Appeals

RULE 40

Appeal From Municipal Trial Courts to the Regional Trial Courts

Section 1. Where to appeal. — An appeal from a judgment or final order of a Municipal Trial Court
may be taken to the Regional Trial Court exercising jurisdiction over the area to which the former
pertains. The title of the case shall remain as it was in the court of origin, but the party appealing the
case shall be further referred to as the appellant and the adverse party as the appellee. (a)

Section 2. When to appeal. — An appeal may be taken within fifteen (15) days after notice to the
appellant of the judgment or final order appealed from. Where a record on appeal is required, the
appellant shall file a notice of appeal and a record on appeal within thirty (30) days after notice of the
judgment or final order.

The period of appeal shall be interrupted by a timely motion for new trial or reconsideration. No
motion for extension of time to file a motion for new trial or reconsideration shall be allowed. (n)

Section 3. How to appeal. — The appeal is taken by filing a notice of appeal with the court that
rendered the judgment or final order appealed from. The notice of appeal shall indicate the parties to
the appeal, the judgment or final order or part thereof appealed from, and state the material dates
showing the timeliness of the appeal.

A record on appeal shall be required only in special proceedings and in other cases of multiple or
separate appeals.

The form and contents of the record on appeal shall be as provided in section 6, Rule 41.

Copies of the notice of appeal, and the record on appeal where required, shall be served on the
adverse party. (n)

Section 4. Perfection of appeal; effect thereof. — The perfection of the appeal and the effect thereof
shall be governed by the provisions of section 9, Rule 41. (n)

Section 5. Appellate court docket and other lawful fees. — Within the period for taking an appeal,
the appellant shall pay to the clerk of the court which rendered the judgment or final order appealed
from the full amount of the appellate court docket and other lawful fees. Proof of payment thereof
shall be transmitted to the appellate court together with the original record or the record on appeal,
as the case may be. (n)

Section 6. Duty of the clerk of court. — Within fifteen (15) days from the perfection of the appeal, the
clerk of court or the branch clerk of court of the lower court shall transmit the original record or the
record on appeal, together with the transcripts and exhibits, which he shall certify as complete, to the
proper Regional Trial Court. A copy of his letter of transmittal of the records to the appellate court
shall be furnished the parties. (n)

Section 7. Procedure in the Regional Trial Court. —

 (a) Upon receipt of the complete record or the record on appeal, the clerk of court of the
Regional Trial Court shall notify the parties of such fact.

(b) Within fifteen (15) days from such notice, it shall be the duty of the appellant to submit a
memorandum which shall briefly discuss the errors imputed to the lower court, a copy of
which shall be furnished by him to the adverse party. Within fifteen (15) days from receipt of
the appellant's memorandum, the appellee may file his memorandum. Failure of the
appellant to file a memorandum shall be a ground for dismissal of the appeal.

(c) Upon the filing of the memorandum of the appellee, or the expiration of the period to do
so, the case shall be considered submitted for decision. The Regional Trial Court shall
decide the case on the basis of the entire record of the proceedings had in the court of
original and such memoranda as are filed. (n)

Section 8. Appeal from orders dismissing case without trial; lack of jurisdiction. — If an appeal is
taken from an order of the lower court dismissing the case without a trial on the merits, the Regional
Trial Court may affirm or reverse it, as the case may be. In case of affirmance and the ground of
dismissal is lack of jurisdiction over the subject matter, the Regional Trial Court, if it has jurisdiction
thereover, shall try the case on the merits as if the case was originally filed with it. In case of
reversal, the case shall be remanded for further proceedings.

If the case was tried on the merits by the lower court without jurisdiction over the subject matter, the
Regional Trial Court on appeal shall not dismiss the case if it has original jurisdiction thereof, but
shall decide the case in accordance with the preceding section, without prejudice to the admission of
amended pleadings and additional evidence in the interest of justice. (n)

Section 9. Applicability of Rule 41. — The other provisions of Rule 41 shall apply to appeals
provided for herein insofar as they are not inconsistent with or may serve to supplement the
provisions of this Rule. (n)

RULE 41

Appeal From The Regional Trial Courts

Section 1. Subject of appeal. — An appeal may be taken from a judgment or final order that
completely disposes of the case, or of a particular matter therein when declared by these Rules to
be appealable.

No appeal may be taken from:

(a) An order denying a motion for new trial or reconsideration;

(b) An order denying a petition for relief or any similar motion seeking relief from judgment;

(c) An interlocutory order;

(d) An order disallowing or dismissing an appeal;

 (e) An order denying a motion to set aside a judgment by consent, confession or
compromise on the ground of fraud, mistake or duress, or any other ground vitiating consent;

(f) An order of execution;

(g) A judgment or final order for or against one or more of several parties or in separate
claims, counterclaims, cross-claims and third-party complaints, while the main case is
pending, unless the court allows an appeal therefrom; and

(h) An order dismissing an action without prejudice.

In all the above instances where the judgment or final order is not appealable, the aggrieved party
may file an appropriate special civil action under Rule 65. (n)

Section 2. Modes of appeal. —

(a) Ordinary appeal. — The appeal to the Court of Appeals in cases decided by the Regional
Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal
with the court which rendered the judgment or final order appealed from and serving a copy
thereof upon the adverse party. No record on appeal shall be required except in special
proceedings and other cases of multiple or separate appeals where law on these Rules so
require. In such cases, the record on appeal shall be filed and served in like manner.

(b) Petition for review. — The appeal to the Court of Appeals in cases decided by the
Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition for review
in accordance with Rule 42.

(c) Appeal by certiorari. — In all cases where only questions of law are raised or involved,
the appeal shall be to the Supreme Court by petition for review on certiorari in accordance
with the Rule 45. (n)

Section 3. Period of ordinary appeal. — The appeal shall be taken within fifteen (15) days from
notice of the judgment or final order appealed from. Where a record on appeal is required, the
appellant shall file a notice of appeal and a record on appeal within thirty (30) days from notice of the
judgment or final order.

The period of appeal shall be interrupted by a timely motion for new trial or reconsideration. No
motion for extension of time to file a motion for new trial or reconsideration shall be allowed. (n)

Section 4. Appellate court docket and other lawful fees. — Within the period for taking an appeal,
the appellant shall pay to the clerk of the court which rendered the judgment or final order appealed
from, the full amount of the appellate court docket and other lawful fees. Proof of payment of said
fees shall be transmitted to the appellate court together with the original record or the record on
appeal. (n)

Section 5. Notice of appeal. — The notice of appeal shall indicate the parties to the appeal, specify
the judgment or final order or part thereof appealed from, specify the court to which the appeal is
being taken, and state the material dates showing the timeliness of the appeal. (4a)

Section 6. Record on appeal; form and contents thereof. — The full names of all the parties to the
proceedings shall be stated in the caption of the record on appeal and it shall include the judgment
or final order from which the appeal is taken and, in chronological order, copies of only such
pleadings, petitions, motions and all interlocutory orders as are related to the appealed judgment or
final order for the proper understanding of the issue involved, together with such data as will show
that the appeal was perfected on time. If an issue of fact is to be raised on appeal, the record on
appeal shall include by reference all the evidence, testimonial and documentary, taken upon the
issue involved. The reference shall specify the documentary evidence by the exhibit numbers or
letters by which it was identified when admitted or offered at the hearing, and the testimonial
evidence by the names of the corresponding witnesses. If the whole testimonial and documentary
evidence in the case is to be included, a statement to that effect will be sufficient without mentioning
the names of the witnesses or the numbers or letters of exhibits. Every record on appeal exceeding
twenty (20) pages must contain a subject index. (6a)

Section 7. Approval of record on appeal. — Upon the filing of the record on appeal for approval and
if no objection is filed by the appellee within five (5) days from receipt of a copy thereof, the trial court
may approve it as presented or upon its own motion or at the instance of the appellee, may direct its
amendment by the inclusion of any omitted matters which are deemed essential to the determination
of the issue of law or fact involved in the appeal. If the trial court orders the amendment of the
record, the appellant, within the time limited in the order, or such extension thereof as may be
granted, or if no time is fixed by the order within ten (10) days from receipt thereof, shall redraft the
record by including therein, in their proper chronological sequence, such additional matters as the
court may have directed him to incorporate, and shall thereupon submit the redrafted record for
approval, upon notice to the appellee, in like manner as the original draft. (7a)

Section 8. Joint record on appeal. — Where both parties are appellants, they may file a joint record
on appeal within the time fixed by section 3 of this Rule, or that fixed by the court. (8a)

Section 9. Perfection of appeal; effect thereof. — A party's appeal by notice of appeal is deemed
perfected as to him upon the filing of the notice of appeal in due time.

A party's appeal by record on appeal is deemed perfected as to him with respect to the subject
matter thereof upon the approval of the record on appeal filed in due time.

In appeals by notice of appeal, the court loses jurisdiction over the case upon the perfection of the
appeals filed in due time and the expiration of the time to appeal of the other parties.

In appeals by record on appeal, the court loses jurisdiction only over the subject matter thereof upon
the approval of the records on appeal filed in due time and the expiration of the appeal of the other
parties.

In either case, prior to the transmittal of the original record or the record on appeal, the court may
issue orders for the protection and preservation of the rights of the parties which do not involve any
matter litigated by the appeal, approve compromises, permit appeals of indigent litigants, order
execution pending appeal in accordance with 2 of Rule 39, and allow withdrawal of the appeal. (9a)

Section 10. Duty of clerk of court of the lower court upon perfection of appeal. — Within thirty (30)
days after perfection of all the appeals in accordance with the preceding section, it shall be the duty
of the clerk of court of the lower court:

(a) To verify the correctness of the original record or the record on appeal, as the case may
be aid to make certification of its correctness;
 (b) To verify the completeness of the records that will be, transmitted to the appellate court;

(c) If found to be incomplete, to take such measures as may be required to complete the
records, availing of the authority that he or the court may exercise for this purpose; and

(d) To transmit the records to the appellate court.

If the efforts to complete the records fail, he shall indicate in his letter of transmittal the exhibits or
transcripts not included in the records being transmitted to the appellate court, the reasons for their
non-transmittal, and the steps taken or that could be taken to have them available.

The clerk of court shall furnish the parties with copies of his letter of transmittal of the records to the
appellate court. (10a)

Section 11. Transcript. — Upon the perfection of the appeal, the clerk shall immediately direct the
stenographers concerned to attach to the record of the case five (5) copies of the transcripts of the
testimonial evidence referred to in the record on appeal. The stenographers concerned shall
transcribe such testimonial evidence and shall prepare and affix to their transcripts an index
containing the names of the witnesses and the pages wherein their testimonies are found, and a list
of the exhibits and the pages wherein each of them appears to have been offered and admitted or
rejected by the trial court. The transcripts shall be transmitted to the clerk of the trial court who shall
thereupon arrange the same in the order in which the witnesses testified at the trial, and shall cause
the pages to be numbered consecutively. (12a)

Section 12. Transmittal. — The clerk of the trial court shall transmit to the appellate court the
original record or the approved record on appeal within thirty (30) days from the perfection of the
appeal, together with the proof of payment of the appellate court docket and other lawful fees, a
certified true copy of the minutes of the proceedings, the order of approval, the certificate of
correctness, the original documentary evidence referred to therein, and the original and three (3)
copies of the transcripts. Copies of the transcripts and certified true copies of the documentary
evidence shall remain in the lower court for the examination of the parties. (11a)

Section 13. Dismissal of appeal. — Prior to the transmittal of the original record or the record on
appeal to the appellate court, the trial court may motu propio or on motion dismiss the appeal for
having been taken out of time. (14a)

3.JUDGEMENT/FINAL ORDERS SUBJECT TO APPEAL

REPUBLIC VS. ORTIGAS AND CO., LTD

LEONEN, J. • LEONEN, J. • G.R. No. 171496

March 03, 2014
THIRD DIVISION G.R. No. 171496, March 03, 2014 REPUBLIC OF THE
PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND
HIGHWAYS (DPWH), PETITIONER, VS. ORTIGAS AND COMPANY LIMITED
PARTNERSHIP, RESPONDENT.
DECISION

LEONEN, J.:

Owners whose properties were taken for public use are entitled to just
compensation.

This is a petition for review on Certiorari under Rule 45 of the Rules of Court,
seeking to nullify and set aside the Court of Appeals' resolution dated October
14, 2005. The Court of Appeals' resolution dismissed petitioner Republic of the
Philippines' appeal from the decision of the Regional Trial Court granting
private respondent Ortigas' petition for authority to sell. This petition also
seeks to nullify the Court of Appeals' resolution dated February 9, 2006, which
denied petitioner Republic of the Philippines' Motion for reconsideration.

Respondent, Ortigas and Company Limited Partnership, is the owner of a

parcel of land known as Lot 5-B-2 with an area of 70,278 square meters in
Pasig City.[1]

Upon the request of the Department of Public Works and Highways, respondent
Ortigas caused the segregation of its property into five lots and reserved one
portion for road widening for the C-5 flyover project. [2] It designated Lot 5-B-2-
A, a 1,445-square-meter portion of its property, for the road widening of
Ortigas Avenue.[3] Respondent Ortigas also caused the annotation of the term
"road widening" on its title. The title was then inscribed with an encumbrance
that it was for road widening and subject to Section 50 of Presidential Decree
No. 1529 or the Property Registration Decree. [4]

The C-5-Ortigas Avenue flyover was completed in 1999, utilizing only 396
square meters of the 1,445-square-meter allotment for the project. [5]

Consequently, respondent Ortigas further subdivided Lot 5-B-2-A into two lots:
Lot 5-B-2-A-1, which was the portion actually used for road widening, and Lot
5-B-2-A-2, which was the unutilized portion of Lot 5-B-2-A. [6]

On February 14, 2001, respondent Ortigas filed with the Regional Trial Court of
Pasig a petition for authority to sell to the government Lot 5-B-2-A-1.
[7]
Respondent Ortigas alleged that the Department of Public Works and
Highways requested the conveyance of the property for road widening
purposes.[8] The case was raffled to Branch 267. [9]

In an order dated March 9, 2001, [10] the Regional Trial Court set the case for
hearing on April 27, 2001, giving opportunity to any interested person to
appear, oppose, and show cause why respondent Ortigas' petition may not be
granted. In the same order, respondent Ortigas was directed to cause the
publication of both the Regional Trial Court's order and respondent Ortigas'
petition. The trial court also directed the Sheriff to serve copies of its order and
respondent Ortigas' petition to the Office of the Solicitor General, Office of the
City Prosecutor, Department of Public Works and Highways, City Engineer of
Pasig, and the Register of Deeds of Pasig.

Despite due notice to the public, including the Office of the Solicitor General
and the Department of Public Works and Highways, no one appeared to oppose
respondent Ortigas' petition in the hearing on April 27, 2001. [11] Respondent
Ortigas was able to establish the jurisdictional facts of the case and was
allowed to present Evidence Ex Parte before the appointed Commissioner, the
Branch Clerk of Court, Atty. Edelyn M. Murillo. [12]

Respondent Ortigas presented Mr. Romulo Rosete to support its allegations in

its petition for authority to sell to the government. [13] Rosete was respondent
Ortigas' liaison officer who represented respondent Ortigas in government
transactions.[14] He testified that he was aware of respondent Ortigas'
ownership of the 70,278-square-meter property in Pasig and its subdivision for
the purpose of designating an area for the C-5-Ortigas Avenue flyover project.
[15]
He also testified that only 396 square meters of the 1,445-square-meter
designated lot was actually utilized after the road had been finished being
constructed in 1999.[16] This caused respondent Ortigas to further subdivide the
designated property into two lots. [17] Rosete presented a certified true copy of
the title of the utilized portion of the lot to prove respondent Ortigas'
ownership.[18] He also alleged that respondent Ortigas was not compensated for
the use of its property, and respondent Ortigas was requested by the
Department of Public Works and Highways to convey the utilized property to
the government.[19] Hence, to facilitate the processing of its compensation,
respondent Ortigas filed a petition with the Regional Trial Court. [20]

Finding merit in respondent Ortigas' petition, the Regional Trial Court issued an
order on June 11, 2001, authorizing the sale of Lot 5-B-2-A-1 to petitioner
Republic of the Philippines. [21]

On June 27, 2001, petitioner Republic of the Philippines, represented by the

Office of the Solicitor General, filed an opposition, alleging that respondent
Ortigas' property can only be conveyed by way of donation to the government,
citing Section 50 of Presidential Decree No. 1529, also known as the Property
Registration Decree.[22]

On June 29, 2001, petitioner Republic of the Philippines filed a Motion for
reconsideration of the Regional Trial Court order dated June 11, 2001,
reiterating its argument in its opposition. [23]

In an order dated October 3, 2001, the Regional Trial Court denied petitioner
Republic of the Philippines' Motion for reconsideration.[24]

Petitioner Republic of the Philippines filed a notice of appeal on October 24,

2001, which reads:
The REPUBLIC OF THE PHILIPPINES, by counsel, hereby respectfully serves
notice of appeal to the Court of Appeals from this Honorable Court's Order
dated October 3, 2001 (copy of which was received by the Office of the
Solicitor General on October 15, 2001) on the ground that said Order is
contrary to law and Evidence.[25] (Emphasis supplied)

In its appellant's brief, petitioner Republic of the Philippines argued that the
Regional Trial Court erred in granting respondent Ortigas the authority to sell
its property to the government because the lot can only be conveyed by
donation to the government. [26]

In a resolution dated October 14, 2005, the Court of Appeals dismissed

petitioner Republic of the Philippines' appeal on the ground that an order or
judgment denying a Motion for reconsideration is not appealable. [27]

Petitioner Republic of the Philippines filed a Motion for reconsideration of the

Court of Appeals' resolution. In its Motion for reconsideration, petitioner
Republic of the Philippines pointed out that its reference in the notice of appeal
to the October 3, 2001 order denying the Motion for reconsideration of the trial
court's decision was merely due to inadvertence. In any case, Rule 37, Section
9 of the Rules of Procedure contemplates as non-appealable only those orders
which are not yet final. The October 3, 2001 order was already final as it
confirmed the June 11, 2001 judgment of the court. [28]

In its resolution dated February 9, 2006, the Court of Appeals denied

the Motion for reconsideration on the ground of lack of Jurisdiction. The Court of
Appeals noted that even if the order denying the Motion for reconsideration
was appealable, the appeal was still dismissible for lack of Jurisdiction because
petitioner Republic of the Philippines raised only a Question of Law.[29]

The issues for our consideration are the following: [30]

Whether the Court of Appeals gravely erred in denying petitioner Republic of the Philippines'
a)
appeal based on technicalities;
Whether the Court of Appeals gravely erred in dismissing the appeal from the trial court order
b)
granting respondent Ortigas authority to sell the land to the Republic of the Philippines.

The Office of the Solicitor General argued that strict application of the rules of
procedure overrides substantial justice, in this case, to the detriment of
petitioner Republic of the Philippines. [31]

On the trial court's grant of authority to respondent Ortigas to sell its property
to the government, the Office of the Solicitor General stated while citing Young
v. City of Manila[32] that respondent Ortigas' subdivision of its land for road
widening automatically withdrew the land from the commerce of man.
 Further, a piece of land segregated by a private owner for public use may
[33]

only be conveyed by donation to the government based on Section 50 of

Presidential Decree No. 1529. [34] "Presently, said land is already being used by
the public as part of the widened' road beside the C-5 [flyover] x x x." [35]

In its comment dated July 25, 2006, respondent Ortigas argued that the Office
of the Solicitor General committed a fatal mistake when it brought by way of
appeal the denial of its Motion for reconsideration before the Court of Appeals.
[36]

This petition lacks merit.

Appeals from the Regional

Trial Court to the Court of
Appeals under Rule 41 must
raise both questions of fact
and law

Section 2 of Rule 50 of the Rules of Court provides that appeals taken from the
Regional Trial Court to the Court of Appeals raising only pure questions of law
are not reviewable by the Court of Appeals. In which case, the appeal shall not
be transferred to the appropriate court. Instead, it shall be dismissed outright.

Appeals from the decisions of the Regional Trial Court, raising purely questions
of law must, in all cases, be taken to the Supreme Court on a petition for
review on Certiorari in accordance with Rule 45. [37] An appeal by notice of
appeal from the decision of the Regional Trial Court in the exercise of its
original Jurisdiction to the Court of Appeals is proper if the appellant raises
questions of fact or both questions of fact and questions of law. [38]

There is a Question of Law when the appellant raises an issue as to what law
shall be applied on a given set of facts.[39] Questions of law do "not involve an
examination of the probative value of the Evidence presented."[40] Its resolution
rests solely on the application of a law given the circumstances. [41] There is
a Question of Fact when the court is required to examine the truth or falsity of
the facts presented.[42] A Question of Fact "invites a review of the Evidence."[43]

The sole issue raised by petitioner Republic of the Philippines to the Court of
Appeals is whether respondent Ortigas' property should be conveyed to it only
by donation, in accordance with Section 50 of Presidential Decree No. 1529.
This question involves the interpretation and application of the provision. It
does not require the Court of Appeals to examine the truth or falsity of the
facts presented. Neither does it invite a review of the Evidence. The issue
raised before the Court of Appeals was, therefore, a question purely of law. The
proper mode of appeal is through a petition for review under Rule 45. Hence,
the Court of Appeals did not err in dismissing the appeal on this ground.

Nevertheless, we take time to emphasize that Rule 41, Section 1, paragraph

(a) of the Rules of Court, which provides that "[n]o appeal may be taken from
[a]n order denying a x x x Motion for reconsideration," is based on the implied
premise in the same section that the judgment or order does not completely
dispose of the case. The pertinent portion of Rule 41, Section 1 provides:

Section 1. Subject of appeal. An appeal may be taken from a judgment or final

order that completely disposes of the case, or of a particular matter therein
when declared by these Rules to be appealable.

In other words, what Section 1 of Rule 41 prohibits is an appeal taken from

an Interlocutory order. An Interlocutory order or judgment, unlike a final order or
judgment, does "not completely dispose of the case [because it leaves to the
court] something else to be decided upon." [44] Appeals from interlocutory orders
are generally prohibited to prevent delay in the administration of justice and to
prevent "undue burden upon the courts." [45]

Orders denying motions for reconsideration are not always interlocutory

orders. A Motion for reconsideration may be considered a final decision, subject
to an appeal, if "it puts an end to a particular matter," [46] leaving the court with
nothing else to do but to execute the decision.

"An appeal from an order denying a Motion for reconsideration of an order of

dismissal of a Complaint is effectively an appeal of the order of dismissal
itself."[47] It is an appeal from a final decision or order.

The trial court's order denying petitioner Republic of the Philippines' Motion for
reconsideration of the decision granting respondent Ortigas the authority to
sell its property to the government was not an Interlocutory order because it
completely disposed of a particular matter. An appeal from it would not cause
delay in the administration of justice. Petitioner Republic of the Philippines'
appeal to the Court of Appeals, however, was properly dismissed because the
former used the wrong mode of appeal.

In any event, we resolve the substantive issue on whether respondent Ortigas

may not sell and may only donate its property to the government in
accordance with Section 50 of Presidential Decree No. 1529.

Section 50 of Presidential
Decree No. 1529 does not
apply in a case that is the
proper subject of an
expropriation proceeding

Respondent Ortigas may sell its property to the government. It must be

compensated because its property was taken and utilized for public road
purposes.
Petitioner Republic of the Philippines insists that the subject property may not
be conveyed to the government through modes other than by donation. It
relies on Section 50 of the Property Registration Decree, which provides that
delineated boundaries, streets, passageways, and waterways of a subdivided
land may not be closed or disposed of by the owner except by donation to the
government. It reads:

Section 50. Subdivision and consolidation plans. Any owner subdividing a tract
of registered land into lots which do not constitute a subdivision project as
defined and provided for under P.D. No. 957, shall file with the Commissioner
of Land Registration or the Bureau of Lands a subdivision plan of such land on
which all boundaries, streets, passageways and waterways, if any, shall
be distinctly and accurately delineated.

If a subdivision plan, be it simple or complex, duly approved by the

Commissioner of Land Registration or the Bureau of Lands together with the
approved technical descriptions and the corresponding owner's duplicate
certificate of title is presented for registration, the Register of Deeds shall,
without requiring further court approval of said plan, register the same in
accordance with the provisions of the Land Registration Act, as amended:
Provided, however, that the Register of Deeds shall annotate on the new
certificate of title covering the street, passageway or open space, a
memorandum to the effect that except by way of donation in favor of the
national government, province, city or municipality, no portion of any
street, passageway, waterway or open space so delineated on the
plan shall be closed or otherwise disposed of by the registered owner
without the approval of the Court of First Instance of the province or
city in which the land is situated. (Emphasis supplied)

Petitioner Republic of the Philippines' reliance on Section 50 of the Property

Registration Decree is erroneous. Section 50 contemplates roads and streets in
a subdivided property, not public thoroughfares built on a private property that
was taken from an owner for public purpose. A public thoroughfare is not a
subdivision road or street.

More importantly, when there is taking of private property for some public
purpose, the owner of the property taken is entitled to be compensated. [48]

There is taking when the following elements are present:

1. The government must enter the private property;

2. The entrance into the private property must be indefinite or permanent;
3. There is color of legal authority in the entry into the property;
4. The property is devoted to public use or purpose;
 5. The use of property for public use removed from the owner all beneficial
enjoyment of the property. [49]

All of the above elements are present in this case. Petitioner Republic of the
Philippines' construction of a road a permanent structure on respondent
Ortigas' property for the use of the general public is an obvious permanent
entry on petitioner Republic of the Philippines' part. Given that the road was
constructed for general public use stamps it with public character, and
coursing the entry through the Department of Public Works and Highways
gives it a color of legal authority.

As a result of petitioner Republic of the Philippines' entry, respondent Ortigas

may not enjoy the property as it did before. It may not anymore use the
property for whatever legal purpose it may desire. Neither may it occupy, sell,
lease, and receive its proceeds. It cannot anymore prevent other persons from
entering or using the property. In other words, respondent Ortigas was
effectively deprived of all the bundle of rights [50] attached to ownership of
property.

It is true that the lot reserved for road widening, together with five other lots,
formed part of a bigger property before it was subdivided. However, this does
not mean that all lots delineated as roads and streets form part of subdivision
roads and streets that are subject to Section 50 of the Property Registration
Decree. Subdivision roads and streets are constructed primarily for the benefit
of the owners of the surrounding properties. They are, thus, constructed
primarily for private use as opposed to delineated road lots taken at the
instance of the government for the use and benefit of the general public.

In this case, the lot was reserved for road widening at the instance of
petitioner Republic of the Philippines. While the lot segregated for road
widening used to be part of the subdivided lots, the intention to separate it
from the delineated subdivision streets was obvious from the fact that it was
located at the fringes of the original lot [51] exactly at petitioner Republic of the
Philippines' intended location for the road widening project. Moreover,
petitioner Republic of the Philippines' intention to take the property for public
use was obvious from the completion of the road widening for the C-5 flyover
project and from the fact that the general public was already taking advantage
of the thoroughfare.

Delineated roads and streets, whether part of a subdivision or segregated for

public use, remain private and will remain as such until conveyed to the
government by donation or through expropriation proceedings. [52] An owner
may not be forced to donate his or her property even if it has been delineated
as road lots because that would partake of an illegal taking. [53] He or she may
even choose to retain said properties. [54] If he or she chooses to retain them,
however, he or she also retains the burden of maintaining them and paying for
real estate taxes.
An owner of a subdivision street which was not taken by the government for
public use would retain such burden even if he or she would no longer derive
any commercial value from said street. To remedy such burden, he or she may
opt to donate it to the government. In such case, however, the owner may not
force the government to purchase the property. That would be tantamount to
allowing the government to take private property to benefit private individuals.
This is not allowed under the Constitution, which requires that taking must be
for public use.[55]

Further, since the Constitution proscribes taking of private property without

just compensation,[56] any taking must entail a corresponding appropriation for
that purpose. Public funds, however, may only be appropriated for public
purpose.[57] Employment of public funds to benefit a private individual
constitutes Malversation.[58] Therefore, private subdivision streets not taken for
public use may only be donated to the government.

In contrast, when the road or street was delineated upon government request
and taken for public use, as in this case, the government has no choice but to
compensate the owner for his or her sacrifice, lest it violates the constitutional
provision against taking without just compensation, thus:

Section 9. Private property shall not be taken for public use without just
compensation.[59]

As with all laws, Section 50 of the Property Registration Decree cannot be

interpreted to mean a license on the part of the government to disregard
constitutionally guaranteed rights.

The right to compensation under Article III, Section 9 of the Constitution was
put in place to protect the individual from and restrain the State's sovereign
power of Eminent domain,[60] which is the government's power to condemn
private properties within its territory for public use or purpose. [61] This power is
inherent and need not be granted by law. [62] Thus, while the government's
power to take for public purpose is inherent, immense, and broad in scope, it is
delimited by the right of an individual to be compensated. In a nutshell, the
government may take, but it must pay.

Respondent Ortigas, immediately upon the government's suggestion that it

needed a portion of its property for road purposes, went so far as to go
through the process of annotating on its own title that the property was
reserved for road purposes. Without question, respondent Ortigas allowed the
government to construct the road and occupy the property when it could have
compelled the government to resort to expropriation proceedings and ensure
that it would be compensated. Now, the property is being utilized, not for the
benefit of respondent Ortigas as a private entity but by the public. Respondent
Ortigas remains uncompensated. Instead of acknowledging respondent
Ortigas' obliging attitude, however, petitioner Republic of the Philippines
refuses to pay, telling instead that the property must be given to it at no cost.
This is unfair.

In the parallel case of Alfonso v. Pasay City[63] wherein Alfonso was deprived of
his property for road purposes, was uncompensated, and was left without any
expropriation proceeding undertaken, this court said:

When a citizen, because of this practice loses faith in the government and its
readiness and willingness to pay for what it gets and appropriates, in the
future said citizen would not allow the Government to even enter his property
unless condemnation proceedings are first initiated, and the value of the
property, as provisionally ascertained by the Court, is deposited, subject to his
disposal. This would mean delay and difficulty for the Government, but all of its
own making.[64]

"There is nothing that can more speedily and effectively embitter a citizen and
taxpayer against his Government and alienate his faith in it, than an injustice
and unfair dealing like the present case." [65]

Title to the subject lot remains under respondent Ortigas' name. The
government is already in possession of the property but is yet to acquire title
to it. To legitimize such possession, petitioner Republic of the Philippines must
acquire the property from respondent Ortigas by instituting expropriation
proceedings or through negotiated sale, which has already been recognized in
law as a mode of government acquisition of private property for public
purpose.[66]

In a negotiated sale, the government offers to acquire for public purpose a

private property, and the owner may accept or reject it. A rejection of the offer,
however, would most likely merely result in the commencement of an
expropriation proceeding that would eventually transfer title to the
government. Hence, the government's offer to acquire for public purpose a
private property may be considered as an act preparatory to an expropriation
proceeding. Therefore, a private owner's initiative to segregate a property to
accommodate government needs saves the government from a long and
arduous expropriation proceeding. This is a commendable act on the part of
the owner. It must be encouraged, not dampened by threats of property
deprivation without compensation.

Respondent Ortigas, which merely accommodated petitioner Republic of the

Philippines' request, remains uncompensated for the taking of its property.
Respondent Ortigas could have brought action to recover possession of the
property, but it instead chose to sell its property to petitioner Republic of the
Philippines. This is both fair and convenient as the road construction had long
been completed, and the road is already being utilized by the public.

Taking of private property without just compensation is a violation of a

person's property right. In situations where the government does not take the
trouble of initiating an expropriation proceeding, the private owner has the
option to compel payment of the property taken, when justified. The trial court
should continue to proceed with this case to determine just compensation in
accordance with law.

WHEREFORE, the petition is DENIED. The decision of the Court of Appeals

is AFFIRMED. The trial court is directed to proceed with the case with due and
deliberate dispatch in accordance with this decision.

SO ORDERED.

TONGONAN HOLDINGS & DEV’T CORP. VS ESCANO

HOLDINGS VS. ESCAÑO

MENDOZA, J. • MENDOZA, J. • G.R. No. 190994

September 07, 2011
THIRD DIVISION G.R. No. 190994, September 07, 2011 TONGONAN HOLDINGS
AND DEVELOPMENT Corporation, PETITIONER, VS. ATTY. FRANCISCO ESCAÑO,
JR. RESPONDENT.

DECISION

MENDOZA, J.:

This is a petition for review on Certiorari under Rule 45 of the Revised Rules of
Court filed by Tongonan Holdings and Development Corporation (THDC)
assailing, on questions of law, the August 12, 2009 Decision [1] of the
19th Division of the Court of Appeals, Cebu City (CA), in CA-G.R. SP No. 03935,
entitled "Atty. Francisco Escaño, Jr. v. Hon. Apolinario Buaya, in his capacity as
Presiding Judge, Regional Trial Court, Branch 35, Ormoc City and Tongonan
Holdings & Development Corporation, represented by its president, Mr. Antonio
Diano," and its December 10, 2009 Resolution denying the Motion for the
reconsideration thereof.

The Facts

This controversy between petitioner THDC and its erstwhile counsel,

respondent Atty. Francisco Escaño, Jr. (Atty. Escaño) arose from a case
for Eminent domain, docketed as Civil Case No. 3392-0 entitled "Philippine
National Oil Company v. Sps. Dominador and Minerva Samson" before the
Regional Trial Court, Branch 35, Ormoc City(RTC). THDC was named as
Defendant-Intervenor in the said case, as it had purchased the subject parcels
of land from the defendant spouses (Spouses Samson) and was represented by
Atty. Escaño of the Escaño Montehermoso Oliver and Trias Law Office from
February 24, 1997 to June 30, 1999. After the dissolution of the law firm, Atty.
Escaño continued to represent THDC from July 1, 1999 until his services was
terminated by THDC in April 2005. [2]

Eventually, in the RTC Order [3] dated November 27, 2000, THDC was awarded
just compensation in the amount of ?33,242,700.00 with legal interest at the
rate of 6% per annum from the date of the filing of the Complaint on June 10,
1996.

Meanwhile, Atty. Escaño sought the entry of his attorney's liens on the basis of
the Memorandum of Agreement (MOA) dated February 24, 1997, contracted
between him and THDC, stipulating the 30% professional or Attorney's Fees.
The RTC, in its Order[4] dated June 13, 2001, declared the claim of
30% Attorney's Fees on the judgment as unconscionable. The amount
of Attorney's Fees was then fixed at 15% of the judgment award in the name of
the partners. On appeal, this reduction of Attorney's Fees was affirmed by the
CA in its Decision[5] dated July 31, 2002.

Upon dismissal of PNOC's appeal in the main case in the CA, Atty. Escaño,
representing THDC, moved for the Execution of the RTC decision. The RTC then
ordered the issuance of a writ of Execution in its Order[6] dated March 11, 2005.

Subsequently, Atty. Escaño filed an Urgent Manifestation with Motion[7] alleging

that THDC had lost its juridical personality as a Corporation due to the
revocation of its certificate of registration. He prayed that the enforcement of
the said writ of Execution be held in abeyance until the termination of the NBI's
investigation relative to the allegations that the RTC Decision of November 27,
2000 and the dismissal of the appeal were secured through Fraud. THDC later
furnished the RTC with a copy of a certification from the Securities and
Exchange Commission (SEC) that the Corporation had not been dissolved. As a
result, THDC terminated the services of Atty. Escaño on the ground of loss of
confidence, which was approved by the RTC.
Afterward, Atty. Esca?ño filed a " Motion to Enter Into the Records
Attorney's Lien"[8] for additional Attorney's Fees of 15% for his professional
services, rendered after the dissolution of their law firm, from July 1, 1999 to
April 29, 2005. He also asked for another 33.7% as additional Attorney's
Fees for Atty. Lino Dumas and partners, whom he claimed to be his consultants
when the case was on appeal. These amounts were on top of the 15% already
finally awarded. In all, he was demanding a total of 63.7% of the judgment
award.

The RTC, in its September 26, 2005 Order, [9] denied the Motion and approved
only the 15% Attorney's Lien on the money judgment in favor of Atty. Escaño
and his former partners. It held that Atty. Escaño was not entitled to an
additional compensation on the ground that when he took over the case from
their law firm there was no separate contract for his legal services. The said
case became his case after the partners divided all of the firm's cases among
themselves; thus, the continuation of his services was still covered by the MOA
previously entered between him and THDC. After his Motion for reconsideration
was denied on January 26, 2006, Atty. Escaño filed a Notice of Appeal.

On April 2, 2007, the RTC gave due course to the Notice of Appeal. The
pertinent portion of the order states:

Nevertheless, in order to afford Atty. Escaño of all avenues available to him in

pursuing his claim for attorney's liens, despite the fact that the main case has
long become final and executory, his appeal is given due course. Despite the
granting of the appeal, the Execution will still proceed but the money recovered
will be held in escrow until the final determination of the Attorney's Fees.

Let the records of this case be forwarded to the Court of Appeals.

SO ORDERED.[10]

THDC then filed its Motion for Reconsideration and Motion to Dismiss
Appeal arguing that the Notice of Appeal was not the proper remedy as the
order being questioned was interlocutory which could not be the subject of an
appeal. It also questioned the order to hold the proceeds of the Execution in
escrow without any Motion from the parties.

On June 25, 2007, the RTC issued a Resolution [11] granting THDC's Motion and
setting aside the April 2, 2007 Order. It reasoned out that the issue
of Attorney's Fees was indeed interlocutory considering that it was only
incidental to the principal action and that the claim for Attorney's Fees could be
properly raised in another forum so as not to prejudice the main case. Atty.
Escaño moved for a reconsideration of the said resolution but it was denied in
an Order dated November 19, 2008.

Aggrieved, Atty. Escaño filed a Petition for Certiorari under Rule 65 with the CA
assailing both the June 25, 2007 Resolution and November 19, 2008 Order of
the RTC. His petition included a prayer to put in escrow all the proceeds of the
money judgment in Civil Case No. 3392-0.

On August 12, 2009, the CA ruled that the RTC acted with Grave abuse of
discretion in denying the appeal. The CA concluded that giving due course to
Atty. Escaño's Notice of Appeal and putting in escrow the money judgment was
proper and appropriate as there was still a need to determine the issue
of Attorney's Fees. The dispositive portion of the assailed CA Decision reads:

WHEREFORE, the petition is GRANTED. The orders of respondent court dated

June 25, 2007 and November 19, 2008, denying petitioner's Notice of
Appeal is SET ASIDE. The Order of the public respondent dated April 2, 2007
is REVIVED and is DECLARED immediately EXECUTORY.

Accordingly, petitioner's Notice of Appeal is given due course and respondent

court is DIRECTED to transmit the records of Civil Case No. 3392-0 to this
Court for review on appeal of the Orders dated September 26, 2005 and
January 26, 2006 regarding the issue of petitioner's Attorney's Fees.

Further, public respondent is directed to put in escrow account at the local

branch of the Land Bank of the Philippines the proceeds of the judgment in
Civil Case No. 3392-0 not subject to existing liens, until the issues as to
petitioner's Attorney's Fees on the basis [of] quantum meruit is finally resolved
and until the identity of the person or persons duly authorized to receive the
proceeds of the judgment in Civil Case 3392-0 are clearly established on
appeal.

SO ORDERED.[12]

THDC filed a Motion for reconsideration of the above decision but the CA
denied the same in its Resolution [13] dated December 10, 2009. Hence, on
February 19, 2010, THDC interposed the present petition before this Court
anchored on the following

GROUNDS

(1)

THE CA ERRONEOUSLY BASED ITS DECISION ON THE PRESUMPTION

THAT THE APPEAL OF ATTY. ESCAÑO WAS PROPERLY LODGED

(2)

THE CA MISINTERPRETED AND MISAPPLIED THE MEANING OF

"Interlocutory order"

(3)

AN Interlocutory order CANNOT BE APPEALED

(4)

THE CA ERRONEOUSLY RULED ON AN ISSUE THAT IT DID NOT

RECOGNIZE

(5)

THE CA ERRONEOUSLY RULED ON A Cause of Action THAT IS NOT WITHIN

ITS ORIGINAL AND EXCLUSIVE Jurisdiction

(6)

THE CA ERRONEOUSLY RULED THAT THE ORDER OF THE RTC OF APRIL

2, 2007 WAS REVIVED AND FURTHER DECLARED IT TO BE
IMMEDIATELY EXECUTORY

(7)

DEPRIVATION OF THE PETITIONER'S RIGHT TO DUE PROCESS.[14]

It appears from the records that on September 6, 2010, the judgment in Civil
Case No. 3392-0 was duly satisfied with the full payment by PNOC of the
judgment obligation. On September 22, 2010, Atty. Escaño filed before this
Court an Urgent Manifestation alleging certain irregular acts of the RTC
pertaining to the money judgment deposited in its fiduciary fund.

Likewise, he filed a Supplemental Manifestation with Urgent Motion for

Issuance of a Cease and Desist Order dated October 4, 2010 stating that an
Order dated October 1, 2010 was issued by the RTC directing the release to
THDC of ?45,454,683.68 out of the ?53,476,098.45 proceeds of the judgment
in Civil Case No. 3392-0 which was ordered to be put in escrow account. Acting
on the said manifestations, this Court, in a Resolution dated October 6, 2010,
issued a Temporary Restraining Order enjoining THDC and the RTC from
implementing and enforcing the Order of October 1, 2010.

On the main issue, the Court finds the petition impressed with merit.

At the outset, Atty. Escaño alleges that the petition failed to comply with Rule
45 as it did not distinctly set forth the questions of law THDC raised before this
Court, and that the seven (7) grounds raised by THDC involved questions of
facts, rather than of law, which are not proper in a petition for review under
Rule 45. He likewise alleges that the petition did not include clearly legible
duplicate original or certified true copies of the material documents of CA-GR
SP No. 03935.

In Republic of the Philippines v. Malabanan,[15] this Court distinguished

a Question of Law from a Question of Fact. A Question of Law arises when there is
doubt as to what the law is on a certain state of facts, while there is a Question
of Fact when the doubt arises as to the truth or falsity of the alleged facts. For
a question to be one of law, the same must not involve an examination of the
probative value of the Evidence presented by the litigants or any of them. The
resolution of the issue must rest solely on what the law provides on the given
set of circumstances. Once it is clear that the issue invites a review of
the Evidence presented, the question posed is one of fact. Thus, the test of
whether a question is one of law or of fact is not the appellation given to such
question by the party raising the same; rather, it is whether the appellate court
can determine the issue raised without reviewing or evaluating the Evidence, in
which case, it is a Question of Law; otherwise it is a Question of Fact.[16]

A perusal of the present petition shows that the issues raised by THDC are
questions of law, as the same can be resolved solely on what the law provides
under the undisputed facts. The issues are the correct appreciation of Atty.
Escaño's appeal, the exact meaning, interpretation and application of
"Interlocutory order;" the rule that an Interlocutory order cannot be appealed;
the legality of the CA decision on the issue of escrow; whether the CA can
make a determination of an issue that it did not recognize; the legality of the
CA decision on the issue of Attorney's Fees when there is no pending case yet
on the matter; the CA's declaration in the questioned decision that the RTC
Order dated April 2, 2007 is revived and immediately executory; and the
question of denial of due process. All of these, indeed, are questions of law.
Thus, Atty. Escaño's argument that the grounds thereof are factual is
misleading.

On the issue of whether the RTC's order of denial of the Motion for entry for
additional Attorney's Fees was interlocutory or final, THDC contends that it was
merely interlocutory because the issue was only collateral to the main issue
of Eminent domain. It submits that the main action of Eminent domain could exist
independently without the issue of Attorney's Fees. The RTC decision of
November 27, 2000 did not even mention the award of Attorney's Fees.
According to THDC, the matter of Attorney's Fees arose when Atty. Escaño
requested that his attorney's liens be entered into the records of the case.
Thus, it insists that the orders relative to the issue of Attorney's Fees being
interlocutory, the same cannot be the subject of appeal in accordance with the
provision of Section 1(c), Rule 41 of the Revised Rules of Court.

Atty. Escaño, on the other hand, counters that the Orders of September 26,
2005 and January 26, 2006 are not interlocutory, but final orders and,
therefore, appealable, as correctly ruled by the CA. He reasons that both
orders finally disposed the issue of his Attorney's Fees before the RTC and there
was nothing more to be done pertaining to the same matter.

