SECOND DIVISION

[G.R. No. 131175. August 28, 2001.]

SPOUSES JOVITO VALENZUELA and NORMA VALENZUELA, SPOUSES ALFREDO QUIAZON and BELLA GONZALES
QUIAZON, SPOUSES EDUARDO DE GUZMAN and JULIETA DE GUZMAN, DE GUZMAN DEVELOPMENT
CORPORATION, SKYFREIGHT BROKERAGE, INC., ATTY. ROMULO R. BOBADILA and WEB-HEGG CONSTRUCTION
RESOURCES, INCORPORATED, Petitioners, v. HONORABLE COURT OF APPEALS and SPOUSES MANUEL T. DE GUIA
and LETICIA MARIANO DE GUIA and the REGISTER OF DEEDS OF PARAAQUE CITY, METRO
MANILA, Respondents.
DECISION

BUENA, J.:

In resolving the propriety of the amendment of the complaint in the present case, which motion to amend was filed after the
lapse of fifteen years from the filing of the initiatory pleading sought to be amended, this Court painstakingly considered not
only the peculiar circumstances obtaining, but also accorded premium to the legal truism that "adjective law is not the
counterfoil of substantive law" and that the rules of procedure must not be perverted into engines of injustice. 1
Sought to be reversed in the instant petition for review on certiorari is the decision 2 of the Court of Appeals dated 15 August
1997 in C.A. G.R. SP. No. 44185, which nullified and set aside the orders dated 11 November 1996 3 and 06 February 1997
of the Regional Trial Court (RTC) of Pasay City, Branch 231, in Civil Case No. PQ-9412-P. The subject orders of the RTC
denied private respondents motion to admit amended complaint dated 18 March 1997.
Similarly impugned is the resolution 4 of the Court of Appeals dated 24 October 1997, denying private respondents motion
for reconsideration.
The factual antecedents and proceedings unfold.
On 10 September 1981, herein private respondents spouses Manuel and Leticia De Guia filed a complaint for specific
performance and damages docketed as Civil Case No. PQ-9412-P 5 against herein petitioners spouses Jovito and Norma
Valenzuela before the then Court of First Instance of Rizal in Pasay City. The complaint prayed, among others, that the
Spouses Valenzuela be ordered to execute in favor of private respondents the necessary deed of sale covering the two (2)
parcels of land allegedly subject of a contract to sell between said parties.
On 16 September 1981, private respondents spouses De Guia, upon discovering that the subject real properties were sold
and transferred by the spouses Valenzuela to herein co-petitioners spouses Alfredo and Bella Gonzales Quiazon, filed Civil
Case No. PQ 9432-P 6 for annulment of sale, cancellation of title and damages, against spouses Valenzuela, spouses
Quiazon, and the Register of Deeds of Pasay City. In the complaint, private respondents spouses De Guia prayed specifically
for the annulment of the deed of sale executed by the spouses Valenzuela in favor of the spouses Quiazon, cancellation of
TCT Nos. 39396 and 39397 in the name of spouses Quiazon, and the reinstatement of TCT No. 39142 in the name of the
spouses Valenzuela, or in the alternative, the reconveyance of the subject properties by the spouses Quiazon to spouses
Valenzuela.
On 13 October 1981, private respondents spouses De Guia amended their complaint in Civil Case No. PQ-9432-P impleading
Webb-Hegg Construction Resources, Inc. as additional defendant.
On 19 January 1983, spouses De Guia filed in Civil Case No. PQ-9432-P a Motion to Admit Second Amended Complaint
impleading as additional defendant Gerardo Villacorta. Prior to the resolution of such pending motion, Civil Case No. PQ9432-P was transferred to the Regional Trial Court of Makati, Branch 133 pursuant to the Judiciary Reorganization Law (B.P.
Blg. 129). As a result of the transfer of the case, Civil Case No. PQ-9432-P was redocketed as Civil Case No. 2723.
On 20 May 1983, the RTC of Makati, Branch 133 issued an order admitting the second amended complaint. Upon motion of
the defendants therein, however, Civil Case No. 2723 was returned to. RTC-Pasay, where herein private respondents spouses
De Guia filed a motion to admit third amended complaint seeking to implead spouses De Guzman, De Guzman Development
Corporation, Skyfreight Brokerage, Inc. and Lawyer Romeo Bobadilla, as additional defendants.
On 30 May 1984, the RTC-Pasay issued an omnibus order 7 denying the motion to admit the third amended complaint and
declaring as automatically vacated the order of RTC-Makati, Branch 133, which admitted the second amended complaint.
Upon denial of their motion for reconsideration, private respondents spouses De Guia then filed a petition for certiorari and
prohibition before the appellate court, docketed as CA G.R. SP. No. 04518.
chanrob1es v irt ua1 1aw 1 ibra ry

On 27 March 1990, after a preliminary hearing on the affirmative defenses of pendency of another action and splitting a
cause of action, the lower court issued an order dismissing the complaint in Civil Case No. PQ-9432-P. Private respondents
spouses De Guia appealed the dismissal of said case before the Court of Appeals which on 30 March 1994, affirmed the

dismissal order of the lower court. Aggrieved, private respondents spouses De Guia filed a petition before the Supreme Court
assailing the decision of the Court of Appeals.
In a Resolution dated 24 July 1995, the High Court dismissed the petition for having been filed beyond the reglementary
period. Private respondents moved to reconsider, which motion the Supreme Court denied via a resolution dated 30
September 1995.
Upon motion of spouses Quiazon in Civil Case Nos. PQ-9412-P and PQ-9432-P, the lower court issued an order dated 17
January 1996 directing the cancellation of the Notice of Lis Pendens under Entry No. 81-11596 and Entry No. 81-12186 and
the Adverse Claim under Entry No. 81-11601 on TCT Nos. 39386 and 39397 in the name of spouses Quiazon. On 02
February 1996, private respondents sought to reconsider the trial courts order.
On 18 March 1996, private respondents filed a motion to admit amended complaint in Civil Case No. PQ-9412-P. Prior to the
resolution of the two pending motions, private respondents filed a motion for the inhibition of the presiding judge of Branch
117, RTC-Pasay. In an order dated 17 April 1996, the court granted the motion for inhibition resulting in the re-raffle of Civil
Case No. PQ-9412-P to Branch 231, presided by Judge Cesar Z. Ylagan.
In an order dated 11 November 1996, Judge Ylagan denied the motion to admit amended complaint prompting herein private
respondents spouses De Guia to file a motion for reconsideration which the lower court denied.
Private respondents elevated the lower courts order denying the motion to admit amended complaint to the Court of
Appeals.
On 15 August 1997, the Court of Appeals rendered the assailed decision the decretal portion of which declares:

jgc:c hanro bles. c om.ph

"WHEREFORE, the instant petition for certiorari and mandamus is hereby GRANTED. Consequently, the orders dated
November 11, 1996 and February 6, 1997 are SET ASIDE and respondent is ordered to admit petitioners amended complaint
dated March 18,1997."
cralaw virtua 1aw lib rary

On 05 November 1997, the RTC-Pasay, Branch 231 issued an order 8 admitting the amended complaint, pursuant to the
decision of the Court of Appeals dated 15 August 1997. Herein petitioners filed with the lower court a manifestation with
motion to reconsider 9 to the effect that they would file a "petition for review on certiorari" before the Supreme Court, to
which manifestation private respondents filed an opposition. Petitioners then filed a reply to the opposition after which the
lower court, in an order dated 23 January, decreed "that the admission of the amended complaint and service of summons
are hereby held in abeyance until after the Supreme Court has resolved the case before it which has effectively placed this
court on notice."
cralaw virtua 1aw lib rary

On 17 December 1997, herein petitioners filed the instant petition where this Court is tasked in the main to resolve the
propriety of the amendment of the complaint in Civil Case No. PQ-9412-P. Petitioners argue, among others, that the
amendment should not be allowed inasmuch as the introduction of amendments to the complaint in Civil Case No. PQ-9412-P
would, in effect, "radically and substantially change the cause of action and theory" of the case.
chanrob1es vi rt ua1 1aw 1i bra ry

The Court sanctions the amendment of the complaint and resolves to strike down the petition. At the this point, a review of
the pertinent provisions regarding amendments is in order. Section 1, Rule 10 of the 1997 Rules of Civil Procedure explicitly
provides:
jg c:chan roble s.com.p h

"SECTION 1. Amendment in general. Pleadings may be amended by adding or striking out an allegation or the name of any
party, or by correcting a mistake in the name of a party or a mistaken or inadequate allegation or description in any other
respect, so that the actual merits of the controversy may speedily be determined, without regard to technicalities, and in the
most expeditious and inexpensive manner." (Emphasis ours)
Equally important is Section 3, Rule 10 of the Rules:

jgc:cha nro bles. com.ph

"SECTION 3. Amendments by leave of court. Except as provided in the next preceding section, substantial amendments may
be made only upon leave of court. But such leave may be refused if it appears to the court that the motion was made with
intent to delay. Orders of the court upon the matters provided in this section shall be made upon motion filed in court, and
after notice to the adverse party, and an opportunity to be heard."
cralaw virt ua1aw li bra ry

Petitioners contend that the foregoing provisions of the 1997 Rules of Civil Procedure cannot be applied in the case at bar.
We do not agree. Elementary is the rule in this jurisdiction that one does not have a vested right in procedural rules, thus:

jgc:chanro bles. com.ph

"Statutes regulating the procedure of courts will be considered as applicable to actions pending and undetermined at the time
of their passage. Procedural laws are retroactive in that sense and to that extent. The fact that procedural statutes may
somehow affect the litigants rights may not preclude their retroactive application to pending actions. The retroactive
application of procedural laws is not violative of any right of a person who may feel that he is adversely affected. Nor is the
retroactive application of procedural statutes constitutionally objectionable. The reason is that as a general rule, no vested
right may attach to, nor arise from procedural laws. It has been held that "a person has no vested right in any particular
remedy, and a litigant cannot insist on the application to the trial of his case, whether civil or criminal, of any other than the
existing rules of procedure." 10 (Emphasis ours)

Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil Procedure 11 amended the former rule 12 in such manner that the
phrase "or that the cause of action or defense is substantially altered" was stricken-off and not retained in the new rules. The
clear import of such amendment in Section 3, Rule 10 is that under the new rules, "the amendment may (now) substantially
alter the cause of action or defense." 13 This should only be true, however, when despite a substantial change or alteration
in the cause of action or defense, the amendments sought to be made shall serve the higher interests of substantial justice,
and prevent delay and equally promote the laudable objective of the rules which is to secure a "just, speedy and inexpensive
disposition of every action and proceeding.
Thus, granting arguendo that the amendment of the complaint in Civil Case No. PQ-9432-P would substantially alter or
change the cause of action or defense in said controversy, this Court nonetheless holds that in the higher interest of
substantial justice, the introduction of amendments to the complaint is apropos at this particular instance to forestall further
delay in the resolution of the actual merits of the parties respective claims and defenses. To reiterate, the Rules of Court
seek to eliminate undue reliance on technical rules and to make litigation as inexpensive, as practicable and as convenient as
can be done. 14 Rules of procedure, after all, are but tools designed to facilitate the attainment of justice, such that when
rigid application of the rules tends to frustrate rather than promote substantial justice, the Supreme Court is empowered to
suspend their operation. 15 This Court will not hesitate to set aside technicalities in favor of what is fair and just. 16
chanro b1es vi rt ua1 1aw 1i bra ry

As the records would readily reveal, the instant case Civil Case No. PQ-9412-P has already dragged and suffered
protracted delay for a span of twenty years, borne by countless legal skirmishes between the party litigants involving
principally entanglement on technical niceties and procedural rules. In fact, the procedural incidents and interlocutory
matters relating to this controversy, to wit, Civil Case No. PQ-9412-P and its related case Civil Case No. PQ-9432-P, have
reached no less than the portals of this Court at least twice first, as to the specific issue of the propriety of admission of a
third amended complaint in Civil Case No. PQ-9432 and second, as to the particular query on the validity of the dismissal of
Civil Case No. PQ-9432-P, on the ground of litis pendentia.
By and large, due to the multifarious procedural incidents involving these two suits, albeit issues concededly not to be
outrightly dismissed as less important, the actual merits of the controversy have yet to reach their full adjudication,
resolution and determination. Under these circumstances, particularly considering the dismissal of Civil Case No. PQ-9432-P
on ground of litis pendentia, the disallowance of the amendment of the complaint in Civil Case No. PQ-9412-P would, to our
mind, necessarily result in an even greater delay in the disposition and adjudication of the actual merits of the case, which
run counter to the hallowed office and cardinal objective of the Rules to provide, at each possible instance, an expeditious
and full resolution of issues involving the respective rights and liabilities of the parties under substantive law.
True enough, the delay that has so characterized the adjudication of the merits of this case which original complaint was
filed practically two decades ago has not escaped the attention of this Court. Thus, in the interest of substantial justice,
this Court allows the introduction of amendments to the complaint in Civil Case No. PQ-9412-P so as to afford the partylitigants the full and genuine opportunity to substantiate their respective claims and defenses and for the trial court to finally
resolve the matters relating to the merits of the case.
Besides, the defendants sought to be impleaded in Civil Case No. PQ-9412-P are not left without justifiable recourse. To this
end, the law in no uncertain terms provide for the necessary legal implements and the adoption of effective means and
defenses sanctioned by the Rules, wherein both parties in the controversy may very well advance and protect their
respective legal interests. By sanctioning the introduction of amendments to the complaint, the issues shall at last be viewed,
so to speak, in the clear light of day and substantial matters therein shall not anymore be lost in the abyss of technicalities
and procedural jargon.
On this matter, the discourse of the Court of Appeals is elucidating:

jgc: chan robles. com.ph

"With the dismissal of Civil Case No. PQ-9432-P in which petitioners (herein private respondents spouses De Guia) seek the
annulment of the sale made by spouses Valenzuela in favor of spouses Quiazon, complete relief could be obtained by
petitioners only by the admission of the amended complaint. Without the amendment, a favorable judgment for petitioners
would be meaningless, if not futile, as the properties covered by the contract to sell which they seek to enforce had already
been sold to spouses Quiazon, who are among those sought to be impleaded as additional defendants in the amended
complaint.
". . . The inquiry should be as to whether or not the amendment is necessary to enable the parties, particularly petitioners, to
obtain complete relief in just one proceeding. As above stated, the non-inclusion of spouses Quiazon and others who may
have acquired rights or interest in the properties in question will render the relief originally sought in Civil Case No. PQ-9412P incomplete without the sale or transfer to spouses Quiazon being nullified; hence, the need for the amendment. . . .
chanrob1es vi rtua 1 1aw 1ib rary

". . . Needless to state, the court is of the considered opinion that admission of the amended complaint is not only necessary
to afford complete relief to the parties; it will also forestall any further need to institute other actions or proceedings arising
from the transaction subject matter of Civil Case No. PQ-9412-P. . . ."
cralaw virtua1aw li bra ry

Inasmuch as herein private respondents, in its amended complaint, likewise pray for reconveyance of the real property,
considering that the subject parcels of land were transferred in the name of spouses Quiazon who notably were not
impleaded in the original complaint in Civil Case No. PQ-9412-P, it bears to stress that "owners of property over which
reconveyance is asserted are indispensable parties without whom no relief is available and without whom the court can

render no valid judgment." 17

Additionally, petitioners stubbornly maintain that the principle of res judicata, specifically the doctrine of conclusiveness of
judgment, should find application in the instant case so as to preclude the court from resolving anew the propriety of the
amendment in Civil Case No. PQ-9412-P, which issue, according to petitioner, was previously passed upon and determined in
Civil Case No. PQ-9432-P.
The contention is without basis. Res judicata, either in the concept of bar by former judgment or conclusiveness of judgment,
cannot be applied to the present case.
In Vda. De Cruzo v. Carriaga, Jr., 18 this Court speaking through Mr. Justice Florenz Regalado, inked an enlightening
discourse on the subject:
jgc:cha nrob les.com .ph

"The doctrine of res judicata thus lays down two main rules which may be stated as follows: 1) The judgment or decree of a
court of competent jurisdiction on the merits concludes the parties and their privies to the litigation and constitutes a bar to a
new action or suit involving the same cause of action either before the same or any other tribunal; and 2) Any right, fact, or
matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court in
which a judgment or decree is rendered on the merits is conclusively settled by the judgment therein and cannot again be
litigated between the parties and their privies whether or not the claim or demand, purpose or subject matter of the two
suits is the same. These two main rules mark the distinction between the principles governing the two typical cases in which
a judgment may operate as evidence. In speaking of these cases, the first general rule above stated, and which corresponds
to the aforequoted paragraph (b) of Section 49, is referred to as bar by former judgment while the second general rule,
which is embodied in paragraph (c) of the same section, is known as conclusiveness of judgment.
"Stated otherwise, when we speak of res judicata in its concept as a bar by former judgment. the judgment rendered in the
first case is an absolute bar to the subsequent action wince said judgment is conclusive not only as to the matters offered
and received to sustain that judgment but also as to any other matter which might have been offered for that purpose and
which could have been adjudged therein. This is the concept in which the term res judicata is more commonly and generally
used and in which it is understood as the bar by prior judgment constituting a ground for a motion to dismiss in civil cases.
"On the other hand, the less familiar concept or less terminological usage of res judicata as a rule on conclusiveness of
judgment refers to the situation where the judgment in the prior action operates as an estoppel only as to the matters
actually determined therein or which were necessarily included therein. Consequently, since other admissible and relevant
matters which the parties in the second action could properly offer are not concluded by the said judgment, the same is not a
bar to or a ground for dismissal of the second action.
chanrob1es vi rtua1 1aw 1ib rary

"At bottom, the other elements being virtually the same, the fundamental difference between the rule of res judicata as a bar
by former judgment and as merely a rule on the conclusiveness of judgment is that, in the first, there is an identity in the
cause of action in both cases involved whereas, in the second, the cause of action in the first case is different from that in the
second case." (Emphasis ours)
Proceeding from the foregoing disquisition, the principle of res judicata, requires the concurrence of the following requisites:
19
"a) The former judgment or order must be final;
"b) It must be a judgment or order on the merits, that is, it was rendered after a consideration of the evidence or stipulations
submitted by the parties at the trial of the case;
"c) It must have been rendered by a court having jurisdiction over the subject matter and the parties; and
"d) There must be, between the first and second actions, identity of parties, of subject matter and of cause of action. This
requisite is satisfied if the two actions are substantially between the same parties." (Emphasis ours)
For want of the second requisite, to wit, that the judgment must be rendered on the merits, the instant case is thus removed
from the operation of the principle of res judicata. Stated differently, if the judgment is not on the merits, it cannot be
considered as a conclusive adjudication of the controversy. Consequently, a judgment dismissing an action for want of
jurisdiction, or because of the pendency of another action between the same parties and for the same cause, or a judgment
absolving a defendant because he was not served with summons, or a dismissal on the ground of misjoinder cannot operate
as res adjudicata on the merits. 20
To this end, it must be noted that the dismissal of Civil Case No. PQ-9432-P was due to litis pendentia or the pendency of
another action, obviously referring to Civil Case No. PQ-9412-P. Applying the foregoing doctrines, the judgment dismissing
Civil Case No. PQ-9432-P, on the ground of litis pendentia, cannot be considered an adjudication on the merits. 21 Clearly
then, res judicata cannot apply.
WHEREFORE, premises considered, the assailed decision of the Court of Appeals in C.A. G.R. SP. No. 44185 is AFFIRMED and
the instant petition is DENIED for lack of merit. Accordingly, the Regional Trial Court of Pasay City Branch 231, is hereby
ordered to admit herein private respondents amended complaint in Civil Case No. PQ-9412-P, to issue the necessary

summons to all impleaded defendants therein and to resolve the case with dispatch.
SO ORDERED.

chanro b1es vi rtua1 1aw 1ib rary

SECOND DIVISION
[G.R. No. 108538. January 22, 1996.]
LOURDES A. VALMONTE and ALFREDO D. VALMONTE, Petitioners, v. THE HONORABLE COURT OF APPEALS,
THIRD DIVISION and ROSITA DIMALANTA, Respondents.
chanroblesvirtuallawlibrar y

Alfredo D. Valmonte and Cirilo E. Doronia, for Petitioners.

Balgos & Perez, for Private Respondent.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; SUMMONS; SERVICE REQUIRED IN ACTION IN PERSONAM. In an action in
personam, personal service of summons or, if this is not possible and he cannot be personally served, substituted service, as
provided in Rule 14, 7-8 is essential for the acquisition by the court of jurisdiction over the person of a defendant who does
not voluntarily submit himself to the authority of the court. If defendant cannot be served with summons because he is
temporarily abroad, but otherwise he is a Philippine resident, service of summons may, by leave of court, be made by
publication. Otherwise stated, a resident defendant in an action in personam, who cannot be personally served with
summons, may be summoned either by means of substituted service in accordance with Rule 14, 8 or by publication as
provided in 17 and 18 of the same Rule.
2. ID.; ID.; ID.; ID.; DEFENDANT MUST BE RESIDENT OF PHILIPPINES. In all of these cases, it should be noted,
defendant must be a resident of the Philippines, otherwise an action in personam cannot be brought because jurisdiction over
his person is essential to make a binding decision.
3. ID.; ID.; ACTION IN REM; NON-RESIDENT DEFENDANT MAY BE SERVED WITH SUMMONS EXTERRITORIALLY. On the
other hand, if the action is in rem or quasi in rem, jurisdiction over the person of the defendant is not essential for giving the
court jurisdiction so long as the court acquires jurisdiction over the res. If the defendant is a nonresident and he is not found
in the country, summons may be served exterritorially in accordance with Rule 14, 17. In such cases, what gives the court
jurisdiction in an action in rem or quasi in rem is that it has jurisdiction over the res, i.e. the personal status of the plaintiff
who is domiciled in the Philippines or the property litigated or attached.
4. ID.; ID.; ID.; ID.; PURPOSE. Service of summons in the manner provided in 17 is not for the purpose of vesting it
with jurisdiction but for complying with the requirements of fair play or due process, so that he will be informed of the
pendency of the action against him and the possibility that property in the Philippines belonging to him or in which he has an
interest may be subjected to a judgment in favor of the plaintiff and he can thereby take steps to protect his interest if he is
so minded.
5. ID.; ID.; ID.; ID.; MODES. As petitioner Lourdes A. Valmonte is a nonresident who is not found in the Philippines,
service of summons on her must be in accordance with Rule 14, 17. Such service, to be effective outside the Philippines,
must be made either (1) by personal service; (2) by publication in a newspaper of general circulation in such places and for
such time as the court may order, in which case a copy of the summons and order of the court should be sent by registered
mail to the last known address of the defendant; or (3) in any other manner which the court may deem sufficient.
6. ID.; ID.; ID.; ID.; ID.; SERVICE OF SUMMONS ON DEFENDANTS HUSBAND AND COUNSEL IN PHILIPPINES, NOT VALID.
Since in the case at bar, the service of summons upon petitioner Lourdes A. Valmonte was not done by means of any of
the first two modes, the question is whether the service on her attorney, petitioner Alfredo D. Valmonte, can be justified
under the third mode, namely, "in any . . . manner the court may deem sufficient." We hold it cannot. This mode of service,
like the first two, must be made outside the Philippines, such as through the Philippine Embassy in the foreign country where
the defendant resides. Moreover, there are several reasons why the service of summons on Atty. Alfredo A. Valmonte cannot
be considered a valid service of summons on petitioner Lourdes A. Valmonte. In the first place, service of summons on
petitioner Alfredo D. Valmonte was not made upon the order of the court as required by Rule 14, 17 and certainly was not
a mode deemed sufficient by the court which in fact refused to consider the service to be valid and on that basis declare
petitioner Lourdes A. Valmonte in default for her failure to file an answer. In the second place, service in the attempted
manner on petitioner was not made upon prior leave of the trial court as required also in Rule 14, 17. As provided in 19,
such leave must be applied for by motion in writing, supported by affidavit of the plaintiff or some person on his behalf and
setting forth the grounds for the application.

DECISION

MENDOZA, J.:

Petitioner Lourdes A. Valmonte is a foreign resident. The question is whether in an action for partition filed against her and
her husband, who is also her attorney, summons intended for her may be served on her husband, who has a law office in the
Philippines. The Regional Trial Court of Manila, Branch 48, said no and refused to declare Lourdes A. Valmonte in default, but
the Court of Appeals said yes. Hence this petition for review on certiorari.
The facts of the case are as follows:

cha nro b1es vi rtua l 1aw lib ra ry

Petitioners Lourdes A. Valmonte and Alfredo D. Valmonte are husband and wife. They are both residents of 90222 Carkeek
Drive South Seattle, Washington, U.S.A. Petitioner Alfredo D. Valmonte, who is a member of the Philippine bar, however,
practices his profession in the Philippines, commuting for this purpose between his residence in the state of Washington and
Manila, where he holds office at S-304 Gedisco Centre, 1564 A. Mabini Ermita, Manila.
chanrob lesvi rtua llawli bra ry

On March 9, 1992, private respondent Rosita Dimalanta, who is the sister of petitioner Lourdes A. Valmonte, filed a complaint
for partition of real property and accounting of rentals against petitioners Lourdes A. Valmonte and Alfredo D. Valmonte
before the Regional Trial Court of Manila, Branch 48. The subject of the action is a three-door apartment located in Paco,
Manila.
In her Complaint, private respondent alleged:

c han rob1es v irt ual 1aw l ibra ry

The plaintiff is of legal age, a widow and is at present a resident of 14823 Conway Road, Chesterfield, Missouri, U.S.A., while
the defendants are spouses, of legal age and at present residents of 90222 Carkeek Drive, South Seattle, Washington,
U.S.A., but, for purposes of this complaint may be served with summons at Gedisco Center, Unit 304, 1564 A. Mabini St.,
Ermita, Manila where defendant Alfredo D. Valmonte as defendant Lourdes Arreola Valmontes spouse holds office and where
he can be found.
chanroblesvi rtua l|awlib rary

Apparently, the foregoing averments were made on the basis of a letter previously sent by petitioner Lourdes A. Valmonte to
private respondents counsel in which, in regard to the partition of the property in question, she referred private respondents
counsel to her husband as the party to whom all communications intended for her should be sent. The letter reads:
chan rob1e s virtual 1aw l ibra ry

July 4, 1991
Dear Atty. Balgos:

chan rob1es v irt ual 1aw li bra ry

This is in response to your letter, dated 20 June 1991, which I received on 3 July 1991. Please address all communications to
my lawyer, Atty. Alfredo D. Valmonte, whose address, telephone and fax numbers appear below.
cha nrob lesvi rtua llawlib ra ry

c/o Prime Marine

Gedisco Center, Unit 304
1564 A. Mabini, Ermita
Metro Manila
Telephone: 521-1736
Fax: 521-2095
Service of summons was then made upon petitioner Alfredo D. Valmonte, who at the time, was at his office in Manila.
Petitioner Alfredo D. Valmonte accepted the summons, insofar as he was concerned, but refused to accept the summons for
his wife, Lourdes A. Valmonte, on the ground that he was not authorized to accept the process on her behalf. Accordingly the
process server left without leaving a copy of the summons and complaint for petitioner Lourdes A. Valmonte.
Petitioner Alfredo D. Valmonte thereafter filed his Answer with Counterclaim. Petitioner Lourdes A. Valmonte, however, did
not file her Answer. For this reason private respondent moved to declare her in default. Petitioner Alfredo D. Valmonte
entered a special appearance in behalf of his wife and opposed the private respondents motion.
chanroble svirtual|awl ibra ry

In its Order dated July 3, 1992, the trial court, denied private respondents motion to declare petitioner Lourdes A. Valmonte
in default. A motion for reconsideration was similarly denied on September 23, 1992. Whereupon, private respondent filed a
petition for certiorari, prohibition and mandamus with the Court of Appeals.
On December 29, 1992, the Court of Appeals rendered a decision granting the petition and declaring Lourdes A. Valmonte in
default. A copy of the appellate courts decision was received by petitioner Alfredo D. Valmonte on January 15, 1993 at his
Manila office and on January 21, 1993 in Seattle, Washington. Hence, this petition.
The issue at bar is whether in light of the facts set forth above, petitioner Lourdes A. Valmonte was validly served with
summons. In holding that she had been, the Court of Appeals stated: 1
chanro blesv irt uallawl ibra ry

[I]n her above-quoted reply, Mrs. Valmonte clearly and unequivocally directed the aforementioned counsel of Dimalanta to

address all communications (evidently referring to her controversy with her sister Mrs. Dimalanta over the Paco property,
now the subject of the instant case) to her lawyer who happens also to be her husband. Such directive was made without
any qualification just as was her choice/designation of her husband Atty. Valmonte as her lawyer likewise made without any
qualification or reservation. Any disclaimer therefore on the part of Atty. Valmonte as to his being his wifes attorney (at least
with regard to the dispute vis-a-vis (sic) the Paco property) would appear to be feeble or trifling, if not incredible.
This view is bolstered by Atty. Valmontes subsequent alleged special appearance made on behalf of his wife. Whereas Mrs.
Valmonte had manifestly authorized her husband to serve as her lawyer relative to her dispute with her sister over the Paco
property and to receive all communications regarding the same and subsequently to appear on her behalf by way of a socalled special appearance, she would nonetheless now insist that the same husband would nonetheless had absolutely no
authority to receive summons on her behalf. In effect, she is asserting that representation by her lawyer (who is also her
husband) as far as the Paco property controversy is concerned, should only be made by him when such representation would
be favorable to her but not otherwise. It would obviously be inequitable for this Court to allow private respondent Lourdes A.
Valmonte to hold that her husband has the authority to represent her when an advantage is to be obtained by her and to
deny such authority when it would turn out to be her disadvantage. If this be allowed, Our Rules of Court, instead of being
an instrument to promote justice would be made use of to thwart or frustrate the same.
x

Turning to another point, it would not do for Us to overlook the fact that the disputed summons was served not upon just an
ordinary lawyer of private respondent Lourdes A. Valmonte, but upon her lawyer husband. But that is not all, the same
lawyer/husband happens to be also her co-defendant in the instant case which involves real property which, according to her
lawyer/husband/co-defendant, belongs to the conjugal partnership of the defendants the spouses Valmonte). It is highly
inconceivable and certainly it would be contrary to human nature for the lawyer/husband/co-defendant to keep to himself the
fact that they (the spouses Valmonte) had been sued with regard to a property which he claims to be conjugal.
Parenthetically, there is nothing in the records of the case before Us regarding any manifestation by private respondent
Lourdes A. Valmonte about her lack of knowledge about the case instituted against her and her lawyer/husband/codefendant by her sister Rosita. . . .
chanroble s.com : vi rtual lawlib rary

PREMISES CONSIDERED, the instant petition for certiorari, prohibition and mandamus is given due course. This Court hereby
Resolves to nullify the orders of the court a quo dated July 3, 1992 and September 23, 1992 and further declares private
respondent Lourdes Arreola Valmonte as having been properly served with summons.
Petitioners assail the aforequoted decision, alleging that the Court of Appeals erred (1) in refusing to apply the provisions of
Rule 14, 17 of the Revised Rules of Court and applying instead Rule 14, 8 when the fact is that petitioner Lourdes A.
Valmonte is a nonresident defendant; and (2) because even if Rule 14, 8 is the applicable provision, there was no valid
substituted service as there was no strict compliance with the requirement by leaving a copy of the summons and complaint
with petitioner Alfredo D. Valmonte. Private respondent, upon the other hand, asserts that petitioners are invoking a
technicality and that strict adherence to the rules would only result in a useless ceremony.
We hold that there was no valid service of process on Lourdes A. Valmonte.
To provide perspective, it will be helpful to determine first the nature of the action filed against petitioners Lourdes A.
Valmonte and Alfredo D. Valmonte by private respondent, whether it is an action in personam, in rem or quasi in rem. This is
because the rules on service of summons embodied in Rule 14 apply according to whether an action is one or the other of
these actions.
In an action in personam, personal service of summons or, if this is not possible and he cannot be personally served,
substituted service, as provided in Rule 14, 7-8 2 is essential for the acquisition by the court of jurisdiction over the
person of a defendant who does not voluntarily submit himself to the authority of the court. 3 If defendant cannot be served
with summons because he is temporarily abroad, but otherwise he is a Philippine resident, service of summons may, by leave
of court, be made by publication. 4 Otherwise stated, a resident defendant in an action in personam, who cannot be
personally served with summons, may be summoned either by means of substituted service in accordance with Rule 14, 8 or
by publication as provided in 17 and 18 of the same Rule. 5
In all of these cases, it should be noted, defendant must be a resident of the Philippines, otherwise an action in persona
cannot be brought because jurisdiction over his person is essential to make a binding decision.
On the other hand, if the action is in rem or quasi in rem, jurisdiction over the person of the defendant is not essential for
giving the court jurisdiction so long as the court acquires jurisdiction over the res. If the defendant is a nonresident and he is
not found in the country, summons may be served exterritorially in accordance with Rule 14, 17, which provides:
chan roblesv irtuallawl ib rary

17. Extraterritorial service. When the defendant does not reside and is not found in the Philippines and the action affects
the personal status of the plaintiff or relates to, or the subject of which is, property within the Philippines, in which the
defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in
excluding the defendant from any interest therein, or the property of the defendant has been attached within the Philippines,
service may, by leave of court, be effected out of the Philippines by personal service as under section 7; or by publication in
a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the

summons and order of the court shall be sent by registered mail to the last known address of the defendant, or in any other
manner the court may deem sufficient. Any order granting such leave shall specify a reasonable time, which shall not be less
than sixty (60) days after notice, within which the defendant must answer.
In such cases, what gives the court jurisdiction in an action in rem or quasi in rem is that it has jurisdiction over the res, i.e.
the personal status of the plaintiff who is domiciled in the Philippines or the property litigated or attached.
Service of summons in the manner provided in 17 is not for the purpose of vesting it with jurisdiction but for complying with
the requirements of fair play or due process, so that he will be informed of the pendency of the action against him and the
possibility that property in the Philippines belonging to him or in which he has an interest may be subjected to a judgment in
favor of the plaintiff and he can thereby take steps to protect his interest if he is so minded. 6
chan roble svirtual|awli bra ry

Applying the foregoing rules to the case at bar, private respondents action, which is for partition and accounting under Rule
69, is in the nature of an action quasi in rem. Such an action is essentially for the purpose of affecting the defendants
interest in a specific property and not to render a judgment against him. As explained in the leading case of Banco Espaol
Filipino v. Palanca: 7
[An action quasi in rem is] an action which while not strictly speaking an action in rem partakes of that nature and is
substantially such. . . . The action quasi in rem differs from the true action in rem in the circumstance that in the former an
individual is named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or lien
burdening the property. All proceedings having for their sole object the sale or other disposition of the property of the
defendant, whether by attachment, foreclosure, or other form of remedy, are in a general way thus designated. The
judgment entered in these proceedings is conclusive only between the parties.
As petitioner Lourdes A. Valmonte is a nonresident who is not found in the Philippines, service of summons on her must be in
accordance with Rule 14, 17. Such service, to be effective outside the Philippines, must be made either (1) by personal
service; (2) by publication in a newspaper of general circulation in such places and for such time as the court may order, in
which case a copy of the summons and order of the court should be sent by registered mail to the last known address of the
defendant; or (3) in any other manner which the court may deem sufficient.
chanrob lesvi rtua l|awlib rary

Since in the case at bar, the service of summons upon petitioner Lourdes A. Valmonte was not done by means of any of the
first two modes, the question is whether the service on her attorney, petitioner Alfredo D. Valmonte, can be justified under
the third mode, namely, "in any . . . manner the court may deem sufficient."
cralaw virt ua1aw lib rary

We hold it cannot. This mode of service, like the first two, must be made outside the Philippines, such as through the
Philippine Embassy in the foreign country where the defendant resides. 8 Moreover, there are several reasons why the
service of summons on Atty. Alfredo D. Valmonte cannot be considered a valid service of summons on petitioner Lourdes A.
Valmonte. In the first place, service of summons on petitioner Alfredo D. Valmonte was not made upon the order of the court
as required by Rule 14, 17 and certainly was not a mode deemed sufficient by the court which in fact refused to consider
the service to be valid and on that basis declare petitioner Lourdes A. Valmonte in default for her failure to file an answer.
In the second place, service in the attempted manner on petitioner was not made upon prior leave of the trial court as
required also in Rule 14, 17. As provided in 19, such leave must be applied for by motion in writing, supported by
affidavit of the plaintiff or some person on his behalf and setting forth the grounds for the application.
chan roblesv irt uallawl ibra ry

Finally, and most importantly, because there was no order granting such leave, petitioner Lourdes A. Valmonte was not given
ample time to file her Answer which, according to the rules, shall be not less than sixty (60) days after notice. It must be
noted that the period to file an Answer in an action against a resident defendant differs from the period given in an action
filed against a nonresident defendant who is not found in the Philippines. In the former, the period is fifteen (15) days from
service of summons, while in the latter, it is at least sixty (60) days from notice.
Strict compliance with these requirements alone can assure observance of due process. That is why in one case, 9 although
the Court considered Publication in the Philippines of the summons (against the contention that it should be made in the
foreign state where defendant was residing) sufficient, nonetheless the service was considered insufficient because no copy
of the summons was sent to the last known correct address in the Philippines.
Private respondent cites the ruling in De Leon v. Hontanosas, 67 SCRA 458, 462-463 (1975), in which it was held that
service of summons upon the defendants husband was binding on her. But the ruling in that case is justified because
summons were served upon defendants husband in their conjugal home in Cebu City and the wife was only temporarily
absent, having gone to Dumaguete City for a vacation. The action was for collection of a sum of money. In accordance with
Rule 14, 8, substituted service could be made on any person of sufficient discretion in the dwelling place of the defendant,
and certainly defendants husband, who was there, was competent to receive the summons on her behalf. In any event, it
appears that defendant in that case submitted to the jurisdiction of the court by instructing her husband to move for the
dissolution of the writ of attachment issued in that case.
chanrob les.co m : virt ual lawli bra ry

On the other hand, in the case of Gemperle v. Schenker, 10 it was held that service on the wife of a nonresident defendant
was found sufficient because the defendant had appointed his wife as his attorney-in-fact. It was held that although
defendant Paul Schenker was a Swiss citizen and resident of Switzerland, service of summons upon his wife Helen Schenker
who was in the Philippines was sufficient because she was her husbands representative and attorney-in-fact in a civil case,

which he had earlier filed against William Gemperle. In fact Gemperles action was for damages arising from allegedly
derogatory statements contained in the complaint filed in the first case. As this Court said," [i]n other words, Mrs. Schenker
had authority to sue, and had actually sued, on behalf of her husband, so that she was, also, empowered to represent him in
suits filed against him, particularly in a case, like the one at bar, which is a consequence of the action brought by her on his
behalf." 11 Indeed, if instead of filing an independent action Gemperle filed a counterclaim in the action brought by Mr.
Schenker against him, there would have been no doubt that the trial court could have acquired jurisdiction over Mr. Schenker
through his agent and attorney-in-fact, Mrs. Schenker.
In contrast, in the case at bar, petitioner Lourdes A. Valmonte did not appoint her husband as her attorney-in-fact. Although
she wrote private respondents attorney that "all communications" intended for her should be addressed to her husband who
is also her lawyer at the latters address in Manila, no power of attorney to receive summons for her can be inferred
therefrom. In fact the letter was written seven months before the filing of this case below, and it appears that it was written
in connection with the negotiations between her and her sister, respondent Rosita Dimalanta, concerning the partition of the
property in question. As is usual in negotiations of this kind, the exchange of correspondence was carried on by counsel for
the parties. But the authority given to petitioners husband in these negotiations certainly cannot be construed as also
including an authority to represent her in any litigation.
For the foregoing reasons, we hold that there was no valid service on petitioner Lourdes A. Valmonte in this case.
WHEREFORE, the decision appealed from is REVERSED and the orders dated July 3, 1992 and September 23, 1992 of the
Regional Trial Court of Manila, Branch 48 are REINSTATED.
SO ORDERED.

EN BANC
[G.R. No. 103200. August 31, 1994.]
LA NAVAL DRUG CORPORATION, Petitioner, v. THE HONORABLE COURT OF APPEALS and WILSON C.
YAO, Respondents.

SYLLABUS

1. REMEDIAL LAW; REPUBLIC ACT NO. 876; ARBITRATORS, HOW GOVERNED; CASE AT BAR. Arbitration, in particular, is
governed by a special law, Republic Act 876, suppletory to which are laws and rules of general application. This case before
us concerns the jurisdiction of courts, in relation to the provisions of Section 6 of Republic Act No. 876, and, in that respect,
the applicability of the doctrine of estoppel.
2. ID.; CIVIL PROCEDURE; JURISDICTION OVER THE PERSON; LACK OF; DEFENSE THEREOF, HOW WAIVED. The lack of
jurisdiction over the person of the defendant may be waived either expressly or impliedly. When a defendant voluntarily
appears, he is deemed to have submitted himself to the jurisdiction of the court. If he so wishes not to waive this defense,
he must do so seasonably by motion for the purpose of objecting to the jurisdiction of the court; otherwise, he shall be
deemed to have submitted himself to that jurisdiction. The decisions promulgated heretofore by this Court would likewise
seemingly apply estoppel to bar the defendant from pursuing that defense by alleging in his answer any other issue for
dismissing the action.
3. ID.; ID.; ID.; ID.; ESTOPPEL; INVOKED ONLY IN HIGHLY EXCEPTIONAL CASES. The doctrine of estoppel is predicated
on, and has its origin in, equity which, broadly defined, is justice according to natural law and right. It is a principle intended
to avoid a clear case of injustice. The term is hardly distinguishable from a waiver of right. Estoppel, like its said counterpart,
must be unequivocal and intentional for, when misapplied, it can easily become a most convenient and effective means of
injustice. Estoppel is not understood to be a principle that, as a rule, should prevalently apply but, such as it concededly is,
as a mere exception from the standard legal norms of general application that can be invoked only in highly exceptional and
justifiable cases.
4. ID.; ID.; ID.; ID.; ID.; ASSERTION OF AFFIRMATIVE DEFENSE ALONG WITH OBJECTION TO COURTS JURISDICTION
OVER THE PERSON, NOT A CASE OF. The submission of other issues in a motion to dismiss, or of an affirmative defense
(as distinguished from an affirmative relief) in an answer, would necessarily foreclose, and have the effect of a waiver of, the
right of a defendant to set up the courts lack of jurisdiction over the person of the defendant. . . . In the same manner that a
plaintiff may assert two or more causes of action in a court suit, a defendant is likewise expressly allowed, under Section 2,
Rule 8, of the Rules of Court, to put up his own defenses alternatively or even hypothetically. Indeed, under Section 2, Rule
9, of the Rules of Court, defenses and objections not pleaded either in a motion to dismiss or in an answer, except for the
failure to state a cause of action, are deemed waived. We take this to mean that a defendant may, in fact, feel enjoined to
set up, along with his objection to the courts jurisdiction over his person, all other possible defenses. It thus appears that it
is not the invocation of any of such defenses, but the failure to so raise them, that can result in waiver or estoppel. By
defenses, of course, we refer to the grounds provided for in Rule 16 of the Rules of Court that must be asserted in a motion
to dismiss or by way of affirmative defenses in an answer.
5. ID.; ID.; JURISDICTION OVER THE SUBJECT MATTER, LACK OF; EFFECTS THEREOF. Lack of jurisdiction over the
subject matter of the suit is yet another matter. Whenever it appears that the court has no jurisdiction over the subject
matter, the action shall be dismissed (Section 2, Rule 9, Rules of Court). This defense may be interposed at any time, during
appeal (Roxas v. Rafferty, 37 Phil. 957) or even after final judgment (Cruzcosa v. Judge Concepcion, Et Al., 101 Phil. 146).
Such is understandable, as this kind of jurisdiction is conferred by law and not within the courts, let alone the parties, to
themselves determine or conveniently set aside.
6. ID.; ID.; JURISDICTION OVER THE NATURE OF THE ACTION, LACK OF; EFFECTS THEREOF. Lack of jurisdiction over the
nature of the action is the situation that arises when a court, which ordinarily would have the authority and competence to
take a case, is rendered without it either because a special law has limited the exercise of its normal jurisdiction on a
particular matter or because the type of action has been reposed by law in certain other courts or quasi-judicial agencies for
determination. Nevertheless, it can hardly be questioned that the rules relating to the effects of want of jurisdiction over the
subject matter should apply with equal vigor to cases where the court is similarly bereft of jurisdiction over the nature of the
action.
7. ID.; ID.; ID.; ID.; CASE AT BENCH. In the case at bench, the want of jurisdiction by the court is indisputable, given the
nature of the controversy. The arbitration law explicitly confines the courts authority only to pass upon the issue of whether
there is or there is no agreement in writing providing for arbitration. In the affirmative, the statute ordains that the court
shall issue an order "summarily directing the parties to proceed with the arbitration in accordance with the terms thereof." If
the court, upon the other hand, finds that no such agreement exists, "the proceeding shall be dismissed." The proceedings
are summary in nature.
8. ID.; ID.; SUMMARY OF RULES RELATING TO EFFECTS OF WANT OF JURISDICTION BY THE COURT. In summary, it is
our considered view, as we now so hereby express, that (1) Jurisdiction over the person must be seasonably raised, i.e.,

that it is pleaded in a motion to dismiss or by way of an affirmative defense in an answer. Voluntary appearance shall be
deemed a waiver of this defense. The assertion, however, of affirmative defenses shall not be construed as an estoppel or as
a waiver of such defense. (2) Where the court itself clearly has no jurisdiction over the subject matter or the nature of the
action, the invocation of this defense may be done at any time. It is neither for the courts nor the parties to violate or
disregard that rule, let alone to confer that jurisdiction, this matter being legislative in character. Barring highly meritorious
and exceptional circumstances, such as hereinbefore exemplified, neither estoppel nor waiver shall apply.

DECISION

VITUG, J.:

In an effort to declog the courts of an increasing volume of work load and, most importantly, in order to accord contending
parties with expeditious alternatives for settling disputes, the law authorizes, indeed discourages, out of court settlements or
adjudications. Compromises and arbitration are widely known and used as such acceptable methods of resolving adversarial
claims.
Arbitrations, in particular, is governed by a special law, Republic Act 876, suppletory to which are laws and rules of general
application. This case before us concerns the jurisdiction of courts, in relation to the provisions of Section 6 of Republic Act
No. 876, and, in that respect, the applicability of the doctrine of estoppel. The law (R.A. 876), specifically Section 6 thereof,
provides:
c han robles v irt ual lawl ibra ry

"Sec. 6. Hearing by court. A party aggrieved by the failure, neglect or refusal of another to perform under an agreement in
writing providing for arbitration may petition the court for an order directing that such arbitration proceed in the manner
provided for in such agreement. Five days notice in writing of the hearing of such application shall be served either
personally or by registered mail upon the party in default. The court shall hear the parties, and upon being satisfied that the
making of the agreement or such failure to comply therewith is not in issue, shall make an order directing the parties to
proceed to arbitration in accordance with the terms of the agreement. If the making of the agreement or default be in issue
the court shall proceed to summarily hear such issue. If the finding be that no agreement in writing providing for arbitration
was made, or that there is no default in the proceeding thereunder, the proceeding shall be dismissed. If the finding be that
a written provision for arbitration was made and there is a default in proceeding thereunder, an order shall be made
summarily directing the parties to proceed with the arbitration in accordance with the terms thereof.
"The court shall decide all motions, petitions or application filed under the provisions of this Act, within ten days after such
motions, petitions, or applications have been heard by it."
cralaw virt ua1aw lib ra ry

In chronology, the events that have led to the case at bench are detailed in the appealed decision of respondent appellate
court, which we here reproduce in toto.
"Original action for Certiorari and Prohibition for Annulment of the Orders, dated April 26, 1990 and June 22, 1990,
respectively, of Branch LXI, Regional Trial Court, Angeles City, in Special Case No. 6024 for Enforcement of ARBITRATION
Agreement with Damages. Petitioner assails that portion of subject Order of April 26, 1990, stating as follows:
jgc:chanrob les.com .ph

"(1) Petitioners claim for damages predicated on alleged tortuous acts of respondents La Naval Drug corporation such as
their alleged interference and dilatory tactics, etc. in the implementation of the Arbitration Agreement in the Contract of
Lease, thereby compelling among others the petitioner to go to Court for redress; and respondent La Naval Drug
Corporations counterclaim for damages may be entertained by this Court in a hearing - not summary - for the purpose,
under the Rules of Court.
(2) A preliminary hearing of the special and affirmative defense to show that Petitioner has no cause of action against
respondents claim for damages is denied; a resolution on this issue deferred after the trial of the case on the merits.
And challenges the Order of June 22, 1990 denying its motion for reconsideration of the said earlier Order.
"From the petition below of respondent Yao, it appears that he is the present owner of a commercial building a portion of
which is leased to petitioner under a contract of lease executed on December 23, 1983 with the former owner thereof, La
Proveedora, Inc., which contract expired on April 30, 1989. However, petitioner exercised its option to lease the same
building for another five years. But petitioner and respondent Yao disagreed on the rental rate, and to resolve the
controversy, the latter, thru written notices to the former, expressed his intention to submit their disagreement to
arbitration, in accordance with Republic Act 876, otherwise known as the Arbitration Law, and paragraph 7 of their lease
contract, providing that:
jgc:chanrob les.com. ph

"7. . . . Should the parties fail to agree on the rate of rentals, the same shall be submitted to a group of Arbitrators
composed of three (3) members, one to be appointed by LESSOR, another by LESSEE and the third one to be agreed upon
by the two arbitrators previously chosen and the parties hereto shall submit to the decision of the arbitrators.

"Thus, on May 6, 1989, respondent Yao appointed Domingo Alamarez, Jr. as his arbitrator, while on June 5, 1989, petitioner
chose Atty. Casiano Sabile as its arbitrator. The confirmation of the appointment of Aurelio Tupang, as third arbitrator, was
held in abeyance because petitioner instructed Atty. Sabile to defer the same until its Board of Directors could convene and
approve Tupangs appointment. Respondent Yao theorizes that this was petitioners design to delay the arbitration
proceedings, in violation of the Arbitration Law, and the governing stipulations of their contract of lease.
"On the basis of the aforesaid allegations, respondent Yao prayed that after summary hearing pursuant to Section 6 of the
Arbitration Law, Atty. Casiano Sabile and Domingo Alamarez be directed to proceed with the arbitration in accordance with
Section 7 of subject Contract of Lease and the applicable provisions of the Arbitration Law, by appointing and confirming the
appointment of the Third Arbitrator; and that the Board of Three Arbitrators be ordered to immediately convene and resolve
the controversy before it, pursuant to Section 12 and the succeeding sections of the Arbitration Law. (Annex A, Petition.).
"In its Answer with Counterclaim (Annex C, Petition), petitioner here specifically denied the averments of the petition below;
theorizing that such petition is premature since respondent Yao has not yet formally required arbitrators Alamarez and Sabile
to agree on the third arbitrator, within ten (10) days from notice, and that the delay in the arbitration was due to respondent
Yaos failure to perform what is incumbent upon him, of notifying and thereafter, requiring both arbitrators to appoint the
third member of the Board of Arbitrators. According to petitioner, it actually gave arbitrators Sabile and Alamarez a free hand
in choosing the third arbitrator; and, therefore, respondent Yao has no cause of action against it (petitioner). By way of
Counterclaim, petitioner alleged that it suffered actual damages of P100,000.00; and incurred attorneys fees of P50,000.00,
plus P500.00 for every court appearance of its counsel.
"On October 20, 1989, respondent Yao filed an amended petition for Enforcement of Arbitration Agreement with Damages;
praying that petitioner be ordered to pay interest on the unpaid rents, at the prevailing rate of interest in commercial banks,
and exemplary damages of at least P250,000.00.
"On October 24, 1989, despite petitioners opposition to the motion to admit the amended petition, the respondent court
admitted the same.
"On October 31, 1989, petitioner answered the amended petition; contending, among others, that the amended petition
should be dismissed on the ground of non-payment of the requisite filing fees therefor; and it being in the nature of an
ordinary civil action, a full blown and regular trial is necessary; so that respondent Yaos proposition for a summary hearing
of the arbitration issue and separate trial for his claim for damages is procedurally untenable and implausible.
"Invoking Section 5, Rule 16 of the Rules of Court, petitioner presented a Motion to Set Case for Preliminary Hearing of its
special and affirmative defenses, which are grounds for a motion to dismiss.
"In its Order of November 14, 1989, the respondent court announced that the two arbitrators chose Mrs. Eloisa R. Narciso as
the third arbitrator. And on November 21, 1989, it ordered the parties to submit their position papers on the issue as to
whether or not respondent Yaos claim for damages may be litigated upon in the summary proceeding for enforcement of
arbitration agreement. It likewise informed the parties that petitioners Motion to Set Case for Preliminary Hearing of Special
and Affirmative Defenses would be resolved together with the question of damages.
"On April 26, 1990, the aforequoted assailed Order issued. In moving for reconsideration of the said Order, petitioner argued
that in Special Case No. 6024, the respondent court sits as a special court exercising limited jurisdiction and is not competent
to act on respondent Yaos claim for damages, which poses an issue litigable in an ordinary civil action. But the respondent
court was not persuaded by petitioners submission. On June 22, 1990, it denied the motion for reconsideration." (Rollo, pp.
89-93).
While the appellate court has agreed with petitioner that, under Section 6 of Republic Act No. 876, a court, acting within the
limits of its special jurisdiction, may in this case solely determine the issue of whether the litigants should proceed or not to
arbitration, it, however, considered petitioner in estoppel from questioning the competence of the court to additionally hear
and decide in the summary proceedings private respondents claim for damages, it (petitioner) having itself filed similarly its
own counterclaim with the court a quo.
chanrobles law lib rary

It is hardly disputable that when a court is called upon to exercise limited and special jurisdiction, that court cannot stray to
matters outside the area of its declared authority or beyond what has been expressly invested by law (Elumbaring v.
Elumbaring, 12 Phil. 384, 387), particularly, such as in this instance, where the proceedings are summary in nature.
Prefatorily, recalling the distinctions, pertinent to the case, between the courts lack of jurisdiction over the person of the
defendant, on the one hand, and its lack of jurisdiction over the subject matter or the nature of the action, upon the other
hand, should be useful.
The lack of jurisdiction over the person of the defendant may be waived either expressly or impliedly. When a defendant
voluntarily appears, he is deemed to have submitted himself to the jurisdiction of the court. If he so wishes not to waive this
defense, he must do so seasonably by motion for the purpose of objecting to the jurisdiction of the court; otherwise, he shall
be deemed to have submitted himself to that jurisdiction. The decisions promulgated heretofore by this Court would likewise
seemingly apply estoppel to bar the defendant from pursuing that defense by alleging in his answer any other issue for
dismissing the action.

