G.R. No.

L-32141 July 29, 1988 Petitioners then elevated the matter to this Court by way of a petition for certiorari
which was docketed as G.R. No. L-31221 on November 15, 1969. The petition was
PAULA VDA. DE DENOSO, GREGORIO DENOSO, ARACELI DENOSO denied in a resolution of November 19, 1969, copy of which was received by
MALATBALAT, assisted by her husband, PERFECTO MALATBALAT and petitioners on December 18, 1969.
NICANOR DENOSO, petitioners,
vs. Again, petitioners filed a petition for certiorari with the appellate court on January 2,
THE COURT OF APPEALS, HON. HERMINIO C. MARIANO, Judge of the Court of 1970, docketed as CA-G.R. No. 44470. It is of the same nature as the first petition
First Instance of Rizal, JOSE SAN AGUSTIN, Clerk of Court and Ex-Oficio that they filed except that the pertinent pleadings and orders were now attached to
Sheriff of Manila, PERLITA GALLARDO, assisted by her husband AMADO N. the petition, involving the same parties and subject matter. In a resolution of February
BAUTISTA, and MILAGROS v. CAGUIOA respondents. 6, 1970, the appellate court dismissed the petition on the ground that it was in effect a
second motion for reconsideration of the resolution dismissing the petition in CA-G.R.
GANCAYCO, J.: No. 43963-R that had become final and executory on November 13, 1969, and that it
is barred by res judicata. Acting on the motion for reconsideration thereof filed by
In the herein petition for certiorari, it appears that petitioner filed an action for the petitioners, the appellate court denied the motion on March 11, 1970, a copy of which
recovery of their former homestead land from private respondents on June 25, 1965 was received by petitioners on June 11, 1970.
in the Court of First Instance of Rizal which was docketed as Civil Case No. 8786.
After pre-trial proceedings and the stipulation of facts, a decision was rendered on On June 26, 1970, petitioners once again filed with this Court another petition
December 28, 1968 dismissing the complaint with costs against petitioners, a copy of questioning the dismissal by the appellate court of their petition in CA-G.R. No. 44470
which decision was received by petitioners on February 6, 1969. On February 25, on the following grounds:
1969, petitioners filed a motion for reconsideration and/or to re-open the trial for the
introduction of additional evidence to which an opposition was filed by private 1. THE HON. COURT OF APPEALS ERRED IN HOLDING THAT
respondents with a counter-petition for execution of costs. The motion was denied in PETITIONERS' PETITION FOR CERTIORARI WITH WRIT OF PRELIMINARY
an order of April 19, 1969. The notice of appeal was filed by petitioners on May 27, INJUNCTION IS BARRED BY RES JUDICATA, AND DISMISSING THE PETITION
1969 while the cash appeal bond and record on appeal were filed on May 31, 1969. A ON SAID GROUND; and
motion to appeal as pauper was also filed by petitioners on June 2, 1969.
2. THE HON. COURT OF APPEALS ERRED IN HOLDING THAT ITS
However, on June 10, 1969, private respondents filed a motion for reconsideration of RESOLUTION OF OCT. 3, 1969, IN CA-G.R. NO. 43963R BECAME FINAL AND
said order in-so-far as it did not order the issuance of a writ of execution. Acting upon EXECUTORY ON NOV. 13, 1969, AND LIKEWISE DISMISSING THE PETITION ON
the motion the lower court ordered the issuance of a writ of execution for the costs in SAID GROUND. (pp. 6-7, Rollo)
the amount of P35.00 on July 30, 1969. Said writ of execution was issued directed to
the ex-oficio Sheriff of Manila against petitioners. Thus, petitioners were levied The petition is devoid of merit. The appellate court in dismissing the petition, rendered
P10.00. an extended resolution as follows:

On September 10, 1969, petitioners filed a petition for certiorari with preliminary Originally assigned to the Fourth Division, this petition for certiorari was referred to us
injunction in this Court docketed as G.R. No. L-30929. In a resolution of September because said Division considered the same "as in the nature of a second motion for
15, 1969, the petition was referred to the appellate court where it was docketed as reconsideration" of our resolution promulgated October 3, 1969, dismissing the
CA-G.R. No. 43963-R. On October 3, 1969, the appellee court dismissed the petition petition in CA-G.R. No. 43963-R.
for failure of petitioners to comply with the provisions of Section 1, last paragraph,
Rule 65 of the Rules of Court requiring the submission of certified copies of pertinent As correctly observed by the Fourth Division in its resolution of January 8, 1970,
pleadings and orders. A copy of this resolution was received by petitioners on except for some minor details which do not change at all the basic issues, the petition
October 6, 1969. On October 17, 1969, petitioners moved to reconsider said in said case (CA-G.R. No. 43963-R) is the same as the petition now before us. And
resolution thereby submitting a copy of the motion for reconsideration, etc. which was as already mentioned, the petition in CA-G.R. No. 43963-R was dismissed pursuant
not attached to the original petition, but this was denied in a resolution of October 29, to our resolution of October 3, 1969, copy of which was received by the petitioners,
1969, a copy of which was received by petitioners on November 4, 1969. thru counsel, on October 6, 1969.

1
Examining the record of CA-G.R. No. 43962-R, it appears that on October 17, 1969, No doubt in this case the dismissal of the petition was because of the failure of
the petitioners filed a motion for reconsideration of our resolution of October 3, 1969, petitioners to comply with the rules requiring the pertinent pleadings to be attached to
attaching thereto the pertinent pleadings which they failed to attach to the original the petition. Such a dismissal is in effect an adjudication upon the merits, unless
petition, including the motion for reconsideration which the respondent Judge otherwise provided for by the Court concerned. In the resolution of dismissal by the
considered as pro forma. This motion was denied on October 29, 1969, and a copy of appellate court, there is no qualification that it is without prejudice to petitioners
the resolution denying the same was received by the petitioners thru counsel, on prosecuting the case anew. Thus, the dismissal is and must be considered an
November 4, 1969. adjudication on the merits.

Thereafter, the petitioners did nothing until the filing of the instant petition on January Moreover, the petition involves the review of a decision of the lower court dismissing
2, 1970. The petition was assigned to the Fourth Division which after treating the the complaint filed by petitioners on the merits. When the petition was filed with the
same as a second motion for reconsideration of our resolution dismissing the petition appellate court then and eventually it was dismissed, it thereby effectively resulted in
in CA-G.R. 43963-R, has referred it to us for such action as we deem proper to take the affirmation of the judgment of the lower court.
in the premises.
There should be an end to litigation. This is the second time the same issue was
It should be noted, however, that our resolution of October 3, 1969, in CA-G.R. No. elevated to this Court by the same parties for the same purpose. While the zeal of
43963-R became final and executory on November 13, 1969. Although no entry of petitioners to pursue their claim however futile is admirable, there is and should be a
judgment has as yet been made. we believe that this Court can no longer entertain a limit to the same. A petition for review by certiorari under Rule 45 of the Rules of
second motion for reconsideration. And this, obviously, is the reason why the Court of a decision of the Court of Appeals is addressed to the sound judicial
petitioners filed this second petition which; considered as a second motion for discretion of this Court. It is not a matter of right. In the present case its denial is
reconsideration of our resolution of October 3, 1969, in CA-G.R. No. 43963- R, was certainly in order.
out of time, it having been filed only on January 2, 1970, or fifty (50) days after the
resolution sought to be reconsidered had become final and executory. But even if the Indeed, private respondents correctly assert that the petition has become moot and
second petition be treated as an original petition as intended, we believe and so hold academic as they have partially satisfied the decision from which they were
that the same is barred by res judicata. attempting to appeal by paying P10.00 of the total cost of P35.00 which was enforced
by the writ of execution. A party who voluntarily executes a judgment either partially or
WHEREFORE, the petition now under consideration should be, as it is hereby, in toto is not permitted to appeal from it."
dismissed.
WHEREFORE, the petition is DENIED with costs against petitioners. SO ORDERED.
The Clerk of Court is hereby ordered to explain in writing within seventy-two (72)
hours from receipt hereof, why no entity has as yet been made of our resolution of G.R. No. L-19613 April 30, 1966
0ctober 3, 1969, dismissing the petition in CA-G.R. No. 43963-R.
ALFONSO G. LOPEZ, plaintiff-appellant, vs. FILIPINAS COMPAÑIA DE
We agree. The action of petitioners is now barred by res judicata. SEGUROS, defendant-appellee.

Petitioners, however, argue that the dismissal of their original petition in CA-G.R. No. REGALA, J.:
43963-R was due to a technicality in failing to attach the required documents to the
petition and that it not being a judgment on the merits, res judicata cannot set in. 1 This is an appeal by the plaintiff-appellant, Alfonso G. Lopez, from an order of the
Court of First Instance of Manila, dated January 25, 1962, dismissing his complaint
Section 3, Rule 17 of the Rules of Court provides as follows: against the defendant-appellee, Filipinas Compañia de Seguros.

Sec. 3. Failure to prosecute. — If plaintiff fails to appear at the time of the trial, or to Prior to April 22, 1959, the plaintiff applied with the defendant company for the
prosecute his action for an unreasonable length of time, or to comply with these rules insurance of his property consisting of a Biederman truck tractor and a Winter Weils
or any order of the court, the action may be dismissed upon the motion of the trailer from loss or damage in the amount of P26,000.00 and P10,000.00,
defendant or upon the court's own motion. This dismissal shall have the effect of an respectively. In connection with the above application, the defendant company
adjudication upon the merits, unless otherwise provided by court. * inquired of the plaintiff the following:

2
5. Has any company in respect of the insurance of any car or vehicle (a) declined, to cases where the company does not admit its liability to the insured." With this
cancelled or refused to renew your insurance? rejection, the plaintiff-appellant filed his complaint with the Court of First Instance of
Manila on September 19, 1961.
(b) increased your premium on renewal?
Against the above complaint, the defendant-appellee filed on September 29, 1961 a
To both questions, the plaintiff answered: "none," though the truth was at that time, motion to dismiss on the ground of prescription. The latter argued that the plaintiff's
the American International Underwriters of the Philippines (AIU) had already declined claim had already prescribed since it was not filed within twelve months from its
a similar application for insurance by the plaintiff in respect of the above-described rejection by the insurance company as stipulated under paragraph 9 of the General
vehicles. Conditions of Commercial Vehicle Comprehensive Policy Nos. 5598 and 5599, to wit:

On April 22, 1959, the defendant-appellee issued to the plaintiff-appellant two If a claim be made and rejected and an action or suit be not commenced within twelve
Commercial Vehicle Comprehensive Policies covering the above properties. On months after such rejection or (in case of an arbitration taking place as provided
August 30, 1959, while the said policies were in force, the aforementioned vehicles herein) within twelve months after the arbitrator, arbitrators, or umpire shall have
figured in an accident at Bagabag, Nueva Vizcaya, resulting in the total loss of the made their award then the claim shall for all purposes be deemed to have been
tractor and partial damage to the trailer. Accordingly, the plaintiff gave notice of the abandoned and shall not thereafter be recovered hereunder.
same to the defendant company and made demand upon the latter for the payment to
him of P27,962.00, the total amount of damages resulting from the accident. On January 25, 1962, the court a quo sustained the above motion and dismissed the
complaint. Thus, the instant appeal.
On April 28, 1960, the defendant-appellant rejected the above claim by reason of,
among others, the claimant's alleged "concealment of a material fact," namely: that The principal issue raised in this appeal is simple: Was the complaint filed by the
the insured property previously been declined insurance by another company. plaintiff-appellant with the Office of the Insurance Commissioner on May 27, 1960 a
commencement of an "action or suit" within the meaning and intent of general
In view of the rejection of his claim by the defendant company, the condition quoted above?, If it was, then the plaintiff's complaint has not yet prescribed
plaintiff-appellant filed on May 27, 1960 with the Office of the Insurance since the complaint filed with the said office was made on May 27, 1960 or just about
Commissioner a complaint against the said company. On June 7, 1960, the Assistant a month after his claim was rejected by the defendant-appellee on April 28 1960. On
Insurance Commissioner requested the defendant company to give its side of the the other hand, if the above-quoted condition refers alone to an "action or suit" filed
above complaint and, thereafter, or on August 1, 1960, the said official "transmitted to with a court of justice, as the Order appealed from urges and as the herein appellee
the plaintiff, thru his counsel, the 'self-explanatory letters' dated June 12, 1960 of the maintains, then, indeed, must the finding or prescription in this incident be upheld.
American International Underwriters of the Philippines, Inc., and June 21, 1960 of the For, while the plaintiff's claim was rejected on April 28, 1960 by the insurance
defendant, which the said office had received from said parties in connection with company, the "action or suit" thereon with a court of justice was filed some 17 months
plaintiff's complaint, with the suggestion that in view of the reluctant attitude of plaintiff later, September 19, 1961.
'towards the company's proposal for the matter to be settled thru arbitration, and
considering the informative facts disclosed, in the letter of the AIUPI, plaintiff should We find for the appellee.
pursue his case to the Court which has proper competence to resolve said matter."
In 1 Moran 86 (1963 ed.), the following jurisprudence is expressed:
On August 16, 1961, the plaintiff-appellant informed by letter the Office of the
Insurance Commissioner that he was willing to submit his claim to arbitration and, in Action is the act by which one sues another in a court of justice for the enforcement or
the premises, suggested that the Assistant Insurance Commissioner be designated protection of a right, or the prevention or redress of a wrong. Special proceeding is
as the sole arbitrator of the same. On September 1, 1960, the Insurance the act by which one seeks to establish the status or right of a party, or a particular
Commissioner informed the plaintiff-appellant of his willingness to act as the single fact. Hence, an action is distinguished from special proceeding in that the former is a
arbitrator, provided that both parties to the dispute manifest in writing their conformity formal demand of a right by one against another, while the latter is but a petition or a
thereto and to abide by the arbitrator's award. The defendant-appellee, on the other declaration of a status, right or fact. (Emphasis supplied.)
hand, informed the Insurance Commissioner on September 22, 1960 that it could not
consent to the above proposal since "the claim of the plaintiff cannot be resolved by The above distinction was laid down in connection with the definition of "action" in
arbitration, as recourse to arbitration referred to in the policy contract, envisioned only Rule 2, Section 1 of the Rules of Court that:
differences or disputes, 'with respect to the amount of the company's liability,' and not
3
Section 1. Action defined.—Action means an ordinary suit in a Court of Justice by In his verified complaint dated June 16, 1993, Mr. Rodrigo B. Supena, President of
which one party prosecutes another for the enforcement or protection of a right, or the Mortgagee BPI Agricultural Development Bank (BAID, for short), charges respondent
prevention or redress of a wrong. (Emphasis supplied.) Judge Rosalio G. de la Rosa with gross ignorance of the law for issuing an unlawful
Order, dated May 25, 1993, in Foreclosure Case No. 93-822, entitled, "BPI
Also, in 1 Am. Jur. 407, as cited in Francisco, Civil Procedure, p. 91, a suit is defined Agricultural Development Bank v. PQL Realty Incorporated." The Order in effect held
as: in abeyance the public auction sale set on May 26, 1993, per Notice of Extrajudicial
Sale of one (1) parcel of land, together with the building and all the improvements
Suit is the prosecution or pursuit of some claim or demand in a court of justice or any existing thereon, described and covered by TCT No. 112644 of the Registry of Deeds
proceeding in a court of justice in which a plaintiff pursues his remedy to recover a of Manila, on the basis of a mere Ex-Parte Motion to Hold Auction Sale in Abeyance
right or claim. (Emphasis supplied.) filed by Mortgagor, PQL Realty Incorporated (PQL, for short).

Upon the authorities, therefore, it is settled that the terms "action" and "suit" are The antecedent facts are as follows:
synonymous. Moreover, it is clear that the determinative or operative fact which
converts a claim into an "action or suit" is the filing of the same with a "court or On April 1, 1993, mortgagee BAID decided to extrajudicially foreclose the Real Estate
justice." Filed elsewhere, as with some other body or office not a court of justice, the Mortgage1 executed by mortgagor PQL in the former's favor. Accordingly, BAID
claim may not properly be categorized under either term. petitioned the Ex-Officio Sheriff of Manila to take the necessary steps for the
foreclosure of the mortgaged property and its sale to the highest bidder.
Apart from the foregoing, however, there is yet one other reason why the appellant's
recourse to the Office of the Insurance Commissioner could not have been an "action On April 21, 1993, Jesusa P. Maningas, the Clerk of Court and Ex-Officio Sheriff of
or suit" which could have halted the running of the prescriptive period stipulated in the Manila, issued a Notice of Extrajudicial Sale, scheduling the public auction sale on
insurance policies involved. An "action or suit" is essentially "for the enforcement or May 26, 1993 at 10:00 o'clock a.m. in front of the City Hall Building, Manila. Said
protection of a right, or the prevention or redress of a wrong." (Rule 2, Sec. 1, Rules notice was subsequently published in the People's Journal Tonight on May 4, 11 and
of Court). There is nothing in the Insurance Law, Act No. 2427, as amended, nor in 19, 1993.
any of its allied Legislations, which empowers the Insurance Commissioner to
adjudicate on disputes relating to an insurance company's liability to an insured under However, on May 25, 1993, or one day before the scheduled sale, the Hon. Rosalio
a policy issued by the former to the latter. The validity of an insured's claim under a G. de la Rosa, in his capacity as Executive Judge of the Regional Trial Court of
specific policy, its amount, and all such other matters as might involve the Manila, issued an Order holding in abeyance the scheduled public auction sale, on
interpretation and construction of the insurance policy, are issues which only a regular the basis of a mere ex-parte motion filed by PQL, a copy of which was received by
court of justice may resolve and settle. Consequently, the complaint filed by the mortgagee-complainant only on May 31, 1993. Complainant avers that, said order is,
appellant herein with the Office of the Insurance Commission could not have been an for all practical intents and purposes, a restraining order for an indefinite period,
"action or suit." issued without the proper case being filed and without the benefit of notice and
hearing, or even an injunction bond from which the mortgagee may seek
The other assignments of error in the appellant's brief spring from or are compensation and restitution for the damages it may suffer by reason of the improper
consequences of the latter's view that the claim be filed with the Office of the cancellation of the auction sale.
Insurance Commissioner was an "action or suit" within the contemplation of
paragraph 9 of the general condition earlier quoted. With our ruling above, therefore, The only ground relied upon by the ex-parte Motion, "that the parties have agreed to
the necessity to pass on them becomes inconsequential. hold the foreclosure proceedings in Makati and not in Manila," is patently without
merit, according to the complainant, as the venue of foreclosure proceedings is fixed
Wherefore, the order appealed from is hereby affirmed, with costs. by law and cannot be subject of stipulation. In sum, complainant submits that the
actuations of respondent judge in granting the ex-parte motion of mortgagor were
[A.M. No. RTJ-93-1031. January 28, 1997] without basis and highly suspicious.

RODRIGO B. SUPENA v. JUDGE ROSALIO G. DE LA ROSA Respondent, in his comment, maintains that he held in abeyance the extrajudicial
foreclosure and sale of the property mortgaged supposed to be held on May 26, 1993
HERMOSISIMA, JR., J.: and instead scheduled the same for hearing on June 16, 1993 (which however did not
transpire), to determine two issues: first, whether the venue in Foreclosure
4
Proceeding No. 93-822 was improperly laid in light of the stipulation in the "Loan the municipal building of the municipality in which the property or part thereof is
Agreement" duly entered into by both parties and acknowledged before a Notary situated."
Public which provides:
Here, the real property subject of the sale is situated in Felix Huertas Street, Sta.
"14) VENUE OF ACTIONS Any action or suit brought under this Agreement or any Cruz, Manila.5 Thus, by express provision of Section 2, the sale cannot be made
other documents related hereto shall be instituted in the proper Courts of Makati, outside of Manila. Moreover, were the intention of the parties be considered with
Metro Manila, Republic of the Philippines."2chanroblesvirtuallawlibrary respect to venue in case the properties mortgaged be extrajudicially foreclosed, they
even unequivocably stipulated in the Deed of Real Estate Mortgage itself under
and, secondly, in order to determine the veracity of the mortgagor's allegation that the paragraph 15 that:
Five Hundred Thousand Pesos (P500,000.00) paid to BPI Agri-Bank last January,
1993 does not reflect and does not appear to have been credited or deducted from " It is hereby agreed that in case of foreclosure of this mortgage under Act 3135, as
the accounts of mortgagor. It was, allegedly, under the principle of fair play, equity amended by Act 4118, the auction sale, in case of properties situated in the province,
and substantial justice which compelled him to issue the Order dated May 25, 1993.3 shall be held at the capital thereof."6chanroblesvirtuallawlibrary

We find the respondent judge culpable as charged. Respondent judge, therefore, had no valid reason to entertain any doubt as to the
propriety of the venue of the auction sale in Manila. The law as well as the intention of
Any judge, worthy of the robe he dons, or any lawyer, for that matter, worth his salt, the parties cannot be more emphatic in this regard.
ought to know that different laws apply to different kinds of sales under our
jurisdiction. We have three different types of sales, namely: an ordinary execution Respondent judge, however, refers to the venue stipulation in the Loan Agreement
sale, a judicial foreclosure sale, and an extrajudicial foreclosure sale. An ordinary signed by the parties to the effect that, "Any action or suit brought under this
execution sale is governed by the pertinent provisions of Rule 39 of the Rules of Agreement or any other documents related hereto shall be instituted in the proper
Court on Execution, Satisfaction and Effect of Judgments. Rule 68 of the Rules, courts of Makati x x x."7 And under the pertinent provisions of Rule 4 of the Rules of
captioned Foreclosure of Mortgage, governs judicial foreclosure sales. On the other Court on Venue of Actions, which provide:
hand, Act No. 3135, as amended by Act No. 4118, otherwise known as "An Act to
Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real "Sec. 2. Venue in Courts of First Instance (a) Real actions. Actions affecting title to, or
Estate Mortgages," applies in cases of extrajudicial foreclosure sales of real estate for recovery of possession, or partition or condemnation of, or foreclosure of
mortgages.4chanroblesvirtuallawlibrary mortgage on, real property, shall be commenced and tried in the province where the
property or any part thereof lies.
The case at bench involves an extrajudicial foreclosure sale of a real estate mortgage
executed by mortgagor PQL in favor of mortgagee BAID. If the main concern of Sec. 3. Venue by agreement. By written agreement of the parties the venue of an
respondent judge in holding in abeyance the auction sale in Manila scheduled on May action may be changed or transferred from one province to another."
26, 1993 was to determine whether or not venue of the execution sale was improperly
laid, he would have easily been enlightened by referring to the correct law, definitely venue of the auction sale should have been laid in Makati as mutually agreed upon by
not the Rules of Court, which is Act No. 3135, as amended particularly Sections 1 and the parties.
2, viz:
Again, in this regard, we reiterate that the law in point here is Act No. 3135, as
"SECTION 1. When a sale is made under a special power inserted in or attached to amended, which is a special law, dealing particularly on extrajudicial foreclosure sales
any real estate mortgage hereafter made as security for the payment of money or the of real estate mortgages, and not the general provisions of the Rules of Court on
fulfillment of any other obligation, the provisions of the following sections shall govern Venue of Actions. In fact, even Section 5, Rule 4, is quite explicit in stating that:
as to the manner in which the sale and redemption shall be effected, whether or not
provision for the same is made in the power. "When rule not applicable. This rule shall not apply in those cases where a specific
rule or law provides otherwise."
SEC. 2. Said sale cannot be made legally outside of the province in which the
property sold is situated; and in case the place within said province in which the sale The failure of respondent to recognize this is an utter display of ignorance of the law
is to be made is the subject of stipulation, such sale shall be made in said place or in to which he swore to maintain professional competence.8 Furthermore, provisions

5
quoted by respondent under Rule 4 pertains to the venue of actions, which an "x x x. An accurate reading, however, of the stipulation, 'The parties agree to sue and
extrajudicial foreclosure is not. Section 1, Rule 2 defines an action in this wise: be sued in the Courts of Manila,' does not preclude the filing of suits in the residence
of plaintiff or defendant. The plain meaning is that the parties merely consented to be
"Action means an ordinary suit in a court of justice, by which one party prosecutes sued in Manila. Qualifying or restrictive words which would indicate that Manila and
another for the enforcement or protection of a right, or the prevention or redress of a Manila alone is the venue are totally absent therefrom. We cannot read into that
wrong." clause that plaintiff and defendant bound themselves to file suits with respect to the
last two transactions in question only or exclusively in Manila. For, that agreement did
Hagans v. Wislizenus9 does not depart from this definition when it states that "[A]n not change or transfer venue. It simply is permissive. The parties solely agreed to add
action is a formal demand of one's legal rights in a court of justice in the manner the courts of Manila as tribunals to which they may resort. They did not waive their
prescribed by the court or by the law. x x x." It is clear that the determinative or right to pursue remedy in the courts specifically mentioned in Section 2 (b) of Rule 4.
operative fact which converts a claim into an "action or suit" is the filing of the same Renuntiatio non praesumitur."14
with a "court of justice." Filed elsewhere, as with some other body or office not a court
of justice, the claim may not be categorized under either term.10 Unlike an action, an In Lamis Ents. v. Lagamon,15 the promissory note sued on had the following
extrajudicial foreclosure of real estate mortgage is initiated by filing a petition not with stipulation:
any court of justice but with the office of the sheriff11 of the province where the sale is
to be made. By no stretch of the imagination can the office of the sheriff come under "In case of litigation, jurisdiction shall be vested in the Court of Davao City."
the category of a court of justice. And as aptly observed by the complainant, if ever
the executive judge comes into the picture, it is only because he exercises The collection suit was instituted in the then Court of First Instance of Tagum, Davao,
administrative supervision over the sheriff. But this administrative supervision, where the defendant resides, and not in Davao City as stipulated. We rejected the
however, does not change the fact that extrajudicial foreclosures are not judicial defense of improper venue and, citing the case of Polytrade, therein held:
proceedings, actions or suits.
"x x x. Anent the claim that Davao City had been stipulated as the venue, suffice it to
Granting arguendo that an extrajudicial foreclosure sale can be classified as an say that a stipulation as to venue does not preclude the filing of suits in the residence
"action or suit" (which it is not) and that the venue stipulation in the Loan Agreement of plaintiff or defendant under Section 2 (b), Rule 4, Rules of Court, in the absence of
would gain relevance, respondent judge still committed a grievous error in holding the qualifying or restrictive words in the agreement which would indicate that the place
auction sale in abeyance due to improper laying of venue. We again quote the subject named is the only venue agreed upon by the parties. The stipulation did not deprive
stipulation for easy reference, to wit: Maningo of his right to pursue remedy in the court specifically mentioned in Section 2
(b)-of Rule 4, Rules of Court, Renuntiatio non praesumitur. x x
"14) VENUE OF ACTIONS Any action or suit brought under this Agreement or any x.16chanroblesvirtuallawlibrary
other documents related hereto shall be instituted in the proper Courts of Makati,
Metro Manila, Republic of the Philippines." In Western Minolco v. Court of Appeals,17 the clause on venue read:

Written stipulations as to venue are either mandatory or permissive. In interpreting "The parties stipulate that the venue of the actions referred to in Section 12.01 [Article
stipulations, inquiry must be made as to whether or not the agreement is restrictive in XII of the Agreement] shall be in the City of Manila."
the sense that the suit may be filed only in the place agreed upon or merely
permissive in that the parties may file their suits not only in the place agreed upon but The initial action was commenced in the then Court of First Instance of Baguio and
also in the places fixed by the rules.12chanroblesvirtuallawlibrary Benguet instead of Manila. This Court took the occasion to reiterate once more the
Polytrade doctrine:
In Polytrade Corporation v. Blanco,13 the stipulation on venue there involved read:
"x x x. In any event, it is not entirely amiss to restate the doctrine that stipulations in a
"The parties agree to sue and be sued in the Courts of Manila." contract, which specify a definite place for the institution of an action arising in
connection therewith, do not, as a rule, supersede the general rules on the matter set
The Court, in ruling that venue had been properly laid in the then Court of First out in Rule 4 of the Rules of Court, but should be construed merely as an agreement
Instance of Bulacan (the place of defendant's residence), said: on an additional forum, not as limiting venue to the specified
place.18chanroblesvirtuallawlibrary

6
It is true that there have been early decisions of the Supreme Court inconsistent with seeking a temporary restraining order with prayer for a possible injunction to stop the
the Polytrade line of cases, notably Bautista v. de Borja.19 and Hoechst Philippines, scheduled extrajudicial foreclosure sale. Definitely, a mere ex-parte Motion to Hold
Inc. v. Torres.20 However, Lamis Enterprises and Western Minolco followed by Moles Auction Sale in Abeyance is not the proper remedy, and this recourse by PQL evinces
v. Intermediate Appellate Court,21 Hongkong and Shanghai Banking Corporation v. a clear attempt on its part to shortcut the entire process. Unfortunately, respondent
Sherman,22 Nasser v. Court of Appeals,23 and Surigao Century Sawmill Co., Inc. v. judge fell prey to this scheme, wittingly or unwittingly. Instead of providing some legal
Court of Appeals24 settled the matter by treading the path blazed by Polytrade. justification for his irregular conduct in issuing the questioned Order, this flimsy
Hence, the inevitable conclusion to be drawn, which respondent judge should have argument advanced by the respondent judge all the more has convinced this Court of
appreciated and followed, is that Bautista and Hoechst Philippines have been his culpability.
rendered obsolete by the Polytrade line of cases. Needless to say, the more recent
jurisprudence shall be deemed modificatory of the old ones. Restating the settled WHEREFORE, the Court, resolving to hold respondent Judge Rosalio G. de la Rosa
rule, therefore, as belabored by this Court in Philippine Banking Corporation v. administratively liable for gross ignorance of the law, imposes on him a FINE of
Tensuan,25 venue stipulations in a contract, while considered valid and enforceable, P2,000.00, the same to be deducted from whatever retirement benefits he may be
do not as a rule supersede the general rule set forth in Rule 4 of the Revised Rules of entitled to receive from the government.
Court. In the absence of qualifying or restrictive words, they should be considered G.R. No. L-41014 November 28, 1988
merely as an agreement on additional forum, not as limiting venue to the specified
place. They are not exclusive but, rather permissive. PACIFIC BANKING CORPORATION vs. COURT OF APPEALS and ORIENTAL
ASSURANCE CORPORATION
Notwithstanding the above fundamental considerations, respondent judge still issued
the May 25, 1993 Order stopping indefinitely the foreclosure sale scheduled the PARAS, J.:
following day on May 26, 1993. Clearly, he can be held accountable for ignorance of
the foregoing jurisprudential developments on the applicable rules governing venue This is a petition for review on certiorari of the decision of respondent Court of
stipulations. Appeals * in CA-G.R. No. 41735-R, entitled "Pacific Banking Corporation vs. Oriental
Assurance Corporation", which set aside the decision of the Court of First Instance
It has been said that when the law transgressed is elementary, the failure to know or (CFI) of Manila, ** which had in turn granted the complaint for a sum of money in Civil
observe it constitutes gross ignorance of the law.26 In this case, a mere reference by Case No. 56889.
respondent judge to Act No. 3135, as opposed to Rule 4 of the Revised Rules of
Court, as well as the Deed of the Real Estate Mortgage itself, would dictate that there As gathered from the records, the undisputed facts of this case are as follows:
is no justification whatsoever for him to hold in abeyance the extrajudicial foreclosure
sale scheduled on May 26, 1993 in front of the City Hall of Manila. A judge owes it to On October 21,1963, Fire Policy No. F-3770 (Exhibit "A"), an open policy, was issued
the public and to the legal profession to know the very law he is supposed to apply to to the Paramount Shirt Manufacturing Co. (hereinafter referred to as the insured, for
a given controversy as mandated by the Code of Judicial Conduct.27 He is called brevity), by which private respondent Oriental Assurance Corporation bound itself to
upon to exhibit more than just a cursory acquaintance with the statutes and indemnify the insured for any loss or damage, not exceeding P61,000.00, caused by
procedural rules.28 There will be great faith in the administration of justice if there be fire to its property consisting of stocks, materials and supplies usual to a shirt factory,
a belief on the part of the parties that the occupants of the bench cannot justly be including furniture, fixtures, machinery and equipment while contained in the ground,
accused of an apparent deficiency in their grasp of legal principles.29 Unfortunately, second and third floors of the building situated at number 256 Jaboneros St., San
respondent judge, instead of inspiring faith and confidence in the administration of Nicolas, Manila, for a period of one year commencing from that date to October 21,
justice, committed a rank disservice to its cause when he issued the May 25, 1993 1964.
Order based on the inapplicable provisions of the Rules of Court.
The insured was at the time of the issuance of the policy and is up to this time, a
As to the second averment of respondent judge, that he issued the May 25, 1993 debtor of petitioner in the amount of not less than Eight Hundred Thousand Pesos
Order so as to determine the truthfulness of the mortgagor's allegation that the (P800,000.00) and the goods described in the policy were held in trust by the insured
P500,000.00 previously paid to the mortgagee BAID was not duly credited nor for the petitioner under thrust receipts (Record on Appeal, p. 4).
deducted from the accounts of the mortgagor, suffice it to state that the same, by no
means, provide any justification for the highly questionable actuation of respondent Said policy was duly endorsed to petitioner as mortgagee/ trustor of the properties
judge in issuing the subject Order. This matter, respondent judge ought to have insured, with the knowledge and consent of private respondent to the effect that "loss
known, should have been the subject of a proper court action for the purpose of if any under this policy is payable to the Pacific Banking Corporation".
7
 It will be noted that the defense of fraud and/or violation of Condition No. 3 in the
On January 4, 1964, while the aforesaid policy was in full force and effect, a fire broke Policy, in the form of non-declaration of co-insurances which was not pleaded in the
out on the subject premises destroying the goods contained in its ground and second answer was also not pleaded in the Motion to Dismiss.
floors (Record on Appeal, p.5)
At any rate, on June 30, 1967, the trial court denied private respondent's motion on
On January 24, 1964, counsel for the petitioner sent a letter of demand to private the ground that the defense of lack of proof of loss or defects therein was raised for
respondent for indemnity due to the loss of property by fire under the endorsement of the first time after the commencement of the suit and that it must be deemed to have
said policy (Brief for Plaintiff-Appellee, pp. 16-17). waived the requirement of proof of loss (Sections 83 and 84, Insurance Act; Record
on Appeal, p. 61).
On January 28, 1964, private respondent informed counsel for the petitioner that it
was not yet ready to accede to the latter's demand as the former is awaiting the final On September 9, 1967, the case was considered submitted for decision from which
report of the insurance adjuster, H.H. Bayne Adjustment Company (Brief for Plaintiff- order private respondent filed a motion for reconsideration to set the case or further
Appellee, pp. 17-18). reception of private respondent's additional evidence, "in order to prove that 'insured
has committed a violation of condition No. 3 of the policy in relation to the other
On March 25, 1964, the said insurance adjuster notified counsel for the petitioner that Insurance Clause.' " (Record on Appeal, pp. 61-69).
the insured under the policy had not filed any claim with it, nor submitted proof of loss
which is a clear violation of Policy Condition No.11, and for which reason, On September 30,1967, the case was set for the continuation of the hearing for the
determination of the liability of private respondent could not be had (Supra, pp. 19- reception merely of the testimony of Alejandro Tan Gatue, Manager of the Adjustment
20). Co., over the vehement opposition of the petitioner (Record on Appeal, p. 129).

On April 24, 1964, petitioner's counsel replied to aforesaid letter asking the insurance On April 18, 1 968, the trial court rendered a decision adjudging private respondent
adjuster to verify from the records of the Bureau of Customs the entries of liable to the petitioner under the said contract of insurance, the dispositive portion of
merchandise taken into the customs bonded warehouse razed by fire as a reliable which reads:
proof of loss (Supra, pp. 21-22). For failure of the insurance company to pay the loss
as demanded, petitioner (plaintiff therein) on April 28, 1 964, filed in the court a quo WHEREFORE, judgment is hereby rendered ordering the defendant to pay the
an action for a sum of money against the private respondent, Oriental Assurance plaintiff P61,000.00, with interest at the rate of 8% per annum from January 4, 1964,
Corporation, in the principal sum of P61,000.00 issued in favor of Paramount Shirt to April 28, 1964, and 12% from April 29, 1964, until the amount is fully paid,
Manufacturing Co. (Record on Appeal, pp. 1-36). P6,100.00, as attorney's fees, and the costs. SO ORDERED. (Record on Appeal, pp.
140-141)
On May 25, 1964, private respondent raised the following defenses in its answer to
wit: (a) lack of formal claim by insured over the loss and (b) premature filing of the suit On appeal, the Court of Appeals reversed the decision of the trial court (Decision
as neither plaintiff nor insured had submitted any proof of loss on the basis of which promulgated on April 23, 1975, Rollo, pp. 21-33).
defendant would determine its liability and the amount thereof, either to the private
respondent or its ad . adjuster H.H. Bayne Adjustment Co., both in violation of Policy Petitioner filed a motion for reconsideration of the said decision of the respondent
Condition No.11 (Record on Appeal, pp. 37-38). Court of Appeals, but this was denied on July 3,1975 for lack of merit (Rollo, pp. 54-
67), resulting in this petition with the following assigned errors;
At the trial, petitioner presented in evidence Exhibit "H", which is a communication
dated December 22, 1965 of the insurance adjuster, H.H. Bayne Adjustment Co. to I
Asian Surety Insurance Co., Inc., revealing undeclared co-insurances with the RESPONDENT COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW IN
following: P30,000.00 with Wellington Insurance; P25,000. 00 with Empire Surety and CONCLUDING FRAUD FROM THE BARE FACT THAT THE INSURED
P250,000.00 with Asian Surety; undertaken by insured Paramount on the same PARAMOUNT PROCURED ADDITIONAL INSURANCES OTHER THAN THOSE
property covered by its policy with private respondent whereas the only co-insurances STATED IN THE POLICY IN SPITE OF THE EXISTENCE OF CONTRARY
declared in the subject policy are those of P30,000.00 with Malayan P50,000.00 with PRESUMPTIONS AND ADMITTED FACT AND CIRCUMSTANCES WHICH
South Sea and P25.000.00 with Victory (Brief for the Defendant pp. 13-14). NEGATE THE CORRECTNESS OF SAID CONCLUSION.

8
(a) The respondent Court did not consider the legal presumption against the 3. The Insured shall give notice to the Company of any insurance already
existence of fraud, which should be established with such quantum of proof as is effected, or which may subsequently be effected, covering any of the property hereby
required for any crime. insured, and unless such notice be given and the particulars of such insurance or
insurances be stated in or endorsed on this Policy by or on behalf of the Company
(b) The record of the case is bereft of proof of such fraud. before the occurrence of any loss or damage, all benefit under this policy shall be
forfeited. (Record on Appeal, p. 12)
(c) The private respondent insurer did not even plead or in anywise raise fraud
as a defense in its answer or motion to dismiss and, therefore, it should have been It is not disputed that the insured failed to reveal before the loss three other
considered waived. insurances. As found by the Court of Appeals, by reason of said unrevealed
insurances, the insured had been guilty of a false declaration; a clear
(d) The total amount of insurance procured by the insured from the different misrepresentation and a vital one because where the insured had been asked to
companies amounted to hardly onehalf (½) of the value of the goods insured. reveal but did not, that was deception. Otherwise stated, had the insurer known that
there were many co-insurances, it could have hesitated or plainly desisted from
II entering into such contract. Hence, the insured was guilty of clear fraud (Rollo, p. 25).
RESPONDENT COURT ERRED IN NOT HOLDING THAT CONSIDERING THE
VOTING ON THE PARTICULAR QUESTION OF FRAUD, THE FINDING OF THE Petitioner's contention that the allegation of fraud is but a mere inference or suspicion
TRIAL COURT THEREON SHOULD BE CONSIDERED AFFIRMED. is untenable. In fact, concrete evidence of fraud or false declaration by the insured
was furnished by the petitioner itself when the facts alleged in the policy under
III clauses "Co-Insurances Declared" and "Other Insurance Clause" are materially
THE CONCURRING OPINION OF MR. JUSTICE CHANCO IS LEGALLY different from the actual number of co-insurances taken over the subject property.
ERRONEOUS IN HOLDING THAT THE ACTION WAS PREMATURELY BROUGHT Consequently, "the whole foundation of the contract fails, the risk does not attach and
BECAUSE THE REQUIRED CLAIM UNDER THE INSURANCE LAW HAS NOT the policy never becomes a contract between the parties. Representations of facts
BEEN FILED, NOTWITHSTANDING THE LETTER, (EXHIBIT "C") OF PETITIONER- are the foundation of the contract and if the foundation does not exist, the
APPELLANT'S LAWYER WHICH IS A SUBSTANTIAL COMPLIANCE OF THE superstructure does not arise. Falsehood in such representations is not shown to vary
LEGAL REQUIREMENTS AND NOT HOLDING THAT PRIVATE RESPONDENT or add to the contract, or to terminate a contract which has once been made, but to
INSURER HAD ALREADY WAIVED THE SUPPOSED DEFECTS IN THE CLAIM show that no contract has ever existed (Tolentino, Commercial Laws of the
FILED BY PETITIONER-APPELLANT FOR ITS FAILURE TO CALL THE Philippines, p. 991, Vol. II, 8th Ed.) A void or inexistent contract is one which has no
ATTENTION OF THE LAYER TO SUCH ALLEGED DEFECTS AND FOR force and effect from the very beginning, as if it had never been entered into, and
ENDORSING THE CLAIM TO ITS ADJUSTER FOR PROCESSING. which cannot be validated either by time or by ratification Tongoy v. C.A., 123 SCRA
99 [1983]; Avila v. C.A. 145 SCRA [1986]).
IV
RESPONDENT COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW IN As the insurance policy against fire expressly required that notice should be given by
NOT INTERPRETING THE PROVISIONS OF THE POLICY LIBERALLY IN FAVOR the insured of other insurance upon the same property, the total absence of such
OF THE HEREIN PETITIONER-APPELLANT, WHO IS NOT THE INSURED BUT notice nullifies the policy (Sta. Ana v. Commercial Union Assurance Co., 55 Phil. 333
ONLY THE ASSIGNEE/MORTGAGEE OF THE PROPERTY INSURED. [1930]; Union Manufacturing Co., Inc. vs. Philippine Guaranty Co., Inc., 47 SCRA 276
[1972]; Pioneer Ins. & Surety Corp., v. Yap, 61 SCRA 432 [1974]).
V
RESPONDENT COURT OF APPEALS COMMITTED A GRAVE ERROR OF LAW IN The argument that notice of co-insurances may be made orally is preposterous and
DISMISSING THE CASE AND IN NOT AFFIRMING THE APPEALED DECISION OF negates policy condition No. 20 which requires every notice and other
THE TRIAL COURT. (Brief for Petitioners, pp. 1-3) communications to the insurer to be written or printed.

The crux of the controversy centers on two points: (a) unrevealed co-insurances Petitioner points out that Condition No. 3 in the policy in relation to the "other
which violated policy conditions No. 3 and (b) failure of the insured to file the required insurance clause" supposedly to have been violated, cannot certainly defeat the right
proof of loss prior to court action. Policy Condition No. 3 explicitly provides: of the petitioner to recover the insurance as mortgagee/assignee. Particularly
referring to the mortgage clause of the policy, petitioner argues that considering the
purpose for which the endorsement or assignment was made, that is, to protect the
9
mortgagee/assignee against any untoward act or omission of the insured, it would be extrajudicially in the manner provided in the policy, the cause of action will accrue
absurd to hold that petitioner is barred from recovering the insurance on account of from the time the insurer finally rejects the claim for payment (Eagle Star Insurance v.
the alleged violation committed by the insured (Rollo, Brief for the petitioner, pp, 33- Chia Yu, 55 Phil 701 [1955]).
35).
In the case at bar, policy condition No. 11 specifically provides that the insured shall
It is obvious that petitioner has missed all together the import of subject mortgage on the happening of any loss or damage give notice to the company and shall within
clause which specifically provides: fifteen (15) days after such loss or damage deliver to the private respondent (a) a
claim in writing giving particular account as to the articles or goods destroyed and the
Mortgage Clause amount of the loss or damage and (b) particulars of all other insurances, if any.
Likewise, insured was required "at his own expense to produce, procure and give to
Loss, if any, under this policy, shall be payable to the PACIFIC BANKING the company all such further particulars, plans, specifications, books, vouchers,
CORPORATION Manila mortgagee/trustor as its interest may appear, it being hereby invoices, duplicates or copies thereof, documents, proofs and information with respect
understood and agreed that this insurance as to the interest of the mortgagee/trustor to the claim". (Record on Appeal, pp. 18-20).
only herein, shall not be invalidated by any act or neglect—except fraud or
misrepresentation, or arson—of the mortgagor or owner/trustee of the property The evidence adduced shows that twenty-four (24) days after the fire, petitioner
insured; provided, that in case the mortgagor or owner/ trustee neglects or refuses to merely wrote letters to private respondent to serve as a notice of loss, thereafter, the
pay any premium, the mortgagee/ trustor shall, on demand pay the same. (Rollo, p. former did not furnish the latter whatever pertinent documents were necessary to
26) prove and estimate its loss. Instead, petitioner shifted upon private respondent the
burden of fishing out the necessary information to ascertain the particular account of
The paragraph clearly states the exceptions to the general rule that insurance as to the articles destroyed by fire as well as the amount of loss. It is noteworthy that
the interest of the mortgagee, cannot be invalidated; namely: fraud, or private respondent and its adjuster notified petitioner that insured had not yet filed a
misrepresentation or arson. As correctly found by the Court of Appeals, concealment written claim nor submitted the supporting documents in compliance with the
of the aforecited requirements set forth in the policy. Despite the notice, the latter remained unheedful.
co-insurances can easily be fraud, or in the very least, misrepresentation (Rollo, p. Since the required claim by insured, together with the preliminary submittal of relevant
27). documents had not been complied with, it follows that private respondent could not be
deemed to have finally rejected petitioner's claim and therefore the latter's cause of
Undoubtedly, it is but fair and just that where the insured who is primarily entitled to action had not yet arisen. Compliance with condition No. 11 is a requirement sine qua
receive the proceeds of the policy has by its fraud and/or misrepresentation, forfeited non to the right to maintain an action as prior thereto no violation of petitioner's right
said right, with more reason petitioner which is merely claiming as indorsee of said can be attributable to private respondent. This is so, as before such final rejection,
insured, cannot be entitled to such proceeds. there was no real necessity for bringing suit. Petitioner should have endeavored to file
the formal claim and procure all the documents, papers, inventory needed by private
Petitioner further stressed that fraud which was not pleaded as a defense in private respondent or its adjuster to ascertain the amount of loss and after compliance await
respondent's answer or motion to dismiss, should be deemed to have been waived. the final rejection of its claim. Indeed, the law does not encourage unnecessary
litigation (Eagle Star Insurance Co., Ltd., et al. v. Chia Yu, p. 701, supra).<äre||
It will be noted that the fact of fraud was tried by express or at least implied consent of anº•1àw>
the parties. Petitioner did not only object to the introduction of evidence but on the
contrary, presented the very evidence that proved its existence. Verily, petitioner prematurely filed Civil Case No. 56889 and dismissal thereof was
warranted under the circumstances. While it is a cardinal principle of insurance law
Be that as it may, it is established that the Supreme Court has ample authority to give that a policy or contract of insurance is to be construed liberally in favor of the insured
beyond the pleadings where in the interest of justice and the promotion of public and strictly as against the insurer company (Eagle Star Insurance Co., Ltd., et al. v.
policy, there is a need to make its own finding to support its conclusion. Otherwise Chia Yu, p. 702, supra; Taurus Taxi Co., Inc. v. The Capital Ins. & Surety Co., Inc., 24
stated, the Court can consider a fact which surfaced only after trial proper (Maharlika SCRA 458 [1968]; National Power Corp. v. CA, 145 SCRA 533 [1986]), yet, contracts
Publishing Corp. v. Tagle, 142 SCRA 561 [1986]). of insurance, like other contracts, are to be construed according to the sense and
meaning of the terms which the parties themselves have used. If such terms are clear
Generally, the cause of action on the policy accrues when the loss occurs, But when and unambiguous, they must be taken and understood in their plain, ordinary and
the policy provides that no action shall be brought unless the claim is first presented popular sense (Young v. Midland Textile Ins. Co., 30 Phil. 617 [1919]; Union
10
Manufacturing Co., Inc. v. Phil. Guaranty Co., Inc., p. 277 supra; Pichel v. Alonzo, III Cavite; and the resolution dated August 23, 1990 of the COMELEC, En Banc denying
SCRA 341 [1982]; Gonzales v. CA, 124 SCRA 630 [1983]; GSIS v. CA, 145 SCRA petitioner's motion for reconsideration.
311 [1986]; Herrera v. Petrophil Corp., 146 SCRA 385 [1986]).
Petitioner Conrado Lindo and private respondent Octavio D. Velasco were candidates
Contracts of insurance are contracts of indemnity upon the terms and conditions for the position of municipal mayor of Ternate, Cavite, in the January 18, 1988 local
specified in the policy. The parties have a right to impose such reasonable conditions elections. After canvass, the Municipal Board of Canvassers of Ternate proclaimed
at the time of the making of the contract as they may deem wise and necessary. The petitioner Lindo as the elected mayor of Ternate on January 19,1988.
agreement has the force of law between the parties. The terms of the policy constitute
the measure of the insurer's liability, and in order to recover, the insured must show On March 22, 1988, Velasco filed an election protest with the Regional Trial Court,
himself within those terms. The compliance of the insured with the terms of the policy Branch XV, with station at Trece Martires City, which was docketed as EPC No. NC-1
is a condition precedent to the light of recovery (Stokes v. Malayan Insurance Co., entitled, "Octavio D. Velasco, Protestant, versus Conrado C. Lindo, Protestee."
Inc., 127 SCRA 766 [1984]). Velasco protested the results of the election in seventeen (17) of the twenty two (22)
precincts in the municipality. On April 18, 1988, Lindo filed his answer to the protest.
It appearing that insured has violated or failed to perform the conditions under No. 3 His answer did not interpose any counter-protest (p. 40, Rollo).
and 11 of the contract, and such violation or want of performance has not been
waived by the insurer, the insured cannot recover, much less the herein petitioner. A physical examination of the ballots and a recount of the votes from Precints Nos. 1,
Courts are not permitted to make contracts for the parties; the function and duty of the 1-A, 2, 2-A, 3, 3-A, 4, 4-A, 5, 6, 8-A and 10-A were conducted before the trial court
courts is simply to enforce and carry out the contracts actually made (Young v. without any controversy. On August 2, 1988, the ballot boxes from precints Nos. 6-A
Midland Textile Ins. Co., 30 Phil. 617 [1915]; Union Manufacturing Co. Inc. v. Phil. and 8 were presented to the court for examination and recounting. It was observed
Guaranty Co. Inc., p. 276 supra). that the ballot boxes from these precincts did not have self-locking metal seals and
the envelopes containing the valid ballots were partially opened. As the ballots were
Finally, the established rule in this jurisdiction that findings of fact of the Court of examined, Lindo objected to thirty-three (33) ballots from precinct No. 6-A and fifty-
Appeals when supported by substantial evidence, are not reviewable on appeal by seven (57) ballots from precinct No. 8, alleging that these ballots were spurious. The
certiorari, deserves reiteration. Said findings of the appellate court are final and contested ballots were sent to the NBI for examination (p. 95, Rollo of G.R. 88337).
cannot be disturbed by the Supreme Court except in certain cases Lereos v. CA, 117
SCRA 395 [1985]; Dalida v. CA, 117 SCRA 480 [1982] Director of Lands v. CA, 117 In its report dated October 12, 1988, the NBI found 32 contested ballots from precinct
SCRA 346 [1982]; Montesa v. CA, 117 SCRA 770 [1982]; Sacay v. Sandiganbayan, No. 6-A and 50 contested ballots from precinct No. 8, to be valid ballots.
142 SCRA 609 [1986]; Guita v. CA, 139 SCRA 576 [1985]; Manlapaz v. CA, 147
SCRA 238-239 [1987]). The ballot boxes from precincts Nos. 9, 9-A, 10 and 11 were also found in the same
condition as the ballot boxes from precincts Nos. 6-A and 8. Lindo likewise objected
PREMISES CONSIDERED, the petition is DISMISSED for lack of merit, and the to the recounting of votes from these precints and the ballots objected to were sent to
decision appealed from is AFFIRMED. No costs. the NBI for examination. Recounting of the votes from these precincts were withheld
by order of the trial court pending examination of the ballots by the NBI. The record
G.R. No. 95016 February 11, 1991 does not disclose the findings of the NBI on the validity of the ballots from these
precincts.
CONRADO C. LINDO vs. COMMISSION ON ELECTIONS, OCTAVIO D. VELASCO
AND THE HON. ENRIQUE ALMARIO, Presiding Judge, RTC, Branch XV, Trece On November 7, 1988, Lindo through counsel, moved in open court to exclude the
Martires City ballots from the four (4) precincts (Precincts No. 9, 9-A, 10 and 11) above-mentioned.
The chairmen of these precincts, when subpoenaed by the court, testified that the
MEDIALDEA, J.: ballot boxes did not have self-locking metal seals and the envelopes containing the
ballots were tampered (pp. 59-63, Rollo). After hearing the testimonies of the
This petition for certiorari with a prayer for a temporary restraining order assails the respective chairmen of the four controverted precincts, the trial court issued an order
decision dated June 6, 1990 of the Commission on Elections (COMELEC), First on November 11, 1988 excluding the ballots from these precincts from the revision.
Division, in EAC No. 6-90 entitled "Octavio D. Velasco, Protestant versus Conrado C. Velasco filed a motion for reconsideration of the order which was denied on
Lindo, Protestee," reversing the decision of the trial court and declaring private December 9, 1 988.
respondent Octavio D. Velasco the duly elected mayor of the municipality of Ternate,
11
On appeal by Velasco, the COMELEC, En Banc, set aside the order of the trial court order denying due course to his notice of appeal be set aside (p. 8, Rollo). Velasco's
on the ground that the examination of the ballots and the recounting of the votes from appeal and Lindo's motion were consolidated in one case and docketed as EAC No.
contested precincts are mandatory under the circumstances pursuant to Section 255 6-90 of the COMELEC.
of BP 881 (Omnibus Election Code). It likewise directed the trial court to proceed with
the revision of the ballots from these four (4) controverted precincts. On June 6, 1990, after hearing the arguments of the parties and after the parties
submitted their respective memoranda, the COMELEC (First Division) rendered its
A petition for certiorari was later filed before this Court by Lindo impugning the order decision on Velasco's appeal and Lindo's motion, the dispositive portion of which,
of the COMELEC and docketed as G.R. No. 88337. On October 17,1989, We reads:
dismissed the petition and affirmed the decision of the COMELEC.
ACCORDINGLY, the decision appealed from declaring as "winner of this contest,
Revision of the ballots from precincts No. 9, 9-A, 10 and 11 was scheduled by the trial candidate Conrado Lindo by 29 votes (sic) margin over candidate Octavio D.
court on January 26, 1990. Upon the resumption of the revision, Lindo moved for its Velasco" is hereby reversed. Protestant Octavio Velasco is hereby declared the duly
suspension until such time that a new Committee on Revision was formed, alleging elected mayor of the Municipality of Ternate, Cavite in the elections held on January
that he (petitioner) had no representative in the existing revision committee. This 18, 1988 by a plurality of 154 votes over Protestee Conrado C. Lindo, who
motion was denied by the trial court had no further action was taken by Lindo. The immediately upon the finality of this decision is directed to vacate the said Office of
revision resumed and was terminated on January 30, 1990. Mayor of Ternate, Cavite and to turn over the same to Protestant Octavio D. Velasco.

On February 6, 1990, the trial court rendered a decision proclaiming Lindo the winner With cost against Protestee. SO ORDERED.
with a plurality of twenty-nine (29) votes. The dispositive portion of the trial court's
decision reads: Lindo's motion for reconsideration was heard on July 12, 1990. Thereafter, the parties
were required to submit their respective memoranda which they complied. On August
Out of the seventeen (17) electoral precincts in the above-entitled election contest, 23, 1990, respondent COMELEC En Banc promulgated a resolution affirming in toto
the sum total number of valid votes received by: the decision of the COMELEC, (First Division).

Protestant Velasco is 1,157 votes while Protestee Conrado Lindo got 1,186 votes. On September 14, 1990, Lindo filed this petition for certiorari with a prayer for a
temporary restraining order raising the following issues:
WHEREFORE, the winner of this contest is candidate Conrado Lindo by 29 votes ISSUES
margin over candidate Octavio Velasco. . . . (P. 37, Rollo).
1. WHETHER OR NOT THE COMELEC COMMITTED GRAVE ABUSE OF
On February 12, 1990, counsel for Lindo, Atty. Amado Montajo, was served a copy of DISCRETION IN DISREGARDING ITS OWN RULE 32, SEC. 3 AND RULE 35,
the decision while attending the hearing of another case. Velasco's counsel was also SECS. 20 AND 22; AND
served a copy of the decision by mail which he received on February 16, 1990.
2. WHETHER OR NOT PETITIONER WAS EFFECTIVELY DENIED DUE
Velasco filed a Notice of Appeal to the COMELEC on February 17, 1990. His main PROCESS WHEN HIS NOTICE OF APPEAL WAS CONSIDERED "FILED OUT OF
argument was that the winner in an election protest case should be determined not TIME" AND THEREFORE "HAS LOST HIS STANDING TO QUESTION A DECISION
only on the basis of the results obtained from the contested precincts but from the WHICH, AS TO HIM, HAD BECOME FINAL AND BEYOND THE REMEDY OF
results of both the contested and uncontested precincts. Lindo, on the other hand, APPEAL," NOTWITHSTANDING THAT, THE PETITIONER HAS FILED HIS NOTICE
filed a Notice of Appeal on February 26, 1990, claiming that he knew of the decision OF APPEAL EVEN BEFORE ANY "PROMULGATION" WAS EVER MADE AS
only on February 22, 1990. REQUIRED BY THE COMELEC RULES. (p. 13, Rollo)

On February 26, 1990, the trial court gave due course to the appeal of Velasco and On September 18, 1990, We required the respondents to file their comments.
denied due course to Lindo's appeal on the ground that it was filed out of time. It Meanwhile, on October 24, 1990, petitioner filed an urgent motion for the issuance of
likewise directed its clerk to forward the records of the case to the COMELEC. a temporary restraining order. On October 25, 1990, We issued a temporary
restraining order enjoining respondent COMELEC, or any of its duly authorized
On March 26, 1990, a month after the trial court denied due Course to his notice of representatives or agents, from enforcing its (COMELEC) resolution promulgated on
appeal, Lindo, filed a motion with the COMELEC praying that respondent trial court's August 23, 1990 in EAC No. 6-90.
12
 over the person and the subject matter of the action, and that which follows a failure
Petitioner imputes grave abuse of discretion on the part of respondent COMELEC for to give notice of a step taken after the court has obtained such jurisdiction and is
disregarding its own rules regarding promulgation of a decision in election protest proceeding with the action. Failure to give notice of the action by the service of a
cases. The rule referred to is Section 20 of Rule 35 of the Comelec Rules of summons for example, is a jurisdictional defect and the court acquires no jurisdiction
Procedure which provides: over the person of the defendant. . . . When, however, the court, by the service of
proper notice has obtained jurisdiction of the person and the subject matter, then the
Sec. 20. Promulgation and Finality of Decision. — The decision of the court shall be failure to give notice of a subsequent step in the action or proceeding is not
promulgated on a date set by it of which due notice must be given the parties. It shall jurisdictional and does not render an order made without notice void (So Chu and
become final five (5) days after promulgation. No motion for reconsideration shall be Limpangco v. Nepomuceno and Reis 29 Phil. 208, also cited in Francisco, Vicente, J.,
entertained. Revised Rules of Court, 2nd edition, p. 112).

It is the contention of petitioner Lindo that the act of merely furnishing the parties with In the case of Pimping v. COMELEC, Nos. 69765-67, Nov. 19, 1985,140 SCRA 192,
a copy of the decision, as was done in the trial court, violated COMELEC rules and citing Macabingkil v. Yatco, 21 SCRA 150, We held:
did not constitute a valid promulgation. Since there was no valid promulgation, the
five (5) day period within which the decision should be appealed to the COMELEC did The fact that petitioners were not served notice in advance of the promulgation of the
not commence to run. decision in the election protest cases, in Our view, does not constitute reversible error
or a reason sufficient enough to compel and warrant the setting aside of the judgment
This contention is untenable. Promulgation is the process by which a decision is rendered by the Comelec. Petitioners anchor their argument on an alleged denial to
published, officially announced, made known to the public or delivered to the clerk of them (of) due process to the deviation by the Comelec from its own made rules.
court for filing, coupled with notice to the parties or their counsel (Neria v. However, the essence of due process is that, the parties in the case were afforded an
Commissioner of Immigration, L-24800, May 27, 1968, 23 SCRA 812). It is the opportunity to be heard. As long as the parties were given the opportunity to be
delivery of a court decision to the clerk of court for filing and publication (Araneta v. heard, before judgment was rendered, the demands of due process were sufficiently
Dinglasan, 84 Phil. 433). It is the filing of the signed decision with the clerk of court met.
(Sumbing v. Davide, G.R. Nos. 86850-51, July 20, 1989, En Banc Minute Resolution).
The additional requirement imposed by the COMELEC rules of notice in advance of Petitioner's protestations of denial of due process when his notice of appeal was
promulgation is not part of the process of promulgation. Hence, We do not agree with denied for having been filed out of time must also fail. The records show that
petitioner's contention that there was no promulgation of the trial court's decision. The petitioner's counsel of record, Atty. Amador Montajo, received a copy of the decision
trial court did not deny that it had officially made the decision public. From the recital on February 12, 1990. The five-day period for petitioner to file his appeal from the
of facts of both parties, copies of the decision were sent to petitioner's counsel of decision of the trial court commenced to run from such date. Petitioner's notice of
record and petitioner's himself. Another copy was sent to private respondent. appeal was filed with the trial court only on February 26, 1990, fourteen (14) days
after his counsel was served a copy of the decision. Clearly, his notice was filed out of
What was wanting and what the petitioner apparently objected to was not the time. In denying the notice of appeal, respondent COMELEC (First Division), held:
promulgation of the decision but the failure of the trial court to serve notice in advance
of the promulgation of its decision as required by the COMELEC rules. The failure to On February 26, 1990, a certain Atty. Antonio Jose F. Cortes, representing himself as
serve such notice in advance of the promulgation may be considered a procedural co-counsel for Protestee Lindo in this case, filed a "NOTICE OF APPEAL" with the
lapse on the part of the trial court which did not prejudice the rights of the parties and trial court. In an order issued on the same date — February 26, 1990 — the court
did not vitiate the validity of the decision of the trial court nor of the promulgation of below denied due course to the notice of appeal filed by Atty. Cortes as follows:
said decision.
The notice of appeal, however, filed by the protestee thru Atty. Antonio S. Cortes, who
A procedural lapse or error should be distinguished from lack of jurisdiction. In the is not the counsel on record, being beyond the reglementary period of five (5) days
former, the proceedings are null and void if and when the error is shown to have from receipt of a copy of the Court's judgment, is hereby denied. It should be noted
caused harm while in the latter, the proceedings are null and void unconditionally (In that the five (5) day period shall commence from February 12, 1990 since Atty.
the matter of the petition of Joson and Joson v. Nable, et al., G.R. No. L-3450, Amador Montajo, counsel on record received the decision of this court on February
September, 1950, XVILJ No. 1, p. 35, cited in Francisco, Vicente, J., Revised Rules of 12, 1990. (pp. 44-45, Rollo)
Court in the Philippines, 2nd edition, p. 112). There is a great difference in the results
which follows the failure to give the necessary notice to confer on the court jurisdiction
13
The failure of petitioner's counsel to give due attention to the decision coming from Petitioners in support of their contention that the filing fee must be assessed on the
the court which heard the case is binding on the petitioner. This failure was the basis of the amended complaint cite the case of Magaspi vs. Ramolete. 1 They
reason for the loss of his standing in court. The blame cannot be passed on to the contend that the Court of Appeals erred in that the filing fee should be levied by
trial court for its alleged failure to conduct a valid promulgation. The COMELEC did considering the amount of damages sought in the original complaint.
not abuse its discretion when it affirmed the order of the trial court denying due
course to petitioner's notice of appeal for having been filed beyond the reglementary The environmental facts of said case differ from the present in that —
period.
1. The Magaspi case was an action for recovery of ownership and possession
This case had been pending with respondent trial court for almost two (2 years where of a parcel of land with damages.2 While the present case is an action for torts and
the herein petitioner had all the opportunities to be heard and was in fact heard. damages and specific performance with prayer for temporary restraining order, etc.3
Election protests are supposed to be summary in nature. That is why the law (Art. 258
of BP 881) and the rules (Sec. 18, Rule 35, Comelec Rules of Procedure) require that 2. In the Magaspi case, the prayer in the complaint seeks not only the
in every case, election protests shall be decided within six (6) months after its filing. annulment of title of the defendant to the property, the declaration of ownership and
The proceedings should not be allowed to drag on during the term of the contested delivery of possession thereof to plaintiffs but also asks for the payment of actual
position with the result that the elected would be deprived of his right to the office and moral, exemplary damages and attorney's fees arising therefrom in the amounts
the defeated would discharge the office which he was not entitled to. specified therein. 4 However, in the present case, the prayer is for the issuance of a
writ of preliminary prohibitory injunction during the pendency of the action against the
Finally, even if We were to concede that petitioner did not lose his right to appeal, it defendants' announced forfeiture of the sum of P3 Million paid by the plaintiffs for the
would still be dismissed. In his motion for reconsideration (pp. 48-74, Rollo) of the property in question, to attach such property of defendants that maybe sufficient to
COMELEC's (First Division) decision of June 6, 1990, and his memorandum (p. 126- satisfy any judgment that maybe rendered, and after hearing, to order defendants to
140, Rollo) filed before the COMELEC, En Banc he does not question the results of execute a contract of purchase and sale of the subject property and annul defendants'
the election in thirteen (13) contested precincts, to wit: Precinct Nos. 1, 1-A, 2, 2-A, 3, illegal forfeiture of the money of plaintiff, ordering defendants jointly and severally to
4, 4-A, 5, 6, 6-A 8, 8-A and 10-A out of a total of seventeen (17) contested precincts. pay plaintiff actual, compensatory and exemplary damages as well as 25% of said
He has limited his objection to the inclusion of the revised results of election in amounts as maybe proved during the trial as attorney's fees and declaring the tender
precincts No. 9, 9-A, 10 and 11 on the ground that the ballot boxes and envelopes of payment of the purchase price of plaintiff valid and producing the effect of payment
containing the ballots for these four (4) precincts were tampered. This is the same and to make the injunction permanent. The amount of damages sought is not
objection interposed in G.R. No. 88337 and the decision therein had already become specified in the prayer although the body of the complaint alleges the total amount of
final and unappealable. over P78 Million as damages suffered by plaintiff.5

ACCORDINGLY, the petition is DISMISSED. The temporary restraining order dated 3. Upon the filing of the complaint there was an honest difference of opinion as to the
October 25, 1990 is hereby LIFTED. SO ORDERED. nature o f the action in the Magaspi case. The complaint was considered as primarily
an action for recovery of ownership and possession of a parcel of land. The damages
G.R. No. 75919 May 7, 1987 stated were treated as merely to the main cause of action. Thus, the docket fee of
only P60.00 and P10.00 for the sheriff's fee were paid. 6
MANCHESTER DEVELOPMENT CORPORATION, ET AL. vs. COURT OF
APPEALS, CITY LAND DEVELOPMENT CORPORATION, STEPHEN ROXAS, In the present case there can be no such honest difference of opinion. As maybe
ANDREW LUISON, GRACE LUISON and JOSE DE MAISI gleaned from the allegations of the complaint as well as the designation thereof, it is
both an action for damages and specific performance. The docket fee paid upon filing
GANCAYCO, J.: of complaint in the amount only of P410.00 by considering the action to be merely
one for specific performance where the amount involved is not capable of pecuniary
Acting on the motion for reconsideration of the resolution of the Second Division of estimation is obviously erroneous. Although the total amount of damages sought is
January 28,1987 and another motion to refer the case to and to be heard in oral not stated in the prayer of the complaint yet it is spelled out in the body of the
argument by the Court En Banc filed by petitioners, the motion to refer the case to the complaint totalling in the amount of P78,750,000.00 which should be the basis of
Court en banc is granted but the motion to set the case for oral argument is denied. assessment of the filing fee.

14
4. When this under-re assessment of the filing fee in this case was brought to The Court of Appeals therefore, aptly ruled in the present case that the basis of
the attention of this Court together with similar other cases an investigation was assessment of the docket fee should be the amount of damages sought in the original
immediately ordered by the Court. Meanwhile plaintiff through another counsel with complaint and not in the amended complaint.
leave of court filed an amended complaint on September 12, 1985 for the inclusion of
Philips Wire and Cable Corporation as co-plaintiff and by emanating any mention of The Court cannot close this case without making the observation that it frowns at the
the amount of damages in the body of the complaint. The prayer in the original practice of counsel who filed the original complaint in this case of omitting any
complaint was maintained. After this Court issued an order on October 15, 1985 specification of the amount of damages in the prayer although the amount of over
ordering the re- assessment of the docket fee in the present case and other cases P78 million is alleged in the body of the complaint. This is clearly intended for no
that were investigated, on November 12, 1985 the trial court directed plaintiffs to other purpose than to evade the payment of the correct filing fees if not to mislead the
rectify the amended complaint by stating the amounts which they are asking for. It docket clerk in the assessment of the filing fee. This fraudulent practice was
was only then that plaintiffs specified the amount of damages in the body of the compounded when, even as this Court had taken cognizance of the anomaly and
complaint in the reduced amount of P10,000,000.00. 7 Still no amount of damages ordered an investigation, petitioner through another counsel filed an amended
were specified in the prayer. Said amended complaint was admitted. complaint, deleting all mention of the amount of damages being asked for in the body
of the complaint. It was only when in obedience to the order of this Court of October
On the other hand, in the Magaspi case, the trial court ordered the plaintiffs to pay the 18, 1985, the trial court directed that the amount of damages be specified in the
amount of P3,104.00 as filing fee covering the damages alleged in the original amended complaint, that petitioners' counsel wrote the damages sought in the much
complaint as it did not consider the damages to be merely an or incidental to the reduced amount of P10,000,000.00 in the body of the complaint but not in the prayer
action for recovery of ownership and possession of real property. 8 An amended thereof. The design to avoid payment of the required docket fee is obvious.
complaint was filed by plaintiff with leave of court to include the government of the
Republic as defendant and reducing the amount of damages, and attorney's fees The Court serves warning that it will take drastic action upon a repetition of this
prayed for to P100,000.00. Said amended complaint was also admitted. 9 unethical practice.

