Professional Documents
Culture Documents
DECISION
CORONA, J : p
This is a petition for review on certiorari under Rule 45 of the Rules of Court
assailing the decision 1 of the Court of Appeals (CA) in CA-G.R. CV No. 57299
dated January 11, 2001 which in turn affirmed with modification the decision of
Branch 57 of the Regional Trial Court (RTC) of Makati City in Civil Case No. 90-
3169, 2 as well as the CA's resolution 3 dated November 14, 2001 which denied
petitioner's motion for reconsideration.
The antecedent facts follow.
Petitioner is a corporation engaged in the manufacture and distribution of all
Nestle products nationwide. Respondent, on the other hand, is a corporation
engaged in trading, marketing, selling and distributing food items to restaurants
and food service outlets. On December 23, 1998, petitioner and respondent
entered into a distributorship agreement (agreement) whereby petitioner would
supply its products for respondent to distribute to its food service outlets. A deed
of assignment was also executed by respondent in favor of petitioner on
December 13, 1988, assigning the time deposit of a certain Calixto Laureano in
the amount of P500,000 to secure respondent's credit purchases from petitioner.
A special power of attorney was likewise executed by Laureano authorizing the
respondent to use the time deposit as collateral.
The areas covered by the agreement were Baguio, Dagupan, Angeles, Bulacan,
Pampanga, Urdaneta, La Union, Tarlac and Olongapo. At the end of 1989, the
agreement expired and the parties executed a renewal agreement on January 22,
1990. A supplemental agreement was executed on June 27, 1990, to take effect
on July 1, 1990.
On July 2, 1990, petitioner fined respondent P20,000 for allegedly selling 50
cases of Krem-Top liquid coffee creamer to Lu Hing Market, a retail outlet in
Tarlac. This was purportedly proscribed by the agreement. Respondent paid the
fine. In September 1990, Krem-Top liquid coffee creamer was sold to Augustus
Bakery and Grocery, an act again allegedly in violation of the agreement.
Petitioner imposed a P40,000 fine which respondent refused to pay. TCDcSE
SO ORDERED. 8
Both the CA and the RTC found, among others, that petitioner indeed failed to
provide support to respondent, its distributor; that petitioner unjustifiably refused
to deliver stocks to respondent; that the imposition of the P20,000 fine was void
for having no basis; that petitioner failed to prove respondent's alleged
outstanding obligation; that petitioner terminated the agreement without sufficient
basis in law or equity and in bad faith; and that petitioner should be held liable for
damages.
Hence this petition raising the following grounds:
(1)
THE [CA] COMMITTED A GRAVE ERROR IN LAW WHEN IT RULED
THAT: "THE RATIOCINATIONS OF THE APPELLANT AS TO THE
APPELLEE'S ALLEGED VIOLATION OF THE CONTRACT ARE THUS
WEAK AND UNCONVINCING" AND "THE APPELLEE'S ALLEGED
NON-PAYMENT AND OUTSTANDING BALANCE OF P995,319.81
WAS NOT SUFFICIENTLY PROVEN" DESPITE THE FACT THAT
FLORENTINO YUE, JR., THE MANAGER OF THE RESPONDENT
ADMITTED IN OPEN COURT IN ANSWER TO THE QUESTION OF
THEN PRESIDING JUDGE PHINNY C. ARAQUIL THAT THE
DISTRIBUTORSHIP AGREEMENT WAS TERMINATED BY YOUR
PETITIONER BECAUSE OF THE UNPAID BALANCE OF THE
RESPONDENT OF AROUND P900,000.00.
(2)
THE [CA] COMMITTED A GRAVE ERROR IN LAW IN DISREGARDING
THE TESTIMONY OF THE WITNESS FOR THE PETITIONER,
CRISTINA RAYOS WHO PREPARED THE STATEMENT OF
ACCOUNT (EXHIBIT 11) ON THE GROUNDS THAT SHE WAS NOT
INVOLVED IN THE DELIVERY AS SHE WAS ONLY IN CHARGE OF
THE RECORDS AND DOCUMENTS OF ALL ACCOUNTS
RECEIVABLES AS PART OF HER DUTIES AS CREDIT AND
COLLECTION MANAGER CONSIDERING THAT THE EVIDENCE
PRESENTED WAS AN EXCEPTION TO THE HEARSAY RULE UNDER
SECTION 45 (SIC), RULE 130, OF THE REVISED RULES ON
EVIDENCE.
(3)
THE [CA] COMMITTED A GRAVE ERROR IN LAW IN AWARDING TO
THE RESPONDENT ACTUAL DAMAGES IN THE AMOUNT OF
P1,000,000.00 AND ORDERING THE REFUND OF THE AMOUNT OF
P500,000.00 REPRESENTING THE TIME DEPOSIT OF THE
RESPONDENT WHICH WAS ASSIGNED AS SECURITY FOR THE
RESPONDENT'S CREDIT LINE BECAUSE THE PETITIONER HAD
THE RIGHT TO TERMINATE THE DISTRIBUTORSHIP AGREEMENT
UNDER ART. 1191 OF THE CIVIL CODE AND PARAGRAPHS 5 AND
22 OF THE DISTRIBUTORSHIP AGREEMENT BECAUSE OF THE
FAILURE OF THE RESPONDENT TO SETTLE ITS ACCOUNT IN THE
AMOUNT OF P995,319.81 AND THAT THE EVIDENCE SUBMITTED
BY THE RESPONDENT ON THE ALLEGED ACTUAL DAMAGES IT
SUSTAINED AS A RESULT OF THE TERMINATION OF THE
DISTRIBUTORSHIP AGREEMENT (EXHIBIT 5) AND COMPANION
EXHIBITS WERE MERELY SPECULATIVE AND DID NOT HAVE
PROBATIVE VALUE. STcADa
(4)
THE [CA] COMMITTED A GRAVE ERROR IN LAW FOR NOT
AWARDING TO THE PETITIONER ITS COUNTERCLAIM. 9
On the first issue, petitioner asserts that respondent's witness, Florentino Yue, Jr.,
a director and officer of respondent corporation, admitted in open court that the
respondent had an unpaid obligation to petitioner in the amount of "around
P900,000." 10
Respondent counters that this statement was merely in answer to the question of
the presiding judge on what ground petitioner supposedlyterminated the
agreement. The witness was not being asked, nor was he addressing, the truth
of such ground. In fact, this witness later testified that "(petitioner) wrote us back
saying that they (had) terminated my contract and that I owe(d) them something
like P900,000." 11
Petitioner's argument is palpably without merit and deserves scant consideration.
It quoted Mr. Yue's statement in isolation from the rest of his testimony and took
it out of context. Obviously, Yue's statement cannot be considered a judicial
admission that respondent had an unpaid obligation of P900,000 and that the
agreement had been terminated for this reason.
On the second issue, petitioner argues that the CA should not have disregarded
the testimony of petitioner's witness, Cristina Rayos, who prepared the statement
of account on the basis of the invoices and delivery orders corresponding to the
alleged overdue accounts of respondent. 12 The CA ruled that petitioner was not
able to prove that respondent indeed had unpaid accounts, saying, among others,
that the testimony of Rayos constituted incompetent evidence:
PHIL 293-304)
SYNOPSIS
On July 16, 1987, the Republic of the Philippines filed with the Sandiganbayan a
complaint for recession, reconveyance, restitution, accounting and damages
against Ferdinand E. Marcos, Imelda Marcos and Prime Holdings, Inc. (PHI).
Alleging ownership of the properties of the Marcoses sought to be forfeited by
the Republic, petitioner Alfonso T. Yuchengco filed a motion for intervention and
complaint-in-intervention on August 11, 1988 impleading the Republic, the
Presidential Commission on Good Government (PCGG), Ferdinand E. Marcos,
Imelda Marcos and PHI as defendants-in-intervention. Petitioner paid a docket
fee of P400.00. Later, the petitioner amended its complainant-in-intervention to
implead Imelda Cojuangco and the Estate of Ramon U. Cojuangco as additional
defendants-in-intervention. After the Sandiganbayan admitted the amended
complaint-in-intervention, the Republic and the PHI filed their answers-in-
intervention. Thereafter, the Estate of Ramon Cojuangco and Imelda O.
Cojuangco filed a motion to dismiss the amended complaint-in-intervention on
the ground, among others, that the petitioner did not pay the correct docket fees,
in violation of the doctrine laid down in Manchester Development Corporation, et
al. vs. Court of Appeals. Contrarily, petitioner claimed that no docket fees are
payable to the Sandiganbayan pursuant to Section 11 of Presidential Decree No.
1606, as amended. Subsequently, petitioner also filed an amended motion for
early resolution to avoid prescription of action. He also moved that he be allowed
to post a bond to answer for whatever docket fees he may be held to pay. The
Sandiganbayan, however, denied petitioner's motion to post bond and it ordered
petitioner to pay the balance of the docket fee in the amount of P14,425.00.
Petitioner paid with reservation. On June 11, 1996, petitioner moved that the
amount of P14,425.00 be refunded to him, insisting that the proceedings in the
Sandiganbayan should be free of charge. However, on October 9, 1996, the
Sandiganbayan issued a resolution granting the motion to dismiss. Hence, this
petition.
The Court held that the ruling that the timely filing of correct docket fees is
jurisdictional is all too familiar. It should be noted, however, that the
pronouncements of this Court on the matter have always been influenced by the
peculiar legal and equitable circumstances surrounding each case. Equitable
considerations are equally significant. Unlike the basis of the Manchester ruling,
there was no evidence in the present case that the petitioner tried to evade the
payment of correct fees or in any way tried to mislead the Sandiganbayan court
and its employees. On the contrary, petitioner paid dues and asked the
Sandiganbayan what are the correct docket fees, if the dues paid are not
accurate. When the Sandiganbayan came out with its own computation,
petitioner paid the corrected amount. Petitioner's position that subsequent
amendments to PD 1606 did not expressly repeal Section 11 thereof was
untenable. Petitioner failed to appreciate that the expansion of the
Sandiganbayan's jurisdiction to include civil cases impliedly amended the same
and Section 1, Rule IV, Part I of the Revised Rules of the Sandiganbayan.
Moreover, the Supreme Court enjoys exclusive power to promulgate the rules on
pleading, practice, and procedure. Hence, Rule 141, Section 7(a), of the Rules of
Court applies to petitioner's complaint and/or amended complainants-in-
intervention.aDIHCT
DECISION
YNARES-SANTIAGO, J : p
This is a petition for review to set aside the Resolution of the Sandiganbayan
dated October 9, 1996 1 dismissing petitioner's Amended-complaint-in-
intervention and the subsequent Resolution dated October 6, 1997 2 denying
petitioner's motion for reconsideration.dctai
The issue in this petition is whether or not, under the undisputed circumstances
at bar, the Sandiganbayan may dismiss the complaint-in-intervention for alleged
failure to pay the correct amount of docket fees on time.
On July 16, 1987, the Republic of the Philippines (hereinafter, the Republic) filed
with the Sandiganbayan a complaint for Rescission, Reconveyance, Restitution,
Accounting and Damages against Ferdinand E. Marcos, Imelda Marcos and
Prime Holdings, Inc. (hereinafter, PHI), docketed as Civil Case No. 0002.
Alleging ownership of the properties of the Marcoses sought to be forfeited by
the Republic, petitioner Yuchengco filed a motion for intervention and complaint-
in-intervention on August 11, 1988, impleading the Republic, the Presidential
Commission on Good Government (PCGG), Ferdinand E. Marcos, Imelda
Marcos and PHI as defendants-in-intervention. 3 Petitioner paid a docket fee of
P400.00.
In the instant case, the Sandiganbayan adhered strictly to the rule enunciated
in Manchester Development Corporation v. Court of Appeals, 43 to wit:
The Court acquires jurisdiction over any case only upon the payment of
the prescribed docket fee. Any amendment of the complaint or similar
pleading will not thereby vest jurisdiction in the Court, much less the
payment of the docket fee based on the amounts sought in the amended
pleading. The ruling in the Magaspi case, insofar as it is inconsistent with
this pronouncement is overturned and reversed.
In Manchester, this Court stated that the allegation in the body of the complaint of
damages suffered in the amount of P78,000,000.00, and the omission of a
specific prayer for that amount, was intended for no other purpose than to evade
the payment of correct filing fees if not to mislead the docket clerk in the
assessment of the correct fee. The ruling was intended to put a stop to such an
irregularity. In the case at bar, however, we note that there is no such irregularity
or attempt to mislead in the instant petition before us.
We also note that the Manchester ruling did not become the final statement on
the matter. In Sun Insurance Office Ltd. v. Asuncion, 44 the Court ruled:
In the present case, a more liberal interpretation of the rules is called for
considering that, unlike Manchester, private respondent demonstrated
his willingness to abide by the rules by paying the additional docket fees
as required.
In the said case, the payment of the correct fee within "a reasonable time" but in
no case beyond its applicable prescriptive or reglementary period was allowed. In
another case 45 decided after Manchester, this Court made some more
distinctions:
Two situations may arise. One is where the complaint or similar pleading
sets out a claim purely for money or damages and there is no precise
statement of the amounts being claimed. In this event the rule is that the
pleading will "not be accepted nor admitted, or shall otherwise be
expunged from the record." In other words, the complaint or pleading
may be dismissed or the claims as to which the amounts are unspecified
may be expunged, although as aforestated the Court may, on motion,
permit amendment of the complaint and payment of the fees provided
the claim has not in the meantime become time-barred. The other is
where the pleading does specify the amount of every claim, but the fees
paid are insufficient; and here again, the rule now is that the court may
allow a reasonable time for the payment of the prescribed fees, or the
balance thereof, and upon such payment, the defect is cured and the
court may properly take cognizance of the action, unless in the
meantime prescription has set in and consequently barred the right of
action.
Where the action involves real property and a related claim for damages
as well, the legal fees shall be assessed on the basis of both (a) the
value of the property and (b) the total amount of related damages sought.
The Court acquires jurisdiction over the action if the filing of the initiatory
pleading is accompanied by the payment of the requisite fees, or, if the
fees are not paid at the time of the filing of the pleading, as of the time of
full payment of the fees within such reasonable time as the court may
grant, unless, of course, prescription has set in the meantime. But
where . . . the fees prescribed for an action involving real property have
been paid, but the amounts of certain of the related damages (actual,
moral and nominal) being demanded are unspecified, the action may not
be dismissed. The Court undeniably has jurisdiction over the action
involving the real property, acquiring it upon the filing of the complaint or
similar pleading and payment of the prescribed fee. And it is not divested
of that authority by the circumstance that it may not have acquired
jurisdiction over the accompanying claims for damages because of lack
of specification thereof. What should be done is simply to expunge those
claims for damages as to which no amounts are stated, which is what
the respondent Court did, or allow, on motion, a reasonable time for the
amendment of the complaint so as to allege the precise amount of each
item of damages and accept payment of the requisite fees therefor within
the relevant prescriptive period.
The rule is not as simple and uncomplicated as Manchester makes it appear.
There are other determining circumstances, equally important. The timely filing of
correct docket fees is jurisdictional, but as shown by our decisions,
considerations of law and equity come into the picture. This situation likewise
obtains in the case at bar.
The Sandiganbayan Law itself, Presidential Decree No. 1606, provides:
SECTION 11. Proceedings free of charge. All proceedings in the
Sandiganbayan shall be conducted at no cost to the complainant and/or
his witnesses.
Petitioner points out that when former President Corazon C. Aquino
issued Executive Order No. 14 in 1986 which expanded the Sandiganbayan's
jurisdiction to include civil cases, she did not repeal or amend Section 11 of P.D.
1606 on filing fees.
Similarly, when Congress in 1994 enacted Republic Act No. 7975 further
strengthening the functional and structural organization of the Sandiganbayan, it
did not amend the provision on non-payment of fees even as it amended or
repealed several sections of the original law. When Congress in 1997
passed Republic Act No. 8429 further amending P.D. 1606, it did not touch the
section on non-payment of court fees. If Congress in repealing various parts
of P.D. 1606 did not touch Section 11, what is the basis of the Sandiganbayan's
ruling on repeal or amendment?
In the resolution submitted to us for review, the Sandiganbayan emphasized that
when P.D. No. 1606 was issued, the jurisdiction of the anti-graft court was limited
to criminal actions. The Sandiganbayan now tries civil cases. While we are
inclined to sustain the ruling that correct filing fees in civil cases must be paid in
all courts, including the Sandiganbayan, this does not preclude a ruling that, in
this case, the petitioner acted in justifiable good faith. There was ample reason
for uncertainty and doubt on the intervenor's part not merely as to the
correctness of the amount to be paid but whether or not docket fees should be
paid at all.
Equitable considerations are equally significant. Unlike the basis of
the Manchester ruling, there is no evidence in the present case that the petitioner
tried to evade the payment of correct fees or in any way tried to mislead that
court and its employees. On the contrary, petitioner paid dues and asked the
Sandiganbayan what are the correct docket fees, if the dues paid are not
accurate. When Sandiganbayan came out with its own computation, petitioner
paid the corrected amount.
Correctly, petitioner asserted that the Sandiganbayan's resolution, assuming it
was correct, was not something that could have been reasonably anticipated by
the ordinary litigant.
Indeed, the actions of the Sandiganbayan clearly call for the application of
equitable considerations. On February 17, 1989, it admitted the complaint-in-
intervention. Answers thereto were filed by PHI and the Cojuangcos. On June 11,
1993, the Sandiganbayan admitted the amended complaint-in-intervention. More
important, the lower court denied the motions to dismiss filed by respondents
questioning the incorrect payment of docket fees in its resolutions dated April 17,
1995, March 29, 1996 and May 7, 1996. Petitioner was thus led into believing,
long before the ten year prescriptive period expired, that its complaint-in-
intervention would stay admitted.
However, the Sandiganbayan on October 9, 1996 and October 6, 1997 issued
the Resolutions now before us in this petition for review. Petitioner's complaint
was dismissed for non-payment of the prescribed docket fees, without obvious
regard to the implications of the reversal of its earlier rulings.
Moreover, on October 27, 1994, petitioner filed a motion for the resolution of the
issue on correct docket fees. When no decision was forthcoming, petitioner on
March 31, 1995 filed a motion to post bond to answer for whatever additional
fees that may be assessed later. On April 17, 1995, the Sandiganbayan decided
to defer the resolution of respondents' motions to dismiss until trial. Petitioner
even elevated the inaction of the Sandiganbayan to the Supreme Court on a
petition for certiorari but this was dismissed for being premature. It can thus be
seen that, far from committing the irregularity illustrated in Manchester, petitioner
did the opposite in this case.
More specifically, petitioner's alleged causes of action before the Sandiganbayan
constitute the following:
1. Claims on the 6% stockholdings in PTIC which he alleged to
have bought from Gregorio Romulo and Leonides Virata but
were purportedly transferred to the Ramon U. Cojuangco
group by coercion, duress and force majeure (Martial Law);
2. Claims on the 25% shares of General Telephone & Electronics
Corporation (GTE) in Philippine Telecommunications
Investment Corporation (PTIC) which petitioner was
prevented from acquiring by virtue of a "put and call"
agreement with GTE;
3. (Alternative Third Cause of Action) Claims on the 4.6% shares in
PTIC.
Considering that petitioner seeks to recover properties, the ownership and
possession of which he was allegedly deprived through fraud, duress and/or
coercion, we hold that, assuming hypothetically these averments to be true, the
legal relationship of constructive trust was present among the parties concerned
in the said transactions. Constructive trust is that created by reason of equity to
answer the demands of justice and prevent unjust enrichment. It arises against
one, who, by fraud, duress or abuse of confidence, obtains or holds the legal
right to property which he ought not, in equity and good conscience, hold. 46
Correspondingly, actions thereon prescribe after ten (10) years as provided by
Article 1144 of the Civil Code:
The following actions must be brought within ten (10) years from the time
the right of action accrues:
1. Upon a written contract;
2. Upon an obligation created by law;
3. Upon a judgment.
(Emphasis provided).
Under normal circumstances, petitioner's cause of action should have prescribed
on February 26, 1996, a month before petitioner was ordered by the
Sandiganbayan to pay docket fees or two months before the docket fees were
actually paid in the corrected amount of P14,825.00. However, we hold that said
payment could not be construed as belatedly made such as to foreclose the
prosecution of his claims.
It should be noted that when the issue on docket fees was raised, petitioner
submitted the determination of the same to the sound discretion of the
Sandiganbayan. As earlier stated, he sought for the immediate resolution of this
issue as early as October 27, 1994. In the alternative, petitioner proposed to post
a bond to answer for the docket fees, if such are payable. He even filed a petition
for certiorari, docketed as G.R. No. 123264, to seek an early resolution of this
issue.
Clearly, petitioner did not sleep on his rights, and prescription has not set in to
bar his right to seek judicial relief. The essence of the statute of limitations is to
prevent fraudulent claims arising from unwarranted length of time and not to
defeat actions asserted on the honest belief that they were sufficiently submitted
for judicial determination.
To punish petitioner for public respondent's failure to timely decide an issue
pivotal to the success of his case would be setting a bad precedent. It would give
trial courts unbridled power and an unfair weapon to frustrate the filing of actions.
We hold that public respondent's belated action after prolonged inaction on the
issue of petitioner's payment of docket fees is a supervening event beyond the
independent will and control of petitioner that tolled the running of the prescriptive
period. Article 1154 of the Civil Code is applicable by parallelism, to wit:
The period during which the obligee was prevented by fortuitous event
from enforcing his right is not reckoned against him.
As earlier stated, equity and the extraordinary circumstances surrounding the
present case necessitate this ruling. For among the parties in the case at bar, the
Sandiganbayan is the most equipped to afford petitioner the opportunity to
present his claims. Not only that, but going back to the pronouncements of this
Court in Sun Insurance Office, Ltd. (SIOL) v. Asuncion, 47 where we recognized
that the sufficiency of the docket fees is a matter for the determination of the
clerk of court and/or his duly authorized docket clerk or clerk in-charge, the
Sandiganbayan could have immediately drawn petitioner's attention if its clerk of
court found difficulty in determining the amount of chargeable docket fees from a
reading of the complaint. Even in the celebrated case of Manchester
Development Corporation v. Court of Appeals, 48 the trial court directed the
plaintiff therein to rectify the flaws in its amended complaint. That way, not only
could the Sandiganbayan have seasonably resolved the issues on docket fees
but it could very well have timely settled petitioner's dilemma on what to do and
what was required to preserve his rights.
Courts are mandated to promptly administer justice. Having the inherent power to
amend and control the processes and orders, to make them conformable to law
and justice 49 we have the avowed duty to uphold the right of all persons to a
speedy disposition of their cases and avert the precipitate loss of rights.
While it may be argued that petitioner could have very well amended his
complaint and alleged the monetary values of the properties he seeks to recover
to comply with Rule 141, Section 7(a) of the Rules of Court, we find, pro hac vice,
that petitioner acted in good faith when he contended that proceedings before the
Sandiganbayan are free of charge. The present rule must, however, be stressed:
parties filing civil actions before the Sandiganbayan are liable to pay the required
docket fees. The situation only differs in the case at bar because of petitioner's
honest conviction manifested in his filing of a reservation for the payments he
made, after having been ordered by the Sandiganbayan on March 29, 1996 to
pay the balance of P14,425.00 and after the court denied his motion to post bond
pending final resolution of the motion to dismiss.
Be that as it may, petitioner's position that subsequent amendments 50 to PD
1606 did not expressly repeal Section 11 thereof is untenable. Petitioner failed to
appreciate that the expansion of the Sandiganbayan's jurisdiction to include civil
cases impliedly amended the same and Section 1, Rule IV, Part I of the Revised
Rules of the Sandiganbayan. Moreover, the Supreme Court enjoys exclusive
power to promulgate the rules on pleading, practice, and procedure.
In addition, Republic Act No. 7975 51 amended Section 9 of P.D. 1606 to read as
follows:
Rules of Procedure. The Rules of Court promulgated by the Supreme
Court shall apply to all cases and proceedings filed with the
Sandiganbayan. . . .
Hence, Rule 141 Section 7(a) of the Rules of Court applies to petitioner's
complaint and/or amended complaints-in-intervention.
Petitioner argues that R.A. 7975, having been promulgated on March 30, 1995
should not be retroactively applied. This is not so, as statutes regulating the
procedure of the courts are applicable to actions pending and undetermined at
the time of their passage, thus, retrospective in such sense and to that extent. 52
As a final note, petitioner's manifestation that he is withdrawing some of the
causes of action alleged in his complaints-in-intervention and the subsequent
amendments thereto should be addressed to the Sandiganbayan for proper
determination and action. This should be taken into consideration by the
Sandiganbayan in determining anew the docket fees payable by petitioner.
WHEREFORE, premises considered, the petition is partially GRANTED. The
questioned Resolutions are SET ASIDE. Petitioner is ordered to submit to public
respondent Sandiganbayan the value of the properties he seeks to recover and
to pay the proper docket fees therefor within thirty (30) days upon determination
thereof either by the Sandiganbayan or its clerk of court, which in turn is directed
to act with dispatch on the matter. SO ORDERED.
L
||| (Yuchengco v. Republic, G.R. No. 131127, [June 8, 2000], 388 PHIL 1039-1064)
SYLLABUS
RESOLUTION
GANCAYCO, J .:
4. When this under-assessment of the filing fee in this case was brought to the
attention of this Court together with similar other cases an investigation was
immediately ordered by the Court. Meanwhile plaintiff through another counsel
with leave of court filed an amended complaint on September 12, 1985 for the
inclusion of Philips Wire and Cable Corporation as co-plaintiff and by eliminating
any mention of the amount of damages in the body of the complaint. The prayer
in the original complaint was maintained. After this Court issued an order on
October 15, 1985 ordering the re-assessment of the docket fee in the present
case and other cases that were investigated, on November 12, 1985 the
trial court directed plaintiffs to rectify the amended complaint by stating the
amounts which they are asking for. It was only then that plaintiffs specified the
amount of damages in the body of the complaint in the reduced
amount of P10,000,000.00. 7 Still no amount of damages were specified in the
prayer. Said amended complaint was admitted.
On the other hand, in the Magaspi case, the trial court ordered the plaintiffs to
pay the amount of P3,104.00 as filing fee covering the damages alleged in the
original complaint as it did not consider the damages to be merely ancillary or
incidental to the action for recovery of ownership and possession of real
property. 8 An amended complaint was filed by plaintiff with leave of court to
include the government of the Republic as defendant and reducing the
amount of damages, and attorney's fees prayed for to P100,000.00. Said
amended complaint was also admitted. 9
In the Magaspi case, the action was considered not only one for
recovery of ownership but also for damages, so that the filing fee for the
damages should be the basis of assessment. Although the payment of the
docketing fee of P60.00 was found to be insufficient, nevertheless, it was held
that since the payment was the result of an "honest difference of opinion as to
the correct amount to be paid as docket fee" the court "had acquired jurisdiction
over the case and the proceedings thereafter had were proper and
regular." 10 Hence, as the amended complaint superseded the original complaint,
the allegations of damages in the amended complaint should be the basis of the
computation of the filing fee. 11
In the present case no such honest difference of opinion was possible as the
allegations of the complaint, the designation and the prayer show clearly that it is
an action for damages and specific performance. The docketing fee should be
assessed by considering the amount of damages as alleged in the original
complaint. cdtai
As reiterated in the Magaspi case the rule is well-settled "that a case is deemed
filed only upon payment of the docket fee regardless of the actual date of filing
in court." 12 Thus, in the present case the trial court did not acquire jurisdiction
over the case by the payment of only P410.00 as docket fee. Neither can the
amendment of the complaint thereby vest jurisdiction upon the Court. 13 For all
legal purposes there is no such original complaint that was duly filed which could
be amended. Consequently, the order admitting the amended complaint and all
subsequent proceedings and actions taken by the trial court are null and void.
The Court of Appeals therefore, aptly ruled in the present case that the
basis of assessment of the docket fee should be the amount of damages sought
in the original complaint and not in the amended complaint.
The Court cannot close this case without making the observation that it frowns at
the practice of counsel who filed the original complaint in this caseof omitting any
specification of the amount of damages in the prayer although the amount of over
P78 million is alleged in the body of the complaint. This is clearly intended for no
other purpose than to evade the payment of the correct filing fees if not to
mislead the docket clerk in the assessmentof the filing fee. This fraudulent
practice was compounded when, even as this Court had taken cognizance of the
anomaly and ordered an investigation, petitioner through another counsel filed an
amended complaint, deleting all mention of the amount of damages being asked
for in the body of the complaint. It was only when in obedience to the
order of this Court of October 18, 1985, the trial court directed that the
amount ofdamages be specified in the amended complaint, that petitioners'
counsel wrote the damages sought in the much reduced
amount of P10,000,000.00 in the body of the complaint but not in the prayer
thereof. The design to avoid payment of the required docket fee is obvious.
The Court serves warning that it will take drastic action upon a repetition of this
unethical practice.cdrep
To put a stop to this irregularity, henceforth all complaints, petitions, answers and
other similar pleadings should specify the amount of damages being prayed for
not only in the body of the pleading but also in the prayer, and said damages
shall be considered in the assessment of the filing fees in any case. Any pleading
that fails to comply with this requirement shall not be accepted nor admitted, or
shall otherwise be expunged from the record.
The Court acquires jurisdiction over any case only upon the payment of the
prescribed docket fee. An amendment of the complaint or similar pleading will not
thereby vest jurisdiction in the Court, much less the payment of the docket fee
based on the amounts sought in the amended pleading. The ruling in the
Magaspi case 14 in so far as it is inconsistent with this pronouncement is
overturned and reversed.
WHEREFORE, the motion for reconsideration is denied for lack of merit. SO
ORDERED.
(Manchester Development Corp. v. Court of Appeals, G.R. No. 75919
|||
Romulo, Mabanta, Buenaventura, Sayoc & De los Angeles Law Offices for
petitioners.
Tanjuatco, Oreta, Tanjuatco, Berenguer & Sanvicente Law Offices for private
respondent.
SYLLABUS
1. STATUTES; PROCEDURAL LAWS; APPLIED RETROSPECTIVELY.
Private respondent claims that the ruling in Manchester (149 SCRA 562) cannot
apply retroactively to Civil Case No. Q-41177 for at the time said civil case was
filed in court there was no such Manchester ruling as yet. Further, private
respondent avers that what is applicable is the ruling of this Court in Magaspi v.
Ramolete, wherein this Court held that the trial court acquired jurisdiction over
the case even if the docket fee paid was insufficient. The contention
that Manchester cannot apply retroactively to this case is untenable. Statutes
regulating the procedure of the courts will be construed as applicable to actions
pending and undetermined at the time of their passage. Procedural laws are
retrospective in that sense and to that extent.
2. REMEDIAL LAW; JURISDICTION; VESTS IN COURTS UPON PAYMENT OF
THE PRESCRIBED DOCKET FEES. It is not simply the filing of the complaint
or appropriate initiatory pleading, but the payment of the prescribed docket fee,
that vests a trial court with jurisdiction over the subject- matter or nature of the
action. Where the filing of the initiatory pleading is not accompanied by payment
of the docket fee, the court may allow payment of the fee within a reasonable
time but in no case beyond the applicable prescriptive or reglementary period.
3. ID.; ID.; PERMISSIVE COUNTERCLAIMS AND THIRD-PARTY CLAIMS; NOT
CONSIDERED FILED UNLESS PRESCRIBED DOCKET FEE IS PAID. The
same rule applies to permissive counterclaims, third-party claims and similar
pleadings, which shall not be considered filed until and unless the filing fee
prescribed therefor is paid. The court may also allow payment of said fee within a
reasonable time but also in no case beyond its applicable prescriptive or
reglementary period.
4. ID.; ID.; PAYMENT OF ADDITIONAL FEE REQUIRED WHERE JUDGMENT
AWARDS CLAIM NOT SPECIFIED IN THE PLEADING. Where the trial court
acquires jurisdiction over a claim by the filing of the appropriate pleading and
payment of the prescribed filing fee but, subsequently, the judgment awards a
claim not specified in the pleading, or if specified the same has been left for
determination by the court, the additional filing fee therefor shall constitute a lien
on the judgment.
DECISION
GANCAYCO, J : p
Again the Court is asked to resolve the issue of whether or not a court acquires
jurisdiction over a case when the correct and proper docket fee has not been
paid.
On February 28, 1984, petitioner Sun Insurance Office, Ltd. (SIOL for brevity)
filed a complaint with the Regional Trial Court of Makati, Metro Manila for the
consignation of a premium refund on a fire insurance policy with a prayer for the
judicial declaration of its nullity against private respondent Manuel Uy Po Tiong.
Private respondent was declared in default for failure to file the required answer
within the reglementary period. cdasia
On the other hand, on March 28, 1984, private respondent filed a complaint in
the Regional Trial Court of Quezon City for the refund of premiums and the
issuance of a writ of preliminary attachment which was docketed as Civil Case
No. Q-41177, initially against petitioner SIOL, and thereafter including E.B.
Philipps and D.J. Warby as additional defendants. The complaint sought, among
others, the payment of actual, compensatory, moral, exemplary and liquidated
damages, attorney's fees, expenses of litigation and costs of the suit. Although
the prayer in the complaint did not quantify the amount of damages sought said
amount may be inferred from the body of the complaint to be about Fifty Million
Pesos (P50,000,000.00).
Only the amount of P210.00 was paid by private respondent as docket fee which
prompted petitioners' counsel to raise his objection. Said objection was
disregarded by respondent Judge Jose P. Castro who was then presiding over
said case.
Upon the order of this Court, the records of said case together with twenty-two
other cases assigned to different branches of the Regional Trial Court of Quezon
City which were under investigation for under-assessment of docket fees were
transmitted to this Court. The Court thereafter returned the said records to the
trial court with the directive that they be re-raffled to the other judges in Quezon
City, to the exclusion of Judge Castro. Civil Case No. Q-41177 was re-raffled to
Branch 104, a sala which was then vacant.
On October 15, 1985, the Court en banc issued a Resolution in Administrative
Case No. 85-10-8752-RTC directing the judges in said cases to reassess the
docket fees and that in case of deficiency, to order its payment. The Resolution
also requires all clerks of court to issue certificates of re-assessment of docket
fees. All litigants were likewise required to specify in their pleadings the amount
sought to be recovered in their complaints.
On December 16, 1985, Judge Antonio P. Solano, to whose sala Civil Case No.
Q-41177 was temporarily assigned, issued an order to the Clerk of Court
instructing him to issue a certificate of assessment of the docket fee paid by
private respondent and, in case of deficiency, to include the same in said
certificate.
On January 7, 1984, to forestall a default, a cautionary answer was filed by
petitioners. On August 30, 1984, an amended complaint was filed by private
respondent including the two additional defendants aforestated.
Judge Maximiano C. Asuncion, to whom Civil Case No. Q- 41177 was thereafter
assigned, after his assumption into office on January 16, 1986, issued a
Supplemental Order requiring the parties in the case to comment on the Clerk of
Court's letter-report signifying her difficulty in complying with the Resolution of
this Court of October 15, 1985 since the pleadings filed by private respondent did
not indicate the exact amount sought to be recovered. On January 23, 1986,
private respondent filed a "Compliance" and a "Re-Amended Complaint" stating
therein a claim of "not less than P10,000,000.00 as actual compensatory
damages" in the prayer. In the body of the said second amended complaint
however, private respondent alleges actual and compensatory damages and
attorney's fees in the total amount of about P44,601,623.70.
On January 24, 1986, Judge Asuncion issued another Order admitting the
second amended complaint and stating therein that the same constituted proper
compliance with the Resolution of this Court and that a copy thereof should be
furnished the Clerk of Court for the reassessment of the docket fees. The
reassessment by the Clerk of Court bases on private respondent's claim of "not
less than P10,000,000.00 as actual and compensatory damages" amounted to
P39,786.00 as docket fee. This was subsequently paid by private respondent.
Petitioners then filed a petition for certiorari with the Court of Appeals questioning
the said order of Judge Asuncion dated January 24, 1986.
On April 24, 1986, private respondent filed a supplemental complaint alleging an
additional claim of P20,000,000.00 as damages so the total claim amounts to
about P64,601,623.70. On October 16, 1986, or some seven months after filing
the supplemental complaint, the private respondent paid the additional docket fee
of P80,396.00. 1
On August 13, 1987, the Court of Appeals rendered a decision ruling, among
others, as follows:
"WHEREFORE, judgment is hereby rendered:
1. Denying due course to the petition in CA-G.R. SP No. L-09715 insofar
as it seeks annulment of the order.
(a) denying petitioners' motion to dismiss the complaint, as amended,
and
(b) granting the writ of preliminary attachment, but giving due course to
the portion thereof questioning the reassessment of the docketing fee,
and requiring the Honorable respondent Court to reassess the docketing
fee to be paid by private respondent on the basis of the amount of
P25,401,707.00." 2
Hence, the instant petition.
During the pendency of this petition and in conformity with the said judgment of
respondent court, private respondent paid the additional docket fee of
P62,432.90 on April 28, 1988. 3
The main thrust of the petition is that the Court of Appeals erred in not finding
that the lower court did not acquire jurisdiction over Civil Case No. Q-41177 on
the ground of non-payment of the correct and proper docket fee. Petitioners
allege that while it may be true that private respondent had paid the amount of
P182,824.90 as docket fee as herein-above related, and considering that the
total amount sought to be recovered in the amended and supplemental complaint
is P64,601,623.70 the docket fee that should be paid by private respondent is
P257,810.49, more or less. Not having paid the same, petitioners contend that
the complaint should be dismissed and all incidents arising therefrom should be
annulled. In support of their theory, petitioner cite the latest ruling of the Court
in Manchester Development Corporation vs. CA, 4 as follows:
"The Court acquires jurisdiction over any case only upon the payment of
the prescribed docket fee. An amendment of the complaint or similar
pleading will not thereby vest jurisdiction in the Court, much less the
payment of the docket fee based on the amounts sought in the amended
pleading. The ruling in the Magaspi Case in so far it is inconsistent with
this pronouncement is overturned and reversed."
On the other hand, private respondent claims that the ruling
in Manchester cannot apply retroactively to Civil Case No. Q-41177 for at the
time said civil case was filed in court there was no such Manchester ruling as yet.
Further, private respondent avers that what is applicable is the ruling of this Court
in Magaspi v. Ramolete, 5 wherein this Court held that the trial court acquired
jurisdiction over the case even if the docket fee paid was insufficient.
In Malimit vs. Degamo, 9 the same principles enunciated in Lazaro and Lee were
applied. It was an original petition for quo warranto contesting the right to office of
proclaimed candidates which was mailed, addressed to the clerk of the Court of
First Instance, within the one-week period after the proclamation as provided
therefor by law. 10 However, the required docket fees were paid only after the
expiration of said period. Consequently, this Court held that the date of such
payment must be deemed to be the real date of filing of aforesaid petition and not
the date when it was mailed.
Again, in Garica vs. Vasquez, 11 this Court reiterated the rule that the docket fee
must be paid before a court will act on a petition or complaint. However, we also
held that said rule is not applicable when petitioner seeks the probate of several
wills of the same decedent as he is not required to file a separate action for each
will but instead he may have other wills probated in the same special proceeding
then pending before the same court.
Then in Magaspi, 12 this Court reiterated the ruling in Malimit and Lee that a case
is deemed filed only upon payment of the docket fee regardless of the actual
date of its filing in court. Said case involved a complaint for recovery of
ownership and possession of a parcel of land with damages filed in the Court of
First Instance of Cebu. Upon the payment of P60.00 for the docket fee and
P10.00 for the sheriff's fee, the complaint was docketed as Civil Case No. R-
11882. The prayer of the complaint sought that the Transfer Certificate of Title
issued in the name of the defendant be declared as null and void. It was also
prayed that plaintiff be declared as owner thereof to whom the proper title should
be issued, and that defendant be made to pay monthly rentals of P3,500.00 from
June 2, 1948 up to the time the property is delivered to plaintiff, P500,000.00 as
moral damages, attorney's fees in the amount of P250,000.00, the costs of the
action and exemplary damages in the amount of P500,000.00.
The defendant then filed a motion to compel the plaintiff to pay the correct
amount of the docket fee to which an opposition was filed by the plaintiff alleging
that the action was for the recovery of a parcel of land so the docket fee must be
based on its assessed value and that the amount of P60.00 was the correct
docketing fee. The trial court ordered the plaintiff to pay P3,140.00 as filing fee.
The plaintiff then filed a motion to admit the amended complaint to include the
Republic as the defendant. In the prayer of the amended complaint the
exemplary damages earlier sought was eliminated. The amended prayer merely
sought moral damages as the court may determine, attorney's fees of
P100,000.00 and the costs of the action. The defendant filed an opposition to the
amended complaint. The opposition notwithstanding, the amended complaint
was admitted by the trial court. The trial court reiterated its order for the payment
of the additional docket fee which plaintiff assailed and then challenged before
this Court. Plaintiff alleged that he paid the total docket fee in the amount of
P60.00 and that if he had to pay the additional fee it must be based on the
amended complaint.
The question posed, therefore, was whether or not the plaintiff may be
considered to have filed the case even if the docketing fee paid was not sufficient.
In Magaspi, We reiterated the rule that the case was deemed filed only upon the
payment of the correct amount for the docket fee regardless of the actual date of
the filing of the complaint; that there was an honest difference of opinion as to the
correct amount to be paid as docket fee in that as the action appears to be one
for the recovery of property the docket fee of P60.00 was correct; and that as the
action is also for damages, We upheld the assessment of the additional docket
fee based on the damages alleged in the amended complaint as against the
assessment of the trial court which was based on the damages alleged in the
original complaint.LLjur
Upon the filing of the complaint, the plaintiff paid the amount of only P410.00 for
the docket fee based on the nature of the action for specific performance where
the amount involved is not capable of pecuniary estimation. However, it was
obvious from the allegation of the complaint as well as its designation that the
action was one for damages and specific performance. Thus, this court held the
plaintiff must be assessed the correct docket fee computed against the amount of
damages of about P78 Million, although the same was not spelled out in the
prayer of the complaint.
Meanwhile, plaintiff through another counsel, with leave of court, filed a amended
complaint on September 12, 1985 by the inclusion of another co-plaintiff and
eliminating any mention of the amount of damages in the body of the complaint.
The prayer in the original complaint was maintained.
On October 15, 1985, this Court ordered the re-assessment of the docket fee in
the said case and other cases that were investigated. On November 12, 1985 the
trial court directed the plaintiff to rectify the amended complaint by stating the
amounts which they were asking for. This plaintiff did as instructed. In the body of
the complaint the amount of damages alleged was reduced to P10,000,000.00
but still no amount of damages was specified in the prayer. Said amended
complaint was admitted.
Applying the principle in Magaspi that "the case is deemed filed only upon
payment of the docket fee regardless of the actual date of filing in court," this
Court held that the trial court did not acquire jurisdiction over the case by
payment of only P410.00 for the docket fee. Neither can the amendment of the
complaint thereby vest jurisdiction upon the Court. For all legal purposes they
was no such original complaint duly filed which could be amended. Consequently,
the order admitting the amended complaint and all subsequent proceedings and
actions taken by the trial court were declared null and void. 13
The present case, as above discussed, is among the several cases of under-
assessment of docket fee which were investigated by this Court together
with Manchester. The facts and circumstances of this case are similar
to Manchester. In the body of the original complaint, the total amount of damages
sought amounted to about P50 Million. In the prayer, the amount of damages
asked for was not stated. The action was for the refund of the premium and the
issuance of the writ of preliminary attachment with damages. The amount of only
P210.00 was paid for the docket fee. On January 23, 1986, private respondent
filed an amended complaint wherein in the prayer it is asked that he be awarded
no less than P10,000,000.00 as actual and exemplary damages but in the body
of the complaint the amount of his pecuniary claim is approximately
P44,601,623.70. Said amended complaint was admitted and the private
respondent was reassessed the additional docket fee of P39,786.00 based on
his prayer of not less than P10,000,000.00 in damages, which he paid.
WHEREFORE, the petition is DISMISSED for lack of merit. The Clerk of Court of
the court a quo is hereby instructed to reassess and determine the additional
filing fee that should be paid by private respondent considering the total amount
of the claim sought in the original complaint and the supplemental complaint as
may be gleaned from the allegations and the prayer thereof and to require private
respondent to pay the deficiency, if any, without pronouncement as to costs.
SO ORDERED.
(Sun Insurance Office, Ltd. v. Asuncion, G.R. Nos. 79937-38, [February 13,
|||
CARPIO MORALES, J : p
Even granting arguendo that the docket fees were not properly paid, the
court cannot just dismiss the case. The Court has not yet ordered (and it
will not in this case) to pay the correct docket fees, thus the Motion to
dismiss is premature, aside from being without any legal basis.
As held in the case of National Steel Corporation vs. CA, G.R. No.
123215, February 2, 1999, the Supreme Court said:
xxx xxx xxx
Although the payment of the proper docket fees is a jurisdictional
requirement, the trial court may allow the plaintiff in an action to
pay the same within a reasonable time within the expiration of
applicable prescription or reglementary period. If the plaintiff fails
to comply with this requirement, the defendant should timely raise
the issue of jurisdiction or else he would be considered in
estoppel. In the latter case, the balance between appropriate
docket fees and the amount actually paid by the plaintiff will be
considered a lien or (sic) any award he may obtain in his favor.
As to the second ground relied upon by the defendants, in that a review
of all annexes to the complaint of the plaintiff reveals that there is not a
single formal demand letter for defendants to fulfill the terms and
conditions of the three (3) trust agreements.
In this regard, the court cannot sustain the submission of defendant. As
correctly pointed out by the plaintiff, failure to make a formal demand for
the debtor to pay the plaintiff is not among the legal grounds for the
dismissal of the case. Anyway, in the appreciation of the court, this is
simply evidentiary.
xxx xxx xxx
WHEREFORE, for lack of merit, the Motion to Dismiss interposed by the
defendants is hereby DENIED. 13 (Underscoring supplied)
Petitioners filed a motion for reconsideration 14 of the denial of their Motion to
Dismiss, but it was denied by the trial court by Order 15 of October 3, 2000.
