G.R. No.

198752

ARTURO C. ALBA, JR., duly represented by his attorneys-in-fact, ARNULFO B. ALBA and ALEXANDER C.
ALBA, Petitioner,
vs.
RAYMUND D. MALAPAJO, RAMIL D. MALAPAJO and the Register of Deeds for the City of Roxas,Respondents.

DECISION

PERALTA, J.:

Assailed in this petition for review on certiorari are the Resolution1 dated February 28, 2011 and the Resolution2dated
August 31, 2011 issued by the Court of Appeals (CA) Cebu City, in CA-G.R. SP No. 05594.

The antecedents are as follows:

On October 19, 2009, petitioner Arturo C. Alba, Jr., duly represented by his attorneys-in-fact, Arnulfo B. Alba and
Alexander C. Alba, filed with the Regional Trial Court (RTC) of Roxas City, Branch 15, a Complaint3 against respondents
Raymund D. Malapajo, Ramil D. Malapajo and the Register of Deeds of Roxas City for recovery of ownership and/or
declaration of nullity or cancellation of title and damages alleging, among others, that he was the previous registered
owner of a parcel of land consisting of 98,146 square meters situated in Bolo, Roxas City, covered by TCT No. T-22345;
that his title was subsequently canceled by virtue of a deed of sale he allegedly executed in favor of respondents
Malapajo for a consideration of Five Hundred Thousand Pesos (P500,000.00); that new TCT No. T-56840 was issued in
the name of respondents Malapajo; that the deed of sale was a forged document which respondents Malapajo were the
co-authors of.

Respondents Malapajo filed their Answer with Counterclaim4 contending that they were innocent purchasers for value and
that the deed was a unilateral document which was presented to them already prepared and notarized; that before the
sale, petitioner had, on separate occasions, obtained loans from them and their mother which were secured by separate
real estate mortgages covering the subject property; that the two real estate mortgages had never been discharged.
Respondents counterclaimed for damages and for reimbursement of petitioner's loan from them plus the agreed monthly
interest in the event that the deed of sale is declared null and void on the ground of forgery.

Petitioner filed a Reply to Answer and Answer to (Permissive) Counterclaim5 stating, among others, that the court had not
acquired jurisdiction over the nature of respondents' permissive counterclaim; and, that assuming without admitting that
the two real estate mortgages are valid, the rate of five percent (5%) per month uniformly stated therein is unconscionable
and must be reduced. Respondents filed their Rejoinder6 thereto.

Petitioner filed a Motion to Set the Case for Preliminary Hearing as if a Motion to Dismiss had been Filed7 alleging that
respondents’ counterclaims are in the nature of a permissive counterclaim, thus, there must be payment of docket fees
and filing of a certification against forum shopping; and, that the supposed loan extended by respondents’ mother to
petitioner, must also be dismissed as respondents are not the real parties-in-interest. Respondents filed their
Opposition8 thereto.

On June 4, 2010, the RTC issued an Order9 denying petitioner's motion finding that respondents’ counterclaims are
compulsory. Petitioner’s motion for reconsideration was denied in an Order10 dated September 30, 2010.

Petitioner filed a petition for certiorari with the CA which sought the annulment of the RTC Orders dated June 4, 2010 and
September 30, 2010.
In a Resolution dated February 28, 2011, the CA dismissed the petition for certiorari saying that there was no proper proof
of service of the petition to the respondents, and that only the last page of the attached copy of the RTC Order was signed
and certified as a true copy of the original while the rest of the pages were mere machine copies.

Petitioner filed a motion for reconsideration which the CA denied in a Resolution dated August 31, 2011 based on the
following findings:

Nevertheless, while petitioner filed with the Petition his Affidavit of Service and incorporated the registry receipts,
petitioner still failed to comply with the requirement on proper proof of service. Post office receipt is not the required proof
of service by registered mail. Section 10, Rule 13 of the 1997 Rules of Civil Procedure specifically stated that service by
registered mail is complete upon actual receipt by the addressee, or after five (5) days from the date he received the first
notice of the postmaster, whichever is earlier. Verily, registry receipts cannot be considered sufficient proof of service;
they are merely evidence of the mail matter with the post office of the sender, not the delivery of said mail matter by the
post office to the addressee. Moreover, Section 13, Rule 13 of the 1997 Rules of Civil Procedure specifically stated that
the proof of personal service in the form of an affidavit of the party serving shall contain a full statement of the date, place
and manner of service, which was not true in the instant petition.11