In the Magaspi case, the action was considered not only one for recovery of To put a stop to this irregularity, henceforth all complaints, petitions, answers and
ownership but also for damages, so that the filing fee for the damages should be the other similar pleadings should specify the amount of damages being prayed for not
basis of assessment. Although the payment of the docketing fee of P60.00 was found only in the body of the pleading but also in the prayer, and said damages shall be
to be insufficient, nevertheless, it was held that since the payment was the result of an considered in the assessment of the filing fees in any case. Any pleading that fails to
"honest difference of opinion as to the correct amount to be paid as docket fee" the comply with this requirement shall not bib accepted nor admitted, or shall otherwise
court "had acquired jurisdiction over the case and the proceedings thereafter had be expunged from the record.
were proper and regular." 10 Hence, as the amended complaint superseded the
original complaint, the allegations of damages in the amended complaint should be The Court acquires jurisdiction over any case only upon the payment of the
the basis of the computation of the filing fee. 11 prescribed docket fee. An amendment of the complaint or similar pleading will not
thereby vest jurisdiction in the Court, much less the payment of the docket fee based
In the present case no such honest difference of opinion was possible as the on the amounts sought in the amended pleading. The ruling in the Magaspi case 14
allegations of the complaint, the designation and the prayer show clearly that it is an in so far as it is inconsistent with this pronouncement is overturned and reversed.
action for damages and specific performance. The docketing fee should be assessed
by considering the amount of damages as alleged in the original complaint. WHEREFORE, the motion for reconsideration is denied for lack of merit. SO
ORDERED.
As reiterated in the Magaspi case the rule is well-settled "that a case is deemed filed
only upon payment of the docket fee regardless of the actual date of filing in court . 12 G.R. Nos. 79937-38 February 13, 1989
Thus, in the present case the trial court did not acquire jurisdiction over the case by
the payment of only P410.00 as docket fee. Neither can the amendment of the SUN INSURANCE OFFICE, LTD., (SIOL), E.B. PHILIPPS and D.J. WARBY, vs.
complaint thereby vest jurisdiction upon the Court. 13 For an legal purposes there is HON. MAXIMIANO C. ASUNCION, Presiding Judge, Branch 104, Regional Trial
no such original complaint that was duly filed which could be amended. Court, Quezon City and MANUEL CHUA UY PO TIONG
Consequently, the order admitting the amended complaint and all subsequent
proceedings and actions taken by the trial court are null and void. GANCAYCO, J.:

15
Again the Court is asked to resolve the issue of whether or not a court acquires
jurisdiction over a case when the correct and proper docket fee has not been paid. Judge Maximiano C. Asuncion, to whom Civil Case No. Q41177 was thereafter
assigned, after his assumption into office on January 16, 1986, issued a
On February 28, 1984, petitioner Sun Insurance Office, Ltd. (SIOL for brevity) filed a Supplemental Order requiring the parties in the case to comment on the Clerk of
complaint with the Regional Trial Court of Makati, Metro Manila for the consignation of Court's letter-report signifying her difficulty in complying with the Resolution of this
a premium refund on a fire insurance policy with a prayer for the judicial declaration of Court of October 15, 1985 since the pleadings filed by private respondent did not
its nullity against private respondent Manuel Uy Po Tiong. Private respondent as indicate the exact amount sought to be recovered. On January 23, 1986, private
declared in default for failure to file the required answer within the reglementary respondent filed a "Compliance" and a "Re-Amended Complaint" stating therein a
period. claim of "not less than Pl0,000,000. 00 as actual compensatory damages" in the
prayer. In the body of the said second amended complaint however, private
On the other hand, on March 28, 1984, private respondent filed a complaint in the respondent alleges actual and compensatory damages and attorney's fees in the total
Regional Trial Court of Quezon City for the refund of premiums and the issuance of a amount of about P44,601,623.70.
writ of preliminary attachment which was docketed as Civil Case No. Q-41177, initially
against petitioner SIOL, and thereafter including E.B. Philipps and D.J. Warby as On January 24, 1986, Judge Asuncion issued another Order admitting the second
additional defendants. The complaint sought, among others, the payment of actual, amended complaint and stating therein that the same constituted proper compliance
compensatory, moral, exemplary and liquidated damages, attorney's fees, expenses with the Resolution of this Court and that a copy thereof should be furnished the Clerk
of litigation and costs of the suit. Although the prayer in the complaint did not quantify of Court for the reassessment of the docket fees. The reassessment by the Clerk of
the amount of damages sought said amount may be inferred from the body of the Court based on private respondent's claim of "not less than P10,000,000.00 as actual
complaint to be about Fifty Million Pesos (P50,000,000.00). and compensatory damages" amounted to P39,786.00 as docket fee. This was
subsequently paid by private respondent.
Only the amount of P210.00 was paid by private respondent as docket fee which
prompted petitioners' counsel to raise his objection. Said objection was disregarded Petitioners then filed a petition for certiorari with the Court of Appeals questioning the
by respondent Judge Jose P. Castro who was then presiding over said case. Upon said order of Judie Asuncion dated January 24, 1986.
the order of this Court, the records of said case together with twenty-two other cases
assigned to different branches of the Regional Trial Court of Quezon City which were On April 24, 1986, private respondent filed a supplemental complaint alleging an
under investigation for under-assessment of docket fees were transmitted to this additional claim of P20,000,000.00 as d.qmages so the total claim amounts to about
Court. The Court thereafter returned the said records to the trial court with the P64,601,623.70. On October 16, 1986, or some seven months after filing the
directive that they be re-raffled to the other judges in Quezon City, to the exclusion of supplemental complaint, the private respondent paid the additional docket fee of
Judge Castro. Civil Case No. Q-41177 was re-raffled to Branch 104, a sala which was P80,396.00.1
then vacant.
On August 13, 1987, the Court of Appeals rendered a decision ruling, among others,
On October 15, 1985, the Court en banc issued a Resolution in Administrative Case as follows:
No. 85-10-8752-RTC directing the judges in said cases to reassess the docket fees WHEREFORE, judgment is hereby rendered:
and that in case of deficiency, to order its payment. The Resolution also requires all
clerks of court to issue certificates of re-assessment of docket fees. All litigants were 1. Denying due course to the petition in CA-G.R. SP No. 1, 09715 insofar as it
likewise required to specify in their pleadings the amount sought to be recovered in seeks annulment of the order
their complaints.
(a) denying petitioners' motion to dismiss the complaint, as amended, and
On December 16, 1985, Judge Antonio P. Solano, to whose sala Civil Case No. Q-
41177 was temporarily assigned, issuedan order to the Clerk of Court instructing him (b) granting the writ of preliminary attachment, but giving due course to the
to issue a certificate of assessment of the docket fee paid by private respondent and, portion thereof questioning the reassessment of the docketing fee, and requiring the
in case of deficiency, to include the same in said certificate. Honorable respondent Court to reassess the docketing fee to be paid by private
respondent on the basis of the amount of P25,401,707.00. 2
On January 7, 1984, to forestall a default, a cautionary answer was filed by
petitioners. On August 30,1984, an amended complaint was filed by private Hence, the instant petition.
respondent including the two additional defendants aforestated.
16
During the pendency of this petition and in conformity with the said judgment of In Lee vs. Republic, 8 the petitioner filed a verified declaration of intention to become
respondent court, private respondent paid the additional docket fee of P62,432.90 on a Filipino citizen by sending it through registered mail to the Office of the Solicitor
April 28, 1988. 3 General in 1953 but the required filing fee was paid only in 1956, barely 5V2 months
prior to the filing of the petition for citizenship. This Court ruled that the declaration
The main thrust of the petition is that the Court of Appeals erred in not finding that the was not filed in accordance with the legal requirement that such declaration should be
lower court did not acquire jurisdiction over Civil Case No. Q-41177 on the ground of filed at least one year before the filing of the petition for citizenship. Citing Lazaro, this
nonpayment of the correct and proper docket fee. Petitioners allege that while it may Court concluded that the filing of petitioner's declaration of intention on October 23,
be true that private respondent had paid the amount of P182,824.90 as docket fee as 1953 produced no legal effect until the required filing fee was paid on May 23, 1956.
herein-above related, and considering that the total amount sought to be recovered in
the amended and supplemental complaint is P64,601,623.70 the docket fee that In Malimit vs. Degamo, 9 the same principles enunciated in Lazaro and Lee were
should be paid by private respondent is P257,810.49, more or less. Not having paid applied. It was an original petition for quo warranto contesting the right to office of
the same, petitioners contend that the complaint should be dismissed and all proclaimed candidates which was mailed, addressed to the clerk of the Court of First
incidents arising therefrom should be annulled. In support of their theory, petitioners Instance, within the one-week period after the proclamation as provided therefor by
cite the latest ruling of the Court in Manchester Development Corporation vs. CA, 4 as law.10 However, the required docket fees were paid only after the expiration of said
follows: period. Consequently, this Court held that the date of such payment must be deemed
to be the real date of filing of aforesaid petition and not the date when it was mailed.
The Court acquires jurisdiction over any case only upon the payment of the
prescribed docket fee. An amendment of the complaint or similar pleading will not Again, in Garica vs, Vasquez, 11 this Court reiterated the rule that the docket fee
thereby vest jurisdiction in the Court, much less the payment of the docket fee based must be paid before a court will act on a petition or complaint. However, we also held
on the amounts sought in the amended pleading. The ruling in the Magaspi Case in that said rule is not applicable when petitioner seeks the probate of several wills of
so far as it is inconsistent with this pronouncement is overturned and reversed. the same decedent as he is not required to file a separate action for each will but
instead he may have other wills probated in the same special proceeding then
On the other hand, private respondent claims that the ruling in Manchester cannot pending before the same court.
apply retroactively to Civil Case No. Q41177 for at the time said civil case was filed in
court there was no such Manchester ruling as yet. Further, private respondent avers Then in Magaspi, 12 this Court reiterated the ruling in Malimit and Lee that a case is
that what is applicable is the ruling of this Court in Magaspi v. Ramolete, 5 wherein deemed filed only upon payment of the docket fee regardless of the actual date of its
this Court held that the trial court acquired jurisdiction over the case even if the docket filing in court. Said case involved a complaint for recovery of ownership and
fee paid was insufficient. possession of a parcel of land with damages filed in the Court of First Instance of
Cebu. Upon the payment of P60.00 for the docket fee and P10.00 for the sheriffs fee,
The contention that Manchester cannot apply retroactively to this case is untenable. the complaint was docketed as Civil Case No. R-11882. The prayer of the complaint
Statutes regulating the procedure of the courts will be construed as applicable to sought that the Transfer Certificate of Title issued in the name of the defendant be
actions pending and undetermined at the time of their passage. Procedural laws are declared as null and void. It was also prayed that plaintiff be declared as owner
retrospective in that sense and to that extent. 6 thereof to whom the proper title should be issued, and that defendant be made to pay
monthly rentals of P3,500.00 from June 2, 1948 up to the time the property is
In Lazaro vs. Endencia and Andres, 7 this Court held that the payment of the full delivered to plaintiff, P500,000.00 as moral damages, attorney's fees in the amount of
amount of the docket fee is an indispensable step for the perfection of an appeal. In a P250,000.00, the costs of the action and exemplary damages in the amount of
forcible entry and detainer case before the justice of the peace court of Manaoag, P500,000.00.
Pangasinan, after notice of a judgment dismissing the case, the plaintiff filed a notice
of appeal with said court but he deposited only P8.00 for the docket fee, instead of The defendant then filed a motion to compel the plaintiff to pay the correct amount of
P16.00 as required, within the reglementary period of appeal of five (5) days after the docket fee to which an opposition was filed by the plaintiff alleging that the action
receiving notice of judgment. Plaintiff deposited the additional P8.00 to complete the was for the recovery of a parcel of land so the docket fee must be based on its
amount of the docket fee only fourteen (14) days later. On the basis of these facts, assessed value and that the amount of P60.00 was the correct docketing fee. The
this court held that the Court of First Instance did notacquire jurisdiction to hear and trial court ordered the plaintiff to pay P3,104.00 as filing fee.
determine the appeal as the appeal was not thereby perfected.
The plaintiff then filed a motion to admit the amended complaint to include the
Republic as the defendant. In the prayer of the amended complaint the exemplary
17
damages earlier sought was eliminated. The amended prayer merely sought moral Meanwhile, plaintiff through another counsel, with leave of court, filed an amended
damages as the court may determine, attorney's fees of P100,000.00 and the costs of complaint on September 12, 1985 by the inclusion of another co-plaintiff and
the action. The defendant filed an opposition to the amended complaint. The eliminating any mention of the amount of damages in the body of the complaint. The
opposition notwithstanding, the amended complaint was admitted by the trial court. prayer in the original complaint was maintained.
The trial court reiterated its order for the payment of the additional docket fee which
plaintiff assailed and then challenged before this Court. Plaintiff alleged that he paid On October 15, 1985, this Court ordered the re-assessment of the docket fee in the
the total docket fee in the amount of P60.00 and that if he has to pay the additional said case and other cases that were investigated. On November 12, 1985, the trial
fee it must be based on the amended complaint. court directed the plaintiff to rectify the amended complaint by stating the amounts
which they were asking for. This plaintiff did as instructed. In the body of the
The question posed, therefore, was whether or not the plaintiff may be considered to complaint the amount of damages alleged was reduced to P10,000,000.00 but still no
have filed the case even if the docketing fee paid was not sufficient. In Magaspi, We amount of damages was specified in the prayer. Said amended complaint was
reiterated the rule that the case was deemed filed only upon the payment of the admitted.
correct amount for the docket fee regardless of the actual date of the filing of the
complaint; that there was an honest difference of opinion as to the correct amount to Applying the principle in Magaspi that "the case is deemed filed only upon payment of
be paid as docket fee in that as the action appears to be one for the recovery of the docket fee regardless of the actual date of filing in court," this Court held that the
property the docket fee of P60.00 was correct; and that as the action is also one, for trial court did not acquire jurisdiction over the case by payment of only P410.00 for
damages, We upheld the assessment of the additional docket fee based on the the docket fee. Neither can the amendment of the complaint thereby vest jurisdiction
damages alleged in the amended complaint as against the assessment of the trial upon the Court. For all legal purposes there was no such original complaint duly filed
court which was based on the damages alleged in the original complaint. which could be amended. Consequently, the order admitting the amended complaint
and all subsequent proceedings and actions taken by the trial court were declared
However, as aforecited, this Court overturned Magaspi in Manchester. Manchester null and void.13
involves an action for torts and damages and specific performance with a prayer for
the issuance of a temporary restraining order, etc. The prayer in said case is for the The present case, as above discussed, is among the several cases of under-
issuance of a writ of preliminary prohibitory injunction during the pendency of the assessment of docket fee which were investigated by this Court together with
action against the defendants' announced forfeiture of the sum of P3 Million paid by Manchester. The facts and circumstances of this case are similar to Manchester. In
the plaintiffs for the property in question, the attachment of such property of the body of the original complaint, the total amount of damages sought amounted to
defendants that may be sufficient to satisfy any judgment that may be rendered, and, about P50 Million. In the prayer, the amount of damages asked for was not stated.
after hearing, the issuance of an order requiring defendants to execute a contract of The action was for the refund of the premium and the issuance of the writ of
purchase and sale of the subject property and annul defendants' illegal forfeiture of preliminary attachment with damages. The amount of only P210.00 was paid for the
the money of plaintiff. It was also prayed that the defendants be made to pay the docket fee. On January 23, 1986, private respondent filed an amended complaint
plaintiff jointly and severally, actual, compensatory and exemplary damages as well wherein in the prayer it is asked that he be awarded no less than P10,000,000.00 as
as 25% of said amounts as may be proved during the trial for attorney's fees. The actual and exemplary damages but in the body of the complaint the amount of his
plaintiff also asked the trial court to declare the tender of payment of the purchase pecuniary claim is approximately P44,601,623.70. Said amended complaint was
price of plaintiff valid and sufficient for purposes of payment, and to make the admitted and the private respondent was reassessed the additional docket fee of
injunction permanent. The amount of damages sought is not specified in the prayer P39,786.00 based on his prayer of not less than P10,000,000.00 in damages, which
although the body of the complaint alleges the total amount of over P78 Millon he paid.
allegedly suffered by plaintiff.
On April 24, 1986, private respondent filed a supplemental complaint alleging an
Upon the filing of the complaint, the plaintiff paid the amount of only P410.00 for the additional claim of P20,000,000.00 in damages so that his total claim is approximately
docket fee based on the nature of the action for specific performance where the P64,601,620.70. On October 16, 1986, private respondent paid an additional docket
amount involved is not capable of pecuniary estimation. However, it was obvious from fee of P80,396.00. After the promulgation of the decision of the respondent court on
the allegations of the complaint as well as its designation that the action was one for August 31, 1987 wherein private respondent was ordered to be reassessed for
damages and specific performance. Thus, this court held the plaintiff must be additional docket fee, and during the pendency of this petition, and after the
assessed the correct docket fee computed against the amount of damages of about promulgation of Manchester, on April 28, 1988, private respondent paid an additional
P78 Million, although the same was not spelled out in the prayer of the complaint. docket fee of P62,132.92. Although private respondent appears to have paid a total
amount of P182,824.90 for the docket fee considering the total amount of his claim in
18
the amended and supplemental complaint amounting to about P64,601,620.70, been left for determination by the court, the additional filing fee therefor shall
petitioner insists that private respondent must pay a docket fee of P257,810.49. constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or
his duly authorized deputy to enforce said lien and assess and collect the additional
The principle in Manchester could very well be applied in the present case. The fee.
pattern and the intent to defraud the government of the docket fee due it is obvious
not only in the filing of the original complaint but also in the filing of the second WHEREFORE, the petition is DISMISSED for lack of merit. The Clerk of Court of the
amended complaint. court a quo is hereby instructed to reassess and determine the additional filing fee
that should be paid by private respondent considering the total amount of the claim
However, in Manchester, petitioner did not pay any additional docket fee until] the sought in the original complaint and the supplemental complaint as may be gleaned
case was decided by this Court on May 7, 1987. Thus, in Manchester, due to the from the allegations and the prayer thereof and to require private respondent to pay
fraud committed on the government, this Court held that the court a quo did not the deficiency, if any, without pronouncement as to costs. SO ORDERED.
acquire jurisdiction over the case and that the amended complaint could not have
been admitted inasmuch as the original complaint was null and void. G.R. No. 86675 December 19, 1989

In the present case, a more liberal interpretation of the rules is called for considering MRCA, INC. vs. HON. COURT OF APPEALS, HON. BENJAMIN V. PELAYO,
that, unlike Manchester, private respondent demonstrated his willingness to abide by Judge, Regional Trial court, National Capital Judicial Region, Branch 168,
the rules by paying the additional docket fees as required. The promulgation of the Pasig, M.M., SPOUSES DOMINGO SEBASTIAN, JR. & LILIA TIOSECO
decision in Manchester must have had that sobering influence on private respondent SEBASTIAN, and EXPECTACION P. TIOSECO, respondents.
who thus paid the additional docket fee as ordered by the respondent court. It
triggered his change of stance by manifesting his willingness to pay such additional GRIÑO-AQUINO, J.:
docket fee as may be ordered.
The petitioner prays this Court to set aside the decision promulgated on January 18,
Nevertheless, petitioners contend that the docket fee that was paid is still insufficient 1989 by the Court of Appeals in CA-G.R. No. SP 15745, affirming the order of the
considering the total amount of the claim. This is a matter which the clerk of court of Regional Trial Court dismissing the complaint for non-payment of the proper filing
the lower court and/or his duly authorized docket clerk or clerk in-charge should fees as the prayer of the complaint failed to specify the amounts of moral damages,
determine and, thereafter, if any amount is found due, he must require the private exemplary damages, attorney's fees and litigation expenses sought to be recovered
respondent to pay the same. by it from the defendants, but left them "to the discretion of this Honorable Court" or
"to be proven during the trial."
Thus, the Court rules as follows:
Invoking the decision of this Court in Manchester Development Corporation vs. Court
1. It is not simply the filing of the complaint or appropriate initiatory pleading, of Appeals, 149 SCRA 562, the private respondents (defendants in Civil Case No.
but the payment of the prescribed docket fee, that vests a trial court with jurisdiction 55740 of the Regional Trial Court of Pasig, Metro Manila, entitled MRCA, Inc. vs.
over the subject matter or nature of the action. Where the filing of the initiatory Spouses Domingo Sebastian, Jr., et al." filed a motion to dismiss the complaint on
pleading is not accompanied by payment of the docket fee, the court may allow July 15, 1988. The petitioner opposed the motion, but the trial court granted it in its
payment of the fee within a reasonable time but in no case beyond the applicable order of August 10, 1988 (p. 54, Rollo). The Court of Appeals upheld the trial court,
prescriptive or reglementary period. hence, this petition for review under Rule 45 of the Rules of Court.

2. The same rule applies to permissive counterclaims, third party claims and Petitioner argues that since the decision in Manchester had not yet been published in
similar pleadings, which shall not be considered filed until and unless the filing fee the Official Gazette when its complaint was filed, the ruling therein was ineffective;
prescribed therefor is paid. The court may also allow payment of said fee within a that said ruling may not be given retroactive effect because it imposes a new penalty
reasonable time but also in no case beyond its applicable prescriptive or for its non-observance; the dismissal of the complaint for want of jurisdiction; and, that
reglementary period. it should not apply to the present case because the petitioner herein (plaintiff in the
trial court) had no fraudulent intent to deprive the government of the proper docketing
3. Where the trial court acquires jurisdiction over a claim by the filing of the fee, unlike the Manchester case where enormous amounts of damages were claimed
appropriate pleading and payment of the prescribed filing fee but, subsequently, the in the body of the complaint, but the amounts were not mentioned in the prayer
judgment awards a claim not specified in the pleading, or if specified the same has thereof, to mislead the clerk of court in computing the filing fees to be paid.
19
 not have computed its damages yet, or probably did not have the evidence to prove
Petitioner's argument regarding the need for publication of the Manchester ruling in them at the time it filed its complaint. In accordance with our ruling in Sun Insurance
the Official Gazette before it may be applied to other cases is not well taken. As Office, Ltd., the petitioner may be allowed to amend its complaint for the purpose of
pointed out by the private respondents in their comment on the petition, publication in specifying, in terms of pesos, how much it claims as damages, and to pay the
the Official Gazette is not a prerequisite for the effectivity of a court ruling even if it requisite filing fees therefor, provided its right of action has not yet prescribed. This
lays down a new rule of procedure, for "it is a doctrine well established that the the petitioner is ready to do.
procedure of the court may be changed at any time and become effective at once, so
long as it does not affect or change vested rights." (Aguillon vs. Director of Lands, 17 WHEREFORE, the petition for review is granted.
Phil. 508). In a later case, this Court held thus:
The Order of the Regional Trial Court is hereby set aside. The complaint in Civil Case
It is a well-established rule of statutory construction that statutes regulating the No. 55740 (MRCA, Inc. vs. Domingo Sebastian, Jr. and Lilia Tioseco Sebastian) is
procedure of the courts will be construed as applicable to actions pending and reinstated and the petitioner is allowed to amend the same by specifying the amounts
undetermined at the time of their passage. Procedural laws are retrospective in that of damages it seeks to recover from the defendants (private respondents) and to pay
sense and to that extent. As the resolution of October 1, 1945, relates to the mode of the proper filing fees therefor as computed by the Clerk of Court.
procedure, it is applicable to cases pending in courts at the time of its adoption; but it
can not be invoked in and applied to the present case in which the decision had G.R. No. 101883 December 11, 1992
become final before said resolution became effective. In this case, the motion for
reconsideration filed by the defendant was denied on July 17, 1944, and a second SPOUSES LYDIA and VIRGILIO MELITON,* vs. COURT OF APPEALS and NELIA
motion for re-hearing or consideration could not be filed after the expiration of the A. ZIGA, represented by her Attorney-in-Fact RAMON A. AREJOLA,**
period of fifteen days from promulgation of the order or judgment deducting the time
in which the first motion had been pending in this Court (Section 1, Rule 54); for said REGALADO, J.:
period had already expired before the adoption of the resolution on October 1, 1945.
Therefore, the Court cannot now permit or allow the petitioner to file any pleading or In its judgment in CA-G.R. No. 250911 promulgated on August 9, 1991, respondent
motion in the present case." (People vs. Sumilang, 77 Phil. 765- 766.) Court of Appeals annulled and set aside the orders dated February 22, 1991 and
March 18, 1991 of the Regional Trial Court of Naga City, Branch 27, in Civil Case No.
The Manchester ruling was applied retroactively in Sun Insurance Office, Ltd., et al. RTC 89-1942 thereof and ordered the dismissal of petitioner's complaint filed herein,
vs. Asuncion, et al., G.R. Nos. 7993738, February 13, 1989, a case that was already hence this appeal by certiorari.
pending before Manchester was promulgated.
On June 22, 1988, private respondent Nelia Ziga, in her own behalf and as attorney-
The complaint in this case was filed on March 24, 1988, or ten months after in-fact of Alex A. Ziga and Emma A. Ziga-Siy, filed a complaint, docketed as Civil
Manchester was promulgated on May 7, 1987, hence, Manchester should apply Case No. RTC 88-1480 of the Regional Trial Court, Branch 27, Naga City,2 against
except for the fact that it was modified in the Sun Insurance case, where we ruled that herein petitioner Lydia Meliton for rescission of a contract of lease over a parcel of
the court may allow payment of the proper filing fee "within a reasonable time but in land situated at Elias Angeles Street, Naga City. Alleged as grounds therefor were
no case beyond the prescriptive or reglementary period." We quote: said petitioner's failure, as lessee, to deposit the one month rental and to pay the
monthly rentals due; her construction of a concrete wall and roof on the site of a
1. It is not simply the filing of the complaint or appropriate initiatory pleading, demolished house on the leased premises without the lessor's written consent; and
but the payment of the prescribed docket fee, that vests a trial court with jurisdiction here unauthorized sublease of the leased property to a third party.
over the subject-matter or nature of the action. Where the filing of the initiatory On July 29, 1988, petitioner Lydia Meliton filed an answer to the complaint denying
pleading is not accompanied by payment of the docket fee, the court may allow the material averments thereof and setting up three counterclaims for recovery of the
payment of the fee within a reasonable time but in no case beyond the applicable value of her kitchenette constructed on the leased parcel of land and which was
prescriptive or reglementary period. (p. 80, Rollo.) demolished by private respondent, in the amount of P34,000.00; the value of the
improvements introduced in the kitchenette to beautify it, in the amount of
Intent to cheat the government of the proper filing fees may not be presumed from the P10,000.00, plus the value of the furniture and fixtures purchased for use in the
petitioner's omission to specify in the body and prayer of its complaint the amounts of kitchenette in the amount of P23,000.00; and moral damages in the amount of
moral and exemplary damages and attorney's fees that it claims to have suffered P20,000.00 aside from attorney's fees of P5,000.00 and P250.00 per court
and/or incurred in its transaction with the private respondents. The petitioner might appearance, with litigation expenses in the amount of P1,000.00. 3
20
 WHEREFORE, the petition for certiorari is GRANTED. Accordingly, the orders
On May 29, 1989, the trial court, on motion of private respondent contending that her complained of (Annexes G and I, petition) are annulled and set aside and the
cause of action had already become moot and academic by the expiration of the respondents' complaint in Civil Case No. RTC 89-1942 before the respondent Court,
lease contract on February 7, 1989, dismissed the complaint. The counterclaims of DISMISSED. Costs against the respondents, except the respondent Court. 10
petitioner Lydia Meliton were also dismissed for non-payment of the docket fees, ergo
the trial court's holding that thereby it had not acquired jurisdiction over the same. 4 Petitioners are now before use, assailing the said judgment of the Court of Appeals
and praying for the annulment thereof.
On December 6, 1989, petitioners Lydia Meliton and Virgilio Meliton filed a complaint
against private respondent for recovery of the same amounts involved and alleged in The present petition requires the resolution of two principal issues, to wit: (1) whether
their counterclaims in Civil Case No. RTC 88-1480, which complaint was docketed as or not the counterclaims of petitioners are compulsory in nature; and (2) whether or
Civil Case No. RTC 89-1942 5 and likewise assigned to Branch 27 of the same trial not petitioners, having failed to seek reconsideration of or to take an appeal from the
court. order of dismissal of their counterclaims, are already barred from asserting the same
in another action.
On February 15, 1991, private respondent filed a motion to dismiss the complaint on
the ground that the cause of action therein was barred by prior judgment in Civil Case 1. Considering Section 4 of Rule 9 of the Rules of Court, a counterclaim is
No. RTC 88-1480, the order of dismissal wherein was rendered on May 29, 1989. 6 compulsory if (a) it arises out of, or is necessarily connected with, the transaction or
occurrence which is the subject matter of the opposing party's claim; (b) it does not
On February 22, 1991, the court below denied private respondent's motion to dismiss require for its adjudication the presence of third parties of whom the court cannot
the complaint in Civil Case No. RTC 89-1942 on the ground that the dismissal of the acquire jurisdiction; and (c) the court has jurisdiction to entertain the claim.
petitioner's counterclaims in Civil Case No. RTC 88-1480 is not an adjudication on the
merits as the court did not acquire jurisdiction over the counterclaims for failure of It has been postulated that while a number of criteria have been advanced for the
petitioner Lydia Meliton to pay the docket fees, hence the said dismissal does not determination of whether the counterclaim is compulsory or permissive, the "one
constitute a bar to the filing of the later complaint. 7 compelling test of compulsoriness" is the logical relationship between the claim
alleged in the complaint and that in the counterclaim, that is, where conducting
Private respondent's motion for reconsideration of the foregoing order was denied by separate trials of the respective claims of the parties would entail a substantial
the lower court for lack of merit in its order of March 18, 1991. 8 Dissatisfied duplication of effort and time, as where they involve many of the same factual and/or
therewith, private respondent filed a petition for certiorari with this Court. In our legal issues.
resolution dated April 29, 1991, we referred this case to the Court of Appeals for
proper determination and disposition pursuant to Section 9, paragraph 1, of B.P. Blg. The phrase "logical relationship" is given meaning by the purpose of the rule which it
129,9 where it was docketed as CA-G.R. SP No. 25093. was designed to implement. Thus, a counterclaim is logically related to the opposing
party's claim where, as already stated, separate trials of each of their respective
In a decision promulgated on August 9, 1991, the Court of Appeals granted the claims would involve a substantial duplication of effort and time by the parties and the
petition, the pertinent part of which reads: courts. Where multiple claims involve many of the same factual issues, or where they
are offshoots of the same basic controversy between the parties, fairness and
The respondents' counterclaim against the petitioner in Civil Case No. RTC 88-1480 considerations of convenience and of economy require that the counterclaimant be
(Annex E, petition) is a compulsory counterclaim, it having (arisen) out of or being permitted to maintain his cause of action. 11
necessarily connected with the transaction or occurrence subject matter of the
petitioner's complaint. The failure of the respondents to seek a reconsideration of the In the aforesaid Civil Case No. 88-1480, all the requisites of a compulsory
dismissal of their counterclaim or to take an appeal therefrom rendered the dismissal counterclaim are present. The counterclaims, as this term is now broadly defined, are
final. Such dismissal barred the prosecution of their counterclaim by another action logically related to the complaint. Private respondent's complaint was for rescission of
(Section 4, Rule 9, Revised Rules of Court; Javier vs. IAC, 171 SCRA 605). the contract of lease due to petitioner Lydia Meliton's breach of her obligations under
the said contract. On the other hand, petitioner's counterclaims were for damages for
The respondent Court, therefore, in issuing the orders complained of (Annexes G and unlawful demolition of the improvements she introduced pursuant to her leasehold
I, petition), gravely abused its discretion amounting to lack of jurisdiction. occupancy of the premises, as well as for the filing of that civil suit which is contended
to be clearly unfounded.

21
Both the claims therein of petitioners and private respondent arose from the same reconsideration of the said order of dismissal bars them from asserting their claims in
contract of lease. The rights and obligations of the parties, as well as their potential another action cannot be upheld.
liability for damages, emanated from the same contractual relation. Petitioners' right
to claim damages for the unlawful demolition of the improvements they introduced on Firstly, where a compulsory counterclaim is made the subject of a separate suit, it
the land was based on their right of possession under the contract of lease which is may be abated upon a plea of auter action pendant or litis pendentia and/or
precisely the very same contract sought to be rescinded by private respondent in her dismissed on the ground of res judicata, 13 depending on the stage or status of the
complaint. The two actions are but the consequences of the reciprocal obligations other suit.
imposed by law upon and assumed by the parties under their aforesaid lease
contract. That contract of lease pleaded by private respondent constitutes the Both defenses are unavailing to private respondent. The present action cannot be
foundation and basis relied on by both parties for recovery of their respective claims. dismissed either on the ground of litis pendentia since there is no other pending
action between the same parties and for the same cause, nor on the ground of res
The relationship between petitioners' counterclaims and private respondent's judicata.
complaint is substantially the same as that which exists between a complaint for
recovery of land by the owner and the claim for improvements introduced therein by In order that a prior judgment will constitute a bar to a subsequent case, the following
the possessor. As we have ruled, in actions for ejectment or for recovery of requisites must concur: (1) the judgment must be final; (2) the judgment must have
possession of real property, it is well settled that the defendant's claims for the value been rendered by a court having jurisdiction over the subject matter and the parties;
of the improvements on the property or necessary expenses for its preservation are (3) the judgment must be on the merits; and (4) there must be between the first and
required to be interposed in the same action as compulsory couterclaims. In such second actions, identity of parties, of subject matter, and of causes of action. 14
cases, it is the refusal of the defendant to vacate or surrender possession of the
premises that serves as the vital link in the chain of facts and events, and which The first case, Civil Case No. RTC 88-1480, was dismissed upon motion of private
constitutes the transaction upon which the plaintiff bases his cause of action. It is respondent, plaintiff therein, under Section 2 of Rule 17. Dismissal thereunder is
likewise an "important part of the transaction constituting the subject matter of the without prejudice, except when otherwise stated in the motion to dismiss or when
counterclaim" of defendant for the value of the improvements or the necessary stated to be with prejudice in the order of the court. 15 The order of dismissal of the
expenses incurred for the preservation of the property. They are offshoots of the first case was unqualified, hence without prejudice and, therefore, does not have the
same basic controversy between the parties, that is, the right of either to the effect of an adjudication on the merits. On a parity of rationale, the same rule should
possession of the property. 12 apply to a counterclaim duly interposed therein and which is likewise dismissed but
not on the merits thereof.
On the foregoing considerations, respondent Court of Appeals correctly held that the
counterclaims of petitioners are compulsory in nature. Moreover, in the same order of dismissal of the complaint, the counterclaims of herein
petitioners were dismissed by reason of the fact the court a quo had not acquired
2. Petitioners having alleged compulsory counterclaims, the next point of jurisdiction over the same for non-payment of the docket fees. On that score, the said
inquiry is whether or not petitioners are already barred from asserting said claims in a dismissal was also without prejudice,
separate suit, the same having been dismissed in the preceding one. The answer is since a dismissal on the ground of lack of jurisdiction does not constitute res judicata,
in the negative. 16 there having been no consideration and adjudication of the case on the merits.

It is indeed the rule, embodied in Section 4, Rule 9 of the Rules of Court, that a The dismissal of the case without prejudice indicates the absence of a decision on the
counterclaim not set up shall be barred if it arises out of or is necessarily connected merits and leaves the parties free to litigate the matter in a subsequent action as
with the transaction or occurrence that is the subject matter of the opposing party's though the dismissal action had not been commenced. 17 The discontinuance of a
claim and does not require for its adjudication the presence of third parties of whom case not on the merits does not bar another action on the same subject matter. 18
the court cannot acquire jurisdiction. However, said rule is not applicable to the case Evidently, therefore, the prior dismissal of herein petitioners' counterclaims is not res
at bar. judicata and will not bar the filing of another action based on the same causes of
Contrary to the claim of private respondent, it cannot be said that therein petitioners action.
failed to duly interpose their causes of action as counterclaims in the previous action.
Petitioners' claims were duly set up as counterclaims in the prior case but the same Secondly, a reading of the order of dismissal will show that the trial court, in
were dismissed by reason of non-payment of docket fees. The ruling of respondent dismissing the complaint of private respondent, did not intend to prejudice the claims
Court of Appeals to the effect that the failure of petitioners to appeal or to move for of petitioners by barring the subsequent judicial enforcement thereof. As stated
22
therein, "(t)he court in dismissing the counterclaim(s) has taken into account the fact paragraph 3, Article 1654 of the Civil Code. The said violation gave rise to a cause of
that a counterclaim partakes of the nature of a complaint and/or a cause of action action for damages in favor of herein petitioners.
against the plaintiffs." 19 This is a clear indication, deducible by necessary
implication, that the lower court was aware of the fact that petitioners could avail of Lastly, even assuming arguendo that the bar under the rule on compulsory
the causes of action in said counterclaims in a subsequent independent suit based counterclaims may be invoked, the peculiar circumstances of this case irresistibly and
thereon and that there was no legal obstacle thereto. That this was the import and justifiedly warrant the relaxation of such rule.
intendment of that statement in its order dismissing petitioners' counterclaims in Civil
Case No. RTC 88-1480 was categorically confirmed by the very same court, wherein The court a quo dismissed petitioners' counterclaims for non-payment of docket fees
Civil Case No. RTC 89-1942 was also subsequently filed, in its assailed orders pursuant to our then ruling in Manchester Development Corporation, et al. vs. Court
denying private respondent's motion to dismiss the latter case on the ground of res of Appeals, et al., 22 before its modification. The failure of petitioners to seek
judicata. reconsideration of or to take an appeal from the order of dismissal of the counterclaim
should not prejudice their right to file their claims in a separate action because they
This is also concordant with the rule governing dismissal of actions by the plaintiff were thereby made to understand and believe that their counterclaims were merely
after the answer has been served as laid down in Rule 17 of the Rules of Court, permissive and could be the subject of a separate and independent action. Under the
which is summarized as follows: An action shall not be dismissed at the request of the Rules, there is no need to pay docket fees for a compulsory counterclaim. 23 The
plaintiff after the service of the answer, except by order of the court and upon such ruling in Manchester applies specifically to permissive counterclaims only, thereby
terms and conditions as the court deems proper. The trial court has the judicial excluding compulsory counterclaims from its purview, 24 and that was the ruling of
discretion in ruling on a motion to dismiss at the instance of the plaintiff. It has to the court below to which the litigants therein submitted. Had the trial court correctly
decide whether the dismissal of the case should be allowed, and if so, on what terms specified that petitioners' counterclaims were compulsory, petitioners could have
and conditions. 20 objected to the dismissal sought by private respondent on the ground that said
counterclaims could not remain pending for independent adjudication. 25
In dismissing private respondent's complaint, the trial court could not but have
reserved to petitioners, as a condition for such dismissal, the right to maintain a Furthermore, under the Manchester doctrine, the defect cannot be cured by an
separate action for damages. Petitioners' claims for damages in the three amendment of the complaint or similar pleadings, much less the payment of the
counterclaims interposed in said case, although in the nature of compulsory docket fee. Hence, the only remedy left for the petitioners was to file a separate action
counterclaims but in light of the aforesaid reservation in the dismissal order, are for their claims and to pay the prescribed docket fees therein within the applicable
consequently independent causes of action which can be the subject of a separate and reglementary period, which is what they did in the case at bar in obedience and
action against private respondent. deference to the judicial mandate laid down in their case. At any rate, the ambivalent
positions adopted by the lower court can be considered cured by what we have
An action for damages specifically applicable in a lessor-lessee relationship is construed as effectively a reservation in its order of dismissal for the filing of a
authorized in Article 1659 of the Civil Code which provides that: complaint based on the causes of action in the dismissed counterclaims.

Art. 1659. If the lessor or the lessee should not comply with the obligations set This, then, is one case where it is necessary to heed the injunction that the rules of
forth in articles 1654 and 1657, the aggrieved party may ask for the rescission of the procedure are not to be applied in a rigid and technical sense. After all, rules of
contract and indemnification for damages, or only the latter, allowing the contract to procedure are used only to help secure substantial justice. They cannot be applied to
remain in force. prevent the achievement of that goal. Form cannot and should not prevail over
substance. 26 Absent a specific requirement for stringent application, the Rules of
Paragraph 3 of Article 1654 of the same Code requires that the lessor must "maintain Court are to be liberally construed to the end that no party shall be deprived of his day
the lessee in the peaceful and adequate enjoyment of the lease for the entire duration in court on technicalities. The courts in our jurisdiction are tribunals both of law and
of the contract." 21 The aggrieved party has the alternative remedies, in case of equity. Hence, under the antecedents of this case, we are persuaded that even if only
contractual breach, of rescission with damages, or for damages only, "allowing the to approximate that desirable measure of justice we are sworn to dispense, this
contract to remain in force." controversy should be resolved on the merits.

The act of private respondent in demolishing the structures introduced by petitioners WHEREFORE, the questioned judgment of respondent Court of Appeals is hereby
on the property leased and the improvements therein during the existence of the REVERSED and SET ASIDE. Civil Case No. RTC 89-1942 is hereby REINSTATED
lease contract is a clear violation by her, as lessor, of her obligation mandated by and the Regional Trial Court of Naga City, Branch 27, or wherever the case has been
23
assigned, is directed to proceed with deliberate dispatch in the adjudication thereof. 12. Due also to the unfounded and malicious refusal of defendants to heed her just
SO ORDERED. and valid demands, she suffered moral damages, the amount whereof she leaves to
the discretion of the Court.
G.R. No. 85879 September 29, 1989
13. Due likewise to the unfounded and wanton refusal and failure of defendants
NG SOON, vs. HON. ALOYSIUS ALDAY, REGIONAL TRIAL COURT, QUEZON to heed her just and valid demands, she suffered exemplary damages, the amount
CITY, BILLIE GAN AND CHINA BANKING CORPORATION whereof she leaves to the discretion of the Court.

MELENCIO-HERRERA, J.: 14. Due finally to the unfounded and wanton refusal and failure of defendants to
heed her just and valid demands, she was constrained to hire the services of counsel,
Applying literally the ruling on docket fees enunciated in Manchester Development binding herself to pay the amount equivalent to twenty percent payable to her,
Corporation vs. Court of Appeals (L-75919, May 7, 1987, 149 SCRA 562), respondent thereby suffering to the tune thereof.
Judge, on 11 August 1988, ordered (1) that petitioner's Complaint below (in Civil
Case No. Q-52489), for reconstitution of a savings account, and payment of damages PRAYER
and attorney's fees, be expunged; and (2) that the case be dismissed. He also
denied, on 21 October 1988, the reconsideration sought by petitioner of that Order. WHEREFORE, plaintiff respectfully prays that this Honorable Court render judgment:

The aforementioned savings account was allegedly maintained with the China 1. Ordering defendants China Banking Corporation to reconstitute Savings
Banking Corporation (CBC) by Gan Bun Yaw, both of whom are respondents herein. Account No. 47591-2 in the name of Mr. Gan Bun Yaw in the amount of P900,000.00
Petitioner, Ng Soon, claims to be the latter's widow. with interest from December 8,1977 or ordering them both to pay her the principal
and interest from December 9, 1977, jointly and severally.
The pertinent portions of the Complaint and Prayer read as follows:
2. Ordering both defendants to pay moral and exemplary damages of not less
2. During his lifetime, Mr. Gan Bun Yaw opened Savings Account No. 17591-2 than P50,000.00.
with CBC wherein he deposited P900,000.00 more or less.
3. Ordering both defendants to pay her attorney's fees equivalent to twenty
3. Before his death on January 3, 1987 he lapsed into a coma until he finally percent of all amounts reconstituted or payable to her, but not less than P50,000.00.
took his last breath. But his passbook still showed a deposit of P900,000.00 more or
less. She prays for such other and further relief to which she may be entitled in law and
equity under the premises. [Emphasis supplied] (pp. 11-13, Rollo)
5. For almost three (3) long years, she looked for the deposit passbook with the
help of her children to no avail. For the filing of the above Complaint, petitioner paid the sum of P3,600.00 as docket
fees.
7. She discovered further that aforesaid savings account was closed by
defendant CBC on December 8, 1988. x x x. Respondent Billie Gan and the Bank, respectively, moved for the dismissal of the
Complaint. Subsequently, respondent Gan, joined by the Bank, moved to expunge
8. She discovered finally that defendant Billie T. Gan connived and colluded the said Complaint from the record for alleged non-payment of the required docket
with the officers and officials of CBC to withdraw all of the aforesaid savings account fees.
of Mr. Gan Bun Yaw by forging his signature. This has to be done because Mr. Gan
Bun Yaw slipped into a comatose condition in the hospital and could not sign any On 11 August 1988, respondent Judge issued the questioned Order granting the
withdrawal slip. "Motion to Expunge Complaint." He explained:

11. Due to the wanton and unfounded refusal and failure of defendants to heed It can thus be seen that while it can be considered at best as impliedly specifying the
her just and valid demands, she suffered actual damages in the form of missing amount (namely, P900,000.00, more or less) of what is referred to in its par. 11 as
money in aforesaid savings account and expenses of litigation. 'missing money 'which apparently is the main part of the alleged actual damages), the
body of the complaint does not specify the following, to wit: the amount of the rest of
24
the alleged actual damages; the amount of the alleged moral damages; the amount of 1. The doctrine laid down in the Manchester case was incorrectly applied by
the alleged exemplary damages; and, the amount of the alleged attorney's fees. As respondent Judge; and
regards the alleged attorney's fees, in particular, the clause 'the amount equivalent to
twenty percent payable to her' is vague and indefinite. It leaves to guesswork the 2. Respondent Judge acted with grave abuse of discretion when he ordered
determination of the exact amount relative to which the 'twenty percent' shall be the Complaint expunged from the record although petitioner had paid the necessary
reckoned. Is it the amount of P900,000.00, more or less? Or is it the total amount of filing fees.
all the actual damages? Or is it the grand total amount of all the damages-actual,
moral, and exemplary-'payable to her'? During the pendency of this case, respondent Gan filed a Manifestation alleging,
among others, that petitioner is an impostor and not the real Ng Soon, wife of Gan
As regards the prayer of the complaint, while it may be regarded as specific enough Bun Yaw, since the real Mrs. Gan Bun Yaw (Ng Soon) died on 29 July 1933, as
as to the principal sum of P900,000.00 as actual damages, it cannot be so regarded shown by a Certificate issued on 27 April 1989 by, and bearing the seal of, the An Hai
with respect to the amount of moral and exemplary damages (No. 2 of the prayer) Municipal Government.
and attorney's fees (No. 3 of the prayer); for, evidently, the phrase 'not less than
P50,000.00' in each of Nos. 2 and 3 of the prayer merely fixes the minimum amount, This allegation was, however, denied by petitioner in her "Sur-rejoinder to
but it does not mean that plaintiff is not praying for an unspecified sum much higher Manifestation" filed on 12 August 1989, to which respondent Gan has countered with
than said minimum. And, again, the clause 'equivalent to twenty percent of all a Reply on 9 September 1989.
amounts reconstituted or payable to her' in No. 3 of the prayer is as vague and
indefinite as the similar clause found in the complaint's body referred to earlier. What We resolved to give due course to the Petition and dispensed with the submittal of
exactly is the amount relative to which the 'twenty percent' shall be determined? Is it Memoranda, the issues having been thoroughly threshed out by the parties.
the amount of P900,000.00, more or less? Or is it the total amount of all the actual
damages? Or is it the grand total amount of all the damages-actual, moral, and Upon the facts, the pleadings, and the law, we grant the Petition.
exemplary-'payable to her'? Certainly, the great difference between any of these
amounts, on the one hand, and the amount of P50,000.00 in the phrase 'not less than It is true that Manchester laid down the rule that all Complaints should specify the
P50,000.00' in No. 3 of the prayer, on the other hand, is quite too obvious to need amount of damages prayed for not only in the body of the complaint but also in the
underscoring. prayer; that said damages shall be considered in the assessment of the filing fees in
any case; and that any pleading that fails to comply with such requirement shall not
Needless to state, implicit in the obligation to specify is the duty to be clear and be accepted nor admitted, or shall, otherwise, be expunged from the record.
definite. A purported specification which is vague and indefinite obviously is no
specification at all; indeed, it will serve no purpose other than to evade the payment of While it may be that the body of petitioner's Complaint below was silent as to the
the correct filing fees by misleading the docket clerk in the assessment of the filing exact amount of moral and exemplary damages, and attorney's fees, the prayer did
fees. specify the amount of not less than P50,000.00 as moral and exemplary damages,
and not less than P50,000.00 as attorney's fees. These amounts were definite
WHEREFORE, the Court hereby grants defendants' aforesaid 'MOTION TO enough and enabled the Clerk of Court of the lower Court to compute the docket fees
EXPUNGE COMPLAINT and hereby denies plaintiffs aforesaid 'URGENT OMNIBUS payable.
MOTION (ETC.)' and 'OPPOSITION (ETC.)' inclusive of all the prayers contained
therein and, accordingly, plaintiff's complaint herein is hereby deemed EXPUNGED Similarly, the principal amount sought to be recovered as "missing money" was fixed
from the record. Further, being rendered moot and academic as a result hereof, at P900,000.00. The failure to state the rate of interest demanded was not fatal not
defendant Billie T. Gan's 'MOTION TO DISMISS' dated April 25,1988 and defendant only because it is the Courts which ultimately fix the same, but also because Rule
China Banking Corporations' 'MOTION TO DISMISS' dated May 25,1988 are hereby 141, Section 5(a) of the Rules of Court, itemizing the filing fees, speaks of "the sum
dismissed. (pp. 16-18, Rollo) claimed, exclusive of interest." This clearly implies that the specification of the interest
rate is not that indispensable.
Petitioner's Motion for the reconsideration of the said Order having been denied, she
asks for its review, more properly for a Writ of Certiorari. Factually, therefore, not everything was left to "guesswork" as respondent Judge has
opined. The sums claimed were ascertainable, sufficient enough to allow a
The Petition is anchored on two grounds, namely: computation pursuant to Rule 141, section 5(a).

25
Furthermore, contrary to the position taken by respondent Judge, the amounts No. Q-52489 for determination and proper disposition of the respective claims and
claimed need not be initially stated with mathematical precision. The same Rule 141, rights of the parties, including the controversy as to the real identity of petitioner. No
section 5(a) (3rd paragraph), allows an appraisal "more or less." Thus: costs. SO ORDERED.

In case the value of the property or estate or the sum claimed is less or more in
accordance with the appraisal of the court, the difference of fee shall be refunded or [G.R. No. 126334. November 23, 2001.]
paid as the case may be.
EMILIO EMNACE, v. COURT OF APPEALS, ESTATE OF VICENTE TABANAO,
In other words, a final determination is still to be made by the Court, and the fees SHERWIN TABANAO, VICENTE WILLIAM TABANAO, JANETTE TABANAO
ultimately found to be payable will either be additionally paid by the party concerned DEPOSOY, VICENTA MAY TABANAO VARELA, ROSELA TABANAO and
or refunded to him, as the case may be. The above provision clearly allows an initial VINCENT TABANA
payment of the filing fees corresponding to the estimated amount of the claim subject
to adjustment as to what later may be proved. YNARES-SANTIAGO, J.:

.... there is merit in petitioner's claim that the third paragraph of Rule 141, Section 5(a) Petitioner Emilio Emnace, Vicente Tabanao and Jacinto Divinagracia were partners in
clearly contemplates a situation where an amount is alleged or claimed in the a business concern known as Ma. Nelma Fishing Industry. Sometime in January of
complaint but is less or more than what is later proved. If what is proved is less than 1986, they decided to dissolve their partnership and executed an agreement of
what was claimed, then a refund will be made; if more, additional fees will be exacted. partition and distribution of the partnership properties among them, consequent to
Otherwise stated, what is subject to adjustment is the difference in the fee and not the Jacinto Divinagracia’s withdrawal from the partnership. 1 Among the assets to be
whole amount (Pilipinas Shell Petroleum Corp., et als., vs. Court of Appeals, et als., distributed were five (5) fishing boats, six (6) vehicles, two (2) parcels of land located
G.R. No. 76119, April 10, 1989). at Sto. Niño and Talisay, Negros Occidental, and cash deposits in the local branches
of the Bank of the Philippine Islands and Prudential Bank.chanrob1es virtua1 1aw
Significantly, too, the pattern in Manchester to defraud the Government of the docket 1ibrary
fee due, the intent not to pay the same having been obvious not only in the filing of
the original complaint but also in the filing of the second amended complaint, is Throughout the existence of the partnership, and even after Vicente Tabanao’s
patently absent in this case. Petitioner demonstrated her willingness to abide by the untimely demise in 1994, petitioner failed to submit to Tabanao’s heirs any statement
Rules by paying the assessed docket fee of P 3,600.00. She had also asked the of assets and liabilities of the partnership, and to render an accounting of the
lower Court to inform her of the deficiency, if any, but said Court did not heed her partnership’s finances. Petitioner also reneged on his promise to turn over to
plea. Tabanao’s heirs the deceased’s 1/3 share in the total assets of the partnership,
amounting to P30,000,000.00, or the sum of P10,000,000.00, despite formal demand
Additionally, in the case of Sun Insurance Office Ltd., et al., vs. Hon. Maximiano for payment thereof. 2
Asuncion et al. (G.R. Nos. 79937-38, February 13, 1989), this Court had already
relaxed the Manchester rule when it held, inter alia,: Consequently, Tabanao’s heirs, respondents herein, filed against petitioner an action
for accounting, payment of shares, division of assets and damages. 3 In their
1. It is not simply the filing of the complaint or appropriate initiatory pleading, complaint, respondents prayed as follows:chanrob1es virtual 1aw library
but the payment of the prescribed docket fee, that vests a trial court with jurisdiction
over the subject matter or nature of the action. Where the filing of the initiatory 1. Defendant be ordered to render the proper accounting of all the assets and
pleading is not accompanied by payment of the docket fee, the court may allow liabilities of the partnership at bar; and
payment of the fee within a reasonable time but in no case beyond the applicable
prescriptive or reglementary period (Italics ours). 2. After due notice and hearing defendant be ordered to
pay/remit/deliver/surrender/yield to the plaintiffs the following:chanrob1es virtual 1aw
In respect of the questioned Identity of petitioner, this is properly a matter falling within library
the competence of the Court a quo, this Court not being a trier of facts.
A. No less than One Third (1/3) of the assets, properties, dividends, cash,
WHEREFORE, the assailed Orders of respondent Judge, dated 11 August 1988 and land(s), fishing vessels, trucks, motor vehicles, and other forms and substance of
21 October 1988, are SET ASIDE, and he is hereby directed to reinstate Civil Case
26
treasures which belong and/or should belong, had accrued and/or must accrue to the I. Whether or not respondent Judge acted without jurisdiction or with grave
partnership; abuse of discretion in taking cognizance of a case despite the failure to pay the
required docket fee;
B. No less than Two Hundred Thousand Pesos (P200,000.00) as moral
damages; II. Whether or not respondent Judge acted without jurisdiction or with grave
abuse of discretion in insisting to try the case which involve (sic) a parcel of land
C. Attorney’s fees equivalent to Thirty Percent (30%) of the entire situated outside of its territorial jurisdiction;
share/amount/award which the Honorable Court may resolve the plaintiffs as entitled
to plus P1,000.00 for every appearance in court. 4 III. Whether or not respondent Judge acted without jurisdiction or with grave
abuse of discretion in allowing the estate of the deceased to appear as party plaintiff,
Petitioner filed a motion to dismiss the complaint on the grounds of improper venue, when there is no intestate case and filed by one who was never appointed by the
lack of jurisdiction over the nature of the action or suit, and lack of capacity of the court as administratrix of the estates; and
estate of Tabanao to sue. 5 On August 30, 1994, the trial court denied the motion to
dismiss. It held that venue was properly laid because, while realties were involved, IV. Whether or not respondent Judge acted without jurisdiction or with grave
the action was directed against a particular person on the basis of his personal abuse of discretion in not dismissing the case on the ground of prescription.
liability; hence, the action is not only a personal action but also an action in
personam. As regards petitioner’s argument of lack of jurisdiction over the action On August 8, 1996, the Court of Appeals rendered the assailed decision, 12
because the prescribed docket fee was not paid considering the huge amount dismissing the petition for certiorari, upon a finding that no grave abuse of discretion
involved in the claim, the trial court noted that a request for accounting was made in amounting to lack or excess of jurisdiction was committed by the trial court in issuing
order that the exact value of the partnership may be ascertained and, thus, the the questioned orders denying petitioner’s motions to dismiss.
correct docket fee may be paid. Finally, the trial court held that the heirs of Tabanao
had a right to sue in their own names, in view of the provision of Article 777 of the Not satisfied, petitioner filed the instant petition for review, raising the same issues
Civil Code, which states that the rights to the succession are transmitted from the resolved by the Court of Appeals, namely:chanrob1es virtual 1aw library
moment of the death of the decedent. 6
I. Failure to pay the proper docket fee;
The following day, respondents filed an amended complaint, 7 incorporating the
additional prayer that petitioner be ordered to "sell all (the partnership’s) assets and II. Parcel of land subject of the case pending before the trial court is outside the
thereafter pay/remit/deliver/surrender/yield to the plaintiffs" their corresponding share said court’s territorial jurisdiction;
in the proceeds thereof. In due time, petitioner filed a manifestation and motion to
dismiss, 8 arguing that the trial court did not acquire jurisdiction over the case due to III. Lack of capacity to sue on the part of plaintiff heirs of Vicente Tabanao; and
the plaintiffs’ failure to pay the proper docket fees. Further, in a supplement to his
motion to dismiss, 9 petitioner also raised prescription as an additional ground IV. Prescription of the plaintiff heirs’ cause of action.
warranting the outright dismissal of the complaint.
It can be readily seen that respondents’ primary and ultimate objective in instituting
On June 15, 1995, the trial court issued an Order, 10 denying the motion to dismiss the action below was to recover the decedent’s 1/3 share in the partnership’s assets.
inasmuch as the grounds raised therein were basically the same as the earlier motion While they ask for an accounting of the partnership’s assets and finances, what they
to dismiss which has been denied. Anent the issue of prescription, the trial court ruled are actually asking is for the trial court to compel petitioner to pay and turn over their
that prescription begins to run only upon the dissolution of the partnership when the share, or the equivalent value thereof, from the proceeds of the sale of the
final accounting is done. Hence, prescription has not set in the absence of a final partnership assets. They also assert that until and unless a proper accounting is
accounting. Moreover, an action based on a written contract prescribes in ten years done, the exact value of the partnership’s assets, as well as their corresponding
from the time the right of action accrues. share therein, cannot be ascertained. Consequently, they feel justified in not having
paid the commensurate docket fee as required by the Rules of Court.
Petitioner filed a petition for certiorari before the Court of Appeals, 11 raising the
following issues:chanrob1es virtual 1aw library We do not agree. The trial court does not have to employ guesswork in ascertaining
the estimated value of the partnership’s assets, for respondents themselves
voluntarily pegged the worth thereof at Thirty Million Pesos (P30,000,000.00). Hence,
27
this case is one which is really not beyond pecuniary estimation, but rather partakes In case the value of the property or estate or the sum claimed is less or more in
of the nature of a simple collection case where the value of the subject assets or accordance with the appraisal of the court, the difference of fee shall be refunded or
amount demanded is pecuniarily determinable. 13 While it is true that the exact value paid as the case may be. (Emphasis ours)
of the partnership’s total assets cannot be shown with certainty at the time of filing,
respondents can and must ascertain, through informed and practical estimation, the In Pilipinas Shell Petroleum Corporation v. Court of Appeals, 19 this Court
amount they expect to collect from the partnership, particularly from petitioner, in pronounced that the above-quoted provision "clearly contemplates an initial payment
order to determine the proper amount of docket and other fees. 14 It is thus of the filing fees corresponding to the estimated amount of the claim subject to
imperative for respondents to pay the corresponding docket fees in order that the trial adjustment as to what later may be proved." 20 Moreover, we reiterated therein the
court may acquire jurisdiction over the action. 15 principle that the payment of filing fees cannot be made contingent or dependent on
the result of the case. Thus, an initial payment of the docket fees based on an
Nevertheless, unlike in the case of Manchester Development Corp. v. Court of estimated amount must be paid simultaneous with the filing of the complaint.
Appeals, 16 where there was clearly an effort to defraud the government in avoiding Otherwise, the court would stand to lose the filing fees should the judgment later turn
to pay the correct docket fees, we see no attempt to cheat the courts on the part of out to be adverse to any claim of the respondent heirs.
respondents. In fact, the lower courts have noted their expressed desire to remit to
the court "any payable balance or lien on whatever award which the Honorable Court The matter of payment of docket fees is not a mere triviality. These fees are
may grant them in this case should there be any deficiency in the payment of the necessary to defray court expenses in the handling of cases. Consequently, in order
docket fees to be computed by the Clerk of Court." 17 There is evident willingness to to avoid tremendous losses to the judiciary, and to the government as well, the
pay, and the fact that the docket fee paid so far is inadequate is not an indication that payment of docket fees cannot be made dependent on the outcome of the case,
they are trying to avoid paying the required amount, but may simply be due to an except when the claimant is a pauper-litigant.
inability to pay at the time of filing. This consideration may have moved the trial court
and the Court of Appeals to declare that the unpaid docket fees shall be considered a Applied to the instant case, respondents have a specific claim — 1/3 of the value of
lien on the judgment award. all the partnership assets — but they did not allege a specific amount. They did,
however, estimate the partnership’s total assets to be worth Thirty Million Pesos
Petitioner, however, argues that the trial court and the Court of Appeals erred in (P30,000,000.00), in a letter 21 addressed to petitioner. Respondents cannot now say
condoning the non-payment of the proper legal fees and in allowing the same to that they are unable to make an estimate, for the said letter and the admissions
become a lien on the monetary or property judgment that may be rendered in favor of therein form part of the records of this case. They cannot avoid paying the initial
respondents. There is merit in petitioner’s assertion. The third paragraph of Section docket fees by conveniently omitting the said amount in their amended complaint.
16, Rule 141 of the Rules of Court states that:chanrob1es virtual 1aw library This estimate can be made the basis for the initial docket fees that respondents
should pay. Even if it were later established that the amount proved was less or more
The legal fees shall be a lien on the monetary or property judgment in favor of the than the amount alleged or estimated, Rule 141, Section 5(a) of the Rules of Court
pauper-litigant. specifically provides that the court may refund the excess or exact additional fees
should the initial payment be insufficient. It is clear that it is only the difference
Respondents cannot invoke the above provision in their favor because it specifically between the amount finally awarded and the fees paid upon filing of this complaint
applies to pauper-litigants. Nowhere in the records does it appear that respondents that is subject to adjustment and which may be subjected to a lien.
are litigating as paupers, and as such are exempted from the payment of court fees.
18 In the oft-quoted case of Sun Insurance Office, Ltd. v. Hon. Maximiano Asuncion, 22
this Court held that when the specific claim "has been left for the determination by the
The rule applicable to the case at bar is Section 5(a) of Rule 141 of the Rules of court, the additional filing fee therefor shall constitute a lien on the judgment and it
Court, which defines the two kinds of claims as: (1) those which are immediately shall be the responsibility of the Clerk of Court or his duly authorized deputy to
ascertainable; and (2) those which cannot be immediately ascertained as to the exact enforce said lien and assess and collect the additional fee." Clearly, the rules and
amount. This second class of claims, where the exact amount still has to be finally jurisprudence contemplate the initial payment of filing and docket fees based on the
determined be the courts based on evidence presented, falls squarely under the third estimated claims of the plaintiff, and it is only when there is a deficiency that a lien
paragraph of said Section 5(a), which provides:chanrob1es virtual 1aw library may be constituted on the judgment award until such additional fee is collected.

Based on the foregoing, the trial court erred in not dismissing the complaint outright
despite their failure to pay the proper docket fees. Nevertheless, as in other
28
procedural rules, it may be liberally construed in certain cases if only to secure a just action. It is an action in personam because it is an action against a person, namely,
and speedy disposition of an action. While the rule is that the payment of the docket Petitioner, on the basis of his personal liability. It is not an action in rem where the
fee in the proper amount should be adhered to, there are certain exceptions which action is against the thing itself instead of against the person. 27 Furthermore, there
must be strictly construed. 23 is no showing that the parcels of land involved in this case are being disputed. In fact,
it is only incidental that part of the assets of the partnership under liquidation happen
In recent rulings, this Court has relaxed the strict adherence to the Manchester to be parcels of land.
doctrine, allowing the plaintiff to pay the proper docket fees within a reasonable time
before the expiration of the applicable prescriptive or reglementary period. 24 The time-tested case of Claridades v. Mercader, Et Al., 28 settled this issue thus:

In the recent case of National Steel Corp. v. Court of Appeals, 25 this Court held The fact that plaintiff prays for the sale of the assets of the partnership, including the
that:chanrob1es virtual 1aw library fishpond in question, did not change the nature or character of the action, such sale
being merely a necessary incident of the liquidation of the partnership, which should
The court acquires jurisdiction over the action if the filing of the initiatory pleading is precede and/or is part of its process of dissolution.
accompanied by the payment of the requisite fees, or, if the fees are not paid at the
time of the filing of the pleading, as of the time of full payment of the fees within such The action filed by respondents not only seeks redress against petitioner. It also
reasonable time as the court may grant, unless, of course, prescription has set in the seeks the enforcement of, and petitioner’s compliance with, the contract that the
meantime. partners executed to formalize the partnership’s dissolution, as well as to implement
the liquidation and partition of the partnership’s assets. Clearly, it is a personal action
It does not follow, however, that the trial court should have dismissed the complaint that, in effect, claims a debt from petitioner and seeks the performance of a personal
for failure of private respondent to pay the correct amount of docket fees. Although duty on his part. 29 In fine, respondents’ complaint seeking the liquidation and
the payment of the proper docket fees is a jurisdictional requirement, the trial court partition of the assets of the partnership with damages is a personal action which may
may allow the plaintiff in an action to pay the same within a reasonable time before be filed in the proper court where any of the parties reside. 30 Besides, venue has
the expiration of the applicable prescriptive or reglementary period. If the plaintiff fails nothing to do with jurisdiction for venue touches more upon the substance or merits of
to comply within this requirement, the defendant should timely raise the issue of the case. 31 As it is, venue in this case was properly laid and the trial court correctly
jurisdiction or else he would be considered in estoppel. In the latter case, the balance ruled so.
between the appropriate docket fees and the amount actually paid by the plaintiff will
be considered a lien or any award he may obtain in his favor. (Emphasis ours) On the third issue, petitioner asserts that the surviving spouse of Vicente Tabanao
has no legal capacity to sue since she was never appointed as administratrix or
Accordingly, the trial court in the case at bar should determine the proper docket fee executrix of his estate. Petitioner’s objection in this regard is misplaced. The surviving
based on the estimated amount that respondents seek to collect from petitioner, and spouse does not need to be appointed as executrix or administratrix of the estate
direct them to pay the same within a reasonable time, provided the applicable before she can file the action. She and her children are complainants in their own
prescriptive or reglementary period has not yet expired. Failure to comply therewith, right as successors of Vicente Tabanao. From the very moment of Vicente Tabanao’s
and upon motion by petitioner, the immediate dismissal of the complaint shall issue death, his rights insofar as the partnership was concerned were transmitted to his
on jurisdictional grounds. heirs, for rights to the succession are transmitted from the moment of death of the
decedent. 32
On the matter of improper venue, we find no error on the part of the trial court and the
Court of Appeals in holding that the case below is a personal action which, under the Whatever claims and rights Vicente Tabanao had against the partnership and
Rules, may be commenced and tried where the defendant resides or may be found, petitioner were transmitted to respondents by operation of law, more particularly by
or where the plaintiffs reside, at the election of the latter. 26 succession, which is a mode of acquisition by virtue of which the property, rights and
obligations to the extent of the value of the inheritance of a person are transmitted. 33
Petitioner, however, insists that venue was improperly laid since the action is a real Moreover, respondents became owners of their respective hereditary shares from the
action involving a parcel of land that is located outside the territorial jurisdiction of the moment Vicente Tabanao died. 34
court a quo. This contention is not well-taken. The records indubitably show that
respondents are asking that the assets of the partnership be accounted for, sold and A prior settlement of the estate, or even the appointment of Salvacion Tabanao as
distributed according to the agreement of the partners. The fact that two of the assets executrix or administratrix, is not necessary for any of the heirs to acquire legal
of the partnership are parcels of land does not materially change the nature of the capacity to sue. As successors who stepped into the shoes of their decedent upon his
29
death, they can commence any action originally pertaining to the decedent. 35 From WHEREFORE, in view of all the foregoing, the instant petition is DENIED for lack of
the moment of his death, his rights as a partner and to demand fulfillment of merit, and the case is REMANDED to the Regional Trial Court of Cadiz City, Branch
petitioner’s obligations as outlined in their dissolution agreement were transmitted to 60, which is ORDERED to determine the proper docket fee based on the estimated
respondents. They, therefore, had the capacity to sue and seek the court’s amount that plaintiffs therein seek to collect, and direct said plaintiffs to pay the same
intervention to compel petitioner to fulfill his obligations. within a reasonable time, provided the applicable prescriptive or reglementary period
has not yet expired. Thereafter, the trial court is ORDERED to conduct the
Finally, petitioner contends that the trial court should have dismissed the complaint on appropriate proceedings in Civil Case No. 416-C. Costs against petitioner. SO
the ground of prescription, arguing that respondents’ action prescribed four (4) years ORDERED.
after it accrued in 1986. The trial court and the Court of Appeals gave scant
consideration to petitioner’s hollow arguments, and rightly so. G.R. Nos. 88075-77 December 20, 1989

The three (3) final stages of a partnership are: (1) dissolution; (2) winding-up; and (3) MAXIMO TACAY, PONCIANO PANES and ANTONIA NOEL
termination. 36 The partnership, although dissolved, continues to exist and its legal vs. REGIONAL TRIAL COURT OF TAGUM Davao del Norte, Branches 1 and 2,
personality is retained, at which time it completes the winding up of its affairs, Presided by Hon. Marcial Fernandez and Hon. Jesus Matas, respectively,
including the partitioning and distribution of the net partnership assets to the partners. PATSITA GAMUTAN, Clerk of Court, and GODOFREDO PINEDA
37 For as long as the partnership exists, any of the partners may demand an
accounting of the partnership’s business. Prescription of the said right starts to run NARVASA, J.:
only upon the dissolution of the partnership when the final accounting is done. 38
In the Regional Trial Court at Tagum, Davao del Norte, 1 three
Contrary to petitioner’s protestations that respondents’ right to inquire into the
business affairs of the partnership accrued in 1986, prescribing four (4) years (3) actions for recovery of possession (acciones publicianas 2 ) were separately
thereafter, prescription had not even begun to run in the absence of a final instituted by Godofredo Pineda against three (3) defendants, docketed as follows:
accounting. Article 1842 of the Civil Code provides:chanrob1es virtual 1aw library
1) vs. Antonia Noel Civil Case No. 2209
The right to an account of his interest shall accrue to any partner, or his legal
representative as against the winding up partners or the surviving partners or the 2) vs. Ponciano Panes Civil Case No. 2210
person or partnership continuing the business, at the date of dissolution, in the
absence of any agreement to the contrary. 3) vs. Maximo Tacay Civil Case No. 2211.

Applied in relation to Articles 1807 and 1809, which also deal with the duty to Civil Cases Numbered 2209 and 2211 were raffled to Branch I of the Trial Court,
account, the above-cited provision states that the right to demand an accounting presided over by Judge Marcial Hernandez. Civil No. 2210 was assigned to Branch 2,
accrues at the date of dissolution in the absence of any agreement to the contrary. presided over by Judge Jesus Matas.
When a final accounting is made, it is only then that prescription begins to run. In the
case at bar, no final accounting has been made, and that is precisely what The complaints 3 all alleged the same essential facts (1) Pineda was the owner of a
respondents are seeking in their action before the trial court, since petitioner has parcel of land measuring 790 square meters, his ownership being evidenced by TCT
failed or refused to render an accounting of the partnership’s business and assets. No. T-46560; (2) the previous owner had allowed the defendants to occupy portions
Hence, the said action is not barred by prescription. of the land by mere tolerance; (3) having himself need to use the property, Pineda
had made demands on the defendants to vacate the property and pay reasonable
In fine, the trial court neither erred nor abused its discretion when it denied petitioner’s rentals therefor, but these demands had been refused; and (4) the last demand had
motions to dismiss. Likewise, the Court of Appeals did not commit reversible error in been made more than a year prior to the commencement of suit. The complaints
upholding the trial court’s orders. Precious time has been lost just to settle this prayed for the same reliefs, to wit:
preliminary issue, with petitioner resurrecting the very same arguments from the trial
court all the way up to the Supreme Court. The litigation of the merits and substantial 1) that plaintiff be declared owner of the areas occupied by the defendants;
issues of this controversy is now long overdue and must proceed without further
delay. 2) that defendants and their "privies and allies" be ordered to vacate and
deliver the portions of the land usurped by them;
30
3) that each defendant be ordered to pay: Ascribing grave abuse of discretion to both Judges Matas and Fernandez in the
rendition of the Orders above described, the defendants in all three (3) actions have
1) P 2,000 as monthly rents from February, 1987; filed with this Court a "Joint Petition" for certiorari, prohibition and mandamus, with
prayer for temporary restraining order and/or writ of preliminary prohibitory injunction,"
2 ) Actual damages, as proven; praying essentially that said orders be annulled and respondent judges directed to
dismiss all the complaints "without prejudice to private respondent Pineda's re-filing a
3) Moral and nominal damages as the Honorable Court may fix ; similar complaint that complies with Circular No. 7." The joint petition (a) re-asserted
the proposition that because the complaints had failed to state the amounts being
4) P30,000.00, "as attorney's fees, and representation fees of P5,000.00 per claimed as actual, moral and nominal damages, the Trial Courts a quo had not
day of appearance;" 4 acquired jurisdiction over the three (3) actions in question-indeed, the respondent
Clerk of Court should not have accepted the complaints which initiated said suits, and
And 4) that he (Pineda) be granted such "further relief and remedies ... just and (b) it was not proper merely to expunge the claims for damages and allow "the so-
equitable in the premises. called cause of action for "reivindicatoria" remain for trial" by itself. 10

The prayer of each complaint contained a handwritten notation (evidently made by The joint petition should be, as it is hereby, dismissed.
plaintiff's counsel) reading, "P5,000.00 as and for," immediately above the typewritten
words, "Actual damages, as proven," the intention apparently being to make the entire It should be dismissed for failure to comply with this Court's Circular No. 1-88
phrase read, " P5,000.00 as and for actual damages as proven. 5 (effective January 1, 1989). The copies of the challenged Orders thereto attached 11
were not certified by the proper Clerk of Court or his duly authorized representative.
Motions to dismiss were filed in behalf of each of the defendants by common Certification was made by the petitioners' counsel, which is not allowed.
counsel .6 Every motion alleged that the Trial Court had not acquired jurisdiction of
the case — The petition should be dismissed, too, for another equally important reason. It fails to
demonstrate any grave abuse of discretion on the part of the respondent Judges in
. . . for the reason that the ... complaint violates the mandatory and clear provision of rendering the Orders complained of or, for that matter, the existence of any proper
Circular No. 7 of the ... Supreme Court dated March 24,1988, by failing to specify all cause for the issuance of the writ of mandamus. On the contrary, the orders appear to
the amounts of damages which plaintiff is claiming from defendant;" and have correctly applied the law to the admitted facts.

. . . for ... failure (of the complaint) to even allege the basic requirement as to the It is true that the complaints do not state the amounts being claimed as actual, moral
assessed value of the subject lot in dispute. and nominal damages. It is also true, however, that the actions are not basically for
the recovery of sums of money. They are principally for recovery of possession of real
Judge Matas denied the motion to dismiss filed in Civil Case No. 2210 but ordered property, in the nature of an accion publiciana. Determinative of the court's jurisdiction
the expunction of the "allegations in paragraph 11 of the ... complaint regarding moral in this type of actions is the nature thereof, not the amount of the damages allegedly
as well as nominal damages . 7 On motion of defendant Panes, Judge Matas later arising from or connected with the issue of title or possession, and regardless of the
ordered the striking out, too, of the "handwritten amount of 'P5,000. 00 as and for.' value of the property. Quite obviously, an action for recovery of possession of real
including the typewritten words 'actual damages as proven' ... in sub-paragraph b of property (such as an accion plenaria de possesion) or the title thereof, 12 or for
paragraph 4 in the conclusion and prayer of the complaint ..." 8 partition or condemnation of, or the foreclosure of a mortgage on, said real property
13 - in other words, a real action-may be commenced and prosecuted without an
The motions to dismiss submitted in Civil Cases Numbered 2211 and 2209 were also accompanying claim for actual, moral, nominal or exemplary damages; and such an
denied in separate orders promulgated by Judge Marcial Fernandez. 9 His Order in action would fall within the exclusive, original jurisdiction of the Regional Trial Court.
Case No. 2209 dated March 15, 1989 (a) declared that since the "action at bar is for
Reivindicatoria, Damages and Attorney's fees ... (d)efinitely this Court has the Batas Pambansa Bilang 129 provides that Regional Trial Courts shall exercise
exclusive jurisdiction," (b) that the claims for actual, moral and nominal damages "are exclusive original jurisdiction inter alia over "all civil actions which involve the title to,
only one aspect of the cause of action," and (c) because of absence of specification or possession of, real property, or any interest therein, except actions for forcible
of the amounts claimed as moral, nominal and actual damages, they should be entry into and unlawful detainer of lands or buildings, original jurisdiction over which is
"expunged from the records." conferred upon Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit
31
Trial Courts." 14 The rule applies regardless of the value of the real property involved, payment of the fee within a reasonable time but in no case beyond the applicable
whether it be worth more than P20,000.00 or not, infra. The rule also applies even prescriptive or reglementary period.
where the complaint involving realty also prays for an award of damages; the amount
of those damages would be immaterial to the question of the Court's jurisdiction. The 2. The same rule applies to permissive counterclaims, third-party claims and
rule is unlike that in other cases e.g., actions simply for recovery of money or of similar pleadings, which shall not be considered filed until and unless the filing fee
personal property, 15 or actions in admiralty and maritime jurisdiction 16 in which the prescribed therefor is paid. The court may also allow payment of said fee within a
amount claimed, 17 or the value of the personal property, is determinative of reasonable time but also in no case beyond its applicable prescriptive or
jurisdiction; i.e., the value of the personal property or the amount claimed should reglementary period.
exceed twenty thousand pesos (P20,000.00) in order to be cognizable by the
Regional Trial Court. 3. Where the trial court acquires jurisdiction over a claim by the filing of the
appropriate pleading and payment of the prescribed filing fee but, subsequently, the
Circular No. 7 of this Court, dated March 24, 1988, cannot thus be invoked, as the judgment awards a claim not specified in the pleading, or if specified, the same has
petitioner does, as authority for the dismissal of the actions at bar. That circular, been left for determination by the court, the additional filing fee therefor shall
avowedly inspired by the doctrine laid down in Manchester Development Corporation constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or
v. Court of appeals, 149 SCRA 562 (May 7, 1987), has but limited application to said his duly authorized deputy to enforce said lien and assess and collect the additional
actions, as shall presently be discussed. Moreover, the rules therein laid down have fee.
since been clarified and amplified by the Court's subsequent decision in Sun
Insurance Office, Ltd. (SIOL) v. Asuncion, et al., G.R. Nos. 79937-38, February 13, As will be noted, the requirement in Circular No. 7 that complaints, petitions, answers,
1989. and similar pleadings should specify the amount of damages being prayed for not
only in the body of the pleading but also in the prayer, has not been altered. What has
Circular No. 7 was aimed at the practice of certain parties who omit from the prayer of been revised is the rule that subsequent "amendment of the complaint or similar
their complaints "any specification of the amount of damages," the omission being pleading will not thereby vest jurisdiction in the Court, much less the payment of the
"clearly intended for no other purposes than to evade the payment of the correct filing docket fee based on the amount sought in the amended pleading," the trial court now
fees if not to mislead the docket clerk, in the assessment of the filing fee." The being authorized to allow payment of the fee within a reasonable time but in no case
following rules were therefore set down: beyond the applicable prescriptive or reglementary period. Moreover, a new rule has
been added, governing awards of claims not specified in the pleading - i.e., damages
1. All complaints, petitions, answers, and similar pleadings should specify the amount arising after the filing of the complaint or similar pleading-as to which the additional
of damages being prayed for not only in the body of the pleading but also in the filing fee therefor shall constitute a lien on the judgment.
prayer, and said damages shall be considered in the assessment of the filing fees in
any case. Now, under the Rules of Court, docket or filing fees are assessed on the basis of the
"sum claimed," on the one hand, or the "value of the property in litigation or the value
2. Any pleading that fails to comply with this requirement shall not be accepted nor of the estate," on the other. 18 There are, in other words, as already above intimated,
admitted, or shall otherwise be expunged from the record. actions or proceedings involving real property, in which the value of the property is
immaterial to the court's jurisdiction, account thereof being taken merely for
3. The Court acquires jurisdiction over any case only upon the payment of the assessment of the legal fees; and there are actions or proceedings, involving
prescribed docket fee. An amendment of the complaint or similar pleading will not personal property or the recovery of money and/or damages, in which the value of the
thereby vest jurisdiction in the Court, much less the payment of the docket fee based property or the amount of the demand is decisive of the trial court's competence
on the amount sought in the amended pleading. (aside from being the basis for fixing the corresponding docket fees). 19

The clarificatory and additional rules laid down in Sun Insurance Office, Ltd. v. Where the action is purely for the recovery of money or damages, the docket fees are
Asuncion, supra, read as follows: assessed on the basis of the aggregate amount claimed, exclusive only of interests
and costs. In this case, the complaint or similar pleading should, according to Circular
1. It is not simply the filing of the complaint or appropriate initiatory pleading, but No. 7 of this Court, "specify the amount of damages being prayed for not only in the
(also) the payment of the prescribed docket fee that vests a trial court with jurisdiction body of the pleading but also in the prayer, and said damages shall be considered in
over the subject-matter or nature of the action. Where the filing of the initiatory the assessment of the filing fees in any case."
pleading is not accompanied by payment of the docket fee, the court may allow
32
Two situations may arise. One is where the complaint or similar pleading sets out a trial court denied the motion of petitioner NSC to dismiss the complaint for recovery of
claim purely for money or damages and there is no precise statement of the amounts personal property which private respondent Jose P. Jacinto had filed.
being claimed. In this event the rule is that the pleading will "not be accepted nor
admitted, or shall otherwise be expunged from the record." In other words, the The facts are as follows:
complaint or pleading may be dismissed, or the claims as to which the amounts are
unspecified may be expunged, although as aforestated the Court may, on motion, Private respondent Jacinto was the former owner of record of 100 shares of stock of
permit amendment of the complaint and payment of the fees provided the claim has the Manila Golf and Country Club (MGCC) now owned by and registered in the name
not in the meantime become time-barred. The other is where the pleading does of petitioner NSC. On February 9, 1990, he filed a complaint 2 against the NSC,
specify the amount of every claim, but the fees paid are insufficient; and here again, alleging that —
the rule now is that the court may allow a reasonable time for the payment of the
prescribed fees, or the balance thereof, and upon such payment, the defect is cured 4. In or about 1970, for valuable considerations, Manila Golf and Country Club,
and the court may properly take cognizance of the action, unless in the meantime Inc. (MGCCI) issued its Stock Certificate No. 1361 to plaintiff representing 100 shares
prescription has set in and consequently barred the right of action. of MGCCI.

Where the action involves real property and a related claim for damages as well, the 5. From about 1972 up to the early part of February 1986, plaintiff was abroad
legal fees shall be assessed on the basis of both (a) the value of the property and (b) and could not return to the Philippines for reasons beyond his control.
the total amount of related damages sought. The Court acquires jurisdiction over the
action if the filing of the initiatory pleading is accompanied by the payment of the 6. When plaintiff returned to the philippines in 1986, he discovered that Stock
requisite fees, or, if the fees are not paid at the time of the filing of the pleading, as of Certificate No. 1361 had been cancelled and a replacement Stock Certiftcate had
the time of full payment of the fees within such reasonable time as the court may been issued in the name of NSC.
grant, unless, of course, prescription has set in the meantime. But where-as in the
case at bar-the fees prescribed for an action involving real property have been paid, 7 The cancellation and transfer of plaintiffs Stock Certificate No. 1361 is void
but the amounts of certain of the related damages (actual, moral and nominal) being for the reasons that: there was no meeting of minds, there was no specific contract
demanded are unspecified, the action may not be dismissed. The Court undeniably between plaintiff and NSC or any party covering the alleged transfer nor was there
has jurisdiction over the action involving the real property, acquiring it upon the filing any consideration for the same.
of the complaint or similar pleading and payment of the prescribed fee. And it is not
divested of that authority by the circumstance that it may not have acquired 8. Despite repeated demands upon NSC to return and re-transfer plaintiff's 100
jurisdiction over the accompanying claims for damages because of lack of shares in MGCCI formerly covered by said Stock Certificate No. 1361, NSC failed and
specification thereof. What should be done is simply to expunge those claims for refused and still fails and refuses to comply with the same.
damages as to which no amounts are stated, which is what the respondent Courts
did, or allow, on motion, a reasonable time for the amendment of the complaints so as 9. MGCCI's act in cancelling plaintiffs stock certificate No. 1361 and issuing a
to allege the precise amount of each item of damages and accept payment of the replacement certificate in the name of NSC is without basis and illegal considering
requisite fees therefor within the relevant prescriptive period. WHEREFORE, the that there was no valid document evidencing the assignment, sale or transfer by
petition is DISMISSED, without pronouncement as to costs. plaintiff to NSC of MGCCI stock certificate No. 1361.

G.R. No. 123215 February 2, 1999 10. In consequence of NSC and MGCCI's illegal act in causing the cancellation
and transfer of plaintiff's Stock Certificate No. 1361 unto NSC's name:
NATIONAL STEEL CORPORATION, vs. COURT OF APPEALS, HON, ARSENIO J.
MAGPALE, and JOSE MA. P. JACINTO 10.1. Plaintiff suffered mental anguish for which an award of moral damages of P1
Million is proper;
MENDOZA, J.:
10.2. Plaintiff was constrained to litigate and secure the services of counsel for a
This is a petition for review on certiorari of the decision, 1 dated September 11, 1995, fee of P100,000.00 and for which NSC and MGCCI should be held liable.
of the Court of Appeals, which dismissed the special civil action for certiorari filed by
petitioner National Steel Corporation (NSC) to set aside the order, dated April 6, Based on the foregoing allegations, Jacinto prayed:
1994, of the Regional Trial Court, Branch LVII, City of Makati. In the said order, the
33
PRAYER 2 Under Sec. 7(a) of Rule 141, as amended by the Resolution of the Supreme
Court En Banc dated September 4, 1990, the docket fees "for filing an action . . . . is
WHEREFOREI it is respectfully prayed that judgment be rendered: P600 for the first P150,000.00 and P5.00 for each P1,000.00 in excess of
P150,000.00.
1. Ordering NSC to execute a deed of assignment re-transferring unto plaintiff
the MGCCI certificate issued to the former in replacement of Stock Certificate No. 3. The actual value of the MGCCI share certificate as of February, 1990, when
1361 and to surrender said Deed of Assignment, together with the MGCCI certificate the complaint was filed, was P5,511,000.00.
issued to NSC (in replacement of Stock Certificate No. 1361) for cancellation thereof
and to order MGCCI to cancel said stock certificate and issue a new one in the name A certification issued by the MGCCI attesting to the fair market value of a MGCCI
of Jose Ma. P. Jacinto: share is attached as Annex B.

2. If for any reason whatsoever NSC fails or refuses to execute the deed of 4. This means that the correct docket fee for the filing of plaintiff's complaint is
assignment and surrender NSC's replacement stock certificate, MGCCI be ordered approximately P26,805.00 and not P4,040.00 which is the amount plaintiff actually
to: paid.