Petitioners thereupon brought the case on certiorari and mandamus 16 to the
Court of Appeals which, by Decision 17 of July 25, 2001, denied it in this wise:
. . . Section 7(a) of Rule 141 of the Rules of Court excludes interest
accruing from the principal amount being claimed in the pleading in the
computation of the prescribed filing fees. The complaint was submitted
for the computation of the filing fee to the Office of the Clerk of Court of
the Regional Trial Court of Makati City which made an assessment that
respondent paid accordingly. What the Office of the Clerk of Court did
and the ruling of the respondent Judge find support in the decisions of
the Supreme Court in Ng Soon vs. Alday and Tacay vs. RTC of Tagum,
Davao del Norte. In the latter case, the Supreme Court explicitly ruled
that "where the action is purely for recovery of money or damages, the
docket fees are assessed on the basis of the aggregate amount claimed,
exclusive only of interests and costs."
Assuming arguendo that the correct filing fees was not made, the rule is
that the court may allow a reasonable time for the payment of the
prescribed fees, or the balance thereof, and upon such payment, the
defect is cured and the court may properly take cognizance of the action
unless in the meantime prescription has set in and consequently barred
the right of action. Here respondent Judge did not make any finding, and
rightly so, that the filing fee paid by private respondent was insufficient.
On the issue of the correct dollar-peso rate of exchange, the Office of
the Clerk of Court of the RTC of Makati pegged it at P43.21 to US$1. In
the absence of any office guide of the rate of exchange which said court
functionary was duty bound to follow, the rate he applied is
presumptively correct. THADEI
In case the value of the property or estate or the sum claim is less or
more in accordance with the appraisal of the court, the difference of fees
shall be refunded or paid as the case may be.
When the complaint in this case was filed in 1998, however, as correctly pointed
out by petitioners, Rule 141 had been amended by Administrative Circular No.
11-94 29 which provides:
BY RESOLUTION OF THE COURT, DATED JUNE 28, 1994,
PURSUANT TO SECTION 5 (5) OF ARTICLE VIII OF THE
CONSTITUTION, RULE 141, SECTION 7 (a) AND (d), and SECTION 8
(a) and (b) OF THE RULES OF COURT ARE HEREBY AMENDED TO
READ AS FOLLOWS:
RULE 141
LEGAL FEES
xxx xxx xxx
Sec. 7. Clerks of Regional Trial Courts
(a) For filing an action or a permissive counterclaim or money claim
against an estate not based on judgment, or for filing with leave of court
a third-party, fourth-party, etc. complaint, or a complaint in intervention,
and for all clerical services in the same, if the total sum
claimed, inclusiveof interest, damages of whatever kind, attorney's
fees, litigation expenses, and costs, or the stated value of the
property in litigation, is:
1. Not more than P100,000.00 P400.00
2. P100,000.00, or more but not more than P150,000.00 600.00
3. For each P1,000.00 in excess of P150,000.00 5.00
xxx xxx xxx
Sec. 8. Clerks of Metropolitan and Municipal Trial Courts
(a) For each civil action or proceeding, where the value of the subject
matter involved, or the amount of the demand, inclusive of interest,
damages or whatever kind, attorney's fees, litigation expenses, and
costs, is:
1. Not more than P20,000.00 P120.00
2. More than P20,000.00 but not more than P100,000.00 400.00
3. More than P100,000.00 but not more than P200,000.00 850.00
(Emphasis and underscoring supplied)
The clerk of court should thus have assessed the filing fee by taking into
consideration "the total sum claimed, inclusive of interest, damages of whatever
kind, attorney's fees, litigation expenses, and costs, or the stated value of the
property in litigation." Respondent's and the Court of Appeals' reliance then
on Tacay was not in order.
Neither was, for the same reason, the Court of Appeals' reliance on
the 1989 case of Ng Soon v. Alday, 30 where this Court held:
. . . The failure to state the rate of interest demanded was not
fatal not only because it is the Courts which ultimately fix the same, but
alsobecause Rule 141, Section 5(a) of the Rules of Court, itemizing
the filing fees, speaks of "the sum claimed, exclusive of interest."
This clearly implies that the specification of the interest rate is not
that indispensable.
Factually, therefore, not everything was left to "guesswork" as
respondent Judge has opined. The sums claimed were ascertainable,
sufficient enough to allow a computation pursuant to Rule 141, section
5(a).
Furthermore, contrary to the position taken by respondent Judge, the
amounts claimed need not be initially stated with mathematical
precision. The same Rule 141, section 5(a) (3rd paragraph), allows
an appraisal "more or less." 31 Thus:
"In case the value of the property or estate or the sum claimed is less or
more in accordance with the appraisal of the court, the difference of fee
shall be refunded or paid as the case may be."
In other words, a final determination is still to be made by the Court, and
the fees ultimately found to be payable will either be additionally paid by
the party concerned or refunded to him, as the case may be. The above
provision clearly allows an initial payment of the filing fees corresponding
to the estimated amount of the claim subject to adjustment as to what
later may be proved.
". . . there is merit in petitioner's claim that the third paragraph of Rule
141, Section 5(a) clearly contemplates a situation where an amount is
alleged or claimed in the complaint but is less or more than what is later
proved. If what is proved is less than what was claimed, then a refund
will be made; if more, additional fees will be exacted. Otherwise stated,
what is subject to adjustment is the difference in the fee and not the
whole amount" (Pilipinas Shell Petroleum Corp., et als., vs. Court of
Appeals, et als., G.R. No. 76119, April 10, 1989). 32 (Emphasis and
underscoring supplied) IaEACT
Respecting the Court of Appeals' conclusion that the clerk of court did not err
when he applied the exchange rate of US$1 = P43.00 "[i]n the absence of any
office guide of the rate of exchange which said court functionary was duty bound
to follow,[hence,] the rate he applied is presumptively correct," the same does not
lie. The presumption of regularity of the clerk of court's application of the
exchange rate is not conclusive. 33 It is disputable. 34 As such, the presumption
may be overturned by the requisite rebutting evidence. 35 In the case at bar,
petitioners have adequately proven with documentary evidence 36 that the
exchange rate when the complaint was filed on September 7, 1998 was US$1 =
P43.21.
In fine, the docket fees paid by respondent were insufficient.
With respect to petitioner's argument that the trial court did not acquire
jurisdiction over the case in light of the insufficient docket fees, the same does
not lie.
True, in Manchester Development Corporation v. Court of Appeals, 37 this Court
held that the court acquires jurisdiction over any case only upon the payment of
the prescribed docket fees, 38 hence, it concluded that the trial court did not
acquire jurisdiction over the case.
It bears emphasis, however, that the ruling in Manchester was clarified in Sun
Insurance Office, Ltd. (SIOL) v. Asuncion 39 when this Court held that in the
former there was clearly an effort to defraud the government in avoiding to pay
the correct docket fees, whereas in the latter the plaintiff demonstrated his
willingness to abide by paying the additional fees as required.
The principle in Manchester could very well be applied in the present
case. The pattern and the intent to defraud the government of the docket
fee due it is obvious not only in the filing of the original complaint but
also in the filing of the second amended complaint.
However, in Manchester, petitioner did not pay any additional docket fee
until the case was decided by this Court on May 7,
1987. Thus, inManchester, due to the fraud committed on the
government, this Court held that the court a quo did not acquire
jurisdiction over the case and that the amended complaint could
not have been admitted inasmuch as the original complaint was
null and void.
In the present case, a more liberal interpretation of the rules is
called for considering that, unlike Manchester, private respondent
demonstrated his willingness to abide by the rules by paying the
additional docket fees as required. The promulgation of the decision
inManchester must have had that sobering influence on private
respondent who thus paid the additional docket fee as ordered by the
respondent court. It triggered his change of stance by manifesting his
willingness to pay such additional docket fee as may be ordered.
Nevertheless, petitioners contend that the docket fee that was paid is still
insufficient considering the total amount of the claim. This is a matter
which the clerk of court of the lower court and/or his duly authorized
docket clerk or clerk in charge should determine and, thereafter, if any
amount is found due, he must require the private respondent to pay the
same.
Thus, the Court rules as follows:
1. It is not simply the filing of the complaint or appropriate initiatory
pleading, but the payment of the prescribed docket fee, that vests a trial
court with jurisdiction over the subject-matter or nature of the action.
Where the filing of the initiatory pleading is not accompanied by payment
of the docket fee, the court may allow payment of the fee within a
reasonable time but in no case beyond the applicable prescriptive or
reglementary period.
2. The same rule applies to permissive counterclaims, third-party claims
and similar pleadings, which shall not be considered filed until and
unless the filing fee prescribed therefor is paid. The court may also allow
payment of said fee within a reasonable time but also in no case beyond
its applicable prescriptive or reglementary period. ASHaTc
3. Where the trial court acquires jurisdiction over a claim by the filing of
the appropriate pleading and payment of the prescribed filing fee but,
subsequently, the judgment awards a claim not specified in the pleading,
or if specified the same has been left for determination by the court, the
additional filing fee therefor shall constitute a lien on the judgment. It
shall be the responsibility of the Clerk of Court or his duly authorized
deputy to enforce said lien and assess and collect the additional
fee. 40 (Emphasis and underscoring supplied)
The ruling in Sun Insurance Office was echoed in the 2005 case of Heirs of
Bertuldo Hinog v. Hon. Achilles Melicor: 41
Plainly, while the payment of the prescribed docket fee is a jurisdictional
requirement, even its non-payment at the time of filing does not
automatically cause the dismissal of the case, as long as the fee is paid
within the applicable prescriptive or reglementary period, more so when
the party involved demonstrates a willingness to abide by the rules
prescribing such payment. Thus, when insufficient filing fees were
initially paid by the plaintiffs and there was no intention to defraud
the government, the Manchester rule does not apply. (Emphasis and
underscoring supplied; citations omitted)
In the case at bar, respondent merely relied on the assessment made by the
clerk of court which turned out to be incorrect. Under the circumstances, the clerk
of court has the responsibility of reassessing what respondent must pay within
the prescriptive period, failing which the complaint merits dismissal.
Parenthetically, in the complaint, respondent prayed for "accrued interest . . .
subsequent to August 15, 1998 until fully paid." The complaint having been filed
on September 7, 1998, respondent's claim includes the interest from August 16,
1998 until such date of filing.
Respondent did not, however, pay the filing fee corresponding to its claim for
interest from August 16, 1998 until the filing of the complaint on September 7,
1998. As priorly discussed, this is required under Rule 141, as amended
by Administrative Circular No. 11-94, which was the rule applicable at the time.
Thus, as the complaint currently stands, respondent cannot claim the interest
from August 16, 1998 until September 7, 1998, unless respondent is allowed by
motion to amend its complaint within a reasonable time and specify the precise
amount of interest petitioners owe from August 16, 1998 to September 7,
1998 42 and pay the corresponding docket fee therefor.
With respect to the interest accruing after the filing of the complaint, the same
can only be determined after a final judgment has been handed down.
Respondent cannot thus be made to pay the corresponding docket fee
therefor. Pursuant, however, to Section 2, Rule 141, as amended
byAdministrative Circular No. 11-94, respondent should be made to pay
additional fees which shall constitute a lien in the event the trial court adjudges
that it is entitled to interest accruing after the filing of the complaint.
Sec. 2. Fees as lien. Where the court in its final judgment awards a
claim not alleged, or a relief different or more than that claimed in the
pleading, the party concerned shall pay the additional fees which shall
constitute a lien on the judgment in satisfaction of said lien. The clerk of
court shall assess and collect the corresponding fees.
In Ayala Corporation v. Madayag, 43 in interpreting the third rule laid down in Sun
Insurance regarding awards of claims not specified in the pleading, this Court
held that the same refers only to damages arising after the filing of the
complaint or similar pleading as to which the additional filing fee therefor
shall constitute a lien on the judgment.
. . . The amount of any claim for damages, therefore, arising on or before
the filing of the complaint or any pleading should be specified. While it is
true that the determination of certain damages as exemplary or
corrective damages is left to the sound discretion of the court, it is the
duty of the parties claiming such damages to specify the amount sought
on the basis of which the court may make a proper determination, and
for the proper assessment of the appropriate docket fees. The
exception contemplated as to claims not specified or to claims
although specified are left for determination of the court is limited
only to any damages that may arise after the filing of the complaint
or similar pleading for then it will not be possible for the claimant to
specify nor speculate as to the amount thereof. 44 (Emphasis and
underscoring supplied; citation omitted) DaIACS
WHEREFORE, the petition is GRANTED in part. The July 25, 2001 Decision and
the December 18, 2001 Resolution of the Court Appeals are hereby MODIFIED.
The Clerk of Court of the Regional Trial Court of Makati City is ordered to
reassess and determine the docket fees that should be paid by respondent, BNP,
in accordance with the Decision of this Court, and direct respondent to pay the
same within fifteen (15) days, provided the applicable prescriptive or
reglementary period has not yet expired. Thereafter, the trial court is ordered to
proceed with the case with utmost dispatch. SO ORDERED.
(Proton Pilipinas Corp. v. Banque Nationale de Paris, G.R. No. 151242, [June
|||
DECISION
GARCIA, J : p
In this special civil action for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure, petitioner Tancredo Redea (Tancredo, hereafter) seeks the
annulment and setting aside of the Resolution 1 dated April 28, 2000 of the
Court of Appeals in CA-G.R. CV No. 59641, as reiterated in its Resolution2 of
November 16, 2000, denying the petitioner's motion for reconsideration.
The present controversy sprung from an action for partition filed by petitioner
Tancredo against his older half-brother, herein private respondent Leocadio
Redea (Leocadio, for brevity) before the then Court of First Instance (now
Regional Trial Court [RTC]) of San Pablo City, Laguna, and thereat docketed as
Civil Case No. S-241 which was subsequently inherited by Branch 33 of the RTC,
Siniloan, Laguna.
The basic complaint for partition alleges that plaintiff Tancredo and defendant
Leocadio are both sons of one Maximo Redea: Tancredo, by Maximo's
marriage to Magdalena Fernandez, and Leocadio, by Maximo's previous
marriage to Emerenciana Redea. The complaint further alleged that the parties'
common father, Maximo, left several pieces of realty, to wit: a residential lot at M.
Calim Street, Famy, Laguna; a riceland at Poroza, Famy, Laguna; and another
parcel of land at Maate, also in Famy, Laguna.
In a decision 3 dated August 20, 1997, the trial court, based on the evidence
presented, confined the partition to only the property actually pertaining to the
estate of the parties' deceased father and co-owned by them, namely, the parcel
of land at Maate, and accordingly rendered judgment as follows:
WHEREFORE, premises considered, judgment is hereby rendered
ordering the defendant [now respondent Leocadio] to partition only the
property located at Maate, Famy, Laguna after plaintiff's [Tancredo's]
reimbursement of the expenses incurred by the defendant in relation to
the said lot. However, partition cannot be effected with regard to
properties located at M. Calim Street, Famy, Laguna and the property
located at Poroza, Famy, Laguna, as the same belong to the defendant.
No pronouncement as to costs. aSTAcH
SO ORDERED. (Words in brackets supplied)
On December 11, 1997, petitioner filed with the trial court a Notice of
Appeal. 4 The court gave due course to the notice and directed the elevation of
the records of the case to the CA whereat petitioner's appeal was docketed
as CA-G.R. CV No. 59641.
On September 28, 1998, the CA issued a resolution directing petitioner, as
appellant, to file his appellant's brief. Evidently, the period for filing the brief was
even extended by the CA.
On March 9, 1999, there being no appellant's brief filed within the extended
period, the CA issued a resolution 5 considering the appeal abandoned and
accordingly dismissing the same. The dismissal resolution reads:
For failure of plaintiff-appellant [now petitioner] to file the required brief
within the extended period, the instant appeal is hereby
consideredABANDONED and accordingly DISMISSED, pursuant to
Section 1(e), Rule 50, 1997 Rules of Civil Procedure.
On November 8, 1999 or eight (8) months after the CA issued the above
resolution, petitioner filed a motion for reconsideration 6 thereof. In a
resolution 7 of November 25, 1999, the CA denied the motion.
Then, on December 28, 1999, in the same CA-G.R. CV No. 59641, petitioner
filed a Petition for Relief 8 bearing date December 27, 1999, anchored on Section
2, 9 Rule 38 of the 1997 Rules of Civil Procedure. In that pleading, petitioner
prays the CA to set aside its dismissal resolution of March 9, 1999,supra,
reinstate his appeal and grant him a fresh period of forty-five (45) days from
notice within which to file his appellant's brief.
In the herein assailed Resolution 10 dated April 28, 2000, the CA denied the
aforementioned Petition for Relief , thus:
WHEREFORE, the petition for relief dated 27 December 1999 is hereby
DENIED.
SO ORDERED.
Explains the CA in said resolution:
Petition for relief is not among the remedies available in the Court of
Appeals. In fact, authorities in remedial law (noted authors Regalado,
Herrera, and Feria) are one in their commentaries that these petitions
are filed with the trial courts. Not one of them has advanced an opinion
or comment that this equitable relief can be obtained in the Court of
Appeals. Under Rule 47, an annulment of judgment or final orders and
resolutions may be filed before this court based on the ground of
extrinsic fraud which seems to be the premise of the petition. Perhaps it
is worth looking into by the petitioner if the factual basis of the present
petition for relief may qualify as an extrinsic fraud, under Rule 47.
Petitioner's motion for reconsideration of the above-mentioned resolution was
likewise denied by the CA in its equally challenged Resolution 11 of November
16, 2000, wherein the appellate court further wrote:
Under the 1964 Rules of Court, there was only one court where a
petition for relief may be filed the Court of First Instance, now the
Regional Trial Court. Section 1 thereof governs a petition to Court of
First Instance for relief from judgment of inferior court while Section 2
thereof governs petition to Court of First Instance for relief from judgment
or other proceeding thereof. The 1997 Rules of Civil Procedure has
altered the said precept. Now, it must be filed before the Municipal Trial
Courts or Metropolitan Trial Courts for judgments or final orders or other
proceedings taken in said courts, and in the same case. And for
judgment, order, or other proceedings in the Regional Trial Court, it must
be filed in the same Regional Trial Court which rendered the judgment or
final order, or other proceedings taken and in the same case. In other
words, under the present rule, such a petition may be filed in the same
court which rendered the judgment or final order, or proceedings taken
and in the same case. This is in accordance with uniform procedure rule
for Municipal and Regional Trial Courts. aCSEcA
The above construction to limit the term "any court" to Municipal Trial
Court and Regional Trial Court and not to include the Court of
Appeals finds support in Section 7 of the Rules which states:
Sec. 7. Procedure where the denial of an appeal is set aside.
Where the denial of an appeal is set aside, the lower court
shall be required to give due course to the appeal and to
elevate the record of the appealed case as if a timely and
proper appeal had been made.
Significantly, there is no specific provision in both the 1964 and 1997
Rules of Court making the petition under Rule 38, applicable in the Court
of Appeals. The procedure in the Court of Appeals from Rule 44 to Rule
55 with the exception of Rule 45 which pertains to the Supreme Court,
identifies the remedies available before said court such as annulment of
judgment or final orders and resolution (Rule 47); motion for
reconsideration (Rule 52); and, new trial, (Rule 53). Nowhere is petition
for relief under Rule 38 mentioned.
But even as the CA stood firm on its stand that a petition for relief from denial of
appeal is not among the remedies available before the CA itself, the appellate
court, in the same Resolution of November 16, 2000, left the final determination
of the question to this Court, thus:
Parenthetically, the main question presented herein is novel in that there
is yet no definite and definitive jurisprudence from the Supreme Court.
Perhaps, the case will clarify this gray area in our adjective law for
guidance of the Bench and Bar. The issue should be elevated to that
Tribunal.
Presently, petitioner is now before this Court via the instant recourse on his
submission that the CA committed grave abuse of discretion when it
I
. . . RULED THAT A PETITION FOR RELIEF IS NOT AN AVAILABLE
REMEDY IN THE COURT OF APPEALS.
II
. . . REFUSED TO GRANT THE PETITION DESPITE A CLEAR
SHOWING THAT (A) PETITIONER, BY REASON OF FRAUD AND
MISTAKE, WAS PREVENTED FROM PROSECUTING HIS APPEAL,
AND (B) PETITIONER HAS A GOOD AND SUBSTANTIAL CAUSE OF
ACTION AGAINST PRIVATE RESPONDENT.
We DISMISS.
In Hagonoy Market Vendor Association v. Municipality of Hagonoy, Bulacan, G.R.
No. 137621, February 6, 2002, then Associate Justice, now Chief Justice
Reynato S. Puno, reminded us that
Laws are of two (2) kinds: substantive and procedural. Substantive laws,
insofar as their provisions are unambiguous, are rigorously applied to
resolve legal issues on the merits. In contrast, courts generally frown
upon an uncompromising application of procedural laws so as not to
subvert substantial justice. Nonetheless, it is not totally uncommon for
courts to decide cases based on a rigid application of the so-called
technical rules of procedure as these rules exist for the orderly
administration of justice.
From the petition, it is clear that this Court is called upon to relax the application
of procedural rules, or suspend them altogether, in favor of petitioner's
substantial rights. There is no doubt as to the power of this Court to do that. In a
fairly recent case, we reiterated:
The Court has often stressed that rules of procedure are merely tools
designed to facilitate the attainment of justice. They were conceived and
promulgated to effectively aid the court in the dispensation of justice.
Courts are not slaves to or robots of technical rules, shorn of judicial
discretion. In rendering justice, courts have always been, as they ought
to be, conscientiously guided by the norm that on the balance,
technicalities take a backseat against substantive rights, and not the
other way around. Thus, if the application of the Rules would tend to
frustrate rather than promote justice, it is always within our power to
suspend the rules or except a particular case from its operation. 12
The Rules itself expressly states in Section 2 of Rule 1 that the rules shall be
liberally construed in order to promote their object and to assist the parties in
obtaining just, speedy and inexpensive determination of every action and
proceeding. Courts, therefore, not only have the power but the duty to construe
and apply technical rules liberally in favor of substantive law and substantial
justice. Furthermore, this Court, unlike courts below, has the power not only to
liberally construe the rules, but also to suspend them, in favor of substantive law
or substantial rights. Such power inherently belongs to this Court, which is
expressly vested with rule-making power by no less than the Constitution. 13
It is equally settled, however, that this Court's power to liberally construe and
even to suspend the rules, presupposes the existence of substantial rights in
favor of which, the strict application of technical rules must concede. The facts
are borne out by the records pertaining to petitioner's purported undivided share
in the property at M. Calim Street, Famy, Laguna, and the property in Poroza
clearly showed that these two properties had been subject of an agreement (Exh.
"1") whereby petitioner recognized respondent's rights to said properties. This
fact binds this Court, there being nothing on record with the trial court as to the
herein alleged fraud against the petitioner. Upon thorough deliberation of the
supposed substantial rights claimed by the petitioner with the court below, the
Court finds no cogent basis to favorably rule on the merits of the appeal even if it
may be given due course which is indispensable to justify this Court in
considering this case as an exception to the rules.
The present case will have to be decided in accordance with existing rules of
procedure. We apply the settled principle that petition for relief under Rule 38 of
the Rules of Court is of equitable character, allowed only in exceptional cases as
when there is no other available or adequate remedy. 14Hence, a petition for
relief may not be availed of where a party has another adequate remedy
available to him, which is either a motion for new trial or appeal from the adverse
decision of the lower court, and he is not prevented from filing such motion or
taking the appeal. The rule is that relief will not be granted to a party who seeks
to be relieved from the effect of the judgment when the loss of the remedy at law
is due to his own negligence, or a mistaken mode of procedure; otherwise, the
petition for relief will be tantamount to reviving the right of appeal which has
already been lost either because of inexcusable negligence or due to a mistake
in the mode of procedure taken by counsel. 15
Under Section 2 of Rule 38, supra, of the Rules of Court, a party prevented from
taking an appeal from a judgment or final order of a court by reason of fraud,
accident, mistake or excusable negligence, may file in the same court and in the
same case a petition for relief praying that his appeal be given due course. This
presupposes, of course, that no appeal was taken precisely because of any of
the aforestated reasons which prevented him from appealing his case. Hence, a
petition for relief under Rule 38 cannot be availed of in the CA, the latter being a
court of appellate jurisdiction. For sure, under the present Rules, petitions for
relief from a judgment, final order or other proceeding rendered or taken should
be filed in and resolved by the court in the same case from which the petition
arose. Thus, petition for relief from a judgment, final order or proceeding involved
in a case tried by a municipal trial court shall be filed in and decided by the same
court in the same case, just like the procedure followed in the present Regional
Trial Court. 16
Here, the record shows that petitioner in fact filed a Notice of Appeal with the trial
court, which the latter granted in its order of December 11, 1997 and ordered the
elevation of the records to the CA. In turn, the CA, in its resolution of September
28, 1998, required the petitioner, thru his former counsel, Atty. Geminiano
Almeda, to file his appellant's brief. But petitioner failed to comply. Consequently,
in its resolution of March 9, 1999, the CA considered the appellant's appeal as
ABANDONED and DISMISSED the same. AIHaCc
Additionally, after the dismissal of his appeal, petitioner filed with the CA a motion
for reconsideration of the dismissal resolution. Unfortunately, however, the
motion was filed very much late on November 8, 1999. Expectedly, in its
resolution 17 of November 25, 1999, the CA denied the motion for reconsideration,
to wit:
The last day to file a motion for reconsideration was on 06 April 1999
and as of 18 October 1999 no such motion was ever filed; in fact on 19
October 1999 the court resolved that an entry of judgment may now be
issued. The motion for reconsideration, however, pleas for leniency on
account of his former lawyer's inefficiency and negligence in that he
failed to appeal the case. This is not well taken.
His former lawyer's lack of fidelity and devotion to his client in the
discharge of his duty of perfecting the appeal on time without
demonstrating fraud, accident, mistake or excusable negligence cannot
be a basis for judicial relief. The client has to bear the adverse
consequences of the inexcusable mistake or negligence of his counsel
or of the latter's employee and may not be heard to complain that the
result of the litigation might have been different had he proceeded
differently (Inocando v. Inocando, 100 Phil. 266)
WHEREFORE, the motion is hereby DENIED.
Petitioner presents himself as a mere farmer seeking the Court's leniency to the
point of disregarding the rules on reglementary period for filing pleadings. But he
fails to point out any circumstance which might lead the Court to conclude that
his station in life had in any way placed his half-brother in a more advantageous
position. As we see it, petitioner failed to show diligence in pursuing his cause.
His condition as a farmer, by itself alone, does not excuse or exempt him from
being vigilant on his right. He cannot lay the blame solely on his former lawyer. It
is settled that clients are bound by the mistakes, negligence and omission of their
counsel. 18 While, exceptionally, a client may be excused from the failure of his
counsel, the circumstances obtaining in this case do not convince the Court to
take exception.
In seeking exemption from the above rule, petitioner claims that he will suffer
deprivation of property without due process of law on account of the gross
negligence of his previous counsel. To him, the negligence of his former counsel
was so gross that it practically resulted to fraud because he was allegedly placed
under the impression that the counsel had prepared and filed his appellant's brief.
He thus prays the Court reverse the CA and remand the main case to the court
of origin for new trial.
Admittedly, this Court has relaxed the rule on the binding effect of counsel's
negligence and allowed a litigant another chance to present his case (1) where
the reckless or gross negligence of counsel deprives the client of due process of
law; (2) when application of the rule will result in outright deprivation of the
client's liberty or property; or (3) where the interests of justice so require. 19 None
of these exceptions obtains here.
For a claim of counsel's gross negligence to prosper, nothing short of clear
abandonment of the client's cause must be shown. Here, petitioner's counsel
failed to file the appellant's brief. While this omission can plausibly qualify as
simple negligence, it does not amount to gross negligence to justify the
annulment of the proceedings below. SDATEc
In Legarda v. Court of Appeals, 20 where the Court initially held that the counsel's
failure to file pleadings at the trial court and later on appeal amounted to gross
negligence, the Court, on motion of the respondent therein, granted
reconsideration and applied the general rule binding the litigant to her counsel's
negligence. In said case, the Court noted that the proceedings which led to the
filing of the petition "were not attended by any irregularity." The same observation
squarely applies here.
To recapitulate, petitioner is not entitled to relief under Rule 38, Section 2 of the
Rules of Court. He was not prevented from filing his notice of appeal by fraud,
accident, mistake or excusable negligence, as in fact he filed one. The relief
afforded by Rule 38 will not be granted to a party who seeks to be relieved from
the effects of the judgment when the loss of the remedy of law was due to his
own negligence, or a mistaken mode of procedure for that matter; otherwise, the
petition for relief will be tantamount to reviving the right of appeal which has
already been lost, either because of inexcusable negligence or due to a mistake
of procedure by counsel. 21 The Rules allow a petition for relief only when there is
no other available remedy, and not when litigants, like the petitioner, lose a
remedy by negligence.
On a final note, the extraordinary writ of certiorari may be issued only where it is
clearly shown that there is patent and gross abuse of discretion as to amount to
an evasion of positive duty or to 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 or personal hostility. 22 The
Court finds no such abuse of discretion in this case.
WHEREFORE, the instant petition is DISMISSED and the assailed resolutions of
the CA are AFFIRMED. No pronouncement as to costs. SO ORDERED.
(Redea v. Court of Appeals, G.R. No. 146611, [February 6, 2007], 543 PHIL
|||
358-371)
SECOND DIVISION
SYLLABUS
GARCIA, J : p
By this petition for review on certiorari, petitioner Charles Cu-Unjieng seeks the
reversal of the following issuances of the Court of Appeals (CA) in CA-G.R. CV
No. 8177-B-UDK, entitled Charles Cu-Unjieng, plaintiff-appellant vs. Union
Bank of the Philippines, et al., defendants-appellees, to wit:
1. Resolution 1 dated May 10, 1999, dismissing, for non-
payment of docket and other lawful fees, petitioner's appeal from
an earlier decisionof the Regional Trial Court at Malolos, Bulacan
which dismissed his complaint for specific performance and
damages against respondent Union Bank of the Philippines and
others; and
2. Resolution 2 dated July 30, 1999 which denied petitioner's Motion
for Reconsideration and ordered expunged the appeal brief
thereto attached.
The facts:
Respondent Union Bank of the Philippines (UBP) is the owner of a
parcel of agricultural land with an area of 218,769 square meters situated in
Barangay Sta. Maria, San Miguel, Bulacan and registered in its name under
Transfer Certificate of Title (TCT) No. TC-1062 of the
Registry of Deeds ofBulacan.
Sometime in January 1994, UBP caused the posting on the bulletin boards of its
branch offices of a three-page list of acquired realty assets available for sale to
interested parties. Included in said list was the aforementioned parcel of land,
offered to be sold for P2,200,000.00.
Petitioner, through a letter 3 dated April 11, 1994 and addressed to Joselito P.
Valera, manager of UBP's Acquired Assets Department, offered to buy the
subject property for a lesser amount of P2,078,305.50, payable as follows: 50%
as down payment with the balance to be paid in equal monthly installments over
a period of two (2) years. Petitioner explained that his offer for an amount lesser
than UBP's asking price was on account of five (5) tenants occupying the subject
land who were allegedly demanding P500,000.00 to voluntarily vacate the same.
As proof of his interest to buy the property, petitioner tendered PCIB Check No.
565827 for P103,915.27, purportedly representing 10% of the 50% down
payment as earnest money or deposit. UBP acknowledged receipt thereof by
way of Union Bank Receipt No. 495081 dated April 11, 1994. DIESaC
On August 30, 1994, petitioner wrote a follow-up letter to UBP inquiring on the
status of his offer to buy the subject premises. 4
Via a reply-letter dated August 31, 1994, the manager of UBP's Acquired Assets
Department advised petitioner that his offer to purchase is yet to be acted upon
because the bank was still awaiting the opinion of its legal division regarding the
sale of "CARPable" agricultural assets acquired by the bank. 5
As it turned out, UBP rejected petitioner's offer as shown by the fact that in
another letter 6 dated December 19, 1994, the bank informed petitioner that his
offer could not be favorably acted upon on account of the legal division's opinion
that sales of lands covered by the Comprehensive Agrarian Reform Law without
prior Department of Agrarian Reform (DAR) approval are considered null and
void. Accordingly, UBP advised petitioner to pick up the refund of his
P103,915.27 "earnest money" at the bank's disbursing unit.
Unable to accept UBP's rejection of his offer, petitioner, through counsel, made a
formal demand 7 for the bank to comply with its obligation to transfer and deliver
the title of the subject property to him by executing the proper
deed of conveyance, under the terms and conditions set forth in his April 11,
1994 offer.
Responding thereto, UBP, thru its counsel, Atty. Luzano, in a letter 8 dated July
19, 1995, reiterated the bank's rejection of petitioner's offer as "the land
being carpable could only be disposed of by the bank either thru Voluntary Offer
to Sell (VOS) or compulsory acquisition, the procedure ofwhich is outlined in Sec.
16" of Republic Act (RA) No. 6657.
It was against the foregoing backdrop of events that, on February 6, 1997, in the
Regional Trial Court (RTC) at Malolos, Bulacan, petitioner filed his complaint 9 in
this case for Specific Performance and Damages against UBP, impleading as co-
defendant in the suit the Register of Deeds of Bulacan. Docketed as Civil Case
No. 80-M-97 and raffled to Branch 9 of the court, the complaint principally sought
UBP's compliance with an alleged perfected contract of sale between it and
petitioner relative to the parcel of land in question. More specifically, the
complaint prays for a judgment ordering UBP to:
a) accept payments from the plaintiff [petitioner] for the sale of the
Property in accordance with the terms and conditions of the letter
dated 11 April 1994;
b) execute a Deed of Absolute Sale over the Property covered by TCT
No. TC 1062 of the Registry of Deeds of the Province of Bulacan
upon the plaintiff's full payment of the amount of Two Million
Seventy Eight Thousand Three Hundred Five & 50/100
(P2,078,305.50), failing in which, the deputy sheriff should be
ordered to execute such deed and the Registry of Deeds to
cancel the title of the Bank and issue a new one in favor of the
plaintiff;
c) pay plaintiff the sum of Five Hundred Thousand Pesos
(P500,000.00) as moral damages;
d) pay plaintiff the sum of Five Hundred Thousand Pesos
(P500,000.00) as exemplary damages;
e) pay plaintiff the sum of Four Hundred Thousand Pesos
(P400,000.00) as attorney's fees; and
f) pay the costs of the suit.
Other reliefs, just and equitable under the premises, are likewise
respectfully prayed for.
After due proceedings, the trial court, in a decision dated September 1,
1998, 10 upon a finding that no perfected contract of sale transpired between the
parties, dismissed petitioner's complaint for lack of sufficient cause of action, thus:
WHEREFORE, on the basis of the evidence adduced and the
laws/jurisprudence applicable thereon, judgment is hereby rendered
DISMISSING the complaint in the above entitled case for
want of sufficient cause of action as well as the defendant's counterclaim
for damages and attorney's fees for lack of proof to warrant the same.
However, defendant Union Bank of the Philippines is ordered to
reimburse plaintiff Charles Cu-Unjieng the amount of P103,915.27
representing the face value of PCIBank Check No. 565827 tendered by
the latter to the former as purported "earnest money", with interest
thereon at the prevailing rates of interest periodically bestowed by UBP
to its savings depositors from April 11, 1994, through the succeeding
years, and until the full amount thereof shall have been delivered to the
plaintiff.
No pronouncement as to costs.
SO ORDERED. DEcITS
With his motion for reconsideration having been denied, petitioner filed with the
trial court a Notice of Appeal 11 therein making known that he is taking an appeal
from the adverse decision to the CA. Acting thereon, the trial court issued an
Order 12 directing the elevation of the records of the case to the CA, whereat
petitioner's appeal was docketed as CA-G.R. CV No. 8177-B-UDK.
As things would have it, in the herein first assailed Resolution dated May 10,
1999, the CA dismissed petitioner's appeal for nonpayment of the required
docket and other lawful appeal fees, to wit:
For failure of the appellant [petitioner] to pay the docket and other lawful
fees (Sec. 4, Rule 41, 1997 Rules of Civil Procedure),
the Court Resolved to DISMISS the appeal pursuant to Sec. 1(c), Rule
50 of the same Rule.
SO ORDERED. 13
Petitioner filed a Motion for Reconsideration, attaching thereto his appellant's
brief. However, in a subsequent Resolution dated July 30, 1999, 14 the
appellate court denied the motion and even expunged from the record the
appellant's brief thereto attached:
Acting on the motion of the plaintiff-appellant [petitioner] for a
reconsideration of the Resolution of May 10, 1999, which dismissed the
appeal for the reason stated therein, and considering the opposition
interposed thereto by defendant-appellee [respondent] Union
Bank of the Philippines and it appearing that the filing of the
notice of appeal of November 5, 1988, was not accompanied by the full
and correct payment of the corresponding appellate court docket and
other lawful fees, and for such tardiness of more than four (4) months,
the Court resolved to DENY the motion for reconsideration and the
attached brief thereto ordered EXPUNGED.
In Pedrosa vs. Hill, 257 SCRA 373, the Supreme Court,
citing Rodillas vs. Commission on Elections (245 SCRA 702 aptly said:
. . . the mere filing of the notice of appeal was not enough. It
should be accompanied by the payment of the correct
amount of appeal fee. In other words, the payment of the full
amount of the docket fee is an indispensable step for the
perfection of an appeal. In both original and appellate cases,
the court acquires jurisdiction over the case only upon the
payment of the prescribed docket fees. Well-rooted is the
principle that perfection of an appeal within the statutory or
reglementary period is not only mandatory but also jurisdictional
and failure to do so renders the questioned decision final and
executory, and deprives the appellate court or body of jurisdiction
to alter the final judgment much less to entertain the appeal. This
requirement of an appeal fee is by no means a mere
technicality of law or procedure. It is an essential requirement
without which the decision appealed from would become final and
executory, as if no appeal was filed at all.
SO ORDERED.
Undaunted, petitioner is now with us via the present recourse seeking a
relaxation of procedural rules and ultimately the reversal and setting aside ofthe
assailed twin resolutions of the appellate court.
Petitioner would have the Court view his failure to pay the appeal docket fees on
time as a non-fatal lapse, or a non-jurisdictional defect which the CAshould have
ignored in order to attain substantial justice. Further, petitioner passes the blame
to the RTC clerk of court who allegedly made the erroneous
computation of docket fees.
PHIL 568-578)
THIRD DIVISION
DECISION
AUSTRIA-MARTINEZ, J : p
On March 14, 2001, Sunwest sent by registered mail another letter, this
time addressed to petitioner, informing her of the dishonor of the RCBC check
and demanding that she pay the said check within five days from receipt of
the letter. 10 The letter was received on March 20, 2001 by Eden Barnedo at
the postal address, "Fernando Avenue, Doa Maria Subd., Daraga, Albay". 11
In her March 20, 2001 reply to Sunwest, petitioner explained that
Sunwest and Muoz Construction had mutual claims against each other:
Muoz Construction had a claim against Sunwest for P10,000,000.00,
including a 15% advance payment, for two river control projects, while
Sunwest had a claim against Muoz Construction for P500,000.00. Given that
the claim of Muoz Construction was bigger than that of Sunwest, petitioner
treated the first claim as having automatically offset, covered or paid the
second claim as represented by the amount of the RCBC check. This explains
why petitioner did "not give emphasis" anymore to the RCBC check, the
amount of which she considered as having been already settled. Petitioner
reminded Sunwest that it was made aware of the offsetting of the amount of
the RCBC check as early as February 15, 2001. 12
Upon a criminal complaint 13 filed by Elizaldy S. Co, Sunwest president,
an Information 14 was filed by the City Prosecutor before the Municipal Trial
Court in Cities (MTCC), Legaspi City, charging petitioner with violation of B.P.
Blg. 22. Petitioner entered a plea of "Not Guilty." 15
After trial, the MTCC rendered a Decision dated August 19,
2003, 16 finding petitioner guilty beyond reasonable doubt of the crime
charged, and sentencing her to pay a fine of P200,000.00; to pay Sunwest
P500,000.00, representing the amount of RCBC Check No. 0000057285, plus
interest thereon at the rate of 12% per annum computed from April 23, 2001,
the date of the filing of the information, until fully paid; and to pay the costs. 17
On appeal by petitioner, the Regional Trial Court (RTC), Legaspi City,
in a Decision dated October 16, 2003, affirmed the MTCC Decision in toto. 18
Petitioner filed a Petition for Review with the CA but the latter dismissed
it outright in the November 19, 2003 Resolution assailed herein, citing the
following grounds:
(a) Failure to attach or incorporate an Affidavit of Service as
required under Section 13, Rule 13 in relation to Section 3, Rule 42 of
the 1997 Rules of Civil Procedure, as amended; and ETHSAI
(b) Failure to furnish copy of the petition and its annexes to the
Office of the Solicitor General which is the counsel of the People of the
Philippines. 19
With the denial by the CA of her Motion for Reconsideration, petitioner
is now before the Court raising the following issues:
Whether or not the Fifth Division of the Court of Appeals gravely
erred in dismissing the petition for review filed by herein petitioner
purely on technical grounds.
Whether or not the court a quo gravely erred in convicting the
petitioner notwithstanding the fact that the criminal complaint was filed
by an unauthorized representative of the private complainant
corporation.
Whether or not the court a quo gravely erred in convicting the
petitioner notwithstanding the fact that the prosecution failed to prove
the element of knowledge of insufficiency of funds in or credit with the
drawee bank on the part of the petitioner.
Whether or not the court a quo gravely erred when it held the
petitioner civilly liable notwithstanding the absence of authority of
Elizaldy S. Co to file the instant case for and in behalf of the private
complainant corporation. 20
The Court finds no merit in the Petition.
Except in criminal cases in which the penalty imposed is reclusion
perpetua or death, an appeal is not a matter of right but of sound judicial
discretion. It may be availed of only in the manner provided by law and the
rules. 21
Rule 42 prescribes the following requirements for the filing with the CA
of a petition for review from a decision of the RTC:
Section 1. How appeal taken; time for filing. A party desiring to
appeal from a decision of the Regional Trial Court rendered in the
exercise of its appellate jurisdiction may file a verified petition for
review with the Court of Appeals, paying at the same time to the clerk
of said Court the corresponding docket and other lawful fees,
depositing the amount of P500.00 for costs, and furnishing the
Regional Trial Court and the adverse party with a copy of the petition.
The petition shall be filed and served within fifteen (15) days from
notice of the decision sought to be reviewed or of the denial of
petitioner's motion for new trial or reconsideration filed in due time after
judgment. Upon proper motion and the payment of the full amount of
the docket and other lawful fees and the deposit for costs before the
expiration of the reglementary period, the Court of Appeals may grant
an additional period of fifteen (15) days only within which to file the
petition for review. No further extension shall be granted except for the
most compelling reason and in no case to exceed fifteen (15) days.
(Emphasis supplied.) AHEDaI
Clearly, therefore, the timeliness of a petition depends not only on its
seasonable filing but also on the prompt service of copy thereof on the
adverse party and the RTC. Thus, the petition must be accompanied by proof
of service as prescribed under Rule 13, viz:
Section 13. Proof of service. Proof of personal service shall
consist of a written admission of the party served, or the official return
of the server, or the affidavit of the party serving, containing a full
statement of the date, place and manner of service. If the service is by
ordinary mail, proof thereof shall consist of an affidavit of the person
mailing of facts showing compliance with section 7 of this Rule. If
service is made by registered mail, proof shall be made by such
affidavit and the registry receipt issued by the mailing office. The
registry return card shall be filed immediately upon its receipt by the
sender, or in lieu thereof the unclaimed letter together with the certified
or sworn copy of the notice given by the postmaster to the addressee.
Failure to serve copy of the petition on the adverse party or to show
proof of service thereof is a fatal defect, 22 for which the petition can be
dismissed under Section 3, Rule 42, thus:
Section 3. Effect of failure to comply with requirements. The
failure of the petitioner to comply with any of the foregoing
requirements regarding the payment of the docket and other lawful
fees, the deposit for costs, proof of service of the petition, and the
contents of and the documents which should accompany the petition
shall be sufficient ground for the dismissal thereof.
In the present case, petitioner failed to serve copy of her petition on the
Solicitor General as counsel of the adverse party, the People of the
Philippines. 23 Hence, the CA did not commit any reversible error in
dismissing her petition. 24
Petitioner did not even show substantial compliance with the
requirement of service of pleading. 25 Although she served copy of her
Petition for Review on Assistant City Prosecutor Catalino C. Serrano, the
latter was no longer counsel of the adverse party when the case was brought
to the CA, nor was he specifically deputized or designated by the Solicitor
General to represent him or receive notices for him. 26 Hence, service on the
Assistant City Prosecutor did not amount to service on the Solicitor
General. 27
However, petitioner argues that, rather than dismiss her petition, the CA
should have advised her to correct the deficiency or taken the initiative of
furnishing the Solicitor General with a copy of the petition and requiring the
latter to comment on it. 28 Furthermore, petitioner appeals for liberality in the
treatment of her appeal, so that it may be decided on the merits rather than on
technicality. 29
aCHcIE
It is true that oftentimes the Court applied the rules with flexibility in
order that the merits of a case will be fully adjudicated upon, notwithstanding
its technical imperfections. 30 But what impels the Court to do so is neither a
party's empty invocations of liberality nor its mechanical correction of the
imperfections. 31 Rather, only a clear showing of prima facie merit of the
petition will persuade the Court to take the extraordinary effort of setting aside
its rules to give way to the imperfect petition. 32 After all, the rationale for
liberality is to bring to light the merits of the petition, unobstructed by mere
deficiencies in its form, such that if the petition has not an iota of merit in it,
then there is nothing for the Court to bring to light at all.
In the present case, while upon motion for reconsideration, petitioner
supplied what were lacking in her petition for review filed with the CA, 33 she
utterly failed to convince the Court that the substantial grounds cited therein
far transcend its technical deficiencies as would justify the resolution of her
petition on its merits rather than form.
A cursory assessment of the arguments of petitioner is necessary.
First, petitioner insists that the criminal case filed against her, as well as
the civil case that was deemed instituted with it, should have been dismissed
for lack of authority of Elizaldy Co to file the same on behalf of Sunwest, the
payee of the RCBC check. 34
The issue of whether a corporate officer may bring suit on behalf of his
corporation for violation of B.P. Blg. 22 is not novel. In Tam Wing Tak v.
Makasiar, 35 the Court affirmed the dismissal of a criminal case for violation
of B.P. Blg. 22 for lack of authority of the private complainant, thus:
Second, it is not disputed in the instant case that Concord, a
domestic corporation, was the payee of the bum check, not petitioner.