An order or judgment of the RTC is deemed final when it finally disposes of a

pending action, so that nothing more can be done with it in the trial court. In
other words, the order or judgment ends the litigation in the lower court. On
the other hand, an order which does not dispose of the case completely and
indicates that other things remain to be done by the court as regards the
merits, is interlocutory.[17]

In Santos v. People of the Philippines, this Court laid down the test in finding
whether an order is interlocutory or final, thus:
The test to determine whether an order or judgment is interlocutory or final is
this: "Does it leave something to be done in the trial court with respect to the
merits of the case? If it does, it is interlocutory; if it does not, it is final". A court
order is final in character if it puts an end to the particular matter resolved or
settles definitely the matter therein disposed of, such that no further questions
can come before the court except the Execution of the order. The term "final"
judgment or order signifies a judgment or an order which disposes of the cause
as to all the parties, reserving no further questions or directions for future
determination. The order or judgment may validly refer to the entire
controversy or to some definite and separate branch thereof. "In the absence
of a statutory definition, a final judgment, order or decree has been held to be
x x x one that finally disposes of, adjudicates, or determines the rights, or
some right or rights of the parties, either on the entire controversy or on some
definite and separate branch thereof, and which concludes them until it is
reversed or set aside." The central point to consider is, therefore, the effects of
the order on the rights of the parties. A court order, on the other hand, is
merely interlocutory in character if it is provisional and leaves substantial
proceeding to be had in connection with its subject. The word "interlocutory"
refers to "something intervening between the commencement and the end of a
suit which decides some point or matter but is not a final decision of the whole
controversy."[18]

InPlanters Products, Inc. v. Court of Appeals,[19]the Court ruled that the order of
the respondent trial court awarding Attorney's Fees in favor of a claimant-
lawyer is a final order and not interlocutory. In the said case, petitioner entered
into an agreement for an Omnibus Credit Line with private respondent bank.
The latter engaged the services of private respondent counsel in filing a suit
against the petitioner to enforce the latter's obligation under the agreement.
As Attorney's Fees, respondent bank assigned to respondent lawyer the right to
collect fees due and collectible from the petitioner under the Trust receipts.
Respondent bank was able to realize from the sale of the attached
merchandise covered by the Trust receipt agreement. In as much as
respondent lawyer had not yet been paid his Attorney's Fees, he filed a claim
for Attorney's Fees which was granted by the trial court.

On the basis of the aforecited distinction and applying the foregoing test, this
Court is of the view that the RTC orders of September 26, 2005 and January 26,
2006 denying the claim for additional Attorney's Fees were final considering
that the main action, which was Civil Case No. 3392-0 for Eminent domain, was
already final. In fact, it was the subject of several motions for Execution. Thus,
the RTC had nothing more to do with respect to the relative rights of the
parties therein. There is nothing left for the judge to perform except to enforce
the judgment.

Moreover, as correctly noted by the CA, the RTC ended with finality the issue of
Atty. Escaño's Attorney's Fees when it rendered the aforementioned orders,
having ruled that he was not entitled to it. The RTC need not resolve anything
else thereby making the said orders final.

Nevertheless, both the RTC and CA were wrong when they entertained
the Motion of Atty. Escaño for additional Attorney's Fees. Indeed, the RTC was
correct when it denied the same but it should have added as the more
important reason that the matter of his Attorney's Fees was already final and
could no longer be opened and litigated upon.

The reason is that the matter of Attorney's Fees of Atty. Escaño was already
covered by a final judgment and can no longer be questioned. The issue on the
matter is now Res Judicata. It must be recalled that the RTC in its Order dated
June 13, 2001,[20] reduced Atty. Escaño's Attorney's Fees from thirty percent
(30%) to fifteen percent (15%) for being "too unconscionable." This decrease in
the amount of Attorney's Fees was sustained by the CA on appeal in its July 31,
2002 Decision.[21] No appeal was taken from the decision of the CA. Thus, the
decision of the CA on the matter of Attorney's Fees constituted Res Judicata.

It is a fundamental legal principle that a decision that has acquired finality

becomes immutable and unalterable, and may no longer be modified in any
respect, even if the modification is meant to correct erroneous conclusions of
fact and law, and whether it be made by the court that rendered it or by the
highest court of the land. The only exceptions to the general rule on finality of
judgments are the so-called Nunc Pro Tunc entries which cause no prejudice to
any party, void judgments, and whenever circumstances transpire after the
finality of the decision which render its Execution unjust and inequitable.
[22]
None of these exceptions is obtaining in the present case.

Litigation must at some time end, even at the risk of occasional errors. Public
policy dictates that once a judgment becomes final, executory and
unappealable, the prevailing party should not be denied the fruits of his victory
by some subterfuge devised by the losing party. Unjustified delay in the
enforcement of a judgment sets at naught the role and purpose of the courts
to resolve justiciable controversies with finality. [23]

The CA could have just dismissed the matter of additional Attorney's

Fees outright on the ground of Res Judicata. Instead of doing so, however, it
provided a semblance of propriety to it when it gave due course to Atty.
Escaño's appeal. The fact that Atty. Escaño had complied with all the
requirements of appeal under Rule 41 of the Revised Rules of Court is
irrelevant considering that an appeal from the final and immutable judgment of
the RTC is not proper. The appeal should have been dismissed on the ground
that the order appealed from is not appealable (Section 1(i) Rule 50). An
appeal which requires the elevation of the entire records of the case entails a
long process which would cause unnecessary delay. This, in effect, would
negate an expeditious disposition of the case at bench.

The CA compounded the problem when it ordered the entire proceeds of the
judgment in Civil Case No. 3392-0, not subject to existing liens, to be held in
an escrow account at the local branch of the Land Bank of the Philippines. The
order of the CA was anchored on the argument that the identity of the
person(s) duly authorized to receive the proceeds of the judgment would still
be resolved in the appeal.

Indeed, this Court recognizes the inherent power of the courts to control its
processes and orders and to employ all auxiliary writs, processes and other
means necessary to carry its Jurisdiction into effect, as embodied in the Rules
of Court. An order directing the proceeds of the judgment to be deposited in
escrow may be one of these auxiliary writs and processes. So, also, the act of
placing property in litigation under judicial possession, whether in the hands of
a receiver, an Administrator, or as in this case, in a government bank, is an
ancient and accepted procedure. [24]

Under the prevailing circumstances, however, the order to hold in escrow the
entire judgment award, including the portion that should have been the just
compensation of THDC as owner of the parcels of land subject of the Eminent
domain case, was certainly not proper. To delay the payment of just
compensation is virtually tantamount to a deprivation of one's property rights.

Considering the attendant circumstances, Atty. Escaño cannot validly invoke

the ruling in Go v. Go.[25]In that case, the Court sustained the escrow order
issued by the trial court to deposit the monthly rentals of the property subject
therein pending the resolution of the main action for Partition or until the
question of co-ownership is finally determined. In upholding the propriety of
such order, the Court held that the rental deposit was the most prudent way to
preserve the rights of the contending parties pending the final determination
of who was lawfully entitled thereto.

In this case, however, the rights of the petitioner were already finally
determined in the main case for Eminent domain. Verily, the recipient of the
judgment proceeds had already been ascertained, THDC, the judgment-
obligee, who has yet to receive the just compensation for the property wrested
from it by the government in the exercise of its power of Eminent domain. It
was, therefore, manifestly unnecessary and highly irregular for the CA to order
the escrow of the entire amount.

Moreover, THDC's personality as a Corporation was only belatedly questioned

by Atty. Escaño after his failure to receive more than the 15% Attorney's
Fees as ruled by the RTC. Records disclose that Atty. Escaño has already been
awarded his Attorney's Fees, in accordance with the MOA he signed with THDC,
which were supposed to be contingent on his client receiving its award. Atty.
Escaño is now estopped to question the personality of his client. As properly
argued by THDC, the CA cannot pass upon the issue of the legality of THDC as
a Corporation, which is not within its exclusive and original Jurisdiction. Such
authority belongs to the SEC, which is the agency vested with
absolute Jurisdiction, supervision and control over corporations as provided for
in Presidential Decree No. 902-A. Furthermore, there is no pending case yet in
any court of competent Jurisdiction questioning THDC's juridical personality.
Yet, the CA hastily issued the escrow order even when the sole pending issue
in the dismissed notice of appeal was Atty. Escaño's attorney's liens. This
compelling circumstance warrants a reversal of the CA decision. THDC should
not be prevented from receiving its judgment-award.

To recapitulate, Atty. Escaño is not entitled to the escrow of the entire

proceeds of the case. Neither is he entitled to the escrow of additional claim
for Attorney's Fees of 15% for his personal services after the dissolution of their
law firm and 33.7% in favor of his consultant, Atty. Lino Dumas and Partners.
Atty. Escaño has already collected his fees through his former law firm and is
now enjoying the fruits of his labor, the uncertainty of the release of his client's
award notwithstanding. He, therefore, has no more right to prevent the release
of the judgment award in favor of THDC.

In fine, this Court holds that THDC, being the rightful claimant, is entitled to
the proceeds of the judgment not subject to existing liens. To uphold the
escrow of the full judgment award would ultimately result in patent injustice
and prejudice to THDC, which, to this date, has yet to be compensated for the
taking of its property. This Court is not only a court of law, but also a court of
justice.[26]

WHEREFORE, the petition is GRANTED. The August 12, 2009 Decision and
the December 10, 2009 Resolution of the Court of Appeals
are REVERSED and SET ASIDE. Accordingly, the RTC is ordered to allow the
immediate release to the petitioner the total amount due in Civil Case No.
3392-0 not subject to existing liens.

The Temporary Restraining Order issued by the Court on October 6, 2010 is

ordered LIFTED.

SO ORDERED.

4.MATTERS NOT APPEALABLE

GUPILAN-AGUILAR VS. OMBUDSMAN

VELASCO JR., J. • VELASCO JR., J. • G.R. No. 197307

February 26, 2014
THIRD DIVISION G.R. No. 197307, February 26, 2014 FLOR GUPILAN-AGUILAR
AND HONORE R. HERNANDEZ, PETITIONERS, VS. OFFICE OF THE OMBUDSMAN,
REPRESENTED BY HON. SIMEON V. MARCELO; AND PNP-CIDG, REPRESENTED
BY DIR. EDUARDO MATILLANO, RESPONDENTS.

DECISION

VELASCO JR., J.:

The Case

This Petition for Review on Certiorari under Rule 45 seeks to reverse and set
aside the July 22, 2009[1] Decision of the Court of Appeals and its June 13, 2011
Resolution in CA-G.R. SP No.88954, affirming the decision of the Ombudsman
in OMB-C-A-03-0327-I that found petitioners guilty of grave misconduct and
dishonesty and dismissed them from the service.

The Facts

In June 2003, the Philippine National Police Criminal Investigation and

Detection Group (PNP-CIDG) conducted an investigation on the lavish lifestyle
and alleged nefarious activities of certain personnel of the Bureau of Customs,
among them petitioners Flor Gupilan-Aguilar (Aguilar), then Chief of the
Miscellaneous Division, and Honore Hernandez (Hernandez), Customs Officer
III. Aguilar was then receiving a basic annual salary of PhP 249,876. Her year-
to-year assets, liabilities and net worth for CYs 1999 to 2002, taken from her
Statement of Assets, Liabilities and Net Worth (SALNs) for the corresponding
years, are shown below:

Real Properties[2] 1999[3] 2000[4] 2001[5] 2002[6]

House and Lot in Quezon P1,030,000.0
P880,000.00 P980,000.00 P1,030,000.00
City 0
Apartment in Caloocan City P500,000.00 P550,000.00 P550,000.00 P550,000.00
Personal Properties[7]
Car P450,000.00 P450,000.00 P450,000.00 P900,000.00
Jewelry P500,000.00 P600,000.00 P650,000.00 P750,000.00
Appliances P100,000.00 P120,000.00 P125,000.00 P135,000.00
Furniture and Fixture P100,000.00 P120,000.00 P125,000.00 P150,000.00
P2,530,000.0 P2,820,000.0 P2,930,000.0 P3,515,000.0
Total Assets
0 0 0 0
Liabilities
GSIS - P450,000.00 P400,000.00 P300,000.00
Car Loan - - - P500,000.00
Total Liabilities - P450,000.00 P400,000.00 P800,000.00
P2,530,000.0 P2,370,000.0 P2,530,000.0 P2,715,000.0
Net Worth
0 0 0 0
Her SALNs for the years aforementioned do not reflect any income source
other than her employment. The spaces for her spouse's name and business
interest were left in blank.

Following weeks of surveillance and lifestyle probe, the PNP-CIDG investigating

team, headed by Atty. Virgilio Pablico, executed on July 28, 2003 a Joint-
Affidavit, depicting Aguilar, who, in her Personal Data Sheet, indicated "Blk 21
Lot 8 Percentage St. BIR Vill, Fairview, QC" as her home address, as owning
properties not declared or properly identified in her SALNs, specifically the
following:

Real Properties

1. Lot 6, Blk 21, BIR Village, Fairview, Quezon City worth approximately
Php1,000,000.00;
2. A 4-bedroom Unit 1007-A Antel Seaview Towers, 2626 Roxas Blvd.,
Pasay City worth Php12,000,000.00, with rights to 4 parking slots; and
3. Residential lot in Naga City worth Php148,200.00

Personal Properties
Make/Model Plate No. Registered Owner
Honda CRV BIM-888 Flor G. Aguilar
Isuzu Trooper HRH-659 Honore R. Hernandez
BMW (red) XCR-500 Asia Int'l Auctioneer, Inc.
BMW (silver) XFD-441 Southwing Heavy Industries, Inc.[8]
It was also unearthed that, during a four-year stretch, from July 1999 to June
2003, Aguilar, per the Bureau of Immigration (BI) records, took 13 unofficial
trips abroad, eight to Los Angeles, California, accompanied most of the time by
daughter Josephine. During the same period, her two other daughters also
collectively made nine travels abroad. Per the PNP-CIDG's estimate, Aguilar
would have spent around PhP 3,400,000 for her and her daughters' foreign
travels.

In view of what it deemed to be a wide variance between Aguilar's acquired

assets and what she spent for her four-year overseas travels, on one hand, and
her income, on the other, the PNP-CIDG, through P/Director Eduardo
Matillanoin a letter-Complaint of July 28, 2003, with enclosures, on a finding
that she has violated Republic Act No. (RA) 1379 [9] in relation to RA 3019[10] and
6713[11]charged her with grave misconduct and dishonesty. Hernandez was
charged too with the same offenses. Upon evaluation of the Complaint and of
the Evidence presented, which included the aforementioned joint- Affidavit, the
Ombudsman created an investigating panel which then conducted
administrative proceedings on the Complaint, docketed as OMB-C-A-03-0327-I.

By Order of September 3, 2003, then Overall Deputy Ombudsman Margarito

Gervacio, Jr. placed Aguilar under preventive suspension for six (6) months
without pay. Another Order, [12] however, was issued, effectively lifting the order
of preventive suspension on the stated ground that Aguilar's untraversed
controverting Evidence "considerably demonstrated the weakness of
the Evidence in support of the Complaint."

In the meantime, Aguilar filed her Counter-Affidavit,[13] primarily addressing the

allegations in the aforementioned joint- Affidavit. In it, she belied allegations
about not declaring Lot 6, Blk 21, BIR Village, Fairview. As explained, what she
considers her dwelling in that area consists of a duplex-type structure that sits
on the Lot 8 she originally owned and the contiguous Lot 6, which she
subsequently acquired from one Norma Jurado. Anent Unit 1007-A of Antel
Seaview Towers, Aguilar pointed to her US-based brother Carlo as owner of this
condo unit, the latter having purchased it from Mina Gabor on July 14, 2003.
Carlo, as she averred, has allowed her to stay in the unit. Appended to
Aguilar's counter-Affidavit is a Deed of Sale[14] purportedly executed in Los
Angeles in favor of Carlo.

Aguilar also denied owning the so-called third real property, the Panicuason,
Naga City lot, since she had already sold it in 1992.

As to allegations that she owns but failed to declare the four above-listed
vehicles, Aguilar admitted to owning only the subject Honda CRV van, but
denied the charge of failing to declare it in her SALN. She ascribed ownership
of the Isuzu Trooper to Hernandez. As for the red and silver BMW cars
registered in the name of the entities mentioned in the Complaint, Aguilar
alleged that they were merely lent to her by her brother's friend.

Not being the owner of the properties aforementioned, Aguilar wondered how
she can be expected to include them in her SALN.

Finally, she claimed having seven brothers and two sisters in the US who had
sponsored her US trips and who at times even sent airline tickets for her and
her daughters' use.

Hernandez, for his defense, alleged that the Complaint adverted only to his
being the registered owner of an Isuzu Trooper. There is no specification, he
added, as to his acquisition of, and not declaring, unexplained wealth. [15]

Ruling of the Ombudsman

Based on the Evidence on record and the parties' position papers, the
investigating panel issued for approval a draft Decision[16] dated June 3, 2004,
which found Aguilar guilty of the offenses charged. And while Hernandez was
also charged and investigated, the Fallo and even the body of the proposed
decision was silent as to him, save for the following line:

x x x the fact that the motor vehicle, Isuzu Trooper with Plate No. HRH 659 is
registered in his [Hernandez's] name, does not make him administratively
liable.[17]

Evidently not totally satisfied with the panel's recommended action, the
Ombudsman directed that a joint clarificatory hearing be conducted, and one
was held on September 23, 2004. The proceedings resulted in the issuance of
what the investigating panel styled as Supplemental Decision [18] dated January
6, 2005 further detailing the bases for the earlier finding on Aguilar's liability.
Like the earlier draft, no reference was made in the Fallo of the Supplemental
Decision to Hernandez's guilt or innocence.
Following a review of the two issuances thus submitted, then Ombudsman
Simeon Marcelo issued on January 18, 2005 a decision
denominated Supplement,[19] approving, with modification, the
adverted Decision and Supplemental Decision. The modification relates to the
liability of Hernandez whom the Ombudsman found to be Aguilar's dummy and
equally guilty of grave misconduct and dishonesty deserving too of the penalty
of dismissal from the service. Dispositively, the Supplement reads:

WHEREFORE, the Decision dated 03 June 2004 and Supplemental Decision

dated 06 January 2005 are approved insofar as it finds respondent Flor Aguilar
guilty of the administrative offenses of Grave Misconduct and Dishonesty and
is hereby meted the penalty of DISMISSAL from the service, with the accessory
penalty of cancellation of eligibility, forfeiture of Retirement benefits and
perpetual disqualification for re-employment in the government service.

Further, the undersigned hereby disapproves the ruling contained in the

Decision dated 03 June 2004 with regard to Honore Hernandez, the latter being
likewise found guilty of the administrative offenses of Grave Misconduct and
Dishonesty and is hereby meted the penalty of Dismissal from the service, with
the accessory penalty of cancellation of eligibility, forfeiture
of Retirement benefits and perpetual disqualification for re-employment in the
government service.

SO ORDERED.

Aguilar and Hernandez moved for but were denied reconsideration [20] via an
Order[21] of February 28, 2005. The two then went to the Court of Appeals (CA)
on a petition for review under Rule 43, docketed as CA-G.R. SP No. 88954.
Even as they decried what they tag as a case disposition in installments,
petitioners asserted the absence of Substantial Evidence to support the
allegations in the Complaint, and that the judgment of dismissal is
recommendatory and not immediately executory.

Ruling of the Court of Appeals

The CA, in its assailed Decision of July 22, 2009, affirmed that of the
Ombudsman, disposing as follows:

WHEREFORE, the instant petition is DENIED and the assailed Decision of the
Ombudsman finding petitioners guilty of Grave Misconduct and Dishonesty,
and meted them the penalty of DISMISSAL from the government service, with
the accessory penalty of cancellation of elibility, forfeiture
of Retirement benefits and perpetual disqualification for reemployment in the
government service in OMB-C-A-03-0327-I is AFFIRMED.

SO ORDERED.[[22]
Even as it junked petitioners' contention on the sufficiency of the
complainant's inculpating Evidence and on the nature of the Ombudsman's
judgment, the CA declared that petitioners' remedy under the premises is an
appeal to this Court by force of Section 14 in relation to Sec. 27 of RA 6770 or
the Ombudsman Act of 1989. Sec. 14 provides that "[n]o court shall hear
any appeal or application for remedy against the decisions or findings
of the Ombudsman, except the Supreme Court on pure questions of
law," while Sec. 27 states that "[f]indings of fact by the [OMB] when
supported by Substantial Evidence are conclusive."

On June 13, 2011, the CA denied petitioners' Motion for reconsideration.

Hence, the present petition raising the following issues:

1. Whether or not a Rule 43 petition to assail the findings or decisions of

the Ombudsman in an administrative case is proper;
2. Whether or not the acts complained of constitute grave misconduct,
dishonesty or both;
3. Whether or not there is Substantial Evidence to support the assailed
findings of the Ombudsman and the CA; and
4. Whether or not the decision of the Ombudsman is but recommendatory
or immediately executory.

Petitioners also invite attention to the June 4, 2012 decision of the Regional
Trial Court (RTC) of Manila in Criminal Case No. 08-263022, acquitting Aguilar
for falsification allegedly involving the same disputed transactions in OMB-C-A-
03-0327-I.

The Court's Ruling

The petition, on its procedural and substantial aspects, is partly meritorious.

The Court shall first address procedural issues and concerns raised in this
recourse.

Petitioners properly appealed to the CA

Petitioners first contend that the CA erred in its holding that, in line with Sec.
14[23] and Sec. 27 of RA 6770, they should have appealed the Ombudsmans
Decision to this Court on questions of law instead of filing a Rule 43 petition
before the CA.

Petitioners stand on solid ground on this issue.

The Ombudsman has defined prosecutorial powers and possesses adjudicative

competence over administrative disciplinary cases filed against public officers.
What presently concerns the Court relates to the grievance mechanism
available to challenge the OMB's decisions in the exercise of that
disciplinary Jurisdiction.
The nature of the case before the Office of the Ombudsman (OMB) determines
the proper remedy available to the aggrieved party and with which court it
should be filed. In administrative disciplinary cases, an appeal from the OMB's
decision should be taken to the CA under Rule 43, unless the decision is not
appealable owing to the penalty imposed.

In the case at bar, the Ombudsman, in the exercise of his administrative

disciplinary Jurisdiction had, after due investigation, adjudged petitioners guilty
of grave misconduct and dishonesty and meted the corresponding penalty.
Recourse to the CA via a Rule 43 petition is the proper mode of appeal. Rule 43
governs appeals to the CA from decisions or final orders of quasi-judicial
agencies.[24]

Reliance by the CA on Sec. 14 in relation to Sec. 27 of RA 6770 to support its

position as to which court a party may repair to to assail the OMB's decision in
disciplinary cases is misinformed. As has been held, those portions of said Sec.
27 and any other provisions implementing RA 6770, insofar as they expanded
the appellate Jurisdiction of this Court without its concurrence, violate Article
VI, Sec. 30 of the 1987 Constitution. [25] We said so in the landmark Fabian v.
Desierto:[26]

WHEREFORE, Section 27 of [RA] 6770 (Ombudsman Act of 1989), together

with Section 7, Rule III of [A.O.]. 07 (Rules of Procedure of the [OMB]), and any
other provision of law or issuance implementing the aforesaid Act and insofar
as they provide for appeals in administrative disciplinary cases from
the Office of the Ombudsman to the Supreme Court, are hereby
declared INVALID and of no further force and effect. (Emphasis added.)

As a consequence and in line with the regulatory philosophy adopted in

appeals from quasi-judicial agencies in the 1997 Revised Rules of Civil
Procedure, appeals from decisions of the Ombudsman in administrative
disciplinary cases should be taken to the CA under the provisions of Rule 43.
[27]
Barata v. Abalos, Jr.,[28]Coronel v. Desierto,[29] and recently Dimagiba v.
Espartero[30] have reiterated the pertinent holding in Fabian.

The Decision of the Ombudsman is mandatory and immediately

executory

This brings us to the issue on the nature of the Ombudsman's decisions in

administrative disciplinary suits, it being petitioners' posture that such
decisions, as here, are only recommendatory and, at any event, not
immediately executory for the reason that the PNP-CIDG filed the
basic Complaint on August 20, 2003[31] when the ruling in Tapiador v. Office of
the Ombudsman[32] had still controlling sway. To
petitioners, Tapiador enunciated the dictum that the Ombudsman's disciplinary
power is only to recommend, the power to suspend and dismiss erring
personnel being vested in the head of the office concerned. As a corollary
point, petitioners also advance the argument that the legal situation changed
only when Office of the Ombudsman v. Court of Appeals [33] and Ombudsman v.
Samaniego[34] were decided in June 2006 and September 2008, respectively.

We are not impressed.

Petitioners' witting or unwitting invocation of Tapiador is specious.

Administrative disciplinary authority of the OMB does not end with a
recommendation to punish. The statement in Tapiador that the Ombudsman is
without authority to directly dismiss an erring public official as its mandate is
only to recommend was mere Obiter dictum, and cannot, in the words
of Ledesma v. Court of Appeals,[35] "be cited as a doctrinal declaration of the
Supreme Court." In fact, the pronouncement in Tapiador on the Ombudsman's
disciplinary authority was only limited to two sentences, to wit:

x x x Besides, assuming arguendo, that petitioner were administratively liable,

the Ombudsman has no authority to directly dismiss the petitioner from the
government service x x x. Under Section 13, subparagraph (3), of Article XI of
the 1987 Constitution, the Ombudsman can only "recommend" the removal of
the public official or employee found to be at fault, to the public official
concerned.[36]

The terse Obiter in Tapiador should be compared with the holding

in Ombudsman v. De Leon[37] which even chronicled the pertinent internal rules
of procedure in the Office of the Ombudsman (OMB) and illustrated that, as
early as 2000, rules were already enforced by the OMB that provide for the
immediate Execution of judgments pending appeal. As pointed out in De Leon,
Sec. 27 of the Ombudsman Act of 1989 prescribes the rules on the effectivity
and finality of the OMB's decisions:

SEC. 27. Effectivity and Finality of Decisions. (1) All provisionary orders at the
Office of the Ombudsman are immediately effective and executory.

xxxx

In all administrative disciplinary cases, orders, directives, or decisions

of the Office of the Ombudsman may be appealed to the Supreme
Court by filing a petition for Certiorari within ten (10) days from receipt
of the written notice of the order, directive or decision or denial of
the Motion for reconsideration in accordance with Rule 45 of the Rules
of Court.

The above rules may be amended or modified by the Office of the

Ombudsman x x x. (Emphasis supplied.)

The then Sec. 7, Rule III of Administrative Order No. 07 (AO 07) or the Rules of
Procedure of the OMB, in turn, stated:
Sec. 7. Finality of decision. Where the respondent is absolved of the charge,
and in case of conviction where the penalty imposed is public censure or
reprimand, suspension of not more than one month, or a fine equivalent to one
month salary, the decision shall be final and unappealable. In all other cases,
the decision shall become final after the expiration of ten (10) days from
receipt thereof by the respondent, unless a Motion for reconsideration or
petition for Certiorari, shall have been filed by him as prescribed in
Section 27 of RA 6770. (Emphasis supplied.)

The Court, in Lapid v. Court of Appeals, [38] has interpreted the above-quoted
provision to mean that the sanctions imposed by the Ombudsman other than
public censure, reprimand, suspension of not more than one month or a fine
equivalent to one month salary are not immediately executory and can be
stayed by an appeal timely filed. The pertinent ruling in Lapid has, however,
been superseded.[39] On August 17, 2000, AO 14-A was issued amending Sec. 7,
Rule III of the Rules of Procedure of the OMB. The rule, as thus amended,
pertinently reads:

Section 7. Finality and Execution of decision. Where x x x the penalty imposed

is public censure or reprimand, suspension of not more than one month, or a
fine equivalent to one month salary, the decision shall be final and
unappealable. In all other cases, the decision may be appealed x x x.

An appeal shall not stop the decision from being executory. In case the
penalty is suspension or removal and the respondent wins such appeal, he
shall be considered as having been under preventive suspension and shall be
paid the salary and such other emoluments that he did not receive by reason
of the suspension or removal. (Emphasis supplied.)

Then came AO 17 dated September 15, 2003 further amending Sec. 7 of Rule
III. Thus, the section now provides:

Section 7. Finality and Execution of decision. Where the respondent is absolved

of the charge, and in case of conviction where the penalty imposed is public
censure or reprimand, suspension of not more than one month, or a fine
equivalent to one month salary, the decision shall be final, executory, and
unappealable. In all other cases, the decision may be appealed to the Court of
Appeals x x x.

An appeal shall not stop the decision from being executory. In case
the penalty is suspension or removal and the respondent wins such
appeal, he shall be considered as having been under preventive
suspension and shall be paid the salary and such other emoluments
that he did not receive by reason of the suspension or
removal. (Emphasis supplied.)

Clearly then, as early as August 17, 2000, when AO 14-A was issued, the OMB-
imposed penalties in administrative disciplinary cases were already
immediately executory notwithstanding an appeal timely filed. In this case, it
must be noted that the Complaint dated July 28, 2003 was filed on August 20,
2003 or after the AO 14-A has come into effect. Thus, no error can be
attributed to the CA when it ruled that the penalties imposed by the
Ombudsman against petitioners are immediately executory.
Immediate Execution argues against the outlandish notion that the Ombudsman
can only recommend disciplinary sanctions.

The acts complained of constitute Dishonesty but not Grave

Misconduct

a. Grave Misconduct

The charges against petitioners for grave misconduct and dishonesty basically
stemmed from their alleged act of amassing unexplained wealth or acquiring
properties disproportionate to their income, petitioner Aguilar's alleged failure
to declare them in her SALNs, and for petitioner Hernandez's alleged
acquiescence to be her dummy. To our the mind, however, we find that even if
petitioners, for argument, failed to include several properties in their SALNs,
the omission, by itself, does not amount to grave misconduct.

Largo v. Court of Appeals [40] is instructional as to the nature of the offense. To

constitute misconduct, the complained act/s or omission must have a direct
relation and be linked to the performance of official duties. The Court wrote
in Amosco v. Magro:

x x x By uniform legal definition, it is a misconduct such as affects his

performance of his duties as an officer and not such only as affects
his character as a private individual. In such cases, it has been said at all
times, it is necessary to separate the character of the man from the character
of the officer x x x. It is settled that misconduct, misfeasance, or malfeasance
warranting removal from office of an officer must have direct relation to and be
connected with the performance of official duties amounting either to
maladministration or willful, intentional neglect and failure to discharge the
duties of the office x x x. [41]

Owning properties disproportionate to one's salary and not declaring them in

the corresponding SALNs cannot, without more, be classified as grave
misconduct. Even if these allegations were true, we cannot see our way clear
how the fact of non-declarations would have a bearing on the performance of
functions by petitioner Aguilar, as Customs Chief of the Miscellaneous Division,
and by petitioner Hernandez, as Customs Operations Officer. It is non-
sequitur to assume that the omission to declare has served, in some way, to
hinder the rendition of sound public service for there is no direct relation or
connection between the two. Without a nexus between the act complained of
and the discharge of duty, the charge of grave misconduct shall necessarily
fail.
b. Dishonesty

Dishonesty, as juridically understood, implies the disposition to lie, cheat,

deceive, or defraud; untrustworthiness; lack of integrity; lack of honesty or
probity in principle; lack of fairness and straightforwardness; disposition to
defraud, deceive or betray. [42] It is a malevolent act that puts serious doubt
upon one's ability to perform duties with the integrity and uprightness
demanded of a Public Officer or employee.[43]

The inculpatory allegations in the controversy, if proved, qualify as acts of

dishonesty that would merit dismissal from service. The requirement of filing a
SALN is enshrined, as it were, in the Constitution [44] to promote transparency in
the civil service and operates as a deterrent against government officials bent
on enriching themselves through unlawful means. By mandate of law, it
behooves every government official or employee to make a complete
disclosure of his or her assets, liabilities and net worth in order to suppress any
questionable accumulation of wealth because the latter usually results from
non-disclosure of such matters. [45]

The significance of requiring the filing of a complete, truthful, and sworn SALN
as a measure to curb corruption in the bureaucracy cannot be gainsaid. Secs. 7
and 8 of the Anti-Graft and Corrupt Practices Act (RA 3019) are emphatic on
this point:

Sec. 7. Statement of Assets and Liabilities. Every Public Officer, within thirty
days after assuming office, and thereafter, on or before the fifteenth day of
April following the close of every calendar year, x x x shall prepare and file x x
x a true, detailed and sworn statement of the amounts and sources of his
income, the amounts of his personal and family expenses and the amount of
income taxes paid for the next preceding calendar year x x x.

Sec. 8. Prima Facie Evidence of and Dismissal Due to Unexplained Wealth. If in

accordance with the provisions of [RA 1379], a public official has been found to
have acquired during his incumbency, whether in his name or in the name of
other persons, an amount of property and/or money manifestly out of
proportion to his salary and to his other lawful income, that fact shall be
ground for dismissal or removal. Properties in the name of the spouse and
dependents of such public official may be taken into consideration, when their
acquisition through legitimate means cannot be satisfactorily shown. x x x
[M]anifestly excessive expenditures incurred by the public official, his spouse
or any of their dependents including x x x frequent travel abroad of a non-
official character by any public official when such activities entail expenses
evidently out of proportion to legitimate income, shall likewise be taken into
consideration in the enforcement of this Section x x x. The circumstances
hereinabove mentioned shall constitute valid ground for the administrative
suspension of the public official concerned for an indefinite period until the
investigation of the unexplained wealth is completed.
The aforequoted Section 8 speaks of unlawful acquisition of wealth and
excessive expenditure, the evil sought to be suppressed and avoided, and
Section 7, which directs full disclosure of wealth in the SALN, is a means of
preventing said evil and is aimed particularly at minimizing if not altogether
curtailing the opportunities for official corruption and maintaining a standard of
honesty in the public service. By the SALN, the public is able to monitor
movement in the fortune of a public official; it serves as a valid check and
balance mechanism to verify undisclosed properties and wealth. [46]

The failure to file a truthful SALN puts in doubts the integrity of the officer and
would normally amount to dishonesty. It should be emphasized, however, that
mere misdeclaration in the SALN does not automatically amount to such an
offense. Dishonesty requires malicious intent to conceal the truth or to make
false statements; otherwise, the government employee may only liable
for Negligence, not for dishonesty.[47] In addition, only when the accumulated
wealth becomes manifestly disproportionate to the income of the Public
Officer/employee and income from other sources, and the Public
Officer/employee fails to properly account or explain these sources of income
and acquisitions, does he or she become susceptible to dishonesty. [48]

Substantial Evidence

The core of the controversy in this case lies in whether or not the
complainant's pieces of Evidence extant in and deducible from the records
meet the quantum of Evidence required to justify the dismissal action taken
against petitioners. Petitioner Aguilar argues that the initial evidentiary
assessment by the OMB when it lifted the order of preventive suspension was
correct. To recall, the OMB declared at that time that the Evidence PNP-CIDG
presented was not strong enough to support the basic Complaint.

In essence, petitioners, Aguilar in particular, urge us to gauge whether or not

the complainant has hurdled the quantum of Evidence requirement in
administrative cases so as to shift the Burden of Evidence on them. Respondents,
on the other hand, are correct in pointing out that a review of
the Evidence would necessarily entail a corresponding evaluation of facts
ascertained by the Ombudsman and the CA, and that as a general rule, the
Court should refrain from delving into factual questions. However, we have
already held in a catena of cases that the general rule admits of exceptions,
including when the judgment is based on misappreciation of facts or when the
findings of facts are conflicting. [49] In light of the series of seemingly confusing
orders and rulings promulgated by the Ombudsman, it is beyond cavil that a
review of the facts in this case is warranted.

a. Evidence against petitioner Aguilar

i. Lot 6, Block 21, BIR Village, Fairview, Quezon City

Petitioner Aguilar admits owning this parcel of land, but insists at every turn
that she had consistently declared it in her SALNs. A perusal of her SALNs from
1999-2002 would indeed show that she had declared ownership of the Fairview
property, entering it merely as "House & Lot, Q.C." This is as opposed to the
allegations of the PNP-CIDG that what she has been declaring is Lot 8 of Block
21, and not Lot 6.

We sustain the findings of the Ombudsman contained in the Supplemental

Decision as to the validity of petitioner Aguilar's account on this point. As
observed by the Ombudsman, the house and lot she declared as residence is
actually a duplex-type structure, with a party wall in the middle, erected on
two lots, Lots 6 and 8. When petitioner Aguilar purchased Lot 8 from one
Norma Jurado, she dismantled the dividing wall to make a solitary unit.

This explanation finds support from a perusal of her travel documents wherein
she interchanges her address between said Lot 6 and Lot 8.

ii. Antel Towers

Petitioner Aguilar argues next that the four-bedroom condominium apartment

with two parking slots along Pasay City is actually owned by her US-based
brother Carlo who allegedly purchased it from Mina Gabor, as evidenced by the
Deed of Sale dated July 14, 2003.

The Court, as were the CA and the OMB, is unconvinced. A cursory reading of
the deed shows July 14, 2003, or a month after the PNP-CIDG initiated an
investigation over Aguilar's lifestyle, as its date of Execution. On the other
hand, petitioner Aguilar admitted during the clarificatory hearing conducted on
September 23, 2004 that, as early as 2000, she and her daughter have already
been occupying the apartment, thus:

Q: You said in your direct clarificatory questioning that you don't know when
Carlo Gupilan bought this property? A: Yes, sir.

Q: But when did you reside in that property for the first time? A: Mga 2000
pa yun.

Q: When for the first time did you know that Carlo Gupilan acquired that Antel
Towers property? A: Noon pong sinabi niya: "Ate, napakalayo sa opisina mo
ang bahay mo. Gusto mo gamitin mo yung bahay ko sa Pasay?"

Q: Mga kailan yun? A: Mga 2000.[50]

Evidently, a serious disparity exists between the document presented and the
statements petitioner Aguilar herself made. As the CA observed, citing the
Ombudsman's findings, petitioner insists that the property is owned by her
brother Carlo who invited her to stay in his condo unit in 2000. However, per
the document she presented, the alleged Deed of Sale between him and
Gabor, was only executed on July 14, 2003.
On what authority then she has been staying on the apartment unit before the
alleged Carlo-Gabor sales transaction was executed remained unexplained.
This aberration coupled by her beneficial ownership of the property, as
demonstrated by her possession and occupancy of the unit, casts serious
doubts as to her brother's alleged ownership of the unit since 2000 and
renders dubious the alleged deed of sale. To recall, graft investigators will not
only look into properties in a public servant's name, but also those claimed by
their relatives or dummies. The SALN requirement will be a useless ritual if
public officers can easily evade the obligation to disclose if they register the
asset under someone else's name.

iii. Naga City property

As petitioner Aguilar alleged, she purchased the property from her parents
who, in June 1990, executed the corresponding deed of sale in her favor. This
sale may be documented, but her claim that she subsequently sold the Naga
property to one Rosendo Gonzales sometime in 1992 is not supported
by Evidence. She has not adduced any document or deed proving that she no
longer owns the property. On the other hand, the PNP-CIDG was able to secure
from the City Assessor's office a copy of the tax declaration of the property in
2002 which, on its face, clearly yields this fact: the property is still registered
under Aguilar's name; the alleged sale between her and Rosendo Gonzales was
not annotated.

iv. Vehicles

There is no quibbling as to the ownership of the Honda CRV and the Isuzu
Trooper. The question pivots only as to the two (2) BMWs that petitioner
Aguilar had acknowledged using.

Per petitioner Aguilar's account, a friend of another brother, Salvador, has

allowed her the use of the BMWs. As claimed, US-based Salvador is in the
business of exporting used cars from the US to the Philippines and has local
contacts which include the two corporations under whose names the BMWs are
registered. The PNP-CIDG, on the other hand, submitted pictures [51] taken
during its surveillance of Aguilar showing the red and silver BMWs leaving the
parking space of Antel Towers, if not parked at slots reserved for the use of the
unit Aguilar has been occupying.

We rule, as the CA and the Ombudsman earlier did, against petitioner Aguilar
on this point. As found by the Ombudsman and confirmed by the CA, petitioner
Aguilar had control and possessionboth attributes of ownershipof the two BMW
vehicles. While she alleged having only borrowed them, her statement during
the clarificatory hearings that she does not know who the real owners are over
stretches credulity. Her allegation was that the vehicles were only lent her by
her brother's friend. But when pressed on how she came into contact with the
friend, who was unnamed, since her brother is in the US, she was unable to
give a direct answer.[52]
In another perspective, it bears to stress that petitioner Aguilar, a ranking
customs official, had veritably admitted to receiving benefits from the above
named corporations which had been facilitating her brother's used car export
business. As correctly observed by the Ombudsman, Sec. 7 of RA 6713 or
the Code of Ethical Standards [53] prohibits public officials and employees from
directly or indirectly soliciting or accepting gifts, favor or things of monetary
value from anyone in connection with any operation being regulated by, or any
transaction which may be affected by the functions of their office. The Anti-
Graft and Corrupt Practices Act declares and penalizes similar acts. [54]

The act complained of as regards the BMW cars for sure is indicative of
corruption, tending to suggest that petitioner Aguilar had used her position in
the customs bureau to advance her brother's business interests as well as that
of the two corporations which facilitate the vehicle exportation and importation
business. Thus, even in the absence of compelling Evidence to prove that
petitioner Aguilar is the actual owner of the subject high-priced BMW vehicles,
she can still be held amenable under the premises for conduct prejudicial to
the best interest of the service.

v. Foreign Travels

Petitioner Aguilar's exculpating allegations, as earlier narrated, as to her

foreign travels during the period material fail to convince.

While indeed some of her siblings executed affidavits tending to prove they
have sufficient income to shoulder her travels, they stopped short of saying
that they did in fact contribute or entirely pay, as Aguilar urges the Court to
believe, for her and her daughters' trip to Los Angeles. Nowhere in the
documents was it mentioned that they defrayed petitioner Aguilar's expenses
for her visits. The general affidavits merely indicated their jobs and how much
salary they receive monthly. As held in Office of the Ombudsman v. Racho,
[55]
an unexplained wealth case, the documents that Racho presented,
purportedly showing his brothers' financial capability to send or contribute
large sum of money for their business, do not prove that they did, in fact,
contribute or remit money for their supposed joint business venture.

As a final note on the matter, petitioner Aguilar had submitted

affidavits[56] wherein she averred that all expenses for her and her daughter's
travel shall be borne or defrayed by her alone. [57] So what happens to her claim
that her siblings shouldered most of her travel expenses?

vi. Summary

Administrative proceedings are governed by the " Substantial Evidence rule,"

meaning a finding of guilt in an administrative case may and would issue if
supported by Substantial Evidence that the respondent has committed the acts
stated in the Complaint. Substantial Evidence is more than a mere scintilla. It
means such relevant Evidence as a reasonable mind might accept as adequate
to support a conclusion, even if other minds equally reasonable might
conceivably opine otherwise. [58] Its absence is not shown by stressing that there
is contrary Evidence, direct or circumstantial, on record. [59]

In the case at bar, the required Evidence sufficient to justify holding petitioner
Aguilar administratively liable has been, to us, as to the CA, satisfied. Not only
did she fail to declare in her SALN the residential lot located at Panicuason,
Naga City, she likewise failed to satisfactorily explain her beneficial ownership
of the Antel Seaview Towers four-bedroom condominium unit and her use of
the two BMWs registered in the name of different corporations, which, as the
records show, are both based in Olongapo City.

Relevant to this determination is Sec. 2 of RA 1379, [60] in relation to Sec. 8 of RA

3019, which states that whenever any Public Officer or employee has acquired
during his incumbency an amount of property which is manifestly out of
proportion to his salary as such officer or employee and to his other lawful
income and the income from legitimately acquired property, said property shall
be presumed Prima Facie to have been unlawfully acquired. When the
presumption holds, the Burden of Evidence then shifts to the respondent, in this
instance petitioner Aguilar, to show that the financial resources used to acquire
the undeclared assets and her expenditures came from lawful income. To be
sure, petitioner Aguilar has failed to discharge this burden, as the CA, and the
OMB before it, have determined. The explanation she offered when confronted
with her undeclared acquisitions and travel splurge is too flimsy compared to
her own admissions as to her beneficial ownership over the properties. Her
SALNs during the years in question clearly indicated she was a pure
compensation income earner. With an annual salary of PhP 249,876, it is
incomprehensible how she could have acquired her undeclared assets on top
of paying for her annual travels and living expenses. The discrepancy in the
total valuation of her declared and undeclared assets is also too glaring for
petitioner Aguilar's omission to be written off as mere Negligence or
carelessness. As a result, no error can be attributed to the CA and the
Ombudsman adjudging her guilty of dishonesty.

Petitioner Aguilar's Acquittal in Crim. Case No. 08-263022 of the Manila RTC on
the ground of insufficiency of Evidence would not carry the day for her. The
dismissal of the criminal aspect of the Complaint filed against Aguilar has
hardly any bearing on the administrative case mainly because the quantum
of Evidence required to support a finding of guilt in a criminal case is Proof
beyond reasonable doubt . Administrative cases are, as a rule, separate and
independent from criminal suits and are governed by differing evidentiary
criteria. The Acquittal of an accused who is also a respondent in an
administrative case does not conclude the administrative proceedings, nor
carry with it relief from administrative liability. This is because unlike in
criminal cases where the threshold quantum of Evidence required is Proof
beyond reasonable doubt , only Substantial Evidence is necessary in administrative
cases.[61]
b. Evidence against petitioner Hernandez

Unlike in the case of his co-petitioner, this Court is unable to make out a case
of dishonesty, let alone grave misconduct against petitioner Hernandez. To be
sure, the OMB investigating panel, in the Decision dated June 3, 2004,
recommended petitioner Hernandez's exoneration. However, in a bizarre twist,
the Ombudsman, in its Supplement dated January 18, 2005, disapproved the
panel's own assessment of the sufficiency of Evidence as regards petitioner
Hernandez and ruled that, while the Isuzu Trooper with Plate No. HRH-659 was
registered under his name, it is actually owned by Aguilar. Accordingly, the
Ombudsman decreed Hernandez's dismissal for supposedly consenting to act
as Aguilar's dummy. The Ombudsman, in net effect, used petitioner
Hernandez's own Admission of vehicle ownership against him and ruled that he
could not afford to acquire the car on his salary of PhP 14,098 a month.

