What should plaintiff do so that judgment be made against defendant?

1. Plaintiff files a motion to declare defendant Samaco in default.

2. Court hears motion and issues an order of default on Samaco.

1
http://sc.judiciary.gov.ph/jurisprudence/2007/july2007/144568.htm

FIRST DIVISION

GUILLERMA S. SABLAS, G.R. No. 144568

joined by her husband,
PASCUAL LUMANAS,
Petitioners, Present:

PUNO, C.J., Chairperson,

SANDOVAL-GUTIERREZ,*
-versus- CORONA,
AZCUNA and
GARCIA, JJ.

ESTERLITA S. SABLAS and

RODULFO S. SABLAS,
Respondents. Promulgated:

July 3, 2007

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

DECISION
CORONA, J.:

This case traces its roots to a complaint for judicial partition, inventory and
accounting filed by respondents Esterlita S. Sablas and Rodulfo S. Sablas against
petitioner spouses Pascual Lumanas and Guillerma S. Sablas in the Regional Trial
Court of Baybay, Leyte, Branch 141 on October 1, 1999.2

Petitioner spouses were served with summons and a copy of the complaint on
October 6, 1999. On October 21, 1999, they filed a motion for extension of time
requesting an additional period of 15 days, or until November 5, 1999, to file their
answer. However, they were able to file it only on November 8, 1999. While the trial

*
On Leave.
1
Presided by Judge Cristina T. Pontejos.
2
The case was docketed as Civil Case No. B-1999-10-24.

2
court observed that the answer was filed out of time, it admitted the pleading because
no motion to declare petitioner spouses in default was filed.3

The following day, November 9, 1999, respondents filed a motion to declare

petitioner spouses in default.4 It was denied by the trial court in an order dated
December 6, 1999.5 Respondents moved for reconsideration but it was also denied.6
Thereafter, they challenged the December 6, 1999 order in the Court of Appeals in
a petition for certiorari7 alleging that the admission of the answer by the trial court
was contrary to the rules of procedure and constituted grave abuse of discretion
amounting to lack of jurisdiction.

In a decision dated July 17, 2000,8 the appellate court ruled that the trial court
committed grave abuse of discretion because, pursuant to Section 3, Rule 9 of the
Rules of Court, the trial court had no recourse but to declare petitioner spouses in
default when they failed to file their answer on or before November 5, 1999. Thus,
the Court of Appeals granted the petition, vacated the December 6, 1999 order and
remanded the case to the trial court for reception of plaintiffs evidence.

Aggrieved, petitioner spouses (defendants in the trial court) now assail the
July 17, 2000 decision of the Court of Appeals in this petition for review on
certiorari.9

Petitioner spouses contend that the Court of Appeals decision was not in
accord with the rules of procedure as it misconstrued Section 3, Rule 9 of the Rules
of Court and was in contravention of jurisprudence.

We agree.

3
Order dated November 9, 1999. Rollo, p. 52.
4
The answer was served on respondents counsel by registered mail and respondents alleged that they were
unaware that petitioner spouses already answered the complaint.
5
Rollo, p. 24.
6
Resolution dated January 11, 2000. Id., pp. 25-26.
7
Under Rule 65 of the Rules of Court. The case was docketed as CA-G.R. SP No. 57397.
8
Penned by Associate Justice Andres B. Reyes, Jr. and concurred in by Associate Justices Quirino D. Abad-
Santos, Jr. (retired) and Romeo A. Brawner (retired) of the Third Division of the Court of Appeals. Rollo,
pp. 63-67.
9
Under Rule 45 of the Rules of Court.

3
WHERE THERE IS NO MOTION, THERE
CAN BE NO DECLARATION OF DEFAULT

The elements of a valid declaration of default are:

1. the court has validly acquired jurisdiction over the person of the
defending party either by service of summons or voluntary
appearance;10
2. the defending party failed to file the answer within the time allowed
therefor and
3. a motion to declare the defending party in default has been filed by the
claiming party with notice to the defending party.

An order of default can be made only upon motion of the claiming party. 11 It
can be properly issued against the defending party who failed to file the answer
within the prescribed period only if the claiming party files a motion to that effect
with notice to the defending party.

In this connection, Section 3, Rule 9 of the Rules of Court provides:

SEC. 3. Default: Declaration of. If the defending party fails to
answer within the time allowed therefor, the court shall, upon motion
of the claiming party with notice to the defending party, and proof of
such failure, declare the defending party in default. x x x. (emphasis
supplied)

Three requirements must be complied with before the court can declare the
defending party in default: (1) the claiming party must file a motion asking the court
to declare the defending party in default; (2) the defending party must be notified of
the motion to declare him in default and (3) the claiming party must prove that the
defending party has failed to answer within the period provided by the Rules of
Court.12

The rule on default requires the filing of a motion and notice of such motion
to the defending party. It is not enough that the defendant fails to answer the
complaint within the reglementary period.13 The trial court cannot motu proprio
declare a defendant in default14 as the rules leave it up to the claiming party to protect
10
Laus v. Court of Appeals, G.R. No. 101256, 08 March 1993, 219 SCRA 688.
11
Mediserv, Inc. v. China Banking Corporation, G.R. No. 140755, 17 April 2001, 356 SCRA 616.
12
De los Santos v. Carpio, G.R. No. 153696, 11 September 2006, 501 SCRA 390 .
13
Id.
14
Viacrusis v. Estenzo, 115 Phil. 556 (1962); Trajano v. Cruz, G.R. No. L-47070, 29 December 1977, 80 SCRA
712.

4
his or its interests. The trial court should not under any circumstances act as counsel
of the claiming party.

WHERE THERE IS NO
DECLARATION OF DEFAULT,
ANSWER MAY BE ADMITTED EVEN
IF FILED OUT OF TIME

It is within the sound discretion of the trial court to permit the defendant to
file his answer and to be heard on the merits even after the reglementary period for
filing the answer expires.15 The Rules of Court provides for discretion on the part of
the trial court not only to extend the time for filing an answer but also to allow an
answer to be filed after the reglementary period.16

Thus, the appellate court erred when it ruled that the trial court had no recourse
but to declare petitioner spouses in default when they failed to file their answer on
or before November 5, 1999.

The rule is that the defendants answer should be admitted where it is filed
before a declaration of default and no prejudice is caused to the plaintiff.17 Where
the answer is filed beyond the reglementary period but before the defendant is
declared in default and there is no showing that defendant intends to delay the case,
the answer should be admitted.18

Therefore, the trial court correctly admitted the answer of petitioner spouses
even if it was filed out of time because, at the time of its filing, they were not yet
declared in default nor was a motion to declare them in default ever filed. Neither
was there a showing that petitioner spouses intended to delay the case.
15
De Dios v. Court of Appeals, G.R. No. 80491, 12 August 1992, 212 SCRA 519.
16
Regalado, Florenz, REMEDIAL LAW COMPENDIUM, vol. I, 6 th Revised edition; Section 11, Rule 11,
Rules of Court provides:
Sec. 11. Extension of time to plead. Upon motion and on such terms as may be just, the
court may extend the time to plead provided in these Rules.

The court may also, upon like terms, allow an answer or other pleading to be filed after the time
fixed by these Rules.
17
Trajano v. Cruz, supra.
18
Cathay Pacific Airways, Ltd. v. Hon. Romillo, Jr., 225 Phil. 397 (1986).

5
WHERE ANSWER HAS BEEN FILED,
THERE CAN BE NO DECLARATION
OF DEFAULT ANYMORE

Since the trial court already admitted the answer, it was correct in denying the
subsequent motion of respondents to declare petitioner spouses in default.

In Cathay Pacific Airways, Ltd. v. Hon. Romillo, Jr.,19 the Court ruled that it
was error to declare the defending party in default after the answer was filed. The
Court was in fact even more emphatic in Indiana Aerospace University v.
Commission on Higher Education:20 it was grave abuse of discretion to declare a
defending party in default despite the latters filing of an answer.

The policy of the law is to have every litigants case tried on the merits as much
as possible. Hence, judgments by default are frowned upon.21 A case is best decided
when all contending parties are able to ventilate their respective claims, present their
arguments and adduce evidence in support thereof. The parties are thus given the
chance to be heard fully and the demands of due process are subserved. Moreover,
it is only amidst such an atmosphere that accurate factual findings and correct legal
conclusions can be reached by the courts.

Accordingly, the petition is hereby GRANTED. The July 17, 2000 decision
of the Court of Appeals in CA-G.R. SP No. 57397 is REVERSED and SET ASIDE
and the December 6, 1999 order of the Regional Trial Court of Baybay, Leyte,
Branch 14 is REINSTATED. The case is REMANDED to the trial court for further
proceedings.

SO ORDERED.

RENATO C. CORONA
Associate Justice

19
Id.
20
G.R. No. 139371, 04 April 2001, 356 SCRA 367.
21
Cathay Pacific Airways, Ltd. v. Romillo, Jr., supra.

6
WE CONCUR:

REYNATO S. PUNO
Chief Justice
Chairperson

(On Leave)

ANGELINA SANDOVAL-GUTIERREZ ADOLFO S. AZCUNA

Associate Justice Associate Justice

CANCIO C. GARCIA
Associate Justice

CERTIFICATION

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

REYNATO S. PUNO
Chief Justice

7
http://sc.judiciary.gov.ph/jurisprudence/2008/september2008/170943.htm

FIRST DIVISION

PEDRO T. SANTOS, JR., G.R. No. 170943

Petitioner,
Present:

PUNO, C.J., Chairperson,

CARPIO,
-versus- CORONA,
AZCUNA and
LEONARDO-DE CASTRO, JJ.

PNOC EXPLORATION
CORPORATION,
Respondent. Promulgated:

September 23, 2008

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

DECISION
CORONA, J.:

8
 This is a petition for review22 of the September 22, 2005 decision23 and
December 29, 2005 resolution24 of the Court of Appeals in CA-G.R. SP No. 82482.

On December 23, 2002, respondent PNOC Exploration Corporation filed a

complaint for a sum of money against petitioner Pedro T. Santos, Jr. in the Regional
Trial Court of Pasig City, Branch 167. The complaint, docketed as Civil Case No.
69262, sought to collect the amount of P698,502.10 representing petitioners unpaid
balance of the car loan25 advanced to him by respondent when he was still a member
of its board of directors.

Personal service of summons to petitioner failed because he could not be

located in his last known address despite earnest efforts to do so. Subsequently, on
respondents motion, the trial court allowed service of summons by publication.

Respondent caused the publication of the summons in Remate, a newspaper

of general circulation in the Philippines, on May 20, 2003. Thereafter, respondent
submitted the affidavit of publication of the advertising manager of Remate26 and an
affidavit of service of respondents employee27 to the effect that he sent a copy of the
summons by registered mail to petitioners last known address.

When petitioner failed to file his answer within the prescribed period,
respondent moved that the case be set for the reception of its evidence ex parte. The
trial court granted the motion in an order dated September 11, 2003.

22
Under Rule 45 of the Rules of Court.
23
Penned by Associate Justice Santiago Javier Ranada (retired) and concurred by Associate Justices Roberto
A. Barrios (deceased) and Mario L. Guaria III of the Eighth Division of the Court of Appeals. Rollo, pp. 20-
25.
24
Id., p. 27.
25
The car loan was originally for P966,000 which was used to procure a Honda CRV for petitioner. The said
loan was evidenced by a promissory note and further secured by a chattel mortgage on the vehicle. One of
the conditions of the promissory note was that, in case of separation from the service, any unpaid balance
shall immediately be paid in full. (See May 19, 2004 Regional Trial Court decision, rollo, pp. 82-83.)
26
Allan Paul A. Plaza.
27
Vincent Panganiban.

9
 Respondent proceeded with the ex parte presentation and formal offer of its
evidence. Thereafter, the case was deemed submitted for decision on October 15,
2003.

On October 28, 2003, petitioner filed an Omnibus Motion for Reconsideration

and to Admit Attached Answer. He sought reconsideration of the September 11,
2003 order, alleging that the affidavit of service submitted by respondent failed to
comply with Section 19, Rule 14 of the Rules of Court as it was not executed by the
clerk of court. He also claimed that he was denied due process as he was not notified
of the September 11, 2003 order. He prayed that respondents evidence ex parte be
stricken off the records and that his answer be admitted.

Respondent naturally opposed the motion. It insisted that it complied with the
rules on service by publication. Moreover, pursuant to the September 11, 2003 order,
petitioner was already deemed in default for failure to file an answer within the
prescribed period.

In an order dated February 6, 2004, the trial court denied petitioners motion
for reconsideration of the September 11, 2003 order. It held that the rules did not
require the affidavit of complementary service by registered mail to be executed by
the clerk of court. It also ruled that due process was observed as a copy of the
September 11, 2003 order was actually mailed to petitioner at his last known address.
It also denied the motion to admit petitioners answer because the same was filed way
beyond the reglementary period.

Aggrieved, petitioner assailed the September 11, 2003 and February 6, 2004
orders of the trial court in the Court of Appeals via a petition for certiorari. He
contended that the orders were issued with grave abuse of discretion. He imputed
the following errors to the trial court: taking cognizance of the case despite lack of
jurisdiction due to improper service of summons; failing to furnish him with copies
of its orders and processes, particularly the September 11, 2003 order, and upholding
technicality over equity and justice.

10
 During the pendency of the petition in the Court of Appeals, the trial court
rendered its decision in Civil Case No. 69262. It ordered petitioner to pay
P698,502.10 plus legal interest and costs of suit.28

Meanwhile, on September 22, 2005, the Court of Appeals rendered its

decision29 sustaining the September 11, 2003 and February 6, 2004 orders of the trial
court and dismissing the petition. It denied reconsideration.30 Thus, this petition.

Petitioner essentially reiterates the grounds he raised in the Court of Appeals,

namely, lack of jurisdiction over his person due to improper service of summons,
failure of the trial court to furnish him with copies of its orders and processes
including the September 11, 2003 order and preference for technicality rather than
justice and equity. In particular, he claims that the rule on service by publication
under Section 14, Rule 14 of the Rules of Court applies only to actions in rem, not
actions in personam like a complaint for a sum of money. He also contends that the
affidavit of service of a copy of the summons should have been prepared by the clerk
of court, not respondents messenger.

The petition lacks merit.

PROPRIETYOF
SERVICE BY PUBLICATION

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

SEC. 14. Service upon defendant whose identity or whereabouts

are unknown. In any action where the defendant is designated as an
28
See May 19, 2004 Regional Trial Court decision, rollo, pp. 82-83. Petitioners motion for reconsideration of
the said decision remains pending.
29
Supra note 2.
30
Supra note 3.

11
 unknown owner, or the like, or whenever his whereabouts are
unknown and cannot be ascertained by diligent inquiry, service
may, by leave of court, be effected upon him by publication in a
newspaper of general circulation and in such places and for such
times as the court may order. (emphasis supplied)

Since petitioner could not be personally served with summons despite diligent
efforts to locate his whereabouts, respondent sought and was granted leave of court
to effect service of summons upon him by publication in a newspaper of general
circulation. Thus, petitioner was properly served with summons by publication.

Petitioner invokes the distinction between an action in rem and an action in

personam and claims that substituted service may be availed of only in an action in
rem. Petitioner is wrong. The in rem/in personam distinction was significant under
the old rule because it was silent as to the kind of action to which the rule was
applicable.31 Because of this silence, the Court limited the application of the old rule
to in rem actions only.32

This has been changed. The present rule expressly states that it applies [i]n
any action where the defendant is designated as an unknown owner, or the like, or
whenever his whereabouts are unknown and cannot be ascertained by diligent
inquiry. Thus, it now applies to any action, whether in personam, in rem or quasi in
rem.33

Regarding the matter of the affidavit of service, the relevant portion of Section
34
19, Rule 14 of the Rules of Court simply speaks of the following:

31
The predecessor of this provision was Section 16, Rule 14 of the 1964 Rules of Procedure which provided:
SEC. 16. Service upon an unknown defendant. Whenever the defendant is designated as
an unknown owner, or the like, or whenever the address of a defendant is unknown and cannot be
ascertained by diligent inquiry, service may, by leave of court, be effected upon him by publication
in a newspaper of general circulation and in such places and for such time as the court may order.
32
Consolidated Plywood Industries, Inc. v. Breva, G.R. No. L-82811, 18 October 1988, 166 SCRA 519;
Asiavest Limited v. Court of Appeals, 357 Phil. 536 (1998); Valmonte v. Court of Appeals, 322 Phil. 96
(1996).
33
See Herrera, Oscar M., REMEDIAL LAW, vol. I, pp. 699 and 702.
34
The provision states:
SEC. 19. Proof of service by publication. If the service has been made by publication,
service may be proved by the affidavit of the printer, his foreman or principal clerk, or of the editor,

12
 an affidavit showing the deposit of a copy of the summons and order
for publication in the post office, postage prepaid, directed to the
defendant by registered mail to his last known address.

Service of summons by publication is proved by the affidavit of the printer,

his foreman or principal clerk, or of the editor, business or advertising manager of
the newspaper which published the summons. The service of summons by
publication is complemented by service of summons by registered mail to the
defendants last known address. This complementary service is evidenced by an
affidavit showing the deposit of a copy of the summons and order for publication in
the post office, postage prepaid, directed to the defendant by registered mail to his
last known address.

The rules, however, do not require that the affidavit of complementary service
be executed by the clerk of court. While the trial court ordinarily does the mailing
of copies of its orders and processes, the duty to make the complementary service
by registered mail is imposed on the party who resorts to service by publication.

Moreover, even assuming that the service of summons was defective, the trial
court acquired jurisdiction over the person of petitioner by his own voluntary
appearance in the action against him. In this connection, Section 20, Rule 14 of
the Rules of Court states:

SEC. 20. Voluntary appearance. The defendants voluntary

appearance in the action shall be equivalent to service of summons.
The inclusion in a motion to dismiss of other grounds aside from lack
of jurisdiction over the person of the defendant shall not be deemed a
voluntary appearance. (emphasis supplied)

business or advertising manager, to which affidavit a copy of the publication shall be attached, and
by an affidavit showing the deposit of a copy of the summons and order for publication in the post
office, postage prepaid, directed to the defendant by registered mail to his last known address.

13
 Petitioner voluntarily appeared in the action when he filed the Omnibus
Motion for Reconsideration and to Admit Attached Answer.35 This was equivalent
to service of summons and vested the trial court with jurisdiction over the person of
petitioner.

ENTITLEMENTTO
NOTICE OF PROCEEDINGS

The trial court allowed respondent to present its evidence ex parte on account
of petitioners failure to file his answer within the prescribed period. Petitioner assails
this action on the part of the trial court as well as the said courts failure to furnish
him with copies of orders and processes issued in the course of the proceedings.

The effects of a defendants failure to file an answer within the time allowed
therefor are governed by Sections 3 and 4, Rule 9 (on Effect of Failure to Plead) of
the Rules of Court:

SEC. 3. Default; declaration of. If the defending party fails to

answer within the time allowed therefor, the court shall, upon
motion of the claiming party with notice to the defending party, and
proof of such failure, declare the defending party in default.
Thereupon, the court shall proceed to render judgment granting the
claimant such relief as his pleading may warrant, unless the court in its
discretion requires the claimant to submit evidence. Such reception of
evidence may be delegated to the clerk of court.

SEC. 4. Effect of order of default. A party in default shall be

entitled to notice of subsequent proceedings but not to take part in
the trial. (emphasis supplied)

35
Herrera, supra note 12 citing Europa v. Intermediate Appellate Court, G.R. No. 72827, 18 July 1989, 175
SCRA 394.

14
 If the defendant fails to file his answer on time, he may be declared in default
upon motion of the plaintiff with notice to the said defendant. In case he is declared
in default, the court shall proceed to render judgment granting the plaintiff such relief
as his pleading may warrant, unless the court in its discretion requires the plaintiff
to submit evidence. The defaulting defendant may not take part in the trial but shall
be entitled to notice of subsequent proceedings.

In this case, even petitioner himself does not dispute that he failed to file his
answer on time. That was in fact why he had to file an Omnibus Motion for
Reconsideration and to Admit Attached Answer. But respondent moved only for
the ex parte presentation of evidence, not for the declaration of petitioner in default.
In its February 6, 2004 order, the trial court stated:

The disputed Order of September 11, 2003 allowing the

presentation of evidence ex-parte precisely ordered that despite and
notwithstanding service of summons by publication, no answer has
been filed with the Court within the required period and/or
forthcoming.[] Effectively[,] that was a finding that the defendant
[that is, herein petitioner] was in default for failure to file an answer
or any responsive pleading within the period fixed in the publication
as precisely the defendant [could not] be found and for which reason,
service of summons by publication was ordered. It is simply illogical
to notify the defendant of the Order of September 11, 2003 simply on
account of the reality that he was no longer residing and/or found on
his last known address and his whereabouts unknown thus the
publication of the summons. In other words, it was reasonable to expect
that the defendant will not receive any notice or order in his last known
address. Hence, [it was] impractical to send any notice or order to him.
Nonetheless, the record[s] will bear out that a copy of the order of
September 11, 2003 was mailed to the defendant at his last known
address but it was not claimed. (emphasis supplied)

As is readily apparent, the September 11, 2003 order did not limit itself to
permitting respondent to present its evidence ex parte but in effect issued an order
15
of default. But the trial court could not validly do that as an order of default can be
made only upon motion of the claiming party.36 Since no motion to declare petitioner
in default was filed, no default order should have been issued.

To pursue the matter to its logical conclusion, if a party declared in default is

entitled to notice of subsequent proceedings, all the more should a party who has not
been declared in default be entitled to such notice. But what happens if the residence
or whereabouts of the defending party is not known or he cannot be located? In such
a case, there is obviously no way notice can be sent to him and the notice requirement
cannot apply to him. The law does not require that the impossible be done.37 Nemo
tenetur ad impossibile. The law obliges no one to perform an impossibility. 38 Laws
and rules must be interpreted in a way that they are in accordance with logic,
common sense, reason and practicality.39

Hence, even if petitioner was not validly declared in default, he could not
reasonably demand that copies of orders and processes be furnished him. Be that as
it may, a copy of the September 11, 2003 order was nonetheless still mailed to
petitioner at his last known address but it was unclaimed.

CORRECTNESSOF
NON-ADMISSION OF ANSWER

Petitioner failed to file his answer within the required period. Indeed, he would
not have moved for the admission of his answer had he filed it on time. Considering
that the answer was belatedly filed, the trial court did not abuse its discretion in
denying its admission.

36
Mediserv, Inc. v. China Banking Corporation, 408 Phil. 745 (2001).
37
Akbayan-Youth v. Commission on Elections, 407 Phil. 618 (2001).
38
Id.
39
Id.

16
 Petitioners plea for equity must fail in the face of the clear and express
language of the rules of procedure and of the September 11, 2003 order regarding
the period for filing the answer. Equity is available only in the absence of law, not
as its replacement.40 Equity may be applied only in the absence of rules of procedure,
never in contravention thereof.

WHEREFORE, the petition is hereby DENIED.

Costs against petitioner.

SO ORDERED.

RENATO C. CORONA
Associate Justice

W E C O N C U R:

REYNATO S. PUNO
Chief Justice
Chairperson

40
Heirs of Spouses de la Cruz v. Heirs of Quintos, Sr., 434 Phil. 708 (2002) citing Tupas v. Court of Appeals,
G.R. No. 89571, 06 February 1991, 193 SCRA 597.

17
ANTONIO T. CARPIO ADOLFO S. AZCUNA
Associate Justice Associate Justice

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

CERTIFICATION

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

REYNATO S. PUNO
Chief Justice

18
 Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

EUGENIO BASBAS, TEOFILO G.R. No. 172660

ARAS, RUFINO ARAS,
GERVACIO BASBAS, ISMAEL
ARAS, EUGENIO ARAS,
SIMFRONIO ARAS, Present:
FELICIANO ARAS, ROSITA
ARAS, EUGENIO BASBAS, JR. CORONA, C. J., Chairperson,
and SPOUSES PABLITO LEONARDO-DE CASTRO,
BASARTE and MARCELINA BRION,
BASBAS BASARTE, DEL CASTILLO, and
Petitioners, VILLARAMA, JR., JJ.

- versus -

BEATA SAYSON and Promulgated:

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

19
 ROBERTO SAYSON, JR.,
Respondents. August 24, 2011
x--------------------------------------------------------------
-----x

DECISION

DEL CASTILLO, J.:

Petitioners seek to prevent the revival of a judgment rendered in favor of the

respondents more than two decades back.

This Petition for Review on Certiorari assails the February 17, 2004 Decision41of
the Court of Appeals (CA) in CA-G.R. CV No. 72385 which denied the appeal filed before
it and affirmed in toto the May 21, 2001 Order42 of the Regional Trial Court of Ormoc
City, Branch 35. Also assailed is the April 19, 2006 Resolution43 denying the Motion for
Reconsideration thereto.

Factual Antecedents

On September 2, 1976, respondent Beata Sayson (Beata) and her husband Roberto
Sayson, Sr. (Roberto Sr.) filed a Petition for Registration of an agricultural land located in
Cagbatang, Balagtas, Matag-ob, Leyte docketed as Land Registration Case No. 0-177. The
said application was opposed by the Republic of the Philippines and herein petitioners
Eugenio Basbas (Eugenio Sr.), Teofilo Aras (Teofilo) and Rufino Aras (Rufino). On
March 22, 1979, the Court of First Instance (CFI) of Leyte, Branch V (Ormoc City)
rendered a Decision adjudicating to the spouses Sayson said agricultural land and
approving its registration under their names.44

41
CA rollo, pp. 102-109; penned by Associate Justice Elvi John S. Asuncion and concurred in by Associate Justices Godardo
A. Jacinto and Lucas P. Bersamin (now a Member of this Court).
42
Records, pp. 440-442; penned by Judge Fortunito L. Madrona.
43
CA rollo, p. 121.
44
See first page of CA Decision dated July 24, 1985 in CA-G.R. No. 66541, records, p. 8.

20
 The oppositors filed their appeal to the CA docketed as CA-G.R. No. 66541. In a
Decision45 dated July 24, 1985, the appellate court affirmed in toto the Decision of the CFI.
This CA Decision became final and executory on August 21, 198546 and, accordingly, a
Writ of Possession was issued on November 21, 1985, which was never implemented.

The following year or on September 17, 1986, Original Certificate of Title (OCT)
No. 249647 was issued to the spouses Sayson pursuant to the March 22, 1979 CFI Decision.
An Alias Writ of Possession was issued on April 6, 1989 but this could also not be
implemented in view of the refusal of Eugenio Sr. and his son Eugenio Basbas, Jr. (Eugenio
Jr.). Claiming that the land they occupied is not the same land subject of the CFI Decision,48
they demanded that a relocation survey be conducted. Hence, a relocation survey was
conducted by order of the Regional Trial Court (RTC), Branch 12, Ormoc City.49

In an Order50 dated September 13, 1989, the RTC approved the Commissioners
Report51 on the relocation survey and ordered the original oppositors, petitioners Eugenio
Sr., Teofilo and Rufino, as well as their co-petitioners herein Gervacio Basbas (Gervacio),
Ismael Aras (Ismael), Eugenio Aras (Eugenio), Simfronio Aras (Simfronio), Feliciano
Aras (Feliciano), Rosita Aras (Rosita) and Eugenio Jr. to vacate the subject property, viz:

[R]espondents are directed to vacate the portion of Lot No. 1, Psu-08-000235

covered by OCT No. 2496 and subject of the final decree of registration
which, [up to the] present, said respondents are still possessing pursuant to
the final and executory judgment of the Court of Appeals and as particularly
defined in the Commissioners report submitted on August 3, 1989 x x x.

45
Id. at 8-13; penned by Associate Justice Leonor Ines Luciano and concurred in by Presiding Justice Ramon G. Gaviola,
Jr., and Associate Justices Edgardo P. Caguioa and Ma. Rosario Quetulio-Losa.
46
See Entry of Judgment, id. at 14.
47
Id. at 15.
48
See the (Sheriffs) Progress Report, id. at 16-17.
49
See RTC Order dated June 16, 1989, id. at 18.
50
Id. at 21-22.
51
Id. at 19-20.

21
 Respondents are reminded that under Rule 71 of the New Rules of
Court, failure on their part to so obey this order may make them liable for
contempt of this Court.

SO ORDERED.52

Gervacio, Ismael, Eugenio, Simfronio, Feliciano, Rosita and Eugenio Jr., although
not oppositors in CA-G.R. No. 66541, were likewise ordered to vacate the property in view
of the following pronouncement in the RTCs September 13, 1989 Order:

It appearing from the records that respondents Eugenio Basbas,

Teofilo Aras, Gervacio Basbas, Rufino Aras, Ismael Aras, Eugenio Aras,
Simfronio Aras, Feliciano Aras, Rosita Aras and Eugenio Basbas[,] Jr.
are parties to the present case, they having been the principal oppositors
to the petition filed by the applicants as shown in the records, pages 34,
35 and 36, Vol. 1 x x x53 (Emphasis supplied.)

This September 13, 1989 Order was, however, not implemented within the five-
year period from the time it became final.54 Hence, respondent Beata and her son Roberto
Sayson, Jr. (Roberto Jr.), as successor-in-interest of the late Roberto Sr., filed on August
18, 1995 a Complaint for Revival of Judgment55 before the RTC of Ormoc City, Branch
12,56 docketed as Civil Case No. 3312-0. Impleaded as defendants were Eugenio Sr.,
Teofilo, Rufino, Gervacio, Ismael, Eugenio, Simfronio, Feliciano, Rosita, and Eugenio Jr.
Petitioner-spouses Pablito Basarte and Marcelina Basbas-Sabarte57 (spouses Basarte),
who, although not identified in the September 13, 1989 Order as principal oppositors in the

52
Id. at 22.
53
Id. at 21.
54
RULES OF COURT, Rule 39, Sec. 6 provides:
Sec. 6. Execution by motion or by independent action. A final and executory judgment or order may be executed
on motion within five (5) years from the date of its entry. After the lapse of such time, and before it is barred by the
statute of limitations, a judgment may be enforced by action. x x x.
55
Records, pp. 1-7.
56
The case was later transferred to Branch 35 of RTC, Ormoc City per Order dated September 22, 1997, id. at 80.
57
Later amended to read as Basarte per Order dated July 3, 1998, id. at 120.

22
land registration case, were likewise impleaded as defendants since they also allegedly
harvested, processed, and sold the coconuts found in the subject property.

Upon receipt of summons, Gervacio, Rufino, Ismael, Eugenio, Feliciano, Rosita

and Eugenio Jr. filed a Motion to Dismiss58 on the ground that the Complaint states no
cause of action. This was, however, denied59 so the same set of petitioners, except for
Feliciano, filed an Answer with Counterclaim.60

In their Answer with counterclaim, said petitioners admitted the allegations in

paragraphs 4, 5, 6, 7, 8, 9, 10, 11 and 12 of respondents Complaint which state that:

xxxx

4. On March 22, 1979, the Honorable Judge Numeriano Estenzo

rendered a decision in the above-mentioned Land Registration [c]ase in favor
of the petitioners x x x and against the oppositors, the dispositive portion of
said decision reads:

WHEREFORE, decision is hereby rendered x x x [and]

the land described under Plan PSU-08-000235 dated
September 10, 1973 of Geodetic Engineer Nestorio Encenzo
already APPROVED by the Acting Regional Director on June
27, 1974 is hereby adjudicated and registered in the names of
the Spouses ROBERTO SAYSON and BEATA O.
SAYSON, of legal ages, Filipinos, spouses and residents of
Campokpok, Tabango, Leyte, Philippines and as soon as this
decision becomes final, let a decree of registration be issued by
the Land Registration Commission.
SO ORDERED. (x x x)

58
Id. at 30-32.
59
See the RTCs Order dated May 9, 1997, id. at 49-50.
60
Id. at 73-77.

23
 5. From the above decision the oppositors (defendants herein)
appealed;

6. On July 24, 1985, the Honorable Court of Appeals rendered its

decision, the dispositive portion [of which] reads:

WHEREFORE, PREMISES CONSIDERED, finding

no merit in this appeal the decision appealed from is hereby
AFFIRMED in toto.

SO ORDERED.

and the said decision has become final and executory on August 21, 1985
per Entry of Judgment issued by the Court of Appeals x x x.

7. That consequently, on September 17, 1986 an Original Certificate

of Title No. N-2496 was issued in the names of Roberto Sayson and Beata
O. Sayson, pursuant to Decree No. N-191615, by the Register of Deeds for
the Province of Leyte;

8. That on motion, the Honorable Court, on November 21, 1985,

issued a Writ of Possession which for some reason or [another] was not
satisfied, so that the Honorable Court, on April 7, 1989 acting on an ex-parte
motion dated April 6, 1989 directed the issuance of an Alias Writ of
Possession;

9. That the Deputy Sheriff of this Court, Mr. Placid[o] Cayco

tendered the Alias Writ of Possession to the oppositors, particularly to Mr.
Eugenio Basbas, Sr. and Eugenio Basbas, Jr. who, as the Deputy Sheriff
stated in his Progress Report dated May 18, 1989 did not believe and obey
the CFI Decision and the decision of the Court of Appeals and x x x [t]hey
demanded a relocation survey to determine the exact location of applicants

24
(complainant[s] herein) property described in the alias writ of possession. x
x x;

10. That on June 16, 1989, the Honorable Court, acting on the
Progress Report of Deputy Sheriff Placido Cayco, issued an Order on even
date appointing Geodetic Engineer Jose A. Tahil as Court Commissioner
specifically to relocate Lot No. 1, Plan Psu-08-000235, LRC No. 0-177,
Land Reg. Record No. N51830 x x x This Order was dictated in open court
in the presence of Mr. Eugenio Basbas, Sr. and Eugenio Basbas, Jr. who had
both objected to the Writ of Possession, and their counsel Atty. Evargisto
Escalon, and Attorney Demetrio D. Sarit, counsel for the applicants. x x x

11. That pursuant to the [O]rder dated June 16, 1989 x x x the Court
assigned Commissioner, Engr. Jose A. Tahil, submitted his report stating that
the job assigned to the commissioner was already fully and peacefully
accomplished; that his findings [show] that all points are existing and intact
on the field except x x x corner 3 of said lot x x x which at present [is] already
defined and indicated on the ground. The commissioner also attached a
Sketch Plan of the land to his report. x x x

12. That, finally, the Honorable Court, on September 13, 1989 issued
an Order approving the Commissioners Report and further stated:

[R]espondents (defendants herein) are directed to vacate the

portion of Lot No. 1, Psu-08-000235 covered by OCT No.
2496 and subject of final decree of registration which, until
[the] present, said respondents are still possessing, pursuant to
the final and executory judgment of the Court of Appeals and
as particularly [defined] in the Commissioners Report
submitted on August 3, 1989 x x x

25
 Respondents are reminded that under Rule 71 of the
New Rules of Court, failure on their part to so obey this Order
may make them liable for contempt of this Court.61

However, petitioners admitted but denied in part:

1) paragraphs 2 and 3, insofar as they alleged that they were all oppositors to the
land registration case when only Eugenio Sr., Teofilo and Rufino were the oppositors
therein; and

2) paragraph 14, with respect to the allegation on the retirement of the Deputy
Sheriff and the heart condition of the Clerk of Court, for lack of sufficient knowledge and
information sufficient to form a belief thereon.

On the other hand, they specifically denied:

1) paragraph 13, on the ground that they have the right of ownership and/or
possession over the subject property; and

2) paragraph 15, on the ground that the property they are cultivating is owned by
them, hence, respondents cannot suffer losses and damages.

Paragraphs 2, 3, 13, 14 and 15 alluded to in the foregoing are as follows:

2. All the defendants named above are x x x of legal age and are
residents of Balagtas, Matag-ob, Leyte where they may be served summons
and other court processes; while defendant-spouses Pablito Basarte and
Marcelina Basbas Basarte were not named as among the oppositors in the
land registration case whose decision is herein sought to be revived, said
61
Id. at 2-5.

26
 spouses are nonetheless participating in the harvest, processing and sale of
the coconuts with the other defendants named above;

3. Plaintiffs Beata Sayson and her late husband, Roberto Sayson are
petitioners in Land Registration Case No. 0-177 for the registration of a
parcel of agricultural land situated in Barrio Balagtas, Matag-ob, Leyte, filed
on September 2, 1976 with the then Court of First Instance of Leyte, Branch
V, Ormoc City. The above-named defendants, namely: Eugenio Basbas,
Teofilo Aras, Gervacio Basbas, Rufino Aras, Ismael Aras, Eugenio Aras,
Simfronio Aras, Feliciano Aras, Rosita Aras and Eugenio Basbas, Jr. were
oppositors to the application;62

xxxx

13. That despite this admonition in the [September 13, 1989] [O]rder
that they could be cited for contempt of Court, the respondents, defendants
herein, had continuously defied the same and this notwithstanding the fact
that it was upon their own demands and insistence that a relocation survey
be made on the premises subject of this case before they would obey the alias
writ of possession x x x and that the finding[s] of the Court[-]appointed
Commissioner Engr. Jose A. Tahil show that the oppositors-respondents did
[encroach] on the land of plaintiffs herein;

14. That this [September 13, 1989] Order however was not
implemented thru a Writ of Execution within the five-year period from the
time the Order became final because of the retirement of Deputy Sheriff
Placido Cayco and by reason also of the fact that the then Clerk of Court,
Atty. Constantino A. Trias, Jr. who was also the ex-officio Provincial Sheriff
was not physically fit to hike thru the mountains and hills of Brgy. Balagtas
where the property and the defendants therein reside due to his heart
condition;

62
Id. at 1-2

27
 15. That despite their knowledge of the Court[s] [September 13, 1989]
Order, the same [having been] dictated in open court, the respondents had
continued to occupy the land of the plaintiffs and for more than five (5) years
since this Order for them to vacate the land in question was issued, they had
harvested the coconuts growing thereon and such other produce of the land
herein involved. And until the decision of the Court of Appeals is executed,
plaintiff will continue to suffer losses and damages by reason of defendants
unlawful occupation and possession and their continued harvesting of the
produce of this land of the herein plaintiffs.63

By way of special and affirmative defenses, said petitioners contended that the
Order sought to be revived is not the judgment contemplated under Section 6, Rule 39 of
the Rules of Court, hence the action for revival of judgment is improper. Also, except for
Rufino, petitioners averred that they cannot be made parties to the complaint for revival of
judgment as they were not parties to the land registration case. They thus believed that the
September 13, 1989 Order sought to be revived is not binding upon them and hence, the
complaint states no cause of action with respect to them. As to the counterclaim, petitioners
prayed that respondents pay them moral and exemplary damages, attorneys fees and
litigation expenses.

Pre-trial conference was thereafter set64 but since not all petitioners were served with
summons, this was reset and alias summons was issued and served upon Simfronio and
the spouses Basarte.65 Upon receipt of summons, Simfronio adopted the Answer with
Counterclaim of Gervacio, Rufino, Ismael, Eugenio, Feliciano, Rosita and Eugenio Jr.66
while the spouses Basarte filed a Motion to Dismiss67 on the ground of lack of cause of
action. As said motion was also denied,68 the spouses Basarte later filed a Manifestation69
that they were also adopting the Answer with Counterclaim filed by Gervacio and the
others.

63
Id. at 5-6.
64
See Notice of Pre-Trial, id. at 85.
65
See Orders dated March 9, 1998 & May 20, 1998, id. at 102 & 112 respectively; Alias Summons dated June 1, 1998, id.
at 113; and Officers Return, id. at 115. See also the Summons served to the spouses Basarte, id. at 148, and the Officers
Return thereof, id. at 147, after the spouses surname was amended to read as spouses Basarte instead as Sabarte.
66
See Simfronios Manifestation and Second Manifestation, id. at 116-119.
67
Id. at 149-151.
68
See RTC Order dated February 9, 1999, id. at 186.
69
Id. at 253.

28
 During the pre-trial conference on July 14, 1999, the RTC issued an Order70 which
provides in part, viz:

In todays pre-trial conference, manifestations and counter-

manifestations were exchanged. All the parties and their counsels are present.
x x x [P]laintiffs counsel presented a Special Power of Attorney by Beata
Sayson but the Court observed that same was not duly acknowledged
before the Philippine Consulate or Embassy in Canada. However, this
matter is not so important[.] [W]hen the Court tried to dig and discuss with
the parties on their real positions, it turned out that the plaintiffs are seeking
revival of the previous final judgment, the original parties of which were
Eugenio Basbas, Teofilo Aras and Rufino Aras. Eugenio and Teofilo are
all dead, leaving Rufino Aras alive. It is quite complicated considering
that in this action, the plaintiffs relied on the Order of this Court penned
by the previous judge dated September 13, 1989 which was made after
or consequent to the final judgment aforementioned, wherein the names
of the other defendants were mentioned in the body thereof. After
considering the merits of the various contentions, the Court is of the
view that the complaint had to limit itself to the names of the original
parties appearing in the original judgment now being sought for revival.
The interest of the plaintiffs in seeking implementation or execution of the
judgment sought to be revived which would involve the other defendants can
be taken when the judgment shall have been revived.

In this connection therefore and as part of the matters to be made part

in the pre-trial conference, in the exercise of the authority granted to it by
law, this Court directs the plaintiffs to make the necessary amendment
and/or to submit a manifestation first to this Court on the point above
raised regarding amendment of the designation of the parties having in
mind the objection of the defendants who manifested that should there be an
amendment, this counter-claim shall be disregarded since they were brought
in unnecessarily in this kind of action.

70
Id. at 215-216.

29
 Plaintiffs therefore are given a period of ten (10) days from today
within which to submit the requisite manifestation furnishing copy thereof to
the defendant who upon receipt shall also be given a period of ten (10) days
within which this Court will make the necessary resolution before allowing
any amendment.

Hold the pre-trial conference in abeyance.

SO ORDERED. 71 (Emphasis supplied.)

In their Manifestation with Prayer,72 respondents informed the RTC about the death
of Eugenio Sr. and Teofilo who were oppositors in the land registration case and the
substitution by their heirs, namely, Gervacio, Marcelina Basbas Basarte,73 and Eugenio Jr.
for Eugenio Sr. and Ismael, Vicente, Ligaya Aras (Ligaya), Rosendo Aras (Rosendo) and
Daina Aras (Daina) for Teofilo. Respondents prayed that their manifestation be considered
for the purpose of determining the proper parties to the case. Despite petitioners Counter-
Manifestation,74 the RTC issued the following Order75 on May 15, 1999:

The Manifestation of plaintiffs and the Counter-Manifestation of

defendants having already been submitted and duly noted, the Court hereby
directs that henceforth in the denomination of this case, the names of the
original parties, Eugenio Basbas and Teofilo Aras (in Land Registration Case
No. 0-177) shall still remain to be so stated as defendants for purposes of the
present case but with additional names of their respective heirs to be included
and stated immediately after each name as heirs in substitution, namely: for
Eugenio Basbas 1) Gervacio Basbas, 2) Marcelina Basbas Basarte, and 3)
Eugenio Basbas, Jr.; and for Teofilo Aras 1) Ismael Aras, 2) Vicente Aras,
3) Ligaya Aras, 4) Rosendo Aras, and 5) Daina Aras.

71
Id.
72
Id. at 231-233.
73
One of the Spouses Basarte.
74
Records, pp. 237-239.
75
Id. at 250.

30
 Since from the records, only Gervacio Basbas, Eugenio Basbas, Jr.
and Ismael Aras were duly served with summons, the Branch Clerk of Court
is hereby directed to serve summons on the other heirs, namely: Marcelina
Basbas Basarte, Vicente Aras, Ligaya Aras, Rosendo Aras, and Daina Aras.

x x x x76

After summons were served, Vicente, Rosendo, Ligaya and Daina were, however,
declared in default for not filing any responsive pleading.77 On February 2, 2001, the RTC
issued a Pre-Trial Order78 where the controverted stipulations and issues to be tried, among
others, were enumerated as follows:

Controverted Stipulations:

1. That defendants are not enjoying the produce of the land because there
are period[s] wherein the fruits were subject of theft and the same is now
pending at the Municipal Trial Court of Matag-ob;

2. That [even] before the start of the original case, the original defendants
referring to the late Eugenio Basbas, Sr. and Teofilo Aras, [and] Rufino
Aras were occupying the property and they were succeeded by the
respective heirs of the deceased Eugenio Basbas, Sr. and Teofilo Aras
[sic];

3. That plaintiff Teofilo Aras, Sr. has a daughter named Fedeliza Aras;

Issues

76
Id.
77
See 1st page of Pre-Trial Order, id. at 348. The Rufino Aras declared in default in said Pre-Trial Order is actually Rosendo
Aras. Rufino filed his Answer together with Gervacio and the others.
78
Id. at 348-350.

31
 1. Whether x x x the plaintiffs are entitled to revival of judgment in the
earlier [land registration] case;

2. Whether x x x the defendants except for defendant Rufino Aras are the
proper parties in the present action;

3. Whether x x x the complaint states a cause of action;

4. Whether x x x defendants are entitled to their counterclaim, and;

5. Whether judgment on the pleadings is allowed or is tenable.79

Respondents subsequently filed an Omnibus Motion for Judgment on the Pleadings

and/or Summary Judgment.80 They contended that since petitioners Answer failed to
tender an issue, they having expressly admitted the material allegations in the complaint,
particularly paragraphs 4 to 12, a judgment on the pleadings or summary judgment is
proper.

Petitioners filed an Opposition Re: Omnibus Motion for Judgment on the Pleadings
and/or Summary Judgment and Memorandum Re: Failure of Plaintiff Beata Sayson to
Appear in the Pre-trial Conference.81 They argued that the case cannot be decided based
on the pleadings nor through summary judgment considering that the controverted
stipulations and issues defined in the Pre-Trial Order must be proven by evidence. In
addition, they questioned the Special Power of Attorney (SPA) executed by Beata in
Canada empowering her son Roberto Jr. to appear on her behalf in the pre-trial conference.
They argued that since said SPA has not been authenticated by a Philippine Consulate
official, it is not sufficient authorization and hence, Beata cannot be considered to have
attended the pre-trial conference. The case must, therefore, be dismissed insofar as she is
concerned.

79
Id. at 349.
80
Id. at 377-382.
81
Id. at 435-439.

32
Ruling of the Regional Trial Court

In resolving respondents Omnibus Motion for Judgment on the Pleadings and/or

Summary Judgment, the RTC found that petitioners Answer does not essentially tender an
issue since the material allegations of the Complaint were admitted. Hence, said court
issued an Order82 dated May 21, 2001, the dispositive portion of which reads:

Wherefore, finding merit in the motion, judgment is hereby rendered

for and in favor of the plaintiffs and against the defendants ordering the
revival of the decision of the Court of Appeals promulgated on July 24, 1985
affirming the decree of registration of this Court in the decision of the Land
Registration Case No. 0-177 dated March 22, 1979, and of the final Order of
this Court dated September 13, 1989 and upon finality of this Order, ordering
the issuance of Writ of Possession for the lot made subject of the decision.
Without pronouncement as to costs.

SO ORDERED.83

Petitioners thus filed a Notice of Appeal84 which was approved in an Order dated
June 06, 2001.85

Ruling of the Court of Appeals

Finding no merit in the appeal, the CA denied the same in a Decision86 dated
February 17, 2004. It noted that petitioners Answer admitted almost all of the allegations
in respondents complaint. Hence, the RTC committed no reversible error when it granted
respondents Motion for Judgment on the Pleadings and/or Summary Judgment. The
appellate court likewise found untenable the issue as regards the failure of the complaint to

82
Id. at 440-442
83
Id. at 442.
84
Id. at 445.
85
Id. at 450.
86
Supra note 1.

33
state a cause of action. To the appellate court, petitioners refusal to vacate the subject
property despite the final and executory Decision of the CA in the land registration case
and the September 13, 1989 Order of the RTC for them to vacate the same, clearly support
respondents cause of action against them. Also contrary to petitioners posture, the
September 13, 1989 Order is a final order as it finally disposed of the controversy between
the parties in the land registration case. The CA likewise found the SPA executed by Beata
in favor of Roberto Jr. as valid, hence, she was duly represented during the pre-trial
conference. The dispositive portion of said CA Decision reads:

WHEREFORE, premises considered, the present appeal is DENIED.

The May 21, 2001 Decision of the Regional Trial Court of Ormoc City,
Branch 35 is AFFIRMED.
SO ORDERED.87

Their Motion for Reconsideration88 having been denied in a Resolution89 dated

April 19, 2006, petitioners are now before this Court through the present Petition for
Review on Certiorari.

Issues

Petitioners impute upon the CA the following errors:

1. The Honorable Court of Appeals clearly committed serious errors of law

in its decision and Resolution dated February 17, 2004 and April 19, 2006
when it affirmed the Order of the Regional Trial Court dated May 21, 2001
and declared that no reversible error was committed by the Regional Trial
Court of Ormoc City in granting respondents motion for judgment on the
pleadings and/or summary judgment;

87
CA rollo, p. 93.
88
Id. at 95-101.
89
Supra note 3.

34
 2. The Honorable Court of Appeals clearly committed serious errors of law
in its Decision and Resolution dated February 17, 2004 and April 19, 2006
when it affirmed the Order of the Regional Trial Court of Ormoc City dated
May 21, 2001 and declared that petitioners argument that respondents
complaint failed to state a cause of action has no merit.

3. The Honorable Court of Appeals clearly committed serious errors of law

when it affirmed the Order of the Regional Trial Court of Ormoc City which
ordered the revival of the Judgment of this Court of Appeals in CA-G.R. No.
66541 entitled Beata Sayson and Roberto Sayson vs. Eugenio Basbas, et al.,
despite the fact that this was not the judgment sought to be revived in Civil
Case No. 3312-0;

4. The Honorable Court of Appeals clearly committed serious errors of law

in ruling that the duly notarized Special Power of Attorney in favor of
Roberto Sayson[,] Jr. is valid and the latter is authorized to represent his
mother, Beata Sayson[,] which is contrary to the ruling in the case of
ANGELITA LOPEZ, represented by PRISCILLA L. TY vs. COURT OF
APPEALS, REGIONAL TRIAL COURT OF QUEZON CITY x x x (G.R.
No. 77008, December 29, 1987).90

The Parties Arguments

Petitioners insist that a judgment on the pleadings or a summary judgment

is not proper in this case since the controverted stipulations and the first three issues
enumerated in the pre-trial order involve facts which must be threshed out during trial.
They also claim that the Complaint for Revival of Judgment states no cause of action
because the September 13, 1989 Order which it sought to revive is not the judgment
contemplated under Section 6, Rule 39 of the Rules of Court and, therefore, cannot be the
subject of such an action. Moreover, they argue that the CA Decision in the land
registration case should not have been revived as same was not prayed for in the Complaint
for Revival of Judgment. Lastly, petitioners assail the SPA which authorized Roberto Jr.
to represent his mother, Beata, during the pre-trial conference, it not having been
authenticated by a Philippine consulate officer in Canada where it was executed. Citing

90
Rollo, p. 19.

35
Lopez v. Court of Appeals,91 they contend that said document cannot be admitted in
evidence and hence, Beata was not duly represented during said pre-trial conference. The
case, therefore, should have been dismissed insofar as she is concerned.

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

Our Ruling

There is no merit in the petition.

91 240 Phil. 811 (1987); In this case, an SPA was executed abroad by the real party in interest

in favor of a representative here in the Philippines to initiate an action for ejectment. Finding

said SPA to be without the authentication of an officer in the foreign service of the Philippines

stationed in that foreign country pursuant to Sec. 25, Rule 132 of the old Rules of Court (now

Sec. 24, Rule 132 of the Revised Rules of Court, see footnote 63), this Court declared the

same as not admissible in evidence. Hence, the litigation was considered not commenced by

the real party-in-interest or by one duly authorized to do so, making the entire proceedings

before the lower courts null and void.

36
I. The instant case is proper for the rendition of a summary judgment.

Petitioners principally assail the CAs affirmance of the RTCs Order granting
respondents Motion for Judgment on the Pleadings and/or Summary Judgment.

In Tan v. De la Vega,92 citing Narra Integrated Corporation v. Court of Appeals,93

the court distinguished summary judgment from judgment on the pleadings, viz:

The existence or appearance of ostensible issues in the pleadings, on

the one hand, and their sham or fictitious character, on the other, are what
distinguish a proper case for summary judgment from one for a judgment on
the pleadings. In a proper case for judgment on the pleadings, there is no
ostensible issue at all because of the failure of the defending partys answer
to raise an issue. On the other hand, in the case of a summary judgment,
issues apparently exist i.e. facts are asserted in the complaint regarding which
there is as yet no admission, disavowal or qualification; or specific denials or
affirmative defenses are in truth set out in the answer but the issues thus
arising from the pleadings are sham, fictitious or not genuine, as shown by
affidavits, depositions, or admissions. x x x.
Simply stated, what distinguishes a judgment on the pleadings from a summary
judgment is the presence of issues in the Answer to the Complaint. When the Answer fails
to tender any issue, that is, if it does not deny the material allegations in the complaint or
admits said material allegations of the adverse partys pleadings by admitting the
truthfulness thereof and/or omitting to deal with them at all, a judgment on the pleadings
is appropriate.94 On the other hand, when the Answer specifically denies the material
averments of the complaint or asserts affirmative defenses, or in other words raises an issue,
a summary judgment is proper provided that the issue raised is not genuine. A genuine
issue means an issue of fact which calls for the presentation of evidence, as distinguished
from an issue which is fictitious or contrived or which does not constitute a genuine issue
for trial.95

a) Judgment on the pleadings is not proper

because petitioners Answer tendered issues.

92
G.R. No. 168809, March 10, 2006, 484 SCRA 538, 550-551.
93
398 Phil. 733,740 (2000).
94
Tan v. De la Vega, supra note 52 at 545.
95
Wood Technology Corporation v. Equitable Banking Corporation, 492 Phil.106, 116 (2005).

37
 In this case, we note that while petitioners Answer to respondents Complaint
practically admitted all the material allegations therein, it nevertheless asserts the
affirmative defenses that the action for revival of judgment is not the proper action and that
petitioners are not the proper parties. As issues obviously arise from these affirmative
defenses, a judgment on the pleadings is clearly improper in this case.

However, before we consider this case appropriate for the rendition of summary
judgment, an examination of the issues raised, that is, whether they are genuine issues or
not, should first be made.

b) The issues raised are not genuine issues,

hence rendition of summary judgment is
proper.
To resolve the issues of whether a revival of judgment is the proper action and
whether respondents are the proper parties thereto, the RTC merely needed to examine the
following: 1) the RTC Order dated September 13, 1989, to determine whether same is a
judgment or final order contemplated under Section 6, Rule 39 of the Rules of Court; and,
2) the pleadings of the parties and pertinent portions of the records96 showing, among
others, who among the respondents were oppositors to the land registration case, the heirs
of such oppositors and the present occupants of the property. Plainly, these issues could be
readily resolved based on the facts established by the pleadings. A full-blown trial on these
issues will only entail waste of time and resources as they are clearly not genuine issues
requiring presentation of evidence.

Petitioners aver that the RTC should not have granted respondents Motion for
Judgment on the Pleadings and/or Summary Judgment because of the controverted
stipulations and the first three issues enumerated in the Pre-trial Order, which, according
to them, require the presentation of evidence. These stipulations and issues, however, when
examined, basically boil down to questions relating to the propriety of the action resorted
to by respondents, which is revival of judgment, and to the proper parties thereto the same
questions which we have earlier declared as not constituting genuine issues.

In sum, this Court holds that the instant case is proper for the rendition of a summary
judgment, hence, the CA committed no error in affirming the May 21, 2001 Order of the
RTC granting respondents Motion for Judgment on the Pleadings and/or Summary
Judgment.

96
Particularly the (1) Complaint, records, pp. 1-7; (2) Answer, id. at 73-77; (3) respondents Manifestation with Prayer, id. at
231-233; and (4) petitioners Counter-Manifestation, id. at 237-239.

38
II. The Complaint states a cause of action.

Petitioners contend that the complaint states no cause of action since the
September 13, 1989 Order sought to be revived is not the judgment contemplated under
Section 6, Rule 39 of the Rules of Court. They also aver that the RTC erred when it ordered
the revival not only of the September 13, 1989 Order but also of the July 24, 1985 CA
Decision, when what was prayed for in the complaint was only the revival of the former.

This Court, however, agrees with respondents that these matters have already been
sufficiently addressed by the RTC in its Order of May 9, 199797 and we quote with
approval, viz:

The body of the Complaint as well as the prayer mentioned about the
executory decision of the Court of Appeals promulgated on July 24, 1985
that had to be finally implemented. So it appears to this Court that the
Complaint does not alone invoke or use as subject thereof the Order of this
Court which would implement the decision or judgment regarding the land
in question. The Rules of Court referring to the execution of judgment,
particularly Rule 39, Sec. 6, provides a mechanism by which the judgment
that had not been enforced within five (5) years from the date of its entry or
from the date the said judgment has become final and executory could be
enforced. In fact, the rule states: judgment may be enforced by action.

So in this Complaint, what is sought is the enforcement of a judgment

and the Order of this Court dated September 13, 1989 is part of the process
to enforce that judgment. To the mind of the Court, therefore, the Complaint
sufficiently states a cause of action.98

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

Anent the SPA, we find that given the particular circumstances in the case at bar, an
SPA is not even necessary such that its efficacy or the lack of it would not in any way
preclude the case from proceeding. This is because upon Roberto Sr.s death, Roberto Jr.,
in succession of his father, became a co-owner of the subject property together with his

97
Id. at 49-50.
98
Id. at 49.

39
mother, Beata. As a co-owner, he may, by himself alone, bring an action for the recovery
of the co-owned property pursuant to the well-settled principle that in a co-ownership, co-
owners may bring actions for the recovery of co-owned property without the necessity of
joining all the other co-owners as co-plaintiffs because the suit is presumed to have been
filed for the benefit of his co-owners.99

While we note that the present action for revival of judgment is not an action for
recovery, the September 13, 1989 Order sought to be revived herein ordered the petitioners,
among others, to vacate the subject property pursuant to the final and executory judgment
of the CA affirming the CFIs adjudication of the same in favor of respondents. This Order
was issued after the failure to enforce the writ of execution and alias writ of execution due
to petitioners refusal to vacate the property. To this Courts mind, respondents purpose in
instituting the present action is not only to have the CA Decision in the land registration
case finally implemented but ultimately, to recover possession thereof from petitioners.
This action is therefore one which Roberto Jr., as co-owner, can bring and prosecute alone,
on his own behalf and on behalf of his co-owner, Beata. Hence, a dismissal of the case with
respect to Beata pursuant to Sec. 5,100 Rule 18 of the Rules of Court will be futile as the
case could nevertheless be continued by Roberto Jr. in behalf of the two of them.

WHEREFORE, the Petition for Review on Certiorari is DENIED and the

assailed Decision of the Court of Appeals dated February 17, 2004 and Resolution dated
April 19, 2006 in CA-G.R. CV No. 72385 are AFFIRMED.

SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice

99
Carandang v. Heirs of De Guzman, G.R. No. 160347, November 29, 2006, 508 SCRA 469, 487 citing Baloloy v.
Hular, 481 Phil. 398, (2004) and Adlawan v. Adlawan, G.R. No. 161916, January 20, 2006, 479 SCRA 275, 283.
100
Sec. 5. Effect of failure to appear. The failure of the plaintiff to appear when so required pursuant to the next
preceding section shall be caused for dismissal of the action. The dismissal shall be with prejudice, unless
otherwise ordered by the court. x x x.

40
 Chairperson

TERESITA J. LEONARDO-DE CASTRO ARTURO D. BRION

Associate Justice Associate Justice

MARTIN S. VILLARAMA, JR.

Associate Justice

CERTIFICATION

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

RENATO C. CORONA
Chief Justice

41
Partial default in a case with multiple defendants
Posted on March 18, 2016April 15, 2017 by Lawyers in the Philippines

What if, in a case filed against multiple defendants, one defendant does not file his
Answer but his co-defendants file theirs?

Can a defendant who failed to file his own Answer be declared in default even if
Answers were filed by his co-defendants?

Yes. The applicable rule is Section 3 of Rule 9 of the Rules of Court.

At the outset, it must be seen that the rules on Default in Section 3 of Rule 9
provide for two distinct and discrete stages of action.

The first stage of action pertains to the finding that a defendant is in default and the
consequent declaration by the Court. With regard to this stage, the first paragraph
of Section 3, Rule 9, provides thus:

Sec. 3. Default; declaration of. If the defending party fails to answer within the
time allowed therefore, the court shall, upon motion of the claiming party with
notice to the defending party, and proof of such failure, declare the defending party
in default.