A citation of a few of our decisions might be apropos.

In Wang Laboratories, Inc., v. Mendoza (156 SCRA 44), this Court has ruled that if the defendant, besides setting up in a
motion to dismiss his objection to the jurisdiction of the court, alleges at the same time any other ground for dismissing the
action, he is deemed to have submitted himself to the jurisdiction of the court. In the process, it has equated the matter to a
situation where, such as in Immaculata v. Judge Navarro, Et. Al. (146 SCRA 5), the defendant invokes an affirmative relief
against his opponent.
In De Midgely v. Judge Ferandos (64 SCRA 23, 31), the Court elaborated thusly:

jgc:chanrob les.co m.ph

"We are of the opinion that the lower court has acquired jurisdiction over the person of Mrs. Midgely by reason of her
voluntary appearance. The reservation in her motion to dismiss that she was making a special appearance to contest the
courts jurisdiction over her person may be disregarded.
"It may be disregarded because it was nullified by the fact that in her motion to dismiss she relied not only on the ground of
lack of jurisdiction over her person but also on the ground that there was no showing that earnest efforts were exerted to
compromise the case and because she prayed for such other relief as may be deemed appropriate and proper.
"x

"When the appearance is by motion for the purpose of objecting to the jurisdiction of the court over the person, it must be
for the sole and separate purpose of objecting to the jurisdiction of the court. If his motion is for any other purpose than to
object to the jurisdiction of the court over his person, he thereby submits himself to the jurisdiction of the court. A special
appearance by motion made for the purpose of objecting to the jurisdiction of the court over the person will be held to be a
general appearance, if the party in said motion should, for example, ask for a dismissal of the action upon the further ground
that the court had no jurisdiction over the subject matter. (Syllabus, Flores v. Zurbito, supra, at page 751. That rule was
followed in Ocampo v. Mina and Arejola, 41 Phil. 308)."
cralaw virt ua1aw lib rary

The justification for the rule was expressed in Republic v. Ker and Company, Ltd. (18 SCRA 207, 213-214), in this wise:

chan roble s lawli bra ry : rednad

"We observe that the motion to dismiss filed on April 14, 1962, aside from disputing the lower courts jurisdiction over
defendants person, prayed for dismissal of the complaint on the ground that plaintiffs cause of action has prescribed. By
interposing such second ground in its motion to dismiss, Ker & Co., Ltd. availed of an affirmative defense on the basis of
which it prayed the court to resolve controversy in its favor. For the court to validly decide the said plea of defendant Ker &
Co., Ltd., it necessarily had to acquire jurisdiction upon the latters person, who, being the proponent of the affirmative
defense, should be deemed to have abandoned its special appearance and voluntarily submitted itself to the jurisdiction of
the court.
"Voluntary appearance cures defects of summons, if any. Such defect, if any, was further cured when defendant filed its
answer to the complaint. A defendant can not be permitted to speculate upon the judgment of the court by objecting to the
courts jurisdiction over its person if the judgment is adverse to it, and acceding to jurisdiction over its person if and when
the judgment sustains its defenses."
cralaw virt ua1aw lib rary

The doctrine of estoppel is predicated on, and has its origin in, equity which, broadly defined, is justice according to natural
law and right. It is a principle intended to avoid a clear case of injustice. The term is hardly distinguishable from a waiver of
right. Estoppel, like its said counterpart, must be unequivocal and intentional for, when misapplied, it can easily become a
most convenient and effective means of injustice. Estoppel is not understood to be a principle that, as a rule, should
prevalently apply but, such as it concededly is, as a mere exception from the standard legal norms of general application that
can be invoked only in highly exceptional and justifiable cases.
Tested by the above criteria, the Court sees it propitious to re-examine specifically the question of whether or not the
submission of other issues in a motion to dismiss, or of an affirmative defense (as distinguished from an affirmative relief) in
an answer, would necessarily foreclose, and have the effect of a waiver of, the right of a defendant to set up the courts lack
of jurisdiction over the person of the defendant.
chanrobles law l ibra ry : red

Not inevitably.
Section 1, Rule 16, of the Rules of Court, provides that a motion to dismiss may be made on the following grounds:

jgc:chan roble s.com.p h

"(a) That the court has no jurisdiction over the person of the defendant or over the subject of the action or suit;
"(b) That the court has no jurisdiction over the nature of the action or suit;
"(c) The venue is improperly laid;
"(d) That the plaintiff has no legal capacity to sue;
"(e) That there is another action pending between the same parties for the same cause;

"(f) That the cause of action is barred by a prior judgment or by statute of limitations;
"(g) That the complaint states no cause of action;
"(h) That the claim or demand set forth in the plaintiffs pleading has been paid, waived, abandoned, or otherwise
extinguished;
"(i) That the claim on which the action or suit is founded is unenforceable under the provisions of the statute of frauds;
"(j) That the suit is between members of the same family and no earnest efforts towards a compromise have been made."

cralaw virtua 1aw lib rary

Any ground for dismissal in a motion to dismiss, except improper venue, may, as further set forth in Section 5 of the same
rule, be pleaded as an affirmative defense and a preliminary hearing may be had thereon as if a motion to dismiss had been
filed. An answer itself contains the negative, as well as affirmative, defenses upon which the defendant may rely (Section 4,
Rule 6, Rules of Court). A negative defense denies the material facts averred in the complaint essential to establish the
plaintiffs cause of action, while an affirmative defense is an allegation of a new matter which, while admitting the material
allegations of the complaint, would, nevertheless, prevent or bar recovery by the plaintiff. Inclusive of these defenses are
those mentioned in Rule 16 of the Rules of Court which would permit the filing of a motion to dismiss.
chan robles law lib rary

In the same manner that a plaintiff may assert two or more causes of action in a court suit, a defendant is likewise expressly
allowed, under Section 2, Rule 8, of the Rules of Court, to put up his own defenses alternatively or even hypothetically.
Indeed, under Section 2, Rule 9, of the Rules of Court, defenses and objections not pleaded either in a motion to dismiss or
in an answer, except for the failure to state a cause of action, are deemed waived. We take this to mean that a defendant
may, in fact, feel enjoined to set up, along with his objection to the courts jurisdiction over his person, all other possible
defenses. It thus appears that it is not the invocation of any of such defenses, but the failure to so raise them, that can result
in waiver or estoppel. By defenses, of course, we refer to the grounds provided for in Rule 16 of the Rules of Court that must
be asserted in a motion to dismiss or by way of affirmative defenses in an answer.
Mindful of the foregoing, in Signetics Corporation v. Court of Appeals and Freuhauf Electronics Phil., Inc. (225 SCRA 737,
738), we lately ruled:
jg c:chan rob les.com. ph

"This is not to say, however, that the petitioners right to question the jurisdiction of the court over its person is now to be
deemed a foreclosed matter. If it is true, as Signetics claims, that its only involvement in the Philippines was through a
passive investment in Sigfil, which it even later disposed of, and that TEAM Pacific is not its agent, then it cannot really be
said to be doing business in the Philippines. It is a defense, however, that requires the contravention of the allegations of the
complaint, as well as a full ventilation, in effect, of the main merits of the case, which should not thus be within the province
of a mere motion to dismiss. So, also, the issue posed by the petitioner as to whether a foreign corporation which has done
business in the country, but which has ceased to do business at the time of the filing of a complaint, can still be made to
answer for a cause of action which accrued while it was doing business, is another matter that would yet have to await the
reception and admission of evidence. Since these points have seasonably been raised by the petitioner, there should be no
real cause for what may understandably be its apprehension, i.e., that by its participation during the trial on the merits, it
may, absent an invocation of separate or independent reliefs of its own, be considered to have voluntarily submitted itself to
the courts jurisdiction."
cralaw vi rt ua1aw lib ra ry

Lack of jurisdiction over the subject matter of the suit is yet another matter. Whenever it appears that the court has no
jurisdiction over the subject matter, the action shall be dismissed (Section 2, Rule 9, Rules of Court). This defense may be
interposed at any time, during appeal (Roxas v. Rafferty, 37 Phil. 957) or even after final judgment (Cruzcosa v. Judge
Concepcion, Et Al., 101 Phil. 146). Such is understandable, as this kind of jurisdiction is conferred by law and not within the
courts, let alone the parties, to themselves determine or conveniently set aside. In People v. Casiano (111 Phil. 73, 93-94),
this Court, on the issue of estoppel, held:
chan robles. com:c ralaw:red

"The operation of the principle of estoppel on the question of jurisdiction seemingly depends upon whether the lower court
actually had jurisdiction or not. If it had no jurisdiction, but the case was tried and decided upon the theory that it had
jurisdiction, the parties are not barred, on appeal, from assailing such jurisdiction, for the same must exist as a matter of
law, and may not be conferred by consent of the parties or by estoppel (5 C.J.S., 861-863).
However, if the lower court had jurisdiction, and the case was heard and decided upon a given theory, such, for instance, as
that the court had no jurisdiction, the party who induced it to adopt such theory will not be permitted, on appeal, to assume
an inconsistent position that the lower court had jurisdiction. Here, the principle of estoppel applies. The rule that
jurisdiction is conferred by law, and does not depend upon the will of the parties, has no bearing thereon."
cralaw virt ua1aw li bra ry

The rule was reiterated in Calimlim v. Ramirez (118 SCRA 399, 406), and quite recently, in Southeast Asian Fisheries
Development Center-Aquaculture Department v. National Labor Relations Commission (206 SCRA 283).
Jurisdiction over the nature of the action, in concept, differs from jurisdiction over the subject matter. Illustrated, lack of
jurisdiction over the nature of the action is the situation that arises when a court, which ordinarily would have the authority
and competence to take a case, is rendered without it either because a special law has limited the exercise of its normal
jurisdiction on a particular matter or because the type of action has been reposed by law in certain other courts or quasijudicial agencies for determination. Nevertheless, it can hardly be questioned that the rules relating to the effects of want of

jurisdiction over the subject matter should apply with equal vigor to cases where the court is similarly bereft of jurisdiction
over the nature of the action.
chanrob les.com: cralaw: red

In summary, it is our considered view, as we now so hereby express, that

(1) Jurisdiction over the person must be seasonably raised, i.e., that it is pleaded in a motion to dismiss or by way of an
affirmative defense in an answer. Voluntary appearance shall be deemed a waiver of this defense. The assertion, however, of
affirmative defenses shall not be construed as an estoppel or as a waiver of such defense.
(2) Where the court itself clearly has no jurisdiction over the subject matter or the nature of the action, the invocation of this
defense may be done at any time. It is neither for the courts nor the parties to violate or disregard that rule, let alone to
confer that jurisdiction, this matter being legislative in character. Barring highly meritorious and exceptional circumstances,
such as hereinbefore exemplified, neither estoppel nor waiver shall apply.
In the case at bench, the want of jurisdiction by the court is indisputable, given the nature of the controversy. The arbitration
law explicitly confines the courts authority only to pass upon the issue of whether there is or there is no agreement in
writing providing for arbitration. In the affirmative, the statute ordains that the court shall issue an order "summarily
directing the parties to proceed with the arbitration in accordance with the terms thereof." If the court, upon the other hand,
finds that no such agreement exists, "the proceeding shall be dismissed." The proceedings are summary in nature.
All considered, the court a quo must then refrain from taking up the claims of the contending parties for damages, which,
upon the other hand, may be ventilated in separate regular proceedings at an opportune time and venue. The circumstances
obtaining in this case are far, we hold, from justifying the application of estoppel against either party.
chan roble svirtualawl ibra ry

WHEREFORE, the decision of the Court of Appeals and the orders of the trial court in question are SET ASIDE. The court a
quo, in the instant proceedings, is ordered to DESIST from further hearing private respondents claim, as well as petitioners
counterclaim, for damages. No costs.
SO ORDERED.

THIRD DIVISION
[G.R. No. 136426. August 6, 1999.]
E.B. VILLAROSA & PARTNER CO., LTD., Petitioner, v. HON. HERMINIO I. BENITO, in his capacity as Presiding
Judge, RTC, Branch 132, Makati City and IMPERIAL DEVELOPMENT CORPORATION, Respondent.
DECISION

GONZAGA-REYES, J.:

Before this Court is a petition for certiorari and prohibition with prayer for the issuance of a temporary restraining order
and/or writ of preliminary injunction seeking to annul and set aside the Orders dated August 5, 1998 and November 20,
1998 of the public respondent Judge Herminio I. Benito of the Regional Trial Court of Makati City, Branch 132 and praying
that the public respondent court be ordered to desist from further proceeding with Civil Case No. 98-824.
chanro bles vi rtua lawlib rary chan roble s.com:c hanro bles. com.ph

Petitioner E.B. Villarosa & Partner Co., Ltd. is a limited partnership with principal office address at 102 Juan Luna St., Davao
City and with branch offices at 2492 Bay View Drive, Tambo, Paraaque, Metro Manila and Kolambog, Lapasan, Cagayan de
Oro City. Petitioner and private respondent executed a Deed of Sale with Development Agreement wherein the former agreed
to develop certain parcels of land located at Barrio Carmen, Cagayan de Oro belonging to the latter into a housing
subdivision for the construction of low cost housing units. They further agreed that in case of litigation regarding any dispute
arising therefrom, the venue shall be in the proper courts of Makati.
On April 3, 1998, private respondent, as plaintiff, filed a Complaint for Breach of Contract and Damages against petitioner, as
defendant, before the Regional Trial Court of Makati allegedly for failure of the latter to comply with its contractual obligation
in that, other than a few unfinished low cost houses, there were no substantial developments therein. 1
Summons, together with the complaint, were served upon the defendant, through its Branch Manager Engr. Wendell
Sabulbero at the stated address at Kolambog, Lapasan, Cagayan de Oro City 2 but the Sheriffs Return of Service 3 stated
that the summons was duly served "upon defendant E.B. Villarosa & Partner Co., Ltd. thru its Branch Manager Engr.
WENDELL SABULBERO on May 5, 1998 at their new office Villa Gonzalo, Nazareth, Cagayan de Oro City, and evidenced by
the signature on the face of the original copy of the summons."
cralaw virtua1 aw lib rary

On June 9, 1998, defendant filed a Special Appearance with Motion to Dismiss 4 alleging that on May 6, 1998, "summons
intended for defendant" was served upon Engr. Wendell Sabulbero, an employee of defendant at its branch office at Cagayan
de Oro City. Defendant prayed for the dismissal of the complaint on the ground of improper service of summons and for lack
of jurisdiction over the person of the defendant. Defendant contends that the trial court did not acquire jurisdiction over its
person since the summons was improperly served upon its employee in its branch office at Cagayan de Oro City who is not
one of those persons named in Section 11, Rule 14 of the 1997 Rules of Civil Procedure upon whom service of summons may
be made.
Meanwhile, on June 10, 1998, plaintiff filed a Motion to Declare Defendant in Default 5 alleging that defendant has failed to
file an Answer despite its receipt allegedly on May 5, 1998 of the summons and the complaint, as shown in the Sheriffs
Return.
On June 22, 1998, plaintiff filed an Opposition to Defendants Motion to Dismiss 6 alleging that the records show that
defendant, through its branch manager, Engr. Wendell Sabulbero actually received the summons and the complaint on May
8, 1998 as evidenced by the signature appearing on the copy of the summons and not on May 5, 1998 as stated in the
Sheriffs Return nor on May 6, 1998 as stated in the motion to dismiss; that defendant has transferred its office from
Kolambog, Lapasan, Cagayan de Oro to its new office address at Villa Gonzalo, Nazareth, Cagayan de Oro; and that the
purpose of the rule is to bring home to the corporation notice of the filing of the action.
On August 5, 1998, the trial court issued an Order 7 denying defendants Motion to Dismiss as well as plaintiffs Motion to
Declare Defendant in Default. Defendant was given ten (10) days within which to file a responsive pleading. The trial court
stated that since the summons and copy of the complaint were in fact received by the corporation through its branch
manager Wendell Sabulbero, there was substantial compliance with the rule on service of summons and consequently, it
validly acquired jurisdiction over the person of the defendant.
chanroblesv irtuallaw lib rary

On August 19, 1998, defendant, by Special Appearance, filed a Motion for Reconsideration 8 alleging that Section 11, Rule 14
of the new Rules did not liberalize but, on the contrary, restricted the service of summons on persons enumerated therein;
and that the new provision is very specific and clear in that the word "manager" was changed to "general manager",
"secretary" to "corporate secretary", and excluding therefrom agent and director.
On August 27, 1998, plaintiff filed an Opposition to defendants Motion for Reconsideration 9 alleging that defendants branch
manager "did bring home" to the defendant-corporation the notice of the filing of the action and by virtue of which a motion
to dismiss was filed; and that it was one (1) month after receipt of the summons and the complaint that defendant chose to

file a motion to dismiss.

On September 4, 1998, defendant, by Special Appearance, filed a Reply 10 contending that the changes in the new rules are
substantial and not just general semantics.
Defendants Motion for Reconsideration was denied in the Order dated November 20, 1998. 11
Hence, the present petition alleging that respondent court gravely abused its discretion tantamount to lack or in excess of
jurisdiction in denying petitioners motions to dismiss and for reconsideration, despite the fact that the trial court did not
acquire jurisdiction over the person of petitioner because the summons intended for it was improperly served. Petitioner
invokes Section 11 of Rule 14 of the 1997 Rules of Civil Procedure.
Private respondent filed its Comment to the petition citing the cases of Kanlaon Construction Enterprises Co., Inc. v. NLRC 12
wherein it was held that service upon a construction project manager is valid and in Gesulgon v. NLRC 13 which held that a
corporation is bound by the service of summons upon its assistant manager.
The only issue for resolution is whether or not the trial court acquired jurisdiction over the person of petitioner upon service
of summons on its Branch Manager.
When the complaint was filed by Petitioner on April 3, 1998, the 1997 Rules of Civil Procedure was already in force. 14
Section 11, Rule 14 of the 1997 Rules of Civil Procedure provides that:

jgc:chan roble s.com.p h

"When the defendant is a corporation, partnership or association organized under the laws of the Philippines with a juridical
personality, service may be made on the president, managing partner, general manager, corporate secretary, treasurer, or
in-house counsel." (Emphasis supplied).
This provision revised the former Section 13, Rule 14 of the Rules of Court which provided that:

jgc:chan roble s.com.p h

"SECTION 13. Service upon private domestic corporation or partnership. If the defendant is a corporation organized under
the laws of the Philippines or a partnership duly registered, service may be made on the president, manager, secretary,
cashier, agent, or any of its directors." (Emphasis supplied).
Petitioner contends that the enumeration of persons to whom summons may be served is "restricted, limited and exclusive"
following the rule on statutory construction expressio unios est exclusio alterius and argues that if the Rules of Court Revision
Committee intended to liberalize the rule on service of summons, it could have easily done so by clear and concise language.
We agree with petitioner.
Earlier cases have uphold service of summons upon a construction project manager 15; a corporations assistant manager
16; ordinary clerk of a corporation 17; private secretary of corporate executives 18; retained counsel 19; officials who had
charge or control of the operations of the corporation, like the assistant general manager 20; or the corporations Chief
Finance and Administrative Officer 21 . In these cases, these persons were considered as "agent" within the contemplation of
the old rule. 22 Notably, under the new Rules, service of summons upon an agent of the corporation is no longer
authorized.
chan robles v irt ual lawl ibra ry

The cases cited by private respondent are therefore not in point. In the Kanlaon case, this Court ruled that under the NLRC
Rules of Procedure, summons on the respondent shall be served personally or by registered mail on the party himself; if the
party is represented by counsel or any other authorized representative or agent, summons shall be served on such person.
In said case, summons was served on one Engr. Estacio who managed and supervised the construction project in Iligan City
(although the principal address of the corporation is in Quezon City) and supervised the work of the employees. It was held
that as manager, he had sufficient responsibility and discretion to realize the importance of the legal papers served on him
and to relay the same to the president or other responsible officer of petitioner such that summons for petitioner was validly
served on him as agent and authorized representative of petitioner. Also in the Gesulgon case cited by private respondent,
the summons was received by the clerk in the office of the Assistant Manager (at principal office address) and under Section
13 of Rule 14 (old rule), summons may be made upon the clerk who is regarded as agent within the contemplation of the
rule.
The designation of persons or officers who are authorized to accept summons for a domestic corporation or partnership is
now limited and more clearly specified in Section 11, Rule 14 of the 1997 Rules of Civil Procedure. The rule now states
"general manager" instead of only "manager" ; "corporate secretary" instead of "secretary" ; and "treasurer" instead of
"cashier." The phrase "agent, or any of its directors" is conspicuously deleted in the new rule.
The particular revision under Section 11 of Rule 14 was explained by retired Supreme Court Justice Florenz Regalado, thus:
23
". . . the then Sec. 13 of this Rule allowed service upon a defendant corporation to be made on the president, manager,
secretary, cashier, agent or any of its directors. The aforesaid terms were obviously ambiguous and susceptible of broad and
sometimes illogical interpretations, especially the word agent of the corporation. The Filoil case, involving the litigation

lawyer of the corporation who precisely appeared to challenge the validity of service of summons but whose very appearance
for that purpose was seized upon to validate the defective service is an illustration of the need for this revised section with
limited scope and specific terminology. Thus the absurd result in the Filoil case necessitated the amendment permitting
service only on the in-house counsel of the corporation who is in effect an employee of the corporation, as distinguished from
an independent practitioner." (Emphasis supplied)
Retired Justice Oscar Herrera, who is also a consultant of the Rules of Court Revision Committee, stated that" (T)he rule
must be strictly observed. Service must be made to one named in (the) statute . . ." 24
It should be noted that even prior to the effectivity of the 1997 Rules of Civil Procedure, strict compliance with the rules has
been enjoined. In the case of Delta Motor Sales Corporation v. Mangosing, 25 the Court held:
jgc:cha nro bles. com.ph

"A strict compliance with the mode of service is necessary to confer jurisdiction of the court over a corporation. The officer
upon whom service is made must be one who is named in the statute; otherwise the service is insufficient. . .
The purpose is to render it reasonably certain that the corporation will receive prompt and proper notice in an action against
it or to insure that the summons be served on a representative so integrated with the corporation that such person will know
what to do with the legal papers served on him. In other words, to bring home to the corporation notice of the filing of the
action. . . .
The liberal construction rule cannot be invoked and utilized as a substitute for the plain legal requirements as to the manner
in which summons should be served on a domestic corporation. . ." (Emphasis supplied).
Service of summons upon persons other than those mentioned in Section 13 of Rule 14 (old rule) has been held as improper.
26 Even under the old rule, service upon a general manager of a firms branch office has been held as improper as summons
should have been served at the firms principal office. In First Integrated Bonding & Ins. Co., Inc. v. Dizon, 27 it was held
that the service of summons on the general manager of the insurance firms Cebu branch was improper; default order could
have been obviated had the summons been served at the firms principal office.
And in the case of Solar Team Entertainment, Inc. v. Hon. Helen Bautista Ricafort, Et. Al. 28 the Court succinctly clarified
that, for the guidance of the Bench and Bar, "strictest" compliance with Section 11 of Rule 13 of the 1997 Rules of Civil
Procedure (on Priorities in modes of service and filing) is mandated and the Court cannot rule otherwise, lest we allow
circumvention of the innovation by the 1997 Rules in order to obviate delay in the administration of justice.
chan roble svi rtual|awl ibra ry

Accordingly, we rule that the service of summons upon the branch manager of petitioner at its branch office at Cagayan de
Oro, instead of upon the general manager at its principal office at Davao City is improper. Consequently, the trial court did
not acquire jurisdiction over the person of the petitioner.
The fact that defendant filed a belated motion to dismiss did not operate to confer jurisdiction upon its person. There is no
question that the defendants voluntary appearance in the action is equivalent to service of summons. 29 Before, the rule
was that a party may challenge the jurisdiction of the court over his person by making a special appearance through a
motion to dismiss and if in the same motion, the movant raised other grounds or invoked affirmative relief which necessarily
involves the exercise of the jurisdiction of the court, the party is deemed to have submitted himself to the jurisdiction of the
court. 30 This doctrine has been abandoned in the case of La Naval Drug Corporation v. Court of Appeals, Et Al., 31 which
became the basis of the adoption of a new provision in the former Section 23, which is now Section 20 of Rule 14 of the 1997
Rules. Section 20 now provides that "the inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over
the person of the defendant shall not be deemed a voluntary appearance." The emplacement of this rule clearly underscores
the purpose to enforce strict enforcement of the rules on summons. Accordingly, the filing of a motion to dismiss, whether or
not belatedly filed by the defendant, his authorized agent or attorney, precisely objecting to the jurisdiction of the court over
the person of the defendant can by no means be deemed a submission to the jurisdiction of the court. There being no proper
service of summons, the trial court cannot take cognizance of a case for lack of jurisdiction over the person of the defendant.
Any proceeding undertaken by the trial court will consequently be null and void. 32
WHEREFORE, the petition is hereby GRANTED. The assailed Orders of the public respondent trial court are ANNULLED and
SET ASIDE. The public respondent Regional Trial Court of Makati, Branch 132 is declared without jurisdiction to take
cognizance of Civil Case No. 98-824, and all its orders and issuances in connection therewith are hereby ANNULLED and SET
ASIDE.
SO ORDERED.

FIRST DIVISION
[G.R. No. 91486. January 19, 2001.]
ALBERTO G. PINLAC, ATTY. ERIBERTO H. DECENA, RODOLFO F. REYES, FELIPE BRIONES, JUANITO METILLA, JR.,
FELIPE A. FLORES, HERMINIO ELEVADO, NARCISO S. SIMEROS,Petitioners, v. COURT OF APPEALS, ATTY.
CORAZON A. MERRERA, ATTY. JEAN MAKASIAR-PUNO, SERGIO ACABAN, represented by Atty. Ramon Gerona,
ATTY. ROGELIO VELASCO, MARTINA S. NONA, OVIDEO MEJICA, ALFREDO ITALIA, MARIANO GUEVARRA, JESUS
YUJUICO, DOMINADOR RIVERA, SATURNINA SALES, represented by Atty. Consolacion Sales-Demontano, FRED
CHUA, SONIA SY CHUA, LAWRENCE CHUA, CAROLINA C. RUBIO, represented by Tessie Sebastian, GEORGE G.
GUERRERO, BEATRIZ TANTOCO, represented by Filomena Cervantes, ATTY. MARCELA CELESTINO-GARCIA,
FEDERICO GARCIA, ILDEFONSO MORALES, LEONCIA VELASCO, OCRAVIO F. LINA, ANA MARIA JARAMILLO,
ESTRELLA BASA, JOSE ESTEVA, JR., CIRILO GONZALES, VILLY TOBIAS, MIGUEL DELA PAZ, RUBEN GUILLERMO,
FAUSTO YADAO, represented by Jeremias Panlilio, RICARDO YAP, ROSAURO/PATRICK MARQUEZ, represented
by Emmanuel Marquez, MODESTA FABRIG and MAXIMINO SALCEDA, MELIA LATOMBO, TERESITA PANGILINANRIVERO, ARCH. DANILO C. DE CASTRO, JOSE S. LEDESMA, JAIME P. ANG, VEICENTE P. ANG, MAURO U. GABRIEL,
ATTY. VIRGINIA GOMEZ, GIL S. BONILLA, LOURDES BLANCO, represented by Catalina Blanco, JOSEFA SANCHEZ
and ROSALINA VILLEGAS, represented by Heidi Bobis, SHIRLEY BUCAG, QUIRINA O. TUVERA, represented by
Wilfredo Orejuros, GREGORIO AVENTINO, represented by Enrico Aventino, LEONARDO L. NICOLAS, NICOMEDES
PENARANDA, FRANCISCA MEDRANO, OFELIA IGNACIO, ROSENDO ABUBO, represented by Santos Chavez,
SOLEDAD BAUTISTA DE COLUMNA, represented by Zenaida Valle, MARQUITA/SEBASTIAN LOPEZ, represented by
Emmanuel Marquez, DELIA DORION, GERARDO L. SANTIAGO, FIDEL PANGANIBAN, represented by Manuel dela
Roca, MATEO and OFELIA INOVEJAS, REMEDIOS C. DOVAS, represented by Josefa Capistrano, DOMINGO
ALTAMIRANO and SPOUSES ROLANDO ALTAMIRANO and MINERVA FETALVERO, BEATRIZ RINGPIS, ROSARIO DE
MATA, RUFINA CRUZ, represented by JOSEFA MANABAT, SPOUSES ANITA SALONGA-CAPAGCUAN and MAYNARD
CAPAGCUAN, DISCORA YATCO, represented by VICTORINA Y. FIRME, and CONSUELO YATCO, GENEROSA
MEDINA VDA. DE NOGUERA, represented by ATTY. RAYMUNDO M. NOGUERA, BEATRIZ SALANDANAN and
LOURDES ALONTE-VASQUEZ, PEDRO COSIO and VICTORINA CARINO, RUTH C. ZARATE, PRECIOSISIMA V.
YAPCHULAY, BASILISA B. YAPCHULAY, OFELIA B. YAPCHULAY, FELISA B. YAPCHULAY, FE B. YAPCHULAY,
WILMA B. YAPCHULAY, FELIX B. YAPCHULAY, MARIANO B. YAPCHULAY, GEN. ALFREDO LIM, and other
registered OWNERS OF VILAR-MALOLES (VILMA) SUBDIVISION, Respondents.
DECISION

YNARES-SANTIAGO, J.:

The instant case springs from a contentious and protracted dispute over a sizeable piece of real property situated in what is
now known as Old Balara, Sitio Veterans, Barrio Payatas and Silangan, all of Quezon City. There are numerous claimants,
titled and untitled alike, each either pressing to own a piece of it, or striving to protect ones right as a titled owner.
chan rob1e s virt ua1 1aw 1 ibra ry

Petitioners herein are World War II veterans, their dependents and successors-in-interest. Together, they filed a class suit
primarily for Quieting of Title before the Regional Trial Court of Quezon City, Branch 83, where it was docketed as Civil Case
No. Q-35672. In particular, petitioners claimed that the real property, which has an aggregate area of 502 hectares, were
part of forest lands belonging to the government; that they and their predecessors-in-interest have occupied said property
continuously, adversely, and exclusively for more than thirty (30) years; and that they have accordingly filed applications for
land titling in their respective names with the appropriate government agency.
While petitioners claim that the land in dispute was part of the public domain, they named as respondents several persons
and corporations who are titled owners of subdivided parcels of land within the subject property. One of those so impleaded
as a party-respondent was the Vil-Ma Maloles Subdivision (hereinafter, Vil-Ma). The individual lot owners of the said
subdivision, however, were not specifically named. Since personal service of summons could not be effected on Vil-Ma and
some of the other named respondents, petitioners moved for leave of court to serve summons by publication which was
granted. Accordingly, the summons was published in the "Metropolitan Newsweek", a periodical edited and published in the
City of Caloocan and Malolos, Bulacan. 1
Some of the named respondents filed their respective responsive pleadings, while the others, including Vil-Ma, failed to
answer, and were thus declared in default. Consequently, petitioners were allowed to present evidence ex parte against the
defaulted respondents. The court a quo found the following facts to be conclusive:
chanro b1es vi rt ual 1 aw libra ry

(T)hat the case involves three parcel of lands, to wit: Lot 1 & 2 situated at the Old Balara, Diliman, Quezon City and Lot 3
situated at Sitio Veterans, Barrio Payatas and Silangan, Quezon City containing an aggregate area of 502 hectares more or
less; that Lot 1 is covered by TCT No. 5690 in the name of defaulted respondent Jose V. Bagtas, which title emanated from
TCT No. 48546 in the name of Emiliana Vda. De Vera Cruz which contains an actual area of only 294.6 sq. meters, but, when
said TCT No. 5690 was issued the same was illegally and fraudulently expanded to cover 23.5767 hectares through
fraudulent resurveys without proper judicial proceedings; that on said illegally expanded area of TCT No. 5690 in the name of
respondent Jose V. Bagtas, more than 363 transfer certificates of title were subsequently issued including those belonging to
some of the defaulted respondents thereof; that TCT No. 5690 contains no technical description on its face; that Lot 2 is

covered by TCT No. 3548 in the name of Eustacio Maloles married to Soledad Villegas and Vicente B. Vilar doing business
under the name and style of defaulted respondent Vilma Maloles Subdivision Inc., which title was derived from TCT No.
33531 in the name of Oscar L. Uy which in turn came from TCT No. 26285 in the name of Maria Lim which was immediately
derived from OCT No. 614 which contains no technical description on its face, that TCT No. 3548 likewise contains no
technical description on its face; that however, on the face of TCT No. 33531 of Oscar L. Uy from which TCT No. 3548 of
defaulted respondent Vilma Maloles Subdivision Inc., was derived, it appears that said TCT No. 33531 was cancelled by
another title, TCT No. 1713 and not by TCT No. 3548, the supposed derivative thereof, which title, from the foregoing facts,
seems to have come from nowhere considering that no document could be produced by the representative of the Register of
Deeds of Pasig, relative to the origin of the aforesaid title and which register of deeds has jurisdiction over the same; that
from this spurious and fraudulent TCT No. 3548 which contains no technical description on its face, numerous TCTs were
subsequently issued, some of which belong to the defaulted respondents hereof, that despite the issuance has not been
cancelled by the Register of Deeds of Quezon City; that Lot 3 was originally covered by OCT No. 333 from which 846
questionable TCTs emanated and issued by the Register of Deeds of Quezon City perpetrated and made possible by the
illegal expansion of the actual area thereof from 4,574 Sq. Meters, more or less, to 407,3875 (sic) hectares without proper
judicial proceedings; that as an example of the fraud perpetrated by respondents, TCT No. 26205 covers a lot situated at
Barrio Ermitao, San Juan del Monte, TCT No. 26287 covers a lot located at Barrio Talipapa, Novaliches, TCT No. 33531
covers a lot located at the District of Cubao. TCT No. 47705 covers a lot situated at Barrio San Francisco, San Juan, TCT No.
133770 covers a lot located at San Bartolome, Caloocan City, TCT No. 45741 covers a lot located at San Francisco del Monte,
San Juan, TCT No. 45636 covers a lot located at the municipality of San Juan, TCT No. 19-6370 covers a lot located at
Kamuning District, TCT No. 188447 covers a lot located at San Francisco del Monte with a different mother title, OCT No.
515, TCI No. (22092) 61850 covers a lot located at Tala Estate Caloocan City, TCT No. 14645 covers lot located at
Kamuning District and TCT No. 14692 covers a lot located at Bo. San Isidro, Caloocan City, yet these TCTs were utilized by
some people to claim an area located inside the litigated premises despite the fact that their technical descriptions, as
aforementioned, are different from the lands being sought to be covered therewith; that Lots 1, 2 & 3 have been under the
possession of petitioners for a continuous, public, open, & uninterrupted period of 30 years through World War II Veterans
Legionnaires of the Philippines, Inc., by the principle of tacking possession; that the Bureau of Forest Development has
certified that Lots 1, 2 & 3 are part of public forest belonging to the government not yet certified for disposition and
alienation; that the Bureau of Forest Development knew and encouraged petitioners occupancy and possession of said lots
as in fact ordinary residential permits were issued by said agency to some of herein petitioners and even helped in
petitioners acquisition of electrical facilities from the MERALCO. 2
Resolving the sole issue of whether or not petitioners were entitled to the land they occupy and possess, even when said land
was allegedly part of unclassified public forest land and yet covered by transfer certificates of title in the names of the
defaulted respondents, the court a quo rendered a Partial Decision in favor of petitioners, based on the following
disquisition:
chan rob 1es vi rtua1 1aw 1ib rary

First, because as established from the foregoing facts, OCT No. 614, TCT No. 5690, TCT No. 3548 covering Lots 1 & 2 of the
disputed land, not having technical descriptions appearing on their respective face, clearly are null and void by reason
thereof. This is because "a Torrens title is the certificate of ownership issued under the Register of Deeds naming and
declaring the owner in fee simple of the real property DESCRIBED therein, free from all liens and encumbrances except such
as maybe expressly noted thereon or otherwise reserved by law." (Philippine National Bank v. Tan Ong Zse, 51 Phil. 317).
Without any technical description a title is fictitious and the mere issuance thereof is fraudulent. Such being the case, it
follows that none of the title holders subsequently issued out of said void titles could say that he or she is an innocent
purchaser for value. For in the case at bar, there are really no rights that could be transferred to them since even the titles of
those supposed owners thereof originally are themselves fictitious. . . . Second, because although the Bureau of Forest
Development maintains, as in fact, it certified that Lots 1, 2 & 3 are part of the unclassified public forest land of the
government, and therefore, are not susceptible of private appropriation, still, due to the established fact that the lots
involved are under the present occupancy and possession of petitioners with the knowledge and tolerance of the Bureau of
Forest Development, the true and real nature of said lands as being public forest has become highly dubious and in the
opinion of this Court could not overcome the presumption that said lands are agricultural. For "the mere fact that a tract of
land has trees upon it or has mineral wealth within it, is not of itself sufficient to declare that one is forest land and the other
mineral land. There must be some proof of the extent as well as of the present or future value of the land as forest or
mineral. It must be shown that the land is more valuable for the forestry or the minerals which it contains than it is for
agricultural purposes. Land may be classified as forest or mineral today and after the exhaustion of the timber or minerals
contained therein may be classified as agricultural land tomorrow. Hence, in case of doubt and considering that it is a matter
of public knowledge that a majority of the lands in the Philippines are agricultural lands, it was rightly held that in the
absence of evidence to the contrary any land may be presumed to be agricultural." And that being the case, it is clear that
petitioners have acquired legally a title over Lots 1, 2 & 3 of this case through extra-ordinary prescription of thirty (30) years
of continuous, public, open and uninterrupted possession thereof, the lands being agricultural and, thus, are susceptible of
private ownership by petitioners.
WHEREFORE, premises considered, judgment is hereby rendered in favor of petitioners and against the defaulted
respondents:
chan rob1e s virtual 1aw lib rary

1) Declaring petitioners through the principal petitioners hereof, to wit: Alberto G. Pinlac, Atty. Eriberto H. Decena, Rodolfo T.
Reyes, Felipe Briones and Juanito S. Metilla as absolute owners in fee simple title of the aforesaid Lots 1, 2 & 3 hereof by
virtue of extra-ordinary prescription, with the exception of the lands covered by the respective transfer certificate of title
belonging to the non-defaulted respondents;

2) Declaring Original Certificate of Title No. 614, TCT No. 5690 and TCT No. 3548 of the Register of Deeds of Quezon City,
and the subsequent TCTs issued therefrom, with the exception of those titles belonging to the non-defaulted respondents, as
null and void ab initio;
3) Ordering the Register of Deeds of Quezon City to cancel OCT No. 614, TCT No. 5690 and TCT No. 3548 as well as the
subsequent TCTs issued and emanating therefrom, with the exception of those titles belonging to the non-defaulted
respondents, from its record;
4) Declaring the area of TCT No. 333 in excess of its true and actual area of 4,574 Sq. Meters, as well as the TCTs
subsequently issued by the Register of Deeds of Quezon City, covering the area in excess of said actual area, with the
exception of those belonging to non-defaulted respondents, as null and void ab initio;
5) Ordering the Register of Deeds of Quezon City to cancel all TCTs subsequently issued based on OCT No. 333 in excess of
the actual area of 4,574 Sq. Meters, with the exception of those titles belonging to the non-defaulted respondents;
6) Declaring the writ of preliminary injunction dated August 7, 1985, in so far as those areas covered by the cancelled OCTs
and TCTs hereof are concerned, as permanent;
7) Ordering the Register of Deeds of Quezon City to issue herein petitioners the corresponding individual transfer certificate
of titles upon proper application made thereof.
SO ORDERED. 3
On May 17, 1989, or exactly one (1) year and fifty-seven (57) days after the above-quoted judgment by default was
rendered, a Petition for Annulment of Judgment with Certiorari, Prohibition and Mandamus 4 was brought before the Court of
Appeals by the titled owners of the subdivided lots within Vil-Ma. They assailed the default judgment which nullified all their
titles, arguing that the court a quo had no jurisdiction over them and their respective titled properties. They also alleged that
they only came to know of the adverse judgment when petitioners sought the execution of the judgment by attempting to
dispossess some of the titled owners of the lots and making formal demands for them to vacate their respective properties.
They likewise claimed that the Partial Decision against the defaulted respondents was null and void on the grounds of lack of
jurisdiction and extrinsic fraud, for the reasons that:
chanrob1e s virtual 1aw lib rary

(1) Civil Case No. Q-35672, while it was a petition to quiet title, was a collateral proceeding, not a direct action attacking
their duly registered titles. Besides, a petition for cancellation of title can only be filed by a registered owner or a person
having an interest in registered property, and must be filed in the original land registration case in which the decree of
registration was entered.
(2) They were never made parties to Civil Case No. Q-35672, nor were their lots described in the complaint, published
summons, and Partial Decision. Named defendant was VIL-MA, a totally separate and independent entity which had already
ceased to exist way back in January of 1976. Moreover, the summons, as well as the Partial Decision was not published in a
newspaper or periodical of general circulation. Thus, the defective service of summons to said defendant did not place the
individual lot owners under the trial courts jurisdiction, nor are they bound by the adverse judgment.
(3) They were denied due process of law as they were not given their day in court. They should have been included as
indispensable parties-respondents in Civil Case No. Q-35672 since the petitioners therein were seeking to annul their
respective transfer certificates of title.
chan rob1e s virtua1 1aw 1ib rary

(4) Their duly registered titles cannot be defeated by the alleged adverse, continuous and notorious possession of the
petitioners since their titles are indefeasible and cannot be acquired by prescription or adverse possession.
(5) If, indeed, the subject property is unclassified forest lands, it is not capable of private appropriation. The court a quo is
bereft of authority to declare motu proprio that the subject property should be reclassified as agricultural, not forest land.
(6) The trial court violated Section 3(c), Rule 10 of the Rules of Court which provides that when some of several respondents
fail to answer, "the court shall try the case against all upon the answers thus filed and render judgment upon the evidence
thus presented," whenever a complaint states a common cause of action against several respondents. Accordingly, the
defense interposed by those who answer or appear to litigate the case should inure to the benefit of even those who fail to
appear or answer.
(7) The trial court cannot render null and void in the default judgment the mother title (OCT No. 614), from which the
petitioners transfer certificates were derived, which the Supreme Court had already declared valid and legal.
To impress upon the Court of Appeals that they have a meritorious defense and that their petition was not intended to delay
or frustrate the final disposition of the case, the titled owners cited the case of De La Cruz v. De La Cruz, 5 where the
Supreme Court traced the origins of OCT 614. It was held in that case, that:
chanrob1e s virtual 1aw l ib rary

. . . The Piedad Estate consists of a vast tract of land originally registered on March 12, 1912 under Original Certificate of
Title No. 614 of the Register of Deeds of the Province of Rizal in the name of the Philippine Government.

The Piedad Estate was one of the so-called friar lands which were purchased by the government of the Philippines pursuant
to the provisions of the Friar Lands Act, Public Act No. 1120 which was enacted on April 26, 1904. . . .
As specifically stated above, the said lands are not "public lands" in the sense in which those words are used in the Public
Land Act Numbered Nine Hundred and twenty-six and cannot be acquired or leased under the provisions thereof. In the case
of Jacinto v. Director of Lands (1926) 49 Phil. 853, the Supreme Court held that the so-called friar lands, to which the
government of the Philippines holds title, are not public lands but private or patrimonial property of the government.
x

As held in Lorenzo v. Nicolas, No. L-4085, 30 July 1952, 91 Phil. 686, "from the provisions of sections 11, 12 and 16 of Act
No. 1120, it is apparent that the pervading legislative intent is to sell the friar lands acquired by the government to actual
settlers and occupants of the same. 6
Claiming that their individual transfer certificates of title were derived from subsequent subdivisions and transfers of the lots
within the Piedad Estate, the defaulted registered owners invoked the Comments and Recommendations of the Ad Hoc
Committee created by the then Ministry of Natural Resources, tasked to investigate the historical background of the Piedad
and Payatas Estates in Quezon City, containing evidence which they would have substantiated had they been given their day
in court. The Ad Hoc Committee reported, to wit:
c han rob1es v irt ual 1aw l ibra ry

FINDINGS AND OBSERVATIONS

The Piedad Estate, situated in the Municipality of San Mateo and Caloocan during the time of registration in 1910, covers an
area of 3850.7226 hectares. The Registration of Title under Case No. 5975 was published in the January 21, 1910 issue of
the Official Gazette.
After the Piedad Estate was registered in Original Certificate of Title No. 614 in the name of the Government in 1910 under
the provisions of Act 496, the area was subdivided originally into 874 lots. As a result of subsequent surveys executed in the
course of disposition, the number of lots increased to 1,305. Disposition of these lots was made by the Bureau of Lands thru
sales, under the Friar Lands Act, as early as 1910 and records show that even before the Second World War, all lots in the
Piedad Estate have been disposed of. Owing perhaps to the scarcity of land applicants at the time, it will be observed that a
number of applicants have acquired several lots totalling several hectares. Among the vendees with several lots are the
Philippine Trust Co., the Zuzuarreguis and the Metropolitan Water District, to name a few. A list of lot holders in the Piedad
Estate with the corresponding lot numbers, lot areas and date of purchase from the Bureau of Lands is hereto attached and
marked as ANNEX "B" .
Thru a series of transfer of lots from one owner to another attended at times by subdivision into smaller lots and at other
times by consolidation of several lots into one, most of the lots of the Piedad Estate have lost their identity both in original
ownership structure and lot descriptions. Piedad Estate now embraces and includes a number of private residential
subdivisions among which are the following:
chan rob1e s vi rtual 1aw lib rary

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

2. U.P. Sites Nos. 1 and 2
3. Sunnyville Subdivision (Owned by the Delos Santos family)
4. Sterling Meadows Subdivision (LRC) Pcs-11110
5. Dona Patrona Subdivision
6. Far Eastern University (43 has.)
7. Luis Reyes (Psd-19419)
8. Jose Yulo (PLS-336-D)
By virtue of subsequent changes in political boundaries, Piedad Estate is now within Quezon City. It is located on both sides
of Luzon Avenue and is bounded on the North by the Republic Avenue; on the East by private residential subdivisions which
includes the B.F. Homes (LRC) Psd-133236, the Villa Ligaya Subdivision (Psd-65729), the Kapalaran Subdivision (Pcs47850), the Kasiyahan Subdivision (LRC) Pcs-12091, Zuzuarregui Property (Psd-34912) and the Doa Beartiz Subdivision
under Psd-39351; on the South by the Don Mariano Marcos Avenue; and on the South-West and West by the U.P. Sites Nos.
1 and 2.
chanrob1es v irt ua1 1aw 1 ibra ry

COMMENTS AND RECOMMENDATION

There is no doubt that Piedad Estate has long been segregated from the mass of the public domain and have become private

lands duly registered under the Torrens System following the procedure for the confirmation of private lands prescribed in
Act 496. Thus the lands inside the Piedad Estate are no longer lands of the public domain. Neither are these lands forest
lands, in the classification of lands for forest purposes, the main criterion prescribed in Section 15 of P.D. 705, the Forestry
Code, is its slope. Those beyond 18% are to be preserved for forest purposes while those below are to be released as not
needed for forest purposes, hence, as alienable and disposable. By its physical nature, location and historical use, the land in
question can hardly be considered and classified as forest land. Physically, it is first, level and at most slightly rolling land.
Location wise, it used to be within the periphery and now in the heart of a metropolis. While originally it was used for
agricultural purposes, it has later become urban due to population pressure and rapid urbanization in the Metro Manila area.
It is devoid of any timber land, more so if we talk of forest of commercial value. In fact, the Composite Land Classification
Committee of the MNR composed of the Directors of BFD, BL, BFAR and BMGS, has already signed a land classification map
and recommended for its release because it has absolutely no forest value.
On the basis of existing records of the Bureau of Lands and the area of the Piedad Estate as contained in the Technical
Descriptions of the said Estate published in the January 21, 1910 issue of the Official Gazette, there is no expansion or
enlargement of the area, hence, it is recommended that existing titles within the area should be respected and their validity
upheld.
x

In view of all the foregoing, the committee recommends that all existing titles validly issued within the area be respected and
their validity upheld. 7 (Emphasis supplied)
Accordingly, the defaulted titled owners prayed that judgment be rendered:

chan rob1e s virtual 1aw lib rary

1. Declaring the aforesaid Partial Decision on defaulted private respondents as null and void;
2. Declaring all Residential Use Permits issued by the Director of Forest Management Bureau as null and void;
3. Declaring all Transfer of Certificates of Titles of the petitioners (respondents herein) emanating from OCT 614 and TCT
3548 (1713) as valid;
4. Ordering private respondents (petitioners herein), their agents or representatives and all other persons claiming right
under them to vacate the respective titled lands of the petitioners squatted by the former;
5. Ordering the dismissal of Hon. Judge Reynaldo Roura from the Regional Trial Court, Macabebe, Pampanga on the grounds
of gross incompetence and gross ignorance of the law (Adm. Circular No. 4 of the Supreme Court, dated January 27, 1988).
6. Making the preliminary injunction as permanent; and
7. Ordering the private respondents (petitioners herein) to pay jointly and solidarily to the petitioners the sum of
P200,000.00 as moral and exemplary damages, plus the sum of P5,000.00 per lot of the petitioners as attorneys fee, aside
from cost of suit, and for any other relief just and proper. 8
On June 23, 1989, the Court of Appeals granted respondents (petitioners therein) application for writ of preliminary
injunction, ruling that:
chan rob1e s virtual 1aw l ibra ry

When this case was called for hearing on June 21, 1989 on the application for the issuance of a writ of preliminary injunction,
the parties and their respective counsel appeared and orally argued their respective stand on the matter. It is admitted that
the herein petitioners, indispensable parties in the case, were not individually served with summons.
We believe and so hold that there is merit in the instant application for preliminary injunction, hence, the same is hereby
GRANTED. Upon the posting by the petitioners of a bond in the amount of One Hundred Thousand Pesos (P100,000.00),
subject to Our approval, let a writ of preliminary injunction issue enjoining the respondents (petitioners herein), and all
persons acting for and in their behalf, to desist and refrain from enforcing or implementing, or from attempting to enforce
and implement, the questioned writ of execution of the partial judgment, dated March 21, 1988, rendered in Civil Case No.
Q-35672, entitled: "Teofilo M. Gariando, Et Al., petitioners versus Gregorio Dizon, Et Al., respondents", until further orders
from this Court.
chanrob1es v irt ua1 1aw 1 ibra ry

SO ORDERED. 9
On November 15, 1989, the Court of Appeals rendered a Decision 10 granting the petition and annulling the Partial Decision
in Civil Case No. Q-35762 based on its finding that the trial courts lack of jurisdiction over the persons of respondents
. . . becomes all the more apparent when petitioners claim or asseverate that the assailed Partial Decision can not bind VilarMaloles (VILMA), the umbrella name, for the simple reason that said PARTNERSHIP was dissolved on January 26, 1976, for it
can no longer be sued as it had no more juridical personality.
x

Furthermore, petitioners contend that "the summons and the Partial Decision were published in a local newspaper edited in
Caloocan City and Malolos, Bulacan known as "METROPOLITAN NEWSWEEK" implying that said summons and Partial Decision
were not published in a newspaper of general circulation in Quezon City as required by PD 1079, Sec. 1 thereof. Petitioners
not having been duly notified of the hearing/proceedings, the Partial Decision being assailed is without significance to them
or as far as petitioners are concerned said Partial Decision is null and void. 11
Petitioners motion for reconsideration was denied in a Resolution dated December 21, 1989. 12
Hence, the instant petition for certiorari which raises the following issues:

chan rob1e s virtual 1aw l ibra ry

I. WHETHER OR NOT RESPONDENT COURT OF APPEALS QUESTIONED DECISION HAS VIOLATED PETITIONERS RIGHT TO
DUE PROCESS BY IGNORING AND LEAVING UNDECIDED ALL THE ISSUES RAISED IN THE ANSWER OF PETITIONERS IN CAG.R. NO. SP-17596.
II. WHETHER OR NOT THE COURT A-QUO HAS ACQUIRED JURISDICTION OVER RESPONDENT VILMA MALOLES SUBDIVISION
BY THE PUBLICATION OF THE SUMMONS AND PETITION AS ORDERED BY THE COURT IN CIVIL CASE NO. Q-35672 AND SO
THE PARTIAL DECISION (ANNEX "B") WAS LEGAL, VALID AND PROPER.
III. WHETHER OR NOT PRIVATE RESPONDENTS PER THEIR PETITION BEFORE RESPONDENT COURT OF APPEALS HAS A
VALID CAUSE OF ACTION CONSIDERING THEY ADOPTED CONTRADICTORY POSITIONS OR THEORIES OF THE CASE, AND
THAT RESPONDENT COURT OF APPEALS DECISION (ANNEX "G") IS VOID. 13
We find no merit in the instant petition.
The case before the Court of Appeals was one for annulment of judgment, certiorari, prohibition and mandamus. In resolving
the same, the Court of Appeals need not retry the facts. An action for annulment of judgment is grounded only on two
justifications: (1) extrinsic fraud; and (2) lack of jurisdiction or denial of due process. 14 All that herein private respondents
had to prove was that the trial court had no jurisdiction; that they were prevented from having a trial or presenting their
case to the trial court by some act or conduct of petitioners; 15 or that they had been denied due process of law. Thus, the
Court of Appeals need only to resolve the issues of lack of jurisdiction, existence of extrinsic fraud, and denial of due process
of law.
The action for annulment of judgment cannot and was not a substitute for the lost remedy of appeal. The very purpose of the
action for annulment of judgment was to have the final and executory judgment set aside so that there will be a renewal of
litigation. 16 Whether or not the assailed Partial Decision based solely on facts and evidence presented by the petitioners is
meritorious is irrelevant and immaterial. Thus, the Court of Appeals did not err, nor did it violate the petitioners right to due
process of law, when it refused to consider all the factual issues raised by petitioners.
We also agree with the Court of Appeals conclusion that the Partial Decision is null and void insofar as private respondents
are concerned since the latter were not duly served summons or notified of the proceedings against them. The summons and
the Partial Decision were published in a local newspaper edited and published in Caloocan City and Malolos, Bulacan.
However, the Court of Appeals found the publication in said newspaper, namely the "Metropolitan Newsweek," to be invalid
because the said periodical is not considered a newspaper of general circulation in Quezon City where the subject property is
located, as required by Presidential Decree No. 1079, Section 1.
Petitioners, however, contend that the service of summons by publication was legal and in accordance with the requirements
of Rule 14, Section 14 of the Rules of Court. The service by publication was done pursuant to the orders of the trial court
dated May 5, 1993 and September 29, 1983. 17
While the service of summons by publication may have been done with the approval of the trial court, it does not cure the
fatal defect that the "Metropolitan Newsweek" is not a newspaper of general circulation in Quezon City. The Rules strictly
require that publication must be "in a newspaper of general circulation and in such places and for such time as the court may
order." 18 The court orders relied upon by petitioners did not specify the place and the length of time that the summons was
to be published. In the absence of such specification, publication in just any periodical does not satisfy the strict
requirements of the rules. The incomplete directive of the court a quo coupled with the defective publication of the summons
rendered the service by publication ineffective. The modes of service of summons should be strictly followed in order that the
court may acquire jurisdiction over the respondents, 19 and failure to strictly comply with the requirements of the rules
regarding the order of its publication is a fatal defect in the service of summons. 20 It cannot be overemphasized that the
statutory requirements of service of summons, whether personally, by substituted service, or by publication, must be
followed strictly, faithfully and fully, and any mode of service other than that prescribed by the statute is considered
ineffective. 21
Be that as it may, even granting that the publication strictly complied with the rules, the service of summons would still be
ineffective insofar as private respondents are concerned. At the time the complaint for Quieting of Title was filed on
November 2, 1983, Vilma Maloles Subdivision no longer existed as a juridical entity. Vilma Maloles Subdivision, a
partnership, was dissolved more than six (6) years earlier, as evidenced by a Certificate of Dissolution issued by the SEC
dated January 26, 1976. 22 Consequently, it could no longer be sued having lost its juridical personality.
chan rob 1es vi rtua1 1aw 1ib rary

It was also established that all the lots within the subdivision had been disposed of to private individuals, herein private
respondents. As the titled owners, they should have been impleaded as party-respondents before the court a quo. They were
not made respondents, neither were they informed of the adverse proceedings that would result in the nullification of their
duly registered titles. Clearly, there was a blatant disregard for their rights as registered owners. Private respondents titles
and rights as owners have been unjustly violated. Hence, the Court of Appeals did not err in granting private respondents
petition by annulling and setting aside the Partial Decision rendered by the court a quo for lack of jurisdiction and for denial
of due process of law.
Petitioners failed to show that they were the aggrieved parties. If ever there was denial of due process, it was private
respondents who suffered therefrom. Whether by petitioners failure to effectively serve summons or by omitting to name
private respondents as respondents, the trial courts Partial Decision declaring private respondents titles null and void was
clearly violative of the due process requirement of the Constitution. It is elementary that before a person can be deprived of
his right or property he should first be informed of the claim against him and the theory on which such claim is premised. 23
The courts will not countenance a denial of the fundamental right to due process, which is a cornerstone of our legal system.
24
The Partial Decision was a judgment by default, which is generally looked upon with disfavor, 25 for it cannot pretend to be
based on the merits of the controversy. 26 As in this case, the judgment by default may amount to a positive and
considerable injustice to private respondents. Hence, justice and equity demand that this case be litigated anew. 27 It is
evident that the reopening of the case would not amount to an exercise in futility nor is it intended to further delay the final
resolution of this controversy. The court a quo should give all the necessary parties every chance to fight their case fairly and
in the open, without resort to technicalities. 28
Finally, the conclusion that the Partial Decision of the court a quo is void finds support in Rule 10, Section 5(c) of the then
Rules of Court, which provides:
jgc:chan roble s.com. ph

"(c) Effect of partial default. When a pleading asserting a claim states a common cause of action against several defending
parties, some of whom answer and the others fail to do so, the court shall try the case against all upon the answers thus filed
and render judgment upon the evidence presented."
c ralaw virtua1aw l ibra ry

In fact, the court a quo enumerated in the Partial Decision those who filed responsive pleadings. Considering that petitioners
in their complaint stated a common cause of action against all the named respondents, the court a quo should have heard
the case as against all respondents, the defaulted respondents included. However, the trial court, unmindful of the abovequoted rule, proceeded to receive evidence ex parte only against the defaulted respondents. The trial courts disposition is
not only violative of the rules but also a clear negation of the defaulted respondents limited rights.
Whatever defense and evidence the non-defaulted respondents may present which would be applicable to the situation of the
defaulted respondents should inure to the benefit of the latter. The nullification of OCT 614 adversely affected the answering
respondents for they all share the same mother title. In effect, the court a quo prejudged the case even against the
answering respondents, for how could OCT 614, the mother title, be valid for one set of respondents and null and void for the
other respondents? In fine, the Partial Decision was procedurally flawed.
WHEREFORE, in view of all the foregoing, the decision of the Court of Appeals in CA-G.R. SP No. 17596 is AFFIRMED and the
instant petition is DENIED for lack of merit.
chan rob1es v irt ua1 1aw 1 ibra ry

SO ORDERED.