In ruling for petitioner Hernandez, we do so taking stock of the pronouncement

in the first-issued Decision of the Ombudsman. There was indeed no specific
allegation in the Complaint against him other than his owning an Isuzu Trooper
vehicle, which he declared in his SALN. But mere ownership is not
an Actionable administrative offense. The PNP-CIDG also did not present any
additional Evidence as against petitioner Hernandez. We are, thus, at a loss to
understand how the Ombudsman, after saying in not so many words that
Hernandez was not guilty, would completely reverse itself in
the Supplement. Having already disposed of the issue as regards petitioner
Hernandez in the Decision, it was then quite improper for the Ombudsman to
reverse its findings six months after, albeit no Evidence had been adduced in
the interim to support the new finding.

While the Ombudsman's reasoningas adopted by the CA, regarding petitioner

Hernandez's purchasing capability, or lack of itmay be plausible at first blush,
the latter was able to justify his ownership of the Isuzu Trooper. Evidence on
record would show that aside from his employment, he and his wife have other
sources of income. As he alleged in his Pleadings, his wife, Ruth, is a practicing
physician who, besides maintaining a clinic in both the Seamen's Hospital in
Manila and at the Medical Center Muntinlupa, engages in OB-GYN consultancy.
And as seen in his SALN for 2002, the couple run Sarah Katrina's Drugstore in
Las Piñas City and even own shares of stocks in Medical Center Muntinlupa. A
car loan worth PhP 1,600,000 was also reported in his 2002 SALN. [62] In fine,
there is valid reason to conclude that the Hernandez couple, with their
combined income, could very well afford a medium-priced motor van.

Given these circumstances, the innocence claim of petitioner Hernandez

becomes all the more credible and the justifications offered sufficient to
absolve him of administrative liability. It should be understood that the laws on
SALN aim to curtail the acquisition of unexplained wealth. Where the source of
the undisclosed wealth can be properly accounted for, as in the case of
petitioner Hernandez, then it is "explained wealth" which the law does not
penalize.[63]
Under OMB AO 17, if the respondent, meted by OMB the penalty of suspension
or removal, is exonerated on appeal, he shall be considered as having been
under preventive suspension and shall be paid the salary and such other
emoluments that he failed to receive by reason of that suspension or removal.
So it must be in the case of petitioner Hernandez.

WHEREFORE, the petition is PARTIALLY GRANTED. The appealed July 22,

2009 Decision and June 13, 2011 Resolution in CA-G.R. SP No.88954
are MODIFIED. The charge for Grave Misconduct against Flor Gupilan-Aguilar
is DISMISSED, while the appellate court's finding of her liability for Dishonesty
and the corresponding penalty imposed are AFFIRMED.

The CA Decision, however, insofar as it finds Honore Hernandez guilty of the

offenses charged against him, is hereby REVERSED and SET ASIDE.
The Complaint against him for Grave Misconduct and Dishonesty is
accordingly DISMISSED. He is accordingly ordered REINSTATED immediately
to his former or equivalent position in the Bureau of Customs without loss or
diminution in his salaries and benefits. In addition, he shall be paid his salary
and such other emoluments corresponding to the period he was out of the
service by reason of the judgment of dismissal decreed by the Office of the
Ombudsman, as affirmed by the Court of Appeals.

SO ORDERED.
10. APPEAL FROM JUDGEMENTS OR FINAL ORDERS OF THE RTC

BOARDWALK BUSINESS VS. VILLAREAL

Ponente: DEL CASTILLO, J.

Decision Date: April 10, 2013
GR Number: G.R. No. 181182
Written By Digest Team 1 year ago

Summary:

This case involves a dispute between petitioner Boardwalk Business Ventures, Inc. and
respondent Elvira A. Villareal over the possession of a vehicle. The Metropolitan Trial Court
ruled in favor of Boardwalk, but the Regional Trial Court reversed the decision. Boardwalk
filed a petition for review with the Court of Appeals, but it was dismissed for procedural
lapses. Boardwalk argues that the dismissal is contrary to existing rules, law,
jurisprudence, and the principle of equity and substantial justice.

Doctrine:

The right to appeal is not a natural right or a component of due process. It is a mere
statutory privilege that must be exercised in accordance with the provisions of law.
Compliance with the rules of court regarding the filing of an appeal is mandatory and
jurisdictional.

Facts:

Boardwalk Business Ventures, Inc. filed a complaint for replevin against Elvira A. Villareal
for the possession of a vehicle.

The Metropolitan Trial Court ruled in favor of Boardwalk, but the Regional Trial Court
reversed the decision. Boardwalk filed a petition for review with the Court of Appeals, but
it was dismissed for procedural lapses.

Petitioner’s/Plaintiff’s Arguments:

- Litigations should be decided on the merits and not on technicalities.

- Boardwalk should not be faulted for the error committed by its counsel's clerk in filing the
motion for extension and paying the docket fees with the wrong court.
- The defective verification and certification against forum shopping should be treated with
leniency, as well as the subsequent submission of the proper secretary's certificate and
payment of docket fees.

Respondent’s/Defendant’s Arguments:
- Boardwalk's reasons for the procedural lapses are flimsy and should not be considered.
- Boardwalk's petition raised factual issues that may not be subject to review at this stage.

Issues and Ruling:

1. Whether the Court of Appeals erred in dismissing the petition for review due
to procedural lapses. - NO
The Court held that Boardwalk failed to comply with the requirements laid down in Rule 42
of the Rules of Court. The petition must be accompanied by a verification and certification
against forum shopping, as well as copies of the relevant pleadings and other material
portions of the record. Boardwalk also failed to show that its representative was duly
authorized to sign the petition. These requirements are mandatory and jurisdictional.
Boardwalk's subsequent attempts to cure the lapses were insufficient.

2. Whether the Court should review the merits of Boardwalk's case. - NO

Since Boardwalk failed to perfect its appeal by not filing the petition within the
reglementary period and paying the docket and other lawful fees before the proper court,
the appeal was not deemed perfected. The Court affirmed the dismissal of the petition by
the Court of Appeals, rendering the Regional Trial Court's decision final and unassailable.

Dispositive:

The petition is denied, and the Court of Appeals' resolutions are affirmed.

Other Notes:

MASLAG VS. MONZON

Ponente: DEL CASTILLO, J.

Decision Date: June 17, 2013
GR Number: G.R. No. 174908
Written By Digest Team (Sept 2024) 1 week ago

Summary:

This case involves a petition for review on certiorari filed by Darma Maslag (petitioner) against Elizabeth Monzon,
William Geston, and the Registry of Deeds of Benguet (respondents). The case originated from a complaint for
reconveyance of real property with declaration of nullity of original certificate of title filed by Maslag in the
Municipal Trial Court (MTC) of La Trinidad, Benguet. The MTC ruled in favor of Maslag, but on appeal, the
Regional Trial Court (RTC) reversed the decision. Maslag then filed an ordinary appeal to the Court of Appeals
(CA), which was dismissed for being an improper remedy. The Supreme Court affirmed the CA's dismissal, ruling
that the proper mode of appeal should have been a petition for review under Rule 42 of the Rules of Court, not an
ordinary appeal under Rule 41.

Doctrine:

"It is incumbent upon x x x appellants to utilize the correct mode of appeal of the decisions of trial courts to the
appellate courts. In the mistaken choice of their remedy, they can blame no one but themselves."

"[J]urisdiction over the subject matter is conferred only by law and it is 'not within the courts, let alone the parties, to
themselves determine or conveniently set aside.' Neither would the active participation of the parties nor estoppel
operate to confer original and exclusive jurisdiction where the court or tribunal only wields appellate jurisdiction
over the case."

"[I]n determining the proper mode of appeal from an RTC Decision or Resolution, the determinative factor is the
type of jurisdiction actually exercised by the RTC in rendering its Decision or Resolution. Was it rendered by the
RTC in the exercise of its original jurisdiction, or in the exercise of its appellate jurisdiction? In short, we look at
what type of jurisdiction was actually exercised by the RTC. We do not look into what type of jurisdiction the RTC
should have exercised."

Facts:

• In 1998, Darma Maslag filed a complaint for reconveyance of real property with declaration of nullity of original
certificate of title against Elizabeth Monzon, William Geston, and the Registry of Deeds of La Trinidad, Benguet in
the Municipal Trial Court (MTC) of La Trinidad, Benguet.
• The MTC ruled in favor of Maslag, finding Monzon guilty of fraud in obtaining an OCT over Maslag's property.
• Respondents appealed to the Regional Trial Court (RTC) of La Trinidad, Benguet.
• The RTC initially declared that the MTC had no jurisdiction over the case and that it would take cognizance of the
case pursuant to Section 8, Rule 40 of the Rules of Court.
• On May 4, 2004, the RTC issued a Resolution reversing the MTC Decision.
• Maslag filed a Notice of Appeal from the RTC's May 4, 2004 Resolution to the Court of Appeals (CA).
• Respondents moved to dismiss Maslag's ordinary appeal for being the improper remedy, asserting that the proper
mode of appeal was a Petition for Review under Rule 42.
• The CA dismissed Maslag's appeal, stating that the proper remedy was a Petition for Review under Rule 42, not an
ordinary appeal.
• Maslag sought reconsideration, arguing for the first time that the RTC rendered its May 4, 2004 Resolution in its
original jurisdiction.
• The CA denied Maslag's Motion for Reconsideration.
• Maslag filed a Petition for Review on Certiorari with the Supreme Court.

Petitioner’s/Plaintiff’s Arguments:

• The RTC rendered its May 4, 2004 Resolution in its original jurisdiction, citing the earlier October 22, 2003 Order
of the RTC declaring the MTC without jurisdiction over the case.
• The CA should be ordered to take cognizance of her appeal.
• The RTC should have issued its May 4, 2004 Resolution in its original jurisdiction because it had earlier ruled that
the MTC had no jurisdiction over the cause of action.

Respondent’s/Defendant’s Arguments:

• The proper mode of appeal is a Petition for Review under Rule 42 because the RTC rendered its May 4, 2004
Resolution in its appellate jurisdiction.
• Petitioner's ordinary appeal was an improper remedy and should be dismissed.

Issues and Ruling:

Whether or not the Court of Appeals was correct in dismissing the appeal filed by the petitioner
YES. The Court of Appeals was correct in dismissing the appeal filed by the petitioner. The Supreme Court affirmed
that the proper mode of appeal should have been a Petition for Review under Rule 42 of the Rules of Court, not an
ordinary appeal under Rule 41. The Court explained that the distinction between these two modes of appeal lies in
the type of jurisdiction exercised by the RTC in the Order or Decision being appealed. In this case, the RTC
exercised its appellate jurisdiction over the MTC decision, despite its earlier erroneous declaration that it had
original jurisdiction. The Court emphasized that "in determining the proper mode of appeal from an RTC Decision
or Resolution, the determinative factor is the type of jurisdiction actually exercised by the RTC in rendering its
Decision or Resolution."
Whether or not the Regional Trial Court exercised original jurisdiction in deciding the case
NO. The Regional Trial Court did not exercise original jurisdiction in deciding the case, despite its earlier
declaration that it would do so. The Supreme Court clarified that the MTC actually had original and exclusive
jurisdiction over the subject matter of the case based on the assessed value of the property involved. The Court
stated that "jurisdiction over the subject matter is conferred only by law and it is 'not within the courts, let alone the
parties, to themselves determine or conveniently set aside.'" The RTC's May 4, 2004 Resolution was, in fact and in
law, a continuation of the proceedings that originated from the MTC and was issued in the exercise of its appellate
jurisdiction.

Dispositive:

WHEREFORE, premises considered, the Petition for Review is DENIED for lack of merit. The assailed May 31,
2006 and September 22, 2006 Resolutions of the Court of Appeals in CA-G.R. CV No. 83365 are AFFIRMED.

Other Notes:

n/a

COUNTDOWN VS. CARD

Ponente: LEONARDO-DE CASTRO, J.

Decision Date: March 14, 2012
GR Number: G.R. No. 173586
Written By Digest Team 1 year ago

Summary:

This case involves a complaint filed by MBF Card International Limited and MBF Discount
Card Limited against MCA-MBF Countdown Cards Philippines Inc. and other individuals for
recovery of money, unfair competition, and damages. The complaint alleged that the
parties entered into negotiations for a joint venture agreement, but before the agreement
was finalized, the defendants began promoting and selling discount cards using the
"Countdown" name and trademark without authorization. The trial court ruled in favor of
the plaintiffs, permanently enjoining the defendants from promoting and selling the cards
and ordering them to refund the plaintiffs and pay damages and attorney's fees. The
defendants appealed, but their appeal was dismissed by the Court of Appeals due to their
failure to file the required appellant's brief.

Doctrine:

Procedural rules must be strictly followed, and failure to comply with these rules may
result in the dismissal of an appeal. While the court may show liberality in the
interpretation and application of the rules in proper cases, such relaxation should not be
extended to litigants who flout the rules and fail to provide valid explanations for their
non-compliance.
Facts:

- MBF Card and MCA Holdings entered into negotiations for a joint venture agreement to
establish a joint venture company in the Philippines for the business of discount cards.
- Before the agreement was finalized, MCA-MBF began promoting and selling discount
cards using the "Countdown" name and trademark without authorization.
- MBF Card demanded that MCA-MBF cease these activities, but MCA-MBF continued to
promote and sell the cards.
- MBF Card filed a complaint for recovery of money, unfair competition, and damages
against MCA-MBF and other individuals.
- The trial court granted a temporary restraining order and later issued a preliminary
injunction against MCA-MBF.
- The trial court ruled in favor of MBF Card, permanently enjoining MCA-MBF from
promoting and selling the cards and ordering them to refund MBF Card and pay damages
and attorney's fees.

Petitioner’s/Plaintiff’s Arguments:

- The Court of Appeals erred in dismissing the appeal based on procedural technicalities
without considering the merits of the case.
- The trial court erred in disregarding corporate fiction and holding individual petitioners
personally liable.
- The trial court erred in ruling that there was no perfected joint venture agreement
without considering the basic principles of contract law.
- The trial court erred in not finding sufficient evidence of Tan Sri's authority to represent
and bind the respondents to the joint venture agreement.
- The trial court's award of attorney's fees is devoid of legal basis.

Respondent’s/Defendant’s Arguments:

None mentioned in the case digest.

Issues and Ruling:

1. Whether the Court of Appeals erred in dismissing the appeal based on

procedural technicalities. - YES. The Court of Appeals correctly dismissed the appeal for
the petitioner's failure to file the required appellant's brief within the prescribed period.
Compliance with procedural rules is necessary for an orderly and speedy administration of
justice.

2. Whether the trial court erred in disregarding corporate fiction and holding
individual petitioners personally liable. - NO. The trial court did not disregard
corporate fiction. The individual petitioners were held personally liable because they were
negotiating with the respondents for the creation of the joint venture company and were
not yet incorporated as a joint venture company at the time of the alleged violations.

3. Whether the trial court erred in ruling that there was no perfected joint
venture agreement without considering the basic principles of contract law. - NO.
The trial court carefully considered the evidence and found that there was no evidence
proving the existence of a perfected joint venture agreement. The absence of a written
contract and the ongoing negotiations were considered as circumstantial proof that the
parties were still in the process of negotiating the contract's terms.

4. Whether the trial court erred in not finding sufficient evidence of Tan Sri's
authority to represent and bind the respondents to the joint venture
agreement. - The case digest does not provide information on the trial court's ruling on
this issue.

5. Whether the trial court's award of attorney's fees is devoid of legal basis. - The
case digest does not provide information on the trial court's basis for awarding attorney's
fees.

Dispositive:

The petition for review on certiorari is dismissed. The Court of Appeals' dismissal of the
appeal is affirmed.

Other Notes:

11. RESIDUAL JURISDICTION

FERNANDEZ VS. CA

Ponente: CHICO-NAZARIO, J.
Decision Date: May 16, 2005
GR Number: G.R. NO. 131094
Written By Digest Team 1 year ago

Summary:

This case involves a complaint for unlawful detainer filed by Concepcion Olivares against Jesus Fernandez. The
Metropolitan Trial Court dismissed the complaint, but the Regional Trial Court reversed the decision and ordered
Fernandez to pay rental arrearages. Fernandez filed a motion for reconsideration, which was denied. He then filed a
motion for extension of time to file a petition for review with the Court of Appeals, but later withdrew the motion.
Fernandez also filed a motion for new trial before the RTC, citing newly discovered evidence. The RTC denied the
motion, stating that the Court of Appeals already had jurisdiction over the case. Fernandez filed a petition for
certiorari, prohibition, and mandamus with the Court of Appeals, which was denied. The issue in this case is
whether the filing of a motion for extension of time to file a petition for review divests the RTC of its jurisdiction to
entertain a motion for new trial.

Doctrine:

The filing of a motion for extension of time to file a petition for review does not automatically divest the trial court
of its jurisdiction over the case, as to entertain a motion for new trial. The trial court retains its residual jurisdiction
until the records of the case have been transmitted to the appellate court.

Facts:

Concepcion Olivares filed a complaint for unlawful detainer against Jesus Fernandez.

The Metropolitan Trial Court dismissed the complaint, but the Regional Trial Court reversed the decision and
ordered Fernandez to pay rental arrearages. Fernandez filed a motion for reconsideration, which was denied. He then
filed a motion for extension of time to file a petition for review with the Court of Appeals, but later withdrew the
motion. Fernandez also filed a motion for new trial before the RTC, citing newly discovered evidence.
The RTC denied the motion, stating that the Court of Appeals already had jurisdiction over the case.

Petitioner’s/Plaintiff’s Arguments:

- Fernandez argues that the Court of Appeals did not acquire jurisdiction over the case because he only filed a
motion for extension of time to file a petition for review, not the petition itself.
- Fernandez contends that the RTC still had jurisdiction to rule on his motion for new trial because its appellate
jurisdiction had not yet been lost.

Respondent’s/Defendant’s Arguments:

- Olivares argues that the Court of Appeals acquired jurisdiction over the case when Fernandez filed a motion for
extension of time to file a petition for review.
- Olivares asserts that the RTC no longer had jurisdiction to entertain Fernandez's motion for new trial.

Issues and Ruling:

1. Whether the filing of a motion for extension of time to file a petition for review automatically divests the
RTC of its jurisdiction over the case, as to entertain a motion for new trial. NO.
The Court held that the filing of a motion for extension of time to file a petition for review does not automatically
divest the RTC of its jurisdiction to entertain a motion for new trial. The Court of Appeals acquires jurisdiction over
the case only upon the timely filing of the petition for review and the payment of docket fees.

2. Whether the RTC still had jurisdiction to rule on Fernandez's motion for new trial. YES.
The Court held that the RTC still had jurisdiction to rule on Fernandez's motion for new trial because its appellate
jurisdiction had not yet been lost. The residual jurisdiction of the trial court is available before the transmittal of the
original records or the records on appeal to the Court of Appeals.

Dispositive:

The petition is denied for lack of merit. The RTC is ordered to execute the decision in favor of Concepcion Olivares.

Other Notes:

n/a

RULE 42: PETITION FOR REVIEW FROM REGIONAL TRIAL COURT TO COURT OF APPEALS

RULE 42

Petition for Review From the Regional Trial Courts to the Court of Appeals

Section 1. How appeal taken; time for filing. — A party desiring to appeal from a decision of the
Regional Trial Court rendered in the exercise of its appellate jurisdiction may file a verified petition
for review with the Court of Appeals, paying at the same time to the clerk of said court the
corresponding docket and other lawful fees, depositing the amount of P500.00 for costs, and
furnishing the Regional Trial Court and the adverse party with a copy of the petition. The petition
shall be filed and served within fifteen (15) days from notice of the decision sought to be reviewed or
of the denial of petitioner's motion for new trial or reconsideration filed in due time after judgment.
Upon proper motion and the payment of the full amount of the docket and other lawful fees and the
deposit for costs before the expiration of the reglementary period, the Court of Appeals may grant an
additional period of fifteen (15) days only within which to file the petition for review. No further
extension shall be granted except for the most compelling reason and in no case to exceed fifteen
(15) days. (n)

Section 2. Form and contents. — The petition shall be filed in seven (7) legible copies, with the
original copy intended for the court being indicated as such by the petitioner, and shall (a) state the
full names of the parties to the case, without impleading the lower courts or judges thereof either as
petitioners or respondents; (b) indicate the specific material dates showing that it was filed on time;
(c) set forth concisely a statement of the matters involved, the issues raised, the specification of
errors of fact or law, or both, allegedly committed by the Regional Trial Court, and the reasons or
arguments relied upon for the allowance of the appeal; (d) be accompanied by clearly legible
duplicate originals or true copies of the judgments or final orders of both lower courts, certified
correct by the clerk of court of the Regional Trial Court, the requisite number of plain copies thereof
and of the pleadings and other material portions of the record as would support the allegations of the
petition.

The petitioner shall also submit together with the petition a certification under oath that he has not
theretofore commenced any other action involving the same issues in the Supreme Court, the Court
of Appeals or different divisions thereof, or any other tribunal or agency; if there is such other action
or proceeding, he must state the status of the same; and if he should thereafter learn that a similar
action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, or
different divisions thereof, or any other tribunal or agency, he undertakes to promptly inform the
aforesaid courts and other tribunal or agency thereof within five (5) days therefrom. (n)

Section 3. Effect of failure to comply with requirements. — The failure of the petitioner to comply
with any of the foregoing requirements regarding the payment of the docket and other lawful fees,
the deposit for costs, proof of service of the petition, and the contents of and the documents which
should accompany the petition shall be sufficient ground for the dismissal thereof. (n)

Section 4. Action on the petition. — The Court of Appeals may require the respondent to file a
comment on the petition, not a motion to dismiss, within ten (10) days from notice, or dismiss the
petition if it finds the same to be patently without merit, prosecuted manifestly for delay, or that the
questions raised therein are too insubstantial to require consideration. (n)

Section 5. Contents of comment. — The comment of the respondent shall be filed in seven (7)
legible copies, accompanied by certified true copies of such material portions of the record referred
to therein together with other supporting papers and shall (a) state whether or not he accepts the
statement of matters involved in the petition; (b) point out such insufficiencies or inaccuracies as he
believes exist in petitioner's statement of matters involved but without repetition; and (c) state the
reasons why the petition should not be given due course. A copy thereof shall be served on the
petitioner. (a)

Section 6. Due course. — If upon the filing of the comment or such other pleadings as the court may
allow or require, or after the expiration of the period for the filing thereof without such comment or
pleading having been submitted, the Court of Appeals finds prima facie that the lower court has
committed an error of fact or law that will warrant a reversal or modification of the appealed decision,
it may accordingly give due course to the petition. (n)
Section 7. Elevation of record. — Whenever the Court of Appeals deems it necessary, it may order
the clerk of court of the Regional Trial Court to elevate the original record of the case including the
oral and documentary evidence within fifteen (15) days from notice. (n)

Section 8. Perfection of appeal; effect thereof. — (a) Upon the timely filing of a petition for review
and the payment of the corresponding docket and other lawful fees, the appeal is deemed perfected
as to the petitioner.

The Regional Trial Court loses jurisdiction over the case upon the perfection of the appeals filed in
due time and the expiration of the time to appeal of the other parties.

However, before the Court of Appeals gives due course to the petition, the Regional Trial Court may
issue orders for the protection and preservation of the rights of the parties which do not involve any
matter litigated by the appeal, approve compromises, permit appeals of indigent litigants, order
execution pending appeal in accordance with section 2 of Rule 39, and allow withdrawal of the
appeal. (9a, R41)

(b) Except in civil cases decided under the Rule on Summary Procedure, the appeal shall stay the
judgment or final order unless the Court of Appeals, the law, or these Rules shall provide otherwise.
(a)

Section 9. Submission for decision. — If the petition is given due course, the Court of Appeals may
set the case for oral argument or require the parties to submit memoranda within a period of fifteen
(15) days from notice. The case shall be deemed submitted for decision upon the filing of the last
pleading or memorandum required by these Rules or by the court itself. (n)

ANDERSON VS. HO

Ponente: DEL CASTILLO, J.

Decision Date: January 07, 2013
GR Number: G.R. No. 172590
Written By Digest Team 1 year ago

Summary:
This case involves a petition for review on certiorari filed by Mary Louise R. Anderson
against Enrique Ho. The Court of Appeals dismissed the petition due to a technicality,
specifically the improper signing of the certification against forum shopping by Anderson's
counsel. Anderson argues for the liberal application of the rules of procedure and
emphasizes the merits of her case. Ho, on the other hand, asserts that Anderson's failure
to comply with the certification requirement demonstrates her disregard for the rules. The
Supreme Court affirms the dismissal of the petition, stating that there are no justifiable
reasons to relax the rule on certification against forum shopping.

Doctrine:

The certification against forum shopping is a mandatory requirement in the rules of court.
It must be executed by the petitioner, not by counsel, unless the petitioner is unable to
sign due to reasonable or justifiable reasons, in which case a special power of attorney
designating counsel to sign on the petitioner's behalf must be executed. A defective
certification is generally not curable by subsequent submission or correction, unless there
are sufficient and justifiable grounds to relax the rule.
Facts:

Mary Louise R. Anderson filed a complaint for ejectment against Enrique Ho before the
Metropolitan Trial Court (MeTC) of Quezon City. Anderson alleged that Ho was in
possession of her property through her mere tolerance and refused to vacate despite a
demand letter. Ho, in his answer, denied the allegations and claimed that he possessed
the property as part of his compensation for services rendered to Anderson.

The MeTC dismissed the case for lack of cause of action, giving weight to a written
document executed by Anderson allowing Ho to occupy the property under certain
conditions.

The Regional Trial Court (RTC) modified the decision, dismissing the complaint without
prejudice pending the determination of the authenticity of the written document.
Anderson's petition for review was dismissed by the Court of Appeals due to the improper
signing of the certification against forum shopping by her counsel.

Petitioner’s/Plaintiff’s Arguments:

- Anderson argues for the liberal application of the rules of procedure.

- She cites cases where the court considered subsequent submission or correction of a
certificate of non-forum shopping as substantial compliance.
- Anderson emphasizes the merits of her case and asserts that the rigid application of
technical rules should not prevail over the merits.

Respondent’s/Defendant’s Arguments:

- Ho points out that Anderson failed to sign the certification against forum shopping
despite extensions granted by the Court of Appeals.
- He argues that this demonstrates Anderson's disregard for the rules.
- Ho asserts that Anderson has no sufficient cause of action for ejectment and damages
against him.

Issues and Ruling:

1. Whether the Court of Appeals correctly dismissed Anderson's petition for

review due to the improper signing of the certification against forum shopping. -
YES

The Supreme Court affirms the dismissal of Anderson's petition. The certification against
forum shopping must be executed by the petitioner, not by counsel, unless the petitioner
is unable to sign for reasonable or justifiable reasons. In this case, Anderson failed to
comply with this requirement, and her subsequent submission of a special power of
attorney and explanation for her failure to execute one prior to filing the petition do not
constitute substantial compliance. The Court emphasizes the need to abide by the rules of
court and the procedural requirements it imposes.

Dispositive:

The petition for review on certiorari is denied. The resolutions of the Court of Appeals
dismissing Anderson's petition are affirmed.

Other Notes:
HEIRS OF GARCIA VS. MUNICIPALITY OF IBA, ZAMBALES

Ponente: BERSAMIN, J.
Decision Date: July 22, 2015
GR Number: G.R. No. 162217
Written By Digest Team (Sept 2024) 1 week ago

Summary:

The heirs of Arturo Garcia I (petitioners), in substitution of the heirs of Melecio Bueno, filed a petition for review
against the Municipality of Iba, Zambales (respondent). The case originated from an ejectment suit filed by Melecio
Bueno against the Municipality of Iba in the Municipal Trial Court (MTC). The MTC ruled in favor of Bueno, but
when the Municipality tried to appeal, the MTC denied due course to the notice of appeal. The Municipality then
filed a petition for certiorari in the Regional Trial Court (RTC), which was granted. The petitioners appealed to the
Court of Appeals (CA) using a petition for review under Rule 42, which the CA dismissed for being the improper
mode of appeal. The Supreme Court affirmed the CA's decision, ruling that the petitioners should have filed an
ordinary appeal under Rule 41 instead.

Doctrine:

"An appeal brings up for review any error of judgment committed by a court with jurisdiction over the subject of the
suit and over the persons of the parties, or any error committed by the court in the exercise of its jurisdiction
amounting to nothing more than an error of judgment."

"Pursuant to this rule, in conjunction with Section 3 and Section 4 of Rule 41, the petitioners should have filed a
notice of appeal in the RTC within the period of 15 days from their notice of the judgment of the RTC, and within
the same period should have paid to the clerk of the RTC the full amount of the appellate court docket and other
lawful fees."

"The distinctions between the various modes of appeal cannot be taken for granted, or easily dismissed, or lightly
treated. The appeal by notice of appeal under Rule 41 is a matter or right, but the appeal by petition for review under
Rule 42 is a matter of discretion."

Facts:

• Melecio R. Bueno was a tenant-farmer beneficiary of an agricultural land in Poblacion, Iba, Zambales.
• In 1983, the Municipality of Iba constructed a public market on a substantial portion of Bueno's land without his
consent.
• On October 18, 1999, Bueno filed an ejectment suit against the Municipality of Iba in the Municipal Trial Court
(MTC) of Iba.
• The MTC ruled in favor of Bueno.
• The Municipality of Iba filed a notice of appeal, but the MTC denied due course to the appeal.
• The Municipality then filed a petition for certiorari in the Regional Trial Court (RTC) of Iba, Zambales.
• The RTC granted the petition for certiorari.
• The petitioners (heirs of Arturo Garcia I, who substituted Bueno upon his death) appealed to the Court of Appeals
(CA) by petition for review under Rule 42.
• The CA dismissed the petition for review for not being the proper mode of appeal.

Petitioner’s/Plaintiff’s Arguments:
• The petitioners admitted that their petition for review under Rule 42 was inappropriate.
• They argued that they substantially complied with the requirements of an ordinary appeal under Rule 41.
• They pleaded for the Court to exercise its equity jurisdiction, claiming that a stringent application of the Rules of
Court would not serve the demands of substantial justice.

Respondent’s/Defendant’s Arguments:

• The respondent's arguments were not explicitly stated in the given court case document.

Issues and Ruling:

Whether or not the petitioners used the correct mode of appeal from the RTC decision
NO. The Supreme Court ruled that the petitioners should have filed an ordinary appeal under Rule 41 of the Rules of
Court, not a petition for review under Rule 42. The Court explained that the RTC decision was issued in the exercise
of its original jurisdiction in a special civil action for certiorari. Therefore, the proper mode of appeal was to file a
notice of appeal with the RTC within 15 days from notice of the judgment, as prescribed in Section 2(a) of Rule 41.

Whether or not the Court should exercise its equity jurisdiction to relax the rules of procedure in favor of the
petitioners
NO. The Supreme Court rejected the petitioners' plea for liberality in the application of the rules. The Court
emphasized that appeal is not a matter of right but a mere statutory privilege, and that parties invoking this privilege
should faithfully comply with the requirements of the Rules of Court. The Court stated that liberality in applying
procedural rules may only be invoked in cases of excusable formal deficiency or error, not in cases where it would
directly subvert the essence of the proceedings or result in the utter disregard of the Rules of Court.

Dispositive:

WHEREFORE, the Court AFFIRMS the resolutions of the Court of Appeals promulgated on October 28, 2003 and
February 10, 2004 in C.A. G.R. SP No. 78706; and ORDERS the petitioners to pay the costs of suit.

Other Notes:

n/a
NTRAMUROS ADMINISTRATION VS. OFFSHORE CONSTRUCTION

Ponente: LEONEN, J.
Decision Date: March 07, 2018
GR Number: G.R. No. 196795
Written By Digest Team (Sept 2024) 1 week ago

Summary:

This case involves a petition for review filed by Intramuros Administration (petitioner) against Offshore
Construction Development Company (respondent). The essential facts are that Intramuros leased certain properties
to Offshore Construction, but after the lease contracts expired, Offshore Construction continued to occupy the
premises despite demands to vacate. Intramuros filed an ejectment complaint in the Metropolitan Trial Court, which
was dismissed. The Regional Trial Court affirmed the dismissal. The Supreme Court reversed the lower courts'
rulings and ordered Offshore Construction to vacate the leased premises immediately.

Doctrine:

"It is settled that the only issue that must be settled in an ejectment proceeding is physical possession of the property
involved. Specifically, action for unlawful detainer is brought against a possessor who unlawfully withholds
possession after the termination and expiration of the right to hold possession."

"To determine the nature of the action and the jurisdiction of the court, the allegations in the complaint must be
examined. The jurisdictional facts must be evident on the face of the complaint."

"The pleas or theories set up by a defendant in its answer or motion to dismiss do not affect the court's jurisdiction."

"Not even the claim that there is an implied new lease or tacita reconduccion will remove the Metropolitan Trial
Court's jurisdiction over the complaint."

Facts:w2

• In 1998, Intramuros leased certain properties to Offshore Construction for a 5-year period from September 1, 1998
to August 31, 2003.
• The lease contracts were modified through a Compromise Agreement in 1999, but retained the original 5-year
period.
• After the lease contracts expired in 2003, Offshore Construction continued to occupy the premises.
• Intramuros tolerated the continued occupation, hoping Offshore Construction would pay its arrears.
• On March 26, 2010, Offshore Construction received Intramuros' latest demand letter to vacate.
• Intramuros filed an ejectment complaint on April 28, 2010.
• The Metropolitan Trial Court dismissed the complaint for lack of jurisdiction and forum shopping.
• The Regional Trial Court affirmed the dismissal.
• Intramuros filed a petition for review with the Supreme Court.

Petitioner’s/Plaintiff’s Arguments:

• The Metropolitan Trial Court had jurisdiction over the ejectment complaint based on the allegations in the
complaint.
• Intramuros did not commit forum shopping as it was not the party that filed the specific performance and
interpleader cases.
• The lease contracts had expired and were not renewed, entitling Intramuros to possession of the premises.

Respondent’s/Defendant’s Arguments:

• The relationship between the parties was a concession agreement, not a simple lease, removing jurisdiction from
the Metropolitan Trial Court.
• Intramuros committed forum shopping by not disclosing the pending specific performance and interpleader cases.
• Offshore Construction had a right to continue occupying the premises to recover its investments.

Issues and Ruling:

Whether or not the Metropolitan Trial Court had jurisdiction over the ejectment complaint filed by
Intramuros Administration
YES. The Supreme Court ruled that the Metropolitan Trial Court had jurisdiction over the ejectment complaint. The
Court emphasized that "the only issue that must be settled in an ejectment proceeding is physical possession of the
property involved." The Court found that Intramuros' complaint contained all the necessary allegations for an
unlawful detainer case. The Court stated that "the pleas or theories set up by a defendant in its answer or motion to
dismiss do not affect the court's jurisdiction." Therefore, Offshore Construction's claim of a concession agreement
did not remove the Metropolitan Trial Court's jurisdiction over the ejectment complaint.

Whether or not Intramuros Administration committed forum shopping when it filed its ejectment complaint
despite the pending cases for specific performance and interpleader
NO. The Supreme Court ruled that Intramuros did not commit forum shopping. The Court found that while there
was an identity of parties in the specific performance and interpleader cases, and the ejectment complaint, there was
no identity of asserted rights or reliefs prayed for. The Court stated that "a judgment in any of the three (3) cases will
not amount to res judicata in the two others." The specific performance case dealt with offsetting expenses, while the
interpleader case was filed by sublessees. Neither case would bar the ejectment complaint, which solely dealt with
the issue of physical possession.

Whether or not Intramuros Administration is entitled to possess the leased premises

YES. The Supreme Court ruled that Intramuros is entitled to possess the leased premises. The Court found that the
lease contracts had expired on August 31, 2003, and there was no proof of any mutually agreed extension. The Court
stated that "petitioner's tolerance of respondent's occupation and use of the leased premises after the end of the lease
contracts does not give the latter a permanent and indefeasible right of possession in its favor." Once Intramuros
demanded that Offshore Construction vacate the premises, its possession became illegal.

Dispositive:

WHEREFORE, the Petition for Review on Certiorari is GRANTED. The April 14, 2011 Decision of Branch 173,
Regional Trial Court, Manila in Civil Case No. 10-124740 is REVERSED AND SET ASIDE, and a new decision is
hereby rendered ordering respondent Offshore Construction and Development Company and any and all its
sublessees and successors-in-interest to vacate the leased premises immediately.

Branch 37, Regional Trial Court, Manila is DIRECTED to resolve Civil Case No. 08-119138 with dispatch.

Other Notes:

n/a

LAND BANK OF PHILIPPINES VS. CA

Ponente: CARPIO MORALES, J.

Decision Date: April 11, 2011
GR Number: G.R. No. 190660
Written By Digest Team (Sept 2024) 1 week ago

Summary:

This case involves a petition filed by the Land Bank of the Philippines against the Court of
Appeals and Elizabeth Diaz, represented by Francisca P. De Guzman as attorney-in-fact.
The case stems from the expropriation of 10 hectares of Elizabeth Diaz's agricultural land
by the Department of Agrarian Reform (DAR). Diaz, unsatisfied with the DAR's valuation,
filed a complaint against Land Bank and DAR before the Regional Trial Court acting as a
Special Agrarian Court (SAC). After the SAC's decision, Diaz appealed to the Court of
Appeals using the wrong mode of appeal. The Supreme Court ruled that Diaz's use of the
wrong mode of appeal was fatal to her case, rendering the SAC's decision final and
executory.
Doctrine:

"Indeed, following Land Bank of the Philippines v. De Leon, the proper mode of appeal
from decisions of Regional Trial Courts sitting as SACs is by petition for review under Rule
42 of the Rules of Court and not through an ordinary appeal under Rule 41."

"Following then the same Land Bank case, resort by Elizabeth to a wrong mode of appeal
was fatal to her cause as it resulted in rendering the decision appealed from final and
executory. Her notice of appeal did not, it bears emphasis, stop the running of the
reglementary period to file a petition for review."

"Although appeal is an essential part of our judicial process, it has been held, time and
again, that the right thereto is not a natural right or a part of due process but is merely a
statutory privilege. Thus, the perfection of an appeal in the manner and within the period
prescribed by law is not only mandatory but also jurisdictional and failure of a party to
conform to the rules regarding appeal will render the judgment final and executory."

Facts:

• Elizabeth Diaz was the registered owner of a 15-hectare agricultural land in San Ricardo,
Talavera, Nueva Ecija.
• The Department of Agrarian Reform (DAR) expropriated 10 hectares of the land under
Presidential Decree No. 27 and Executive Order No. 228.
• DAR valued the expropriated land at P197,922.18.
• Diaz, through her attorney-in-fact Francisca P. De Guzman, filed a complaint against
Land Bank and DAR before the Regional Trial Court acting as a Special Agrarian Court
(SAC).
• The SAC adopted the DAR's valuation and fixed the just compensation at P197,922.29.
• Diaz appealed the SAC's decision to the Court of Appeals using an ordinary appeal
instead of a petition for review.
• Land Bank filed a motion to dismiss the appeal, arguing that the wrong mode of appeal
was used.
• The Court of Appeals denied Land Bank's motion to dismiss.
• Land Bank filed a petition for review on certiorari with the Supreme Court.

Petitioner’s/Plaintiff’s Arguments:

• The Special Agrarian Court's decision had become final and executory.
• The Court of Appeals never acquired jurisdiction over the appeal filed by Elizabeth Diaz
due to the wrong mode of appeal used.
• Elizabeth Diaz acted in bad faith by sending copies of her motion for reconsideration and
notice of appeal to Land Bank's main office instead of its counsel of record.

Respondent’s/Defendant’s Arguments:

• The Court of Appeals properly denied Land Bank's motion to dismiss the appeal.
• Land Bank failed to file an appellee's brief as directed by the Court of Appeals.
• Land Bank filed the motion to dismiss the appeal after a significant delay (157 days from
the last day for filing the brief).

Issues and Ruling:

Whether or not the proper mode of appeal from decisions of Regional Trial
Courts sitting as Special Agrarian Courts (SACs) is by petition for review under
Rule 42 of the Rules of Court
YES. The Supreme Court ruled that the proper mode of appeal from decisions of Regional
Trial Courts sitting as SACs is by petition for review under Rule 42 of the Rules of Court,
not through an ordinary appeal under Rule 41. The Court cited the case of Land Bank of
the Philippines v. De Leon, which established this principle based on Section 60 of Republic
Act No. 6657 (Comprehensive Agrarian Reform Law).

Whether or not the use of the wrong mode of appeal renders the decision of the
Special Agrarian Court final and executory
YES. The Supreme Court ruled that Elizabeth Diaz's use of the wrong mode of appeal
(ordinary appeal instead of petition for review) was fatal to her case. It resulted in
rendering the decision of the Special Agrarian Court final and executory. The Court
emphasized that the notice of appeal filed by Diaz did not stop the running of the
reglementary period to file a petition for review.

Whether or not the right to appeal is a natural right or part of due process
NO. The Supreme Court reiterated that the right to appeal is not a natural right or part of
due process but is merely a statutory privilege. The Court stated that the perfection of an
appeal in the manner and within the period prescribed by law is mandatory and
jurisdictional. Failure to conform to the rules regarding appeal will render the judgment
final and executory.

Dispositive:

WHEREFORE, the petition is GRANTED. The Resolution of the Court of Appeals dated June
2, 2009 is SET ASIDE.

The Decision dated June 21, 2006 of the Regional Trial Court of Guimba, Nueva Ecija,
Branch 33 sitting as a Special Agrarian Court in Agr. Case No. 1194-G is deemed final and
executory.

Other Notes:

MACAWIWILI GOLD MINING AND DEVELOPMENT VS. CA

Ponente: MENDOZA, J.
Decision Date: October 12, 1998
GR Number: G.R. No. 115104
Written By Digest Team (Sept 2024) 1 week ago

Summary:

This case involves a petition for certiorari filed by Macawiwili Gold Mining and
Development Co., Inc. and Omico Mining and Industrial Corporation (petitioners) against
the Court of Appeals and Philex Mining Corporation (respondents). The petitioners seek to
set aside the resolution of the Court of Appeals denying their motion to dismiss Philex
Mining's appeal from a ruling of the trial court. The trial court had dismissed Philex
Mining's complaint for expropriation of the petitioners' mining areas. The Supreme Court
granted the petition, set aside the Court of Appeals resolution, and dismissed Philex
Mining's appeal, ruling that the appeal raised only questions of law that should have been
brought directly to the Supreme Court instead of the Court of Appeals.
Doctrine:

"It is settled that the writ of certiorari lies only when petitioner has no other plain, speedy,
and adequate remedy in the ordinary course of law. Thus, a motion for reconsideration, as
a general rule, must be filed before the tribunal, board, or officer against whom the writ of
certiorari is sought."

"When a definite question has been properly raised, argued, and submitted to a lower
court, and the latter has decided the question, a motion for reconsideration is no longer
necessary as a condition precedent to the filing of a petition for certiorari in this Court."

"[F]or a question to be one of law, the same must not involve an examination of the
probative value of the evidence presented by the litigants or any of them. And the
distinction is well-known: There is a question of law in a given case when the doubt or
difference arises as to what the law is on a certain state of facts; there is a question of fact
when the doubt or difference arises as to the truth or the falsehood of alleged facts."

Facts:

• On October 16, 1992, Philex Mining Corporation filed a complaint for expropriation
against Macawiwili Gold Mining and Development Co., Inc. and Omico Mining & Industrial
Corporation.
• Philex Mining sought to expropriate 21.9 hectares of petitioners' mining areas based on
Section 59 of Presidential Decree No. 463.
• The Regional Trial Court of La Trinidad, Benguet dismissed Philex Mining's complaint on
February 18, 1993.
• Philex Mining appealed the dismissal to the Court of Appeals.
• Petitioners filed a Motion to Dismiss Appeal on February 16, 1994, arguing that only
questions of law were involved and the appeal should be to the Supreme Court.
• The Court of Appeals denied petitioners' motion in a resolution dated April 12, 1994.
• Without filing a motion for reconsideration, petitioners filed a petition for certiorari with
the Supreme Court.

Petitioner’s/Plaintiff’s Arguments:

• The appeal raises only questions of law and should be brought to the Supreme Court by
means of a petition for review on certiorari.
• The question of whether respondent has a right to expropriate petitioners' mining areas
under Section 59 of Presidential Decree No. 463 is a question of law.
• The Court of Appeals gravely abused its discretion in denying their motion to dismiss the
appeal.

