G.R. No. 219815, September 14, 2016
220, contending that the 2000 writ merely prohibited UOBP
J.O.S. MANAGING BUILDERS, INC. AND EDUARDO B.
OLAGUER, Petitioners, v. UNITED OVERSEAS BANK
PHILIPPINES (FORMERLY KNOWN AS WESTMONT
BANK), EMMANUEL T. MANGOSING AND DAVID GOH
CHAI ENG, Respondents.
DECISION
JARDELEZA, J.:
Before us is a Petition for Review1 assailing the October 7,
20142 and July 20, 20153 Orders of the Regional Trial Court
(RTC) of Quezon City (RTC-QC), Branch 87 (RTC Br. 87) in
Civil Case No. Q-11-69413. The first Order dismissed the
petition for contempt filed by J.O.S. Managing Builders, Inc.
(J.O.S.) and Eduardo B. Olaguer4 (collectively, petitioners)
against United Overseas Bank Philippines (UOBP), Emmanuel
T. Mangosing and David Goh Chai Eng 5 (collectively,
respondents) on the ground of mootness. The second Order
expunged petitioners' motion for reconsideration of the October
7, 2014 Order from the record of the case due to violation of
the three-day notice rule on motions.
Facts
On September 10, 1999, petitioners filed a Petition for
Annulment of Extrajudicial Foreclosure Sale (annulment case)
against UOBP and Atty. Ricardo F. De Guzman in RTC-
QC.6 The case was raffled to RTC-QC, Branch 98 (RTC Br. 98)
and docketed as Civil Case No. Q-99-38701.7 On May 17,
2000, RTC Br. 98 issued a writ of preliminary injunction (2000
writ) against respondents prohibiting them from: (a)
consolidating title to the subject properties; and (b) committing
any acts prejudicial to petitioners.8Eventually, on June 12,
2008, it also issued a decision annulling the extrajudicial
foreclosure and public auction sale of the
properties.9 Respondents filed an appeal to the Court of
Appeals (CA) docketed as CA-G.R. CV No. 92414.10
On May 5, 2008, while the annulment case was still pending,
respondents sold the properties to Onshore Strategic Assets,
Inc.11 Thus, petitioners filed a Petition to Declare Respondents
in Contempt of Court12(contempt case) in RTC-QC. The case
was docketed as Civil Case No. Q-11-69413 and raffled to
RTC, Branch 220 (RTC Br. 220). Petitioners averred that
respondents' sale of the properties constitutes indirect
contempt of court because it was done in violation of the 2000
writ issued by RTC Br. 98. Additionally, they prayed that
respondents be ordered to pay actual, moral and exemplary
damages including attorney's fees and cost of suit.
Respondents filed a Motion to Dismiss on the ground of failure
to state a cause of action. They countered that the sale of the
properties did not violate the 2000 writ because petitioners did
not plead that the sale was prejudicial to them. Further, the
petition did not allege that respondents consolidated title to the
properties. RTC Br. 220 denied the motion to dismiss.
Respondents moved for reconsideration, but it was
denied.13 They elevated the case to the CA via a petition
for certiorari, but the CA also dismissed it.14
Respondents then filed an Answer Ad Cautelam15 in RTC Br.
from consolidating title to the properties and did not enjoin it
from selling or transferring them to any person or
entity.16 Respondents also asserted that the sale is not
prejudicial to the interest of petitioners because the 1997 Rules
of Civil Procedure (the Rules) recognizes and allows
transfers pendente lite.17 By way of counterclaim, respondents
prayed that petitioners be ordered to pay moral and exemplary
damages and attorney's fees.18
In another turn of events, the contempt case was re-raffled to
RTC Br. 87.19 On May 8, 2014, respondents filed its second
motion to dismiss.20 They argued that the decision of RTC Br.
98 in the annulment case was reversed by the CA in its
Decision dated November 28, 2013. They claimed that the
CA's dismissal of the annulment case automatically dissolved
or set aside the 2000 writ because a writ of preliminary
injunction is merely ancillary to the main case. 21 Therefore, the
contempt case which seeks to punish them for the alleged
violation of the 2000 writ had become moot and
academic.22 Petitioners opposed the motion but RTC Br. 87, in
its first assailed Order, granted respondent's motion and
dismissed the case. It ruled that "the writ of preliminary
injunction was rendered moot and academic with the [CA's
dismissal of the annulment case] on the merits, which in effect
automatically terminated the writ of preliminary injunction
issued therein, even if an appeal is taken from said
judgment."23
Petitioners filed a Motion for Reconsideration24 (MR) of the
order of dismissal. Respondents filed a Motion to
Expunge25cralawred the MR on the ground that petitioners
violated the three-day notice rule under Section 4, Rule 15 of
the Rules. Respondents alleged that the hearing for petitioners'
MR was set on November 7, 2014 but they received the notice
only on November 6 or one (1) day before the scheduled
hearing. In its second assailed Order, RTC Br. 87 granted
respondent's motion to expunge.26
Petitioners now directly seek recourse to us via this petition for
review on certiorari raising the following issues:
1. Whether RTC Br. 87 erred in expunging petitioners'
MR from the record of the case;
2. Whether RTC Br. 87 erred in giving due course to
respondents' motion to dismiss filed after their
answer ad cautelam; and cralawlawlibrary
3. Whether RTC Br. 87 erred in dismissing the contempt
case on the ground of mootness.
Petitioners pray that we set aside the October 7, 2014 and July
20, 2015 Orders of RTC Br. 87, declare respondents guilty of
contempt of court, and order them to pay damages.27
Our Ruling
We partially grant the petition and reverse the challenged
Orders of RTC Br. 87.
1
At the outset, we find no merit in the claim of respondents that
petitioners' direct resort to us violates the hierarchy of courts.
Section 2(c), Rule 41 of the Rules provides that in all cases
where only questions of law are raised or involved, the appeal
shall be before us.28 Petitioners question the grant of due
course to respondents' motion to dismiss filed after the filing of
their Answer Ad Cautelam, the grant of respondents' motion to
dismiss the contempt case on the ground of mootness, and the
grant of respondents' motion to expunge petitioners' MR on the
ground of violation of the three-day notice rule. In order to
resolve these issues, we need not examine or evaluate the
evidence of the parties, but rely solely on what the law provides
on the given set of undisputed facts.29 Consequently,
petitioners' remedy for assailing the correctness of the Orders
of RTC Br. 87, involving as it does a pure question of law,
indeed lies with us.30
RTC Br. 87 erred when it granted
respondent's motion to expunge
petitioner's MR from the records.
Section 4, Rule 15 of the Rules, provides that:
Sec. 4. Hearing of motion. — Except for motions which the
court may act upon without prejudicing the rights of the
adverse party, every written motion shall be set for hearing by
the applicant.
Every written motion required to be heard and the notice of the
hearing thereof shall be served in such a manner as to ensure
its receipt by the other party at least three (3) days before the
date of hearing, unless the court for good cause sets the
hearing on shorter notice.
The general rule is that the three-day notice requirement in
motions under Section 4 of the Rules is mandatory. It is an
integral component of procedural due process. The purpose of
the three-day notice requirement, which was established not
for the benefit of the movant but rather for the adverse party, is
to avoid surprises upon the latter and to grant it sufficient time
to study the motion and to enable it to meet the arguments
interposed therein.31
In Cabrera v. Ng,32 the facts of which are analogous to the
present petition, we held that the three-day notice requirement
is not a hard-and-fast rule. A liberal construction of the
procedural rules is proper where the lapse in the literal
observance of a rule of procedure has not prejudiced the
adverse party and has not deprived the court of its
authority.33 We ruled:
It is undisputed that the hearing on the motion for
reconsideration filed by the spouses Cabrera was reset by the
RTC twice with due notice to the parties; it was only on
October 26, 2007 that the motion was actually heard by the
RTC. At that time, more than two months had passed since the
respondent received a copy of the said motion for
reconsideration on August 21, 2007. The respondent was thus
given sufficient time to study the motion and to enable him to
meet the arguments interposed therein. Indeed, the respondent
was able to file his opposition thereto on September 20, 2007.
Notwithstanding that the respondent received a copy of the
said motion for reconsideration four days after the date set by
the spouses Cabrera for the hearing thereof, his right to due
process was not impinged as he was afforded the chance to
argue his position. Thus, the RTC erred in denying the spouses
Cabrera's motion for reconsideration based merely on their
failure to comply with the three-day notice requirement.34
Thus, the test is the presence of opportunity to be heard, as
well as to have time to study the motion and meaningfully
oppose or controvert the grounds upon which it is
based.35 When the adverse party had been afforded such
opportunity, and has been indeed heard through the pleadings
filed in opposition to the motion, the purpose behind the three-
day notice requirement is deemed realized. In such case, the
requirements of procedural due process are substantially
complied with.36
Here, respondents claimed to have actually received the notice
for the November 7, 2014 hearing only on November 6,
2014.37 On the supposed day of hearing, however, RTC Br. 87
issued a Constancia38resetting the hearing to December 5,
2014. Thereafter, on November 11, 2014, respondent filed a
motion to expunge petitioners' MR.39 Clearly, respondents' right
to due process was not violated as they were able to oppose
petitioner's MR in the form of their motion to expunge.
RTC Br. 87 did not err in giving due
course to respondents' motion to
dismiss.
Petitioners fault RTC Br. 87 for giving due course to
respondents' motion to dismiss. Respondents filed their second
motion to dismiss almost one (1) year and six (6) months after
they submitted their Answer Ad Cautelam.40 Thus, petitioners
aver that respondents violated Section 1, Rule 16 of the Rules,
stating that a motion to dismiss must be filed "within the time
for but before filing the answer to the complaint or pleading
asserting a claim."
Petitioners are incorrect. In Obando v. Figueras,41 we held that
the period to file a motion to dismiss depends upon the
circumstances of the case:
x xx Section 1 of Rule 16 of the Rules of Court requires that, in
general, a motion to dismiss should be filed within the
reglementary period for filing a responsive pleading. Thus, a
motion to dismiss alleging improper venue cannot be
entertained unless made within that period.
However, even after an answer has been filed, the Court
has allowed a defendant to file a motion to dismiss on the
following grounds: (1) lack of jurisdiction, (2) litispendentia,
(3) lack of cause of action, and (4) discovery during trial of
evidence that would constitute a ground for
dismissal. Except for lack of cause of action or lack of
jurisdiction, the grounds under Section 1 of Rule 16 may be
waived. If a particular ground for dismissal is not raised or if no
motion to dismiss is filed at all within the reglementary period, it
is generally considered waived under Section 1, Rule 9 of the
Rules.
Applying this principle to the case at bar, the respondents did
not waive their right to move for the dismissal of the civil case
based on Petitioner Obando's lack of legal capacity. It must be
pointed out that it was only after he had been convicted of
2
estafa through falsification that the probate court divested
him of his representation of the Figueras estates. It was
only then that this ground became available to the
respondents. Hence, it could not be said that they waived
it by raising it in a Motion to Dismiss filed after their
Answer was submitted. Verily, if the plaintiff loses his
capacity to sue during the pendency of the case, as in the
present controversy, the defendant should be allowed to
file a motion to dismiss, even after the lapse of the
reglementary period for filing a responsive
pleading.42(Emphasis supplied.)
In the same manner, respondents' motion to dismiss was
based on an event that transpired after it filed its Answer Ad
Cautelam. Consequently, there was no violation of Section 1,
Rule 16 of the Rules as they could not have possibly raised it
as an affirmative defense in their answer.
While RTC Br. 87 did not err in giving due course to
respondents' motion to dismiss, the propriety of granting it is an
entirely different matter.
RTC Br. 87 erred when it dismissed
the contempt case for being moot and
academic.
In their motion to dismiss, respondents advance that the CA's
reversal of RTC Br. 98's ruling is a supervening event that
renders the contempt case moot and academic. They argue
that it would now be absurd to restrain UOBP from exercising
its rights under the Deed of Real Estate Mortgage when it was
found to have proceeded lawfully in the foreclosure
proceedings. Respondents maintain that it would be illogical to
hold them in contempt for a lawful act.43
RTC Br. 87 agreed,44 citing the cases of Golez v.
Leonidas45 and Buyco v. Baraquia,46 where we held that a writ
of preliminary injunction is deemed lifted upon dismissal of the
main case, its purpose as a provisional remedy having been
served, despite the filing of an appeal.
We are not persuaded. A case is moot when it ceases to
present a justiciable controversy by virtue of supervening
events so that a declaration thereon would be of no practical
value.47 Courts decline jurisdiction over it as there is no
substantial relief to which petitioner will be entitled and which
will anyway be negated by the dismissal of the petition.48 Here,
the consequent dissolution of the 2000 writ did not render the
contempt case moot and academic. Foremost, RTC Br. 87's
reliance in Golez and Buycois misplaced. As correctly pointed
out by petitioners, the facts and circumstances in the two cases
differ from the present petition. In Golez and Buyco, the alleged
acts in violation of the writ of preliminary injunction were
committed AFTER the writ was lifted upon the dismissal of the
main action, such that a case for contempt on the ground of
violation of the writ would be unavailing. In the case before us,
the sale of the properties—which is the act alleged to be in
violation of the 2000 writ—was conducted while the 2000 writ
was still subsisting. In fact, the 2000 writ was issued on May
17, 2000, while the sale was made on May 5, 2008. RTC Br.
98 annulled the sale in favor of petitioners on June 12, 2008. 49
The reversal by the CA of the ruling of RTC Br. 98 in the
annulment case and the automatic dissolution of the 2000 writ
will not protect respondents from an action ascribing a violation
of the 2000 writ, which was committed while it was still in full
force and effect. In Lee v. Court of Appeals,50 we explained
that:
An injunction or restraining order which is not void must be
obeyed while it remains in full force and effect, and has not
been overturned, that is, in general, until the injunction or
restraining order has been set aside, vacated, or modified by
the court which granted it, or until the order or decree awarding
it has been reversed on appeal or error. The injunction must be
obeyed irrespective of the ultimate validity of the order, and no
matter how unreasonable and unjust the injunction may be in
its terms. Defendant cannot avoid compliance with the
commands, or excuse his violation, of the injunction by simply
moving to dissolve it, or by the pendency of a motion to modify
it. The fact that an injunction or restraining order has been
dissolved or terminated, or has expired, does not necessarily
protect a person in a proceeding against him for a violation of
the injunction or order while it was in force, as by acts between
granting of the injunction and its termination, at least where the
proceeding is one to punish for a criminal contempt. 51
Notably, this is not to say that respondents are already guilty of
indirect contempt. Whether respondents violated the 2000 writ
is not for us to decide. Section 5, Rule 71 of the Rules provides
that where the charge for indirect contempt has been
committed against a Regional Trial Court or a court of
equivalent or higher rank, or against an officer appointed by it,
the charge may be filed with such court. Here, the petition for
indirect contempt was correctly filed with the RTC. The
contempt case was however dismissed while it was only in the
pre-trial stage and clearly before the parties could present their
evidence. Proceedings for indirect contempt of court require
normal adversarial procedures. It is not summary in character.
The proceedings for the punishment of the contumacious act
committed outside the personal knowledge of the judge
generally need the observance of all the elements of due
process of law, that is, notice, written charges, and an
opportunity to deny and to defend such charges before guilt is
adjudged and sentence imposed.52
In this regard, we cannot grant petitioners' prayer to declare
respondents guilty of contempt of court and order them to pay
damages.
WHEREFORE, the petition is PARTIALLY GRANTED. The
October 7, 2014 and July 20, 2015 Orders of the Regional Trial
Court of Quezon City, Branch 87 in Civil Case No. Q-11-69413
are hereby REVERSED. The case is REMANDED to the
court a quo for continuance of the trial of the case.
SO ORDERED.
3
G.R. No. 185145 February 5, 2014
SPOUSES VICENTE AFULUGENCIA and LETICIA
AFULUGENCIA, Petitioners,
vs.
METROPOLITAN BANK & TRUST CO. and EMMANUEL L.
ORTEGA, Clerk of Court, Regional Trial Court and Ex-
Officio Sheriff, Province of Bulacan, Respondents.
DECISION
DEL CASTILLO, J.:
Section 6,1 Rule 25 of the Rules of Court (Rules) provides that
"a party not served with written interrogatories may not be
compelled by the adverse party to give testimony in open court,
or to give a deposition pending appeal." The provision seeks to
prevent fishing expeditions and needless delays. Its goal is to
maintain order and facilitate the conduct of trial.
Assailed in this Petition for Review on Certiorari 2 are the April
15, 2008 Decision3 of the Court of Appeals (CA) in CA-G.R. SP
No. 99535 which dismissed petitioners' Petition for Certiorari
for lack of merit and its October 2, 2008 Resolution 4 denying
petitioners' Motion for Reconsideration.5
Factual Antecedents
Petitioners, spouses Vicente and Leticia Afulugencia, filed a
Complaint6 for nullification of mortgage, foreclosure, auction
sale, certificate of sale and other documents, with damages,
against respondents Metropolitan Bank & Trust Co.
(Metrobank) and Emmanuel L. Ortega (Ortega) before the
Regional Trial Court (RTC) of Malolos City, where it was
docketed as Civil Case No. 336-M-2004 and assigned to
Branch 7.
Metrobank is a domestic banking corporation existing under
Philippine laws, while Ortega is the Clerk of Court and Ex-
Officio Sheriff of the Malolos RTC.
After the filing of the parties’ pleadings and with the conclusion
of pre-trial, petitioners filed a Motion for Issuance of Subpoena
DucesTecum Ad Testificandum7 to require Metrobank’s
officers8 to appear and testify as the petitioners’ initial
witnesses during the August 31, 2006 hearing for the
presentation of their evidence-in-chief, and to bring the
documents relative to their loan with Metrobank, as well as
those covering the extrajudicial foreclosure and sale of
petitioners’ 200-square meter land in Meycauayan, Bulacan
covered by Transfer Certificate of Title No. 20411 (M). The
Motion contained a notice of hearing written as follows:
NOTICE
The Branch Clerk of Court
Regional Trial Court
Branch 7, Malolos, Bulacan
Greetings:
Please submit the foregoing motion for the consideration and
approval of the Hon. Court immediately upon receipt hereof.
(signed)
Vicente C. Angeles9
Metrobank filed an Opposition10 arguing that for lack of a
proper notice of hearing, the Motion must be denied; that being
a litigated motion, the failure of petitioners to set a date and
time for the hearing renders the Motion ineffective and pro
forma; that pursuant to Sections 1 and 611 of Rule 25 of the
Rules, Metrobank’s officers – who are considered adverse
parties – may not be compelled to appear and testify in court
for the petitioners since they were not initially served with
written interrogatories; that petitioners have not shown the
materiality and relevance of the documents sought to be
produced in court; and that petitioners were merely fishing for
evidence.
Petitioners submitted a Reply12 to Metrobank’s Opposition,
stating that the lack of a proper notice of hearing was cured by
the filing of Metrobank’s Opposition; that applying the principle
of liberality, the defect may be ignored; that leave of court is
not necessary for the taking of Metrobank’s officers’
depositions; that for their case, the issuance of a subpoena is
not unreasonable and oppressive, but instead favorable to
Metrobank, since it will present the testimony of these officers
just the same during the presentation of its own evidence; that
the documents sought to be produced are relevant and will
prove whether petitioners have paid their obligations to
Metrobank in full, and will settle the issue relative to the validity
or invalidity of the foreclosure proceedings; and that the Rules
do not prohibit a party from presenting the adverse party as its
own witness.
Ruling of the Regional Trial Court
On October 19, 2006, the trial court issued an Order 13 denying
petitioners’ Motion for Issuance of Subpoena DucesTecum Ad
Testificandum, thus:
The motion lacks merit.
As pointed out by the defendant bank in its opposition, the
motion under consideration is a mere scrap of paper by reason
of its failure to comply with the requirements for a valid notice
of hearing as specified in Sections 4 and 5 of Rule 15 of the
Revised Rules of Court. Moreover, the defendant bank and its
officers are adverse parties who cannot be summoned to
testify unless written interrogatories are first served upon them,
as provided in Sections 1 and 6, Rule 25 of the Revised Rules
of Court.
In view of the foregoing, and for lack of merit, the motion under
consideration is hereby DENIED.
SO ORDERED.14
Petitioners filed a Motion for Reconsideration15 pleading for
leniency in the application of the Rules and claiming that the
defective notice was cured by the filing of Metrobank’s
Opposition, which they claim is tantamount to notice. They
further argued that Metrobank’s officers – who are the subject
4
of the subpoena – are not party-defendants, and thus do not
comprise the adverse party; they are individuals separate and
distinct from Metrobank, the defendant corporation being sued
in the case.
In an Opposition16 to the Motion for Reconsideration,
Metrobank insisted on the procedural defect of improper notice
of hearing, arguing that the rule relative to motions and the
requirement of a valid notice of hearing are mandatory and
must be strictly observed. It added that the same rigid
treatment must be accorded to Rule 25, in that none of its
officers may be summoned to testify for petitioners unless
written interrogatories are first served upon them. Finally, it
said that since a corporation may act only through its officers
and employees, they are to be considered as adverse parties
in a case against the corporation itself.
In another Order17 dated April 17, 2007, the trial court denied
petitioners’ Motion for Reconsideration. The trial court held,
thus:
Even if the motion is given consideration by relaxing Sections 4
and 5, Rule 15 of the Rules of Court, no such laxity could be
accorded to Sections 1 and 6 of Rule 25 of the Revised Rules
of Court which require prior service of written interrogatories to
adverse parties before any material and relevant facts may be
elicited from them more so if the party is a private corporation
who could be represented by its officers as in this case. In
other words, as the persons sought to be subpoenaed by the
plaintiffs-movants are officers of the defendant bank, they are
in effect the very persons who represent the interest of the
latter and necessarily fall within the coverage of Sections 1 and
6, Rule 25 of the Revised Rules of Court.
In view of the foregoing, the motion for reconsideration is
hereby denied.
SO ORDERED.18
Ruling of the Court of Appeals
Petitioners filed a Petition for Certiorari 19 with the CA asserting
this time that their Motion for Issuance of Subpoena
DucesTecum Ad Testificandum is not a litigated motion; it does
not seek relief, but aims for the issuance of a mere process.
For these reasons, the Motion need not be heard. They
likewise insisted on liberality, and the disposition of the case on
its merits and not on mere technicalities. 20 They added that
Rule 2121 of the Rules requires prior notice and hearing only
with respect to the taking of depositions; since their Motion
sought to require Metrobank’s officers to appear and testify in
court and not to obtain their depositions, the requirement of
notice and hearing may be dispensed with. Finally, petitioners
claimed that the Rules – particularly Section 10,22 Rule 132 –
do not prohibit a party from presenting the adverse party as its
own witness.
On April 15, 2008, the CA issued the questioned Decision,
which contained the following decretal portion:
WHEREFORE, the petition is DISMISSED for lack of merit.
The assailed orders dated October 19, 2006 and April 17, 2007
in Civil Case No. 336-M-2004 issued by the RTC, Branch 7,
Malolos City, Bulacan, are AFFIRMED. Costs against
petitioners.
SO ORDERED.23
The CA held that the trial court did not commit grave abuse of
discretion in issuing the assailed Orders; petitioners’ Motion is
a litigated motion, especially as it seeks to require the adverse
party, Metrobank’s officers, to appear and testify in court as
petitioners’ witnesses. It held that a proper notice of hearing,
addressed to the parties and specifying the date and time of
the hearing, was required, consistent with Sections 4 and
5,24 Rule 15 of the Rules.
The CA held further that the trial court did not err in denying
petitioners’ Motion to secure a subpoena ducestecum/ad
testificandum, ratiocinating that Rule 25 is quite clear in
providing that the consequence of a party’s failure to serve
written interrogatories upon the opposing party is that the latter
may not be compelled by the former to testify in court or to
render a deposition pending appeal. By failing to serve written
interrogatories upon Metrobank, petitioners foreclosed their
right to present the bank’s officers as their witnesses.
The CA declared that the justification for the rule laid down in
Section 6 is that by failing to seize the opportunity to inquire
upon the facts through means available under the Rules,
petitioners should not be allowed to later on burden Metrobank
with court hearings or other processes. Thus, it held:
x xx Where a party unjustifiedly refuses to elicit facts material
and relevant to his case by addressing written interrogatories
to the adverse party to elicit those facts, the latter may not
thereafter be compelled to testify thereon in court or give a
deposition pending appeal. The justification for this is that the
party in need of said facts having foregone the opportunity to
inquire into the same from the other party through means
available to him, he should not thereafter be permitted to
unduly burden the latter with courtroom appearances or other
cumbersome processes. The sanction adopted by the Rules is
not one of compulsion in the sense that the party is being
directly compelled to avail of the discovery mechanics, but one
of negation by depriving him of evidentiary sources which
would otherwise have been accessible to him.25
Petitioners filed their Motion for Reconsideration,26 which the
CA denied in its assailed October 2, 2008 Resolution. Hence,
the present Petition.
Issues
Petitioners now raise the following issues for resolution:
I
THE COURT OF APPEALS COMMITTED REVERSIBLE
ERRORS IN REQUIRING NOTICE AND HEARING (SECS. 4
AND 5, RULE 15, RULES OF COURT) FOR A MERE
MOTION FOR SUBPOENA OF RESPONDENT BANK’S
OFFICERS WHEN SUCH REQUIREMENTS APPLY ONLY TO
DEPOSITION UNDER SEC. 6, RULE 25, RULES OF COURT.
II
5
THE COURT OF APPEALS COMMITTED (REVERSIBLE)
ERROR IN HOLDING THAT THE PETITIONERS MUST
FIRST SERVE WRITTEN INTERROGATORIES TO
RESPONDENT BANK’S OFFICERS BEFORE THEY CAN BE
SUBPOENAED.27
Petitioners’ Arguments
Praying that the assailed CA dispositions be set aside and that
the Court allow the issuance of the subpoena ducestecum/ad
testificandum, petitioners assert that the questioned Motion is
not a litigated motion, since it seeks not a relief, but the
issuance of process. They insist that a motion which is subject
to notice and hearing under Sections 4 and 5 of Rule 15 is an
application for relief other than a pleading; since no relief is
sought but just the process of subpoena, the hearing and
notice requirements may be done away with. They cite the
case of Adorio v. Hon. Bersamin,28 which held that –
Requests by a party for the issuance of subpoenas do not
require notice to other parties to the action.1âwphi1 No
violation of due process results by such lack of notice since the
other parties would have ample opportunity to examine the
witnesses and documents subpoenaed once they are
presented in court.29
Petitioners add that the Rules should have been liberally
construed in their favor, and that Metrobank’s filing of its
Opposition be considered to have cured whatever defect the
Motion suffered from.
Petitioners likewise persist in the view that Metrobank’s officers
– the subject of the Motion – do not comprise the adverse party
covered by the rule; they insist that these bank officers are
mere employees of the bank who may be called to testify for
them.
Respondents’ Arguments
Metrobank essentially argues in its Comment30 that the subject
Motion for the issuance of a subpoena ducestecum/ad
testificandum is a litigated motion, especially as it is directed
toward its officers, whose testimony and documentary
evidence would affect it as the adverse party in the civil case.
Thus, the lack of a proper notice of hearing renders it useless
and a mere scrap of paper. It adds that being its officers, the
persons sought to be called to the stand are themselves
adverse parties who may not be compelled to testify in the
absence of prior written interrogatories; they are not ordinary
witnesses whose presence in court may be required by
petitioners at any time and for any reason.
Finally, Metrobank insists on the correctness of the CA
Decision, adding that since petitioners failed up to this time to
pay the witnesses’ fees and kilometrage as required by the
Rules,31 the issuance of a subpoena should be denied.
Our Ruling
The Court denies the Petition.
On the procedural issue, it is quite clear that Metrobank was
notified of the Motion for Issuance of Subpoena DucesTecum
Ad Testificandum; in fact, it filed a timely Opposition thereto.
The technical defect of lack of notice of hearing was thus cured
by the filing of the Opposition.32
Nonetheless, contrary to petitioners’ submission, the case of
Adorio cannot apply squarely to this case. In Adorio, the
request for subpoena ducestecum was sought against bank
officials who were not parties to the criminal case for violation
of Batas PambansaBlg. 22. The situation is different here, as
officers of the adverse party Metrobank are being compelled to
testify as the calling party’s main witnesses; likewise, they are
tasked to bring with them documents which shall comprise the
petitioners’ principal evidence. This is not without significant
consequences that affect the interests of the adverse party, as
will be shown below.
As a rule, in civil cases, the procedure of calling the adverse
party to the witness stand is not allowed, unless written
interrogatories are first served upon the latter. This is
embodied in Section 6, Rule 25 of the Rules, which provides –
Sec. 6. Effect of failure to serve written interrogatories.
Unless thereafter allowed by the court for good cause shown
and to prevent a failure of justice, a party not served with
written interrogatories may not be compelled by the adverse
party to give testimony in open court, or to give a deposition
pending appeal.
One of the purposes of the above rule is to prevent fishing
expeditions and needless delays; it is there to maintain order
and facilitate the conduct of trial. It will be presumed that a
party who does not serve written interrogatories on the adverse
party beforehand will most likely be unable to elicit facts useful
to its case if it later opts to call the adverse party to the witness
stand as its witness. Instead, the process could be treated as a
fishing expedition or an attempt at delaying the proceedings; it
produces no significant result that a prior written interrogatories
might bring.
Besides, since the calling party is deemed bound by the
adverse party’s testimony,33 compelling the adverse party to
take the witness stand may result in the calling party damaging
its own case. Otherwise stated, if a party cannot elicit facts or
information useful to its case through the facility of written
interrogatories or other mode of discovery, then the calling of
the adverse party to the witness stand could only serve to
weaken its own case as a result of the calling party’s being
bound by the adverse party’s testimony, which may only be
worthless and instead detrimental to the calling party’s cause.
Another reason for the rule is that by requiring prior written
interrogatories, the court may limit the inquiry to what is
relevant, and thus prevent the calling party from straying or
harassing the adverse party when it takes the latter to the
stand.
Thus, the rule not only protects the adverse party from
unwarranted surprises or harassment; it likewise prevents the
calling party from conducting a fishing expedition or bungling
its own case. Using its own judgment and discretion, the court
can hold its own in resolving a dispute, and need not bear
witness to the parties perpetrating unfair court practices such
as fishing for evidence, badgering, or altogether ruining their
6
own cases. Ultimately, such unnecessary processes can only
constitute a waste of the court’s precious time, if not pointless
entertainment.

In the present case, petitioners seek to call Metrobank’s

officers to the witness stand as their initial and main witnesses,
and to present documents in Metrobank’s possession as part
of their principal documentary evidence. This is improper.
Petitioners may not be allowed, at the incipient phase of the
presentation of their evidence-in-chief at that, to present
Metrobank’s officers – who are considered adverse parties as
well, based on the principle that corporations act only through
their officers and duly authorized agents 34 – as their main
witnesses; nor may they be allowed to gain access to
Metrobank’s documentary evidence for the purpose of making
it their own. This is tantamount to building their whole case
from the evidence of their opponent. The burden of proof and
evidence falls on petitioners, not on Metrobank; if petitioners
cannot prove their claim using their own evidence, then the
adverse party Metrobank may not be pressured to hang itself
from its own defense.

It is true that under the Rules, a party may, for good cause
shown and to prevent a failure of justice, be compelled to give
testimony in court by the adverse party who has not served
written interrogatories. But what petitioners seek goes against
the very principles of justice and fair play; they would want that
Metrobank provide the very evidence with which to prosecute
and build their case from the start. This they may not be
allowed to do.

Finally, the Court may not turn a blind eye to the possible
consequences of such a move by petitioners. As one of their
causes of action in their Complaint, petitioners claim that they
were not furnished with specific documents relative to their
loan agreement with Metrobank at the time they obtained the
loan and while it was outstanding. If Metrobank were to
willingly provide petitioners with these documents even before
petitioners can present evidence to show that indeed they were
never furnished the same, any inferences generated from this
would certainly not be useful for Metrobank. One may be that
by providing petitioners with these documents, Metrobank
would be admitting that indeed, it did not furnish petitioners
with these documents prior to the signing of the loan
agreement, and while the loan was outstanding, in violation of
the law.

With the view taken of the case, the Court finds it unnecessary
to further address the other issues raised by the parties, which
are irrelevant and would not materially alter the conclusions
arrived at.

WHEREFORE, the Petition is DENIED. The assailed April 15,

2008 Decision and October 2, 2008 Resolution of the Court of
Appeals in CA-G.R. SP No. 99535 are AFFIRMED.

SO ORDERED.

7
G.R. No. 171872 June 28, 2010 On 4 October 2004, the RTC issued an Order, denying
petitioner’s Motion for Reconsideration for failure to appeal
FAUSTO R. PREYSLER, JR., Petitioner, within the 15 days reglementary period and declaring the 22
vs. January 2004 Decision as final and executory. The RTC ruled
MANILA SOUTHCOAST DEVELOPMENT that petitioner’s Motion for Reconsideration was fatally flawed
CORPORATION, Respondent. for failure to observe the three-day notice rule. Petitioner filed
an Omnibus Motion for Reconsideration of the Order dated 4
October 2004. In its Order dated 22 February 2005, the RTC
DECISION dismissed the Omnibus Motion. Petitioner then filed a petition
for certiorari with the Court of Appeals, alleging that the RTC
CARPIO, J.: committed grave abuse of discretion in dismissing the Motion
for Reconsideration and Omnibus Motion for petitioner’s
The Case alleged failure to observe the three-day notice rule.

