092) 61850 covers a lot located at Tala Estate Caloocan City, TCT No. 14645 covers lot located at Kamuning District and TCT No. 14692 covers a lot located at Bo. San Isidro, Caloocan City, yet these TCTs were utilized by some people to claim an area located inside the litigated premises despite the fact that their technical descriptions, as aforementioned, are different from the lands being sought to be covered therewith; that Lots 1, 2 & 3 have been under the possession of petitioners for a continuous, public, open, & uninterrupted period of 30 years through World War II Veterans Legionnaires of the Philippines, Inc., by the principle of tacking possession; that the Bureau of Forest Development has certified that Lots 1, 2 & 3 are part of public forest belonging to the government not yet certified for disposition and alienation; that the Bureau of Forest Development knew and encouraged petitioners occupancy and possession of said lots as in fact ordinary residential permits were issued by said agency to some of herein petitioners and even helped in petitioners acquisition of electrical facilities from the MERALCO.[2] Resolving the sole issue of whether or not petitioners were entitled to the land they occupy and possess, even when said land was allegedly part of unclassified public forest land and yet covered by transfer certificates of title in the names of the defaulted respondents, the court a quo rendered a Partial Decision in favor of petitioners, based on the following disquisition: First, because as established from the foregoing facts, OCT No. 614, TCT No. 5690, TCT No. 3548 covering Lots 1 & 2 of the disputed land, not having technical descriptions appearing on their respective face, clearly are null and void by reason thereof. This is because a torrens title is the certificate of ownership issued under 108

the Register of Deeds naming and declaring the owner in fee simple of the real property DESCRIBED therein, free from all liens and encumbrances except such as maybe expressly noted thereon or otherwise reserved by law. (Philippine National Bank vs. Tan Ong Zse, 51 Phil. 317).Without any technical description a title is fictitious and the mere issuance thereof is fraudulent. Such being the case, it follows that none of the title holders subsequently issued out of said void titles could say that he or she is an innocent purchaser for value. For in the case at bar, there are really no rights that could be transferred to them since even the titles of those supposed owners thereof originally are themselves fictitious. x x x Second, because although the Bureau of Forest Development maintains, as in fact, it certified that Lots 1, 2 & 3 are part of the unclassified public forest land of the government, and therefore, are not susceptible of private appropriation, still, due to the established fact that the lots involved are under the present occupancy and possession of petitioners with the knowledge and tolerance of the Bureau of Forest Development, the true and real nature of said lands as being public forest has become highly dubious and in the opinion of this Court could not overcome the presumption that said lands are agricultural. For the mere fact that a tract of land has trees upon it or has mineral wealth within it, is not of itself sufficient to declare that one is forest land and the other mineral land. There must be some proof of the extent as well as of the present or future value of the land as forest or mineral. It must be shown that the land is more valuable for the forestry or the minerals which it contains than it is for agricultural purposes. Land may be classified as forest or mineral today and after the exhaustion of the timber or minerals contained therein may be classified as agricultural land tomorrow. Hence, in case of doubt and considering that it is a matter of public knowledge that a majority of the lands in the Philippines are agricultural lands, it was rightly held that in the absence of evidence to the contrary any land may be presumed to be agricultural. And that being the case, it is clear that petitioners have acquired legally a title over Lots 1, 2 & 3 of this case through extra-ordinary prescription of thirty (30) years of continuous, public, open and uninterrupted possession thereof, the lands being agricultural and, thus, are susceptible of private ownership by petitioners. WHEREFORE, premises considered, judgment is hereby rendered in favor of petitioners and against the defaulted respondents: 1) Declaring petitioners through the principal petitioners hereof, to wit: Alberto G. Pinlac, Atty. Eriberto H. Decena, Rodolfo T. Reyes, Felipe Briones and Juanito S. Metilla as absolute owners in fee simple title of the aforesaid Lots 1, 2 & 3 hereof by virtue of extra-ordinary prescription, with the exception of the lands covered by 109

the respective transfer certificate of title belonging to the non-defaulted respondents; 2) Declaring Original Certificate of Title No. 614, TCT No. 5690 and TCT No. 3548 of the Register of Deeds of Quezon City, and the subsequent TCTs issued therefrom, with the exception of those titles belonging to the non-defaulted respondents, as null and void ab initio; 3) Ordering the Register of Deeds of Quezon City to cancel OCT No. 614, TCT No. 5690 and TCT No. 3548 as well as the subsequent TCTs issued and emanating therefrom, with the exception of those titles belonging to the non-defaulted respondents, from its record; 4) Declaring the area of TCT No. 333 in excess of its true and actual area of 4,574 Sq. Meters, as well as the TCTs subsequently issued by the Register of Deeds of Quezon City, covering the area in excess of said actual area, with the exception of those belonging to non-defaulted respondents, as null and void ab initio; 5) Ordering the Register of Deeds of Quezon City to cancel all TCTs subsequently issued based on OCT No. 333 in excess of the actual area of 4,574 Sq. Meters, with the exception of those titles belonging to the non-defaulted respondents; 6) Declaring the writ of preliminary injunction dated August 7, 1985, in so far as those areas covered by the cancelled OCTs and TCTs hereof are concerned, as permanent; 7) Ordering the Register of Deeds of Quezon City to issue herein petitioners the corresponding individual transfer certificate of titles upon proper application made thereof. SO ORDERED.[3] On May 17, 1989, or exactly one (1) year and fifty-seven (57) days after the above-quoted judgment by default was rendered, a Petition for Annulment of Judgment with Certiorari, Prohibition and Mandamus [4] was brought before the Court of Appeals by the titled owners of the subdivided lots within Vil-Ma. They assailed the default judgment which nullified all their titles, arguing that the court a quohad no jurisdiction over them and their respective titled properties. They also alleged that they only came to know of the adverse judgment when petitioners sought the execution of the judgment by attempting to dispossess 110

some of the titled owners of the lots and making formal demands for them to vacate their respective properties. They likewise claimed that the Partial Decision against the defaulted respondents was null and void on the grounds of lack of jurisdiction and extrinsic fraud, for the reasons that: (1) Civil Case No. Q-35672, while it was a petition to quiet title, was a collateral proceeding, not a direct action attacking their duly registered titles. Besides, a petition for cancellation of title can only be filed by a registered owner or a person having an interest in registered property, and must be filed in the original land registration case in which the decree of registration was entered. (2) They were never made parties to Civil Case No. Q-35672, nor were their lots described in the complaint, published summons, and Partial Decision. Named defendant was VIL-MA, a totally separate and independent entity which had already ceased to exist way back in January of 1976. Moreover, the summons, as well as the Partial Decision was not published in a newspaper or periodical of general circulation.Thus, the defective service of summons to said defendant did not place the individual lot owners under the trial courts jurisdiction, nor are they bound by the adverse judgment. (3) They were denied due process of law as they were not given their day in court. They should have been included as indispensable partiesrespondents in Civil Case No. Q-35672 since the petitioners therein were seeking to annul their respective transfer certificates of title. (4) Their duly registered titles cannot be defeated by the alleged adverse, continuous and notorious possession of the petitioners since their titles are indefeasible and cannot be acquired by prescription or adverse possession. (5) If, indeed, the subject property is unclassified forest lands, it is not capable of private appropriation. The court a quo is bereft of authority to declare motu proprio that the subject property should be reclassified as agricultural, not forest land. (6) The trial court violated Section 3(c), Rule 10 of the Rules of Court which provides that when some of several respondents fail to answer, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence thus presented, whenever a complaint states a common cause of action against several respondents. Accordingly, the 111

defense interposed by those who answer or appear to litigate the case should inure to the benefit of even those who fail to appear or answer. (7) The trial court cannot render null and void in the default judgment the mother title (OCT No. 614), from which the petitioners transfer certificates were derived, which the Supreme Court had already declared valid and legal. To impress upon the Court of Appeals that they have a meritorious defense and that their petition was not intended to delay or frustrate the final disposition of the case, the titled owners cited the case of De La Cruz v. De La Cruz,[5] where the Supreme Court traced the origins of OCT 614. It was held in that case, that: x x x. The Piedad Estate consists of a vast tract of land originally registered on March 12, 1912 under Original Certificate of Title No. 614 of the Register of Deeds of the Province of Rizal in the name of the Philippine Government. The Piedad Estate was one of the so-called friar lands which were purchased by the government of the Philippines pursuant to the provisions of the Friar Lands Act, Public Act No. 1120 which was enacted on April 26, 1904. x x x. As specifically stated above, the said lands are not public lands in the sense in which those words are used in the Public Land Act Numbered Nine Hundred and twenty-six and cannot be acquired or leased under the provisions thereof. In the case of Jacinto vs. Director of Lands (1926) 49 Phil. 853, the Supreme Court held that the so-called friar lands, to which the government of the Philippines holds title, are not public lands but private or patrimonial property of the government. xxxxxxxxx As held in Lorenzo vs. Nicolas, No. L-4085, 30 July 1952, 91 Phil. 686, from the provisions of sections 11, 12 and 16 of Act No. 1120, it is apparent that the pervading legislative intent is to sell the friar lands acquired by the government to actual settlers and occupants of the same.[6] Claiming that their individual transfer certificates of title were derived from subsequent subdivisions and transfers of the lots within the Piedad Estate, the defaulted registered owners invoked the Comments and Recommendations of the Ad Hoc Committee created by the then Ministry of Natural Resources, tasked to investigate the historical background of the Piedad and Payatas Estates in Quezon City, containing evidence which they would have substantiated had they been given their day in court. The Ad Hoc Committee reported, to wit: 112

FINDINGS AND OBSERVATIONS The Piedad Estate, situated in the Municipality of San Mateo and Caloocan during the time of registration in 1910, covers an area of 3850.7226 hectares. The Registration of Title under Case No. 5975 was published in the January 21, 1910 issue of the Official Gazette. After the Piedad Estate was registered in Original Certificate of Title No. 614 in the name of the Government in 1910 under the provisions of Act 496, the area was subdivided originally into 874 lots. As a result of subsequent surveys executed in the course of disposition, the number of lots increased to 1,305. Disposition of these lots was made by the Bureau of Lands thru sales, under the Friar Lands Act, as early as 1910 and records show that even before the Second World War, all lots in the Piedad Estate have been disposed of. Owing perhaps to the scarcity of land applicants at the time, it will be observed that a number of applicants have acquired several lots totalling several hectares. Among the vendees with several lots are the Philippine Trust Co., the Zuzuarreguis and the Metropolitan Water District, to name a few. A list of lot holders in the Piedad Estate with the corresponding lot numbers, lot areas and date of purchase from the Bureau of Lands is hereto attached and marked as ANNEX B. Thru a series of transfer of lots from one owner to another attended at times by subdivision into smaller lots and at other times by consolidation of several lots into one, most of the lots of the Piedad Estate have lost their identity both in original ownership structure and lot descriptions. Piedad Estate now embraces and includes a number of private residential subdivisions among which are the following: 1. Villar Maloles Subdivision (owned by Villar Maloles, Psd-21997) 2. U.P. Sites Nos. 1 and 2 3. Sunnyville Subdivision (Owned by the Delos Santos family) 4. Sterling Meadows Subdivision (LRC) Pcs-11110 5. Dona Patrona Subdivision 6. Far Eastern University (43 has.) 7. Luis Reyes (Psd-19419) 113

8. Jose Yulo (PLS-336-D) By virtue of subsequent changes in political boundaries, Piedad Estate is now within Quezon City. It is located on both sides of Luzon Avenue and is bounded on the North by the Republic Avenue; on the East by private residential subdivisions which includes the B.F. Homes (LRC) Psd-133236, the Villa Ligaya Subdivision (Psd-65729), the Kapalaran Subdivision (Pcs-47850), the Kasiyahan Subdivision (LRC) Pcs-12091, Zuzuarregui Property (Psd-34912) and the Doa Beartiz Subdivision under Psd-39351; on the South by the Don Mariano Marcos Avenue; and on the South-West and West by the U.P. Sites Nos. 1 and 2. COMMENTS AND RECOMMENDATION There is no doubt that Piedad Estate has long been segregated from the mass of the public domain and have become private lands duly registered under the Torrens System following the procedure for the confirmation of private lands prescribed in Act 496. Thus the lands inside the Piedad Estate are no longer lands of the public domain. Neither are these lands forest lands, in the classification of lands for forest purposes, the main criterion prescribed in Section 15 of P.D. 705, the Forestry Code, is its slope. Those beyond 18% are to be preserved for forest purposes while those below are to be released as not needed for forest purposes, hence, as alienable and disposable. By its physical nature, location and historical use, the land in question can hardly be considered and classified as forest land. Physically, it is first, level and at most slightly rolling land. Location wise, it used to be within the periphery and now in the heart of a metropolis. While originally it was used for agricultural purposes, it has later become urban due to population pressure and rapid urbanization in the Metro Manila area. It is devoid of any timber land, more so if we talk of forest of commercial value. In fact, the Composite Land Classification Committee of the MNR composed of the Directors of BFD, BL, BFAR and BMGS, has already signed a land classification map and recommended for its release because it has absolutely no forest value. On the basis of existing records of the Bureau of Lands and the area of the Piedad Estate as contained in the Technical Descriptions of the said Estate published in the January 21, 1910 issue of the Official Gazette, there is no expansion or enlargement of the area, hence, it is recommended that existing titles within the area should be respected and their validity upheld. xxxxxxxxx

114

In view of all the foregoing, the committee recommends that all existing titles validly issued within the area be respected and their validity upheld. [7] (Emphasis supplied) Accordingly, the defaulted titled owners prayed that judgment be rendered: 1. Declaring the aforesaid Partial Decision on defaulted private respondents as null and void; 2. Declaring all Residential Use Permits issued by the Director of Forest Management Bureau as null and void; 3. Declaring all Transfer of Certificates of Titles of the petitioners (respondents herein) emanating from OCT 614 and TCT 3548 (1713) as valid; 4. Ordering private respondents (petitioners herein), their agents or representatives and all other persons claiming right under them to vacate the respective titled lands of the petitioners squatted by the former; 5. Ordering the dismissal of Hon. Judge Reynaldo Roura from the Regional Trial Court, Macabebe, Pampanga on the grounds of gross incompetence and gross ignorance of the law (Adm. Circular No. 4 of the Supreme Court, dated January 27, 1988). 6. Making the preliminary injunction as permanent; and 7. Ordering the private respondents (petitioners herein) to pay jointly and solidarily to the petitioners the sum of P200,000.00 as moral and exemplary damages, plus the sum of P5,000.00 per lot of the petitioners as attorneys fee, aside from cost of suit, and for any other relief just and proper.[8] On June 23, 1989, the Court of Appeals granted respondents (petitioners therein) application for writ of preliminary injunction, ruling that: When this case was called for hearing on June 21, 1989 on the application for the issuance of a writ of preliminary injunction, the parties and their respective counsel appeared and orally argued their respective stand on the matter. It is admitted that the herein petitioners, indispensable parties in the case, were not individually served with summons.

115

We believe and so hold that there is merit in the instant application for preliminary injunction, hence, the same is hereby GRANTED. Upon the posting by the petitioners of a bond in the amount of One Hundred Thousand Pesos (P100,000.00), subject to Our approval, let a writ of preliminary injunction issue enjoining the respondents (petitioners herein), and all persons acting for and in their behalf, to desist and refrain from enforcing or implementing, or from attempting to enforce and implement, the questioned writ of execution of the partial judgment, dated March 21, 1988, rendered in Civil Case No. Q-35672, entitled: Teofilo M. Gariando, et al., petitioners versus Gregorio Dizon, et al., respondents, until further orders from this Court. SO ORDERED.[9] On November 15, 1989, the Court of Appeals rendered a Decision [10] granting the petition and annulling the Partial Decision in Civil Case No. Q-35762 based on its finding that the trial courts lack of jurisdiction over the persons of respondents --x x x becomes all the more apparent when petitioners claim or asseverate that the assailed Partial Decision can not bind Vilar-Maloles (VILMA), the umbrella name, for the simple reason that said PARTNERSHIP was dissolved on January 26, 1976, for it can no longer be sued as it had no more juridical personality. xxxxxxxxx Furthermore, petitioners contend that the summons and the Partial Decision were published in a local newspaper edited in Caloocan City and Malolos, Bulacan known as METROPOLITAN NEWSWEEK implying that said summons and Partial Decision were not published in a newspaper of general circulation in Quezon City as required by PD 1079, Sec. 1 thereof. Petitioners not having been duly notified of the hearing/proceedings, the Partial Decision being assailed is without significance to them or as far as petitioners are concerned said Partial Decision is null and void.[11] Petitioners motion for reconsideration was denied in a Resolution dated December 21, 1989.[12] Hence, the instant petition for certiorari which raises the following issues: I. WHETHER OR NOT RESPONDENT COURT OF APPEALS QUESTIONED DECISION HAS VIOLATED PETITIONERS RIGHT TO DUE PROCESS BY IGNORING AND LEAVING UNDECIDED 116

ALL THE ISSUES RAISED IN THE ANSWER OF PETITIONERS IN CA-G.R. NO. SP-17596. II. WHETHER OR NOT THE COURT A-QUO HAS ACQUIRED JURISDICTION OVER RESPONDENT VILMA MALOLES SUBDIVISION BY THE PUBLICATION OF THE SUMMONS AND PETITION AS ORDERED BY THE COURT IN CIVIL CASE NO. Q35672 AND SO THE PARTIAL DECISION (ANNEX B) WAS LEGAL, VALID AND PROPER. III. WHETHER OR NOT PRIVATE RESPONDENTS PER THEIR PETITION BEFORE RESPONDENT COURT OF APPEALS HAS A VALID CAUSE OF ACTION CONSIDERING THEY ADOPTED CONTRADICTORY POSITIONS OR THEORIES OF THE CASE, AND THAT RESPONDENT COURT OF APPEALS DECISION (ANNEX G) IS VOID.[13] We find no merit in the instant petition. The case before the Court of Appeals was one for annulment of judgment, certiorari, prohibition and mandamus. In resolving the same, the Court of Appeals need not retry the facts. An action for annulment of judgment is grounded only on two justifications: (1) extrinsic fraud; and (2) lack of jurisdiction or denial of due process.[14] All that herein private respondents had to prove was that the trial court had no jurisdiction; that they were prevented from having a trial or presenting their case to the trial court by some act or conduct of petitioners; [15] or that they had been denied due process of law. Thus, the Court of Appeals need only to resolve the issues of lack of jurisdiction, existence of extrinsic fraud, and denial of due process of law. The action for annulment of judgment cannot and was not a substitute for the lost remedy of appeal. The very purpose of the action for annulment of judgment was to have the final and executory judgment set aside so that there will be a renewal of litigation.[16] Whether or not the assailed Partial Decision based solely on facts and evidence presented by the petitioners is meritorious is irrelevant and immaterial. Thus, the Court of Appeals did not err, nor did it violate the petitioners right to due process of law, when it refused to consider all the factual issues raised by petitioners. We also agree with the Court of Appeals conclusion that the Partial Decision is null and void insofar as private respondents are concerned since the latter were not duly served summons or notified of the proceedings against them. The summons and the Partial Decision were published in a local newspaper edited and published 117

in Caloocan City and Malolos, Bulacan. However, the Court of Appeals found the publication in said newspaper, namely the Metropolitan Newsweek, to be invalid because the said periodical is not considered a newspaper of general circulation in Quezon City where the subject property is located, as required by Presidential Decree No. 1079, Section 1. Petitioners, however, contend that the service of summons by publication was legal and in accordance with the requirements of Rule 14, Section 14 of the Rules of Court. The service by publication was done pursuant to the orders of the trial court dated May 5, 1993 and September 29, 1983.[17] While the service of summons by publication may have been done with the approval of the trial court, it does not cure the fatal defect that the Metropolitan Newsweek is not a newspaper of general circulation in Quezon City. The Rules strictly require that publication must be in a newspaper of general circulation and in such places and for such time as the court may order. [18] The court orders relied upon by petitioners did not specify the place and the length of time that the summons was to be published. In the absence of such specification, publication in just any periodical does not satisfy the strict requirements of the rules. The incomplete directive of the court a quo coupled with the defective publication of the summons rendered the service by publication ineffective. The modes of service of summons should be strictly followed in order that the court may acquire jurisdiction over the respondents,[19] and failure to strictly comply with the requirements of the rules regarding the order of its publication is a fatal defect in the service of summons.[20] It cannot be overemphasized that the statutory requirements of service of summons, whether personally, by substituted service, or by publication, must be followed strictly, faithfully and fully, and any mode of service other than that prescribed by the statute is considered ineffective.[21] Be that as it may, even granting that the publication strictly complied with the rules, the service of summons would still be ineffective insofar as private respondents are concerned. At the time the complaint for Quieting of Title was filed on November 2, 1983, Vilma Maloles Subdivision no longer existed as a juridical entity. Vilma Maloles Subdivision, a partnership, was dissolved more than six (6) years earlier, as evidenced by a Certificate of Dissolution issued by the SEC dated January 26, 1976.[22] Consequently, it could no longer be sued having lost its juridical personality. It was also established that all the lots within the subdivision had been disposed of to private individuals, herein private respondents. As the titled owners, they should have been impleaded as party-respondents before the court a quo. They were not made respondents, neither were they informed of the adverse proceedings 118

that would result in the nullification of their duly registered titles. Clearly, there was a blatant disregard for their rights as registered owners. Private respondents titles and rights as owners have been unjustly violated. Hence, the Court of Appeals did not err in granting private respondents petition by annulling and setting aside the Partial Decision rendered by the court a quo for lack of jurisdiction and for denial of due process of law. Petitioners failed to show that they were the aggrieved parties. If ever there was denial of due process, it was private respondents who suffered therefrom. Whether by petitioners failure to effectively serve summons or by omitting to name private respondents as respondents, the trial courts Partial Decision declaring private respondents titles null and void was clearly violative of the due process requirement of the Constitution. It is elementary that before a person can be deprived of his right or property he should first be informed of the claim against him and the theory on which such claim is premised. [23] The courts will not countenance a denial of the fundamental right to due process, which is a cornerstone of our legal system.[24] The Partial Decision was a judgment by default, which is generally looked upon with disfavor,[25] for it cannot pretend to be based on the merits of the controversy.[26] As in this case, the judgment by default may amount to a positive and considerable injustice to private respondents. Hence, justice and equity demand that this case be litigated anew.[27] It is evident that the reopening of the case would not amount to an exercise in futility nor is it intended to further delay the final resolution of this controversy. The court a quo should give all the necessary parties every chance to fight their case fairly and in the open, without resort to technicalities.[28] Finally, the conclusion that the Partial Decision of the court a quo is void finds support in Rule 10, Section 5(c) of the then Rules of Court, which provides: (c) Effect of partial default. - When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented. In fact, the court a quo enumerated in the Partial Decision those who filed responsive pleadings. Considering that petitioners in their complaint stated a common cause of action against all the named respondents, the court a quo should have heard the case as against all respondents, the defaulted respondents included. However, the trial court, unmindful of the above-quoted rule, proceeded to receive evidence ex parte only against the defaulted respondents. The trial courts 119

disposition is not only violative of the rules but also a clear negation of the defaulted respondents limited rights. Whatever defense and evidence the non-defaulted respondents may present which would be applicable to the situation of the defaulted respondents should inure to the benefit of the latter. The nullification of OCT 614 adversely affected the answering respondents for they all share the same mother title. In effect, the court a quo pre-judged the case even against the answering respondents, for how could OCT 614, the mother title, be valid for one set of respondents and null and void for the other respondents? In fine, the Partial Decision was procedurally flawed. WHEREFORE, in view of all the foregoing, the decision of the Court of Appeals in CA-G.R. SP No. 17596 is AFFIRMED and the instant petition is DENIED for lack of merit. SO ORDERED. Davide, Jr., C.J., (Chairman), Kapunan, and Pardo, JJ., concur. Puno, J., no part.

[1]

Annex R, Records, p. 259.

[2]

Partial Decision on Defaulted Private Respondents, Civil Case No. Q-35672, RTC, Quezon City, Branch 83, penned by Judge Reynaldo V. Roura; Rollo, pp. 5052; references to exhibits omitted. [3]

Ibid., pp. 52-54 (citations omitted).

[4]

CA-G.R. SP No. 17596.

[5]

130 SCRA 666 (1984).

[6]

At 673-677.

[7]

Special Order No. 426, Series of 1986; Rollo, pp. 214-221.

[8]

Petition, Rollo, p. 111.

[9]

Record, p. 319.

[10]

Associate Justice Ricardo J. Francisco, ponente; Associate Justices Antonio M. Martinez and Jesus M. Elbinias, concurring. [11]

Rollo, pp. 127-129. 120

[12]

Rollo, p. 136.

[13]

Petition, Rollo, p. 35.

[14]

Strait Times, Inc. v. CA, 294 SCRA 714 (1998); Salonga v. CA, 269 SCRA 534 (1997). [15]

Ybanez v. CA, 253 SCRA 540 (1997).

[16]

I Moran, Rules of Court, 1950 ed., p. 697, citing Anuran v. Aquino, 38 Phil. 29; Banco-Espaol-Filipino v. Palanca, 37 Phil. 921; Santiago v. Ceniza, 5 SCRA 494 (1962). [17]

Annex F-1 and F-2 cited in pp. 39-40, Rollo.

[18]

Rules of Court, Rule 14, Section 14.

[19]

Gan Hock v. CA, 197 SCRA 223 (1991).

[20]

Sahagun v. CA, 198 SCRA 44 (1991).

[21]

Paluwagan ng Bayan Savings Bank v. King, 172 SCRA 60 (1989).

[22]

Annex P, Record, p. 255.

[23]

Republic v. Sandiganbayan, 266 SCRA 515 (1997).

[24]

Fabella v. CA, 282 SCRA 256 (1997).

[25]

Trajano v. Cruz, 80 SCRA 712 (1977).

[26]

Lesaca v. Ca, 215 SCRA 17 (1992); Coombs v. Santos, 24 Phil. 446 (1913).

[27]

Sps. Rudy Ameloquio, Sr. and Laguimas Obnamia v. CA, G.R. No. 124243, June 15, 2000. [28]

Gerales v. CA, 218 SCRA 638 (1993); Goldloop Properties, Inc. v. CA, 212 SCRA 504 (1992).

121

FIRST DIVISION HEIRS OF MAMERTO MANGUIAT, G.R. No. 150768 represented by GERARDO MANGUIAT; HEIRS OF FELIPE MARUDO, represented by JOSE MARUDO; HEIRS OF JULIANA MAILON, represented by GAVINA MAILON MENDOZA; HEIRS OF LEONCIA MERCADO, represented by ANIANA MANGUIAT; HEIRS OF VICENTE PEREZ, represented by SOTERO PEREZ; HEIRS OF VICENTE GARCIA, represented by MACARIO GARCIA LUCIDO; and HEIRS OF TRANQUILINA MENDOZA, represented by RUFINA MENDOZA, Petitioners, - versus THE HON. COURT OF APPEALS and J.A. DEVELOPMENT CORPORATION, Respondents. x ----------------------------------------------------x HEIRS OF MAMERTO MANGUIAT,represented by GERARDO MANGUIAT; HEIRS OF FELIPE MARUDO, represented by JOSE MARUDO; HEIRS OF JULIANA MAILON, represented by GAVINA MAILON MENDOZA; HEIRS OF LEONCIA MERCADO, represented by 122

ANIANA MANGUIAT; HEIRS OF VICENTE PEREZ, represented by G.R. No. 160176 SOTERO PEREZ; HEIRS OF VICENTE GARCIA, represented by MACARIO GARCIA LUCIDO; and HEIRS OF TRANQUILINA MENDOZA, represented Present: by RUFINA MENDOZA, PUNO, C.J., Chairperson, Petitioners, CARPIO, CORONA,

- versus -

AZCUNA, and THE HON. COURT OF APPEALS LEONARDOAND REPUBLIC OF THE PHILIPPINES, CASTRO, JJ.

DE

Respondents.

Promulgated:

August 20, 2008 x ----------------------------------------------------------------------------------------x DECISION PUNO, C.J.:

123

Before us are two petitions for review on certiorari assailing the Decisions of the Court of Appeals in CA-G.R. SP No. 60770 and CA-G.R. SP No. 61703 dated August 29, 2001 and January 22, 2003, respectively, and their Resolutions dated November 16, 2001 and September 29, 2003, respectively. In both cases, the Court of Appeals set aside the partial decision of the Regional Trial Court of Tagaytay City, dated February 18, 2000, in Civil Case No. TG-1904. The facts show that petitioners filed a complaint against respondent J.A. Development Corporation (JDC), Bureau of Telecommunications (BUTEL), Juan dela Cruz, and Pedro dela Cruz on May 14, 1999 with the Regional Trial Court of Tagaytay City. The complaint, docketed as Civil Case No. TG-1904, was for quieting of title and cancellation of certificates of title over Lot 1993, commonly known as the Calamba Estate. Petitioners alleged that they succeeded to the rights of their predecessors-in-interest to whom Lot1993 was awarded on November 13, 1914 by virtue of a Sales Certificate, in accordance with the provisions of the Friar Land Act. Petitioners, thus, sought to annul the Torrenstitle issued to respondent, BUTEL, Juan dela Cruz, and Pedro dela Cruz. On May 19, 1999, summons was served on respondent JDC through its employee, Jacqueline de los Santos.[1] On the same date, summons was served on BUTEL through a certain employee, Cholito Anitola. [2] The sheriffs return did not describe the position of Mr. Anitola at BUTEL.[3] Respondent JDC moved to dismiss the complaint on the following grounds: (1) lack of jurisdiction of the court over the subject matter of the case; (2) lack of cause of action; (3) prescription; and (4) improper venue. [4] With leave of court, it supplemented its motion by raising the additional ground of res judicata citing the judgment of the same court in Civil Case No. TG-1516. It contended that Civil Case Nos. TG-1904 and TG-1516 have identical parties and causes of action, and that the order of dismissal of the latter case has long become final due to prescription, and laches has long set in.[5] The motion to dismiss was denied on January 11, 2000.[6] JDC filed a motion for reconsideration which, to date, has not been resolved. On July 1, 1999, petitioners moved to have BUTEL declared in default for its failure to file an answer despite service of summons and to allow them to present their evidence ex parte.[7] The motion was granted on November 10, 1999. [8] A week later, the petitioners presented their evidence before the branch clerk of court acting as commissioner. 124

On February 18, 2000, the trial court promulgated a partial decision against BUTEL, the dispositive portion of which states: PREMISES CONSIDERED, this Court found and hold (sic) that the plaintiffs were able to prove satisfactorily and convincingly their allegations in the complaint as against defendant Bureau of Telecommunication[s]. WHEREFORE, partial decision is hereby rendered: a. Declaring that (sic) the plaintiffs as the equitable owner of Lot 1993-I and transfer certificate of title covering the same is hereby ordered cancelled as null and void; b. Ordering the transfer of possession of said Lot 1993-I to the plaintiffs; c. Enjoining the defendant Bureau of Telecommunication[s], its representative, agents or privies to remove any improvements they have on Lot 1993-I.[9] On March 28, 2000, petitioners filed a motion to execute. On April 7, 2000, respondent JDC moved to set aside the partial decision, arguing in the main that the decision constitutes a prejudgment of the merits of the entire case.[10] On July 17, 2000, the trial court denied the motion.[11] On August 25, 2000, respondent filed a motion for reconsideration of the order.[12] On August 8, 2000, the trial court ordered the issuance of a writ of execution. On September 15, 2000, respondent JDC filed a petition for certiorari and prohibition with the Court of Appeals to annul: (1) the partial decision dated February 18, 2000; (2) the order dated July 17, 2000; and (3) the writ of execution dated August 8, 2000.[13] The petition was raffled to the Fifteenth Division of the appellate court and docketed as CA-G.R. SP No. 60770. On October 31, 2000, the Republic of the Philippines, through the Office of the Solicitor General, filed a petition for Annulment of Judgment with the Court of Appeals docketed as CA-G.R. SP No. 61703, and raffled to its Ninth Division.[14] It sought the nullification of the partial decision dated February 18, 2000 on the ground of lack of jurisdiction. It alleged that the service of summons made on BUTEL was not valid as it was not made upon the Solicitor General who is its statutory counsel and representative. 125

On August 29, 2001, the Fifteenth Division of the Court of Appeals promulgated its decision granting the petition of respondent JDC. The dispositive portion states: WHEREFORE, it is hereby resolved that the (sic): (a) the Partial Decision dated 18 February 2000; (b) the Order dated 17 July 2000; and (c) Writ of Execution dated 10 August 2000 in Civil Case No. TG-1904 entitled Heirs of Mamerto Manguiat, [e]t [a]l., Plaintiffs, versus J.A. Development Corporation, Bureau of Telecommunication[s], Juan Dela Cruz, and Pedro Dela Cruz, Defendants[,] are hereby ordered SET ASIDE, for having been issued with grave abuse of discretion. The public respondent is hereby ordered to follow strictly Sec. 3(c), Rule 9 of the 1997 Rules of Civil Procedure. SO ORDERED.[15] Petitioners moved for reconsideration of the decision but the motion was denied on November 16, 2001.[16] Hence, petitioners filed the instant petition for review on certiorari with this Court, docketed as G.R. No. 150768. On January 22, 2003, the Ninth Division of the Court of Appeals promulgated its decision granting the petition of the Republic of the Philippines and setting aside the judgment of the trial court in Civil Case No. TG-1904 for lack of jurisdiction.[17] Petitioners filed a motion for reconsideration but the motion was denied on September 29, 2003. They then filed a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure with this Court which was docketed as G.R. No. 160176. On May 25, 2005, this Court resolved to consolidate G.R. Nos. 150768 and 160176.

In G.R. No. 150768, petitioners contend that the Court of Appeals erred in setting aside the partial decision. They claim that the trial court was correct in rendering the partial judgment as the causes of action against the respondent, BUTEL, Juan dela Cruz, and Pedro dela Cruz were distinct and severable, involving distinct lots or interests owned separately by each of the defendants but joined in one complaint to avoid multiplicity of suits.[18] 126

On the other hand, respondent JDC contends that the partial decision was a pre-judgment of the entire case because its interests were inseparable from the respondent, BUTEL, Juan dela Cruz, and Pedro dela Cruz. JDC claims that its set of titles find their origin in the same title whose validity is assailed by the petitioners in their complaint. It argues that the Court of Appeals correctly relied on Section 3(c), Rule 9 of the 1997 Rules of Civil Procedure when BUTEL was declared in default,[19] viz.: SECTION 3. Default, declaration of. If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as the pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court. xxx (c) Effect of partial default. When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented. In G.R. No. 160176, petitioners assert that summons was validly served on the Republic of the Philippines considering that the sheriffs return states that it was duly served.They further aver that Section 13, Rule 14 of the 1997 Rules of Civil Procedure does not limit service of summons to the Solicitor General but allows service on other officers as the court may direct. They point out that the failure to inform the Solicitor General of Civil Case No. TG-1904 can only be attributed to the gross negligence of the BUTEL.[20] For its part, respondent Republic of the Philippines contends that summons must be served upon it through the Solicitor General and that service of summons on an employee of the BUTEL is insufficient compliance with Section 13, Rule 14 of the Rules of Court.[21] In both cases before us, the decisive issue is whether jurisdiction over the BUTEL was validly acquired by the Regional Trial Court through service of 127

summons upon its employee whose authority to do so does not appear from the sheriffs return. We rule in favor of respondent, BUTEL, Juan dela Cruz, and Pedro dela Cruz. Summons must be served upon a party for valid judgment to be rendered against him. This not only comports with basic procedural law but the constitutional postulate of due process. The disputable presumption that an official duty has been regularly performed will not apply where it is patent from the sheriffs or servers return that it is defective.[22] Rule 14, Section 13 of the 1997 Rules of Procedure provides: SECTION 13. Service upon public corporations. When the defendant is the Republic of the Philippines, service may be effected on the Solicitor General; in case of a province, city or municipality, or like public corporations, service may be effected on its executive head, or on such other officer or officers as the law or the court may direct.[23] It is clear under the Rules that where the defendant is the Republic of the Philippines, service of summons must be made on the Solicitor General. The BUTEL is an agency attached to the Department of Transportation and Communications created under E.O. No. 546 on July 23, 1979, and is in charge of providing telecommunication facilities, including telephone systems to government offices. It also provides its services to augment limited or inadequate existing similar private communication facilities. It extends its services to areas where no communication facilities exist yet; and assists the private sector engaged in telecommunication services by providing and maintaining backbone telecommunication network.[24] It is indisputably part of the Republic, and summons should have been served on the Solicitor General. We now turn to the question of whether summons was properly served according to the Rules of Court. Petitioners rely solely on the sheriffs return to prove that summons was properly served. We quote its contents, viz.: THIS IS TO CERTIFY that on the 19th day of May 1999, the undersigned caused the service of Summons and Complaint upon defendant J.A. Development Corporation at the address indicated in the summons, the same having been received by a certain Jacqueline delos Santos, a person employed thereat, of sufficient age and 128

discretion to receive such process, who signed on the lower portion of the Summons to acknowledge receipt thereof. Likewise, copy of the Summons and Complaint was served upon defendant Bureau of Telecommunications at the address indicated in the Summons, a copy of the same was received by a certain Cholito Anitola, a person employed thereat, who signed on the lower portion of the Summons to acknowledge receipt thereof. [25] (Emphasis supplied) It is incumbent upon the party alleging that summons was validly served to prove that all requirements were met in the service thereof. We find that this burden was not discharged by the petitioners. The records show that the sheriff served summons on an ordinary employee and not on the Solicitor General. Consequently, the trial court acquired no jurisdiction over BUTEL, and all proceedings therein are null and void. Further, we likewise affirm the decision of the Court of Appeals in CA-G.R. SP No. 60770, setting aside the partial decision of the trial court for having been issued with grave abuse of discretion. It ruled that when the trial court declared the BUTEL in default, allowed petitioners to present their evidence ex parte and rendered a partial decision holding that petitioners are the owners of the subject property, such was tantamount to prejudging the case against respondent JDC. The trial court ruled that petitioners validly acquired the subject parcel of land without any consideration of the evidence that respondent JDC may present to substantiate its claim of ownership over its aliquot part of the subject property. The trial court should have followed the Rules of Court in this situation. Sec. 3(c) of Rule 9 states that when a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented. Therefore, the answer filed by a defendant inure to the benefit of all the defendants, defaulted or not, and all of them share a common fate in the action. It is not within the authority of the trial court to divide the case before it by first hearing it ex parte as against the defaulted defendant and rendering a default judgment (in the instant case, partial decision) against it, then proceeding to hear the case, as to the non-defaulted defendant. This deprives the defaulted defendant of due process as it is denied the benefit of the answer and the evidence which could have been presented by its non-defaulted co-defendant.[26]

129

IN VIEW WHEREOF, the petitions are DENIED for lack of merit. The Decision and Resolution of the Fifteenth Division of the Court of Appeals in CAG.R. SP No. 60770, dated August 29, 2001 and November 16, 2001, respectively, are AFFIRMED. Likewise, the Decision and Resolution of the Ninth Division of the Court of Appeals in CA-G.R. SP No. 61703, dated January 22, 2003 and September 29, 2003, respectively, are AFFIRMED. The partial decision of the Regional Trial Court dated February 18, 2000, its order dated July 17, 2000, and the writ of execution dated August 8, 2000 are ANNULLED and SET ASIDE. SO ORDERED.