Respondent’s/Defendant’s Arguments:

• The issues raised in its appeal are factual and the appellate court is the proper forum for
the ventilation of such issues.
• Section 59 of Presidential Decree No. 463 expressly grants respondent the right to
expropriate mining claims or lands owned by other persons.
• There is nothing absurd in allowing a mining company to expropriate land belonging to
another mining company.
• Respondent is not guilty of forum-shopping or subverting the Supreme Court's decision
in Poe Mining v. Garcia.
• The expropriation will not divide the surface from the subsurface as respondent seeks to
expropriate all rights over the 21.9 hectare area.
Issues and Ruling:

Whether or not the Court of Appeals committed grave abuse of discretion in

denying petitioners' Motion to Dismiss Appeal
YES. The Supreme Court found that the Court of Appeals committed grave abuse of
discretion in denying the petitioners' motion to dismiss the appeal. The Court ruled that
the issues raised in Philex Mining's appeal were purely questions of law, which should have
been brought directly to the Supreme Court by petition for review on certiorari under Rule
45, rather than to the Court of Appeals. The Court examined Philex Mining's assignment of
errors and determined that they raised legal questions that did not require an examination
of the probative weight of evidence but rather a determination of what the law is on the
given state of facts.

Whether or not petitioners' failure to file a motion for reconsideration before the
Court of Appeals is fatal to their petition for certiorari
NO. The Supreme Court held that while a motion for reconsideration is generally required
before filing a petition for certiorari, there are exceptions to this rule. In this case, the
issues raised by petitioners in their petition were substantially the same as those asserted
in their Motion to Dismiss Appeal before the Court of Appeals. The Court ruled that filing a
motion for reconsideration would have been futile as it would simply repeat their
arguments. Therefore, the failure to file a motion for reconsideration was not fatal to the
allowance of their action.

Dispositive:

WHEREFORE, the petition is GRANTED, the challenged resolution of the Court of Appeals is
SET ASIDE, and the appeal of respondent Philex Mining is DISMISSED.

Other Notes

OSS RICA SALES VS. ONG

Ponente: TINGA, J.
Decision Date: August 16, 2005
GR Number: G.R. NO. 132197
Written By Digest Team (Sept 2024) 1 week ago

Summary:

This case involves a dispute between Ross Rica Sales Center, Inc. and Juanito King & Sons,
Inc. (petitioners) and Spouses Gerry Ong and Elizabeth Ong (respondents) over possession
of three parcels of land. The petitioners filed an unlawful detainer case against the
respondents in the Municipal Trial Court (MTC) of Mandaue City. The MTC ruled in favor of
the petitioners, which was affirmed by the Regional Trial Court (RTC). However, the Court
of Appeals overturned these decisions, ruling that the MTC had no jurisdiction over the
case. The Supreme Court reversed the Court of Appeals decision and reinstated the MTC
ruling, holding that the complaint sufficiently alleged a case for unlawful detainer within
the MTC's jurisdiction.

Doctrine:

"Well-settled is the rule that what determines the nature of an action as well as which
court has jurisdiction over it are the allegations of the complaint and the character of the
relief sought."

"In an action for unlawful detainer, an allegation that the defendant is unlawfully
withholding possession from the plaintiff is deemed sufficient, without necessarily
employing the terminology of the law."

"The phrase 'unlawful withholding' has been held to imply possession on the part of
defendant, which was legal in the beginning, having no other source than a contract,
express or implied, and which later expired as a right and is being withheld by defendant."

"Even if respondents claim ownership as a defense to the complaint for ejectment, the
conclusion would be the same for mere assertion of ownership by the defendant in an
ejectment case will not therefore oust the municipal court of its summary jurisdiction."

Facts:

• Petitioners Ross Rica Sales Center, Inc. and Juanito King & Sons, Inc. are the registered
owners of three parcels of land covered by TCT Nos. 36466, 36467, and 36468.
• Respondent Elizabeth Ong was the previous registered owner of the lots.
• Respondents have been living in the house constructed on the lots.
• Petitioners sent a letter to respondents on May 6, 1995, informing them of their intent to
use the lots and demanding that they vacate within 30 days.
• Respondents refused to vacate the lots.
• Petitioners filed a complaint for unlawful detainer against respondents in the Municipal
Trial Court (MTC) of Mandaue City.
• The MTC ruled in favor of petitioners, ordering respondents to vacate the premises.
• The Regional Trial Court (RTC) affirmed the MTC's decision.
• The Court of Appeals reversed the lower courts' decisions, ruling that the MTC had no
jurisdiction over the case.
• Petitioners filed a petition for review with the Supreme Court.

Petitioner’s/Plaintiff’s Arguments:

• The RTC decision had become final and executory at the time the petition for review was
filed.
• The allegations in the complaint constitute a case for unlawful detainer properly
cognizable by the MTC.
• As registered owners, petitioners are entitled to the possession of the subject premises.

Respondent’s/Defendant’s Arguments:

• The MTC had no jurisdiction over the case as there was no contract between the parties.
• The case should be considered an accion reivindicatoria under the jurisdiction of the
RTC.
• Respondents occupy the subject lots as the legal owners.

Issues and Ruling:

Whether or not the RTC decision had already become final and executory at the
time the petition for review was filed
NO. The Supreme Court found that the respondents' petition for review was filed on time.
The Court explained that although respondents initially filed an erroneous Notice of
Appeal, this was effectively withdrawn by the timely filing of a Motion for Reconsideration
the following day. The period for appeal was tolled by the Motion for Reconsideration and
started to run again from the receipt of the order denying it. Counting the fifteen days
from receipt of the denial and the ten-day request for additional period, the respondents
filed their Petition for Review within the prescribed time.

Whether or not the allegations in the complaint constitute a case for unlawful
detainer properly cognizable by the MTC
YES. The Supreme Court ruled that the complaint sufficiently alleged a case for unlawful
detainer within the jurisdiction of the MTC. The Court stated: "the allegation in the
Complaint that: '. . . despite demand to vacate, the defendants have refused and still
refuse to vacate said lots, thus, unlawfully withholding possession of said lots from
plaintiffs and depriving plaintiffs of the use of their lots;' is already sufficient to constitute
an unlawful detainer case." The Court emphasized that the complaint established the basic
elements of an unlawful detainer case, which was sufficient to vest jurisdiction in the MTC.

Whether or not the case should be considered an accion reivindicatoria under

the jurisdiction of the RTC
NO. The Supreme Court rejected the respondents' contention that the case was an accion
reivindicatoria under the RTC's jurisdiction. The Court explained that in an action for
unlawful detainer, the question of possession is primordial while the issue of ownership is
generally unessential. The Court stated: "Neither the allegation in petitioners' complaint
for ejectment nor the defenses thereto raised by respondents sufficiently convert this case
into an accion reivindicatoria which is beyond the province of the MTC to decide." The
Court emphasized that petitioners only sought to recover physical possession of the
subject property, and the mere fact that they claimed ownership did not deprive the MTC
of jurisdiction to try the ejectment case.

Dispositive:

WHEREFORE, the Petition is GRANTED. The Decision of the Court of Appeals dated 6
January 1998 is REVERSED and SET ASIDE and the Decision dated 24 April 1996 of the
Municipal Trial Court of Mandaue City REINSTATED and AFFIRMED. Costs against
respondents.

Other Notes:

RULE 43 : APPEALS FROM COURT OF TAX APPEALS AND QUASI-JUDICIAL AGENCIES

RULE 43

Appeals From the Court of Tax Appeals and Quasi-Judicial Agencies to the Court of Appeals

Section 1. Scope. — This Rule shall apply to appeals from judgments or final orders of the Court of
Tax Appeals and from awards, judgments, final orders or resolutions of or authorized by any quasi-
judicial agency in the exercise of its quasi-judicial functions. Among these agencies are the Civil
Service Commission, Central Board of Assessment Appeals, Securities and Exchange Commission,
Office of the President, Land Registration Authority, Social Security Commission, Civil Aeronautics
Board, Bureau of Patents, Trademarks and Technology Transfer, National Electrification
Administration, Energy Regulatory Board, National Telecommunications Commission, Department of
Agrarian Reform under Republic Act No. 6657, Government Service Insurance System, Employees
Compensation Commission, Agricultural Invention Board, Insurance Commission, Philippine Atomic
Energy Commission, Board of Investments, Construction Industry Arbitration Commission, and
voluntary arbitrators authorized by law. (n)

Section 2. Cases not covered. — This Rule shall not apply to judgments or final orders issued under
the Labor Code of the Philippines. (n)

Section 3. Where to appeal. — An appeal under this Rule may be taken to the Court of Appeals
within the period and in the manner herein provided, whether the appeal involves questions of fact,
of law, or mixed questions of fact and law. (n)

Section 4. Period of appeal. — The appeal shall be taken within fifteen (15) days from notice of the
award, judgment, final order or resolution, or from the date of its last publication, if publication is
required by law for its effectivity, or of the denial of petitioner's motion for new trial or reconsideration
duly filed in accordance with the governing law of the court or agency a quo. Only one (1) motion for
reconsideration shall be allowed. Upon proper motion and the payment of the full amount of the
docket fee before the expiration of the reglementary period, the Court of Appeals may grant an
additional period of fifteen (15) days only within which to file the petition for review. No further
extension shall be granted except for the most compelling reason and in no case to exceed fifteen
(15) days. (n)

Section 5. How appeal taken. — Appeal shall be taken by filing a verified petition for review in seven
(7) legible copies with the Court of Appeals, with proof of service of a copy thereof on the adverse
party and on the court or agency a quo. The original copy of the petition intended for the Court of
Appeals shall be indicated as such by the petitioner.

Upon the filing of the petition, the petitioner shall pay to the clerk of court of the Court of Appeals the
docketing and other lawful fees and deposit the sum of P500.00 for costs. Exemption from payment
of docketing and other lawful fees and the deposit for costs may be granted by the Court of Appeals
upon a verified motion setting forth valid grounds therefor. If the Court of Appeals denies the motion,
the petitioner shall pay the docketing and other lawful fees and deposit for costs within fifteen (15)
days from notice of the denial. (n)

Section 6. Contents of the petition. — The petition for review shall (a) state the full names of the
parties to the case, without impleading the court or agencies either as petitioners or respondents; (b)
contain a concise statement of the facts and issues involved and the grounds relied upon for the
review; (c) be accompanied by a clearly legible duplicate original or a certified true copy of the
award, judgment, final order or resolution appealed from, together with certified true copies of such
material portions of the record referred to therein and other supporting papers; and (d) contain a
sworn certification against forum shopping as provided in the last paragraph of section 2, Rule 42.
The petition shall state the specific material dates showing that it was filed within the period fixed
herein. (2a)

Section 7. Effect of failure to comply with requirements. — The failure of the petitioner to comply
with any of the foregoing requirements regarding the payment of the docket and other lawful fees,
the deposit for costs, proof of service of the petition, and the contents of and the documents which
should accompany the petition shall be sufficient ground for the dismissal thereof. (n)

Section 8. Action on the petition. — The Court of Appeals may require the respondent to file a
comment on the petition not a motion to dismiss, within ten (10) days from notice, or dismiss the
petition if it finds the same to be patently without merit, prosecuted manifestly for delay, or that the
questions raised therein are too unsubstantial to require consideration. (6a)
Section 9. Contents of comment. — The comment shall be filed within ten (10) days from notice in
seven (7) legible copies and accompanied by clearly legible certified true copies of such material
portions of the record referred to therein together with other supporting papers. The comment shall
(a) point out insufficiencies or inaccuracies in petitioner's statement of facts and issues; and (b) state
the reasons why the petition should be denied or dismissed. A copy thereof shall be served on the
petitioner, and proof of such service shall be filed with the Court of Appeals. (9a)

Section 10. Due course. — If upon the filing of the comment or such other pleadings or documents
as may be required or allowed by the Court of Appeals or upon the expiration of the period for the
filing thereof, and on the records the Court of Appeals finds prima facie that the court or agency
concerned has committed errors of fact or law that would warrant reversal or modification of the
award, judgment, final order or resolution sought to be reviewed, it may give due course to the
petition; otherwise, it shall dismiss the same. The findings of fact of the court or agency concerned,
when supported by substantial evidence, shall be binding on the Court of Appeals. (n)

Section 11. Transmittal of record. — Within fifteen (15) days from notice that the petition has been
given due course, the Court of Appeals may require the court or agency concerned to transmit the
original or a legible certified true copy of the entire record of the proceeding under review. The
record to be transmitted may be abridged by agreement of all parties to the proceeding. The Court of
Appeals may require or permit subsequent correction of or addition to the record. (8a)

Section 12. Effect of appeal. — The appeal shall not stay the award, judgment, final order or
resolution sought to be reviewed unless the Court of Appeals shall direct otherwise upon such terms
as it may deem just. (10a)

Section 13. Submission for decision. — If the petition is given due course, the Court of Appeals may
set the case for oral argument or require the parties to submit memoranda within a period of fifteen
(15) days from notice. The case shall be deemed submitted for decision upon the filing of the last
pleading or memorandum required by these Rules or by the court of Appeals. (n)

ALCARAZ VS. GONZALEZ

Ponente: CALLEJO, SR., J.

Decision Date: September 20, 2006
GR Number: G.R. NO. 164715
Written By Digest Team 1 year ago

Summary:

This case involves a petition for review of the decision of the Court of Appeals (CA) in CA-
G.R. SP No. 75589, which granted the petition for review of the resolution of the Secretary
of Justice in I.S. No. H-03484 for attempted homicide. The petitioner, Arnel C. Alcaraz, fired
his gun at the car of the respondent, Ramon C. Gonzalez, during a road altercation. The CA
reversed the resolution of the Secretary of Justice, finding that there was probable cause
to charge Alcaraz with attempted homicide.

Doctrine:
The determination of probable cause during a preliminary investigation is within the
discretionary authority of the executive branch. The decision whether to dismiss a criminal
complaint is dependent on the sound discretion of the investigating prosecutor and the
Secretary of Justice. Courts are not empowered to substitute their own judgment for that of
the executive branch. The CA may review the resolution of the Secretary of Justice, but
only in a petition for certiorari under Rule 65, on the ground of grave abuse of discretion
amounting to excess or lack of jurisdiction.

Facts:

Ramon C. Gonzalez was driving his car along the South Luzon Expressway when Arnel C.
Alcaraz, a customs collector, suddenly cut into his lane. Gonzalez chased after Alcaraz and
confronted him. Alcaraz then fired his gun twice at Gonzalez's car. Gonzalez reported the
incident to the police and filed a criminal complaint for attempted homicide against
Alcaraz.

The investigating prosecutor found probable cause and filed an information for attempted
homicide. However, the Secretary of Justice reversed the resolution and ordered the
withdrawal of the information.

Petitioner’s/Plaintiff’s Arguments:

- Alcaraz did not have the intent to kill Gonzalez and only fired his gun to scare him.
- The trajectory of the bullet does not prove intent to kill.
- The Secretary of Justice erred in giving weight to Gonzalez's allegations.

Respondent’s/Defendant’s Arguments:

- Alcaraz admitted to firing his gun, which shows his intent to kill.
- The Secretary of Justice acted beyond his authority in finding no probable cause and
ordering the withdrawal of the information.

Issues and Ruling:

1. Whether the CA had jurisdiction to review the resolutions of the Secretary of

Justice under a petition for review under Rule 43. NO.
The CA erred in granting the petition for review under Rule 43. The proper remedy from an
adverse resolution of the Secretary of Justice is a petition for certiorari under Rule 65.

2. Whether there was probable cause to charge Alcaraz with attempted

homicide. YES.
The determination of probable cause during a preliminary investigation is within the
discretionary authority of the executive branch. The Secretary of Justice, as the head of
the executive branch, has the power to affirm, modify, or reverse the resolution of the
investigating prosecutor. In this case, the Secretary of Justice found that there was no
intent to kill based on the evidence presented.

Dispositive:

The petition is granted. The decision and resolution of the Court of Appeals are nullified.

Other Notes:
CORTES VS. OMBUDSMAN

Ponente: PEREZ, J.
Decision Date: June 10, 2013
GR Number: G.R. Nos. 187896-97
Written By Digest Team 1 year ago

Summary:

This case involves the dismissal of criminal and administrative complaints filed by the
petitioner against the respondents for violation of the Anti-Graft and Corrupt Practices Act
and misconduct. The complaints alleged that the respondents used a heavy equipment
grader owned by the province of Aklan to level a portion of the petitioner's land. The Office
of the Ombudsman (Visayas) recommended the dismissal of the cases due to the
existence of previous cases involving the same parties and issues. The petitioner appealed
the dismissal to the Supreme Court.

Doctrine:

The proper remedy for appeals from decisions of the Office of the Ombudsman in
administrative disciplinary cases is to file a petition for review under Rule 43 with the
Court of Appeals. However, in criminal complaints, the remedy is to file a petition for
certiorari under Rule 65 with the Supreme Court.

Facts:

The petitioner filed criminal and administrative complaints against the respondents for
grading and leveling a portion of his land using a grader owned by the province of Aklan.

The Office of the Ombudsman (Visayas) dismissed the complaints, citing the existence of
previous complaints involving the same parties and issues.

The previous complaints were filed by the petitioner's brother and were also dismissed.

Petitioner’s/Plaintiff’s Arguments:

- The Office of the Ombudsman (Visayas) erred in dismissing the complaint on the ground
of previous similar complaints.
- The Office of the Ombudsman (Visayas) erred in giving more weight to an inventory of
barangay roads over the petitioner's original certificate of title.
- The Office of the Ombudsman (Visayas) violated the petitioner's constitutional rights.
- The Office of the Ombudsman (Visayas) failed to state the legal basis for its decision.

Respondent’s/Defendant’s Arguments:

- Respondent igtanloc denied leveling and grading the petitioner's land.

- Respondent fernandez claimed to have acted in his official capacity and issued a driver's
trip ticket to igtanloc.
- Respondent sucgang argued that the complaints were a repetition of previous cases filed
by the petitioner's brother.
Issues and Ruling:

1. Whether the Office of the Ombudsman (Visayas) erred in dismissing the

complaint on the ground of previous similar complaints. - YES. The Supreme Court
held that the previous and present complaints were essentially the same, involving the
same parties, issues, and arguments. Allowing a similar complaint to proceed would result
in endless litigation.

2. Whether the Office of the Ombudsman (Visayas) erred in giving more weight
to an inventory of barangay roads over the petitioner's original certificate of
title. - NOT APPLICABLE. The Court did not address this issue in its ruling.

3. Whether the Office of the Ombudsman (Visayas) violated the petitioner's

constitutional rights. - NOT APPLICABLE. The Court did not find any violation of the
petitioner's constitutional rights in this case.

4. Whether the Office of the Ombudsman (Visayas) failed to state the legal basis
for its decision. - NOT APPLICABLE. The Court did not find any violation of the
constitutional requirement to state the factual and legal basis for a decision.

Dispositive:

The petition is denied, and the order of the Office of the Ombudsman (Visayas) is affirmed.

Other Notes:

FABIAN VS. DESIERTO

Ponente: REGALADO, J
Decision Date: September 16, 1998
GR Number: G.R. No. 129742
Written By Digest Team (Sept 2024) 1 week ago

Summary:

This case involves a petition filed by Teresita G. Fabian against the Office of the Ombudsman, challenging a joint
order that absolved Nestor V. Agustin from administrative charges. The key issue is the constitutionality of Section
27 of Republic Act No. 6770, which allows appeals from Ombudsman decisions directly to the Supreme Court. The
Supreme Court ruled that Section 27 is unconstitutional as it increases the Court's appellate jurisdiction without its
advice and consent, in violation of Section 30, Article VI of the Constitution. The Court held that appeals from
Ombudsman decisions in administrative disciplinary cases should instead be taken to the Court of Appeals under
Rule 43 of the Rules of Court.
Doctrine:

"Section 27 of Republic Act No. 6770 cannot validly authorize an appeal to this Court from decisions of the Office
of the Ombudsman in administrative disciplinary cases. It consequently violates the proscription in Section 30,
Article VI of the Constitution against a law which increases the Appellate jurisdiction of this Court."

"As a consequence of our ratiocination that Section 27 of Republic Act No. 6770 should be struck down as
unconstitutional, and in line with the regulatory philosophy adopted in appeals from quasi-judicial agencies in the
1997 Revised Rules of Civil Procedure, appeals from decisions of the Office of the Ombudsman in administrative
disciplinary cases should be taken to the Court of Appeals under the provisions of Rule 43."

Facts:

• Teresita G. Fabian filed an administrative complaint against Nestor V. Agustin, then Assistant Regional Director
of DPWH Region IV-A, for grave misconduct and other charges.
• The Ombudsman initially found Agustin guilty of misconduct and suspended him for one year without pay.
• On reconsideration, the Deputy Ombudsman exonerated Agustin from the administrative charges.
• Fabian appealed the decision to the Supreme Court, citing Section 27 of Republic Act No. 6770 which allows
direct appeals to the Supreme Court.
• The Supreme Court raised the issue of the constitutionality of Section 27 of RA 6770 in light of Section 30, Article
VI of the 1987 Constitution.

Petitioner’s/Plaintiff’s Arguments:

• Section 27 of Republic Act No. 6770 allows appeals from Ombudsman decisions directly to the Supreme Court.
• The provision does not increase the Supreme Court's appellate jurisdiction as it only involves questions of law,
which the Court already has jurisdiction over.
• The Court has previously taken cognizance of cases involving Section 27 of RA 6770, which can be viewed as
acquiescence or acceptance of the appellate jurisdiction.

Respondent’s/Defendant’s Arguments:

• The Office of the Ombudsman is empowered by the Constitution and law to promulgate its own rules of procedure.
• Section 27 of RA 6770 is valid under the constitutional and statutory authority granted to the Office of the
Ombudsman.
• The case could be decided on other grounds without addressing the constitutional question.

Issues and Ruling:

Whether or not Section 27 of Republic Act No. 6770 is constitutional

NO. The Supreme Court ruled that Section 27 of Republic Act No. 6770 is unconstitutional. The Court held that this
provision violates Section 30, Article VI of the 1987 Constitution, which prohibits laws increasing the appellate
jurisdiction of the Supreme Court without its advice and consent. The Court explained that allowing direct appeals
from Ombudsman decisions to the Supreme Court improperly expands its appellate jurisdiction. The Court noted
that the legislative history showed the Senate was aware of this constitutional issue but did not consult the Supreme
Court as required.

Whether or not appeals from Ombudsman decisions in administrative disciplinary cases should be taken to
the Court of Appeals
YES. The Supreme Court ruled that appeals from Ombudsman decisions in administrative disciplinary cases should
be taken to the Court of Appeals under Rule 43 of the Rules of Court. The Court reasoned that this is in line with the
regulatory philosophy adopted for appeals from quasi-judicial agencies in the 1997 Revised Rules of Civil
Procedure. The Court explained that transferring appellate jurisdiction to the Court of Appeals is a procedural matter
within its rule-making power and does not impair substantive rights, as parties still have a remedy and a competent
tribunal to administer that remedy.

Dispositive:

WHEREFORE, Section 27 of Republic Act No. 6770 (Ombudsman Act of 1989), together with Section 7, Rule III
of Administrative Order No. 07 (Rules of Procedure of the Office of the Ombudsman), and any other provision of
law or issuance implementing the aforesaid Act and insofar as they provide for appeals in administrative disciplinary
cases from the Office of the Ombudsman to the Supreme Court, are hereby declared INVALID and of no further
force and effect.

The instant petition is hereby referred and transferred to the Court of Appeals for final disposition, with said petition
to be considered by the Court of Appeals pro hac vice as a petition for review under Rule 43, without prejudice to its
requiring the parties to submit such amended or supplemental pleadings and additional documents or records as it
may deem necessary and proper.

Other Notes:

n/a
LANTING VS. OMBUDSMAN

Ponente: SANDOVAL-GUTIERREZ, J.
Decision Date: May 06, 2005
GR Number: G.R. NO. 141426
Written By Digest Team (Sept 2024) 1 week ago

Summary:

This case involves a petition for review on certiorari filed by Zenaida F. Lanting (petitioner)
against the Ombudsman, various city officials of Manila, and others (respondents). Lanting
filed a criminal complaint with the Office of the Ombudsman against the respondents for
alleged violations of the Anti-Graft and Corrupt Practices Act. The Ombudsman dismissed
the complaint. Lanting then filed a petition for certiorari and mandamus with the Court of
Appeals, which was dismissed for lack of jurisdiction. The Supreme Court affirmed the
Court of Appeals' dismissal, ruling that it has sole jurisdiction to review Ombudsman
resolutions in criminal cases on pure questions of law.

Doctrine:

"Considering that petitioner's complaint is criminal in nature, this Court has the sole
authority to review the Ombudsman's Resolutions on pure question of law as expressly
mandated in Section 14, 2nd paragraph of R.A. 6770, which provides:

'Sec. 14. Restrictions. x x x.

No court shall hear any appeal or application for remedy against the decision or findings of
the Ombudsman, except the Supreme Court on pure question of law.'"

"In Fabian vs. Desierto, we held that only 'appeals from the decisions of the Office of the
Ombudsman in administrative disciplinary cases should be taken to the Court of Appeals
under the provisions of Rule 43 (of the 1997 Revised Rules of Civil Procedure).'"

Facts:

• Zenaida F. Lanting was the Administrative Officer IV of the City Council of Manila.
• She filed a complaint with the Office of the Ombudsman against Manila city officials for
alleged violations of the Anti-Graft and Corrupt Practices Act.
• The complaint alleged unlawful appointment of Ernesto Saw, Jr., a purported Chinese
citizen, as a Researcher in the City Council.
• Lanting also alleged fraudulent publication of a vacant position and questioned other
appointments.
• The Ombudsman dismissed Lanting's complaint on April 8, 1999.
• Lanting filed a motion for reconsideration, which was denied on July 26, 1999.
• Lanting then filed a petition for certiorari and mandamus with the Court of Appeals.
• The Court of Appeals dismissed the petition for lack of jurisdiction on September 9, 1999.
• Lanting's motion for reconsideration was denied by the Court of Appeals on January 5,
2000.
• Lanting filed a petition for review on certiorari with the Supreme Court.

Petitioner’s/Plaintiff’s Arguments:

• The Court of Appeals erred in dismissing the petition for certiorari and mandamus.
• The complaint before the Ombudsman included acts constituting grounds for
administrative complaints.
• The Court of Appeals should have taken cognizance of the petition based on the ruling in
Fabian vs. Desierto.

Respondent’s/Defendant’s Arguments:

• The Court of Appeals correctly dismissed the petition for lack of jurisdiction.
• The complaint before the Ombudsman was criminal in nature, not administrative.
• Under R.A. 6770, only the Supreme Court has jurisdiction to review Ombudsman
resolutions in criminal cases.

Issues and Ruling:

Whether or not the Court of Appeals erred in dismissing the petition for
certiorari and mandamus for lack of jurisdiction
NO. The Supreme Court ruled that the Court of Appeals did not err in dismissing the
petition for lack of jurisdiction. The Court held that Lanting's complaint before the
Ombudsman was criminal in nature, not administrative. As such, under Section 14 of
Republic Act No. 6770 (The Ombudsman Act of 1989), only the Supreme Court has
jurisdiction to review Ombudsman resolutions in criminal cases on pure questions of law.
The Court cited its previous ruling in Fabian vs. Desierto, which held that only appeals
from Ombudsman decisions in administrative disciplinary cases should be taken to the
Court of Appeals. Since Lanting's complaint was criminal in nature, the Court of Appeals
correctly dismissed the petition for lack of jurisdiction.

Dispositive:

WHEREFORE, the petition for review on certiorari is hereby DENIED. Costs against
petitioner.

Other Notes:

PEREZ VS. THE

Ponente: CORONA, J.
Decision Date: May 27, 2004
GR Number: G.R. No. 131445
Written By Digest Team (Sept 2024) 1 week ago

Summary:
This case involves petitioners Amado G. Perez (deceased) represented by his widow and
others against the Office of the Ombudsman, Mayor Ignacio R. Bunye, and other
respondents. The petitioners, members of a market vendors' association, filed criminal
complaints with the Office of the Ombudsman against several respondents, including
Mayor Bunye, for alleged violation of the Anti-Graft and Corrupt Practices Act. The
Ombudsman dismissed the complaint against Mayor Bunye. The petitioners challenged
this dismissal through a petition for certiorari and mandamus in the Court of Appeals,
which was dismissed for lack of jurisdiction. The Supreme Court affirmed the dismissal of
the petition, ruling that petitions for certiorari questioning the Ombudsman's decisions in
criminal cases should be filed directly with the Supreme Court, not the Court of Appeals.

Doctrine:

"It is the nature of the case that determines the proper remedy to be filed and the
appellate court where such remedy should be filed by a party aggrieved by the decisions
or orders of the Office of the Ombudsman. If it is an administrative case, appeal should be
taken to the Court of Appeals under Rule 43 of the Rules of Court. If it is a criminal case,
the proper remedy is to file with the Supreme Court an original petition for certiorari under
Rule 65."

"Grave abuse of discretion implies a capricious and whimsical exercise of judgment

tantamount to lack of jurisdiction. In other words, the exercise of power is in an arbitrary
or despotic manner by reason of passion or personal hostility. It must be so patent and
gross as to amount to an evasion of positive duty or a virtual refusal to perform the duty
enjoined or to act at all in contemplation of law."

Facts:

• Petitioners, members of the Kilusang Bayan ng mga Magtitinda ng Bagong Pamilihang

Bayan ng Muntinlupa, Inc. (KBMBPM), filed two complaints with the Office of the
Ombudsman against several respondents, including Mayor Ignacio R. Bunye.
• The complaints alleged violation of RA 3019 (Anti-Graft and Corrupt Practices Act) for
destroying the doors of the KBMBPM office while serving a Take-Over Order.
• On April 11, 1997, the Office of the Ombudsman issued a resolution excluding Mayor
Bunye from the criminal indictment.
• Petitioners challenged this exclusion through a petition for certiorari and mandamus in
the Court of Appeals on September 1, 1997.
• The Court of Appeals dismissed the petition for lack of jurisdiction, citing Section 27 of
RA 6770 (Ombudsman Act of 1989).
• Petitioners then filed this petition for review with the Supreme Court.

Petitioner’s/Plaintiff’s Arguments:

• The Office of the Ombudsman erred in excluding Mayor Bunye from the criminal
indictment.
• The Court of Appeals incorrectly dismissed their petition for certiorari and mandamus.
• The Ombudsman's decision to dismiss the complaint against Mayor Bunye constituted
grave abuse of discretion.

Respondent’s/Defendant’s Arguments:

• The dismissal of the complaint against Mayor Bunye was proper due to lack of evidence
of his specific participation in the alleged violent implementation of the Take-Over Order.
• Mayor Bunye's presence at the scene, if true, was not improper given his duties under
the Local Government Code.
• The letter dated August 8, 1988, from Mayor Bunye was merely a request for suspension
and not an order itself.

Issues and Ruling:

Whether or not the Court of Appeals was correct in dismissing the petition for
certiorari and mandamus
YES. The Supreme Court affirmed that the CA was correct in dismissing the petition, but for
different reasons. The Court clarified that Section 27 of RA 6770, which the CA cited,
applies only to administrative cases, not criminal cases like the one at hand. The proper
procedure for challenging the Ombudsman's decisions in criminal cases is to file a petition
for certiorari under Rule 65 directly with the Supreme Court, not the Court of Appeals.

Whether or not the Office of the Ombudsman committed grave abuse of

discretion in dismissing the complaint against Mayor Bunye
NO. The Supreme Court found no grave abuse of discretion on the part of the Office of the
Ombudsman. The Court stated that the Ombudsman's factual findings showed no evidence
of Mayor Bunye's specific participation in the alleged violent implementation of the Take-
Over Order. The Court emphasized its policy of non-interference with the Ombudsman's
investigatory and prosecutorial powers absent any compelling reason, citing constitutional,
statutory, and practical considerations.

Dispositive:

WHEREFORE, the petition is hereby DENIED for lack of merit.

Other Notes
ST. MARTIN FUNERAL HOME VS. NLRC

Ponente: REGALADO, J.
Decision Date: September 16, 1998
GR Number: G.R. No. 130866
Written By Digest Team (Sept 2024) 1 week ago

Summary:

This case involves a petition for certiorari filed by St. Martin Funeral Home (petitioner)
against the National Labor Relations Commission (NLRC) and Bienvenido Aricayos (private
respondent). The private respondent filed a complaint for illegal dismissal against the
petitioner before the NLRC. The labor arbiter initially ruled in favor of the petitioner,
declaring no employer-employee relationship existed. On appeal, the NLRC set aside this
decision and remanded the case to the labor arbiter. The petitioner then filed this petition
alleging grave abuse of discretion by the NLRC.

The Supreme Court took this opportunity to reexamine the procedure for judicial review of
NLRC decisions. It ruled that petitions for certiorari against NLRC decisions should be filed
with the Court of Appeals rather than directly with the Supreme Court, in accordance with
the hierarchy of courts.

Doctrine:

"The Court is, therefore, of the considered opinion that ever since appeals from the NLRC
to the Supreme Court were eliminated, the legislative intendment was that the special civil
action of certiorari was and still is the proper vehicle for judicial review of decisions of the
NLRC. The use of the word "appeal" in relation thereto and in the instances we have noted
could have been a lapsus plumae because appeals by certiorari and the original action for
certiorari are both modes of judicial review addressed to the appellate courts."

"Therefore, all references in the amended Section 9 of B.P. No. 129 to supposed appeals
from the NLRC to the Supreme Court are interpreted and hereby declared to mean and
refer to petitions for certiorari under Rule 65. Consequently, all such petitions should
henceforth be initially filed in the Court of Appeals in strict observance of the doctrine on
the hierarchy of courts as the appropriate forum for the relief desired."

Facts:

• Private respondent Bienvenido Aricayos filed a complaint for illegal dismissal against
petitioner St. Martin Funeral Home before the NLRC.
• Aricayos claimed he worked as Operations Manager from February 6, 1995 to January 22,
1996 when he was dismissed.
• St. Martin Funeral Home claimed Aricayos was not an employee but the uncle of the
owner who voluntarily helped with the business.
• The labor arbiter ruled in favor of St. Martin, finding no employer-employee relationship
existed.
• Aricayos appealed to the NLRC, which set aside the labor arbiter's decision and
remanded the case.
• St. Martin filed a motion for reconsideration, which was denied by the NLRC.
• St. Martin then filed this petition for certiorari with the Supreme Court alleging grave
abuse of discretion by the NLRC.

Petitioner’s/Plaintiff’s Arguments:

• The NLRC committed grave abuse of discretion in setting aside the labor arbiter's
decision and remanding the case.
• There was no employer-employee relationship between St. Martin Funeral Home and
Aricayos.
• Aricayos was not an employee but merely voluntarily helped with the business as a
relative of the owner.

Respondent’s/Defendant’s Arguments:

• An employer-employee relationship existed between St. Martin Funeral Home and

Aricayos.
• Aricayos worked as Operations Manager from February 1995 to January 1996.
• The labor arbiter erred in not giving credence to the evidence submitted by Aricayos.
• Aricayos was illegally dismissed from his employment.

Issues and Ruling:

Whether or not petitions for certiorari against NLRC decisions should be filed
directly with the Supreme Court
NO. The Supreme Court ruled that petitions for certiorari against NLRC decisions should be
filed with the Court of Appeals rather than directly with the Supreme Court. The Court held
that the legislative intent was for the special civil action of certiorari to be the proper
vehicle for judicial review of NLRC decisions. It interpreted references to "appeals" from
the NLRC to the Supreme Court in B.P. No. 129 to mean petitions for certiorari under Rule
65. The Court directed that such petitions should be initially filed in the Court of Appeals in
observance of the hierarchy of courts.

Whether or not the Court of Appeals has jurisdiction to review decisions of the
NLRC
YES. The Supreme Court clarified that the Court of Appeals has jurisdiction to review
decisions of the NLRC through petitions for certiorari. It interpreted the amended Section 9
of B.P. No. 129 as granting the Court of Appeals jurisdiction over petitions for certiorari
against NLRC decisions, despite confusing language about the Supreme Court's appellate
jurisdiction. The Court held this interpretation aligns with the legislative intent to reduce
the Supreme Court's caseload by allowing initial review by the Court of Appeals.

Dispositive:

WHEREFORE, under the foregoing premises, the instant petition for certiorari is hereby
REMANDED, and all pertinent records thereof ordered to be FORWARDED, to the Court of
Appeals for appropriate action and disposition consistent with the views and ruling herein
set forth, without pronouncement as to costs.

Other Notes:

RULE 45: APPEAL BY CERTIORARI TO SUPREME COURT

RULE 45

Appeal by Certiorari to the Supreme Court

Section 1. Filing of petition with Supreme Court. — A party desiring to appeal by certiorari from a
judgment or final order or resolution of the Court of Appeals, the Sandiganbayan, the Regional Trial
Court or other courts whenever authorized by law, may file with the Supreme Court a verified petition
for review on certiorari. The petition shall raise only questions of law which must be distinctly set
forth. (1a, 2a)

Section 2. Time for filing; extension. — The petition shall be filed within fifteen (15) days from notice
of the judgment or final order or resolution appealed from, or of the denial of the petitioner's motion
for new trial or reconsideration filed in due time after notice of the judgment. On motion duly filed and
served, with full payment of the docket and other lawful fees and the deposit for costs before the
expiration of the reglementary period, the Supreme Court may for justifiable reasons grant an
extension of thirty (30) days only within which to file the petition. (1a, 5a)

Section 3. Docket and other lawful fees; proof of service of petition. — Unless he has theretofore
done so, the petitioner shall pay the corresponding docket and other lawful fees to the clerk of court
of the Supreme Court and deposit the amount of P500.00 for costs at the time of the filing of the
petition. Proof of service of a copy, thereof on the lower court concerned and on the adverse party
shall be submitted together with the petition. (1a)

Section 4. Contents of petition. — The petition shall be filed in eighteen (18) copies, with the original
copy intended for the court being indicated as such by the petitioner and shall (a) state the full name
of the appealing party as the petitioner and the adverse party as respondent, without impleading the
lower courts or judges thereof either as petitioners or respondents; (b) indicate the material dates
showing when notice of the judgment or final order or resolution subject thereof was received, when
a motion for new trial or reconsideration, if any, was filed and when notice of the denial thereof was
received; (c) set forth concisely a statement of the matters involved, and the reasons or arguments
relied on for the allowance of the petition; (d) be accompanied by a clearly legible duplicate original,
or a certified true copy of the judgment or final order or resolution certified by the clerk of court of the
court a quo and the requisite number of plain copies thereof, and such material portions of the
record as would support the petition; and (e) contain a sworn certification against forum shopping as
provided in the last paragraph of section 2, Rule 42. (2a)

Section 5. Dismissal or denial of petition. — The failure of the petitioner to comply with any of the
foregoing requirements regarding the payment of the docket and other lawful fees, deposit for costs,
proof of service of the petition, and the contents of and the documents which should accompany the
petition shall be sufficient ground for the dismissal thereof.

The Supreme Court may on its own initiative deny the petition on the ground that the appeal is
without merit, or is prosecuted manifestly for delay, or that the questions raised therein are too
unsubstantial to require consideration. (3a)

Section 6. Review discretionary. — A review is not a matter of right, but of sound judicial discretion,
and will be granted only when there are special and important reasons thereof. The following, while
neither controlling nor fully measuring the court's discretion, indicate the character of the reasons
which will be considered:

(a) When the court a quo has decided a question of substance, not theretofore determined
by the Supreme Court, or has decided it in a way probably not in accord with law or with the
applicable decisions of the Supreme Court; or

(b) When the court a quo has so far departed from the accepted and usual course of judicial
proceedings, or so far sanctioned such departure by a lower court, as to call for an exercise
of the power of supervision. (4a)

Section 7. Pleadings and documents that may be required; sanctions. — For purposes of
determining whether the petition should be dismissed or denied pursuant to section 5 of this Rule, or
where the petition is given due course under section 8 hereof, the Supreme Court may require or
allow the filing of such pleadings, briefs, memoranda or documents as it may deem necessary within
such periods and under such conditions as it may consider appropriate, and impose the
corresponding sanctions in case of non-filing or unauthorized filing of such pleadings and documents
or non-compliance with the conditions therefor. (n)

Section 8. Due course; elevation of records. — If the petition is given due course, the Supreme
Court may require the elevation of the complete record of the case or specified parts thereof within
fifteen (15) days from notice. (2a)

Section 9. Rule applicable to both civil and criminal cases. — The mode of appeal prescribed in this
Rule shall be applicable to both civil and criminal cases, except in criminal cases where the penalty
imposed is death, reclusion perpetua or life imprisonment. (n)
ASIAN TERMINALS VS. SIMON ENTERPRISES

Ponente: VILLARAMA, JR., J.

Decision Date: February 27, 2013
GR Number: G.R. No. 177116
Written By Digest Team (Sept 2024) 1 week ago

Summary:

This case involves a petition for review on certiorari filed by Asian Terminals, Inc. (ATI)
against Simon Enterprises, Inc. ATI is challenging the Court of Appeals decision that held
them solidarily liable with other defendants for shortages in shipments of soybean meal
received by Simon Enterprises. The essential facts are that Simon Enterprises claimed
shortages in two shipments of soybean meal it received, which were handled by ATI as the
arrastre operator. Simon Enterprises filed a complaint for damages against ATI and other
defendants in the Regional Trial Court. The RTC ruled in favor of Simon Enterprises, which
was affirmed by the Court of Appeals. The Supreme Court reversed the lower court rulings
and dismissed the complaint against ATI, finding that Simon Enterprises failed to prove the
actual weight of the shipment at origin and therefore could not establish that a shortage
occurred.

Doctrine:

"Though it is true that common carriers are presumed to have been at fault or to have
acted negligently if the goods transported by them are lost, destroyed, or deteriorated,
and that the common carrier must prove that it exercised extraordinary diligence in order
to overcome the presumption, the plaintiff must still, before the burden is shifted to the
defendant, prove that the subject shipment suffered actual shortage. This can only be
done if the weight of the shipment at the port of origin and its subsequent weight at the
port of arrival have been proven by a preponderance of evidence, and it can be seen that
the former weight is considerably greater than the latter weight, taking into consideration
the exceptions provided in Article 1734 of the Civil Code."

"The presumption that the bill of lading, which petitioner relies upon to support its claim
for restitution, constitutes prima facie evidence of the goods therein described was
correctly deemed by the appellate court to have been rebutted in light of abundant
evidence casting doubts on its veracity."

"In the absence of clear, convincing and competent evidence to prove that the cargo
indeed weighed, albeit the Bill of Lading qualified it by the phrase "said to weigh,"
6,599.23 MT at the port of origin when it was loaded onto the MV Hoegh, the fact of loss or
shortage in the cargo upon its arrival in Manila cannot be definitively established. The
legal basis for attributing liability to either of the respondents is thus sorely wanting."

Facts:

• On October 25, 1995 and November 25, 1995, Contiquincybunge Export Company
loaded shipments of U.S. Soybean Meal onto vessels for delivery to Simon Enterprises in
Manila.
• When the shipments arrived in Manila, they were discharged to receiving barges of Asian
Terminals, Inc. (ATI), the arrastre operator.
• Simon Enterprises claimed shortages in both shipments upon receipt.
• On December 3, 1996, Simon Enterprises filed an action for damages against the
unknown owners of the vessels, their local agent, and ATI.
• The Regional Trial Court ruled in favor of Simon Enterprises, holding the defendants
solidarily liable for damages.
• The Court of Appeals affirmed the RTC decision.
• ATI filed a petition for review on certiorari with the Supreme Court.

Petitioner’s/Plaintiff’s Arguments:

• Simon Enterprises failed to prove that the subject shipment suffered actual loss/shortage
as there was no competent evidence to prove that it actually weighed 3,300 metric tons at
the port of origin.
• Stipulations in the bill of lading that the cargo was carried on a "shipper's weight,
quantity and quality unknown" basis are not contrary to public policy.
• Shortage/loss, if any, may have been due to the inherent nature of the shipment and its
insufficient packing considering that the subject cargo was shipped in bulk and had a
moisture content of 12.5%.
• Simon Enterprises failed to substantiate its claim for damages as no competent evidence
was presented to prove the same.
• Simon Enterprises has not presented any evidence showing any fault/negligence on the
part of ATI.

Respondent’s/Defendant’s Arguments:

• The bill of lading, proforma invoice, and packing list prove that the subject shipment
weighed 3,300 metric tons at the port of origin.
• The survey reports from Del Pan Surveyors prove that there was a shortage in the
shipment upon arrival in Manila.
• ATI, as the arrastre operator, should be held jointly and severally liable with the carrier
for the shortages.
• The spillages that occurred during unloading demonstrate negligence on the part of ATI.

Issues and Ruling:

Whether or not Simon Enterprises proved that the subject shipment suffered
actual shortage
NO. The Supreme Court ruled that Simon Enterprises failed to prove that the subject
shipment suffered actual shortage. The Court stated: "In this case, respondent failed to
prove that the subject shipment suffered shortage, for it was not able to establish that the
subject shipment was weighed at the port of origin at Darrow, Louisiana, U.S.A. and that
the actual weight of the said shipment was 3,300 metric tons." The Court noted that the
bill of lading contained the qualification "Shipper's weight, quantity and quality unknown,"
meaning the carrier was oblivious to the contents of the shipment. Without clear evidence
of the actual weight at origin, the fact of shortage could not be definitively established.