The Ruling of the Court of Appeals

This petition for review1 assails the 22 November 2005
Decision2 and the 3 March 2006 Resolution3 of the Court of
Appeals in CA-G.R. SP No. 89621. In its Decision dated 22 November 2005, the Court of Appeals
dismissed the petition. The Court of Appeals held that the
The Facts three-day notice rule under Sections 4, 5, and 6 of Rule 15 of
the Rules of Court is mandatory and non-compliance therewith
is fatal and renders the motion pro forma. As found by the
On 15 January 2002, petitioner Fausto R. Preysler, Jr. RTC, petitioner’s Motion for Reconsideration dated 12
(petitioner) filed with the Municipal Trial Court (MTC) of February 2004 was received by respondent only on 3 March
Batangas a complaint for forcible entry against respondent 2004, or six days after the scheduled hearing on 26 February
Manila Southcoast Development Corporation (respondent). 2004. Furthermore, the Court of Appeals held that all violations
The subject matter of the complaint is a parcel of land with an of Sections 4, 5, and 6 of Rule 15 which render the purpose of
area of 21,922 square meters located in SitioKutad, Barangay the notice of hearing of the motion nugatory are deemed fatal.
Papaya, Nasugbu, Batangas. The disputed land, covered by
Transfer Certificate of Title (TCT) No. TF-12174 in the name of
petitioner, is also within the property covered by TCT No. T- Petitioner moved for reconsideration, which the Court of
720975 in the name of respondent.6 TCT No. T-72097 covers Appeals denied in its Resolution dated 3 March 2006. Hence,
three contiguous parcels of land with an aggregate area of this petition for review.
86,507,778 square meters.
The Issues
On 13 December 2002, the MTC ruled in favor of petitioner and
ordered respondent to vacate the disputed land covered by In his petition for review, petitioner submits that:
TCT No. TF-1217 in the name of petitioner and to return the
possession of the land to petitioner.7Respondent appealed to I
the Regional Trial Court (RTC). In its Decision dated 22
January 2004, the RTC, Branch 14, Nasugbu, Batangas
reversed the MTC decision and dismissed petitioner’s THE COURT OF APPEALS COMMITTED GRAVE ERROR IN
complaint. AFFIRMING THE RULING OF THE PUBLIC RESPONDENT
THAT PETITIONER HAD VIOLATED THE THREE-DAY
NOTICE RULE DESPITE THE FACTS THAT:
Petitioner received the RTC Decision on 9 February 2004 and
thereafter filed a Motion for Reconsideration, which was set for
hearing on 26 February 2004. Petitioner sent a copy of the A) PRIVATE RESPONDENT WAS DULY
Motion for Reconsideration to respondent’s counsel by HEARD ON THE MOTION FOR
registered mail on 23 February 2004. During the 26 February RECONSIDERATION, HAD OPPORTUNITY
2004 scheduled hearing of the motion, the RTC judge reset the TO OPPOSE, AND ACTUALLY OPPOSED
hearing to 2 April 2004 because the court’s calendar could not SAID MOTION.
accommodate the hearing of the motion. All the parties were
notified of the schedule for the next hearing. B) PRIVATE RESPONDENT WAS NOT
PREJUDICED BY THE ALLEGED DEFECT
Meanwhile, it was only on 3 March 2004, or 6 days after the OF THE MOTION.
scheduled hearing on 26 February 2004, that respondent’s
counsel received a copy of petitioner’s Motion for C) THE PURPOSE OF THE THREE-DAY
Reconsideration. NOTICE RULE WAS SUFFICIENTLY
ACHIEVED.
The rescheduled hearing on 2 April 2004 was again reset on 7
May 2004 because the RTC judge was on official leave. The 7 D) THE ALLEGED FAILURE OF
May 2004 hearing was further reset to 6 August 2004. After the PETITIONER TO COMPLY WITH SECTION
hearing, respondent filed its Motion to Dismiss dated 9 August 4, RULE 15 WAS CURED BY THE FACT
2004,8 claiming that non-compliance with the three-day notice THAT THE PUBLIC RESPONDENT RESET
rule did not toll the running of the period of appeal, which SEVERAL TIMES THE HEARING OF THE
rendered the decision final. MOTION, AND THE PRIVATE
8
 RESPONDENT WAS PROPERLY
NOTIFIED THEREOF AND OPPOSED SAID
MOTION.
E) PETITIONER HAD AN EXTREMELY
MERITORIOUS CASE.
II
THE COURT OF APPEALS SERIOUSLY ERRED IN NOT
RULING ON THE ISSUE OF THE ALLEGED DEFECT OF
THE PETITIONER’S OMNIBUS MOTION, THEREBY
AFFIRMING THE ERRONEOUS COMPUTATION OF THE
THREE-DAY NOTICE BY THE RESPONDENT TRIAL JUDGE.
III
THE COURT OF APPEALS ERRED IN NOT RESOLVING
THE MERITS OF THE PETITIONER’S MOTION FOR
RECONSIDERATION FILED BEFORE THE PUBLIC
RESPONDENT.9
The Ruling of the Court
We find the petition meritorious.
In upholding the RTC Order denying petitioner’s Motion for
Reconsideration, the Court of Appeals relied mainly on
petitioner’s alleged violation of the notice requirements under
Sections 4, 5, and 6, Rule 15 of the Rules of Court which read:
SECTION 4. Hearing of motion. – Except for motions which the
court may act upon without prejudicing the rights of the
adverse party, every written motion shall be set for hearing by
the applicant.
Every written motion required to be heard and the notice of the
hearing thereof shall be served in such a manner as to ensure
its receipt by the other party at least three (3) days before the
date of hearing, unless the court for good cause sets the
hearing on shorter notice.
SECTION 5. Notice of hearing. – The notice of hearing shall be
addressed to all parties concerned, and shall specify the time
and date of the hearing which must not be later than ten (10)
days after the filing of the motion.
SECTION 6. Proof of service necessary. – No written motion
set for hearing shall be acted upon by the court without proof of
service thereof.
The three-day notice rule is not absolute. A liberal construction
of the procedural rules is proper where the lapse in the literal
observance of a rule of procedure has not prejudiced the
adverse party and has not deprived the court of its
authority.10 Indeed, Section 6, Rule 1 of the Rules of Court
provides that the Rules should be liberally construed in order to
promote their objective of securing a just, speedy and
inexpensive disposition of every action and proceeding. Rules
of procedure are tools designed to facilitate the attainment of
justice, and courts must avoid their strict and rigid application
which would result in technicalities that tend to frustrate rather
than promote substantial justice.11
In SomeraVda. De Navarro v. Navarro,12 the Court held that
there was substantial compliance of the rule on notice of
motions even if the first notice was irregular because no
prejudice was caused the adverse party since the motion was
not considered and resolved until after several postponements
of which the parties were duly notified.13
Likewise, in Jehan Shipping Corporation v. National Food
Authority,14 the Court held that despite the lack of notice of
hearing in a Motion for Reconsideration, there was substantial
compliance with the requirements of due process where the
adverse party actually had the opportunity to be heard and had
filed pleadings in opposition to the motion. The Court held:
This Court has indeed held time and again, that under Sections
4 and 5 of Rule 15 of the Rules of Court, mandatory is the
requirement in a motion, which is rendered defective by failure
to comply with the requirement. As a rule, a motion without a
notice of hearing is considered pro forma and does not affect
the reglementary period for the appeal or the filing of the
requisite pleading.
As an integral component of the procedural due process,
the three-day notice required by the Rules is not intended
for the benefit of the movant. Rather, the requirement is
for the purpose of avoiding surprises that may be sprung
upon the adverse party, who must be given time to study
and meet the arguments in the motion before a resolution
of the court. Principles of natural justice demand that the
right of a party should not be affected without giving it an
opportunity to be heard.
The test is the presence of opportunity to be heard, as well
as to have time to study the motion and meaningfully
oppose or controvert the grounds upon which it is
based. x xx
A close perusal of the records reveal that the trial court gave
petitioner ten days within which to comment on respondent’s
Motion for Reconsideration. Petitioner filed its Opposition to the
Motion on November 26, 2001. In its 14-page Opposition, it not
only pointed out that the Motion was defective for not
containing a notice of hearing and should then be dismissed
outright by the court; it also ventilated its substantial arguments
against the merits of the Motion and of the Supplemental
Motion for Reconsideration. Notably, its arguments were
recited at length in the trial court’s January 8, 2002 Joint
Resolution. Nevertheless, the court proceeded to deny the
Motions on the sole ground that they did not contain any notice
of hearing.
The requirement of notice of time and hearing in the pleading
filed by a party is necessary only to apprise the other of the
actions of the former. Under the circumstances of the present
case, the purpose of a notice of hearing was
served.15 (Emphasis supplied)
In this case, the Court of Appeals ruled that petitioner failed to
comply with the three-day notice rule. However, the Court of
Appeals overlooked the fact that although respondent received
petitioner’s Motion for Reconsideration six days after the
9
scheduled hearing on 26 February 2004, the said hearing was
reset three (3) times with due notice to the parties. Thus, it was
only on 6 August 2004, or more than five months after
respondent received a copy of petitioner’s Motion for
Reconsideration, that the motion was heard by the RTC.
Clearly, respondent had more than sufficient time to oppose
petitioner’s Motion for Reconsideration. In fact, respondent did
oppose the motion when it filed its Motion to Dismiss dated 9
August 2004. In view of the circumstances of this case, we find
that there was substantial compliance with procedural due
process. Instead of dismissing petitioner’s Motion for
Reconsideration based merely on the alleged procedural
lapses, the RTC should have resolved the motion based on the
merits.

Furthermore, the RTC likewise erred in dismissing petitioner’s

Omnibus Motion for allegedly failing to comply with the three-
day notice requirement. The RTC found that the notice of
hearing of petitioner’s Omnibus Motion which was set to be
heard on 12 November 2004 was received by respondent on 9
November 2004. The RTC held that the service of the notice of
hearing was one day short of the prescribed minimum three
days notice.1avvph!1

We disagree. Section 4 of Rule 15 provides that "[e]very

written motion required to be heard and the notice of the
hearing thereof shall be served in such a manner as to
ensure its receipt by the other party at least three (3) days
before the date of the hearing, unless the court for good
cause sets the hearing on shorter notice." Thus, the date of the
hearing should be at least three days after receipt of the notice
of hearing by the other parties. In this case, the petitioner’s
Omnibus Motion was set for hearing on 12 November 2004.
Thus, to comply with the notice requirement, respondent
should have received the notice of the hearing at least three
days before 12 November 2004, which is 9 November 2004.
Clearly, respondent’s receipt on 9 November 2004 (Tuesday)
of the notice of hearing of the Omnibus Motion which was set
to be heard on 12 November 2004 (Friday), was within the
required minimum three-days’ notice. As explained by Retired
Justice Jose Y. Feria in his book, Civil Procedure Annotated,
when the notice of hearing should be given:

The ordinary motion day is Friday. Hence, the notice

should be served by Tuesday at the latest, in order that the
requirement of the three days may be complied with.

If notice be given by ordinary mail, it should be actually

received by Tuesday, or if not claimed from the post office, the
date of the first notice of the postmaster should be at least five
(5) days before Tuesday.16 (Emphasis supplied)

WHEREFORE, we GRANT the petition. We SET ASIDE the

Decision dated 22 November 2005 and the Resolution dated 3
March 2006 of the Court of Appeals in CA-G.R. SP No. 89621.
We REMAND the case to the Regional Trial Court, Branch 14,
Nasugbu, Batangas to resolve petitioner’s Motion for
Reconsideration and Omnibus Motion on the merits.

SO ORDERED.

10
G.R. No. 163785 December 27, 2007
KKK FOUNDATION, INC., Petitioner,
vs.
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.3 Petitioner 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
₱4,181,450; 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:
x 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:
x 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.
x xxx
Finding the Compromise Agreement quoted above to be not
contrary to law, morals, good customs and public policy, the
same is hereby APPROVED.
x 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
11
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
12
arguments in the motion.17 Records show that while Angeles’s Inc., in conformity with the Decision dated June 28, 2002 of the
Motion for Issuance of Writ of Execution contained a notice of trial court. This is without prejudice to filing a new motion for
hearing, it did not particularly state the date and time of the consolidation by respondent Angeles.
hearing. However, we still find that petitioner was not denied
procedural due process. Upon receiving the Motion for No pronouncement as to costs.
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 SO ORDERED.
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.1awphi1 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 ₱5,500,000, 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 hereby ORDERED to issue
another writ of execution against petitioner KKK Foundation,

13
G.R. No. 201601, March 12, 2014
MARYLOU CABRERA, Petitioner, v. FELIX
NG, Respondents.
DECISION
REYES, J.:
Before this Court is a petition for review on certiorari1 under
Rule 45 of the Rules of Court seeking to annul and set aside
the Decision2 dated October 21, 2009 and the
Resolution3 dated March 26, 2012 of the Court of Appeals (CA)
in CA-G.R. SP No. 03392. The CA denied the petition
for certiorari filed by Marylou Cabrera (petitioner), which
assailed the Order4 dated December 19, 2007 of the Regional
Trial Court (RTC) of Mandaue City, Branch 56, in Civil Case
No. MAN-4773.
The Facts
On February 14, 2004, Felix Ng (respondent) filed a complaint
for sum of money with the RTC against the petitioner and her
husband Marionilo Cabrera (spouses Cabrera), alleging that
the latter issued to him the following: (1) Metrobank Check No.
0244694 dated June 30, 2002 for the amount of Thirty-One
Thousand Pesos (P31,000.00); (2) Metrobank Check No.
0244674 dated August 9, 2002 for the amount of Thirty-Eight
Thousand Seventy-Four Pesos and Seventy-Six Centavos
(P38,074.76); and (3) Metrobank Check No. 0244745 dated
August 15, 2005 for Two Million Five Hundred Thousand
Pesos (P2,500,000.00). That when presented for payment, the
said checks were all dishonored as the accounts from which
they had been drawn were already closed.
The spouses Cabrera admitted that they issued Metrobank
Check No. 0244694 and Metrobank Check No. 0244674 to the
respondent and that the same were dishonored when
presented for payment. However, they claimed that they paid
the respondent the amount represented by the said checks
through the latter’s son Richard Ng. Further, they deny having
issued Metrobank Check No. 0244745 to the respondent,
alleging that the said check was forcibly taken from them by
Richard Ng.
On August 7, 2007, the RTC rendered a Decision, 5 which
ordered the spouses Cabrera to pay the respondent the
following: (1) Two Million Five Hundred Sixty-Nine Thousand
Seventy-Four Pesos (P2,569,074.00) plus legal interest from
inception of the obligation until fully paid; (2) moral damages in
the amount of Fifty Thousand Pesos (P50,000.00); (3)
attorney’s fees of Twenty Thousand Pesos (P20,000.00); and
(4) litigation expenses in the amount of Ten Thousand Pesos
(P10,000.00).
On August 8, 2007, the spouses Cabrera received a copy of
the RTC Decision dated August 7, 2007. On August 14, 2007,
the spouses Cabrera filed with the RTC a motion for
reconsideration,6 which they set for hearing on August 17,
2007. On even date, the spouses Cabrera sent a copy of their
motion for reconsideration to the respondent thru registered
mail; it was actually received by the respondent on August 21,
2007.
The said motion for reconsideration, however, was not heard
on August 17, 2007 as the new acting presiding judge of the
said court had just assumed office. On August 28, 2007, the
RTC issued a notice,7which set the said motion for
reconsideration for hearing on September 25, 2007.
On September 20, 2007, the respondent filed an opposition8 to
the motion for reconsideration filed by the spouses Cabrera.
The respondent alleged that the said motion for
reconsideration is a mere scrap of paper since it violated the
three-day notice requirement. The respondent pointed out that
the spouses Cabrera sent to him a copy of their motion for
reconsideration, which was set for hearing on August 17, 2007,
via registered mail on August 14, 2007; that he actually
received a copy thereof only on August 21, 2007 - four days
after the scheduled hearing thereon.
It appears that the scheduled hearing of the spouses Cabrera’s
motion for reconsideration on September 25, 2007 did not push
through. Consequently, on September 26, 2007, the RTC
issued another notice,9which set the said motion for
reconsideration for hearing on October 26, 2007.
On October 26, 2007, the RTC issued an Order,10 which
directed the parties to file their additional pleadings, after which
the motion for reconsideration filed by the spouses Cabrera
would be deemed submitted for resolution.
On December 19, 2007, the RTC issued an Order 11 which
denied the motion for reconsideration filed by the spouses
Cabrera. The RTC pointed out that the spouses Cabrera
violated Section 4, Rule 15 of the Rules of Court, which
mandates that every motion required to be heard should be
served by the movant in such a manner as to ensure its receipt
by the other party at least three days before the date of
hearing. Thus:chanRoblesVirtualawlibrary
After a meticulous scrutiny of the records of this case, the court
opines that the motion was filed beyond the reglementary three
(3)[-]day period.
As the records bear out, the instant motion was mailed to the
plaintiff’s counsel on August 14[, 2007] and was set for hearing
on August 17, 2007. However, the copy of said motion had
reached plaintiff’s side and a copy of which was received by
plaintiff’s counsel only on August 17, 2007[,] four (4) days late
after it was supposed to be heard. Hence, a clear blatant
violations [sic] of the rule on notice and hearing.12crallawlibrary
The RTC further opined that a motion, which fails to comply
with the three-day notice requirement is a mere scrap of paper;
it is not entitled to judicial cognizance and would not toll the
running of the reglementary period for filing the requisite
pleadings. Accordingly, the RTC held, its Decision dated
August 7, 2007 had already become final for failure of the
spouses Cabrera to comply with the three-day notice
requirement.
The petitioner then filed a petition for certiorari13 with the CA,
alleging that the RTC gravely abused its discretion in denying
her motion for reconsideration. The petitioner pointed out that
the RTC did not actually conduct a hearing on her motion for
reconsideration on August 17, 2007; that her motion for
reconsideration was actually heard on October 26, 2007, after
the respondent had already filed his opposition thereto. Thus,
the petitioner claimed, the issue of her failure to comply with
the three-day notice requirement had already been rendered
14
moot. In any case, the petitioner asserted, the RTC should
have resolved her motion for reconsideration on its merits
rather than simply denying it on mere technicality.
On October 21, 2009, the CA, by way of the assailed
Decision,14 denied the petition for certiorari filed by the
petitioner. The CA opined that the RTC did not abuse its
discretion in denying the motion for reconsideration filed by the
spouses Cabrera since it merely applied the three-day notice
requirement under Section 4, Rule 15 of the Rules of Court.
Thus:chanRoblesVirtualawlibrary
It appears that petitioner’s Motion for Reconsideration was set
for hearing on 17 August 2007. A copy thereof was mailed to
private respondent on 14 August 2007, and private respondent
actually received his copy only on 21 August 2007 or four (4)
days after the set date of hearing; and thus, depriving him of
the opportunity to oppose the motion. Respondent court,
therefore, correctly held that such motion violated the three (3)-
day notice rule; the essence of due process. Respondent court
had applied said rule to the given situation, and of no doubt,
mere adherence to the rules cannot be considered grave
abuse of discretion on the part of the respondent court. x x
x.15 (Citation omitted)
The petitioner sought a reconsideration of the Decision dated
October 21, 2009 but it was denied by the CA in its
Resolution16 dated March 26, 2012.
Hence, the instant petition.
The Issue
The sole issue to be resolved by the Court is whether the CA
erred in affirming the RTC Order dated December 19, 2007,
which denied the motion for reconsideration filed by the
spouses Cabrera.
The Court’s Ruling
The petition is meritorious.
Sections 4 and 5, Rule 15 of the Rules of Court provide
that:chanRoblesVirtualawlibrary
Sec. 4. Hearing of motion. - Except for motions which the court
may act upon without prejudicing the rights of the adverse
party, every written motion shall be set for hearing by the
applicant.
Every written motion required to be heard and the notice of the
hearing thereof shall be served in such a manner as to
ensure its receipt by the other party at least three (3) days
before the date of hearing, unless the court for good cause
sets the hearing on shorter notice.
Sec. 5. Notice of hearing. - The notice of hearing shall be
addressed to all parties concerned, and shall specify the time
and date of the hearing which must not be later than ten (10)
days after the filing of the motion. (Emphasis ours)
The general rule is that the three-day notice requirement in
motions under Sections 4 and 5 of the Rules of Court is
mandatory. It is an integral component of procedural due
process.17 “The purpose of the three-day notice requirement,
which was established not for the benefit of the movant but
rather for the adverse party, is to avoid surprises upon the
latter and to grant it sufficient time to study the motion and to
enable it to meet the arguments interposed
therein.”18crallawlibrary
“A motion that does not comply with the requirements of
Sections 4 and 5 of Rule 15 of the Rules of Court is a
worthless piece of paper which the clerk of court has no right to
receive and which the court has no authority to act
upon.”19 “Being a fatal defect, in cases of motions to reconsider
a decision, the running of the period to appeal is not tolled by
their filing or pendency.”20crallawlibrary
Nevertheless, the three-day notice requirement is not a hard
and fast rule. When the adverse party had been afforded the
opportunity to be heard, and has been indeed heard through
the pleadings filed in opposition to the motion, the purpose
behind the three-day notice requirement is deemed realized. In
such case, the requirements of procedural due process are
substantially complied with. Thus, in Preysler, Jr. v. Manila
Southcoast Development Corporation,21 the Court ruled
that:chanRoblesVirtualawlibrary
The three-day notice rule is not absolute. A liberal construction
of the procedural rules is proper where the lapse in the literal
observance of a rule of procedure has not prejudiced the
adverse party and has not deprived the court of its authority.
Indeed, Section 6, Rule 1 of the Rules of Court provides that
the Rules should be liberally construed in order to promote
their objective of securing a just, speedy and inexpensive
disposition of every action and proceeding. Rules of procedure
are tools designed to facilitate the attainment of justice, and
courts must avoid their strict and rigid application which would
result in technicalities that tend to frustrate rather than promote
substantial justice.
In SomeraVda. De Navarro v. Navarro, the Court held that
there was substantial compliance of the rule on notice of
motions even if the first notice was irregular because no
prejudice was caused the adverse party since the motion was
not considered and resolved until after several postponements
of which the parties were duly notified.
Likewise, in Jehan Shipping Corporation v. National Food
Authority, the Court held that despite the lack of notice of
hearing in a Motion for Reconsideration, there was substantial
compliance with the requirements of due process where the
adverse party actually had the opportunity to be heard and had
filed pleadings in opposition to the motion. The Court
held:chanRoblesVirtualawlibrary
This Court has indeed held time and again, that under Sections
4 and 5 of Rule 15 of the Rules of Court, mandatory is the
requirement in a motion, which is rendered defective by failure
to comply with the requirement. As a rule, a motion without a
notice of hearing is considered pro forma and does not affect
the reglementary period for the appeal or the filing of the
requisite pleading.
As an integral component of the procedural due process,
the three-day notice required by the Rules is not intended
for the benefit of the movant. Rather, the requirement is
for the purpose of avoiding surprises that may be sprung
upon the adverse party, who must be given time to study
and meet the arguments in the motion before a resolution
15
of the court. Principles of natural justice demand that the
right of a party should not be affected without giving it an
opportunity to be heard.

The test is the presence of opportunity to be heard, as well

as to have time to study the motion and meaningfully
oppose or controvert the grounds upon which it is based.
x x x22 (Emphasis supplied and citations omitted)

It is undisputed that the hearing on the motion for

reconsideration filed by the spouses Cabrera was reset by the
RTC twice with due notice to the parties; it was only on
October 26, 2007 that the motion was actually heard by the
RTC. At that time, more than two months had passed since
the respondent received a copy of the said motion for
reconsideration on August 21, 2007. The respondent was thus
given sufficient time to study the motion and to enable him to
meet the arguments interposed therein. Indeed, the
respondent was able to file his opposition thereto on
September 20, 2007.

Notwithstanding that the respondent received a copy of the

said motion for reconsideration four days after the date set by
the spouses Cabrera for the hearing thereof, his right to due
process was not impinged as he was afforded the chance to
argue his position. Thus, the RTC erred in denying the
spouses Cabrera’s motion for reconsideration based merely on
their failure to comply with the three-day notice requirement.

WHEREFORE, in consideration of the foregoing disquisitions,

the instant petition is GRANTED. The Decision dated October
21, 2009 and the Resolution dated March 26, 2012 of the Court
of Appeals in CA-G.R. SP No. 03392, are
hereby REVERSED and SET ASIDE. The case is
hereby REMANDED to the Regional Trial Court of Mandaue
City, Branch 56, to resolve the Motion for Reconsideration filed
by the spouses Cabrera on the merits within five (5) days from
the finality of this Decision.

SO ORDERED.

16
G.R. No.182157 August 17, 2015
ANLUD METAL RECYCLING CORPORATION, as
represented by ALFREDO A. DY, Petitioner,
vs.
JOAQUIN ANG, Respondent.
DECISION
SERENO, CJ:
We resolve the Petition for Review 1 filed by petitioner Anlud
Metal Recycling Corporation, which assails the Decision and
Resolution of the Court of Appeals (CA) in CA-G.R. SP No.
97124. 2 The CA affirmed the Decision and Order of the
Regional Trial Court (RTC) in Criminal Case No. 12691-2004-
C 3 dismissing the charge of estate against respondent Joaquin
Ang; 4
The antecedent facts are as follows:
San Miguel Packaging Products-Metal Closures Lithography
Plant (SMC-MCLP) allegedly awarded petitioner an exclusive
contract to purchase its aluminum-and tin-based scrap
materials from 20 March 2003 to 31 January 2004. However,
on 23 January 2004, the President of Anlud Metal Recycling
Corporation Found that SMC-MCLP’s employee ConradoAlday
had allowed Nenita B. Dela Cruz to load
scrap materials in two trucks! owned by respondent Ang, which
were then operated by his truck drivers Edjanel Jose Paniergo
and Renato Bagauana.
Based on the narration of petitioner, Dela Cruz pretended to be
an agent of Anlud Metal Recycling Corporation when she
arranged for the transport of the scrap materials. She had
allegedly coordinated the hauling with Alday, who was then
working for SMC-MCLP. Alday purportedly allowed the trucks
driven by Paniergo and Bagaua to enter the plant and load the
scrap materials in the cargoes based on a false representation
that the transaction was authorized by petitioner. Fortunately,
the two trucks was not able to leave the premises of SMC-
MCLP.
Petitioner lodged a Complaint for attempted estafa through
falsification of commercial/private document against Alday,
Dela Cruz, Paniergo, Bagaua, and respondent Ang.
Subsequently, the Investigating Prosecutor caused the filing
with the RTC of an Information for estafa under Article 315,
paragraph 2( a) of the Revised Penal Code, which reads as
follows: 5
That on or about January 23, 2004 at Brgy. Canlubang, in the
City of Calamba and within the jurisdiction of this Honorable
Court, the above-named accused, conspiring, confederating
and mutually helping one another, with intent to defraud by
means of fraudulent acts executed prior to or simultaneously
with the commission of the fraud, did then there unlawfully,
willfully and feloniously pretend to possess business or
imaginary transactions by claiming that he has the authority
from complainant Anlud Metal Recycling Corporation to
withdraw from San Miguel Corp - Metal Closure Lithography
Plant (SMC MCLP), when in truth and in fact they were not and
as a consequence, they were able to withdraw thirty (30) metric
tons of Aluminum Scraps from the said SMC-MCLP estimated
at more than ₱500,000 using the name of Anlud Metal
Recycling Corporation (ANLUD), which was charged to the
latter's account, to its damage and prejudice in the amount of
PS00,000.
CONTRARY TO LAW.
The RTC issued a Warrant of Arrest 6 on 26 October 2004
against Ang and his co-accused. Thereafter, respondent filed a
Petition for Reinvestigation and a Motion for Preliminary
Investigation before the City Prosecutor's Office. He also filed
with the RTC an Urgent Motion to Suspend Proceedings
Pending Reinvestigation and to Recall Order of Arrest Against
Accused Movant Joaquin Ang. 7
In its Order dated 20 January 2005, 8 the RTC denied the
motion filed by Ang. It ruled that his allegations were not
supported by evidence; and that based on the facts of the
case, there was a reasonable ground to engender a well-
founded belief that he had committed estafa.
In contrast, on 3 February 2005, the City Prosecutor's Office
issued its Resolution on Reconsideration 9 absolving
respondent from the offense charged. It discussed that
although he owned the trucks that carried the scrap materials,
the theory of conspiracy had no foundation absent any proof
that he had performed any overt act of estafa. It also
highlighted the fact that he was not present at the time of the
incident. As a result, the City Prosecutor's Office filed an
Amended Information, 10 which no longer included him as an
accused.
Petitioner bewailed the dropping of respondent from the
charge. Thus, it filed with the Department of Justice (DOJ) a
Petition for Review, which the latter granted. 11 According to
the DOJ, respondent could not be considered innocent of
estafa, since (1) his denial was self-serving; (2) he owned the
trucks used in loading the scrap materials; (3) he failed to
adduce exculpatory evidence showing that it was Dela Cruz
who had commanded the use of his trucks; ( 4) the drivers of
the trucks were respondent's own; and (5) it can be inferred
from the action of the truck drivers that they received
instructions from him. Respondent filed a Motion for
Reconsideration, but to no avail. 12 Thus, a Second Amended
Information 13 was filed with the RTC, which already named
Ang as one of the accused. On 16 June 2006, respondent
sought judicial relief by filing an Omnibus Motion to Determine
Probable Cause and to Defer Issuance of Warrant of Arrest
Until Determination of Probable Cause Is Completed (Omnibus
Motion). 14 Petitioner filed its Comment/Opposition 15 thereto on
7 July 2006. ·
This time around, the court took a different stance. In its
Decision dated 18 September 2006, the RTC dismissed the
case against respondent for want of probable cause. It
explained that mere ownership of the trucks did not make
respondent a co-conspirator for estafa. For conspiracy to be
appreciated against Ang, the trial court required proof showing
that he knew of the crime, consented to its commission, or
performed any of its elements.
17
Petitioner filed a Motion for Reconsideration 16 and a Motion for
Inhibition, 17 but both were denied through the RTC Order
dated 3 October 2006. 18 The court reiterated in its ruling that
"in the resolution of the judicial determination of probable
cause, the court is not bound and cannot be bound by the
findings of the Secretary of Justice in the existence of probable
cause and hold the accused for trial." 19
Unrelenting, petitioner questioned the dismissal of Ang's
criminal case before the CA. In its Decision dated 4 December
2007, and subsequent Resolution dated 13 March 2008, the
CA gave due course to the Petition for
Certiorari 20 notwithstanding that Anlud Metal Recycling
Corporation had appealed without the participation of the Office
of the Solicitor General (OSG), which was supposed to act on
behalf of the People of the Philippines.
However, the petition failed on the merits. Petitioner had
argued before the CA that the RTC should not have
entertained respondent's Omnibus Motion, because its Notice
of Hearing was addressed only to the public prosecutor and not
to petitioner. The CA rejected this argument and ruled that the
"absence of a notice to a private prosecutor although the public
prosecutor has been notified is a matter that is for a trial judge
to consider in his sound discretion." 21
Petitioner also failed to dispute the RTC's ruling to exclude Ang
as an accused in the crime of estafa. According to the CA,
since the trial court had conducted an independent evaluation,
the fact alone that the latter reversed its earlier finding of
probable cause did not amount to grave abuse of discretion;
and any error of the RTC was an error of judgment not
correctible by certiorari.
Aggrieved, petitioner filed the instant petition before this Court
and raised the following contentions: (1) the RTC had no
jurisdiction to determine probable cause; (2) it abused its
discretion when it entertained respondent's Omnibus Motion for
determination of probable cause despite a defective Notice of
Hearing; and (3) it erred in dismissing the charge of estafa
against Ang. In turn, respondent filed a Comment, 22 which
included the issue of petitioner's standing to file this appeal
without the participation of the OSG. Petitioner submitted its
Reply 23 to refute the allegations of respondent.
RULING OF THE COURT
Petitioner has no personality to appeal the dismissal of the
criminal case for estafa before this Court. Before the Court
proceeds with the substantive issues in this case, the
procedural issue of petitioner's personality to appeal the
dismissal of the criminal case merits preliminary attention.
Petitioner argues that since the CA has already ruled upon this
issue, without respondent filing a partial appeal, then the latter
has already lost its right to question the standing of Anlud
·Metal Recycling Corporation. This argument is unmeritorious.
In the past, the Court has motupropre ascertained the standing
of a private offended party to appeal the dismissal of a criminal
case.24
In any event, respondent cannot be considered to have waived
its argument regarding the personality of petitioner to file the
instant appeal. In his Comment, respondent cites Republic v.
Partisala 25 and asserts that petitioner has no right to appeal
the dismissal of the criminal case absent the participation of
the OSG. In its Reply, petitioner responds by quoting the ruling
of the CA, viz: 26
As argued by petitioner, citing the case of Perez v. Hagonoy
Rural Bank, Inc., the petitioner, as private complainant, has
legal personality to impugn the dismissal of the criminal case
against the private respondent under Rule 65. As private
offended party, the petitioner has an interest in the civil aspect
of the case; thus, it may file a special civil action for certiorari
and prosecute the same in its own name without making the
People of the Philippines a party. While it is only the Solicitor
General who may bring or defend actions in behalf of the
Republic of the Philippines, or represent the People or State in
criminal proceedings pending in the Supreme Court and the
Court of Appeals, the private offended party retains the right to
bring a special civil action for certiorari in his own name in
criminal proceedings before the courts of law.
Notably, both positions taken by the parties are supported by
jurisprudence. It is then proper for this Court to clarify the
standing of a private offended party - in this case, petitioner - to
appeal the dismissal of the criminal case against the accused,
who in this case is respondent.
The real party in interest in a criminal case is the People of the
Philippines. Hence, if the criminal case is dismissed by the trial
court, the criminal aspect of the case must be instituted by the
Solicitor General on behalf of the State. 27
As a qualification, however, this Court recognizes that the
private offended party has an interest in the civil aspect of the
case. 28 Logically, the capability of the private complainant to
question the dismissal of the criminal proceedings is limited
only to questions relating to the civil aspect of the case. 29 It
should ideally be along this thin framework that we may
entertain questions regarding the dismissals of criminal cases
instituted by private offended parties. Enlarging this scope may
result in wanton disregard of the OSG's personality, as well as
the clogging of our dockets, which this Court is keen to avoid.
Therefore, the litmus test in ascertaining the personality of
herein petitioner lies in whether or not the substance of the
certiorari action it instituted in the CA referred to the civil aspect
of the case. 30
Here in this Rule 45 petition, petitioner argues that the RTC
erred when it concluded that "there is no evidence of
conspiracy against private respondent Ang." Petitioner goes on
to enumerate circumstances that collectively amount to a
finding that based on probable cause, respondent conspired
with the accused in defrauding Anlud Metal Recycling
Corporation.: 31
Clearly, petitioner mainly disputes the RTC's finding of want of
probable cause to indict Ang as an accused for estafa. This
dispute refers, though, to the criminal, and not the civil, aspect
of the case. In Jimenez v. Sorongon 32we similarly ruled:
In this case, the petitioner has no legal personality to assail the
dismissal of the criminal case since the main issue raised by
the petitioner involved the criminal aspect of the case, i.e., the
existence of probable cause. The petitioner did not appeal to
protect his alleged pecuniary interest as an offended party of
18
the crime, but to cause the reinstatement of the criminal action
against the respondents. This involves the right to prosecute
which pertains exclusively to the People, as represented by the
OSG. (Emphasis supplied)
Given that nowhere in the pleadings did petitioner even briefly
discuss the civil liability of respondent, this Court holds that
Anlud Metal Recycling Corporation lacks the requisite legal
standing to appeal the discharge of respondent Ang from the
Information for estafa. On this ground alone, the petition
already fails. 33
Nonetheless, this Court has already acknowledged the interest
of substantial justice, grave error committed by the judge, and
lack of due process as veritable grounds to allow appeals to
prosper despite the non participation of the OSG. 34 But as will
be discussed below, petitioner has failed to demonstrate that
the petition falls under any of these exceptions.
The RTC may conduct a judicial determination of probable
cause.
Petitioner explains that there are two determinations of
probable cause: the first is for the purpose of filing a criminal
information in the court, and the second is for the issuance of a
warrant of arrest. Petitioner submits that since the first kind is
executive in nature, then the RTC had absolutely no jurisdiction
to determine the existence of probable cause to hold
respondent as an accused in the crime of estafa.
Hence, for petitioner, the RTC grievously erred when it gave
due course to the Omnibus Motion of respondent, which
questioned the determination of probable cause by the
prosecutor. Respondent counters this argument by alleging
that the RTC may resolve issues brought before it pursuant to
the power of the court to administer justice.
Petitioner's interpretation of the rules on the determination of
probable cause is inaccurate. Although courts must respect the
executive determination of probable cause, 35 the trial courts
may still independently determine probable cause. They are
not irrevocably bound to the determination of probable cause
by the prosecutor and the DOJ. 36
The trial court actually has the following options upon the filing
of a criminal information: ( 1) immediately dismiss the case if
the evidence on record clearly fails to establish probable
cause; (2) issue a warrant of arrest if it finds probable cause;
and (3) order the prosecutor to present additional evidence
within five days from notice in case of doubt as to the existence
of probable cause. 37 These options are provided in Rule 112,
Section 6 (a) of the Rules of Court, which reads:
SECTION 6. When warrant of arrest may issue.-" (a) By the
Regional Trial Court. -" Within ten ( 10) days from the filing of
the complaint or information, the judge shall personally
evaluate the resolution of the prosecutor and its supporting
evidence. He may immediately dismiss the case if the evidence
on record clearly fails to establish probable cause. If he finds
probable cause, he shall issue a warrant of arrest, or a
commitment order if the accused has already been arrested
pursuant to a warrant issued by the judge who conducted the
preliminary investigation or when the complaint or information
was filed pursuant to Section 7 of this Rule. In case of doubt on
the existence of probable cause, the judge may order the
prosecutor to present additional evidence within five (5) days
from notice and the issue must be resolved by the court within
thirty (30) days from the filing of the complaint of information.
(Emphasis supplied)
Indeed, the RTC is allowed to dismiss the charge of estafa
against Ang notwithstanding the executive determination of
probable cause by the prosecutor. If we were to construe
otherwise, we would be contradicting the basic principle that
"once an information is filed in RTC, any disposition of the case
rests already in the sound discretion of the court." 38
Rule 15, Section 5 of the Rules of Court was substantially
complied with.
Citing Rule 15, Section 5 of the Rules of Court, petitioner
regards the Notice of Hearing appended to respondent's
Omnibus Motion as defective. This is because the notice was
addressed only to the public prosecutor and the clerk of court,
and not to the private offended party - petitioner herein. 39
By having a defective Notice of Hearing, petitioner concludes
that the Omnibus Motion was a mere scrap of paper, which the
RTC should have instantly disregarded. Thus, when the RTC,
as affirmed by the CA, gave due course to the motion,
petitioner believes that its right to due process was oppressed.
Petitioner correctly argues that a notice of hearing must be
addressed to all the parties concerned; 40 and that failure to
comply with this directive results in a motion that should be
treated as a mere scrap of paper. 41 However, this general
requirement of a valid notice of hearing is one of those
procedural rules that admit of various exceptions. 42
In Jehan Shipping Corporation v. National Food
Authority, 43 the Court considered the defect in the notice of
hearing as cured, since the adverse party had the opportunity
to be heard and had filed pleadings in opposition to the motion.
In particular, the adverse party was able to argue the
procedural defects and even ventilate substantial arguments.
This same application has already been echoed in our past
decisions. 44 In those cases, the Court observes that the real
purpose behind the requirement of notice of hearing is to afford
the adverse parties a chance to be heard before a motion is
resolved by the court. 45 The test is the presence of the
opportunity to be heard, as well as to have time to study the
motion and meaningfully oppose or controvert the grounds
upon which it is based. 46 Considering the circumstances of the
present case, . we believe that procedural due process has
substantially been complied with.
Petitioner filed a Comment/Opposition on 7 July 2006
specifically to oppose the supposedly defective Omnibus
Motion filed by respondent on 16 June 2006. In that pleading,
petitioner raised the incompleteness of the Notice of Hearing
and likewise argued about the substantive merits - that
probable cause existed to indict Ang as an accused.
Thereafter, the RTC scheduled the hearing for the judicial
determination of probable cause on 16 August 2006, but the
hearing was later rescheduled on 30 August 2006. 47 Only after
these proceedings had transpired did the trial court issue its
assailed Decision on 18 September 2006 finding a want of
19
probable cause to hold Ang for trial for the crime of estafa.
Thereafter, petitioner filed a Motion for Reconsideration on 2
October 2006, which the RTC denied in its Order dated 3
October 2006.
Based on the sequence of events mentioned above, it is clear
that petitioner was given an opportunity to be heard. It
advanced its opposition to the Omnibus Motion when it filed its
Comment/Opposition on 7 July 2006 and later on in its Motion
for Reconsideration dated 2 October 2006. From these facts,
we conclude that Rule 15, Section 5 of the Rules of Court on
notice of hearing was substantially complied with.
Consequently, this Court cannot agree with petitioner that the
latter's right to due process has been denied. In any event,
petitioner cannot anchor the reversal of the finding of want of
probable cause on the mere pretext that the Omnibus Motion
filed by respondent was just a scrap of paper as it contained a
defective Notice of Hearing. The judicial determination of
probable cause may proceed even if the accused does not file
a pertinent motion. As adverted to earlier, the RTC may
immediately dismiss the case if the evidence on record clearly
fails to establish probable cause. 48
The RTC did not exceed its jurisdiction when it dismissed the
charge of estafa against respondent for want of probable
cause.
In the main, petitioner questions the ruling of the CA, which
dismissed its Petition for Certiorari. The CA held that the RTC
did not commit an error of jurisdiction when the latter ruled that
the prosecution failed to establish probable cause against
respondent.
Ordinarily, the detennination of probable cause is not lodged
with this Court. 49 We emphasize that the viewpoint we follow
must conform to the nature of reviewing a CA decision, which
was rendered under Rule 65 of the Rules of Court.
In Hao v. People, [[50] ] we explained that in this situation, the
Court is confronted with the question of whether the CA
correctly determined the presence or absence of grave abuse
of discretion on the part of the trial court, and not on the basis
of whether the latter's assessment of the incidents before it
was strictly legally correct. To recall, grave abuse of discretion
exists when there is an arbitrary or despotic exercise of power
due to passion, prejudice or personal hostility; or a whimsical,
arbitrary or capricious exercise of power that amounts to an
evasion of or a refusal to perform a positive duty enjoined by
law or to act at all in contemplation of law. 51
In this case, the CA no longer dealt with the particular exhibits
relied upon by the RTC to conclude the absence of probable
cause to indict Ang as an accused in the case for estafa. In its
rulings, the RTC reasoned as follows: 52
The fact that the accused is the owner of the truck that carried
the objects of the crime cannot make him a co-conspirator in
the execution of the crime of estafa. An affirmation of this
supposition (sic) open a floodgate for charges against people,
whose only fault was being owners of vehicle used in the
commission of the crime.
x xxx
Upon review and examination of the prosecution evidence in
the judicial determination of probable cause, there is total
absence of any prosecution evidence in their documents
(Annexes "A-1" to "A-9") and witnesses' affidavits (Exhibits "A"
& "B") where this Court can logically surmised nor inferred (sic)
from any of the proven acts of any of the other accused that
Accused Joaquin Ang was in conspiracy with the other
accused in their common criminal unity and intent to defraud
Anlud.
There was nothing from these documents and affidavits that
Accused Joaquin Ang committed, executed or implied any act
leading to a conclusion that he knew the commission of the
crime or performed any of the elements of the offense to
establish that he acted in unison with the other accused. There
was no proof that he benefited from the effects of the crime.
There was no proof that he gave his consent to the
commission of the alleged crime.
In view of this (sic) findings, this Court agrees with the
observation of the Office of the City Prosecutor of Calamba
City in their Resolution on Reconsideration dated 22
September 2004 that absolved Accused Joaquin Ang. To
quote their logic and ratio:
The bone of movant's contention dwells on the theory of
conspiracy which was the basis of his inclusion as one of the
accused. Indubitably, accused Renato Bagaua and Edjanel
Jose were the assigned drivers of his trucks with plate number
UUG 787 and TJL 632 that were chanced upon by the
complainant loading scrap materials inside the premises of San
Miguel Corporation-Metal Closure Lithography Plant (SMC-
MCLP) sometime in January 23, 2004. A careful perusal of the
evidence adduced by the parties will clearly show that moving
was not around at the premises of SMC MCLP during the time
that the other respondents were loading scrap materials on his
truck Neither that he executed any act leading to a conclusion
that he has knowledge thereof or performed any of the
elements of the offense charged to show that he acted in
unison with the accused. There is also no proof that he
benefited, in any manner, from the effects of the crime or gave
his consent to the commission thereof.
Based on the explanation of the RTC, this Court holds that the
CA was correct in not finding grave abuse of discretion on the
part of the trial court.1âwphi1 In referring to the extant facts,
the arguments of the parties, as well as logic and law, the RTC
did not whimsically, arbitrarily, or capriciously ascertain the
absence of probable cause.
Probable cause, albeit requiring less evidence than that which
would justify a conviction, nevertheless implies the probability
of guilt and requires more than bare suspicion. 53 Given that
Ang was implicated in the conspiracy, the trial court correctly
looked into whether respondent performed any overt act as
direct or indirect contribution to the execution of the crime
planned to be committed. 54
As held by the RTC, apart from owning the trucks, no other link
has been established by the prosecution to hold respondent as
a conspirator in the hauling of the scrap materials. Even in the
instant petition,55 petitioner harps only on Ang being engaged
in scrap trading, owning the trucks, and employing the accused
as his truck drivers. Without more, none of these depicts any
20
overt act of respondent connected to the accomplishment of
estafa.