The first stage thus concludes with the declaration that a defending party is in
default.

The second stage of action pertains to the conduct of the case after the declaration
in default. The ordinary consequence upon a defendant after he is found in default
is provided in paragraph (a) of Section 3, Rule 9, thus:

(a) Effect of order of default. A party in default is entitled to notice of

subsequent proceedings, but not to take part in the trial.

There is a critical distinction between the first stage of action, a defendants being
declared in default, and the second stage of action, the consequences thereof, i.e.
the conduct of the case after such a declaration. While both pertain to default, they
are not identical.

It is clear that paragraph (c) of Section 3, Rule 9 also refers to the second stage.

42
(c) Effect of partial default. When a pleading asserting a claim states a
common cause of action against several defending parties, some of whom answer
and the others fail to do so, the court shall try the case against all upon the answers
thus filed and render judgment upon the evidence presented.

Paragraph (c) only provides for the manner in which the trial will be conducted in
a case where a defendant filed no Answer although his co-defendants did. The
paragraph provides only that the case will be tried upon the Answers filed by the
responsive defendants. Nowhere does it state that the Rule on default does not
apply. It is not an exception to a defendant being declared in default.

The defendant who does not file an Answer is to be declared in default. This is the
Rule and paragraph (c) of Section 3, Rule 9 is no exception to it. Said provision, in
fact, recognizes a situation where one defendant among several is in default. This
is clear from paragraph (c)s own heading, Effect of partial default. That very
heading recognizes that default exists within the set. This recognition can only be
upon the Courts declaration of default pursuant to the first paragraph of Section 3
of Rule 9.

Paragraph (c) of Section 3, Rule 9 thus provides for the manner of the trials
conduct in a situation where one party among several, but not all, were declared in
default pursuant to the first paragraph of Section 3, Rule 9. It contemplates the
existence of default in one of the defendants. It is, therefore, not an exception to
the rule on default, but a consequence.

A contrary interpretation would allow a defendant in willful default to nevertheless

present evidence contrary to the Rules explicit provision. This would render in
vain the provisions for the Rule on Default and defeat the Rules of Courts
objective of securing a just, speedy and inexpensive disposition of every action and
proceeding.[1]

Jurisprudence is in full support of this view. The Supreme Court has ruled upon
Section 3 (c) of Rule 9 in the case of PINLAC, ET AL. vs. COURT OF
APPEALS, ET AL., G.R. No. 91486, 19 January 2001. There the Supreme Court
affirmed that when a party does not file an Answer, although his co-defendants do
so, default is availing against the former. The Supreme Court ruled:

(c) Effect of partial default. When a pleading asserting a claim states a

common cause of action against several defending parties, some of whom answer
and the others fail to do so, the court shall try the case against all upon the answers
thus filed and render judgment upon the evidence presented.
43
In fact, the court a quo enumerated in the Partial Decision those who filed
responsive pleadings. Considering that petitioners in their complaint stated a
common cause of action against all the named respondents, the court a quo should
have heard the case as against all respondents, the defaulted respondents included.
However, the trial court, unmindful of the above-quoted rule, proceeded to receive
evidence ex parte only against the defaulted respondents. The trial courts
disposition is not only violative of the rules but also a clear negation of the
defaulted respondents limited rights.

Whatever defense and evidence the non-defaulted respondents may present which
would be applicable to the situation of the defaulted respondents should inure to
the benefit of the latter. The nullification of OCT 614 adversely affected the
answering respondents for they all share the same mother title. In effect, the court
a quo pre-judged the case even against the answering respondents, for how could
OCT 614, the mother title, be valid for one set of respondents and null and void for
the other respondents? In fine, the Partial Decision was procedurally flawed.
[Boldfacing supplied]

Pinlac vs. Court of Appeals affirms that a declaration of partial default is in order
in these cicumstances. For, under Pinlac, that a Complaint states a common cause
of action against all the named defendants means only that the Honorable Court
should hear the case and receive evidence against all defendants, the defaulted
defendant included.

But, as Pinlac vs. Court of Appeals makes clear, Section 3 (c) of Rule 9 does not
mean that a delinquent defendant whose co-defendants did file their
Answers cannot be declared in default. He still should be declared in default for
having failed to file an Answer within the time given by the Rules. He does remain
entitled to the limited rights of a defendant in default, but to no more than those.

Although such defenses and evidence as the non-defaulted co-defendant may

present which would be applicable to the situation of the defaulted defendant could
inure to his benefit, being in default, the latter should be so declared. And so the
defaulted defendant shall remain entitled to notice of subsequent proceedings, but
he cannot take part in the trial.[2]

The Supreme Court again explained in depth the governing rules in a situation of
partial default under Section 3 (c) of Rule 9 in the case of REMIGIA GRAGEDA
ET AL., vs. HON. NIMFA C. GOMEZ, ET AL., G.R. No. 169536, 21 September
2007:

44
Stated differently, in all instances where a common cause of action is alleged
against several defendants, some of whom answer and the others do not, the latter
or those in default acquire a vested right not only to own the defense interposed in
the answer of their co-defendant or co-defendants not in default but also to expect
a result of the litigation totally common with them in kind and in amount whether
favorable or unfavorable. The substantive unity of the plaintiffs cause against all
the defendants is carried through to its adjective phase as ineluctably demanded by
the homogeneity and indivisibility of justice itself. Indeed, since the singleness of
the cause of action also inevitably implies that all the defendants are indispensable
parties, the courts power to act is integral and cannot be split such that it cannot
relieve any of them and at the same time render judgment against the rest.
Considering the tenor of the section in question, it is to be assumed that when any
defendant allows himself to be declared in default knowing that his co-defendant
has already answered, he does so trusting in the assurance implicit in the rule that
his default is in essence a mere formality that deprives him of no more than the
right to take part in the trial and that the court would deem anything done by or for
the answering defendant as done by or for him. The presumption is that otherwise
he would not have seen to it that he would not be in default. Of course, he has to
suffer the consequences of whatever the answering defendant may do or fail to do,
regardless of possible adverse consequences, but if the complaint has to be
dismissed in so far as the answering defendant is concerned, it becomes his
inalienable right that the same be dismissed also as to him. It does not matter that
the dismissal is upon the evidence presented by the plaintiff or upon the latters
mere desistance, for in both contingencies, the lack of sufficient legal basis must be
the cause. x x x.

The primary question which a Motion To Declare Defendant In Default hinges on

is whether or not the defendant failed to Answer within the time given him.

The question of whether or not his co-defendant had filed an Answer is relevant
only as to the second stage, the manner of how trial will subsequently be
conducted. It has no bearing on the first stage, the declaration of the delinquent
partys default.

The application of the Rules in such a case are therefore clear. The Rules on partial
default are as they were laid out in the same case of Grageda vs. Hon. Gomez:

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

45
 1. While the non-answering defendants may be declared in default, the court
would still try the case against them on the assumption that they are deemed
to have adopted the Answer of the answering defendants; and
2. If declared in default, the defaulting party is deprived of no more than the
right to take part in the trial. Consequently, the result of the litigation,
whether favorable or unfavorable, shall affect and bind the defaulting party
and the answering defendant with equal force and effect.

[1] Section 6, Rule 1 of the Rules of Court.

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

46
 (Motion to Declare Defendant in Default)

(CAPTION)

MOTION

(TO DECLARE DEFENDANT IN DEFAULT)

Plaintiff, by counsel and unto this Honorable Court, respectfully states

1.The records of the Honorable Court show that Defendant was served with copy
of the summons and of the complaint, together with annexes thereto on
_____________;

2.Upon verification however, the records show that Defendant _____________ has
failed to file his Answer within the reglementary period specified by the Rules of
Court despite the service of the summons and the complaint;

3.As such, it is respectfully prayed that Defendant _____________ be declared in

default pursuant to the Rules of Court and that the Honorable Court proceed to
render judgment as the complaint may warrant.

PRAYER

WHEREFORE, it is respectfully prayed that Defendant _____________ be

declared in default pursuant to the Rules of Court and that the Honorable Court
proceed to render judgment as the complaint may warrant.

Other relief just and equitable are likewise prayed for.

_____________, Philippines, __Date__.

(COUNSEL)

(NOTICE OF HEARING)

(EXPLANATION)

COPY FURNISHED:

47
OPPOSING COUNSEL

48
 FIRST DIVISION

ERLINDA GAJUDO, FERNANDO G.R. No. 151098

GAJUDO, JR., ESTELITA GAJUDO,
BALTAZAR GAJUDO and DANILO Present:
ARAHAN CHUA,
Petitioners, Panganiban, CJ,
Chairman,
Ynares-Santiago,
- versus - Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ
Promulgated:
TRADERS ROYAL BANK,[1]
Respondent. March 21, 2006
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - -- x

DECISION

PANGANIBAN, CJ:

T he mere fact that a defendant is declared in default does not automatically result
in the grant of the prayers of the plaintiff. To win, the latter must still present the
same quantum of evidence that would be required if the defendant were still
present. A party that defaults is not deprived of its rights, except the right to be heard
and to present evidence to the trial court. If the evidence presented does not support

49
a judgment for the plaintiff, the complaint should be dismissed, even if the defendant
may not have been heard or allowed to present any countervailing evidence.

The Case

Before us is a Petition for Review[2] under Rule 45 of the Rules of Court,

assailing the June 29, 2001 Decision[3] and December 6, 2001 Resolution[4] of the
Court of Appeals (CA) in CA-GR CV No. 43889. The CA disposed as follows:

UPON THE VIEW WE TAKE OF THIS CASE, THUS, the

partial judgment appealed from, must be, as it hereby is, VACATED
and SET ASIDE, and another one entered DISMISSING the complaint
at bench. Without costs.[5]

The assailed Resolution denied petitioners Motion for Reconsideration[6] for

lack of merit.

The Facts

The CA narrated the facts as follows:

[Petitioners] filed a complaint before the Regional Trial Court of

Quezon City, Branch 90, against [respondent] Traders Royal Bank, the
City Sheriff of Quezon City and the Register of Deeds of Quezon
City. Docketed thereat as Civil Case No. Q-41203, the complaint
sought the annulment of the extra-judicial foreclosure and auction sale
made by [the] city sheriff of Quezon City of a parcel of land covered
by TCT No. 16711 of the Register of Deeds of Quezon City, the
conventional redemption thereof, and prayed for damages and the
issuance of a writ of preliminary injunction.

50
 The complaint alleged that in mid 1977[, Petitioner] Danilo
Chua obtained a loan from [respondent] bank in the amount
of P75,000.00 secured by a real estate mortgage over a parcel of land
covered by TCT No. 16711, and owned in common by the
[petitioners]; that when the loan was not paid, [respondent] bank
commenced extra-judicial foreclosure proceedings on the property;
that the auction sale of the property was set on 10 June 1981, but was
reset to 31 August 1981, on [Petitioner Chuas] request, which,
however, was made without the knowledge and conformity of the other
[petitioners]; that on the re-scheduled auction sale, [the] Sheriff of
Quezon City sold the property to the [respondent] bank, the highest
bidder therein, for the sum of P24,911.30; that the auction sale was
tainted with irregularity because, amongst others, the bid price was
shockingly or unconscionably, low; that the other [petitioners] failed
to redeem the property due to their lack of knowledge of their right of
redemption, and want of sufficient education; that, although the period
of redemption had long expired, [Petitioner] Chua offered to buy back,
and [respondent] bank also agreed to sell back, the foreclosed property,
on the understanding that Chua would pay [respondent] bank the
amount of P40,135.53, representing the sum that the bank paid at the
auction sale, plus interest; that [Petitioner] Chua made an initial
payment thereon in the amount of P4,000.00, covered by Interbank
Check No. 09173938, dated 16 February 1984, duly receipted by
[respondent] bank; that, in a sudden change of position, [respondent]
bank wrote Chua, on 20 February 1984, asking that he could
repurchase the property, but based on the current market value thereof;
and that sometime later, or on 22 March 1984, [respondent] bank wrote
Chua anew, requiring him to tender a new offer to counter the offer
made thereon by another buyer.

Traversing [petitioners] complaint, [respondent] bank, upon 05

July 1984, filed its answer with counterclaim, thereunder asserting that
the foreclosure sale of the mortgaged property was done in accordance
with law; and that the bid price was neither unconscionable, nor
shockingly low; that [petitioners] slept on their rights when they failed
to redeem the property within the one year statutory period; and that
[respondent] bank, in offering to sell the property to [Petitioner] Chua

51
on the basis of its current market price, was acting conformably with
law, and with legitimate banking practice and regulations.

Pre-trial having been concluded, the parties entered upon trial,

which dragged/lengthened to several months due to
postponements. Upon 11 June 1988, however, a big conflagration hit
the City Hall of Quezon City, which destroyed, amongst other things,
the records of the case. After the records were reconstituted,
[petitioners] discovered that the foreclosed property was sold by
[respondent] bank to the Ceroferr Realty Corporation, and that the
notice of lis pendens annotated on the certificate of title of the
foreclosed property, had already been cancelled. Accordingly,
[petitioners], with leave of court, amended their complaint, but the
Trial Court dismissed the case without prejudice due to [petitioners]
failure to pay additional filing fees.

So, upon 11 June 1990, [petitioners] re-filed the complaint with

the same Court, whereat it was docketed as Civil Case No. 90-5749,
and assigned to Branch 98: the amended complaint substantially
reproduced the allegations of the original complaint. But [petitioners]
this time impleaded as additional defendants the Ceroferr Realty
Corporation and/or Cesar Roque, and Lorna Roque, and included an
additional cause of action, to wit: that said new defendants conspired
with [respondent] bank in [canceling] the notice of lis pendens by
falsifying a letter sent to and filed with the office of the Register of
Deeds of Quezon City, purportedly for the cancellation of said notice.

Summons was served on [respondent] bank on 26 September

1990, per Sheriffs Return dated 08 October 1990. Supposing that all
the defendants had filed their answer, [petitioners] filed, on 23 October
1991, a motion to set case for pre-trial, which motion was, however,
denied by the Trial Court in its Order of25 October 1991, on the ground
that [respondent] bank has not yet filed its answer. On 13 November
1991[, petitioners] filed a motion for reconsideration, thereunder
alleging that they received by registered mail, on 19 October 1990, a
copy of [respondent] banks answer with counterclaim, dated 04
October 1990, which copy was attached to the motion. In its Order
52
of 14 November 1991, the trial Court denied for lack of merit, the
motion for reconsideration, therein holding that the answer with
counterclaim filed by [respondent] bank referred to another civil case
pending before Branch 90 of the same Court.

For this reason, [petitioners] filed on 02 December 1991 a

motion to declare [respondent] bank in default, thereunder alleging that
no answer has been filed despite the service of summons on it on 26
September 1990.

On 13 December 1991, the Trial Court declared the motion

submitted for resolution upon submission by [petitioners] of proof of
service of the motion on [respondent] bank.

Thus, on 16 January 1992, upon proof that [petitioners] had

indeed served [respondent] bank with a copy of said motion, the Trial
Court issued an Order of default against [respondent] bank.

Upon 01 December 1992, on [petitioners] motion, they were by

the Court allowed to present evidence ex parte on 07 January 1993,
insofar as [respondent] bank was concerned.

Thereafter, or on 08 February 1993, the Trial Court rendered the

new questioned partial decision.[7]
Aggrieved, [respondent] bank filed a motion to set aside [the]
partial decision by default against Traders Royal Bank and admit
[respondent] Traders Royal Banks x x x Answer with counterclaim:
thereunder it averred, amongst others, that the erroneous filing of said
answer was due to an honest mistake of the typist and inadvertence of
its counsel.

The [trial court] thumbed down the motion in its Order of 26

July 1993.[8]

53
 Respondent bank appealed the Partial Decision[9] to the CA. During the
pendency of that appeal, Ceroferr Realty Corporation and/or Cesar and/or Lorna
Roque filed a Manifestation with Motion[10] asking the CA to discharge them as
parties, because the case against them had already been dismissed on the basis of
their Compromise Agreement[11] with petitioners. On May 14, 1996, the CA issued
a Resolution[12] granting Ceroferr et al.s Manifestation with Motion to discharge
movants as parties to the appeal. The Court, though, deferred resolution of the
matters raised in the Comment[13] of respondent bank. The latter contended that the
Partial Decision had been novated by the Compromise Agreement, whose effect
of res judicata had rendered that Decision functus officio.
Ruling of the Court of Appeals

The CA ruled in favor of respondent bank. Deemed, however, to have rested

on shaky ground was the latters Motion to Set Aside Partial Decision by Default
Against Traders Royal Bank and Admit Defendant Traders Royal Banks
Answer.[14] The reasons offered by the bank for failing to file an answer were
considered by the appellate court to be at once specious, shallow and sophistical and
can hardly be dignified as a mistake or excusable negligence, which ordinary
prudence could not have guarded against.[15]

In particular, the CA ruled that the erroneous docket number placed on the
Answer filed before the trial court was not an excusable negligence by the banks
counsel. The latter had a bounden duty to be scrupulously careful in reviewing
pleadings. Also, there were several opportunities to discover and rectify the mistake,
but these were not taken. Moreover, the banks Motion to Set Aside the Partial
Decision and to Admit [the] Answer was not accompanied by an affidavit of
merit. These mistakes and the inexcusable negligence committed by respondents
lawyer were binding on the bank.

On the issue of whether petitioners had convincingly established their right to

relief, the appellate court held that there was no ground to invalidate the foreclosure
sale of the mortgaged property. First, under Section 3 of Act No. 3135, an
extrajudicial foreclosure sale did not require personal notice to the
mortgagor. Second, there was no allegation or proof of noncompliance with the

54
publication requirement and the public posting of the notice of sale, provided under
Act No. 3135, as amended. Third, there was no showing of inadequacy of price as
no competent evidence was presented to show the real market value of the land sold
or the readiness of another buyer to offer a price higher than that at which the
property had been sold.

Moreover, petitioners failed to prove that the bank had agreed to sell the
property back to them. After pointing out that the redemption period had long
expired, respondents written communications to Petitioner Chua only showed, at
most, that the former had made a proposal for the latter to buy back the property at
the current market price; and that Petitioner Chua was requested to make an offer to
repurchase the property, because another buyer had already made an offer to buy
it. On the other hand, respondent noted that the Interbank check for P4,000 was for
deposit only. Thus, there was no showing that the check had been issued to cover
part of the repurchase price.

The appellate court also held that the Compromise Agreement had not resulted
in the novation of the Partial Decision, because the two were not incompatible. In
fact, the bank was not even a party to the Agreement. Petitioners recognition of
Ceroferrs title to the mortgaged property was intended to preclude future litigation
against it.

Hence this Petition.[16]

Issues

In their Memorandum, petitioners raise the following issues:

1. Whether or not the Respondent Court of Appeals erred in

failing to apply the provisions of Section 3, Rule 9 of the 1997 Rules
of Civil Procedure [and in applying instead] the rule on preponderance
of evidence under Section 1, Rule 133 of the Rules of Court.

55
 2. Whether or not the respondent appellate court failed to apply
the conventional redemption rule provided for under Article 1601 of
the New Civil Code.

3. Whether or not this Honorable Court can exercise its judicial

prerogative to evaluate the findings of facts.[17]

The first issue is one of law and may be taken up by the Court without hindrance,
pursuant to Section 1 of Rule 45 of the Rules of Court.[18] The second and the third
issues, however, would entail an evaluation of the factual findings of the appellate
court, a function ordinarily not assumed by this Court, unless in some excepted
cases. The Court will thus rule on the first issue before addressing the second and
the third issues jointly.

The Courts Ruling

The Petition has no merit.

First Issue:
Quantum of Proof

Petitioners challenge the CA Decision for applying Section 3 of Rule 9 of the

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

For ease of discussion, these two rules will be reproduced below, starting with
Section 3 of Rule 9 of the Rules of Court:

56
 Sec. 3. Default; declaration of. If the defending party fails to
answer within the time allowed therefor, the court shall, upon motion of
the claiming party with notice to the defending party, and proof of such
failure, declare the defending party in default. Thereupon, the court shall
proceed to render judgment granting the claimant such relief as his
pleading may warrant, unless the court in its discretion requires the
claimant to submit evidence. Such reception of evidence may be
delegated to the clerk of court.

(a) Effect of order of default. A party in default shall be entitled

to notice of subsequent proceedings but not to take part in the trial.

(b) Relief from order of default. A party declared in default may

at any time after notice thereof and before judgment file a motion under
oath to set aside the order of default upon proper showing that his failure
to answer was due to fraud, accident, mistake or excusable negligence
and that he has a meritorious defense.In such case, the order of default
may be set aside on such terms and conditions as the judge may impose
in the interest of justice.

(c) Effect of partial default. When a pleading asserting a claim

states a common cause of action against several defending parties, some
of whom answer and the others fail to do so, the court shall try the case
against all upon the answers thus filed and render judgment upon the
evidence presented.

(d) Extent of relief to be awarded. A judgment rendered against a

party in default shall not exceed the amount or be different in kind from
that prayed for nor award unliquidated damages.

57
 (e) Where no defaults allowed. If the defending party in an action
for annulment or declaration of nullity of marriage or for legal separation
fails to answer, the court shall order the prosecuting attorney to
investigate whether or nor a collusion between the parties exists, and if
there is no collusion, to intervene for the State in order to see to it that
the evidence submitted is not fabricated.

We now quote Section 1 of Rule 133:

SECTION 1. Preponderance of evidence, how determined. In

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

Between the two rules, there is no incompatibility that would preclude the
application of either one of them. To begin with, Section 3 of Rule 9 governs the
procedure which the trial court is directed to take when a defendant fails to file an
answer. According to this provision, the court shall proceed to render judgment
granting the claimant such relief as his pleading may warrant, subject to the courts
discretion on whether to require the presentation of evidence ex parte. The same
provision also sets down guidelines on the nature and extent of the relief that may

58
be granted. In particular, the courts judgment shall not exceed the amount or be
different in kind from that prayed for nor award unliquidated damages.

As in other civil cases, basic is the rule that the party making allegations has
the burden of proving them by a preponderance of evidence. [19] Moreover, parties
must rely on the strength of their own evidence, not upon the weakness of the
defense offered by their opponent.[20] This principle holds true, especially when the
latter has had no opportunity to present evidence because of a default
order. Needless to say, the extent of the relief that may be granted can only be as
much as has been alleged and proved[21] with preponderant evidence required under
Section 1 of Rule 133.

Regarding judgments by default, it was explained in Pascua v.

Florendo[22] that complainants are not automatically entitled to the relief prayed for,
once the defendants are declared in default. Favorable relief can be granted only
after the court has ascertained that the relief is warranted by the evidence offered
and the facts proven by the presenting party. In Pascua, this Court ruled that x x x
it would be meaningless to require presentation of evidence if every time the other
party is declared in default, a decision would automatically be rendered in favor of
the non-defaulting party and exactly according to the tenor of his prayer. This is not
contemplated by the Rules nor is it sanctioned by the due process clause.[23]

The import of a judgment by default was further clarified in Lim Tanhu v.

Ramolete.[24] The following disquisition is most instructive:

Unequivocal, in the literal sense, as these provisions [referring to

the subject of default then under Rule 18 of the old Rules of Civil
Procedure] are, they do not readily convey the full import of what they
contemplate. To begin with, contrary to the immediate notion that can
be drawn from their language, these provisions are not to be understood
as meaning that default or the failure of the defendant to answer should
be interpreted as an admission by the said defendant that the plaintiffs
59
 cause of action find support in the law or that plaintiff is entitled to the
relief prayed for. x x x.

xxxxxxxxx

Being declared in default does not constitute a waiver of rights

except that of being heard and of presenting evidence in the trial court. x
x x.

In other words, a defaulted defendant is not actually thrown out

of court. While in a sense it may be said that by defaulting he leaves
himself at the mercy of the court, the rules see to it that any judgment
against him must be in accordance with law. The evidence to support the
plaintiffs cause is, of course, presented in his absence, but the court is
not supposed to admit that which is basically incompetent. Although the
defendant would not be in a position to object, elementary justice
requires that only legal evidence should be considered against him. If the
evidence presented should not be sufficient to justify a judgment for the
plaintiff, the complaint must be dismissed. And if an unfavorable
judgment should be justifiable, it cannot exceed in amount or be different
in kind from what is prayed for in the complaint.[25]

In sum, while petitioners were allowed to present evidence ex parte under

Section 3 of Rule 9, they were not excused from establishing their claims for
damages by the required quantum of proof under Section 1 of Rule 133. Stated
differently, any advantage they may have gained from the ex parte presentation of
evidence does not lower the degree of proof required. Clearly then, there is no
incompatibility between the two rules.

Second and Third Issues:

Review of the Evidence

60
Petitioners urge this Court to depart from the general rule that the lower courts
findings of fact are not reviewable in a petition for review.[26] In support of their plea,
they cite the conflicting findings of the trial and the appellate courts, as well as the
alleged conjectures and surmises made by the CA in arriving at its Decision.

Indeed, the differences between the findings of the two courts a quo, leading to
entirely disparate dispositions, is reason enough for this Court to review the evidence
in this case.[27] Whether the CA indulged in surmises and conjectures when it issued
the assailed Decision will thus be determined.

At the outset, it behooves this Court to clarify the CAs impression that no evidence
was presented in the case which might have contributed to petitioners challenge to
its Decision. The appellate courts observation was based on the notation by the lower
courts clerk of court that there were no separate folders for exhibits and transcripts,
because there was no actual hearing conducted in this case.[28]

True, there was no hearing conducted between petitioners and

respondent, precisely because the latter had been declared in default, and petitioners
had therefore been ordered to present their evidence ex parte. But the absence of a
hearing did not mean that no evidence was presented. The Partial Decision
dated February 8, 1993, in fact clearly enumerated the pieces of evidence adduced
by petitioners during the ex parte presentation on January 7, 1993. The documentary
evidence they presented consisted of the following:
1. A copy of respondent banks Petition for the extrajudicial foreclosure and
auction sale of the mortgaged parcel of land[29]

2. The Certificate of Sale that was a consequence of the foreclosure sale[30]

3. A Statement of Account dated February 15, 1984, showing Petitioner

Chuas outstanding debt in the amount of P40,135.53[31]

61
 4. A copy of the Interbank check dated February 16, 1984, in the amount
of P4,000[32]

5. The Official Receipt issued by the bank acknowledging the check[33]

6. The banks letter dated February 20, 1984, advising Petitioner Chua of the
sale of the property at an extrajudicial public auction; the lapse of the period of
redemption; and an invitation to purchase the property at its current market price[34]

7. Another letter from the bank dated March 22, 1984, inviting Petitioner
Chua to submit, within five days, an offer to buy the same property, which another
buyer had offered to buy[35]

8. A copy of the Notice of Lis Pendens, the filing of which was done after
that of the Amended Complaint[36]

9. A copy of the title showing the inscription of the Notice of Lis Pendens[37]

10. A copy of the Absolute Deed of Sale to Cerrofer[38]

11. A copy of a letter dated August 29, 1986, made and signed by petitioners
counsel, requesting the cancellation of the Notice of Lis Pendens[39]

12. A copy of a page of the Memorandum of Encumbrance from TCT No.

(314341) 7778/T-39[40]

Having clarified this matter, we proceed to review the facts.

Petitioners do not deny that the one-year period for legal redemption had already
lapsed when respondent bank supposedly offered to sell the property in

62
question. The records clearly show that the Certificate of Sale following the
extrajudicial public auction of the property was registered on June 21, 1982, the date
from which the legal redemption period was to be reckoned. [41] Petitioners insist,
though, that they had the right to repurchase the property through conventional
redemption, as provided under Article 1601 of the Civil Code, worded as follows:

ART. 1601. Conventional redemption shall take place when the

vendor reserves the right to repurchase the thing sold, with the obligation
to comply with the provisions of Article 1616 and other stipulations
which may have been agreed upon.
It is true that the one-year period of redemption provided in Act No. 3135, as
amended -- the law under which the property here was sold in a foreclosure sale --
is only directory and, as such can be extended by agreement of the
parties.[42] However, it has also been held that for legal redemption to be converted
into conventional redemption, two requisites must be established: 1) voluntary
agreement of the parties to extend the redemption period; and 2) the debtors
commitment to pay the redemption price on a fixed date.[43] Thus, assuming that an
offer was made to Petitioner Chua to buy back the property after the lapse of the
period of legal redemption, petitioners needed to show that the parties had agreed to
extend the period, and that Petitioner Chua had committed to pay the redemption
price on a fixed date.

The letters sent by the bank to Petitioner Chua on February 20 and March 22, 1984,
do not convincingly show that the parties arrived at a firm agreement for the
repurchase of the property. What can be gleaned from the February 20 letter is that
Petitioner Chua proposed to pay the redemption price for the property, but that the
bank refused to accede to his request, because the one-year redemption period had
already lapsed.[44] The bank, though, had offered to sell back the property to him at
the current market value. Indeed, an examination of his earlier letter of February 17,
1984, readily reveals that he expressed willingness to settle his account with the
bank, but that his present financial situation precludes [him] from effecting an
immediate settlement x x x.[45]

On the other hand, the letter dated March 22, 1984, clearly states that x x x
the Bank rejected [his] request to redeem said property due to [the] lapse of [the] one
(1) year legal redemption period.[46] Nonetheless, he was [invited] to submit an offer

63
to buy the same property in five (5) days from receipt [of the letter]. [47] Petitioner
Chua was also informed that the bank had received an offer to purchase the
foreclosed property. As to the P4,000 check enclosed in his proposal dated February
17, 1984, as a token of his good faith, he was advised that the amount was still
outstanding in the books of the bank and could be claimed by him if he thought the
invitation was not feasible.

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

Granting that these documents evinced an agreement, petitioners were still

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

Indeed, other than the Interbank check marked for deposit by respondent bank,
no other evidence was presented to establish that petitioners had offered to pay the
alleged redemption price of P40,135.53 on a fixed date. For that matter, petitioners
have not shown that they tendered payment of the balance and/or consigned the
payment to the court, in order to fulfill their part of the purported agreement. These
remedies are available to an aggrieved debtor under Article 1256 of the Civil
Code,[51] when the creditor unjustly refuses to accept the payment of an obligation.

The next question that presents itself for resolution is the propriety of the CAs ruling
vacating the Partial Decision of the regional trial court (RTC) and dismissing the
case. To recall, the RTC had resolved to withhold a ruling on petitioners right to
redeem conventionally and/or order the reconveyance of the property in question,

64
pending a determination of the validity of the sale to Cerrofer Realty Corporation
and Spouses Cesar and Lorna Roque. The trial court, however, granted the prayer
for damages against respondent bank. The RTC ruled as follows:

The evidence presented by [petitioners] in so far as the cause of

action against [respondent] Traders Royal Bank is concerned are
preponderant to support the claims of the [petitioners]. However, in
view of the fact that the property subject matter of this case has already
been conveyed to defendant Cerrofer Realty Corporation thus the issue
as to whether or not the said conveyance or sale is valid is sill pending
between the [petitioners] and [respondents] Cerrofer Realty
Corporation and Cesar Roque and Lorna Roque. Hence, this Court
resolves to grant the prayer for damages against Traders Royal Bank.

The claims of the [petitioners] as against [respondent] Traders

Royal Bank having been established and proved by evidence, judgment
is hereby rendered ordering [respondent] Traders Royal Bank to pay
[petitioners] actual damage or the market value of the land in question
in the sum of P500,000.00; the sum of P70,000.00 as compensatory
damages; the sum of P200,000.00 to the heirs of [petitioner] Danilo
Chua; and attorneys fees in the sum of P30,000.00.[52]

In the light of the pending issue as to the validity of the sale of the property
to the third parties (Cerrofer Realty Corporation and Spouses Roque), the trial court
properly withheld judgment on the matter and thus left the prayer for damages as
the sole issue for resolution.

To adjudge damages, paragraph (d) of Section 3 of Rule 9 of the Rules of

Court provides that a judgment against a party in default shall not exceed the amount
or be different in kind from that prayed for nor award unliquidated damages. The
proscription against the award of unliquidated damages is significant, because it
means that the damages to be awarded must be proved convincingly, in accordance
with the quantum of evidence required in civil cases.

65
 Unfortunately for petitioners, the grant of damages was not sufficiently
supported by the evidence for the following reasons.

First, petitioners were not deprived of their property without cause. As

correctly pointed out by the CA, Act No. 3135, as amended, does not require
personal notice to the mortgagor.[53] In the present case, there has been no allegation
-- much less, proof -- of noncompliance with the requirement of publication and
public posting of the notice of sale, as required by ct No. 3135. Neither has there
been competent evidence to show that the price paid at the foreclosure sale was
inadequate.[54] To be sure, there was no ground to invalidate the sale.

Second, as previously stated, petitioners have not convincingly established

their right to damages on the basis of the purported agreement to repurchase.Without
reiterating our prior discussion on this point, we stress that entitlement to actual and
compensatory damages must be proved even under Section 3 of Rule 9 of the Rules
of Court. The same is true with regard to awards for moral damages and attorneys
fees, which were also granted by the trial court.

In sum, petitioners have failed to convince this Court of the cogency of their position,
notwithstanding the advantage they enjoyed in presenting their evidence ex
parte. Not in every case of default by the defendant is the complainant entitled to
win automatically.

WHEREFORE, this Petition is hereby DENIED and the assailed Decision

and Resolution AFFIRMED. Costs against petitioners.

SO ORDERED.

66
 ARTEMIO V. PANGANIBAN
Chief Justice
Chairman, First Division

WECONCUR:

CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice Associate Justice

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

Associate Justice Associate Justice

CERTIFICATION

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

ARTEMIO V. PANGANIBAN
Chief Justice

67
[1]
The Court of Appeals was included in the Petition as a respondent. However, the
CA was omitted by this Court from the title of the case, because it need not
be impleaded in petitions for review, under Section 4 of Rule 45 of the Rules
of Court.
[2]
Rollo, pp. 9-27.
[3]
Penned by Justice Renato C. Dacudao and concurred in by Justices Romeo J.
Callejo Sr. (then chairperson of the Special Thirteenth Division and now a
member of this Court) and Alicia L. Santos (acting member). Id., pp. 29-39.
[4]
Id., p. 41.
[5]
CA Decision, p. 11; id., p. 39.
[6]
CA rollo, pp. 145-152.
[7]
The dispositive portion of the Partial Decision reads as follows:
The claims of the [petitioners] as against [Respondent]
Traders Royal Bank having been established and proved by
evidence, judgment is hereby rendered ordering [Respondent]
Traders Royal Bank to pay [petitioners] actual damage or the market
value of the land in question in the sum of P500,000.00; the sum
of P70,000.00 as compensatory damages; the sum of P200,000.00 to
the heirs of [Petitioner] Danilo Chua; and attorneys fees in the sum
of P30,000.00. (Partial Decision dated February 8, 1993, p. 2;
records, p. 173).
[8]
CA Decision, pp. 2-5; rollo, pp. 30-33.
[9]
Records, pp. 172-173.
[10]
CA rollo, pp. 37-41.
[11]
Contained in the RTC Decision dated October 28, 1993; records, pp. 263-264.
[12]
CA Rollo, pp. 84-87.
[13]
Records, pp. 75-82.
[14]
Id., pp. 176-183.
[15]
CA Decision, p. 7; rollo, p. 35.
[16]
The Petition was deemed submitted for decision on March 29, 2005, upon the
Courts receipt of respondents 4-page Memorandum, signed by Atty.
Diosdado B. Jimenez of Gonzales Sinense Jimenez & Associates. Petitioners

68
 Memorandum, signed by Atty. Sergio F. Angeles of Angeles & Associates,
was received by the Court on May 15, 2003.
[17]
Petitioners Memorandum, pp. 10-17; rollo, pp. 98-105.
[18]
Section 1 of Rule 45 of the Rules of Court provides that x x x. The petition shall
raise only questions of law which must be distinctly set forth.
[19]
Saguid v. Court of Appeals, 451 Phil. 825, June 10, 2003; Ocampo v.
Ocampo, 427 SCRA 545, April 14, 2004; Catapusan v. Court of Appeals, 332
Phil. 586, November 21, 1996. Section 1 of Rule 131 of the Rules of Court
provides:
SECTION 1. Burden of proof. Burden of proof is the duty
of a party to present evidence on the facts in issue necessary to
establish his claim or defense by the amount of evidence required
by law.
[20]
Saguid v. CA, ibid. (citing Heirs of Anastacio Fabela v. CA, 362 SCRA
531, August 9, 2001).
[21]
Regalado, Remedial Law Compendium, Vol. 1, 7th rev. ed. (1999), p. 169. See
also P. T. Cerna Corporation v. CA, 221 SCRA 19, 25, April 6, 1993.
[22]
220 Phil. 588, April 30, 1985 cited in Luxuria Homes, Inc. v. CA, 361
Phil. 989, January 28, 1999.
[23]
Pascua v. Florendo, supra, pp. 595-596, per Gutierrez, Jr., J.
[24]
66 SCRA 425, August 29, 1975. See also Heirs of Anastacio Fabela v. CA, supra
at note 20.
[25]
Id., pp. 452-453, per Barredo, J.
[26]
Vibram Manufacturing Corporation v. Manila Electric Company, 466 SCRA
178, August 9, 2005; Rubiato v. Heirs of Jovito Rubiato, 464 SCRA 296, July
28, 2005; Republic v. CA, 328 Phil. 238, July 12, 1996;Baricuatro Jr. v.
Court of Appeals, 382 Phil. 15, 24, February 9, 2000.
[27]
Manila Banking Corp. v. Silverio, 466 SCRA 438, August 11, 2005; Yason v.
Arciaga, 449 SCRA 458, January 28, 2005; Menchavez v. Torres Jr. 449
SCRA 380, January 26, 2005.
[28]
CA Decision, p. 9; rollo, p. 37.
[29]
Records, pp. 9-12.
[30]
Id., pp. 13-14.
[31]
Id., p. 15.
[32]
Id., p. 16.
[33]
Id., p. 17.
[34]
Id., p. 18.
[35]
Id., p. 19.

69
[36]
Id., pp. 20-21.
[37]
Id., pp. 22-23.
[38]
Id., pp. 24-26.
[39]
Id., p. 27.
[40]
Id., p. 28.
[41]
Union Bank of the Philippines v. CA, 412 Phil. 64, June 25, 2001; Castro v.
Bague, 359 SCRA 28, June 20, 2001; Ysmael v. CA, 376 Phil. 323, November
16, 1999. Section 28 of Rule 39 of the Rules of Court provides that legal
redemption should be made at any time within one (1) year from the date of
the registration of the certificate of sale x x x.
[42]
Ibaan Rural Bank, Inc. v. Court of Appeals, 378 Phil. 707, 713, December 17,
1999; Lazo v. Republic Surety & Insurance Co., Inc., 31 SCRA 329, January
30, 1970.
[43]
Landrito v. Court of Appeals, 466 SCRA 107, August 9, 2005 (citing Lazo v.
Republic Surety & Insurance Co., Inc., supra); Ibaan Rural Bank, Inc. v.
Court of Appeals, supra.
[44]
Records, p. 18.
[45]
Id., p. 195.
[46]
Id., p. 19.
[47]
Ibid.
[48]
Id., p. 15.
[49]
Id., p. 16.
[50]
Id., p. 17.
[51]
ART. 1256. If the creditor to whom tender of payment has been made refuses
without just cause to accept it, the debtor shall be released from responsibility
by the consignation of the thing or sum due. x x x.
[52]
Partial Decision, p. 2; records, p. 173.
[53]
Section 3 of Act No. 3135, as amended, provides as follows:
Notice shall be given by posting notices of the sale for not
less than twenty days in at least three public places of the
municipality or city where the property is situated, and if such
property is worth more than four hundred pesos, such notice shall
also be published once a week for at least three consecutive weeks
in a newspaper of general circulation in the municipality or city.
(See also Ardiente v. Provincial Sheriff, 436 SCRA 655, August
17, 2004)
[54]
This fact would have been shown by presenting evidence that another bidder had
offered to pay a higher price for the property during the bidding.

70
 Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

HEIRS OF FRANCISCA MEDRANO, G.R. No. 165770

namely YOLANDA R. MEDRANO,
ALFONSO R. MEDRANO, JR., EDITA
M. ALFARO, MARITES M.
PALENTINOS, and GIOVANNI Present:
MEDRANO, represented by their legal
representative, Marites Medrano- CORONA, C. J., Chairperson,
Palentinos, LEONARDO-DE CASTRO,
BERSAMIN,*
Petitioners, DEL CASTILLO, and
PEREZ, JJ.
- versus -

ESTANISLAO DE VERA, Promulgated:

Respondent. August 9, 2010
x--------------------------------------------------------x

DECISION

DEL CASTILLO, J.

In cases where the subject property is transferred by the defendant during the pendency of
the litigation, the interest of the transferee pendente lite cannot be considered independent
of the interest of his transferors. If the transferee files an answer while the transferor is
declared in default, the case should be tried on the basis of the transferees answer and with
the participation of the transferee.

This Petition for Review on Certiorari[1] assails the June 25, 2004 Decision[2] of the Court
of Appeals (CA) in CA-G.R. SP No. 80053, which contained the following dispositive
portion:

71
 WHEREFORE, premises considered, the petition is hereby GRANTED and
this Court orders that the case be remanded to the court a quo for further trial.

SO ORDERED.[3]

Likewise assailed is the appellate courts October 6, 2004 Resolution[4] denying petitioners
Motion for Reconsideration.

Factual Antecedents

This case concerns a 463-square meter parcel of land[5] covered by Transfer Certificate of
Title (TCT) No. 41860 in the name of Flaviana De Gracia (Flaviana). In 1980, Flaviana
died[6]intestate, leaving her half-sisters Hilaria Martin-Paguyo (Hilaria) and Elena Martin-
Alvarado (Elena) as her compulsory heirs.

In September 1982, Hilaria and Elena, by virtue of a private document denominated Tapno
Maamoan ti Sangalobongan,[7] waived all their hereditary rights to Flavianas land in favor
of Francisca Medrano (Medrano). It stated that the waiver was done in favor of Medrano
in consideration of the expenses that she incurred for Flavianas medication, hospitalization,
wake and burial. In the same year, Medrano built her concrete bungalow on the land in
question without any objection from Hilaria and Elena or from their children.

When Hilaria and Elena died, some of their children affirmed the contents of the private
document executed by their deceased mothers. To that end, they executed separate Deeds
of Confirmation of Private Document and Renunciation of Rights in favor of
Medrano.[8] They likewise affirmed in said documents that Medrano had been occupying
and possessing the subject property as owner since September 1982.

Due to the refusal of the other children[9] to sign a similar renunciation, Medrano filed a
Complaint[10] on April 27, 2001 for quieting of title, reconveyance, reformation of
instrument, and/or partition with damages against Pelagia M. Paguyo-Diaz (Pelagia),
Faustina Paguyo-Asumio (Faustina), Jesus Paguyo (Jesus), Veneranda Paguyo-Abrenica,
Emilio a.k.a. Antonio Alvarado, Francisca Alvarado-Diaz (Francisca) and Estrellita
Alvarado-Cordero (Estrellita). The case was docketed as Civil Case No. U-7316 and
raffled to Branch 48 of the Regional Trial Court (RTC) of Urdaneta, Pangasinan. Medrano
then caused the annotation of a notice of lis pendens on TCT No. 41860[11] on May 3, 2001.

Summons upon the original complaint was duly served upon Pelagia and Estrellita .[12]
72
On August 29, 2001, Medrano filed an Amended Complaint[13] impleading the widow and
children of Antonio Alvarado, in view of the latters death.[14] Summons upon the amended
complaint was served upon the other defendants,[15] but no longer served upon Pelagia and
Estrellita.

On April 2, 2002, respondent Estanislao D. De Vera (De Vera) filed an Answer with
Counterclaim.[16] De Vera presented himself as the real party-in-interest on the ground that
some of the named defendants (Faustina, Pelagia, Francisca, Elena Kongco-Alvarado,
Jesus, and Estrellita) had executed a Deed of Renunciation of Rights[17] in his favor on
March 23, 2002. He maintained that the Tapno Maamoan ti Sangalobongan that was
executed by the defendants predecessors in favor of Medrano was null and void for want
of consideration. Thus, while some children affirmed the renunciation of their deceased
mothers rights in the lot in favor of Medrano, the other children renounced their hereditary
rights in favor of De Vera.

Medrano filed a Motion to Expunge Answer with Counterclaim of Estanislao D. De Vera

and to Declare Defendants in Default.[18] She argued that respondent De Vera had no
personality to answer the complaint since he was not authorized by the named defendants
to answer in their behalf.

In an Order,[19] dated July 30, 2002, the trial court disagreed with Medranos argument and
admitted De Veras Answer with Counterclaim. The trial court opined that De Vera did not
need a special power of attorney from the defendants because he did not answer the
complaint in their behalf. De Vera made a voluntary appearance in the case as the
transferee of the defendants rights to the subject property. The trial court further explained
that when the presence of other parties is required for granting complete relief, the court
shall order them to be brought in as defendants. While it was unsure whether De Vera was
an indispensable party to the case, the trial court opined that at the very least he was a
necessary party for granting complete relief. It thus held that the admission of De Veras
Answer with Counterclaim is proper in order to avoid multiplicity of suits.[20] In the same
Order, the court declared the named defendants in default for not answering the complaint
despite valid service of summons. Thus, it appears that the court a quo treated the named
defendants and De Vera as distinct and separate parties.

Medranos response to the aforesaid order was two-fold. With regard to the order declaring
the named defendants in default, Medrano filed on February 13, 2003 a Motion to Set
Reception of Evidence Before the Branch Clerk of Court.[21] She argued that she could
present evidence ex parte against the defaulting defendants on the ground that she
presented alternative causes of action against them in her complaint. Her cause of action
73
on the basis of acquisitive prescription can be raised solely against the defaulting original
defendants.[22] She thus prayed to be allowed to present evidence ex parte with respect to
her claim of acquisitive prescription against the defaulting defendants. As for the order
admitting De Veras Answer with Counterclaim, Medrano filed on February 21, 2003 a
Motion for Reconsideration of Order dated July 30, 2002.[23] She asked the court to order
De Vera to file a pleading-in-intervention so that he could be properly named as a
defendant in the case.

In an Order[24] dated March 6, 2003, the trial court resolved to grant Medranos Motion to
Set Reception of Evidence. It ordered the conduct of ex parte presentation of evidence on
the same day and the continuation thereof to proceed on March 10, 2003. Thus, Medrano
presented her evidence ex parte on the set dates. On March 10, 2003, the case was
submitted for resolution.[25]

Given the courts standing order which admitted De Veras Answer with Counterclaim, De
Vera filed a Motion to Set the Case for Preliminary Conference on March 27, 2003.[26]

The trial court resolved petitioners and De Veras respective pending motions in its March
31, 2003 Order.[27] The trial court granted Medranos motion and set aside its Order which
admitted De Veras Answer with Counterclaim. Citing Rule 19 of the Rules of Court, the
court ordered De Vera to file a pleading-in-intervention so that he could be recognized as
a party-defendant. As a necessary consequence to this ruling, the trial court denied De
Veras motion to set the case for preliminary conference for prematurity.

De Vera did not comply with the courts order despite service upon his lawyer, Atty.
Simplicio M. Sevilleja, on April 2, 2003.

Ruling of the Regional Trial Court

The RTC rendered its Decision[28] on April 21, 2003. It ruled that ownership over the titled
property has vested in petitioners by virtue of good faith possession for more than 10 years;
thus, it was no longer necessary to compel the defendants - heirs of Hilaria and Elena - to
execute an instrument to confirm Medranos rightful ownership over the land.

The trial court likewise held that the private document denominated as Tapno Maamoan
Ti Sangalobongan sufficiently conveyed to Medrano the subject property. The court held
that the conveyance was done in consideration of the various expenses that Medrano
incurred for Flavianas benefit. While the court conceded that the parcel of land was not
adequately described in the Tapno Maamoan ti Sangalobongan, its location, metes and

74
bounds were nonetheless confirmed by the defendants siblings in their respective deeds of
confirmation.

The dispositive portion of the Decision reads, in toto:

WHEREFORE, judgment is hereby rendered:

(1) Declaring [Medrano], substituted by her heirs, as the rightful and

lawful owner of the land covered by T.C.T. No. 41860;[29]

(2) Ordering the Register of Deeds of Tayug, Pangasinan to cancel

T.C.T. No. 41860 and to issue another Transfer Certificate of Title in the
name of [Medrano];

All other claims are hereby denied for lack of merit.

SO ORDERED.[30]

De Vera filed a Motion for Reconsideration[31] arguing that he was an indispensable party
who was not given an opportunity to present his evidence in the case. He also maintained
that Medrano was not the owner of the property, but a mere administratrix of the land as
evidenced by the records in SP Proc. No. 137577.[32]

De Veras motion was denied[33] for lack of merit on July 22, 2003. The court noted that De
Vera had no legal personality to file a motion for reconsideration because he did not file a
pleading-in-intervention. The trial court explained it would have allowed De Vera to
present his evidence in the case had he complied with the courts order to file a pleading-
in-intervention.

On September 10, 2003, De Vera filed a Manifestation[34] informing the trial court of his
intention to file a petition for certiorari and mandamus before the CA, pursuant to Rule 41,
Section 1, second paragraph and Rule 65 of the Rules of Court.

On October 7, 2003, petitioners filed a Motion for Entry of Judgment and

Execution[35] before the trial court. They also filed a Counter-Manifestation[36] to De Veras
Manifestation.Petitioners insisted that De Vera, as a transferee pendente lite, was bound by
the final judgment or decree rendered against his transferors. Even assuming that De Vera
had a right to appeal, the period therefor had already lapsed on August 12, 2003.
In its Order[37] dated December 10, 2003, the court a quo maintained that De Vera was not
a party to the suit, hence his appeal would not stay the finality and execution of
75
judgment. Thus the trial court ordered the entry of judgment in Civil Case No. U-7316. The
writ of execution was issued on December 12, 2003.

De Vera sought reconsideration[38] of the above order but the same was denied[39] on the
basis that De Vera had no personality to assail any order, resolution, or decision of the trial
court in Civil Case No. U-7316.

The Register of Deeds of Tayug, Pangasinan complied with the writ by canceling TCT No.
41860 in the name of Flaviana De Gracia and issuing TCT No. 65635 in the names of
petitioners[40] on April 19, 2004.

Proceedings before the Court of Appeals

De Vera argued in his Petition for Certiorari and Mandamus[41] before the CA that the trial
court erred in declaring the defendants in default and sought a writ compelling the trial
court to try the case anew. He insisted that he stepped into the shoes of the defendants with
regard to the subject property by virtue of the quitclaim that the defendants executed in his
favor. Thus, the trial court should have considered the defendants as properly substituted
by De Vera when he filed his Answer.

The standing order of the trial court with regard to De Vera at the time that it allowed
Medrano to present her evidence was to admit De Veras Answer with Counterclaim. Thus,
De Vera argued that it was improper for the trial court to have allowed Medrano to present
her evidence ex parte because it had yet to rule on whether De Vera had personality to
participate in the proceedings.

Ruling of the Court of Appeals

The appellate court agreed with De Vera. The CA noted that the ex parte presentation of
evidence took place on March 6 and 10, 2003; while the Motion to Expunge Answer and
Require Filing of Pleading-in-Intervention was granted much later on March 31, 2003. The
CA held that the trial court gravely abused its discretion by allowing Medrano to present
her evidence ex parte while De Veras personality to participate in the case still remained
unresolved. The premature ex parte presentation of evidence rendered a pleading-in-
intervention moot and academic.

The CA pointed out that the trial court should have exercised its authority to order the
substitution of the original defendants instead of requiring De Vera to file a pleading-in-
intervention. This is allowed under Rule 3, Section 19 of the Rules of Court. Since a

76
transferee pendente lite is a proper party[42] to the case, the court can order his outright
substitution for the original defendants.

The CA further held that De Veras failure to file the necessary pleading-in-intervention
was a technical defect that could have been easily cured. The trial court could have settled
the controversy completely on its merits had it admitted De Veras Answer with
Counterclaim. Not affording De Vera his right to adduce evidence is not only a manifest
grave abuse of discretion amounting to lack or excess of jurisdiction but also runs counter
to the avowed policy of avoiding multiplicity of suits.

The appellate court then ordered the case remanded to the trial court to afford De Vera an
opportunity to present his evidence.

Petitioners filed a Motion for Reconsideration,[43] which motion was denied[44] for lack of
merit on October 6, 2004.

Issues

I
Whether De Vera could participate in Civil Case No. U-7316
without filing a motion to intervene

II
Whether De Vera is bound by the judgment against his transferors

III
Whether it was proper for the CA to take cognizance of
respondents Petition for Certiorari and Mandamus

Our Ruling

We sustain the CAs ruling that the trial court gravely abused its discretion in refusing to
allow De Vera to participate in the case and requiring him to file a motion to intervene.

The trial court misjudged De Veras interest in Civil Case No. U-7316. It held that De Veras
right to participate in the case was independent of the named defendants. Because of its
ruling that De Vera had an independent interest, the trial court considered his interest as
separate from Medranos claims against the named defendants, and allowed the latter to be
tried separately. Thus, it admitted De Veras Answer with Counterclaim but declared the
77
named defendants in default and allowed the ex parte presentation of evidence by Medrano
against the named defendants.

The trial courts approach is seriously flawed because De Veras interest is not independent
of or severable from the interest of the named defendants. De Vera is a transferee pendente
lite of the named defendants (by virtue of the Deed of Renunciation of Rights that was
executed in his favor during the pendency of Civil Case No. U-7316). His rights were
derived from the named defendants and, as transferee pendente lite, he would be bound by
any judgment against his transferors under the rules of res judicata.[45] Thus, De Veras
interest cannot be considered and tried separately from the interest of the named
defendants.

It was therefore wrong for the trial court to have tried Medranos case against the
named defendants (by allowing Medrano to present evidence ex parte against them) after
it had already admitted De Veras answer. What the trial court should have done is to treat
De Vera (as transferee pendente lite) as having been joined as a party-defendant, and to try
the case on the basis of the answer De Vera had filed and with De Veras participation. As
transferee pendente lite, De Vera may be allowed to join the original defendants under Rule
3, Section 19:

SEC. 19. Transfer of interest. In case of any transfer of interest, the action
may be continued by or against the original party, unless the court upon
motion directs the person to whom the interest is transferred to be substituted
in the action or joined with the original party. (Emphasis supplied)

The above provision gives the trial court discretion to allow or disallow the
substitution or joinder by the transferee. Discretion is permitted because, in general, the
transferees interest is deemed by law as adequately represented and protected by the
participation of his transferors in the case. There may be no need for the
transferee pendente lite to be substituted or joined in the case because, in legal
contemplation, he is not really denied protection as his interest is one and the same as his
transferors, who are already parties to the case.[46]

While the rule allows for discretion, the paramount consideration for the exercise thereof
should be the protection of the parties interests and their rights to due process. In the instant
case, the circumstances demanded that the trial court exercise its discretion in favor of
allowing De Vera to join in the action and participate in the trial. It will be remembered
that the trial court had already admitted De Veras answer when it declared the original
defendants in default. As there was a transferee pendente lite whose answer had already
78
been admitted, the trial court should have tried the case on the basis of that answer, based
on Rule 9, Section 3(c):

Effect of partial default. When a pleading asserting a claim states a

common cause of action against several defending parties, some of whom
answer and the others fail to do so, the court shall try the case against all upon
the answers thus filed and render judgment upon the evidence presented.

Thus, the default of the original defendants should not result in the ex parte presentation of
evidence because De Vera (a transferee pendente lite who may thus be joined as defendant
under Rule 3, Section 19) filed an answer. The trial court should have tried the case based
on De Veras answer, which answer is deemed to have been adopted by the non-answering
defendants.[47]

To proceed with the ex parte presentation of evidence against the named defendants
after De Veras answer had been admitted would not only be a violation of Rule 9, Section
3(c), but would also be a gross disregard of De Veras right to due process. This is because
the ex parte presentation of evidence would result in a default judgment which would bind
not just the defaulting defendants, but also De Vera, precisely because he is a
transferee pendente lite.[48] This would result in an anomaly wherein De Vera would be
bound by a default judgment even if he had filed an answer and expressed a desire to
participate in the case.

We note that under Rule 3, Section 19, the substitution or joinder of the transferee is upon
motion, and De Vera did not file any motion for substitution or joinder. However, this
technical flaw may be disregarded for the fact remains that the court had already admitted
his answer and such answer was on record when the ex parte presentation of evidence was
allowed by the court. Because De Veras answer had already been admitted, the court
should not have allowed the ex parte presentation of evidence.

We are not persuaded by petitioners insistence that De Vera could not have
participated in the case because he did not file a motion to intervene. The purpose of
intervention is to enable a stranger to an action to become a party in order for him to protect
his interest and for the court to settle all conflicting claims. Intervention is allowed to avoid
multiplicity of suits more than on due process considerations. The intervenor can choose
not to participate in the case and he will not be bound by the judgment.

In this case, De Vera is not a stranger to the action but a transferee pendente lite. As
mentioned, a transferee pendente lite is deemed joined in the pending action from the
79
moment when the transfer of interest is perfected.[49] His participation in the case should
have been allowed by due process considerations.[50]

We likewise adopt with approval the appellate courts observation that De Veras failure to
file a pleading-in-intervention will not change the long foregone violation of his right to
due process. The ex parte presentation of evidence had already been terminated when the
trial court required De Vera to file his pleading-in-intervention. Even if he complied with
the order to file a pleading-in-intervention, the damage had already been done. The
precipitate course of action taken by the trial court rendered compliance with its order
moot.
Given the Courts finding that the ex parte presentation of evidence constituted a violation
of due process rights, the trial courts judgment by default cannot bind De Vera. A void
judgment cannot attain finality and its execution has no basis in law. The case should be
remanded to the trial court for trial based on De Veras answer and with his participation.

Certiorari petition before the CA proper

Petitioners point out that De Vera admitted receiving the trial courts Order denying his
motion for reconsideration on July 28, 2003. Thus he only had until August 12, 2003 to
file an appeal of the decision. Having lost his right to appeal by allowing the period therefor
to lapse, respondent has also lost his right to file a petition for certiorari before the CA. A
special civil action for certiorari is not a substitute for the lost remedy of appeal.

Respondent argues that a Rule 65 certiorari petition before the CA is proper because an
ordinary appeal would not have been speedy and adequate remedy to properly relieve him
from the injurious effects of the trial courts orders.

We agree with respondent that ordinary appeal was not an adequate remedy under the
circumstances of the case. An appeal seeks to correct errors of judgment committed by a
court, which has jurisdiction over the person and the subject matter of the dispute. In the
instant case, the trial court maintained that it had no jurisdiction over De Vera because it
did not consider him a party to the case. Its stance is that De Vera, as a non-party to the
case, could not participate therein, much less assail any of the orders, resolutions, or
judgments of the trial court. An appeal would have been an illusory remedy in this situation
because his notice of appeal would have certainly been denied on the ground that he is not
a party to the case.

On the other hand, certiorari is an extraordinary remedy for the correction of errors of
jurisdiction. It is proper if the court acted without or in grave abuse of discretion amounting
to lack or excess of jurisdiction and there is no appeal or any plain, speedy, and adequate
80
remedy in law. Given the circumstance that the final decision in Civil Case No. U-7316
prejudices De Veras rights despite the fact that he was not recognized as a party thereto
and was not allowed to assail any portion thereof, De Veras remedy was to annul the trial
court proceedings on the ground that it was conducted with grave abuse of discretion
amounting to lack of jurisdiction. With such annulment, the trial court should hear the case
anew with De Vera fully participating therein.

WHEREFORE, the petition is DENIED. The June 25, 2004 Decision of the Court of
Appeals in CA-G.R. SP No. 80053 and its October 6, 2004 Resolution are AFFIRMED.

Costs against petitioners.

SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice
WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

TERESITA J. LEONARDO-DE CASTRO LUCAS P. BERSAMIN

Associate Justice Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

81
 CERTIFICATION

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

RENATO C. CORONA
Chief Justice

*
In lieu of Associate Justice Presbitero J. Velasco, Jr., per Special Order No. 876
dated August 2, 2010.
[1]
Rollo, pp. 14-56.
[2]
CA rollo, pp. 152-160; penned by Associate Justice Eugenio S. Labitoria and
concurred in by Associate Justices Jose L. Sabio, Jr. and Jose C. Mendoza (now
a Member of this Court).
[3]
Id. at 160.
[4]
Id. at 205-206.
[5]
Located at Roxas St., cor. Cerezo St, Barangay Guiset Norte, San Manuel,
Pangasinan.
[6]
Flaviana De Gracia died on February 14, 1980 per Certificate of Death, records,
p. 10.
[7]
Exhibit C, Folder of Exhibits.
[8]
Two of Hilarias children, Victorio and Miguel Paguyo, executed the Deed of
Confirmation on September 23, 1998, Exhibit D, Folder of Exhibits; while four
of Elenas children, Elet, Francisco, Dolores, and Felipe, executed their own Deed
of Confirmation on January 26, 2000, Exhibit E, Folder of Exhibits.
[9]
Pelagia Diaz, Faustina Asumio, Jesus Paguyo, Veneranda Abrenica, Emilio a.ka.
Antonio Alvarado, Francisca Diaz, and Estrellita Cordero.
[10]
Records, pp. 2-8 with Annexes.
[11]
Entry No. 196296, rollo, p. 103.
82
[12]
Records, p. 32.
[13]
Id. at 136-146.
[14]
Ex-Parte Notice of Death and Motion to Amend Complaint, id. at 134-135.
[15]
Id. at 170 and 197.
[16]
Id. at188-194.
[17]
Id. at 192-193.
[18]
Id. at 206-208. Dated July 1, 2002 and filed on July 9, 2002.
[19]
Id. at 225-226; penned by Judge Alicia B. Gonzales-Decano.
[20]
Id. at 226.
[21]
Id. at 230-231.
[22]
Id. at 231.
[23]
Id. at 233-234.
[24]
Id. at 237.
[25]
Id. at 239. Meanwhile, Francisca Medrano died and her daughter Edith M. Alfaro
was entered as her legal representative (Id. at 248).
[26]
Id. at 247.
[27]
Id. at 249-250.
[28]
Id. at 254-262.
[29]
See Order dated December 11, 2003, id. at 390.
[30]
Id. at 262.
[31]
Id. at 269-271.
[32]
Id. at 275-276.
[33]
Id. at 285-286.
[34]
Id. at 289.
[35]
Id. at 297-299.
[36]
Id. at 306-307.
[37]
Id. at 386-387.
[38]
Id. at 397-399.
[39]
Order dated May 13, 2004; id. at 415.
[40]
Id. at 428-429.
[41]
Filed on October 23, 2003. Entitled Pelagia M. Paguyo-Diaz, Jesus M. Paguyo,
Faustina M. Paguyo-Asumio, Franscisca M. Alvarado-Diaz, Elena Kongco-
Alvarado, and Estrellita M. Alvarado-Cordero, substituted by Estanislao de Vera
v. Regional Trial Court, First Judicial Region, Branch 48, Urdaneta City,
Pangasinan, Heirs of Francisca R. Medrano, namely: Alfonso Medrano, Jr.,
Editha M. Alfaro, Marites M. Palentinos, and Giovani Medrano, represented by
their legal representative, Editha M. Alfaro. CA rollo, pp. 10-27.
[42]
Heirs of Francisco Guballa, Sr. v. Court of Appeals, G.R. Nos. L-78223 and L-
79403, December 19, 1988, 168 SCRA 518, 534.
[43]
CA rollo, pp. 165-184.
83
[44]
Id. at 205-206.
[45]
RULES OF COURT, Rule 39, Section 47(b).
[46]
Santiago Land Development Corporation v. Court of Appeals, 334 Phil. 741, 748
(1997), and its Resolution in 342 Phil. 643, 649 (1997).
[47]
See Heirs of Mamerto Manguiat v. Court of Appeals, G.R. Nos. 150768 and
160176, August 20, 2008, 562, SCRA 422, 432-433. See also Grageda v. Gomez,
G.R. No. 169536, September 21, 2007, 533 SCRA 677, 692-693.
[48]
RULES OF COURT, Rule 39, Section 47(b).
[49]
Santiago Land Development Corporation v. Court of Appeals, supra note 46
at 748.
[50]
See also Dela Cruz v. Joaquin, G.R. No. 162788, July 28, 2005, 464 SCRA 576,
584, which states: The rule on the substitution of parties was crafted to protect
every partys right to due process. x x x [N]o adjudication can be made against the
successor of the deceased if the fundamental right to a day in court is denied. The
Court has nullified not only trial proceedings conducted without the appearance
of the legal representatives of the deceased, but also the resulting judgments.

84
 THIRD DIVISION

JOSE R. MARTINEZ, G. R. No. 160895

Petitioner,
Present:
QUISUMBING,
- versus - Chairperson,
CARPIO,
CARPIO MORALES,
TINGA, and
REPUBLIC OF THE PHILIPPINES, VELASCO, JR., JJ.
Respondents.
Promulgated:

October 30, 2006

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

DECISION

TINGA, J.:

The central issue presented in this Petition for Review is whether an order of
general default issued by a trial court in a land registration case bars the Republic of
the Philippines, through the Office of the Solicitor General, from interposing an
appeal from the trial courts subsequent decision in favor of the applicant.

The antecedent facts follow.

On 24 February 1999, petitioner Jose R. Martinez (Martinez) filed a petition

for the registration in his name of three (3) parcels of land included in the Cortes,
Surigao del Sur Cadastre. The lots, individually identified as Lot No. 464-A, Lot No.
464-B, and Lot No. 370, Cad No. 597, collectively comprised around 3,700 square
meters. Martinezalleged that he had purchased lots in 1952 from his uncle, whose
85
predecessors-in-interest were traceable up to the 1870s. It was claimed
that Martinez had remained in continuous possession of the lots; that the lots had
remained unencumbered; and that they became private property through prescription
pursuant to Section 48(b) of Commonwealth Act No. 141. Martinez further claimed
that he had been constrained to initiate the proceedings because the Director of the
Land Management Services had failed to do so despite the completion of the
cadastral survey of Cortes, Surigao del Sur.[1]

The case was docketed as Land Registration Case No. N-30 and raffled to the
Regional Trial Court (RTC) of Surigao del Sur, Branch 27. The Office of the
Solicitor General (OSG) was furnished a copy of the petition. The trial court set the
case for hearing and directed the publication of the corresponding Notice of Hearing
in the Official Gazette. On 30 September 1999, the OSG, in behalf of the Republic
of the Philippines, opposed the petition on the grounds that appellees possession was
not in accordance with Section 48(b) of Commonwealth Act No. 141; that his
muniments of title were insufficient to prove bona-fide acquisition and possession
of the subject parcels; and that the properties formed part of the public domain and
thus not susceptible to private appropriation.[2]

Despite the opposition filed by the OSG, the RTC issued an order of general
default, even against the Republic of the Philippines, on 29 March 2000. This ensued
when during the hearing of even date, no party appeared before the Court to
oppose Martinezs petition.[3]

Afterwards, the trial court proceeded to receive Martinezs oral and

documentary evidence in support of his petition. On 1 August 2000, the RTC
rendered a Decision[4]concluding that Martinez and his predecessors-in-interest had
been for over 100 years in possession characterized as continuous, open, public, and
in the concept of an owner. The RTC thus decreed the registration of the three (3)
lots in the name of Martinez.

From this Decision, the OSG filed a Notice of Appeal dated 28 August
[5]
2000, which was approved by the RTC. However, after the records had been
transmitted to the Court of Appeals, the RTC received a letter dated 21 February
2001[6] from the Land Registration Authority (LRA) stating that only Lot Nos. 464-
A and 464-B were referred to in the Notice of Hearing published in the Official
Gazette; and that Lot No. 370, Cad No. 597 had been deliberately omitted due to the
lack of an approved survey plan for that property. Accordingly, the LRA manifested
that this lot should not have been adjudicated to Martinez for lack of jurisdiction.
This letter was referred by the RTC to the Court of Appeals for appropriate action.[7]
86
 On 10 October 2003, the Court of Appeals promulgated the assailed
Decision,[8] reversing the RTC and instead ordering the dismissal of the petition for
registration. In light of the opposition filed by the OSG, the appellate court found
the evidence presented by Martinez as insufficient to support the registration of the
subject lots. The Court of Appeals concluded that the oral evidence presented
by Martinez merely consisted of general declarations of ownership, without alluding
to specific acts of ownership performed by him or his predecessors-in-interest. It
likewise debunked the documentary evidence presented by Martinez, adjudging the
same as either inadmissible or ineffective to establish proof of ownership.

No motion for reconsideration appears to have been filed with the Court of
Appeals by Martinez, who instead directly assailed its Decision before this Court
through the present petition.

We cannot help but observe that the petition, eight (8) pages in all, was
apparently prepared with all deliberate effort to attain nothing more but the
perfunctory. The arguments raised center almost exclusively on the claim that the
OSG no longer had personality to oppose the petition, or appeal its allowance by the
RTC, following the order of general default. Starkly put, the [OSG] has no
personality to raise any issue at all under the circumstances pointed out
hereinabove.[9] Otherwise, it is content in alleging that [Martinez] presented
sufficient and persuasive proof to substantiate the fact that his title to Lot Nos. 464-
A and 464-B is worth the confirmation he seeks to be done in this registration
case;[10] and that the RTC had since issued a new Order dated 1 September 2003,
confirming Martinezs title over Lot No. 370.

In its Comment dated 24 May 2004,[11] the OSG raises several substantial
points, including the fact that it had duly opposed Martinezs application for
registration before the RTC; that jurisprudence and the Rules of Court acknowledge
that a party in default is not precluded from appealing the unfavorable judgment;
that the RTC had no jurisdiction over Lot No. 370 since its technical description was
not published in the Official Gazette; and that as found by the Court of Appeals the
evidence presented by Martinez is insufficient for registering the lots in his
name.[12] Despite an order from the Court requiring him to file a Reply to the
Comment, counsel for Martinez declined to do so, explaining, among others, that he
felt he would only be taxing the collective patience of this [Court] if he merely
repeats x x x what petitioner had succinctly stated x x x on pages four (4) to seven
(7) of his said petition. Counsel for petitioner was accordingly fined by the Court.[13]

87
 The Courts patience is taxed less by redundant pleadings than by insubstantial
arguments. The inability of Martinez to offer an effective rebuttal to the arguments
of the OSG further debilitates what is an already weak petition.

The central question, as posed by Martinez, is whether the OSG could have
still appealed the RTC decision after it had been declared in default. The OSG argues
that a party in default is not precluded from filing an appeal, citing Metropolitan
Bank & Trust Co. v. Court of Appeals,[14] and asserts that [t]he Rules of Court
expressly provides that a party who has been declared in default may appeal from
the judgment rendered against him.[15]

There is error in that latter, unequivocal averment, though one which does not
deter from the ultimate correctness of the general postulate that a party declared in
default is allowed to pose an appeal. Elaboration is in order.

We note at the onset that the OSG does not impute before this Court that the
RTC acted improperly in declaring public respondent in default, even though an
opposition had been filed to Martinezs petition. Under Section 26 of Presidential
Decree No. 1529, as amended, the order of default may be issued [i]f no person
appears and answers within the time allowed. The RTC appears to have issued the
order of general default simply on the premise that no oppositor appeared before it
on the hearing of 29 March 2000. But it cannot be denied that the OSG had already
duly filed its Opposition to Martinezs petition long before the said hearing. As we
held in Director of Lands v. Santiago:[16]

[The] opposition or answer, which is based on substantial

grounds, having been formally filed, it was improper for the respondent
Judge taking cognizance of such registration case to declare the
oppositor in default simply because he failed to appear on the day set
for the initial healing. The pertinent provision of law which states: "If
no person appears and answers within the time allowed, the court may
at once upon motion of the applicant, no reason to the contrary
appearing, order a general default to be recorded . . . ," cannot be
interpreted to mean that the court can just disregard the answer before
it, which has long been filed, for such an interpretation would be
nothing less than illogical, unwarranted, and unjust. Had the law
intended that failure of the oppositor to appear on the date of the initial
hearing would be a ground for default despite his having filed an
answer, it would have been so stated in unmistakable terms, considering
the serious consequences of an order of default. Especially in this case
88
 where the greater public interest is involved as the land sought to be
registered is alleged to be public land, the respondent Judge should have
received the applicant's evidence and set another date for the reception
of the oppositor's evidence. The oppositor in the Court below and
petitioner herein should have been accorded ample opportunity to
establish the government's claim.[17]

Strangely, the OSG did not challenge the propriety of the default order,
whether in its appeal before the Court of Appeals or in its petition before this Court.
It would thus be improper for the Court to make a pronouncement on the validity of
the default order since the same has not been put into issue. Nonetheless, we can,
with comfort, proceed from same apparent premise of the OSG that the default
order was proper or regular.

The juridical utility of a declaration of default cannot be disputed. By forgoing

the need for adversarial proceedings, it affords the opportunity for the speedy
resolution of cases even as it penalizes parties who fail to give regard or obedience
to the judicial processes.

The extent to which a party in default loses standing in court has been the
subject of considerable jurisprudential debate. Way back in 1920, in Velez v.
Ramas,[18] we declared that the defaulting defendant loses his standing in court, he
not being entitled to the service of notices in the case, nor to appear in the suit in any
way. He cannot adduce evidence; nor can he be heard at the final hearing.[19] These
restrictions were controversially expanded in Lim Toco v. Go Fay,[20] decided in
1948, where a divided Court pronounced that a defendant in default had no right to
appeal the judgment rendered by the trial court, except where a motion to set aside
the order of default had been filed. This, despite the point raised by Justice Perfecto
in dissent that there was no provision in the then Rules of Court or any law depriving
a defaulted defendant of the right to be heard on appeal.[21]

The enactment of the 1964 Rules of Court incontestably countermanded

the Lim Toco ruling. Section 2, Rule 41 therein expressly stated that [a] party who
has been declared in default may likewise appeal from the judgment rendered against
him as contrary to the evidence or to the law, even if no petition for relief to set aside
the order of default has been presented by him in accordance with Rule 38. [22] By
clearly specifying that the right to appeal was available even if no petition for relief
to set aside the order of default had been filed, the then fresh Rules clearly rendered
the Lim Toco ruling as moot.

89
 Another provision in the 1964 Rules concerning the effect of an order of
default acknowledged that a party declared in default shall not be entitled to notice
of subsequent proceedings, nor to take part in the trial.[23] Though it might be argued
that appellate proceedings fall part of the trial since there is no final termination of
the case as of then, the clear intent of the 1964 Rules was to nonetheless allow the
defaulted defendant to file an appeal from the trial court decision. Indeed,
jurisprudence applying the 1964 Rules was unhesitant to affirm a defaulted
defendants right to appeal, as guaranteed under Section 2 of Rule 41, even as Lim
Toco was not explicitly abandoned.

In the 1965 case of Antonio, et al. v. Jacinto,[24] the Court acknowledged that
the prior necessity of a ruling setting aside the order of default however, was changed
by the Revised Rules of Court. Under Rule 41, section 2, paragraph 3, a party who
has been declared in default may likewise appeal from the judgment rendered against
him as contrary to the evidence or to the law, even if no petition for relief to set aside
the order of default has been presented by him in accordance with Rule 38.[25] It was
further qualified in Matute v. Court of Appeals[26] that the new availability of a
defaulted defendants right to appeal did not preclude a defendant who has been
illegally declared in default from pursuing a more speedy and efficacious remedy,
like a petition for certiorari to have the judgment by default set aside as a nullity. [27]

In Tanhu v. Ramolete,[28] the Court cited with approval the commentaries of

Chief Justice Moran, expressing the reformulated doctrine that following Lim Toco,
a defaulted defendant cannot adduce evidence; nor can he be heard at the final
hearing, although

[under Section 2, Rule 41,] he may appeal the judgment rendered against him on the
merits.[29]

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

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.

90
 No appeal may be taken from:

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

(b) An order denying a petition for relief or any similar motion

seeking relief from judgment;

(c) An interlocutory order;

(d) An order disallowing or dismissing an appeal;

(e) An order denying a motion to set aside a judgment by

consent, confession or compromise on the ground of fraud, mistake or
duress, or any other ground vitiating consent;

(f) An order of execution;

(g) A judgment or final order for or against or one or more of

several parties or in separate claims, counterclaims, cross-claims and
third-party complaints, while the main case is pending, unless the court
allows an appeal therefrom; and

(h) An order dismissing an action without prejudice.

In all the above instances where the judgment or final order is

not appealable, the aggrieved party may file an appropriate special civil
action under Rule 65.

Evidently, the prior warrant that a defaulted defendant had the right to appeal
was removed from Section 2, Rule 41. On the other hand, Section 3 of Rule 9 of the
1997 Rules incorporated the particular effects on the parties of an order of default:

Sec. 3. Default; declaration of.If the defending party fails to

answer within the time allowed therefor, the court shall, upon motion
of the claiming party with notice to the defending party, and proof of
such failure, declare the defending party in default. Thereupon, the
court shall proceed to render judgment granting the claimant such relief
91
 as his pleading may warrant, unless the court in its discretion requires
the claimant to submit evidence. Such reception of evidence may be
delegated to the clerk of court.

(a) Effect of order of default.A party in default shall be entitled

to notice of subsequent proceedings but shall not take part in the trial.

(b) Relief from order of default.A party declared in default may

any time after notice thereof and before judgment file a motion under
oath to set aside the order of default upon proper showing that his
failure to answer was due to fraud, accident, mistake or excusable
negligence and that he has a meritorious defense. In such case, the order
of default may be set aside on such terms and conditions as the judge
may impose in the interest of justice.

(c) Effect of partial default.When a pleading asserting a claim

states a common cause of action against several defending parties, some
of whom answer and the others fail to do so, the court shall try the case
against all upon the answers thus filed and render judgment upon the
evidence presented.

(d) Extent of relief to be awarded.A judgment rendered against a

party in default shall not exceed the amount or be different in kind from
that prayed for nor award unliquidated damages.

xxx

It cannot be escaped that the old provision expressly guaranteeing the right of
a defendant declared in default to appeal the adverse decision was not replicated in
the 1997 Rules of Civil Procedure. Should this be taken as a sign that under the 1997
Rules a defaulted defendant no longer has the right to appeal the trial court decision,
or that the Lim Toco doctrine has been reinstated?

92
 If post-1997 jurisprudence and the published commentaries to the 1997 Rules
were taken as an indication, the answer should be in the negative. The right of a
defaulted defendant to appeal remains extant.

By 1997, the doctrinal rule concerning the remedies of a party declared in

default had evolved into a fairly comprehensive restatement as offered in Lina v.
Court of Appeals:[30]

a) The defendant in default may, at any time after discovery

thereof and before judgment, file a motion, under oath, to set aside the
order of default on the ground that his failure to answer was due to
fraud, accident, mistake or excusable neglect, and that he has
meritorious defenses; (Sec 3, Rule 18)

b) If the judgment has already been rendered when the defendant

discovered the default, but before the same has become final and
executory, he may file a motion for new trial under Section 1(a) of Rule
37;

c) If the defendant discovered the default after the judgment has

become final and executory, he may file a petition for relief under
Section 2 of Rule 38; and

d) He may also appeal from the judgment rendered against him

as contrary to the evidence or to the law, even if no petition to set aside
the order of default has been presented by him. (Sec. 2, Rule 41)[31]

The fourth remedy, that of appeal, is anchored on Section 2, Rule 41 of the

1964 Rules. Yet even after that provisions deletion under the 1997 Rules, the Court
did not hesitate to expressly rely again on the Lina doctrine, including the
pronouncement that a defaulted defendant may appeal from the judgment rendered
against him. This can be seen in the cases of Indiana Aerospace University v.
Commission on Higher Education,[32] Tan v. Dumarpa,[33] and Crisologo v. Globe
Telecom, Inc.[34]

Annotated textbooks on the 1997 Rules of Civil Procedure similarly

acknowledge that even under the new rules, a defaulted defendant retains the right
to appeal as previously confirmed under the old Section 2, Rule 41. In his textbook
on Civil Procedure, Justice Francisco answers the question What are the remedies
93
available to a defending party in default? with a reiteration of the Lina doctrine,
including the remedy that a defaulted defendant may also appeal from the judgment
rendered against him as contrary to the evidence or to the law, even if no petition to
set aside the order of default has been presented by him. [35] Justice Regalado also
restates the Lina rule in his textbook on Civil Procedure, opining that the remedies
enumerated therein, even if under the former Rules of Procedure, would hold true
under the present amended Rules.[36] Former Court of Appeals Justice Herrerra
likewise reiterates the Lina doctrine, though with the caveat that an appeal from an
order denying a petition for relief from judgment was no longer appealable under
Section 1, Rule 41 of the 1997 Rules.[37] Herrera further adds:

Section 2, paragraph [2] of the former Rule 41, which allows an

appeal from a denial of a petition for relief, was deleted from the present
Rule, and confined appeals to cases from a final judgment or final order
that completely disposes of the case, or of a particular matter therein,
when declared by these rules to be appealable. A judgment by default
may be considered as one that completely disposes of the case.[38]

We are hard-pressed to find a published view that the enactment of the 1997
Rules of Civil Procedure accordingly withdrew the right, previously granted under
the 1964 Rules, of a defaulted defendant to appeal the judgment by default against
him. Neither is there any provision under the 1997 Rules which expressly denies the
defaulted defendant such a right. If it is perplexing why the 1997 Rules deleted the
previous authorization under the old Section 2, Rule 41 (on subject of appeal), it is
perhaps worth noting that its counterpart provision in the 1997 Rules, now Section
1, Rule 41, is different in orientation even as it also covers subject of appeal. Unlike
in the old provision, the bulk of the new provision is devoted to enumerating the
various rulings from which no appeal may be taken, and nowhere therein is a
judgment by default included. A declaration therein that a defaulted defendant may
still appeal the judgment by default would have seemed out of place.

Yet even if it were to assume the doubtful proposition that this contested right
of appeal finds no anchor in the 1997 Rules, the doctrine still exists, applying the
principle of stare decisis. Jurisprudence applying the 1997 Rules has continued to
acknowledge the Lina doctrine which embodies this right to appeal as among the
remedies of a defendant, and no argument in this petition persuades the Court to rule
otherwise.

In Rural Bank of Sta. Catalina v. Land Bank of the Philippines,[39] the Court,
through Justice Callejo, Sr., again provided a comprehensive restatement of the
94
remedies of the defending party declared in default, which we adopt for purposes of
this decision:

It bears stressing that a defending party declared in default loses

his standing in court and his right to adduce evidence and to present his
defense. He, however, has the right to appeal from the judgment by
default and assail said judgment on the ground, inter alia, that the
amount of the judgment is excessive or is different in kind from that
prayed for, or that the plaintiff failed to prove the material allegations
of his complaint, or that the decision is contrary to law. Such party
declared in default is proscribed from seeking a modification or reversal
of the assailed decision on the basis of the evidence submitted by him
in the Court of Appeals, for if it were otherwise, he would thereby be
allowed to regain his right to adduce evidence, a right which he lost in
the trial court when he was declared in default, and which he failed to
have vacated. In this case, the petitioner sought the modification of the
decision of the trial court based on the evidence submitted by it only in
the Court of Appeals.[40]

If it cannot be made any clearer, we hold that a defendant party declared in

default retains the right to appeal from the judgment by default on the ground that
the plaintiff failed to prove the material allegations of the complaint, or that the
decision is contrary to law, even without need of the prior filing of a motion to set
aside the order of default. We reaffirm that the Lim Toco doctrine, denying such right
to appeal unless the order of default has been set aside, was no longer controlling in
this jurisdiction upon the effectivity of the 1964 Rules of Court, and up to this day.

Turning to the other issues, we affirm the conclusion of the Court of Appeals
that Martinez failed to adduce the evidence needed to secure the registration of the
subject lots in his name.

It should be noted that the OSG, in appealing the case to the Court of Appeals,
did not introduce any new evidence, but simply pointed to the insufficiency of the
evidence presented by Martinez before the trial court. The Court of Appeals was
careful to point out that the case against Martinez was established not by the OSGs
evidence, but by petitioners own insufficient evidence. We adopt with approval the
following findings arrived at by the Court of Appeals, thus:

The burden of proof in land registration cases is incumbent on

the applicant who must show that he is the real and absolute owner in
95
fee simple of the land applied for. Unless the applicant succeeds in
showing by clear and convincing evidence that the property involved
was acquired by him or his ancestors by any of the means provided for
the proper acquisition of public lands, the rule is settled that the
property must be held to be a part of the public domain. The applicant
must, therefore, present competent and persuasive proof to substantiate
his claim. He may not rely on general statements, or mere conclusions
of law other than factual evidence of possession and title.

Considered in the light of the opposition filed by the Office of

the Solicitor General, we find the evidence adduced by appellee, on the
whole, insufficient to support the registration of the subject parcels in
his name. To prove the provenance of the land, for one, all that appellee
proffered by way of oral evidence is the following cursory testimony
during his direct examination, viz:

xxxx

Q You mentioned that you are the owner of these three (3) parcels of
land. How did you begin the ownership of the same?
A I bought it from my uncles Julian Martinez and Juan Martinez.

xxxx

Q x x x x Who took possession of these parcels of land from then on?

A I took possession, sir

Q As owner?
A Yes, as owner.

Q Up to the present who is in possession as owner of these parcels of

land?
A I took possession.

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

96
xxxx

Court:

Q Of your own knowledge[,] where [sic] did your grandfather Hilarion

Martinez acquire these lands?
A According to my grandfather he bought that land from a certain Juan
Casano in the year 1870s[,] I think.

xxxx

Q By the way[,] when did your grandfather Hilarion Martinez die?

A Either in 1920 or 1921.

Q Since you said your immediate predecessors-in-interest Julian

Martinez and Juan Martinez inherited the same from your
grandfather. Can you say it the same that your predecessors-in-
interest were the owners and possessors of the same since 1921
up to the time they sold the land to you in 1952?
A Yes, sir.

xxxx

In the dreary tradition of most land registration cases,

appellee has apparently taken the absence of representation for
appellant at the hearing of his petition as license to be perfunctory
in the presentation of his evidence. Actual possession of land,
however, consists in the manifestation of acts of dominion over it of
such a nature as a party would naturally exercise over his own
property. It is not enough for an applicant to declare himself or his
predecessors-in-interest the possessors and owners of the land for
which registration is sought. He must present specific acts of
ownership to substantiate the claim and cannot just offer general
statements which are mere conclusions of law requiring evidentiary
support and substantiation.

The record shows that appellee did not fare any better with the
documentary evidence he adduced before the trial court. The October
97
 20, 1952 Deed of Sale by which appellee claims to have purchased
the subject parcels from his uncle, Julian Martinez, was not
translated from the vernacular in which it was executed and, by
said token, was inadmissible in evidence. Having submitted a white
print copy of the survey plan for Lot Nos. 464-A and 464-B,
appellee also submitted the tracing cloth plan for Lot No. 370
which does not, however, appear to be approved by the Director of
Lands. In much the same manner that the submission of the original
tracing cloth plan is a mandatory statutory requirement which cannot
be waived, the rule is settled that a survey plan not approved by the
Director of Lands is not admissible in evidence.[41]

These findings of the Court of Appeals, arrived at after a sufficiently extensive

evaluation of the evidence, stand in contrast to that contained in the RTC decision,
encapsulated in a one-paragraph prcis of the factual allegations of Martinez
concerning how he acquired possession of the subject properties. The Court of
Appeals, of course, is an appropriate trier of facts, and a comparison between the
findings of fact of the Court of Appeals and that of the RTC clearly demonstrates
that it was the appellate court which reached a more thorough and considered
evaluation of the evidence.

As correctly held by the Court of Appeals, the burden of proof expected of the
petitioner in a land registration case has not been matched in this case.

WHEREFORE, the petition is DISMISSED. Costs against petitioner.

SO ORDERED.

DANTE O. TINGA Associate Justice

WE CONCUR:

98
 LEONARDO A. QUISUMBING
Associate Justice
Chairperson

ANTONIO T. CARPIO CONCHITA CARPIO MORALES

Associate Justice Associate Justice

PRESBITERO J. VELASCO, JR.

Associate Justice

ATTESTATION

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

LEONARDO A. QUISUMBING
Associate Justice
Chairperson, Third Division
CERTIFICATION

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

99
ARTEMIO V. PANGANIBAN
Chief Justice

[1]
Records, pp. 1-4.
[2]
Id. at 108-108a.
[3]
Id. at 161.
[4]
Id. at 229-230.
[5]
Id. at 239.
[6]
CA rollo, p. 17.
[7]
Id. at 19.
[8]
Rollo, pp. 12-20.
[9]
Id. at 9.
[10]
Id. at 9-10.
[11]
Id. at 30-45.
[12]
Id. at 37-42.
[13]
Id. at 49.
[14]
G.R. No. 110147, 17 April 2001, 356 SCRA 563.
[15]
Rollo, p. 38, citing Oriental Media Inc. v. Court of Appeals, 250 SCRA
647.
[16]
No. L-41278, 15 April 1988, 160 SCRA 186.

100
 [17]
Id. at 191.
[18]
40 Phil. 787 (1920).
[19]
Id. at 792.
[20]
80 Phil. 166 (1948).
[21]
Id. at 176; J. Perfecto, dissenting.
[22]
See 1964 RULES OF COURT, Rule 41, Sec. 2. The entire provision reads:

SEC. 2. Judgments or orders subject to appeal.Only final

judgments or orders shall be subject to appeal. No interlocutory or
incidental judgment or order shall stay the progress of an action, nor
shall it be the subject of appeal until final judgment or order is rendered
for one party or the other.

A judgment denying relief under Rule 38 is subject to appeal,

and in the course thereof, a party may also assail the judgment on the
merits, upon the ground that it is not supported by the evidence or it is
contrary to law.

A party who has been declared in default may likewise appeal

from the judgment rendered against him as contrary to the
evidence or to the law, even if no petition for relief to set aside the
order of default has been presented by him in accordance with Rule
38. [Emphasis supplied.]
[23]
See 1964 RULES OF COURT, Rule 18, Sec. 2. Except when the party in
default files a motion to set aside the order of default, in which even he shall be
entitled to notice of all further proceedings regardless of whether the order of default
is set aside or not. See also 1964 RULES OF CIVIL PROCEDURE, Rule 13, Sec.
9.
[24]
121 Phil. 1128 (1965).
[25]
Id. at 1131.
[26]
136 Phil. 157 (1969).
101
 [27]
Id. at 190.
[28]
160 Phil. 1101 (1976).
[29]
Id. at 1128.
[30]
No. L-63397, 9 April 1985, 135 SCRA 637.
[31]
Id. at 642. See also Tiburcio v. Castro, No. L-58997, 28 May 1988, 161
SCRA 583; Dulos v. Court of Appeals, G.R. No. 87917, 7 August 1990, 188 SCRA
413; Ramnani v. Court of Appeals, G.R. No. 101789, 28 April 1993, 221 SCRA 582;
[32]
G.R. No. 139371, 4 April 2001, 356 SCRA 367.
[33]
G.R. No. 138777, 22 September 2004, 438 SCRA 659.
[34]
G.R. No. 167631, 16 December 2005, 478 SCRA 433, 439.
[35]
R.J. FRANCISCO, CIVIL PROCEDURE: RULES 1-22 (2001 ed.), at 340.
[36]
F. REGALADO, REMEDIAL LAW COMPENDIUM, Vol. 1 (2001 ed.),
pp. 173-174.
[37]
O. HERRERA, REMEDIAL LAW (2000 ed.), pp. 570-571.
[38]
Id. at 572; emphasis supplied. The quoted text actually reads, Section 2,
paragraph 3 of the former Rule 41 which allows an appeal from a denial of a petition
for relief x x x. However, it is Section 2, paragraph 2, and not paragraph 3, which
stated that [a] judgment denying relief under Rule 38 is subject to appeal x x x. We
consider the error to be clerical in nature.
[39]
G.R. No. 148019, 26 July 2004, 435 SCRA 183.
[40]
Id. at 190-191.
[41]
Rollo, pp. 17-20.

102
 FIRST DIVISION

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

ALBERTO G. PINLAC, ATTY. ERIBERTO H. DECENA, RODOLFO F.

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

103
 MATEO and OFELIA INOVEJAS, REMEDIOS C. DOVAS,
represented by Josefa Capistrano, DOMINGO ALTAMIRANO and
SPOUSES ROLANDO ALTAMIRANO and MINERVA FETALVERO,
BEATRIZ RINGPIS, ROSARIO DE MATA, RUFINA CRUZ,
represented by JOSEFA MANABAT, SPOUSES ANITA SALONGA-
CAPAGCUAN and MAYNARD CAPAGCUAN, DISCORA YATCO,
represented by VICTORINA Y. FIRME, and CONSUELO YATCO,
GENEROSA MEDINA VDA. DE NOGUERA, represented by ATTY.
RAYMUNDO M. NOGUERA, BEATRIZ SALANDANAN and
LOURDES ALONTE-VASQUEZ, PEDRO COSIO and VICTORINA
CARINO, RUTH C. ZARATE, PRECIOSISIMA V. YAPCHULAY,
BASILISA B. YAPCHULAY, OFELIA B. YAPCHULAY, FELISA B.
YAPCHULAY, FE B. YAPCHULAY, WILMA B. YAPCHULAY,
FELIX B. YAPCHULAY, MARIANO B. YAPCHULAY, GEN.
ALFREDO LIM, and other registered OWNERS OF VILAR-
MALOLES (VILMA) SUBDIVISION, respondents.

DECISION
YNARES-SANTIAGO, J.:

The instant case springs from a contentious and protracted dispute over a
sizeable piece of real property situated in what is now known as Old Balara, Sitio
Veterans, Barrio Payatas and Silangan, all of Quezon City. There are numerous
claimants, titled and untitled alike, each either pressing to own a piece of it, or
striving to protect ones right as a titled owner.
Petitioners herein are World War II veterans, their dependents and successors-
in-interest. Together, they filed a class suit primarily for Quieting of Title before the
Regional Trial Court of Quezon City, Branch 83, where it was docketed as Civil
Case No. Q-35672. In particular, petitioners claimed that the real property, which
has an aggregate area of 502 hectares, were part of forest lands belonging to the
government; that they and their predecessors-in-interest have occupied said property
continuously, adversely, and exclusively for more than thirty (30) years; and that
they have accordingly filed applications for land titling in their respective names
with the appropriate government agency.
While petitioners claim that the land in dispute was part of the public domain,
they named as respondents several persons and corporations who are titled owners
of subdivided parcels of land within the subject property. One of those so impleaded
as a party-respondent was the Vil-Ma Maloles Subdivision (hereinafter, Vil-
Ma). The individual lot owners of the said subdivision, however, were not
104
specifically named. Since personal service of summons could not be effected on Vil-
Ma and some of the other named respondents, petitioners moved for leave of court
to serve summons by publication which was granted. Accordingly, the summons
was published in the Metropolitan Newsweek, a periodical edited and published in
the City of Caloocan and Malolos, Bulacan.[1]
Some of the named respondents filed their respective responsive pleadings,
while the others, including Vil-Ma, failed to answer, and were thus declared in
default. Consequently, petitioners were allowed to present evidence ex parte against
the defaulted respondents. The court a quo found the following facts to be
conclusive:

(T)hat the case involves three parcel of lands, to wit: Lot 1 & 2 situated at the Old
Balara, Diliman, Quezon City and Lot 3 situated at Sitio Veterans, Barrio Payatas
and Silangan, Quezon City containing an aggregate area of 502 hectares more or
less; that Lot 1 is covered by TCT No. 5690 in the name of defaulted respondent
Jose V. Bagtas, which title emanated from TCT No. 48546 in the name of Emiliana
Vda. De Vera Cruz which contains an actual area of only 294.6 sq. meters, but,
when said TCT No. 5690 was issued the same was illegally and fraudulently
expanded to cover 23.5767 hectares through fraudulent resurveys without proper
judicial proceedings; that on said illegally expanded area of TCT No. 5690 in the
name of respondent Jose V. Bagtas, more than 363 transfer certificates of title were
subsequently issued including those belonging to some of the defaulted
respondents thereof; that TCT No. 5690 contains no technical description on its
face; that Lot 2 is covered by TCT No. 3548 in the name of Eustacio Maloles
married to Soledad Villegas and Vicente B. Vilar doing business under the name
and style of defaulted respondent Vilma Maloles Subdivision Inc., which title was
derived from TCT No. 33531 in the name of Oscar L. Uy which in turn came from
TCT No. 26285 in the name of Maria Lim which was immediately derived from
OCT No. 614 which contains no technical description on its face, that TCT No.
3548 likewise contains no technical description on its face; that however, on the
face of TCT No. 33531 of Oscar L. Uy from which TCT No. 3548 of defaulted
respondent Vilma Maloles Subdivision Inc., was derived, it appears that said TCT
No. 33531 was cancelled by another title, TCT No. 1713 and not by TCT No.
3548, the supposed derivative thereof, which title, from the foregoing facts, seems
to have come from nowhere considering that no document could be produced by
the representative of the Register of Deeds of Pasig, relative to the origin of the
aforesaid title and which register of deeds has jurisdiction over the same; that from
this spurious and fraudulent TCT No. 3548 which contains no technical description
on its face, numerous TCTs were subsequently issued, some of which belong to the

105
defaulted respondents hereof, that despite the issuance has not been cancelled by
the Register of Deeds of Quezon City; that Lot 3 was originally covered by OCT
No. 333 from which 846 questionable TCTs emanated and issued by the Register
of Deeds of Quezon City perpetrated and made possible by the illegal expansion of
the actual area thereof from 4,574 Sq. Meters, more or less, to
407,3875 (sic) hectares without proper judicial proceedings; that as an example of
the fraud perpetrated by respondents, TCT No. 26205 covers a lot situated at
Barrio Ermitao, San Juan del Monte, TCT No. 26287 covers a lot located at Barrio
Talipapa, Novaliches, TCT No. 33531 covers a lot located at the District of
Cubao. TCT No. 47705 covers a lot situated at Barrio San Francisco, San Juan,
TCT No. 133770 covers a lot located at San Bartolome, Caloocan City, TCT No.
45741 covers a lot located at San Francisco del Monte, San Juan, TCT No. 45636
covers a lot located at the municipality of San Juan, TCT No. 19-6370 covers a lot
located at Kamuning District, TCT No. 188447 covers a lot located at San
Francisco del Monte with a different mother title, OCT No. 515, TCT No. (22092)
61850 covers a lot located at Tala Estate Caloocan City, TCT No. 14645 covers lot
located at Kamuning District and TCT No. 14692 covers a lot located at Bo. San
Isidro, Caloocan City, yet these TCTs were utilized by some people to claim an
area located inside the litigated premises despite the fact that their technical
descriptions, as aforementioned, are different from the lands being sought to be
covered therewith; that Lots 1, 2 & 3 have been under the possession of petitioners
for a continuous, public, open, & uninterrupted period of 30 years through World
War II Veterans Legionnaires of the Philippines, Inc., by the principle of tacking
possession; that the Bureau of Forest Development has certified that Lots 1, 2 & 3
are part of public forest belonging to the government not yet certified for
disposition and alienation; that the Bureau of Forest Development knew and
encouraged petitioners occupancy and possession of said lots as in fact ordinary
residential permits were issued by said agency to some of herein petitioners and
even helped in petitioners acquisition of electrical facilities from the
MERALCO.[2]

Resolving the sole issue of whether or not petitioners were entitled to the land
they occupy and possess, even when said land was allegedly part of unclassified
public forest land and yet covered by transfer certificates of title in the names of the
defaulted respondents, the court a quo rendered a Partial Decision in favor of
petitioners, based on the following disquisition:

First, because as established from the foregoing facts, OCT No. 614, TCT No.
5690, TCT No. 3548 covering Lots 1 & 2 of the disputed land, not having
technical descriptions appearing on their respective face, clearly are null and void

106
by reason thereof. This is because a torrens title is the certificate of ownership
issued under the Register of Deeds naming and declaring the owner in fee simple
of the real property DESCRIBED therein, free from all liens and encumbrances
except such as maybe expressly noted thereon or otherwise reserved by law.
(Philippine National Bank vs. Tan Ong Zse, 51 Phil. 317).Without any technical
description a title is fictitious and the mere issuance thereof is fraudulent. Such
being the case, it follows that none of the title holders subsequently issued out of
said void titles could say that he or she is an innocent purchaser for value. For in
the case at bar, there are really no rights that could be transferred to them since
even the titles of those supposed owners thereof originally are themselves
fictitious. x x x Second, because although the Bureau of Forest Development
maintains, as in fact, it certified that Lots 1, 2 & 3 are part of the unclassified
public forest land of the government, and therefore, are not susceptible of private
appropriation, still, due to the established fact that the lots involved are under the
present occupancy and possession of petitioners with the knowledge and tolerance
of the Bureau of Forest Development, the true and real nature of said lands as
being public forest has become highly dubious and in the opinion of this Court
could not overcome the presumption that said lands are agricultural. For the mere
fact that a tract of land has trees upon it or has mineral wealth within it, is not of
itself sufficient to declare that one is forest land and the other mineral land. There
must be some proof of the extent as well as of the present or future value of the
land as forest or mineral. It must be shown that the land is more valuable for the
forestry or the minerals which it contains than it is for agricultural purposes. Land
may be classified as forest or mineral today and after the exhaustion of the timber
or minerals contained therein may be classified as agricultural land
tomorrow. Hence, in case of doubt and considering that it is a matter of public
knowledge that a majority of the lands in the Philippines are agricultural lands, it
was rightly held that in the absence of evidence to the contrary any land may be
presumed to be agricultural. And that being the case, it is clear that petitioners have
acquired legally a title over Lots 1, 2 & 3 of this case through extra-ordinary
prescription of thirty (30) years of continuous, public, open and uninterrupted
possession thereof, the lands being agricultural and, thus, are susceptible of private
ownership by petitioners.

WHEREFORE, premises considered, judgment is hereby rendered in favor of

petitioners and against the defaulted respondents:

1) Declaring petitioners through the principal petitioners hereof, to wit: Alberto G.

Pinlac, Atty. Eriberto H. Decena, Rodolfo T. Reyes, Felipe Briones and Juanito S.
Metilla as absolute owners in fee simple title of the aforesaid Lots 1, 2 & 3 hereof

107
by virtue of extra-ordinary prescription, with the exception of the lands covered by
the respective transfer certificate of title belonging to the non-defaulted
respondents;

2) Declaring Original Certificate of Title No. 614, TCT No. 5690 and TCT No.
3548 of the Register of Deeds of Quezon City, and the subsequent TCTs issued
therefrom, with the exception of those titles belonging to the non-defaulted
respondents, as null and void ab initio;

3) Ordering the Register of Deeds of Quezon City to cancel OCT No. 614, TCT
No. 5690 and TCT No. 3548 as well as the subsequent TCTs issued and emanating
therefrom, with the exception of those titles belonging to the non-defaulted
respondents, from its record;

4) Declaring the area of TCT No. 333 in excess of its true and actual area of 4,574
Sq. Meters, as well as the TCTs subsequently issued by the Register of Deeds of
Quezon City, covering the area in excess of said actual area, with the exception of
those belonging to non-defaulted respondents, as null and void ab initio;

5) Ordering the Register of Deeds of Quezon City to cancel all TCTs subsequently
issued based on OCT No. 333 in excess of the actual area of 4,574 Sq. Meters,
with the exception of those titles belonging to the non-defaulted respondents;

6) Declaring the writ of preliminary injunction dated August 7, 1985, in so far as

those areas covered by the cancelled OCTs and TCTs hereof are concerned, as
permanent;

7) Ordering the Register of Deeds of Quezon City to issue herein petitioners the
corresponding individual transfer certificate of titles upon proper application made
thereof.

SO ORDERED.[3]

On May 17, 1989, or exactly one (1) year and fifty-seven (57) days after the
above-quoted judgment by default was rendered, a Petition for Annulment of
Judgment with Certiorari, Prohibition and Mandamus[4] was brought before the
Court of Appeals by the titled owners of the subdivided lots within Vil-Ma. They
assailed the default judgment which nullified all their titles, arguing that the court a
quohad no jurisdiction over them and their respective titled properties. They also
alleged that they only came to know of the adverse judgment when petitioners sought

108
the execution of the judgment by attempting to dispossess some of the titled owners
of the lots and making formal demands for them to vacate their respective properties.
They likewise claimed that the Partial Decision against the defaulted respondents
was null and void on the grounds of lack of jurisdiction and extrinsic fraud, for the
reasons that:
(1) Civil Case No. Q-35672, while it was a petition to quiet title, was a
collateral proceeding, not a direct action attacking their duly registered
titles. Besides, a petition for cancellation of title can only be filed by a
registered owner or a person having an interest in registered property, and
must be filed in the original land registration case in which the decree of
registration was entered.
(2) They were never made parties to Civil Case No. Q-35672, nor were their
lots described in the complaint, published summons, and Partial
Decision. Named defendant was VIL-MA, a totally separate and
independent entity which had already ceased to exist way back in January
of 1976. Moreover, the summons, as well as the Partial Decision was not
published in a newspaper or periodical of general circulation.Thus, the
defective service of summons to said defendant did not place the
individual lot owners under the trial courts jurisdiction, nor are they bound
by the adverse judgment.
(3) They were denied due process of law as they were not given their day in
court. They should have been included as indispensable parties-
respondents in Civil Case No. Q-35672 since the petitioners therein were
seeking to annul their respective transfer certificates of title.
(4) Their duly registered titles cannot be defeated by the alleged adverse,
continuous and notorious possession of the petitioners since their titles are
indefeasible and cannot be acquired by prescription or adverse possession.
(5) If, indeed, the subject property is unclassified forest lands, it is not
capable of private appropriation. The court a quo is bereft of authority to
declare motu proprio that the subject property should be reclassified as
agricultural, not forest land.
(6) The trial court violated Section 3(c), Rule 10 of the Rules of Court which
provides that when some of several respondents fail to answer, the court
shall try the case against all upon the answers thus filed and render
judgment upon the evidence thus presented, whenever a complaint states
a common cause of action against several respondents. Accordingly, the

109
 defense interposed by those who answer or appear to litigate the case
should inure to the benefit of even those who fail to appear or answer.
(7) The trial court cannot render null and void in the default judgment the
mother title (OCT No. 614), from which the petitioners transfer
certificates were derived, which the Supreme Court had already declared
valid and legal.
To impress upon the Court of Appeals that they have a meritorious defense and
that their petition was not intended to delay or frustrate the final disposition of the
case, the titled owners cited the case of De La Cruz v. De La Cruz,[5] where the
Supreme Court traced the origins of OCT 614. It was held in that case, that:

x x x. The Piedad Estate consists of a vast tract of land originally registered on

March 12, 1912 under Original Certificate of Title No. 614 of the Register of
Deeds of the Province of Rizal in the name of the Philippine Government.

The Piedad Estate was one of the so-called friar lands which were purchased by the
government of the Philippines pursuant to the provisions of the Friar Lands Act,
Public Act No. 1120 which was enacted on April 26, 1904. x x x.

As specifically stated above, the said lands are not public lands in the sense in
which those words are used in the Public Land Act Numbered Nine Hundred and
twenty-six and cannot be acquired or leased under the provisions thereof. In the
case of Jacinto vs. Director of Lands (1926) 49 Phil. 853, the Supreme Court held
that the so-called friar lands, to which the government of the Philippines holds title,
are not public lands but private or patrimonial property of the government.

xxxxxxxxx

As held in Lorenzo vs. Nicolas, No. L-4085, 30 July 1952, 91 Phil. 686, from the
provisions of sections 11, 12 and 16 of Act No. 1120, it is apparent that the
pervading legislative intent is to sell the friar lands acquired by the government to
actual settlers and occupants of the same.[6]

Claiming that their individual transfer certificates of title were derived from
subsequent subdivisions and transfers of the lots within the Piedad Estate, the
defaulted registered owners invoked the Comments and Recommendations of the
Ad Hoc Committee created by the then Ministry of Natural Resources, tasked to
investigate the historical background of the Piedad and Payatas Estates in Quezon
City, containing evidence which they would have substantiated had they been given
their day in court. The Ad Hoc Committee reported, to wit:
110
 FINDINGS AND OBSERVATIONS

The Piedad Estate, situated in the Municipality of San Mateo and Caloocan during
the time of registration in 1910, covers an area of 3850.7226 hectares. The
Registration of Title under Case No. 5975 was published in the January 21, 1910
issue of the Official Gazette.

After the Piedad Estate was registered in Original Certificate of Title No. 614 in
the name of the Government in 1910 under the provisions of Act 496, the area was
subdivided originally into 874 lots. As a result of subsequent surveys executed in
the course of disposition, the number of lots increased to 1,305. Disposition of
these lots was made by the Bureau of Lands thru sales, under the Friar Lands Act,
as early as 1910 and records show that even before the Second World War, all lots
in the Piedad Estate have been disposed of. Owing perhaps to the scarcity of land
applicants at the time, it will be observed that a number of applicants have
acquired several lots totalling several hectares. Among the vendees with several
lots are the Philippine Trust Co., the Zuzuarreguis and the Metropolitan Water
District, to name a few. A list of lot holders in the Piedad Estate with the
corresponding lot numbers, lot areas and date of purchase from the Bureau of
Lands is hereto attached and marked as ANNEX B.

Thru a series of transfer of lots from one owner to another attended at times by
subdivision into smaller lots and at other times by consolidation of several lots into
one, most of the lots of the Piedad Estate have lost their identity both in original
ownership structure and lot descriptions. Piedad Estate now embraces and includes
a number of private residential subdivisions among which are the following:

1. Villar Maloles Subdivision (owned by Villar Maloles, Psd-21997)

2. U.P. Sites Nos. 1 and 2

3. Sunnyville Subdivision (Owned by the Delos Santos family)

4. Sterling Meadows Subdivision (LRC) Pcs-11110

5. Dona Patrona Subdivision

6. Far Eastern University (43 has.)

7. Luis Reyes (Psd-19419)

111
8. Jose Yulo (PLS-336-D)

By virtue of subsequent changes in political boundaries, Piedad Estate is now

within Quezon City. It is located on both sides of Luzon Avenue and is bounded
on the North by the Republic Avenue; on the East by private residential
subdivisions which includes the B.F. Homes (LRC) Psd-133236, the Villa Ligaya
Subdivision (Psd-65729), the Kapalaran Subdivision (Pcs-47850), the Kasiyahan
Subdivision (LRC) Pcs-12091, Zuzuarregui Property (Psd-34912) and the Doa
Beartiz Subdivision under Psd-39351; on the South by the Don Mariano Marcos
Avenue; and on the South-West and West by the U.P. Sites Nos. 1 and 2.

COMMENTS AND RECOMMENDATION

There is no doubt that Piedad Estate has long been segregated from the mass of the
public domain and have become private lands duly registered under the Torrens
System following the procedure for the confirmation of private lands prescribed in
Act 496. Thus the lands inside the Piedad Estate are no longer lands of the public
domain. Neither are these lands forest lands, in the classification of lands for forest
purposes, the main criterion prescribed in Section 15 of P.D. 705, the Forestry
Code, is its slope. Those beyond 18% are to be preserved for forest purposes while
those below are to be released as not needed for forest purposes, hence, as
alienable and disposable. By its physical nature, location and historical use, the
land in question can hardly be considered and classified as forest land. Physically,
it is first, level and at most slightly rolling land. Location wise, it used to be within
the periphery and now in the heart of a metropolis. While originally it was used for
agricultural purposes, it has later become urban due to population pressure and
rapid urbanization in the Metro Manila area. It is devoid of any timber land, more
so if we talk of forest of commercial value. In fact, the Composite Land
Classification Committee of the MNR composed of the Directors of BFD, BL,
BFAR and BMGS, has already signed a land classification map and recommended
for its release because it has absolutely no forest value.

On the basis of existing records of the Bureau of Lands and the area of the Piedad
Estate as contained in the Technical Descriptions of the said Estate published in
the January 21, 1910 issue of the Official Gazette, there is no expansion or
enlargement of the area, hence, it is recommended that existing titles within the
area should be respected and their validity upheld.

xxxxxxxxx

112
In view of all the foregoing, the committee recommends that all existing titles
validly issued within the area be respected and their validity
upheld.[7] (Emphasis supplied)

Accordingly, the defaulted titled owners prayed that judgment be rendered:

1. Declaring the aforesaid Partial Decision on defaulted private respondents as null

and void;

2. Declaring all Residential Use Permits issued by the Director of Forest

Management Bureau as null and void;

3. Declaring all Transfer of Certificates of Titles of the petitioners (respondents

herein) emanating from OCT 614 and TCT 3548 (1713) as valid;

4. Ordering private respondents (petitioners herein), their agents or representatives

and all other persons claiming right under them to vacate the respective titled lands
of the petitioners squatted by the former;

5. Ordering the dismissal of Hon. Judge Reynaldo Roura from the Regional Trial
Court, Macabebe, Pampanga on the grounds of gross incompetence and gross
ignorance of the law (Adm. Circular No. 4 of the Supreme Court, dated January
27, 1988).

6. Making the preliminary injunction as permanent; and

7. Ordering the private respondents (petitioners herein) to pay jointly and solidarily
to the petitioners the sum of P200,000.00 as moral and exemplary damages, plus
the sum of P5,000.00 per lot of the petitioners as attorneys fee, aside from cost of
suit, and for any other relief just and proper.[8]

On June 23, 1989, the Court of Appeals granted respondents (petitioners therein)
application for writ of preliminary injunction, ruling that:

When this case was called for hearing on June 21, 1989 on the application for the
issuance of a writ of preliminary injunction, the parties and their respective counsel
appeared and orally argued their respective stand on the matter. It is admitted that
the herein petitioners, indispensable parties in the case, were not individually
served with summons.

113
We believe and so hold that there is merit in the instant application for preliminary
injunction, hence, the same is hereby GRANTED. Upon the posting by the
petitioners of a bond in the amount of One Hundred Thousand Pesos
(P100,000.00), subject to Our approval, let a writ of preliminary injunction issue
enjoining the respondents (petitioners herein), and all persons acting for and in
their behalf, to desist and refrain from enforcing or implementing, or from
attempting to enforce and implement, the questioned writ of execution of the
partial judgment, dated March 21, 1988, rendered in Civil Case No. Q-35672,
entitled: Teofilo M. Gariando, et al., petitioners versus Gregorio Dizon, et al.,
respondents, until further orders from this Court.

SO ORDERED.[9]

On November 15, 1989, the Court of Appeals rendered a Decision[10] granting

the petition and annulling the Partial Decision in Civil Case No. Q-35762 based on
its finding that the trial courts lack of jurisdiction over the persons of respondents --
-

x x x becomes all the more apparent when petitioners claim or asseverate that the
assailed Partial Decision can not bind Vilar-Maloles (VILMA), the umbrella name,
for the simple reason that said PARTNERSHIP was dissolved on January 26,
1976, for it can no longer be sued as it had no more juridical personality.

xxxxxxxxx

Furthermore, petitioners contend that the summons and the Partial Decision were
published in a local newspaper edited in Caloocan City and Malolos, Bulacan
known as METROPOLITAN NEWSWEEK implying that said summons and
Partial Decision were not published in a newspaper of general circulation in
Quezon City as required by PD 1079, Sec. 1 thereof. Petitioners not having been
duly notified of the hearing/proceedings, the Partial Decision being assailed is
without significance to them or as far as petitioners are concerned said Partial
Decision is null and void.[11]

Petitioners motion for reconsideration was denied in a Resolution dated

December 21, 1989.[12]
Hence, the instant petition for certiorari which raises the following issues:
I. WHETHER OR NOT RESPONDENT COURT OF APPEALS
QUESTIONED DECISION HAS VIOLATED PETITIONERS RIGHT
TO DUE PROCESS BY IGNORING AND LEAVING UNDECIDED
114
 ALL THE ISSUES RAISED IN THE ANSWER OF PETITIONERS IN
CA-G.R. NO. SP-17596.
II. WHETHER OR NOT THE COURT A-QUO HAS ACQUIRED
JURISDICTION OVER RESPONDENT VILMA MALOLES
SUBDIVISION BY THE PUBLICATION OF THE SUMMONS AND
PETITION AS ORDERED BY THE COURT IN CIVIL CASE NO. Q-
35672 AND SO THE PARTIAL DECISION (ANNEX B) WAS LEGAL,
VALID AND PROPER.
III. WHETHER OR NOT PRIVATE RESPONDENTS PER THEIR
PETITION BEFORE RESPONDENT COURT OF APPEALS HAS A
VALID CAUSE OF ACTION CONSIDERING THEY ADOPTED
CONTRADICTORY POSITIONS OR THEORIES OF THE CASE,
AND THAT RESPONDENT COURT OF APPEALS DECISION
(ANNEX G) IS VOID.[13]
We find no merit in the instant petition.
The case before the Court of Appeals was one for annulment of judgment,
certiorari, prohibition and mandamus. In resolving the same, the Court of Appeals
need not retry the facts. An action for annulment of judgment is grounded only on
two justifications: (1) extrinsic fraud; and (2) lack of jurisdiction or denial of due
process.[14] All that herein private respondents had to prove was that the trial court
had no jurisdiction; that they were prevented from having a trial or presenting their
case to the trial court by some act or conduct of petitioners;[15] or that they had been
denied due process of law. Thus, the Court of Appeals need only to resolve the issues
of lack of jurisdiction, existence of extrinsic fraud, and denial of due process of law.
The action for annulment of judgment cannot and was not a substitute for the
lost remedy of appeal. The very purpose of the action for annulment of judgment
was to have the final and executory judgment set aside so that there will be a renewal
of litigation.[16] Whether or not the assailed Partial Decision based solely on facts
and evidence presented by the petitioners is meritorious is irrelevant and
immaterial. Thus, the Court of Appeals did not err, nor did it violate the petitioners
right to due process of law, when it refused to consider all the factual issues raised
by petitioners.
We also agree with the Court of Appeals conclusion that the Partial Decision is
null and void insofar as private respondents are concerned since the latter were not
duly served summons or notified of the proceedings against them. The summons and
the Partial Decision were published in a local newspaper edited and published in
Caloocan City and Malolos, Bulacan. However, the Court of Appeals found the

115
publication in said newspaper, namely the Metropolitan Newsweek, to be invalid
because the said periodical is not considered a newspaper of general circulation in
Quezon City where the subject property is located, as required by Presidential
Decree No. 1079, Section 1.
Petitioners, however, contend that the service of summons by publication was
legal and in accordance with the requirements of Rule 14, Section 14 of the Rules of
Court. The service by publication was done pursuant to the orders of the trial court
dated May 5, 1993 and September 29, 1983.[17]
While the service of summons by publication may have been done with the
approval of the trial court, it does not cure the fatal defect that the Metropolitan
Newsweek is not a newspaper of general circulation in Quezon City. The Rules
strictly require that publication must be in a newspaper of general circulation and in
such places and for such time as the court may order.[18] The court orders relied upon
by petitioners did not specify the place and the length of time that the summons was
to be published. In the absence of such specification, publication in just any
periodical does not satisfy the strict requirements of the rules. The incomplete
directive of the court a quo coupled with the defective publication of the summons
rendered the service by publication ineffective. The modes of service of summons
should be strictly followed in order that the court may acquire jurisdiction over the
respondents,[19] and failure to strictly comply with the requirements of the rules
regarding the order of its publication is a fatal defect in the service of summons.[20] It
cannot be overemphasized that the statutory requirements of service of summons,
whether personally, by substituted service, or by publication, must be followed
strictly, faithfully and fully, and any mode of service other than that prescribed by
the statute is considered ineffective.[21]
Be that as it may, even granting that the publication strictly complied with the
rules, the service of summons would still be ineffective insofar as private
respondents are concerned. At the time the complaint for Quieting of Title was filed
on November 2, 1983, Vilma Maloles Subdivision no longer existed as a juridical
entity. Vilma Maloles Subdivision, a partnership, was dissolved more than six (6)
years earlier, as evidenced by a Certificate of Dissolution issued by the SEC dated
January 26, 1976.[22] Consequently, it could no longer be sued having lost its
juridical personality.
It was also established that all the lots within the subdivision had been disposed
of to private individuals, herein private respondents. As the titled owners, they
should have been impleaded as party-respondents before the court a quo. They were
not made respondents, neither were they informed of the adverse proceedings that
would result in the nullification of their duly registered titles. Clearly, there was a

116
blatant disregard for their rights as registered owners. Private respondents titles and
rights as owners have been unjustly violated. Hence, the Court of Appeals did not
err in granting private respondents petition by annulling and setting aside the Partial
Decision rendered by the court a quo for lack of jurisdiction and for denial of due
process of law.
Petitioners failed to show that they were the aggrieved parties. If ever there was
denial of due process, it was private respondents who suffered therefrom. Whether
by petitioners failure to effectively serve summons or by omitting to name private
respondents as respondents, the trial courts Partial Decision declaring private
respondents titles null and void was clearly violative of the due process requirement
of the Constitution. It is elementary that before a person can be deprived of his right
or property he should first be informed of the claim against him and the theory on
which such claim is premised.[23] The courts will not countenance a denial of the
fundamental right to due process, which is a cornerstone of our legal system. [24]
The Partial Decision was a judgment by default, which is generally looked upon
with disfavor,[25] for it cannot pretend to be based on the merits of the
controversy.[26] As in this case, the judgment by default may amount to a positive
and considerable injustice to private respondents. Hence, justice and equity demand
that this case be litigated anew.[27] It is evident that the reopening of the case would
not amount to an exercise in futility nor is it intended to further delay the final
resolution of this controversy. The court a quo should give all the necessary parties
every chance to fight their case fairly and in the open, without resort to
technicalities.[28]
Finally, the conclusion that the Partial Decision of the court a quo is void finds
support in Rule 10, Section 5(c) of the then Rules of Court, which provides:

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

In fact, the court a quo enumerated in the Partial Decision those who filed
responsive pleadings. Considering that petitioners in their complaint stated a
common cause of action against all the named respondents, the court a quo should
have heard the case as against all respondents, the defaulted respondents
included. However, the trial court, unmindful of the above-quoted rule, proceeded
to receive evidence ex parte only against the defaulted respondents. The trial courts
disposition is not only violative of the rules but also a clear negation of the defaulted
respondents limited rights.
117
 Whatever defense and evidence the non-defaulted respondents may present
which would be applicable to the situation of the defaulted respondents should inure
to the benefit of the latter. The nullification of OCT 614 adversely affected the
answering respondents for they all share the same mother title. In effect, the court a
quo pre-judged the case even against the answering respondents, for how could OCT
614, the mother title, be valid for one set of respondents and null and void for the
other respondents? In fine, the Partial Decision was procedurally flawed.
WHEREFORE, in view of all the foregoing, the decision of the Court of
Appeals in CA-G.R. SP No. 17596 is AFFIRMED and the instant petition is
DENIED for lack of merit.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Kapunan, and Pardo, JJ., concur.
Puno, J., no part.