Whether or not the alleged shortage could be due to the inherent nature of the
shipment
YES. The Court ruled that the alleged shortage, if any, may have been due to the inherent
nature of the subject shipment or its packaging. The Court noted that soybean meal tends
to settle or consolidate over time, especially with increased moisture and time. The
shipment had a moisture content of 12.5% and the voyage lasted 36 days, during which
the cargo likely lost weight due to changes in temperature and moisture levels. The Court
also pointed out that the alleged shortage of 199.863 metric tons was only 6.05% of the
total shipment, which was within the allowable 10% variance.

Whether or not Simon Enterprises proved negligence on the part of ATI

NO. The Court agreed with ATI that Simon Enterprises had not proven any negligence on
ATI's part. The Court stated: "As petitioner ATI pointed out, a reading of the Survey Report
of Del Pan Surveyors (Exhibits "D" to "D-4" of respondent) would not show any untoward
incident or negligence on the part of petitioner ATI during the discharging operations." The
Court also noted discrepancies in the weighing methods used by Simon Enterprises to
establish the alleged shortage, further undermining their claim.

Dispositive:

WHEREFORE, the petition for review on certiorari is GRANTED. The Decision dated
November 27, 2006 and Resolution dated March 23, 2007 of the Court of Appeals in CA-
G.R. CV No. 71210 are REVERSED AND SET ASIDE insofar as petitioner Asian Terminals,
Inc. is concerned. Needless to add, the complaint against petitioner docketed as RTC
Manila Civil Case No. 96-81101 is ordered DISMISSED.

Other Notes:

MACKY VS. ANGELES

Ponente: QUISUMBING, J.
Decision Date: September 30, 2003
GR Number: G.R. No. 144230
Written By Digest Team (Sept 2024) 1 week ago

Summary:

This case involves a petition for review on certiorari filed by Arturo G. Mackay (petitioner) against Hon. Adoracion
G. Angeles, Acting Presiding Judge of the RTC Branch 125, Caloocan City, and Antonio G. Mackay (respondents).
The petitioner seeks to annul the Decision of the Court of Appeals which denied his petition for certiorari and
prohibition with preliminary injunction and/or restraining order. The case originated from a special proceeding
where the petitioner was appointed as regular administrator of the intestate estate of deceased Eufrocina G. Mackay
but was later removed due to failure to submit the required inventory and pay estate taxes. The Supreme Court
denied the petition, affirming the Court of Appeals' decision.

Doctrine:

"In De Borja v. Tan, we held that the trial court does not act with grave abuse of discretion in ordering the
immediate assumption into office of one who has been appointed as administrator before the perfection of an appeal
from the order appointing him as such, where sufficient reasons exist to order execution pending appeal. Section 2,
Rule 39 of the Rules of Court allow discretionary execution where special reasons or circumstances exist."

"As it is the duty of trial courts in which cases are pending for the settlement of estates to expedite the proceedings,
and considering further that the trial court is expressly authorized by the Rules of Court to order execution pending
appeal, we find no grave abuse of discretion in the trial court's actuations."

"The remedies of appeal and certiorari are mutually exclusive and not alternative or successive. Certiorari as a mode
of appeal under Rule 45 should be distinguished from certiorari as an original action under Rule 65. In an appeal by
certiorari, the petition is based on questions of law which the appellant desires the appellate court to resolve. In
certiorari as an original action, the only question that may be raised is whether or not the lower court acted without
or in excess of jurisdiction or with grave abuse of discretion."

Facts:

• Petitioner Arturo G. Mackay was appointed as regular administrator of the intestate estate of deceased Eufrocina
G. Mackay on March 20, 1996.
• After nearly 24 months, petitioner had not submitted the required inventory of estate assets and liabilities, nor paid
the taxes due on the estate.
• Private respondent Antonio G. Mackay filed an urgent motion on March 10, 1998 for the removal of petitioner as
regular administrator.
• Despite notices, petitioner failed to attend scheduled hearings.
• Judge Adoracion G. Angeles issued an Order on July 15, 1998 relieving petitioner as administrator and appointing
private respondent as his substitute.
• Petitioner's motion for reconsideration was denied on August 28, 1998.
• Petitioner filed a notice of appeal and record on appeal on September 29, 1998, 22 days after receiving the denial
order.
• The trial court had already issued letters of administration to private respondent on September 24, 1998.
• Petitioner filed a petition for certiorari and prohibition with the Court of Appeals, which was denied.
• The Court of Appeals affirmed the trial court's orders, leading to this petition for review on certiorari with the
Supreme Court.

Petitioner’s/Plaintiff’s Arguments:
• The Order appointing private respondent as administrator, having been appealed, cannot be immediately executed
by granting letters of administration.
• The Court of Appeals erred in affirming public respondent's orders as they were issued in violation of petitioner's
right to appeal and with grave abuse of discretion.
• The appellate court acted in excess of jurisdiction by resolving questions not raised in the petition for certiorari
filed before it.

Respondent’s/Defendant’s Arguments:

• The trial court did not commit grave abuse of discretion in removing petitioner as regular administrator for failure
to render an accounting of the assets and liabilities of the estate.
• The immediate issuance of letters of administration to private respondent was justified due to the need for an
administrator and the undue delay in settling the estate.
• The Court of Appeals correctly applied the presumption of regularity in the performance of official duty.

Issues and Ruling:

Whether or not the issuance of letters of administration to private respondent was premature and in violation
of the reglementary period on appeals in special proceedings
NO. The Supreme Court held that the trial court did not act with grave abuse of discretion in ordering the immediate
assumption into office of the appointed administrator before the perfection of an appeal. The Court cited De Borja v.
Tan, which allows discretionary execution where special reasons or circumstances exist. In this case, the estate
would be left without an administrator, and the prompt settlement of the estate had already been unduly delayed.
The Court emphasized that it is the duty of trial courts to expedite proceedings for the settlement of estates, and the
Rules of Court expressly authorize execution pending appeal.

Whether or not the Court of Appeals erred in applying the presumption of regularity in the performance of
official duty despite the alleged premature issuance of letters of administration
NO. The Supreme Court found no error in the Court of Appeals' affirmation of the trial court's order granting
discretionary execution. The Court reiterated that sufficient reasons existed to order execution pending appeal,
namely the need for an administrator and the undue delay in settling the estate. As such, the presumption of
regularity in the performance of official duty was correctly applied.

Whether or not the Court of Appeals gravely abused its discretion in resolving issues which are proper
subjects of an ordinary appeal and not raised in the petition for certiorari
NO. The Supreme Court clarified that in appeals by certiorari under Rule 45, only errors of law may be raised. The
Court emphasized that the remedies of appeal and certiorari are mutually exclusive and not alternative or successive.
The allegation of grave abuse of discretion, being beyond the scope of appeals by certiorari, was given scant
consideration by the Court.

Dispositive:

WHEREFORE, the instant petition for review on certiorari is DENIED. The Decision of the Court of Appeals dated
April 14, 2000, in CA-G.R. SP No. 49219, which denied petitioner Arturo G. Mackay's petition for certiorari and
prohibition with preliminary injunction and/or restraining order and its Resolution dated July 26, 2000 denying
reconsideration of said decision, are hereby AFFIRMED.

Other Notes:

n/a
MAZA VS. TURLA

Ponente: LEONEN, J.
Decision Date: February 15, 2017
GR Number: G.R. No. 187094
Written By Digest Team (Sept 2024) 1 week ago

Summary:

This case involves a Petition for Certiorari and Prohibition filed by former party-list representatives Liza L. Maza,
Saturnino C. Ocampo, Teodoro A. Casiño, and Rafael V. Mariano (petitioners) against Judge Evelyn A. Turla and
several prosecutors (respondents). The petitioners seek to nullify Judge Turla's orders remanding murder cases
against them back to the prosecutors for another preliminary investigation. The petitioners argue that Judge Turla
should have determined probable cause herself based on the evidence submitted, rather than remanding the cases.
The Supreme Court partially granted the petition, ruling that Judge Turla acted without legal basis in remanding the
cases instead of determining probable cause herself.

Doctrine:

"Upon filing of an information in court, trial court judges must determine the existence or non-existence of probable
cause based on their personal evaluation of the prosecutor's report and its supporting documents. They may dismiss
the case, issue an arrest warrant, or require the submission of additional evidence. However, they cannot remand the
case for another conduct of preliminary investigation on the ground that the earlier preliminary investigation was
improperly conducted."

"The determination of probable cause by the trial court judge is a judicial function, whereas the determination of
probable cause by the prosecutors is an executive function."
"The admissibility or inadmissibility of evidence cannot be ruled upon in a preliminary investigation."

Facts:

• Petitioners are former members of the House of Representatives representing various party-list groups.
• In December 2006, police referred three murder cases against petitioners and 15 others to the Provincial
Prosecutor.
• A panel of prosecutors conducted a preliminary investigation and found probable cause to file murder charges
against petitioners in April 2008.
• Two Informations for murder were filed against petitioners in the Regional Trial Court of Palayan City.
• Petitioners filed a Motion for Judicial Determination of Probable Cause with Prayer to Dismiss the Case Outright.
• Judge Turla issued an order remanding the cases back to the prosecutors for another preliminary investigation,
citing flaws in the original investigation.
• Petitioners filed a Petition for Certiorari and Prohibition with the Supreme Court seeking to nullify Judge Turla's
orders and dismiss the cases against them.

Petitioner’s/Plaintiff’s Arguments:

• Judge Turla shirked her constitutional duty to determine probable cause and improperly remanded the cases.
• The cases should have been dismissed due to lack of evidence establishing probable cause.
• The prosecution evidence was inadmissible for violating the res inter alios acta rule.
• Judge Turla's order to remand had no basis in law, jurisprudence, or rules.

Respondent’s/Defendant’s Arguments:

• The petition violates the hierarchy of courts principle.

• Judge Turla's remand recognizes prosecutors' exclusive authority to determine probable cause for filing charges.
• The prosecution correctly found probable cause to file the indictments.
• Issues of admissibility of evidence should be addressed during trial, not preliminary investigation.

Issues and Ruling:

Whether or not Judge Turla gravely abused her discretion in remanding the cases to the Provincial
Prosecutor for another preliminary investigation
YES. The Supreme Court ruled that Judge Turla acted without legal basis in remanding the cases. The Court held
that upon filing of an information, a judge has three options: (1) dismiss the case if evidence clearly fails to establish
probable cause, (2) issue a warrant of arrest if probable cause is found, or (3) order the prosecutor to present
additional evidence if there is doubt. There is no option to remand for another preliminary investigation. The Court
emphasized that the judge's duty is to personally determine probable cause based on the prosecutor's report and
supporting evidence.

Whether or not the admissibility of evidence can be ruled upon in a preliminary investigation
NO. The Supreme Court clarified that a preliminary investigation is merely preparatory to a trial and not a trial on
the merits. At this stage, prosecutors only determine if there is sufficient ground to believe a crime was committed
and the respondent is probably guilty. The Court held that "the admissibility or inadmissibility of evidence cannot be
ruled upon in a preliminary investigation."

Dispositive:

WHEREFORE, the Petition is PARTIALLY GRANTED. The assailed Orders dated July 18, 2008 and December 2,
2008 of the Regional Trial Court, Palayan City, Branch 40 in Criminal Case Nos. 1879-P and 1880-P are SET
ASIDE. The case is remanded to the Regional Trial Court, Palayan City, Branch 40 for further proceedings with due
and deliberate dispatch in accordance with this Decision.

Other Notes:

n/a
PHILIPPINE BANK OF COMMUNICATIONS VS. CA

Ponente: CAGUIOA, J
Decision Date: February 15, 2017
GR Number: G.R. No. 218901
Written By Digest Team (Sept 2024) 1 week ago

Summary:

This case involves a petition for certiorari and mandamus filed by Philippine Bank of Communications (PBCOM)
against the Court of Appeals (CA), Judge Honorio E. Guanlao, Jr. of the Regional Trial Court (RTC) of Makati City,
and private respondents Trayeller Kids Inc., Cely L. Gabaldon-Co, and Jeannie L. Lugmoc. PBCOM sought to
reverse the CA's decision that dismissed its petition for certiorari and mandamus, which challenged the RTC's order
denying due course to PBCOM's notice of appeal. The case originated from a complaint for collection of sum of
money filed by PBCOM against the private respondents. The Supreme Court granted PBCOM's petition, ruling that
the RTC acted without jurisdiction in denying PBCOM's notice of appeal on the ground that it was the wrong
remedy.

Doctrine:

"Notably, in its petition before the CA, PBCOM assailed the RTC Order denying due course to its notice of appeal.
In Neplum, Inc. v. Orbeso, this Court ruled that a trial court's order disallowing a notice of appeal, which is
tantamount to a disallowance or dismissal of the appeal itself, is not a decision or final order from which an appeal
may be taken. The suitable remedy for the aggrieved party is to elevate the matter through a special civil action
under Rule 65."

"Rule 41, Section 13 of the 1997 Rules on Civil Procedure states:

SEC. 13. Dismissal of appeal. - Prior to the transmittal of the original record or the record on appeal to the appellate
court, the trial court may, motu proprio or on motion, dismiss the appeal for having been taken out of time or for
non-payment of the docket and other lawful fees within the reglementary period."

"The authority to dismiss an appeal for being an improper remedy is specifically vested upon the CA and not the
RTC. Rule 50, Section 1 of the same Rules states:
SECTION 1. Grounds for dismissal of appeal. - An appeal may be dismissed by the Court of Appeals, on its own
motion or on that of the appellee, on the following grounds:
xxxx
(i) The fact that [the] order or judgment appealed from is not appealable."

Facts:

• PBCOM filed a complaint for collection of sum of money against private respondents before the RTC of Makati
City.
• The RTC ordered PBCOM to pay additional docket fees within 15 days.
• PBCOM paid the additional fees but filed its compliance late.
• The RTC dismissed PBCOM's complaint for failure to comply with the order to pay additional fees.
• PBCOM's motion for reconsideration was denied by the RTC.
• PBCOM filed a notice of appeal, which was denied due course by the RTC.
• PBCOM filed a petition for certiorari and mandamus with the CA without filing a motion for reconsideration.
• The CA denied PBCOM's petition, ruling that it was the wrong mode of appeal and lacked a prior motion for
reconsideration.
• PBCOM filed a petition for certiorari and mandamus with the Supreme Court.

Petitioner’s/Plaintiff’s Arguments:

• The CA should have given due course to its Petition for Certiorari and Mandamus because it is the proper remedy
to question the RTC Order denying its Notice of Appeal.
• A motion for reconsideration is not required when the order assailed is a patent nullity for having been issued
without jurisdiction.
• The RTC acted without jurisdiction in denying due course to PBCOM's notice of appeal on the ground that it was
the wrong remedy.

Respondent’s/Defendant’s Arguments:

• PBCOM's petition for certiorari and mandamus was a wrong mode of appeal.
• PBCOM failed to comply with the mandatory requirement of filing a motion for reconsideration before filing a
petition for certiorari.
• The dismissal of PBCOM's complaint by the RTC was an adjudication on the merits and should have been
challenged by appeal within the reglementary period.

Issues and Ruling:

Whether or not the CA erred in dismissing PBCOM's petition for certiorari and mandamus on the ground
that it was the wrong mode of appeal
YES. The Supreme Court ruled that the CA erred in dismissing PBCOM's petition. The Court held that a petition for
certiorari under Rule 65 is the correct remedy to question the RTC's order denying due course to a notice of appeal.
The Court cited its ruling in Neplum, Inc. v. Orbeso, which established that a trial court's order disallowing a notice
of appeal is not appealable and should be challenged through a special civil action under Rule 65.

Whether or not the CA erred in dismissing PBCOM's petition for certiorari and mandamus for failure to file
a prior motion for reconsideration
YES. The Supreme Court ruled that while a motion for reconsideration is generally required before filing a petition
for certiorari, there are exceptions to this rule. One such exception is when the order being questioned is a patent
nullity, as in this case where the RTC acted without jurisdiction in denying PBCOM's notice of appeal on the ground
that it was the wrong remedy.

Whether or not the RTC acted with jurisdiction in denying due course to PBCOM's notice of appeal
NO. The Supreme Court ruled that the RTC acted without or in excess of its jurisdiction when it denied due course
to PBCOM's notice of appeal on the ground that it was the wrong remedy. The Court explained that under Rule 41,
Section 13 of the 1997 Rules of Civil Procedure, the RTC's power to dismiss an appeal is limited to instances where
the appeal was taken out of time or there was non-payment of docket and other lawful fees. The authority to dismiss
an appeal for being an improper remedy is vested in the Court of Appeals under Rule 50, Section 1 of the Rules of
Court.

Dispositive:

WHEREFORE, the instant petition is GRANTED. The Order dated June 2, 2011 issued by the Regional Trial Court,
Branch 56 in Makati City and the assailed Decision dated July 31, 2014 and Resolution dated May 5, 2015 of the
Court of Appeals in CA-G.R. SP No. 120884, are hereby REVERSED and SET ASIDE. The Regional Trial Court,
Branch 56 in Makati City is DIRECTED to give due course to petitioner's Notice of Appeal dated May 26, 2011 and
to elevate the case records to the Court of Appeals for the review of petitioner's appeal. No costs.

Other Notes:

n/a

REPUBLIC VS. MERCADERA

Ponente: MENDOZA, J.
Decision Date: December 08, 2010
GR Number: G.R. No. 186027
Written By Digest Team (Sept 2024) 1 week ago

Summary:
This case involves a petition filed by Merlyn Mercadera to correct her given name in her Certificate of Live Birth
from "Marilyn" to "Merlyn". The Regional Trial Court granted the petition, which was affirmed by the Court of
Appeals. The Republic of the Philippines, through the Office of the Solicitor General, appealed to the Supreme
Court arguing that the correction should have been filed under Rule 103 for change of name rather than Rule 108 for
correction of entries. The Supreme Court affirmed the lower courts' rulings, holding that the petition was properly
filed under Rule 108 as it merely sought to correct a misspelled given name, which is a clerical error.

Doctrine:

"To correct simply means 'to make or set aright; to remove the faults or error from.' To change means 'to replace
something with something else of the same kind or with something that serves as a substitute.'"

"Corrections for clerical errors may be set right under Rule 108."

"Rule 108 of the Rules of Court provides only the procedure or mechanism for the proper enforcement of the
substantive law embodied in Article 412 of the Civil Code and so does not violate the Constitution."

Facts:

• Merlyn Mercadera sought to correct her given name in her Certificate of Live Birth from "Marilyn" to "Merlyn"
• She initially attempted to have the correction made through the Local Civil Registrar under Republic Act No. 9048
• The Local Civil Registrar refused to make the correction without a court order
• Mercadera filed a petition for correction of entries under Rule 108 with the Regional Trial Court
• The RTC granted the petition after an ex parte presentation of evidence
• The Office of the Solicitor General appealed, arguing the petition should have been filed under Rule 103 for
change of name
• The Court of Appeals affirmed the RTC decision
• The OSG filed a petition for review with the Supreme Court

Petitioner’s/Plaintiff’s Arguments:

• The correction from "Marilyn" to "Merlyn" is a substantial change tantamount to a change of name
• The petition should have been filed under Rule 103 for change of name, not Rule 108 for correction of entries
• The lower court erred in admitting photocopies of documentary evidence and hearsay testimony

Respondent’s/Defendant’s Arguments:

• The petition sought only to correct a misspelled given name, not to change the name
• The correction is a clerical error that can be addressed under Rule 108
• The documentary evidence and testimony sufficiently supported the circumstances alleged in the petition

Issues and Ruling:

Whether or not the petition for correction of name from "Marilyn" to "Merlyn" should have been filed
under Rule 103 instead of Rule 108
NO. The Supreme Court ruled that the petition was properly filed under Rule 108. The Court held that the correction
sought was merely to rectify a misspelled given name, which is a clerical error that can be corrected under Rule 108.
The Court distinguished between "correcting" an entry, which means to remove faults or errors, and "changing" a
name, which involves replacing it with something else. In this case, Mercadera was seeking to correct her misspelled
name to conform with the name she had been using since childhood.

Whether or not the correction of name from "Marilyn" to "Merlyn" is a substantial change requiring
adversarial proceedings
NO. The Supreme Court ruled that the correction from "Marilyn" to "Merlyn" is a clerical error that does not require
full adversarial proceedings. The Court noted that similar cases involving minor spelling corrections have been
recognized as harmless errors. Additionally, the Court found that even if full adversarial proceedings were required,
the publication and notice requirements fulfilled by Mercadera were sufficient to make the proceedings adversarial
in nature.

Dispositive:

WHEREFORE, the December 9, 2008 Decision of the Court of Appeals in CA-G.R. CV No. 00568-MIN is
AFFIRMED.

Other Notes:

n/a

II.POST-JUDGDEMENT REMEDIES

RULE 47: ANNULMENT OF JUDGEMENT OR FINAL ORDERS AND

RESOLUTIONS

RULE 47

Annulment of Judgments of Final Orders and Resolutions

Section 1. Coverage. — This Rule shall govern the annulment by the Court of Appeals of judgments
or final orders and resolutions in civil actions of Regional Trial Courts for which the ordinary
remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available
through no fault of the petitioner. (n)

Section 2. Grounds for annulment. — The annulment may be based only on the grounds of extrinsic
fraud and lack of jurisdiction.

Extrinsic fraud shall not be a valid ground if it was availed of, or could have been availed of, in a
motion for new trial or petition for relief. (n)

Section 3. Period for filing action. — If based on extrinsic fraud, the action must be filed within four
(4) years from its discovery; and if based on lack of jurisdiction, before it is barred by laches or
estoppel. (n)

Section 4. Filing and contents of petition. — The action shall be commenced by filing a verified
petition alleging therein with particularity the facts and the law relied upon for annulment, as well as
those supporting the petitioner's good and substantial cause of action or defense, as the case may
be.
The petition shall be filed in seven (7) clearly legible copies, together with sufficient copies
corresponding to the number of respondents. A certified true copy of the judgment or final order or
resolution shall be attached to the original copy of the petition intended for the court and indicated as
such by the petitioner.

The petitioner shall also submit together with the petition affidavits of witnesses or documents
supporting the cause of action or defense and a sworn certification that he has not theretofore
commenced any other action involving the same issues in the Supreme Court, the Court of Appeals
or different divisions thereof, or any other tribunal or agency if there is such other action or
proceeding, he must state the status of the same, and if he should thereafter learn that a similar
action or proceeding has been filed or is pending before the Supreme Court, the Court of Appeals, or
different divisions thereof, or any other tribunal or agency, he undertakes to promptly inform the
aforesaid courts and other tribunal or agency thereof within five (5) days therefrom. (n)

Section 5. Action by the court. — Should the court find no substantial merit in the petition, the same
may be dismissed outright with specific reasons for such dismissal.

Should prima facie merit be found in the petition, the same shall be given due course and summons
shall be served on the respondent. (n)

Section 6. Procedure. — The procedure in ordinary civil cases shall be observed. Should trial be
necessary, the reception of the evidence may be referred to a member of the court or a judge of a
Regional Trial Court. (n)

Section 7. Effect of judgment. — A judgment of annulment shall set aside the questioned judgment
or final order or resolution and render the same null and void, without prejudice to the original action
being refiled in the proper court. However, where the judgment or final order or resolution is set
aside on the ground of extrinsic fraud, the court may on motion order the trial court to try the case as
if a timely motion for new trial had been granted therein. (n)

Section 8. Suspension prescriptive period. — The prescriptive period for the refiling of the aforesaid
original action shall be deemed suspended from the filing of such original action until the finality of
the judgment of annulment. However, the prescriptive period shall not be suspended where the
extrinsic-fraud is attributable to the plaintiff in the original action. (n)

Section 9. Relief available. — The judgment of annulment may include the award of damages,
attorney's fees and other relief.

If the questioned judgment or final order or resolution had already been executed the court may
issue such orders of restitution or other relief as justice and equity may warrant under the
circumstances. (n)

Section 10. Annulment of judgments or final orders of Municipal Trial Courts. — An action to annul a
judgment or final order of a Municipal Trial Court shall be filed in the Regional Trial Court having
jurisdiction over the former. It shall be treated as an ordinary civil action and sections 2, 3, 4, 7, 8
and 9 of this Rule shall be applicable thereto. (n)

G.R. NO. 80890

ISLAMIC DA'WAH COUNCIL OF THE PHILIPPINES VS. CA

CORTES, J. • CORTES, J. • G.R. No. 80892

September 29, 1989
THIRD DIVISION G.R. No. 80892, September 29, 1989 ISLAMIC DA'WAH
COUNCIL OF THE PHILIPPINES, PETITIONER, VS. HONORABLE COURT OF
APPEALS AND THE HEIRS OF JESUS AMADO ARANETA, RESPONDENTS.

DECISION

CORTES, J.:

Petitioner impugns the resolutions of the Court of Appeals dated November 10

and December 2 and 3, 1987 which, in effect, gave due course to private
respondents' petition for annulment of judgment.

The antecedents of this case are as follows:

On February 15, 1984 Freddie and Marconi Da Silva, as mortgagors, and

Islamic Da'Wah Council of the Philippines (Council for brevity), as mortgagee,
executed a real estate mortgage over a 4,754 sq.m. parcel of land located
in Cubao, Quezon City and covered by Transfer Certificate of Title (TCT) No.
30461 as security for the payment of a one million peso promissory note in
favor of the mortgagee.The mortgagors were unable to pay their obligation,
hence, the Council instituted foreclosure proceedings with the Regional Trial
Court, docketed as Civil Case No. Q-43746.On February 5, 1985 the parties
submitted a Compromise Agreement wherein it was stipulated that because of
the Da Silvas' inability to pay their debt to the Council, and for the additional
consideration of P500,000.00; they jointly agree to cede, transfer and convey
to the Council the land they mortgaged to the latter.On February 12, 1985, the
Regional Trial Court approved the Compromise Agreement.Thereafter, TCT No.
328021 was issued in the name of the Council by the Register of Deeds
of Quezon City.

Subsequent thereto, on August 8, 1985, Jesus Amado Araneta filed with the
Register of Deeds a notice of lis pendens in connection with Civil Case No. Q-
47989 entitled "Islamic Da'Wah Council of the Philippines v.
Jesus Amado Araneta" for ejectment.The Complaint was converted into an
action for collection of rentals with damages but was later on withdrawn by the
Council.On August 13, 1985Araneta also filed with the same Register of Deeds
an Affidavit of adverse claim in connection with Civil Case No. Q-43469 entitled
"Marconi Da Silva, et al. v. Jesus Amado Araneta, et al." for recovery of
possession.The notice of lis pendens and adverse claim were annotated at the
back of TCT No. 328021 by the Register of Deeds.

On October 9, 1985 the Council filed in the Regional Trial Court of Quezon City
a Complaint for Quieting of Title, Recovery of Possession and Damages with
Preliminary Mandatory Injunction against Araneta praying, inter alia, for the
cancellation of all the annotations at the back of TCT No. 328021.The case is
docketed as Civil Case No. Q-46196.

While this case was pending, on July 6, 1987, the heirs of Jesus Amado Araneta,
private respondents herein, filed with the Court of Appeals a petition to annul
the judgment in Civil Case No. Q-43746 for foreclosure.In support of their
petition the heirs of Araneta narrated the following events:

(1) on December 20, 1953 Jesus Amado Araneta purchased the 4,754 sq.m.
parcel of land located in Cubao from the Spouses Garcia and since then he and
his family have always been in possession thereof;

(2) for some reason known only to Araneta and Fred Da Silva, an employee of
the former, title to the property was placed in the latter's name as evidenced
by TCT No. 30461 although from the time of its issuance the owner's duplicate
copy of said TCT has always been in the possession of Araneta;

(3) on January 31, 1963, the parties decided to terminate the Trust that had
been created over the property, thus, Da Silva executed a deed of sale over
the same parcel of land in favor of Araneta but no consideration was given by
the latter to the former for said sale and any recital consideration appearing in
the deed is purely fictitious;

(4) the Register of Deeds, however, refused to register the deed of sale
because the title is in the name of "Fred Da Silva married to Leocadia Da Silva"
and is thus presumed conjugal and the conjugal partnership should first be
liquidated as the wife had already died;

(5) alleging that their copy was lost and/or destroyed, on February 1, 1984
Freddie and Marconi Da Silva, two of the three surviving children of
Fred Da Silva who died in 1963, filed a petition, docketed as LRC record Case
No. Q-2772, for the issuance of a new copy of the owner's duplicate copy of
TCT No. 30461.The petition was granted by Judge Vera on March 24, 1984;

(6) Araneta learned about this and immediately filed a Motion to re-open the
proceedings stating that he has in his possession the owner's duplicate copy of
TCT No. 30461 and explaining the reasons for such possession;

(7) the Motion was granted and on December 7, 1984 the land registration
court ordered the Da Silvas to (a) return to the Register of Deeds the second
owner's duplicate copy of the title and (b) neither enter into any transaction
concerning said second owner's duplicate copy nor utilize the title for any
purpose other than to return the same to the Register of Deeds;

(8) on November 11, 1985, the Da Silvas manifested before the land
registration court that the title to the property was transferred to the Council
based on a Compromise Agreement in Civil Case No. Q-43746 for foreclosure;
and,
(9) on Motion of the heirs of Araneta, who substituted him upon his death in
1985, Judge Vera consolidated Civil Cases Nos. Q-2772 and Q-43469, both of
which were raffled to his sala, with Civil Case No. Q-46196 but the judge
hearing the latter case would not heed the order of consolidation.

and then set out their case for annulment of judgment alleging that
the Da Silvas, with the connivance of the Council, executed a purported
promissory note secured by a real state mortgage the terms and conditions of
which were made very onerous as to pave the way for the foreclosure of the
property by virtue of a confession of judgment; and, the Council had always
known of the Araneta's claim of ownership over the land because
the former's executive officer and secretary general is the lawyer of
the Da Silvas in the cases they filed against the Aranetas.The heirs
of Araneta in their petition prayed, inter alia, that (1) the judgment in Civil
Case No. Q-43746 be annulled and set aside and (2) a restraining order be
issued to enjoin the proceedings in Civil Case No. Q-46196 [Petition, Annex
"A".]

In a resolution dated November 10, 1987 the Court of Appeals

issued a temporary restraining order enjoining the trial judge from hearing Civil
Case No. Q-46196 until further orders from the court.In the same resolution the
parties were ordered to appear for a pre-trial conference.The Council filed
a Motion for reconsideration of this resolution.Later on the Council filed a
Supplement to Motion for Reconsideration with Motion to Dismiss questioning
the Court of Appeals' Jurisdiction to hear the petition forannulment of a
judgment that had already been fully executed.The Council also invoked the
additional grounds of lack of Cause of Action because the Aranetas are not valid
claimants of the property; lack of legal capacity to sue because
the Aranetas were not parties to the foreclosure
case; litis pendentia becauseof the pendency of the Quieting of Title case
between the same parties; and, abandonment, waiver and unenforceability
under the Statute of Frauds [Petition, Annex "H".] On December 2, 1987 the
Court of Appeals denied the Council's Motion for reconsideration for lack of
merit.In the hearing conducted on December 3, 1987 the Council reiterated the
grounds it raised in its Supplemental Motion and Motion to Dismiss but the
same were summarily denied by the Court of Appeals.Hence, this
petition for Certiorari.

Petitioner contends the following:first, that the Court of Appeals should not
continue to hear the petition for annulment of judgment since it is already fully
executed and the purpose for which the case for annulment was filed will no
longer be served, the parties having already complied with the decision;
second, private respondents have no right to question the validity or legality of
the decision rendered foreclosing the mortgage since they are foreign to the
transaction of mortgage between petitioner and Freddie and Marconi Da Silva;
lastly petitioner claims that private respondents have another remedy in law
and that is in Civil Case No. Q-46196 for Quieting of Title where the question of
ownership may be passed upon.
At the outset it must be clarified that the instant petition is one
for Certiorari under Rule 65 of the Rules of Court.Thus, the inquiry this Court
should address itself is limited to error of Jurisdiction or Grave abuse of
discretion committed by the Court of Appeals, in particular, whether or not
respondent court acted without Jurisdiction or with Grave abuse of discretion in
giving due course to the petition for annulment of judgment.This clarification is
rendered necessary because the parties themselves, in their Pleadings, have
gone beyond this issue and have discussed the merits of the annulment of
judgment case now pending decision with the Court of Appeals.

In its Petition, the Council contends that a Regional Trial Court has the
authority and Jurisdiction to annul a judgment of another Regional Trial Court, a
coordinate or co-equal court.Specifically, petitioner alleges that the filing of a
separate action for annulment of judgment is unnecessary because the
Regional Trial Court hearing Civil Case No. Q-43469 for Quieting of Title can
annul the judgment in Civil Case No. Q-43746 for Foreclosure rendered by
another Regional Trial Court [Rollo, pp. 15-16.] In its Memorandum, however,
the Council admitted that the Court of Appeals has the exclusive Jurisdiction to
annul the decision of the Regional Trial Court [Rollo, pp. 152-153.]

Annulment of judgment is a remedy in law independent of the case where the

judgment sought to be annulled was rendered.The judgment may be annulled
on the ground of extrinsic or collateral Fraud [Canlas v. Hon. Court of Appeals,
G.R. No. 77691, August 8, 1988.] Jurisdiction over actions for annulment of
Regional Trial Court judgment has been clarified by Batas Pambansa Blg. 129
(otherwise known as The Judiciary Reorganization Act of 1980).Prior to the
enactment of this law, different views had been entertained regarding the
issue of whether or not a branch of a Regional Trial Court may
annul a judgment of another branch of the same court.* However,
Batas Pambansa Blg. 129 introduced a new provision conferring on the Court
of Appeals exclusive original Jurisdiction over actions for annulment of
judgments of Regional Trial Courts.Sec. 9 (2) of Batas Pambansa Blg. 129
expressly provides that:

Sec. 9.Jurisdiction. - The Court of Appeals shall exercise:

***
(2) Exclusive original Jurisdiction over actions for annulment of judgments of
Regional Trial Courts;
***
Thus, it is beyond dispute that it is only the Court of Appeals that can take
cognizance of the annulment of judgment in Civil Case No. Q-43746 rendered
by the Regional Trial Court.

The next issue raised in this petition deals with the question of who may
properly institute a petition for annulment of judgment.It is petitioner's
contention that the remedy is available only to one who is a party to the case
where the judgment sought to be annulled is rendered.Private respondents, on
the other hand, allege that "there are sufficient facts and circumstances
sufficient to show Prima Facie that [they] have a substantial interest in the
ownership of the property which had been foreclosed without their knowledge
and consent" [Rollo, p. 90.] In fine, the question deals with whether or not the
heirs of Araneta have a Cause of Action against the Council.

In Militante v. Edrosolano [G.R. No. L-27940, June 10, 1971, 39 SCRA 473], an
action for annulment of judgment in Civil Case No. 6216
between Edrosolano and Belosillo was filed by Militante.The petition stemmed
from a Complaint instituted by Militante on September 6,
1965against Edrosolano for damages arising from a breach of contract of
carriage.On January 18, 1966Militante obtained an order of
preliminary Attachment on the property of Edrosolano.Alleging that he
purchased all of Edrosolano's TPU equipment on February
28, 1966, Belosillo filed a third-party claim.It appears that on February
25, 1963Belosillo obtained a judgment by default against Edrosolano in Civil
Case No. 6216 for collection of the amount of P45,000.00, the value of the
promissory note executed by the latter on February 1, 1960.After a recital of
these antecedent facts, Militante, in his petition for annulment of judgment
contended, inter alia, that (1) Civil Case No. 6216 "was based on a
fictitious Cause of Action because [the] promissory note was without lawful
consideration whatsoever" [at 476]; (2) Edrosolano did not file any answer
to Belosillo's Complaint and allowed the latter to obtain a judgment by default
which judgment attained finality without the former appealing therefrom; and,
(3) while judgment in Civil Case No. 6216 was promulgated in 1963 it was
"only on January 19, 1966 when . . . Belosillo caused the Execution thereof after
[Militante] had already instituted his civil case for damages
against . . . Edrosolano and an order for issuance of
preliminary Attachment issued" [at 477.] The trial court however
dismissed Militante's action for annulment on finding that it did not state
a Cause of Action.Thereafter, Militante filed an appeal to this Tribunal and in
setting aside the trial court's order of dismissal, the Court, speaking through
then Mr. Associate Justice Enrique Fernando, stated that:

***
2.More specifically, the view entertained by the lower court in its order of
dismissal that an action for annulment of judgment can be availed of only by
those principally or secondarily bound is contrary to what had been so clearly
declared by this Court in the leading case of Anuran v. Aquino [38 Phil. 29],
decided in 1918.It was emphatically announced therein:"There can be no
question as to the right of any person adversely affected by a
judgment to maintain an action to enjoin its enforcement and to have
it declared a nullity on the ground of Fraud and collusion practiced in
the very matter of obtaining the judgment when such Fraud is extrinsic
or collateral to the matters involved in the issues raised at the trial
which resulted in such judgment.* * *." [at 32-33.] Such a principle was
further fortified by an observation made by this Court through
Justice Ozaeta in Garchitorena v. Sotelo [74 Phil. 25 (1942).] These are his
words:"The collusive conduct of the parties in the foreclosure suit constituted
an extrinsic or collateral Fraud by reason of which the judgment rendered
therein may be annulled in this separate action [citing also the case of
Anuran.] Aside from the Anuran-Aquino case, innumerable
authorities from other jurisdictions may be cited in support of the
annulment.But were there not any precedent to guide us, reason and justice
would compel us to lay down such doctrine for the first time." [at 481-482;
Underscoring supplied.]
It is therefore clear from the foregoing that a person need not be a party to the
judgment sought to be annulled.What is essential is that he can prove his
allegation that the judgment was obtained by the use of Fraud and collusion
and he would be adversely affected thereby.

In this present case it is true that the heirs of Araneta are not parties to the
foreclosure case.Neither are they principally nor secondarily bound by the
judgment rendered therein.However, in their petition filed with the Court of
Appeals they alleged Fraud and connivance perpetuated by and between
the Da Silvas and the Council as would adversely affect them.This allegation, if
fully substantiated by preponderance of Evidence, could be the basis for the
annulment of Civil Case No. Q-43476.

Finally, the Council asserts that the remedy of annulment of judgment applies
only to final and executory judgment and not to that which had already
been fully executed or implemented.It is the Council's contention that as the
judgment in the foreclosure case had already been executed evidenced by the
fact that title to the property in question had been transferred in its name the
judgment can no longer be annulled.The Council's contention is devoid of
merit.In Garchitorena v. Sotelo, supra, the Court affirmed the trial court's
annulment of the judgment on foreclosure notwithstanding the fact that
ownership of the house and lot subject of the mortgage had passed from the
mortgagee who foreclosed the mortgage and purchased the property at public
auction to a person who bought the same and finally to another individual in
whose name the Torrens certificate of title stood by the time the case reached
this Tribunal.

In view of the foregoing the Court finds that the Court of Appeals neither acted
without Jurisdiction nor committed Grave abuse of discretion in giving due course
to the petition for annulment of judgment as would warrant the issuance of the
extraordinary writ of Certiorari in this case.

WHEREFORE, the instant petition is DISMISSED and the orders of the

Court of Appeals dated November 10 and December 2 and 3, 1987 are
AFFIRMED.

SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Feliciano, and Bidin, JJ., concur.

* In Republic v. Reyes [G.R. Nos. L-30263-5, October 30, 1987, 155 SCRA 313
citing Cabigo v. Del Rosario, 44 Phil. 84 (1949); PNB v. Javellana, 92 Phil. 525
(1952); Mas v. Dumara-og, G.R. No. L-16252, September 29, 1964, 12 SCRA
34; and Parco v. Court of Appeals, G.R. No. L-33152, January 30, 1982, 111
SCRA 262], the Court held that the various branches of the Regional Trial Court
being co-equal cannot interfere with the respective cases of each branch,
much less a branch's order or judgment.In Republic v. Court of Appeals [G.R.
Nos. L-41115-6, September 11, 1982, 116 SCRA 505 citing Dulap v. Court of
Appeals, G.R. No. L-28306, December 18, 1971, 42 SCRA 537; and Gianan v.
Imperial, G.R. No. L-37963, February 28, 1974, 55 SCRA 755], the Court held
that a court or a branch thereof has authority or Jurisdiction to annul a
judgment rendered by another court of concurrent Jurisdiction or by another
branch.

ISLAMIC DA'WAH COUNCIL OF THE PHILIPPINES VS. CA

Ponente: CORTES, J.
Decision Date: September 29, 1989
GR Number: G.R. No. 80892
Written By Digest Team 1 year ago

Summary:

The Islamic Da'wah Council of the Philippines (petitioner) challenges the Court of Appeals'
resolutions that allowed the annulment of judgment petition filed by the heirs of Jesus Amado
Araneta (respondents). The case involves a real estate mortgage and subsequent foreclosure
proceedings. The respondents allege fraud and collusion between the petitioner and the
mortgagors, which adversely affected their claim of ownership over the property. The Court of
Appeals issued a temporary restraining order and ordered a pre-trial conference. The petitioner
argues that the annulment of judgment is unnecessary since the judgment has already been fully
executed, and the respondents have no right to question its validity. The petitioner also claims
that the respondents have another remedy in the quieting of title case.

Doctrine:

Annulment of judgment is a remedy in law independent of the case where the judgment sought to
be annulled was rendered. The Court of Appeals has exclusive original jurisdiction over actions
for annulment of judgments of regional trial courts.
Facts:

The Islamic Da'wah Council of the Philippines (petitioner) executed a real estate mortgage with
Freddie and Marconi da Silva as mortgagors.

The mortgage was for a 4,754 sq.m. parcel of land in Cubao, Quezon City.

The mortgagors failed to pay their obligation, leading to foreclosure proceedings. A compromise
agreement was reached, and the regional trial court approved it.

The council was issued a new transfer certificate of title (TCT) for the property. Jesus Amado
Araneta, the respondent, filed a notice of lis pendens and an affidavit of adverse claim with the
register of deeds.

The council filed a complaint for quieting of title, recovery of possession, and damages against
Araneta.

The heirs of Araneta filed a petition to annul the judgment in the foreclosure case, alleging fraud
and collusion between the da Silvas and the council.

Petitioner’s/Plaintiff’s Arguments:

- The Court of Appeals should not continue to hear the annulment of judgment petition since the
judgment has already been fully executed.
- The respondents have no right to question the validity of the foreclosure judgment as they are
foreign to the mortgage transaction.
- The respondents have another remedy in the quieting of title case.

Respondent’s/Defendant’s Arguments:

- The respondents have a substantial interest in the ownership of the property, which was
foreclosed without their knowledge and consent.
- The da Silvas and the council executed a promissory note and mortgage with onerous terms to
pave the way for foreclosure.
- The council was aware of the respondents' claim of ownership.

Issues and Ruling:

1. Whether the Court of Appeals had jurisdiction to hear the petition for annulment of
judgment. - YES. The Court of Appeals has exclusive original jurisdiction over actions for
annulment of judgments of regional trial courts, as provided by Batas Pambansa Blg. 129.

2. Whether the heirs of Araneta have a cause of action against the council. - YES. A person
need not be a party to the judgment sought to be annulled. What is essential is that they can
prove fraud and collusion that adversely affected them.
3. Whether the remedy of annulment of judgment applies to fully executed judgments. -
YES. Annulment of judgment applies to both final and executory judgments and those that have
already been fully executed or implemented.

Dispositive:

The petition is dismissed, and the Court of Appeals' orders are affirmed.

Other Notes:

n/a
G.R. NO.220940

SEBASTIAN VS. CRUZ

PERLAS-BERNABE, J. • PERLAS-BERNABE, J. • G.R. No. 220940

March 20, 2017
FIRST DIVISION G.R. No. 220940, March 20, 2017 JOY VANESSA M. SEBASTIAN,
PETITIONER, VS. SPOUSES NELSON C. CRUZ AND CRISTINA P. CRUZ AND THE
REGISTER OF DEEDS FOR THE PROVINCE OF PANGASINAN, RESPONDENTS.

DECISION

PERLAS-BERNABE, J.:

Assailed in this petition for review on Certiorari[1] are the Resolutions dated
March 13, 2015[2] and October 9, 2015[3] of the Court of Appeals (CA) in CA-G.R.
SP No. 136564 dismissing the petition for annulment of judgment filed by
petitioner Joy Vanessa M. Sebastian (Sebastian) before it.