Petitioner relies on the Memorandum submitted by Ang before

the Office of the Provincial Prosecutor of Calamba, Laguna, on
25 September 2004 to argue that respondent admitted his
complicity in the transaction. He purportedly admitted to the
crime when he pleaded: 56

Worse, Alfredo (petitioner's representative) went beyond the

bounds of fairness and good faith by maliciously and recklessly
accusing the poor truck drivers Edjanel and Renato of the
crime when all they did was to drive the truck for their employer
who had negotiated with San Miguel for the purchase of the
scrap material.

This issue was already raised by petitioner in the proceedings

below. Unfortunately, neither the RTC nor the CA discussed
this matter.

Based on our own appreciation then, we find that nowhere in

the above-quoted passage is it indicated that respondent
specifically made a factual admission that he had instructed his
drivers to go to the plant, misrepresent that they were from
Anlud Metal Recycling Corporation, and coordinate the hauling
of the scrap materials with Alday and Dela Cruz. An admission
must be clear; and in this instance, it must take into account
the unwavering position of Ang that he did not conspire with
any of the accused in their alleged scheme to haul scrap
materials with the use of his trucks. 57

All told, we are not inclined to disturb the conclusions of the

RTC, as these are based on the evidence on record. Neither
are we in disagreement with the CA, which remarked that the
dismissal of the criminal action against Ang is "not fatal to the
cause of the public prosecution because such quashal appears
to have been issued at the initial stage of the criminal trial
process." 58 Considering the foregoing, we rule to sustain the
judgments of the courts a quo.

WHEREFORE, the Petition for Review filed by Anlud Metal

Recycling Corporation is DENIED. The Court of Appeals
Decision dated 4 December 2007 and subsequent Resolution
dated 13 March 2008 in CA G.R. SP. No. 97124, affirming the
Regional Trial Court Decision dated 18 September 2006 and
Order dated 3 October 2006 in Criminal Case No. 12691-04-C
are AFFIRMED.

SO ORDERED.

21
G.R. No. 216566, February 17, 2016 contract between Chervin and MAC; and that it already paid
Chervin on January 22, 2009, and on July 13, 2010 in full
MAGELLAN AEROSPACE settlement of its obligations.11
CORPORATION, Petitioner, v. PHILIPPINE AIR
FORCE, Respondent. Chervin also asked the RTC to dismiss the complaint against
them asserting that MAC had no capacity to sue because of its
status as a nonresident doing business in the Philippines
DECISION without the required license, and that no disclosure was made
that it was suing on an isolated transaction which would mean
MENDOZA, J.: that the real party-in-interest was not MAC, but NFSI.12

In this petition1 for review on certiorari under Rule 45 of the
Rules of Court, petitioner Magellan Aerospace Corporation
(MAC) seeks the review of the November 18, 2013
Decision2 and January 26, 2015 Resolution3 of the Court of
Appeals (CA) in CA-G.R. CV No. 96589, insofar as they
sustained the February 14, 2011 Order4 of the Regional Trial
Court, Branch 211, Mandaluyong City (RTC), in dismissing the
complaint5 filed by MAC against the respondent, Philippine Air
Force (PAF).
The Antecedents
On September 18, 2008, PAF contracted Chervin Enterprises,
Inc. (Chervin) for the overhaul of two T76 aircraft engines in an
agreement denominated as "Contract for the Procurement of
Services and Overhaul of Two (2) OV10 Engines." 6 Due to its
lack of technical capability to effect the repair and overhaul
required by PAF, Chervin commissioned MAC to do the work
for US$364,577.00. MAC, in turn, outsourced the overhaul
service from another subcontractor, National Flight Services,
Inc. (NFSI). Eventually, the engines were overhauled and
delivered to the PAF. Satisfied with the service, PAF accepted
the overhauled engines.7
On December 15, 2008, MAC demanded from Chervin the
payment of US$264,577.00 representing the balance of the
contract price. In a letter to the Trade Commission of the
Canadian Embassy, dated December 21, 2009, PAF confirmed
that it had already released to Chervin the amount of
P23,760,000.00, on November 7, 2008, as partial payment for
the overhaul service, and that it withheld the amount of
P2,376,000.00 as retention fund.8
Notwithstanding the release of funds to Chervin, MAC was not
paid for the services rendered despite several demands.
Unpaid, MAC demanded from PAF the release of the retained
amount. In a letter, dated March 3, 2010, however, PAF
rejected the demand and informed MAC that the amount could
not be released as it was being held in trust for Chervin. 9
On February 14, 2011, the RTC granted both motions to
dismiss and ordered the dismissal of the complaint filed by
MAC. The decretal portion of the said order reads:
WHEREFORE, finding defendants CHERVIN ENTERPRISES,
INC. AND ELVI T. SOSING, and public defendant PHILIPPINE
AIR FORCE'S motions to be impressed with merit, the same
are hereby GRANTED.
SO ORDERED.13ChanRoblesVirtualawlibrary
Aggrieved, MAC appealed before the CA.
On November 18, 2013, the CA partly granted MAC's appeal
by reversing the RTC order of dismissal of the complaint
against Chervin and Sosing. It, however, affirmed the dismissal
of the complaint against PAF. The CA explained that MAC
failed to show that PAF had a correlative duty of paying under
the overhauling contract as it was obvious that the contract
was executed only between MAC and Chervin. Thus, the CA
disposed:
We PARTIALLY GRANT the appeal, and REVERSE the Order
dated 14 February 2011 of the Regional Trial Court, Branch
211, Mandaluyong City, insofar as it dismissed the Complaint
against defendants-appellees Chervin Enterprises, Inc., and
Elvi T. Sosing. We REMAND the case to the RTC for the
continuation of proceedings against said defendants-appellees.
IT IS SO ORDERED.14ChanRoblesVirtualawlibrary
MAC moved for a partial reconsideration of the decision but its
motion was denied by the CA in its January 26, 2015
Resolution.
Persistent, MAC filed this petition citing the following
GROUNDS IN SUPPORT OF THE PETITION

On July 6, 2010, MAC filed a complaint10 for sum of money I. THE COURT OF APPEALS ERRED IN
before the RTC against Chervin together with its Managing RULING THAT THE COMPLAINT DOES
Director, Elvi T. Sosing (Sosing), and the PAF. It prayed that NOT STATE A CAUSE OF ACTION
Chervin be ordered to pay the amount of US$264,577.00, plus AGAINST RESPONDENT PAF, WHEN THE
12% legal interest from January 15, 2009 until full payment; COMPLAINT CLEARLY AND
that in the event of failure of Chervin to pay the amount SUFFICIENTLY ALLEGED ULTIMATE
claimed, PAF be ordered to pay the said amount with interest FACTS THAT WILL SHOW AND SUPPORT
and to release the retained amount of P2,376,000.00 plus SUCH CAUSE OF ACTION.
attorneys fees and litigation expenses amounting to
P500,000.00; and that the defendants pay the costs of suit.
II. THE COURT OF APPEALS DECIDED IN A
MAC alleged that Chervin merely acted as an agent of PAF.
MANNER CONTRARY TO LEGAL
PRECEDENT WHEN IT RULED THAT
On August 24, 2010, PAF moved to dismiss the complaint
THERE WAS NO AGENCY
averring that its contract with Chervin was one for repair and
RELATIONSHIP BETWEEN RESPONDENT
overhaul and not for agency; that it was never privy to any
PAF AND CHERVIN/SOSING, AND
22
 DISMISSED THE COMPLAINT BASED ON
FAILURE TO STATE A CAUSE OF
ACTION.
III. THE COURT OF APPEALS DECIDED IN A
MANNER CONTRARY TO LAW AND
LEGAL PRECEDENT WHEN IT FAILED TO
CONSIDER THAT RESPONDENT PAF'S
MOTION TO DISMISS VIOLATED THE
MANDATORY RULE ON NOTICE FOR
MOTIONS AND SHOULD NOT HAVE
BEEN TAKEN COGNIZANCE BY THE RTC
IN THE FIRST PLACE.15
MAC prays that its complaint against PAF be reinstated and
that this Court rule that (1) the CA erred in finding that the
complaint against PAF failed to sufficiently state a cause of
action; (2) the conclusion of the CA that no agency relationship
existed between PAF and Chervin is premature as such
conclusion can only be had after the trial on the merits is
conducted; and (3) PAF violated the three-day notice rule
relative to the motion to dismiss filed before the RTC.
The Court's Ruling
The Court denies the petition.
Cause of action is defined as an act or omission by which a
party violates a right of another.16 In pursuing that cause, a
plaintiff must first plead in the complaint a "concise statement
of the ultimate or essential facts constituting the cause of
action."17 In particular, the plaintiff must show on the face of the
complaint that there exists a legal right on his or her part, a
correlative obligation of the defendant to respect such right,
and an act or omission of such defendant in violation of the
plaintiffs rights.18
Such a complaint may, however, be subjected to an immediate
challenge. Under Section 1(g), Rule 16 of the Rules of Court
(Rules), the defendant may file a motion to dismiss "[w]ithin the
time for but before filing the answer to the complaint or
pleading asserting a claim" anchored on the defense that the
pleading asserting the claim stated no cause of action. 19
In making such challenge, the defendant's issue is not whether
a plaintiff will ultimately prevail, but whether the claimant is
entitled to offer evidence to support the claims. 20 It has nothing
to do with the merits of the case. "Whether those allegations
are true or not is beside the point, for their truth is
hypothetically admitted by the motion."21 The inquiry is then
limited only into the sufficiency, not the veracity of the material
allegations.22 Thus, 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.23 Conversely, the dismissal of the complaint is
permitted if the allegations stated therein fail to show that
plaintiff is entitled to relief.
Accordingly, the survival of the complaint against a Rule 16
challenge depends upon the sufficiency of the averments
made. In determining whether an initiatory pleading sufficiently
pleads, the test applied is whether the court can render a valid
judgment in accordance with the prayer if the truth of the facts
alleged is admitted.24
In this case, MAC seeks the Court's attention to the following
allegations in the complaint as cited in the petition:
5. On or about 18 September 2008, defendant PAF contracted
defendant Chervin for the overhaul of two (2) T76 aircraft
engines, with serial numbers GE-00307 and GE-00039,
respectively.
6. Defendant Chervin did not and does not have the capacity,
technical skilled personnel or tools to directly perform the
overhaul of aircraft engines. In order to perform the overhaul
services, defendant Chervin and its Managing
Director/Proprietor, defendant Sosing, acting for and on behalf
or for the benefit of defendant PAF, commissioned plaintiff to
perform the services and to overhaul the subject aircraft
engines for the price of US$364,577.00.
xxx
10. Meanwhile, on or about 7 November 2008, defendant PAF
released the amount of Twenty Three Million Seven Hundred
Sixty Thousand Pesos (£23,760,000.00) to its agents,
defendants Chervin and Sosing, as payment of 90% of the total
price of the overhaul services. Defendant PAF retained a 10%
retention fund in the amount of Two Million Three Hundred
Seventy Six Thousand Pesos (P2,376,000.00). A copy of
defendant PAF's letter dated 21 December 2009 to Trade
Commissioner of the Canadian Embassy, affirming the PAF's
release and retention of the aforestated sums of money, is
attached hereto as Annex "I".
11. However, notwithstanding defendant PAF's release of
funds covering 90% payment for the repair of the subject
aircraft engines, defendant PAF's agents - defendants Chervin
and Sosing - did not pay plaintiff for the services rendered,
leaving an indebtedness to plaintiff in the amount of Two
Hundred Sixty Four Thousand Five Hundred Seventy Seven
US Dollars (US$264,577.00).
xxx
18. Meanwhile, plaintiff also sent to defendant PAF - as the
principal of defendants Chervin and Sosing, and the
beneficiary of plaintiffs overhaul and repair services which were
commissioned by defendants Chervin and Sosing for and on its
behalf - a demand letter dated 26 January 2010, demanding
the release of the 10% retention amount of Two Million Three
Hundred Seventy Six Thousand Pesos (P2,376,000.00)
directly to plaintiff, as partial payment of the amount owed to it.
A copy of plaintiffs demand letter to defendant PAF is attached
hereto as Annex "M".
19. However, in a reply letter dated 3 March 2010, defendant
PAF rejected plaintiffs demand, alleging that 'the amount of
retention money (P2,376,000.00) withheld by the PAF is kept in
trust for Chervin Enterprises who is the owner thereof. A copy
of defendant PAF's reply letter dated 3 March 2010 is attached
hereto as Annex "N".
20. As defendants Chervin's and Sosing's principal, defendant
PAF must comply with all the obligations which its agents,
defendants Chervin and Sosing, may have contracted within
the scope of their authority (Article 1910, Civil Code of the
Philippines). These obligations include paying plaintiff in full for
the overhaul and repair services performed on defendant
PAF's aircraft engines, which services were commissioned by
23
defendants Chervin and Sosing for and on behalf of defendant short, factual circumstances serving as predicates were not
PAF. provided, to add to MAC's barren statement concerning PAF's
liability.
21. Hence, as the principal of defendants Chervin and Sosing,
and the beneficiary of plaintiffs overhaul and repair services, What MAC entirely did was to state a mere conclusion of law, if
defendant PAF must be made answerable for defendants not, an inference based on matters not stated in the pleading.
Chervin's and Sosing's failure to pay plaintiff. Therefore, as an To clarify, a mere allegation that PAF, as a principal of Chervin,
alternative cause of action in the event that the First Cause of can be held liable for nonpayment of the amounts due, does
Action is not and/or cannot be fully satisfied by defendants not comply with the ultimate fact rule. Without the constitutive
Chervin and Sosing, defendant PAF must be held liable for the factual predicates, any assertion could never satisfy the
outstanding amount of Two Hundred Sixty Four Thousand Five threshold of an ultimate fact.
Hundred Seventy Seven US Dollars (US$264,577.00), plus
12% legal interest thereon from 15 January 2009 until full Not being an ultimate fact, the assumption of truth does not
payment is received.25ChanRoblesVirtualawlibrary apply to the aforementioned allegation made by MAC
concerning PAF. Consequently, the narrative that PAF can be
held liable as a principal in the agreement between Chervin
In essence, MAC asserts that the allegations stating that
and MAC cannot be considered in the course of applying the
Chervin "acted for and in behalf of a "principal," PAF, in tapping
sufficiency test used in Section 1(g) Rule 16. It, therefore,
its services for the overhaul of the aircraft engines, completed
produces no link to the alleged PAF's correlative duty to pay
with the requirements of sufficiency in stating its cause of
the amounts being claimed by MAC - a necessary element of a
action against PAF. MAC claims that its allegation of Chervin
cause of action that must be found in the pleading.
being "mere agents" of PAF in the overhaul contract,
establishes clearly, under the premise of admitting them as
Lacking that essential link, and after hypothetically admitting
true for purposes of a Rule 16 challenge, its entitlement to
the truth of all the allegations other than those that are ought to
recover from PAF, the latter being the "principal" and
be excluded for not being ultimate facts, it is demonstrable that
"beneficiary."
the CA correctly ruled for the dismissal of the complaint on the
ground of MAC s failure to state its cause of action against
The Court is not persuaded.
PAF.
The standard used in determining the sufficiency of the
The foregoing discussion makes plain that the CA did not act
allegations is not as comprehensive as MAC would want to
prematurely in dismissing the complaint. To reiterate, in a
impress.
motion to dismiss filed under Section 1(g) of Rule 16, the issue
is not whether the plaintiff is entitled to relief. Instead, the issue
The assumption of truth (commonly known as hypothetical
is simply whether the plaintiff, on the basis of the allegations
admission of truth), accorded under the test, does not cover all
hypothetically admitted as true, can be permitted to
the allegations pleaded in the complaint. Only ultimate facts or
substantiate the claims during the trial. The trial court only
those facts which the expected evidence will support 26 are
passes upon the issue on the basis of the allegations in the
considered for purposes of the test.27 It does not cover legal
complaint assuming them to be true and does not make any
conclusions or evidentiary facts.
inquiry into the truth of the allegations or a declaration that they
are false.29
The reason for such a rule is quite simple. The standard
requires that "[e]very pleading shall contain in a methodical
Perhaps, the CA might have been misunderstood as, indeed,
and logical form, a plain, concise and direct statement of the
the tenor of its decision apparently gave an untimely
ultimate facts on which the party pleading relies for his claim or
conclusion that no agency relationship existed. Be that as it
defense, as the case may be, omitting the statement of mere
may, this Court affirms the findings of the CA - that the order of
evidentiary facts."28 Thus, trial courts need not overly stretch its
dismissal of MAC s complaint against PAF is proper.
limits in considering all allegations just because they were
included in the complaint. Evidently, matters that are required
Proceeding now to whether PAF violated the three-day notice
and expected to be sufficiently included in a complaint and,
rule relative to its motion to dismiss filed before the RTC, it has
thus, accorded the assumption of truth, exclude those that are
been repeatedly held that the three 3-day notice requirement in
mere legal conclusions, inferences, evidentiary facts, or even
motions under Sections 4 and 5, Rule 15 of the Rules of Court
unwarranted deductions.
as mandatory for being an integral component of procedural
due process.30 Just like any other rule, however, this Court has
In this case, the averment that Chervin acted as PAF's mere
permitted its relaxation subject, of course, to certain conditions.
agents in subsequently contracting MAC to perform the
Jurisprudence provides that for liberality to be applied, it must
overhauling services is not an ultimate fact. Nothing can be
be assured that the adverse party has been afforded the
found in the complaint that can serve as a premise of PAF's
opportunity to be heard through pleadings filed in opposition to
status as the principal in the contract between Chervin and
the motion. In such a way, the purpose behind the three-day
MAC. No factual circumstances were alleged that could
notice rule is deemed realized. In Anama v. Court of
plausibly convince the Court that PAF was a party to the
Appeals,31 the Court explained:
subsequent outsourcing of the overhauling services. Not even
in the annexes can the Court find any plausible basis for the
assertion of MAC on PAF's status as a principal. Had MAC In SomeraVda. De Navarro v. Navarro, the Court held that
went beyond barren words and included in the complaint there was substantial compliance of the rule on notice of
essential supporting details, though not required to be overly motions even if the first notice was irregular because no
specific, this would have permitted MAC to substantiate its prejudice was caused the adverse party since the motion was
claims during the trial and survive the Rule 16 challenge. In not considered and resolved until after several postponements

24
of which the parties were duly notified.
Likewise, in Jehan Shipping Corporation v. National Food
Authority, the Court held that despite the lack of notice of
hearing in a motion for reconsideration, there was substantial
compliance with the requirements of due process where the
adverse party actually had the opportunity to be heard and had
filed pleadings in opposition to the motion. The Court held:
chanRoblesvirtualLawlibrary
This Court has indeed held time and again, that under Sections
4 and 5 of Rule 15 of the Rules of Court, mandatory is the
requirement in a motion, which is rendered defective by failure
to comply with the requirement. As a rule, a motion without a
notice of hearing is considered pro forma and does not affect
the reglementary period for the appeal or the filing of the
requisite pleading.32
Here, the Court agrees with the observations of the OSG,
representing PAF. Indeed, it is a matter of record that during
the August 21, 2010 scheduled hearing, MAC's counsel did not
object to receiving the copy of PAF's motion to dismiss on the
same day. What that counsel did instead was to ask for a
period of 15 days within which to file its comment/opposition to
the said motion which the RTC granted. On September 14,
2010, MAC filed its Opposition.33
Clearly, MAC was afforded the opportunity to be heard as its
opposition to the motion to dismiss was considered by the RTC
in resolving the issue raised by PAF. Objectively speaking, the
spirit behind the three (3)-day notice requirement was satisfied.
subcontracted to it is concerned. Subcontractors are also
bound by the same nationality requirement that applies to
the principal suppliers.34
[Emphases Supplied]
Were the above stated rules adhered to? As the Court has no
time and resources to probe into the matter, it is in the interest
of the public that separate investigations be conducted by the
Office of the Ombudsman and the Commission on Audit to find
out if the provisions in the Government Procurement Reform
Act (Procurement Law) and its implementing rules and
regulations on subcontracting and participation of foreign
suppliers of services were complied with.
If warranted by any initial finding of irregularities, appropriate
charges should be filed against the responsible
officers.chanrobleslaw
WHEREFORE, the petition is DENIED.
The Office of the Ombudsman and the Commission on Audit
are hereby ordered to investigate and find out if the provisions
in the Procurement Law and its implementing rules and
regulations on subcontracting and participation of foreign
bidders were complied with and file the appropriate charges, if
warranted.
SO ORDERED.cralawlawlibrary

One Final Note

The Court has observed that Chervin was allowed and

considered qualified to bid despite the fact that it had no
technical capability to provide the services required by the
PAF. It is quite disturbing that after Chervin's initial
subcontracting agreement with MAC, another layer of
subcontractor entered the scene so that the overhaul and
repair could be completed. Moreover, it appears that the
subcontractors engaged by Chervin are foreign entities.