THIRD DIVISION
[G.R. No. 152776. October 8, 2003.]
HENRY S. OAMINAL, Petitioner, v. PABLITO M. CASTILLO and GUIA S. CASTILLO,Respondents.
DECISION

PANGANIBAN, J.:

In the instant case, the receipt of the summons by the legal secretary of the defendants respondents herein is deemed
proper, because they admit the actual receipt thereof, but merely question the manner of service. Moreover, when they
asked for affirmative reliefs in several motions and thereby submitted themselves to the jurisdiction of the trial court,
whatever defects the service of summons may have had were cured.
The Case
Before us is a Petition for Review 1 under Rule 45 of the Rules of Court, seeking to nullify the March 26, 2002 Decision 2 of
the Court of Appeals (CA) in CA-GR SP No. 66562. The assailed Decision disposed thus:
jgc:chan robles. com.ph

"WHEREFORE, the [D]ecision dated 23 August 2001 is hereby NULLIFIED and SET ASIDE and Civil Case No. OZC-00-13
ordered DISMISSED, without prejudice. Costs against [petitioner]." 3
The Antecedents
The antecedents of the case were narrated by the CA as follows:

jgc:c hanro bles. com.ph

"On 09 March 2000, [Petitioner Henry Oaminal] filed a complaint for collection against [Respondents Pablito and Guia
Castillo] with the Regional Trial Court [RTC] of Ozamis City (Branch 35) . . . The complaint prayed that [respondents] be
ordered to pay P1,500,000.00 by way of liquidated damages and P150,000.00 as attorneys fees.
"On 30 May 2000, the summons together with the complaint was served upon Ester Fraginal, secretary of [Respondent] Mrs.
Castillo.
"On 06 June 2000, [respondents] filed their Urgent Motion to Declare Service of Summons Improper and Legally Defective
alleging that the Sheriffs Return has failed to comply with Section (1), Rule 14 of the Rules of Court or substituted service of
summons.
"The scheduled hearing of the Motion on 14 July 2000 did not take place because . . . [RTC] Judge [Feline Zapatos] took a
leave of absence from July 17 to 19, 2000[;] hence[,] it was re-scheduled to 16 August 2000.
"On 19 October 2000, [petitioner] filed an Omnibus Motion to Declare [Respondents] in Default and to Render Judgment
because no answer [was] filed by [the latter].
" [Respondents] forthwith filed the following:

chan rob1e s virtual 1aw lib rary

a. Omnibus Motion Ad Cautelam to Admit Motion to Dismiss and Answer with Compulsory Counter-claim dated 9 November
2000 which was set for hearing on 27 November 2000 at 8:30 a.m.;
b. . . . Urgent Motion to Dismiss also dated 9 November 2000 which was also set for hearing on 27 November 2000 at 8:30
a.m. The said motion was anchored on the premise that . . . [petitioners] complaint was barred by improper venue and litis
pendentia; and
c. Answer with Compulsory Counter-Claim dated 9 November 2000.
"On 16 November 2000, . . . [the] judge denied [respondents] Motion to Dismiss, admitted [their] Answer, and set the pretrial [on] 17 January 2001.
"On 24 November 2000, [respondents] filed an Urgent Motion to Inhibit Ad Cautelam against Judge [Zapatos], in the higher
interest of substantial justice and the [r]ule of [l]aw . . .
"On 27 December 2000, Judge [Zapatos] denied the motion and transferred the January 17th pre-trial to 19 February 2001.
" [Respondents] filed an Urgent Omnibus Motion for Reconsideration with the Accompanying Plea to Reset dated 22 January

2001. The motion requested that it be set for consideration and approval by the trial court on 05 February 2001 at 8:30 a.m.
Said motion in the main prayed that an order be issued by the Honorable Court reconsidering its adverse order dated 16
November 2000, by dismissing the case at bar on the ground of improper venue or in the alternative, that the Honorable
Presiding Judge reconsider and set aside, its order dated December 27, 2000 by inhibiting himself from the case at hand.
"On 22 May 2001, Judge [Zapatos] ruled that [respondents] Omnibus Motion Ad Cautelam to Admit Motion to Dismiss and
Answer with Counterclaim was filed outside the period to file answer, hence he (1) denied the Motion to Admit Motion to
Dismiss and Answer; (2) declared [respondents] in default; and (3) ordered [petitioner] to present evidence ex-parte within
ten days from receipt of [the] order, [failing] which, the case will be dismissed.
"On 23 August 2001, Judge [Zapatos] rendered a decision on the merits, with the following dispositi[on]:

cha nrob 1es vi rtua l 1aw lib ra ry

WHEREFORE, finding by preponderance of evidence, judgment is hereby rendered in favor of [petitioner], ordering
[respondents] to pay . . . :
chanrob1es vi rtual 1aw li bra ry

1) P1,500,000.00 by way of [l]iquidated [d]amages;

2) P20,000.00 as attorneys fees and litigation expenses; and
3) . . . cost[s]." 4
On September 11, 2001, respondents filed with the CA a Petition for certiorari, prohibition and injunction, with a prayer for a
writ of preliminary injunction or temporary restraining order (TRO). In the main, they raised the issue of whether the trial
court had validly acquired jurisdiction over them.
On September 20, 2001, the appellate court issued a TRO to enjoin the lower court from issuing a writ of execution to
enforce the latters decision.
Ruling of the Court of Appeals
The CA ruled that the trial court did not validly acquire jurisdiction over respondents, because the summons had been
improperly served on them. It based its finding on the Sheriffs Return, which did not contain any averment that effort had
been exerted to personally serve the summons on them before substituted service was resorted to. Thus, the appellate court
set aside the trial courts Decision and dismissed, without prejudice, Civil Case No. OZC-00-13.
Hence, this Petition. 5
Issues
Petitioner submits the following issues for our consideration:

chan rob1e s virtual 1aw lib rary

"I
Whether respondents recourse to a Petition for Certiorari [was] appropriate when the remedy of appeal was available?
"II
Whether the Decision of the trial court attained finality?
"III
Whether the Honorable Third Division of the Court of Appeals [was] correct in entertaining and in granting the Writ
of Certiorari when the facts clearly establish[ed] that not only was [an] appeal available, but . . . there were other plain,
speedy and adequate remedies in the ordinary course of law?
"IV
Whether the Honorable Third Division of the Court of Appeals had jurisdiction to nullify and set aside the Decision of the trial
court and dismiss the case?
"V

[Whether] receipt by a legal secretary of a summons [is deemed] receipt by a lawyer in contemplation of law?" 6
Simply stated, the issues boil down to the following: (1) whether the Petition for certiorari before the CA was proper; and (2)
whether the trial court acquired jurisdiction over respondents.
Since the Petition for certiorari was granted by the CA based on the trial courts alleged lack of jurisdiction over respondents,
the second issue shall be discussed ahead of the former.
The Courts Ruling
The present Petition is partly meritorious.
First Issue:

chanrob1es vi rt ual 1aw li bra ry

Jurisdiction over Defendants

Petitioner contends that the trial court validly acquired jurisdiction over the persons of respondents, because the latter never
denied that they had actually received the summons through their secretary. Neither did they dispute her competence to
receive it.
Moreover, he argues that respondents automatically submitted themselves to the jurisdiction of the trial court when they
filed, on November 9, 2000, an Omnibus Motion to Dismiss or Admit Answer, a Motion to Dismiss on the grounds of improper
venue and litis pendentia, and an Answer with Counterclaim.
On the other hand, respondents insist that the substituted service of summons on them was improper. Thus, they allege that
the trial court did not have the authority to render its August 23, 2001 Decision.
We clarify.
Service of Summons
In civil cases, the trial court acquires jurisdiction over the person of the defendant either by the service of summons or by
the latters voluntary appearance and submission to the authority of the former. Where the action is in personam and the
defendant is in the Philippines, the service of summons may be made through personal or substituted service in the manner
provided for by Sections 6 and 7 of Rule 14 of the Revised Rules of Court, which read:
jgc:chan roble s.com. ph

"Section 6. Service in person on defendant. Whenever practicable, the summons shall be served by handing a copy thereof
to the defendant in person, or, if he refuses to receive and sign for it, by tendering it to him.
"Section 7. Substituted service. If, for justifiable causes, the defendant cannot be served within a reasonable time as
provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendants residence
with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendants office or
regular place of business with some competent person in charge thereof."
cralaw virtua 1aw lib rary

Personal service of summons is preferred over substituted service. Resort to the latter is permitted when the summons
cannot be promptly served on the defendant in person and after stringent formal and substantive requirements have been
complied with. 7
For substituted service of summons to be valid, it is necessary to establish the following circumstances: (a) personal service
of summons within a reasonable time was impossible; (b) efforts were exerted to locate the party; and (c) the summons was
served upon a person of sufficient age and discretion residing at the partys residence or upon a competent person in charge
of the partys office or regular place of business. 8 It is likewise required that the pertinent facts proving these circumstances
are stated in the proof of service or officers return.
In the present case, the Sheriffs Return 9 failed to state that efforts had been made to personally serve the summons on
respondents. Neither did the Return indicate that it was impossible to do so within a reasonable time. It simply stated:
jgc:chan robles. com.ph

"THIS IS TO CERTIFY that on the 30th day of May 2000, copies of the summons together with the complaint and annexes
attached thereto were served upon the defendants Pablito M. Castillo and Guia B. Castillo at their place of business at No. 7,
21st Avenue, Cubao, Quezon City thru MS. ESTER FREGINAL, secretary, who is authorized to receive such kind of process.
She signed in receipt of the original as evidenced by her signature appearing on the original summons.
"That this return is submitted to inform the Honorable . . . Court that the same was duly served." 10
Nonetheless, nothing in the records shows that respondents denied actual receipt of the summons through their secretary,
Ester Fraginal. Their "Urgent Motion to Declare Service of Summons Improper and Legally Defective" 11 did not deny receipt

thereof; it merely assailed the manner of its service. In fact, they admitted in their Motion that the "summons, together with
the complaint, was served by the Sheriff on Ester Fraginal, secretary of the defendants at No. 7, 21st Avenue, Cubao,
Quezon City on 30 May 2000." 12
That the defendants actual receipt of the summons satisfied the requirements of procedural due process had previously been
upheld by the Court thus:
jgc:chanroble s.com.p h

". . . [T]here is no question that summons was timely issued and received by private Respondent. In fact, he never denied
actual receipt of such summons but confined himself to argument that the Sheriff should prove that personal service was first
made before resorting to substituted service.
"This brings to the fore the question of procedural due process. In Montalban v. Maximo (22 SCRA 1077 [1968]) the Court
ruled that The constitutional requirement of due process exacts that the service be such as may be reasonably expected to
give the notice desired. Once the service provided by he rules reasonably accomplishes that end, the requirement of justice
is answered; the traditional notions of fair play are satisfied; due process is served." 13
There is likewise no showing that respondents had heretofore pursued the issue of lack of jurisdiction; neither did they
reserve their right to invoke it in their subsequent pleadings. If at all, what they avoided forfeiting and waiving both in
their Omnibus Motion ad Cautelam to Admit Motion to Dismiss and Answer with Compulsory Counter-Claim 14 and in their
Motion to Dismiss 15 was their right to invoke the grounds of improper venue and litis pendentia. They argued therein:

jgc:c hanro bles. com.ph

"3. . . . To be sure, the [respondents] have already prepared a finalized draft of their [M]otion to [D]ismiss the case at bar,
based on the twin compelling grounds of improper venue and [the] additional fact that there exists a case between the
parties involving the same transaction/s covered plaintiffs cause of action. . . .;
"4. That as things now stand, the [respondents] are confronted with the dilemma of filing their [M]otion to [D]ismiss based
on the legal grounds stated above and thus avoid forfeiture and waiver of these rights as provided for by the Rules and also
file the corresponding [M]otion to [A]dmit . . . [A]nswer as mandated by the Omnibus Rule.
x

x" 16

Verily, respondents did not raise in their Motion to Dismiss the issue of jurisdiction over their persons; they raised only
improper venue an litis pendentia. Hence, whatever defect there was in the manner of service should be deemed waived. 17
Voluntary Appearance and Submission
Assuming arguendo that the service of summons was defective, such flaw was cured and respondents are deemed to have
submitted themselves to the jurisdiction of the trial court when they filed an Omnibus Motion to Admit the Motion to Dismiss
and Answer with Counterclaim, an Answer with Counterclaim, a Motion to Inhibit, and a Motion for Reconsideration and Plea
to Reset Pre-trial. The filing of Motions seeking affirmative relief to admit answer, for additional time to file answer, for
reconsideration of a default judgment, and to lift order of default with motion for reconsideration are considered voluntary
submission to the jurisdiction of the court. 18 Having invoked the trial courts jurisdiction to secure affirmative relief,
respondents cannot after failing to obtain the relief prayed for repudiate the very same authority they have invoked. 19
Second Issue:

chanrob1e s virtual 1aw l ibra ry

Propriety of the Petition for Certiorari

Petitioner contends that the certiorari Petition filed by respondents before the CA was improper, because other remedies in
the ordinary course of law were available to them. Thus, he argues that the CA erred when it took cognizance of and granted
the Petition.
Well-settled is the rule that certiorari will lie only when a court has acted without or in excess of jurisdiction or with grave
abuse of discretion. 20 As a condition for the filing of a petition forcertiorari, Section 1 of Rule 65 of the Rules of Court
additionally requires that "no appeal nor any plain, speedy and adequate remedy in the ordinary course of law" must be
available. 21 It is axiomatic that the availability of the right of appeal precludes recourse to the special civil action
forcertiorari. 22
Here, the trial courts judgment was a final Decision that disposed of the case. It was therefore a fit subject of an appeal. 23
However, instead of appealing the Decision, respondents filed a Petition forcertiorari on September 11, 2001.
Be that as it may, a petition for certiorari may be treated as a petition for review under Rule 45. Such move is in accordance
with the liberal spirit pervading the Rules of Court and in the interest of substantial justice, especially (1) if the petition was
filed within the reglementary period for filing a petition for review; 24 (2) errors of judgment are averred; 25 and (3) there is
sufficient reason to justify the relaxation of the rules. 26 Besides, it is axiomatic that the nature of an action is determined by
the allegations of the complaint or petition and the character of the relief sought. 27 The Court explained:
jgc:chanrobles. com.ph

". . . It cannot . . . be claimed that this petition is being used as a substitute for appeal after that remedy has lost through
the fault of petitioner. Moreover, stripped of allegations of grave abuse of discretion, the petition actually avers errors of

judgment rather than of jurisdiction, which are the subject of a petition for review." 28
The present case satisfies all the above requisites. The Petition for certiorari before the CA was filed within the reglementary
period of appeal. A review of the records shows that respondents filed their Petition on September 11, 2001 four days
after they had received the RTC Decision. Verily, there were still 11 days to go before the lapse of the period for filing an
appeal. Aside from charging grave abuse of discretion and lack of jurisdiction, they likewise assigned as errors the order and
the judgment of default as well as the RTCs allegedly unconscionable and iniquitous award of liquidated damages. 29 We
find the latter issue particularly significant, considering that the trial court awarded P1,500,000 as liquidated damages
without the benefit of a hearing and out of an obligation impugned by respondents because of petitioners failure to pay. 30
Hence, there are enough reasons to treat the Petition for certiorari as a petition for review.
In view of the foregoing, we rule that the Petition effectively tolled the finality of the trial court Decision. 31 Consequently,
the appellate court had jurisdiction to pass upon the assigned errors. The question that remains is whether it was correct in
setting aside the Decision and in dismissing the case.
Trial Courts Default Orders Erroneous
A review of the assailed Decision reveals that the alleged lack of jurisdiction of the trial court over the defendants therein was
the reason why the CA nullified the formers default judgment and dismissed the case without prejudice. However, we have
ruled earlier that the lower court had acquired jurisdiction over them. Given this fact, the CA erred in dismissing the case; as
a consequence, it failed to rule on the propriety of the Order and the judgment of default. To avoid circuitousness and further
delay, the Court deems it necessary to now rule on this issue.
As much as possible, suits should be decided on the merits and not on technicalities. 32 For this reason, courts have
repeatedly been admonished against default orders and judgments that lay more emphasis on procedural niceties at the
expense of substantial justice. 33 Not being based upon the merits of the controversy, such issuances amount to a
considerable injustice resulting in serious consequences on the part of the defendant. Thus, it is necessary to examine
carefully the grounds upon which these orders and judgments are sought to be set aside. 34
Respondents herein were declared in default by the trial court on May 22, 2001, purportedly because of their delay in filing
an answer. Its unexpected volte face came six months after it had ruled to admit their Answer on November 16, 2000, as
follows:
jgc:c hanrobles. com.ph

"That with respect to the Motion to Admit Answer, this Court is not in favor of terminating this case on the basis of
technicality for failure to answer on time, hence, as ruled in the case of Nantz v. Jugo and Cruz, 43 O.G. No. 11, p. 4620, it
was held:
chan rob1es v irt ual 1aw l ibra ry

Lapses in the literal observance of a rule of procedure will be overlooked when they do not involve public policy, when they
arose from an honest mistake or unforeseen accident, when they have not prejudiced the adverse party and have not
deprived the court of its authority. Conceived in the best traditions of practical and moral justice and common sense, the
Rules of Court frown upon hairsplitting technicalities that do not square with their liberal tendency and with the ends of
justice unless something in the nature of the factors just stated intervene. . .
"WHEREFORE, . . . in the interest of justice, the Answer of the [respondents] is hereby admitted." 35
Indiana Aerospace University v. Commission on Higher Education 36 held that no practical purpose was served in declaring
the defendants in default when their Answer had already been filed albeit after the 15-day period, but before they were
declared as such. Applying that ruling to the present case, we find that respondents were, therefore, imprudently declared in
default.
WHEREFORE, the Petition is hereby GRANTED IN PART, and the Decision of the Court of Appeals MODIFIED. The trial courts
Order of Default dated May 22, 2001 and Judgment of Default dated August 23, 2001 are ANNULLED, and the case
remanded to the trial court for further proceedings on the merits. No costs.
SO ORDERED.

SECOND DIVISION
[G.R. No. 144662. October 13, 2003.]
SPOUSES EFREN MASON and DIGNA MASON, Petitioners, v. THE HONORABLE COURT OF APPEALS and
COLUMBUS PHILIPPINES BUS CORPORATION, Respondents.
DECISION

QUISUMBING, J.:

This petition for review assails the decision, 1 dated May 12, 2000, of the Court of Appeals and its resolution 2 dated August
25, 2000 in CA-G.R. SP No. 54649 denying petitioners motion for reconsideration. The decision set aside the decision 3 of
the Regional Trial Court of Pasay City, Branch 112, in Civil Case No. 98-1567 and directed said court to conduct further
proceedings on the complaint for rescission of lease contract.
chanrob1e s virtua1 1aw 1 ibra ry

The antecedent facts of the case, as found by the Court of Appeals, are as follows:

chan rob1e s virtual 1aw libra ry

Petitioners spouses Efren and Digna Mason owned two parcels of land located along Epifanio delos Santos Avenue in Pasay
City. On March 30, 1993, petitioners and private respondent Columbus Philippines Bus Corporation (hereafter Columbus)
entered into a lease contract, under which Columbus undertook to construct a building worth ten million pesos (P10,000,000)
at the end of the third year of the lease. Because private respondent failed to comply with this stipulation, the petitioners on
November 13, 1998, filed a complaint for rescission of contract with damages against private respondent before the Regional
Trial Court of Pasay City, docketed as Civil Case No. 98-1567. Summons was served upon private respondent through a
certain Ayreen Rejalde. While the receiving copy of the summons described Rejalde as a secretary of Columbus, the sheriffs
return described Rejalde as a secretary to the corporate president, duly authorized to receive legal processes.
Private respondent failed to file its answer or other responsive pleading, hence petitioners filed a motion to declare private
respondent in default. The motion was granted and petitioners were allowed to present evidence ex parte. Thereafter, the
case was submitted for decision.
On April 22, 1999, the trial court rendered its decision whose dispositive portion reads:

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WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and against defendant declaring the
contract of lease rescinded, terminated and cancelled, and ordering defendant:
cha nro b1es vi rtua l 1aw lib ra ry

1. To pay plaintiffs the amount of P10 Million which is the value of the building which defendant failed to construct on the
leased properties, as and by way [of] actual damages;
2. To pay plaintiffs the amount of P63,862.57 beginning November 1998 until defendant and the sub-lessee vacate the
leased property by way of reasonable compensation for the use of the properties;
3. and all other persons and entities claiming rights under it, to surrender possession to plaintiffs and to vacate the leased
premises;
4. to pay plaintiffs the amount of P300,000.00 as and by way of moral damages;
5. to pay plaintiffs the amount of P100,000.00 as and by way of exemplary damages;
6. to pay plaintiffs attorneys fees in the amount of P100,000.00; and
7. to pay the cost of suit.
SO ORDERED. 4
That decision became final on May 12, 1999. The following day, private respondent filed a motion to lift order of default,
which was opposed by petitioners. The trial court ordered the parties to submit their respective memoranda. However,
without waiting for the same, the trial court on May 26, 1999, denied the motion to lift order of default, thus:
chan rob1e s virtual 1a w libra ry

It appearing that the decision rendered by this Court on April 27, 1999 became final and executory on May 12, 1999,
defendants Motion to Lift Order of Default is hereby DENIED. Concomitant thereto, plaintiffs Motion for Execution is hereby
GRANTED.
The Order of this Court on May 21, 1999 allowing the parties to file their respective memoranda within ten (10) days from
May 21, 1999 is hereby revoked and set aside, since the incidents can be resolved based on the records.
WHEREFORE, let a writ of execution issue to enforce and implement the final and executory decision rendered by this Court

on April 7, 1999.
SO ORDERED. 5
Private respondent filed a motion for reconsideration, which was denied. Undaunted, private respondent filed a manifestation
and motion to lift the writ of execution. It suffered the same fate as the motion for reconsideration for being dilatory. The
branch sheriff was directed to proceed with the enforcement of the decision.
Private respondent appealed to the Court of Appeals, which ruled in its favor, thus:

chan rob1es v irt u al 1aw lib rary

WHEREFORE, the petition is GRANTED; the decision in Civil Case No. 98-1567 and all the proceedings therein, including the
order of default and writ of execution, are SET ASIDE. The court a quo is ORDERED to require petitioner to file its answer and
thereafter to conduct further appropriate proceedings with reasonable dispatch.
SO ORDERED. 6
The Court of Appeals held that the trial court erred when it denied private respondents motion to lift order of default. The
appellate court pointed out that private respondent was not properly served with summons, thus it cannot be faulted if it
failed to file an Answer. Section 11, 7 Rule 14 of the 1997 Rules of Civil Procedure requires that service of summons upon
domestic private juridical entity shall be made through its president, managing partner, general manager, corporate
secretary, treasurer or in-house counsel. Since service upon private respondent was made through a certain Ayreen Rejalde,
a mere filing clerk in private respondents office, as evidenced by the latters employment record, such service cannot be
considered valid. Consequently, the subsequent proceedings, including the order of default, judgment by default and its
execution, were also invalid because the trial court did not acquire jurisdiction over private Respondent. Besides judgments
by default are not favored, especially so when there is a prima facie showing that the defaulting party has a meritorious
defense, which in this case was grounded on the contract of lease sued upon, said the Court of Appeals.
Petitioner filed a motion for reconsideration, but to no avail. Hence, this petition for review averring that the Court of Appeals
erred in:
chan rob1e s virtual 1aw l ib rary

I. . . . HOLDING THAT THERE WAS NO VALID SERVICE OF SUMMONS UPON PRIVATE RESPONDENT COLUMBUS PHILIPPINES
BUS CORPORATION
II. . . . NOT HOLDING THAT THERE WAS VALID SERVICE OF SUMMONS CONFORMABLY WITH THE SUBSTANTIAL
COMPLIANCE RULE.
III. . . . HOLDING THAT WITH THE ADOPTION OF SECTION 11, RULE 14 OF THE 1997 RULES OF CIVIL PROCEDURE, THE
SUBSTANTIAL COMPLIANCE RULE NO LONGER APPLIES.
IV. . . . NOT HOLDING THAT JURISDICTION WAS ACQUIRED OVER PRIVATE RESPONDENT COLUMBUS PHILIPPINES BUS
CORPORATION AND THAT ITS MOTION TO LIFT ORDER OF DEFAULT LACKS MERIT. 8
The issues in this case may be succinctly stated as follows:

chanrob1es v irt ual 1aw li bra ry

a. Whether there was valid service of summons on private respondent for the trial court to acquire jurisdiction, and
b. Whether private respondents motion to lift order of default was in order.
On the first issue, petitioners contend that while Section 11, Rule 14 of the 1997 Rules of Civil Procedure clearly specifies the
persons authorized to receive summons on behalf of a private juridical entity, said provision did not abandon or render
inapplicable the substantial compliance rule. Petitioners cite Millenium Industrial Commercial Corporation v. Tan, 9 and
maintain that this Court, by referring to E.B Villarosa & Partner Co., Ltd. v. Judge Benito, 10 effectively ruled that said
provision is the statement of the general rule on service of summons upon corporation and the substantial compliance rule is
the exception. Petitioners claim that this Court, in an array of cases, upheld the substantial compliance rule when it allowed
the validity of the service of summons on the corporations employee other than those mentioned in the Rule where said
summons and complaint were in fact seasonably received by the corporation from said employee. Petitioners insist that
technicality must not defeat speedy justice.
Petitioners stress that even though the summons was received by a mere filing clerk in private respondents corporation,
there was substantial compliance with Section 11, Rule 14 because the summons actually reached private Respondent. This
can be gleaned from private respondents motion to lift order of default where private respondent did not question the
validity of the service of summons but explained in paragraph three thereof that its failure to answer the complaint was due
to its impression that the case would not be pursued by petitioners because the corporation already made payments to them.
11
From said averment, according to petitioners, private respondent in effect admitted that it received the summons.
Notwithstanding this, private respondent did not file its answer to the complaint, said the petitioners. This is tantamount to
negligence which the court cannot tolerate, petitioners conclude. There being valid service of summons, the Regional Trial
Court acquired jurisdiction over private respondent, according to petitioners.

Petitioners further contend that the Court of Appeals reliance on E.B Villarosa & Partner Co., Ltd. v. Judge Benito, 12 in
denying their motion for reconsideration was misplaced, because the factual milieu in said case was different from that in the
instant case. In Villarosa, according to them, there was no showing of actual receipt by the defendant corporation of the
summons while in this case, private respondent actually received the summons.
Private respondent counters that nowhere in the Millenium case did this Court expressly state or remotely imply that we have
not abandoned the doctrine of substantial compliance. Private respondent claims that petitioners misquoted the portion of
the Millenium decision where this Court cited the Villarosa case, to make it appear that the Villarosa ruling, which provides an
interpretation of Section 11, Rule 14 of the 1997 Rules of Civil Procedure, states the general rule on the service of summons
upon corporations where the substantial compliance rule is the exception. Private respondent avers that what this Court
discussed in the Millenium case was the rule on service of summons under the old Rules of Court prior to the promulgation
and effectivity of the 1997 Rules of Civil Procedure. The Millenium case held that as a general rule, service upon one who is
not enumerated in Section 13, 13 Rule 14 of the then Rules of Court is invalid, according to privateRespondent. An exception
is when the summons is actually received by the corporation, which means that there was substantial compliance with the
rule. Private respondent stresses that since the exception referred to the old rule, it cannot be made to apply to the new rule,
which clearly specifies and limits the persons authorized to receive the summons in behalf of the corporation.
Neither can petitioners rely on Millenium to justify their theory, adds private respondent, because at the time the complaint
in this case was filed with the trial court, the 1997 Rules of Civil Procedure were already in effect. The case law applicable in
the instant case, contends private respondent, is Villarosa which squarely provides for the proper interpretation of the new
rule on the service of summons upon domestic corporation, thus:
chanrob1es v irt ual 1aw l ibra ry

The designation of persons or officers who are authorized to accept summons for a domestic corporation or partnership is
now limited and more clearly specified in Section 11, Rule 14 of the 1997 Rules of Civil Procedure. The rule now states
"general manager" instead of only "manager" ; "corporate secretary" instead of "secretary" ; and "treasurer" instead of
"cashier." The phrase "agent, or any of its directors" is conspicuously deleted in the new rule. 14
According to private respondent, service through Ayreen Rejalde, a mere filing clerk of private respondent and not one of
those enumerated above, is invalid.
We find private respondents submission on this issue meritorious.
The question of whether the substantial compliance rule is still applicable under Section 11, Rule 14 of the 1997 Rules of Civil
Procedure has been settled in Villarosa which applies squarely to the instant case. In the said case, petitioner E.B. Villarosa &
Partner Co. Ltd. (hereafter Villarosa) with principal office address at 102 Juan Luna St., Davao City and with branches at
2492 Bay View Drive, Tambo, Paraaque, Metro Manila and Kolambog, Lapasan, Cagayan de Oro City, entered into a sale
with development agreement with private respondent Imperial Development Corporation. As Villarosa failed to comply with
its contractual obligation, private respondent initiated a suit for breach of contract and damages at the Regional Trial Court of
Makati. Summons, together with the complaint, was served upon Villarosa through its branch manager at Kolambog,
Lapasan, Cagayan de Oro City. Villarosa filed a Special Appearance with Motion to Dismiss on the ground of improper service
of summons and lack of jurisdiction. The trial court denied the motion and ruled that there was substantial compliance with
the rule, thus, it acquired jurisdiction over Villarosa. The latter questioned the denial before us in its petition for certiorari.
We decided in Villarosas favor and declared the trial court without jurisdiction to take cognizance of the case. We held that
there was no valid service of summons on Villarosa as service was made through a person not included in the enumeration in
Section 11, Rule 14 of the 1997 Rules of Civil Procedure, which revised the Section 13, Rule 14 of the 1964 Rules of Court.
We discarded the trial courts basis for denying the motion to dismiss, namely, private respondents substantial compliance
with the rule on service of summons, and fully agreed with petitioners assertions that the enumeration under the new rule is
restricted, limited and exclusive, following the rule in statutory construction that expressio unios est exclusio alterius. Had
the Rules of Court Revision Committee intended to liberalize the rule on service of summons, we said, it could have easily
done so by clear and concise language. Absent a manifest intent to liberalize the rule, we stressed strict compliance with
Section 11, Rule 14 of the 1997 Rules of Civil Procedure.
Neither can herein petitioners invoke our ruling in Millenium to support their position for said case is not on all fours with the
instant case. We must stress that Millenium was decided when the 1964 Rules of Court were still in force and effect, unlike
the instant case which falls under the new rule. Hence, the cases 15 cited by petitioners where we upheld the doctrine of
substantial compliance must be deemed overturned by Villarosa, which is the later case.
At this juncture, it is worth emphasizing that notice to enable the other party to be heard and to present evidence is not a
mere technicality or a trivial matter in any administrative or judicial proceedings. The service of summons is a vital and
indispensable ingredient of due process. 16 We will deprive private respondent of its right to present its defense in this multimillion peso suit, if we disregard compliance with the rules on service of summons.
On the second issue, petitioners claim that private respondents motion to lift order of default was not in order for it was filed
late, contrary to the provision in sub-paragraph (b), Section 3, 17 Rule 9 of the 1997 Rules of Civil Procedure, which requires
filing of the motion after notice but before judgment. Also, the motion was (a) not under oath; (b) did not show the fraud,
accident, mistake or excusable neglect that caused private respondents failure to answer; and (c) did not show private
respondents meritorious defense.

Private respondent, in turn, argues that since service upon it was invalid, the trial court did not acquire jurisdiction over it.
Hence, all the subsequent proceedings in the trial court are null and void, including the order of default. This renders the
second issue now moot and academic.
We find merit in private respondents submissions. Since we have ruled that service of summons upon private respondent
through its filing clerk cannot be considered valid, it necessarily follows therefore that the Regional Trial Court of Pasay City
did not acquire jurisdiction over privateRespondent. 18 Consequently, all the subsequent proceedings held before it, including
the order of default, are null and void. 19 As private respondent points out, the second issue has become moot and
academic.
WHEREFORE, the instant petition is DENIED. The questioned decision, as well as the resolution, of the Court of Appeals in
CA-G.R. SP No. 54649 are AFFIRMED. Costs against petitioners.
chan rob1e s virtua1 1aw 1 ibra ry

SO ORDERED.

SECOND DIVISION
[G.R. NO. 159590 : October 18, 2004]
HONGKONG AND SHANGHAI BANKING CORPORATION LIMITED, Petitioner, v. CECILIA DIEZ CATALAN, Respondent.
[G.R. NO. 159591 : October 18, 2004]
HSBC INTERNATIONAL TRUSTEE LIMITED, Petitioner, v. CECILIA DIEZ CATALAN, Respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before us are two Petitions for Review on Certiorari under Rule 45 of the Rules of Court separately filed by the Hongkong and
Shanghai Banking Corporation Limited (HSBANK) and HSBC International Trustee Limited (HSBC TRUSTEE). They seek the
reversal of the consolidated Decision,1 dated August 14, 2003, of the Court of Appeals (CA) in CA-G.R. SP Nos. 75756 and
75757, which dismissed the petitions for certiorari of herein petitioners assailing the Order, dated May 15, 2002, of the
Regional Trial Court, Branch 44, Bacolod City (RTC) in Civil Case No. 01-11372 that denied their respective motions to
dismiss the amended complaint of respondent Cecilia Diez Catalan.
The factual antecedents are as follows:
On January 29, 2001, respondent filed before the RTC, a complaint for a sum of money with damages against petitioner
HSBANK, docketed as Civil Case No. 01-11372, due to HSBANK's alleged wanton refusal to pay her the value of five HSBANK
checks issued by Frederick Arthur Thomson (Thomson) amounting to HK$3,200,000.00.2
On February 7, 2001, summons was served on HSBANK at the Enterprise Center, Tower I, Ayala Avenue corner Paseo de
Roxas St., Makati City.3 HSBANK filed a Motion for Extension of Time to File Answer or Motion to Dismiss dated February 21,
2001.4 Then, it filed a Motion to Dismiss, dated March 8, 2001, on the grounds that (a) the RTC has no jurisdiction over the
subject matter of the complaint; (b) the RTC has not acquired jurisdiction for failure of the plaintiff to pay the correct filing or
docket fees; (c) the RTC has no jurisdiction over the person of HSBANK; (d) the complaint does not state a cause of action
against HSBANK; and (e) plaintiff engages in forum-shopping.5
On September 10, 2001, Catalan filed an Amended Complaint impleading petitioner HSBC TRUSTEE as co-defendant and
invoking Article 19 of the Civil Code as basis for her cause of action.6
The Amended Complaint alleges:
Defendants HSBANK and HSBC TRUSTEE, doing business in the Philippines, are corporations duly organized under the laws of
the British Virgin Islands with head office at 1 Grenville Street, St. Helier Jersey, Channel Islands and with branch offices at
Level 12, 1 Queen's Road Central, Hongkong and may be served with summons and other court processes through their
main office in Manila with address at HSBC, the Enterprise Center, Tower 1, Ayala Avenue corner Paseo de Roxas Street,
Makati City.
Sometime in March 1997, Thomson issued five HSBANK checks payable to Catalan, to wit:

CHECK
NO.

DATE

AMOUNT

807852

Mar. 15,
1997

$600,000.00

807853

Mar. 17,
1997

800,000.00

807854

Mar. 17,
1997

600,000.00

807855

Mar. 22,

600,000.00

1997
807856

Mar. 23,
1997

TOTAL

600,000.00
$3,200,000.00

The checks when deposited were returned by HSBANK purportedly for reason of "payment stopped" pending confirmation,
despite the fact that the checks were duly funded. On March 18, 1997, Thomson wrote a letter to a certain Ricky Sousa7 of
HSBANK confirming the checks he issued to Catalan and requesting that all his checks be cleared. On March 20, 1997,
Thomson wrote another letter to Sousa of HSBANK requesting an advice in writing to be sent to the Philippine National Bank,
through the fastest means, that the checks he previously issued to Catalan were already cleared. Thereafter, Catalan
demanded that HSBANK make good the checks issued by Thomson. On May 16, 1997, Marilou A. Lozada, personal secretary
and attorney-in-fact of Thomson, wrote a letter to Sousa of HSBANK informing him that HSBANK's failure to clear all the
checks had saddened Thomson and requesting that the clearing of the checks be facilitated. Subsequently, Thomson died
and Catalan forwarded her demand to HSBC TRUSTEE. Catalan sent photocopies of the returned checks to HSBC TRUSTEE.
Not satisfied, HSBC TRUSTEE through deceit and trickery, required Catalan, as a condition for the acceptance of the checks,
to submit the original copies of the returned checks, purportedly, to hasten payment of her claim. HSBC TRUSTEE succeeded
in its calculated deception because on April 21, 1999, Catalan and her former counsel went to Hongkong at their own
expense to personally deliver the originals of the returned checks to the officers of HSBC TRUSTEE, anxious of receiving the
money value of the checks but HSBC TRUSTEE despite receipt of the original checks, refused to pay Catalan's claim. Having
seen and received the original of the checks, upon its request, HSBC TRUSTEE is deemed to have impliedly accepted the
checks. Moreover, the refusal of HSBANK and HSBC TRUSTEE to pay the checks is equivalent to illegal freezing of one's
deposit. On the assurance of HSBC TRUSTEE that her claim will soon be paid, as she was made to believe that payments of
the checks shall be made by HSBC TRUSTEE "upon sight," the unsuspecting Catalan left the originals of the checks with
HSBC TRUSTEE and was given only an acknowledgment receipt. Catalan made several demands and after several more
follow ups, on August 16, 1999, Phoenix Lam, Senior Vice President of HSBC TRUSTEE, in obvious disregard of her valid
claim, informed Catalan that her claim is disapproved. No reason or explanation whatsoever was made why her claim was
disapproved, neither were the checks returned to her. Catalan appealed for fairness and understanding, in the hope that
HSBC TRUSTEE would act fairly and justly on her claim but these demands were met by a stonewall of silence. On June 9,
2000, Catalan through counsel sent a last and final demand to HSBC TRUSTEE to remit the amount covered by the checks
but despite receipt of said letter, no payment was made. Clearly, the act of the HSBANK and HSBC TRUSTEE in refusing to
honor and pay the checks validly issued by Thomson violates the abuse of rights principle under Article 19 of the Civil Code
which requires that everyone must act with justice, give everyone his due and observe honesty and good faith. The refusal of
HSBANK and HSBC TRUSTEE to pay the checks without any valid reason is intended solely to prejudice and injure Catalan.
When they declined payment of the checks despite instructions of the drawer, Thomson, to honor them, coupled with the fact
that the checks were duly funded, they acted in bad faith, thus causing damage to Catalan. A person may not exercise his
right unjustly or in a manner that is not in keeping with honesty or good faith, otherwise he opens himself to liability for
abuse of right.8
Catalan prays that HSBANK and HSBC TRUSTEE be ordered to pay P20,864,000.00 representing the value of the five checks
at the rate of P6.52 per HK$1 as of January 29, 2001 for the acts of HSBANK and HSBC TRUSTEE in refusing to pay the
amount justly due her, in addition to moral and exemplary damages, attorney's fees and litigation expenses.9
On October 2, 2001, HSBANK filed a Motion to Dismiss Amended Complaint on the grounds that: (a) the RTC has no
jurisdiction over the subject matter of the complaint since the action is a money claim for a debt contracted by Thomson
before his death which should have been filed in the estate or intestate proceedings of Thomson; (b) Catalan engages in
forum shopping by filing the suit and at the same time filing a claim in the probate proceeding filed with another branch of
the RTC; (c) the amended complaint states no cause of action against HSBANK since it has no obligation to pay the checks as
it has not accepted the checks and Catalan did not re-deposit the checks or make a formal protest; (d) the RTC has not
acquired jurisdiction over the person of HSBANK for improper service of summons; and, (e) it did not submit to the
jurisdiction of the RTC by filing a motion for extension of time to file a motion to dismiss.10
Meanwhile, on October 17, 2001, summons for HSBC TRUSTEE was tendered to the In House Counsel of HSBANK (Makati
Branch) at the Enterprise Center, Tower 1, Ayala Avenue corner Paseo de Roxas, Makati. Without submitting itself to the
jurisdiction of the RTC, HSBC TRUSTEE filed a Special Appearance for Motion to Dismiss Amended Complaint, dated October
29, 2001, questioning the jurisdiction of the RTC over it.11 HSBC TRUSTEE alleges that tender of summons through HSBANK
Makati did not confer upon the RTC jurisdiction over it because: (a) it is a corporation separate and distinct from HSBANK;
(b) it does not hold office at the HSBANK Makati or in any other place in the Philippines; (c) it has not authorized HSBANK
Makati to receive summons for it; and, (d) it has no resident agent upon whom summons may be served because it does not
transact business in the Philippines.

Subsequently, HSBC TRUSTEE filed a Submission, dated November 15, 2001, attaching the Affidavit executed in Hongkong
by Phoenix Lam, Senior Vice-President of HSBC TRUSTEE, attesting to the fact that: 1) HSBC TRUSTEE has not done nor is it
doing business in the Philippines; 2) it does not maintain any office in Makati or anywhere in the Philippines; 3) it has not
appointed any agent in Philippines; and 4) HSBANK Makati has no authority to receive any summons or court processes for
HSBC TRUSTEE.12
On May 15, 2002, the RTC issued an Order denying the two motions to dismiss.13 The RTC held that it has jurisdiction over
the subject matter of the action because it is an action for damages under Article 19 of the Civil Code for the acts of unjustly
refusing to honor the checks issued by Thomson and not a money claim against the estate of Thomson; that Catalan did not
engage in forum-shopping because the elements thereof are not attendant in the case; that the question of cause of action
should be threshed out or ventilated during the proceedings in the main action and after the plaintiff and defendants have
adduced evidence in their favor; that it acquired jurisdiction over the person of defendants because the question of whether
a foreign corporation is doing business or not in the Philippines cannot be a subject of a Motion to Dismiss but should be
ventilated in the trial on the merits; and defendants voluntarily submitted to the jurisdiction of the RTC setting up in their
Motions to Dismiss other grounds aside from lack of jurisdiction.
HSBANK and HSBC TRUSTEE filed separate motions for reconsideration14 but both proved futile as they were denied by the
RTC in an Order dated December 20, 2002.15
On February 21, 2003, Catalan moved to declare HSBANK and HSBC TRUSTEE in default for failure to file their answer to the
amended complaint.
On March 5, 2003, HSBANK and HSBC TRUSTEE filed separate petitions for certiorari and/or prohibition with the CA,
docketed as CA-G.R. SP Nos. 7575616 and 75757,17 respectively.
Subsequently, HSBANK and HSBC TRUSTEE filed before the RTC separate Answers ad cautelam, both dated March 18, 2003,
as a "precaution against being declared in default and without prejudice to the separate petitions for certiorari and/or
prohibition then pending with the CA."18
Meanwhile, the two petitions for certiorari before the CA were consolidated and after responsive pleadings were filed, the
cases were deemed submitted for decision.
In a consolidated Decision dated August 14, 2003, the CA dismissed the two petitions for certiorari .19The CA held that the
filing of petitioners' answers before the RTC rendered moot and academic the issue of the RTC's lack of jurisdiction over the
person of the petitioners; that the RTC has jurisdiction over the subject matter since it is one for damages under Article 19 of
the Civil Code for the alleged unjust acts of petitioners and not a money claim against the estate of Thomson; and, that the
amended complaint states a cause of action under Article 19 of the Civil Code which could merit a favorable judgment if
found to be true. The CA noted that Catalan may have prayed for payment of the value of the checks but ratiocinated that
she merely used the value as basis for the computation of the damages.
Hence, the present petitions.
In G.R. No. 159590, HSBANK submits the following assigned errors:
I.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT THE COURT A QUO, ACTING AS AN (SIC)
REGULAR COURT, HAS JURISDICTION OVER THE AMENDED COMPLAINT SEEKING TO ORDER HSBC TRUSTEE, THE
EXECUTOR OF THE DECEASED FREDERICK ARTHUR THOMSON, TO PAY SUBJECT CHECKS ISSUED BY THE LATE FREDERICK
ARTHUR THOMSON, ADMITTEDLY IN PAYMENT OF HIS INDEBTEDNESS TO CATALAN.
II.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT THE AMENDED COMPLAINT DOES NOT SEEK TO
ORDER HSBANK AND HSBC INTERNATIONAL TRUSTEE LIMITED TO PAY THE OBLIGATION OF THE (SIC) FREDERICK ARTHUR
THOMSON AS EVIDENCED BY THE CHECKS, BUT PRAYS FOR DAMAGES EQUIVALENT OR COMPUTED ON THE BASIS OF THE
VALUE OF THE CHECKS BECAUSE THE DEFENDANTS FAILED TO COMPLY WITH THE MANDATES OF ARTICLE 19 OF THE NEW
CIVIL CODE.
III.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT ALLEGATIONS IN THE AMENDED COMPLAINT
MAKE OUT A CAUSE OF ACTION WHICH COULD MERIT A FAVORABLE JUDGMENT IF FOUND TO BE TRUE, OR IN NOT
HOLDING THAT THE AMENDED COMPLAINT STATES NO CAUSE OF ACTION AGAINST HSBANK, AS DRAWEE BANK.