The Facts

The instant case stemmed from a petition [4] for annulment of judgment filed by
Sebastian before the CA, praying for the annulment of the Decision [5] dated
March 27, 2014 of the Regional Trial Court of Lingayen, Pangasinan, Branch 69
(RTC) in LRC Case No. 421. Petitioner alleged that respondent Nelson C. Cruz
(Nelson), married to Cristina P. Cruz (Cristina; collectively, Spouses Cruz), is
the registered owner of a 40,835-square meter parcel of land located in Brgy.
Bogtong-Bolo, Mangatarem, Pangasinan and covered by Katibayan ng Orihinal
na Titulo Blg. (OCT No.) P-41566[6] (subject land). Sometime in November 2009,
Nelson, through his father and attorney-infact, Lamberto P. Cruz (Lamberto),
then sold the subject lot in favor of Sebastian, as evidenced by a Deed of
Absolute Sale[7] executed by the parties. Upon Sebastian's payment of the
purchase price, Lamberto then surrendered to her the possession of the
subject land, OCT No. P-41566, and his General Power of Attorney [8] together
with a copy of Tax Declaration No. 9041 and Property Index No. 013-26-019-
0322.[9] Sebastian then paid the corresponding capital gains tax, among others,
to cause the transfer of title to her name. [10] However, upon her presentment of
the aforesaid documents to the Register of Deeds of the Province of
Pangasinan (RD-Pangasinan), the latter directed her to secure a Special Power
of Attorney executed by Spouses Cruz authorizing Lamberto to sell the subject
land to her. Accordingly, Sebastian requested the Execution of such document
to Lamberto, who promised to do so, but failed to comply. Thus, Sebastian was
constrained to cause the annotation of an adverse claim in OCT No. P-41566 on
August 2, 2011 in order to protect her rights over the subject land. [11]

According to Sebastian, it was only on July 14, 2014 upon her inquiry with RD-
Pangasinan about the status of the aforesaid title when she discovered that:
(a) Nelson executed an Affidavit of Loss dated September 23, 2013 attesting to
the loss of owner's duplicate copy of OCT No. P-41566, which he registered
with the RD-Pangasinan; (b) the Spouses Cruz filed before the RTC a petition
for the issuance of a second owner's copy of OCT No. P-41566, docketed as
LRC Case No. 421; and (c) on March 27, 2014, the RTC promulgated a Decision
granting Spouses Cruz's petition and, consequently, ordered the issuance of a
new owner's duplicate copy of OCT No. P-41566 in their names. [12] In view of the
foregoing incidents, Sebastian filed the aforesaid petition for annulment of
judgment before the CA on the ground of lack of Jurisdiction. Essentially, she
contended that the RTC had no Jurisdiction to take cognizance of LRC Case No.
421 as the duplicate copy of OCT No. P-41566 - which was declared to have no
further force in effect - was never lost, and in fact, is in her possession all
along.[13]

The CA Ruling

In a Resolution[14] dated March 13, 2015, the CA did not give due course to
Sebastian's petition and, consequently, dismissed the same outright. [15] It held
that the compliance by Spouses Cruz with the jurisdictional requirements of
publication and notice of hearing clothed the RTC with Jurisdiction to take
cognizance over the action In Rem, and constituted a constructive notice to the
whole world of its pendency. As such, personal notice to Sebastian of the
action was no longer necessary. [16]

Aggrieved, petitioner moved for reconsideration, [17] which was, however, denied
in a Resolution[18] dated October 9, 2015; hence, this petition. [19]

The Issue Before the Court

The core issue for the Court's resolution is whether or not the CA correctly
denied due course to Sebastian's petition for annulment of judgment, resulting
in its outright dismissal.

The Court's Ruling

The petition is meritorious.

Under Section 2, Rule 47 of the Rules of Court, the only grounds for annulment
of judgment are extrinsic Fraud and lack of Jurisdiction. Lack of Jurisdiction as a
ground for annulment of judgment refers to either lack of Jurisdiction over the
person of the defending party or over the subject matter of the claim. In case
of absence, or lack, of Jurisdiction, a court should not take cognizance of the
case. Thus, the prevailing rule is that where there is want of Jurisdiction over a
subject matter, the judgment is rendered null and void. A void judgment is in
legal effect no judgment, by which no rights are divested, from which no right
can be obtained, which neither binds nor bars any one, and under which all
acts performed and all claims flowing out are void. It is not a decision in
contemplation of law and, hence, it can never become executory. It also
follows that such a void judgment cannot constitute a bar to another case by
reason of Res Judicata.[20]

As will be explained hereunder, the CA erred in denying due course to

Sebastian's petition for annulment of judgment and, resultantly, in dismissing
the same outright.

The governing law for judicial reconstitution of title is Republic Act No. (RA) 26,
[21]
Section 15 of which provides when reconstitution of a title should be
allowed:

Section 15. If the court, after hearing, finds that the documents presented, as
supported by parole Evidence or otherwise, are sufficient and proper to warrant
the reconstitution of the lost or destroyed certificate of title, and that
petitioner is the registered owner of the property or has an interest
therein, that the said certificate of title was in force at the time it was
lost or destroyed, and that the description, area and boundaries of
the property are substantially the same as those contained in the lost
or destroyed certificate of title , an order of reconstitution shall be issued.
The clerk of court shall forward to the register of deeds a certified copy of said
order and all the documents which, pursuant to said order, are to be used as
the basis of the reconstitution. If the court finds that there is no
sufficient Evidence or basis to justify the reconstitution, the petition shall be
dismissed, but such dismissal shall not preclude the right of the party or
parties entitled thereto to file an application for confirmation of his or their title
under the provisions of the Land Registration Act. (Emphasis and underscoring
supplied)
From the foregoing, it appears that the following requisites must be complied
with for an order for reconstitution to be issued: (a) that the certificate of title
had been lost or destroyed; (b) that the documents presented by petitioner are
sufficient and proper to warrant reconstitution of the lost or destroyed
certificate of title; (c) that the petitioner is the registered owner of the property
or had an interest therein; (d) that the certificate of title was in force at the
time it was lost and destroyed; and (e) that the description, area and
boundaries of the property are substantially the same as those contained in
the lost or destroyed certificate of title. Verily, the reconstitution of a
certificate of title denotes restoration in the original form and condition of a
lost or destroyed instrument attesting the title of a person to a piece of land.
The purpose of the reconstitution of title is to have, after observing the
procedures prescribed by law, the title reproduced in exactly the same way it
has been when the loss or destruction occurred. RA 26 presupposes that the
property whose title is sought to be reconstituted has already been brought
under the provisions of the Torrens System.[22]

Indubitably, the fact of loss or destruction of the owner's duplicate certificate

of title is crucial in clothing the RTC with Jurisdiction over the judicial
reconstitution proceedings. In Spouses Paulino v. CA,[23] the Court reiterated the
rule that when the owner's duplicate certificate of title was not actually lost or
destroyed, but is in fact in the possession of another person, the reconstituted
title is void because the court that rendered the order of reconstitution had
no Jurisdiction over the subject matter of the case, viz.:

As early as the case of Strait Times, Inc. v. CA, the Court has held that when
the owner's duplicate certificate of title has not been lost, but is, in
fact, in the possession of another person, then the reconstituted
certificate is void, because the court that rendered the decision had
no Jurisdiction. Reconstitution can be validly made only in case of loss of the
original certificate. This rule was reiterated in the cases of Villamayor v.
Arante, Rexlon Realty Group, Inc. v. [CA], Eastworld Motor
Industries Corporation v. Skunac Corporation, Rodriguez v. Lim, Villanueva v.
Viloria, and Camitan v. Fidelity Investment Corporation. Thus, with Evidence that
the original copy of the TCT was not lost during the conflagration that hit the
Quezon City Hall and that the owner's duplicate copy of the title was actually in
the possession of another, the RTC decision was null and void for lack
of Jurisdiction.

xxxx

In reconstitution proceedings, the Court has repeatedly ruled that

before Jurisdiction over the case can be validly acquired, it is a
condition sine qua non that the certificate of title has not been issued
to another person.If a certificate of title has not been lost but is in
fact in the possession of another person, the reconstituted title is
void and the court rendering the decision has not
acquired Jurisdiction over the petition for issuance of new title. The
courts simply have no Jurisdiction over petitions by (such) third parties for
reconstitution of allegedly lost or destroyed titles over lands that are already
covered by duly issued subsisting titles in the names of their duly registered
owners. The existence of a prior title Ipso Facto nullifies the
reconstitution proceedings. The proper recourse is to assail directly in a
proceeding before the regional trial court the validity of the Torrens title
already issued to the other person. [24] (Emphases and underscoring supplied)
In this case, Sebastian's petition for annulment of judgment before the CA
clearly alleged that, contrary to the claim of Spouses Cruz in LRC Case No. 421,
the owner's duplicate copy of OCT No. P-41566 was not really lost, as the same
was surrendered to her by Lamberto, Nelson's father and attorney-in-fact, and
was in her possession all along. [25] Should such allegation be proven following
the conduct of further proceedings, then there would be no other conclusion
than that the RTC had no Jurisdiction over the subject matter of LRC Case No.
421. As a consequence, the Decision dated March 27, 2014 of the RTC in the
said case would then be annulled on the ground of lack of Jurisdiction.

Thus, the Court finds Prima Facie merit in Sebastian's petition for annulment of
judgment before the CA. As such, the latter erred in denying it due course and
in dismissing the same outright. In this light, the Court finds it more prudent to
remand the case to the CA for further proceedings to first resolve the above-
discussed jurisdictional issue, with a directive to: (a) grant due course to the
petition; and (b) cause the service of summons on Spouses Cruz and the RD-
Pangasinan, in accordance with Section 5, Rule 47 [26] of the Rules of Court.

WHEREFORE, the petition is GRANTED. The Resolutions dated March 13,

2015 and October 9, 2015 of the Court of Appeals (CA) in CA G.R. SP No.
136564 are hereby REVERSED and SET ASIDE. Accordingly, the instant case
is REMANDED to the CA for further proceedings.

SO ORDERED.
SEBASTIAN VS. CRUZ

Ponente: PERLAS-BERNABE, J.
Decision Date: March 20, 2017
GR Number: G.R. No. 220940
Written By Digest Team (Sept 2024) 2 weeks ago

Summary:

Joy Vanessa M. Sebastian (petitioner) filed a petition for review on certiorari against Spouses
Nelson C. Cruz and Cristina P. Cruz and the Register of Deeds for the Province of Pangasinan
(respondents). The case stemmed from Sebastian's petition for annulment of judgment filed
before the Court of Appeals (CA), which sought to annul the decision of the Regional Trial
Court (RTC) in LRC Case No. 421. The RTC had granted the Spouses Cruz's petition for the
issuance of a second owner's copy of OCT No. P-41566, which Sebastian claimed was never lost
and was in her possession. The CA dismissed Sebastian's petition outright, but the Supreme
Court found merit in her case and remanded it to the CA for further proceedings.

Doctrine:

"Under Section 2, Rule 47 of the Rules of Court, the only grounds for annulment of judgment are
extrinsic fraud and lack of jurisdiction. Lack of jurisdiction as a ground for annulment of
judgment refers to either lack of jurisdiction over the person of the defending party or over the
subject matter of the claim. In case of absence, or lack, of jurisdiction, a court should not take
cognizance of the case. Thus, the prevailing rule is that where there is want of jurisdiction over a
subject matter, the judgment is rendered null and void."

"If a certificate of title has not been lost but is in fact in the possession of another person, the
reconstituted title is void and the court rendering the decision has not acquired jurisdiction over
the petition for issuance of new title. The courts simply have no jurisdiction over petitions by
(such) third parties for reconstitution of allegedly lost or destroyed titles over lands that are
already covered by duly issued subsisting titles in the names of their duly registered owners. The
existence of a prior title ipso facto nullifies the reconstitution proceedings."

Facts:

• Nelson C. Cruz is the registered owner of a 40,835-square meter parcel of land in Pangasinan
covered by OCT No. P-41566.
• In November 2009, Nelson, through his father and attorney-in-fact Lamberto P. Cruz, sold the
land to Joy Vanessa M. Sebastian.
• Sebastian paid the purchase price and received possession of the land, OCT No. P-41566, and
other related documents.
• When Sebastian tried to transfer the title to her name, the Register of Deeds required a Special
Power of Attorney from Spouses Cruz.
• Unable to obtain the Special Power of Attorney, Sebastian annotated an adverse claim on OCT
No. P-41566 on August 2, 2011.
• On July 14, 2014, Sebastian discovered that Nelson had executed an Affidavit of Loss for OCT
No. P-41566 on September 23, 2013.
• Spouses Cruz filed a petition for the issuance of a second owner's copy of OCT No. P-41566
(LRC Case No. 421) before the RTC.
• On March 27, 2014, the RTC granted Spouses Cruz's petition and ordered the issuance of a new
owner's duplicate copy of OCT No. P-41566.
• Sebastian filed a petition for annulment of judgment before the CA, claiming the RTC lacked
jurisdiction as the title was never lost.
• The CA dismissed Sebastian's petition outright, leading to her filing a petition for review on
certiorari before the Supreme Court.

Petitioner’s/Plaintiff’s Arguments:

• The RTC had no jurisdiction to take cognizance of LRC Case No. 421 as the duplicate copy of
OCT No. P-41566 was never lost.
• The owner's duplicate copy of OCT No. P-41566 is in Sebastian's possession.
• The RTC's decision in LRC Case No. 421 should be annulled on the ground of lack of
jurisdiction.

Respondent’s/Defendant’s Arguments:

• The compliance with jurisdictional requirements of publication and notice of hearing clothed
the RTC with jurisdiction.
• The action in rem constituted constructive notice to the whole world of its pendency.
• Personal notice to Sebastian of the action was not necessary.
Issues and Ruling:

Whether or not the CA correctly denied due course to Sebastian's petition for annulment of
judgment, resulting in its outright dismissal
NO. The Supreme Court found that the CA erred in denying due course to Sebastian's petition
for annulment of judgment and dismissing it outright. The Court explained that Sebastian's
petition clearly alleged that the owner's duplicate copy of OCT No. P-41566 was not really lost,
as it was in her possession. If this allegation is proven, it would mean that the RTC had no
jurisdiction over the subject matter of LRC Case No. 421. The Court found prima facie merit in
Sebastian's petition and deemed it more prudent to remand the case to the CA for further
proceedings to resolve the jurisdictional issue.

Dispositive:

WHEREFORE, the petition is GRANTED. The Resolutions dated March 13, 2015 and October
9, 2015 of the Court of Appeals (CA) in CA G.R. SP No. 136564 are hereby REVERSED and
SET ASIDE. Accordingly, the instant case is REMANDED to the CA for further proceedings.

Other Notes:

G.R.NO.159926

SEAFOOD VS. BPI

BERSAMIN, J. • BERSAMIN, J. • G.R. No. 159926

January 20, 2014
FIRST DIVISION G.R. No. 159926, January 20, 2014 PINAUSUKAN SEAFOOD
HOUSE, ROXAS BOULEVARD, INC., PETITIONER, VS. FAR EAST BANK
& Trust COMPANY, NOW BANK OF THE PHILIPPINE ISLANDS AND HECTOR IL.
GALURA, RESPONDENTS.

D EC I S I O N

BERSAMIN, J.:

Extrinsic Fraud, as a ground for the annulment of a judgment, must emanate

from an act of the Adverse Party, and the Fraud must be of such nature as to
have deprived the petitioner of its day in court. The Fraud is not extrinsic if the
act was committed by the petitioner's own counsel.

The Case

This appeal seeks to undo the dismissal by the Court of Appeals (CA) of the
petitioner's action for annulment of judgment through the assailed resolution
promulgated on July 31, 2003, [1] as well as the denial of its Motion for
reconsideration on September 12, 2003. [2]

Antecedents

On various dates in 1993, Bonier de Guzman (Bonier), then the President of

petitioner Corporation (Pinausukan, for short), executed four real estate
mortgages involving the petitioner's 517 square meter parcel of land situated
in Pasay City [3] in favor of Far East Bank and Trust Company (now Bank of
Philippine Islands), to be referred to herein as the Bank. The parcel of land was
registered in Transfer Certificate of Title No. 126636 of the Register of Deeds
of Pasay City under the name of Pinausukan. [4] When the unpaid obligation
secured by the mortgages had ballooned to P15,129,303.67 as of June 2001,
the Bank commenced proceedings for the extrajudicial foreclosure of the
mortgages on August 13, 2001 in the Office of the Ex Officio Sheriff, Regional
Trial Court (RTC), in Pasay City. [5] Two weeks thereafter, the sheriff issued the
notice of sheriff's sale, setting the public auction on October 8, 2001 at the
main entrance of the Hall of Justice of Pasay City. [6]

Learning of the impending sale of its property by reason of the foreclosure of

the mortgages, Pinausukan, represented by Zsae Carrie de Guzman, brought
against the Bank and the sheriff an action for the annulment of real estate
mortgages in the RTC on October 4, 2001 (Civil Case No. 01-0300), averring
that Bonier had obtained the loans only in his personal capacity and had
constituted the mortgages on the corporate asset without Pinausukan's
consent through a board resolution. The case was assigned to Branch 108.
[7]
Pinausukan applied for the issuance of a temporary restraining order or writ
of preliminary Injunction to enjoin the Bank and the sheriff from proceeding
with the extrajudicial foreclosure and the public auction.

In the ensuing trial of Civil Case No. 01-0300, Pinausukan presented Zsae
Carrie de Guzman as its first witness on May 30, 2002. However, the
subsequent hearing dates were reset several times. In August 2002, the
parties informed the RTC about their attempts to settle the case.

The counsels of the parties did not appear in court on the hearing scheduled
on September 5, 2002 despite having agreed thereto. Accordingly, on October
31, 2002, the RTC dismissed Civil Case No. 01-0300 for failure to prosecute.
[8]
The order of dismissal attained finality. [9]

On June 24, 2003, the sheriff issued a notice of extrajudicial sale concerning
the property of Pinausukan. [10] The notice was received by Pinausukan a week
later.

Claiming surprise over the turn of events, Pinausukan inquired from the RTC
and learned that Atty. Michael Dale Villaflor (Atty. Villaflor), its counsel of
record, had not informed it about the order of dismissal issued on October 31,
2002.
On July 24, 2003, Pinausukan brought the petition for annulment in the CA
seeking the nullification of the order of October 31, 2002 dismissing Civil Case
No. 01-0300. Its petition, under the verification of Roxanne de Guzman-San
Pedro (Roxanne), who was one of its Directors, and concurrently its Executive
Vice President for Finance and Treasurer, stated that its counsel had been
guilty of gross and palpable Negligence in failing to keep track of the case he
was handling, and in failing to apprise Pinausukan of the developments on the
case. It further pertinently stated as follows:

6. Inquiry from counsel, Atty. Michael Dale T. Villaflor disclosed that although
the Registry Return Receipt indicated that he received the Order on November
28, 2002, according to him, as of said date, he no longer holds office at
12th Floor, Ever Gotesco Corporate Center, 1958 C.M. Recto Avenue, Manila but
has transferred to Vecation (sic) Club, Inc., with office address 10th Floor
Rufino Tower, Ayala Avenue, Makati City. Petitioner was never notified of the
change of office and address of its attorney.

7. The palpable Negligence of counsel to keep track of the case he was handling
constituted professional misconduct amounting to extrinsic Fraud properly
warranting the annulment of the Order dated October 31, 2003 as petitioner
was unduly deprived of its right to present Evidence in Civil Case No. 01-0300
through no fault of its own. [11]

On July 31, 2003, the CA dismissed the petition for annulment, [12]citing the
failure to attach the affidavits of Witnesses attesting to and describing the
alleged extrinsic Fraud supporting the Cause of Action as required by Section 4,
Rule 47 of the Rules of Court; and observing that the verified petition related
only to the correctness of its allegations, a requirement entirely different and
separate from the affidavits of Witnesses required under Rule 47 of the Rules of
Court.

On September 12, 2003,[13] the CA denied Pinausukan's Motion for

reconsideration.

Issue

Pinausukan posits that the requirement for attaching the affidavits

of Witnesses to the petition for annulment should be relaxed; that even if
Roxanne had executed the required Affidavit as a witness on the
extrinsic Fraud, she would only repeat therein the allegations already in the
petition, thereby duplicating her allegations under her oath; that
the Negligence of Atty. Villaflor, in whom it entirely relied upon, should not
preclude it from obtaining relief; and that it needed a chance to prove in the
RTC that Bonier had no right to mortgage its property.

Ruling
The appeals lacks merit.

1.
Nature and statutory requirements for
an action to annul a judgment or final order

The remedy of annulment of judgment has been long authorized and

sanctioned in the Philippines. In Banco Español-Filipino v. Palanca,[14] of 1918
vintage, the Court, through Justice Street, recognized that there were only two
remedies available under the rules of procedure in force at the time to a party
aggrieved by a decision of the Court of First Instance (CFI) that had already
attained finality, namely: that under Sec. 113, Code of Civil Procedure, which
was akin to the petition for relief from judgment under Rule 38, Rules of Court;
and that under Sec. 513, Code of Civil Procedure, which stipulated that the
party aggrieved under a judgment rendered by the CFI "upon default" and who
had been "deprived of a hearing by Fraud, accident, mistake or
excusable Negligence" and the CFI had "finally adjourned so that no adequate
remedy exists in that court" could "present his petition to the Supreme Court
within sixty days after he first learns of the rendition of such judgment, and not
thereafter, setting forth the facts and praying to have judgment set aside." [15] It
categorically ruled out a mere Motion filed for that purpose in the same action
as a proper remedy.

The Jurisdiction over the action for the annulment of judgment had been lodged
in the CFI as a court of general Jurisdiction on the basis that the subject matter
of the action was not capable of pecuniary estimation. Section 56, paragraph
1, of Act No. 136 (An Act providing for the Organization of Courts in the
Philippine Islands), effective on June 11, 1901, vested original Jurisdiction in the
CFI over "all civil actions in which the subject of litigations is not capable of
pecuniary estimation." The CFI retained its Jurisdiction under Section 44(a) of
Republic Act No. 296 (The Judiciary Act of 1948), effective on June 17, 1948,
which contained a similar provision vesting original Jurisdiction in the CFI over
"all civil actions in which the subject of the litigation is not capable of
pecuniary estimation."

In the period under the regimes of Act No. 136 and Republic Act No. 296, the
issues centered on which CFI, or branch thereof, had the Jurisdiction over the
action for the annulment of judgment. It was held in Mas v. Dumara-og[16] that
"the power to open, modify or vacate a judgment is not only possessed by, but
is restricted to the court in which the judgment was rendered." In J.M. Tuason
& Co., Inc. v. Torres,[17] the Court declared that "the Jurisdiction to annul a
judgment of a branch of the Court of First Instance belongs solely to the very
same branch which rendered the judgment." In Sterling
Investment Corporation v. Ruiz,[18] the Court enjoined a branch of the CFI of
Rizal from taking cognizance of an action filed with it to annul the judgment of
another branch of the same court.
In Dulap v. Court of Appeals,[19] the Court observed that the philosophy
underlying the pronouncements in these cases was the policy of judicial
stability, as expressed in Dumara-og, to the end that the judgment of a court
of competent Jurisdiction could not be interfered with by any court of
concurrent Jurisdiction. Seeing that the pronouncements in Dumara-og, J.M.
Tuason & Co., Inc. and Sterling Investment confining the Jurisdiction to annul a
judgment to the court or its branch rendering the judgment would "practically
amount to judicial legislation," the Court found the occasion to re-examine the
pronouncements. Observing that the plaintiff's Cause of Action in an action to
annul the judgment of a court "springs from the alleged nullity of the judgment
based on one ground or another, particularly Fraud, which fact affords the
plaintiff a right to judicial interference in his behalf," and that that the two
cases were distinct and separate from each other because "the Cause of
Action (to annul judgment) is entirely different from that in the action which
gave rise to the judgment sought to be annulled, for a direct attack against a
final and executory judgment is not incidental to, but is the main object of, the
proceeding," the Court concluded that "there is no plausible reason why the
venue of the action to annul the judgment should necessarily follow the venue
of the previous action" if the outcome was not only to violate the existing rule
on venue for personal actions but also to limit the opportunity for the
application of such rule on venue for personal actions. [20] The Court observed
that the doctrine under Dumara-og, J.M. Tuason & Co., Inc. and Sterling
Investment could then very well "result in the difficulties precisely sought to be
avoided by the rules; for it could be that at the time of the filing of the second
action for annulment, neither the plaintiff nor the defendant resides in the
same place where either or both of them did when the first action was
commenced and tried," thus unduly depriving the parties of the right expressly
given them by the Rules of Court "to change or transfer venue from one
province to another by written agreement a right conferred upon them for their
own convenience and to minimize their expenses in the litigation and renders
innocuous the provision on waiver of improper venue in Section 4 (of Rule 4 of
the Revised Rules of Court)."[21] The Court eventually ruled:

Our conclusion must therefore be that a court of first instance or a branch

thereof has the authority and Jurisdiction to take cognizance of, and to act in, a
suit to annul a final and executory judgment or order rendered by another
court of first instance or by another branch of the same court. The policy of
judicial stability, which underlies the doctrine laid down in the cases of
Dumara-og, J.M. Tuason & Co., Inc. and Sterling Investment Corporation, et al.,
supra, should be held subordinate to an orderly administration of justice based
on the existing rules of procedure and the law. [22] x x x

In 1981, the Legislature enacted Batas Pambansa Blg. 129 (Judiciary

Reorganization Act of 1980).[23] Among several innovations of this legislative
enactment was the formal establishment of the annulment of a judgment or
final order as an action independent from the generic classification of
litigations in which the subject matter was not capable of pecuniary estimation,
and expressly vested the exclusive original Jurisdiction over such action in the
CA.[24] The action in which the subject of the litigation was incapable of
pecuniary estimation continued to be under the exclusive original Jurisdiction of
the RTC, which replaced the CFI as the court of general Jurisdiction.[25] Since
then, the RTC no longer had Jurisdiction over an action to annul the judgment
of the RTC, eliminating all concerns about judicial stability. To implement this
change, the Court introduced a new procedure to govern the action to annul
the judgment of the RTC in the 1997 revision of the Rules of Court under Rule
47, directing in Section 2 thereof that "[t]he annulment may be based only on
the grounds of extrinsic Fraud and lack of Jurisdiction."[26]

The Court has expounded on the nature of the remedy of annulment of

judgment or final order in Dare Adventure Farm Corporation v. Court of
Appeals,[27]viz:

A petition for annulment of judgment is a remedy in equity so exceptional in

nature that it may be availed of only when other remedies are wanting, and
only if the judgment, final order or final resolution sought to be annulled was
rendered by a court lacking Jurisdiction or through extrinsic Fraud. Yet, the
remedy, being exceptional in character, is not allowed to be so easily and
readily abused by parties aggrieved by the final judgments, orders or
resolutions. The Court has thus instituted safeguards by limiting the grounds
for the annulment to lack of Jurisdiction and extrinsic Fraud, and by prescribing
in Section 1 of Rule 47 of the Rules of Court that the petitioner should show
that the ordinary remedies of new trial, appeal, petition for relief or other
appropriate remedies are no longer available through no fault of the petitioner.
A petition for annulment that ignores or disregards any of the safeguards
cannot prosper.

The attitude of judicial reluctance towards the annulment of a judgment, final

order or final resolution is understandable, for the remedy disregards the time-
honored doctrine of immutability and unalterability of final judgments, a solid
corner stone in the dispensation of justice by the courts. The doctrine of
immutability and unalterability serves a two-fold purpose, namely: (a) to avoid
delay in the administration of justice and thus, procedurally, to make orderly
the discharge of judicial business; and (b) to put an end to judicial
controversies, at the risk of occasional errors, which is precisely why the courts
exist. As to the first, a judgment that has acquired finality becomes immutable
and unalterable and is no longer to be modified in any respect even if the
modification is meant to correct an erroneous conclusion of fact or of law, and
whether the modification is made by the court that rendered the decision or by
the highest court of the land. As to the latter, controversies cannot drag on
indefinitely because fundamental considerations of public policy and sound
practice demand that the rights and obligations of every litigant must not hang
in suspense for an indefinite period of time.
The objective of the remedy of annulment of judgment or final order is to undo
or set aside the judgment or final order, and thereby grant to the petitioner an
opportunity to prosecute his cause or to ventilate his defense. If the ground
relied upon is lack of Jurisdiction, the entire proceedings are set aside without
prejudice to the original action being refiled in the proper court. [28] If the
judgment or final order or resolution is set aside on the ground of
extrinsic Fraud, the CA may on Motion order the trial court to try the case as if a
timely Motion for new trial had been granted therein. [29] The remedy is by no
means an appeal whereby the correctness of the assailed judgment or final
order is in issue; hence, the CA is not called upon to address each error
allegedly committed by the trial court. [30]

Given the extraordinary nature and the objective of the remedy of annulment
of judgment or final order, Pinausukan must be mindful of and should closely
comply with the following statutory requirements for the remedy as set forth in
Rule 47 of the Rules of Court.

The first requirement prescribes that the remedy is available only when the
petitioner can no longer resort to the ordinary remedies of new trial, appeal,
petition for relief or other appropriate remedies through no fault of the
petitioner.[31] This means that the remedy, although seen as "a last
remedy,"[32] is not an alternative to the ordinary remedies of new trial, appeal
and petition for relief. The petition must aver, therefore, that the petitioner
failed to move for a new trial, or to appeal, or to file a petition for relief without
fault on his part. But this requirement to aver is not imposed when the ground
for the petition is lack of Jurisdiction (whether alleged singly or in combination
with extrinsic Fraud), simply because the judgment or final order, being void,
may be assailed at any time either collaterally or by direct action or by
resisting such judgment or final order in any action or proceeding whenever it
is invoked, unless the ground of lack of Jurisdiction is meanwhile barred
by Laches.[33]

The second requirement limits the ground for the action of annulment of
judgment to either extrinsic Fraud or lack of Jurisdiction.

Not every kind of Fraud justifies the action of annulment of judgment. Only
extrinsic Fraud does. Fraud is extrinsic, according to Cosmic
Lumber Corporation v. Court of Appeals,[34] "where the unsuccessful party has
been prevented from exhibiting fully his case, by Fraud or deception practiced
on him by his opponent, as by keeping him away from court, a false promise of
a compromise; or where the defendant never had knowledge of the suit, being
kept in ignorance by the acts of the plaintiff; or where an attorney fraudulently
or without authority connives at his defeat; these and similar cases which show
that there has never been a real contest in the trial or hearing of the case are
reasons for which a new suit may be sustained to set aside and annul the
former judgment and open the case for a new and fair hearing."
The overriding consideration when extrinsic Fraud is alleged is that the
fraudulent scheme of the prevailing litigant prevented the petitioner from
having his day in court. [35] Nonetheless, extrinsic Fraud shall not be a valid
ground if it was availed of, or could have been availed of, in a Motion for new
trial or petition for relief. [36]

In contrast, intrinsic Fraud refers to the acts of a party at a trial that prevented
a fair and just determination of the case, but the difference is that the acts or
things, like falsification and false testimony, could have been litigated and
determined at the trial or adjudication of the case. [37] In other words,
intrinsic Fraud does not deprive the petitioner of his day in court because he
can guard against that kind of Fraud through so many means, including a
thorough trial preparation, a skillful cross-examination, resorting to the modes
of discovery, and proper scientific or forensic applications. Indeed, forgery of
documents and Evidence for use at the trial and perjury in court testimony have
been regarded as not preventing the participation of any party in the
proceedings, and are not, therefore, constitutive of extrinsic Fraud.[38]

Lack of Jurisdiction on the part of the trial court in rendering the judgment or
final order is either lack of Jurisdiction over the subject matter or nature of the
action, or lack of Jurisdiction over the person of the petitioner. The former is a
matter of substantive law because statutory law defines the Jurisdiction of the
courts over the subject matter or nature of the action. The latter is a matter of
procedural law, for it involves the service of summons or other process on the
petitioner. A judgment or final order issued by the trial court
without Jurisdiction over the subject matter or nature of the action is always
void, and, in the words of Justice Street in Banco Español-Filipino v. Palanca,
[39]
"in this sense it may be said to be a lawless thing, which can be treated as
an outlaw and slain at sight, or ignored wherever and whenever it exhibits its
head."[40] But the defect of lack of Jurisdiction over the person, being a matter of
procedural law, may be waived by the party concerned either expressly or
impliedly.

The third requirement sets the time for the filing of the action. The action, if
based on extrinsic Fraud, must be filed within four years from the discovery of
the extrinsic Fraud; and if based on lack of Jurisdiction, must be brought before
it is barred by Laches or estoppel.

Laches is the failure or neglect for an unreasonable and unexplained length of

time to do that which by exercising due diligence could nor should have 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
abandoned it or declined to assert it. [41] Its other name is stale demands, and it
is based upon grounds of public policy that requires, for the peace of society,
the discouragement of stale claims and, unlike the statute of limitations, is not
a mere question of time but is principally a question of the inequity or
unfairness of permitting a right or claim to be enforced or asserted. [42] The
existence of four elements must be shown in order to validate Laches as a
defense, to wit: (a) conduct on the part of the defendant, or of one under
whom a claim is made, giving rise to a situation for which a Complaint is filed
and a remedy sought; (b) delay in asserting the rights of the complainant, who
has knowledge or notice of the defendant's conduct and has been afforded an
opportunity to institute a suit; (c) lack of knowledge or notice on the part of the
defendant that the complainant will assert the right on which the latter has
based the suit; and (d) injury or prejudice to the defendant in the event that
the complainant is granted a relief or the suit is not deemed barred. [43]

Estoppel precludes a person who has admitted or made a representation about

something as true from denying or disproving it against anyone else relying on
his Admission or representation.[44] Thus, our law on Evidence regards estoppel
as conclusive by stating that "[w]henever a party has, by his own declaration,
act, or omission, intentionally and deliberately led another to believe a
particular thing true, and to act upon such belief, he cannot, in any litigation
arising out of such declaration, act or omission, be permitted to falsify it." [45]

The fourth requirement demands that the petition should be verified, and
should allege with particularity the facts and the law relied upon for
annulment, as well as those supporting the petitioner's good and
substantial Cause of Action or defense, as the case may be. [46] The need for
particularity cannot be dispensed with because averring the circumstances
constituting either Fraud or mistake with particularity is a universal
requirement in the rules of pleading. [47] The petition is to be filed in seven
clearly legible copies, together with sufficient copies corresponding to the
number of respondents, and shall contain essential submissions, specifically:
(a) the certified true copy of the judgment or final order or resolution, to be
attached to the original copy of the petition intended for the court and
indicated as such by the petitioner; [48] (b) the affidavits of Witnesses or
documents supporting the Cause of Action or defense; and (c) the sworn
certification that the petitioner has not theretofore commenced any other
action involving the same issues in the Supreme Court, the CA or the different
divisions thereof, or any other tribunal or agency; if there is such other action
or proceeding, he must state the status of the same, and if he should
thereafter learn that a similar action or proceeding has been filed or is pending
before the Supreme Court, the CA, or different divisions thereof, or any other
tribunal or agency, he undertakes to promptly inform the said courts and other
tribunal or agency thereof within five days therefrom. [49]

The purpose of these requirements of the sworn verification and the

particularization of the allegations of the extrinsic Fraud in the petition, of the
submission of the certified true copy of the judgment or final order or
resolution, and of the Attachment of the affidavits of Witnesses and documents
supporting the Cause of Action or defense is to forthwith bring all the relevant
facts to the CA's cognizance in order to enable the CA to determine whether or
not the petition has substantial merit. Should it find Prima Facie merit in the
petition, the CA shall give the petition due course and direct the service of
summons on the respondent; otherwise, the CA has the discretion to outrightly
dismiss the petition for annulment. [50]

2.
Pinausukan's petition for annulment was
substantively and procedurally defective

A review of the dismissal by the CA readily reveals that Pinausukan's petition

for annulment suffered from procedural and substantive defects.

The procedural defect consisted in Pinausukan's disregard of the fourth

requirement mentioned earlier consisting in its failure to submit together with
the petition the affidavits of Witnesses or documents supporting the Cause of
Action. It is true that the petition, which narrated the facts relied upon, was
verified under oath by Roxanne. However, the submission of the affidavits
of Witnesses together with the petition was not dispensable for that reason. We
reiterate with approval the CA's emphatic observation in the resolution of July
31, 2003 dismissing the petition for annulment to the effect that Roxanne's
verification related only "to the correctness of the allegations in the petition"
and was "not the same [or] equivalent to the Affidavit of Witnesses that the
above-cited Rule requires." [51] To us, indeed, the true office of the verification is
merely to secure an assurance that the allegations of a pleading are true and
correct and not the product of the imagination or a matter of speculation, and
that the pleading is filed in good faith. [52]

Pinausukan's failure to include the affidavits of Witnesses was fatal to its

petition for annulment. Worthy to reiterate is that the objective of the
requirements of verification and submission of the affidavits of Witnesses is to
bring all the relevant facts that will enable the CA to immediately determine
whether or not the petition has substantial merit. In that regard, however, the
requirements are separate from each other, for only by the affidavits of
the Witnesses who had competence about the circumstances constituting the
extrinsic Fraud can the petitioner detail the extrinsic Fraud being relied upon as
the ground for its petition for annulment. This is because extrinsic Fraud cannot
be presumed from the recitals alone of the pleading but needs to be
particularized as to the facts constitutive of it. The distinction between the
verification and the affidavits is made more pronounced when an issue is
based on facts not appearing of record. In that instance, the issue may be
heard on affidavits or depositions presented by the respective parties, subject
to the court directing that the matter be heard wholly or partly on oral
testimony or depositions. [53]

The substantive defect related to the supposed neglect of Atty. Villaflor to keep
track of the case, and to his failure to apprise Pinausukan of the developments
in the case, which the CA did not accept as constituting extrinsic Fraud,
because
Based solely on these allegations, we do not see any basis to give due course
to the petition as these allegations do not speak of the
extrinsic Fraud contemplated by Rule 47. Notably, the petition's own language
states that what is involved in this case is mistake and gross Negligence of
petitioner's own counsel. The petition even suggests that the Negligence of
counsel may constitute professional misconduct (but this is a matter for lawyer
and client to resolve). What is certain, for purposes of the application of Rule
47, is that mistake and gross Negligence cannot be equated to the
extrinsic Fraud that Rule 47 requires to be the ground for an annulment of
judgment. By its very nature, extrinsic Fraud relates to a cause that is
collateral in character, i.e., it relates to any fraudulent act of the prevailing
party in litigation which is committed outside of the trial of the case, where the
defeated party has been prevented from presenting fully his side of the cause,
by Fraud or deception practiced on him by his opponent. Even in the presence
of Fraud, annulment will not lie unless the Fraud is committed by the Adverse
Party, not by one's own lawyer. In the latter case, the remedy of the client is to
proceed against his own lawyer and not to re-litigate the case where judgment
had been rendered.[54]

We concur with the CA. Verily, such neglect of counsel, even if it was true, did
not amount to extrinsic Fraud because it did not emanate from any act of
FEBTC as the prevailing party, and did not occur outside the trial of the case.
Moreover, the failure to be fully aware of the developments in the case was
Pinausukan's own responsibility. As a litigant, it should not entirely leave the
case in the hands of its counsel, for it had the continuing duty to keep itself
abreast of the developments if only to protect its own interest in the litigation.
It could have discharged its duty by keeping in regular touch with its counsel,
but it did not. Consequently, it has only itself to blame.

WHEREFORE, the Court AFFIRMS the assailed resolutions of the Court of

Appeals promulgated on July 31, 2003 and September 12, 2003;
and ORDERS the petitioner to pay the Costs of Suit.

SO ORDERED.
SEAFOOD VS. BPI

Ponente: BERSAMIN, J.
Decision Date: January 20, 2014
GR Number: G.R. No. 159926
Written By Digest Team (Sept 2024) 2 weeks ago

Summary:

This case involves a petition filed by Pinausukan Seafood House, Roxas

Boulevard, Inc. (Pinausukan) against Far East Bank & Trust Company (now
Bank of the Philippine Islands) and Hector IL. Galura. Pinausukan sought to
annul a judgment dismissing its earlier case against the bank for failure to
prosecute. The Court of Appeals dismissed Pinausukan's petition for
annulment, and the Supreme Court affirmed this dismissal. The Supreme Court
ruled that the alleged negligence of Pinausukan's counsel did not constitute
extrinsic fraud, which is required as a ground for annulment of judgment under
Rule 47 of the Rules of Court.

Doctrine:

"Extrinsic fraud, as a ground for the annulment of a judgment, must emanate

from an act of the adverse party, and the fraud must be of such nature as to
have deprived the petitioner of its day in court. The fraud is not extrinsic if the
act was committed by the petitioner's own counsel."

"A petition for annulment of judgment is a remedy in equity so exceptional in

nature that it may be availed of only when other remedies are wanting, and
only if the judgment, final order or final resolution sought to be annulled was
rendered by a court lacking jurisdiction or through extrinsic fraud."

Facts:

• Bonier de Guzman, then President of Pinausukan, executed four real estate

mortgages involving the company's property in favor of Far East Bank and
Trust Company in 1993.
• When the unpaid obligation reached P15,129,303.67 in June 2001, the bank
initiated extrajudicial foreclosure proceedings.
• Pinausukan filed a case to annul the real estate mortgages in October 2001,
claiming Bonier obtained the loans in his personal capacity without company
consent.
• The Regional Trial Court dismissed the case for failure to prosecute on
October 31, 2002.
• Pinausukan claimed its counsel, Atty. Michael Dale Villaflor, failed to inform
them about the dismissal.
• On July 24, 2003, Pinausukan filed a petition for annulment of judgment with
the Court of Appeals.
• The Court of Appeals dismissed the petition on July 31, 2003, citing
procedural defects.
• Pinausukan's motion for reconsideration was denied on September 12, 2003.

Petitioner’s/Plaintiff’s Arguments:

• The requirement for attaching affidavits of witnesses to the petition for

annulment should be relaxed.
• The negligence of Atty. Villaflor, in whom Pinausukan entirely relied upon,
should not preclude it from obtaining relief.
• Pinausukan needed a chance to prove in the RTC that Bonier had no right to
mortgage its property.
Respondent’s/Defendant’s Arguments:

• The petition for annulment failed to comply with the procedural requirements
under Rule 47 of the Rules of Court.
• The alleged negligence of Pinausukan's counsel does not constitute extrinsic
fraud.
• Pinausukan had the responsibility to keep itself informed of the
developments in the case.

Issues and Ruling:

Whether or not the Court of Appeals erred in dismissing Pinausukan's

petition for annulment of judgment
NO. The Supreme Court affirmed the Court of Appeals' dismissal of
Pinausukan's petition for annulment. The Court ruled that Pinausukan's petition
suffered from both procedural and substantive defects. Procedurally,
Pinausukan failed to submit the required affidavits of witnesses supporting its
cause of action. Substantively, the alleged negligence of Pinausukan's counsel
did not constitute extrinsic fraud as required under Rule 47 of the Rules of
Court. The Court emphasized that extrinsic fraud must emanate from an act of
the adverse party, not from one's own counsel.

Whether or not the alleged negligence of Pinausukan's counsel

constitutes extrinsic fraud
NO. The Supreme Court ruled that the alleged neglect of Pinausukan's counsel
did not amount to extrinsic fraud. The Court stated: "Verily, such neglect of
counsel, even if it was true, did not amount to extrinsic fraud because it did
not emanate from any act of FEBTC as the prevailing party, and did not occur
outside the trial of the case." The Court further noted that it was Pinausukan's
own responsibility to keep itself informed of the developments in the case.

Dispositive:

WHEREFORE, the Court AFFIRMS the assailed resolutions of the Court of

Appeals promulgated on July 31, 2003 and September 12, 2003; and ORDERS
the petitioner to pay the costs of suit.

Other Notes:

G.R. NO. 189724

REPUBLIC VS. SPOUSES DE CASTRO

CARPIO MORALES, J. • CARPIO MORALES, J. • G.R. No. 189724

February 07, 2011
THIRD DIVISION G.R. No. 189724, February 07, 2011 REPUBLIC OF THE
PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF ENVIRONMENT AND
NATURAL RESOURCES, REGION IV-B, PETITIONER, VS. SPOUSES FLORENCIO DE
CASTRO AND ROMELIA CALIBOSO DE CASTRO, RESPONDENTS.

DECISION

CARPIO MORALES, J.:

The Director of the Bureau of Lands, now Lands Management Bureau (LMB),
Manila issued on July 13, 1955 Free Patent No. V-16555 under Free Patent
Application No. V-33580 covering Lot No. 6742, Pls-296 (the lot) in the name of
Marcelino Manipon (Manipon), with an area of 5.376 hectares, located at
Naujan, Oriental Mindoro.

On the basis of the free patent, the Register of Deeds of Oriental Mindoro
issued on March 5, 1957 Original Certificate of Title (OCT) No. P-2124 in the
name of Manipon.

Manipon later sold the lot to Spouses Florencio and Romelia de Castro
(respondents) who, after OCT No. P-2124 was cancelled, were issued Transfer
Certificate of Title (TCT) No. T-33730.

An investigation conducted by the representatives of LMB, Manila on the

issuance of Free Patent No. V-16555 showed that the lot is not an alienable
and disposable land of the public domain since it is within the established
reservation for the exclusive use of non-Christian tribes, now known as
the Paitan Mangyan Reservation, proclaimed as such by the Governor-General
of the Philippine Islands by virtue of Proclamation No. 809 dated June 4, 1935;
and that Manipon - who began occupying the lot only in 1944 as indicated in
his free patent application - and respondents had not established any right to
possess and own the lot.