These arrangements appear to be non-compliant with the rules

on subcontracting particularly on disclosure and the limits on
the participation of foreign entities. Under the Government
Procurement Policy Board (GPPB) Manual of Procedures for
the Procurement of Goods and Services, subcontracting rules
are laid down as follows:

Generally, a supplier may be allowed to subcontract a portion

of the contract or project. However, the supplier should not be
allowed to subcontract a material or significant portion of the
contract or project, which portion must not exceed twenty
percent (20%) of the total project cost. The bidding documents
must specify what are considered as significant/material
component(s) of the project. All subcontracting
arrangements must be disclosed at the time of bidding,
and subcontractors must be identified in the bid submitted
by the supplier. Any subcontracting arrangements made
during project implementation and not disclosed at the
time of the bidding shall not be allowed. The subcontracting
arrangement shall not relieve the supplier of any liability or
obligation under the contract. Moreover, subcontractors are
obliged to comply with the provisions of the contract and shall
be jointly and severally liable with the principal supplier, in case
of breach thereof, in so far as the portion of the contract
25
G.R. No. 182673 October 5, 2009
AQUALAB PHILIPPINES, INC., Petitioner,
vs.
HEIRS OF MARCELINO PAGOBO, namely: PELAGIO
PAGOBO, GONZALO PAGOBO, ANIANA PAGOBO,
ALFREDO SALVADOR, SAMUEL PAGOBO, REMEDIOS
PAGOBO, VALENTINA PAGOBO, JONATHAN PAGOBO,
VIRGILIO PAGOBO, FELISA YAYON, SIMPLICIO YAYON,
BARTOLOME YAYON, BERNARDINA YAYON, and ISIDRA
YAYON; HEIRS OF HILARION PAGOBO, namely: PABLO
PAGOBO, ALFREDO PAGOBO, FELIX PAGOBO, RUFINA
P. DAHIL, BRIGIDA P. GODINEZ, HONORATA P. GODINEZ,
MAXIMO PAGOBO, ADRIANA PAGOBO, CECILIA
PAGOBO, LILIA PAGOBO, CRESCENCIO PAGOBO,
ROBERTO PAGOBO, ALFONSO PAGOBO, CANDIDO
PAGOBO, BARTOLOME PAGOBO, ELPIDIO PAGOBO,
PEDRO PAGOBO, ROGELIO PAGOBO, SHIRLEY P.
CAÑETE, MILAGROS PAGOBO, JUANITO PAGOBO, JR.,
ANTONIO PAGOBO, IRENEA PAGOBO, and ANIANO P.
WAGWAG; HEIRS OF ANTONIO PAGOBO, namely:
GAUDENCIO PAGOBO, LOTITA PAGOBO, ERNESTO
PAGOBO, ROMANA P. DANIL, FELISA PAGOBO, CARMEN
PAGOBO, and SALUD PAGOBO; HEIRS OF MAXIMO
PAGOBO, namely: RAMON PAGOBO, RODULFO
PAGOBO, CRIPSIN PAGOBO, and URBANO
PAGOBO; HEIRS OF DONATA PAGOBO WAGWAG,
namely: FELISA WAGWAG, ANASTACIO WAGWAG,
FILDEL WAGWAG, and NEMESIA WAGWAG; HEIR OF
AQUILINA PAGOBO: VICTOR PAGOBO; HEIRS OF
JUANITO PAGOBO EYAS, namely: MARCELO P. EYAS,
ROCHI P. FLORES, and ORDIE P. FLORES; HEIRS OF
CATALINA PAGOBO, namely: RESTITUTO PAGOBO,
CARLINA P. TALINGTING, TEOFILO P. TALINGTING, and
JUANITO P. TALINGTING, Respondents.
DECISION
VELASCO, JR., J.:
The Case
In this Petition for Review on Certiorari under Rule 45, Aqualab
Philippines, Inc. (Aqualab) assails the March 15, 2007
Decision1 and April 22, 2008 Resolution2 of the Court of
Appeals (CA) in CA-G.R. CV No. 58540, which reversed the
September 30, 1997 Order3 of the Regional Trial Court (RTC),
Branch 53 in Lapu-lapu City, Cebu. The RTC dismissed Civil
Case No. 4086-L for Partition, Declaration of Nullity of
Documents, Cancellation of Transfer Certificate of Titles,
Reconveyance with Right of Legal Redemption, Damages and
Attorney’s Fees filed by respondents.
The Facts
Subject of the complaint initiated by respondents are Lots
6727-Q and 6727-Y of the OponCadastre, situated in Punta
Engaño, Lapu-lapu City, Mactan Island, Cebu, particularly
described as follows:
LOT NO. 6727-Q
A parcel of land (Lot 6727-Q of the subdivision on plan (LRC)
Psd-117050, being a portion of Lot 6727 of the Cadastral
Survey of Opon, L.R.C. (GLRO) Cad. Rec. No. 1004), situated
in the Barrio of Punta Engaño, City of Lapu-lapu, Island of
Mactan x xx containing an area of ONE THOUSAND (1,000)
SQUARE METERS, more or less. All points referred to are
indicated on the plan and marked on the ground as follows: x
xx date of the original survey, Aug. 1927 – Dec. 1928, and that
of the subdivision survey, Aug. 7, and 10, 1963, and Sept. 27
and 30, 1967.
LOT NO. 6727-Y
A parcel of land (Lot 6727-Y of the subdivision on plan (LRC)
Psd-117050, being a portion of Lot 6727 of the Cadastral
Survey of Opon, L.R.C. (GLRO) Cad. Rec. No. 1004), situated
in the Barrio of Punta Engaño, City of Lapu-lapu, Island of
Mactan x xx containing an area of SIXTEEN THOUSAND ONE
HUNDRED SIXTY SEVEN (16,167) SQUARE METERS, more
or less. All points referred to are indicated on the plan and
marked on the ground as follows: x xx date of the original
survey, Aug. 1927 – Dec. 1928, and that of the subdivision
survey, Aug. 7, and 10, 1963, and Sept. 27 and 30, 1967.
Lot 6727-Q and Lot 6727-Y used to form part of Lot 6727
owned by respondents’ great grandfather, Juan Pagobo,
covered by Original Certificate of Title No. (OCT) RO-
22464 containing an area of 127,436 square meters.
Lot 6727 was once covered by Juan Pagobo’s homestead
application. Upon his death on January 18, 1947,5 his
homestead application continued to be processed culminating
in the issuance on December 18, 1969 of Homestead Patent
No. 128470 for Lot 6727. On the basis of this homestead
patent, OCT RO-2246 was issued in the name of Juan
Pagobo. Apparently, from the description of the subdivision lots
of Lot 6727, particularly those of subject Lots 6727-Q and
6727-Y above, and even before the issuance of OCT RO-2246,
the mother Lot 6727 was surveyed in 1963 and 1967 and
eventually subdivided into 34 subdivision lots denominated as
Lots 6727-A to 6727-HH.
Incidentally, on the same date that OCT RO-2246 was issued
covering Lot 6727, OCT RO-12776 was likewise issued also
covering Lot 6727 in the name of the late Juan Pagobo also
pursuant to Homestead Patent No. 128470. Subsequently,
however, on August 10, 1977, OCT RO-1277 was canceled for
being null and void pursuant to an Order issued on August 4,
1977 by the Court of First Instance in Lapu-lapu City in view of
the issuance of OCT RO-2246.7
Shortly after OCT RO-1277 and OCT RO-2246 were issued,
subject Lots 6727-Q and 6727-Y were subsequently sold to
Tarcela de Espina who then secured Transfer Certificate of
Title No. (TCT) 32948 therefor on April 21, 1970. The purchase
by Tarcela de Espina of subject Lot 6727-Y from the heirs of
Juan Pagobo and subject Lot 6727-Q from one Antonio
Alcantara was duly annotated on the Memorandum of
Incumbrances of both OCT RO-12779 and OCT RO-2246.10
Subsequently, Tarcela de Espina sold subject lots to Rene
Espina who was issued, on September 28, 1987, TCT
1783011 for Lot 6727-Q and TCT 1783112 for Lot 6727-Y.
Thereafter, Rene Espina sold subject lots to Anthony
26
GawKache, who in turn was issued TCT 17918 13 and TCT
18177,14 respectively, on November 9, 1987. Finally, Aqualab
acquired subject lots from Anthony GawKache and was issued
TCT 1844215 and TCT 18443,16respectively, on May 4, 1988.
On August 10, 1994, respondents, alleging that Aqualab has
disturbed their peaceful occupation of subject lots in 1991, filed
a Complaint17 for Partition, Declaration of Nullity of Documents,
Cancellation of Transfer Certificate of Titles, Reconveyance
with Right of Legal Redemption, Damages and Attorney’s
Fees against Aqualab, the Register of Deeds of Lapu-Lapu
City, Cebu, and, for being unwilling co-plaintiffs and alleged
refusal to have subject lots partitioned, the Heirs of
BernabePagobo, namely: AnastacioPagobo, Demetrio Pagobo,
Felix Pagobo, Olympia P. Tampus, DamasaPagobo, Salud P.
Maloloy-on, Candida Pagobo, and Adriana P. Mahusay.
The Complaint pertinently alleged that:
ALLEGATIONS COMMON TO ALL CAUSE OF ACTION
4. Plaintiffs are the absolute and legal owners and rightful
possessors of Lot [no.] 6727-Q and Lot no. 6727-Y. These are
ancestral lands which are part of a bigger parcel of land,
registered in the name of the plaintiffs’ great grandfather Juan
Pagobo and more particularly described as follows:
x xxx
5. Ownership and Possession by plaintiff’s [sic] predecessors-
in-interest, and plaintiffs herein, respectively, over the said
land, have been peaceful, continuous [sic] open, public and
adverse, since the year 1936 or even earlier. Their peaceful
possession was disturbed only in 1991 as hereinafter
described.
x xxx
15. In the records with the office of the Registry of Deeds of
Lapu-Lapu City, Lot No. 6727 of the OponCadastre has been
subdivided in to THIRTY-FOUR (34) lots and are denominated
as Lots Nos. 6727-A to 6727-HH, respectively, as per
subdivision plan, a machine copy of which is hereto attached
and marked as Annex "A" hereof.
16. Defendants AnastacioPagobo, x xx are the surviving
children and grandchildren, respectively, of the late BERNABE
PAGOBO and are herein joined as party-defendants for being
"unwilling co-plaintiffs"; and also because despite demands by
plaintiffs upon these aforenamed defendants for the partition of
the aforesaid land, the latter refused and still refuses to have
the same partitioned.
FIRST CAUSE OF ACTION AGAINST DEFENDANT
AQUALAB PHILIPPINES, INC. AND SANTIAGO TANCHAN,
JR.
17. Sometime in 1991, defendant Aqualab Philippines Inc.
represented by Santiago Tanchan, Jr., claiming ownership of
Lot Nos. 6727-Q and 6727-Y, forcibly entered, and without any
court Order, and against the will of the plaintiffs, said Lot no.
6727-Q and Lot no. 6727-Y. The truth of the matter is that
these defendants despite full knowledge that absolute and
legal ownership of Lot no. 6727-Q and Lot no. 6727-Y
belonged to plaintiffs, and despite knowledge that peaceful,
public and adverse possession were being continuously
exercised by plaintiff over said land for a period in excess of
THIRTY (30) years, did there and then, by the use of fraud and
misrepresentation and without informing the plaintiffs, caused
the transfer into the name of defendant Aqualab Philippines
Inc., Lot no. 6727-Q and Lot no. 6727-Y, consisting of an area
of ONE THOUSAND (1,000) SQUARE METERS and
SIXTEEN THOUSAND ONE HUNDRED SIXTY SEVEN
(16,167) SQUARE METERS, respectively. Lots No. 6727-Q
and Lot no. 6727-Y are presently covered by Transfer
Certificate of Titles No. 18442 and CTC No. 18443,
respectively, copies of which are hereto attached as Annexes
"B" and "C", respectively.
18. The defendants entered into transactions of the lands
subject matter of this case, without the knowledge of plaintiffs
and their predecessors-in-interest, and defendants did so
despite full knowledge that ownership of said lands belonged to
plaintiffs and their predecessors-in-interest; and that
defendants entered into said transactions despite full
knowledge by them and their predecessors-in-interest that the
lots was [sic] covered by a homestead patent and as such
cannot be alienated within twenty-five (25) years from its
issuance on February 10, 1970.
SECOND CAUSE OF ACTION
x xxx
20. Granting, without necessarily admitting, that the transaction
entered into by the defendants are legal and binding; Plaintiffs
then have not been duly notified of the said sale and therefore,
have the right to redeem the same under Article 1620 in
relation to Article 1623 of the New Civil Code, and also under
Commonwealth Acts [sic] No. 141, as amended.18
On August 26, 1994, the heirs of BernabePagobo filed their
Answer,19 asserting that subject Lot 6727-Y was owned by
their predecessor BernabePagobo as evidenced by Tax
Declaration No. (TD) 00520.20 They maintained that even
before the Second World War and before the death of Juan
Pagobo on January 18, 1947, BernabePagobo already had
possession of subject Lot 6727-Y which was the portion
assigned to him. Moreover, they contended that respondents
never made any demands for partition of subject Lot 6727-Y.
On September 12, 1994, Aqualab filed its Motion to
Dismiss21 on the grounds of: (1) prescription of the action for
declaration of nullity of documents, cancellation of transfer
certificates of title, and reconveyance; and (2) no cause of
action for partition and legal redemption of the mother title of
subject lots, i.e., OCT RO-2246 had already been subdivided
and several conveyances made of the subdivided lots.
Ruling of the Trial Court
By Order dated September 30, 1997, the RTC granted
Aqualab’s motion and dismissed respondents’ complaint,
disposing as follows:
27
Wherefore, in the light of the foregoing considerations,
defendant Aqualab’s motion to dismiss, being impressed with
merit, is hereby granted. The complaint in the above-entitled
case is hereby dismissed.
SO ORDERED. 22
In granting Aqualab’s motion to dismiss, the trial court ruled
that prescription has set in. Moreover, the trial court held that
Aqualab is an innocent purchaser for value and, thus, its rights
are protected by law. Finally, it concluded that legal redemption
or reconveyance was no longer available to respondents.
Undaunted, respondents appealed the above dismissal to the
CA. The parties thereafter filed their respective briefs.
Ruling of the Appellate Court
The CA saw things differently. On March 15, 2007, it rendered
the assailed decision, reversing the September 30, 1997 Order
of dismissal by the RTC, declaring the sale of subject lots as
null and void, and remanding the case to the trial court for
partition proceedings. The fallo reads:
WHEREFORE, in view of the foregoing premises, the Order of
the Regional Trial Court dismissing the instant Complaint for
Partition, Declaration of Nullity of Documents, Cancellation of
Transfer Certificates of Title, Reconveyance with Right of Legal
Redemption, Damages and Attorney’s Fees, and other Reliefs
is REVERSED and SET ASIDE, and the instant appeal is
GRANTED, hereby declaring the sale of the homestead and
TCT Nos. 18442 and 18443 under the name of Aqualab null
and void, and ordering the Register of Deeds for the City of
Lapu-lapu to cancel both certificates of title and to issue new
certificates of title over Lots 6727-Q and 6727-Y under the
name of appellants, and let this case be REMANDED to the
trial court for the presentation of evidence on the claim for
partition and for damages.
SO ORDERED.23
The CA resolved the following issues: (1) the propriety of the
dismissal of the complaint by the RTC; and, (2) whether
respondents have the right to redeem subject lots. The CA
ruled that the trial court erred in dismissing the complaint as
the sale of subject lots to Tarcela de Espina was void, thus
making the subsequent conveyances ineffective and no titles
were validly transferred. Moreover, it ruled that Aqualab is not
an innocent purchaser for value, and held that respondents, as
heirs of the homestead grantee, never lost their valid title to the
subject lots.
Through the equally assailed April 22, 2008 Resolution, the CA
denied Aqualab’s motion for reconsideration.
Hence, we have this petition.
The Issues
(A)
WHETHER OR NOT THE COURT OF APPEALS
COMMITTED A RADICAL DEPARTURE FROM THE USUAL
AND ACCEPTED COURSE OF JUDICIAL PROCEEDINGS
THAT WOULD WARRANT THE REVERSAL OF THE COURT
OF APPEALS’ DECISION
(B)
WHETHER OR NOT THE COMPLAINT SHOULD BE
DISMISSED COMPLAINT [SIC] ON THE GROUND OF LACK
OF CAUSE OF ACTION
(C)
WHETHER OR NOT THE TRANSFERS OF THE DISPUTED
PROPERTY TO HEREIN PETITIONER’S PREDECESSORS-
IN-INTEREST WERE VIOLATIVE OF THE FIVE (5) YEAR
PROHIBITIVE PERIOD UNDER SECTION 118 OF THE
PUBLIC LAND ACT SO AS TO WARRANT THEIR
NULLIFICATION
(D)
WHETHER OR NOT THE PETITIONER IS AN INNOCENT
PURCHASER IN GOOD FAITH
(E)
WHETHER OR NOT THE RESPONDENTS’ CAUSE OF
ACTION HAS PRESCRIBED WARRANTING THE DISMISSAL
OF THEIR COMPLAINT ON THE GROUND OF
PRESCRIPTION
(F)
WHETHER OR NOT THE RESPONDENTS’ COMPLAINT
CONSTITUTES A COLLATERAL ATTACK AGAINST THE
TITLES OF HEREIN PETITIONER’S PREDECESSORS-IN-
INTEREST WARRANTING THE DISMISSAL THEREOF
(G)
WHETHER OR NOT THE RESPONDENTS’ APPEAL
BEFORE THE COURT OF APPEALS SHOULD HAVE BEEN
DISMISSED IN VIEW OF THE RESPONDENTS’ ADMISSION
THAT THE CONVEYANCE OF THE DISPUTED PROPERTY
TO HEREIN PETITIONER WAS VALID
(H)
WHETHER OR NOT THE COURT OF APPEALS DEPRIVED
THE PETITIONER OF ITS PROPERTY WITHOUT DUE
PROCESS OF LAW WHEN IT NULLIFIED THE
PETITIONER’S TITLE AND OWNERSHIP OVER SUBJECT
PROPERTY WITHOUT TRIAL THEREBY DEPRIVING THE
PETITIONER OF ITS PROPERTY WITHOUT DUE PROCESS
OF LAW 24
The Court’s Ruling
The petition is partly meritorious.
28
The core issues raised in the instant petition are factual in
nature and can be summed up into two: first, whether the
action of respondents is barred by prescription; and second,
whether Aqualab is an innocent purchaser for value.
Hypothetical Admission of Factual Allegations
in the Complaint by Filing a Motion to Dismiss
In filing a motion to dismiss, the movant hypothetically admits
the truth of the material and relevant facts alleged and pleaded
in the complaint. The court, in resolving the motion to dismiss,
must consider such hypothetical admission, the documentary
evidence presented during the hearing thereof, and the
relevant laws and jurisprudence bearing on the issues or
subject matter of the complaint.
Dismissal by Trial Court on Prescription and
Finding Defendant an Innocent Purchaser for Value
The trial court ruled that prescription has set in, since
respondents alleged in the complaint fraud and
misrepresentation in procuring the transfer of subject lots, and
such transfer was made on April 21, 1970, while the instant
complaint was filed only on August 10, 1994, or a little over 24
years. Relying on Buenaventura v. Court of Appeals,25 where
the Court held that an action for reconveyance of title due to
fraud is susceptible to prescription either within four or 10
years, the trial court held that the instant action is definitely
barred. It also ruled that even if a constructive trust was
created as averred by respondents, still, the instant action has
prescribed for a constructive trust prescribes in 10 years,
relying on Tenio-Obsequio v. Court of Appeals.26
Moreover, the trial court, also relying on Tenio-Obsequio,
agreed with Aqualab’s assertion that it was an innocent
purchaser for value, which merely relied on the correctness of
the TCTs covering subject lots, i.e., TCT 17918 and TCT
18177 in the name of Anthony GawKache, and, as such,
Aqualab, as vendee, need not look beyond the certificate of
title and investigate the title of the vendor appearing on the
face of said titles.
Finally, the trial court concluded that respondents cannot
invoke legal redemption under Article 1620 in relation to Art.
1623 of the Civil Code and under Commonwealth Act No. (CA)
141, as amended,27 for Lot 6727 had already been divided into
subdivision lots, the subject of numerous transactions.
Besides, it reasoned that legal redemption under CA 141 is
only applicable to cases of proper conveyance of a land
covered by a homestead patent, but not, as in the instant case,
when the conveyances were assailed to be improper.
Aqualab Hypothetically Admitted the Fraudulent
Conveyances
and Respondents’ Possession of Subject Lots
Respondents aver that they are the absolute and lawful owners
of subject properties, i.e., Lots 6727-Q and 6727-Y, over which
they have had actual possession since 1936 or earlier until
sometime in 1991, when Aqualab disturbed such
possession.28 While the records show that respondents did not
have in their names the certificate of titles over subject lots, the
factual assertion of open, peaceful, public, and adverse
possession is hypothetically admitted by Aqualab.
Moreover, respondents allege that the conveyances of subject
lots were fraudulently made in violation of the restrictions on
alienation of homesteads under CA 141, and that said
conveyances were made without their knowledge and, thus,
asserting their right to redeem the subject properties in line
with the policy of CA 141 that the homestead should remain
with the grantee and his family.29 The alleged fraudulent
conveyances were likewise hypothetically admitted by
Aqualab.
On the other hand, Aqualab’s co-defendants, the heirs of
BernabePagobo, to respondents’ complaint, filed their Answer
asserting possession and ownership over subject Lot 6727-Y
by submitting TD 00520 to prove payment of the real estate tax
thereon. However, on the allegation of disturbance of
possession and fraudulent conveyances without knowledge of
respondents, the heirs of BernabePagobo merely maintained
that they had no knowledge and information sufficient to form a
belief as to the truth thereof.
It is, thus, clear that by filing its motion to dismiss, Aqualab
hypothetically admitted the veracity of respondents’ continuous
possession of subject lots until 1991 when Aqualab disturbed
such possession. Aqualab likewise hypothetically admitted the
fraudulent and illegal conveyances of subject lots.
In its Motion to Dismiss, Aqualab moved for the dismissal of
respondents’ complaint on the ground of prescription, that it is
an innocent purchaser for value whose rights are protected by
law, and that the complaint failed to state a cause of action for
partition and legal redemption.
Prescription Is Not Apparent
on the Face of the Complaint
From the foregoing premises, the trial court erred in finding
prescription. Prescription, as a ground for a motion to dismiss,
is adequate when the complaint, on its face, shows that the
action has already prescribed.30 Such is not the case in this
instance. Respondents have duly averred continuous
possession until 1991 when such was allegedly disturbed by
Aqualab. Being in possession of the subject lots—
hypothetically admitted by Aqualab—respondents’ right to
reconveyance or annulment of title has not prescribed or is not
time-barred.
Verily, an action for annulment of title or reconveyance based
on fraud is imprescriptible where the plaintiff is in possession of
the property subject of the acts.31 And the prescriptive period
for the reconveyance of fraudulently registered real property is
10 years, reckoned from the date of the issuance of the
certificate of title, if the plaintiff is not in possession. 32 Thus,
one who is in actual possession of a piece of land on a claim of
ownership thereof may wait until his possession is disturbed or
his title is attacked before taking steps to vindicate his right.33
In the instant case, as hypothetically admitted, respondents
were in possession until 1991, and until such possession is
disturbed, the prescriptive period does not run. Since
respondents filed their complaint in 1994, or three years after
their possession was allegedly disturbed, it is clear that
prescription has not set in, either due to fraud or constructive
trust.
29
Besides, if the plaintiff, as the real owner of the property,
remains in possession of the property, the prescriptive period
to recover title and possession of the property does not run
against him. In such a case, an action for reconveyance, if
nonetheless filed, would be in the nature of a suit for quieting of
title, an action that is imprescriptible.34
Thus, the trial court’s reliance on Buenaventura35 and Tenio-
Obsequio36 for prescription on the right of reconveyance due to
fraud and constructive trust, respectively, is misplaced, for in
both cases, the plaintiffs before the trial court were not in
possession of the lots subject of their action.
Aqualab Not an Innocent Purchaser for Value Due to the
Hypothetically Admitted Respondents’ Possession of
Subject Lots
In the instant case, again based on the hypothetically admitted
allegations in the complaint, it would appear that Anthony
GawKache, Aqualab’s predecessor-in-interest, was not in
possession of subject lots. Such a fact should have put
Aqualab on guard relative to the possessors’ (respondents’)
interest over subject lots. A buyer of real property that is in the
possession of a person other than the seller must be wary, and
a buyer who does not investigate the rights of the one in
possession can hardly be regarded as a buyer in good faith.37
Having hypothetically admitted respondents’ possession of
subject lots, Aqualab cannot be considered, in the context of its
motion to dismiss, to be an innocent purchaser for value or a
purchaser in good faith. Moreover, the defense of
indefeasibility of a Torrens title does not extend to a transferee
who takes it with notice of a flaw in the title of his transferor. 38
The Complaint Sufficiently
States a Cause of Action
Upon the foregoing disquisitions, it is abundantly clear to the
Court that respondents’ complaint sufficiently stated, under the
premises, a cause of action. Not lost on us is the fact that the
RTC dismissed the complaint of respondents on the grounds of
prescription and in the finding that Aqualab is an innocent
purchaser for value of the subject lots. Quoting Philippine Bank
of Communications v. Trazo,39 the Court said in Bayot v. Court
of Appeals40that:
A cause of action is an act or omission of one party in violation
of the legal right of the other. A motion to dismiss based on
lack of cause of action hypothetically admits the truth of the
allegations in the complaint. The allegations in a complaint are
sufficient to constitute a cause of action against the defendants
if, hypothetically admitting the facts alleged, the court can
render a valid judgment upon the same in accordance with the
prayer therein. A cause of action exists if the
following elements are present, namely: (1) a right in favor of
the plaintiff by whatever means and under whatever law it
arises or is created; (2) an obligation on the part of the named
defendant to respect or not to violate such right; and (3) an act
or omission on the part of such defendant violative of the right
of the plaintiff or constituting a breach of the obligation of the
defendant to the plaintiff for which the latter may maintain an
action for recovery of damages.41
Indeed, to sustain a motion to dismiss for lack of cause of
action, the complaint must show that the claim for relief does
not exist rather than that a claim has been defectively stated or
is ambiguous, indefinite, or uncertain.42However, a perusal of
respondents’ Complaint before the RTC, in light of Aqualab’s
motion to dismiss which hypothetically admitted the truth of the
allegations in the complaint, shows that respondents’ action
before the RTC has sufficiently stated a cause of action.
Hypothetically admitting fraud in the transfers of subject lots,
which indisputably were first transferred in apparent violation of
pertinent provisions in CA 141 prohibiting alienation of
homesteads within five years from the grant of the homestead
patent, and the continuing possession of respondents until
1991 of the subject lots, the action for reconveyance and
nullification filed in 1994 not only sufficiently stated a cause of
action but also has not yet prescribed.1avvphi1
Given the findings above, the trial court gravely committed an
error of judgment in granting Aqualab’s motion to dismiss.
The appellate court was, thus, correct insofar as it reversed
and set aside the September 30, 1997 Order of dismissal of
the trial court. Unfortunately, however, it went further, for it did
not merely remand the case for further proceedings, i.e., for
trial on the merits, but it also resolved and decided the case in
favor of respondents without going into a full-blown trial on the
merits. This violated Aqualab’s right to due process.
The CA Committed Reversible Error
in Deciding the Case on the Merits
The CA reversibly erred when it decided the case on the merits
when what was appealed thereto was a dismissal of the case
through a motion to dismiss. There was no trial on the merits.
Thus, its resolution of the case on the merits had no factual
basis. The lynchpins in the resolution of the motion to dismiss
are in the issues of prescription and whether Aqualab is an
innocent purchaser for value. On these two issues we ruled, as
discussed above, that based on the motion to dismiss, the
allegations in the complaint, and the pieces of documentary
evidence on record, prescription has not yet set in and that
Aqualab is apparently not a purchaser in good faith for, as
hypothetically admitted, respondents had possession over
subject lots until 1991.
Such hypothetical admission, however, is not equivalent to or
constitutive of a judicial admission, for, after all, Aqualab has
not yet filed its Answer. It was, therefore, erroneous for the CA
to decide the case on the merits. And much less can the CA
rule that Aqualab did not controvert respondents’ allegation of
disturbance in their possession. It was a hypothetically
admitted fact but not the factual finding of the trial court.
The Parties’ Assertions and Allegations
Still Have to Be Proved by Trial on the Merits
First, the assertion of respondents that they had possession
until 1991, a factual issue, still had to be established on trial.
Indeed, he who asserts a fact has the burden of proving it. So,
too, the contention of being an innocent purchaser for value by
Aqualab still has yet to be determined through a trial on the
merits. The hypothetical admission applied against a defendant
is relied upon by the court only to resolve his motion to dismiss.
Verily, the burden of proving the purchaser’s good faith lies in
30
the one who asserts the same—it is not enough to invoke the
ordinary presumption of good faith.43

And if Aqualab is found to be truly an innocent purchaser for

value, its rights as such is protected by law; more so in
situations where there have been a series of transfers of the
subject lots, in which case, respondents’ rights, if any, will be
for damages from those who perpetrated the fraudulent
conveyances.

No Factual and Legal Bases for the

Cancellation of Certificates of Title

Second, and corollary to the first, given that there is no judicial

factual finding that Aqualab is not an innocent purchaser for
value, it is legally and factually without bases for the appellate
court to order the cancellation of the certificates of title covering
subject lots in the name of Aqualab.

Third, the issues of reconveyance or redemptive rights of

respondents and their action for partition have to be resolved
by the trial court in light of its eventual findings from a trial on
the merits of the instant case.

We, thus, hold that the instant case should proceed to trial for
the parties to adduce their respective evidence to support their
contrary positions in the defense of their asserted rights.

WHEREFORE, this petition is hereby PARTIALLY GRANTED.

The CA’s Decision dated March 15, 2007 and Resolution dated
April 22, 2008 in CA-G.R. CV No. 58540 are hereby
REVERSED and SET ASIDE. The RTC’s Order dated
September 30, 1997 dismissing Civil Case No. 4086-L is
likewise REVERSED and SET ASIDE. The instant case is
hereby REINSTATED, and petitioner Aqualab is REQUIRED
within the period available pursuant to Section 4 of Rule 16,
1997 Revised Rules of Civil Procedure TO FILE its answer
before the trial court. The trial court is ordered to proceed with
dispatch to the trial on the merits.

No costs.

SO ORDERED.

31
G.R. No. 168289 March 22, 2010
THE MUNICIPALITY OF HAGONOY, BULACAN,
represented by the HON. FELIX V. OPLE, Municipal Mayor,
and FELIX V. OPLE, in his personal capacity, Petitioners,
vs.
HON. SIMEON P. DUMDUM, JR., in his capacity as the
Presiding Judge of the REGIONAL TRIAL COURT,
BRANCH 7, CEBU CITY; HON. CLERK OF COURT & EX-
OFFICIO SHERIFF of the REGIONAL TRIAL COURT of
CEBU CITY; HON. CLERK OF COURT & EX-OFFICIO
SHERIFF of the REGIONAL TRIAL COURT of BULACAN
and his DEPUTIES; and EMILY ROSE GO KO LIM CHAO,
doing business under the name and style KD
SURPLUS, Respondents.
DECISION
PERALTA, J.:
This is a Joint Petition1 under Rule 45 of the Rules of Court
brought by the Municipality of Hagonoy, Bulacan and its former
chief executive, Mayor Felix V. Ople in his official and personal
capacity, from the January 31, 2005 Decision2 and the May 23,
2005 Resolution3 of the Court of Appeals in CA-G.R. SP No.
81888. The assailed decision affirmed the October 20, 2003
Order4 issued by the Regional Trial Court of Cebu City, Branch
7 in Civil Case No. CEB-28587 denying petitioners’ motion to
dismiss and motion to discharge/dissolve the writ of preliminary
attachment previously issued in the case. The assailed
resolution denied reconsideration.
The case stems from a Complaint5 filed by herein private
respondent Emily Rose Go Ko Lim Chao against herein
petitioners, the Municipality of Hagonoy, Bulacan and its chief
executive, Felix V. Ople (Ople) for collection of a sum of money
and damages. It was alleged that sometime in the middle of the
year 2000, respondent, doing business as KD Surplus and as
such engaged in buying and selling surplus trucks, heavy
equipment, machinery, spare parts and related supplies, was
contacted by petitioner Ople. Respondent had entered into an
agreement with petitioner municipality through Ople for the
delivery of motor vehicles, which supposedly were needed to
carry out certain developmental undertakings in the
municipality. Respondent claimed that because of Ople’s
earnest representation that funds had already been allocated
for the project, she agreed to deliver from her principal place of
business in Cebu City twenty-one motor vehicles whose value
totaled ₱5,820,000.00. To prove this, she attached to the
complaint copies of the bills of lading showing that the items
were consigned, delivered to and received by petitioner
municipality on different dates.6 However, despite having made
several deliveries, Ople allegedly did not heed respondent’s
claim for payment. As of the filing of the complaint, the total
obligation of petitioner had already totaled ₱10,026,060.13
exclusive of penalties and damages. Thus, respondent prayed
for full payment of the said amount, with interest at not less
than 2% per month, plus ₱500,000.00 as damages for
business losses, ₱500,000.00 as exemplary damages,
attorney’s fees of ₱100,000.00 and the costs of the suit.
On February 13, 2003, the trial court issued an Order 7 granting
respondent’s prayer for a writ of preliminary attachment
conditioned upon the posting of a bond equivalent to the
amount of the claim. On March 20, 2003, the trial court issued
the Writ of Preliminary Attachment8 directing the sheriff "to
attach the estate, real and personal properties" of petitioners.
Instead of addressing private respondent’s allegations,
petitioners filed a Motion to Dismiss9 on the ground that the
claim on which the action had been brought was unenforceable
under the statute of frauds, pointing out that there was no
written contract or document that would evince the supposed
agreement they entered into with respondent. They averred
that contracts of this nature, before being undertaken by the
municipality, would ordinarily be subject to several
preconditions such as a public bidding and prior approval of the
municipal council which, in this case, did not obtain. From this,
petitioners impress upon us the notion that no contract was
ever entered into by the local government with
respondent.10 To address the claim that respondent had made
the deliveries under the agreement, they advanced that the
bills of lading attached to the complaint were hardly probative,
inasmuch as these documents had been accomplished and
handled exclusively by respondent herself as well as by her
employees and agents.11
Petitioners also filed a Motion to Dissolve and/or Discharge the
Writ of Preliminary Attachment Already Issued,12invoking
immunity of the state from suit, unenforceability of the contract,
and failure to substantiate the allegation of fraud.13
On October 20, 2003, the trial court issued an Order 14 denying
the two motions. Petitioners moved for reconsideration, but
they were denied in an Order15 dated December 29, 2003.
Believing that the trial court had committed grave abuse of
discretion in issuing the two orders, petitioners elevated the
matter to the Court of Appeals via a petition for certiorari under
Rule 65. In it, they faulted the trial court for not dismissing the
complaint despite the fact that the alleged contract was
unenforceable under the statute of frauds, as well as for
ordering the filing of an answer and in effect allowing private
respondent to prove that she did make several deliveries of the
subject motor vehicles. Additionally, it was likewise asserted
that the trial court committed grave abuse of discretion in not
discharging/dissolving the writ of preliminary attachment, as
prayed for in the motion, and in effect disregarding the rule that
the local government is immune from suit.
On January 31, 2005, following assessment of the parties’
arguments, the Court of Appeals, finding no merit in the
petition, upheld private respondent’s claim and affirmed the
trial court’s order.16 Petitioners moved for reconsideration, but
the same was likewise denied for lack of merit and for being a
mere scrap of paper for having been filed by an unauthorized
counsel.17 Hence, this petition.
In their present recourse, which raises no matter different from
those passed upon by the Court of Appeals, petitioners ascribe
error to the Court of Appeals for dismissing their challenge
against the trial court’s October 20 and December 29, 2003
Orders. Again, they reason that the complaint should have
been dismissed at the first instance based on unenforceability
and that the motion to dissolve/discharge the preliminary
attachment should have been granted.18
32
Commenting on the petition, private respondent notes that with
respect to the Court of Appeals’ denial of the certiorari petition,
the same was rightly done, as the fact of delivery may be
properly and adequately addressed at the trial of the case on
the merits; and that the dissolution of the writ of preliminary
attachment was not proper under the premises inasmuch as
the application for the writ sufficiently alleged fraud on the part
of petitioners. In the same breath, respondent laments that the
denial of petitioners’ motion for reconsideration was rightly
done by the Court of Appeals, because it raised no new matter
that had not yet been addressed.19
After the filing of the parties’ respective memoranda, the case
was deemed submitted for decision.
We now rule on the petition.
To begin with, the Statute of Frauds found in paragraph (2),
Article 1403 of the Civil Code,20 requires for enforceability
certain contracts enumerated therein to be evidenced by some
note or memorandum. The term "Statute of Frauds" is
descriptive of statutes that require certain classes of contracts
to be in writing; and that do not deprive the parties of the right
to contract with respect to the matters therein involved, but
merely regulate the formalities of the contract necessary to
render it enforceable.21
In other words, the Statute of Frauds only lays down the
method by which the enumerated contracts may be proved.
But it does not declare them invalid because they are not
reduced to writing inasmuch as, by law, contracts are
obligatory in whatever form they may have been entered into,
provided all the essential requisites for their validity are
present.22 The object is to prevent fraud and perjury in the
enforcement of obligations depending, for evidence thereof, on
the unassisted memory of witnesses by requiring certain
enumerated contracts and transactions to be evidenced by a
writing signed by the party to be charged.23 The effect of
noncompliance with this requirement is simply that no action
can be enforced under the given contracts. 24 If an action is
nevertheless filed in court, it shall warrant a dismissal under
Section 1(i),25 Rule 16 of the Rules of Court, unless there has
been, among others, total or partial performance of the
obligation on the part of either party.26
It has been private respondent’s consistent stand, since the
inception of the instant case that she has entered into a
contract with petitioners. As far as she is concerned, she has
already performed her part of the obligation under the
agreement by undertaking the delivery of the 21 motor vehicles
contracted for by Ople in the name of petitioner municipality.
This claim is well substantiated — at least for the initial
purpose of setting out a valid cause of action against
petitioners — by copies of the bills of lading attached to the
complaint, naming petitioner municipality as consignee of the
shipment. Petitioners have not at any time expressly denied
this allegation and, hence, the same is binding on the trial court
for the purpose of ruling on the motion to dismiss. In other
words, since there exists an indication by way of allegation that
there has been performance of the obligation on the part of
respondent, the case is excluded from the coverage of the rule
on dismissals based on unenforceability under the statute of
frauds, and either party may then enforce its claims against the
other.
No other principle in remedial law is more settled than that
when a motion to dismiss is filed, the material allegations of the
complaint are deemed to be hypothetically admitted. 27 This
hypothetical admission, according to Viewmaster Construction
Corporation v. Roxas28 and Navoa v. Court of
29
Appeals, extends not only to the relevant and material facts
well pleaded in the complaint, but also to inferences that may
be fairly deduced from them. Thus, where it appears that the
allegations in the complaint furnish sufficient basis on which
the complaint can be maintained, the same should not be
dismissed regardless of the defenses that may be raised by the
defendants.30 Stated differently, where the motion to dismiss is
predicated on grounds that are not indubitable, the better policy
is to deny the motion without prejudice to taking such
measures as may be proper to assure that the ends of justice
may be served.31
It is interesting to note at this point that in their bid to have the
case dismissed, petitioners theorize that there could not have
been a contract by which the municipality agreed to be bound,
because it was not shown that there had been compliance with
the required bidding or that the municipal council had approved
the contract. The argument is flawed. By invoking
unenforceability under the Statute of Frauds, petitioners are in
effect acknowledging the existence of a contract between them
and private respondent — only, the said contract cannot be
enforced by action for being non-compliant with the legal
requisite that it be reduced into writing. Suffice it to say that
while this assertion might be a viable defense against
respondent’s claim, it is principally a matter of evidence that
may be properly ventilated at the trial of the case on the merits.
Verily, no grave abuse of discretion has been committed by the
trial court in denying petitioners’ motion to dismiss this case.
The Court of Appeals is thus correct in affirming the same.
We now address the question of whether there is a valid
reason to deny petitioners’ motion to discharge the writ of
preliminary attachment.
Petitioners, advocating a negative stance on this issue, posit
that as a municipal corporation, the Municipality of Hagonoy is
immune from suit, and that its properties are by law exempt
from execution and garnishment. Hence, they submit that not
only was there an error committed by the trial court in denying
their motion to dissolve the writ of preliminary attachment; they
also advance that it should not have been issued in the first
place. Nevertheless, they believe that respondent has not been
able to substantiate her allegations of fraud necessary for the
issuance of the writ.32
Private respondent, for her part, counters that, contrary to
petitioners’ claim, she has amply discussed the basis for the
issuance of the writ of preliminary attachment in her affidavit;
and that petitioners’ claim of immunity from suit is negated by
Section 22 of the Local Government Code, which vests
municipal corporations with the power to sue and be sued.
Further, she contends that the arguments offered by petitioners
against the writ of preliminary attachment clearly touch on
matters that when ruled upon in the hearing for the motion to
discharge, would amount to a trial of the case on the merits. 33
The general rule spelled out in Section 3, Article XVI of the
Constitution is that the state and its political subdivisions may
33
not be sued without their consent. Otherwise put, they are
open to suit but only when they consent to it. Consent is
implied when the government enters into a business contract,
as it then descends to the level of the other contracting party;
or it may be embodied in a general or special law34 such as
that found in Book I, Title I, Chapter 2, Section 22 of the Local
Government Code of 1991, which vests local government units
with certain corporate powers —one of them is the power to
sue and be sued.
Be that as it may, a difference lies between suability and
liability. As held in City of Caloocan v. Allarde, 35 where the
suability of the state is conceded and by which liability is
ascertained judicially, the state is at liberty to determine for
itself whether to satisfy the judgment or not. Execution may not
issue upon such judgment, because statutes waiving non-
suability do not authorize the seizure of property to satisfy
judgments recovered from the action. These statutes only
convey an implication that the legislature will recognize such
judgment as final and make provisions for its full satisfaction.
Thus, where consent to be sued is given by general or special
law, the implication thereof is limited only to the resultant
verdict on the action before execution of the judgment.36
Traders Royal Bank v. Intermediate Appellate Court, 37 citing
Commissioner of Public Highways v. San Diego,38 is instructive
on this point. In that case which involved a suit on a contract
entered into by an entity supervised by the Office of the
President, the Court held that while the said entity opened itself
to suit by entering into the subject contract with a private entity;
still, the trial court was in error in ordering the garnishment of
its funds, which were public in nature and, hence, beyond the
reach of garnishment and attachment proceedings.
Accordingly, the Court ordered that the writ of preliminary
attachment issued in that case be lifted, and that the parties be
allowed to prove their respective claims at the trial on the
merits. There, the Court highlighted the reason for the rule, to
wit:
The universal rule that where the State gives its consent to be
sued by private parties either by general or special law, it may
limit claimant’s action "only up to the completion of
proceedings anterior to the stage of execution" and that the
power of the Courts ends when the judgment is rendered,
since government funds and properties may not be seized
under writs of execution or garnishment to satisfy such
judgments, is based on obvious considerations of public policy.
Disbursements of public funds must be covered by the
corresponding appropriations as required by law. The functions
and public services rendered by the State cannot be allowed to
be paralyzed or disrupted by the diversion of public funds from
their legitimate and specific objects. x x x39
With this in mind, the Court holds that the writ of preliminary
attachment must be dissolved and, indeed, it must not have
been issued in the very first place. While there is merit in
private respondent’s position that she, by affidavit, was able to
substantiate the allegation of fraud in the same way that the
fraud attributable to petitioners was sufficiently alleged in the
complaint and, hence, the issuance of the writ would have
been justified. Still, the writ of attachment in this case would
only prove to be useless and unnecessary under the premises,
since the property of the municipality may not, in the event that
respondent’s claim is validated, be subjected to writs of
execution and garnishment — unless, of course, there has
been a corresponding appropriation provided by
law.401avvphi1
Anent the other issues raised by petitioners relative to the
denial of their motion to dissolve the writ of attachment, i.e.,
unenforceability of the contract and the veracity of private
respondent’s allegation of fraud, suffice it to say that these
pertain to the merits of the main action. Hence, these issues
are not to be taken up in resolving the motion to discharge, lest
we run the risk of deciding or prejudging the main case and
force a trial on the merits at this stage of the proceedings.41
There is one final concern raised by petitioners relative to the
denial of their motion for reconsideration. They complain that it
was an error for the Court of Appeals to have denied the
motion on the ground that the same was filed by an
unauthorized counsel and, hence, must be treated as a mere
scrap of paper.42
It can be derived from the records that petitioner Ople, in his
personal capacity, filed his Rule 65 petition with the Court of
Appeals through the representation of the law firm Chan
Robles & Associates. Later on, municipal legal officer Joselito
Reyes, counsel for petitioner Ople, in his official capacity and
for petitioner municipality, filed with the Court of Appeals a
Manifestation with Entry of Appearance43 to the effect that he,
as counsel, was "adopting all the pleadings filed for and in
behalf of [Ople’s personal representation] relative to this
case."44
It appears, however, that after the issuance of the Court of
Appeals’ decision, only Ople’s personal representation signed
the motion for reconsideration. There is no showing that the
municipal legal officer made the same manifestation, as he
previously did upon the filing of the petition. 45 From this, the
Court of Appeals concluded that it was as if petitioner
municipality and petitioner Ople, in his official capacity, had
never moved for reconsideration of the assailed decision, and
adverts to the ruling in Ramos v. Court of Appeals 46 and
Municipality of Pililla, Rizal v. Court of Appeals47 that only
under well-defined exceptions may a private counsel be
engaged in lawsuits involving a municipality, none of which
exceptions obtains in this case.48
The Court of Appeals is mistaken. As can be seen from the
manner in which the Manifestation with Entry of Appearance is
worded, it is clear that petitioner municipality’s legal officer was
intent on adopting, for both the municipality and Mayor Ople,
not only the certiorari petition filed with the Court of Appeals,
but also all other pleadings that may be filed thereafter by
Ople’s personal representation, including the motion for
reconsideration subject of this case. In any event, however, the
said motion for reconsideration would warrant a denial,
because there seems to be no matter raised therein that has
not yet been previously addressed in the assailed decision of
the Court of Appeals as well as in the proceedings below, and
that would have otherwise warranted a different treatment of
the issues involved.
WHEREFORE, the Petition is GRANTED IN PART. The
January 31, 2005 Decision of the Court of Appeals in CA-G.R.
SP No. 81888 is AFFIRMED insofar as it affirmed the October
20, 2003 Decision of the Regional Trial Court of Cebu City,
Branch 7 denying petitioners’ motion to dismiss in Civil Case
34
No. CEB-28587. The assailed decision is REVERSED insofar
as it affirmed the said trial court’s denial of petitioners’ motion
to discharge the writ of preliminary attachment issued in that
case. Accordingly, the August 4, 2003 Writ of Preliminary
Attachment issued in Civil Case No. CEB-28587 is ordered
lifted.