[1]
Annex R, Records, p. 259.
[2]
Partial Decision on Defaulted Private Respondents, Civil Case No. Q-35672,
RTC, Quezon City, Branch 83, penned by Judge Reynaldo V. Roura; Rollo, pp. 50-
52; references to exhibits omitted.
[3]
Ibid., pp. 52-54 (citations omitted).
[4]
CA-G.R. SP No. 17596.
[5]
130 SCRA 666 (1984).
[6]
At 673-677.
[7]
Special Order No. 426, Series of 1986; Rollo, pp. 214-221.
[8]
Petition, Rollo, p. 111.
[9]
Record, p. 319.
[10]
Associate Justice Ricardo J. Francisco, ponente; Associate Justices Antonio M.
Martinez and Jesus M. Elbinias, concurring.
[11]
Rollo, pp. 127-129.
[12]
Rollo, p. 136.
[13]
Petition, Rollo, p. 35.

118
[14]
Strait Times, Inc. v. CA, 294 SCRA 714 (1998); Salonga v. CA, 269 SCRA 534
(1997).
[15]
Ybanez v. CA, 253 SCRA 540 (1997).
[16]
I Moran, Rules of Court, 1950 ed., p. 697, citing Anuran v. Aquino, 38 Phil. 29;
Banco-Espaol-Filipino v. Palanca, 37 Phil. 921; Santiago v. Ceniza, 5 SCRA 494
(1962).
[17]
Annex F-1 and F-2 cited in pp. 39-40, Rollo.
[18]
Rules of Court, Rule 14, Section 14.
[19]
Gan Hock v. CA, 197 SCRA 223 (1991).
[20]
Sahagun v. CA, 198 SCRA 44 (1991).
[21]
Paluwagan ng Bayan Savings Bank v. King, 172 SCRA 60 (1989).
[22]
Annex P, Record, p. 255.
[23]
Republic v. Sandiganbayan, 266 SCRA 515 (1997).
[24]
Fabella v. CA, 282 SCRA 256 (1997).
[25]
Trajano v. Cruz, 80 SCRA 712 (1977).
[26]
Lesaca v. Ca, 215 SCRA 17 (1992); Coombs v. Santos, 24 Phil. 446 (1913).
[27]
Sps. Rudy Ameloquio, Sr. and Laguimas Obnamia v. CA, G.R. No. 124243, June
15, 2000.
[28]
Gerales v. CA, 218 SCRA 638 (1993); Goldloop Properties, Inc. v. CA, 212
SCRA 504 (1992).

119
FIRST DIVISION

HEIRS OF MAMERTO MANGUIAT, G.R. No. 150768

represented by GERARDO MANGUIAT;
HEIRS OF FELIPE MARUDO, represented
by JOSE MARUDO; HEIRS OF JULIANA
MAILON, represented by GAVINA
MAILON MENDOZA; HEIRS OF
LEONCIA MERCADO, represented by
ANIANA MANGUIAT; HEIRS OF
VICENTE PEREZ, represented by
SOTERO PEREZ; HEIRS OF VICENTE
GARCIA, represented by MACARIO
GARCIA LUCIDO; and HEIRS OF
TRANQUILINA MENDOZA, represented
by RUFINA MENDOZA,
Petitioners,

- versus -

THE HON. COURT OF APPEALS and J.A.

DEVELOPMENT CORPORATION,
Respondents.

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

HEIRS OF MAMERTO
MANGUIAT,represented by GERARDO
MANGUIAT; HEIRS OF FELIPE
MARUDO, represented by JOSE
MARUDO; HEIRS OF JULIANA
MAILON, represented by GAVINA

120
 MAILON MENDOZA; HEIRS OF
LEONCIA MERCADO, represented by
G.R. No. 160176
ANIANA MANGUIAT; HEIRS OF
VICENTE PEREZ, represented by
SOTERO PEREZ; HEIRS OF VICENTE
GARCIA, represented by MACARIO
Present:
GARCIA LUCIDO; and HEIRS OF
TRANQUILINA MENDOZA, represented PUNO, C.J., Chairperson,
by RUFINA MENDOZA, CARPIO,
Petitioners, CORONA,
AZCUNA, and
- versus - LEONARDO- DE CASTRO, JJ.

THE HON. COURT OF APPEALS

AND REPUBLIC OF THE PHILIPPINES,
Respondents.

Promulgated:

August 20, 2008

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

DECISION

PUNO, C.J.:

121
 Before us are two petitions for review on certiorari assailing the Decisions of
the Court of Appeals in CA-G.R. SP No. 60770 and CA-G.R. SP No. 61703
dated August 29, 2001 and January 22, 2003, respectively, and their Resolutions
dated November 16, 2001 and September 29, 2003, respectively. In both cases, the
Court of Appeals set aside the partial decision of
the Regional Trial Court of Tagaytay City, dated February 18, 2000, in Civil Case
No. TG-1904.

The facts show that petitioners filed a complaint against respondent J.A.
Development Corporation (JDC), Bureau of Telecommunications (BUTEL), Juan
dela Cruz, and Pedro dela Cruz on May 14, 1999 with
the Regional Trial Court of Tagaytay City. The complaint, docketed as Civil Case
No. TG-1904, was for quieting of title and cancellation of certificates of title
over Lot 1993, commonly known as the Calamba Estate. Petitioners alleged that
they succeeded to the rights of their predecessors-in-interest to whom Lot1993
was awarded on November 13, 1914 by virtue of a Sales Certificate, in accordance
with the provisions of the Friar Land Act. Petitioners, thus, sought to annul
the Torrenstitle issued to respondent, BUTEL, Juan dela Cruz, and Pedro dela Cruz.
On May 19, 1999, summons was served on respondent JDC through its
employee, Jacqueline de los Santos.[1] On the same date, summons was served on
BUTEL through a certain employee, Cholito Anitola.[2] The sheriffs return did not
describe the position of Mr. Anitola at BUTEL.[3]

Respondent JDC moved to dismiss the complaint on the following grounds:

(1) lack of jurisdiction of the court over the subject matter of the case; (2) lack of
cause of action; (3) prescription; and (4) improper venue.[4] With leave of court, it
supplemented its motion by raising the additional ground of res judicata citing the
judgment of the same court in Civil Case No. TG-1516. It contended that Civil Case
Nos. TG-1904 and TG-1516 have identical parties and causes of action, and that the
order of dismissal of the latter case has long become final due to prescription, and
laches has long set in.[5] The motion to dismiss was denied on January 11,
2000.[6] JDC filed a motion for reconsideration which, to date, has not been resolved.

On July 1, 1999, petitioners moved to have BUTEL declared in default for its
failure to file an answer despite service of summons and to allow them to present
their evidence ex parte.[7] The motion was granted on November 10, 1999.[8] A week
later, the petitioners presented their evidence before the branch clerk of court acting
as commissioner.

122
 On February 18, 2000, the trial court promulgated a partial decision against
BUTEL, the dispositive portion of which states:

PREMISES CONSIDERED, this Court found and hold (sic) that

the plaintiffs were able to prove satisfactorily and convincingly their
allegations in the complaint as against defendant Bureau of
Telecommunication[s].

WHEREFORE, partial decision is hereby rendered:

a. Declaring that (sic) the plaintiffs as the equitable owner
of Lot 1993-I and transfer certificate of title covering the same is
hereby ordered cancelled as null and void;

b. Ordering the transfer of possession of said Lot 1993-I to the

plaintiffs;

c. Enjoining the defendant Bureau of Telecommunication[s], its

representative, agents or privies to remove any improvements they have
on Lot 1993-I.[9]

On March 28, 2000, petitioners filed a motion to execute. On April 7, 2000,

respondent JDC moved to set aside the partial decision, arguing in the main that the
decision constitutes a prejudgment of the merits of the entire case.[10] On July 17,
2000, the trial court denied the motion.[11] On August 25, 2000, respondent filed a
motion for reconsideration of the order.[12] On August 8, 2000, the trial court ordered
the issuance of a writ of execution.

On September 15, 2000, respondent JDC filed a petition for certiorari and
prohibition with the Court of Appeals to annul: (1) the partial decision
dated February 18, 2000; (2) the order dated July 17, 2000; and (3) the writ of
execution dated August 8, 2000.[13] The petition was raffled to the Fifteenth Division
of the appellate court and docketed as CA-G.R. SP No. 60770.

On October 31, 2000, the Republic of the Philippines, through the Office of
the Solicitor General, filed a petition for Annulment of Judgment with the Court of
Appeals docketed as CA-G.R. SP No. 61703, and raffled to its Ninth Division.[14] It
sought the nullification of the partial decision dated February 18, 2000 on the ground
of lack of jurisdiction. It alleged that the service of summons made on BUTEL was
not valid as it was not made
upon the Solicitor General who is its statutory counsel and representative.

123
 On August 29, 2001, the Fifteenth Division of the Court of Appeals
promulgated its decision granting the petition of respondent JDC. The dispositive
portion states:

WHEREFORE, it is hereby resolved that the (sic): (a) the Partial

Decision dated 18 February 2000; (b) the Order dated 17 July 2000; and
(c) Writ of Execution dated 10 August 2000 in Civil Case No. TG-1904
entitled Heirs of Mamerto Manguiat, [e]t [a]l., Plaintiffs, versus J.A.
Development Corporation, Bureau of Telecommunication[s], Juan
Dela Cruz, and Pedro Dela Cruz, Defendants[,] are hereby ordered SET
ASIDE, for having been issued with grave abuse of discretion.

The public respondent is hereby ordered to follow strictly Sec.

3(c), Rule 9 of the 1997 Rules of Civil Procedure.

SO ORDERED.[15]

Petitioners moved for reconsideration of the decision but the motion was
denied on November 16, 2001.[16] Hence, petitioners filed the instant petition for
review on certiorari with this Court, docketed as G.R. No. 150768.

On January 22, 2003, the Ninth Division of the Court of Appeals promulgated
its decision granting the petition of the Republic of the Philippines and setting aside
the judgment of the trial court in Civil Case No. TG-1904 for lack of
jurisdiction.[17] Petitioners filed a motion for reconsideration but the motion was
denied on September 29, 2003. They then filed a petition for review
on certiorari under Rule 45 of the 1997 Rules of Civil Procedure with this Court
which was docketed as G.R. No. 160176.

On May 25, 2005, this Court resolved to consolidate G.R. Nos. 150768 and
160176.

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

124
 On the other hand, respondent JDC contends that the partial decision was a
pre-judgment of the entire case because its interests were inseparable from the
respondent, BUTEL, Juan dela Cruz, and Pedro dela Cruz. JDC claims that its set of
titles find their origin in the same title whose validity is assailed by the petitioners
in their complaint. It argues that the Court of Appeals correctly relied on Section
3(c), Rule 9 of the 1997 Rules of Civil Procedure when BUTEL was declared in
default,[19] viz.:

SECTION 3. Default, declaration of. If the defending party fails

to answer within the time allowed therefor, the court shall, upon motion
of the claiming party with notice to the defending party, and proof of
such failure, declare the defending party in default. Thereupon, the
court shall proceed to render judgment granting the claimant such relief
as the pleading may warrant, unless the court in its discretion requires
the claimant to submit evidence. Such reception of evidence may be
delegated to the clerk of court.

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

In G.R. No. 160176, petitioners assert that summons was validly served on
the Republic of the Philippines considering that the sheriffs return states that it was
duly served.They further aver that Section 13, Rule 14 of the 1997 Rules of Civil
Procedure does not limit service of summons to the Solicitor General but allows
service on other officers as the court may direct. They point out that the failure to
inform the Solicitor General of Civil Case No. TG-1904 can only be attributed to the
gross negligence of the BUTEL.[20]
For its part, respondent Republic of the Philippines contends that summons
must be served upon it through the Solicitor General and that service of summons
on an employee of the BUTEL is insufficient compliance with Section 13, Rule 14
of the Rules of Court.[21]

In both cases before us, the decisive issue is whether jurisdiction over the
BUTEL was validly acquired by the Regional Trial Court through service of

125
summons upon its employee whose authority to do so does not appear from the
sheriffs return.

We rule in favor of respondent, BUTEL, Juan dela Cruz, and Pedro dela Cruz.

Summons must be served upon a party for valid judgment to be rendered

against him. This not only comports with basic procedural law but the constitutional
postulate of due process. The disputable presumption that an official duty has been
regularly performed will not apply where it is patent from the sheriffs or servers
return that it is defective.[22]
Rule 14, Section 13 of the 1997 Rules of Procedure provides:
SECTION 13. Service upon public corporations. When the
defendant is the Republic of the Philippines, service may be effected on
the Solicitor General; in case of a province, city or municipality, or like
public corporations, service may be effected on its executive head, or
on such other officer or officers as the law or the court may direct.[23]

It is clear under the Rules that where the defendant is the Republic of
the Philippines, service of summons must be made on the Solicitor General. The
BUTEL is an agency attached to the Department of Transportation and
Communications created under E.O. No. 546 on July 23, 1979, and is in charge of
providing telecommunication facilities, including telephone systems to government
offices. It also provides its services to augment limited or inadequate existing similar
private communication facilities. It extends its services to areas where no
communication facilities exist yet; and assists the private sector engaged in
telecommunication services by providing and maintaining backbone
telecommunication network.[24] It is indisputably part of the Republic, and summons
should have been served on the Solicitor General.

We now turn to the question of whether summons was properly served

according to the Rules of Court. Petitioners rely solely on the sheriffs return to prove
that summons was properly served. We quote its contents, viz.:

THIS IS TO CERTIFY that on the 19th day of May 1999, the

undersigned caused the service of Summons and Complaint upon
defendant J.A. Development Corporation at the address indicated in the
summons, the same having been received by a certain Jacqueline delos
Santos, a person employed thereat, of sufficient age and discretion to
receive such process, who signed on the lower portion of the Summons
to acknowledge receipt thereof.
126
 Likewise, copy of the Summons and Complaint was served
upon defendant Bureau of Telecommunications at the address
indicated in the Summons, a copy of the same was received by a
certain Cholito Anitola, a person employed thereat, who signed on
the lower portion of the Summons to acknowledge receipt
thereof.[25] (Emphasis supplied)

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

IN VIEW WHEREOF, the petitions are DENIED for lack of merit. The
Decision and Resolution of the Fifteenth Division of the Court of Appeals in CA-
G.R. SP No. 60770, dated August 29, 2001 and November 16, 2001, respectively,
are AFFIRMED. Likewise, the Decision and Resolution of the Ninth Division of the

127
Court of Appeals in CA-G.R. SP No. 61703, dated January 22, 2003 and September
29, 2003, respectively, are AFFIRMED. The partial decision of the Regional Trial
Court dated February 18, 2000, its order dated July 17, 2000, and the writ of
execution dated August 8, 2000 are ANNULLED and SET ASIDE.

SO ORDERED.

REYNATO S. PUNO
Chief Justice

WE CONCUR:

ANTONIO T. CARPIO
Associate Justice

RENATO C. CORONA ADOLFO S. AZCUNA

Associate Justice Associate Justice

128
 TERESITA J. LEONARDO-DE CASTRO
Associate Justice

CERTIFICATION

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

REYNATO S. PUNO
Chief Justice

[1]
Rollo, G.R. No. 160176, p. 61.
[2]
Id. at 60-61.
[3]
Ibid.
[4]
RTC Records, Civil Case No. TG-1904, p. 19.
[5]
Id. at 92-98.

129
[6]
Rollo, G.R. No. 160176, p. 213.
[7]
Rollo, G.R. No. 150768, p. 62.
[8]
Id. at 64.
[9]
Id. at 59, 277.
[10]
Rollo, G.R. No. 160176, p. 231.
[11]
Id. at 240.
[12]
Id. at 242.
[13]
Rollo, G.R. No. 150768, p. 249.
[14]
Supra note 7.
[15]
Rollo, G.R. No. 150768, p. 39.
[16]
Id. at 47.
[17]
Rollo, G.R. No. 160176, p. 44.
[18]
Rollo, G.R. No. 150768, pp. 9-19.
[19]
Id. at 93-137.
[20]
Rollo, G.R. No. 160176, pp. 3-30.
[21]
Id. at 99-111.
[22]
Laus v. Court of Appeals, G.R. No. 101256, March 8, 1993, 219 SCRA 688,
705; citing Venturanza v. Court of Appeals, No. L-77760, December 11,
1987, 156 SCRA 305, 313 (1987).
[23]
1997 Rules of Civil Procedure, Rule 14, Section 13.
[24]
Sec. 13, E.O. No. 546.
[25]
Rollo, G.R. No. 160176, p. 61.
[26]
Regalado, Remedial Law Compendium, vol. 1, 7th revised ed., 1999, p. 177.

130
 Republic of the Philippines
Supreme Court
Manila

THIRD DIVISION

HUTAMA-RSEA/SUPERMAX PHILS., G.R. No. 173181

J.V.,
Petitioner, Present:

CORONA, J.,
Chairperson,
VELASCO, JR.,
- versus - NACHURA,
DEL CASTILLO,* and
MENDOZA, JJ.

KCD BUILDERS CORPORATION, Promulgated:

represented by its President CELSO C.
DIOKNO,
Respondent.
March 3, 2010

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

131
 DECISION
NACHURA, J.:

Before the Court is a petition for review on certiorari under Rule 45 of the Rules of
Court, assailing the Decision[1] dated October 14, 2005 and the Resolution[2] dated
June 19, 2006 of the Court of Appeals (CA) in CA-G.R. CV No. 78262.

The Facts

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

On 10 December 2001, appellee KCD Builders Corporation filed

a complaint for sum of money against appellants [Hutama-RSEA/Super
Max, Philippines and/or Charles H.C. Yang] before the Regional Trial
Court of Makati. Its cause of action arose from a written contract which
was the Notice to Proceed dated 10 November 2000 executed by the
parties whereby appellant [Hutama] as principal contractor of Package
2-Site Works in Philips Semiconductors Phils. Inc. Integrated Circuits
Plant Phase II Project located at the Light Industry and Science Park of
the Philippines-2 (LISPP-2) Calamba, Laguna contracted with appellee
[KCD] as sub-contractor for the said project. The final billing dated 20
September 2001 was submitted to appellant Charles H.C. Yang, and
despite a joint evaluation by the parties through their respective
representatives who agreed on the amount [of] P2,967,164.71 as
HUTAMAs total obligation to appellee [KCD], and a letter of demand,
appellant corporation [Hutama] failed and refused to pay.

Summons was served on appellants [Hutama and Yang] on 8 February

2002 which was received by their secretary, Ms. Evelyn Estrabela in
behalf of the two defendants [Hutama and Yang]. On 21 February 2002,
their counsel filed an Entry of Appearance and Motion for Extension of
time to File Responsive Pleading. They were given a 20-day extension
period to file the responsive pleading, or until 16 March 2002.

132
On 11 April 2002, appellee [KCD] filed a Motion to Declare
Defendant/s [Hutama and Yang] in Default for failure to file the
responsive pleading within the extended period, and set the same for
hearing on 26 April 2002.

On 23 April 2002, appellant Charles H.C. Yang filed a Motion to

Dismiss for failure of the complaint to state a case of action against him,
as he merely signed the sub-contract between the parties not for his
personal benefit but only in behalf of appellant HUTAMA. On the same
date, appellant HUTAMA filed an Urgent Motion to Admit Attached
Answer with Compulsory Counterclaim, together with the said answer.

During the hearing on appellees [KCDs] motion to declare defendant/s

[Hutama and Yang] in default, the trial court noted the filing of
appellants [Hutama and Yangs] respective motion to dismiss and
answer with counterclaim but noted that the filing thereof on 27 March
2002 was too late considering that they were only given an extended
period up [to] 16 March 2002 to do the same. Thus, the trial court
granted the motion to declare defendants [Hutama and Yang] in default
and directed, upon appellees [KCDs] motion, the presentation of
evidence ex-parte before the branch clerk of court who was appointed
as commissioner to received evidence.

Appellants [Hutama and Yang] filed an Urgent Motion to Set Aside

Order of Default. During the hearing, the trial court ordered appellee
[KCD] to file an opposition or comment. After the Manifestation filed
by appellee [KCD] on 24 June 2002, the trial court set anew the hearing
on the motion to set aside order of default on 22 August 2002, but
appellants [Hutama and Yang] failed to appear. The trial court then
denied the said motion in the Order dated 19 September 2002.

During the ex-parte presentation of evidence, appellees [KCDs] witness

Celso C. Dioko testified that there was a contract executed between
appellants [Hutama and Yang] and appellee [KCD] regarding the

133
 construction of Package 2 Site Works in Philips Semiconductor Phils.
Inc., Calamba, Laguna where appellee [KCD] was the sub-contractor
as evidenced by a Notice to Proceed.After the completion of the project,
he [Dioko] billed them the total amount of P3,009,954.05. After they
[Hutama and Yang] received the bill, they asked him [Dioko] to have a
joint evaluation by their engineer and his engineer on site. The
authorized engineer to evaluate the amount arrived at was Engr. Jose
De Asis. Thus, their authorized engineers came out with the total
amount of P2,967,164.71 as cost of the project. After the joint
evaluation, he [Dioko] again sent the bill to appellant Charles H.C.
Yang and wrote a letter to HUTAMA to pay the final billing. The
appellants [Hutama and Yang], however, failed to comply with the
demand. Upon the filing of this case, appellee [KCD] paid P30,000.00
acceptance fee and P3,000.00 per appearance fee and a contingency of
15% of the total amount due as attorneys fees.

Engr. Jose De Asis testified that he is an employee of appellee

corporation [KCD] and knows the appellants [Hutama and Yang] to be
the representatives of HUTAMA. He was the one who prepared the
final evaluation and the total outstanding obligation inside the office of
Philips Conductors [in] Calamba, Laguna. He and appellants [Hutama
and Yang] were present when the agreement was prepared and the
amount agreed upon was promised to be paid to Dioko.[3]

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

WHEREFORE, in view of the foregoing premises, judgment is

rendered in favor of the plaintiff [KCD] as against the defendant[s
Hutama and Yang], ordering the defendants to:

1.) Pay the plaintiff [KCD] the amount

of P2,967,164.71 representing the defendants [Hutama and
Yangs] total indebtedness in favor of the plaintiff [KCD] with interest

134
 of 12% per annum from October 11, 2001, until the same has been fully
paid;

2.) Pay the plaintiff [KCD] 5% of the total amount

awarded plus P30,000.00 acceptance fees and P3,000.00 appearance
fees as and by way of attorneys fees; and

3.) Costs of the suit.

SO ORDERED.[5]

Aggrieved, Hutama Semiconductor Phils., Inc. (Hutama) and Charles H.C.

Yang (Yang) filed an appeal before the CA. On October 14, 2005, the CA rendered
a Decision,[6] the dispositive portion of which reads:

WHEREFORE, the foregoing considered, the assailed decision

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

SO ORDERED.[7]

Unsatisfied, Hutama and Yang filed a motion for reconsideration; however,

the same was denied in a Resolution[8] dated June 19, 2006.

Hence, this petition.

The Issues

135
Petitioner assigned the following errors:

THE HONORABLE COURT OF APPEALS COMMITTED A

SERIOUS, REVERSIBLE ERROR, IF NOT GRAVE ABUSE OF
DISCRETION, IN REFUSING TO RESOLVE AS TO

(A) WHETHER OR NOT THE COURT A

QUO COMMITTED SERIOUS, REVERSIBLE ERROR,
WHEN IT FAILED TO CONSIDER THAT
RESPONDENT ABANDONED THE PROJECT AND IT
IS THE LATTER (sic) LIABLE TO PETITIONER;

(B) WHETHER OR NOT THE COURT A

QUO COMMITTED SERIOUS, REVERSIBLE ERROR,
WHEN IT DENIED PETITIONERS RIGHTS TO
PRESENT ITS EVIDENCE IN VIOLATION OF ITS
CONSTITUTIONAL RIGHTS TO DUE PROCESS;
AND

(C) WHETHER OR NOT THE COURT A

QUO COMMITTED SERIOUS, REVERSIBLE ERROR,
WHEN IT FAILED TO CONSIDER THAT
RESPONDENT FAILED TO COMPLY WITH
SECTION 5, RULE 7 OF THE 1997 RULES OF CIVIL
PROCEDURE ON VERIFICATION AND
CERTIFICATION OF NON-FORUM SHOPPING;

II

136
 THE HONORABLE COURT OF APPEALS COMMITTED A
SERIOUS, REVERSIBLE ERROR, IF NOT GRAVE ABUSE OF
DISCRETION, IN DENYING PETITIONER[S] MOTION FOR
RECONSIDERATION WITHOUT STATING CLEARLY AND
DISTINCTLY THE FACTUAL AND LEGAL BASIS THEREOF.[9]

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

The Ruling of the Court

We resolve to deny the petition.

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

A petition under Rule 45 of the Rules of Court shall raise only questions of law. As
a rule, findings of fact of a trial judge, when affirmed by the CA, are binding upon
the Supreme Court. This rule admits of only a few exceptions, such as when the
findings are grounded entirely on speculations, surmises or conjectures; when an
inference made by the appellate court from its factual findings is manifestly
mistaken, absurd or impossible; when there is grave abuse of discretion in the
appreciation of facts; when the findings of the appellate court go beyond the issues
of the case, run contrary to the admissions of the parties to the case, or fail to notice
certain relevant facts which, if properly considered, will justify a different
conclusion; when there is a misappreciation of facts; when the findings of fact are
conclusions without mention of the specific evidence on which they are based, are
premised on the absence of evidence, or are contradicted by the evidence on
record.[10] However, not one of the exceptions is present in this case.

137
Based on the findings of fact of the RTC, which were affirmed by the CA, it was
proven that Hutama contracted the services of KCD as a sub-contractor of Package
2 Site Works at Phillips Semiconductors Philippines, Inc. Integrated Circuits Plant
Phase II Project, located in Calamba, Laguna. After the completion of the project,
KCD billed Hutama Three Million Nine Hundred Nine Thousand Nine Hundred
Sixty-Four Pesos and 05/100 (P3,909,964.05). The amount was reduced to Two
Million Nine Hundred Sixty-Seven Thousand One Hundred Sixty-Four Pesos and
71/100 (P2,967,164.71) by agreement of the parties. Thus, on October 11, 2001,
KCD sent Hutama the final bill. However, Hutama refused to settle the obligation
and its refusal compelled KCD to file the collection suit before the RTC.

Second, Hutama avers that the CA committed a reversible error when it

upheld the decision of the RTC, which was based on the ex-parte evidence presented
by KCD. Allegedly, its constitutional right to due process was violated when the
RTC issued an order of default[11] which resulted in its failure to present evidence.

However, we find that the RTC acted within the confines of its discretion
when it issued the order of default upon the motion of KCD when Hutama failed to
file an answer within the extended period. The RTC did not hastily issue the order
of default. It gave Hutama the opportunity to explain its side. On August 22, 2002,
the motion to set aside the order of default was set for hearing, but neither Hutamas
counsel, nor any other representative of petitioner corporation, appeared. According
to the counsel of Hutama, in his Memorandum,[12] he failed to file an answer on time
because he went to the province for the Lenten season. He assigned the case to his
associate, but the latter also went to the province. This flimsy excuse deserves scant
consideration.

Third, Hutama questions the verification and certification on non-forum

shopping of KCD, issued by its board of directors, because the same was signed by
the latters president without proof of authority to sign the same.

A pleading is verified by an affidavit that an affiant has read the pleading and
that the allegations therein are true and correct as to his personal knowledge or based
on authentic records. The party does not need to sign the verification. A party's

138
representative, lawyer, or any person who personally knows the truth of the facts
alleged in the pleading may sign the verification.[13]

On the other hand, a certification of non-forum shopping is a certification

under oath by the plaintiff or principal party in the complaint or other initiatory
pleading, asserting a claim for relief, or in a sworn certification annexed thereto and
simultaneously filed therewith, that (a) he has not theretofore commenced any action
or filed any claim involving the same issues in any court, tribunal or quasi-judicial
agency and, to the best of his knowledge, no such other action or claim is pending
therein; (b) if there is such other pending action or claim, a complete statement of
the present status thereof; and (c) if he should thereafter learn that the same or similar
action or claim has been filed or is pending, he shall report that fact within five days
therefrom to the court wherein his aforesaid complaint or initiatory pleading has
been filed.[14]

It is true that the power of a corporation to sue and be sued is lodged in the
board of directors that exercises its corporate powers.[15] However, it is settled and
we have so declared in numerous decisions that the president of a corporation may
sign the verification and the certification of non-forum shopping.
In Ateneo de Naga University v. Manalo,[16] we held that the lone signature of
the University President was sufficient to fulfill the verification requirement,
because such officer had sufficient knowledge to swear to the truth of the allegations
in the petition.

In Peoples Aircargo and Warehousing Co., Inc. v. CA,[17] we held that in the
absence of a charter or bylaw provision to the contrary, the president of a corporation
is presumed to have the authority to act within the domain of the general objectives
of its business and within the scope of his or her usual duties. Moreover, even if a
certain contract or undertaking is outside the usual powers of the president, the
corporations ratification of the contract or undertaking and the acceptance of benefits
therefrom make the corporate presidents actions binding on the corporation.

Finally, Hutama questions the resolution of the CA on its motion for

reconsideration on the ground that it denied the same without stating clearly and
distinctly the factual and legal basis thereof.

139
 In denying petitioners motion for reconsideration, the CA ruled that it found
no plausible reason to depart from its earlier decision wherein all the issues had been
exhaustively passed upon. That ruling contained a sufficient legal reason or basis to
deny the motion. There was no need for the CA to restate the rationale for its decision
that the petitioner wanted reconsidered.

WHEREFORE, in view of the foregoing, the instant petition is DENIED. The

Decision dated October 14, 2005 and the Resolution dated June 19, 2006 of the Court
of Appeals in CA-G.R. CV No. 78262 are hereby AFFIRMED. Costs against
petitioners.

SO ORDERED.

ANTONIO EDUARDO B. NACHURA

Associate Justice

WE CONCUR:

RENATO C. CORONA
Associate Justice
Chairperson

140
 PRESBITERO J. VELASCO, JR. MARIANO C. DEL CASTILLO
Associate Justice Associate Justice

JOSE CATRAL MENDOZA

Associate Justice

ATTESTATION

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

RENATO C. CORONA
Associate Justice
Chairperson, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution and the Division
Chairperson's Attestation, I certify that the conclusions in the above Decision had

141
been reached in consultation before the case was assigned to the writer of the opinion
of the Courts Division.

REYNATO S. PUNO
Chief Justice

*
Additional member in lieu of Associate Justice Diosdado M. Peralta per Special
Order No. 824 dated February 12, 2010.
[1]
Penned by Associate Justice Josefina Guevara-Salonga, with Associate Justices
Delilah Vidallon-Magtolis and Fernanda Lampas-Peralta, concurring; rollo, pp. 28-
35.
[2]
Rollo, pp. 36-37.
[3]
Id. at 29-31.
[4]
Penned by Judge Romeo F. Barza, RTC, Makati City, Branch 61; id. at 86-88.
[5]
Id. at 88.
[6]
Supra note 1.
[7]
Rollo, p. 35.
[8]
Supra note 2.
[9]
Rollo, pp. 173-174.
[10]
Halili v. Court of Appeals, G.R. No. 113539, March 12, 1998, 287 SCRA 465.

[11]
Rules of Court, Rule 9, Sec. 3 reads:
Sec. 3. Default; declaration of. If the defending party fails to answer within
the time allowed therefore, the court shall, upon motion of the claiming party with
notice to the defending party, and proof of such failure, declare the defending party
in default. Thereupon, the court shall proceed to render judgment granting the
claimant such relief as his pleading may warrant, unless the court in its discretion
requires the claimant to submit evidence. Such reception of evidence may be
delegated to the clerk of court.

142
 (a) Effect of order of default. - A party in default shall be entitled
to notice of subsequent proceedings but not to take part in the trial.
(b) Relief from order of default. - A party declared in default may
at any time after notice thereof and before judgment file a motion under
oath to set aside the order of default upon proper showing that his
failure to answer was due to fraud, accident, mistake or excusable
negligence and that he has a meritorious defense. In such case, the order
of default may be set aside on such terms and conditions as the judge
may impose in the interest of justice.
(c) Effect of partial default. - When a pleading asserting a claim
states a common cause of action against several defending parties, some
of whom answer and the others fail to do so, the court shall try the case
against all upon the answers thus filed and render judgment upon the
evidence presented.
(d) Extent of relief to be awarded. - A judgment rendered against
a party in default shall not exceed the amount or be different in kind
from that prayed for nor award unliquidated damages.
(e) Where no defaults allowed. - If the defending party in an
action for annulment or declaration of nullity of marriage or for legal
separation fails to answer, the court shall order the prosecuting attorney
to investigate whether or not a collusion between the parties exists, and
if there is no collusion, to intervene for the State in order to see to it that
the evidence submitted is not fabricated.
[12]
Rollo, pp. 164-178.
[13]
Rules of Court, Rule 7, Sec. 4; LDP Marketing, Inc. v. Monter, G.R. No. 159653,
January 25, 2006, 480 SCRA 137.
[14]
Rules of Court, Rule 7, Sec. 5 (par. 1).
[15]
LDP Marketing, Inc. v. Monter, supra note 13.
[16]
G.R. No. 160455, May 9, 2005, 458 SCRA 325.
[17]
G.R. No. 117847, October 7, 1998, 297 SCRA 170.

143
 THIRD DIVISION

UNITED OVERSEAS BANK OF G.R. No. 172651

THE PHILIPPINES (formerly
WESTMONT BANK),
Present:
Petitioner,
YNARES-SANTIAGO,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
- versus - NACHURA, and
REYES, JJ.

ROSEMOOR MINING AND Promulgated:

DEVELOPMENT
CORPORATION and DRA.
LOURDES S. PASCUAL,
Respondents.
October 2, 2007
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

144
Before this Court is a Petition for Review on Certiorari under Rule 45, of the
Revised Rules of Court, filed by petitioner United Overseas Bank of the Philippines
(Overseas Bank), seeking the reversal and the setting aside of the Decision,[1] dated
10 May 2005, and the Resolution,[2] dated 16 May 2006 of the Court of Appeals in
CA-G.R. CV No. 78583. The appellate court, in its assailed Decision and
Resolution, affirmed the Decision of the Regional Trial Court (RTC) of Malolos,
Bulacan, Branch 16, declaring, inter alia, as null and void the Real Estate Mortgage
executed by Rosemoor Mining and Development Corporation (Rosemoor Mining)
in favor of Overseas Bank, with the modification that the award of moral and
exemplary damages and attorneys fees were deleted.

Overseas Bank is a banking institution duly authorized to engage in banking

business under Philippine laws.[3]

Rosemoor Mining, on the other hand, is a domestic corporation, likewise duly

authorized by Philippine laws to engage in mining operation.[4]

In order to raise the necessary funds for the importation of machineries needed for
its operations, Rosemoor Mining, through its President, Lourdes Pascual (Pascual),
M.D., obtained a loan from Overseas Bank in the amount of P80,000,000.00. The
loan was secured by two Real Estate Mortgage Contracts over six parcels of land
situated at San Miguel, Bulacan, and registered under the name of Rosemoor
Mining, and another two parcels of land situated at Gapan, Nueva Ecija, registered
under Pascuals name.[5]

The arrangement agreed to by the parties was for Overseas Bank to handle,
on behalf of Rosemoor Mining, the amount of P50,000,000.00 to be used for the
importation of machineries, while the loan balance of P30,000,000.00 will be
released by Overseas Bank to Rosemoor Mining as a revolving credit line.[6]

Pursuant to such agreement, Rosemoor Mining executed four irrevocable Letters of

Credit in the total amount US$1,943,508.11 for the importation of machineries. To
answer for the 20% advance payment of the total amount of the Letters of Credit,

145
Rosemoor Mining proceeded to draw against its P50,000,000.00 credit facility with
the Overseas Bank specifically allocated for the acquisition of machineries and
executed promissory notes in favor of the bank in the amount
of P49,82,682.50. Rosemoor Mining also partially availed itself of the
remaining P30,000,000.00 credit line for which it executed two promissory notes in
Overseas Banks favor in the amounts of P10,000,000.00 and P3,500,000.00

Subsequently, Rosemoor Mining defaulted in the payment of its various drawings

of Letters of Credit and promissory notes which prompted Overseas Bank to cause
the extrajudicial foreclosure of the mortgaged Nueva Ecija properties on 22 May
1998, and the similarly mortgaged Bulacan properties on 10 August 1998, and the
sale thereof by public auction. The Overseas Bank was the highest bidder on both
occasions.[7]

In order to prevent the impending consolidation of ownership of the mortgaged

properties in the name of Overseas Bank, Rosemoor Mining instituted two separate
complaints against the bank, the procedural incidents of which were litigated all the
way up to this Court on four occasions, three of which were already decided with
finality, leaving the instant petition for our resolution.

One of the two cases was filed before the RTC of Manila and the other one before
the RTC of Bulacan.

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

On 5 August 1998, Rosemoor Mining instituted an action for damages,

accounting, release of the balance of the loan and machinery and annulment of
foreclosure sales against Overseas Bank before the RTC of Manila, Branch 33.[8]

146
 In its Complaint docketed as Civil Case No. 98-90089, Rosemoor Mining
alleged that it obtained a loan from Overseas Bank in the amount of P80,000,000.00,
secured by Real Estate Mortgages over parcels of land located in Bulacan and Nueva
Ecija, but the proceeds of the loan did not redound to its benefit because it was
allegedly mishandled by Overseas Bank causing serious financial injury to
Rosemoor Mining. To further aggravate its injury, Rosemoor Mining claimed that
Overseas Bank hastily foreclosed the mortgaged properties without previous notice
to Rosemoor Mining.[9]
On 10 August 1998, Overseas Bank filed an Urgent Motion to Dismiss the
above complaint on the ground of improper venue since one of the prayers therein
included the nullification of the foreclosure of real estate mortgages, a real action
which must be lodged before the RTC of the place where the property or one of the
properties is situated.Considering that none of the mortgaged properties was located
in Manila, the filing of the Complaint before the RTC of Manila was, therefore,
invalid. Consequently, Rosemoor Mining amended its Complaint deleting the prayer
for nullification of foreclosure sale. Hence, Oveseas Banks Urgent Motion to
Dismiss was denied by the RTC of Manila for lack of merit in an Omnibus
Resolution dated 24 January 2000.[10]

Subsequently, Overseas Bank filed its Answer with Counterclaim. After the
pre-trial was conducted, trial on the merits ensued.

Bulacan Case
Civil Case No. 215-M-202
RTC of Malolos,Bulacan, Branch 16

On 11 March 2002, Rosemoor Mining filed another action denominated as

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

147
 In order to prevent the threatened consolidation of titles over the mortgaged
properties in Overseas Banks name, Rosemoor Mining moved for the issuance of a
Writ of Preliminary Injunction. During the hearing for the issuance of the said writ,
the Bulacan RTC found merit in Rosemoor Minings Motion and thus ordered that
the scheduled consolidation of titles be temporarily enjoined pending the
determination of the merits of the pending case.[12]

On 26 March 2002, Overseas Bank, instead of filing an Answer, filed a

Motion to Dismiss Civil Case No. 215-M-02 on the ground of forum-shopping in
view of the pendency of the other case involving the same parties and the same issues
before the RTC of Manila.[13]

On 13 May 2002, the Bulacan RTC denied the Motion to Dismiss filed by
Overseas Bank on the ground that the arguments raised therein were not applicable
in the present case. The court a quo then directed Overseas Bank to file an Answer
within five days from the receipt of the Order denying its Motion to Dismiss.[14]

Again, instead of filing an Answer, Overseas Bank filed a Motion for

Reconsideration[15] of the Bulacan RTC Order denying its Motion to Dismiss Civil
Case No. 215-M-02. On the other hand, Rosemoor Mining filed a Motion to Declare
Overseas Bank in Default[16] for failure to timely file an Answer.

Acting on the Motions filed by the parties, the Bulacan RTC, in an Order dated
10 September 2002, denied the Motion for Reconsideration of Overseas Bank and
granted the motion of Rosemoor Mining to declare the bank in default.[17]

Aggrieved by the Bulacan RTC Orders, dated 13 May 2002 and 10 September
2002, which respectively denied Overseas Banks Motion to Dismiss Civil Case No.
215-M-02 and declared it in default, Overseas Bank assailed the same before the
Court of Appeals on the ground that they were issued with grave abuse of
discretion.[18]

In its Petition for Certiorari docketed as CA-G.R. SP No. 73358, Overseas

Bank, in addition to the issues of forum shopping and propriety of the default order,
148
likewise raised the issue of the venue for Civil Case No. 215-M-02 before the RTC
of Bulacan. Overseas Bank argued that the venue of the action for nullification of
the foreclosure sales of the mortgaged properties which were located in Bulacan and
Nueva Ecija, were improperly lodged before the Bulacan RTC.[19]

For lack of merit, the Court of Appeals in its Decision dated 20 June 2004,
dismissed the Petition and declared that no forum-shopping existed in the filing of
Civil Case No. 98-90089 before the RTC of Manila and Civil Case No. 215-M-02
before the RTC of Bulacan; and upholding the validity of the default order against
Overseas Bank and the propriety of venue.

Dissatisfied, Overseas Bank elevated the matter before this Court via a
Petition for Review on Certiorari of the 20 June 2004 Decision of the Court of
Appeals. The Petition was docketed as G.R. No. 159669.[20]

In the meantime, just as the Overseas Bank moved for the dismissal of Civil
Case No. 215-M-02 before the RTC of Bulacan on the ground of forum-shopping,
Overseas Bank also filed a Motion to Dismiss Civil Case No. 98-90089 before the
RTC of Manila on the same ground.[21]

In an Order dated 23 October 2002, the Manila RTC denied the Motion to
Dismiss the case before it for lack or merit. The subsequent Motion for
Reconsideration filed by Overseas Bank was also denied by the lower court.[22]

On Certiorari, the Court of Appeals, in its Decision dated 26 February 2004,

affirmed the Order dated 23 October 2002 of the Manila RTC, for failure by the
Overseas Bank to establish that the court a quo gravely erred in ruling that no forum
shopping attended the actions filed by Rosemoor Mining. The Motion for
Reconsideration filed by Overseas Bank was also denied by the appellate court in a
Resolution dated 30 April 2004.[23]

Undaunted, Overseas Bank again raised the issue before this Court in G.R.
No. 163521, advancing that Rosemoor Mining was guilty of forum shopping in
instituting both the Bulacan and the Manila Cases.[24]

149
 Both petitions, G.R. No. 163521 and G.R. No. 159669, were consolidated
and jointly resolved by the Second Division of this Court, since the issues raised
therein were interrelated.[25]

On 12 March 2007, this Court put to rest the issue of forum-shopping by

declaring that Rosemoor Mining is not guilty of forum shopping in filing Civil Case
No. 275-M-02 before the Bulacan RTC, after it had instituted Civil Case No. 98-
90089 before the Manila RTC. This Court ratiocinated that there was no identity of
parties involved and the rights asserted in both actions were different from each
other.[26]

On the issue of improper venue, this Court ruled that the action to nullify the
foreclosure sales of the Nueva Ecija properties, along with the Bulacan properties
were properly instituted before the Bulacan RTC, thus:

[T]he venue of real actions affecting properties found in different

provinces is determined by the singularity or plurality of the
transactions involving said parcels of land. Where said parcels are the
object of one and the same transaction, the venue is in the court of any
of the provinces wherein a parcel of land is situated.[27]

This Court further upheld the validity of the Order dated 13 May 2002, of the
Bulacan RTC declaring Overseas Bank in default in Civil Case No. 215-M-02, ruling
in this wise:

The motion for reconsideration could not have tolled the running
of the period to answer for two reasons. One, it was filed late, nine days
after the due date of the answer. Two, it was a mere rehash of the
motion to dismiss; hence, pro forma in nature. Thus, the Malolos RTC
did not err in declaring the Bank in default.[28]

150
 In sum, this Court in G.R. No. 163521 and G.R. No. 159669, denied the
Petitions for Review on Certiorari filed by Overseas Bank and affirmed the assailed
Decisions, dated 26 February 2004 and 20 June 2003 of the Court of Appeals, in
CA-G.R. No. 76934 and CA-G.R. No. 73358, respectively.

In the interregnum, the Bulacan RTC, after its declaration that Overseas Bank
was in default, proceeded with the ex-parte reception of evidence offered by
Rosemoor Mining in Civil Case No. 215-M-02.

On 24 October 2002, the RTC of Bulacan, rendered a Decision[29] in favor of

Rosemoor Mining granting its prayers, among which was its declaration that the
Real Estate Mortgage executed by Rosemoor Mining in favor of Overseas Bank is
null and void. The dispositive portion of the Bulacan RTC Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered in

favor of petitioners and against respondents, to wit:

1. The Writ of Preliminary Injunction issued by this Court

on March 25, 2002, is hereby made permanent.

2. Declaring as null and void the Real Estate Mortgages

executed by [Rosemoor Mining] in favor
of [Overseas Bank] (Exhibits D and E) and the
subsequent foreclosures of such mortgages;

3. Ordering the [Overseas Bank], to pay unto [Rosemoor

Mining] as follows:

P2,000,000.00 as moral and exemplary

damages unto [Pascual] (P1,000,000.00 as
exemplary damages),

151
 P13,000,000.00 unto [Rosemoor Mining]
as moral and exemplary damages
(P3,000,000.00 as moral damages
and P10,000,000.00 as exemplary damages),
and

P100,000.00 unto petitioner as attorneys

fees, plus cost of litigation.[30]

On appeal, the Court of Appeals in a Decision dated 10 May 2005, in CA-

G.R. No. 78583 affirmed the Bulacan RTC Decision with the modification, that the
award of moral and exemplary damages, as well as the attorneys fees, was
deleted. The Motions for Reconsideration interposed by both Overseas Bank and
Rosemoor Mining were denied by the appellate court in its Resolution dated 16 May
2006.

Hence, this instant Petition for Review on Certiorari filed by Overseas Bank raising
the following issues:

I.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF

LAW WHEN IT AFFIRMED THE DECISION OF BRANCH
16 OF THE REGIONAL TRIAL COURT OF MALOLOS,
BULACAN DECLARING PETITIONER IN DEFAULT AND
DEPRIVING IT OF DUE PROCESS.

152
II.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR

OF LAW WHEN IT AFFIRMED THE DECISION OF
THE SAID BRANCH OF THE REGIONAL TRIAL COURT
OF MALOLOS, BULACAN ASSUMING JURISDICTION
OVER REAL PROPERTIES IN NUEVA ECIJA AND
ANNULLING FORECLOSURE OF REAL ESTATE
MORTGAGES OVER THE SAME.

III.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR

OF LAW WHEN IT AFFIRMED THE DECISION OF THE
SAID BRANCH OF THE REGIONAL TRIAL COURT OF
MALOLOS, BULACAN MAKING PERMANENT THE
INJUNCTION IT ISSUED DESPITE LACK OF EVIDENCE
SHOWING COMPLIANCE WITH REQUISITES.

IV.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR

OF LAW WHEN IT AFFIRMED THE DECISION OF THE
SAID BRANCH OF THE REGIONAL TRIAL COURT OF
MALOLOS, BULACAN FINDING THAT THE REAL
ESTATE MORTGAGES EXECUTED BY RESPONDENTS
WERE FRAUDULENTLY SECURED AND WANTING IN
CONSIDERATION.

V.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR

OF LAW WHEN IT AFFIRMED THE DECISION OF THE

153
 SAID BRANCH OF THE REGIONAL TRIAL COURT OF
MALOLOS, BULACAN REFUSING TO DISMISS THE
PETITION OUTRIGHT ON THE GROUND OF FORUM
SHOPPING.

VI.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR

OF LAW WHEN IT AFFIRMED THE DECISION OF THE
SAID BRANCH OF THE REGIONAL TRIAL COURT OF
MALOLOS, BULACAN WHICH, ALTHOUGH A DEFAULT
JUDGMENT, EXCEEDED JURISDICTION AS IT GRANTED
A RELIEF NOT INCLUDED IN THE COMPLAINT.

VI.

THE COURT OF APPEALS COMMITTED SERIOUS ERROR

OF LAW WHEN IT DENIED THE MOTION FOR
RECONSIDERATION FILED BY PETITIONER.[31]

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

Also, in the same cases, this Court already pronounced that Rosemoor Mining is not
guilty of forum shopping by filing both the Bulacan and the Manila cases. In the
same Decision, this Court affirmed the validity of the Bulacan RTC Order, dated 10
September 2002, declaring Overseas Bank in default in Civil Case No. 215-M-
02. Finally, this Court also ruled that the action for nullification of the foreclosure

154
sales of the mortgaged properties in Bulacan and Nueva Ecija were properly lodged
before the Bulacan RTC.[34]

Our jurisprudential pronouncements in G.R. Nos. 159669 and 163521, on the

aforementioned issues are conclusive upon this Court in the instant petition and
could no longer be overturned without transgressing the elementary principle of
the law of the case.

In Padillo v. Court of Appeals,[35] this Court had the occasion to explain this
principle thus:

Law of the case has been defined as the opinion delivered on a

former appeal. More specifically, it means that whatever is once
irrevocably established as the controlling legal rule or decision
between the same parties in the same case continues to be the law of
the case, whether correct on general principles or not, so long as the
facts on which such decision was predicated continue to be the facts
of the case before the court. As a general rule, a decision on a prior
appeal of the same case is held to be the law of the case whether that
question is right or wrong, the remedy of the party deeming himself
aggrieved being to seek a rehearing.

The concept of Law of the Case was further elucidated in the

1919 case of Zarate v. Director of Lands, thus:

A well-known legal principle is that when an appellate court has

once declared the law in a case, such declaration continues to be the law
of that case even on a subsequent appeal. The rule made by an appellate
court, while it may be reversed in other cases, cannot be departed from
in subsequent proceedings in the same case. The Law of the Case, as
applied to a former decision of an appellate court, merely expresses the
practice of the courts in refusing to reopen what has been decided. Such
a rule is necessary to enable an appellate court to perform its duties
satisfactorily and efficiently, which would be impossible if a question,
once considered and decided by it, were to be litigated anew in the same
155
 case upon any and every subsequent appeal. Again, the rule is necessary
as a matter of policy to end litigation. There would be no end to a suit
if every obstinate litigant could, by repeated appeals, compel a court to
listen to criticisms on their opinions, or speculate of chances from
changes in its members.[36]

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

In the same breadth, Overseas Bank cannot contend that it was denied its day in court
when it was declared in default for such was the legal and logical consequence of its
obstinate refusal to file an Answer despite the Bulacan RTCs directive.

Undeniably, when Overseas Bank deliberately opted to file a Motion for

Reconsideration of the Order dated 13 May 2002, of the Bulacan RTC denying its
Motion to Dismiss, instead of filing an Answer, it assumed the risk of losing its
standing in court and it cannot simply excuse itself from the adverse consequence of
its chosen procedural course.

Overseas Bank further argued that Rosemoor Mining is not entitled to

Injunction for the evidence it presented before the RTC of Bulacan is insufficient to
156
warrant the issuance of the same. Hence, the Decision of the Bulacan RTC in Civil
Case No. 215-M-02, permanently enjoining it from foreclosing the mortgage
properties, is without basis and therefore void.

Again, we do not agree. In controverting the basis relied upon by the Bulacan
RTC in issuing the Injunction, Overseas Bank, in effect, wants this Court to calibrate
the evidence presented before the lower court all over again, a task which we cannot
do in consonance with the well-settled rule that this Court is not a trier of facts.[37]

In Cagayan de Oro Landless Residents Association, Inc. v. Court of

Appeals,[38] this Court, in explaining the concept of injunction, underscored that the
issuance of the writ of injunction is vested in the discretion of the trial court, thus:

As an extraordinary remedy, injunction is calculated to prevent

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

Even Justice Moran, in his renowned Commentaries,[39] was emphatic in

vesting in the court deciding the case the discretion to grant or deny the injunction,
opining that:

Except in cases wherein the statute gives an absolute right to an

injunction, this remedy, whether temporary or permanent, cannot, as a
general rule, be sought as a matter of right, but its granting or refusal
rest in the sound discretion of the court under the circumstances and the
facts of the particular case.

157
Upon perusal of the records, it was not shown that the granting of the prayer for
Injunction was attended with manifest abuse since the Bulacan RTC found sufficient
basis for its issuance based on its intelligible appreciation of the evidence presented
by Rosemoor Mining.

The mere reliance of the Bulacan RTC on the testimony of Rosemoor Minings
lone witness does not amount to grave abuse of discretion. It must be recalled that
Overseas Bank was given the opportunity to establish its right over the mortgaged
properties during the hearing for the issuance of the writ of preliminary injunction,
only that, the court a quo gave more evidentiary weight to Rosemoor Minings
claim. Giving credence to the evidence offered by one party over that of the other is
an exercise of the courts sound judgment and is not equivalent to grave abuse of
discretion.

For the same reason, this Court cannot find merit in the contention of Overseas Bank
that the Court of Appeals erred in affirming the Decision of the Bulacan RTC in
Civil Case No. 215-M-02 annulling the mortgage contracts as well as the subsequent
foreclosures pursuant thereto. Worth noting is that in voiding the mortgage contracts
and foreclosure sales, the court a quo stressed the want of consideration for the Real
Estate Mortgages and the fraud employed by Overseas Bank in securing the said
contracts, to wit:

Thus, on the basis of the foregoing uncontroverted evidence and

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

158
The above pronouncement of the Bulacan RTC was affirmed by the Court of
Appeals, pursuant to the well-entrenched principle that the factual findings of the
trial courts should be accorded great weight and are generally not disturbed on
appeal. We are equally bound by this principle. Moreover, in cases where the factual
findings of the trial court are affirmed by the Court of Appeals, as in the case at bar,
this rule finds greater application.

In Professional Academic Plans, Inc. v. Crisostomo,[41] this Court declared:

Factual issues are beyond the province of the Supreme Court in a

petition for review, for it is not the Courts function to weigh the
evidence all over again. While the Court may, in exceptional cases,
resolve factual issues, the petitioners herein failed to establish any such
exceptional circumstances. Moreover, it is doctrinal that findings of
facts of the CA upholding those of the trial court are binding upon the
Supreme Court.

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

Finally, Overseas Bank averred that the Bulacan RTC exceeded its jurisdiction in
granting a relief not prayed for by Rosemoor Mining in its complaint. In its prayer,
Rosemoor Mining asked for the nullification of the foreclosure sales of the
mortgaged properties but the Bulacan RTC declared void, not only the foreclosure
sales but the Real Estate Mortgages over the said properties as well.

In order to resolve the final issue posed by Overseas Bank, attention must be called
on the pertinent provisions of Rule 9 of the Revised Rules of Court, on the
declaration of default which provide:

159
SEC. 3. Default; declaration of. If the defending party fails to answer
within the time allowed therefor, the court shall, upon motion of the
claiming party with notice to the defending party, and proof of such
failure, declare the defending party in default. Thereupon, the court
shall proceed to render judgment granting the claimant such relief as
his pleading may warrant, unless the court in its discretion requires the
claimant to submit evidence. Such reception of evidence may be
delegated to the clerk of court.

(a) Effect of order of default. A party in default shall be

entitled to notice of subsequent proceedings but not to take
part in the trial.

(b) Relief from order of default. A party declared in

default may at any time after notice thereof and before
judgment file a motion under oath to set aside the order of
default upon proper showing that his failure to answer was
due to fraud, accident, mistake or excusable negligence
and that he has a meritorious defense. In such case, the
order of default may be set aside on such terms and
conditions as the judge may impose in the interest of
justice.

(c) Effect of partial default. When a pleading asserting a

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

(d) Extent of relief to be awarded. A judgment

rendered against a party in default shall not exceed the
amount or be different in kind from that prayed for
nor award unliquidated damages.

160
 (e) Where no defaults allowed. If the defending party in
an action for annulment or declaration of nullity of
marriage or for legal separation fails to answer, the court
shall order the prosecuting attorney to investigate whether
or nor a collusion between the parties exists, and if there
is no collusion, to intervene for the State in order to see to
it that the evidence submitted is not fabricated. (Emphasis
supplied.)

In its Petition, Rosemoor Mining prayed for the following reliefs, to

quote:

WHEREFORE, premises considered, it must be respectfully prayed

that this Honorable Court

1. Issue ex-parte a temporary restraining order before the matter

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

2. That after due notice, a writ of preliminary injunction be issued

upon the posting of a bond in such amount as may be fixed by this
Court;

161
 3. That after due hearing and trial, judgment be rendered in favor of
petitioners and against [Overseas Bank]

a. Permanently enjoining respondent bank from

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

b. Declaring the foreclosures of real estate mortgages

on the properties of petitioners Rosemoor and Dra.
Pascual to be null and void;

c. Recognizing the ownership of the petitioners in fee

simple over their properties above-mentioned;

d. Awarding to petitioners the damages prayed for,

including attorneys fees and costs and expenses of
litigation.

Petitioners pray for such other reliefs and remedies as may be

deemed just and equitable in the premises.[42] (Emphases supplied.)

However, upon promulgation of the Decision, the Bulacan RTC, declared as null
and void the Real Estate Mortgages, not only the foreclosures of such
mortgages. The pertinent portion of the Bulacan RTC Decision thus reads:

162
 Declaring as null and void the Real Estate Mortgages executed by
[Rosemoor Mining] in favor of [Overseas Bank] (Exhibits D and E) and
the subsequent foreclosures of such mortgages.[43]

Based on the foregoing, Overseas Bank now argues that the RTC of Bulacan
exceeded its jurisdiction in granting a relief not prayed for in the Complaint in
violation of the clear and categorical mandate of the Revised Rules of Court,
proscribing it from awarding reliefs in excess of or different from that prayed for in
the complaint.

We are not persuaded.

While it is true that Rosemoor Mining did not specifically ask for the
annulment of the Real Estate Mortgages, upon scrutiny of its Complaint however, it
is apparent that the allegations propounded by Rosemoor Mining go into the very
validity of the mortgage contracts. The allegation that Overseas Bank committed
fraudulent acts in the constitution of the Real Estate Mortgages was actually an
attack on the mortgage contracts, and not just on the foreclosures of these
mortgages. The nullity of the foreclosures, therefore, was merely a necessary
consequence of the invalidity of the mortgages.