Since Proclamation No. 809 has not been amended nor repealed/revoked by
any subsequent law or presidential issuance, the Republic of the Philippines
(petitioner), through the Office of the Solicitor General, [1] filed in 1998
a Complaint[2] for "Cancellation of TCT No. T-33730 and Reversion" against
Manipon and herein respondents, as well as the Register of Deeds of Calapan,
Oriental Mindoro, docketed as Civil Case No. R-4694, which was raffled to
Branch 40 of the Regional Trial Court of Calapan City. Manipon had, at the time
of the filing of the Complaint, been dead for ten years. [3]

Respondents failed to file their answer to the Complaint despite receipt of

summons, hence, they were declared in default. [4] Their "Motion To Lift Order Of
Default And To Admit Hereto Attached Answer," which alleged that their failure
to answer was due to "oversight and excusable neglect," [5] was denied for lack
of merit.

Following the Ex Parte presentation of Evidence by petitioner, the trial court

rendered a Decision[6] dated October 9, 2002 in its favor nullifying Manipon's
Free Patent No. V-16555 and respondents' TCT No. T-33730; ordering the
reversion of the lot to the State; and directing respondents to immediately
vacate the lot and surrender their title to the Register of Deeds of Oriental
Mindoro for immediate cancellation.

No Motion for reconsideration of the trial court's decision, or appeal therefrom

was filed by respondents, hence, the decision became final and executory.

On petitioner's Motion, the trial court, by Order of April 29, 2004, issued a writ
of Execution on August 2, 2005.[7]The writ was served on respondents on March
29, 2005 and implemented on July 20, 2006 .[8]

On March 15, 2007, respondents filed a petition for annulment of judgment of

the trial court's decision of October 9, 2002 before the Court of Appeals (CA)
on grounds that it did not acquire Jurisdiction over the person of Manipon as he
had been dead when petitioner's Complaint was filed, hence, his title to the lot -
as well as respondents' title which merely emanated from his - stays; and that
the trial court's decision did not attain finality as they did not receive a copy of
its decision, hence, the Execution thereof was void.

By the now assailed Decision [9] of June 26, 2009, the appellate
court denied respondents' petition for annulment of judgment. Finding,
however, that respondents were not served with a copy of the trial court's
decision of October 9, 2002 and, therefore, it had not yet become final and
executory, the appellate court nullified the trial court's order of April 29, 2004
granting petitioner's Motion for Execution, the writ of Execution of August 2,
2005, and all Execution proceedings, and ordered the trial court to serve a copy
of its October 9, 2002 decision to them "so that they can avail of the
appropriate remedy under the Rules of Court ."[10]

Its Motion for partial reconsideration of the appellate court's decision having
been denied by Resolution [11] of September 30, 2009, petitioner filed the
present petition for review on Certiorari.

Respondents maintain that they did not receive a copy of the trial court's
decision of October 9, 2002, [12] and that they came to know of it only on
September 29, 2005 when the trial court's sheriff personally served upon them
a copy of the writ of Execution of the decision.[13]

Section 1, Rule 47 of the 1987 Rules of Civil Procedure provides that the
remedy of annulment of judgments or final orders/resolutions of a Regional
Trial Court in civil actions can only be availed of where "the ordinary
remedies of new trial, appeal, petition for relief or other appropriate
remedies are no longer available through no fault of the petitioner ."

A petition for annulment of judgment under Rule 47 is a remedy granted only

under exceptional circumstances where a party, without fault on his part, has
failed to avail of the ordinary or other appropriate remedies provided by law.
Such action is never resorted to as a substitute for a party's own neglect in not
promptly availing of the ordinary or other appropriate remedies. [14]

Upon notice of the writ of Execution on, by respondents' own information,

September 29, 2005, respondents - if indeed they were completely unaware of
the trial court's decision - had available remedies to question it. They could
have promptly filed a Motion to quash the writ of Execution or, in the
alternative, a petition for relief from judgment under Rule 38[15] of the 1987
Rules of Civil Procedure. That they had ample opportunity to do so is gathered
from the fact that the writ of Execution of the decision was not immediately
implemented by the sheriff as it was satisfied only on July 20, 2006. Having
failed to avail of any of the aforesaid remedies without any justification,
respondents are barred from resorting to the action for annulment of
judgment under Rule 47; otherwise, they would benefit from their own inaction
or Negligence. So Lazaro v. Rural Bank of Francisco Balagtas (Bulacan), Inc.
[16]
teaches:

Let it be stressed at the outset that before a party can avail of the reliefs
provided for by Rule 47, i.e., annulment of judgments, final orders, and
resolutions, it is a condition sine qua non that one must have failed
to move for new trial in, or appeal from, or file a petition for relief against
said issuances or take other appropriate remedies thereon, through no
fault attributable to him. If he failed to avail of those cited remedies
without sufficient justification, he cannot resort to the action for
annulment provided in Rule 47, for otherwise he would benefit from
his own inaction or Negligence (Republic v. Sandiganbayan, G.R. No. 140615,
Feb. 19, 2001, 352 SCRA 235, 250).

In the instant case, not only did petitioner fail to avail of the ordinary and
appropriate remedies in assailing the questioned judgments of the trial court,
but he also failed to show to the satisfaction of this Court that he could not
have availed of the ordinary and appropriate remedies under the
Rules. According to petitioner, he allegedly learned of the cases filed
against him by respondent bank only when the writs of Execution were
issued against him. At the very least then, he could have moved to
quash the writs of Execution. In the alternative, he could have filed
a petition for relief from judgment under Rule 38. Instead, petitioner
merely alleged that he approached Atty. Gregorio Salazar, the bank's counsel,
for clarification and assistance, which is not one of the ordinary and
appropriate remedies contemplated by the Rules. Petitioner's failure to
explain why he failed to avail of said remedies, which were still
available to him at that time, in both Civil Case No. 7355-M and Civil Case
No. 2856-V-88, is fatal to his cause. To be sure, a petition for annulment
of judgment under Rule 47 is not a substitute for one's own neglect in
not availing of the ordinary and appropriate remedies, but a peculiar
remedy granted under certain conditions to those who failed to avail
of the ordinary remedies without their fault. Thus, in our considered
view, based on the cited reasons and circumstances, the Court of Appeals did
not err when it denied the petition for annulment of judgment. (Emphasis and
underscoring supplied)

WHEREFORE, the petition for review on Certiorari is GRANTED and the

assailed Court of Appeals Decision dated June 26, 2009 and Resolution dated
September 30, 2009 are REVERSED and SET ASIDE, but only insofar as the
Court of Appeals nullified 1) the Order dated April 29, 2004 of the Regional
Trial Court, Br, 40 of Calapan City granting petitioner's Motion for the issuance
of a writ of Execution, 2) the Writ of Execution dated August 2, 2005, and
all Execution proceedings/actions pursuant thereto, and 3) the trial court's
order to immediately serve a copy of its Decision dated October 9, 2002 upon
respondents.

The trial court's Order dated April 29, 2004, the Writ of Execution dated August
2, 2005 and all proceedings/actions pursuant to the implementation of its
October 9, 2002 Decision, are declared in order and accordingly REINSTATED.

SO ORDERED.

Brion, Bersamin, Villarama, Jr., and Sereno, JJ., concur.

REPUBLIC VS. SPOUSES DE CASTRO

Ponente: CARPIO MORALES, J.

Decision Date: February 07, 2011
GR Number: G.R. No. 189724
Written By Digest Team (Sept 2024) 2 weeks ago

Summary:

The Republic of the Philippines, represented by the Department of Environment and Natural
Resources, filed a complaint for cancellation of title and reversion against Spouses Florencio and
Romelia de Castro. The case involved a lot that was part of a Mangyan reservation but was
erroneously granted a free patent. The Regional Trial Court ruled in favor of the Republic,
ordering the cancellation of the de Castros' title and reversion of the land to the State. The de
Castros filed a petition for annulment of judgment with the Court of Appeals, which was denied.
However, the CA nullified the execution proceedings. The Supreme Court reversed the CA's
decision on the execution proceedings, reinstating the trial court's order of execution and all
related actions.

Doctrine:

"A petition for annulment of judgment under Rule 47 is a remedy granted only under exceptional
circumstances where a party, without fault on his part, has failed to avail of the ordinary or other
appropriate remedies provided by law. Such action is never resorted to as a substitute for a
party's own neglect in not promptly availing of the ordinary or other appropriate remedies."
"Before a party can avail of the reliefs provided for by Rule 47, i.e., annulment of judgments,
final orders, and resolutions, it is a condition sine qua non that one must have failed to move for
new trial in, or appeal from, or file a petition for relief against said issuances or take other
appropriate remedies thereon, through no fault attributable to him. If he failed to avail of those
cited remedies without sufficient justification, he cannot resort to the action for annulment
provided in Rule 47, for otherwise he would benefit from his own inaction or negligence."

Facts:

• The Bureau of Lands issued Free Patent No. V-16555 to Marcelino Manipon in 1955 for a
5.376-hectare lot in Naujan, Oriental Mindoro.
• Original Certificate of Title No. P-2124 was issued to Manipon in 1957.
• Manipon sold the lot to Spouses Florencio and Romelia de Castro, who were issued Transfer
Certificate of Title No. T-33730.
• An investigation revealed that the lot was within the Paitan Mangyan Reservation, established
by Proclamation No. 809 in 1935.
• The Republic filed a complaint in 1998 for cancellation of TCT No. T-33730 and reversion of
the land.
• The de Castros were declared in default for failing to file an answer.
• The Regional Trial Court ruled in favor of the Republic on October 9, 2002.
• The decision became final and executory, and a writ of execution was issued on August 2,
2005.
• The de Castros filed a petition for annulment of judgment with the Court of Appeals on March
15, 2007.
• The Court of Appeals denied the petition but nullified the execution proceedings.
• The Republic filed a petition for review on certiorari with the Supreme Court.

Petitioner’s/Plaintiff’s Arguments:

• The Court of Appeals erred in nullifying the execution proceedings of the trial court's decision.
• The de Castros failed to avail themselves of appropriate remedies after receiving notice of the
writ of execution.
• The petition for annulment of judgment was not the proper remedy in this case.

Respondent’s/Defendant’s Arguments:

• They did not receive a copy of the trial court's decision of October 9, 2002.
• They only learned of the decision when the writ of execution was served on September 29,
2005.
• The trial court's decision had not yet become final and executory.

Issues and Ruling:

Whether or not the Court of Appeals erred in nullifying the execution proceedings of the
trial court's decision
YES. The Supreme Court ruled that the Court of Appeals erred in nullifying the execution
proceedings. The Court held that the de Castros failed to avail themselves of the appropriate
remedies available to them after receiving notice of the writ of execution. They could have filed
a motion to quash the writ of execution or a petition for relief from judgment under Rule 38. By
failing to do so without justification, they were barred from resorting to an action for annulment
of judgment under Rule 47. The Court emphasized that a petition for annulment of judgment is
not a substitute for a party's own neglect in not promptly availing of ordinary or other
appropriate remedies.

Whether or not the de Castros were entitled to annulment of judgment under Rule 47
NO. The Supreme Court ruled that the de Castros were not entitled to annulment of judgment
under Rule 47. The Court explained that annulment of judgment is a remedy granted only under
exceptional circumstances where a party, without fault on their part, has failed to avail of
ordinary or other appropriate remedies. In this case, the de Castros had ample opportunity to file
a motion to quash the writ of execution or a petition for relief from judgment after receiving
notice of the writ of execution. Their failure to do so without justification barred them from
resorting to an action for annulment of judgment.

Dispositive:

WHEREFORE, the petition for review on certiorari is GRANTED and the assailed Court of
Appeals Decision dated June 26, 2009 and Resolution dated September 30, 2009 are
REVERSED and SET ASIDE, but only insofar as the Court of Appeals nullified 1) the Order
dated April 29, 2004 of the Regional Trial Court, Br, 40 of Calapan City granting petitioner's
motion for the issuance of a writ of execution, 2) the Writ of Execution dated August 2, 2005,
and all execution proceedings/actions pursuant thereto, and 3) the trial court's order to
immediately serve a copy of its Decision dated October 9, 2002 upon respondents. The trial
court's Order dated April 29, 2004, the Writ of Execution dated August 2, 2005 and all
proceedings/actions pursuant to the implementation of its October 9, 2002 Decision, are declared
in order and accordingly REINSTATED.

Other Notes:

n/a
G.R. NO. 151170

LINER VS. MALINIAS

TINGA, J. • TINGA, J. • G. R. NO. 151170

May 29, 2007
SECOND DIVISION G. R. NO. 151170, May 29, 2007 VICTORY LINER, INC.,
PETITIONER, VS. MICHAEL MALINIAS, RESPONDENT.

DECISION

TINGA, J.:
The matter began as a simple civil suit for damages arising from an
unremarkable traffic accident. However, the procedural aspect of the case has
since taken on a life of its own, transforming what should be a molehill into a
mountain built on sediments of compounded errors.

This case finds its origin from a vehicular collision that occurred in La Union on
19 March 1996 between a bus owned by petitioner Victory Liner, Inc. and an
Isuzu Truck used by respondent Michael Malinias. [1] Nobody died, but both
vehicles were damaged from the accident. A Complaint for sum of money and
damages was instituted by respondent against petitioner and the bus driver,
Leoncio Bulaong, alleging pecuniary damage to the truck in the amount of
P47,180.00, representing lost income for the non-use of the truck as it
underwent repairs in the amount of P15,000.00. Claims for Exemplary
damages and Attorney's Fees were also lodged in the Complaint,[2] which was
filed with the Municipal Trial Court (MTC) of La Trinidad, Benguet. After pre-
trial, the bus driver was dropped as defendant in the case after summons could
not be served on him and respondent agreed to waive his Cause of
Action against said driver. [3]

In the course of trial, respondent finished presenting his Evidence and rested
his case. In the meantime, counsel for petitioner filed a Motion to withdraw as
counsel, but the same was denied by the MTC in an Order dated 15 September
1997 as the Motion did not bear any signature of conformity from the
petitioner. When the case was called for the reception of
petitioner's Evidence on the previous scheduled date of 27 October 1997, no
appearance was made for the bus company. Respondent thus immediately
moved that petitioner be declared to have waived its right to
adduce Evidence in its favor and that the case be deemed submitted for
judgment. The MTC found merit in respondent»┐½s contention, and ordered
the case be deemed submitted for decision as of 27 October 1997. On 13
January 1998, the MTC rendered judgment in favor of respondent, awarding
him the sum of P82,180.00.

Through its new counsel, petitioner filed a Motion for Reconsideration. The
Notice of Hearing therein stated: "Please submit the foregoing Motion for
Reconsideration for hearing before the Honorable Court at a schedule and time
convenient to this Honorable Court and the parties." [4] The MTC ruled in an
Order[5] dated 23 February 1998 that the notice did not conform with the
mandatory requirements of Section 5, Rule 15 of the 1997 Rules of Civil
Procedure, and that the Motion was thus a mere scrap of paper which did not
suspend the period to appeal. Accordingly, the MTC declared that its earlier
judgment dated 13 January 1998 had become final and executory. In the same
order and upon the same predicates, the MTC also granted the Motion for
Issuance of Writ of Execution filed by respondent.

Petitioner responded to the foregoing developments by filing a Notice of

Appeal, as well as a Motion for the inhibition by the MTC judge
which Motion was immediately granted. The case was assigned to a new MTC
judge, who was then tasked with ruling on the Notice of Appeal. It was only on
28 September 1999, or eighteen (18) months after the Notice of Appeal was
filed, that the MTC acted on the same and ruled that it had been filed beyond
the reglementary period. Again, the MTC reiterated that the Judgment dated 13
January 1998 had long become final and executory since the fatally
defective Motion for Reconsideration did not toll the reglementary period for
appeal.[6]

What then followed was a series of unsuccessful attempts by petitioner to have

the lower courts set aside or stay the now-final judgment against it. First,
petitioner filed a Petition for Relief from Judgment with the MTC on 25 October
1999.[7] This was denied by the MTC in an Order [8] dated 13 March 2000 on the
ground that it had been filed out of time. The MTC explained that the petition
for relief from judgment must have been filed either within sixty (60) days from
the date petitioner's new counsel learned of the judgment, or sixty (60) days
after learning that the Motion for Reconsideration had been denied for having
been filed out of time. Neither circumstance was met by petitioner.
Subsequently, the MTC likewise denied a Motion for Reconsideration filed by
petitioner.[9]

Second, petitioner filed on 26 June 2000 a petition for Certiorari[10] under Rule
65 with the Regional Trial Court (RTC) of La Trinidad, Benguet, imputing Grave
abuse of discretion to the MTC, and seeking to annul four (4) of the MTC's
rulings, namely: the original 1998 judgment against petitioner; the 1999 order
which declared that the Notice of Appeal was filed out of time; and the two
orders dismissing the Petition for Relief from Judgment. The petition
for Certiorari was dismissed by the RTC in an Order [11] dated 21 November 2000.
The RTC agreed with the MTC that the Petition for Relief from Judgment had
been belatedly filed. The RTC also reiterated the consistent ruling that the
judgment in question had already become final in February of 1998. Thus, the
RTC could not ascribe Grave abuse of discretion to the MTC.[12]

Petitioner filed a Motion for reconsideration of the RTC ruling, while respondent
filed with the same court a Motion for Execution. On 3 July 2001, at a point
when petitioner had allegedly not yet received any order acting on
its Motion for reconsideration, petitioner received instead an Order dated 21
June 2001[13] where the RTC directed the issuance of a writ of Execution in favor
of respondent, the MTC judgment having already become final and executory.

Third, petitioner filed on 17 July 2001 with the Court of Appeals a "Petition
for Certiorari to Annul Judgment" under the aegis of Rule 47 of the 1997 Rules
of Civil Procedure. Interestingly, based on the first paragraph and the express
relief prayed for in this petition, the "judgment" sought to be annulled was not
the final and executory judgment of the MTC, but rather, the two orders of the
RTC which successively dismissed the special civil action for Certiorari, and
directed the issuance of a writ of Execution in favor of respondent.[14] However,
in explaining the "nature of the petition," petitioner claimed that it was seeking
to annul the judgment and orders of both the RTC and the MTC, [15] although the
issues identified in the petition pertain only to "serious errors" and " Grave
abuse of discretion" on the part of the RTC. [16] There is a general allegation that
the acts of the RTC in granting the Motion for Execution even before
petitioner's Motion for reconsideration was acted upon constituted an
extrinsic Fraud,[17] but no particular arguments were offered to explain why that
was so.

The petition for annulment of judgment was accompanied by a Verification and

Certification Against Forum Shopping which was signed by counsel for
petitioner. On that basis, the Court of Appeals dismissed the petition outright
in a Resolution[18] dated 26 July 2001, stressing the rule that it should be the
petitioner, not its counsel, which should execute the verification and
certification against Forum Shopping.

Petitioner filed a Motion for Reconsideration[19] where it pointed out that it had
simultaneously filed with its petition for annulment of judgment a Motion for
Extension[20] to submit the certificate of authority to file the petition. The day
after the petition was filed, or on 18 July 2001, petitioner filed with the Court of
Appeals the said Certificate of Authority. [21] The Certificate of Authority
prepared by petitioner's corporate secretary, dated 17 July 2001, certified that
on 10 July 2001, petitioner's Board of Directors authorized counsel for petitioner
to file "the necessary action, petition or any other Pleadings necessary in any
and all Hierarchy of Courts" with respect to the instant case. [22]

Nonetheless, the Court of Appeals, on 5 December 2001, issued a

Resolution[23] denying the Motion for Reconsideration. The appellate court
observed that in petitioner's Motion for Extension to submit the certification of
authority, it was explained that petitioner's counsel was constrained to sign the
verification and certification against Forum Shopping because "the certificate of
authority granted to the petitioner's station manager in Baguio City has been
misplaced."[24] The Court of Appeals thus concluded that "the one really
authorized to represent the petitioner is Operations Manager Rogelio Ortega
stationed in Baguio City, but whose authority has been misplaced or lost, as in
fact, the latter signed the certification on non- Forum Shopping in the petition
filed before the [RTC]." [25] The Court of Appeals also reiterated that subsequent
compliance such as petitioner's counsel's subsequent submission of her
authority to represent the petitioner, would not excuse petitioner's failure to
comply with the required certification against forum-shopping in the first
instance.

The Court of Appeals further held that upon a "judicious reading of the instant
petition for the annulment of judgment and its annexes," it was clear that the
ground of extrinsic Fraud raised by petitioner had already been availed of in its
earlier petition for relief from judgment before the MTC. Such circumstance
contradicted Section 2 of Rule 47, which provides that "extrinsic Fraud shall not
be a valid ground (for annulment of judgment) if it was availed of, or could
have been availed of, in a Motion for new trial or petition for relief." [26]
Hence this petition for review under Rule 45, seeking that the Court "annul and
set aside the questioned Resolutions of the Court of Appeals x x x as well as
the twin Orders of [the RTC] x x x and remand the case [to] the court of origin
for further proceedings and give petitioner its right to present its case in the
interest of due process and substantial errors." [27]

Two sets of arguments are raised. The first concerns the errors ascribed to the
Court of Appeals in dismissing outright the petition for annulment of judgment.
The second concerns the alleged Grave abuse of discretion on the part of the
RTC in directing the issuance of the writ of Execution even without resolving
petitioner's Motion for reconsideration.

The reasoning employed by the Court of Appeals in dismissing the petition for
annulment of judgment is fraught with error and thus cannot be sustained. At
the same time, however, the petition now before the Court cannot be granted.

As indicated in the 5 December 2001 Resolution of the Court of Appeals, the

two main grounds relied upon for dismissing the petition for annulment of
judgment were petitioner's failure to comply with the requirements in
the Execution of the verification and certification against forum-shopping, and
the petition's reliance on the ground of extrinsic Fraud which could have been
raised or availed of in a Motion for new trial or petition for relief. We turn our
attention to the first ground.

It is of importance that, as borne by the Certificate of Authority executed by

petitioner's Corporate Secretary, counsel for petitioner had been authorized by
petitioner's Board of Directors to prepare and file with the Court of Appeals the
petition herself as of 10 July 2001, or seven (7) days before the petition was
indeed filed. We fail to understand the significance attached by the Court of
Appeals on the prior authority of the Baguio station manager to perform the
same acts. The impression left by the disquisition of the appellate court is that
such prior authority was beyond recall by petitioner's Board of Directors, and
that no new person could be similarly authorized by the Corporation to perform
such acts.

The fact that the previous authority may have been misplaced or lost, thus
causing petitioner to authorize a new person to file the necessary Pleadings or
petitions in the case involving the respondent, is of no consequence if the new
authority is issued before the filing of the pleading that requires verification or
certification against forum-shopping. The circumstance is similar to a situation
where the previously authorized person had died or severed his or her
connection with the corporate litigant. Juridical persons appearing before the
courts are not perpetually bound to maintain the same authorized
representatives in the preparation and certification of Pleadings.

The appellate court cited the rule that substantial compliance could not cure
the defect in the verification or certification requirements. Yet the bare fact
remains that counsel for petitioner was authorized to prepare the petition and
to execute the verification and certification requirements at the time the
petition was filed with the Court of Appeals, a fact borne out by the Certificate
of Authority itself. The error consisted in petitioner counsel's failure to attach
such certificate to the petition, but she did submit said certificate to the Court
of Appeals the very next day. Petitioner emphasizes that the certificate of
authority submitted on 18 July 2001 was filed "on the 15th day of the 60-day
reglementary period to file appeal," perhaps to stress the point that if the
petition itself was filed on the same day as the certificate of authority, the
petition would have still been timely. However, petitioner seems to forget that
under Rule 47, its petition for annulment of judgment based on
extrinsic Fraud[28] actually had a term of four (4) years [29] as "reglementary
period."

In any event, the observation of the Court of Appeals that substantial

compliance "will not suffice in the matter involving strict observance" of the
certification requirement on non- Forum Shopping contradicts our recent
jurisprudence which holds that "[t]he rule of substantial compliance may be
availed of with respect to the contents of the certification [against Forum
Shopping]."[30] While the lack of certification against Forum Shopping is generally
not cured by its submission after the filing of the petition, and the submission
of a certificate against Forum Shopping is deemed obligatory, the requirement
has been relaxed under justifiable circumstances under the rule on substantial
compliance.[31] The same characteristics hold true as to the verification
requirement.[32]

We hold and so rule that the appellate court's utilization on petitioner's belated
submission of the complete verification and certification requirements as
anchor for the dismissal of the petition for annulment of judgment does not
merit affirmance.

The Court of Appeals did rely on another ground for the dismissal of the
petition for annulment of judgment, the reliance on the ground of
extrinsic Fraud which could have been availed of in a Motion for new trial or
petition for relief. The formulation by the appellate court on that score cannot
be fully adopted by the Court. However, to demonstrate why the Court of
Appeals erred in that regard, it is necessary to discuss the more fundamental
errors that have attended the facts of this case, errors for which petitioner is
mostly to blame, errors which militate against the grant of this petition.

From the timeline, it appears that petitioner's woes began after the Motion to
withdraw as counsel filed by its former lawyer was not allowed by the MTC due
to the absence of the written conformity thereto of the petitioner. [33] At the next
hearing date, when petitioner was to commence its presentation of Evidence,
nobody appeared in its behalf, causing the MTC, upon Motion, to consider as
waived petitioner's right to present its Evidence. The subsequent rendition of
the MTC Judgment without considering the Evidence of petitioner would form its
initial cause of distress.
But what proved to be the most crucial failure on the part of petitioner was to
file a Motion for Reconsideration of the MTC Judgment which contained a
defective Notice of Hearing, failing as it did to set a date for hearing. Under
Sections 5 and 6 of Rule 15, the notice of hearing shall be addressed to the
parties concerned and shall specify the time and date of the hearing of
the Motion; no Motion shall be acted upon by the court without proof of service
of the notice thereof, except when the court is satisfied that the rights of
the Adverse Party are not affected.[34]

Not only did the defect render the Motion for reconsideration itself unworthy of
consideration, it more crucially failed to toll the period to appeal.
A Motion without a notice of hearing is pro forma, a mere scrap of paper that
does not toll the period to appeal, and upon the expiration of the 15-day
period, the questioned order or decision becomes final and executory. The
rationale behind this rule is plain: unless the movant sets the time and place of
hearing, the court will be unable to determine whether the Adverse
Party agrees or objects to the Motion, and if he objects, to hear him on his
objection, since the rules themselves do not fix any period within which he
may file his reply or opposition. [35]

Thus, the MTC judgment became final and executory despite the filing of
the Motion for Reconsideration thereto, as said Motion did not toll the period for
filing an appeal therefrom. Yet that did not mean that petitioner was left bereft
of further remedies under our Rules. For one, petitioner could have assailed
the MTC's denial of the Motion for Reconsideration through a special civil action
for Certiorari under Rule 65 alleging Grave abuse of discretion amounting to lack
of Jurisdiction on the part of the MTC in denying the Motion. If that remedy were
successful, the effect would have been to void the MTC's denial of
the Motion for Reconsideration, thus allowing petitioner to again pursue
such Motion as a means towards the filing of a timely appeal.

Another remedy for the petitioner is found under Rule 38 of the 1997 Rules of
Civil Procedure, which governs petitions for relief from judgment. Indeed,
Section 2, Rule 38 finds specific application in this case, as it provides that
"[w]hen a judgment or final order is rendered by any court in a case, and a
party thereto, by Fraud, accident, mistake, or excusable Negligence, has been
prevented from taking an appeal, he may file a petition [for relief from denial
of appeal] in such court and in the same case praying that the appeal be given
due course."[36] Such petition should be filed within sixty (60) days after the
petitioner learns of the judgment or final order, and not more than six (6)
months after such judgment or final order was entered. The facts of this case
indicate that petitioner could have timely resorted to this remedy.

What the petitioner undertook instead was to pursue the notice of appeal,
despite the unequivocal statement in the MTC Order of 23 February 1998 that
"the Judgment [sought to be reconsidered] has now become final and
executory."[37] The Rules mandate that an appeal by notice of appeal is deemed
perfected upon the filing of the notice of appeal in due time, [38] due time being
within fifteen (15) days after notice to the appellant of the judgment or final
order appealed from.[39] While the period of appeal shall be interrupted by a
timely Motion for reconsideration,[40] the MTC deemed, with legal basis, that
the Motion interposed by petitioner could not have been deemed filed and
should instead be treated as "a mere scrap of paper."

The apposite reaction on the part of petitioner would have been to seek the
reversal of the MTC Order which disregarded its Motion for reconsideration,
through either of the remedies we explained above. Certiorari has as its object
the nullification of the MTC Order on the basis that it was rendered with Grave
abuse of discretion, while a petition for relief seeks that the MTC allow the
appeal despite the finality of judgment on the ground that petitioner was
prevented from taking an appeal due to Fraud, accident, mistake, or
excusable Negligence. Either remedy would have had the benefit of intellectual
honesty, as they recognized the MTC declaration that the judgment had
become final. At the same time, either remedy provides the appropriate
recourse to the petitioner in the face of such declaration, since both petitions
for Certiorari and for relief from judgment would be aimed at setting aside the
adverse ill-effects of the MTC's pronouncement.

On the other hand, a notice of appeal pursued even with a prior

pronouncement by the trial court that the judgment sought to be appealed was
already final is either misconceived or downright obtuse. It may have been a
different matter if the notice of appeal was undertaken without there being any
prior express ruling from the trial court that the appealed judgment was
already final and that statement was instead expressed at the time the trial
court denies the notice of appeal, for at least in that case, the appellant
proceeded with the appeal with the comfort that the trial court had not yet said
that the appeal was barred. However, as in this case, where the trial court
already notified the would-be appellant that the judgment was already final,
executory and thus beyond appeal, appellant should suffer the consequences if
the notice of appeal is nonetheless stubbornly pursued.

Within this context, it does not even really matter whether petitioner's legal
rights were unduly impaired by the MTC's abject refusal to recognize
its Motion for reconsideration, thus giving rise to the finality of the judgment in
question. Even if the petitioner has the right to feel aggrieved over the MTC's
action in this case, it should not have pretended that its Right to
appeal remained undiminished and viable by filing the notice of appeal. It
should have instead undertook first to remove the cloud that hovered on
its Right to appeal. As earlier explained, our procedural rules give ample
guidance and method as to how petitioner could have removed such cloud. A
notice of appeal under these circumstances is unresponsive to the main
impediment to petitioner's cause - the prevailing finality of the MTC judgment.

Truth be told, the fact that the MTC had taken more than eighteen (18) months
before it acted on the Notice of Appeal is close to scandalous, even if such
delay was caused in part by the inhibition of the original judge who heard the
case. Still, the delay could not have extenuated the defunctness of appeal as a
remedy available to petitioner. A notice of appeal presupposes that appeal still
exists as a right to the appellant, hence the use of the term "notice," since the
function of the submission is merely to notify the trial court that the appellant
was availing of the Right to appeal, and not to seek the court's permission that
it be allowed to pose an appeal. In the same vein, the "denial" or refusal to
take cognizance of a notice of appeal is predicated on a finding that the Right
to appeal did not or no longer existed, and not on the refusal of the trial court
to allow the appellant to pursue the appeal.

Hence, petitioner could not, by way of notice of appeal, seek the restoration of
its extinct Right to appeal. Despite the egregious delay by the MTC in acting on
the Notice of Appeal, the fact remains that the MTC could not have given due
course to the appeal whether it had acted the day after the notice of appeal
was filed, or more than eighteen (18) months later.

Notably, it was only after the Notice of Appeal was denied that the petitioner
had pursued the two remedies it could have undertaken from the MTC Order
declaring its Motion for reconsideration as a mere scrap of paper. First,
petitioner filed a Petition for Relief from Judgment with the MTC. The problem
with this remedy was the utter belatedness in the resort thereto. Section 3 of
Rule 38 requires that said petition must be filed within sixty (60) days after
petitioner learns of the judgment, final order or other proceeding to be set
aside, and not more than six (6) months after such judgment or final order was
entered. Neither benchmark was met by the petitioner, since the petition was
filed only on 25 October 1999, or some sixteen (16) months after the rendition
of the judgment sought to be set aside, and around fourteen (14) months after
such judgment was declared final and executory. Petitioner had opportunely
learned of both the rendition of the judgment and the Order refusing to give
cognizance to the Motion for reconsideration. Had it simply consulted the
rulebook, it should have realized that a petition for relief from judgment was a
remedy available to it, and certainly one more appropriate than the Notice of
Appeal it ultimately resorted to.

Following the denial of the Petition for Relief from Judgment, petitioner then
filed a petition for Certiorari under Rule 65 with the RTC. Said petition was
designed to be omnibus in nature, as it sought to assail all the adverse rulings
handed down by the MTC, including the original Judgment which had been
promulgated over two (2) years earlier. It is extremely dubious to propose
that Certiorari still avails to set aside a two (2) year old decision, and indeed
Section 4 of Rule 65 requires that the special civil action be filed not later than
sixty days from notice of the judgment, order or resolution sought to be
assailed.[41]

On those MTC rulings that still fell within the timely scope of Certiorari,
particularly the rulings denying the petition for relief from judgment, [42] we
agree with the RTC that there could have been no Grave abuse of discretion on
the part of the MTC in denying the petitions since the latter was merely
enforcing the reglementary period under Section 3, Rule 38.

At this juncture, petitioner filed a petition for annulment of judgment with the
Court of Appeals. One might presume that the judgment sought for annulment
would have been that rendered by the MTC. Yet what petitioner expressly
sought to be nullified were mainly the RTC rulings dismissing the petition
for Certiorari. The sense of this remedial action is lost on the Court.

Admittedly, there appears to have been a half-hearted or incomplete attempt

to have the MTC rulings annulled as well. [43] Disregarding for the nonce the
merits of the annulment of the MTC decisions, Section 10 of Rule 48 of the
1997 Rules of Civil Procedure makes it clear that "[a]n action to annul a
judgment or final order of a Municipal Trial Court shall be filed in the Regional
Trial Court having Jurisdiction over the former,"[44] and not with the Court of
Appeals. Considering the periods prescribed under Rule 47 for the filing of an
action for annulment of judgment are quite broad or capable of discretionary
appreciation,[45] the petitioner could have filed such action for annulment of the
MTC's judgment with the RTC which would not have been lightly disregarded
with timeliness as premise.

Still, it was the RTC rulings which were subject of the petition for annulment
filed with the Court of Appeals which had Jurisdiction over such actions.[46] This
recourse was ill-advised, to say the least, for varied reasons. For one, the RTC
rulings dismissing petitioner's special civil action for Certiorari could have been
the subject of an ordinary appeal to the Court of Appeals under Section 1, Rule
41 of the 1997 Rules of Civil Procedure, since such dismissals partake of a final
order that completely disposed of the original petition filed with the RTC. It
may have been that petitioner was threatened by the impending Execution of
the adverse MTC decision, despite the fact that it had a pending Motion for
reconsideration of the RTC's dismissal of its Certiorari petition. That
notwithstanding, annulment of judgment still stands as a most incongruous
remedy if such impending Execution did impel an active recourse on the part of
the petitioner.

More fundamentally, the annulment of the RTC decision dismissing the special
civil action for Certiorari would not properly engender the annulment of the
adverse MTC judgment. In fact, the annulment of such RTC decision would not
give rise to any viable or useful right or benefit to the petitioner, since it would
not stay in any way the MTC judgment or its Execution. At most, the only
possible implication of the annulment of the RTC decision is that relief still
existed to extenuate the MTC rulings dismissing the petition for relief
from judgment, the same rulings which were timely assailed in the petition
for Certiorari.

We do have to offer some clarification regarding the citation by the Court of

Appeals as ground for dismissing the petition for annulment the fact that "the
ground raised by petitioner is extrinsic Fraud, which ground petitioner has
already availed of in its petition for relief from judgment in the Municipal Trial
Court."[47] Section 2 of Rule 47 does disqualify extrinsic Fraud as a valid ground
"if it was availed of, or could have been availed of, in a Motion for new trial or
petition for relief," [48] and such provision would have found incontestable
relevance had the clear object of the petition for annulment been the MTC
judgment.[49] But petitioner's action for annulment of judgment did not provide
clarity in that regard, and in fact does devote considerable effort in imputing
errors on the part of the RTC with the objective of annulling, in particular, the
RTC decision. If that were so, reliance on Section 2 of Rule 47 would have been
misplaced, since the judgment subject of the petition for relief was different
from the decision subject of the action for annulment of judgment. Still, given
the confused nature of the petition for annulment of judgment, blame could
hardly be attributed to the RTC.

All told, even if we were to hold that the Court of Appeals erred in dismissing
the petition on the perceived defect in the verification and certification
requirements, the appellate court would have been left with an action
stigmatized by error upon error interminably. Most frustratingly, for every
procedural misstep committed by petitioner, there existed a corresponding
viable alternative which would have necessitated a ruling on the merits, and
which petitioner could have chosen with ease. Instead of filing a Notice of
Appeal, it could have instead filed a special civil action for Certiorari or a
petition for relief from judgment. Instead of filing the no longer timely petition
for relief from judgment, it could have instead by then filed a petition for
annulment of judgment. When it did file a petition for annulment with the Court
of Appeals, it could have instead filed a more feasible petition for annulment
with the RTC.

If the consequences for pursuing the wrong remedial tack in this case seem
harsh, it should be remembered that there is no innate Right to appeal. Appeal
is a statutory right which may be exercised within the prescribed limits. The
1997 Rules of Civil Procedure provides for a rational and orderly method by
which appeal can be pursued, and even contingency remedial measures if
appeal could no longer be timely pursued. The failure of petitioner to
undertake a timely appeal, or to engage in the available modes of relief even if
appeal was no longer possible, simply has to bear consequence. The lower
court rulings germane to this case were, consistently cognizant of this fact,
transformed to legal conclusion, and we are hard-pressed to find any cause for
annulment of any of those judgments. The dismissal of the petition by the
Court of Appeals is ultimately correct.

All the errors could have been avoided had petitioner, at the onset, recognized
that the judicial system deemed the original MTC Judgment dated 13 January
1998 as having become final and executory after no valid Motion for
reconsideration was filed thereto. On many levels, there existed ample
remedies to undo such deleterious consequence, yet petitioner ended up each
time selecting the wrong answer among the varied options. In the end, all
petitioner accomplished was to persistently water a dead plant.
WHEREFORE, the petition is DENIED. Costs against petitioner.

SO ORDERED.
LINER VS. MALINIAS

Ponente: TINGA, J.
Decision Date: May 29, 2007
GR Number: G. R. NO. 151170
Written By Digest Team 1 year ago

Summary:

This case involves a civil suit for damages arising from a traffic accident. The
petitioner, Victory Liner, Inc., was sued by the respondent, Michael Malinias, for
damages to his truck. The Municipal Trial Court (MTC) ruled in favor of the
respondent, and the petitioner's motion for reconsideration was denied. The
MTC judgment became final and executory. The petitioner then filed a notice of
appeal, which was denied by the MTC. The petitioner subsequently filed a
petition for relief from judgment, which was also denied. The petitioner then
filed a petition for certiorari with the Regional Trial Court (RTC), which was
dismissed. The petitioner filed a motion for reconsideration, but received an
order for the issuance of a writ of execution instead. The petitioner then filed a
petition for annulment of judgment with the Court of Appeals, which was
dismissed due to procedural errors. The petitioner now seeks to annul the
Court of Appeals' resolutions and the RTC orders.

Doctrine:

The court emphasizes the importance of complying with procedural

requirements, such as the verification and certification against forum
shopping. It also clarifies that substantial compliance may be accepted in
certain circumstances. The court also explains the availability of remedies,
such as a petition for relief from judgment and a petition for certiorari, when a
judgment has become final and executory.

Facts:

The petitioner, Victory Liner, Inc., was sued by the respondent, Michael
Malinias, for damages to his truck resulting from a traffic accident.

The MTC ruled in favor of the respondent, and the petitioner's motion for
reconsideration was denied.

The MTC judgment became final and executory.

The petitioner filed a notice of appeal, which was denied by the MTC.
The petitioner then filed a petition for relief from judgment, which was also
denied.

The petitioner filed a petition for certiorari with the RTC, which was dismissed.

The petitioner filed a petition for annulment of judgment with the Court of
Appeals, which was dismissed due to procedural errors.

Petitioner’s/Plaintiff’s Arguments:

- The Court of Appeals erred in dismissing the petition for annulment of

judgment based on procedural errors.
- The petitioner's counsel was authorized to file the petition and execute the
verification and certification requirements.
- The petitioner's belated submission of the complete verification and
certification requirements should be considered substantial compliance.
- The petitioner's right to appeal was unduly impaired by the MTC's refusal to
recognize its motion for reconsideration.

Respondent’s/Defendant’s Arguments:

- The petition for annulment of judgment should be dismissed due to

procedural errors, specifically the failure to comply with the verification and
certification against forum shopping requirements.
- The petitioner's belated submission of the complete verification and
certification requirements does not cure the defect.
- The ground of extrinsic fraud raised by the petitioner has already been
availed of in its earlier petition for relief from judgment.

Issues and Ruling:

1. Whether the Court of Appeals erred in dismissing the petition for

annulment of judgment based on procedural errors. - YES. The Court of
Appeals erred in dismissing the petition based on the perceived defect in the
verification and certification requirements. The petitioner's counsel was
authorized to file the petition and execute the requirements, and the
subsequent submission of the complete requirements should be considered
substantial compliance.

2. Whether the petitioner's right to appeal was unduly impaired by the

MTC's refusal to recognize its motion for reconsideration. - NO. The
petitioner's right to appeal was not unduly impaired by the MTC's refusal to
recognize its motion for reconsideration. The petitioner had other viable
remedies available, such as a petition for relief from judgment or a special civil
action for certiorari, which it failed to pursue in a timely manner.

Dispositive:
The petition is denied. Costs are awarded against the petitioner.

Other Notes:

III-PROVISIONAL REMEDIES

RULE 57: PRELIMINARY ATTACHMENT

RULE 57

Preliminary Attachment

Section 1. Grounds upon which attachment may issue. — At the commencement of the action or at
any time before entry of judgment, a plaintiff or any proper party may have the property of the
adverse party attached as security for the satisfaction of any judgment that may be recovered in the
following cases:

(a) In an action for the recovery of a specified amount of money or damages, other than
moral and exemplary, on a cause of action arising from law, contract, quasi-contract, delict or
quasi-delict against a party who is about to depart from the Philippines with intent to defraud
his creditors;

(b) In an action for money or property embezzled or fraudulently misapplied or converted to

his own use by a public officer, or an officer of a corporation, or an attorney, factor, broker,
agent, or clerk, in the course of his employment as such, or by any other person in a
fiduciary capacity, or for a willful violation of duty;

(c) In an action to recover the possession of property unjustly or fraudulently taken, detained
or converted, when the property, or any part thereof, has been concealed, removed, or
disposed of to prevent its being found or taken by the applicant or an authorized person;

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

(e) In an action against a party who has removed or disposed of his property, or is about to
do so, with intent to defraud his creditors; or

(f) In an action against a party who does not reside and is not found in the Philippines, or on
whom summons may be served by publication. (1a)

Section 2. Issuance and contents of order. — An order of attachment may be issued either ex
parte or upon motion with notice and hearing by the court in which the action is pending, or by the
Court of Appeals or the Supreme Court, and must require the sheriff of the court to attach so much
of the property in the Philippines of the party against whom it is issued, not exempt from execution,
as may be sufficient to satisfy the applicant's demand, unless such party makes deposit or gives a
bond as hereinafter provided in an amount equal to that fixed in the order, which may be the amount
sufficient to satisfy the applicant's demand or the value of the property to be attached as stated by
the applicant, exclusive of costs. Several writs may be issued at the same time to the sheriffs of the
courts of different judicial regions. (2a)
Section 3. Affidavit and bond required. — An order of attachment shall be granted only when it
appears by the affidavit of the applicant, or of some other person who personally knows the facts,
that a sufficient cause of action exists, that the case is one of those mentioned in section 1 hereof,
that there is no other sufficient security for the claim sought to be enforced by the action, and that
the amount due to the applicant, or the value of the property the possession of which he is entitled to
recover, is as much as the sum for which the order is granted above all legal counterclaims. The
affidavit, and the bond required by the next succeeding section, must be duly filed with the court
before the order issues. (3a)

Section 4. Condition of applicant's bond. — The party applying for the order must thereafter give a
bond executed to the adverse party in the amount fixed by the court in its order granting the
issuance of the writ, conditioned that the latter will pay all the costs which may be adjudged to the
adverse party and all damages which he may sustain by reason of the attachment, if the court shall
finally adjudge that the applicant was not entitled thereto. (4a)

Section 5. Manner of attaching property. — The sheriff enforcing the writ shall without delay and
with all reasonable diligence attach, to await judgment and execution in the action, only so much of
the property in the Philippines of the party against whom the writ is issued, not exempt from
execution, as may be sufficient to satisfy the applicant's demand, unless the former makes a deposit
with the court from which the writ is issued, or gives a counter-bond executed to the applicant, in an
amount equal to the bond fixed by the court in the order of attachment or to the value of the property
to be attached, exclusive of costs. No levy on attachment pursuant to the writ issued under section 2
hereof shall be enforced unless it is preceded, or contemporaneously accompanied, by service of
summons, together with a copy of the complaint, the application for attachment the applicant's
affidavit and bond, and the order and writ of attachment, on the defendant within the Philippines.