REYNATO S. PUNO Chief Justice

WE CONCUR:

ANTONIO T. CARPIO Associate Justice

130

RENATO C. CORONA ADOLFO S. AZCUNA Associate Justice Associate Justice

TERESITA J. LEONARDO-DE CASTRO Associate Justice

C E R T I FI CAT I O N Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO 131

Chief Justice

[1]

Rollo, G.R. No. 160176, p. 61. Id. at 60-61. [3] Ibid. [4] RTC Records, Civil Case No. TG-1904, p. 19. [5] Id. at 92-98. [6] Rollo, G.R. No. 160176, p. 213. [7] Rollo, G.R. No. 150768, p. 62. [8] Id. at 64. [9] Id. at 59, 277. [10] Rollo, G.R. No. 160176, p. 231. [11] Id. at 240. [12] Id. at 242. [13] Rollo, G.R. No. 150768, p. 249. [14] Supra note 7. [15] Rollo, G.R. No. 150768, p. 39. [16] Id. at 47. [17] Rollo, G.R. No. 160176, p. 44. [18] Rollo, G.R. No. 150768, pp. 9-19. [19] Id. at 93-137. [20] Rollo, G.R. No. 160176, pp. 3-30. [21] Id. at 99-111. [22] Laus v. Court of Appeals, G.R. No. 101256, March 8, 1993, 219 SCRA 688, 705; citing Venturanza v. Court of Appeals, No. L-77760, December 11, 1987, 156 SCRA 305, 313 (1987). [23] 1997 Rules of Civil Procedure, Rule 14, Section 13. [24] Sec. 13, E.O. No. 546. [25] Rollo, G.R. No. 160176, p. 61. [26] Regalado, Remedial Law Compendium, vol. 1, 7th revised ed., 1999, p. 177. [2]

132

Republic of the Philippines Supreme Court Manila

THIRD DIVISION HUTAMA-RSEA/SUPERMAX PHILS., J.V., Petitioner,

G.R. No. 173181 Present: CORONA, J., Chairperson, VELASCO, JR.,

- versus -

NACHURA, DEL CASTILLO,* and MENDOZA, JJ.

KCD BUILDERS CORPORATION, represented by its President CELSO C. DIOKNO,

Promulgated:

Respondent. March 3, 2010 x------------------------------------------------------------------------------------x

133

DECISION NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court, assailing the Decision[1] dated October 14, 2005 and the Resolution[2] 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 [HutamaRSEA/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 HUTAMAs 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 134

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 20day 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 appellees [KCDs] motion to declare defendant/s [Hutama and Yang] in default, the trial court noted the filing of appellants [Hutama and Yangs] 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 appellees [KCDs] 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, 135

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, appellees [KCDs] 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 subcontractor 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 attorneys 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.[3]

On February 20, 2003, the Regional Trial Court (RTC) rendered a decision [4] in favor of KCD Builders Corporation (KCD), viz.:

136

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 Yangs] 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 attorneys fees; and 3.)

Costs of the suit.

SO ORDERED.[5]

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,[6] 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.[7]

137

Unsatisfied, Hutama and Yang filed a motion for reconsideration; however, the same was denied in a Resolution[8] 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 PETITIONERS 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 138

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.[9]

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 139

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.[10] 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[11] 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 Hutamas counsel, nor any other representative of petitioner corporation, appeared. According to the counsel of Hutama, in his Memorandum, [12] 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.

140

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 latters 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.[13] 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 quasijudicial 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.[14] 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.[15] 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,[16] 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 Peoples Aircargo and Warehousing Co., Inc. v. CA,[17] 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. 141

Moreover, even if a certain contract or undertaking is outside the usual powers of the president, the corporations ratification of the contract or undertaking and the acceptance of benefits therefrom make the corporate presidents 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 petitioners 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.

ANTONIO EDUARDO B. NACHURA Associate Justice WE CONCUR:

RENATO C. CORONA 142

Associate Justice Chairperson

PRESBITERO J. VELASCO, JR.

MARIANO C. DEL CASTILLO

Associate Justice

Associate Justice

JOSE CATRAL MENDOZA Associate Justice

ATT E STAT I O N I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA Associate Justice Chairperson, Third Division

143

C E R T I FI CAT I O N Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson's Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO Chief Justice

*

Additional member in lieu of Associate Justice Diosdado M. Peralta per Special Order No. 824 dated February 12, 2010. [1] Penned by Associate Justice Josefina Guevara-Salonga, with Associate Justices Delilah Vidallon-Magtolis and Fernanda Lampas-Peralta, concurring; rollo, pp. 2835. [2] Rollo, pp. 36-37. [3] Id. at 29-31. [4] Penned by Judge Romeo F. Barza, RTC, Makati City, Branch 61; id. at 86-88. [5] Id. at 88. [6] Supra note 1. [7] Rollo, p. 35. [8] Supra note 2. [9] Rollo, pp. 173-174. [10] Halili v. Court of Appeals, G.R. No. 113539, March 12, 1998, 287 SCRA 465.

144

[11]

Rules of Court, Rule 9, Sec. 3 reads: Sec. 3. Default; declaration of. If the defending party fails to answer within the time allowed therefore, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court. (a) Effect of order of default. - A party in default shall be entitled to notice of subsequent proceedings but not to take part in the trial. (b) Relief from order of default. - A party declared in default may at any time after notice thereof and before judgment file a motion under oath to set aside the order of default upon proper showing that his failure to answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense. In such case, the order of default may be set aside on such terms and conditions as the judge may impose in the interest of justice. (c) Effect of partial default. - When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented. (d) Extent of relief to be awarded. - A judgment rendered against a party in default shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages. (e) Where no defaults allowed. - If the defending party in an action for annulment or declaration of nullity of marriage or for legal separation fails to answer, the court shall order the prosecuting attorney to investigate whether or not a collusion between the parties exists, and if there is no collusion, to intervene for the State in order to see to it that the evidence submitted is not fabricated. [12]

Rollo, pp. 164-178. Rules of Court, Rule 7, Sec. 4; LDP Marketing, Inc. v. Monter, G.R. No. 159653, January 25, 2006, 480 SCRA 137. [13]

[14]

Rules of Court, Rule 7, Sec. 5 (par. 1). 145

[15]

LDP Marketing, Inc. v. Monter, supra note 13. G.R. No. 160455, May 9, 2005, 458 SCRA 325. [17] G.R. No. 117847, October 7, 1998, 297 SCRA 170. [16]

146

THIRD DIVISION UNITED OVERSEAS BANK OF THE PHILIPPINES (formerly WESTMONT BANK),

G.R. No. 172651 Present:

Petitioner,

YNARES-SANTIAGO, Chairperson, AUSTRIA-MARTINEZ, CHICO-NAZARIO, - versus -

NACHURA, and REYES, JJ.

ROSEMOOR MINING AND DEVELOPMENT CORPORATION and DRA. LOURDES S. PASCUAL, Respondents.

Promulgated:

October 2, 2007

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

DECISION

CHICO-NAZARIO, J.:

147

Before this Court is a Petition for Review on Certiorari under Rule 45, of the Revised Rules of Court, filed by petitioner United Overseas Bank of the Philippines (Overseas Bank), seeking the reversal and the setting aside of the Decision,[1] dated 10 May 2005, and the Resolution,[2] dated 16 May 2006 of the Court of Appeals in CA-G.R. CV No. 78583. The appellate court, in its assailed Decision and Resolution, affirmed the Decision of the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 16, declaring, inter alia, as null and void the Real Estate Mortgage executed by Rosemoor Mining and Development Corporation (Rosemoor Mining) in favor of Overseas Bank, with the modification that the award of moral and exemplary damages and attorneys fees were deleted. Overseas Bank is a banking institution duly authorized to engage in banking business under Philippine laws.[3] Rosemoor Mining, on the other hand, is a domestic corporation, likewise duly authorized by Philippine laws to engage in mining operation.[4] In order to raise the necessary funds for the importation of machineries needed for its operations, Rosemoor Mining, through its President, Lourdes Pascual (Pascual), M.D., obtained a loan from Overseas Bank in the amount of P80,000,000.00. The loan was secured by two Real Estate Mortgage Contracts over six parcels of land situated at San Miguel, Bulacan, and registered under the name of Rosemoor Mining, and another two parcels of land situated at Gapan, Nueva Ecija, registered under Pascuals name.[5] The arrangement agreed to by the parties was for Overseas Bank to handle, on behalf of Rosemoor Mining, the amount of P50,000,000.00 to be used for the importation of machineries, while the loan balance of P30,000,000.00 will be released by Overseas Bank to Rosemoor Mining as a revolving credit line.[6] Pursuant to such agreement, Rosemoor Mining executed four irrevocable Letters of Credit in the total amount US$1,943,508.11 for the importation of machineries. To answer for the 20% advance payment of the total amount of the Letters of Credit, 148

Rosemoor Mining proceeded to draw against its P50,000,000.00 credit facility with the Overseas Bank specifically allocated for the acquisition of machineries and executed promissory notes in favor of the bank in the amount of P49,82,682.50. Rosemoor Mining also partially availed itself of the remaining P30,000,000.00 credit line for which it executed two promissory notes in Overseas Banks favor in the amounts of P10,000,000.00 and P3,500,000.00 Subsequently, Rosemoor Mining defaulted in the payment of its various drawings of Letters of Credit and promissory notes which prompted Overseas Bank to cause the extrajudicial foreclosure of the mortgaged Nueva Ecija properties on 22 May 1998, and the similarly mortgaged Bulacan properties on 10 August 1998, and the sale thereof by public auction. The Overseas Bank was the highest bidder on both occasions.[7] In order to prevent the impending consolidation of ownership of the mortgaged properties in the name of Overseas Bank, Rosemoor Mining instituted two separate complaints against the bank, the procedural incidents of which were litigated all the way up to this Court on four occasions, three of which were already decided with finality, leaving the instant petition for our resolution. One of the two cases was filed before the RTC of Manila and the other one before the RTC of Bulacan.

Manila Case Civil Case No. 98-90089 RTC of Manila, Branch 33

On 5 August 1998, Rosemoor Mining instituted an action for damages, accounting, release of the balance of the loan and machinery and annulment of foreclosure sales against Overseas Bank before the RTC of Manila, Branch 33.[8] 149

In its Complaint docketed as Civil Case No. 98-90089, Rosemoor Mining alleged that it obtained a loan from Overseas Bank in the amount of P80,000,000.00, secured by Real Estate Mortgages over parcels of land located in Bulacan and Nueva Ecija, but the proceeds of the loan did not redound to its benefit because it was allegedly mishandled by Overseas Bank causing serious financial injury to Rosemoor Mining. To further aggravate its injury, Rosemoor Mining claimed that Overseas Bank hastily foreclosed the mortgaged properties without previous notice to Rosemoor Mining.[9] On 10 August 1998, Overseas Bank filed an Urgent Motion to Dismiss the above complaint on the ground of improper venue since one of the prayers therein included the nullification of the foreclosure of real estate mortgages, a real action which must be lodged before the RTC of the place where the property or one of the properties is situated.Considering that none of the mortgaged properties was located in Manila, the filing of the Complaint before the RTC of Manila was, therefore, invalid. Consequently, Rosemoor Mining amended its Complaint deleting the prayer for nullification of foreclosure sale. Hence, Oveseas Banks Urgent Motion to Dismiss was denied by the RTC of Manila for lack of merit in an Omnibus Resolution dated 24 January 2000.[10] Subsequently, Overseas Bank filed its Answer with Counterclaim. After the pre-trial was conducted, trial on the merits ensued. Bulacan Case Civil Case No. 215-M-202 RTC of Malolos,Bulacan, Branch 16

On 11 March 2002, Rosemoor Mining filed another action denominated as Petition for Injunction with Damages[11] before the RTC of Malolos, Bulacan, docketed as Civil Case No. 215-M-02. The Complaint prayed for the annulment of Real Estate Mortgage foreclosures that Rosemoor Mining executed in favor of Overseas Bank on the ground of fraud.

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In order to prevent the threatened consolidation of titles over the mortgaged properties in Overseas Banks name, Rosemoor Mining moved for the issuance of a Writ of Preliminary Injunction. During the hearing for the issuance of the said writ, the Bulacan RTC found merit in Rosemoor Minings Motion and thus ordered that the scheduled consolidation of titles be temporarily enjoined pending the determination of the merits of the pending case.[12] On 26 March 2002, Overseas Bank, instead of filing an Answer, filed a Motion to Dismiss Civil Case No. 215-M-02 on the ground of forum-shopping in view of the pendency of the other case involving the same parties and the same issues before the RTC of Manila.[13] On 13 May 2002, the Bulacan RTC denied the Motion to Dismiss filed by Overseas Bank on the ground that the arguments raised therein were not applicable in the present case. The court a quo then directed Overseas Bank to file an Answer within five days from the receipt of the Order denying its Motion to Dismiss.[14] Again, instead of filing an Answer, Overseas Bank filed a Motion for Reconsideration[15] of the Bulacan RTC Order denying its Motion to Dismiss Civil Case No. 215-M-02. On the other hand, Rosemoor Mining filed a Motion to Declare Overseas Bank in Default[16] for failure to timely file an Answer. Acting on the Motions filed by the parties, the Bulacan RTC, in an Order dated 10 September 2002, denied the Motion for Reconsideration of Overseas Bank and granted the motion of Rosemoor Mining to declare the bank in default.[17] Aggrieved by the Bulacan RTC Orders, dated 13 May 2002 and 10 September 2002, which respectively denied Overseas Banks Motion to Dismiss Civil Case No. 215-M-02 and declared it in default, Overseas Bank assailed the same before the Court of Appeals on the ground that they were issued with grave abuse of discretion.[18] In its Petition for Certiorari docketed as CA-G.R. SP No. 73358, Overseas Bank, in addition to the issues of forum shopping and propriety of the default 151

order, likewise raised the issue of the venue for Civil Case No. 215-M-02 before the RTC of Bulacan. Overseas Bank argued that the venue of the action for nullification of the foreclosure sales of the mortgaged properties which were located in Bulacan and Nueva Ecija, were improperly lodged before the Bulacan RTC.[19] For lack of merit, the Court of Appeals in its Decision dated 20 June 2004, dismissed the Petition and declared that no forum-shopping existed in the filing of Civil Case No. 98-90089 before the RTC of Manila and Civil Case No. 215-M-02 before the RTC of Bulacan; and upholding the validity of the default order against Overseas Bank and the propriety of venue. Dissatisfied, Overseas Bank elevated the matter before this Court via a Petition for Review on Certiorari of the 20 June 2004 Decision of the Court of Appeals. The Petition was docketed as G.R. No. 159669.[20] In the meantime, just as the Overseas Bank moved for the dismissal of Civil Case No. 215-M-02 before the RTC of Bulacan on the ground of forum-shopping, Overseas Bank also filed a Motion to Dismiss Civil Case No. 98-90089 before the RTC of Manila on the same ground.[21] In an Order dated 23 October 2002, the Manila RTC denied the Motion to Dismiss the case before it for lack or merit. The subsequent Motion for Reconsideration filed by Overseas Bank was also denied by the lower court.[22] On Certiorari, the Court of Appeals, in its Decision dated 26 February 2004, affirmed the Order dated 23 October 2002 of the Manila RTC, for failure by the Overseas Bank to establish that the court a quo gravely erred in ruling that no forum shopping attended the actions filed by Rosemoor Mining. The Motion for Reconsideration filed by Overseas Bank was also denied by the appellate court in a Resolution dated 30 April 2004.[23]

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Undaunted, Overseas Bank again raised the issue before this Court in G.R. No. 163521, advancing that Rosemoor Mining was guilty of forum shopping in instituting both the Bulacan and the Manila Cases.[24] Both petitions, G.R. No. 163521 and G.R. No. 159669, were consolidated and jointly resolved by the Second Division of this Court, since the issues raised therein were interrelated.[25] On 12 March 2007, this Court put to rest the issue of forum-shopping by declaring that Rosemoor Mining is not guilty of forum shopping in filing Civil Case No. 275-M-02 before the Bulacan RTC, after it had instituted Civil Case No. 98-90089 before the Manila RTC. This Court ratiocinated that there was no identity of parties involved and the rights asserted in both actions were different from each other.[26] On the issue of improper venue, this Court ruled that the action to nullify the foreclosure sales of the Nueva Ecija properties, along with the Bulacan properties were properly instituted before the Bulacan RTC, thus: [T]he venue of real actions affecting properties found in different provinces is determined by the singularity or plurality of the transactions involving said parcels of land. Where said parcels are the object of one and the same transaction, the venue is in the court of any of the provinces wherein a parcel of land is situated.[27]

This Court further upheld the validity of the Order dated 13 May 2002, of the Bulacan RTC declaring Overseas Bank in default in Civil Case No. 215-M-02, ruling in this wise: The motion for reconsideration could not have tolled the running of the period to answer for two reasons. One, it was filed late, nine days after the due date of the answer. Two, it was a mere rehash 153

of the motion to dismiss; hence, pro forma in nature. Thus, the Malolos RTC did not err in declaring the Bank in default.[28]

In sum, this Court in G.R. No. 163521 and G.R. No. 159669, denied the Petitions for Review on Certiorari filed by Overseas Bank and affirmed the assailed Decisions, dated 26 February 2004 and 20 June 2003 of the Court of Appeals, in CA-G.R. No. 76934 and CA-G.R. No. 73358, respectively. In the interregnum, the Bulacan RTC, after its declaration that Overseas Bank was in default, proceeded with the ex-parte reception of evidence offered by Rosemoor Mining in Civil Case No. 215-M-02. On 24 October 2002, the RTC of Bulacan, rendered a Decision [29] in favor of Rosemoor Mining granting its prayers, among which was its declaration that the Real Estate Mortgage executed by Rosemoor Mining in favor of Overseas Bank is null and void. The dispositive portion of the Bulacan RTC Decision reads: WHEREFORE, premises considered, judgment is hereby rendered in favor of petitioners and against respondents, to wit: 1. The Writ of Preliminary Injunction issued by this Court on March 25, 2002, is hereby made permanent. 2. Declaring as null and void the Real Estate Mortgages executed by [Rosemoor Mining] in favor of [Overseas Bank] (Exhibits D and E) and the subsequent foreclosures of such mortgages; 3. Ordering the [Overseas Bank], to pay unto [Rosemoor Mining] as follows: 154

P2,000,000.00 as moral and exemplary damages unto [Pascual] (P1,000,000.00 as exemplary damages), P13,000,000.00 unto [Rosemoor Mining] as moral and exemplary damages (P3,000,000.00 as moral damages and P10,000,000.00 as exemplary damages), and P100,000.00 unto petitioner as attorneys fees, plus cost of litigation.[30]

On appeal, the Court of Appeals in a Decision dated 10 May 2005, in CAG.R. No. 78583 affirmed the Bulacan RTC Decision with the modification, that the award of moral and exemplary damages, as well as the attorneys fees, was deleted. The Motions for Reconsideration interposed by both Overseas Bank and Rosemoor Mining were denied by the appellate court in its Resolution dated 16 May 2006. Hence, this instant Petition for Review on Certiorari filed by Overseas Bank raising the following issues:

I. THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW WHEN IT AFFIRMED THE DECISION OF BRANCH 16 OF THE REGIONAL TRIAL COURT OF MALOLOS, 155

BULACAN DECLARING PETITIONER IN DEFAULT AND DEPRIVING IT OF DUE PROCESS.

II. THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW WHEN IT AFFIRMED THE DECISION OF THE SAID BRANCH OF THE REGIONAL TRIAL COURT OF MALOLOS, BULACAN ASSUMING JURISDICTION OVER REAL PROPERTIES IN NUEVA ECIJA AND ANNULLING FORECLOSURE OF REAL ESTATE MORTGAGES OVER THE SAME. III. THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW WHEN IT AFFIRMED THE DECISION OF THE SAID BRANCH OF THE REGIONAL TRIAL COURT OF MALOLOS, BULACAN MAKING PERMANENT THE INJUNCTION IT ISSUED DESPITE LACK OF EVIDENCE SHOWING COMPLIANCE WITH REQUISITES. IV. THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW WHEN IT AFFIRMED THE DECISION OF THE SAID BRANCH OF THE REGIONAL TRIAL COURT OF MALOLOS, BULACAN FINDING THAT THE REAL ESTATE MORTGAGES EXECUTED BY RESPONDENTS WERE FRAUDULENTLY SECURED AND WANTING IN CONSIDERATION.

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V. THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW WHEN IT AFFIRMED THE DECISION OF THE SAID BRANCH OF THE REGIONAL TRIAL COURT OF MALOLOS, BULACAN REFUSING TO DISMISS THE PETITION OUTRIGHT ON THE GROUND OF FORUM SHOPPING. VI. THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW WHEN IT AFFIRMED THE DECISION OF THE SAID BRANCH OF THE REGIONAL TRIAL COURT OF MALOLOS, BULACAN WHICH, ALTHOUGH A DEFAULT JUDGMENT, EXCEEDED JURISDICTION AS IT GRANTED A RELIEF NOT INCLUDED IN THE COMPLAINT. VI. THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW WHEN IT DENIED THE MOTION FOR RECONSIDERATION FILED BY PETITIONER.[31]

The first, second and fifth errors assigned by Overseas Bank, questioning the propriety of the default order and the venue of the action for nullification and assuming that Rosemoor Mining committed forum shopping, were already resolved by the Second Division of this Court in G.R. Nos. 159669 and 163521, promulgated on 12 March 2007.[32] As evidenced by the Entry of Judgment,[33] this consolidated Decision became final and executory on 14 September 2007. 157

Also, in the same cases, this Court already pronounced that Rosemoor Mining is not guilty of forum shopping by filing both the Bulacan and the Manila cases. In the same Decision, this Court affirmed the validity of the Bulacan RTC Order, dated 10 September 2002, declaring Overseas Bank in default in Civil Case No. 215-M-02. Finally, this Court also ruled that the action for nullification of the foreclosure sales of the mortgaged properties in Bulacan and Nueva Ecija were properly lodged before the Bulacan RTC.[34] Our jurisprudential pronouncements in G.R. Nos. 159669 and 163521, on the aforementioned issues are conclusive upon this Court in the instant petition and could no longer be overturned without transgressing the elementary principle of the law of the case. In Padillo v. Court of Appeals,[35] this Court had the occasion to explain this principle thus: Law of the case has been defined as the opinion delivered on a former appeal. More specifically, it means that whatever is once irrevocably established as the controlling legal rule or decision between the same parties in the same case continues to be the law of the case, whether correct on general principles or not, so long as the facts on which such decision was predicated continue to be the facts of the case before the court. As a general rule, a decision on a prior appeal of the same case is held to be the law of the case whether that question is right or wrong, the remedy of the party deeming himself aggrieved being to seek a rehearing. The concept of Law of the Case was further elucidated in the 1919 case of Zarate v. Director of Lands, thus: A well-known legal principle is that when an appellate court has once declared the law in a case, such declaration continues to be the law of that case even on a subsequent appeal. The rule made by an 158

appellate court, while it may be reversed in other cases, cannot be departed from in subsequent proceedings in the same case. The Law of the Case, as applied to a former decision of an appellate court, merely expresses the practice of the courts in refusing to reopen what has been decided. Such a rule is necessary to enable an appellate court to perform its duties satisfactorily and efficiently, which would be impossible if a question, once considered and decided by it, were to be litigated anew in the same case upon any and every subsequent appeal. Again, the rule is necessary as a matter of policy to end litigation. There would be no end to a suit if every obstinate litigant could, by repeated appeals, compel a court to listen to criticisms on their opinions, or speculate of chances from changes in its members. [36]

Applying the above-stated rule in the case at bar, Overseas Bank, therefore, is now barred from once again raising before this Court the issues on forum shopping, the default order and venue of Civil Case No. 215-M-02, after the intricacies involved therein were already adjudicated and resolved fully and with finality in G.R. Nos. 159669 and 163521. Verily, the Overseas Bank cannot feign that it was denied its day in court when it was precluded from presenting its evidence during the hearing by the default order of the Bulacan RTC in Civil Case No. 215-M-02. It bears to stress that Overseas Bank, in several instances, was able to raise before this Court the issue of the validity of the interlocutory orders issued by the courts a quo and, likewise, on various occasions, moved for the dismissal of both the Bulacan and Manila cases, instead of proving the merits of its cases before the lower courts. Overseas Bank, therefore, cannot pound on due process and substantial justice, when it is evident in the records that it had, countless times, used, if not abused, such procedural due process for its end and thereby prolonged the disposition of the cases involved. In the same breadth, Overseas Bank cannot contend that it was denied its day in court when it was declared in default for such was the legal and logical consequence of its obstinate refusal to file an Answer despite the Bulacan RTCs directive.

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Undeniably, when Overseas Bank deliberately opted to file a Motion for Reconsideration of the Order dated 13 May 2002, of the Bulacan RTC denying its Motion to Dismiss, instead of filing an Answer, it assumed the risk of losing its standing in court and it cannot simply excuse itself from the adverse consequence of its chosen procedural course. Overseas Bank further argued that Rosemoor Mining is not entitled to Injunction for the evidence it presented before the RTC of Bulacan is insufficient to warrant the issuance of the same. Hence, the Decision of the Bulacan RTC in Civil Case No. 215-M-02, permanently enjoining it from foreclosing the mortgage properties, is without basis and therefore void. Again, we do not agree. In controverting the basis relied upon by the Bulacan RTC in issuing the Injunction, Overseas Bank, in effect, wants this Court to calibrate the evidence presented before the lower court all over again, a task which we cannot do in consonance with the well-settled rule that this Court is not a trier of facts.[37] In Cagayan de Oro Landless Residents Association, Inc. v. Court of Appeals, this Court, in explaining the concept of injunction, underscored that the issuance of the writ of injunction is vested in the discretion of the trial court, thus: [38]

As an extraordinary remedy, injunction is calculated to prevent or maintain the status quo of things and is generally availed of to prevent actual or threatened acts, until the merits of the case can be heard. As such, injunction is accepted as the strong arm of equity or the transcendent remedy to be used cautiously, as it affects the respective rights of the parties, and only upon the full conviction on the part of the court of its extreme necessity. Its issuance rests entirely within the discretion of the court taking cognizance of the case and is generally not interfered with except in cases of manifest abuse.

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Even Justice Moran, in his renowned Commentaries,[39] was emphatic in vesting in the court deciding the case the discretion to grant or deny the injunction, opining that: Except in cases wherein the statute gives an absolute right to an injunction, this remedy, whether temporary or permanent, cannot, as a general rule, be sought as a matter of right, but its granting or refusal rest in the sound discretion of the court under the circumstances and the facts of the particular case.

Upon perusal of the records, it was not shown that the granting of the prayer for Injunction was attended with manifest abuse since the Bulacan RTC found sufficient basis for its issuance based on its intelligible appreciation of the evidence presented by Rosemoor Mining. The mere reliance of the Bulacan RTC on the testimony of Rosemoor Minings lone witness does not amount to grave abuse of discretion. It must be recalled that Overseas Bank was given the opportunity to establish its right over the mortgaged properties during the hearing for the issuance of the writ of preliminary injunction, only that, the court a quo gave more evidentiary weight to Rosemoor Minings claim. Giving credence to the evidence offered by one party over that of the other is an exercise of the courts sound judgment and is not equivalent to grave abuse of discretion. For the same reason, this Court cannot find merit in the contention of Overseas Bank that the Court of Appeals erred in affirming the Decision of the Bulacan RTC in Civil Case No. 215-M-02 annulling the mortgage contracts as well as the subsequent foreclosures pursuant thereto. Worth noting is that in voiding the mortgage contracts and foreclosure sales, the court a quo stressed the want of consideration for the Real Estate Mortgages and the fraud employed by Overseas Bank in securing the said contracts, to wit:

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Thus, on the basis of the foregoing uncontroverted evidence and established facts, this Court finds that the mortgages (Exhibits D and E) executed by the petitioners are null and void and declares them to be so having been fraudulently secured and for want of consideration and that the subsequent foreclosures thereof were also null and void. Moreover, as established by petitioners, the respondent bank, thru its officers, in apparent negligence and bad faith, bungled and mishandled the loan account and letters of credits transactions covering the machineries to be imported such that Rosemoor did not receive any of such machineries. Such manipulations effectively undermined the petitioner corporations credit standing before the financial institution, crippled its operations and blemished its reputation.[40]

The above pronouncement of the Bulacan RTC was affirmed by the Court of Appeals, pursuant to the well-entrenched principle that the factual findings of the trial courts should be accorded great weight and are generally not disturbed on appeal. We are equally bound by this principle. Moreover, in cases where the factual findings of the trial court are affirmed by the Court of Appeals, as in the case at bar, this rule finds greater application. In Professional Academic Plans, Inc. v. Crisostomo,[41] this Court declared: Factual issues are beyond the province of the Supreme Court in a petition for review, for it is not the Courts function to weigh the evidence all over again. While the Court may, in exceptional cases, resolve factual issues, the petitioners herein failed to establish any such exceptional circumstances. Moreover, it is doctrinal that findings of facts of the CA upholding those of the trial court are binding upon the Supreme Court.

Thus, we find no compelling reason to deviate from the factual findings of the trial court as sustained by the appellate court. 162

Finally, Overseas Bank averred that the Bulacan RTC exceeded its jurisdiction in granting a relief not prayed for by Rosemoor Mining in its complaint. In its prayer, Rosemoor Mining asked for the nullification of the foreclosure sales of the mortgaged properties but the Bulacan RTC declared void, not only the foreclosure sales but the Real Estate Mortgages over the said properties as well. In order to resolve the final issue posed by Overseas Bank, attention must be called on the pertinent provisions of Rule 9 of the Revised Rules of Court, on the declaration of default which provide: SEC. 3. Default; declaration of. If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court. (a) Effect of order of default. A party in default shall be entitled to notice of subsequent proceedings but not to take part in the trial. (b) Relief from order of default. A party declared in default may at any time after notice thereof and before judgment file a motion under oath to set aside the order of default upon proper showing that his failure to answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense. In such case, the order of default may be set aside on such terms and conditions as the judge may impose in the interest of justice.

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(c) Effect of partial default. When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented. (d) Extent of relief to be awarded. A judgment rendered against a party in default shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages. (e) Where no defaults allowed. If the defending party in an action for annulment or declaration of nullity of marriage or for legal separation fails to answer, the court shall order the prosecuting attorney to investigate whether or nor a collusion between the parties exists, and if there is no collusion, to intervene for the State in order to see to it that the evidence submitted is not fabricated. (Emphasis supplied.)

In its Petition, Rosemoor Mining prayed for the following reliefs, to quote: WHEREFORE, premises considered, it must be respectfully prayed that this Honorable Court 1.

Issue ex-parte a temporary restraining order before the matter could be heard on notice to restrain and enjoin respondent [Overseas Bank] from proceeding with its threatened consolidation of titles over the subject properties of petitioner [Rosemoor Mining] in San Miguel, Bulacan covered by TCT Nos. 42132; 42133; 42134; 42135; 42136 and RT 34569 (T-222448) on 164

March 16, 2002 or at any time thereafter; that the respondent Register of Deeds of the Province of Bulacan be enjoined and restrained from registering any document(s) submitted and/or to be submitted by respondent [Overseas Bank] consolidating its titles over the above-named properties of [Rosemoor Mining] in San Miguel, Bulacan; and likewise, that the Register of Deeds of the Province of Bulacan be restrained and enjoined from cancelling the titles of [Rosemoor Mining] over its properties, namely, TCT Nos. TCT Nos. 42132; 42133; 42134; 42135; 42136 and RT 34569 (T-222448); 2.

That after due notice, a writ of preliminary injunction be issued upon the posting of a bond in such amount as may be fixed by this Court;

3.

That after due hearing and trial, judgment be rendered in favor of petitioners and against [Overseas Bank] a.

Permanently enjoining respondent bank from proceeding from the consolidation of its titles of the subject properties of Rosemoor covered by TCT Nos. 42132; 42133; 42134; 42135; 42136 and RT 34569 (T222448) and permanently restraining respondent Register of Deeds of Bulacan from from registering any document(s) submitted and/or to be submitted by [Overseas Bank] consolidating its titles over the abovenamed properties of petitioner [Rosemoor Mining] in San Miguel, Bulacan; and likewise, that the Register of Deeds of the Province of Bulacan be restrained and enjoined from cancelling the titles of [Rosemoor Mining] over its properties, namely, TCT Nos. TCT Nos. 42132; 42133; 42134; 42135; 42136 and RT 34569 (T-222448);

b.

Declaring the foreclosures of real estate mortgages on the properties of petitioners Rosemoor and Dra. Pascual to be null and void;

c.

Recognizing the ownership of the petitioners in fee simple over their properties above-mentioned; 165

d.

Awarding to petitioners the damages prayed for, including attorneys fees and costs and expenses of litigation.

Petitioners pray for such other reliefs and remedies as may be deemed just and equitable in the premises.[42] (Emphases supplied.)

However, upon promulgation of the Decision, the Bulacan RTC, declared as null and void the Real Estate Mortgages, not only the foreclosures of such mortgages. The pertinent portion of the Bulacan RTC Decision thus reads: Declaring as null and void the Real Estate Mortgages executed by [Rosemoor Mining] in favor of [Overseas Bank] (Exhibits D and E) and the subsequent foreclosures of such mortgages.[43]

Based on the foregoing, Overseas Bank now argues that the RTC of Bulacan exceeded its jurisdiction in granting a relief not prayed for in the Complaint in violation of the clear and categorical mandate of the Revised Rules of Court, proscribing it from awarding reliefs in excess of or different from that prayed for in the complaint. We are not persuaded. While it is true that Rosemoor Mining did not specifically ask for the annulment of the Real Estate Mortgages, upon scrutiny of its Complaint however, it is apparent that the allegations propounded by Rosemoor Mining go into the very validity of the mortgage contracts. The allegation that Overseas Bank committed fraudulent acts in the constitution of the Real Estate Mortgages was actually an attack on the mortgage contracts, and not just on the foreclosures of these

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mortgages. The nullity of the foreclosures, therefore, was merely a necessary consequence of the invalidity of the mortgages. Thus, to void the foreclosure sales and not the mortgage contracts would only result in absurdity when it is palpable from the body of the Complaint in Civil Case No. 215-M-02 that Rosemoor Minings challenge of the foreclosure sales was rooted in the defective mortgage contracts. If at all, Rosemoor Minings failure to particularly pray for the nullification of the Real Estate Mortgages was merely an oversight on its part that is deemed cured when it asked from the court a quo for such other reliefs and remedies as may be deemed just and equitable in the premises.[44] Moreover, the general prayer of Rosemoor Mining, couched in the phrase, such other reliefs and remedies as may be deemed just and equitable in the premises, should be interpreted to include the prayer for the nullification of the mortgage contracts since this is already evident from the allegations contained in the body of its Complaint though it was not specifically pleaded in the prayer. In a cantena of cases,[45] this Court ruled that the general prayer is broad enough to justify extension of a remedy different from or together with the specific remedy sought. Even without the prayer for a specific remedy, proper relief may be granted by the court if the facts alleged in the complaint and the evidence introduced so warrant.[46]The prayer in the complaint for other reliefs equitable and just in the premises justifies the grant of a relief not otherwise specifically prayed for. WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals Decision dated 10 May 2005 and its Resolution dated 16 May 2006 in CA-G.R. CV No. 78583 are hereby AFFIRMED. Costs against the petitioner. SO ORDERED.

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MINITA V. CHICO-NAZARIO Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO Associate Justice Chairperson

MA. ALICIA AUSTRIA-MARTINEZ ANTONIO EDUARDO B. NACHURA Associate Justice Associate Justice

RUBEN T. REYES Associate Justice

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ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO Associate Justice Chairperson, Third Division

CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. 169

REYNATO S. PUNO Chief Justice

[1]

Penned by Associate Justice Roberto A. Barrios with Associate Justices Amelita G. Tolentino and Vicente S.E. Veloso, concurring. Rollo, pp. 64-75. [2] Id. at 78-80. [3] Id. at 12. [4] Id. [5] Id. at 97-105. [6] Id. [7] Id. [8] Id. at 81-96. [9] Id. [10] United Oversesas Bank v. Judge Ros, G.R. No. 171532, 7 August 2007. [11] Rollo, pp. 97-105. [12] Id. at 145-146. [13] Rollo of G.R. No. 159669, pp. 248-264. [14] Rollo, pp. 124-125. [15] Id. at 126-132. [16] Id. at 138-140. [17] Id. at 142-145. [18] Id. at 69. [19] Id. [20] Id. at 270. [21] Id. at 264. [22] Id. at 264-265. [23] Id. [24] Id. at 265. [25] Id. at 270. 170

[26]

Id. Id. at 274. [28] Id. at 277. [29] Id. at 145-150. [30] Id. at 150. [31] Rollo, pp. 388-389 [32] Id. at 259-282. [33] Rollo of G.R. Nos. 159669 and 163521. [34] Id. [35] Radio Communications of the Philippines, Inc. v. Court of Appeals, G.R. No. 139762, 26 April 2006, 488 SCRA 306. [27]

[36]

Id. at 311-312. New City Builders, Inc. v. National Labor Relations Commission, G.R. No. 149281, 15 June 2005, 460 SCRA 220, 225-229. [38] 324 Phil. 466, 477 (1996). [39] Moran, Comments on the Rules of Court, Vol. III, 1980, pp. 66-67, as cited in Annotation, Injunction by Alicia Gonzales-Decano, 446 SCRA 127. [40] Rollo, p. 150. [41] G.R. No. 148599, 14 March 2005, 453 SCRA 342, 353-354. [42] Rollo, pp. 103-104. [43] Id. at 150. [44] Arroyo, Jr. v. Taduran, 466 Phil. 173, 180 (2004). [37]

[45]

BPI Family Bank v. Buenaventura, G.R. Nos. 148196 & 148259, 30 September 2005, 471 SCRA 431; Morales v. Court of Appeals, G.R. No. 112140, 23 June 2005, 461 SCRA 34. [46] Eugenio, Sr. v. Velez, G.R. No. 85140, 17 May 1990, 185 SCRA 425, 432-433.