Therefore, it is Concord, as payee of the bounced check, which is the
injured party. Since petitioner was neither a payee nor a holder of the
bad check, he had neither the personality to sue nor a cause of action
against Vic Ang Siong. Under Section 36 of the Corporation Code,
read in relation to Section 23, it is clear that where a corporation
is an injured party, its power to sue is lodged with its board of
directors or trustees. Note that petitioner failed to show any proof
that he was authorized or deputized or granted specific powers by
Concord's board of director to sue Victor And Siong for and on
behalf of the firm. Clearly, petitioner as a minority stockholder
and member of the board of directors had no such power or
authority to sue on Concord's behalf. . . . 36 (Emphasis supplied)
We applied the same rule just recently to Ilusorio v. Ilusorio, 37 which
involved a criminal complaint for robbery and qualified trespass. DcCITS
However, it bears emphasis that in both cases, the deficiency in the
complaint was challenged by the accused at the preliminary investigation
stage, or before he entered a plea upon arraignment. On the contrary, in the
present case, petitioner questioned the authority of Elizaldy Co after
arraignment and completion of the prosecution's presentation of evidence.
Thus, she is barred from raising such objection under Section 9, Rule 117 of
the Rules of Court, to wit:
Section 9. Failure to move to quash or to allege any ground
therefor. The failure of the accused to assert any ground of a motion
to quash before he pleads to the complaint or information, either
because he did not file a motion to quash or failed to allege the same
in said motion, shall be deemed a waiver of any objections except
those based on the grounds provided for in paragraphs (a), (b), (g),
and (i) of section 3 of this Rule.
The deficiency in the complaint/information arising from the lack of
authority of Elizaldy Co was not jurisdictional. It did not detract from the
unquestioned authority of the Assistant City Prosecutor to file the Information,
nor impair the jurisdiction of the MTCC to act on the same. 38
Second, petitioner harps on the purported lack of notice to her of the
dishonor of the RCBC check. This contention flies in the face of documentary
evidence consisting of the March 20, 2001 letter of petitioner to Sunwest
where she expressly acknowledged receiving the March 14, 2001 notice of
dishonor of the RCBC check. 39
In fine, for deficiency in form and for lack of showing that her appeal to
the CA was meritorious, the petition for review of petitioner was correctly
dismissed by the CA.
WHEREFORE, the petition is DENIED. Costs against petitioner. SO
ORDERED.
||| (Muoz v. People, G.R. No. 162772, [March 14, 2008], 572 PHIL 258-270)
DECISION
YNARES-SANTIAGO, J : p
This petition for certiorari under Rule 65 of the Rules of Court assails
the February 6, 2006 Resolution 1 of the Sandiganbayan in Criminal Case No.
27808 granting the prosecution's Manifestation with Motion for Additional
Marking of Documentary Exhibits and the June 21, 2006 Resolution 2 denying
the motions for reconsideration separately filed by petitioner and his co-
accused. aDSAEI
SO ORDERED.
(San Juan v. Sandiganbayan, G.R. No. 173956, [August 6, 2008], 583 PHIL
|||
309-320)
DECISION
CHICO-NAZARIO, J : p
This is a Petition for Review on Certiorari assailing the Decision 1 of the
Court of Appeals dated 27 September 2005 and its Resolution dated 7 March
2006 in CA-G.R. CV No. 83507 affirming the Decision of the Regional Trial
Court (RTC) of Tagaytay City, Branch 18.
The factual and procedural antecedents of this case are as follows:
On 18 October 2000, the spouses James and Maria Rosa
Nieves Relova and the spouses Bienvenido and Eufracia Perez, respondents
before this Court, filed against Atty. Ana Liza Luna, Clerk of Court of Branch
18 of the RTC of Tagaytay City, and herein petitioner Teresita Monzon an
initiatory pleading captioned as a Petition for Injunction. The case, which was
filed before the same Branch 18 of the RTC of Tagaytay City, was docketed
as Civil Case No. TG-2069. STADIH
The Order by the trial court which allowed respondents to present their
evidence ex parte states:
In view of the absence of [Monzon] as well as her counsel
despite due notice, as prayed for by counsel for by [respondents
herein], let the reception of [respondent's] evidence in this case be held
ex-parte before a commissioner who is the clerk of court of this Court,
with orders upon her to submit her report immediately upon completion
thereof. 5
It can be seen that despite the fact that Monzon was not declared in
default by the RTC, the RTC nevertheless applied the effects of a default
order upon petitioner under Section 3, 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.
In his book on remedial law, former Justice Florenz D. Regalado writes
that failure to appear in hearings is not a ground for the declaration of a
defendant in default:
Failure to file a responsive pleading within the reglementary
period, and not failure to appear at the hearing, is the sole ground
for an order of default (Rosario, et al. vs. Alonzo, et al., L-17320, June
29, 1963), except the failure to appear at a pre-trial conference
wherein the effects of a default on the part of the defendant are
followed, that is, the plaintiff shall be allowed to present evidence ex
parte and a judgment based thereon may be rendered against the
defendant (Section 5, Rule 18). 6 Also, a default judgment may be
rendered, even if the defendant had filed his answer, under the
circumstance in Sec. 3(c), Rule 29. 7
Hence, according to Justice Regalado, the effects of default are
followed only in three instances: (1) when there is an actual default for failure
to file a responsive pleading; (2) failure to appear in the pre-trial conference;
and (3) refusal to comply with modes of discovery under the circumstance in
Sec. 3 (c), Rule 29. THEDcS
Unlike Rule 68, which governs judicial foreclosure sales, neither Act No.
3135 as amended, nor A.M. No. 99-10-05-0 grants to junior encumbrancers
the right to receive the balance of the purchase price. The only right given to
second mortgagees in said issuances is the right to redeem the foreclosed
property pursuant to Section 6 of Act No. 3135, as amended by Act No. 4118,
which provides:
Sec. 6. Redemption. In all cases in which an extrajudicial
sale is made under the special power hereinbefore referred to, the
debtor, his successors in interest or any judicial creditor or judgment
creditor of said debtor, or any person having a lien on the property
subsequent to the mortgage or deed of trust under which the
property is sold, may redeem the same at any time within the term
of one year from and after the date of the sale; and such
redemption shall be governed by the provisions of sections four
hundred and sixty-four to four hundred and sixty-six, 14 inclusive, of the
Code of Civil Procedure, in so far as these are not inconsistent with
this Act.
Even if, for the sake of argument, Rule 68 is to be applied to
extrajudicial foreclosure of mortgages, such right can only be given to second
mortgagees who are made parties to the (judicial) foreclosure. While a second
mortgagee is a proper and in a sense even a necessary party to a proceeding
to foreclose a first mortgage on real property, he is not an indispensable party,
because a valid decree may be made, as between the mortgagor and the first
mortgagee, without regard to the second mortgage; but the consequence of a
failure to make the second mortgagee a party to the proceeding is that the lien
of the second mortgagee on the equity of redemption is not affected by the
decree of foreclosure. 15
A cause of action is the act or omission by which a party violates the
right of another. 16 A cause of action exists if the following elements are
present: (1) a right in favor of the plaintiff by whatever means and under
whatever law it arises or is created; (2) an obligation on the part of the named
defendant to respect or not to violate such right; and (3) an act or omission on
the part of such defendant violative of the right of plaintiff or constituting a
breach of the obligation of defendant to the plaintiff for which the latter may
maintain an action for recovery of damages. 17 In view of the foregoing
discussions, we find that respondents do not have a cause of action against
Atty. Ana Liza Luna for the delivery of the subject amounts on the basis of
Section 4, Rule 68 of the Rules of Court, for the reason that the foregoing
Rule does not apply to extrajudicial foreclosure of mortgages. aSTAIH
289-306)
DECISION
CHICO-NAZARIO, J : p
5. Civil Case No. L-97-0236, which was filed by the Heirs of Agapito
Villanueva covering a parcel of land with an area of 10,572
square meters, located in Magasawang Mangga, Barrio Pugad
Lawin, Las Pias, Rizal;
6. Civil Case No. L-97-0237, which was filed by the Heirs of Hilarion
Garcia, et al., covering a parcel of land with an area of 15,372
square meters, located in Magasawang Mangga, Barrio Pugad
Lawin, Las Pias, Rizal under Psu-96920 approved by the
Director of the Bureau of Lands on 16 January 1933;
7. Civil Case No. L-97-0238, which was filed by Serafina SP Argana, et
al., covering a parcel of land with an area of 29,391 square
meters, located in Magasawang Mangga, Barrio Pugad Lawin,
Las Pias, Rizal under Psu-96909 approved by the Director of the
Bureau of Lands on 18 January 1933; and
8. Civil Case No. L-97-0239, which was filed by the Heirs of Mariano
Villanueva, et al., covering a parcel of land with an area of 7,454
square meters, located in Magasawang Mangga, Barrio Pugad
Lawin, Las Pias, Rizal under Psu-96910 approved by the
Director of the Bureau ofLands on 16 January 1933.
The eight Complaints 11 were similarly worded and contained
substantially identical allegations. Petitioners claimed in their Complaints that
they had been in continuous, open, and exclusive possession of the afore-
described parcels of land (subject properties) for more than 90 years until they
were forcibly ousted by armed men hired by respondents in 1991. They had
cultivated the subject properties and religiously paid the real estate taxes for
the same. Respondents cannot rely on Transfer Certificates of Title (TCTs)
No. 9176, No. 9177, No. 9178, No. 9179, No. 9180, No. 9181 and No.
9182, 12 issued by the Registry of Deeds of Las Pias in their names, to
support their claim over the subject properties since, petitioners averred, the
subject properties were not covered by said certificates. Petitioners also
alleged that said TCTs, purportedly derived from Original Certificate of Title
(OCT) No. 6122, issued in favor of Jose Velasquez, were spurious. ACIDTE
It also appears from the records that the RTC did not conduct a hearing
to receive evidence proving that petitioners were guilty of laches. Well-settled
is the rule that the elements of laches must be proven positively. Laches is
evidentiary in nature, a fact that cannot be established by mere allegations in
the pleadings and cannot be resolved in a motion to dismiss. At this stage,
therefore, the dismissal of petitioners' Complaints on the ground of laches is
premature. Those issues must be resolved at the trial of the case on the
merits, wherein both parties will be given ample opportunity to prove their
respective claims and defenses. 44
Complaints are not barred by
res judicata.
Lastly, respondents argued in their Motion to Dismiss that petitioners'
Complaints are barred by res judicata, citing Vda. de Cailles andOrosa.
Likewise, petitioners are barred from instituting any case for
recovery of possession by the MTC Decision in Civil Case No. 3271.
Res judicata refers to the rule that a final judgment or decree on the
merits by a court of competent jurisdiction is conclusive of the rights ofthe
parties or their privies in all later suits on all points and matters determined in
the former suit. Res judicata has two concepts: (1) "bar by prior judgment" as
enunciated in Rule 39, Section 47 (b) of the Rules of Civil Procedure; and (2)
"conclusiveness of judgment" in Rule 39, Section 47 (c).
There is "bar by prior judgment" when, as between the first case where
the judgment was rendered, and the second case that is sought to be barred,
there is identity of parties, subject matter, and causes of action. But where
there is identity of parties and subject matter in the first and second cases,
but no identity of causes of action, the first judgment is conclusive only as to
those matters actually and directly controverted and determined and not as to
matters merely involved therein. There is "conclusiveness of judgment". Under
the doctrine of conclusiveness ofjudgment, facts and issues actually and
directly resolved in a former suit cannot again be raised in any future case
between the same parties, even if the latter suit may involve a different claim
or cause of action. The identity of causes of action is not required but merely
identity of issues. 45
DSacAE
Vda. de Cailles and Orosa cannot bar the filing of petitioners'
Complaints before the RTC under the doctrine of conclusiveness of judgment,
since they involve entirely different subject matters. In both cases, the subject
matter was a parcel of land referred to as Lot 9 Psu-11411 Amd-2, while
subject matter of the petitioners' Complaints are lots which are not included in
the said land.
It follows that the more stringent requirements of res judicata as "bar by
prior judgment" will not apply to petitioners' Complaints. In Vda. de Cailles, the
Court confirmed the ownership of Dominador Mayuga over a 53-hectare
parcel of land located in Las Pias, Rizal, more particularly referred to as Lot
9, Psu-11411, Amd-2. The Court also recognized that Nicolas Orosa was
Dominador Mayuga's successor-in-interest. However, the judgment in said
case was not executed because the records of the Land Registration
Authority revealed that the property had previously been decreed in
favor of Jose T. Velasquez, to whom OCT No. 6122 was issued. During the
execution proceedings, Goldenrod Inc. filed a motion to intervene, the
granting of which by the trial court was challenged in Orosa. The Court held
in Orosa that Goldenrod, Inc., despite having acquired the opposing
rights of Nicolas Orosa and Jose T. Velasquez to the property sometime in
1987, no longer had any interest in the same as would enable it to intervene
in the execution proceedings, since it had already sold its interest in February
1989 to the consortium composed ofrespondents, Peaksun Enterprises and
Export Corporation, and Elena Jao.
The adjudication of the land to respondents' predecessors-in-interest
in Vda. de Cailles and Orosa is not even relevant to petitioners' Complaints.
According to petitioners' allegations in their Complaints, although the subject
properties were derived from the 119.8-hectare parcelof land referred to as
Lot 9, Psu-11411, they are not included in the 53-hectare portion thereof,
specifically identified as Lot 9, Psu-11411, Amd-2, subject of Vda. de
Cailles and Orosa. This was the reason why petitioners had to cite Vda. de
Cailles and Orosa: to distinguish the subject properties from the land acquired
by respondents and the other members of the consortium. There clearly being
no identity of subject matter andof parties, then, the rulings of this Court
in Vda. de Cailles and Orosa do not bar by prior judgment Civil Cases No. LP-
97-0228, No. LP-97-0229, No. LP-97-0230, No. LP-97-0231, No. LP-97-0236,
No. LP-97-0237, No. LP-97-0238, and No. LP-97-0239 instituted by
petitioners in the RTC.
The Court is aware that petitioners erroneously averred in their
Complaints that the subject properties "originated from Psu-11411, Lot 9,
Amd-2", instead of stating that the said properties originated from Psu-11411,
Lot 9. However, this mistake was clarified in later allegations in the same
Complaints, where petitioners stated that "Psu-114, Lot 9
consists of 1,198,017 square meters", or 119.8 hectares when converted,
while Psu-11411, Lot 9, Amd-2 referred to a 53-hectare parcel. Petitioners
pointed out that in Vda. de Cailles and Orosa, the Court acknowledged "the
ownership [of respondents' predecessor-in-interest] only over a fifty-three (53)
hectare parcel, more particularly referred to as Lot 9 Psu-11411, Amd-2."
Thus, petitioners argued that the rights which respondents acquired from
Mayuga and Orosa "cover[ed] only 531,449 square meters or 53
hectares of Psu-11411, Lot 9. They do not extend to the latter's other
portion of 1,198,017 square meters part of which [petitioners] had been
occupying until they were forcibly evicted by [respondents]." Accordingly, the
single statement in the Complaints that the subject properties originated from
Lot 9, Psu-11411, Amd-2, is an evident mistake which cannot prevail over the
rest of the allegations in the same Complaints. DaIAcC
SYNOPSIS
The officers of Danao Police Station and Pardo Sub-Station took Rutchel Apostol
from the house of Eduardo Balagtas without any warrant of arrest. Petitioner
Balagtas, acting on behalf of Rutchel, initiated a special proceeding for habeas
corpus before the Regional Trial Court of Cebu City. The Regional Trial Court of
origin rendered a decision dismissing the complaint for lack of cause of action
since it has been shown that Rutchel was under the care and custody of her
parents and not being illegally detained by the respondents. Eduardo Balagtas
appealed to the Court of Appeals. The Court of Appeals came out with a decision
affirming the decision below. Undaunted, the petitioner found his way to this
Court via the present petition for certiorari.
EaIDAT
According to the Court, the petitioner failed to substantiate his petition for habeas
corpus. The facts clearly indicated that Rutchel was not forcibly detained or
abducted by her mother. She voluntarily went with her mother after the latter
persuaded her to return to their home. There was no amount of force employed
on her, which would amount to deprivation of her liberty. The petition was
dismissed for lack of merit.
SYLLABUS
DECISION
PURISIMA, J : p
This is a Petition for Certiorari under Rule 65 of the Revised Rules of Court
assailing the Decision of the Court of Appeals 1 in CA G.R. SP No. 28155, dated
January 26, 1993, affirming the Decision of Branch 11, 7th Judicial Region,
Regional Trial Court of Cebu, dismissing the petition in Special Proceeding Case
No. 3328-CEB, entitled "In the Matter of the Petition for Habeas Corpus of
Rutchel Apostol". LLjur
The undersigned asked Miss Apostol whether she is held against her will
in their home to which she answered in the affirmative. When asked
whether she's free to go out, she said she can but only if she has a
companion. She said that she has freedom but not the freedom of doing
what she wants and likes to do. When further asked what does she
wants and likes to do. When further asked what does she like, being
there in their house or somewhere else, she said that she prefers the
Chaitanya Mission. The undersigned also asked her whether she is fit to
go to Cebu City and show herself in Court on February 28, 1992, the
next scheduled hearing, she answered "yes" and she wants to. When
questioned whether she is under treatment, she said "no". However, the
psychiatrist said that she has been undergoing psychotherapy, a
treatment which do not prescribe medicines, but only deals in
psychology. In short, is just talking with the patient, listening to her
problems and ideas and in the process, advicing and helping her. The
psychiatrist called this psychotherapy. According to him psychiatry deals
in two things, the objective and subjective observations. Miss Rutchel
Apostol argued and insisted that there was no mention of her being
under treatment, that the psychiatrist is merely her and her mother's
mediator. But when asked by the doctor to confirm to the truth that she
once admitted that she suffered depression which sometimes made her
contemplate suicide, she confirmed to the truth of the matter but
qualified that she is coping with the situation.
At this point, the undersigned sought the psychiatrist's opinion on Miss
Apostol's fitness to travel to Cebu City and show herself in Court on
February 28, 1992, the psychiatrist said that as of that time, he would not
advice her to. However, he said that in about four (4) weeks time from
February 22, 1992, Ms. Apostol may do so. The psychiatrist believes
that Ms. Apostol may not be able to cope with the stress yet because of
the different factors that may ensue.
Before the investigation ended, Ms. Rutchel Apostol offered three
(3) conditions to her mother which her mother rejected, namely:
1. That she be allowed to go to the mission in Cebu for one (1) month;
2. That when summer classes will open, she will enroll and be allowed to visit the
Chaitanya Mission in Iloilo; and
3. That after she will finish her college course, she will be left free to go where she
pleases." 2
On March 25, 1992, the Regional Trial Court of origin rendered a Decision
dismissing the Complaint for lack of cause of action since it has been shown that
Rutchel Apostol was under the care and custody of her parents and not being
illegally detained by the respondents." 3
On August 11, 1992, Eduardo Balagtas took an appeal to the Court of Appeals,
docketed as CA-G.R. SP. No. 28155, asseverating:
"Although the original respondents were the policemen who forcibly took
away Rutchel Apostol from the Chaitanya Mission, and whom the
petitioner believed were in custody of Rutchel Apostol, the petition was
deemed amended when the policemen in their comment to the petition
alleged that it is the parents of Rutchel Apostol who are now in actual
custody of Rutchel Apostol and the parents of Rutchel Apostol admitted
that they are in custody of Rutchel Apostol and submitted themselves to
the jurisdiction of this Honorable Court by allowing the Commissioner
appointed by this Honorable Court to examine Rutchel Apostol in their
house in Iloilo City.
xxx xxx xxx
It is to be stressed that since Rutchel Apostol is now 19 years of age,
she has now reached the age of majority and is now emancipated from
parental control:
ARTICLE 234. Emancipation takes place by the
attainment of majority. Unless otherwise provided,
majority commences at the age of eighteen years." cdasia
Since Rutchel Apostol has reached the age of majority, the parents of
Rutchel Apostol cannot keep her in their custody against her will:
"xxx xxx xxx
In a case, the petitioner asked for writ of habeas corpus to return
his daughter, who had already reached the age of majority, to her
parental home which she left without his consent as father nor the
consent of her mother. In denying the application, the Supreme
Court held: 'There can be no question that parental authority,
which includes the right to custody, terminates upon a child
reaching the age of majority, at which age the child acquires the
right, power and privilege to control his person (articles 314 and
137, Civil Code). This right to control one's person includes the
right to choose a separate place of residence and the persons in
whose company he desires to live. The freedom is incompatible
with custody; no one can be said to have freedom to control his
person and at the same time continue subject to someone's
custody. As habeas corpus applies only in cases where the
rightful custody of a person is denied to another (section 1, Rule
102, Rules of Court), petitioner herein would be entitled thereto
only if the right to custody of his daughter is reserved to him by
law.
Emancipation by majority is always absolute as to one's person;
there is no provision in the law that limits it in any case. Article
317 refers to control over property. Article 321 is not an exception
to the effects of emancipation by attainment of the age of majority;
it is a limitation of the right of an emancipated daughter to leave
the home of her parents if she is living with them, in the interest of
public decorum (2 Manresa, 786-787). It can not, therefore, be
said that the daughter, who after majority continues to live with
her parents, remains under her parents custody. The right to
freedom and control of one's person is a natural right; no
limitation thereto can be imposed or inferred, except by express
provision of law. The prohibition for daughters from leaving their
parental homes, if they live in company with their parents, is a
limitation of a natural right and can not be enlarged beyond its
very limited scope; it can not be extended by interpretation into a
sort of parental authority with its corresponding concomitant of
custody. Custody ends with emancipation, and the mere fact that
she may have live with them cannot be considered as a
continuation of revival of the custody, which had definitely
terminated upon her emancipation.' (V-B, Francisco, The Revised
Rules of Court In the Philippines, 696 citing Dy Pico v. Ricardo,
47 O.G. 5232)
The parents of Rutchel Apostol should be ordered to discharge Rutchel
Apostol from their custody:
'When prisoner discharged if no appeal. When the court or
judge has examined into the cause of the caption and restraint of
the prisoner, and is satisfied that he is unlawfully imprisoned or
restrained, he shall forthwith order his discharge from
confinement, but such discharge shall not be effective until a copy
of the order has been served on the officer or person detaining
the prisoner does not desire to appeal, (sic) the petitioner shall be
forthwith release.' Section 15, Rule 102)" 4
On January 26, 1993, the Fifth Division of the Court of Appeals came out with a
Decision 5 affirming the Decision below, ratiocinating as follows:
". . . Petitioner has failed to establish a cause of action against the
respondent members of the Philippine National Police of the Danao
Police Station and the PARDO Sub-Station, Cebu City Police Station.
There is no showing that respondents ever detained or are restraining
Rutchel Apostol, in whose behalf the petition for habeas corpus is
purportedly filed. It is the burden of the petitioner to substantiate by clear
and convincing evidence that Rutchel is under the custody or is
unlawfully detained and restrained of her liberty by the respondents.
Petitioner's evidence failed to prove this; and the petition should be
dismissed (Ngaya-an vs. Balweg, 200 SCRA 149).
In this case, respondents presented the mother of Rutchel Apostol, who
affirmed in court that the respondents merely responded to her request
for assistance in locating her daughter, who voluntarily returned home
with her to Iloilo City on the day that she was located. Although the
Commissioner's report tends to show that she still wishes to join the
Chaitanya Mission in Cebu City and that she is presently in the house of
her parents, where she is not free to do what she wants and likes to do,
the parents are not named as respondents in this case. The fact that the
mother Angeles Apostol, testified in behalf of herein respondents does
not make the parents a party to this special proceeding, nor justify the
issuance of an order directed against parties not properly impleaded.
The thrust of the petitioner's complaint is that Rutchel Apostol was
forcibly taken and abducted on November 18, 1991 and that
respondents continue to detain her at the Pardo Police Sub-station
and/or Danao Police Station. The essential allegations of the petition
were not proven, and the petition was correctly dismissed." 6
Undaunted, the petitioner found his way to this Court via the present Petition
for Certiorari, assigning as lone error, that: LexLib
"THE RESPONDENT COURT ERRED IN DISMISSING THE PETITION ON THE
GROUND OF TECHNICALITY THAT THE MOTHER OF RUTCHEL APOSTOL WHO
IS ILLEGALLY DETAINING HER WAS NOT FORMALLY IMPLEADED AS A
RESPONDENT IN THIS CASE." 7
The petition is not impressed with merit.
To begin with, habeas corpus embraces so broad a dimension. In one case, this
Court held that:
". . . habeas corpus, aside from being thorough and complete, affords
prompt relief from unlawful imprisonment of any kind, and under all
circumstances. . . ." (Cf. People ex rel Livingston vs. Wyatt, 186 N.Y.
383; 79 N.E. 330)" (Pepito Lao Alfonso et. al., v. Mirtiniano Vivo, March
31, 1966, G. R. No. L-20801, 16 SCRA 510, 517)
However, explicit is the following provision of the Revised Rules of Court:
Section 2, Rule 3. A real party in interest is the party who stands to be
benefited or injured by the judgment in the suit, or the party entitled to
the avails of the suit. Unless otherwise authorized by law or these Rules,
every action must be prosecuted or defended in the name of the real
party in interest.
The trial Court did not acquire jurisdiction over the person of Rutchel's mother
(Mrs. Angeles Apostol) since she was not impleaded as defendant and neither
did she intervene in the case as required by the Rules. No judgment could be
pronounced against her; otherwise, she would be deprived of the rudiments of
due process.
Petitioner has no cause of action against her and therefore, the respondent Court
correctly dismissed the Petition. If the suit is not brought in the name of or
against the real party in interest, a motion to dismiss may be filed on the ground
that the Complaint states no cause of action (Sec. 1(g), Rule 16). The
respondents sufficiently explained that they conducted police surveillance and
merely acted upon the directive of the PNP officials who, in turn, performed their
duties as requested by Rutchel's mother.
A real party in interest is the party who could be benefited or injured by the
judgment or the party entitled to the avails of the suit.
Then too, in Bautista v. Barredo, et al., G.R. No. 20653, April 30, 1965, 13 SCRA
744, 746, the Court held:
"In dismissing the case against defendant Jose M. Barredo the court a
quo took the view that he could not be impleaded on the basis of the
judgment rendered in Civil Case No. 1636 for the reason that he was not
a party therein upon the theory "that an action on the judgment cannot
be maintained against one not a party or not bound by it. . . ."
In Filipinas Ind. Corp., et al. v. San Diego, G.R. No. 22347, May 27, 1968, it was
held that the foregoing rule is mandatory. Again, in another case, the Court ruled
thus:
". . . and as Ayala y Cia, Alfonso Zobel and the Dizons were the only
ones impleaded as parties-defendants, the judgment was made effective
exclusively against them. . . ." (Republic v. Ayala y Cia, et. al, G. R. L-
20950, May 31, 1965)
Assuming arguendo that the mother of Rutchel was impleaded, still the petitioner
failed to substantiate the petition for habeas corpus. The facts clearly indicate
that Rutchel is on her right mind, not to mention her being one of the topnotchers
in the Midwifery Licensure Examination given by the Professional Regulations
Commission. She was not forcibly detained or abducted by her mother, the fact
being that she voluntarily went with her mother after the latter persuaded her to
return to their home in Iloilo City. There was no amount of force employed on her,
which would amount to deprivation of liberty.
WHEREFORE, the Petition is DISMISSED for lack of merit, and the Decision of
the Court of Appeals in CA G.R. SP No. 28155 affirming the Decision of Branch
11 of the Regional Trial Court of Cebu AFFIRMED. No pronouncement as to
costs. SO ORDERED.
(Balagtas v. Court of Appeals, G.R. No. 109073, [October 20, 1999], 375 PHIL
|||
480-490)
DECISION
QUISUMBING, J : p
Before us is a petition for review assailing the Resolutions dated June 15,
2004 1 and August 23, 2004 2 of the Court of Appeals in CA-G.R. SP No. 83895
for annulment of judgment.
The pertinent facts are undisputed.
Midas Diversified Export Corp. (Midas), thru its president, Mr. Samuel U. Lee,
obtained six (6) loans from private respondent Metropolitan Bank and Trust
Company (Metrobank), amounting to P588,870,000 as evidenced by promissory
notes. To secure the payment of an P8,000,000 loan, Louisville Realty &
Development Corporation (Louisville), thru its president, Mr. Samuel U. Lee,
executed in favor of Metrobank, a real estate mortgage over three parcels of land
situated at No. 40 Timog Ave., Brgy. Laging Handa, Quezon City, with all the
buildings and improvements thereon. The properties are covered by Transfer
Certificates of Title (TCT) Nos. N-163455, N-166349 and N-166350 issued by the
Registry of Deeds of Quezon City.
When the debtor-mortgagor failed to pay, Metrobank extra-judicially foreclosed
the real estate mortgage in accordance with Act No. 3135, 3 as amended.
Thereafter, in a public auction, Metrobank was the highest bidder. A Certificate of
Sale 4 dated December 11, 2000 was duly registered with the Registry of Deeds
of Quezon City on December 13, 2000. When Louisville refused to turn over the
real properties, on March 17, 2001, Metrobank filed before the Regional Trial
Court (RTC), Branch 223, Quezon City, an ex parte petition 5 for the issuance of
a writ of possession docketed as LRC Case No. Q-13915(01). After presentation
of evidence ex parte, the RTC granted the petition in an Order 6 dated July 5,
2001, the dispositive portion of which reads as follows: HTAIcD
Third, we also note that petitioner availed of the wrong remedy in filing Civil Case
No. Q02-46514, for nullification of real estate mortgage and extrajudicial
foreclosure sale, more than six (6) months after the issuance of the writ of
possession considering the mandate of Section 8 27 of Act No. 3135, as
amended. Hence, even petitioner's action for annulment of judgment cannot
prosper as it cannot be a substitute for a lost remedy. AaIDHS
RESOLUTION
QUISUMBING, J : p
For review on certiorari is the Decision 1 dated February 22, 1995 of the Court of
Appeals in CA-G.R. SP No. 23687, which annulled and set aside the judgment
and orders of the Regional Trial Court (RTC) of Digos, Davao del Sur, Branch 19,
in Civil Case No. 2647, Maria Gonzales v. Priscilla Manio and Jose Manio.
The facts as culled from the records are as follows:
On April 2, 1990, petitioner Maria Gonzales filed a complaint against the spouses
Priscilla and Jose Manio with the RTC of Digos, Davao del Sur, Branch 19.
Gonzales sought the execution of the deed of sale in her favor for the property
she bought from Priscilla Manio. She also asked for damages and attorney's fees.
Gonzales alleged that on April 26, 1988, she paid P10,000 to Priscilla as
downpayment on the P400,000 purchase price of the lot with improvements,
since Priscilla had a special power of attorney from her son, Aristotle, the owner
of the land. They also agreed that the balance would be paid within three months
after the execution of the deed of sale. Yet, after the lapse of the period and
despite repeated demands, Priscilla did not execute the deed of sale. Thus,
Gonzales filed an action for specific performance against the spouses Priscilla
and Jose Manio.
For failure to file an Answer, the Manios were declared in default and Gonzales
was allowed to present evidence ex parte.
After trial, the court rendered judgment in favor of Gonzales, which we quote
verbatim:
WHEREFORE, premises considered, it is hereby ordered that judgment
is rendered in favor of plaintiff and against defendants, ordering
defendants:
1) To execute the final deed of sale and transfer of the property
mentioned in paragraph 4 above to plaintiff, or should the
defendant refuse to execute the deed of sale, the Clerk of
Court be directed to execute the same upon plaintiff's
depositing of the sum of P390,000.00 with the Clerk of
Court as complete and valid payment thereof to defendant
Priscilla Manio;
2) To pay plaintiff the sum of P100,000.00 for moral damages and
P50,000.00 for exemplary damages;
3) To pay plaintiff the sum of P50,000.00 for attorney's fees plus
P700.00 per appearances of plaintiff's counsel before this
Honorable Court as appearance fees;
4) To pay plaintiff the sum of P5,000.00 as litigation expenses.
SO ORDERED. 2
Gonzales deposited with the Clerk of Court the P390,000 balance of the price
and filed a motion for execution. 3 She later withdrew the motion because the trial
court's decision was not properly served on the defendants. After numerous
delays, the sheriff finally personally served a copy of the decision on Priscilla on
August 4, 1990, at the ungodly hour of 12:00 midnight at Sitio Wilderness,
Barangay Mount Carmel, Bayugan, Agusan del Sur. 4
Since there was no appeal, the trial court's decision became final and executory.
But the writ of execution was not served upon the defendants, since according to
the Sheriff's Return, the defendants could not be located. The sheriff, likewise,
informed the trial court that the money judgment could be readily satisfied by the
petitioner's cash deposit should the trial court grant the motion to release the
cash deposit filed by Gonzales. 5
Subsequently, Gonzales filed a motion asking that the Clerk of Court be directed
to be the one to execute a deed of conveyance. Gonzales also filed a motion to
withdraw the cash deposit for the balance of the price to offset the award of
damages. The trial court granted both motions but later modified the amount to
P207,800.
On October 29, 1990, Gonzales filed a petition for the nullification of the Owner's
Duplicate Certificate of Title No. 16658 and asked that a new certificate be
issued in her name to give effect to the deed of conveyance since Priscilla
refused to relinquish the owner's duplicate copy.
Consequently, the trial court declared the owner's duplicate copy of TCT No.
16658 void, and directed the City Civil Registrar to issue a new certificate of title
in favor of Gonzales. The orders were reiterated in subsequent orders and TCT
No. T-23690 was issued under the name of Gonzales.
On December 14, 1990, herein respondents Maria Paz Dabon and Rosalina
Dabon, claiming to have bought the aforementioned lot from Aristotle Manio filed
before the Court of Appeals a petition for annulment of judgment and orders of
the RTC in Civil Case No. 2647. The case was docketed as CA G.R. SP No.
23687, entitled "Maria Paz Dabon and Rosalina Dabon v. Hon. Dominador F.
Carillo, Presiding Judge, RTC Branch 19, Digos, Davao del Sur; Bonifacio J.
Guyot, Clerk of Court and Provincial Sheriff of Davao del Sur; Alfredo C. Senoy,
Deputy Prov. Sheriff assigned to RTC Br. 19, Digos, Davao del Sur; Marcos D.
Risonar, Jr., Registrar of Deeds of Davao del Sur; and Maria Gonzales." The
Dabons alleged therein that the judgment of the trial court was void ab
initio because of lack of jurisdiction over their persons, as the real parties in
interest, and that they were fraudulently deprived of their right to due process.
They also prayed for a Temporary Restraining Order and for Preliminary
Prohibitory Injunction against Gonzales. They gave the trial court a notice of their
action for the annulment of the judgment and subsequent orders in Civil Case No.
2647. 6
Meanwhile, Gonzales filed before the trial court a motion for the issuance of a
writ of possession. The Dabons filed an opposition on the following grounds: (1)
The writ of possession cannot be enforced because the defendants named in the
writ, the Manios, were no longer in possession of the property; (2) They had
bought the lot with the improvements therein and had taken possession, although
they had not yet registered their ownership with the Register of Deeds; and (3)
The court did not acquire jurisdiction over them as the real parties in interest. ScAaHE
On December 17, 1990, the Court of Appeals, without giving due course to the
petition, issued a resolution restraining the trial court from implementing its
Decision dated June 19, 1990 7 and its subsequent orders thereto in Civil Case
No. 2647 until further notice from the Court of Appeals. It also required Gonzales
to file her Comment. 8
The Court of Appeals in a resolution denied the application for preliminary
injunction and appointed a commissioner to receive evidence of the parties. 9
Following the Commissioner's report, the Court of Appeals found that (1) the
contract of sale between Gonzales and Priscilla was unenforceable because the
sale was evidenced by a handwritten note which was vague as to the amount
and which was not notarized; (2) the trial court did not acquire jurisdiction over
the indispensable parties; and (3) the proceedings were attended with fraud. The
Court of Appeals nullified the judgment of the RTC in Civil Case No. 2647 and
cancelled TCT No. T-23690. The dispositive portion of said judgment reads as
follows:
WHEREFORE, premises considered, the questioned decision, dated
June 19, 1990 (and all orders arising therefrom), of the Regional Trial
Court (Branch 19) in Digos, Davao del Sur is hereby ANNULLED and
SET ASIDE and the Transfer Certificate of Title No. T-23690 which
was issued thereafter declared null and void and ordered canceled.
Costs against the private respondent.
SO ORDERED. 10
On July 17, 1995, Gonzales' Motion for Reconsideration was denied. Hence, the
instant petition, assigning the following errors:
I
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING
THAT THE PURCHASE OF THE DISPUTED PROPERTY BY
PETITIONER MARIA GONZALES FROM ARISTOTLE MANIO THRU
THE LATTER'S MOTHER AND ATTORNEY-IN-FACT WAS A VALID
CONTRACT AS BETWEEN THE CONTRACTING PARTIES.
II
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING
THAT PETITIONER MARIA GONZALES WAS IN GOOD FAITH IN
BUYING THE DISPUTED PROPERTY FROM ARISTOTLE MANIO
THRU THE LATTER'S MOTHER AND ATTORNEY-IN-FACT.
III
THE HONORABLE COURT OF APPEALS ERRED IN NOT APPLYING
IN THE INSTANT CASE THE DOCTRINE IN DOUBLE SALE UNDER
ARTICLE 1544 OF THE CIVIL CODE OF THE PHILIPPINES.
IV
THE HONORABLE COURT OF APPEALS GRAVELY FAILED TO
APPRECIATE THE FACT THAT PRIVATE RESPONDENTS'
[PETITIONERS BELOW] CLAIM IS HIGHLY INCREDIBLE,
IMPROBABLE, AND FRAUDULENT.
V
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING
THAT PRIVATE RESPONDENTS MARIA PAZ DABON AND
ROSALINA DABON HAVE NO RIGHT TO BRING THE INSTANT SUIT.
VI
COROLLARILY, THE HONORABLE COURT OF APPEALS ERRED IN
NOT SUSTAINING PETITIONER MARIA GONZALES' [PRIVATE
RESPONDENT BELOW] CLAIM FOR DAMAGES AGAINST THE
PRIVATE RESPONDENTS [PETITIONERS BELOW]. 11
Simply, the threshold issues in this petition are: (1) whether the Court of Appeals
erred in declaring the sale of the land to Gonzales by Priscilla invalid; (2) whether
there was basis to annul the judgment of the RTC; and (3) whether the Dabons
could file the action for annulment of judgment.
We shall discuss the issues jointly.
Prefatorily, we note that named as petitioners are Presiding Judge Dominador
Carillo; Bonifacio Guyot, Alfredo Senoy, Clerk of Court and Deputy Sheriff of the
same court, respectively; Marcos D. Risonar, Registrar of Deeds of Davao del
Sur; and Maria Gonzales. In our view, petitioner Gonzales apparently had
impleaded Judge Carillo, Guyot, Senoy and Risonar in this petition by merely
reversing the designation of said public officers among the respondents below in
the Court of Appeals, as now among the petitioners herein. Since they are not
interested parties and would not benefit from any of the affirmative reliefs sought,
only Maria Gonzales remains as the genuine party-petitioner in the instant case.
We now come to the main issues: (1) Was there sufficient basis to annul the
judgment in Civil Case No. 2647? (2) Are the Dabons proper parties to file the
petition for annulment of judgment?
Petitioner Gonzales contends that the respondents do not have standing before
the Court of Appeals to file a petition for annulment of the judgment in Civil Case
No. 2647 because respondents were not parties therein. Petitioner maintains that
respondents have no right that could be adversely affected by the judgment
because they are not the owners of the property. Petitioner claims that the Court
of Appeals should have applied the doctrine of double sale to settle the issue of
ownership and declare her the true owner of the property. Petitioner concludes
that respondents not being the owners and are not real parties in interest in
the complaint for specific performance have no right to bring the action for
annulment of the judgment. According to petitioner Gonzales, she did not
implead Aristotle as defendant in Civil Case No. 2647 since a decision against
Priscilla, Aristotle's attorney-in-fact, would bind Aristotle also.
Respondents (Maria Paz and Rosalina Dabon) now insist that they are parties in
interest as buyers, owners and possessors of the contested land and that they
had been fraudulently deprived of their day in court during the proceedings in the
trial court in Civil Case No. 2647. They have no remedy in law other than to file a
case for the annulment of judgment of the trial court in said case.
Petitioner Gonzales should be reminded of Section 3 of Rule 3 of the Rules on
Civil Procedure which explicitly states that an action should be brought against
the real party in interest, 12 and in case the action is brought against the agent,
the action must be brought against an agent acting in his own name and for the
benefit of an undisclosed principal without joining the principal, except when the
contract involves things belonging to the principal. 13 The real party in interest is
the party who would be benefited or injured by the judgment or is the party
entitled to the avails of the suit. We have held that in such a situation, an
attorney-in-fact is not a real party in interest and that there is no law permitting an
action to be brought by and against an attorney-in-fact. 14
Worth stressing, the action filed by Gonzales before the RTC is for specific
performance to compel Priscilla to execute a deed of sale, involving real property
which, however, does not belong to Priscilla but to Aristotle Manio, the son of
Priscilla. The complaint only named as defendant Priscilla, joined by her spouse,
yet Priscilla had no interest on the lot and can have no interest whatever in any
judgment rendered. She was not acting in her own name, nor was she acting for
the benefit of an undisclosed principal. The joinder of all indispensable parties is
a condition sine qua non of the exercise of judicial powers, and the absence of
indispensable party renders all subsequent actions of the court null and void for
want of authority to act, not only as to the absent parties but even as to those
present. 15 Accordingly, the failure to implead Aristotle Manio as defendant
renders all proceedings in the Civil Case No. 2647, including the order granting
the cancellation of TCT No. 16658 and issuance of a new title, null and void.
It is settled that a person need not be a party to the judgment sought to be
annulled. 16 What is essential is that he can prove his allegation that the
judgment was obtained by fraud or collusion and he would be adversely affected
thereby, 17 because if fully substantiated by preponderance of evidence, those
allegations could be the basis for annulment of the assailed judgment.
In the present case, even if respondents were not parties to the specific
performance case, any finding that there was extrinsic fraud in the institution of
the complaint, i.e. exclusion of the real party in interest, and collusion between
petitioner and Sheriff Senoy, would adversely affect the respondents' ownership
and thus, could be their basis for annulment of the judgment.
Pertinently, Section 2 of Rule 47 of the Rules on Civil Procedure explicitly
provides the two grounds for annulment of judgment, namely: extrinsic fraud and
lack of jurisdiction. 18
There is extrinsic fraud when a party has been prevented by fraud or deception
from presenting his case. Fraud is extrinsic where it prevents a party from having
a trial or from presenting his entire case to the court, or where it operates upon
matters pertaining not to the judgment itself but to the manner in which it is
procured. The overriding consideration when extrinsic fraud is alleged is that the
fraudulent scheme of the prevailing litigant prevented a party from having his day
in court. 19 It must be distinguished from intrinsic fraud which refers to acts of a
party at a trial which prevented a fair and just determination of the case, and
which could have been litigated and determined at the trial or adjudication of the
case. 20
In its Decision dated February 22, 1995, the Court of Appeals found that indices
of fraud attended the case before the trial court: First, the plaintiff deliberately
excluded the Dabons as party to the case despite knowledge that the Dabons
had alleged that they had bought the land from Aristotle.Second, the Sheriff's
Return was suspiciously served on a Saturday, at midnight, on August 4,
1990. Third, the trial court ordered the plaintiff to deposit the full payment of
property, but subsequently ordered its withdrawal. Lastly, there was no notice
given to the person named in the certificate of title which Gonzales wanted to be
annulled. DETcAH
Of the indices of fraud cited by the Court of Appeals, the failure to comply with
the notification requirement in the petition for the cancellation of title amounts to
extrinsic fraud. Under the Property Registration Decree, all parties in interest
shall be given notice. 21 There is nothing in the records that show Gonzales
notified the actual occupants or lessees of the property. Further, the records
show that Gonzales had known of the sale of the land by Aristotle to the Dabons
and despite her knowledge, the former did not include the Dabons in her petition
for the annulment of title. Deliberately failing to notify a party entitled to notice
also constitutes extrinsic fraud. 22 This fact is sufficient ground to annul the order
allowing the cancellation of title in the name of Gonzales.
Likewise, under Rule 47, a judgment is void for lack of jurisdiction over the
persons of the real parties in interest, i.e., Aristotle Manio and the Dabons.
Lastly, petitioner insists that the contract of sale between her and Priscilla was
valid and enforceable because under the provision on double sale, 23she owned
the land because she bought the lot on April 26, 1988, while the same was
allegedly sold to the Dabons on October 19, 1989. In our view, the doctrine on
double sale holds no relevance in this case. The pertinent article of the Civil
Code provides:
ART. 1544. If the same thing should have been sold to different vendees,
the ownership shall be transferred to the person who may have first
possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the
person acquiring it who in good faith recorded it in the Registry of
Property.
Should there be no inscription, the ownership shall pertain to the person
who in good faith was first in possession; and in the absence thereof; to
the person who presents the oldest title, provided there is good faith.
Otherwise stated, where it is immovable property that is the subject of a double
sale, ownership shall be transferred (1) to the person acquiring it who in good
faith first recorded it in the Registry of Property; (2) in default thereof, to the
person who in good faith was first in possession; and (3) in default thereof, to the
person who presents the oldest title, provided there is good faith. The
requirement of the law is two-fold: acquisition in good faith and registration in
good faith. 24
At this juncture, we must emphasize that the action for annulment of judgment
under Rule 47 of the Rules of Court does not involve the merits of the final order
of the trial court. 25 The issue of whether before us is a case of double sale is
outside the scope of the present petition for review. The appellate court only
allowed the reception of extraneous evidence to determine extrinsic fraud. To
determine which sale was valid, review of evidence is necessary. This we cannot
do in this petition. An action for annulment of judgment is independent of the
case where the judgment sought to be annulled is rendered 26 and is not an
appeal of the judgment therein. 27
The extraneous evidence presented to the appellate court cannot be used to
supplant the evidence in the records of the specific performance case because
the extraneous evidence was not part of the records on the merits of the case.