Thus, to void the foreclosure sales and not the mortgage contracts would only result
in absurdity when it is palpable from the body of the Complaint in Civil Case No.
215-M-02 that Rosemoor Minings challenge of the foreclosure sales was rooted in
the defective mortgage contracts. If at all, Rosemoor Minings failure to particularly
pray for the nullification of the Real Estate Mortgages was merely an oversight on
its part that is deemed cured when it asked from the court a quo for such other reliefs
and remedies as may be deemed just and equitable in the premises.[44]

Moreover, the general prayer of Rosemoor Mining, couched in the phrase,

such other reliefs and remedies as may be deemed just and equitable in the premises,
should be interpreted to include the prayer for the nullification of the mortgage

163
contracts since this is already evident from the allegations contained in the body of
its Complaint though it was not specifically pleaded in the prayer.

In a cantena of cases,[45] this Court ruled that the general prayer is broad
enough to justify extension of a remedy different from or together with the specific
remedy sought. Even without the prayer for a specific remedy, proper relief may be
granted by the court if the facts alleged in the complaint and the evidence introduced
so warrant.[46]The prayer in the complaint for other reliefs equitable and just in the
premises justifies the grant of a relief not otherwise specifically prayed for.

WHEREFORE, premises considered, the instant Petition is DENIED. The

Court of Appeals Decision dated 10 May 2005 and its Resolution dated 16 May 2006
in CA-G.R. CV No. 78583 are hereby AFFIRMED. Costs against the petitioner.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

164
MA. ALICIA AUSTRIA-MARTINEZ ANTONIO EDUARDO B. NACHURA
Associate Justice Associate Justice

RUBEN T. REYES
Associate Justice

ATTESTATION

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

165
CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division

CERTIFICATION

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

REYNATO S. PUNO
Chief Justice

[1]
Penned by Associate Justice Roberto A. Barrios with Associate Justices Amelita
G. Tolentino and Vicente S.E. Veloso, concurring. Rollo, pp. 64-75.
[2]
Id. at 78-80.
[3]
Id. at 12.

166
[4]
Id.
[5]
Id. at 97-105.
[6]
Id.
[7]
Id.
[8]
Id. at 81-96.
[9]
Id.
[10]
United Oversesas Bank v. Judge Ros, G.R. No. 171532, 7 August 2007.
[11]
Rollo, pp. 97-105.
[12]
Id. at 145-146.
[13]
Rollo of G.R. No. 159669, pp. 248-264.
[14]
Rollo, pp. 124-125.
[15]
Id. at 126-132.
[16]
Id. at 138-140.
[17]
Id. at 142-145.
[18]
Id. at 69.
[19]
Id.
[20]
Id. at 270.
[21]
Id. at 264.
[22]
Id. at 264-265.
[23]
Id.
[24]
Id. at 265.
[25]
Id. at 270.
[26]
Id.
[27]
Id. at 274.
[28]
Id. at 277.
[29]
Id. at 145-150.
[30]
Id. at 150.
[31]
Rollo, pp. 388-389
[32]
Id. at 259-282.
[33]
Rollo of G.R. Nos. 159669 and 163521.
[34]
Id.
[35]
Radio Communications of the Philippines, Inc. v. Court of Appeals, G.R. No.
139762, 26 April 2006, 488 SCRA 306.
[36]
Id. at 311-312.
[37]
New City Builders, Inc. v. National Labor Relations Commission, G.R. No.
149281, 15 June 2005, 460 SCRA 220, 225-229.
[38]
324 Phil. 466, 477 (1996).
[39]
Moran, Comments on the Rules of Court, Vol. III, 1980, pp. 66-67, as cited in
Annotation, Injunction by Alicia Gonzales-Decano, 446 SCRA 127.

167
[40]
Rollo, p. 150.
[41]
G.R. No. 148599, 14 March 2005, 453 SCRA 342, 353-354.
[42]
Rollo, pp. 103-104.
[43]
Id. at 150.
[44]
Arroyo, Jr. v. Taduran, 466 Phil. 173, 180 (2004).
[45]
BPI Family Bank v. Buenaventura, G.R. Nos. 148196 & 148259, 30 September
2005, 471 SCRA 431; Morales v. Court of Appeals, G.R. No. 112140, 23 June
2005, 461 SCRA 34.
[46]
Eugenio, Sr. v. Velez, G.R. No. 85140, 17 May 1990, 185 SCRA 425, 432-433.

168
https://lawyerphilippines.org/2016/03/18/partial-default-in-a-case-with-multiple-
defendants/

Partial default in a case with multiple defendants

Posted on March 18, 2016April 15, 2017 by Lawyers in the Philippines

What if, in a case filed against multiple defendants, one defendant does not file his
Answer but his co-defendants file theirs?

Can a defendant who failed to file his own Answer be declared in default even if
Answers were filed by his co-defendants?

Yes. The applicable rule is Section 3 of Rule 9 of the Rules of Court.

At the outset, it must be seen that the rules on Default in Section 3 of Rule 9
provide for two distinct and discrete stages of action.

The first stage of action pertains to the finding that a defendant is in default and the
consequent declaration by the Court. With regard to this stage, the first paragraph
of Section 3, Rule 9, provides thus:

Sec. 3. Default; declaration of. If the defending party fails to answer within the
time allowed therefore, the court shall, upon motion of the claiming party with
notice to the defending party, and proof of such failure, declare the defending party
in default.

The first stage thus concludes with the declaration that a defending party is in
default.

The second stage of action pertains to the conduct of the case after the declaration
in default. The ordinary consequence upon a defendant after he is found in default
is provided in paragraph (a) of Section 3, Rule 9, thus:

(a) Effect of order of default. A party in default is entitled to notice of

subsequent proceedings, but not to take part in the trial.

There is a critical distinction between the first stage of action, a defendants being
declared in default, and the second stage of action, the consequences thereof, i.e.
the conduct of the case after such a declaration. While both pertain to default, they
are not identical.

169
It is clear that paragraph (c) of Section 3, Rule 9 also refers to the second stage.

(c) Effect of partial default. When a pleading asserting a claim states a

common cause of action against several defending parties, some of whom answer
and the others fail to do so, the court shall try the case against all upon the answers
thus filed and render judgment upon the evidence presented.

Paragraph (c) only provides for the manner in which the trial will be conducted in
a case where a defendant filed no Answer although his co-defendants did. The
paragraph provides only that the case will be tried upon the Answers filed by the
responsive defendants. Nowhere does it state that the Rule on default does not
apply. It is not an exception to a defendant being declared in default.

The defendant who does not file an Answer is to be declared in default. This is the
Rule and paragraph (c) of Section 3, Rule 9 is no exception to it. Said provision, in
fact, recognizes a situation where one defendant among several is in default. This
is clear from paragraph (c)s own heading, Effect of partial default. That very
heading recognizes that default exists within the set. This recognition can only be
upon the Courts declaration of default pursuant to the first paragraph of Section 3
of Rule 9.

Paragraph (c) of Section 3, Rule 9 thus provides for the manner of the trials
conduct in a situation where one party among several, but not all, were declared in
default pursuant to the first paragraph of Section 3, Rule 9. It contemplates the
existence of default in one of the defendants. It is, therefore, not an exception to
the rule on default, but a consequence.

A contrary interpretation would allow a defendant in willful default to nevertheless

present evidence contrary to the Rules explicit provision. This would render in
vain the provisions for the Rule on Default and defeat the Rules of Courts
objective of securing a just, speedy and inexpensive disposition of every action and
proceeding.[1]

Jurisprudence is in full support of this view. The Supreme Court has ruled upon
Section 3 (c) of Rule 9 in the case of PINLAC, ET AL. vs. COURT OF
APPEALS, ET AL., G.R. No. 91486, 19 January 2001. There the Supreme Court
affirmed that when a party does not file an Answer, although his co-defendants do
so, default is availing against the former. The Supreme Court ruled:

(c) Effect of partial default. When a pleading asserting a claim states a

common cause of action against several defending parties, some of whom answer
170
and the others fail to do so, the court shall try the case against all upon the answers
thus filed and render judgment upon the evidence presented.

In fact, the court a quo enumerated in the Partial Decision those who filed
responsive pleadings. Considering that petitioners in their complaint stated a
common cause of action against all the named respondents, the court a quo should
have heard the case as against all respondents, the defaulted respondents included.
However, the trial court, unmindful of the above-quoted rule, proceeded to receive
evidence ex parte only against the defaulted respondents. The trial courts
disposition is not only violative of the rules but also a clear negation of the
defaulted respondents limited rights.

Whatever defense and evidence the non-defaulted respondents may present which
would be applicable to the situation of the defaulted respondents should inure to
the benefit of the latter. The nullification of OCT 614 adversely affected the
answering respondents for they all share the same mother title. In effect, the court
a quo pre-judged the case even against the answering respondents, for how could
OCT 614, the mother title, be valid for one set of respondents and null and void for
the other respondents? In fine, the Partial Decision was procedurally flawed.
[Boldfacing supplied]

Pinlac vs. Court of Appeals affirms that a declaration of partial default is in order
in these cicumstances. For, under Pinlac, that a Complaint states a common cause
of action against all the named defendants means only that the Honorable Court
should hear the case and receive evidence against all defendants, the defaulted
defendant included.

But, as Pinlac vs. Court of Appeals makes clear, Section 3 (c) of Rule 9 does not
mean that a delinquent defendant whose co-defendants did file their
Answers cannot be declared in default. He still should be declared in default for
having failed to file an Answer within the time given by the Rules. He does remain
entitled to the limited rights of a defendant in default, but to no more than those.

Although such defenses and evidence as the non-defaulted co-defendant may

present which would be applicable to the situation of the defaulted defendant could
inure to his benefit, being in default, the latter should be so declared. And so the
defaulted defendant shall remain entitled to notice of subsequent proceedings, but
he cannot take part in the trial.[2]

The Supreme Court again explained in depth the governing rules in a situation of
partial default under Section 3 (c) of Rule 9 in the case of REMIGIA GRAGEDA
171
ET AL., vs. HON. NIMFA C. GOMEZ, ET AL., G.R. No. 169536, 21 September
2007:

Stated differently, in all instances where a common cause of action is alleged

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

The primary question which a Motion To Declare Defendant In Default hinges on

is whether or not the defendant failed to Answer within the time given him.

The question of whether or not his co-defendant had filed an Answer is relevant
only as to the second stage, the manner of how trial will subsequently be
conducted. It has no bearing on the first stage, the declaration of the delinquent
partys default.

The application of the Rules in such a case are therefore clear. The Rules on partial
default are as they were laid out in the same case of Grageda vs. Hon. Gomez:

172
The effects, therefore, of a failure to file a separate Answer when other co-
defendants (against whom a common cause of action was alleged) had already
filed theirs, are limited to the following:

1. While the non-answering defendants may be declared in default, the court

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

[1] Section 6, Rule 1 of the Rules of Court.

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

173
FIRST DIVISION

ERLINDA GAJUDO, FERNANDO G.R. No. 151098

GAJUDO, JR., ESTELITA GAJUDO,
BALTAZAR GAJUDO and DANILO Present:
ARAHAN CHUA,
Petitioners, Panganiban, CJ,
Chairman,
Ynares-Santiago,
- versus - Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ

Promulgated:

TRADERS ROYAL BANK,101

Respondent. March 21, 2006
x -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- - -- x

DECISION

101
The Court of Appeals was included in the Petition as a respondent. However, the CA was omitted by this
Court from the title of the case, because it need not be impleaded in petitions for review, under Section 4
of Rule 45 of the Rules of Court.

174
PANGANIBAN, CJ:

The mere fact that a defendant is declared in default does not automatically result in
the grant of the prayers of the plaintiff. To win, the latter must still present the same
quantum of evidence that would be required if the defendant were still present. A
party that defaults is not deprived of its rights, except the right to be heard and to
present evidence to the trial court. If the evidence presented does not support a
judgment for the plaintiff, the complaint should be dismissed, even if the defendant
may not have been heard or allowed to present any countervailing evidence.

The Case

Before us is a Petition for Review102 under Rule 45 of the Rules of Court, assailing
the June 29, 2001 Decision103 and December 6, 2001 Resolution104 of the Court of
Appeals (CA) in CA-GR CV No. 43889. The CA disposed as follows:

UPON THE VIEW WE TAKE OF THIS CASE, THUS, the

partial judgment appealed from, must be, as it hereby is, VACATED
and SET ASIDE, and another one entered DISMISSING the complaint
at bench. Without costs.105

102
Rollo, pp. 9-27.
103
Penned by Justice Renato C. Dacudao and concurred in by Justices Romeo J. Callejo Sr. (then chairperson
of the Special Thirteenth Division and now a member of this Court) and Alicia L. Santos (acting member).
Id., pp. 29-39.
104
Id., p. 41.
105
CA Decision, p. 11; id., p. 39.

175
The assailed Resolution denied petitioners Motion for Reconsideration106 for lack
of merit.

The Facts

The CA narrated the facts as follows:

[Petitioners] filed a complaint before the Regional Trial Court

of Quezon City, Branch 90, against [respondent] Traders Royal Bank,
the City Sheriff of Quezon City and the Register of Deeds of Quezon
City. Docketed thereat as Civil Case No. Q-41203, the complaint
sought the annulment of the extra-judicial foreclosure and auction
sale made by [the] city sheriff of Quezon City of a parcel of land
covered by TCT No. 16711 of the Register of Deeds of Quezon City,
the conventional redemption thereof, and prayed for damages and the
issuance of a writ of preliminary injunction.

The complaint alleged that in mid 1977[, Petitioner] Danilo

Chua obtained a loan from [respondent] bank in the amount of
P75,000.00 secured by a real estate mortgage over a parcel of land
covered by TCT No. 16711, and owned in common by the
[petitioners]; that when the loan was not paid, [respondent] bank
commenced extra-judicial foreclosure proceedings on the property;
that the auction sale of the property was set on 10 June 1981, but was
reset to 31 August 1981, on [Petitioner Chuas] request, which,
however, was made without the knowledge and conformity of the
other [petitioners]; that on the re-scheduled auction sale, [the] Sheriff
of Quezon City sold the property to the [respondent] bank, the highest
bidder therein, for the sum of P24,911.30; that the auction sale was
tainted with irregularity because, amongst others, the bid price was
shockingly or unconscionably, low; that the other [petitioners] failed
to redeem the property due to their lack of knowledge of their right of
redemption, and want of sufficient education; that, although the
period of redemption had long expired, [Petitioner] Chua offered to

106
CA rollo, pp. 145-152.

176
buy back, and [respondent] bank also agreed to sell back, the
foreclosed property, on the understanding that Chua would pay
[respondent] bank the amount of P40,135.53, representing the sum
that the bank paid at the auction sale, plus interest; that [Petitioner]
Chua made an initial payment thereon in the amount of P4,000.00,
covered by Interbank Check No. 09173938, dated 16 February 1984,
duly receipted by [respondent] bank; that, in a sudden change of
position, [respondent] bank wrote Chua, on 20 February 1984, asking
that he could repurchase the property, but based on the current market
value thereof; and that sometime later, or on 22 March 1984,
[respondent] bank wrote Chua anew, requiring him to tender a new
offer to counter the offer made thereon by another buyer.

Traversing [petitioners] complaint, [respondent] bank, upon 05 July

1984, filed its answer with counterclaim, thereunder asserting that the
foreclosure sale of the mortgaged property was done in accordance
with law; and that the bid price was neither unconscionable, nor
shockingly low; that [petitioners] slept on their rights when they
failed to redeem the property within the one year statutory period;
and that [respondent] bank, in offering to sell the property to
[Petitioner] Chua on the basis of its current market price, was acting
conformably with law, and with legitimate banking practice and
regulations.

Pre-trial having been concluded, the parties entered upon trial, which
dragged/lengthened to several months due to postponements. Upon
11 June 1988, however, a big conflagration hit the City Hall of
Quezon City, which destroyed, amongst other things, the records of
the case. After the records were reconstituted, [petitioners] discovered
that the foreclosed property was sold by [respondent] bank to the
Ceroferr Realty Corporation, and that the notice of lis pendens
annotated on the certificate of title of the foreclosed property, had
already been cancelled. Accordingly, [petitioners], with leave of
court, amended their complaint, but the Trial Court dismissed the
case without prejudice due to [petitioners] failure to pay additional
filing fees.

177
So, upon 11 June 1990, [petitioners] re-filed the complaint with the
same Court, whereat it was docketed as Civil Case No. 90-5749, and
assigned to Branch 98: the amended complaint substantially
reproduced the allegations of the original complaint. But [petitioners]
this time impleaded as additional defendants the Ceroferr Realty
Corporation and/or Cesar Roque, and Lorna Roque, and included an
additional cause of action, to wit: that said new defendants conspired
with [respondent] bank in [canceling] the notice of lis pendens by
falsifying a letter sent to and filed with the office of the Register of
Deeds of Quezon City, purportedly for the cancellation of said notice.

Summons was served on [respondent] bank on 26 September 1990,

per Sheriffs Return dated 08 October 1990. Supposing that all the
defendants had filed their answer, [petitioners] filed, on 23 October
1991, a motion to set case for pre-trial, which motion was, however,
denied by the Trial Court in its Order of 25 October 1991, on the
ground that [respondent] bank has not yet filed its answer. On 13
November 1991[, petitioners] filed a motion for reconsideration,
thereunder alleging that they received by registered mail, on 19
October 1990, a copy of [respondent] banks answer with
counterclaim, dated 04 October 1990, which copy was attached to the
motion. In its Order of 14 November 1991, the trial Court denied for
lack of merit, the motion for reconsideration, therein holding that the
answer with counterclaim filed by [respondent] bank referred to
another civil case pending before Branch 90 of the same Court.

For this reason, [petitioners] filed on 02 December 1991 a motion to

declare [respondent] bank in default, thereunder alleging that no
answer has been filed despite the service of summons on it on 26
September 1990.

On 13 December 1991, the Trial Court declared the motion submitted

for resolution upon submission by [petitioners] of proof of service of
the motion on [respondent] bank.

178
 Thus, on 16 January 1992, upon proof that [petitioners] had indeed
served [respondent] bank with a copy of said motion, the Trial Court
issued an Order of default against [respondent] bank.

Upon 01 December 1992, on [petitioners] motion, they were by the

Court allowed to present evidence ex parte on 07 January 1993,
insofar as [respondent] bank was concerned.

Thereafter, or on 08 February 1993, the Trial Court rendered

the new questioned partial decision.107
Aggrieved, [respondent] bank filed a motion to set aside [the] partial
decision by default against Traders Royal Bank and admit
[respondent] Traders Royal Banks x x x Answer with counterclaim:
thereunder it averred, amongst others, that the erroneous filing of said
answer was due to an honest mistake of the typist and inadvertence of
its counsel.

The [trial court] thumbed down the motion in its Order of 26 July
1993.108

Respondent bank appealed the Partial Decision109 to the CA. During the pendency
of that appeal, Ceroferr Realty Corporation and/or Cesar and/or Lorna Roque filed
a Manifestation with Motion110 asking the CA to discharge them as parties, because
the case against them had already been dismissed on the basis of their Compromise
107
The dispositive portion of the Partial Decision reads as follows:
The claims of the [petitioners] as against [Respondent] Traders Royal Bank
having been established and proved by evidence, judgment is hereby rendered ordering
[Respondent] Traders Royal Bank to pay [petitioners] actual damage or the market
value of the land in question in the sum of P500,000.00; the sum of P70,000.00 as
compensatory damages; the sum of P200,000.00 to the heirs of [Petitioner] Danilo
Chua; and attorneys fees in the sum of P30,000.00. (Partial Decision dated February 8,
1993, p. 2; records, p. 173).
108
CA Decision, pp. 2-5; rollo, pp. 30-33.
109
Records, pp. 172-173.
110
CA rollo, pp. 37-41.

179
Agreement111 with petitioners. On May 14, 1996, the CA issued a Resolution112
granting Ceroferr et al.s Manifestation with Motion to discharge movants as parties
to the appeal. The Court, though, deferred resolution of the matters raised in the
Comment113 of respondent bank. The latter contended that the Partial Decision had
been novated by the Compromise Agreement, whose effect of res judicata had
rendered that Decision functus officio.

Ruling of the Court of Appeals

The CA ruled in favor of respondent bank. Deemed, however, to have rested on

shaky ground was the latters Motion to Set Aside Partial Decision by Default
Against Traders Royal Bank and Admit Defendant Traders Royal Banks
Answer.114 The reasons offered by the bank for failing to file an answer were
considered by the appellate court to be at once specious, shallow and sophistical
and can hardly be dignified as a mistake or excusable negligence, which ordinary
prudence could not have guarded against.115

In particular, the CA ruled that the erroneous docket number placed on the Answer
filed before the trial court was not an excusable negligence by the banks counsel.
The latter had a bounden duty to be scrupulously careful in reviewing pleadings.
Also, there were several opportunities to discover and rectify the mistake, but these
were not taken. Moreover, the banks Motion to Set Aside the Partial Decision and
to Admit [the] Answer was not accompanied by an affidavit of merit. These
mistakes and the inexcusable negligence committed by respondents lawyer were
binding on the bank.

On the issue of whether petitioners had convincingly established their right to

relief, the appellate court held that there was no ground to invalidate the
foreclosure sale of the mortgaged property. First, under Section 3 of Act No. 3135,
an extrajudicial foreclosure sale did not require personal notice to the mortgagor.
Second, there was no allegation or proof of noncompliance with the publication
requirement and the public posting of the notice of sale, provided under Act No.

111
Contained in the RTC Decision dated October 28, 1993; records, pp. 263-264.
112
CA Rollo, pp. 84-87.
113
Records, pp. 75-82.
114
Id., pp. 176-183.
115
CA Decision, p. 7; rollo, p. 35.

180
3135, as amended. Third, there was no showing of inadequacy of price as no
competent evidence was presented to show the real market value of the land sold
or the readiness of another buyer to offer a price higher than that at which the
property had been sold.

Moreover, petitioners failed to prove that the bank had agreed to sell the property
back to them. After pointing out that the redemption period had long expired,
respondents written communications to Petitioner Chua only showed, at most, that
the former had made a proposal for the latter to buy back the property at the
current market price; and that Petitioner Chua was requested to make an offer to
repurchase the property, because another buyer had already made an offer to buy it.
On the other hand, respondent noted that the Interbank check for P4,000 was for
deposit only. Thus, there was no showing that the check had been issued to cover
part of the repurchase price.

The appellate court also held that the Compromise Agreement had not resulted in
the novation of the Partial Decision, because the two were not incompatible. In
fact, the bank was not even a party to the Agreement. Petitioners recognition of
Ceroferrs title to the mortgaged property was intended to preclude future litigation
against it.

Hence this Petition.116

Issues

In their Memorandum, petitioners raise the following issues:

1. Whether or not the Respondent Court of Appeals erred in

failing to apply the provisions of Section 3, Rule 9 of the 1997 Rules
of Civil Procedure [and in applying instead] the rule on

116
The Petition was deemed submitted for decision on March 29, 2005, upon the Courts receipt of
respondents 4-page Memorandum, signed by Atty. Diosdado B. Jimenez of Gonzales Sinense Jimenez&
Associates. Petitioners Memorandum, signed by Atty. Sergio F. Angeles of Angeles & Associates, was
received by the Court on May 15, 2003.

181
 preponderance of evidence under Section 1, Rule 133 of the Rules of
Court.

2. Whether or not the respondent appellate court failed to apply

the conventional redemption rule provided for under Article 1601 of
the New Civil Code.

3. Whether or not this Honorable Court can exercise its judicial

prerogative to evaluate the findings of facts.117

The first issue is one of law and may be taken up by the Court without
hindrance, pursuant to Section 1 of Rule 45 of the Rules of Court.118 The second and
the third issues, however, would entail an evaluation of the factual findings of the
appellate court, a function ordinarily not assumed by this Court, unless in some
excepted cases. The Court will thus rule on the first issue before addressing the
second and the third issues jointly.

The Courts Ruling

The Petition has no merit.

First Issue:
Quantum of Proof

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

117
Petitioners Memorandum, pp. 10-17; rollo, pp. 98-105.
118
Section 1 of Rule 45 of the Rules of Court provides that x x x. The petition shall raise only questions of
law which must be distinctly set forth.

182
that the quantum of evidence for judgments flowing from a default order under Section
3 of Rule 9 is not the same as that provided for in Section 1 of Rule 133.

For ease of discussion, these two rules will be reproduced below, starting with
Section 3 of Rule 9 of the Rules of Court:

Sec. 3. Default; declaration of. If the defending party fails to

answer within the time allowed therefor, the court shall, upon motion of
the claiming party with notice to the defending party, and proof of such
failure, declare the defending party in default. Thereupon, the court
shall proceed to render judgment granting the claimant such relief as his
pleading may warrant, unless the court in its discretion requires the
claimant to submit evidence. Such reception of evidence may be
delegated to the clerk of court.

(a) Effect of order of default. A party in default shall be entitled

to notice of subsequent proceedings but not to take part in the trial.

(b) Relief from order of default. A party declared in default may

at any time after notice thereof and before judgment file a motion under
oath to set aside the order of default upon proper showing that his
failure to answer was due to fraud, accident, mistake or excusable
negligence and that he has a meritorious defense. In such case, the
order of default may be set aside on such terms and conditions as the
judge may impose in the interest of justice.

183
 (c) Effect of partial default. When a pleading asserting a claim
states a common cause of action against several defending parties, some
of whom answer and the others fail to do so, the court shall try the case
against all upon the answers thus filed and render judgment upon the
evidence presented.

(d) Extent of relief to be awarded. A judgment rendered against

a party in default shall not exceed the amount or be different in kind
from that prayed for nor award unliquidated damages.

(e) Where no defaults allowed. If the defending party in an

action for annulment or declaration of nullity of marriage or for legal
separation fails to answer, the court shall order the prosecuting attorney
to investigate whether or nor a collusion between the parties exists, and
if there is no collusion, to intervene for the State in order to see to it that
the evidence submitted is not fabricated.

We now quote Section 1 of Rule 133:

SECTION 1. Preponderance of evidence, how determined. In

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

184
 witnesses, though the preponderance is not necessarily with the greater
number.

Between the two rules, there is no incompatibility that would preclude the
application of either one of them. To begin with, Section 3 of Rule 9 governs the
procedure which the trial court is directed to take when a defendant fails to file an
answer. According to this provision, the court shall proceed to render judgment
granting the claimant such relief as his pleading may warrant, subject to the courts
discretion on whether to require the presentation of evidence ex parte. The same
provision also sets down guidelines on the nature and extent of the relief that may
be granted. In particular, the courts judgment shall not exceed the amount or be
different in kind from that prayed for nor award unliquidated damages.

As in other civil cases, basic is the rule that the party making allegations has
the burden of proving them by a preponderance of evidence.119 Moreover, parties
must rely on the strength of their own evidence, not upon the weakness of the
defense offered by their opponent.120 This principle holds true, especially when the
latter has had no opportunity to present evidence because of a default order.
Needless to say, the extent of the relief that may be granted can only be as much as
has been alleged and proved121 with preponderant evidence required under Section
1 of Rule 133.

Regarding judgments by default, it was explained in Pascua v. Florendo122 that

complainants are not automatically entitled to the relief prayed for, once the
defendants are declared in default. Favorable relief can be granted only after the
court has ascertained that the relief is warranted by the evidence offered and the
119
Saguid v. Court of Appeals, 451 Phil. 825, June 10, 2003; Ocampo v. Ocampo, 427 SCRA 545, April 14,
2004; Catapusan v. Court of Appeals, 332 Phil. 586, November 21, 1996. Section 1 of Rule 131 of the Rules of
Court provides:
SECTION 1. Burden of proof. Burden of proof is the duty of a party
to present evidence on the facts in issue necessary to establish his claim
or defense by the amount of evidence required by law.
120
Saguid v. CA, ibid. (citing Heirs of Anastacio Fabela v. CA, 362 SCRA 531, August 9, 2001).
121
Regalado, Remedial Law Compendium, Vol. 1, 7th rev. ed. (1999), p. 169. See also P. T. Cerna
Corporation v. CA, 221 SCRA 19, 25, April 6, 1993.
122
220 Phil. 588, April 30, 1985 cited in Luxuria Homes, Inc. v. CA, 361 Phil. 989, January 28, 1999.

185
facts proven by the presenting party. In Pascua, this Court ruled that x x x it would
be meaningless to require presentation of evidence if every time the other party is
declared in default, a decision would automatically be rendered in favor of the
non-defaulting party and exactly according to the tenor of his prayer. This is not
contemplated by the Rules nor is it sanctioned by the due process clause.123

123
Pascua v. Florendo, supra, pp. 595-596, per Gutierrez, Jr., J.

186
 The import of a judgment by default was further clarified in Lim Tanhu v.
Ramolete.124 The following disquisition is most instructive:

Unequivocal, in the literal sense, as these provisions [referring

to the subject of default then under Rule 18 of the old Rules of Civil
Procedure] are, they do not readily convey the full import of what they
contemplate. To begin with, contrary to the immediate notion that can
be drawn from their language, these provisions are not to be understood
as meaning that default or the failure of the defendant to answer should
be interpreted as an admission by the said defendant that the plaintiffs
cause of action find support in the law or that plaintiff is entitled to the
relief prayed for. x x x.

xxx xxx xxx

Being declared in default does not constitute a waiver of rights

except that of being heard and of presenting evidence in the trial court.
x x x.

In other words, a defaulted defendant is not actually thrown out

of court. While in a sense it may be said that by defaulting he leaves
himself at the mercy of the court, the rules see to it that any judgment
against him must be in accordance with law. The evidence to support
the plaintiffs cause is, of course, presented in his absence, but the court
is not supposed to admit that which is basically incompetent. Although
the defendant would not be in a position to object, elementary justice
requires that only legal evidence should be considered against him. If
the evidence presented should not be sufficient to justify a judgment for
the plaintiff, the complaint must be dismissed. And if an unfavorable
judgment should be justifiable, it cannot exceed in amount or be
different in kind from what is prayed for in the complaint.125

124
66 SCRA 425, August 29, 1975. See also Heirs of Anastacio Fabela v. CA, supra at note 20.
125
Id., pp. 452-453, per Barredo, J.

187
In sum, while petitioners were allowed to present evidence ex parte under Section
3 of Rule 9, they were not excused from establishing their claims for damages by
the required quantum of proof under Section 1 of Rule 133. Stated differently, any
advantage they may have gained from the ex parte presentation of evidence does
not lower the degree of proof required. Clearly then, there is no incompatibility
between the two rules.

Second and Third Issues:

Review of the Evidence

Petitioners urge this Court to depart from the general rule that the lower
courts findings of fact are not reviewable in a petition for review.126 In support of
their plea, they cite the conflicting findings of the trial and the appellate courts, as
well as the alleged conjectures and surmises made by the CA in arriving at its
Decision.

Indeed, the differences between the findings of the two courts a quo, leading
to entirely disparate dispositions, is reason enough for this Court to review the
evidence in this case.127 Whether the CA indulged in surmises and conjectures
when it issued the assailed Decision will thus be determined.

At the outset, it behooves this Court to clarify the CAs impression that no
evidence was presented in the case which might have contributed to petitioners
challenge to its Decision. The appellate courts observation was based on the
notation by the lower courts clerk of court that there were no separate folders for

126
Vibram Manufacturing Corporation v. Manila Electric Company, 466 SCRA 178,
August 9, 2005; Rubiato v. Heirs of Jovito Rubiato, 464 SCRA 296, July 28, 2005;
Republic v. CA, 328 Phil. 238, July 12, 1996; Baricuatro Jr. v. Court of Appeals, 382
Phil. 15, 24, February 9, 2000.
127
Manila Banking Corp. v. Silverio, 466 SCRA 438, August 11, 2005; Yason v. Arciaga, 449 SCRA 458,
January 28, 2005; Menchavez v. Torres Jr. 449 SCRA 380, January 26, 2005.

188
exhibits and transcripts, because there was no actual hearing conducted in this
case.128

True, there was no hearing conducted between petitioners and respondent,

precisely because the latter had been declared in default, and petitioners had
therefore been ordered to present their evidence ex parte. But the absence of a
hearing did not mean that no evidence was presented. The Partial Decision dated
February 8, 1993, in fact clearly enumerated the pieces of evidence adduced by
petitioners during the ex parte presentation on January 7, 1993. The documentary
evidence they presented consisted of the following:
1. A copy of respondent banks Petition for the extrajudicial foreclosure and
auction sale of the mortgaged parcel of land129

2. The Certificate of Sale that was a consequence of the foreclosure sale130

3. A Statement of Account dated February 15, 1984, showing Petitioner

Chuas outstanding debt in the amount of P40,135.53131

4. A copy of the Interbank check dated February 16, 1984, in the amount of
132
P4,000

5. The Official Receipt issued by the bank acknowledging the check133

6. The banks letter dated February 20, 1984, advising Petitioner Chua of the
sale of the property at an extrajudicial public auction; the lapse of the period of
redemption; and an invitation to purchase the property at its current market price134

128
CA Decision, p. 9; rollo, p. 37.
129
Records, pp. 9-12.
130
Id., pp. 13-14.
131
Id., p. 15.
132
Id., p. 16.
133
Id., p. 17.
134
Id., p. 18.

189
 7. Another letter from the bank dated March 22, 1984, inviting Petitioner
Chua to submit, within five days, an offer to buy the same property, which another
buyer had offered to buy135

8. A copy of the Notice of Lis Pendens, the filing of which was done after
that of the Amended Complaint136

9. A copy of the title showing the inscription of the Notice of Lis Pendens137

10. A copy of the Absolute Deed of Sale to Cerrofer138

11. A copy of a letter dated August 29, 1986, made and signed by
petitioners counsel, requesting the cancellation of the Notice of Lis Pendens139

12. A copy of a page of the Memorandum of Encumbrance from TCT No.

(314341) 7778/T-39140

Having clarified this matter, we proceed to review the facts.

Petitioners do not deny that the one-year period for legal redemption had
already lapsed when respondent bank supposedly offered to sell the property in
question. The records clearly show that the Certificate of Sale following the
extrajudicial public auction of the property was registered on June 21, 1982, the
date from which the legal redemption period was to be reckoned.141 Petitioners
insist, though, that they had the right to repurchase the property through

135
Id., p. 19.
136
Id., pp. 20-21.
137
Id., pp. 22-23.
138
Id., pp. 24-26.
139
Id., p. 27.
140
Id., p. 28.
141
Union Bank of the Philippines v. CA, 412 Phil. 64, June 25, 2001; Castro v. Bague, 359 SCRA 28, June 20,
2001; Ysmael v. CA, 376 Phil. 323, November 16, 1999. Section 28 of Rule 39 of the Rules of Court provides that
legal redemption should be made at any time within one (1) year from the date of the registration of the certificate of
sale x x x.

190
conventional redemption, as provided under Article 1601 of the Civil Code,
worded as follows:

ART. 1601. Conventional redemption shall take place when the

vendor reserves the right to repurchase the thing sold, with the
obligation to comply with the provisions of Article 1616 and other
stipulations which may have been agreed upon.
It is true that the one-year period of redemption provided in Act No. 3135, as
amended -- the law under which the property here was sold in a foreclosure sale --
is only directory and, as such can be extended by agreement of the parties.142
However, it has also been held that for legal redemption to be converted into
conventional redemption, two requisites must be established: 1) voluntary
agreement of the parties to extend the redemption period; and 2) the debtors
commitment to pay the redemption price on a fixed date.143 Thus, assuming that an
offer was made to Petitioner Chua to buy back the property after the lapse of the
period of legal redemption, petitioners needed to show that the parties had agreed
to extend the period, and that Petitioner Chua had committed to pay the redemption
price on a fixed date.

The letters sent by the bank to Petitioner Chua on February 20 and March 22,
1984, do not convincingly show that the parties arrived at a firm agreement for the
repurchase of the property. What can be gleaned from the February 20 letter is that
Petitioner Chua proposed to pay the redemption price for the property, but that the
bank refused to accede to his request, because the one-year redemption period had
already lapsed.144 The bank, though, had offered to sell back the property to him at
the current market value. Indeed, an examination of his earlier letter of February 17,
1984, readily reveals that he expressed willingness to settle his account with the
bank, but that his present financial situation precludes [him] from effecting an

142
Ibaan Rural Bank, Inc. v. Court of Appeals, 378 Phil. 707, 713, December 17, 1999; Lazo v. Republic
Surety & Insurance Co., Inc., 31 SCRA 329, January 30, 1970.

143 Landrito v. Court of Appeals, 466 SCRA 107, August 9, 2005 (citing Lazo v. Republic
Surety & Insurance Co., Inc., supra); Ibaan Rural Bank, Inc. v. Court of Appeals, supra.
144
Records, p. 18.

191
immediate settlement x x x.145

On the other hand, the letter dated March 22, 1984, clearly states that x x x
the Bank rejected [his] request to redeem said property due to [the] lapse of [the] one
(1) year legal redemption period.146 Nonetheless, he was [invited] to submit an offer
to buy the same property in five (5) days from receipt [of the letter]. 147 Petitioner
Chua was also informed that the bank had received an offer to purchase the
foreclosed property. As to the P4,000 check enclosed in his proposal dated February
17, 1984, as a token of his good faith, he was advised that the amount was still
outstanding in the books of the bank and could be claimed by him if he thought the
invitation was not feasible.

More important, there was no showing that petitioners had committed to pay
the redemption price on a fixed date. True, Petitioner Chua had attempted to establish
a previous agreement to repurchase the property for less than its fair market value.
He had submitted in evidence a Statement of Account148 dated February 15, 1984,
showing a balance of P40,135.53; the Interbank check dated February 16, 1984 , for
P4,000, which was deposited to the account of respondent bank;149 and the Official
Receipt for the check.150

Granting that these documents evinced an agreement, petitioners were still

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

Indeed, other than the Interbank check marked for deposit by respondent bank,
no other evidence was presented to establish that petitioners had offered to pay the
145
Id., p. 195.
146
Id., p. 19.
147
Ibid.
148
Id., p. 15.
149
Id., p. 16.
150
Id., p. 17.

192
alleged redemption price of P40,135.53 on a fixed date. For that matter, petitioners
have not shown that they tendered payment of the balance and/or consigned the
payment to the court, in order to fulfill their part of the purported agreement. These
remedies are available to an aggrieved debtor under Article 1256 of the Civil
Code,151 when the creditor unjustly refuses to accept the payment of an obligation.

The next question that presents itself for resolution is the propriety of the
CAs ruling vacating the Partial Decision of the regional trial court (RTC) and
dismissing the case. To recall, the RTC had resolved to withhold a ruling on
petitioners right to redeem conventionally and/or order the reconveyance of the
property in question, pending a determination of the validity of the sale to Cerrofer
Realty Corporation and Spouses Cesar and Lorna Roque. The trial court, however,
granted the prayer for damages against respondent bank. The RTC ruled as
follows:

The evidence presented by [petitioners] in so far as the cause of

action against [respondent] Traders Royal Bank is concerned are
preponderant to support the claims of the [petitioners]. However, in
view of the fact that the property subject matter of this case has
already been conveyed to defendant Cerrofer Realty Corporation thus
the issue as to whether or not the said conveyance or sale is valid is
sill pending between the [petitioners] and [respondents] Cerrofer
Realty Corporation and Cesar Roque and Lorna Roque. Hence, this
Court resolves to grant the prayer for damages against Traders Royal
Bank.

The claims of the [petitioners] as against [respondent] Traders

Royal Bank having been established and proved by evidence,
judgment is hereby rendered ordering [respondent] Traders Royal
Bank to pay [petitioners] actual damage or the market value of the
land in question in the sum of P500,000.00; the sum of P70,000.00 as
compensatory damages; the sum of P200,000.00 to the heirs of

151
ART. 1256. If the creditor to whom tender of payment has been made refuses without just cause to
accept it, the debtor shall be released from responsibility by the consignation of the thing or sum due. x x x.

193
 [petitioner] Danilo Chua; and attorneys fees in the sum of
P30,000.00.152

In the light of the pending issue as to the validity of the sale of the property
to the third parties (Cerrofer Realty Corporation and Spouses Roque), the trial
court properly withheld judgment on the matter and thus left the prayer for
damages as the sole issue for resolution.

To adjudge damages, paragraph (d) of Section 3 of Rule 9 of the Rules of

Court provides that a judgment against a party in default shall not exceed the
amount or be different in kind from that prayed for nor award unliquidated
damages. The proscription against the award of unliquidated damages is
significant, because it means that the damages to be awarded must be proved
convincingly, in accordance with the quantum of evidence required in civil cases.

Unfortunately for petitioners, the grant of damages was not sufficiently

supported by the evidence for the following reasons.

First, petitioners were not deprived of their property without cause. As

correctly pointed out by the CA, Act No. 3135, as amended, does not require
personal notice to the mortgagor.153 In the present case, there has been no
allegation -- much less, proof -- of noncompliance with the requirement of
publication and public posting of the notice of sale, as required by ct No. 3135.
Neither has there been competent evidence to show that the price paid at the

152
Partial Decision, p. 2; records, p. 173.
153
Section 3 of Act No. 3135, as amended, provides as follows:
Notice shall be given by posting notices of the sale for not less than
twenty days in at least three public places of the municipality or city where
the property is situated, and if such property is worth more than four
hundred pesos, such notice shall also be published once a week for at
least three consecutive weeks in a newspaper of general circulation in the
municipality or city. (See also Ardiente v. Provincial Sheriff, 436 SCRA 655,
August 17, 2004)

194
foreclosure sale was inadequate.154 To be sure, there was no ground to invalidate
the sale.

Second, as previously stated, petitioners have not convincingly established

their right to damages on the basis of the purported agreement to repurchase.
Without reiterating our prior discussion on this point, we stress that entitlement to
actual and compensatory damages must be proved even under Section 3 of Rule 9
of the Rules of Court. The same is true with regard to awards for moral damages
and attorneys fees, which were also granted by the trial court.

In sum, petitioners have failed to convince this Court of the cogency of their
position, notwithstanding the advantage they enjoyed in presenting their evidence
ex parte. Not in every case of default by the defendant is the complainant entitled
to win automatically.

154
This fact would have been shown by presenting evidence that another bidder had offered to pay a higher
price for the property during the bidding.

195
WHEREFORE, this Petition is hereby DENIED and the assailed Decision and
Resolution AFFIRMED. Costs against petitioners.

SO ORDERED.

ARTEMIO V. PANGANIBAN
Chief Justice
Chairman, First Division

WECONCUR:

CONSUELO YNARES-SANTIAGO MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice Associate Justice

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

Associate Justice Associate Justice

CERTIFICATION

196
Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above Decision were reached in consultation before the case
was assigned to the writer of the opinion of the Courts Division.

ARTEMIO V. PANGANIBAN
Chief Justice

197
 Republic of the Philippines
SUPREME COURT
Manila

SECOND DIVISION

G.R. No. 200134 August 15, 2012

ROBERTO OTERO, Petitioner,

vs.
ROGER TAN, Respondent.

VILLARAMA, JR.,*

RESOLUTION

REYES, J.:

Before this Court is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to
annul and set aside the Decision1 dated April 29, 2011 rendered by the Court of Appeals (CA) in CA-G.R.
SP No. 02244, which affirmed the Judgment2 dated December 28, 2007 issued by the Regional Trial Court
(RTC), Cagayan de Oro City, Branch 23 in Civil Case No. 2007-90.

The Antecedent Facts

A Complaint3 for collection of sum of money and damages was filed by Roger Tan (Tan) with the
Municipal Trial Court in Cities (MTCC), Cagayan de Oro City on July 28, 2005 against Roberto Otero
(Otero). Tan alleged that on several occasions from February 2000 to May 2001, Otero purchased on
credit petroleum products from his Petron outlet in Valencia City, Bukidnon in the aggregate amount of P
270,818.01. Tan further claimed that despite several verbal demands, Otero failed to settle his obligation.

Despite receipt of the summons and a copy of the said complaint, which per the records of the case below
were served through his wife Grace R. Otero on August 31, 2005, Otero failed to file his answer with the
MTCC.

On November 18, 2005, Tan filed a motion with the MTCC to declare Otero in default for his failure to
file his answer. Otero opposed Tans motion, claiming that he did not receive a copy of the summons and a
copy of Tans complaint. Hearing on the said motion was set on January 25, 2006, but was later reset to
March 8, 2006, Otero manifesting that he only received the notice therefor on January 23, 2006. The
hearing on March 8, 2006 was further reset to April 26, 2006 since the presiding judge was attending a
convention. Otero failed to appear at the next scheduled hearing, and the MTCC issued an order declaring

198
him in default. A copy of the said order was sent to Otero on May 9, 2006. Tan was then allowed to
present his evidence ex parte.

Tan adduced in evidence the testimonies of Rosemarie Doblado and Zita Sara, his employees in his Petron
outlet who attended Otero when the latter made purchases of petroleum products now the subject of the
action below. He likewise presented various statements of account4 showing the petroleum products which
Otero purchased from his establishment. The said statements of account were prepared and checked by a
certain Lito Betache (Betache), apparently likewise an employee of Tan.

The MTCC Decision

On February 14, 2007, the MTCC rendered a Decision5 directing Otero to pay Tan his outstanding
obligation in the amount of P 270,818.01, as well as attorneys fees and litigation expenses and costs in the
amounts of P 15,000.00 and P 3,350.00, respectively. The MTCC opined that Oteros failure to file an
answer despite notice is a tacit admission of Tans claim.

Undeterred, Otero appealed the MTCC Decision dated February 14, 2007 to the RTC, asserting that the
MTCCs disposition is factually baseless and that he was deprived of due process.

The RTC Decision

On December 28, 2007, the RTC rendered a Judgment6 affirming the MTCC Decision dated February 14,
2007. The RTC held that the statements of account that were presented by Tan before the MTCC were
overwhelming enough to prove that Otero is indeed indebted to Tan in the amount of P 270,818.01.
Further, brushing aside Oteros claim of denial of due process, the RTC pointed out that:

As to the second assignment of error, suffice to say that as borne out by the record of the case, defendant-
appellant was given his day in Court contrary to his claim. His wife, Grace R. Otero received a copy of the
summons together with a copy of the Complaint and its corresponding annexes on August 31, 2005, per
Return of Service made by Angelita N. Bandoy, Process Server of OCC-MTCC of Davao City. He was
furnished with a copy of the Motion to Declare Defendant in Default on November 18, 2005, per Registry
Receipt No. 2248 which was received by the defendant. Instead of filing his answer or any pleading to set
aside the Order of default, he filed his Comment to the Motion to Declare Defendant in Default of which
plaintiff filed his Rejoinder to Defendants Comment.

The case was set for hearing on January 23, 2006, but defendant through counsel sent a telegram that he
only received the notice on the day of the hearing thereby he was unable to appear due to his previous
scheduled hearings. Still, for reasons only known to him, defendant failed to lift the Order of Default.

199
The hearing on January 23, 2006 was reset on March 8, 2006 and again reset on April 26, 2006 by
agreement of counsels x x x.

It is not therefore correct when defendant said that he was deprived of due process.7

Otero sought reconsideration of the Judgment dated December 28, 2007 but it was denied by the RTC in
its Order8 dated February 20, 2008.

Otero then filed a petition for review9 with the CA asserting that both the RTC and the MTCC erred in
giving credence to the pieces of evidence presented by Tan in support of his complaint. Otero explained
that the statements of account, which Tan adduced during the ex parte presentation of his evidence, were
prepared by a certain Betache who was not presented as a witness by Tan. Otero avers that the genuineness
and due execution of the said statements of account, being private documents, must first be established lest
the said documents be rendered inadmissible in evidence. Thus, Otero asserts, the MTCC and the RTC
should not have admitted in evidence the said statements of account as Tan failed to establish the
genuineness and due execution of the same.

The CA Decision

On April 29, 2011, the CA rendered the assailed Decision10 which denied the petition for review filed by
Otero. In rejecting Oteros allegation with regard to the genuineness and due execution of the statements
of account presented by Tan, the CA held that any defense which Otero may have against Tans claim is
already deemed waived due to Oteros failure to file his answer. Thus:

Otero never denied that his wife received the summons and a copy of the complaint. He did not question
the validity of the substituted service. Consequently, he is charged with the knowledge of Tans monetary
claim. Section 1, Rule 9 of the Rules of Court explicitly provides that defenses and objections not pleaded
are deemed waived. Moreover, when the defendant is declared in default, the court shall proceed to render
judgment granting the claimant such relief as his pleading may warrant.

Due to Oteros failure to file his Answer despite being duly served with summons coupled with his
voluntary appearance in court, he is deemed to have waived whatever defenses he has against Tans claim.
Apparently, Otero is employing dilatory moves to defer the payment of his obligation which he never
denied.11 (Citation omitted)

Oteros Motion for Reconsideration12 was denied by the CA in its Resolution13 dated December 13, 2011.

Hence, the instant petition.

Issues

200
Essentially, the fundamental issues to be resolved by this Court are the following: first, whether Otero,
having been declared in default by the MTCC, may, in the appellate proceedings, still raise the failure of
Tan to authenticate the statements of account which he adduced in evidence; and second, whether Tan was
able to prove the material allegations of his complaint.

The Courts Ruling

The petition is denied.

First Issue: Authentication of the Statements of Account

The CA, in denying the petition for review filed by Otero, held that since he was declared in default by the
MTCC, he is already deemed to have waived whatever defenses he has against Tans claim. He is, thus,
already barred from raising the alleged infirmity in the presentation of the statements of account.

We do not agree.

A defendant who fails to file an

answer loses his standing in court.

The effect of a defendants failure to file an answer within the time allowed therefor is primarily governed
by Section 3, Rule 9 of the Rules of Court, viz:

Sec. 3. Default; declaration of. If the defending party fails to answer within the time allowed therefor,
the court shall, upon motion of the claiming party with notice to the defending party, and proof of such
failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment
granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the
claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court. x x x
(Emphasis ours)

A defendant who fails to file an answer may, upon motion, be declared by the court in default. Loss of
standing in court, the forfeiture of ones right as a party litigant, contestant or legal adversary, is the
consequence of an order of default. A party in default loses his right to present his defense, control the
proceedings, and examine or cross-examine witnesses. He has no right to expect that his pleadings would
be acted upon by the court nor may be object to or refute evidence or motions filed against him. 14

A defendant who was declared in

default may nevertheless appeal
from the judgment by default,
albeit on limited grounds.

201
Nonetheless, the fact that a defendant has lost his standing in court for having been declared in default
does not mean that he is left sans any recourse whatsoever. In Lina v. CA, et al.,15 this Court enumerated
the remedies available to party who has been declared in default, to wit:

a) The defendant in default may, at any time after discovery thereof and before judgment, file a motion,
under oath, to set aside the order of default on the ground that his failure to answer was due to fraud,
accident, mistake or excusable neglect, and that he has meritorious defenses; (Sec 3, Rule 18)

b) If the judgment has already been rendered when the defendant discovered the default, but before the
same has become final and executory, he may file a motion for new trial under Section 1(a) of Rule 37;

c) If the defendant discovered the default after the judgment has become final and executory, he may file a
petition for relief under Section 2 of Rule 38; and

d) He may also appeal from the judgment rendered against him as contrary to the evidence or to the law,
even if no petition to set aside the order of default has been presented by him. (Sec. 2, Rule 41)16
(Emphasis ours)

Indeed, a defending party declared in default retains the right to appeal from the judgment by default.
However, the grounds that may be raised in such an appeal are restricted to any of the following: first, the
failure of the plaintiff to prove the material allegations of the complaint; second, the decision is contrary to
law; and third, the amount of judgment is excessive or different in kind from that prayed for.17 In these
cases, the appellate tribunal should only consider the pieces of evidence that were presented by the
plaintiff during the ex parte presentation of his evidence.

A defendant who has been declared in default is precluded from raising any other ground in his appeal
from the judgment by default since, otherwise, he would then be allowed to adduce evidence in his
defense, which right he had lost after he was declared in default.18 Indeed, he is proscribed in the appellate
tribunal from adducing any evidence to bolster his defense against the plaintiffs claim. Thus, in Rural
Bank of Sta. Catalina, Inc. v. Land Bank of the Philippines,19 this Court explained that:

It bears stressing that a defending party declared in default loses his standing in court and his right to
adduce evidence and to present his defense. He, however, has the right to appeal from the judgment by
default and assail said judgment on the ground, inter alia, that the amount of the judgment is excessive or
is different in kind from that prayed for, or that the plaintiff failed to prove the material allegations of his
complaint, or that the decision is contrary to law. Such party declared in default is proscribed from seeking
a modification or reversal of the assailed decision on the basis of the evidence submitted by him in the
Court of Appeals, for if it were otherwise, he would thereby be allowed to regain his right to adduce
evidence, a right which he lost in the trial court when he was declared in default, and which he failed to

202
have vacated. In this case, the petitioner sought the modification of the decision of the trial court based on
the evidence submitted by it only in the Court of Appeals.20 (Citations omitted and emphasis ours)

Here, Otero, in his appeal from the judgment by default, asserted that Tan failed to prove the material
allegations of his complaint. He contends that the lower courts should not have given credence to the
statements of account that were presented by Tan as the same were not authenticated. He points out that
Betache, the person who appears to have prepared the said statements of account, was not presented by
Tan as a witness during the ex parte presentation of his evidence with the MTCC to identify and
authenticate the same. Accordingly, the said statements of account are mere hearsay and should not have
been admitted by the lower tribunals as evidence.

Thus, essentially, Otero asserts that Tan failed to prove the material allegations of his complaint since the
statements of account which he presented are inadmissible in evidence. While the RTC and the CA, in
resolving Oteros appeal from the default judgment of the MTCC, were only required to examine the
pieces of evidence that were presented by Tan, the CA erred in brushing aside Oteros arguments with
respect to the admissibility of the said statements of account on the ground that the latter had already
waived any defense or objection which he may have against Tans claim.

Contrary to the CAs disquisition, it is not accurate to state that having been declared in default by the
MTCC, Otero is already deemed to have waived any and all defenses which he may have against Tans
claim.

While it may be said that by defaulting, the defendant leaves himself at the mercy of the court, the rules
nevertheless see to it that any judgment against him must be in accordance with the evidence required by
law. The evidence of the plaintiff, presented in the defendants absence, cannot be admitted if it is
basically incompetent. Although the defendant would not be in a position to object, elementary justice
requires that only legal evidence should be considered against him. If the same should prove insufficient to
justify a judgment for the plaintiff, the complaint must be dismissed. And if a favorable judgment is
justifiable, it cannot exceed in amount or be different in kind from what is prayed for in the complaint.21

Thus, in SSS v. Hon. Chaves,22 this Court emphasized that:

We must stress, however, that a judgment of default against the petitioner who failed to appear during pre-
trial or, for that matter, any defendant who failed to file an answer, does not imply a waiver of all of their
rights, except their right to be heard and to present evidence to support their allegations. Otherwise, it
would be meaningless to request presentation of evidence every time the other party is declared in default.
If it were so, a decision would then automatically be rendered in favor of the non-defaulting party and
exactly to the tenor of his prayer. The law also gives the defaulting parties some measure of protection
because plaintiffs, despite the default of defendants, are still required to substantiate their allegations in the
complaint.23 (Citations omitted and emphasis ours)

203
The statements of account
presented by Tan were merely
hearsay as the genuineness and due
execution of the same were not
established.

Anent the admissibility of the statements of account presented by Tan, this Court rules that the same
should not have been admitted in evidence by the lower tribunals.

Section 20, Rule 132 of the Rules of Court provides that the authenticity and due execution of a private
document, before it is received in evidence by the court, must be established. Thus:

Sec. 20. Proof of private document. Before any private document offered as authentic is received in
evidence, its due execution and authenticity must be proved either:

a) By anyone who saw the document executed or written; or

b) By evidence of the genuineness of the signature or handwriting of the maker.

Any other private document need only be identified as that which it is claimed to be.

A private document is any other writing, deed, or instrument executed by a private person without the
intervention of a notary or other person legally authorized by which some disposition or agreement is
proved or set forth. Lacking the official or sovereign character of a public document, or the solemnities
prescribed by law, a private document requires authentication in the manner allowed by law or the Rules
of Court before its acceptance as evidence in court. The requirement of authentication of a private
document is excused only in four instances, specifically: (a) when the document is an ancient one within
the context of Section 21, Rule 132 of the Rules of Court; (b) when the genuineness and authenticity of an
actionable document have not been specifically denied under oath by the adverse party; (c) when the
genuineness and authenticity of the document have been admitted; or (d) when the document is not being
offered as genuine.24

The statements of account which Tan adduced in evidence before the MTCC indubitably are private
documents. Considering that these documents do not fall among the aforementioned exceptions, the
MTCC could not admit the same as evidence against Otero without the required authentication thereof
pursuant to Section 20, Rule 132 of the Rules of Court. During authentication in court, a witness positively
testifies that a document presented as evidence is genuine and has been duly executed, or that the
document is neither spurious nor counterfeit nor executed by mistake or under duress.25

Here, Tan, during the ex parte presentation of his evidence, did not present anyone who testified that the
said statements of account were genuine and were duly executed or that the same were neither spurious or

204
counterfeit or executed by mistake or under duress. Betache, the one who prepared the said statements of
account, was not presented by Tan as a witness during the ex parte presentation of his evidence with the
MTCC.

Considering that Tan failed to authenticate the aforesaid statements of account, the said documents should
not have been admitted in evidence against Otero. It was thus error for the lower tribunals to have
considered the same in assessing the merits of Tans Complaint.

Second Issue: The Material Allegations of the Complaint

In view of the inadmissibility of the statements of account presented by Tan, the remaining question that
should be settled is whether the pieces of evidence adduced by Tan during the ex parte presentation of his
evidence, excluding the said statements of account, sufficiently prove the material allegations of his
complaint against Otero.

We rule in the affirmative.

In civil cases, it is a basic rule that the party making allegations has the burden of proving them by a
preponderance of evidence. The parties must rely on the strength of their own evidence and not upon the
weakness of the defense offered by their opponent.26 This rule holds true especially when the latter has had
no opportunity to present evidence because of a default order. Needless to say, the extent of the relief that
may be granted can only be so much as has been alleged and proved with preponderant evidence required
under Section 1 of Rule 133.27

Notwithstanding the inadmissibility of the said statements of account, this Court finds that Tan was still
able to prove by a preponderance of evidence the material allegations of his complaint against Otero.

First, the statements of account adduced by Tan during the ex parte presentation of his evidence are just
summaries of Otero's unpaid obligations, the absence of which do not necessarily disprove the latter's
liability.

Second, aside from the statements of account, Tan likewise adduced in evidence the testimonies of his
employees in his Petron outlet who testified that Otero, on various occasions, indeed purchased on credit
petroleum products from the former and that he failed to pay for the same. It bears stressing that the
MTCC, the R TC and the CA all gave credence to the said testimonial evidence presented by Tan and,
accordingly, unanimously found that Otero still has unpaid outstanding obligation in favor of Tan in the
amount of P 270,818.01.

205
Well-established is the principle that factual findings of the trial court, when adopted and confirmed by the
CA, are binding and conclusive on this Court and will generally not be reviewed on appeal.28 The Court
sees no compelling reason to depart from the foregoing finding of fact of the lower courts.

WHEREFORE, in consideration of the foregoing disquisitions, the petition is DENIED. The Decision
dated April 29, 2011 rendered by the Court of Appeals in CA-G.R. SP No. 02244 is AFFIRMED.

SO ORDERED.

BIENVENIDO L. REYES
Associate Justice

WE CONCUR:

ANTONIO T. CARPIO
Senior Associate Justice
Chairperson, Second Division

ARTURO D. BRION MARTIN S. VILLARAMA, JR.

Associate Justice Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

CERTIFICATION

I certify that the conclusions in the above Resolution had been reached in consultation before the case was
assigned to the writer of the opinion of the Court's Division.