SO ORDERED.

35
G.R. No. 176951 April 12, 2011
LEAGUE OF CITIES OF THE PHILIPPINES (LCP),
represented by LCP National President Jerry P. Treñas;
City of Calbayog, represented by Mayor Mel Senen S.
Sarmiento; and Jerry P. Treñas, in his personal capacity
as Taxpayer, Petitioners,
vs.
COMMISSION ON ELECTIONS; Municipality of Baybay,
Province of Leyte; Municipality of Bogo, Province of Cebu;
Municipality of Catbalogan, Province of Western Samar;
Municipality of Tandag, Province of Surigao del Sur;
Municipality of Borongan, Province of Eastern Samar; and
Municipality of Tayabas, Province of Quezon, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 177499
LEAGUE OF CITIES OF THE PHILIPPINES (LCP),
represented by LCP National President Jerry P. Treñas;
City of Calbayog, represented by Mayor Mel Senen S.
Sarmiento; and Jerry P. Treñas, in his personal capacity
as Taxpayer, Petitioners,
vs.
COMMISSION ON ELECTIONS; Municipality of Lamitan,
Province of Basilan; Municipality of Tabuk, Province of
Kalinga; Municipality of Bayugan, Province of Agusan del
Sur; Municipality of Batac, Province of Ilocos Norte;
Municipality of Mati, Province of Davao Oriental; and
Municipality of Guihulngan, Province of Negros
Oriental, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 178056
LEAGUE OF CITIES OF THE PHILIPPINES (LCP),
represented by LCP National President Jerry P. Treñas;
City of Calbayog, represented by Mayor Mel Senen S.
Sarmiento; and Jerry P. Treñas, in his personal capacity
as Taxpayer, Petitioners,
vs.
COMMISSION ON ELECTIONS; Municipality of
Cabadbaran, Province of Agusan del Norte; Municipality of
Carcar, Province of Cebu; Municipality of El Salvador,
Province of Misamis Oriental; Municipality of Naga, Cebu;
and Department of Budget and Management, Respondents.
RESOLUTION
BERSAMIN, J.:
We consider and resolve the Ad Cautelam Motion for
Reconsideration filed by the petitioners vis-à-vis the Resolution
promulgated on February 15, 2011.
To recall, the Resolution promulgated on February 15, 2011
granted the Motion for Reconsideration of the respondents
presented against the Resolution dated August 24, 2010,
reversed the Resolution dated August 24, 2010, and declared
the 16 Cityhood Laws — Republic Acts Nos. 9389, 9390, 9391,
9392, 9393, 9394, 9398, 9404, 9405, 9407, 9408, 9409, 9434,
9435, 9436, and 9491 — constitutional.
Now, the petitioners anchor their Ad Cautelam Motion for
Reconsideration upon the primordial ground that the Court
could no longer modify, alter, or amend its judgment declaring
the Cityhood Laws unconstitutional due to such judgment
having long become final and executory. They submit that the
Cityhood Laws violated Section 6 and Section 10 of Article X of
the Constitution, as well as the Equal Protection Clause.
The petitioners specifically ascribe to the Court the following
errors in its promulgation of the assailed February 15, 2011
Resolution, to wit:
I. THE HONORABLE COURT HAS NO
JURISDICTION TO PROMULGATE THE
RESOLUTION OF 15 FEBRUARY 2011 BECAUSE
THERE IS NO LONGER ANY ACTUAL CASE OR
CONTROVERSY TO SETTLE.
II. THE RESOLUTION CONTRAVENES THE 1997
RULES OF CIVIL PROCEDURE AND RELEVANT
SUPREME COURT ISSUANCES.
III. THE RESOLUTION UNDERMINES THE
JUDICIAL SYSTEM IN ITS DISREGARD OF THE
PRINCIPLES OF RES JUDICATA AND THE
DOCTRINE OF IMMUTABILITY OF FINAL
JUDGMENTS.
IV. THE RESOLUTION ERRONEOUSLY RULED
THAT THE SIXTEEN (16) CITYHOOD BILLS DO
NOT VIOLATE ARTICLE X, SECTIONS 6 AND 10 OF
THE 1987 CONSTITUTION.
V. THE SIXTEEN (16) CITYHOOD LAWS VIOLATE
THE EQUAL PROTECTION CLAUSE OF THE
CONSTITUTION AND THE RIGHT OF LOCAL
GOVERNMENTS TO A JUST SHARE IN THE
NATIONAL TAXES.
Ruling
Upon thorough consideration, we deny the Ad Cautelam
Motion for Reconsideration for its lack of merit.
I.
Procedural Issues
With respect to the first, second, and third assignments of
errors, supra, it appears that the petitioners assail the
jurisdiction of the Court in promulgating the February 15, 2011
Resolution, claiming that the decision herein had long become
final and executory. They state that the Court thereby violated
rules of procedure, and the principles of res judicata and
immutability of final judgments.
The petitioners posit that the controversy on the Cityhood Laws
ended with the April 28, 2009 Resolution denying the
respondents’ second motion for reconsideration vis-à-vis the
November 18, 2008 Decision for being a prohibited pleading,
36
and in view of the issuance of the entry of judgment on May 21,
2009.
The Court disagrees with the petitioners.
In the April 28, 2009 Resolution, the Court ruled:
By a vote of 6-6, the Motion for Reconsideration of the
Resolution of 31 March 2009 is DENIED for lack of merit. The
motion is denied since there is no majority that voted to
overturn the Resolution of 31 March 2009.
The Second Motion for Reconsideration of the Decision of 18
November 2008 is DENIED for being a prohibited pleading,
and the Motion for Leave to Admit Attached Petition in
Intervention dated 20 April 2009 and the Petition in Intervention
dated 20 April 2009 filed by counsel for Ludivina T. Mas, et al.
are also DENIED in view of the denial of the second motion for
reconsideration. No further pleadings shall be entertained. Let
entry of judgment be made in due course.
Justice Presbitero J. Velasco, Jr. wrote a Dissenting Opinion,
joined by Justices Consuelo Ynares-Santiago, Renato C.
Corona, Minita Chico-Nazario, Teresita Leonardo-De Castro,
and Lucas P. Bersamin. Chief Justice Reynato S. Puno and
Justice Antonio Eduardo B. Nachura took no part. Justice
Leonardo A. Quisumbing is on leave.1
Within 15 days from receipt of the April 28, 2009 Resolution,
the respondents filed a Motion To Amend Resolution Of April
28, 2009 By Declaring Instead That Respondents’ "Motion for
Reconsideration Of the Resolution Of March 31, 2009" And
"Motion For Leave To File, And To Admit Attached ‘Second
Motion For Reconsideration Of The Decision Dated November
18, 2008’ Remain Unresolved And To Conduct Further
Proceedings Thereon, arguing therein that a determination of
the issue of constitutionality of the 16 Cityhood Laws upon a
motion for reconsideration by an equally divided vote was not
binding on the Court as a valid precedent, citing the separate
opinion of then Chief Justice Reynato S. Puno in Lambino v.
Commission on Elections.2
Thus, in its June 2, 2009 Resolution, the Court issued the
following clarification of the April 28, 2009 Resolution, viz:
As a rule, a second motion for reconsideration is a prohibited
pleading pursuant to Section 2, Rule 52 of the Rules of Civil
Procedure which provides that: "No second motion for
reconsideration of a judgment or final resolution by the same
party shall be entertained." Thus, a decision becomes final and
executory after 15 days from receipt of the denial of the first
motion for reconsideration.
However, when a motion for leave to file and admit a second
motion for reconsideration is granted by the Court, the Court
therefore allows the filing of the second motion for
reconsideration. In such a case, the second motion for
reconsideration is no longer a prohibited pleading.
In the present case, the Court voted on the second motion for
reconsideration filed by respondent cities. In effect, the Court
allowed the filing of the second motion for reconsideration.
Thus, the second motion for reconsideration was no longer a
prohibited pleading. However, for lack of the required number
of votes to overturn the 18 November 2008 Decision and 31
March 2009 Resolution, the Court denied the second motion
for reconsideration in its 28 April 2009 Resolution.3
As the result of the aforecited clarification, the Court resolved
to expunge from the records several pleadings and documents,
including respondents’ Motion To Amend Resolution Of April
28, 2009 etc.
The respondents thus filed their Motion for Reconsideration of
the Resolution of June 2, 2009, asseverating that their Motion
To Amend Resolution Of April 28, 2009 etc. was not another
motion for reconsideration of the November 18, 2008 Decision,
because it assailed the April 28, 2009 Resolution with respect
to the tie-vote on the respondents’ Second Motion For
Reconsideration. They pointed out that the Motion To Amend
Resolution Of April 28, 2009 etc. was filed on May 14, 2009,
which was within the 15-day period from their receipt of the
April 28, 2009 Resolution; thus, the entry of judgment had been
prematurely made. They reiterated their arguments with
respect to a tie-vote upon an issue of constitutionality.
In the September 29, 2009 Resolution,4 the Court required the
petitioners to comment on the Motion for Reconsideration of
the Resolution of June 2, 2009 within 10 days from receipt.
As directed, the petitioners filed their Comment Ad
CautelamWith Motion to Expunge.
The respondents filed their Motion for Leave to File and to
Admit Attached "Reply to Petitioners’ ‘Comment Ad
CautelamWith Motion to Expunge’", together with the Reply.
On November 17, 2009, the Court resolved to note the
petitioners’ Comment Ad CautelamWith Motion to Expunge, to
grant the respondents’ Motion for Leave to File and Admit
Reply to Petitioners’ Comment Ad Cautelam with Motion to
Expunge, and to note the respondents’ Reply to Petitioners’
Comment Ad Cautelam with Motion to Expunge.
On December 21, 2009, the Court, resolving the Motion To
Amend Resolution Of April 28, 2009 etc. and voting anew on
the Second Motion For Reconsideration in order to reach a
concurrence of a majority, promulgated its Decision granting
the motion and declaring the Cityhood Laws as
constitutional,5 disposing thus:
WHEREFORE, respondent LGUs’ Motion for Reconsideration
dated June 2, 2009, their "Motion to Amend the Resolution of
April 28, 2009 by Declaring Instead that Respondents’ ‘Motion
for Reconsideration of the Resolution of March 31, 2009’ and
‘Motion for Leave to File and to Admit Attached Second Motion
for Reconsideration of the Decision Dated November 18, 2008’
Remain Unresolved and to Conduct Further Proceedings,"
dated May 14, 2009, and their second Motion for
Reconsideration of the Decision dated November 18, 2008 are
GRANTED. The June 2, 2009, the March 31, 2009, and April
31, 2009 Resolutions are REVERSED and SET ASIDE. The
entry of judgment made on May 21, 2009 must accordingly be
RECALLED.
37
The instant consolidated petitions and petitions-in-intervention
are DISMISSED. The cityhood laws, namely Republic Act Nos.
9389, 9390, 9391, 9392, 9393, 9394, 9398, 9404, 9405, 9407,
9408, 9409, 9434, 9435, 9436, and 9491 are declared VALID
and CONSTITUTIONAL.
SO ORDERED.
On January 5, 2010, the petitioners filed an Ad Cautelam
Motion for Reconsideration against the December 21, 2009
Decision.6 On the same date, the petitioners also filed a Motion
to Annul Decision of 21 December 2009.7
On January 12, 2010, the Court directed the respondents to
comment on the motions of the petitioners.8
On February 4, 2010, petitioner-intervenors City of Santiago,
City of Legazpi, and City of Iriga filed their separate
Manifestations with Supplemental Ad Cautelam Motions for
Reconsideration.9 Similar manifestations with supplemental
motions for reconsideration were filed by other petitioner-
intervenors, specifically: City of Cadiz on February 15,
2010;10 City of Batangas on February 17, 2010;11 and City of
Oroquieta on February 24, 2010.12 The Court required the
adverse parties to comment on the motions.13 As directed, the
respondents complied.
On August 24, 2010, the Court issued its Resolution reinstating
the November 18, 2008 Decision.14
On September 14, 2010, the respondents timely filed a Motion
for Reconsideration of the "Resolution" Dated August 24,
2010.15 They followed this by filing on September 20, 2010 a
Motion to Set "Motion for Reconsideration of the ‘Resolution’
dated August 24, 2010" for Hearing.16 On November 19, 2010,
the petitioners sent in their Opposition [To the "Motion for
Reconsideration of ‘Resolution’ dated August 24, 2010"].17 On
November 30, 2010,18 the Court noted, among others, the
petitioners’ Opposition.
On January 18, 2011,19 the Court denied the respondents’
Motion to Set "Motion for Reconsideration of the ‘Resolution’
dated August 24, 2010" for Hearing.
Thereafter, on February 15, 2011, the Court issued the
Resolution being now challenged.
It can be gleaned from the foregoing that, as the June 2, 2009
Resolution clarified, the respondents’ Second Motion For
Reconsideration was not a prohibited pleading in view of the
Court’s voting and acting on it having the effect of allowing the
Second Motion For Reconsideration; and that when the
respondents filed their Motion for Reconsideration of the
Resolution of June 2, 2009 questioning the expunging of their
Motion To Amend Resolution Of April 28, 2009 etc. (which had
been filed within the 15-day period from receipt of the April 28,
2009 Resolution), the Court opted to act on the Motion for
Reconsideration of the Resolution of June 2, 2009 by directing
the adverse parties through its September 29, 2009 Resolution
to comment. The same permitting effect occurred when the
Court, by its November 17, 2009 Resolution, granted the
respondents’ Motion for Leave to File and Admit Reply to
Petitioners’ Comment Ad Cautelam with Motion to Expunge,
and noted the attached Reply.
Moreover, by issuing the Resolutions dated September 29,
2009 and November 17, 2009, the Court: (a) rendered
ineffective the tie-vote under the Resolution of April 28, 2009
and the ensuing denial of the Motion for Reconsideration of the
Resolution of March 31, 2009 for lack of a majority to overturn;
(b), re-opened the Decision of November 18, 2008 for a
second look under reconsideration; and (c) lifted the directive
that no further pleadings would be entertained. The Court in
fact entertained and acted on the respondents’ Motion for
Reconsideration of the Resolution of June 2, 2009. Thereafter,
the Court proceeded to deliberate anew on the respondents’
Second Motion for Reconsideration and ended up with the
promulgation of the December 21, 2009 Decision (declaring
the Cityhood Laws valid and constitutional).
It is also inaccurate for the petitioners to insist that the
December 21, 2009 Decision overturned the November 18,
2008 Decision on the basis of the mere Reflections of the
Members of the Court. To be sure, the Reflections were the
legal opinions of the Members and formed part of the
deliberations of the Court. The reference in the December 21,
2009 Decision to the Reflections pointed out that there was still
a pending incident after the April 28, 2009 Resolution that had
been timely filed within 15 days from its receipt, 20 pursuant to
Section 10, Rule 51,21 in relation to Section 1, Rule 52,22 of the
Rules of Court. Again, the Court did act and deliberate upon
this pending incident, leading to the issuance of the December
21, 2009 Decision (declaring the Cityhood Laws free from
constitutional infirmity). It was thereafter that the Court
rendered its August 24, 2010 Resolution (reinstating the
November 18, 2008 Decision), to correct which the
respondents’ Motion for Reconsideration of the "Resolution"
Dated August 24, 2010 was filed. And, finally, the Court issued
its February 15, 2011 Resolution, reversing and setting aside
the August 24, 2010 Resolution.
It is worth repeating that the actions taken herein were made
by the Court en banc strictly in accordance with the Rules of
Court and its internal procedures. There has been no
irregularity attending or tainting the proceedings.
It also relevant to state that the Court has frequently
disencumbered itself under extraordinary circumstances from
the shackles of technicality in order to render just and equitable
relief.23
On whether the principle of immutability of judgments and bar
by res judicata apply herein, suffice it to state that the
succession of the events recounted herein indicates that the
controversy about the 16 Cityhood Laws has not yet been
resolved with finality. As such, the operation of the principle of
immutability of judgments did not yet come into play. For the
same reason is an adherence to the doctrine of res judicata not
yet warranted, especially considering that the precedential
ruling for this case needed to be revisited and set with certainty
and finality.
II.
Substantive Issues
38
The petitioners reiterate their position that the Cityhood Laws
violate Section 6 and Section 10 of Article X of the Constitution,
the Equal Protection Clause, and the right of local governments
to a just share in the national taxes.
The Court differs.
Congress clearly intended that the local government units
covered by the Cityhood Laws be exempted from the coverage
of R.A. No. 9009. The apprehensions of the then Senate
President with respect to the considerable disparity between
the income requirement of ₱20 million under the Local
Government Code (LGC) prior to its amendment, and the ₱100
million under the amendment introduced by R.A. No. 9009
were definitively articulated in his interpellation of Senator
Pimentel during the deliberations on Senate Bill No. 2157. The
then Senate President was cognizant of the fact that there
were municipalities that then had pending conversion bills
during the 11th Congress prior to the adoption of Senate Bill
No. 2157 as R.A. No. 9009,24 including the municipalities
covered by the Cityhood Laws. It is worthy of mention that the
pertinent deliberations on Senate Bill No. 2157 occurred on
October 5, 2000 while the 11th Congress was in session, and
the conversion bills were then pending in the Senate. Thus, the
responses of Senator Pimentel made it obvious that R.A. No.
9009 would not apply to the conversion bills then pending
deliberation in the Senate during the 11th Congress.
R.A. No. 9009 took effect on June 30, 2001, when the 12th
Congress was incipient. By reason of the clear legislative intent
to exempt the municipalities covered by the conversion bills
pending during the 11th
Congress, the House of Representatives adopted Joint
Resolution No. 29, entitled Joint Resolution to Exempt Certain
Municipalities Embodied in Bills Filed in Congress before June
30, 2001 from the coverage of Republic Act No. 9009.
However, the Senate failed to act on Joint Resolution No. 29.
Even so, the House of Representatives readopted Joint
Resolution No. 29 as
Joint Resolution No. 1 during the 12th Congress, 25 and
forwarded Joint Resolution No. 1 to the Senate for approval.
Again, the Senate failed to approve Joint Resolution No. 1.
At this juncture, it is worthwhile to consider the manifestation of
Senator Pimentel with respect to Joint Resolution No. 1, to wit:
MANIFESTATION OF SENATOR PIMENTEL
House Joint Resolution No. 1 seeks to exempt certain
municipalities seeking conversion into cities from the
requirement that they must have at least P100 million in
income of locally generated revenue, exclusive of the internal
revenue share that they received from the central government
as required under Republic Act No. 9009.
The procedure followed by the House is questionable, to say
the least. The House wants the Senate to do away with the
income requirement of P100 million so that, en masse, the
municipalities they want exempted could now file bills
specifically converting them into cities. The reason they want
the Senate to do it first is that Cong. Dodo Macias, chair of the
House Committee on Local Governments, I am told, will not
entertain any bill for the conversion of municipalities into cities
unless the issue of income requirement is first hurdled. The
House leadership therefore wants to shift the burden of
exempting certain municipalities from the income requirement
to the Senate rather than do it itself.
That is most unusual because, in effect, the House wants the
Senate to pass a blanket resolution that would qualify the
municipalities concerned for conversion into cities on the
matter of income alone. Then, at a later date, the House would
pass specific bills converting the municipalities into cities.
However, income is not only the requirement for municipalities
to become cities. There are also the requirements on
population and land area.
In effect, the House wants the Senate to tackle the qualification
of the municipalities they want converted into cities piecemeal
and separately, first is the income under the joint resolution,
then the other requirements when the bills are file to convert
specific municipalities into cities. To repeat, this is a most
unusual manner of creating cities.
My respectful suggestion is for the Senate to request the
House to do what they want to do regarding the applications of
certain municipalities to become cities pursuant to the
requirements of the Local Government Code. If the House
wants to exempt certain municipalities from the requirements of
the Local Government Code to become cities, by all means, let
them do their thing. Specifically, they should act on specific
bills to create cities and cite the reasons why the municipalities
concerned are qualified to become cities. Only after the House
shall have completed what they are expected to do under the
law would it be proper for the Senate to act on specific bills
creating cities.
In other words, the House should be requested to finish
everything that needs to be done in the matter of converting
municipalities into cities and not do it piecemeal as they are
now trying to do under the joint resolution.
In my long years in the Senate, this is the first time that a resort
to this subterfuge is being undertaken to favor the creation of
certain cities. I am not saying that they are not qualified. All I
am saying is, if the House wants to pass and create cities out
of certain municipalities, by all means let them do that. But they
should do it following the requirements of the Local
Government Code and, if they want to make certain
exceptions, they can also do that too. But they should not use
the Senate as a ploy to get things done which they themselves
should do.
Incidentally, I have recommended this mode of action verbally
to some leaders of the House. Had they followed the
recommendation, for all I know, the municipalities they had
envisioned to be covered by House Joint Resolution No. 1
would, by now – if not all, at least some – have been converted
into cities. House Joint Resolution No. 1, the House, in effect,
caused the delay in the approval in the applications for
cityhood of the municipalities concerned.
Lastly, I do not have an amendment to House Joint Resolution
No. 1. What I am suggesting is for the Senate to request the
39
House to follow the procedure outlined in the Local
Government Code which has been respected all through the
years. By doing so, we uphold the rule of law
and minimize the possibilities of power play in the approval of
bills converting municipalities into cities.26
Thereafter, the conversion bills of the respondents were
individually filed in the House of Representatives, and were all
unanimously and
favorably voted upon by the Members of the House of
Representatives.27 The bills, when forwarded to the Senate,
were likewise unanimously approved by the Senate. 28 The acts
of both Chambers of Congress show that the exemption
clauses ultimately incorporated in the Cityhood Laws are but
the express articulations of the clear legislative intent to
exempt the respondents, without exception, from the coverage
of R.A. No. 9009. Thereby, R.A. No. 9009, and, by necessity,
the LGC, were amended, not by repeal but by way of the
express exemptions being embodied in the exemption clauses.
The petitioners further contend that the new income
requirement of ₱100 million from locally generated sources is
not arbitrary because it is not difficult to comply with; that there
are several municipalities that have already complied with the
requirement and have, in fact, been converted into cities, such
as Sta. Rosa in Laguna (R.A. No 9264), Navotas (R.A. No.
9387) and San Juan (R.A. No. 9388) in Metro Manila,
Dasmariñas in Cavite (R.A. No. 9723), and Biñan in Laguna
(R.A. No. 9740); and that several other municipalities have
supposedly reached the income of ₱100 million from locally
generated sources, such as Bauan in Batangas, Mabalacat in
Pampanga, and Bacoor in Cavite.
The contention of the petitioners does not persuade.
As indicated in the Resolution of February 15, 2011, fifty-nine
(59) existing cities had failed as of 2006 to post an average
annual income of ₱100 million based on the figures contained
in the certification dated December 5, 2008 by the Bureau of
Local Government. The large number of existing cities, virtually
50% of them, still unable to comply with the ₱100 million
threshold income five years after R.A. No. 9009 took effect
renders it fallacious and probably unwarranted for the
petitioners to claim that the ₱100 million income requirement is
not difficult to comply with.
In this regard, the deliberations on Senate Bill No. 2157 may
prove enlightening, thus:
Senator Osmeña III. And could the gentleman help clarify why
a municipality would want to be converted into a city?
Senator Pimentel. There is only one reason, Mr. President, and
it is not hidden. It is the fact that once converted into a city, the
municipality will have roughly more than three times the share
that it would be receiving over the internal revenue allotment
than it would have if it were to remain a municipality. So more
or less three times or more.
Senator Osmeña III. Is it the additional funding that they will be
able to enjoy from a larger share from the internal revenue
allocations?
Senator Pimentel. Yes, Mr. President.
Senator Osmeña III. Now, could the gentleman clarify, Mr.
President, why in the original Republic Act No. 7160, known as
the Local Government Code of 1991, such a wide gap was
made between a municipality—what a municipality would
earn—and a city? Because essentially, to a person’s mind,
even with this new requirement, if approved by Congress, if a
municipality is earning P100 million and has a population of
more than 150,000 inhabitants but has less than 100 square
kilometers, it would not qualify as a city.
Senator Pimentel. Yes.
Senator Osmeña III. Now would that not be quite arbitrary on
the part of the municipality?
Senator Pimentel. In fact, Mr. President, the House version
restores the "or". So, this is a matter that we can very well take
up as a policy issue. The chair of the committee does not say
that we should, as we know, not listen to arguments for the
restoration of the word "or" in the population or territorial
requirement.
Senator Osmeña III. Mr. President, my point is that, I agree
with the gentleman’s "and", but perhaps we should bring down
the area. There are certainly very crowded places in this
country that are less than 10,000 hectares—100 square
kilometers is 10,000 hectares. There might only be 9,000
hectares or 8,000 hectares. And it would be unfair if these
municipalities already earning P100,000,000 in locally
generated funds and have a population of over 150,000 would
not be qualified because of the simple fact that the physical
area does not cover 10,000 hectares.
Senator Pimentel. Mr. President, in fact, in Metro Manila there
are any number of municipalities. San Juan is a specific
example which, if we apply the present requirements, would
not qualify: 100 square kilometers and a population of not less
than 150,000.
But my reply to that, Mr. President, is that they do not have to
become a city?
Senator Osmeña III. Because of the income.
Senator Pimentel. But they are already earning a lot, as the
gentleman said. Otherwise, the danger here, if we become lax
in the requirements, is the metropolis-located local
governments would have more priority in terms of funding
because they would have more qualifications to become a city
compared to far-flung areas in Mindanao or in the Cordilleras,
or whatever.
Therefore, I think we should not probably ease up on the
requirements. Maybe we can restore the word "or" so that if
they do not have the 100 square kilometers of territory, then if
they qualify in terms of population and income, that would be
all right, Mr. President.
40
Senator Osmeña III. Mr. President, I will not belabor the point
at this time. I know that the distinguished gentleman is
considering several amendments to the Local Government
Code. Perhaps this is something that could be further refined at
a later time, with his permission.
So I would like to thank the gentleman for his graciousness in
answering our questions.
Senator Pimentel. I also thank the gentleman, Mr. President. 29
The Court takes note of the fact that the municipalities cited by
the petitioners as having generated the threshold income of
₱100 million from local sources, including those already
converted into cities, are either in Metro Manila or in provinces
close to Metro Manila. In comparison, the municipalities
covered by the Cityhood Laws are spread out in the different
provinces of the Philippines, including the Cordillera and
Mindanao regions, and are considerably very distant from
Metro Manila. This reality underscores the danger the
enactment of R.A. No. 9009 sought to prevent, i.e., that "the
metropolis-located local governments would have more priority
in terms of funding because they would have more
qualifications to become a city compared to the far-flung areas
in Mindanao or in the Cordilleras, or whatever," actually
resulting from the abrupt increase in the income requirement.
Verily, this result is antithetical to what the Constitution and
LGC have nobly envisioned in favor of countryside
development and national growth. Besides, this result should
be arrested early, to avoid the unwanted divisive effect on the
entire country due to the local government units closer to the
National Capital Region being afforded easier access to the
bigger share in the national coffers than other local government
units.
There should also be no question that the local government
units covered by the Cityhood Laws belong to a class of their
own. They have proven themselves viable and capable to
become component cities of their respective provinces. They
are and have been centers of trade and commerce, points of
convergence of transportation, rich havens of agricultural,
mineral, and other natural resources, and flourishing tourism
spots. In his speech delivered on the floor of the Senate to
sponsor House Joint Resolution No. 1, Senator Lim recognized
such unique traits,30viz:
It must be noted that except for Tandag and Lamitan, which
are both second-class municipalities in terms of income, all the
rest are categorized by the Department of Finance as first-
class municipalities with gross income of at least P70 million as
per Commission of Audit Report for 2005. Moreover, Tandag
and Lamitan, together with Borongan, Catbalogan, and Tabuk,
are all provincial capitals.
The more recent income figures of the 12 municipalities, which
would have increased further by this time, indicate their
readiness to take on the responsibilities of cityhood.
Moreover, the municipalities under consideration are leading
localities in their respective provinces. Borongan, Catbalogan,
Tandag, Batac and Tabuk are ranked number one in terms of
income among all the municipalities in their respective
provinces; Baybay and Bayugan are number two; Bogo and
Lamitan are number three; Carcar, number four; and Tayabas,
number seven. Not only are they pacesetters in their respective
provinces, they are also among the frontrunners in their
regions – Baybay, Bayugan and Tabuk are number two
income-earners in Regions VIII, XIII, and CAR, respectively;
Catbalogan and Batac are number three in Regions VIII and I,
respectively; Bogo, number five in Region VII; Borongan and
Carcar are both number six in Regions VIII and VII,
respectively. This simply shows that these municipalities are
viable.
Petitioner League of Cities argues that there exists no issue
with respect to the cityhood of its member cities, considering
that they became cities in full compliance with the criteria for
conversion at the time of their creation.
The Court considers the argument too sweeping. What we
pointed out was that the previous income requirement of ₱20
million was definitely not insufficient to provide the essential
government facilities, services, and special functions vis-à-vis
the population of a component city. We also stressed that the
increased income requirement of ₱100 million was not the only
conclusive indicator for any municipality to survive and remain
viable as a component city. These observations were
unerringly reflected in the respective incomes of the fifty-nine
(59) members of the League of Cities that have still failed,
remarkably enough, to be compliant with the new requirement
of the ₱100 million threshold income five years after R.A. No.
9009 became law.
Undoubtedly, the imposition of the income requirement of ₱100
million from local sources under R.A. No. 9009 was arbitrary.
When the sponsor of the law chose the specific figure of ₱100
million, no research or empirical data buttressed the figure. Nor
was there proof that the proposal took into account the after-
effects that were likely to arise. As already mentioned, even the
danger the passage of R.A. No. 9009 sought to prevent might
soon become a reality. While the Constitution mandates that
the creation of local government units must comply with the
criteria laid down in the LGC, it cannot be justified to insist that
the Constitution must have to yield to every amendment to the
LGC despite such amendment imminently producing effects
contrary to the original thrusts of the LGC to promote
autonomy, decentralization, countryside development, and the
concomitant national growth.
Moreover, if we were now to adopt the stringent interpretation
of the Constitution the petitioners are espousing, we may have
to apply the same restrictive yardstick against the recently
converted cities cited by the petitioners, and find two of them
whose conversion laws have also to be struck down for being
unconstitutional. The two laws are R.A. No. 938731 and R.A.
No. 9388,32 respectively converting the municipalities of San
Juan and Navotas into highly urbanized cities. A cursory
reading of the laws indicates that there is no indication of
compliance with the requirements imposed by the LGC, for,
although the two local government units concerned presumably
complied with the income requirement of ₱50 million under
Section 452 of the LGC and the income requirement of ₱100
million under the amended Section 450 of the LGC, they
obviously did not meet the requirements set forth under
Section 453 of the LGC, to wit:
Section 453. Duty to Declare Highly Urbanized Status.—It shall
be the duty of the President to declare a city as highly
urbanized within thirty (30) days after it shall have met the
41
minimum requirements prescribed in the immediately the considerations that justice and fair play demanded. Hence,
preceding Section, upon proper application therefor and this Court should do no less by stamping its imprimatur to the
ratification in a plebiscite by the qualified voters therein. clear and unmistakable legislative intent and by duly
recognizing the certain collective wisdom of Congress.
Indeed, R.A. No. 9387 and R.A. No. 9388 evidently show that
the President had not classified San Juan and Navotas as WHEREFORE, the Ad Cautelam Motion for Reconsideration
highly urbanized cities upon proper application and ratification (of the Decision dated 15 February 2011) is denied with finality.
in a plebiscite by the qualified voters therein. A further perusal
of R.A. No. 9387 reveals that San Juan did not qualify as a SO ORDERED.
highly urbanized city because it had a population of only
125,558, contravening the required minimum population of
200,000 under Section 452 of the LGC. Such non-qualification
as a component city was conceded even by Senator Pimentel
during the deliberations on Senate Bill No. 2157.