Petitioner filed the instant petition for review raising the following assignment of errors:

I. CONTRARY TO THE ERRONEOUS RULING OF THE COURT A QUO, THE COUNTERCLAIMS INTERPOSED BY
RESPONDENTS MALAPAJO IN THEIR ANSWER WITH COUNTERCLAIM ARE, BASED ON APPLICABLE LAW AND
JURISPRUDENCE, PERMISSIVE IN NATURE, NOT COMPULSORY, AND THEREFORE, SUCH ANSWER WITH
RESPECT TO SUCH COUNTERCLAIMS IS IN REALITY AN INITIATORY PLEADING WHICH SHOULD HAVE BEEN
ACCOMPANIED BY A CERTIFICATION AGAINST FORUM SHOPPING AND CORRESPONDING DOCKET FEES,
THEREFORE, SHOULD HAVE BEEN PAID, FAILING IN WHICH THE COUNTERCLAIMS SHOULD HAVE BEEN
ORDERED DISMISSED. MOREOVER, AS REGARDS THE LOAN ALLEGEDLY EXTENDED BY THEIR MOTHER TO
PETITIONER, WHICH UP TO NOW IS SUPPOSEDLY STILL UNPAID, RESPONDENTS MALAPAJO ARE NOT THE
REAL PARTIES-IN-INTEREST AND IS, THEREFORE, DISMISSIBLE ON THIS ADDITIONAL GROUND; and

II. THE HONORABLE COURT OF APPEALS COMMITTED A VERY SERIOUS ERROR WHEN IT DISMISSED THE
PETITION FOR CERTIORARI BASED ON PURE TECHNICALITY, THEREBY GIVING MORE PREMIUM AND MORE
WEIGHT ON TECHNICALITIES RATHER THAN SUBSTANCE AND DISREGARDING THE MERITS OF THE
PETITION.12

We find that the CA erred in denying petitioner's petition for certiorari after the latter had clearly shown compliance with
the proof of service of the petition as required under Section 13 of Rule 13 of the 1997 Rules of Civil Procedure, which
provides:

Sec.13. Proof of service.

Proof of personal service shall consist of a written admission of the party served, or the official return of the server, or the
affidavit of the party serving, containing a full statement of the date, place and manner of service. If the service is by
ordinary mail, proof thereof shall consist of an affidavit of the person mailing of facts showing compliance with section 7 of
this Rule. If service is made by registered mail, proof shall be made by such affidavit and the registry receipt issued by the
mailing office. The registry return card shall be filed immediately upon its receipt by the sender, or in lieu thereof the
unclaimed letter together with the certified or sworn copy of the notice given by the postmaster to the addressee.

Clearly, service made through registered mail is proved by the registry receipt issued by the mailing office and an affidavit
of the person mailing of facts showing compliance with the rule. In this case, Nerissa Apuyo, the secretary of petitioner’s
counsel, had executed an affidavit13 of personal service and service by registered mail which she attached to the petition
marked as original filed with the CA. She stated under oath that she personally served a copy of the petition to the RTC of
Roxas City on December 6, 2010, as evidenced by a stamp mark of the RTC on the corresponding page of the petition;
that she also served copies of the petition by registered mail to respondents' counsels on December 6, 2010 as evidenced
by registry receipts numbers "PST 188" and "PST 189", both issued by the Roxas City Post Office. The registry receipts
issued by the

post office were attached to the petition filed with the CA. Petitioner had indeed complied with the rule on proof of service.

Since the case was dismissed outright on technicality, the arguments raised in the petition for certiorari were not at all
considered. However, we will now resolve the issue on the merits so as not to delay further the disposition of the case
instead of remanding it to the CA.

The issue for resolution is whether respondents’ counterclaim, i.e., reimbursement of the loan obtained from them in case
the deed of absolute sale is declared null and void on the ground of forgery, is permissive in nature which requires the
payment of docket fees and a certification against forum shopping for the trial court to acquire jurisdiction over the same.

A counterclaim is any claim which a defending party may have against an opposing party.14 A compulsory counterclaim is
one which, being cognizable by the regular courts of justice, arises out of or is connected with the transaction or
occurrence constituting the subject matter of the opposing party's claim and does not require for its adjudication the
presence of third parties of whom the court cannot acquire jurisdiction. Such a counterclaim must be within the jurisdiction
of the court both as to the amount and the nature thereof, except that in an original action before the Regional Trial Court,
necessarily connected with the subject matter of the opposing party's claim or even where there is such a connection, the
Court has no jurisdiction to entertain the claim or it requires for adjudication the presence of third persons over whom the
court acquire jurisdiction.15 A compulsory counterclaim is barred if not set up in the same action.