IV.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN DISREGARDING THE FACT THAT CATALAN ENGAGED IN FORUM
SHOPPING BY FILING THE AMENDED COMPLAINT WHILE HER PETITION FOR THE PROBATE OF THE SUPPOSED WILL OF THE
DECEASED FREDERICK ARTHUR THOMSON IS PENDING WITH ANOTHER BRANCH OF THE COURT A QUO.
V.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT HSBANK HAD SUBMITTED TO THE JURISDICTION
OF THE COURT A QUO BY SUBMITTING AN ANSWER TO THE AMENDED COMPLAINT.20
In G.R. No. 159591, HSBC TRUSTEE also assigns the foregoing first, second and fifth errors as its own.21 In addition, it
claims that:
THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN NOT ORDERING THE DISMISSAL OF THE AMENDED COMPLAINT
AGAINST HSBC TRUSTEE DESPITE THE FACT IT HAS NOT BEEN DULY SERVED WITH SUMMONS. 22
HSBANK and HSBC TRUSTEE contend in common that Catalan has no cause of action for abuse of rights under Article 19 of
the Civil Code; that her complaint, under the guise of a claim for damages, is actually a money claim against the estate of
Thomson arising from checks issued by the latter in her favor in payment of indebtedness.
HSBANK claims that the money claim should be dismissed on the ground of forum-shopping since Catalan also filed a petition
for probate of the alleged last will of Thomson before RTC, Branch 48, Bacolod City, docketed as Spec. Proc No. 00-892. In
addition, HSBANK imputes error upon the CA in holding that by filing an answer to the amended complaint, petitioners are
estopped from questioning the jurisdiction of the RTC.
HSBC TRUSTEE maintains that the RTC did not acquire jurisdiction over it for improper service of summons.
In her Comment, Catalan insists that her complaint is one for damages under Article 19 of the Civil Code for the wanton
refusal to honor and pay the value of five checks issued by the Thomson amounting to HK$3,200,000.00. She argues that
the issue of jurisdiction has been rendered moot by petitioners' participation in the proceedings before the RTC.
Succinctly, the issues boil down to the following:
1) Does the complaint state a cause of action?

chanroblesvi rtua lawlib rary

2) Did Catalan engage in forum-shopping by filing the complaint for damages when she also filed a petition for probate of the
alleged last will of Thomson with another branch of the RTC? and,
3) Did the RTC acquire jurisdiction over HSBANK and HSBC TRUSTEE? Corollary thereto, did the filing of the answer before
the RTC render the issue of lack of jurisdiction moot and academic?
We shall resolve the issue in seriatim.
Does the complaint state a cause of action against HSBANK and HSBC TRUSTEE?

chanroblesv irt ualawli bra ry

The elementary test for failure to state a cause of action is whether the complaint alleges facts which if true would justify the
relief demanded. Stated otherwise, may the court render a valid judgment upon the facts alleged therein?23 The inquiry is
into the sufficiency, not the veracity of the material allegations.24 If the allegations in the complaint furnish sufficient basis on
which it can be maintained, it should not be dismissed regardless of the defense that may be presented by the defendants.25
Catalan anchors her complaint for damages on Article 19 of the Civil Code. It speaks of the fundamental principle of law and
human conduct that a person "must, in the exercise of his rights and in the performance of his duties, act with justice, give
every one his due, and observe honesty and good faith." It sets the standards which may be observed not only in the
exercise of one's rights but also in the performance of one's duties. When a right is exercised in a manner which does not
conform with the norms enshrined in Article 19 and results in damage to another, a legal wrong is thereby committed for
which the wrongdoer must be held responsible.26 But a right, though by itself legal because recognized or granted by law as
such, may nevertheless become the source of some illegality. A person should be protected only when he acts in the
legitimate exercise of his right, that is, when he acts with prudence and in good faith; but not when he acts with negligence
or abuse.27There is an abuse of right when it is exercised for the only purpose of prejudicing or injuring another. The exercise
of a right must be in accordance with the purpose for which it was established, and must not be excessive or unduly harsh;
there must be no intention to injure another.28

Thus, in order to be liable under the abuse of rights principle, three elements must concur, to wit: (a) that there is a legal
right or duty; (b) which is exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another.29
In this instance, after carefully examining the amended complaint, we are convinced that the allegations therein are in the
nature of an action based on tort under Article 19 of the Civil Code. It is evident that Catalan is suing HSBANK and HSBC
TRUSTEE for unjustified and willful refusal to pay the value of the checks.
HSBANK is being sued for unwarranted failure to pay the checks notwithstanding the repeated assurance of the drawer
Thomson as to the authenticity of the checks and frequent directives to pay the value thereof to Catalan. Her allegations in
the complaint that the gross inaction of HSBANK on Thomson's instructions, as well as its evident failure to inform Catalan of
the reason for its continued inaction and non-payment of the checks, smack of insouciance on its part, are sufficient
statements of clear abuse of right for which it may be held liable to Catalan for any damages she incurred resulting
therefrom. HSBANK's actions, or lack thereof, prevented Catalan from seeking further redress with Thomson for the recovery
of her claim while the latter was alive.
HSBANK claims that Catalan has no cause of action because under Section 189 of the Negotiable Instruments Law, "a check
of itself does not operate as an assignment of any part of the funds to the credit of the drawer with the bank, and the bank is
not liable to the holder unless and until it accepts or certifies it." However, HSBANK is not being sued on the value of the
check itself but for how it acted in relation to Catalan's claim for payment despite the repeated directives of the drawer
Thomson to recognize the check the latter issued. Catalan may have prayed that she be paid the value of the checks but it is
axiomatic that what determines the nature of an action, as well as which court has jurisdiction over it, are the allegations of
the complaint, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted
therein.30
Anent HSBC TRUSTEE, it is being sued for the baseless rejection of Catalan's claim. When Catalan parted with the checks as
a requirement for the processing of her claim, even going to the extent of traveling to Hongkong to deliver personally the
checks, HSBC TRUSTEE summarily disapproved her claim with nary a reason. HSBC TRUSTEE gave no heed to Catalan's
incessant appeals for an explanation. Her pleas fell on deaf and uncaring corporate ears. Clearly, HSBC TRUSTEE's acts are
anathema to the prescription for human conduct enshrined in Article 19 of the Civil Code.
Did Catalan engage in forum-shopping?

chan roble svirtualawl ibra ry

It has been held that forum-shopping exists where a litigant sues the same party against whom another action or actions for
the alleged violation of the same right and the enforcement of the same relief is/are still pending, the defense of litis
pendentia in one case is a bar to the others; and, a final judgment in one would constitute res judicata and thus would cause
the dismissal of the rest.31
Thus, there is forum-shopping when there exist: a) identity of parties, or at least such parties as represent the same
interests in both actions, b) identity of rights asserted and relief prayed for, the relief being founded on the same facts, and
c) the identity of the two preceding particulars is such that any judgment rendered in the pending case, regardless of which
party is successful would amount to res judicata in the other.32
Applying the foregoing requisites to the case before us in relation to Spec. Proc No. 00-892, the probate proceeding brought
by Catalan before RTC, Branch 48, Bacolod City, it is obvious that forum-shopping does not exist.
There is no identity of parties. HSBANK is not a party in the probate proceeding. HSBC TRUSTEE is only a party in the
probate proceeding because it is the executor and trustee named in the Hongkong will of Thomson. HSBC TRUSTEE is
representing the interest of the estate of Thomson and not its own corporate interest.
With respect to the second and third requisites, a scrutiny of the entirety of the allegations of the amended complaint in this
case reveals that the rights asserted and reliefs prayed for therein are different from those pleaded in the probate
proceeding, such that a judgment in one case would not bar the prosecution of the other case. Verily, there can be no forumshopping where in one proceeding a party raises a claim for damages based on tort and, in another proceeding a party seeks
the allowance of an alleged last will based on one's claim as an heir. After all, the merits of the action for damages is not to
be determined in the probate proceeding and vice versa. Undeniably, the facts or evidence as would support and establish
the two causes of action are not the same.33Consequently, HSBANK's reliance on the principle of forum-shopping is clearly
misplaced.
Did the RTC acquire jurisdiction over HSBANK and HSBC TRUSTEE?

chanroblesv irt ualawli bra ry

The Rules of Court provides that a court generally acquires jurisdiction over a person through either a valid service of
summons in the manner required by law or the person's voluntary appearance in court.34
In holding that it acquired jurisdiction over HSBANK and HSBC TRUSTEE, the RTC held that both voluntarily submitted to the
jurisdiction of the court by setting up in their Motions to Dismiss other grounds aside from lack of jurisdiction. On the other

hand, the CA ruled that HSBANK and HSBC TRUSTEE are estopped from challenging the jurisdiction of the RTC because they
filed their respective answers before the RTC.
We find that both lower courts overlooked Section 20 of Rule 14 of the 1997 Rules of Civil Procedure which provides that "the
inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be
deemed a voluntary appearance." Nonetheless, such omission does not aid HSBANK's case.
It must be noted that HSBANK initially filed a Motion for Extension of Time to File Answer or Motion to Dismiss.35 HSBANK
already invoked the RTC's jurisdiction over it by praying that its motion for extension of time to file answer or a motion to
dismiss be granted. The Court has held that the filing of motions seeking affirmative relief, such as, to admit answer, for
additional time to file answer, for reconsideration of a default judgment, and to lift order of default with motion for
reconsideration, are considered voluntary submission to the jurisdiction of the court.36 Consequently, HSBANK's expressed
reservation in its Answer ad cautelam that it filed the same "as a mere precaution against being declared in default, and
without prejudice to the Petition for Certiorari and/or Prohibition xxx now pending before the Court of Appeals"37 to assail the
jurisdiction of the RTC over it is of no moment. Having earlier invoked the jurisdiction of the RTC to secure affirmative relief
in its motion for additional time to file answer or motion to dismiss, HSBANK, effectively submitted voluntarily to the
jurisdiction of the RTC and is thereby estopped from asserting otherwise, even before this Court.
In contrast, the filing by HSBC TRUSTEE of a motion to dismiss cannot be considered a voluntary submission to the
jurisdiction of the RTC. It was a conditional appearance, entered precisely to question the regularity of the service of
summons. It is settled that a party who makes a special appearance in court challenging the jurisdiction of said court, e.g.,
invalidity of the service of summons, cannot be considered to have submitted himself to the jurisdiction of the court.38 HSBC
TRUSTEE has been consistent in all its pleadings in assailing the service of summons and the jurisdiction of the RTC over it.
Thus, HSBC TRUSTEE cannot be declared in estoppel when it filed an Answer ad cautelam before the RTC while its petition
for certiorari was pending before the CA. Such answer did not render the petition for certiorari before the CA moot and
academic. The Answer of HSBC TRUSTEE was only filed to prevent any declaration that it had by its inaction waived the right
to file responsive pleadings.
Admittedly, HSBC TRUSTEE is a foreign corporation, organized and existing under the laws of the British Virgin Islands. For
proper service of summons on foreign corporations, Section 12 of Rule 14 of the Revised Rules of Court provides:
SEC. 12. Service upon foreign private juridical entity. - When the defendant is a foreign private juridical entity which has
transacted business in the Philippines, service may be made on its resident agent designated in accordance with law for that
purpose, or if there be no such agent, on the government official designated by law to that effect, or on any of its officers or
agents within the Philippines.
In French Oil Mill Machinery Co., Inc. v. Court of Appeals,39 we had occasion to rule that it is not enough to merely allege in
the complaint that a defendant foreign corporation is doing business. For purposes of the rule on summons, the fact of doing
business must first be "established by appropriate allegations in the complaint" and the court in determining such fact need
not go beyond the allegations therein.40
The allegations in the amended complaint subject of the present cases did not sufficiently show the fact of HSBC TRUSTEE's
doing business in the Philippines. It does not appear at all that HSBC TRUSTEE had performed any act which would give the
general public the impression that it had been engaging, or intends to engage in its ordinary and usual business undertakings
in the country. Absent from the amended complaint is an allegation that HSBC TRUSTEE had performed any act in the
country that would place it within the sphere of the court's jurisdiction.
We have held that a general allegation, standing alone, that a party is doing business in the Philippines does not make it so;
a conclusion of fact or law cannot be derived from the unsubstantiated assertions of parties notwithstanding the demands of
convenience or dispatch in legal actions, otherwise, the Court would be guilty of sorcery; extracting substance out of
nothingness.41
Besides, there is no allegation in the amended complaint that HSBANK is the domestic agent of HSBC TRUSTEE to warrant
service of summons upon it. Thus, the summons tendered to the In House Counsel of HSBANK (Makati Branch) for HSBC
TRUSTEE was clearly improper.
There being no proper service of summons, the RTC cannot take cognizance of the case against HSBC TRUSTEE for lack of
jurisdiction over it. Any proceeding undertaken by the RTC is therefore null and void.42 Accordingly, the complaint against
HSBC TRUSTEE should have been dismissed for lack of jurisdiction over it.
WHEREFORE, the petition in G.R. No. 159590 is DENIED. The Decision of the Court of Appeals, dated August 14, 2003, in
CA-G.R. SP No. 75757 dismissing the petition for certiorari of the Hongkong and Shanghai Banking Corporation Limited
is AFFIRMED.

The petition in G.R. No. 159591 is GRANTED. The Decision of the Court of Appeals, dated August 14, 2003, in CA-G.R. SP
No. 75756 dismissing the petition for certiorari of the HSBC International Trustee Limited is REVERSED and SET ASIDE.
The Regional Trial Court, Branch 44, Bacolod City is declared without jurisdiction to take cognizance of Civil Case No. 0111372 against the HSBC International Trustee Limited, and all its orders and issuances with respect to the latter are
hereby ANNULLED andSET ASIDE. The said Regional Trial Court is hereby ORDERED to DESIST from maintaining further
proceedings against the HSBC International Trustee Limited in the case aforestated.
SO ORDERED.

THIRD DIVISION
[G.R. NO. 147530 : June 29, 2005]
PABLO B. CASIMINA, then General Manager of the Philippine Fisheries Development Authority, Petitioner, v. HON.
EMILIO B. LEGASPI, in his capacity as Presiding Judge of RTC of Iloilo, Branch 22 and EMMANUEL T.
ILLERA, Respondents.
DECISION
CORONA, J.:
Before us is a Petition for Review under Rule 45 of the Rules of Civil Procedure for the nullification of the decision dated
August 18, 2000 of Hon. Emilio B. Legaspi, presiding judge of the Regional Trial Court of Iloilo City, Branch 22 in Civil Case
No. 00-26187, directing petitioner to desist from giving effect to the re-assignment of private respondent from his permanent
station in Iloilo City to the Quezon City office.
The facts follow.
Private respondent Emmanuel T. Illera was the Port Manager of the Iloilo Fishing Port Complex (IFPC) while petitioner Pablo
B. Casimina was the then General Manager of the Philippine Fisheries Development Authority (PFDA) with offices in Quezon
City.
On March 17, 2000, petitioner Casimina issued Special Order No. 821 re-assigning private respondent from Iloilo to the
central office in Quezon City:
17 March 2000
SPECIAL ORDER
No. 82
Series of 2000
Subject: REASSIGNMENT OF PERSONNEL
In the exigency of the service, Mr. EMMANUEL T. ILLERA, Port Manager of the Iloilo Fish Port Complex (IFPC) is hereby
reassigned to the Central Office of the General Manager effective 03 April 2000. To assume responsibility of over-all port
administration, Engr. TITO C. COSEJO, Port Manager, Navotas Fish Port Complex (NFPC) is hereby re-assigned and
designated as Acting Port Manager of the Iloilo Fish Port Complex.
Mr. Illera and Engr. Cosejo should immediately clear themselves of their administrative accountabilities before proceeding to
their new place of assignment.
This Order shall remain effective until revoked in writing by the undersigned.
(SGD.) PABLO B. CASIMINA
General Manager
On March 22, 2000, private respondent sent a memorandum2 to petitioner praying for a reconsideration of the above order.
He wrote '
22 March 2000
MEMORANDUM
F O R: The General Manager, PFDA
T H R U: The Asst. General Manager, PFDA
F R O M: The Port Manager, PFDA-IFPC

SUBJECT: REASSIGNMENT
In the late afternoon of 21 March 2000, S.O. no. 82 s. 2000 was faxed to my office. I was surprised when my staff gave this
communication to me the next day because considering my transfer or any employees transfers for that matter - would have
far reaching official and personal consequences as well, I expected that this matter should have at least first been discussed
with me. As it is I do not know for what reasons if any I am being reassigned or even what I am supposed to be doing in
your office when I get there. The S.O. itself is silent on these matters.
My situation becomes quite ironic when we look at S.O. no. 81 s. 2000 which is dated 14 March 2000. Before this Order
referring to Ms. Irma Catain's detail to Central Office was even prepared, Ms. Catain first talked to you, me and Atty. Paz to
whose office she will be assigned. When we accepted her personal reasons for reassignment our offices worked out the
details of her transfer and so the Special Order was issued. If you will recall, last 18 January 2000 an undated S.O. No. 024
was issued transferring Engr. P. Zapanta, the IFPC Acting EMD chief to General Santos and no prior consultation was also
done. I thought with the procedure observed in Ms. Catain's case all that was behind us.
In view therefore of the above I am requesting that S.O. No. 82 s.2000 be reconsidered.
(SGD.) EMMANUEL T. ILLERA
On March 29, 2000, petitioner issued a memorandum3 to private respondent stating therein the reason for the reassignment. He explained '
29 March 2000
MEMORANDUM
T O: The Port Manager, IFPC
F R O M: The General Manager
SUBJECT: Reassignment to Central Office
Your response dated 22 March 2000 to Special Order No. 82 Series of 2000 regarding your reassignment to the Central
Office is noted.
While in the Central Office, you are expected to help review and formulate credit and collection policies that would negate the
accumulation of uncollected accounts receivables, in addition to the other duties that may be assigned to you in the interest
of the service.
In this connection, you are hereby ordered to cease and desist from the further performance of your duties as Port Manager
of the Iloilo Fish Port Complex effective 03 April 2000 and to assume duties and responsibilities as stated.
For strict compliance.
(SGD.) PABLO B. CASIMINA
After receiving the memorandum, private respondent immediately filed a case for injunction with prayer for temporary
restraining order and a writ of preliminary injunction against petitioner in the RTC of Iloilo, Branch 22 docketed as Civil Case
No. 00-26187, to restrain petitioner from transferring him to the central office in Quezon City.
On April 14, 2000, petitioner, through counsel, filed an omnibus motion for the dismissal of the complaint on the grounds of
lack of jurisdiction over his person and the subject matter, and lack of cause of action. He averred that he never received any
summons or copy of the complaint against him, hence, the court never acquired jurisdiction over his person. He further
contended that the case involved personnel movement of a government employee in the public service and should have been
appealed to the Civil Service Commission instead of the regular courts.
The trial court denied petitioner's motion to dismiss the complaint against him and granted the writ of preliminary injunction
prayed for by private respondent ordering petitioner to "desist from giving effect to the re-assignment of plaintiff (herein
private respondent) from his permanent station in Iloilo City to the Quezon City office."4
Petitioner moved for a reconsideration of the above decision but it was denied, hence, this appeal. He raises the following as
the issues for our consideration:

A. Whether or not public respondent, Hon. Emilio B. Legaspi, in his capacity as Presiding Judge of the Regional Trial Court of
Iloilo, Branch 22, exercised grave abuse of discretion which is tantamount to lack of or in excess of jurisdiction in deciding
the case when the said trial court has not acquired jurisdiction over the person of the petitioner and the subject matter of the
case;
B. Whether or not the instant case should be dismissed for lack of cause of action on the ground of private respondent's
failure to exhaust administrative remedies.5
Petitioner contends that the court a quo did not acquire jurisdiction over his person because the summons, together with a
copy of the complaint, was not personally served on him. He argues that the summons was served by the sheriff in the PFDA
office in the Iloilo Fishing Port Complex while his office was in Quezon City. He further contends that when Assistant
Government Corporate Counsel Reynaldo R. Tansioco, Government Corporate Attorney Ruben S. de la Paz and Government
Corporate Attorney Mariano C. Alojado appeared in court during the hearing of the motion for the issuance of a preliminary
injunction on April 18, 2000, they did so only to inform the court that they had filed an omnibus motion to dismiss the
complaint against petitioner on the ground of lack of jurisdiction over his person and over the subject matter of the case.
We find the petition meritorious.
A court acquires jurisdiction over a person either through a valid service of summons or the person's voluntary appearance in
court. A court must necessarily have jurisdiction over a party for the latter to be bound by a court decision.6
Generally accepted is the principle that no man shall be affected by any proceeding to which he is a stranger, and strangers
to a case are not bound by judgment rendered by the court.7
Summons is a writ by which the defendant is notified of the action brought against him. Service of such writ is the means by
which the court may acquire jurisdiction over his person.8 As a rule, summons should be personally served on the
defendant.9 It is only when summons cannot be served personally within a reasonable period of time that substituted service
may be resorted to.10 The Rules specify two modes for effecting substituted service of summons, to wit:
a) by leaving copies of the summons at the defendant's residence with some person of suitable age and discretion then
residing therein, or
b) by leaving the copies at defendant's office or regular place of business with some competent person in charge thereof.11
Here, petitioner never received the summons against him, whether personally or in his office. The records show that
petitioner's official address as the General Manager of the Philippine Fisheries Development Authority (PFDA) was in Quezon
City. Yet, the summons, together with a copy of the complaint, was served not in his Manila office but in PFDA's Iloilo branch
office and received by the records receiving officer there. We have held that the failure to faithfully, strictly and fully comply
with the requirements of substituted service renders the service ineffective.12
In ruling that there was a valid service of summons, respondent judge "presumed that the said Records Receiving Officer
(was) authorized to receive the communication or court processes addressed to the defendant."13 He further surmised and
held that:
One thing sure is, he forwarded it to their Manila, Quezon City Central Office. In fact, Engr. Tito Cosejo who briefly acted as
the Department Manager of the Iloilo Fishing Port Complex, appeared in Court during the summary hearing on the plaintiff's
prayer for the issuance of the TRO on April 4, 2000 and informed the Court that the summons was received by their Central
Office when defendant was on his way to the province. There was therefore substantial compliance of the rule on service of
summons.
We disagree.
The doctrine of substantial compliance requires that for there to be a valid service of summons,actual receipt of the
summons by the defendant through the person served must be shown.14 We further require that where there is substituted
service, there should be a report indicating that the person who received the summons in the defendant's behalf was one
with whom petitioner had a relation of confidence ensuring that the latter would receive or would be notified of the summons
issued in his name.15 None of these was observed in the case at bar.
We cannot infer actual receipt of summons by petitioner from the fact that the government corporate counsel filed a motion
to dismiss the case against him and Mr. Cosejo appeared on his behalf during the summary hearing for the issuance of a
temporary restraining order to ask for the postponement of the case. It is well-settled that a party who makes a special
appearance in court challenging the jurisdiction of said court based on the ground of invalidity of summons, among others,
cannot be considered to have submitted himself to the jurisdiction of the court.16 Even the assertion of affirmative defenses,

aside from lack of jurisdiction over the person of the defendant, cannot be considered a waiver of the defense of lack of
jurisdiction over such person.17
Since the trial court did not acquire jurisdiction over the person of petitioner, he could not have been bound by the decision
of respondent judge ordering him to desist from transferring private respondent from his station in Iloilo City to the central
office in Quezon City. Any decision rendered without jurisdiction is a total nullity and may be struck down at any time, even
on appeal, before this Court.
On the issue of lack of jurisdiction over the subject matter, we agree with petitioner that this case falls within the jurisdiction
of the Civil Service Commission (CSC) because it involves the movement of government personnel to promote order and
efficiency in public service. The 1987 Constitution specifically mandates that:
Section 3. The Civil Service Commission, as the central personnel agency of the government, shall establish a career
service and adopt measures to promote morale, efficiency, integrity, responsiveness, progressiveness, and
courtesy in the civil service. It shall strengthen the merits and rewards system, integrate all human resources
development programs for all levels and ranks, and institutionalize a management climate conducive to public accountability.
It shall submit to the President and the Congress an annual report on its personnel programs.18 (emphasis ours)
Personnel actions, i.e., appointments, promotions, transfers, re-assignments, etc., are specifically provided for in Section 26
(3), Chapter 5, Book V, Subtitle A, of Executive Order No. 292, or the Administrative Code of 1987. Thus,
Section 26. Personnel Actions. - xxx any action denoting the movement or progress of personnel in the civil service shall be
known as personnel action. Such action shall include appointment through certification, promotion, transfer, reinstatement,
re-employment, detail, reassignment, demotion, and separation. All personnel actions shall be in accordance with such rules,
standards, and regulations as may be promulgated by the Commission.
xxx
(3) Transfer. A transfer is a movement from one position to another which is of equivalent rank, level, or salary without
break in service involving the issuance of an appointment.
It shall not be considered disciplinary when made in the interest of public service, in which case, the employee
concerned shall be informed of the reason therefore. If the employee believes that there is no justification for the
transfer, he may appeal his case to the Commission.(emphasis ours)
xxx
While we are aware that the power to transfer and re-assign government employees from one office to another can be
abused by some unscrupulous government officials, not all transfers, however, amount to removal from office.19
'(N)either does illegality attach to the transfer of an employee from his assigned station to the main office, effected in good
faith and in the interest of the service pursuant to Sec. 32 of the Civil Service Act.20
Here, petitioner ordered the transfer of private respondent from the Iloilo branch to the main office in Manila in the exigency
of the service and in order to
'help review and formulate credit and collection policies that would negate the accumulation of uncollected accounts
receivables, in addition to the other duties that may be assigned to (him) in the interest of the service.21
There is nothing to show from the facts presented to us that the order transferring private respondent to Manila was done in
bad faith or motivated by ill will. We thus find his refusal to transfer to the main office to be without basis.
In any event, if private respondent believed that his transfer was unjustified, his remedy was to appeal to the Civil Service
Commission.22 It was therefore wrong for the trial court to take cognizance of the case without private respondent first
exhausting the administrative remedies available to him.
WHEREFORE, foregoing premises considered, the petition is hereby GRANTED. The decision in Civil Case No. 00-26187, and
the order denying the motion for its reconsideration, are hereby ANNULLED AND SET ASIDE.
SO ORDERED.

FIRST DIVISION
[G.R. NO. 155488 : December 6, 2006]
ERLINDA R. VELAYO-FONG, Petitioner, v. SPOUSES RAYMOND and MARIA HEDY VELAYO,Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure seeking the reversal
of the Decision1 of the Court of Appeals (CA) dated May 14, 2002 in CA-G.R. CV No. 54434 which affirmed the Decision of
the Regional Trial Court, Branch 105, Quezon City (RTC) in Civil Case No. Q-93-17133; and the CA Resolution2 dated October
1, 2002 which denied petitioner's motion for reconsideration.
The procedural antecedents and factual background of the case are as follows:
On August 9, 1993, Raymond Velayo (Raymond) and his wife, Maria Hedy Velayo (respondents) filed a complaint for sum of
money and damages with prayer for preliminary attachment against Erlinda R. Velayo-Fong (petitioner), Rodolfo R. Velayo,
Jr. (Rodolfo Jr.) and Roberto R. Velayo (Roberto).3Raymond is the half-brother of petitioner and her co-defendants.
In their Complaint, respondents allege that petitioner, a resident of 1860 Alamoana Boulevard, Honolulu, Hawaii, USA, and
her co-defendants, who are residents of the Philippines, made it appear that their common father, Rodolfo Velayo, Sr.
(Rodolfo Sr.) and petitioner had filed a complaint against Raymond before the National Bureau of Investigation (NBI),
accusing Raymond of the crimes of estafa and kidnapping a minor; that petitioner and her co-defendants also requested that
respondents be included in the Hold Departure List of the Bureau of Immigration and Deportation (BID) which was granted,
thereby preventing them from leaving the country and resulting in the cancellation of respondents' trips abroad and caused
all of respondents' business transactions and operations to be paralyzed to their damage and prejudice; that petitioner and
her co-defendants also filed a petition before the Securities and Exchange Commission (SEC) docketed as Case No. 4422
entitled "Rodolfo Velayo Sr. et al. v. Raymond Velayo et al." which caused respondents' funds to be frozen and paralyzed the
latters' business transactions and operations to their damage and prejudice. Since petitioner was a non-resident and not
found in the Philippines, respondents prayed for a writ of preliminary attachment against petitioner's properties located in the
Philippines.
Before respondents' application for a writ of preliminary attachment can be acted upon by the RTC, respondents filed on
September 10, 1993 an Urgent Motion praying that the summons addressed to petitioner be served to her at Suite 201,
Sunset View Towers Condominium, Roxas Boulevard, Pasay City and at No. 5040 P. Burgos Street, T. Towers Condominium,
Makati.4 In its Order dated September 13, 1993, the RTC granted the said motion.5
The Process Server submitted the Officer's Return, to wit:
THIS IS TO CERTIFY, that after several failed attempts to serve the copy of summons and complaint issued in the aboveentitled case at the given addresses of defendant Erlinda Velayo as mentioned in the Order of this Court dated September
13, 1993, finally, on the 23rd day of September, 1993, at the instance of herein plaintiffs through counsel, undersigned was
able to SERVED (sic) personally upon defendant Erlinda Velayo the copy of summons together with the thereto attached copy
of the complaint, not at her two (2) given addresses, but at the lobby of Intercontinental Hotel, Makati, Metro Manila, right in
the presence of lobby counter personnel by the name of Ms. A. Zulueta, but said defendant refused to sign in receipt thereof.
I FURTHER CERTIFY, that on the 27th day of September, 1993, copy of the same WAS SERVED personally upon the other
defendant Rodolfo R. Velayo, Jr., at No. Block 57, Lots 17 and 19, G. Sanchez Street, BF Resort Village, Las Pias, Metro
Manila, but who also refused to sign in receipt thereof.
WHEREFORE, original copy of the summons is now being respectfully returned to the Honorable Court DULY SERVED.
Quezon City, Philippines, September 30, 1993.6
Upon ex-parte motions7 of respondents, the RTC in its Order dated November 23, 1993 and January 5, 1994, declared
petitioner and her co-defendant in default for failure to file an answer and ordered the ex-parte presentation of respondents'
evidence.8
On June 15, 1994, the RTC rendered its Decision in respondents' favor, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered ordering the defendants to pay the plaintiffs:

1. the amount of P65,000.00 as actual damages;

2. the amount of P200,000.00 as moral damages;
3. Attorney's fees in the amount of P5,000,00 it being a judgment by default; and

cralawlib ra ry

4. cost of suit.
SO ORDERED.9
On September 1, 1994, petitioner filed a Motion to Set Aside Order of Default claiming that she was prevented from filing a
responsive pleading and defending herself against respondents' complaint because of fraud, accident or mistake; that
contrary to the Officer's Return, no summons was served upon her; that she has valid and meritorious defenses to refute
respondents' material allegations.10Respondents opposed said Motion.11
In its Order dated May 29, 1995, the RTC denied petitioner's Motion ruling that the presumption of regularity in the discharge
of the function of the Process Server was not sufficiently overcome by petitioner's allegation to the contrary; that there was
no evident reason for the Process Server to make a false narration regarding the service of summons to defaulting defendant
in the Officer's Return.12
On September 4, 1995, respondents filed a Motion for Execution.13 On September 22, 1995, petitioner filed an Opposition to
Motion for Execution contending that she has not yet received the Decision and it is not yet final and executory as against
her.14
In its Order dated January 3, 1996, the RTC, finding that the Decision dated June 15, 1994 and the Order dated May 29,
1995 were indeed not furnished or served upon petitioner, denied respondents' motion for execution against petitioner and
ordered that petitioner be furnished the said Decision and Order.15
On March 28, 1996, the RTC issued an Order directing the issuance of the writ of execution against petitioner's codefendant.16
On May 23, 1996, petitioner, through her counsel, finally received the Decision dated June 15, 1994 and the Order dated
May 29, 1995.17
Petitioner filed an appeal with the CA questioning the propriety and validity of the service of summons made upon her.
Respondents opposed the appeal, arguing that the petition should be dismissed since it raised pure questions of law, which is
not within the CA's jurisdiction to resolve under Section 2 (c) of Rule 41 of the Revised Rules of Court; that, in any case,
petitioner's reliance on the rule of extraterritorial service is misplaced; that the judgment by default has long been final and
executory since as early as August 1994 petitioner became aware of the judgment by default when she verified the status of
the case; that petitioner should have filed a motion for new trial or a petition for relief from judgment and not a motion to set
aside the order of default since there was already a judgment by default.
On May 14, 2002, the CA rendered its Decision affirming the Decision and Order of the RTC18 ruling that it (CA) has
jurisdiction since the petition raised a question of fact, that is, whether petitioner was properly served with summons; that
the judgment by default was not yet final and executory against petitioner since the records reveal and the RTC Order dated
January 3, 1996 confirmed that she was not furnished or served a copy of the decision; that petitioner was validly served
with summons since the complaint for damages is an action in personam and only personal, not extraterritorial service, of
summons, within the forum, is essential for the acquisition of jurisdiction over her person; that petitioner's allegations that
she did not know what was being served upon her and that somebody just hurled papers at her were not substantiated by
competent evidence and cannot overcome the presumption of regularity of performance of official functions in favor of the
Officer's Return.
Petitioner filed a Motion for Reconsideration19 but the CA denied it in its Resolution dated October 1, 2002.20
Hence, the present petition anchored on the following grounds:
I
THE COURT OF APPEALS PATENTLY ERRED IN NOT RULING THAT PETITIONER WAS NOT VALIDLY SERVED WITH SUMMONS.
II

THE COURT OF APPEALS PATENTLY ERRED IN NOT RULING THAT PETITIONER WAS PREVENTED FROM FILING RESPONSIVE
PLEADING AND DEFENDING AGAINST RESPONDENTS' COMPLAINT BECAUSE OF FRAUD, ACCIDENT AND MISTAKE.21
Parties filed their respective Memoranda on September 8 and 9, 2005.
Petitioner argues that summons should have been served through extraterritorial service since she is a non-resident; that the
RTC should have lifted the order of default since a default judgment is frowned upon and parties should be given their day in
court; that she was prevented from filing a responsive pleading and defending against respondents' complaint
through fraud, accident or mistake considering that the statement in the Officer's Return that she was personally served
summons is inaccurate; that
she does not remember having been served with summons during the said date but remembers that a man hurled some
papers at her while she was entering the elevator and, not knowing what the papers were all about, she threw back the
papers to the man before the elevator closed; that she has a valid and meritorious defense to refute the material allegations
of respondents' complaint.
On the other hand, respondents contend that petitioner was validly served with summons since the rules do not require that
service be made upon her at her place of residence as alleged in the complaint or stated in the summons; that
extraterritorial service applies only when the defendant does not reside and is not found in the Philippines; that petitioner
erred in filing a motion to set aside the order of default at the time when a default judgment was already rendered by the
RTC since the proper remedy is a motion for new trial or a petition for relief from judgment under Rule 38; that the issue on
summons is a pure question of law which the CA does not have jurisdiction to resolve under Section 2 (c) of Rule 41 of the
1997 Rules of Civil Procedure.22
The Court finds it proper to resolve first whether the issue involved in the appeal filed with the CA is a question of law and
therefore not within the jurisdiction of the CA to resolve.
In Murillo v. Consul,23 which was later adopted by the 1997 Rules of Civil Procedure, the Court clarified the three modes of
appeal from decisions of the RTC, namely: (a) ordinary appeal or appeal by writ of error, where judgment was rendered in a
civil or criminal action by the RTC in the exercise of original jurisdiction; (b) Petition for Review, where judgment was
rendered by the RTC in the exercise of appellate jurisdiction; and (c) Petition for Review to the Supreme Court.
The first mode of appeal, governed by Rule 41, is taken to the Court of Appeals on questions of fact or mixed questions of
fact and law. The second mode of appeal, covered by Rule 42, is brought to the Court of Appeals on questions of fact, of law,
or mixed questions of fact and law. The third mode of appeal, provided for by Rule 45, is elevated to the Supreme Court only
on questions of law.
A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact
when the doubt arises as to the truth or falsity of the alleged facts.24 For a question to be one of law, the same must not
involve an examination of the probative value of the evidence presented by the litigants or any of them.25 The resolution of
the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a
review of the evidence presented, the question posed is one of fact.26 Thus, the test of whether a question is one of law or of
fact is not the appellation given to such question by the party raising the same; rather, it is whether the appellate court can
determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise it is
a question of fact.27
Respondents' claim that the issues raised by petitioner before the CA are pure legal questions is not tenable.
A scrutiny of petitioner's petition before the CA reveals that it raised two issues: (a) the propriety of the service effected on a
non-resident; and (b) the validity of the service made upon her. The first is a question of law. There is indeed a question as
to what and how the law should be applied. The second is a question of fact. The resolution of said issue entails a review of
the factual circumstances that led the RTC to conclude that service was validly effected upon petitioner. Therefore, petitioner
properly brought the case to the CA via the first mode of appeal under the aegis of Rule 41.
How may service of summons be effected on a non-resident?

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Section 17,28 Rule 14 of the Rules of Court provides:

Section 17. Extraterritorial service - When the defendant does not reside and is not found in the Philippines and the action
affects the personal status of the plaintiff or relates to, or the subject of which, is property within the Philippines, in which the
defendant has or claims a lien or interest, actual or contingent, or in which relief demanded consists, wholly or in part, in

excluding the defendant from any interest therein, or the property of the defendant has been attached in the Philippines,
service may, by leave of court, be effected out of the Philippines by personal service as under section 7; or by publication in
a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the
summons and order of the court shall be sent by registered mail to the last known address of the defendant, or in any other
manner the court may deem sufficient. Any order granting such leave shall specify a reasonable time, which shall not be less
than sixty (60) days after notice, within which the defendant must answer.
Under this provision, when the defendant is a nonresident and he is not found in the country, summons may be served
extraterritorially. There are only four instances when extraterritorial service of summons is proper, namely: (a) when the
action affects the personal status of the plaintiffs; (b) when the action relates to, or the subject of which is property, within
the Philippines, in which the defendant claims a lien or interest, actual or contingent; (c) when the relief demanded in such
action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and (d)
when the defendant's property has been attached within the Philippines. In these instances, service of summons may be
effected by (a) personal service out of the country, with leave of court; (b) publication, also with leave of court; or (c) any
other manner the court may deem sufficient.
Thus, extrajudicial service of summons apply only where the action is in rem, that is, an action against the thing itself
instead of against the person, or in an action quasi in rem, where an individual is named as defendant and the purpose of the
proceeding is to subject his interest therein to the obligation or loan burdening the property. The rationale for this is that
in in rem and quasi in remactions, jurisdiction over the person of the defendant is
not a prerequisite to confer jurisdiction on the court provided that the court acquires jurisdiction over the res.29
Where the action is in personam, that is, one brought against a person on the basis of her personal liability, jurisdiction over
the person of the defendant is necessary for the court to validly try and decide the case. When the defendant is a nonresident, personal service of summons within the state is essential to the acquisition of jurisdiction over the
person.30 Summons on the defendant must be served by handing a copy thereof to the defendant in person, or, if he refuses
to receive it, by tendering it to him.31 This cannot be done, however, if the defendant is not physically present in the country,
and thus, the court cannot acquire jurisdiction over his person and therefore cannot validly try and decide the case against
him.32
In the present case, respondents' cause of action in Civil Case No. Q-93-17133 is anchored on the claim that petitioner and
her co-defendants maliciously instituted a criminal complaint before the NBI and a petition before the SEC which prevented
the respondents from leaving the country and paralyzed the latters' business transactions. Respondents pray that actual and
moral damages, plus attorney's fees, be awarded in their favor. The action instituted by respondents affect the parties alone,
not the whole world. Any judgment therein is binding only upon the parties properly impleaded.33 Thus, it is an action in
personam. As such, personal service of summons upon the defendants is essential in order for the court to acquire
jurisdiction over their persons.34
The Court notes that the complaint filed with the RTC alleged that petitioner is a non-resident who is not found in the
Philippines for which reason respondents initially prayed that a writ of preliminary attachment be issued against her
properties within the Philippines to confer jurisdiction upon the RTC. However, respondents did not pursue its application for
said writ when petitioner was subsequently found physically present in the Philippines and personal service of summons was
effected on her.
Was there a valid service of summons on petitioner? The answer is in the affirmative.
Petitioner's bare allegation that the statement in the "Officer's Return that she was personally served summons is inaccurate"
is not sufficient. A process server's certificate of service is prima facieevidence of the facts as set out in the
certificate.35 Between the claim of non-receipt of summons by a party against the assertion of an official whose duty is to
send notices, the latter assertion is fortified by the presumption that official duty has been regularly performed.36 To
overcome the presumption of regularity of performance of official functions in favor of such Officer's Return, the evidence
against it must be clear and convincing. Petitioner having been unable to come forward with the requisite quantum of proof
to the contrary, the presumption of regularity of performance on the part of the process server stands.
The Court need not make a long discussion on the propriety of the remedy adopted by petitioner in the RTC of filing a motion
to set aside the order of default at a time when there was already a judgment by default. As aptly held by the CA, since
petitioner was not furnished or served a copy of the judgment of default, there was no notice yet of such judgment as
against her. Thus, the remedy of filing a motion to set aside the order of default in the RTC was proper.
Petitioner's argument that the RTC should have set aside the order of default and applied the liberal interpretation of rules
with a view of affording parties their day in court is not tenable. While indeed default orders are not viewed with favor, the
party seeking to have the order of default lifted must

first show that her failure to file an answer or any other responsive pleading was due to fraud, accident, mistake, or
excusable neglect and then she must show that she has a valid and meritorious defense.37
In this case, petitioner failed to show that her failure to file an answer was due to fraud, accident, mistake or excusable
neglect. Except for her bare unsupported allegation that the summons were only thrown to her at the elevator, petitioner did
not present any competent evidence to justify the setting aside of the order of default.
Moreover, when a party files a motion to lift order of default, she must also show that she has a meritorious defense or that
something would be gained by having the order of default set aside.38The term meritorious defense implies that the applicant
has the burden of proving such a defense in order to have the judgment set aside. The cases usually do not require such a
strong showing. The test employed appears to be essentially the same as used in considering summary judgment, that is,
whether there is enough evidence to present an issue for submission to the trier of fact, or a showing that on the undisputed
facts it is not clear that the judgment is warranted as a matter of law.39 The defendant must show that she has a meritorious
defense otherwise the grant of her motion will prove to be a useless exercise. Thus, her motion must be accompanied by a
statement of the evidence which she intends to present if the motion is granted and which is such as to warrant a reasonable
belief that the result of the case would probably be otherwise if a new trial is granted.40
In the present case, petitioner contented herself with stating in her affidavit of merit that the cases against respondent
Raymond were filed at the instance of her father.41 Such allegation is a conclusion rather than a statement of facts showing a
meritorious defense. The affidavit failed to controvert the facts alleged by the respondents. Petitioner has not shown
that she has a meritorious defense.
Thus, since petitioner failed to show that her failure file an answer was not due to fraud, accident, mistake, or excusable
neglect; and that she had a valid and meritorious defense, there is no merit to her prayer for a liberal interpretation of
procedural rules.
WHEREFORE, the instant petition is DENIED. The assailed Decision and Resolution of the Court of Appeals are AFFIRMED.
Costs against petitioner.
SO ORDERED.

FIRST DIVISION
[G.R. NO. 170943, September 23, 2008]
PEDRO T. SANTOS, JR., Petitioner, v. PNOC EXPLORATION CORPORATION, Respondent.
DECISION
CORONA, J.:
This is a petition for review1 of the September 22, 2005 decision2 and December 29, 2005 resolution3of the Court of Appeals
in CA-G.R. SP No. 82482.
On December 23, 2002, respondent PNOC Exploration Corporation filed a complaint for a sum of money against petitioner
Pedro T. Santos, Jr. in the Regional Trial Court of Pasig City, Branch 167. The complaint, docketed as Civil Case No. 69262,
sought to collect the amount of P698,502.10 representing petitioner's unpaid balance of the car loan4 advanced to him by
respondent when he was still a member of its board of directors.
Personal service of summons to petitioner failed because he could not be located in his last known address despite earnest
efforts to do so. Subsequently, on respondent's motion, the trial court allowed service of summons by publication.
Respondent caused the publication of the summons in Remate, a newspaper of general circulation in the Philippines, on May
20, 2003. Thereafter, respondent submitted the affidavit of publication of the advertising manager of Remate5 and an
affidavit of service of respondent's employee6 to the effect that he sent a copy of the summons by registered mail to
petitioner's last known address.
When petitioner failed to file his answer within the prescribed period, respondent moved that the case be set for the
reception of its evidence ex parte. The trial court granted the motion in an order dated September 11, 2003.
Respondent proceeded with the ex parte presentation and formal offer of its evidence. Thereafter, the case was deemed
submitted for decision on October 15, 2003.
On October 28, 2003, petitioner filed an "Omnibus Motion for Reconsideration and to Admit Attached Answer." He sought
reconsideration of the September 11, 2003 order, alleging that the affidavit of service submitted by respondent failed to
comply with Section 19, Rule 14 of the Rules of Court as it was not executed by the clerk of court. He also claimed that he
was denied due process as he was not notified of the September 11, 2003 order. He prayed that respondent's evidence ex
parte be stricken off the records and that his answer be admitted.
Respondent naturally opposed the motion. It insisted that it complied with the rules on service by publication. Moreover,
pursuant to the September 11, 2003 order, petitioner was already deemed in default for failure to file an answer within the
prescribed period.
In an order dated February 6, 2004, the trial court denied petitioner's motion for reconsideration of the September 11, 2003
order. It held that the rules did not require the affidavit of complementary service by registered mail to be executed by the
clerk of court. It also ruled that due process was observed as a copy of the September 11, 2003 order was actually mailed to
petitioner at his last known address. It also denied the motion to admit petitioner's answer because the same was filed way
beyond the reglementary period.
Aggrieved, petitioner assailed the September 11, 2003 and February 6, 2004 orders of the trial court in the Court of Appeals
via a petition for certiorari . He contended that the orders were issued with grave abuse of discretion. He imputed the
following errors to the trial court: taking cognizance of the case despite lack of jurisdiction due to improper service of
summons; failing to furnish him with copies of its orders and processes, particularly the September 11, 2003 order, and
upholding technicality over equity and justice.
During the pendency of the petition in the Court of Appeals, the trial court rendered its decision in Civil Case No. 69262. It
ordered petitioner to pay P698,502.10 plus legal interest and costs of suit.7
Meanwhile, on September 22, 2005, the Court of Appeals rendered its decision8 sustaining the September 11, 2003 and
February 6, 2004 orders of the trial court and dismissing the petition. It denied reconsideration.9 Thus, this petition.
Petitioner essentially reiterates the grounds he raised in the Court of Appeals, namely, lack of jurisdiction over his person due
to improper service of summons, failure of the trial court to furnish him with copies of its orders and processes including the
September 11, 2003 order and preference for technicality rather than justice and equity. In particular, he claims that the rule
on service by publication under Section 14, Rule 14 of the Rules of Court applies only to actions in rem, not actionsin
personam like a complaint for a sum of money. He also contends that the affidavit of service of a copy of the summons
should have been prepared by the clerk of court, not respondent's messenger.

The petition lacks merit.

Propriety Of
Service By Publication
Section 14, Rule 14 (on Summons) of the Rules of Court provides:
SEC. 14. Service upon defendant whose identity or whereabouts are unknown. - In any action where the defendant is
designated as an unknown owner, or the like, orwhenever his whereabouts are unknown and cannot be ascertained
by diligent inquiry, service may, by leave of court, be effected upon him by publication in a newspaper of
general circulation and in such places and for such times as the court may order. (emphasis supplied)
Since petitioner could not be personally served with summons despite diligent efforts to locate his whereabouts, respondent
sought and was granted leave of court to effect service of summons upon him by publication in a newspaper of general
circulation. Thus, petitioner was properly served with summons by publication.
Petitioner invokes the distinction between an action in rem and an action in personam and claims that substituted service
may be availed of only in an action in rem. Petitioner is wrong. The in rem/in personam distinction was significant under the
old rule because it was silent as to the kind of action to which the rule was applicable.10 Because of this silence, the Court
limited the application of the old rule to in rem actions only.11
This has been changed. The present rule expressly states that it applies "[i]n any action where the defendant is designated
as an unknown owner, or the like, or whenever his whereabouts are unknown and cannot be ascertained by diligent inquiry."
Thus, it now applies to any action, whetherin personam, in rem or quasi in rem.12
Regarding the matter of the affidavit of service, the relevant portion of Section 19,13 Rule 14 of the Rules of Court simply
speaks of the following:
... an affidavit showing the deposit of a copy of the summons and order for publication in the post office, postage prepaid,
directed to the defendant by registered mail to his last known address.
Service of summons by publication is proved by the affidavit of the printer, his foreman or principal clerk, or of the editor,
business or advertising manager of the newspaper which published the summons. The service of summons by publication is
complemented by service of summons byregistered mail to the defendant's last known address. This complementary service
is evidenced by an affidavit "showing the deposit of a copy of the summons and order for publication in the post office,
postage prepaid, directed to the defendant by registered mail to his last known address."
The rules, however, do not require that the affidavit of complementary service be executed by the clerk of court. While the
trial court ordinarily does the mailing of copies of its orders and processes, the duty to make the complementary service by
registered mail is imposed on the party who resorts to service by publication.
Moreover, even assuming that the service of summons was defective, the trial court acquired jurisdiction over the
person of petitioner by his own voluntary appearance in the actionagainst him. In this connection, Section 20, Rule
14 of the Rules of Court states:
SEC. 20. Voluntary appearance. - The defendant's voluntary appearance in the action shall be equivalent to service
of summons. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the
defendant shall not be deemed a voluntary appearance. (emphasis supplied)
Petitioner voluntarily appeared in the action when he filed the "Omnibus Motion for Reconsideration and to Admit Attached
Answer"14 This was equivalent to service of summons and vested the trial court with jurisdiction over the person of
petitioner.
Entitlement To
Notice Of Proceedings
The trial court allowed respondent to present its evidence ex parte on account of petitioner's failure to file his answer within
the prescribed period. Petitioner assails this action on the part of the trial court as well as the said court's failure to furnish
him with copies of orders and processes issued in the course of the proceedings.
The effects of a defendant's failure to file an answer within the time allowed therefor are governed by Sections 3 and 4, Rule
9 (on Effect of Failure to Plead) of the Rules of Court:
SEC. 3. Default; declaration of. - If the defending party fails to answer within the time allowed therefor, the court
shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare
the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as
his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence. Such reception of
evidence may be delegated to the clerk of court.
SEC. 4. Effect of order of default. - A party in default shall be entitled to notice of subsequent proceedings but not to
take part in the trial. (emphasis supplied)
If the defendant fails to file his answer on time, he may be declared in default upon motion of the plaintiff with notice to the
said defendant. In case he is declared in default, the court shall proceed to render judgment granting the plaintiff such relief
as his pleading may warrant, unless the court in its discretion requires the plaintiff to submit evidence. The defaulting
defendant may not take part in the trial but shall be entitled to notice of subsequent proceedings.

In this case, even petitioner himself does not dispute that he failed to file his answer on time. That was in fact why he had to
file an "Omnibus Motion for Reconsideration and to Admit Attached Answer." But respondent moved only for the ex
parte presentation of evidence, not for the declaration of petitioner in default. In its February 6, 2004 order, the trial court
stated:
The disputed Order of September 11, 2003 allowing the presentation of evidence ex-parte precisely ordered that "despite
and notwithstanding service of summons by publication, no answer has been filed with the Court within the required period
and/or forthcoming.["] Effectively[,] that was a finding that the defendant [that is, herein petitioner] was in
default for failure to file an answer or any responsive pleading within the period fixed in the publication as
precisely the defendant [could not] be found and for which reason, service of summons by publication was ordered. It is
simply illogical to notify the defendant of the Order of September 11, 2003 simply on account of the reality that he was no
longer residing and/or found on his last known address and his whereabouts unknown - thus the publication of the summons.
In other words, it was reasonable to expect that the defendant will not receive any notice or order in his last known address.
Hence, [it was] impractical to send any notice or order to him. Nonetheless, the record[s] will bear out that a copy of
the order of September 11, 2003 was mailed to the defendant at his last known address but it was not claimed.
(emphasis supplied)
As is readily apparent, the September 11, 2003 order did not limit itself to permitting respondent to present its evidence ex
parte but in effect issued an order of default. But the trial court could not validly do that as an order of default can be made
only upon motion of the claiming party.15 Since no motion to declare petitioner in default was filed, no default order should
have been issued.
To pursue the matter to its logical conclusion, if a party declared in default is entitled to notice of subsequent proceedings, all
the more should a party who has not been declared in default be entitled to such notice. But what happens if the residence or
whereabouts of the defending party is not known or he cannot be located? In such a case, there is obviously no way notice
can be sent to him and the notice requirement cannot apply to him. The law does not require that the impossible be
done.16Nemo tenetur ad impossibile. The law obliges no one to perform an impossibility.17 Laws and rules must be
interpreted in a way that they are in accordance with logic, common sense, reason and practicality.18
Hence, even if petitioner was not validly declared in default, he could not reasonably demand that copies of orders and
processes be furnished him. Be that as it may, a copy of the September 11, 2003 order was nonetheless still mailed to
petitioner at his last known address but it was unclaimed.
CorrectnessOf
Non-Admission Of Answer
Petitioner failed to file his answer within the required period. Indeed, he would not have moved for the admission of his
answer had he filed it on time. Considering that the answer was belatedly filed, the trial court did not abuse its discretion in
denying its admission.
Petitioner's plea for equity must fail in the face of the clear and express language of the rules of procedure and of the
September 11, 2003 order regarding the period for filing the answer. Equity is available only in the absence of law, not as its
replacement.19 Equity may be applied only in the absence of rules of procedure, never in contravention thereof.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioner.
SO ORDERED

THIRD DIVISION
[G.R. NO. 183802 : September 17, 2009]
ALEXANDER TAM WONG, Petitioner, v. CATHERINE FACTOR-KOYAMA, Respondent.
DECISION
CHICO-NAZARIO, J.:
For Review on Certiorari, under Rule 45 of the Revised Rules of Court, are the Resolutions dated 17 January 20081 and 18
July 20082 of the Court of Appeals dismissing outright the Petition for Certiorari, under Rule 65 of the same Rules, of
Alexander Tam Wong (Wong) in CA-G.R. SP No. 101860, for being the wrong remedy. Wong intended to assail before the
appellate court the Orders dated 25 September 20073 and 18 December 20074 of the Regional Trial Court (RTC), Branch 121
of Caloocan City, which, respectively, declared him in default in Civil Case No. C-21860 and denied his Motion to Dismiss the
Complaint in said case.
The present controversy originates from a Complaint5 dated 17 July 2007, for specific performance, sum of money, and
damages, filed with the RTC by private respondent Catherine Factor-Koyama (Koyama) against Wong, docketed as Civil Case
No. C-21860. Koyama alleged in her Complaint that Wong deliberately refused to execute and deliver a deed of absolute
sale, and to surrender the condominium certificate of title (CCT) pertaining to a condominium unit, particularly described as
A3-4B California Garden Square, with an area of 57.5 square meters and located at Libertad Street corner Calbayog Street,
Mandaluyong City, Metro Manila (subject property), which she had already bought from him. Koyama further averred that
she had been renting out the subject property to foreign tourists, but Wong padlocked the same while she was in Japan
attending to her business. When she requested him to open the subject property, he reportedly mauled her, causing her
physical injuries, and also took her personal belongings.
On 24 July 2007, the RTC issued summons6 addressed to Wong at his residence, No. 21 West Riverside Street, San Francisco
Del Monte, Quezon City. However, the original summons and the accompanying copy of the Complaint and its Annexes were
eventually returned to the RTC by Sheriff IV Renebert B. Baloloy (Sheriff Baloloy), who indicated in his Sheriff's Return dated
14 August 2007 that said court process should already be deemed "DULY SERVED." According to his Return,7 Sheriff Baloloy
had repeatedly attempted to serve the summons at Wong's residential address on 27 July 2007, 8 August 2007, and 10
August 2007, but Wong was always not around according to the latter's housemaids, Marie Sandoval (Sandoval) and Loren
Lopez (Lopez). Sheriff Baloloy then attempted to leave the summons with Criz Mira (Mira), Wong's caretaker, who is of legal
age, and residing at the same address for two and a half years, but Mira refused to acknowledge or receive the same.
On 25 September 2007, after the lapse of the 15-day reglementary period8 without Wong filing an answer to the Complaint
in Civil Case No. C-21860, Koyama moved for the RTC to declare him in default, and to allow her to present her evidence ex
parte and/or to render judgment in her favor. The RTC set Koyama's Motion for hearing on 25 October 2007 at 8:30 in the
morning or as soon as counsel and the matter may be heard.9
On 25 September 2007, the RTC, presided by public respondent Hon. Adoracion Angeles, issued an Order10 declaring Wong
in default.
Wong subsequently filed with the RTC, by registered mail sent on 5 October 2007, a Manifestation11claiming that he did not
receive any summons from said court. According to him, he was only informed unofficially by a tricycle driver on 27
September 2007 regarding papers from a court in Caloocan City, which the tricycle driver returned to the court after failing
to locate Wong. This prompted Wong to file an inquiry12 dated 28 September 2007 with the Office of the Clerk of Court of the
RTC of Caloocan City as regards any case that might have been filed against him. In response, the Office of the Clerk of
Court of the RTC of Caloocan City issued a Certification13 dated 3 October 2007 bearing the details of Civil Case No. C-21860,
which Koyama had instituted against him. Wong asserted that he would not hesitate to submit himself to the jurisdiction of
the RTC, should the proper procedure be observed.
In its Order14 dated 9 October 2007, the RTC stressed that, as early as 25 September 2007, Wong had been declared in
default.
Wong, by special appearance of counsel, then filed with the RTC on 22 October 2007 a Motion to Dismiss15 Civil Case No. C21860, asserting, among other grounds, that there was no service of summons upon him, hence, the RTC did not acquire
jurisdiction over his person; and that he was not given the opportunity to oppose Koyama's Motion to have him declared in
default.
In her Opposition16 to the Motion to Dismiss, filed on 5 November 2007, Koyama maintained that there was a proper
substituted service of the summons, consequently, the RTC acquired jurisdiction over the person of Wong; and that Wong
was served a copy of the Motion to have him declared in default on 3 October 2007, as evidenced by the Registry Return
Card.17

Wong filed a Reply18 on 7 November 2007 to Koyama's aforementioned Opposition, denying that a Loren Lopez or Criz Mira
resided at his home address. Said housemaids were fictitious, as proven by the Certificate19 issued by Junn L. Sta. Maria,
Punong Barangay of San Francisco Del Monte, Quezon City on 7 November 2007, stating that Loren Lopez and Criz Mira were
not residents of 21-B Westriverside St., San Francisco Del Monte, Quezon City.
The RTC denied Wong's Motion to Dismiss for lack of merit. In its Order20 dated 18 December 2007, the RTC declared that
Sheriff Baloloy validly resorted to a substituted service of the summons, pursuant to Section 7, Rule 14 of the Revised Rules
of Court.21 Sheriff Baloloy's performance of his official duty enjoyed the presumption of regularity, and Wong failed to rebut
the same by merely presenting the Barangay Certificate, which is "not a role model of accuracy," especially when referring to
mere transient residents in the area, such as lessees, housemaids or caretakers.
Wong went before the Court of Appeals via a Petition for Certiorari22 under Rule 65 of the Revised Rules of Court contending
that the RTC committed grave abuse of discretion, amounting to lack or excess of jurisdiction, in issuing its Orders dated 25
September 2007 and 18 October 2007 in which it, respectively, declared Wong in default in Civil Case No. C-21860 and
denied his Motion to Dismiss the Complaint in the same case. Wong insisted that there was no valid service of summons
upon him, and that he was not notified of Koyama's Motion to have him declared in default.
The Court of Appeals, in a Resolution23 dated 17 January 2008, dismissed Wong's Petition forCertiorari outright for being the
improper remedy.
According to the Court of Appeals, Wong should have availed himself of the following remedies for RTC Order dated 25
September 2007, declaring him in default:
As to the first assailed Order declaring [Wong] in default, the remedies available to a party declared in default were
reiterated in Cerezo v. Tuazon, viz:
a) The defendant in default may, at any time after discovery thereof and before judgment, file a motion under oath to set
aside the order of default on the ground that his failure to answer was due to fraud, accident, mistake or excusable
negligence, and that he has a meritorious defense (Sec. 3, Rule 18 [now Sec. 3(b), Rule 9]);
b) If the judgment has already been rendered when the defendant discovered the default, but before the same has become
final and executory, he may file a motion for new trial under Section 1(a) of Rule 37;
c) If the defendant discovered the default after the judgment has become final and executory, he may file a petition for relief
under Section 2 [now Section 1] of Rule 38; and
cralawl ibra ry

d) He may also appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition
to set aside the order of default has been presented by him (Sec. 2, Rule 41).
Moreover, a petition for certiorari to declare the nullity of a judgment by default is also available if the trial court improperly
declared a party in default, or even if the trial court properly declared a party in default, if grave abuse of discretion attended
such declaration.24
As for the 18 December 2007 Order of the RTC denying Wong's Motion to Dismiss, the appellate court held:
As to the second assailed Order denying petitioner's Motion to Dismiss, the said Order is interlocutory and is not a proper
subject of a petition for certiorari . Even in the face of an error of judgment on the part of a judge denying the motion to
dismiss, certiorari will not lie. Certiorari is not a remedy to correct errors of procedure.
Let it be stressed at this point that basic rule that when a motion to dismiss is denied by the trial court, the remedy is not to
file a petition for certiorari, but to appeal after a decision has been rendered. An order denying a motion to dismiss is
interlocutory, and so the proper remedy in such a case is to appeal after a decision has been rendered. A writ of certiorari is
not intended to correct every controversial interlocutory ruling; it is resorted only to correct a grave abuse of discretion or a
whimsical exercise of judgment equivalent to lack of jurisdiction. Its function is limited to keeping an inferior court within its
jurisdiction and to relieve persons from arbitrary acts'acts which courts or judges have no power or authority in law to
perform. It is not designed to correct erroneous findings and conclusions made by the courts.25
Ultimately, the Court of Appeals decreed:
WHEREFORE, premises considered, the Petition is DISMISSED outright.26
Wong filed a Motion for Reconsideration27 of the foregoing Resolution on 6 February 2008, but the Court of Appeals denied
the same for lack of merit in a Resolution28 dated 18 July 2008.