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https://lawyerphilippines.org/2016/03/18/partial-default-in-a-case-with-multipledefendants/

Partial default in a case with multiple defendants Posted on March 18, 2016April 15, 2017 by Lawyers in the Philippines What if, in a case filed against multiple defendants, one defendant does not file his Answer but his co-defendants file theirs? Can a defendant who failed to file his own Answer be declared in default even if Answers were filed by his co-defendants? Yes. The applicable rule is Section 3 of Rule 9 of the Rules of Court. At the outset, it must be seen that the rules on Default in Section 3 of Rule 9 provide for two distinct and discrete stages of action. The first stage of action pertains to the finding that a defendant is in default and the consequent declaration by the Court. With regard to this stage, the first paragraph of Section 3, Rule 9, provides thus: “Sec. 3. Default; declaration of. — If the defending party fails to answer within the time allowed therefore, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default.” The first stage thus concludes with the declaration that a defending party is in default. The second stage of action pertains to the conduct of the case after the declaration in default. The ordinary consequence upon a defendant after he is found in default is provided in paragraph (a) of Section 3, Rule 9, thus: “(a) Effect of order of default. – A party in default is entitled to notice of subsequent proceedings, but not to take part in the trial.” There is a critical distinction between the first stage of action, a defendant’s being declared in default, and the second stage of action, the consequences thereof, i.e. the conduct of the case after such a declaration. While both pertain to default, they are not identical. 172

It is clear that paragraph (c) of Section 3, Rule 9 also refers to the second stage. “(c) Effect of partial default. — When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented.” Paragraph (c) only provides for the manner in which the trial will be conducted in a case where a defendant filed no Answer although his co-defendants did. The paragraph provides only that the case will be tried upon the Answers filed by the responsive defendants. Nowhere does it state that the Rule on default does not apply. It is not an exception to a defendant being declared in default. The defendant who does not file an Answer is to be declared in default. This is the Rule and paragraph (c) of Section 3, Rule 9 is no exception to it. Said provision, in fact, recognizes a situation where one defendant among several is in default. This is clear from paragraph (c)’s own heading, “Effect of partial default”. That very heading recognizes that default exists within the set. This recognition can only be upon the Court’s declaration of default pursuant to the first paragraph of Section 3 of Rule 9. Paragraph (c) of Section 3, Rule 9 thus provides for the manner of the trial’s conduct in a situation where one party among several, but not all, were declared in default pursuant to the first paragraph of Section 3, Rule 9. It contemplates the existence of default in one of the defendants. It is, therefore, not an exception to the rule on default, but a consequence. A contrary interpretation would allow a defendant in willful default to nevertheless present evidence contrary to the Rules’ explicit provision. This would render in vain the provisions for the Rule on Default and defeat the Rules of Court’s objective of securing a just, speedy and inexpensive disposition of every action and proceeding.[1] Jurisprudence is in full support of this view. The Supreme Court has ruled upon Section 3 (c) of Rule 9 in the case of PINLAC, ET AL. vs. COURT OF APPEALS, ET AL., G.R. No. 91486, 19 January 2001. There the Supreme Court affirmed that when a party does not file an Answer, although his co-defendants do so, default is availing against the former. The Supreme Court ruled: “(c) Effect of partial default. — When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer 173

and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented.” In fact, the court a quo enumerated in the Partial Decision those who filed responsive pleadings. Considering that petitioners in their complaint stated a common cause of action against all the named respondents, the court a quo should have heard the case as against all respondents, the defaulted respondents included. However, the trial court, unmindful of the above-quoted rule, proceeded to receive evidence ex parte only against the defaulted respondents. The trial court’s disposition is not only violative of the rules but also a clear negation of the defaulted respondents’ limited rights. Whatever defense and evidence the non-defaulted respondents may present which would be applicable to the situation of the defaulted respondents should inure to the benefit of the latter. The nullification of OCT 614 adversely affected the answering respondents for they all share the same mother title. In effect, the court a quo pre-judged the case even against the answering respondents, for how could OCT 614, the mother title, be valid for one set of respondents and null and void for the other respondents? In fine, the Partial Decision was procedurally flawed. [Boldfacing supplied] Pinlac vs. Court of Appeals affirms that a declaration of partial default is in order in these cicumstances. For, under Pinlac, that a Complaint states a common cause of action against all the named defendants means only that the Honorable Court should hear the case and receive evidence against all defendants, the defaulted defendant included. But, as Pinlac vs. Court of Appeals makes clear, Section 3 (c) of Rule 9 does not mean that a delinquent defendant — whose co-defendants did file their Answers — cannot be declared in default. He still should be declared in default for having failed to file an Answer within the time given by the Rules. He does remain entitled to the limited rights of a defendant in default, but to no more than those. Although such defenses and evidence as the non-defaulted co-defendant may present which would be applicable to the situation of the defaulted defendant could inure to his benefit, being in default, the latter should be so declared. And so the defaulted defendant shall remain entitled to notice of subsequent proceedings, but he cannot take part in the trial.[2] The Supreme Court again explained in depth the governing rules in a situation of partial default under Section 3 (c) of Rule 9 in the case of REMIGIA GRAGEDA 174

ET AL., vs. HON. NIMFA C. GOMEZ, ET AL., G.R. No. 169536, 21 September 2007: Stated differently, in all instances where a common cause of action is alleged against several defendants, some of whom answer and the others do not, the latter or those in default acquire a vested right not only to own the defense interposed in the answer of their co-defendant or co-defendants not in default but also to expect a result of the litigation totally common with them in kind and in amount whether favorable or unfavorable. The substantive unity of the plaintiffs cause against all the defendants is carried through to its adjective phase as ineluctably demanded by the homogeneity and indivisibility of justice itself. Indeed, since the singleness of the cause of action also inevitably implies that all the defendants are indispensable parties, the court’s power to act is integral and cannot be split such that it cannot relieve any of them and at the same time render judgment against the rest. Considering the tenor of the section in question, it is to be assumed that when any defendant allows himself to be declared in default knowing that his co-defendant has already answered, he does so trusting in the assurance implicit in the rule that his default is in essence a mere formality that deprives him of no more than the right to take part in the trial and that the court would deem anything done by or for the answering defendant as done by or for him. The presumption is that otherwise he would not have seen to it that he would not be in default. Of course, he has to suffer the consequences of whatever the answering defendant may do or fail to do, regardless of possible adverse consequences, but if the complaint has to be dismissed in so far as the answering defendant is concerned, it becomes his inalienable right that the same be dismissed also as to him. It does not matter that the dismissal is upon the evidence presented by the plaintiff or upon the latter’s mere desistance, for in both contingencies, the lack of sufficient legal basis must be the cause. x x x. The primary question which a Motion To Declare Defendant In Default hinges on is whether or not the defendant failed to Answer within the time given him. The question of whether or not his co-defendant had filed an Answer is relevant only as to the second stage, the manner of how trial will subsequently be conducted. It has no bearing on the first stage, the declaration of the delinquent party’s default. The application of the Rules in such a case are therefore clear. The Rules on partial default are as they were laid out in the same case of Grageda vs. Hon. Gomez:

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The effects, therefore, of a failure to file a separate Answer when other codefendants (against whom a common cause of action was alleged) had already filed theirs, are limited to the following: 1. While the non-answering defendants may be declared in default, the court would still try the case against them on the assumption that they are deemed to have adopted the Answer of the answering defendants; and 2. If declared in default, the defaulting party is deprived of no more than the right to take part in the trial. Consequently, the result of the litigation, whether favorable or unfavorable, shall affect and bind the defaulting party and the answering defendant with equal force and effect.

[1]

Section 6, Rule 1 of the Rules of Court.

[2]

Section 3 (a), Rule 9 of the Rules of Court.

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FIRST DIVISION

ERLINDA GAJUDO, FERNANDO

G.R. No. 151098

GAJUDO, JR., ESTELITA GAJUDO, BALTAZAR GAJUDO and DANILO

Present:

ARAHAN CHUA, Petitioners, Panganiban, CJ, Chairman, Ynares-Santiago, - versus -

Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ Promulgated:

TRADERS ROYAL BANK,* Respondent. March 21, 2006 x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - -- x

DECISION



The Court of Appeals was included in the Petition as a respondent. However, the CA was omitted by this Court from the title of the case, because it need not be impleaded in petitions for review, under Section 4 of Rule 45 of the Rules of Court.

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PANGANIBAN, CJ:

T

he mere fact that a defendant is declared in default does not automatically result in the grant of the prayers of the plaintiff. To win, the latter must still present the same quantum of evidence that would be required if the defendant were still present. A party that defaults is not deprived of its rights, except the right to be heard and to present evidence to the trial court. If the evidence presented does not support a judgment for the plaintiff, the complaint should be dismissed, even if the defendant may not have been heard or allowed to present any countervailing evidence. The Case Before us is a Petition for Review* under Rule 45 of the Rules of Court, assailing the June 29, 2001 Decision* and December 6, 2001 Resolution* of the Court of Appeals (CA) in CA-GR CV No. 43889. The CA disposed as follows: UPON THE VIEW WE TAKE OF THIS CASE, THUS, the partial judgment appealed from, must be, as it hereby is, VACATED and SET ASIDE, and another one entered DISMISSING the complaint at bench. Without costs.*

 

 

Rollo, pp. 9-27. Penned by Justice Renato C. Dacudao and concurred in by Justices Romeo J. Callejo Sr. (then chairperson of the Special Thirteenth Division and now a member of this Court) and Alicia L. Santos (acting member). Id., pp. 29-39. Id., p. 41. CA Decision, p. 11; id., p. 39.

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The assailed Resolution denied petitioners Motion for Reconsideration* for lack of merit. The Facts The CA narrated the facts as follows: [Petitioners] filed a complaint before the Regional Trial Court of Quezon City, Branch 90, against [respondent] Traders Royal Bank, the City Sheriff of Quezon City and the Register of Deeds of Quezon City. Docketed thereat as Civil Case No. Q-41203, the complaint sought the annulment of the extra-judicial foreclosure and auction sale made by [the] city sheriff of Quezon City of a parcel of land covered by TCT No. 16711 of the Register of Deeds of Quezon City, the conventional redemption thereof, and prayed for damages and the issuance of a writ of preliminary injunction. The complaint alleged that in mid 1977[, Petitioner] Danilo Chua obtained a loan from [respondent] bank in the amount of P75,000.00 secured by a real estate mortgage over a parcel of land covered by TCT No. 16711, and owned in common by the [petitioners]; that when the loan was not paid, [respondent] bank commenced extra-judicial foreclosure proceedings on the property; that the auction sale of the property was set on 10 June 1981, but was reset to 31 August 1981, on [Petitioner Chuas] request, which, however, was made without the knowledge and conformity of the other [petitioners]; that on the re-scheduled auction sale, [the] Sheriff of Quezon City sold the property to the [respondent] bank, the highest bidder therein, for the sum of P24,911.30; that the auction sale was tainted with irregularity because, amongst others, the bid price was shockingly or unconscionably, low; that the other [petitioners] failed to redeem the property due to their lack of knowledge of their right of redemption, and want of sufficient education; that, although the period of redemption had long expired, [Petitioner] Chua offered to buy back, and [respondent] bank also agreed to sell back, the 

CA rollo, pp. 145-152.

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foreclosed property, on the understanding that Chua would pay [respondent] bank the amount of P40,135.53, representing the sum that the bank paid at the auction sale, plus interest; that [Petitioner] Chua made an initial payment thereon in the amount of P4,000.00, covered by Interbank Check No. 09173938, dated 16 February 1984, duly receipted by [respondent] bank; that, in a sudden change of position, [respondent] bank wrote Chua, on 20 February 1984, asking that he could repurchase the property, but based on the current market value thereof; and that sometime later, or on 22 March 1984, [respondent] bank wrote Chua anew, requiring him to tender a new offer to counter the offer made thereon by another buyer. Traversing [petitioners] complaint, [respondent] bank, upon 05 July 1984, filed its answer with counterclaim, thereunder asserting that the foreclosure sale of the mortgaged property was done in accordance with law; and that the bid price was neither unconscionable, nor shockingly low; that [petitioners] slept on their rights when they failed to redeem the property within the one year statutory period; and that [respondent] bank, in offering to sell the property to [Petitioner] Chua on the basis of its current market price, was acting conformably with law, and with legitimate banking practice and regulations. Pre-trial having been concluded, the parties entered upon trial, which dragged/lengthened to several months due to postponements. Upon 11 June 1988, however, a big conflagration hit the City Hall of Quezon City, which destroyed, amongst other things, the records of the case. After the records were reconstituted, [petitioners] discovered that the foreclosed property was sold by [respondent] bank to the Ceroferr Realty Corporation, and that the notice of lis pendens annotated on the certificate of title of the foreclosed property, had already been cancelled. Accordingly, [petitioners], with leave of court, amended their complaint, but the Trial Court dismissed the case without prejudice due to [petitioners] failure to pay additional filing fees.

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So, upon 11 June 1990, [petitioners] re-filed the complaint with the same Court, whereat it was docketed as Civil Case No. 90-5749, and assigned to Branch 98: the amended complaint substantially reproduced the allegations of the original complaint. But [petitioners] this time impleaded as additional defendants the Ceroferr Realty Corporation and/or Cesar Roque, and Lorna Roque, and included an additional cause of action, to wit: that said new defendants conspired with [respondent] bank in [canceling] the notice of lis pendens by falsifying a letter sent to and filed with the office of the Register of Deeds of Quezon City, purportedly for the cancellation of said notice. Summons was served on [respondent] bank on 26 September 1990, per Sheriffs Return dated 08 October 1990. Supposing that all the defendants had filed their answer, [petitioners] filed, on 23 October 1991, a motion to set case for pre-trial, which motion was, however, denied by the Trial Court in its Order of 25 October 1991, on the ground that [respondent] bank has not yet filed its answer. On 13 November 1991[, petitioners] filed a motion for reconsideration, thereunder alleging that they received by registered mail, on 19 October 1990, a copy of [respondent] banks answer with counterclaim, dated 04 October 1990, which copy was attached to the motion. In its Order of 14 November 1991, the trial Court denied for lack of merit, the motion for reconsideration, therein holding that the answer with counterclaim filed by [respondent] bank referred to another civil case pending before Branch 90 of the same Court. For this reason, [petitioners] filed on 02 December 1991 a motion to declare [respondent] bank in default, thereunder alleging that no answer has been filed despite the service of summons on it on 26 September 1990. On 13 December 1991, the Trial Court declared the motion submitted for resolution upon submission by [petitioners] of proof of service of the motion on [respondent] bank.

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Thus, on 16 January 1992, upon proof that [petitioners] had indeed served [respondent] bank with a copy of said motion, the Trial Court issued an Order of default against [respondent] bank. Upon 01 December 1992, on [petitioners] motion, they were by the Court allowed to present evidence ex parte on 07 January 1993, insofar as [respondent] bank was concerned. Thereafter, or on 08 February 1993, the Trial Court rendered the new questioned partial decision.* Aggrieved, [respondent] bank filed a motion to set aside [the] partial decision by default against Traders Royal Bank and admit [respondent] Traders Royal Banks x x x Answer with counterclaim: thereunder it averred, amongst others, that the erroneous filing of said answer was due to an honest mistake of the typist and inadvertence of its counsel. The [trial court] thumbed down the motion in its Order of 26 July 1993.*

Respondent bank appealed the Partial Decision* to the CA. During the pendency of that appeal, Ceroferr Realty Corporation and/or Cesar and/or Lorna Roque filed a Manifestation with Motion* asking the CA to discharge them as parties, because the case against them had already been dismissed on the basis of their Compromise 

The dispositive portion of the Partial Decision reads as follows:

The claims of the [petitioners] as against [Respondent] Traders Royal Bank having been established and proved by evidence, judgment is hereby rendered ordering [Respondent] Traders Royal Bank to pay [petitioners] actual damage or the market value of the land in question in the sum of P500,000.00; the sum of P70,000.00 as compensatory damages; the sum of P200,000.00 to the heirs of [Petitioner] Danilo Chua; and attorneys fees in the sum of P30,000.00. (Partial Decision dated February 8, 1993, p. 2; records, p. 173).  CA Decision, pp. 2-5; rollo, pp. 30-33.  Records, pp. 172-173.  CA rollo, pp. 37-41.

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Agreement* with petitioners. On May 14, 1996, the CA issued a Resolution* granting Ceroferr et al.s Manifestation with Motion to discharge movants as parties to the appeal. The Court, though, deferred resolution of the matters raised in the Comment* of respondent bank. The latter contended that the Partial Decision had been novated by the Compromise Agreement, whose effect of res judicata had rendered that Decision functus officio. Ruling of the Court of Appeals The CA ruled in favor of respondent bank. Deemed, however, to have rested on shaky ground was the latters Motion to Set Aside Partial Decision by Default Against Traders Royal Bank and Admit Defendant Traders Royal Banks Answer.* The reasons offered by the bank for failing to file an answer were considered by the appellate court to be at once specious, shallow and sophistical and can hardly be dignified as a mistake or excusable negligence, which ordinary prudence could not have guarded against.* In particular, the CA ruled that the erroneous docket number placed on the Answer filed before the trial court was not an excusable negligence by the banks counsel. The latter had a bounden duty to be scrupulously careful in reviewing pleadings. Also, there were several opportunities to discover and rectify the mistake, but these were not taken. Moreover, the banks Motion to Set Aside the Partial Decision and to Admit [the] Answer was not accompanied by an affidavit of merit. These mistakes and the inexcusable negligence committed by respondents lawyer were binding on the bank. On the issue of whether petitioners had convincingly established their right to relief, the appellate court held that there was no ground to invalidate the foreclosure sale of the mortgaged property. First, under Section 3 of Act No. 3135, an extrajudicial foreclosure sale did not require personal notice to the mortgagor. Second, there was no allegation or proof of noncompliance with the publication requirement and the public posting of the notice of sale, provided under Act No. 

Contained in the RTC Decision dated October 28, 1993; records, pp. 263-264. CA Rollo, pp. 84-87.  Records, pp. 75-82.  Id., pp. 176-183.  CA Decision, p. 7; rollo, p. 35. 

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3135, as amended. Third, there was no showing of inadequacy of price as no competent evidence was presented to show the real market value of the land sold or the readiness of another buyer to offer a price higher than that at which the property had been sold. Moreover, petitioners failed to prove that the bank had agreed to sell the property back to them. After pointing out that the redemption period had long expired, respondents written communications to Petitioner Chua only showed, at most, that the former had made a proposal for the latter to buy back the property at the current market price; and that Petitioner Chua was requested to make an offer to repurchase the property, because another buyer had already made an offer to buy it. On the other hand, respondent noted that the Interbank check for P4,000 was for deposit only. Thus, there was no showing that the check had been issued to cover part of the repurchase price. The appellate court also held that the Compromise Agreement had not resulted in the novation of the Partial Decision, because the two were not incompatible. In fact, the bank was not even a party to the Agreement. Petitioners recognition of Ceroferrs title to the mortgaged property was intended to preclude future litigation against it. Hence this Petition.*

Issues In their Memorandum, petitioners raise the following issues: 1. Whether or not the Respondent Court of Appeals erred in failing to apply the provisions of Section 3, Rule 9 of the 1997 Rules of Civil Procedure [and in applying instead] the rule on 

The Petition was deemed submitted for decision on March 29, 2005, upon the Courts receipt of respondents 4-page Memorandum, signed by Atty. Diosdado B. Jimenez of Gonzales Sinense Jimenez& Associates. Petitioners Memorandum, signed by Atty. Sergio F. Angeles of Angeles & Associates, was received by the Court on May 15, 2003.

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preponderance of evidence under Section 1, Rule 133 of the Rules of Court. 2. Whether or not the respondent appellate court failed to apply the conventional redemption rule provided for under Article 1601 of the New Civil Code. 3. Whether or not this Honorable Court can exercise its judicial prerogative to evaluate the findings of facts.*

The first issue is one of law and may be taken up by the Court without hindrance, pursuant to Section 1 of Rule 45 of the Rules of Court. * The second and the third issues, however, would entail an evaluation of the factual findings of the appellate court, a function ordinarily not assumed by this Court, unless in some excepted cases. The Court will thus rule on the first issue before addressing the second and the third issues jointly. The Courts Ruling The Petition has no merit. First Issue: Quantum of Proof

Petitioners challenge the CA Decision for applying Section 3 of Rule 9 of the Rules of Court, rather than Section 1 of Rule 133 of the same Rules. In essence, petitioners argue  

Petitioners Memorandum, pp. 10-17; rollo, pp. 98-105. Section 1 of Rule 45 of the Rules of Court provides that x x x. The petition shall raise only questions of law which must be distinctly set forth.

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that the quantum of evidence for judgments flowing from a default order under Section 3 of Rule 9 is not the same as that provided for in Section 1 of Rule 133. For ease of discussion, these two rules will be reproduced below, starting with Section 3 of Rule 9 of the Rules of Court: Sec. 3. Default; declaration of. If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court. (a) Effect of order of default. A party in default shall be entitled to notice of subsequent proceedings but not to take part in the trial. (b) Relief from order of default. A party declared in default may at any time after notice thereof and before judgment file a motion under oath to set aside the order of default upon proper showing that his failure to answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense. In such case, the order of default may be set aside on such terms and conditions as the judge may impose in the interest of justice.

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(c) Effect of partial default. When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented. (d) Extent of relief to be awarded. A judgment rendered against a party in default shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages. (e) Where no defaults allowed. If the defending party in an action for annulment or declaration of nullity of marriage or for legal separation fails to answer, the court shall order the prosecuting attorney to investigate whether or nor a collusion between the parties exists, and if there is no collusion, to intervene for the State in order to see to it that the evidence submitted is not fabricated.

We now quote Section 1 of Rule 133:

SECTION 1. Preponderance of evidence, how determined. In civil cases, the party having the burden of proof must establish his case by a preponderance of evidence. In determining where the preponderance or superior weight of evidence on the issues involved lies, the court may consider all the facts and circumstances of the case, the witnesses manner of testifying, their intelligence, their means and opportunity of knowing the facts to which they are testifying, the nature of the facts to which they testify, the probability or improbability of their testimony, their interest or want of interest, and also their personal credibility so far as the same may legitimately appear upon the trial. The court may also consider the number of

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witnesses, though the preponderance is not necessarily with the greater number.

Between the two rules, there is no incompatibility that would preclude the application of either one of them. To begin with, Section 3 of Rule 9 governs the procedure which the trial court is directed to take when a defendant fails to file an answer. According to this provision, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, subject to the courts discretion on whether to require the presentation of evidence ex parte. The same provision also sets down guidelines on the nature and extent of the relief that may be granted. In particular, the courts judgment shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages. As in other civil cases, basic is the rule that the party making allegations has the burden of proving them by a preponderance of evidence.* Moreover, parties must rely on the strength of their own evidence, not upon the weakness of the defense offered by their opponent.* This principle holds true, especially when the latter has had no opportunity to present evidence because of a default order. Needless to say, the extent of the relief that may be granted can only be as much as has been alleged and proved* with preponderant evidence required under Section 1 of Rule 133. Regarding judgments by default, it was explained in Pascua v. Florendo* that complainants are not automatically entitled to the relief prayed for, once the defendants are declared in default. Favorable relief can be granted only after the court has ascertained that the relief is warranted by the evidence offered and the 

Saguid v. Court of Appeals, 451 Phil. 825, June 10, 2003; Ocampo v. Ocampo, 427 SCRA 545, April 14, 2004; Catapusan v. Court of Appeals, 332 Phil. 586, November 21, 1996. Section 1 of Rule 131 of the Rules of Court provides:

SECTION 1. Burden of proof. Burden of proof is the duty of a party to present evidence on the facts in issue necessary to establish his claim or defense by the amount of evidence required by law. 

Saguid v. CA, ibid. (citing Heirs of Anastacio Fabela v. CA, 362 SCRA 531, August 9, 2001). Regalado, Remedial Law Compendium, Vol. 1, 7th rev. ed. (1999), p. 169. See also P. T. Cerna Corporation v. CA, 221 SCRA 19, 25, April 6, 1993.  220 Phil. 588, April 30, 1985 cited in Luxuria Homes, Inc. v. CA, 361 Phil. 989, January 28, 1999. 

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facts proven by the presenting party. In Pascua, this Court ruled that x x x it would be meaningless to require presentation of evidence if every time the other party is declared in default, a decision would automatically be rendered in favor of the non-defaulting party and exactly according to the tenor of his prayer. This is not contemplated by the Rules nor is it sanctioned by the due process clause.*



Pascua v. Florendo, supra, pp. 595-596, per Gutierrez, Jr., J.

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The import of a judgment by default was further clarified in Lim Tanhu v. Ramolete.* The following disquisition is most instructive: Unequivocal, in the literal sense, as these provisions [referring to the subject of default then under Rule 18 of the old Rules of Civil Procedure] are, they do not readily convey the full import of what they contemplate. To begin with, contrary to the immediate notion that can be drawn from their language, these provisions are not to be understood as meaning that default or the failure of the defendant to answer should be interpreted as an admission by the said defendant that the plaintiffs cause of action find support in the law or that plaintiff is entitled to the relief prayed for. x x x. xxx

xxx

xxx

Being declared in default does not constitute a waiver of rights except that of being heard and of presenting evidence in the trial court. x x x. In other words, a defaulted defendant is not actually thrown out of court. While in a sense it may be said that by defaulting he leaves himself at the mercy of the court, the rules see to it that any judgment against him must be in accordance with law. The evidence to support the plaintiffs cause is, of course, presented in his absence, but the court is not supposed to admit that which is basically incompetent. Although the defendant would not be in a position to object, elementary justice requires that only legal evidence should be considered against him. If the evidence presented should not be sufficient to justify a judgment for the plaintiff, the complaint must be dismissed. And if an unfavorable judgment should be justifiable, it cannot exceed in amount or be different in kind from what is prayed for in the complaint.*

 

66 SCRA 425, August 29, 1975. See also Heirs of Anastacio Fabela v. CA, supra at note 20. Id., pp. 452-453, per Barredo, J.

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In sum, while petitioners were allowed to present evidence ex parte under Section 3 of Rule 9, they were not excused from establishing their claims for damages by the required quantum of proof under Section 1 of Rule 133. Stated differently, any advantage they may have gained from the ex parte presentation of evidence does not lower the degree of proof required. Clearly then, there is no incompatibility between the two rules. Second and Third Issues: Review of the Evidence

Petitioners urge this Court to depart from the general rule that the lower courts findings of fact are not reviewable in a petition for review.* In support of their plea, they cite the conflicting findings of the trial and the appellate courts, as well as the alleged conjectures and surmises made by the CA in arriving at its Decision. Indeed, the differences between the findings of the two courts a quo, leading to entirely disparate dispositions, is reason enough for this Court to review the evidence in this case.* Whether the CA indulged in surmises and conjectures when it issued the assailed Decision will thus be determined. At the outset, it behooves this Court to clarify the CAs impression that no evidence was presented in the case which might have contributed to petitioners challenge to its Decision. The appellate courts observation was based on the notation by the lower courts clerk of court that there were no separate folders for exhibits and transcripts, because there was no actual hearing conducted in this case.* 

Vibram Manufacturing Corporation v. Manila Electric Company, 466 SCRA 178, August 9, 2005; Rubiato v. Heirs of Jovito Rubiato, 464 SCRA 296, July 28, 2005; Republic v. CA, 328 Phil. 238, July 12, 1996; Baricuatro Jr. v. Court of Appeals, 382 Phil. 15, 24, February 9, 2000.



Manila Banking Corp. v. Silverio, 466 SCRA 438, August 11, 2005; Yason v. Arciaga, 449 SCRA 458, January 28, 2005; Menchavez v. Torres Jr. 449 SCRA 380, January 26, 2005.  CA Decision, p. 9; rollo, p. 37.

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True, there was no hearing conducted between petitioners and respondent, precisely because the latter had been declared in default, and petitioners had therefore been ordered to present their evidence ex parte. But the absence of a hearing did not mean that no evidence was presented. The Partial Decision dated February 8, 1993, in fact clearly enumerated the pieces of evidence adduced by petitioners during the ex parte presentation on January 7, 1993. The documentary evidence they presented consisted of the following: 1. A copy of respondent banks Petition for the extrajudicial foreclosure and auction sale of the mortgaged parcel of land* 2. The Certificate of Sale that was a consequence of the foreclosure sale* 3. A Statement of Account dated February 15, 1984, showing Petitioner Chuas outstanding debt in the amount of P40,135.53* 4. A copy of the Interbank check dated February 16, 1984, in the amount of

*

P4,000

5. The Official Receipt issued by the bank acknowledging the check* 6. The banks letter dated February 20, 1984, advising Petitioner Chua of the sale of the property at an extrajudicial public auction; the lapse of the period of redemption; and an invitation to purchase the property at its current market price*



Records, pp. 9-12. Id., pp. 13-14.  Id., p. 15.  Id., p. 16.  Id., p. 17.  Id., p. 18. 

192

7. Another letter from the bank dated March 22, 1984, inviting Petitioner Chua to submit, within five days, an offer to buy the same property, which another buyer had offered to buy* 8. A copy of the Notice of Lis Pendens, the filing of which was done after that of the Amended Complaint* 9. A copy of the title showing the inscription of the Notice of Lis Pendens* 10. A copy of the Absolute Deed of Sale to Cerrofer* 11. A copy of a letter dated August 29, 1986, made and signed by petitioners counsel, requesting the cancellation of the Notice of Lis Pendens* 12. A copy of a page of the Memorandum of Encumbrance from TCT No. (314341) 7778/T-39* Having clarified this matter, we proceed to review the facts. Petitioners do not deny that the one-year period for legal redemption had already lapsed when respondent bank supposedly offered to sell the property in question. The records clearly show that the Certificate of Sale following the extrajudicial public auction of the property was registered on June 21, 1982, the date from which the legal redemption period was to be reckoned.* Petitioners insist, though, that they had the right to repurchase the property through 

Id., p. 19. Id., pp. 20-21.  Id., pp. 22-23.  Id., pp. 24-26.  Id., p. 27.  Id., p. 28.  Union Bank of the Philippines v. CA, 412 Phil. 64, June 25, 2001; Castro v. Bague, 359 SCRA 28, June 20, 2001; Ysmael v. CA, 376 Phil. 323, November 16, 1999. Section 28 of Rule 39 of the Rules of Court provides that legal redemption should be made at any time within one (1) year from the date of the registration of the certificate of sale x x x. 

193

conventional redemption, as provided under Article 1601 of the Civil Code, worded as follows: ART. 1601. Conventional redemption shall take place when the vendor reserves the right to repurchase the thing sold, with the obligation to comply with the provisions of Article 1616 and other stipulations which may have been agreed upon. It is true that the one-year period of redemption provided in Act No. 3135, as amended -- the law under which the property here was sold in a foreclosure sale -is only directory and, as such can be extended by agreement of the parties.* However, it has also been held that for legal redemption to be converted into conventional redemption, two requisites must be established: 1) voluntary agreement of the parties to extend the redemption period; and 2) the debtors commitment to pay the redemption price on a fixed date.* Thus, assuming that an offer was made to Petitioner Chua to buy back the property after the lapse of the period of legal redemption, petitioners needed to show that the parties had agreed to extend the period, and that Petitioner Chua had committed to pay the redemption price on a fixed date.

The letters sent by the bank to Petitioner Chua on February 20 and March 22, 1984, do not convincingly show that the parties arrived at a firm agreement for the repurchase of the property. What can be gleaned from the February 20 letter is that Petitioner Chua proposed to pay the redemption price for the property, but that the bank refused to accede to his request, because the one-year redemption period had already lapsed.* The bank, though, had offered to sell back the property to him at the current market value. Indeed, an examination of his earlier letter of February 17, 1984, readily reveals that he expressed willingness to settle his account with the bank, but that his present financial situation precludes [him] from effecting an immediate settlement x x x.*



Ibaan Rural Bank, Inc. v. Court of Appeals, 378 Phil. 707, 713, December 17, 1999; Lazo v. Republic Surety & Insurance Co., Inc., 31 SCRA 329, January 30, 1970.

Landrito v. Court of Appeals, 466 SCRA 107, August 9, 2005 (citing Lazo v. Republic Surety & Insurance Co., Inc., supra); Ibaan Rural Bank, Inc. v. Court of Appeals, supra. 

 

Records, p. 18. Id., p. 195.

194

On the other hand, the letter dated March 22, 1984, clearly states that x x x the Bank rejected [his] request to redeem said property due to [the] lapse of [the] one (1) year legal redemption period.* Nonetheless, he was [invited] to submit an offer to buy the same property in five (5) days from receipt [of the letter]. * Petitioner Chua was also informed that the bank had received an offer to purchase the foreclosed property. As to the P4,000 check enclosed in his proposal dated February 17, 1984, as a token of his good faith, he was advised that the amount was still outstanding in the books of the bank and could be claimed by him if he thought the invitation was not feasible.

More important, there was no showing that petitioners had committed to pay the redemption price on a fixed date. True, Petitioner Chua had attempted to establish a previous agreement to repurchase the property for less than its fair market value. He had submitted in evidence a Statement of Account * dated February 15, 1984, showing a balance of P40,135.53; the Interbank check dated February 16, 1984 , for P4,000, which was deposited to the account of respondent bank;* and the Official Receipt for the check.*

Granting that these documents evinced an agreement, petitioners were still unable to establish a firm commitment on their part to pay the redemption price on a fixed date. On the contrary, the February 17 letter of Petitioner Chua to the bank clearly manifested that he was not capable of paying the account immediately. For this reason, he proposed to pay in three or four installments without a specification of dates for the payments, but with a plea for a reduction of the interest charges. That proposal was rejected.

Indeed, other than the Interbank check marked for deposit by respondent bank, no other evidence was presented to establish that petitioners had offered to pay the alleged redemption price of P40,135.53 on a fixed date. For that matter, petitioners have not shown that they tendered payment of the balance and/or consigned the payment to the court, in order to fulfill their part of the purported agreement. These remedies are available to an aggrieved debtor under Article 1256 

Id., p. 19. Ibid.  Id., p. 15.  Id., p. 16.  Id., p. 17. 

195

of the Civil Code,* when the creditor unjustly refuses to accept the payment of an obligation.

The next question that presents itself for resolution is the propriety of the CAs ruling vacating the Partial Decision of the regional trial court (RTC) and dismissing the case. To recall, the RTC had resolved to withhold a ruling on petitioners right to redeem conventionally and/or order the reconveyance of the property in question, pending a determination of the validity of the sale to Cerrofer Realty Corporation and Spouses Cesar and Lorna Roque. The trial court, however, granted the prayer for damages against respondent bank. The RTC ruled as follows: The evidence presented by [petitioners] in so far as the cause of action against [respondent] Traders Royal Bank is concerned are preponderant to support the claims of the [petitioners]. However, in view of the fact that the property subject matter of this case has already been conveyed to defendant Cerrofer Realty Corporation thus the issue as to whether or not the said conveyance or sale is valid is sill pending between the [petitioners] and [respondents] Cerrofer Realty Corporation and Cesar Roque and Lorna Roque. Hence, this Court resolves to grant the prayer for damages against Traders Royal Bank. The claims of the [petitioners] as against [respondent] Traders Royal Bank having been established and proved by evidence, judgment is hereby rendered ordering [respondent] Traders Royal Bank to pay [petitioners] actual damage or the market value of the land in question in the sum of P500,000.00; the sum of P70,000.00 as compensatory damages; the sum of P200,000.00 to the heirs of [petitioner] Danilo Chua; and attorneys fees in the sum of P30,000.00.*



ART. 1256. If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor shall be released from responsibility by the consignation of the thing or sum due. x x x.  Partial Decision, p. 2; records, p. 173.

196

In the light of the pending issue as to the validity of the sale of the property to the third parties (Cerrofer Realty Corporation and Spouses Roque), the trial court properly withheld judgment on the matter and thus left the prayer for damages as the sole issue for resolution. To adjudge damages, paragraph (d) of Section 3 of Rule 9 of the Rules of Court provides that a judgment against a party in default shall not exceed the amount or be different in kind from that prayed for nor award unliquidated damages. The proscription against the award of unliquidated damages is significant, because it means that the damages to be awarded must be proved convincingly, in accordance with the quantum of evidence required in civil cases. Unfortunately for petitioners, the grant of damages was not sufficiently supported by the evidence for the following reasons. First, petitioners were not deprived of their property without cause. As correctly pointed out by the CA, Act No. 3135, as amended, does not require personal notice to the mortgagor.* In the present case, there has been no allegation -- much less, proof -- of noncompliance with the requirement of publication and public posting of the notice of sale, as required by ct No. 3135. Neither has there been competent evidence to show that the price paid at the foreclosure sale was inadequate.* To be sure, there was no ground to invalidate the sale. Second, as previously stated, petitioners have not convincingly established their right to damages on the basis of the purported agreement to repurchase. Without reiterating our prior discussion on this point, we stress that entitlement to actual and compensatory damages must be proved even under Section 3 of Rule 9 

Section 3 of Act No. 3135, as amended, provides as follows:

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. (See also Ardiente v. Provincial Sheriff, 436 SCRA 655, August 17, 2004) This fact would have been shown by presenting evidence that another bidder had offered to pay a higher price for the property during the bidding. 

197

of the Rules of Court. The same is true with regard to awards for moral damages and attorneys fees, which were also granted by the trial court. In sum, petitioners have failed to convince this Court of the cogency of their position, notwithstanding the advantage they enjoyed in presenting their evidence ex parte. Not in every case of default by the defendant is the complainant entitled to win automatically.

198

WHEREFORE, this Petition is hereby DENIED and the assailed Decision and Resolution AFFIRMED. Costs against petitioners. SO ORDERED.