2.1 Cancel in its stock and transfer book the stock certificate issued to NSC xxx xxx xxx
issued in replacement of certificate No. 1361;
6. The failure of plaintiff to pay the correct filing fees on February 13, 1990
2.2 Issue a new stock certificate in the name of NSC or the stock certificate that meant that this court did not acquire jurisdiction over plaintiffs action. Under the ruling
might have been issued in replacement thereof; of Sun Insurance, and as explained below, the plaintiff cannot now pay the deficiency
in the filing fees because it is already "beyond the applicable prescriptive or
2.3 Declare as lost and of no force and effect the MGCCI stock certificate now reglementary period."
outstanding and registered in the name of NSC.
The trial court denied petitioner's motion in an order, dated April 6, 1994. Hence, the
3. Ordering NSC and MGCCI to pay plaintiff, jointly and severally: latter brought a special civil action for certiorari in the Court of Appeals, but its petition
was dismissed on September 11, 1995.
3.1 P1 Million as moral damages ; and
The principal relief, or prayer in private respondent's complaint is specific, for the
3.2 P100.000.00 as attorney's fees. "NSC to execute a deed of assignment re-transferring unto plaintiff the MGCCI
certificate . . . in replacement of stock certificate No. 1861 . . . .
Other reliefs are also prayed for. 3
There is no allegation in the complaint of any quantified amount and/or of the actual
Petitioner NSC sought the dismissal of the complaint on the ground of prescription, value of the stock certificate in question.
but its motion was denied by the trial court in an order, dated November 9, 1990.
Petitioner NSC brought a special civil action for certiorari in the Court of Appeals, but There is also no separate cause of action and/or prayer in the face of the complaint
again its petition was dismissed by the appellate court on August 30, 1991. Its that private respondent, even in the alternative, prayed that if the principal relief is
attempt to secure review in this Court failed as its petition was dismissed in a unavailing, that defendants be ordered to pay him the actual or equivalent value of
resolution, dated March 18, 1992. the stock certificate, hence there is even no reason or basis to move for a more
definite statement or for a bill of particulars of any matter which is not averred in the
Petitioner NSC then filed its answer, after which trial was held. It thereafter filed a complaint with sufficient definiteness or particularity to enable petitioner to properly
motion 4 to dismiss the complaint against it on the ground of lack of jurisdiction. It prepare for a more responsive pleading or to prepare for trial.
alleged:
Perspicaciously, what should guide the office of the Clerk of Court, Regional Trial
Plaintiff paid docket and other fees totalling P4,040.00. The certification of Clerk of Court, Makati, Metro Manila, in assessing the, correct docket fees for the filing of the
Court Ma. Corazon Cecelia P. Cuba is attached as Annex A. complaint in Civil Case No. 90-4051, when it was filed on February 13, 1990, is what
is alleged and prayed for in the complaint. It would be uncalled for and baseless for
34
the clerk of court to consider at that point in time the supposed "actual value of the This contention has no merit. Although appellant's complaint is entitled to be one for
MGCCI share certificate as of February, 1990, . . . (in the amount of) P5,511000.00", specific performance, yet the fact that he asked that a deed of sale of a parcel of land
and then and there assess an additional docket fee of P22,765.00 (P26,805.00 minus situated in Quezon City be issued in his favor and that a transfer certiticate of title
P4,040.00), precisely because the said sum of "P5,511,000.00" is not alleged in the covering said land be issued to him shows that the primary objective and nature of
body of the complaint, and which is not also sought to be recovered in the action. the action is to recover the parcel of land itself because to execute in favor of
appellant the conveyance requested there is need to make a finding that he is the
There can be no divergence of opinion from the allegations, designation and the owner of the land which in the last analysis resolves itself into an issue of ownership.
reliefs prayed for, as clearly and definitely spelled out in the face of the complaint, that
private respondent's principal relief is for petitioner NSC "to execute a deed of Similarly, if as in this case, plaintiff herein private respondent Jacinto, seeks the
assignment re-transferring unto plaintiff the MGCCI certificate issued to the former in execution in his favor of a deed of assignment of shares of stock, it follows that the
replacement of stock certificate No. 1861 . . . . And there also appears to be no hint of action is for recovery of personal property, the main purpose of which is to regain the
any intention on the part of private respondent to mislead the clerk of court in ownership and possession of the said shares of stock.
assessing the correct fees, or to evade the payment of the correct fees.
Accordingly, as petetioner NSC contends private respondent Jacinto should pay
Hence, this petition raising the following assignment of errors: docket fees based on the value of the shares of stock and the amount of damages he
seeks to recover. Under Rule 141, §7(a) of the Rules of Court as it stood at the time
Assignment of Errors of the filing of the complaint against petitioner, docket fees for ordinary civil actions
THE RESPONDENT COURT OF APPEALS ERRED IN CHARACTERIZING THE should be based on the total sum claimed, exclusive of interest, or the stated value of
NATURE OF PRIVATE RESPONDENT'S ACTION AS ONE FOR SPECIFIC the property in litigation. 6 Thus, the docket fees should be computed on the basis on
PERFORMANCE AND NOT ONE FOR RECOVERY OF PROPERTY. the value of the property and the amount of related damages claimed, exclusive of
interest. As we held in Tacay v. Regional Trial Court, 7 where the action involves real
THE RESPONDENT COURT OF APPEALS ERRED IN REFUSING TO TAKE property and a related claim for damages as well, the legal fees shall be assessed on
COGNIZANCE OF THE TACAY [v. Regional Trial Court, 180 SCRA 433 (1989)] AND the basis of both (a) the value of the property and (b) the total amount of related
BPI CREDIT [v. Court of Appeals, 204 SCRA 601 (1991)] RULINGS. damages sought. The Court acquires jurisdiction over the action if the filing of the
initiatory pleading is accompanied by the payment of the requisite fees, or, if the fees
THE RESPONDENT COURT OF APPEALS ERRED IN NOT FINDING THAT THE are not paid at the time of the filing of the pleading, as of the time of full payment of
LOWER COURT FAILED TO ACQUIRE JURISDICTION OVER PRIVATE the fees within such reasonable time as the court may grant, unless, of course,
RESPONDENT'S COMPLAINT DUE TO NON-PAYMENT OF THE REQUIRED prescription has set in the meantime.
FILING FEES.
It does not follow, however, that the trial court should have dismissed the complaint
Petitioner NSC correctly argues that the action in this case is for the recovery of for failure of private respondent to pay the correct amount of docket fees. Although
property rather than for specific performance and, hence, the docket fee should be the payment of the proper docket fees is a jurisdictional requirement, the trial court
based on the value of the property sought to be recovered. It is similar to an action in may allow the plaintif in an action to pay the same within a reasonable time before the
which petitioner seeks the execution of a deed of sale of a parcel of land in his favor. expiration of the applicable prescriptive or reglementary period. 8 If the plaintiff fails to
Such action has been held to be for the recovery of the real property and nor for comply with this requirement, the defendant should timely raise the issue of
specific performance since his primary objective is to regain the ownership and jurisdiction or else he would be considered in estoppel. In the latter case, the balance
possession of the parcel of land. In Ruiz v. J.M. Tuason & Co., Inc., it was held: 5 between the appropriate docket fees and the amount actually paid by the plaintiff will
be considered a lien on any award he may obtain in his favor. Thus, in Pantranco
Appellant contends that the present action is transitory because it is one for specific North Express, Inc. v. Court of Appeals, we held: 9
performance and its object is to compel J. M. Tuason & Co., Inc, to execute a final
deed of sale of the property in question in favor of appellant founded upon The petitioner raised the issue regarding jurisdiction for the first time in its Brief filed
compliance with the compromise agreement wherein said company recognized the with the public respondent in CA-G.R. CV No. 26220 on 2 February 1991. After
sale made by Florencio Deudor of said property in favor of Jose Dinglasan who, in the vigorously participating in all stages of the case before the trial court's authority
same agreement, was recognized by the company as a purchaser who had already authority in order to ask for affirmative relief, the petitioner is effectively barred by
made partial payment of the purchased price of the land. estoppel from challenging the trial court's jurisdiction. Although the issue of
jurisdiction may be raised at any stage of the proceedings as the same is conferred
35
by law, it is nonetheless settled that a party may be barred from raising it on ground of "WHEREFORE, premises considered, the petition is GRANTED. Accordingly, the
laches or estoppel. The deficiency in the payment of the docket fees must, however, Order dated 13 August 1999 denying petitioners’ Motion for Inhibition and the Order
be considered a lien on the judgment which must be remitted to the clerk of court of dated 20 August 1999 denying the Motion for Reconsideration are hereby nullified
the court a quo upon the execution of the judgment. and respondent Judge is hereby inhibited from further sitting in Civil Case No. CEB-
21854 entitled ‘Gochan et. al. vs. Gochan, et al.’"4
In the case at bar, petitioner NSC filed in 1990 a motion to dismiss but did not raise
this point. Instead it based his motion on prescription. Upon the denial by the trial The assailed Resolution denied petitioner’s Motion for Reconsideration.5
court of its motion to dismiss, it filed an answer, submitted its pre-trial brief, and
participated in the proceedings before the trial court. It was only in 1993 — more than The Facts
three years after filing its motion to dismiss — that petitioner NSC again filed a motion
to dismiss the action on the ground of lack of jurisdiction. Clearly, petitioner is The facts of the case are summarized by the Court of Appeals in this wise:
estopped from raising this issue. Indeed, while the lack of jurisdiction of a court may
be raised at any stage of an action, nevertheless, the party raising such question may "There is no dispute as to the antecedent facts that gave rise to the instant petition
be estopped if he has actively taken part in the very proceedings which he questions involving close relatives who are either aunties, nieces and nephews or first-cousins.
and he only objects to the court's jurisdiction because the judgment or the order
subsequently rendered is adversed to him. 10 "On 03 April 1998, private respondents filed a Complaint for Specific Performance
and Damages against petitioners. The case was raffled to respondent Judge Dicdican
WHEREFORE, the decision of the Court of Appeals, dated September 11, 1995, is and docketed as Civil Case No. CEB-21854.
AFFIRMED. The deficiency in the payment of the docket fees shall be a lien on any
judgment may be rendered in favor of private respondent Jose P. Jacinto. SO "On 26 May 1998, petitioners filed their Answer with Counterclaim and affirmative
ORDERED. defenses.

G.R. No. 143089 February 27, 2003 "On 07 August 1998, before pre-trial could be conducted, petitioners filed a motion for
a hearing on their affirmative defenses some of which are grounds for a motion to
MERCEDES R. GOCHAN, ALFREDO R. GOCHAN, ANGELINA R. GOCHAN dismiss and therefore may be the subject of a preliminary hearing pursuant to Section
HERNAEZ, MA. MERCED R. GOCHAN GOROSPE, CRISPO R. GOCHAN JR. and 6, Rule 16, 1997 RCP. The motion was set for hearing on 11 August 1998.
MARLON R. GOCHAN vs. VIRGINIA GOCHAN, LOUISE GOCHAN, LAPULAPU
REAL ESTATE CORPORATION, FELIX GOCHAN & SONS REALTY "In an order dated 11 August 1998, respondent judge denied petitioners’ motion
CORPORATION and MACTAN REALTY CORPORATION without conducting a hearing. Respondent judge however did not stop with the denial
but went on to rule on the merits of the affirmative defenses, stating as follows:
PANGANIBAN, J.:
‘[T]he Statute of Frauds does not apply in this case because the contract which is the
Allegations and perceptions of bias from the mere tenor and language of a judge is subject matter of this case is already an executed contract. The Statute of Frauds
insufficient to show prejudgment. Allowing inhibition for these reasons would open the applies only to executory contracts. x x x. For another, the contention of the
floodgates to abuse. Unless there is concrete proof that a judge has a personal defendants that the claims of the plaintiffs are already extinguished by full payment
interest in the proceedings, and that his bias stems from an extra-judicial source, this thereof does not appear to be indubitable because the plaintiffs denied under oath the
Court shall always commence from the presumption that a magistrate shall decide on due execution and genuineness of the receipts which are attached as Annexes 1-A,
the merits of a case with an unclouded vision of its facts.1 1-B and 1-C of the defendants’ answer. x x x. Then, still for another, the contention
that the Complaint is defective because it allegedly has f[a]iled to implead
The Case indispensable parties appears to be wanting in merit because the parties to the
memorandum of agreement adverted to in the complaint are all parties in this case.
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, Then the matter of payment of docketing and filing fees is not a fatal issue in this case
assailing the January 28, 2000 Decision2 and the May 2, 2000 Resolution3 of the because the record shows that the plaintiffs had paid at least PhP165,000.00 plus...’
Court of Appeals (CA) in CA-GR SP No. 54985. The decretal portion of the Decision
reads as follows:

36
"The above ruling is the subject of a petition for certiorari before this Court docketed
as C.A.-G.R. SP No. 49084 which is pending resolution on a motion for "On 16 August 1999, petitioners filed a motion for reconsideration of the order of
[re]consideration. Because of the pendency of this petition, petitioners filed on 28 denial which the respondent judge likewise denied in his Order dated 20 August
September 1998 a motion to suspend proceedings. Instead of suspending 1999, reiterating that petitioners failed to appear during the hearing on the motion."6
proceedings, the respondent judge set the case for pre-trial on 09 November 1998, (Citations omitted)
per Order dated 01 October 1998.
Ruling of the Court of Appeals
"On 05 November 1998, petitioners’ counsel Atty. Rolando Lim filed a motion to reset
the pre-trial from 09 November 1998 to 03 December 1998 on the ground that he had The CA opined that the apprehensions of respondents about the bias or partiality of
to go to Japan because of a previous commitment. Atty. Vicente Espina, who Judge Dicdican in favor of petitioners were well-founded.7 It held that the totality of
attended the pre-trial to explain Atty. Lim’s absence, manifested to respondent judge the circumstances showed that he had a glaring animosity towards their case.8 It
that the petitioners were willing to explore the possibility of an amicable settlement. In further ruled that he had "likewise displayed petulance and impatience in his handling
spite of the absence of handling counsel Atty. Lim and in spite of Atty. Espina’s of the case, a norm of behavior inconsistent with the cold neutrality of an impartial
manifestation of a possible compromise, respondent judge proceeded with and judge."9
terminated the pre-trial. And in spite of the manifestation of Atty. Espina, respondent
judge indicated in the pre-trial order he issued that the ‘possibility (of a compromise) The CA based its ruling on the following circumstances10 pointed out by
is nil.’ respondents:

"After the termination of the pre-trial, respondent judge proceeded to hear the 1. Judge Dicdican denied the Motion to Hear Affirmative Defenses filed by
evidence of private respondents who presented their first witness on direct respondents, but in the same Order ruled on its merits without giving them an
examination on 18 January 1999. This first witness was cross-examined by opportunity to be heard.
petitioners’ counsel on 22 January 1999. Further hearings were set for 28 and 30 2. The above Order of the judge was too well-prepared to be extemporaneous,
April 1999. On 23 April 1999, petitioners’ counsel Atty. Lim filed an urgent motion leading respondents to suspect that he was bent on deciding the case in favor of
praying that the hearing on 28 April be moved to 30 April 1999 on the ground that he petitioners.
had to undergo medical tests and treatment on 27 and 28 April 1999, and that his law
partner Atty. Espina would not be able to attend in his behalf because the latter had to 3. Without indicating for the record respondents’ objections, Judge Dicdican admitted
attend his brother’s wedding in Kananga, Leyte on 28 April 1999. all exhibits of petitioners and even allowed their witnesses to answer all questions,
even if he had not yet resolved the applicability of the Statute of Frauds.
"Petitioners’ counsel went to court on 30 April 1999 and was surprised to learn that
his motion to reset the hearing on 28 April 1999 was disregarded and that trial 4. The judge denied respondents’ requests for postponements, which were
proceeded with private respondents’ counsel conducting a re-direct examination of reasonable and justified under the circumstances. Further, during the April 28, 1999
their first witness and presenting their second witness on direct examination. During hearing, he allowed petitioners to present their witnesses even in the absence of
the hearing on 30 April 1999, respondent judge ordered petitioners’ counsel to respondents’ counsel. And, knowing that the counsel was absent when those
conduct the re-cross examination of the first witness and the cross-examination of the witnesses testified in the previous hearing, the judge forced him to cross-examine
second witness. Petitioners’ counsel manifested that he had not read the transcript of them in the subsequent April 30, 1999 hearing.
stenographic notes taken during the hearing on 28 April 1999 and was therefore not
prepared for cross-examination. However, when respondent judge threatened to 5. During the hearing for respondents’ Motion for Inhibition, the judge started to hear
waive petitioners’ right to examine private respondents’ witnesses, petitioners’ the case before the scheduled time.
counsel had no choice but to accede to do what he was not prepared for.
6. Judge Dicdican issued a Pretrial Order stating that the possibility of a compromise
"On 05 August 1999, petitioners filed a motion to inhibit respondent judge from further was "nil" despite the pretrial manifestation of respondents’ counsel that the parties
sitting in the case on grounds of partiality, pre-judgment and gross ignorance of the were willing to explore the possibility of a compromise.
law. The motion was set for hearing on 09 August 1999 at 10:00 A.M.
Hence, this Petition.11
"In an order dated 13 August 1999, respondent judge denied the motion for inhibition
on the ground that petitioners failed to appear to substantiate the motion. The Issues
37
In their Memorandum,12 petitioners submit the following issues for our consideration: "[T]he two petitions did not seek the same relief from the Court of Appeals. In CA-
G.R. SP. No. 49084, petitioners prayed, among others, for the annulment of the
"1. Whether or not the respondents are guilty of forum shopping in filing two petitions orders of the trial court denying their motion for preliminary hearing on affirmative
for certiorari in the CA based on the same order of Judge Dicdican; defenses in Civil Case No. CEB-21854. No such reliefs are involved in the second
petition, where petitioners merely prayed for the issuance of an order enjoining public
"2. Whether or not the CA was correct in enjoining Judge Dicdican from sitting in the respondent Judge Dicdican from further trying the case and to assign a new judge in
case at bar on the ground of bias and partiality; his stead."17

"3. Whether or not filing of a motion for inhibition on flimsy grounds is not a form of It should be clear that our Decision in GR No. 146089 has become final and
forum shopping."13 executory with the denial18 of respondents’ [herein petitioners’] Motion for
Reconsideration therein.
Simply stated, the issues in this case are as follows: (1) whether respondents are
guilty of forum shopping, and (2) whether Judge Dicdican should have inhibited Main Issue:
himself.
Inhibition
The Court’s Ruling
Although we find that respondents did not commit forum-shopping, still we gave due
The Petition is meritorious insofar as the second issue is concerned. Judge Dicdican course to this Petition on the main issue of inhibition. Petitioners argue that the CA
need not inhibit himself. erred when it ruled that Judge Dicdican should be inhibited from hearing Civil Case
No. CEB-21854 on the ground of bias and prejudice.
First Issue:
Forum Shopping A critical component of due process is a hearing before a tribunal that is impartial and
Petitioners argue that respondents should have raised the issue of Judge Dicdican’s disinterested.19 Every litigant is indeed entitled to nothing less than "the cold
alleged bias and partiality in their first Petition for Certiorari docketed as CA-GR SP neutrality of an impartial judge." All the other elements of due process, like notice and
No. 49084, not in the present case docketed in the appellate court as CA-GR SP No. hearing, would be meaningless if the ultimate decision were to come from a biased
54985. For filing two Petitions raising the same issues, respondents allegedly split judge.20 Section 1 of Rule 137 of the Rules of Court provides:
their cause of action and thus became guilty of forum shopping. Petitioners further
contend that the elements of litis pendentia or res judicata are present in the case at "SECTION 1. Disqualification of judges. - No judge or judicial officer shall sit in any
bar, because the matter raised in this Petition could have been taken up in the first case in which he, or his wife or child, is pecuniarily interested as heir, legatee, creditor
one. or otherwise, or in which he is related to either party within the sixth degree of
consanguinity or affinity, or to counsel within the fourth degree, computed according
We disagree. This Court has already definitively ruled on this matter in GR No. to the rules of the civil law, or in which he has been executor, administrator, guardian,
146089.14 In its Decision, it was confronted with the very same question raised in this trustee or counsel, or in which he has presided in any inferior court when his ruling or
Petition. At issue then is whether there was forum shopping in the filing of two decision is the subject of review, without the written consent of all parties in interest,
Petitions for Certiorari -- one for CA-GR SP No. 49084 and the other for CA-GR SP signed by them and entered upon the record.
No. 54985, the precursor of the present Petition.
"A judge may, in the exercise of his sound discretion, disqualify himself from sitting in
The Court made a distinction between the two Petitions filed. The first involved the a case, for just or valid reasons other than those mentioned above."21
"propriety of the affirmative defenses relied upon by petitioners [herein respondents]
in Civil Case No. CEB-21 854."15 The second Petition, which is the subject of the The Rules contemplate two kinds of inhibition: compulsory and voluntary. The
present appeal, "raised the issue of whether or not public respondent Judge Dicdican instances mentioned in the first paragraph of the cited Rule conclusively presume that
was guilty of manifest partiality warranting his inhibition from further hearing Civil judges cannot actively and impartially sit in a case. The second paragraph, which
Case No. CEB-21 854."16 embodies voluntary inhibition, leaves to the discretion of the judges concerned
whether to sit in a case for other just and valid reasons, with only their conscience as
Below we quote a more important point: guide.
38
 His actuations have not engendered reasonable suspicion as to his fairness and
To be sure, judges may not be legally prohibited from sitting in a litigation.22 But ability to decide the case with the cold neutrality of an impartial judge. Verily,
when circumstances reasonably arouse suspicions, and out of such suspicions a respondents have not convinced us that Judge Dicdican should inhibit himself from
suggestion is made of record that they might be induced to act with prejudice for or hearing the case.
against a litigant, they should conduct a careful self-examination.23 Under the second
paragraph of the cited Section of the Rules of Court, parties have the right to seek the Let us now examine one by one the circumstances relied upon by the CA in ruling for
inhibition or the disqualification of judges who do not appear to be wholly free, the inhibition of Judge Dicdican.
disinterested, impartial or independent in handling a case. Whether judges should
inhibit themselves therefrom rests on their own "sound discretion."24 That discretion Denial of Respondents’ Motion to Hear Affirmative Defenses
is a matter of conscience and is addressed primarily to their sense of fairness and
justice.25 The first circumstance which the appellate court relied upon to show the alleged bias
and partiality of Judge Dicdican was his denial of the Motion to Hear Affirmative
However, judges are exhorted to exercise their discretion in a way that the people’s Defenses filed by respondents.34 According to them, even if the judge had denied
faith in the courts of justice would not be impaired. A salutary norm for them to their Motion, he still ruled on the merits of their affirmative defenses and thus deprived
observe is to reflect on the possibility that the losing parties might nurture at the back them of an opportunity to be heard.
of their minds the thought that the former have unmeritoriously tilted the scales of
justice against them.26 Of course, the judges’ right must be weighed against their The fact that respondents’ Motion for Hearing was denied does not by itself show bias
duty to decide cases without fear of repression. and partiality. Clearly, Judge Dicdican based his denial on the Rules of Court,
according to which a preliminary hearing on affirmative defenses is indeed
Verily, the second paragraph of Section 1 of Rule 137 does not give judges the discretionary on the part of a judge.35 Thus, Judge Dicdican cannot be charged with
unfettered discretion to decide whether to desist from hearing a case. The inhibition bias and partiality, merely on the basis of his decision not to grant a motion for a
must be for just and valid causes. The mere imputation of bias or partiality is not preliminary hearing.
enough ground for them to inhibit, especially when the charge is without basis.27 This
Court has to be shown acts or conduct clearly indicative of arbitrariness or prejudice We are not unmindful of our ruling in the previous Gochan v. Gochan case.36 This
before it can brand them with the stigma of bias or partiality.28 Court held therein that the trial court committed grave abuse of discretion when it
denied the motion of respondents for a preliminary hearing on their affirmative
In a string of cases, the Supreme Court has said that bias and prejudice, to be defenses. But even in that case, two members of this Court37 dissented and believed
considered valid reasons for the voluntary inhibition of judges, must be proved with that respondent judge (herein Judge Dicdican) had not committed any grave abuse of
clear and convincing evidence.29 Bare allegations of their partiality will not suffice. It discretion in disallowing the preliminary hearing on respondents’ affirmative defenses.
cannot be presumed, especially if weighed against the sacred oaths of office of
magistrates, requiring them to administer justice fairly and equitably -- both to the In any event, this Court’s ruling of grave abuse of discretion in a certiorari proceeding
poor and the rich, the weak and the strong, the lonely and the well-connected.30 such as the one issued in the earlier Gochan case does not necessarily translate to
bias and partiality that would ipso facto lead to the inhibition of the trial judge. In fact,
Equally important is the established doctrine that bias and prejudice must be shown in the previously cited case, this Court did not mention any badge of bias or partiality
to have resulted in an opinion on the merits on the basis of an extrajudicial source, on the part of Judge Dicdican. He was simply directed to conduct forthwith the
not on what the judge learned from participating in the case.31 As long as opinions preliminary hearing on the affirmative defenses.
formed in the course of judicial proceedings are based on the evidence presented
and the conduct observed by the magistrate, such opinion -- even if later found to be To repeat, as long as opinions formed in the course of judicial proceedings are based
erroneous -- will not prove personal bias or prejudice on the part of the judge.32 on the evidence presented and the conduct observed by the judge, such opinion --
While palpable error may be inferred from the decision or the order itself, extrinsic even if later found to be erroneous on appeal or made with grave abuse of discretion
evidence is required to establish bias, bad faith, malice or corrupt purpose. At bottom, on certiorari -- will not necessarily prove personal bias or prejudice on the part of the
to disqualify a judge, the movant must prove bias and prejudice by clear and judge.38
convincing evidence.33
Neither can respondents convince us that they were deprived of due process. The
Prescinding from the foregoing standards, we do not agree with the Court of Appeals’ essence of due process is the reasonable opportunity to be heard and to submit any
conclusion that Judge Dicdican has shown a glaring bias against respondents’ case. evidence available in support of one’s defense.39 Where one is accorded an
39
opportunity to be heard, either through oral arguments or pleadings, there is no denial
of procedural due process.40 Due process was designed to afford an opportunity to As to respondents’ doubts arising from the alleged "suspicious" appearance of the
be heard; an oral hearing need not always be held. Moreover, this constitutional TSN of the August 11, 2003 hearing, this Court cannot take it as an indication of
mandate is deemed satisfied if the pleader is granted an opportunity to seek partiality on the part of the judge. Clearly, it was Atty. Jonathan G. Talabo, the branch
reconsideration of the action or ruling complained of.41 clerk of court of Branch 11 of the RTC of Cebu, who had issued the Certification48
dated November 11, 1999. Respondents failed to prove that Judge Dicdican had a
Judge Dicdican’s Order42 denying respondents’ Motion for Hearing was based on the hand in its issuance. What is clear is that the TSN of August 11, 1998 was prepared
pleadings filed by both parties. Respondents filed their Motion to Hear Affirmative and signed by Emelyn V. Fuentes, stenographic reporter of Branch 11 of the RTC of
Defenses, while petitioners filed their Comment to the Motion.43 Thus, it cannot be Cebu. Connecting this "suddenly found" TSN to Judge Dicdican is not only
said that respondent judge arbitrarily ruled thereon. He thereafter allowed the speculative, but also baseless and unfair and will not suffice to bar respondent judge
respondents and petitioners to file their Motion for Reconsideration44 and from performing his lawfully mandated duty.
Opposition,45 respectively, before deciding on the matter again.
Admission of Petitioners’ Exhibits Without indicating Respondents’ Objections
Character of the Order Denying Respondents’ Motion
In his Order49 dated June 2, 1999, Judge Dicdican admitted the documentary
Respondents further argue that before hearing their Motion to Hear Affirmative evidence of plaintiffs. He did so after petitioners had filed their Formal Offer of
Defenses, Judge Dicdican had already prepared an Order denying their plea. This is Exhibits50 and respondents their Comments (on Plaintiff’s Exhibits).51 The former
an allegation that they have not been able to prove. We cannot rely merely on their was filed on May 5, 1999 and the latter on May 12, 1999. He issued his Order
submissions that he was in fact bent on ruling against them. Petitioners correctly admitting the evidence of petitioners only on June 2, 1999 or a good 21 days after
argued as follows: respondents had submitted their objections to the former’s exhibits.

"The fact is that Judge Dicdican really dictated his Order in open court with legal We cannot see how such an Order would translate to bias and partiality.
citations and authorities but did not prepare it beforehand. We respectfully submit that Respondents argue the judge should have indicated their objections for the record.
said act cannot be considered as a manifestation of bias and partiality and deprived But it is clear that he indeed allowed them to file their Comment/Objections to
respondents of due process because the motion filed by respondents, copy of which petitioners’ Formal Offer. It is enough that he allowed both parties to be heard, and
was attached as Annex ‘A’ to the reply of petitioners was complete with the evidence that he decided based on their submissions.
already attached as annexes thereto and contained citation of authorities and the We do not agree, either, with the appellate court’s findings that petitioners’ witnesses
opposition of petitioners, copy of which was attached to the reply as Annex ‘B,’ were allowed to answer all questions asked of them, even if respondent judge had not
contained citations of authorities as well."46 yet ruled on the applicability of the Statute of Frauds.

The argument that the Order of Judge Dicdican was too scholarly to be Aside from the fact that these objections are sweeping and unsubstantiated, they
extemporaneous is merely the conjecture of respondents. This characterization does should have been raised before the trial judge himself. Respondents had every
not show in any way that he was biased or partial. Besides, as earlier adverted to, opportunity to object to the questions the witnesses were asked and the answers the
both the Motion and the Comment thereto had been filed days before the hearing latter gave during the trial, based on the following provision of the Rules of Court:
thereon. It is not unusual -- in fact, it is expected -- that the judge would study the
Motion and the Comment filed before him. If he prepared well for the arguments, he "Objection to a question propounded in the course of the oral examination of a
should be commended, not faulted. witness shall be made as soon as the grounds therefor shall become reasonably
apparent."52
Besides, Judge Dicdican ruled that the issues raised in the Motion could be
determined on the basis of preponderance of evidence presented by both parties.47 As to the striking out of answers, the rule on evidence (Rule 132) provide:
This means that he did not foreclose the possibility that the parties would ventilate
these defenses during the trial. "SEC. 39. Striking out answer. - Should a witness answer the question before the
adverse party had the opportunity to voice fully its objection to the same, and such
To show his fairness, he even allowed the postponement of the pretrial set for that objection is found to be meritorious, the court shall sustain the objection and order the
hearing upon the request of respondents’ counsel. This act showed that he was in no answer given to be stricken off the record.
hurry to decide the case in favor of petitioners.
40
"On proper motion, the court may also order the striking out of answers which are
incompetent, irrelevant, or otherwise improper."53 As can be seen from the Pretrial Order, respondents were ably represented by Atty.
Espina. Hence, they suffered no prejudice even if the pretrial was not postponed. The
Respondents have not shown that they were in any way denied their right to object to trial court observed during the hearing:
questions propounded in the course of the hearing.
"The Court actually does not consider that as the reason to postpone the pre-trial in
Denial of Requests for Postponement and the Forced Cross-Examination of this case because it seemed that there is a pattern to delay. And the Court can not
Witnesses countenance that there would be no movement of this case. There seemed to be a
pattern as observed by the Court. So we will go on with the pre-trial if there is no
The CA also ruled that the denial by Judge Dicdican of the postponements requested possibility of an amicable settlement."57
by respondents’ counsels also showed his bias and partiality.
It seems that respondents have no one else to blame but themselves for the trial
We disagree. A motion for continuance or postponement is not a matter of right, but a court’s denial of their requests for postponement.
request addressed to the sound discretion of the court.54 Parties asking for
postponement have absolutely no right to assume that their motions would be As to the other time when the request of respondents for postponement was denied
granted. Thus, they must be prepared on the day of the hearing.55 by Judge Dicdican, this Court notes that both their counsels -- Attys. Lim and Espina
-- were present during the preceding hearing when the dates of the succeeding
Given this rule, the question of the correctness of the denial of respondents’ requests hearings were agreed upon. As stated in the TSN,58 the parties agreed that the next
for postponements was addressed to the sound discretion of Judge Dicdican. His setting would be on April 28, 1999 at 9:00 a.m. and on April 30, 1999 at 10:00 a.m.
action thereon cannot be disturbed by appellate courts in the absence of any clear But on April 23, 1999 -- more than two months after the trial date had been set and
and manifest abuse of discretion resulting in a denial of substantial justice.56 Since only five days before the scheduled hearing -- respondents’ counsel filed an urgent
there was no such finding with regard to the disallowance of the requests for Motion to Reset the hearing to April 28, 1999, because both lawyers allegedly had
postponement, the CA cannot overturn the decision of the judge. Much less can it other commitments. Petitioners filed an Opposition to the Motion to Reset; thus,
assume his bias and partiality based merely on the denial of the requests for respondent judge’s denial of the Motion was not at all arbitrary or whimsical.
postponement.
The appellate court also faults Judge Dicdican for allowing petitioners to present their
Moreover, respondents cannot claim that all their requests were turned down by witnesses even in the absence of respondents’ counsel and, on the succeeding
Judge Dicdican. This Court takes notice of the fact that respondents asked for an hearing, for forcing the counsel to cross-examine the witness presented previously.
extension of time to file their answer and later asked for two postponements of the
pretrial. In fact, when the pretrial was finally set for August 11, 1998, they then filed As we have ruled above, parties asking for postponement have absolutely no right to
their Motion to Hear Affirmative Defenses. And when the judge denied it, they again assume that their motion would be granted and must thus be prepared on the day of
asked for a postponement of the pretrial, a request that was readily granted by the the hearing.59 What further militates against respondents’ counsel is his excuse that
trial court. he was informed by a court personnel that his Motion to Reset had been granted.60
Supposedly because of this information, the counsel was under the impression that
Respondents fault Judge Dicdican for not postponing the pretrial on November 9, there would be no hearing on the last scheduled date. His assumption that his motion
1998, when their counsel had to represent the Cebu Lions Club in an international to reset would be granted was bad enough. What was worse was that, in following up
conference in Japan. But they should be aware that the court had already given them the proceedings of the case, he relied on the unauthorized communication of an
one whole month to procure from the Court of Appeals a temporary restraining order unidentified court personnel. He could have easily verified if there was a hearing, and
(TRO) to cause the suspension of the proceedings in the lower court. So, on what transpired if it indeed there was one. This is the duty imposed upon lawyers.
November 9, 1998, they were given sufficient time to prepare for the pretrial. If their
counsel learned of the date of the conference only recently, he could have easily Due diligence requires that lawyers should obtain timely information from the
assigned the case to Atty. Vicente A. Espina Jr., his co-counsel. In fact, Atty. Espina, concerned clerks of court regarding action on their motions; lack of notice thereof will
armed with a special power of attorney to represent respondents, was present in not necessarily make them any less accountable for their omission.61
court on the hearing date. He even admitted that he was able to read the records of
the case. Also, as correctly argued by petitioners’ counsel, respondents had with Petitioners correctly argue thus:
them their pretrial briefs which could have guided them.
41
"x x x. Judge Dicdican then allowed the counsel for petitioners to conduct the redirect Without presenting any proof of their presence on the hearing date at the designated
examination of his first witness, and to conduct the direct examination of his second time, the arguments of respondents’ counsel lose force and credence. Such
witness, giving the petitioners the opportunity to conduct the re-cross examination of arguments become even less convincing when validated against the records of this
said witness and cross-examination of the second witness on April 30, 1999. Judge case. As shown by the Minutes of the Session67 held on August 9, 1999 at 10:00
Dicdican therefore was very fair and considerate to respondents in giving them the a.m., only the counsels for plaintiffs [herein petitioners] were present.
opportunity to re-cross examine and cross-examine petitioners’ witnesses instead of
considering the respondents to have waived said right which was within his It should be observed that the entries in official records made in the performance of
prerogative."62 duty by a public officer of the Philippines or by some other person especially enjoined
by law are prima facie evidence of the facts therein stated.68 This means that, in the
Indeed, the right to cross-examine may be waived.63 The repeated failure of a party present case, such evidence is satisfactory, more so because it has been
to cross-examine a witness is an implied waiver of that right.64 Respondents in this uncontradicted by opposing evidence. Also, when the court interpreter69 signed the
case were afforded the opportunity to cross and re-cross examine the other parties’ Minutes of the Session, it is presumed that official duty was regularly performed.70
witnesses. It was respondents’ counsel who failed to take advantage of these
opportunities. In any event, Judge Dicdican cannot be accused of evading the Motion filed for his
inhibition. He allowed it to be filed and even cancelled one hearing until the resolution
Denial of the Motion for Inhibition of that Motion. He also allowed petitioners to file their Opposition thereto71 and thus
showed that he wanted to hear both sides of the issue.
The appellate court maintains that during the hearing for respondents’ Motion for
Inhibition, the judge called the case before the scheduled time. We do not find the Order72 denying the Motion for Inhibition arbitrary or whimsical.
Respondent judge clearly explained why the grounds for it were unjust and invalid.
Again, this is a claim that remains unproven and unsubstantiated. Hence, it cannot be On the basis of his circumspect and judicious ruling, we do not see how bias and
the extrajudicial source from which can be inferred bias and partiality. Both parties partiality on his part can be inferred.
uniformly quote the proceedings on the hearing date for the case succeeding that on
which the Motion to Inhibit was to be heard: Thereafter, he allowed a Motion for Reconsideration73 to be filed with the
corresponding Opposition74 thereto.
"COURT: Were you here last Monday? I did not see you?
We again emphasize that personal bias or prejudice is not proved by the opinions the
ATTY. LIM: I was here, your Honor. judge forms in the course of judicial proceedings, so long as these have been based
on the evidence presented and the conduct observed by the judge, even if such
COURT: When this case was called, there was no appearance. opinions are later found to be erroneous.75

COURT INTERPRETER: He came late, Your Honor. Declaration of the Absence of the Possibility of a Compromise

ATTY. LIM: I was here, your Honor, at 10:00 o’clock, your Honor, in fact, there were Finally, Judge Dicdican was charged with bias, based on his pretrial Order stating that
still many parties around, your Honor. there was no more possibility of a compromise among the parties.

COURT: As far as the minute is concerned, it is not reflected that you were here. From the time the original Complaint was filed up to the date of the pretrial, the parties
When the case was called you were not here. The court could not be at the mercy of had more than seven months to enter into a compromise agreement. This was more
the parties, so, the court has to act. So, the court stand by that order. So you are not than sufficient time. It escapes this Court why, exactly on the day of the pretrial,
ready."65 respondents suddenly informed the court that it was exploring the possibility of a
settlement. Besides, their absence during the pretrial negated the sincerity of their
Respondents maintain that "[o]n the date of said hearing, counsel for respondents desire to enter into a settlement. We take note of the following argument of
was present at 10:00 a.m. However, he learned that the hearing of the case was petitioners:
called earlier upon order of Judge Dicdican. Counsel for respondents then decided to
leave the courtroom, to inquire later, albeit unsurprised."66 "But Judge Dicdican did not believe in their sincerity to pursue an amicable settlement
of the case since they had already filed their first petition for certiorari seeking the
42
issuance of a TRO/Writ of Preliminary [lnjunction] enjoining him from taking further are capable of pecuniary estimation, and therefore would fall under the jurisdiction of
proceedings in the case below. Furthermore, they were never present at the the municipal courts if the claim does not exceed the jurisdictional amount of
scheduled pre-trials and hearings of the case."76 P400,000.00 in Metro Manila. Second, he has to convince us that the moral and
exemplary damages claimed by the private respondent should be excluded from the
ALL TOLD, a perusal of the records of this case will reveal that respondents failed to computation of the above-mentioned jurisdictional amount because they arose from a
adduce any extrinsic evidence to prove that Judge Dicdican had been motivated by cause of action other than the negligent act of the defendant.
malice or prejudice in issuing the assailed rulings. They simply lean on his series of
allegedly adverse rulings, which they characterize as tainted with bias and partiality. Petitioner urges us to reverse the 28 October 2004 Decision and 26 January 2005
We note that his rulings resolving the various motions or requests they had filed were Resolution of the Court of Appeals, Eighth Division, in CA-G.R. SP No. 76206
all made only after considering the arguments raised by all the parties. It is true that denying due course to the petition for certiorari filed by petitioner under Rule 65,
he erred in some of his rulings, but such errors do not necessarily translate to elevating the 21 October 2002 Omnibus Order and the 21 January 2003 Order of the
prejudice. The instances when he allegedly exhibited antagonism and partiality Regional Trial Court (RTC), Branch 42, City of Manila. The dispositive portion of the
against respondents and/or their counsels did not deprive them of a fair and impartial 28 October 2004 Decision of the Court of Appeals reads:
trial.
WHEREFORE, the petition is DENIED DUE COURSE and DISMISSED for lack of
The parties should be guided by the words of this Court in Pimentel v. Salanga:77 merit.2

"Efforts to attain fair, just and impartial trial and decision, have a natural and alluring The factual and procedural antecedents of this case are as follows:
appeal. But, we are not licensed to indulge in unjustified assumptions, or make a
speculative approach to this ideal. It ill behooves this Court to tar and feather a judge On 1 March 2002, private respondent Fokker Santos filed a complaint for quasi-delict
as biased or prejudiced, simply because counsel for a party litigant happens to and damages against Jimmy T. Pinion, the driver of a truck involved in a traffic
complain against him. As applied here, respondent judge has not as yet crossed the accident, and against petitioner Artemio Iniego, as owner of the said truck and
line that divides partiality and impartiality. He has not thus far stepped to one side of employer of Pinion. The complaint stemmed from a vehicular accident that happened
the fulcrum. No act or conduct of his would show arbitrariness or prejudice. Therefore, on 11 December 1999, when a freight truck allegedly being driven by Pinion hit
we are not to assume what respondent judge, not otherwise legally disqualified, will private respondent’s jitney which private respondent was driving at the time of the
do in a case before him. x x x Prejudice is not to be presumed. Especially if weighed accident.
against a judge’s legal obligation under his oath to administer justice ‘without respect
to person and do equal right to the poor and the rich.’ To disqualify or not to disqualify On 24 August 2002, private respondent filed a Motion to Declare defendant in Default
himself then, as far as respondent judge is concerned, is a matter of conscience."78 allegedly for failure of the latter to file his answer within the final extended period. On
28 August 2002, petitioner filed a Motion to Admit and a Motion to Dismiss the
WHEREFORE, the Petition is hereby GRANTED and the assailed CA Decision and complaint on the ground, among other things, that the RTC has no jurisdiction over
Resolution REVERSED and SET ASIDE. The prayer for the inhibition of Judge Isaias the cause of action of the case.
Dicdican is hereby DENIED. He is DIRECTED to proceed with the hearing of CEB-21
854 with all reasonably speed. No pronouncement as to costs. SO ORDERED. On 21 October 2002, public respondent Judge Guillermo G. Purganan, acting as
presiding judge of the RTC, Branch 42, Manila, issued the assailed Omnibus Order
G. R. No. 166876 March 24, 2006 denying the Motion to Dismiss of the petitioner and the Motion to Declare Defendant
in Default of the private respondent. Pertinent portions of the Omnibus Order and the
ARTEMIO INIEGO, vs. The HONORABLE JUDGE GUILLERMO G. PURGANAN, in dispositive portion thereof read:
his official capacity as Presiding Judge of the Regional Trial Court, Branch 42,
City of Manila, and FOKKER C. SANTOS In his opposition to the motion to declare him in default and his Motion to Admit
defendant IÑEGO alleged that he never received the Order dated 12 August 2002.
CHICO-NAZARIO, J.: But believing in good faith, without being presumptuous, that his 3rd Motion for
additional Time to file or any appropriate [pleading] would be granted, he filed the
For this Court to grant this petition for review on certiorari under Rule 45 of the Rules aforesaid Motion received by the Court on 23 August 2002.
of Court, petitioner has to persuade us on two engaging questions of law. First, he
has to convince us that actions for damages based on quasi-delict are actions that
43
The explanation of defendant IÑEGO has merit. The order dated 12 August 2002 was On 22 November 2004, petitioner moved for reconsideration, which was denied by
sent to a wrong address, thus defendant IÑEGO did not receive it. Since it was not the Court of Appeals on 26 January 2005. Hence, this present petition.
received, he was not aware that the court would grant no further extension. The
Motion to Admit Motion to Dismiss has to be granted and the Motion to declare Petitioner claims that actions for damages based on quasi-delict are actions that are
Defendant IÑEGO [in default] has to be DENIED. capable of pecuniary estimation; hence, the jurisdiction in such cases falls upon either
the municipal courts (the Municipal Trial Courts, Metropolitan Trial Courts, Municipal
The plaintiff opines that this court has exclusive jurisdiction because the cause of Trial Courts In Cities, And Municipal Circuit Trial Courts), or the Regional Trial Courts,
action is the claim for damages, which exceeds P400,000.00. The complaint prays for depending on the value of the damages claimed.
actual damages in the amount of P40,000.00, moral damages in the amount of
P300,000.00, and exemplary damages in the amount of P150,000.00. Excluding Petitioner argues further that should this Court find actions for damages capable of
attorney’s fees in the amount of P50,000.00, the total amount of damages being pecuniary estimation, then the total amount of damages claimed by the private
claimed is P490,000.00. respondent must exceed P400,000.00 in order that it may fall under the jurisdiction of
the RTC. Petitioner asserts, however, that the moral and exemplary damages claimed
Proceeding on the assumption that the cause of action is the claim of (sic) for by private respondent be excluded from the computation of the total amount of
damages in the total amount of P490,000.00, this court has jurisdiction. But is the damages for jurisdictional purposes because the said moral and exemplary damages
main cause of action the claim for damages? arose, not from the quasi-delict, but from the petitioner’s refusal to pay the actual
damages.
This court is of the view that the main cause of action is not the claim for damages but
quasi-delict. Damages are being claimed only as a result of the alleged fault or I
negligence of both defendants under Article 2176 of the Civil Code in the case of Actions for damages based on quasi-delicts are primarily and effectively actions for
defendant Pinion and under Article 2180 also of the Civil Code in the case of the recovery of a sum of money for the damages suffered because of the defendant’s
defendant Iniego. But since fault or negligence (quasi-delicts) could not be the subject alleged tortious acts, and are therefore capable of pecuniary estimation.
of pecuniary estimation, this court has exclusive jurisdiction.
In a recent case,6 we did affirm the jurisdiction of a Municipal Circuit Trial Court in
WHEREFORE, in view of all the foregoing, the motion to declare defendant Iniego in actions for damages based on quasi-delict, although the ground used to challenge
default and the said defendant’s motion to dismiss are denied.3 said jurisdiction was an alleged forum shopping, and not the applicability of Section
19(1) of Batas Pambansa Blg. 129.
On 7 November 2002, petitioner filed a Motion for Reconsideration of the Omnibus
Order of 21 October 2002. On 21 January 2003, public respondent issued an Order According to respondent Judge, what he referred to in his assailed Order as not
denying petitioner’s motion for reconsideration. Pertinent portions of the 21 January capable of pecuniary estimation is the cause of action, which is a quasi-delict, and not
2003 Order are reproduced hereunder: the amount of damage prayed for.7 From this, respondent Judge concluded that
since fault or negligence in quasi-delicts cannot be the subject of pecuniary
What this court referred to in its Order sought to be reconsidered as not capable of estimation, the RTC has jurisdiction. The Court of Appeals affirmed respondent Judge
pecuniary estimation is the CAUSE OF ACTION, which is quasi-delict and NOT the in this respect.8
amount of damage prayed for. Respondent Judge’s observation is erroneous. It is crystal clear from B.P. Blg. 129,
as amended by Republic Act No. 7691, that what must be determined to be capable
WHEREFORE, in view of the foregoing, the motion for reconsideration is DENIED.4 or incapable of pecuniary estimation is not the cause of action, but the subject matter
of the action.9 A cause of action is "the delict or wrongful act or omission committed
Petitioner elevated the 21 October 2002 and 21 January 2003 Orders of the RTC to by the defendant in violation of the primary rights of the plaintiff."10 On the other
the Court of Appeals on petition for certiorari under Rule 65 of the Rules of Court. On hand, the "subject matter of the action" is "the physical facts, the thing real or
28 October 2004, the Court of Appeals promulgated the assailed Decision, the personal, the money, lands, chattels, and the like, in relation to which the suit is
dispositive portion thereof reads: prosecuted, and not the delict or wrong committed by the defendant."11

WHEREFORE, the petition is DENIED DUE COURSE and dismissed for lack of The case of Lapitan v. Scandia, Inc., et al.,12 has guided this Court time and again in
merit.5 determining whether the subject matter of the action is capable of pecuniary

44
estimation. In Lapitan, the Court spoke through the eminent Mr. Justice Jose B.L. amount of damages claimed by the private respondent nevertheless still exceeds the
Reyes: jurisdictional limit of P400,000.00 and remains under the jurisdiction of the RTC.

In determining whether an action is one the subject matter of which is not capable of Petitioner argues that in actions for damages based on quasi-delict, claims for
pecuniary estimation this Court has adopted the criterion of first ascertaining the damages arising from a different cause of action (i.e., other than the fault or
nature of the principal action or remedy sought. If it is primarily for the recovery of a negligence of the defendant) should not be included in the computation of the
sum of money, the claim is considered capable of pecuniary estimation, and whether jurisdictional amount. According to petitioner, the moral and exemplary damages
jurisdiction is in the municipal courts or in the courts of first instance [now Regional claimed by the respondents in the case at bar are not direct and proximate
Trial Courts] would depend on the amount of the claim. However, where the basic consequences of the alleged negligent act. Petitioner points out that the complaint
issue is something other than the right to recover a sum of money, where the money itself stated that such moral and exemplary damages arose from the alleged refusal
claim is purely incidental to, or a consequence of, the principal relief sought like suits of defendants to honor the demand for damages, and therefore there is no
to have the defendant perform his part of the contract (specific performance) and in reasonable cause and effect between the fault or negligence of the defendant and the
actions for support, or for annulment of a judgment or to foreclose a mortgage, this claim for moral and exemplary damages.14 If the claims for moral and exemplary
court has considered such actions as cases where the subject of the litigation may not damages are not included in the computation for purposes of determining jurisdiction,
be estimated in terms of money, and are cognizable exclusively by courts of first only the claim for actual damages in the amount of P40,000.00 will be considered,
instance [now Regional Trial Courts]. x x x.13 (Emphasis supplied.) and the MeTC will have jurisdiction.

Actions for damages based on quasi-delicts are primarily and effectively actions for We cannot give credence to petitioner’s arguments. The distinction he made between
the recovery of a sum of money for the damages suffered because of the defendant’s damages arising directly from injuries in a quasi-delict and those arising from a refusal
alleged tortious acts. The damages claimed in such actions represent the monetary to admit liability for a quasi-delict is more apparent than real, as the damages sought
equivalent of the injury caused to the plaintiff by the defendant, which are thus sought by respondent originate from the same cause of action: the quasi-delict. The fault or
to be recovered by the plaintiff. This money claim is the principal relief sought, and is negligence of the employee and the juris tantum presumption of negligence of his
not merely incidental thereto or a consequence thereof. It bears to point out that the employer in his selection and supervision are the seeds of the damages claimed,
complaint filed by private respondent before the RTC actually bears the caption "for without distinction.
DAMAGES."
Even assuming, for the sake of argument, that the claims for moral and exemplary
Fault or negligence, which the Court of Appeals claims is not capable of pecuniary damages arose from a cause of action other than the quasi-delict, their inclusion in
estimation, is not actionable by itself. For such fault or negligence to be actionable, the computation of damages for jurisdictional purposes is still proper. All claims for
there must be a resulting damage to a third person. The relief available to the damages should be considered in determining the jurisdiction of the court regardless
offended party in such cases is for the reparation, restitution, or payment of such of whether they arose from a single cause of action or several causes of action. Rule
damage, without which any alleged offended party has no cause of action or relief. 2, Section 5, of the Rules of Court allows a party to assert as many causes of action
The fault or negligence of the defendant, therefore, is inextricably intertwined with the as he may have against the opposing party. Subsection (d) of said section provides
claim for damages, and there can be no action based on quasi-delict without a claim that where the claims in all such joined causes of action are principally for recovery of
for damages. money, the aggregate amount claimed shall be the test of jurisdiction.15

We therefore rule that the subject matter of actions for damages based on quasi- Hence, whether or not the different claims for damages are based on a single cause
delict is capable of pecuniary estimation. of action or different causes of action, it is the total amount thereof which shall govern.
Jurisdiction in the case at bar remains with the RTC, considering that the total amount
II claimed, inclusive of the moral and exemplary damages claimed, is P490,000.00.
The amount of damages claimed is within the jurisdiction of the RTC, since it is the
claim for all kinds of damages that is the basis of determining the jurisdiction of In sum, actions for damages based on quasi-delicts are actions that are capable of
courts, whether the claims for damages arise from the same or from different causes pecuniary estimation. As such, they fall within the jurisdiction of either the RTC or the
of action. municipal courts, depending on the amount of damages claimed. In this case, the
Despite our concurrence in petitioner’s claim that actions for damages based on amount of damages claimed is within the jurisdiction of the RTC, since it is the claim
quasi-delict are actions that are capable of pecuniary estimation, we find that the total for all kinds of damages that is the basis of determining the jurisdiction of courts,

45
whether the claims for damages arise from the same or from different causes of domain is therefore within the exclusive original jurisdiction of the Regional Trial Court
action. and not with this Court."4

WHEREFORE, the petition for review on certiorari is hereby DENIED for lack of merit. Assailed RTC Ruling
The Decision and Resolution of the Court of Appeals dated 28 October 2004 and 26
January 2005, respectively, are AFFIRMED insofar as they held that the Regional The RTC also dismissed the Complaint when filed before it, holding that an action for
Trial Court has jurisdiction. No costs. SO ORDERED. eminent domain affected title to real property; hence, the value of the property to be
expropriated would determine whether the case should be filed before the MTC or the
G.R. No. 138896 June 20, 2000 RTC. Concluding that the action should have been filed before the MTC since the
value of the subject property was less than P20,000, the RTC ratiocinated in this
BARANGAY SAN ROQUE, TALISAY, CEBU, vs. Heirs of FRANCISCO PASTOR wise:
namely: EUGENIO SYLIANCO, TEODORO SYLIANCO, TEODORO SYLIANCO,
ISABEL SYLIANCO, EUGENIA S. ONG, LAWRENCE SYLIANCO, LAWSON The instant action is for eminent domain. It appears from the current Tax Declaration
SYLIANCO, LAWINA S. NOTARIO, LEONARDO SYLIANCO JR. and LAWFORD of the land involved that its assessed value is only One Thousand Seven Hundred
SYLIANCO Forty Pesos (P1,740.00). Pursuant to Section 3, paragraph (3), of Republic Act No.
7691, all civil actions involving title to, or possession of, real property with an
PANGANIBAN, J.: assessed value of less than P20,000.00 are within the exclusive original jurisdiction of
the Municipal Trial Courts. In the case at bar, it is within the exclusive original
An expropriation suit is incapable of pecuniary estimation. Accordingly, it falls within jurisdiction of the Municipal Trial Court of Talisay, Cebu, where the property involved
the jurisdiction of the regional trial courts, regardless of the value of the subject is located.
property.
The instant action for eminent domain or condemnation of real property is a real
The Case action affecting title to or possession of real property, hence, it is the assessed value
of the property involved which determines the jurisdiction of the court. That the right of
Before us is a Petition for Review on Certiorari assailing the March 29, 1999 Order1 eminent domain or condemnation of real, property is included in a real action affecting
of the Regional Trial Court (RTC) of Cebu City (Branch 58) in Civil Case No. CEB- title to or possession of real property, is pronounced by retired Justice Jose Y. Feria,
21978, in which it dismissed a Complaint for eminent domain. It ruled as follows: thus, "Real actions are those affecting title to or possession of real property. These
include partition or condemnation of, or foreclosures of mortgage on, real
Premises considered, the motion to dismiss is hereby granted on the ground that this property. . . ."5
Court has no jurisdiction over the case. Accordingly, the Orders dated February 19,
1999 and February 26, 1999, as well as the Writ of Possession issued by virtue of the Aggrieved, petitioner appealed directly to this Court, raising a pure question of law.6
latter Order are hereby recalled for being without force and effect.2 In a Resolution dated July 28, 1999, the Court denied the Petition for Review "for
being posted out of time on July 2, 1999, the due date being June 2, 1999, as the
Petitioner also challenges the May 14, 1999 Order of the RTC denying motion for extension of time to file petition was denied in the resolution of July 14,
reconsideration. 1999."7 In a subsequent Resolution dated October 6, 1999, the Court reinstated the
Petition.8
The Facts
Issue
Petitioner filed before the Municipal Trial Court (MTC) of Talisay, Cebu (Branch 1)3 a
Complaint to expropriate a property of the respondents. In an Order dated April 8, In its Memorandum, petitioner submits this sole issue for the consideration of this
1997, the MTC dismissed the Complaint on the ground of lack of jurisdiction. It Court:
reasoned that "[e]minent domain is an exercise of the power to take private property
for public use after payment of just compensation. In an action for eminent domain, Which court, MTC or RTC, has jurisdiction over cases for eminent domain or
therefore, the principal cause of action is the exercise of such power or right. The fact expropriation where the assessed value of the subject property is below Twenty
that the action also involves real property is merely incidental. An action for eminent Thousand (P20,000.00) Pesos?9

46
This Court's Ruling In the present case, an expropriation suit does not involve the recovery of a sum of
money. Rather, it deals with the exercise by the government of its authority and right
The Petition is meritorious. to take private property for public use. 11 In National Power Corporation v. Jocson, 12
the Court ruled that expropriation proceedings have two phases:
Main Issue:
The first is concerned with the determination of the authority of the plaintiff to exercise
Jurisdiction over an Expropriation Suit the power of eminent domain and the propriety of its exercise in the context of the
facts involved in the suit. It ends with an order, if not of dismissal of the action, "of
In support of its appeal, petitioner cites Section 19 (1) of BP 129, which provides that condemnation declaring that the plaintiff has a lawful right to take the property sought
RTCs shall exercise exclusive original jurisdiction over "all civil actions in which the to be condemned, for the public use or purpose described in the complaint, upon the
subject of the litigation is incapable of pecuniary estimation; . . . . ." It argues that the payment of just compensation to be determined as of the date of the filing of the
present action involves the exercise of the right to eminent domain, and that such complaint." An order of dismissal, if this be ordained, would be a final one, of course,
right is incapable of pecuniary estimation. since it finally disposes of the action and leaves nothing more to be done by the Court
on the merits. So, too, would an order of condemnation be a final one, for thereafter
Respondents, on the other hand, contend that the Complaint for Eminent Domain as the Rules expressly state, in the proceedings before the Trial Court, "no objection
affects the title to or possession of real property. Thus, they argue that the case to the exercise of the right of condemnation (or the propriety thereof) shall be filed or
should have been brought before the MTC, pursuant to BP 129 as amended by heard."
Section 3 (3) of RA 7691. This law provides that MTCs shall have exclusive original
jurisdiction over all civil actions that involve title to or possession of real property, the The second phase of the eminent domain action is concerned with the determination
assessed value of which does not exceed twenty thousand pesos or, in civil actions in by the court of "the just compensation for the property sought to be taken." This is
Metro Manila, fifty thousand pesos exclusive of interest, damages of whatever kind, done by the Court with the assistance of not more than three (3) commissioners. The
attorney's fees, litigation expenses and costs. order fixing the just compensation on the basis of the evidence before, and findings
of, the commissioners would be final, too. It would finally dispose of the second stage
We agree with the petitioner that an expropriation suit is incapable of pecuniary of the suit, and leave nothing more to be done by the Court regarding the issue. . . .
estimation. The test to determine whether it is so was laid down by the Court in this
wise: It should be stressed that the primary consideration in an expropriation suit is whether
the government or any of its instrumentalities has complied with the requisites for the
A review of the jurisprudence of this Court indicates that in determining whether an taking of private property. Hence, the courts determine the authority of the
action is one the subject matter of which is not capable of pecuniary estimation, this government entity, the necessity of the expropriation, and the observance of due
Court has adopted the criterion of first ascertaining the nature of the principal action process. 1 In the main, the subject of an expropriation suit is the government's
or remedy sought. If it is primarily for the recovery of a sum of money, the claim is exercise of eminent domain, a matter that is incapable of pecuniary estimation.
considered capable of pecuniary estimation, and whether jurisdiction is in the
municipal courts or in the courts of first instance would depend on the amount of the True, the value of the property to be expropriated is estimated in monetary terms, for
claim. However, where the basic issue is something other than the right to recover a the court is duty-bound to determine the just compensation for it.1avvphi1 This,
sum of money, or where the money claim is purely incidental to, or a consequence of, however, is merely incidental to the expropriation suit. Indeed, that amount is
the principal relief sought, like in suits to have the defendant perform his part of the determined only after the court is satisfied with the propriety of the expropriation.
contract (specific performance) and in actions for support, or for annulment of a
judgment or to foreclose a mortgage, this Court has considered such actions as cases Verily, the Court held in Republic of the Philippines v. Zurbano that "condemnation
where the subject of the litigation may not be estimated in terms of money, and are proceedings are within the jurisdiction of Courts of First Instance," 14 the forerunners
cognizable exclusively by courts of first instance. The rationale of the rule is plainly of the regional trial courts. The said case was decided during the effectivity of the
that the second class cases, besides the determination of damages, demand an Judiciary Act of 1948 which, like BP 129 in respect to RTCs, provided that courts of
inquiry into other factors which the law has deemed to be more within the first instance had original jurisdiction over "all civil actions in which the subject of the
competence of courts of first instance, which were the lowest courts of record at the litigation is not capable of pecuniary estimation." 15 The 1997 amendments to the
time that the first organic laws of the Judiciary were enacted allocating jurisdiction Rules of Court were not intended to change these jurisprudential precedents.
(Act 136 of the Philippine Commission of June 11, 1901). 10

47
We are not persuaded by respondents' argument that the present action involves the consumers",4 promulgated Presidential Decree No. 5515 providing for the reduction
title to or possession of a parcel of land. They cite the observation of retired Justice from 5% to 2% of the franchise tax paid by electric companies, thus:
Jose Y. Feria, an eminent authority in remedial law, that condemnation or
expropriation proceedings are examples of real actions that affect the title to or "SECTION 1. Any provision of law or local ordinance to the contrary notwithstanding,
possession of a parcel of land. 16 the franchise tax payable by all grantees of franchises to generate, distribute and sell
electric current for light, heat and power shall be two (2%) of their gross receipts
Their reliance is misplaced. Justice Feria sought merely to distinguish between real received from the sale of electric current and from transactions incident to the
and personal actions. His discussion on this point pertained to the nature of actions, generation, distribution and sale of electric current."
not to the jurisdiction of courts. In fact, in his pre-bar lectures, he emphasizes that
jurisdiction over eminent domain cases is still within the RTCs under the 1997 Rules. On February 5, 1982, the Philippine Consumers Foundation, Inc., (PCFI) filed with the
Board of Energy (BOE) a "Petition for Specific Performance, Damages and Violation
To emphasize, the question in the present suit is whether the government may of P. D. No. 551"6 against the Manila Electric Company (Meralco), docketed as BOE
expropriate private property under the given set of circumstances. The government Case No. 82-198. PCFI sought for the immediate refund by Meralco to its customers
does not dispute respondents' title to or possession of the same. Indeed, it is not a of all the savings it realized under P.D. No. 551, through the reduction of its franchise
question of who has a better title or right, for the government does not even claim that tax from 5% to 2%, with interest at the legal rate; and for the payment of damages
it has a title to the property. It merely asserts its inherent sovereign power to and a fine in the amount of P50, 000.00 for violating P.D. 551. It moored its petition
"appropriate and control individual property for the public benefit, as the public on Section 4 of P.D. No. 551 which provides:
necessity, convenience or welfare may demand." 17
"Sec. 4. All the savings realized by electric franchise holders from the reduction of the
WHEREFORE, the Petition is hereby GRANTED and the assailed Orders SET franchise tax under Section 1 and tariff reductions and tax credits under Sections 2
ASIDE. The Regional Trial Court is directed to HEAR the case. No costs. SO and 3, shall be passed on to the ultimate consumer. The Secretary of Finance shall
ORDERED. promulgate rules and regulations and devise a reporting systems to carry out the
provisions of this Decree."

G.R. No. 101783 January 23, 2002 In its answer to the petition, Meralco alleged that it was duly authorized by the BOE in
its Order dated March 10, 1980 in BOE Case No. 79-692 to retain the disputed
MANILA ELECTRIC COMPANY, vs. PHILIPPINE CONSUMERS FOUNDATION, savings; and that the said Order had long become final.
INC., EDGARDO S. ISIP, HON. JUDGE MANUEL M. CALANOG, JR., and HON.
JUDGE TIRSO D'C. VELASCO, respondents. On November 25, 1982, the BOE issued its Decision dismissing PCFI's petition,
declaring that Meralco was indeed authorized by the BOE, in BOE Case No. 79-692,
SANDOVAL-GUTIERREZ, J.: to retain the disputed savings under P.D. 551, thus:

Interest republicae ut sit finis litium1 - it is to the interest of the public that there should "It is at once evident from the foregoing controlling facts and circumstances,
be an end to litigation by the same parties and their privies over a subject fully and particularly the Order of this Board dated March 10, 1980, as confirmed by the reply-
fairly adjudicated. From this overwhelming concern springs the doctrine of res judicata letter dated March 3, 1981, that Meralco has been duly authorized to retain the
– an obvious rule of reason according stability to judgments. savings realized under the provisions of P.D. 551. The authority granted in the said
Order and letter is so clear and unequivocal as to leave any room for contradictory
Challenged in this petition for review on certiorari are the a) Decision in Civil Case No. interpretation. This Board, therefore, holds as untenable petitioner’s claim that
Q-89-3659 dated January 16, 1991 of the Regional Trial Court, Branch 76, Quezon respondent Meralco was never authorized under the said Order and letter to hold on
City; 2 and b) its Order dated September 10, 19913 denying the motion for to the savings realized under the said decree.
reconsideration of the said Decision.
"The Board likewise finds to be devoid of merit petitioner’s contention that pursuant to
The pertinent facts are: Opinion No. 140, Series of 1979, of the Minister of Justice, it is absolutely mandatory
on the part of respondent Meralco to pass on to its customers the savings under
On September 11, 1974, former President Ferdinand E. Marcos, with the objective of consideration. It must be pointed out that the Order of March 10, 1980 was issued by
enabling the grantees of electric franchises to reduce their rates "within the reach of this Board on the basis of the recommendation contained in the Memorandum dated
48
November 30, 1979 of the Minister of Finance, which was approved by the President its conclusions. Not only had the March 10, 1980 decision confirmed the findings of
of the Philippines in his directive to this Board dated December 11, 1979 issued thru the Minister of Finance on Meralco’s accounts and finances but in filing the second
Presidential Executive Assistant Jacobo Clave. This Board believes and so holds that case, the petitioners were asking for a readjudication of the same issues in another
the approval by the President of the Philippines of the aforesaid Finance Ministry’s challenge to these same findings .x x x."8 (Emphasis supplied)
recommendation had the effects of (a) reversing or modifying the aforementioned
Opinion of the Minister of Justice; and (b) confirming the promulgation by the Ministry Four years thereafter, PCFI and a certain Edgardo S. Isip, private respondents herein,
of Finance, conformably with the specific authority granted it under P.D. No. 551, of filed with respondent Regional Trial Court, Branch 76, Quezon City, a petition for
an additional rule or regulation for the implementation of the said decree for the declaratory relief, docketed as Civil Case No. Q-89-3659. Private respondents prayed
guidance of this Board. In issuing the Order of March 10, 1980, therefore, the Board for a ruling on who should be entitled to the savings realized by Meralco under P.D.
has done no more than follow and be guided by the said additional rule or regulation. No. 551. Once again, they insisted that pursuant to Section 4 of P.D. No. 551, the
savings belong to the ultimate consumers.
"It is noteworthy to mention also that the registered oppositors in BOE Case No. 79-
692 (formerly BPW Case No. 72-2146), where the respondent herein originally filed Meralco, in its answer, prayed for the dismissal of the petition on the ground of res
its motion requesting for authority to defer the passing on to its customers of the judicata, citing this Court's Resolution in G.R. No. 63018 which affirmed the BOE's
franchise tax reduction benefits under P.D. No. 551, have done nothing to seek relief Decision in BOE Case No. 82-198.
from or to appeal to the appropriate forum, the said Order of March 10, 1980. As a
consequence, the disposition contained therein have long become final. On January 16, 1991, respondent RTC rendered the assailed Decision declaring null
and void the Resolution of this Court in G.R. No. 63018 and on the basis of the
"That Meralco has been authorized to retain the savings resulting from the reduction Dissenting Opinion of the late Justice Claudio Teehankee, held that the disputed
of the franchise tax under P.D. No. 551 is, therefore beyond question."7 (Emphasis savings belong to the consumers, thus:
supplied)
"Respondent Meralco’s theory is devoid of merit. As correctly stated in the dissenting
PCFI filed a motion for reconsideration but was denied by the BOE. Hence, PCFI filed opinion of the late Chief Justice Claudio Teehankee in the October 22, 1985
a Petition for Certiorari with this Court, docketed as G.R. No. 63018. In a Resolution resolution of the Supreme Court in SC G.R. No. 63018, the decision of the Board of
dated October 22, 1985, this Court dismissed the petition for lack of merit, holding Energy is ultra vires, hence, null and void. x x x.
that:
"It is a well-settled rule in statutory construction that when the law is clear, it leaves no
"We see no grave abuse of discretion warranting the setting aside of the BOE order. room for interpretation. The memorandum issued by the Minister of Finance which
was made the basis of the decision of the Board of Energy has no legal effect
"P.D. No. 551 ordered the Minister of Finance to issue implementing rules and because Sec. 4 of P.D. No. 551 is clear and unequivocal.
regulations. The Minister authorized all grantees of electric franchises, not Meralco
alone, whose rates of return on their rate bases were below the legal allowable level "Since the law is clear, what is left to be done by the administrative body or agency
to either ask for increased rates or to defer the passing on of benefits under the concerned is to enforce the law. There is no room for an administrative interpretation
decree to consumers until just and reasonable returns could be had. Lengthy of the law. In the instant case, the Board interpreted PD 551 and chose not only to
investigations, audits, hearings, and determinations over practically an eight year enforce it but to amend and modify the law on the basis of a Memorandum and the
period preceded the questioned decision. The petitioners failed both below and in this authority issued by the Minister of Finance to all grantees of electric-franchises, not
petition to successfully refute the facts ascertained in the audits and examinations. Meralco alone, whose rates of return on their rate basis were below the legal
The BOE approved option formed the basis of subsequent determinations of Meralco allowable level, to either ask for an increased rates or to defer the passing on of
rates and the adopted formula became the basis of computations. When this petition benefits under the decree to consumers, until just and reasonable return could be
was filed on January 27, 1983, the November 25, 1982 ruling was already final and had. This is beyond the authority granted by PD 551 to the Minister of Finance. PD
executory. Moreover, the March 10, 1980 judgment rendered in BOE Case No. 79- 551 merely ordered the Minister of Finance to issue implementing rules and
692, where Meralco had filed a motion for authority to defer passing on to customers regulations. He cannot amend or modify the clear mandate of the law. The act
the savings from the reduction of franchise taxes, was not appealed or questioned by therefore of the Minister of Finance was ultra vires, hence, null and void. Considering
the petitioners. Instead, they filed BOE Case No. 82-198 on February 5, 1982 or that said act became the basis of the Board of Energy’s decision, it follows that said
almost two years later, raising the same issues against the same parties. BOE’s decision is likewise null and void and the Supreme Court resolution affirming said
questioned decision in Case No. 82-198 used the facts in BOE Case No. 79-692 for decision is also null and void having proceeded from a void judgment, hence, cannot
49
be considered as valid judgment that will be a bar to the present action."9 (Emphasis settled. Thus, the relitigation of the same issue in Civil Case No. Q-89-3659 cannot be
supplied) sanctioned under the principle of res judicata.