ANTONIO T. CARPIO
Senior Associate Justice
(Per Section 12, R.A. 296
The Judiciary Act of 1948, as amended)

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

206
1
Penned by Associate Justice Edgardo T. Lloren, with Associate Justices Romulo V. Borja and
Rodrigo F. Lim. Jr., concurring; rollo, pp. 30-33.
2
Under the sala of Presiding Judge Ma. Anita M. Esguerra-Lucagho; id. at 49-50.
3
Id. at 44-46.
4
Id. at 73-81.
5
Under the sala of Judge Eleuteria Badoles-Algodon; id. at 47-48.
6
Id. at 49-50.
7
Id.
8
Id. at 51.
9
Id. at 52-63.
10
Id. at 30-33.
11
Id. at 32-33.
12
Id. at 34-40.
13
Id. at 42-43.
14
See S.C. Johnson & Son, Inc. v. Court of Appeals, 188 Phil. 579 (1990); Cavili v. Judge Florendo,
238 Phil. 597, 603 (1987).
15
220 Phil. 311 (1985).
16
Id. at 316-317.
17
See Martinez v. Republic of the Philippines, 536 Phil. 868 (2006).
18
See Arquero v. Court of Appeals, G.R. No. 168053, September 21, 2011.
19
479 Phil. 43 (2004).
20
Id. at 52.

207
21
See Tanhu v. Judge Ramolete, 160 Phil. 1101, 1126 (1975).
22
483 Phil. 292 (2004).
23
Id. at 301-302.
24
Patula v. People of the Philippines, G.R. No. 164457, April 11, 2012.
25
Salas v. Sta. Mesa Market Corporation, G.R. No. 157766, July 12, 2007, 527 SCRA 465, 472.

See New Sun Valley Homeowners Association, Inc. v. Sangguniang Barangay, Barangay Sun
26

Valley, Paraaque City, G.R. No. 156686, July 27, 2011, 654 SCRA 438, 464.
27
See Gajudo v. Traders Royal Bank, 519 Phil. 791, 803 (2006).
28
Insular Investment and 71-ust Corporation v. Capital One Equities Corp., G.R. No. 183308, April
25,2012.

208
 Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

SPOUSES HUMBERTO DELOS G.R. No. 153696

SANTOS and CARMENCITA
DELOS SANTOS, Present:
Petitioners,
PANGANIBAN, CJ., Chairperson,
- versus - YNARES-SANTIAGO,
AUSTRIA-MARTINEZ,
HON. EMMANUEL C. CALLEJO, SR. and
CARPIO, Presiding Judge of CHICO-NAZARIO, JJ.
RTC, Branch 16, Davao City
and METROPOLITAN BANK Promulgated:
and TRUST COMPANY,
Respondents. September 11, 2006

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

209
 DECISION

AUSTRIA-MARTINEZ, J.:

Before us is a petition for review on certiorari under Rule 45 of the Rules of

Court filed by spouses Humberto delos Santos and Carmencita delos Santos
(petitioners) assailing the Decision155 dated April 30, 2002 of the Court of Appeals
(CA) in CA-G.R. SP No. 64961.156

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

On January 3, 2001, Metropolitan Bank and Trust Company (or

Metrobank) filed a complaint157 for sum of money against spouses
Humberto and Carmencita delos Santos (or petitioners) before the
Regional Trial Court of Davao City (Branch 16).

On January 22, 2001, petitioners were served with the summons,

together with a copy of the complaint. As petitioners failed to file an
answer within the reglementary period, Metrobank, on February 8,
2001,158 filed a motion to declare them in default. The motion was set
for hearing on February 16, 2001.

155
Penned by Justice Edgardo P. Cruz, concurred in by Justices Mariano C. del Castillo and Regalado E.
Maambong; CA rollo, pp. 115-121.
156
Entitled Sps. Humberto delos Santos and Carmencita delos Santos v. Hon. Emmanuel C. Carpio, Presiding
Judge of the Regional Trial Court, 11th Judicial Region, Branch 16, Davao City, and Metropolitan Bank and
Trust Company.
157
Docketed as Civil Case No. 28,362-2001.
4
Should be February 9, 2001, records, p. 15.

210
 Acting on the motion, the lower court, presided over by Hon.
Emmanuel C. Carpio (or respondent judge), issued an order dated
February 12, 2001 declaring petitioners in default and setting the ex-
parte presentation of Metrobanks evidence on March 7, 2001.

On February 15, 2001, petitioners filed an opposition to

Metrobanks motion to declare them in default, claiming that upon
receipt of the summons, they immediately sought the services of Atty.
Philip Pantojan (or Atty. Pantojan) of the Into Pantojan Gonzales and
Marasigan Law Offices but it was only on February 12, 2001 that they
were able to meet with Atty. Pantojan. Petitioners alleged that not being
learned in law, they were unaware of the consequences of delay in the
filing of their answer.

On the same date, February 15, 2001, petitioners filed a motion

to admit answer, as well as the answer. In an order dated February 16,
2001, respondent judge disregarded petitioners opposition to
Metrobanks motion for default and stood pat on his previous default
order.

On February 19, 2001, Metrobank filed an opposition to

petitioners motion to admit answer, arguing that said motion was
rendered moot and academic by the February 12, 2001 order.
Metrobank also chided petitioners for violating the three-day notice
rule under Sec. 4, Rule 15 of the 1997 Rules of Civil Procedure. In an
order dated February 20, 2001, the motion to admit answer was denied.

On February 27, 2001, petitioners filed a motion to lift the order

of default; Metrobank opposed the motion. In their motion, petitioners
reiterated that, being laymen, they were unaware of the fifteen-day
period within which to file the answer and that their failure to do so was
due to the unavailability of Atty. Pantojan who was then always out of
town. They attached to their motion an Affidavit of Merits which
restated the contents of the motion. Petitioners further claimed that if
given our day in Court, we have a meritorious defense to set up against
the allegations of the plaintiffs complaint.
211
 On March 2, 2001, respondent judge issued an order holding in
abeyance the ex-parte reception of evidence pending resolution of
petitioners motion to lift the order of default.

On March 5, 2001, respondent judge issued an order denying

petitioners motion to lift the order of default and setting the reception
of Metrobanks evidence on March 7, 2001, as previously scheduled. On
that date (March 7, 2001), Metrobank presented its evidence and the
case was submitted for decision. Petitioners moved for reconsideration
of the March 5, 2001 order but their motion was denied on March 21,
2001.159

Aggrieved, petitioners filed a Petition for Certiorari with the CA ascribing

grave abuse of discretion committed by the trial court amounting to lack of
jurisdiction in issuing the Orders dated February 12 and 16, 2001, declaring them in
default and denying their Opposition to Metropolitan Bank and Trust Companys
(Metrobank) Motion to Declare them in Default, respectively; and the Orders dated
March 5 and 21, 2001 denying their Motion to Lift the Order of Default and their
Motion for Reconsideration, respectively.

In a Decision dated April 30, 2002, the CA denied the petition for lack of
merit and accordingly dismissed the same. The CA did not find the excuse proffered
by petitioners, i.e., the ignorance of procedural rules and their lawyers unavailability,
as constitutive of excusable negligence. It also ruled that for an order of default to
be set aside, petitioners must have a meritorious defense or that something could be
gained by having the order of default set aside; that petitioners affidavit of merit did
not show a meritorious defense since it merely stated that they have a meritorious
defense to set up against the allegation of petitioners complaint but there was no
discussion of such defense and the facts which they intend to prove in support
thereof.

159
CA rollo, pp. 115-117.

212
 The CA further found unmeritorious the contention of petitioners that they
were declared in default without giving them ample time to file an opposition to
Metrobanks Motion to Declare them in Default; that under Section 3, Rule 9 of the
Rules of Court, it is provided that the court shall, upon motion of the claiming party
with notice to the defending party in default, and proof of such failure, declare the
defending party in default; and that since it is clear from the records that the
reglementary period for filing an answer had expired with no responsive pleading
filed by petitioners, the trial court had properly declared them in default. The CA
further declared that even assuming that the trial court committed a procedural lapse
in declaring petitioners in default before the scheduled hearing of Metrobanks
motion, such error is not so serious as to constitute grave abuse of discretion.

Hence, the instant petition filed by petitioners raising the following issues, to
wit:

1. Whether or not the procedural lapse committed by Honorable

Public Respondent in issuing an Order declaring petitioners [sic] in
default on 12 February 2001 or four (4) days before the scheduled
hearing of Metrobanks Motion to declare petitioners [sic] in default on
16 February 2001 is so serious as to constitute grave abuse of discretion.
2. Whether or not LITIS PENDENTIA raised by petitioners
[sic] as an affirmative defense is a meritorious defense.

3. Whether or not it is beyond the authority of the Honorable

Trial Court to rule on the issue of LITIS PENDENTIA simply and
chiefly because the defendants failed to seasonably raise it.

4. What constitutes Affidavit of Merit? 160

Petitioners claim that the trial court committed grave abuse of discretion in
declaring them in default in its Order dated February 12, 2001, which was four days
before the hearing set on Metrobanks Motion to Declare them in Default; that their
failure to file their Answer within the reglementary period was due to the fact that
160
Rollo, pp. 16-17.

213
the services of their counsel of choice could not be secured within the period; that
they had filed their Motion to Admit Answer and their Answer as well as their
Opposition to respondents motion to declare them in default on February 15, 2001,
a day prior to the scheduled date of hearing.

Petitioners aver that under Section 1, Rule 9 of the Rules of Court, defenses
like the court has no jurisdiction, litis pendentia, res judicata and prescription can
be taken cognizance of by the court despite the fact that they are not in a motion to
dismiss or Answer; that the trial court should have looked into their affirmative
defense of litis pendentia raised in their Answer since it is a meritorious defense as
it is a ground for a dismissal of a complaint. They further contend that although the
affirmative defense of litis pendentia had reached the trial courts attention, it still
refused to pass judgment on said legal concern; that the defense of litis pendentia
raised in their Answer is sufficient to show that the affidavit of merit showed a
meritorious defense; that the procedural lapse committed by the trial court would
cause the unlawful deprivation of their property rights through undue haste.

In its Comment, Metrobank contends that petitioners failed to file a motion

for reconsideration before filing the instant petition which would vest authority for
this Court to assume jurisdiction; that the rule on declaration of default did not
expressly mandate the trial court to conduct a hearing of the motion as it merely
requires that the notice of the motion was made to the defending party; that the trial
court declared petitioners in default since they failed to file their Answer within the
reglementary period; that assuming arguendo that the trial court committed
procedural lapse in declaring petitioners in default before the scheduled hearing,
there is still no grave abuse of discretion committed by the trial court since even if
the hearing was held, it would not make any difference as petitioners failed to file
their Answer within the reglementary period.

Metrobank further argues that petitioners negligence is not excusable because

if they have consulted the associates of Atty. Pantojan, they would definitely be
advised to ask for an extension of time to file their answer; that petitioners failed to
present a meritorious defense since aside from merely stating in general terms their
claim of litis pendentia as a defense, the same is misplaced because Civil Case No.
28,362-2001 pending in RTC of Davao City, Branch 16, and Civil Case No. 27,875-
2000 filed by petitioners in RTC of Davao City, Branch 10, have separate and
distinct causes of action; that the trial court is correct in not ruling on the issue of
214
litis pendentia as petitioners Answer was not admitted as part of the records of the
case.

Petitioners filed their Reply contending that appeal by certiorari under Rule
45 does not require prior filing of a motion for reconsideration; that the procedural
lapse committed by the trial court in declaring petitioners in default before the
scheduled hearing should not be tolerated since petitioners land and building are at
stake; and that they should not be faulted for not consulting the associates of Atty.
Pantojan as they reposed their trust and confidence in him.

Petitioners and Metrobank filed their respective memoranda. Metrobanks

Memorandum no longer questioned petitioners non-filing of a motion for
reconsideration of the CA decision.

Prefatorily, we agree with petitioners that in appeal by certiorari, the prior

filing of a motion for reconsideration is not required.161

The principal issue before us is whether or not the CA erred in upholding the
Orders of the trial court declaring petitioners in default and denying their Motion to
Lift Order of Default.

We rule in the affirmative.

Section 3, Rule 9 of the Rules of Court provides:

Sec. 3. Default; declaration of If the defending party fails

to answer within the time allowed therefor, the court shall, upon motion
of the claiming party with notice to the defending party, and proof of
such failure, declare the defending party in default. Thereupon, the
court shall proceed to render judgment granting the claimant such relief
as his pleading may warrant, unless the court in its discretion requires

161
Atty. Paa v. Court of Appeals, 347 Phil. 122, 136 (1997).

215
 the claimant to submit evidence. Such reception of evidence may be
delegated to the clerk of court.

Clearly, there are three requirements which must be complied with by the
claiming party before the court may declare the defending party in default, to wit:
(1) the claiming party must file a motion asking the court to declare the defending
party in default; (2) the defending party must be notified of the motion to declare
him in default; (3) the claiming party must prove that the defending party has failed
to answer within the period provided by the Rule.

In filing motions, Section 4, Rule 15 of the Rules of Court, specifically

provides:

Sec. 4. Hearing of motion. Except for motions which the court

may act upon without prejudicing the rights of the adverse party, every
written motion shall be set for hearing by the applicant. (Emphasis
supplied)

xxxx

Prior to the present rule on default introduced by the 1997 Rules of Civil
Procedure, as amended, Section 1 of the former Rule 18 on default is silent on
whether or not there is need for a notice of a motion to declare defendant in
default.162 The Court then ruled that there is no need.163 However, the present rule
expressly requires that the motion of the claiming party should be with notice to
the defending party.164 The purpose of a notice of a motion is to avoid surprises on
the opposite party and to give him time to study and meet the arguments.165 The
notice of a motion is required when the party has the right to resist the relief sought
162
Oscar M. Herrera, Comments on the 1997 Rules of Civil Procedure as amended, Volume VII, p. 101, 1997
edition.
163
Id. citing The Philippine British Company, Inc. v. De los Angeles, 159 Phil. 660, 673 (1975); Dulos v. Court
of Appeals, G.R. No. 87917, August 7, 1990, 188 SCRA 413, 420.
164
RULES OF COURT, Rule 9, Section 3.
165
Herrera, Remedial Law, Volume I, p. 733, 2000 edition.

216
by the motion and principles of natural justice demand that his right be not affected
without an opportunity to be heard.166

Therefore, as the present rule on default requires the filing of a motion and
notice of such motion to the defending party, it is not enough that the defendant
failed to answer the complaint within the reglementary period to be a sufficient
ground for declaration in default. The motion must also be heard.

In this case, it is not disputed that petitioners were served summons on

January 22, 2001.167 Under Section 1, Rule 11 of the Rules of Court, the defendant
shall file his answer to the complaint within 15 days after service of summons,
unless a different period is fixed by the court. Petitioners answer was due on
February 6, 2001, but no answer was filed by petitioners. Thus, Metrobank filed a
Motion168 to declare petitioners in default on February 9, 2001, setting the hearing
thereof on February 16, 2001. However, four days before the scheduled hearing,
the trial court issued the Order dated February 12, 2001, declaring petitioners in
default.

We could not see any justifiable reason why the trial court chose not to hear
the petitioners on the date and time fixed in Metrobanks motion, and instead,
hastily granted the motion before it could be heard on the ground that it had found
the motion to be impressed with merit. Indeed, in totally disregarding the purpose
for which the filing of a motion and notice to defending party are required by the
Rules, the trial court had acted in a despotic manner that is correctly assailed
through a petition for certiorari which petitioners have seasonably filed with the
CA.

Again, respondent Judge acted capriciously when he totally ignored

petitioners Opposition to Metrobanks Motion to Declare them in Default and
denied their Motion to Admit Answer, both filed on February 15, 2001, a day
166
Yap v. Court of Appeals, 200 Phil. 509, 514 (1982).
167
Records, pp. 13-14.
168
Id. at 15.

217
before the scheduled hearing, which showed their desire to be heard before the
motion to declare them in default is resolved by the trial court.

A mere perusal of the Answer attached to the Motion to Admit Answer

would readily reveal that petitioners raised a special and affirmative defense the
other action pending between the same parties for the same cause. Petitioners
alleged that they entered into several loan agreements with Metrobank involving an
aggregate amount of P12,500,000.00 which was the basis of petitioners causes of
action in a civil case they earlier filed against Metrobank with the RTC of Davao
City, Branch 10, docketed as Civil Case No. 27,875-2000, for damages, fixing of
interest rates, application of excess interest payments; that the principal obligation
of P12,500,000.00 includes all other loans which petitioners have with Metrobank;
that the P500,000.00 obligation covered by the promissory note subject of the
instant Civil Case No. 28,362-2001 is part of the P12,500,000.00 loan of
petitioners, subject of Civil Case No. 27,875-2000 that was earlier filed; and that a
written copy of the P500,000.00 loan was not attached to the complaint.

Thus, the trial court is deemed to have been apprised of the affirmative
defense of litis pendentia. Instead of unceremoniously discarding petitioners
Opposition and Motion to Admit Answer169 which were filed before the scheduled
date of hearing of the motion to declare petitioners in default, it behooved upon the
trial court to delve into the merits of the Opposition and the Answer.

The trial court then should have been guided by Section 11, Rule 11 of the
Rules of Court, to wit:

Sec. 11. Extension of time to plead. - Upon motion and on such

terms as may be just, the court may extend the time to plead provided
in these Rules.

The court may also, upon like terms, allow an answer or other
pleading to be filed after the time fixed by these Rules.

169
Set for hearing on the same day that the hearing on the motion to declare petitioners in default was set.

218
and Section 1, Rule 9 of the 1997 Rules of Procedure which provides:

Sec. 1. Defenses and objections not pleaded. - Defenses and

objections not pleaded either in a motion to dismiss or in the answer
are deemed waived. However, when it appears from the pleadings or
the evidence on record that the court has no jurisdiction over the
subject matter, that there is another action pending between the same
parties for the same cause, or that the action is barred by a prior
judgment or by statute of limitations, the court shall dismiss the claim.

Under Rule 11, it is within the discretion of the trial court to permit the filing
of defendants answer even beyond the reglementary period, provided there is
justification for the belated action, and there was no showing that the defendant
intended to delay the case. Petitioners may be considered to have committed
excusable negligence when they waited for the counsel of their choice who was out
of town which caused the delay in filing their Answer; and the Motion to Admit
Answer was filed before the scheduled date of hearing on the Motion to Declare
Petitioners in Default, showing that petitioners had no intention to delay the case.

Under Rule 9, the trial court may motu proprio dismiss the claim when it
appears from the pleadings or evidence on the record that there is another cause of
action pending between the same parties for the same cause. With the alleged
affirmative defense of litis pendentia, the trial court had justifiable compelling
reason to recall its premature Order declaring petitioners in default.

219
 In a case,170 we found the trial court to have gravely abused its discretion
when it declared defendants in default; that the answer should be admitted because
it had been filed before it was declared in default and no prejudice was caused to
plaintiff; and that the hornbook rule is that default judgments are generally
disfavored.171

In this case, since the Order dated February 12, 2001 declaring petitioners in
default is null and void, the filing of the Answer may be considered as having been
filed before petitioners were declared in default and therefore no prejudice was
caused to Metrobank and there was no undue delay on the part of petitioners.

Basic elementary sense of fairness, liberality and substantial justice so dictate

that the premature Order be considered as null and void. It is the avowed policy of
the law to accord both parties every opportunity to pursue and defend their cases in
the open and relegate technicality to the background in the interest of substantial
justice.172

Since the Order dated February 12, 2001 was null and void, the trial court
likewise committed grave abuse of discretion in issuing the Orders dated March 5,
2001 and March 21, 2001 denying petitioners Motion to Lift Order of Default and
Motion for Reconsideration, respectively.

We reiterate the ruling in Akut v. Court of Appeals,173 where we found that

the trial court committed grave abuse of discretion in declaring therein petitioners
in default and in denying their motion to set aside the order of default, thus:

170
Indiana Aerospace University v. Commission on Higher Education, G.R. No. 139371, April 4, 2001, 356
SCRA 367, 381.
171
Id.
172
Republic of the Philippines v. Sandiganbayan, G.R. Nos. 109430-43, December 28, 1994, 239 SCRA 529,
536.
173
201 Phil. 680 (1982).

220
 The controlling principle ignored by respondent court is that it
is within sound judicial discretion to set aside an order of default and
to permit a defendant to file his answer and to be heard on the merits
even after the reglementary period for the filing of the answer has
expired. This discretion should lean towards giving party-litigants
every opportunity to properly present their conflicting claims on the
merits of the controversy without resorting to technicalities. Courts
should be liberal in setting aside orders of default, for default
judgments are frowned upon, and unless it clearly appears that
reopening of the case is intended for delay, it is best that the trial
courts give both parties every chance to fight their case fairly and in
the open, without resort to technicality. x x x

x x x Moreover, petitioners' answer shows that they have a

prima facie meritorious defense. They should, therefore, be given
their day in court to avoid the danger of committing a grave injustice
if they were denied an opportunity to introduce evidence in their
behalf.

Our ruling in Mercader v. Bonto174 and the copious

precedents therein cited that "considering that the late filing of
defendants' answer was due to excusable negligence and that they
appear to have a meritorious defense; that defendants filed an
answer before they were declared in default; and that the late
filing of the answer did not in any way prejudice or deprive the
plaintiff of any substantial right, nor was there intention to
unduly delay the case, WE hold that the respondent judge
committed an abuse of discretion in declaring the defendants in
default and in refusing to set aside the order of default" is fully
applicable to the case at bar.

Time and again the Court has enjoined trial judges to act with
circumspection and not to precipitately declare parties in default,

174
G.R. No. L-48564, August 20, 1979, 92 SCRA 665, 677.

221
 needlessly compelling the aggrieved party to undergo the additional
expense, anxiety and delay of seeking the intervention of the appellate
courts and depriving them of the much needed time and attention that
could instead have well been devoted to the study and disposition of
more complex and complicated cases and issues.175 (Emphasis
supplied)

In sum, we find that the RTC Order declaring petitioners in default and its
subsequent Order denying petitioners Motion to Lift Order of Default are null and
void; and the CA erroneously upheld the assailed Orders of the trial court.

WHEREFORE, the petition for review is GRANTED. The Decision of the

Court of Appeals dated April 30, 2002 in CA-G.R. SP No. 64961 is REVERSED
and SET ASIDE. The Order of Default of the Regional Trial Court is SET ASIDE
and the Answer filed by petitioners is deemed ADMITTED. The trial court is
DIRECTED to continue with deliberate speed with the proceedings in the case
below.

Costs against private respondent.

SO ORDERED.

MA. ALICIA AUSTRIA-MARTINEZ

Associate Justice

175
Supra note 19, at 687-688.

222
WE CONCUR:

ARTEMIO V. PANGANIBAN
Chief Justice

Chairperson

CONSUELO YNARES-SANTIAGO ROMEO J. CALLEJO, SR.

Associate Justice Associate Justice

MINITA V. CHICO-NAZARIO
Associate Justice
CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified

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

ARTEMIO V. PANGANIBAN
Chief Justice

223
G.R. No. 193494, March 07, 2014 - LUI ENTERPRISES, INC., Petitioner, v.
ZUELLIG PHARMA CORPORATION AND THE PHILIPPINE BANK OF
COMMUNICATIONS, Respondents.

THIRD DIVISION

G.R. No. 193494, March 07, 2014

LUI ENTERPRISES, INC., Petitioner, v. ZUELLIG PHARMA

CORPORATION AND THE PHILIPPINE BANK OF
COMMUNICATIONS, Respondents.

DECISION

LEONEN, J.:

There should be no inexplicable delay in the filing of a motion to set aside order of
default. Even when a motion is filed within the required period, excusable
negligence must be properly alleged and proven.

This is a petition for review on certiorari of the Court of Appeals decision1 dated
May 24, 2010 and resolution2 dated August 13, 2010 in CAG.R. CV No. 88023.
The Court of Appeals affirmed in toto the Regional Trial Court of Makatis
decision3 dated July 4, 2006.

The facts as established from the pleadings of the parties are as

follows:chanRoblesvirtualLawlibrary

On March 9, 1995, Lui Enterprises, Inc. and Zuellig Pharma Corporation entered
into a 10year contract of lease4 over a parcel of land located in Barrio Tigatto,
Buhangin, Davao City. The parcel of land was covered by Transfer Certificate of
Title No. T166476 and was registered under Eli L. Lui.5

On January 10, 2003, Zuellig Pharma received a letter6 from the Philippine Bank
of Communications. Claiming to be the new owner of the leased property, the bank
asked Zuellig Pharma to pay rent directly to it. Attached to the letter was a copy of

224
Transfer Certificate of Title No. 336962 under the name of the Philippine Bank of
Communications.7 Transfer Certificate of Title No. 336962 was derived from
Transfer Certificate of Title No. T166476.8

Zuellig Pharma promptly informed Lui Enterprises of the Philippine Bank of

Communications claim. On January 28, 2003, Lui Enterprises wrote to Zuellig
Pharma and insisted on its right to collect the leased propertys rent. 9

Due to the conflicting claims of Lui Enterprises and the Philippine Bank of
Communications over the rental payments, Zuellig Pharma filed a complaint10 for
interpleader with the Regional Trial Court of Makati. In its complaint, Zuellig
Pharma alleged that it already consigned in court P604,024.35 as rental payments.
Zuellig Pharma prayed that it be allowed to consign in court its succeeding
monthly rental payments and that Lui Enterprises and the Philippine Bank of
Communications be ordered to litigate their conflicting claims.11

The Philippine Bank of Communications filed its answer12 to the complaint. On the
other hand, Lui Enterprises filed a motion to dismiss13 on the ground that Zuellig
Pharmas alleged representative did not have authority to file the complaint for
interpleader on behalf of the corporation. Under the secretarys certificate14 dated
May 6, 2003 attached to the complaint, Atty. Ana L.A. Peralta was only authorized
to initiate and represent [Zuellig Pharma] in the civil proceedings for consignation
of rental payments to be filed against Lui Enterprises, Inc. and/or [the Philippine
Bank of Communications].15

According to Lui Enterprises, an earlier filed nullification of deed of dation in

payment case pending with the Regional Trial Court of Davao barred the filing of
the interpleader case.16 Lui Enterprises filed this nullification case against the
Philippine Bank of Communications with respect to several properties it dationed
to the bank in payment of its obligations. The property leased by Zuellig Pharma
was among those allegedly dationed to the Philippine Bank of Communications. 17

In the nullification of deed of dation in payment case, Lui Enterprises raised the
issue of which corporation had the better right over the rental payments.18 Lui
Enterprises argued that the same issue was involved in the interpleader case. To
avoid possible conflicting decisions of the Davao trial court and the Makati trial
court on the same issue, Lui Enterprises argued that the subsequently filed
interpleader case be dismissed.

To support its argument, Lui Enterprises cited a writ of preliminary injunction19

225
dated July 2, 2003 issued by the Regional Trial Court of Davao, ordering Lui
Enterprises and the Philippine Bank of Communications [to maintain] status
quo20 with respect to the rent. By virtue of the writ of preliminary injunction, Lui
Enterprises argued that it should continue collecting the rental payments from its
lessees until the nullification of deed of dation in payment case was resolved. The
writ of preliminary injunction dated July 2, 2003
reads:chanRoblesvirtualLawlibrary
WHEREAS, on June 30, 2003, the Court issued an Order, a portion of which is
quoted:
WHEREFORE, PREMISES CONSIDERED, let a Writ of Preliminary Injunction
issue, restraining and enjoining [the Philippine Bank of Communications], its
agents or [representative], the Office of the Clerk of CourtSheriff and all persons
acting on their behalf, from conducting auction sale on the properties of [Lui
Enterprises] in EJFREM Case No. 627203 scheduled on July 3, 2003 at 10:00
a.m. at the Hall of Justice, Ecoland, Davao City, until the final termination of the
case, upon plaintiff [sic] filing of a bond in the amount of P1,000,000.00 to answer
for damages that the enjoined parties may sustain by reason of the injunction if the
Court should finally decide that applicant is not entitled thereto.
WHEREAS, that plaintiff posted a bond of P1,000,000.00 duly approved by this
Court.

IT IS HEREBY ORDERED by the undersigned Judge that, until further orders,

[the Philippine Bank of Communications] and all [its] attorneys, representatives,
agents and any other persons assisting [the bank], are directed to restrain from
conducting auction sale on the Properties of [Lui Enterprises] in EJFREM Case
No. 627203 scheduled on July 3, 2003 at 10:00 a.m. at the Hall of Justice,
Ecoland, Davao City, until the final termination of the case.21

Zuellig Pharma filed its opposition22 to the motion to dismiss. It argued that the
motion to dismiss should be denied for having been filed late. Under Rule 16,
Section 1 of the 1997 Rules of Civil Procedure, a motion to dismiss should be filed
within the required time given to file an answer to the complaint, which is 15 days
from service of summons on the defendant.23 Summons was served on Lui
Enterprises on July 4, 2003. It had until July 19, 2003 to file a motion to dismiss,
but Lui Enterprises filed the motion only on July 23, 2003.24

As to Lui Enterprises claim that the interpleader case was filed without authority,
Zuellig Pharma argued that an action interpleader is a necessary consequence of

226
the action for consignation.25 Zuellig Pharma consigned its rental payments
because of the clearly conflicting claims of [Lui Enterprises] and [the Philippine
Bank of Communications].26 Since Atty. Ana L.A. Peralta was authorized to file a
consignation case, this authority necessarily included an authority to file the
interpleader case.

Nevertheless, Zuellig Pharma filed in court the secretarys certificate dated August
28, 2003,27 which expressly stated that Atty. Ana L.A. Peralta was authorized to
file a consignation and interpleader case on behalf of Zuellig Pharma.28

With respect to the nullification of deed of dation in payment case, Zuellig Pharma
argued that its pendency did not bar the filing of the interpleader case. It was not a
party to the nullification case.29

As to the writ of preliminary injunction issued by the Regional Trial Court of

Davao, Zuellig Pharma argued that the writ only pertained to properties owned by
Lui Enterprises. Under the writ of preliminary injunction, the Regional Trial Court
of Davao enjoined the July 3, 2003 auction sale of Lui Enterprises properties, the
proceeds of which were supposed to satisfy its obligations to the Philippine Bank
of Communications. As early as April 21, 2001, however, the Philippine Bank of
Communications already owned the leased property as evidenced by Transfer
Certificate of Title No. 336962. Thus, the writ of preliminary injunction did not
apply to the leased property.30

Considering that Lui Enterprises filed its motion to dismiss beyond the 15day
period to file an answer, Zuellig Pharma moved that Lui Enterprises be declared in
default.31

In its compliance32 dated September 15, 2003, the Philippine Bank of

Communications [joined Zuellig Pharma] in moving to declare [Lui Enterprises]
in default, and in [moving for] the denial of [Lui Enterprises] motion to
dismiss.33

The Regional Trial Court of Makati found that Lui Enterprises failed to file its
motion to dismiss within the reglementary period. Thus, in its order34 dated
October 6, 2003, the trial court denied Lui Enterprises motion to dismiss and
declared it in default.35

Lui Enterprises did not move for the reconsideration of the order dated October 6,
2003. Thus, the Makati trial court heard the interpleader case without Lui
227
Enterprises participation.

Despite having been declared in default, Lui Enterprises filed the manifestation
with prayer36 dated April 15, 2004. It manifested that the Regional Trial Court of
Davao allegedly issued the order37 dated April 1, 2004, ordering all of Lui
Enterprises lessees to observe status quo with regard to the rental payments38
and continue remitting their rental payments to Lui Enterprises while the
nullification of deed of dation in payment case was being resolved. The order dated
April 1, 2004 of the Regional Trial Court of Davao
reads:chanRoblesvirtualLawlibrary

ORDER

Posed for Resolution is the Motion for Amendment of Order filed by [Lui
Enterprises] on September 23, 2003 seeking for the preservation of status quo on
the payment/remittance of rentals to [it] and the disposal/construction of the
properties subject matter of this case.

xxxx

As elsewhere stated, [the Philippine Bank of Communications] did not oppose the
instant motion up to the present. In fact, during the hearing held on March 15,
2004, [the banks] counsel manifested in open court that except for the rentals due
from [Zuellig Pharma] which are the subject of a consignation suit before a Makati
Court, the other rental payments are continuously received by [Lui Enterprises].

There being no objection from [the Philippine Bank of Communications], and in

order to protect the right of [Lui Enterprises] respecting the subject of the action
during the pendency of this case, this Court, in the exercise of its discretion hereby
grants the motion.

Accordingly, consistent with the order of this Court dated June 30, 2003, the
parties are hereby directed to further observe status quo with regard to the rental
payments owing or due from the lessees of the properties subject of the first set of
deeds of dacion and that the defendants are enjoined from disposing of the
properties located at Green Heights Village, Davao City until the case is finally
resolved.

With the order dated April 1, 2004 issued by the Regional Trial Court of Davao as
basis, Lui Enterprises argued that Zuellig Pharma must remit its rental payments to
228
it and prayed that the interpleader case be dismissed.

The Regional Trial Court of Makati only noted the manifestation with prayer dated
April 15, 2004.39

It was only on October 21, 2004, or one year after the issuance of the order of
default, that Lui Enterprises filed a motion to set aside order of default40 in the
Makati trial court on the ground of excusable negligence. Lui Enterprises argued
that its failure to file a motion to dismiss on time was caused by the negligence of
[Lui Enterprises] former counsel.41 This negligence was allegedly excusable
because [Lui Enterprises] was prejudiced and prevented from fairly presenting
[its] case.42

For its allegedly meritorious defense, Lui Enterprises argued that the earlier filed
nullification of deed of dation in payment case barred the filing of the interpleader
case. The two actions allegedly involved the same parties and the same issue of
which corporation had the better right over the rental payments. To prevent the
possibility of two courts x x x rendering conflicting rulings [on the same issue],43
Lui Enterprises argued that the subsequently filed interpleader case be dismissed.

Zuellig Pharma filed its opposition44 to the motion to set aside order of default. It
argued that a counsels failure to file a timely answer was inexcusable negligence
which bound his client.

Further, Zuellig Pharma argued that the pending case for nullification of deed of
dation in payment [did] not preclude [Zuellig Pharma] from seeking the relief
prayed for in the [interpleader case].45

While the motion to set aside order of default was still pending for resolution, Lui
Enterprises filed the manifestation and motion to dismiss46 dated April 21, 2005 in
the Makati trial court. It manifested that the Davao trial court issued another
order47 dated April 18, 2005 in the nullification of deed of dation in payment case.
In this order, the Davao trial court directed the Philippine Bank of
Communications to inform Zuellig Pharma to pay rent to Lui Enterprises while the
Davao trial courts order dated April 1, 2004 was subsisting. The order dated April
18, 2005 of the Davao trial court reads:chanRoblesvirtualLawlibrary

ORDER

Plaintiffs move for execution or implementation of the Order dated September 14,

229
2004. In substance, [Lui Enterprises] seek[s] to compel the remittance in their
favor of the rentals from [Zuellig Pharma], one of the lessees alluded to in the
September 14, 2004 Order whose rental payments must be remitted to and
collected by [Lui Enterprises]. [The Philippine Bank of Communications] did not
submit any opposition.

It appears from the records that sometime in February 2003, after being threatened
with a lawsuit coming from [the Philippine Bank of Communications], [Zuellig
Pharma] stopped remitting its rentals to [Lui Enterprises] and instead, has
reportedly deposited the monthly rentals before a Makati court for consignation.

As aptly raised by the plaintiffs, a possible impasse may insist should the Makati
Courts ruling be contrary to or in conflict with the status quo order issued by this
Court. To preclude this spectacle, Zuellig Pharma should accordingly be advised
with the import of the Order dated September 14, 2004, the salient portion of
which is quoted:
x x x prior to the institution of the instant case and by agreement of the parties,
plaintiffs were given as they did exercise the right to collect, receive and enjoy
rental payments x x x.

Since the April 1, 2004 status quo order was a necessary implement of the writ of
preliminary injunction issued on June 30, 2003, it follows that plaintiffs right to
collect and receive rental payments which he enjoyed prior to the filing of this
case, must be respected and protected and maintained until the case is resolved. As
such, all rentals due from the aboveenumerated lessees must be remitted to and
collected by the Plaintiffs.

Status quo simply means the last actual peaceable uncontested status that preceded
the actual controversy. (Searth Commodities Corp. v. Court of Appeals, 207 SCRA
622).
As such, the [Philippine Bank of Communications] [is] hereby directed to
forthwith inform [Zuellig Pharma] of the April 1, 2004 status quo order and the
succeeding September 14, 2004 Order, and consequently, for the said lessee to
remit all rentals due from February 23, 2003 and onwards to [Lui Enterprises] in
the meanwhile that the status quo order is subsisting.

In its manifestation and motion to dismiss, Lui Enterprises reiterated its prayer for
the dismissal of the interpleader case to prevent the possibility of [the Regional
Trial Court, Branch 143, Makati City] and [the Regional Trial Court, Branch 16,

230
Davao City] rendering conflicting rulings [on the same issue of which corporation
has the better right to the rental payments].48

Without resolving the motion to set aside order of default, the Makati trial court
denied the manifestation with motion to dismiss dated April 21, 2005 on the
ground that Lui Enterprises already lost its standing in court.49

Lui Enterprises did not file any motion for reconsideration of the denial of the
manifestation and motion to dismiss dated April 21, 2005.

In its decision50 dated July 4, 2006, the Regional Trial Court of Makati ruled that
Lui Enterprises [was] barred from any claim in respect of the [rental payments]51
since it was declared in default. Thus, according to the trial court, there was no
issue as to which corporation had the better right over the rental payments. 52 The
trial court awarded the total consigned amount of P6,681,327.30 to the Philippine
Bank of Communications and ordered Lui Enterprises to pay Zuellig Pharma
P50,000.00 in attorneys fees.53

Lui Enterprises appealed to the Court of Appeals.54

The Court of Appeals found Lui Enterprises appellants brief insufficient. Under
Rule 44, Section 13 of the 1997 Rules of Civil Procedure, an appellants brief must
contain a subject index, page references to the record, table of cases, textbooks and
statutes cited, and the statement of issues, among others. However, Lui
Enterprises appellants brief did not contain these requirements.55

As to the denial of Lui Enterprises motion to dismiss, the Court of Appeals

sustained the trial court. The Court of Appeals found that Lui Enterprises filed its
motion to dismiss four days late.56

With respect to Lui Enterprises motion to set aside order of default, the Court of
Appeals found that Lui Enterprises failed to show the excusable negligence that
prevented it from filing its motion to dismiss on time. On its allegedly meritorious
defense, the Court of Appeals ruled that the nullification of deed of dation in
payment case did not bar the filing of the interpleader case, with Zuellig Pharma
not being a party to the nullification case.57

On the award of attorneys fees, the Court of Appeals sustained the trial court since
Zuellig Pharma x x x was constrained to file the action for interpleader with
consignation in order to protect its interests x x x.58
231
Thus, in its decision59 promulgated on May 24, 2010, the Court of Appeals
dismissed Lui Enterprises appeal and affirmed in toto the Regional Trial Court of
Makatis decision.

Lui Enterprises filed a motion for reconsideration.60

The Court of Appeals denied Lui Enterprises motion for reconsideration in its
resolution promulgated on August 13, 2010.61 Hence, this petition.

In this petition for review on certiorari ,62 Lui Enterprises argued that the Court of
Appeals applied the rules of procedure strictly63 and dismissed its appeal on
technicalities. According to Lui Enterprises, the Court of Appeals should have
taken a liberal stance and allowed its appeal despite the lack of subject index, page
references to the record, table of cases, textbooks and statutes cited, and the
statement of issues in its appellants brief.64

Lui Enterprises also claimed that the trial court should have set aside the order of
default since its failure to file a motion to dismiss on time was due to excusable
negligence.65

For its allegedly meritorious defense, Lui Enterprises argued that the pending
nullification of deed of dation in payment case barred the filing of the interpleader
case. The nullification of deed of dation in payment case and the interpleader case
allegedly involved the same issue of which corporation had the better right to the
rent. To avoid conflicting rulings on the same issue, Lui Enterprises argued that the
subsequently filed interpleader case be dismissed.66

No attorneys fees should have been awarded to Zuellig Pharma as argued by Lui
Enterprises. Zuellig Pharma filed the interpleader case despite its knowledge of the
nullification of deed of dation in payment case filed in the Davao trial court where
the same issue of which corporation had the better right over the rental payments
was being litigated. Thus, Zuellig Pharma filed the interpleader case in bad faith
for which it was not entitled to attorneys fees.67

The Philippine Bank of Communications filed its comment68 on the petition for
review on certiorari . It argued that Lui Enterprises failed to raise any error of law
and prayed that we affirm in toto the Court of Appeals decision.

For Zuellig Pharma, it manifested that it was adopting the Philippine Bank of
232
Communications arguments in its comment.69

The issues for our resolution are:chanRoblesvirtualLawlibrary

I. Whether the Court of Appeals erred in dismissing Lui Enterprises appeal for
lack of subject index, page references to the record, table of cases, textbooks and
statutes cited, and the statement of issues in Lui Enterprises appellants brief;

II. Whether the Regional Trial Court of Makati erred in denying Lui Enterprises
motion to set aside order of default;

III. Whether the annulment of deed of dation in payment pending in the Regional
Trial Court of Davao barred the subsequent filing of the interpleader case in the
Regional Trial Court of Makati; and

IV. Whether Zuellig Pharma was entitled to attorneys fees.

Lui Enterprises petition for review on certiorari is without merit. However, we

delete the award of attorneys fees.

Lui Enterprises did not comply with the

rules on the contents of the appellants
brief

Under Rule 50, Section 1, paragraph (f) of the 1997 Rules of Civil Procedure, the
Court of Appeals may, on its own motion or that of the appellee, dismiss an appeal
should the appellants brief lack specific requirements under Rule 44, Section 13,
paragraphs (a), (c), (d), and (f):chanRoblesvirtualLawlibrary

Section 1. Grounds for dismissal of appeal. An appeal may be dismissed by the

Court of Appeals, on its own motion or on that of the appellee, on the following
grounds:chanRoblesvirtualLawlibrary

xxxx

(f) Absence of specific assignment of errors in the appellants brief, or of page

233
references to the record as required in Section 13, paragraphs (a), (c), (d), and (f) of
Rule 44.

These requirements are the subject index of the matter in brief, page references to
the record, and a table of cases alphabetically arranged and with textbooks and
statutes cited:chanRoblesvirtualLawlibrary

Section 13. Contents of the appellants brief. The appellants brief shall contain,
in the order herein indicated, the following:chanRoblesvirtualLawlibrary

(a) A subject index of the matter in brief with a digest of the arguments and page
references, and a table of cases alphabetically arranged, textbooks and statutes
cited with references to the pages where they are cited;

xxxx

(c) Under the heading Statement of the Case, a clear and concise statement of
the nature of the action, a summary of the proceedings, the appealed rulings and
orders of the court, the nature of the controversy, with page references to the
record;

(d) Under the heading Statement of Facts, a clear and concise statement in a
narrative form of the facts admitted by both parties and of those in controversy,
together with the substance of the proof relating thereto in sufficient detail to make
it clearly intelligible, with page references to the record;

xxxx

(f) Under the heading Argument, the appellants arguments on each assignment
of error with page references to the record. The authorities relied upon shall be
cited by the page of the report at which the case begins and the page of the report
on which the citation is found;

xxxx

Lui Enterprises appellants brief lacked a subject index, page references to the
record, and table of cases, textbooks and statutes cited. Under Rule 50, Section 1 of
the 1997 Rules of Civil Procedure, the Court of Appeals correctly dismissed Lui
Enterprises appeal.

234
Except for cases provided in the Constitution,70 appeal is a purely statutory
right.71 The right to appeal must be exercised in the manner prescribed by law72
and requires strict compliance with the Rules of Court on appeals.73 Otherwise, the
appeal shall be dismissed, and its dismissal shall not be a deprivation of due
process of law.

In Mendoza v. United Coconut Planters Bank, Inc.,74 this court sustained the Court
of Appeals dismissal of Mendozas appeal. Mendozas appellants brief lacked a
subject index, assignment of errors, and page references to the record. In De Liano
v. Court of Appeals,75 this court also sustained the dismissal of De Lianos appeal.
De Lianos appellants brief lacked a subject index, a table of cases and authorities,
and page references to the record.

There are exceptions to this rule. In Philippine Coconut Authority v. Corona

International, Inc.,76 the Philippine Coconut Authoritys appellants brief lacked a
clear and concise statement of the nature of the action, a summary of the
proceedings, the nature of the judgment, and page references to the record.
However, this court found that the Philippine Coconut Authority substantially
complied with the Rules. Its appellants brief apprise[d] [the Court of Appeals] of
the essential facts and nature of the case as well as the issues raised and the laws
necessary [to dispose of the case].77 This court [deviated] from a rigid
enforcement of the rules78 and ordered the Court of Appeals to resolve the
Philippine Coconut Authoritys appeal.

In Go v. Chaves,79 Gos 17page appellants brief lacked a subject index.

However, Go subsequently filed a subject index. This court excused Gos
procedural lapse since the appellants brief [consisted] only of 17 pages which
[the Court of Appeals] may easily peruse to apprise it of [the case] and of the relief
sought.80 This court ordered the Court of Appeals to resolve Gos appeal in the
interest of justice.81

In Philippine Coconut Authority and Go, the appellants substantially complied

with the rules on the contents of the appellants brief. Thus, this court excused the
appellants procedural lapses.

In this case, Lui Enterprises did not substantially comply with the rules on the
contents of the appellants brief. It admitted that its appellants brief lacked the
required subject index, page references to the record, and table of cases, textbooks,
and statutes cited. However, it did not even correct its admitted technical
235
omissions82 by filing an amended appellants brief with the required contents.83
Thus, this case does not allow a relaxation of the rules. The Court of Appeals did
not err in dismissing Lui Enterprises appeal.

Rules on appeal are designed for the proper and prompt disposition of cases
before the Court of Appeals.84 With respect to the appellants brief, its required
contents are designed to minimize the [Court of Appeals] labor in [examining]
the record upon which the appeal is heard and determined.85

The subject index serves as the briefs table of contents.86 Instead of [thumbing]
through the [appellants brief]87 every time the Court of Appeals Justice
encounters an argument or citation, the Justice deciding the case only has to refer
to the subject index for the argument or citation he or she needs.88 This saves the
Court of Appeals time in reviewing the appealed case. Efficiency allows the
justices of the appellate court to substantially attend to this case as well as other
cases.

Page references to the record guarantee that the facts stated in the appellants brief
are supported by the record.89 A statement of fact without a page reference to the
record creates the presumption that it is unsupported by the record and, thus, may
be stricken or disregarded altogether.90

As for the table of cases, textbooks, and statutes cited, this is required so that the
Court of Appeals can easily verify the authorities cited for accuracy and
aptness.91

Lui Enterprises appellants brief lacked a subject index, page references to the
record, and a table of cases, textbooks, and statutes cited. These requirements
were designed to assist the appellate court in the accomplishment of its tasks, and,
overall, to enhance the orderly administration of justice.92 This court will not
disregard rules on appeal in the guise of liberal construction.93 For this court to
liberally construe the Rules, the party must substantially comply with the Rules
and correct its procedural lapses.94 Lui Enterprises failed to remedy these errors.

All told, the Court of Appeals did not err in dismissing Lui Enterprises appeal. It
failed to comply with Rule 44, Section 13, paragraphs (a), (c), (d), and (f) of the
1997 Rules of Civil Procedure on the required contents of the appellants brief.

II

236
Lui Enterprises failed to show that its
failure to answer the complaint within
the required period was due to excusable
negligence

When a defendant is served with summons and a copy of the complaint, he or she
is required to answer within 15 days from the day he or she was served with
summons.95 The defendant may also move to dismiss the complaint [w]ithin the
time for but before filing the answer.96

Fifteen days is sufficient time for a defendant to answer with good defenses against
the plaintiffs allegations in the complaint. Thus, a defendant who fails to answer
within 15 days from service of summons either presents no defenses against the
plaintiffs allegations in the complaint or was prevented from filing his or her
answer within the required period due to fraud, accident, mistake or excusable
negligence.97

In either case, the court may declare the defendant in default on plaintiffs motion
and notice to defendant.98 The court shall then try the case until judgment without
defendants participation99 and grant the plaintiff such relief as his or her complaint
may warrant.100

A defendant declared in default loses his or her standing in court.101 He or she is

deprived of the right to take part in the trial and forfeits his [or her] rights as a
party litigant,102 has no right to present evidence [supporting his or her]
allegations,103 and has no right to control the proceedings [or] crossexamine
witnesses.104 Moreover, he or she has no right to expect that [the court] would
[act] upon [his or her pleadings]105 or that he or she may [oppose] motions filed
against him [or her].106

However, the defendant declared in default does not [waive] all of [his or her]
rights.107 He or she still has the right to receive notice of subsequent
proceedings.108 Also, the plaintiff must still present evidence supporting his or her
allegations despite the default of [the defendant].109

Default, therefore, is not meant to punish the defendant but to enforce the prompt
filing of the answer to the complaint. For a defendant without good defenses,
default saves him or her the embarrassment of openly appearing to defend the
237
indefensible.110 As this court explained in Gochangco v. The Court of First
Instance of Negros Occidental, Branch IV:111

It does make sense for a defendant without defenses, and who accepts the
correctness of the specific relief prayed for in the complaint, to forego the filing of
the answer or any sort of intervention in the action at all. For even if he did
intervene, the result would be the same: since he would be unable to establish any
good defense, having none in fact, judgment would inevitably go against him. And
this would be an acceptable result, if not being in his power to alter or prevent it,
provided that the judgment did not go beyond or differ from the specific relief
stated in the complaint. x x x.112 (Emphasis in the original)

On the other hand, for a defendant with good defenses, it would be unnatural for
him [or her] not to set x x x up [his or her defenses] properly and timely.113 Thus,
it must be presumed that some insuperable cause prevented him [or her] from
[answering the complaint].114 In which case, his or her proper remedy depends on
when he or she discovered the default and whether the default judgment was
already rendered by the trial court.

After notice of the declaration of default but before the court renders the default
judgment, the defendant may file, under oath, a motion to set aside order of
default. The defendant must properly show that his or her failure to answer was
due to fraud, accident,115 mistake116 or excusable negligence.117 The defendant
must also have a meritorious defense. Rule 9, Section 3, paragraph (b) of the 1997
Rules of Civil Procedure provides:chanRoblesvirtualLawlibrary
Section 3. Default; declaration of. x x x x

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

If the defendant discovers his or her default after judgment but prior to the
judgment becoming final and executory, he or she may file a motion for new trial
under Rule 37, Section 1, paragraph (a) of the 1997 Rules of Civil Procedure.118 If
he or she discovers his or her default after the judgment has become final and
executory, a petition for relief from judgment under Rule 38, Section 1 of the 1997
238
Rules of Civil Procedure may be filed.119

Appeal is also available to the defendant declared in default. He or she may appeal
the judgment for being contrary to the evidence or to the law under Rule 41,
Section 2 of the 1997 Rules of Civil Procedure.120 He or she may do so even if he
or she did not file a petition to set aside order of default.121

A petition for certiorari may also be filed if the trial court declared the defendant
in default with grave abuse of discretion.122

The remedies of the motion to set aside order of default, motion for new trial, and
petition for relief from judgment are mutually exclusive, not alternative or
cumulative. This is to compel defendants to remedy their default at the earliest
possible opportunity. Depending on when the default was discovered and whether
a default judgment was already rendered, a defendant declared in default may avail
of only one of the three remedies.

Thus, if a defendant discovers his or her default before the trial court renders
judgment, he or she shall file a motion to set aside order of default. If this motion
to set aside order of default is denied, the defendant declared in default cannot
await the rendition of judgment, and he or she cannot file a motion for new trial
before the judgment becomes final and executory, or a petition for relief from
judgment after the judgment becomes final and executory.

Also, the remedies against default become narrower and narrower as the trial nears
judgment. The defendant enjoys the most liberality from this court with a motion
to set aside order of default, as he or she has no default judgment to contend with,
and he or she has the whole period before judgment to remedy his or her default.

With a motion for new trial, the defendant must file the motion within the period
for taking an appeal123 or within 15 days from notice of the default judgment.
Although a default judgment has already been rendered, the filing of the motion for
new trial tolls the reglementary period of appeal, and the default judgment cannot
be executed against the defendant.

A petition for relief from judgment is filed after the default judgment has become
final and executory. Thus, the filing of the petition for relief from judgment does
not stay the execution of the default judgment unless a writ of preliminary
injunction is issued pending the petitions resolution.124

239
Upon the grant of a motion to set aside order of default, motion for new trial, or a
petition for relief from judgment, the defendant is given the chance to present his
or her evidence against that of plaintiffs. With an appeal, however, the defendant
has no right to present evidence on his or her behalf and can only appeal the
judgment for being contrary to plaintiffs evidence or the law.

Similar to an appeal, a petition for certiorari does not allow the defendant to
present evidence on his or her behalf. The defendant can only argue that the trial
court committed grave abuse of discretion in declaring him or her in default.

Thus, should a defendant prefer to present evidence on his or her behalf, he or she
must file either a motion to set aside order of default, motion for new trial, or a
petition for relief from judgment.

In this case, Lui Enterprises had discovered its default before the Regional Trial
Court of Makati rendered judgment. Thus, it timely filed a motion to set aside
order of default, raising the ground of excusable negligence.

Excusable negligence is one which ordinary diligence and prudence could not
have guarded against.125 The circumstances should be properly alleged and
proved. In this case, we find that Lui Enterprises failure to answer within the
required period is inexcusable.

Lui Enterprises counsel filed its motion to dismiss four days late. It did not
immediately take steps to remedy its default and took one year from discovery of
default to file a motion to set aside order of default. In its motion to set aside order
of default, Lui Enterprises only conveniently blamed its x x x counsel [for the late
filing of the answer]126 without offering any excuse for the late filing. This is not
excusable negligence under Rule 9, Section 3, paragraph (b)127 of the 1997 Rules
of Civil Procedure. Thus, the Regional Trial Court of Makati did not err in refusing
to set aside the order of default.

Lui Enterprises argued that the Regional Trial Court of Makati should have been
liberal in setting aside its order of default. After it had been declared in default, Lui
Enterprises filed several manifestations informing the Makati trial court of the
earlier filed nullification of deed of dation in payment case which barred the filing
of the interpleader case. Lui Enterprises president, Eli L. Lui, and counsel even
flew in from Davao to Makati to formally [manifest that] a [similar] action
between [Lui Enterprises] and [the Philippine Bank of Communications]128 was
already pending in the Regional Trial Court of Davao. However, the trial court did
240
not recognize Lui Enterprises standing in court.

The general rule is that courts should proceed with deciding cases on the merits
and set aside orders of default as default judgments are frowned upon.129 As
much as possible, cases should be decided with both parties given every chance to
fight their case fairly and in the open, without resort to technicality.130

However, the basic requirements of Rule 9, Section 3, paragraph (b) of the 1997
Rules of Civil Procedure must first be complied with.131 The defendants motion to
set aside order of default must satisfy three conditions. First is the time element.
The defendant must challenge the default order before judgment. Second, the
defendant must have been prevented from filing his answer due to fraud, accident,
mistake or excusable negligence. Third, he must have a meritorious defense. As
this court held in SSS v. Hon. Chaves:132
Procedural rules are not to be disregarded or dismissed simply because their non
observance may have resulted in prejudice to a partys substantive rights. Like all
rules[,] they are to be followed, except only when for the most persuasive of
reasons they may be relaxed to relieve a litigant of an injustice not commensurate
with the degree of his thoughtlessness in not complying with the procedure
prescribed. x x x.133

As discussed, Lui Enterprises never explained why its counsel failed to file the
motion to dismiss on time. It just argued that courts should be liberal in setting
aside orders of default. Even assuming that it had a meritorious defense and that its
representative and counsel had to fly in from Davao to Makati to personally appear
and manifest in court its meritorious defense, Lui Enterprises must first show that
its failure to answer was due to fraud, accident, mistake or excusable negligence.
This Lui Enterprises did not do.

Lui Enterprises argued that Zuellig Pharma filed the interpleader case to compel
Lui Enterprises and the Philippine Bank of Communications to litigate their
claims. Thus, [d]eclaring the other claimant in default would ironically defeat the
very purpose of the suit.134 The Regional Trial Court of Makati should not have
declared Lui Enterprises in default.

Under Rule 62, Section 1 of the 1997 Rules of Civil Procedure, a person may file a
special civil action for interpleader if conflicting claims are made against him or
her over a subject matter in which he or she has no interest. The action is brought
against the claimants to compel them to litigate their conflicting claims among
241
themselves. Rule 62, Section 1 of the 1997 Rules of Civil Procedure
provides:chanRoblesvirtualLawlibrary

Section 1. When interpleader proper. Whenever conflicting claims upon the

same subject matter are or may be made against a person who claims no interest
whatever in the subject matter, or an interest which in whole or in part is not
disputed by the claimants, he may bring an action against the conflicting claimants
to compel them to interplead and litigate their several claims among themselves.

An interpleader complaint may be filed by a lessee against those who have

conflicting claims over the rent due for the property leased.135 This remedy is for
the lessee to protect him or her from double vexation in respect of one
liability.136 He or she may file the interpleader case to extinguish his or her
obligation to pay rent, remove him or her from the adverse claimants dispute, and
compel the parties with conflicting claims to litigate among themselves.

In this case, Zuellig Pharma filed the interpleader case to extinguish its obligation
to pay rent. Its purpose in filing the interpleader case was not defeated137 when
the Makati trial court declared Lui Enterprises in default.

At any rate, an adverse claimant in an interpleader case may be declared in default.

Under Rule 62, Section 5 of the 1997 Rules of Civil Procedure, a claimant who
fails to answer within the required period may, on motion, be declared in default.
The consequence of the default is that the court may render judgment barring [the
defaulted claimant] from any claim in respect to the subject matter.138 The Rules
would not have allowed claimants in interpleader cases to be declared in default if
it would ironically defeat the very purpose of the suit.139

The Regional Trial Court of Makati declared Lui Enterprises in default when it
failed to answer the complaint within the required period. Lui Enterprises filed a
motion to set aside order of default without an acceptable excuse why its counsel
failed to answer the complaint. It failed to prove the excusable negligence. Thus,
the Makati trial court did not err in refusing to set aside the order of default.

III

The nullification of deed in dation in

payment case did not bar the filing of
the interpleader case. Litis pendentia

242
is not present in this case.

Lui Enterprises allegedly filed for nullification of deed of dation in payment with
the Regional Trial Court of Davao. It sought to nullify the deed of dation in
payment through which the Philippine Bank of Communications acquired title over
the leased property. Lui Enterprises argued that this pending nullification case
barred the Regional Trial Court of Makati from hearing the interpleader case. Since
the interpleader case was filed subsequently to the nullification case, the
interpleader case should be dismissed.

Under Rule 16, Section 1, paragraph (e) of the 1997 Rules of Civil Procedure, a
motion to dismiss may be filed on the ground of litis
pendentia:chanRoblesvirtualLawlibrary
Section 1. Grounds. Within the time for but before filing the answer to the
complaint or pleading asserting a claim, a motion to dismiss may be made on any
of the following grounds:chanRoblesvirtualLawlibrary

xxxx

(e) That there is another action pending between the same parties for the same
cause;

xxxx

Litis pendentia is Latin for a pending suit.140 It exists when another action is
pending between the same parties for the same cause of action x x x.141 The
subsequent action is unnecessary and vexatious142 and is instituted to harass the
respondent [in the subsequent action].143

The requisites of litis pendentia are:chanRoblesvirtualLawlibrary

(1) Identity of parties or at least such as represent the same interest in both
actions;
(2) Identity of rights asserted and reliefs prayed for, the reliefs being founded on
the same facts; and
(3) The identity in the two cases should be such that the judgment that may be
rendered in one would, regardless of which party is successful, amount to res
judicata in the other.144

243
All of the requisites must be present.145 Absent one requisite, there is no litis
pendentia.146

In this case, there is no litis pendentia since there is no identity of parties in the
nullification of deed of dation in payment case and the interpleader case. Zuellig
Pharma is not a party to the nullification case filed in the Davao trial court.

There is also no identity of rights asserted and reliefs prayed for. Lui Enterprises
filed the first case to nullify the deed of dation in payment it executed in favor of
the Philippine Bank of Communications. Zuellig Pharma subsequently filed the
interpleader case to consign in court the rental payments and extinguish its
obligation as lessee. The interpleader case was necessary and was not instituted to
harass either Lui Enterprises or the Philippine Bank of Communications.

Thus, the pending nullification case did not bar the filing of the interpleader case.

Lui Enterprises cited Progressive Development Corporation, Inc. v. Court of

Appeals147 as authority to set aside the subsequently filed interpleader case. In this
cited case, petitioner Progressive Development Corporation, Inc. entered into a
lease contract with Westin Seafood Market, Inc. The latter failed to pay rent. Thus,
Progressive Development Corporation, Inc. repossessed the leased premises,
inventoried the movable properties inside the leased premises, and scheduled the
public sale of the inventoried properties as they agreed upon in their lease contract.