ARTEMIO V. PANGANIBAN Chief Justice Chairman, First Division

WECONCUR:

CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ Associate Justice Associate Justice

ROMEO J. CALLEJO, SR. Associate Justice

MINITA V. CHICO-NAZARIO Associate Justice

CERTIFICATION

199

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN Chief Justice

200

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 200134

August 15, 2012

ROBERTO OTERO, Petitioner, vs. ROGER TAN, Respondent. VILLARAMA, JR.,* R E S O LUTIO N REYES, J.: Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to annul and set aside the Decision1 dated April 29, 2011 rendered by the Court of Appeals (CA) in CA-G.R. SP No. 02244, which affirmed the Judgment2 dated December 28, 2007 issued by the Regional Trial Court (RTC), Cagayan de Oro City, Branch 23 in Civil Case No. 2007-90. The Antecedent Facts A Complaint3 for collection of sum of money and damages was filed by Roger Tan (Tan) with the Municipal Trial Court in Cities (MTCC), Cagayan de Oro City on July 28, 2005 against Roberto Otero (Otero). Tan alleged that on several occasions from February 2000 to May 2001, Otero purchased on credit petroleum products from his Petron outlet in Valencia City, Bukidnon in the aggregate amount of P 270,818.01. Tan further claimed that despite several verbal demands, Otero failed to settle his obligation. Despite receipt of the summons and a copy of the said complaint, which per the records of the case below were served through his wife Grace R. Otero on August 31, 2005, Otero failed to file his answer with the MTCC. On November 18, 2005, Tan filed a motion with the MTCC to declare Otero in default for his failure to file his answer. Otero opposed Tan’s motion, claiming that he did not receive a copy of the summons and a copy of Tan’s complaint. Hearing on the said motion was set on January 25, 2006, but was later reset to March 8, 2006, Otero manifesting that he only received the notice therefor on January 23, 2006. The hearing on March 8, 2006 was further reset to April 26, 2006 since the presiding judge was attending a 201

convention. Otero failed to appear at the next scheduled hearing, and the MTCC issued an order declaring him in default. A copy of the said order was sent to Otero on May 9, 2006. Tan was then allowed to present his evidence ex parte. Tan adduced in evidence the testimonies of Rosemarie Doblado and Zita Sara, his employees in his Petron outlet who attended Otero when the latter made purchases of petroleum products now the subject of the action below. He likewise presented various statements of account4 showing the petroleum products which Otero purchased from his establishment. The said statements of account were prepared and checked by a certain Lito Betache (Betache), apparently likewise an employee of Tan. The MTCC Decision On February 14, 2007, the MTCC rendered a Decision5 directing Otero to pay Tan his outstanding obligation in the amount of P 270,818.01, as well as attorney’s fees and litigation expenses and costs in the amounts of P 15,000.00 and P 3,350.00, respectively. The MTCC opined that Otero’s failure to file an answer despite notice is a tacit admission of Tan’s claim. Undeterred, Otero appealed the MTCC Decision dated February 14, 2007 to the RTC, asserting that the MTCC’s disposition is factually baseless and that he was deprived of due process. The RTC Decision On December 28, 2007, the RTC rendered a Judgment6 affirming the MTCC Decision dated February 14, 2007. The RTC held that the statements of account that were presented by Tan before the MTCC were overwhelming enough to prove that Otero is indeed indebted to Tan in the amount of P 270,818.01. Further, brushing aside Otero’s claim of denial of due process, the RTC pointed out that: As to the second assignment of error, suffice to say that as borne out by the record of the case, defendantappellant was given his day in Court contrary to his claim. His wife, Grace R. Otero received a copy of the summons together with a copy of the Complaint and its corresponding annexes on August 31, 2005, per Return of Service made by Angelita N. Bandoy, Process Server of OCC-MTCC of Davao City. He was furnished with a copy of the Motion to Declare Defendant in Default on November 18, 2005, per Registry Receipt No. 2248 which was received by the defendant. Instead of filing his answer or any pleading to set aside the Order of default, he filed his Comment to the Motion to Declare Defendant in Default of which plaintiff filed his Rejoinder to Defendant’s Comment. The case was set for hearing on January 23, 2006, but defendant through counsel sent a telegram that he only received the notice on the day of the hearing thereby he was unable to appear due to his previous scheduled hearings. Still, for reasons only known to him, defendant failed to lift the Order of Default. 202

The hearing on January 23, 2006 was reset on March 8, 2006 and again reset on April 26, 2006 by agreement of counsels x x x. It is not therefore correct when defendant said that he was deprived of due process.7 Otero sought reconsideration of the Judgment dated December 28, 2007 but it was denied by the RTC in its Order8 dated February 20, 2008. Otero then filed a petition for review9 with the CA asserting that both the RTC and the MTCC erred in giving credence to the pieces of evidence presented by Tan in support of his complaint. Otero explained that the statements of account, which Tan adduced during the ex parte presentation of his evidence, were prepared by a certain Betache who was not presented as a witness by Tan. Otero avers that the genuineness and due execution of the said statements of account, being private documents, must first be established lest the said documents be rendered inadmissible in evidence. Thus, Otero asserts, the MTCC and the RTC should not have admitted in evidence the said statements of account as Tan failed to establish the genuineness and due execution of the same. The CA Decision On April 29, 2011, the CA rendered the assailed Decision10 which denied the petition for review filed by Otero. In rejecting Otero’s allegation with regard to the genuineness and due execution of the statements of account presented by Tan, the CA held that any defense which Otero may have against Tan’s claim is already deemed waived due to Otero’s failure to file his answer. Thus: Otero never denied that his wife received the summons and a copy of the complaint. He did not question the validity of the substituted service. Consequently, he is charged with the knowledge of Tan’s monetary claim. Section 1, Rule 9 of the Rules of Court explicitly provides that defenses and objections not pleaded are deemed waived. Moreover, when the defendant is declared in default, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant. Due to Otero’s failure to file his Answer despite being duly served with summons coupled with his voluntary appearance in court, he is deemed to have waived whatever defenses he has against Tan’s claim. Apparently, Otero is employing dilatory moves to defer the payment of his obligation which he never denied.11 (Citation omitted) Otero’s Motion for Reconsideration12 was denied by the CA in its Resolution13 dated December 13, 2011. Hence, the instant petition.

203

Issues Essentially, the fundamental issues to be resolved by this Court are the following: first, whether Otero, having been declared in default by the MTCC, may, in the appellate proceedings, still raise the failure of Tan to authenticate the statements of account which he adduced in evidence; and second, whether Tan was able to prove the material allegations of his complaint. The Court’s Ruling The petition is denied. First Issue: Authentication of the Statements of Account The CA, in denying the petition for review filed by Otero, held that since he was declared in default by the MTCC, he is already deemed to have waived whatever defenses he has against Tan’s claim. He is, thus, already barred from raising the alleged infirmity in the presentation of the statements of account. We do not agree. A defendant who fails to file an answer loses his standing in court. The effect of a defendant’s failure to file an answer within the time allowed therefor is primarily governed by Section 3, Rule 9 of the Rules of Court, viz: Sec. 3. Default; declaration of. – If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court. x x x (Emphasis ours) A defendant who fails to file an answer may, upon motion, be declared by the court in default. Loss of standing in court, the forfeiture of one’s right as a party litigant, contestant or legal adversary, is the consequence of an order of default. A party in default loses his right to present his defense, control the proceedings, and examine or cross-examine witnesses. He has no right to expect that his pleadings would be acted upon by the court nor may be object to or refute evidence or motions filed against him.14 A defendant who was declared in default may nevertheless appeal from the judgment by default, 204

albeit on limited grounds. Nonetheless, the fact that a defendant has lost his standing in court for having been declared in default does not mean that he is left sans any recourse whatsoever. In Lina v. CA, et al.,15 this Court enumerated the remedies available to party who has been declared in default, to wit: a) The defendant in default may, at any time after discovery thereof and before judgment, file a motion, under oath, to set aside the order of default on the ground that his failure to answer was due to fraud, accident, mistake or excusable neglect, and that he has meritorious defenses; (Sec 3, Rule 18) b) If the judgment has already been rendered when the defendant discovered the default, but before the same has become final and executory, he may file a motion for new trial under Section 1(a) of Rule 37; c) If the defendant discovered the default after the judgment has become final and executory, he may file a petition for relief under Section 2 of Rule 38; and d) He may also appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition to set aside the order of default has been presented by him. (Sec. 2, Rule 41)16 (Emphasis ours) Indeed, a defending party declared in default retains the right to appeal from the judgment by default. However, the grounds that may be raised in such an appeal are restricted to any of the following: first, the failure of the plaintiff to prove the material allegations of the complaint; second, the decision is contrary to law; and third, the amount of judgment is excessive or different in kind from that prayed for.17 In these cases, the appellate tribunal should only consider the pieces of evidence that were presented by the plaintiff during the ex parte presentation of his evidence. A defendant who has been declared in default is precluded from raising any other ground in his appeal from the judgment by default since, otherwise, he would then be allowed to adduce evidence in his defense, which right he had lost after he was declared in default.18 Indeed, he is proscribed in the appellate tribunal from adducing any evidence to bolster his defense against the plaintiff’s claim. Thus, in Rural Bank of Sta. Catalina, Inc. v. Land Bank of the Philippines,19 this Court explained that: It bears stressing that a defending party declared in default loses his standing in court and his right to adduce evidence and to present his defense. He, however, has the right to appeal from the judgment by default and assail said judgment on the ground, inter alia, that the amount of the judgment is excessive or is different in kind from that prayed for, or that the plaintiff failed to prove the material allegations of his complaint, or that the decision is contrary to law. Such party declared in default is proscribed from seeking a modification or reversal of the assailed decision on the basis of the evidence submitted by him in the Court of Appeals, for if it were otherwise, he would thereby be allowed to regain his right to adduce 205

evidence, a right which he lost in the trial court when he was declared in default, and which he failed to have vacated. In this case, the petitioner sought the modification of the decision of the trial court based on the evidence submitted by it only in the Court of Appeals.20 (Citations omitted and emphasis ours) Here, Otero, in his appeal from the judgment by default, asserted that Tan failed to prove the material allegations of his complaint. He contends that the lower courts should not have given credence to the statements of account that were presented by Tan as the same were not authenticated. He points out that Betache, the person who appears to have prepared the said statements of account, was not presented by Tan as a witness during the ex parte presentation of his evidence with the MTCC to identify and authenticate the same. Accordingly, the said statements of account are mere hearsay and should not have been admitted by the lower tribunals as evidence. Thus, essentially, Otero asserts that Tan failed to prove the material allegations of his complaint since the statements of account which he presented are inadmissible in evidence. While the RTC and the CA, in resolving Otero’s appeal from the default judgment of the MTCC, were only required to examine the pieces of evidence that were presented by Tan, the CA erred in brushing aside Otero’s arguments with respect to the admissibility of the said statements of account on the ground that the latter had already waived any defense or objection which he may have against Tan’s claim. Contrary to the CA’s disquisition, it is not accurate to state that having been declared in default by the MTCC, Otero is already deemed to have waived any and all defenses which he may have against Tan’s claim. While it may be said that by defaulting, the defendant leaves himself at the mercy of the court, the rules nevertheless see to it that any judgment against him must be in accordance with the evidence required by law. The evidence of the plaintiff, presented in the defendant’s absence, cannot be admitted if it is basically incompetent. Although the defendant would not be in a position to object, elementary justice requires that only legal evidence should be considered against him. If the same should prove insufficient to justify a judgment for the plaintiff, the complaint must be dismissed. And if a favorable judgment is justifiable, it cannot exceed in amount or be different in kind from what is prayed for in the complaint.21 Thus, in SSS v. Hon. Chaves,22 this Court emphasized that: We must stress, however, that a judgment of default against the petitioner who failed to appear during pretrial or, for that matter, any defendant who failed to file an answer, does not imply a waiver of all of their rights, except their right to be heard and to present evidence to support their allegations. Otherwise, it would be meaningless to request presentation of evidence every time the other party is declared in default. If it were so, a decision would then automatically be rendered in favor of the non-defaulting party and exactly to the tenor of his prayer. The law also gives the defaulting parties some measure of protection because plaintiffs, despite the default of defendants, are still required to substantiate their allegations in the 206

complaint.23 (Citations omitted and emphasis ours) The statements of account presented by Tan were merely hearsay as the genuineness and due execution of the same were not established. Anent the admissibility of the statements of account presented by Tan, this Court rules that the same should not have been admitted in evidence by the lower tribunals. Section 20, Rule 132 of the Rules of Court provides that the authenticity and due execution of a private document, before it is received in evidence by the court, must be established. Thus: Sec. 20. Proof of private document. – Before any private document offered as authentic is received in evidence, its due execution and authenticity must be proved either: a) By anyone who saw the document executed or written; or b) By evidence of the genuineness of the signature or handwriting of the maker. Any other private document need only be identified as that which it is claimed to be. A private document is any other writing, deed, or instrument executed by a private person without the intervention of a notary or other person legally authorized by which some disposition or agreement is proved or set forth. Lacking the official or sovereign character of a public document, or the solemnities prescribed by law, a private document requires authentication in the manner allowed by law or the Rules of Court before its acceptance as evidence in court. The requirement of authentication of a private document is excused only in four instances, specifically: (a) when the document is an ancient one within the context of Section 21, Rule 132 of the Rules of Court; (b) when the genuineness and authenticity of an actionable document have not been specifically denied under oath by the adverse party; (c) when the genuineness and authenticity of the document have been admitted; or (d) when the document is not being offered as genuine.24 The statements of account which Tan adduced in evidence before the MTCC indubitably are private documents. Considering that these documents do not fall among the aforementioned exceptions, the MTCC could not admit the same as evidence against Otero without the required authentication thereof pursuant to Section 20, Rule 132 of the Rules of Court. During authentication in court, a witness positively testifies that a document presented as evidence is genuine and has been duly executed, or that the 207

document is neither spurious nor counterfeit nor executed by mistake or under duress.25 Here, Tan, during the ex parte presentation of his evidence, did not present anyone who testified that the said statements of account were genuine and were duly executed or that the same were neither spurious or counterfeit or executed by mistake or under duress. Betache, the one who prepared the said statements of account, was not presented by Tan as a witness during the ex parte presentation of his evidence with the MTCC. Considering that Tan failed to authenticate the aforesaid statements of account, the said documents should not have been admitted in evidence against Otero. It was thus error for the lower tribunals to have considered the same in assessing the merits of Tan’s Complaint. Second Issue: The Material Allegations of the Complaint In view of the inadmissibility of the statements of account presented by Tan, the remaining question that should be settled is whether the pieces of evidence adduced by Tan during the ex parte presentation of his evidence, excluding the said statements of account, sufficiently prove the material allegations of his complaint against Otero. We rule in the affirmative. In civil cases, it is a basic rule that the party making allegations has the burden of proving them by a preponderance of evidence. The parties must rely on the strength of their own evidence and not upon the weakness of the defense offered by their opponent.26 This rule holds true especially when the latter has had no opportunity to present evidence because of a default order. Needless to say, the extent of the relief that may be granted can only be so much as has been alleged and proved with preponderant evidence required under Section 1 of Rule 133.27 Notwithstanding the inadmissibility of the said statements of account, this Court finds that Tan was still able to prove by a preponderance of evidence the material allegations of his complaint against Otero. First, the statements of account adduced by Tan during the ex parte presentation of his evidence are just summaries of Otero's unpaid obligations, the absence of which do not necessarily disprove the latter's liability. Second, aside from the statements of account, Tan likewise adduced in evidence the testimonies of his employees in his Petron outlet who testified that Otero, on various occasions, indeed purchased on credit petroleum products from the former and that he failed to pay for the same. It bears stressing that the MTCC, the R TC and the CA all gave credence to the said testimonial evidence presented by Tan and, accordingly, unanimously found that Otero still has unpaid outstanding obligation in favor of Tan in the 208

amount of P 270,818.01. Well-established is the principle that factual findings of the trial court, when adopted and confirmed by the CA, are binding and conclusive on this Court and will generally not be reviewed on appeal.28 The Court sees no compelling reason to depart from the foregoing finding of fact of the lower courts. WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED. The Decision dated April 29, 2011 rendered by the Court of Appeals in CA-G.R. SP No. 02244 is AFFIRMED. SO ORDERED. BIENVENIDO L. REYES Associate Justice WE CONCUR: ANTONIO T. CARPIO Senior Associate Justice Chairperson, Second Division ARTURO D. BRION Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice

JOSE PORTUGAL PEREZ Associate Justice C E R T I F I CAT I O N I certify that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. ANTONIO T. CARPIO Senior Associate Justice (Per Section 12, R.A. 296 The Judiciary Act of 1948, as amended)

Footnotes 209

*

Additional member per Special Order No. 1274 dated July 30. 2012 vice Associate Justice Maria Lourdes P.A. Sereno. 1

Penned by Associate Justice Edgardo T. Lloren, with Associate Justices Romulo V. Borja and Rodrigo F. Lim. Jr., concurring; rollo, pp. 30-33. 2

Under the sala of Presiding Judge Ma. Anita M. Esguerra-Lucagho; id. at 49-50.

3

Id. at 44-46.

4

Id. at 73-81.

5

Under the sala of Judge Eleuteria Badoles-Algodon; id. at 47-48.

6

Id. at 49-50.

7

Id.

8

Id. at 51.

9

Id. at 52-63.

10

Id. at 30-33.

11

Id. at 32-33.

12

Id. at 34-40.

13

Id. at 42-43.

14

See S.C. Johnson & Son, Inc. v. Court of Appeals, 188 Phil. 579 (1990); Cavili v. Judge Florendo, 238 Phil. 597, 603 (1987). 15

220 Phil. 311 (1985).

16

Id. at 316-317.

17

See Martinez v. Republic of the Philippines, 536 Phil. 868 (2006).

18

See Arquero v. Court of Appeals, G.R. No. 168053, September 21, 2011.

210

19

479 Phil. 43 (2004).

20

Id. at 52.

21

See Tanhu v. Judge Ramolete, 160 Phil. 1101, 1126 (1975).

22

483 Phil. 292 (2004).

23

Id. at 301-302.

24

Patula v. People of the Philippines, G.R. No. 164457, April 11, 2012.

25

Salas v. Sta. Mesa Market Corporation, G.R. No. 157766, July 12, 2007, 527 SCRA 465, 472.

26

See New Sun Valley Homeowners’ Association, Inc. v. Sangguniang Barangay, Barangay Sun Valley, Parañaque City, G.R. No. 156686, July 27, 2011, 654 SCRA 438, 464. 27

See Gajudo v. Traders Royal Bank, 519 Phil. 791, 803 (2006).

28

Insular Investment and 71-ust Corporation v. Capital One Equities Corp., G.R. No. 183308, April 25,2012.

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Republic of the Philippines Supreme Court Manila

FIRST DIVISION

SPOUSES HUMBERTO DELOS

G.R. No. 153696

SANTOS and CARMENCITA DELOS SANTOS,

Present:

Petitioners, PANGANIBAN, CJ., Chairperson, - versus -

YNARES-SANTIAGO, AUSTRIA-MARTINEZ,

HON. EMMANUEL C.

CALLEJO, SR. and

CARPIO, Presiding Judge of

CHICO-NAZARIO, JJ.

RTC, Branch 16, Davao City and METROPOLITAN BANK

Promulgated:

and TRUST COMPANY, Respondents.

September 11, 2006

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

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DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of Court filed by spouses Humberto delos Santos and Carmencita delos Santos (petitioners) assailing the Decision* dated April 30, 2002 of the Court of Appeals (CA) in CA-G.R. SP No. 64961.* The antecedent facts of the case as summarized by the CA are as follows: On January 3, 2001, Metropolitan Bank and Trust Company (or Metrobank) filed a complaint* for sum of money against spouses Humberto and Carmencita delos Santos (or petitioners) before the Regional Trial Court of Davao City (Branch 16). On January 22, 2001, petitioners were served with the summons, together with a copy of the complaint. As petitioners failed to file an answer within the reglementary period, Metrobank, on February 8, 2001,* filed a motion to declare them in default. The motion was set for hearing on February 16, 2001.



Penned by Justice Edgardo P. Cruz, concurred in by Justices Mariano C. del Castillo and Regalado E. Maambong; CA rollo, pp. 115-121.  Entitled Sps. Humberto delos Santos and Carmencita delos Santos v. Hon. Emmanuel C. Carpio, Presiding Judge of the Regional Trial Court, 11 th Judicial Region, Branch 16, Davao City, and Metropolitan Bank and Trust Company.  Docketed as Civil Case No. 28,362-2001. 4 Should be February 9, 2001, records, p. 15.

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Acting on the motion, the lower court, presided over by Hon. Emmanuel C. Carpio (or respondent judge), issued an order dated February 12, 2001 declaring petitioners in default and setting the exparte presentation of Metrobanks evidence on March 7, 2001. On February 15, 2001, petitioners filed an opposition to Metrobanks motion to declare them in default, claiming that upon receipt of the summons, they immediately sought the services of Atty. Philip Pantojan (or Atty. Pantojan) of the Into Pantojan Gonzales and Marasigan Law Offices but it was only on February 12, 2001 that they were able to meet with Atty. Pantojan. Petitioners alleged that not being learned in law, they were unaware of the consequences of delay in the filing of their answer. On the same date, February 15, 2001, petitioners filed a motion to admit answer, as well as the answer. In an order dated February 16, 2001, respondent judge disregarded petitioners opposition to Metrobanks motion for default and stood pat on his previous default order. On February 19, 2001, Metrobank filed an opposition to petitioners motion to admit answer, arguing that said motion was rendered moot and academic by the February 12, 2001 order. Metrobank also chided petitioners for violating the three-day notice rule under Sec. 4, Rule 15 of the 1997 Rules of Civil Procedure. In an order dated February 20, 2001, the motion to admit answer was denied. On February 27, 2001, petitioners filed a motion to lift the order of default; Metrobank opposed the motion. In their motion, petitioners reiterated that, being laymen, they were unaware of the fifteen-day period within which to file the answer and that their failure to do so was due to the unavailability of Atty. Pantojan who was then always out of town. They attached to their motion an Affidavit of Merits which restated the contents of the motion. Petitioners further claimed 214

that if given our day in Court, we have a meritorious defense to set up against the allegations of the plaintiffs complaint. On March 2, 2001, respondent judge issued an order holding in abeyance the ex-parte reception of evidence pending resolution of petitioners motion to lift the order of default. On March 5, 2001, respondent judge issued an order denying petitioners motion to lift the order of default and setting the reception of Metrobanks evidence on March 7, 2001, as previously scheduled. On that date (March 7, 2001), Metrobank presented its evidence and the case was submitted for decision. Petitioners moved for reconsideration of the March 5, 2001 order but their motion was denied on March 21, 2001.*

Aggrieved, petitioners filed a Petition for Certiorari with the CA ascribing grave abuse of discretion committed by the trial court amounting to lack of jurisdiction in issuing the Orders dated February 12 and 16, 2001, declaring them in default and denying their Opposition to Metropolitan Bank and Trust Companys (Metrobank) Motion to Declare them in Default, respectively; and the Orders dated March 5 and 21, 2001 denying their Motion to Lift the Order of Default and their Motion for Reconsideration, respectively. In a Decision dated April 30, 2002, the CA denied the petition for lack of merit and accordingly dismissed the same. The CA did not find the excuse proffered by petitioners, i.e., the ignorance of procedural rules and their lawyers unavailability, as constitutive of excusable negligence. It also ruled that for an order of default to be set aside, petitioners must have a meritorious defense or that something could be gained by having the order of default set aside; that petitioners affidavit of merit did not show a meritorious defense since it merely stated that they have a meritorious defense to set up against the allegation of petitioners complaint but there was no discussion of such defense and the facts which they intend to prove in support thereof. 

CA rollo, pp. 115-117.

215

The CA further found unmeritorious the contention of petitioners that they were declared in default without giving them ample time to file an opposition to Metrobanks Motion to Declare them in Default; that under Section 3, Rule 9 of the Rules of Court, it is provided that the court shall, upon motion of the claiming party with notice to the defending party in default, and proof of such failure, declare the defending party in default; and that since it is clear from the records that the reglementary period for filing an answer had expired with no responsive pleading filed by petitioners, the trial court had properly declared them in default. The CA further declared that even assuming that the trial court committed a procedural lapse in declaring petitioners in default before the scheduled hearing of Metrobanks motion, such error is not so serious as to constitute grave abuse of discretion. Hence, the instant petition filed by petitioners raising the following issues, to wit: 1. Whether or not the procedural lapse committed by Honorable Public Respondent in issuing an Order declaring petitioners [sic] in default on 12 February 2001 or four (4) days before the scheduled hearing of Metrobanks Motion to declare petitioners [sic] in default on 16 February 2001 is so serious as to constitute grave abuse of discretion. 2. Whether or not LITIS PENDENTIA raised by petitioners [sic] as an affirmative defense is a meritorious defense. 3. Whether or not it is beyond the authority of the Honorable Trial Court to rule on the issue of LITIS PENDENTIA simply and chiefly because the defendants failed to seasonably raise it. 4. What constitutes Affidavit of Merit? *



Rollo, pp. 16-17.

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Petitioners claim that the trial court committed grave abuse of discretion in declaring them in default in its Order dated February 12, 2001, which was four days before the hearing set on Metrobanks Motion to Declare them in Default; that their failure to file their Answer within the reglementary period was due to the fact that the services of their counsel of choice could not be secured within the period; that they had filed their Motion to Admit Answer and their Answer as well as their Opposition to respondents motion to declare them in default on February 15, 2001, a day prior to the scheduled date of hearing. Petitioners aver that under Section 1, Rule 9 of the Rules of Court, defenses like the court has no jurisdiction, litis pendentia, res judicata and prescription can be taken cognizance of by the court despite the fact that they are not in a motion to dismiss or Answer; that the trial court should have looked into their affirmative defense of litis pendentia raised in their Answer since it is a meritorious defense as it is a ground for a dismissal of a complaint. They further contend that although the affirmative defense of litis pendentia had reached the trial courts attention, it still refused to pass judgment on said legal concern; that the defense of litis pendentia raised in their Answer is sufficient to show that the affidavit of merit showed a meritorious defense; that the procedural lapse committed by the trial court would cause the unlawful deprivation of their property rights through undue haste. In its Comment, Metrobank contends that petitioners failed to file a motion for reconsideration before filing the instant petition which would vest authority for this Court to assume jurisdiction; that the rule on declaration of default did not expressly mandate the trial court to conduct a hearing of the motion as it merely requires that the notice of the motion was made to the defending party; that the trial court declared petitioners in default since they failed to file their Answer within the reglementary period; that assuming arguendo that the trial court committed procedural lapse in declaring petitioners in default before the scheduled hearing, there is still no grave abuse of discretion committed by the trial court since even if the hearing was held, it would not make any difference as petitioners failed to file their Answer within the reglementary period. Metrobank further argues that petitioners negligence is not excusable because if they have consulted the associates of Atty. Pantojan, they would definitely be advised to ask for an extension of time to file their answer; that petitioners failed to present a meritorious defense since aside from merely stating 217

in general terms their claim of litis pendentia as a defense, the same is misplaced because Civil Case No. 28,362-2001 pending in RTC of Davao City, Branch 16, and Civil Case No. 27,875-2000 filed by petitioners in RTC of Davao City, Branch 10, have separate and distinct causes of action; that the trial court is correct in not ruling on the issue of litis pendentia as petitioners Answer was not admitted as part of the records of the case. Petitioners filed their Reply contending that appeal by certiorari under Rule 45 does not require prior filing of a motion for reconsideration; that the procedural lapse committed by the trial court in declaring petitioners in default before the scheduled hearing should not be tolerated since petitioners land and building are at stake; and that they should not be faulted for not consulting the associates of Atty. Pantojan as they reposed their trust and confidence in him. Petitioners and Metrobank filed their respective memoranda. Metrobanks Memorandum no longer questioned petitioners non-filing of a motion for reconsideration of the CA decision. Prefatorily, we agree with petitioners that in appeal by certiorari, the prior filing of a motion for reconsideration is not required.* The principal issue before us is whether or not the CA erred in upholding the Orders of the trial court declaring petitioners in default and denying their Motion to Lift Order of Default. We rule in the affirmative. Section 3, Rule 9 of the Rules of Court provides: Sec. 3. Default; declaration of If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and 

Atty. Paa v. Court of Appeals, 347 Phil. 122, 136 (1997).

218

proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court.

Clearly, there are three requirements which must be complied with by the claiming party before the court may declare the defending party in default, to wit: (1) the claiming party must file a motion asking the court to declare the defending party in default; (2) the defending party must be notified of the motion to declare him in default; (3) the claiming party must prove that the defending party has failed to answer within the period provided by the Rule. In filing motions, Section 4, Rule 15 of the Rules of Court, specifically provides: Sec. 4. Hearing of motion. Except for motions which the court may act upon without prejudicing the rights of the adverse party, every written motion shall be set for hearing by the applicant. (Emphasis supplied) xxxx Prior to the present rule on default introduced by the 1997 Rules of Civil Procedure, as amended, Section 1 of the former Rule 18 on default is silent on whether or not there is need for a notice of a motion to declare defendant in default.* The Court then ruled that there is no need.* However, the present rule expressly requires that the motion of the claiming party should be with notice to the defending party.* The purpose of a notice of a motion is to avoid surprises on the opposite party and to give him time to study and meet the arguments.* The notice of a motion is required when the party has the right to resist the relief sought 



 

Oscar M. Herrera, Comments on the 1997 Rules of Civil Procedure as amended, Volume VII, p. 101, 1997 edition. Id. citing The Philippine British Company, Inc. v. De los Angeles, 159 Phil. 660, 673 (1975); Dulos v. Court of Appeals, G.R. No. 87917, August 7, 1990, 188 SCRA 413, 420. RULES OF COURT, Rule 9, Section 3. Herrera, Remedial Law, Volume I, p. 733, 2000 edition.

219

by the motion and principles of natural justice demand that his right be not affected without an opportunity to be heard.* Therefore, as the present rule on default requires the filing of a motion and notice of such motion to the defending party, it is not enough that the defendant failed to answer the complaint within the reglementary period to be a sufficient ground for declaration in default. The motion must also be heard. In this case, it is not disputed that petitioners were served summons on January 22, 2001.* Under Section 1, Rule 11 of the Rules of Court, the defendant shall file his answer to the complaint within 15 days after service of summons, unless a different period is fixed by the court. Petitioners answer was due on February 6, 2001, but no answer was filed by petitioners. Thus, Metrobank filed a Motion* to declare petitioners in default on February 9, 2001, setting the hearing thereof on February 16, 2001. However, four days before the scheduled hearing, the trial court issued the Order dated February 12, 2001, declaring petitioners in default. We could not see any justifiable reason why the trial court chose not to hear the petitioners on the date and time fixed in Metrobanks motion, and instead, hastily granted the motion before it could be heard on the ground that it had found the motion to be impressed with merit. Indeed, in totally disregarding the purpose for which the filing of a motion and notice to defending party are required by the Rules, the trial court had acted in a despotic manner that is correctly assailed through a petition for certiorari which petitioners have seasonably filed with the CA. Again, respondent Judge acted capriciously when he totally ignored petitioners Opposition to Metrobanks Motion to Declare them in Default and denied their Motion to Admit Answer, both filed on February 15, 2001, a day before the scheduled hearing, which showed their desire to be heard before the motion to declare them in default is resolved by the trial court. A mere perusal of the Answer attached to the Motion to Admit Answer would readily reveal that petitioners raised a special and affirmative defense the other action pending between the same parties for the same cause. Petitioners 

Yap v. Court of Appeals, 200 Phil. 509, 514 (1982). Records, pp. 13-14.  Id. at 15. 

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alleged that they entered into several loan agreements with Metrobank involving an aggregate amount of P12,500,000.00 which was the basis of petitioners causes of action in a civil case they earlier filed against Metrobank with the RTC of Davao City, Branch 10, docketed as Civil Case No. 27,875-2000, for damages, fixing of interest rates, application of excess interest payments; that the principal obligation of P12,500,000.00 includes all other loans which petitioners have with Metrobank; that the P500,000.00 obligation covered by the promissory note subject of the instant Civil Case No. 28,362-2001 is part of the P12,500,000.00 loan of petitioners, subject of Civil Case No. 27,875-2000 that was earlier filed; and that a written copy of the P500,000.00 loan was not attached to the complaint. Thus, the trial court is deemed to have been apprised of the affirmative defense of litis pendentia. Instead of unceremoniously discarding petitioners Opposition and Motion to Admit Answer* which were filed before the scheduled date of hearing of the motion to declare petitioners in default, it behooved upon the trial court to delve into the merits of the Opposition and the Answer. The trial court then should have been guided by Section 11, Rule 11 of the Rules of Court, to wit: Sec. 11. Extension of time to plead. - Upon motion and on such terms as may be just, the court may extend the time to plead provided in these Rules. The court may also, upon like terms, allow an answer or other pleading to be filed after the time fixed by these Rules. and Section 1, Rule 9 of the 1997 Rules of Procedure which provides: Sec. 1. Defenses and objections not pleaded. - Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim.



Set for hearing on the same day that the hearing on the motion to declare petitioners in default was set.

221

Under Rule 11, it is within the discretion of the trial court to permit the filing of defendants answer even beyond the reglementary period, provided there is justification for the belated action, and there was no showing that the defendant intended to delay the case. Petitioners may be considered to have committed excusable negligence when they waited for the counsel of their choice who was out of town which caused the delay in filing their Answer; and the Motion to Admit Answer was filed before the scheduled date of hearing on the Motion to Declare Petitioners in Default, showing that petitioners had no intention to delay the case. Under Rule 9, the trial court may motu proprio dismiss the claim when it appears from the pleadings or evidence on the record that there is another cause of action pending between the same parties for the same cause. With the alleged affirmative defense of litis pendentia, the trial court had justifiable compelling reason to recall its premature Order declaring petitioners in default. In a case,* we found the trial court to have gravely abused its discretion when it declared defendants in default; that the answer should be admitted because it had been filed before it was declared in default and no prejudice was caused to plaintiff; and that the hornbook rule is that default judgments are generally disfavored.* In this case, since the Order dated February 12, 2001 declaring petitioners in default is null and void, the filing of the Answer may be considered as having been filed before petitioners were declared in default and therefore no prejudice was caused to Metrobank and there was no undue delay on the part of petitioners. Basic elementary sense of fairness, liberality and substantial justice so dictate that the premature Order be considered as null and void. It is the avowed policy of the law to accord both parties every opportunity to pursue and defend their cases in the open and relegate technicality to the background in the interest of substantial justice.* Since the Order dated February 12, 2001 was null and void, the trial court likewise committed grave abuse of discretion in issuing the Orders dated March 5, 

 

Indiana Aerospace University v. Commission on Higher Education, G.R. No. 139371, April 4, 2001, 356 SCRA 367, 381. Id. Republic of the Philippines v. Sandiganbayan, G.R. Nos. 109430-43, December 28, 1994, 239 SCRA 529, 536.

222

2001 and March 21, 2001 denying petitioners Motion to Lift Order of Default and Motion for Reconsideration, respectively. We reiterate the ruling in Akut v. Court of Appeals,* where we found that the trial court committed grave abuse of discretion in declaring therein petitioners in default and in denying their motion to set aside the order of default, thus: The controlling principle ignored by respondent court is that it is within sound judicial discretion to set aside an order of default and to permit a defendant to file his answer and to be heard on the merits even after the reglementary period for the filing of the answer has expired. This discretion should lean towards giving party-litigants every opportunity to properly present their conflicting claims on the merits of the controversy without resorting to technicalities. Courts should be liberal in setting aside orders of default, for default judgments are frowned upon, and unless it clearly appears that reopening of the case is intended for delay, it is best that the trial courts give both parties every chance to fight their case fairly and in the open, without resort to technicality. x x x x x x Moreover, petitioners' answer shows that they have a prima facie meritorious defense. They should, therefore, be given their day in court to avoid the danger of committing a grave injustice if they were denied an opportunity to introduce evidence in their behalf. Our ruling in Mercader v. Bonto* and the copious precedents therein cited that "considering that the late filing of defendants' answer was due to excusable negligence and that they appear to have a meritorious defense; that defendants filed an answer before they were declared in default; and that the late filing of the answer did not in any way prejudice or deprive the plaintiff of any substantial right, nor was there intention to unduly delay the case, WE hold that the respondent judge committed an abuse of discretion in declaring the defendants in default and in refusing to set aside the order of default" is fully applicable to the case at bar. 

201 Phil. 680 (1982).



G.R. No. L-48564, August 20, 1979, 92 SCRA 665, 677.

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Time and again the Court has enjoined trial judges to act with circumspection and not to precipitately declare parties in default, needlessly compelling the aggrieved party to undergo the additional expense, anxiety and delay of seeking the intervention of the appellate courts and depriving them of the much needed time and attention that could instead have well been devoted to the study and disposition of more complex and complicated cases and issues.* (Emphasis supplied) In sum, we find that the RTC Order declaring petitioners in default and its subsequent Order denying petitioners Motion to Lift Order of Default are null and void; and the CA erroneously upheld the assailed Orders of the trial court. WHEREFORE, the petition for review is GRANTED. The Decision of the Court of Appeals dated April 30, 2002 in CA-G.R. SP No. 64961 is REVERSED and SET ASIDE. The Order of Default of the Regional Trial Court is SET ASIDE and the Answer filed by petitioners is deemed ADMITTED. The trial court is DIRECTED to continue with deliberate speed with the proceedings in the case below. Costs against private respondent. SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ Associate Justice

WE CONCUR: 

Supra note 19, at 687-688.

224

ARTEMIO V. PANGANIBAN Chief Justice Chairperson

CONSUELO YNARES-SANTIAGO Associate Justice

ROMEO J. CALLEJO, SR. Associate Justice

MINITA V. CHICO-NAZARIO Associate Justice C E R T I F I CAT I O N Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. ARTEMIO V. PANGANIBAN Chief Justice

225

G.R. No. 193494, March 07, 2014 - LUI ENTERPRISES, INC., Petitioner, v. ZUELLIG PHARMA CORPORATION AND THE PHILIPPINE BANK OF COMMUNICATIONS, Respondents.