Meralco moved for a reconsideration of the above Decision but was denied by Res judicata means a matter adjudged, a thing judicially acted upon or decided; a
respondent court in its Order of September 10, 1991. thing or matter settled by judgment.13 In res judicata, the judgment in the first action
is considered conclusive as to every matter offered and received therein, as to any
Hence, Meralco's petition for review on certiorari anchored on the following grounds: other admissible matter which might have been offered for that purpose, and all other
matters that could have been adjudged therein.14 For a claim of res judicata to
"I prosper, the following requisites must concur: 1) there must be a final judgment or
RESPONDENT JUDGES ERRED IN HOLDING THAT CIVIL CASE NO. 89-3659 IS order; 2) the court rendering it must have jurisdiction over the subject matter and the
NOT BARRED BY PRIOR JUDGMENT. parties; 3) it must be a judgment or order on the merits; and 4) there must be,
between the two cases identity of parties, subject matter and causes of action.15
II
RESPONDENT JUDGES ERRED IN DECLARING NULL AND VOID A All the above requisites are extant in the records and thus, beyond dispute.
RESOLUTION OF THIS HONORABLE SUPREME COURT.
Re: FIRST REQUISITE - there must be a final judgment:
III
RESPONDENT JUDGES ERRED IN HOLDING THAT THE REMEDY OF It is beyond question that this Court’s Resolution dated October 22, 1985 in G.R. No.
DECLARATORY RELIEF WAS STILL AVAILABLE TO PRIVATE RESPONDENTS. 63018, sustaining the BOE’s Decision dated November 25, 1982 in BOE Case No.
82-198 which dismissed PCFI's petition, attained finality on December 4, 1985. As a
IV matter of fact, this Court had long ago issued an Entry of Judgment stating that the
RESPONDENT JUDGES ERRED IN NOT DISMISSING THE PETITION FOR said Resolution "became final and executory and is x x x recorded in the Book of
DECLARATORY RELIEF."10 Entries of Judgements." Prior thereto, or on March 10, 1980, the BOE's Order in BOE
Case No. 79-672 became final when the oppositors therein did not appeal.
Meralco contends that Civil Case No. Q -89-3659 is already barred by prior
judgments, referring to a) this Court’s Resolution in G.R. No. 63018 sustaining the Re: SECOND REQUISITE - the court which rendered the final judgment must have
BOE's Decision in BOE Case No. 82-198; and b) the Order dated March 10, 1980 of jurisdiction over the subject matter and the parties:
the same Board in BOE Case No. 79-692, both holding that Meralco is authorized to
retain its savings realized under P.D. 551. Meralco likewise argues that respondent There is no question that the BOE has jurisdiction over the subject matter and the
RTC cannot annul the Resolution of this Court in G.R. No. 63018 considering that trial parties herein. Under P.D. No. 1206,16 The BOE is the agency authorized to
courts cannot set aside decisions of a superior court. And lastly, Meralco maintains "regulate and fix the power rates to be charged by electric companies."17 As such, it
that private respondents can no longer avail of the remedy of an action for declaratory has jurisdiction over Meralco, an electric company, and over the savings it realized
relief in view of the rule that such action should be filed before a violation of the under P.D. No. 551. It bears stressing that P.D. No. 551 was passed precisely to
statute occurred.11 enable the grantees of electric franchises to reduce their rates within the reach of
consumers. Clearly, the matter on how the disputed savings should be disposed of in
In their comment,12 private respondents argue that this Court's Resolution in G.R. order to realize a reduction of rates is within the competence of the BOE.
No. 63018 cannot be a bar to Civil Case No. Q-89-3659 for declaratory relief
considering that it did not delve on the essential issue raised in the latter case, i.e., Re: THIRD REQUISITE - it must be a judgment or order on the merits:
who is entitled to the savings. Further, they claim that public interest would be
defeated by the application of res judicata. The BOE's Decision in BOE Case No. 82-198 is a judgment on the merits. A
judgment is on the merits when it determines the rights and liabilities of the parties
The petition is meritorious. based on the disclosed facts, irrespective of formal, technical or dilatory objections.
After according both parties the opportunities to be heard, the BOE disposed of the
The issue - whether or not Meralco is duly authorized to retain the savings resulting controversy by resolving the rights of the parties under P.D. No. 551. In its Decision,
from the reduction of the franchise tax under P.D. No. 551 as long as its rate of return the BOE declared in clear and unequivocal manner that Meralco "has been duly
falls below the 12 % allowable rate recognized in this jurisdiction – has long been authorized to retain the savings realized under the provisions of P.D. No. 551" and
50
that private respondent PCFI’s argument to the contrary is "untenable." The BOE's not susceptible of equivocation. This pronouncement was sustained by this Court in
Decision was upheld by this Court in G.R. No. 63018. G.R. No. 63018. In finding no grave abuse of discretion on the part of the BOE, this
Court saw the wisdom of its assailed Decision. Thus, this Court held: "[I]n dismissing
Re: FOURTH REQUISITE - there must be between the two cases identity of parties, the petition for specific performance, the BOE authorized Meralco, in lieu of
subject matter and causes of action: increasing its rates to get a more reasonable return on investments while at the same
time refunding to consumers the benefit of P.D. No. 551, to instead defer the passing
There is identity of parties between the two cases. BOE Case No. 82-198 was a on of benefits but without the planned increases. Instead of giving back money to
contest between private respondent PCFI, as petitioner, and Meralco, as respondent. consumers and then taking back the same in terms of increased rates, Meralco was
Civil Case No. Q-89-3659 involves the same contenders, except that respondent allowed by the BOE to follow the more simplified and rational procedure."21
Edgardo Isip joined PCFI as a plaintiff. But his inclusion as such plaintiff is
inconsequential. A party by bringing forward, in a second case, additional parties Private respondents now argue that G.R. No. 63018 merely decreed the
cannot escape the effects of the principle of res judicata when the facts remain the postponement of the passing of Meralco's savings to the consumers until it could
same. Res judicata is not defeated by a minor difference of parties, as it does not increase its rate charges. On this point, this Court categorically ruled:
require absolute but only substantial identity of parties.18
"X x x. And finally, as stated by the Solicitor General, if only to put the issue to final
The subject matters of BOE Case No. 82-198 and Civil Case No. Q-89-3659 are rest, BOE’s decision authorizing Meralco to retain the savings resulting from the
likewise identical since both refer to the savings realized by Meralco from the reduction of franchise tax as long as its rate of return falls below the 12% allowable
reduction of the franchise tax under P.D. No. 551. The subject matter of an action rate is supported by P.D. No. 551, the rules and administrative orders of the Ministry
refers to the thing, wrongful act, contract or property which is directly involved in the of Finance which had been duly authorized by the decree itself and by directives of
action, concerning which the wrong has been done and with respect to which the the President to carry out the provisions of the decree, and most of all by equitable
controversy has arisen.19 In both cases, the controversy is how the disputed savings economic considerations without which the decree would lose its purpose and
shall be disposed of - whether they shall be retained by Meralco or be passed on to viability."22
the consumers.
Corollarily, let it not be overlooked that the purpose of an action for declaratory relief
With respect to identity of causes of action, this requisite is likewise present. In both is to secure an authoritative statement of the rights and obligations of the parties
cases, the act alleged to be in violation of the legal right of private respondents is under a statute, deed, contract etc. for their guidance in the enforcement thereof, or
Meralco's retention of the savings it realized under P.D. No. 551. While it is true that compliance therewith, and not to settle issues arising from an alleged breach thereof.
BOE Case No. 82-198 is one for specific performance, while Civil Case No. Q-89- It may be entertained only before the breach or violation of the statute, deed, contract
3659 is for declaratory relief - in the ultimate - both are directed towards only one etc., to which it refers.23 The petition gives a practical remedy in ending controversies
relief, i.e., the refund of the disputed savings to the consumers. To seek a court's which have not reached the stage where other relief is immediately available.1âwphi1
declaration on who should benefit from the disputed savings (whether Meralco or the It supplies the need for a form of action that will set controversies at rest before they
consumers) will result in the relitigation of an issue fairly and fully adjudicated in BOE lead to repudiation of obligations, invasion of rights, and the commission of wrongs.24
Case No. 82-198. Here, private respondents brought the petition for declaratory relief long after the
alleged violation of P.D. No. 551.
Clearly, the test of identity of causes of action lies not in the form of an action. The
difference of actions in the aforesaid cases is of no moment. The doctrine of res Lastly, we are dismayed by respondent RTC's adherence to the Dissenting Opinion,
judicata still applies considering that the parties were litigating for the same thing and instead of the Majority Opinion, of the members of this Court in G.R. No. 63018, as
more importantly, the same contentions.20 As can be gleaned from the records, well as its temerity to declare a Resolution of this Court "null and void" and "cannot be
private respondents’ arguments in Civil Case No. Q-89-3659 bear extreme considered as valid judgment that will be a bar to the present action."
resemblance with those raised in BOE Case No. 82-198.
A lower court cannot reverse or set aside decisions or orders of a superior court,
Respondent RTC's Decision granting PCFI and Isip's petition for declaratory relief is especially of this Court, for to do so will negate the principle of hierarchy of courts and
in direct derogation of the principle of res judicata. Twice, it has been settled that nullify the essence of review. A final judgment, albeit erroneous, is binding on the
Meralco is duly authorized to retain the savings it realized under P.D. No. 551 as long whole world. Thus, it is the duty of the lower courts to obey the Decisions of this Court
as its rate of return falls below the 12% allowable rate. The pronouncement of the and render obeisance to its status as the apex of the hierarchy of courts. "A becoming
BOE in BOE Case No. 82-198 finding such fact to be "beyond question" is clear and modesty of inferior courts demands conscious realization of the position that they
51
occupy in the interrelation and operation of the integrated judicial system of the 16. The organization, as earlier stated, of the Third District Public School
nation."25 "There is only one Supreme Court from whose decisions all other courts Teachers Homeowners Association, under the sponsorship and patronage of HIGC,
should take their bearings," as eloquently declared by Justice J. B. L. Reyes.26 unjustly deprived ODECOR of not less than 10,000 committed buyers, and as a
consequence suffered a big financial loss;
Respondent RTC, and for this matter, all lower courts, ought to be reminded that a
final and executory decision or order can no longer be disturbed or reopened no 17. As part of its scheme to destroy the viability of ODECOR's Housing project,
matter how erroneous it may be. Although judicial determinations are not infallible, HIGC maliciously and unreasonably; (a) delayed action on ODECOR's request for the
judicial error should be corrected through appeals, not through repeated suits on the issuance of Certificate of Completion of houses which have already been completed;
same claim.27 In setting aside the Resolution and Entry of Judgment of this Court in (b) froze ODECOR's requests for "take-out" appraisals of the value of its houses and
G.R. No. 63018, respondent court grossly violated basic rules of civil procedure. lots, instead, approved very low appraisal values; (c) refused to allow ODECOR to
construct smaller and cheaper house and lot packages, and unreasonably required
In fine, we stress that the rights of Meralco under P.D. No. 551, as determined by the ODECOR to secure prior clearance from the National Home Mortgage Finance Corp.
BOE and sustained by this Court, have acquired the character of res judicata and can before it (HIGC) will allow ODECOR to construct smaller packages; and (d) delayed
no longer be challenged. countersigning the checks, which were issued by ODECOR to pay the suppliers of
construction materials used in the project, which delay resulted in the pilferage of
WHEREFORE, the petition is hereby GRANTED. The assailed RTC Decision dated valuable construction materials and (e) delayed action of ODECOR's labor payrolls,
January 16, 1991 and Order dated September 10, 1991 in Civil Case No. Q-89-3659 thus, demoralizing the employees of the ODECOR;
are REVERSED and SET ASIDE. SO ORDERED.
19. HIGC's aforementioned acts not only resulted in ODECOR's financial crises
G.R. No. 94677 October 15, 1991 and/or reversals, but also brought about almost the total loss of its market; and such
loss of market renders HIGC liable for the actual and consequential damages
ORIGINAL DEVELOPMENT AND CONSTRUCTION CORPORATION, vs. HON. suffered by ODECOR;
COURT OF APPEALS and HOME INSURANCE AND GUARANTY CORPORATION
20. In order to prevent the total collapse of the Doña Helen Subdivision project,
PARAS, J.: to rescue ODECOR from its financial straits, and to enable the ODECOR to continue
its distressed operations, ODECOR's President, for the account of ODECOR, had to
Assailed in this petition for certiorari is the decision * of the Court of Appeals dated secure personal loans from sympathetic friends, in which loans ODECOR bound itself
dated July 31, 1990 in CA G.R. SP No. 18462 entitled "Home Insurance and to pay monthly a high rate of interest; and accordingly, the principal and the interests
Guaranty Corporation v. Hon. Adriano R.. Osorio and Original Development and should be charged to or considered as a liability of the HIGC, by way of reparation for
Construction Corporation" ordering that the complaint in Civil Case No. 3020-V-89 be actual and consequential damages, to ODECOR;
expunged from the record and declaring the orders dated June 1 and 29, 1989 of the
court a quo as null and void for having been issued without jurisdiction. 24. Notwithstanding insistent demands by ODECOR, NHMFC has delivered to
the former, is staggered and delayed installments in a period of five (5) years, the
The factual background of the case appears undisputed, to wit: amount of P5,366,727.80 only, which malicious delays have caused ODECOR to
incur unnecessary expenses in the form of interests on its loans, unexpected
On December 19, 1988, herein petitioner Original Development and Construction administrative and operational requirements, which interest payments and other
Corporation (ODECOR for brevity) filed a complaint for breach of contract and expenses could have been avoided had the National Home Mortgage Finance
damages against private respondent Home Insurance and Guaranty Corporation Corporation promptly paid over to ODECOR the moneys which it (NHMFC) had
(HIGC for short), National Home Mortgage Finance Corporation (NHMFC for short) guaranteed to pay;
and Caloocan City Public School Teachers Association (CCPSTA for brevity). The
case was docketed as Civil Case No. 3020-V-89 and assigned to Branch 171 of the 25. Notwithstanding ODECOR's repeated demands on NHMFC for the latter to
Regional Trial Court in Valenzuela, Metro Manila. effect payment and delivery to it of the remaining balance of the originating banks'
The questioned allegations in the body of the complaint, among others, are as transmitted loan proceed in the amount of P2,272,193.10 which amount represents
follows: the `take out' proceeds of twenty-two (22) House and lot buyers, NHMFC has
maliciously refused or rejected such demands; and this malicious non-payment
aggravated the financial difficulties and the deterioration of ODECOR and forced it to
52
curtail its development operations and to abandon its program to construct 10,000 On March 4, 1989, HIGC filed a motion to dismiss on the ground that the court did not
units; acquire jurisdiction due to non-payment of the proper docket fees, citing the case of
Manchester Development Corporation vs. Court of Appeals (149 SCRA 56 [1987]).
26. NHMFC's aforestated unjust, if not illegal, acts subject NHMFC to liability to NHMFC, on the other hand, filed its answer while CCPSTA was declared in default
pay ODECOR for actual, consequential and exemplary damages for the losses and (Petition, Rollo, pp. 6-7). The court, in its order dated June 1, 1989 denied the motion
injuries which were sustained by it (plaintiff); to dismiss and directed the Clerk of Court in this wise:

27. ODECOR, as a result of the aforedescribed illegal and unlawful acts ... to issue the Certificate of Reassessment of the proper docket fee to include in the
committed by the several defendants, and to protect its financial interests, good name Certificate the deficiency, if any. In case the payment is insufficient, plaintiff must pay
and reputation, and to recover its huge losses, has been needlessly compelled to file the deficiency within Five (5) days from receipt of the certificate of reassessment to
this action in Court, and for this purpose, had to engage the professional services of a the Clerk of Court.
reputable law counsel for which it agreed to pay 25% of its total money claims as
attorney's fees excluding trial honorarium of P3,000.00 per hearing. In the event that the judgment awards claim not specified in the complaint or such
claim left for determination by the court as proved at the trial, the additional filing fee
The prayer states: therefor shall constitute a lien in the judgment and the Clerk of Court or her duly
authorized deputy will enforce said liens and after assessment to collect the additional
WHEREFORE, the plaintiff to this Honorable Court respectfully prays that judgment fee.
be rendered:
SO ORDERED.
1. Adjudging all the defendants guilty of breach of contracts and/or bad faith
and/or unfair business practice and, accordingly, liable for their unlawful acts which Pursuant to the above order, the Clerk of Court filed an Ex-Parte motion dated June
sabotaged and ruined the financial resources and housing development enterprise of 6, 1989 (Rollo, pp. 38-39) stating that she has already issued the required certificate
the plaintiff; of reassessment but the deficiency could not be included therein because the claim
for attorney's fee manifested in the body of the complaint was not reiterated in the
2. Adjudging all the defendants, solidarily liable to compensate the plaintiff for prayer. Hence, the docket fees paid by ODECOR did not include the demand for
actual, consequential, exemplary and moral damages, the amount of which will be attorney's fees. The Clerk of Court, therefore, moved that the complaint be amended
proved at the trial; accordingly. This prompted HIGC to move for a reconsideration of the aforecited
order of the court, praying that the complaint be dismissed or in the alternative, to
3. Requiring National Home Mortgage Finance Corporation to deliver and/or to amend ODECOR's complaint to reflect the specific amount of damages both in the
pay to the plaintiff the amount of P2,272,193.10 which sum is due and payable to the body as well as in the prayer (Rollo, p. 43). But the same was denied in the
plaintiff and is in its possession and custody; subsequent order dated June 29, 1989. ODECOR thereafter filed its amended
complaint dated July 6, 1989 containing substantially all its allegations in the first
4. Declaring the defendants liable to the plaintiff for attorney's fees and other complaint except that it specified its claim for attorney's fees as equivalent to 25% of
expenses of litigation and the costs of this suit; and the total monthly liability and other expenses of litigation and costs of the suit. Such
amended complaint was admitted by the court on July 11, 1989. HIGC then filed its
5. Granting to the plaintiff such other reliefs and remedies which are just and answer thereto, but after the issues had been joined and the case had been set for
equitable in the premises. (Emphasis supplied) pre-trial conference, HIGC filed a petition for certiorari with the appellate court
questioning the jurisdiction of the lower court over the case on the same ground of
Simultaneous with the filing of the said complaint, ODECOR paid the following: failure to pay the proper docket fees. The appellate court, in turn, restrained the lower
P4,344.00 under O.R. No. 1772201-H; P4,344.00 under O.R. No. 007830; and court from taking further cognizance of the case and on July 31, 1990, rendered its
P86.00; based on the one numerical figure appearing in the complaint as decision, the dispositive portion of which reads:
P2,272,193.10 for alleged "loan take out proceeds" which the other defendant
NHMFC allegedly failed to remit to ODECOR. The rest appears to be an unspecified In view of the foregoing, We find and so hold that the respondent court did not acquire
amount of damages which the trial court could not assess (Rollo, p. 71). jurisdiction over Civil Case No. 3020-V-89. The complaint in the said Civil Case is
ordered expunged from the record and the orders dated June 1 and 29, 1989 having
been issued without jurisdiction, are declared null and void.
53
 have acquired jurisdiction over the accompanying claim for damages. Accordingly, the
SO ORDERED. Court may expunge the claims for damages or allow the amendment of the complaint
so as to allege the precise amount of each item of damages within the prescriptive
ODECOR moved for a reconsideration of this decision but later withdrew the same period (Ibid.).
and filed instead the present petition.
Coming back to the case at bar, it is readily evident that none of the foregoing
The issue now at hand is whether the court acquires jurisdiction over a case even if requisites was complied with.
the complaint does not specify the amount of damages.
Petitioners invoke the liberal interpretation of the rules as enumerated by this Court in
The petition is devoid of merit. the case of Sun Insurance Office, Ltd. (SIOL) v. Asuncion 170 SCRA 284-285 [1989]
which is not, however, applicable as in said case, private respondent amended his
ODECOR's first complaint as well as its amended complaint vaguely asserted its complaint several times, stating the amount claimed and paying each time the
claim for actual, consequential, exemplary and moral damages, "the amount of which required docket fees. While it is true that eventually the docket fees paid are still
will be proved at the trial" and the demand for attorney's fees as "equivalent to 25% of insufficient, he nevertheless manifested his willingness to pay such additional docket
the total monetary liability and other expenses of litigation and costs of this suit". Such fee as may be ordered.
terms are certainly not definite enough to support the computation of the proper
docket fees. While it is not required that the exact amounts be stated, the plaintiff The same is not true in the case at bar where in line with the foregoing
must ascertain, in his estimation, the sums he wants and the sums required to pronouncements, the trial court allowed the amendment of the complaint for the
determine the amount of such docket and other fees. Thus, it is evident that the determination of the fees, but such amendment did not, however, in anyway help in
complaint did not state enough facts and sums to enable the Clerk of Court of the specifying the amount of damages claimed. At most, the demand for attorney's fees
lower court to compute the docket fees payable and left to the judge "mere was stated as 25% of the total monetary liability, another unspecified amount which
guesswork" as to these amounts, which is fatal. (Spouses Belen Gregorio v. The cannot be the basis of computation.
Honorable Judge Zosimo Z. Angeles, et al., G.R. No. 85847, December 21, 1989,
180 SCRA 490). The intent to defraud the government appears obvious, not only in As to awards of claims not specified in the pleadings — this Court had already
the filing of the original complaint but also in the filing of the amended complaint. clarified that they refer only to damages arising after the filing of the complaint or
similar pleading, to which the additional filing fee shall constitute a lien on the
In any event, the requirement in Circular No. 7 that complaints, petitions, answers, judgment. The amount of any claim for damages, therefore, arising on or before the
and similar pleadings should specify the amount of damages being prayed for not filing of the complaint or any pleading, should be specified. The exception
only in the body of the pleadings but also in the prayer has not been altered (Tacay v. contemplated as to claims not specified or to claims although specified are left for the
RTC of Tagum, Davao del Norte, 180 SCRA 443-444 [1989]). determination of the court is limited only to any damages that may arise after the filing
of the complaint or similar pleading for then it will not be possible for the claimant to
What has been revised is the rule that subsequent amendment of the complaint or specify nor speculate as to the amount thereof (Tacay v. RTC of Tagum, supra; Ayala
similar pleading will not thereby vest jurisdiction on the Court, much less the payment Corporation, et al. v. The Honorable Job Maddayag, et al., G.R. No. 88421, 181
of the docket fee based on the amount sought in the amended pleading. The trial SCRA 687 [1990]) (Emphasis supplied).
court now is authorized to allow payment of the fee within a reasonable time but in no
case beyond the applicable prescriptive or reglementary period (Ibid). PREMISES CONSIDERED, the petition is hereby DISMISSED and the decision
appealed from is AFFIRMED. SO ORDERED.
Thus, where a complaint purely for money or damages did not specify the amounts
being claimed, the Court may allow amendment of the pleading and payment of the Sps BELEN GREGORIO VS. ANGELES
proper fees or where the pleading specified the amount of every claim but the fees 259 Phil. 974
paid are insufficient, the defect may be cured and the Court may take cognizance of
the action by payment of the proper fees provided that in both cases, prescription has SARMIENTO, J.:
not set in the meantime. Similarly where the action involves real property and a
related claim for damages and the prescribed fees for an action involving real The only issue here is whether or not the failure of the complaint to specify the sum of
property have been paid but the amounts of the unrelated damages are unspecified, exemplary damages allegedly suffered (among other damages sustained) warrants
the Court undeniably has jurisdiction over the action on the real property but may not its dismissal ostensibly in consonance with the Court's ruling in Manchester
54
Development Corporation v. Court of Appeals.[1] The Court rules, insofar as the
litigation is concerned, that it does not. The private respondents moved for the dismissal of this complaint on the ground of
failure to prosecute for an unreasonable length of time pursuant to Section 3, Rule 17
The facts, in their barest essentials, are not disputed. of the Revised Rules of Court. The trial court denied the dismissal motion.

On October 16, 1987, the petitioners sued the private respondents for a sum of Subsequently, the private respondents filed a "Motion to Dismiss and/or to Expunge
money arising from a loan. The complaint, docketed as Civil Case No. 18058 of the Complaint from the Record." Expunction was sought for failure of the petitioners "to
Regional Trial Court, Branch 137, Makati, Metro Manila, prayed for judgment as specify both in the body and in the prayer of their Complaint the amount of exemplary
follows: damages they seek to recover from the defendants ..."[4] on the strength of
Manchester as well as Circular No. 7 of the Court, implementing Manchester.
WHEREFORE, premises considered, it is respectfully prayed that the Honorable On November 10, 1988, the trial judge dismissed the case ...
Court, after due hearing, orders the defendants to pay jointly and severally:
a. The principal of P100,000.00, less whatever was paid per evidence to be ... for failure of the plaintiff to comply with Administration Circular No. 7 dated March
presented, if any; 24, 1988 re-affirming the pronouncement of the Supreme Court in this case in
b. Attorney's fees of 25% of principal, plus interest or P52,000.00; Manchester Development Corporation vs. Court of Appeals "No. L-75919, May 7,
c. Interests of 12% per annum = P108,000.00 for nine (9) years which is provided in 1987." (149 SCRA 562)[5]
Annex "B" and is part of the principal = P100,000.00 + P108,000.00; The lower court is now held to be in error in ordering dismissal.
d. Exemplary damages subject to the discretion of the Honorable Court;
e. Expenses of litigation of P10,000.00; The petition is possessed of merit.
f. For other relief which the Honorable Court may deem just to impose under the
circumstances, such as issuance of the order/writ of attachment due to conversion as The complaint (first or second) specified enough sums, as and for actual damages,
stated in the herein affidavit.[2] except exemplary damages, within Manchester's (or Circular No. 7's) contemplation.
On account of the failure on the part of the petitioners to appear at the pre-trial What would have been fatal was if the petitioners mentioned no amount at all. This is
conference and to file a pre-trial brief, the trial court dismissed the complaint. the teaching of Manchester.

On February 23, 1988, the petitioners filed another complaint, denominated as Civil At any rate:
Case No. 88-159 of the Regional Trial Court, Branch 58, Makati, Metro Manila,
praying as follows: Art. 2233. Exemplary damages cannot be recovered as a matter of right; the court
will decide whether or not they should be adjudicated.[6]
WHEREFORE, premises considered, it is respectfully prayed that the Honorable
Court, after due hearing, orders the defendants to pay jointly and severally: So also, "... the amount of the exemplary damages need not be proved ..."[7]
a. The principal of P100,000.00, less whatever was paid per evidence to be
presented, if any; In other words, the amount payable by way of exemplary damages may be
determined in the course of the trial. The plaintiff (the petitioners in this case) could
b. Attorney's fees of 25% of principal, plus interest or P52,000.00; not have therefore predicted how much exemplary losses they had incurred.

c. Interests of 12% per annum = P108,000.00 for nine (9) years which is provided in We are not saying--so let us make one thing clear--that the amount of exemplary
Annex "B" and is part of the principal = P100,000.00 + P108,000.00; damages need not be alleged in all cases. Certainly, it would have been different had
the case been one purely for moral, nominal, temperate, or exemplary, damages, (as
d. Exemplary damages subject to the discretion of the Honorable Court; in libel) other than actual. Though these damages are, under the Civil Code,
damages that can not be shown with certainty, unlike actual damages, the plaintiff
e. Expenses of litigation of P10,000.00; must ascertain, in his estimation, the sums he wants, and the sums required to
determine the amount of docket and other fees.
f. For other relief which the Honorable Court may deem just to impose under the
circumstances, such as issuance of the order/writ of attachment due to conversion as The case at bar is different. It is, in essence, a demand for specific performance, as a
stated in the herein affidavit.[3] consequence of a contract of loan between the parties in the sum of: "a. The
55
principal of P100,000.00, less whatever was paid per evidence to be presented, if The appellate court dismissed for lack of merit the counterclaim of BENECO against
any; b. Attorney's fees of 25% of principal, plus interest or P52,000.00; c. Interests of the Bernardos and its third party complaint against Guillermo Canave, Jr., as well as
12% per annum = P108,000.00 for nine (9) years which is provided in Annex "B" and the latter's counterclaim.
is part of the principal = P100,000.00 + P108,000.00; d. Exemplary damages subject
to the discretion of the Honorable Court; e. Expenses of litigation of P10,000.00; f. For For five (5) years up to the time of his death, Jose Bernardo managed a stall at the
other relief which the Honorable Court may deem just to impose under the Baguio City meat market. On 14 January 1985 at around 7:50 in the morning, Jose
circumstances, such as issuance of the order/writ of attachment due to conversion as together with other meat vendors went out of their stalls to meet a jeepney loaded
stated in the herein affidavit."[8] with slaughtered pigs in order to select the meat they would sell for the day. Jose was
the very first to reach the parked jeepney. Grasping the handlebars at the rear
The demand for exemplary damages was obviously meant to magnify the total claims, entrance of the vehicle, and as he was about to raise his right foot to get inside, Jose
as is the usual practice, but the failure to specify it is not lethal. The court can assess suddenly stiffened and trembled as though suffering from an epileptic seizure. Romeo
the docketing fees on the basis of the actual damages sought. Pimienta who saw Jose thought he was merely joking but noticed almost in disbelief
that he was already turning black. In no time the other vendors rushed to Jose and
So it has been held that where the complaint states enough facts and sums to they discovered that the antenna of the jeepney bearing the pigs had gotten
"enable ... the Clerk of Court of the lower Court to compute the docket fees entangled with an open electric wire at the top of the roof of a meat stall. Pimienta
payable,"[9] the trial court would be in error to expunge the pleading. What is fatal, so quickly got hold of a broom and pried the antenna loose from the open wire. But
we are told,[1]0 is if the complaint left to the judge mere "guesswork" as to the shortly after, Jose released his hold on the handlebars of the jeep only to slump to the
amounts payable as and by way of docket fees. ground. He died shortly in the hospital. Cause of his death was "cardio-respiratory
arrest secondary to massive brain congestion with petheccial hemorrhage, brain
Finally, Manchester involved clearly an effort to defraud the government, and so, bilateral pulmonary edema and congestion and endocardial petecchial hemorrhage
resort to its ruling must be justified by a showing of a prior attempt to cheat the courts. and dilation (history of electrocution)."
This is not the case here.
On 6 February 1985 Caridad O. Bernardo, widow of Jose Bernardo, and their minor
WHEREFORE, the petition is GRANTED. The case is REMANDED to the court a children, Jojo, Jeffrey and Jo-an, all surnamed Bernardo, filed a complaint against
quo for further proceedings. SO ORDERED. BENECO before the Regional Trial Court of Baguio City for a sum of money and
damages arising from the electrocution of Jose Bernardo. In the same civil action,
G.R. No. 127326 December 23, 1999 BENECO filed a third-party complaint against Guillermo Canave, Jr., the jeepney
owner.
BENGUET ELECTRIC COOPERATIVE, INC., vs. COURT OF APPEALS, CARIDAD
O. BERNARDO as Guardian Ad Litem for Minors JOJO, JEFFREY and JO-AN, all In its decision dated 15 August 1994, the trial court ruled in favor of the Bernardos
surnamed BERNARDO, and GUILLERMO CANAVE, JR and ordered BENECO to pay them damages. 2 Both petitioner and private
respondents herein appealed to the Court of Appeals. On 5 November 1996 the
BELLOSILLO, J.: appellate court promulgated its Decision which BENECO now assails contending inter
alia that the appellate court gravely erred in ordering BENECO to pay damages in
This case involves a review on certiorari of the Decision of the Court of Appeals 1 light of the clear evidence that it was third-party defendant Canave's fault or
affirming with modification the decision of the Regional Trial Court of Baguio City, and negligence which was the proximate and sole cause, or at least the principal cause,
ordering petitioner Benguet Electric Cooperative Inc. (BENECO) to pay Caridad O. of the electrocution and death of Jose Bernardo.
Bernardo, as guardian ad litem of the three (3) minor children of the late Jose
Bernardo P50,000.00 as indemnity for his death, with interest thereon at the legal rate First, BENECO questions the award of damages by respondent court notwithstanding
from February 6, 1985, the date of the filing of the complaint, until fully paid, a clear showing that the electrocution and death of Jose Bernardo were directly
P100,000.00 for moral damages, P20,000.00 for exemplary damages, another attributable to the fault and negligence of jeepney owner Guillermo Canave, Jr.
P20,000.00 for attorney's fees, P864,000.00 for net income loss for the remaining
thirty (30) years of the life expectancy of the deceased, and to pay the costs of suit. The records of the case show that respondent court did not commit any reversible
error in affirming the findings of the trial court that BENECO was solely responsible for
the untimely death of Jose Bernardo through accidental electrocution. According to
the trial court, which we find substantiated by the records — 3
56
 that the exposed splicing point (Exhibit "1-E") is only about eight (8) feet from the
Through Virgilio Cerezo, a registered master electrician and presently the Chief ground level.
Electrical Building Inspector of the General Services Division of the City of Baguio,
who was tasked to investigate the electrocution of Bernardo, the plaintiffs adduced There is no question that as an electric cooperative holding the exclusive franchise in
proof tending to show that the defendant BENECO installed a No. 2 high voltage main supplying electric power to the towns of Benguet province, its primordial concern is
wire distribution line and a No. 6 service line to provide power at the temporary meat not only to distribute electricity to its subscribers but also to ensure the safety of the
market on Hilltop Road. It put up a three-inch G.I. pipe pole to which the No. 2 main public by the proper maintenance and upkeep of its facilities. It is clear to us then that
line was strung on top of a stall where a service drop line was connected. The height BENECO was grossly negligent in leaving unprotected and uninsulated the splicing
of the electrical connection from the No. 2 line to the service line was barely eight (8) point between the service drop line and the service entrance conductor, which
to nine (9) feet (Exhibit "E"; See Exhibit "D-1") which is in violation of the Philippine connection was only eight (8) feet from the ground level, in violation of the Philippine
Electrical Code which requires a minimum vertical clearance of fourteen (14) feet from Electrical Code. BENECO's contention that the accident happened only on January
the level of the ground since the wiring crosses a public street. Another violation 14, 1985, around seven (7) years after the open wire was found existing in 1978, far
according to Cerezo, is that the main line connected to the service line was not of from mitigating its culpability, betrays its gross neglect in performing its duty to the
rigid conduit wiring but totally exposed without any safety protection (Ibid). Worse, the public. 4 By leaving an open live wire unattended for years, BENECO demonstrated
open wire connections were not insulated (Ibid); See Exhibits "D-6", "D-6-A", "D-7"). its utter disregard for the safety of the public. Indeed, Jose Bernardo's death was an
The jeep's antenna which was more than eight (8) feet high (Exhibit "D-9") from the accident that was bound to happen in view of the gross negligence of BENECO.
ground (It is about six to seven feet long and mounted on the left fender which is
about three feet above the ground) got entangled with the open wire connections BENECO theorizes in its defense that the death of Jose Bernardo could be attributed
(Exhibit "D-8"), thereby electrically charging its handlebars which Bernardo held on to to the negligence of Canave, Jr., in parking his jeepney so close to the market stall
enter the vehicle resulting in his electrocution. which was neither a parking area nor a loading area, with his antenna so high as to
get entangled with an open wire above the Dimasupil
While Vedasto Augusto, an electrical engineer and the line superintendent in the store. 5 But this line of defense must be discarded. Canave's act of parking in an area
electrical department of the defendant BENECO, admitted that the allowable vertical not customarily used for that purpose was by no means the independent negligent act
clearance of the service drop line is even 15 feet from the ground level and not only adverted to by BENECO in citing Manila Electric Co. v. Ronquillo. 6 Canave was well
14 feet, he and Jose Angeles, then an instrument man or surveyor of the BENECO, within his right to park the vehicle in the said area where there was no showing that
insisted that BENECO installed (they do not know by whom in particular) from the any municipal law or ordinance was violated nor that there was any foreseeable
Apollo Building nearby a service drop line carrying 220 volts which was attached to a danger posed by his act. One thing however is sure, no accident would have
G.I. pipe pole (Exhibits "1" and "1-A"). The vertical clearance of the point of happened had BENECO installed the connections in accordance with the prescribed
attachment of the service drop line on the G.I. post to the ground is 15.5 feet (Exhibit vertical clearance of fifteen (15) feet.
"1-B"), which is more than the allowable 15-foot clearance. To this service drop line
was connected the service entrance conductor (Exhibit "1-D") to supply power inside Second. BENECO avers that the Court of Appeals gravely erred in awarding
the premises to be serviced through an electric meter. At the lower portion of the P864,000.00 as net income loss for the thirty (30) years remaining of the life
splicing or connecting point between the service drop line and the service entrance expectancy of the deceased Jose Bernardo, albeit the trial court found no firm basis
conductor is a three to four-inch bare wire to serve as a ground. They saw the bare for awarding this item of damages.
wire because the splicing point was exposed as it was not covered with tape (Exhibit
"1-E"). The antenna of the jeep which electrocuted Bernardo got entangled with this We recall that the trial court disallowed the award for net loss income in view of the
exposed splicing point. alleged contradictory and untrustworthy testimony of the deceased's surviving spouse
Caridad Bernardo. Thus —
Augusto claimed that it was not BENECO's job to splice or connect the service
entrance conductor to the service drop line but rather the owner of the premises to be As to lost earnings. The court finds the allegations of the plaintiffs, particularly Caridad
serviced whose identity they did not, however, determine. Bernardo contradictory and untrustworthy. While in the complaint, which she herself
verified, she asseverated that at the time of his death on January 14, 1985, her late
Significantly, on cross-examination, Augusto admitted that the service drop line that husband was earning no less than P150.00 daily after deducting personal expenses
BENECO installed did not end at the point to which it is attached to the G.I. post. and household and other family obligations; at the trial she bloated this up to
Rather, it passed through a spool insulator that is attached to the post (Exhibit "1-F") P3,000.00 gross daily or P300.00 profit a day or a net income of P200.00 daily after
and extended down to where the service entrance conductor is spliced with the result deducting personal and household expenses. But inexplicably she could not present
57
the income tax return of her husband for 1983 and 1984 although she stated that he
had been filing such returns. What she submitted are his income tax returns for 1981 Q: How much more or less would you say his daily income from the stall, if you
and 1982 showing a much lower annual gross income of P12,960.00 and P16,120.00, know?
respectively. The Court, therefore, finds no firm basis for awarding this item of
damages. A: P150 to P200 more, sometimes more than P200.

In modifying the decision of the trial court, the Court of Appeals relied on the Q: What is this? Monthly, daily, or what?
testimony of Rosita Noefe, sister of the deceased, that her brother started as her
helper in the several meat stalls she operated until 1982 when she allowed Jose to A: Daily sir.
operate one of her stalls as his own and gave him an initial capital of P15,000.00 to
add to his own. She explained that her brother sold from 100 to 150 kilos of pork and Q: Now, when you said that he earns sometimes 150 or 200 in a day can (sic)
30 to 50 kilos of meat a day earning an income of about P150.00 to P200.00 pesos you tell this court more or less how many in terms of net or in terms of kilos that he
daily. After deducting his personal expenses and family obligations, Jose earned a can sell with that amount daily?
daily net income between P70.00 and P80.00. Jose Bernardo died of electrocution at
the age of thirty-three (33). Following the ruling in Villa Rey Transit v. Court of A: More than one hundred (100) kilos, sir, or one hundred fifty kilos (150).
Appeals 7 and Davila v. PAL 8 his life expectancy would allow him thirty and one third
(30-1/3) years more. Assuming on the basis of his P80.00 daily net income translated Q: By the way what was your brother selling also in that meat stall?
to P2,400.00 monthly or P28,800.00 yearly, the net income loss for the thirty (30)
years remaining of his life expectancy would amount to P864,000.00. 9 A: Pork and beef, sir.

While we are of the opinion that private respondent Bernardo is entitled to indemnity Q: In terms of how many slaughter(ed) pigs would that be if you know? 100 to
for loss of earning capacity of her deceased husband we however find that a 150 kilo
modification is in order. The amount corresponding to the loss of earning capacity is
based mainly on two factors: (a) the number of years on the basis of which the A: Two (2) pigs, sir.
damages shall be computed; and, (b) the rate at which the losses sustained by the
widow and her children should be fixed. 10 Q: Is this . . . How about meat, I mean aside from pigs?

We consider that the deceased was married with three (3) children and thirty-three A: About thirty (30) to fifty (50) kilos for beef.
(33) years old at the time of his death. By applying the formula: 2/3 x (80 - 33) = Life
Expectancy, the normal life expectancy of the deceased would be thirty-one and one- Q: Now, will you tell this court why you know more or less that this is his daily
third (31-1/3) years and not thirty (30) as found by the respondent court. By taking income?
into account the nature and quality of life of a meat vendor, it is hard to conceive that
Jose would still be working for the full stretch of the remaining thirty-one (31) years of A: I know it because I experienced it and I only transferred this stall to him.
his life; and therefore it is but reasonable to make allowances and reduce his life
expectancy to twenty-five (25) years. 11 Q: And his income, you said, of 150 daily to 200 for the sale of pork and meat
will you know what are his family expenses being your brother and is living with you in
Anent the second factor, we are of the view that the Court of Appeals was correct in the same place at the slaughter house?
relying on the unrebutted testimony of Rosita Noefe concerning the income of Jose,
thus providing a basis for fixing the rate of damages incurred by the heirs of the A: About P70.00 to P80.00 a day.
deceased. Rosita clarified as follows:
Q: And what are the other income that your brother derive (sic) aside from the
Q: Now you said that you brother's stall is just very near, about 4 to 5 meters meat stall after spending these daily expenses?
away from your stall. Do you know more or less how your brother was earning by way
of income because the stall belongs also to you and your husband? A: None, sir.

A: Yes, sir (emphasis supplied).

58
Contrary to the assertion of BENECO, there is ample basis for the fixing of damages = P675,000.00 NET INCOME LOSS (as reduced)
incurred by the heirs of the deceased. Notwithstanding the failure of private
respondent Bernardo to present documentary evidence to support her claim, the Third. BENECO contends that exemplary damages should not be awarded as the
unrebutted testimony of Rosita Noefe supplied this deficiency. Indeed, there is no amount claimed was not specified in the body nor in the prayer of the complaint, in
reason to doubt the veracity of Rosita's testimony considering that she owned the contravention of the mandate in Rule 11 of the Interim Rules and Guidelines
very same stall that Jose was operating and managing before his death. Her implementing BP 129 which requires the amount of damages to be specifically
testimony on the earning capacity of Jose is enough to establish the rationale for the alleged apparently for the purpose of computing the docket fees.
award.
BENECO's contention deserves no merit. The amount of exemplary damages need
The discrepancy between private respondent Bernardo's claims regarding her not be pleaded in the complaint because the same cannot be predetermined. One
husband's income as contained in the complaint, where she alleged that Jose was can merely ask that it be fixed by the court as the evidence may warrant and be
earning no less than P150.00 a day, and her testimony during trial that he earned awarded at its own discretion. 14 In fact, the amount of exemplary damages need not
P300.00 daily, could not obviate the fact that at the time of his death Jose was be proved because its determination is contingent upon or incidental to the amount of
earning a living as a meat vendor. Undoubtedly, his untimely death deprived his compensatory damages that may be awarded to the claimant. Moreover, this Court in
family of his potential earnings. The allegation in the complaint fixing his income at a number of occasions ruled that the amount of docket fees to be paid should be
P150.00 a day was corroborated by the unqualified declaration of Rosita Noefe that computed on the basis of the amount of the damages stated in the complaint. Where
he was earning P150.00 to P200.00 a day. Obviously the bloated figure of P300.00 subsequently however the judgment awarded a claim not specified in the pleading, or
given by private respondent Bernardo was an afterthought perhaps impelled by the if specified, the same was left for the determination of the court, an additional filing
prospect of being awarded a greater sum. fee therefor may be assessed and considered to constitute a lien on the judgment. 15

We now fix Jose's daily gross income at P150.00 or his annual gross income at We are not unaware of the principle laid down in Tacay v. Regional Trial Court of
P54,000.00. After deducting personal expenses, household and other family Tagum 16 where the trial court was ordered to either expunge the unspecified claim
obligations, we can safely assume that his annual net income at the time of death for exemplary damages or allow the private respondent to amend the complaint within
was P27,000.00 or 50% of his yearly gross earnings of P54,000.00. 12 a reasonable time and specify the amount corresponding docket fees. However, we
prefer not to expunge the claim for exemplary damages and pursue the Tacay lead,
Accordingly, determining the indemnity for the loss of earning capacity, we multiply for to delete the claim for exemplary damages would be to give premium to
the life expectancy of the deceased as reduced to twenty-five (25) years by the BENECO's gross negligence while to order the amendment of the complaint would be
annual net income of P27,000.00 which gives us P675,000.00. Therefore, we deduce to unjustly delay the proceedings and prolong further the almost fifteen-year agony of
that his net earning capacity is P675,000.00 computed as follows: 13 Net Earning the intended beneficiaries.
Capacity = Life Expectancy x Gross Annual Income - Necessary Living Expenses.
Reduced to simpler form: Exemplary damages are imposed by way of example or correction for the public
good, in addition to moral, temperate, liquidated or compensatory damages. It is
Net Earning = Life x Gross Annual — Necessary awarded as a deterrent to socially deleterious actions. In quasi-delict, exemplary
damages are awarded when the act or omission which caused injury is attended by
Capacity Expectancy Income Living Expenses gross negligence. 17 Gross negligence has been defined as negligence characterized
by the want of even slight care, acting or omitting to act in a situation where there is
= 2 (80 - 33) x (P54,000 — 27,000) duty to act, not inadvertently but willfully and intentionally, with a conscious
indifference to consequences in so far as other persons may be affected. 18
————
In the instant case, there is a clear showing of BENECO's gross negligence when it
3 failed to detect, much less to repair, for an inexcusably long period of (7) years the
uninsulated connection which caused the death of Jose Bernardo. The gravity of its
= 31-1/3 ineptitude was compounded when it installed the service drop line way below the
prescribed minimum vertical clearance of fifteen (15) feet. Again, precautionary
(reduced to 25) x 27,000 = 675,000.00 measures were not taken in wanton disregard of the possible consequences. Under
these circumstances, we find no reason to disturb the finding of respondent court
59
awarding exemplary damages to private respondent Bernardo in the amount of petitioned the court in his capacity as counsel for the heirs, the herein petitioners, and
P20,000.00. as executor under the will.

Finally, BENECO questions the grant of moral damages and attorney's fees on the The petition was not opposed and hence, on November 17, 1987, the respondent
same ground of non-culpability. It is settled that moral damages are not intended to court issued a "certificate of allowance," 1 the dispositive part of which reads as
enrich the complainant but to serve to obviate his/her spiritual suffering by reason of follows:
the culpable action of the defendant. Its award is aimed at the restoration of the
spiritual status quo ante, and it must be commensurate to the suffering inflicted. As a WHEREFORE, upon the foregoing, the Court hereby renders certification that subject
result of the accidental death of Jose, his widow Caridad and their three (3) minor will and testament is accordingly allowed in accordance with Sec. 13 of Rule 76 of the
children had to scrounge for a living in order to keep their heads above water. Rules of Court. SO ORDERED.
Caridad had to depend on the generosity of her relatives which came intermittently
and far between and augment whatever she received from them with her meager On March 14, 1988, Atty. Ephraim Serquina filed a "motion for attorney's fees" 3
income from her small business. She must have agonized over the prospect of raising against the petitioners, alleging that the heirs had agreed to pay, as and for his legal
her three (3) small children all by herself given her unstable financial condition. For services rendered, the sum of P68,000.00.
the foregoing reasons, we sustain the award of moral damages by respondent court
except as to the amount thereof. In the instant case, we are of the opinion that moral Thereafter summonses were served upon the heirs "as if it were a complaint against
damages in the amount of P50,000.00 are more in accord with the injury suffered by said heirs" 4 directing them to answer the motion.
private respondent and her children.
Thereafter, the heirs filed their answer and denied the claim for P68,000.00 alleging
As for attorney's fees, we find no legal nor factual basis to overturn the ruling of that the sum agreed upon was only P7,000.00, a sum they had allegedly already
respondent court on the matter; accordingly, the grant of P20,000.00 attorney's fees paid.
to private respondent Bernardo is adopted.
After pre-trial, the respondent court rendered judgment and disposed as follows:
WHEREFORE, the assailed Decision of the Court of Appeals dated 5 November 1996
ordering petitioner Benguet Electric Cooperative, Inc., to pay private respondent In the light of the foregoing, considering the extent of the legal services rendered to
Caridad O. Bernardo as guardian ad litem for the minors Jojo, Jeffrey and Jo-an, all the clients, the value of the properties gained by the clients out of said services, the
surnamed Bernardo, P20,000.00 as exemplary damages, another P20,000.00 for petition for attorney's fees is granted. Judgment is hereby rendered directing the
attorney's fees, and P50,000.00 as indemnity for the death of Jose Bernardo, is respondent heirs to pay their lawyer the sum of P65,000.00 as true and reasonable
AFFIRMED with the MODIFICATION that the P864,000.00 as net income loss is attorney's fees which shall be a lien on the subject properties. Cost against the
reduced to P675,000.00 and the P100,000.00 as moral damages is also reduced to respondent.
P50,000.00. Costs against petitioner. SO ORDERED.
SO ORDERED.
G.R. No. 86250 February 26, 1990
On October 21, 1988, eleven days after the heirs received a copy of the decision, 6
ALBERTO F. LACSON, EDITHA F. LACSON, ROMEO F. LACSON and ZENA F. the latter filed a notice of appeal.
VELASCO vs. HON. LUIS R. REYES, in his capacity as presiding judge of
Branch 22 of the Regional Trial Court of Cavite, Branch 22, and/or Multiple Sala, On November 7, 1988, the respondent court issued an order directing the heirs to
Imus, Cavite, and EPHRAIM J. SERQUINA, amend their notice of appeal. 7

SARMIENTO, J.: On October 27, 1988, the respondent court issued an order "noting" the notice on
appeal "appellants [the heirs] having failed to correct or complete the same within the
On August 26, 1987, the private respondent, Ephraim Serquina, petitioned the reglementary period to effect an appeal." 8
respondent court for the probate of the last will and testament of Carmelita Farlin. His
petition was docketed as Sp. Proc. No. 127-87 of the respondent court, entitled "In Re On November 24, 1988, the respondent court issued yet another order denying the
Testate Estate of Carmelita S. Farlin, Ephraim J. Serquina, Petitioner." He also notice of appeal for failure of the heirs to file a record on appeal. 9

60
Thereafter, Atty. Serquina moved for execution. In that event, the parties should have known, the respondent court in particular, that
docket fees should have been priorly paid before the court could lawfully act on the
On December 5, 1988, the respondent court issued an order granting execution. 10 case, and decide it.

The petitioners submit that the decision, dated October 26, 1988, and the orders, It may be true that the claim for attorney's fees was but an incident in the main case,
dated October 27, 1988, November 24, 1988, and December 5, 1988, respectively, still, it is not an escape valve from the payment of docket fees because as in all
are nun and void for the following reasons: (1) the respondent court never acquired actions, whether separate or as an offshoot of a pending proceeding, the payment of
jurisdiction over the "motion for attorney's fees" for failure on the part of the movant, docket fees is mandatory.
Ephraim Serquina, to pay docket fees; (2) the respondent court gravely abused its
discretion in denying the heirs' notice of appeal for their failure to file a record on Assuming, therefore, ex gratia argumenti, that Atty. Serquina's demand for attorney's
appeal; and (3) the respondent court also gravely abused its discretion in awarding fees in the sum of P68,000.00 is valid, he, Atty. Serquina, should have paid the fees
attorney's fees contrary to the provisions of Section 7, of Rule 85, of the Rules of in question before the respondent court could validly try his "motion".
Court.
II.
Atty. Serquina now defends the challenged acts of the respondent court: (1) his With respect to the second issue, it has been held that in appeals arising from an
motion was a mere incident to the main proceedings; (2) the respondent court rightly incident in a special proceeding, a record on appeal is necessary, otherwise, the
denied the notice of appeal in question for failure of the heirs to submit a record on appeal faces a dismissal. 14 It has likewise been held, however, that in the interest of
appeal; and (3) in collecting attorney's fees, he was not acting as executor of justice, an appeal, brought without a record on appeal, may be reinstated under
Carmelita Farlin's last will and testament because no letters testamentary had in fact exceptional circumstances. Thus:
been issued. It is noted, however, that the question presented in this case is one of first impression;
that the petitioner acted in honest, if mistaken, interpretation of the applicable law;
We take these up seriatim. that the probate court itself believed that the record on appeal was unnecessary; and
that the private respondent herself apparently thought so, too, for she did not move to
I. dismiss the appeal and instead impliedly recognized its validity by filing the appellee's
Anent docket fees, it has been held 11 that the court acquires jurisdiction over any brief.
case only upon payment of the prescribed docket fee.
In view of these circumstances, and in the interest of justice, the Court feels that the
Although the rule has since been tempered, 12 that is, there must be a clear showing petitioner should be given an opportunity to comply with the above-discussed rules by
that the party had intended to evade payment and to cheat the courts, it does not submitting the required record on appeal as a condition for the revival of the appeal.
excuse him from paying docket fees as soon as it becomes apparent that docket fees The issue raised in his appeal may then be fully discussed and, in the light of the
are indeed payable. briefs already filed by the parties, resolved on the merits by the respondent court. 15

In the case at bar, the "motion for attorney's fees" was clearly in the nature of an In the instant case, the Court notes the apparent impression by the parties at the
action commenced by a lawyer against his clients for attorney's fees. The very outset, that a record on appeal was unnecessary, as evidenced by: (1) the very
decision of the court states: holding of the respondent court that "[i]t is now easy to appeal as there is no more
need for a record on appeal . . . [b]y merely filing a notice of appeal, the appellant can
This case is an out-growth from Sp. Proc. No. 127-87 of same Court which was long already institute his appeal . . . ;" 16 (2) in its order to amend notice of appeal, it did
decided (sic). It resulted from the filing of a petition for attorney's fees by the lawyer of not require the appellants to submit a record on appeal; and (3) Atty. Serquina
the petitioner's heirs in the case against the latter. interposed no objection to the appeal on that ground.

Upon the filing of the petition for attorney's fees, the heir- respondents (sic) were In any event, since we are annulling the decision appealed from, the matter is a dead
accordingly summoned to answer the petition as if it were a complaint against said issue.
heirs who retained the petitioner as their lawyer in the said case.13
III.

61
As we have indicated, we are granting certiorari and are annulling the decision P65,000.00 as and for Mr. Serquina's attorney's fees, to operate as a "lien on the
appealed from, but there seems to be no reason why we can not dispose of the heirs' subject properties," 21 the trial judge must be said to have gravely abused its
appeal in a single proceeding. discretion (apart from the fact that it never acquired jurisdiction, in the first place, to
act on said Mr. Serquina's "motion for attorney's fees").
It is pointed out that an attorney who is concurrently an executor of a will is barred
from recovering attorney's fees from the estate. The Rule is specifically as follows: The next question is quite obvious: Who shoulders attorney's fees? We have held that
a lawyer of an administrator or executor may not charge the estate for his fees, but
SEC. 7. What expenses and fees allowed executor or administrator. Not to charge for rather, his client. 22 Mutatis mutandis, where the administrator is himself the counsel
services as attorney. Compensation provided by will controls unless renounced. — An for the heirs, it is the latter who must pay therefor.
executor or administrator shall be allowed the necessary expenses in the care,
management and settlement of the estate, and for his services, four pesos per day for In that connection, attorney's fees are in the nature of actual damages, which must be
the time actually and necessarily employed, or a commission upon the value of so duly proved. 23 They are also subject to certain standards, to wit: (1) they must be
much of the estate as comes into his possession and is finally disposed of by him in reasonable, that is to say, they must have a bearing on the importance of the subject
the payment of debts, expenses, legacies, or distributive shares, or by delivery to matter in controversy; (2) the extent of the services rendered; and (3) the professional
heirs or devisees, of two per centum of the first five thousand pesos of such value, standing of the lawyer. 24 In all cases, they must be addressed in a full-blown trial
one per centum of so much of such value as exceeds five thousand pesos and does and not on the bare word of the parties. 25 And always, they are subject to the
not exceed thirty thousand pesos, one-half per centum of so much of such value as moderating hand of the courts.
exceeds thirty thousand pesos and does not exceed one hundred thousand pesos,
and one-quarter per centum of so much of such value as exceeds one hundred The records show that Atty. Ephraim Serquina, as counsel for the heirs, performed
thousand pesos. But in any special case, where the estate is large, and the the following:
settlement has been attended with great difficulty, and has required a high degree of
capacity on the part of the executor or administrator, a greater sum may be allowed. If 5. That after the order of allowance for probate of the will, the undersigned
objection to the fees allowed be taken, the allowance may be reexamined on appeal. counsel assisted the heirs to transfer immediately the above-mentioned real estate in
their respective names, from (sic) the payment of estate taxes in the Bureau of
If there are two or more executors or administrators, the compensation shall be Internal Revenue to the issuance by the Registry of Deeds of the titles, in order for the
apportioned among them by the court according to the services actually rendered by heirs to sell the foregoing real estate of 10,683 sq. cm (which was also the subject of
them respectively. sale prior to the death of the testator) to settle testator's obligations and day-to-day
subsistence being (sic) that the heirs, except Zena F. Velasco, are not employed
When the executor or administrator is an attorney, he shall not charge against the neither doing any business; 26
estate any professional fees for legal services rendered by him.
The Court is not persuaded from the facts above that Atty. Serquina is entitled to the
When the deceased by will makes some other provision for the compensation of his sum claimed by him (P68,000.00) or that awarded by the lower court (P65,000.00).
executor, that provision shall be a full satisfaction for his services unless by a written The Court observes that these are acts performed routinely since they form part of
instrument filed in the court he renounces all claim to the compensation provided by what any lawyer worth his salt is expected to do. The will was furthermore not
the will. 17 contested. They are not, so Justice Pedro Tuason wrote, "a case [where] the
administrator was able to stop what appeared to be an improvident disbursement of a
The rule is therefore clear that an administrator or executor may be allowed fees for substantial amount without having to employ outside legal help at an additional
the necessary expenses he has incurred as such, but he may not recover attorney's expense to the estate," 27 to entitle him to a bigger compensation. He did not exactly
fees from the estate. His compensation is fixed by the rule but such a compensation achieve anything out of the ordinary.
is in the nature of executor's or administrator's commissions, and never as attorney's
fees. In one case, 18 we held that "a greater sum [other than that established by the The records also reveal that Atty. Serquina has already been paid the sum of
rule] may be allowed 'in any special case, where the estate is large, and the P6,000.00. 28 It is our considered opinion that he should be entitled to P15,000.00 for
settlement has been attended with great difficulty, and has required a high degree of his efforts on a quantum meruit basis. Hence, we hold the heirs liable for P9,000.00
capacity on the part of the executor or administrator.'" 19 It is also left to the sound more.
discretion of the court. 20 With respect to attorney's fees, the rule, as we have seen,
disallows them. Accordingly, to the extent that the trial court set aside the sum of
62
WHEREFORE, premises considered, judgment is hereby rendered: (1) GRANTING ESTATE OF FERDINAND E. MARCOS, IMELDA R. MARCOS, IMELDA (IMEE) R.
the petition and making the temporary restraining order issued on January 16, 1989 MARCOS-MANOTOC, TOMAS MANOTOC, IRENE R. MARCOS-ARANETA,
PERMANENT; and (2) ORDERING the petitioners to PAY the private respondent, GREGORIO MA. ARANETA, III, FERDINAND R. MARCOS, JR., IMELDA
Atty. Ephraim Serquina, attorney's fees in the sum of P9,000.00. The said fees shall COJUANGCO, ESTATE OF RAMON COJUANGCO (represented by the
not be recovered from the estate of Carmelita Farlin. No costs. SO ORDERED. Administratrix, IMELDA COJUANGCO), PRIME HOLDINGS, INC., ALFONSO T.
YUCHENGCO, AND Y. REALTY CORPORATION, Respondents.
G.R. No. 149802 January 20, 2006
CARPIO MORALES, J.:
ALFONSO T. YUCHENGCO AND Y REALTY CORPORATION vs. THE
HONORABLE SANDIGANBAYAN, FOURTH DIVISION, REPUBLIC OF THE These five consolidated petitions pray for the nullification of certain issuances of the
PHILIPPINES, PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, ESTATE Sandiganbayan in Civil Case No. 0002, "Republic of the Philippines v. Estate of
OF FERDINAND E. MARCOS, IMELDA R. MARCOS, PRIME HOLDINGS, INC., Ferdinand E. Marcos, et al."
ESTATE OF RAMON U. COJUANGCO, represented by IMELDA O. COJUANGCO,
and IMELDA O. COJUANGCO The complaint in Civil Case No. 0002 (or the case) was filed before the
Sandiganbayan on July 16, 1987 by the Republic of the Philippines (the Republic)
G.R. No. 150320 January 20, 2006 through the Presidential Commission on Good Government (PCGG) against former
ALFONSO T. YUCHENCGO AND Y REALTY CORPORATION, Petitioners, President and Mrs. Marcos, their three children, and some other individuals. The
vs. complaint was later amended to implead additional defendants.
THE HONORABLE SANDIGANBAYAN, FOURTH DIVISION, REPUBLIC OF THE
PHILIPPINES, PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT, ESTATE The case is for the recovery of alleged ill-gotten wealth of the Marcoses, among which
OF FERDINAND E. MARCOS, IMELDA R. MARCOS, PRIME HOLDINGS, INC., are shares of stock in the Philippine Telecommunications Investment Corporation
ESTATE OF RAMON U. COJUANGCO represented by IMELDA O. COJUANGCO, (PTIC): 76,779 shares in the name of Ramon U. Cojuangco, 21,525 shares in the
and IMELDA O. COJUANGCO, Respondents. name of Imelda O. Cojuangco, and 111,415 shares in the name of Prime Holdings
G.R. No. 150367 January 20, 2006 Incorporated (PHI). PTIC is the biggest stockholder of PLDT, it owning some 28% of
REPUBLIC OF THE PHILIPPINES, Petitioner, the outstanding shares in PLDT at the time Civil Case No. 0002 was filed.1
vs.
HON. SANDIGANBAYAN (FOURTH DIVISION), ESTATE OF FERDINAND E. In the course of the proceedings in Civil Case No. 0002, the first three petitions
MARCOS (represented by its Administrator, the Bureau of Internal Revenue), assailing interlocutory orders of the Sandiganbayan were filed before this Court.
IMELDA R. MARCOS, PRIME HOLDINGS, INC., ESTATE OF RAMON U.
COJUANGCO (represented by its Administratrix, IMELDA O. COJUANGCO), Thus, the petitions in G.R. Nos. 149802 and 150320, filed by Alfonso Yuchengco and
IMELDA O. COJUANGCO, ALFONSO T. YUCHENGCO, and Y REALTY Y Realty Corporation, complainants-in-intervention in Civil Case No. 0002, assail via
CORPORATION, Respondents. petition for certiorari orders and resolutions of the Sandiganbayan denying their
motions to suspend trial pending discovery proceedings and to re-set trial dates (with
G.R. No. 153207 January 20, 2006 alternative prayer for a change in the order of trial), and declaring them as having
ALFONSO T. YUCHENGCO AND Y REALTY CORPORATION, Petitioners, waived their right to present evidence.
vs.
REPUBLIC OF THE PHILIPPINES, PRESIDENTIAL COMMISSION ON GOOD The petition in G.R. No. 150367, filed by the Republic, assails via petition for certiorari
GOVERNMENT, ESTATE OF FERDINAND E. MARCOS, IMELDA R. MARCOS, the Sandiganbayan Orders denying its Respectful Motion for Additional Time to
PRIME HOLDINGS, INC., ESTATE OF RAMON U. COJUANGCO represented by Complete the Presentation of Evidence and directing it to submit its offer of evidence
IMELDA O COJUANGCO, and IMELDA O. COJUANGCO, Respondents. within 30 days.

G.R. No. 153459 January 20, 2006 During the pendency of these first three petitions, the Sandiganbayan continued with
REPUBLIC OF THE PHILIPPINES, represented by the PRESIDENTIAL the proceedings in Civil Case No. 0002, no restraining order enjoining the same
COMMISSION ON GOOD GOVERNMENT, Petitioner, having been issued by this Court.
vs.

63
The Sandiganbayan, still during the pendency of the first three petitions, promulgated
in Civil Case No. 0002 a Partial Decision on May 6, 2002 the dispositive portion of The Sandiganbayan having held in its 73-page Partial Decision3 that the Republic
which reads: has failed to prove that the PLDT shares sought to be recovered are ill-gotten, thus:

WHEREFORE, premises considered, the complaint of plaintiff Republic of the . . . the Republic has failed to provide such "proof of authenticity or reliability" of the
Philippines on the PLDT shares subject of separate trial is hereby DISMISSED for documents offered by it in evidence. Thus almost all the documents offered by the
lack of merit. Republic are photocopies, and no effort was undertaken . . . to submit the originals of
said documents, or to have them properly identified, or to otherwise justify the
The Motion for Summary Judgment [filed by Imelda Cojuangco, et al] is hereby admission of mere photocopies. Not surprisingly, defendants . . . objected to the
GRANTED, and the Complaint-in-Intervention [filed by the Yuchengcos] DISMISSED. admission of the Republic’s documentary exhibits, citing violation of the Best
Evidence Rule (Section 3, Rule 130 of the Revised Rules of Civil Procedure ["Rules"],
SO ORDERED. (Underscoring supplied) the Rules of Presentation of Documentary Evidence (Section 20, Rule 132 of the
Rules). The Hearsay Evidence Rule, and the rule as to Purpose/s of Documentary
The last two of the five petitions at bar, both for review on certiorari, were thereupon Evidence (Section 34, Rule 132 of the Rules)."4 (Underscoring supplied),
filed. The petition in G.R. No. 153207 filed by the complainants-in-intervention
Yuchengcos, and that in G.R. No. 153459 filed by the Republic, both challenge the a discussion of the evidence presented in the case is in order.
Partial Decision.
FACTUAL BACKGROUND OF PHI AND ITS DEALINGS WITH PTIC
The incidents that gave rise to the filing of the petitions are stated in the minority’s
dissenting opinion penned by Justice Cancio Garcia which immediately follows this PHI was registered on October 5, 1977 with the following five (5) incorporators: Jose
majority opinion. The dissenting opinion substantially reiterates the draft that Justice D. Campos, Jr. (son of Jose Yao Campos), Rolando Gapud (Gapud), Renato Lirio
Garcia prepared which was used by this Court as a working basis for its deliberations. (Lirio), Ernesto Abalos (Abalos), and Gervacio Gaviola (Gaviola), with 400 shares
each, with a par value of P100 per share. The total amount of capital stock
In issue in these petitions are: subscribed was thus P200,000.00, P50,000.00 of which was actually paid.5 Its place
of business was at 66 United Street, Mandaluyong, Metro Manila.6
1. Whether petitioners in G.R. Nos. 149802, 150320 and 150367 were denied due
process when the Sandiganbayan in effect directed them to terminate the The five PHI incorporators, in their capacity as stockholders, elected themselves as
presentation of their respective evidence; and directors on October 10, 1977. On even date, they elected the following as officers of
the corporation:
2. Whether the Partial Decision being assailed via petition for review in G.R. Nos.
153207 and 153459, conforms to the evidence presented, the law and/or settled Rolando C. Gapud - President
jurisprudence.
Jose D. Campos, Jr. - Vice-President
There is no disagreement with respect to the disposition-dismissal by the minority of
the first three petitions – the first having become moot, and the second and third for Gervasio T. Gaviola - Treasurer
lack of grave abuse of discretion on the part of the Sandiganbayan.2 There is also no
disagreement with respect to the disposition-denial by the minority of the fourth Francisco G. De Guzman - Secretary
petition (G.R. No. 153207) in the absence of reversible error on the part of the
Sandiganbayan. Rodolfo R. Dimaano - Assistant Secretary

It is with respect to the disposition-denial by the minority of the fifth petition (G.R. No. Meanwhile, 54,349 shares in another corporation, PTIC, were "contributed to and/or
153459) insofar as it denied the prayer of the Republic for a judgment ordering the abandoned" by one of its stockholders, General Telephone and Electronics (GTE), an
Estate of Ramon U. Cojuangco (Cojuangco), Imelda O. Cojuangco, PHI, their American corporation, in favor of PTIC.
assigns, nominees and agents to reconvey to the Republic 111,415 PTIC shares
registered in the name of PHI that the majority does not agree, in light of the On December 20, 1977, the PTIC Board of Directors resolved to sell such 54,349
immediately following discussions. shares to its stockholders in proportion to their holdings.7 No stockholder, apart from
64
Cojuangco, PTIC President and member of its Board of Directors, expressed interest that PHI has an undisclosed beneficial owner, their only disagreement being who this
in purchasing the shares.8 All the 54,349 shares were then transferred to his name. owner is.

Cojuangco and Luis Tirso Rivilla (Rivilla), another stockholder of PTIC, together with The Cojuangcos and PHI in their Comment proffer that the beneficial owners are the
PHI President Gapud, forged an agreement dated January 27, 1978 referring to the Cojuangcos, arguing as follows:
"various discussions during which [Cojuangco and Rivilla] offered to sell and [PHI]
agreed to purchase partially paid subscriptions and common shares of [PTIC]."9 The x x x The unsupported allegation that President Marcos owned the disputed shares in
agreement which indicated the basic terms and conditions of the transaction states PLDT, PTIC and PHI may perhaps explain the circumstances surrounding PHI’s
that the number of PTIC shares which Cojuangco and Rivilla were prepared to sell to incorporation, why PTIC’s stockholders were disinterested in purchasing PLDT’s
PHI was "111,415 common shares representing 46.1250% of the subscribed and shares in 1977, why PTIC’s stockholders waived their right of first refusal in 1978,
outstanding shares of PTIC." why there are no proper entries in PHI’s Stock and Transfer Book, or why the subject
shareholdings were not included in Ramon U. Cojuangco’s Estate inventory.
On April 20, 1978, the PTIC Board of Directors granted Cojuangco and Rivilla However, the converse syllogism is not true – the details of PHI’s incorporation, or the
authorization to transfer their PTIC shares to PHI.10 fact that PTIC’s stockholders were disinterested in purchasing PLDT’s shares in 1977,
or that PTIC’s stockholders waived their right of first refusal in 1978, or that there are
Cojuangco thereafter ceded to PHI 77,719 PTIC shares registered in his name via no proper entries in PHI’s Stock and Transfer Book, or that 400 PHI shares were not
two separate deeds of assignment both dated May 2, 1978, one for 44,023 shares included in Ramon U. Cojuangco’s Estate inventory do not necessarily establish that
and the other for 33,696 shares.11 Rivilla likewise conveyed PTIC 33,696 shares President Marcos owned the subject shares in PHI, PTIC and PLDT.
registered in his name to PHI via a deed of assignment also dated May 2, 1978.12
Thus, a total of 111,415 PTIC shares was transferred to PHI on May 2, 1978. These circumstances show that PHI had an undisclosed principal and beneficial
owner. Subsequent events, i.e. the assignment of shares in 1981 and 1983, reveal
Gapud and Jose D. Campos, Jr. later assigned all their shares in PHI (400 shares and confirm that Mr. Ramon U. Cojuangco and his family were the principal and
each) to Cojuangco and PTIC Director Oscar Africa (Africa), respectively, via two beneficial owners of PHI, and, corollarily, the subject PHI, PTIC and PLDT shares, not
separate deeds of assignment dated February 18, 1981.13 President Marcos.20 (Emphasis, italics and underscoring supplied)

On May 9, 1981, Cojuangco and Africa were elected directors of PHI, replacing Imelda Marcos, on the other hand, consistent with the theory of petitioner
Gapud and Jose D. Campos, Jr., while the other directors – Lirio, Abalos, and Gaviola SEPARATE DISSENTING OPINION
– remained as such.14 On even date, Cojuangco and Africa were elected by the PHI
Board of Directors as President and Vice-President, respectively, while de Guzman SANDOVAL-GUTIERREZ, J.:
and Gaviola remained as Secretary and Treasurer, respectively.15
I join Mr. Justice Cancio C. Garcia in his well-crafted Dissent in G.R. No. 153459
Subsequently, by Deed of Assignment16 dated June 1983 (the day is not indicated), denying the Republic’s petition and affirming respondent Sandiganbayan’s Decision.
Africa transferred all his 400 PHI shares — 240 to Antonio Cojuangco and 160 to
Trinidad Cojuangco Yulo. On even date, the remaining incorporators on the board of In civil suits for forfeiture before the Sandiganbayan, like the instant case, the
directors – Lirio, Abalos, and Gaviola – each executed a deed of assignment Republic must meet the burden of proof and establish with a preponderance of
transferring their PHI shares to members of the Cojuangco family. Thus Lirio evidence that the property in question –
transferred 240 shares to Antonio Cojuangco and 160 to Trinidad C. Yulo;17 Abalos
transferred 320 shares to Ramon O. Cojuangco, Jr. and 80 to Miguel O. ". . . are assets and properties purportedly pertaining to former President Ferdinand
Cojuangco;18 and Gaviola transferred 320 shares to Ma. Victoria O. Cojuangco Yulo E. Marcos and/or his wife Mrs. Imelda Romualdez Marcos, their close relatives,
and 80 also to Antonio Cojuangco.19 subordinates, business associates, dummies, agents or nominees which had been or
were acquired by them directly or indirectly, through or as a result of the improper or
BENEFICIAL OWNERSHIP OF PHI illegal use of funds or properties owned by the Government of the Philippines or any
of its branches, instrumentalities, enterprises, banks or financial institutions, or by
Significantly, respondents in G.R. No. 153459, namely: Estate of Ramon Cojuangco, taking advantage of their office, authority, influence, connections or relationships,
Imelda O. Cojuangco, PHI, and Imelda R. Marcos all agree with petitioner Republic resulting in their unjust enrichment, and causing damage and prejudice to the Filipino
people and the Republic of the Philippines."1
65
The alleged ill-gotten assets in this case are shares of stock in Prime Holdings Inc. Campos also testified that he had never communicated in any manner whatsoever
(PHI) which, in turn, holds shares in Philippine Telecommunications Investment with President Marcos, his alleged principal, nor with Ramon Cojuangco regarding
Corporation (PTIC), a shareholder in the Philippine Long Distance Telephone Marcos’ beneficial ownership of shares of stock in PHI or PTIC or Prime Holdings,
Company (PLDT). The Republic’s case is premised on the theory that PHI is a Inc., thus:
"dummy corporation," not owned by private respondent Cojuangco family, but merely
held in beneficial trust for former President Ferdinand E. Marcos. "7. Did you ever have any discussions or correspondences with President Marcos
regarding his beneficial ownership or the beneficial ownership by any member of his
I have closely reviewed the records and revisited both factual and legal bases of the family, directly or indirectly, of shares of stock in Philippine Long Distance Telephone
Sandiganbayan Decision, and found that the Republic failed to prove its case by Company (PLDT), Philippine Telecommunications Investment Corporation (PTIC) or
preponderance of evidence. Prime Holdings, Inc.?

The Republic’s case is anchored almost entirely upon the testimonies of Messrs. Jose Answer: No, Ma’am.
Y. Campos, Rolando Gapud and Francisco de Guzman. They attempted to prove that
PHI was a corporate vehicle "organized for" Marcos. As "beneficial owner" of PHI, xxx
Marcos used Ramon U. Cojuangco as a "dummy" controlling PHI and its assets.
Did you ever have any discussions or correspondences with Ramon U. Cojuangco
The same witnesses identified the modus operandi employed by Marcos to hide his regarding the beneficial ownership by President Marcos or any member of his family,
ill-gotten wealth. Unfortunately, the evidence for the Republic fails to show that PHI is directly or indirectly, of shares of stock in PLDT, PTIC or Prime Holdings, Inc.?
Marcos’ "dummy corporation."
Answer: No, Ma’am."
Witness Campos, in describing the modus operandi behind dummy corporations
"organized for" Marcos, stated: Considering the fact that Campos – by his own admission – was the organizer of
dummy corporations for Marcos, it is contrary to human experience that he never had
"In the organization, administration and management of the above-named any discussion with the former President about PHI, if indeed it was such a dummy
corporations, as it was my policy that whenever such a corporation is organized for corporation.
and on behalf of the intended beneficiaries, I execute and I require all my said
associates to execute a Deed of Trust or Deed of Assignment duly signed in favor of Obviously, there was nothing to discuss with President Marcos about PHI because it
an unnamed beneficiary and to deliver the original copy thereof to the former was not one of his dummy corporations. In fact, the Republic’s other witness, Atty.
President. It is in fact my policy and procedure that we disclaim completely any Francisco de Guzman, admitted that PHI did not meet the description of a Marcos
interest in any such business and make it clear to the former President that we hold dummy corporation, thus, to quote the very same passage cited in the Dissent:
such interests on his behalf."
"Q: Was it the standard operating procedure in Jose Yao Campos holdings
In his affidavit, Campos named PHI as one of the companies he organized for companies that the stock certificates of the stockholders would be endorsed in blank?
President Marcos. Yet, when asked if the modus operandi was applied to PHI as it
was with the other Marcos dummy corporations, he vacillated,2 thus: A: Yes, sir.

"3. In your Sworn Statement, page 2, you stated that with respect to the corporations Q: And who would hold custody or possession of those/ bank endorsed stock
you held in trust for President Marcos, it was your ‘policy’ that whenever such a certificates?
corporation was organized, you executed, and you required all your business
associates to execute, a Deed of Trust or Deed of Assignment in favor of an A: In the case of many of the corporations I think including Prime Holdings, Inc. these
‘unnamed beneficiary,’ and delivered the originals thereof to President Marcos. xxx are not fully paid shares and therefore, I knew that no stock certificates have been
Was this ‘policy’ FOLLOWED IN THE CASE OF [PHI]? xxx issued, sir.

ANSWER: ‘All the corporations I organized – that was the standard policy – that we Q: So, specifically in the case of Prime Holdings, Inc. there were no stock certificates
surrendered direct to President Marcos.’" issued because the subscriptions were not fully paid?
66
A: Yes, sir. Q: Of that particular company?

Q: Do you know if the stockholders of Prime Holdings, Inc., this is prior to 1981, had A: No, to Mr. Gaviola, sir.
executed Deed of Assignment in blank for their subscription to PHI shares?
Q: Mr. Gaviola was the Treasurer of Prime Holdings, Inc. wasn’t he?
A: Yes, sir, the standard operating procedure in the companies of Mr. Campos is that
all the subscribers would have either a Deed of Assignment signed or a Deed of A: I think he is because he is always, was the Treasurer of many of the companies of
Trust, sir. Mr. Campos, sir.

Q: And you are referring to these holding companies that Mr. Campos, a number of Q: So, there is the SOP also, MR. Gervacio Gaviola is the Treasurer of Prime
holding companies that Mr. Campos have caused to be incorporated, these are the Holdings, Inc.?
companies?
A: Yes, sir.
A: Yes, sir.
xxx xxx xxx
Q: You said Deed of Trust, would there be a designated trustee?
Q: Now, who would hold the records of these companies which would include those
A: No, sir. blank Deeds of Assignment or Deeds of Trust?

Q: So, these are Deeds of Assignment or Deeds of Trust, the beneficiary of which A: Well, the actual custodian of that will be the Legal Department who has all the legal
would be left blank? files, sir.

A: Yes, sir. Q: Was it not or would you consider it risky that the blank Deeds of Assignment or
blank Deeds of Trust of all the shares in this companies he right there in the records,
Q: But the assignors or the trustees or grantors would all sign, would all execute be among the corporate records, that somebody could take them and put their
these Deeds? names?
A: Yes, sir.
A: Maybe there is some risk there but you see, sir, the people in the Legal
Q: Who would have possession, you mentioned standard operating procedure or Department are well trusted by all of us. They have been with the company for many
SOP, under the SOP who would hold the blank deeds? years and considering the competence that they have established with us, nobody
would even get those records without, let’s say order of Mr. Campos or me or the
A: A copy of which usually two (2) copies are made, sir. Corporate Secretary, sir.

Q: Two (2) originals? Q: And who were these trusted people of the Legal Department?

A: No. A: The lawyers, sir.

Q: Xerox copies? Q: Could you give us the names?

A: No. One original and one Xerox copy and the original will be included in the A; Yes, two of them died and one of them retired. Mr. Urbano Francisco was the only
records, sir. survivor, sir.

Q: The records of that particular company? Q: Can I have the names of those who died?

A: Yes, sir, and the other one we give it to the Treasurer. A: Ed Halagao, I cannot remember the other one, sir.
67
 CONSUL AGUILUCHO: How much did you receive as consideration for assigning
Q: These are the trusted lawyers of the Legal Department of UNILAB? your shares to him?

A: Yes, sir. MR. GAPUD: The consideration for this assignment was that upon my assignment,
first, my fiduciary responsibilities as nominee were extinguished, and secondly, I had
xxx transferred and extinguished any and all liabilities under the subscription payable.

Q: Do you know what happened to those blank deeds of Assignment of Deeds of CONSUL AGUILUCHO: Do you know if Ramon Cojuangco received the said shares
Trust of Prime Holdings, Inc. that were entrusted with the trusted lawyers of UNILAB? for himself or for anybody else?

A: When Prime Holdings, Inc.’s records were delivered, all those records, all those MR. GAPUD: I don’t know."
papers are with the records, sir.
In fact, while he could have easily identified Marcos as the beneficial owner of PHI,
Q: So, you are referring to the 1982 delivery to the representative of Mr. Ramon U. witness Gapud – who succeeded Campos as President of PHI – refused under oath
Cojuangco? to do so. Instead:

A: Yes, sir, except two (2) Deeds of Assignment which were I think made directly "CONSUL AGUILUCHO: The heirs of Ramon U. Cojuango, namely Imelda O.
afterwards when Mr. Gapud and Mr. Jose Campos, Jr. made the direct assignments Cojuangco and her children… claim that they own eighty (80) percent of the
to persons actually designated in the Deeds of Assignment, sir. outstanding capital stock of Prime Holding, while the Estate of Ramon U. Cojuangco
allegedly owns the remaining twenty (20) percent? Question: Based on your personal
Q: Who were those? knowledge, do you affirm or deny the said allegation?

A: The shares of Mr. Gapud was (sic) given to Mr. Ramon U. Cojuangco, Mr. MR. GAPUD: I do not know. I can neither affirm nor deny."
Campos, Jr. I can’t remember to whom he made the assignment, sir."
The majority of my colleagues hold that "Gapud’s statement relating to subsequent
If, according to the Republic’s own witness, the shares of a Marcos dummy execution of deeds of assignment to Cojuangco and his kin does not detract from the
corporation are covered by a Deed of Assignment endorsed to an unnamed prior delivery of blank deeds to the former President, especially so in this case where,
beneficiary, then Atty. De Guzman’s above admissions are fatal to the Republic’s by Gapud’s own recounting, he and his co-incorporators executed the 1981 and 1983
case. His categorical declaration is that the blank Deeds of Assignment and Deeds of Deeds of Assignment with the knowledge and authorization of the same person to
Trust covering PHI shares were not delivered to Marcos, but to Ramon U. Cojuangco. whom the earlier deeds were delivered – President Marcos."

Now, delivery of the blank deeds of Assignment and Deeds of Trust was a crucial But the ponencia conveniently sidesteps the reality that there is no evidence of such
element of the modus operandi. Considering that Marcos was not in possession of prior delivery to Marcos. Witness de Guzman declared that the blank Deeds of
the Deeds over PHI shares, he could not have controlled or managed PHI. To be Assignment over PHI shares were placed in the custody of the Legal Department, and
sure, there was no point organizing PHI as a dummy corporation for Marcos since he thereafter delivered to Ramon Cojuangco, together with all the records of PHI.
could not perform these functions.
The majority also hold that the alleged execution by the incorporators, as "nominees"
Witness Gapud testified that he assigned his PHI shares to Ramon U. Cojuangco – of Marcos, of the Deeds of Assignment/Deeds of Trust is consistent with Gapud’s
not Marcos, thus: statement that he received virtually nothing in return for PHI shares. But to my mind,
this is fallacious – a conjecture made to fit an insignificant fact. A straightforward
"CONSUL AGUILUCHO: Is it really true that you assigned your 400 shares [in Prime explanation is simply that when the PHI shares were assigned to Ramon U.
Holdings] to Ramon U. Cojuangco? Cojuangco – the true beneficial owner -Gapud’s role as a nominee became
untenable. Obviously, a nominee’s role ends when the principal’s exercise of his right
MR. GAPUD: Yes. begins.

68
Nor is it accurate to say that there was an absence of consideration for the transfer of
the PHI shares. Gapud himself admitted that the consideration for the assignment of Another source of debate in this case has been the evidentiary standard applicable to
his shares to Cojuangco was the termination of his fiduciary responsibilities as this and other ill-gotten wealth cases, given the Sandiganbayan’s reliance on Baseco
nominee and the extinguishment of his liabilities under the subscription. vs. PCGG4 and related jurisprudence. The ponencia stresses that this Court never
intended to lay down evidentiary standards in Baseco and, therefore, the
The ponencia does not explain why Marcos allowed the execution of the Deeds of Sandiganbayan’s reference to such standards is nothing more than its "inference from
Assignment in favor of respondent Cojuangcos. If PHI was indeed a dummy its reading of the Decision."
corporation, then it would be contrary to human experience for President Marcos to
deprive himself of the legal mechanism to assert his alleged beneficial ownership. I disagree. To my mind, Baseco is applicable.

Indeed, if the transfer of PHI shares to the Cojuangco family was with the "blessings" Baseco is a landmark ruling that confirms the modus operandi described by the
of President Marcos, then it can only mean the he was never interested in those Republic’s witnesses here. In that case, "street certificates" (i.e. stock certificates
shares – a fact consistent with Campos’ statement that he "never discussed" the PHI endorsed in blank) and Deeds of Assignment to various corporations including
shares with Marcos. Therefore, the plausible reason for this is that Marcos never Baseco, also assigned in blank, were among the documents found to have been in
owned the shares in the first place. Marcos’ possession in Malacañang. We were convinced that based on such proof,
Marcos "actually owns well nigh one hundred percent of its outstanding stock."5
The realistic scenario, therefore, is that these shares actually pertained to Ramon U.
Cojuangco from the beginning and the assignments to him and members of his family But unlike Baseco, here there is no such documentary evidence. Neither PHI stock
merely confirmed what already existed in fact. In other words, Cojuangco – not certificates nor PHI Deeds of Assignment have turned up in Marcos’ hands. Witness
Marcos – has been the beneficial owner of the shares from the start. This explains de Guzman testified that assignments of PHI shares were delivered to Cojuangco, not
why no blank Deeds of Trust or Assignment were executed and delivered by the Marcos. Documentary evidence (Exhibits "1" to "5", for instance) clearly identify
stockholders of PHI, and the reason why they executed and delivered Deeds of Ramon U. Cojuangco and the members of his family as the assignees of PHI shares
Assignment specifically naming Ramon U. Cojuangco and the members of his family – certainly removing any idea that these were assigned in blank to an "unnamed
as the assignees of the PHI shares. This also explains why PHI’s capitalization was beneficiary."
not increased despite its acquisition of PTIC shares. An increase was unnecessary
because Ramon U. Cojuangco actually did not part with the ownership of the PTIC Because this is a civil forfeiture case, then the Republic must establish, by a
shares transferred to PHI, since after all, he, not Marcos, owned the PHI. That he is "preponderance of evidence," that the PHI shares were "ill-gotten wealth." Its burden
the owner thereof is shown by the following circumstances: is explained by this Court, thus:

(a) respondent Cojuangco took over as Chairman and President of PHI after the "Equiponderance of evidence rule states:
assignment; and (b) the books and records of PHI were turned over to him, as
testified to by de Guzman, the Republic’s witness. Certainly, these assignments are When the scales shall stand upon an equipoise and there is nothing in the evidence
effective: which shall incline it to one side or the other, the court will find for the defendant.

"When a formal deed of assignment is executed by the transferor in favor of a Under said principle, the plaintiff must rely on the strength of his evidence and not on
transferee, for the purpose of assigning shares of stock, endorsement and delivery the weaknesses of defendant’s claim. Even if the evidence of the plaintiff may be
requirements stated in Section 63 of the Corporation Code are deemed substantially stronger than that of the defendant, there is no preponderance of evidence on his
complied with. This mode of transfer covers a situation where no certificate of stock side if such evidence is insufficient in itself to establish his cause of
has been issued or where the stock certificate is not in the possession of the action."61awphil.net
transferor-stockholder so that the shares of stock may be transferred by means of a
deed of assignment."3 Similarly:

Additionally, the Republic failed to prove that Marcos had a subsisting interest in PHI. "We are at a loss to determine which position is correct. Under the circumstances, we
There had been no intervention on his part in the affairs of PLDT, PTIC, or PHI. Nor are constrained to decide the issues under the rule of burden of proof.
did he issue instructions that "hugely and inexplicably benefited" these companies
indicating he had any actual interest therein.
69
Where the evidence on an issue of fact is in equipoise or there is any doubt on which In its Amended Complaint for Reconveyance, Reversion, Accounting, Restitution and
the evidence preponderates the party having the burden of proof falls upon that issue, Damages, the Republic of the Philippines, through the Presidential Commission on
that is to say, if the evidence touching on disputed facts is equally balanced, or if it Good Government (PCGG), alleges, inter alia, that these PTIC shares of stock held
does not produce a just, rational belief of its existence, or it leaves the mind in a state by PHI and the Cojuangcos belong in truth and in fact to the Marcoses. In other
of perplexity the party holding the affirmative as to such fact must fail. (23 C.J. 11- words, PHI and the Cojuangcos are mere dummies/conduits/nominees of the
12)"7 Marcoses who effectively owned PTIC and, necessarily, the disputed shares of stock
of PLDT.
So must it be in this case. On the assumption that the Republic has presented a
persuasive case, it may not be said that the defendants do not have in their favor an Pursuant to its mandate, the PCGG filed the complaint for reversion of the Marcoses’
equally persuasive one. Even were we to find the balance of evidence to be just ill-gotten wealth including these PLDT shares of stock to the Republic.
about at equipoise, the Republic’s instant claim – as a matter of law – must fall.
In their respective Answers, PHI and the Cojuangcos vehemently deny that the
Some might argue that the evidentiary requirement in civil forfeiture cases has an Marcos family owned the disputed shares of stock. PHI, in particular, asserted that
even higher standard, that is, proof beyond reasonable doubt. In Cabal vs. Kapunan,8 the members of the family of the late Ramon Cojuangco own all the outstanding
we ruled that proceedings for forfeiture of property in favor of the State (under the shares in PHI.
Anti-Graft Law) is criminal and penal in nature because such actions are primarily to
punish for violation of a duty or a public wrong and to deter others from offending in Imelda Marcos, on the other hand, admitted in her Answer that they hold beneficial
the like manner. Forfeiture of property is in substance a criminal proceeding, and ownership over these shares of stock. She maintained that their wealth was lawfully
such forfeiture has been held to partake of the nature of a penalty. acquired.