A counterclaim is permissive if it does not arise out of or is not necessarily connected with the subject matter of the
opposing party's claim.16 It is essentially an independent claim that may be filed separately in another case.

To determine whether a counterclaim is compulsory or permissive, we have devised the following tests: (a) Are the issues
of fact and law raised by the claim and by the counterclaim largely the same? (b) Would res judicata bar a subsequent suit
on defendants’ claims, absent the compulsory counterclaim rule? (c) Will substantially the same evidence support or
refute plaintiffs’ claim as well as the defendants’ counterclaim? and (d) Is there any logical relation between the claim and
the counterclaim?17 A positive answer to all four questions would indicate that the counterclaim is compulsory.18

Based on the above-mentioned tests, we shall determine the nature of respondents’ counterclaim. Respondents anchored
their assailed counterclaim on the following allegations in their affirmative defenses in their Answer with Counterclaim,
thus:

xxxx

10. The plaintiff's cause of action is based on his allegation that his signature on the Deed of Absolute Sale was forged.

The Deed of Absolute Sale is a unilateral instrument, i.e., it was signed only by the vendor, who is the plaintiff in this case
and his instrumental witnesses, who are his parents in this case. It was presented to defendants already completely
prepared, accomplished and notarized. Defendants had no hand in its preparation, accomplishment and notarization.

While the plaintiff claims that his signature on the instrument is forged, he never questioned the genuineness of the
signatures of his instrumental witnesses, his parents Arturo P. Alba, Sr. and Norma C. Alba, who signed the said
instrument below the words "SIGNED IN THE PRESENCE OF" and above the words "Father" and "Mother," respectively.

Furthermore, plaintiff acknowledged in par. 7 of his Complaint that the stated consideration in the Deed of Absolute Sale
is P500,000.00 and he never categorically denied having received the same.
11. Before the plaintiff sold the property to the defendants, he secured a loan from them in the sum of Six Hundred
Thousand Pesos (P600,000.00) payable on or before November 10, 2008. The loan is evidenced by a Promissory Note
and secured by a Real Estate Mortgage dated September 11, 2008, both executed by him, covering the parcel of land
subject of this case, Lot 2332-D, Psd 06-000738. Like the Deed of Absolute Sale, the Real Estate Mortgage is a unilateral
instrument, was signed solely by the plaintiff, and furthermore, his parents affixed their signatures thereon under the
heading "WITH MY PARENTAL CONSENT", and above the words, "Father" and "Mother," respectively.

Prior to this, or as early as July 25, 2008, the plaintiff also obtained a loan payable on or before September 6, 2008 from
defendants' mother, Alma D. David, and already mortgaged to her Lot 2332-D, Psd 06-000738. The loan is evidenced by
a Promissory Note and a Real Estate Mortgage, both of which were executed by plaintiff. Again, the Real Estate Mortgage
is an unilateral instrument, was signed solely by the plaintiff and furthermore, his parents also affixed their signatures
thereon under the heading, "WITH MY PARENTAL CONSENT " and above the words, "Father" and "Mother,"
respectively.

In both instances, the plaintiff was always represented by his parents, who always manifested their authority to transact in
behalf of their son the plaintiff.
1âwphi1

As in the case with the Deed of Absolute Sale, the defendants or their mother did not have any hand in the preparation,
accomplishment or notarization of the two Promissory Notes with accompanying Real Estate Mortgages, x x x.

Neither of the two Real Estate Mortgages have been discharged or extinguished.

12. Considering the foregoing, the plaintiff's allegation that his signature on the Deed of Absolute Sale was forged, and
that the defendants are the "co-authors" of the said forgery, are absolutely false and baseless.