THIRD DIVISION G.R. No. 193494, March 07, 2014 LUI ENTERPRISES, INC., Petitioner, v. ZUELLIG PHARMA CORPORATION AND THE PHILIPPINE BANK OF COMMUNICATIONS, Respondents. DECISION LEONEN, J.: There should be no inexplicable delay in the filing of a motion to set aside order of default. Even when a motion is filed within the required period, excusable negligence must be properly alleged and proven. This is a petition for review on certiorari of the Court of Appeals’ decision1 dated May 24, 2010 and resolution2 dated August 13, 2010 in CA–G.R. CV No. 88023. The Court of Appeals affirmed in toto the Regional Trial Court of Makati’s decision3 dated July 4, 2006. The facts as established from the pleadings of the parties are as follows:chanRoblesvirtualLawlibrary On March 9, 1995, Lui Enterprises, Inc. and Zuellig Pharma Corporation entered into a 10–year contract of lease4 over a parcel of land located in Barrio Tigatto, Buhangin, Davao City. The parcel of land was covered by Transfer Certificate of Title No. T–166476 and was registered under Eli L. Lui.5 On January 10, 2003, Zuellig Pharma received a letter6 from the Philippine Bank of Communications. Claiming to be the new owner of the leased property, the bank asked Zuellig Pharma to pay rent directly to it. Attached to the letter was a copy of 226

Transfer Certificate of Title No. 336962 under the name of the Philippine Bank of Communications.7 Transfer Certificate of Title No. 336962 was derived from Transfer Certificate of Title No. T–166476.8 Zuellig Pharma promptly informed Lui Enterprises of the Philippine Bank of Communications’ claim. On January 28, 2003, Lui Enterprises wrote to Zuellig Pharma and insisted on its right to collect the leased property’s rent.9 Due to the conflicting claims of Lui Enterprises and the Philippine Bank of Communications over the rental payments, Zuellig Pharma filed a complaint10 for interpleader with the Regional Trial Court of Makati. In its complaint, Zuellig Pharma alleged that it already consigned in court P604,024.35 as rental payments. Zuellig Pharma prayed that it be allowed to consign in court its succeeding monthly rental payments and that Lui Enterprises and the Philippine Bank of Communications be ordered to litigate their conflicting claims.11 The Philippine Bank of Communications filed its answer12 to the complaint. On the other hand, Lui Enterprises filed a motion to dismiss13 on the ground that Zuellig Pharma’s alleged representative did not have authority to file the complaint for interpleader on behalf of the corporation. Under the secretary’s certificate14 dated May 6, 2003 attached to the complaint, Atty. Ana L.A. Peralta was only authorized to “initiate and represent [Zuellig Pharma] in the civil proceedings for consignation of rental payments to be filed against Lui Enterprises, Inc. and/or [the Philippine Bank of Communications].”15 According to Lui Enterprises, an earlier filed nullification of deed of dation in payment case pending with the Regional Trial Court of Davao barred the filing of the interpleader case.16 Lui Enterprises filed this nullification case against the Philippine Bank of Communications with respect to several properties it dationed to the bank in payment of its obligations. The property leased by Zuellig Pharma was among those allegedly dationed to the Philippine Bank of Communications.17 In the nullification of deed of dation in payment case, Lui Enterprises raised the issue of which corporation had the better right over the rental payments.18 Lui Enterprises argued that the same issue was involved in the interpleader case. To avoid possible conflicting decisions of the Davao trial court and the Makati trial court on the same issue, Lui Enterprises argued that the subsequently filed interpleader case be dismissed. To support its argument, Lui Enterprises cited a writ of preliminary injunction19 227

dated July 2, 2003 issued by the Regional Trial Court of Davao, ordering Lui Enterprises and the Philippine Bank of Communications “[to maintain] status quo”20 with respect to the rent. By virtue of the writ of preliminary injunction, Lui Enterprises argued that it should continue collecting the rental payments from its lessees until the nullification of deed of dation in payment case was resolved. The writ of preliminary injunction dated July 2, 2003 reads:chanRoblesvirtualLawlibrary WHEREAS, on June 30, 2003, the Court issued an Order, a portion of which is quoted: WHEREFORE, PREMISES CONSIDERED, let a Writ of Preliminary Injunction issue, restraining and enjoining [the Philippine Bank of Communications], its agents or [representative], the Office of the Clerk of Court–Sheriff and all persons acting on their behalf, from conducting auction sale on the properties of [Lui Enterprises] in EJF–REM Case No. 6272–03 scheduled on July 3, 2003 at 10:00 a.m. at the Hall of Justice, Ecoland, Davao City, until the final termination of the case, upon plaintiff [sic] filing of a bond in the amount of P1,000,000.00 to answer for damages that the enjoined parties may sustain by reason of the injunction if the Court should finally decide that applicant is not entitled thereto. WHEREAS, that plaintiff posted a bond of P1,000,000.00 duly approved by this Court. IT IS HEREBY ORDERED by the undersigned Judge that, until further orders, [the Philippine Bank of Communications] and all [its] attorneys, representatives, agents and any other persons assisting [the bank], are directed to restrain from conducting auction sale on the Properties of [Lui Enterprises] in EJF–REM Case No. 6272–03 scheduled on July 3, 2003 at 10:00 a.m. at the Hall of Justice, Ecoland, Davao City, until the final termination of the case.21 Zuellig Pharma filed its opposition22 to the motion to dismiss. It argued that the motion to dismiss should be denied for having been filed late. Under Rule 16, Section 1 of the 1997 Rules of Civil Procedure, a motion to dismiss should be filed within the required time given to file an answer to the complaint, which is 15 days from service of summons on the defendant.23 Summons was served on Lui Enterprises on July 4, 2003. It had until July 19, 2003 to file a motion to dismiss, but Lui Enterprises filed the motion only on July 23, 2003.24 As to Lui Enterprises’ claim that the interpleader case was filed without authority, Zuellig Pharma argued that an action interpleader “is a necessary consequence of 228

the action for consignation.”25 Zuellig Pharma consigned its rental payments because of “the clearly conflicting claims of [Lui Enterprises] and [the Philippine Bank of Communications].”26 Since Atty. Ana L.A. Peralta was authorized to file a consignation case, this authority necessarily included an authority to file the interpleader case. Nevertheless, Zuellig Pharma filed in court the secretary’s certificate dated August 28, 2003,27 which expressly stated that Atty. Ana L.A. Peralta was authorized to file a consignation and interpleader case on behalf of Zuellig Pharma.28 With respect to the nullification of deed of dation in payment case, Zuellig Pharma argued that its pendency did not bar the filing of the interpleader case. It was not a party to the nullification case.29 As to the writ of preliminary injunction issued by the Regional Trial Court of Davao, Zuellig Pharma argued that the writ only pertained to properties owned by Lui Enterprises. Under the writ of preliminary injunction, the Regional Trial Court of Davao enjoined the July 3, 2003 auction sale of Lui Enterprises’ properties, the proceeds of which were supposed to satisfy its obligations to the Philippine Bank of Communications. As early as April 21, 2001, however, the Philippine Bank of Communications already owned the leased property as evidenced by Transfer Certificate of Title No. 336962. Thus, the writ of preliminary injunction did not apply to the leased property.30 Considering that Lui Enterprises filed its motion to dismiss beyond the 15–day period to file an answer, Zuellig Pharma moved that Lui Enterprises be declared in default.31 In its compliance32 dated September 15, 2003, the Philippine Bank of Communications “[joined Zuellig Pharma] in moving to declare [Lui Enterprises] in default, and in [moving for] the denial of [Lui Enterprises’] motion to dismiss.”33 The Regional Trial Court of Makati found that Lui Enterprises failed to file its motion to dismiss within the reglementary period. Thus, in its order34 dated October 6, 2003, the trial court denied Lui Enterprises’ motion to dismiss and declared it in default.35 Lui Enterprises did not move for the reconsideration of the order dated October 6, 2003. Thus, the Makati trial court heard the interpleader case without Lui 229

Enterprises’ participation. Despite having been declared in default, Lui Enterprises filed the manifestation with prayer36 dated April 15, 2004. It manifested that the Regional Trial Court of Davao allegedly issued the order37 dated April 1, 2004, ordering all of Lui Enterprises’ lessees to “observe status quo with regard to the rental payments”38 and continue remitting their rental payments to Lui Enterprises while the nullification of deed of dation in payment case was being resolved. The order dated April 1, 2004 of the Regional Trial Court of Davao reads:chanRoblesvirtualLawlibrary ORDER Posed for Resolution is the Motion for Amendment of Order filed by [Lui Enterprises] on September 23, 2003 seeking for the preservation of status quo on the payment/remittance of rentals to [it] and the disposal/construction of the properties subject matter of this case. xxxx As elsewhere stated, [the Philippine Bank of Communications] did not oppose the instant motion up to the present. In fact, during the hearing held on March 15, 2004, [the bank’s] counsel manifested in open court that except for the rentals due from [Zuellig Pharma] which are the subject of a consignation suit before a Makati Court, the other rental payments are continuously received by [Lui Enterprises]. There being no objection from [the Philippine Bank of Communications], and in order to protect the right of [Lui Enterprises] respecting the subject of the action during the pendency of this case, this Court, in the exercise of its discretion hereby grants the motion. Accordingly, consistent with the order of this Court dated June 30, 2003, the parties are hereby directed to further observe status quo with regard to the rental payments owing or due from the lessees of the properties subject of the first set of deeds of dacion and that the defendants are enjoined from disposing of the properties located at Green Heights Village, Davao City until the case is finally resolved. With the order dated April 1, 2004 issued by the Regional Trial Court of Davao as basis, Lui Enterprises argued that Zuellig Pharma must remit its rental payments to 230

it and prayed that the interpleader case be dismissed. The Regional Trial Court of Makati only noted the manifestation with prayer dated April 15, 2004.39 It was only on October 21, 2004, or one year after the issuance of the order of default, that Lui Enterprises filed a motion to set aside order of default40 in the Makati trial court on the ground of excusable negligence. Lui Enterprises argued that its failure to file a motion to dismiss on time “was caused by the negligence of [Lui Enterprises’] former counsel.”41 This negligence was allegedly excusable because “[Lui Enterprises] was prejudiced and prevented from fairly presenting [its] case.”42 For its allegedly meritorious defense, Lui Enterprises argued that the earlier filed nullification of deed of dation in payment case barred the filing of the interpleader case. The two actions allegedly involved the same parties and the same issue of which corporation had the better right over the rental payments. To prevent “the possibility of two courts x x x rendering conflicting rulings [on the same issue],”43 Lui Enterprises argued that the subsequently filed interpleader case be dismissed. Zuellig Pharma filed its opposition44 to the motion to set aside order of default. It argued that a counsel’s failure to file a timely answer was inexcusable negligence which bound his client. Further, Zuellig Pharma argued that the pending case for nullification of deed of dation in payment “[did] not preclude [Zuellig Pharma] from seeking the relief prayed for in the [interpleader case].”45 While the motion to set aside order of default was still pending for resolution, Lui Enterprises filed the manifestation and motion to dismiss46 dated April 21, 2005 in the Makati trial court. It manifested that the Davao trial court issued another order47 dated April 18, 2005 in the nullification of deed of dation in payment case. In this order, the Davao trial court directed the Philippine Bank of Communications to inform Zuellig Pharma to pay rent to Lui Enterprises while the Davao trial court’s order dated April 1, 2004 was subsisting. The order dated April 18, 2005 of the Davao trial court reads:chanRoblesvirtualLawlibrary ORDER Plaintiffs move for execution or implementation of the Order dated September 14, 231

2004. In substance, [Lui Enterprises] seek[s] to compel the remittance in their favor of the rentals from [Zuellig Pharma], one of the lessees alluded to in the September 14, 2004 Order whose rental payments “must be remitted to and collected by [Lui Enterprises].” [The Philippine Bank of Communications] did not submit any opposition. It appears from the records that sometime in February 2003, after being threatened with a lawsuit coming from [the Philippine Bank of Communications], [Zuellig Pharma] stopped remitting its rentals to [Lui Enterprises] and instead, has reportedly deposited the monthly rentals before a Makati court for consignation. As aptly raised by the plaintiffs, a possible impasse may insist should the Makati Court’s ruling be contrary to or in conflict with the status quo order issued by this Court. To preclude this spectacle, Zuellig Pharma should accordingly be advised with the import of the Order dated September 14, 2004, the salient portion of which is quoted: x x x prior to the institution of the instant case and by agreement of the parties, plaintiffs were given as they did exercise the right to collect, receive and enjoy rental payments x x x. Since the April 1, 2004 status quo order was a necessary implement of the writ of preliminary injunction issued on June 30, 2003, it follows that plaintiff’s right to collect and receive rental payments which he enjoyed prior to the filing of this case, must be respected and protected and maintained until the case is resolved. As such, all rentals due from the above–enumerated lessees must be remitted to and collected by the Plaintiffs. Status quo simply means the last actual peaceable uncontested status that preceded the actual controversy. (Searth Commodities Corp. v. Court of Appeals, 207 SCRA 622). As such, the [Philippine Bank of Communications] [is] hereby directed to forthwith inform [Zuellig Pharma] of the April 1, 2004 status quo order and the succeeding September 14, 2004 Order, and consequently, for the said lessee to remit all rentals due from February 23, 2003 and onwards to [Lui Enterprises] in the meanwhile that the status quo order is subsisting. In its manifestation and motion to dismiss, Lui Enterprises reiterated its prayer for the dismissal of the interpleader case to prevent “the possibility of [the Regional Trial Court, Branch 143, Makati City] and [the Regional Trial Court, Branch 16, 232

Davao City] rendering conflicting rulings [on the same issue of which corporation has the better right to the rental payments].”48 Without resolving the motion to set aside order of default, the Makati trial court denied the manifestation with motion to dismiss dated April 21, 2005 on the ground that Lui Enterprises already lost its standing in court.49 Lui Enterprises did not file any motion for reconsideration of the denial of the manifestation and motion to dismiss dated April 21, 2005. In its decision50 dated July 4, 2006, the Regional Trial Court of Makati ruled that Lui Enterprises “[was] barred from any claim in respect of the [rental payments]”51 since it was declared in default. Thus, according to the trial court, there was no issue as to which corporation had the better right over the rental payments.52 The trial court awarded the total consigned amount of P6,681,327.30 to the Philippine Bank of Communications and ordered Lui Enterprises to pay Zuellig Pharma P50,000.00 in attorney’s fees.53 Lui Enterprises appealed to the Court of Appeals.54 The Court of Appeals found Lui Enterprises’ appellant’s brief insufficient. Under Rule 44, Section 13 of the 1997 Rules of Civil Procedure, an appellant’s brief must contain a subject index, page references to the record, table of cases, textbooks and statutes cited, and the statement of issues, among others. However, Lui Enterprises’ appellant’s brief did not contain these requirements.55 As to the denial of Lui Enterprises’ motion to dismiss, the Court of Appeals sustained the trial court. The Court of Appeals found that Lui Enterprises filed its motion to dismiss four days late.56 With respect to Lui Enterprises’ motion to set aside order of default, the Court of Appeals found that Lui Enterprises failed to show the excusable negligence that prevented it from filing its motion to dismiss on time. On its allegedly meritorious defense, the Court of Appeals ruled that the nullification of deed of dation in payment case did not bar the filing of the interpleader case, with Zuellig Pharma not being a party to the nullification case.57 On the award of attorney’s fees, the Court of Appeals sustained the trial court since “Zuellig Pharma x x x was constrained to file the action for interpleader with consignation in order to protect its interests x x x.”58 233

Thus, in its decision59 promulgated on May 24, 2010, the Court of Appeals dismissed Lui Enterprises’ appeal and affirmed in toto the Regional Trial Court of Makati’s decision. Lui Enterprises filed a motion for reconsideration.60 The Court of Appeals denied Lui Enterprises’ motion for reconsideration in its resolution promulgated on August 13, 2010.61 Hence, this petition. In this petition for review on certiorari ,62 Lui Enterprises argued that the Court of Appeals applied “the rules of procedure strictly”63 and dismissed its appeal on technicalities. According to Lui Enterprises, the Court of Appeals should have taken a liberal stance and allowed its appeal despite the lack of subject index, page references to the record, table of cases, textbooks and statutes cited, and the statement of issues in its appellant’s brief.64 Lui Enterprises also claimed that the trial court should have set aside the order of default since its failure to file a motion to dismiss on time was due to excusable negligence.65 For its allegedly meritorious defense, Lui Enterprises argued that the pending nullification of deed of dation in payment case barred the filing of the interpleader case. The nullification of deed of dation in payment case and the interpleader case allegedly involved the same issue of which corporation had the better right to the rent. To avoid conflicting rulings on the same issue, Lui Enterprises argued that the subsequently filed interpleader case be dismissed.66 No attorney’s fees should have been awarded to Zuellig Pharma as argued by Lui Enterprises. Zuellig Pharma filed the interpleader case despite its knowledge of the nullification of deed of dation in payment case filed in the Davao trial court where the same issue of which corporation had the better right over the rental payments was being litigated. Thus, Zuellig Pharma filed the interpleader case in bad faith for which it was not entitled to attorney’s fees.67 The Philippine Bank of Communications filed its comment68 on the petition for review on certiorari . It argued that Lui Enterprises failed to raise any error of law and prayed that we affirm in toto the Court of Appeals’ decision. For Zuellig Pharma, it manifested that it was adopting the Philippine Bank of 234

Communications’ arguments in its comment.69 The issues for our resolution are:chanRoblesvirtualLawlibrary I. Whether the Court of Appeals erred in dismissing Lui Enterprises’ appeal for lack of subject index, page references to the record, table of cases, textbooks and statutes cited, and the statement of issues in Lui Enterprises’ appellant’s brief; II. Whether the Regional Trial Court of Makati erred in denying Lui Enterprises’ motion to set aside order of default; III. Whether the annulment of deed of dation in payment pending in the Regional Trial Court of Davao barred the subsequent filing of the interpleader case in the Regional Trial Court of Makati; and IV. Whether Zuellig Pharma was entitled to attorney’s fees. Lui Enterprises’ petition for review on certiorari is without merit. However, we delete the award of attorney’s fees. I Lui Enterprises did not comply with the rules on the contents of the appellant’s brief Under Rule 50, Section 1, paragraph (f) of the 1997 Rules of Civil Procedure, the Court of Appeals may, on its own motion or that of the appellee, dismiss an appeal should the appellant’s brief lack specific requirements under Rule 44, Section 13, paragraphs (a), (c), (d), and (f):chanRoblesvirtualLawlibrary Section 1. Grounds for dismissal of appeal. – An appeal may be dismissed by the Court of Appeals, on its own motion or on that of the appellee, on the following grounds:chanRoblesvirtualLawlibrary xxxx (f) Absence of specific assignment of errors in the appellant’s brief, or of page

235

references to the record as required in Section 13, paragraphs (a), (c), (d), and (f) of Rule 44. These requirements are the subject index of the matter in brief, page references to the record, and a table of cases alphabetically arranged and with textbooks and statutes cited:chanRoblesvirtualLawlibrary Section 13. Contents of the appellant’s brief. – The appellant’s brief shall contain, in the order herein indicated, the following:chanRoblesvirtualLawlibrary (a) A subject index of the matter in brief with a digest of the arguments and page references, and a table of cases alphabetically arranged, textbooks and statutes cited with references to the pages where they are cited; xxxx (c) Under the heading “Statement of the Case,” a clear and concise statement of the nature of the action, a summary of the proceedings, the appealed rulings and orders of the court, the nature of the controversy, with page references to the record; (d) Under the heading “Statement of Facts,” a clear and concise statement in a narrative form of the facts admitted by both parties and of those in controversy, together with the substance of the proof relating thereto in sufficient detail to make it clearly intelligible, with page references to the record; xxxx (f) Under the heading “Argument,” the appellant’s arguments on each assignment of error with page references to the record. The authorities relied upon shall be cited by the page of the report at which the case begins and the page of the report on which the citation is found; xxxx Lui Enterprises’ appellant’s brief lacked a subject index, page references to the record, and table of cases, textbooks and statutes cited. Under Rule 50, Section 1 of the 1997 Rules of Civil Procedure, the Court of Appeals correctly dismissed Lui Enterprises’ appeal. 236

Except for cases provided in the Constitution,70 appeal is a “purely statutory right.”71 The right to appeal “must be exercised in the manner prescribed by law”72 and requires strict compliance with the Rules of Court on appeals.73 Otherwise, the appeal shall be dismissed, and its dismissal shall not be a deprivation of due process of law. In Mendoza v. United Coconut Planters Bank, Inc.,74 this court sustained the Court of Appeals’ dismissal of Mendoza’s appeal. Mendoza’s appellant’s brief lacked a subject index, assignment of errors, and page references to the record. In De Liano v. Court of Appeals,75 this court also sustained the dismissal of De Liano’s appeal. De Liano’s appellant’s brief lacked a subject index, a table of cases and authorities, and page references to the record. There are exceptions to this rule. In Philippine Coconut Authority v. Corona International, Inc.,76 the Philippine Coconut Authority’s appellant’s brief lacked a clear and concise statement of the nature of the action, a summary of the proceedings, the nature of the judgment, and page references to the record. However, this court found that the Philippine Coconut Authority substantially complied with the Rules. Its appellant’s brief “apprise[d] [the Court of Appeals] of the essential facts and nature of the case as well as the issues raised and the laws necessary [to dispose of the case].”77 This court “[deviated] from a rigid enforcement of the rules”78 and ordered the Court of Appeals to resolve the Philippine Coconut Authority’s appeal. In Go v. Chaves,79 Go’s 17–page appellant’s brief lacked a subject index. However, Go subsequently filed a subject index. This court excused Go’s procedural lapse since the appellant’s brief “[consisted] only of 17 pages which [the Court of Appeals] may easily peruse to apprise it of [the case] and of the relief sought.”80 This court ordered the Court of Appeals to resolve Go’s appeal “in the interest of justice.”81 In Philippine Coconut Authority and Go, the appellants substantially complied with the rules on the contents of the appellant’s brief. Thus, this court excused the appellants’ procedural lapses. In this case, Lui Enterprises did not substantially comply with the rules on the contents of the appellant’s brief. It admitted that its appellant’s brief lacked the required subject index, page references to the record, and table of cases, textbooks, and statutes cited. However, it did not even correct its admitted “technical 237

omissions”82 by filing an amended appellant’s brief with the required contents.83 Thus, this case does not allow a relaxation of the rules. The Court of Appeals did not err in dismissing Lui Enterprises’ appeal. Rules on appeal “are designed for the proper and prompt disposition of cases before the Court of Appeals.”84 With respect to the appellant’s brief, its required contents are designed “to minimize the [Court of Appeals’] labor in [examining] the record upon which the appeal is heard and determined.”85 The subject index serves as the brief’s table of contents.86 Instead of “[thumbing] through the [appellant’s brief]”87 every time the Court of Appeals Justice encounters an argument or citation, the Justice deciding the case only has to refer to the subject index for the argument or citation he or she needs.88 This saves the Court of Appeals time in reviewing the appealed case. Efficiency allows the justices of the appellate court to substantially attend to this case as well as other cases. Page references to the record guarantee that the facts stated in the appellant’s brief are supported by the record.89 A statement of fact without a page reference to the record creates the presumption that it is unsupported by the record and, thus, “may be stricken or disregarded altogether.”90 As for the table of cases, textbooks, and statutes cited, this is required so that the Court of Appeals can easily verify the authorities cited “for accuracy and aptness.”91 Lui Enterprises’ appellant’s brief lacked a subject index, page references to the record, and a table of cases, textbooks, and statutes cited. These requirements “were designed to assist the appellate court in the accomplishment of its tasks, and, overall, to enhance the orderly administration of justice.”92 This court will not disregard rules on appeal “in the guise of liberal construction.”93 For this court to liberally construe the Rules, the party must substantially comply with the Rules and correct its procedural lapses.94 Lui Enterprises failed to remedy these errors. All told, the Court of Appeals did not err in dismissing Lui Enterprises’ appeal. It failed to comply with Rule 44, Section 13, paragraphs (a), (c), (d), and (f) of the 1997 Rules of Civil Procedure on the required contents of the appellant’s brief. II 238

Lui Enterprises failed to show that its failure to answer the complaint within the required period was due to excusable negligence When a defendant is served with summons and a copy of the complaint, he or she is required to answer within 15 days from the day he or she was served with summons.95 The defendant may also move to dismiss the complaint “[w]ithin the time for but before filing the answer.”96 Fifteen days is sufficient time for a defendant to answer with good defenses against the plaintiff’s allegations in the complaint. Thus, a defendant who fails to answer within 15 days from service of summons either presents no defenses against the plaintiff’s allegations in the complaint or was prevented from filing his or her answer within the required period due to fraud, accident, mistake or excusable negligence.97 In either case, the court may declare the defendant in default on plaintiff’s motion and notice to defendant.98 The court shall then try the case until judgment without defendant’s participation99 and grant the plaintiff such relief as his or her complaint may warrant.100 A defendant declared in default loses his or her standing in court.101 He or she is “deprived of the right to take part in the trial and forfeits his [or her] rights as a party litigant,”102 has no right “to present evidence [supporting his or her] allegations,”103 and has no right to “control the proceedings [or] cross–examine witnesses.”104 Moreover, he or she “has no right to expect that [the court] would [act] upon [his or her pleadings]”105 or that he or she “may [oppose] motions filed against him [or her].”106 However, the defendant declared in default “does not [waive] all of [his or her] rights.”107 He or she still has the right to “receive notice of subsequent proceedings.”108 Also, the plaintiff must still present evidence supporting his or her allegations “despite the default of [the defendant].”109 Default, therefore, is not meant to punish the defendant but to enforce the prompt filing of the answer to the complaint. For a defendant without good defenses, default saves him or her “the embarrassment of openly appearing to defend the 239

indefensible.”110 As this court explained in Gochangco v. The Court of First Instance of Negros Occidental, Branch IV:111 It does make sense for a defendant without defenses, and who accepts the correctness of the specific relief prayed for in the complaint, to forego the filing of the answer or any sort of intervention in the action at all. For even if he did intervene, the result would be the same: since he would be unable to establish any good defense, having none in fact, judgment would inevitably go against him. And this would be an acceptable result, if not being in his power to alter or prevent it, provided that the judgment did not go beyond or differ from the specific relief stated in the complaint. x x x.112 (Emphasis in the original) On the other hand, for a defendant with good defenses, “it would be unnatural for him [or her] not to set x x x up [his or her defenses] properly and timely.”113 Thus, “it must be presumed that some insuperable cause prevented him [or her] from [answering the complaint].”114 In which case, his or her proper remedy depends on when he or she discovered the default and whether the default judgment was already rendered by the trial court. After notice of the declaration of default but before the court renders the default judgment, the defendant may file, under oath, a motion to set aside order of default. The defendant must properly show that his or her failure to answer was due to fraud, accident,115 mistake116 or excusable negligence.117 The defendant must also have a meritorious defense. Rule 9, Section 3, paragraph (b) of the 1997 Rules of Civil Procedure provides:chanRoblesvirtualLawlibrary Section 3. Default; declaration of. – x x x x (b) Relief from order of default. – A party declared in default may at any time after notice thereof and before judgment file a motion under oath to set aside the order of default upon proper showing that his failure to answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense. In such case, the order of default may be set aside on such terms and conditions as the judge may impose in the interest of justice. If the defendant discovers his or her default after judgment but prior to the judgment becoming final and executory, he or she may file a motion for new trial under Rule 37, Section 1, paragraph (a) of the 1997 Rules of Civil Procedure.118 If he or she discovers his or her default after the judgment has become final and executory, a petition for relief from judgment under Rule 38, Section 1 of the 1997 240

Rules of Civil Procedure may be filed.119 Appeal is also available to the defendant declared in default. He or she may appeal the judgment for being contrary to the evidence or to the law under Rule 41, Section 2 of the 1997 Rules of Civil Procedure.120 He or she may do so even if he or she did not file a petition to set aside order of default.121 A petition for certiorari may also be filed if the trial court declared the defendant in default with grave abuse of discretion.122 The remedies of the motion to set aside order of default, motion for new trial, and petition for relief from judgment are mutually exclusive, not alternative or cumulative. This is to compel defendants to remedy their default at the earliest possible opportunity. Depending on when the default was discovered and whether a default judgment was already rendered, a defendant declared in default may avail of only one of the three remedies. Thus, if a defendant discovers his or her default before the trial court renders judgment, he or she shall file a motion to set aside order of default. If this motion to set aside order of default is denied, the defendant declared in default cannot await the rendition of judgment, and he or she cannot file a motion for new trial before the judgment becomes final and executory, or a petition for relief from judgment after the judgment becomes final and executory. Also, the remedies against default become narrower and narrower as the trial nears judgment. The defendant enjoys the most liberality from this court with a motion to set aside order of default, as he or she has no default judgment to contend with, and he or she has the whole period before judgment to remedy his or her default. With a motion for new trial, the defendant must file the motion within the period for taking an appeal123 or within 15 days from notice of the default judgment. Although a default judgment has already been rendered, the filing of the motion for new trial tolls the reglementary period of appeal, and the default judgment cannot be executed against the defendant. A petition for relief from judgment is filed after the default judgment has become final and executory. Thus, the filing of the petition for relief from judgment does not stay the execution of the default judgment unless a writ of preliminary injunction is issued pending the petition’s resolution.124 241

Upon the grant of a motion to set aside order of default, motion for new trial, or a petition for relief from judgment, the defendant is given the chance to present his or her evidence against that of plaintiff’s. With an appeal, however, the defendant has no right to present evidence on his or her behalf and can only appeal the judgment for being contrary to plaintiff’s evidence or the law. Similar to an appeal, a petition for certiorari does not allow the defendant to present evidence on his or her behalf. The defendant can only argue that the trial court committed grave abuse of discretion in declaring him or her in default. Thus, should a defendant prefer to present evidence on his or her behalf, he or she must file either a motion to set aside order of default, motion for new trial, or a petition for relief from judgment. In this case, Lui Enterprises had discovered its default before the Regional Trial Court of Makati rendered judgment. Thus, it timely filed a motion to set aside order of default, raising the ground of excusable negligence. Excusable negligence is “one which ordinary diligence and prudence could not have guarded against.”125 The circumstances should be properly alleged and proved. In this case, we find that Lui Enterprises’ failure to answer within the required period is inexcusable. Lui Enterprises’ counsel filed its motion to dismiss four days late. It did not immediately take steps to remedy its default and took one year from discovery of default to file a motion to set aside order of default. In its motion to set aside order of default, Lui Enterprises only “conveniently blamed its x x x counsel [for the late filing of the answer]”126 without offering any excuse for the late filing. This is not excusable negligence under Rule 9, Section 3, paragraph (b)127 of the 1997 Rules of Civil Procedure. Thus, the Regional Trial Court of Makati did not err in refusing to set aside the order of default. Lui Enterprises argued that the Regional Trial Court of Makati should have been liberal in setting aside its order of default. After it had been declared in default, Lui Enterprises filed several manifestations informing the Makati trial court of the earlier filed nullification of deed of dation in payment case which barred the filing of the interpleader case. Lui Enterprises’ president, Eli L. Lui, and counsel even flew in from Davao to Makati to “formally [manifest that] a [similar] action between [Lui Enterprises] and [the Philippine Bank of Communications]”128 was already pending in the Regional Trial Court of Davao. However, the trial court did 242

not recognize Lui Enterprises’ standing in court. The general rule is that courts should proceed with deciding cases on the merits and set aside orders of default as default judgments are “frowned upon.”129 As much as possible, cases should be decided with both parties “given every chance to fight their case fairly and in the open, without resort to technicality.”130 However, the basic requirements of Rule 9, Section 3, paragraph (b) of the 1997 Rules of Civil Procedure must first be complied with.131 The defendant’s motion to set aside order of default must satisfy three conditions. First is the time element. The defendant must challenge the default order before judgment. Second, the defendant must have been prevented from filing his answer due to fraud, accident, mistake or excusable negligence. Third, he must have a meritorious defense. As this court held in SSS v. Hon. Chaves:132 Procedural rules are not to be disregarded or dismissed simply because their non– observance may have resulted in prejudice to a party’s substantive rights. Like all rules[,] they are to be followed, except only when for the most persuasive of reasons they may be relaxed to relieve a litigant of an injustice not commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed. x x x.133 As discussed, Lui Enterprises never explained why its counsel failed to file the motion to dismiss on time. It just argued that courts should be liberal in setting aside orders of default. Even assuming that it had a meritorious defense and that its representative and counsel had to fly in from Davao to Makati to personally appear and manifest in court its meritorious defense, Lui Enterprises must first show that its failure to answer was due to fraud, accident, mistake or excusable negligence. This Lui Enterprises did not do. Lui Enterprises argued that Zuellig Pharma filed the interpleader case to compel Lui Enterprises and the Philippine Bank of Communications to litigate their claims. Thus, “[d]eclaring the other claimant in default would ironically defeat the very purpose of the suit.”134 The Regional Trial Court of Makati should not have declared Lui Enterprises in default. Under Rule 62, Section 1 of the 1997 Rules of Civil Procedure, a person may file a special civil action for interpleader if conflicting claims are made against him or her over a subject matter in which he or she has no interest. The action is brought against the claimants to compel them to litigate their conflicting claims among 243

themselves. Rule 62, Section 1 of the 1997 Rules of Civil Procedure provides:chanRoblesvirtualLawlibrary Section 1. When interpleader proper. – Whenever conflicting claims upon the same subject matter are or may be made against a person who claims no interest whatever in the subject matter, or an interest which in whole or in part is not disputed by the claimants, he may bring an action against the conflicting claimants to compel them to interplead and litigate their several claims among themselves. An interpleader complaint may be filed by a lessee against those who have conflicting claims over the rent due for the property leased.135 This remedy is for the lessee to protect him or her from “double vexation in respect of one liability.”136 He or she may file the interpleader case to extinguish his or her obligation to pay rent, remove him or her from the adverse claimants’ dispute, and compel the parties with conflicting claims to litigate among themselves. In this case, Zuellig Pharma filed the interpleader case to extinguish its obligation to pay rent. Its purpose in filing the interpleader case “was not defeated”137 when the Makati trial court declared Lui Enterprises in default. At any rate, an adverse claimant in an interpleader case may be declared in default. Under Rule 62, Section 5 of the 1997 Rules of Civil Procedure, a claimant who fails to answer within the required period may, on motion, be declared in default. The consequence of the default is that the court may “render judgment barring [the defaulted claimant] from any claim in respect to the subject matter.”138 The Rules would not have allowed claimants in interpleader cases to be declared in default if it would “ironically defeat the very purpose of the suit.”139 The Regional Trial Court of Makati declared Lui Enterprises in default when it failed to answer the complaint within the required period. Lui Enterprises filed a motion to set aside order of default without an acceptable excuse why its counsel failed to answer the complaint. It failed to prove the excusable negligence. Thus, the Makati trial court did not err in refusing to set aside the order of default. III The nullification of deed in dation in payment case did not bar the filing of the interpleader case. Litis pendentia 244

is not present in this case. Lui Enterprises allegedly filed for nullification of deed of dation in payment with the Regional Trial Court of Davao. It sought to nullify the deed of dation in payment through which the Philippine Bank of Communications acquired title over the leased property. Lui Enterprises argued that this pending nullification case barred the Regional Trial Court of Makati from hearing the interpleader case. Since the interpleader case was filed subsequently to the nullification case, the interpleader case should be dismissed. Under Rule 16, Section 1, paragraph (e) of the 1997 Rules of Civil Procedure, a motion to dismiss may be filed on the ground of litis pendentia:chanRoblesvirtualLawlibrary Section 1. Grounds. – Within the time for but before filing the answer to the complaint or pleading asserting a claim, a motion to dismiss may be made on any of the following grounds:chanRoblesvirtualLawlibrary xxxx (e) That there is another action pending between the same parties for the same cause; xxxx Litis pendentia is Latin for “a pending suit.”140 It exists when “another action is pending between the same parties for the same cause of action x x x.”141 The subsequent action is “unnecessary and vexatious”142 and is instituted to “harass the respondent [in the subsequent action].”143 The requisites of litis pendentia are:chanRoblesvirtualLawlibrary (1) Identity of parties or at least such as represent the same interest in both actions; (2) Identity of rights asserted and reliefs prayed for, the reliefs being founded on the same facts; and (3) The identity in the two cases should be such that the judgment that may be rendered in one would, regardless of which party is successful, amount to res judicata in the other.144 245

All of the requisites must be present.145 Absent one requisite, there is no litis pendentia.146 In this case, there is no litis pendentia since there is no identity of parties in the nullification of deed of dation in payment case and the interpleader case. Zuellig Pharma is not a party to the nullification case filed in the Davao trial court. There is also no identity of rights asserted and reliefs prayed for. Lui Enterprises filed the first case to nullify the deed of dation in payment it executed in favor of the Philippine Bank of Communications. Zuellig Pharma subsequently filed the interpleader case to consign in court the rental payments and extinguish its obligation as lessee. The interpleader case was necessary and was not instituted to harass either Lui Enterprises or the Philippine Bank of Communications. Thus, the pending nullification case did not bar the filing of the interpleader case. Lui Enterprises cited Progressive Development Corporation, Inc. v. Court of Appeals147 as authority to set aside the subsequently filed interpleader case. In this cited case, petitioner Progressive Development Corporation, Inc. entered into a lease contract with Westin Seafood Market, Inc. The latter failed to pay rent. Thus, Progressive Development Corporation, Inc. repossessed the leased premises, inventoried the movable properties inside the leased premises, and scheduled the public sale of the inventoried properties as they agreed upon in their lease contract. Westin Seafood Market, Inc. filed for forcible entry with damages against Progressive Development Corporation, Inc. It subsequently filed an action for damages against Progressive Development Corporation for its “forcible takeover of the leased premises.”148 This court ordered the subsequently filed action for damages dismissed as the pending forcible entry with damages case barred the subsequently filed damages case. Progressive Development Corporation, Inc. does not apply in this case. The action for forcible entry with damages and the subsequent action for damages were filed by the same plaintiff against the same defendant. There is identity of parties in both cases. In this case, the nullification of deed of dation in payment case was filed by Lui 246

Enterprises against the Philippine Bank of Communications. The interpleader case was filed by Zuellig Pharma against Lui Enterprises and the Philippine Bank of Communications. A different plaintiff filed the interpleader case against Lui Enterprises and the Philippine Bank of Communications. Thus, there is no identity of parties, and the first requisite of litis pendentia is absent. As discussed, Lui Enterprises filed the nullification of deed of dation in payment to recover ownership of the leased premises. Zuellig Pharma filed the interpleader case to extinguish its obligation to pay rent. There is no identity of reliefs prayed for, and the second requisite of litis pendentia is absent. Since two requisites of litis pendentia are absent, the nullification of deed of dation in payment case did not bar the filing of the interpleader case. Lui Enterprises alleged that the Regional Trial Court of Davao issued a writ of preliminary injunction against the Regional Trial Court of Makati. The Regional Trial Court of Davao allegedly enjoined the Regional Trial Court of Makati from taking cognizance of the interpleader case. Lui Enterprises argued that the Regional Trial Court of Makati “should have respected the orders issued by the Regional Trial Court of Davao.”149 Lui Enterprises cited Compania General de Tabacos de Filipinas v. Court of Appeals150 where this court allegedly held:chanRoblesvirtualLawlibrary x x x [T]he issuance of the said writ by the RTC of Agoo, La Union not only seeks to enjoin Branch 9 of the RTC of Manila from proceedingwith the foreclosure case but also has the effect of pre–empting the latter’s order. x x x.151 Compania General de Tabacos de Filipinas is not an authority for the claim that a court can issue a writ of preliminary injunction against a co–equal court. The cited sentence was taken out of context. In Compania General de Tabacos de Filipinas, this court held that the Regional Trial Court of Agoo had no power to issue a writ of preliminary injunction against the Regional Trial Court of Manila.152 A court cannot enjoin the proceedings of a co–equal court. Thus, when this court said that the Regional Trial Court of Agoo’s writ of preliminary injunction “not only seeks to enjoin x x x [the Regional Trial Court of Manila] from proceeding with the foreclosure case but also has the effect of pre– empting the latter’s orders,”153 this court followed with “[t]his we cannot countenance.”154 247

At any rate, the Regional Trial Court of Davao’s order dated April 18, 2005 was not a writ of preliminary injunction. It was a mere order directing the Philippine Bank of Communications to inform Zuellig Pharma to pay rent to Lui Enterprises while the status quo order between Lui Enterprises and the Philippine Bank of Communications was subsisting. The Regional Trial Court of Davao did not enjoin the proceedings before the Regional Trial Court of Makati. The order dated April 18, 2005 provides:chanRoblesvirtualLawlibrary As such, [the Philippine Bank of Communications] [is] hereby directed to forthwith inform Zuellig Pharma Corp., of the April 1, 2004 status quo order and the succeeding September 14, 2004 Order, and consequently, for the said lessee to remit all rentals due from February 23, 2003 and onwards to plaintiff Lui Enterprises, Inc., in the meanwhile that the status quo order is subsisting.155 Thus, the Regional Trial Court of Davao did not enjoin the Regional Trial Court of Makati from hearing the interpleader case. All told, the trial court did not err in proceeding with the interpleader case. The nullification of deed of dation in payment case pending with the Regional Trial Court of Davao did not bar the filing of the interpleader case with the Regional Trial Court of Makati. IV The Court of Appeals erred in awarding attorney’s fees In its ordinary sense, attorney’s fees “represent the reasonable compensation [a client pays his or her lawyer] [for legal service rendered].”156 In its extraordinary sense, attorney’s fees “[are] awarded x x x as indemnity for damages [the losing party pays the prevailing party].”157 The award of attorney’s fees is the exception rather than the rule.158 It is not awarded to the prevailing party “as a matter of course.”159 Under Article 2208 of the Civil Code, attorney’s fees cannot be recovered in the absence of stipulation, except under specific circumstances:chanRoblesvirtualLawlibrary (1) When exemplary damages are awarded; (2) When the defendant’s act or omission has compelled the plaintiff to litigate with third persons or to incur expenses to protect his interest; (3) In criminal cases of malicious prosecution against the plaintiff; 248

(4) In case of a clearly unfounded civil action or proceeding against the plaintiff; (5) Where the defendant acted in gross and evident bad faith in refusing to satisfy the plaintiff’s plainly valid, just and demandable claim; (6) In actions for legal support; (7) In actions for the recovery of wages of household helpers, laborers and skilled workers; (8) In actions for indemnity under workmen’s compensation and employer’s liability laws; (9) In a separate civil action to recover civil liability arising from a crime; (10) When at least double judicial costs are awarded; (11) In any other case where the court deems it just and equitable that attorney’s fees and expenses of litigation should be recovered.160 Even if a party is “compelled to litigate with third persons or to incur expenses to protect his [or her] rights,”161 attorney’s fees will not be awarded if no bad faith “could be reflected in a party’s persistence in a case.”162 To award attorney’s fees, the court must have “factual, legal, [and] equitable justification.”163 The court must state the award’s basis in its decision.164 These rules are based on the policy that “no premium should be placed on the right to litigate.”165 In this case, the Court of Appeals awarded attorney’s fees as “[Zuellig Pharma] was compelled to litigate with third persons or to incur expenses to protect [its] interest[s].”166 This is not a compelling reason to award attorney’s fees. That Zuellig Pharma had to file an interpleader case to consign its rental payments did not mean that Lui Enterprises was in bad faith in insisting that rental payments be paid to it. Thus, the Court of Appeals erred in awarding attorney’s fees to Zuellig Pharma. All told, the Court of Appeals’ award of P50,000.00 as attorney’s fees must be deleted. WHEREFORE, in view of the foregoing, the petition for review on certiorari is DENIED. The Court of Appeals’ decision and resolution in CA–G.R. CV No. 88023 are AFFIRMED with MODIFICATION. The award of P50,000.00 attorney’s fees to Zuellig Pharma Corporation is DELETED. SO ORDERED. 249

Velasco, Jr., (Chairperson), Peralta, Abad, and Mendoza, JJ., concur.