Westin Seafood Market, Inc. filed for forcible entry with damages against
Progressive Development Corporation, Inc. It subsequently filed an action for
damages against Progressive Development Corporation for its forcible takeover of
the leased premises.148

This court ordered the subsequently filed action for damages dismissed as the
pending forcible entry with damages case barred the subsequently filed damages
case.

Progressive Development Corporation, Inc. does not apply in this case. The action
for forcible entry with damages and the subsequent action for damages were filed
by the same plaintiff against the same defendant. There is identity of parties in both
cases.

In this case, the nullification of deed of dation in payment case was filed by Lui
244
Enterprises against the Philippine Bank of Communications. The interpleader case
was filed by Zuellig Pharma against Lui Enterprises and the Philippine Bank of
Communications. A different plaintiff filed the interpleader case against Lui
Enterprises and the Philippine Bank of Communications. Thus, there is no identity
of parties, and the first requisite of litis pendentia is absent.

As discussed, Lui Enterprises filed the nullification of deed of dation in payment to

recover ownership of the leased premises. Zuellig Pharma filed the interpleader
case to extinguish its obligation to pay rent. There is no identity of reliefs prayed
for, and the second requisite of litis pendentia is absent.

Since two requisites of litis pendentia are absent, the nullification of deed of dation
in payment case did not bar the filing of the interpleader case.

Lui Enterprises alleged that the Regional Trial Court of Davao issued a writ of
preliminary injunction against the Regional Trial Court of Makati. The Regional
Trial Court of Davao allegedly enjoined the Regional Trial Court of Makati from
taking cognizance of the interpleader case. Lui Enterprises argued that the
Regional Trial Court of Makati should have respected the orders issued by the
Regional Trial Court of Davao.149 Lui Enterprises cited Compania General de
Tabacos de Filipinas v. Court of Appeals150 where this court allegedly
held:chanRoblesvirtualLawlibrary

x x x [T]he issuance of the said writ by the RTC of Agoo, La Union not only seeks
to enjoin Branch 9 of the RTC of Manila from proceedingwith the foreclosure case
but also has the effect of preempting the latters order. x x x.151

Compania General de Tabacos de Filipinas is not an authority for the claim that a
court can issue a writ of preliminary injunction against a coequal court. The cited
sentence was taken out of context. In Compania General de Tabacos de Filipinas,
this court held that the Regional Trial Court of Agoo had no power to issue a writ
of preliminary injunction against the Regional Trial Court of Manila.152 A court
cannot enjoin the proceedings of a coequal court.

Thus, when this court said that the Regional Trial Court of Agoos writ of
preliminary injunction not only seeks to enjoin x x x [the Regional Trial Court of
Manila] from proceeding with the foreclosure case but also has the effect of pre
empting the latters orders,153 this court followed with [t]his we cannot
countenance.154

245
At any rate, the Regional Trial Court of Davaos order dated April 18, 2005 was
not a writ of preliminary injunction. It was a mere order directing the Philippine
Bank of Communications to inform Zuellig Pharma to pay rent to Lui Enterprises
while the status quo order between Lui Enterprises and the Philippine Bank of
Communications was subsisting. The Regional Trial Court of Davao did not enjoin
the proceedings before the Regional Trial Court of Makati. The order dated April
18, 2005 provides:chanRoblesvirtualLawlibrary
As such, [the Philippine Bank of Communications] [is] hereby directed to
forthwith inform Zuellig Pharma Corp., of the April 1, 2004 status quo order and
the succeeding September 14, 2004 Order, and consequently, for the said lessee to
remit all rentals due from February 23, 2003 and onwards to plaintiff Lui
Enterprises, Inc., in the meanwhile that the status quo order is subsisting.155

Thus, the Regional Trial Court of Davao did not enjoin the Regional Trial Court of
Makati from hearing the interpleader case.

All told, the trial court did not err in proceeding with the interpleader case. The
nullification of deed of dation in payment case pending with the Regional Trial
Court of Davao did not bar the filing of the interpleader case with the Regional
Trial Court of Makati.

IV

The Court of Appeals erred in awarding attorneys fees

In its ordinary sense, attorneys fees represent the reasonable compensation [a

client pays his or her lawyer] [for legal service rendered].156 In its extraordinary
sense, attorneys fees [are] awarded x x x as indemnity for damages [the losing
party pays the prevailing party].157

The award of attorneys fees is the exception rather than the rule.158 It is not
awarded to the prevailing party as a matter of course.159 Under Article 2208 of
the Civil Code, attorneys fees cannot be recovered in the absence of stipulation,
except under specific circumstances:chanRoblesvirtualLawlibrary

(1) When exemplary damages are awarded;

(2) When the defendants act or omission has compelled the plaintiff to litigate
with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
246
(4) In case of a clearly unfounded civil action or proceeding against the plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to satisfy
the plaintiffs plainly valid, just and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and
skilled workers;
(8) In actions for indemnity under workmens compensation and employers
liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that attorneys
fees and expenses of litigation should be recovered.160

Even if a party is compelled to litigate with third persons or to incur expenses to

protect his [or her] rights,161 attorneys fees will not be awarded if no bad faith
could be reflected in a partys persistence in a case.162

To award attorneys fees, the court must have factual, legal, [and] equitable
justification.163 The court must state the awards basis in its decision.164 These
rules are based on the policy that no premium should be placed on the right to
litigate.165

In this case, the Court of Appeals awarded attorneys fees as [Zuellig Pharma]
was compelled to litigate with third persons or to incur expenses to protect [its]
interest[s].166 This is not a compelling reason to award attorneys fees. That
Zuellig Pharma had to file an interpleader case to consign its rental payments did
not mean that Lui Enterprises was in bad faith in insisting that rental payments be
paid to it. Thus, the Court of Appeals erred in awarding attorneys fees to Zuellig
Pharma.

All told, the Court of Appeals award of P50,000.00 as attorneys fees must be
deleted.

WHEREFORE, in view of the foregoing, the petition for review on certiorari is

DENIED. The Court of Appeals decision and resolution in CAG.R. CV No.
88023 are AFFIRMED with MODIFICATION. The award of P50,000.00
attorneys fees to Zuellig Pharma Corporation is DELETED.

247
SO ORDERED.

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

March 28, 2014

N O T I C E OF J U D G M E N T

Sirs/Mesdames:chanRoblesvirtualLawlibrary

Please take notice that on ___March 12, 2014___ a Decision, copy attached
herewith, was rendered by the Supreme Court in the aboveentitled case, the
original of which was received by this Office on March 28, 2014 at 2:00 p.m.

Very truly yours,

(SGD)
LUCITA ABJELINA SORIANO
Division Clerk of Court

Endnotes:

1
Rollo, pp. 2841. This decision was penned by Associate Justice Ramon M. Bato,
Jr., with Associate Justices Juan Q. Enriquez, Jr. and Florito S. Macalino,
concurring.
2
Id. at 4344.
3
Id. at 7479.
4
Id. at 5366.
5
Record, p. 44.

248
6
Rollo, p. 68.
7
Id. at 6970.
8
Id. at 77, decision dated July 4, 2006.
9
Id. at 71.
10
Id. at 4752, complaint dated May 7, 2003.
11
Id. at 30.
12
Record, pp. 3747.
13
Rollo, pp. 8082.
14
Id. at 52.
15
Id.
16
Record, p. 405.
17
Rollo, p. 81.
18
Record, pp. 7780.
19
Id. at 87.
20
Rollo, p. 81.
21
Record, p. 87.
22
Id. at 9398.
23
Rules of Court, Rule 11, sec. 1.
24
Rollo, pp. 3031.
25
Record, p. 94.

249
26
Id. at 95.
27
Id. at 98.
28
Id., secretarys certificate dated August 28, 2003,
states:chanRoblesvirtualLawlibrary

RESOLVED, that the Board of Directors of ZUELLIG PHARMA

CORPORATION (the Corporation) hereby authorize ATTY. ANA L.A.
PERALTA with address as that of the Corporation, to initiate, represent and act on
behalf of the Corporation, including the authority to execute verifications and
certificate of nonforum shopping, in the civil proceedings for consignation of
rental payments and interpleader and in all other legal suits or proceedings to be
filed against Lui Enterprises, Inc. and/or Philippine Bank of Communications, and
to be the Corporations true and lawful attorneyinfact, in its name, place and
stead.
29
Record, p. 95.
30
Id. at 9596.
31
Id. at 96.
32
Id. at 101103.
33
Id. at 101.
34
Id. at 111113.
35
Id. at 112.
36
Id. at 208209.
37
Id. at 210211.
38
Id. at 211.
39
Id. at 215, in an order dated April 29, 2004.
40
Id. at 402409.
250
41
Id. at 402.
42
Id.
43
Id. at 405.
44
Id. at 393395.
45
Id. at 394.
46
Rollo, pp. 8388.
47
Id. at 8990.
48
Id. at 87.
49
Record, p. 451, in an order dated May 3, 2005.
50
Rollo, pp. 7479.
51
Id. at 77.
52
Id.
53
Id. at 7879.
54
Court of Appeals rollo, pp. 1738.
55
Rollo, pp. 3335.
56
Id. at 3536.
57
Id. at 3637.
58
Id. at 40.
59
Id. at 2841.
60
Court of Appeals rollo, pp. 128137.
251
61
Rollo, pp. 4344.
62
Id. at 626.
63
Id. at 16.
64
Id. at 1416.
65
Id. at 1819.
66
Id. at 2021.
67
Id. at 2223.
68
Id. at 104121.
69
Id. at 129130.
70
CONSTI., Art. VIII, sec. 5, par. 2 provides:chanRoblesvirtualLawlibrary

Sec. 5. The Supreme Court shall have the following

powers:chanRoblesvirtualLawlibrary

xxxx

(2) Review, revise, reverse, modify, or affirm on appeal or certiorari, as the law or
the Rules of Court may provide, final judgments and orders of lower courts
in:chanRoblesvirtualLawlibrary

(a) All cases in which the constitutionality or validity of any treaty, international or
executive agreement, law, presidential decree, proclamation, order, instruction,
ordinance, or regulation is in question.
(b) All cases involving the legality of any tax, impost, assessment, or toll, or any
penalty imposed in relation thereto.
(c) All cases in which the jurisdiction of any lower court is in issue.
(d) All criminal cases in which the penalty imposed is reclusion perpetua or
higher.
(e) All cases in which only an error or question of law is involved.

252
71
Mendoza v. United Coconut Planters Bank, Inc., G.R. No. 165575, February 2,
2011, 641 SCRA 333, 345 [Per J. Peralta, Second Division].
72
De Liano v. Court of Appeals, 421 Phil. 1033, 1040 (2001) [Per J. De Leon, Jr.,
Second Division].
73
Mendoza v. United Coconut Planters Bank, Inc., G.R. No. 165575, February 2,
2011, 641 SCRA 333, 345 [Per J. Peralta, Second Division].
74
Id. at 333.
75
421 Phil. 1033 (2001) [Per J. De Leon, Jr., Second Division].
76
395 Phil. 742 (2000) [Per J. Kapunan, First Division].
77
Id. at 750.
78
Id.
79
G.R. No. 182341, April 23, 2010, 619 SCRA 333 [Per J. Del Castillo, Second
Division].
80
Id. at 344.
81
Id. at 342.
82
Rollo, p. 14.
83
Mendoza v. United Coconut Planters, Bank, Inc., G.R. No. 165575, February 2,
2011, 641 SCRA 333, 348 [Per J. Peralta, Second Division].
84
Id.
85
De Liano v. Court of Appeals, 421 Phil. 1033, 1041 (2001) [Per J. De Leon, Jr.,
Second Division], citing Estiva v. Cawil, 59 Phil. 67, 6869 (1933) [Per J.
Malcolm, En Banc].
86
Id. at 1042.
87
Id.
253
88
Id.
89
Id. at 1044.
90
Id.
91
Id. at 10451046.
92
Id. at 1040.
93
Mendoza v. United Coconut Planters Bank, Inc., G.R. No. 165575, February 2,
2011, 641 SCRA 333, 348 [Per J. Peralta, Second Division].
94
Id.
95
RULES OF COURT, Rule 11, sec.1.
96
RULES OF COURT, Rule 16, sec. 1.
97
Gochangco v. The Court of First Instance of Negros Occidental, Branch IV, 241
Phil. 48, 67 (1988) [Per C.J. Narvasa, En Banc].
98
RULES OF COURT, Rule 9, sec. 3.
99
RULES OF COURT, Rule 9, sec. 3 (a).
100
RULES OF COURT, Rule 9, sec. 3.
101
Otero v. Tan, G.R. No. 200134, August 15, 2012, 678 SCRA 583, 591 [Per J.
Reyes, Second Division].
102
Mediserv, Inc. v. China Banking Corporation, 408 Phil. 745, 755 (2001) [Per J.
GonzagaReyes, Third Division].
103
SSS v. Hon. Chaves, 483 Phil. 292, 301 (2004) [Per J. Quisumbing, First
Division].
104
Otero v. Tan, G.R. No. 200134, August 15, 2012, 678 SCRA 583, 591 [Per J.
Reyes, Second Division].
254
105
Id. at 591592.
106
Id. at 592.
107
SSS v. Hon. Chaves, 483 Phil. 292, 301 (2004) [Per J. Quisumbing, First
Division].
108
Mediserv, Inc. v. China Banking Corporation, 408 Phil. 745, 755 (2001) [Per J.
GonzagaReyes, Third Division].
109
SSS v. Hon. Chaves, 483 Phil. 292, 302 (2004) [Per J. Quisumbing, First
Division].
110
Gochangco v. The Court of First Instance of Negros Occidental, Branch IV,
241 Phil. 48, 67 (1988) [Per C.J. Narvasa, En Banc].
111
241 Phil. 48 (1988) [Per C.J. Narvasa, En Banc].
112
Id. at 67.
113
Id.
114
Id.
115
Ong Guan Can v. Century Insurance Co., 45 Phil. 667 (1924) [Per J. Johnson,
En Banc], cited in The Mechanics of Lifting an Order of Default, Annotation,
December 14, 1981, 110 SCRA 223, 226.
116
Tanchan v. Court of Appeals, 365 Phil. 34 (1999) [Per J. Purisima, Third
Division].
117
Santos v. Hon. Samson, 196 Phil. 398 (1981) [Per C.J. Concepcion, Jr., Second
Division].
118
David v. Judge GutierrezFruelda, 597 Phil. 354, 361 (2009) [Per Acting C.J.
Quisumbing, Second Division].
119
Id.

255
120
Id.
121
Id.
122
Sps. Delos Santos v. Judge Carpio, 533 Phil. 42, 5354 (2006) [Per J. Austria
Martinez, First Division]; Acance v. Court of Appeals, 493 Phil. 676, 685 (2005)
[Per J. Callejo, Sr., Second Division]; Indiana Aerospace University v.
Commission on Higher Education, 408 Phil. 483, 497 (2001) [Per C.J. Panganiban,
Third Division].
123
Rules of Court, Rule 37, sec. 1.
124
Rules of Court, Rule 38, sec. 5.
125
Magtoto v. Court of Appeals, G.R. No. 175792, November 21, 2012, 686 SCRA
88, 101 [Per J. Del Castillo, Second Division].
126
Rollo, p. 36.
127
RULES OF COURT, Rule 9, sec. 3, par. (b) Relief from order of default. A
party declared in default may at any time after notice thereof and before judgment
file a motion under oath to set aside the order of default upon proper showing that
his failure to answer was due to fraud, accident, mistake or excusable negligence
and that he has a meritorious defense. In such case, the order of default may be set
aside on such terms and conditions as the judge may impose in the interest of
justice.
128
Id. at 18.
129
Republic v. Sandiganbayan, 565 Phil. 172, 185 (2007) [Per J. Quisumbing,
Second Division]; Samartino v. Raon, 433 Phil. 173, 187 (2002) [Per J. Ynares
Santiago, First Division]; Tanchan v. Court of Appeals, 365 Phil. 34, 41 (1999)
[Per J. Purisima, Third Division].
130
Tanchan v. Court of Appeals, 365 Phil. 34, 41 (1999) [Per J. Purisima, Third
Division].
131
David v. Judge GutierrezFruelda, 597 Phil. 354, 362 (2009) [Per Acting C.J.
Quisumbing, Second Division].

256
132
483 Phil. 292 [Per J. Quisumbing, First Division].
133
Id. at 301.
134
Rollo, p. 19.
135
Pasricha v. Don Luis Dison Realty, Inc., 572 Phil. 52, 69 (2008) [Per J. Nachura,
Third Division]; Ocampo v. Tirona, 495 Phil. 55, 68 (2005) [Per J. Carpio, First
Division].
136
Pasricha v. Don Luis Dison Realty, Inc., 572 Phil. 52, 69 (2008) [Per J. Nachura,
Third Division]; Ocampo v. Tirona, 495 Phil. 55, 68 (2005) [Per J. Carpio, First
Division].
137
Rollo, p. 19.
138
RULES OF COURT, Rule 62, sec. 5.
139
Rollo, p. 19.
140
Feliciano v. Court of Appeals, 350 Phil. 499, 505 (1998) [Per J. Bellosillo, First
Division].
141
University Physicians Services, Inc. v. Court of Appeals, 381 Phil. 54, 67 (2000)
[Per J. GonzagaReyes, Third Division].
142
Id.
143
Id.
144
Feliciano v. Court of Appeals, 350 Phil. 499, 505506 (1998) [Per J. Bellosillo,
First Division].
145
University Physicians Services, Inc. v. Court of Appeals, 381 Phil. 54, 67 (2000)
[Per J. GonzagaReyes, Third Division].
146
Id.
147
361 Phil. 566 (1999) [Per J. Bellosillo, Second Division].

257
148
Id. at 581.
149
Rollo, p. 22.
150
422 Phil. 405 (2001) [Per J. De Leon, Jr., Second Division].
151
Id. at 422.
152
Id.
153
Id.
154
Id.
155
Rollo, p. 90.
156
Philippine National Construction Corporation v. APAC Marketing Corporation,
G.R. No. 190957, June 5, 2013, 697 SCRA 441, 449 [Per C.J. Sereno, First
Division], citing Benedicto v. Villaflores, G.R. No. 185020, October 6, 2010, 632
SCRA 446.
157
Id.
158
Id. at 450.
159
Id.
160
CIVIL CODE, Art. 2208.
161
Philippine National Construction Corporation v. APAC Marketing Corporation,
G.R. No. 190957, June 5, 2013, 697 SCRA 441, 449 [Per C.J. Sereno, First
Division], citing ABSCBN Broadcasting Corp. v. CA, 361 Phil. 499 (1999).
162
Id.
163
Id. at 450.
164
Id.
165
Id. at 449.
258
166
Rollo, p. 40

259
 Republic of the Philippines
SUPREME COURT
Manila

G.R. No. 184197 : February 11, 2010

RAPID CITY REALTY AND DEVELOPMENT CORPORATION,

Petitioner, v. ORLANDO VILLA and LOURDES PAEZ-VILLA,1cralaw
Respondents.

DECISION

CARPIO MORALES, J.:

Sometime in 2004, Rapid City Realty and Development Corporation

(petitioner) filed a complaint for declaration of nullity of subdivision plans . . .
mandamus and damages against several defendants including Spouses
Orlando and Lourdes Villa (respondents). The complaint, which was docketed
at the Regional Trial Court of Antipolo City as Civil Case No. 04-7350, was
lodged at Branch 71 thereof.

After one failed attempt at personal service of summons, Gregorio Zapanta

(Zapanta), court process server, resorted to substituted service by serving
summons upon respondents househelp who did not acknowledge receipt
thereof and refused to divulge their names. Thus Zapanta stated in the Return
of Summons:

THIS IS TO CERTIFY that on September 24, 2004, the undersigned caused

the service of summons together with a copy of the complaint with its annexes
to defendant Spouses Lourdes Estudillo Paez-Cline and Orlando Villa at their
given address at 905 Padre Faura Street, Ermita Manila, as per information
given by two lady househelps who are also residing at the said address, the
defendant spouses are not around at that time. On the 27th of September,
2004, I returned to the same placeto serve the summons. I served the
summons and the copy of the complaint with its annexes to the two ladies (The
same lady househelp I met on Sept. 24, 2004) but they refused to sign to
acknowledge receipt and they refused to tell their name as per instruction of
the defendants. With me who can attest to the said incident is Mr. Jun Llanes,
who was with me at that time.2cralaw x x x (emphasis and underscoring
supplied)

260
Despite substituted service, respondents failed to file their Answer, prompting
petitioner to file a "Motion to Declare Defendants[-herein respondents] in
Default" which the trial court granted by Order of May 3, 2005.

More than eight months thereafter or on January 30, 2006, respondents filed
a Motion to Lift Order of Default,3cralaw claiming that on January 27, 2006
they "officially receivedall pertinent papers such as Complaint and Annexes.
Motion to Dismiss of the Solicitor General and the ORDER dated May 3, 2005
granting the Motion to Declare [them] in Default." And they denied the
existence of two women helpers who allegedly refused to sign and
acknowledge receipt of the summons. In any event, they contended that
assuming that the allegation were true, the helpers had no authority to receive
the documents.4cralaw

By Order of July 17, 2006, the trial court set aside the Order of Default and
gave herein respondents five days to file their Answer. Respondents just the
same did not file an Answer, drawing petitioner to again file a Motion to
declare them in default, which the trial court again granted by Order of
February 21, 2007.

On April 18, 2007, respondents filed an Omnibus Motion for reconsideration

of the second order declaring them in default and to vacate proceedings, this
time claiming that the trial court did not acquire jurisdiction over their
persons due to invalid service of summons.

The trial court denied respondents Omnibus Motion by Order of May 22,
2007 and proceeded to receive ex-parte evidence for petitioner.

Respondents, via certiorari , challenged the trial court's February 21, 2007
and April 18, 2007 Orders before the Court of Appeals.

In the meantime, the trial court, by Decision of September 4, 2007, rendered

judgment in favor of petitioner.

By Decision of April 29, 2008,5cralaw the appellate court annulled the trial
court's Orders declaring respondents in default for the second time in this
wise:

In assailing the orders of the trial court through their Motion to Lift and later
their OmnibusMotion the petitioners [herein-respondents] never raised any
other defense in avoidance of the respondents [herein petitioners] claim, and
261
 instead focused all their energies on questioning the said court's jurisdiction.
The latter motion clearly stated prefatorily their counsel's reservation or
"special appearance to question jurisdiction" over the persons of the
petitioners. "A party who makes a special appearance in court challenging the
jurisdiction of said court based on the ground of invalid service of summons is
not deemed to have submitted himself to the jurisdiction of the court."6cralaw
(citation omitted; italics, emphasis and underscoring supplied)

Petitioner's motion for reconsideration having been denied by the appellate

court by Resolution of August 12, 2008, it comes to the Court via petition for
review on certiorari , arguing in the main that respondents, in filing the first
Motion to Lift the Order of Default, voluntarily submitted themselves to the
jurisdiction of the court.

The petition is impressed with merit.

It is settled that if there is no valid service of summons, the court can still
acquire jurisdiction over the person of the defendant by virtue of the latter's
voluntary appearance. Thus Section 20 of Rule 14 of the Rules of Court
provides:

Sec. 20. Voluntary appearance . The defendant's voluntary appearance in the

action shall be equivalent to service of summons. The inclusion in a motion to
dismiss of other grounds aside from lack of jurisdiction over the person shall
not be deemed a voluntary appearance.

And Philippine Commercial International Bank v. Spouses Wilson Dy Hong Pi

and Lolita Dy, et al. enlightens:

Preliminarily, jurisdiction over the defendant in a civil case is acquired either

by the coercive power of legal processes exerted over his person, or his
voluntary appearance in court. As a general proposition, one who seeks an
affirmative relief is deemed to have submitted to the jurisdiction of the court.
It is by reason of this rule that we have had occasion to declare that the filing
of motions to admit answer, for additional time to file answer, for
reconsideration of a default judgment, and to lift order of default with motion
for reconsideration, is considered voluntary submission to the court's
jurisdiction. This, however, is tempered by the concept of conditional
appearance, such that a party who makes a special appearance to challenge,
among others, the court's jurisdiction over his person cannot be considered to
have submitted to its authority.
262
 Prescinding from the foregoing, it is thus clear that:

(1) Special appearance operates as an exception to the general rule on

voluntary appearance;

(2) Accordingly, objections to the jurisdiction of the court over the person of
the defendantmust be explicitly made, i.e., set forth in an unequivocal
manner; and

(3) Failure to do so constitutesvoluntary submission to the jurisdiction of the

court, especially in instances where a pleading or motion seeking affirmative
relief is filed and submitted to the court for resolution.7cralaw (italics and
underscoring supplied)

In their first Motion to Lift the Order of Default8cralaw dated January 30,
2006, respondents alleged:

xxxx

4. In the case of respondents, there is no reason why they should not receive
the Orders of this Honorable Court since the subject of the case is their multi-
million real estate property and naturally they would not want to be declared
in default or lose the same outright without the benefit of a trial on the merits;

5. It would be the height of injustice if the respondents is [sic] denied the equal
protection of the laws[;]

6. Respondents must be afforded "Due process of Law" as enshrined in the

New Constitution, which is a basic right of every Filipino, since they were not
furnished copies of pleadings by the plaintiff and the Order dated May 3,
2005;

x x x x9cralaw

and accordingly prayed as follows:

WHEREFORE, . . . it is most respectfully prayed . . . that the Order dated

May 5, 2005 declaring [them] in default be LIFTED.10cralaw

263
 Respondents didnot, in said motion, allege that their filing thereof was a
special appearance for the purpose only to question the jurisdiction over their
persons. Clearly, they had acquiesced to the jurisdiction of the court.

WHEREFORE, the petition is GRANTED. The assailed Court of Appeals

Decision of April 29, 2008 is REVERSED and SET ASIDE.

Let the original records of Civil Case No. 04-7350 be remanded to the court of
origin, Regional Trial Court of Antipolo City, Branch 71.

SO ORDERED.

CONCHITA CARPIO MORALES

Associate Justice

WE CONCUR:

REYNATO S. PUNO
Chief Justice
Chairperson

ANTONIO EDUARDO B.
LUCAS P. BERSAMIN
NACHURA*
Associate Justice
Associate Justice

MARTIN S. VILLARAMA, JR.

Associate Justice

CERTIFICATION

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

REYNATO S. PUNO
Chief Justice

264
 Endnotes:
1
cralaw The Court of Appeals was originally impleaded as respondent.
Pursuant however to Rule 45, Sec. 4 of the Rules of Court, the courts or
judges rendering the assailed judgment shall not be impleaded as respondents
in a petition for review on certiorari .
*
Additional member per Special Order No. 821.
2
cralaw Records, p. 219.
3
cralaw Id. at 367-372.
4
cralaw Rollo, pp. 70-71.
5
cralaw Penned by Associate Justice Apolinario O. Bruselas, Jr. with the
concurrence of Associate Justices Rebecca de Guia-Salvador and Vicente S.E.
Veloso.
6
cralaw Supra note 4.
7
cralaw G.R. No. 171137, June 5, 2009.
8
cralaw Records, pp. 367-371.
9
cralaw Id. at 368-369.
10
cralaw Id. at 370.

265
 THIRD DIVISION

REMIGIA* GRAGEDA, G.R. No. 169536

CLARITA GRAGEDA-
IMPERIAL, MOSAD-LINO
GRAGEDA, ANTONIO
GRAGEDA, MERLIN GRAGEDA Present:
and HEIRS OF JUAN MOROA
GRAGEDA, represented by his
widow, MARCELITA N.
GRAGEDA, YNARES-SANTIAGO, J.,

Petitioners, Chairperson,

AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
- versus -
NACHURA, and
REYES, JJ.

HON. NIMFA C. GOMEZ, in her

capacity as Presiding Judge,
Municipal Circuit Trial Court of
Camalig-Jovellar, and HAUDINY
GRAGEDA,
Respondents.
Promulgated:

September 21, 2007

*
Sometimes spelled Remegia in the rollo.

266
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x

DECISION

CHICO-NAZARIO, J.:

This is a Petition for Review on Certiorari assailing the Decision dated 31

August 2005, of the Court of Appeals in CA-G.R. SP No. 89563, dismissing the
appeal taken by petitioners from the 15 March 2005 Order of the Regional Trial
Court (RTC), Branch 3, of Legazpi City, in SCA Case No. 10440. In its 15 March
2005 Order, the RTC dismissed petitioners Petition for Certiorari under Rule 65 of
the Rules of Court, assailing; (a) the 22 September 2004 Order of the Municipal
Circuit Trial Court (MCTC) of Camalig-Jovellar, granting the Motion for Issuance
of Alias Writ of Execution filed by private respondent Haudiny Grageda, and (b) the
13 January 2005 Order, issued by the same court denying petitioners Motion for
Reconsideration.

The factual and procedural antecedents of this case are as follows:

Juan Navia Grageda owned a 1,527 square meter parcel of land in Quirangay,
Camalig, Albay, denominated as Lot No. 6386, and the residential house standing
thereon. On 27 July 1982, Juan Navia Grageda died single and without issue. He left
the following as his heirs:

(1) his sister, petitioner Remigia Grageda;

(2) the two daughters of his deceased brother Lauro Grageda, namely:
Dorotea Grageda Naga and Lina Grageda-Solano;
(3) the six children of another late brother, Amado Grageda, to wit:
Antonio Grageda, Merlin Grageda, Haudiny Grageda, Juan Moroa
Grageda, Hipolito Grageda, and Aurea Grageda-Villa;

267
 (4) the two children of a third late brother, Moises Grageda, namely:
Mosadlino Grageda, and Clarita Grageda-Imperial.

A fourth brother, Rufo Grageda, also died single and without issue.

In July 1998, Dorotea Grageda-Naga and Lina Grageda-Solano (referred to

in the title of the Complaint as Lina Solano-Naga), heirs of Lauro Grageda, filed
with the MCTC of Camalig-Jovellar, Albay a Complaint176 for partition of Lot No.
6386 and its improvement/s, which was docketed as Civil Case No. C-655.
Impleaded as defendants therein were all the other surviving heirs of Juan Navia
Grageda.

Of the defendants, only Remigia Grageda (sister heir of Juan Grageda),

Mosadlino Grageda (one of the heirs of Moises Grageda) and Juan Moroa Grageda
(one of the heirs of Amado Grageda) tendered an Answer to the Complaint. In their
Answer, they averred that they do not know of any person by the name of Lina
Solano-Naga, although Lauro Grageda was known to have several children, among
whom was Estaquio Grageda who is not a party to the case.177 They manifested that
they do not have any interest in the subject property because it now belongs to a third
person, who was never made a party to this case.178 They also claimed that the
properties of Juan Navia Grageda had already been the subject of a Deed of
Extrajudicial Partition and Exchange executed by his siblings Amado Grageda,
Lauro Grageda, Rufo Grageda, and Remegia Grageda, and his nephew Mosadlino
Grageda and niece Clara Grageda Imperial, and duly notarized by RTC Judge
Gregorio Consulta, then MCTC Judge of Camalig-Jovellar, immediately after the
death of said Juan Grageda in the year 1983.179 As regards the house constructed on
the subject lot, they averred that it was constructed at the expense of petitioner
Remegia Grageda, a public school teacher, and said house now belongs to a third
person who was not impleaded as a party defendant in this case.180

176
Rollo, p. 46.
177
Id. at 50.
178
Id. at 50-51.
179
Id. at 51.
180
Id.

268
 On 31 March 2000, the MCTC issued its Decision in Civil Case No. C-655.
The MCTC pertinently ruled:

The defendants, however, contend that the estate of the late Juan
Navia Grageda was extrajudicially divided among his heirs. But, they
did not adduce any credible proof that Lot No. 6386 was included on
such division. Further, there is no evidence on record showing that the
plaintiffs predecessor-in-interest, the late Lauro Grageda, has agreed to
dispose or part away in favor of another person his share in Lot No.
6386.

As to the claim by the defendants that a third person has acquired

ownership over Lot No. 6386, there is no iota of proof adduced on
record to lend credence to such claim. This Court finds such claim
baseless. Anyway, the admission by the defendants Remigia Grageda
and Juan Moroa Grageda that they are staying on the house built over
Lot No. 6386 negates such claim.

Now, Juan Navia Grageda died single, without a child, and

without a will. His intestate heirs, his brothers Rufo, Lauro, Amado and
Moises, his sister Remegia, hence inherit his estate in equal shares.
(Article 1004, Civil Code). As Lauro Grageda is now deceased, his
share on Juans estate goes to his own estate. As the plaintiffs are the
heirs of the late Lauro Grageda, (Article 979, Ibid.), they can rightfully
claim whatever property interest belonging to his estate.

Clearly, the plaintiffs are co-heirs to the estate of the late Juan
Navia Grageda. As co-heirs, they are co-owners of such estate. As Lot
No. 6386 appears as the remaining part of such estate, as co-owners of
such land, they can rightfully demand for its partition. Article 494, the
Civil Code, is explicit of this, stating, in part, as follows, to wit: No co-
owner shall be obliged to remain in the co-ownership. Each co-owner
may demand at any time the partition of the thing owned in common,
insofar as his share is concerned xxx xxx. And such partition should not

269
 be limited on Lot No. 6386, but should include the house built on it,
because such house is but an accessory to it. (Article 445, Ibid.).181

The dispositive portion of the MCTC Decision provides:

WHEREFORE, Premises considered, judgment is hereby

rendered as follows, to wit:

1. Ordering the partition of Lot No. 6386, including the

house built on it, into four (4) equal shares, among
Remegia Grageda, Heirs of Amado Grageda, Heirs of
Moises Grageda and the Heirs of Lauro Grageda, the
latter represented by the plaintiffs Dorotea Grageda-
Naga and Lina Grageda-Solano. They shall contribute
equally for any such expenses necessary to effect such
partition;

2. Ordering the defendants to pay the plaintiffs the following

sums of money:

2.a. The amount of Twenty Thousand Pesos, Philippine

currency, as attorneys fees, to include counsel's appearance
fees;

2.b. The amount of Five Thousand Pesos, Philippine

currency, as and by way of litigation expenses.

The defendants shall pay the costs of suit.182

181
Id. at 54-55.
182
Id. at 55.

270
 On 16 January 2001, the MCTC issued an Order commissioning Geodetic
Engineer Ramon Magdaong to conduct a survey of the subject lot, to carry out the
partition, and to submit his report thereon. The full contents of such Order are as
follows:

Geodetic engineer Ramon Magdaong is hereby commissioned to

conduct a survey on re: partition of Lot No. 6386 pursuant to and to
carry out that portion of the decision, dated March 31, 2000 re:
partition of Lot No. 6386 into four (4) equal shares, on the above-
entitled case. Engineer Magdaong shall consider the value of the house
standing on such lot as he partition it pursuant to his commission.

Thus, engineer Magdaong is hereby directed to appear and thus

take his oath as commissioner before this Court on February 8, 2001, at
9:30 oclock in the morning.

Within a period of ten (10) days after Engineer Magdaong has

taken his commissioners oath, he will convene the parties to a meeting
before he conduct his survey to partition Lot No. 6386.

Commissioner Magdaong shall notify the parties, their counsels

and this Court of the date and precise time he will conduct his survey
to partition Lot No. 6386. Such survey shall be transparent, and the
parties shall have the option to attend it, assisted by another geodetic
engineer of their choice, if they so wish, and they can raise objection/s
as commissioner Magdaong conduct his survey, and the latter is hereby
required to note any and all objections.

Within a period of fifteen (15) days after commissioner

Magdaong has completed his survey to partition Lot No. 6386, he shall
submit with this Court his written report embodying the result of such
survey, furnishing separate copies thereof to the parties thru their
counsels.

271
 Commissioner Magdaongs compensation for his work shall be
taxed as costs against the parties here, pursuant to the above decision.

Send separate copies of this order upon Engineer Ramon

Magdaong, who resides in Daraga, Albay, the parties and their
counsels.183

On 22 October 2001, Dorotea Grageda-Naga and Lina Grageda-Solano filed

a Manifestation stating that the disputed property had already been partitioned in
accordance with MCTCs Order.184 It appears, however, that only the one-fourth
share pertaining to the plaintiffs had been segregated.

On 9 May 2002, private respondent Haudiny Grageda and his brother Hipolito
Grageda filed before the MCTC of Camalig-Jovellar a Complaint against their
siblings Juan Moroa Grageda, Aurea Grageda-Villa, Antonio Grageda and Merlin
Grageda for the partition, amongst themselves, of the one-fourth share in Lot No.
6487 pertaining to their late father, Amado Grageda. The case was docketed as Civil
Case No. C-691.185

On 4 June 2002, Juan Moroa Grageda, Aurea Grageda-Villa, Antonio

Grageda, and Merlin Grageda filed a Motion to Dismiss186 Civil Case No. C-691,
alleging, inter alia, that since Haudiny Grageda and Hipolito Grageda had not filed
their separate Answer in Civil Case No. C-655, they are deemed to have adopted the
answer filed by Remigia Grageda, Mosadlino Grageda, and Juan Moroa Grageda,
wherein they manifested that the property now belongs to a third person.

On 9 September 2003, the MCTC dismissed the Complaint in Civil Case No.
C-691 without prejudice, on the ground that the same is premature inasmuch as the

183
Id. at 56-57.
184
Id. at 58.
185
Id. at 59-62.
186
Id. at 63-64.

272
share pertaining to the Heirs of Amado Grageda had not yet been segregated. The
MCTC held as follows:

This action for Partition commenced by the plaintiffs is anchored

on the Decision dated March 31, 2002, rendered by this court in Civil
Case No. C-655 (RTC No. 9834) entitled DOROTEA GRAGEDA-
NAGA and LINA SOLANO-NAGA vs. REMEGIA GRAGEDA,
JUAN MOROA-GRAGEDA, ANTONIO GRAGEDA, MERLIN
GRAGEDA, [J]UADINI GRAGEDA, HIPOLITO GRAGEDA,
AUREA GRAGEDA, CLARITA GRAGEDA-IMPERIAL and
MOSADLINO GRAGEDA, which provided among others that Lot No.
6386, including the house built on it, be partitioned into four equal
shares among Remigia Grageda, the heirs of Amado Grageda, the heirs
of Moises Grageda and the heirs of Lauro Grageda.

In this case (CC No. C-691), the plaintiffs and the defendants are
all children/heirs of the late AMADO GRAGEDA. The complaint filed
in this case prayed that the share adjudged as pertaining to the heirs of
AMADO GRAGEDA, now co-owned by his children be partitioned.

Section 2, Rule 69 of the Rules of Court provides as follows:

Order for partition, and partition by agreement

thereunder. If after the trial the court finds that the plaintiff
has no right thereto, it shall order the partition of the real
estate among all the parties in interest. Thereupon, the
parties may, if they are able to agree, make the partition
among themselves by proper instruments of conveyance,
and the court shall confirm the partition so agreed upon by
all the parties, and such partition, together with the order
of the court confirming the same, shall be recorded in the
registry of deeds of the place in which the property is
situated.

273
 Hence, under the aforequoted rule, there are two stages in every
action for partition.

The first phase is the determination of whether or not a co-

ownership in fact exists and a partition is proper. This phase existed and
ended by virtue of the Decision in Civil Case No. C-655 entitled,
Dorotea Gragera-Naga and Lina Grageda-Solano vs. Remegia
Grageda, et al.

The second phase commences when the parties are unable to

agree upon the partition agreed by the court. In that event, partition shall
be effected for the parties by the court with the assistance of not more
than three commissioners.

A perusal of the records in Civil Case No. C-655 (RTC No. 9834)
showed that the approved partition segregated only the share
appertaining to the heirs of LAURO GRAGEDA, and the respective
individual shares appertaining to REMIGIA GRAGEDA, Heirs of
MOISES GRAGEDA, and Heirs of AMADO GRAGEDA (the father
of the parties in this case [C.C. No. C-691] remained unsegregated.
Hence, except for the segregated portion pertaining to the heirs of
LAURO GRAGEDA, the remaining portion of Lot 6386, including a
portion of the house remained undivided.

Nonetheless, as discussed above, the total shares pertaining to

Remigia Grageda, heirs of Moises Grageda, and heirs of Amado
Grageda are not yet segregated, hence, it will still be premature for the
herein plaintiffs to ask for partition of the share pertaining them as heirs
of Amado Grageda.

WHEREFORE, for lack of cause of action, and pre-maturity of

action, this case is DISMISSED, without prejudice.187

187
Id. at 71-72.

274
 Haudiny and Hipolito Grageda filed a Motion for Reconsideration, but the
same was denied.

Haudiny Grageda, acting alone, filed on 15 December 2003, a Motion for the
Issuance of an Alias Writ of Execution in Civil Case No. C-655, seeking to execute
the partition of the remaining three-fourths portion of the subject property among
the remaining heirs.

On 22 September 2004, the MCTC directed the parties, within fifteen days
from receipt of its Order, to submit a project of partition of the lot involved in said
case.

Petitioners filed a Motion for Reconsideration of said Order. On 13 January

2005, the MCTC effectively denied the Motion, and directed Geodetic Engineer
Ramon Magdaong to partition the remaining three-fourths undivided part of Lot No.
6386, holding that it could not add and/or declare that which is not in the Decision,
and that it is simply mandated to carry out its terms.

Petitioners filed a Petition for Certiorari with the RTC of Legazpi City,
docketed as SCA Case No. 10440. The RTC dismissed the Petition on the ground
that it is patently without merit and manifestly intended for delay, and that the
question raised therein is too insubstantial and deserves scant consideration.
Petitioners appealed to the Court of Appeals, which rendered the assailed Decision,
the dispositive portion of which states:

UPON THE VIEW WE TAKE OF THIS CASE, THUS, the

appeal at bench must be, as it hereby is, DENIED DUE COURSE, and
consequently DISMISSED. Without special pronouncement as to
costs.188

188
Id. at 33.

275
 Thus, this Petition for Review on Certiorari, where petitioners raise the sole
issue:

IS THE COURT OF APPEALS CORRECT IN FINDING THAT

PRIVATE RESPONDENTS CLAIM IN HIS MOTION FOR
EXECUTION FILED IN CIVIL CASE NO. C-655 IS NOT A
COMPULSORY CROSS-CLAIM WHICH HE COULD ENFORCE
AT ANY TIME?189

Petitioners argue that private respondent Haudiny Gragedas claim in his

Motion for Execution in Civil Case No. C-655 filed with the MCTC is in the nature
of a compulsory cross-claim, which he should have ventilated in the said case by
filing an answer separate from that filed by petitioners Remigia Grageda and
Mosadlino Grageda and petitioner Marcelita N. Gragedas late husband, Juan Moroa
Grageda, who were the only defendants to file an Answer thereto. 190 Petitioners
submit that it was necessary for private respondent Haudiny Grageda to file a
separate Answer in Civil Case No. C-655, because the defendants who actually filed
their Answer disclaimed any interest in the lot involved in said case, which they
averred, already belonged to another person not impleaded as a defendant therein.191
According to petitioners, by private respondent Haudiny Gragedas failure to file a
separate answer in Civil Case No. C-655, he was deemed to have adopted the answer
filed by the answering defendants, and that the admissions made by the answering
defendants in their answer should be binding on Haudiny Grageda.192

Petitioners further argue that since private respondent Haudiny Grageda did
not file a separate Answer or a cross-claim in Civil Case No. C-655, the issue in said
case was limited to whether the plaintiffs therein (Dorotea Grageda Naga and Lina
Grageda-Solano) had the right to a share in Lot No. 6386.193 According to

189
Id. at 114.
190
Id. at 114-115.
191
Id. at 115.
192
Id. at 115.
193
Id.

276
petitioners, the issue of whether the defendants in Civil Case No. C-655 (which
include petitioners and private respondent in the case at bar), could likewise demand
a partition of Lot No. 6386 among themselves was not properly raised in said case.
Thus, there was no opportunity to introduce evidence against private respondent
Haudiny Grageda in Civil Case No. C-655, because he did not contest the claim
made by the answering defendants in their Answer therein that the lot involved in
said case already belongs to a third person.194

Presented with these arguments, the very same arguments raised by

petitioners with the MCTC and the RTC, the Court of Appeals held that the MCTC
was correct in ordering the execution of its 31 March 2000 Decision, with respect to
the remaining of the subject property. According to the Court of Appeals, petitioners
arguments were baseless, since there was no evidence with respect to its claim that
the subject property was now owned by a third person, and since the MCTC Decision
has already become final and executory. Thus:

It should be easy enough to see that this cross-claim hypothesis

which is the petitioners mainstay in this appeal is a subtle, cunning ruse
or attempt by the petitioners to deprive private respondent Haudiny
Grageda, son of the late Amado Grageda, - by way of perceived
procedural technicality, - of what is lawfully and rightfully his share in
the subject lot as a co-heir and co-owner under the Civil Code of the
Philippines. For, as the MCTC pointed out in its decision in Civil Case
No. C-655, the defendants therein (Remigia Grageda, Juan Grageda and
Mosadlino Grageda) did not adduce any credible proof that Lot No.
6386 was included (in) such division. Further, there is no evidence on
record showing that the plaintiffs predecessor-in-interest, the late Lauro
Grageda, has agreed to dispose (of) or part away [with] in favor of
another person [with] his share (in) Lot No. 6386. The same court
moreover noted that As to the claim by the defendants that a third
person (i.e. Rosadel N. Grageda) has acquired ownership over Lot No.
6386, there is no iota of proof adduced on record to lend credence to
such claim. This Court finds such claim baseless. Anyway, the
admission by the defendants Remigia Grageda and Juan Moroa
Grageda that they were staying (in) the house built over Lot No. 6386
negates such claim. We are bound by this finding of the MCTC

194
Id. at 116.

277
judgment, as this has already attained finality, and is, therefore,
irrevocable.

Quite apart from the foregoing, Haudiny Grageda (and his

brother Hipolito Gragedas) failure or inability to tender an answer in
Civil Case No. C-655 should not be held up against them. For these two
must have known, as they are presumed to know, that an action for
partition, is, as a general proposition, imprescriptible (last paragraph of
Art. 494 of the Civil Code). In point of fact, on March 21, 2002 these
two filed a complaint for partition with damages (Civil Case No. 691
of the MCTC of Camalig-Jovellar) against their siblings Juan Moroa
Grageda, Aurea Grageda-Villa, Antonio Grageda and Marlin Grageda
in line with the decision of the same court in Civil Case No. C-655.
And, even as this action (Civil Case No. C-691) was dismissed on the
ground that it was premature (See MCTC Order dated Sept. 9, 2003 in
civil Case No. C-691), for the reason that while the first phase of a
partition proceeding under Sec. 2, Rule 69 of the Rules of Court had
been ended and concluded by a decision in Civil Case No. 655, the
second phase had yet to be finalized and concluded, the required three
commissioners for the partition not having been appointed by the court
yet. To be noted, too, is the fact that said dismissal was without
prejudice.

Nevertheless, it cannot escape notice that upon a timely Motion

for Reconsideration and Appointment of Commissioners the MCTC, in
an order dated February 2, 2004, ruled that As to the prayer for
appointment of commissioner, this court is of the opinion that the same
may be proper in Civil Case No. C-655 and not in this case. What is
more, the decision in this case has obviously become final and
executory, as stressed in the January 13, 2005 order of MCTC Judge
Nimfa C. Gomez, who therein hastened to add that This court cannot
add and/or declare that which is not in the Decision, but is simply
mandated to carry out its terms. In order to do this, the Ex Parte
Manifestation of Atty. Hermel R. Marantal stated in No. 2 above (viz.
there is now a need to order the appointed commissioner, Engr. Ramon
Magdaong, to proceed with the partition of said remaining shares so as
to fully implement the final and executory judgment of this Honorable

278
 Court dated March 31, 2000 and for said commissioner to thereafter
submit his report) is GIVEN DUE COURSE.195

We agree with the Court of Appeals.

The cross-claim argument presented by petitioners is directed against the

correctness of the judgment and, thus, should have been the subject of an appeal
from the 31 March 2000 MCTC Decision. These arguments cannot be threshed out
in a Petition for Certiorari against a Motion for Execution of such Decision.

Petitioners argument that Civil Case No. C-655 was tried and decided on the
basic issue of whether the plaintiffs therein (Dorotea Grageda Naga and Lina
Grageda-Solano), had a right to a share in Lot No. 6386, is contradicted by the
dispositive portion of the Decision of the MCTC and the subsequent 16 January 2001
Order of the MCTC. The dispositive portion of the final and executory Decision of
the MCTC on Civil Case No. C-655, clearly ordered the partition of Lot No. 6386
into four equal shares. One of those shares was ordered to be awarded to the Heirs
of Amado Grageda, of which private respondent Haudiny Grageda is a part. The 16
January 2001 Order of the MCTC (commissioning Geodetic Engineer Ramon
Magdaong to conduct a survey of the subject lot, to carry out the partition, and to
submit his report thereon), on the other hand, confirms that the MCTC intended in
its Decision to order the partition of Lot No. 6386 into four equal shares, and not
merely to segregate the one-fourth share of the plaintiffs therein.

It is basic that when there is a conflict between the dispositive portion or fallo
of a Decision and the opinion of the court contained in the text or body of the
judgment, the former prevails over the latter.196 An order of execution is based on
the disposition, not on the body, of the Decision.197 This rule rests on the theory that
the fallo is the final order while the opinion in the body is merely a statement
ordering nothing.198

195
Id. at 30-32.
196
PH Credit Corporation v. Court of Appeals, 421 Phil. 821, 833 (2001).
197
Id. at 833-834.
198
Rosales v. Court of Appeals, 405 Phil. 638, 655 (2001).

279
 Indeed, the foregoing rule is not without an exception. We have held that
where the inevitable conclusion from the body of the decision is so clear as to show
that there was a mistake in the dispositive portion, the body of the decision will
prevail.199 The case at bar, however, does not fall under this exception. The MCTC
Decision, while primarily dealing with the right of the plaintiffs to their one-fourth
share in the subject property, likewise discussed, albeit sparingly, the ownership of
the entire Lot No. 6386, and not just the right of the plaintiffs thereto. Specifically,
the Decision discussed that the allegation of third-person ownership is baseless due
to the complete absence of evidence proving such claim, and the admission by
Remigia Grageda and Juan Moroa Grageda that they were staying in the house built
on Lot No. 6386.200

Finally, petitioners contention that Haudiny Gragedas failure to file a separate

Answer in Civil Case No. C-655 resulted in his adopting the Answer filed by the
answering defendants, including the admissions thereon, is unavailing. The principle
petitioners are evidently referring to is based on Rule 9, Section 3(c) of the Rules of
Court, which provides:

(c) Effect of partial default. When a pleading asserting a claim

states a common cause of action against several defending parties, some
of whom answer and the others fail to do so, the court shall try the case
against all upon the answers thus filed and render judgment upon the
evidence presented.

Thus, in Tanhu v. Judge Ramolete,201 we held:

Stated differently, in all instances where a common cause of

action is alleged against several defendants, some of whom answer and
the others do not, the latter or those in default acquire a vested right
not only to own the defense interposed in the answer of their co-
199
Id.
200
Rollo, p. 54.
201
160 Phil. 1101, 1131-1132 (1975).

280
 defendant or co-defendants not in default but also to expect a result
of the litigation totally common with them in kind and in amount
whether favorable or unfavorable. The substantive unity of the
plaintiffs cause against all the defendants is carried through to its
adjective phase as ineluctably demanded by the homogeneity and
indivisibility of justice itself. Indeed, since the singleness of the cause
of action also inevitably implies that all the defendants are
indispensable parties, the court's power to act is integral and cannot be
split such that it cannot relieve any of them and at the same time render
judgment against the rest. Considering the tenor of the section in
question, it is to be assumed that when any defendant allows himself
to be declared in default knowing that his co-defendant has already
answered, he does so trusting in the assurance implicit in the rule
that his default is in essence a mere formality that deprives him of
no more than the right to take part in the trial and that the court
would deem anything done by or for the answering defendant as
done by or for him. The presumption is that otherwise he would not
have seen to it that he would not be in default. Of course, he has to
suffer the consequences of whatever the answering defendant may do
or fail to do, regardless of possible adverse consequences, but if the
complaint has to be dismissed in so far as the answering defendant is
concerned, it becomes his inalienable right that the same be dismissed
also as to him. It does not matter that the dismissal is upon the evidence
presented by the plaintiff or upon the latter's mere desistance, for in
both contingencies, the lack of sufficient legal basis must be the cause.
x x x.

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

1. While the non-answering defendants may be declared in default, the

court would still try the case against them on the assumption that they
are deemed to have adopted the Answer of the answering defendants;
and

281
 2. If declared in default, the defaulting party is deprived of no more
than the right to take part in the trial. Consequently, the result of the
litigation, whether favorable or unfavorable, shall affect and bind the
defaulting party and the answering defendant with equal force and
effect.

Thus, in this case, while it is implied that Haudiny Grageda has adopted the
Answer of the answering defendants in Civil Case No. C-655, such adoption cannot
result in a waiver of private respondent Haudiny Gragedas right to take part in the
favorable results of the litigation. Under the principle of renuntiatio non prsumitur,
a waiver of right may not be performed unless the will to waive is indisputably
shown by him who holds the right.202 Private respondent Haudiny Gragendas
supposed waiver of his right to a share in the subject property must therefore be
express203 and cannot be lightly presumed from his failure to tender a separate
Answer to the Complaint in Civil Case No. C-655. As the result of the litigation as
to the answering defendants, whether favorable or unfavorable, would likewise be
applicable to Haudiny Grageda, the disposition of the MCTC (that the subject
property be partitioned into four equal shares, one share of which to be awarded to
the Heirs of Amado Grageda) should be adjudged applicable to him.

WHEREFORE, the instant Petition is hereby DENIED. The Decision of the

Court of Appeals dated 31 August 2005 is AFFIRMED. No costs.

SO ORDERED.

MINITA V. CHICO-NAZARIO
Associate Justice

202
Testate Estate of Mota. v. Serra, 47 Phil. 464, 469-470 (1925).
203
Id.

282
WE CONCUR:

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson

MA. ALICIA AUSTRIA-MARTINEZ ANTONIO EDUARDO B. NACHURA

Associate Justice Associate Justice

RUBEN T. REYES
Associate Justice

283
 ATTESTATION

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

CONSUELO YNARES-SANTIAGO
Associate Justice
Chairperson, Third Division

CERTIFICATION

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

284
 REYNATO S. PUNO
Chief Justice

285
 FIRST DIVISION

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

LETICIA P. LIGON, petitioner, vs. COURT OF APPEALS and IGLESIA NI

CRISTO, respondents.

DECISION
DAVIDE, JR., J.:

This petition, as appeal under Rule 45 and at the same time as a special civil
action for certiorari under Rule 65 of the Rules of Court, seeks to reverse the
Decision204 of the Court of Appeals of 11 September 1996 in CA-G.R. SP No. 40258
and its Resolution205 of 3 January 1997 denying petitioners motion for
reconsideration of the Decision.
As far as could be gathered from the voluminous pleadings filed by the parties
in this case and in CA-G.R. SP No. 40258, the factual antecedents are as follows:
Petitioner Leticia P. Ligon (hereafter LIGON) is the mortgagee in three deeds of
mortgage covering two parcels of land located along Tandang Sora, Barangay
Culiat, Quezon City, covered by Transfer Certificates of Title (TCT) Nos. 170567
(now RT-26521) and 176616 (now RT-26520) belonging to the Islamic Directorate
of the Philippines (hereafter IDP). These deeds of mortgage were executed by certain
Abdulrahman R.T. Linzag and Rowaida Busran-Sampaco on 21 March 1988, 25
April 1988, and 29 July 1988 as security for the loans of P3 million, P2 million, and
P4 million, respectively, which IDP allegedly obtained from LIGON. 206
It must be pointed out that two groups had earlier vied for control of the IDP,
namely, (1) the Carpizo group headed by Engr. Farouk Carpizo and (2) the Abbas
group led by Zorayda Tamano and Atty. Firdaussi Abbas. In its decision of 3 October
1986 in SEC Case No. 2687, the Securities and Exchange Commission (SEC)

204
Per Luna, A., J., with Barcelona and Valdez, JJ., concurring. Annex A of Petition, Rollo, 65-91;
205
Annex C of Petition, Rollo, 115-126.
206
Partial Judgment in Civil Case No. Q-91-10494, 3-5; Original Record (OR), Vol. III, 1,169-1,171;
Complaint, 6; OR, Vol. I, 8. The Complaint stated that copies of said mortgages were attached thereto as
Annexes D, E, and F, but said annexes were not in the record.