WHEREFORE, I vote to DENY the petition in G. R. No. 153459 and AFFIRM Alfonso Yuchengco and Y Corp. filed a complaint in intervention seeking to recover
respondent Sandiganbayan’s Partial Decision. from the Cojuangcos their shares of stock and asserting ownership thereof as against
the Republic. Yuchengco claims that the Marcos regime compelled him into giving up
6% of PTIC shares formerly owned by Gregorio Romulo and Leonides Virata and
deprived him of exercising his option to buy General Telephone and Electronics,
The Lawphil Project - Arellano Law Foundation Inc.’s (GTE’s) 25% equity in PTIC. This 25% equity in PTIC was subsequently
acquired by PHI.
CONCURRING OPINION
After protracted hearings, the Sandiganbayan rendered the assailed Partial Decision
CALLEJO, SR., J.: dated May 6, 2002 dismissing the Republic’s complaint insofar as it seeks to recover
the PLDT shares.
I concur with the majority opinion penned by Madam Justice Conchita Carpio Morales
and vote to grant the petition in G.R. No. 153459 to the extent that it prays for the The petition in G.R. No. 153459 is filed by the Republic assailing the Partial Decision.
reconveyance to the Republic of the Philippines of 111,415 shares of stock of the Yuchengco and Y Corp. also assail the said Partial Decision in their petition in G.R.
Philippine Telecommunication Investment Corp. (PTIC) registered in the name of No. 153207.
Prime Holdings Inc. (PHI).
The petition in G.R. No. 150367 is filed by the Republic assailing the
PTIC is the biggest stockholder of Philippine Long Distance Telephone Co. (PLDT), Sandiganbayan’s Order denying its Respectful Motion for Additional Time to
owning 28% of its outstanding shares or totaling approximately 625 million PLDT Complete the Presentation of Evidence. The petitions in G.R. Nos. 149802 and
shares valued at approximately 1.6 billion pesos. 150320 were filed by Yuchengco and Y Corp. assailing the Orders of the
Sandiganbayan denying their motions to suspend trial pending discovery proceedings
The shares of stock of PTIC are registered in the following names: 111,415 (46% of and cancellation of hearings. The Sandiganbayan declared them to have waived their
total shares) are held by PHI; 76,779 were held by Ramon Cojuangco during his right to present evidence.
lifetime; and 21,525 are held by Imelda Cojuangco (44% of total shares).
In the Partial Decision, the Sandiganbayan ruled that the Republic failed to prove that
the PLDT shares are part of the ill-gotten wealth of the Marcoses. Consequently, it
70
affirmed the PHI’s and the Cojuangco’s ownership over the disputed shares. The The Sandiganbayan, in fine, ruled that the Republic failed to prove by preponderant
Sandiganbayan held that "almost all the documents offered by the Republic are evidence that PTIC as well as the disputed shares in PLDT belonged to the
photocopies;" thus, the latter failed to provide "such proof of authenticity or reliability:" Marcoses.

We are therefore constrained to find that the Republic’s documentary evidence, to the The majority opinion further adds the following relevant facts:
extent that they are mere photocopies, or are otherwise unidentified, unauthenticated,
and constitutive of hearsay, may not be justifiably relied upon by this Court, nor may PHI was incorporated in 1977 by Jose D. Campos (son of Jose Yao Campos),
their integrity be assumed, for their purpose of establishing the facts, or for supporting Gapud, Renato Lirio, Ernesto Abalos and Gervacio Gaviola, with 400 shares each in
the theory pursued by the Republic. their names. These incorporators were also the officers of PHI.

More particularly, there is no competent evidence to show that defendant Ferdinand Meanwhile, in 1977, 54,349 shares of PTIC, originally owned by GTE, a US
Marcos had any hand in PTIC, or in the acquisition by the defendants Cojuangco in corporation, were acquired by Ramon Cojuangco, who was then PTIC President and
their own names of any of their shares therein. There is no competent evidence to member of its board of directors.
establish or even infer, the existence of a relationship of trust between the defendants
Cojuangco and defendant Ferdinand Marcos with PTIC, or to establish that In 1978, together with Luis Revilla, another stockholder of PTIC, Ramon Cojuangco
presidential concessions, benefits, or other incentives that could have improved the ceded a total of 111,415 PTIC shares to PHI through several deeds of assignment.
financial and operational situation of PTIC, PLDT, and PHI, were accorded said
companies by defendant Ferdinand Marcos. Accordingly, there is no competent In 1981, Gapud and Jose D. Campos later assigned all their shares in PHI (400
evidence to prove the Republic’s allegation that the PLDT shares herein were ill- shares each) to Cojuangco and Oscar Africa, respectively, through separate deeds of
gotten. assignment.

On the other hand, there is evidence for the defense which establishes the fact that On that same year, Cojuangco and Africa became directors of PHI and its President
all shares in PHI were vested upon defendant Ramon U. Cojuangco and his family. and Vice-President, respectively.
Thus documents were offered in evidence plainly naming and identifying Ramon U.
Cojuangco and members of his family as assignees of PHI shares, and in the In 1983, Africa transferred his 400 PHI shares to Antonio Cojuangco and Trinidad
absence of blank Deeds of Assignment and/or Deeds of trust executed by Cojuangco Yulo. Also, Lirio, Abalos and Gaviola, remaining incorporators of PHI,
stockholders of PHI, said corporation may not be said to have been organized for transferred their 1,200 shares in PHI to members of the Cojuangco family through
defendant Marcos’s benefit. To reiterate, it is the existence of such blank Deeds of deeds of assignment. In effect, the Cojuangcos acquired full control of PHI.
Assignment and/or Deeds of Trust that distinguishes corporations asserted to be
owned by defendant Ferdinand Marcos from the others. Deposition of Campos

More importantly, with the assignment of PHI shares specifically to defendant Ramon Campos was a Marcos crony. He categorically stated that he organized corporations
U. Cojuangco and members of his family, defendant Ferdinand Marcos lost the for and in behalf of Pres. Marcos. He gave a list of these corporations which included
essential legal instrumentation or mechanism upon which he could have claimed the PHI. It was his policy that "whenever such corporation is organized for and on behalf
shares in ownership or compel the reconveyance thereof to him. of the intended beneficiaries, I execute and require all my said business associates to
execute a Deed of Trust or Deed of Assignment duly signed in favor of unnamed
Likewise, there is, by the evidence, sufficient basis to conclude that the defendants beneficiary and to deliver the original copy thereof to the former President."
Cojuangco acquired the shares in their names in PTIC as the actual and beneficial
owners thereof. In fact, based on plaintiff’s own offered document, it is clear and In 1979, he suffered a severe heart attack; thus, he transferred to Gapud the
indubitable that defendants Cojuangco were original stockholders of PTIC, hence management of these corporations.
held some of their shares therein as early as 1967. These shares have been claimed
by them in actual and beneficial ownership. When defendant Ramon U. Cojuangco When categorically asked during his deposition whether the policy of executing deeds
died on May 6, 1984, the 76,779 PTIC shares registered in his name were declared of trust or assignment in favor of an "unnamed beneficiary" and delivering them to
as part of his estate.1 then Pres. Marcos was followed in the case of PHI, Campos replied that "all the
corporations I organized – that was the standard policy – that we surrendered direct
to President Marcos."
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These statements were corroborated by the testimony of de Guzman on cross- CONSUL AGUILUCHO. How much did you receive as consideration for assigning
examination to the effect that he received instructions from Campos to organize PHI your shares to him?
and thereafter, he (Campos) told him that it was Gapud who would be giving
instructions regarding PHI. MR GAPUD. The consideration for the assignment was that upon my assignment,
first, my fiduciary responsibilities as nominee were extinguished, and secondly, I had
The foregoing statements clearly show that PHI was one of the corporations transferred and extinguished any and all liabilities under the subscription payable.
organized by Campos for and in behalf of Pres. Marcos and that in all the
corporations he organized, it was the standard policy that they surrendered [a deed of Deposition of de Guzman
trust or assignment] direct to the latter. In other words, PHI was beneficially owned by
Pres. Marcos. De Guzman was the Corporate Secretary of PHI. In his testimony, de Guzman
identified the original incorporators of PHI, namely, Gapud, Lirio, Gaviola and Abalos,
Deposition of Gapud as close associates of Campos. The other incorporator, Jose D. Campos, Jr., was the
latter’s son. The office of PHI was within the premises of the United Laboratories,
Gapud was one of the incorporators of PHI and a close associate of Campos. When another corporation controlled by Campos.
asked whether he knew the beneficial owners of PHI, Gapud answered that what he
knew was that "the shares of stock and/or assignments endorsed in blank were Based on the foregoing, there is nary any evidence on Cojuangco’s role in the
delivered to Pres. Marcos by Mr. Campos." Also, that the deed of assignment in blank organization of PHI to substantiate the thesis that the same was beneficially owned by
covering his (Gapud’s) 400 shares in PHI was delivered by Campos to Pres. Marcos. Cojuangco. On the other hand, the Republic’s thesis that President Marcos is the
However, he affirmed that he subsequently transferred these shares to Ramon beneficial owner of PHI "is deduced from established facts which, weighed by
Cojuangco through a deed of assignment. common experience, engender the inference as a very strong probability."
Preponderance of evidence lies with the Republic.
Gapud’s testimony corroborates Campos’ statement that PHI was organized for and
in behalf of Pres. Marcos. There is no contradiction between Gapud’s claims that On the basis of the evidence on record, I am convinced that that President Marcos
blank deed of assignment covering his shares in PHI was delivered to Pres. Marcos owned PHI and all the incorporators thereof acted under his direction and that once
and, later, he executed a deed of assignment covering these same shares in favor of this is acknowledged, the following conclusions inevitably follow:
Cojuangco.
1. Cojuangco was elected President and took over the management of PHI on 1981
I agree with the disquisitions of the majority that Gapud’s statement relating to the with the cooperation of the Marcos nominees who, it must be emphasized, still held
subsequent execution of deeds of assignment to Cojuangco and his kin does not the majority stockholding as of that date;
detract from the prior delivery of blank deeds to the former President, especially so in
this case where, by Gapud’s own recounting, he and his co-incorporators executed 2. As the remaining incorporators on the Board divested their shares only in 1983,
the 1981 and 1983 deeds of assignment with the knowledge and authorization of the Cojuangco managed a Marcos-controlled corporation for at least two years;
same person to whom the earlier deeds were delivered – President Marcos.
3. The simultaneous divestment of shares by the three remaining incorporators on the
VICE CONSUL HERNANDEZ Board to Cojuangco’s close relatives in 1983 were with the knowledge and
authorization of their Principal – President Marcos.
So the aforesaid Deeds of Assignments obviously were with the knowledge and upon
authorization and order of former President Ferdinand E. Marcos, is this correct? The preponderance of evidence lies with the Republic with respect to the 111,415
shares of PTIC registered in the name of PHI. Such evidence consists of the
MR. GAPUD. Considering that Prime Holdings, Inc. was incorporated upon the statement of Campos as corroborated by the statements of Gapud and De Guzman.
instructions of former President Marcos, obviously all the nominees would act only
upon his authorization. That’s my answer. For clarity, the ownership of the outstanding PTIC shares are divided as follows:

As gleaned from the deposition of Gapud, there is practically no consideration for the q 111,415 shares are held by the Prime Holdings Inc. (PHI);
transfer by Gapud of his shares to Cojuangco:
72
q 76,779 were held by Ramon Cojuangco during his lifetime and; Florentin, Daniel Q. Tan and Elizabeth S. Campos continued to be named
stockholders in these corporations although they did not have any financial interest
q 21,525 are held by Imelda Cojuangco. therein. (Emphasis and underscoring supplied).

Thus, 46% of the total shares are held by PHI while the other 44% are held by the Annex A referred to by Campos included PHI.
Cojuangcos. However, as shown earlier, the Cojuangco family eventually acquired
control of PHI when, in 1983, its incorporators transferred their shares to the former. In his Sworn Statement dated December 18, 1995, Campos further averred:

With respect to the incorporation of PHI, the following allegations in the Sworn 3. In your Sworn Statement, page 2, you stated that with respect to the corporations
Statement dated March 21, 1986 of Campos are enlightening: you held in trust for President Marcos, it was your "policy" that whenever such a
corporation was organized, you executed, and you required all your business
1. My relationship with the then President Ferdinand E. Marcos dates back to the time associates to execute, A Deed of Trust or Deed of Assignment in favor of an
when he was first elected as Congressman of the then Philippine Congress. The "unnamed beneficiary", and delivered the originals thereof to President Marcos. x x x
relationship continued when he was then elected President of the Republic of the Was this "policy" followed in the case of [PHI]? x x x
Philippines. Thereafter I assisted in the organization and acquisition of some business
ventures for the former President. Following his directive I instructed my lawyers and ANSWER: All the corporations I organized – that was the standard policy – that we
requested the assistance of my other business associates and officers of the surrendered direct to President Marcos.
company to organize, establish and manage these business ventures for and on
behalf of the President; 3.1 Was it also your policy to deliver to President Marcos the stock certificates that
you and your business associates held in trust for him?
2. The companies that we have organized for and on behalf of former President
Marcos are listed in Annex "A" attached herewith; ANSWER: Yes, Ma’m.

3. In the organization, administration and management of the abovenamed 3.2 If stock certificates that you and your business associates held in trust for
corporations, it was my policy that whenever such a corporation is organized for and President Marcos were delivered to him was it also your policy to have the stock
on behalf of the intended beneficiaries, I execute and I require all my said business certificates indorsed in blank? Were the stock certificates in {PHI} indorsed in blank?
associates to execute a Deed of Trust or Deed of Assignment duly signed in favour of
an unnamed beneficiary and to deliver the original copy thereof to the former ANSWER: If there are certificates issued in Prime Holdings, it is the same way it was
President. It is in fact my policy and procedure that we disclaim completely any delivered to him. If there is such certificate issued, it is indorsed in blank and follow
interest in any of such businesses and make it clear to the former President that we the same pattern for all the corporations. Whatever we have decided, we deliver, sign
hold such interests on his behalf; in blank and deliver to him.

4. In the latter part of 1979 suffered a severe heart attack and was confined in the 3.3. Did you and your business associates deliver to President Marcos the stock
intensive care unit of the Makati Medical Center. x x x certificates issued by [PHI]? If not, what did you and your business associates do with
the stock certificates?
5. Occasioned by the withdrawal of my active participation in the management of the
abovenamed corporations, Mr. Rolando C. Gapud who was my financial consultant ANSWER: If Prime Holdings certificates have been issued, as I said Ma’m, it is
took over the direct responsibility of directing, managing and administering all the delivered to the President.
activities of the said corporations. However, since Mr. Gapud did not have the
administrative staff to efficiently manage the businesses, he requested me that all the 4. In your Sworn Statement, page 2, you also stated that "it is in fact my policy and
employees and officers involved in the organization should continue to remain in the procedure that we disclaim completely any interest" in the business organized for
companies even only in a nominal capacity considering that they had previously President Marcos and "make it clear to the former President that we held such
disclaimed any interest therein. It is for this reason that Rolando C. Gapud and my interests in his behalf" . . . . Was this "policy and procedure" followed in the case of
business associates, namely, Mariano K. Tan, Jose D. Campos, Jr., Luciano E. [PHI]? xxx
Salazar, Francisco G. De Guzman, Guillermo C. Gastrock, Ernesto S. Abalos,
Gervasio T. Gaviola, Rodolfo Dimaano, Manuel Engwa, Lourdes F. Florentino,
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ANSWER: The policy is followed by every corporation that we organized for the
President. CONSUL AGUILUCHO: How much did you receive as consideration for assigning
your shares to him [referring to Ramon Cojuangco]?
4.1 Did you and your business associates also "disclaim completely any interest" in ...
(PTIC) and "make it clear to the former President that we hold such interests on his MR. GAPUD: The consideration for the assignment was that upon my assignment,
behalf"? first, my fiduciary responsibilities as nominee were extinguished, and secondly, I had
transferred and extinguished any and all liabilities under the subscription payable.
ANSWER: Ma’m, as I said, I don’t know that Prime Holdings has such holdings of the
PTIC shares that you referred to. (‘Emphasis and underscoring supplied) This lack of consideration renders the acquisition by the Cojuangcos of the said PHI
shares of no juridical effect.
The admissions of Campos are judicial; hence, conclusive on him and his
successors-in-interest. The same can be contradicted only by showing that it was It also appears that the transfer by these incorporators of their shares in favor of
made through palpable mistake or that no such admission was made.2 All proofs Cojuangco was made with the knowledge and consent of then Pres. Marcos. As
submitted by him and his successors contrary thereto or inconsistent therewith should Gapud further averred in his deposition:
be ignored, whether objection is interposed by him or not.3 The admissions of
Campos are even admissions against interest, and, hence, trustworthy. For their part, VICE CONSUL HERNANDEZ: Can we note your objection and let Mr. Gapud answer.
the Cojuangcos failed to allege, much less show, that the admissions of Campos
were made through palpable mistake or that no such admission was made. So the aforesaid Deeds of Assignments obviously will be with the knowledge and
upon authorization and order of former Pres. Ferdinand E. Marcos, is this correct?
It bears stressing that under Executive Order No. 14,4 the quantum of evidence
required in cases involving forfeiture proceedings is preponderance of evidence, i.e., MR. GAPUD: Considering that Prime Holdings, Inc. was incorporated upon the
"evidence which is of greater weight, or more convincing than that which is offered in instructions of former President Marcos, obviously all the nominees would act only
opposition to it. The term ‘preponderance of evidence’ means the weight, credit and upon his authorization. That’s my answer.
value of the aggregate evidence on either side and is usually considered to be
synonymous with the terms ‘greater weight of evidence’ or ‘greater weight of the VICE CONSUL HERNANDEZ: So the deposition ends.
credible evidence.’ Preponderance of the evidence means evidence which is offered
in opposition thereto."5 Given the lack of consideration and the authority given by Pres. Marcos therefor, it
would thus appear that the deeds of assignment executed by the PHI incorporators in
The testimony of Campos, as corroborated by Gapud and de Guzman, that he favor of Ramon Cojuangco and his family were forged for the purpose of conveying
organized PHI for and in behalf of Pres. Marcos should be accorded great probative management and control of PHI to the latter who likewise acted for and in behalf of
weight. The incorporators of the said corporation were close associates of Campos Pres. Marcos.
and, in fact, Gapud admitted that he did not really own the shares registered in his
name and that the deed of assignment covering these shares was delivered by In fine, the preponderance of evidence lies with the Republic insofar as the 111,415
Campos to Pres. Marcos. shares in PTIC held by PHI are concerned. Again, the evidence shows that PHI was
organized for and in behalf of Pres. Marcos. Thus, the 111,415 shares in PTIC, and
Reliance by the dissenting opinion on the deeds of assignment purportedly executed necessarily the corresponding shares in PLDT, held by PHI must be reconveyed to
by the PHI incorporators in favor of Cojuangco family members is misplaced. The fact the Republic as part of the Marcoses’ ill-gotten wealth.
that in these deeds of assignments the Cojuangcos were specifically named, does not
constitute proof that the beneficial ownership of PHI belonged to the Cojuangcos ACCORDINGLY, I vote to grant the petition in G.R. No. 153459 to the extent that it
although they (deeds of assignment with specific names) deviated from the "standard prays for the reconveyance to the Republic of 111,415 shares of stock of PTIC
practice" mentioned by Campos of delivering invariably blank deeds of assignment to registered in the name of PHI.
Pres. Marcos.
ROMEO J. CALLEJO, JR.
To reiterate, there is no evidence at all that there was a consideration for the transfer Associate Justice
by the incorporators of their shares in favor of the Cojuangcos. As Gapud stated in his
deposition:
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Footnotes shares in Philippine Long Distance Telephone Company, Inc. (PLDT). The Republic
seeks to recover the covered PLDT shares from Imelda O. Cojuangco, the Estate of
1 Assailed Partial Decision, pp. 32-33. Ramon U. Cojuangco, represented by its administratrix Imelda O. Cojuangco
(collectively, "Cojuangcos"), and Prime Holdings, Inc. (PHI), as part of the alleged "ill-
2 Rule 129, Section 4, Revised Rules of Evidence. gotten wealth" of the Marcos family.

3 Cunanan v. Amparo, 80 Phil. 229. Subsequently, petitioner Alfonso T. Yuchengco (Yuchengco), joined later by his ally,
Y Realty Corporation (Y Realty), intervened, claiming they are the rightful owners of
4 Executive Order No. 14 provides that "civil suits for restitution, reparation of PHI’s 46% shareholding in PTIC. They would assert that their claim for recovery of
damages, forfeiture proceedings provided for under Republic Act No. 1379, or any the property allegedly unjustly taken from them is superior to the forfeiture claim of the
other civil action under the Civil Code or other existing laws, in connection with (said Republic.
EO Nos. 1 and 2) may be filed separately from and proceed independently of any
criminal proceedings and may be proved by preponderance of evidence. Acting on a February 1996 motion of the Cojuangcos, the Sandiganbayan would later
resolve to sever the PLDT-share-ownership issue from the other claims involved in
5 Republic v. Court Appeals, 204 SCRA 160. Civil Case No. 0002, and allowed a separate trial with respect only to the issue
related to the PLDT shares. In the course of the separate trial, the Sandiganbayan
(Fourth Division) issued certain orders and resolutions, infra, that are now subject to
The Lawphil Project - Arellano Law Foundation challenge in either one of the herein five (5) consolidated petitions.

DISSENTING OPINION Three (3) of these petitions, i.e., G.R. No. 150367, G.R. No. 149802 and G. R. No.
150320, are for certiorari under Rule 65 of the Rules of Court, the first filed by
GARCIA, J.: Republic and the remaining two, by Yuchengco/Y Realty (collectively, the
Yuchengcos). These recourses similarly assail as having been issued in grave abuse
Before the Court are these five (5) separate petitions to nullify and set aside certain of discretion or in excess or lack of jurisdiction, ergo null and void, certain resolutions
issuances of the Sandiganbayan, Fourth Division, in Civil Case No. 0002, a complaint and orders issued by the graft court in Civil Case 0002. As each petitioner in these
for reconveyance, reversion, accounting, restitution and damages thereat instituted by three (3) petitions alleged, the resolutions and orders adverted to effectively deny
the Republic of the Philippines (Republic), through the Presidential Commission on them due process of law. Accordingly, they pray that writs of certiorari issue with the
Good Government (PCGG). end in view of enjoining respondent Sandiganbayan to allow them additional trial
dates for purposes of presenting their respective evidence in the separate trial below.
Per its en banc Resolution of March 4, 2003,1 the Court ordered the consolidation of
these five (5) petitions, emanating, as they all do, from the same case. On the other hand, G.R. No. 153459 and G.R. No. 153207, filed by Republic and the
Yuchengcos, respectively, under Rule 45 of the Rules of Court, each seeks a review
I. THE UNDERLYING CASE: and the setting aside, allegedly for not being in accord with the evidence adduced
below, and for being contrary to law and settled jurisprudence, the Sandiganbayan’s
CIVIL CASE NO. 0002 Partial Decision3 on the PLDT issue dated April 25, 2002, but promulgated on May 6,
2002 (simply Partial Decision, hereafter). The Partial Decision, which was rendered
Civil Case No. 0002, one of several suits involving ill-gotten or unexplained wealth after the three (3) aforementioned petitions for certiorari had been filed, disposes, as
that the Republic, through the PCGG, initiated with the Sandiganbayan pursuant to follows:
Executive Order (EO) Nos. 1 and 2 in relation to EO No. 14, all series of 1986,2 seeks
the recovery of ill-gotten wealth from former President Ferdinand E. Marcos (Pres. WHEREFORE, premises considered, the complaint of the plaintiff Republic of the
Marcos, hereafter), later substituted by his Estate, his wife, their three (3) children Philippines on the PLDT shares subject of separate trial is hereby DISMISSED for
(Marcos family, or Marcoses, collectively) and their alleged cronies. Among the lack of merit.
properties identified as partaking the nature of "ill-gotten wealth", as the term is
contextually understood, are shares of stock in Philippine Telecommunications The Motion for Summary Judgment is hereby GRANTED, and the Complaint-in-
Investment Corporation (PTIC, for short) which, in turn, covered over two (2) million Intervention DISMISSED.

75
SO ORDERED.
2. The wrongs committed by Defendants, acting singly or collectively and in unlawful
The arguments and counter-arguments of the herein four (4) main sets of litigants concert with one another. . . include the misappropriation and theft of public funds,
(the Republic, the Marcoses, the Cojuangcos and the Yuchengcos) on a menu of plunder of the nation’s wealth, extortion, blackmail, bribery, embezzlement and other
issues presently pressed in pleadings after pleadings are as numerous as they are acts of corruption, betrayal and public trust . . . .
extensive. What is more, the parties, along the way, squeezed the rules of procedure
to the hilt, thus adding incidental matters to an already complex proceedings. So as 17. Among the assets acquired by Defendants in the manner above-described . . . are
not to be sidetracked, or, worse still, waylaid thereby and thus neglect, if not funds and other property listed in Annex "A" hereof and made an integral part of this
altogether miss, the proverbial tree for the forest, the Court shall limit itself and shall Complaint, [including, but not limited to the following]:
accord particular focus only to what it perceives to be material determinative facts and
matters which led to the filing of the instant petitions. Towards the same end, the c. Stocks
Court shall condense the several issues raised into two (2) core questions for
resolution, to wit: Shares of stocks in numerous corporations . . ., including about 2.4 million shares
of . . . [PLDT] valued, at current market prices, approximately P1.6 Billion pesos and
1. whether or not petitioners in G.R. Nos. 149802, 150320 and 150367 were denied covered by shares of stock in . . . (PTIC) registered in the names of Prime Holdings
due process when the respondent court in effect directed them to terminate the Inc. (PHI), Ramon Cojuangco and the latter’s associates.
presentation of their respective evidence; and
During his lifetime, Ramon U. Cojuangco held 76,779 shares of stock in PTIC, while
2. whether or not the challenged Partial Decision, subject of the petitions for review in Imelda O. Cojuangco held 21,525 shares of stock in her own name, the beneficial and
G.R. Nos. 153459 and 153207, conforms to the evidence presented, the law and/or actual ownership of which is that of defendants Ferdinand Marcos and his family.
settled jurisprudence.
Defendant Prime Holdings, Inc. (PHI) held 111,415 shares which in truth and in fact
II. THE PARTIES & THEIR PRINCIPAL belong to defendants Ferdinand E. Marcos and his family. This stockholding of
defendants Marcos and his family in PTIC, through Ramon U. Cojuangco and PHI,
CLAIM in CIVIL CASE No. 0002 constitutes the majority stockholding in PTIC. PTIC, in turn, is the biggest stockholder
of PLDT shares. In the manner above stated, defendants Marcos and his family
A. Petitioner Republic effectively controlled PLDT. (Underscoring in the Original; Words in bracket, added)

The original complaint in Civil Case No. 0002, filed on July 16, 1987 by the Republic, As may thus be gathered from the above averments, petitioner Republic, as plaintiff a
thru the PCGG, named, as defendants, Pres. Marcos and Imelda R. Marcos (Mrs. quo, seeks to recover from respondents Cojuangcos/PHI, the following PTIC shares
Marcos, hereafter), their three (3) children, and seven (7) other individuals. As the of stock, viz: (1) the 111,415 shares in PHI’s name; (2) the 76,779 and the 21,525
case progressed, the Republic successively amended its original complaint to include shares in the name of Ramon U. Cojuangco and Imelda O. Cojuangco, respectively.
other alleged illegally acquired assets and/or implead other parties. The desired recovery is predicated on the postulate that the three, as defendants a
quo, are mere dummies/nominees/conduits of the Marcos family in the control of
Among the properties sought to be recovered as part of the alleged ill-gotten wealth PLDT.
of the Marcos family are, as indicated earlier, shares of stock in PTIC and PLDT.
B. Respondents Cojuangcos and PHI
The Republic’s Third Amended Complaint ("Amended Complaint"), dated April 20,
1990,4 impleaded, as additional party-defendants, the herein respondents In its Answer dated June 5, 1990,5 to the Republic’s Amended Complaint, PHI belied
Cojuangcos/PHI, and, as to them, the Amended Complaint pertinently avers: allegations that the Marcos family is the beneficial owner of its 111,415 PTIC shares,
1. This is a civil action against Defendants Ferdinand E. Marcos, Imelda R. Marcos, . . stating in this regards, as follows:
. Imelda Cojuangco, the Estate of Ramon Cojuangco, and Prime Holdings, Inc. to 11. Answering defendant PHI specifically denies the allegations contained in
recover from them ill-gotten wealth consisting of funds and other property which they . paragraphs 20 (a) and 20 (b) of plaintiff’s Complaint. Insofar as the facts alleged in
. . had acquired and accumulated in flagrant breach of trust and of their fiduciary paragraph 20 (c) thereof, defendant PHI respectfully alleges that: (a) Defendant PHI
obligations as public officers, . . . thus resulting in their unjust enrichment during is the registered stockholder of 111,415 shares in . . . (PTIC); that "during his lifetime"
Defendant Ferdinand E. Marcos’ 20 years of rule . . . . Ramon U. Cojuangco held 76,779 shares of stock in PTIC; that Imelda O. Cojuangco
76
held 21,525 shares of stock "in her name", but answering defendant specifically their respective names subsequent to the incorporation were likewise acquired and
denies that these shares registered in said names are owned, actually and/or held for and behalf of said principals.
beneficially, by Ferdinand E. Marcos and his family.
3.2. On 7 December 1967, defendant Ramon Cojuangco and Mr. Luis T. Rivilla,. . .
The truth of the matter is that the members of the family of the late Ramon U. executed an agreement whereby . . . (67,392) shares of PTIC, which were held in
Cojuangco own all the outstanding shares in PHI in full legal and beneficial ownership their names were transferred, . . . unto defendant Imelda R. Marcos in consideration
.... of the extinguishment of [their] loan of . . .(P3,400,000.00) . . . .

Respondent Cojuangcos’ Answer dated June 9, 1990,6 to the same Amended

Complaint contains virtually the same material averments as those in PHI’s answer. 3.4. Mrs. Marcos subsequently authorized Messrs. Cojuangco and Rivilla, their
And like PHI, the Cojuangcos also pray for the dismissal, as to them, of the Amended assigns, . . . to hold said 67,392 PTIC shares for and in her behalf on the
Complaint. understanding, agreement and recognition of her true, lawful and beneficial
ownership thereof.
C. Respondent Imelda R. Marcos
4. Sometime in 1977, defendants Ramon Cojuangco and Imelda Cojuangco likewise
As its most essential, Mrs. Marcos’ Answer with Counterclaim dated November 22, acquired for and in behalf of Mr. and Mrs. Marcos and their family approximately . . .
1993,7 confirmed the Republic’s allegation about the Marcoses’ ownership over the (54,349) fully paid shares of stock in PTIC from General Telephone and Electronics,
PLDT shares in controversy, but with the qualification that these shares were Inc. (GTE), an American company. Again, this share acquisition was on the
legitimate acquisitions. Very much later, however, Mrs. Marcos, by motion dated understanding, agreement and recognition that defendant Cojuangcos were mere
January 22, 1999, sought leave to amend answer for the purpose of pursuing a cross- trustees/nominees of Mr. and Mrs. Marcos and their family.
claim against Cojuangcos/PHI. The respondent court, however, denied her motion,
holding that the proferred Amended Answer with Cross-Claim thus attached to her
motion varied her theory of defense, in that, while she asserted in her original answer 5. All the shares of stock of PTIC registered in the name of defendants Ramon
that the late Pres. Marcos had lawfully acquired and thus owned the PLDT shares in Cojuangco, Imelda Cojuangco, their assigns, nominees and representatives, . . .,
question, she, in the intended amended answer with cross-claim, traversed the were never acquired and held in their own right, . . . since they have always been held
allegations of the Republic’s Amended Complaint by pleading lack of knowledge of by them as trustees/nominees for and in behalf of Mr. and Mrs. Marcos and family –
facts sufficient to form a belief as to the truth thereof. Nonetheless, the respondent the true, lawful and beneficial owners thereof.
court allowed Mrs. Marcos to file a pleading to contain her cross-claim against
Cojuangcos/PHI. 6. On 05 October 1977, . . .. (PHI) was organized . . . as an investment and holding
company. PHI’s principal asset at present is the . . . (111,415) PTIC shares of stock
Accordingly, Mrs. Marcos filed a Cross-Claim dated April 21, 19998 against registered and held in PTIC.
Cojuangcos/PHI, alleging, inter alia, the following:
6.1 PHI was incorporated to serve as the holding company of all the PTIC shares
2. The . . . (PLDT), . . . is one of the assets listed in Annex "A" of the Third Amended owned by Mr. and Mrs. Marcos and family, in addition to those being held by
Complaint [of the Republic] . . . . trustees/nominees . . . . For this purpose, PHI was organized with the following as
incorporators [Jose D. Campos, Rolando C. Gapud, Renato E. Lirio, Gervaso T.
3. The Philippine Telecommunications Investment Corp. (PTIC) was organized . . . Gaviola and Ernesto S. Abalos, with 400 shares each], all of whom are the
with the primary purpose to " . . . otherwise deal in all securities, shares of stocks and trustees/nominees of the Marcoses:
bonds of the [PLDT]." x x x . PTIC is the single biggest corporate stockholder of
PLDT. 6.3 In 1978, . . . (111,415) shares of stock in PTIC were transferred and registered in
the name of PHI. These PTIC shares came from various sources, including from
3.1. PTIC’s capital stock were originally subscribed by . . ., among others: defendants registered stockholders of PTIC.
Ramon Cojuangco and Imelda Cojuangco both of whom held shares of stock in their
respective names as trustees . . .for and in behalf of the late President Ferdinand E. On the basis of the foregoing averments, Mrs. Marcos, for her own behalf and that of
Marcos, . . . and family . . . . All shares of stock in PTIC acquired and registered in her family, prayed that judgment be rendered ordering the Cojuangcos/PHI, their
assignees and agents, to transfer in her favor (i) the aforesaid shares of stock in PTIC
77
being held by them as trustees/nominees of the Marcos family, and (ii) all the two 7. In 1967, PTIC was owned by the following: GTE received 25% of PTIC as part of
thousand (2,000) shares of stock in PHI being held by them as such the consideration for selling its shareholding in PLDT to PTIC. Approximately 57% of
trustees/nominees, together with all the fruits accruing from the time that they were the PTIC stock was divided among the Ramon U. Cojuangco group.
constituted or acted as such trustees/nominees.
Gregorio Romulo and Leonides Virata each received 3% of PTIC for their services
In fine, Mrs. Marcos maintained that all PTIC shares registered in the names of rendered . . . .
Cojuangcos/PHI as well as the PHI shares which are registered in the name of its
incorporators have always been held by them as trustees and/or nominees of the The remaining 12% of PTIC was divided among various persons. Plaintiff-in-
Marcos spouses and their family who are the lawful and beneficial owners thereof. intervention Yuchengco - . . . who already controlled 10% of PLDT – purchased
She assumed the same posture in her Pre-trial Brief dated April 24, 19999 as well in 7.75% of the stock in PTIC (18,720 shares) . . . . He placed the 7.75% shares in the
her Answer to petitioner Republic’s Request for Admission.10 name of . . . Y Realty Corporation.

Via a Resolution promulgated on February 22, 2000,11 the respondent court 8. Some time after PTIC’s acquisition of 28% of PLDT, Gregorio Romulo and
dismissed Mrs. Marcos’ Cross-claim "for being barred and for failure to state a cause Leonides Virata . . . approached . . . Yuchengco and offered to sell their respective
of action." Her motion for reconsideration was denied in another Resolution of May 3% shareholdings in PTIC to him for P300,000.00 each. Plaintiff-in-intervention
23, 2000.12 Yuchengco agreed to buy.

D. Petitioner Yuchengcos 9. But, the Ramon U. Cojuangco group learned of the agreed sale and sent Atty.
Alberto Meer to . . . Yuchengco to inform him that . . . President Marcos objected to
Petitioner Yuchengco filed his Complaint-in-Intervention and his Amended Complaint- his acquiring additional shares in PTIC. xxxx Yuchengco was instructed to pay the
in-Intervention in August 1988 and May 1993, respectively, both of which the purchase price of P600,000.00 and to transfer the 6% stockholdings to the Ramon U.
Sandiganbayan (Third Division) admitted. He asserted ownership over a certain Cojuangco group. Otherwise, . . . Yuchengco was told, his business interests would
number of PTIC shares and necessarily a portion of the disputed PLDT shares. Y suffer.
Realty later joined Yuchengco in his Second Amended Complaint-in-Intervention and,
to the extent of their combined claim over the disputed PLDT shares, pitted the same Gregorio Romulo, upon finding out, also strenuously objected to selling to the Ramon
against that of either the Republic, the Marcos family, or the Cojuangcos/PHI. U. Cojuangco group.

The Yuchengcos’s joint Second Amended Complaint-in-Intervention dated September But, . . . Yuchengco and Gregorio Romulo complied as they could not do otherwise.
20, 199313 - admitted on June 11, 1995 - contained the ensuing material averments: xxx Yuchengco paid the P600,000.00 price. The 6% stockholdings of Gregorio
Romulo and Leonides Virata were transferred to the Ramon U. Cojuangco group and
FIRST CAUSE OF ACTION eventually to. . .[PHI].

6. In the early to mid-1960’s, the largest block of stock of . . . [PLDT] was held by 10. xxx Yuchengco was the victim of illegal coercion and duress of the Marcos
General Telephone & Electronics Corporation ("GTE"), which held 28% of its regime. He was coerced into giving up Gregorio Romulo’s and Leonides Virata’s 6%
outstanding stock. shareholdings in PTIC . . . .

In 1967, GTE decided to divest its shareholdings in PLDT. . . . GTE agreed to sell its xxx Yuchengco was prevented by the same illegal coercion and duress and by force
PLDT shares to the Ramon U. Cojuangco group, which included . . . Ferdinand E. majeure (Martial Law) from seeking judicial relief until after the ouster of the former
Marcos and/or . . . Imelda R. Marcos, Estate of Ramon U. Cojuangco and Imelda O. regime.
Cojuangco, and their nominees.
11. Consequently, . . . [PHI] holds the 6% stockholdings in PTIC, and all dividends
The Ramon U. Cojuangco group caused. . . (PTIC) to be formed for the purpose of and distributions attributable thereto, in constructive trust for . . .
purchasing GTE’s 28% stockholdings in PLDT. xxx.
xxx xxx xxx

SECOND CAUSE OF ACTION

78
 20.2. When GTE was coerced by the Ramon U. Cojuangco group to waive its 25%
xxx xxx xxx stockholdings in PTIC in February 1976, the remaining stockholders of PTIC were
entitled to a pro-rata distribution of said 25% stockholdings – which were instead
14. On 22 November 1967 – at about the time GTE sold out its PLDT shares to PTIC wholly re-issued to the Ramon U. Cojuangco group for a nominal amount and
and received 25% of PTIC – GTE through its . . ., John J. Douglas, entered into a "put eventually transferred to . . . [PHI].
and call" agreement with . . . Yuchengco for GTE’s 25% stockholdings in PTIC. xxx
20.3. Thus, plaintiffs-in-intervention, with 13.75% of the remaining 75% stock, were
15. But, as with the Leonides Virata and Gregorio Romulo shares, … Yuchengco was entitled to 4.6% of the 25% stockholdings formerly belonging to GTE."
prevented from acquiring GTE’s 25% shares in PTIC by exercise of his "put and call"
agreement with GTE. [It is thus prayed] –

16. In February 1976, GTE was compelled by the Ramon U. Cojuangco group to On the first cause of action,
waive its 25% stockholdings in PTIC for free. At a meeting in Tokyo with Ted
Brophy, . . . and Ramon U. Cojuangco, [and 3 others], Brophy waived the 25% (a) xxx Ordering . . . [PHI] to turn over the 6% PTIC shareholdings including stock,
stockholdings, notwithstanding plaintiff’s "put and call" agreement with GTE. Said cash and other dividends and stock splits thereon, to . . . Yuchengco; and
25% stockholdings in PTIC were re-issued to the Ramon U. Cojuangco group for a
nominal amount and eventually transferred to . . . [PHI]. (b) Adjudging plaintiff-in-intervention Yuchengco to be the true owner of said 6% PTIC
[formerly Virata’s and Romulo’s], shareholdings;
17. Again, . . . Yuchengco . . . was coerced into not exercising his "put and call"
agreement with GTE for the latter’s 25% stockholdings in PTIC, when he was On the second cause of action
otherwise ready, willing and able to do so. xxx.
(a) Ordering . . . [PHI] to turn over the 25% PTIC shareholdings (formerly of GTE),
Plaintiff-in-intervention Yuchengco was prevented by the same illegal coercion and including all . . . dividends and stock splits thereon, to . . . Yuchengco [as true owner
duress and by force majeure (Martial Law) from seeking judicial relief until after the thereof]; and xxx
ouster of the former regime.
On the alternative third cause of action,
18. Consequently, . . .[PHI] and the owners of . . . [PHI] – whether they be (a) the
Estate of Ramon U. Cojuangco and Imelda O. Cojuangco (b) plaintiff Republic and (a) Ordering defendant-in-intervention [PHI] to turn over 4.6% of its PTIC
the PCGG, or (c) the Estate of Ferdinand E. Marcos and Imelda R. Marcos – hold the shareholdings (plaintiffs-in-intervention’s pro-rata share of GTE’s former 25% shares),
25% stockholdings in PTIC, and all dividends and distributions attributable thereto, in including all stock, cash and other dividends and stock splits thereon, to plaintiffs-in-
constructive trust for plaintiff-in-intervention Yuchengco, and should be compelled to intervention; and
turn over the same to him.
(b) Adjudging plaintiffs-in-intervention to be the true owners of said 4.6% PTIC
ALTERNATIVE THIRD CAUSE OF ACTION shareholdings." (Underscoring as found in the original; Emphasis and words in
bracket added).
xxx xxx xxx
In their answer to the Amended Complaint-in-Intervention, which they later manifested
20. In the event the Honorable Court should adjudge that . . . Yuchengco is not as serving as their answer to the Second Amended Complaint-in-Intervention,
entitled to recover, under the Second Cause of Action, the 25% shareholdings in respondents Cojuangcos/PHI set up, inter alia, by way of affirmative defense, the
PTIC formerly belonging to GTE, then plaintiffs-in-intervention are at least entitled to following grounds: (1) lack of cause of action, since the PTIC and PHI shares of stock
recover 4.6% of said 25% shareholdings, as demonstrated below. in the name of the late Ramon U. Cojuangco and members of his family were lawfully
acquired by them; (2) neither of the Marcos spouses was a member of the Ramon U.
20.1. xxx Y Realty Corporation owns 7.7% of the stock in PTIC, and . . . Yuchengco is Cojuangco group, so that they (the Marcos spouses) have no interest whatsoever
entitled to recover the 6% shareholdings formerly belonging to Gregorio Romulo and over any share in the said corporations; and (3) no jurisdiction has been acquired by
Leonides Virata . . . – for a total of 13.75%. the Sandiganbayan over the Amended Complaint-in-Intervention for non-payment of
the proper docket fees.
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 Republic’s formal offer of documentary evidence, which respondent court in fact
III. THE PETITIONS directed him to do via an Order dated September 5, 200120 .

A. G.R. Nos. 150367 and 153459 (Republic’s) Hence, petitioner Republic filed on October 6, 2001 its "Formal Offer of Evidence"
dated October 4, 2001, followed later by a "Supplemental Offer of Evidence" dated
On February 16, 2001, petitioner Republic secured a subpoena ad testificandum14 November 13, 200121 therein reserving the right to present the testimony of Mrs.
for Mrs. Marcos to testify as its witness respecting her claim over the disputed PLDT Marcos, as a hostile witness regarding her cross-claim, should this Court grant its
shareholdings. Mrs. Marcos, however, wasted no time in moving for the quashal of petition for certiorari that it (Republic) intended to file. The intended petition was
the subpoena, invoking in this regard her right against self-incrimination. In its eventually filed and is presently docketed as G.R. No. 150367.
opposition to motion, petitioner Republic argued that Mrs. Marcos has waived such
right when, in her Answer and subsequent pleadings, she made judicial admissions Via its petition in G.R. No. 150367, petitioner Republic seeks to nullify the following
and declaration of the beneficial ownership of the Marcoses over the disputed PLDT issuances of the respondent court, as described hereunder for better perspective:
shares. The respondent court, per its Order of May 4, 2001, denied her motion to
quash subpoena.15 Another resolution of July 9, 2001 would eventually follow 1) Order dated May 30, 2001,22 denying the Republic’s respectful motion for
denying reconsideration of the denial of her motion to quash subpoena, along the additional time to complete the presentation of evidence and Resolution of August 27,
following tenor: 2001,23 denying the motion to reconsider the May 30, 2001 order; and

Be that as it may, the prosecution’s Opposition to Motion to Quash, dated 3 April 2) Order dated September 5, 2001,24 directing the Republic to submit its offer of
2001, specifically mentions only defendant Imelda Marcos’ admission that Ferdinand evidence within 30 days from that date.
Marcos acquired the properties mentioned in paragraph 19 of the complaint; hence,
other than this fact, said prosecution may not propound any question that may violate It is the Republic’s submission that the respondent court gravely abused its discretion
her right against self-incrimination, upon proper and timely objection. when it issued the aforementioned assailed orders and resolution considering that:

WHEREFORE, defendant Imelda Marcos’ Motion for Reconsideration dated 19 June I. THE ASSAILED ORDERS . . . AMOUNT TO A DEPRIVATION OF THE
2001, is hereby denied, and the subpoena earlier issued stand. However, in lieu of REPUBLIC’S SUBSTANTIVE AND CONSTITUTIONALLY ENSHRINED RIGHT TO
the testimony of said defendant in court, the plaintiff may, instead, make use of the THE FULL RECOVERY OF THE MARCOSES’ ILL-GOTTEN WEALTH.
provisions in Rule 26 of the Revised Rules on Civil Procedure. 16
II. THE ASSAILED ORDERS BLATANTLY VIOLATED THE REPUBLIC’S RIGHT TO
In the meantime, petitioner Republic continued presenting other witnesses, relying - PROCEDURAL DUE PROCESS OF LAW WHEN THE RESPONDENT COURT,
as it would later claim – on the oral assurance given by the graft court during the AFTER ISSUING AND SUSTAINING THE VALIDITY OF THE SUBPOENA TO
hearing on March 26, 2001 that it would allow the Republic to present Mrs. Marcos as IMELDA MARCOS, DENIED PETITIONER’S PLEA TO PRESENT HER AS
its adverse or hostile witness. ADVERSE/HOSTILE WITNESS AND TO COMPLETE THE PRESENTATION OF
THE REPUBLIC’S EVIDENCE.
At the May 28, 2001 hearing, the respondent court directed petitioner Republic to
wrap up by May 30, 2001 the presentation of its evidence. This prompted petitioner A. BY ISSUING THE ASSAILED ORDERS, THE RESPONDENT COURT VIOLATED
Republic to posthaste file its "Respectful Motion For Additional Time To Complete THE REPUBLIC’S RIGHT TO DUE PROCESS OF LAW INASMUCH AS IT BARRED
Presentation Of Evidence"17therein praying for two (2) additional settings to complete THE REPUBLIC FROM PRESENTING IMELDA MARCOS AS ADVERSE/HOSTILE
the presentation of its evidence. But, in an open court Order dated May 30, 2001,18 WITNESS, NOTWITHSTANDING THAT THE REPUBLIC CONSISTENTLY AND
the respondent court denied the said respectful motion; the desired reconsideration CATEGORICALLY ASSERTED ITS RIGHT TO PRESENT HER AS SUCH
was also denied per a Resolution dated August 27, 2001.19 WITNESS.

Meanwhile, in the September 5, 2001 hearing, PCGG Special Counsel Tomas B. BY ISSUING THE ASSAILED ORDERS, THE RESPONDENT COURT
Evangelista, apparently unaware of the August 27, 2001 Order adverted to, reiterated RENDERED NUGATORY ITS OWN SUBPOENA DIRECTED TO IMELDA MARCOS,
the Republic’s intention to present Mrs. Marcos as its witness, only to be apprised by WHOSE VALIDITY THE RESPONDENT COURT HAD ALREADY SUSTAINED WITH
the respondent court of its August 27, 2001 Order, supra. In the end, Atty. FINALITY.
Evangelista requested that he be allowed thirty (30) days within which to file the
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C. BY ISSUING THE ASSAILED ORDERS, THE RESPONDENT COURT
CAPRICIOUSLY SUBORDINATED THE PROCESS OF LAW TO EXPEDIENCY AND Whether the properties, assets, and funds sought to be recovered by the plaintiff are
DISPATCH. ill-gotten or lawfully acquired;

D. BY ISSUING THE ASSAILED ORDERS, THE RESPONDENT COURT DEPRIVED Subsequent events show that the scheduled July 10, 2000 hearing was cancelled at
THE REPUBLIC OF DUE PROCESS OF LAW WHEN IT EFFECTIVELY BARRED the instance of petitioner Republic’s counsel. The July 14, 2000 hearing was also
THE REPUBLIC FROM PRESENTING, AMONG OTHER EVIDENCE, IMELDA cancelled and reset to July 31, 2000. The July 31, 2000 hearing was likewise
MARCOS, A VITAL AND MATERIAL WITNESS WHOSE TESTIMONY WITH cancelled but the parties agreed, however, for the continuation of trial on August 11
RESPECT TO HER CROSS-CLAIM AGAINST THE RESPONDENTS and 18, 2000 in the morning and on September 13, 18, 20 and 25, 2000, morning and
COJUANGCOS WILL BUTTRESS THE REPUBLIC’S CAUSE OF ACTION IN CIVIL afternoon sessions.
CASE NO. 0002 NOT ONLY AGAINST HER, BUT ALSO AGAINST THE
RESPONDENTS COJUANGCOS. Presented in the August 11, 2000 hearing as petitioner Republic’s witness was Atty.
Francisco G. de Guzman. The August 18, 2000 hearing - when petitioner Republic
E. THE ASSAILED ORDERS BETRAY THE RESPONDENT COURT’S GLARING, intended to present the PCGG records custodian, Ma. Lourdes Magno - was
ALL-TOO-TRANSPARENT TURNABOUT INASMUCH AS THEY IRONICALLY cancelled. Owing to the voluminous records she had to identify and testify on, the
SUPPRESSED THE ENFORCEABILITY OF THE RESPONDENT COURT’S OWN respondent court ordered that Magno’s testimony be taken before the Executive Clerk
SUBPOENA TO IMELDA MARCOS, EVEN AS THE RESPONDENT COURT HAD of Court on three trial dates to end on September 5, 2000.
ALREADY SUSTAINED THE VALIDITY OF THAT SUBPOENA.
On September 5, 2000, the respondent court scheduled four (4) hearings for the
On the basis of the foregoing arguments, petitioner Republic prays, by way of relief, remaining days of the month of September 2000.
that this Court, upon the annulment of the assailed Orders and Resolution subject of
its petition in G.R. No. 150367, direct the respondent court to allow the Republic to However, the first three (3) settings, i.e., September 13, 18 and 20, 2000, were, upon
complete its presentation of evidence, and compel respondent Mrs. Marcos to take petitioner Republic’s written motion dated September 11, 2000, and for reasons
the witness stand. ranging from its inability to locate a misplaced deposition to affording the new
assigned Solicitor time to go over the case records, cancelled.
In their comment to the petition in G.R. No. 150367, respondents Cojuangcos/PHI
maintained the correctness of the assailed orders and resolution. Setting particular Despite the developments immediately adverted to above, the parties and their
focus on Republic’s claim of having been denied its day in court, said respondents counsels nonetheless appeared for the September 18, 2000 hearing. There, Atty.
contend that an agreed calendar of hearings was in place, but petitioner Republic Taningco of the PCGG manifested that the Government panel is in the process of
moved to cancel a number of trial dates for lack of preparedness or for want of ready compiling the records to support the Republic’s motion for admission, which, in turn,
witnesses, which thus impelled the respondent court to come out with the assailed would serve as his basis for recommending the filing of a motion for summary
issuances. judgment. Accordingly, the respondent court, in a bid to expedite an early case
disposition, then blocked off the following dates for the presentation of evidence: For
In the light of conflicting allegations thus made, the Court deems it appropriate to petitioner Republic, December 5, 2000, January 29, 30 and 31, February 1 and 2,
recite additional determinative antecedents as may be gathered from the records. 2001; and for respondents Cojuangcos/PHI, March 12, 13, 14, 15, 26, 27 and 28,
Thus – 2001.

It would appear that at the preliminary conference held on September 28, 1998, the What transpired next were the following events:
parties agreed to continue the preliminary conference and the pre-trial on January 14,
1999. Following a series of postponements, the pre-trial for the Republic’s Amended 1. The scheduled hearing on December 5, 2000 was cancelled because the
Complaint was finally conducted on May 25, 2000 and terminated on the same day. Republic’s witness was not available.
The Pre-trial Order issued on that date sets the trial of the case, upon mutual
agreement, to July 10, 14, 31, August 11 and 18, 2000 at 8:30 in the morning. 2. Petitioner Republic filed a motion to reset the January 29, 30 and 31, 2001
hearings, its Special Counsel having just received his assignment order for Civil Case
Thereafter, the respondent court issued a Supplemental Pre-Trial Order dated July No. 0002.
10, 2000,25 therein defining the principal issue, as follows:
81
3. On January 29, 2001, petitioner Republic manifested its intention to call Mrs. is, as earlier stated, what moved petitioner Republic to file its "Respectful Motion for
Marcos on the witness stand, but requested for additional hearing dates, pleading that Additional Time To Complete Presentation Of Evidence".26
it will not be ready to present Mrs. Marcos within its allotted time. Respondents
Cojuangcos/ PHI offered to stipulate on the testimony of the Republic’s intended In the meantime, pending resolution of G.R. No. 150367, the separate trial continued.
witness, one Atty. Manuel G. Montecillo. After respondents Cojuangcos/PHI have rested their case, the respondent court
rendered its Partial Decision, which, to reiterate, is the subject of petitioner Republic’s
4. Respondent court cancelled the January 29, 2001 hearing and required the parties petition for review, now docketed as G.R. No. 153459, on the following supporting
to make an appearance at the next scheduled hearing, January 30, 2001, as grounds:
previously set.
THE SANDIGANBAYAN COMMITTED (SIC) GRAVELY ERRED IN ITS PARTIAL
5. The January 30, 2001 schedule was cancelled, as requested by petitioner DECISION DATED MAY 6, 2002 WHEN IT DECIDED QUESTIONS OF
Republic, owing to lack of witness. In addition, the same petitioner also asked for the SUBSTANCE IN A WAY NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE
cancellation of the three (3) succeeding scheduled hearings, i.e., January 31, DECISIONS OF THE HONORABLE COURT AND/OR HAS DEPARTED FROM THE
February 1 and 2, 2001, and instead requested for a February 9, 2001 setting, ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS CONSIDERING
undertaking to present Mrs. Marcos on that date, then rest its case, with or without THAT:
her testimony.
I. THE SANDIGANBAYAN PARTIAL DECISION DATED MAY 6, 2002 DOES NOT
6. The February 9, 2001 setting was reset, owing to the unavailability on that day of COMPLY WITH THE BASIC REQUIREMENT UNDER SECTION 14, ARTICLE VIII
the Republic’s intended witness, Mrs. Marcos, who, Atty. Evangelista of PCGG OF THE 1987 CONSTITION THAT "NO DECISION SHALL BE RENDERED BY ANY
explained, was physically indisposed. Acting on the Republic’s request for a month to COURT WITHOUT CLEARLY AND DISTINCTLY EXPRESSING THEREIN THE
present Mrs. Marcos, the respondent court granted the desired resetting to March 12, FACTS AND THE LAW ON WHICH IT IS BASED," HENCE, PETITIONER WAS
13, 14 and 15, 2001, on the condition that the Republic will have to rest its case with DEPRIVED OF ITS RIGHT TO DUE PROCESS OF LAW.
or without her testimony.
II. THE SANDIGANBAYAN RULED IN ITS PARTIAL DECISION DATED MAY 6,
7. On March 12, 2001, the Republic requested to reset the scheduled hearing. 2002 AGAINST THE ADMISSIBILITY OF THE DOCUMENTARY EVIDENCE AFTER
Respondent court gave the Republic another opportunity to present its evidence and ADMITTING THE SAME IN EVIDENCE, THEREBY DEPRIVING PETITIONER OF
accordingly reset the hearings to March 26, 27, and 28, 2001, as previously ITS RIGHT TO DUE PROCESS OF LAW.
scheduled.
III. THE PARTIAL DECISION DATED MAY 6, 2002 IS FATALLY FLAWED AS IT
8. On March 26, 2001, the Republic presented Lourdes Magno, the PCGG record FAILED OR OMITTED TO MENTION VITAL FACTS AND REFUSED TO CONSIDER
custodian. Her direct, cross and redirect examinations were done that day. Ms. MATERIAL EVIDENCE PRESENTED BY PETITIONER TO SUPPORT ITS
Magno was followed on March 27, 2001, by Rosalie Sarthou of the BIR. Respondents COMPLAINT AND REFUSED TO CONSIDER EVIDENCE WHICH THE
Cojuangcos/PHI manifested that the Republic had until the next trial date to finish its SANDIGANBAYAN ITSELF HAD IN FACT ALREADY ADMITTED.
presentation of evidence.
IV. PETITIONER WAS DEPRIVED OF THE OPPORTUNITY TO PRESENT
9. After the parties, in the March 28, 2001 hearing, were through with Ms. Sarthou, RESPONDENT IMELDA R. MARCOS AS ITS ADVERSE/HOSTILE WITNESS, ALSO
the Republic requested and was granted five additional trial dates, i.e., May 7, 9, 16, IN A MANNER VIOLATIVE OF PETITIONER’S FUNDAMENTAL RIGHT TO
28, and 30, 2001, for the presentation of further evidence. PROCEDURAL AND SUBSTANTIVE DUE PROCESS OF LAW.

10. The hearing on May 7, 2001 was cancelled and reset to May 9, 2001. On May 9, V. THE SANDIGANBAYAN DISREGARDED THE DECLARATIONS UNDER
2001, Republic presented Mr. Danilo Daniel, a PCGG Director, after which the OATH/JUDICIAL ADMISSIONS OF RESPONDENT IMELDA MARCOS POSITIVELY
presentation of further evidence was continued to May 28, and 30, 2001. IDENTIFYING AND CLAIMING OWNERSHIP OVER THE SUBJECT SHARES IN
PLDT, WHICH DECLARATION LIKEWISE CONCLUSIVELY ESTABLISHES AND
It is upon the foregoing factual backdrop that the respondent court issued, in the May CONFIRMS THE ACTUAL AND BENEFICIAL OWNERSHIP BY RESPONDENTS
28, 2001 hearing, its Order of even date directing petitioner Republic to terminate the MARCOS OF SAID SHARES OR, THEIR PRINCIPAL-NOMINEE RELATIONSHIP.
presentation of its evidence on the hearing of May 30, 2001. The May 28, 2000 Order
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VI. THE SANDIGANBAYAN COMMITTED UNDUE HASTE IN DECIDING THE due on the Second Amended Complaint-in-Intervention in the amount of
CASE, IN UTTER DISREGARD OF ITS MANDATED DUTY TO ASCERTAIN THE P8,729,185.00, which the latter paid on April 4, 2001.
TRUTH IN ALL MATTERS IN CONTROVERSY."
Barely a month after, the Yuchengcos filed with the respondent court an "Urgent
Petitioner Republic thus pray for a judgment: (1) reversing and setting aside the Motion To Suspend Trial Pending Discovery Proceedings" dated April 30, 2001,30
Partial Decision dated April 25, 2002; and (2) ordering respondents Cojuangcos/PHI, followed by a "Supplement" thereto dated May 7, 200131. Thereat, they prayed for
their assignees, nominees, and agents to RETURN and RECONVEY to the Republic the cancellation of the separate trial settings already made and agreed upon until they
"(a) the 111,415 PTIC shares in the name of Prime Holdings, Incorporated (PHI) shall have fully undertaken pre-trial discovery proceedings under the provisions of
ceded and conveyed by Ramon U. Cojuangco and Luis T. Rivilla to PHI; (b) the Rule 23 of the Rules of Court, a right they allegedly are entitled to, but were unable to
76,779 PTIC shares in the name of Ramon U. Cojuangco; and (c) the 21,525 PTIC exercise due to the erroneous dismissal by the respondent court of their Amended
shares in the name of Imelda O. Cojuangco, for being ILL-GOTTEN WEALTH of Complaint-in-Intervention.
Ferdinand E. Marcos and his family".27
The Yuchengcos commenced with the discovery process by filing and serving notices
This brings us to the Yuchengcos’ petitions. for the deposition-taking of Atty. Francisco De Guzman, former PHI Corporate
Secretary, and Atty. Teresa Mercado- Ferrer, then Corporate Secretary of PTIC on
B. G.R. Nos. 149802, 150320 and 153207 [Yuchengcos’] May 15, 2001 and May 17, 2001, respectively, with a request for the issuance of
subpoena for them. On May 15, 2001, however, they filed amended notices re-
As already elsewhere herein mentioned, petitioner Yuchengcos intervened in Civil scheduling the deposition taking of Attys. De Guzman and Mercado-Ferrer for May
Case No. 0002 to recover ownership of a portion of the disputed PLDT shares the 31, 2001 and June 1, 2001, respectively. The Yuchengcos would later request
forfeiture of which petitioner Republic itself is pursuing owing to their being "ill-gotten another rescheduling and issuance of the corresponding subpoenas for the June 11
wealth". Mr. Yuchengco’s original Complaint-in-Intervention was filed on August 11, and 12, 2001 deposition taking of both individuals. The deposition taking of Atty. De
1988; the Amended Complaint-in-Intervention, on May 31 1993, and the Second Guzman proceeded as scheduled – and was completed - on June 12, 2001. The
Amended Complaint-in-Intervention, on September 22, 1993, this time joined by Y scheduled deposition taking of Atty. Mercado-Ferrer on June 11, 2001, however, was
Realty. deferred upon her request for a 2-week time to prepare therefor. Her deposition was
finally taken on July 6 and completed on July 13, 2001.
In a Resolution dated October 9, 1996, the respondent court dismissed the Amended
Complaint-in-Intervention for non-payment of docket fees, among other grounds, and In the meantime, the respondent court, via a Resolution dated May 24, 2001,32 as
denied the Yuchengcos’ Motion to Admit Second Amended Complaint, posthaste reiterated in an Order given in open court on July 12, 2001, denied the Yuchengcos’
sending the Yuchengcos to this Court on earlier separate petitions for review on "Urgent Motion To Suspend Trial Pending Discovery" and its "Supplement", for the
certiorari. reason that: (a) Rule 23 of the Rules of Court does not authorize the suspension of
trial owing alone to the fact that a party wishes, in the interim, to avail itself of a mode
However, Mr. Yuchengco’s intervention was effectively reinstated and his and Y of discovery; (b) petitioners were not being deprived of their right of discovery, as they
Realty’s Second Amended Complaint-in-Intervention admitted by the respondent have in fact taken the deposition of Mr. Gregorio Romulo in 1987; and (c) the ground
court pursuant to the Decision rendered by this Court in G.R. No. 131127, relied upon was not among the instances calling for the suspension of trial under
(Yuchengco vs. Republic, et al.), on June 8, 2000,28 in relation to a companion Section 8, Rule 30 of the Rules of Court.33 The Yuchengcos would receive a copy of
Decision dated March 13, 2001,29 in G.R. No. 131530, (Y Realty Corporation vs. the denying resolution on June 7, 2001. Respondent court would, in a Resolution of
Hon. Sandiganbayan). September 5, 2001,34 deny the Yuchengcos’ motion for reconsideration [filed on
August 17] of the aforesaid May 24, 2001 order.
In its Decision in G.R. No. 131127, this Court ordered petitioner Yuchengco "to submit
to public respondent Sandiganbayan the value of the properties he seeks to recover At the hearing of May 30, 2001 for the continuation of the reception of the Republic’s
and to pay the proper docket fees therefor within thirty (30) days upon determination evidence, respondent court issued an order to reflect that the parties agreed on the
thereof either by the Sandiganbayan or its clerk of court, which in turn is directed to following settings, viz: (1) July 12, 2001 for the pre-trial conference vis-à-vis the
act with dispatch on the matter." Yuchengcos’ complaint-in-intervention, and July 30 and August 7, 2001 for the
reception of their evidence; and (2) August 29 and September 12, 2001, for the
Following another round of legal skirmish on our judgments in G.R. No. 131127 and reception of the evidence for respondents Cojuangcos and PHI.35
G.R. No. 131530, the respondent court assessed the Yuchengcos the docket fees
83
In the pre-trial conference for the complaint-in-intervention conducted on July 12, in-intervention be set on August 29, September 5, and 12, 2001 at 8:30 in the
2001, the Yuchengcos orally moved for the resetting of the scheduled pre-trial as well morning, as previously scheduled and agreed upon by the parties. 37
as the trial dates previously agreed upon. They likewise moved to change the order of
trial vis-à-vis respondents Cojuangcos/PHI, such that they (Yuchengcos) shall be On August 15, 2001, the Yuchengcos moved for a reconsideration of the respondent
presenting their evidence as plaintiffs-in-intervention only after Cojuangcos/PHI shall court’s Resolution of May 24, 2001, as reiterated in the open-court Order decreed on
have presented their defense evidence in relation to the Republic’s Amended July 12, 2001. The desired reconsideration was, however, denied per the respondent
Complaint. Both motions were denied in open court. The parties thereupon agreed on court’s Resolution dated September 5, 2001.38
their trial dates. The dispositive portion of the July 12, 2001 Pre-Trial Order reads:
The Yuchengcos received a copy of the formal Order of August 7, 2001, on August
WHEREFORE, with this Pretrial Order, the pretrial stage of this case with respect to 15, 2001 and took due notice of the denying September 5 Resolution on September
plaintiff-in-intervention Y Realty Corporation is hereby terminated. 18, 2001.

As agreed upon by all the parties, let the trial on the merits be set on July 26 and 30, Unable to accept these denials, the Yuchengcos came to us via their present petition
2001 for the reception of evidence for said plaintiff-intervenor, and on August 7, 29, in G.R. No. 149802, on the singular ground that -
2001 and September 5 and 12, 2001 for the turn of the defendants-intervenors to
present their evidence. 36 RESPONDENT SANDIGANBAYAN COMMITTED GRAVE ABUSE OF DISCRETION,
OR ACTED WITHOUT OR IN EXCESS OF ITS JURISDICTION, IN ISSUING THE
At the initial scheduled hearing on July 26, 2001 for the presentation of their evidence QUESTIONED RESOLUTIONS AND ORDER, ALL OF WHICH CONSTITUTE AN
as plaintiffs-in-intervention, the Yuchengcos were unable to present any witness to ARBITRARY DENIAL OF PETITIONER’S RIGHT TO PRE-TRIAL DISCOVERY.
testify on their behalf. Likewise, on July 30, 2001, the Yuchengcos manifested that
the subpoenaed Atty. de Guzman and Atty. Mercado-Ferrer were not in court. This In the meantime, on August 21, 2001, the Yuchengcos moved for a reconsideration of
development prompted respondents Cojuangcos/PHI to counter-manifest that De the Order of August 7, 2001,39 but their motion for reconsideration was likewise
Guzman’s and Mercado-Ferrer’s testimonies need not be taken anymore, both having denied by the respondent court per its Resolution dated September 28, 2001,40
already been deposed and subjected to cross-examination, for which reason they saying:
(Cojuangcos/ PHI) have waived their right to cross-examine.
xxx it appearing that the court, in various instances, had accorded plaintiffs-in-
At the next hearing session – August 7, 2001 - the Yuchengcos again moved for the intervention the opportunities to present their evidence but failed altogether to do so,
cancellation and resetting of the hearing on the ground that the witness they intended thus effectively delaying the early disposition of the instant case which has been
to present on that day – one Nene Trajano - was unavailable. The respondent court pending for the last fourteen (14) years.
denied the motion to cancel, and, in an open court order, deemed the Yuchengcos as
having waived their right to present evidence, rationalizing as follows: The Yuchengcos received their copy of the Resolution of September 28, 2001 on
October 8, 2001.
When this case was called for hearing today, Atty. Laurence Arroyo appeared for the
plaintiffs-in-intervention, . . ., and moved for the cancellation of today’s hearing as his . On October 12, 2001, the respondent court rejected the Yuchengcos’ further requests
. . witnesses are not present in Court. for the issuance of subpoenae to Imelda O. Cojuangco, her son, Antonio, and three
(3) other individuals. For, as explained by the respondent court, such request is an
The Court reminded the plaintiffs-in-intervention that precisely the parties agreed on attempt on the part of the Yuchengcos to set to naught its earlier Order considering
the trial dates for them to present and terminate the presentation of their respective them as having waived their right to present further evidence.
evidence, i.e., the hearings for plaintiffs-in-intervention were set on July 26, 30, and
August 7, 2001 and for defendants-in-intervention on August 29, September 5 and Hence, the Yuchengcos’ second petition for certiorari, now docketed as G.R. No.
12. It appears that the plaintiffs-in-intervention failed to present their evidence on July 150320, in which they ascribe to the respondent court the commission of grave abuse
26, 30, and in today’s hearing. of discretion or of an act in excess of its jurisdiction in issuing the Order and
Resolution dated August 7, 2001 and September 28, 2001, respectively. Pressing on,
In view thereof, the plaintiffs-in-intervention are hereby deemed to have waived their the Yuchengcos argue that they -
right to present further evidence and let the reception of evidence by the defendants-

84
I. xxx WERE DEPRIVED OF THEIR RIGHT TO PRESENT EVIDENCE AND THEIR To this motion for summary judgment, the Yuchengcos interposed an opposition,
DAY IN COURT IN VIOLATION OF DUE PROCESS. followed by a supplement to opposition.

II. xxx SHOULD NOT HAVE BEEN COMPLELLED TO PRESENT EVIDENCE WHEN On the basis of the foregoing antecedents, and acting on the motion for summary
RESPONDENTS REPUBLIC/PCGG HAD NOT YET FORMALLY OFFERED THEIR judgment, the respondent court rendered its assailed Partial Decision.42 Feeling
EVIDENCE AND RESTED THEIR CASE. aggrieved, just like the Republic, over the dismissal of their PLDT shares claims, the
Yuchengcos have challenged in their petition in G.R. No. 153207 the aforesaid Partial
III. xxx SHOULD NOT HAVE BEEN COMPELLED TO PRESENT EVIDENCE Decision, raising the following issues for resolution:
BEFORE RESPONDENTS (DEFENDANTS) PHI/COJUANGCOS.
I. The Sandiganbayan gravely erred when it insisted on rendering the questioned
IV. xxx WERE UNREASONABLY BOUND TO THE SCHEDULE OF TRIAL IN THE Partial Decision despite the pendency of G.R. Nos. 149802 and 150320.
30 MAY 2001 ORDER, CONSISTING OF MERELY 3 TRIAL DATES SPANNING 13
DAYS. II. The Sandiganbayan gravely erred in confining the presentation of petitioners’
evidence to three (3) hearing dates spanning less than two (2) weeks.
V. RESPONDENT SANDIGANBAYAN ERRONEOUSLY FOUND THAT
PETITIONERS FAILED TO PRESENT EVIDENCE ON 26 AND 30 JULY AND 7 III. The Sandiganbayan gravely erred in granting respondents PHI/Cojuangcos’
AUGUST 2001. (Petition, G.R. No. 150320, p. 26) Motion for Summary Judgment.