March 28, 2014 N O T I C E OF J U D G M E N T Sirs/Mesdames:chanRoblesvirtualLawlibrary Please take notice that on ___March 12, 2014___ a Decision, copy attached herewith, was rendered by the Supreme Court in the above–entitled case, the original of which was received by this Office on March 28, 2014 at 2:00 p.m. Very truly yours, (SGD) LUCITA ABJELINA SORIANO Division Clerk of Court Endnotes: 1

Rollo, pp. 28–41. This decision was penned by Associate Justice Ramon M. Bato, Jr., with Associate Justices Juan Q. Enriquez, Jr. and Florito S. Macalino, concurring. 2

Id. at 43–44.

3

Id. at 74–79.

4

Id. at 53–66.

5

Record, p. 44.

6

Rollo, p. 68. 250

7

Id. at 69–70.

8

Id. at 77, decision dated July 4, 2006.

9

Id. at 71.

10

Id. at 47–52, complaint dated May 7, 2003.

11

Id. at 30.

12

Record, pp. 37–47.

13

Rollo, pp. 80–82.

14

Id. at 52.

15

Id.

16

Record, p. 405.

17

Rollo, p. 81.

18

Record, pp. 77–80.

19

Id. at 87.

20

Rollo, p. 81.

21

Record, p. 87.

22

Id. at 93–98.

23

Rules of Court, Rule 11, sec. 1.

24

Rollo, pp. 30–31.

25

Record, p. 94.

26

Id. at 95. 251

27

Id. at 98.

28

Id., secretary’s certificate dated August 28, 2003, states:chanRoblesvirtualLawlibrary RESOLVED, that the Board of Directors of ZUELLIG PHARMA CORPORATION (the “Corporation”) hereby authorize ATTY. ANA L.A. PERALTA with address as that of the Corporation, to initiate, represent and act on behalf of the Corporation, including the authority to execute verifications and certificate of non–forum shopping, in the civil proceedings for consignation of rental payments and interpleader and in all other legal suits or proceedings to be filed against Lui Enterprises, Inc. and/or Philippine Bank of Communications, and to be the Corporation’s true and lawful attorney–in–fact, in its name, place and stead. 29

Record, p. 95.

30

Id. at 95–96.

31

Id. at 96.

32

Id. at 101–103.

33

Id. at 101.

34

Id. at 111–113.

35

Id. at 112.

36

Id. at 208–209.

37

Id. at 210–211.

38

Id. at 211.

39

Id. at 215, in an order dated April 29, 2004.

40

Id. at 402–409. 252

41

Id. at 402.

42

Id.

43

Id. at 405.

44

Id. at 393–395.

45

Id. at 394.

46

Rollo, pp. 83–88.

47

Id. at 89–90.

48

Id. at 87.

49

Record, p. 451, in an order dated May 3, 2005.

50

Rollo, pp. 74–79.

51

Id. at 77.

52

Id.

53

Id. at 78–79.

54

Court of Appeals rollo, pp. 17–38.

55

Rollo, pp. 33–35.

56

Id. at 35–36.

57

Id. at 36–37.

58

Id. at 40.

59

Id. at 28–41.

60

Court of Appeals rollo, pp. 128–137. 253

61

Rollo, pp. 43–44.

62

Id. at 6–26.

63

Id. at 16.

64

Id. at 14–16.

65

Id. at 18–19.

66

Id. at 20–21.

67

Id. at 22–23.

68

Id. at 104–121.

69

Id. at 129–130.

70

CONSTI., Art. VIII, sec. 5, par. 2 provides:chanRoblesvirtualLawlibrary

Sec. 5. The Supreme Court shall have the following powers:chanRoblesvirtualLawlibrary xxxx (2) Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or the Rules of Court may provide, final judgments and orders of lower courts in:chanRoblesvirtualLawlibrary (a) All cases in which the constitutionality or validity of any treaty, international or executive agreement, law, presidential decree, proclamation, order, instruction, ordinance, or regulation is in question. (b) All cases involving the legality of any tax, impost, assessment, or toll, or any penalty imposed in relation thereto. (c) All cases in which the jurisdiction of any lower court is in issue. (d) All criminal cases in which the penalty imposed is reclusion perpetua or higher. (e) All cases in which only an error or question of law is involved. 71

Mendoza v. United Coconut Planters Bank, Inc., G.R. No. 165575, February 2, 2011, 641 SCRA 333, 345 [Per J. Peralta, Second Division]. 254

72

De Liano v. Court of Appeals, 421 Phil. 1033, 1040 (2001) [Per J. De Leon, Jr., Second Division]. 73

Mendoza v. United Coconut Planters Bank, Inc., G.R. No. 165575, February 2, 2011, 641 SCRA 333, 345 [Per J. Peralta, Second Division]. 74

Id. at 333.

75

421 Phil. 1033 (2001) [Per J. De Leon, Jr., Second Division].

76

395 Phil. 742 (2000) [Per J. Kapunan, First Division].

77

Id. at 750.

78

Id.

79

G.R. No. 182341, April 23, 2010, 619 SCRA 333 [Per J. Del Castillo, Second Division]. 80

Id. at 344.

81

Id. at 342.

82

Rollo, p. 14.

83

Mendoza v. United Coconut Planters, Bank, Inc., G.R. No. 165575, February 2, 2011, 641 SCRA 333, 348 [Per J. Peralta, Second Division]. 84

Id.

85

De Liano v. Court of Appeals, 421 Phil. 1033, 1041 (2001) [Per J. De Leon, Jr., Second Division], citing Estiva v. Cawil, 59 Phil. 67, 68–69 (1933) [Per J. Malcolm, En Banc]. 86

Id. at 1042.

87

Id.

88

Id. 255

89

Id. at 1044.

90

Id.

91

Id. at 1045–1046.

92

Id. at 1040.

93

Mendoza v. United Coconut Planters Bank, Inc., G.R. No. 165575, February 2, 2011, 641 SCRA 333, 348 [Per J. Peralta, Second Division]. 94

Id.

95

RULES OF COURT, Rule 11, sec.1.

96

RULES OF COURT, Rule 16, sec. 1.

97

Gochangco v. The Court of First Instance of Negros Occidental, Branch IV, 241 Phil. 48, 67 (1988) [Per C.J. Narvasa, En Banc]. 98

RULES OF COURT, Rule 9, sec. 3.

99

RULES OF COURT, Rule 9, sec. 3 (a).

100

RULES OF COURT, Rule 9, sec. 3.

101

Otero v. Tan, G.R. No. 200134, August 15, 2012, 678 SCRA 583, 591 [Per J. Reyes, Second Division]. 102

Mediserv, Inc. v. China Banking Corporation, 408 Phil. 745, 755 (2001) [Per J. Gonzaga–Reyes, Third Division]. 103

SSS v. Hon. Chaves, 483 Phil. 292, 301 (2004) [Per J. Quisumbing, First Division]. 104

Otero v. Tan, G.R. No. 200134, August 15, 2012, 678 SCRA 583, 591 [Per J. Reyes, Second Division]. 105

Id. at 591–592. 256

106

Id. at 592.

107

SSS v. Hon. Chaves, 483 Phil. 292, 301 (2004) [Per J. Quisumbing, First Division]. 108

Mediserv, Inc. v. China Banking Corporation, 408 Phil. 745, 755 (2001) [Per J. Gonzaga–Reyes, Third Division]. 109

SSS v. Hon. Chaves, 483 Phil. 292, 302 (2004) [Per J. Quisumbing, First Division]. 110

Gochangco v. The Court of First Instance of Negros Occidental, Branch IV, 241 Phil. 48, 67 (1988) [Per C.J. Narvasa, En Banc]. 111

241 Phil. 48 (1988) [Per C.J. Narvasa, En Banc].

112

Id. at 67.

113

Id.

114

Id.

115

Ong Guan Can v. Century Insurance Co., 45 Phil. 667 (1924) [Per J. Johnson, En Banc], cited in The Mechanics of Lifting an Order of Default, Annotation, December 14, 1981, 110 SCRA 223, 226. 116

Tanchan v. Court of Appeals, 365 Phil. 34 (1999) [Per J. Purisima, Third Division]. 117

Santos v. Hon. Samson, 196 Phil. 398 (1981) [Per C.J. Concepcion, Jr., Second Division]. 118

David v. Judge Gutierrez–Fruelda, 597 Phil. 354, 361 (2009) [Per Acting C.J. Quisumbing, Second Division]. 119

Id.

120

Id. 257

121

Id.

122

Sps. Delos Santos v. Judge Carpio, 533 Phil. 42, 53–54 (2006) [Per J. Austria– Martinez, First Division]; Acance v. Court of Appeals, 493 Phil. 676, 685 (2005) [Per J. Callejo, Sr., Second Division]; Indiana Aerospace University v. Commission on Higher Education, 408 Phil. 483, 497 (2001) [Per C.J. Panganiban, Third Division]. 123

Rules of Court, Rule 37, sec. 1.

124

Rules of Court, Rule 38, sec. 5.

125

Magtoto v. Court of Appeals, G.R. No. 175792, November 21, 2012, 686 SCRA 88, 101 [Per J. Del Castillo, Second Division]. 126

Rollo, p. 36.

127

RULES OF COURT, Rule 9, sec. 3, par. (b) Relief from order of default. – A party declared in default may at any time after notice thereof and before judgment file a motion under oath to set aside the order of default upon proper showing that his failure to answer was due to fraud, accident, mistake or excusable negligence and that he has a meritorious defense. In such case, the order of default may be set aside on such terms and conditions as the judge may impose in the interest of justice. 128

Id. at 18.

129

Republic v. Sandiganbayan, 565 Phil. 172, 185 (2007) [Per J. Quisumbing, Second Division]; Samartino v. Raon, 433 Phil. 173, 187 (2002) [Per J. Ynares– Santiago, First Division]; Tanchan v. Court of Appeals, 365 Phil. 34, 41 (1999) [Per J. Purisima, Third Division]. 130

Tanchan v. Court of Appeals, 365 Phil. 34, 41 (1999) [Per J. Purisima, Third Division]. 131

David v. Judge Gutierrez–Fruelda, 597 Phil. 354, 362 (2009) [Per Acting C.J. Quisumbing, Second Division]. 132

483 Phil. 292 [Per J. Quisumbing, First Division]. 258

133

134

Id. at 301. Rollo, p. 19.

135

Pasricha v. Don Luis Dison Realty, Inc., 572 Phil. 52, 69 (2008) [Per J. Nachura, Third Division]; Ocampo v. Tirona, 495 Phil. 55, 68 (2005) [Per J. Carpio, First Division]. 136

Pasricha v. Don Luis Dison Realty, Inc., 572 Phil. 52, 69 (2008) [Per J. Nachura, Third Division]; Ocampo v. Tirona, 495 Phil. 55, 68 (2005) [Per J. Carpio, First Division]. 137

138

139

Rollo, p. 19. RULES OF COURT, Rule 62, sec. 5. Rollo, p. 19.

140

Feliciano v. Court of Appeals, 350 Phil. 499, 505 (1998) [Per J. Bellosillo, First Division]. 141

University Physicians Services, Inc. v. Court of Appeals, 381 Phil. 54, 67 (2000) [Per J. Gonzaga–Reyes, Third Division]. 142

Id.

143

Id.

144

Feliciano v. Court of Appeals, 350 Phil. 499, 505–506 (1998) [Per J. Bellosillo, First Division]. 145

University Physicians Services, Inc. v. Court of Appeals, 381 Phil. 54, 67 (2000) [Per J. Gonzaga–Reyes, Third Division]. 146

Id.

147

361 Phil. 566 (1999) [Per J. Bellosillo, Second Division].

148

Id. at 581. 259

149

Rollo, p. 22.

150

422 Phil. 405 (2001) [Per J. De Leon, Jr., Second Division].

151

Id. at 422.

152

Id.

153

Id.

154

Id.

155

Rollo, p. 90.

156

Philippine National Construction Corporation v. APAC Marketing Corporation, G.R. No. 190957, June 5, 2013, 697 SCRA 441, 449 [Per C.J. Sereno, First Division], citing Benedicto v. Villaflores, G.R. No. 185020, October 6, 2010, 632 SCRA 446. 157

Id.

158

Id. at 450.

159

Id.

160

CIVIL CODE, Art. 2208.

161

Philippine National Construction Corporation v. APAC Marketing Corporation, G.R. No. 190957, June 5, 2013, 697 SCRA 441, 449 [Per C.J. Sereno, First Division], citing ABS–CBN Broadcasting Corp. v. CA, 361 Phil. 499 (1999). 162

Id.

163

Id. at 450.

164

Id.

165

Id. at 449.

166

Rollo, p. 40 260

261

Republic of the Philippines SUPREME COURT Manila G.R. No. 184197 : February 11, 2010 RAPID CITY REALTY AND DEVELOPMENT CORPORATION, Petitioner, v. ORLANDO VILLA and LOURDES PAEZ-VILLA,1cralaw Respondents. DECISION CARPIO MORALES, J.: Sometime in 2004, Rapid City Realty and Development Corporation (petitioner) filed a complaint for declaration of nullity of subdivision plans . . . mandamus and damages against several defendants including Spouses Orlando and Lourdes Villa (respondents). The complaint, which was docketed at the Regional Trial Court of Antipolo City as Civil Case No. 04-7350, was lodged at Branch 71 thereof. After one failed attempt at personal service of summons, Gregorio Zapanta (Zapanta), court process server, resorted to substituted service by serving summons upon respondents househelp who did not acknowledge receipt thereof and refused to divulge their names. Thus Zapanta stated in the Return of Summons: THIS IS TO CERTIFY that on September 24, 2004, the undersigned caused the service of summons together with a copy of the complaint with its annexes to defendant Spouses Lourdes Estudillo Paez-Cline and Orlando Villa at their given address at 905 Padre Faura Street, Ermita Manila, as per information given by two lady househelps who are also residing at the said address, the defendant spouses are not around at that time. On the 27th of September, 2004, I returned to the same placeto serve the summons. I served the summons and the copy of the complaint with its annexes to the two ladies (The same lady househelp I met on Sept. 24, 2004) but they refused to sign to acknowledge receipt and they refused to tell their name as per instruction of the defendants. With me who can attest to the said incident is Mr. Jun Llanes, who was with me at that time.2cralaw x x x (emphasis and underscoring supplied) 262

Despite substituted service, respondents failed to file their Answer, prompting petitioner to file a "Motion to Declare Defendants[-herein respondents] in Default" which the trial court granted by Order of May 3, 2005. More than eight months thereafter or on January 30, 2006, respondents filed a Motion to Lift Order of Default,3cralaw claiming that on January 27, 2006 they "officially receivedall pertinent papers such as Complaint and Annexes. Motion to Dismiss of the Solicitor General and the ORDER dated May 3, 2005 granting the Motion to Declare [them] in Default." And they denied the existence of two women helpers who allegedly refused to sign and acknowledge receipt of the summons. In any event, they contended that assuming that the allegation were true, the helpers had no authority to receive the documents.4cralaw By Order of July 17, 2006, the trial court set aside the Order of Default and gave herein respondents five days to file their Answer. Respondents just the same did not file an Answer, drawing petitioner to again file a Motion to declare them in default, which the trial court again granted by Order of February 21, 2007. On April 18, 2007, respondents filed an Omnibus Motion for reconsideration of the second order declaring them in default and to vacate proceedings, this time claiming that the trial court did not acquire jurisdiction over their persons due to invalid service of summons. The trial court denied respondents Omnibus Motion by Order of May 22, 2007 and proceeded to receive ex-parte evidence for petitioner. Respondents, via certiorari , challenged the trial court's February 21, 2007 and April 18, 2007 Orders before the Court of Appeals. In the meantime, the trial court, by Decision of September 4, 2007, rendered judgment in favor of petitioner. By Decision of April 29, 2008,5cralaw the appellate court annulled the trial court's Orders declaring respondents in default for the second time in this wise: In assailing the orders of the trial court through their Motion to Lift and later their OmnibusMotion the petitioners [herein-respondents] never raised any other defense in avoidance of the respondents [herein petitioners] claim, and 263

instead focused all their energies on questioning the said court's jurisdiction. The latter motion clearly stated prefatorily their counsel's reservation or "special appearance to question jurisdiction" over the persons of the petitioners. "A party who makes a special appearance in court challenging the jurisdiction of said court based on the ground of invalid service of summons is not deemed to have submitted himself to the jurisdiction of the court."6cralaw (citation omitted; italics, emphasis and underscoring supplied) Petitioner's motion for reconsideration having been denied by the appellate court by Resolution of August 12, 2008, it comes to the Court via petition for review on certiorari , arguing in the main that respondents, in filing the first Motion to Lift the Order of Default, voluntarily submitted themselves to the jurisdiction of the court. The petition is impressed with merit. It is settled that if there is no valid service of summons, the court can still acquire jurisdiction over the person of the defendant by virtue of the latter's voluntary appearance. Thus Section 20 of Rule 14 of the Rules of Court provides: Sec. 20. Voluntary appearance . The defendant's voluntary appearance in the action shall be equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person shall not be deemed a voluntary appearance. And Philippine Commercial International Bank v. Spouses Wilson Dy Hong Pi and Lolita Dy, et al. enlightens: Preliminarily, jurisdiction over the defendant in a civil case is acquired either by the coercive power of legal processes exerted over his person, or his voluntary appearance in court. As a general proposition, one who seeks an affirmative relief is deemed to have submitted to the jurisdiction of the court. It is by reason of this rule that we have had occasion to declare that the filing of motions to admit answer, for additional time to file answer, for reconsideration of a default judgment, and to lift order of default with motion for reconsideration, is considered voluntary submission to the court's jurisdiction. This, however, is tempered by the concept of conditional appearance, such that a party who makes a special appearance to challenge, among others, the court's jurisdiction over his person cannot be considered to have submitted to its authority. 264

Prescinding from the foregoing, it is thus clear that: (1) Special appearance operates as an exception to the general rule on voluntary appearance; (2) Accordingly, objections to the jurisdiction of the court over the person of the defendantmust be explicitly made, i.e., set forth in an unequivocal manner; and (3) Failure to do so constitutesvoluntary submission to the jurisdiction of the court, especially in instances where a pleading or motion seeking affirmative relief is filed and submitted to the court for resolution.7cralaw (italics and underscoring supplied) In their first Motion to Lift the Order of Default8cralaw dated January 30, 2006, respondents alleged: xxxx 4. In the case of respondents, there is no reason why they should not receive the Orders of this Honorable Court since the subject of the case is their multimillion real estate property and naturally they would not want to be declared in default or lose the same outright without the benefit of a trial on the merits; 5. It would be the height of injustice if the respondents is [sic] denied the equal protection of the laws[;] 6. Respondents must be afforded "Due process of Law" as enshrined in the New Constitution, which is a basic right of every Filipino, since they were not furnished copies of pleadings by the plaintiff and the Order dated May 3, 2005; x x x x9cralaw and accordingly prayed as follows: WHEREFORE, . . . it is most respectfully prayed . . . that the Order dated May 5, 2005 declaring [them] in default be LIFTED.10cralaw

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Respondents didnot, in said motion, allege that their filing thereof was a special appearance for the purpose only to question the jurisdiction over their persons. Clearly, they had acquiesced to the jurisdiction of the court. WHEREFORE, the petition is GRANTED. The assailed Court of Appeals Decision of April 29, 2008 is REVERSED and SET ASIDE. Let the original records of Civil Case No. 04-7350 be remanded to the court of origin, Regional Trial Court of Antipolo City, Branch 71. SO ORDERED. CONCHITA CARPIO MORALES Associate Justice WE CONCUR: REYNATO S. PUNO Chief Justice Chairperson ANTONIO EDUARDO B. NACHURA* Associate Justice

LUCAS P. BERSAMIN Associate Justice

MARTIN S. VILLARAMA, JR. Associate Justice C E R T I FI CAT I O N Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court's Division. REYNATO S. PUNO Chief Justice

Endnotes: 266

1

cralaw The Court of Appeals was originally impleaded as respondent. Pursuant however to Rule 45, Sec. 4 of the Rules of Court, the courts or judges rendering the assailed judgment shall not be impleaded as respondents in a petition for review on certiorari . *

Additional member per Special Order No. 821. 2

cralaw Records, p. 219. 3

cralaw Id. at 367-372.

4

cralaw Rollo, pp. 70-71.

5

cralaw Penned by Associate Justice Apolinario O. Bruselas, Jr. with the concurrence of Associate Justices Rebecca de Guia-Salvador and Vicente S.E. Veloso. 6

cralaw Supra note 4.

7

cralaw G.R. No. 171137, June 5, 2009. 8

cralaw Records, pp. 367-371. 9

cralaw Id. at 368-369.

10

cralaw Id. at 370.

267

THIRD DIVISION REMIGIA* GRAGEDA, CLARITA GRAGEDAIMPERIAL, MOSAD-LINO GRAGEDA, ANTONIO GRAGEDA, MERLIN GRAGEDA and HEIRS OF JUAN MOROA GRAGEDA, represented by his widow, MARCELITA N. GRAGEDA, Petitioners,

G.R. No. 169536

Present:

YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, CHICO-NAZARIO,

- versus -

NACHURA, and REYES, JJ.

HON. NIMFA C. GOMEZ, in her capacity as Presiding Judge, Municipal Circuit Trial Court of Camalig-Jovellar, and HAUDINY GRAGEDA, Respondents.

Promulgated:

September 21, 2007 **

Sometimes spelled Remegia in the rollo.

268

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

DECISION

CHICO-NAZARIO, J.: This is a Petition for Review on Certiorari assailing the Decision dated 31 August 2005, of the Court of Appeals in CA-G.R. SP No. 89563, dismissing the appeal taken by petitioners from the 15 March 2005 Order of the Regional Trial Court (RTC), Branch 3, of Legazpi City, in SCA Case No. 10440. In its 15 March 2005 Order, the RTC dismissed petitioners Petition for Certiorari under Rule 65 of the Rules of Court, assailing; (a) the 22 September 2004 Order of the Municipal Circuit Trial Court (MCTC) of Camalig-Jovellar, granting the Motion for Issuance of Alias Writ of Execution filed by private respondent Haudiny Grageda, and (b) the 13 January 2005 Order, issued by the same court denying petitioners Motion for Reconsideration. The factual and procedural antecedents of this case are as follows: Juan Navia Grageda owned a 1,527 square meter parcel of land in Quirangay, Camalig, Albay, denominated as Lot No. 6386, and the residential house standing thereon. On 27 July 1982, Juan Navia Grageda died single and without issue. He left the following as his heirs: (1) his sister, petitioner Remigia Grageda; (2) the two daughters of his deceased brother Lauro Grageda, namely: Dorotea Grageda Naga and Lina Grageda-Solano;

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(3) the six children of another late brother, Amado Grageda, to wit: Antonio Grageda, Merlin Grageda, Haudiny Grageda, Juan Moroa Grageda, Hipolito Grageda, and Aurea Grageda-Villa; (4) the two children of a third late brother, Moises Grageda, namely: Mosadlino Grageda, and Clarita Grageda-Imperial. A fourth brother, Rufo Grageda, also died single and without issue. In July 1998, Dorotea Grageda-Naga and Lina Grageda-Solano (referred to in the title of the Complaint as Lina Solano-Naga), heirs of Lauro Grageda, filed with the MCTC of Camalig-Jovellar, Albay a Complaint* for partition of Lot No. 6386 and its improvement/s, which was docketed as Civil Case No. C-655. Impleaded as defendants therein were all the other surviving heirs of Juan Navia Grageda. Of the defendants, only Remigia Grageda (sister heir of Juan Grageda), Mosadlino Grageda (one of the heirs of Moises Grageda) and Juan Moroa Grageda (one of the heirs of Amado Grageda) tendered an Answer to the Complaint. In their Answer, they averred that they do not know of any person by the name of Lina Solano-Naga, although Lauro Grageda was known to have several children, among whom was Estaquio Grageda who is not a party to the case. * They manifested that they do not have any interest in the subject property because it now belongs to a third person, who was never made a party to this case. * They also claimed that the properties of Juan Navia Grageda had already been the subject of a Deed of Extrajudicial Partition and Exchange executed by his siblings Amado Grageda, Lauro Grageda, Rufo Grageda, and Remegia Grageda, and his nephew Mosadlino Grageda and niece Clara Grageda Imperial, and duly notarized by RTC Judge Gregorio Consulta, then MCTC Judge of Camalig-Jovellar, immediately after the death of said Juan Grageda in the year 1983. * As regards the house constructed on the subject lot, they averred that it was constructed at the expense of petitioner Remegia Grageda, a public school teacher, and said house now belongs to a third person who was not impleaded as a party defendant in this case.* 

Rollo, p. 46. Id. at 50.  Id. at 50-51.  Id. at 51.  Id. 

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On 31 March 2000, the MCTC issued its Decision in Civil Case No. C-655. The MCTC pertinently ruled: The defendants, however, contend that the estate of the late Juan Navia Grageda was extrajudicially divided among his heirs. But, they did not adduce any credible proof that Lot No. 6386 was included on such division. Further, there is no evidence on record showing that the plaintiffs predecessor-in-interest, the late Lauro Grageda, has agreed to dispose or part away in favor of another person his share in Lot No. 6386. As to the claim by the defendants that a third person has acquired ownership over Lot No. 6386, there is no iota of proof adduced on record to lend credence to such claim. This Court finds such claim baseless. Anyway, the admission by the defendants Remigia Grageda and Juan Moroa Grageda that they are staying on the house built over Lot No. 6386 negates such claim. Now, Juan Navia Grageda died single, without a child, and without a will. His intestate heirs, his brothers Rufo, Lauro, Amado and Moises, his sister Remegia, hence inherit his estate in equal shares. (Article 1004, Civil Code). As Lauro Grageda is now deceased, his share on Juans estate goes to his own estate. As the plaintiffs are the heirs of the late Lauro Grageda, (Article 979, Ibid.), they can rightfully claim whatever property interest belonging to his estate. Clearly, the plaintiffs are co-heirs to the estate of the late Juan Navia Grageda. As co-heirs, they are co-owners of such estate. As Lot No. 6386 appears as the remaining part of such estate, as co-owners of such land, they can rightfully demand for its partition. Article 494, the Civil Code, is explicit of this, stating, in part, as follows, to wit: No co-owner shall be obliged to remain in the co-ownership. Each coowner may demand at any time the partition of the thing owned in 271

common, insofar as his share is concerned xxx xxx. And such partition should not be limited on Lot No. 6386, but should include the house built on it, because such house is but an accessory to it. (Article 445, Ibid.).*

The dispositive portion of the MCTC Decision provides: WHEREFORE, Premises considered, judgment is hereby rendered as follows, to wit: 1.

Ordering the partition of Lot No. 6386, including the house built on it, into four (4) equal shares, among Remegia Grageda, Heirs of Amado Grageda, Heirs of Moises Grageda and the Heirs of Lauro Grageda, the latter represented by the plaintiffs Dorotea GragedaNaga and Lina Grageda-Solano. They shall contribute equally for any such expenses necessary to effect such partition;

2.

Ordering the defendants to pay the plaintiffs the following sums of money: 2.a. The amount of Twenty Thousand Pesos, Philippine currency, as attorneys fees, to include counsel's appearance fees; 2.b. The amount of Five Thousand Pesos, Philippine currency, as and by way of litigation expenses.

The defendants shall pay the costs of suit.*  

Id. at 54-55. Id. at 55.

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On 16 January 2001, the MCTC issued an Order commissioning Geodetic Engineer Ramon Magdaong to conduct a survey of the subject lot, to carry out the partition, and to submit his report thereon. The full contents of such Order are as follows: Geodetic engineer Ramon Magdaong is hereby commissioned to conduct a survey on re: partition of Lot No. 6386 pursuant to and to carry out that portion of the decision, dated March 31, 2000 re: partition of Lot No. 6386 into four (4) equal shares, on the aboveentitled case. Engineer Magdaong shall consider the value of the house standing on such lot as he partition it pursuant to his commission. Thus, engineer Magdaong is hereby directed to appear and thus take his oath as commissioner before this Court on February 8, 2001, at 9:30 oclock in the morning. Within a period of ten (10) days after Engineer Magdaong has taken his commissioners oath, he will convene the parties to a meeting before he conduct his survey to partition Lot No. 6386. Commissioner Magdaong shall notify the parties, their counsels and this Court of the date and precise time he will conduct his survey to partition Lot No. 6386. Such survey shall be transparent, and the parties shall have the option to attend it, assisted by another geodetic engineer of their choice, if they so wish, and they can raise objection/s as commissioner Magdaong conduct his survey, and the latter is hereby required to note any and all objections. Within a period of fifteen (15) days after commissioner Magdaong has completed his survey to partition Lot No. 6386, he 273

shall submit with this Court his written report embodying the result of such survey, furnishing separate copies thereof to the parties thru their counsels. Commissioner Magdaongs compensation for his work shall be taxed as costs against the parties here, pursuant to the above decision. Send separate copies of this order upon Engineer Ramon Magdaong, who resides in Daraga, Albay, the parties and their counsels.*

On 22 October 2001, Dorotea Grageda-Naga and Lina Grageda-Solano filed a Manifestation stating that the disputed property had already been partitioned in accordance with MCTCs Order.* It appears, however, that only the one-fourth share pertaining to the plaintiffs had been segregated. On 9 May 2002, private respondent Haudiny Grageda and his brother Hipolito Grageda filed before the MCTC of Camalig-Jovellar a Complaint against their siblings Juan Moroa Grageda, Aurea Grageda-Villa, Antonio Grageda and Merlin Grageda for the partition, amongst themselves, of the one-fourth share in Lot No. 6487 pertaining to their late father, Amado Grageda. The case was docketed as Civil Case No. C-691.* On 4 June 2002, Juan Moroa Grageda, Aurea Grageda-Villa, Antonio Grageda, and Merlin Grageda filed a Motion to Dismiss * Civil Case No. C-691, alleging, inter alia, that since Haudiny Grageda and Hipolito Grageda had not filed their separate Answer in Civil Case No. C-655, they are deemed to have adopted the answer filed by Remigia Grageda, Mosadlino Grageda, and Juan Moroa Grageda, wherein they manifested that the property now belongs to a third person. 

Id. at 56-57. Id. at 58.  Id. at 59-62.  Id. at 63-64. 

274

On 9 September 2003, the MCTC dismissed the Complaint in Civil Case No. C-691 without prejudice, on the ground that the same is premature inasmuch as the share pertaining to the Heirs of Amado Grageda had not yet been segregated. The MCTC held as follows: This action for Partition commenced by the plaintiffs is anchored on the Decision dated March 31, 2002, rendered by this court in Civil Case No. C-655 (RTC No. 9834) entitled DOROTEA GRAGEDA-NAGA and LINA SOLANO-NAGA vs. REMEGIA GRAGEDA, JUAN MOROA-GRAGEDA, ANTONIO GRAGEDA, MERLIN GRAGEDA, [J]UADINI GRAGEDA, HIPOLITO GRAGEDA, AUREA GRAGEDA, CLARITA GRAGEDAIMPERIAL and MOSADLINO GRAGEDA, which provided among others that Lot No. 6386, including the house built on it, be partitioned into four equal shares among Remigia Grageda, the heirs of Amado Grageda, the heirs of Moises Grageda and the heirs of Lauro Grageda. In this case (CC No. C-691), the plaintiffs and the defendants are all children/heirs of the late AMADO GRAGEDA. The complaint filed in this case prayed that the share adjudged as pertaining to the heirs of AMADO GRAGEDA, now co-owned by his children be partitioned. Section 2, Rule 69 of the Rules of Court provides as follows: Order for partition, and partition by agreement thereunder. If after the trial the court finds that the plaintiff has no right thereto, it shall order the partition of the real estate among all the parties in interest. Thereupon, the parties may, if they are able to agree, make the partition among themselves by proper instruments of conveyance, and the court shall confirm the partition so agreed upon by all the parties, and such 275

partition, together with the order of the court confirming the same, shall be recorded in the registry of deeds of the place in which the property is situated. Hence, under the aforequoted rule, there are two stages in every action for partition. The first phase is the determination of whether or not a coownership in fact exists and a partition is proper. This phase existed and ended by virtue of the Decision in Civil Case No. C-655 entitled, Dorotea Gragera-Naga and Lina Grageda-Solano vs. Remegia Grageda, et al. The second phase commences when the parties are unable to agree upon the partition agreed by the court. In that event, partition shall be effected for the parties by the court with the assistance of not more than three commissioners. A perusal of the records in Civil Case No. C-655 (RTC No. 9834) showed that the approved partition segregated only the share appertaining to the heirs of LAURO GRAGEDA, and the respective individual shares appertaining to REMIGIA GRAGEDA, Heirs of MOISES GRAGEDA, and Heirs of AMADO GRAGEDA (the father of the parties in this case [C.C. No. C-691] remained unsegregated. Hence, except for the segregated portion pertaining to the heirs of LAURO GRAGEDA, the remaining portion of Lot 6386, including a portion of the house remained undivided. Nonetheless, as discussed above, the total shares pertaining to Remigia Grageda, heirs of Moises Grageda, and heirs of Amado Grageda are not yet segregated, hence, it will still be premature for the herein plaintiffs to ask for partition of the share pertaining them as heirs of Amado Grageda.

276

WHEREFORE, for lack of cause of action, and pre-maturity of action, this case is DISMISSED, without prejudice.*

Haudiny and Hipolito Grageda filed a Motion for Reconsideration, but the same was denied. Haudiny Grageda, acting alone, filed on 15 December 2003, a Motion for the Issuance of an Alias Writ of Execution in Civil Case No. C-655, seeking to execute the partition of the remaining three-fourths portion of the subject property among the remaining heirs. On 22 September 2004, the MCTC directed the parties, within fifteen days from receipt of its Order, to submit a project of partition of the lot involved in said case. Petitioners filed a Motion for Reconsideration of said Order. On 13 January 2005, the MCTC effectively denied the Motion, and directed Geodetic Engineer Ramon Magdaong to partition the remaining three-fourths undivided part of Lot No. 6386, holding that it could not add and/or declare that which is not in the Decision, and that it is simply mandated to carry out its terms. Petitioners filed a Petition for Certiorari with the RTC of Legazpi City, docketed as SCA Case No. 10440. The RTC dismissed the Petition on the ground that it is patently without merit and manifestly intended for delay, and that the question raised therein is too insubstantial and deserves scant consideration. Petitioners appealed to the Court of Appeals, which rendered the assailed Decision, the dispositive portion of which states: UPON THE VIEW WE TAKE OF THIS CASE, THUS, the appeal at bench must be, as it hereby is, DENIED DUE COURSE, 

Id. at 71-72.