Hence, Wong filed the instant Petition before this Court.

In the meantime, since neither the Court of Appeals nor this Court issued a Temporary Restraining Order (TRO) or writ of
preliminary injunction enjoining the proceedings in Civil Case No. C-21860, the RTC continued hearing the said case. In an
Order29 dated 20 November 2008, the RTC motu proprioallowed Wong to cross-examine Koyama during the hearing on 23
January 2009, even though it did not lift its 25 September 2007 Order, which had declared him in default. The RTC
reasoned:
The Court believes that the interest of justice and fair play would be better served if the [herein petitioner Wong] would be
given the chance to cross examine the witness, and for which reason the Court suspends the proceedings and resets the
continuation of the hearing of this case on January 23, 2009 at 8:30 a.m.
Wong, through counsel, actively participated in the hearing held on 23 January 2009 by extensively cross-examining
Koyama.30 After said hearing, he filed before this Court, on 18 February 2009, a Motion for Clarification31 as to the validity of
the RTC Order dated 20 November 2008 allowing him to cross-examine Koyama, but without lifting the Order of Default.
On 8 July 2009, the RTC rendered its Decision32 in Civil Case No. C-21860, the dispositive of which reads:
WHEREFORE, premises considered, the contract of sale between the parties relative to the sale of the condominium unit is
hereby RESCINDED and the [herein petitioner Wong] is ordered to pay the [herein respondent Koyama] the sum of TWO
MILLION TWO HUNDRED FOUR THOUSAND (Php2,204,000.00) PESOS with legal rate of interest from the date of demand on
May 25, 2007; to pay the plaintiff the sum of TWO HUNDRED THOUSAND (Php200,000.00) PESOS as and for attorney's fees;
to pay another sum of TWO THOUSAND FIVE HUNDRED (Php2,500.00) PESOS per court appearance for six (6) times and to
pay the costs of suit.
Wong avers herein that the RTC did not acquire jurisdiction over his person since he was not served the summons.
Summons is a writ by which the defendant is notified of the action brought against him or her. In a civil action, jurisdiction
over the defendant is acquired either upon a valid service of summons or the defendant's voluntary appearance in court.
When the defendant does not voluntarily submit to the court's jurisdiction or when there is no valid service of summons, any
judgment of the court, which has no jurisdiction over the person of the defendant, is null and void.33
Where the action is in personam, i.e., one that seeks to impose some responsibility or liability directly upon the person of the
defendant through the judgment of a court,34 and the defendant is in the Philippines, the service of summons may be made
through personal or substituted service in the manner described in Sections 6 and 7, Rule 14 of the Revised Rules of Court,
which provide:
SEC. 6. Service in person on defendant. - Whenever practicable, the summons shall be served by handing a copy thereof to
the defendant in person, or if he refuses to receive and sign for it, by tendering it to him.
SEC. 7. Substituted service. - If, for justifiable causes, the defendant cannot be served within a reasonable time as provided
in the preceding section, service may be effected (a) by leaving copies of the summons at the defendant's residence with
some person of suitable age and discretion then residing therein; or (b) by leaving the copies at the defendant's office or
regular place of business with some competent person in charge thereof.
It is well-established that a summons upon a respondent or a defendant must be served by handing a copy thereof to him in
person or, if he refuses to receive it, by tendering it to him. Personal service of summons most effectively ensures that the
notice desired under the constitutional requirement of due process is accomplished.35 The essence of personal service is the
handing or tendering of a copy of the summons to the defendant himself.36
Under our procedural rules, service of summons in person of defendants is generally preferred over substituted
service.37 Substituted service derogates the regular method of personal service. It is an extraordinary method since it seeks
to bind the respondent or the defendant to the consequences of a suit even though notice of such action is served not upon
him but upon another to whom the law could only presume would notify him of the pending proceedings.38
The Court requires that the Sheriff's Return clearly and convincingly show the impracticability or hopelessness of personal
service.39 Proof of service of summons must (a) indicate the impossibility of service of summons within a reasonable time;
(b) specify the efforts exerted to locate the defendant; and (c) state that the summons was served upon a person of
sufficient age and discretion who is residing in the address, or who is in charge of the office or regular place of business, of
the defendant. It is likewise required that the pertinent facts proving these circumstances be stated in the proof of service or
in the officer's return. The failure to comply faithfully, strictly and fully with all the foregoing requirements of substituted
service renders the service of summons ineffective.40

Sheriff Baloloy's Return dated 14 August 2007 described the circumstances surrounding the service of the summons upon
Wong as follows:
THIS IS TO CERTIFY that on August 27, 2007, the undersigned Sheriff IV was in receipt of a copy of summons, complaint
together with annexes in the above-entitled case issued by this Honorable Court for service, below were the proceedings
taken thereon, to wit:
That on July 27, 2007, the undersigned went to the residence of the Defendant located at #21 West Riverside St. San
Francisco Del Monte, Quezon City to serve the said summons, complaint and its annexes but Mr. Wong was not around.
According to Ms. Marie Sandoval, housemaid, the subject was out (sic) for office;
That on August 8, 2007, the undersigned tried to serve again the said summons, complaint and its annexes but according
again to Ms. Sandoval, the subject was out of town;
That on August 10, 2007, the undersigned went again to the said residence to serve the same summons, complaint and its
annexes but Ms. Loren Lopez, another housemaid, said that Mr. Wong was out again (sic) for office; and
cra lawlib rary

That in the interest of justice, the undersigned left the said summons complaint and its annexes to Mr. Wong's caretaker, Mr.
Criz Mira of legal age who reside at the said address for almost two and a half years but he refused to acknowledge/receive
the said summons.
WHEREFORE, the original summons, complaint and its annexes is hereby returned to this Honorable Court with the
information DULY SERVED.41
rbl r l l l b rr

The Court, after a careful study of Sheriff Baloloy's afore-quoted Return, finds that he improperly resorted to substituted
service upon Wong of the summons for Civil Case No. C-21860.
Apart from establishing that Sheriff Baloloy went to Wong's residence on three different dates, and that the latter was not
around every time, there is nothing else in the Sheriff's Return to establish that Sheriff Baloloy exerted extraordinary efforts
to locate Wong. During his visits to Wong's residence on 27 July 2007 and 10 August 2007, Sheriff Baloloy was informed by
the housemaids that Wong was at his office. There is no showing, however, that Sheriff Baloloy exerted effort to know
Wong's office address, verify his presence thereat, and/or personally serve the summons upon him at his office.42 Although
Wong was out of town when Sheriff Baloloy attempted to serve the summons at the former's residence on 8 August 2007,
there was no indication that Wong's absence was other than temporary or that he would not soon return.
Evidently, the Return failed to relay if sufficient efforts were exerted by Sheriff Baloloy to locate Wong, as well as the
impossibility of personal service of summons upon Wong within a reasonable time. Sheriff Baloloy's three visits to Wong's
residence hardly constitute effort on his part to locate Wong; and Wong's absence from his residence during Sheriff Baloloy's
visits, since Wong was at the office or out-of-town, does not connote impossibility of personal service of summons upon him.
It must be stressed that, before resorting to substituted service, a sheriff is enjoined to try his best efforts to accomplish
personal service on the defendant. And since the defendant is expected to try to avoid and evade service of summons, the
sheriff must be resourceful, persevering, canny, and diligent in serving the process on the defendant.43
Nevertheless, even without valid service of summons, a court may still acquire jurisdiction over the person of the defendant,
if the latter voluntarily appears before it. Section 20, Rule 14 of the Revised Rules of Court recognizes that:
Section 20. Voluntary Appearance. The defendant's voluntary appearance in the action shall be equivalent to service of
summons. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the
defendant shall not be deemed a voluntary appearance. (Emphasis ours.)
The RTC acquired jurisdiction over Wong by virtue of his voluntary appearance before it in Civil Case No. C-21860. The Court
is not referring to Wong's filing of his Motion to Dismiss the Complaint in Civil Case No. C-21860, on the ground of lack of
jurisdiction of the RTC over his person, because that clearly does not constitute voluntary appearance. The Court, instead,
calls attention to the RTC Order dated 20 November 2008 allowing Wong to cross-examine Koyama. Wong, through his
counsel, took advantage of the opportunity opened to him by the said Order and aggressively questioned her during the 23
January 2009 hearing, despite his knowledge that the RTC had not yet lifted the 25 September 2007 Order declaring him in
default. By actively participating in the 23 January 2009 hearing, he effectively acknowledged full control of the RTC over
Civil Case No. C-21860 and over his person as the defendant therein; he is, thus, deemed to have voluntarily submitted
himself to the jurisdiction of said trial court.
The Court further stresses the fact that the RTC already rendered a Decision in Civil Case No. C-21860 on 8 July 2009. Wong
filed with the RTC a Notice of Appeal on 10 August 2009. Given these developments, the Court deems it unnecessary to still
address the issue of whether Wong was improperly declared in default by the RTC in its Order dated 25 September 2007.
Following the remedies cited in Cerezo v. Tuazon,44 Wong could already raise and include said issue in his appeal of the RTC

Decision dated 8 July 2009 to the Court of Appeals. The Court can no longer grant him any remedy herein without
preempting the action of the Court of Appeals on Wong's appeal of the RTC judgment.
IN VIEW WHEREOF, the Petition is DENIED. Costs against the petitioner.
SO ORDERED.

FIRST DIVISION
G.R. No. 175799 : November 28, 2011
NM ROTHSCHILD & SONS (AUSTRALIA) LIMITED, Petitioner, v. LEPANTO CONSOLIDATED MINING
COMPANY, Respondent.
DECISION
LEONARDO-DE CASTRO, J.:
This is a Petition for Review on Certiorari assailing the Decision1 of the Court of Appeals dated September 8, 2006 in CA-G.R.
SP No. 94382 and its Resolution2 dated December 12, 2006, denying the Motion for Reconsideration.
re d

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On August 30, 2005, respondent Lepanto Consolidated Mining Company filed with the Regional Trial Court (RTC) of Makati
City a Complaint3 against petitioner NM Rothschild & Sons (Australia) Limited praying for a judgment declaring the loan and
hedging contracts between the parties void for being contrary to Article 20184 of the Civil Code of the Philippines and for
damages. The Complaint was docketed as Civil Case No. 05-782, and was raffled to Branch 150. Upon respondents
(plaintiffs) motion, the trial court authorized respondents counsel to personally bring the summons and Complaint to the
Philippine Consulate General in Sydney, Australia for the latter office to effect service of summons on petitioner (defendant).
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On October 20, 2005, petitioner filed a Special Appearance With Motion to Dismiss5 praying for the dismissal of the
Complaint on the following grounds: (a) the court has not acquired jurisdiction over the person of petitioner due to the
defective and improper service of summons; (b) the Complaint failed to state a cause of action and respondent does not
have any against petitioner; (c) the action is barred by estoppel; and (d) respondent did not come to court with clean hands.
red

On November 29, 2005, petitioner filed two Motions: (1) a Motion for Leave to take the deposition of Mr. Paul Murray
(Director, Risk Management of petitioner) before the Philippine Consul General; and (2) a Motion for Leave to Serve
Interrogatories on respondent.
On December 9, 2005, the trial court issued an Order6 denying the Motion to Dismiss. According to the trial court, there was
a proper service of summons through the Department of Foreign Affairs (DFA) on account of the fact that the defendant has
neither applied for a license to do business in the Philippines, nor filed with the Securities and Exchange Commission (SEC) a
Written Power of Attorney designating some person on whom summons and other legal processes maybe served. The trial
court also held that the Complaint sufficiently stated a cause of action. The other allegations in the Motion to Dismiss were
brushed aside as matters of defense which can best be ventilated during the trial.
red

On December 27, 2005, petitioner filed a Motion for Reconsideration.7 On March 6, 2006, the trial court issued an Order
denying the December 27, 2005 Motion for Reconsideration and disallowed the twin Motions for Leave to take deposition and
serve written interrogatories.8
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On April 3, 2006, petitioner sought redress via a Petition for Certiorari9 with the Court of Appeals, alleging that the trial court
committed grave abuse of discretion in denying its Motion to Dismiss. The Petition was docketed as CA-G.R. SP No. 94382.
red

On September 8, 2006, the Court of Appeals rendered the assailed Decision dismissing the Petition for Certiorari. The Court
of Appeals ruled that since the denial of a Motion to Dismiss is an interlocutory order, it cannot be the subject of a Petition
for Certiorari, and may only be reviewed in the ordinary course of law by an appeal from the judgment after trial. On
December 12, 2006, the Court of Appeals rendered the assailed Resolution denying the petitioners Motion for
Reconsideration.
Meanwhile, on December 28, 2006, the trial court issued an Order directing respondent to answer some of the questions in
petitioners Interrogatories to Plaintiff dated September 7, 2006.
Notwithstanding the foregoing, petitioner filed the present petition assailing the September 8, 2006 Decision and the
December 12, 2006 Resolution of the Court of Appeals. Arguing against the ruling of the appellate court, petitioner insists
that (a) an order denying a motion to dismiss may be the proper subject of a petition for certiorari; and (b) the trial court
committed grave abuse of discretion in not finding that it had not validly acquired jurisdiction over petitioner and that the
plaintiff had no cause of action.
Respondent, on the other hand, posits that: (a) the present Petition should be dismissed for not being filed by a real party in
interest and for lack of a proper verification and certificate of non-forum shopping; (b) the Court of Appeals correctly ruled
that certiorari was not the proper remedy; and (c) the trial court correctly denied petitioners motion to dismiss.
Our discussion of the issues raised by the parties follows:

chan roblesv irt uallawl ibra ry

Whether petitioner is a real party in interest

Respondent argues that the present Petition should be dismissed on the ground that petitioner no longer existed as a
corporation at the time said Petition was filed on February 1, 2007. Respondent points out that as of the date of the filing of
the Petition, there is no such corporation that goes by the name NM Rothschild and Sons (Australia) Limited. Thus, according
to respondent, the present Petition was not filed by a real party in interest, citing our ruling in Philips Export B.V. v. Court of
Appeals,10 wherein we held:
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A name is peculiarly important as necessary to the very existence of a corporation (American Steel Foundries vs. Robertson,
269 US 372, 70 L ed 317, 46 S Ct 160; Lauman vs. Lebanon Valley R. Co., 30 Pa 42; First National Bank vs. Huntington
Distilling Co., 40 W Va 530, 23 SE 792). Its name is one of its attributes, an element of its existence, and essential to its
identity (6 Fletcher [Perm Ed], pp. 3-4). The general rule as to corporations is that each corporation must have a name by
which it is to sue and be sued and do all legal acts. The name of a corporation in this respect designates the corporation in
the same manner as the name of an individual designates the person (Cincinnati Cooperage Co. vs. Bate, 96 Ky 356, 26 SW
538; Newport Mechanics Mfg. Co. vs. Starbird, 10 NH 123); and the right to use its corporate name is as much a part of the
corporate franchise as any other privilege granted (Federal Secur. Co. vs. Federal Secur. Corp., 129 Or 375, 276 P 1100, 66
ALR 934; Paulino vs. Portuguese Beneficial Association, 18 RI 165, 26 A 36).11
red

In its Memorandum12 before this Court, petitioner started to refer to itself as Investec Australia Limited (formerly NM
Rothschild & Sons [Australia] Limited) and captioned said Memorandum accordingly. Petitioner claims that NM Rothschild
and Sons (Australia) Limited still exists as a corporation under the laws of Australia under said new name. It presented
before us documents evidencing the process in the Australian Securities & Investment Commission on the change of
petitioners company name from NM Rothschild and Sons (Australia) Limited to Investec Australia Limited.13
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We find the submissions of petitioner on the change of its corporate name satisfactory and resolve not to dismiss the present
Petition for Review on the ground of not being prosecuted under the name of the real party in interest. While we stand by our
pronouncement in Philips Export on the importance of the corporate name to the very existence of corporations and the
significance thereof in the corporations right to sue, we shall not go so far as to dismiss a case filed by the proper party
using its former name when adequate identification is presented. 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. 14 There is no doubt in our
minds that the party who filed the present Petition, having presented sufficient evidence of its identity and being represented
by the same counsel as that of the defendant in the case sought to be dismissed, is the entity that will be benefited if this
Court grants the dismissal prayed for.
red

Since the main objection of respondent to the verification and certification against forum shopping likewise depends on the
supposed inexistence of the corporation named therein, we give no credit to said objection in light of the foregoing
discussion.

Propriety of the Resort to a Petition for Certiorari with the Court of Appeals
We have held time and again that an order denying a Motion to Dismiss is an interlocutory order which neither terminates
nor finally disposes of a case as it leaves something to be done by the court before the case is finally decided on the merits.
The general rule, therefore, is that the denial of a Motion to Dismiss cannot be questioned in a special civil action
for Certiorari which is a remedy designed to correct errors of jurisdiction and not errors of judgment.15 However, we have
likewise held that when the denial of the Motion to Dismiss is tainted with grave abuse of discretion, the grant of the
extraordinary remedy of Certiorari may be justified. By grave abuse of discretion is meant:
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[S]uch capricious and whimsical exercise of judgment that is equivalent to lack of jurisdiction. The abuse of discretion must
be grave as where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and
must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined
by or to act all in contemplation of law.16
red

The resolution of the present Petition therefore entails an inquiry into whether the Court of Appeals correctly ruled that the
trial court did not commit grave abuse of discretion in its denial of petitioners Motion to Dismiss. A mere error in judgment
on the part of the trial court would undeniably be inadequate for us to reverse the disposition by the Court of Appeals.

Issues more properly ventilated during the trial of the case

As previously stated, petitioner seeks the dismissal of Civil Case No. 05-782 on the following grounds: (a) lack of jurisdiction
over the person of petitioner due to the defective and improper service of summons; (b) failure of the Complaint to state a
cause of action and absence of a cause of action; (c) the action is barred by estoppel; and (d) respondent did not come to
court with clean hands.

As correctly ruled by both the trial court and the Court of Appeals, the alleged absence of a cause of action (as opposed to
the failure to state a cause of action), the alleged estoppel on the part of petitioner, and the argument that respondent is
in pari delicto in the execution of the challenged contracts, are not grounds in a Motion to Dismiss as enumerated in Section
1, Rule 1617 of the Rules of Court. Rather, such defenses raise evidentiary issues closely related to the validity and/or
existence of respondents alleged cause of action and should therefore be threshed out during the trial.
re d

As regards the allegation of failure to state a cause of action, while the same is usually available as a ground in a Motion to
Dismiss, said ground cannot be ruled upon in the present Petition without going into the very merits of the main case.
It is basic that [a] cause of action is the act or omission by which a party violates a right of another.18 Its elements are the
following: (1) a right existing in favor of the plaintiff, (2) a duty on the part of the defendant to respect the plaintiff's right,
and (3) an act or omission of the defendant in violation of such right.19 We have held that to sustain a Motion to Dismiss for
lack of cause of action, the complaint must show that the claim for relief does not exist and not only that the claim was
defectively stated or is ambiguous, indefinite or uncertain.20
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The trial court held that the Complaint in the case at bar contains all the three elements of a cause of action, i.e., it alleges
that: (1) plaintiff has the right to ask for the declaration of nullity of the Hedging Contracts for being null and void and
contrary to Article 2018 of the Civil Code of the Philippines; (2) defendant has the corresponding obligation not to enforce the
Hedging Contracts because they are in the nature of wagering or gambling agreements and therefore the transactions
implementing those contracts are null and void under Philippine laws; and (3) defendant ignored the advice and intends to
enforce the Hedging Contracts by demanding financial payments due therefrom.21
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The rule is that in a Motion to Dismiss, a defendant hypothetically admits the truth of the material allegations of the ultimate
facts contained in the plaintiff's complaint.22 However, this principle of hypothetical admission admits of exceptions. Thus,
in Tan v. Court of Appeals,23 we held:
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cha nro blesvi rtua llawli bra ry

The flaw in this conclusion is that, while conveniently echoing the general rule that averments in the complaint are deemed
hypothetically admitted upon the filing of a motion to dismiss grounded on the failure to state a cause of action, it did not
take into account the equally established limitations to such rule, i.e., that a motion to dismiss does not admitthe truth of
mere epithets of fraud; nor allegations of legal conclusions; nor an erroneous statement of law; nor mere inferences or
conclusions from facts not stated; nor mere conclusions of law; nor allegations of fact the falsity of which is subject to
judicial notice; nor matters of evidence; nor surplusage and irrelevant matter; nor scandalous matter inserted merely to
insult the opposing party; nor to legally impossible facts; nor to facts which appear unfounded by a record incorporated in
the pleading, or by a document referred to; and, nor to general averments contradicted by more specific averments. A more
judicious resolution of a motion to dismiss, therefore, necessitates that the court be not restricted to the consideration of the
facts alleged in the complaint and inferences fairly deducible therefrom. Courts may consider other facts within the range of
judicial notice as well as relevant laws and jurisprudence which the courts are bound to take into account, and they are also
fairly entitled to examine records/documents duly incorporated into the complaint by the pleader himself in
ruling on the demurrer to the complaint.24 (Emphases supplied.)
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In the case at bar, respondent asserts in the Complaint that the Hedging Contracts are void for being contrary to Article
201825 of the Civil Code. Respondent claims that under the Hedging Contracts, despite the express stipulation for deliveries
of gold, the intention of the parties was allegedly merely to compel each other to pay the difference between the value of the
gold at the forward price stated in the contract and its market price at the supposed time of delivery.
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Whether such an agreement is void is a mere allegation of a conclusion of law, which therefore cannot be hypothetically
admitted. Quite properly, the relevant portions of the contracts sought to be nullified, as well as a copy of the contract itself,
are incorporated in the Complaint. The determination of whether or not the Complaint stated a cause of action would
therefore involve an inquiry into whether or not the assailed contracts are void under Philippine laws. This is, precisely, the
very issue to be determined in Civil Case No. 05-782. Indeed, petitioners defense against the charge of nullity of the
Hedging Contracts is the purported intent of the parties that actual deliveries of gold be made pursuant thereto. Such a
defense requires the presentation of evidence on the merits of the case. An issue that requires the contravention of the
allegations of the complaint, as well as the full ventilation, in effect, of the main merits of the case, should not be within the
province of a mere Motion to Dismiss.26 The trial court, therefore, correctly denied the Motion to Dismiss on this ground.
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It is also settled in jurisprudence that allegations of estoppel and bad faith require proof. Thus, in Paraaque Kings
Enterprises, Inc. v. Court of Appeals,27 we ruled:
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chan roble svirtual lawlib rary

Having come to the conclusion that the complaint states a valid cause of action for breach of the right of first refusal and that
the trial court should thus not have dismissed the complaint, we find no more need to pass upon the question of whether the
complaint states a cause of action for damages or whether the complaint is barred by estoppel or laches. As these
matters require presentation and/or determination of facts, they can be best resolved after trial on the
merits.28 (Emphases supplied.)
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On the proposition in the Motion to Dismiss that respondent has come to court with unclean hands, suffice it to state that the
determination of whether one acted in bad faith and whether damages may be awarded is evidentiary in nature. Thus, we
have previously held that [a]s a matter of defense, it can be best passed upon after a full-blown trial on the merits.29
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Jurisdiction over the person of petitioner

Petitioner alleges that the RTC has not acquired jurisdiction over its person on account of the improper service of summons.
Summons was served on petitioner through the DFA, with respondents counsel personally bringing the summons and
Complaint to the Philippine Consulate General in Sydney, Australia.
In the pleadings filed by the parties before this Court, the parties entered into a lengthy debate as to whether or not
petitioner is doing business in the Philippines. However, such discussion is completely irrelevant in the case at bar, for two
reasons. Firstly,since the Complaint was filed on August 30, 2005, the provisions of the 1997 Rules of Civil Procedure
govern the service of summons. Section 12, Rule 14 of said rules provides:
chan roble svi rtual lawlib rary

Sec. 12. Service upon foreign private juridical entity. When the defendant is a foreign private juridical entity which has
transacted business in the Philippines, service may be made on its resident agent designated in accordance with law for
that purpose, or, if there be no such agent, on the government official designated by law to that effect, or on any of its
officers or agents within the Philippines. (Emphasis supplied.)
This is a significant amendment of the former Section 14 of said rule which previously provided:

c han roblesv irt uallawl ibra ry

Sec. 14. Service upon private foreign corporations. If the defendant is a foreign corporation, or a nonresident joint stock
company or association, doing business in the Philippines, service may be made on its resident agent designated in
accordance with law for that purpose, or if there be no such agent, on the government official designated by law to that
effect, or on any of its officers or agents within the Philippines. (Emphasis supplied.)
The coverage of the present rule is thus broader.30 Secondly, the service of summons to petitioner through the DFA by the
conveyance of the summons to the Philippine Consulate General in Sydney, Australia was clearly made not through the
above-quoted Section 12, but pursuant to Section 15 of the same rule which provides:
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chan roblesv irtuallawl ib rary

Sec. 15. Extraterritorial service. When the defendant does not reside and is not found in the Philippines, and the action
affects the personal status of the plaintiff or relates to, or the subject of which is property within the Philippines, in which the
defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in
excluding the defendant from any interest therein, or the property of the defendant has been attached within the Philippines,
service may, by leave of court, be effected out of the Philippines by personal service as under section 6; or by publication in
a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the
summons and order of the court shall be sent by registered mail to the last known address of the defendant, or in any other
manner the court may deem sufficient. Any order granting such leave shall specify a reasonable time, which shall not be less
than sixty (60) days after notice, within which the defendant must answer.
Respondent argues31 that extraterritorial service of summons upon foreign private juridical entities is not proscribed under
the Rules of Court, and is in fact within the authority of the trial court to adopt, in accordance with Section 6, Rule 135:
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chan roble svirtuallaw lib rary

Sec. 6. Means to carry jurisdiction into effect. When by law jurisdiction is conferred on a court or judicial officer, all
auxiliary writs, processes and other means necessary to carry it into effect may be employed by such court or officer; and if
the procedure to be followed in the exercise of such jurisdiction is not specifically pointed out by law or by these rules, any
suitable process or mode of proceeding may be adopted which appears comformable to the spirit of said law or rules.
Section 15, Rule 14, however, is the specific provision dealing precisely with the service of summons on a defendant which
does not reside and is not found in the Philippines, while Rule 135 (which is in Part V of the Rules of Court entitled Legal
Ethics) concerns the general powers and duties of courts and judicial officers.
Breaking down Section 15, Rule 14, it is apparent that there are only four instances wherein a defendant who is a nonresident and is not found in the country may be served with summons by extraterritorial service, to wit: (1) when the action
affects the personal status of the plaintiffs; (2) when the action relates to, or the subject of which is property, within the
Philippines, in which the defendant claims a lien or an interest, actual or contingent; (3) when the relief demanded in such
action consists, wholly or in part, in excluding the defendant from any interest in property located in the Philippines; and (4)
when the defendant non-resident's property has been attached within the Philippines. In these instances, service of
summons may be effected by (a) personal service out of the country, with leave of court; (b) publication, also with leave of
court; or (c) any other manner the court may deem sufficient.32
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Proceeding from this enumeration, we held in Perkin Elmer Singapore Pte Ltd. v. Dakila Trading Corporation33 that:
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chanroble svirtuallaw lib rary

Undoubtedly, extraterritorial service of summons applies only where the action is in rem or quasi in rem, but
not if an action is in personam.
When the case instituted is an action in rem or quasi in rem, Philippine courts already have jurisdiction to hear and decide
the case because, in actions in rem and quasi in rem, jurisdiction over the person of the defendant is not a prerequisite to
confer jurisdiction on the court, provided that the court acquires jurisdiction over the res. Thus, in such instance,
extraterritorial service of summons can be made upon the defendant. The said extraterritorial service of summons is not for
the purpose of vesting the court with jurisdiction, but for complying with the requirements of fair play or due process, so that
the defendant will be informed of the pendency of the action against him and the possibility that property in the Philippines
belonging to him or in which he has an interest may be subjected to a judgment in favor of the plaintiff, and he can thereby
take steps to protect his interest if he is so minded. On the other hand, when the defendant or respondent does not
reside and is not found in the Philippines, and the action involved is in personam, Philippine courts cannot try
any case against him because of the impossibility of acquiring jurisdiction over his person unless he voluntarily
appears in court.34 (Emphases supplied.)
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In Domagas v. Jensen,35 we held that:

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[T]he aim and object of an action determine its character. Whether a proceeding is in rem, or in personam, or quasi in
rem for that matter, is determined by its nature and purpose, and by these only. A proceeding in personam is a proceeding
to enforce personal rights and obligations brought against the person and is based on the jurisdiction of the person, although
it may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to control or dispose of it
in accordance with the mandate of the court. The purpose of a proceeding in personam is to impose, through the judgment
of a court, some responsibility or liability directly upon the person of the defendant. Of this character are suits to compel a
defendant to specifically perform some act or actions to fasten a pecuniary liability on him.36
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It is likewise settled that [a]n action in personam is lodged against a person based on personal liability; an action in rem is
directed against the thing itself instead of the person; while an action quasi in rem names a person as defendant, but its
object is to subject that persons interest in a property to a corresponding lien or obligation.37
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The Complaint in the case at bar is an action to declare the loan and Hedging Contracts between the parties void
with a prayer for damages. It is a suit in which the plaintiff seeks to be freed from its obligations to the defendant under a
contract and to hold said defendant pecuniarily liable to the plaintiff for entering into such contract. It is therefore an
action in personam, unless and until the plaintiff attaches a property within the Philippines belonging to the defendant, in
which case the action will be converted to one quasi in rem.
Since the action involved in the case at bar is in personam and since the defendant, petitioner Rothschild/Investec, does not
reside and is not found in the Philippines, the Philippine courts cannot try any case against it because of the impossibility of
acquiring jurisdiction over its person unless it voluntarily appears in court.38
red

In this regard, respondent vigorously argues that petitioner should be held to have voluntarily appeared before the trial court
when it prayed for, and was actually afforded, specific reliefs from the trial court.39 Respondent points out that while
petitioners Motion to Dismiss was still pending, petitioner prayed for and was able to avail of modes of discovery against
respondent, such as written interrogatories, requests for admission, deposition, and motions for production of documents.40
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Petitioner counters that under this Courts ruling in the leading case of La Naval Drug Corporation v. Court of Appeals,41 a
party may file a Motion to Dismiss on the ground of lack of jurisdiction over its person, and at the same time raise affirmative
defenses and pray for affirmative relief, without waiving its objection to the acquisition of jurisdiction over its person.42
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It appears, however, that petitioner misunderstood our ruling in La Naval. A close reading of La Navalreveals that the Court
intended a distinction between the raising of affirmative defenses in an Answer (which would not amount to acceptance of
the jurisdiction of the court) and the prayer for affirmative reliefs (which would be considered acquiescence to the
jurisdiction of the court):
chan roblesv irt uallawl ibrary

In the same manner that a plaintiff may assert two or more causes of action in a court suit, a defendant is
likewise expressly allowed, under Section 2, Rule 8, of the Rules of Court, to put up his own defenses
alternatively or even hypothetically. Indeed, under Section 2, Rule 9, of the Rules of Court, defenses and objections not
pleaded either in a motion to dismiss or in an answer, except for the failure to state a cause of action, are deemed waived.
We take this to mean that a defendant may, in fact, feel enjoined to set up, along with his objection to the court's jurisdiction
over his person, all other possible defenses. It thus appears that it is not the invocation of any of such defenses, but the
failure to so raise them, that can result in waiver or estoppel. By defenses, of course, we refer to the grounds provided
for in Rule 16 of the Rules of Court that must be asserted in a motion to dismiss or by way of affirmative
defenses in an answer.
Mindful of the foregoing, in Signetics Corporation vs. Court of Appeals and Freuhauf Electronics Phils., Inc. (225
SCRA 737, 738), we lately ruled:

This is not to say, however, that the petitioner's right to question the jurisdiction of the court over its person is
now to be deemed a foreclosed matter. If it is true, as Signetics claims, that its only involvement in the Philippines was
through a passive investment in Sigfil, which it even later disposed of, and that TEAM Pacific is not its agent, then it cannot
really be said to be doing business in the Philippines. It is a defense, however, that requires the contravention of the
allegations of the complaint, as well as a full ventilation, in effect, of the main merits of the case, which should not thus be
within the province of a mere motion to dismiss. So, also, the issue posed by the petitioner as to whether a foreign
corporation which has done business in the country, but which has ceased to do business at the time of the filing of a
complaint, can still be made to answer for a cause of action which accrued while it was doing business, is another matter that
would yet have to await the reception and admission of evidence. Since these points have seasonably been raised by
the petitioner, there should be no real cause for what may understandably be its apprehension, i.e., that by its
participation during the trial on the merits, it may, absent an invocation of separate or independent reliefs of its
own, be considered to have voluntarily submitted itself to the court's jurisdiction.43 (Emphases supplied.)
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In order to conform to the ruling in La Naval, which was decided by this Court in 1994, the former Section 23, Rule
1444 concerning voluntary appearance was amended to include a second sentence in its equivalent provision in the 1997
Rules of Civil Procedure:
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SEC. 20. Voluntary appearance. The defendant's voluntary appearance in the action shall be equivalent to service of
summons. The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of
the defendant shall not be deemed a voluntary appearance . (Emphasis supplied.)
The new second sentence, it can be observed, merely mentions other grounds in a Motion to Dismiss aside from lack of
jurisdiction over the person of the defendant. This clearly refers to affirmative defenses, rather than affirmative reliefs.
Thus, while mindful of our ruling in La Naval and the new Section 20, Rule 20, this Court, in several cases, ruled that seeking
affirmative relief in a court is tantamount to voluntary appearance therein.45 Thus, in Philippine Commercial International
Bank v. Dy Hong Pi, 46 wherein defendants filed a Motion for Inhibition without submitting themselves to the jurisdiction of
this Honorable Court subsequent to their filing of a Motion to Dismiss (for Lack of Jurisdiction), we held:
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Besides, any lingering doubts on the issue of voluntary appearance dissipate when the respondents' motion for inhibition is
considered. This motion seeks a sole relief: inhibition of Judge Napoleon Inoturan from further hearing the case. Evidently,
by seeking affirmative relief other than dismissal of the case, respondents manifested their voluntary
submission to the court's jurisdiction. It is well-settled that the active participation of a party in the proceedings is
tantamount to an invocation of the court's jurisdiction and a willingness to abide by the resolution of the case, and will bar
said party from later on impugning the court's jurisdiction.47 (Emphasis supplied.)
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In view of the above, we therefore rule that petitioner, by seeking affirmative reliefs from the trial court, is deemed to have
voluntarily submitted to the jurisdiction of said court. A party cannot invoke the jurisdiction of a court to secure affirmative
relief against his opponent and after obtaining or failing to obtain such relief, repudiate or question that same
jurisdiction.48 Consequently, the trial court cannot be considered to have committed grave abuse of discretion amounting to
lack or excess of jurisdiction in the denial of the Motion to Dismiss on account of failure to acquire jurisdiction over the
person of the defendant.
red

WHEREFORE, thePetition for Review on Certiorari is DENIED. The Decision of the Court of Appeals dated September 8,
2006 and its Resolution dated December 12, 2006 in CA-G.R. SP No. 94382 are hereby AFFIRMED.
No pronouncement as to costs.
SO ORDERED.

FIRST DIVISION
[G.R. No. L-51458. July 19, 1982.]
MANUEL YAP, Petitioner, v. HON. COURT OF APPEALS, RAYMOND AND LYDIA TOMASSI,Respondents.
Francisco E. F. Remotigue and Francis M. Zosa for Petitioner.
Ernesto F. Carreon for Respondents.
SYNOPSIS
The Court of First Instance rendered judgment against petitioner in a civil suit for damages. Within the period prescribed by
law, he filed a Notice of Appeal, a Cash Appeal Bond, and a Motion for Extension of twenty days from March 13, 1978 (until
April 2,1978) within which to file his Record on Appeal. The Motion was not acted upon by the Trial Court. On March 30,
1978, within the extended period prayed for, petitioner submitted his Record on Appeal, but the Trial Court disapproved the
same for having been filed out of time, petitioners motion for extension of time to file it not having been acted upon for lack
of notice of hearing. The Court of Appeals, on a Petition for" Certiorari and Mandamus," ruled that the Trial Court committed
no grave abuse of discretion in disapproving petitioners Record on Appeal because it was filed out of time. Hence, this
Petition for Review.
The Supreme Court held that the Trial Court has the power to act on the ex-parte Motion for extension of time to file the
Record on Appeal since the said Motion did not appear to be a contentious Motion and may be acted upon even without proof
of service on adverse party; consequently, the Petition should be granted because dismissal of appeals on a purely technical
ground is frowned upon as the policy of the Court is to encourage the hearing of appeals on the merit.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; MOTIONS; NOTICE TO ADVERSE PARTY NECESSARY, AS A RULE; EXCEPTION. As
a general rule, notice of motion is required where a party has a right to relief sought by the motion and principles of natural
justice demand that his right be not affected without an opportunity to be heard (Amante v. Sunga, 64 SCRA 192 (1975),
citing 60 C.J.S. 15). The three-day-notice required by law is intended not for the benefit of the movant but to avoid surprise
upon the adverse party and to give the latter time to study and meet the arguments of the motion (J.M. Tuason & Co. Inc. v.
Magdangal, 4 SCRA 84 (1962). No motion shall be acted upon by the court without proof of service of the notice, "except
when the court is satisfied that the rights of the adverse party or parties are not affected" (Section 6, Rule 15, Rules of
Court).
2. ID.; ID.; ID.; ID.; MOTION FOR EXTENSION OF TIME TO FILE RECORD ON APPEAL, AN EXCEPTION. The Motion in
question does not affect the substantive rights of private respondents as it merely seeks to extend the period to file the
Record on Appeal, which extension may be granted by the Trial Court upon application made prior to the expiration of the
original period (Berkenkotter v. Court of Appeals, 33 SCRA 228 [[1973]), Neither was there any claim that said Motion, which
was grounded on justifiable reason, was interposed to delay the appeal. As early as Moya v. Barton, 76 Phil. 831 [1946], this
Court held that a Motion requesting an extension within which to file Record on Appeal may be considered as one which may
be heard ex-parte. In Que Tiac v. Republic, 43 SCRA 36 (1972), it was similarly held that a telegraphic Motion for extension
of time to file a Record on Appeal is addressed to the discretion of the Court, which may act thereon ex-parte And in the
more recent case of Commercial Union Assurance Company Limited v. Lepanto Consolidated Mining Company, 86 SCRA 79,
98 (1978), this Court ruled that the Trial Court has the power and authority so act on an ex-parte Motion for extension of
time to file the Record on Appeal, which was filed within the original period prescribed by the Rules since the said Motion did
not appear to be a litigated or a contentious Motion and may be acted upon even without proof of service on adverse party.
3. ID; ID; APPEALS; DISMISSAL OF APPEAL ON PURELY TECHNICAL GROUNDS FROWNED UPON. Dismissal of appeals on
purely technical grounds is frowned upon as the policy of the Court is to encourage the healing of appeals on the merits
(Calasiao Farmers Cooperative Marketing Association Inc. v. Court of Appeals, 106 SCRA 630 (1981)). Litigants should be
afforded every opportunity to establish the merits of their cases without the constraints of technicalities (A One Feeds, Inc. v.
Court of Appeals, 100 SCRA 390 (1980).

DECISION

MELENCIO-HERRERA, J.:

Petitioner herein seeks to set aside respondent Court of Appeals 1 Decision of May 22, 1979 and its Resolution of July 26,
1979 in CA-G.R. No. 07966-SP, sustaining the trial Courts action disapproving petitioners Record on Appeal for having been

filed out of time.

The antecedent facts follow:

ch anrob1e s virtual 1aw lib rary

On September 11, 1973, private respondents, spouses Raymond Tomassi and Lydia Tomassi, filed a complaint for Damages
against petitioner Manuel Yap, before the Court of First Instance of Cebu, Branch XIII, docketed as Civil Case No. R-13571.
Petitioner-defendant filed his Answer with Special Defenses and Counterclaim, after which, trial ensued. On January 31,
1978, the Trial Court rendered judgment against petitioner, ordering him to pay private respondents P30,000.00, as moral
and exemplary damages, P20,000.00, as actual damages, P5,000.00, as attorneys fees, and the costs of suit.
chanroble s.com.p h : virtual law li bra ry

Copy of the Decision was received by petitioner-defendant on February 10, 1978. He filed, on March 2, 1978, a Notice of
Appeal, and on March 7, 1978, a Cash Appeal Bond and Motion for Extension of twenty days from March 13, 1978 (or until
April 2, 1978) within which to file his Record on Appeal. Said Motion was not acted upon by the Trial Court. On March 30,
1978, or within the extended period prayed for, petitioner submitted his Record on Appeal. On the same date, respondents
filed a Motion for the Issuance of Writ of Execution alleging that the Decision had already become final and executory as
petitioners Motion for extension of time to file Record on Appeal failed to comply with the requirements of the Rules of Court
on Motions, and therefore, did not toll the running of the period to perfect an appeal.
On April 24, 1978, the trial Court disapproved petitioners Record on Appeal, stating:

jgc:chan roble s.com.p h

"The records show that on March 7, 1978, defendant filed a MOTION FOR EXTENSION OF TIME TO FILE RECORD ON APPEAL,
but since said motion did not contain any notice of hearing, the COURT did not act on it. The reglementary period expired on
March 13, 1978, without any extension granted to defendant. It is rather, too presumptuous, on the part of the defendant to
assume that the Court would grant the extension just because he prayed for it.
IN VIEW OF THE FOREGOING, the approval of defendants RECORD ON APPEAL is hereby denied for having been filed out of
time."
cralaw virtua1aw l ibra ry

Petitioner moved to reconsider the said Order, but reconsideration was denied by the Trial Court. Petitioner then filed with
the Court of Appeals a Petition for" Certiorari and Mandamus" docketed as CA-G.R. No. 07966-SP, praying that the Trial
Court be ordered to approve his Record on Appeal and give due course thereto.
On May 22, 1979, the Court of Appeals dismissed the Petition ruling that the Trial Court did not commit grave abuse of
discretion in disapproving the Record on Appeal as the same was filed beyond the prescribed period.
Reconsideration of the Decision was sought by petitioner but respondent Court denied the same for lack of merit.
Petitioner hied to this Court, with the present Petition for Review on Certiorari, posing the following queries:

jgc: chan roble s.com.p h

"1. Is a motion for extension of time to file record on appeal, a litigated and contentious motion which requires a notice of
hearing before it may be acted upon by the trial court or is it one that may be heard ex-parte and therefore does not need a
notice of hearing?
"2. In disapproving petitioners record on appeal which was filed within the extended period prayed for, did the Court of
Appeals not depart from the liberal posture adopted by the Honorable Supreme Court in a long line of cases to disregard
technicalities so that cases may be decided on their merits?"
It is not disputed that petitioners Notice of Appeal, Cash Appeal Bond, and Motion for Extension to File Record on Appeal
were seasonably filed, and that the Record on Appeal was submitted within the extended period requested. The only issue is
whether the said Motion for extension should mandatorily comply with the requirements of the Rules on Motions before the
same may be acted upon by the trial Court. Sections 4, 5 and 6 of Rule 15 provide:
c hanro ble s.com.ph : vi rtua l law lib ra ry

"Section 4. Notice. Notice of a motion shall be served by the applicant to all parties concerned at least three days before
the hearing thereof, together with a copy of the motion, 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.
"Section 6. Proof of service to be filed with motion. No motion shall be acted upon by the court, without proof of service of
the notice hereof, except when the court is satisfied that the rights of the adverse party or parties are not affected." (Italics
supplied)
As a general rule, notice of motion is required where a party has a right to resist the relief sought by the motion and
principles of natural justice demand that his right be not affected without an opportunity to be heard. 2 The three-day-notice
required by law is intended not for the benefit of the movant but to avoid surprises upon the adverse party and to give the
latter time to study and meet the arguments of the motion. 3

The Motion in question does not affect the substantive rights of private respondents as it merely seeks to extend the period
to file the Record on Appeal, which extension may be granted by the Trial Court upon application made prior to the expiration
of the original period. 4 Neither was there any claim that said Motion, which was grounded on justifiable reason, was
interposed to delay the appeal. As early as Moya v. Barton, 76 Phil. 831 [1946], this Court held that a Motion requesting an
extension within which to file Record on Appeal may be considered as one which may be heard ex-parte. In Que Tiac v.
Republic, 43 SCRA 56 [1972], it was similarly held that a telegraphic Motion for extension of time to file a Record on Appeal
is addressed to the discretion of the Court, which may act thereon ex-parte. And in the more recent case of Commercial
Union Assurance Company Limited v. Lepanto Consolidated Mining Company, 86 SCRA 79, 98 [1978], this Court ruled that
the Trial Court has the power and authority to act on an ex-parte Motion for extension of time to file the Record on Appeal,
which was filed within the original period prescribed by the Rules since the said Motion did not appear to be a litigated or a
contentious Motion and may be acted upon even without proof of service on adverse party.
In the same case, this Court held:

jgc:cha nro bles. com.ph

". . . While the earlier cases pertinent to the issue command mandatory compliance with Sections 4, 5 and 6 of Rule 15 of
the Rules of Court, the weight of the authorities recently promulgated by the Supreme Court culminating in Amante v.
Sunga, 64 SCRA 192 and Pimentel v. Court of Appeals, 64 SCRA 475, tend towards liberally giving every litigant the
assistance in obtaining a fair, expeditious and reasonable determination of his rights as he seeks recourse to the court of law
for justice without technicalities and without strict adherence to the letter of the Rules, thereby promoting their objective . .
."
cralaw virt ua1aw lib ra ry

Accordingly, we find for petitioner. Dismissal of appeals on purely technical grounds is frowned upon as the policy of the
Court is to encourage the hearing of appeals on the merits. 5 Litigants should be afforded every opportunity to establish the
merits of their cases without the constraints of technicalities. 6
WHEREFORE, the Petition is granted. The questioned Decision and Resolution of respondent Court of Appeals dated May 22,
1979 and July 26, 1979, respectively, are hereby annulled and set aside. The Court of First Instance of Cebu, Branch XIII, is
hereby directed to approve petitioners Record on Appeal and to elevate the same to the Court of Appeals.
No costs.
SO ORDERED.

FIRST DIVISION
[G.R. No. L-40945. November 10, 1986.]
IGMEDIO AZAJAR, Petitioner, v. THE HONORABLE COURT OF APPEALS (Second Division) and CHAM SAMCO &
SONS, INC., Respondents.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; MOTIONS; MUST BE SET HEARING WITH NOTICE TO PARTIES CONCERNED; FAILURE
TO COMPLY WITH REQUIREMENT, FATAL; EXCEPTIONS. It was wrong, of course, for the private respondent to have failed
to set its motion to dismiss for hearing on a specified date and time. The law explicitly requires that 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, and that the notice shall be directed to the parties
concerned, stating the time and place for the hearing of the motion. The uniform holding of this Court has been that a failure
to comply with the requirement is a fatal flaw. Such notice is required to avoid surprises upon the opposite party and give
the latter time to study and meet the arguments of the motion, as well as to determine or make determinable the time of
submission of the motion for resolution. Where, however, the defendant entertained for plausible reasons the erroneous
notion that a hearing on his motion was dispensable and he moreover had pleaded meritorious defenses which, if proven,
would defeat the plaintiffs claim, considering also the desirability that cases should be determined on the merits after giving
all the parties full opportunity to ventilate their causes and defenses, rather than on technicality or procedural imperfections,
the ends of justice are better served by brushing aside technicality and affording the defendant its day in court.