Again, the extraneous evidence was only allowed merely to prove the allegations
of extrinsic fraud. Accordingly, we hold that the issue of ownership of the subject
real property cannot be addressed in this petition for review.
Annulment of judgment is not a relief to be granted indiscriminately by the courts.
It is a recourse equitable in character and allowed only in exceptional cases as
where there is no available or other adequate remedy. 28 This case falls under
said exception. In this case, where it was found that the trial court did not have
jurisdiction over the real parties in interest, and that notices were deliberately not
given, amount to extrinsic fraud. The Court of Appeals did not err in granting the
annulment of the judgment in Civil Case No. 2647 and the orders subsequent
thereto, for lack of jurisdiction and extrinsic fraud.
154-170)
SYNOPSIS
Ruling that the judgment sought to be reviewed has become final and executory,
the Court of Appeals ordered the Regional Trial Court to take appropriate action
on the urgent ex parte motion for issuance of a writ of execution filed by private
respondent. Pursuant thereto, the Regional Trial Court of Manila issued a writ of
possession thus placing private respondent in possession of petitioner's barge
Lawin. Hence, this petition.
The case filed by private respondent with the trial court involved multiple
defendants. Several defendants entered into a compromise agreement with
private respondent. A compromise agreement is immediately final and executory.
As to these defendants therefore, the trial court Decision had become final.
Nevertheless, said decision cannot be said to have attained finality as to
petitioner, which was not a party to the compromise. Moreover, petitioner filed a
Motion for Reconsideration two days before the lapse of the reglementary period
to appeal. Execution shall issue as matter of right upon the expiration of the
period to appeal if no appeal has been duly perfected.
The sheriff's return showed that the president of petitioner corporation was
served summons through his secretary. A summons addressed to a corporation
and served on the secretary of the President binds that corporation. The
secretary however, should be an employee of the corporation sought to be
summoned. In the case at bar, the secretary was not an employee of petitioner
but of Vlasons Shipping, Inc. Acting under the impression that petitioner had
been placed under its jurisdiction, the trial court dispensed with the service on
petitioner of new summons for the subsequent amendments of the petition. But
the first service of summons on petitioner was invalid. Thus, the trial court never
acquired jurisdiction over the petitioner. Not having been validly served summons,
it would be legally impossible to declare petitioner to be in default. A default
judgment cannot affect the rights of a party who was never declared in
default.HTDcCE
SYLLABUS
14. ID.; ID.; ID.; ID.; PARTY NOT PREVIOUSLY SERVED MUST BE SERVED
WITH NEW SUMMONS ON AMENDED PLEADING; CASE AT BAR. In this
case, the trial court obviously labored under the erroneous impression that
petitioner had already been placed under its jurisdiction since it had been served
summons through the secretary of its president. Thus, it dispensed with the
service on petitioner of new summons for the subsequent amendments of the
Petition. We have already ruled, however, that the first service of summons on
petitioner was invalid. Therefore, the trial court never acquired jurisdiction, and
the said court should have required a new service of summons for the amended
Petitions.
15. ID.; ID.; AMENDMENT OF PLEADINGS; LIBERALLY ALLOWED. The
judicial attitude has always been favorable and liberal in allowing amendments to
pleadings. Pleadings shall be construed liberally so as to render substantial
justice to the parties and to determine speedily and inexpensively the actual
merits of the controversy with the least regard to technicalities.
16. ID.; ID.; PLEADINGS; INCLUSION OF ALL PARTIES IN COMPLAINT, A
FORMAL REQUIREMENT, NON-INCLUSION OF SOME, NOT FATAL. The
inclusion of the names of all the parties in the title of a complaint is a formal
requirement under Section 3, Rule 7. However, the rules of pleadings require
courts to pierce the form and go into the substance, and not to be misled by a
false or wrong name given to a pleading. The averments in the complaint, not the
title, are controlling. Although the general rule requires the inclusion of the names
of all the parties in the title of a complaint, the non-inclusion of one or some of
them is not fatal to the cause of action of a plaintiff, provided there is a statement
in the body of the petition indicating that a defendant was made a party to such
action.
17. ID.; ID.; ID.; ID.; ID.; CASE AT BAR. Private respondent claims that
petitioner has always been included in the caption of all the Petitions it filed,
which included Antonio Sy, field manager of petitioner. We checked and noted
that in the caption and the body of the Amended Petition and Second Amended
Petition with Supplemental Petition, Antonio Sy was alleged to be representing
Med Line Philippines, not petitioner. Because it was private respondent who was
responsible for the errors, the Court cannot excuse it from compliance, for such
action will prejudice petitioner, who had no hand in the preparation of these
pleadings. In any event, we reiterate that, as a general rule, mere failure to
include the name of a party in the title of a complaint is not fatal by itself.
18. ID.; ID.; JUDGMENT; MUST CONFORM TO PLEADINGS AND THEORY OF
ACTION. The general rule is allegata et probata a judgment must conform
to the pleadings and the theory of the action under which the case was tried. But
a court may also rule and render judgment on the basis of the evidence before it,
even though the relevant pleading has not been previously amended, so long as
no surprise or prejudice to the adverse party is thereby caused.
19. ID.; ID.; ID.; ID.; JURISDICTION OVER PERSON, INDISPENSABLE. In
the case at bar, the liability of petitioner was based not on any allegation in the
four Petitions filed with the trial court, but on the evidence presented ex parte by
the private respondent. Since the trial court had not validly acquired jurisdiction
over the person of petitioner, there was no way for the latter to have validly and
knowingly waived its objection to the private respondent's presentation of
evidence against it.
20. ID.; ID.; DEFAULT; JUDGMENT BY DEFAULT; PARTY MUST HAVE
SUBMITTED ITSELF TO JURISDICTION OF COURT; CASE AT BAR. The
reception of evidence ex parte against a non-defaulting party is procedurally
indefensible. Without a declaration that petitioner is in default as required in
Section 1, Rule 18, the trial court had no authority to order the presentation of
evidence ex parte against petitioner to render judgment against it by default. The
trial judge must have thought that since it failed to appear despite summons and
was in default, it effectively waived any objection to the presentation of evidence
against it. This rule, however, would have applied only if petitioner had submitted
itself to the jurisdiction of the trial court. The latter correctly declared, in the
Resolution just cited, that the default judgment against the former had been
improvidently rendered.
21. ID.; ID.; NONPAYMENT OF DOCKET FEES WILL NOT PREVENT COURT
FROM HOLDING PARTY LIABLE FOR DAMAGES; JURISDICTION OVER
PERSON REQUIRED. Had the trial court validly acquired jurisdiction over
petitioner, nonpayment of docket fees would not have prevented it from holding
petitioner liable for damages. The Court, in Manchester Development
Corporation v. Court of Appeals, ruled that a court acquires jurisdiction over any
case only upon the payment of the prescribed docket fee, not upon the
amendment of the complaint or the payment of the docket fees based on the
amount sought in the amended pleading. This ruling, however, was modified
in Sun Insurance Office, Ltd. v. Asuncion, which added: "3. Where the trial court
acquires jurisdiction over a claim [through] the filing of the appropriate pleading
and payment of the prescribed filing fee but, subsequently, the judgment awards
a claim not specified in the pleading, or if specified the same has been left for
determination by the court, the additional filing fee therefor shall constitute a lien
on the judgment. It shall be the responsibility of the Clerk of Court or his duly
authorized deputy to enforce said lien and assess and collect the additional fee."
Filing fees for damages and awards that cannot be estimated constitute liens on
the awards finally granted by the trial court. Their nonpayment alone, is not a
ground for the invalidation of the award.
22. ID.; ID.; DEFAULT; DECLARATION OR ORDER OF DEFAULT;
PUNISHMENT FOR UNNECESSARY DELAY IN JOINING ISSUES. A
declaration or order of default is issued as a punishment for unnecessary delay in
joining issues. In such event, defendants lose their standing in court, they cannot
expect the trial court to act upon their pleadings, and they are not entitled to
notice of the proceeding until the final termination of the case. Thus, the trial
court proceeds with the reception of the plaintiff's evidence upon which a default
judgment is rendered.
23. ID.; ID.; ID.; JUDGMENT BY DEFAULT; SHALL NOT EXCEED AMOUNT
OR DIFFERENT IN KIND FROM THAT PRAYED FOR. Section 1 of Rule 18
provides that after the defendant has been declared in default, "the court shall
proceed to receive the plaintiff's evidence and render judgment granting him such
relief as the complaint and the facts proven may warrant." The reliefs that may be
granted, however, are restricted by Section 5, which provides that a judgment
entered against a party in default shall not exceed the amount or be different in
kind from that prayed for. aDCIHE
24. ID.; ID.; ID.; ID.; CLAIMANT MUST STILL PROVE CLAIM; DEFENDANTS
MERELY WAIVED RIGHT TO BE HEARD AND PRESENT EVIDENCE. In
other words, under Section 1, a declaration of default is not an admission of the
truth or the validity of the plaintiff's claims. The claimant must still prove his claim
and present evidence. In this sense the law gives defaulting parties some
measure of protection because plaintiffs, despite the default of defendants, are
still required to substantiate their allegations in the complaint. The judgment of
default against defendants who have not appeared or filed their answers does
not imply a waiver of all their rights, except their right to be heard and to present
evidence in their favor. Their failure to answer does not imply their admission of
the facts and the causes of action of the plaintiffs, because the latter are required
to adduce evidence to support their allegations.
25. ID.; ID.; ID.; ID.; ID.; COURT NOT ALLOWED TO RECEIVE EVIDENCE TO
SHOW RELIEF NOT SOUGHT. Moreover, the trial court is not allowed by the
Rules to receive evidence that tends to show a relief not sought or specified in
the pleadings. The plaintiff cannot be granted an award greater than or different
in kind from that specified in the complaint.
26. ID.; ID.; ID.; ID.; ID.; ID.; DISTINGUISHED FROM DEFENDANT WHO FILED
ANSWER BUT ABSENT DURING TRIAL. This case should be distinguished,
however, from that of defendants, who filed an answer but were absent during
trial. In that case, they can be held liable for an amount greater than or different
from that originally prayed for, provided that the award is warranted by the
proven facts. This rule is premised on the theory that the adverse party failed to
object to evidence relating to an issue not raised in the pleadings.
27. ID.; ID.; ID.; ID.; ID.; CASE AT BAR. The latter rule, however, is not
applicable to the instant case. Admittedly, private respondent presented evidence
that would have been sufficient to hold petitioner liable for damages. However, it
did not include in its amended Petitions any prayer for damages against
petitioner. Therefore, the trial court could not have validly held the latter liable for
damages even if it were in default.
28. ID.; ID.; JUDGMENT; EXECUTION; NOT ALLOWED WHERE JUDGMENT
HAS NOT BECOME FINAL AND EXECUTORY. Section 1 of Rule 39 provides
that execution shall issue only upon a judgment that finally disposes of the action
or proceeding. Such execution shall issue as a matter of right upon the expiration
of the period to appeal it, if no appeal has been duly perfected. In the present
case, however, we have already shown that the trial court's Decision has not
become final and executory against petitioner. In fact, the judgment does not
even bind it. Obviously, Respondent Court committed serious reversible errors
when it allowed the execution of the said judgment against petitioner.
DECISION
PANGANIBAN, J : p
The Case
These principles were used by this Court in resolving this Petition for Review on
Certiorari before us, assailing the July 19, 1993 Decision 1 and the August 15,
1995 Resolution, 2 both promulgated by the Court of Appeals. The assailed
Decision disposed as follows: 3
"ACCORDINGLY, in view of the foregoing disquisitions, all the three (3)
consolidated petitions for certiorari are hereby GRANTED.
THE assailed Order of respondent Judge Arsenio Gonong of the
Regional Trial Court of Manila, Branch 8, dated April 5, 1991, in the first
petition for certiorari (CA-G.R. SP No. 24669); the assailed Order of
Judge Bernardo Pardo, Executive Judge of the Regional Trial Court of
Manila, Branch 8, dated July 6, 1992, in the second petition for certiorari
(CA-G.R. SP No. 28387); and finally, the assailed order or Resolution en
banc of the respondent Court of Tax Appeals Judges Ernesto Acosta,
Ramon de Veyra and Manuel Gruba, under date of October 5, 1992, in
the third petition for certiorari (CA-G.R. SP No. 29317) are all hereby
NULLIFIED and SET ASIDE thereby giving way to the entire
decision dated February 18, 1991 of the respondent Regional Trial Court
of Manila, Branch 8, in Civil Case No. 89-51451 which
remains valid, final and executory, if not yet wholly executed.
The writ of preliminary injunction heretofore issued by this Court on
March 6, 1992 and reiterated on July 22, 1992 and this date against the
named respondents specified in the dispositive portion of the judgment
of the respondent Regional Trial Court of Manila, Branch 8 in the first
petition for certiorari, which remains valid, existing and enforceable, is
hereby MADE PERMANENT without prejudice (1) to the [private
respondent's] remaining unpaid obligations to the herein party-
intervenor in accordance with the Compromise Agreement or in
connection with the decision of the respondent lower court in CA-G.R.
SP No. 24669 and (2) to the government, in relation to the forthcoming
decision of the respondent Court of Tax Appeals on the amount of taxes,
charges, assessments or obligations that are due, as totally secured and
fully guaranteed payment by the [private respondent's] bond, subject to
the relevant rulings of the Department of Finance and other prevailing
laws and jurisprudence."
The assailed Resolution ruled:
"ACCORDINGLY, in the light of the foregoing disquisitions, as well as
considering these clarifications, the three (3) motions aforementioned
are hereby DENIED."
The Facts
Poro Point Shipping Services, then acting as the local agent of Omega Sea
Transport Company of Honduras & Panama, a Panamanian company, (hereafter
referred to as Omega), requested permission for its vessel M/V Star Ace, which
had engine trouble, to unload its cargo and to store it at the Philippine Ports
Authority (PPA) compound in San Fernando, La Union while awaiting
transshipment to Hongkong. The request was approved by the Bureau of
Customs. 4 Despite the approval, the customs personnel boarded the vessel
when it docked on January 7, 1989, on suspicion that it was the hijacked M/V
Silver Med owned by Med Line Philippines Co., and that its cargo would be
smuggled into the country. 5 The district customs collector seized said vessel and
its cargo pursuant to Section 2301, Tariff and Customs Code. A notice of hearing
of SFLU Seizure Identification No. 3-89 was served on its consignee, Singkong
Trading Co. of Hongkong, and its shipper, Dusit International Co., Ltd. of
Thailand.
While seizure proceedings were ongoing, La Union was hit by three typhoons,
and the vessel ran aground and was abandoned. On June 8, 1989, its authorized
representative, Frank Cadacio, entered into a salvage agreement with private
respondent to secure and repair the vessel at the agreed consideration of $1
million and "fifty percent (50%) [of] the cargo after all expenses, cost and
taxes." 6
Finding that no fraud was committed, the District Collector of Customs, Aurelio M.
Quiray, lifted the warrant of seizure on July 16, 1989. 7 However, in a Second
Indorsement dated November 11, 1989, then Customs Commissioner Salvador
M. Mison declined to issue a clearance for Quiray's Decision; instead, he
forfeited the vessel and its cargo in accordance with Section 2530 of the Tariff
and Customs Code. 8 Accordingly, acting District Collector of Customs John S.
Sy issued a Decision decreeing the forfeiture and the sale of the cargo in favor of
the government. 9
To enforce its preferred salvor's lien, herein Private Respondent Duraproof
Services filed with the Regional Trial Court of Manila a Petition for Certiorari,
Prohibition and Mandamus 10 assailing the actions of Commissioner Mison and
District Collector Sy. Also impleaded as respondents were PPA Representative
Silverio Mangaoang, and Med Line Philippines, Inc.
On January 10, 1989, private respondent amended its Petition 11 to include
former District Collector Quiray; PPA Port Manager Adolfo Ll. Amor Jr.; Petitioner
Vlason Enterprises as represented by its president, Vicente Angliongto; Singkong
Trading Company as represented by Atty. Eddie Tamondong; Banco Du Brasil;
Dusit International Co., Inc.; Thai-Nan Enterprises Ltd. and Thai-United Trading
Co., Ltd. 12 In both Petitions, private respondent plainly failed to include any
allegation pertaining to petitioner, or any prayer for relief against it.
Summonses for the amended Petition were served on Atty. Joseph Capuyan for
Med Line Philippines: Angliongto (through his secretary, Betty Bebero), Atty.
Tamondong and Commissioner Mison. 13 Upon motion of the private respondent,
the trial court allowed summons by publication to be served upon the alien
defendants who were not residents and had no direct representatives in the
country. 14
On January 29, 1990, private respondent moved to declare respondents in
default, but the trial court denied the motion in its February 23, 1990
Order, 15 because Mangaoang and Amor had jointly filed a Motion to Dismiss,
while Mison and Med Line had moved separately for an extension to file a similar
motion. 16 Later it rendered an Order dated July 9, 1990, giving due course to the
motions to dismiss filed by Mangaoang and Amor on the ground of litis pendentia,
and by the commissioner and district collector of customs on the ground of lack
of jurisdiction. 17 In another Order, the trial court dismissed the action against
Med Line Philippines on the ground of litis pendentia. 18
On two other occasions, private respondent again moved to declare the following
in default: petitioner, Quiray, Sy and Mison on March 26, 1990; 19and Banco Du
Brazil, Dusit International Co., Inc., Thai-Nan Enterprises Ltd. and Thai-United
Trading Co., Ltd. on August 24, 1990. 20 There is no record, however, that the
trial court acted upon the motions. On September 18, 1990, petitioner filed
another Motion for leave to amend the petition,21 alleging that its counsel failed to
include the following "necessary and/or indispensable parties": Omega
represented by Cadacio; and M/V Star Acerepresented by Capt. Nahon Rada,
relief captain. Aside from impleading these additional respondents, private
respondent also alleged in the Second (actually, third) Amended Petition 22 that
the owners of the vessel intended to transfer and alienate their rights and
interests over the vessel and its cargo, to the detriment of the private
respondent. cda
The trial court granted leave to private respondent to amend its Petition, but only
to exclude the customs commissioner and the district collector. 23Instead, private
respondent filed the "Second Amended Petition with Supplemental Petition"
against Singkong Trading Company; and Omega andM/V Star Ace, 24 to which
Cadacio and Rada filed a Joint Answer. 25
Declared in default in an Order issued by the trial court on January 23, 1991,
were the following: Singkong Trading Co., Commissioner Mison, M/V Star
Ace and Omega. 26 Private respondent filed, and the trial court granted, an ex
parte Motion to present evidence against the defaulting respondents. 27Only
private respondent, Atty. Tamondong, Commissioner Mison, Omega and M/V
Star Ace appeared in the next pretrial hearing; thus, the trial court declared the
other respondents in default and allowed private respondent to present evidence
against them. 28 Cesar Urbino, general manager of private respondent, testified
and adduced evidence against the other respondents, including herein petitioner.
As regards petitioner, he declared: "Vlason Enterprises represented by Atty. Sy
and Vicente Angliongto thru constant intimidation and harassment of utilizing the
PPA Management of San Fernando, La Union . . . further delayed, and [private
respondent] incurred heavy overhead expenses due to direct and incidental
expenses . . . causing irreparable damages of about P3,000,000 worth of ship
tackles, rigs, and appurtenances including radar antennas and apparatuses,
which were taken surreptitiously by persons working for Vlason Enterprises or its
agents[.]" 29
On December 29, 1990, private respondent and Rada, representing Omega,
entered into a Memorandum of Agreement stipulating that Rada would write and
notify Omega regarding the demand for salvage fees of private respondent; and
that if Rada did not receive any instruction from his principal, he would assign the
vessel in favor of the salvor. 30
On February 18, 1991, the trial court disposed as follows:
"WHEREFORE, IN VIEW OF THE FOREGOING, based on the
allegations, prayer and evidence adduced, both testimonial and
documentary, the Court is convinced, that, indeed,
defendants/respondents are liable to [private respondent] in the amount
as prayed for in the petition for which it renders judgment as follows:
1. Respondent M/V Star Ace, represented by Capt. Nahum Rada, [r]elief
[c]aptain of the vessel and Omega Sea Transport Company, Inc.,
represented by Frank Cadacio[,] is ordered to refrain from
alienating or [transferring] the vessel M/V Star Ace to any third
parties;
Subsequently, upon the motion of Omega, Singkong Trading Co. and private
respondent, the trial court approved a Compromise Agreement 31among the
movants, reducing by 20 percent the amounts adjudged. For their part,
respondents-movants agreed not to appeal the Decision. 32 On March 8, 1991,
private respondent moved for the execution of judgment, claiming that the trial
court Decision had already become final and executory. 33 The Motion was
granted 34 and a Writ of Execution was issued. 35 To satisfy the Decision, Sheriffs
Jorge Victorino, Amado Sevilla and Dionisio Camagon were deputized on
March 13, 1991 to levy and to sell on execution the defendant's vessel and
personal property.
On March 14, 1991, petitioner filed, by special appearance, a Motion for
Reconsideration on the grounds that it was allegedly not impleaded as a
defendant, served summons or declared in default; that private respondent was
not authorized to present evidence against it in default; that the judgment in
default was fatally defective, because private respondent had not paid filing fees
for the award; and that private respondent had not prayed for such
award. 36 Private respondent opposed the Motion, arguing that it was a mere
scrap of paper due to its defective notice of hearing.
On March 18, 1991, the Bureau of Customs also filed an ex parte Motion to recall
the execution, and to quash the notice of levy and the sale on
execution. 37 Despite this Motion, the auction sale was conducted on March 21,
1991 by Sheriff Camagon, with private respondent submitting the winning
bid. 38 The trial court ordered the deputy sheriffs to cease and desist from
implementing the Writ of Execution and from levying on the personal property of
the defendants. 39 Nevertheless, Sheriff Camagon issued the corresponding
Certificate of Sale on March 27, 1991. 40
On April 12, 1991, 41 private respondent filed with the Court of Appeals (CA) a
Petition for Certiorari and Prohibition to nullify the cease and desist orders of the
trial court. 42 Respondent Court issued on April 26, 1991 a Resolution which
reads: 43
"MEANWHILE, in order to preserve the status quo and so as not to
render the present petition moot and academic, a TEMPORARY
RESTRAINING ORDER is hereby ISSUED enjoining the respondent
Judge, the Honorable Arsenio M. Gonong, from enforcing and/or
implementing the Orders dated 22 March 1991 and 5 April 1991 which
ordered respondent Sheriff to cease and desist from implementing the
writ of execution and the return thereof, the quashing of the levy . . . on
[the] execution [and sale] of the properties levied upon and sold at public
auction by the Sheriff, for reason of grave abuse of discretion and in
excess of jurisdiction, until further orders from this Court.
cdll
"WITHIN ten (10) days from notice hereof, respondents [petitioner
included] are also required to SHOW CAUSE why the prayer for a writ of
preliminary injunction should not be granted."
On May 8, 1991, petitioner received from Camagon a notice to pay private
respondent P3 million to satisfy the trial court Decision. Not having any
knowledge of the CA case to which it was not impleaded, petitioner filed with the
trial court a Motion to Dismiss ex abutandi ad cautelam on the grounds that (1)
the Petition of private respondent stated no cause of action against it, (2) the trial
court had no jurisdiction over the case, and (3) litis pendentia barred the suit. 44
On May 10, 1991, Camagon levied on petitioner's properties, which were
scheduled for auction later on May 16, 1991. Specific descriptions of the
properties are as follows: 45
"a). Motor Tugboat "DEN DEN" ex Emerson-I
Length: 35.67 ms. Breadth: 7:33 ms.
Depth: 3.15 ms. Gross Tons: 205.71
Net tons: 67.78 Official Number 213551
Material: Steel Class License: CWL
License No. 4424"
b) Barge "FC99" ex YD-153
Length: 34.15 ms. Breadth: 15.85 ms.
Depth: 2.77 ms. Gross Tons: 491.70
Net Tons: 491.70 Official Number 227236
Material: Steel Class License: CWL
License No. 83-0012
c) Barge "LAWIN" ex "Sea-Lion 2"
Length: 66.92 ms. Breadth: 11.28 ms.
Depth: 4.52 ms. Gross Tons: 1,029.56
Net Tons: 1,027/43 Official Number 708069
Material: Steel Class License: Coastwise
License No: 81-0059"
Petitioner also filed a special appearance before the CA. It prayed for the lifting of
the levy on its properties or, alternatively, for a temporary restraining order
against their auction until its Motion for Reconsideration was resolved by the trial
court. 46cdtai
Acting on petitioner's Motion for Reconsideration, the trial court reversed its
Decision of February 18, 1991, holding in its May 22, 1991 Resolution as
follows: 47
". . . [T]hat . . . Motion For Reconsideration [of the petitioner] was filed on
March 14, 1991 (See: page 584, records, Vol. 2) indubitably showing
that it was seasonably filed within the 15-day time-frame. Therefore, . . .
said default-judgment ha[d] not yet become final and executory when the
Writ of Execution was issued on March 13, 1991 . . . The rules [provide]
that [the e]xecution shall issue as a matter of right upon the expiration of
the period of appeal from a judgment if no appeal has been duly
perfected (Sec. 1, R-39, RRC). That being the case, VEC has all the
right to file as it did . . . the aforementioned reconsideration motion
calling [the] attention of the Court and pointing therein its supposed error
and its correction if, indeed, any [error was] committed. It is in this light
that this Court made an in-depth reflection and assessment of the
premises or reasons raised by [petitioner], and after a re-examination of
the facts and evidence spread on the records, it has come to the
considered conclusion that the questioned default-judgment has been
improvidently issued. By the records, the claim of [private respondent]
that his January 29, 1990 Ex-Parte Motion To Declare Defendants In
Default (pp. 174-177, records, Vol. 1) including VEC had been granted is
belied by the February 23, 1990 Order (pp. 214-215, records, ibid) par. 2,
thereof, reading to wit:
'By the foregoing, for reasons stated thereunder respectively, this
Court, in the exercise of its judicious discretion, in the sense that
the rules should be liberally construed in order to promote their
object and to assist the parties, resolves to DENY petitioner's
Motion to have the Commissioner of Customs AND OTHER
ENUMERATED RESPONDENTS DECLARED IN DEFAULT
[Emphasis ours].
Not even [private respondent'[s] November 23, 1990 'Ex-Parte Motion To
Present [Evidence] Against Defaulting Defendants' (page 489, records,
Vol. 2) [can] be deemed as a remedy of the fact that there never was
issued an order of default against respondents including [petitioner] VEC.
Having thus established that there [had] been no order of default against
VEC as contemplated by Sec. 1, Rule 18, in relation to Sec. 9, Rule 13,
Revised Rules of Court, there could not have been any valid default-
judgment rendered against it. The issuance of an order of default is a
condition sine qua non in order [that] a judgment by default be clothed
with validity. Further, records show that this Court never had authorized
[private respondent] to adduce evidence ex-parte against [petitioner]
VEC. In sum, the February 18, 1991 decision by default is null and void
as against [petitioner] VEC. With this considered conclusion of nullity of
said default judgment in question, this Court feels there is no more need
for it to resolve Arguments I-A & I-B, as well as III-A & III-B, of the March
14, 1991 Motion for Reconsideration. The Court agrees, however, with
said discussions on the non-compliance [with] Sec. 2, Rule 7 (Title of
Complaint) and Sec. I, Rule 8 on the requirement of indicating in the
complaint the ultimate facts on which the party pleading relies for his
claim of defense [] which is absent in the January 9, Amended Petition
(pp. 122-141, records, Vol. I) [] for it merely mentioned [petitioner]
VEC in par. 5 thereof and no more. It abides, likewise, with [Argument]
III-B that the Decision in suit award[ed] amounts never asked for in
instant petition as regards VEC (Sec. 5, Rule 18, RRC). . . . .
WHEREFORE, in view of the foregoing consideration, and as prayed for,
the February 18, 1991 Judgment by Default is hereby reconsidered and
SET ASIDE."
On June 26, 1992, then Executive Judge Bernardo P. Pardo 48 of the Regional
Trial Court of Manila issued an Order 49 annulling the Sheriff's Report/Return
dated April 1, 1991, and all proceedings taken by Camagon.
The CA granted private respondent's Motion to file a Supplemental Petition
impleading petitioner in CA-GR 24669. 50 In view of the rampant pilferage of the
cargo deposited at the PPA compound, private respondent obtained from the
appellate court a Writ of Preliminary Injunction dated March 6, 1992. The Writ
reads: 51
"ACCORDINGLY, in view of the foregoing disquisitions, the urgent
verified motion for preliminary injunction dated February 11, 1992 is
hereby GRANTED. Therefore, let a writ of preliminary injunction forthwith
issue against the respondents and all persons or agents acting in their
behalf, enjoining them not to interfere in the transferring of the
aforementioned vessel and its cargoes, or in removing said cargoes . . .
from [the] PPA compound." cdll
On August 28, 1995, the Regional Trial Court of Manila, Branch 26, issued a Writ
of Possession which resulted in private respondent taking possession of
petitioner's barge Lawin (formerly Sea Lion 2) on September 1, 1995. 58
Hence, this Petition. 59
Ruling of the Respondent Court
As already adverted to, Respondent Court granted the Petition for Certiorari of
the private respondent, which was consolidated with the latter's two other
Petitions. The court a quo issued the following rulings:
1. The trial court had jurisdiction over the salvor's claim or admiralty case
pursuant to Batas Pambansa Bilang 129.
2. Since the Decision of the trial court became final and executory, never
having been disputed or appealed to a higher court, the trial judge
committed grave abuse of discretion in recalling the Writ of
Execution and in quashing the levy and the execution of the sale
of M/V Star Aceand its cargo.
* 2. Such acts constituted an alteration or a modification of a final and
executory judgment and could never be justified under law and
jurisprudence.
3. Civil Case 59-51451 dealt only with the salvor's claim without passing
upon the legality or the validity of the undated Decision of the
Commissioner of Customs in the seizure proceeding.
4. Petitioner and his co-respondents could not invoke the jurisdiction of a
court to secure affirmative relief against their opponent and, after
failing to obtain such relief, question the court's jurisdiction.
5. Petitioner had no recourse through any of the following judicially
accepted means to question the final judgment:
a. a petition for relief from judgment under Rule 38,
b. a direct action to annul and enjoin the enforcement of the
questioned judgment, and
c. a collateral attack against the questioned judgment which
appears void on its face.
6. A court which has already acquired jurisdiction over a case cannot be
ousted by a coequal court; the res in this case the vessel and
its cargo were placed under the control of the trial court ahead
of the CTA.
7. The admiralty Decision had attained finality while the issue of the
validity of the seizure proceedings was still under
determination. cdlex
In the assailed Resolution, Respondent Court clarified that there was no need to
serve summons anew on petitioner, since it had been served summons when the
Second Amended Petition (the third) was filed; and that petitioner's Motion for
Reconsideration was defective and void, because it contained no notice of
hearing addressed to the counsel of private respondent in violation of Rule 16,
Section 4 of the Rules of Court.
"To this second motion, [private respondent] contends that there was no
need to serve summons anew to VEC when the second amended
petition was filed impleading VEC, pursuant to the ruling of the Supreme
Court in Asiatic Travel Corp. vs. CA (164 SCRA 623); and that finally,
the decision of the court a quo o[n] February 18, 1991 became final and
executory, notwithstanding the timely filing of the motion for
reconsideration of VEC for the reason that the said motion for
reconsideration was defective or void, there being no notice of hearing
addressed to the counsel of petitioner. In fact, no motion such as this
instant one can be acted upon by the Court without proof of service of
the notice thereof, pursuant to Rule 16, Section 4 of the Rules of Court.
xxx xxx xxx
"Finally, we should never lose sight of the fact that the instant petition
for certiorari is proper only to correct errors of jurisdiction committed by
the lower court, or grave abuse of discretion which is tantamount to lack
of jurisdiction. Where the error is not one of jurisdiction but an error of
law or of fact which is a mistake of judgment, appeal is the remedy
(Salas vs. Castro, 216 SCRA 198). Here, respondents failed to appeal.
Hence, the decision dated February 18, 1991 of the lower court has long
become final, executory and unappealable. We do not and cannot
therefore review the instant case as if it were on appeal and direct
actions on these motions. While the proper remedy is appeal, the action
for certiorari will not be entertained. Indeed, certiorari is not a
substitute for lapsed appeal.
"At any rate, the decision dated July 19, 1993 of this Court on the main
petition for certiorari is not yet final (except with respect to respondent
PPA), the Bureau of Customs having filed a petition for certiorari and
prohibition, under Rule 65 of the Rules of Court, with the Supreme Court,
necessitating prudence on Our part to await its final verdict." 60
Assignment of Errors
Before us, petitioner submits the following assignment of errors on the part of
Respondent Court: 61
"I
The Court of Appeals committed serious error in ruling that the entire
decision of the trial court in Civil Case No. 89-51451 dated 18 February
1991 became final and executory because it 'was never disputed or
appealed'.
"A. VEC filed a motion for reconsideration of the said decision two days
before deadline, which motion was granted by the trial court.
"B. The trial court correctly granted VEC's motion for reconsideration and
set aside the 18 February 1991 decision . . . against VEC, for: cdasia
1. Has the February 18, 1991 RTC Decision become final and
executory in regard to petitioner?
2. Did the trial court acquire jurisdiction over the petitioner?
3. Was the RTC default judgment binding on petitioner?
4. Was the grant of damages against petitioner procedurally proper?
5. Was private respondent entitled to a writ of execution?
This Court's Ruling
The petition is meritorious.
First Issue: Finality of the RTC Decision
A judgment becomes "final and executory" by operation of law. Its finality
becomes a fact when the reglementary period to appeal lapses, and no appeal is
perfected within such period. 62 The admiralty case filed by private respondent
with the trial court involved multiple defendants. This being the case, it
necessarily follows that the period of appeal of the February 18, 1991 RTC
Decision depended on the date a copy of the judgment was received by each of
the defendants. Elsewise stated, each defendant had a different period within
which to appeal, depending on the date of receipt of the Decision. 63
Omega, Singkong Trading Co. and M/V Star Ace chose to enter into a
compromise agreement with private respondent. As to these defendants, the trial
court Decision had become final, and a writ of execution could be issued against
them. 64 Doctrinally, a compromise agreement is immediately final and
executory. 65 aisadc
Petitioner, however, is not in the same situation. Said Decision cannot be said to
have attained finality as to the petitioner, which was not a party to the
compromise. Moreover, petitioner filed a timely Motion for Reconsideration with
the trial court, thirteen days after it received the Decision or two days before the
lapse of the reglementary period to appeal. A motion for reconsideration tolls the
running of the period to appeal. 66 Thus, as to petitioner, the trial court decision
had not attained finality.
Exception to the Rule on Notice of Hearing
Respondent Court and private respondent argue that, although timely filed,
petitioner's Motion for Reconsideration was a mere scrap of paper, because (1) it
did not contain a notice of hearing addressed to the current counsel of private
respondent, and (2) the notice of hearing addressed to and served on private
respondent's deceased counsel was not sufficient. Admittedly, this Motion
contained a notice of hearing sent to Atty. Jesus C. Concepcion who, according
to private respondent, had already died and had since been substituted by its
new counsel, Atty. Domingo Desierto. Therefore, the appellate court ruled that
the said Motion did not toll the reglementary period to appeal and that the trial
court Decision became final.
This Court disagrees. Rule 15 of the Rules of Court states:
"SECTION 4. Notice. Notice of a motion shall be served by the
applicant to all parties concerned, at least three (3) days before the
hearing thereof, together with a copy of the motion, and of any affidavits
and other papers accompanying it. The court, however, for good cause
may hear a motion on shorter notice, specially on matters which the
court may dispose of on its own motion.
SECTION 5. Contents of notice. The notice shall be directed to the
parties concerned, and shall state the time and place for the hearing of
the motion." 67
Ideally, the foregoing Rule requires the petitioner to address and to serve on the
counsel of private respondent the notice of hearing of the Motion for
Reconsideration. The case at bar, however, is far from ideal. First, petitioner was
not validly summoned and it did not participate in the trial of the case in the lower
court; thus, it was understandable that petitioner would not be familiar with the
parties and their counsels. Second, Atty. Desierto entered his appearance only
as collaborating counsel, 68 who is normally not entitled to notices even from this
Court. Third, private respondent made no manifestation on record that Atty.
Concepcion was already dead. Besides, it was Atty. Concepcion who signed the
Amended Petition, wherein petitioner was first impleaded as respondent and
served a copy thereof. Naturally, petitioner's attention was focused on this
pleading, and it was within its rights to assume that the signatory to such
pleading was the counsel for private respondent. cdt
The Court has consistently held that a motion which does not meet the
requirements of Sections 4 and 5 of Rule 15 of the Rules of Court is considered a
worthless piece of paper, which the clerk of court has no right to receive and the
trial court has no authority to act upon. Service of a copy of a motion containing a
notice of the time and the place of hearing of that motion is a mandatory
requirement, and the failure of movants to comply with these requirements
renders their motions fatally defective. 69 However, there are exceptions to the
strict application of this rule. These exceptions are as follows: 70
". . . Liberal construction of this rule has been allowed by this Court in
cases (1) where a rigid application will result in a manifest failure or
miscarriage of justice; 71 especially if a party successfully shows that the
alleged defect in the questioned final and executory judgment is not
apparent on its face or from the recitals contained therein; (2) where the
interest of substantial justice will be served; 72 (3) where the resolution of
the motion is addressed solely to the sound and judicious discretion of
the court; 73 and (4) where the injustice to the adverse party is not
commensurate [to] the degree of his thoughtlessness in not complying
with the procedure prescribed." 74
The present case falls under the first exception. Petitioner was not informed of
any cause of action or claim against it. All of a sudden, the vessels which
petitioner used in its salvaging business were levied upon and sold in execution
to satisfy a supposed judgment against it. To allow this to happen simply
because of a lapse in fulfilling the notice requirement which, as already said,
was satisfactorily explained would be a manifest failure or miscarriage of
justice.
A notice of hearing is conceptualized as an integral component of procedural due
process intended to afford the adverse parties a chance to be heard before a
motion is resolved by the court. Through such notice, the adverse party is
permitted time to study and answer the arguments in the motion.
Circumstances in the case at bar show that private respondent was not denied
procedural due process, and that the very purpose of a notice of hearing had
been served. On the day of the hearing, Atty. Desierto did not object to the said
Motion for lack of notice to him; in fact, he was furnished in open court with a
copy of the motion and was granted by the trial court thirty days to file his
opposition to it. These circumstances clearly justify a departure from the literal
application of the notice of hearing rule. 75 In other cases, after the trial court
learns that a motion lacks such notice, the prompt resetting of the hearing with
due notice to all the parties is held to have cured the defect. 76
Verily, the notice requirement is not a ritual to be followed blindly. Procedural due
process is not based solely on a mechanistic and literal application that renders
any deviation inexorably fatal. Instead, procedural rules are liberally construed to
promote their objective and to assist in obtaining a just, speedy and inexpensive
determination of any action and proceeding. 77 For the foregoing reasons, we
believe that Respondent Court committed reversible error in holding that the
Motion for Reconsideration was a mere scrap of paper. llcd
In this case, the trial court obviously labored under the erroneous impression that
petitioner had already been placed under its jurisdiction since it had been served
summons through the secretary of its president. Thus, it dispensed with the
service on petitioner of new summons for the subsequent amendments of the
Petition. We have already ruled, however, that the first service of summons on
petitioner was invalid. Therefore, the trial court never acquired jurisdiction, and
the said court should have required a new service of summons for the amended
Petitions.cdlex
We agree. The trial court denied the January 29, 1990 Motion of private
respondent to declare all the defendants in default, but it never acted on the
latter's subsequent Motion to declare petitioner likewise. During the pretrial on
January 23, 1993, the RTC declared in default only "Atty. Eddie Tamondong, as
well as the other defendants Hon. Salvador Mison, M/V Star Ace, Omega Sea
Transport Co., Inc. of Panama and Singkong Trading Co., [but] despite . . . due
notice to them, [they] failed to appear." 90 Even private respondent cannot
pinpoint which trial court order held petitioner in default.
More important, the trial court, in its Resolution dated May 22, 1991, admitted
that it never declared petitioner in default, viz.:
". . . It is in this light that this [c]ourt made an in-depth reflection and
assessment of the premises or reasons raised by [petitioner] VEC[;] and
after a re-examination of the facts and evidence spread on the records, it
has come to the considered conclusion that the questioned default-
judgment has been improvidently issued. [Based on] the records, the
claim of [private respondent] that [its] January 29, 1990 Ex-Parte Motion
to Declare Defendants In Default (pp. 174-177, records, Vol. 1) including
VEC had been granted is belied by the February 23, 1990 Order (pp.
214-215, records,ibid) par. 2, thereof, . . .
xxx xxx xxx
Not even petitioner's November 23, 1990 "Ex-Parte Motion To Present
Evidence Against Defaulting Defendants" (page 489, records, Vol. 2)
[can] be deemed as a remedy [for] the fact that there never was issued
an order of default against respondents including [petitioner] VEC.
Having thus established that there ha[d] been no order of default against
VEC as contemplated by Sec. 1, Rule 18, in relation to Sec. 9, Rule 13,
Revised Rules of Court, there could not have been any valid default
judgment rendered against it. The issuance of an order [o]f default is a
condition sine qua non in order [that] a judgment by default be clothed
with validity. Further, records show that this [c]ourt never had authorized
[private respondent] to adduce evidence ex-parte against [Petitioner]
VEC. In sum, the February 18, 1991 decision by default is null and void
as against [Petitioner] VEC. . . ."
prLL
The aforementioned default judgment refers to the February 18, 1989 Decision,
not to the Order finding petitioner in default as contended by private respondent.
Furthermore, it is a legal impossibility to declare a party-defendant to be in
default before it was validly served summons.
Trial Court Did Not Allow
Presentation of Evidence
Ex Parte Against Petitioner
The Order of December 10, 1990, which allowed the presentation of evidence ex
parte against the defaulting defendants, could not have included petitioner,
because the trial court granted private respondent's motion praying for the
declaration of only the foreign defendants in default. So too, private
respondent's ex parte Motion to present evidence referred to the foreign
defendants only. 91
Furthermore, the reception of evidence ex parte against a non-defaulting party is
procedurally indefensible. Without a declaration that petitioner is in default as
required in Section 1, Rule 18, the trial court had no authority to order the
presentation of evidence ex parte against petitioner to render judgment against it
by default. The trial judge must have thought that since it failed to appear despite
summons and was in default, it effectively waived any objection to the
presentation of evidence against it. This rule, however, would have applied only if
petitioner had submitted itself to the jurisdiction of the trial court. The latter
correctly declare, in the Resolution just cited, that the default judgment against
the former had been improvidently rendered. cdasia
Section 1 of Rule 18 provides that after the defendant has been declared in
default, "the court shall proceed to receive the plaintiff's evidence and render
judgment granting him such relief as the complaint and the facts proven may
warrant." The reliefs that may be granted, however, are restricted by Section 5,
which provides that a judgment entered against a party in default shall not
exceed the amount or be different in kind from that prayed for.
In other words, under Section 1, a declaration of default is not an admission of
the truth or the validity of the plaintiff's claims. 95 The claimant must still prove his
claim and present evidence. In this sense the law gives defaulting parties some
measure of protection because plaintiffs, despite the default of defendants, are
still required to substantiate their allegations in the complaint. The judgment of
default against defendants who have not appeared or filed their answers does
not imply a waiver of all their rights, except their right to be heard and to present
evidence in their favor. Their failure to answer does not imply their admission of
the facts and the causes of action of the plaintiffs, because the latter are required
to adduce evidence to support their allegations. cda
Moreover, the trial court is not allowed by the Rules to receive evidence that
tends to show a relief not sought or specified in the pleadings. 96 The plaintiff
cannot be granted an award greater than or different in kind from that specified in
the complaint. 97
This case should be distinguished, however, from that of defendants, who filed
an answer but were absent during trial. In that case, they can be held liable for
an amount greater than or different from that originally prayed for, provided that
the award is warranted by the proven facts. This rule is premised on the theory
that the adverse party failed to object to evidence relating to an issue not raised
in the pleadings.
The latter rule, however, is not applicable to the instant case. Admittedly, private
respondent presented evidence that would have been sufficient to hold petitioner
liable for damages. However, it did not include in its amended Petitions any
prayer for damages against petitioner. Therefore, the trial court could not have
validly held the latter liable for damages even if it were in default.
Fifth Issue: Execution of Final Judgment
Section 1 of Rule 39 provides that execution shall issue only upon a judgment
that finally disposes of the action or proceeding. Such execution shall issue as a
matter of right upon the expiration of the period to appeal it, if no appeal has
been duly perfected. 98
In the present case, however, we have already shown that the trial court's
Decision has not become final and executory against petitioner. In fact, the
judgment does not even bind it. Obviously, Respondent Court committed serious
reversible errors when it allowed the execution of the said judgment against
petitioner.
WHEREFORE, the appeal is hereby GRANTED, and the assailed Decision and
Resolution of the Court of Appeals are REVERSED and SET ASIDE insofar as
they affect petitioner. The levy and the sale on execution of petitioner's properties
are declared NULL and VOID. Said properties are ordered RESTORED to
petitioner. No pronouncement as to costs. SO ORDERED.
(Vlason Enterprises Corp. v. Court of Appeals, G.R. Nos. 121662-64, [July 6,
|||
CHICO-NAZARIO, J : p
In this Petition for Review under Rule 45 of the Rules of Court, petitioners pray
for the reversal of the Decision of the Court of Appeals in CA-G.R. CV No.
64957, 1 affirming the Order of the Regional Trial Court (RTC) of San Mateo,
Rizal, Branch 77, in Civil Case No. 1220, 2 dismissing petitioners' Complaint for
declaration of nullity of Original Certificate of Title (OCT) No. 670 and all other
titles emanating therefrom.