13. If the Deed of Absolute Sale is declared null and void on the ground of forgery, then the plaintiff should reimburse the
defendants the loan he obtained from them, which he did not deny having obtained, plus the agreed monthly interest.19

Petitioner seeks to recover the subject property by assailing the validity of the deed of sale on the subject property which
he allegedly executed in favor of respondents Malapajo on the ground of forgery. Respondents counterclaimed that, in
case the deed of sale is declared null and void, they be paid the loan petitioner obtained from them plus the agreed
monthly interest which was covered by a real estate mortgage on the subject property executed by petitioner in favor of
respondents. There is a logical relationship between the claim and the counterclaim, as the counterclaim is connected
with the transaction or occurrence constituting the subject matter of the opposing party's claim. Notably, the same
evidence to sustain respondents' counterclaim would disprove petitioner's case. In the event that respondents could
convincingly establish that petitioner actually executed the promissory note and the real estate mortgage over the subject
property in their favor then petitioner's complaint might fail. Petitioner's claim is so related logically to respondents'
counterclaim, such that conducting separate trials for the claim and the counterclaim would result in the substantial
duplication of the time and effort of the court and the parties.20

Since respondents' counterclaim is compulsory, it must be set up in the same action; otherwise, it would be barred
forever.21 If it is filed concurrently with the main action but in a different proceeding, it would be abated on the ground
of litis pendentia; if filed subsequently, it would meet the same fate on the ground of res judicata.22 There is, therefore, no
need for respondents to pay docket fees and to file a certification against forum shopping for the court to acquire
jurisdiction over the said counterclaim.

We agree with the RTC’s disquisition in finding that respondents’ counterclaim is compulsory, to wit:

The arguments of the plaintiffs that this transaction is a permissive counterclaim do not convince.
By the manner in which the answer pertaining to this transaction was phrased, the real estate mortgage was the origin of
the Deed of Absolute Sale after the loan of P600,000.00 using the same property as security for the payment thereof was
not settled. In short, it is one of defendants' defenses and controverting evidence against plaintiffs' allegations of
falsification of the Deed of Absolute Sale, the property subject of the Deed of Sale being one and the same property
subject of the mortgage.23

xxxx

Can the Court adjudicate upon the issues [of whether or not the plaintiff could recover ownership and or whether or not
the title to the property in question may be canceled or declared null and void, and damages] without the presence of the
mother of defendants in whose favor the Real Estate Mortgage of the property subject of this action was executed?

Definitely, this Court can. That there was an allegation pertaining to the mortgage of the property in question to
defendants’ mother is only some sort of a backgrounder on why a deed of sale was executed by plaintiff in defendants’
favor, the truth or falsity of which will have to be evidentiary on the part of the parties hereto. In short, the Court does not
need the presence of defendants’ mother before it can adjudicate on whether or not the deed of absolute sale was
genuine or falsified and whether or not the title to the property may be cancelled.24

WHEREFORE, premises considered, the instant petition is PARTIALLY GRANTED. The Resolutions dated February 28,
2011 and August 31, 2011 issued by the Court of Appeals in CA-G.R. SP No. 05594 dismissing the petition
for certiorari and denying reconsideration thereof, respectively, for failure to show proper proof of service of the petition to
respondents, are SET ASIDE. Acting on the petition for certiorari, we resolve to DENY the same and AFFIRM the Order
dated June 4, 2010 of the Regional Trial Court of Roxas City, Branch 15, denying petitioner's motion to set the case for
hearing as if a motion to dismiss had been filed, and the Order dated September 30, 2010 denying reconsideration
thereof.

SO ORDERED.

G.R. No. 155701

LIM TECK CHUAN, Petitioner,

vs.
SERAFIN UY and LEOPOLDA CECILIO, LIM SING CHAN @ HENRY LIM, Respondents.

DECISION

REYES, J.:

Before this Court is a petition for review on certiorari1 under Rule 45 filed by Lim Teck Chuan (petitioner) assailing the
Orders dated April 25, 20022 and October 21, 20023 of the Regional Trial Court (RTC) of Lapu-lapu City, Branch 27, in
Civil Case No. 4786-L, which dismissed the case uponjointa motion of respondents Serafin Uy (Serafin) and Leopolda
Cecilio (Leopolda) despite an opposition and manifestation of the petitioner to have his counterclaim prosecuted in the
same action, and denied the petitioner's motion for reconsideration for being barren of merit, respectively.