DECISION

NARVASA, J.:

Petitioner seeks reversal of the Resolution of the respondent Court of Appeals (now Intermediate Appellate Court) dated
March 25, 1975 setting aside the judgment by default rendered against private respondent by the Court of First Instance,
and directing that said respondent be allowed to file its answer to the complaint and after joinder of issues, trial be had and
judgment rendered on the merits.
This case originated from a complaint filed by petitioner Igmedio Azajar against respondent Cham Samco and Sons, Inc. in
the Court of First Instance (now Regional Trial Court) of Camarines Sur. 1 Azajars claim, briefly, is that he had purchased
from defendant (hereafter referred to simply as Cham Samco), thru the latters agent, 100 Kegs of nails of various sizes,
specified in one of Cham Samcos printed order forms, and had given to the agent P18,000.00 in full payment thereof; but in
breach of contract, Cham Samco had offered to deliver only a part of the quantity ordered.
Cham Samco filed a motion to dismiss on two grounds: (1) failure of the complaint to state a cause of action the
complaints language indicating not a perfected sale but merely an "offer to buy by plaintiff that was partly accepted by
defendant," and failing to show that as explicitly required by the order form, prices had been confirmed by Cham Samcos
"Manila Office," 2 and (2) that venue was improperly laid Cham Samcos invariable condition in transactions of this nature,
as Azajar well knew from many such transactions in the past, being that "any legal action thereon must be instituted in the
City of Manila." 3
The motion to dismiss contained a notice addressed to the Clerk of Court reading as follows:

jgc:c hanro bles. com.ph

"The Clerk of Court

Court of First Instance of Camarines Sur
Naga City
S i r:

chan rob1es v irt ual 1aw li bra ry

Please submit the foregoing motion to the Court for its consideration and resolution immediately upon receipt thereof.
Makati, Rizal for Naga City, February 4, 1974
(SGD) POLO S. PANTALEON
Copy furnished:

chanro b1es vi rtua l 1aw lib ra ry

Atty. Augusto A. Pardalias

Naga City
NF-927" 4
It is this notice that has given rise to the controversy at bar.
Contending that such a notice was fatally defective and rendered the Motion to Dismiss incapable of tolling the period to
answer, Azajar filed a motion dated February 20, 1974 to declare Cham Samco in default, which the Court granted. By Order
dated February 22, 1974 the Court pronounced Cham Samco in default and allowed Azajar to present evidence ex-parte. The
Court justified the order of default in this wise:
jgc:cha nrob les.co m.ph

"On February 4, 1974, defendant thru counsel, instead of filing an answer to the complaint, filed a "Motion to Dismiss" which,
in legal contemplation, is not a motion at all because the "notice" therein is directed to the Clerk of Court instead of to the
party concerned (as required by Section 5, Rule 15 of the Rules of Court) and is without the requisite notice of time and
place of hearing, that a motion "with a notice of hearing (a) directed to the Clerk of Court not to the parties; and (b) merely
stating that the same be "submitted for resolution of the Honorable Court upon receipt thereof," copy of which motion was
duly furnished to and received by "the adverse counsel, is fatally defective and did not toll the running of the period to
appeal" (Cladera v. Sarmiento, 39 SCRA 552). Consequently, inasmuch as the "motion to dismiss in this case is a mere scrap
of paper because it is without the requisite notice of time and place of hearing (Manakil v. Hevilla, 42 Phil. 81; Roman
Catholic Bishop v. Unisan, 44 Phil. 866; Director of Lands v. Sanz, 45 Phil. 117; and Manila Surety v. Bath, 14 SCRA 435),
the filing thereof did not suspend the running of the period to file the required responsive pleading. That from February 4,
1974 to February 21, 1974, seventeen (17) days had lapsed and defendant failed to file any responsive pleading. . . ." 5
Then on March 30, 1974, the Trial Court rendered judgment by default against defendant Cham Samco ordering it:

jgc:cha nrob les.co m.ph

". . . to deliver immediately to the plaintiff the nails mentioned in the Order Form No. 9020 (Exhibit A); (2) requiring
defendant to pay plaintiff the sum of P15,000.00 by way of actual damages, the sum of P10,000.00 by way of consequential
damages, plus interest in both instances, and the additional sum of P5,000.00, for exemplary damages; (3) ordering
defendant to pay plaintiff the sum of P7,500.00 for attorneys fees and related expenses of litigation; and (4) to pay the
costs."
cralaw virtua1aw lib rary

Cham Samco filed a Motion for New Trial on April 9, 1974. It contended that its failure to observe the rules governing notice
of motions was due to excusable negligence, "because the grounds alleged in the Motion to Dismiss were all in such nature
and character that addressed themselves to a motu proprio resolution by the court and thus rendered a hearing
dispensable." 6 It also alleged certain defenses available to it which if duly alleged and proven, would absolve it from all
liability. 7 This motion was denied.
Cham Samco went to the Court of Appeals on certiorari asserting that the trial court acted with grave abuse of discretion
amounting to lack of jurisdiction in declaring it in default and then rendering judgment by default 8 The petition was
dismissed for lack of merit by the Court of Appeals on November 20, 1974. 9
But on motion for reconsideration seasonably presented, the Court of Appeals reversed itself. By Resolution dated March 25,
1975, 10 it set aside the Trial Courts order of default of February 22, 1974, judgment by default of March 13, 1974, and
Order dated June 4, 1974 denying Cham Samcos motion for new trial, and directed the lower Court to allow Cham Samco to
file its answer to the complaint and upon due joinder of issues, to try and decide the case on the merits.
chanroble s.com:c ralaw:re d

The Court held that:

jgc:chanrobles. com.ph

". . . (t)he notice in the motion which was addressed to the clerk of court asking him to submit the motion for the
consideration of the court is a substantial compliance with the provision of section 3 Rule 16 of the Rules of Court. Verily
under the said rule, the Court has the alternative of either hearing the case or deferring the hearing and determination
thereof until the trial on the merits. Thus upon the filing of said motion the court should have set the motion for hearing or
outrightly deny the motion, or otherwise postpone the hearing until the trial on the ground that the grounds thereof do not
appear to be indubitable. The prompt filing and apparently valid grounds invoked in the motion are not the acts and
declarations of a defaulting party."
cralaw virtua 1aw lib rary

". . . (E)ven assuming that the declaration of default of the petitioner was in order we find that the trial court committed a
grave abuse of discretion when it denied the motion for new trial that was filed by the petitioner not only on the ground of
excusable negligence we have above discussed but also on the ground that it has a meritorious defense." and
". . . (E)xcessive damages have been awarded to the private Respondent. In addition to ordering the petitioner to deliver to
the private respondent the nails ordered by the latter, the petitioner was also ordered to pay not only P15,000 actual
damages for profits that the private respondent could have earned but also consequential damages of P10,000 for the
unrealized profits that the said earnings and capital of the plaintiff could have earned, plus interest in both instances,
exemplary damages of P5,000 and P7,500 for attorneys fees and related expenses of litigation. Thus for the capital of
respondent of P18,100.00 in the purchase of the nails, the petitioner was ordered to pay damages of a total of P37,500.00,

which including the interest awarded can amount to over P40,000, more than double the value of the said investment
of Respondent. Under Section 1, Rule 37 of the Rules of Court award of excessive damages could be a ground for new trial."

cralaw

virtua 1aw lib rary

The Court concluded its opinion with the observation that "the ends of justice would be better served in this case if we brush
aside technicality and afford the petitioner its day in court."
cralaw virt ua1aw li bra ry

It was wrong, of course, for Cham Samco to have failed to set its motion to dismiss for hearing on a specified date and time.
The law explicitly requires that notice of a motion shall be served by the appellant 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;
11 and that the notice shall be directed to the parties concerned, stating the time and place for the hearing of the motion. 12
The uniform holding of this Court has been that a failure to comply with the requirement is a fatal flaw. 13 Such notice is
required to avoid surprises upon the opposite party and give the latter time to study and meet the arguments of the motion,
as well as to determine or make determinable the time of submission of the motion for resolution. 14
Cham Samco quite frankly admits its error. It pleads however that under the circumstances the error be not regarded as
irremediable or that it be deemed as constituting excusable negligence, warranting relief. It argues that legal and logical
considerations, which it took to be tenable, caused it to theorize that a hearing on the motion was dispensable. It also
adverts to its possession of affirmative defenses in addition to those set out in its motion to dismiss which, if ventilated and
established at the trial, would absolve it from all liability under the complaint.
Cham Samcos belief that it was not necessary that its motion to dismiss be set for hearing was avowedly engendered by two
factors, namely:
chan rob1es v irt ual 1aw li bra ry

1) the fact that while the Rules of Court "specify the motions which can be heard only with prior service upon adverse
parties," 15 said Rules "do not point out which written motions may be ex parte, preferring, it appears, to leave to the court,
in motions other than those specified, the discretion either to ex parte resolve . . . or to call the parties to a hearing . . .; 16
and
2) the further fact that its motion to dismiss was based on two grounds on which a hearing was superfluous, the first, failure
of the complaint to state a cause of action, being determinable exclusively from the allegations of the complaint and no
evidence being allowable thereon; and the second, that venue is improperly laid, being resolvable exclusively on the basis of
documents annexed to the motion. 17
These considerations, to be sure, did not erase movants duty to give notice to the adverse party of the date and time of the
hearing on its motion, the purpose of said notice being, as already stressed, not only to give the latter time to oppose the
motion if so minded, but also to determine the time of its submission for resolution. Without such notice, the occasion would
not arise to determine with reasonable certitude whether and within what time the adverse party would respond to the
motion, and when the motion might already be resolved by the Court. The duty to give that notice is imposed on the movant,
not on the Court.
cralawnad

Withal, the reasons for Cham Samcos erroneous notion of the dispensability of a hearing on its motion to dismiss are not
utterly without plausibility. This circumstance, taken together with the fact, found by the Intermediate Appellate Court and
not disputed by petitioner Azajar, that Cham Samco has meritorious defenses which if proven would defeat Azajars claim
against it, and the eminent desirability more than once stressed by this Court that cases should be determined on the merits
after full opportunity to all parties for ventilation of their causes and defenses, rather than on technicality or some procedural
imperfections, 18 all conduce to concurrence with the Court of Appeals that "the ends of justice would be better served in
this case if we brush aside technicality and afford the petitioner its day in court."
cralaw vi rtua1aw l ib rary

WHEREFORE, the Resolutions of the Court of Appeals of pealed from, are affirmed. Costs against petitioner.
SO ORDERED.

SECOND DIVISION
[G.R. NO. 163785 : December 27, 2007]
KKK FOUNDATION, INC., Petitioner, v. HON. ADELINA CALDERON-BARGAS, in her capacity as Presiding Judge of
the REGIONAL TRIAL COURT, Branch 78 of Morong, Rizal, SHERIFF IV SALES T. BISNAR, THE REGISTER OF
DEEDS FOR MORONG, RIZAL, and IMELDA A. ANGELES,Respondents.
DECISION
QUISUMBING, J.:
In this Petition for Review under Rule 45 of the Rules of Court, petitioner urges this Court to reverse and set aside the
Decision1 dated November 28, 2003, and the Resolution2 dated May 26, 2004, of the Court of Appeals in CA-G.R. SP No.
73965.
The antecedent facts are as follows:
On March 1, 2002, petitioner KKK Foundation, Inc. filed a complaint for Annulment of Extra-judicial Foreclosure of Real
Estate Mortgage and/or Nullification of Sheriff's Auction Sale and Damages with Prayer for the Issuance of Temporary
Restraining Order and/or Writ of Preliminary Injunction.3Petitioner alleged that: (1) the auction sale was made with fraud
and/or bad faith since there was no public bidding; (2) the sheriff did not post the requisite Notice of Sheriff's Sale; (3) the
petition for extrajudicial foreclosure was fatally defective since it sought to foreclose properties of two different entities; (4)
the foreclosed properties were awarded and sold to Imelda A. Angeles for an inadequate bid of only P4,181,450; and (5) the
auction sale involved eight parcels of land covered by individual titles but the same were sold en masse.
On March 7, 2002, Judge Adelina Calderon-Bargas issued a temporary restraining order preventing Angeles from
consolidating her ownership to the foreclosed properties. On even date, petitioner and Angeles executed a Compromise
Agreement wherein petitioner agreed to pay Angeles the bid price of the eight parcels of land within 20 days. The parties
then filed a Motion to Approve Compromise Agreement.4
On April 1, 2002, petitioner filed an Urgent Ex-Parte Motion to Recall Compromise Agreement5 since the other property
owner and other trustees of petitioner were not consulted prior to the signing of the agreement. Angeles opposed the
motion.
On May 2, 2002, Judge Calderon-Bargas issued an Order,6 which reads in part:
xxx
Record shows that the Urgent Ex-Parte Motion to Recall Compromise Agreement and Motion to Approve Compromise
Agreement both failed to comply with Sec[s]. 4 and 5, Rule 15 of the Civil Procedure. Both proceedings have no specific date
of hearing. The reason why the Motion to Approve Compromise Agreement up to now has not yet been acted upon was that
it has no date of hearing.
WHEREFORE, the Urgent Ex-Parte Motion to Recall Compromise Agreement and the Motion to [Approve] Compromise
Agreement are considered mere scrap[s] of paper.
SO ORDERED.
In its Decision7 dated June 28, 2002, the trial court approved the Compromise Agreement, as follows:
The parties, duly assisted by their respective counsels, submitted before this Court a Compromise Agreement, as follows:
xxx
[1.] The plaintiff shall pay to the defendant, Imelda Angeles, the amount of P5,500,000.00 representing the bid price for all
the eight titles (TCT Nos. M-95417, 95419, 95418, 95420, 95421, 50889, 50890 and 50893) subject of the auction sale
dated March 7, 2001 plus whatever taxes [and/or] assessments and expenses of the public auction as prescribed under Act
3135, within twenty (20) days from the signing of this compromise agreement. Said payment shall be considered full
settlement of all obligations stated under that Real Estate Mortgage, dated July 15, 1997 and that Deed of Assumption of
Mortgage dated August 11, 1999'.

2. Upon the payment of the afore-stated amount, the defendant shall make, sign, execute and deliver to the plaintiff a
Certificate of Deed of Redemption of all the above titles, and shall surrender and deliver to the plaintiff all the eight titles
mentioned above. The defendant shall also make, sign, execute and deliver to the plaintiff a Deed of Cancellation of
Mortgage annotated at the back of all the eight titles above-mentioned. The defendant shall also return to the plaintiff all
checks issued by the plaintiff to the defendant as payment of its obligations.
xxx
Finding the Compromise Agreement quoted above to be not contrary to law, morals, good customs and public policy, the
same is hereby APPROVED.
xxx
Angeles then moved for the issuance of a writ of execution. On September 9, 2002, the trial court required petitioner to
comment on the motion within ten (10) days.8 On October 3, 2002, the trial court directed the Clerk of Court to issue a writ
of execution.9 On the same date, the trial court received petitioner's Motion for Extension of Time to File Comment with Entry
of Appearance which was denied on October 10, 2002.10 Petitioner then moved for reconsideration of the October 3, 2002
Order.
Petitioner came to the Court of Appeals via petition for certiorari alleging that Judge Calderon-Bargas committed grave abuse
of discretion amounting to lack or excess of jurisdiction when: (1) she issued the October 3, 2002 and the October 10, 2002
Orders even before petitioner could file its comment; (2) she granted the Motion for Issuance of Writ of Execution although it
lacked the requisite notice of hearing; and (3) the writ of execution changed the tenor of the decision dated June 28, 2002.
In dismissing the petition, the appellate court ruled that petitioner was not deprived of due process when the trial court
issued the October 3, 2002 and the October 10, 2002 Orders since it was given sufficient time to file its comment. The
appellate court did not rule on the second and third issues after noting that petitioner's motion for reconsideration of the
October 3, 2002 Order had not yet been resolved by the trial court. It did not resolve the issues even after the trial court
denied petitioner's motion for reconsideration on December 12, 2003,11 ratiocinating that the trial court's denial of
petitioner's motion for reconsideration did not operate to reinstate the petition because at the time it was filed, petitioner had
no cause of action.
In the instant petition before us, petitioner alleges that the appellate court seriously erred:
I.
'IN NOT HOLDING THAT PETITIONER WAS DENIED THE REQUISITE PROCEDURAL DUE PROCESS WHEN PUBLIC
RESPONDENT ISSUED THE QUESTIONED ORDERS OF OCTOBER 3, 2002 AND OCTOBER 10, 2002 EVEN BEFORE PETITIONER
COULD FILE ITS COMMENT AND IN FURTHER ISSUING THE WRIT OF EXECUTION EVEN BEFORE THE RESOLUTION OF THE
PETITIONER'S MOTION FOR RECONSIDERATION OF THE ORDER OF OCTOBER 3, 2002.
II.
'IN NOT HOLDING THAT PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION WHEN IT GRANTED PRIVATE
RESPONDENT'S MOTION FOR ISSUANCE OF WRIT OF EXECUTION ALTHOUGH THE SAME WAS FILED WITHOUT AN
ACCOMPANYING NOTICE OF HEARING.
III.
'IN NOT HOLDING THAT PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF DISCRETION IN NOT HOLDING THAT EVEN
ASSUMING THAT THE DECISION RENDERED IN ACCORDANCE WITH THE COMPROMISE AGREEMENT IS VALID AND BINDING
UPON THE PETITIONER, THE WRIT OF EXECUTION ISSUED PURSUANT THERETO IS VOID AS IT VARIES THE TENOR OF THE
JUDGMENT.12
Simply, the issues are whether the trial court seriously erred: (1) in issuing the October 3, 2002 and the October 10, 2002
Orders without awaiting petitioner's comment; (2) in granting the Motion for Issuance of Writ of Execution although it lacked
the requisite notice of hearing; and (3) in issuing the writ of execution since it varied the tenor of the decision dated June 28,
2002.
Petitioner contends that it was denied due process when the trial court granted Angeles's Motion for Issuance of Writ of
Execution on October 3, 2002, despite its receipt of petitioner's Motion for Extension of Time to File Comment with Entry of
Appearance on the same day. Further, Sheriff Sales T. Bisnar served upon petitioner the Notice to Settle and/or Pay the
Compromise Judgment Amount although its motion for reconsideration of the October 3, 2002 Order was still pending.

Petitioner also argues that Angeles's Motion for Issuance of Writ of Execution lacked the requisite notice of hearing. Finally,
petitioner claims that the writ of execution varied the tenor of the decision dated June 28, 2002.
Respondent Angeles counters that petitioner was not denied due process since it was given ten (10) days to comment on the
Motion for Issuance of Writ of Execution which period had lapsed without petitioner filing any comment. Petitioner filed its
Motion for Extension of Time to File Comment with Entry of Appearance only after the reglementary period had expired.
Angeles further contends that the Motion for Issuance of Writ of Execution contained the requisite notice of hearing. Finally,
she argues that the writ of execution did not vary the tenor of the decision dated June 28, 2002.
On the first issue, we note that in its September 9, 2002 Order, the trial court gave petitioner ten (10) days to file its
comment to Angeles's Motion for Issuance of Writ of Execution. While petitioner claims that it received the Order only on
September 21, 2002, Angeles counters that petitioner received it on September 12, 2002. We are more inclined to believe
Angeles's allegation since the trial court itself declared in its Order dated October 10, 2002 that the Order dated September
9, 2002 was personally served upon petitioner on September 12, 2002.13 Thus, petitioner had until September 22, 2002
within which to file its comment or to request for an extension of time. Consequently, petitioner's motion for extension and
comment were not seasonably filed and such procedural lapse binds petitioner.
Anent the second issue, we have consistently held that a motion which does not meet the requirements of Sections 4 and 5
of Rule 1514 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.15 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. However, there are exceptions to the strict application of this rule. These exceptions are: (1)
where a rigid application will result in a manifest failure or miscarriage of justice 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; (3) where the resolution of the motion is addressed
solely to the sound and judicious discretion of the court; and (4) where the injustice to the adverse party is not
commensurate with the degree of his thoughtlessness in not complying with the procedure prescribed.16
A notice of hearing is an integral component of procedural due process 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 given time to study and answer the
arguments in the motion.17 Records show that while Angeles's Motion for Issuance of Writ of Execution contained a notice of
hearing, it did not particularly state the date and time of the hearing. However, we still find that petitioner was not denied
procedural due process. Upon receiving the Motion for Issuance of Writ of Execution, the trial court issued an Order dated
September 9, 2002 giving petitioner ten (10) days to file its comment. The trial court ruled on the motion only after the
reglementary period to file comment lapsed. Clearly, petitioner was given time to study and comment on the motion for
which reason, the very purpose of a notice of hearing had been achieved.
The notice requirement is not a ritual to be followed blindly.

rbl r l l l brr

Procedural due process is not based solely on a mechanical 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.18
On the last issue, we note that the Compromise Agreement approved by the trial court in its Decision dated June 28, 2002
merely provided that petitioner would pay Angeles the bid price of P5,500,000, for the eight parcels of land subject of the
auction sale, within twenty (20) days. Upon payment, Angeles would execute a Certificate of Deed of Redemption and a Deed
of Cancellation of Mortgage, and surrender to petitioner the titles to the eight parcels of land. Nevertheless, when the trial
court issued the writ of execution, the writ gave Sheriff Bisnar the option "to allow the consolidation of the subject real
properties in favor of the defendant Imelda Angeles."19
Undoubtedly, the writ of execution imposed upon petitioner an alternative obligation which was not included or contemplated
in the Compromise Agreement. While the complaint originally sought to restrain Angeles from consolidating her ownership to
the foreclosed properties, that has been superseded by the Compromise Agreement. Therefore, the writ of execution which
directed Sheriff Bisnar to "cause the Register of Deeds of Morong, Rizal, to allow the consolidation of the subject real
properties in favor of the defendant Imelda Angeles" is clearly erroneous because the judgment under execution failed to
provide for consolidation.
Because the writ of execution varied the terms of the judgment and exceeded them, it had no validity. The writ of execution
must conform to the judgment which is to be executed, as it may not vary the terms of the judgment it seeks to enforce.
Neither may it go beyond the terms of the judgment sought to be executed. Where the execution is not in harmony with the
judgment which gives it life and exceeds it, it has pro tanto no validity.20
WHEREFORE, the instant petition is PARTIALLY GRANTED. The Decision dated November 28, 2003 and the Resolution dated
May 26, 2004 of the Court of Appeals in CA-G.R. SP No. 73965 are MODIFIED such that the writ of execution issued on
October 11, 2002 by Judge Adelina Calderon-Bargas is declared NULL and VOID.

Let this case be REMANDED to the Regional Trial Court of Morong, Rizal, Branch 78, which is herebyORDERED to issue
another writ of execution against petitioner KKK Foundation, Inc., in conformity with the Decision dated June 28, 2002 of the
trial court. This is without prejudice to filing a new motion for consolidation by respondent Angeles.
No pronouncement as to costs.
SO ORDERED.

SECOND DIVISION
[G.R. No. L-24238. November 28, 1980.]
JOSE SANTOS, Plaintiff-Appellant, v. LORENZO J. LIWAG, Defendant-Appellee.

DECISION

CONCEPCION, JR., J.:

Appeal from the order of the Court of First Instance of Manila, dated October 17, 1964, which dismissed the complaint filed in
Civil Case No. 57282, for the failure of the plaintiff to submit a bill of particulars within 10 days from notice thereof.
chanrob les vi rtua l lawlib rary

The record shows that on June 8, 1964, the appellant Jose Santos filed a complaint against Lorenzo J. Liwag with the Court
of First Instance of Manila, docketed therein as Civil Case No. 57282, seeking the annulment of certain documents, attached
to the complaint and marked as Annexes "A", "B", and "C", as having been executed by means of misrepresentations,
machination, false pretenses, threats, and other fraudulent means, as well as for damages and costs. 1
Claiming that the allegations in the complaint are indefinite and uncertain, as well as conflicting, the defendant filed a motion
on July 4, 1964, asking the trial court that the plaintiff be ordered to submit a more definite statement or bill of particulars
on certain allegations of the complaint, as well as the facts constituting the misrepresentations, machinations, and frauds
employed by the defendant in the execution of the documents in question in order that he could be well informed of the
charges filed against him, for him to prepare an intelligent and proper pleading necessary and appropriate in the premises. 2
The plaintiff opposed the motion saying that the allegations in his complaint are sufficient and contain ultimate facts
constituting his causes of action and that the subject of the defendants motion is evidentiary in nature. 3
The trial court, however, granted the motion and directed the plaintiff "to submit a bill of particulars with respect to the
paragraphs specified in defendants motion", 4 and when the plaintiff failed to comply with the order, the court, acting upon
previous motion of the defendant, 5 dismissed the complaint with costs against the plaintiff. 6 Hence, the present appeal.
We find no merit in the appeal. The allowance of a motion for a more definite statement of bill of particular rests within the
sound judicial discretion of the court and, as usual in matters of a discretionary nature, the ruling of the trial court in that
regard will not be reversed unless there has been a palpable abuse of discretion or a clearly erroneous order. In the instant
case, the complaint is without doubt imperfectly drawn and suffers from vagueness and generalization to enable the
defendant property to prepare a responsive pleading and to clarify issues and aid the court in an orderly and expeditious
disposition of the case.
chanroblesv irt ualawli bra ry

The present action is one for the annulment of documents which have been allegedly executed by reason of deceit,
machination, false pretenses, misrepresentation, threats, and other fraudulent means. Deceit, machination, false pretenses,
misrepresentation, and threats, however, are largely conclusions of law and mere allegations thereof without a statement of
the facts to which such terms have reference are not sufficient. The allegations must state the facts and circumstances from
which the fraud, deceit, machination, false pretenses, misrepresentation, and threats may be inferred as a conclusion. In his
complaint, the appellant merely averred that all the documents sought to be annulled were all executed through the use of
deceits, machination, false pretenses, misrepresentation, threats, and other fraudulent means without the particular facts on
which alleged fraud, deceit, machination, or misrepresentations are predicated. Hence, it was proper for the trial court to
grant the defendants motion for a bill of particulars, and when the plaintiff failed to comply with the order, the trial court
correctly dismissed the complaint. 7
WHEREFORE, the judgment appealed from should be, as it is hereby, affirmed. Without pronouncement as to costs in this
instance.
chanroble s virtual law lib rary

SO ORDERED.

EN BANC
[G.R. No. L-15808. April 23, 1963.]
FAUSTA AGCANAS, JUAN MIGUEL, JUANITA MIGUEL, assisted by her husband ULPIANO PASION, assisted by her
husband JUAN PASCUAL, Plaintiffs-Appellees, v. BRUNO MERCADO, and ANTONIO DASALLA, DefendantsAppellants.
Melanio T . Singson for Plaintiffs-Appellees.
Adriano D. Dasalla and Antonio F . Dasalla, for Defendants-Appellants.

SYLLABUS

1. PLEADING AND PRACTICE; DENIAL OF MOTION TO DISMISS WHILE MOTION FOR BILL OF PARTICULARS REMAINED
PENDING; FILING OF ANSWER SUSPENDED. Upon the denial of a defendants motion to dismiss, the reglementary period
within which to file an answer remains suspended until the motion for a bill of particulars previously filed by the same
defendant is denied or, if it is granted, until the bill is served on him.

DECISION

MAKALINTAL, J.:

Appeal by defendants from the Court of First Instance of Isabela on a question of law.
On November 25, 1956 plaintiffs filed this action to recover portions of a parcel of land in Isabela, and damages. Under date
of December 4, 1956 defendants filed a motion for a bill of particulars, with notice of hearing on December 8, but since the
motion was actually received in court only on December 12 the court set it for hearing on December 22. On December 17,
however, defendants filed a motion to dismiss the complaint, with a prayer that consideration of their motion for a bill of
particulars be held in abeyance pending resolution of their motion to dismiss. On December 22, 1956, the date set by the
court for the hearing of the motion for a bill of particulars and by defendants for the hearing of their motion to dismiss, the
court issued an order postponing "consideration" of both motions to December 29. On March 7, 1957 the court denied the
motion to dismiss and ordered defendants "to answer the complaint within the reglementary period provided for by the Rules
of Court." Hearing of the case on the merits was set for October 29, 1957, notice of which was duly received by defendants.
Defendants not having filed their answer, plaintiffs, on October 17, 1957, moved to have them declared in default. On the
same day the court issued the order of default, together with another order commissioning the clerk of court to receive
plaintiffs evidence. On October 21, 1957 defendants moved to cancel the hearing scheduled for October 29, on two grounds,
one of which was that their motion for a bill of particulars had not yet been resolved. The motion to cancel was set for
hearing on October 26, 1957. When defendants arrived in court on that day they learned that an order of default had been
issued, so they immediately filed a motion asking that the same be set aside, that their pending motion for a bill of
particulars be resolved and that they be given a reasonable period thereafter within which to file their answer to the
complaint. On December 13, 1957 the court denied the motion and rendered its decision in favor of plaintiffs and against
defendants. On January 4, 1958 it denied defendants motion for reconsideration of the order of denial. On January 24,
defendants filed their record on appeal (to this Court from the order of December 13, 1957), but as they subsequently filed a
petition for relief from the judgment by default, they asked that consideration and approval of their record on appeal be held
in abeyance until said petition had been resolved. The request was granted. Defendants petition for relief, which was filed on
January 28, 1958, was denied on March 21, as was also, on September 20, 1958, their motion for reconsideration of the
order of denial. On October 4, 1958 the court denied likewise their motion for a writ of preliminary injunction to restrain
execution of the judgment by default. Hence this appeal.
Appellants eighteen assignments of error may be reduced to a single proposition: Whether or not upon denial of a
defendants motion to dismiss the reglementary period within which to file an answer resumes running even though the
motion for a bill of particulars of the same defendants is still pending and unresolved.
cralawnad

Both a motion to dismiss and a motion for a bill of particulars interrupt the time to file a responsive pleading. In the case of a
motion to dismiss, the period starts running again as soon as the movant receives a copy of the order of denial. 1 In the case
of a motion for a bill of particulars, the suspended period shall continue to run upon service on the movant of the bill of
particulars, if the motion is granted, or of the notice of its denial, but in any event he shall have not less than five days within
which to file his responsive pleading. 2
When appellants filed a motion to dismiss, they requested that resolution of their previous motion for a bill of particulars be
held in abeyance. This was but practical, because if the court had granted the motion to dismiss there would have been no
need for a bill of particulars. Resolution of the motion for the purpose was necessary only in the event that court should

deny, as it did, the motion to dismiss, in which case the period to file an answer remained suspended until the motion for a
bill of particulars is denied or, it is granted, until the bill is served on the moving party.
The lower court deemed appellants to have "tacitly waived their right to push through the hearing of the motion for bill of
particulars," because of their failure to set it for hearing or to ask the clerk of court to calendar it after denial of the motion to
dismiss. Appellants did set the motion for hearing on December 8, 1956, although it was not heard on that day because it
arrived in court only on December 12. Thereafter they did not have to reset it, as the clerk of court scheduled it for hearing
on December 22, 1956. And on that day the court issued an order that "the consideration of the motion to dismiss, as well as
the bill of particulars, is hereby postponed to December 29, 1956." As to whether or not both motions were actually heard on
December 29 does not appear of record. But heard or not, the motions should be considered submitted, and it was the clear
duty of the court to resolve the motion for a bill of particulars, as it did the motion to dismiss. No action having been taken
thereon until the present, the period to answer has not yet expired. The lower court, therefore, erred in declaring appellants
in default and in taking all the subsequent actions it did in the case.
chanroblesv irtuallawl ib rary:red

The order of default issued and the decision rendered by the trial court are set aside and the case is remanded for further
proceedings, pursuant to the Rules. Costs against plaintiffs- appellees.

FIRST DIVISION
[G.R. No. 106429. June 13, 1994.]
JOSELITA SALITA, Petitioner, v. HON. DELILAH MAGTOLIS, in her capacity as Judge of the RTC, Quezon City, Br.
107, and ERWIN ESPINOSA, Respondents.

SYLLABUS

1. REMEDIAL LAW; PLEADINGS; ULTIMATE FACTS, DEFINED. A complaint only needs to state the "ultimate facts
constituting the plaintiffs cause or causes of action." Ultimate facts has been defined as "those facts which the expected
evidence will support." (Blacks Law Dictionary, Fourth Ed., citing McDuffie v. California Tehama Land Corporation, 138 Cal.
App. 245, 32 P. 2d 385, 386) As stated by private respondent," [t]he term does not refer to the details of probative matter
or particulars of evidence by which these material elements are to be established." It refers to "the facts which the evidence
on the trial will prove, and not the evidence which will be required to prove the existence of those facts." And a motion for
bill of particulars will not be granted if the complaint, while not very definite, nonetheless already states a sufficient cause of
action. A motion for bill of particulars may not call for matters which should form part of the proof of the complaint upon
trial. Such information may be obtained by other means.
2. ID.; ID.; BILL OF PARTICULARS; RULE; WHEN NOT APPLICABLE; CASE AT BAR. We sustain the view of respondent
Court of Appeals that the Bill of Particulars filed by private respondent is sufficient to state a cause of action, and to require
more details from private respondent would be to ask for information on evidentiary matters. Indeed, petitioner has already
been adequately apprised of private respondents cause of action against her thus . . . (she) was psychologically
incapacitated to comply with the essential marital obligations of their marriage in that she was unable to understand and
accept the demands made by his profession that of a newly qualified Doctor of Medicine upon petitioners time and
efforts so that she frequently complained of his lack of attention to her even to her mother, whose intervention caused
petitioner to lose his job. On the basis of the aforequoted allegations, it is evident that petitioner can already prepare her
responsive pleading or for trial. Private respondent has already alleged that "she (petitioner) was unable to understand and
accept the demands made by his profession . . . upon his time and efforts . . ." Certainly, she can respond to this. To
demand for more details would indeed be asking for information on evidentiary facts facts necessary to prove essential or
ultimate facts. For sure, the additional facts called for by petitioner regarding her particular acts or omissions would be
evidentiary, and to obtain evidentiary matters is not the functions of a motion for bill of particulars. The Court distinguishes
the instant case from Tantuico, Jr. v. Republic (G.R. No. 89114, 2 December 1991, 204 SSCRA 428) where we said
Furthermore, the particulars prayed for, such as names of persons, names of corporations, dates, amounts involved, a
specification of property for identification purposes, the particular transactions involving withdrawals and disbursements, and
a statement of other material facts as would support the conclusions and inferences in the complaint, are not evidentiary in
nature. On the contrary, those particulars are material facts that should be clearly and definitely averred in the complaint in
order that the defendant may, in fairness, be informed of the claims made against him to the end that he may be prepared
to meet the issues at the trial. The aforementioned pronouncement cannot apply to the instant case. That ruling involves
alleged "misappropriation and theft of public funds, plunder of the nations wealth, extortion, blackmail, bribery,
embezzlement, and other acts of corruption, betrayal of public trust and brazen abuse of power." The respondents therein
pray for reconveyance, reversion, accounting, restitution and damages. There, the alleged illicit acts should be fully
documented. The instant case, on the other hand, concerns marital relationship. It would be unreasonable, if not unfeeling,
to document each and every circumstance of marital disagreement. True, the complaining spouse will have to prove his case,
but that will not come until trial begins.

DECISION

BELLOSILLO, J.:

Erwin Espinosa, 32, and Joselita Salita, 22, were married at the Roman Catholic Church in Ermita, Manila, on 25 January
1986. A year later, their union turned sour. They separated in fact in 1988. Subsequently, Erwin sued for annulment on the
ground of Joselitas psychological incapacity.
The issue before us however is not the scope nor even the interpretation of Art. 36 of the Family Code. 1 Rather, the issue is
the sufficiency of the allegations in the petition for annulment of marriage and the subsequent bill of particulars filed in
amplification of the petition.
The petition for annulment was filed before the Regional Trial Court of Quezon City on 7 January 1992. Therein it is alleged
that" [s]ometime in 1987, petitioner came to realize that respondent was psychologically incapacitated to comply with the
essential marital obligations of their marriage, which incapacity existed at the time of the marriage although the same
became manifest only thereafter." 2 Dissatisfied with the allegation in the petition, Joselita moved for a bill of particulars
which the trial court granted. 3 Subsequently, in his Bill of Particulars, Edwin specified that

. . . at the time of their marriage, respondent (Joselita Salita) was psychologically incapacitated to comply with the essential
marital obligations of their marriage in that she was unable to understand and accept the demands made by his profession
that of a newly qualified Doctor of Medicine upon petitioners time and efforts so that she frequently complained of his lack
of attention to her even to her mother, whose intervention caused petitioner to lose his job.
chan roble svirtualawl ibra ry

Still Joselita was not contended with the Bill of Particulars. She argued that the "assertion (in the Bill of Particulars) is a
statement of legal conclusion made by petitioners counsel and not an averment of ultimate facts, as required by the Rules
of Court, from which such a conclusion may properly be inferred . . ." 4 But finding the questioned Bill of Particulars
adequate, the trial court issued an order upholding its sufficiency and directing Joselita to file her responsive pleading.
Joselita was not convicted. She filed a petition for certiorari with us. However, we referred her petition to the Court of
Appeals for resolution.
On 21 July 1992, the Court of Appeals denied due course to her petition thus
In the same case under consideration, Espinosa has amplified Salitas alleged psychological incapacity in his bill of particulars
...
In our view, the aforesaid specification more than satisfies the Rules requirement that a complaint must allege the ultimate
facts constituting a plaintiffs cause of action. To require more details thereof, to insist on a specification of Salitas particular
conduct or behavior with the corresponding circumstances of time, place and person indicating her alleged psychological
incapacity would be to ask for information on evidentiary matters. To obtain evidentiary details, Salita may avail herself of
the different modes of discovery provided by the Rules of Court (Rules 24 to 28).
Whether Espinosas averments in his bill of particulars constitute psychological incapacity in the contemplation of the Family
Code is a question that may be resolved in a motion to dismiss or after trial on the merits of the case, not in a motion for bill
of particulars. And certainly, that matter cannot be resolved in the present petition. 5
Hence, the instant petition for review on certiorari filed by Joselita Salita questioning the Resolution of the Court of Appeals
denying due course to her petition.
Petitioner insists that the allegations in the Bill of Particulars constitute a legal conclusion, not an averment of facts, and fail
to point out the specific essential marital obligations shall allegedly was not able to perform, and thus render the Bill of
Particulars insufficient if not irrelevant to her husbands cause of action. She rationalizes that her insistence on the
specification of her particular conduct or behavior with the corresponding circumstances of time, place and person does not
call for information on evidentiary matters because without these details she cannot adequately and intelligently prepare her
answer to the petition.
chanro bles. com.ph : vi rtual law lib rary

Private respondent on the other hand believes that his allegations in the Bill of Particulars constitute the ultimate facts which
the Rules of Court requires at this point, He defines ultimate facts as
. . . important and substantial facts which either directly form the basis of the primary right and duty, or which directly make
upon the wrongful acts or omissions of the defendant. The term does not refer to the details of probative matter or
particulars of evidence by which these material elements are to be established. It refers to principal, determinate facts upon
the existence of which the entire cause of action rests. 6
Ultimate facts are conclusions drawn from intermediate and evidentiary facts, or allegations of mixed law and fact; they are
conclusions from reflection and natural reasoning on evidentiary fact. The ultimate facts which are to be pleaded are the
issuable, constitutive, or traversible facts essential to the statement of the cause of action; the facts which the evidence on
the trial will prove, and not the evidence which will be required to prove the existence of those facts . . . 7
Private respondent further argues that" [c]onclusions of law and evidentiary matters need not be stated in the complaint.
The rules of pleadings limit the statement of the cause of action only to such operative facts as would give rise to the right of
action of the plaintiff to obtain relief against the wrongdoer. The details of probative matter or particulars of evidence,
statements of law, inferences and arguments need not be stated." 8
In a nutshell, the ultimate question is whether the Bill of Particulars submitted by herein respondent is of sufficient
definiteness or particularly as to enable herein petitioner to property prepare her responsive pleading or for trial.

ch anroble s law lib ra ry : red

A complaint only needs to state the "ultimate facts constituting the plaintiffs cause or causes of action." 9 Ultimate facts has
been defined as "those facts which the expected evidence will support." 10 As stated by private respondent," [t]he term does
not refer to the details of probative matter or particulars of evidence by which these material elements are to be
established." It refers to "the facts which the evidence on the trial will prove, and not the evidence which will be required to
prove the existence of those facts." And a motion for bill of particulars will not be granted if the complaint, while not very
definite, nonetheless already states a sufficient cause of action. 11 A motion for bill of particulars may not call for matters
which should form part of the proof of the complaint upon trial. Such information may be obtained by other means. 12
We sustain the view of respondent Court of Appeals that the Bill of Particulars filed by private respondent is sufficient to state

a cause of action, and to require more details from private respondent would be to ask for information on evidentiary
matters. Indeed, petitioner has already been adequately apprised of private respondents cause of action against her thus
. . . (she) was psychologically incapacitated to comply with the essential marital obligations of their marriage in that she was
unable to understand and accept the demands made by his profession that of a newly qualified Doctor of Medicine upon
petitioners time and efforts so that she frequently complained of his lack of attention to her even to her mother, whose
intervention caused petitioner to lose his job.
On the basis of the aforequoted allegations, it is evident that petitioner can already prepare her responsive pleading or for
trial. Private respondent has already alleged that "she (petitioner) was unable to understand and accept the demands made
by his profession . . . upon his time and efforts . . ." Certainly, she can respond to this. To demand for more details would
indeed be asking for information on evidentiary facts facts necessary to prove essential or ultimate facts. 13 For sure, the
additional facts called for by petitioner regarding her particular acts or omissions would be evidentiary, and to obtain
evidentiary matters is not the functions of a motion for bill of particulars. 14
We distinguish the instant case from Tantuico, Jr. v. Republic 15 where we said
Furthermore, the particulars prayed for, such as names of persons, names of corporations, dates, amounts involved, a
specification of property for identification purposes, the particular transactions involving withdrawals and disbursements, and
a statement of other material facts as would support the conclusions and inferences in the complaint, are not evidentiary in
nature. On the contrary, those particulars are material facts that should be clearly and definitely averred in the complaint in
order that the defendant may, in fairness, be informed of the claims made against him to the end that he may be prepared
to meet the issues at the trial.
The aforementioned pronouncement cannot apply to the instant case. That ruling involves alleged "misappropriation and
theft of public funds, plunder of the nations wealth, extortion, blackmail, bribery, embezzlement, and other acts of
corruption, betrayal of public trust and brazen abuse of power." The respondents therein pray for reconveyance, reversion,
accounting, restitution and damages. There, the alleged illicit acts should be fully documented. The instant case, on the other
hand, concerns marital relationship. It would be unreasonable, if not unfeeling, to document each and every circumstance of
marital disagreement. True, the complaining spouse will have to prove his case, but that will not come until trial begins.
Consequently, we have no other recourse but to order the immediate resumption of the annulment proceedings which have
already been delayed for more than two years now, even before it could reach its trial stage. Whether petitioner is
psychologically incapacitated should be immediately determined. There is no point in unreasonably delaying the resolution of
the petition and prolonging the agony of the wedded couple who after coming out from a storm still have the right to a
renewed blissful life either alone or in the company of each other.
chanrobles law lib rary

A word on Art. 36 of the Family Code. 16 We do not see the need to define or limit the scope of the provision. Not in the
case, at least. For, we are not called upon to do so, the actual controversy being the sufficient of the bill of particulars. To
interpret the provision at this juncture would be to give an obiter dictum which is ill-timed. Besides, it appears that petitioner
in her memorandum has demonstrated a good grasp of what Art. 26 actually covers. Suffice it to say that Mme. Justice
Sempio-Diy, formerly of the Court of Appeals and a member of the Civil Code Revision Committee that drafted the Family
Code, explains
The Committee did not give any examples of psychological incapacity for fear that the giving of examples would limit the
applicability of the provision under the principles of ejusdem generis. Rather, the Committee would like the judge to interpret
the provision on a case-to-case basis, guided by experience, the findings of experts and researchers in psychological
disciplines, and by decisions of church tribunals which, although not binding on the civil courts, may be given persuasive
effect since the provision was taken from Canon Law. 17
WHEREFORE, there being no reversible error, the instant petition is DENIED and the questioned Resolution of respondent
Court of Appeals dated 21 July 1992 is AFFIRMED.
SO ORDERED.

THIRD DIVISION
[G.R. No. 45107. November 11, 1991.]
BENEDICTO RAMOS, Petitioner, v. HON. ELVIRO L. PERALTA, Presiding Judge, Branch XVII, Court of First
Instance of Manila, SPOUSES JUVENCIO ORTANEZ and JULIANA S. ORTANEZ, MINDANAO INSURANCE CO., INC.
and P. R. ROMAN, INC., Respondents.
Angel Suntay, Jr. and Renato M. Coronado for Petitioner.
Tolentino, Garcia, Cruz & Reyes for respondents Ortanez.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; MOTION TO DISMISS, LITIS PENDENTIA AS A GROUND; REQUISITES. Under the
rules and jurisprudence, for litis pendentia to be invoked as a ground for the dismissal of an action, the concurrence of the
following requisites is necessary: (a) Identity of parties or at least such as represent the same interest in both actions; (b)
Identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) The identity in the two
cases should be such that the judgment that may be rendered in one would, regardless of which party is successful, amount
to res judicata in the other.
2. ID.; ID.; ID.; ID.; ID.; IDENTITY OF PARTIES; PRESENT IN CASE AT BAR. It is worthwhile mentioning that in his basic
petition for review, one of the assigned errors of petitioner is that the respondent court erred in not holding that the parties
in Civil Case No. 4102 are not the same as the parties in Civil Case No. 103647. 8 However, in his brief, no further mention
of this assigned error was made; a clear indication of petitioners admission of the identity of parties in Civil Case No. 4102
and Civil Case No. 103647, particularly as he filed a third party complaint in Civil Case No. 4102 against the spouses Ortanez
and Mindanao Insurance.
3. ID.; ID.; ID.; ID.; ID.; IDENTITY OF RIGHTS ASSERTED AND RELIEF PRAYED FOR; PRESENT IN CASE AT BAR. We
agree with private respondents observation that petitioners approach to his consignation case is quite constricted. His
contention that the only issue in a consignation case is whether or not the defendant is willing to accept the proffered
payment is true only where there is no controversy with respect to the obligation sought to be discharged by such payment.
His consignation case, however, is not as simple. While ostensibly, the immediate relief sought for in his consignation case is
to compel therein defendants to accept his advance rentals, the ultimate purpose of such action is to compel the new owner
of the fishpond to recognize his leasehold rights and right of occupation. In the last analysis, therefore, the issue involved in
Civil Case No. 103647 is the right of possession over the fishpond intertwined with the validity and effectivity of the lease
contract. This is the same issue involved in Civil Case No. 4102. Although an action for quieting of title refers to ownership,
P. R. Roman, Inc. in its complaint in Civil Case No. 4102. Thus, while the respondent court in the assailed order of dismissal
dated August 27, 1976 described Civil Case No. 4102 as "precisely for the ownership of the subject matter of the property
allegedly leased to the plaintiff herein," its order dated October 22, 1976 denying petitioners motion for reconsideration.
That whatever decision may be handed down in Civil Case No. 4102 would constitute res judicata in Civil Case No. 103647 is
beyond cavil. Should the Bataan court rule that the lease contract is valid and effective against P. R. Roman, Inc., then
petitioner can compel it to accept his proffered payment of rentals; otherwise, he may not do so.
4. ID.; ID.; ID.; GRANTING THEREOF ON THE GROUND OF LITIS PENDENTIA; DOES NOT DEPRIVE A PARTY OF THE RIGHT
TO CHOOSE THE VENUE OF HIS ACTION. Petitioner next contends that the dismissal of Civil Case No. 103647 deprived
him of his right to choose the venue of his action. Verily, the rules on the venue of personal actions are laid down generally
for the convenience of the plaintiff and his witnesses. But, as observed by private respondents, this right given to the plaintiff
is not immutable. It must yield to the greater interest of the orderly administration of justice, which as in this case, may call
for the dismissal of an action on the basis of litis pendentia to obviate the possibility of conflicting decisions being rendered
by two different courts. As private respondents would put it," (T)he Rules of Court are not perfect. It does not pretend to be
able to make everyone happy simultaneously or consecutively or all the time. Even the Rules of Court has hierarchy of
values; thus, the choice of venue may bow to dismissal of the case because of litis pendentia. At any rate, petitioner cannot
complain of any inconvenience arising from the dismissal of Civil Case No. 103647. Being the defendant in Civil Case No.
4102, he cannot but litigate before the Bataan court, and bringing his consignation case before the same court would actually
save him time, effort and litigation expenses.

DECISION

FERNAN, C.J.:

Put in issue in this petition for review on certiorari is the propriety of the dismissal by the then Court of First Instance of
(CFI) of Manila, Branch XVII of petitioners action for consignation of the sum of P70,000.00 representing advance rentals for

the 101-hectare Salgado fishpond located in Bo. Balut, Pilar, Bataan.

Petitioner started occupying the Salgado fishpond in 1964 by virtue of a lease contract executed in his favor by private
respondents spouses Juvencio and Juliana Ortanez. The original lease for a term of five (5) years from January 1, 1964 to
January 1, 1990, was renewed several times, the last renewal being on June 28, 1974 under a "Kasunduan sa Pag-upa" for a
period of three (3) years starting January 1, 1975 to December 31, 1977.
chan robles v irt ual lawl ibra ry

Unknown to petitioner, title 1 to said property was in the name of Philippine International Surety Co., Inc., a corporation
founded, organized and 99.5%-owned by the Salgado spouses. Later renamed Mindanao Insurance Co., Inc., 2 said
corporation was placed under receivership and liquidation on June 20, 1968 in Civil Case No. Q-10664 of the then CFI of
Rizal, Branch IV, Quezon City, upon application of Insurance Commissioner Gregoria Cruz-Ansaldo who was appointed
receiver.
Thereafter on February 23, 1976, respondent P. R. Roman, Inc. purchased from Mindanao Insurance the Salgado fishpond
for P950,000.00. The deed of sale was signed by the receiver and duly approved by the liquidation court.
Apparently due to this development, the spouses Ortanez refused to accept from petitioner the advance rentals on the
fishpond due on March 15, 1976 in the amount of P30,000.00.
On or about May 1, 1976, petitioner received a letter from Don Pablo R. Roman informing him of the latters acquisition of
the fishpond and intention to take possession thereof on May 16, 1976. In his letter-reply, petitioner reminded Mr. Roman of
his lease contract over the fishpond and refused to consent to the intended take over. Notwithstanding petitioners objection,
P. R. Roman, Inc. took over possession of the fishpond.
On August 2, 1976, petitioner filed before the CFI of Manila the aforesaid complaint, docketed as Civil Case No. 103647, 3
against private respondents Juvencio and Juliana Ortanez, Mindanao Insurance and P. R. Roman, Inc. for consignation of the
sum of P70,000.00 representing advance rentals on the fishpond in the amounts of P30,000.00 and P40,000.00 respectively
due on March 15, 1976 and June 15, 1976, which he had previously tendered to, but refused by the spouses Ortanez and
Pablo Roman.
P. R. Roman, Inc. filed a motion to dismiss on the grounds that venue was improperly laid, the complaint states no cause of
action and the court has no jurisdiction over the subject of the action or suit. In its motion to dismiss, P. R. Roman, Inc. cited
the pendency before the then CFI of Bataan of Civil Case No. 4102 instituted by P.R. Roman, Inc. against petitioner
Benedicto Ramos on August 13, 1976 to quiet its title over the Salgado fishpond.
On August 27, 1976, respondent CFI of Manila issued an order 4 dismissing Civil Case No. 103647, stating in part:

chan rob1es v irt ual 1aw l ibra ry

Without discussing in detail the grounds mentioned above, the Court really sees that this case should be dismissed not only
insofar as against P. R. Roman, Inc. but also as against the other defendants mentioned above for the reason, principally,
that there is already a case pending between the same parties and for the same cause in Civil Case No. 4102 of Branch II of
the Court of First Instance of Bataan, entitled P. R. Roman, Inc. v. Benedicto Roman, which is precisely for the ownership of
the subject matter of the property allegedly leased to the plaintiff herein (Exhibit "A" -Motion). In the said case, the
defendant therein, Benedicto Ramos, who is the plaintiff in the case at bar, filed a motion for leave to file a third-party
complaint against the spouses surnamed Ortanez and the Mindanao Insurance Company, Inc. All the issues respecting the
fishpond, including the lease contract, are necessarily involved in the case pending now in Bataan. Aside from the above, the
Court cannot decide this case because it cannot pre-empt the Court of Bataan on whether or nor the P. R. Roman, Inc. is
already the owner because if it finds that the said defendant P. R. Roman, Inc. is really the owner of the fishpond, there is no
more lease for which rentals are to be paid."
cralaw virt ua1aw lib ra ry

Petitioner moved for reconsideration, but was unsuccessful, the court a quo, standing "pat on its previous order and
reiterat(ing) its dismissal of the case, without costs." 5
Hence this petition anchored on the following ascribed errors of law. 6
1. The respondent court erred in not holding that the only issue in consignation of funds is whether the defendant is willing to
accept the proffered payment or not.
chanroble s virtual lawl ibrary

2. The respondent court erred in not holding that the prerogative of choosing the proper venue belongs to the plaintiff.
3. The respondent court erred in holding that the subsequent filing of Civil Case No. 4102 before the Court of First Instance
of Bataan is a bar to the prosecution of Civil Case No. 103647 before it.
Petitioner contends that the Bataan quieting-of-title Civil Case No. 4102 cannot serve as a bar to his Manila consignation Civil
Case No. 103647 because they involve different issues. Civil Case No. 4102 deals with the question of ownership while the
only issue involved in his consignation case is whether or not the defendant is willing to accept the proffered payment. In
fact, petitioner posits, the action to quiet title is a useless futile exercise as he does not question P. R. Roman Inc.s
ownership of the fishpond under consideration, but merely wishes to assert his leasehold and possessory rights over said
property under the "Kasunduan sa Pag-upa." He further contends that compelling him to litigate before the Bataan court
would render nugatory his right as a plaintiff to choose the venue of his action. Besides, Civil Case No. 103647 was filed on

August 2, 1976, ahead of Civil Case No. 4102 which was filed on a much later date, August 13, 1976, after the Manila CFI
had already acquired jurisdiction over Civil Case No. 103647.
Private respondents counter that the view taken by petitioner of the Manila consignation case is quite limited and bookish,
because while it may be true that theoretically, the main issue involved in a consignation case is whether or not the
defendant is willing to accept the proffered payment, in the consignation case brought by petitioner, other issues were
pleaded by petitioner himself, such as the validity and binding effect of the lease contract and the existence of the supposed
obligor-obligee relationship. They further contend that a plaintiffs right of choice of venue is not absolute, but must invariably
bow to the dismissal of the case because of litis pendentia which, in refutation of petitioners argument, does not require that
there is a prior pending action, merely that there is a pending action.
We find for Respondents.
Under the rules and jurisprudence, for litis pendentia to be invoked as a ground for the dismissal of an action, the
concurrence of the following requisites is necessary: (a) Identity of parties or at least such as represent the same interest in
both actions; (b) Identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) The
identity in the two cases should be such that the judgment that may be rendered in one would, regardless of which party is
successful, amount to res judicata in the other. 7
These requisites are present in the case at bar. It is worthwhile mentioning that in his basic petition for review, one of the
assigned errors of petitioner is that the respondent court erred in not holding that the parties in Civil Case No. 4102 are not
the same as the parties in Civil Case No. 103647. 8 However, in his brief, no further mention of this assigned error was
made; a clear indication of petitioners admission of the identity of parties in Civil Case No. 4102 and Civil Case No. 103647,
particularly as he filed a third party complaint in Civil Case No. 4102 against the spouses Ortanez and Mindanao insurance.
Anent the second element, we agree with private respondents observation that petitioners approach to his consignation case
is quite constricted. His contention that the only issue in a consignation case is whether or not the defendant is willing to
accept the proffered payment is true only where there is no controversy with respect to the obligation sought to be
discharged by such payment. His consignation case, however, is not as simple. While ostensibly, the immediate relief sought
for in his consignation case is to compel therein defendants to accept his advance rentals, the ultimate purpose of such
action is to compel the new owner of the fishpond to recognize his leasehold rights and right of occupation. In the last
analysis, therefore, the issue involved in Civil Case No. 103647 is the right of possession over the fishpond intertwined with
the validity and effectivity of the lease contract.
chanrobles vi rt ual lawli bra ry

This is the same issue involved in Civil Case No. 4102. Although an action for quieting of title refers to ownership, P. R.
Roman, Inc. in its complaint 9 in Civil Case No. 4102 alleged:
cha nro b1es vi rtua l 1aw lib ra ry

5. There is a cloud on the aforesaid titles of plaintiff on the said agricultural land, marked Annexes "A", "B" and "C" hereof, as
well as on its right of possession over that real property by reason of a certain "Kasunduan sa Pagupa" (Contract of Lease)
dated June 28, 1974 executed by and between the spouses Jovencio Ortanez and Juliana S. Ortanez purportedly as "mayari/Nagpapaupa" (owner/lessor) and the defendant as lessee, which instrument is apparently valid or effective but in truth
and in fact invalid, ineffective, voidable or unenforceable, and is prejudicial to the said titles of plaintiff as well as to its right
of possession over the same fishpond/agricultural land in Barrio Balut, Pilar, Bataan.
Thus, while the respondent court in the assailed order of dismissal dated August 27, 1976 described Civil Case No. 4102 as
"precisely for the ownership of the subject matter of the property allegedly leased to the plaintiff herein," 10 its order dated
October 22, 1976 denying petitioners motion for reconsideration, more perceptively stated. 11
"In Civil Case No. 4102 of the Court of First Instance of Bataan, entitled P. R. Roman, Inc. v. Benedicto Ramos one of the
principal issues is the possession of the fishpond subject matter of the lease supposed rents of which are supposed to be
consignated in the instant case, plaintiff P. R. Roman, Inc. there, claiming to be entitled to the possession of said property as
owner under a certificate of title and defendant Benedicto Ramos, plaintiff here, anchoring his claim of possession upon his
lease with the Ortanez spouses against whom, on his motion, he filed a third party complaint in which he prayed in the
alternative, that should he lose possession of the fishpond in favor of P. R. Roman, Inc., the Ortanezes should be condemned
to reimburse him the rentals he has already paid for the unexpired portion of the lease. The issue of whether or not the lease
subsists even as regards P. R. Roman, Inc., for it is the view of Ramos that it bought the property with knowledge of the
lease, is squarely planted in the case before the Court of First Instance of Bataan, and, consequently, the more appropriate
court with which rents are to be consignated. . . ."
cralaw virt ua1aw lib rary

That whatever decision may be handed down in Civil Case No. 4102 would constitute res judicata in Civil Case No. 103647 is
beyond cavil. Should the Bataan court rule that the lease contract is valid and effective against P. R. Roman, Inc., then
petitioner can compel it to accept his proffered payment of rentals; otherwise, he may not do so.
Petitioner next contends that the dismissal of Civil Case No. 103647 deprived him of his right to choose the venue of his
action. Verily, the rules on the venue of personal actions are laid down generally for the convenience of the plaintiff and his
witnesses. But, as observed by private respondents, this right given to the plaintiff is not immutable. It must yield to the
greater interest of the orderly administration of justice, which as in this case, may call for the dismissal of an action on the
basis of litis pendentia to obviate the possibility of conflicting decisions being rendered by two different courts. 12

As private respondents would put it," (T)he Rules of Court are not perfect. It does not pretend to be able to make everyone
happy simultaneously or consecutively or all the time. Even the Rules of Court has hierarchy of values; thus, the choice of
venue may bow to dismissal of the case because of litis pendentia. 13 At any rate, petitioner cannot complain of any
inconvenience arising from the dismissal of Civil Case No. 103647. Being the defendant in Civil Case No. 4102, he cannot but
litigate before the Bataan court, and bringing his consignation case before the same court would actually save him time,
effort and litigation expenses.
Finally, the rule on litis pendentia does not require that the later case should yield to the earlier case. What is required
merely is that there be another pending action, not a prior pending action. Considering the broader scope of inquiry involved
in Civil Case No. 4102 and the location of the property involved, no error was committed by the lower court in deferring to
the Bataan courts jurisdiction.
chanrob les vi rtual lawlib rary

WHEREFORE, the assailed decision dated August 27, 1976 of the then Court of First Instance of Manila, Branch XVII, is
AFFIRMED in toto. This decision is immediately executory, with costs against petitioner.
SO ORDERED.