In their Complaint, petitioners alleged that they occupied and possessed parcels
of land, located in Sitio Panayawan, Barangay San Rafael, Montalban (now
Rodriquez), Province of Rizal (Subject Property), by virtue of several Deeds of
Assignment, dated 15 April 1994 and 02 June 1994, executed by a certain
Ismael Favila y Rodriguez. 3
According to the Deeds of Assignment, the Subject Property was part of a vast
tract of land called "Hacienda Quibiga," which extended to Paraaque, Las Pias,
Muntinlupa, Cavite, Batangas, Pasay, Taguig, Makati, Pasig, Mandaluyong,
Quezon City, Caloocan, Bulacan, and Rizal; awarded to Don Hermogenes
Rodriguez by the Queen of Spain and evidenced by a Spanish title. Ismael Favila
claimed to be one of the heirs and successors-in-interest of Don Hermogenes
Rodriguez. Acting as Attorney-in-Fact pursuant to a Special Power of Attorney
executed by his "mga kapatid" on 25 February 1965, Ismael Favila signed the
aforementioned Deeds of Assignment, assigning portions of the Subject Property
to the petitioners, each portion measuring around 500 to 1,000 square meters, in
exchange for the labor and work done on the Subject Property by the petitioners
and their predecessors. 4
Petitioners came by information that respondent was planning to evict them from
the Subject Property. Two of the petitioners had actually received notices to
vacate. Their investigations revealed that the Subject Property was included in
Transfer Certificates of Titles (TCTs) No. 53028, No. 281660, No. N-39258 and
No. 205270, all originating from OCT No. 670, and now in the name of
respondent. 5
OCT No. 670 was issued in the name of respondent's mother, Isabel Manahan y
Francisco, and three other individuals, pursuant to Decree No. 10248, dated 13
February 1913, in Case No. 8502 of the Court of Land Registration of the
Philippine Islands. The whole property covered by OCT No. 670 was
subsequently adjudicated in favor of Isabel Manahan Santiago (formerly Isabel
Manahan y Francisco). Consequently, OCT No. 670 was cancelled and TCT No.
T-53028 was issued exclusively in the name of Isabel Manahan Santiago. On 28
December 1968, Isabel Manahan Santiago executed a Deed of Donation
transferring the property to her son, respondent herein, who subsequently
secured TCTs No. 281660, No. N-39258 and No. 205270 in his own name. 6
Petitioners filed with the trial court, on 29 April 1996, an action for declaration of
nullity of respondent's certificates of title on the basis that OCT No. 670 was fake
and spurious. Among the defects of OCT No. 670 pointed out by petitioners were
that: (1) OCT No. 670 was not signed by a duly authorized officer; (2) Material
data therein were merely handwritten and in different penmanships; (3) OCT No.
670 was not printed on the Official Form used in 1913, the year it was issued; (4)
It failed to indicate the Survey Plan which was the basis of the Technical
Description of the property covered by the title; (5) Decree No. 10248 referred to
in OCT No. 670 was issued only on 11 April 1913, while OCT No. 670 was
issued earlier, on 13 February 1913; and (6) Decree No. 10248 was issued over
a property other than the one described in OCT No. 670, although also located in
the Province of Rizal. 7
Respondent filed his Answer with Prayer for Preliminary Hearing on the
Affirmative Defenses on 03 July 1996. According to respondent, "[t]he allegations
in the Complaint would readily and patently show that the same are flimsy,
fabricated, malicious, without basis in law and in fact. . . " 8
As an affirmative defense, respondent claimed that the petitioners had no legal
capacity to file the Complaint, and thus, the Complaint stated no cause of action.
Since OCT No. 670 was genuine and authentic on its face, then OCT No. 670
and all of respondent's land titles derived therefrom, are incontrovertible,
indefeasible and conclusive against the petitioners and the whole world. 9
Citing the consolidated cases of Director of Forestry, et al. v. Hon. Emmanuel M.
Muoz, et al. and Pinagcamaligan Indo-Agro Development Corporation v. Hon.
Macario Peralta, Jr., et al., 10 respondent argued that the Spanish title, on which
petitioners based their claim, was neither indefeasible nor
imprescriptible. Moreover, Presidential Decree (P.D.) No. 892, which took effect
on 16 February 1976, required all holders of Spanish titles or grants to apply for
registration of their lands under Republic Act No. 496, otherwise known as the
Land Registration Act, 11 within six months from effectivity of the decree. After the
given period, Spanish titles could no longer be used as evidence of land
ownership in any registration proceedings under the Torrens System. 12
Respondent also raised the affirmative defense of prescription. He pointed out
that any action against his certificates of title already prescribed, especially with
regard to OCT No. 670, which was issued in 1913 or more than 83 years prior to
the filing of the Complaint by the petitioners. At the very least, respondent
contended, "it must be presumed that the questioned land titles were issued by
the public officials concerned in the performance of their regular duties and
functions pursuant to the law." 13
Even assuming arguendo that the petitioners entered and occupied the Subject
Property, they did so as mere intruders, squatters and illegal occupants, bereft of
any right or interest, since the Subject Property was already covered by Torrens
certificates of title in the name of respondent and his predecessors-in-interest. 14
Lastly, respondent denied knowing the petitioners, much less, threatening to
evict them. In fact, petitioners were not included as defendants in Civil Case No.
783 entitled, "Carmelino M. Santiago v. Remigio San Pascual, et al.," which
respondent instituted before the same trial court against squatters occupying the
Subject Property. In its decision, dated 01 July 1992, the trial court held that
"there is no doubt that the plaintiff (respondent herein) is the owner of the land
involved in this case on which the defendants have built their houses and
shanties. . . ." Although the decision in Civil Case No. 783 was appealed to the
Court of Appeals, it had become final and executory for failure of the defendants-
appellants therein to file their appellants' brief. 15
In the instant case, the trial court held a preliminary hearing on the affirmative
defenses as prayed for by the respondent. During said hearing, petitioners
presented their lone witness, Engineer Placido Naval, a supposed expert on land
registration laws. In response to questions from Honorable Judge Francisco C.
Rodriguez of the trial court, Engineer Naval answered that a parcel of land titled
illegally would revert to the State if the Torrens title was cancelled, and that it was
the State, through the Office of the Solicitor General, that should file for the
annulment or cancellation of the title. Respondent, on the other hand, did not
present any evidence but relied on all the pleadings and documents he had so
far submitted to the trial court. 16
After the preliminary hearing, the trial court issued the questioned Order, dated
05 February 1999, dismissing petitioners' Complaint. Pertinent portions of the
Order of the trial court read: SEcITC
In the present case, this Court may assume that the respondent is raising the
affirmative defense that the Complaint filed by the petitioners before the trial
court stated no cause of action because the petitioners lacked the personality to
sue, not being the real party-in-interest. It is the respondent's contention that only
the State can file an action for annulment of his certificates of title, since such an
action will result in the reversion of the ownership of the Subject Property to the
State.
The affirmative defense that the Complaint stated no cause of action, similar to a
motion to dismiss based on the same ground, requires ahypothetical
admission of the facts alleged in the Complaint. In the case of Garcon v.
Redemptorist Fathers, 26 this Court laid down the rules as far as this ground for
dismissal of an action or affirmative defense is concerned:
It is already well-settled by now that, in a motion to dismiss a complaint
based on lack of cause of action, the question submitted to the court for
determination is the sufficiency of the allegations of fact made in the
complaint to constitute a cause of action, and not on whether these
allegations of fact are true, for said motion must hypothetically admit the
truth of the facts alleged in the complaint; that the test of the sufficiency
of the facts alleged in the complaint is whether or not, admitting the facts
alleged, the court could render a valid judgment upon the same in
accordance with the prayer of said complaint. Stated otherwise, the
insufficiency of the cause of action must appear in the face of the
complaint in order to sustain a dismissal on this ground, for in the
determination of whether or not a complaint states a cause of action,
only the facts alleged therein and no other matter may be considered,
and the court may not inquire into the truth of the allegations, and find
them to be false before a hearing is had on the merits of the case; and it
is improper to inject in the allegations of the complaint facts not alleged
or proved, and use these as basis for said motion.
In resolving whether or not the Complaint in the present case stated a cause of
action, the trial court should have limited itself to examining the sufficiency of the
allegations in the Complaint. It was proscribed from inquiring into the truth of the
allegations in the Complaint or the authenticity of any of the documents referred
or attached to the Complaint, since these are deemed hypothetically admitted by
the respondent. The trial court evidently erred in making findings as to the
authenticity of the Deeds of Assignment executed by Ismael Favila in favor of
petitioners on 15 April 1994 and 02 June 1994; and questioning the existence
and execution of the Special Power of Attorney in favor of said Ismael Favila by
his siblings on 25 February 1965. These matters may only be resolved after a
proper trial on the merits.
Petitioners alleged in their Complaint, and respondent hypothetically admitted
that: (1) Petitioners' predecessors-in-interest, in the concept of owners, had been
in actual, physical, open, continuous and adverse possession of the Subject
Property against the whole world since time immemorial; (2) The Subject
Property was part of the vast tract of land called "Hacienda Quibiga" awarded to
Don Hermogenes Rodriguez by the Queen of Spain by virtue of a Spanish title;
(3) Ismael Favila, an heir and successor-in-interest of Don Hermogenes
Rodriguez, acting as Attorney-in-Fact pursuant to a Special Power of Attorney
executed by his "mga kapatid" on 25 February 1965, executed Deeds of
Assignment covering the Subject Property in favor of petitioners; (4) Petitioners
still occupied and possessed the Subject Property, on which their houses were
erected, when they discovered that the Subject Property was already covered by
Torrens certificates of title in the name of respondent; and (5) That petitioners
filed the Complaint to prevent their eviction by the respondent. To determine
whether these allegations are sufficient to constitute a cause of action, it is
important for this Court to establish first the nature of petitioners' action. acHDTA
Indeed, petitioners' Complaint filed before the trial court was captioned as an
action for declaration of nullity of respondent's certificates of title. However, the
caption of the pleading should not be the governing factor, but rather the
allegations therein should determine the nature of the action, because even
without the prayer for a specific remedy, the courts may nevertheless grant the
proper relief as may be warranted by the facts alleged in the Complaint and the
evidence introduced. 27
The trial court believed that petitioners' action was ultimately one for reversion of
the Subject Property to the public domain. Based on the testimony of Engineer
Naval and the case of Nagao v. Court of Appeals, 28 it declared that the State,
represented by the Office of the Solicitor General, is the party-in-interest in an
action for cancellation of a certificate of title illegally issued in the name of a
private individual, because the eventual effect of such cancellation is the
reversion of the property to the State.
The Court disagrees in this pronouncement of the trial court, and calls for a far
closer review of its decision in Nagao v. Court of Appeals, 29 wherein the Court
held that
It is then clear from the allegations in the complaint that private
respondents claim ownership of the 2,250 square meter portion for
having possessed it in the concept of an owner, openly, peacefully,
publicly, continuously and adversely since 1920. This claim is an
assertion that the lot is private land, or that even assuming it was part of
the public domain, private respondents had already acquired imperfect
title thereto under Section 48(b) of C.A. No. 141, otherwise known as the
Public Land Act, as amended by R.A. No. 1942. . . .
Under Section 48, a subject lot is, for all legal intents and purposes,
segregated from the public domain, because the beneficiary is
"conclusively presumed to have performed all the conditions essential to
a Government grant and shall be entitled to a certificate of title under the
provisions of this chapter."
Consequently, merely on the basis of the allegations in the complaint,
the lot in question is apparently beyond the jurisdiction of the Director of
the Bureau of Lands and could not be the subject of a Free Patent.
Hence, dismissal of private respondents' complaint was premature and
trial on the merits should have been conducted to thresh out evidentiary
matters.
It would have been entirely different if the action were clearly for
reversion, in which case, it would have to be instituted by the Solicitor
General pursuant to Section 101 of C.A. No. 141, which provides:
Sec. 101. All actions for the reversion to the Government of lands
of the public domain or improvements thereon shall be instituted
by the Solicitor General or the officer acting in his stead, in the
proper courts, in the name of the [Republic] of the Philippines.
In the more recent case of Heirs of Ambrocio Kionisala v. Heirs of Honorio
Dacut, 30 the difference between an action for declaration of nullity of land titles
from an action for reversion was more thoroughly discussed as follows: IEAaST
P.D. No. 892 became effective on 16 February 1976. The successors of Don
Hermogenes Rodriguez had only until 14 August 1976 to apply for a Torrens title
in their name covering the Subject Property. In the absence of an allegation in
petitioners' Complaint that petitioners' predecessors-in-interest complied with P.D.
No. 892, then it could be assumed that they failed to do so. Since they failed to
comply with P.D. No. 892, then the successors of Don Hermogenes Rodriguez
were already enjoined from presenting the Spanish title as proof of their
ownership of the Subject Property in registration proceedings.
Registration proceedings under the Torrens system do not create or vest title, but
only confirm and record title already created and vested. 36 By virtue of P.D. No.
892, the courts, in registration proceedings under the Torrens system, are
precluded from accepting, confirming and recording a Spanish title. Reason
therefore dictates that courts, likewise, are prevented from accepting and
indirectly confirming such Spanish title in some other form of action brought
before them (i.e., removal of cloud on or quieting of title), only short of ordering
its recording or registration. To rule otherwise would open the doors to the
circumvention of P.D. No. 892, and give rise to the existence of land titles,
recognized and affirmed by the courts, but would never be recorded under the
Torrens system of registration. This would definitely undermine the Torrens
system and cause confusion and instability in property ownership that P.D. No.
892 intended to eliminate.
Petitioners argued that the Spanish title may still be presented as proof of
ownership on the basis of the exception provided in the fourth whereas clause
of P.D. No. 892, which reads:
WHEREAS, Spanish titles to lands which have not yet been brought
under the operation of the Torrens system, being subject to prescription,
are now ineffective to prove ownership unless accompanied by proof of
actual possession; . . .
Since Petitioners alleged that they were in actual possession of the Subject
Property, then they could still present the Spanish title as evidence of their
ownership of the Subject Property. 37
This Court cannot sustain petitioners' argument. Actual proof of possession only
becomes necessary because, as the same whereas clause points out, Spanish
titles are subject to prescription. A holder of a Spanish title may still lose his
ownership of the real property to the occupant who actually possesses the same
for the required prescriptive period. 38 Because of this inherent weakness of a
Spanish title, the applicant for registration of his Spanish title under the Torrens
system must also submit proof that he is in actual possession of the real property,
so as to discount the possibility that someone else has acquired a better title to
the same property by virtue of prescription.
Moreover, legislative intent must be ascertained from a consideration of the
statute as a whole, and not just a particular provision alone. A word or phrase
taken in the abstract may easily convey a meaning quite different from the one
actually intended and evident when the word or phrase is considered with those
with which it is associated. An apparently general provision may have a limited
application if read together with other provisions of the statute. 39
The fourth whereas clause of P.D. No. 892 should be interpreted and
harmonized with the other provisions of the whole statute. 40 Note that the tenor
of the whole presidential decree is to discontinue the use of Spanish titles and to
strip them of any probative value as evidence of ownership. It had clearly set a
deadline for the filing of applications for registration of all Spanish titles under the
Torrens system (i.e., six months from its effectivity or on 14 August 1976), after
which, the Spanish titles may no longer be presented to prove ownership. HDIaET
All holders of Spanish titles should have filed applications for registration of their
title on or before 14 August 1976. In a land registration proceeding, the applicant
should present to the court his Spanish title plus proof of actual possession of the
real property. However, if such land registration proceeding was filed and
initiated after 14 August 1976, the applicant could no longer present his Spanish
title to the court to evidence his ownership of the real property, regardless of
whether the real property was in his actual possession.
Therefore, the fact that petitioners were in actual possession of the Subject
Property when they filed the Complaint with the trial court on 29 April 1996 does
not exclude them from the application of P.D. No. 892, and their Spanish title
remain inadmissible as evidence of their ownership of the Subject Property,
whether in a land registration proceeding or in an action to remove a cloud on or
to quiet title.
The preceding discussion does not bar holders of Spanish titles from claiming
ownership of the real property on some other basis, such as those provided in
either the Land Registration Decree 41 or the Public Land Act. 42 Petitioners
though failed to allege any other basis for their titles in their Complaint aside from
possession of the Subject Property from time immemorial, which this Court has
already controverted; and the Spanish title, which is already ineffective to prove
ownership over the Subject Property.
Therefore, without legal or equitable title to the Subject Property, the petitioners
lacked the personality to file an action for removal of a cloud on, or quieting of,
title and their Complaint was properly dismissed for failing to state a cause of
action. In view of the dismissal of the case on this ground, it is already
unnecessary for this Court to address the issue of prescription of the action. EcDSHT
Wherefore, this Court DENIES the instant petition and AFFIRMS the Decision of
the Court of Appeals, dated 29 July 2002, and the Order of the Regional Trial
Court of San Mateo, Rizal, Branch 77, dated 05 February 1999, dismissing
petitioners' Complaint for failure to state a cause of action. SO ORDERED.
||| (Evangelista v. Santiago, G.R. No. 157447, [April 29, 2005], 497 PHIL 269-297)
SYNOPSIS
The Supreme Court held that the circumstances of this case do not justify the
exercise of equity jurisdiction that would allow a suit to be filed by one who is not
a real party in interest. Equity is invoked only when the plaintiff, on the basis of
the action filed and the relief sought, has a clear right that he seeks to enforce, or
that would obviously be violated if the action filed were to be dismissed for lack of
standing. In the present dispute, only the State can file a suit for reconveyance of
a public land. Therefore, not being the owners of the land but mere applicants for
sale patents thereon. Respondents have no personality to file the suit. Neither
will they be directly affected by the judgment in such suit.
SYLLABUS
3. ID.; ID.; ID.; DEFINED. Under Section 2, Rule 3 of the Rules of Court, every
action must be prosecuted or defended in the name of the real party in interest. It
further defines a "real party in interest" as one who stands to be benefited or
injured by the judgment in the suit. In Joya v. Presidential Commission on Good
Government, this Court explained that "legal standing means a personal and
substantial interest in the case such that the party has sustained or will sustain
direct injury as a result of . . . the act being challenged. The term 'interest' is
material interest, an interest in issue and to be affected by the decree, as
distinguished from mere interest in the question involved, or a mere incidental
interest. Moreover, the interest of the party must be personal and not one based
on a desire to vindicate the constitutional right of some third and unrelated party."
4. ID.; ID.; ID.; SUIT FILED BY PERSONS NOT PARTY IN INTEREST MUST
BE DISMISSED ON THE GROUND THAT THE COMPLAINT STATES NO
CAUSE OF ACTION. Clearly, a suit filed by a person who is not a party in
interest must be dismissed. Thus, in Lucas v. Durian, the Court affirmed the
dismissal of a Complaint filed by a party who alleged that the patent was
obtained by fraudulent means and, consequently, prayed for the annulment of
said patent and the cancellation of a certificate of title. The Court declared that
the proper party to bring the action was the government, to which the property
would revert. Likewise affirming the dismissal of a Complaint for failure to state a
cause of action, the Court in Nebrada v. Heirs of Alivionoted that the plaintiff,
being a mere homestead applicant, was not the real party in interest to institute
an action for reconveyance. HADTEC
5. ID.; ID.; EQUITY; CAN ONLY SUPPLEMENT THE LAW BUT NOT
SUPPLANT IT. Indeed, "[f]or all its conceded merits, equity is available only in
the absence of law and not as its replacement. Equity is described as justice
without legality, which simply means that it cannot supplant although it may, as
often happens, supplement the law." To grant respondents standing in the
present case is to go against the express language of the law. Equity cannot give
them this privilege. Equity can only supplement the law, not supplant it. STcADa
DECISION
PANGANIBAN, J : p
Equity may be invoked only in the absence of law; it may supplement the law, but
it can neither contravene nor supplant it. aisadc
Statement of the Case
This principle is stressed by this Court in granting the Petition for Review
on Certiorari before us seeking the nullity of the April 16, 1997 Decision of the
Court of Appeals 1 in CA-GR CV No. 50025 and its October 13, 1997 Resolution
denying reconsideration. The dispositive portion of the assailed Decision reads
as follows:
"WHEREFORE, the foregoing considered, the appealed decision is SET
ASIDE and another one entered allowing plaintiffs-appellants to stay in
the premises pending final termination of the administrative proceedings
for cancellation of defendants-appellees' titles and final termination of
the action for reversion and annulment of title. Let notice of lis
pendens be annotated on Original Certificate of Title Nos. T-55515 and
T-55516.
"Let a copy of this decision be furnished to the Director of Lands and the
Office of the Solicitor General for the administrative investigation of
plaintiff-appellant's complaint and [for] the eventual filing of the petition
for the cancellation of defendants-appellees' title [to] be initiated,
expedited if still pending, and resolved without further delay." 2
By the foregoing disposition, the Court of Appeals effectively reversed the
February 9, 1995 Decision 3 of the Regional Trial Court of Misamis Oriental,
Branch 17, which disposed:
"WHEREFORE, premises considered, the complaint filed in this case
against the defendants by the plaintiffs should be, as it is hereby ordered,
DISMISSED, for lack of merit. Accordingly, the defendants are hereby
declared as owners of the property in litigation as evidenced by their
certificates of title covering their respective portions of Lot No. 3714 and
the plaintiffs, who are now possessing and occupying said parcel of land,
are hereby ordered to vacate the same within ninety (90) days, so that
the defendants can take possession of their respective portions and
enjoy the same as owners thereof.
"The counter-claims are, likewise, dismissed for failure to prove the
same. Costs against the plaintiffs." 4
Hence, this recourse to this Court. 5
The Facts
As found by the Court of Appeals, the facts of the case are as follows:
". . . Plaintiffs-appellants [herein respondents] are the actual occupants
and residents of a portion [of land] consisting of 1 ha. 7552 sq. m.
(Appellants' Brief, p. 28, Rollo) of the controverted lot, Lot No. 3714 of
the Cadastral Survey of Cagayan [(]Cadastral Case No. 18, L.R.C. Rec.
No. 1562[)] with the improvements thereon, situated in the Barrio of
Lapasan, City of Cagayan de Oro . . . containing an area of ONE
HUNDRED TWENTY SIX THOUSAND ONE HUNDRED AND TWELVE
(126,112) SQUARE METERS, more or less (Exhibit '2'; Records, pp. 12-
13).
"Plaintiffs-appellants are miscellaneous sales patent applicants of their
respective portions of the aforedescribed lot occupied by them [(]some
as far back as 1965[)] and have been religiously paying taxes on the
property. The action for reconveyance with damages filed before the
Regional Trial Court, Misamis Oriental, Cagayan de Oro City springs
from the fact that the lot in question [(]Lot 3714[)] had been titled under
Original Certificate of Title No. O-740 issued by the then Land
Registration Commission on December 13, 1977 in the name of Patricio
Salcedo married to Pilar Nagac. Said OCT was issued pursuant to
Decree of Registration No. N-168305 in accordance with a decision of
the Cadastral Court in Cadastral Case No. 18, LRC Cad. Rec. No. 1562
dated August 6, 1941 penned by the Hon. Lope Consing (Pre-Trial Brief
for Defendant Spouses Francisco and Angela Tankiko and Spouses
Isaias and Anita Valdehueza, Records, p. 258). Subsequently, separate
titles (Transfer Certificates of Title NO. T-55515 and T-55516) were
issued to defendant-appellee Tankiko after the latter purchased Lots
3714-B, 3714-C of the subdivision plan from the Heirs of Patricio
Salcedo represented by Atty. Godofredo Cabildo, their attorney-in-fact.
In turn, defendant-appellee Francisco Tankiko sold Lot 3714-C to
defendant-appellees Isaias and Anita Valdehuesa.
As the property in dispute is still part of the public domain, respondents are not
the proper parties to file an action for reconveyance, as they are not owners of
the land, but only applicants for sales patent thereon. However, equitable
considerations persuaded the CA to allow plaintiffs-appellants to remain on the
land in question, so that future litigation may be avoided.
Statement of the Issues
In their Memorandum, petitioners claim that the CA erred in its ruling on the
following issues:
"1. Respondents' legal personality to sue;
2. Decree of Registration;
3. Petitioners as innocent purchasers for value;
4. Allowing respondents to stay in the premises; and
5. Prescription." 7
This Court believes that the pivotal issue in this case is whether the private
respondents may be deemed the proper parties to initiate the present suit.
The Court's Ruling
The petition is meritorious.
Main Issue: Personality to Sue
Although the respondents had no personality to file the action for reconveyance
with damages, the Court of Appeals still ruled that the particular circumstances of
this case necessitated the exercise of equity jurisdiction, in order to avoid leaving
unresolved the matter of possession of the land in question.
On the other hand, petitioners insist that respondents had no legal capacity to file
the Complaint, because they were not the owners of the land but mere applicants
for sales patent thereon. Therefore, petitioners argue that respondents, not being
the real parties in interest, have no legal standing to institute the Complaint in the
trial court.
We agree with petitioners. The Court is not persuaded that the circumstances of
this case justify the exercise of equity jurisdiction that would allow a suit to be
filed by one who is not a real party in interest.
First, equity is invoked only when the plaintiff, on the basis of the action filed and
the relief sought, has a clear right that he seeks to enforce, or that would
obviously be violated if the action filed were to be dismissed for lack of standing.
In the present case, respondents have no clear enforceable right, since their
claim over the land in question is merely inchoate and uncertain. Admitting that
they are only applicants for sales patents on the land, they are not and they do
not even claim to be owners thereof. In fact, there is no certainty that their
applications would even be ruled upon favorably, considering that some of the
applications have been pending for more than ten years already.
Second, it is evident that respondents are not the real parties in interest.
Because they admit that they are not the owners of the land but mere applicants
for sales patents thereon, it is daylight clear that the land is public in character
and that it should revert to the State. This being the case,Section 101 of the
Public Land Act categorically declares that only the government may institute an
action to recover ownership of a public land. 8 InSumail v. CFI, 9 a case involving
facts identical to the present controversy, the Court held that a private party had
no personality to institute an action for reversion of a parcel of land to the public
domain, viz.:
"Under section 101 above reproduced, only the Solicitor General or the
officer acting in his stead may bring the action for reversion.
Consequently, Sumail may not bring such action or any action which
would have the effect of cancelling a free patent and the corresponding
certificate of title issued on the basis thereof, with the result that the land
covered thereby will again form part of the public domain. Furthermore,
there is another reason for withholding legal personality from Sumail. He
does not claim the land to be his private property. . . . Consequently,
even if the parcel were declared reverted to the public domain, Sumail
does not automatically become owner thereof. He is a mere public land
applicant like others who might apply for the same."
Under Section 2, Rule 3 of the Rules of Court, 1 0 every action must be
prosecuted or defended in the name of the real party in interest. It further defines
a "real party in interest" as one who stands to be benefited or injured by the
judgment in the suit. In Joya v. Presidential Commission on Good Government,
this Court explained that "legal standing means a personal and substantial
interest in the case such that the party has sustained or will sustain direct injury
as a result of . . . the act being challenged. The term 'interest' is material interest,
an interest in issue and to be affected by the decree, as distinguished from mere
interest in the question involved, or a mere incidental interest. Moreover, the
interest of the party must be personal and not one based on a desire to vindicate
the constitutional right of some third and unrelated party." 11
Clearly, a suit filed by a person who is not a party in interest must be dismissed.
Thus, in Lucas v. Durian, 12 the Court affirmed the dismissal of a Complaint filed
by a party who alleged that the patent was obtained by fraudulent means and,
consequently, prayed for the annulment of said patent and the cancellation of a
certificate of title. The Court declared that the proper party to bring the action was
the government, to which the property would revert. Likewise affirming the
dismissal of a Complaint for failure to state a cause of action, the Court
in Nebrada v. Heirs of Alivio 13 noted that the plaintiff, being a mere homestead
applicant, was not the real party in interest to institute an action for reconveyance.
In Gabila v. Bariga, 14 the Court further declared:
"The present motion to dismiss is actually predicated on Section 1(g),
Rule 16 of the Revised Rules of Court, i.e., failure of the complaint to
state a cause of action, for it alleged in paragraph 12 thereof that the
plaintiff admits that he has no right to demand the cancellation or
amendment of the defendant's title, because, even if the said title were
cancelled or amended, the ownership of the land embraced therein, or
the portion thereof affected by the amendment would revert to the public
domain. In his amended complaint, the plaintiff makes no pretense at all
that any part of the land covered by the defendant's title was privately
owned by him or by his predecessors-in-interest. Indeed, it is admitted
therein that the said land was at all times a part of the public domain until
December 18, 1964, when the government issued a title thereon in favor
of the defendant. Thus, if there is any person or entity in relief, it can only
by the government."
Verily, the Court stressed that "[i]f the suit is not brought in the name of or against
the real party in interest, a motion to dismiss may be filed on the ground that the
complaint states no cause of action.'' 15 In fact, a final judgment may be
invalidated if the real parties in interest are not included. This was underscored
by the Court in Arcelona v. CA, 16 in which a final judgment was nullified because
indispensable parties were not impleaded.
In the present dispute, only the State can file a suit for reconveyance of a public
land. Therefore, not being the owners of the land but mere applicants for sales
patents thereon, respondents have no personality to file the suit. Neither will they
be directly affected by the judgment in such suit.
Indeed, "[f]or all its conceded merits, equity is available only in the absence of
law and not as its replacement. Equity is described as justice without legality,
which simply means that it cannot supplant although it may, as often happens,
supplement the law." 17 To grant respondents standing in the present case is to
go against the express language of the law. Equity cannot give them this
privilege. Equity can only supplement the law, not supplant it.
Having resolved that the respondents have no legal standing to sue and are not
the real parties in interest, we find no more necessity to take up the other issues.
They shall become important only if a proper suit is instituted by the solicitor
general in the future.
WHEREFORE, the petition is hereby GRANTED and the assailed Decision is
REVERSED and SET ASIDE. The Complaint filed in Civil Case No. 91-241
before the Regional Trial Court of Misamis Oriental, Branch 17, is DISMISSED.
No costs. SO ORDERED.
(Spouses Tankiko v. Cezar, G.R. No. 131277, [February 2, 1999], 362 PHIL
|||
184-196)
DECISION
VELASCO, JR., J : p
The Case
Ascribing grave abuse of discretion to respondent Ombudsman, this Petition for
Review on Certiorari, 1 under Rule 45 pursuant to Section 27 of RA 6770, 2 seeks
to reverse and set aside the November 26, 1997 Order 3 of the Office of the
Special Prosecutor (OSP) in OMB-1-94-3425 duly approved by then
Ombudsman Aniano Desierto on August 21, 1998, which recommended the
dismissal of the Information 4 in Criminal Case No. 23661 filed before the
Sandiganbayan against respondents Pampanga Provincial Adjudicator Toribio E.
Ilao, Jr., Chief Legal Officer Eulogio M. Mariano and Legal Officer Jose D.
Jimenez, Jr. (both of the DAR Legal Division in San Fernando, Pampanga), and
Ernesto R. Salenga. The petition likewise seeks to set aside the October 30,
1998 Memorandum 5 of the OSP duly approved by the Ombudsman on
November 27, 1998 which denied petitioner's Motion for
Reconsideration. 6 Previously, the filing of the Information against said
respondents was authorized by the May 10, 1996 Resolution 7 and October 3,
1996 Order 8 of the Ombudsman which found probable cause that they granted
unwarranted benefits, advantage, and preference to respondent Salenga in
violation of Section 3 (e) of RA 3019. 9
The Facts
Paciencia Regala owns a seven (7)-hectare fishpond located at Sasmuan,
Pampanga. Her Attorney-in-Fact Faustino R. Mercado leased the fishpond for
PhP 230,000.00 to Eduardo Lapid for a three (3)-year period, that is, from August
7, 1990 to August 7, 1993. 10 Lessee Eduardo Lapid in turn sub-leased the
fishpond to Rafael Lopez for PhP 50,000.00 during the last seven (7) months of
the original lease, that is, from January 10, 1993 to August 7,
1993. 11 Respondent Ernesto Salenga was hired by Eduardo Lapid as fishpond
watchman (bante-encargado). In the sub-lease, Rafael Lopez rehired respondent
Salenga.
Meanwhile, on March 11, 1993, respondent Salenga, through a certain Francis
Lagman, sent his January 28, 1993 demand letter 12 to Rafael Lopez and
Lourdes Lapid for unpaid salaries and non-payment of the 10% share in the
harvest.
On June 5, 1993, sub-lessee Rafael Lopez wrote a letter to respondent Salenga
informing the latter that for the last two (2) months of the sub-lease, he had given
the rights over the fishpond to Mario Palad and Ambit Perez for PhP
20,000.00. 13 This prompted respondent Salenga to file a Complaint14 before the
Provincial Agrarian Reform Adjudication Board (PARAB), Region III, San
Fernando, Pampanga docketed as DARAB Case No. 552-P'93 entitled Ernesto R.
Salenga v. Rafael L. Lopez and Lourdes L. Lapid for Maintenance of Peaceful
Possession, Collection of Sum of Money and Supervision of Harvest. The
Complaint was signed by respondent Jose D. Jimenez, Jr., Legal Officer of the
Department of Agrarian Reform (DAR) Region III Office in San Fernando,
Pampanga, as counsel for respondent Salenga; whereas respondent Eulogio M.
Mariano was the Chief Legal Officer of DAR Region III. The case was assigned
to respondent Toribio E. Ilao, Jr., Provincial Adjudicator of DARAB, Pampanga.
On May 10, 1993, respondent Salenga amended his complaint. 15 The
amendments included a prayer for the issuance of a temporary restraining order
(TRO) and preliminary injunction. However, before the prayer for the issuance of
a TRO could be acted upon, on June 16, 1993, respondent Salenga filed a
Motion to Maintain Status Quo and to Issue Restraining Order 16 which was set
for hearing on June 22, 1993. In the hearing, however, only respondent Salenga
with his counsel appeared despite notice to the other parties. Consequently,
the ex-parte presentation of respondent Salenga's evidence in support of the
prayer for the issuance of a restraining order was allowed, since the motion was
unopposed, and on July 21, 1993, respondent Ilao, Jr. issued a TRO. 17
Thereafter, respondent Salenga asked for supervision of the harvest, which the
board sheriff did. Accordingly, defendants Lopez and Lapid received their
respective shares while respondent Salenga was given his share under protest.
In the subsequent hearing for the issuance of a preliminary injunction, again, only
respondent Salenga appeared and presented his evidence for the issuance of
the writ.IaCHTS
The Issues
Petitioner raises two assignments of errors, to wit:
THE HONORABLE OMBUDSMAN ERRED IN GIVING DUE COURSE A
MISPLACED COUNTER-AFFIDAVIT FILED AFTER THE
TERMINATION OF THE PRELIMINARY INVESTIGATION AND/OR
THE CASE WAS ALREADY FILED BEFORE THE SANDIGANBAYAN.
ASSUMING OTHERWISE, THE HONORABLE OMBUDSMAN
LIKEWISE ERRED IN REVERSING HIS OWN RESOLUTION WHERE
IT WAS RESOLVED THAT ACCUSED AS PROVINCIAL AGRARIAN
ADJUDICATOR HAS NO JURISDICTION OVER A COMPLAINT
WHERE THERE EXIST [sic] NO TENANCY RELATIONSHIP
CONSIDERING [sic] COMPLAINANT IS NOT A TENANT BUT A
"BANTE-ENCARGADO" OR WATCHMAN-OVERSEER HIRED FOR A
SALARY OF P3,000.00 PER MONTH AS ALLEGED IN HIS OWN
COMPLAINT. 30
Before delving into the errors raised by petitioner, we first address the preliminary
procedural issue of the authority and locus standi of petitioner to pursue the
instant petition.
Preliminary Issue: Legal Standing
Locus standi is defined as "a right of appearance in a court of justice . . . on a
given question." 31 In private suits, standing is governed by the "real-parties-in
interest" rule found in Section 2, Rule 3 of the 1997 Rules of Civil Procedure
which provides that "every action must be prosecuted or defended in the name of
the real party in interest." Accordingly, the "real-party-in interest" is "the party who
stands to be benefited or injured by the judgment in the suit or the party entitled
to the avails of the suit." 32 Succinctly put, the plaintiffs' standing is based on their
own right to the relief sought.
The records show that petitioner is a non-lawyer appearing for himself and
conducting litigation in person. Petitioner instituted the instant case before the
Ombudsman in his own name. In so far as the Complaint-Affidavit filed before the
Office of the Ombudsman is concerned, there is no question on his authority and
legal standing. Indeed, the Office of the Ombudsman is mandated to "investigate
and prosecute on its own or on complaint by any person, any act or omission
of any public officer or employee, office or agency, when such act or omission
appears to be illegal, unjust, improper or inefficient (emphasis supplied)." 33 The
Ombudsman can act on anonymous complaints and motu proprio inquire into
alleged improper official acts or omissions from whatever source, e.g., a
newspaper. 34 Thus, any complainant may be entertained by the Ombudsman for
the latter to initiate an inquiry and investigation for alleged irregularities.
However, filing the petition in person before this Court is another matter. The
Rules allow a non-lawyer to conduct litigation in person and appear for oneself
only when he is a party to a legal controversy. Section 34 of Rule 138 pertinently
provides, thus:
SEC. 34. By whom litigation conducted. In the court of a justice of the
peace a party may conduct his litigation in person, with the aid of an
agent or friend appointed by him for that purpose, or with the aid of an
attorney. In any other court, a party may conduct his litigation
personallyor by aid of an attorney, and his appearance must be
either personal or by a duly authorized member of the bar (emphases
supplied).
Petitioner has no legal standing
Is petitioner a party or a real party in interest to have the locus standi to pursue
the instant petition? We answer in the negative. TSEAaD
Based on the foregoing discussion, petitioner indubitably does not have locus
standi to pursue this action and the instant petition must be forthwith dismissed
on that score. Even granting arguendo that he has locus standi, nonetheless,
petitioner fails to show grave abuse of discretion of respondent Ombudsman to
warrant a reversal of the assailed November 26, 1997 Order and the October 30,
1998 Memorandum.
First Issue: Submission of Counter-Affidavit
The Sandiganbayan, not the Ombudsman, ordered re-investigation
On the substantive aspect, in the first assignment of error, petitioner imputes
grave abuse of discretion on public respondent Ombudsman for allowing
respondent Ilao, Jr. to submit his Counter-Affidavit when the preliminary
investigation was already concluded and an Information filed with the
Sandiganbayan which assumed jurisdiction over the criminal case. This
contention is utterly erroneous.
The facts clearly show that it was not the Ombudsman through the OSP who
allowed respondent Ilao, Jr. to submit his Counter-Affidavit. It was the
Sandiganbayan who granted the prayed for re-investigation and ordered the OSP
to conduct the re-investigation through its August 29, 1997 Order, as follows:
Considering the manifestation of Prosecutor Cicero Jurado, Jr. that
accused Toribio E. Ilao, Jr. was not able to file his counter-affidavit in
the preliminary investigation, there appears to be some basis for
granting the motion of said accused for reinvestigation.
WHEREFORE, accused Toribio E. Ilao, Jr. may file his counter-affidavit,
with documentary evidence attached, if any, with the Office of the
Special Prosecutor within then (10) days from today. The prosecution
is ordered to conduct a reinvestigation within a period of thirty (30)
days. 38(Emphases supplied.)
As it is, public respondent Ombudsman through the OSP did not exercise any
discretion in allowing respondent Ilao, Jr. to submit his Counter-Affidavit. The
OSP simply followed the graft court's directive to conduct the re-investigation
after the Counter-Affidavit of respondent Ilao, Jr. was filed. Indeed, petitioner did
not contest nor question the August 29, 1997 Order of the graft court. Moreover,
petitioner did not file any reply-affidavit in the re-investigation despite notice.
Re-investigation upon sound discretion of graft court
Furthermore, neither can we fault the graft court in granting the prayed for re-
investigation as it can readily be seen from the antecedent facts that respondent
Ilao, Jr. was not given the opportunity to file his Counter-Affidavit. Respondent
Ilao, Jr. filed a motion to dismiss with the Ombudsman but such was not resolved
before the Resolution finding cause to bring respondents to trial was issued.
In fact, respondent Ilao, Jr.'s motion to dismiss was resolved only through the
May 10, 1996 Resolution which recommended the filing of an Information.
Respondent Ilao, Jr.'s Motion for Reconsideration and/or Re-investigation was
denied and the Information was filed with the graft court.
Verily, courts are given wide latitude to accord the accused ample opportunity to
present controverting evidence even before trial as demanded by due process.
Thus, we held in Villaflor v. Vivar that "[a] component part of due process in
criminal justice, preliminary investigation is a statutory and substantive right
accorded to the accused before trial. To deny their claim to a preliminary
investigation would be to deprive them of the full measure of their right to due
process." 39
Second Issue: Agrarian Dispute
Anent the second assignment of error, petitioner contends that DARAB Case No.
552-P'93 is not an agrarian dispute and therefore outside the jurisdiction of the
DARAB. He maintains that respondent Salenga is not an agricultural tenant but a
mere watchman of the fishpond owned by Paciencia Regala. Moreover,
petitioner further argues that Rafael Lopez and Lourdes Lapid, the respondents
in the DARAB case, are not the owners of the fishpond. CAaSHI
Jovito R. Salonga, Fernando Santiago and Emilio C . Capulong, Jr., for the
petitioners.
Renato L. Cayetano, Eleazar Reyes for private respondent PGMC.
The Solicitor General for public respondent.
SYLLABUS
DECISION
MENDOZA, J : p
In the operation of the lottery, the PCSO is to employ its own personnel.
(Par. 5) It is responsible for the loss of, or damage to, the equipment from any
cause and for the cost of their maintenance and repair. (Pars. 7-8)
Upon the expiration of the leases, the PCSO has the option to purchase
the equipment for the sum of P25 million.
A copy of the ELA was submitted to the Court by the PGMC in
accordance with its manifestation in the prior case. cdt
On February 21, 1995 this suit was filed seeking to declare the ELA
invalid on the ground that it is substantially the same as the Contract of Lease
nullified in the first case. Petitioners argue:
1. THE AMENDED ELA IS NULL AND VOID SINCE IT IS BASICALLY
OR SUBSTANTIALLY THE SAME AS OR SIMILAR TO THE OLD
LEASE CONTRACT AS REPRESENTED AND ADMITTED BY
RESPONDENTS PGMC AND PCSO.
2. ASSUMING ARGUENDO, THAT THE AMENDED ELA IS
MATERIALLY DIFFERENT FROM THE OLD LEASES CONTRACT,
THE AMENDED ELA IS NEVERTHELESS NULL AND VOID FOR
BEING INCONSISTENT WITH AND VIOLATIVE OF PCSO'S CHARTER
AND THE DECISION OF THIS HONORABLE COURT OF MAY 5,
1995. aisadc
For the reason set forth below, we hold that petitioners have no cause
against respondents and therefore their petition should be dismissed.
I. PETITIONERS' STANDING
The Kilosbayan, Inc. is an organization described in its petition as
"composed of civic-spirited citizens, pastors, priests, nuns and lay leaders
who are committed to the cause of truth, justice, and national renewal." Its
trustees are also suing in their individual and collective capacities as
"taxpayers and concerned citizens." The other petitioners (Sen. Freddie Webb,
Sen. Wigberto Taada and Rep. Joker P. Arroyo) are members of the
Congress suing as such and as "taxpayer and concerned citizens."
Neither the doctrine of stare decisis nor that of "law of the case", nor
that of conclusive of judgment poses a barrier to a determination of
petitioners' right to maintain this suit.
Stare decisis is usually the wise policy. But in this case, concern for
stability in decisional law does not call for adherence to what has recently
been laid down as the rule. The previous ruling sustaining petitioners'
intervention may itself be considered a departure from settled rulings on "real
parties in interest" because no constitutional issues were actually involved.
Just five years before that ruling this Court had denied standing to a party who,
in questioning the validity of another form of lottery, claimed the right to sue in
the capacity of taxpayer, citizen and member of the Bar. (Valmonte v.
Philippine Charity Sweepstakes, G.R. No. 78716, Sept . 22, 1987) Only
recently this Court held that members of Congress have standing to question
the validity of presidential veto on the ground that, if true, the illegality of the
veto would impair their prerogatives as members of Congress. Conversely if
the complaint is not grounded on the impairment of the powers of Congress,
legislators do not have standing to question the validity of any law or official
action. (Philippine Constitution Association v. Enriquez, 235 SCRA 506 [1994])
There is an additional reason for a reexamination of the ruling on standing. The
voting on petitioners' standing in the previous case was a narrow one, with seven
(7) members sustaining petitioners' standing and six (6) denying petitioners' right
to bring the suit. The majority was thus a tenuous one that is not likely to be
maintained in any subsequent litigation. In addition, there have been changes in
the membership of the Court, with the retirement of Justices Cruz and Bidin and
the appointment of the writer of this opinion and Justice Francisco. Given this fact
it is hardly tenable to insist on the maintenance of the ruling as to petitioners'
standing. cdta
Petitioners argue that inquiry into their right to bring this suit is barred by the
doctrine of "law of the case." We do not think this doctrine is applicable
considering the fact that while this case is a sequel to G.R. No. 113375, it is not
its continuation: The doctrine applies only when a case is before a court a
second time after a ruling by an appellate court. Thus in People v. Pinuila, 103
Phil. 992, 999 (1958), it was stated:
"'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 of decision between the same
parties in the same case continues to be the law of these case, whether
correct on general principles or not, so long as the facts on which such
decision was predicated continue to be facts of the case before the
court." (21 C.J.S. 330)
"It may be stated as a rule of general application that, where the
evidence on a second or succeeding appeal is substantially the same as
that on the first or preceding appeal, all matters, questions, points, or
issues adjudicated on the prior appeal are the law of the case on all
subsequent appeals and will not be considered or re-adjudicated therein.
(5 C.J.S. 1267)cdasia
"In accordance with the general rule stated in Section 1821, where after
a definite determination, the court has remanded the cause for further
action below, it will refuse to examine question other than those arising
subsequently to such determination and remand, or other than the
propriety of the compliance with its mandate; and if the court below has
proceeded in substantial conformity to the directions of the appellate
court, its action will not be questioned on a second appeal . . . .