The petitioners’ contention that the Cityhood Laws violated

their right to a just share in the national taxes is not acceptable.

In this regard, it suffices to state that the share of local

government units is a matter of percentage under Section 285
of the LGC, not a specific amount. Specifically, the share of the
cities is 23%, determined on the basis of population (50%),
land area (25%), and equal sharing (25%). This share is also
dependent on the number of existing cities, such that when the
number of cities increases, then more will divide and share the
allocation for cities. However, we have to note that the
allocation by the National Government is not a constant, and
can either increase or decrease. With every newly converted
city becoming entitled to share the allocation for cities, the
percentage of internal revenue allotment (IRA) entitlement of
each city will decrease, although the actual amount received
may be more than that received in the preceding year. That is
a necessary consequence of Section 285 and Section 286 of
the LGC.

As elaborated here and in the assailed February 15, 2011

Resolution, the Cityhood Laws were not violative of the
Constitution and the LGC. The respondents are thus also
entitled to their just share in the IRA allocation for cities. They
have demonstrated their viability as component cities of their
respective provinces and are developing continuously, albeit
slowly, because they had previously to share the IRA with
about 1,500 municipalities. With their conversion into
component cities, they will have to share with only around 120
cities.

Local government units do not subsist only on locally

generated income, but also depend on the IRA to support their
development. They can spur their own developments and
thereby realize their great potential of encouraging trade and
commerce in the far-flung regions of the country. Yet their
potential will effectively be stunted if those already earning
more will still receive a bigger share from the national coffers,
and if commercial activity will be more or less concentrated
only in and near Metro Manila.

III.
Conclusion

We should not ever lose sight of the fact that the 16 cities
covered by the Cityhood Laws not only had conversion bills
pending during the 11th Congress, but have also complied with
the requirements of the LGC prescribed prior to its amendment
by R.A. No. 9009. Congress undeniably gave these cities all
42
G.R. No. 182403 March 9, 2010
ATTY. RESTITUTO G. CUDIAMAT, ERLINDA P.
CUDIAMAT1 and CORAZON D. CUDIAMAT, Petitioners,
vs.
BATANGAS SAVINGS AND LOAN BANK, INC., and THE
REGISTER OF DEEDS, NASUGBU,
BATANGAS,Respondents.
DECISION
CARPIO MORALES, J.:
Petitioner Atty. RestitutoCudiamat and his brother Perfecto
were the registered co-owners of a 320 square meter parcel of
land (the property) in Balayan, Batangas, covered by TCT No.
T-37889 of the Register of Deeds of Nasugbu, Batangas.
Restituto, who resided in Ozamiz City with his wife, entrusted
the custody of the title to who was residing in Balayan.
In 1979, Perfecto, without the knowledge and consent of
Restituto, obtained a loan from respondent Batangas Savings
and Loan Bank, Inc. (the bank). To secure the payment of the
loan, Perfecto mortgaged the property for the purpose of which
he presented a Special Power of Attorney (SPA) purportedly
executed by Restituto, with the marital consent of his wife-
herein co-petitioner ErlindaCudiamat.
On June 19, 1991, Restituto was informed, via letter2 dated
June 7, 1991 from the bank, that the property was foreclosed.
He thus, by letter3 dated June 25, 1991, informed the bank that
he had no participation in the execution of the mortgage and
that he never authorized Perfecto for the purpose.
In the meantime, Perfecto died in 1990. In 1998, as Perfecto’s
widow petitioner Corazon was being evicted from the property,
she and her co-petitioner-spouses Restituto and Erlinda filed
on August 9, 1999 before the Regional Trial Court (RTC) of
Balayan a complaint4 "for quieting of title with damages"
against the bank and the Register of Deeds of Nasugbu,
docketed as Civil Case No. 3618, assailing the mortgage as
being null and void as they did not authorize the encumbrance
of the property.
In its Answer to the complaint, the bank, maintaining the
validity of the mortgage, alleged that it had in fact secured a
title in its name, TCT No. T-48405, after Perfecto failed to
redeem the mortgage; that the Balayan RTC had no jurisdiction
over the case as the bank had been placed under receivership
and under liquidation by the Philippine Deposit Insurance
Corporation (PDIC); that PDIC filed before the RTC of
Nasugbu a petition for assistance in the liquidation of the bank
which was docketed as SP No. 576; and that jurisdiction to
adjudicate disputed claims against it is lodged with the
liquidation court-RTC Nasugbu.
By Decision of January 17, 2006,5 Branch 9 of the Balayan
RTC rendered judgment, in the complaint for quieting of title, in
favor of the plaintiffs-herein petitioners. It ordered respondent
Register of Deeds of Nasugbu to cancel the encumbrance
annotated on TCT No. T-37889, and to cancel TCT No. T-
48405 issued in the name of the bank and reinstate the former
title. It also directed the bank to return the property to petitioner
spouses Restituto and Erlinda and to pay ₱20,000 to all the
petitioners to defray the costs of suit.
The bank appealed to the Court of Appeals, contending, inter
alia, that the Balayan RTC had no jurisdiction over petitioners’
complaint for quieting of title.
By the assailed Decision of December 21, 2007,6 the appellate
court, ruling in favor of the bank, dismissed petitioners’
complaint for quieting of title, without prejudice to the right of
petitioners to take up their claims with the Nasugbu RTC sitting
as a liquidation court.
To the appellate court, the Balayan RTC, as a court of general
jurisdiction, should have deferred to the Nasugbu RTC which
sits as a liquidation court, given that the bank was already
under receivership when petitioners filed the complaint for
quieting of title.
Petitioners’ Motion for Reconsideration having been denied by
the appellate court by Resolution of March 27, 2008, they filed
the present petition for review on certiorari.1avvphi1
Assailing the appellate court’s ruling that the Balayan RTC had
no jurisdiction over their complaint, petitioners argue that their
complaint was filed earlier than PDIC’s petition for assistance
in the liquidation; and that the bank is now estopped from
questioning the jurisdiction of the Balayan RTC because it
actively participated in the proceedings thereat.
The petition is impressed with merit.
Estoppel bars the bank from raising the issue of lack of
jurisdiction of the Balayan RTC.
In Lozon v. NLRC,7 the Court came up with a clear rule on
when jurisdiction by estoppel applies and when it does not:
The operation of estoppel on the question of jurisdiction
seemingly depends on 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 the consent of the parties or by
estoppel." 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… (underscoring supplied)
The ruling was echoed in Metromedia Times Corporation v.
Pastorin.8
In the present case, the Balayan RTC, sitting as a court of
general jurisdiction, had jurisdiction over the complaint for
quieting of title filed by petitioners on August 9, 1999. The
Nasugbu RTC, as a liquidation court, assumed jurisdiction over
the claims against the bank only on May 25, 2000, when
PDIC’s petition for assistance in the liquidation was raffled
thereat and given due course.
43
While it is well-settled that lack of jurisdiction on the subject
matter can be raised at any time and is not lost by estoppel by
laches, the present case is an exception. To compel petitioners
to re-file and relitigate their claims before the Nasugbu RTC
when the parties had already been given the opportunity to
present their respective evidence in a full-blown trial before the
Balayan RTC which had, in fact, decided petitioners’ complaint
(about two years before the appellate court rendered the
assailed decision) would be an exercise in futility and would
unjustly burden petitioners.

The Court, in Valenzuela v. Court of Appeals, 9 held that as a

general rule, if there is a judicial liquidation of an insolvent
bank, all claims against the bank should be filed in the
liquidation proceeding. The Court in Valenzuela, however, after
considering the circumstances attendant to the case, held that
the general rule should not be applied if to order the aggrieved
party to refile or relitigate its case before the litigation court
would be "an exercise in futility." Among the circumstances the
Court considered in that case is the fact that the claimants
were poor and the disputed parcel of land was their only
property, and the parties’ claims and defenses were properly
ventilated in and considered by the judicial court.

In the present case, the Court finds that analogous

considerations exist to warrant the application of Valenzuela.
Petitioner Restituto was 78 years old at the time the petition
was filed in this Court, and his co-petitioner-wife Erlinda
died10 during the pendency of the case. And, except for co-
petitioner Corazon, Restituto is a resident of Ozamis City. To
compel him to appear and relitigate the case in the liquidation
court-Nasugbu RTC when the issues to be raised before it are
the same as those already exhaustively passed upon and
decided by the Balayan RTC would be superfluous.

WHEREFORE, the petition is GRANTED. The Decision of

December 21, 2007 and Resolution dated March 27, 2008 of
the Court of Appeals are SET ASIDE. The Decision dated
January 17, 2006 of the Regional Trial Court of Balayan,
Batangas, Branch 9 is REINSTATED.

SO ORDERED.

44
G. R. No. 162322 March 14, 2012
REPUBLIC OF THE PHILIPPINES, Petitioner,
vs.
BANTIGUE POINT DEVELOPMENT
CORPORATION, Respondent.
DECISION
SERENO, J.:
This Rule 45 Petition requires this Court to address the issue of
the proper scope of the delegated jurisdiction of municipal trial
courts in land registration cases. Petitioner Republic of the
Philippines (Republic) assails the Decision of the Court of
Appeals (CA)1 in CA-G.R. CV No. 70349, which affirmed the
Decision of the Municipal Trial Court (MTC) of San Juan,
Batangas2 in LRC Case No. N-98-20, LRA Record No. 68329,
granting respondent Bantigue Point Development
Corporation’s (Corporation) application for original registration
of a parcel of land. Since only questions of law have been
raised, petitioner need not have filed a Motion for
Reconsideration of the assailed CA Decision before filing this
Petition for Review.
The Facts
On 17 July 1997, respondent Bantigue Point Development
Corporation filed with the Regional Trial Court (RTC) of
Rosario, Batangas an application for original registration of title
over a parcel of land with an assessed value of ₱4,330, ₱1,920
and ₱8,670, or a total assessed value of ₱14,920 for the entire
property, more particularly described as Lot 8060 of Cad 453-
D, San Juan Cadastre, with an area of more or less 10,732
square meters, located at Barangay Barualte, San Juan,
Batangas. 3
On 18 July 1997, the RTC issued an Order setting the case for
initial hearing on 22 October 1997.4 On 7 August 1997, it
issued a second Order setting the initial hearing on 4
November 1997.5
Petitioner Republic filed its Opposition to the application for
registration on 8 January 1998 while the records were still with
the RTC.6
On 31 March 1998, the RTC Clerk of Court transmitted
motuproprio the records of the case to the MTC of San Juan,
because the assessed value of the property was allegedly less
than ₱100,000.7
Thereafter, the MTC entered an Order of General Default 8 and
commenced with the reception of evidence. 9 Among the
documents presented by respondent in support of its
application are Tax Declarations,10 a Deed of Absolute Sale in
its favor,11 and a Certification from the Department of
Environment and Natural Resources (DENR) Community
Environment and Natural Resources Office (CENRO) of
Batangas City that the lot in question is within the alienable and
disposable zone.12 Thereafter, it awarded the land to
respondent Corporation.13
Acting on an appeal filed by the Republic,14 the CA ruled that
since the former had actively participated in the proceedings
before the lower court, but failed to raise the jurisdictional
challenge therein, petitioner is thereby estopped from
questioning the jurisdiction of the lower court on appeal. 15 The
CA further found that respondent Corporation had sufficiently
established the latter’s registrable title over the subject property
after having proven open, continuous, exclusive and notorious
possession and occupation of the subject land by itself and its
predecessors-in-interest even before the outbreak of World
War II.16
Dissatisfied with the CA’s ruling, petitioner Republic filed this
instant Rule 45 Petition and raised the following arguments in
support of its appeal:
I.
THE REPUBLIC CANNOT BE ESTOPPED FROM
QUESTIONING THE JURISDICTION OF THE
MUNICIPAL TRIAL COURT OVER THE
APPLICATION FOR ORIGINAL REGISTRATION OF
LAND TITLE EVEN FOR THE FIRST TIME ON
APPEAL
II.
THE MUNICIPAL TRIAL COURT FAILED TO
ACQUIRE JURISDICTION OVER THE
APPLICATION FOR ORIGINAL REGISTRATION OF
LAND TITLE.17
The Court’s Ruling
We uphold the jurisdiction of the MTC, but remand the case to
the court a quo for further proceedings in order to determine if
the property in question forms part of the alienable and
disposable land of the public domain.
I
The Republic is not estopped from raising the issue of
jurisdiction in this case.
At the outset, we rule that petitioner Republic is not estopped
from questioning the jurisdiction of the lower court, even if the
former raised the jurisdictional question only on appeal. The
rule is settled that lack of jurisdiction over the subject matter
may be raised at any stage of the proceedings.18 Jurisdiction
over the subject matter is conferred only by the Constitution or
the law.19 It cannot be acquired through a waiver or enlarged
by the omission of the parties or conferred by the
acquiescence of the court.20 Consequently, questions of
jurisdiction may be cognizable even if raised for the first time
on appeal.21
The ruling of the Court of Appeals that "a party may be
estopped from raising such [jurisdictional] question if he has
actively taken part in the very proceeding which he questions,
belatedly objecting to the court’s jurisdiction in the event that
the judgment or order subsequently rendered is adverse to
him"22 is based on the doctrine of estoppel by laches. We are
aware of that doctrine first enunciated by this Court in Tijam v.
45
Sibonghanoy.23 In Tijam, the party-litigant actively participated
in the proceedings before the lower court and filed pleadings
therein. Only 15 years thereafter, and after receiving an
adverse Decision on the merits from the appellate court, did
the party-litigant question the lower court’s jurisdiction.
Considering the unique facts in that case, we held that
estoppel by laches had already precluded the party-litigant
from raising the question of lack of jurisdiction on appeal.
In Figueroa v. People,24 we cautioned that Tijam must be
construed as an exception to the general rule and applied only
in the most exceptional cases whose factual milieu is similar to
that in the latter case.
The facts are starkly different in this case, making the
exceptional rule in Tijam inapplicable. Here, petitioner Republic
filed its Opposition to the application for registration when the
records were still with the RTC.25 At that point, petitioner could
not have questioned the delegated jurisdiction of the MTC,
simply because the case was not yet with that court. When the
records were transferred to the MTC, petitioner neither filed
pleadings nor requested affirmative relief from that court. On
appeal, petitioner immediately raised the jurisdictional question
in its Brief.26Clearly, the exceptional doctrine of estoppel by
laches is inapplicable to the instant appeal.
Laches has been defined as the "failure or neglect, for an
unreasonable and unexplained length of time, to do that which,
by exercising due diligence, could or should have been done
earlier; it is negligence or omission to assert a right within a
reasonable time, warranting the presumption that the party
entitled to assert it either has abandoned or declined to assert
it."27 In this case, petitioner Republic has not displayed such
unreasonable failure or neglect that would lead us to conclude
that it has abandoned or declined to assert its right to question
the lower court's jurisdiction.
II
The Municipal Trial Court properly acquired jurisdiction over
the case.
In assailing the jurisdiction of the lower courts, petitioner
Republic raised two points of contention: (a) the period for
setting the date and hour of the initial hearing; and (b) the
value of the land to be registered.
First, petitioner argued that the lower court failed to acquire
jurisdiction over the application, because the RTC set the date
and hour of the initial hearing beyond the 90-day period
provided under the Property Registration Decree.28
We disagree.
The Property Registration Decree provides:
Sec. 23. Notice of initial hearing, publication, etc. - The court
shall, within five days from filing of the application, issue an
order setting the date and hour of the initial hearing which shall
not be earlier than forty-five days nor later than ninety days
from the date of the order. x xx.
In this case, the application for original registration was filed on
17 July 1997.29 On 18 July 1997, or a day after the filing of the
application, the RTC immediately issued an Order setting the
case for initial hearing on 22 October 1997, which was 96 days
from the Order.30 While the date set by the RTC was beyond
the 90-day period provided for in Section 23, this fact did not
affect the jurisdiction of the trial court. In Republic v. Manna
Properties, Inc.,31petitioner Republic therein contended that
there was failure to comply with the jurisdictional requirements
for original registration, because there were 125 days between
the Order setting the date of the initial hearing and the initial
hearing itself. We ruled that the lapse of time between the
issuance of the Order setting the date of initial hearing and the
date of the initial hearing itself was not fatal to the application.
Thus, we held:
x xx [A] party to an action has no control over the Administrator
or the Clerk of Court acting as a land court; he has no right to
meddle unduly with the business of such official in the
performance of his duties. A party cannot intervene in matters
within the exclusive power of the trial court. No fault is
attributable to such party if the trial court errs on matters within
its sole power. It is unfair to punish an applicant for an act or
omission over which the applicant has neither responsibility nor
control, especially if the applicant has complied with all the
requirements of the law.32
Indeed, it would be the height of injustice to penalize
respondent Corporation by dismissing its application for
registration on account of events beyond its control.
Moreover, since the RTC issued a second Order on 7 August
1997 setting the initial hearing on 4 November 1997, 33within
the 90-day period provided by law, petitioner Republic argued
that the jurisdictional defect was still not cured, as the second
Order was issued more than five days from the filing of the
application, again contrary to the prescribed period under the
Property Registration Decree.34
Petitioner is incorrect.
The RTC’s failure to issue the Order setting the date and hour
of the initial hearing within five days from the filing of the
application for registration, as provided in the Property
Registration Decree, did not affect the court’s its jurisdiction.
Observance of the five-day period was merely directory, and
failure to issue the Order within that period did not deprive the
RTC of its jurisdiction over the case. To rule that compliance
with the five-day period is mandatory would make jurisdiction
over the subject matter dependent upon the trial court.
Jurisdiction over the subject matter is conferred only by the
Constitution or the law.35 It cannot be contingent upon the
action or inaction of the court.
This does not mean that courts may disregard the statutory
periods with impunity. We cannot assume that the law
deliberately meant the provision "to become meaningless and
to be treated as a dead letter."36 However, the records of this
case do not show such blatant disregard for the law. In fact, the
RTC immediately set the case for initial hearing a day after the
filing of the application for registration,37 except that it had to
issue a second Order because the initial hearing had been set
beyond the 90-day period provided by law.
Second, petitioner contended38 that since the selling price of
the property based on the Deed of Sale annexed to
46
respondent’s application for original registration was
₱160,000,39 the MTC did not have jurisdiction over the case.
Under Section 34 of the Judiciary Reorganization Act, as
amended,40 the MTC’s delegated jurisdiction to try cadastral
and land registration cases is limited to lands, the value of
which should not exceed ₱100,000.
We are not persuaded.
The delegated jurisdiction of the MTC over cadastral and land
registration cases is indeed set forth in the Judiciary
Reorganization Act, which provides:
Sec. 34. Delegated Jurisdiction in Cadastral and Land
Registration Cases. - Metropolitan Trial Courts, Municipal Trial
Courts, and Municipal Circuit Trial Courts may be assigned by
the Supreme Court to hear and determine cadastral or land
registration cases covering lots where there is no controversy
or opposition, or contested lots where the value of which does
not exceed One hundred thousand pesos (₱100,000.00), such
value to be ascertained by the affidavit of the claimant or by
agreement of the respective claimants if there are more than
one, or from the corresponding tax declaration of the real
property. Their decision in these cases shall be appealable in
the same manner as decisions of the Regional Trial Courts.
(As amended by R.A. No. 7691) (Emphasis supplied.)
Thus, the MTC has delegated jurisdiction in cadastral and land
registration cases in two instances: first, where there is no
controversy or opposition; or, second, over contested lots, the
value of which does not exceed ₱100,000.
The case at bar does not fall under the first instance, because
petitioner opposed respondent Corporation’s application for
registration on 8 January 1998.41
However, the MTC had jurisdiction under the second instance,
because the value of the lot in this case does not exceed
₱100,000.
Contrary to petitioner’s contention, the value of the land should
not be determined with reference to its selling price. Rather,
Section 34 of the Judiciary Reorganization Act provides that
the value of the property sought to be registered may be
ascertained in three ways: first, by the affidavit of the
claimant; second, by agreement of the respective claimants, if
there are more than one; or, third, from the corresponding tax
declaration of the real property.42
In this case, the value of the property cannot be determined
using the first method, because the records are bereft of any
affidavit executed by respondent as to the value of the
property. Likewise, valuation cannot be done through the
second method, because this method finds application only
where there are multiple claimants who agree on and make a
joint submission as to the value of the property. Here, only
respondent Bantigue Point Development Corporation claims
the property.
The value of the property must therefore be ascertained with
reference to the corresponding Tax Declarations submitted by
respondent Corporation together with its application for
registration. From the records, we find that the assessed value
of the property is ₱4,330, ₱1,920 and ₱8,670, or a total
assessed value of ₱14,920 for the entire property. 43 Based on
these Tax Declarations, it is evident that the total value of the
land in question does not exceed ₱100,000. Clearly, the MTC
may exercise its delegated jurisdiction under the Judiciary
Reorganization Act, as amended.
III
A certification from the CENRO is not sufficient proof that the
property in question is alienable and disposable land of the
public domain.
Even as we affirm the propriety of the MTC’s exercise of its
delegated jurisdiction, we find that the lower court erred in
granting respondent Corporation’s application for original
registration in the absence of sufficient proof that the property
in question was alienable and disposable land of the public
domain.
The Regalian doctrine dictates that all lands of the public
domain belong to the State.44 The applicant for land registration
has the burden of overcoming the presumption of State
ownership by establishing through incontrovertible evidence
that the land sought to be registered is alienable or disposable
based on a positive act of the government. 45 We held in
Republic v. T.A.N. Properties, Inc. that a CENRO certification
is insufficient to prove the alienable and disposable character
of the land sought to be registered.46 The applicant must also
show sufficient proof that the DENR Secretary has approved
the land classification and released the land in question as
alienable and disposable.47
Thus, the present rule is that an application for original
registration must be accompanied by (1) a CENRO or
PENRO48 Certification; and (2) a copy of the original
classification approved by the DENR Secretary and certified as
a true copy by the legal custodian of the official records. 49
Here, respondent Corporation only presented a CENRO
certification in support of its application. 50 Clearly, this falls
short of the requirements for original registration.1âwphi1
We therefore remand this case to the court a quo for reception
of further evidence to prove that the property in question forms
part of the alienable and disposable land of the public domain.
If respondent Bantigue Point Development Corporation
presents a certified true copy of the original classification
approved by the DENR Secretary, the application for original
registration should be granted. If it fails to present sufficient
proof that the land in question is alienable and disposable
based on a positive act of the government, the application
should be denied.
WHEREFORE, premises considered, the instant Petition for
Review is DENIED. Let this case be REMANDED to the
Municipal Trial Court of San Juan, Batangas, for reception of
evidence to prove that the property sought to be registered is
alienable and disposable land of the public domain.
SO ORDERED.
47
G.R. No. 160604 March 28, 2008
PHILIPPINE DAILY INQUIRER, ISAGANI YAMBOT, LETTY
JIMENEZ-MAGSANOC, PERGENITO B. BANDAYREL, JR.,
GOBLETH C. MOULIC, ESTANISLAO CALDEZ, and
ZENAIDA CALDEZ, Petitioners,
vs.
HON. ELMO M. ALAMEDA, in his capacity as the Presiding
Judge of the REGIONAL TRIAL COURT OF TUGUEGARAO
CITY, CAGAYAN, BRANCH 5, and LUZ CORTEZ
BABARAN, Respondents.
DECISION
AZCUNA, J.:
Before us is a petition for review on certiorari seeking the
review, setting aside, and annulment of the Resolution 1 of the
Court of Appeals (CA) in CA-G.R. SP No. 79702 dated October
22, 2003 dismissing the petition for certiorari and prohibition
filed by petitioners.
The antecedents are as follows:
The Philippine Daily Inquirer (PDI), in its August 1, 2000 issue,
published an article with the heading "After Bong, who’s
next?"2 The article narrates the death of Expedito "Bong"
Caldez, a photo correspondent of the PDI in Cagayan. In said
article, the family of the deceased correspondent laments the
death of their loved one due to the alleged erroneous diagnosis
of Dr. Luz Babaran.3
Later, in its September 29, 2000 issue, the PDI published
another article with the heading "DOH orders probe of fotog’s
death."4 In said article, it was reported that the regional
Department of Health (DOH) in Tuguegarao City has started
investigating the death of ExpeditoCaldez following an order
from the DOH’s Bureau of Licensing and Regulation.
On July 25, 2001, based on the two PDI column articles, Dr.
Babaran filed a complaint for Damages,5 Civil Case No. 5850,
against herein petitioners. In said complaint Dr. Babaran
alleged, among other things, that: after learning about the
article published in the August 1, 2000 issue of the PDI, she
wrote a letter to the editor of the PDI but she never received
any response from the latter; to aggravate the matter, another
article appeared in the September 29, 2000 issue of the PDI
and she was again singled out as having erroneously
diagnosed the illness of ExpeditoCaldez; the Report 6 of the
DOH Fact-Finding Committee concluding that her diagnosis
cannot be considered erroneous, was suppressed and was
never published by the PDI; the articles portrayed her as
incompetent and one whose alleged erroneous diagnosis
caused the death of ExpeditoCaldez; and, in causing the
articles to be published, petitioners acted in bad faith.
On September 13, 2001, petitioners filed their Answer 7 with
counterclaims. In said answer, petitioners raised, among
others, the following defenses: that the complaint states no
cause of action against them; that the complaint fails and omits
to state the factual premises to support a conclusion that there
was malice on the part of the PDI in publishing the questioned
news report; that private respondent failed to allege "actual
malice" on the part of the petitioners; that a case for actionable
libel with claims for damages has not been adequately stated
in the complaint; and, that the complaint fails to establish the
basis of petitioners’ liability.8
Pre-trial was held and terminated, and petitioners thereafter
filed a Motion for a Preliminary Hearing on Affirmative Defense
Raised in the Answer (which is also a ground for a motion to
dismiss).9 In said motion, it was alleged that at the pre-trial on
February 19, 2003, the court noted that one of the defenses
raised by petitioners was that private respondent has not
delineated the participation of each of petitioners in the
publication of the alleged libelous articles. 10 Thereupon, private
respondent’s counsel asked for a few days to determine
whether the complaint should be amended to cure its defects.
However, private respondent had not moved to amend the
complaint, hence, petitioners filed the motion.11
In support thereof, petitioners contend that: in libel charges, the
participation of each defendant must be specifically alleged in
the complaint, which private respondent failed to do; and the
allegations of the complaint are mere conclusions of law and
opinions of the private respondent.12 Petitioners ultimately
prayed that a preliminary hearing be conducted on their
affirmative defense that the complaint failed to state a cause of
action; and that, thereafter, the complaint be dismissed. 13
Subsequently, private respondent filed a Comment/Opposition
to the Motion to Dismiss Based on Affirmative Defense. 14 In
said comment/opposition, private respondent averred that at
the February 19, 2003 pre-trial, the issue of whether or not the
complaint states a cause of action was not raised. As such, it is
no longer an issue to be litigated in the case. Private
respondent prayed that the court deny petitioners’ motion to
dismiss.
On May 30, 2003, the Regional Trial Court (RTC) issued an
Order15 denying petitioners’ motion in this wise:
With this finding and conclusion, the Court finds no further
necessity in dwelling at length on the other issues raised by the
defendants. Consequently, the motion for a Preliminary
Hearing on Affirmative Defense Raised in the Answer (which is
also a ground for a motion to dismiss) is hereby DENIED. The
initial presentation of plaintiff’s evidence is set on July 3, 2003,
at 8:30 o’clock in the morning.
SO ORDERED.16
The RTC opined that private respondent’s allegations in her
complaint, as well as her documentary evidence, show that
there is sufficient cause of action. It added that the
documentary evidence discloses facts which are sufficient to
enable the court to go beyond the disclosures in the complaint.
Considering that the facts alleged in the complaint which make
out the principal cause of action and relief are sufficient, the
case should not be dismissed.17
Petitioners filed a Motion for Reconsideration18 but it was
denied in the Order19 dated July 29, 2003.
Aggrieved, petitioners filed a Petition for Certiorari and
Prohibition (with Prayer for the Issuance of Temporary
48
Restraining Order and/or Preliminary Injunction)20 with the CA,
relying on the ground that:
THE RESPONDENT TRIAL JUDGE GRAVELY ABUSED HIS
DISCRETION AND EXCEEDED HIS JURISDICTION IN NOT
DISMISSING THE COMPLAINT DESPITE ITS FAILURE TO
VALIDLY AND SUFFICIENTLY STATE A CAUSE OF ACTION
FOR LIBEL AGAINST THE PETITIONERS BECAUSE:
A) THE PARTICIPATION OF EACH DEFENDANT
(PETITIONER) IN THE WRITING, EDITING,
PRINTING, AND PUBLICATION OF THE NEWS
ARTICLES IN QUESTION IS NOT SPECIFICALLY
SET OUT IN THE COMPLAINT;
B) THE MATERIAL ALLEGATIONS OF THE
COMPLAINT ARE PURELY LEGAL CONCLUSIONS
AND OPINIONS OF PRIVATE RESPONDENT, AND
NOT STATEMENTS OF ULTIMATE FACTS.21
Petitioners prayed among others: that the Orders of the RTC
dated May 30, 2003 and July 29, 2003 be annulled and set
aside for having been rendered with grave abuse of discretion
and/or excess of jurisdiction; and that Civil Case No. 5850 be
dismissed for failure to state a cause of action.22
On October 22, 2003, the CA issued a Resolution 23 dismissing
the petition for being insufficient in form and substance and for
presenting no justiciable issue needing serious consideration
by the court. Also, the CA noted that the Order dated May 30,
2003 shows that the RTC had already ruled against petitioners’
affirmative defense that the complaint states no cause of
action.
Hence, this petition, raising the following issues:
WHETHER OR NOT A COMPLAINT WHICH FAILS TO
VALIDLY AND SUFFICIENTLY STATE A CAUSE OF ACTION
FOR LIBEL BECAUSE:
A) THE PARTICIPATION OF EACH DEFENDANT
(PETITIONER) IN THE WRITING, EDITING,
PRINTING, AND PUBLICATION OF THE NEWS
ARTICLES IN QUESTION IS NOT SPECIFICALLY
SET OUT IN THE COMPLAINT;
B) THE MATERIAL ALLEGATIONS OF THE
COMPLAINT ARE PURELY LEGAL CONCLUSIONS
AND OPINIONS OF PRIVATE RESPONDENT, AND
NOT STATEMENTS OF ULTIMATE FACTS; AND
C) THE COMPLAINT IS VIOLATIVE OF
PETITIONERS’ CONSTITUTIONAL RIGHTS TO
FREE PRESS AND TO FREE SPEECH.
SHOULD BE DISMISSED UPON MOTION BY THE
DEFENDANTS (PETITIONERS HEREIN). 24
Petitioners argue that private respondent’s complaint failed to
comply with the requirement in libel cases that the participation
of each defendant must be specifically alleged in the complaint.
Petitioners maintain that their divergent personal
circumstances and different legal existence, not to mention the
absence of any professional relationship of two of petitioners
with the rest of them, should have prompted private respondent
to specify the participation of each petitioner in the news
gathering, reporting, editing, publication, and circulation of the
subject articles. As such it cannot be determined with certainty
from the allegations in the complaint whose acts and omissions
are actually complained of.25
Also, petitioners added that the material allegations of the
complaint are not statements of ultimate facts but were mere
conclusions of law and were merely private respondent’s
opinions.26
Finally, petitioners contend that the complaint violates their
constitutionally protected freedom of speech and of the
press.27
As defined in Section 2, Rule 2 of the Rules of Court, a cause
of action is the act or omission by which a party violates the
right of another. In relation to a complaint, it is a formal
statement of the operative facts that give rise to a remedial
right. The question of whether the complaint states a cause of
action is determined by its averments regarding the acts
committed by the defendant. Thus, it must contain a concise
statement of the ultimate or essential facts constituting the
plaintiff's cause of action. As such, the failure to make a
sufficient allegation of a cause of action in the complaint
warrants its dismissal.28 Its essential elements are as follows:
1. A right in favor of the plaintiff by whatever means
and under whatever law it arises or is created;
2. An obligation on the part of the named defendant to
respect or not to violate such right; and
3. Act or omission on the part of such defendant in
violation of the right of the plaintiff or constituting a
breach of the obligation of the defendant to the
plaintiff for which the latter may maintain an action for
recovery of damages or other appropriate relief.
Of the three, the most important is the last element since it is
only upon the occurrence of the last element that a cause of
action arises, giving the plaintiff the right to maintain an action
in court for recovery of damages or other appropriate relief.29 In
determining whether an initiatory pleading states a cause of
action, "the test is as follows: admitting the truth of the facts
alleged, can the court render a valid judgment in accordance
with the prayer?" To be taken into account are only the
material allegations in the complaint; extraneous facts and
circumstances or other matters aliunde are not considered.
The court may however consider, in addition to the complaint,
the appended annexes or documents, other pleadings of the
plaintiff, or admissions in the records.30
When a defendant seeks the dismissal of the complaint
through a motion to dismiss, the sufficiency of the motion
should be tested on the strength of the allegations of facts
contained in the complaint and on no other basis. 31 The issue
of whether or not the complaint failed to state a cause of
action, warranting its dismissal, must be passed upon on the
basis of the allegations stated therein assuming them to be
true and the court cannot inquire into the truth of the
49
allegations and declare them to be false; otherwise, it would be
a procedural error and a denial of due process to the plaintiff.32

This Court finds that petitioners raised the threshold question

of whether the complaint sufficiently alleges a cause of
action.1avvphi1

Hence, the trial court should have granted petitioners’ motion

for a preliminary hearing on the affirmative defenses raised in
the answer based on failure to state a cause of action. This
procedure is designed to prevent a tedious, if not traumatic,
trial in case the complaint falls short of sufficiently alleging a
cause of action.