SECOND DIVISION
[G.R. No. L-30523. April 22, 1977.]
LEE BUN TING and ANG CHIA, Petitioners, v. HON. JOSE A. ALIGAEN, Judge of the Court of First Instance of
Capiz, 11th Judicial District, Branch II; ATTY. ANTONIO D. AMOSIN, as court-appointed Receiver; RAFAEL A.
DINGLASAN, FRANCISCO A. DINGLASAN, CARMEN A. DINGLASAN, RAMON A. DINGLASAN, LOURDES A.
DINGLASAN, MERCEDES A. DINGLASAN, CONCEPCION A. DINGLASAN, MARIANO A. DINGLASAN, JOSE A.
DINGLASAN, LORETO A. DINGLASAN, RIZAL A. DINGLASAN, JIMMY DINGLASAN, and JESSE
DINGLASAN,Respondents.
Norberto J. Quisumbing and Humberto V. Quisumbing, for Petitioners.
Rafael A. Dinglasan for Respondents.

DECISION

ANTONIO, J.:

Petition for certiorari to annul the Orders of respondent court dated October 10, 1968 and November 9, 1968 and other
related Orders in Civil Case No. V-3064, entitled "Rafael A. Dinglasan, Et. Al. v. Lee Bun Ting, Et. Al.", with prayer for the
issuance of a writ of preliminary injunction. The antecedent facts are as follows:
chanro b1es vi rt ual 1aw li bra ry

On June 27, 1956, this Court rendered judgment in G. R. No. L-5996, entitled "Rafel Dinglasan, Et. Al. v. Lee Bun Ting, Et.
Al." 1 In that case, We found that:
jgc:chanrob les.com. ph

"In the month of March, 1936, petitioners-appellants sold to Lee Liong, a Chinese citizen, predecessor in interest of
respondents-appellees, a parcel of land situated on the corner of Roxas Avenue and Pavia Street, Capiz (now Roxas City),
Capiz, designated as lot 398 and covered by Original Certificate of Title No. 3389. The cost was P6,000.00 and soon after the
sale Lee Liong constructed thereon a concrete building which he used as a place for his lumber business and in part as
residence for himself and family. Petitioners had contended that the sale was a conditional sale, or one with the right of
repurchase during the last years of a ten-year period, but booth the trial court and the Court of Appeals found that the sale
was an absolute one. Another contention of the petitioners-appellants is that the sale is null and void as it was made in
violation of the provision contained in the Constitution (Article XIII, section 5), but the Court of Appeals found that the
purchaser was not aware of the constitutional prohibition while petitioners-appellants were because the negotiations for the
sale were conducted with the knowledge and direct intervention of Judge Rafael Dinglasan, one of the plaintiffs, who was at
that time an assistant attorney in the Department of Justice. . . ." (p. 429).
In reply to the contention of appellants therein that as the sale to Lee Liong is prohibited by the Constitution, title to the land
did not pass to said alien because the sale did not produce any juridical effect in his favor, and that the constitutional
prohibition should be deemed self-executing in character in order to give effect to the constitutional mandate, this Court
said:
jgc:chan roble s.com.p h

". . . In answer we state that granting the sale to be null and void and can not give title to the vendee, it does not necessarily
follow therefrom that the title remained in the vendor, who had also violated the constitutional prohibition, or that he
(vendor) has the right to recover the title of which he has divested himself by his act in ignoring the prohibition. In such
contingency another principle of law sets in to bar to equally guilty vendor from recovering the title which he had voluntarily
conveyed for a consideration, that of pari delicto. We have applied this principle as a bar to the present action in a series of
cases, thus:
chanrob1es vi rtua l 1aw lib ra ry

We can, therefore, say that even if the plaintiffs can still invoke the Constitution, or the doctrine in the Krivenko case, to set
aside the sale in question, they are now prevented from doing so if their purpose is to recover the lands that they have
voluntarily parted with, because of their guilty knowledge that what they were doing was in violation of the Constitution.
They cannot escape the law. As this Court well said: A party to an illegal contract cannot come into a court of law and ask to
have his illegal objects carried out. The law will not aid either party to an illegal agreement; it leaves the parties where it
finds them. The rule is expressed in the maxims: Ex dolo malo non oritur actio, and In pari delicto potior est conditio
defendentis.. . . .
"It is not necessary for us to re-examine the doctrine laid down by us in the above cases. We must add in justification of the
adoption of the doctrine that the scope of our power and authority is to interpret the law merely, leaving to the proper coordinate body the function of laying down the policy that should be followed in relation to conveyances in violation of the
constitutional prohibition and in implementing said policy. The situation of these prohibited conveyances is not different from

that of homestead sold within five years from and after the issuance of the patent, (Section 118, C.A. 141, otherwise known
as the Public Land Law), for which situation the legislature has adopted the policy, not of returning the homestead sold to the
original homesteader, but of forfeiting the homestead and returning it to the public domain again subject to disposition in
accordance with law. (Section 124, Id.).
"The doctrine of in pari delicto bars petitioners-appellants from recovering the title to the property in question and renders
unnecessary the consideration of the other arguments presented in appellants brief.
"There is one other cause why petitioners remedy cannot be entertained, that is the prescription of the action. As the sale
occurred in March, 1936, more than ten years had already elapsed from the time the cause of action accrued when the action
was filed (1948)." (pp. 431-432).
Noting the absence of policy governing lands sold to aliens in violation of the constitutional prohibition, We further said:

jgc:cha nrob les.co m.ph

"We take this occasion to call the attention of the legislature to the absence of a law or policy on sales in violation of the
Constitution; this Court would have filled the void were we not aware of the fact that the matter falls beyond the scope of our
authority and properly belongs to a co-ordinate power." (P. 432).
Accordingly, the petition in the foregoing case was denied.
Twelve (12) years later, on the basis of the decision of this Court in Philippine Banking Corporation v. Lui She, 2 private
respondents Rafael A. Dinglasan, Et. Al. filed a complaint on July 1, 1968 for the recovery of the same parcel of land subject
matter of the first-mentioned case. Said complaint was docketed as Civil Case No. V-3064 before respondent court. Private
respondents (plaintiffs before the court a quo) reiterated their contention that the sale made to Lee Liong, predecessor-ininterest of petitioners (defendants a quo), was null and void for being violative of the Constitution, and prayed that plaintiffs
be declared as the rightful and legal owners of the property in question; that defendants be ordered to vacate the premises,
to surrender possession thereof to plaintiffs and to receive the amount of P6,000.00 from the plaintiffs as restitution of the
purchase price; and that defendants be ordered to pay damages to the plaintiffs in the amount of P2,000.000 a month from
the time of the filing of the complaint until the property is returned to them, as well as the costs of suit.
A motion to dismiss, dated September 23, 1968, was filed by defendants-petitioners on the ground of res judicata, alleging
that the decision in the case of "Rafael Dinglasan, Et. Al. v. Lee Bun Ting, Et. Al.", supra, promulgated on June 27, 1956, has
definitely settled the issues between the parties. An opposition thereto was filed by plaintiffs, with the averment that the
decision in the prior case "cannot be pleaded in bar of the instant action because of new or additional facts or grounds of
recovery and because of change of law or jurisprudence." 3 In support of the change in Jurisprudence asserted, the decision
of this Court in Philippine Banking Corporation v. Lui She, supra, was advanced, upon the contention that said decision
warrants a reopening of the case and the return of the parcel of land involved to the plaintiffs. A reply to the opposition was
filed by defendants by registered mail on October 16, 1968, alleging that the decision in Philippine Banking Corporation v. Lui
She, which was promulgated in 1967, "cannot affect the outcome of the instant case. Said 1967 decision cannot be applied
to the instant case where there had been already a final and conclusive determination some twelve years earlier. While a
doctrine laid down in previous cases may be overruled, the previous cases themselves cannot thereby be reopened. The
doctrine may be changed for future cases but it cannot reach back into the past and overturn finally settled cases." 4
However, on October 10, 1968, before the filing of the above reply, respondent court had issued an Order denying the
motion to dismiss. The court said:
jgc:chan roble s.com.p h

"A copy of the decision rendered in the case of Rafael Dinglasan, Et. Al. v. Lee Bun Ting, Et Al., G. R. No. L-5996 is attached
to the motion to dismiss.
"In that case, the Supreme Court ruled that both parties violated the constitutional prohibition (Article XIII, sec. 9) for the
purchaser was an alien and prohibited to acquire residential lot while the vendors, Filipino citizens, can not also recover the
property for having violated the constitutional prohibition, under the principle of pari delicto. The vendee cannot own the
property, neither can the vendor recover what he sold.
"To fill the void, the Supreme Court pointed out that the coordinate body Congress of the Philippines can pass remedial
legislation.
"But Congress failed to act. Neither was there any proceeding after almost twenty years for escheat or reversion instituted by
the Office of the Solicitor General after the Krivenko decision which prohibits the transfer to aliens of any private agricultural
land including residential lands whatever its origin might have been.
"But the Supreme Court took a decisive step and in bold relief dispelled darkening clouds in the case of Philippine Banking
Corporations v. Lui She, promulgated September 12, 1967, . . . .
"The concurring opinion of Justice Fernando is very enlightening and elucidating. . . . .
"The Court wishes to refer to the concurring opinion of Justice Fernando as an additional authority supporting the herein
order.

"PREMISES CONSIDERED, the Court finds the motion to dismiss unmeritorious and holds that the same he as it is hereby
DENIED." 5
A motion for reconsideration of the foregoing Order was filed by defendants, alleging that their reply to plaintiffs opposition
to the motion to dismiss was not even considered by the court a quo because the Order was issued before said reply could
reach the court. Further, it was asserted that the Philippine Banking Corporation v. Lui She case had the effect of annulling
and setting aside only the contracts subject matter thereof "and no other contracts, certainly not contracts outside the issues
in said judgment as that in the instant case", and of ordering the return only of the lands involved in said case, and not the
land subject of the present action. Moreover, it was averred that "Nowhere in the majority opinion nor in the concurring
opinion in said decision of Philippine Banking Corporation v. Lui She does there appear any statement which would have the
effect of reopening and changing previously adjudicated rights of parties and finally settled cases" and that the principle
enunciated in such case "should apply after, not on or before, September 12, 1967." The motion for reconsideration was
found to have not been well taken and, consequently, was denied by respondent court on November 9, 1968. Defendants
were given ten (10) days from receipt of the Order within which to file their answer to the complaint, which defendants
complied with.
Defendants answer, dated December 5, 1968, contained the following allegations, among others:

jgc:chanrob les.co m.ph

"(a) The sale of the parcel of land involved was made in 1935 before the promulgation of the Constitution.
"(b) Said conveyance was an absolute sale, not subject to any right or repurchase . . .
"(c) Upon the purchase of the said parcel of land by the deceased Lee Liong, he and defendant Ang Chia constructed thereon
a camarin for lumber business and later a two-storey five door accessoria with an assessed valuation of P35,000.00, which
said improvements were destroyed during the Japanese entry into the municipality of Capiz in April 1942; thereafter, the
same improvements were rebuilt.
"(d) In July 1947, the said Lee Liong being already deceased, defendants as his legal heirs entered into an extrajudicial
settlement of said property, there being no creditors or other heirs, and by virtue of said extrajudicial settlement,
approximately two-thirds of said property was adjudicated to defendant Ang Chia and Lee Bing Hoo as co-owners and the
remaining one-third to defendant Lee Bun Ting.
"(e) The deceased Lee Liong and defendants have been declaring and paying real estate taxes on the said property since
1935 and up to the present year.
x

In addition to the foregoing, defendants reiterated their defense of res judicata, on the basis of the decision of the Supreme
Court of June 27, 1956. It was, therefore, prayed that the complaint be dismissed, with counterclaim for attorneys fees and
expenses of litigation or, in case of adverse judgment, that plaintiffs be ordered to pay the reasonable equivalent of the value
of the property at the time of the restoration, plus reimbursement of improvements thereon.
A reply and answer to the counterclaim, dated December 14, 1968, was filed by plaintiffs. On March 31, 1969, respondent
court issued an Order denying a motion filed by petitioners for simplification of the issues and for the striking out from the
records of the declaration of Rafael Dinglasan under the Survivorship Disqualification Rule. A motion for reconsideration of
the foregoing Order was denied on May 7, 1969.
During the pendency of the trial, plaintiffs filed a petition for the appointment of a receiver "to receive, collect and hold in
trust all income of the property in the form of monthly rentals of P2,000.00", on the premise that defendants have no other
visible property which will answer for the payment of said rentals. This petition was opposed by defendants, alleging that
plaintiffs will not suffer any irreparable injury or grave damage if the petition for receivership is not granted, particularly as
defendants are solvent, and further considering that defendants have a building on the parcel of land, the value of which
must likewise be considered before plaintiffs can be awarded possession of the land. The matter of receivership was heard by
respondent court and on May 17, 1969, it issued an Order appointing respondent Atty. Antonio D. Amosin, Deputy Clerk of
Court, as receiver, with instructions to take immediate possession of the property in litigation and to preserve, administer
and dispose of the same in accordance with law and order of the court, upon the posting of a bond in the amount of P500.00.
On May 17, 1969, the appointed receiver took his oath. Hence, the instant petition.
Petitioners herein pray that judgment be rendered annulling and setting aside respondent courts complained of Orders dated
October 10, 1968. November 9, 1968, March 31, 1969, May 7, 1969 and May 17, 1969, and ordering the dismissal of Civil
Case no. V-3064 of respondent court on the ground of res judicata. Petitioners further prayed for the issuance of a writ of
preliminary injunction to restrain respondent court from proceeding with the scheduled hearings of the case, and respondent
receiver from executing the order to take immediate possession of the property in litigation.
On June 16, 1969, this Court issued the writ of preliminary injunction prayed for, restraining respondent court from
continuing with the scheduled trial of the case and respondent receiver from executing the order to take immediate
possession of the property in litigation and/or otherwise discharging or performing his function as receiver.
cralaw nad

The issue posed before Us is whether the questions which were decided in Rafael Dinglasan, Et. Al. v. Lee Bun Ting, Et Al.,
supra, could still be relitigated in Civil Case No. V-3064, in view of the subsequent decision of this Court in Philippine Banking
Corporation v. Lui She, supra.
We resolve the issue in the negative. The decision of this Court in G. R. No. L-5996, "Rafael Dinglasan, Et. Al. v. Lee Bun
Ting, Et. Al." constitutes a bar to Civil Case No. V-3064 before the respondent court. Said Civil case, therefore, should have
been dismissed because it is a mere relitigation of the same issues previously adjudged with finality, way back in 1956,
between the same parties or their privies and concerning the same subject matter. We have consistently held that the
doctrine of res judicata applies where, between a pending action and one which has been finally and definitely settled, there
is identity of parties, subject matter and cause of action.
The concept of res judicata as a "bar by prior judgment" was explained in Comilang v. Court of Appeals, Et Al., promulgated
on July 15, 1975, 6 thus:
jgc:chanroble s.com.p h

"The fundamental principle upon which the doctrine of res judicata rests is that parties ought not to be permitted to litigate
the same issue more than once; that, when a right or fact has been juridically tried and determined by a court of competent
jurisdiction, or an opportunity for such trial has been given, the judgment of the court, so long as is remains unreversed,
should he conclusive upon the parties and those in privity with them in law or estate. . . . .
x

"This principle of res judicata is embodied in Rule 39, Sec. 49(b) and (c) of the Rules of Court, as follows:

chanro b1es vi rt ual 1aw li bra ry

(b) In other cases the judgment or order is, with respect to the matter directly adjudged or as to any other matter that
could have been raised in relation thereto, conclusive between the parties and their successors in interest by title subsequent
to the commencement of the action or special proceeding, litigating for the same title and in the same capacity.
(c) In any other litigation between the same parties or their successors-in-interest, that only is deemed to have been
adjudged in a former judgment which appears upon its face to have been so adjudged, or was actually and necessarily
included therein or necessary thereto.
"Sec. 49(b) enunciates that concept of res judicata known as bar by prior judgment while Sec. 49(c) refers to
Conclusiveness of judgment. There is bar by prior judgment when, between the first case where the judgment was
rendered and the second case which is sought to be barred, there is identity of parties, subject matter and cause of action.
The judgment in the first case constitutes an absolute bar to the subsequent action. It is final as to the claim or demand in
controversy, including the parties and those in privity with them, not only as to every matter which was offered and received
to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that
purpose and of all matters that could have been adjudged in that case. But where between the first and second cases, there
is identity of parties but no identity or cause of action, the first judgment is conclusive in the second case, only as to those
matters actually and directly controverted and determined and not as to matters merely involved therein." (pp. 76-78).
A comparison between the earlier case of "Rafael Dinglasan, Et. Al. v. Lee Bun Ting, Et. Al." (G. R. No. L-5996) and the case
pending before respondent court 7 reveals that the requisites for the application of the doctrine of res judicata are present. It
is undisputed that the first case was tried and decided by a court of competent jurisdiction, whose decision was affirmed on
appeal by this Tribunal. The parties to the two cases are substantially the same, namely, as plaintiffs, Rafael A. Dinglasan,
Carmen A. Dinglasan, Francisco A. Dinglasan, Jr., Ramon A. Dinglasan, Lourdes A. Dinglasan, Mercedes A. Dinglasan,
Concepcion A. Dinglasan, Mariano A. Dinglasan, Jose A. Dinglasan, Loreto A. Dinglasan, Manuel A. Dinglasan, Rizal A.
Dinglasan and Jimmy Dinglasan (the differences being the inclusions of the minor Vicente Dinglasan in L-5996 and Jesse
Dinglasan in the case before respondent court), against defendants Lee Bun Ting and Ang Chia, in her capacity as widow of
the deceased Lee Liong (and Administratrix of his estate in L-5996). The subject matter of the two actions are the same,
namely, that "parcel of land, Cadastral Lot No. 398, located at Trece de Agosto Street, now Roxas Avenue, corner of Pavia
St., in the municipality of Capiz, now Roxas City, covered by Original Certificate of Title No. 3389 of the Office of Register of
Deeds of Capiz in the name of . . . Francisco Dinglasan and originally declared under Tax (Declaration) No. 19284 also in his
name in the municipality of Capiz, but now declared as Cadastral Lots Nos. 398-A and 398-B respectively under Tax
Declarations Nos. 7487 and 7490 in the City of Roxas in the names of Ang Chia Vda. de Lee and Lee Bun Ting respectively . .
." The causes of action and the reliefs prayed for are
identical the annulment of the sale and the recovery of the subject parcel of land.
Notwithstanding the mode of action taken by private respondents, We find that in the ultimate analysis, Civil Case No. V3064 is but an attempt to reopen the issues which were resolved in the previous case. Contrary to the contentions of private
respondents, there has been no change in the facts or in the conditions of the parties. Neither do We find Our ruling in the
Philippine Banking Corporation case applicable to the case at bar, considering the rule that posterior changes in the doctrine
of this Court cannot retroactively be applied to nullify a prior final ruling in the same proceeding where the prior adjudication
was had, whether the case should he civil or criminal in nature. The determination of the questions of fact and of law by this
Court on June 27, 1956 in case No. L-5996 has become the law of the case, and may not now be disputed or relitigated by a
reopening of the same questions in a subsequent litigation between the same parties and their privies over the same subject
matter. Thus, in People v. Olarte, 8 We explained this doctrine, as follows:
chan roble s.com : vi rtual law lib rary

"Suffice it to say that our ruling in Case L-13027, rendered on the first appeal, constitutes the law of the case, and, even if
erroneous, it may no longer be disturbed or modified since it has become final long ago. A subsequent reinterpretation of the
law may be applied to new cases but certainly not to an old one finally and conclusively determined (People v. Pinuila, G. R.
No. L-11374, May 30, 1958; 55 O.G. 4228).
"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 the case, whether correct on general principles or not, so long as the facts on which such decision was
predicated continue to be the facts of the case before the court. (21 C.J.S. 330). (cited in Pinuila case, supra).
As a general rule a decision on a prior appeal of the same case is held to be the law of the case whether that decision is right
or wrong, the remedy of the Party being to seek a rehearing. (5 C.J.S. 1277). (also cited in Pinuila case).
It is also aptly held in another case that:

chanrob1es v irt ual 1aw l ibra ry

It need not be stated that the Supreme Court, being the court of last resort, is the final arbiter of all legal questions properly
brought before it and that its decision in any given case constitutes the law of that particular case. Once its judgment
becomes final it is binding on all inferior courts, and hence beyond their power and authority to alter or modify. (Kabigting v.
Acting Director of Prisons, G. R. No. L-15548, October 30, 1962).
"More categorical still is the pronouncement of this Court in Pomeroy v. Director of Prisons, L-14284-85, February 24, 1960:

chanro b1es

virtua l 1aw lib rary

It will be seen that the prisoners stand assumes that doctrines and rulings of the Supreme Court operate retrospectively,
and that they can claim the benefit of decisions in People v. Hernandez; People v. Geronimo, and People v. Dugonon (L6025-26, July 18, 1956; L-8936, Oct. 31, 1956; and L-8926, June 29, 1957, respectively), promulgated four or more years
after the prisoner applicants had been convicted by final judgment and started serving sentence. However, the rule adopted
by this Court (and by the Federal Supreme Court) is that judicial doctrines have only prospective operation and do not apply
to cases previously decided (People v. Pinuila, L-11374, promulgated May 30, 1958)
"In the foregoing decision, furthermore, this Court quoted and reiterated the rule in the following excerpts from People v.
Pinuila, G.R. No. L-11374, jam cit.:
jgc:chanrob les.co m.ph

"The decision of this Court on that appeal by the government from the order of dismissal, holding that said appeal did not
place the appellants, including Absalong Bignay, in double jeopardy, signed and concurred in by six justices as against three
dissenters headed by the Chief Justice, promulgated way back in the year 1952, has long become the law of the case. It may
be erroneous, judge by the law on double jeopardy as recently interpreted by this same Tribunal. Even so, it may not be
disturbed and modified. Our recent interpretation of the law may he applied to new cases, but certainly not to an old one
finally and conclusively determined. As already stated, the majority opinion in that appeal is now the law of the case."
cralaw virtua1aw l ib rary

"The same principle, the immutability of the law of the case notwithstanding subsequent changes of judicial opinion, has
been followed in civil cases:
chan rob1es vi rtual 1aw lib rary

Fernando v. Crisostomo, 90 Phil. 585; Padilla v. Paterno, 93 Phil. 884; Samahang Magsasaka, Inc. v. Chua Guan, L-7252,
February, 1955.
"It is thus clear that posterior changes in the doctrine of this Court can not retroactively he applied to nullify a prior final
ruling in the same proceeding where the prior adjudication was had, whether the case should be civil or criminal in nature."
9
Reasons of public policy, judicial orderliness, economy and judicial time and the interests of litigants, as well as the peace
and order of society, all require that stability be accorded the solemn and final judgments of the courts or tribunals of
competent jurisdiction. There can be no question that such reasons apply with greater force on final judgments of the highest
Court of the land.
chanrobles vi rtua l lawlib rary

WHEREFORE, certiorari is granted, the Orders complained of are hereby annulled and set aside, and respondent Judge is
directed to issue an Order dismissing Civil Case No. V-3064. With costs against private respondents.

EN BANC
[G.R. No. L-16463. January 30, 1965.]
PHILIPPINE NATIONAL BANK, Plaintiff-Appellants, v. HERMOGENES HIPOLITO and LEONOR
JUNSAY, Defendants-Appellees.
Ramon B. de los Reyes, for Plaintiff-Appellant.
P. A. Palanca for Defendants-Appellees.

SYLLABUS

1. PLEADINGS AND PRACTICE; MOTION TO DISMISS ADMITS TRUTH OF ALLEGATIONS OF COMPLAINT. In a motion to
dismiss defendant hypothetically admits the truth of the allegations of fact contained in the complaint.
2. ID.; ID.; DENIAL OF ALLEGATIONS OF COMPLAINT NOT PROPER IN A MOTION TO DISMISS. A denial of an allegation of
a complaint, as for example the denial of an offer of payment which would prevent prescription from setting in, would be
proper in the answer to the complaint but not in a motion for dismissal, for the contradictory allegations would require
presentation of evidence.
3. PRESCRIPTION; RENEWAL OF OBLIGATION BY OFFER OF PAYMENT. An offer of payment works as a renewal of the
obligation and prevents prescription from setting in.

DECISION

MAKALINTAL, J.:

Appeal from the order of dismissal by the Court of First Instance of Negros Occidental.
The complaint, filed on June 18, 1959, allege that defendants obtained various sugar crop loans from plaintiff through its
Victorias Branch, evidenced by promissory notes (reproduced as annexes to the complaint) respectively dated January 25,
1941, February 13, 1941, March 8, 1941, April 3, 1941, May 2, 1941 and June 23, 1941; that of the total amount of
P9,692.00 represented by said notes defendants paid P3,905.61, leaving a balance of P6,786.39, which, added to accrued
interest of P5,213.34, summed up to P11,999.73 as of January 17, 1957; that despite repeated demands, defendants failed
and refused to pay said amount; that in view of such demands defendants, on May 7, 1957, went to Attorney Francis I.
Medel of the legal department of plaintiffs Victorias branch and offered a plan of payment of the account, but for reasons
unknown to plaintiff and probably due to the transfer of defendant Hipolito as supervising teacher to some other province, his
proposed plan of payment did not materialize; that said offer of plan of payment was an acknowledgment of defendants just
and valid obligation. The prayer is for the court to order defendants to pay to plaintiff the said amount of P11,999.73, with
accrued annual interest thereon at the rate of 5% from January 17, 1957 up to the date of payment, plus attorneys fees
equivalent to 10%.
Defendants move for a bill of particulars, but the motion was denied. They then moved to dismiss on the ground that
plaintiffs cause of action, if any, had already prescribed. To the motion they attached a joint affidavit of merit, wherein they
averred that they never made any acknowledgment of indebtedness nor offered a plan of payment, but on the contrary had
always maintained that plaintiffs action had prescribed.
Plaintiff opposed the motion, contending that the prescriptive period had been suspended by "Executive Order No. 32,
otherwise known as the Moratorium Law," and interrupted, pursuant to Article 1973 of the old Civil Code, by plaintiffs
written extra-judicial demands as well as by defendants acknowledgment of the indebtedness. Attached to the opposition
were (1) a statement of defendants account dated July 22, 1947; (2) plaintiffs letter dated October 31, 1953, asking
defendants to make arrangements for the liquidation of the debt (3) letter of plaintiffs Victorias Branch Manager, dated
February 4, 1959, addressed to defendant Hipolito (at Iloilo City) requesting him to settle his account, otherwise drastic
action would be taken against him as a government employee, and reminding him of his May 7, 1957 interview with Branch
Attorney Medel, wherein he proposed a plan of payment which however did not materialize; and (4) defendant Hipolitos
answer dated February 16, 1959, requesting said Manager, in his personal and not in his official capacity, to be more
"sensitive" to the financial plight of defendants; and requesting further that he or any of his investigators study the case by
seeing Mrs. Hipolito (who was then staying very near the Victorias Branch Office) about "the actual insolvency of the family,"
ending up with an appeal for help "in this matter."
cralaw virt ua1aw lib ra ry

Defendants replied to plaintiffs opposition, stating among other things that Executive Order No. 32, if at all, suspended the
prescriptive period "only for two (2) years, four (4) months and sixteen (16) days, from March 10, 1945, or only up to July

26, 1948," citing Bachrach Motors Co., Inc. v. Chua Tia Hian, 53 O.G. 6524; that the alleged written extrajudicial demands
constitute self-serving evidence; and that defendant Hipolitos letter of February 16, 1959 can not be considered as an
acknowledgment of indebtedness.
In dismissing the complaint the lower court ruled that since the seven promissory notes constituted one single obligation,
arising as it did from plaintiffs financiation of defendants sugar crop for 1941-42, the date of the last promissory note, June
23, 1941, should be considered as the true date of the written contract, from which the ten year prescriptive period (Art.
1144, par. 1 of the new Civil Code) started; that said period was suspended only for two (2) years, four (4) months and
sixteen (16) days (by reason of Executive Order No. 32) until said Order was declared unconstitutional; that prescription set
in on November 8, 1953, five (5) years, five (5) months and ten (10) days before the complaint was filed on June 18, 1959;
that the alleged letters of demand cannot be considered as extrajudicial demands "under Art. 1155 of the Civil Code"
because there is no proof that defendants received them; that plaintiffs letter of demand of February 4, 1959, which was
admittedly received by defendant Hipolito, did not work to interrupt the prescriptive period which had already previously
elapsed; and that defendant Hipolitos answering letter of February 16, 1959 does not contain any express or tacit
acknowledgment of the obligation nor promise to pay the same and hence did not renew the obligation.
We are of the opinion that the dismissal of the complaint is erroneous. In a motion to dismiss defendant hypothetically
admits the truth of the allegations of fact contained in the complaint. (Pangan v. Evening News Publishing Co., Inc., L-13308,
Dec. 29, 1960; Pascual v. Secretary of Public Works and Communications, L-10405, Dec. 29, 1960; Republic v. Ramos, L15484, Jan. 31, 1963).
An examination of the complaint herein does not indicate clearly that prescription has set in. On the contrary, it is belied by
the allegation concerning defendants offer of payment made on May 7, 1957. Such offer hypothetically admitted in the
motion, worked as a renewal of the obligation.
It is true that defendants attached to the motion a joint affidavit of merit wherein they deny having made an offer of a plan
of payment. Such denial, however, being a contrary averment of fact, would be proper in the answer to the complaint but
not in a motion for dismissal, for the contradictory allegations would require presentation of evidence (Alquigue v. De Leon,
L-15059, March 30, 1963). The same is true of the other allegations in the complaint concerning, the demands for payment
sent by plaintiff upon defendants and the partial payments made by them, all or some of which may have a material bearing
on the question of prescription. In other words, the ground for dismissal not being indubitable, the lower court should have
deferred determination of the issue until after trial of the case on the merits. (Sec. 3, Rule 16, Revised Rules of Court;
Geganto v. Katalbas, L-17105, July 31, 1963).
The order appealed from is set aside and the case is remanded to the lower court for further proceedings, with costs against
appellees.

FIRST DIVISION
[G.R. No. 109068. January 10, 1994.]
GAUDENCIO GUERRERO, Petitioner, v. REGIONAL TRIAL COURT OF ILOCOS NORTE, BR. XVI, JUDGE LUIS B.
BELLO, JR., PRESIDING, AND PEDRO G. HERNANDO, Respondents.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; MOTION TO DISMISS; EARNEST EFFORT TOWARDS A COMPROMISE BETWEEN
FAMILY MEMBERS AS A GROUND; DOES NOT INCLUDE RELATIVES BY AFFINITY. The Constitution protects the sanctity of
the family and endeavors to strengthen it as a basic autonomous social institution. This is also embodied in Art. 149, and
given flesh in Art. 151, of the Family Code. Considering that Article 151 starts with the negative word "No," the requirement
is mandatory that the complaint or petition, which must be verified, should allege that earnest efforts towards a compromise
have been made but that the same failed, so that" [i]f it is shown that no such efforts were in fact made, the case must be
dismissed." Further, Art. 151 is complemented by Sec. 1, par. (j), Rule 16, of the Rules of Court which provides as a ground
for a motion to dismiss" (t)hat the suit is between members of the same family and no earnest efforts towards a compromise
have been made." As early as two decades ago, we already ruled in Gayon v. Gayon (36 SCRA 104, 108) that the
enumeration of "brothers and sisters" as members of the same family does not comprehend "sisters-in-law." In that case,
then Chief Justice Concepcion emphasized that "sisters-in-law" (hence, also "brothers-in-law) are not listed under Art. 217 of
the New Civil Code as members of the same family. Since Art. 150 of the Family Code repeats essentially the same
enumeration of "members of the family," we find no reason to alter existing jurisprudence on the matter. Consequently, the
court a quo erred in ruling that petitioner Guerrero, being a brother-in-law of private respondent Hernando, was required to
exert earnest efforts towards a compromise before filing the present suit.
2. ID.; ID.; ID.; ID.; CONSIDERED A CONDITION PRECEDENT TO THE FILING OF A SUIT. In OLaco v. Co Cho Chit, (G.R.
No. 58010, 31 March 1993) citing Mendoza v. Court of Appeals, that the attempt to compromise as well as the inability to
succeed is a condition precedent to the filing of a suit between members of the same family, the absence of such allegation
in the complaint being assailable at any stage of the proceeding, even on appeal, for lack of cause of action. It is not
therefore correct, as petitioner contends, that private respondent may be deemed to have waived the aforesaid defect in
failing to move to dismiss or raise the same in the Answer. On the other hand, we cannot sustain the proposition of private
respondent that the case was, after all, also dismissed pursuant to Sec. 3, Rule 17, of the Rules of Court for failure of
petitioner to comply with the courts order to amend his complaint.

DECISION

BELLOSILLO, J.:

Filed by petitioner as an accion publiciana 1 against private respondent, this case assumed another dimension when it was
dismissed by respondent Judge on the ground that the parties being brothers-in-law the complaint should have alleged that
earnest efforts were first exerted towards a compromise.
chanrob lesvi rtua lawlib rary

Admittedly, the complaint does not allege that the parties exerted earnest efforts towards a compromise and that the same
failed. However, private respondent Pedro G. Hernando apparently overlooked this alleged defect since he did not file any
motion to dismiss nor attack the complaint on this ground in his answer. It was only on 7 December 1992, at the pre-trial
conference, that the relationship of petitioner Gaudencio Guerrero and respondent Hernando was noted by respondent Judge
Luis B. Bello, Jr., they being married to half-sisters hence are brothers-in-law, and on the basis thereof respondent Judge
gave petitioner five (5) days "to file his motion and amended complaint" to allege that the parties were very close relatives,
their respective wives being sisters, and that the complaint to be maintained should allege that earnest efforts towards a
compromise were exerted but failed. Apparently, respondent Judge considered this deficiency a jurisdictional defect.
On 11 December 1992, Guerrero moved to reconsider the 7 December 1992 Order claiming that since brothers by affinity are
not members of the same family, he was not required to exert efforts towards a compromise. Guerrero likewise argued that
Hernando was precluded from raising this issue since he did not file a motion to dismiss nor assert the same as an
affirmative defense in his answer.
chan robles. com:c ralaw:red

On 22 December 1992, respondent Judge denied the motion for reconsideration holding that" [f]ailure to allege that earnest
efforts towards a compromise is jurisdictional such that for failure to allege same the court would be deprived of its
jurisdiction to take cognizance of the case." He warned that unless the complaint was amended within five (5) days the case
would be dismissed.
On 29 January 1993, the 5-day period having expired without Guerrero amending his complaint, respondent Judge dismissed

the case, declaring the dismissal however to be without prejudice.

Guerrero appeals by way of this petition for review the dismissal by the court a quo. He raises these legal issues: (a) whether
brothers by affinity are considered members of the same family contemplated in Art. 217, par. (4), and Art. 222 of the New
Civil Code, as well as under Sec. 1, par. (j), Rule 16, of the Rules of Court requiring earnest efforts towards a compromise
before a suit between them may be instituted and maintained; and, (b) whether the absence of an allegation in the
complaint that earnest efforts towards a compromise were exerted, which efforts failed, is a ground for dismissal for lack of
jurisdiction.
The Constitution protects the sanctity of the family and endeavors to strengthen it as a basic autonomous social institution. 2
This is also embodied in Art. 149, 3 and given flesh in Art. 151, of the Family Code, which provides:
c hanrob1es vi rt ual 1aw li bra ry

Art. 151. No suit between members of the same family shall prosper unless it should appear from the verified complaint or
petition that earnest efforts toward a compromise have been made, but that the same have failed. If it is shown that no such
efforts were in fact made, the case must be dismissed.
This rule shall not apply to cases which may not be the subject of compromise under the Civil Code.

chanro bles law l ib rary

Considering that Art. 151 herein-quoted starts with the negative word "No," the requirement is mandatory 4 that the
complaint or petition, which must be verified, should allege that earnest efforts towards a compromise have been made but
that the same failed, so that" [i]f it is shown that no such efforts were in fact made, the case must be dismissed."
cralaw virtua1aw li bra ry

Further, Art. 151 is contemplated by Sec. 1, par. (j), Rule 16, of the Rules of Court which provides as a ground for a motion
to dismiss" (t)hat the suit is between members of the same family and no earnest efforts towards a compromise have been
made."
cralaw virtua 1aw lib rary

The Code Commission, which drafted the precursor provision in the Civil Code, explains the reason for the requirement that
earnest efforts at compromise be first exerted before a complaint is given due course
This rule is introduced because it is difficult to imagine a sadder and more tragic spectacle than a litigation between members
of the same family. It is necessary that every effort should be made toward a compromise before a litigation is allowed to
breed hate and passion in the family. It is known that a lawsuit between close relatives generates deeper bitterness than
between strangers . . . A litigation in a family is to be lamented far more than a lawsuit between strangers . . . 5
But the instant case presents no occasion for the application of the above-quoted provisions. As early as two decades ago,
we already ruled in Gayon v. Gayon 6 that the enumeration of "brothers and sisters" as members of the same family does
not comprehend "sisters-in-law." In that case, then Chief Justice Concepcion emphasized that "sisters-in-law" (hence, also
"brothers-in-law") are not listed under Art. 217 of the New Civil Code as members of the same family. Since Art. 150 of the
Family Code repeats essentially the same enumeration of "members of the family," we find no reason to alter existing
jurisprudence on the matter. Consequently, the court a quo erred in ruling that petitioner Guerrero, being a brother-in-law of
private respondent Hernando, was required to exert earnest efforts towards a compromise before filing the present suit.
In his Comment, Hernando argues that." . . although both wives of the parties were not impleaded, it remains a truism that
being spouses of the contending parties, and the litigation involves ownership of real property, the spouses interest and
participation in the land in question cannot be dined, making the suit still a suit between half-sisters . . ." 7
Finding this argument preposterous, Guerrero counters in his Reply that his "wife has no actual interest and participation in
the land subject of the . . . suit, which the petitioner bought, according to his complaint, before he married his wife." 8 This
factual controversy however may be best left to the court a quo to resolve when it resumes hearing the case.
chanrobles law lib rary : red nad

As regards the second issue, we need only reiterate our ruling in OLaco v. Co Cho Chit, 9 citing Mendoza v. Court of Appeals,
10 that the attempt to compromise as well as the inability to succeed is a condition precedent to the filing of a suit between
members of the same family, the absence of such allegation in the complaint being assailable at any stage of the proceeding,
even on appeal, for lack of cause of action.
It is not therefore correct, as petitioner contends, that private respondent may be deemed to have waived the aforesaid
defect in failing to move to dismiss or raise the same in the Answer. On the other hand, we cannot sustain the proposition of
private respondent that the case was, after all, also dismissed pursuant to Sec. 3, Rule 17, of the Rules of Court 11 for
failure of petitioner to comply with the courts order to amend his complaint.
A review of the assailed orders does not show any directive which Guerrero supposedly defied. The Order of 7 December
1992 merely gave Guerrero five (5) days to file his motion and amended complaint with a reminder that the complaint failed
to allege that earnest efforts were exerted towards a compromise. The Order of 22 December 1992, which denied Guerreros
motion for reconsideration, simply stated that "Plaintiff if it (sic) so desire must amend the complaint otherwise, the court will
have to dismiss the case (Emphasis supplied) . . ." The Order of 29 January 1993 dismissing the case without prejudice only
made reference to an earlier order "admonishing" counsel for Guerrero to amend the complaint, and an "admonition" is not
synonymous with "order." Moreover, since the assailed orders do not find support in our jurisprudence but, on the other
hand, are based on an erroneous interpretation and application of the law, petitioner could not be bound to comply with
them. 12

WHEREFORE, the petition is GRANTED and the appealed Orders of 7 December 1992, 22 December 1992 and 29 January
1993 are SET ASIDE. The Regional Trial Court of Laoag City, Branch 16, or whichever branch of the court the case may now
be assigned, is directed to continue with Civil Case No. 10084-16 with deliberate dispatch.
chanrobles vi rt ual lawli bra ry

SO ORDERED.

FIRST DIVISION
[G.R. No. 88586. April 27, 1990.]
CONTINENTAL CEMENT CORPORATION, Petitioner, v. COURT OF APPEALS and MUNICIPALITY OF
NORZAGARAY, Respondents.
Gil Venerando R. Racho for Petitioner.
Ponciano G. Hernandez for Private Respondent.

SYLLABUS

1. REMEDIAL LAW; CIVIL PROCEDURE; MOTION TO DISMISS; SEASONABLY FILED IN CASE AT BAR. The default order
was clearly erroneous and should not have been sustained on appeal. There is no question that the motion to dismiss was
filed seasonably, within the period of the second extension granted by the trial court. It is true that such a motion could not
be considered a responsive pleading as we have held in many cases. Nevertheless, it is also true that in Section 1 of Rule 16
of the Rules of Court, it is provided that "within the time for pleading, a motion to dismiss the action may be made" on the
grounds therein enumerated, including the grounds invoked by the petitioner.
2. ID.; ID.; ID.; TIME TO PLEAD FROM DENIAL THEREOF. It is clearly provided in Section 4 of the same Rule that: Sec. 4.
Time to plead. If the motion to dismiss is denied or if determination thereof is deferred, the movant shall file his answer
within the period prescribed by Rule 11, computed from the time he received notice of denial or deferment, unless the court
provides a different period. The motion to dismiss was filed on May 25, 1985, three days before the expiration of the second
extension. Notice of its denial was served on the petitioner on July 29, 1985. From that date, the petitioner had 15 days
within which to file its answer, or until August 13, 1985. It was unable to do so, however, because of the default order issued
by the trial court on August 2, 1985. On that date, the petitioner still had eleven days before the expiration of the 15-day
reglementary period during which the petitioner was supposed to file his answer.
3. ID.; ID.; ORDER OF DEFAULT; NULL AND VOID FOR HAVING BEEN ISSUE BEFORE AN ANSWER WAS FILED. We hold
that in issuing the order of default before the expiration of the period for the filing of its answer, the trial court deprived the
petitioner of the opportunity to be heard in its defense. The judgment by default thereafter rendered, on the basis only of the
evidence of the plaintiff, was therefore also invalid. We do not agree with the respondent court that the petitioner should
have first filed a motion to set aside the default order before challenging the judgment by default on appeal. The evidence
that the default order was not served on the petitioner has not been refuted. It is not explained why the default judgment
was served on the correct counsel of the petitioner but the default order was not. At any rate, the default order was a total
nullity and produced no legal effect whatsoever because it was issued even before the petitioner could file its answer. This
was clearly a violation of due process.
4. ID.; ID.; MOTION FOR RECONSIDERATION; SUSPENDS THE RUNNING OF REGLEMENTARY PERIOD TO APPEAL. The
record shows that the decision of the Court of Appeals was rendered on April 7, 1989, and notice thereof was served on the
petitioner on April 17, 1989. On April 28, 1989, the petitioner filed a motion for reconsideration, which was denied on June 1,
1989. Notice of the denial was served on June 8, 1989, and on June 21, 1989, the petitioner asked this Court for a 30-day
extension within which to file the present petition. The extension was granted up to July 23, 1989. The private respondent
contends that the petition was filed late because the 15-day reglementary period should be counted from April 17, 1989,
when the decision of the respondent court was served on the petitioner. Its reason is that the motion for reconsideration was
pro forma and did not suspend the running of the said period, which thus expired on May 3, 1989. While mindful of the
decision cited by the private respondent, we call attention to our later pronouncement on this matter, in the case of Siy v.
Court of Appeals: In the first place, the very purpose of a motion for reconsideration is to point out the findings and
conclusions of the decision which in the movants view, are not supported by law or the evidence. The movant, therefore, is
very often confined to the amplification on further discussion of the same issues already passed upon by the court.
Otherwise, his remedy would not be a reconsideration of the decision but a new trial or some other remedy. Conformably, we
must hold that the motion for reconsideration was not pro forma. Hence, it did have the effect of suspending the
reglementary period of appeal until the denial of the motion was notified to the petitioner.
5. ID.; ID.; REGIONAL TRIAL COURT; VESTED WITH POWER TO DETERMINE QUESTIONS OF FACTS. The rest of the
petition deals with the substantive issue of whether the respondent Municipality of Norzagaray has the power to impose
business taxes on the petitioner as a manufacturer and distributor of cement. This issue involves not only legal but also
factual considerations that have not been fully examined because the petitioner was not given its day in court. A fair
resolution of this issue requires a healing where both parties will be given an opportunity to present their respective sides in
accordance with the procedure prescribed by the Rules of Court. No less than full compliance with procedural due process will
suffice. Hence, It is imperative that this case be remanded to the court a quo for a full trial on the merits.

DECISION

CRUZ, J.:

The question involved in this case is quite simple and not even new. A little research could have easily resolved it and
avoided this litigation that has come up all the way to this Court. If we are rendering a full-blown decision instead of
disposing of the issue by a short resolution, it is not only because we see the need to reiterate certain basic rules that should
be well-settled by now. What we especially intend is to impress upon bench and bar the value of keeping abreast of the
doctrines announced by the Court in the interpretation of its Rules.
The facts are easily recounted.
On February 1, 1985, the Municipality of Norzagaray filed a complaint for recovery of taxes against the petitioner in the
Regional Trial Court of Malolos, Bulacan. Before the expiration of the 15-day reglementary period to answer, the petitioner
filed two successive motions for extension of time to file responsive pleadings, which were both granted. The last day of the
second extension was May 28, 1985. On May 25, 1985, the petitioner filed a motion to dismiss the complaint on the ground
of the plaintiffs lack of capacity to sue and lack of a cause of action. The motion was denied on July 16, 1985, "both for lack
of merit and for having been improperly filed." On July 25, 1985, the plaintiff moved to declare the petitioner in default for
having filed only the motion to dismiss and not a responsive pleading during the extension granted. This declaration was
made on August 2, 1985, and evidence for the plaintiff was thereafter received ex parte, resulting in a judgment in its favor
on February 4, 1986. The judgment was affirmed by the respondent court in its decision dated April 7, 1989, 1 which is the
subject of the present petition.
Our ruling follows.
The default order was clearly erroneous and should not have been sustained on appeal. There is no question that the motion
to dismiss was filed seasonably, within the period of the second extension granted by the trial court. It is true that such a
motion could not be considered a responsive pleading as we have held in many cases. 2 Nevertheless, it is also true that in
Section 1 of Rule 16 of the Rules of Court, it is provided that "within the time for pleading, a motion to dismiss the action
may be made" on the grounds therein enumerated, including the grounds invoked by the petitioner.
Moreover, it is clearly provided in Section 4 of the same Rule that:

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Sec. 4. Time to plead. If the motion to dismiss is denied or if determination thereof is deferred, the movant shall file his
answer within the period prescribed by Rule 11, computed from the time he received notice of denial or deferment, unless
the court provides a different period.
The motion to dismiss was filed on May 25, 1985, three days before the expiration of the second extension. Notice of its
denial was served on the petitioner on July 29, 1985. From that date, the petitioner had 15 days within which to file its
answer, or until August 13, 1985. It was unable to do so, however, because of the default order issued by the trial court on
August 2, 1985. On that date, the petitioner still had eleven days before the expiration of the 15-day reglementary period
during which the petitioner was supposed to file his answer.
The respondents are reminded of our ruling in Barraza v. Campos, 3 to wit:

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Under the facts of the case at bar, respondent Judge had granted petitioners an extension of fifteen (15) days to file their
answer, or up to November 18, 1978. Instead of filing the answer, petitioners filed a Motion to Dismiss the Complaint on
November 17, 1978, one (1) day before the expiration of the period as extended by the court. This is clearly allowed under
Section 1, Rule 16, Rules of Court. A motion to dismiss is the usual, proper and ordinary method of testing the legal
sufficiency of a complaint. The issue raised by a motion to dismiss is similar to that formerly raised by a demurrer under the
Code of Civil Procedure. (Zobel v. Abreu, 98 Phil. 343). A motion to dismiss under any of the grounds enumerated in Section
1, Rule 8 (now Section 1, Rule 16) of the Rules of Court, must be filed within the time for pleading, that is, within the time to
answer. (J.M. Tuason v. Rafor, L-15537, June 30, 1962, 5 SCRA 478.)
Private respondents argument that although a motion to dismiss interrupts the running of the period within which to file an
answer, this refers to the original period of fifteen (15) days within which to file the responsive pleading and not to the
extension of time within which to file the answer, is without merit. There is nothing in the Rules which provides, directly or
indirectly, that the interruption of the running of the period within which to file an answer when a motion to dismiss the
complaint is filed and pending before the court, refers only to the original period of fifteen (15) days and not to the extension
of time to file the answer as granted by the court. It may be true that under Section 4 of Rule 16, if the motion to dismiss is
denied or if the termination thereof is deferred, the movant shall file his answer within the time prescribed by Rule 11,
computed, from the time he received notice of the denial or deferment, unless the court provides a different period.
This Section 1 of Rule 11 in relation to Section 4 of Rule 16 allows the defendant to file his answer not only within the original
fifteen (15) days period but also within "a different period (as) fixed by the court." (Emphasis supplied.)
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The above ruling was a reiteration of Mandac v. Gumarad, 4 where we also set aside a default order upon a showing that the
motion to dismiss was filed before the expiration of the extension granted by the trial court for the filing of the answer.