"As a general rule a decision on a prior appeal of the same is held to be
the law of the case whether that decision is right or wrong, the remedy of
the party deeming himself aggrieved to seek a rehearing. (5 C.J.S. 1276-
77)
"Questions necessarily involved in the decision on a former appeal will
be regarded as the law of the case on a subsequent appeal, although
the questions are not expressly treated in the opinion of the court, as the
presumption is that all the facts in the case bearing on the point decided
have received due consideration whether all or none of them are
mentioned in the opinion. (5 C.J.S. 1286-87)" cdtai
Petitioners invoke the following Principles and State Policies set forth in
Art. II of the Constitution:
The maintenance of peace and order, the protection of life, liberty, and
property, and the promotion of the general welfare are essential for the
employment by all the people of the blessings of democracy. (Sec. 5)
The natural and primary right and duty of the parents in the rearing of the
youth for civic efficiency and the development of moral character shall
receive the support of the Government. (Sec. 12) cdtai
The State recognizes the vital role of the youth in nation-building and
shall promote their physical, moral, spiritual, intellectual, and social well-
being. It shall inculcate in the youth patriotism and nationalism, and
encourage their involvement in public and civic affairs. (Sec. 13)
The state shall give priority to education, science and technology, arts,
culture, and sports to foster patriotism and nationalism, accelerate social
progress, and promote total human liberation and development. (Sec. 17)
(Memorandum for Petitioners, p. 7) cdt
These are not, however, self executing provisions, the disregard of which can
give rise to a cause of action in the courts. They do not embody judicially
enforceable constitutional rights but guidelines for legislation.
Thus, while constitutional policies are invoked, this case involves basically
questions of contract law. More specifically, the question is whether petitioners
have legal right which has been violated.
In action for annulment of contracts such as this action, the real parties are those
who are parties to the agreement or are bound either principally or subsidiarily or
are prejudiced in their rights with respect to one of the contracting parties and
can show the detriment which would positively result to them from the contract
even though they did no intervene in it (Ibaez v. Hongkong & Shanghai Bank,
22 Phil. 572 [1912]), or who claim a right to take part in a public bidding but have
been illegally excluded from it. (See De la Lara Co., Inc. v. Secretary of Public
Works and Communications, G.R. No. L-13460, Nov. 28, 1958)
These are parties with "a present substantial interest, as distinguished from a
mere expectancy or future, contingent, subordinate, or consequential interest . . . .
The phrase 'present substantial interest' more concretely is meant such interest
of a party in the subject matter of action as will entitle him, under the substantive
law, to recover if the evidence is sufficient, or that he has the legal title to
demand and the defendant will be protected in a payment by him." (1 MORAN,
COMMENTS ON THE RULES OF COURT 154-155 (1979) ) Thus, in Gonzales v.
Hechanova, 118 Phil. 1065 (1963) petitioner's right to question the validity of a
government contract for the importation of rice was sustained because he was a
rice planter with substantial production, who had a right under the law to sell to
the government. cdasia
But petitioners do not have such present substantial interest in the ELA as would
entitle them to bring this suit. Denying to them the right to intervene will not leave
without remedy any perceived illegality in the execution of government contracts.
Question as to the nature or validity of public contracts or the necessity for a
public bidding before they may be made can be raised in an appropriate case
before the Commission on Audit or before the Ombudsman. The
Constitution requires that the Ombudsman and his deputies, "as protectors of the
people shall act promptly on complaints filed in any form or manner against
public officials or employees of the government, or any subdivision, agency or
instrumentality thereofincluding government-owned or controlled corporations."
(Art. XI , Sec. 12) In addition, the Solicitor General is authorized to bring an
action for quo warranto if it should be thought that a government corporation, like
the PCSO, has offended against its corporate charter or misused its franchise.
(Rule 66, Sec. 2 (a) (d))
We now turn to the merits of petitioners' claim constituting their cause of action.
II. THE EQUIPMENT LEASE AGREEMENT
This Court ruled in the previous case that the Contract of Leases, which
the PCSO had entered into two with the PGMC on December 17, 1993 for the
operation of an on-line lottery system, was actually a joint venture agreement
or, at the very least, a contract involving "collaboration or association" with
another party and for that reason, was void. The Court noted the following
features of the contract: cdt
(1) The PCSO had neither funds nor expertise to operate the on-line
lottery system so that it would be dependent on the PGMC for the operation of
the lottery system.
(2) The PGMC would exclusively bear all costs and expenses for
printing tickets, payment of salaries and wages of personnel, advertising and
promotion and other expenses for the operation of the lottery system. Mention
was made of the provision, which the Court considered "unusual in a lessor-
lessee relationship but inherent in a joint venture," for the payment of the
rental not at a fixed amount but at a certain percentage (4.9%) of the gross
receipts from the sale of tickets, and the possibility that "nothing may be due
demandable at all because the PGMC binds itself to 'bear all risks if the
revenue from the ticket sales, on an annualized basis, are insufficient to pay
the entire prize money.'" (232 SCRA at 147)
(3) It was only after the term of the contract that PCSO personnel would
be ready to operate the lottery system themselves because it would take the
entire eight-year term of the contract for the technology transfer to be
completed. In the view of the Court, this meant that for the duration of the
contract, the PGMC would actually be the operator of the lottery system, and
not simply the lessor of equipment. aisadc
These features of the old Contract of Lease have been removed in the
present ELA. While the rent is still expressed in terms of percentage (it is now
4.3% of the gross receipts from the sale of the tickets) in the ELA, the PGMC
is now guaranteed a minimum rent of P35,000.00 a year per terminal in
commercial operation. (Par. 2) The PGMC is thus assured of payment of the
rental. Thus par. 2 of the ELA provides:
2. RENTAL
During the effectivity of this Agreement and the term of this lease as
provided in paragraph 3 hereof, LESSEE shall pay rental to
LESSOR equivalent to FOUR POINT THREE PERCENT (4.3%)
of the gross amount of ticket sales from all the LESSEE's on-line
lottery operations in the Territory, which rental shall be computed
and payable bi-weekly net of withholding taxes on income, if any:
provided that, in no case shall the annual aggregate rentals per
year during the term of the leases be less than the annual
minimum fixed rental computed at P35,000.00 per terminal in
commercial operation per annum, provided, further that the
annual minimum fixed rental shall be reduced pro-rata for the
number of days during the year that a terminal is not in
commercial operation due to repairs or breakdown. In the event
the aggregate bi-weekly rentals in any year falls short of the
annual minimum fixed rental computed at P35,000.00 per terminal
in commercial operation, the LESSEE shall pay such shortfall
from out of the proceeds of the then current ticket sales from
LESSEE's on-line lottery in the Territory (after payment first of
prizes and agents' commissions but prior to any other payments,
allocations or disbursements) until said shortfall shall have been
fully settled, but without prejudice to the payment to LESSOR of
the then current bi-weekly rentals in accordance with the
provisions of the first sentence of this paragraph 2.
The PCSO now bears all losses because the operation of the system is
completely in its hands. This feature of the new contract negates any doubt that it
is anything but a lease agreement.
It is contended that the rental of 4.3% is substantially the same as the 4.9% in
the old contract because the reduction is negligible especially now that the PCSO
assumes all business risks and risk of loss of, or damage to, equipment.
Petitioners allege that: aisadc
Petitioners reply that to obviate the possibility that the rental would not
exceed 15% of the net receipts what the respondents should have done was
not to agree on a minimum fixed rental of P35,000.00 per terminal in
commercial operation . This is a matter of business judgment which, in the
absence of a clear and convincing showing that it was made in grave abuse of
discretion of the PCSO, this Court is not inclined to review. In this case the
rental has to be expressed in terms of percentage of the revenue of the PCSO
because rental are treated in the charter of the agency (R.A. No. 1169, Sec. 6
(C)) as "operating expenses" and the allotment for "operating expenses" is a
percentage of the net receipts.
The ELA also provides:
8. REPAIR SERVICES aisadc
We hold that the ELA is a lease contract and that it contains none of the features
of the former contract which were considered "badges of a joint venture
agreement." To further find fault with the new contract would be to cavil and
expose the opposition to the contract to be actually an opposition to lottery under
any and all circumstances. But "[t]he morality of gambling is not a justifiable issue.
Gambling is not illegal per se . . . . It is left to Congress to deal with activity as it
sees fit." (Magtajas v. Pryce Properties Corp. Inc., 234 SCRA 255, 268
(1994). Cf . Lim v. Pacquing, G.R. No. 115044, Jan. 27, 1995) In the case of
lottery, there is no dispute that, to enable the Philippine Charity Sweepstakes
Office to raise funds for charity, Congress authorized the Philippine Charity
Sweepstakes Office (PCSO) to hold or conduct lotteries under certain conditions.
We therefore now consider whether under the charter of the PCSO any contract
for the operation of an on-line lottery system, which involves any form of
collaboration or association, is prohibited.
III. THE INTERPRETATION of SEC. 1 OF R.A. 1169
In G.R. No. 113375 it was held that the PCSO does not have the power to enter
into any contract which would involve it in any form of "collaboration, association
or joint venture" for the holding of sweepstakes races, lotteries and other similar
activities. This interpretation must be reexamined especially in determining
whether petitioners have a cause of action.
We hold that the charter of the PCSO doe not absolutely prohibit it from holding
or conducting lottery "in collaborating, association or joint venture" with another
party. What the PCSO is prohibited from doing is to invest in a business engaged
in sweepstakes races, lotteries and similar activities, and it is prohibited from
doing so whether in "collaboration, association or joint venture" with others or "by
itself." The reason for that is that these are competing activities and the PCSO
should not invest in the business of a competitor.
It will be helpful to quote the pertinent provisions of R.A. No. 1169, as
amended by B.P. Blg. 42: cdta
When parsed, it will be seen that Sec. 1 grants the PCSO authority to do any of
the following: (1) to hold or conduct charity sweepstakes races, lotteries and
similar activities; and/or (2) to invest whether "by itself or in collaboration,
association or joint venture with any person, association, company or entity" in
any "health and welfare-related investments, programs, projects and activities
which may be profit oriented," except "the activities mentioned in the preceding
paragraph (A)," i.e., sweepstakes races, lotteries and similar activities. The
PCSO is prohibited from investing in "activities mentioned in the preceding
paragraph (A)" because, as already stated, these are competing activities.
The subject of Sec. 1 (B) is the authority of the PCSO to invest in certain projects
for the profit in order to enable it to expand its health programs, medical
assistance and charitable grants. The exception in the law refers to investments
in businesses engaged in sweepstakes races, lotteries and similar activities. The
limitation applies not only when the investments is undertaken by the PCSO "in
collaboration, association or joint venture" but also when made by the PCSO
alone, "by itself." The prohibition can not apply to the holding of a lottery by the
PCSO itself. Otherwise when it is authorized to do in par. (A) would be negated
by what is prohibited by par. (B).
To harmonize pars. (A) and (B), the latter must be read as referring to
the authority of the PCSO to invest in the business of others. Put in another
way, the prohibition in Sec. 1 (B) is not so much against the PCSO entering
into any collaboration, association or joint venture with others as against the
PCSO investing in the business of another franchise holder which would
directly compete with PCSO's own charity sweepstakes races, lotteries or
similar activities. The prohibition applies whether the PCSO makes the
investment alone or with others. cdt
THE SPEAKER.
Is there any objection to the amendment? (Silence) The amendment, as
amended, is approved.
MR. ZAMORA.
Continuing the line, Mr. Speaker, after "charitable grants" change the
period (.) into a semi-colon (;) and add the following
proviso: PROVIDED, THAT SUCH INVESTMENTS, PROGRAMS,
PROJECTS AND ACTIVITIES SHALL NOT COMPETE WITH
THE PRIVATE SECTOR IN AREAS WHERE THE PRIVATE
INVESTMENTS ARE ADEQUATE.
May I read the whole paragraph, Mr. speaker.
MR. DAVIDE.
May I introduce an amendment after "adequate". The intention of the
amendment is not to leave the determination of whether it is
adequate or not to anybody. And my amendment is to add after
"adequate" the words AS MAY BE DETERMINED BY THE
NATIONAL ECONOMIC AND DEVELOPMENT AUTHORITY. As
a matter of fact, it will strengthen the authority to invest in these
areas, provided that the determination of whether the private
sector's activity is already adequate must be determined by the
National Economic and Development Authority.
MR. ZAMORA.
Mr. Speaker, the committee accepts the proposed amendment.
MR. DAVIDE.
Thank you, Mr. Speaker. aisadc
THE SPEAKER.
May the sponsor now read the entire paragraph?
MR. ZAMORA.
May I read the paragraph, Mr. Speaker.
"Subject to the Minister of Human Settlements, to engage in
health and welfare-oriented investment programs, projects, and
activities which may be profit-oriented, by itself or in collaboration,
association or joint venture with any person, association,
company or entity, whether domestic or foreign, EXCEPT FOR
THE ACTIVITIES MENTIONED IN PARAGRAPH (a) for the
purpose of providing for permanent and continuing sources of
funds for health programs, including the expansion of existing
ones, medical assistance and services and/or charitable grants:
PROVIDED THAT SUCH INVESTMENTS, HEALTH PROGRAMS,
PROJECTS AND ACTIVITIES SHALL NOT COMPETE WITH
THE PRIVATE SECTOR IN AREAS WHERE THE PRIVATE
INVESTMENTS ARE ADEQUATE AS MAY BE DETERMINED
BY THE NATIONAL AND ECONOMIC DEVELOPMENT
AUTHORITY."
THE SPEAKER.
Is there any objection to the amendment? aisadc
MR. PELAEZ.
Mr. Speaker.
THE SPEAKER.
The Gentleman from Misamis Oriental is recognized.
MR. PELAEZ.
Mr. Speaker, may I suggest that in that proviso, we remove "health
programs, projects and activities," because the proviso refers only
to investments activities "provided that such investments will
not compete with the private sector in areas where the
investments are adequate . . ." aisadc
MR. ZAMORA.
It is accepted, Mr. Speaker.
THE SPEAKER.
Is there any objection?
MR. PELAEZ.
Mr. Speaker, may I propose an improvement to the amendment of the
Gentlemen from Cebu, just for style, I would suggest the insertion
of the word PRECEDING before the word "paragraph." The
phrase will read "the PRECEDING paragraph." aisadc
MR. ZAMORA.
It is accepted, Mr. Speaker.
THE SPEAKER.
Very well. Is there any objection to the committee amendment, as
amended? (Silence) The Chair hears none; the amendment is
approved.
The construction given to Sec. 1 in the previous decision is insupportable in light
of both the text of Sec. 1 and the deliberations of the Batasang Pambansa which
enacted the amendatory law. aisadc
Petitioners point out that while the general rule requiring public bidding covers
"contract[s] for public services or for
furnishing supplies, materialsand equipment" to the government or to any of its
branches, agencies or instrumentalities, the exceptions in pars. (a), (b), (d), (e),
and (f) refer to contracts for the furnishing of supplies only, while par. (c) refers to
the furnishing of materials, only. They argue that as the general rule covers the
furnishing of "supplies, materials and equipment," the reference in the exceptions
to the furnishing of "supplies" must be understood as excluding the furnishing of
any of the other items, i.e. "materials" and "equipment."
E.O. No. 301, Sec. 1 applies only to contracts for the purchase of supplies,
materials and equipment. It does not refer to contracts of lease of equipment like
the ELA. The provisions on lease are found in Secs. 6 and 7 but they refer to the
lease of privately-owned buildings or spaces for government use or of
government-owned buildings or spaces for private use, and these provisions do
not require public bidding. These provisions state:
Sec. 6. Guidelines for Lease Contracts. Any provision of law, decree,
executive order or other issuances to the contrary notwithstanding, the
Department of Public Works and Highways (DPWH), with respect to the
leasing of privately-owned buildings or spaces for government use or of
government-owned buildings or space for private use, shall formulate
uniform standards or guidelines for determining the reasonableness of
the terms of lease contracts and of rental rates involved.
aisadc
Petitioners contend that in any event the contract in question is not the "most
advantageous to the government." Whether the making of the present ELA
meets this condition is not to be judged by a comparison, line by line, of its
provisions with those of the old contract which this Court found to be in reality a
joint venture agreement. In some respects the old contracts would be more
favorable to the government because the PGMC assumed many of the risks and
burdens incident to the operation of the on-line lottery system, while under the
ELA it is freed from these burdens. That is because the old contract was a joint
venture agreement. The ELA, on the other hand, is a lease contract, with the
PCSO, as lessee, bearing solely the risks and burdens of operating the on-line
lottery system.
It is paradoxical that in their effort to show that the ELA is a joint venture
agreement and not a lease contract, petitioners point to contractual provisions
whereby the PGMC assumed risk and losses which might conceivably be
incurred in the operation of the lottery system, but to show that the present
lease agreement is not the most advantageous arrangement that can be
obtained, the very absence of these features of the old contract which made it
a joint venture agreement, is criticized.
Indeed the question is not whether compared with the former joint
venture agreement the present lease contract is "[more] advantageous to the
government." The question is whether under the circumstances, the ELA is
the most advantageous contract that could be obtained compared with similar
lease agreements which the PCSO could have made with other parties.
Petitioners have not shown that more favorable terms could have been
obtained by the PCSO or that at any rate the ELA, which the PCSO
concluded with the PGMC, is disadvantageous to the government. cdasia
For the foregoing reasons, we hold:
(1) that petitioners have neither standing to bring this suit nor substantial interest
to make them real parties in interest within the meaning of Rule 3, Sec. 2;
(2) that a determination of the petitioners' right to bring this suit is not precluded
or barred by the decision in the prior case between the parties; cdtai
(3) that the Equipment Lease Agreement of January 25, 1995 is valid as a lease
contract under the Civil Code and is not contrary to the charter of the Philippine
Charity Sweepstakes Office;
(4) that under Sec. 1 (A) of its charter (R.A. 1169), the Philippine Charity
Sweepstakes Office has authority to enter into a contract for the holding of an on-
line lottery, whether alone or in association, collaboration or joint venture with
another party, so long as it itself holds or conducts such lottery; and
(5) That the Equipment Lease Agreement in question did not have to be
submitted to the public bidding as a condition for its validity.aisadc
791)
SANDOVAL-GUTIERREZ, J : p
Judicial power is the power to hear and decide cases pending between parties
who have the right to sue in courts of law and equity. 1 Corollary to this dictum is
the principle of locus standi of a litigant. He who is directly affected and whose
interest is immediate and substantial has the standing to sue. Thus, a party must
show a personal stake in the outcome of the case or an injury to himself that can
be redressed by a favorable decision in order to warrant an invocation of the
court's jurisdiction and justify the exercise of judicial power on his behalf.
Assailed in this petition for certiorari is the legality of Resolution No. 2002-05 of
the Commission on Audit (COA) providing for Organizational Restructuring Plan.
The above-named petitioners basically alleged therein that this Plan is
intrinsically void for want of an enabling law authorizing COA to undertake the
same and providing for the necessary standards, conditions, restrictions,
limitations, guidelines, and parameters. Petitioners further alleged that in initiating
such Organizational Restructuring Plan without legal authority, COA committed
grave abuse of discretion amounting to lack or excess of jurisdiction.
At this point, it is pertinent to state that the COA is a quasi-judicial body and that
its decision, order or ruling may be brought to the Supreme Court oncertiorari by
the aggrieved party. 2
Petitioners Eufemio C. Domingo, Celso C. Gangan, Pascasio S. Banaria are
retired Chairmen, while Sofronio B. Ursal, and Alberto P. Cruz are retired
Commissioners of COA. All claim "to maintain a deep-seated abiding interest in
the affairs of COA," 3 especially in its Organizational Restructuring Plan, as
concerned taxpayers.
The other petitioners are incumbent officers or employees of COA. Maria L.
Matib and Angelo G. Sanchez are State Auditor III and State Auditor II,
respectively, assigned to the Cordillera Administrative Region (CAR). Prior to the
implementation of the questioned COA Organizational Restructuring Plan, they
were Resident Auditors and later Audit Team Leaders. Petitioner Rachel U.
Pacpaco is a State Auditor III assigned to CAR and a Team Supervisor, while
petitioner Sherwin A. Sipi-an is a State Auditor I also assigned at the CAR. These
petitioners claim that they were unceremoniously divested of their
designations/ranks as Unit Head, Team Supervisor, and Team Leader upon
implementation of the COA Organizational Restructuring Plan without just cause
and without due process, in violation of Civil Service Law. Moreover, they were
deprived of their respective Representation and Transportation Allowances
(RATA), thus causing them undue financial prejudice. EHaASD
Petitioners now invoke this Court's judicial power to strike down the COA
Organizational Restructuring Plan for being unconstitutional or illegal.
Initially, for our resolution is the issue of whether petitioners have the legal
standing to institute the instant petition.
Petitioners invoke our ruling in Chavez v. Public Estates Authority, 4 Agan, Jr. v.
Philippine International Air Terminals Co., Inc., 5 and Information Technology
Foundation of the Philippines v. Commission on Elections 6 that where the
subject matter of a case is a matter of public concern and imbued with public
interest, then this fact alone gives them legal standing to institute the instant
petition. Petitioners contend that the COA Organizational Restructuring Plan is
not just a mere reorganization but a revamp or overhaul of the COA, with a
"spillover effect" upon its audit performance. This will have an impact upon the
rest of the government bodies subject to its audit supervision, thus, should be
treated as a matter of transcendental importance. Consequently, petitioners' legal
standing should be recognized and upheld.
Respondents, through the Office of the Solicitor General (OSG), counter that
petitioners have no legal standing to file the present petition since following our
ruling in Kilusang Mayo Uno Labor Center v. Garcia, Jr., 7 they have not shown
"a personal stake in the outcome of the case" or an actual or potential injury that
can be redressed by our favorable decision. Petitioners themselves admitted that
"they do not seek any affirmative relief nor impute any improper or improvident
act against the said respondents" and "are not motivated by any desire to seek
affirmative relief from COA or from respondents that would redound to their
personal benefit or gain." It is clear then that petitioners failed to show any
"present substantial interest" in the outcome of this case, citing Kilosbayan v.
Morato. 8 Nor may petitioners claim that as taxpayers, they have legal standing
since nowhere in their petition do they claim that public funds are being spent in
violation of law or that there is a misapplication of the taxpayers' money, as we
ruled in Dumlao v. Comelec. 9
Petitioners' reliance upon our rulings in Chavez, 10 Agan, Jr., 11 and Information
Technology Foundation 12 is flawed.
In Chavez, we ruled that the petitioner has legal standing since he is a taxpayer
and his purpose in filing the petition is to compel the Public Estate Authority (PEA)
to perform its constitutional duties with respect to: (a) the right of the citizens to
information on matters of public concern; and (b) the application of a
constitutional provision intended to insure the equitable distribution of alienable
lands of the public domain among Filipino citizens. The thrust of the first is to
compel PEA to disclose publicly information on the sale of Government lands
worth billions of pesos, as mandated by the Constitution and statutory law. The
thrust of the second is to prevent PEA from alienating hundreds of hectares of
alienable lands of the public domain, thereby compelling it to comply with a
constitutional duty to the nation. We held that these matters are of transcendental
public importance.13
In Agan, Jr., we held that petitioners have legal standing as they have a direct
and substantial interest to protect. By the implementation of the PIATCO
contracts, they stand to lose their source of livelihood, a property right zealously
protected by the Constitution. Such financial prejudice on their part is sufficient to
confer upon them the requisite locus standi. 14
In Information Technology Foundation, there were two reasons why petitioners'
standing was recognized. First, the nation's political and economic future virtually
hangs in the balance, pending the outcome of the 2004 elections. Accordingly,
the award for the automation of the electoral process was a matter of public
concern, imbued with public interest. Second, the individual petitioners, as
taxpayers, asserted a material interest in seeing to it that public funds are
properly used.
Here, petitioners have not shown any direct and personal interest in the COA
Organizational Restructuring Plan. There is no indication that they have
sustained or are in imminent danger of sustaining some direct injury as a result of
its implementation. In fact, they admitted that "they do not seek any affirmative
relief nor impute any improper or improvident act against the respondents" and
"are not motivated by any desire to seek affirmative relief from COA or from
respondents that would redound to their personal benefit or gain." Clearly, they
do not have any legal standing to file the instant suit.
We are well aware of the averments of petitioners Matib, Pacpaco, Sanchez, and
Sipi-An that they were demoted and unceremoniously divested of their previous
designations as Unit Head, Team Supervisor, or Team Leader; that they were
deprived of their RATA; that they were relegated to being mere Team Members,
entitled to only a reimbursable transportation allowance; and that they were
denied due process.
Such averments lack merit. Actually, they were not demoted. Under Section 11,
Rule VII of the Omnibus Rules Implementing Book V of the Administrative Code
of 1987, a demotion is the movement from one position to another involving the
issuance of an appointment with diminution in duties, responsibilities, status, or
rank which may or may not involve reduction in salary. 15 A demotion by
assigning an employee to a lower position in the same service which has a lower
rate of compensation is tantamount to removal, if no cause is shown for it. 16
Here, there have been no new appointments issued to Matib, Pacpaco, Sanchez,
and Sipi-An under the COA Organizational Restructuring Plan. Thus, their
contention that they have been demoted is baseless.
Moreover, the change in their status from COA auditors (receiving monthly RATA)
to COA auditors (receiving only reimbursable RATA) cannot be attributed to the
COA Organizational Restructuring Plan but to the implementation of the Audit
Team Approach (ATAP), pursuant to COA Resolution No. 96-305 dated April 16,
1996.
Under the ATAP, an audit team, not a resident auditor, is deployed to conduct an
audit. An audit team may be composed of two (2) or more members under an
Audit Team Leader. Whenever practicable, an Audit Team Supervisor supervises
at least three (3) audit teams. The composition of an audit team is not permanent.
Hence, an Audit Team Member may be designated or assigned as an Audit
Team Leader for one assignment and subsequently as a Team Member in
another engagement. The designation depends upon the position or rank of the
one who is designated as an Audit Team Leader. Thus, a State Auditor III who
may have been assigned as an Audit Team Leader in one engagement may find
himself relegated to being an Audit Team Member in another engagement, if a
State Auditor IV or State Auditor V is designated as the Audit Team Leader.
DECISION
TINGA, J : p
This is a petition for review challenging the decision of the trial court, affirmed by
the Court of Appeals, granting the petition for mandamus filed by herein
respondents, Barangay Chairmen (or Punong Barangay) of several barangays in
the province of Lanao del Sur.
The petition for mandamus filed by respondents before the trial court is rooted in
their claim that they were deprived of their Internal Revenue Allotment (IRA) for
the 2nd and 3rd quarters of 1997. Respondents further alleged that these same
funds were released by petitioner as Manager of Land Bank of the Philippines
(LBP), the depositary bank, to third persons.
There were originally six (6) petitioners when the Petition for Mandamus with
Prayer for Writ of Preliminary Mandatory Injunction was filed by now respondents
before the court of origin. They were Alimatar Malawi, Abdulkhayr Pangcoga,
Salimatar Sarip, Lomala Cadar, Aliriba S. Macarambon and Abdul Usman who
were the incumbent barangay chairmen of Bubong Ngingir (Kabasaran), Ilian,
Linindingan, Mapantao-Ingod, Paigoay and Rangiran, respectively, all from the
Municipality of Pagayawan, Lanao del Sur. 1 All of them were the incumbent
barangay chairmen of their respective barangays prior to the 12 May 1997
barangay elections. The elections on 12 May 1997 in the aforesaid barangays
resulted in a failure of elections. Thereafter, the special elections held in these
barangays likewise resulted in a failure of elections. 2 Consequently, respondents
remained in office in a holdover capacity pursuant to the provisions of Sec. 1
of R.A. No. 6679 3 and Comelec Resolution No. 2888 dated February 5, 1997. 4
Beginning with the second quarter of 1997, LBP was selected as the government
depository bank for the IRAs of the abovementioned barangays. 5Being a new
government depositary bank for the IRA funds, the authorized public officials had
to open new accounts in behalf of their government units with the proper LBP
branch from which they could withdraw the IRAs. 6
After the failed 12 May 1997 elections, respondents attempted to open their
respective barangays' IRA bank accounts but were refused by petitioner because
respondents needed to show their individual certifications showing their right to
continue serving as Barangay Chairmen and the requisite Municipal Accountant's
Advice giving respondents the authority to withdraw IRA deposits. 7 The
requirement for the Accountant's Advice stemmed from Commission on Audit
Circular No. 94-004. 8
Respondents were eventually allowed to open accounts for their barangays
except for Lomala Cadar and Abdul Usman of barangays Mapantao-Ingud and
Rangiran, respectively, because the accounts for these barangays were
previously opened by two persons who presented themselves as the duly
proclaimed Barangay Chairmen for these same barangays. 9
In any event, all respondents were not allowed to withdraw the IRA funds from
the opened accounts, owing to the absence of the requisite Accountant's
Advice. 10
Then on 4 August 1997, five (5) other persons presented themselves before
petitioner as the newly proclaimed Punong Barangays of the five barangays
concerned, 11 each of them presenting a certification of his election as Punong
Barangay issued by the provincial director of the DILG-ARMM and another
Certification issued by the Local Government Operations Officer attesting, among
others, to the revocation of the certification previously issued to
respondents. 12 Without verifying the authenticity of the certifications presented
by these third persons, petitioner proceeded to release the IRA funds for the 2nd
and 3rd quarters of 1997 to them. 13
Respondents thus filed on 11 August 1997 a special civil action
for Mandamus with Application for Preliminary Mandatory Injunction docketed as
Civil Case No. 11-106, to compel petitioner to allow them to open and maintain
deposit accounts covering the IRAs of their respective barangays and to
withdraw therefrom. 14 The case was raffled to the Regional Trial Court (RTC) of
Lanao del Sur, Branch 11. 15
At the trial respondents Sarip, Cadar, Pangcoga and Usman testified that they
were duly elected chairpersons of their respective barangays and continued as
such in a holdover capacity until their re-election on 30 August 1997. They
testified further that despite presenting the corresponding documents, petitioner
refused to allow the withdrawal of the funds. 16
Respondent Macarambon testified that he was the incumbent chairperson of
Barangay Paigoay prior to the 12 May 1997 elections and that due to the failure
of elections, he continued to occupy his position in a holdover capacity until he
was succeeded by his wife upon the latter's election to the same post. He
testified on petitioner's refusal to release the money to him despite his
submission of the Accountant's Advice. 17
For failure to appear at the scheduled hearing on 20 April 1999, petitioner was
held as in default and respondents were allowed to present evidenceex parte.
Petitioner's Motion for Reconsideration of the Order declaring him as in default
was granted. 18
After failing again to appear on the given time for him to adduce evidence,
another Order was issued wherein petitioner was deemed to have waived his
right to present evidence. The Order was lifted on petitioner's Motion for
Reconsideration. Instead of presenting evidence, petitioner filed on 10 November
1999 a Motion to Dispense or Waive Presentation of Evidence wherein he
represented that the prayers in the complaint had already been complied
with. 19 The RTC granted petitioner's motion through an Order dated 24
September 1999. 20
Thereafter, the RTC rendered a Decision 21 dated 8 October 1999 commanding
petitioner to pay respondents, except respondent Alimatar Malawiwho failed to
testify, the IRAs of their respective barangays "even without the Accountant's
Advice." 22 The dispositive portion of the Decision reads, to wit:
WHEREFORE, premises all considered, the instant petition is hereby
granted. Accordingly, Mr. Maclaring M. Lucman, Manager of the Land
Bank of the Philippines, Marawi City branch, is hereby ordered to pay
the following: 23
1. Aliriba Macarambon, the 2nd Quarter IRA of Paigoay,
Pagayawan in the sum of P48,200.00;
2. Salimatar Sarip of Linindingan the
2nd Quarter IRA P54,220.00
3rd Quarter IRA P54,220.00
3. Lomala S. Cadar of Mapantao the
2nd Quarter IRA P54,320.00
3rd Quarter IRA P54,320.00
4. Abdulkhay Pangcoga of Ilian the
2nd Quarter IRA P53,361.00
3rd Quarter IRA P53,361.00
5. Abdul Usman of Rangiran the
2nd Quarter IRA P51,185.00
3rd Quarter IRA P51,185.00
even without the Accountant's Advice and the subsequent IRAs until
their term of office shall have expired.
SO ORDERED. 24
The RTC gave no credence to petitioner's assertion of payment to the rightful
barangay officers, there having been no testimonial or documentary evidence
proferred in substantiation thereof. 25 It considered petitioner's refusal to present
evidence as a "silence" that equates to an admission of respondents'
allegations. 26 Furthermore, the RTC relied on the testimonies and certifications
adduced by respondents in holding that they were occupying their positions in a
holdover capacity 27 and that by virtue thereof, they had "the perfect right to
continue performing the duties and functions of their positions including the
withdrawal of funds of their respective barangays." 28
The Court of Appeals 29 affirmed the RTC's Decision in toto. Hence, this petition.
Petitioner argues that respondents have no cause of action against him since
they failed to present valid certifications showing their respective right to continue
serving as Punong Barangay as well as the requisite Municipal Accountant's
Advice. Petitioner also asserts that the LBP Marawi Branch had already released
the contested IRAs to the Barangay Treasurers who were acting in conjunction
with the duly recognized Punong Barangays, thereby making the petition
for mandamus moot and academic. 30 These are factual issues that are generally
beyond the review of this Court.
Petitioner adds that respondents have no legal personality to institute the petition
for mandamus in their own names since the IRAs rightfully belong to the
respective barangays and not to them and that their respective barangays
already received the claimed IRAs in this instant case. 31
For the proper adjudication of the present petition, two related core issues have
to be resolved. First, what is the cause of action alleged in the initiatory pleading
filed by respondents before the trial court? Second, are there indispensable
parties which were not impleaded?
Although the pleading filed before the lower court was denominated as a Petition
for Mandamus With Prayer For Writ of Preliminary Injunction, the allegations
thereof indicate that it is an action for specific performance, particularly to compel
petitioner to allow withdrawal of funds from the accounts of the barangays
headed by respondents with the LBP, Marawi Branch. Thus, the Petition alleged:
"12. Despite the opening of deposit accounts for the barangays
mentioned in the preceding paragraph, respondent, without any valid or
lawful cause, failed and refused, and still fails and refuses, to allow the
withdrawal of the funds or IRA of the said barangays as evidenced by
the WITHDRAWAL CHECKS (attached as Annexes "D" to "D-3" hereof)
of said barangays which were refused payment when presented to the
Land Bank on August 4, 1997." 32
From the records of the case, it appears that the shares of the barangays in the
IRA had already been remitted by the Department of Budget and Management
(DBM) to the LBP Marawi Branch where they were kept in the accounts opened
in the names of the barangays.
By virtue of the deposits, there exists between the barangays as depositors and
LBP a creditor-debtor relationship. Fixed, savings, and current deposits of money
in banks and similar institutions are governed by the provisions concerning
simple loan. 33 In other words, the barangays are the lenders while the bank is
the borrower.
This Court elucidated on the matter in Guingona, Jr., et al. v. The City Fiscal of
Manila, et al., 34 citing Serrano v. Central Bank of the Philippines, 35 thus:
Bank deposits are in the nature of irregular deposits. They are really
loans because they earn interest. All kinds of bank deposits, whether
fixed, savings, or current are to be treated as loans and are to be
covered by the law on loans (Art. 1980, Civil Code; Gullas v. Phil.
National Bank, 62 Phil. 519). Current and savings deposits are loans to a
bank because it can use the same. The petitioner here in making time
deposits that earn interest with respondent Overseas Bank of Manila
was in reality a creditor of the respondent Bank and not a depositor. The
respondent Bank was in turn a debtor of petitioner. Failure of the
respondent Bank to honor the time deposit is failure to pay its
obligation as a debtor and not a breach of trust arising from a
depository's failure to return the subject matter of the deposit. (Emphasis
supplied.) 36
The relationship being contractual in nature, mandamus is therefore not an
available remedy since mandamus does not lie to enforce the performance of
contractual obligations. 37
This brings us to the second core issue.
The IRA funds for which the bank accounts were created belong to the
barangays headed by respondents. The barangays are the only lawful recipients
of these funds. Consequently, any transaction or claim involving these funds can
be done only through the proper authorization from the barangays as juridical
entities.
The determination, therefore, of whether or not the IRA funds were unlawfully
withheld or improperly released to third persons can only be determined if the
barangays participated as parties to this action. These questions cannot be
resolved with finality without the involvement of the barangays. After all, these
controversies involve funds rightfully belonging to the barangays. Hence, the
barangays are indispensable parties in this case.
An indispensable party is defined as parties-in-interest without whom there can
be no final determination of an action. 38 The nature of an indispensable party
was thoroughly discussed in Arcelona v. Court of Appeals, 39 to quote:
An indispensable party is a party who has such an interest in the
controversy or subject matter that a final adjudication cannot be made, in
his absence, without injuring or affecting that interest, a party who has
not only an interest in the subject matter of the controversy, but also has
an interest of such nature that a final decree cannot be made without
affecting his interest or leaving the controversy in such a condition that
its final determination may be wholly inconsistent with equity and good
conscience. It has also been considered that an indispensable party is a
person in whose absence there cannot be a determination between the
parties already before the court which is effective, complete, or equitable.
Further, an indispensable party is one who must be included in an action
before it may properly go forward. aHSTID
DECISION
CARPIO MORALES, J : p
At bar is a special civil action for prohibition assailing the constitutionality of the
creation of the Philippine Amusement and Gaming Corporation (PAGCOR) as
well as the "grant of franchises" by PAGCOR to 1) Sports and Games
Entertainment Corporation (SAGE) to engage in internet gambling, 2) Best World
Gaming and Entertainment Corporation (BEST WORLD) to engage in
computerized bingo gaming, and 3) Belle Jai-alai Corporation (BELLE) and
Filipinas Gaming Entertainment Totalizator Corporation (FILGAME) to engage in
jai-alai operations.
Ramon A. Gonzales, as a citizen, taxpayer and member of the Philippine Bar,
filed on September 28, 2000 the instant Petition 1 as a class suit underSection 12,
Rule 3 of the Rules of Court 2 seeking to restrain PAGCOR from continuing its
operations and prohibit it and its co-respondents from enforcing: (1) the "Grant of
an Authority and Agreement for the Operation of Sports Betting and Internet
Gambling" 3 executed between PAGCOR and SAGE; (2) the "Grant of Authority
to Operate Computerized Bingo Games" 4 between PAGCOR and BEST
WORLD; and (3) the "Agreement" 5 among PAGCOR, BELLE and FILGAME to
conduct jai-alai operations.
In compliance with this Court's Resolution of October 18, 2000, respondents filed
their respective comments on the petition, to which petitioner filed corresponding
replies.
In Del Mar v. Phil. Amusement and Gaming Corp., et al., 6 this Court, by Decision
of November 29, 2000, enjoined PAGCOR, BELLE, and FILGAME from
managing, maintaining and operating jai-alai games, and from enforcing the
agreement entered into by them for that purpose. 7
Their motions for reconsideration of said decision in Del Mar having been
denied, 8 PAGCOR, BELLE and FILGAME filed motions for clarification which
this Court, by Resolution of August 24, 2001, resolved in this wise:
WHEREFORE, . . . the Court resolves (a) to partially GRANT the
motions for clarification insofar as it is prayed that Philippine Amusement
and Gaming Corporation (PAGCOR) has a valid franchise to, but only by
itself (i.e., not in association with any other person or entity) operate,
maintain and/or manage the game of jai-alai, and (b) to DENY the
motions insofar as respondents would also seek a reconsideration of the
Court's decision of 29 November 2000 that has, since then, (i) enjoined
the continued operation, maintenance, and/or management of jai-alai
games by PAGCOR in association with its co-respondents Belle Jai-Alai
Corporation and/or Filipinas Gaming Entertainment Totalizator
Corporation and (ii) held to be without force and effect the agreement of
17 June 1999 among said respondents. HCaDIS
For this purpose, you are authorized to secure the support of the
Philippine National Police and all concerned local government units.
I expect an initial report on the implementation of this directive, through
the Executive Secretary, within 48 hours from receipt hereof.
For direct and immediate compliance.
(SGD. Joseph E. Estrada) 12 (Emphasis supplied)
This Court, by Resolution of August 13, 2001, granted the motion of Attys. Jose
Salvador M. Rivera, E. Hans S. Santos and Agnes H. Maranan of Rivera Santos
and Maranan to withdraw as counsel for BEST WORLD "for the reason that
despite diligent effort on its part, counsel has been unable to get in touch or
communicate with its principal client." 13
The petition having been given due course by Resolution of September 19, 2001,
the parties were required to submit their respective Memoranda. Only
respondents PAGCOR and SAGE submitted their Memoranda, on December 6,
2001 14 and January 24, 2002, 15 respectively.
Gonzales having failed to file his Memorandum within the prescribed period, this
Court which, in the meantime, was informed of the alleged demise of Gonzales,
required by Resolution of July 29, 2002 1) respondents to confirm the death of
Gonzales, and 2) the parties to manifest whether they were still interested in
prosecuting the petition, or whether supervening events had rendered it moot
and academic. 16
On September 10, 2002, Attys. Manuel B. Imbong and Jo Aurea M. Imbong filed
a Motion for Substitution stating, among other things, that (1) Gonzales died on
January 17, 2002; (2) his heirs are not interested to pursue and prosecute the
present special civil action or be substituted as petitioners herein; and (3) the
petition was instituted by Gonzales as a class suit in behalf of "all Filipino citizens,
taxpayers and members of the Philippine Bar" and, as such, survives his death.
They thus pray that as they are among the "Filipino citizens, taxpayers and
members of the Philippine Bar" for whom the herein class suit was instituted and
are both capable of prosecuting the instant case, they be substituted as
petitioners in lieu of Gonzales and that they be given thirty days from notice
within which to file their memorandum. 17
By Resolution of December 9, 2002, this Court required respondents to file their
Comments on the Motion for Substitution filed by Attys. Imbong and Imbong.
In their separate Comments, 18 respondents PAGCOR and SAGE both argue
that, among others things, movants Attys. Imbong and Imbong may not be
substituted for Gonzales as the former are neither legal representatives nor heirs
of the latter within the purview of Section 16, Rule 3 of the Rules of Court which
reads:
Sec. 16. Death of party, duty of counsel. Whenever a party to a
pending action dies, and the claim is not thereby extinguished, it shall be
the duty of his counsel to inform the court within thirty (30) days after
such death of the fact thereof, and to give the name and address of his
legal representative or representatives. Failure of counsel to comply with
this duty shall be a ground for disciplinary action.
EDCIcH
Movants argue, however, that "unless the herein substitution is allowed, the
citizens and taxpayers represented by Gonzales in this class suit will be denied
due process." 22 From this argument as well as their averment that they are
"among the 'Filipino citizens and taxpayers and member[s] of the Philippine Bar'
for whom the herein class suit was instituted and are interested to pursue this
case," 23 it is evident that movants are not asserting any right or interest
transmitted to them by the death of Gonzales, but are seeking to protect
their own individual interests as members of the classes alleged to have been
represented by Gonzales.
As such, the more proper procedure would have been for them to file a Motion
for Intervention as expressly provided for in Section 12, Rule 3 of the Rules of
Court, and not a Motion for Substitution under Section 17 of the same rule.
Ideally, such a Motion for Intervention should be filed before the possibility of
abatement is raised by the death of the named/representative party (or parties) to
the class suit; or where such is not possible, within a reasonable time from the
death of the named or representative party.
Considering that movants, as former law partners of Gonzales, could not have
been unaware of the latter's death on January 17, 2002, respondents rightly
question the timeliness of the Motion for Substitution, it having been filed almost
eight months thereafter, or only on September 10, 2002.
But even if this Court were to consider the Motion for Substitution as a
seasonably filed Motion for Intervention, still the instant petition would have to be
dismissed for being moot and academic. ATESCc
The Petition in essence raises two substantive issues. First, whether Presidential
Decree (P.D.) 1869, as amended (the PAGCOR Charter), is unconstitutional for
having been issued pursuant to an unlawful exercise of legislative power by then
President Ferdinand E. Marcos. Second, whether the contracts entered into by
PAGCOR with its co-respondents are void for being undue delegations by
PAGCOR of its franchise 24 to operate and maintain gambling casinos, sports,
gaming pools and the like.
The second issue has already been raised in the Del Mar cases, 25 this Court
ruling that PAGCOR "has a valid franchise to, but only by itself (i.e., not in
association with any other person or entity) operate, maintain and/or manage the
game of jai-alai," and that, consequently, the Agreement of June 17, 1999 among
PAGCOR, BELLE and FILGAME was without force and effect. This ruling was
recently reiterated in Jaworski v. Phil. Amusement and Gaming Corp. 26 where
This Court held:
In the case at bar, PAGCOR executed an agreement with SAGE
whereby the former grants the latter the authority to operate and
maintain sports betting stations and Internet gaming operations. In
essence, the grant of authority gives SAGE the privilege to actively
participate, partake and share PAGCOR's franchise to operate a
gambling activity. The grant of franchise is a special privilege that
constitutes a right and a duty to be performed by the grantee. The
grantee must not perform its activities arbitrarily and whimsically but
must abide by the limits set by its franchise and strictly adhere to its
terms and conditionalities. A corporation as a creature of the State is
presumed to exist for the common good. Hence, the special privileges
and franchises it receives are subject to the laws of the State and the
limitations of its charter. There is therefore a reserved right of the State
to inquire how these privileges had been employed, and whether they
have been abused.
While PAGCOR is allowed under its charter to enter into operator's
and/or management contracts, it is not allowed under the same charter
to relinquish or share its franchise, much less grant a veritable franchise
to another entity such as SAGE. PAGCOR can not delegate its power in
view of the legal principle of delegata potestas delegare non potest,
inasmuch as there is nothing in the charter to show that it has been
expressly authorized to do so. In Lim v. Pacquing, the Court clarified that
"since ADC has no franchise from Congress to operate the jai-alai, it
may not so operate even if it has a license or permit from the City Mayor
to operate the jai-alai in the City of Manila." By the same token, SAGE
has to obtain a separate legislative franchise and not "ride on"
PAGCOR's franchise if it were to legally operate on-line Internet
gambling.
WHEREFORE, in view of all the foregoing, the instant petition is
GRANTED. The "Grant of Authority and Agreement to Operate Sports
Betting and Internet Gaming" executed by PAGCOR in favor of SAGE is
declared NULL and VOID.
SO ORDERED. 27 (Emphasis supplied; citations omitted)
The first issue has likewise been rendered moot and academic.
In assailing the constitutionality of P.D. 1869, petitioner does not point to any
inconsistency between it and the present Constitution. Instead, it questions its
issuance as an illegal exercise of legislative powers by then President Marcos.