WHEREFORE, the petition is GRANTED. The Resolution of

the Court of Appeals dated October 22, 2003 is REVERSED,
and the case is REMANDED to the Regional Trial Court of
Tuguegarao City, Cagayan, Branch 5, for the trial court to hear
and resolve petitioners’ Affirmative Defenses Raised in the
Answer.

No costs.

SO ORDERED.

50
G.R. No. 190710 June 6, 2011
JESSE U. LUCAS, Petitioner,
vs.
JESUS S. LUCAS, Respondent.
DECISION
NACHURA, J.:
Is a prima facie showing necessary before a court can issue a
DNA testing order? In this petition for review on certiorari, we
address this question to guide the Bench and the Bar in
dealing with a relatively new evidentiary tool. Assailed in this
petition are the Court of Appeals (CA) Decision1 dated
September 25, 2009 and Resolution dated December 17,
2009.
The antecedents of the case are, as follows:
On July 26, 2007, petitioner, Jesse U. Lucas, filed a Petition to
Establish Illegitimate Filiation (with Motion for the Submission
of Parties to DNA Testing)2 before the Regional Trial Court
(RTC), Branch 72, Valenzuela City. Petitioner narrated that,
sometime in 1967, his mother, Elsie Uy (Elsie), migrated to
Manila from Davao and stayed with a certain "Ate Belen
(Belen)" who worked in a prominent nightspot in Manila. Elsie
would oftentimes accompany Belen to work. On one occasion,
Elsie got acquainted with respondent, Jesus S. Lucas, at
Belen’s workplace, and an intimate relationship developed
between the two. Elsie eventually got pregnant and, on March
11, 1969, she gave birth to petitioner, Jesse U. Lucas. The
name of petitioner’s father was not stated in petitioner’s
certificate of live birth. However, Elsie later on told petitioner
that his father is respondent. On August 1, 1969, petitioner was
baptized at San Isidro Parish, Taft Avenue, Pasay City.
Respondent allegedly extended financial support to Elsie and
petitioner for a period of about two years. When the
relationship of Elsie and respondent ended, Elsie refused to
accept respondent’s offer of support and decided to raise
petitioner on her own. While petitioner was growing up, Elsie
made several attempts to introduce petitioner to respondent,
but all attempts were in vain.
Attached to the petition were the following: (a) petitioner’s
certificate of live birth; (b) petitioner’s baptismal certificate; (c)
petitioner’s college diploma, showing that he graduated from
Saint Louis University in Baguio City with a degree in
Psychology; (d) his Certificate of Graduation from the same
school; (e) Certificate of Recognition from the University of the
Philippines, College of Music; and (f) clippings of several
articles from different newspapers about petitioner, as a
musical prodigy.
Respondent was not served with a copy of the petition.
Nonetheless, respondent learned of the petition to establish
filiation. His counsel therefore went to the trial court on August
29, 2007 and obtained a copy of the petition.
Petitioner filed with the RTC a Very Urgent Motion to Try and
Hear the Case. Hence, on September 3, 2007, the RTC,
finding the petition to be sufficient in form and substance,
issued the Order3 setting the case for hearing and urging
anyone who has any objection to the petition to file his
opposition. The court also directed that the Order be published
once a week for three consecutive weeks in any newspaper of
general circulation in the Philippines, and that the Solicitor
General be furnished with copies of the Order and the petition
in order that he may appear and represent the State in the
case.
On September 4, 2007, unaware of the issuance of the
September 3, 2007 Order, respondent filed a Special
Appearance and Comment. He manifested inter alia that: (1)
he did not receive the summons and a copy of the petition; (2)
the petition was adversarial in nature and therefore summons
should be served on him as respondent; (3) should the court
agree that summons was required, he was waiving service of
summons and making a voluntary appearance; and (4) notice
by publication of the petition and the hearing was improper
because of the confidentiality of the subject matter.4
On September 14, 2007, respondent also filed a Manifestation
and Comment on Petitioner’s Very Urgent Motion to Try and
Hear the Case. Respondent reiterated that the petition for
recognition is adversarial in nature; hence, he should be
served with summons.
After learning of the September 3, 2007 Order, respondent filed
a motion for reconsideration.5 Respondent averred that the
petition was not in due form and substance because petitioner
could not have personally known the matters that were alleged
therein. He argued that DNA testing cannot be had on the
basis of a mere allegation pointing to respondent as petitioner’s
father. Moreover, jurisprudence is still unsettled on the
acceptability of DNA evidence.
On July 30, 2008, the RTC, acting on respondent’s motion for
reconsideration, issued an Order6 dismissing the case. The
court remarked that, based on the case of Herrera v.
Alba,7 there are four significant procedural aspects of a
traditional paternity action which the parties have to face: a
prima facie case, affirmative defenses, presumption of
legitimacy, and physical resemblance between the putative
father and the child. The court opined that petitioner must first
establish these four procedural aspects before he can present
evidence of paternity and filiation, which may include
incriminating acts or scientific evidence like blood group test
and DNA test results. The court observed that the petition did
not show that these procedural aspects were present.
Petitioner failed to establish a prima facie case considering that
(a) his mother did not personally declare that she had sexual
relations with respondent, and petitioner’s statement as to what
his mother told him about his father was clearly hearsay; (b)
the certificate of live birth was not signed by respondent; and
(c) although petitioner used the surname of respondent, there
was no allegation that he was treated as the child of
respondent by the latter or his family. The court opined that,
having failed to establish a prima facie case, respondent had
no obligation to present any affirmative defenses. The
dispositive portion of the said Order therefore reads:
WHEREFORE, for failure of the petitioner to establish
compliance with the four procedural aspects of a traditional
paternity action in his petition, his motion for the submission of
parties to DNA testing to establish paternity and filiation is
hereby denied. This case is DISMISSED without prejudice.
51
SO ORDERED.8
Petitioner seasonably filed a motion for reconsideration to the
Order dated July 30, 2008, which the RTC resolved in his
favor. Thus, on October 20, 2008, it issued the Order 9 setting
aside the court’s previous order, thus:
WHEREFORE, in view of the foregoing, the Order dated July
30, 2008 is hereby reconsidered and set aside.
Let the Petition (with Motion for the Submission of Parties to
DNA Testing) be set for hearing on January 22, 2009 at 8:30 in
the morning.
x xxx
SO ORDERED.10
This time, the RTC held that the ruling on the grounds relied
upon by petitioner for filing the petition is premature
considering that a full-blown trial has not yet taken place. The
court stressed that the petition was sufficient in form and
substance. It was verified, it included a certification against
forum shopping, and it contained a plain, concise, and direct
statement of the ultimate facts on which petitioner relies on for
his claim, in accordance with Section 1, Rule 8 of the Rules of
Court. The court remarked that the allegation that the
statements in the petition were not of petitioner’s personal
knowledge is a matter of evidence. The court also dismissed
respondent’s arguments that there is no basis for the taking of
DNA test, and that jurisprudence is still unsettled on the
acceptability of DNA evidence. It noted that the new Rule on
DNA Evidence11 allows the conduct of DNA testing, whether at
the court’s instance or upon application of any person who has
legal interest in the matter in litigation.
Respondent filed a Motion for Reconsideration of Order dated
October 20, 2008 and for Dismissal of Petition, 12reiterating that
(a) the petition was not in due form and substance as no
defendant was named in the title, and all the basic allegations
were hearsay; and (b) there was no prima facie case, which
made the petition susceptible to dismissal.
The RTC denied the motion in the Order dated January 19,
2009, and rescheduled the hearing.13
Aggrieved, respondent filed a petition for certiorari with the CA,
questioning the Orders dated October 20, 2008 and January
19, 2009.
On September 25, 2009, the CA decided the petition for
certiorari in favor of respondent, thus:
WHEREFORE, the instant petition for certiorari is hereby
GRANTED for being meritorious. The assailed Orders dated
October 20, 2008 and January 19, 2009 both issued by the
Regional Trial Court, Branch 172 of Valenzuela City in SP.
Proceeding Case No. 30-V-07 are REVERSED and SET
ASIDE. Accordingly, the case docketed as SP. Proceeding
Case No. 30-V-07 is DISMISSED.14
The CA held that the RTC did not acquire jurisdiction over the
person of respondent, as no summons had been served on
him. Respondent’s special appearance could not be
considered as voluntary appearance because it was filed only
for the purpose of questioning the jurisdiction of the court over
respondent. Although respondent likewise questioned the
court’s jurisdiction over the subject matter of the petition, the
same is not equivalent to a waiver of his right to object to the
jurisdiction of the court over his person.
The CA remarked that petitioner filed the petition to establish
illegitimate filiation, specifically seeking a DNA testing order to
abbreviate the proceedings. It noted that petitioner failed to
show that the four significant procedural aspects of a traditional
paternity action had been met. The CA further held that a DNA
testing should not be allowed when the petitioner has failed to
establish a prima facie case, thus:
While the tenor [of Section 4, Rule on DNA Evidence] appears
to be absolute, the rule could not really have been intended to
trample on the substantive rights of the parties. It could have
not meant to be an instrument to promote disorder,
harassment, or extortion. It could have not been intended to
legalize unwarranted expedition to fish for evidence. Such will
be the situation in this particular case if a court may at any time
order the taking of a DNA test. If the DNA test in compulsory
recognition cases is immediately available to the
petitioner/complainant without requiring first the presentation of
corroborative proof, then a dire and absurd rule would result.
Such will encourage and promote harassment and extortion.
x xxx
At the risk of being repetitious, the Court would like to stress
that it sees the danger of allowing an absolute DNA testing to a
compulsory recognition test even if the plaintiff/petitioner failed
to establish prima facie proof. x xx If at anytime, motuproprio
and without pre-conditions, the court can indeed order the
taking of DNA test in compulsory recognition cases, then the
prominent and well-to-do members of our society will be easy
prey for opportunists and extortionists. For no cause at all, or
even for [sic] casual sexual indiscretions in their younger years
could be used as a means to harass them. Unscrupulous
women, unsure of the paternity of their children may just be
taking the chances-just in case-by pointing to a sexual partner
in a long past one-time encounter. Indeed an absolute and
unconditional taking of DNA test for compulsory recognition
case opens wide the opportunities for extortionist to prey on
victims who have no stomach for scandal.15
Petitioner moved for reconsideration. On December 17, 2009,
the CA denied the motion for lack of merit.16
In this petition for review on certiorari, petitioner raises the
following issues:
I.
WHETHER OR NOT THE COURT OF APPEALS
ERRED WHEN IT RESOLVED THE ISSUE OF LACK
OF JURISDICTION OVER THE PERSON OF
HEREIN RESPONDENT ALBEIT THE SAME WAS
NEVER RAISED IN THE PETITION FOR
CERTIORARI.
52
 I.A
WHETHER OR NOT THE COURT OF
APPEALS ERRED WHEN IT RULED THAT
JURISDICTION WAS NOT ACQUIRED
OVER THE PERSON OF THE
RESPONDENT.
I.B
WHETHER OR NOT THE COURT OF
APPEALS ERRED WHEN IT FAILED TO
REALIZE THAT THE RESPONDENT HAD
ALREADY SUBMITTED VOLUNTARILY TO
THE JURISDICTION OF THE COURT A
QUO.
I.C
WHETHER OR NOT THE COURT OF
APPEALS ERRED WHEN IT ESSENTIALLY
RULED THAT THE TITLE OF A PLEADING,
RATHER THAN ITS BODY, IS
CONTROLLING.
II.
WHETHER OR NOT THE COURT OF APPEALS
ERRED WHEN IT ORDERED THE DISMISSAL OF
THE PETITION BY REASON OF THE MOTION
(FILED BY THE PETITIONER BEFORE THE COURT
A QUO) FOR THE CONDUCT OF DNA TESTING.
II.A
WHETHER OR NOT THE COURT OF APPEALS
ERRED WHEN IT ESSENTIALLY RULED THAT DNA
TESTING CAN ONLY BE ORDERED AFTER THE
PETITIONER ESTABLISHES PRIMA FACIE PROOF
OF FILIATION.
III.
WHETHER OR NOT THE COURT OF APPEALS
ERRED WITH ITS MISPLACED RELIANCE ON THE
CASE OF HERRERA VS. ALBA,
ESPECIALLY AS REGARDS THE ‘FOUR
SIGNIFICANT PROCEDURAL ASPECTS OF A
TRADITIONAL PATERNITY ACTION.’17
Petitioner contends that respondent never raised as issue in
his petition for certiorari the court’s lack of jurisdiction over his
person. Hence, the CA had no legal basis to discuss the same,
because issues not raised are deemed waived or abandoned.
At any rate, respondent had already voluntarily submitted to
the jurisdiction of the trial court by his filing of several motions
asking for affirmative relief, such as the (a) Motion for
Reconsideration of the Order dated September 3, 2007; (b) Ex
Parte Motion to Resolve Motion for Reconsideration of the
Order dated November 6, 2007; and (c) Motion for
Reconsideration of the Order dated October 20, 2008 and for
Dismissal of Petition. Petitioner points out that respondent
even expressly admitted that he has waived his right to
summons in his Manifestation and Comment on Petitioner’s
Very Urgent Motion to Try and Hear the Case. Hence, the
issue is already moot and academic.
Petitioner argues that the case was adversarial in nature.
Although the caption of the petition does not state respondent’s
name, the body of the petition clearly indicates his name and
his known address. He maintains that the body of the petition is
controlling and not the caption.
Finally, petitioner asserts that the motion for DNA testing
should not be a reason for the dismissal of the petition since it
is not a legal ground for the dismissal of cases. If the CA
entertained any doubt as to the propriety of DNA testing, it
should have simply denied the motion.18 Petitioner points out
that Section 4 of the Rule on DNA Evidence does not require
that there must be a prior proof of filiation before DNA testing
can be ordered. He adds that the CA erroneously relied on the
four significant procedural aspects of a paternity case, as
enunciated in Herrera v. Alba.19Petitioner avers that these
procedural aspects are not applicable at this point of the
proceedings because they are matters of evidence that should
be taken up during the trial.20
In his Comment, respondent supports the CA’s ruling on most
issues raised in the petition for certiorari and merely reiterates
his previous arguments. However, on the issue of lack of
jurisdiction, respondent counters that, contrary to petitioner’s
assertion, he raised the issue before the CA in relation to his
claim that the petition was not in due form and substance.
Respondent denies that he waived his right to the service of
summons. He insists that the alleged waiver and voluntary
appearance was conditional upon a finding by the court that
summons is indeed required. He avers that the assertion of
affirmative defenses, aside from lack of jurisdiction over the
person of the defendant, cannot be considered as waiver of the
defense of lack of jurisdiction over such person.
The petition is meritorious.
Primarily, we emphasize that the assailed Orders of the trial
court were orders denying respondent’s motion to dismiss the
petition for illegitimate filiation. 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 a number of cases, the court
has granted the extraordinary remedy of certiorari on the denial
of the motion to dismiss but only when it has been tainted with
grave abuse of discretion amounting to lack or excess of
jurisdiction.21 In the present case, we discern no grave abuse
of discretion on the part of the trial court in denying the motion
to dismiss.
The grounds for dismissal relied upon by respondent were (a)
the court’s lack of jurisdiction over his person due to the
absence of summons, and (b) defect in the form and substance
53
of the petition to establish illegitimate filiation, which is
equivalent to failure to state a cause of action.
We need not belabor the issues on whether lack of jurisdiction
was raised before the CA, whether the court acquired
jurisdiction over the person of respondent, or whether
respondent waived his right to the service of summons. We
find that the primordial issue here is actually whether it was
necessary, in the first place, to serve summons on respondent
for the court to acquire jurisdiction over the case. In other
words, was the service of summons jurisdictional? The answer
to this question depends on the nature of petitioner’s action,
that is, whether it is an action in personam, in rem, or quasi in
rem.
An 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 person's
interest in a property to a corresponding lien or obligation. A
petition directed against the "thing" itself or the res, which
concerns the status of a person, like a petition for adoption,
annulment of marriage, or correction of entries in the birth
certificate, is an action in rem.22
In an action in personam, jurisdiction over the person of the
defendant is necessary for the court to validly try and decide
the case. In a proceeding in rem or quasi in rem, jurisdiction
over the person of the defendant is not a prerequisite to confer
jurisdiction on the court, provided that the latter has jurisdiction
over the res. Jurisdiction over the res is acquired either (a) by
the seizure of the property under legal process, whereby it is
brought into actual custody of the law, or (b) as a result of the
institution of legal proceedings, in which the power of the court
is recognized and made effective. 23
The herein petition to establish illegitimate filiation is an action
in rem. By the simple filing of the petition to establish
illegitimate filiation before the RTC, which undoubtedly had
jurisdiction over the subject matter of the petition, the latter
thereby acquired jurisdiction over the case. An in
rem proceeding is validated essentially through publication.
Publication is notice to the whole world that the proceeding has
for its object to bar indefinitely all who might be minded to
make an objection of any sort to the right sought to be
established.24 Through publication, all interested parties are
deemed notified of the petition.
If at all, service of summons or notice is made to the
defendant, it is not for the purpose of vesting the court with
jurisdiction, but merely for satisfying the due process
requirements.25 This is but proper in order to afford the person
concerned the opportunity to protect his interest if he so
chooses.26 Hence, failure to serve summons will not deprive
the court of its jurisdiction to try and decide the case. In such a
case, the lack of summons may be excused where it is
determined that the adverse party had, in fact, the opportunity
to file his opposition, as in this case. We find that the due
process requirement with respect to respondent has been
satisfied, considering that he has participated in the
proceedings in this case and he has the opportunity to file his
opposition to the petition to establish filiation.
To address respondent’s contention that the petition should
have been adversarial in form, we further hold that the herein
petition to establish filiation was sufficient in form. It was indeed
adversarial in nature despite its caption which lacked the name
of a defendant, the failure to implead respondent as defendant,
and the non-service of summons upon respondent. A
proceeding is adversarial where the party seeking relief has
given legal warning to the other party and afforded the latter an
opportunity to contest it.27 In this petition—classified as an
action in rem—the notice requirement for an adversarial
proceeding was likewise satisfied by the publication of the
petition and the giving of notice to the Solicitor General, as
directed by the trial court.
The petition to establish filiation is sufficient in substance. It
satisfies Section 1, Rule 8 of the Rules of Court, which requires
the complaint to contain a plain, concise, and direct statement
of the ultimate facts upon which the plaintiff bases his claim. A
fact is essential if it cannot be stricken out without leaving the
statement of the cause of action inadequate.28 A complaint
states a cause of action when it contains the following
elements: (1) the legal right of plaintiff, (2) the correlative
obligation of the defendant, and (3) the act or omission of the
defendant in violation of said legal right.29
The petition sufficiently states the ultimate facts relied upon by
petitioner to establish his filiation to respondent. Respondent,
however, contends that the allegations in the petition were
hearsay as they were not of petitioner’s personal knowledge.
Such matter is clearly a matter of evidence that cannot be
determined at this point but only during the trial when petitioner
presents his evidence.
In a motion to dismiss a complaint based on lack of cause of
action, the question submitted to the court for determination is
the sufficiency of the allegations made in the complaint to
constitute a cause of action and not whether those allegations
of fact are true, for said motion must hypothetically admit the
truth of the facts alleged in the complaint.30
The inquiry is confined to the four corners of the complaint, and
no other.31 The test of the sufficiency of the facts alleged in the
complaint is whether or not, admitting the facts alleged, the
court could render a valid judgment upon the same in
accordance with the prayer of the complaint.32
If the allegations of the complaint are sufficient in form and
substance but their veracity and correctness are assailed, it is
incumbent upon the court to deny the motion to dismiss and
require the defendant to answer and go to trial to prove his
defense. The veracity of the assertions of the parties can be
ascertained at the trial of the case on the merits.33
The statement in Herrera v. Alba34 that there are four
significant procedural aspects in a traditional paternity case
which parties have to face has been widely misunderstood and
misapplied in this case. A party is confronted by these so-
called procedural aspects during trial, when the parties have
presented their respective evidence. They are matters of
evidence that cannot be determined at this initial stage of the
proceedings, when only the petition to establish filiation has
been filed. The CA’s observation that petitioner failed to
establish a prima facie case—the first procedural aspect in a
paternity case—is therefore misplaced. A prima facie case is
54
built by a party’s evidence and not by mere allegations in the
initiatory pleading.
Clearly then, it was also not the opportune time to discuss the
lack of a prima facie case vis-à-vis the motion for DNA testing
since no evidence has, as yet, been presented by petitioner.
More essentially, it is premature to discuss whether, under the
circumstances, a DNA testing order is warranted considering
that no such order has yet been issued by the trial court. In
fact, the latter has just set the said case for hearing.
At any rate, the CA’s view that it would be dangerous to allow a
DNA testing without corroborative proof is well taken and
deserves the Court’s attention. In light of this observation, we
find that there is a need to supplement the Rule on DNA
Evidence to aid the courts in resolving motions for DNA testing
order, particularly in paternity and other filiation cases. We,
thus, address the question of whether a prima facie showing is
necessary before a court can issue a DNA testing order.
The Rule on DNA Evidence was enacted to guide the Bench
and the Bar for the introduction and use of DNA evidence in
the judicial system. It provides the "prescribed parameters on
the requisite elements for reliability and validity (i.e., the proper
procedures, protocols, necessary laboratory reports, etc.), the
possible sources of error, the available objections to the
admission of DNA test results as evidence as well as the
probative value of DNA evidence." It seeks "to ensure that the
evidence gathered, using various methods of DNA analysis, is
utilized effectively and properly, [and] shall not be misused
and/or abused and, more importantly, shall continue to ensure
that DNA analysis serves justice and protects, rather than
prejudice the public."35
Not surprisingly, Section 4 of the Rule on DNA Evidence
merely provides for conditions that are aimed to safeguard the
accuracy and integrity of the DNA testing. Section 4 states:
SEC. 4. Application for DNA Testing Order. – The appropriate
court may, at any time, either motuproprio or on application of
any person who has a legal interest in the matter in litigation,
order a DNA testing. Such order shall issue after due hearing
and notice to the parties upon a showing of the following:
(a) A biological sample exists that is relevant to the
case;
(b) The biological sample: (i) was not previously
subjected to the type of DNA testing now requested;
or (ii) was previously subjected to DNA testing, but the
results may require confirmation for good reasons;
(c) The DNA testing uses a scientifically valid
technique;
(d) The DNA testing has the scientific potential to
produce new information that is relevant to the proper
resolution of the case; and
(e) The existence of other factors, if any, which the
court may consider as potentially affecting the
accuracy or integrity of the DNA testing.
This Rule shall not preclude a DNA testing, without need of a
prior court order, at the behest of any party, including law
enforcement agencies, before a suit or proceeding is
commenced.
This does not mean, however, that a DNA testing order will be
issued as a matter of right if, during the hearing, the said
conditions are established.
In some states, to warrant the issuance of the DNA testing
order, there must be a show cause hearing wherein the
applicant must first present sufficient evidence to establish a
prima facie case or a reasonable possibility of paternity or
"good cause" for the holding of the test. 36 In these states, a
court order for blood testing is considered a "search," which,
under their Constitutions (as in ours), must be preceded by a
finding of probable cause in order to be valid. Hence, the
requirement of a prima facie case, or reasonable possibility,
was imposed in civil actions as a counterpart of a finding of
probable cause. The Supreme Court of Louisiana eloquently
explained —
Although a paternity action is civil, not criminal, the
constitutional prohibition against unreasonable searches and
seizures is still applicable, and a proper showing of sufficient
justification under the particular factual circumstances of the
case must be made before a court may order a compulsory
blood test. Courts in various jurisdictions have differed
regarding the kind of procedures which are required, but those
jurisdictions have almost universally found that a preliminary
showing must be made before a court can constitutionally
order compulsory blood testing in paternity cases. We agree,
and find that, as a preliminary matter, before the court may
issue an order for compulsory blood testing, the moving party
must show that there is a reasonable possibility of paternity. As
explained hereafter, in cases in which paternity is contested
and a party to the action refuses to voluntarily undergo a blood
test, a show cause hearing must be held in which the court can
determine whether there is sufficient evidence to establish
a prima facie case which warrants issuance of a court order for
blood testing.371avvphi1
The same condition precedent should be applied in our
jurisdiction to protect the putative father from mere harassment
suits. Thus, during the hearing on the motion for DNA testing,
the petitioner must present prima facie evidence or establish a
reasonable possibility of paternity.
Notwithstanding these, it should be stressed that the issuance
of a DNA testing order remains discretionary upon the court.
The court may, for example, consider whether there is absolute
necessity for the DNA testing. If there is already
preponderance of evidence to establish paternity and the DNA
test result would only be corroborative, the court may, in its
discretion, disallow a DNA testing.
WHEREFORE, premises considered, the petition is
GRANTED. The Court of Appeals Decision dated September
25, 2009 and Resolution dated December 17, 2009 are
REVERSED and SET ASIDE. The Orders dated October 20,
2008 and January 19, 2009 of the Regional Trial Court of
Valenzuela City are AFFIRMED.
SO ORDERED.
55
G.R. No. 143188 February 14, 2007
FLORENTINO PINEDA, Petitioner,
vs.
HEIRS OF ELISEO GUEVARA, represented by ERNESTO E.
GUEVARA and ISAGANI S. GUEVARA, namely: ELISEO
GUEVARA, JR., ZENAIDA G. SAPALICIO, DANTE G.
GUEVARA, DANILO C. GUEVARA, and ISAGANI S.
GUEVARA, Respondents.
DECISION
TINGA, J.:
On appeal by way of certiorari under Rule 45 of the 1997 Rules
of Civil Procedure are the Decision1 and Resolution of the
Court of Appeals in CA-G.R. CV No. 54074. The Decision
reversed the order of dismissal of the Regional Trial Court
(RTC), Branch 273, Marikina, and directed the court a quo to
conduct trial on the merits, while the Resolution denied
petitioner Pineda’s motion for reconsideration.
As borne out by the records, the following are the factual
antecedents.
On 7 September 1995, respondents Eliseo Guevara, Jr.,
Zenaida G. Sapalicio, Dante G. Guevara and Isagani S.
Guevara, collectively referred hereinafter as the Guevara heirs,
filed an action for the nullification of the certificates of title of a
parcel of land measuring approximately 2,304 hectares
situated in Marikina.
Named defendants were the estate of the late Pedro Gonzales,
Virginia Perez, Crisanta Perez, Jose Perez, Roy Guadalupe,
LinoBucad and Florentino Pineda. The complaint, docketed as
Civil Case No. 95-171-MK, was raffled to Branch 273 of the
RTC of Marikina.
The Guevara heirs alleged in the complaint that they were the
co-owners of a property originally covered by Original
Certificate of Title (OCT) No. 386 issued on 7 December 1910
in favor of the spouses Emiliano Guevara and MatildeCrimen.
The couple’s son, and the Guevara heirs’ predecessor-in-
interest, Eliseo Guevara, allegedly purchased the property on 1
January 1932 and had exercised ownership over the property
since then by selling and donating portions thereof to third
persons. The Guevara heirs averred that the sale of the
property to Eliseo Guevara was annotated at the back of OCT
No. 386.
According to the Guevara heirs, the defendants illegally
claimed ownership and possession over a certain portion of the
property, particularly that area covered by Transfer Certificate
of Title (TCT) No. 223361 issued to the estate of Pedro C.
Gonzales. TCT No. 223361 was derived from OCT No. 629,
which the Guevara heirs described as fake, having been
issued only on 26 January 1912 or subsequent to the issuance
of OCT No. 386. Hence, the Guevara heirs prayed that OCT
No. 629 and its derivative titles, to wit, TCT Nos. 223361,
244447, 244448, 244449 be cancelled, that the Guevara heirs
be declared owners of the property and that a new certificate of
title be issued in their names.
Defendant Pineda filed an answer with counterclaim, raising
the defenses of lack of cause of action, prescription, laches
and estoppel. He averred that he was a buyer in good faith and
had been in actual possession of the land since 1970 initially
as a lessor and subsequently as an owner. He registered the
property in his name and was issued TCT No. 257272.
Defendants Virginia, Crisanta, and Jose, all surnamed Perez,
filed an answer with compulsory counterclaim and averred that
their father, Marcos Perez, purchased the property from the
late Pedro Gonzales and had it declared in Perez’s name for
taxation purposes. According to them, they had been in actual
possession of a lot measuring 375 square meters before 1958
and had been regularly paying the property taxes thereon.
The rest of the defendants, including the estate of Pedro
Gonzales, also filed an answer with counterclaim, raising the
same defenses of laches and prescription and res judicata.
They claimed that OCT No. 629 was issued to the Municipality
of Marikina in 1912 and that the late Pedro Gonzales and his
family started occupying the property as early as 1950 as
lessees thereon. The late Pedro Gonzales allegedly bought the
property from the Municipality of Marikina in a public bidding on
25 April 1966 and had allowed defendants to occupy the
property. They asserted that the Guevara heirs never actually
occupied the property.
On 4 December 1995, the RTC set the case for hearing as if a
motion to dismiss had been filed. During the hearing, the
parties presented oral arguments and were directed to file their
memoranda.
After submission of memoranda, the RTC issued an Order
dated 7 May 1996, dismissing the action on the ground of
laches. The Guevara heirs appealed the order of dismissal,
claiming the denial of their right to due process.
On 23 August 1999, the Court of Appeals promulgated the
assailed Decision, which set aside the RTC’s order of dismissal
and directed the reinstatement of Civil Case No. 95-171-MK.
The appellate court ruled that a complaint cannot be dismissed
under Rule
16, Section 12 of the Rules of Court based on laches since
laches is not one of the grounds enumerated under said
provision. Although the RTC order of dismissal did not rule on
the other affirmative defenses raised by petitioners in the
answer, such as lack of cause of action, prescription and res
judicata, the Court of Appeals discussed them and ruled that
none of these affirmative defenses raised were present to
warrant the dismissal of the action.
Only Pineda sought reconsideration. In its 3 May 2000
Resolution, the Court of Appeals denied Pineda’s motion.
Hence, the instant petition, attributing the following errors to the
Court of Appeals:
THE COURT OF APPEALS ERRED IN TAKING
COGNIZANCE OF THE APPEAL OF RESPONDENTS WHICH
RAISED ONLY PURELY QUESTIONS OF LAW; AND,
THEREFORE, IT ACTED WITHOUT JURISDICTION IN
HEARING AND DECIDING THE SAID APPEALED CASE.
56
THE COURT OF APPEALS ERRED IN NOT CONSIDERING
THE AFFIRMATIVE DEFENSE OF LACHES AS
ANALOGOUS TO PRESCRIPTION.
THE COURT OF APPEALS ERRED IN HOLDING THAT THE
TRIAL COURT’S DISMISSAL OF THE RESPONDENTS’
COMPLAINT IS ERRONEOUS FOR THE REASON THAT
THE AFFIRMATIVE DEFENSE OF LACHES IS NOT AMONG
THE GROUNDS FOR A MOTION TO DISMISS UNDER THE
RULES, WHICH MAY BE ALLEGED AS AFFIRMATIVE
DEFENSE TO BE PROVED DURING THE TRIAL.
AS A COROLLARY TO THE THIRD ASSIGNED ERROR
ABOVE, THE COURT OF APPEALS ERRED IN NOT
TREATING THE ASSAILED ORDER OF DISMISSAL OF
RESPONDENTS’ COMPLAINT BY THE TRIAL COURT AS A
SUMMARY JUDGMENT, TO AVOID PROTRACTED
LITIGATION.
THE COURT OF APPEALS ERRED IN NOT HOLDING THAT
WHILE PRESCRIPTION IN DEROGATION OF THE TITLE TO
REGISTERED OWNERS WILL NOT LIE, LACHES WILL.3
Counsel for the estate of Pedro Gonzales filed a
Comment/Manifestation,4 stating that her clients have adopted
and joined Pineda’s petition praying for the reinstatement of the
trial court’s order of dismissal.
At bottom, the petition raises two main issues, to wit: (1)
whether or not the appeal of the heirs of Guevara was
improperly elevated to the Court of Appeals since, according to
them, it raised a pure question of law; and (2) whether or not
the trial court correctly dismissed the action on the ground of
laches without conducting trial on the merits.
Petitioner Pineda had ample opportunity to raise before the
Court of Appeals the objection on the improper mode of appeal
taken by the heirs of Guevara. This, he failed to do. The issue
of improper appeal was raised only in Pineda’s motion for
reconsideration of the Court of Appeals’ Decision. Hence, this
Court cannot now, for the first time on appeal, pass upon this
issue. For an issue cannot be raised for the first time on
appeal.5 In any case, the appeal by the heirs of Guevara also
raised the issue regarding the existence of laches on the part
of petitioners as defendants, which is factual in nature as
discussed below.
Now, did the trial court correctly order the dismissal of the
complaint based on laches without conducting trial on the
merits? The Court of Appeals disagreed, holding that under
Rule 16, Section 16 of the Rules of Court, laches is not
enumerated under said provision, hence, it must be proved
during trial. On the other hand, petitioner Pineda asserts that
laches is analogous to prescription and, therefore, can be a
ground of dismissing a complaint as though a motion to
dismiss is filed.
Well-settled is the rule that the elements of laches must be
proved positively. Laches is evidentiary in nature which could
not be established by mere allegations in the pleadings and
can not be resolved in a motion to dismiss. At this stage
therefore, the dismissal of the complaint on the ground of
laches is premature.7 Those issues must be resolved at the
trial of the case on the merits wherein both parties will be given
ample opportunity to prove their respective claims and
defenses.8
The elements of laches are: (1) conduct on the part of the
defendant, or of one under whom he claims, giving rise to the
situation of which the complaint seeks a remedy; (2) delay in
asserting the complainant’s rights, the complainant having had
knowledge or notice of the defendant’s conduct as having been
afforded an opportunity to institute a suit; (3) lack of knowledge
or notice on the part of the defendant that the complainant
would assert the right in which he bases his suit; and (4) injury
or prejudice to the defendant in the event relief is accorded to
the complainant, or the suit is not held barred.9
Whether or not the elements of laches are present is a
question involving a factual determination by the trial court.
There is no absolute rule as to what constitutes laches or
staleness of demand; each case is to be determined according
to its particular circumstances.10 Laches is not concerned with
the mere lapse of time, rather, the party must have been
afforded an opportunity to pursue his claim in order that the
delay may sufficiently constitute laches.11 Without prejudging
the instant case, an apparent delay in the enforcement of one’s
claim does not automatically constitute laches. The party
charged with negligence or omission in invoking his right must
be afforded the opportunity to raise his defenses, which can be
accommodated only in a contentious proceeding.
In reversing the RTC’s order of dismissal, the Court of Appeals
held that "laches could not be a ground to dismiss the
complaint as it is not enumerated under Rule 16, Section
1."12 This is not entirely correct. Under paragraph (h) thereof,
where a claim or demand set forth in the plaintiff’s pleading has
been paid, waived, abandoned, or otherwise extinguished, the
same may be raised in a motion to dismiss. The language of
the rule, particularly on the relation of the words "abandoned"
and "otherwise extinguished" to the phrase "claim or demand
deemed set forth in the plaintiff’s pleading" is broad enough to
include within its ambit the defense of bar by laches. However,
when a party moves for the dismissal of the complaint based
on laches, the trial court must set a hearing on the motion
where the parties shall submit not only their arguments on the
questions of law but also their evidence on the questions of
fact involved.13 Thus, being factual in nature, the elements of
laches must be proved or disproved through the presentation
of evidence by the parties. As discussed above, an apparent
delay in the filing of a complaint as shown in a pleading does
not automatically warrant the dismissal of the complaint on the
ground of laches.
In the case at bar, while the trial court correctly set the case for
hearing as though a motion to dismiss had been filed, the
records do not reveal that it extended to the parties the
opportunity to present evidence. For instance, counsel for the
heirs of Guevara filed and served written interrogatories 14 on
one of the defendants but the trial court held in abeyance the
resolution of the motion to order the defendant to submit
answers to the written interrogatories.15 The trial court likewise
denied the Ex Parte Motion To Set Trial filed by the heirs of
Guevara.16These were the instances which would have
enabled the trial court to receive evidence on which to anchor
its factual findings. Although the trial court heard oral
arguments and required the parties to submit their respective
memoranda, the presentation of evidence on the defenses
which are grounds for a motion to dismiss was not held at all.
57
Otherwise, the oral arguments and memoranda submitted by
the parties would have enabled this Court to review the trial
court’s factual finding of laches instead of remanding the case
for trial on the merits. A perusal of the records precludes this
Court from making a categorical declaration on whether the
heirs of Guevara were guilty of laches.