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and consequently DISMISSED. Without special pronouncement as to costs.*

Thus, this Petition for Review on Certiorari, where petitioners raise the sole issue: IS THE COURT OF APPEALS CORRECT IN FINDING THAT PRIVATE RESPONDENTS CLAIM IN HIS MOTION FOR EXECUTION FILED IN CIVIL CASE NO. C-655 IS NOT A COMPULSORY CROSS-CLAIM WHICH HE COULD ENFORCE AT ANY TIME?*

Petitioners argue that private respondent Haudiny Gragedas claim in his Motion for Execution in Civil Case No. C-655 filed with the MCTC is in the nature of a compulsory cross-claim, which he should have ventilated in the said case by filing an answer separate from that filed by petitioners Remigia Grageda and Mosadlino Grageda and petitioner Marcelita N. Gragedas late husband, Juan Moroa Grageda, who were the only defendants to file an Answer thereto. * Petitioners submit that it was necessary for private respondent Haudiny Grageda to file a separate Answer in Civil Case No. C-655, because the defendants who actually filed their Answer disclaimed any interest in the lot involved in said case, which they averred, already belonged to another person not impleaded as a defendant therein.* According to petitioners, by private respondent Haudiny Gragedas failure to file a separate answer in Civil Case No. C-655, he was deemed to have adopted the answer filed by the answering defendants, and that the admissions made by the answering defendants in their answer should be binding on Haudiny Grageda.*



Id. at 33. Id. at 114.  Id. at 114-115.  Id. at 115.  Id. at 115. 

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Petitioners further argue that since private respondent Haudiny Grageda did not file a separate Answer or a cross-claim in Civil Case No. C-655, the issue in said case was limited to whether the plaintiffs therein (Dorotea Grageda Naga and Lina Grageda-Solano) had the right to a share in Lot No. 6386.* According to petitioners, the issue of whether the defendants in Civil Case No. C-655 (which include petitioners and private respondent in the case at bar), could likewise demand a partition of Lot No. 6386 among themselves was not properly raised in said case. Thus, there was no opportunity to introduce evidence against private respondent Haudiny Grageda in Civil Case No. C-655, because he did not contest the claim made by the answering defendants in their Answer therein that the lot involved in said case already belongs to a third person.* Presented with these arguments, the very same arguments raised by petitioners with the MCTC and the RTC, the Court of Appeals held that the MCTC was correct in ordering the execution of its 31 March 2000 Decision, with respect to the remaining of the subject property. According to the Court of Appeals, petitioners arguments were baseless, since there was no evidence with respect to its claim that the subject property was now owned by a third person, and since the MCTC Decision has already become final and executory. Thus: It should be easy enough to see that this cross-claim hypothesis which is the petitioners mainstay in this appeal is a subtle, cunning ruse or attempt by the petitioners to deprive private respondent Haudiny Grageda, son of the late Amado Grageda, - by way of perceived procedural technicality, - of what is lawfully and rightfully his share in the subject lot as a co-heir and co-owner under the Civil Code of the Philippines. For, as the MCTC pointed out in its decision in Civil Case No. C-655, the defendants therein (Remigia Grageda, Juan Grageda and Mosadlino Grageda) did not adduce any credible proof that Lot No. 6386 was included (in) such division. Further, there is no evidence on record showing that the plaintiffs predecessor-ininterest, the late Lauro Grageda, has agreed to dispose (of) or part away [with] in favor of another person [with] his share (in) Lot No. 6386. The same court moreover noted that As to the claim by the defendants that a third person (i.e. Rosadel N. Grageda) has acquired ownership over Lot No. 6386, there is no iota of proof adduced on  

Id. Id. at 116.

279

record to lend credence to such claim. This Court finds such claim baseless. Anyway, the admission by the defendants Remigia Grageda and Juan Moroa Grageda that they were staying (in) the house built over Lot No. 6386 negates such claim. We are bound by this finding of the MCTC judgment, as this has already attained finality, and is, therefore, irrevocable. Quite apart from the foregoing, Haudiny Grageda (and his brother Hipolito Gragedas) failure or inability to tender an answer in Civil Case No. C-655 should not be held up against them. For these two must have known, as they are presumed to know, that an action for partition, is, as a general proposition, imprescriptible (last paragraph of Art. 494 of the Civil Code). In point of fact, on March 21, 2002 these two filed a complaint for partition with damages (Civil Case No. 691 of the MCTC of Camalig-Jovellar) against their siblings Juan Moroa Grageda, Aurea Grageda-Villa, Antonio Grageda and Marlin Grageda in line with the decision of the same court in Civil Case No. C-655. And, even as this action (Civil Case No. C-691) was dismissed on the ground that it was premature (See MCTC Order dated Sept. 9, 2003 in civil Case No. C-691), for the reason that while the first phase of a partition proceeding under Sec. 2, Rule 69 of the Rules of Court had been ended and concluded by a decision in Civil Case No. 655, the second phase had yet to be finalized and concluded, the required three commissioners for the partition not having been appointed by the court yet. To be noted, too, is the fact that said dismissal was without prejudice. Nevertheless, it cannot escape notice that upon a timely Motion for Reconsideration and Appointment of Commissioners the MCTC, in an order dated February 2, 2004, ruled that As to the prayer for appointment of commissioner, this court is of the opinion that the same may be proper in Civil Case No. C-655 and not in this case. What is more, the decision in this case has obviously become final and executory, as stressed in the January 13, 2005 order of MCTC Judge Nimfa C. Gomez, who therein hastened to add that This court cannot add and/or declare that which is not in the Decision, but is simply mandated to carry out its terms. In order to do this, the Ex Parte Manifestation of Atty. Hermel R. Marantal stated in No. 2 above 280

(viz. there is now a need to order the appointed commissioner, Engr. Ramon Magdaong, to proceed with the partition of said remaining shares so as to fully implement the final and executory judgment of this Honorable Court dated March 31, 2000 and for said commissioner to thereafter submit his report) is GIVEN DUE COURSE.*

We agree with the Court of Appeals. The cross-claim argument presented by petitioners is directed against the correctness of the judgment and, thus, should have been the subject of an appeal from the 31 March 2000 MCTC Decision. These arguments cannot be threshed out in a Petition for Certiorari against a Motion for Execution of such Decision. Petitioners argument that Civil Case No. C-655 was tried and decided on the basic issue of whether the plaintiffs therein (Dorotea Grageda Naga and Lina Grageda-Solano), had a right to a share in Lot No. 6386, is contradicted by the dispositive portion of the Decision of the MCTC and the subsequent 16 January 2001 Order of the MCTC. The dispositive portion of the final and executory Decision of the MCTC on Civil Case No. C-655, clearly ordered the partition of Lot No. 6386 into four equal shares. One of those shares was ordered to be awarded to the Heirs of Amado Grageda, of which private respondent Haudiny Grageda is a part. The 16 January 2001 Order of the MCTC (commissioning Geodetic Engineer Ramon Magdaong to conduct a survey of the subject lot, to carry out the partition, and to submit his report thereon), on the other hand, confirms that the MCTC intended in its Decision to order the partition of Lot No. 6386 into four equal shares, and not merely to segregate the one-fourth share of the plaintiffs therein. It is basic that when there is a conflict between the dispositive portion or fallo of a Decision and the opinion of the court contained in the text or body of the judgment, the former prevails over the latter. * An order of execution is based on the  

Id. at 30-32. PH Credit Corporation v. Court of Appeals, 421 Phil. 821, 833 (2001).

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disposition, not on the body, of the Decision. * This rule rests on the theory that the fallo is the final order while the opinion in the body is merely a statement ordering nothing.* Indeed, the foregoing rule is not without an exception. We have held that where the inevitable conclusion from the body of the decision is so clear as to show that there was a mistake in the dispositive portion, the body of the decision will prevail.* The case at bar, however, does not fall under this exception. The MCTC Decision, while primarily dealing with the right of the plaintiffs to their one-fourth share in the subject property, likewise discussed, albeit sparingly, the ownership of the entire Lot No. 6386, and not just the right of the plaintiffs thereto. Specifically, the Decision discussed that the allegation of third-person ownership is baseless due to the complete absence of evidence proving such claim, and the admission by Remigia Grageda and Juan Moroa Grageda that they were staying in the house built on Lot No. 6386.* Finally, petitioners contention that Haudiny Gragedas failure to file a separate Answer in Civil Case No. C-655 resulted in his adopting the Answer filed by the answering defendants, including the admissions thereon, is unavailing. The principle petitioners are evidently referring to is based on Rule 9, Section 3(c) of the Rules of Court, which provides: (c) Effect of partial default. When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented.

Thus, in Tanhu v. Judge Ramolete,* we held: 

Id. at 833-834. Rosales v. Court of Appeals, 405 Phil. 638, 655 (2001).  Id.  Rollo, p. 54.  160 Phil. 1101, 1131-1132 (1975). 

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Stated differently, in all instances where a common cause of action is alleged against several defendants, some of whom answer and the others do not, the latter or those in default acquire a vested right not only to own the defense interposed in the answer of their co-defendant or co-defendants not in default but also to expect a result of the litigation totally common with them in kind and in amount whether favorable or unfavorable. The substantive unity of the plaintiffs cause against all the defendants is carried through to its adjective phase as ineluctably demanded by the homogeneity and indivisibility of justice itself. Indeed, since the singleness of the cause of action also inevitably implies that all the defendants are indispensable parties, the court's power to act is integral and cannot be split such that it cannot relieve any of them and at the same time render judgment against the rest. Considering the tenor of the section in question, it is to be assumed that when any defendant allows himself to be declared in default knowing that his co-defendant has already answered, he does so trusting in the assurance implicit in the rule that his default is in essence a mere formality that deprives him of no more than the right to take part in the trial and that the court would deem anything done by or for the answering defendant as done by or for him. The presumption is that otherwise he would not have seen to it that he would not be in default. Of course, he has to suffer the consequences of whatever the answering defendant may do or fail to do, regardless of possible adverse consequences, but if the complaint has to be dismissed in so far as the answering defendant is concerned, it becomes his inalienable right that the same be dismissed also as to him. It does not matter that the dismissal is upon the evidence presented by the plaintiff or upon the latter's mere desistance, for in both contingencies, the lack of sufficient legal basis must be the cause. x x x.

The effects, therefore, of a failure to file a separate Answer when other codefendants (against whom a common cause of action was alleged) had already filed theirs, are limited to the following:

283

1.

While the non-answering defendants may be declared in default, the court would still try the case against them on the assumption that they are deemed to have adopted the Answer of the answering defendants; and

2.

If declared in default, the defaulting party is deprived of no more than the right to take part in the trial. Consequently, the result of the litigation, whether favorable or unfavorable, shall affect and bind the defaulting party and the answering defendant with equal force and effect.

Thus, in this case, while it is implied that Haudiny Grageda has adopted the Answer of the answering defendants in Civil Case No. C-655, such adoption cannot result in a waiver of private respondent Haudiny Gragedas right to take part in the favorable results of the litigation. Under the principle of renuntiatio non prsumitur, a waiver of right may not be performed unless the will to waive is indisputably shown by him who holds the right.* Private respondent Haudiny Gragendas supposed waiver of his right to a share in the subject property must therefore be express* and cannot be lightly presumed from his failure to tender a separate Answer to the Complaint in Civil Case No. C-655. As the result of the litigation as to the answering defendants, whether favorable or unfavorable, would likewise be applicable to Haudiny Grageda, the disposition of the MCTC (that the subject property be partitioned into four equal shares, one share of which to be awarded to the Heirs of Amado Grageda) should be adjudged applicable to him.

WHEREFORE, the instant Petition is hereby DENIED. The Decision of the Court of Appeals dated 31 August 2005 is AFFIRMED. No costs. SO ORDERED.

 

Testate Estate of Mota. v. Serra, 47 Phil. 464, 469-470 (1925). Id.

284

MINITA V. CHICO-NAZARIO Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO Associate Justice Chairperson

MA. ALICIA AUSTRIA-MARTINEZ ANTONIO EDUARDO B. NACHURA Associate Justice Associate Justice

RUBEN T. REYES Associate Justice

285

ATTESTATION I attest that the conclusions in the above Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

CONSUELO YNARES-SANTIAGO Associate Justice Chairperson, Third Division

CERTIFICATION Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairpersons Attestation, it is hereby certified that the conclusions in the above 286

Decision were reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

REYNATO S. PUNO Chief Justice

287

FIRST DIVISION

[G.R. No. 127683. August 7, 1998]

LETICIA P. LIGON, petitioner, vs. COURT OF APPEALS and IGLESIA NI CRISTO, respondents. DECISION DAVIDE, JR., J.: This petition, as appeal under Rule 45 and at the same time as a special civil action for certiorari under Rule 65 of the Rules of Court, seeks to reverse the Decision* of the Court of Appeals of 11 September 1996 in CA-G.R. SP No. 40258 and its Resolution* of 3 January 1997 denying petitioners motion for reconsideration of the Decision. As far as could be gathered from the voluminous pleadings filed by the parties in this case and in CA-G.R. SP No. 40258, the factual antecedents are as follows: Petitioner Leticia P. Ligon (hereafter LIGON) is the mortgagee in three deeds of mortgage covering two parcels of land located along Tandang Sora, Barangay Culiat, Quezon City, covered by Transfer Certificates of Title (TCT) Nos. 170567 (now RT-26521) and 176616 (now RT-26520) belonging to the Islamic Directorate of the Philippines (hereafter IDP). These deeds of mortgage were executed by certain Abdulrahman R.T. Linzag and Rowaida Busran-Sampaco on 21 March 1988, 25 April 1988, and 29 July 1988 as security for the loans of P3 million, P2 million, and P4 million, respectively, which IDP allegedly obtained from LIGON.* It must be pointed out that two groups had earlier vied for control of the IDP, namely, (1) the Carpizo group headed by Engr. Farouk Carpizo and (2) the Abbas group led by Zorayda Tamano and Atty. Firdaussi Abbas. In its decision of 3 October 1986 in SEC Case No. 2687, the Securities and Exchange Commission (SEC) declared null and void the election of both groups to the IDP Board of  

Per Luna, A., J., with Barcelona and Valdez, JJ., concurring. Annex A of Petition, Rollo, 65-91; Annex C of Petition, Rollo, 115-126.



Partial Judgment in Civil Case No. Q-91-10494, 3-5; Original Record (OR), Vol. III, 1,169-1,171; Complaint, 6; OR, Vol. I, 8. The Complaint stated that copies of said mortgages were attached thereto as Annexes D, E, and F, but said annexes were not in the record.

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Trustees. Nevertheless, on 20 April 1989, the Carpizo group caused the signing of an alleged Board Resolution authorizing the sale of the two parcels of land mentioned above to private respondent Iglesia ni Cristo (hereafter INC). The sale was evidenced by a Deed of Absolute Sale i dated 20 April 1989, wherein IDP and INC stipulated that the former would evict all squatters and illegal occupants in the two lots within forty-five (45) days from execution of the sale. IDP failed to clear the lots of squatters; hence, on 19 October 1990 INC filed with the Regional Trial Court (RTC) of Quezon City a complaint for specific performance with damages, which was docketed as Civil Case No. Q-90-6937. On 30 May 1991, IDPs original Board of Trustees headed by Senator Mamintal Tamano, or the Tamano group, filed a petition with SEC to annul the sale of the two lots to INC. The case was docketed as SEC Case No. 4012. On 5 July 1993, the SEC promulgated its decision in SEC Case No. 4012 annulling, inter alia, the sale of the two parcels of land to INC. Aggrieved, INC filed a special civil action for certiorari before the Court of Appeals, which was docketed as CA-G.R. SP No. 33295. In its decision of 28 October 1994, the Court of Appeals granted INCs petition and set aside the portion of the SEC decision declaring the sale null and void. Consequently, the Tamano group appealed to this Court in a petition for review in G.R. No. 117897 entitled Islamic Directorate of the Philippines v. Court of Appeals. Meanwhile, on 12 September 1991, the RTC rendered a partial judgment in Civil Case No. Q-90-6937; and on 7 October 1991, it rendered an amended partial judgment granting the reliefs prayed for by INC except the prayer for damages, which was to be resolved later. On 31 October 1991, the INC filed with the RTC of Quezon City a complaint ii for the annulment of the deeds of mortgage over the two lots, impleading as defendants therein LIGON, Abdulrahman R.T. Linzag, Rowaida Busran-Sampaco, and the IDP. The case was docketed as Civil Case No. Q-91-10494. In its answer, iii IDP interposed a cross-claim against LIGON. On the other hand, LIGON filed an answeriv with counterclaim; a cross-claim against IDP; and a third-party complaint against Pablo de Leon, Guillermo Vina, and Aida Vina. Later, LIGON filed a motionv in Civil Case No. Q-91-10494 to declare INC and IDP in default for their failure to file an answer to her counterclaim and crossclaim, respectively. She further prayed that she be allowed to present evidence exparte. INC opposedvithe motion, saying that some of the grounds raised by LIGON in her counterclaim were sufficiently dealt with in INCs complaint, while the other grounds were in the nature of a compulsory counterclaim and did not therefore require an answer. On 30 September 1992, the trial court granted LIGONs motion 289

and allowed LIGON to present evidence ex-parte to support her cross-claim against IDP.vii Then, on 2 August 1995, LIGON filed in Civil Case No. Q-91-10494, an urgent motionviii for rendition of partial judgment against IDP in the cross-claim for the foreclosure of the mortgages. On 27 October 1995, the trial court rendered a partial judgmentix (1) ordering IDP to pay LIGON the amounts of P3 million, P2 million, and P4 million with interest at 36% per annum compounded annually from the dates the loans became due and demandable; and (2) directing the foreclosure sale of the mortgaged properties in case of non-payment of said amounts. On 21 November 1995, INC filed a Motion for Reconsiderationx of the partial judgment, which was, however, denied by the trial court in its Order xi of 20 March 1996 on the following grounds: . . . [T]he INC has no personality to seek a reconsideration of the partial judgment. Firstly, the judgment involves a cross-claim in which INC is not a party; the right to appeal from a judgment or to move for a reconsideration thereof is a right inherent to the party in the cross-claim affected adversely by the judgment. Section 2, Rule 3 of the Rules of Court provides that a case shall be prosecuted and defended in the name of the real party-in-interest. INC is not a party to the mortgages hence it is not a real party-in-interest to the foreclosure thereof. ... Not being a party to the cross-claim, as indeed it cannot be being the plaintiff and cross-claim being a suit between co-parties, INC has no right to file the instant motion. Secondly, INC is the plaintiff in this case that sued IDP. Thus, the interests of INC as plaintiff are adverse to or in conflict with those of IDP, a defendant. The plaintiff cannot take up the cudgels for an adverse party, the defendant. Thirdly, the right of the INC to file this motion rests on its being a subsequent purchaser of the property or its being the new owner; thus, it claims it steps into the shoes of IDP. The right of IDP as a party to a case should be distinguished from its rights as owner-seller of the property, especially in this case where not only did INC sue IDP but IDP also chose not to exercise its right to move for a reconsideration of the partial judgment or to appeal therefrom. More importantly, even assuming arguendo that INC is now the new owner of the mortgaged property, the fact remains that the sale to it on April 20, 1989, is admittedly after the execution of the real estate mortgages in 1988; the mortgages 290

were registered in 1991 while the sale was never inscribed in the TCTs of the IDP. The INC is simply a subsequent buyer whose rights were explicitly defined in the case of Limpin vs. IAC (supra). Finally, this Court has already ruled that INC is not a party to the mortgages and may have no right to question the validity thereof .... Consequently, INC filed with the Court of Appeals a petition xii for certiorari with prayer for the issuance of a temporary restraining order to annul the aforementioned partial judgment and the order denying private respondents motion for reconsideration. The case was docketed as CA-G.R. SP No. 40258. In its decisionxiii of 11 September 1996 in CA-G.R. SP No. 40258, the Court of Appeals ruled in favor of INC and justified its ruling in this wise: Technically, while the IDP can be declared in default for failure to file its answer to Ligons counterclaim, and that Ligons motion to present her evidence exparte against the IDP is not irregular, the respondent court should not have rendered a partial judgment based on the evidence presented by Ligon, without giving the INC an opportunity to present its evidence contra as well as to substantiate its allegations in the complaint that the mortgage contracts are null and void and of no binding force and effect . ... Had respondent court, upon motion by respondent Ligon allowed her to introduce her evidence, and afterwards afforded the INC of the opportunity to be heard in its complaint to prove that the loans and the mortgages are invalid, such recourse could have prevented the most mischievous consequences in the administration of justice to suitors, that of depriving one of his day in court -- the affording of an opportunity to be heard on the other. ... We find sufficient basis to hold that respondent court committed grave abuse of discretion tantamount to lack or in excess of jurisdiction in rendering a partial judgment at that stage of the proceedings, the dispositive portion of which would even indicate that respondent Ligon was awarded more than what she prayed for. We further find that respondent court exceeded its jurisdiction in rendering partial judgment in favor of respondent Ligon without first giving petitioner its day in court since the issues in the respective claims of the parties against each other are interrelated and inseparably intertwined with one another -- one maintains that the mortgages are null and void, while the other asks for foreclosure of the same mortgage contracts -- respondent court could have deferred disposition of one 291

claim adverse to the claim of the other until the claim of both are heard and the parties afforded the opportunity to present their evidence in support of their opposing claim. This decision prompted LIGONs Urgent Motions to Vacate Null and Void Decision Dated September 11, 1996, Dismiss the Petition and/or for Reconsiderationxiv and Motion to Recuse Associate Justices Artemon D. Luna, Ramon A. Barcelona, and Salvador J. Valdez, Jr., xv which was accompanied by Amended Urgent Motions to Vacate Null and Void Decision Dated September 11, 1996, Dismiss the Petition and/or for Reconsideration. xvi These were denied by the Court of Appeals in its Resolutionxvii of 3 January 1997. Undaunted by the foregoing adversities in CA-G.R. SP No. 40258, LIGON filed the instant petition on 27 February 1997. LIGON claims that respondent Court of Appeals (1) acted with grave abuse of discretion in refusing to order INC to implead or include IDP as an indispensable party in the petition for certiorari; (2) acted without jurisdiction in annulling the decision of the lower court; and (3) erred in not dismissing INCs petition because INC was not aggrieved by the trial courts decision and was guilty of forum-shopping. LIGON asserts that IDP was an indispensable party in INCs action in CA-G.R. SP No. 40258 because IDP is the mortgagor and defendant in the foreclosure suit instituted by petitioner Ligon before the lower court; it has such interest in the controversy that a final decree would necessarily affect its rights and interests; and, an action to annul a contract cannot be maintained without joining both contracting parties as defendants or respondents. Since IDP was not impleaded in said case, the petition should have been dismissed pursuant to Section 7, Rule 3 of the Rules of Court.xviii The Court of Appeals, therefore, acquired no jurisdiction over the case; and its decision was a total nullity. As to the second ground, LIGON claims that the Court of Appeals was powerless to annul the trial courts judgment because IDP was not a party in CAG.R. SP No. 40258. Regarding the third ground, LIGON asserts that INC was not aggrieved by the trial courts decision because at no time was it a party to the action for foreclosure of the mortgages; moreover, INC did not show that it would suffer substantial injury or manifest injustice in case of foreclosure of the mortgages. She asserts that IDP was the aggrieved party, then tirelessly reiterates her argument that IDP should have been joined as petitioner or respondent in the certiorari proceeding. As to forum-shopping, LIGON maintains that both litis pendentia and res judicata [were] irrepressibly present and attendant in INCs action before the 292

appellate court. INC filed three actions, in all of which there was identity of (1) parties or interests represented, (2) right or causes, and (3) reliefs sought. Civil Case No. Q-90-6937 was for the enforcement of the stipulation in the Deed of Absolute Sale between INC and IDP obliging IDP to clear the properties sold of squatters. In Civil Case No. Q-91-10494, INC sought to stop the foreclosure of the mortgages. The third case was CA-G.R. SP. No. 40258, wherein the same relief was being sought by INC, that is, to enjoin the foreclosure of the mortgages. LIGON claims that the issues in the three cases were so intertwined that the resolution of any one would constitute res judicata in the others. For its part, INC argues that IDP was not an indispensable party in CA-G.R. SP No. 40258. LIGONs reliance on Section 7, Rule 3 of the Rules of Court on compulsory joinder of indispensable parties is misplaced. INC contends that the rules on ordinary civil actions, including said Section 7, apply only suppletorily to special civil actions. Section 5, Rule 65 of the Rules of Court declares that the defendants in a special civil action for certiorari shall be the person or persons interested in sustaining the proceeding in court to be joined with the court or judge whose act or omission is being contested. It is illogical and absurd to argue that IDP is interested in defending the validity of an adverse partial judgment. As regards LIGONs second ground, INC counters that the special civil action for certiorari was an independent action and not a continuation of the proceedings before the trial court. Thus, not all the parties in the case at the trial court could be included in the independent action for certiorari. Anent the third ground, INC maintains that it was aggrieved by the foreclosure judgment because, being the new owner of the subject lots, it would suffer substantial injury and manifest injustice from the foreclosure of the mortgages. INC relies on Article 1609 of the Civil Code, which subrogates the vendee to the rights and actions of the vendor. INC claims it did not engage in forum-shopping, as the cases it filed involved different issues. Civil Case No. Q-90-6937 involved the validity of the sale of the IDP properties to INC; Civil Case No. Q-91-10494, the validity of the mortgages; and CA-G.R. SP No. 40258, the validity of the partial judgment rendered by the trial court. The judgment in one case was not determinative of the issues in the other cases. As to the trial courts declaration that IDP was in default, INC contends that the same was illegal, since IDP did not have to file an answer to LIGONs cross-claim pursuant to Section 4, Rule 18 of the Rules of Court.xix INC further argues that LIGONS cross-claim for foreclosure of the mortgages 293

could not proceed ahead of the main action for annulment of said mortgages. Meanwhile, on 14 May 1997, this Court promulgated its decision xx in G.R. No. 117897 (Islamic Directorate of the Philippines v. Court of Appeals). It set aside the decision of the Court of Appeals of 28 October 1994 in CA-G.R. SP No. 33295 and upheld the decision of the SEC holding null and void the sale of the two lots to INC. This Court clarified and decided the issue therein as follows: The main question though in this petition is: Did the Court of Appeals commit reversible error in setting aside that portion of the SECs Decision in SEC Case No. 4012 which declared the sale of two (2) parcels of land in Quezon City between the IDP-Carpizo Group and private respondent INC as null and void? We rule in the affirmative. There can be no question as to the authority of the SEC to pass upon the issue as to who among the different contending groups is the legitimate Board of Trustees of the IDP since this is a matter properly falling within the original and exclusive jurisdiction of the SEC by virtue of Sections 3 and 5 (c) of Presidential Decree No. 902-A: ... . . . If the SEC can declare who is the legitimate IDP Board, then by parity of reasoning, it can also declare who is not the legitimate IDP Board. This is precisely what the SEC did in SEC Case No. 4012 when it adjudged the election of the Carpizo Group to the IDP Board of Trustees to be null and void. By this ruling, the SEC in effect made the unequivocal finding that the IDP-Carpizo Group is a bogus Board of Trustees. Consequently, the Carpizo Group is bereft of any authority whatsoever to bind IDP in any kind of transaction including the sale or disposition of IDP property. ... Nothing thus becomes more settled than that the IDP-Carpizo Group with whom private respondent INC contracted is a fake Board. Premises considered, all acts carried out by the Carpizo Board, particularly the sale of the Tandang Sora property, allegedly in the name of the IDP, have to be struck down for having been done without the consent of the IDP thru a legitimate Board of Trustees. ... The Carpizo Group-INC sale is further deemed null and void ab initio because of the Carpizo Groups failure to comply with Section 40 of the Corporation Code 294

pertaining to the disposition of all or substantially all assets of the corporation: ... The Tandang Sora property, it appears from the records, constitutes the only property of the IDP. Hence, its sale to a third-party is a sale or disposition of all the corporate property and assets of IDP falling squarely within the contemplation of the foregoing section. For the sale to be valid, the majority vote of the legitimate Board of Trustees, concurred in by the vote of at least 2/3 of the bona fide members of the corporation should have been obtained. These twin requirements were not met as the Carpizo Group which voted to sell the Tandang Sora property was a fake Board of Trustees, and those whose names and signatures were affixed by the Carpizo group together with the sham Board Resolution authorizing the negotiation for the sale were, from all indications, not bona fide members of the IDP as they were made to appear to be . All told, the disputed Deed of Absolute Sale executed by the fake Carpizo Board and private respondent INC was intrinsically void ab initio. Before addressing the issues raised in the present petition, it must be recalled that LIGON describes her petition as an appeal under Rule 45 and at the same time as a special civil action of certiorari under Rule 65 of the Rules of Court. This Court cannot tolerate such a chimera. The remedies of appeal and certiorari are mutually exclusive and not alternative nor successive. xxi It is settled that the averments in the complaint, and not the nomenclature given by the parties, determine the nature of the action.xxii Considering that this petition primarily consists of allegations charging the Court of Appeals with having acted with grave abuse of discretion and without jurisdiction, this Court shall treat this petition as a special civil action for certiorari under Rule 65 of the Rules of Court. Returning to the instant petition, the first issue must be resolved against LIGON. At the time CA-G.R. SP No. 40258 was filed, the law on who should be parties in a special civil action for certiorari were Sections 1 and 5 of Rule 65 of the Rules of Court,xxiii which provided: Section 1. Petition for certiorari. -- When any tribunal, board, or officer exercising judicial functions, has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings, as the law requires, of such tribunal, board or officer. 295

Sec. 5. Defendants and costs in certain cases. -- When the petition filed relates to the acts or omissions of a court or judge, the petitioner shall join, as parties defendant with such court or judge, the person or persons interested in sustaining the proceedings in the court.... There can be no dispute on the fact that insofar as the partial decision in Civil Case No. Q-91-10494, challenged in CA-G.R. SP No. 40258, is concerned, IDP can by no yardstick be considered as a party interested in sustaining the challenged partial decision pursuant to the aforequoted Section 5. In fact, IDP was also an aggrieved party in said partial decision. It could have challenged the partial decision and the previous order declaring it in default. Neither is there merit in the second ground relied upon by LIGON. While LIGON may be correct in her argument that a cross-claim must be answered, and the party who fails to file an answer thereto may be declared in default, xxiv one should not lose sight of the true nature of a cross-claim. Section 7xxv of Rule 6 of the Rules of Court defines a cross-claim as any claim by one party against a coparty arising out of the transaction or occurrence that is the subject matter either of the original action or of a counterclaim. It may include a claim that the party against whom it is asserted is or may be liable to the cross-claimant for all or part of a claim asserted in the action against the cross-claimant. The answer then to the cross-claim is meant to join the subsidiary issues between the co-parties in relation to the opposing partys claim against the cross-claimant.xxvi Needless to state, until the principal issue between the plaintiff and the defendant cross-claimant shall have been heard and determined, it would be premature to decide the cross-claim. It may also be pointed out that in her cross-claim against IDP, LIGON alleged that IDP unjustly refused to pay the loans it contracted from her, which had become due and demandable. She thus prayed that the trial court render judgment 1. Ordering IDP, INC, VINA and DE LEON to pay solidarily defendant, third party plaintiff and cross claimant LIGON the sum of P9 Million plus stipulated interest of 36% per annum from the due dates of the obligations within ten (10) days from finality of the judgment and attorneys fees of P900,000.00 plus appearance fee of P1,000.00 per appearance in Court and conferences with adverse parties as attorneys fees; 2. Should they fail to pay the said sums within the abovementioned period of time, ordering the foreclosure of the real estate mortgages, the sale at public auction of the property subject matter of said mortgages and the application of the proceeds thereof to the satisfaction of the sums due defendant and cross claimant LIGON, including the taxes paid, attorneys 296

fees and costs of foreclosure and litigation. Earlier however, IDP charged in its Answer with Cross-claimxxvii that LIGON should have known that the persons she transacted with had no authority to bind IDP to the loans and mortgages she was trying to enforce. Further, IDP alleged that it never benefited from the money loaned from LIGON. Thus, IDP argued that as far as it was concerned, the subject loans and mortgages were null and void. IDP prayed that judgment be rendered 1. Declaring that the mortgages executed by ATTY. ABDULRAHMAN LINZAG and MRS. ROWAIDA BUSHRAN SAMPACO and annotated in the Transfer Certificates of Title are null and void as far as defendant IDP is concerned; 2. Ordering and directing the Register of Deeds of Quezon City to cancel the registered or annotated mortgages on the aforementioned Transfer Certificates of Title; 3. Ordering the cross-claim defendant Ligon to deliver the original of the reconstituted Transfer Certificates of Title. From the foregoing, it is inevitable that IDPs cross-claim effectively joined the subsidiary issues between the co-parties. Requiring an answer to LIGONs crossclaim would be superfluous. Consequently, declaring IDP in default on the crossclaim was improper. LIGONs contention that INC was not aggrieved by the trial courts order of foreclosure of mortgages cannot be taken seriously. INCs principal cause of action was the annulment of the mortgages. The partial decision resolved this issue against INC through the backdoor and without INC having presented its evidence. In short, the trial court disregarded the fact that LIGONs cross-claim was connected with, or dependent on, the subject of INCs original complaint. As regards the final issue, we hold that INC did not engage in forum-shopping. There is forum-shopping when as a result of an adverse decision in one forum or, it may be added, in anticipation thereof, a party seeks a favorable opinion in another forum through means other than appeal or certiorari,xxviii raising identical causes of action, subject matter, and issues.xxix Forum-shopping exists when two or more actions involve the same transactions, essential facts, and circumstances; and raise identical causes of action, subject matter, and issues.xxx Yet another indication is when the elements of litis pendencia are present or where a final judgment in one case will amount to res judicata in the other case. The test is whether in the two or more pending cases there is an identity of (a) parties, (b) rights or causes of action, and (c) reliefs sought.xxxi 297

INC instituted Civil Case No. Q-90-6937 to compel IDP to comply with its undertaking to clear of squatters the lots the latter sold to the former. On the other hand, in Civil Case No. Q-91-10494 INC sought to annul the mortgages and enjoin LIGON from foreclosing them. The two cases involved different transactions and sought different reliefs. Moreover, INC won in Civil Case No. Q-90-6937; hence, it cannot be said that the later Civil Case No. Q-91-10494 was filed as a result of an adverse decision in one forum. On the other hand, CA-G.R. SP No. 40258 was a special civil action for certiorari, which was instituted, and correctly so, in reaction to an adverse partial decision in Civil Case No. Q-91-10494. Unfortunately, the dismissal of the instant petition cannot inure to the benefit of INC, since its opposition to LIGONs cause has been rendered moot and academic by the decision in G.R. No. 117897 declaring null and void the sale of the IDP properties to INC. Upon the other hand, the validity of the deeds of mortgage in favor of LIGON has yet to be settled in Civil Case No. Q-91-10494. WHEREFORE, the instant petition is DISMISSED for lack of merit. Costs against petitioner LETICIA P. LIGON. SO ORDERED. Vitug, Panganiban, and Quisumbing, JJ., concur. Bellosillo, J. - took no part.

298

Republic of the Philippines Supreme Court Manila FIRST DIVISION HERMINIO T. DISINI, Petitioner,

G.R. No. 175730

- versus -

Present:

THE HONORABLE SANDIGANBAYAN, THE REPUBLIC OF THE PHILIPPINES, as represented by the OFFICE OF THE SOLICITOR GENERAL (OSG), and the PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT (PCGG), Respondents.

CORONA, C. J., Chairperson, CARPIO,* VELASCO, Jr., DEL CASTILLO, and PEREZ, JJ.

Promulgated: July 5, 2010

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

DECISION DEL CASTILLO, J.: The simultaneous availment of judicial remedies from different fora for exactly the same ultimate relief and involving the same issue constitutes forumshopping. It is a prohibited malpractice, condemned for trifling with the courts and 

*

In lieu of Associate Justice Teresita J. Leonardo-De Castro, per raffle dated June 28, 2010.

299

their processes. The Case The instant Petition for Certiorari and Prohibition* under Rule 65 of the Rules of Court seeks to: 1. Annul the December 18, 2006 Resolution of the Sandiganbayan (respondent court), which denied petitioners Motion to Lift Default Order and to Admit Answer, and consequently allowed respondent Republic to present evidence ex-parte in Civil Case No. 0013 entitled Republic of the Philippines v. Herminio T. Disini, et al.; 2. Annul the orders or declarations made by the Sandiganbayan in open court during the hearing of December 8, 2006, which prevented petitioner from commenting ad cautelam on the Republics Urgent Manifestation and Motion (hereinafter the Urgent Manifestation and Motion) to Present Evidence ExParte;* 3. Prohibit the Sandiganbayan from continuing with the ex-parte proceedings and rendering a judgment by default; 4. Secure injunctive relief to enjoin the Sandiganbayan from conducting further proceedings in Civil Case No. 0013 and from rendering judgment on the basis of the ex-parte proceedings; and  

Rollo, pp. 3-75. Sandiganbayan rollo, Vol. IV, pp. 470-475. The Urgent Manifestation and Motion prays for the resolution of PCGGs earlier motion to drop Sison as party-defendant (filed on September 17, 2002; id. at 374-377; considered submitted for resolution by virtue of Sandiganbayans Order dated September 20, 2002; id. at 411) and the motion-to-intervene filed by strangers to the amended complaint (filed September 15, 2006; id. at 428432). In the event that these motions are resolved in PCGGs favor, they also pray that they be allowed to present evidence ex-parte.

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5. Declare null and void all the proceedings conducted as against petitioner because of lack of jurisdiction over his person, violation of his Constitutional rights to due process and fair play, and the arbitrary acts of respondent court which effectively ousted it of jurisdiction to hear the case.* In sum, petitioner assails the Sandiganbayans refusal to set aside its Order of Default against petitioner, as well as its acts which allegedly reveal its inclination to railroad the proceedings and render a precipitate judgment by default against petitioner.* Factual Antecedents On July 23, 1987, the Republic (through the Presidential Commission on Good Government [PCGG]) filed with the Sandiganbayan a civil complaint for reconveyance, reversion, accounting, restitution, and damages against petitioner Herminio T. Disini (Disini), spouses Ferdinand and Imelda Marcos (Marcos spouses) and Rodolfo B. Jacob (Jacob).* The same was docketed as Civil Case No. 0013 and assigned to the First Division of the Sandiganbayan (respondent court). Summons for Disini was issued on July 29, 1987.* Per Sheriffs Return dated September 4, 1987, * the summons* was unserved on the ground that petitioner did not live at the given address, which was No. 92 Kennedy St., Greenhills, San Juan, Metro Manila. The occupants of said address were the Roman family.