The antecedent facts are as follows:

The subject matter of the present controversy is a piece of land known as Lot 5357 with an area of 33,610 square meters,
covered by Transfer Certificate of Title (TCT) No. T-0500, situated in Barrio Agus, Lapu-lapu City, Cebu, owned and
registered under the name of Antonio Lim Tanhu (Antonio), married to Dy Ochay.
Lot 5357 was sold by Antonio to the spouses Francisco Cabansag (Francisco) and Estrella Cabansag (Spouses
Cabansag) as evidenced by a Deed of Sale executed on January 8, 1966. Apparently, Francisco failed to transfer the title
of the property to their names because of his work and frequent travels abroad.4

In 1988, Spouses Cabansag sold the lot to Serafin, as evidenced by a Deed of Sale dated April 8, 1988. To pave the way
for the transfer of title to Serafin’s name, Spouses Cabansag attempted to have the same transferred under their names
first. However, Francisco failed to do so as he lost the owner’s copy of TCT No. T-0500 together with other documents
pertaining to the sale of the subject lot. This prompted Serafin to exert efforts to secure copies of the lost documents
himself. On May 15, 1996, Serafin filed a petition before the RTC, docketed as Cadastral Case No. 21 praying for the
issuance of a new owner’s duplicate TCT in his name, thereby cancelling TCT No. T-0500 in the name of Antonio.5

Serafin’s petition for the issuance of a new owner’s copy of TCT No. T-0500 was raffled to the RTC of Lapu-lapu City,
Branch 27, then sitting as a cadastral court (Cadastral Court). After due notice and hearing, the Cadastral Court issued an
Order6 on June 14, 1996 directing the Register of Deeds of Lapu-lapu City to issue a new owner’s duplicate copy of TCT
No. T-0500.

However, the aforesaid order was recalled and nullified on September 3, 19967 on the ground that the petitioner filed an
Opposition and/or Motion for Reconsideration with Manifestation for Special Appearance8 dated August 22, 1996 alleging
that he is one of the six legitimate descendants of Antonio; and that the original owner’s copy of TCT No. T-0500 was not
lost and has always been in his custody. The court further directed the petitioner to deposit the said owner’s copy of TCT
No. T-0500 with said court.

In the meantime, on August 2, 1996, Lim Sing Chan alias Henry Lim (Henry) executed an Affidavit of Sole
Adjudication/Settlement of the Estate of Antonio Lim Tanhu with Deed of Sale9 (Affidavit of Self-Adjudication) claiming that
he is the only surviving heir of Antonio. In the same document, Henry sold Lot 5357 to Leopolda in the amount of
500,000.00.

With this turn of events, Serafin filed on July 25, 1997 a Complaint10 for quieting of title, surrender of owner’s copy of
certificate of title, declaration of nullity of affidavit of adjudication and sale, annulment of tax declaration, and other reliefs
with a prayer for preliminary injunction before the RTC, docketed as Civil Case No. 4786-L. Impleaded as defendants
were Leopolda, Henry, and the herein petitioner.

Leopolda filed her Answer11 (with counterclaim, and cross-claim against Henry), asserting that she was the buyer in good
faith and for value of Lot 5357. She alleged that the said property was never encumbered to any person during the lifetime
of Antonio; that the deed of sale in favor of Spouses Cabansag was simulated and spurious; and that the said document
was never registered with the proper government agency, nor was it ever annotated on the certificate of title covering the
said property. She claimed that the lot in question was sold to her as evidenced by the Affidavit of Self-Adjudication
executed by Henry; that she caused the issuance of a new tax declaration over the said property in her name; that since
then, she has been in open, actual and material possession of the subject lot in the concept of an owner.

For his part, the petitioner averred in his Answer12 (with counterclaim, and cross-claims against Leopolda and Henry), that
Lot 5357 was never transferred nor encumbered to any person during Antonio’s lifetime. The deed of sale in favor of
Spouses Cabansag was simulated and spurious, and was intended to defraud the estate of Antonio. Furthermore, the
petitioner questioned Henry’s claim that he was an heir of Antonio, much less the only surviving heir of the latter.
Corollarily, the petitioner questioned the validity of Henry’s Affidavit of Self-Adjudication and Leopolda’s claim of title to the
subject property.

On November 11, 1997, Leopolda filed her Answer13 to the petitioner’s cross-claim. She basically reiterated her allegations
raised in her Answer to Serafin’s complaint.