As for the period allowed the defendant to file its answer following the denial of the motion to dismiss, the Court clearly held
thus in Acosta-Ofalia v. Sundiam: 5
. . . the period for filing a responsive pleading commences to run all over again from the time the defendant receives notice
of the denial of his motion to dismiss.
In the case at bar, the petitioners received the notice of the denial of their motion to dismiss on September 24, 1975. Hence,
they had fifteen (15) days from said date or up to October 9, 1975, within which to file their answer. The petitioners were
declared in default on September 29, 1975, i.e., ten (10) days before the expiration of the time for filing their answer.
Obviously, the order of default made on September 19, 1975, was premature and is, therefore, null and void as well as the
reception of private respondents evidence ex parte, the decision rendered thereon, and the writ of execution, having been
predicated on a void order of default.
Manifestly, respondent Judge acted with grave abuse of discretion when he declared the petitioners in default. (Emphasis
supplied.)
On the basis of the above doctrines, the Court recapitulates the rules as follows:

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1. The trial court may in its discretion and on proper motion extend the 15-day reglementary period for the filing of
responsive pleadings.
2. During the original reglementary 15-day period, or any extension of such period, the defendant may file a motion to
dismiss the complaint.
3. If the motion to dismiss is denied, the defendant is allowed another fifteen days from notice of the denial to file the
responsive pleading. The full 15-day reglementary period starts all over again.
Accordingly, we hold that in issuing the order of default before the expiration of the period for the filing of its answer, the
trial court deprived the petitioner of the opportunity to be heard in its defense. The judgment by default thereafter rendered,
on the basis only of the evidence of the plaintiff, was therefore also invalid.
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We do not agree with the respondent court that the petitioner should have first filed a motion to set aside the default order
before challenging the judgment by default on appeal. The evidence that the default order was not served on the petitioner
has not been refuted. It is not explained why the default judgment was served on the correct counsel of the petitioner but
the default order was not. 6 At any rate, the default order was a total nullity and produced no legal effect whatsoever
because it was issued even before the petitioner could file its answer. This was clearly a violation of due process.
We come finally to the timeliness of the present petition.
The private respondent contends that it was filed out of time on July 22, 1989, because the appealed decision had already
become final and executory before that date.
The record shows that the decision of the Court of Appeals was rendered on April 7, 1989, and notice thereof was served on
the petitioner on April 17, 1989. On April 28, 1989, the petitioner filed a motion for reconsideration, which was denied on
June 1, 1989. Notice of the denial was served on June 8, 1989, and on June 21, 1989, the petitioner asked this Court for a
30-day extension within which to file the present petition. The extension was granted up to July 23, 1989.
The private respondent contends that the petition was filed late because the 15-day reglementary period should be counted
from April 17, 1989, when the decision of the respondent court was served on the petitioner. Its reason is that the motion for
reconsideration was pro forma and did not suspend the running of the said period, which thus expired on May 3, 1989. The
basis of this argument is the wording of the denial, which ran as follows:
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The issues raised and the arguments contended in the Motion for Reconsideration of defendant-appellant are the same issues
and arguments presented in the appellants brief, reply brief and supplemental reply brief, which have been discussed in
plaintiff-appellees brief and resolved in the decision of this Court dated April 7, 1989.
After close scrutiny of the Motion for Reconsideration, We find no cogent reason to reverse Our decision.

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WHEREFORE, the Motion for Reconsideration is DENIED for lack of merit. 7

While mindful of the decision cited by the private respondent, 8 we call attention to our later pronouncement on this matter,
in the case of Siy v. Court of Appeals: 9
In the first place, the very purpose of a motion for reconsideration is to point out the findings and conclusions of the decision
which in the movants view, are not supported by law or the evidence. The movant, therefore, is very often confined to the
amplification on further discussion of the same issues already passed upon by the court. Otherwise, his remedy would not be
a reconsideration of the decision but a new trial or some other remedy.

Conformably, we must hold that the motion for reconsideration was not pro forma. Hence, it did have the effect of
suspending the reglementary period of appeal until the denial of the motion was notified to the petitioner.
The rest of the petition deals with the substantive issue of whether the respondent Municipality of Norzagaray has the power
to impose business taxes on the petitioner as a manufacturer and distributor of cement. This issue involves not only legal but
also factual considerations that have not been fully examined because the petitioner was not given its day in court. A fair
resolution of this issue requires a healing where both parties will be given an opportunity to present their respective sides in
accordance with the procedure prescribed by the Rules of Court. No less than full compliance with procedural due process will
suffice. Hence, It is imperative that this case be remanded to the court a quo for a full trial on the merits.
WHEREFORE, the decision of the respondent court dated April 7, 1989, the default order of the trial court dated August 2,
1985, and the judgment by default dated February 4, 1986, are SET ASIDE. Civil Case No. 7971-M is REMANDED to the
Regional Trial Court of Malolos, Bulacan, for further proceedings in accordance with the rules laid down in this decision. Costs
against respondent Municipality of Norzagaray.
SO ORDERED.

FIRST DIVISION
[G.R. No. L-48315. February 27, 1979.]
ATTY. DOMINADOR B. BORJE, Petitioner, v. HON. COURT OF FIRST INSTANCE OF MISAMIS OCCIDENTAL,
BRANCH II, VIOLETA GALICINAO; MISAMIS OCCIDENTAL WATER DISTRICT, and THE CHAIRMAN OF THE
BOARD, Respondents.
Dominador B. Borje in his own behalf.
SYNOPSIS
Petitioner sued private defendants for damages for disconnecting his water service, with prayer for preliminary mandatory
injunction. Upon order of the trial court the water service was reconnected immediately. Private respondents moved to
dismiss alleging: (1) lack of jurisdiction and (2) pendency of another action between the same parties for the same cause.
The trial court dismissed the complaint not on the grounds alleged in the motion to dismiss but on the grounds that there
was no malice or bad faith in the severance of the water connection of petitioner and that private respondents had already
reconnected the same.
Petitioner, on petition for certiorari, alleged that the trial court acted with grave abuse of discretion amounting to lack of
jurisdiction for dismissing the complaint without conducting any hearing despite the existence of controverted facts that need
to be proved.
The Supreme Court held that dismissal of actions on grounds not alleged in the motion to dismiss is improper; that the trial
court, motu proprio, cannot dismiss an action except where plaintiff fails to appear at the trial or fails to prosecute the case;
that dismissal of an action without affording the parties an opportunity to be heard and present evidence in support of their
case is violative of due process.
Petition granted and the questioned orders set aside.

SYLLABUS

1. COURT; ACTION; DISMISSAL; GRAVE ABUSE OF DISCRETION; DISMISSAL OF ACTION ON GROUND NOT ALLEGED IN
MOTION TO DISMISS. It is a grave abuse of discretion if not in excess of jurisdiction for a court to dismiss an action on
grounds not alleged in the motion to dismiss. Such dismissal is improper for in so doing, a court in effect dismisses an action
motu proprio without giving the plaintiff a chance to argue the point and without receiving any arguments or evidence on the
question.
2. ID.; ID.; ID.; ID.; DISMISSAL OF ACTION WITHOUT REQUISITE MOTION. Section 1, Rule 16 of the Rules of Court
enumerates the grounds upon which an action may be dismissed and specifically ordains that the motion to this and be filed.
In the light of this express requirement the court has no power to dismiss the case without the requisites motion duly
presented, hence, dismissal at its own initiative constitutes a grave abuse of its discretion if not in excess of jurisdiction.
3. ID.; ID.; DISMISSAL UPON COURTS OWN MOTION. The only instance in which, according to said Rules, the Court may
dismiss upon the courts own motion an action is, when the "plaintiff fails to appear at the time of the trial or to prosecute his
action for an unreasonable length of time or to comply with the Rules or any order of the court."
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4. ID.; ID.; DUE PROCESS; DISMISSAL OF CASE WITHOUT HEARING, DESPITE EXISTENCE OF CONTROVERTED FACTS,
VIOLATIVE OF DUE PROCESS. Where the respective allegations of the parties requires presentation of proof, it would be
violative of due process for the trial court to make a summary finding, from the controverted facts, of lack of malice or bad
faith on the part of defendants and then decree the dismissal of the case. When doubtful question of facts exists, the trial
court in the exercise of sound discretion should refuse to consider and decide the case in a summary manner, but should
allow the parties to present proof in support of their respective stand. This is because the right to a hearing, which is the
right of the parties interested or affected to present their respective cases and submit evidence in support thereof, is one of
the primary cardinal rights of litigants.
5. ID.; ID.; ID.; DISMISSAL OF ACTIONS HEARING VIOLATIVE TO DUE PROCESS. The dismissal of an action upon a
motion to dismiss constitutes a denial of due process, if, from a consideration of the pleadings, it appears that there are
issues of fact which cannot be decided without a trial of the case on the merits. Summary or outright dismissals of actions
are not proper where there are factual matters in dispute which need presentation and appreciation of evidence. The
demands of a fair, impartial and wise administration of justice call for a faithful adherence to legal precepts on procedure
which ensure to litigants the opportunity to present their evidence and secure a ruling on all the issues presented in their
respective pleadings. "Shorts cuts" in judicial processes are to be avoided where they impede rather than promote a
judicious dispensation of justice.

DECISION

GUERRERO, J.:

The cause for certiorari and/or mandamus brought to the attention of this Court in this case is the alleged grave abuse of
discretion amounting to lack of jurisdiction of respondent Court of First Instance of Misamis Occidental, Branch II, for
dismissing the complaint for damages of petitioner in Civil Case No. OZ 686, entitled "Atty. Dominador B. Borje v. Violeta
Galicinao, Et. Al." without conducting any hearing despite the existence of controverted facts that needed to be proved.
Petitioner alleged that he is the counsel of the water consuming public of Ozamiz City who were indignant against the
increase of water rates imposed by respondent Misamis Occidental Water District and who thereby resorted to court action
for redress and/or remedy. After acceptance of the retainer as counsel plus the consequent representation of the consumers
also in debates and discussions in the air, he allegedly received water bills from the Water District without indication of the
meter readings, the number of cubic meters consumed and the amounts to be paid. So he refused to pay the "blank bills."
For such failure, petitioners water service was cut on February 6, 1978.
By reason of these acts of "harassment" of private respondents resulting in his "humiliation" as well as unlawful deprivation
of a lifes necessity, petitioner brought Special Civil Case No. OZ 686, an action for damages with preliminary mandatory
injunction, before respondent Court.
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Acting on the prayer incorporated therein for preliminary mandatory injunction, respondent Court issued an order dated
February 8, 1978 enjoining respondents from disconnecting the water service of petitioner. Upon learning that the same was
already cut, the Court issued another order reconnect it immediately.
On February 15, 1978, private respondents filed a motion to dismiss the complaint on two grounds, namely: a lack of
jurisdiction of respondent Court allegedly because the "main thrust the subject and nature of the action or suit appearing in
the complaint is clearly within the field of special civil action or suit action or special proceeding" 1 and (b) there is another
action pending between the same parties for the same cause, referring to Special Civil Case No. 0390.
On February 27, 1978, petitioner filed an opposition thereto stating that the issues raised are justiciable and a court of
general jurisdiction has the authority to try the case. He further contended that Special Civil Case No. 0390, which
questioned the increased water rates unilaterally imposed by the Misamis Occidental Water District, the constitutionality of
Presidential Decree No. 198 and the selection of the members of the Board of Directors, is entirely different from Civil Case
No. OZ-686, which is an action for damages due to the harassment committed by private respondents on petitioner.
Surprisingly though, respondent Court, through Hon. Melecio A. Genato, a temporary judge assigned thereat, issued an order
dated March 9, 1978 dismissing the case not on the basis of the grounds alleged by private respondents in their motion to
dismiss but on the grounds that there was no malice or bad faith in the severance of the water connection of petitioner and
that private respondent had already reconnected the same. The dispositive portion thereof states:
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"WHEREFORE, the above entitled case is hereby dismissed for being moot and academic without pronouncement as to costs.
SO ORDERED." 2
A motion for reconsideration was thus filed by petitioner where he assailed the said order of dismissal for having been
rendered in violation of Section 1, Rule 36, Revised Rules of Court and for not being correct because although his water
service has been reconnected, he has suffered damages which could be proved by him in an impartial proceeding. He also
assailed the said order, denominating it as a "midnight order" because on March 9, 1978, "the Clerk of Court officially
showed Hon. Melecio A. Genato the telegram of Hon. Bienvenido A. Ebarle to schedule trials from March 10, 1978 to March
17, 1978 indicating that he has already and previously taken his oath." 3
An opposition thereto was filed by private respondents disputing only the claim of petitioner that the order dated March 9,
1978 was a midnight order. Petitioner filed a "rejoinder" reiterating that the order of dismissal is a midnight order citing the
cases of Siazon v. Hon. Judge of CFI of Cotabato, Branch II, L-29354, January 27, 1969, 26 SCRA 664 and Li Siu Liat v.
Republic of the Philippines, L-25356, November 25, 1967, 21 SCRA 1039. By reason of the number of arguments on the
issue of whether the order dated March 9, 1978 is a midnight order or not, the respondent Court, through Hon. Bienvenido A.
Ebarle, considered the motion for reconsideration as mainly anchored on the lack of authority of Judge Genato. In denying
the said motion, the Court held in an order dated April 18, 1978, as follows:
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"While it may be true that Judge Genato might not have the authority anymore to issue the said order in view of the
pertinent citations made by plaintiff, the more important thing to consider is the intrinsic merit of the complaint in relation to
the order of dismissal. The Court has gone over the pleadings of both parties, closely studied the issues involved, and
weighed the preponderance of their implication carefully.

"The cause of action as admitted by plaintiff is the alleged arbitrary disconnection by defendants of plaintiffs water pipes.
However, it appears that plaintiff was not singled out in the matter of water pipes disconnection, for aside from him, there
were three other consumers whose connections were ordered cut and in fact disconnected about the same time and/or
occasion, an official act of defendants indicating absence of malice." 4
In assailing the order of dismissal dated March 9, 1978 which was affirmed in the order dated April 18, 1978, petitioner
contends in this instant petition for certiorari and/or mandamus with this Court that said dismissal cannot be on lack of cause
of action because the complaint alleged sufficient facts to show that his rights have been seriously violated by private
respondents. He also argues that it cannot be a judgment on the pleadings because the facts are controverted. He thereby
concludes that respondent Court has gravely abused its discretion amounting to lack or excess of jurisdiction when it
dismissed the case without any evidence presented by both parties in support of their respective positions considering that
the allegations of that he has no appeal nor any plain, speedy and adequate remedy in the ordinary course of law, except
this present petition.
Indeed, respondent Court acted with grave abuse of discretion if not in excess of its jurisdiction in dismissing the case.
Firstly, the said order of dismissal dated March 9, 1978 is not premises on lack of jurisdiction or on the pendency of another
case between the same parties for the same cause - the grounds alleged by private respondents in their motion to dismiss.
On this score, it has been held in the case of Malig, Et. Al. v. Bush, 5 that dismissal of actions on grounds not alleged in the
motion to dismiss is improper for in so doing, a court in effect dismisses an action motu proprio without giving the plaintiffs a
chance to argue the point and without receiving any arguments or evidence on the question.
But while in the aforecited Malig case, the order of dismissal is based on one of the grounds enumerated in Section 1 of Rule
16, Revised Rules of Court, namely: prescription, the order herein brought to Us for review is not based on any of them. In a
rather summary fashion, respondent Court made a finding on the basis merely of the pleadings filed and without conducting
any hearing, that there is no malice or bad faith on the part of private respondents in their act of severing petitioners water
supply. Respondent court also noted the fact that private respondents bad reconnected the water pipes or water service of
petitioner and erroneously concluded that the case has become moot and academic.
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To all intents and purposes, respondent Court decreed the dismissal on its own initiative as in the case of Manila Herald
Publishing Co., Inc. v. Ramos, Et. Al. 6 where neither a motion to dismiss nor an answer had been made when the decision
was handed down. In granting the writ of certiorari, this Court ruled therein that: "Section 1 of Rule 8 (now Section 1 of Rule
16) enumerates the grounds upon which an action may be dismissed, and it specifically ordains that a motion to this end be
filed. In the light of this express requirement we do not believe that the court had power to dismiss the case without the
requisite motion duly presented. . . . The only instance in which. according to said Rules, the court may dismiss upon the
courts own motion on action is, when the "plaintiff fails to appear at the time of the trial or to the prosecute his action for an
unreasonable length of time or to comply with the Rules or any order of the court."
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The real cause for concern, though, is not so much the dismissal of the case for lack of presentation of the requisite motion
but rather the dismissal thereof without affording petitioner an opportunity to be heard despite the presence of factual issues
that needed to be proved.
In the case at bar, respondents premised their right to cut off the water service connection on the violation of petitioners
water service contract 7 which is the contract signed by petitioner with the National Waterworks and Sewerage Authority on
September 16, 1958 to which private respondent Misamis Occidental Water District claims it has been subrogated. The said
contract provides the following:
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"3. To pay monthly the NWSA for the water service furnished upon presentation of the bill or within thirty (30) days from its
presentation."
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"6. That the NWSA may disconnect the service upon violation of the term of the contract."

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In addition to the said contract, private respondents also presented their "Notice to the Public" 8 where the water consumers
were likewise informed that upon failure to settle their bills within the connection period, their water service will be shut off.
Thirdly, they annexed to their comment on this petition a facsimile copy of the monthly bill 9 furnished each water consumer
wherein it is stated that "service may be disconnected immediately if payment of the bill is not made to the field collector
after due date."
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Indeed, all these empower the private respondents to disconnect the water service of the consumers upon failure to pay. But
the question posed by petitioner is whether or not there is really failure to pay on his part. It is his contention that there is
no failure as he was sent water bills that did not indicate the meter readings, the number of cubic meters consumed and the
amount to be paid.
Inasmuch as private respondents deny these allegations of petitioner, an issue of fact exists that requires presentation of
proof. If the allegations of petitioner are true private respondents are not at an authorized to cut off his water service as the
collection period as to him would not have even started yet. For an obligation to become due there must be a demand. 10
Default generally begins from the moment the creditor demands the performance of the obligation. Without such demand,
judicial or extra-judicial, the effects of default will not arise.
chanro bles. com : virt ual law l ibra ry

It is to be noted that private respondents attached to their comment on this petition only a facsimile copy of the water bill

issued to consumers while they presented to this Court a xerox copy of the contract between NWSA and the petitioner, and a
xerox copy of the final notice, not just facsimiles thereof. Although the issue of the effectivity of the denial of private
respondents as to the alleged sending of blank bills is not for this Court to determine, it would not be amiss to state that
private respondents could have easily annexed also a xerox copy of the water bill sent to petitioner, if only to belie the
latters claims.
At any rate, private respondents also argue that petitioner could have paid his account when the final notice 11 to pay was
sent him since he was then already certain of the amount of the bill. This final notice is the notice of disconnection, served on
the day the service was cut off.
Petitioner, however, contends that this was the first time he ever came to know of the sum due from him and besides, he
claims that only the total amount due for the months of November and December, 1977 was stated. There is no specification
of the amount due for each month, the meter readings and the number of cubic meters consumed, thus, leaving him
uncertain as to how the amount was arrived at. Assuming the truth of these allegations, private respondents would not have
been entitled still to cut off petitioners water supply at the time they cut if off as the demand did not contain the requisite
details and hence, improper. And even if the sufficiency of the demand is conceded, petitioner has still thirty days from date
of such knowledge within which to pay the same in accordance with the contract and the avowed policy of the water district.
Verily, the above discussion shows the need of presentation of proof for the respective allegations of the parties. For the
respondent Court to make a summary finding of lack of malice or bad faith on the part of private respondents from those
controverted facts and then decree the dismissal of the case is, therefore, violative of due process. In view of the doubtful
question of facts presented herein, respondent court, in the exercise of sound discretion, should have refused to consider and
decide in a summary manner and should have allowed the parties to present proof in support of their respective stand. This
is because the right to a hearing, which is the right of the parties interested or affected to present their respective cases and
submit evidence in support thereof, is one of the primary cardinal rights of litigants.
The importance of this right has been underscored in several cases of this nature decided by this Court. In one of such cases,
De Leon v. Henson, 12 this Court ruled that the dismissal of an action upon a motion to dismiss constitutes a denial of due
process, if, from a consideration of the pleadings, it appears that there are issues of fact which cannot be decided without a
trial of the case on the merits. Similarly, in Constantino v. Estenzo, 13 citing Garanciang, Et. Al. v. Garanciang, Et. Al. 14 and
Boaga v. Soler, 15 this Court held as follows:
jgc:c hanro bles. com.ph

". . . Summary or outright dismissals of actions are not proper where there are factual matters in dispute which need
presentation and appreciation of evidence. The demands of a fair, impartial and wise administration of justice call for faithful
adherence to legal precepts on procedure which ensure to litigants the opportunity to present their evidence and secure a
ruling on all the issues presented in their respective pleadings. `Short cuts in judicial processes are to be avoided where
they impede rather than promote a judicious dispensation of justice."
cralaw virt ua1aw li bra ry

WHEREFORE, the petition for certiorari and/or mandamus is hereby GRANTED, the Orders dated March 9, 1978 and April 18,
1978 dismissing the complaint of petitioner for damages and denying the motion for reconsideration thereof, respectively,
are set aside for being null and void, and respondent Court of First Instance of Misamis Occidental, Branch II is hereby
ordered to try the case on the merits after conducting a pre-trial conference.
Teehankee (Chairman), Makasiar, Fernandez, De Castro and Melencio- Herrera, JJ., concur.

THIRD DIVISION
[G.R. NO. 143788. September 9, 2005]
DANFOSS, INC., Petitioners, v. CONTINENTAL CEMENT CORPORATION, Respondent.
DECISION
CORONA, J.:
This is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules on Civil Procedure of the February 11, 2000
decision1 of the Court of Appeals in CA-G.R. No. SP-55645, and its resolution dated June 7, 2000 denying petitioner's motion
for reconsideration.
The antecedents show that on November 5, 1998, respondent Continental Cement Corporation (CCC) filed a complaint for
damages against petitioner DANFOSS and Mechatronics Instruments and Controls, Inc. (MINCI) before the Regional Trial
Court of Quezon City, Branch 80, alleging that:
xxx
6. On 1 September 1997, Plaintiff CCC purchased from defendant MINCI two (2) unit 132 KW Danfoss Brand Frequency
Converter/Inverter for use in the Finish Mill of its Cement Plant located in Barrio Bigte, Norzagaray, Bulacan. The said
purchase is covered by a Purchase [Order] (PO) No. 36625'.
6.1 Under the terms and conditions of the purchase order, the delivery of the two (2) unit Frequency Converter are to be
delivered within eight (8) to ten (10) weeks from the opening of the letter of credit;
7. Defendant MINCI, immediately relayed the purchase order of plaintiff CCC to the other defendant DANFOSS, represented
by Messrs. Klaus Stove and Hans Vigaard, who in turn forwarded the same to their Asian Regional Office in Singapore and
Head Office in Denmark for the shipment of the orders to the Philippines.
7.1 Defendant DANFOSS' commitment to deliver the two (2) unit Danfoss Brand Frequency Converter/Inverter to plaintiff
CCC was relayed by defendant MINCI to CCC upon the assurance of Messrs. Stove and Vigaard of DANFOSS.
8. On September 1997, plaintiff CCC received the pro-forma invoice of defendant MINCI through fax transmission dated 2
September 1998, indicating the mode of payment through irrevocable letter of credit in favor of Danfoss Industries Pte. Ltd.'
8.1 Plaintiff CCC executed and opened a letter of credit under LC No. 970884 in favor of DANFOSS INDUSTRIES PTE. LTD.,
with address at 6 Jalan Pesawat, Singapore 619364, which is the Asian Regional Office of defendant DANFOSS'
9. Defendant MINCI informed plaintiff CCC through fax transmission dated 17 September 1997, that the two (2) unit
Frequency Converter/Inverter are ready for shipment, and at the same time requested for the amendments of the letter of
credit changing the port of origin/loading from Singapore to Denmark'.
9.1 In compliance, plaintiff CCC amended the letter of credit changing the port of origin from Singapore to Denmark'.
10. On 6 November 1997, defendant MINCI informed plaintiff CCC that Danfoss Industries Pte. Ltd. was still checking the
status of the shipment of the two (2) unit Frequency Converter/Inverter with Danfoss Denmark.
10.1 In reply, plaintiff CCC through a letter dated 7 November 1997, reiterated its demand that every delay in the shipment
of the two (2) unit Frequency Converter/Inverter will cause substantial losses in its operations and requested for the early
work out and the immediate shipment of the frequency converter to avoid further loss to the company'.
11. However, on 9 November 1997, defendant DANFOSS, informed the other defendant MINCI through fax transmission,
copy furnished plaintiff CCC, that the reason why DANFOSS has delivery problems was that some of the supplied components
for the new VLT 5000 series did not meet the agreed quality standard. That means that their factory was canvassing for
another supplier. And at that moment, there was no clear message when normal production will resume'.
12. Due to this information received, plaintiff CCC surmised that defendants MINCI and DANFOSS could not be able to deliver
the two (2) unit Frequency Converter within the maximum period of ten (10) weeks period from the opening of the Letter of
Credit, as one of the conditions in the Purchase Order dated 1 September 1997.

12.1 Thereafter, no definite commitment was received by plaintiff CCC from defendants MINCI and DANFOSS for the delivery
of the two (2) unit Frequency Converter.
13. By reason of the delay of the defendants MINCI and DANFOSS to deliver the two (2) unit Frequency Converter/Inverter
under PO No. 36625, plaintiff CCC, through its Purchasing Manager, informed defendant MINCI in a letter dated 13
November 1997, of the plaintiff's intention to cancel the said order'.
13.1 As a consequence thereof, plaintiff CCC has suffered an actual substantial production losses in the amount of Eight
Million Sixty-four Thousand Pesos (P8,064,000.00) due to the time lost and delay in the delivery of the said two (2) unit
Frequency Converter/Inverter. Likewise, plaintiff CCC was compelled to look for another supplier.
xxx xxx xxx2
On February 17, 1999, petitioner DANFOSS filed a motion to dismiss the complaint on the ground that it did not state a
cause of action:
xxx xxx xxx
The above allegations of the complaint clearly establish the following key constitutive facts:
1. Defendant's period of delivery is from 8 to 10 weeks from the opening of the letter of credit on September 9, 1997 or until
November 19, 1997.
2. Defendant Danfoss, although having problems with its supplier during the period prior to defendant's cancellation,
nevertheless, plaintiff never alleged that Danfoss Denmark cannot perform its obligation to deliver by the 10th week or on
November 20, 1997. Admittedly, plaintiff only surmised that defendant Danfoss could not deliver.
3. Before the period for delivery has expired on November 19, 1997, the plaintiff cancelled its order on November 13, 1997.
The cancellation took place seven (7) days before the expiry of the defendant's obligation to deliver on November 19, 1997.
4. Neither plaintiff nor defendant Danfoss changed the date of delivery, what plaintiff changed in the letter of credit was only
the port of origin/loading from Singapore to Denmark. The period of delivery as stipulated in the pro forma invoice issued by
defendant MINCI remained intact, that is for a period of 6 to 10 weeks from the opening of the letter of credit on September
9, 1997 or until November 19, 1997 was still in force when the plaintiff cancelled its order on November 13, 1997. Defendant
Danfoss has not incurred in delay and has 7 days more within which to make delivery. Plaintiff, having cancelled the order on
November 13, 1997 before the expiry of defendant Danfoss' delivery commitment, defendant Danfoss's principal could not
have been in default.
5. Plaintiff never made an extrajudicial demand for the delivery of two (2) units Frequency Converter on its due date. On the
contrary, as above alleged, plaintiff cancelled its order on November 13, 1997.
6. Plaintiff's claim for damages could not have accrued until after defendant incurred in delay.
The above allegations neither prove any right of the plaintiffs arising from the transactions nor a violation of such right. It is
submitted that this Honorable Court based on the complaint, cannot render a valid judgment against the defendant Danfoss.
The plaintiff's cause of action against Danfoss or plaintiff's right to demand delivery cannot arise earlier than November 19,
1997, which is the last day for the defendant Danfoss's principal (Danfoss Denmark) to deliver the two (2) units Frequency
Converter. As admitted by the plaintiff, it cancelled its order on November 13, 1997, or six (6) days before the expiry of the
defendant's obligation to deliver. Indeed, defendant Danfoss's obligation to deliver is not yet demandable. The period of 8 to
10 weeks for the delivery of plaintiff's purchase order of two (2) units Frequency Converter was established for the benefit of
both the plaintiff and the defendant Danfoss. As such, plaintiff cannot demand delivery before the period stipulated'.
xxx
From the allegations of the complaint, there is also no clear and categorical demand for the fulfillment of the plaintiff's
obligation to deliver by the 10th week or on November 19, 1997.
WHEREFORE, it is respectfully prayed of this Honorable Court that the Complaint be dismissed for failure to state a cause of
action.3
The court a quo denied the motion to dismiss in its order4 dated May 28, 1999, holding that:
xxx

In the Court's opinion, the issue of whether or not the defendants incur delay in the delivery of the equipment in question
within the period stipulated is a debatable question which necessitates actual trial on the merits where the parties have to
adduce evidence in support of their respective stance.
While the defendants contend that the stipulated period of delivery had not lapsed yet when the plaintiff cancelled its order of
the two equipments in question as the cancellation took place seven (7) days before the expiry date of the defendants'
obligation to deliver, the plaintiff's position is that the acts of the defendants had made compliance with their obligation to
deliver within the period stipulated, impossible, hence, there was no need for a demand as the law provides that "when
demand would be useless, as when the obligor has rendered it beyond his power to perform." The plaintiff's contention if
properly and strongly supported by evidence during the hearing of the merits of the case may well negates (sic) the
defendant's contrary stand.
As to the argument of the defendant MINCI that it cannot be held liable jointly with the defendant Danfoss due to the fact
that it was merely an "agent" of Danfoss, the Court finds the same a debatable issue considering the stand of plaintiff that
the defendant MINCI dealt with the former not as an agent but also as a principal. The issue at hand necessitates the
presentation of evidence which has to be done during the hearing on the merits of the case where the issue of damages
incurred by either of the parties may well be taken up and judgment be rendered after presentation of evidence by the
parties.
WHEREFORE, premises considered, the two motions to dismiss, interposed separately by the defendants as earlier stated,
are both denied.
SO ORDERED.5
Danfoss filed a motion for reconsideration of the order but it was denied. On appeal to the Court of Appeals, the latter also
denied Danfoss' petition for lack of merit. The CA likewise denied petitioner's motion for reconsideration, hence, this appeal.
The only issue for our consideration is whether or not the CA erred in affirming the denial by the court a quo of petitioner's
motion to dismiss the complaint for damages on the ground that it failed to state a cause of action.
Section 1 (g), Rule 16 of the 1997 Revised Rules on Civil Procedure provides that:
Section 1. Grounds - Within the time for but before filing the answer to the complaint or pleading asserting a claim, a motion
to dismiss may be made on any of the following grounds:
xxx
(g) That the pleading asserting the claim states no cause of action;
A cause of action is defined under Section 2, Rule 2 of the same Rules as:
Sec. 2. Cause of action, defined. 'A cause of action is the act or omission by which a party violates a right of another.
It is the delict or wrongful act or omission committed by the defendant in violation of the primary right of the plaintiff.6
In order to sustain a dismissal on the ground of lack of cause of action, the insufficiency must appear on the face of the
complaint. And the test of the sufficiency of the facts alleged in the complaint to constitute a cause of action is whether or
not, admitting the facts alleged, the court can render a valid judgment thereon in accordance with the prayer of the
complaint. For this purpose, the motion to dismiss must hypothetically admit the truth of the facts alleged in the complaint.7
After a careful perusal of the allegations in respondent's complaint for damages against petitioner, we rule that the same
failed to state a cause of action. When respondent sued petitioner for damages, petitioner had not violated any right of
respondent from which a cause of action had arisen. Respondent only surmised that petitioner would not be able to deliver
the two units frequency converter/inverter on the date agreed upon by them. Based on this apprehension, it cancelled its
order six days prior to the agreed date of delivery. How could respondent hold petitioner liable for damages (1) when
petitioner had not yet breached its obligation to deliver the goods and (2) after respondent made it impossible for petitioner
to deliver them by cancelling its order even before the agreed delivery date?
c ralawlib ra ry

The trial court erred in ruling that the issue of whether or not the defendants incurred delay in the delivery of the equipment
within the period stipulated was a debatable question. It said that trial on the merits was necessary and the parties had to
adduce evidence in support of their respective positions.8 But what was there to argue about when, based on the allegations
of the complaint, petitioner was not yet due to deliver the two units frequency converter/inverter when respondent cancelled
its order? It still had six days within which to comply with its obligation. The court a quoshould not have denied petitioner's
motion to dismiss the complaint (for its failure to state a cause of action) when, on its face, it was clear that petitioner had

not yet reneged on its obligation to deliver the frequency converter/inverter on the date mutually agreed upon by the
parties. Moreover, the obligation itself was negated by no less than respondent's own act of cancelling its order even before
the prestation became due and demandable. Where therefore was the breach? Where was the damage caused by petitioner?
There was none.
Consequently, it was wrong for the CA to affirm the order of the trial court denying petitioner's motion to dismiss the
complaint for its failure to state a cause of action.
The principle of anticipatory breach enunciated in Blossom & Company, Inc. v. Manila Gas Corporation9 does not apply here.
In that case, Blossom & Company, Inc. entered into a contract with Manila Gas Corporation for the sale and delivery of water
gas and coal gas tar at stipulated prices for a period of four years. On the second year of the contract, Manila Gas willfully
and deliberately refused to deliver any coal and water gas tar to Blossom and Company, Inc. because it was asking for a
higher price than what had been previously stipulated by them. The price of its tar products had gone up. We held that:
'even if the contract is divisible in its performance and the future periodic deliveries are not yet due, if the obligor has already
manifested his refusal to comply with his future periodic obligations, "the contract is entire and the breach total," hence,
there can only be one action for damages.10
Thus, the principle contemplates future periodic deliveries and a willful refusal to comply therewith. Here, the obligation was
single and indivisible - to deliver two units of frequency converter/inverter by November 19, 1997. The records do not show
that petitioner refused to deliver the goods on the date agreed upon. On the contrary, petitioner exerted efforts to make
good its obligation by looking for other suppliers who could provide it the parts needed to make timely delivery of the
frequency converter/inverter ordered by respondent.
Furthermore, respondent's complaint suffered from another fatal infirmity. It was premature. The obligation of petitioner to
respondent was not yet due and demandable at the time the latter filed the complaint. The alleged violation of respondent's
right being no more than mere speculation, there was no need to call for judicial intervention.
The premature invocation of the court's intervention was fatal to respondent's cause of action.11Hence, the dismissal of
respondent's complaint was in order.
In sum, since respondent's fear that petitioner might not be able to deliver the frequency converter/inverter on time was not
the cause of action referred to by the Rules and jurisprudence, the motion to dismiss the respondent's complaint for
damages for lack of cause of action should have been granted by the trial court. In addition, the dismissal of the complaint
was warranted on the ground of prematurity.
WHEREFORE, we hereby GRANT the petition. The assailed decision of the CA dated February 11, 2000 and its resolution
dated June 7, 2000 are REVERSED and SET ASIDE. Civil Case No. Q-98-35997 pending before the Regional Trial Court of
Quezon City, Branch 80, is hereby DISMISSED.
SO ORDERED.

SECOND DIVISION
[G.R. NO. 161309 : February 23, 2005]
DOUGLAS LU YM, Petitioner, v. GERTRUDES NABUA, GEORGE N. LU, ALEX N. LU, CAYETANO N. LU, JR., JULIETA N.
LU AND BERNADITA N. LU, Respondents.
DECISION
TINGA, J.:
One of the innovations introduced by the 1997 Rules of Civil Procedure is that the resolution of a motion to dismiss shall
state clearly and distinctly the reasons therefor. In the case at bar, the Court is provided with the opportunity and task to
elucidate on the meaning and application of the new requirement.
Before us is a Petition for Review on Certiorari1 dated February 11, 2004 filed by Douglas Lu Ym assailing the Court of
Appeals' Decision2 and Resolution3 respectively dated August 20, 2003 and December 16, 2003. The
questioned Decision dismissed petitioner's Petition 4 and affirmed the trial court's orders dated September 16, 20025 and
October 16, 20026 which respectively denied petitioner's Omnibus Motion to Dismiss the Amended Complaint7 and Motion for
Reconsideration.8
The facts9 as succinctly summarized by the Court of Appeals are as follows:
The instant petition stemmed from an Amended Complaint filed by the private respondents against the petitioner, for
Accounting with TRO and Injunction, on May 15, 2002.
On August 16, 2002, the petitioner filed an Omnibus Motion to Dismiss the Amended Complaint based on the following
grounds:
A. Plaintiffs' claims are barred by a prior judgment or by the statute of limitations {Rule 16, Sec. 1 (f)}.
B. Plaintiffs have no legal capacity to sue and/or do not have a cause of action {Rule 16, Sec. 1(d) and/or 1(g)}.
C. Fraud and equity.
D. Docket fees not deemed paid, therefore, a condition precedent for filing the claim has not been complied with {Rule 16,
Sec. 1(j)}.
On August 29, 2002, the private respondents filed their Opposition to the Omnibus Motion to Dismiss Amended Complaint
alleging the following:
1. Plaintiffs' claims are not barred by prior judgment nor by statute of limitations;
2. Plaintiffs have the legal capacity to sue and have valid cause of action;
3. Docket fees have been paid by plaintiffs.
After the filing of petitioner's Reply to the Opposition to the Motion to Dismiss Amended Complaint, the incident was
submitted for resolution pursuant to the August 30, 2002 Order of the court a quo.
In resolving the Omnibus Motion to Dismiss the Amended Complaint, the lower court ruled as follows:
There are justiciable questions raised in the pleadings of the herein parties which are proper subject of a full blown trial. The
Omnibus Motion to Dismiss Amended Complaint is hereby denied.
SO ORDERED.
The Motion for Reconsideration filed by the petitioner was resolved by the trial court in this wise:
An attempt to discuss on the merit of the case might be interpreted as prejudgment. It is the better part of discretion, for the
Court to deny the Motion Reconsideration of the order denying the Motion to Dismiss.

WHEREFORE, the Motion for Reconsideration is hereby denied.

SO ORDERED.
Petitioner filed a Petition for Certiorari and Prohibition Under Rule 65 With Prayer for the Issuance of Temporary Restraining
Order and/or Writ of Preliminary Injunction, contending that the trial court committed grave abuse of discretion in denying
his motion to dismiss. The appellate court dismissed the petition holding that the assailed orders may only be reviewed in the
ordinary course of law by an appeal from the judgment after trial. Thus, the proper recourse was for petitioner to have filed
an answer and proceeded to trial since the issues raised in his motion to dismiss require presentation of evidence aliunde. An
exception is when the trial court acts with grave abuse of discretion in denying the motion to dismiss, in which case a Petition
for Certiorari under Rule 65 may be proper. This, the trial court did not commit. Moreover, the Court of Appeals declared that
although the assailed orders were briefly phrased, the trial court complied with the requirements set forth under Rule 16 of
the 1997 Rules of Civil Procedure (Rules) on the resolution of motions to dismiss.
With the denial of his Motion for Reconsideration, petitioner is now before this Court seeking a review of the appellate
court's Decision and Resolution claiming that the denial of his motion to dismiss was a disguised deferment of the resolution
of the said motion and that the trial court failed to discuss and address each of the grounds cited therein contrary to the
express mandate of Section 3, Rule 16 of the Rules. Petitioner further argues that the trial court committed grave abuse of
discretion in refusing to address his grounds to dismiss and thereby postponing their proper ventilation until trial. According
to him, Section 2 of the Rules provides that all available evidence on the question of fact involved in the motion to dismiss
may be presented including evidence aliunde. Thus, the grounds for dismissal raised in his motion to dismiss could have been
resolved in a hearing prior to a full-blown trial.
Even assuming that the presentation of evidence aliunde is not allowed, petitioner contends that the trial court and the Court
of Appeals both erred in refusing to rule on the other grounds to dismiss which do not require presentation of
evidence aliunde such as failure of the Amended Complaint to state a cause of action/the application of the "clean hands"
doctrine, and the trial court's lack of jurisdiction for failure of the respondents to pay the proper filing and docket fees.
Petitioner also avers that there are other grounds to dismiss the case such as res judicata, respondents' lack of capacity to
sue/waiver and prescription, all of which are allegedly supported by evidence on record. It is petitioner's theory that
the Amended Complaint is a collateral attack on the duly probated and fully implemented Last Will and Testament of
Cayetano Ludo.10 According to petitioner, Cayetano Ludo's estate had been distributed by virtue of a Project of
Partition11 approved by the estate court in its Order12 dated January 18, 1984 in Sp. Proc. No. 167-CEB. There are, between
the estate case and Civil Case No. 27717, identity of parties, subject matter and cause of action. Hence, any further issue
regarding the recovery of respondents' supposed shares in Mr. Ludo's estate through Civil Case No. 27717 is precluded by
the estate court's final and fully executed orders.
Petitioner moreover contends that respondents George, Alex, Cayetano, Jr., Julieta and Bernadita Lu have lost standing to
sue as a result of the document entitled Assignment of Rights and Interests to the Inheritance from Don Cayetano Ludo13 by
which they supposedly conveyed their interest to their inheritance to Ludo and Lu Ym Corporation. As regards respondent
Gertrudes Nabua, petitioner alleges that the Amended Complaint fails to plead his actual contribution to the properties
acquired by Mr. Ludo as required by Article 148 of the Family Code. Hence, she too lacks capacity to sue.
Finally, petitioner claims that the case is already barred by prescription and laches. Petitioner asserts that nearly 20 years
had passed since (i) Mr. Ludo passed away on April 14, 1983; (ii) petitioner and respondents George, Alex, Cayetano, Jr.,
Julieta and Bernadita Lu executed the Project of Partitiondated November 25, 1983; (iii) respondents George, Alex,
Cayetano, Jr., Julieta and Bernadita Lu executed the Assignment of Rights and Interests to the Inheritance from Don
Cayetano Ludo dated February 22, 1984; and (iv) the estate court issued its (a) July 6, 1983 Order14 admitting Mr. Ludo's
Will to probate; (b) January 18, 1984 Order15 approving the Project of Partition and terminating the estate case; and (c) May
18, 1984 Order16 discharging petitioner and Silvano Ludo from all their duties, liabilities and responsibilities as executors of
Mr. Ludo's estate.
In their Comment17 dated May 28, 2004, respondents contend that the trial court did not defer the resolution of petitioner's
motion to dismiss. On the contrary, the trial court denied the motion considering that there are justiciable questions raised in
the pleadings of the parties which require a full-blown trial. According to respondents, the appellate court properly
considered this a sufficient disposition of the motion because the Rules do not require courts at all times to cite the law and
the facts upon which a resolution is based, it being sufficient, in case of resolutions that do not finally dispose of a case such
as the denial of a motion to dismiss, to cite the legal basis therefor.
Moreover, the estate proceedings allegedly do not bar the instant case. Having hypothetically admitted that Mr. Ludo's Will
was simulated, respondents contend that petitioner cannot invoke the finality of the probate proceedings as a shield against
the instant case because the simulation and fraud attendant in the execution of the Will are personal to petitioner. Besides,
the properties included in Mr. Ludo's Will are not the same properties sought to be accounted in the instant case. Allegedly,
the properties subject of this case are those which petitioner excluded from Mr. Ludo's Will during the probate proceedings,
whose titles and evidence of ownership were earlier transferred to petitioner for him to hold in trust for respondents.

Respondents contend that the issue as to respondent Gertrudes Nabua's shares in Mr. Ludo's properties as the latter's
common law wife, raised as a specific allegation in the Amended Complaint,has been joined by petitioner's denial. Hence, a
hearing on this matter is necessary.
Moreover, respondents insist that the trial court correctly declared that there are justiciable questions necessitating trial on
the merits because the Assignment of Rights and Interests to the Inheritance from Don Cayetano Ludo dated February 22,
1984, by which respondents George, Alex, Cayetano, Jr., Julieta and Bernadita Lu allegedly transferred their interest in Mr.
Ludo's estate to Ludo and Lu Ym Corporation, was allegedly not offered and admitted in evidence. Hence, any conclusion
drawn from this document would be unwarranted.
Finally, respondents contend that petitioner never raised the issues of prescription and laches in his motion to dismiss.
In his Reply18 dated September 30, 2004, petitioner reiterates his submissions.
At issue is whether the Court of Appeals erred in dismissing the Petition for Certiorari and in holding that the trial court did
not commit grave abuse of discretion in denying petitioner's motion to dismiss.
An order denying a motion to dismiss is an interlocutory order which neither terminates nor finally disposes of a case, as it
leaves something to be done by the court before the case is finally decided on the merits. As such, the general rule is that
the denial of a motion to dismiss cannot be questioned in a special civil action for certiorari which is a remedy designed to
correct errors of jurisdiction and not errors of judgment. Neither can a denial of a motion to dismiss be the subject of an
appeal unless and until a final judgment or order is rendered. In order to justify the grant of the extraordinary remedy
of certiorari, the denial of the motion to dismiss must have been tainted with grave abuse of discretion amounting to lack or
excess of jurisdiction.19
At the core of the present petition is the question of whether the trial court's denial of petitioner's motion to dismiss on the
ground that "[T]here are justiciable questions raised in the pleadings of the herein parties which are proper subject of a full
blown trial"20 contravenes Sec. 3, Rule 16 of the Rules and constitutes grave abuse of discretion on the part of the trial court.
Sec. 3, Rule 16 of the Rules provides:
Sec. 3. Resolution of motion. 'After the hearing, the court may dismiss the action or claim, deny the motion or order the
amendment of the pleading.
The court shall not defer the resolution of the motion for the reason that the ground relied upon is not indubitable.
In every case, the resolution shall state clearly and distinctly the reasons therefor.
Under this provision, there are three (3) courses of action which the trial court may take in resolving a motion to
dismiss, i.e., to grant, to deny, or to allow amendment of the pleading. Deferment of the resolution of a motion to dismiss if
the ground relied upon is not indubitable is now disallowed in view of the provision21 requiring presentation of all available
arguments and evidence. Thus, there is no longer any need to defer action until the trial as the evidence presented, and such
additional evidence as the trial court may require, would already enable the trial court to rule upon the dubitability of the
ground alleged.22
Further, it is now specifically required that the resolution on the motion shall clearly and distinctly state the reasons therefor.
This proscribes the common practice of perfunctorily dismissing the motion for "lack of merit." Such cavalier dispositions can
often pose difficulty and misunderstanding on the part of the aggrieved party in taking recourse therefrom and likewise on
the higher court called upon to resolve the same, usually on certiorari.23
The questioned order of the trial court denying the motion to dismiss with a mere statement that there are justiciable
questions which require a full blown trial falls short of the requirement of Rule 16 set forth above. Owing to the terseness of
its expressed justification, the challenged order ironically suffers from undefined breadth which is a hallmark of imprecision.
With its unspecific and amorphous thrust, the issuance is inappropriate to the grounds detailed in the motion to dismiss.
While the requirement to state clearly and distinctly the reasons for the trial court's resolutory order under Sec. 3, Rule 16 of
the Rules does call for a liberal interpretation, especially since jurisprudence dictates that it is decisions on cases submitted
for decision that are subject to the stringent requirement of specificity of rulings under Sec. 1, Rule 3624 of the Rules, the
trial court's order in this case leaves too much to the imagination.
It should be noted that petitioner raised several grounds in his motion to dismiss, i.e., bar by prior judgment or by the
statute of limitations, lack of capacity to sue, lack of cause of action, and non-payment of docket fees.
Specifically, petitioner sought the dismissal of the complaint, arguing as follows:

A. Plaintiffs' claims are barred by a prior judgment or by the statute of limitations (Rule 16, Sec. 1(f))
5. Plaintiffs now raise the issue that Cayetano Ludo, allegedly then "in failing health" was unduly influenced by the defendant
to execute a "simulated will" to cheat the government of enormous amounts of estate and inheritance taxes.
6. Plaintiffs may no longer do so, for, subject to the right to appeal, the allowance of a will is conclusive as to its due
execution, Rule 75, Sec. 1. "Due execution" settles the extrinsic validity of the will, i.e., whether the testator, being of
sound mind freely executed the will in accordance with the formalities by law.
rb l r l l lb r r

7. It was conclusively established by the allowance of the will, which plaintiffs did not appeal, that the following
circumstances were notpresent:
Rule 76, Sec. 9
(b) 'the testator was insane, or otherwise mentally incapable to make a will, at the time of its execution;
(c) '(the will) was executed under duress, or the influence of fear, or threats;
(d) '(the will) was procured by undue and improper pressure and influence, on the part of the beneficiary, or of some other
person for his benefit;
8. The foregoing are the precise sort of questions and issues plaintiffs Nabua and her children are illicitly seeking to try by
independent action in a different sala. Why are they doing this? Because the time for them to bring their claims in the
probate court has prescribed. The judicial decree of distribution vests title in the distributees and any objections thereto
should be raised in a seasonable appeal, otherwise it will have binding effect like any other judgment in rem.
....
B. Plaintiffs have no legal capacity to sue and/or do not have a cause of action (Rule 16, Secs. 1(d) and/or 1(g))
12. The following documents reveal that the plaintiff Nabua could never have been the common-law wife that she claims to
be, because Cayetano Ludo was married to someone else:
(a) Petition for Naturalization by Cayetano Ludo filed in 1946, wherein he declares in paragraph FIFTH that he is married to
Uy Ching Gee (ANNEX "J");
(b) Order of the Court of First Instance dated June 7, 1949, wherein it is stated that Cayetano Ludo has established in open
court that he is married to Uy Ching Gee, a native of Amoy, China, who likewise lived with him in the Philippines and that
they have three legitimate children born 1937, 1939 and 1942 (ANNEX "K");
(c) Identification Certificate No. 5697 issued by the Bureau of Immigration to Liong Cheng on November 18, 1957, also
known as Visitacion Uy Ching Gui, recognizing her as a citizen of the Philippines being the lawful wife of Cayetano Ludo
(ANNEX "L");
(d) Death Certificate of Visitacion Uy dated August 7, 1969, wherein it is indicated that her civil status is married and the
surviving spouse is Cayetano Ludo (ANNEX "M");
(e) Death Certificate of Cayetano Ludo dated July 16, 1986, wherein it is indicated that his surviving spouse is Florame delos
Reyes Ludo (ANNEX "B").
13. Plaintiffs-children of Nabua do not have legal capacity or cause of action because they are not the real parties in interest.
13. [sic] Their distributive share in the estate of Cayetano Ludo having been assigned to Ludo and LuYm Corporation (ANNEX
"G"), plaintiffs-children of Nabua are not real parties in interest; Ludo & LuYm Corp. is. Every action must be
prosecuted or defended in the name of the real party in interest.
....
C. Fraud and Equity
14. The "fraud" (confused by plaintiffs to mean undue influence) of "imposing" a "stimulated will" on Cayetano Ludo has
been conclusively negated by the allowance of the will, as provided in Rule 75, Sec. 1, above discussed.

15. Furthermore, an action for fraud prescribes 4 years from the execution of the "fraudulent" or "simulated will," which was
long ago in this case.
16. But more important than any of the foregoing is that plaintiffs who participated in the probate proceedings and signed
the settlement are precluded by "dirty hands" from claiming relief.
17. By their own admission (to which they are bound by Rule 130, Sec. 26), plaintiffs were parties to a settlement pursuant
to a fraudulent "simulated will" which they portrayed as a massive scheme to defraud the government of estate and
inheritance taxes.
. . . .25 (Emphases in the original.)
Having raised substantial grounds for dismissal, the trial court should have, at the very least, specified which of these
grounds require a full-blown trial. This would have enabled the defendant to determine the errors that should be the subject
of his motion for reconsideration or Petition forCertiorari, and given the appellate court sufficient basis for determining the
propriety of the denial of the motion to dismiss.
In this regard, judges should be reminded to take pains in crafting their orders, stating therein clearly and comprehensively
the reasons for their issuance, which are necessary for the full understanding of the action taken.26
Accordingly, considering that the order of the trial court is a patent nullity for failure to comply with a mandatory provision of
the Rules, petitioner was correct in directly assailing the order on certioraribefore the Court of Appeals.
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However, while it was error for the appellate court to rule that the trial court did not commit grave abuse of discretion in
denying petitioner's motion to dismiss, it does not necessarily follow that the motion to dismiss should have been granted.

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The instant petition raises significant factual questions as regards petitioner's claim that the Amended Complaint should have
been dismissed which are properly addressed to the trial court. Moreover, it cannot be gainsaid that the trial court should be
given the opportunity to correct itself by evaluating the evidence, applying the law and making an appropriate ruling.27 A
remand of the case to the trial court for further proceedings is, therefore, in order.
WHEREFORE, the petition is GRANTED in part. The Decision of the Court of Appeals dated August 20, 2003 sustaining the
trial court's denial of petitioner's motion to dismiss, as well as its Resolution dated December 16, 2003 denying
reconsideration, is REVERSED and SET ASIDE. The case is REMANDED to the Regional Trial Court of Cebu City for further
proceedings to resolve anew with deliberate dispatch the motion to dismiss in accordance with Section 3, Rule 16 of the 1997
Rules of Civil Procedure as elucidated in this Decision.
SO ORDERED.