Thus, petitioner argues that: (1) P.D. 1416, which gives the President continuing
authority to reorganize the national government and is the basis ofP.D. 1869, is
an undue delegation to the President of the legislative power to create public
offices; (2) P.D. 1869 is an undue delegation of legislative power to the President
to create PAGCOR, a public corporation, and empowering it to grant franchises;
(3) Proclamation 1081 declaring martial lawand authorizing the President to issue
decrees is unconstitutional, hence P.D. 1416 and P.D. 1869 issued pursuant
thereto are likewise unconstitutional; and (4) the 1973 Constitution was not
validly ratified, hence it could not have legitimized Proclamation 1081.
Petitioner's arguments come almost thirty years too late. As he himself was
aware, the issues surrounding the effectivity of Proclamation 1081, the force and
effectivity of the 1973 Constitution, and the former President's legislative powers
under Martial Law and the 1973 Constitution were settled in the cases
of Javellana v. Executive Secretary, 28 Aquino, Jr. v. Enrile, 29 Aquino,
Jr. v. Commission on Elections, 30 and Legaspi v. Minister of Finance. 31While
legal scholars may continue to debate the wisdom and reasoning of these
decisions, their objective existence and historical impact on the Philippine legal
system cannot seriously be questioned. IAcDET
DECISION
TINGA, J :
p
We resolve these two consolidated cases which, though with distinct
courts of origin, pertain to issues stemming from the same loan transaction.
The antecedent facts follow.
Respondent Rosemoor Mining and Development Corporation
(Rosemoor), a Philippine mining corporation with offices at Quezon City,
applied for and was granted by petitioner Westmont Bank 1 (Bank) a credit
facility in the total amount of P80 million consisting of P50,000,000.00 as long
term loan and P30,000,000.00 as revolving credit line. 2
To secure the credit facility, a lone real estate mortgage agreement was
executed by Rosemoor and Dr. Lourdes Pascual (Dr. Pascual), Rosemoor's
president, as mortgagors in favor of the Bank as mortgagee in the City of
Manila. 3 The agreement, however, covered six (6) parcels of land located in
San Miguel, Bulacan 4 (Bulacan properties), all registered under the name of
Rosemoor, 5 and two (2) parcels of land 6 situated in Gapan, Nueva Ecija
(Nueva Ecija properties), owned and registered under the name of Dr.
Pascual. 7
Rosemoor subsequently opened with the Bank four (4) irrevocable
Letters of Credit (LCs) totaling US$1,943,508.11. 8 To cover payments by the
Bank under the LCs, Rosemoor proceeded to draw against its credit facility
and thereafter executed promissory notes amounting collectively to
P49,862,682.50. 9 Two (2) other promissory notes were also executed by
Rosemoor in the amounts of P10,000,000.00 and P3,500,000.00, respectively,
to be drawn from its revolving credit line. 10
Rosemoor defaulted in the payment of its various drawings under the
LCs and promissory notes. In view of the default, the Bank caused the
extrajudicial foreclosure of the Nueva Ecija properties on 22 May 1998 and
the Bulacan properties on 10 August 1998. The Bank was the highest bidder
on both occasions. 11
On 8 October 1999, the Bank caused the annotation of the Notarial
Certificate of Sale covering the Nueva Ecija properties on the certificates of
title concerned. Later, on 16 March 2001, the Notarial Certificate of Sale
covering the Bulacan properties was annotated on the certificates of title of
said properties. 12
The foregoing facts led to Rosemoor's filing of separate complaints
against the Bank, one before the Regional Trial Court of Manila (Manila RTC)
and the other before the Regional Trial Court of Malolos, Bulacan (Malolos
RTC). aSIATD
As regards the identity of rights asserted and reliefs prayed for, the
main contention of Rosemoor in the Manila case is that the Bank had failed to
deliver the full amount of the loan, as a consequence of which Rosemoor
demanded the remittance of the unreleased portion of the loan and payment
of damages consequent thereto. 43 In contrast, the Malolos case was filed for
the purpose of restraining the Bank from proceeding with the consolidation of
the titles over the foreclosed Bulacan properties because the loan secured by
the mortgage had not yet become due and demandable. 44 While the right
asserted in the Manila case is to receive the proceeds of the loan, the right
sought in the Malolos case is to restrain the foreclosure of the properties
mortgaged to secure a loan that was not yet due.
Moreover, the Malolos case is an action to annul the foreclosure sale
that is necessarily an action affecting the title of the property sold. 45 It is
therefore a real action which should be commenced and tried in the province
where the property or part thereof lies. 46 The Manila case, on the other hand,
is a personal action 47 involving as it does the enforcement of a contract
between Rosemoor, whose office is in Quezon City, and the Bank, whose
principal office is in Binondo, Manila. 48 Personal actions may be commenced
and tried where the plaintiff or any of the principal plaintiffs resides, or where
the defendants or any of the principal defendants resides, at the election of
the plaintiff. 49
It was subsequent to the filing of the Manila case that Rosemoor and Dr.
Pascual saw the need to secure a writ of injunction because the consolidation
of the titles to the mortgaged properties in favor of the Bank was in the offing.
But then, this action can only be commenced where the properties, or a
portion thereof, is located. Otherwise, the petition for injunction would be
dismissed for improper venue. Rosemoor, therefore, was warranted in filing
the Malolos case and cannot in turn be accused of forum-shopping.
Clearly, with the foregoing premises, it cannot be said that respondents
committed forum-shopping.
Action to nullify foreclosure sale of
mortgaged properties in Bulacan and
Nueva Ecija before the Malolos RTC
The Bank challenges the Malolos RTC's jurisdiction over the action to
nullify the foreclosure sale of the Nueva Ecija properties along with the
Bulacan properties. This question is actually a question of venue and not of
jurisdiction, 50 which, if improperly laid, could lead to the dismissal of the
case. 51
The rule on venue of real actions is provided in Section 1, Rule 4 of the
1997 Rules of Civil Procedure, which reads in part:
Section 1. Venue of Real Actions. Actions affecting title to or
possession of real property, or interest therein, shall be commenced
and tried in the proper court which has jurisdiction over the area
wherein the real property involved, or a portion thereof, is situated.
xxx xxx xxx
The venue of the action for the nullification of the foreclosure sale is
properly laid with the Malolos RTC although two of the properties together
with the Bulacan properties are situated in Nueva Ecija. Following the above-
quoted provision of the Rules of Court, the 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. 52
Ironically, the Bank itself correctly summarized the applicable
jurisprudential rule in one of the pleadings before the Court. 53 Yet the Bank
itself has provided the noose on which it would be hung. Resorting to
deliberate misrepresentation, the Bank stated in the same pleading that "the
Bulacan and Nueva Ecija [p]roperties were not the subject of one single
real estate mortgage contract." 54
In the present case, there is only one proceeding sought to be nullified
and that is the extra-judicial mortgage foreclosure sale. And there is only one
initial transaction which served as the basis of the foreclosure sale and that is
the mortgage contract. Indeed, Rosemoor, through Dr. Pascual, executed a
lone mortgage contract where it undertook to "mortgage the land/real property
situated in Bulacan and Nueva Ecija," with the list of mortgaged properties
annexed thereto revealing six (6) properties in Bulacan and two (2) properties
in Nueva Ecija subject of the mortgage.
This apparent deliberate misrepresentation cannot simply pass without
action. The real estate mortgage form supplied to Rosemoor is the Bank's
standard pre-printed form. Yet the Bank perpetrated the misrepresentation.
Blame must be placed on its doorstep. But as the Bank's pleading was
obviously prepared by its counsel, the latter should also share the blame. A
lawyer shall not do any falsehood, nor consent to the doing of any in court;
nor shall he mislead, or allow the Court to be misled by any artifice. 55 Both
the Bank's president and counsel should be made to explain why they should
not be sanctioned for contempt of court. EaDATc
Nos. 159669 & 163521, [March 12, 2007], 547 PHIL 38-57)
SYNOPSIS
Petitioners alleged that upon the filing of their application for registration with the
CFI of Cavite, Branch III, Cavite City, said court acquired jurisdiction over
the res because land registration proceedings are in rem and, therefore, the
CFI of Cavite, Branch IV at Tagaytay City could not have acquired jurisdiction
over the same res by virtue of respondents' application for registration.
Contending that the decision of the CFI of Cavite, Branch III, on April 19, 1971
declaring that title to the land belonged to petitioners had become final and
executory on June 18, 1980, they asserted that they were the lawful
owners of the land. They claimed that the said decision, while promulgated
subsequent to the issuance of the certificate of title in the names of the
respondents, should be executed and that the certificate of title issued to the
latter should be nullified.
The private respondents interposed the defenses of prescription, laches and/or
estoppel and failure to state a cause of action.
A proceeding in rem, such as land registration proceedings, requires constructive
seizure of the land as against all persons, including the state, who have rights to
or interests in the property. Constructive seizure of the land for registration is
effected through publication of the application for registration and
service of notice to affected parties. Consequently, when private respondents
filed their own application for registration of the same parcel of land, strictly
speaking, the Tagaytay City branch could no longer entertain the application for
registration as the res involved had been constructively seized by the Cavite City
branch of the same court. The Court was not persuaded that the registration
proceedings instituted by private respondents should be nullified by reason of the
fact that the Cavite City branch of the same court was already proceeding with
another registration case for the same piece of land.
In land registration proceedings, all interested parties are obliged to take
care of their interests and to zealously pursue their objective of registration on
account of the rule that whoever first acquires title to a piece of land shall prevail.
Hence, even though an applicant precedes another, he may not be deemed to
have priority of right to register title. As such, while his application is being
processed, an applicant is duty-bound to observe vigilance and to take care that
his right or interest is duly protected. Petitioners failed to exercise the due
diligence required of them as applicants for land registration.
The Court found petitioners guilty of laches. They let almost seven (7) years to
pass from discovery that the land was already registered in the nameof private
respondents before they acted to revive what already was a dormant judgment.
The Court, therefore, dismissed the petition.
SYLLABUS
DECISION
YNARES-SANTIAGO, J : p
In this case, the two applications for registration of the same parcel of land were
filed twelve years apart in different branches of the same Court ofFirst Instance,
but a certificate of title was issued in one case while the other is still pending
appeal. cdtai
The applicants in the earlier case are now before this Court on a petition for
review on certiorari. They assert that the decision ordering the issuanceof a
decree of registration in their favor, while promulgated subsequent to the
issuance of the certificate of title in the names of the second applicants, should
be "executed" and that the certificate of title issued to the latter should be nullified.
The facts of the case are as follows:
On July 25, 1956, Pedro Lopez, et al. filed an application for the registration of a
69-hectare parcel of land in Tagaytay City with the Court of First
Instance of Cavite, Branch III under Land Registration Case No. 299 and LRC
Record No. 11617. On January 29, 1957, the court issued an order ofgeneral
default, excepting only the Director of Lands.
On June 24, 1957, Assistant Fiscal Jose M. Legaspi, representing the
Municipality of Silang, Cavite, filed a motion to lift the order of general default and
submitted an opposition on behalf of the municipality. The opposition was later
amended on September 16, 1966 alleging that a portion of the land applied for
which the municipality had leased to private persons had been its patrimonial
property since 1930 or earlier. The municipality further alleged that in a
registration case entitled "Mariano Lopez de Leon v. Municipality of Silang" (CA-
G.R. No. 8161-R), the Court of Appeals found that the applicants had never been
in possession of the land sought to be registered.
In its answer to the amended opposition, the applicants claimed that a part of the
whole tract of land they sought to register was their inheritance, which includes
Lot No. 2 of plan PSU-51901 with an area of 119 hectares. However, it had to be
excluded in the application for registration of the 69-hectare land in Cavite upon
the recommendation of the Chief Surveyor of the General Land Registration
Office because it is located in the province ofLaguna. Similarly, Lot No. 1 of PSU-
51901 that lies within Tagaytay City had been excluded from the registration
proceedings under G.L.R.O. Rec. No. 53498 or Land Registration Case No. 2201
in the Court of First Instance of Laguna. 1
Nevertheless, the municipality filed a motion to dismiss the application for original
registration of Lot No. 1 on the ground of res judicata. The applicants, on the
other hand, contended that the principle of res judicata is not applicable because
the subject matter of CA-G.R. No. 8161-R
(Mariano Lopez de Leon v. Municipality of Silang) was Lot No. 2 or the
portion of the land in Laguna.
On February 7, 1969, the lower court issued an order denying the motion to
dismiss for lack of merit on the ground that the oppositor municipality had no
personality to intervene considering that Lot No. 1 was outside of its territorial
limits. The lower court held:
". . . . Even if said land was communal property of the
Municipality of Silang, by virtue of its incorporation into (the)
city of Tagaytay it became the property of the latter. Hence, the
Municipality of Silang has no personality to appear in this (sic)
proceedings. If any right of action exists, it accrues in favor of the
City of Tagaytay and the same should be pursued by the said city." 2
The oppositor municipality filed a motion for reconsideration of the said order. On
July 23, 1970, the court issued an order stating that "in order not to impede
whatever action the movant" might take against the order of February 7, 1969,
said motion should be denied. On January 12, 1971, the applicants filed a motion
praying that the clerk of court be commissioned to receive evidence for them it
appearing that the order of July 23, 1970 had become final and executory "by
virtue of which the Municipality of Silang no longer ha(d) any personality to
appear in these proceedings." 3 The court granted said motion and directed the
clerk of court to submit a report on the matter.
In his report dated April 15, 1971, Clerk of Court Rolando D. Diaz stated that
since time immemorial, Micaela, Fernando, Ciriaco and Catalino, all
surnamed De los Reyes, owned and possessed the parcel of land in question.
On November 3, 1870, they sold the land to Ambrocio Carrillo Trinidad and
Francisco Dimaranan. On September 15, 1892, the property passed in
ownership to Pedro Lopez de Leon, Sr. and Maxima Carrillo Trinidad, the
daughter and sole heir of Ambrocio Carrillo Trinidad. Pedro and Maxima
remained in possession of the property until their death when their children,
applicants Pedro Lopez, Mariano Lopez de Leon, Pastor Lopez de Leon,
Eulogio Lopez, Clara Lopez, Ricarda Lopez and Rosario Lopez took over
ownership and possession thereof. Upon their death, their
respective heirs succeeded over the property and, on February 25, 1971, they
partitioned it. The agricultural property was under the supervision of Domingo
Opea who planted portions thereof to rice and other agricultural products.
The clerk of court thus recommended that the court confirm its order of general
default, approve his report, and register the property in the namesof the
applicants in accordance with the extrajudicial partition of the property. 4
On April 19, 1971, the court 5 accordingly rendered a decision approving the
report of the clerk of court and ordering that once the decision becomes final, the
corresponding decree of registration of title be issued in favor of the applicants. 6
The oppositor Municipality of Silang interposed an appeal from the said
decision of the land registration court to the Court of Appeals. On May 2, 1979,
the Court of Appeals rendered a Decision 7 dismissing the appeal "for
lack of personality of the oppositor-appellant Municipality of Silang to interfere in
the registration proceedings below." 8 Undaunted, the oppositor municipality filed
with this Court a petition for review on certioraridocketed as G.R. No. 51054
(Municipality of Silang v.Court of Appeals) which was denied on September 19,
1979. The municipality's motion for reconsideration was likewise denied with
finality for lack of merit on October 24, 1979. 9 On November 9, 1979, judgment
was entered in the said case. 10
Meanwhile, in the course of examining the records for the purpose of issuing the
decree of registration in favor of Pedro Lopez, et al., the Land Registration
Commission discovered that Lot No. 1, plan Psu-51901 had been decreed in
favor of private respondents Honesto de Castro, et al. 11
Further investigation revealed that sometime in 1967, 12 Honesto de Castro, et al.
filed before the Court of First Instance of Cavite, Branch IV in Tagaytay City, an
application for the registration of the same parcel of land under Land Registration
Case No. TG-95 and LRC Rec. No. N-33292. The case was called for hearing on
March 18, 1968. Eight (8) days later or on March 26, 1968, the
court 13 promulgated a decision adjudicating the land located at Barrio Iruhin,
Tagaytay City, more particularly described as Plan Psu-51901-Amd., in
favor of said applicants and directing that upon the finality of the decision, the
corresponding decree of registration be issued. 14 The ruling of the court was
based on its finding that one Hermogenes Orte, who originally owned the land
sought to be registered, sold it in 1932 to Marciano de Castro. The deed
evidencing said sale was destroyed during the Japanese
occupation. De Castro continued possession of the land until his death on April
26, 1940. His wife Epifania and their children named Maria Socorro, Francisco,
Honesto, Romualdo, Felicitacion, Faustino and Felixberto continued
possession of the property who declared the land for assessment and taxation
purposes in Cabuyao, Laguna. However, upon learning that the property lies in
Tagaytay City, the applicants declared it in their names in said city. cdll
The cause of the conflicting claims over the same land was never explained
because the head of the geodetic engineers of the Land Registration
Commission did not appear in court in Land Registration Case No. 299. Hence,
on August 19, 1981, the CFI of Cavite, Branch III 15 issued an order declaring that
the court had lost jurisdiction to hear the case, without, however, dismissing the
case.
Seven (7) years later, or on June 28, 1988, the heirs of Pedro Lopez, et al. filed a
complaint "for execution of judgment and cancellation of land titles ofthe
defendants and their successors-in-interest" before the Regional Trial
Court of Cavite, Branch 18, at Tagaytay City. Docketed as Civil Case No. TG-
1028, the complaint named as defendants Honesto C. de Castro, Maria
Socorro de Castro married to Antonio Perigrina, Francisco de Castro "widow,"
Faustino de Castro, Felixberto de Castro, Epifania C. Vda. de Castro and their
successors-in-interest.
The complaint alleged the facts pertinent to enforce the judgment of April 19,
1971. The plaintiffs, petitioners herein, alleged further that, upon the filing of their
application for registration with the CFI of Cavite, Branch III at Cavite City, said
court acquired jurisdiction over the res because land registration proceedings
are in rem and therefore, the CFI of Cavite, Branch IV at Tagaytay City could not
have acquired jurisdiction over the same resby virtue of De Castros' application
for registration. They claimed that no less than this Court had recognized the
jurisdiction of Branch III in Cavite City when it passed upon the correctness of the
lower court's ruling in favor of Pedro Lopez, et al. Contending that the
decision of Branch III on April 19, 1971 declaring that title to the land belonged
to Pedro Lopez, et al. had become final and executory on June 18, 1980, they
asserted that they were the lawful owners of the land. However, they had been
unduly deprived ownership and possession thereof on account of its "wrongful
registration" in the name of the defendants "by means of fraud and
misrepresentation." As a result of their undue deprivation of ownership,
possession and enjoyment of the property notwithstanding that the
question of ownership had been settled in their favor, plaintiffs claimed that they
suffered actual and moral damages. Claiming that the judgment sought to be
executed had not been barred by the statute of limitations, they prayed as follows:
WHEREFORE, plaintiffs pray for the judgment to effect:
1. Execution of judgment of the decision of the then Court of First
Instance (CFI) Branch III, Cavite, dated April 19, 1971 by the Hon.
Judge Alfredo Catolico which became final on June 18, 1980;
2. Ordering the National Land Titles and Deeds Registration
Administration and the Register of Deeds of Tagaytay City to
cancel the titles of the land in question under the names of the
defendants and their successors in interest and that new title to
the same parcel of land be issued to plaintiffs;
3. Ordering all the occupants of the questioned land to vacate the
premises and deliver possession thereof to the plaintiffs;
4. Ordering the defendants and/or their successors in interest to pay
plaintiffs or its (sic) heirs and/or successors in interest actual
damages (in) the amount of P200,000.00 or the amount that may
be proven during the hearing and trial of this case;
5. Ordering the defendants and/or their successors in interest to pay
plaintiffs the sum of P200,000.00 for and as attorney's fees;
6. To pay plaintiffs exemplary damages in the amount of P100,000.00 or
the sum that may be proven during the trial;
7. Ordering the defendants to pay the costs of suit.
Plaintiffs further pray for such other reliefs just and proper under the
premises. 16
In their answer with compulsory counterclaim, the defendants interposed the
defenses of prescription, laches and/or estoppel and failure to state a
cause of action. They averred that they were no longer the owners of the
property as it had been sold "absolutely and unconditionally to innocent third
parties for valuable consideration and in good faith." They contended that in
view of the indefeasibility of their title to the property, even the title of their
successors-in-interest can not be subject to collateral attack. They claimed that
Branch III of the CFI in Cavite should have "remanded" the records of LRC Case
No. 299 or LRC Record No. 11617 to the same CFI branch in Tagaytay City to
which the "legal and proper jurisdiction to hear and decide that particular case
belonged." They asserted that the complaint should have been directed by the
plaintiffs against the Assurance Fund under the provisions of P.D. No. 1529.
Alleging that the "very precipitate and wrongful suit" caused them mental anguish,
serious anxiety, social humiliation and similar injury, they claimed moral
damages of P500,000.00, nominal damages of P100,000.00 and attorney's
fees of P300,000.00.
On May 21, 1990, the RTC of Cavite, Branch 18 in Tagaytay City 17 rendered the
decision in Civil Case No. TG-1028 dismissing the complaint for being "improper
and premature." The court likewise dismissed the defendants' counterclaims for
"their dearth of sufficient legal, factual and evidentiary support." 18
The lower court held that the decision of Branch III that became final on June 18,
1980, could not be enforced against defendants considering that they were not
parties in LRC Record No. 11617. Neither could it order the cancellation of the
titles issued to defendants because the LRC and/or the
Register of Deeds of Tagaytay City had not been impleaded as parties to the
case and therefore the court did not acquire jurisdiction over them.
The lower court held further that because the case was covered by Act No.
496 and/or P.D. No. 1529 which are special laws, Section 6, Rule 39 of the
Rules of Court on execution of judgment by independent action cannot be
invoked. The court also ruled that:
Treating the second issue raised by plaintiffs, the then Court of First
Instance of Cavite, Branch IV, or this Court, validly acquired jurisdiction
over the case filed by defendants Honesto de Castro, et al., in LRC Case
No. TG-95. The records show that herein defendants as petitioner(s) in
that case, complied with all the jurisdictional requirements of law,
conferring jurisdiction upon this Court to try that case and lent validly (sic)
upon its proceedings. As admitted by the plaintiffs themselves, this Court
was not aware of the existence of LRC Record No. 11617, pending
before the other Branch of this Court, in the same manner that they, or
the plaintiffs themselves, did not also know the existence of LRC Case
No. TG-95 before this Court. This Court is assured that good faith
pervaded among the parties concerned, in the conduct of its
proceedings, all procedural requirements having been punctiliously
complied with and no irregularity or breach of law having been
committed. So that the decision rendered by this Court in that case is
valid and subsisting, for all intents and purposes and can be nullified
only under circumstances and through procedures mandated by law.
Hence, the corresponding decree of registration issued in TG-95 and the
original certificates of titles issued to defendants in consequence thereof,
are all valid and binding until declared otherwise, in a case directly
assailing their validity, and of course, by a competent court. And by
express provision of law, the same are insulated from any collateral
attack. 19
The court concluded that the complaint was in the nature of a collateral attack on
the validity of the certificate of title issued in favor of the defendants and their
successors-in-interest because, "(b)y its caption and averments, the
validity of the title in question, is not directly assailed."
LibLex
Petitioners filed a motion for reconsideration of said decision, which was denied
on May 29, 1991. It reiterated that the plaintiffs' failure to implead the
Administrator of the NLRDRA, the Register of Deeds of Tagaytay City and the
possessors of the property in question was a fatal procedural error because they
were indispensable parties over which the court should acquire jurisdiction. Their
inclusion as defendants in the case was necessary in order that their title to the
property could be directly attacked. Petitioners should have availed of the
remedy provided by Section 32 of P.D. No. 1529and their failure to observe that
law was a "colossal error" because once issued, a certificate of title becomes
indefeasible, "completely insulated from any form of collateral attack assailing its
validity." 20
Petitioners sought recourse before the Court of Appeals, which dismissed the
appeal on November 29, 1993. 21 Stressing the indefeasibility of title under the
Torrens System of land registration, the Court of Appeals echoed the lower
court's ruling that the decree of registration in favor ofrespondents cannot be
reopened or set aside in a "collateral proceeding such as the one in the case at
bar which has for its objective the execution ofa judgment which apparently has
become dormant, thus appellants' insistence that it be revived." Citing Article
1544 of the Civil Code on sale ofproperty to different vendees which it opined
had a "persuasive influence" in the resolution of the appeal, it held that "in case
land has been registered in the name of two different persons, the earlier in date
(of registration) shall prevail." Nonetheless, emphasizing that the land in question
has been transferred to a third person, the Court of Appeals ruled that the title
issued in favor of respondents should be "maintained in their status quo, until the
proper court shall have determined their priorities, and the equities resulting
therefrom." 22
Consequently, petitioners filed the instant petition for review on certiorari under
Rule 45 of the Rules of Court, raising the following assignment oferrors:
1. THE RESPONDENT COURT OF APPEALS COMMITTED A
SERIOUS REVERSIBLE ERROR WHEN IT FAILED TO RULE
ON THE VITAL AND PIVOTAL ISSUE THAT THE TRIAL COURT
(CFI TAGAYTAY CITY, BRANCH IV), HAS NO JURISDICTION
OVER THE SUBSEQUENT LAND REGISTRATION CASE FILED
BY THE APPLICANTS BELOW, PRIVATE RESPONDENTS
HEREIN, AND IN DECREEING THE REGISTRATION OF TITLE
OVER THE SAID LOTS WHICH WERE ALREADY PREVIOUSLY
THE SUBJECT OF REGISTRATION PROCEEDINGS BY
ANOTHER COURT (CFI CAVITE, BRANCH III) IN A PREVIOUS
LAND REGISTRATION CASE IN FAVOR OF THE
PETITIONERS HEREIN WHICH WAS SUSTAINED BY THE
COURT OF APPEALS AND EVEN BY THIS HONORABLE
COURT.
2. THE RESPONDENT COURT OF APPEALS COMMITTED A GRAVE
REVERSIBLE ERROR WHEN IT LIKEWISE FAILED TO
RESOLVE THE ISSUE OF THE PROPRIETY OF THE INSTANT
ACTION FILED BY THE PETITIONERS FOR
EXECUTION OF JUDGMENT OF CFI BRANCH III, WHICH IS
EQUIVALENT TO A REVIVAL OF THE JUDGMENT.
3. THE RESPONDENT COURT OF APPEALS COMMITTED A GRAVE
REVERSIBLE ERROR IN MERELY RELYING ON THE
DOCTRINE OFINDEFEASIBILITY OF TITLE, COLLATERAL
ATTACK ON THE RESPONDENTS' TITLES, AND PRIORITY IN
THE REGISTRATION AND ISSUANCE OFTHE TITLES IN
FAVOR OF THE RESPONDENTS, WHICH RELIANCE ARE
MISPLACED AND UNAVAILING IN VIEW OF THE
LACK OF JURISDICTIONOF THE LOWER COURT TO TAKE
COGNIZANCE OF THE LAND REGISTRATION CASE FILED BY
THE PRIVATE RESPONDENTS AND TO ISSUE THE
DECREE OF REGISTRATION.
4. THE RESPONDENT COURT OF APPEALS GRAVELY ERRED IN
HOLDING THAT THE PETITIONERS CANNOT DIVEST
PRIVATE RESPONDENTS OFTHE DISPUTED LOTS BY FILING
THE INSTANT ACTION FOR EXECUTION OF JUDGMENT AND
ASSAILING THE VALIDITY OF RESPONDENTS' TITLES.
5. THE RESPONDENT COURT OF APPEALS SERIOUSLY ERRED IN
NOT HOLDING THAT THE PETITIONERS ARE RIGHTFULLY
AND LEGALLY ENTITLED TO THE LOTS IN QUESTION.
In all cases where the authority to proceed is conferred by a statute and the
manner of obtaining jurisdiction is mandatory, the same must be strictly complied
with, or the proceedings will be utterly void. 23
When petitioners applied for the registration of Lot No. 1 before the CFI in Cavite
City in 1956, the governing law then as regards the matter ofjurisdiction was
the Judiciary Act of 1948 or Republic Act No. 296. Section 52 of that law
providing for the permanent stations of district judges or judges of Courts of First
Instance stated that for the Seventh Judicial District that included the
province of Cavite, there would be two judges in Cavite City. 24 The law did not
create other branches of the CFI in the province of Cavite outside of the
City of Cavite.
It was on June 22, 1963 when Republic Act No. 3749 took effect that a CFI
branch in Tagaytay City was set up. 25 That amendment to Republic Act No.
296 provided that four judges would preside "over the Courts of First
Instance of the Province of Cavite and the Cities of Cavite, Tagaytay and Trece
Martires" who would be "judges of the first, second, third and fourth
branches" of that court. Because the rule has always been that the court having
territorial jurisdiction over the property should take cognizance of its
registration, 26 upon the creation of the Tagaytay City branch, petitioners'
application for registration should have been transferred to that court inasmuch
as the property involved is located in that city.
It appears, however, that the Cavite City branch remained the
venue of petitioners' application for registration, apparently on account of the
following provision of Rep. Act No. 3749:
SEC. 6. Wherever an additional branch or branches of the Court of First
Instance is or are established in this Act in the same place where there
is an existing court or courts of first instance, all cases already filed in
the latter court or courts shall be heard, tried and decided by such latter
court or courts.
Notably, the law is not clear on whether or not the phrase "in the same place"
refers to the judicial district/province or the place where a branch ofthe court is
stationed. Hence, considering the general rule that once a court acquires
jurisdiction over a case it remains with that court until its full termination, 27 the
phrase "in the same place" should be interpreted as referring to the
province of Cavite. The Cavite City branch of the CFI of Cavite thus correctly
retained jurisdiction over the application for registration because there was no
jurisdictional question involved in the proceedings in Land Registration Case No.
299. What was in question was whether the Cavite City branch of the Cavite CFI
was the proper venue for said case upon the creation of the Tagaytay City
branch. As this Court once said:
Venue and jurisdiction are entirely distinct matters. Jurisdiction may not
be conferred by consent or waiver upon a court which otherwise would
have no jurisdiction over the subject-matter of an action; but the
venue of an action as fixed by statute may be changed by the
consent of the parties and an objection that the plaintiff brought his suit
in the wrong county may be waived by the failure of the defendant to
make a timely objection. In either case, the court may render a valid
judgment. Rules as to jurisdiction can never be left to the consent or
agreement of the parties, whether or not a prohibition exists against their
alteration. 28
Venue is procedural, not jurisdictional, and hence may be waived. It is meant to
provide convenience to the parties, rather than restrict their access to the courts
as it relates to the place of trial. 29 Thus, the last paragraph of Section 51 of Rep.
Act No. 296 provided that in land registration cases, the Secretary of Justice,
who was then tasked with the administration and supervision of all courts, may
transfer land registration courts "to any other place more convenient to the
parties." This implied that Land Registration Case No. 299 could be retained in
the Cavite City branch of the CFI if it would be convenient to the applicants who
had been used to transacting business with that branch; the case did not have to
be transferred to Tagaytay City. Parenthetically, Circular No. 46 dated July 3,
1963 that then Secretary of Justice Juan R. Liwag addressed to all CFI judges
and clerks ofcourt in line with the enforcement of Rep. Act No. 3947, merely
quotes Section 6 thereof. Said circular does not elucidate on whether cases
should be transferred to the branches that had territorial jurisdiction over them.
Petitioners' claim that this Court had "sustained" the jurisdiction of the Cavite City
branch of the CFI over Land Registration Case No. 299 in G.R. No. 51054 is
incorrect. To be sure, the principal issue raised in the petition for review
on certiorari in G.R. No. 51054 was the personality of the Municipality of Silang to
file an opposition to the application for land registration. While this Court upheld
the lower court's ruling on that issue, such affirmance in no way implied that the
issue of jurisdiction was likewise resolved. It is only now that the same issue is
brought to light for resolution.
As regards the jurisdiction of the Tagaytay City branch over the land registration
proceedings instituted by private respondents, the order of general default issued
in Land Registration Case No. 299 is of relevance. When the Cavite City
branch of the CFI issued an order of default, it is presumed to have regularly
performed its task in accordance with law especially with regard to notice
requirements. Act No. 496 provided that after the court shall have set the
application for initial hearing the following procedure should be observed:
SEC. 31. Upon receipt of the order of the court setting the time for initial
hearing of the application from the clerk of the Court of First Instance,
the Chief of the General Land Registration Office shall cause a notice
thereof to be published twice, in successive issues of the Official Gazette,
in the English language. The notice shall be issued by order of the court,
attested by the Chief of the General Land Registration Office, and shall
be in form substantially as follows: . . .. 30
The general order of default of January 29, 1957 stated as follows:
It appearing from the certificate of the Chief of the General Land
Registration Office and the return of the Sheriff, attached to the
record of this case, that the notice relative to the application in said case
was duly published, posted, and served in accordance with law; and that
the time allowed for entering appearance and filing answers expired at
9:30 A.M. on the 29th day of January, 1957, for which date said case
was duly set for hearing by the Court;
And it further appearing from said record that no person has appeared
as respondent in the case filed an answer within the time for that
purpose allowed, with the exception of the Director of Lands represented
by Asst. Provincial Fiscal Jose M. Legaspi;
All persons, except those herein above named, are hereby declared to
be in default in the above-entitled case, and it is ordered that a general
default be recorded in said case, and that the application therein be
taken as confessed by all the world, except the persons hereinabove
named.
It is so ordered. 31
On January 24, 1957, the Municipality of Silang filed a motion to lift said general
order of default and to admit its opposition to the registration. 32 This fact
supports the presumption that the officials concerned performed their duties
regularly because it implies notice, whether actual or constructive, on the
part of said municipality that a land registration proceedings had been filed with
respect to Lot No. 1.
Compliance with the requirement of notice and publication had the
effect of notifying all persons interested in the proceedings including the herein
private respondents. As this Court said in Aguilar v. Caoagdan:
. . . it is true that appellants were not personally notified of the
pendency of the present registration case even if they were actually
occupying, as they claim, portions of the land, but such procedural
defect cannot affect the jurisdiction of the court because registration
proceedings have the nature of actions in rem. . . .. 33
A proceeding in rem, such as land registration proceedings, requires constructive
seizure of the land as against all persons, including the state, who have rights to
or interests in the property. 34 Constructive seizure of the land for registration is
effected through publication of the application for registration and
service of notice to affected parties. 35 Consequently, when private respondents
filed their own application for registration of the same parcel of land, strictly
speaking, the Tagaytay City branch could no longer entertain the application for
registration as the res involved had been constructively seized by the Cavite City
branch of the same court. In hindsight, this complication of two applications for
registration having been filed for one and the same tract of land could have been
avoided had Land Registration Case No. 299 been transferred to the Tagaytay
City branch of the same court where it rightfully belonged, upon the
effectivity of Rep. Act No. 3947.
Be that as it may, the Court is not persuaded that the registration proceedings
instituted by private respondents should be nullified by reason of the fact that the
Cavite City branch of the same court was already proceeding with another
registration case for the same piece of land. cdll
In filing the action for execution of judgment and cancellation of titles, petitioners
must have realized that only the remedy of filing an action for damages was
available to them. Otherwise, they could have filed an action for
reconveyance of the property. Of course, petitioners cleverly clothed their
complaint as one for execution of judgment under the provisions of the
Rules of Court. Clearly, such procedural strategy was a bid to revive the
decision of the lower court ordering the issuance of a decree of registration in
their names. In other words, petitioners availed of procedural remedies provided
for by the Rules of Court as it appeared that because of the lapse of time, they
would not benefit from remedies prescribed by land registration laws.
The wrong appellation of petitioners' complaint shall not mislead this Court as, in
the determination of the nature of a complaint, its averments rather than its title,
are the proper gauges. 42 A reading of the allegations of the complaint in Civil
Case No. TG-1028 betrays petitioners' true intention in filing the case. In
paragraph 15 of the complaint, petitioners alleged that they were "unduly
deprived of their ownership and lawful possession ofthe land . . . due to the
wrongful registration of the subject land in the name of the defendants by
means of fraud and misrepresentations." Except for this general statement, the
issue of fraud or misrepresentation is not alleged with particularity in the
complaint. 43 This is unfortunate because, if filed within the time set by law, a
complaint with the proper allegation of fraud coupled with proof thereof could
cause the loss of the indefeasibility ofprivate respondents' title to the property. It
is established that if fraud attended the acquisition of title under the Torrens
System, such title cannot be used as a means to perpetuate fraud against the
rightful owner of real property. 44
We take note of petitioners' allegation in their reply memorandum that in the
registration proceedings filed by private respondents, "what was published in the
Official Gazette was the description of a bigger tract of land that includes the
smaller lot actually applied for by respondents." 45 That factual allegation could
have had its impact before the trial court in an action for reconveyance on the
ground of fraud in the acquisition of title but not before this Court where factual
issues may no longer be raised.
The inevitable conclusion therefore is that petitioners were cognizant all the
while of the futility of their attempt to cancel the title of private respondents under
the law. Hence, they indirectly and collaterally attacked the land title duly issued
to private respondents on the theory that the revival of the dormant judgment in
their favor could result in the realization of their objective of nullifying such title.
However, aggrieved applicants for land registration cannot seek protection under
the provisions of the Rules of Court which are merely suppletory to special laws
governing land registration proceedings.
The resolution of the instant petition cannot be complete without a word on the
manner by which officials of the then Land Registration Commission ignored the
lower court's order to explain the conflicting claims of ownership over the same
property. Particularly, there is a need for an explanation why they caused the
publication of the notice of hearing in private respondents' application for
registration notwithstanding that the same office had already published the
notice of hearing as regards petitioners' application for registration of the same
parcel of land. It is within the power of these officials to determine whether or not
the same parcel of land is the subject of two applications for registration. The
indefeasibility of private respondents' title over the property should not get in the
way of an administrative investigation of possible omission or neglect of official
duty. This Court cannot let such malfeasance or misfeasance in office pass
unnoticed lest the integrity of the Torrens System of land registration be
undermined.
WHEREFORE, the instant petition for review is DENIED, and the
dismissal of Civil Case No. TG-1028 is AFFIRMED. Let a copy of this Decision
be furnished the Department of Justice so that an investigation against officials
who were responsible for the publication of two notices of hearing of an
application for registration of the same parcel of land may be conducted and the
guilty officials duly sanctioned.
SO ORDERED.
(Heirs of Lopez v. De Castro, G.R. No. 112905, [February 3, 2000], 381 PHIL
|||
591-618)
SYLLABUS
DECISION
SANCHEZ, J : p
604-610)
DECISION
QUISUMBING, J : p
This is a petition for certiorari assailing the orders dated May 15, 2003 1 and
September 15, 2003 2 in Civil Case No. 2002-0555 issued by public respondent,
Presiding Judge Jane Aurora C. Lantion, of the Regional Trial Court (RTC) of
Lipa City, Batangas.
The facts of the case are as follows:
Petitioners Renato and Angelina Lantin took several peso and dollar loans from
respondent Planters Development Bank and executed several real estate
mortgages and promissory notes to cover the loans. They defaulted on the
payments so respondent bank foreclosed the mortgaged lots. The foreclosed
properties, in partial satisfaction of petitioners' debt, were sold at a public auction
where the respondent bank was the winning bidder. On November 8, 2003,
petitioners filed against Planters Development Bank and its officers Elizabeth
Umali, Alice Perce and Jelen Mosca (private respondents), a Complaint for
Declaration of Nullity and/or Annulment of Sale and/or Mortgage, Reconveyance,
Discharge of Mortgage, Accounting, Permanent Injunction, and Damages with
the RTC of Lipa City, Batangas. Petitioners alleged that only their peso loans
were covered by the mortgages and that these had already been fully paid,
hence, the mortgages should have been discharged. They challenged the validity
of the foreclosure on the alleged non-payment of their dollar loans as the
mortgages did not cover those loans.
Private respondents moved to dismiss the complaint on the ground of improper
venue since the loan agreements restricted the venue of any suit in Metro Manila.
On May 15, 2003, the respondent judge dismissed the case for improper venue.
Petitioners sought reconsideration. They argued that the trial court in effect
prejudged the validity of the loan documents because the trial court based its
dismissal on a venue stipulation provided in the agreement. The motion for
reconsideration was denied and the lower court held that the previous order did
not touch upon the validity of the loan documents but merely ruled on the
procedural issue of venue. EcHTDI
Petitioners contend that, since the validity of the loan documents were squarely
put in issue, necessarily this meant also that the validity of the venue stipulation
also was at issue. Moreover, according to the petitioners, the venue stipulation in
the loan documents is not an exclusive venue stipulation under Section 4(b) of
Rule 4 of the 1997 Rules of Civil Procedure. 4 The venue in the loan agreement
was not specified with particularity. Besides, petitioners posit, the rule on venue
of action was established for the convenience of the plaintiff, herein petitioners.
Further, petitioners also contend that since the complaint involves several causes
of action which did not arise solely from or connected with the loan documents,
the cited venue stipulation should not be made to apply.
Private respondents counter that, in their complaint, petitioners did not assail the
loan documents, and the issue of validity was merely petitioners' afterthought to
avoid being bound by the venue stipulation. They also aver that the venue
stipulation was not contrary to the doctrine in Unimasters,5 which requires that a
venue stipulation employ categorical and suitably limiting language to the effect
that the parties agree that the venue of actions between them should be laid only
and exclusively at a definite place. According to private respondents, the
language of the stipulation is clearly exclusive.
At the outset, we must make clear that under Section 4 (b) of Rule 4 of the 1997
Rules of Civil Procedure, the general rules on venue of actions shall not apply
where the parties, before the filing of the action, have validly agreed in writing on
an exclusive venue. The mere stipulation on the venue of an action, however, is
not enough to preclude parties from bringing a case in other venues. The parties
must be able to show that such stipulation isexclusive. 6 In the absence of
qualifying or restrictive words, the stipulation should be deemed as merely an
agreement on an additional forum, not as limiting venue to the specified place. 7
The pertinent provisions of the several real estate mortgages and promissory
notes executed by the petitioner respectively read as follows:
18. In the event of suit arising out of or in connection with this mortgage
and/or the promissory note/s secured by this mortgage, the parties
hereto agree to bring their causes of auction (sic) exclusively in the
proper court of Makati, Metro Manila or at such other venue chosen by
the Mortgagee, the Mortgagor waiving for this purpose any other
venue. 8 (Emphasis supplied.) HCaEAT
I/We further submit that the venue of any legal action arising out of this
note shall exclusively be at the proper court of Metropolitan Manila,
Philippines or any other venue chosen by the BANK, waiving for this
purpose any other venue provided by the Rules of Court. 9 (Emphasis
supplied.)
Clearly, the words "exclusively" and "waiving for this purpose any other venue"
are restrictive and used advisedly to meet the requirements.
Petitioners claim that effecting the exclusive venue stipulation would be
tantamount to a prejudgment on the validity of the loan documents. We note
however that in their complaint, petitioners never assailed the validity of the
mortgage contracts securing their peso loans. They only assailed the terms and
coverage of the mortgage contracts. What petitioners claimed is that their peso
loans had already been paid thus the mortgages should be discharged, and that
the mortgage contracts did not include their dollar loans. In our view, since the
issues of whether the mortgages should be properly discharged and whether
these also cover the dollar loans, arose out of the said loan documents, the
stipulation on venue is also applicable thereto.
Considering all the circumstances in this controversy, we find that the respondent
judge did not commit grave abuse of discretion, as the questioned orders were
evidently in accord with law and jurisprudence.
WHEREFORE, the petition is DISMISSED. The assailed orders dated May 15,
2003 and September 15, 2003 of the Regional Trial Court of Lipa City, Batangas,
in Civil Case No. 2002-0555 are AFFIRMED.
Costs against petitioners. SO ORDERED.
(Spouses Lantin v. Lantion, G.R. No. 160053, [August 28, 2006], 531 PHIL 318-
|||
324)
DECISION
YNARES-SANTIAGO, J : p
Assailed in this petition for review under Rule 45 of the Rules of Court is the May
31, 2005 Decision 1 of the Court of Appeals in CA-G.R. CV No. 78456, which
held that venue was properly laid before the Regional Trial Court of Bulanao,
Tabuk, Kalinga (Kalinga RTC), and reversed the trial court's September 3, 2002
Resolution 2 dismissing the complaint of respondent Warren Embes
Lubayen in Civil Case No. 511, on the ground of improper venue.
The facts show that on October 24, 2001, respondent, a resident of Magsaysay,
Tabuk, Kalinga, filed with the Kalinga RTC a complaint 3 for damages against
petitioner Auction in Malinta, Inc., a corporation with business address at Malinta,
Valenzuela City, and engaged in public auction of heavy equipments, trucks, and
assorted machineries. Respondent alleged that in an auction conducted by
petitioner on May 29, 2001, he was declared the highest bidder for a wheel
loader T.C.M. 75B, series no. 3309. On June 7, 2001, respondent tendered the
payment for the said item but petitioner could no longer produce the loader. It
offered a replacement but failed to deliver the same up to the filing of the
complaint. Hence, respondent instituted this case to recover actual, moral, and
exemplary damages plus attorney's fees.
Petitioner filed a motion to dismiss on the ground of improper venue. It argued
that the correct venue is the RTC of Valenzuela City pursuant to the
stipulation in the Bidders Application and Registration Bidding Agreement which
states that:
ALL COURT LITIGATION PROCEDURES SHALL BE
CONDUCTED IN THE APPROPRIATE COURTS OF VALENZUELA
CITY, METRO MANILA. 4
In a Resolution dated September 3, 2002, the Kalinga RTC held that the clear
intention of the parties was to limit the venue to the proper court of Valenzuela
City and thus dismissed respondent's complaint on the ground of improper
venue. 5
Aggrieved, respondent appealed to the Court of Appeals which reversed the
Resolution of the Kalinga RTC and reinstated the complaint. The dispositive
portion thereof, reads:
WHEREFORE, the Resolution appealed from is hereby REVERSED and
SET ASIDE. The case is remanded to the RTC which is ordered to
reinstate plaintiff's complaint for damages.
IDAaCc
SO ORDERED. 6
Petitioner's motion for reconsideration was denied; hence, the instant petition.
The sole issue is whether the stipulation in the parties' Bidders Application and
Registration Bidding Agreement effectively limited the venue of the instant case
exclusively to the proper court of Valenzuela City.
The Court rules in the negative.
The general rule on the venue of personal actions, as in the instant case for
damages 7 filed by respondent, is embodied in Section 2, Rule 4 of the Rules of
Court. It provides:
Sec. 2. Venue of Personal Actions. All other actions may be
commenced and tried where the plaintiff or any of the principal plaintiffs
resides, or where the defendant or any of the principal defendants
resides, or in the case of a nonresident defendant, where he may be
found, at the election of the plaintiff.