The requirement of prior or contemporaneous service of summons shall not apply where the
summons could not be served personally or by substituted service despite diligent efforts, or the
defendant is a resident of the Philippines temporarily absent therefrom, or the defendant is a non-
resident of the Philippines, or the action is one in rem or quasi in rem. (5a)

Section 6. Sheriff's return. — After enforcing the writ, the sheriff must likewise without delay make a
return thereon to the court from which the writ issued, with a full statement of his proceedings under
the writ and a complete inventory of the property attached, together with any counter-bond given by
the party against whom attachment is issued, and serve copies thereof on the applicant. (6a)

Section 7. Attachment of real and personal property; recording thereof. — Real and personal
property shall be attached by the sheriff executing the writ in the following manner:

(a) Real property, or growing crops thereon, or any interest therein, standing upon the record
of the registry of deeds of the province in the name of the party against whom attachment is
issued, or not appearing at all upon such records, or belonging to the party against whom
attachment is issued and held by any other person, or standing on the records of the registry
of deeds in the name of any other person, by filing with the registry of deeds a copy of the
order, together with a description of the property attached, and a notice that it is attached, or
that such real property and any interest therein held by or standing in the name of such other
person are attached, and by leaving a copy of such order, description, and notice with the
occupant of the property, if any, or with such other person or his agent if found within the
province. Where the property has been brought under the operation of either the Land
Registration Act or the Property Registration Decree, the notice shall contain a reference to
the number of the certificate of title, the volume and page in the registration book where the
certificate is registered, and the registered owner or owners thereof.
 The registrar of deeds must index attachments filed under this section in the names of the
applicant, the adverse party, or the person by whom the property is held or in whose name it
stands in the records. If the attachment is not claimed on the entire area of the land covered
by the certificate of title, a description sufficiently accurate for the identification of the land or
interest to be affected shall be included in the registration of such attachment;

(b) Personal property capable of manual delivery, by taking and safely keeping it in his
custody, after issuing the corresponding receipt therefor.

(c) Stocks or shares, or an interest in stocks or shares, of any corporation or company, by

leaving with the president or managing agent thereof, a copy of the writ, and a notice stating
that the stock or interest of the party against whom the attachment is issued is attached in
pursuance of such writ;

(d) Debts and credits, including bank deposits, financial interest, royalties, commissions and
other personal property not capable of manual delivery, by leaving with the person owing
such debts, or having in his possession or under his control, such credits or other personal
property, or with his agent, a copy of the writ, and notice that the debts owing by him to the
party against whom attachment is issued, and the credits and other personal property in his
possession, or under his control, belonging to said party, are attached in pursuance of such
writ;

(e) The interest of the party against whom attachment is issued in property belonging to the
estate of the decedent, whether as heir, legatee, or devisee, by serving the executor or
administrator or other personal representative of the decedent with a copy of the writ and
notice that said interest is attached. A copy of said writ of attachment and of said notice shall
also be filed in the office of the clerk of the court in which said estate is being settled and
served upon the heir, legatee or devisee concerned.

If the property sought to be attached is in custodia legis, a copy of the writ of attachment shall be
filed with the proper court or quasi-judicial agency, and notice of the attachment served upon the
custodian of such property. (7a)

Section 8. Effect of attachment of debts, credits and all other similar personal property. — All
persons having in their possession or under their control any credits or other similar personal
property belonging to the party against whom attachment is issued, or owing any debts to him, at the
time of service upon them of the copy of the writ of attachment and notice as provided in the last
preceding section, shall be liable to the applicant for the amount of such credits, debts or other
similar personal property, until the attachment is discharged, or any judgment recovered by him is
satisfied, unless such property is delivered or transferred, or such debts are paid, to the clerk, sheriff,
or other proper officer of the court issuing the attachment. (8a)

Section 9. Effect of attachment of interests in property belonging to the estate of a decedent. — The
attachment of the interest of an heir, legatee, or devisee in the property belonging to the estate of a
decedent shall not impair the powers of the executor, administrator, or other personal representative
of the decedent over such property for the purpose of administration. Such personal representative,
however, shall report the attachment to the court when any petition for distribution is filed, and in the
order made upon such petition, distribution may be awarded to such heir, legatee or devisee, but the
property attached shall be ordered delivered to the sheriff making the levy, subject to the claim of
such heir, legatee, or devisee, or any person claiming under him. (9a)
Section 10. Examination of party whose property is attached and persons indebted to him or
controlling his property; delivery of property to sheriff. — Any person owing debts to the party whose
property is attached or having in his possession or under his control any credit or other personal
property belonging to such party, may be required to attend before the court in which the action is
pending, or before a commissioner appointed by the court, and be examined on oath respecting the
same. The party whose property is attached may also be required to attend for the purpose of giving
information respecting his property, and may be examined on oath. The court may, after such
examination, order personal property capable of manual delivery belonging to him, in the possession
of the person so required to attend before the court, to be delivered to the clerk of the court or sheriff
on such terms as may be just, having reference to any lien thereon or claim against the same, to
await the judgment in the action. (10a)

Section 11. When attached property may be sold after levy on attachment and before entry of
judgment. — Whenever it shall be made to appear to the court in which the action is pending, upon
hearing with notice to both parties, that the property attached is perishable, or that the interests of all
the parties to the action will be subserved by the sale thereof, the court may order such property to
be sold at public auction in such manner as it may direct, and the proceeds of such sale to be
deposited in court to abide the judgment in the action. (11a)

Section 12. Discharge of attachment upon giving counter-bond. — After a writ of attachment has
been enforced, the party whose property has been attached, or the person appearing on his behalf,
may move for the discharge of the attachment wholly or in part on the security given. The court shall,
after due notice and hearing, order the discharge of the attachment if the movant makes a cash
deposit, or files a counter-bond executed to the attaching party with the clerk of the court where the
application is made, in an amount equal to that fixed by the court in the order of attachment,
exclusive of costs. But if the attachment is sought to be discharged with respect to a particular
property, the counter-bond shall be equal to the value of that property as determined by the court. In
either case, the cash deposit or the counter-bond shall secure the payment of any judgment that the
attaching party may recover in the action. A notice of the deposit shall forthwith be served on the
attaching party. Upon the discharge of an attachment in accordance with the provisions of this
section, the property attached, or the proceeds of any sale thereof, shall be delivered to the party
making the deposit or giving the counter-bond, or to the person appearing on his behalf, the deposit
or counter-bond aforesaid standing in place of the property so released. Should such counter-bond
for any reason be found to be or become insufficient, and the party furnishing the same fail to file an
additional counter-bond, the attaching party may apply for a new order of attachment. (12a)

Section 13. Discharge of attachment on other grounds. — The party whose property has been
ordered attached may file a motion with the court in which he action is pending, before or after levy
or even after the release of the attached property, for an order to set aside or discharge the
attachment on the ground that the same was improperly or irregularly issued or enforced, or that the
bond is insufficient. If the attachment is excessive, the discharge shall be limited to the excess. If the
motion be made on affidavits on the part of the movant but not otherwise, the attaching party may
oppose the motion by counter-affidavits or other evidence in addition to that on which the attachment
was made. After due notice and hearing, the court shall order the setting aside or the corresponding
discharge of the attachment if it appears that it was improperly or irregularly issued or enforced, or
that the bond is insufficient, or that the attachment is excessive, and the defect is not cured forthwith.
(13a)

Section 14. Proceedings where property claimed by third person. — If the property attached is
claimed by any person other than the party against whom attachment had been issued or his agent,
and such person makes an affidavit of his title thereto, or right to the possession thereof, stating the
grounds of such right or title, and serves such affidavit upon the sheriff while the latter has
possession of the attached property, and a copy thereof upon the attaching party, the sheriff shall
not be bound to keep the property under attachment, unless the attaching party or his agent, on
demand of the sheriff, shall file a bond approved by the court to indemnify the third-party claimant in
a sum not less than the value of the property levied upon. In case of disagreement as to such value,
the same shall be decided by the court issuing the writ of attachment. No claim for damages for the
taking or keeping of the property may be enforced against the bond unless the action therefor is filed
within one hundred twenty (120) days from the date of the filing of the bond.

The sheriff shall not be liable for damages for the taking or keeping of such property to any such
third-party claimant, if such bond shall be filed. Nothing herein contained shall prevent such claimant
or any third person from vindicating his claim to the property, or prevent the attaching party from
claiming damages against a third-party claimant who filed a frivolous or plainly spurious claim, in the
same or a separate action.

When the writ of attachment is issued in favor of the Republic of the Philippines, or any officer duly
representing it, the filing of such bond shall not be required, and in case the sheriff is sued for
damages as a result of the attachment, he shall be represented by the Solicitor General, and if held
liable therefor, the actual damages adjudged by the court shall be paid by the National Treasurer out
of the funds to be appropriated for the purpose. (14a)

Section 15. Satisfaction of judgment out of property attached, return of sheriff. — If judgment be
recovered by the attaching party and execution issue thereon, the sheriff may cause the judgment to
be satisfied out of the property attached, if it be sufficient for that purpose in the following manner:

(a) By paying to the judgment obligee the proceeds of all sales of perishable or other
property sold in pursuance of the order of the court, or so much as shall be necessary to
satisfy the judgment;

(b) If any balance remains due, by selling so much of the property, real or personal, as may
be necessary to satisfy the balance, if enough for that purpose remain in the sheriff's hands,
or in those the clerk of the court;

(c) By collecting from all persons having in their possession credits belonging to the
judgment obligor, or owing debts to the latter at the time of the attachment of such credits or
debts, the amount of such credits and debts as determined by the court in the action, and
stated in the judgment, and paying the proceeds of such collection over to the judgment
obligee.

The sheriff shall forthwith make a return in writing to the court of his proceedings under this section
and furnish the parties with copies thereof. (15a)

Section 16. Balance due collected upon an execution; excess delivered to judgment obligor. — If
after realizing upon all the property attached, including the proceeds of any debts or credits
collected, and applying the proceeds to the satisfaction of the judgment less the expenses of
proceedings upon the judgment any balance shall remain due, the sheriff must proceed to collect
such balance as upon ordinary execution. Whenever the judgment shall have been paid, the sheriff,
upon reasonable demand, must return to the judgment obligor the attached property remaining in his
hands, and any proceeds of the sale of the property attached not applied to the judgment. (16a)

Section 17. Recovery upon the counter-bond. — When the judgment has become executory, the
surety or sureties on any counter-bond given pursuant to the provisions of this Rule to secure the
payment of the judgment shall become charged on such counter-bond and bound to pay the
judgment obligee 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. (17a)

Section 18. Disposition of money deposited. — Where the party against whom attachment had been
issued has deposited money instead of giving counter-bond, it shall be applied under the direction of
the court to the satisfaction of any judgment rendered in favor of the attaching party, and after
satisfying the judgment the balance shall be refunded to the depositor or his assignee. If the
judgment is in favor of the party against whom attachment was issued, the whole sum deposited
must be refunded to him or his assignee. (18a)

Section 19. Disposition of attached property where judgment is for party against whom attachment
was issued. — If judgment be rendered against the attaching party, all the proceeds of sales and
money collected or received by the sheriff, under the order of attachment, and all property attached
remaining in any such officer's hands, shall be delivered to the party against whom attachment was
issued, and the order of attachment discharged. (19a)

Section 20. Claim for damages on account of improper, irregular or excessive attachment. — An
application for damages on account of improper, irregular or excessive attachment must be filed
before the trial or before appeal is perfected or before the judgment becomes executory, with due
notice to the attaching party and his surety or sureties setting forth the facts showing his right to
damages and the amount thereof. Such damages may be awarded only after proper hearing and
shall be included in the judgment on the main case.

If the judgment of the appellate court be favorable to the party against whom the attachment was
issued he must claim damages sustained during the pendency of the appeal by filing an application
in the appellate court, with notice to the party in whose favor the attachment was issued or his surety
or sureties, before the judgment of the appellate court becomes executory. The appellate court may
allow the application to be heard and decided by the trial court.

Nothing herein contained shall prevent the party against whom the attachment was issued from
recovering in the same action the damages awarded to him from any property of the attaching party
not exempt from execution should the bond or deposit given by the latter be insufficient or fail to fully
satisfy the award. (20a)

1.
1. GROUND

EQUITABLE BANKING VS. SPECIAL STEEL

DEL CASTILLO, J. • DEL CASTILLO, J. • G.R. No. 175350

June 13, 2012
FIRST DIVISION G.R. No. 175350, June 13, 2012 EQUITABLE
BANKING Corporation, PETITIONER, VS. SPECIAL STEEL PRODUCTS, INC. AND
AUGUSTO L. PARDO, RESPONDENTS.

DECISION

DEL CASTILLO, J.:

A crossed check with the notation "account payee only" can only be deposited
in the named payee's account. It is gross Negligence for a bank to ignore this
rule solely on the basis of a third party's oral representations of having a good
title thereto.

Before the Court is a Petition for Review on Certiorari of the October 13, 2006
Decision of the Court of Appeals (CA) in CA-G.R. CV No. 62425. The dispositive
portion of the assailed Decision reads:

WHEREFORE, premises considered, the May 4, 1998 Decision of the Regional

Trial Court of Pasig City, Branch 168, in Civil Case No. 63561, is
hereby AFFIRMED.

SO ORDERED.[1]
Factual Antecedents

Respondent Special Steel Products, Inc. (SSPI) is a private

domestic Corporation selling steel products. Its co-respondent Augusto L. Pardo
(Pardo) is SSPI's President and majority stockholder. [2]

International Copra Export Corporation (Interco) is its regular customer. [3]

Jose Isidoro[4] Uy, alias Jolly Uy (Uy), is an Interco employee, in charge of the
purchasing department, and the son-in-law of its majority stockholder. [5]

Petitioner Equitable Banking Corporation (Equitable or bank) is a private

domestic Corporation engaged in banking[6] and is the depository bank of
Interco and of Uy.

In 1991, SSPI sold welding electrodes to Interco, as evidenced by the following

sales invoices:

Sales Invoice No. 65042 dated February 14, 1991 for P325,976.34 [7]
Sales Invoice No. 65842 dated April 11, 1991 for P345,412.80 [8]
Sales Invoice No. 65843 dated April 11, 1991 for P313,845.84 [9]
The due dates for these invoices were March 16, 1991 (for the first sales
invoice) and May 11, 1991 (for the others). The invoices provided that Interco
would pay interest at the rate of 36% per annum in case of delay.

In payment for the above welding electrodes, Interco issued three checks
payable to the order of SSPI on July 10, 1991, [10] July 16, 1991,[11] and July 29,
1991.[12] Each check was crossed with the notation "account payee only" and
was drawn against Equitable. The records do not identify the signatory for
these three checks, or explain how Uy, Interco's purchasing officer, came into
possession of these checks.
The records only disclose that Uy presented each crossed check to Equitable
on the day of its issuance and claimed that he had good title thereto. [13] He
demanded the deposit of the checks in his personal accounts in Equitable,
Account No. 18841-2 and Account No. 03474-0. [14]

Equitable acceded to Uy's demands on the assumption that Uy, as the son-in-
law of Interco's majority stockholder, [15] was acting pursuant to Interco's orders.
The bank also relied on Uy's status as a valued client. [16] Thus, Equitable
accepted the checks for deposit in Uy's personal accounts [17] and stamped "ALL
PRIOR ENDORSEMENT AND/OR LACK OF ENDORSEMENT GUARANTEED" on their
dorsal portion.[18] Uy promptly withdrew the proceeds of the checks.

In October 1991, SSPI reminded Interco of the unpaid welding electrodes,

amounting to P985,234.98. [19] It reiterated its demand on January 14, 1992.
[20]
SSPI explained its immediate need for payment as it was experiencing some
financial crisis of its own. Interco replied that it had already issued three
checks payable to SSPI and drawn against Equitable. SSPI denied receipt of
these checks.

On August 6, 1992, SSPI requested information from Equitable regarding the

three checks. The bank refused to give any information invoking the
confidentiality of deposits. [21]

The records do not disclose the circumstances surrounding Interco's and SSPI's
eventual discovery of Uy's scheme. Nevertheless, it was determined that Uy,
not SSPI, received the proceeds of the three checks that were payable to SSPI.
Thus, on June 30, 1993 (twenty-three months after the issuance of the three
checks), Interco finally paid the value of the three checks to SSPI, plus a
portion of the accrued interests. Interco refused to pay the entire accrued
interest of P767,345.64 on the ground that it was not responsible for the delay.
Thus, SSPI was unable to collect P437,040.35 (at the contracted rate of 36%
per annum) in interest income. [22]

SSPI and its president, Pardo, filed a Complaint for damages with application for
a writ of preliminary Attachment against Uy and Equitable Bank.
The Complaint alleged that the three crossed checks, all payable to the order of
SSPI and with the notation "account payee only," could be deposited and
encashed by SSPI only. However, due to Uy's fraudulent representations, and
Equitable's indispensable connivance or gross Negligence, the restrictive nature
of the checks was ignored and the checks were deposited in Uy's account. Had
the defendants not diverted the three checks in July 1991, the plaintiffs could
have used them in their business and earned money from them. Thus, the
plaintiffs prayed for an award of Actual damages consisting of the unrealized
interest income from the proceeds of the checks for the two-year period that
the defendants withheld the proceeds from them (from July 1991 up to June
1993).[23]

In his personal capacity, Pardo claimed an award of P3 million as Moral

damages from the defendants. He allegedly suffered hypertension, anxiety, and
sleepless nights for fear that the government would charge him for tax evasion
or money laundering. He maintained that defendants' actions amounted to
money laundering and that it unfairly implicated his company in the scheme.
As for his fear of tax evasion, Pardo explained that the Bureau of Internal
Revenue might notice a discrepancy between the financial reports of Interco
(which might have reported the checks as SSPI's income in 1991) and those of
SSPI (which reported the income only in 1993). Since Uy and Equitable were
responsible for Pardo's worries, they should compensate him jointly and
severally therefor.[24]

SSPI and Pardo also prayed for Exemplary damages and Attorney's Fees.[25]

In support of their application for preliminary Attachment, the plaintiffs alleged

that the defendants are guilty of Fraud in incurring the obligation upon which
the action was brought and that there is no sufficient security for the claim
sought to be enforced in this action. [26]

The trial court granted plaintiffs' application. [27] It issued the writ of
preliminary Attachment on September 20, 1993, [28] upon the filing of plaintiffs'
bond for P500,000.00. The sheriff served and implemented the writ against the
personal properties of both defendants. [29]

Upon Equitable's Motion and filing of a counter-bond, however, the trial court
eventually discharged the Attachment[30] against it.[31]

Equitable then argued for the dismissal of the Complaint for lack of Cause of
Action. It maintained that interest income is due only when it is expressly
stipulated in writing. Since Equitable and SSPI did not enter into any
contract, Equitable is not liable for damages, in the form of unobtained
interest income, to SSPI. [32] Moreover, SSPI's acceptance of Interco's payment
on the sales invoices is a waiver or extinction of SSPI's Cause of Action based
on the three checks.[33]

Equitable further argued that it is not liable to SSPI because it accepted the
three crossed checks in good faith. [34] Equitable averred that, due to Uy's close
relations with the drawer of the checks, the bank had basis to assume that the
drawer authorized Uy to countermand the original order stated in the check
(that it can only be deposited in the named payee's account). Since only Uy is
responsible for the fraudulent conversion of the checks, he should reimburse
Equitable for any amounts that it may be made liable to plaintiffs. [35]

The bank counter-claimed that SSPI is liable to it in damages for the wrongful
and malicious Attachment of Equitable's personal properties. The bank
maintained that SSPI knew that the allegation of Fraud against the bank is a
falsehood. Further, the bank is financially capable to meet the plaintiffs' claim
should the latter receive a favorable judgment. SSPI was aware that the
preliminary Attachment against the bank was unnecessary, and intended only
to humiliate or destroy the bank's reputation. [36]

Meanwhile, Uy answered that the checks were negotiated to him; that he is a

holder for value of the checks and that he has a good title thereto. [37] He did
not, however, explain how he obtained the checks, from whom he obtained his
title, and the value for which he received them. During trial, Uy did not present
any Evidence but adopted Equitable's Evidence as his own.

Ruling of the Regional Trial Court [38]

The RTC clarified that SSPI's Cause of Action against Uy and Equitable is for
quasi-delict. SSPI is not seeking to enforce payment on the undelivered checks
from the defendants, but to recover the damage that it sustained from the
wrongful non-delivery of the checks. [39]

The crossed checks belonged solely to the payee named therein, SSPI. Since
SSPI did not authorize anyone to receive payment in its behalf, Uy clearly had
no title to the checks and Equitable had no right to accept the said checks from
Uy. Equitable was negligent in permitting Uy to deposit the checks in his
account without verifying Uy's right to endorse the crossed checks. The court
reiterated that banks have the duty to scrutinize the checks deposited with it,
for a determination of their genuineness and regularity. The law holds banks to
a high standard because banks hold themselves out to the public as experts in
the field. Thus, the trial court found Equitable's explanation regarding Uy's
close relations with the drawer unacceptable. [40]

Uy's conversion of the checks and Equitable's Negligence make them liable to
compensate SSPI for the actual damage it sustained. This damage consists of
the income that SSPI failed to realize during the delay. [41] The trial court then
equated this unrealized income with the interest income that SSPI failed to
collect from Interco. Thus, it ordered Uy and Equitable to pay, jointly and
severally, the amount of P437,040.35 to SSPI as Actual damages.[42]

It also ordered the defendants to pay Exemplary damages of

P500,000.00, Attorney's Fees amounting to P200,000.00, as well as Costs of
Suit.[43]

The trial court likewise found merit in Pardo's claim for Moral damages. It found
that Pardo suffered anxiety, sleepless nights, and hypertension in fear that he
would face criminal prosecution. The trial court awarded Pardo the amount of
P3 million in Moral damages.[44]

The dispositive portion of the trial court's Decision reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiffs Special Steel

Products, Inc., and Augusto L. Pardo and against defendants Equitable
Banking Corporation [and] Jose Isidoro Uy, alias "Jolly Uy," ordering defendants
to jointly and severally pay plaintiffs the following:

1. P437,040.35 as Actual damages;

2. P3,000,000.00 as Moral damages to Augusto L. Pardo;
3. P500,000.00 as Exemplary damages;
4. P200,000.00 as Attorney's Fees; and
5. Costs of Suit.

Defendant EBC's counterclaim is hereby DISMISSED for lack of factual and

legal basis.

Likewise, the crossclaim filed by defendant EBC against defendant Jose Isidoro
Uy and the crossclaim filed by defendant Jose Isidoro Uy against defendant
EBC are hereby DISMISSED for lack of factual and legal basis.

SO ORDERED.

Pasig City, May 4, 1998. [45]

The trial court denied Equitable's Motion for reconsideration in its Order dated
November 19, 1998.[46]

Only Equitable appealed to the CA, [47] reiterating its defenses below.

Appealed Ruling of the Court of Appeals [48]

The appellate court found no merit in Equitable's appeal.

It affirmed the trial court's ruling that SSPI had a Cause of Action for quasi-delict
against Equitable.[49] The CA noted that the three checks presented by Uy to
Equitable were crossed checks, and strictly made payable to SSPI only. This
means that the checks could only be deposited in the account of the named
payee.[50] Thus, the CA found that Equitable had the responsibility of ensuring
that the crossed checks are deposited in SSPI's account only. Equitable
violated this duty when it allowed the deposit of the crossed checks in Uy's
account.[51]

The CA found factual and legal basis to affirm the trial court's award of Moral
damages in favor of Pardo.[52]

It likewise affirmed the award of Exemplary damages and Attorney's Fees in favor
of SSPI.[53]

Issues

1. Whether SSPI has a Cause of Action against Equitable for quasi-delict;

2. Whether SSPI can recover, as Actual damages, the stipulated 36% per annum
interest from Equitable;

3. Whether speculative fears and imagined scenarios, which cause sleepless

nights, may be the basis for the award of Moral damages; and

4. Whether the Attachment of Equitable's personal properties was wrongful.

Our Ruling

SSPI's Cause of Action

This case involves a Complaint for damages based on quasi-delict. SSPI asserts
that it did not receive prompt payment from Interco in July 1991 because of
Uy's wilful and illegal conversion of the checks payable to SSPI, and of
Equitable's gross Negligence, which facilitated Uy's actions. The combined
actions of the defendants deprived SSPI of interest income on the said moneys
from July 1991 until June 1993. Thus, SSPI claims damages in the form of
interest income for the said period from the parties who wilfully or negligently
withheld its money from it.

Equitable argues that SSPI cannot assert a right against the bank based on the
undelivered checks.[54] It cites provisions from the Negotiable Instruments Law
and the case of Development Bank of Rizal v. Sima Wei [55] to argue that a
payee, who did not receive the check, cannot require the drawee bank to pay it
the sum stated on the checks.

Equitable's argument is misplaced and beside the point. SSPI's Cause of

Action is not based on the three checks. SSPI does not ask Equitable or Uy to
deliver to it the proceeds of the checks as the rightful payee. SSPI does not
assert a right based on the undelivered checks or for breach of contract.
Instead, it asserts a Cause of Action based on quasi-delict. A quasi-delict is an
act or omission, there being fault or Negligence, which causes damage to
another. Quasi-delicts exist even without a contractual relation between the
parties. The courts below correctly ruled that SSPI has a Cause of Action for
quasi-delict against Equitable.

The checks that Interco issued in favor of SSPI were all crossed, made payable
to SSPI's order, and contained the notation "account payee only." This creates
a reasonable expectation that the payee alone would receive the proceeds of
the checks and that diversion of the checks would be averted. This expectation
arises from the accepted banking practice that crossed checks are intended for
deposit in the named payee's account only and no other. [56] At the very least,
the nature of crossed checks should place a bank on notice that it should
exercise more caution or expend more than a cursory inquiry, to ascertain
whether the payee on the check has authorized the holder to deposit the same
in a different account. It is well to remember that "[t]he banking system has
become an indispensable institution in the modern world and plays a vital role
in the economic life of every civilized society. Whether as mere passive entities
for the safe-keeping and saving of money or as active instruments of business
and commerce, banks have attained an [sic] ubiquitous presence among the
people, who have come to regard them with respect and even gratitude and,
above all, Trust and confidence. In this connection, it is important that banks
should guard against injury attributable to Negligence or bad faith on its part.
As repeatedly emphasized, since the banking business is impressed with public
interest, the Trust and confidence of the public in it is of paramount
importance. Consequently, the highest degree of diligence is expected, and
high standards of integrity and performance are required of it." [57]

Equitable did not observe the required degree of diligence expected of a

banking institution under the existing factual circumstances.

The fact that a person, other than the named payee of the crossed check, was
presenting it for deposit should have put the bank on guard. It should
have verified if the payee (SSPI) authorized the holder (Uy) to present the
same in its behalf, or indorsed it to him. Considering however, that the named
payee does not have an account with Equitable (hence, the latter has no
specimen signature of SSPI by which to judge the genuineness of its
indorsement to Uy), the bank knowingly assumed the risk of relying solely on
Uy's word that he had a good title to the three checks. Such misplaced reliance
on empty words is tantamount to gross Negligence, which is the "absence of or
failure to exercise even slight care or diligence, or the entire absence of care,
evincing a thoughtless disregard of consequences without exerting any effort
to avoid them."[58]

Equitable contends that its knowledge that Uy is the son-in-law of the majority
stockholder of the drawer, Interco, made it safe to assume that the drawer
authorized Uy to countermand the order appearing on the check. In other
words, Equitable theorizes that Interco reconsidered its original order and
decided to give the proceeds of the checks to Uy. [59] That the bank arrived at
this conclusion without anything on the face of the checks to support it is
demonstrative of its lack of caution. It is troubling that Equitable proceeded
with the transaction based only on its knowledge that Uy had close relations
with Interco. The bank did not even make inquiries with the drawer, Interco
(whom the bank considered a "valued client"), to verify Uy's representation.
The banking system is placed in peril when bankers act out of blind faith and
empty promises, without requiring proof of the assertions and without making
the appropriate inquiries. Had it only exercised due diligence, Equitable could
have saved both Interco and the named payee, SSPI, from the trouble that the
bank's mislaid Trust wrought for them.

Equitable's pretension that there is nothing under the circumstances that

rendered Uy's title to the checks questionable is outrageous. These are crossed
checks, whose manner of discharge, in banking practice, is restrictive and
specific. Uy's name does not appear anywhere on the crossed checks.
Equitable, not knowing the named payee on the check, had no way of verifying
for itself the alleged genuineness of the indorsement to Uy. The checks bear
nothing on their face that supports the belief that the drawer gave the checks
to Uy. Uy's relationship to Interco's majority stockholder will not justify
disregarding what is clearly ordered on the checks.

Actual damages

For its role in the conversion of the checks, which deprived SSPI of the use
thereof, Equitable is solidarily liable with Uy to compensate SSPI for the
damages it suffered.

Among the compensable damages are Actual damages, which encompass the
value of the loss sustained by the plaintiff, and the profits that the plaintiff
failed to obtain.[60] Interest payments, which SSPI claims, fall under the second
category of Actual damages.

SSPI computed its claim for interest payments based on the interest rate
stipulated in its contract with Interco. It explained that the stipulated interest
rate is the actual interest income it had failed to obtain from Interco due to the
defendants' tortious conduct.

The Court finds the application of the stipulated interest rate erroneous.

SSPI did not recover interest payments at the stipulated rate from Interco
because it agreed that the delay was not Interco's fault, but that of the
defendants'. If that is the case, then Interco is not in delay (at least not after
issuance of the checks) and the stipulated interest payments in their contract
did not become operational. If Interco is not liable to pay for the 36% per
annum interest rate, then SSPI did not lose that income. SSPI cannot lose
something that it was not entitled to in the first place. Thus, SSPI's claim that it
was entitled to interest income at the rate stipulated in its contract with
Interco, as a measure of its actual damage, is fallacious.

More importantly, the provisions of a contract generally take effect only among
the parties, their assigns and heirs. [61] SSPI cannot invoke the contractual
stipulation on interest payments against Equitable because it is neither a party
to the contract, nor an assignee or an heir to the contracting parties.

Nevertheless, it is clear that defendants' actions deprived SSPI of the present

use of its money for a period of two years. SSPI is therefore entitled to obtain
from the tortfeasors the profits that it failed to obtain from July 1991 to June
1993. SSPI should recover interest at the legal rate of 6% per annum, [62] this
being an award for damages based on quasi-delict and not for a loan or
forbearance of money.

Moral damages
Both the trial and appellate courts awarded Pardo P3 million in Moral damages.
Pardo claimed that he was frightened, anguished, and seriously anxious that
the government would prosecute him for money laundering and tax evasion
because of defendants' actions. [63] In other words, he was worried about the
repercussions that defendants' actions would have on him.

Equitable argues that Pardo's fears are all imagined and should not be
compensated. The bank points out that none of Pardo's fears panned out. [64]

Moral damages are recoverable only when they are the proximate result of the
defendant's wrongful act or omission. [65] Both the trial and appellate courts
found that Pardo indeed suffered as a result of the diversion of the three
checks. It does not matter that the things he was worried and anxious about
did not eventually materialize. It is rare for a person, who is beset with
mounting problems, to sift through his emotions and distinguish which fears or
anxieties he should or should not bother with. So long as the injured party's
moral sufferings are the result of the defendants' actions, he may
recover Moral damages.

The Court, however, finds the award of P3 million excessive. Moral damages are
given not to punish the defendant but only to give the plaintiff the means to
assuage his sufferings with diversions and recreation. [66] We find that the award
of P50,000.00[67] as Moral damages is reasonable under the circumstances.

Equitable to recover amounts from Uy

Equitable then insists on the allowance of their cross-claim against Uy. The
bank argues that it was Uy who was enriched by the entire scheme and should
reimburse Equitable for whatever amounts the Court might order it to pay in
damages to SSPI.[68]

Equitable is correct. There is unjust enrichment when (1) a person is unjustly

benefited, and (2) such benefit is derived at the expense of or with damages to
another.[69] In the instant case, the fraudulent scheme concocted by Uy allowed
him to improperly receive the proceeds of the three crossed checks and enjoy
the profits from these proceeds during the entire time that it was withheld
from SSPI. Equitable, through its gross Negligence and mislaid Trust on Uy,
became an unwitting instrument in Uy's scheme. Equitable's fault renders it
solidarily liable with Uy, insofar as respondents are concerned. Nevertheless,
as between Equitable and Uy, Equitable should be allowed to recover from Uy
whatever amounts Equitable may be made to pay under the judgment. It is
clear that Equitable did not profit in Uy's scheme. Disallowing Equitable's
cross-claim against Uy is tantamount to allowing Uy to unjustly enrich himself
at the expense of Equitable. For this reason, the Court allows Equitable's cross-
claim against Uy.

Preliminary Attachment
Equitable next assails as error the trial court's dismissal of its counter-claim for
wrongful preliminary Attachment. It maintains that, contrary to SSPI's allegation
in its application for the writ, there is no showing whatsoever that Equitable
was guilty of Fraud in allowing Uy to deposit the checks. Thus, the trial court
should not have issued the writ of preliminary Attachment in favor of SSPI. The
wrongful Attachment compelled Equitable to incur expenses for a counter-bond,
amounting to P30,204.26, and caused it to sustain damage, amounting to P5
million, to its goodwill and business credit. [70]

SSPI submitted the following Affidavit in support of its application for a writ of
preliminary Attachment:

I, Augusto L. Pardo, of legal age, under oath hereby depose and declare:

1. I am one of the plaintiffs in the above-entitled case; the other plaintiff is our
family Corporation, Special Steel Products, Inc., of which I am the president and
majority stockholder; I caused the preparation of the foregoing Complaint, the
allegations of which I have read, and which I hereby affirm to be true and
correct out of my own Personal Knowledge;

2. The Corporation and I have a sufficient Cause of Action against defendants

Isidoro Uy alias Jolly Uy and Equitable Banking Corporation, who are guilty
of Fraud in incurring the obligation upon which this action is brought, as
particularly alleged in the Complaint, which allegations I hereby adopt and
reproduce herein;

3. There is no sufficient security for our claim in this action and that the
amount due us is as much as the sum for which the order is granted above all
legal counterclaims;

4. We are ready and able to put up a bond executed to the defendants in an

amount to be fixed by the Court[,] conditioned on the payment of all costs[,]
which may be adjudged to defendants[,] and all damages[,] which they may
sustain by reason of the Attachment of the court, should [the court] finally
adjudge that we are not entitled thereto. [71]

The Complaint (to which the supporting Affidavit refers) cites the following
factual circumstances to justify SSPI's application:

6. x x x Yet, notwithstanding the fact that SPECIAL STEEL did not open an
account with EQUITABLE BANK as already alleged, thru its connivance with
defendant UY in his fraudulent scheme to defraud SPECIAL STEEL, or at least
thru its gross Negligence EQUITABLE BANK consented to or allowed the opening
of Account No. 18841-2 at its head office and Account No. 03474-0 at its
Ermita Branch in the name of SPECIAL STEEL without the latter's knowledge,
let alone authority or consent, but obviously on the bases of spurious or
falsified documents submitted by UY or under his authority, which
documents EQUITABLE BANK did not bother to verify or check their
authenticity with SPECIAL STEEL. [72]

xxxx

9. On August 6, 1992, plaintiffs, thru counsel, wrote EQUITABLE BANK about

the fraudulent transactions involving the aforesaid checks, which could not
have been perpetrated without its indispensable participation and cooperation,
or gross Negligence, and therein solicited its cooperation in securing
information as to the anomalous and irregular opening of the false accounts
maintained in SPECIAL STEEL's name, but EQUITABLE BANK malevolently
shirking from its responsibility to prevent the further perpetration of Fraud,
conveniently, albeit unjustifiably, invoked the confidentiality of the deposits
and refused to give any information, and accordingly denied SPECIAL STEEL's
valid request, thereby knowingly shielding the identity of the ma[le]factors
involved [in] the unlawful and fraudulent transactions. [73]

The above Affidavit and the allegations of the Complaint are bereft of specific
and definite allegations of Fraud against Equitable that would justify
the Attachment of its properties. In fact, SSPI admits its uncertainty whether
Equitable's participation in the transactions involved Fraud or was a result of
its Negligence. Despite such uncertainty with respect to Equitable's
participation, SSPI applied for and obtained a preliminary Attachment of
Equitable's properties on the ground of Fraud. We believe that such
preliminary Attachment was wrongful. "[A] writ of preliminary Attachment is too
harsh a provisional remedy to be issued based on mere abstractions of Fraud.
Rather, the rules require that for the writ to issue, there must be a recitation
of clear and concrete factual circumstances manifesting that the debtor
practiced Fraud upon the creditor at the time of the Execution of their
agreement in that said debtor had a preconceived plan or intention not to pay
the creditor."[74] No proof was adduced tending to show that Equitable had a
preconceived plan not to pay SSPI or had knowingly participated in Uy's
scheme.

That the plaintiffs eventually obtained a judgment in their favor does not
detract from the wrongfulness of the preliminary Attachment. While
"the Evidence warrants [a] judgment in favor of [the] applicant, the proofs may
nevertheless also establish that said applicant's proffered ground
for Attachment was inexistent or specious, and hence, the writ should not have
issued at all x x x."[75]

For such wrongful preliminary Attachment, plaintiffs may be held liable for
damages. However, Equitable is entitled only to such damages as
its Evidence would allow,[76] for the wrongfulness of an Attachment does not
automatically warrant the award of damages. The debtor still has the burden of
proving the nature and extent of the injury that it suffered by reason of the
wrongful Attachment.[77]

The Court has gone over the records and found that Equitable has duly proved
its claim for, and is entitled to recover, Actual damages. In order to lift the
wrongful Attachment of Equitable's properties, the bank was compelled to pay
the total amount of P30,204.26 in premiums for a counter-bond. [78] However,
Equitable failed to prove that it sustained damage to its "goodwill and business
credit" in consequence of the alleged wrongful Attachment. There was no proof
of Equitable's contention that respondents' actions caused it public
embarrassment and a bank run.

WHEREFORE, premises considered, the Petition is PARTIALLY

GRANTED. The assailed October 13, 2006 Decision of the Court of Appeals in
CA-G.R. CV No. 62425 is MODIFIED by:

1. REDUCING the award of Actual damages to respondents to the rate of 6%

per annum of the value of the three checks from July 1991 to June 1993 or a
period of twenty-three months;

2. REDUCING the award of Moral damages in favor of Augusto L. Pardo from

P3,000,000.00 to P 50,000.00; and

3. REVERSING the dismissal of Equitable Banking Corporation's cross-claim

against Jose Isidoro Uy, alias Jolly Uy. Jolly Uy is
hereby ORDERED to REIMBURSE Equitable Banking Corporation the amounts
that the latter will pay to respondents.

Additionally, the Court hereby REVERSES the dismissal of Equitable

Banking Corporation's counterclaim for damages against Special Steel Products,
Inc. This Court ORDERS Special Steel Products, Inc. to PAY Equitable
Banking Corporation Actual damages in the total amount of P30,204.36, for
the wrongful preliminary Attachment of its properties.

The rest of the assailed Decision is AFFIRMED.

SO ORDERED.
EQUITABLE BANKING VS. SPECIAL STEEL

Ponente: DEL CASTILLO, J.

Decision Date: June 13, 2012
GR Number: G.R. No. 175350
Written By Digest Team (Sept 2024) 2 weeks ago

Summary:
This case involves a complaint for damages filed by Special Steel Products, Inc.
(SSPI) and its president Augusto L. Pardo against Equitable Banking
Corporation (Equitable) and Jose Isidoro Uy. SSPI alleged that Equitable,
through gross negligence or connivance with Uy, allowed Uy to deposit three
crossed checks payable to SSPI into his personal accounts. This deprived SSPI
of the use of the funds for two years. The Supreme Court ruled that Equitable
was grossly negligent in accepting the crossed checks for deposit in Uy's
accounts without proper verification, making it liable for damages to SSPI.
However, the Court modified some of the lower courts' rulings on the damages
awarded.

Doctrine:

"A crossed check with the notation 'account payee only' can only be deposited
in the named payee's account. It is gross negligence for a bank to ignore this
rule solely on the basis of a third party's oral representations of having a good
title thereto."

"The banking system has become an indispensable institution in the modern

world and plays a vital role in the economic life of every civilized society.
Whether as mere passive entities for the safe-keeping and saving of money or
as active instruments of business and commerce, banks have attained an [sic]
ubiquitous presence among the people, who have come to regard them with
respect and even gratitude and, above all, trust and confidence. In this
connection, it is important that banks should guard against injury attributable
to negligence or bad faith on its part. As repeatedly emphasized, since the
banking business is impressed with public interest, the trust and confidence of
the public in it is of paramount importance. Consequently, the highest degree
of diligence is expected, and high standards of integrity and performance are
required of it."

Facts:

• SSPI sold welding electrodes to International Copra Export Corporation

(Interco) in 1991.
• Interco issued three crossed checks payable to SSPI as payment, drawn
against Equitable Bank.
• Jose Isidoro Uy, an Interco employee, presented the checks to Equitable for
deposit in his personal accounts.
• Equitable allowed the deposit of the checks in Uy's accounts without
verifying his authority.
• SSPI did not receive the checks or their proceeds.
• In June 1993, Interco finally paid SSPI the value of the checks plus partial
interest.
• SSPI filed a complaint for damages against Uy and Equitable for the
unrealized interest income during the two-year delay.

Petitioner’s/Plaintiff’s Arguments:
• SSPI has no cause of action against Equitable based on the undelivered
checks.
• The stipulated interest rate in SSPI's contract with Interco cannot be applied
against Equitable.
• Pardo's fears of prosecution were imagined and should not be compensated.
• The preliminary attachment of Equitable's properties was wrongful and
caused damage to its reputation.

Respondent’s/Defendant’s Arguments:

• Equitable was grossly negligent in allowing the deposit of crossed checks into
Uy's account without proper verification.
• SSPI is entitled to recover the interest income it lost due to the delay caused
by Equitable's negligence.
• Pardo suffered moral damages as a result of the defendants' actions.
• The preliminary attachment was justified based on the allegations of fraud in
the complaint.

Issues and Ruling:

Whether or not SSPI has a cause of action against Equitable for quasi-
delict
YES. The Court ruled that SSPI has a valid cause of action for quasi-delict
against Equitable. The bank's gross negligence in allowing the deposit of
crossed checks into Uy's account without proper verification caused damage to
SSPI by depriving it of the use of the funds for two years. The Court
emphasized that banks are held to a high standard of diligence due to the
nature of their business, and Equitable failed to meet this standard.

Whether or not SSPI can recover, as actual damages, the stipulated

36% per annum interest from Equitable
NO. The Court found the application of the stipulated interest rate erroneous.
Since Interco was not at fault for the delay, the stipulated interest in their
contract with SSPI did not become operational. The Court ruled that SSPI
should instead recover interest at the legal rate of 6% per annum as damages
for the quasi-delict.

Whether or not speculative fears and imagined scenarios, which cause

sleepless nights, may be the basis for the award of moral damages
YES. The Court affirmed that moral damages are recoverable when they are
the proximate result of the defendant's wrongful act or omission. While Pardo's
fears of prosecution for money laundering and tax evasion did not materialize,
the Court found that his anxiety and suffering were still a result of the
defendants' actions. However, the Court reduced the award from P3 million to
P50,000, deeming the original amount excessive.

Whether or not the attachment of Equitable's personal properties was

wrongful
YES. The Court found that the preliminary attachment of Equitable's properties
was wrongful. SSPI's application for the writ lacked specific and definite
allegations of fraud against Equitable, and SSPI admitted uncertainty about
whether Equitable's involvement was due to fraud or negligence. The Court
ruled that Equitable is entitled to recover actual damages for the wrongful
attachment, specifically the amount paid for the counter-bond premium.

Dispositive:

WHEREFORE, premises considered, the Petition is PARTIALLY GRANTED. The

assailed October 13, 2006 Decision of the Court of Appeals in CA-G.R. CV No.
62425 is MODIFIED by:

1. REDUCING the award of actual damages to respondents to the rate of 6%

per annum of the value of the three checks from July 1991 to June 1993 or a
period of twenty-three months;

2. REDUCING the award of moral damages in favor of Augusto L. Pardo from

P3,000,000.00 to P 50,000.00; and

3. REVERSING the dismissal of Equitable Banking Corporation's cross-claim

against Jose Isidoro Uy, alias Jolly Uy. Jolly Uy is hereby ORDERED to
REIMBURSE Equitable Banking Corporation the amounts that the latter will pay
to respondents.

Additionally, the Court hereby REVERSES the dismissal of Equitable Banking

Corporation's counterclaim for damages against Special Steel Products, Inc.
This Court ORDERS Special Steel Products, Inc. to PAY Equitable Banking
Corporation actual damages in the total amount of P30,204.36, for the
wrongful preliminary attachment of its properties.

The rest of the assailed Decision is AFFIRMED.

Other Notes:

6. Discharge of Attachment
G.R. NO. 92813
G