To summarize, assailed and sought to be nullified by the Yuchengcos in their IV. The Sandiganbayan gravely erred in finding that the subject PTIC shares do not
certiorari petitions in G.R. No. 149802 and G.R. No. 150320, are the following related partake of the character of ill-gotten wealth. (Petition, G.R. No. 153207, pp. 33-34)
issuances of the respondent court:
IV. THE COURT’S RULING
(1) Resolution dated May 24, 2001, denying their "Urgent Motion To Suspend Trial
Pending Discovery" and its Supplement; As a matter of sound and long appellate practice, the Court, before considering the
merits of a petition before it, looks into the matter of timeliness and accordingly would
(2) Order dated July 12, 2001, denying their verbal motions for the re-setting of the dismiss or otherwise deny further due course to petitions for non-compliance with the
agreed pre-trial and trial dates insofar as their complaint-in-intervention is concerned jurisdictional caveat on timeliness of filing. The threshold question, therefore, is
or, in the alternative, for a change in the order of trial so that Cojuangcos/ PHI be whether or not all the five (5) petitions at bar were timely filed.
made to present their evidence in relation to the complaint of petitioner Republic
ahead of them (Yuchengcos), and the Resolution dated September 5, 2001, denying Lateness and Mootness of the Petition in G.R. NO. 149802
reconsideration of the Resolution dated May 24, 2001 and of the Order of July 12,
2001; and A review of the records clearly indicates that the Yuchengcos’ petition for certiorari in
G.R. No. 149802 was filed out of time. As it were, there can hardly be any quibbling
(3) Resolution dated August 7, 2001, declaring them as being deemed to have that the Resolution of May 24, 2001 assailed thereby is interlocutory in character. For,
waived their right to present evidence, and the Resolution dated September 28, 2001, respondent court’s refusal to suspend trial until the Yuchengcos shall have completed
denying reconsideration of the Resolution of August 7, 2001. their discovery did not terminate the case. Further proceedings were still required,
such as the further reception of evidence for all parties, inclusive of the Yuchengcos.
Apropos the Yuchengcos’ Second Amended Complaint-in-Intervention, respondent In his ponencia in Investments, Inc. vs. Court of Appeals,43 then Justice and later
Cojuangcos/PHI filed on September 20, 2001 a "Motion For Summary Judgment".41 Chief Justice Andres Narvasa explained the nature of an interlocutory order and how
They contended that the pleadings and affidavits on record failed to tender any it differs with one that is final:
genuine issue on the alleged coercion and duress allegedly exerted by the late Pres.
Marcos and/or the Cojuangco group. According to them, the desired recovery of The concept of "final judgment", as distinguished from one which has "become final"
PLDT shares sought under the Second Amended Complaint-in-Intervention is (or "executory" as of right [final and executory]), is definite and settled. A "final"
anchored on such coercion and duress employed. judgment or order is one that finally disposes of a case, leaving nothing more to be
done by the Court in respect thereto, e.g., an adjudication on the merits which, on the
basis of the evidence presented at the trial, declares categorically what the rights and
85
obligations of the parties are and which party is in the right; or a judgment or order have a new 60-day period from receipt of the denial of the motion for reconsideration,
that dismisses an action on the ground, for instance, of res judicata or prescription. within which to file the petition. As such, the timeliness of the petition must be
Once rendered, the task of the Court is ended, as far as deciding the controversy or reckoned from the date of notice or receipt of the order or resolution assailed, as if no
determining the rights and liabilities of the litigants is concerned. Nothing more motion for reconsideration was filed.
remains to be done by the Court except to await the parties’ next move . . . and
ultimately, of course, to cause the execution of the judgment once it becomes "final" Given the following sequence of events: a copy of the May 24, 2001 resolution was
or, to use the established and more distinctive term, "final and executory". received on June 7; the motion for reconsideration thereof was filed on August 15,
with a copy of the resolving issuance dated September 5 received on September 18,
Conversely, an order that does not finally dispose of the case, and does not end the the question that now comes to fore is: Vis-a-vis the May 24, 2001 resolution, was the
Court’s task of adjudicating the parties’ contentions and determining their rights and motion for its reconsideration filed on August 15, 2001 timely, so that the Yuchengcos
liabilities as regards each other, but obviously indicates that other things remain to be can validly reckon, as they in fact did, the 60-day period from their receipt on
done by the Court, is "interlocutory", e.g., an order denying a motion to dismiss under September 18, 2001 of the September 5, 2001 Resolution denying reconsideration of
Rule 16 of the Rules, . . . . Unlike a "final" judgment or order, which is appealable, as the Resolution of May 24, 2001 jointly with the Order of July 12, 2001?
above pointed out, an ‘interlocutory’ order may not be questioned on appeal except
only as part of an appeal that may eventually be taken from the final judgment To answer the poser, a determination must first be made as to when should a motion
rendered in the case. (at pp. 339-340) for reconsideration of an interlocutory order be filed. In Denso (Phils.), Inc. vs. The
Intermediate Appellate Court, et al.,45this Court ruled that a motion for
Following Investments, Inc., the remedy of an appeal from the interlocutory May 24, reconsideration of an interlocutory order is not subject to the usual limiting fifteen-day
2001 Order was unavailing to the Yuchengcos, thus the propriety of their coming to period of appeal prescribed for final judgments or orders. The Denso ruling, however,
this Court, with respect to that order, in G.R. No. 149802 via a special action for stopped short of directly addressing the issue of precisely when should a party file a
certiorari under Rule 65 of the Rules of the Court. motion for reconsideration of an interlocutory order. For, apart from saying that such
motion is not subject to the 15-day-appeal-period rule, it merely held that moving for
It may be recalled, however, that prior to the filing of their petition in G.R. No. 149802, reconsideration after the lapse of a 38-day period after receipt of the assailed order is
the Yuchengcos first urged the respondent court for a reconsideration of its May 24, not unreasonable.
2001 Resolution, a copy of which they received, by their own admission, on June 7,
2001. The corresponding motion filed on August 15, 2001 also sought the While the Rules of Court has no specific provision dealing directly with the question,
reconsideration of the open-court Order dated July 12, 2001. Given these defining Section 4 of Rule 65 provides a logical answer.
dates, there is a need to look into the timeliness of the said motion as a preliminary
step to determine the timeliness of the Yuchengcos’ petition in G.R. No. 149802 itself. Taken in its proper perspective, the clause "not subject to the limiting 15-day period
for appeal prescribed for final judgments or orders" cannot plausibly be stretched to
The rule on the filing of petitions for certiorari is embodied in Section 4, Rule 65 of the mean that the period to ask for reconsideration of an interlocutory order can exceed
Rules of Court, partly reading - the 60-day threshold prescribed under the Section 4 of Rule 65 for filing a petition for
certiorari. Else, a legal aberration would ensue where a party who has merely 60 days
SEC. 4. When and where petition filed. – The petition may be filed not later than sixty from notice of an adverse interlocutory order to interpose a special action for certiorari
(60) days from notice of the judgment, order or resolution. In case a motion for would be allowed a longer period to move for reconsideration of such order.
reconsideration or new trial is timely filed, whether such motion is required or not, the
sixty (60) day period shall be counted from notice of the denial of said motion. 44 Withal, the filing of the Yuchengcos’ motion for reconsideration of the Resolution of
May 24, 2001 on August 15, 2001, which is the 69th day from notice of the said
As the rule now thus stands, the 60-day reglementary period within which to file a Resolution on June 7, 2001, is beyond the 60-day period prescribed under the
petition for certiorari shall be reckoned from notice of the resolution or order sought to present Section 4 of Rule 65, and is, therefore, late. Perforce, and as discussed
be nullified, save when a motion for reconsideration is timely filed in which case the earlier, their petition in G.R. No. 149802 itself was belatedly filed. In fine, for lack of a
60-day period shall start from receipt of the denial of such motion. timely motion for reconsideration of the May 24, 2001 Resolution, the same has, in a
manner of speaking, thereby become final and executory. Certiorari, insofar as the
A corollary rule, subsumed in the same Section 4 of Rule 65, applies in the event it is said resolution is concerned, is no longer available.
determined that a motion for reconsideration is not timely. In such a situation, a party
seeking to avail himself of the remedy of certiorari under the same Rule 65, does not
86
Apropos the Order of July 12, 2001, this Court is of the view that the same petition in (14) years. And this, in hindsight, is not an idle speculation on our part as respondent
G.R. No. 149802 has, with respect to such order, become moot and academic. As we court would later write in its Partial Decision, citing Republic vs. Sandiganbayan,46
look back at the incidents subject of the stated order, the Yuchengcos had moved that the following:
the trial be suspended to await the completion of their discovery procedure or, in the
alternative, for respondents Cojuangcos/PHI to present their evidence, vis-à-vis the We stress that the resolution of the complaint-in-intervention, along with the principal
claim of petitioner Republic, ahead of them (Yuchengcos). By this desired variation of case, is long overdue. What the Supreme Court has said in this regard four years ago
the order of trial, the Yuchengcos were, as we see it, actually hoping to be given has acquired even greater urgency today –
additional trial dates for presentation of evidence on top of those dates allotted them
but did not utilize. Owing, however, to the promulgation of the Partial Decision dated ‘xxx Eleven years have passed since the government started its search for and
April 25, 2002, we can assume that during the pendency of the petition in G.R. No. reversion of such alleged ill-gotten wealth. The definitive resolution of such cases on
149802, petitioner Republic and respondent Cojuangcos/PHI had, in the separate trial the merits is thus long overdue. If there is adequate proof of illegal acquisition,
on the PLDT shares, already finished with the presentation of their evidence and have accumulation, misappropriation, fraud or illicit conduct, let it be brought now . . .’
rested their case, the latter in relation to both the Republic’s Amended Complaint and
the Yuchengcos’ Complaint-in-Intervention. In net effect, the change in the order of It cannot be gainsaid that the respondent court merely exercised its discretion to
presentation of evidence veritably sought in G.R. No. 149802 can no longer be order – and to be guided by such order - the termination of the respective
granted, or, if granted, can no longer be implemented. It is, therefore, futile to belabor, presentation of evidence by both petitioners Yuchengcos and Republic or to set a
let alone rule, on the merits of this particular petition insofar as it relates to the Order limiting timetable for such presentation. We are loathe to disturb such exercise of
of July 12, 2001. Time and again, we have said that courts exist to decide actual judicial discretion which has spawned the petitions for certiorari in G.R. No. 150320
controversies, and do not render opinions on moot cases. and G.R. No. 150367. For, jurisprudence teaches that certiorari lies only when the
tribunal acts without or oversteps its jurisdiction, or gravely abuses its discretion, 47
The Due Process Issue in as when the power is exercised in an arbitrary or despotic manner by reason of
passion, prejudice or personal hostility.48 The abuse must, in fine, be of such degree
G.R. NOS. 150320 and 150367 as to amount to an evasion of positive duty, or a virtual refusal to perform a duty
enjoined, or to act at all, in contemplation of law, as to be equivalent to having acted
The Court shall first pass upon the issue of due process, or lack of it, to be precise, without jurisdiction.49
uniformly invoked in G.R. Nos. 150320 and 150367. If non-observance of the
requirements of due process indeed tainted the separate trial below, then the What we said in Lee, et al. vs. People50is also apropos, viz.:
resolution on the issue of the substantive correctness of the Partial Decision raised in
petitions for review in G.R. No. 153459 and G.R. No. 153207 should be clear, simple xxx Certiorari may not be availed of where it is not shown that the respondent court
and unavoidable. For, a judgment arrived at after a trial marred by lack of due lacked or exceeded its jurisdiction over the case even if its findings are not correct.
process deserves to be immediately struck down as a nullity.
In other words, certiorari will issue only to correct errors or jurisdiction and not to
It may be well to revisit the various issuances sought to be annulled under Rule 65 of correct errors of procedure or mistakes in the court’s findings and conclusions. An
the Rules of Court on due procedural ground. Specifically, petitioner Republic assails, interlocutory order may be assailed by certiorari only when it is shown that the court
in G.R. No.150367, the respondent court’s Order dated May 30, 2001 denying its acted without or in excess of jurisdiction or with grave abuse of discretion. However,
motion for additional time to present its evidence, as well as the Order dated this Court generally frowns upon this remedial measure as regards interlocutory
September 5, 2001 requiring the same petitioner to file and terminate its formal offer orders. To tolerate the practice of allowing interlocutory orders to be the subject of
of evidence within 30 days. On the other hand, in G.R. No. 150320, the Yuchengcos review by certiorari will not only delay the administration of justice but will also unduly
urge the annulment of the August 7, 2001 and September 28, 2001 Resolutions in burden the courts. (At pp. 402-03)
which they were deemed by the respondent court to have waived their right to present
further evidence. At bottom, respondent court issued these assailed orders and/or Complementing Lee is Ampeloquio, Sr. vs. Court of Appeals51where we wrote:
resolutions owing to both petitioners’ failure to complete the presentation of their
respective evidence within the agreed trial dates, a failure which, if allowed to xxx If every error committed by the trial court were to be a proper object of review by
continue, would, in the eyes of that court, further derail the early disposition of Civil certiorari, the trial would never come to an end and the appellate courts’ dockets
Case No. 0002. It could have been that the respondent court was, in the end, would be clogged ad infinitum with the aggrieved parties-litigants filing petitions
actuated by the desire to resolve a case that has been pending for the last fourteen against every interlocutory order of the trial court. Such a situation could only
87
undermine the proper conduct of litigation before the courts and ought not to be of power to the prejudice of the appellant, or that the ruling objected to rested on an
tolerated if we are to enhance the prompt administration of justice at every level of the erroneous principle of law not vested in discretion.
judicial hierarchy.
The doctrine, supported by numerous citations of authority, is thus stated in the
In the light of the foregoing doctrinal holdings, we can say without fear of contradiction Encyclopedia of Pleading and Practice (vol. 2, pp. 416, 418):
that not every erroneous interlocutory order, if that be the case, is correctible by
certiorari. We grant certiorari only upon clear showing that the trial court issued its Abuse of discretion. - Accordingly, where the power is so exercised as to deprive a
challenged interlocutory order without or in excess of jurisdiction or in grave abuse of party of a legal right, or unduly benefit one party at the expense of the other, or
discretion amounting to lack of jurisdiction. Conversely, absent the vitiating element of where, generally, the injustice or inexpediency of the act is so clear as to show
want or excess of jurisdiction, certiorari is unavailing as a remedy. beyond a reasonable doubt the violation of equitable considerations, the act of
decision is always reviewable in some form on appeal, as an abuse of power.
We thus sustain as defensible, nay correct, under the obtaining factual milieu and
certainly within the jurisdiction of the respondent court, the issuance of the assailed ‘Presumption. - The presumption on appeal that the exercise of discretionary powers
orders and resolutions respecting the presentation of evidence. As it were, petitioners was sound is very strong. The appellant must rebut it by showing a strong and clear
Republic’s and Yuchengcos’ respective certiorari petitions basically rest on the case of abuse of power to his prejudice, or that the decision below rested on an
postulate that the respondent court violated their right to due process of law when it erroneous principle of law not vested in discretion. A mere mistake of judgment, or a
refused to grant them what basically were requests for further postponements to difference in opinion between the appellate and the trial court, is not sufficient.’
further receive their respective evidence.
It cannot be stressed enough that postponements have a way of causing delays of
Lest it be overlooked, the matter of granting or denying a plea for continuance or the vexatious kind. With this in mind and with respect to the specific issue before us,
postponement is, as a rule, addressed to the sound discretion of the trial court.52 In we are now confronted with the task of harmonizing two (2) basic, but not necessarily
1916, or some eighty nine (89) years ago, the landmark case of Lino- Luna vs. irreconcilable, rights etched no less in the Bill of Rights. We refer to the right to due
Arcenas,53expounded on the juridical concept of "discretion" in the following wise: process, on one hand, and the right to speedy trial, on the other. This undertaking
becomes all the more made difficult by the stark reality that these petitions involve "ill-
In its very nature, the discretionary control conferred upon the trial judge over the gotten wealth" reputedly amassed by the Marcos family, their friends and former
proceedings had before him implies the absence of any hard-and-fast rule by which it business associates where, as in several like cases, the Court itself dictated a
is to be exercised, and in accordance with which it may be reviewed. But the resolution in "utmost dispatch", albeit acknowledging in the same breath that "over
discretion conferred upon the courts is not a willful, arbitrary, capricious and and above the exigencies of recovering ill-gotten wealth, we must carry out the more
uncontrolled discretion. It is a sound, judicial discretion which should always be pressing constitutional task of seeing to it that all parties are afforded due processes
exercised with due regard to the rights of the parties and the demands of equity and and substantial justice", stressing that this burden extends "[E]ven to those suspected
justice. As was said in the case of The Styria vs. Morgan (186 U.S., 1, 9): "The . . . of having acquired and/or accumulated ill-gotten wealth…" 54
establishment of a clearly defined rule of action would be the end of discretion, and
yet discretion should not be a word for arbitrary will or inconsiderate action." So in the It is, therefore, well-nigh apropos to hark on judicial precedents on the two
case of Goodwin vs. Prime (92 Me., 355), it was said that "discretion implies that in constitutional rights adverted to above.
the absence of positive law or fixed rule the judge is to decide by his view of
expediency or by the demands of equity and justice." In the abstract "due process" has been described as nothing more and nothing less
than "the embodiment of the sporting idea of fair play."55 Its irreducible minimum
There being no "positive law or fixed rule" to guide the judge in the court below in requirements are notice and hearing,56 the right to be heard being its most basic
such cases, there is no "positive law or fixed rule" to guide a court of appeal in tenet.57 In PCIB vs. Court of Appeals,58we held that the essence of due process is
reviewing his action in the premises, and such courts will not therefore attempt to that a party is afforded a reasonable opportunity to be heard in support of his case;
control the exercise of discretion by the court below unless it plainly appears that what the law abhors and prohibits is the absolute absence of the opportunity to be
there was "inconsiderate action" or the exercise of mere "arbitrary will," or in other heard. Hence, a party cannot feign denial of due process when, having been afforded
words that his action in the premises amounted to "an abuse of discretion." But the the opportunity to present his side, chooses, for whatever reason, not to be heard.59
right of an appellate court to review judicial acts which lie in the discretion of inferior
courts may properly be invoked upon a showing of a strong and clear case of abuse On the other hand, the right to speedy trial, as an adjunct to the right of all persons to
a speedy disposition of their cases before judicial, quasi-judicial, or administrative
88
bodies, requires that court proceedings should be conducted according to fixed rules afternoon; provided that said extension will not go beyond the three-month limit
and must be free from vexatious, capricious and oppressive delays.60 In the computed from the first trial date except when authorized in writing by the Court
determination of whether or not the right to speedy trial has been violated, the factors Administrator, Supreme Court.
that may be considered and balanced are length of delay, reason for the delay,
assertion of the right or failure to assert it, and prejudice to counsel by the delay.61 It is thus abundantly clear that the mandatory continuous trial scheme, the guidelines
on trial, and, to a significant level, the ideal articulated in Republic (PCGG) vs.
Given the foregoing perspective, it was in keeping with the imperatives of speedy trial Sandiganbayan64to resolve "ill-gotten wealth cases" with utmost dispatch,
for the respondent court, in the exercise of its discretion, to issue the circumscribed, in a way, the respondent court’s otherwise wide latitude in the conduct
orders/resolutions assailed in G.R. No. 150320 and G.R. No. 150367 as a necessary of its proceedings. At bottom, then, respondent court acted with some degree of
consequence to its denial of petitioners’ innumerable motions for postponement. circumspection and, doubtless, well within its authority when, in its assailed issuances
in G.R. No. 150367, it refused to accommodate petitioner Republic with additional trial
An old but still good decisional law holds that the postponement of the hearing of a dates and ordered it to file its formal offer of exhibits and rest its case. The same
case, which had been previously set with due notice to the parties and their attorneys, conclusion applies to petitioner Yuchengcos in G.R. No. 150320. Grave abuse of
is not an absolute right of the litigants nor of their counsel.62 Owing, however, to the discretion cannot be ascribed on the respondent court in (i) proceeding to hear the
practice that persists to this day, we acknowledged the stubborn reality that evidence of the Yuchengcos on the agreed trial dates of July 26 and 30 and August 7,
continuances and postponements form part of the procedural system of dispensing 2001, (ii) refusing to reset the hearings to later dates, and (iii) declaring them to have
justice.63 But even so, the Court has already taken measures to cleanse the system effectively waived their right to present further evidence when they were still without
of this practice which, when abused, as it has often been abused, leads to "the evidence or witness on the last trial date. There is hardly any dispute that these were
wheels of justice grinding to a halt". One reformative step is the mandatory trial dates previously agreed upon and to which the Yuchengcos committed to abide.
continuous trial scheme prescribed under Supreme Court (SC) Administrative Order And under the cited Guidelines on Trial, petitioner Yuchengcos were bound to
No.4, series of 1988, in relation to SC Circular No. 1-89. Under this scheme, "trials complete the presentation of their evidence within the trial dates assigned to them.
are to be held on the scheduled dates without needless postponements, the factual Likewise, at the end of the trial dates, they were deemed to have completed with the
issues for trial well defined at pre-trial and the whole proceedings terminated and presentation of their evidence. It would be an aberration for the Court to fault and
ready for judgment within ninety (90) days from the date of the initial hearing, unless, reverse the graft court for following what it has enjoined the latter to observe in the
for meritorious reasons, an extension is permitted". Following a trial period involving first place.
the participation of designated pilot courts, the Court issued Administrative Circular
(AC) No. 3-90, series of 1990, decreeing the adoption of the mandatory continuous As to petitioner Republic, it was given, per our own count, no less than twenty (20)
trial system starting February 15, 1990, in all trial courts. trial dates. There were, in fact, more trial settings than those agreed upon and
directed in the pre-trial of May 25, 2000. The accommodating attitude of the graft
Not to be overlooked as another measure towards a speedy disposition of cases is court towards petitioner Republic did not escape petitioner Yuchengcos’ notice. While
the issuance of SC Administrative Circular No. 3-99 prescribing guidelines on perhaps a bit exaggerated, petitioner Yuchengcos statement in page 88 of their
effective management of cases to ensure their speedy disposition. Some highlights: "Consolidated Memorandum" that "not once did [the Sandiganbayan] deny their
(Republic’s) requests to cancel scheduled hearings" belies the Republic’s lament that
B. Trial the respondent court did not accord it "fair, adequate and reasonable opportunity to
present all evidence they consider vital".
(5) The judge shall conduct trial with utmost dispatch, with judicious exercise of the
court’s power to control trial proceedings to avoid delay. The problem lies not in the alleged unreasonable refusal of the respondent court to
grant the Republic more trial dates, but, as the respondent court aptly suggested, in
(7) The trial shall be terminated within ninety (90) days from initial hearing. the Republic’s innumerable requests for cancellation and resetting of hearings, on
Appropriate disciplinary sanctions may be imposed on the judge and the lawyers for one pretext after another, which, at the end of the day, reflected on the
failure to comply with this requirement due to causes attributable to them. unpreparedness of its set of counsels and the seeming unavailability of admissible
material evidence. With the view we take of the case, petitioner Republic sought, but
(8) Each party is bound to complete the presentation of his evidence within the trial in vain, to present respondent Mrs. Marcos, it being its posture that her testimony -
dates assigned to him. After the lapse of said dates, the party is deemed to have after she had announced to the four winds that the Marcos family owns the disputed
completed the presentation of evidence. However, upon verified motion based on PLDT shares in the name of respondent Cojuangcos/PHI - would have been vital to
compelling reasons, the judge may allow a party additional trial dates in the its case. Ironical as it may sound, petitioner Republic seems to imply by its consuming
89
bid to have Mrs. Marcos on the witness stand that it cannot adequately prove its case to the reinstatement action of this Court. Neither is there any rule requiring the
without her testimony. For, how else explain the fact that it footnoted its Formal Offer suspension of trial just to allow a party-litigant to complete discovery procedure.
of Evidence with the reservation to have her testify, if so allowed by this Court?
And, when we take into stock of respondent court’s constant reminders to the
To be sure, we have taken note of petitioner Republic’s assertion that respondent contending parties to observe the trial schedule in view of the length of time that Civil
court gave its word during the March 26, 2001 hearing that it can present Mrs. Marcos Case No. 0002 has been pending, petitioners Republic and Yuchengcos have, in the
after all of its intended witnesses shall have testified. This assurance, if indeed given, final reckoning, only themselves to point at for their present plight. The recorded facts
cannot be taken to mean, however, that the court has to forever await her testimony. indicate that they were not denied the opportunity to be heard.
The refusal to grant petitioner Republic additional trial dates just to have the unwilling
Mrs. Marcos testify is understandable, when taken in the perspective of vexatious Finally, we cannot write finis to the due process issue without resolving the question
delays juxtaposed with the Republic’s counsel’s commitment given in one of the of whether the respondent court, through the use of its coercive powers, could have
hearings to finish with the presentation of evidence with or without her testimony. As had compelled Mrs. Marcos to be petitioner Republic’s hostile witness and testify on
we refer to the records, we see that the first time petitioner Republic manifested its the circumstances surrounding their (the Marcos family) claimed acquisition and
intention to present Mrs. Marcos as its hostile witness was during the hearing of ownership of the disputed PLDT and PTIC shares.
January 29, 2001. But the succeeding scheduled hearing dates, i.e, January 30 and
31, 2001, February 1, 2, and 9, March 12, 13, 14, 15, 26, 27, and 28, May 7, 9, 16 The Court only has to recall that when Mrs. Marcos refused to make a court
and 28, 2001 came and went without Mrs. Marcos testifying as a witness of petitioner appearance for petitioner Republic, she invoked her right against self-incrimination
Republic. It is in fact not amiss to say that all these scheduled hearings were, at the under Article III, Section 17 of the Constitution.65 She was correct. She cannot be
instance of petitioner Republic, cancelled or reset to other dates, either because of compelled to testify without violating her constitutional right against self-incrimination.
the unavailability of the intended witness or the government handling counsel was ill As she aptly observed, Civil Case No. 0002, while basically a civil suit, is penal in
prepared for trial. nature, since it is, for all intents and purposes, a forfeiture proceeding, taken under
and pursuant to EO Nos. 1 and 2, series of 1986.66 These twin issuances indeed
The Yuchengcos were no better. They agreed to present their evidence on certain seek, as ultimate objective, the "recovery of all ill-gotten wealth accumulated by
trial dates, but were unable to do so in any of those trial dates, inclusive of the last former President Ferdinand E. Marcos, his immediate family, relatives, subordinates
scheduled hearing. In any event, the depositions of Attys. de Guzman and Mercado- and close associates", and the properties being contemplated to be recovered being
Ferrer, together with that of Gregorio Romulo, were received in evidence for said those "funds, moneys, assets and properties illegally acquired or misappropriated" by
petitioners over the objections of the adverse parties. Moreover, petitioner said persons – thus, stamping upon the civil suit the characteristics of a forfeiture
Yuchengcos wasted their trial dates by their unyielding insistence on presenting proceedings.
witnesses who have already been deposed, and even after respondents
Cojuangcos/PHI anticipatorily manifested their intention to waive their right to further The suggestion that the right against compulsory self-incrimination may be invoked
cross-examine the deponents. While perhaps a bit anti-climactic to state at this only in criminal proceedings is valid to a certain extent, but not enough justification to
juncture, there was no attempt to present petitioner Yuchengco himself, when it would compel Mrs. Marcos to testify against her volition, given the penal characteristics of
seem that he was in the best of position to testify on his and/or Y Realty Corporation’s Civil Case No. 0002. This is because Rule 115, Section 1(e) of the Rules of Court
claim over the PTIC and PLDT shares or on the alleged duress exerted on him by the accords the accused at a trial the right "to be exempt from being compelled to be
Marcoses or the Cojuangco group. witness against himself ". The kernel of this privilege is testimonial compulsion, or
simply a prohibition against legal process to extract from a person’s own lips an
Neither do we find persuasive cogency in the Yuchengcos’ posture that the separate admission of guilt against his will.67 As this Court has further explained in People vs.
trial should have been suspended to await the completion of their discovery efforts. Ayson68 -
For, such arrangement, if allowed and put in motion, would have veritably provided
said petitioners with tools to cause the indefinite suspension of the separate trial by The right of a defendant in a criminal case (to be exempt from being a witness against
the convenient plea of inadequate availment of discovery. Besides, we are at loss to himself) signifies that he cannot be compelled to testify or produce evidence in the
understand the Yuchengcos’ contention about their inability to undertake discovery criminal cases in which he is the accused, or one of the accused. He cannot be
procedure until this Court reinstated their Amended Complaint-in-Intervention compelled to do so even by subpoena or other process or order of the Court. He
heretofore dismissed by the respondent court. There is no rule, and the Yuchengcos cannot be required to be a witness either for the prosecution, or for a co-accused, or
have cited none – precluding them from undertaking such discovery procedure prior even for himself. In other words – unlike an ordinary witness (or a party in a civil
action) who may be compelled to testify by subpoena, having only the right to refuse
90
to answer a particular incriminatory question at the time it is put to him – the expense and loss of time involved in a trial. Even if the pleadings appear, on their
defendant in a criminal action can refuse to testify altogether. He can refuse to take face, to raise issues, summary judgment may still ensue as a matter of law if the
the witness stand, be sworn, answer any question. And, as the law categorically affidavits, depositions and admissions show that such issues are not genuine.70 The
states, his neglect or refusal to be a witness shall not in any manner prejudice or be presence or absence of a genuine issue as to any material fact determines, at
used against him. (Emphasis supplied) bottom, the propriety of summary judgment. A "genuine issue", as differentiated from
a fictitious or contrived one, is an issue of fact that requires the presentation of
Lest we be misunderstood, this Court’s concurrence with Mrs. Marcos is really evidence. To the party who moves for summary judgment rests the onus of
nothing more than being faithful with what was taught in the oft-cited case of Cabal demonstrating clearly the absence of any genuine issue of fact, or that the issue
vs. Kapunan,69to wit: posed in the complaint is patently unsubstantial so as not to constitute a genuine
issue for trial.71
In a strict signification, a forfeiture is a divestiture of property without compensation, in
consequence of a default or an offense, and the term is used in such a sense in this Guided by the principles above indicated, we hold that, under the circumstances
article. A forfeiture, as thus defined, is imposed by way of punishment not by the mere obtaining, summary judgment is proper and the respondent court did not commit a
convention of the parties, but by the lawmaking power, to insure a prescribed course reversible error in granting the corresponding motion for summary judgment filed by
of conduct. It is a method deemed necessary by the legislature to restrain the respondents Cojuangcos/PHI on the Second Amended Complaint-in-Intervention.
commission of an offense and to aid in the prevention of such an offense. The effect
of such a forfeiture is to transfer the title to the specific thing from the owner to the As may be observed, petitioner Yuchengco anchored his claim over the disputed
sovereign power. (23 Am. Jur. 599, italics in the original) PLDT shares on the proposition that the Marcos regime coerced him into giving up
6% of PTIC shares formerly owned by Gregorio Romulo and Leonides Virata which
In Black’s Law Dictionary a "forfeiture" is defined to be "the incurring of a liability to he paid for. Apart from this 6% PTIC-share transaction, he alleged having entered
pay a definite sum of money as the consequence of violating the provisions of some into a "put and call" agreement with GTE for the purchase of the latter’s 25% equity in
statute or refusal to comply with some requirement of law". It may be said to be a PTIC, but that he was again coerced into not exercising his option to purchase, only
penalty imposed for misconduct or breach of duty. (Com. vs. French, 114 S.W. 255) to be apprised later that PHI acquired the same 25% stockholdings.

As a consequence, proceedings for forfeiture of property are deemed criminal or It cannot be overemphasized, vis-à-vis the Yuchengcos’ claim that, when respondents
penal, and, hence, the exemption of defendants in criminal cases from the obligation Cojuangcos/PHI moved for summary judgment, the Yuchengcos, consequent to their
to be witnesses against themselves is applicable thereto. having been deemed to have waived their right to present their evidence, were
effectively precluded from pursuing discovery procedure. In net effect, the only facts
The rule protecting a person from being compelled to furnish evidence which would before the respondent court at the time of the filing of the motion for summary
incriminate him exists not only when he is liable criminally to prosecution and judgment were those to be gathered from the pleadings and the depositions of Mr.
punishment, but also when his answer would tend to expose him to a xxx forfeiture Romulo and Attys. de Guzman and Mercado-Ferrer.
xxx." (Am. Jur. Sec. 43, p. 48) (Italics in the original)
No substantial proof of coercion or duress, however, appears from the depositions on
Assayed against the cited jurisprudence, respondent Mrs. Marcos can, as was her file. On the other hand, the only relevant facts deducible from the deposition of Atty.
bent, refuse to testify altogether, notwithstanding the express allegations she made in Mercado-Ferrer on the "put and call" option, are: (1) the put option of petitioner
the pleadings adverted to by petitioner Republic. Alfonso T. Yuchengco expired in 1972; and (2) petitioner Y Realty Corporation
executed a waiver of its pre-emptive right on the transfer of the PTIC shares held by
The Propriety of SUMMARY JUDGMENT as GTE to Mr. Ramon U. Cojuangco in 1978. Thus, if, by its own terms, the "put and call"
option expired in 1972, Yuchengco’s right had long lapsed when the assignment of
Against the Yuchengcos’ Second Amended Complaint-in-Intervention the PTIC shares were made in favor of the late Ramon U. Cojuangco. Moreover, the
waiver Y Realty Corporation executed may be seen to confirm petitioner Yuchengco’s
Under Section 3, Rule 35, of the 1997 Rules of Civil Procedure, summary judgment assent to the aforesaid assignment of PTIC shares in favor of Ramon Cojuangco.
may be allowed where, save for the amount of damages, there is no genuine issue as
to any material fact and the moving party is entitled to a judgment as a matter of law. As to Mr. Gregorio D. Romulo, his deposition taken on August 3, 1987 yields the
Summary or accelerated judgment is a procedural technique aimed at weeding out following:
sham claims or defenses at an early stage of the litigation, thereby avoiding the
91
"ATTY. QUISUMBING: ALL objections are recorded.

Q: And who were the major stockholders in that corporation i.e. [PTIC]? ATTY. QUISUMBING:

A: The stockholders involved is the Gentel who turned over their equity to PLDT into Q: Did you subsequently make any confirmation of the information that you received?
the corporation and it was assumed that this company formed in the Bahamas would
be the body agent of PLDT which in turn would buy all those equipments from Gentel A: Yes, but I never saw a piece of paper, I was told by Ramon Cojuangco and Antonio
through the Bahamas corporation paying Gentel its share with a large commission, I Meer about this information after their return from their trip abroad and that we
do not know. successfully negotiated the purchase of PLDT.

Q: When you said Gentel, are you referring to General Telephone & Electronics Q: And what was the role of then President Marcos in this acquisition?
Corporation you have mentioned?
ATTY. LEANO: No basis.
A: Yes, sir.
ATTY. FRANCISCO:
Q: And … who held the interest in PTIC eventually?
Leading.
A: What resulted, from my point of view, was while in Manila, I received word that I
was the owner of 3% shares in PTIC, I immediately wired my office in New York and xxx xxx xxx
wanted to know if I could hold the shares in my name or if they wanted to transfer to
them but I had the offer and I wanted to know definitely what was the position of the COMMISSIONER:
Headquarters with regards to this.
But the witness may answer the question if he so desire.
Q: And what was their position?
A: Our position was the acquired 3% do not mean anything to us of a company that is A: I believe that I can answer the question by simply telling the Court how we were
from PLDT, at least one regular share of the PLDT had no or rather IT&T had no informed that PLDT was available apparently because I am only told this. The person
interest in PLDT except to acquire if it could be acquired and we have quite to iron in that found that this PLDT was going to be sold to Ninoy Aquino was his cousin
the fire at that time so I don’t know now. Danding Cojuangco, his cousin told the President and the President asked
Ambassador Roberto S. Benedicto to go to the offices of PLDT and stop all ways then
Q: Who else held stockholding interest? he signed for Monching Cojuangco because he felt that a transaction of this nature, of
this large was beyond the abilities of Danding . . . I do not know but that was then
A: I was informed that Leo Virata had 3%, Tony Meer had 3%, Oscar Africa had 1% transmitted to us by Monching Cojuangco, I do not know and I cannot testify to the
or 2% and the rest were distributed among the relatives and in-laws of Cojuangco, oh veracity of this story but what we were told that in order to meet us …
yes, Mr. Alfonso Yuchengco. I don’t know if awarded or allowed to possess the 7% of
the original shares. ATTY. FRANCISCO:

ATTY. FRANCISCO: I would like to request for the striking of the testimony of the I move to strike out the answer of the witness for being hearsay.
witness from the record, that is hearsay because he claimed that he was merely
informed of the other interests. ATTY. PALMA:

ATTY. LEANO: I adopt the manifestation of counsel. Counsel for Prime Holding adopts the same objection.

xxx xxx xxx ATTY. LEANO:

COMMISSIONER: For Mrs. Cojuangco, the same objection for being hearsay.

92
COMMISSIONER: ATTY. LEANO:

All objections recorded. All his statements are hearsay, all his statements are mere expression of opinion and
under the law, the best evidence should be the document.
xxx xxx xxx
xxx xxx xxx
ATTY. QUISUMBING:
COMMISSIONER:
Q: So General Telephone and Electronics Corporation was paid the monthly fee and
who made those payment on the fees? All objections are recorded.

ATTY. LEANO: ATTY. QUISUMBING:

The best evidence would be the payment. Q: You mentioned the DBP and Licaros, were they connected then at that time and
how?
A: I believe it was already PLDT that is being privy to the financial method, PLDT is
not answering definitely who came, who held but much later on, every interest then A: In the purchase of eventually of PLDT, it required the guaranty of the DBP that any
was bought up by at that time Chairman of the Board of the DBP and that our friend future commitments made by this group will be guaranteed by the Philippine
Alfonso Yuchengco may eventually had PTIC but since we were, at least was government.
completely out of the picture, I did not know whether it was true or not but since Leo
Virata was still at that time very much involved with PLDT because of the guarantee Q: What specifically was guaranteed by the DBP?
issued by DBP during the time of Licaros, I believe he has reason to at least suspect
that the company of General Telephone had negotiated with Mr. Yuchengco, I do not A: Of my knowledge, it was required that the agreed purchase price be guaranteed by
know if this is true, I have not spoken to Mr. Yuchengco about this matter, he has not DBP to Gentel.
asked me to speak about this. I decided this because naturally it is always a matter of
motive, my motive is that long before Senator Salonga made sequestration, I was Q: Do you remember the figure? And the guarantee of the DBP was given in favor of
sequestered and so with Leo Virata and I felt my repose had been dead a long time whom?
that whoever enjoyed the benefits of that sequestration should at least be taken to
proper authorities or in turn make amends of the years that they have illegally enjoyed A: It was released by order of Mr. Licaros in favor, I believe of PTIC.
the recourse which is substantial and which at today’s prices must be worth an awful
of money. Q: Which is the PTIC, what did you mean by PTIC, what firm?

Q: Now, you mentioned Licaros of the DBP … A: That PTIC is the Philippine Telecommunications Investment Company.

ATTY. LEANO: Q: So the DBP issued a guaranty, guaranteeing PTIC an obligation to whom?

I object, may I move for the striking out of the answer for being hearsay. A: To Gentel.

ATTY. PALMA: Q: Was there an intermediary bank involved in the U.S.?

Same objection for being hearsay. A: In the later operation, I only remember the Irving Trust lending $1million to Ramon
Cojuangco in order to pay the options of this group to purchase PLDT from Gentel.
ATTY. FRANCISCO:
xxx xxx xxx
It is not responsive to the question.

93
Q: You spoke of this sequestration or rather the sequestration of yours and of Leo afternoon, so what was conveyed to me by the words Pasig, I cannot definitely say
Virata, what did you mean by that, will you give us specifics? now but I do know what it conveyed in those days the long regime of powers that
were in control at that time.
A: I will give you the specifics as I know it happened to me personally. Leo Virata and
I decided to bail out because we did not like what was going on, we offered our Q: You said that you have never been treated that way before, you refer to your
shares to Alfonso Yuchengco, he offered to pay them but being honorable, we have selling, to your offer to sell to Yuchengco but being forced to sell to another?
to tell Ramon Cojuangco and Tony Meer that in turn have a meeting in the new PLDT
building where across from the office of Tony and Ramon was a lunch and we were ATTY. LEANO:
told that our shares had to be given to Pasig, now what that mean, I do not know,
there is approximately no way to verify that. Those words were enough for Ramon, to He never said that, may we just make our objection.
tell Monching, go ahead and take these two and you will be taken cared of later on,
he was never paid, I found out this. Q: What were forced to do that made you angry?

Q: While you say you do not know exactly what Pasig means, who used the word A: What made me angry was, I know that the company had a tremendous future,
Pasig? when Mr. Yuchengco gave me a visit in the hospital seven years ago on my stroke,
not now, he mentioned the fact that he had never been reimbursed of the money that
A: Monching, Ramon Cojuangco. he advanced to me and that I thought that was terrible.

Q: What do you understand of Pasig? Q: Now let us go back to your reasons as well as of the reasons Leo Virata in getting
rid of this 3% share each in PTIC, what were those reasons exactly that made you
ATTY. LEANO: decide to sell out?

May I make another objection insofar as the estate is concerned because of the A: Normally, inspection of the corporation means to look to the corporation papers, I
testimony of the witness, we would like to manifest our continuing objection to any never did, or they are signed by the incorporators in terms of the original documents
and all questions and matters that would affect the estate of Ramon Cojuangco, we at the buyers’ list, I never saw them, we understood that PTIC was in operation, pay
are making this objection in behalf of the widow whom we are representing in behalf regular dividends, I never saw them, so naturally I asked the man who got me in to all
of the estate. this things in the first place, what happened, he said, I do not know, I have not
received anything either, so let us get rid of this and we have thought most likely the
COMMISSIONER: buyer is Mr. Alfonso Yuchengco.

The objection is recorded. Q: What happened to your offer to Yuchengco?

A: Now, this is the way we were told, and Mr. Cojuangco, there was a pre-long A: He accepted it, I and Leo Virata arrived and we decided to tell Monching and Tony
negotiation in that lunch between Mr. Virata, myself and later, Mr. Yuchengco. I do not that we had sold our shares to Mr. Yuchengco. Apparently Leo told Ramon this only
know how the thing terminated because I was asked by Mr. Virata to go home and by the time we arrived in the PLDT building, he had already apparently consulted
because I get very violent, I did not like being treated that way by anybody and that is and we were told that the Pasig did not like and said go ahead and you will be taken
it, I went home and much later on because I refused to discuss this with anybody, I cared of which much later on told me never happened. Doon ako nagalit, masiyado
found out that Mr. Yuchengco was never paid but that he paid me, I know he did nanag pag-oonse. Well, anyway now, there is nothing more demanding of persons at
because I used in my name to pay a corporate obligation to the RCBC bank which is I their state that being locked in a hospital room for years and in the usual reading, I
believe was his bank. decided whoever enjoyed those shares, better make good and since I have read in
the newspapers about investigation of PTIC which seem to get out the cloud, I
Q: Now, you said that you got violently angry, so what did you understand by the word decided to do this, maybe to give some clue to the investigation of PTIC, I don’t know.
Pasig?
Q: And what was the figure agreed upon with Mr. Yuchengco?
A: I cannot specify because in my mind, at that time there was a turmoil, too much I
understand we have been drinking since lunch time and this was about 4:00 in the A: Apparently . . .
94
 As we see it, Mr. Romulo’s deposition is virtually a hearsay account and should,
ATTY. LEANO therefore, be disregarded, being itself inadmissible in evidence. Supporting and
opposing affidavits shall be based on personal knowledge of the declarant, shall set
I just want to make the same objection for being hearsay. forth such facts as would be admissible in evidence, and shall show affirmatively that
the affiant is competent to testify to the matters stated therein. Therefore, in
ATTY. QUISUMBING: determining whether summary judgment is proper, statements contained in affidavits,
which would be inadmissible in evidence (such as statements of opinion, belief and
These objections are to be used during the presentation of evidence not at the taking hearsay) must be disregarded. So it must be with the Romulo deposition.
of the deposition. Just remember that.
One minor point. Petitioner Yuchengcos drew attention to the pendency of their
ATTY.LEANO: But we want to make our objection. petitions in G.R. Nos. 149802 and 150320 when the Partial Decision was rendered,
suggesting doubtless that it was error on the part of the respondent court to proceed
xxx xxx xxx with the separate trial below without awaiting the outcome of said petitions.

COMMISSIONER: We are not persuaded. The pendency of the petitions in G.R. Nos. 149802 and
150320 did not, without more, dilute the validity of the assailed Partial Decision or
All objections are recorded. diminish the authority of the respondent court to render the same. Section 7, Rule 65
of the Rules of Court says as much:
A: I do not know anymore that anybody else, after this maybe stray bit of information
will be remembered later on but none right now and I was reviewing over my mind SEC. 7. Expediting proceedings; injunctive relief. - The court in which the petition [for
time and again, my participation in the whole affair, I was eventually and I was used in certiorari, prohibition or mandamus] is filed may issue orders expediting the
that way as a means to get IT&T into their negotiation and let Gentel to the bargaining proceedings, and it may also grant a temporary restraining order or a writ of
if only to show that they could afford to buy Gentel, in effect, they were closing the preliminary injunction for the preservation of the rights of the parties pending such
deal, leaving IT&T to force Gentel to sit down and negotiate with them. That was the proceedings. The petition shall not interrupt the course of the principal case unless a
idea because unfortunately, IT&T did not work for them but for this group apparently temporary restraining order or a writ of preliminary injunction has been issued against
that I do not know anymore. the public respondent from further proceedings in the case.

Q: My last question only is, how much is the figure for the sale of this 3% The governing rule, in fine, is that to arrest the course of the principal action during
the pendency of certiorari proceedings, there must be an interrupting restraining order
A: I understand, well, I used part of it to pay an obligation worth P636,000.00, it was or a writ of preliminary injunction from the appellate court directed to the lower
an obligation with the defunct T.J. Wolfe that was bought by me which appears in its court.73 There was none in the instant case. Accordingly, it was in order for the
book that amount or a little bit more with RCBC, now the balance maybe used by Mr. respondent court to proceed with the separate trial in Civil Case No. 0002 and
Virata for something else, I do not know. x x x necessarily in rendering a judgment, in this instance, the Partial Decision, which, in its
estimation, is called for by the facts and law of the case.
CROSS EXAMINATION:
DISMISSAL OF THE AMENDED COMPLAINT
BY ATTY. LEANO
AGAINST COJUANGCOS/PHI
xxx xxx xxx
We now come what, to us, is the center of the controversy. We refer to the question of
Q: Was Tony Meer present in that meeting? whether or not the disputed PLDT shares, which are covered by the equally disputed
PTIC shares of respondents Cojuangcos/PHI, are indeed part of the "ill-gotten wealth"
A: He was always in the meeting . . . . (TSN of the Deposition of Gregorio L. Romulo, of the Marcos family - ergo to be forfeited in favor of the State - using the evidentiary
August 3, 1987 pp. 12 –37). 72 standards and determinative indicia set out in Bataan Shipyard & Engineering Co.,
Inc. (Baseco) vs. PCGG,74 and applied analogously in subsequent cases,75 whence
the conclusion that the wealth is "ill-gotten" may be reasonably deduced. Respondent
95
court cited the benchmark outlined in Baseco in support of its Partial Decision,76 to tenable reason for any of the parties offering them as common exhibits to object to
wit: their admissibility.

One, evidence indicating manifest partiality and favorable treatment by the former Were want of proof of authenticity and reliability of the offered documentary evidence
President towards the alleged trustees, as demonstrated by active interplay between was, with respect to the Republic’s Amended Complaint, the rationale behind the
him and such trustees and/or presidential interventions which have resulted in adverse Partial Decision, as it strikes this Court to be, we can only say that such
inexplicable benefits to the trustees or to the corporations held by him through such disposition is not in accordance with Section 3 of EO No. 1478 which enjoins courts,
trustees; and in resolving suits filed in the recovery efforts, not to strictly apply technical rules of
evidence. Be that as it may, we instead take the course of delving into the substance
Two, the existence of documents and records in the possession of the former of the evidence on record which petitioner Republic asserts to be "vital facts and
President which, through indorsements and/or assignment made thereon in blank by material evidence",79 and thereby determine whether or not the respondent court
his trustees, provide the legal instrumentation for him to assert, now or in the future, indeed justifiably ignored them in arriving at the disputed holding dismissing the
ownership or control over the properties held by his trustees and/or to recover such Amended Complaint as against the Cojuangcos/PHI. Towards this end, the Court
properties from them. (At p. 23) shall first ascertain what could be those asserted "vital facts and material evidence"
be by looking at the allegations of the Republic in its Petition. Thus, according to the
The respondent court dismissed the Republic’s Amended Complaint as against the Republic’s petition in G.R. No. 153459, to cite pertinently:
Cojuangcos/ PHI on the finding that the former has not adequately discharged its
burden of proving, by the threshold preponderance of evidence required in "ill-gotten 1. PHI was registered by Jose Y. Campos on November 8, 1977 with a paid-up
wealth" cases, that the subject PLDT shares are ill-gotten. Wrote the respondent capital of a measly Fifty Thousand Pesos (P50,000.00) and utilizing as place of
court: business the address of UNILAB, a corporation owned and controlled by Jose Y.
Campos, and with UNILAB’s officers and directors, namely Rolando Gapud, Renato
xxx the Republic has failed to provide such "proof of authenticity or reliability" of the Lirio, [etc.] . . . and Gervacio Gaviola managing PHI xxx albeit, said managing officers
documents offered by it in evidence. Thus almost all the documents offered by the and directors had no financial interest whatsoever in PHI.
Republic are photocopies, and no effort was undertaken . . . to submit the originals of
said documents, or to have them properly identified, or to otherwise justify the 2. On May 2, 1978, Ramon U. Cojuangco, ceded and conveyed in favor of PHI by
admission of mere photocopies. Not surprisingly, defendants . . . objected to the way of Deed of Assignment dated May 2, 1978, some 44,023 shares of stock of
admission of the Republic’s documentary exhibits, citing violation of the Best PTIC . . . . On that same date, also by way of Deed of Assignment . . . Ramon U.
Evidence Rule (Section 3, Rule 130 of the Revised Rules of Civil Procedure ["Rules"], Cojuangco ceded and conveyed in favor of PHI another 33,696 shares of stock of
the Rules on Presentation of Documentary Evidence (Section 20, Rule 132 of the PTIC . . . . Also on the same date, Luis Tirso Rivilla ceded and conveyed in favor of
Rules), the Hearsay Evidence Rule, and the rule as to Purpose/s of Documentary PHI another 33,696 shares . . . . Ramon U. Cojuangco and Luis Tirso Rivilla were
Evidence (Section 34, Rule 132 of the Rules)." (at p. 31) compensated by PHI for said PTIC shares of stock which all in all sum up to 111,415
shareholdings in the name of PHI. xxx
Excepting, petitioner Republic tags the respondent court’s determinative finding as a
"sweeping conclusion" or "bare generalization". Pressing the point, petitioner Republic 3. From the foregoing evidence, there is no doubt that respondent PHI is a
argues that the Partial Decision did not identify with particular specificity which corporation which was formed and organized and maintained by the former dictator,
evidence failed to hurdle the bar of admissibility for being "mere photocopies" or "are President Ferdinand E. Marcos through confessed dummies, Jose Yao Campos and
otherwise unidentified, unauthenticated, and constitutive of hearsay".77 Rolando C. Gapud, who, in conspiracy with Ramon U. Cojuangco and Luis Tirso
Rivilla, sought to acquire for the Marcoses the single biggest majority shareholdings in
Petitioner Republic’s lament is, to a point, well taken. Indeed, not all documents the PLDT.
Republic offered in evidence in the separate trial on the PLDT shares suffer from the
infirmity imputed on them by the graft court. For, as argued with some measure of 4. The foregoing is confirmed by the declarations of confessed nominees/cronies of
merit, most of these documentary evidence have been identified and authenticated former President Ferdinand E. Marcos: Jose Y. Campos, Roland C. Gapud and Atty.
during the deposition taking of the deponents whose depositions were entered into Francisco de Guzman.
evidence after the usual procedure of comparing the originals with the faithful
reproductions thereof which were those marked in evidence. And certainly not lost on xxx xxx xxx
this Court is the fact that some documents are common exhibits, thus, there exists no
96
On the basis of the foregoing evidence, respondents Cojuangcos cannot lawfully businesses that have been entrusted to me and following such request, I signed and
acquire ownership of title over the PHI shares of stocks, because the same constitute delivered to him a Certification dated January 1980, attached herewith as Annex "B"
the Marcos ill-gotten wealth, formed and/or acquired in violation of the 1973 to the effect that my family including my wife and children expressly disclaimed any
Constitution. xx (Petition, G.R. No. 153459, pp. 69-90) interest in the businesses that I have been holding in his behalf and they
acknowledged the truthfulness, authenticity and validity of various Deeds of Trust and
Indubitably, petitioner Republic calls attention to the sworn declarations of Messrs. Deeds of Assignment which I and my business associates signed and executed as
Jose Yao Campos, Roland C. Gapud and Atty. Francisco de Guzman (Campos, aforementioned covering properties, interest and shares of stock of the corporations
Gapud and de Guzman, respectively, hereafter) as alleged proof of its theory of the listed therein.
case, i.e., that the disputed PLDT shares are in fact owned by the Marcos family and
that respondents Cojuangcos/PHI are but dummies/nominees/conduit for the Marcos 5. Occasioned by the withdrawal of my active participation in the management of the
family to control PLDT. It is, hence, our task to scrutinize the sworn declarations of above named corporations, Mr. Rolando C. Gapud who was my financial consultant
Campos et al., to ascertain if they indeed prove the facts adverted to by petitioner took over the direct responsibility of directing, managing and administering all the
Republic, failing which would naturally impel this Court to affirm the Partial Decision activities of the said corporation. However, since Mr. Gapud did not have the
insofar as it dismissed the Republic’s Amended Complaint against the respondents administrative staff to efficiently manage the businesses, he requested me that all the
Cojuangcos/PHI. employees and officers involved in the organization should continue to remain in the
companies even only in a nominal capacity considering that they had previously
Following are excerpts of the Sworn Statement of Mr. Campos, dated March 21, disclaimed any interest therein. It is for this reason that Roland C. Gapud and my
198680: business associates, namely, . . . Francisco G. de Guzman, . . . Ernesto Abalos,
Gervasio T. Gaviola, . . ., Renato E. Lirio, Rafael de Guzman, [etc.] . . . continued to
"xxx a discussion between me and Mr. Ramon Diaz, a member of the Commission be named stockholders in these corporations although they did not have any financial
[PCGG} who inquired about certain assets and properties that I might be holding in interest therein;
favour (sic) of certain beneficiaries and which . . . are now about to be claimed by the
Philippine Government. Among the Philippine corporations listed in item #4.16 of Annex "A" of Mr. Campos’
aforesaid Sworn Statement and held in trust by him and his associates was "Prime
1. My relationship with the then President Ferdinand E. Marcos dates back to the time Holdings Corporation".
when he was first elected as Congressman . . . [and] continued when he was then
elected President . . . . Thereafter I assisted in the organization and acquisition of Moreover, on the occasion of his deposition-taking on December 18, 1995 at the
some business ventures for the former President. Following his directive I instructed Philippine Consulate General, Vancouver, British Columbia, Canada Mr. Campos,
my lawyers and requested the assistance of my other business associates and responding to written interrogatories, made the following declarations in answer:81
officers of the company to organize, establish and manage these business ventures
for and on behalf of the President; "2.2 The records show that [PHI] owns approximately 46% of the stock of . . . (PTIC)
which in turn owns approximately 28% of Philippine Long Distance Telephone
2. The companies that we have organized for and on behalf of former President Company (PLDT). The records of this Civil Case No. 0002 show that PCGG has
Marcos are listed in Annex "A" attached herewith; sequestered 111,415 shares of stock in PTIC registered in the name of [PHI]. Was
anything with respect to PTIC delivered to the PCGG by Atty. De Guzman or anyone
3. In the organization, administration and management of the abovenamed else in your behalf? Please describe with specificity the things that were delivered.
corporations, it was my policy that whenever such a corporation is organized for and
on behalf of the intended beneficiaries, I execute and I require all my said business ANSWER: As I said, I don’t know that Prime Holdings has any holdings of PTIC.
associates to execute a Deed of Trust or Deed of Assignment duly signed in favour
(sic) of an unnamed beneficiary and to deliver the original copy thereof to the former 3. In your Sworn Statement, page 2, you stated that with respect to the corporations
President. It is in fact my policy and procedure that we disclaim completely any you held in trust for President Marcos, it was your "policy" that whenever such a
interest in any of such businesses and make it clear to the former President that we corporation was organized, you executed, and you required all your business
hold such interests on his behalf; associates to execute, a Deed of Trust or Deed of Assignment in favor of an
"unnamed beneficiary", and delivered the originals thereof to President Marcos. x x x.
4. In the latter part of 1979 I suffered a severe heart attack . . . . Because of this . . ., I Was this "policy" followed in the case of [PHI]? xxx
requested former President Marcos to relieve me of my responsibilities regarding the
97
ANSWER: All the corporations that I organized – that was the standard policy – that
we surrendered direct to President Marcos. ANSWER: Any matters that pertain to PTIC, I don’t have any knowledge of, Ma’am.

3.1. Was it also your policy to deliver to President Marcos the stock certificates that xxx
you and your business associates held in trust for him?
ANSWER: Consul Morales, just to make everything short, after my heart attack in
ANSWER: Yes, Ma’m. 1979, Mr. Gapud took over the management of the corporations that belonged to the
President . . . I did not participate anymore in anything of the President’s corporations
3.2. If stock certificates that you and your business associates held in trust for managed by Mr. Gapud after my heart attack and after he took over the management
President Marcos were delivered to him was it also your policy to have the stock of those corporations. It is because of health reasons that I was compelled not only to
certificates indorsed in blank? Were the stock certificates in [PHI] Inc. indorsed in relinquish that to the President, but also my own companies and …
blank?
xxx xxx xxx
ANSWER: If there are certificates issued in Prime Holdings, it is the same way it was
delivered to him. If there is such certificate issued, it is indorsed in blank and follow 10. Did you ever have any discussions or correspondence with anyone other than
the same pattern for all the corporations. Whatever we have decided, we deliver, sign President Marcos, Ramon U. Cojuangco or Rolando C. Gapud regarding the
in blank and deliver to him. beneficial ownership by President Marcos or any member of his family, directly or
indirectly, of shares of stock in PLDT, PTIC, or Prime Holdings, Inc.?
3.3 Did you and your business associates deliver to President Marcos the stock
certificates issued by [PHI]? If not, what did you and your business associates do with ANSWER: No, Ma’am.
the stock certificates?
xxx xxx xxx
ANSWER: If Prime Holdings certificates have been issued, as I said Ma’m, it is
delivered to the President. 11. In your Sworn Statement, pages 2-3, you stated that because of a heart attack in
the latter part of 1979, you requested President Marcos to relieve you or your
4. In your Sworn Statement, page 2, you also stated that "it is in fact my policy and responsibilities regarding the businesses entrusted to you, and that Rolando C.
procedure that we disclaim completely any interest" in the businesses organized for Gapud took over the direct responsibility of directing, managing and administering all
President Marcos and "make it clear to the former President that we held such the activities of the said corporations. xxx
interests in his behalf". xxx. Was this "policy and procedure" followed in the case of ANSWER: Yes, Ma’m.
[PHI]? xxx
11.1 Please describe in detail the circumstances surrounding the transfer, if any, of
ANSWER: The policy is followed by every corporation that we organized for the the direct responsibility of directing, managing and administering all the activities of
President. PHI] to Mr. Gapud?

4.1 Did you and your business associates also "disclaim completely any interest" in . . ANSWER: As I stated Ma’am, Prime Holdings has been a holding company. The only
. (PTIC) and "make it clear to the former President that we hold such interests on his assets are the stock certificates and there is nothing. I think – at that time I transferred
behalf"? – there is nothing Mr. Gapud has to manage to do because it’s a shared corporation.
(Words in bracket added)
ANSWER: Ma’m, as I said, I don’t know that Prime Holdings has such holdings of the
PTIC shares that you referred to. Contextually, the only conclusion the Court can plausibly attach to the above
response of Mr. Campos is that he had no knowledge about PHI’s shareholdings in
5. The records of . . . (PTIC) show that Luis T. Rivilla owned approximately PTIC. His answers, such as "Ma’m, as I said I don’t know that Prime Holdings has
P4,565,750 worth of shares of stock in PTIC and that some time in 1978-1980, he such holdings of the PTIC shares that you referred to", and "Any matters that pertain
transferred approximately P2,903,762 worth of such shares to [PHI]. Who was the to PTIC I don’t have any knowledge" say as much. It is also a fact deducible from Mr.
true or beneficial owner of the shares of stock in PTIC transferred by Luis T. Rivilla to Campos’ sworn declarations that he adhered to a set of pattern or practice when he
[PHI] in 1978-1980? organized corporations for then Pres. Marcos. Thus, he declared that he, his family
98
and his associates executed deeds of trust or assignment in favor of an unnamed CONSUL AGUILUCHO: Do you know the PTIC owns 25% of the common voting
beneficiary, and there disclaim any interest in the corporations that he (Mr. Campos) stock of the . . . PLDT?
organized for Pres. Marcos. Or, they indorsed the stock certificates in blank. And, all
of such deeds or certificates were delivered to the late President. Yet, Mr. Campos MR. GAPUD: Yes.
was unable to declare with certitude if these patterns and practices were followed vis-
à-vis PHI. Accordingly, the question begging an answer is whether there truly exists, CONSUL AGUILUCHO : Do you know the beneficial owner or owners of [PHI]?
in respect to PHI shares, certificates indorsed in blank or deeds of trust or assignment
in favor of an unnamed beneficiary delivered to the late President. If there is one MR. GAPUD : What I know . . . is the shares of stock and/or the assignments
person who can provide a satisfactory answer to this question, it is Mr. Campos. But endorsed in blank were delivered to President Marcos by Mr. Campos.
he is not saying anything. Under this scenario, we cannot see our way clear on how
the sworn declarations of Mr. Campos could have, as asserted by petitioner Republic, CONSUL AGUILUCHO: The heirs of Ramon U. Cojuangco, namely: Imelda O.
proved that respondent PHI was merely incorporated to hold the PTIC shares, that in Cojuangco and her children . . .claim that they own . . .(80%) percent of the
turn would have proved that PHI together with respondents Cojuangcos were mere outstanding capital stock of [PHI], while the Estate of Ramon U. Cojuangco allegedly
dummies of the Marcos family to hold the controlling share of PLDT. owns the remaining twenty (20%) percent.

On the other hand, Mr. Gapud’s deposition - taken on October 19, October 20 and Question: Based on your personal knowledge, do you affirm or deny the said
December 11, 1995 at the Hong Kong Philippine Consulate Office - materially reads: allegation?

"CONSUL AGUILUCHO: MR. GAPUD: I do not know. I can neither affirm or deny.

On paragraph 4 of Exhibit "E", Mr. Gaviola stated: CONCUL AGUILUCHO: The said heirs also alleged that [PHI] was incorporated on 5
October 1977 with the following stockholders, namely: Rolando C. Gapud, Renato E.
‘That I have no personal knowledge of the operation of Prime Holdings, Inc. as Mr. Lirio, Jose D. Campos, Jr., Gervasio T. Gaviola and Ernesto S. Abalos, with 400
Rolando C. Gapud handled all the directing, managing and administering of all the shares each, . . . .
activities of the said corporation.’
Question: Based on your personal knowledge, do you affirm or deny the said
Question: Based on your personal knowledge, do you affirm or deny the contents of allegation?
the said paragraph 4 of Exhibit "E"?
MR. GAPUD: I affirm. xxx MR. GAPUD: I affirm.
CONCUL AGUILUCHO: Did you really own the 400 shares of the Prime Holdings?
Madam Consul, I would like to make a clarification here. Because Mr. Gaviola says I
handled all the directing and managing and administering of all the activities. Prior to MR. GAPUD: No.
the heart attack of Mr. Campos I recall that he was also involved in the administration
of this company. So, with that clarification I affirm paragraph 4. CONSUL AGUILUCHO: For whom did you hold those 400 shares?

CONSUL AGUILUCHO: For how long did you manage [PHI]? MR. GAPUD: Well, as I said earlier the shares and/or assignment indorsed in blank
were delivered by Mr. Campos to President Marcos.
MR. GAPUD: I would estimate maybe two or three years after Mr. Campos’ heart
attack. CONSUL AGUILUCHO: The same heirs likewise alleged:

CONSUL AGUILUCHO: Do you know anything about the . . . (PTIC), 46% of the "In separate Deeds of Assignment dated 18 February 1981, two (2) of the
capital stock of which is owned by [PHI]? incorporators of Prime Holdings, namely: Rolando C. Gapud and Jose D. Campos,
Jr., assigned and conveyed to Messrs. Ramon U. Cojuangco and Oscar Africa,
MR. GAPUD: Well, very little except for that which I have read from the newspapers. respectively, all their shareholdings in Prime, consisting of four hundred (400) shares
of stock each, or twenty (20%) percent each of the shares of stock of Prime (Annexes
"C" and "-1").
99
Question: Based on your personal knowledge, do you affirm or deny the said xxx xxx xxx. 82 (Underscoring added)
allegation?
Continuing his deposition-taking on December 11, 1995, Mr. Gapud also said:
xxx
"VICE CONSUL HERNANDEZ: No. 5, regarding [PHI] which was one of the
MR. GAPUD: Madam Consul, I think I can only affirm that which pertains to me, companies organized for former President Ferdinand E, Marcos, as stated by
namely: the Deed of Assignment that I signed. I will leave it to Mr. Campos to affirm deponent Jose Y. Campos in his Sworn Statement (EXHIBIT "D") and affirmed by you
his Deed of Assignment. also, and the various Deeds of Assignment of shares in Prime Holdings, Inc. by the
listed Stockholders-Nominees in favor of the late Ramon U. Cojuangco and his
ATTY. MANALAYSAY: Madam Consul General, in view of the identification by the children, respectively, namely:
witness of the Deed of Assignment, may we request that the same be marked as our
Exhibit "1" (Cojuangco) Deed of Assignment dated February 18, 1981 signed by you and marked EXHIBIT
"F";
xxx xxx xxx
Deed of Assignment dated February 18, 1981 signed by JOSE D. CAMPOS, JR.,
ASST. SOLICITOR GENERAL DEL ROSARIO: Do you identify this as your copy marked EXHIBIT "F-1";
signature?
Deed of Assignment dated June 1983 signed by RENATO E. LIRIO, copy marked as
MR. GAPUD: Yes. EXHIBIT "F-2";

xxx xxx xxx Deed of Assignment dated June 1983 signed by GERVACIO T. GAVIOLA, copy
marked as EXHIBIT "F-3";
CONSUL AGUILUCHO: May we continue?
Deed of Assignment dated June 1983 signed by ERNESTO S. ABALOS, copy
Showing you the said Annex "C" now marked as Exhibit "F" for purposes of this marked EXHIBIT "F-4";
proceeding, do you affirm or deny the authenticity of this document?
Deed of Assignment dated July 1983 signed by OSCAR T. AFRICA, copy marked
MR. GAPUD: Yes, I affirm. EXHIBIT "F-5";

CONSUL AGUILUCHO: Is it really true that you assigned your 400 shares to Ramon The aforesaid Deeds of Assignments obviously will be with the knowledge and upon
U. Cojuangco? authorization and order of former President Ferdinand E. Marcos, is this correct?

MR. GAPUD: Yes. ATTY. MANALAYSAY: Your Honor, before the witness answers the question, we
would like to reiterate our objection insofar as the question referring to Mr. Oscar T.
CONSUL AGUILUCHO: How much did you receive as consideration for assigning Africa is concerned. We are objecting to the question on the ground that Mr. Gapud
your shares to him? would be incompetent to testify with respect to Mr. Africa, considering that Mr. Africa
is not among the stockholders-nominees mentioned by Mr. Campos or Mr. Gapud as
MR. GAPUD: The consideration for the assignment was that upon my assignment, far as Prime Holdings is concerned and Mr. Africa is not among the incorporators of
first, my fiduciary responsibilities as nominee were extinguished, and secondly, I had Prime Holdings, Inc.
transferred and extinguished any and all liabilities under the subscription payable.
xxx xxx xxx
CONSUL AGUILUCHO: Do you know if Ramon U. Cojuangco received the said
shares for himself or for anybody else? VICE CONSUL HERNANDEZ: Can we note your objection and let Mr. Gapud
answer?
MR. GAPUD: I don’t know.
100
So the aforesaid Deeds of Assignments obviously will be with the knowledge and Q: Of Mr. Campos?
upon authorization and order of former President Ferdinand E. Marcos, is this
correct? A: I said holding company, you asked me what is the nature of the company and I
think you clarified the question, a holding company is one that hold assets and I said
MR. GAPUD: Considering that [PHI] was incorporated upon the instructions of former yes, sir, that’s how I understand a holding company.
President Marcos, obviously all the nominees would act only upon his authorization.
That’s my answer. 83 Q: And you testified that all of these five (5) original stockholders of [PHI] worked for
Mr. Campos?
Like Mr. Campos before him, Mr. Gapud also seems to be without personal
knowledge of whether or not PHI owned shares in PTIC. He admits that whatever he A: Yes, sir.
knows about PHI’s holding in PTIC, if there be any, is based only on what he has read
from the newspapers. True it is that he acknowledged not actually owning the 400 Q: So, the following year of 1978 you were still Corporate Secretary of [PHI]?
PHI shares in his name. But when asked for whom he held such shares, he hedged
on his answer, saying: "Well, as I said earlier the shares and/or assignment indorsed A: Yes, sir.
in blank were delivered by Mr. Campos to President Marcos". Mr. Gapud, however,
would later contradict himself with respect to the disposition of the said 400 PHI Q: And were you still taking instructions from Mr. Campos the following year 1978
shares with his statement that he assigned what on paper was his PHI shares to the with regard to [PHI]?
late Ramon U. Cojuangco. Clearly, it would have been implausible for him to make
the assignment to Mr. Cojuangco if the covering certificates had previously been A: Yes, sir.
delivered to Pres. Marcos. He also affirmed that his assignment of PHI shares to Mr.
Cojuangco was for a consideration, albeit this consisted of being freed from his Q: And how long after that did you continue to take instructions from Mr. Campos with
fiduciary responsibilities as nominee and of the extinguishment of his liabilities on his regard to [PHI]?
subscription.
A: xxx I’m not too sure about this, but he distanced himself in many operations even
Taken as a package, Mr. Gapud’s sworn statements do not sufficiently prove of United Laboratories when he had a heart attack in 1979, sir.
petitioner Republic’s theory of the case.
Q: So you are saying that you took instructions from Mr. Campos with regard to [PHI]
The sworn statement of Atty. Francisco de Guzman, former PHI corporate secretary, until 1979 when Mr. Campos had a heart attack?
taken during his deposition on June 12, 2001, is hereunder pertinently reproduced,
viz.: A: Yes, that is the possibility of having instructions from him because after that he
really was very inactive in all these corporations and it was then that Mr. Gapud who
ATTY. QUISUMBING: But as of 1978 . . . Prime Holdings, Inc. [PHI] was incorporated took over, sir.
on instruction of Mr. Jose Yao Campos in 1977, so as of 1978 [PHI] was still a holding
company of Mr. Campos? Q: In 1979?
Witness: Please repeat the question. A: Yes, sir.

Atty. Quisumbing :The records in the Securities and Exchange Commission indicate Q: By the way, in 1979 after Mr. Campos suffered this heart attack and I believe that
that [PHI] was incorporated in October of 1977 and you already testified that [PHI] was late 1979, did Mr. Campos also retire from active involvement in UNILAB?
was incorporated on instructions of Mr. Campos?
A: Yes, sir.
Witness: Yes sir:
xxx xxx xxx
Q: And you also testified that Prime Holdings is a holding company?
Q: After 1979 when Mr. Gapud took over, are you aware if there are any transfers of
A: Yes, sir. shares of stocks in [PHI] to other people?

101
A: Yes, sir. Q: And you are referring to these holding companies that Mr. Campos, a number of
holding companies that Mr. Campos have caused to be incorporated, these are the
Q: Will you tell us about that? companies?

A: My recollection is, Mr. Gapud himself made a Deed of Assignment but I don’t A: Yes, sir.
remember to whom the Deed of Assignment, in whose favor.
Q: You said Deed of Trust, would there be a designated trustee?
Q: What year was that?
A: No, sir.
A: I cannot recall the year, sir.
Q: So, these are Deeds of Assignment or Deeds of Trust, the beneficiary of which
Q: But this was in 1979? would be left blank?

A: I suppose so, sir. A: Yes, sir.

Q: Now, did Mr. Gapud assign his four hundred shares to Mr. Ramon U. Cojuangco? Q: But the assignors or the trustees or grantors would all sign, would all execute
these Deeds?
A: I think the document will show because I cannot recall as to the person who made
the assignment, sir, I’m sorry, I don’t really have a single paper of the records, sir. A: Yes, sir.

xxx xxx xxx Q: Who would have possession, you mentioned standard operating procedure or
SOP, under that SOP who would hold the blank deeds?
Q: Was it the standard operating procedure in Jose Yao Campos holdings companies
that the stock certificates of the stockholders would be endorsed in blank? A: A copy of which usually two (2) copies are made, sir.

A: Yes, sir. Q: Two (2) originals?

Q: And who would hold custody or possession of those blank endorsed stock A: No.
certificates?
Q: Xerox copies?
A: In the case of many of the corporations I think including [PHI] these are not fully
paid shares and therefore, I knew that no stock certificates have been issued, sir. A: No, one original and one xerox copy and the original will be included in the
records, sir.
Q: So, specifically in the case of [PHI] there were no stock certificates issued because
the subscriptions were not fully paid? Q: The records of that particular company?

A: Yes, sir. A: Yes, sir, and the other one we give it to the Treasurer.

Q: Do you know if the stockholders of [PHI], this is prior to 1981, had executed Deed Q: Of that particular company?
of Assignment in blank for their subscriptions to PHI shares?
A: No, to Mr. Gaviola, sir.
A: Yes, sir, in the standard operating procedure in the companies of Mr. Campos is
that all the subscribers would have either a Deed of Assignment signed or a Deed of Q: Mr. Gaviola was the Treasurer of [PHI] wasn’t he?
Trust, sir.
A: I think he is because he is always, was the Treasurer of many of the companies of
Mr. Campos, sir.
102
 A: I didn’t say ownership, sir. I said that when there was a change when Mr. Ramon
Q: So, there is the SOP also, Mr. Gervacio Gaviola is the Treasurer of [PHI]? Cojuangco became the Chairman, just on time when he said there will be a change of
officer that is why they got the records from me.
A: Yes, sir.
Q: So, are you saying that there was no change of ownership in [PHI] in 1981, 1982?
xxx xxx xxx
A: Except the assignments made by the two (2) persons, sir. That is what I know.
Q: Do you know, so what happened to those blank Deeds of Assignment and Deeds
of Trust of [PHI] that were entrusted with the trusted lawyers of UNILAB? xxx xxx xxx

A: When [PHI’s] records were delivered, all those records, all those papers are with Q: You indicated earlier that those change of officers of [PHI] in 1982, who were the
the records, sir. new officers that took over?

Q: So, you are referring to the 1982 delivery to the representative of Mr. Ramon U. A: I do not know, sir.
Cojuangco?
xxx xxx xxx
A: Yes, sir, except two (2) Deeds of Assignment which were I think made directly
afterward when Mr. Gapud and Mr. Jose Campos, Jr. made the direct assignments to Q: Who do you know was changed among the officers of [PHI] Holdings, Inc.
persons actually designated in the Deeds of Assignment, sir.
A: Mr. Gapud as the Chairman and President, sir.
Q: Who were those?
Q: Was replaced?
A: The shares of Mr. Gapud was given to Mr. Ramon U. Cojuangco, Mr. Campos, Jr. I
can’t remember to whom he made the assignment, sir. A: Was replaced by Mr. Cojuangco, sir.

Q: Does the name Atty. Africa ring a bell? Q: By Mr. Ramon Cojuangco?

A: Yes, sir. A: Yes, sir.

Q: Would he be the person who was the assignee of the shares of either Mr. Gapud Q: And this is about 1982?
or Mr. Campos, Jr.?
A: Possibly I cannot recall the exact date, sir.
A: Well, I think so, sir.
xxx xxx xxx
Q: Now, this was in the year 1981, do you recall that?
Atty. Quisumbing:
A: No, sir.
You testified earlier that Mr. Cojuangco became the President?
Q: Do you recall it might be 1982?
Witness: Yes, sir. I testified to that effect because that was the instruction given to me
A: I have no idea as to the year when this was made, sir. that the succeeding minutes of the annual meeting Mr. Gapud told me that the new
Chairman and President will be, was Mr. Ramon Cojuangco, sir.
Q: But you testified that there was a change of ownership of [PHI] that led to the
change of officers including yourself in 1982? Q: And that was the instruction of Mr. Gapud?

A: Yes, sir.
103
 organization of corporations on behalf of the late President Marcos, respondent PHI
Q: He was the President and Chairman before Mr. Cojuangco? included. The pattern, to repeat, consisted of: the execution of deeds of trust or
assignment to an unnamed beneficiary, or to indorse in blank the stock certificates,
A: Yes, sir. and deliver the corresponding deeds to the late President. In the case of what for the
nonce may be referred to as the "Cojuangco assignment", the beneficiary portion of
Q: Now, did you have any involvement in [PHI] after 1982 the deeds was not in blank. Instead, the name of Mr. Ramon Cojuangco specifically
appeared therein. Possession of the deeds were with the respondents Cojuangcos,
A: None, sir. not the Marcoses, necessarily implying that nothing was delivered to the late
President Marcos in regards to the covered PHI shares. And there can be no serious
Q: And you testified that all the records that you were holding of [PHI] were taken argument that petitioner Republic has not produced any deed of assignment or trust
from you in 1982 executed to an unnamed beneficiary or certificates indorsed in blank which would
have otherwise corresponded to the disputed shareholdings of the Cojuangcos in
A: Yes, sir. PLDT by virtue of the PHI shares assigned to them.

Q: By Mr. Gapud? Upon the above observations and absent any positive testimony, even from persons
already extended by the PCGG state immunity from criminal prosecution and like
A: Yes, sir. privileges, notably Messrs. Campos, Gapud and De Guzman, provided they disclose,
among other things, relevant information respecting the alleged accumulated "ill-
Q: Do you know who if (sic) he retained those records or if he turned it over to the gotten wealth" of the Marcoses, that respondents Cojuangcos held their assigned
new Chairman and President? shares on behalf of the late Pres. Marcos, we also hold as untenable petitioner
Republic’s unyielding posture that the aforementioned deeds of assignment to
A: Well, he told me he will be turning it over to the Cojuangcos, sir. respondents Cojuangcos are sham and fictitious.

Q: And those include the blank Deeds of Assignment and Deeds of Trust? In all, this Court is unable to accord concurrence to petitioner Republic’s theory that
the disputed PLDT shares, covered by the necessary PTIC stock certificates in the
A: I suppose so, sir.84 (Underscoring and the word "PHI" in bracket in lieu of the name of respondents Cojuangcos/PHI, are part of the Marcoses’ "ill-gotten wealth",
words "Prime Holdings Inc." added) for lack of direct and substantial proof thereof. Petitioner Republic’s recovery efforts
cannot be predicated on speculations, surmises or vague inferences, as here. In this
In esse, Atty. Guzman merely reiterated facts deducible from the sworn declarations sense, the respondent court stood on solid legal ground when it held that "a claim or
of Mr. Campos and Mr. Gapud, foremost of which is that PHI was among the recovery of properties alleged by the Republic to have been ill-gotten cannot proceed
corporations organized upon Mr. Campos’ instructions and that for all the under the mere presumption that said properties are indeed ill-gotten".
corporations of Mr. Campos, deeds of trust or assignment were executed. Atty. De
Guzman’s statements are also affirmatory of the fact that Mr. Gapud assigned PHI On another point, petitioner Republic has made much of respondent court’s failure to
shares in his name to Mr. Cojuangco. Interestingly, however, Atty. De Guzman appreciate in its favor the allegations, partaking of judicial admissions, made by
disclosed a detail about the formation and the running of PHI not heretofore known, respondent Mrs. Marcos in her Answer to its Amended Complaint, Cross-claim and
i.e., that there were two copies of the deeds of trust or assignment, one a machine other pleadings, bearing on the Marcoses’ ownership of the disputed PLDT shares. In
copy, and the other, the original, that was kept in the records of the company. But of this regard, suffice it to state that these admissions are evidence against the party
particular significance from this disclosure is the actuality that until the time that Mr. who made them or, in appropriate case, their privies.85 In the concrete, the
Cojuangco assumed the chairmanship and presidency of PHI and the records were admissions adverted to made by Mrs. Marcos, even if they partake of judicial
delivered to him (Cojuangco), the deeds of trust or assignment were on file with the admissions, are binding and conclusive only as to her. They cannot bind or prejudice
records, "except two (2) Deeds of Assignment which were xxx made directly respondents Cojuangcos/PHI who have taken issue against Mrs. Marcos on her
afterward when Mr. Gapud and Mr. Jose Campos, Jr. made the direct assignments to ownership claim over the PLDT shares in question.
persons actually designated in the Deeds of Assignments".
This brings us to what are known as the "General Telephone & Electronics [GTE]
Given the above, it would appear that the execution of the Deeds of Assignment to Documents", which to petitioner Republic are likewise material evidentiary link to
Ramon Cojuangco markedly departs from the set pattern usually followed in the prove that the disputed PLDT shares form part of the Marcoses’ "ill-gotten wealth",
104
but which merited scant consideration from, if not altogether ignored by, the
respondent court. In accordance with your request to Mr. Stratton Anderson of our Washington Office, I
am enclosing a copy of a "Proposal with Respect to the Sale of General Telephone &
Two (2) letters comprise the GTE Documents: one, purportedly from Leslie H. Warker Electronics Corporation’s Stockholdings in [PLDT] to a Philippine Group", dated June
of GTE to Mr. Ramon Cojuangco confirming an appointment with the latter’s 6, 1967, together with a letter of July 18, 1967 amending the Proposal, and a copy of
"principal"; and the other, from Theodore F. Brophy of GTE to US Assistant Secretary a press release issued by this Corporation upon the completion of the step provided
of State Eugene H. Braderman naming then Pres. Marcos as the "Principal". Per for in Article VIII E.P. of the proposal.
petitioner Republic’s account, photo-copies of the GTE Documents were among the
papers and materials seized by the US Customs Service from the Marcos family in The ‘principal’ referred to in the July 18 letter is President Marcos.
February 26, 1986 in Hawaii and subsequently turned over to PCGG.
Since the transaction has not been completed, and we cannot be sure at this time
The Warker letter under date of June 18, 196786 reads in full, as follows: that it will be completed, we would prefer not to submit a detailed memorandum
concerning the background of the Proposal. I would, however, be glad to discuss it
Mr. Ramon Cojuangco with you on the telephone and answer any questions you may have.

Manila Sincerely yours,

Philippine Islands (Sgd.) Theodore F. Brophy"

Dear Mr. Cojuangco: Petitioner Republic contends that the said GTE Documents are "authorized public
records of a private document". As such, it argues, citing Section 27 of Rule 132,88
We have received your cable on July 18, 1967 to Mr. Douglas in which you confirmed that there would be no need to present the original copies thereof, as they may be
that an appointment had been secured for Mr. Brophy to meet with your principal proved by a mere copy thereof, provided such copy is attested by the legal custodian
during the week of August 13, 1967, the date and hour to be finalized upon Mr. of the records, with an appropriate certificate that such officer has the custody.
Brophy’s arrival. According to said petitioner, the attestation of Ms. Lourdes Magno, PCGG Record
Officer, with the certification that she has such custody would suffice for the purpose
Based on this assurance, the "Proposal with Respect to the Sale of General of authenticating and proving their genuineness so as to have the GTE documents
Telephone & Electronics Corporation’s Stockholdings in [PLDT] to a Philippine Group" received in evidence.
dated June 6, 1967 will remain open until 4:30 p.m. New York time on August 31,
1967, and unless accepted by that time (or further extended) will expire. We disagree. Not every single paper or document in the custody of PCGG in relation
to its quest to recover the "ill-gotten wealth" of the Marcos family has the character
Article VIII. D. of the proposal shall be deemed to be modified in this respect by this and probative value of an "authorized public record". Even the official seal of the
letter. PCGG on the two (2) GTE Documents does not suffice to make them "authorized
public records" of a private document and thus enhance their admissibility. The GTE
I assure you of Mr. Brophy’s cooperation with you in pursuing the proposal and hope Documents are still private writings. The GTE Documents turned over by the US
that during your meetings you will be able to reach a mutually satisfactory solution to Government in the hands of the PCGG are not self-authenticating, for what is
any questions which may arise. contextually considered a public document is not the private writing, but the public
record thereof.89 Their authenticity and due execution, as condition sine qua non for
Sincerely yours, their reception in evidence, with the evidentiary weight they might otherwise be
(Sgd.) LESLIE H. WARKER" entitled to, must first be proved under Section 20, Rule 132 of the Rules Court, which
reads:
The Brophy letter to Mr. Braderman87 referred to above reads:
"SEC. 20. Proof of private document. – Before any private document offered as
October 9, 1967 authentic is received in evidence, its due execution and authenticity must be proved
either:
Dear Mr. Braderman:
105
(a) By anyone who saw the document executed or written, or assigned on each party and the quantum of evidence required by the circumstances.
So it must be with ill-gotten wealth recovery cases,
(b) By evidence of the genuineness of the signature or handwriting of the maker.
Insofar as the disputed PLDT shares in underlying Civil Case No. 0002 are
Any other private document need only be identified as that which it is claimed to concerned, we agree with the holding of the respondent court that there is no
be."lawph!l.net satisfactory proof that they are indeed part of the "ill-gotten wealth" being recovered
by the State. The case for petitioner Republic falls short to satisfy the standards set
A contrary ruling would otherwise put the recovery suits beyond the pale of the law on mainly in BASECO93 to establish a finding of "ill-gotten wealth". We thus lend
admissibility of evidence. This could not have been the intention of then President concurrence to respondent court’s conclusion, that:
Corazon C. Aquino when she issued EO No. 14, series of 1986, supra, providing that
"technical rules of procedure and evidence shall not be applied strictly to [said ill- "Hence, a claim for recovery of properties alleged by the Republic to have been ill-
gotten wealth cases]." gotten cannot proceed under the mere presumption that said properties are indeed ill-
gotten. Before that characterization can be appended to the properties sought to (be)
In Republic vs. Sandiganbayan (Third Division),90 the Court wrote: recovered, there must be proof of such claim. The characterization cannot arise on
the basis of public notoriety. In the case at bar, the Republic failed to present the
xxx Eleven years have passed since the government initiated its search for and proof required to characterize the PLDT shares as ill-gotten. As a necessary
reversion of such ill-gotten wealth. The definitive resolution of such cases on the consequence of this failure, its claim for recovery thereof cannot succeed." (at p. 41)
merits is thus long overdue. If there is proof of illegal acquisition, accumulation,
misappropriation, fraud of illicit conduct, let it be brought out now. Let the ownership In amplification of the foregoing, I reiterate what I wrote in my "COMMENT" (Annex
of these funds and other assets be finally determined and resolved with dispatch, free "A" hereof) to the DISSENTING (now majority) OPINION of Justice Morales and my
from all the delaying technicalities and annoying procedural sidetracks. "REJOINDER" (Annex "B" hereof) to her reply to my comment.

A little over six years (6) later, in July 2003, the Court, in Republic vs. Sandiganbayan WHEREFORE, I vote to DENY, for lack of merit, the instant petitions and to AFFIRM
91 repeated the same message imparted in the earlier Republic case, although the the assailed issuances of the Sandiganbayan (4th Division) in Civil Case No. 0002.
clause "[A]lmost two decades have passed" was used, and aptly so, in lieu of
"[E]leven years have passed". G.R. No. L-21450 April 15, 1968

What we said in both Republic cases is as sound and compelling as it is today. It SERAFIN TIJAM, ET AL., vs. MAGDALENO SIBONGHANOY alias GAVINO
should not, however, be given a slant to mean that the Court has laid down a policy SIBONGHANOY and LUCIA BAGUIO MANILA SURETY AND FIDELITY CO., INC.
that each and every recovery suit brought by the PCGG shall be governed by (CEBU BRANCH)
different norms of justice or fair play. Far from it. If the required quantum of proof
obtains to establish illegal acquisition, accumulation, misappropriation, fraud or illicit DIZON, J.:
conduct, ours is the duty to affirm the recovery efforts of the Republic. On the other
hand, should such proof be wanting, we have the equally exacting obligation to On July 19, 1948 — barely one month after the effectivity of Republic Act No. 296
declare that it is so. Simple justice demands such attitude from this Court. So does known as the Judiciary Act of 1948 — the spouses Serafin Tijam and Felicitas
the guarantee against deprivation of property without due process, which, like other Tagalog commenced Civil Case No. R-660 in the Court of First Instance of Cebu
basic constitutional guarantees, applies to all individuals, including tyrants, charlatans against the spouses Magdaleno Sibonghanoy and Lucia Baguio to recover from them
and scoundrels of every stripe, to borrow from Justice Isagani A. Cruz in his dissent in the sum of P1,908.00, with legal interest thereon from the date of the filing of the
Marcos vs. Manglapus.92 complaint until the whole obligation is paid, plus costs. As prayed for in the complaint,
a writ of attachment was issued by the court against defendants' properties, but the
It has been said that each case, and each litigious situation, must stand on its own same was soon dissolved upon the filing of a counter-bond by defendants and the
peculiar set of facts, just as every case disposition must stand on the basis of such Manila Surety and Fidelity Co., Inc. hereinafter referred to as the Surety, on the 31st
facts established by relevant and competent evidence in the light of applicable of the same month.
statutory and decisional law. Other decided cases may be appropriate as points of
reference , but, in the ultimate analysis, one’s cause of action shall succeed or fail on After being duly served with summons the defendants filed their answer in which,
the basis of the superiority of his evidence, taking into account the burden of proof after making some admissions and denials of the material averments of the
106
complaint, they interposed a counterclaim. This counterclaim was answered by the Although the appellees failed to file their brief, the Court of Appeals, on December 11,
plaintiffs. 1962, decided the case affirming the orders appealed from.