286
declared null and void the election of both groups to the IDP Board of Trustees.
Nevertheless, on 20 April 1989, the Carpizo group caused the signing of an alleged
Board Resolution authorizing the sale of the two parcels of land mentioned above to
private respondent Iglesia ni Cristo (hereafter INC). The sale was evidenced by a
Deed of Absolute Salei dated 20 April 1989, wherein IDP and INC stipulated that
the former would evict all squatters and illegal occupants in the two lots within forty-
five (45) days from execution of the sale.
IDP failed to clear the lots of squatters; hence, on 19 October 1990 INC filed
with the Regional Trial Court (RTC) of Quezon City a complaint for specific
performance with damages, which was docketed as Civil Case No. Q-90-6937.
On 30 May 1991, IDPs original Board of Trustees headed by Senator Mamintal
Tamano, or the Tamano group, filed a petition with SEC to annul the sale of the two
lots to INC. The case was docketed as SEC Case No. 4012. On 5 July 1993, the SEC
promulgated its decision in SEC Case No. 4012 annulling, inter alia, the sale of the
two parcels of land to INC. Aggrieved, INC filed a special civil action for certiorari
before the Court of Appeals, which was docketed as CA-G.R. SP No. 33295. In its
decision of 28 October 1994, the Court of Appeals granted INCs petition and set
aside the portion of the SEC decision declaring the sale null and void. Consequently,
the Tamano group appealed to this Court in a petition for review in G.R. No. 117897
entitled Islamic Directorate of the Philippines v. Court of Appeals.
Meanwhile, on 12 September 1991, the RTC rendered a partial judgment in Civil
Case No. Q-90-6937; and on 7 October 1991, it rendered an amended partial
judgment granting the reliefs prayed for by INC except the prayer for damages,
which was to be resolved later.
On 31 October 1991, the INC filed with the RTC of Quezon City a complaintii
for the annulment of the deeds of mortgage over the two lots, impleading as
defendants therein LIGON, Abdulrahman R.T. Linzag, Rowaida Busran-Sampaco,
and the IDP. The case was docketed as Civil Case No. Q-91-10494. In its answer,iii
IDP interposed a cross-claim against LIGON. On the other hand, LIGON filed an
answeriv with counterclaim; a cross-claim against IDP; and a third-party complaint
against Pablo de Leon, Guillermo Vina, and Aida Vina.
Later, LIGON filed a motionv in Civil Case No. Q-91-10494 to declare INC and
IDP in default for their failure to file an answer to her counterclaim and cross-claim,
respectively. She further prayed that she be allowed to present evidence ex-parte.
INC opposedvithe motion, saying that some of the grounds raised by LIGON in her
counterclaim were sufficiently dealt with in INCs complaint, while the other grounds
were in the nature of a compulsory counterclaim and did not therefore require an
287
answer. On 30 September 1992, the trial court granted LIGONs motion and allowed
LIGON to present evidence ex-parte to support her cross-claim against IDP.vii
Then, on 2 August 1995, LIGON filed in Civil Case No. Q-91-10494, an urgent
motionviii for rendition of partial judgment against IDP in the cross-claim for the
foreclosure of the mortgages. On 27 October 1995, the trial court rendered a partial
judgmentix (1) ordering IDP to pay LIGON the amounts of P3 million, P2 million,
and P4 million with interest at 36% per annum compounded annually from the dates
the loans became due and demandable; and (2) directing the foreclosure sale of the
mortgaged properties in case of non-payment of said amounts.
On 21 November 1995, INC filed a Motion for Reconsiderationx of the partial
judgment, which was, however, denied by the trial court in its Orderxi of 20 March
1996 on the following grounds:
. . . [T]he INC has no personality to seek a reconsideration of the partial
judgment.
Firstly, the judgment involves a cross-claim in which INC is not a party; the right
to appeal from a judgment or to move for a reconsideration thereof is a right inherent
to the party in the cross-claim affected adversely by the judgment. Section 2, Rule 3
of the Rules of Court provides that a case shall be prosecuted and defended in the
name of the real party-in-interest. INC is not a party to the mortgages hence it is not
a real party-in-interest to the foreclosure thereof.
...
Not being a party to the cross-claim, as indeed it cannot be being the plaintiff
and cross-claim being a suit between co-parties, INC has no right to file the instant
motion.
Secondly, INC is the plaintiff in this case that sued IDP. Thus, the interests of
INC as plaintiff are adverse to or in conflict with those of IDP, a defendant. The
plaintiff cannot take up the cudgels for an adverse party, the defendant.
Thirdly, the right of the INC to file this motion rests on its being a subsequent
purchaser of the property or its being the new owner; thus, it claims it steps into the
shoes of IDP. The right of IDP as a party to a case should be distinguished from its
rights as owner-seller of the property, especially in this case where not only did INC
sue IDP but IDP also chose not to exercise its right to move for a reconsideration of
the partial judgment or to appeal therefrom.
More importantly, even assuming arguendo that INC is now the new owner of
the mortgaged property, the fact remains that the sale to it on April 20, 1989, is

288
admittedly after the execution of the real estate mortgages in 1988; the mortgages
were registered in 1991 while the sale was never inscribed in the TCTs of the IDP.
The INC is simply a subsequent buyer whose rights were explicitly defined in the
case of Limpin vs. IAC (supra).
Finally, this Court has already ruled that INC is not a party to the mortgages and
may have no right to question the validity thereof ....
Consequently, INC filed with the Court of Appeals a petitionxii for certiorari
with prayer for the issuance of a temporary restraining order to annul the
aforementioned partial judgment and the order denying private respondents motion
for reconsideration. The case was docketed as CA-G.R. SP No. 40258.
In its decisionxiii of 11 September 1996 in CA-G.R. SP No. 40258, the Court of
Appeals ruled in favor of INC and justified its ruling in this wise:
Technically, while the IDP can be declared in default for failure to file its answer
to Ligons counterclaim, and that Ligons motion to present her evidence ex-parte
against the IDP is not irregular, the respondent court should not have rendered a
partial judgment based on the evidence presented by Ligon, without giving the INC
an opportunity to present its evidence contra as well as to substantiate its allegations
in the complaint that the mortgage contracts are null and void and of no binding
force and effect .
...
Had respondent court, upon motion by respondent Ligon allowed her to
introduce her evidence, and afterwards afforded the INC of the opportunity to be
heard in its complaint to prove that the loans and the mortgages are invalid, such
recourse could have prevented the most mischievous consequences in the
administration of justice to suitors, that of depriving one of his day in court -- the
affording of an opportunity to be heard on the other.
...
We find sufficient basis to hold that respondent court committed grave abuse of
discretion tantamount to lack or in excess of jurisdiction in rendering a partial
judgment at that stage of the proceedings, the dispositive portion of which would
even indicate that respondent Ligon was awarded more than what she prayed for.
We further find that respondent court exceeded its jurisdiction in rendering
partial judgment in favor of respondent Ligon without first giving petitioner its day
in court since the issues in the respective claims of the parties against each other are
interrelated and inseparably intertwined with one another -- one maintains that the

289
mortgages are null and void, while the other asks for foreclosure of the same
mortgage contracts -- respondent court could have deferred disposition of one claim
adverse to the claim of the other until the claim of both are heard and the parties
afforded the opportunity to present their evidence in support of their opposing claim.
This decision prompted LIGONs Urgent Motions to Vacate Null and Void
Decision Dated September 11, 1996, Dismiss the Petition and/or for
Reconsiderationxiv and Motion to Recuse Associate Justices Artemon D. Luna,
Ramon A. Barcelona, and Salvador J. Valdez, Jr.,xv which was accompanied by
Amended Urgent Motions to Vacate Null and Void Decision Dated September 11,
1996, Dismiss the Petition and/or for Reconsideration.xvi These were denied by the
Court of Appeals in its Resolutionxvii of 3 January 1997.
Undaunted by the foregoing adversities in CA-G.R. SP No. 40258, LIGON filed
the instant petition on 27 February 1997. LIGON claims that respondent Court of
Appeals (1) acted with grave abuse of discretion in refusing to order INC to implead
or include IDP as an indispensable party in the petition for certiorari; (2) acted
without jurisdiction in annulling the decision of the lower court; and (3) erred in not
dismissing INCs petition because INC was not aggrieved by the trial courts decision
and was guilty of forum-shopping.
LIGON asserts that IDP was an indispensable party in INCs action in CA-G.R.
SP No. 40258 because IDP is the mortgagor and defendant in the foreclosure suit
instituted by petitioner Ligon before the lower court; it has such interest in the
controversy that a final decree would necessarily affect its rights and interests; and,
an action to annul a contract cannot be maintained without joining both contracting
parties as defendants or respondents. Since IDP was not impleaded in said case, the
petition should have been dismissed pursuant to Section 7, Rule 3 of the Rules of
Court.xviii The Court of Appeals, therefore, acquired no jurisdiction over the case;
and its decision was a total nullity.
As to the second ground, LIGON claims that the Court of Appeals was powerless
to annul the trial courts judgment because IDP was not a party in CA-G.R. SP No.
40258.
Regarding the third ground, LIGON asserts that INC was not aggrieved by the
trial courts decision because at no time was it a party to the action for foreclosure of
the mortgages; moreover, INC did not show that it would suffer substantial injury or
manifest injustice in case of foreclosure of the mortgages. She asserts that IDP was
the aggrieved party, then tirelessly reiterates her argument that IDP should have been
joined as petitioner or respondent in the certiorari proceeding.

290
 As to forum-shopping, LIGON maintains that both litis pendentia and res
judicata [were] irrepressibly present and attendant in INCs action before the
appellate court. INC filed three actions, in all of which there was identity of (1)
parties or interests represented, (2) right or causes, and (3) reliefs sought. Civil Case
No. Q-90-6937 was for the enforcement of the stipulation in the Deed of Absolute
Sale between INC and IDP obliging IDP to clear the properties sold of squatters. In
Civil Case No. Q-91-10494, INC sought to stop the foreclosure of the mortgages.
The third case was CA-G.R. SP. No. 40258, wherein the same relief was being
sought by INC, that is, to enjoin the foreclosure of the mortgages. LIGON claims
that the issues in the three cases were so intertwined that the resolution of any one
would constitute res judicata in the others.
For its part, INC argues that IDP was not an indispensable party in CA-G.R. SP
No. 40258. LIGONs reliance on Section 7, Rule 3 of the Rules of Court on
compulsory joinder of indispensable parties is misplaced. INC contends that the
rules on ordinary civil actions, including said Section 7, apply only suppletorily to
special civil actions. Section 5, Rule 65 of the Rules of Court declares that the
defendants in a special civil action for certiorari shall be the person or persons
interested in sustaining the proceeding in court to be joined with the court or judge
whose act or omission is being contested. It is illogical and absurd to argue that IDP
is interested in defending the validity of an adverse partial judgment.
As regards LIGONs second ground, INC counters that the special civil action
for certiorari was an independent action and not a continuation of the proceedings
before the trial court. Thus, not all the parties in the case at the trial court could be
included in the independent action for certiorari.
Anent the third ground, INC maintains that it was aggrieved by the foreclosure
judgment because, being the new owner of the subject lots, it would suffer
substantial injury and manifest injustice from the foreclosure of the mortgages. INC
relies on Article 1609 of the Civil Code, which subrogates the vendee to the rights
and actions of the vendor.
INC claims it did not engage in forum-shopping, as the cases it filed involved
different issues. Civil Case No. Q-90-6937 involved the validity of the sale of the
IDP properties to INC; Civil Case No. Q-91-10494, the validity of the mortgages;
and CA-G.R. SP No. 40258, the validity of the partial judgment rendered by the trial
court. The judgment in one case was not determinative of the issues in the other
cases.
As to the trial courts declaration that IDP was in default, INC contends that the
same was illegal, since IDP did not have to file an answer to LIGONs cross-claim

291
pursuant to Section 4, Rule 18 of the Rules of Court.xix
INC further argues that LIGONS cross-claim for foreclosure of the mortgages
could not proceed ahead of the main action for annulment of said mortgages.
Meanwhile, on 14 May 1997, this Court promulgated its decisionxx in G.R. No.
117897 (Islamic Directorate of the Philippines v. Court of Appeals). It set aside the
decision of the Court of Appeals of 28 October 1994 in CA-G.R. SP No. 33295 and
upheld the decision of the SEC holding null and void the sale of the two lots to INC.
This Court clarified and decided the issue therein as follows:
The main question though in this petition is: Did the Court of Appeals commit
reversible error in setting aside that portion of the SECs Decision in SEC Case No.
4012 which declared the sale of two (2) parcels of land in Quezon City between the
IDP-Carpizo Group and private respondent INC as null and void?
We rule in the affirmative.
There can be no question as to the authority of the SEC to pass upon the issue as
to who among the different contending groups is the legitimate Board of Trustees of
the IDP since this is a matter properly falling within the original and exclusive
jurisdiction of the SEC by virtue of Sections 3 and 5 (c) of Presidential Decree No.
902-A:
...
. . . If the SEC can declare who is the legitimate IDP Board, then by parity of
reasoning, it can also declare who is not the legitimate IDP Board. This is precisely
what the SEC did in SEC Case No. 4012 when it adjudged the election of the Carpizo
Group to the IDP Board of Trustees to be null and void. By this ruling, the SEC in
effect made the unequivocal finding that the IDP-Carpizo Group is a bogus Board
of Trustees. Consequently, the Carpizo Group is bereft of any authority whatsoever
to bind IDP in any kind of transaction including the sale or disposition of IDP
property.
...
Nothing thus becomes more settled than that the IDP-Carpizo Group with whom
private respondent INC contracted is a fake Board.
Premises considered, all acts carried out by the Carpizo Board, particularly the
sale of the Tandang Sora property, allegedly in the name of the IDP, have to be
struck down for having been done without the consent of the IDP thru a legitimate
Board of Trustees.
...
292
 The Carpizo Group-INC sale is further deemed null and void ab initio because
of the Carpizo Groups failure to comply with Section 40 of the Corporation Code
pertaining to the disposition of all or substantially all assets of the corporation:
...
The Tandang Sora property, it appears from the records, constitutes the only
property of the IDP. Hence, its sale to a third-party is a sale or disposition of all the
corporate property and assets of IDP falling squarely within the contemplation of the
foregoing section. For the sale to be valid, the majority vote of the legitimate Board
of Trustees, concurred in by the vote of at least 2/3 of the bona fide members of the
corporation should have been obtained. These twin requirements were not met as the
Carpizo Group which voted to sell the Tandang Sora property was a fake Board of
Trustees, and those whose names and signatures were affixed by the Carpizo group
together with the sham Board Resolution authorizing the negotiation for the sale
were, from all indications, not bona fide members of the IDP as they were made to
appear to be .
All told, the disputed Deed of Absolute Sale executed by the fake Carpizo Board
and private respondent INC was intrinsically void ab initio.
Before addressing the issues raised in the present petition, it must be recalled
that LIGON describes her petition as an appeal under Rule 45 and at the same time
as a special civil action of certiorari under Rule 65 of the Rules of Court. This Court
cannot tolerate such a chimera. The remedies of appeal and certiorari are mutually
exclusive and not alternative nor successive.xxi It is settled that the averments in the
complaint, and not the nomenclature given by the parties, determine the nature of
the action.xxii Considering that this petition primarily consists of allegations charging
the Court of Appeals with having acted with grave abuse of discretion and without
jurisdiction, this Court shall treat this petition as a special civil action for certiorari
under Rule 65 of the Rules of Court.
Returning to the instant petition, the first issue must be resolved against LIGON.
At the time CA-G.R. SP No. 40258 was filed, the law on who should be parties
in a special civil action for certiorari were Sections 1 and 5 of Rule 65 of the Rules
of Court,xxiii which provided:
Section 1. Petition for certiorari. -- When any tribunal, board, or officer
exercising judicial functions, has acted without or in excess of its or his jurisdiction,
or with grave abuse of discretion and there is no appeal, nor any plain, speedy, and
adequate remedy in the ordinary course of law, a person aggrieved thereby may file
a verified petition in the proper court alleging the facts with certainty and praying

293
that judgment be rendered annulling or modifying the proceedings, as the law
requires, of such tribunal, board or officer.
Sec. 5. Defendants and costs in certain cases. -- When the petition filed relates
to the acts or omissions of a court or judge, the petitioner shall join, as parties
defendant with such court or judge, the person or persons interested in sustaining the
proceedings in the court....
There can be no dispute on the fact that insofar as the partial decision in Civil Case
No. Q-91-10494, challenged in CA-G.R. SP No. 40258, is concerned, IDP can by
no yardstick be considered as a party interested in sustaining the challenged partial
decision pursuant to the aforequoted Section 5. In fact, IDP was also an aggrieved
party in said partial decision. It could have challenged the partial decision and the
previous order declaring it in default.
Neither is there merit in the second ground relied upon by LIGON. While
LIGON may be correct in her argument that a cross-claim must be answered, and
the party who fails to file an answer thereto may be declared in default,xxiv one should
not lose sight of the true nature of a cross-claim. Section 7xxv of Rule 6 of the Rules
of Court defines a cross-claim as any claim by one party against a co-party arising
out of the transaction or occurrence that is the subject matter either of the original
action or of a counterclaim. It may include a claim that the party against whom it is
asserted is or may be liable to the cross-claimant for all or part of a claim asserted in
the action against the cross-claimant. The answer then to the cross-claim is meant to
join the subsidiary issues between the co-parties in relation to the opposing partys
claim against the cross-claimant.xxvi Needless to state, until the principal issue
between the plaintiff and the defendant cross-claimant shall have been heard and
determined, it would be premature to decide the cross-claim.
It may also be pointed out that in her cross-claim against IDP, LIGON alleged
that IDP unjustly refused to pay the loans it contracted from her, which had become
due and demandable. She thus prayed that the trial court render judgment
1. Ordering IDP, INC, VINA and DE LEON to pay solidarily defendant,
third party plaintiff and cross claimant LIGON the sum of P9 Million plus
stipulated interest of 36% per annum from the due dates of the obligations
within ten (10) days from finality of the judgment and attorneys fees of
P900,000.00 plus appearance fee of P1,000.00 per appearance in Court
and conferences with adverse parties as attorneys fees;
2. Should they fail to pay the said sums within the abovementioned period
of time, ordering the foreclosure of the real estate mortgages, the sale at
public auction of the property subject matter of said mortgages and the
294
 application of the proceeds thereof to the satisfaction of the sums due
defendant and cross claimant LIGON, including the taxes paid, attorneys
fees and costs of foreclosure and litigation.
Earlier however, IDP charged in its Answer with Cross-claimxxvii that LIGON
should have known that the persons she transacted with had no authority to bind IDP
to the loans and mortgages she was trying to enforce. Further, IDP alleged that it
never benefited from the money loaned from LIGON. Thus, IDP argued that as far
as it was concerned, the subject loans and mortgages were null and void. IDP prayed
that judgment be rendered
1. Declaring that the mortgages executed by ATTY. ABDULRAHMAN
LINZAG and MRS. ROWAIDA BUSHRAN SAMPACO and annotated
in the Transfer Certificates of Title are null and void as far as defendant
IDP is concerned;
2. Ordering and directing the Register of Deeds of Quezon City to cancel the
registered or annotated mortgages on the aforementioned Transfer
Certificates of Title;
3. Ordering the cross-claim defendant Ligon to deliver the original of the
reconstituted Transfer Certificates of Title.
From the foregoing, it is inevitable that IDPs cross-claim effectively joined the
subsidiary issues between the co-parties. Requiring an answer to LIGONs cross-
claim would be superfluous. Consequently, declaring IDP in default on the cross-
claim was improper.
LIGONs contention that INC was not aggrieved by the trial courts order of
foreclosure of mortgages cannot be taken seriously. INCs principal cause of action
was the annulment of the mortgages. The partial decision resolved this issue against
INC through the backdoor and without INC having presented its evidence. In short,
the trial court disregarded the fact that LIGONs cross-claim was connected with, or
dependent on, the subject of INCs original complaint.
As regards the final issue, we hold that INC did not engage in forum-shopping.
There is forum-shopping when as a result of an adverse decision in one forum or, it
may be added, in anticipation thereof, a party seeks a favorable opinion in another
forum through means other than appeal or certiorari,xxviii raising identical causes of
action, subject matter, and issues.xxix Forum-shopping exists when two or more
actions involve the same transactions, essential facts, and circumstances; and raise
identical causes of action, subject matter, and issues.xxx Yet another indication is
when the elements of litis pendencia are present or where a final judgment in one

295
case will amount to res judicata in the other case. The test is whether in the two or
more pending cases there is an identity of (a) parties, (b) rights or causes of action,
and (c) reliefs sought.xxxi
INC instituted Civil Case No. Q-90-6937 to compel IDP to comply with its
undertaking to clear of squatters the lots the latter sold to the former. On the other
hand, in Civil Case No. Q-91-10494 INC sought to annul the mortgages and enjoin
LIGON from foreclosing them. The two cases involved different transactions and
sought different reliefs. Moreover, INC won in Civil Case No. Q-90-6937; hence, it
cannot be said that the later Civil Case No. Q-91-10494 was filed as a result of an
adverse decision in one forum. On the other hand, CA-G.R. SP No. 40258 was a
special civil action for certiorari, which was instituted, and correctly so, in reaction
to an adverse partial decision in Civil Case No. Q-91-10494.
Unfortunately, the dismissal of the instant petition cannot inure to the benefit of
INC, since its opposition to LIGONs cause has been rendered moot and academic
by the decision in G.R. No. 117897 declaring null and void the sale of the IDP
properties to INC. Upon the other hand, the validity of the deeds of mortgage in
favor of LIGON has yet to be settled in Civil Case No. Q-91-10494.
WHEREFORE, the instant petition is DISMISSED for lack of merit.
Costs against petitioner LETICIA P. LIGON.
SO ORDERED.
Vitug, Panganiban, and Quisumbing, JJ., concur.
Bellosillo, J. - took no part.

296
 Republic of the Philippines
Supreme Court
Manila

FIRST DIVISION

HERMINIO T. DISINI, G.R. No. 175730

Petitioner,

- versus - Present:

THE HONORABLE CORONA, C. J., Chairperson,

SANDIGANBAYAN, THE CARPIO,
REPUBLIC OF THE VELASCO, Jr.,
PHILIPPINES, as represented by DEL CASTILLO, and
the OFFICE OF THE PEREZ, JJ.
SOLICITOR GENERAL (OSG),
and the PRESIDENTIAL
COMMISSION ON GOOD
GOVERNMENT (PCGG), Promulgated:
Respondents. July 5, 2010
x-------------------------------------------------------------------x

DECISION

DEL CASTILLO, J.:

The simultaneous availment of judicial remedies from different fora for

exactly the same ultimate relief and involving the same issue constitutes forum-
shopping. It is a prohibited malpractice, condemned for trifling with the courts and

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

297
 their processes.

The Case

The instant Petition for Certiorari and Prohibition207 under Rule 65 of the Rules of
Court seeks to:
1. Annul the December 18, 2006 Resolution of the Sandiganbayan (respondent
court), which denied petitioners Motion to Lift Default Order and to Admit
Answer, and consequently allowed respondent Republic to present evidence ex-
parte in Civil Case No. 0013 entitled Republic of the Philippines v. Herminio T.
Disini, et al.;

2. Annul the orders or declarations made by the Sandiganbayan in open court

during the hearing of December 8, 2006, which prevented petitioner from
commenting ad cautelam on the Republics Urgent Manifestation and Motion
(hereinafter the Urgent Manifestation and Motion) to Present Evidence Ex-
Parte;208

3. Prohibit the Sandiganbayan from continuing with the ex-parte proceedings and
rendering a judgment by default;

4. Secure injunctive relief to enjoin the Sandiganbayan from conducting further

proceedings in Civil Case No. 0013 and from rendering judgment on the basis
of the ex-parte proceedings; and

207
Rollo, pp. 3-75.
208
Sandiganbayan rollo, Vol. IV, pp. 470-475. The Urgent Manifestation and Motion prays for the resolution of
PCGGs earlier motion to drop Sison as party-defendant (filed on September 17, 2002; id. at 374-377; considered
submitted for resolution by virtue of Sandiganbayans Order dated September 20, 2002; id. at 411) and the motion-
to-intervene filed by strangers to the amended complaint (filed September 15, 2006; id. at 428-432). In the event
that these motions are resolved in PCGGs favor, they also pray that they be allowed to present evidence ex-parte.

298
 5. Declare null and void all the proceedings conducted as against petitioner because
of lack of jurisdiction over his person, violation of his Constitutional rights to
due process and fair play, and the arbitrary acts of respondent court which
effectively ousted it of jurisdiction to hear the case.209

In sum, petitioner assails the Sandiganbayans refusal to set aside its Order of Default
against petitioner, as well as its acts which allegedly reveal its inclination to railroad the
proceedings and render a precipitate judgment by default against petitioner.210

Factual Antecedents

On July 23, 1987, the Republic (through the Presidential Commission on Good
Government [PCGG]) filed with the Sandiganbayan a civil complaint for reconveyance,
reversion, accounting, restitution, and damages against petitioner Herminio T. Disini
(Disini), spouses Ferdinand and Imelda Marcos (Marcos spouses) and Rodolfo B. Jacob
(Jacob).211 The same was docketed as Civil Case No. 0013 and assigned to the First
Division of the Sandiganbayan (respondent court). Summons for Disini was issued on July
29, 1987.212 Per Sheriffs Return dated September 4, 1987,213 the summons214 was unserved
on the ground that petitioner did not live at the given address, which was No. 92 Kennedy
St., Greenhills, San Juan, Metro Manila. The occupants of said address were the Roman
family.

209
Rollo, pp. 852-853.
210
Id. at 853.
211
Sandiganbayan rollo, Vol. I, pp. 1-22.
212
Id. at 23.
213
Id. at 72.
214
Id. at 23.

299
 On August 26, 1987,215 the Complaint was amended216 to include Rafael A. Sison
(Sison) as a party-defendant.217

The Amended Complaint alleged that Disini acted in unlawful concert with his co-
defendants in acquiring and accumulating ill-gotten wealth through the misappropriation
of public funds, plunder of the nations wealth, extortion, embezzlement, and other acts of
corruption.218

215
Sandiganbayan Resolution dated August 26, 1987, id. at 68.
216
Id. at 44-66.
217
Id. at 41-43.
218
The portions of the Amended Complaint that pertain to petitioner are as follows:

4. Defendant HERMINIO T. DISINI is a close associate of defendant Ferdinand E. Marcos and the husband
of the first cousin of Defendant Imelda R. Marcos. By reason of this relationship, defendant Herminio
Disini was awarded by defendant Ferdinand E. Marcos the tobacco filter monopoly. It was from the
said monopoly that the former first derived his fortune. In the same token, at the behest of defendant
Ferdinand E. Marcos, the corporations under Defendant Herminio Disini became the beneficiaries of
rescue funds infused by the government to the tune of several billion pesos. Later, said defendant
Herminio Disini obtained staggering commissions from the Westinghouse in exchange for securing the
nuclear plant contract from the Philippine government. Said defendant may be served with summons
and other court processes at his last known address at 92 Kennedy St., Greenhills, San Juan, Metro
Manila. Defendant Herminio T. Disini is temporarily outside, even as he remains a resident and citizen
of the Philippines.218
xxxx

13. Defendants Herminio T. Disini and Rodolfo Jacob, by themselves and/or in unlawful concert, active
collaboration and willing participation of defendants Ferdinand E. Marcos and Imelda R. Marcos, and
taking undue advantage of their association and influence with the latter defendant spouses in order
to prevent disclosure and recovery of ill-gotten assets, engaged in devices, schemes, and stratagems
such as:

(a) acted as the above defendant spouses dummy, nominee and/or agent in acquiring and
exercising control of several corporations, such as: (1) Herdis Group of Companies, (2) Energy
Corporation, (3) Vulcan Industrial Mining, (4) United Oriental Bank, (5) Three-M;
(b) unlawfully obtained favored loans and rescue funds from government financing institutions,
under terms and conditions grossly and manifestly disadvantageous to plaintiff and the
Filipino people;
(c) unlawfully utilizing the Herdis Group of Companies and Asia Industries, Inc. as conduits
through which defendants received, kept, and/or invested improper payments such as
unconscionably large commissions from foreign corporations like the Westinghouse
Corporation;
(d) secured special concessions, privileges and/or benefits from defendants Ferdinand E. Marcos
and Imelda R. Marcos, such as a contract awarded to Westinghouse Corporation which built
an inoperable nuclear facility in the country for a scandalously exorbitant amount that
included defendants staggering commissions defendant Rodolfo Jacob executed for HGI the

300
 The Sandiganbayan issued summons on the Amended Complaint on September 3,
1987.219 On September 15, 1987, the Sandiganbayan Deputy Sheriff proceeded to the
same address, No. 92 Kennedy Street, Greenhills, San Juan, Metro Manila. Again, the
summons was returned unserved for the reason that the Roman family occupied the said
residence.220

In the meantime, petitioners co-defendants, Sison221 and Jacob,222 filed their

respective answers, while the Marcos spouses were declared in default223 for failure to file
their responsive pleadings despite valid service of summons.224

After the lapse of two years without any progress in the case, Jacob filed an
Omnibus Motion for the Sandiganbayan to either set the case for pre-trial or to dismiss the
same with respect to Jacob for failure to prosecute.225 Jacob argued that there was no
excuse for the delay in prosecuting the case. He reasoned that, if summons could not be
served on his co-defendant Disini within a reasonable time, the prosecution should have
moved to exclude Disini from the complaint so that the case could be disposed of one way

contract for the aforesaid nuclear plant;

(e) participated in numerous stratagems and devices to prevent disclosure and to avoid discovery
of their unabated plunder of the public treasury by, among others, acting as conduits to siphon
out of the country illegally acquired assets of defendants Ferdinand E. Marcos and Imelda R.
Marcos, through Fe Roa Gimenez, a defendant in a separate suit;
(f) obtained, with the active collaboration of defendant Rafael A. Sison, from the Development
Bank of the Philippines (DBP) huge amounts in peso and foreign currency denominated loans
and guarantees in favor of Cellophil Resources Corporation, a corporation beneficially held
and controlled by Defendant Herminio T. Disini, in violation of duly approved DBP policies on
allowable collateral ratios, maximum allowable exposure and standard conditions for loans
and guarantee accommodations. (Amended Complaint, pp. 11-13; Sandiganbayan rollo, Vol.
I, pp. 54-56)
219
Sandiganbayan rollo, Vol. I, p. 70.
220
Id. at 81.
221
Filed on November 18, 1987 (Id. at 100-106).
222
Filed on February 14, 1989 (Id. at 323-336).
223
Sandiganbayan Resolution dated June 23, 1989 (Id. at 490-505).
224
Marcos v. Garchitorena, G.R. Nos. 90110-43, February 22, 1990 (unsigned resolution).
225
Sandiganbayan rollo, Vol. I, pp. 570-571.

301
or another instead of being left pending indefinitely.

The Sandiganbayan denied Jacobs motion.226 It held that the Republic had not
lacked in efforts to ascertain Disinis whereabouts; hence, there is no basis to rule that it
failed to prosecute the case. Nevertheless, it ordered the Republic to furnish the court with
the correct address of petitioner or to file a motion to show the reasonability of expecting
Disini to be summoned.

In response, the Republic filed a Manifestation that it is still in the process of

securing alias summonses for the unserved defendants and will take steps to serve
summons by publication.227

On October 11, 1990, the Republic moved to drop Jacob as party-defendant

considering that he will testify as a witness for the Republic in its ill-gotten wealth cases
both here and abroad.228 It also sought several times to suspend the pre-trial on various
grounds such as the PCGGs vacillation regarding the grant of immunity in favor of Jacob229
and the Republics admission that it still could not ascertain Disinis whereabouts for
purposes of service of summons. The Republic explained that it was still trying to exhaust
all efforts to make a personal or substituted service of summons through the help of the
Philippine consulate office in Austria, where Disini is believed to be residing.230

On August 4, 1994, the Sandiganbayan resolved to grant the dismissal of the

complaint against Jacob with prejudice and ordered him dropped as party-defendant.231

226
Resolution dated October 26, 1989. Sandiganbayan rollo, Vol. II, p. 10.
227
Id. at 56-57.
228
Sandiganbayan rollo, Vol. III, pp. 12-13.
229
Id. at 80-83 and 120-121.
230
Id. at 20-22.
231
Id. at 292-308.

302
 When it appeared that pre-trial could finally continue in 1995, the Republic again
moved for several resetting of pre-trial for reasons such as looking at the possibility of
granting immunity to petitioners other co-defendant, Sison, and the unavailability of the
solicitor assigned to the case.232

After displaying utmost liberality in the past as regards the postponement of the pre-
trial, the Sandiganbayan issued a strongly-worded Order on January 17, 1997, on which
date the Republic was still not ready to submit Sisons affidavit for the consideration of the
court. The Order reads:

Over the year, the matter of the affidavit [of Sison] remains unresolved. In the end,
this case is sought once more to be reset with no visible product for the effort.

Under the circumstances, should no action be taken thereon with finality on or

before March 14, 1997, the Court will assume that the government is not disposed to
prosecute this matter and will dismiss the case.233

Heeding the Sandiganbayans warning, the Office of the Solicitor General filed its
Manifestation and Urgent Motion to Drop Rafael Sison as Party-Defendant on March 14,
1997.234

A year later, on April 8, 1998, the Republic filed an Ex Parte Motion for Leave to
Serve Summons by Publication.235 It stated that resort to service by publication was needed
because they could not ascertain Disinis whereabouts despite diligent efforts to do so.
While this motion was awaiting resolution five months later, the Republic filed an Urgent

232
Id. at 542, 561-562, 567; Sandiganbayan rollo, Vol. IV, pp. 24-25, 69-70, 78, 90-91.
233
Sandiganbayan rollo, Vol. IV, pp. 195-196.
234
Id. at 201-202.
235
Id. at 243-244.

303
Ex Parte Motion for Issuance of Alias Summons.236 It allegedly received information that
Disini had returned to the Philippines and could be served with summons at No. 92
Kennedy Street, Greenhills, San Juan, Metro Manila. Alias summons was issued but was
returned unserved on the ground that Disini did not occupy the said house, which belonged
to the Roman family.237 Receiving information that Disini was often seen at No. 35
Buchanan Street, Greenhills, San Juan, Metro Manila, the sheriff proceeded to the new
address only to find that it belonged to petitioners cousin, Jesus Disini.238

Failing to serve summons personally on Disini, the Republic filed an Urgent Motion
to Resolve Motion for Leave to Serve Summons by Publication on October 3, 2001.239
While awaiting the resolution of the Urgent Motion, the Republic again received
information that petitioner has been regularly seen at the Wack Wack Golf and Country
Club in Mandaluyong City and at No. 57 Flamingo Street, Greenmeadows Subdivision,
Quezon City. Thus, the Republic sought again the issuance of alias summons, without
prejudice to the resolution of its previous Motion for Leave for Issuance of Summons by
Publication.240 The Sandiganbayan issued an alias summons for Disini, but it was returned
unserved.

On February 6, 2002, the Republic filed a Motion to Resolve (Ex Parte Motion for
Leave to Serve Summons by Publication).241 The same was granted242 and on April 23,
2002, the summons and the Amended Complaint were published in Peoples Tonight, with
a copy sent by registered mail to Disinis last known address, No. 92 Kennedy Street,

236
Filed on September 11, 1998, id. at 251-252.
237
Sheriffs Return, id. at 258-259.
238
Sheriffs Return, id. at 258-259.
239
Id. at 285-287.
240
Filed on November 8, 2001, id at 292-294.
241
Id. at 299-301.
242
Id. at 318-319.

304
Greenhills, San Juan, Metro Manila.243 By August 27, 2002, petitioner was declared in
default for failure to file his responsive pleading within 60 days from the publication of the
summons.244

Since three of the party-defendants (Ferdinand Marcos, Imelda Marcos, and

petitioner) had been declared in default, while one was dropped to become state witness
(Jacob), Sison remained as the sole defendant who could participate in Civil Case No.
0013. Given that there was a pending motion to drop Sison also as party-defendant, the
Republic asked the Sandiganbayan to resolve the said motion so that they could proceed
with the ex parte presentation of evidence.245 The said motion was submitted for resolution
on September 20, 2002.246

On February 17, 2003, with the motion to drop Sison as party-defendant still
pending, the Republic asked the Sandiganbayan to hold in abeyance the pre-trial until the
said motion had been resolved.247 On February 27, 2003, the Sandiganbayan clerk of court
sent notice of the cancellation of the pre-trial set for March 4, 2003.248

The records of the Sandiganbayan became silent from the year 2003 to 2006,
revealing an inaction that would only be broken by a foreign court that imposed a deadline
on the freeze orders of the Disini Swiss accounts. This development began when petitioner
Disinis wife and children filed a petition249 in a Swiss Federal Court to remove a previously

243
Id. at 343-344.
244
Id. at 365-366.
245
Id. at 374-377.
246
Id. at 411.
247
Id. at 418-421.
248
Id. at 423.
249
Entitled Pacienca Escolin-Disini, Liliana and Herminio Angel Disini, and Lea Disini vs. District Attorney I of
the Canton of Zurich, Section B, Superior Court of the Canton of Zurich, 3rd Criminal Chamber, and the Republic
of the Philippines. Id. at 476-492.

305
issued freeze order on their Swiss accounts. On August 18, 2006, the Swiss Federal Court
rendered a partial decision250 ordering the counsel for the Republic of the Philippines to
submit a forfeiture order from a Philippine court with regard to the assets of Liliana and
Herminio Disini not later than December 30, 2006; otherwise, the Swiss Federal Court
would revoke the freeze order on the Disini Swiss accounts.251

250
Id. at 476-492.
251
The relevant portion of the Swiss Federal Court decision, as translated into English, reads as follows:
Facts of the Case
A.
In April 1986, the Republic of the Philippines requested the Swiss authorities for judicial assistance in
the repatriation of assets which had been misappropriated by Ferdinand E. Marcos, his family members and
persons close to him in the exercise of their official functions. This group of persons includes Herminio T.
Disini. On April 7, 1986, the Solicitor General of the Philippines initiated a criminal investigation against
him.
On October 21, 1986, the Office of the Investigating Judge of Canton Fribourg ordered the accounts of
Herminio T. Disini blocked.
B.
With the requests for judicial assistance dated March 20, 1989 and July 11, 1991, the Republic of the
Philippines also requested the blocking of the accounts of family members of Herminio T. Disini and return
of the corresponding account records.
By an order dated October 14, 1991, the Investigating Judge of Canton Fribourg granted the request,
ordered the referenced accounts of Schweizerische Volksbank (now: Credit Suisse) under the names of
Pacienca Escolin-Disini (the wife of Herminio T. Disini), Herminio Angel Disini (the son of Herminio T.
Disini) and his wife Liliana, and Lea Disini (the daughter of Herminio T. Disini) to be blocked. The account
records were delivered to the Republic of the Philippines on November 8, 1999.
Subsequently, a number of requests by the account holders to release the blocked assets were rejected.
xxxx
D.
On December 21, 2004, the account holders filed another petition demanding the release of their
accounts stating that there were no criminal or civil proceedings pending in the Philippines for which judicial
assistance could be provided. The [Cantonal] Attorneys Office dismissed the petition by Herminio Angel and
Liliana Disini, Paciencia Escolin-Disini and Lea Disini on August 30, 2005 referring to a report by the
Philippines dated June 10, 2005 (Status Report) which stated that a number of criminal and forfeiture
proceedings were pending against Herminio T. Disini.
xxxx
The Supreme Court considers:
xxxx
5.3 The appellants account records were sent to the Philippines as early as 1991. As such, the
Philippines have already had all of the records necessary to confiscate the appellants assets
blocked in Switzerland.
The Philippine forfeiture proceeding (Civil Case No. 0013) was initiated in 1987, that is 19
years ago. According to the Philippine authorities, Herminio T. Disini was declared in default on
August 27, 2002 after he had allegedly prevented the service of court summonses for years and
thereby blocked the case. Nonetheless, the case is still pending in the pre-trial phase.
xxxx
5.4 However, after the account block has been maintained for so long without the Philippines ever
indicating a term for the conclusion of the forfeiture proceeding, it appears also in light of Art.
3 par. 3 of the Judicial Assistance Treaty appropriate to provide the Republic of the Philippines
with a final opportunity to reach a forfeiture decision concerning the appellants assets.

306
 This deadline apparently spurred the Republic (through the PCGG) to file an Urgent
Manifestation and Motion252 with the Sandiganbayan on November 30, 2006. The
Republic prayed for the resolution of its Urgent Motion to Resolve (its motion to drop
Rafael Sison as party-defendant).253 Should the resolution of this pending motion be
favorable to the Republic, it likewise prayed for the setting of the ex parte presentation of
evidence at an early date.

On December 7, 2006, petitioner Disini filed a Motion to Lift Order of Default and
for Leave to File and Admit Attached Answer,254 together with an Answer to Amended
Complaint with Compulsory Counterclaims.255 He maintained that he was unaware of the
civil case pending against him because he never received summons or other processes from
the court, nor any pleadings from the parties of the case. His only fault, he averred, was
that he was ignorant of the proceedings in the case because of the absence of a proper
notice. Petitioner asked the respondent court to look at his meritorious defenses. He then
invoked the liberality of the courts in lifting default orders to give both parties every
opportunity to defend their cases, and pointed out that the proceedings, being in their pre-

Therefore the counsel of the Philippines is granted until December 31, 2006 to submit to the
Supreme Court at least a lower court forfeiture decision concerning the appellants assets blocked in
Switzerland. Until then, the Supreme Court case will be stayed. After expiration of this period, the
Supreme Court will revoke the block on the accounts of Liliana and Herminio Angel Disini if no
forfeiture order has been handed down or if the submitted decision does not meet the minimum
requirements of Art. 74a IRSG.
xxxx
Thus the Federal Court decides
1.
To the legal representative of the Republic of the Philippines is given a time limit until
December 31, 2006 in order to file a erstinstanzlichen Einziehungsentscheid (first instance
decision) with regard to the assets of Liliana and Herminio Angel Disini which are blocked in
Switzerland.
xxxx
252
Sandiganbayan rollo, Vol. IV, pp. 470-475.
253
It also included a motion to resolve the Motion to Intervene filed by third parties, who claim equitable ownership
of a piece of real estate, which was included in the list of sequestered assets of Disini. This Motion to Intervene
was eventually dismissed on the ground that the property over which the movants claim an interest is not among
the properties in litigation in Civil Case No. 0013. Sandiganbayan rollo, Vol. V, pp. 120-123.
254
Id. at 5-21.
255
Id. at 22-64.

307
trial stage, would not be delayed by petitioners participation therein.

Petitioners Answer contained affirmative defenses such as the respondent courts

failure to acquire jurisdiction over his person through service by publication and the failure
of the Amended Complaint to state a cause of action against him.

With the two motions pending before it, the Sandiganbayan heard the Republic on
its Urgent Manifestation and Motion on December 8, 2006. Petitioner Disinis lawyers were
present during the hearing but were not allowed to participate therein because of the
prevailing default order against Disini. The Sandiganbayan issued the following Order at
the end of the said hearing:

This morning, the Court heard the arguments of the counsel for [respondent]
regarding the latters Urgent Manifestation and Motion dated November 29, 2006. The
Court also gave the [respondent] a non-extendible period of three days counted from today
within which to file its comment on the Motion to Lift Order of Default filed by [petitioner]
Disini, and the latter is given a non-extendible period of three days from December 11,
2006 or until December 14, 2006, within which to file his reply to the comment of the
[respondent], after which the incident shall be considered submitted for resolution without
need of oral arguments. The Court will act on the [respondent]s Urgent Manifestation and
Motion dated November 29, 2006 after the Court has resolved the Motion to Lift Order of
Default.

x x x x256

On December 11, 2006, the Republic filed its Comment/Opposition257 stating that
it exhausted all efforts to ascertain the whereabouts of petitioner Disini. Failing to do so,
the Republic resorted to service of summons by publication. This mode of service is
allowed under Sections 14 and 15 of Rule 14 considering that the forfeiture case is in rem

256
Id. at 74-A. Signed by Presiding Justice Teresita J. Leonardo-De Castro, Diosdado M. Peralta, Efren N. Dela
Cruz.
257
Id. at 80-99.

308
and the defendants address is unknown. The Republic explained that it filed its Ex Parte
Motion for Leave to Serve Summons by Publication because it received information that
petitioner had already gone to Austria. Clearly then, Disini was no longer a resident of the
Philippines. The Republic reiterated that the service of summons by publication is proper
considering that what is involved is a forfeiture case, an action in rem, under Republic Act
No. 1379, in relation to Executive Order (EO) Nos. 1, 2, 14, and 14-A all issued by
President Corazon C. Aquino.

As for petitioners allegation that the Republic was aware of Disinis address as
shown by the fact that summons were properly served at his correct address258 in two
criminal cases pending before the same First Division of the Sandiganbayan, the Republic
pointed out that these criminal cases were filed on June 30, 2004, while respondents Ex
Parte Motion for Leave to Serve Summons by Publication was filed on April 8, 1998.
Hence, at the time the Republic asked for service by publication, it was not yet aware of
petitioners correct address. Since petitioner failed to file his answer to a validly served
Amended Complaint, the motion to lift the order of default is utterly lacking merit.

Petitioner Disini filed his Reply on December 14, 2006259 basically expounding on
the arguments he stated in his Motion to Lift.

On December 15, 2006, the Sandiganbayan granted PCGGs motion to drop Sison
as party-defendant in Civil Case No. 0013,260 leaving only the defaulted defendants (i.e.,
the Marcos spouses and petitioner Disini) as parties to the case.

258
The correct address of Herminio T. Disini was No. 1 Lark Street, Greenmeadows, Quezon City.
259
Sandiganbayan rollo, Vol. V, pp. 100-129.
260
Id. at 124-127.

309
Ruling of the Sandiganbayan (Assailed Resolution)

On December 18, 2006, the Sandiganbayan resolved to deny261 petitioners Motion

to Lift Default Order.

The Sandiganbayan held that the Republic exerted diligence in ascertaining

petitioners whereabouts as evidenced by the two motions it filed for the issuance of alias
summons. The Sandiganbayan looked favorably at the Republics efforts to personally
serve the summons on petitioner despite the pendency of its Ex Parte Motion for Leave to
Serve Summons by Publication. It held that the Republics determination to serve summons
at the places where the petitioner was last heard of to reside belies the petitioners claim that
the Republic had intended to mislead the court into service by publication all along. The
Sandiganbayan likewise held that the rules for a valid service of summons by publication
were observed.

The Sandiganbayan did not find any indication that the Republic knew petitioners
actual residence when it sought leave to serve summons by publication in 1998 and 2001.

As for the argument that publication is not proper because the action is in personam,
the Sandiganbayan ruled that Civil Case No. 0013 is an action in rem for which service by
publication is proper. The case is in rem because it involves the forfeiture of ill-gotten
wealth based on EO No. 2,262 EO No. 14263 and No. 14-A264 promulgated by former
President Corazon Aquino by virtue of her legislative authority. It cited the case of

261
Id. at 131-138.
262
Dated March 12, 1986.
263
Dated May 7, 1986.
264
Dated August 18, 1986.

310
Republic v. Sandiganbayan and Marcos265 where the Court ruled that forfeiture
proceedings are civil actions in rem.

Given the validity of the service of summons, the respondent court held that
petitioners failure to file a responsive pleading within the allotted period resulted in his
default. The respondent court refused to lift the order of default on the ground that there
was no fraud, accident, mistake or excusable negligence that would justify such an action.

Petitioner then filed an Extremely Urgent Motion for Reconsideration266 and an

Extremely Urgent Manifestation and Motion267 on December 19, 2006. Aside from asking
for reconsideration, petitioner also prayed that the republics ex parte presentation of
evidence be held in abeyance until the resolution of his motion for reconsideration.

Petitioners motions were set for hearing on December 20, 2006 but the said hearing
did not take place. Instead, the Sandiganbayan issued the following orders on December
19 and 20, 2006 respectively:

Considering the difficulty in obtaining a quorum for the purpose of hearing the
Extremely Urgent Manifestation and Motion dated December 18, 2006 of [petitioner]
Herminio T. Disini, the Court resolves to cancel the hearing on the abovesaid motion on
December 20, 2006, and instead require the [respondent] to file its written comment on the
above-said motion on or before December 22, 2006, after which the motion shall be
deemed submitted for resolution.268

Considering the difficulty in obtaining a quorum for the purpose of hearing the
Extremely Urgent Motion for Reconsideration dated December 19, 2006 of [petitioner]
Herminio T. Disini which was filed at the close of office hours on December 19, 2006, the
Court resolves to cancel the hearing on the above-said motion on December 20, 2006, and
instead require the [respondent] to file its written comment on the above-said motion within

265
416 SCRA 133, 141.
266
Sandiganbayan rollo, Vol. V, pp. 140-169.
267
Id. at 170-175.
268
Id. at 197. Issued on December 19, 2006.

311
 a non-extendible period of three (3) days from receipt thereof, after which the motion shall
be deemed submitted for resolution, unless the parties or the Court will set the matter for
hearing anew after the submission of the above comment.269

The Republics ex parte presentation of evidence held before the Sandiganbayan

Executive Clerk of Court began on December 20, 2006 as evidenced by the transcript.270
While petitioner was not allowed to participate in the said proceedings, he was notified
thereof and his counsels were present to observe the same.

On December 22, 2006, petitioner filed this Petition for Certiorari. On January 2,
2007, he filed a Supplement to the Petition for Certiorari and Prohibition271 protesting the
continuation of the ex parte proceedings before the Sandiganbayan as a grave abuse of
discretion amounting to lack of jurisdiction. He also filed a Second Supplemental Petition
on January 5, 2007.272

Proceedings before the Sandiganbayan during the pendency of the instant Petition for
Certiorari and Prohibition
On August 7, 2007, the Sandiganbayan issued its Resolution273 denying petitioners
Extremely Urgent Motion for Reconsideration for lack of merit.

The Republic presented 10 witnesses.274 It filed its Formal Offer of Evidence dated
October 17, 2008, which offer was admitted in the Resolution dated December 3, 2008.275

269
Id. at 198. Issued on December 20, 2006.
270
Id. at 200-206.
271
Id. at 312-328.
272
Rollo, pp. 533-590.
273
Sandiganbayan rollo, Vol. VII, pp. 420-434.
274
Stephen Tanchuling on December 22, 2006; Ma. Lourdes Magno y Oliveros on January 9, 2007; Danilo Daniel
on January 25, 2007; Angelito Vicente Manahan on February 14, 2007; Rafael Sison on March 26, 2007; Maria
Cristina Beronilla on August 1, 2007; Rodolfo Jacob on January 12, 2007; Jesus Jose Vergara on January 15,
2007; Ricardo Valera Paras on August 14, 2007; and Jesus Disini on August 8, 2008.
275
Sandiganbayan rollo, Vol. X, p. 2.

312
On February 11, 2009, the Republic filed its Memorandum.276

On July 7, 2009, despite the pendency of his Petition for Certiorari and Prohibition
with the Supreme Court, petitioner filed with the Sandiganbayan a Second Motion to Lift
the Order of Default277 dated August 27, 2002 the very same Order which is now at the
heart of the present petition.

On September 8, 2009, petitioner filed with the Sandiganbayan a Motion to

Expunge or Cross-Examine Plaintiffs Witnesses.278 On September 15, 2009, he also filed
a Motion to Expunge Evidence Presented Before the Clerk of Court.279

On September 23, 2009, petitioner filed with this Court a Motion for Leave to File
Supplemental Memorandum,280 which was denied in a Resolution dated September 30,
2009.281

On October 15, 2009, petitioner filed with the Sandiganbayan a Motion to Expunge
Rolando Gapuds Deposition taken on October 18-20, 1995.282 On October 19, 2009, he
filed a Motion to Expunge or Cross-Examine Plaintiffs witnesses.283

On February 18, 2010, petitioner filed with the Sandiganbayan a Supplement to the
Second Motion to Lift the Order of Default dated August 27, 2002 with Motion to Take

276
Id. at 25-83.
277
Id. at 101-205.
278
Id. at 342-355.
279
Id. at 356-361.
280
Rollo, pp. 1229-1242.
281
Id. at 1245-1246.
282
Sandiganbayan rollo, Vol. XI, pp. 56-69.
283
Id. at 146-176.

313
Judicial Notice.284 On March 4, 2010, he filed a Motion for Leave to Take Deposition.285

Issues

Petitioner raised the following issues for our consideration:

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

2. Whether the Sandiganbayan court gravely abused its discretion when it

allowed the Republic to present its evidence ex-parte while petitioners Motion
for Reconsideration [of the stay of the default order] had not yet been
resolved.286

Our Ruling

Issue of Validity of Service of Summons Mooted

by Voluntary Appearance

In his Petition, petitioner originally sought the nullification of the proceedings

before the Sandiganbayan on the theory of lack of jurisdiction over his person, premised
on the alleged impropriety in the service of summons.

However, petitioner subsequently filed several motions with the Sandiganbayan

which sought various affirmative reliefs from that court, sans any qualification of the nature

284
Id. at 321-342.
285
Id. at 378-386.
286
Rollo, p. 870.

314
of its appearance and without reserving or reiterating its previous objection on the ground
of lack of jurisdiction over the person. These motions are:

(a) Motion to Expunge Exhibits A, B, C, D, E, XX, YY, ZZ, EE, and their
Submarkings or Cross-Examine Plaintiffs Witness,287 which sought to
expunge various affidavits of the Republics witnesses;

(b) Motion to Expunge Evidence Presented Before the Clerk of Court,288 which
prayed that all the evidence presented before the clerk of court be stricken off
the records for being taken in violation of the Rules;

(c) Motion to Expunge Gapuds Deposition taken on 18-20 October 1995,289

which sought to remove from the records the deposition offered by the
Republic;

(d) Motion to Expunge Exhibits FFF and GGG,290 which sought to strike off the
mentioned exhibits of respondents and asked the Sandiganbayan to permit
petitioner to cross-examine witness Jesus Disini;

(e) Motion for Consolidation,291 which prayed that Civil Case No. 0013 be
consolidated with Criminal Case Nos. 28001 and 28001; and

(f) Motion for Leave to Take Deposition based on Section 1 of Rule 23

(Depositions Pending Action or De Benne Esse).292

287
Filed on September 8, 2009. Sandiganbayan, rollo, Vol. X, pp. 342-355.
288
Filed on September 15, 2009. Id. at 356-361.
289
Filed on October 15, 2009. Sandiganbayan rollo, Vol. XI, pp. 56-69.
290
Filed on October 19, 2009. Id. at 146-176.
291
Filed on February 8, 2010. Id. at 302-311.
292
Filed on March 4, 2010. Id. at 378-386.

315
 In regard to the last mentioned Motion for Leave to Take Deposition293 (which is
the last pleading on record), it is important to note that there are two instances when the
defendant can take depositions under Section 1 of Rule 23: (1) after the court has acquired
jurisdiction over the defendant or the property subject of the action; and (2) after an answer
has been served. Both instances presuppose that the court has already acquired jurisdiction
over the defendant. By seeking the relief contained in this provision, petitioner is deemed
to have voluntarily submitted himself to the jurisdiction of the Sandiganbayan. Thus,
petitioner may be held to have waived his objections regarding the lack of jurisdiction over
his person by seeking affirmative relief through the said provision.

While petitioner bewailed the mode of service of summons on him and questioned
the Sandiganbayans jurisdiction over his person, he has rendered his own arguments moot
by his voluntary appearance or submission to the jurisdiction of the Sandiganbayan.
Jurisprudence holds that an objection based on lack of jurisdiction over the person is
waived when the defendant files a motion or pleading which seeks affirmative relief other
than the dismissal of the case.294

Issue of Non-Lifting of Default Order Dismissed

for Forum-shopping

When petitioner filed this Petition on December 22, 2006 assailing the
Sandiganbayans December 18, 2006 Resolution, the latter was still the subject of a pending
Extremely Urgent Motion for Reconsideration filed by petitioner with the Sandiganbayan.
The filing of the instant petition before this Court while a motion for reconsideration was

293
Id.
294
Philippine Commercial International Bank v. Spouses Dy, G.R. No. 171137, June 5, 2009, 588 SCRA 612, 629..

316
still pending before the Sandiganbayan constitutes, strictly speaking, forum-shopping,295
which could have warranted the outright dismissal of the petition. However, in light of the
due process issues raised by petitioner and the very real possibility that he had no other
speedy remedy available to him, his Petition was given due course.

Inexplicably, and in continuing disregard of the rules on forum-shopping and

judicial courtesy, petitioner raised again the same issue (validity of the default order and
the propriety of lifting said default order) in a Second Motion to Lift the Order of Default
dated August 27, 2002 which he filed with the Sandiganbayan after the latter denied his
Extremely Urgent Motion for Reconsideration.

This Second Motion to Lift the Order of Default was filed on July 27, 2009,
admittedly during the pendency of the instant Petition. Both remedies seek from different
fora exactly the same ultimate relief (lifting of the default order issued by the
Sandiganbayan) and raise the same issue (validity of the default order and the propriety of
lifting said default order). In availing himself of these two remedies, petitioner has engaged
in forum-shopping.

There is forum shopping when one party repetitively avails of several judicial
remedies in different courts, simultaneously or successively, all substantially founded on
the same transactions and the same essential facts and circumstances, and all raising
substantially the same issues either pending in, or already resolved adversely, by some
other court.296 Forum shopping is a prohibited malpractice and condemned as trifling with

295
Montes v. Court of Appeals, G.R. No. 143797, May, 4, 2006, 489 SCRA 432-443, 439-440; Go v. Looyuko, G.R.
Nos. 147923, 147962 & 154035, October 26, 2007, 537 SCRA 445, 477-478; Madara v. Hon. Perello, G.R. No.
172449, August 20, 2008, 562 SCRA 638-659, 654-655.
296
Feliciano v. Villasin, G.R. No. 174929, June 27, 2008, 556 SCRA 348-373, 370.

317
the courts and their processes.297 It is proscribed because it unnecessarily burdens the courts
with heavy caseloads, and unduly taxes the manpower and financial resources of the
judiciary.298 It is inimical to the orderly administration of justice as it creates the possibility
of conflicting decisions being rendered by two courts,299 and opens the system to the
possibility of manipulation.300
In filing a Second Motion to Lift the Order of Default with the Sandiganbayan while
the instant Petition is pending with this Court, petitioner has unfairly doubled his chances
of securing the lifting of the default order. This misdeed amounts to a wagering on the
result of [petitioners] twin devious strategies, and shows not only [his] lack of faith in this
Court in its evenhanded administration of law but also [his] expression of disrespect if not
ridicule for our judicial process and orderly procedure.301

The situation here is strikingly similar to that in People v. Sandiganbayan.302 In that

case, the petitioner had filed with the Sandiganbayan a motion for consolidation of a
bribery case with a plunder case. The Sandiganbayan refused, leading the petitioner to file
a petition for certiorari with this Court. While the said petition was pending with this Court,
the petitioner filed another motion for consolidation with the Sandiganbayan, praying
anew for the consolidation of the bribery case with a plunder case. The motion raised the
same issues and prayed for the same remedy as the pending petition with this Court,
namely, the consolidation of the bribery case and the plunder case. The Court held that
such move clearly constitutes forum-shopping.

297
Chemphil Export & Import Corporation v. Court of Appeals, 321 Phil. 619, 655-656 (1995).
298
Abines v. Bank of the Philippine Islands, G.R. No. 167900, February 13, 2006, 482 SCRA 421, 428.
299
Tan v. Court of Appeals, G.R. No. 164966, June 8, 2007, 524 SCRA 306, 318, citing Top Rate Construction &
General Services, Inc. v. Paxton Development Corporation, 457 Phil. 740, 748 (2003).
300
Madara v. Hon. Perello, supra note 89.
301
Top Rate Construction & General Services, Inc. v. Paxton Development Corporation, supra note 93 at 760.
302
456 Phil. 707, 718 (2003).

318
 This is almost exactly what happened in the instant case. Petitioner had filed with
the Sandiganbayan a motion to lift default order. The Sandiganbayan refused, leading
petitioner to file a petition for certiorari with this Court. While the said petition was
pending with this Court, petitioner filed another motion to lift default order with the
Sandiganbayan, praying anew for the lifting of the default order. Thus, following the ruling
in People v. Sandiganbayan, we rule that petitioners actuations clearly constitute forum-
shopping.

Because of the forum-shopping committed by petitioner, the Court cannot grant the
relief he prayed for.
Certiorari is an improper remedy

Petitioner imputes grave abuse of discretion on the Sandiganbayan for allegedly

railroading the proceedings in violation of his right to due process and fair trial. More
specifically, petitioner points out that when the Sandiganbayan denied his Motion to Lift
Order of Default (December 18, 2006), he immediately filed an Extremely Urgent Motion
for Reconsideration (December 19, 2006). However, before the latter could be resolved,
the Sandiganbayan allowed the ex-parte presentation of evidence to proceed (December
20, 2006). This prompted petitioner to file the instant Petition with this Court two days later
(December 22, 2006).

While it may have been more convenient if the Sandiganbayan resolved first the
Extremely Urgent Motion for Reconsideration before allowing the ex-parte presentation
of evidence, we cannot say that the course taken by the Sandiganbayan constitutes grave
abuse of discretion. We cannot infer from the Sandiganbayans deliberate speed that it was
done to prejudice petitioner. There was adequate justification for the Sandiganbayans
resolve to finish the twenty-year old forfeiture case with dispatch. Aside from the length of
319
time that Civil Case No. 0013 has stagnated in the dockets, the Republics manifestation
(that a resolution was necessary by December 30, 2006 in order to maintain the Swiss
Federal Courts freeze order on petitioners Swiss accounts) is reason enough not to further
delay the case as a matter of public interest. Besides, it should be remembered that when
the Sandiganbayan received evidence ex-parte on December 20, 2006, petitioner was still
in default and his Motion to Lift Default Order has already been denied. The ex-parte
presentation of evidence on December 20, 2006 was simply consistent with petitioners
default status as of that time.

Grave abuse of discretion refers to such capricious or whimsical exercise of

judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be patent
and gross as to amount to an evasion of positive duty or a virtual refusal to perform a duty
enjoined by law, or to act at all in contemplation of law, as where the power is exercised in
an arbitrary and despotic manner by reason of passion and hostility. The actions of the
Sandiganbayan were not thus tainted under the circumstances we described above. Thus,
we cannot accept petitioners contention that the proceedings taken below must be nullified
because of the alleged railroading by the Sandiganbayan.

Moreover, Rule 65 petitions for certiorari are extraordinary remedies available only
when there is grave abuse of discretion amounting to lack of jurisdiction and the petitioner
has no other plain, speedy, and adequate remedy for correcting such abuse.303

By filing a Second Motion to Lift the Order of Default and the various motions
seeking the Sandiganbayans correction of the perceived errors during the Republics ex
parte presentation of evidence, petitioner has revealed his belief that he had adequate

303
RULES OF COURT, Rule 65, Section 1.

320
remedies before the Sandiganbayan. A resort to a Rule 65 petition is, under the premises,
improper.

WHEREFORE, the Petition for Certiorari is DISMISSED. Costs against

petitioner.

SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

ANTONIO T. CARPIO PRESBITERO J. VELASCO, JR.

Associate Justice Associate Justice

JOSE PORTUGAL PEREZ

Associate Justice

321
 CERTIFICATION

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

RENATO C. CORONA
Chief Justice

i Exhibit A, Folder of Exhibits, Civil Case No. Q-91-10494.

ii OR, Vol. I, 3-14.
iii Id., 128-137.
iv Id., 264-278.
v OR, Vol. II, 515-516.
vi Id., 518-519, 538-543.
vii OR, Vol. II, 551-552.
viii OR, Vol. III, 1162-1166.
ix Id., 1167-1173. Per Judge Eudarlio B. Valencia.
x Id., 1174-1183.
xi Id., 1328-1335.
xii Rollo, CA-G.R. Sp. No. 40258 [CA Rollo 2-21].
xiii Supra note 1.
xiv Annex B of Petition, Rollo, 92-113.
xv CA Rollo, 569-572.
xvi Id., 573-594.

322
xvii Supra note 2.
xviii This is reproduced in Sec. 7, Rule 3 of the 1997 Rules of Civil Procedure.

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

323