     

Rollo, pp. 852-853. Id. at 853. Sandiganbayan rollo, Vol. I, pp. 1-22. Id. at 23. Id. at 72. Id. at 23.

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On August 26, 1987,* the Complaint was amended* to include Rafael A. Sison (Sison) as a party-defendant.* The Amended Complaint alleged that Disini acted in unlawful concert with his codefendants in acquiring and accumulating ill-gotten wealth through the misappropriation of public funds, plunder of the nations wealth, extortion, embezzlement, and other acts of corruption.*   



Sandiganbayan Resolution dated August 26, 1987, id. at 68. Id. at 44-66. Id. at 41-43. The portions of the Amended Complaint that pertain to petitioner are as follows: 4.

Defendant HERMINIO T. DISINI is a close associate of defendant Ferdinand E. Marcos and the husband of the first cousin of Defendant Imelda R. Marcos. By reason of this relationship, defendant Herminio Disini was awarded by defendant Ferdinand E. Marcos the tobacco filter monopoly. It was from the said monopoly that the former first derived his fortune. In the same token, at the behest of defendant Ferdinand E. Marcos, the corporations under Defendant Herminio Disini became the beneficiaries of rescue funds infused by the government to the tune of several billion pesos. Later, said defendant Herminio Disini obtained staggering commissions from the Westinghouse in exchange for securing the nuclear plant contract from the Philippine government. Said defendant may be served with summons and other court processes at his last known address at 92 Kennedy St., Greenhills, San Juan, Metro Manila. Defendant Herminio T. Disini is temporarily outside, even as he remains a resident and citizen of the Philippines. xxxx

13. Defendants Herminio T. Disini and Rodolfo Jacob, by themselves and/or in unlawful concert, active collaboration and willing participation of defendants Ferdinand E. Marcos and Imelda R. Marcos, and taking undue advantage of their association and influence with the latter defendant spouses in order to prevent disclosure and recovery of ill-gotten assets, engaged in devices, schemes, and stratagems such as: (a) acted as the above defendant spouses dummy, nominee and/or agent in acquiring and exercising control of several corporations, such as: (1) Herdis Group of Companies, (2) Energy Corporation, (3) Vulcan Industrial Mining, (4) United Oriental Bank, (5) Three-M; (b) unlawfully obtained favored loans and rescue funds from government financing institutions, under terms and conditions grossly and manifestly disadvantageous to plaintiff and the Filipino people; (c) unlawfully utilizing the Herdis Group of Companies and Asia Industries, Inc. as conduits through which defendants received, kept, and/or invested improper payments such as unconscionably large commissions from foreign corporations like the Westinghouse Corporation; (d) secured special concessions, privileges and/or benefits from defendants Ferdinand E. Marcos and Imelda R. Marcos, such as a contract awarded to Westinghouse Corporation which built an inoperable nuclear facility in the country for a scandalously exorbitant amount that included defendants staggering commissions defendant Rodolfo Jacob executed for HGI the contract for the aforesaid nuclear plant;

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The Sandiganbayan issued summons on the Amended Complaint on September 3, 1987.* On September 15, 1987, the Sandiganbayan Deputy Sheriff proceeded to the same address, No. 92 Kennedy Street, Greenhills, San Juan, Metro Manila. Again, the summons was returned unserved for the reason that the Roman family occupied the said residence.* In the meantime, petitioners co-defendants, Sison* and Jacob,* filed their respective answers, while the Marcos spouses were declared in default* for failure to file their responsive pleadings despite valid service of summons.* After the lapse of two years without any progress in the case, Jacob filed an Omnibus Motion for the Sandiganbayan to either set the case for pre-trial or to dismiss the same with respect to Jacob for failure to prosecute. * Jacob argued that there was no excuse for the delay in prosecuting the case. He reasoned that, if summons could not be served on his co-defendant Disini within a reasonable time, the prosecution should have moved to exclude Disini from the complaint so that the case could be disposed of one way or another instead of being left pending indefinitely. (e) participated in numerous stratagems and devices to prevent disclosure and to avoid discovery of their unabated plunder of the public treasury by, among others, acting as conduits to siphon out of the country illegally acquired assets of defendants Ferdinand E. Marcos and Imelda R. Marcos, through Fe Roa Gimenez, a defendant in a separate suit; (f) obtained, with the active collaboration of defendant Rafael A. Sison, from the Development Bank of the Philippines (DBP) huge amounts in peso and foreign currency denominated loans and guarantees in favor of Cellophil Resources Corporation, a corporation beneficially held and controlled by Defendant Herminio T. Disini, in violation of duly approved DBP policies on allowable collateral ratios, maximum allowable exposure and standard conditions for loans and guarantee accommodations. (Amended Complaint, pp. 11-13; Sandiganbayan rollo, Vol. I, pp. 54-56)  Sandiganbayan rollo, Vol. I, p. 70.      

Id. at 81. Filed on November 18, 1987 (Id. at 100-106). Filed on February 14, 1989 (Id. at 323-336). Sandiganbayan Resolution dated June 23, 1989 (Id. at 490-505). Marcos v. Garchitorena, G.R. Nos. 90110-43, February 22, 1990 (unsigned resolution). Sandiganbayan rollo, Vol. I, pp. 570-571.

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The Sandiganbayan denied Jacobs motion.* It held that the Republic had not lacked in efforts to ascertain Disinis whereabouts; hence, there is no basis to rule that it failed to prosecute the case. Nevertheless, it ordered the Republic to furnish the court with the correct address of petitioner or to file a motion to show the reasonability of expecting Disini to be summoned. In response, the Republic filed a Manifestation that it is still in the process of securing alias summonses for the unserved defendants and will take steps to serve summons by publication.* On October 11, 1990, the Republic moved to drop Jacob as party-defendant considering that he will testify as a witness for the Republic in its ill-gotten wealth cases both here and abroad.* It also sought several times to suspend the pre-trial on various grounds such as the PCGGs vacillation regarding the grant of immunity in favor of Jacob* and the Republics admission that it still could not ascertain Disinis whereabouts for purposes of service of summons. The Republic explained that it was still trying to exhaust all efforts to make a personal or substituted service of summons through the help of the Philippine consulate office in Austria, where Disini is believed to be residing.* On August 4, 1994, the Sandiganbayan resolved to grant the dismissal of the complaint against Jacob with prejudice and ordered him dropped as party-defendant.*

     

Resolution dated October 26, 1989. Sandiganbayan rollo, Vol. II, p. 10. Id. at 56-57. Sandiganbayan rollo, Vol. III, pp. 12-13. Id. at 80-83 and 120-121. Id. at 20-22. Id. at 292-308.

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When it appeared that pre-trial could finally continue in 1995, the Republic again moved for several resetting of pre-trial for reasons such as looking at the possibility of granting immunity to petitioners other co-defendant, Sison, and the unavailability of the solicitor assigned to the case.* After displaying utmost liberality in the past as regards the postponement of the pre-trial, the Sandiganbayan issued a strongly-worded Order on January 17, 1997, on which date the Republic was still not ready to submit Sisons affidavit for the consideration of the court. The Order reads: Over the year, the matter of the affidavit [of Sison] remains unresolved. In the end, this case is sought once more to be reset with no visible product for the effort. Under the circumstances, should no action be taken thereon with finality on or before March 14, 1997, the Court will assume that the government is not disposed to prosecute this matter and will dismiss the case.*

Heeding the Sandiganbayans warning, the Office of the Solicitor General filed its Manifestation and Urgent Motion to Drop Rafael Sison as Party-Defendant on March 14, 1997.* A year later, on April 8, 1998, the Republic filed an Ex Parte Motion for Leave to Serve Summons by Publication.* It stated that resort to service by publication was needed because they could not ascertain Disinis whereabouts despite diligent efforts to do so. While this motion was awaiting resolution five months later, the Republic filed an Urgent Ex Parte Motion for Issuance of Alias Summons.* It allegedly received information that     

Id. at 542, 561-562, 567; Sandiganbayan rollo, Vol. IV, pp. 24-25, 69-70, 78, 90-91. Sandiganbayan rollo, Vol. IV, pp. 195-196. Id. at 201-202. Id. at 243-244. Filed on September 11, 1998, id. at 251-252.

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Disini had returned to the Philippines and could be served with summons at No. 92 Kennedy Street, Greenhills, San Juan, Metro Manila. Alias summons was issued but was returned unserved on the ground that Disini did not occupy the said house, which belonged to the Roman family.* Receiving information that Disini was often seen at No. 35 Buchanan Street, Greenhills, San Juan, Metro Manila, the sheriff proceeded to the new address only to find that it belonged to petitioners cousin, Jesus Disini.* Failing to serve summons personally on Disini, the Republic filed an Urgent Motion to Resolve Motion for Leave to Serve Summons by Publication on October 3, 2001.* While awaiting the resolution of the Urgent Motion, the Republic again received information that petitioner has been regularly seen at the Wack Wack Golf and Country Club in Mandaluyong City and at No. 57 Flamingo Street, Greenmeadows Subdivision, Quezon City. Thus, the Republic sought again the issuance of alias summons, without prejudice to the resolution of its previous Motion for Leave for Issuance of Summons by Publication.* The Sandiganbayan issued an alias summons for Disini, but it was returned unserved. On February 6, 2002, the Republic filed a Motion to Resolve (Ex Parte Motion for Leave to Serve Summons by Publication).* The same was granted* and on April 23, 2002, the summons and the Amended Complaint were published in Peoples Tonight, with a copy sent by registered mail to Disinis last known address, No. 92 Kennedy Street, Greenhills, San Juan, Metro Manila.* By August 27, 2002, petitioner was declared in default for failure to file his responsive pleading within 60 days from the publication of       

Sheriffs Return, id. at 258-259. Sheriffs Return, id. at 258-259. Id. at 285-287. Filed on November 8, 2001, id at 292-294. Id. at 299-301. Id. at 318-319. Id. at 343-344.

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the summons.* Since three of the party-defendants (Ferdinand Marcos, Imelda Marcos, and petitioner) had been declared in default, while one was dropped to become state witness (Jacob), Sison remained as the sole defendant who could participate in Civil Case No. 0013. Given that there was a pending motion to drop Sison also as party-defendant, the Republic asked the Sandiganbayan to resolve the said motion so that they could proceed with the ex parte presentation of evidence.* The said motion was submitted for resolution on September 20, 2002.* On February 17, 2003, with the motion to drop Sison as party-defendant still pending, the Republic asked the Sandiganbayan to hold in abeyance the pre-trial until the said motion had been resolved.* On February 27, 2003, the Sandiganbayan clerk of court sent notice of the cancellation of the pre-trial set for March 4, 2003.* The records of the Sandiganbayan became silent from the year 2003 to 2006, revealing an inaction that would only be broken by a foreign court that imposed a deadline on the freeze orders of the Disini Swiss accounts. This development began when petitioner Disinis wife and children filed a petition* in a Swiss Federal Court to remove a previously issued freeze order on their Swiss accounts. On August 18, 2006, the Swiss Federal Court rendered a partial decision* ordering the counsel for the Republic of the Philippines to submit a forfeiture order from a Philippine court with regard to the assets      



Id. at 365-366. Id. at 374-377. Id. at 411. Id. at 418-421. Id. at 423. Entitled Pacienca Escolin-Disini, Liliana and Herminio Angel Disini, and Lea Disini vs. District Attorney I of the Canton of Zurich, Section B, Superior Court of the Canton of Zurich, 3rd Criminal Chamber, and the Republic of the Philippines. Id. at 476-492. Id. at 476-492.

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of Liliana and Herminio Disini not later than December 30, 2006; otherwise, the Swiss Federal Court would revoke the freeze order on the Disini Swiss accounts.* This deadline apparently spurred the Republic (through the PCGG) to file an Urgent Manifestation and Motion* with the Sandiganbayan on November 30, 2006. The Republic prayed for the resolution of its Urgent Motion to Resolve (its motion to drop



The relevant portion of the Swiss Federal Court decision, as translated into English, reads as follows: Facts of the Case A. In April 1986, the Republic of the Philippines requested the Swiss authorities for judicial assistance in the repatriation of assets which had been misappropriated by Ferdinand E. Marcos, his family members and persons close to him in the exercise of their official functions. This group of persons includes Herminio T. Disini. On April 7, 1986, the Solicitor General of the Philippines initiated a criminal investigation against him. On October 21, 1986, the Office of the Investigating Judge of Canton Fribourg ordered the accounts of Herminio T. Disini blocked. B. With the requests for judicial assistance dated March 20, 1989 and July 11, 1991, the Republic of the Philippines also requested the blocking of the accounts of family members of Herminio T. Disini and return of the corresponding account records. By an order dated October 14, 1991, the Investigating Judge of Canton Fribourg granted the request, ordered the referenced accounts of Schweizerische Volksbank (now: Credit Suisse) under the names of Pacienca Escolin-Disini (the wife of Herminio T. Disini), Herminio Angel Disini (the son of Herminio T. Disini) and his wife Liliana, and Lea Disini (the daughter of Herminio T. Disini) to be blocked. The account records were delivered to the Republic of the Philippines on November 8, 1999. Subsequently, a number of requests by the account holders to release the blocked assets were rejected. xxxx D. On December 21, 2004, the account holders filed another petition demanding the release of their accounts stating that there were no criminal or civil proceedings pending in the Philippines for which judicial assistance could be provided. The [Cantonal] Attorneys Office dismissed the petition by Herminio Angel and Liliana Disini, Paciencia Escolin-Disini and Lea Disini on August 30, 2005 referring to a report by the Philippines dated June 10, 2005 (Status Report) which stated that a number of criminal and forfeiture proceedings were pending against Herminio T. Disini. xxxx The Supreme Court considers: xxxx 5.3 The appellants account records were sent to the Philippines as early as 1991. As such, the Philippines have already had all of the records necessary to confiscate the appellants assets blocked in Switzerland. The Philippine forfeiture proceeding (Civil Case No. 0013) was initiated in 1987, that is 19 years ago. According to the Philippine authorities, Herminio T. Disini was declared in default on August 27, 2002 after he had allegedly prevented the service of court summonses for years and thereby blocked the case. Nonetheless, the case is still pending in the pre-trial phase. xxxx 5.4 However, after the account block has been maintained for so long without the Philippines ever indicating a term for the conclusion of the forfeiture proceeding, it appears also in light of Art. 3 par. 3 of the Judicial Assistance Treaty appropriate to provide the Republic of the Philippines with a final opportunity to reach a forfeiture decision concerning the appellants

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Rafael Sison as party-defendant).* Should the resolution of this pending motion be favorable to the Republic, it likewise prayed for the setting of the ex parte presentation of evidence at an early date. On December 7, 2006, petitioner Disini filed a Motion to Lift Order of Default and for Leave to File and Admit Attached Answer,* together with an Answer to Amended Complaint with Compulsory Counterclaims.* He maintained that he was unaware of the civil case pending against him because he never received summons or other processes from the court, nor any pleadings from the parties of the case. His only fault, he averred, was that he was ignorant of the proceedings in the case because of the absence of a proper notice. Petitioner asked the respondent court to look at his meritorious defenses. He then invoked the liberality of the courts in lifting default orders to give both parties every opportunity to defend their cases, and pointed out that the proceedings, being in their pre-trial stage, would not be delayed by petitioners participation therein. Petitioners Answer contained affirmative defenses such as the respondent courts

 

 

assets. Therefore the counsel of the Philippines is granted until December 31, 2006 to submit to the Supreme Court at least a lower court forfeiture decision concerning the appellants assets blocked in Switzerland. Until then, the Supreme Court case will be stayed. After expiration of this period, the Supreme Court will revoke the block on the accounts of Liliana and Herminio Angel Disini if no forfeiture order has been handed down or if the submitted decision does not meet the minimum requirements of Art. 74a IRSG. xxxx Thus the Federal Court decides 1. To the legal representative of the Republic of the Philippines is given a time limit until December 31, 2006 in order to file a erstinstanzlichen Einziehungsentscheid (first instance decision) with regard to the assets of Liliana and Herminio Angel Disini which are blocked in Switzerland. xxxx Sandiganbayan rollo, Vol. IV, pp. 470-475. It also included a motion to resolve the Motion to Intervene filed by third parties, who claim equitable ownership of a piece of real estate, which was included in the list of sequestered assets of Disini. This Motion to Intervene was eventually dismissed on the ground that the property over which the movants claim an interest is not among the properties in litigation in Civil Case No. 0013. Sandiganbayan rollo, Vol. V, pp. 120-123. Id. at 5-21. Id. at 22-64.

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failure to acquire jurisdiction over his person through service by publication and the failure of the Amended Complaint to state a cause of action against him. With the two motions pending before it, the Sandiganbayan heard the Republic on its Urgent Manifestation and Motion on December 8, 2006. Petitioner Disinis lawyers were present during the hearing but were not allowed to participate therein because of the prevailing default order against Disini. The Sandiganbayan issued the following Order at the end of the said hearing: This morning, the Court heard the arguments of the counsel for [respondent] regarding the latters Urgent Manifestation and Motion dated November 29, 2006. The Court also gave the [respondent] a non-extendible period of three days counted from today within which to file its comment on the Motion to Lift Order of Default filed by [petitioner] Disini, and the latter is given a non-extendible period of three days from December 11, 2006 or until December 14, 2006, within which to file his reply to the comment of the [respondent], after which the incident shall be considered submitted for resolution without need of oral arguments. The Court will act on the [respondent]s Urgent Manifestation and Motion dated November 29, 2006 after the Court has resolved the Motion to Lift Order of Default. x x x x*

On December 11, 2006, the Republic filed its Comment/Opposition* stating that it exhausted all efforts to ascertain the whereabouts of petitioner Disini. Failing to do so, the Republic resorted to service of summons by publication. This mode of service is allowed under Sections 14 and 15 of Rule 14 considering that the forfeiture case is in rem and the defendants address is unknown. The Republic explained that it filed its Ex Parte Motion for Leave to Serve Summons by Publication because it received information that petitioner had already gone to Austria. Clearly then, Disini was no longer a resident of the Philippines. The Republic reiterated that the service of summons by publication is proper 



Id. at 74-A. Signed by Presiding Justice Teresita J. Leonardo-De Castro, Diosdado M. Peralta, Efren N. Dela Cruz. Id. at 80-99.

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considering that what is involved is a forfeiture case, an action in rem, under Republic Act No. 1379, in relation to Executive Order (EO) Nos. 1, 2, 14, and 14-A all issued by President Corazon C. Aquino. As for petitioners allegation that the Republic was aware of Disinis address as shown by the fact that summons were properly served at his correct address * in two criminal cases pending before the same First Division of the Sandiganbayan, the Republic pointed out that these criminal cases were filed on June 30, 2004, while respondents Ex Parte Motion for Leave to Serve Summons by Publication was filed on April 8, 1998. Hence, at the time the Republic asked for service by publication, it was not yet aware of petitioners correct address. Since petitioner failed to file his answer to a validly served Amended Complaint, the motion to lift the order of default is utterly lacking merit. Petitioner Disini filed his Reply on December 14, 2006* basically expounding on the arguments he stated in his Motion to Lift. On December 15, 2006, the Sandiganbayan granted PCGGs motion to drop Sison as party-defendant in Civil Case No. 0013, * leaving only the defaulted defendants (i.e., the Marcos spouses and petitioner Disini) as parties to the case. Ruling of the Sandiganbayan (Assailed Resolution) On December 18, 2006, the Sandiganbayan resolved to deny* petitioners Motion    

The correct address of Herminio T. Disini was No. 1 Lark Street, Greenmeadows, Quezon City. Sandiganbayan rollo, Vol. V, pp. 100-129. Id. at 124-127. Id. at 131-138.

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to Lift Default Order. The Sandiganbayan held that the Republic exerted diligence in ascertaining petitioners whereabouts as evidenced by the two motions it filed for the issuance of alias summons. The Sandiganbayan looked favorably at the Republics efforts to personally serve the summons on petitioner despite the pendency of its Ex Parte Motion for Leave to Serve Summons by Publication. It held that the Republics determination to serve summons at the places where the petitioner was last heard of to reside belies the petitioners claim that the Republic had intended to mislead the court into service by publication all along. The Sandiganbayan likewise held that the rules for a valid service of summons by publication were observed. The Sandiganbayan did not find any indication that the Republic knew petitioners actual residence when it sought leave to serve summons by publication in 1998 and 2001. As for the argument that publication is not proper because the action is in personam, the Sandiganbayan ruled that Civil Case No. 0013 is an action in rem for which service by publication is proper. The case is in rem because it involves the forfeiture of ill-gotten wealth based on EO No. 2, * EO No. 14* and No. 14-A* promulgated by former President Corazon Aquino by virtue of her legislative authority. It cited the case of Republic v. Sandiganbayan and Marcos* where the Court ruled that forfeiture proceedings are civil actions in rem. Given the validity of the service of summons, the respondent court held that    

Dated March 12, 1986. Dated May 7, 1986. Dated August 18, 1986. 416 SCRA 133, 141.

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petitioners failure to file a responsive pleading within the allotted period resulted in his default. The respondent court refused to lift the order of default on the ground that there was no fraud, accident, mistake or excusable negligence that would justify such an action. Petitioner then filed an Extremely Urgent Motion for Reconsideration * and an Extremely Urgent Manifestation and Motion* on December 19, 2006. Aside from asking for reconsideration, petitioner also prayed that the republics ex parte presentation of evidence be held in abeyance until the resolution of his motion for reconsideration. Petitioners motions were set for hearing on December 20, 2006 but the said hearing did not take place. Instead, the Sandiganbayan issued the following orders on December 19 and 20, 2006 respectively: Considering the difficulty in obtaining a quorum for the purpose of hearing the Extremely Urgent Manifestation and Motion dated December 18, 2006 of [petitioner] Herminio T. Disini, the Court resolves to cancel the hearing on the abovesaid motion on December 20, 2006, and instead require the [respondent] to file its written comment on the above-said motion on or before December 22, 2006, after which the motion shall be deemed submitted for resolution.* Considering the difficulty in obtaining a quorum for the purpose of hearing the Extremely Urgent Motion for Reconsideration dated December 19, 2006 of [petitioner] Herminio T. Disini which was filed at the close of office hours on December 19, 2006, the Court resolves to cancel the hearing on the above-said motion on December 20, 2006, and instead require the [respondent] to file its written comment on the above-said motion within a non-extendible period of three (3) days from receipt thereof, after which the motion shall be deemed submitted for resolution, unless the parties or the Court will set the matter for hearing anew after the submission of the above comment.*



Sandiganbayan rollo, Vol. V, pp. 140-169. Id. at 170-175.  Id. at 197. Issued on December 19, 2006.  Id. at 198. Issued on December 20, 2006. 

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The Republics ex parte presentation of evidence held before the Sandiganbayan Executive Clerk of Court began on December 20, 2006 as evidenced by the transcript. * While petitioner was not allowed to participate in the said proceedings, he was notified thereof and his counsels were present to observe the same. On December 22, 2006, petitioner filed this Petition for Certiorari. On January 2, 2007, he filed a Supplement to the Petition for Certiorari and Prohibition* protesting the continuation of the ex parte proceedings before the Sandiganbayan as a grave abuse of discretion amounting to lack of jurisdiction. He also filed a Second Supplemental Petition on January 5, 2007.* Proceedings before the Sandiganbayan during the pendency of the instant Petition for Certiorari and Prohibition On August 7, 2007, the Sandiganbayan issued its Resolution* denying petitioners Extremely Urgent Motion for Reconsideration for lack of merit. The Republic presented 10 witnesses.* It filed its Formal Offer of Evidence dated October 17, 2008, which offer was admitted in the Resolution dated December 3, 2008.* On February 11, 2009, the Republic filed its Memorandum.* On July 7, 2009, despite the pendency of his Petition for Certiorari and Prohibition with the Supreme Court, petitioner filed with the Sandiganbayan a Second     

 

Id. at 200-206. Id. at 312-328. Rollo, pp. 533-590. Sandiganbayan rollo, Vol. VII, pp. 420-434. Stephen Tanchuling on December 22, 2006; Ma. Lourdes Magno y Oliveros on January 9, 2007; Danilo Daniel on January 25, 2007; Angelito Vicente Manahan on February 14, 2007; Rafael Sison on March 26, 2007; Maria Cristina Beronilla on August 1, 2007; Rodolfo Jacob on January 12, 2007; Jesus Jose Vergara on January 15, 2007; Ricardo Valera Paras on August 14, 2007; and Jesus Disini on August 8, 2008. Sandiganbayan rollo, Vol. X, p. 2. Id. at 25-83.

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Motion to Lift the Order of Default* dated August 27, 2002 the very same Order which is now at the heart of the present petition. On September 8, 2009, petitioner filed with the Sandiganbayan a Motion to Expunge or Cross-Examine Plaintiffs Witnesses.* On September 15, 2009, he also filed a Motion to Expunge Evidence Presented Before the Clerk of Court.* On September 23, 2009, petitioner filed with this Court a Motion for Leave to File Supplemental Memorandum,* which was denied in a Resolution dated September 30, 2009.* On October 15, 2009, petitioner filed with the Sandiganbayan a Motion to Expunge Rolando Gapuds Deposition taken on October 18-20, 1995. * On October 19, 2009, he filed a Motion to Expunge or Cross-Examine Plaintiffs witnesses.* On February 18, 2010, petitioner filed with the Sandiganbayan a Supplement to the Second Motion to Lift the Order of Default dated August 27, 2002 with Motion to Take Judicial Notice.* On March 4, 2010, he filed a Motion for Leave to Take Deposition.* Issues         

Id. at 101-205. Id. at 342-355. Id. at 356-361. Rollo, pp. 1229-1242. Id. at 1245-1246. Sandiganbayan rollo, Vol. XI, pp. 56-69. Id. at 146-176. Id. at 321-342. Id. at 378-386.

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Petitioner raised the following issues for our consideration: 1.

Whether the Sandiganbayan court gravely abused its discretion in not lifting its default order against petitioner Disini

2.

Whether the Sandiganbayan court gravely abused its discretion when it allowed the Republic to present its evidence ex-parte while petitioners Motion for Reconsideration [of the stay of the default order] had not yet been resolved.* Our Ruling

Issue of Validity of Service of Summons Mooted by Voluntary Appearance In his Petition, petitioner originally sought the nullification of the proceedings before the Sandiganbayan on the theory of lack of jurisdiction over his person, premised on the alleged impropriety in the service of summons. However, petitioner subsequently filed several motions with the Sandiganbayan which sought various affirmative reliefs from that court, sans any qualification of the nature of its appearance and without reserving or reiterating its previous objection on the ground of lack of jurisdiction over the person. These motions are: (a) Motion to Expunge Exhibits A, B, C, D, E, XX, YY, ZZ, EE, and their Submarkings or Cross-Examine Plaintiffs Witness,* which sought to expunge  

Rollo, p. 870. Filed on September 8, 2009. Sandiganbayan, rollo, Vol. X, pp. 342-355.

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various affidavits of the Republics witnesses; (b) Motion to Expunge Evidence Presented Before the Clerk of Court, * which prayed that all the evidence presented before the clerk of court be stricken off the records for being taken in violation of the Rules; (c) Motion to Expunge Gapuds Deposition taken on 18-20 October 1995, * which sought to remove from the records the deposition offered by the Republic; (d) Motion to Expunge Exhibits FFF and GGG,* which sought to strike off the mentioned exhibits of respondents and asked the Sandiganbayan to permit petitioner to cross-examine witness Jesus Disini; (e) Motion for Consolidation,* which prayed that Civil Case No. 0013 be consolidated with Criminal Case Nos. 28001 and 28001; and (f) Motion for Leave to Take Deposition based on Section 1 of Rule 23 (Depositions Pending Action or De Benne Esse).* In regard to the last mentioned Motion for Leave to Take Deposition * (which is the last pleading on record), it is important to note that there are two instances when the defendant can take depositions under Section 1 of Rule 23: (1) after the court has acquired jurisdiction over the defendant or the property subject of the action; and (2) after an answer has been served. Both instances presuppose that the court has already acquired      

Filed on September 15, 2009. Id. at 356-361. Filed on October 15, 2009. Sandiganbayan rollo, Vol. XI, pp. 56-69. Filed on October 19, 2009. Id. at 146-176. Filed on February 8, 2010. Id. at 302-311. Filed on March 4, 2010. Id. at 378-386. Id.

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jurisdiction over the defendant. By seeking the relief contained in this provision, petitioner is deemed to have voluntarily submitted himself to the jurisdiction of the Sandiganbayan. Thus, petitioner may be held to have waived his objections regarding the lack of jurisdiction over his person by seeking affirmative relief through the said provision. While petitioner bewailed the mode of service of summons on him and questioned the Sandiganbayans jurisdiction over his person, he has rendered his own arguments moot by his voluntary appearance or submission to the jurisdiction of the Sandiganbayan. Jurisprudence holds that an objection based on lack of jurisdiction over the person is waived when the defendant files a motion or pleading which seeks affirmative relief other than the dismissal of the case.* Issue of Non-Lifting of Default Order Dismissed for Forum-shopping When petitioner filed this Petition on December 22, 2006 assailing the Sandiganbayans December 18, 2006 Resolution, the latter was still the subject of a pending Extremely Urgent Motion for Reconsideration filed by petitioner with the Sandiganbayan. The filing of the instant petition before this Court while a motion for reconsideration was still pending before the Sandiganbayan constitutes, strictly speaking, forum-shopping,* which could have warranted the outright dismissal of the petition. However, in light of the due process issues raised by petitioner and the very real possibility that he had no other speedy remedy available to him, his Petition was given 



Philippine Commercial International Bank v. Spouses Dy, G.R. No. 171137, June 5, 2009, 588 SCRA 612, 629.. Montes v. Court of Appeals, G.R. No. 143797, May, 4, 2006, 489 SCRA 432-443, 439-440; Go v. Looyuko, G.R. Nos. 147923, 147962 & 154035, October 26, 2007, 537 SCRA 445, 477-478; Madara v. Hon. Perello, G.R. No. 172449, August 20, 2008, 562 SCRA 638-659, 654-655.

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due course. Inexplicably, and in continuing disregard of the rules on forum-shopping and judicial courtesy, petitioner raised again the same issue (validity of the default order and the propriety of lifting said default order) in a Second Motion to Lift the Order of Default dated August 27, 2002 which he filed with the Sandiganbayan after the latter denied his Extremely Urgent Motion for Reconsideration. This Second Motion to Lift the Order of Default was filed on July 27, 2009, admittedly during the pendency of the instant Petition. Both remedies seek from different fora exactly the same ultimate relief (lifting of the default order issued by the Sandiganbayan) and raise the same issue (validity of the default order and the propriety of lifting said default order). In availing himself of these two remedies, petitioner has engaged in forum-shopping. There is forum shopping when one party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues either pending in, or already resolved adversely, by some other court.* Forum shopping is a prohibited malpractice and condemned as trifling with the courts and their processes. * It is proscribed because it unnecessarily burdens the courts with heavy caseloads, and unduly taxes the manpower and financial resources of the judiciary.* It is inimical to the orderly administration of justice as it creates the possibility of conflicting decisions being rendered by two courts, * and opens the system    

Feliciano v. Villasin, G.R. No. 174929, June 27, 2008, 556 SCRA 348-373, 370. Chemphil Export & Import Corporation v. Court of Appeals, 321 Phil. 619, 655-656 (1995). Abines v. Bank of the Philippine Islands, G.R. No. 167900, February 13, 2006, 482 SCRA 421, 428. Tan v. Court of Appeals, G.R. No. 164966, June 8, 2007, 524 SCRA 306, 318, citing Top Rate Construction & General Services, Inc. v. Paxton Development Corporation, 457 Phil. 740, 748 (2003).

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to the possibility of manipulation.* In filing a Second Motion to Lift the Order of Default with the Sandiganbayan while the instant Petition is pending with this Court, petitioner has unfairly doubled his chances of securing the lifting of the default order. This misdeed amounts to a wagering on the result of [petitioners] twin devious strategies, and shows not only [his] lack of faith in this Court in its evenhanded administration of law but also [his] expression of disrespect if not ridicule for our judicial process and orderly procedure.* The situation here is strikingly similar to that in People v. Sandiganbayan.* In that case, the petitioner had filed with the Sandiganbayan a motion for consolidation of a bribery case with a plunder case. The Sandiganbayan refused, leading the petitioner to file a petition for certiorari with this Court. While the said petition was pending with this Court, the petitioner filed another motion for consolidation with the Sandiganbayan, praying anew for the consolidation of the bribery case with a plunder case. The motion raised the same issues and prayed for the same remedy as the pending petition with this Court, namely, the consolidation of the bribery case and the plunder case. The Court held that such move clearly constitutes forum-shopping. This is almost exactly what happened in the instant case. Petitioner had filed with the Sandiganbayan a motion to lift default order. The Sandiganbayan refused, leading petitioner to file a petition for certiorari with this Court. While the said petition was pending with this Court, petitioner filed another motion to lift default order with the Sandiganbayan, praying anew for the lifting of the default order. Thus, following the ruling in People v. Sandiganbayan, we rule that petitioners actuations clearly constitute 

Madara v. Hon. Perello, supra note 89.



Top Rate Construction & General Services, Inc. v. Paxton Development Corporation, supra note 93 at 760. 456 Phil. 707, 718 (2003).



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forum-shopping. Because of the forum-shopping committed by petitioner, the Court cannot grant the relief he prayed for. Certiorari is an improper remedy Petitioner imputes grave abuse of discretion on the Sandiganbayan for allegedly railroading the proceedings in violation of his right to due process and fair trial. More specifically, petitioner points out that when the Sandiganbayan denied his Motion to Lift Order of Default (December 18, 2006), he immediately filed an Extremely Urgent Motion for Reconsideration (December 19, 2006). However, before the latter could be resolved, the Sandiganbayan allowed the ex-parte presentation of evidence to proceed (December 20, 2006). This prompted petitioner to file the instant Petition with this Court two days later (December 22, 2006). While it may have been more convenient if the Sandiganbayan resolved first the Extremely Urgent Motion for Reconsideration before allowing the ex-parte presentation of evidence, we cannot say that the course taken by the Sandiganbayan constitutes grave abuse of discretion. We cannot infer from the Sandiganbayans deliberate speed that it was done to prejudice petitioner. There was adequate justification for the Sandiganbayans resolve to finish the twenty-year old forfeiture case with dispatch. Aside from the length of time that Civil Case No. 0013 has stagnated in the dockets, the Republics manifestation (that a resolution was necessary by December 30, 2006 in order to maintain the Swiss Federal Courts freeze order on petitioners Swiss accounts) is reason enough not to further delay the case as a matter of public interest. Besides, it should be remembered that when the Sandiganbayan received evidence ex-parte on December 20, 2006, petitioner was still in default and his Motion to Lift Default Order has already been 321

denied. The ex-parte presentation of evidence on December 20, 2006 was simply consistent with petitioners default status as of that time. Grave abuse of discretion refers to such capricious or whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be patent and gross as to amount to an evasion of positive duty or a virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by reason of passion and hostility. The actions of the Sandiganbayan were not thus tainted under the circumstances we described above. Thus, we cannot accept petitioners contention that the proceedings taken below must be nullified because of the alleged railroading by the Sandiganbayan. Moreover, Rule 65 petitions for certiorari are extraordinary remedies available only when there is grave abuse of discretion amounting to lack of jurisdiction and the petitioner has no other plain, speedy, and adequate remedy for correcting such abuse. * By filing a Second Motion to Lift the Order of Default and the various motions seeking the Sandiganbayans correction of the perceived errors during the Republics ex parte presentation of evidence, petitioner has revealed his belief that he had adequate remedies before the Sandiganbayan. A resort to a Rule 65 petition is, under the premises, improper. WHEREFORE, the Petition for Certiorari is DISMISSED. Costs against petitioner. SO ORDERED. 

RULES OF COURT, Rule 65, Section 1.

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MARIANO C. DEL CASTILLO Associate Justice

WE CONCUR:

RENATO C. CORONA Chief Justice Chairperson

ANTONIO T. CARPIO Associate Justice

PRESBITERO J. VELASCO, JR. Associate Justice

JOSE PORTUGAL PEREZ Associate Justice

C E R T I FI CAT I O N

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Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division. RENATO C. CORONA Chief Justice

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i Exhibit A, Folder of Exhibits, Civil Case No. Q-91-10494. ii OR, Vol. I, 3-14. iii Id., 128-137. iv Id., 264-278. v OR, Vol. II, 515-516. vi Id., 518-519, 538-543. vii OR, Vol. II, 551-552. viii OR, Vol. III, 1162-1166. ix Id., 1167-1173. Per Judge Eudarlio B. Valencia. x Id., 1174-1183. xi Id., 1328-1335. xii Rollo, CA-G.R. Sp. No. 40258 [CA Rollo 2-21]. xiii Supra note 1. xiv Annex B of Petition, Rollo, 92-113. xv CA Rollo, 569-572. xvi Id., 573-594. xvii Supra note 2. xviii This is reproduced in Sec. 7, Rule 3 of the 1997 Rules of Civil Procedure.

xix Substantially reproduced in Section 3(c), Rule 9 of the 1997 Rules of Civil Procedure, which reads: SEC. 3. Default; declaration of. ... (c) Effect of partial default. When a pleading asserting a claim states a common cause of action against several defending parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed and render judgment upon the evidence presented. xx 272 SCRA 454 [1997]. xxi Fajardo v. Bautista, 232 SCRA 291, 298[1994]. xxii Abad v. Court of First Instance of Pangasinan, Br. VIII, 206 SCRA 567, 579[1992]; Solid Homes, Inc. v. Court of Appeals, 271 SCRA 157, 164 [1997]. xxiii These are retained, with modifications, in Sections 1 and 5, respectively, of Rule 65 of the 1997 Rules of Civil Procedure. xxiv Rule 6, Sec. 10. This is not reproduced in the 1997 Rules of Civil Procedure; however, the matter of default is covered by Sec. 3 of Rule 9 thereof. xxv Now Sec. 8, Rule 6, 1997 Rules of Civil Procedure. xxvi I Vicente J. Francisco, The Revised Rules of Court In The Philippines (Civil Procedure) 492 (1973). xxvii OR, Vol. I, 128-137. xxviii Washington Distillers, Inc. v. Court of Appeals, 260 SCRA 821, 835 [1996]. xxix Laureano Investment & Development Corporation v. Court of Appeals, 272 SCRA 253, 266 [1997], citing International Container Terminal Services, Inc. v. Court of Appeals, 249 SCRA 389 [1995]. xxx Valencia v. Court of Appeals, 263 SCRA 275, 286 [1996]. xxxi Employees Compensation Commission v. Court of Appeals, 257 SCRA 717, 722-723 [1996] citing Buan v. Lopez, 145 SCRA 34 [1986].