The aforequoted rule, however, finds no application where the parties, before the
filing of the action, have validly agreed in writing on an exclusive venue. 8 But the
mere stipulation on the venue of an action is not enough to preclude parties from
bringing a case in other venues. It must be shown that such stipulation is
exclusive. In the absence of qualifying or restrictive words, such as "exclusively"
and "waiving for this purpose any other venue, " 9 "shall only" preceding the
designation of venue, 10 "to the exclusion of the other courts," 11 or words of
similar import, the stipulation should be deemed as merely an agreement on an
additional forum, not as limiting venue to the specified place. 12
This has been the rule since the 1969 case of Polytrade Corporation v.
Blanco. 13 It was held therein that the clause "[t]he parties agree to sue and be
sued in the Courts of Manila," does not preclude the filing of suits in the court
which has jurisdiction over the place of residence of the plaintiff or the defendant.
The plain meaning of the said provision is that the parties merely consented to be
sued in Manila considering that there are no qualifying or restrictive words which
would indicate that Manila, and Manila alone, is the agreed venue. It simply is
permissive and the parties did not waive their right to pursue remedy in the
courts specifically mentioned in Section 2 of Rule 4 of the Rules of Court. 14
The Polytrade doctrine was further applied in the case of Unimasters
Conglomeration, Inc. v. Court of Appeals, 15 which analyzed the various
jurisprudence rendered after the Polytrade case. In Unimasters, we held that a
stipulation stating that "[a]ll suits arising out of this Agreement shall be filed
with/in the proper Courts of Quezon City," 16 is only permissive and does not limit
the venue to the Quezon City courts. As explained in the said case:
In other words, unless the parties make very clear, by employing
categorical and suitably limiting language, that they wish the venue of
actions between them to be laid only and exclusively at a definite place,
and to disregard the prescriptions of Rule 4, agreements on venue are
not to be regarded as mandatory or restrictive, but merely permissive, or
complementary of said rule. The fact that in their agreement the parties
specify only one of the venues mentioned in Rule 4, or fix a place for
their actions different from those specified by said rule, does not, without
more, suffice to characterize the agreement as a restrictive one. There
must, to repeat, be accompanying language clearly and categorically
expressing their purpose and design that actions between them be
litigated only at the place named by them, regardless of the general
precepts of Rule 4; and any doubt or uncertainty as to the parties'
intentions must be resolved against giving their agreement a restrictive
or mandatory aspect. Any other rule would permit of individual,
subjective judicial interpretations without stable standards, which could
well result in precedents in hopeless inconsistency. 17
The rule enunciated in Unimasters and Polytrade was reiterated in subsequent
cases where the following agreements on venue were likewise declared to be
merely permissive and do not limit the venue to the place specified therein, to wit:
1. "If court litigation becomes necessary to enforce collection, an
additional equivalent (sic) to 25% of the principal amount will be charged.
The agreed venue for such action is Makati, Metro Manila,
Philippines." 18
2. "In case of litigation hereunder, venue shall be in the City Court or
Court of First Instance of Manila as the case may be for determination of
any and all questions arising thereunder." 19
Then too, the doctrine that absent qualifying or restrictive words, the venue shall
either be that stated in the law or rule governing the action or the one
agreed in the contract, was applied to an extra-judicial foreclosure sale under Act
No. 3135. 20 In Langkaan Realty Development, Inc. v. United Coconut Planters
Bank, 21 where the provision on the venue employed the word "shall" to refer to
the place where the foreclosure will be held, the Court ruled that said provision
"lack(s) qualifying or restrictive words to indicate the exclusivity of the agreed
forum," and therefore "the stipulated place is considered only as an additional,
not a limiting venue." 22 The said stipulation reads:
It is hereby agreed that in case of foreclosure of this mortgage under Act
3135, as amended, and Presidential Decree No. 385, the auction sale
shall be held at the capital of the province, if the property is within the
territorial jurisdiction of the province concerned, or shall be held in the
city, if the property is within the territorial jurisdiction of the city
concerned. 23
In the instant case, the stipulation in the parties' agreement, i.e., "all Court
litigation procedures shall be conducted in the appropriate Courts of Valenzuela
City, Metro Manila," evidently lacks the restrictive and qualifying words that will
limit venue exclusively to the RTC of Valenzuela City. Hence, the Valenzuela
courts should only be considered as an additional choice of venue to those
mentioned under Section 2, Rule 4 of the Rules of Court. Accordingly, the
present case for damages may be filed with the (a) RTC of Valenzuela City as
stipulated in the bidding agreement; (b) RTC of Bulanao, Tabuk, Kalinga which
has jurisdiction over the residence of respondent (plaintiff); or with the (c) RTC of
Valenzuela City which has jurisdiction over the business address of petitioner
(defendant). The filing of the complaint in the RTC of Bulanao, Tabuk, Kalinga, is
therefore proper, respondent being a resident of Tabuk, Kalinga.
The case of Hoechst Philippines, Inc. v. Torres, 24 promulgated in 1978, and
invoked by petitioner in its motion to dismiss, had already been superseded by
current decisions on venue. In the said case, the Court construed the proviso:
"[i]n case of any litigation arising out of this agreement, the venue of action shall
be in the competent courts of the Province of Rizal," 25 as sufficient to limit the
venue to the proper court of Rizal. However,in Supena v. De la Rosa, 26 we ruled
that Hoechst had been rendered obsolete by recent jurisprudence applying the
doctrine enunciated in Polytrade.
In sum, we find that the Court of Appeals correctly declared that venue in the
instant case was properly laid with the RTC of Bulanao, Tabuk, Kalinga.
WHEREFORE, the petition is DENIED. The May 31, 2005 Decision of the Court
of Appeals in CA-G.R. CV No. 78456 which reversed the September 3, 2002
Resolution of the Regional Trial Court of Bulanao, Tabuk, Kalinga; reinstated the
complaint in Civil Case No. 511; and remanded the case to the said court, is
AFFIRMED. Costs against petitioner. SO ORDERED.
(Auction in Malinta, Inc. v. Luyaben, G.R. No. 173979, [February 12, 2007], 544
|||
PHIL 500-506)
SYNOPSIS
Petitioner filed an action for specific performance with damages against the
respondent before the Regional Trial Court of Pasig City praying, inter alia, that
the respondent be ordered to execute the necessary deeds of transfer and
conveyance of a portion of a property situated in Kay-biga, Paraaque, Metro
Manila covered under TCT No. S-30409, corresponding to 36.5 percent of its
total area, as compensation for the undertakings she and her companions had
performed and accomplished in favor of the respondent. The RTC, however,
dismissed the complaint on grounds of improper venue, non-joinder of necessary
parties, and nonpayment of the proper docket fees. Hence this petition.
Actions affecting title to or possession of real property or an interest therein (real
actions) shall be commenced and tried in the proper court that has territorial
jurisdiction over the area where the real property is situated. On the other hand,
all other actions (personal actions) shall be commenced and tried in the proper
courts where the plaintiff or any of the principal plaintiffs resides or where the
defendant or any of the principal defendants resides. In the present case,
petitioner sought payment of her services in accordance with the undertaking the
parties signed. Breach of contract gives rise to a cause of action for specific
performance or for rescission.
The Court held that neither a misjoinder nor a non-joinder of parties is a ground
for the dismissal of an action because parties may be dropped or added by order
of the court, on motion of any party or on the court's own initiative at any stage of
the action. The RTC should have ordered the joinder of such party, and non-
compliance with the said order would have been ground for dismissal of the
action. Moreover, the non-inclusion of a necessary party does not prevent the
court from proceeding with the action, and the judgment rendered therein shall
be without prejudice to the rights of such party.
Anent the non-filing of appropriate docket fee, the Court clarified that the Rule
requiring that the assessed value of the real estate, subject of an action, should
be considered in computing the filing fees, does not apply to an action for specific
performance which is classified as an action not capable of pecuniary estimation,
such as the case at bar. The Court granted the petition and ordered the remand
of the case to the court of origin.
SYLLABUS
DECISION
PANGANIBAN, J : p
Breach of contract gives rise to a cause of action for specific performance or for
rescission. A suit for such breach is not capable of pecuniary estimation; hence,
the assessed value of the real estate, subject of the said action, should not be
considered in computing the filing fees. Neither a misjoinder nor a non-joinder of
parties is a ground for dismissal of an action, because parties may be dropped or
added at any stage of the proceedings.
The Case
Before us is a Petition for Review on Certiorari under Rule 45, assailing the
Orders dated September 8, 2000 and November 21, 2000, promulgated by the
Regional Trial Court (RTC) of Pasig City, Branch 263. 1 The first assailed Order
disposed as follows:
"WHEREFORE, foregoing premises considered, this Court hereby
resolves to dismiss the instant complaint." 2
Reconsideration was denied in the second challenged Order. 3
The Facts
Culled from the pleadings, the facts of this case are as follows.
On December 3, 1996, herein respondent Landcenter Construction &
Development Corporation, represented by Wilfredo B. Maghuyop entered into
an Agreement 4 with Petitioner Rebecca Cabutihan. The Agreement stipulates:
"WHEREAS, [respondent corporation], . . . is the absolute owner, . . . of
a parcel of land situated at Kay-biga, Paraaque, Metro Manila covered
under Transfer Certificate of Title No. (S-30409) (partially cancelled by
TCT Nos. 110001 to 110239) and particularly described as follows:
'A parcel of land (Plan Psu-80206, Case No. 290, G.L.R.O.
Record No. 2291), situated in the Barrio of Kay-biga, Municipality
of Paraaque, Province of Rizal. Bounded on the NE., by
properties of Eulogio Cruz and Isidro Alano; on the E., by property
of Justo Bernardo; on the SE., by properties of Marcelo Nofuente
and Lorenzo Molera; on the SW., by properties of Higino and
Pedro P. Lopez; on the W., by property of Odon Rodriguez; and
on the NW., by properties of Evaristo de los Santos and Pastor
Leonardo . . . ; containing an area of ONE HUNDRED SEVEN
THOUSAND AND FORTY SEVEN (107,047) SQUARE METERS,
more or less.'
"WHEREAS, [respondent corporation] decided to engage the assistance
of [petitioner] and . . . herein called the FACILITATOR for the purpose of
facilitating and arranging the recovery of the property in question, as well
as the financing of such undertakings necessary in connection thereto;
"WHEREFORE, premises considered and of the mutual covenants of
the parties, they have agreed, as follows:
1. The FACILITATOR undertakes to effect the recovery of the
property subject hereof, including the financing of the undertaking,
up to the registration of the same in the name of [respondent
corporation], except any and all taxes due;
2. The FACILITATOR shall be responsible for whatever
arrangements necessary in relation to the squatters presently
occupying [a] portion of the property, as well as the legitimate
buyers of lots thereof;
3. As compensation for the undertaking of the FACILITATOR,
[she] shall be entitled to Twenty [Percent] (20%) of the total area
of the property thus recovered for and in behalf of [respondent
corporation].
Furthermore, the action was filed only by petitioner. There was no allegation that
she had been authorized by Forro, Radan and Anave to represent their
respective shares in the compensation.
Finally, since this case was an action in rem, it was imperative for petitioner to
pay the appropriate docket or filing fees equivalent to the pecuniary value of her
claim, a duty she failed to discharge. Consequently, following Manchester
Development Corp. v. Court of Appeals, 13 the trial court never acquired
jurisdiction over the case.
Hence, this Petition. 14
Issues
In her Memorandum, petitioner phrases the issue in this wise:
"Whether or not the dismissal of the [C]omplaint was in accordance with
the pertinent law and jurisprudence on the matter." 15
She argues that the RTC erred in dismissing her Complaint on the grounds of (1)
improper venue, (2) non-joinder of necessary parties, and (3) non-payment of
proper docket fees.
This Court's Ruling
The Petition is meritorious.
First Issue:
Proper Venue
Maintaining that the action is in personam, not in rem, petitioner alleges that the
venue was properly laid. The fact that "she ultimately sought the conveyance of
real property" not located in the territorial jurisdiction of the RTC of Pasig is, she
claims, an anticipated consequence and beyond the cause for which the action
was instituted.
On the other hand, the RTC ruled that since the primary objective of petitioner
was to recover real property even though her Complaint was for specific
performance and damages her action should have been instituted in the trial
court where the property was situated, in accordance withCommodities Storage
& Ice Plant Corp. v. Court of Appeals. 16
We agree with petitioner. Sections 1 and 2, Rule 4 of the Rules of Court provide
an answer to the issue of venue. 17 Actions affecting title to or possession of real
property or an interest therein (real actions), shall be commenced and tried in the
proper court that has territorial jurisdiction over the area where the real property
is situated. On the other hand, all other actions, (personal actions) shall be
commenced and tried in the proper courts where the plaintiff or any of the
principal plaintiffs resides or where the defendant or any of the principal
defendants resides.
In Commodities Storage cited earlier, petitioner spouses obtained a loan secured
by a mortgage over their land and ice plant in Sta. Maria, Bulacan. Because they
had failed to pay the loan, the mortgage was foreclosed and the ice plant
auctioned. Before the RTC of Manila, they sued the bank for damages and for
the fixing of the redemption period. Since the spouses ultimately sought
redemption of the mortgaged property, the action affected the mortgage debtor's
title to the foreclosed property; hence, it was a real action. 18 Where the action
affects title to the property, it should be instituted in the trial court where the
property is situated. 19
In National Steel Corp. v. Court of Appeals, 20 the Court held that "an action in
which petitioner seeks the execution of a deed of sale of a parcel of land in his
favor . . . has been held to be for the recovery of the real property and not for
specific performance since his primary objective is to regain the ownership and
possession of the parcel of land."
However, in La Tondea Distillers, Inc. v. Ponferrada, 21 private respondents filed
an action for specific performance with damages before the RTC of Bacolod City.
The defendants allegedly reneged on their contract to sell to them a parcel of
land located in Bago City a piece of property which the latter sold to petitioner
while the case was pending before the said RTC. Private respondent did not
claim ownership but, by annotating a notice of lis pendens on the title, recognized
defendants' ownership thereof. This Court ruled that the venue had properly been
laid in the RTC of Bacolod, even if the property was situated in Bago.
In Siasoco v. Court of Appeals, 22 private respondent filed a case for specific
performance with damages before the RTC of Quezon City. It alleged that after it
accepted the offer of petitioners, they sold to a third person several parcels of
land located in Montalban, Rizal. The Supreme Court sustained the trial court's
order allowing an amendment of the original Complaint for specific performance
with damages. Contrary to petitioners' position that the RTC of Quezon City had
no jurisdiction over the case, as the subject lots were located in Montalban, Rizal,
the said RTC had jurisdiction over the original Complaint. The Court reiterated
the rule that a case for specific performance with damages is a personal action
which may be filed in a court where any of the parties reside.
A close scrutiny of National Steel and Ruiz reveals that the prayers for the
execution of a Deed of Sale were not in any way connected to a contract, like the
Undertaking in this case. Hence, even if there were prayers for the execution of a
deed of sale, the actions filed in the said cases were not for specific performance.
In the present case, petitioner seeks payment of her services in accordance with
the undertaking the parties signed. Breach of contract gives rise to a cause of
action for specific performance or for rescission. 23 If petitioner had filed an
action in rem for the conveyance of real property, the dismissal of the case would
have been proper on the ground of lack of cause of action.
Second Issue:
Non-Joinder of Proper Parties
Petitioner claims that she was duly authorized and empowered to represent the
members of her group and to prosecute their claims on their behalfvia a Special
Power of Attorney executed by Forro, Radan and Anave. Besides, she argues
that the omission of her companions as plaintiffs did not prevent the RTC from
proceeding with the action, because whatever judgment would be rendered
would be without prejudice to their rights. In the alternative, she avers that the
trial court may add or drop a party or parties at any stage of the action and on
such terms as are just.
The RTC ruled that there was no allegation anywhere in the records that
petitioner had been authorized to represent Forro, Radan and Anave, who were
real parties-in-interest with respect to their respective shares of the 36.5 percent
claim. Such being the case, the trial court never acquired jurisdiction over the
subject matter of their claims.
Again, we side with petitioner. Neither a misjoinder nor a non-joinder of parties is
a ground for the dismissal of an action. Parties may be dropped or added by
order of the court, on motion of any party or on the court's own initiative at any
stage of the action. 24 The RTC should have ordered the joinder of such party,
and noncompliance with the said order would have been ground for dismissal of
the action.
Although the Complaint prayed for the conveyance of the whole 36.5 percent
claim without impleading the companions of petitioner as party-litigants, the RTC
could have separately proceeded with the case as far as her 20 percent share in
the claim was concerned, independent of the other 16.5 percent. This fact means
that her companions are not indispensable parties without whom no final
determination can be had. 25 At best, they are mere necessary parties who ought
to be impleaded for a complete determination or settlement of the claim subject
of the action. 26 The non-inclusion of a necessary party does not prevent the
court from proceeding with the action, and the judgment rendered therein shall
be without prejudice to the rights of such party. 27
Third Issue:
Correct Docket Fees
Petitioner insists that the value of the real property, which was the subject of the
contract, has nothing to do with the determination of the correct docket or filing
fees.
The RTC ruled that although the amount of damages sought had not been
specified in the body of the Complaint, one can infer from the assessed value of
the disputed land that it would amount to P50 million. Hence, when compared to
this figure, the P210 paid as docket fees would appear paltry.
We hold that the trial court and respondent used technicalities to avoid the
resolution of the case and to trifle with the law. True, Section 5, Rule 141 of the
Rules of Court requires that the assessed value of the real estate, subject of an
action, should be considered in computing the filing fees. But the Court has
already clarified that the Rule does not apply to an action for specific
performance, 28 which is classified as an action not capable of pecuniary
estimation. 29
Besides, if during the course of the trial, petitioner's 20 percent claim on the
Fourth Estate Subdivision can no longer be satisfied and the payment of its
monetary equivalent is the only solution left, Sunlife Insurance Office, Ltd. v.
Asuncion 30 holds as follows: "Where the filing of the initiatory pleading is not
accompanied by payment of the docket fee, the court may allow payment of the
fee within a reasonable time but in no case beyond the applicable prescriptive or
reglementary period."
WHEREFORE, the Petition is hereby GRANTED, and the assailed Orders
REVERSED and SET ASIDE. The case is REMANDED to the court of origin
which is ordered to PROCEED with deliberate speed in disposing of the case. No
costs. SO ORDERED.
(Cabutihan v. Landcenter Construction & Development Corp., G.R. No. 146594,
|||
DECISION
PANGANIBAN, J : p
"On March 17, 1999, LGISC and LGIC filed a Motion to Dismiss raising
the following grounds: (1) lack of jurisdiction over the persons of
defendants, summons not having been served on its resident agent; (2)
improper venue; and (3) failure to state a cause of action. The [trial]
court denied the said motion in an Order dated January 7, 2000.
"On March 6, 2000, LGISC and LGIC filed an Answer with Compulsory
Counterclaim ex abundante cautela. Thereafter, they filed a 'Motion for
Reconsideration and to Expunge Complaint' which was denied.
"On December 4, 2000, HYATT filed a motion for leave of court to
amend the complaint, alleging that subsequent to the filing of the
complaint, it learned that LGISC transferred all its organization, assets
and goodwill, as a consequence of a joint venture agreement with Otis
Elevator Company of the USA, to LG Otis Elevator Company (LG OTIS,
for brevity). Thus, LGISC was to be substituted or changed to LG OTIS,
its successor-in-interest. Likewise, the motion averred
that . . . GOLDSTAR was being utilized by LG OTIS and LGIC in
perpetrating their unlawful and unjustified acts againstHYATT.
Consequently, in order to afford complete relief, GOLDSTAR was to be
additionally impleaded as a party-defendant. Hence, in the Amended
Complaint, HYATT impleaded . . . GOLDSTAR as a party-defendant,
and all references to LGISC were correspondingly replaced with LG
OTIS.
"On December 18, 2000, LG OTIS (LGISC) and LGIC filed their
opposition to HYATT's motion to amend the complaint. It argued that: (1)
the inclusion of GOLDSTAR as party-defendant would lead to a change
in the theory of the case since the latter took no part in the negotiations
which led to the alleged unfair trade practices subject of the case; and
(b) HYATT's move to amend the complaint at that time was dilatory,
considering that HYATTwas aware of the existence of GOLDSTAR for
almost two years before it sought its inclusion as party-defendant.
"On January 8, 2001, the [trial] court admitted the Amended Complaint.
LG OTIS (LGISC) and LGIC filed a motion for reconsideration thereto
but was similarly rebuffed on October 4, 2001.
"On April 12, 2002, . . . GOLDSTAR filed a Motion to Dismiss the
amended complaint, raising the following grounds: (1) the venue was
improperly laid, as neither HYATT nor defendants reside in
Mandaluyong City, where the original case was filed; and (2) failure to
state a cause of action against [respondent], since the amended
complaint fails to allege with certainty what specific ultimate
acts . . . Goldstar performed in violation of . . . Hyatt's rights. In the Order
dated May 27, 2002, which is the main subject of the present petition,
the [trial] court denied the motion to dismiss, ratiocinating as follows:
'Upon perusal of the factual and legal arguments raised by the
movants-defendants, the court finds that these are substantially
the same issues posed by the then defendant LG Industrial
System Co. particularly the matter dealing [with] the issues of
improper venue, failure to state cause of action as well as this
court's lack of jurisdiction. Under the circumstances obtaining, the
court resolves to rule that the complaint sufficiently states a cause
of action and that the venue is properly laid. It is significant to note
that in the amended complaint, the same allegations are adopted
as in the original complaint with respect to
the Goldstar Philippines to enable this court to adjudicate a
complete determination or settlement of the claim subject of the
action it appearing preliminarily as sufficiently alleged in the
plaintiff's pleading that said Goldstar Elevator Philippines Inc., is
being managed and operated by the same Korean officers of
defendants LG-OTIS Elevator Company and LG International
Corporation.'
"On June 11, 2002, [Respondent] GOLDSTAR filed a motion for
reconsideration thereto. On June 18, 2002, without waiving the grounds
it raised in its motion to dismiss, [it] also filed an 'Answer Ad Cautelam'.
On October 1, 2002, [its] motion for reconsideration was denied.
"From the aforesaid Order denying . . . Goldstar's motion for
reconsideration, it filed the . . . petition for certiorari [before the CA]
alleging grave abuse of discretion amounting to lack or excess of
jurisdiction on the part of the [trial] court in issuing the assailed Orders
dated May 27, 2002 and October 1, 2002." 5
Ruling of the Court of Appeals
The CA ruled that the trial court had committed palpable error amounting to
grave abuse of discretion when the latter denied respondent's Motion to Dismiss.
The appellate court held that the venue was clearly improper, because none of
the litigants "resided" in Mandaluyong City, where the case was filed.
According to the appellate court, since Makati was the principal place of business
of both respondent and petitioner, as stated in the latter's Articles of Incorporation,
that place was controlling for purposes of determining the proper venue. The fact
that petitioner had abandoned its principal office in Makati years prior to the filing
of the original case did not affect the venue where personal actions could be
commenced and tried.
Hence, this Petition. 6
The Issue
In its Memorandum, petitioner submits this sole issue for our consideration:
"Whether or not the Court of Appeals, in reversing the ruling of the
Regional Trial Court, erred as a matter of law and jurisprudence, as well
as committed grave abuse of discretion, in holding that in the light of the
peculiar facts of this case, venue was improper[.]" 7
This Court's Ruling
The Petition has no merit.
Sole Issue:
Venue
The resolution of this case rests upon a proper understanding of Section 2 of
Rule 4 of the 1997 Revised Rules of Court:
"Sec. 2. Venue of personal actions. All other actions may be
commenced and tried where the plaintiff or any of the principal plaintiff
resides, or where the defendant or any of the principal defendant resides,
or in the case of a non-resident defendant where he may be found, at
the election of the plaintiff."
Since both parties to this case are corporations, there is a need to clarify the
meaning of "residence." The law recognizes two types of persons: (1) natural and
(2) juridical. Corporations come under the latter in accordance with Article 44(3)
of the Civil Code. 8
Residence is the permanent home the place to which, whenever absent for
business or pleasure, one intends to return. 9 Residence is vital when dealing
with venue. 10 A corporation, however, has no residence in the same sense in
which this term is applied to a natural person. This is precisely the reason why
the Court in Young Auto Supply Company v. Court of Appeals 11 ruled that "for
practical purposes, a corporation is in a metaphysical sense a resident of the
place where its principal office is located as stated in the articles of
incorporation." 12 Even before this ruling, it has already been established that the
residence of a corporation is the place where its principal office is established. 13
This Court has also definitively ruled that for purposes of venue, the term
"residence" is synonymous with "domicile." 14 Correspondingly, the Civil Code
provides:
"Art. 51. When the law creating or recognizing them, or any other
provision does not fix the domicile of juridical persons, the same shall be
understood to be the place where their legal representation is
established or where they exercise their principal functions." 15
It now becomes apparent that the residence or domicile of a juridical person is
fixed by "the law creating or recognizing" it. Under Section 14(3) of the
Corporation Code, the place where the principal office of the corporation is to be
located is one of the required contents of the articles of incorporation, which shall
be filed with the Securities and Exchange Commission (SEC).
In the present case, there is no question as to the residence of respondent. What
needs to be examined is that of petitioner. Admittedly, 16 the latter's principal
place of business is Makati, as indicated in its Articles of Incorporation. Since the
principal place of business of a corporation determines its residence or domicile,
then the place indicated in petitioner's articles of incorporation becomes
controlling in determining the venue for this case.
Petitioner argues that the Rules of Court do not provide that when the plaintiff is
a corporation, the complaint should be filed in the location of its principal office as
indicated in its articles of incorporation. 17 Jurisprudence has, however, settled
that the place where the principal office of a corporation is located, as stated in
the articles, indeed establishes its residence. 18 This ruling is important in
determining the venue of an action by or against a corporation, 19 as in the
present case.
Without merit is the argument of petitioner that the locality stated in its Articles of
Incorporation does not conclusively indicate that its principal office is still in the
same place. We agree with the appellate court in its observation that the
requirement to state in the articles the place where the principal office of the
corporation is to be located "is not a meaningless requirement. That proviso
would be rendered nugatory if corporations were to be allowed to simply
disregard what is expressly stated in their Articles of Incorporation." 20
Inconclusive are the bare allegations of petitioner that it had closed its Makati
office and relocated to Mandaluyong City, and that respondent was well aware of
those circumstances. Assuming arguendo that they transacted business with
each other in the Mandaluyong office of petitioner, the fact remains that, in law,
the latter's residence was still the place indicated in its Articles of Incorporation.
Further unacceptable is its faulty reasoning that the ground for the CA's dismissal
of its Complaint was its failure to amend its Articles of Incorporation so as to
reflect its actual and present principal office. The appellate court was clear
enough in its ruling that the Complaint was dismissed because the venue had
been improperly laid, not because of the failure of petitioner to amend the latter's
Articles of Incorporation.
Indeed, it is a legal truism that the rules on the venue of personal actions are
fixed for the convenience of the plaintiffs and their witnesses. Equally settled,
however, is the principle that choosing the venue of an action is not left to a
plaintiff's caprice; the matter is regulated by the Rules of Court. 21Allowing
petitioner's arguments may lead precisely to what this Court was trying to avoid
in Young Auto Supply Company v. CA: 22 the creation of confusion and untold
inconveniences to party litigants. Thus enunciated the CA:
". . . . To insist that the proper venue is the actual principal office and not
that stated in its Articles of Incorporation would indeed create confusion
and work untold inconvenience. Enterprising litigants may, out of some
ulterior motives, easily circumvent the rules on venue by the simple
expedient of closing old offices and opening new ones in another place
that they may find well to suit their needs." 23
We find it necessary to remind party litigants, especially corporations, as follows:
"The rules on venue, like the other procedural rules, are designed to
insure a just and orderly administration of justice or the impartial and
evenhanded determination of every action and proceeding. Obviously,
this objective will not be attained if the plaintiff is given unrestricted
freedom to choose the court where he may file his complaint or petition.
"The choice of venue should not be left to the plaintiff's whim or caprice.
He may be impelled by some ulterior motivation in choosing to file a
case in a particular court even if not allowed by the rules on venue." 24
WHEREFORE, the Petition is hereby DENIED, and the assailed Decision and
Resolution AFFIRMED. Costs against petitioner. SO ORDERED.
S
(Hyatt Elevators and Escalators Corp. v. Goldstar Elevators Phils. Inc., G.R. No.
|||
DECISION
VELASCO, JR., J : p
In this Petition for Review on Certiorari under Rule 45 of the 1997 Revised Rules
of Court, the distinction between "actual residence" and "domicile" comes once
again under review.
The Facts
Petitioner Ang Kek Chen resides at 1287-1291 Jose Abad Santos Avenue corner
Padre Algue Street, Tondo, 1012 Manila. 1 He is not a lawyer, and has filed
pleadings with this Court on his own behalf.
Respondent Atty. Eleazar S. Calasan was born in Aparri, Cagayan on September
8, 1947. He has been a registered voter in Aparri, Cagayan since 1969. He owns
real property, his ancestral home, which was donated to him by his mother,
situated on Quirino Street, Aparri, Cagayan. 2 However, respondent Atty.
Calasan also has a house and lot in Las Pias, Metro Manila, which he and his
family live in; has a business address at 10/F Manufacturers Building, Plaza Sta.
Cruz, 1003 Manila; applied for and received a commission as notary public from
the Manila Regional Trial Court (RTC); and secured a Community Tax Certificate
in Las Pias City, Metro Manila.cCSEaA
Respondent Atty. Calasan was the counsel of one Jaime U. Lim, an opponent of
petitioner. Petitioner alleged that his residence had been damaged by the
corporation of which Jaime U. Lim was president.
While Atty. Calasan was acting as counsel for Jaime Lim, petitioner wrote a letter
and filed a counter-affidavit which respondent Atty. Calasan believed maligned
him, with copies furnished various people, among them high officials of the
Philippine government. Atty. Calasan then filed criminal cases for libel against
petitioner in Aparri, Cagayan, among them Crim. Case Nos. 07-1168 and VI-
1094, which were dismissed.
Petitioner responded by filing his own administrative cases against respondent
Atty. Calasan, among them Administrative Case Nos. 5444 and 6233, alleging
serious gross misconduct on the part of Atty. Calasan and praying for his
disbarment. It is noted that even among his pleadings in this particular case,
even in his final memorandum, he made references to what he believed were
betrayals of the attorney's oath by Atty. Calasan, and with repeated calls for Atty.
Calasan's disbarment.
On December 4, 2001, respondents spouses Atty. Eleazar S. Calasan and
Leticia B. Calasan filed a complaint for damages with the Aparri, Cagayan RTC
against petitioner and his spouse for alleged malicious imputations against Atty.
Calasan made by petitioner, and it was docketed as Civil Case No. 08-418. 3
On January 8, 2002, petitioner filed a Motion to Dismiss on the following grounds:
(1) that the court had no jurisdiction over the subject matter of the claim; (2) that
the venue was improperly laid; (3) that the pleading asserting the claim stated no
cause of action; (4) that a condition precedent for filing claim had not been
complied with; (5) that the claim was barred by the statute of limitations; and (6)
that the claim or demand set forth in plaintiff's pleadings had been abandoned or
otherwise extinguished. 4
In the February 26, 2002 Order, the Aparri, Cagayan RTC, Branch 8 dismissed
the complaint on the ground that the venue had been improperly
laid. 5Respondents fared no better in their Motion for Reconsideration of that
dismissal, as the motion was denied in the March 20, 2002 Order. 6 DIETcC
The CA noted the findings of the other Aparri RTC branches in the dismissals of
criminal cases for libel filed by respondents against petitioner to conclude that
respondents had their actual residence in Las Pias.
In Criminal Case No. 07-1168 decided by the Aparri Cagayan RTC, Branch 7,
the trial court, despite finding that Atty. Calasan's domicile was in Aparri,
Cagayan, dismissed the criminal information against petitioner, stating, thus:
Under the circumstances, therefore, the situation of private complainant
does not fall within the conceptual meaning of the term "residence" as
explained in the cases mentioned above. His situation is that he owns a
house in Aparri and comes home at least once a month. However, his
presence in the place of his residence, although consistent, is admittedly
not continuous. For this reason, the complainant's stay at his house in
Aparri may only be considered as occasional or intermittent. The
requirement is that his stay in his place of abode must not only be
consistent but also continuous. Therefore, his stay in Aparri is not
"residence" for purposes of determining venue in libel cases. 15
In Criminal Case No. VI-1094 decided by the Aparri, Cagayan RTC, Branch 6,
the trial court likewise dismissed the information against petitioner, holding that:
The Court does not believe that the offended party is only temporarily
residing in Manila for the following reasons: Seventy percent of his cases
are cases in Metro Manila; he has his law office in Metro Manila but he
has none in Aparri, Cagayan; he and his family reside in Las Pinas [sic]
though he has an ancestral house in Aparri, Cagayan. His presence in
Aparri is seldom, while he is most of the time in Metro Manila. The
offended party, therefore, is actually residing in Las Pinas [sic] and he
should have filed the libel case in Las Pinas [sic], Metro Manila. 16
Considering the foregoing findings of these trial courts, as well as the findings of
the Aparri, Cagayan RTC, Branch 8 in Civil Case No. 08-418, the CA found that
respondents were residents of Las Pias. ITSacC
However, upon a Motion for Reconsideration from respondents, the CA set aside
its earlier Decision, its findings reading as follows:
We have closely examined the records and we find that petitioners'
residence is in Aparri, Cagayan.
As stated, an individual does not lose the domicile even if he has lived
and maintained residences in different places. Residence, it bears
repeating, implies a factual relationship to a given place for various
purposes. The absence from legal residence or domicile to pursue a
profession, to study or to do other things of a temporary or semi
permanent nature does no [sic] constituent loss of residence. Thus, the
assertion by the trial court that they could not have been a resident [sic]
of Aparri, Cagayan is misplaced. 17
The CA erred in its findings.
The trial court did not find that respondents were not residents of Aparri,
Cagayan. It specifically stated that they were in fact "residents and domiciled in
Aparri, Cagayan." 18
The crucial distinction that must be made is between "actual residence" and
"domicile." The case of Garcia Fule v. Court of Appeals had already made the
distinction in 1976. The pertinent portion of the case reads as follows:
But, the far-ranging question is this: What does the term "resides"
mean? . . . We lay down the doctrinal rule that the term "resides"
connotes ex vi termini "actual residence" as distinguished from "legal
residence or domicile." This term "resides," like the terms "residing" and
"residence," is elastic and should be interpreted in the light of the object
or purpose of the statute or rule in which it is employed. In the
application of venue statutes and rules . . . residence rather
than domicile is the significant factor. Even where the statute uses the
word "domicile" still it is construed as meaning residence and not
domicile in the technical sense. Some cases make a distinction between
the terms "residence" and "domicile" but as generally used in statutes
fixing venue, the terms are synonymous, and convey the same meaning
as the term "inhabitant." In other words, "resides" should be viewed or
understood in its popular sense, meaning the personal, actual or
physical habitation of a person, actual residence or place of abode. It
signifies physical presence in a place and actual stay thereat. In this
popular sense, the term means merely residence, that is personal
residence, not legal residence or domicile. Residence simply requires
bodily presence as an inhabitant in a given place, while domicile requires
bodily presence in that place and also an intention to make it one's
domicile. No particular length of time of residence is required though;
however, the residence must be more than temporary. 19
It is clear that in granting respondents' Motion for Reconsideration, the CA
accepted the argument of respondent Atty. Calasan that "residence" is
synonymous with "domicile."
In Saludo, Jr. v. American Express International, Inc., the term "residence" was
equated with "domicile" as far as election law was concerned. However the case
also stated that:
for purposes of venue, the less technical definition of "residence" is
adopted. Thus, it is understood to mean as "the personal, actual or
physical habitation of a person, actual residence or place of abode. It
signifies physical presence in a place and actual stay thereat. In this
popular sense, the term means merely residence, that is, personal
residence, not legal residence or domicile. Residence simply requires
bodily presence as aninhabitant in a given place, while domicile requires
bodily presence in that place and also an intention to make it one's
domicile." 20
aTIEcA
There is clearly a distinction between the two terms, "residence" and "domicile,"
which shall be applied in this civil action for damages.
Art. 360 of the Revised Penal Code does not use the term "domicile" in providing
for venue in the filing of the criminal case and the civil action for damages. The
applicable clause of Art. 360 in this case states that "where any of the offended
parties actually resides at the time of the commission of the offense . . .
(emphasis supplied)." It is thus essential to determine where the offended parties,
the respondents in this case, actually resided during the year 2000, the time of
the commission of the offense.
The published matters, subjects of this civil action, are a counter affidavit dated
June 9, 2000 and a letter dated June 19, 2000, both from petitioner, neither of
which was submitted to persons in Aparri, Cagayan. To prove respondent Atty.
Calasan's residence at the time, which petitioner alleged was No. 8 Galaxy
Avenue, Mapayapa Village, Las Pias City, Metro Manila, Atty. Calasan's
Community Tax Certificates (CTCs) for the years 2000 and 2001 were
presented. 21 Respondent Atty. Calasan did not deny that he had such an
address in Las Pias, which is only the import of the CTCs. He claimed that the
Las Pias residential unit was constructed out of convenience and necessity for
his family and his profession. There is no denial that he and his family lived at
that particular address during the time of the publication of petitioner's documents.
That is actually enough to qualify it as a residence, even without the intention to
maintain it as legal residence.
Respondents' legal residence or domicile has been established as being in Aparri,
Cagayan. The finding of the trial court that the actual residence of respondents
was in Las Pias is not inconsistent with the establishment of respondents'
domicile in Aparri. To state that respondents' actual residence was in Las Pias
does not mean that they have abandoned their legal residence. The case of Koh
v. Court of Appeals stated:
This Court held in the case of Uytengsu vs. Republic, 50 O.G. 4781,
October 1954, reversing its previous stand in Larena v. Ferrer, 61 Phil.
36 andNuval v. Guray 52 Phil 645, that
"There is a difference between domicile and residence.
Residence is used to indicate a place of abode, whether
permanent or temporary; domicile denotes a fixed permanent
residence to which when absent, one has the intention of
returning. A man may have a residence in one place and a
domicile in another. Residence is not domicile, but domicile is
residence coupled with the intention to remain for an unlimited
time. A man can have but one domicile for one and the same
purpose at any time, but he may have numerous places of
residence. His place of residence generally is his place of
domicile, but is not by any means, necessarily so since no length
of residence without any intention of remaining will constitute
domicile." 22 (Italics supplied.)
In respondents' case, they maintained a residence in Las Pias in the year 2000,
and their domicile in Aparri, Cagayan which was maintained year after year. As
mentioned in Koh, one may have both a residence and a domicile. One need not
abandon one's domicile to acquire a separate residence, if this separate
residence is not intended to be legal residence as well. The ideas of "domicile"
and "actual residence" may even at times refer to one and the same place, but
not so in this particular case, where there are two particular and distinct places
referred to.
Thus, the trial court was correct in dismissing the complaint because it found that
the offended parties actually resided for the greater part of the year 2000 in Las
Pias, even if their legal residence was in Aparri, Cagayan. To reiterate, for
purposes of determining venue, "residence" is not synonymous with "domicile."
One may reside in a place apart from one's legal residence, without changing
domicile, and that residence would constitute "actual residence" for purposes of
determining venue.
In passing, it must be noted that petitioner is not a lawyer, and it may be
instructive for him to consult counsel before filing pleadings or praying for results
that have no legal basis, if for purposes of clarity alone. As for his prayer that
respondent Atty. Calasan be disbarred, this petition is not the proper remedy for
such. Should he still wish to pursue such an action, he must follow the proper
procedure, which would grant respondent Atty. Calasan due process. The fact
that petitioner, who is not an attorney, was allowed to plead his case before this
Court does not exempt him from proper procedure, which would put opposing
lawyers at an unfair disadvantage.
WHEREFORE, premises considered, the questioned November 21, 2002
Resolution of the CA in CA-G.R. SP No. 70335 is hereby REVERSED and SET
ASIDE and its August 12, 2002 Decision is REINSTATED and AFFIRMED.
Consequently, the February 26, 2002 Order of the Aparri, Cagayan RTC, Branch
8, dismissing the complaint in Civil Case No. 08-418, is likewise hereby
AFFIRMED. Costs against respondents. SO ORDERED.
(Ang Kek Chen v. Spouses Calasan, G.R. No. 161685, [July 24, 2007], 555
|||
PHIL 115-127)
SYNOPSIS
In denying the petition, the Supreme Court ruled that petitioner has the obligation
to reimburse respondent. The terms of the parties' contract are clear and
unequivocal. Petitioner gave a warranty as to the ownership of the object of sale
and against any lien and encumbrance. A tax liability was then a potential lien
upon NSCP's marine vessels. Being in bad faith for having failed to inform
respondent of such potential lien, petitioner breached its warranty and should,
therefore, be held liable for the resulting damage, i.e., reimbursement for the
amounts paid by petitioner to the US IRS. Justice and equity require that
petitioner be held liable for NSCP'S tax liabilities and reimburse respondent for
the amounts it paid. It would be unjust enrichment on the part of petitioner to be
relieved of the obligation.
SYLLABUS
DECISION
SANDOVAL-GUTIERREZ, J : p
Before us is a petition for review on certiorari 1 assailing the Decision of the Court
of Appeals dated May 21, 2001 in CA-G.R. CV No. 66026, affirming with
modification the Decision dated August 6, 1999 of the Regional Trial Court,
Branch 62, Makati City, in Civil Case No. 96-558 for sum of money and damages.
The factual antecedents are:
The National Development Company, petitioner, is a government-owned and
controlled corporation created and existing under Commonwealth Act No. 182,
as amended by Presidential Decree No. 1648.
The National Shipping Corporation of the Philippines (NSCP) is a wholly-
owned subsidiary of petitioner offering shipping services for containerized cargo
between the Far East ports and the U.S. West Coast. 2
On March 1, 1993, petitioner's Board of Directors approved the privatization plan
of the NSCP. 3 In May 1993, the Board offered for sale to the public its one
hundred percent (100%) stock ownership in NSCP worth P150,000.00, as well as
its three (3) ocean-going vessels (M/V National Honor,
M/VNational Pride and M/V National Dignity). 4
Consequently, petitioner released to the public an Information
Package 5 containing NSCP's background, assets, operational and financial
status. Attached thereto is NSCP's Financial Statements covering the period from
December 1990 up to 1992. SDIaCT
"SO ORDERED." 22
The Court of Appeals held:
"We concur with the trial court in ordering defendant-appellant (now
petitioner) to reimburse plaintiff-appellee (now respondent) the
deficiency taxes it paid to the US IRS, and quote with favor its well-
written ratiocination as follows:
'In its effort to extricate itself from liability, defendant further
argues that the sale with the plaintiff was on 'CASH, AS-WHERE-
IS' basis and that plaintiff, as an offeror, was responsible for
informing itself with respect to any and all conditions regarding the
NSCP shares and vessels which may in any manner affect the
offer price or the nature of offeror's proposal (Exhs. 8, 8-A to A-B).
'The above-mentioned contracts form part of the NSCP's
Negotiated Sale Guidelines dated March 1993 prepared by NSCP
and required by NDC (now petitioner) to be attached with the
Proposal Letter Form, which was also prepared by NSCP, and
submitted to NDC by bidders. These contracts are ready-made
form of contracts, the preparation of which was left entirely to the
NSCP. Their nature is that of a contract of adhesion. A contract of
adhesion may be struck down as void and unenforceable, for
being subversive of public policy, when the weaker party is
imposed upon in dealing with the dominant bargaining party and
is reduced to the alternative of taking it or leaving it, completely
deprived of the opportunity to bargain on equal footing (Saludo,
Jr. vs. Court of Appeals, 207 SCRA 498 [1992]). In the case at
bar, the acceptance of the Negotiated Sale Guidelines and
submission thereof together with the Proposal Letter Form by a
prospective buyer is a required formality of the bidding. Under the
circumstance, the plaintiff, in taking such contracts, may not be
deemed to have been given the opportunity to bargain on equal
footing.'" 23
Petitioner now comes to us via the instant petition, ascribing to the Court of
Appeals the following error:
"THE COURT OF APPEALS ERRED IN CONCURRING WITH THE
TRIAL COURT IN ORDERING HEREIN PETITIONER TO REIMBURSE
RESPONDENT THE DEFICIENCY TAXES IT PAID TO THE US IRS." 24
Petitioner contends that contrary to the findings of both lower courts, the
Negotiated Sale Guidelines and the Proposal Letter Form are mere invitations to
bid. As such, they are not contracts and should be treated as mere offer or
proposal to prospective buyers of the NSCP shares and marine vessels. 25
Petitioner further stresses that the sale was on an "AS IS, WHERE IS"
basis. 26 By accepting the terms and conditions of the sale, respondent, in effect,
accepted the risk of an "AS IS, WHERE IS" arrangement wherein the latter is
charged with caution under the principle of caveat emptor. 27 Pursuant to the
Negotiated Sale Guidelines and the Proposal Letter Form, respondent should
have apprised itself of the financial status and liabilities of NSCP and its marine
vessels. Therefore, for its predicament, respondent should not fault petitioner. 28
For its part, respondent maintains that the Court of Appeals did not commit any
error in its challenged Decision. The Negotiated Sale Guidelines and the
Proposal Letter Form constitute a contract of adhesion because the buyer was
required to submit its bid through a pro forma proposal letter. 29The offer to
bidders was on a "take it, or leave it" basis, leaving no room for argument or
negotiation, except as to the price. 30 Being a contract of adhesion, it should be
strictly construed against the seller, herein petitioner. 31
Respondent also contends that under Articles 19, 32 20 33 and 21 34 of the Civil
Code, petitioner had then the legal duty to disclose its tax liabilities. Records
show that respondent repeatedly inquired from petitioner about such
matter. 35 Instead of telling the truth, petitioner made several assurances that the
NSCP was a clean, lien-free going concern and profitable entity. 36 In fact, under
Section 7.01 of the Negotiated Sale Guidelines, petitioner made a warranty
against any lien or encumbrance. 37 CHATcE