After trial upon the issues thus joined, the Court rendered judgment in favor of the On January 8, 1963 — five days after the Surety received notice of the decision, it
plaintiffs and, after the same had become final and executory, upon motion of the filed a motion asking for extension of time within which to file a motion for
latter, the Court issued a writ of execution against the defendants. The writ having reconsideration. The Court of Appeals granted the motion in its resolution of January
been returned unsatisfied, the plaintiffs moved for the issuance of a writ of execution 10 of the same year. Two days later the Surety filed a pleading entitled MOTION TO
against the Surety's bond (Rec. on Appeal, pp. 46-49), against which the Surety filed DISMISS, alleging substantially that appellees action was filed in the Court of First
a written opposition (Id. pp. 49) upon two grounds, namely, (1) Failure to prosecute Instance of Cebu on July 19, 1948 for the recovery of the sum of P1,908.00 only; that
and (2) Absence of a demand upon the Surety for the payment of the amount due a month before that date Republic Act No. 296, otherwise known as the Judiciary Act
under the judgment. Upon these grounds the Surety prayed the Court not only to of 1948, had already become effective, Section 88 of which placed within the original
deny the motion for execution against its counter-bond but also the following exclusive jurisdiction of inferior courts all civil actions where the value of the subject-
affirmative relief : "to relieve the herein bonding company of its liability, if any, under matter or the amount of the demand does not exceed P2,000.00, exclusive of interest
the bond in question" (Id. p. 54) The Court denied this motion on the ground solely and costs; that the Court of First Instance therefore had no jurisdiction to try and
that no previous demand had been made on the Surety for the satisfaction of the decide the case. Upon these premises the Surety's motion prayed the Court of
judgment. Thereafter the necessary demand was made, and upon failure of the Appeals to set aside its decision and to dismiss the case. By resolution of January 16,
Surety to satisfy the judgment, the plaintiffs filed a second motion for execution 1963 the Court of Appeals required the appellees to answer the motion to dismiss,
against the counterbond. On the date set for the hearing thereon, the Court, upon but they failed to do so. Whereupon, on May 20 of the same year, the Court resolved
motion of the Surety's counsel, granted the latter a period of five days within which to to set aside its decision and to certify the case to Us. The pertinent portions of its
answer the motion. Upon its failure to file such answer, the Court granted the motion resolution read as follows:
for execution and the corresponding writ was issued.
It would indeed appear from the record that the action at bar, which is a suit for
Subsequently, the Surety moved to quash the writ on the ground that the same was collection of money in the sum of exactly P1,908.00 exclusive of interest, was
issued without the required summary hearing provided for in Section 17 of Rule 59 of originally instituted in the Court of First Instance of Cebu on July 19, 1948. But about
the Rules of Court. As the Court denied the motion, the Surety appealed to the Court a month prior to the filing of the complaint, more specifically on June 17, 1948, the
of Appeals from such order of denial and from the one denying its motion for Judiciary Act of 1948 took effect, depriving the Court of First Instance of original
reconsideration (Id. p. 97). Its record on appeal was then printed as required by the jurisdiction over cases in which the demand, exclusive of interest, is not more than
Rules, and in due time it filed its brief raising therein no other question but the ones P2,000.00. (Secs. 44[c] and 86[b], R.A. No. 296.)
covered by the following assignment of errors:
We believe, therefore, that the point raised in appellant's motion is an important one
I. That the Honorable Court a quo erred in issuing its order dated November 2, 1957, which merits serious consideration. As stated, the complaint was filed on July 19,
by holding the incident as submitted for resolution, without a summary hearing and 1948. This case therefore has been pending now for almost 15 years, and throughout
compliance with the other mandatory requirements provided for in Section 17, Rule the entire proceeding appellant never raised the question of jurisdiction until after
59 of the Rules of Court. receipt of this Court's adverse decision.

II. That the Honorable Court a quo erred in ordering the issuance of execution against There are three cases decided by the Honorable Supreme Court which may be
the herein bonding company-appellant. worthy of consideration in connection with this case, namely: Tyson Tan, et al. vs.
Filipinas Compañia de Seguros, et al., G.R. No. L-10096, March 23, 1956; Pindangan
III. That the Honorable Court a quo erred in denying the motion to quash the writ of Agricultural Co., Inc. vs. Jose P. Dans, etc., et al., G.R. No. L-14591, September 26,
execution filed by the herein bonding company-appellant as well as its subsequent 1962; and Alfredo Montelibano, et al. vs. Bacolod-Murcia Milling Co., Inc., G.R. No. L-
motion for reconsideration, and/or in not quashing or setting aside the writ of 15092, September 29, 1962, wherein the Honorable Supreme Court frowned upon
execution. the 'undesirable practice' of appellants submitting their case for decision and then
accepting the judgment, if favorable, but attacking it for lack of jurisdiction when
Not one of the assignment of errors — it is obvious — raises the question of lack of adverse.
jurisdiction, neither directly nor indirectly.

107
Considering, however, that the Supreme Court has the "exclusive" appellate A party may be estopped or barred from raising a question in different ways and for
jurisdiction over "all cases in which the jurisdiction of any inferior court is in issue" different reasons. Thus we speak of estoppel in pais, or estoppel by deed or by
(See. 1, Par. 3[3], Judiciary Act of 1948, as amended), we have no choice but to record, and of estoppel by laches.
certify, as we hereby do certify, this case to the Supreme Court.1äwphï1.ñët
Laches, in a general sense is failure or neglect, for an unreasonable and unexplained
ACCORDINGLY, pursuant to Section 31 of the Judiciary Act of 1948 as amended, let length of time, to do that which, by exercising due diligence, could or should have
the record of this case be forwarded to the Supreme Court. been done earlier; it is negligence or omission to assert a right within a reasonable
time, warranting a presumption that the party entitled to assert it either has
It is an undisputed fact that the action commenced by appellees in the Court of First abandoned it or declined to assert it.
Instance of Cebu against the Sibonghanoy spouses was for the recovery of the sum
of P1,908.00 only — an amount within the original exclusive jurisdiction of inferior The doctrine of laches or of "stale demands" is based upon grounds of public policy
courts in accordance with the provisions of the Judiciary Act of 1948 which had taken which requires, for the peace of society, the discouragement of stale claims and,
effect about a month prior to the date when the action was commenced. True also is unlike the statute of limitations, is not a mere question of time but is principally a
the rule that jurisdiction over the subject matter is conferred upon the courts question of the inequity or unfairness of permitting a right or claim to be enforced or
exclusively by law, and as the lack of it affects the very authority of the court to take asserted.
cognizance of the case, the objection may be raised at any stage of the proceedings.
However, considering the facts and circumstances of the present case — which shall It has been held that a party can not invoke the jurisdiction of a court to sure
forthwith be set forth — We are of the opinion that the Surety is now barred by laches affirmative relief against his opponent and, after obtaining or failing to obtain such
from invoking this plea at this late hour for the purpose of annuling everything done relief, repudiate or question that same jurisdiction (Dean vs. Dean, 136 Or. 694, 86
heretofore in the case with its active participation. A.L.R. 79). In the case just cited, by way of explaining the rule, it was further said that
the question whether the court had jurisdiction either of the subject-matter of the
As already stated, the action was commenced in the Court of First Instance of Cebu action or of the parties was not important in such cases because the party is barred
on July 19, 1948, that is, almost fifteen years before the Surety filed its motion to from such conduct not because the judgment or order of the court is valid and
dismiss on January 12, 1963 raising the question of lack of jurisdiction for the first conclusive as an adjudication, but for the reason that such a practice can not be
time. tolerated — obviously for reasons of public policy.

It must be remembered that although the action, originally, was exclusively against Furthermore, it has also been held that after voluntarily submitting a cause and
the Sibonghanoy spouses the Surety became a quasi-party therein since July 31, encountering an adverse decision on the merits, it is too late for the loser to question
1948 when it filed a counter-bond for the dissolution of the writ of attachment issued the jurisdiction or power of the court (Pease vs. Rathbun-Jones etc., 243 U.S. 273, 61
by the court of origin (Record on Appeal, pp. 15-19). Since then, it acquired certain L. Ed. 715, 37 S. Ct. 283; St. Louis etc. vs. McBride, 141 U.S. 127, 35 L. Ed. 659).
rights and assumed specific obligations in connection with the pending case, in And in Littleton vs. Burgess, 16 Wyo. 58, the Court said that it is not right for a party
accordance with sections 12 and 17, Rule 57, Rules of Court (Bautista vs. Joaquin, who has affirmed and invoked the jurisdiction of a court in a particular matter to
46 Phil. 885; Kimpang & Co. vs. Javier, 65 Phil. 170). secure an affirmative relief, to afterwards deny that same jurisdiction to escape a
penalty.
Upon the filing of the first motion for execution against the counter-bond the Surety
not only filed a written opposition thereto praying for its denial but also asked for an Upon this same principle is what We said in the three cases mentioned in the
additional affirmative relief — that it be relieved of its liability under the counter-bond resolution of the Court of Appeals of May 20, 1963 (supra) — to the effect that we
upon the grounds relied upon in support of its opposition — lack of jurisdiction of the frown upon the "undesirable practice" of a party submitting his case for decision and
court a quo not being one of them. then accepting the judgment, only if favorable, and attacking it for lack of jurisdiction,
Then, at the hearing on the second motion for execution against the counter-bond, when adverse — as well as in Pindañgan etc. vs. Dans, et al., G.R. L-14591,
the Surety appeared, through counsel, to ask for time within which to file an answer or September 26, 1962; Montelibano, et al., vs. Bacolod-Murcia Milling Co., Inc., G.R. L-
opposition thereto. This motion was granted, but instead of such answer or 15092; Young Men Labor Union etc. vs. The Court of Industrial Relation et al., G.R. L-
opposition, the Surety filed the motion to dismiss mentioned heretofore. 20307, Feb. 26, 1965, and Mejia vs. Lucas, 100 Phil. p. 277.
The facts of this case show that from the time the Surety became a quasi-party on
July 31, 1948, it could have raised the question of the lack of jurisdiction of the Court
of First Instance of Cebu to take cognizance of the present action by reason of the
108
sum of money involved which, according to the law then in force, was within the
original exclusive jurisdiction of inferior courts. It failed to do so. Instead, at several Given in open court, this 2nd day of November, 1957, at Cebu City, Philippines.
stages of the proceedings in the court a quo as well as in the Court of Appeals, it
invoked the jurisdiction of said courts to obtain affirmative relief and submitted its case (Sgd.) JOSE M. MENDOZA
for a final adjudication on the merits. It was only after an adverse decision was Judge
rendered by the Court of Appeals that it finally woke up to raise the question of
jurisdiction. Were we to sanction such conduct on its part, We would in effect be (Record on Appeal, pp.
declaring as useless all the proceedings had in the present case since it was 64-65, emphasis ours)
commenced on July 19, 1948 and compel the judgment creditors to go up their
Calvary once more. The inequity and unfairness of this is not only patent but Since the surety's counsel failed to file any answer or objection within the period given
revolting. him, the court, on December 7, 1957, issued an order granting plaintiffs' motion for
execution against the surety; and on December 12, 1957, the corresponding writ of
Coming now to the merits of the appeal: after going over the entire record, We have execution was issued.
become persuaded that We can do nothing better than to quote in toto, with approval,
the decision rendered by the Court of Appeals on December 11, 1962 as follows: On December 24, 1957, the surety filed a motion to quash the writ of execution on the
ground that the same was "issued without the requirements of Section 17, Rule 59 of
In Civil Case No. R-660 of the Court of First Instance of Cebu, which was a suit for the Rules of Court having been complied with," more specifically, that the same was
collection of a sum of money, a writ of attachment was issued against defendants' issued without the required "summary hearing". This motion was denied by order of
properties. The attachment, however, was subsequently discharged under Section 12 February 10, 1958.
of Rule 59 upon the filing by defendants of a bond subscribed by Manila Surety &
Fidelity Co., Inc. On February 25, 1958, the surety filed a motion for reconsideration of the above-
stated order of denial; which motion was likewise denied by order of March 26, 1958.
After trial, judgment was rendered in favor of plaintiffs.
From the above-stated orders of February 10, 1958 and March 26, 1958 — denying
The writ of execution against defendants having been returned totally unsatisfied, the surety's motion to quash the writ of execution and motion for reconsideration,
plaintiffs moved, under Section 17 of Rule 59, for issuance of writ of execution against respectively — the surety has interposed the appeal on hand.
Manila Surety & Fidelity Co., Inc. to enforce the obligation of the bond. But the motion
was, upon the surety's opposition, denied on the ground that there was "no showing The surety insists that the lower court should have granted its motion to quash the
that a demand had been made, by the plaintiffs to the bonding company for payment writ of execution because the same was issued without the summary hearing required
of the amount due under the judgment" (Record on Appeal, p. 60). by Section 17 of Rule 59, which reads;

Hence, plaintiffs made the necessary demand upon the surety for satisfaction of the "Sec. 17. When execution returned unsatisfied, recovery had upon bond. — If the
judgment, and upon the latter's failure to pay the amount due, plaintiffs again filed a execution be returned unsatisfied in whole or in part, the surety or sureties on any
motion dated October 31, 1957, for issuance of writ of execution against the surety, bond given pursuant to the provisions of this role to secure the payment of the
with notice of hearing on November 2, 1957. On October 31, 1957, the surety judgment shall become finally charged on such bond, and bound to pay to the plaintiff
received copy of said motion and notice of hearing. upon demand the amount due under the judgment, which amount may be recovered
from such surety or sureties after notice and summary hearing in the same action."
It appears that when the motion was called on November 2, 1957, the surety's (Emphasis ours)
counsel asked that he be given time within which to answer the motion, and so an
order was issued in open court, as follows:1äwphï1.ñët Summary hearing is "not intended to be carried on in the formal manner in which
ordinary actions are prosecuted" (83 C.J.S. 792). It is, rather, a procedure by which a
As prayed for, Atty. Jose P. Soberano, Jr., counsel for the Manila Surety & Fidelity question is resolved "with dispatch, with the least possible delay, and in preference to
Co., Inc., Cebu Branch, is given until Wednesday, November 6, 1957, to file his ordinary legal and regular judicial proceedings" (Ibid, p. 790). What is essential is that
answer to the motion for the issuance of a writ of execution dated October 30, 1957 of "the defendant is notified or summoned to appear and is given an opportunity to hear
the plaintiffs, after which this incident shall be deemed submitted for resolution. SO what is urged upon him, and to interpose a defense, after which follows an
ORDERED. adjudication of the rights of the parties" (Ibid., pp. 793-794); and as to the extent and
109
latitude of the hearing, the same will naturally lie upon the discretion of the court, (Autocorp) executed a corporate guarantee2 to the extent of US$2,000,000.00. BNP
depending upon the attending circumstances and the nature of the incident up for and Proton subsequently entered into three trust receipt agreements dated June 4,
consideration. 1996,3 January 14, 1997,4 and April 24, 1997.5

In the case at bar, the surety had been notified of the plaintiffs' motion for execution Under the terms of the trust receipt agreements, Proton would receive imported
and of the date when the same would be submitted for consideration. In fact, the passenger motor vehicles and hold them in trust for BNP. Proton would be free to sell
surety's counsel was present in court when the motion was called, and it was upon the vehicles subject to the condition that it would deliver the proceeds of the sale to
his request that the court a quo gave him a period of four days within which to file an BNP, to be applied to its obligations to it. In case the vehicles are not sold, Proton
answer. Yet he allowed that period to lapse without filing an answer or objection. The would return them to BNP, together with all the accompanying documents of title.
surety cannot now, therefore, complain that it was deprived of its day in court.
Allegedly, Proton failed to deliver the proceeds of the sale and return the unsold
It is argued that the surety's counsel did not file an answer to the motion "for the motor vehicles.
simple reason that all its defenses can be set up during the hearing of the motion
even if the same are not reduced to writing" (Appellant's brief, p. 4). There is Pursuant to the corporate guarantee, BNP demanded from Automotive, Asea and
obviously no merit in this pretense because, as stated above, the record will show Autocorp the payment of the amount of US$1,544,984.406 representing Proton's total
that when the motion was called, what the surety's counsel did was to ask that he be outstanding obligations. These guarantors refused to pay, however. Hence, BNP filed
allowed and given time to file an answer. Moreover, it was stated in the order given in on September 7, 1998 before the Makati Regional Trial Court (RTC) a complaint
open court upon request of the surety's counsel that after the four-day period within against petitioners praying that they be ordered to pay (1) US$1,544,984.40 plus
which to file an answer, "the incident shall be deemed submitted for resolution"; and accrued interest and other related charges thereon subsequent to August 15, 1998
counsel apparently agreed, as the order was issued upon his instance and he until fully paid and (2) an amount equivalent to 5% of all sums due from petitioners as
interposed no objection thereto. attorney's fees.

It is also urged that although according to Section 17 of Rule 59, supra, there is no The Makati RTC Clerk of Court assessed the docket fees which BNP paid at
need for a separate action, there must, however, be a separate judgment against the P352,116.307 which was computed as follows:8
surety in order to hold it liable on the bond (Appellant's Brief, p. 15). Not so, in our
opinion. A bond filed for discharge of attachment is, per Section 12 of Rule 59, "to First Cause of Action î º $ 844,674.07
secure the payment to the plaintiff of any judgment he may recover in the action," and Second Cause of Action î º171,120.53
stands "in place of the property so released". Hence, after the judgment for the Third Cause of Action î º 529,189.80
plaintiff has become executory and the execution is "returned unsatisfied" (Sec. 17,
Rule 59), as in this case, the liability of the bond automatically attaches and, in failure $1,544,984.40
of the surety to satisfy the judgment against the defendant despite demand therefor, 5% as Attorney's Fees î º $ 77,249.22
writ of execution may issue against the surety to enforce the obligation of the bond. TOTAL - '. . $1,622,233.62
Conversion rate to peso x 43_
UPON ALL THE FOREGOING, the orders appealed from are hereby affirmed, with TOTAL - '. . P69,756,000.00
costs against the appellant Manila Surety and Fidelity Company, Inc. (roundoff)
Computation based on Rule 141:
PROTON PILIPINAS CORPORATION, AUTOMOTIVE PHILIPPINES, ASEA ONE
CORPORATION and AUTOCORP, Petitioners, v. BANQUE NATIONALE DE COURT JDF
PARIS,1 Respondent. P 69,756,000.00 P 69.606.000.00
- 150,000.00 x .003
CARPIO MORALES, J.: 69,606,000.00 208,818.00
x .002 + 450.00
It appears that sometime in 1995, petitioner Proton Pilipinas Corporation (Proton) 139,212.00 P 209,268.00
availed of the credit facilities of herein respondent, Banque Nationale de Paris (BNP). + 150.00
To guarantee the payment of its obligation, its co-petitioners Automotive Corporation P 139,362.00
Philippines (Automotive), Asea One Corporation (Asea) and Autocorp Group LEGAL : P139,362.00
110
+ 209,268.00 plaintiff is not among the legal grounds for the dismissal of the case. Anyway, in the
P348,630.00 x 1% = P3,486.30 appreciation of the court, this is simply evidentiary.
P 139,362.00
+ 209,268.00 WHEREFORE, for lack of merit, the Motion to Dismiss interposed by the defendants
3,486.00 is hereby DENIED.13 (Underscoring supplied)ςrαlαωlιbrαrÿ
P 352,116.30 - Total fees paid by the plaintiff
To the complaint, the defendants-herein petitioners filed on October 12, 1998 a Petitioners filed a motion for reconsideration14 of the denial of their Motion to
Motion to Dismiss9 on the ground that BNP failed to pay the correct docket fees to Dismiss, but it was denied by the trial court by Order15 of October 3, 2000.
thus prevent the trial court from acquiring jurisdiction over the case.10 As additional
ground, petitioners raised prematurity of the complaint, BNP not having priorly sent Petitioners thereupon brought the case on certiorari and mandamus 16 to the Court of
any demand letter.11 Appeals which, by Decision17 of July 25, 2001, denied it in this wise:

By Order12 of August 3, 1999, Branch 148 of the Makati RTC denied petitioners' 'Section 7(a) of Rule 141 of the Rules of Court excludes interest accruing from the
Motion to Dismiss, viz: principal amount being claimed in the pleading in the computation of the prescribed
filing fees. The complaint was submitted for the computation of the filing fee to the
Resolving the first ground relied upon by the defendant, this court believes and so Office of the Clerk of Court of the Regional Trial Court of Makati City which made an
hold that the docket fees were properly paid. It is the Office of the Clerk of Court of assessment that respondent paid accordingly. What the Office of the Clerk of Court
this station that computes the correct docket fees, and it is their duty to assess the did and the ruling of the respondent Judge find support in the decisions of the
docket fees correctly, which they did.ςηαñrοblεš νιr†υαl lαω lιbrαrÿ Supreme Court in Ng Soon v. Alday and Tacay v. RTC of Tagum, Davao del Norte. In
the latter case, the Supreme Court explicitly ruled that "where the action is purely for
Even granting arguendo that the docket fees were not properly paid, the court cannot recovery of money or damages, the docket fees are assessed on the basis of the
just dismiss the case. The Court has not yet ordered (and it will not in this case) to aggregate amount claimed, exclusive only of interests and costs."
pay the correct docket fees, thus the Motion to dismiss is premature, aside from being
without any legal basis. Assuming arguendo that the correct filing fees was not made, the rule is that the court
may allow a reasonable time for the payment of the prescribed fees, or the balance
As held in the case of National Steel Corporation v. CA, G.R. No. 123215, February 2, thereof, and upon such payment, the defect is cured and the court may properly take
1999, the Supreme Court said: cognizance of the action unless in the meantime prescription has set in and
consequently barred the right of action. Here respondent Judge did not make any
xxx finding, and rightly so, that the filing fee paid by private respondent was insufficient.

Although the payment of the proper docket fees is a jurisdictional requirement, the On the issue of the correct dollar-peso rate of exchange, the Office of the Clerk of
trial court may allow the plaintiff in an action to pay the same within a reasonable time Court of the RTC of Makati pegged it at P 43.21 to US$1. In the absence of any office
within the expiration of applicable prescription or reglementary period. If the plaintiff guide of the rate of exchange which said court functionary was duty bound to follow,
fails to comply with this requirement, the defendant should timely raise the issue of the rate he applied is presumptively correct.
jurisdiction or else he would be considered in estoppel. In the latter case, the balance
between appropriate docket fees and the amount actually paid by the plaintiff will be Respondent Judge correctly ruled that the matter of demand letter is evidentiary and
considered a lien or (sic) any award he may obtain in his favor. does not form part of the required allegations in a complaint. Section 1, Rule 8 of the
1997 Rules of Civil Procedure pertinently provides:
As to the second ground relied upon by the defendants, in that a review of all
annexes to the complaint of the plaintiff reveals that there is not a single formal "Every pleading shall contain in a methodical and logical form, a plain, concise and
demand letter for defendants to fulfill the terms and conditions of the three (3) trust direct statement of the ultimate facts on which the party pleading relies for his claim or
agreements. defense, as the case may be, omitted the statement of mere evidentiary facts."

In this regard, the court cannot sustain the submission of defendant. As correctly Judging from the allegations of the complaint particularly paragraphs 6, 12, 18, and
pointed out by the plaintiff, failure to make a formal demand for the debtor to pay the 23 where allegations of imputed demands were made upon the defendants to fulfill

111
their respective obligations, annexing the demand letters for the purpose of putting up DAMAGES SO SPECIFIED IN THE COMPLAINT SHALL BE THE BASIS FOR
a sufficient cause of action is not required. ASSESSING THE AMOUNT OF THE FILING FEES.

In fine, respondent Judge committed no grave abuse of discretion amounting to lack In Manchester Development Corporation v. Court of Appeals, No. L-75919, May 7,
or excess of jurisdiction to warrant certiorari and mandamus .18 (Underscoring 1987, 149 SCRA 562, this Court condemned the practice of counsel who in filing the
supplied)ςrαlαωlιbrαrÿ original complaint omitted from the prayer any specification of the amount of damages
although the amount of over P78 million is alleged in the body of the complaint. This
Their Motion for Reconsideration19 having been denied by the Court of Appeals,20 Court observed that "(T)his is clearly intended for no other purpose than to evade the
petitioners filed the present Petition for Review on Certiorari 21 and pray for the payment of the correct filing fees if not to mislead the docket clerk, in the assessment
following reliefs: of the filing fee. This fraudulent practice was compounded when, even as this Court
had taken cognizance of the anomaly and ordered an investigation, petitioner through
WHEREFORE, in view of all the foregoing, it is most respectfully prayed of this another counsel filed an amended complaint, deleting all mention of the amount of
Honorable Court to grant the instant petition by REVERSING and SETTING ASIDE damages being asked for in the body of the complaint. xxx"
the questioned Decision of July 25, 2001 and the Resolution of December 18, 2001
for being contrary to law, to Administrative Circular No. 11-94 and Circular No. 7 and For the guidance of all concerned, the WARNING given by the court in the afore-cited
instead direct the court a quo to require Private Respondent Banque to pay the case is reproduced hereunder:
correct docket fee pursuant to the correct exchange rate of the dollar to the peso on
September 7, 1998 and to quantify its claims for interests on the principal obligations "The Court serves warning that it will take drastic action upon a repetition of this
in the first, second and third causes of actions in its Complaint in Civil Case No. 98- unethical practice.
2180.22 (Underscoring supplied)ςrαlαωlιbrαrÿ
To put a stop to this irregularity, henceforth all complaints, petitions, answers and
Citing Administrative Circular No. 11-94,23 petitioners argue that BNP failed to pay other similar pleadings should specify the amount of damages being prayed for not
the correct docket fees as the said circular provides that in the assessment thereof, only in the body of the pleading but also in the prayer, and said damages shall be
interest claimed should be included. There being an underpayment of the docket considered in the assessment of the filing fees in any case. Any pleading that fails to
fees, petitioners conclude, the trial court did not acquire jurisdiction over the case. comply with this requirement shall not be accepted nor admitted, or shall otherwise be
expunged from the record.
Additionally, petitioners point out that the clerk of court, in converting BNP's claims
from US dollars to Philippine pesos, applied the wrong exchange rate of US $1 = The Court acquires jurisdiction over any case only upon the payment of the
P43.00, the exchange rate on September 7, 1998 when the complaint was filed prescribed docket fee. An amendment of the complaint or similar pleading will not
having been pegged at US $1 = P43.21. Thus, by petitioners' computation, BNP's thereby vest jurisdiction in the Court, much less the payment of the docket fee based
claim as of August 15, 1998 was actually P70,096,714.72,24 not P69,756,045.66. on the amount sought in the amended pleading. The ruling in the Magaspi case (115
SCRA 193) in so far as it is inconsistent with this pronouncement is overturned and
Furthermore, petitioners submit that pursuant to Supreme Court Circular No. 7,25 the reversed."
complaint should have been dismissed for failure to specify the amount of interest in
the prayer. Strict compliance with this Circular is hereby enjoined.

Circular No. 7 reads: Let this be circularized to all the courts hereinabove named and to the President and
Board of Governors of the Integrated Bar of the Philippines, which is hereby directed
TO: JUDGES AND CLERKS OF COURT OF THE COURT OF TAX APPEALS, to disseminate this Circular to all its members.
REGIONAL TRIAL COURTS, METROPOLITAN TRIAL COURTS IN CITIES,
MUNICIPAL TRIAL COURTS, MUNICIPAL CIRCUIT TRIAL COURTS, SHARI'A March 24, 1988.
DISTRICT COURTS;AND THE INTEGRATED BAR OF THE PHILIPPINES
(Sgd). CLAUDIO TEEHANKEE
SUBJECT: ALL COMPLAINTS MUST SPECIFY AMOUNT OF DAMAGES SOUGHT Chief Justice
NOT ONLY IN THE BODY OF THE PLEADING, BUT ALSO IN THE PRAYER IN
ORDER TO BE ACCEPTED AND ADMITTED FOR FILING. THE AMOUNT OF (Emphasis and underscoring supplied)ςrαlαωlιbrαrÿ
112
 Where the action is purely for the recovery of money or damages, the docket fees are
On the other hand, respondent maintains that it had paid the filing fee which was assessed on the basis of the aggregate amount claimed, exclusive only of interests
assessed by the clerk of court, and that there was no violation of Supreme Court and costs.28 (Emphasis and underscoring supplied),
Circular No. 7 because the amount of damages was clearly specified in the prayer, to it made an overpayment.
wit:
When Tacay was decided in 1989, the pertinent rule applicable was Section 5 (a) of
2. On the FIRST CAUSE OF ACTION - Rule 141 which provided for the following:

(c) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS EIGHT SEC. 5. Clerks of Regional Trial Courts. - (a) For filing an action or proceeding, or a
HUNDRED FORTY FOUR THOUSAND SIX HUNDRED SEVENTY FOUR AND permissive counter-claim or cross-claim not arising out of the same transaction
SEVEN CENTS (US$ 844,674.07), plus accrued interests and other related charges subject of the complaint, a third-party complaint and a complaint in intervention and
thereon subsequent to August 15, 1998, until fully paid; and (ii) an amount equivalent for all services in the same, if the sum claimed, exclusive of interest, of the value of
to 5% of all sums due from said Defendant, as and for attorney's fees; the property in litigation, or the value of the estate, is:

3. On the SECOND CAUSE OF ACTION - 1. Less than P 5,000.00 '. P 32.00

2. P 5,000.00 or more but less than P 10,000.00 48.00
(d) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS ONE 3. P 10,000.00 or more but less than P 20,000.00 '' '. . 64.00
HUNDRED TWENTY AND FIFTY THREE CENTS (US$171,120.53), plus accrued 4. P 20,000.00 or more but less than P 40,000.00 '' '. . 80.00
interests and other related charges thereon subsequent to August 15, 1998 until fully 5. P 40,000.00 or more but less than P 60,000.00 '' '. . 120.00
paid; and (ii) an amount equivalent to 5% of all sums due from said Defendant, as 6. P 60,000.00 or more but less than P 80,000.00 '' '. 160.00
and for attorney's fees; 7. P 80,000.00 or more but less than P 150,000.00 - 200.00
8. And for each P 1,000.00 in excess of P 150,000.00 ..... 4.00
4. On the THIRD CAUSE OF ACTION - 9. When the value of the case cannot be estimated - 400.00
10. When the case does not concern property
(e) Defendant PROTON be ordered to pay the sum of (i) US DOLLARS FIVE (naturalization, adoption, legal separation, etc.) .. ''. .. 64.00
HUNDRED TWENTY NINE THOUSAND ONE HUNDRED EIGHTY NINE AND 11. In forcible entry and illegal detainer cases
EIGHTY CENTS (US$529,189.80), plus accrued interests and other related charges appealed from inferior courts '. 40.00
thereon subsequent to August 15, 1998 until fully paid; and (ii) an amount equivalent If the case concerns real estate, the assessed value thereof shall be considered in
to 5% or all sums due from said Defendant, as and for attorney's fees; computing the fees.

5. On ALL THE CAUSES OF ACTION - In case the value of the property or estate or the sum claim is less or more in
accordance with the appraisal of the court, the difference of fees shall be refunded or
Defendants AUTOMOTIVE CORPORATION PHILIPPINES, ASEA ONE paid as the case may be.
CORPORATION and AUTOCORP GROUP to be ordered to pay Plaintiff BNP the
aggregate sum of (i) US DOLLARS ONE MILLION FIVE HUNDRED FORTY FOUR When the complaint in this case was filed in 1998, however, as correctly pointed out
THOUSAND NINE HUNDRED EIGHTY FOUR AND FORTY CENTS by petitioners, Rule 141 had been amended by Administrative Circular No. 11-9429
(US$1,544,984.40) (First through Third Causes of Action), plus accrued interest and which provides:
other related charges thereon subsequent to August 15, 1998 until fully paid; and (ii)
an amount equivalent to 5% of all sums due from said Defendants, as and for BY RESOLUTION OF THE COURT, DATED JUNE 28, 1994, PURSUANT TO
attorney's fees.26 SECTION 5 (5) OF ARTICLE VIII OF THE CONSTITUTION, RULE 141, SECTION 7
(a) AND (d), and SECTION 8 (a) and (b) OF THE RULES OF COURT ARE HEREBY
Moreover, respondent posits that the amount of US$1,544,984.40 represents not only AMENDED TO READ AS FOLLOWS:
the principal but also interest and other related charges which had accrued as of
August 15, 1998. Respondent goes even further by suggesting that in light of Tacay RULE 141
v. Regional Trial Court of Tagum, Davao del Norte27 where the Supreme Court held, LEGAL FEES

113
xxx Furthermore, contrary to the position taken by respondent Judge, the amounts
claimed need not be initially stated with mathematical precision. The same Rule 141,
Sec. 7. Clerks of Regional Trial Courts section 5(a) (3rd paragraph), allows an appraisal "more or less."31 Thus:

(a) For filing an action or a permissive counterclaim or money claim against an estate "In case the value of the property or estate or the sum claimed is less or more in
not based on judgment, or for filing with leave of court a third-party, fourth-party, etc. accordance with the appraisal of the court, the difference of fee shall be refunded or
complaint, or a complaint in intervention, and for all clerical services in the same, if paid as the case may be."
the total sum claimed, inclusive of interest, damages of whatever kind, attorney's
fees, litigation expenses, and costs, or the stated value of the property in litigation, is: In other words, a final determination is still to be made by the Court, and the fees
ultimately found to be payable will either be additionally paid by the party concerned
1. Not more than P 100,000.00 P 400.00 or refunded to him, as the case may be. The above provision clearly allows an initial
2. P 100,000.00, or more but not more than P 150,000.00 - 600.00 payment of the filing fees corresponding to the estimated amount of the claim subject
3. For each P 1,000.00 in excess of P 150,000.00 - '. 5.00 to adjustment as to what later may be proved.
xxx
". . . there is merit in petitioner's claim that the third paragraph of Rule 141, Section
Sec. 8. Clerks of Metropolitan and Municipal Trial Courts 5(a) clearly contemplates a situation where an amount is alleged or claimed in the
complaint but is less or more than what is later proved. If what is proved is less than
(a) For each civil action or proceeding, where the value of the subject matter involved, what was claimed, then a refund will be made; if more, additional fees will be exacted.
or the amount of the demand, inclusive of interest, damages or whatever kind, Otherwise stated, what is subject to adjustment is the difference in the fee and not the
attorney's fees, litigation expenses, and costs, is: whole amount" (Pilipinas Shell Petroleum Corp., et als., v. Court of Appeals, et als.,
G.R. No. 76119, April 10, 1989).32 (Emphasis and underscoring supplied)Ï‚rαlαÏ
1. Not more than P 20,000.00 '. .. P 120.00 ‰lιbrαrÿ
2. More than P 20,000.00 but not more than P 100,000.00 '. 400.00
3. More than P 100,000.00 but not more than P 200,000.00 - 850.00 Respecting the Court of Appeals' conclusion that the clerk of court did not err when
(Emphasis and underscoring supplied)ςrαlαωlιbrαrÿ he applied the exchange rate of US $1 = P43.00 "[i]n the absence of any office guide
of the rate of exchange which said court functionary was duty bound to follow,[hence,]
The clerk of court should thus have assessed the filing fee by taking into the rate he applied is presumptively correct," the same does not lie. The presumption
consideration "the total sum claimed, inclusive of interest, damages of whatever kind, of regularity of the clerk of court's application of the exchange rate is not
attorney's fees, litigation expenses, and costs, or the stated value of the property in conclusive.33 It is disputable.34 As such, the presumption may be overturned by the
litigation." Respondent's and the Court of Appeals' reliance then on Tacay was not in requisite rebutting evidence.35 In the case at bar, petitioners have adequately proven
order. with documentary evidence36 that the exchange rate when the complaint was filed on
September 7, 1998 was US $1 = P43.21.
Neither was, for the same reason, the Court of Appeals' reliance on the 1989 case of
Ng Soon v. Alday,30 where this Court held: In fine, the docket fees paid by respondent were insufficient.

'The failure to state the rate of interest demanded was not fatal not only because it is With respect to petitioner's argument that the trial court did not acquire jurisdiction
the Courts which ultimately fix the same, but also because Rule 141, Section 5(a) of over the case in light of the insufficient docket fees, the same does not lie.
the Rules of Court, itemizing the filing fees, speaks of "the sum claimed, exclusive of
interest." This clearly implies that the specification of the interest rate is not that True, in Manchester Development Corporation v. Court of Appeals,37 this Court held
indispensable. that the court acquires jurisdiction over any case only upon the payment of the
prescribed docket fees,38 hence, it concluded that the trial court did not acquire
Factually, therefore, not everything was left to "guesswork" as respondent Judge has jurisdiction over the case.
opined. The sums claimed were ascertainable, sufficient enough to allow a
computation pursuant to Rule 141, section 5(a). It bears emphasis, however, that the ruling in Manchester was clarified in Sun
Insurance Office, Ltd. (SIOL) v. Asuncion39 when this Court held that in the former
there was clearly an effort to defraud the government in avoiding to pay the correct
114
docket fees, whereas in the latter the plaintiff demonstrated his willingness to abide constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or
by paying the additional fees as required. his duly authorized deputy to enforce said lien and assess and collect the additional
fee.40 (Emphasis and underscoring supplied)ςrαlαωlιbrαrÿ
The principle in Manchester could very well be applied in the present case. The
pattern and the intent to defraud the government of the docket fee due it is obvious The ruling in Sun Insurance Office was echoed in the 2005 case of Heirs of Bertuldo
not only in the filing of the original complaint but also in the filing of the second Hinog v. Hon. Achilles Melicor:41
amended complaint.
Plainly, while the payment of the prescribed docket fee is a jurisdictional requirement,
However, in Manchester, petitioner did not pay any additional docket fee until the even its non-payment at the time of filing does not automatically cause the dismissal
case was decided by this Court on May 7, 1987. Thus, in Manchester, due to the of the case, as long as the fee is paid within the applicable prescriptive or
fraud committed on the government, this Court held that the court a quo did not reglementary period, more so when the party involved demonstrates a willingness to
acquire jurisdiction over the case and that the amended complaint could not have abide by the rules prescribing such payment. Thus, when insufficient filing fees were
been admitted inasmuch as the original complaint was null and void. initially paid by the plaintiffs and there was no intention to defraud the government,
the Manchester rule does not apply. (Emphasis and underscoring supplied; citations
In the present case, a more liberal interpretation of the rules is called for considering omitted)
that, unlike Manchester, private respondent demonstrated his willingness to abide by
the rules by paying the additional docket fees as required. The promulgation of the In the case at bar, respondent merely relied on the assessment made by the clerk of
decision in Manchester must have had that sobering influence on private respondent court which turned out to be incorrect. Under the circumstances, the clerk of court has
who thus paid the additional docket fee as ordered by the respondent court. It the responsibility of reassessing what respondent must pay within the prescriptive
triggered his change of stance by manifesting his willingness to pay such additional period, failing which the complaint merits dismissal.
docket fee as may be ordered.
Parenthetically, in the complaint, respondent prayed for "accrued interest' subsequent
Nevertheless, petitioners contend that the docket fee that was paid is still insufficient to August 15, 1998 until fully paid." The complaint having been filed on September 7,
considering the total amount of the claim. This is a matter which the clerk of court of 1998, respondent's claim includes the interest from August 16, 1998 until such date of
the lower court and/or his duly authorized docket clerk or clerk in charge should filing.
determine and, thereafter, if any amount is found due, he must require the private
respondent to pay the same. Respondent did not, however, pay the filing fee corresponding to its claim for interest
from August 16, 1998 until the filing of the complaint on September 7, 1998. As priorly
Thus, the Court rules as follows: discussed, this is required under Rule 141, as amended by Administrative Circular
No. 11-94, which was the rule applicable at the time. Thus, as the complaint currently
1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the stands, respondent cannot claim the interest from August 16, 1998 until September 7,
payment of the prescribed docket fee, that vests a trial court with jurisdiction over the 1998, unless respondent is allowed by motion to amend its complaint within a
subject-matter or nature of the action. Where the filing of the initiatory pleading is not reasonable time and specify the precise amount of interest petitioners owe from
accompanied by payment of the docket fee, the court may allow payment of the fee August 16, 1998 to September 7, 199842 and pay the corresponding docket fee
within a reasonable time but in no case beyond the applicable prescriptive or therefor.
reglementary period.
With respect to the interest accruing after the filing of the complaint, the same can
2. The same rule applies to permissive counterclaims, third-party claims and similar only be determined after a final judgment has been handed down. Respondent
pleadings, which shall not be considered filed until and unless the filing fee prescribed cannot thus be made to pay the corresponding docket fee therefor. Pursuant,
therefor is paid. The court may also allow payment of said fee within a reasonable however, to Section 2, Rule 141, as amended by Administrative Circular No. 11-94,
time but also in no case beyond its applicable prescriptive or reglementary period. respondent should be made to pay additional fees which shall constitute a lien in the
event the trial court adjudges that it is entitled to interest accruing after the filing of the
3. Where the trial court acquires jurisdiction over a claim by the filing of the complaint.
appropriate pleading and payment of the prescribed filing fee but, subsequently, the
judgment awards a claim not specified in the pleading, or if specified the same has Sec. 2. Fees as lien. - Where the court in its final judgment awards a claim not
been left for determination by the court, the additional filing fee therefor shall alleged, or a relief different or more than that claimed in the pleading, the party
115
concerned shall pay the additional fees which shall constitute a lien on the judgment an award not prayed for in the complaint, even if proven ex parte.chanrobles law
in satisfaction of said lien. The clerk of court shall assess and collect the library
corresponding fees.
The Case
In Ayala Corporation v. Madayag,43 in interpreting the third rule laid down in Sun
Insurance regarding awards of claims not specified in the pleading, this Court held These principles were used by this Court in resolving this Petition for Review on
that the same refers only to damages arising after the filing of the complaint or similar Certiorari before us, assailing the July 19, 1993 Decision 1 and the August 15, 1995
pleading as to which the additional filing fee therefor shall constitute a lien on the Resolution, 2 both promulgated by the Court of Appeals. The assailed Decision
judgment. disposed as follows: 3

'The amount of any claim for damages, therefore, arising on or before the filing of the "ACCORDINGLY, in view of the foregoing disquisitions, all the three (3) consolidated
complaint or any pleading should be specified. While it is true that the determination petitions for certiorari are hereby GRANTED.
of certain damages as exemplary or corrective damages is left to the sound discretion
of the court, it is the duty of the parties claiming such damages to specify the amount THE assailed Order of respondent Judge Arsenio Gonong of the Regional Trial Court
sought on the basis of which the court may make a proper determination, and for the of Manila, Branch 8, dated April 5, 1991, in the first petition for certiorari (CA-G.R. SP
proper assessment of the appropriate docket fees. The exception contemplated as to No. 24669); the assailed Order of Judge Bernardo Pardo, Executive Judge of the
claims not specified or to claims although specified are left for determination of the Regional Trial Court of Manila, Branch 8, dated July 6, 1992, in the second petition for
court is limited only to any damages that may arise after the filing of the complaint or certiorari (CA- G.R. SP No. 28387); and finally, the assailed order or Resolution en
similar pleading for then it will not be possible for the claimant to specify nor speculate banc of the respondent Court of Tax Appeals Judges Ernesto Acosta, Ramon de
as to the amount thereof.44 (Emphasis and underscoring supplied; citation Veyra and Manuel Gruba, under date of October 5, 1992, in the third petition for
omitted)ςηαñrοblεš νιr†υαl lαω lιbrαrÿ certiorari (CA-G.R. SP No. 29317) are all hereby NULLIFIED and SET ASIDE thereby
giving way to the entire decision dated February 18, 1991 of the respondent Regional
WHEREFORE, the petition is GRANTED in part. The July 25, 2001 Decision and the Trial Court of Manila, Branch 8, in Civil Case No. 89-51451 which remains valid, final
December 18, 2001 Resolution of the Court Appeals are hereby MODIFIED. The and executory, if not yet wholly executed.
Clerk of Court of the Regional Trial Court of Makati City is ordered to reassess and
determine the docket fees that should be paid by respondent, BNP, in accordance The writ of preliminary injunction heretofore issued by this Court on March 6, 1992
with the Decision of this Court, and direct respondent to pay the same within fifteen and reiterated on July 22, 1992 and this date against the named respondents
(15) days, provided the applicable prescriptive or reglementary period has not yet specified in the dispositive portion of the judgment of the respondent Regional Trial
expired. Thereafter, the trial court is ordered to proceed with the case with utmost Court of Manila, Branch 8 in the first petition for certiorari, which remains valid,
dispatch. SO ORDERED. existing and enforceable, is hereby MADE PERMANENT without prejudice (1) to the
[G.R. Nos. 121662-64. July 6, 1999.] [private respondent’s] remaining unpaid obligations to the herein party-intervenor in
accordance with the Compromise Agreement or in connection with the decision of the
VLASON ENTERPRISES CORPORATION, Petitioner, v. COURT OF APPEALS respondent lower court in CA-G.R. SP No. 24669 and (2) to the government, in
and DURAPROOF SERVICES, represented by its General Manager, Cesar relation to the forthcoming decision of the respondent Court of Tax Appeals on the
Urbino Sr., Respondents. amount of taxes, charges, assessments or obligations that are due, as totally secured
and fully guaranteed payment by the [private respondent’s] bond, subject to the
PANGANIBAN, J.: relevant rulings of the Department of Finance and other prevailing laws and
jurisprudence."cralaw virtua1aw library

Summons to a domestic or resident corporation should be served on officers, agents The assailed Resolution ruled:
or employees, who are responsible enough to warrant the presumption that they will
transmit to the corporation notice of the filing of the action against it. Rules on the "ACCORDINGLY, in the light of the foregoing disquisitions, as well as considering
service of motions should be liberally construed in order to promote the ends of these clarifications, the three (3) motions aforementioned are hereby DENIED."cralaw
substantial justice. A rigid application that will result in the manifest injustice should be virtua1aw library
avoided. A default judgment against several defendants cannot affect the rights of
one who was never declared in default. In any event, such judgment cannot include The Facts
116
 allowed summons by publication to be served upon the alien defendants who were
Poro Point Shipping Services, then acting as the local agent of Omega Sea Transport not residents and had no direct representatives in the country. 14
Company of Honduras & Panama, a Panamanian company, (hereafter referred to as On January 29, 1990, private respondent moved to declare respondents in default,
Omega), requested permission for its vessel M/V Star Ace, which had engine trouble, but the trial court denied the motion in its February 23, 1990 Order, 15 because
to unload its cargo and to store it at the Philippine Ports Authority (PPA) compound in Mangaoang and Amor had jointly filed a Motion to Dismiss, while Mison and Med Line
San Fernando, La Union while awaiting transshipment to Hongkong. The request was had moved separately for an extension to file a similar motion. 16 Later it rendered an
approved by the Bureau of Customs. 4 Despite the approval, the customs personnel Order dated July 9, 1990, giving due course to the motions to dismiss filed by
boarded the vessel when it docked on January 7, 1989, on suspicion that it was the Mangaoang and Amor on the ground of litis pendentia, and by the commissioner and
hijacked M/V Silver Med owned by Med Line Philippines Co., and that its cargo would district collector of customs on the ground of lack of jurisdiction. 17 In another Order,
be smuggled into the country. 5 The district customs collector seized said vessel and the trial court dismissed the action against Med Line Philippines on the ground of litis
its cargo pursuant to Section 2301, Tariff and Customs Code. A notice of hearing of pendentia. 18
SFLU Seizure Identification No. 3-89 was served on its consignee, Singkong Trading
Co. of Hongkong, and its shipper, Dusit International Co., Ltd. of Thailand. On two other occasions, private respondent again moved to declare the following in
default: petitioner, Quiray, Sy and Mison on March 26, 1990; 19 and Banco Du Brazil,
While seizure proceedings were ongoing, La Union was hit by three typhoons, and Dusit International Co., Inc., Thai-Nan Enterprises Ltd. and Thai-United Trading Co.,
the vessel ran aground and was abandoned. On June 8, 1989, its authorized Ltd. on August 24, 1990. 20 There is no record, however, that the trial court acted
representative, Frank Cadacio, entered into a salvage agreement with private upon the motions. On September 18, 1990, petitioner filed another Motion for leave to
respondent to secure and repair the vessel at the agreed consideration of $1 million amend the petition, 21 alleging that its counsel failed to include the following
and "fifty percent (50%) [of] the cargo after all expenses, cost and taxes." 6 "necessary and/or indispensable parties" : Omega represented by Cadacio; and M/V
Star Ace represented by Capt. Nahon Rada, relief captain. Aside from impleading
Finding that no fraud was committed, the District Collector of Customs, Aurelio M. these additional respondents, private respondent also alleged in the Second (actually,
Quiray, lifted the warrant of seizure on July 16, 1989. 7 However, in a Second third) Amended Petition 22 that the owners of the vessel intended to transfer and
Indorsement dated November 11, 1989, then Customs Commissioner Salvador M. alienate their rights and interests over the vessel and its cargo, to the detriment of the
Mison declined to issue a clearance for Quiray’s Decision; instead, he forfeited the private Respondent.
vessel and its cargo in accordance with Section 2530 of the Tariff and Customs Code.
8 Accordingly, acting District Collector of Customs John S. Sy issued a Decision The trial court granted leave to private respondent to amend its Petition, but only to
decreeing the forfeiture and the sale of the cargo in favor of the government. 9 exclude the customs commissioner and the district collector. 23 Instead, private
respondent filed the "Second Amended Petition with Supplemental Petition" against
To enforce its preferred salvor’s lien, herein Private Respondent Duraproof Services Singkong Trading Company; and Omega and M/V Star Ace, 24 to which Cadacio and
filed with the Regional Trial Court of Manila a Petition for Certiorari, Prohibition and Rada filed a Joint Answer.25cralaw:red
Mandamus 10 assailing the actions of Commissioner Mison and District Collector Sy.
Also impleaded as respondents were PPA Representative Silverio Mangaoang, and Declared in default in an Order issued by the trial court on January 23, 1991, were the
Med Line Philippines, Inc. following: Singkong Trading Co., Commissioner Mison, M/V Star Ace and Omega. 26
Private respondent filed, and the trial court granted, an ex parte Motion to present
On January 10, 1989, private respondent amended its Petition 11 to include former evidence against the defaulting respondents. 27 Only private respondent, Atty.
District Collector Quiray; PPA Port Manager Adolfo Ll. Amor Jr; Petitioner Vlason Tamondong, Commissioner Mison; Omega and M/V Star Ace appeared in the next
Enterprises as represented by its president, Vicente Angliongto; Singkong Trading pretrial hearing; thus, the trial court declared the other respondents in default and
Company as represented by Atty. Eddie Tamondong; Banco Du Brasil; Dusit allowed private respondent to present evidence against them. 28 Cesar Urbino,
International Co., Inc.; Thai-Nan Enterprises Ltd. and Thai-United Trading Co., Ltd. 12 general manager of private respondent, testified and adduced evidence against the
In both Petitions, private respondent plainly failed to include any allegation pertaining other respondents, including herein petitioner. As regards petitioner, he declared:
to petitioner, or any prayer for relief against it. "Vlason Enterprises represented by Atty. Sy and Vicente Angliongto thru constant
intimidation and harassment of utilizing the PPA Management of San Fernando, La
Summonses for the amended Petition were served on Atty. Joseph Capuyan for Med Union . . . further delayed, and [private respondent] incurred heavy overhead
Line Philippines: Angliongto (through his secretary, Betty Bebero), Atty. Tamondong expenses due to direct and incidental expenses . . . causing irreparable damages of
and Commissioner Mison. 13 Upon motion of the private respondent, the trial court about P3,000,000 worth of ship tackles, rigs, and appurtenances including radar

117
antennas and apparatuses, which were taken surreptitiously by persons working for 5. Costs of [s]uit."
Vlason Enterprises or its agents[.]" 29
Subsequently, upon the motion of Omega, Singkong Trading Co. and private
On December 29, 1990, private respondent and Rada, representing Omega, entered respondent, the trial court approved a Compromise Agreement 31 among the
into a Memorandum of a Agreement stipulating that Rada would write and notify movants, reducing by 20 percent the amounts adjudged. For their part, respondents-
Omega regarding the demand for salvage fees of private respondent; and that if Rada movants agreed not to appeal the Decision. 32 On March 8, 1991, private respondent
did not receive any instruction from his principal, he would assign the vessel in favor moved for the execution of judgment, claiming that the trial court Decision had
of the salvor. 30 already become final and executory. 33 The Motion was granted 34 and a Writ of
Execution was issued. 35 To satisfy the Decision, Sheriffs Jorge Victorino, Amado
On February 18, 1991, the trial court disposed as follows: Sevilla and Dionisio Camañgon were deputized on March 13, 1991 to levy and to sell
on execution the defendant’s vessel and personal property.
"WHEREFORE, IN VIEW OF THE FOREGOING, based on the allegations, prayer
and evidence adduced, both testimonial and documentary, the Court is convinced, On March 14, 1991, petitioner filed, by special appearance, a Motion for
that, indeed, defendants/respondents are liable to [private respondent] in the amount Reconsideration on the grounds that it was allegedly not impleaded as a defendant,
as prayed for in the petition for which it renders judgment as follows:chanrob1es served summons or declared in default; that private respondent was not authorized to
virtual 1aw library present evidence against it in default; that the judgment in default was fatally
defective, because private respondent had not paid filing fees for the award; and that
1. Respondent M/V Star Ace, represented by Capt. Nahum Rada, [r]elief private respondent had not prayed for such award. 36 Private respondent opposed
[c]aptain of the vessel and Omega Sea Transport Company, Inc., represented by the Motion, arguing that it was a mere scrap of paper due to its defective notice of
Frank Cadacio[,] is ordered to refrain from alienating or [transferring] the vessel M/V hearing.
Star Ace to any third parties;
On March 18, 1991, the Bureau of Customs also filed an ex parte Motion to recall the
2. Singkong Trading Company to pay the following:chanrob1es virtual 1aw execution, and to quash the notice of levy and the sale on execution. 37 Despite this
library Motion, the auction sale was conducted on March 21, 1991 by Sheriff Camañgon,
with private respondent submitting the winning bid. 38 The trial court ordered the
a. Taxes due the government; deputy sheriffs to cease and desist from implementing the Writ of Execution and from
levying on the personal property of the defendants. 39 Nevertheless, Sheriff
b. Salvage fees on the vessel in the amount of $1,000,000.00 based on . . . Camañgon issued the corresponding Certificate of Sale on March 27, 1991. 40
Lloyd’s Standard Form of Salvage Agreement;
On April 12, 1991, 41 private respondent filed with the Court of Appeals (CA) a
c. Preservation, securing and guarding fees on the vessel in the amount of Petition for Certiorari and Prohibition to nullify the cease and desist orders of the trial
$225,000.00; court. 42 Respondent Court issued on April 26, 1991 a Resolution which reads: 43

d. Maintenance fees in the amount of P2,685,000.00; "MEANWHILE, in order to preserve the status quo and so as not to render the
present petition moot and academic, a TEMPORARY RESTRAINING ORDER is
e. Salaries of the crew from August 16, 1989 to December 1989 in the amount hereby ISSUED enjoining the respondent Judge, the Honorable Arsenio M. Gonong,
of $43,000.00 and unpaid salaries from January 1990 up to the present; from enforcing and/or implementing the Orders dated 22 March 1991 and 5 April
1991 which ordered respondent Sheriff to cease and desist from implementing the
f. Attorney’s fees in the amount of P656,000.00; writ of execution and the return thereof, the quashing of the levy . . . on [the]
execution [and sale] of the properties levied upon and sold at public auction by the
3. [Vlason] Enterprises to pay [private respondent] in the amount of P3,000,000 Sheriff, for reason of grave abuse of discretion and in excess of jurisdiction, until
00 for damages; further orders from this Court.chanroblesvirtualawlibrary

4. Banco [Du] Brazil to pay [private respondent] in the amount of $300,000.00 "WITHIN ten (10) days from notice hereof, respondents [petitioner included] are also
in damages; and finally, required to SHOW CAUSE why the prayer for a writ of preliminary injunction should
not be granted."cralaw virtua1aw library
118
 License No: 81-0059"
On May 8, 1991, petitioner received from Camañgon a notice to pay private
respondent P3 million to satisfy the trial court Decision. Not having any knowledge of Petitioner also filed a special appearance before the CA. It prayed for the lifting of the
the CA case to which it was not impleaded, petitioner filed with the trial court a Motion levy on its properties or, alternatively, for a temporary restraining order against their
to Dismiss ex abutandi ad cautelam on the grounds that (1) the Petition of private auction until its Motion for Reconsideration was resolved by the trial court.
respondent stated no cause of action against it, (2) the trial court had no jurisdiction
over the case, and (3) litis pendentia barred the suit. 44 Acting on petitioner’s Motion for Reconsideration, the trial court reversed its Decision
of February 18, 1991, holding in its May 22, 1991 Resolution as follows: 47
On May 10, 1991, Camañgon levied on petitioner’s properties, which were scheduled
for auction later on May 16, 1991. Specific descriptions of the properties are as ". . . [T]hat . . . Motion For Reconsideration [of the petitioner] was filed on March 14,
follows: 45 1991 (See: page 584, records, Vol. 2) indubitably showing that it was seasonably filed
within the 15-day time-frame. Therefore, said default-judgment ha[d] not yet become
"a). Motor Tugboat — "DEN DEN" ex Emerson-I final and executory when the Writ of Execution was issued on March 13, 1991. The
rules [provide] that [the e]xecution shall issue as a matter of right upon the expiration
Length: 35.67 ms. Breadth: 7:33 ms. of the period of appeal from a judgment if no appear has been duly perfected (Sec. 1,
R-39, RRC). That being the case, VEC has all the right to file as it did . . . the
Depth: 3.15 ms. Gross Tons: 205.71 aforementioned reconsideration motion calling [the] attention of the Court and
pointing therein its supposed error and its correction if, indeed, any [error was]
Net tons: 67.78 Official Number 213551 committed. It is in this light that this Court made an in-depth reflection and
assessment of the premises or reasons raised by [petitioner], and after a re-
Material: Steel Class License: CWL examination of the facts and evidence spread on the records, it has come to the
considered conclusion that the questioned default-judgment has been improvidently
License No. 4424" issued. By the records, the claim of [private respondent] that his January 29, 1990 Ex-
Parte Motion To Declare Defendants In Default (pp. 174-177, records, Vol. 1)
b) Barge — "FC99" ex YD-153 including VEC had been granted is belied by the February 23, 1990 Order (pp. 214-
215, records, ibid) par. 2, thereof, reading to wit:chanrob1es virtual 1aw library
Length: 34.15 ms. Breadth: 15.85 ms.
‘By the foregoing, for reasons stated thereunder respectively, this Court, in the
Depth: 2.77 ms. Gross Tons: 491.70 exercise of its judicious discretion, in the sense that the rules should be liberally
construed in order to promote their object and to assist the parties, resolves to DENY
Net Tons: 491.70 Official Number 227236 petitioner’s Motion to have the Commissioner of Customs AND OTHER
ENUMERATED RESPONDENTS DECLARED IN DEFAULT [Emphasis ours].
Material: Steel Class License: CWL
Not even [private respondent’[s] November 23, 1990 ‘Ex-Parte Motion To Present
License No. 83-0012 [Evidence] Against Defaulting Defendants’ (page 489, records, Vol. 2) [can] be
deemed as a remedy of the fact that there never was issued an order of default
c) Barge — "LAWIN" ex "Sea-Lion 2" against respondents including [petitioner] VEC. Having thus established that there
[had] been no order of default against VEC as contemplated by Sec. 1, Rule 18, in rel
Length: 66.92 ms. Breadth: 11.28 ms. ation to Sec. 9, Rule 13, Revised Rules of Court, there could not have been any valid
default-judgment rendered against it. The issuance of an order of default is a
Depth: 4.52 ms. Gross Tons: 1,029.56 condition sine qua non in order [that] a judgment by default be clothed with validity.
Further, records show that this Court never had authorized [private respondent] to
Net Tons: 1,027/43 Official Number 708069 adduce evidence ex-parte against [petitioner] VEC. In sum, the February 18, 1991
decision by default is null and void as against [petitioner] VEC. With this considered
Material: Steel Class License: Coastwise conclusion of nullity of said default judgment in question, this Court feels there is no
more need for it to resolve Arguments I-A & I-B, as well as III-A & III-B, of the March
119
14, 1991 Motion for Reconsideration. The Court agrees, however, with said
discussions on the non-compliance [with] Sec. 2, Rule 7 (Title of Complaint) and Sec. 2. Direct him to assign personnel and/or representatives to conduct an
I, Rule 8 on the requirement of indicating in the complaint the ultimate facts on which inventory of part of the vessel’s cargo now in the possession of Mr. Cesar S. Urbino,
the party pleading relies for his claim of defense [—] which is absent in the January 9, Sr. at 197 Heroes del ‘96 street, Caloocan City, which inventory may be participated
Amended Petition (pp. 122-141, records, Vol. I) [—] for it merely mentioned in by all the parties interested in said cargo."cralaw virtua1aw library
[petitioner] VEC in par. 5 thereof and no more. It abides, likewise, with [Argument] III-
B that the Decision in suit award[ed] amounts never asked for in instant petition as To enjoin the CTA from enforcing said Order, private respondent filed before the
regards VEC (Sec. 5, Rule 18, RRC). . . Court of Appeals other Petition for Certiorari, 56 which was later also consolidated
with CA-GR SP No. 24669.
WHEREFORE, in view of the foregoing consideration, and as prayed for, the
February 18, 1991 Judgment by Default is hereby reconsidered and SET On July 19, 1993, the CA rendered the assailed Decision. Petitioner filed (1) a Motion
ASIDE."cralaw virtua1aw library for Clarification, praying for a declaration that the trial court Decision against it was
not valid; and (2) a partial Motion for Reconsideration, seeking to set aside the
On June 26, 1992, then Executive Judge Bernardo P. Pardo 48 of the Regional Trial assailed Decision insofar as the latter affected it.
Court of Manila issued an Order 49 annulling the Sheriff’s Report/Return dated April
1, 1991, and all proceedings taken by Camañgon. On July 5, 1995, the Court of Appeals issued the following Resolution: 57

The CA granted private respondent’s Motion to file a Supplemental Petition "Pending resolution of the motions for reconsideration, filed by Vlason Enterprises
impleading petitioner in CA-GR 24669. 50 In view or the rampant pilferage of the Corporation and Banco [Du] Brazil, and considering [private respondent’s] Motion for
cargo deposited at the PPA compound, private respondent obtained from the Entry of Judgment with respect to respondent PPA having already been granted by
appellate court a Writ of Preliminary Injunction dated March 6, 1992. The Writ reads: this Court as far back as June 17, 1994, pursuant to the resolution of the Supreme
51 Court dated December 8, 1993 in G.R. No. 111270-72 (Philippine Ports Authority v.
Court of Appeals, Et. Al.) informing the parties in said case that the judgment sought
"ACCORDINGLY, in view of the foregoing disquisitions, the urgent verified motion for to be reviewed has now become final and executory, the lower court may now take
preliminary injunction dated February 11, 1992 is hereby GRANTED. Therefore, let a appropriate action on the urgent ex-parte motion for issuance of a writ of execution,
writ of preliminary injunction forthwith issue against the respondents and all persons filed by [private respondent] on July 15, 1994." chanrobles virtual lawlibrary
or agents acting in their behalf, enjoining them not to interfere in the transferring of
the aforementioned vessel and its cargoes, or in removing said cargoes . . . from [the] On August 28, 1995, the Regional Trial Court of Manila, Branch 26, issued a Writ of
PPA compound." chanroblesvirtualawlibrary Possession which resulted in private respondent taking possession of petitioner’s
barge Lawin (formerly Sea Lion 2) on September 1, 1995. 58
On September 15, 1992, Sheriff Amado Sevilla seized petitioner’s motor tugboat Den
Den by virtue of the Order 52 dated April 3, 1992, issued by the RTC of Manila, Hence, this Petition. 59
Branch 26. 53
Ruling of the Respondent Court
On August 6, 1992, the CA consolidated CA-GR SP No. 28387 54 with CA-GR SP
No. 24669. 55 The Court of Tax Appeals issued on October 5, 1992, a Resolution in As already adverted to, Respondent Court granted the Petition for Certiorari of the
CTA Case Nos. 4492, 4494 and 4500, which disposed as private respondent, which was consolidated with the latter’s two other Petitions. The
follows:jgc:chanrobles.com.ph court a quo issued the following rulings:chanrob1es virtual 1aw library

"Confirming the order in open court on October 5, 1992, the Court hereby 1. The trial court had jurisdiction over the salvor’s claim or admiralty case
RESOLVES to:chanrob1es virtual 1aw library pursuant to Batas Pambansa Bilang 129.

1. Order Respondent Commissioner of Customs to assign or detail [a] sufficient 2. Since the Decision of the trial court became final and executory, never
number of customs police and guards aboard, and around the vicinity of, the vessel having been disputed or appealed to a higher court, the trial judge committed grave
‘M/V star Ace’ now in anchor at Mariveles, Bataan or elsewhere, in order to ensure its abuse of discretion in recalling the Writ of Execution and in quashing the levy and the
safety during the pendency of these cases; execution of the sale of M/V Star Ace and its cargo.
120
3. Such acts constituted an alteration or a modification of a final and executory "Finally, we should never lose sight of the fact that the instant petition for certiorari is
judgment and could never be justified under law and jurisprudence. proper only to correct errors of jurisdiction committed by the lower court, or grave
4. Civil Case 59-51451 dealt only with the salvor’s claim without passing upon abuse of discretion which is tantamount to lack of jurisdiction. Where the error is not
the legality or the validity of the undated Decision of the Commissioner of Customs in one of jurisdiction but an error of law or of fact which is a mistake of judgment, appeal
the seizure proceeding. is the remedy (Salas v. Castro, 216 SCRA 198). Here, respondents failed to appeal.
Hence, the decision dated February 18, 1991 of the lower court has long become
5. Petitioner and his co-respondents could not invoke the jurisdiction of a court final, executory and unappealable. We do not and cannot therefore review the instant
to secure affirmative relief against their opponent and, after failing to obtain such case as if it were on appeal and direct actions on these motions. While the proper
relief, question the court’s jurisdiction. remedy is appeal, the action for certiorari will not be entertained. Indeed, certiorari is
not a substitute for lapsed appeal.
6. Petitioner had no recourse through any of the following judicially accepted
means to question the final judgment:chanrob1es virtual 1aw library "At any rate, the decision dated July 19, 1993 of this Court on the main petition for
certiorari is not yet final (except with respect to respondent PPA), the Bureau of
a. a petition for relief from judgment under Rule 38, Customs having filed a petition for certiorari and prohibition, under Rule 65 of the
Rules of Court, with the Supreme Court, necessitating prudence on Our part to await
b. a direct action to annul and enjoin the enforcement of the questioned its final verdict." 60
judgment, and
Assignment of Errors
c. a collateral attack against the questioned judgment which appears void on its
face. Before us, petitioner submits the following assignment of errors on the part of
Respondent Court: 61
6. A court which has already acquired jurisdiction over a case cannot be ousted
by a coequal court; the res in this case — the vessel and its cargo — were placed "I
under the control of the trial court ahead of the CTA. The Court of Appeals committed serious error in ruling that the entire decision of the
trial court in Civil Case No. 89-51451 dated 18 February 1991 became final and
7. The admiralty Decision had attained finality while the issue of the validity of executory because it ‘was never disputed or appealed’.
the seizure proceedings was still under determination.chanrobles virtual lawlibrary
"A. VEC filed a motion for reconsideration of the said decision two days before
In the assailed Resolution, Respondent Court clarified that there was no need to deadline, which motion was granted by the trial court.
serve summons anew on petitioner, since it had been served summons when the
Second Amended Petition (the third) was filed; and that petitioner’s Motion for "B. The trial court correctly granted VEC’s motion for reconsideration and set
Reconsideration was defective and void, because it contained no notice of hearing aside the 18 February 1991 decision . . . against VEC, for:chanroblesvirtuallawlibrary
addressed to the counsel of private respondent in violation of Rule 16, Section 4 of
the Rules of Court. 1. The trial court never acquired jurisdiction over the person of VEC as to
enable it to render any judgment against it:jgc:chanrobles.com.ph
"To this second motion, [private respondent] contends that there was no need to
serve summons anew to VEC when the second amended petition was filed "(i) VEC was not impleaded as a respondent in Civil Case No. 89-51451;
impleading VEC, pursuant to the ruling of the Supreme Court in Asiatic Travel Corp.
v. CA (164 SCRA 623); and that finally, the decision of the court a quo o[n] February ‘(ii) Summons was not served on VEC;
18, 1991 became final and executory, notwithstanding the timely filing of the motion
for reconsideration of VEC for the reason that the said motion for reconsideration was "2. The trial court improperly rendered judgment by default against VEC;
defective or void, there being no notice of hearing addressed to the counsel of
petitioner. In fact, no motion such as this instant one can be acted upon by the Court ‘(i) The trial court never issued an order of default against VEC;
without proof of service of the notice thereof, pursuant to Rule 16, Section 4 of the
Rules of Court.
121
(ii) The trial court never authorized ex-parte presentation of evidence against defendant had a different period within which to appeal, depending on the date of
VEC. receipt of the Decision.

"3. The Judgment by default was fatally defective because: Omega, Singkong Trading Co. and M/V Star Ace chose to enter into a compromise
agreement with private Respondent. As to these defendants, the trial court Decision
"(i) No filing fee was paid by [private respondent] for the staggering amount of had become final, and a writ of execution could be issued against them. Doctrinally, a
damages awarded by the trial court. compromise agreement is immediately final and executory.

"(ii) The 18 February 1991 decision violates the Revised Rules of Court, which Petitioner, however, is not in the same situation. Said Decision cannot be said to have
prescribe that a judgment by default cannot decree a relief not prayed for. attained finality as to the petitioner, which was not a party to the compromise.
Moreover, petitioner filed a timely Motion for Reconsideration with the trial court,
"II thirteen days after it received the Decision or two days before the lapse of the
reglementary period to appeal. A motion for reconsideration tolls the running of the
period to appeal. 66 Thus, as to petitioner, the trial court decision had not attained
Since the 18 February 1991 Decision in Civil Case No. 89-51451 is void as against finality.
VEC, the recall of the writ of execution was valid, as far as VEC is concerned."cralaw
virtua1aw library Exception to the Rule on Notice of Hearing

The Court believes that the issues can be simplified and restated as Respondent Court and private respondent argue that, although timely filed,
follows:chanrobles virtual lawlibrary petitioner’s Motion for Reconsideration was a mere scrap of paper, because (1) it did
not contain a notice of hearing addressed to the current counsel of private
1. Has the February 18, 1991 RTC Decision become final and executory in respondent, and (2) the notice of hearing addressed to and served on private
regard to petitioner? respondent’s deceased counsel was not sufficient. Admittedly, this Motion contained
a notice of hearing sent to; Atty. Jesus C. Conception who, according to private
2. Did the trial court acquire jurisdiction over the petitioner? respondent, had already died and had since been substituted by its new counsel,
Atty. Domingo Desierto. Therefore, the appellate court ruled that the said Motion did
3. Was the RTC default judgment binding on petitioner? not toll the reglementary period to appeal and that the trial court Decision became
final.
4. Was the grant of damages against petitioner procedurally proper?
This Court disagrees. Rule 15 of the Rules of Court states:
5. Was private respondent entitled to a writ of execution?
"SECTION 4. Notice. — Notice of a motion shall be served by the applicant to all
This Court’s Ruling parties concerned, at least three (3) days before the hearing thereof, together with a
copy of the motion, and of any affidavits and other papers accompanying it. The
The petition is meritorious. court, however, for good cause may hear a motion on shorter notice, specially on
matters which the court may dispose of on its own motion.
First Issue: Finality of the RTC Decision
SECTION 5. Contents of notice. — The notice shall be directed to the parties
A judgment becomes "final and executory" by operation of law. Its finality becomes a concerned, and shall state the time and place for the hearing of the motion." 67
fact when the reglementary period to appeal lapses, and no appeal is perfected within
such period. 62 The admiralty case filed by private respondent with the trial court Ideally, the foregoing Rule requires the petitioner to address and to serve on the
involved multiple defendants. This being the case, it necessarily follows that the counsel of private respondent the notice of hearing of the Motion for Reconsideration.
period of appeal of the February 18, 1991 RTC Decision depended on the date a The case at bar, however, is far from ideal. First, petitioner was not validly summoned
copy of the judgment was received by each of the defendants. Elsewise stated, each and it did not participate in the trial of the case in the lower court; thus, it was
understandable that petitioner would not be familiar with the parties and their

122
counsels. Second, Atty. Desierto entered his appearance only as collaborating notice, the prompt resetting of the hearing with due notice to all the parties is held to
counsel, 68 who is normally not entitled to notices even from this Court. Third, private have cured the defect. 76
respondent made no manifestation on record that Atty. Conception was already dead.
Besides, it was Atty. Conception who signed the Amended Petition, wherein petitioner Verily, the notice requirement is not a ritual to be followed blindly. Procedural due
was first impleaded as respondent and served a copy thereof. Naturally, petitioner’s process is not based solely on a mechanistic and literal application that renders any
attention was focused on this pleading, and it was within its rights to assume that the deviation inexorably fatal. Instead, procedural rules are liberally construed to promote
signatory to such pleading was the counsel for Private their objective and to assist in obtaining a just, speedy and inexpensive determination
Respondent.chanroblesvirtuallawlibrary of any action and proceeding. 77 For the foregoing reasons, we believe that
Respondent Court committed reversible error in holding that the Motion for
The Court has consistently held that a motion which does not meet the requirements Reconsideration was a mere scrap of paper.chanrobles lawlibrary : rednad
of Sections 4 and 5 of Rule 15 of the Rules of Court is considered a worthless piece
of paper, which the clerk of court has no right to receive and the trial court has no Second Issue: Jurisdiction Over Petitioner
authority to act upon. Service of a copy of a motion containing a notice of the time
and the place of hearing of that motion is a mandatory requirement, and the failure of Service of Summons on a Corporations
movants to comply with these requirements renders their motions fatally defective. 69
However, there are exceptions to the strict application of this rule. These exceptions The sheriff’s return shows that Angliongto who was president of petitioner
are as follows: 70 corporation, through his secretary Betty Bebero, was served summons on January
18, 1990. 78 Petitioner claims that this service was defective for two reasons: (1)
". . . Liberal construction of this rule has been allowed by this Court in cases (1) where Bebero was an employee of Vlasons Shipping, Inc., which was an entity separate and
a rigid application will result in a manifest failure or miscarriage of justice; 71 distinct from Petitioner Vlason Enterprises Corporation (VEC); and (2) the return
especially if a party successfully shows that the alleged defect in the questioned final pertained to the service of summons for the amended Petition, not for the "Second
and executory judgment is not apparent on its face or from the recitals contained Amended Petition with Supplemental Petition," the latter pleading having superseded
therein; (2) Where the interest of substantial justice will be served; 72 (3) where the the former.
resolution of the motion is addressed solely to the sound and judicious discretion of
the court; 73 and (4) where the injustice to the adverse party is not commensurate [to] A corporation may be served summons through its agents or officers who under the
the degree of his thoughtlessness in not complying with the procedure prescribed." 74 Rules are designated to accept service of process. A summons addressed to a
corporation and served on the secretary of its president binds that corporation. 79
The present case falls under the first exception. Petitioner was not informed of any This is based on the rationale that service must be made on a representative so
cause of action or claim against it. All of a sudden, the vessels which petitioner used integrated with the corporation sued, that it is safe to assume that said representative
in its salvaging business were levied upon and sold in execution to satisfy a supposed had sufficient responsibility and discretion to realize the importance of the legal
judgment against it. To allow this to happen simply because of a lapse in fulfilling the papers served and to relay the same to the president or other responsible officer of
notice requirement — which, as already said, was satisfactorily explained — would be the corporation being sued. 80 The secretary of the president satisfies this criterion.
a manifest failure or miscarriage of justice. This rule requires, however, that the secretary should be an employee of the
corporation sought to be summoned. Only in this manner can there be an assurance
A notice of hearing is conceptualized as an integral component of procedural due that the secretary will "bring home to the corporation [the] notice of the filing of the
process intended to afford the adverse parties a chance to be heard before a motion action" against it.
is resolved by the court. Through such notice, the adverse party is permitted time to
study and answer the arguments in the motion. In the present case, Bebero was the secretary of Angliongto, who was president of
both VSI and petitioner, but she was an employee of VSI, not of petitioner. The
Circumstances in the case at bar show that private respondent was not denied piercing of the corporate veil cannot be resorted to when serving summons. 81
procedural due process, and that the very purpose of a notice of hearing had been Doctrinally, a corporation is a legal entity distinct and separate from the members and
served. On the day of the hearing, Atty. Desierto did not object to the said Motion for stockholders who compose it. However, when the corporate fiction is used as a
lack of notice to him; in fact, he was furnished in open court with a copy of the motion means of perpetrating a fraud, evading an existing obligation, circumventing a statute,
and was granted by the trial court thirty days to file his opposition to it. These achieving or perfecting a monopoly or, in generally perpetrating a crime, the veil will
circumstances clearly justify a departure from the literal application of the notice of be lifted to expose the individuals composing it. None of the foregoing exceptions has
hearing rule. 75 In other cases, after the trial court learns that a motion lacks such been shown to exist in the present case. Quite the contrary, the piercing of the
123
corporate veil in this case will result in manifest injustice. This we cannot allow. construed liberally so as to render substantial justice to the parties and to determine
Hence, the corporate fiction remains.chanrobles virtual lawlibrary speedily and inexpensively the actual merits of the controversy with the least regard
to technicalities. 86
Effect of Amendment of Pleadings on Jurisdiction
The inclusion of the names of all the parties in the title of a complaint is a formal
Petitioner claims that the trial court did not acquire jurisdiction over it, because the requirement under Section 3, Rule 7. However, the rules of pleadings require courts
former had not been served summons anew for the Second Amended Petition or for to pierce the form and go into the substance, and not to be misled by a false or wrong
the Second Amended Petition with Supplemental Petition. In the records, it appears name given to a pleading. The averments in the complaint, not the title, are
that only Atty. Tamondong, counsel for Singkong Trading, was furnished a copy of the controlling. Although the general rule requires the inclusion of the names of all the
Second Amended Petition. 82 The corresponding sheriff’s return indicates that only parties in the title of a complaint, the non-inclusion of one or some of them is not fatal
Omega, M/V Star Ace and Capt. Rada were served summons and copies of said to the cause of action of a plaintiff, provided there is a statement in the body of the
Petition. petition indicating that a defendant was made a party to such action.
We disagree. Although it is well-settled that an amended pleading supersedes the Private respondent claims that petitioner has always been included in the caption of
original one, which is thus deemed withdrawn and no longer considered part of the all the Petitions it filed, which included Antonio Sy, field manager of petitioner. We
record, it does not follow ipso facto that the service of a new summons for amended checked and noted that in the caption and the body of the Amended Petition and
petitions or complaints is required. Where the defendants have already appeared Second Amended Petition with Supplemental Petition, Antonio Sy was alleged to be
before the trial court by virtue of a summons on the original complaint, the amended representing Med Line Philippines, not petitioner. Because it was private respondent
complaint may be served upon them without need of another summons, even if new who was responsible for the errors, the Court cannot excuse it from compliance, for
causes of action are alleged. 84 After it is acquired, a court’s jurisdiction continues such action will prejudice petitioner, who had no hand in the preparation of these
until the case is finally terminated. Conversely, when defendants have not yet pleadings. In any event, we reiterate that, as a general rule, mere failure to include
appeared in court and no summons has been validly served, new summons for the the name of a party in the title of a complaint is not fatal by itself.chanrobles
amended complaint must be served on them. 85 It is not the change of cause of virtualawlibrary chanrobles.com:chanrobles.com.ph
action that gives rise to the need to serve another summons for the amended
complaint, but rather the acquisition of jurisdiction over the persons of the defendants. Stating a Cause of Action in the Complaint
If the trial court has not yet acquired jurisdiction over them, a new service of summons
for the amended complaint is required. The general rule is allegata et probata — a judgment must conform to the pleadings
and the theory of the action under which the case was tried. 87 But a court may also
In this case, the trial court obviously labored under the erroneous impression that rule and render judgment on the basis of the evidence before it, even though the
petitioner had already been placed under its jurisdiction since it had been served relevant pleading has not been previously amended, so long as no surprise or
summons through the secretary of its president. Thus, it dispensed with the service prejudice to the adverse party is thereby caused. 88
on petitioner of new summons for the subsequent amendments of the Petition. We
have already ruled, however, that the first service of summons on petitioner was In the case at bar, the liability of petitioner was based not on any allegation in the four
invalid. Therefore, the trial court never acquired jurisdiction, and the said court should Petitions filed with the trial court, but on the evidence presented ex parte by the
have required a new service of summons for the amended Petitions.chanrobles private Respondent. Since the trial court had not validly acquired jurisdiction over the
virtual lawlibrary person of petitioner, there was no way for the latter to have validly and knowingly
waived its objection to the private respondent’s presentation of evidence against it.
Impleading a Party in the Title of the Complaint
Third Issue: Judgment By Default
Petitioner further claims that the trial court failed to acquire jurisdiction to render
judgment against it because (1) the title of the three Petitions filed by private The trial court Decision holding petitioner liable for damages is basically a default
respondent never included petitioner as a party-defendant, in violation of Rule 7; and judgment. In Section 18, judgment by default is allowed under the following condition:
(2) the Petitions failed to state any allegation of ultimate facts constituting a cause of 89
action against petitioner.
"SECTION 1. Judgment by default. — If the defendant fails to answer within the
We disagree with petitioner on the first ground. The judicial attitude has always been time specified in these rules, the court shall, upon motion of the plaintiff and proof of
favorable and liberal in allowing amendments to pleadings. Pleadings shall be such failure, declare the defendant in default. Thereupon the court shall proceed to
124
receive the plaintiff’s evidence and render judgment granting him such relief as the Furthermore, it is a legal impossibility to declare a party-defendant to be in default
complaint and the facts proven may warrant . . ."cralaw virtua1aw library before it was validly served summons.