Neither does the affirmative defense of prescription alleged in

an answer automatically warrant the dismissal of the complaint
under Rule 16. An allegation of prescription can effectively be
used in a motion to dismiss only when the complaint on its face
shows that indeed the action has already
prescribed.17 Otherwise, the issue of prescription is one
involving evidentiary matters requiring a full-blown trial on the
merits and cannot be determined in a mere motion to
dismiss.18 Pineda’s theory that the defense of laches should be
treated as an affirmative defense of prescription warranting the
dismissal of the complaint is erroneous.1awphi1.net

There is also no basis in procedural law to treat the RTC’s

order of dismissal as a summary judgment. The trial court
cannot motuproprio decide that summary judgment on an
action is in order. Under the applicable provisions of Rule 35,
the defending party or the claimant, as the case may be, must
invoke the rule on summary judgment by filing a motion. 19 The
adverse party must be notified of the motion for summary
judgment20 and furnished with supporting affidavits,
depositions or admissions before hearing is conducted. 21 More
importantly, a summary judgment is permitted only if there is
no genuine issue as to any material fact and a moving party is
entitled to a judgment as a matter of law.22

Based on the parties’ allegations in the complaint and answer,

the issues in the case at bar are far from settled. For instance,
both petitioner and respondents claim their ownership rights
over the same property based on two different original
certificates of title. Respondents charge petitioner of illegal
occupation while the latter invokes good faith in the acquisition
of the property. Clearly, these are factual matters which can be
best ventilated in a full-blown proceeding before the trial court,
especially when what are involved appear to be sizeable
parcels of land covered by two certificates of title.

Except for Pineda, the other defendants did not elevate the
Court of Appeals’ Decision to this Court. With respect to them,
the appellate court’s Decision has already become final and
conclusive, notwithstanding their adoption23 of Pineda’s
petition.

WHEREFORE, the instant petition for review on certiorari is

DENIED and the Decision and Resolution of the Court of
Appeals in CA-G.R. CV No. 54074 are AFFIRMED. Let the
records of the case be remanded for further proceedings to the
Regional Trial Court of Marikina City, which is hereby
ORDERED to try and decide the case with deliberate speed.

SO ORDERED.

58
G.R. No. 161030 September 14, 2011
JOSE FERNANDO, JR., ZOILO FERNANDO, NORMA
FERNANDO BANARES, ROSARIO FERNANDO
TANGKENCGO, HEIRS OF TOMAS FERNANDO,
represented by ALFREDO V. FERNANDO, HEIRS OF
GUILLERMO FERNANDO, represented by Ronnie H.
Fernando, HEIRS OF ILUMINADA FERNANDO, represented
by Benjamin Estrella and HEIRS OF GERMOGENA
FERNANDO, Petitioners,
vs.
LEON ACUNA, HERMOGENES FERNANDO, HEIRS OF
SPOUSES ANTONIO FERNANDO AND FELISA CAMACHO,
represented by HERMOGENES FERNANDO, Respondents.
DECISION
LEONARDO-DE CASTRO, J.:
This is a petition for review on certiorari under Rule 45 of the
1997 Rules of Civil Procedure seeking to reverse and set aside
the Decision1 dated November 24, 2003 of the Court of
Appeals in CA-G.R. CV No. 75773, entitled "Jose Fernando,
Jr., et al. v. Heirs of Germogena Fernando, et al.," which
reversed and set aside the Decision2 dated May 16, 2002 of
Branch 84, Regional Trial Court (RTC) of Malolos, Bulacan in
Civil Case No. 256-M-97.
At the heart of this controversy is a parcel of land covered by
Original Certificate of Title (OCT) No. RO-487 (997)3registered
in the names of Jose A. Fernando, married to LucilaTinio, and
Antonia A. Fernando, married to Felipe Galvez, and located in
San Jose, Baliuag, Bulacan. When they died intestate, the
property remained undivided. Petitioners herein – namely, Jose
Fernando, Jr., Zoilo Fernando, Norma Fernando Banares,
Rosario Fernando Tangkencgo, the heirs of Tomas Fernando,
the heirs of Guillermo Fernando, the heirs of Iluminada
Fernando and the heirs of Germogena Fernando – are the
heirs and successors-in-interest of the deceased registered
owners. However, petitioners failed to agree on the division of
the subject property amongst themselves, even after
compulsory conciliation before the Barangay Lupon.
Thus, petitioners, except for the heirs of Germogena Fernando,
filed a Complaint4 for partition on April 17, 1997 against the
heirs of Germogena Fernando. In the Complaint, plaintiffs
alleged, among others, that they and defendants are common
descendants and compulsory heirs of the late spouses Jose A.
Fernando and LucilaTinio, and the late spouses Antonia A.
Fernando and Felipe Galvez. They further claimed that their
predecessors-in-interest died intestate and without instructions
as to the disposition of the property left by them covered by
OCT No. RO-487 (997). There being no settlement, the heirs
are asking for their rightful and lawful share because they wish
to build up their homes or set up their business in the
respective portions that will be allotted to them. In sum, they
prayed that the subject property be partitioned into eight equal
parts, corresponding to the hereditary interest of each group of
heirs.
In their Answer5 filed on May 20, 1997, defendants essentially
admitted all of the allegations in the complaint. They alleged
further that they are not opposing the partition and even offered
to share in the expenses that will be incurred in the course of
the proceedings.
In his Complaint in Intervention6 filed on January 12, 1998,
respondent Leon Acuna (Acuna) averred that in the
Decision7 dated November 29, 1929 of the Cadastral Court of
Baliuag, Bulacan, the portion of the property identified as Lot
1303 was already adjudicated to: (a) Antonio Fernando,
married to Felisa Camacho; (b) spouses Jose Martinez and
GregoriaSison; (c) spouses Ignacio de la Cruz and
SaludWisco; and (d) Jose Fernando, married to LucilaTinio, the
petitioners’ predecessor-in-interest. He likewise claimed that in
a 1930 Decision of the Cadastral Court, the portion identified
as Lot 1302 was also already adjudicated to other people as
well.
Respondent Acuna further alleged that SaludWisco, through
her authorized attorney-in-fact, Amador W. Cruz, sold her
lawful share denominated as Lot 1303-D with an area of 3,818
square meters to Simeon P. Cunanan,8 who in turn sold the
same piece of land to him as evidenced by a Deed of Sale. 9 He
also belied petitioners’ assertion that the subject property has
not been settled by the parties after the death of the original
owners in view of the Decision10 dated July 30, 1980 of the
Court of First Instance (CFI) of Baliuag, Bulacan, in LRC Case
No. 80-389 which ordered the Register of Deeds of Bulacan to
issue the corresponding certificates of title to the claimants of
the portion of the subject property designated as Lot
1302.11 Norma Fernando, one of the petitioners in the instant
case, even testified in LRC Case No. 80-389. According to
respondent Acuna, this circumstance betrayed bad faith on the
part of petitioners in filing the present case for partition.
Respondent Acuna likewise averred that the action for partition
cannot prosper since the heirs of the original owners of the
subject property, namely Rosario, Jose Jr., Norma, Tomas,
Guillermo, Leopoldo, Hermogena, Illuminada and Zoilo, all
surnamed Fernando, and LucilaTinio, purportedly had already
sold their respective one-tenth (1/10) share each in the subject
property to RupertaSto. Domingo Villasenor for the amount of
₱35,000.00 on January 25, 1978 as evidenced by a
"KasulatansaBilihang Patuluyan."12 He added that he was in
possession of the original copy of OCT No. RO-487 (997) and
that he had not commenced the issuance of new titles to the
subdivided lots because he was waiting for the owners of the
other portions of the subject property to bear their respective
shares in the cost of titling.
Subsequently, a Motion for Intervention13 was filed on June 23,
1998 by respondent Hermogenes Fernando (Hermogenes), for
himself and on behalf of the heirs of the late spouses, Antonio
A. Fernando and Felisa Camacho. According to him, in the July
30, 1980 Decision of the CFI of Bulacan, their predecessors-in-
interest had already been adjudged owners of Lots 1302-A,
1302-F, 1302-G,14 1302-H and 1302-J of OCT No. RO-487
(997) and any adverse distribution of the properties would
cause respondents damage and prejudice. He would also later
claim, in his Answer-in-Intervention,15 that the instant case is
already barred by res judicata and, should be dismissed.
In the interest of substantial justice, the trial court allowed the
respondents to intervene in the case.
59
The plaintiffs and defendants jointly moved to have the case
submitted for judgment on the pleadings on May 7,
1999.16 However, the trial court denied said motion in a
Resolution17 dated August 23, 1999 primarily due to the
question regarding the ownership of the property to be
partitioned, in light of the intervention of respondents Acuna
and Hermogenes who were claiming legal right thereto.
In their Manifestation18 filed on April 12, 2000, petitioners
affirmed their execution of a Deed of Sale in favor of
RupertaSto. Domingo Villasenor in 1978, wherein they sold to
her 1,000 square meters from Lot 1303 for the sum of ₱
35,000.00.
After the pre-trial conference, trial ensued. On September 19,
2000, petitioner Elizabeth Alarcon testified that they (plaintiffs)
are not claiming the entire property covered by OCT No. RO-
487 (997) but only the area referred to as Lot 1303 and
Sapang Bayan. She also admitted that Lot 1302 had already
been divided into ten (10) sublots and allocated to various
owners pursuant to the July 30, 1980 Decision of the CFI of
Baliuag, Bulacan and these owners already have their own
titles. She likewise claimed that the entire area consisting of
Lot 1303 and Sapang Bayan is based on the subdivision plan
of Lot 1303. She admitted that plaintiffs’ predecessor-in-
interest was only allocated a portion of Lot 1303 based on the
said plan. However, she claimed that the November 29, 1929
Decision subdividing Lot 1303 was never implemented nor
executed by the parties.19
Petitioner Norma Fernando testified on October 3, 2000 that
she is one of the children of Jose A. Fernando and LucilaTinio.
She affirmed that plaintiffs were only claiming Lot 1303 and
Sapang Bayan. She also testified that Sapang Bayan was
supposedly included in Lot 1302 and was previously a river
until it dried up. Unlike Lot 1302, the rest of the property was
purportedly not distributed. She likewise averred that she is
aware of a November 29, 1929 Decision concerning the
distribution of Lot 1303 issued by the cadastral court but
insisted that the basis of the claims of the petitioners over Lot
1303 is the title in the name of her ascendants and not said
Decision.20
On November 16, 2000, as previously directed by the trial court
and agreed to by the parties, counsel for respondent
Hermogenes prepared and submitted an English translation of
the November 29, 1929 Decision. The same was admitted and
marked in evidence as Exhibit "X"21 as a common exhibit of the
parties. The petitioners also presented Alfredo Borja, the
Geodetic Engineer who conducted a relocation survey of the
subject property.
After plaintiffs rested their case, respondent Hermogenes
testified on December 7, 2000. In his testimony, he claimed to
know the plaintiffs and defendants as they were allegedly his
relatives and neighbors. He confirmed that according to the
November 29, 1929 Decision, portions of Lot 1303 was
designated as Lots 1303-A, 1303-B, 1303-C and 1303-D which
were adjudicated to certain persons, including Jose Fernando,
while the rest of Lot 1303 was adjudicated to his parents,
Antonio A. Fernando married to Felisa Camacho. According to
respondent Hermogenes, his family’s tenant and the latter’s
children occupied the portion of Lot 1303 allotted to his
(Hermogenes) parents while the rest of Lot 1303 was occupied
by the persons named in the said November 29, 1929
Decision. He admitted, however, that nobody among the
purported possessors of Lot 1303 registered the lots assigned
to them in the Decision.22
On January 18, 2001, respondent Hermogenes presented a
witness, Engineer Camilo Vergara who testified that the subject
land is divided into Lots 1302 and 1303 with a creek dividing
the two lots known as Sapang Bayan. He also identified a
Sketch Plan numbered as PSD-45657 and approved on
November 11, 1955.23 During the hearing on January 30, 2001,
respondent Hermogenes made an oral offer of his evidence
and rested his case. On the same date, respondent Acuna, in
lieu of his testimony, offered for the parties to simply stipulate
on the due execution and authenticity of the Deeds of Sale
dated April 6, 1979 and December 28, 1980, showing the
transfer of Lot 1303-D from SaludWisco to Simeon Cunanan
and subsequently to respondent Acuna. When counsel for
plaintiffs and defendants agreed to the stipulation, albeit
objecting to the purpose for which the deeds of sale were
offered, the trial court admitted Acuna’s exhibits and Acuna
rested his case.24
On February 15, 2001, plaintiffs recalled Norma Fernando as a
rebuttal witness. In her rebuttal testimony, she identified the tax
declaration25 over the said property in the name of Jose A.
Fernando; an official receipt26 dated October 3, 1997 issued by
the Office of the Treasurer of the Municipality of Baliuag,
Bulacan for payment of real property taxes from 1991 to 1997;
and a real property tax clearance27 dated October 6, 1997, to
show that plaintiffs have allegedly been paying the real
property taxes on the entire property covered by OCT No. RO-
487 (997). However, she further testified that they were now
willing to pay taxes only over the portion with an area of 44,234
square meters, which is included in their claim.28
In a Decision dated May 16, 2002, the trial court ruled that
plaintiffs and defendants (petitioners herein) were indeed the
descendants and successors-in-interest of the registered
owners, Jose A. Fernando (married to LucilaTinio) and Antonia
Fernando (married to Felipe Galvez), of the property covered
by OCT No. RO-487 (997). After finding that the parties
admitted that Lot 1302 was already distributed and titled in the
names of third persons per the July 30, 1980 Decision of the
CFI of Baliuag, Bulacan the trial court proceeded to rule on the
allocation of Lot 1303 and Sapang Bayan.
With respect to Lot 1303, the trial court found that the
November 29, 1929 Decision of the Cadastral Court,
adjudicating said lot to different persons and limiting Jose
Fernando’s share to Lot 1303-C, was never implemented nor
executed despite the lapse of more than thirty years. Thus, the
said decision has already prescribed and can no longer be
executed. The trial court ordered the reversion of Lot 1303 to
the ownership of spouses Jose A. Fernando and LucilaTinio
and spouses Antonia A. Fernando and Felipe Galvez under
OCT No. RO-487 (997) and allowed the partition of Lot 1303
among petitioners as successors-in-interest of said registered
owners. Excluded from the partition, however, were the
portions of the property which petitioners admitted had been
sold or transferred to RupertaSto. Domingo Villasenor and
respondent Acuna.
As for the ownership of Sapang Bayan, the trial court found
that the same had not been alleged in the pleadings nor raised
as an issue during the pre-trial conference. Also, according to
60
the trial court, the parties failed to clearly show whether
Sapang Bayan was previously a dry portion of either Lot 1302
or Lot 1303. Neither was there any proof that Sapang Bayan
was a river that just dried up or that it was an accretion which
the adjoining lots gradually received from the effects of the
current of water. It was likewise not established who were the
owners of the lots adjoining Sapang Bayan. The trial court
concluded that none of the parties had clearly and sufficiently
established their claims over Sapang Bayan.
The dispositive portion of the May 16, 2002 Decision of the trial
court reads:
WHEREFORE, all the foregoing considered, judgment is
hereby rendered ordering the reversion of Lot 1303, except the
portions allotted to Acuna and RupertaSto. Domingo
Villasenor, to the ownership of Jose Fernando and Lucia Tinio
and Antonia Fernando and Felipe Galvez under OCT No. 997
and thereafter allowing the partition of said Lot 1303 among the
plaintiffs and the defendants as successors-in-interest of Jose
and Lucia as well as Antonia and Felipe after the settlement of
any inheritance tax, fees, dues and/or obligation chargeable
against their estate.29
All the parties, with the exception of respondent Acuna,
elevated this case to the Court of Appeals which rendered the
assailed November 24, 2003 Decision, the dispositive portion
of which reads:
WHEREFORE, premises considered, the decision dated May
16, 2002, of the Regional Trial Court of Malolos, Bulacan, Third
Judicial Region, Branch 84, in Civil Case No. 256-M-97, is
hereby REVERSED and SET ASIDE and the complaint dated
April 17, 1997 filed by plaintiffs-appellants is dismissed. Costs
against plaintiffs-appellants.30
Hence, plaintiffs and defendants in the court a quo elevated the
matter for our review through the instant petition.
Petitioner raises the following issues for consideration:
1. Whether or not the ownership of Lot 1303 and the
Sapang Bayan portion of the piece of land covered by
O.C.T. No. RO-487 (997) or Plan Psu-39080 should
revert to the descendants and heirs of the late
spouses Jose Fernando and LucilaTinio and Antonia
Fernando, married to Felipe Galvez;
2. Whether or not a title registered under the Torrens
system, as the subject original certificate of title is the
best evidence of ownership of land and is a notice
against the world.31
The petition is without merit.
Petitioners based their claims to the disputed areas designated
as Lot 1303 and Sapang Bayan on their ascendants’ title, OCT
No. RO-487 (997), which was issued on February 26, 1927 in
the name of Jose A. Fernando married to LucilaTinio and
Antonia A. Fernando married to Felipe Galvez. The Court now
rules on these claims in seriatim.
Petitioners’ claim with respect to Lot 1303
As the records show, in the November 29, 1929 Decision of the
Cadastral Court of Baliuag, Bulacan (in Cadastral Record No.
14, GLRO Cad. Record No. 781) which was written in Spanish,
Lot 1303 had already been divided and adjudicated to spouses
Jose A. Fernando and LucilaTinio; spouses Antonia A.
Fernando and Felipe Galvez; spouses Antonio A. Fernando
and Felisa Camacho; spouses Jose Martinez and
GregoriaSison; and spouses Ignacio de la Cruz and
SaludWisco from whom respondent Acuna derived his title.
The English translation of the said November 29, 1929
Decision was provided by respondent Hermogenes and was
adopted by all the parties as a common exhibit designated as
Exhibit "X." The agreed English translation of said Decision
reads:
Lot No. 1303 – This lot is decreed in record No. 448, G.L.R.O.
Record No. 25414 and actually with Original Certificate No.
997 (exhibited today) in the name of Jose A. Fernando and
Antonia A. Fernando, who now pray that said lot be subdivided
in accordance with the answers recorded in the instant
cadastral record, and the sketch, Exh. "A", which is attached to
the records.
A part or portion of the lot has been claimed by Antonio A.
Fernando, of legal age, married to Felisa Camacho; another
portion by the spouses Jose Martinez and GregoriaSison;
another portion by Antonia A. Fernando, of legal age, married
to Felipe Galvez; another portion by Jose A. Fernando, of legal
age, married to LucilaTinio; and another portion by the spouses
Ignacio de la Cruz and SaludWisco, both of legal age. The part
claimed by the spouses Jose A. Martinez and GregoriaSison is
Lot 1303-A of Exh. A; the part claimed by Antonia A. Fernando
is Lot 1303-B of said exhibit; the part claimed by Jose A.
Fernando is Lot 1303-C of said exhibit, and the part claimed by
the spouses Ignacio de la Cruz and SaludWisco is Lot 1303-D
of the aforementioned Exhibit.
The subdivision of said lot is hereby ordered, separating from
the same the portions that correspond to each of the claimants,
which portions are known as Lots 1303-A, 1303-B, 1303-C,
and 1303-D in the sketch, Exh. "A", and once subdivided, are
adjudicated in favor of the spouses, Jose Martinez and
GregoriaSison, of legal age, Lot No. 1303-A, in favor of Antonia
A. Fernando, of legal age, married to Felipe Galvez, Lot No.
1303-B; in favor of Jose A. Fernando, of legal age, married to
LucilaTinio, Lot 1303-C; in favor of the spouses Ignacio de la
Cruz and SaludWisco, of legal age, Lot 1303-D; and the rest of
Lot 1303 is adjudged in favor of Antonio A. Fernando married
to Felisa Camacho. It is likewise ordered that once the
subdivision plan is approved, the same be forwarded by the
Director of Lands to this Court for its final decision.
It is ordered that the expense for mentioned subdivision, shall
be for the account of the spouses Jose Martinez and
GregoriaSison, Antonia A. Fernando, Jose A. Fernando, the
spouses Ignacio de la Cruz and SaludWisco, and Antonio A.
Fernando.32
From the foregoing, it would appear that petitioners’
ascendants themselves petitioned for the cadastral court to
divide Lot 1303 among the parties to the 1929 case and they
were only allocated Lots 1303-B and 1303-C. Still, as the trial
court noted, the November 29, 1929 Decision was never fully
implemented in the sense that the persons named therein
merely proceeded to occupy the lots assigned to them without
61
having complied with the other directives of the cadastral court
which would have led to the titling of the properties in their
names. Nonetheless, it is undisputed that the persons named
in the said November 29, 1929 Decision and, subsequently,
their heirs and assigns have since been in peaceful and
uncontested possession of their respective lots for more than
seventy (70) years until the filing of the suit for partition on April
17, 1997 by petitioners which is the subject matter of this case.
Respondent Hermogenes, who testified that petitioners were
his relatives and neighbors, further affirmed before the trial
court that the persons named in the November 29, 1929
Decision took possession of their respective lots:
ATTY. VENERACION:
Q – This Jose A. Fernando married to LucilaTinio, you testified
earlier are the parents of the plaintiffs. Did they take
possession of lot 1303-C?
A – Yes, sir. They took possession.
Q – Did they take possession of the other lots?
A – No. Yes, the portion…
Q – The other lots in the name of the other persons. Did they
take possession of that?
A – Yes, they took took possession of the other… No, sir.
Q – I am asking you whether they took possession, the
children…
ATTY. SANTIAGO:
The questions are already answered, your Honor.
ATTY. VENERACION:
What is the answer?
ATTY. SANTIAGO:
It’s in the record.
COURT:
The persons named in the Decision already took possession of
the lots allotted to them as per that Decision. So that was
already answered. Anything else?
ATTY. VENERACION;
No more question, Your Honor.33
It is noteworthy that petitioners do not dispute that the
November 29, 1929 Decision of the cadastral court already
adjudicated the ownership of Lot 1303 to persons other than
the registered owners thereof. Petitioners would, nonetheless,
claim that respondents’ purported failure to execute the
November 29, 1929 Decision over Lot 1303 (i.e., their failure to
secure their own titles) meant that the entire Lot 1303 being
still registered in the name of their ascendants rightfully
belongs to them. This is on the theory that respondents’ right to
have the said property titled in their names have long
prescribed.
On this point, we agree with the appellate court.
Section 47 of Presidential Decree No. 1529, otherwise known
as the Property Registration Decree, states that "[n]o title to
registered land in derogation of the title of the registered owner
shall be acquired by prescription or adverse possession."
Thus, the Court has held that the right to recover possession of
registered land is imprescriptible because possession is a
mere consequence of ownership.34
However, in Heirs of Anacleto B. Nieto v. Municipality of
Meycauayan, Bulacan,35 the Court had recognized the
jurisprudential thread regarding the exception to the foregoing
doctrine that while it is true that a Torrens title is indefeasible
and imprescriptible, the registered landowner may lose his right
to recover possession of his registered property by reason of
laches.
Thus, in Heirs of BatiogLacamen v. Heirs of Laruan, 36 the
Court had held that while a person may not acquire title to the
registered property through continuous adverse possession, in
derogation of the title of the original registered owner, the heir
of the latter, however, may lose his right to recover back the
possession of such property and the title thereto, by reason of
laches.
In the more recent case of Bartola M. Vda. De Tirona v.
Encarnacion,37 we similarly held that while jurisprudence is
settled on the imprescriptibility and indefeasibility of a Torrens
title, there is equally an abundance of cases where we
unequivocally ruled that registered owners may lose their right
to recover possession of property through the equitable
principle of laches.
Laches means the failure or neglect for an unreasonable and
unexplained length of time to do that which, by observance of
due diligence, could or should have been done earlier. It is
negligence or omission to assert a right within a reasonable
time, warranting the presumption that the party entitled to
assert his right either has abandoned or declined to assert it.
Laches thus operates as a bar in equity.38 The essential
elements of laches are: (a) conduct on the part of the
defendant, or of one under whom he claims, giving rise to the
situation complained of; (b) delay in asserting complainant’s
rights after he had knowledge of defendant’s acts and after he
has had the opportunity to sue; (c) lack of knowledge or notice
by defendant that the complainant will assert the right on which
he bases his suit; and (d) injury or prejudice to the defendant in
the event the relief is accorded to the complainant.39
In view of respondents’ decades long possession and/or
ownership of their respective lots by virtue of a court judgment
and the erstwhile registered owners’ inaction and neglect for an
unreasonable and unexplained length of time in pursuing the
recovery of the land, assuming they retained any right to
recover the same, it is clear that respondents’ possession may
no longer be disturbed. The right of the registered owners as
62
well as their successors-in-interest to recover possession of
the property is already a stale demand and, thus, is barred by
laches.
In the same vein, we uphold the finding of the Court of Appeals
that the title of petitioners’ ascendants wrongfully included lots
belonging to third persons.40 Indeed, petitioners’ ascendants
appeared to have acknowledged this fact as they were even
the ones that prayed for the cadastral court to subdivide Lot
1303 as evident in the November 29, 1929 Decision. We
concur with the Court of Appeals that petitioners’ ascendants
held the property erroneously titled in their names under an
implied trust for the benefit of the true owners. Article 1456 of
the Civil Code provides:
ART. 1456. If property is acquired through mistake or fraud, the
person obtaining it is, by force of law, considered a trustee of
an implied trust for the benefit of the person from whom the
property comes.
As aptly observed by the appellate court, the party thus
aggrieved has the right to recover his or their title over the
property by way of reconveyance while the same has not yet
passed to an innocent purchaser for value. 41 As we held in
Medizabel v. Apao,42 the essence of an action for
reconveyance is that the certificate of title is respected as
incontrovertible. What is sought is the transfer of the property,
in this case its title, which has been wrongfully or erroneously
registered in another person's name, to its rightful owner or to
one with a better right. It is settled in jurisprudence that mere
issuance of the certificate of title in the name of any person
does not foreclose the possibility that the real property may be
under co-ownership with persons not named in the certificate
or that the registrant may only be a trustee or that other parties
may have acquired interest subsequent to the issuance of the
certificate of title.43
We cannot subscribe to petitioners’ argument that whatever
rights or claims respondents may have under the November
29, 1929 Decision has prescribed for their purported failure to
fully execute the same. We again concur with the Court of
Appeals in this regard. An action for reconveyance of
registered land based on implied trust prescribes in ten (10)
years, the point of reference being the date of registration of
the deed or the date of the issuance of the certificate of title
over the property. However, this Court has ruled that the ten-
year prescriptive period applies only when the person enforcing
the trust is not in possession of the property. If a person
claiming to be its owner is in actual possession of the property,
the right to seek reconveyance, which in effect seeks to quiet
title to the property, does not prescribe. The reason is that the
one who is in actual possession of the land claiming to be its
owner may wait until his possession is disturbed or his title is
attacked before taking steps to vindicate his right. 44
Petitioners’ claim with respect to Sapang Bayan
As for the issue of the ownership of Sapang Bayan, we sustain
the appellate court insofar as it ruled that petitioners failed to
substantiate their ownership over said area. However, we find
that the Court of Appeals erred in ruling that the principle of
accretion is applicable. The said principle is embodied in Article
457 of the Civil Code which states that "[t]o the owners of lands
adjoining the banks of rivers belong the accretion which they
gradually receive from the effects of the current of the waters."
We have held that for Article 457 to apply the following
requisites must concur: (1) that the deposit be gradual and
imperceptible; (2) that it be made through the effects of the
current of the water; and (3) that the land where accretion
takes place is adjacent to the banks of rivers.45 The character
of the Sapang Bayan property was not shown to be of the
nature that is being referred to in the provision which is an
accretion known as alluvion as no evidence had been
presented to support this assertion.
In fact from the transcripts of the proceedings, the parties could
not agree how Sapang Bayan came about. Whether it was a
gradual deposit received from the river current or a dried-up
creek bed connected to the main river could not be
ascertained.
Even assuming that Sapang Bayan was a dried-up creek bed,
under Article 420, paragraph 146 and Article 502, paragraph
147 of the Civil Code, rivers and their natural beds are property
of public dominion. In the absence of any provision of law
vesting ownership of the dried-up river bed in some other
person, it must continue to belong to the State.
We ruled on this issue in Republic v. Court of Appeals,48 to wit:
The lower court cannot validly order the registration of Lots 1
and 2 in the names of the private respondents. These lots were
portions of the bed of the Meycauayan river and are therefore
classified as property of the public domain under Article 420
paragraph 1 and Article 502, paragraph 1 of the Civil Code of
the Philippines. They are not open to registration under the
Land Registration act. The adjudication of the lands in question
as private property in the names of the private respondents is
null and void.49 1avvphi1
Furthermore, in Celestial v. Cachopero,50 we similarly ruled
that a dried-up creek bed is property of public dominion:
A creek, like the Salunayan Creek, is a recess or arm
extending from a river and participating in the ebb and flow of
the sea. As such, under Articles 420(1) and 502(1) of the Civil
Code, the Salunayan Creek, including its natural bed, is
property of the public domain which is not susceptible to
private appropriation and acquisitive prescription. And, absent
any declaration by the government, that a portion of the creek
has dried-up does not, by itself, alter its inalienable character.51
Therefore, on the basis of the law and jurisprudence on the
matter, Sapang Bayan cannot be adjudged to any of the
parties in this case.WHEREFORE, premises considered, the
petition is hereby DENIED. The assailed Decision dated
November 24, 2003 of the Court of Appeals in CA-G.R. CV No.
75773 is hereby AFFIRMED. Costs against petitioners.
63
G.R. No. 175799 November 28, 2011
NM ROTHSCHILD & SONS (AUSTRALIA)
LIMITED, Petitioner,
vs.
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.
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 respondent’s
(plaintiff’s) motion, the trial court authorized respondent’s
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).
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.
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 Order 6 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.
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
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.
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 petitioner’s Motion for
Reconsideration.
Meanwhile, on December 28, 2006, the trial court issued an
Order directing respondent to answer some of the questions in
petitioner’s 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 petitioner’s motion to dismiss.
Our discussion of the issues raised by the parties follows:
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:
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,
64
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
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 petitioner’s company name from NM Rothschild and Sons
(Australia) Limited to Investec Australia Limited.13
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 corporation’s
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.
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:
[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
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 petitioner’s 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 respondent’s alleged cause of action and should
therefore be threshed out during the trial.
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
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
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:
65
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 admit the 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.)
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.
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,
petitioner’s 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.
It is also settled in jurisprudence that allegations of estoppel
and bad faith require proof. Thus, in Parañaque Kings
Enterprises, Inc. v. Court of Appeals,27 we ruled:
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.)
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
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 respondent’s 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:
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:
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:
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,
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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:
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 non-
resident 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
Proceeding from this enumeration, we held in Perkin Elmer
Singapore Pte Ltd. v. Dakila Trading Corporation 33 that:
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.)
In Domagas v. Jensen,35 we held that:
[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
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 person’s interest in a property to a
corresponding lien or obligation."37
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
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
petitioner’s 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
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admission, deposition, and motions for production of
documents.40
Petitioner counters that under this Court’s 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
It appears, however, that petitioner misunderstood our ruling in
La Naval. A close reading of La Naval reveals 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):
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.)
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:
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:
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.)1âwphi1
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.
WHEREFORE, the Petition 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
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