Thus, it becomes crucial to determine whether petitioner was ever declared in default, Trial Court Did Not Allow
and whether the reception of evidence ex parte against it was procedurally valid.
Presentation of Evidence
Petitioner Was Never Declared In Default
Ex Parte Against Petitioner
Petitioner insists that the trial court never declared it in default.chanrobles law library
The Order of December 10, 1990, which allowed the presentation of evidence ex
We agree. The trial court denied the January 29, 1990 Motion of private respondent parte against the defaulting defendants, could not have included petitioner, because
to declare all the defendants in default, but it never acted on the latter’s subsequent the trial court granted private respondent’s motion praying for the declaration of only
Motion to declare petitioner likewise. During the pretrial on January 23, 1993, the the foreign defendants in default. So too, private respondent’s ex parte Motion to
RTC declared in default only "Atty. Eddie Tamondong, as well as the other present evidence referred to the foreign defendants only. 91
defendants Hon. Salvador Mison, M/V Star Ace, Omega Sea Transport Co., Inc. of
Panama and Singkong Trading Co., [but] despite . . . due notice to them, [they] failed Furthermore, the reception of evidence ex parte against a non-defaulting party is
to appear." 90 Even private respondent cannot pinpoint which trial court order held procedurally indefensible. Without a declaration that petitioner is in default as required
petitioner in default. in Section 1, Rule 18, the trial court had no authority to order the presentation of
evidence ex parte against petitioner to render judgment against it by default. The trial
More important, the trial court, in its Resolution dated May 22, 1991, admitted that it judge must have thought that since it failed to appear despite summons and was in
never declared petitioner in default, viz.:jgc:chanrobles.com.ph default, it effectively waived any objection to the presentation of evidence against it.
This rule, however, would have applied only if petitioner had submitted itself to the
". . . It is in this light that this [c]ourt made an in-depth reflection and assessment of jurisdiction of the trial court. The latter correctly declare, in the Resolution just cited,
the premises or reasons raised by [petitioner] VEC[;] and after a re-examination of the that the default judgment against the former had been improvidently rendered.
facts and evidence spread on the records, it has come to the considered conclusion
that the questioned default-judgment has been improvidently issued. [Based on] the Fourth Issue: Awards Not Paid and Prayed For
records, the claim of [private respondent] that [its] January 29, 1990 Ex-Parte Motion
to Declare Defendants In Default (pp. 174-177, records, Vol. 1) including VEC had Additional Filing Fees as
been granted is belied by the February 23, 1990 Order (pp. 214-215, records, ibid) Lien on the Judgment
par. 2, thereof, . .
Had the trial court validly acquired jurisdiction over petitioner, nonpayment of docket
Not even petitioner’s November 23, 1990 "Ex-Parte Motion To Present Evidence fees would not have prevented it from holding petitioner liable for damages. The
Against Defaulting Defendants" (page 489, records, Vol. 2) [can] be deemed as a Court, in Manchester Development Corporation v. Court of Appeals, 92 ruled that a
remedy [for] the fact that there never was issued an order of default against court acquires jurisdiction over any case only upon the payment of the prescribed
respondents including [petitioner] VEC. Having thus established that there ha[d] been docket fee, not upon the amendment of the complaint or the payment of the docket
no order of default against VEC as contemplated by Sec. 1, Rule 18, in relation to fees based on the amount sought in the amended pleading. This ruling, however, was
Sec. 9, Rule 13, Revised Rules of Court, there could not have been any valid default modified in Sun Insurance Office, Ltd. v. Asuncion, 93 which
judgment rendered against it. The issuance of an order [o]f default is a condition sine added:jgc:chanrobles.com.ph
qua non in order [that] a judgment by default be clothed with validity. Further, records
show that this [c]ourt never had authorized [private respondent] to adduce evidence "3. Where the trial court acquires jurisdiction over a claim [through] the filing of
ex-parte against [Petitioner] VEC. In sum, the February 18, 1991 decision by default the appropriate pleading and payment of the prescribed filing fee but, subsequently,
is null and void as against [Petitioner] VEC. . ." chanrobles.com.ph : virtual law library the judgment awards a claim not specified in the pleading, or if specified the same
has been left for determination by the court, the additional filing fee therefor shall
The aforementioned default judgment refers to the February 18, 1989 Decision, not to constitute a lien on the judgment. It shall be the responsibility of the Clerk of Court or
the Order finding petitioner in default as contended by private Respondent.

125
his duly authorized deputy to enforce said lien and assess and collect the additional adverse party failed to object to evidence relating to an issue not raised in the
fee."cralaw virtua1aw library pleadings.

Filing fees for damages and awards that cannot be estimated constitute liens on the The latter rule, however, is not applicable to the instant case. Admittedly, private
awards finally granted by the trial court. Their nonpayment alone is not a ground for respondent presented evidence that would have been sufficient to hold petitioner
the invalidation of the award. liable for damages. However, it did not include in its amended Petitions any prayer for
damages against petitioner. Therefore, the trial court could not have validly held the
Judgment by Default Cannot latter liable for damages even if it were in default.

Grant Relief Not Prayed For Fifth Issue: Execution of Final Judgment

A declaration or order of default is issued as a punishment for unnecessary delay in Section 1 of Rule 39 provides that execution shall issue only upon a judgment that
joining issues. In such event, defendants lose their standing in court, they cannot finally disposes of the action or proceeding. Such execution shall issue as a matter of
expect the trial court to act upon their pleadings, and they are not entitled to notice of right upon the expiration of the period to appeal it, if no appeal has been duly
the proceeding until the final termination of the case. 94 Thus, the trial court proceeds perfected. 98
with the reception of the plaintiff’s evidence upon which a default judgment is
rendered. In the present case, however, we have already shown that the trial court’s Decision
has not become final and executory against petitioner. In fact, the judgment does not
Section 1 of Rule 18 provides that after the defendant has been declared in default, even bind it. Obviously, Respondent Court committed serious reversible errors when
"the court shall proceed to receive the plaintiff’s evidence and render judgment it allowed the execution of the said judgment against petitioner.
granting him such relief as the complaint and the facts proven may warrant." The
reliefs that may be granted, however, are restricted by Section 5, which provides that WHEREFORE, the appeal is hereby GRANTED, and the assailed Decision and
a judgment entered against a party in default shall not exceed the amount or be Resolution of the Court of Appeals are REVERSED and SET ASIDE insofar as they
different in kind from that prayed for. affect petitioner. The levy and the sale on execution of petitioner’s properties are
declared NULL and VOID. Said properties are ordered RESTORED to petitioner. No
In other words, under Section 1, a declaration of default is not an admission of the pronouncement as to costs. SO ORDERED.
truth or the validity of the plaintiff’s claims. 95 The claimant must still prove his claim
and present evidence. In this sense the law gives defaulting parties some measure of G.R. No. 103412. February 3, 2000
protection because plaintiffs, despite the default of defendants, are still required to
substantiate their allegations in the complaint. The judgment of default against REPUBLIC OF THE PHILIPPINES, Represented by the DIRECTOR OF LANDS,
defendants who have not appeared or filed their answers does not imply a waiver of Petitioner, v. COURT OF APPEALS, A. SISON & SONS, INC., BASILIO
all their rights, except their right to be heard and to present evidence in their favor. FRANCISCO, SPS. JUAN BASA AND FLORDELIZA R. MIRAVITE, SPS. JUAN
Their failure to answer does not imply their admission of the facts and the causes of BASA AND ELISEA C. BASA, SPS. AMORSOLO L. BALOY and BARBARA
action of the plaintiffs, because the latter are required to adduce evidence to support BALOY, SPS. ELISEO D. JOSE and ERLINDA B. JOSE, SPS. GEORGE C. BESA
their allegations.chanroblesvirtuallawlibrary:red and ENCARNACION FAUSTINO, SPS. MARIANO BANES and MINDA BALOY,
SPS. JOSE ANGELES and JOSEFINA M. ANGELES, SPS. LORENZO D.
Moreover, the trial court is not allowed by the Rules to receive evidence that tends to RAMIREZ and SEVILLA P. RAMIREZ, SPS. CONRADO Q. VASQUEZ and PACITA
show a relief not sought or specified in the pleadings. 96 The plaintiff cannot be V. VASQUEZ, SOLEDAD BAUTISTA, VIRGINIA V. DE CASTRO, FLORDELIZA J.
granted an award greater than or different in kind from that specified in the complaint. TOLEDO, SPS. IMOGENE T. PROXEDES, JOSE P. PROXEDES and NOEL J.
97 TOLEDO, SPS. EUFRONIO M. HERNANDO and ADORACION HERNANDO, SPS.
TOMAS B. DE VERA, JR., and CONCEPCION F. DE VERA, MELODINA DE
This case should be distinguished, however, from that of defendants, who filed an CASTRO, SPS. GUILLERMO SABADISTO and ERLINDA SABADISTO, SPS.
answer but were absent during trial. In that case, they can be held liable for an RAMON R. VICENTE and FORTUNATA S. CRUZ, SPS. BIENVENIDO CRUZ and
amount greater than or different from that originally prayed for, provided that the LIBERTAD S. CRUZ, SPS. ANTONIO G. SAN AGUSTIN and VIOLETA Q. SAN
award is warranted by the proven facts. This rule is premised on the theory that the AGUSTIN, SPS. GODOFREDO O. PLATA, JR. and LETICIA V. PLATA, and the
REGISTRAR OF DEEDS of CAVITE CITY, Respondents.
126
 decided by the then Court of First Instance (CFI) of Cavite in May 17, 1978 and June
QUISUMBING, J.: 4, 1985, respectively, declared the questioned land as not foreshore land. These
judgments were affirmed in toto by the Court of Appeals in CA-G.R. Nos. 65033-R
For review is the Decision of the Court of Appeals dated December 27, 1991 in CA- and 65034-R, respectively. We upheld the appellate courts ruling in our resolution of
G.R. No. SP 20113, which dismissed, on the ground of res judicata, petitioners action October 12, 1983 in G.R. Nos. 62676-77. In Civil Case No. 2494, the same CFI held
for recovery of foreshore areas, cancellation of titles, and injunction. that the disputed property was not foreshore land. This was affirmed on appeal in CA-
G.R. CV No. 70426. An order of dismissal was issued in Civil Case No. N-4614,
The facts, which we find supported by the records, are as follows: which was affirmed in CA-G.R. SP No. 08803. The appellate court likewise pointed to
our ruling in G.R. No. 74943 dismissing petitioners special civil action for certiorari.
On January 18, 1985, petitioner filed with the Regional Trial Court (RTC) of Cavite Finding that res judicata had set in, the appellate court held that the issue of whether
City a complaint docketed as Civil Case No. N-4614 to nullify Transfer Certificate of or not the questioned land is foreshore area is already a settled one and conclusive
Title (TCT) No. (555) RT-2957 and its derivative titles, and to revert the lands covered upon the parties.3cräläwvirtualibräry
by these titles to the public domain. The complaint alleged that said TCT was a falsely
reconstituted title, issued by an unauthorized recorder at the Office of the Register of The Court of Appeals disposed:
Deeds. It further alleged that the lot covered by said title was foreshore land and
cannot be privately appropriated. "Hence, the issue of whether or not the questioned land is a portion of the foreshore
area can no longer be inquired into, the issue being a settled one and is conclusive
On January 8, 1986, private respondent A. Sison & Sons, Inc., moved to dismiss the between the parties.
complaint, which the RTC granted on the ground of lack of jurisdiction.
WHEREFORE, in view of the foregoing, the instant petition is hereby ordered
On March 18, 1986, petitioner moved for reconsideration. The motion was denied. DISMISSED. No pronouncement as to costs.
According to the trial court, since petitioners objective was reversion of the lots to the
public domain, a reopening of the land registration case would be necessary, and it SO ORDERED."
had no jurisdiction to do so.1cräläwvirtualibräry
Petitioner now, before this court, contends that:jo
On April 22, 1986, petitioner filed with the appellate court a "Motion for Extension of
Time to File Petition for Review" of the orders of the trial court. The matter was "[T]he Court of Appeals dismissed the petition on the ground that it was barred by res
docketed as CA-G.R. SP No. 08803. Without waiting for the results of CA-G.R. SP judicata, although the evidence did not show that the prior judgments were judgments
No. 08803, Petitioner, on June 27, 1986, filed a special civil action for certiorari with on the merits and final, and that there was identity of parties, subject matter, and
this Court to nullify the orders in Civil Case No. N-4614. This petition was docketed as causes of action between said prior judgments and CA-G.R. No. 20113 as required
G.R. No. 74943. On October 9, 1986, the appellate court resolved to deem CA-G.R. by the Rules of Court and the doctrine pronounced in Suarez v. Court of Appeals, 193
SP No. 08803 as abandoned. On June 19, 1989, we dismissed the petition in G.R. SCRA 183, and Nabus v. Court of Appeals, 193 SCRA 732."5cräläwvirtualibräry
No. 74943 for failure to show grave abuse of discretion on the trial courts
part.2cräläwvirtualibräry Did the Court of Appeals err in finding petitioners claim barred by res judicata?

On February 27, 1990, petitioner filed another petition for review of the lower courts The doctrine of res judicata provides that a final judgment on the merits rendered by a
orders in Civil Case No. N-4614 docketed as CA-G.R. No. 20113 with the Court of court of competent jurisdiction, is conclusive as to the rights of the parties and their
Appeals. It reiterated the same matters covered in Civil Case No. N-4614 and sought privies and constitutes an absolute bar to subsequent actions involving the same
essentially the same reliefs. On October 4, 1990, A. Sison & Sons, Inc., filed its claim, demand, or cause of action.6cräläwvirtualibräry
answer contending that CA-G.R. No. 20113 was barred by res judicata and forum-
shopping. For res judicata to apply, the following elements must be satisfied:

On December 27, 1991, the Court of Appeals dismissed the petition due to res 1. There must be a final judgment;
judicata. The appellate court found that the main question before it was whether or
not the lands covered by the titles in question were foreshore lands. It ruled that 2. It must have been rendered by a court having jurisdiction over the subject matter
several courts had already passed upon it. Civil Cases Nos. N-1924 and N-2052 and the parties;
127
 Petitioner likewise claims that Civil Case No. N-2498 was for the cancellation of OCT
3. It must be a judgment on the merits; and No. (P-19) RF-1, covering Lot 1, LN-4828-D, a memorial park lot while Civil Case No.
N-4614 sought to cancel TCT No. (555) RT 2957, which is a subdivision lot, so there
4. There must be between the first and second actions an identity of parties, identity is no identity of subject matter between Civil Case No. N-2498 and the present action.
of subject matter, and identity of causes of action.7cräläwvirtualibräry
Note, however, that Civil Cases No. N-4614 and CA-G.R. No. 20113 were initiated for
There is no dispute as to the presence of the first two elements of res judicata. the benefit of so-called "small fishermen" whom the appellate court found to be
squatters. The records show that some of these alleged "small fishermen" were also
Anent the third element, petitioner argues that the order of dismissal in Civil Case No. parties-defendants in Civil Case Nos. N-1924 and N-2052. For purposes of res
N-4614 is not a decision on the merits and that it was error for the appellate court to judicata, only substantial identity is required and not absolute identity.12 Parties in
rule otherwise. both cases need not be physically identical provided that there is privity between the
parties or their successors-in-interest subsequent to the commencement of the
A judgment is on the merits when it determines the rights and liabilities of the parties previous cause of action, litigating for the same thing, title, or capacity.13 The Court of
based on the ultimate facts as disclosed by the pleadings or issues presented for Appeals correctly found in our view, that since all the aforecited cases were ultimately
trial.8 It is not necessary that there should have been a trial, actual hearing, or in the interest of these "small fishermen," there is privity of interest in all the cases.
arguments on the facts of the case.9 For as long as the parties had full legal
opportunity to be heard on their respective claims and contentions, the judgment is on On identity of subject matter, the issue of whether or not the disputed property
the merits.10cräläwvirtualibräry forming part of Cavite Seabreeze Subdivision is a portion of the foreshore area and
hence incapable of private appropriation has been settled, in the aforecited cases.
In the present case, the order of dismissal in Civil Case No. N-4614 was issued only Where material facts or questions, which were in issue in a former action, were
after an actual hearing and after the lower court had considered the evidence of both judicially determined such facts are res judicata.14'
parties. Further, petitioner was given an opportunity to be heard on its motion for
reconsideration. Without doubt, the order of dismissal in Civil Case No. N-4614 is a As to identity of causes of action, the allegations in the complaint and the relief
judgment on the merits. sought,15 determine the nature of an action as well as which court will have
jurisdiction. Civil Case No. N-4614 and Civil Case No. 2498 were both instituted for
In G.R. No. 74943, we denied certiorari through a minute resolution. Minute the benefit of alleged "small fishermen." Civil Case No. 4614 was for the annulment of
resolutions of this Court denying due course to petitions or dismissing cases an allegedly invalid reconstituted title. Civil Case No. 2498 sought the cancellation of
summarily, for failure to comply with the formal or substantial requirements laid down a free patent and title for having been fraudulently acquired. The primary reliefs
therefor by law, are dispositions on the merits.11cräläwvirtualibräry sought in both cases were similar, the reversion of land to the State. If the disputed
properties were declared "foreshore lands," they could be used by the alleged "small
Respecting the fourth element, petitioner points out that in Civil Case No. N-4614 and fishermen." There is, thus, substantial identity in the causes of action.
CA-G.R. No. 20113, the litigants are the Republic and A. Sison & Sons, Inc. The
subject matters are Lots No. 1081-B-1 and 1080-B-2 of Subdivision Plan SWO-17519 All told, petition is barred by res judicata.
covered by TCT No. (555) RT-2957, situated in Caridad, Cavite City. The cause of
action is nullification of the certificate of title for having been invalidly reconstituted. ACCORDINGLY , the petition is DENIED, and the decision of the Court of Appeals
dated December 27, 1991 is AFFIRMED. No pronouncement as to costs. SO
In Civil Case No. N-1924, the parties were A. Sison & Sons, Inc, and the spouses ORDERED.
Rolando and Linda Francisco. The subject matter was a subdivision lot, while in Civil
Case No. N-2052, the subject matter was a memorial park. The cause of action in the [G.R. No. 125683. March 2, 1999]
two cases was recovery of possession of subdivision and memorial park lots.
EDEN BALLATAN and SPS. BETTY MARTINEZ and CHONG CHY LING,
Petitioner insist that a comparison between Civil Case No. N-4614, lots CA-G.R. No. Petitioners, v. COURT OF APPEALS, GONZALO GO, WINSTON GO, LI CHING
20113 and Civil Case No. N-1924 & Civil Case No. N-2052 shows that the fourth YAO, ARANETA INSTITUTE OF AGRICULTURE and JOSE N. QUEDDING,
element, commonality of parties, subject matter and cause of action, is absent. Respondents.

PUNO, J.:
128
This is a petition for review on certiorari of the decision of the Court of Appeals dated On the basis of this survey, on June 10, 1985, petitioner Ballatan made a written
March 25, 1996 in CA-G.R. CV No. 32472 entitled "Eden Ballatan, et. al., plaintiffs- demand on respondents Go to remove and dismantle their improvements on Lot No.
appellees v. Gonzalo Go and Winston Go, appellants and third-party plaintiffs- 24. Respondents Go refused. The parties, including Li Ching Yao, however, met
appellants v. Li Ching Yao, et.al., third-party defendants."1cräläwvirtualibräry several times to reach an agreement on the matter.

The instant case arose from a dispute over forty-two (42) square meters of residential Failing to agree amicably, petitioner Ballatan brought the issue before the barangay.
land belonging to petitioners. The parties herein are owners of adjacent lots located at Respondents Go did not appear. Thus, on April 1, 1986, petitioner Ballatan instituted
Block No. 3, Poinsettia Street, Araneta University Village, Malabon, Metro Manila. Lot against respondents Go Civil Case No. 772-MN for recovery of possession before the
No. 24, 414 square meters in area, is registered in the name of petitioners Eden Regional Trial Court, Malabon, Branch 169. The Go's filed their "Answer with Third-
Ballatan and spouses Betty Martinez and Chong Chy Ling.2 Lots Nos. 25 and 26, Party Complaint" impleading as third-party defendants respondents Li Ching Yao, the
with an area of 415 and 313 square meters respectively, are registered in the name of AIA and Engineer Quedding.
respondent Gonzalo Go, Sr.3 On Lot No. 25, respondent Winston Go, son of Gonzalo
Go, Sr., constructed his house. Adjacent to Lot No. 26 is Lot No. 27, 417 square On August 23, 1990, the trial court decided in favor of petitioners. It ordered the Go's
meters in area, and is registered in the name of respondent Li Ching to vacate the subject portion of Lot No. 24, demolish their improvements and pay
Yao.4cräläwvirtualibräry petitioner Ballatan actual damages, attorney's fees and the costs of the suit. It
dismissed the third-party complaint against: (1) AIA after finding that the lots sold to
In 1985, petitioner Ballatan constructed her house on Lot No. 24. During the the parties were in accordance with the technical description and verification plan
construction, she noticed that the concrete fence and side pathway of the adjoining covered by their respective titles; (2) Jose N. Quedding, there being no privity of
house of respondent Winston Go encroached on the entire length of the eastern side relation between him and respondents Go and his erroneous survey having been
of her property.5 Her building contractor informed her that the area of her lot was made at the instance of AIA, not the parties; and (3) Li Ching Yao for failure to prove
actually less than that described in the title. Forthwith, Ballatan informed respondent that he committed any wrong in the subject encroachment.8 The court made the
Go of this discrepancy and his encroachment on her property. Respondent Go, following disposition:
however, claimed that his house, including its fence and pathway, were built within
the parameters of his father's lot; and that this lot was surveyed by Engineer Jose "WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the
Quedding, the authorized surveyor of the Araneta Institute of Agriculture (AIA), the defendants, ordering the latter:
owner-developer of the subdivision project.
1. To demolish and remove all improvements existing and encroaching on plaintiff's
Petitioner Ballatan called the attention of the AIA to the discrepancy of the land area lot;
in her title and the actual land area received from them. The AIA authorized another
survey of the land by Engineer Jose N. Quedding. 2. To clear, vacate and deliver possession of the encroached area to the plaintiffs;

In a report dated February 28, 1985, Engineer Quedding found that the lot area of 3. To pay plaintiffs jointly and severally the following:
petitioner Ballatan was less by a few meters and that of respondent Li Ching Yao,
which was three lots away, increased by two (2) meters. Engineer Quedding declared a) P7,800.00 for the expenses paid to the surveyors;
that he made a verification survey of Lots Nos. 25 and 26 of respondents Go in 1983
and allegedly found the boundaries to have been in their proper position. He, b) P5,000.00 for plaintiffs' transportation;
however, could not explain the reduction in Ballatan's area since he was not present
at the time respondents Go constructed their boundary walls.6cräläwvirtualibräry 4. To pay plaintiffs, jointly and severally, attorney's fees equivalent to 25% of the
current market value of the subject matter in litigation at the time of execution; and
On June 2, 1985, Engineer Quedding made a third relocation survey upon request of
the parties. He found that Lot No. 24 lost approximately 25 square meters on its 5. To pay the costs of suit.
eastern boundary, that Lot No. 25, although found to have encroached on Lot No. 24,
did not lose nor gain any area; that Lot No. 26 lost some three (3) square meters The third-party complaint filed by third-party plaintiff Gonzalo Go and Winston Go
which, however, were gained by Lot No. 27 on its western boundary.7 In short, Lots against third-party defendants Araneta Institute of Agriculture, Jose N. Quedding and
Nos. 25, 26 and 27 moved westward to the eastern boundary of Lot No. 24. Li Ching Yao is hereby DISMISSED, without pronouncement as to costs.
129
 2. UNDER THE GUISE OF APPLYING EQUITY BUT IN EFFECT A VERY
SO ORDERED." APPARENT PARTIALITY AND FAVOR TO RESPONDENTS GO, IT ORDERED
PAYMENT OF THE ENCROACHED AREA AT THE VALUE AT THE TIME OF ITS
Respondents Go appealed. On March 25, 1996, the Court of Appeals modified the TAKING AND NOT THE VALUE AT THE TIME OF PAYMENT, THEREBY
decision of the trial court. It affirmed the dismissal of the third-party complaint against ENRICHING THE GO'S BUT DEPRIVING PETITIONERS OF THE FRUITS OR
the AIA but reinstated the complaint against Li Ching Yao and Jose Quedding. INCREASE IN VALUE OF THEIR PROPERTY TO WHICH THEY ARE ENTITLED
Instead of ordering respondents Go to demolish their improvements on the subject UNDER THE LAW AS THE REGISTERED OWNERS WITH TORRENS TITLE IN
land, the appellate court ordered them to pay petitioner Ballatan, and respondent Li THEIR NAMES.
Ching Yao to pay respondents Go, a reasonable amount for that portion of the lot
which they encroached, the value to be fixed at the time of taking. It also ordered 3. WHEN IT DID NOT DISMISS THE THIRD-PARTY COMPLAINT DUE TO NON-
Jose Quedding to pay respondents Go attorney's fees of P5,000.00 for his erroneous PAYMENT OF ANY FILING OR DOCKET FEE.
survey. The dispositive portion of the decision reads:
4. WHEN IT DENIED PETITIONERS THE RECOVERY OF THE NECESSARY
"WHEREFORE, premises considered, the decision appealed from is hereby EXPENSES IN PROTECTING THEIR RIGHTS IN THIS CASE."10
AFFIRMED insofar as the dismissal of the third-party complaint against Araneta
Institute of Agriculture is concerned but modified in all other aspects as follows: Petitioners question the admission by respondent Court of Appeals of the third-party
complaint by respondents Go against the AIA, Jose Quedding and Li Ching Yao.
1) Defendants-appellants are hereby ordered to pay plaintiffs-appellees the Petitioners claim that the third-party complaint should not have been considered by
reasonable value of the forty-two (42) square meters of their lot at the time of its the Court of Appeals for lack of jurisdiction due to third-party plaintiffs' failure to pay
taking; the docket and filing fees before the trial court.

2) Third-party defendant Li Ching Yao is hereby ordered to pay defendants-appellants The third-party complaint in the instant case arose from the complaint of petitioners
the reasonable value of the thirty-seven (37) square meters of the latter's lot at the against respondents Go. The complaint filed was for accion publiciana, i.e., the
time of its taking; and recovery of possession of real property which is a real action. The rule in this
jurisdiction is that when an action is filed in court, the complaint must be accompanied
3) Third-party defendant Jose N. Quedding is hereby ordered to pay to defendants- by the payment of the requisite docket and filing fees.11 In real actions, the docket
appellants the amount of P5,000.00. as attorney's fees. and filing fees are based on the value of the property and the amount of damages
claimed, if any.12 If the complaint is filed but the fees are not paid at the time of filing,
LET THE RECORD of the case be remanded to the Regional Trial Court of Malabon the court acquires jurisdiction upon full payment of the fees within a reasonable time
for further proceedings and reception of evidence for the determination of the as the court may grant, barring prescription.13 Where the fees prescribed for the real
reasonable value of Lots Nos. 24 and 26. action have been paid but the fees of certain related damages are not, the court,
although having jurisdiction over the real action, may not have acquired jurisdiction
SO ORDERED."9 over the accompanying claim for damages.14 Accordingly, the court may expunge
those claims for damages, or allow, on motion, a reasonable time for amendment of
Hence, this petition. Petitioners allege that: the complaint so as to allege the precise amount of damages and accept payment of
the requisite legal fees.15 If there are unspecified claims, the determination of which
"RESPONDENT COURT OF APPEALS ERRED ON QUESTIONS OF LAW AND may arise after the filing of the complaint or similar pleading, the additional filing fee
GRAVELY ABUSED ITS DISCRETION AMOUNTING TO LACK OF JURISDICTION thereon shall constitute a lien on the judgment award.16 The same rule also applies
WHEN: to third-party claims and other similar pleadings.17cräläwvirtualibräry

1. IT APPLIED EQUITY OR EQUITABLE SOLUTIONS TO THE INSTANT CASE IN In the case at bar, the third-party complaint filed by respondents Go was incorporated
UTTER DISREGARD AND IN VIOLATION OR GROSS IGNORANCE OF EXISTING in their answer to the complaint. The third-party complaint sought the same remedy
LAWS AND JURISPRUDENCE VESTING BASIC PROPERTY RIGHTS TO HEREIN as the principal complaint but added a prayer for attorney's fees and costs without
PETITIONERS. RESPONDENT COURT HAS NO POWER TO APPLY/USE EQUITY specifying their amounts, thus:
IN THE PRESENCE OF EXISTING LAWS TO THE CONTRARY.
"ON THE THIRD PARTY COMPLAINT
130
1. That summons be issued against Third-Party Defendants Araneta Institute of Respondent Li Ching Yao built his house on his lot before any of the other parties
Agriculture, Jose N. Quedding and Li Ching Yao; did.24 He constructed his house in 1982, respondents Go in 1983, and petitioners in
1985.25 There is no evidence, much less, any allegation that respondent Li Ching
2. That after hearing, they be sentenced to indemnify the Third-Party Plaintiffs for Yao was aware that when he built his house he knew that a portion thereof
whatever is adjudged against the latter in favor of the Plaintiffs; encroached on respondents Go's adjoining land. Good faith is always presumed, and
upon him who alleges bad faith on the part of a possessor rests the burden of
3. That Third-Party Defendants be ordered to pay attorney's fees as may be proved proof.26cräläwvirtualibräry
during trial;
All the parties are presumed to have acted in good faith. Their rights must, therefore,
4. That Third-Party Defendants be ordered to pay the costs. be determined in accordance with the appropriate provisions of the Civil Code on
property.
Other just and equitable reliefs are also prayed for."18
Article 448 of the Civil Code provides:
The Answer with Third-Party Complaint was admitted by the trial court without the
requisite payment of filing fees, particularly on the Go's prayer for damages.19 The "Art. 448. The owner of the land on which anything has been built, sown or planted in
trial court did not award the Go's any damages. It dismissed the third-party complaint. good faith, shall have the right to appropriate as his own the works, sowing or
The Court of Appeals, however, granted the third-party complaint in part by ordering planting, after payment of the indemnity provided for in Articles 546 and 548,27 or to
third-party defendant Jose N. Quedding to pay the Go's the sum of P5,000.00 as oblige the one who built or planted to pay the price of the land, and the one who
attorney's fees. sowed the proper rent. However, the builder or planter cannot be obliged to buy the
land if its value is considerably more than that of the building or trees. In such case,
Contrary to petitioners' claim, the Court of Appeals did not err in awarding damages he shall pay reasonable rent, if the owner of the land does not choose to appropriate
despite the Go's failure to specify the amount prayed for and pay the corresponding the building or trees after proper indemnity. The parties shall agree upon the terms of
additional filing fees thereon. The claim for attorney's fees refers to damages arising the lease and in case of disagreement, the court shall fix the terms thereof."
after the filing of the complaint against the Go's. The additional filing fee on this claim
is deemed to constitute a lien on the judgment award.20cräläwvirtualibräry The owner of the land on which anything has been built, sown or planted in good faith
shall have the right to appropriate as his own the building, planting or sowing, after
The Court of Appeals found that the subject portion is actually forty-two (42) square payment to the builder, planter or sower of the necessary and useful expenses, and in
meters in area, not forty-five (45), as initially found by the trial court; that this forty-two the proper case, expenses for pure luxury or mere pleasure. The owner of the land
(42) square meter portion is on the entire eastern side of Lot No. 24 belonging to may also oblige the builder, planter or sower to purchase and pay the price of the
petitioners; that on this said portion is found the concrete fence and pathway that land. If the owner chooses to sell his land, the builder, planter or sower must
extends from respondent Winston Go's house on adjacent Lot No. 25; that inclusive purchase the land, otherwise the owner may remove the improvements thereon. The
of the subject portion, respondents Go did not gain nor lose any portion of Lots Nos. builder, planter or sower, however, is not obliged to purchase the land if its value is
25 and 26; that instead, Lot No. 27, on which respondent Li Ching Yao built his considerably more than the building, planting or sowing. In such case, the builder,
house, encroached on the land of respondents Go, gaining in the process thirty-seven planter or sower must pay rent to the owner of the land. If the parties cannot come to
(37) square meters of the latter's land.21cräläwvirtualibräry terms over the conditions of the lease, the court must fix the terms thereof. The right
to choose between appropriating the improvement or selling the land on which the
We hold that the Court of Appeals correctly dismissed the third-party complaint improvement stands to the builder, planter or sower, is given to the owner of the
against AIA. The claim that the discrepancy in the lot areas was due to AIA's fault was land.28cräläwvirtualibräry
not proved. The appellate court, however, found that it was the erroneous survey by
Engineer Quedding that triggered these discrepancies. And it was this survey that Article 448 has been applied to improvements or portions of improvements built by
respondent Winston Go relied upon in constructing his house on his father's land. He mistaken belief on land belonging to the adjoining owner.29 The facts of the instant
built his house in the belief that it was entirely within the parameters of his father's case are similar to those in Cabral v. Ibanez,30 to wit:
land. In short, respondents Go had no knowledge that they encroached on petitioners' "[P]laintiffs Geronima Zabala and her husband Justino Bernardo, constructed their
lot. They are deemed builders in good faith22 until the time petitioner Ballatan house in the belief that it was entirely within the area of their own land without
informed them of their encroachment on her property.23cräläwvirtualibräry knowing at that time that part of their house was occupying a 14-square meter portion
131
of the adjoining lot belonging to the defendants, and that the defendants Bernardo M. on which their improvement stands. If the Go's are unwilling or unable to buy the lot,
Cabral and Mamerta M. Cabral were likewise unaware of the fact that a portion of then they must vacate the land and, until they vacate, they must pay rent to
plaintiff's house was extending and occupying a portion of their lot with an area of 14 petitioners. Petitioners, however, cannot compel respondents Go to buy the land if its
square meters. The parties came to know of the fact that part of the plaintiff's house value is considerably more than the portion of their house constructed thereon. If the
was occupying part of defendant's land when the construction of plaintiff's house was value of the land is much more than the Go's improvement, then respondents Go
about to be finished, after a relocation of the monuments of the two properties had must pay reasonable rent. If they do not agree on the terms of the lease, then they
been made by the U.S. Army through the Bureau of Lands, according to their may go to court to fix the same.
'Stipulation of Facts,' dated August 17, 1951.
In the event that petitioners elect to sell to respondents Go the subject portion of their
On the basis of these facts, we held that: lot, the price must be fixed at the prevailing market value at the time of payment. The
Court of Appeals erred in fixing the price at the time of taking, which is the time the
"The Court, therefore, concludes that the plaintiffs are builders in good faith and the improvements were built on the land. The time of taking is determinative of just
relative rights of the defendant Mamerta Cabral as owner of the land and of the compensation in expropriation proceedings. The instant case is not for expropriation.
plaintiffs as owners of the building is governed by Article 361 of the Civil Code (Co It is not a taking by the state of private property for a public purpose upon payment of
Tao v. Joaquin Chan Chico, 46 Off. Gaz.5514). Article 361 of the old Civil Code has just compensation. This is a case of an owner who has been paying real estate taxes
been reproduced with an additional provision in Article 448 of the new Civil Code, on his land but has been deprived of the use of a portion of this land for years. It is
approved June 18, 1949."31 but fair and just to fix compensation at the time of payment.34cräläwvirtualibräry

Similarly, in Grana and Torralba v. Court of Appeals,32 we held that: Article 448 and the same conditions abovestated also apply to respondents Go as
owners and possessors of their land and respondent Li Ching Yao as builder of the
"Although without any legal and valid claim over the land in question, petitioners, improvement that encroached on thirty-seven (37) square meters of respondents Go's
however, were found by the Court of Appeals to have constructed a portion of their land.
house thereon in good faith. Under Article 361 of the old Civil Code (Article 448 of the
new), the owner of the land on which anything has been built in good faith shall have IN VIEW WHEREOF, the decision of respondent Court of Appeals is modified as
the right to appropriate as his own the building, after payment to the builder of follows:
necessary or useful expenses, and in the proper case, expenses for pure luxury or
mere pleasure, or to oblige the builder to pay the price of the land. Respondents, as (1) Petitioners are ordered to exercise within thirty (30) days from finality of this
owners of the land, have therefore the choice of either appropriating the portion of decision their option to either buy the portion of respondents Go's improvement on
petitioners' house which is on their land upon payment of the proper indemnity to their Lot No. 24, or sell to said respondents the portion of their land on which the
petitioners, or selling to petitioners that part of their land on which stands the improvement stands. If petitioners elect to sell the land or buy the improvement, the
improvement. It may here be pointed out that it would be impractical for respondents purchase price must be at the prevailing market price at the time of payment. If buying
to choose to exercise the first alternative, i.e., buy that portion of the house standing the improvement will render respondents Go's house useless, then petitioners should
on their land, for in that event the whole building might be rendered useless. The sell the encroached portion of their land to respondents Go. If petitioners choose to
more workable solution, it would seem, is for respondents to sell to petitioners that sell the land but respondents Go are unwilling or unable to buy, then the latter must
part of their land on which was constructed a portion of the latter's house. If vacate the subject portion and pay reasonable rent from the time petitioners made
petitioners are unwilling or unable to buy, then they must vacate the land and must their choice up to the time they actually vacate the premises. But if the value of the
pay rentals until they do so. Of course, respondents cannot oblige petitioners to buy land is considerably more than the value of the improvement, then respondents Go
the land if its value is considerably more than that of the aforementioned portion of may elect to lease the land, in which case the parties shall agree upon the terms of
the house. If such be the case, then petitioners must pay reasonable rent. The parties the lease. Should they fail to agree on said terms, the court of origin is directed to fix
must come to an agreement as to the conditions of the lease, and should they fail to the terms of the lease.
do so, then the court shall fix the same."33
From the moment petitioners shall have exercised their option, respondents Go shall
In light of these rulings, petitioners, as owners of Lot No. 24, may choose to purchase pay reasonable monthly rent up to the time the parties agree on the terms of the
the improvement made by respondents Go on their land, or sell to respondents Go lease or until the court fixes such terms.
the subject portion. If buying the improvement is impractical as it may render the Go's
house useless, then petitioners may sell to respondents Go that portion of Lot No. 24
132
(2) Respondents Go are likewise directed to exercise their rights as owners of Lots Subsequently, on June 22, 1992, Tabalba filed his answer with Counterclaim,6
Nos. 25 and 26, vis-a-vis respondent Li Ching Yao as builder of the improvement that alleging as one of his affirmative defenses lack of jurisdiction on the part of the trial
encroached on thirty seven (37) square meters of respondents Go's land in court to entertain the election protest for having been filed beyond the ten-day period
accordance with paragraph one abovementioned. provided by law.

(3) The Decision of the Court of Appeals ordering Engineer Quedding, as third-party On August 17, 1992, Pahilan filed a Motion for Inhibition, dated August 14, 1992,
defendant, to pay attorney's fees of P5,000.00 to respondents Go is affirmed. The because of alleged serious and grave doubts that the presiding judge could
additional filing fee on the damages constitutes a lien on this award. impartially hear and decide his election protest with the cold neutrality of an impartial
judge, as the latter allegedly belongs to and had supported a political group adverse
(4) The Decision of the Court of Appeals dismissing the third-party complaint against to the candidacy of petitioner.
Araneta Institute of Agriculture is affirmed. SO ORDERED.
On August 18, 1992, the trial court proceeded with the pre-trial conference, heard the
G.R. No. 110170 February 21, 1994 defense on the allegation of lack of jurisdiction for non-payment of docket fees, and
thereafter ordered the parties to submit their respective memoranda.
ROLETO A. PAHILAN, vs. RUDY A. TABALBA, COMMISSION ON ELECTIONS,
and HONORABLE JUDGE SINFOROSO V. TABAMO, JR., BRANCH 28, Tabalba filed his Memorandum in Support of Affirmative Defense of Lack of
MAMBAJAO, CAMIGUIN Jurisdiction,7 dated September 4, 1992. Under date of September 22, 1992, Pahilan
filed a Memorandum8 as well as a Motion to Resolve Motion for Inhibition Prior to
REGALADO, J.: Resolution of Affirmative Defenses.9

This original action for certiorari impugns the Order1 of respondent Commission on On October 2, 1992, the trial court issued an Order 10 denying the motion for
Elections, dated January 19, 1993, dismissing the appeal filed by petitioner Roleto A. inhibition and dismissing the election protest for "non-payment on time of the required
Pahilan for the latter's failure to file a notice of appeal with the Regional Trial Court of fees for filing an initiatory pleading." Pahilan's counsel received a copy of said order
Mumbajao, Camiguin, and, necessarily on the same rationale, the Resolution2 on October 12, 1992 in Cagayan de Oro City.
promulgated by said respondent on May 6, 1993 denying petitioner's motion for
reconsideration. On October 17, 1992 and within the 5-day period to appeal, Pahilan filed a verified
appeal brief 11 in respondent Commission on Elections, with copies duly served on
Petitioner Pahilan and private respondent Tabalba were candidates for Mayor of the Regional Trial Court of Mambajao, Camiguin and the counsel for herein private
Guinsiliban, Camiguin during the local elections held on May 11, 1992. On May 13, respondent.
1992, the Municipal Board of Canvassers proclaimed Tabalba as the duly elected
Mayor of Guinsilban, the latter having garnered 1,087 votes as against 806 votes for On December 12, 1992, the Comelec Contests Adjudication Department directed the
Pahilan. Clerk of Court, Regional Trial Court, Camiguin, Branch 28, to immediately transmit the
complete records of EP case No. 3(92) which was being appealed by herein
Thereafter, Pahilan filed an election protest3 which he sent by registered mail on May petitioner. 12 Thereafter, in a letter 13 dated January 7, 1993, the said Clerk of Court
23, 1992, addressed to the Clerk of Court of the Regional Trial Court of Mambajao, informed respondent Commission that "to this very late date, this office has not
Camiguin, attaching thereto P200.00 in cash as payment for docket fees. In a letter4 received any notice of appeal from the aggrieved party." As a consequence,
dated May 28, 1992, the OIC-Clerk of Court of the Regional Trial Court of Mambajao, respondent Commission, in an Order dated January 19, 1993, dismissed Pahilan's
Camiguin, Branch 28, informed Pahilan that the correct fees that where supposed to verified appeal for failure to appeal within the prescribed period.
be paid amounted to P620.00, and that, accordingly, the petition would not be entered
in the court docket and summons would not be issued pending payment of the Pahilan filed a motion for reconsideration 14 of the order dismissing his appeal. Both
balance of P420.00. parties were required by respondent Commission to file their respective memoranda.
Finally, on May 6, 1993, respondent Commission issued its aforestated resolution
On June 16, 1992, upon receipt of the latter, Pahilan paid the required balance in the denying Pahilan's motion for reconsideration.
total amount P470.00.5
Hence, this petition on the bases of the following assigned errors:

133
1. Whether or not respondent Commission validly dismissed the verified Sec. 9. Grounds for dismissal of appeal. — The appeal may be dismissed upon
"Appeal" of petitioner which contains all the elements of a "notice of appeal" and more motion of either party or at the instance of the Commission on any of the following
expressive of the intent to elevate the case for review by said appellate body, and grounds:
furnishing copies thereof to the respondent trial judge and counsel for the adverse
party, aside from the incomplete payment of the appeal fee; and (a) Failure of the appellant to pay the appeal fee;

2. Whether or not the respondent trial judge validly dismissed the petition of (b) Failure of the appellant to file copies of his brief within the time provided by
protest of petitioner for non-payment on time of the required fee. these rules;

We find cogency and merit in the petition. (c) Want of specific assignment of errors in the appellant's brief; and

The bone of contention in this petition is the alleged erroneous dismissal of (d) Failure to file notice of appeal within the prescribed period.
petitioner's appeal by respondent Commission because of the failure of petitioner to
file a notice of appeal before the Regional Trial Court of Mambajao, Camiguin which, In the case at bar, petitioner received a copy of the trial court's order dismissing his
in turn, dismissed the election protest of petitioner for non-payment of docket fees. election protest on October 12, 1992. As earlier stated, herein petitioner, instead of
filing a notice of appeal as required by the rules, filed with respondent Commission a
The COMELEC RULES OF PROCEDURE provide for the manner in which appeals verified appeal brief within the five-day reglementary period by registered mail under
from decisions of courts in election contests shall be made, to wit: Registry Receipt No. 43093, dated October 17, 1992. It will be noted, however, that
on even date, petitioner likewise sent by registered mail copies of his appeal brief to
RULE 22 — Appeals from Decisions of Courts the Regional Trial Court of Mambajao, Camiguin, under Registry Receipt No. 43091,
in Election Protest Cases and to the counsel of herein private respondent, under Registry Receipt No. 43092.
15
Sec. 1. Caption and title of appealed cases. — In all election contests involving the
elections, returns, and qualifications of municipal or barangay officials, the party The question now posed by the foregoing factual situation is whether the notice of
interposing the appeal shall be called the "Appellant" and the adverse party the appeal can be validly substituted by an appeal brief. We firmly believe and so hold,
"Appellee", but the title of the case shall remain as it was in the court of origin. under the considerations hereinunder discussed, that the same may be allowed.

Sec. 3. Notice of Appeal. — Within five (5) days after promulgation of the decision of First, in cases where a record on appeal is required under the Rules of Court, it has
the court, the aggrieved party may file with said court a notice of appeal, and serve a been consistently held that the filing or presentation and approval of the record on
copy thereof upon the attorney of record of the adverse party. appeal on time necessarily implies or involves the filing of the notice of appeal, 16
because the act of taking or perfecting an appeal is more expressive of the intention
Sec. 4. Immediate transmittal of records of the case. — The Clerk of the court to appeal than the filing of a mere notice to do so. 17
concerned shall, within fifteen (15) days from the filing of the notice of appeal,
transmit to the Electoral Contests Adjudication Department the complete records of If the courts can deign to be indulgent and lenient in the interpretation of the rules
the case, together with all the evidence, including the original and three(3) copies of respecting ordinary civil actions involving private parties representing private
the transcript of stenographic notes of the proceedings. interests, with more reason should the rules involving election cases, which are
undoubtedly impressed with public interest, be construed with the same or even
Sec. 5. Filing of briefs. — The Clerk of Court concerned, upon receipt of the greater forbearance and liberality.
complete records of the case, shall notify the appellant or his counsel to file with the
Electoral Contests Adjudication Department within thirty (30) days from receipt of It has been frequently decided, it may be stated as a general rule recognized by all
such notice, ten (10) legible copies of his brief with proof of service thereof upon the courts, that statutes providing for election contests are to be liberally construed to the
appellee. end that the will of the people in the choice of public officers may not be defeated by
mere technical objections. An election contest, unlike an ordinary action, is imbued
Within thirty (30) days from receipt of the brief of the appellant, the appellee shall file with public interest since it involves not only the adjudication of the private interests of
ten (10) legible copies of his brief with proof of service thereof upon the appellant. rival candidates but also the paramount need of dispelling the uncertainty which
beclouds the real choice of the electorate with respect to who shall discharge the
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prerogatives of the office within their gift. Moreover, it is neither fair nor just to keep in No. 3(92); and that the appeal is being made pursuant to Section 22 of Republic Act
office for an uncertain period one whose right to it is under suspicion. It is imperative No. 7166, that is, before the Commission on Elections.
that his claim be immediately cleared not only for the benefit of the winner but for the
sake of public interest, which can only be achieved by brushing aside technicalities of Accordingly, there is no gainsaying the fact that the particulars which ought to be
procedure with protract and delay the trial of an ordinary reflected in the notice of appeal have been specifically and categorically spelled out in
action. 18 the appeal brief of petitioner. Perforce, and in light of the foregoing disquisitions, we
find and so hold that petitioner is entitled to the relief prayed for.
For this reason, broad perspectives of public policy impose upon courts the
imperative duty to ascertain by all means within their command who is the real We now proceed to resolve the issue anent the dismissal of petitioner's election
candidate elected in as expeditious a manner as possible, without being fettered by protest by the Regional Trial Court for non-payment, or more accurately the
technicalities and procedural barriers to the end that the will of the people may not be incomplete payment, of docket fees. Ordinarily, with the reversal of the respondent
frustrated. 19 Commission's questioned order, this case should be remanded to said court for
adjudication on the merits. Considering, however, the exigencies of time appurtenant
It is true that perfection of an appeal in the manner and within the period laid down by to the disposition of election cases, and considering further that the issue has at any
law is not only mandatory but also jurisdictional, and that the failure to perfect an rate been squarely raised in this petition, it is now incumbent upon this Court to act on
appeal as required by the rules has the effect of defeating the right of appeal of a the propriety of the trial court's order dismissing the election protest for failure of
party and precluding the appellate court from acquiring jurisdiction over the case. 20 petitioner to pay the correct amount of docket fees.
Nevertheless, in some instances, this Court has disregarded such unintended lapses
so as to give due course to appeals on the basis of strong and compelling reasons, In dismissing petitioner's action, the trial court relied on the rulings enunciated in the
such as serving the ends of justice and preventing a grave miscarriage thereof in the cases of Malimit vs. Degamo 24 (an action for quo warranto), Magaspi, et al. vs.
exercise of our equity Ramolete, et al. 25 (a suit for recovery of possession and ownership of land), Lee vs.
jurisdiction. 21 Republic 26 (a petition for declaration of intention to become a Filipino citizen),
Manchester Development Corporation vs. Court of Appeals, et al. 27 (an action for a
It is our considered opinion that public interest is of far greater importance than the sum of money and damages), Sun Insurance Office, Ltd., (SIOL) et al. vs. Asuncion.
justifications of substantial justice and equity in seeking an exception to the general 28 (a suit for a sum of money and damages), and Tacay, et al. vs. Regional Trial
rule. Hence, election cases, by their very nature, should and ought to merit a similar Court of Tagum, Davao del Norte, etc., et al. 29 (an action for damages). It bears
exemption from a strict application of technical rules of procedure. emphasis that the foregoing cases, except for Malimit vs. Degamo, are ordinary civil
actions. This fact alone would have sufficed for a declaration that there was no basis
Second, it has been shown and it is not even denied that the Regional Trial Court of for the dismissal of petitioner's protest for the simple reason that an election contest is
Camiguin, as well as the counsel for private respondent, was furnished copies of the not an ordinary civil action. Consequently the rules governing ordinary civil actions
appeal brief which were sent by registered mail on October 17, 1992, within the are not necessarily binding on special actions like an election contest wherein public
reglementary period to appeal. This fact was never refuted by the Solicitor General in interest will be adversely affected.
his Comment. Concomitantly, although the Clerk of Court claimed that he had not
received any notice of appeal from herein petitioner, it would be safe to assume, The case of Malimit vs. Degamo, on its part, is not on all fours with the present case.
under the circumstances, that the appeal brief duly directed mailed was received in In that case, the petition for quo warranto was mailed to the clerk of Court on
the regular course of the December 14, 1959 and was received by the latter on December 17, 1959. The
mail 22 and was, therefore, deemed filed with the trial court as of the date of mailing. docket fee was deemed paid only on January 5, 1960, because the petitioner therein
failed to prove his allegation that a postal money order for the docket fee was
Third, applying suppletorily the provisions of the Rules of Court, 23 particularly attached to his petition. Hence, the petition for quo warranto was correctly dismissed.
Section 4, Rule 41 thereof, the requirement is that a notice of appeal shall specify the
parties to the appeal; shall designate the judgment or order, or part thereof, appealed In the case at bar, it cannot be gainsaid that the sum of P200.00 was attached to the
from; and shall specify the court to which the appeal is taken. A perusal of herein petition mailed to the Regional Trial Court of Camiguin and this fact was even
petitioner's appeal brief will disclose the following information: that the parties to the acknowledged by the Clerk of Court thereof when he requested herein petitioner to
case are Roleto A. Pahilan as protestant-appellant and Rudy A Tabalba as protestee- pay the balance of the correct docket fee. In Malimit, there was no docket fee paid at
appellee; that appellant therein is appealing from the order of the Regional Trial Court all at the time of mailing; in the present case, the docket fee was paid except that the
of Mambajao, Camiguin, dismissing the petition for election contest in Election Case amount given was not correct. Considering the fact that there was an honest effort on
135
the part of herein petitioner to pay the full amount of docket fees, we are not inclined avoided in Manchester and like cases will never arise. Peremptorily, there will be no
to insist on a stringent application of the rules. occasion to apply the rulings in the cases mentioned. In addition, the filing fee to be
paid in an election case is a fixed amount of P300.00. There will consequently be no
Furthermore, there are strong and compelling reasons to rule that the doctrine we opportunity for a situation to arise wherein an election contest will have to be
have established in Manchester and cases subsequent thereto cannot be made to dismissed for failure to state the exact amount of damages and thus evince an intent
apply to election cases. to deprive the Government of the docket fees due.

As we have earlier stated, the cases cited are ordinary civil actions whereas election Finally, in Manchester, there was a deliberate attempt on the part of the plaintiffs
cases are not. The rules which apply to ordinary civil actions may not necessarily therein to evade payment of the correct docket fees. In the case of petitioner, he
serve the purpose of election cases, especially if we consider the fact that election already explained, and this we find acceptable and justified, that "since the schedule
laws are to be accorded utmost liberality in their interpretation and application, of the new rates of court fees was not then available and the filing of the petition for
bearing in mind always that the will of the people must be upheld. Ordinary civil election contests was done thru the mails, the old rates readily came to mind, and this
actions would generally involve private interests while all elections cases are, at all was the reason why only two hundred pesos was remitted at the same time with the
times, invested with public interest which cannot be defeated by mere procedural or petition." 30
technical infirmities.
To summarize, the evil sought to be avoided in Manchester and similar cases can
Again, the Court in Manchester made its ruling in view of its finding that there existed never obtain in election cases since (1) the filing fee in an election cases is fixed and
the unethical practice of lawyers and parties of filing an original complaint without not dependent on the amount of damages sought to be recovered, if any; and (2) a
specifying in the prayer the amount of damages which, however, is stated in the body claim for damages in an election case is merely ancillary to the main cause of action
of the complaint. This stratagem is clearly intended for no other purpose than to and is not even determinative of the court's jurisdiction which is governed by the
evade the payment of the correct filing fees by misleading the docket clerk in the nature of the election filed.
assessment thereof. Thus, the court therein held that jurisdiction shall be acquired
only upon payment of the prescribed docket fee. WHEREFORE, the Order of the Commission on Elections dated January 19, 1993, as
well as its Resolution promulgated on May 6, 1993, both in EAC No. 24-92; and the
That ruling was later relaxed in the case of Sun Insurance which allowed the Order of the Regional Trial court of Mambajao, Camiguin, dated October 2, 1992, in
subsequent payment of the correct docket fees provided it is made within the Election Case No. 3(92) are hereby REVERSED and SET ASIDE, and the records of
reglementary period or before prescription has set in. The reason given was that this case are hereby ordered REMANDED to the court a quo for the expeditious
there was no intent on the part of the petitioners therein to defraud the government, continuation of the proceedings in and the adjudication of the election protest pending
unlike the plaintiff in the case of Manchester. therein as early as practicable. SO ORDERED.

In Tacay, et al. vs. Tagum, et al., it was stated that this Court, inspired by the doctrine G.R. No. L-17299 July 31, 1963
laid down in Manchester, issued Circular No. 7 on March 24, 1988, which was aimed
at the practice of certain parties who omit from the prayer of their complaints any JOSEFINA POTESTAS CABRERA and CRESENCIA POTESTAS OMULON vs.
specification of the amount of damages, the omission being clearly intended for no MARIANO T. TIANO
other purpose than to evade the payment of the correct filing fees by deluding the
docket clerk in his assessment of the same. In all these cases, the rule was applied PAREDES, J.:
for failure of the plaintiff to include in the prayer of the complaint the total amount of
damages sought against the defendant. The reason for this, according to the Tacay Ciriaco Potestas and Gregoria Blanco, were parents of five children, Isabelo, Lourdes,
case, is because the amount of damages will help determine two things: first, the Clemente, Josefina, and Cresencia. Gregoria died before the second world war,
jurisdiction of the court; and, second, the amount of docket fees to be paid. together with Clemente, single. During their lifetime, the spouses acquired properties,
among which was a parcel of agricultural land, of about seven (7) hectares, located at
In the case now before us, and in election cases in general, it is not the amount of barrio Manga, municipality of Tangub, Misamis Occidental, planted to coconuts and
damages, if any, that is sought to be recovered which vests in the courts the fruit-bearing trees. On July 2, 1947, Ciriaco, the surviving husband and three (3)
jurisdiction to try the same. Rather, it is the nature of the action which is determinative children (Isabelo, Lourdes and Cresencia), purportedly sold the above mentioned
of jurisdiction. Thus, regardless of the amount of damages claimed, the action will still parcel to herein defendant Mariano T. Tiano, for P3,500.00. At the time of the sale,
have to be filed with the Regional Trial Court. In such a case, the evil sought to be
136
Cresencia was a minor, and the other child, Josefina, did not sign the deed of sale, question was presented on June 20, 1957, and the summons was sent out the
and did not know about the transaction. following day. The Civil Code, provides that—

Under date of June 20, 1957, in action for "Partition and Recovery of Real Estate, The prescription of actions is interrupted when they are filed before the court, when
with Damages" was filed by Josefina and Cresencia against Tiano. In the complaint, it there is a written extra-judicial demand by the creditors, and when there is any written
was alleged that they were entitled to a portion of the land, since Josefina did not sign acknowledgment of the debt of the debtor. (Art. 1155)
the sale and Crescencia was a minor; that defendant Tiano had usurped the portions
belonging to them, to their damage and prejudice in the amount of P7,000.00, which Since the sale of the property took place on July 2, 1947, the ten (10) year period
consisted of their share in the produce of the property, during the period of within which to file the action had not yet elapsed on June 20, 1957, when the
defendant's possession. complaint was presented. While it is true that the sale in question had taken place
before the effectivity of the new Civil Code and the law then on matter of prescription
In answer, defendant claimed that the plaintiffs herein knew of the sale and that he was Act No. 190, said law, however, contained no specific provision on the
was not aware of any defect in the title of his vendors. As a Special Defense, interruption of the prescriptive period; and the established rule then, as it is the rule
defendant alleged that he was the absolute owner of the land by acquisitive now, is that the commencement of the suit prior to the expiration of the applicable
prescription of ten (10) years, from the date of purchase. Before the trial, the parties limitation period, interrupts the running of the statute, as to all parties to the action (34
agreed to a stipulation of facts, parts of which recite — Am. Jur., Sec. 247, pp. 202-203; Peralta, et al. v. Alipio, G. R. No. L-8273, Oct. 24,
1955). The fact that summons was only served on defendant on July 2, 1957, which
3. That at the time of the sale, appearing in Doc. No. 54, Page 81, Book No. 7, S. incidentally and/or coincidentally was the end of the ten (10) year period, is of no
1947, in the book of Notary Public Basilio Binaoro of Tangub, Mis. Occ., Cresencia moment, since civil actions are deemed commenced from date of the filing and
was a minor being only 16 years old, while Josefina who was long married and of docketing of the complaint with the Clerk of Court, without taking into account the
legal age did not know about the sale and/or did not give her consent to the same; issuance and service of summons (Sotelo v. Dizon, et al., 67 Phil. 573). The
contention that the period was not interrupted, until after defendant received the
4. That the plaintiffs commenced this case against the defendant on June 20, 1957 summons is, therefore, without legal basis.
and the judicial summons was issued by the Clerk of Court on June 21, 1957, but
defendant received the same on July 2, 1957. Defendant-appellant claims that he had already acquired full ownership of the
After the hearing, the court a quo rendered the following judgment — property in question because the judicial summons, which could civilly interrupt his
possession (Art. 1123, N.C.C.), was received by him only on July 2, 1957. Conceding,
WHEREFORE, premises considered, the court hereby renders judgment declaring for the purposes of argument, that the article cited is applicable, still appellant cannot
that the plaintiffs are entitled each to 1/8 of the property in question and therefore avail himself of acquisitive prescription, for the simple reason that no finding was
Judgment is hereby ordered declaring them entitled to partition the property in made by the trial court that his possession from the time of the sale (July 2, 1947),
question in proportion of 1/8 each of them, plus damages for both of them in the was with just title, in good faith, in the concept of an owner, public, peaceful, adverse
amount of P1,000.00 and attorney's fees in the amount of P200.00. and uninterrupted (Arts. 1117 & 1118, N.C.C.). Good faith is a question of fact which
must be proved (Art. 1127, N.C.C.). For the purposes of acquisitive prescription, just
The trial court in the same decision, commissioned the Deputy Provincial Sheriff, to title must also be proved, it is never presumed (Art. 1131, N.C.C.). The factual
partition the property in question and render a report within 30 days. Defendant requisite of adverse possession do not appear in the stipulation of facts and the trial
moved for a reconsideration of the decision, contending that prescription had already court did not make findings to this effect. These circumstances could and/or should
set in, and his (defendant's) title, had become irrevocable, and that the award of have been ventilated, had the appeal been taken to the Court of Appeals. Defendant,
damages had no factual and legal basis. The motion for reconsideration was denied however, having chosen to appeal the decision directly to this Court, he is deemed to
on March 5, 1960. The Commissioner's report, partitioning the property was have waived questions of fact and raised only questions of law. There being no
submitted on April 11, 1960. Defendant perfected his appeal on May 9, 1960, and on factual finding by the lower court of the presence of the requisites of acquisitive
May 14, 1960, the same was given due course and elevated to this Court. prescription this Court has to reject, as did the trial court, said defense. Moreover, on
July 2, 1957, when the summons was received, the ten (10) years necessary for
In claiming that prescription had taken place, appellant insists that the period should acquisitive prescription had not yet elapsed. In fact, said period terminated on that
be counted from the date the summons was served on him, which was on July 2, very day.1äwphï1.ñët
1957. It was agreed, however, that the complaint for the recovery of the land in

137
As to the award of damages, We find Ourselves devoid of ample authority to review Plaintiff-appellant's motion for reconsideration of the order of dismissal having been
the same, since it involves appreciation of facts. It cannot be denied, as found by the denied, plaintiff-appellant filed a new complaint, docketed as Civil Case No. 65341
lower court, that plaintiffs herein are entitled to a share in the land. Verily, they should which is the present action and which is also for revival and enforcement of the
also share in the produce, which, admittedly, was enjoyed by the defendant-appellant judgment rendered in Civil Case No. 22237.
herein.
Defendant-appellee filed a motion to dismiss the complaint in Civil Case No. 65341
WHEREFORE, the decision appealed from should be, as it is hereby affirmed. Costs on the ground that plaintiff-appellant's cause of action had already prescribed. On
against appellant in both instances. January 12, 1967, the trial court denied the motion to dismiss for the reason that the
filing of Civil Case No. 60112 on March 5, 1965 interrupted the running of the period
G.R. No. L-30738 July 30, 1982 of prescription, and it started to run again only after its dismissal on March 12, 1966;
and, therefore, when Civil Case No. 65341 was filed on May 10, 1966, only 9 years, 5
BOARD OF LIQUIDATORS, TRUSTEE OF THE LAND SETTLEMENT AND months and 11 days had expired from the time that the judgment in Civil Case No.
DEVELOPMENT CORPORATION vs. JOSE ZULUETA 22237 had become final and executory. Defendant-appellee's repeated attempts to
secure a reconsideration of the denial of his motion to dismiss failed to achieve a
VASQUEZ, J.: favorable result. Defendant-appellee filed an answer to the complaint with a
counterclaim.
This is an appeal by petition for review from a decision of the Court of First Instance
of Manila dismissing the complaint filed by plaintiff-appellant against defendant- On September 19, 1968, after plaintiff-appellant had presented its evidence, the trial
appellee in Civil Case No. 65341. court reset the continuation of the hearing on November 28, 1968 for the presentation
of the evidence of defendant-appellee. On the last mentioned date, the defendant-
On November 23, 1955, a decision was rendered by the Court of First Instance of appellee failed to appear and the trial court declared the case submitted for decision.
Manila, Branch VII, in Civil Case No. 22237, entitled "Land Settlement and
Development Corporation, Plaintiff, vs. Jose Zulueta, Defendant", based on an In a decision dated December 27, 1968, the trial court dismissed Civil Case No.
amicable settlement between the parties, pursuant to which defendant-appellee was 65341. The said dismissal was reasoned out as follows:
ordered to pay the Land Settlement and Development Corporation the sum of
P10,391.62 with interest at four (4%) per cent per annum from January 13, 1948 until The plaintiff contends that the filing on March 5, 1965 of the first action for revival of
the same is fully paid in the manner stated in the amicable settlement and subject to judgment interrupted the period of prescription. Upon the other hand, the defendant,
the terms thereof, without pronouncement as to costs. arguing that the dismissal of the said action for lack of prosecution did not stop the
period of prescription, which is ten years from November 23, 1955, has cited the
On March 5, 1965, herein plaintiff-appellant, as trustee of the Land Settlement and decision in Conspecto vs. Fruto, et al., 31 Phil. 144, wherein it was held that
Development Corporation, filed a complaint in the Court of First Instance of Manila
against defendant-appellee, docketed as Civil Case No. 60112 to revive the judgment While the commencement of the action would of course, stop the running of the
rendered in Civil Case No. 22237 which had not been enforced by that time. Difficulty statute of limitations, its dismissal or voluntary abandonment by plaintiff would leave
was encountered in serving summons on defendant-appellee, thereby prompting the the parties in exactly the same position as if no action had been commenced at all.
trial court to dismiss Civil Case No. 60112 in an order dated March 12, 1966, reading Said action by reason of its dismissal or abandonment took no time out of the period
as follows: of prescription.

It appearing that this case has long been pending with this Court, the same having and the decision in Oriental Commercial Co., Inc. vs. Jureidini, Inc., et al., 71 Phil. 25,
been filed way back on March 5, 1965, and since then defendant has not yet been to the effect that
served with summons, and notwithstanding such fact, no further action has been
taken by plaintiff; for lack of interest to prosecute, the instant case is hereby Cuando se entabla una accion dentro del plazo de prescripcion y se desiste de ella
DISMISSED without prejudice, and without pronouncement as to costs. despues, o se sobresee sin condiciones, por una razon u otra, no hace que la
accion's que se entable mas tarde, pero ya fuera del periodo de prescripcion, se
IT IS SO ORDERED. (Rollo, p. 27.) pueda considerar como presentada dentro de dicho periodo porque quiere contares
con la accion entablada con anterioridad. La falta de de gestion de la recurrente por
cuya causa de desestimaron sus demandas segunda y tercera, no puede
138
interpretarse sino como una renuncia de su parte; y, al ejercitar su ultima accion no Article 1155 of the New Civil Code expressly provides that the "prescription of action
se ha colocado en la misma situacion en que antes se hallaba al ejercitar sus tres is interrupted when they are filed before the court ..." (Sotelo vs. Dizon, 67 Phil. 537;
anteriores acciones. Este es el mismo criterio que expresamos cuando se nos Cabrera vs. Tianco, 8 SCRA 582.) Such interruption lasts during the pendency of the
presento una cuestion analoga en la causa de Conspecto contra Fruto, 31 Jur. Fil action. (Florendo vs. Organo, 9 Phil. 483.)
155.
These principles apply to the prescription of the action to revive or enforce a
In the opinion of the Court, the stand of the defendant is well taken. It has not been judgment. (Marc Donnelly vs. Court of First Instance of Manila, 44 SCRA 381.) The
intimated by the plaintiff that the authorities relied upon by the defendant had been facts in the last cited case are almost similar to the present action. In Marc Donnelly,
overruled by any subsequent pronouncement of the Supreme Court. As the decision a judgment was rendered by the Court of First Instance of Manila which became final
sought to be revived was rendered and became final and executory on November 23, on August 5, 1957. On July 8, 1967, an action was filed to revive the judgment. Due
1955, and the present action was instituted on May 10, 1966, or more than the ten- to the fact that summons could not be served on the defendant despite the exercise
year period provided for in Article 1144 of the Civil Code, the said action has already of due diligence by the plaintiff, the revival action was dismissed "for failure to
prescribed. As held in Conspecto vs. Fruto, et al., cited, in Commercial Co., Inc. vs. prosecute, but the dismissal shall be without prejudice." Copy of the order of
Jureidini, Inc., et al., the dismissal of the action filed on March 5, 1965 left the parties dismissal was received by the plaintiff on March 19, 1969. Twelve (12) days later or
in exactly the same position as if no action had been commenced at all, and took no on March 31, 1969, a second action for revival was filed. The second action was
time out of the period of prescription. dismissed by the trial court on the ground that the said revival action was instituted
after the lapse of 10 years from the time that the decision sought to be revived had
WHEREFORE, the complaint is dismissed without pronouncement as to costs. SO become final and executory.
ORDERED.
Resolving the issue of whether or not the first action for revival of judgment
A motion for the reconsideration of the said decision was denied by the trial court. On interrupted the period of prescription, We reversed the dismissal of the second action
August 4, 1969, plaintiff-appellant filed the present petition for review. The petition to revive judgment upon the following considerations:
was given due course in Our Resolution of August 6, 1969 and the petitioner filed its
brief as plaintiff-appellant. No brief was filed in behalf of defendant-appellee. The sole issue to be resolved herein is whether or not prescription has set in to bar
the filing by petitioner of his second action to revive the judgment in Civil Case No.
The only issue raised in this appeal is whether or not plaintiff-appellant's cause of 23466. An action for the revival of a judgment prescribes in ten (10) years (Art.
action in Civil Case No. 65341 had already prescribed. 1144[3], Civil Code). The ten-year period is counted either from the date the judgment
became final or from the date of its entry (Vda. de Decena vs. De los Angeles, etc., et
Article 1144 of the New Civil Code provides that an action based upon a judgment al., L-29317, May 29, 1971, 39 SCRA 95, 99). The prescription of an action is
"must be brought within ten (10) years from the time the right of action accrues." The interrupted, among others, by its filing before the court (Art. 1155, Civil Code).
prescriptive period starts from the time that the judgment becomes final and
executory. In the case at bar, the decision sought to be enforced, to wit, that rendered Applying the foregoing tenets to the case at bar, we find that petitioner's filing of the
in Civil Case No. 22237, being based on a compromise agreement, the same became first action for revival of the judgment in Civil Case No. 23466 was well within the ten-
final and executory on the date of its rendition on November 23, 1955. year prescriptive period. Final judgment was entered by the Court of Appeals on
August 5, 1957. Petitioners filed Civil Case No. 70028 (his first action to revive the
There is no question that when the first revival action, docketed as Civil Case No. judgment) on July 8, 1967. Therefore, as of the latter date, only nine (9) years, eleven
60112, was filed on March 5, 1965, only 9 years, 3 months and 12 days had elapsed (11) months and three (3) days had elapsed. The ten-year prescriptive period was
from November 23, 1955. It is also a fact that when the second action to revive effectively suspended by the filing of Civil Case No. 70028.
judgment was filed on May 10, 1965, it was already more than 10 years from the
finality of the decision rendered in Civil Case No. 22237 which is sought to be revived Let us now consider the second complaint (Civil Case No. 76166) for revival of the
therein. These circumstances render it necessary to determine whether the filing of same judgment in Civil Case No. 23466, in which complaint petitioner also alleged
Civil Case No. 60112, the first action to revive judgment tolled the running of the 10- that final entry of the judgment was made on August 5, 1957. The first such action
year prescriptive period to enforce the subject judgment. In the affirmative case, it (Civil Case No. 70028) was dismissed by the court without prejudice; and copy of the
would follow that the filing of Civil Case No. 65341 on May 10, 1966 was well within dismissal order was received by petitioner on March 19, 1969. On March 31, 1969,
the period allowed by the statute of limitations. petitioner filed the second action for revival of the judgment. When a case is ordered
dismissed without prejudice, the plaintiff may file his complaint against the same
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defendant in a separate action, even if the order has already become final and plaintiff-appellant be charged with failure to recommence its suit within a reasonable
executory (Rapadaz Vda. de Rapisura vs. Nicolas, etc., et al., L-22594, April 29, time after its dismissal. The record reveals that plaintiff-appellant received notice of
1966, 16 SCRA 798, 801). As it is, the second case to revive the judgment was filed the dismissal of Civil Case No. 60112 on March 21, 1966. Four (4) days later, or on
even before the order of dismissal in the first case could become final, for only twelve March 25, 1966, plaintiff-appellant filed a motion for reconsideration of said order of
(12) days had expired between March 19, 1969, when petitioner received notice of dismissal. Plaintiff-appellant received the order denying the motion for reconsideration
the dismissal order, and March 31, 1969, when he filed the second motion. In any on April 26, 1966. On May 10, 1966, plaintiff-appellant filed its second action for
event, the dismissal of the first case being without prejudice, the filing of the second revival, docketed as Civil Case No. 65341.
action was still within the original period of ten (10) years. At any rate, when the
defendant's address cannot with due diligence be ascertained and no property of his Nor may the ruling in Jureidini defeat herein plaintiff-appellant's cause of action. In
can be found, the period of prescription is tolled under article 1108(2) of the new Civil Jureidini, the plaintiff filed three (3) cases within the period of prescription, all of which
Code. In the premises, our conclusion must necessarily be that the trial court were dismissed, the first on motion of the plaintiff, and the other two (2) for failure to
committed a reversible error in dismissing Civil Case No. 76166 on the ground of prosecute. When the fourth action was filed beyond the prescriptive period, it was
prescription. (44 SCRA pp. 383-384.) held that the act of the plaintiff in failing to prosecute his first three (3) cases may not
be interpreted except as a waiver on its part and did not place the plaintiff on the
As may be noted from the decision dismissing Civil Case No. 65341, the trial court same situation where it was before the filing of the first of the three actions; and,
relied on the rulings in Conspecto vs. Fruto, et al., 31 Phil. 148 and Oriental following the view expressed in the analogous case of Conspecto vs. Fruto, 31 Phil.
Commercial Co., Inc. vs. Jureidini, Inc., et al., 71 Phil. 25. Said reliance is misplaced, 150, the fourth action should be dismissed on the ground of prescription. It is to be
the facts in the said cases being different from those appearing in the one under noted that as in Fruto, the filing of the actions within the prescriptive period was
consideration. In Fruto, it was held that the running of the period of limitation was not considered as not interrupting the running of the period of limitation due to the
interrupted by an action filed within the said period because the said action was circumstance that the plaintiff is deemed to have abandoned or waived its claim.
discontinued by "its dismissal or voluntary abandonment by the plaintiff." The decision
went on to state that "the real reason for the said dismissal does not clearly appear of As already stated above, herein plaintiff-appellant may not be faulted with having
record." abandoned its claim against the defendant-appellee which the former had asserted in
filing Civil Case No. 60112. The said case was dismissed primarily due to the failure
In the case under consideration, the first action for revival, Civil Case No. 60112, was to serve summons on defendant-appellee who had somehow managed to evade
dismissed not by reason of abandonment. As in the case of Marc Donnelley, the being placed under the jurisdiction of the Court. Subsequent acts of plaintiff-appellant
dismissal of the first revival action as due to the inability to serve summons on the after the dismissal of Civil Case No. 60112 adequately negated any supposed
defendant-appellee. This was because, as stated in the petition for review, the intention to waive or abandon its claim against defendant-appellee.
defendant-appellee was so elusive that when summons was forwarded to his address
at Iloilo City, the same was returned unserved because defendant-appellee was in It will be noted that the two cases relied upon by the trial court were both decided
Manila; and when it was attempted to be served in Manila, he was supposed to be in when the statute of limitations was contained in the old Code of Civil Procedure, Act
Iloilo City. (Rollo, p. 14.) No. 190. In said law, there was no specific provision, as that now contained in Article
1155 of the Civil Code, that " the prescription of actions is interrupted when they are
In Fruto, it is also recognized that the dismissal of an action filed within the filed in court." (Florendo vs. Organo, 90 Phil. 483.) It is accordingly extremely doubted
prescriptive period does not necessarily result in the non-interruption of the period of if the rulings in Fruto and Jureidini may still be availed of to uphold the view that the
limitation. Thus, it was declared: period of prescription is not interrupted by an action which the plaintiff shag abandon
or otherwise fail to prosecute. The language of Article 1155 is unqualified and does
Where a suit, commenced within the period of limitation, is abandoned or dismissed not give room for making a distinction as to the effect of the filing of an action in court
by reason of the death of the plaintiff, the operation of the statute is prevented if the or the running of the period of prescription.
suit is recommenced, within a reasonable time, by the representatives of the
deceased (Martin vs. Archer, 3 Hill, [S.C.] 211.) (Emphasis supplied.) The record further reveals that plaintiff-appellant made written extra-judicial demands
upon defendant-appellee by means of letters marked as Exhibits "E-2" and "F",
The plaintiff-appellant may not be accused of having abandoned Civil Case No. respectively. Such written extrajudicial demand also produced the result of
60112. They asserted due diligence in trying to serve summons on defendant- interrupting the period of prescription. (Art. 1155, Civil Code; Marella vs. Agoncillo, 44
appellee but unfortunately, their efforts were thwarted due to the ability of the Phil. 844.)
defendant-appellee to evade service of such court process on him. Neither may
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We are accordingly of the considered view that the trial court erred in dismissing Civil
Case No. 65341. We do not find it necessary, however, to remand the ease to the
court of origin for further proceedings. In the decision rendered by the trial court, it
made a finding of the material fact upon which the plaintiff's cause of action is based.
It stated the following:

It appears from the evidence presented by the plaintiff (the defendant did not present
any evidence) that under date of November 23, 1965, a decision was rendered in
Civil Case No. 22237 of the Court of First Instance of Manila, Land Settlement and
Development Corporation vs. Jose Zulueta, based on an amicable settlement,
ordering the defendant to pay to the plaintiff the sum of P10,391.62, with interest at
4% per annum from January 13, 1948 (Exhibit "A"); that the said judgment has not as
yet been satisfied; that as of February 15, 1965, the outstanding obligation of the
defendant is P18,501.97 (Exhibit "E"); that demands for payment were made on the
defendant on January 6, 1956 (Exhibit "E-2") and on January 18, 1965 (Exhibit "F").

There can be no serious dispute that the plaintiff Board of Liquidators can prosecute
this action as trustee of the abolished Land Settlement and Development Corporation,
known for short as LASEDECO. The principal issue is whether or not the action has
prescribed. (Decision, Rollo, pp. 79-80.)

The defendant-appellee presented no contradictory evidence, he having failed to

appear for the trial of the case scheduled on November 28, 1968 despite notice,
thereby prompting the trial court to consider the case submitted for decision on the
basis of the evidence presented by the plaintiff. The facts found by the trial court
suffice to justify the rendition of a decision on the merits which the trial court failed to
do in view of its ruling that the action is barred by the statute of limitations.

WHEREFORE, the judgment appealed from is hereby REVERSED AND SET ASIDE.
In lieu thereof, another one is rendered ordering defendant-appellee to pay plaintiff-
appellant the sum of P10,391.62 with interest at four (4%) per cent per annum from
January 13, 1948 until full payment, with costs against defendant-appellee. SO
ORDERED.

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