Henry did not file an answer to any of the claims against him.
On December 22, 1998, the pre-trial conference14 was conducted where the parties agreed to the following stipulation of
facts:

[T]hat Antonio Lim Tanhu was the registered owner of Lot 5357 of the Cadastral Survey of Opon located in Lapu-lapu
City[;] that Antonio Lim Tanhu died on April 13, 1991[;] that Antonio Lim Tanhu was succeeded upon his death by his six
children, namely, the defendant Lim Teck Chuan, Lim Sing Tai, Helen Lim, Lenesita Lim, Warlito Lim and Michael Lim
Tan Ho[;] that the defendant Lim Sing Chan is actually a fictitious person[;] that there exists an ancient document
denominated as Deed of Absolute Sale of Lot 5357 executed on January 8, 1966 by Antonio Lim Tanhu in favor of the
spouses Francisco Cabansag and Estrella M. Cabansag (Exhibit A)[;] that there also exists a document denominated as
Deed of Absolute Sale (Exhibit B) of Lot 5357 executed on April 8, 1988 by the spouses Francisco Cabansag and Estrella
M. Cabansag in favor of the plaintiff[;] and that there exists, too, a document denominated as Affidavit of [Sale]
Adjudication/Settlement of Estate of Antonio Lim Tanhu with Deed of Sale executed on May 2, 1996 by a certain Lim Sing
Chan (Exhibit 1-Cecilio). x x x.15

The parties also agreed to the following issues:

1.Whether or not the plaintiff has valid causes of action for quieting of title, declaration of nullity of documents of sale and
tax declarations, reconveyance of title and damages against the defendants[;]

2.Whether or not the defendants Leopolda Cecilio and Lim Teck Chuan have valid counterclaims against the plaintiff; and

3.Whether or not the defendant Lim Teck Chuan has a valid cross-claim against the defendant Leopolda Cecilio.16

Thereafter, the pre-trial order was amended such that it should not be considered as established and stipulated facts that
Henry is a fictitious person and that the Deed of Sale of Lot 5357 purportedly executed by Antonio on January 8, 1966 is
genuine and authentic since there were actually no admissions made on these circumstances.17

In the same Order18 dated July 17, 1999, the RTC denied Serafin’s motion for summary judgment19 because under the
circumstances, there were actually genuine issues of fact to be resolved and passed upon by the court.

Eventually, the RTC set the initial trial of the case on March 28, 2001.20 However, it was postponed upon motion of
Leopolda’s counsel and upon the manifestation of Serafin’s counsel that there was an on-going negotiation for an
amicable settlement. For his part, the petitioner’s counsel manifested that the petitioner was not involved in any
negotiation for amicable settlement. The scheduled hearing was reset to July 11, 200121 and later to November 12, 2001.22

On September 20, 2001, Serafin and Leopolda submitted a Joint Motion to Dismiss.23 They averred that:

1.That the case at [bench] is filed by the Plaintiff Serafin Uy against the defendants for "quieting of title, surrender of
owner of certificate of title, declaration of nullity of affidavit of adjudication and sale annulment of tax declaration, and other
reliefs consistent with law, justice and equity[ ];

2.That in the case at bench, Plaintiff Serafin Uy seeks the quieting of title on his right over Lot 5357 of the Cadastral
Survey of Opon situated at Barangay Agus, Lapu-lapu City, in view of the affidavit of adjudication and Sale dated August
2, 1996 (Annex "F") of the Complaint, and Tax Decl. No. 01532 issued in the name of Leopolda Cecilio both of which
documents affected Lot 5357 (Annex G to the Complaint);

3.That Plaintiff Serafin Uy and Defendant Leopolda Cecilio have amicably settled their differences in the case at bench
and Def. Leopolda Cecilio has agreed to waive her counterclaim for damages in the instant case;
4.That Plaintiff Serafin Uy has already secured a certificate of title to Lot No. 5357 in his name dated July 26, 2001, and
has also agreed for the cancellation of the same, and for issuance of a new one, over said Lot 5357, in their common
names;

5.That whatever claim defendant Lim Teck Chuan may have on said Lot No. 5357, the same may be ventilated by said
defendant in an appropriate independent action that he may initiate and file[.]

PRAYER

WHEREFORE, this Honorable Court is most respectfully prayed and humbly implored to dismiss the Complaint and the
respective counterclaims of the defendants in the case at bench.24

On October 4, 2001, the petitioner filed his Opposition/Comment25 praying for the denial of the Joint Motion to Dismiss on
the ground of bad faith, and to prohibit Serafin and Leopolda from undertaking any further transaction involving the subject
lot. The pertinent portion of his opposition reads as follows:

1. That the [petitioner] opposes the ‘Joint Motion to Dismiss’ filed by [Serafin] and [Leopolda] on the grounds:

1.1that there [is] BAD FAITH on the part of [Serafin] and [Leopolda];

1.2.That the [petitioner] was not involved in any amicable settlements between [Serafin] and [Leopolda] because both
[Serafin] and [Leopolda] connived to MISLEAD this Honorable Court and to DEFRAUD the estate of [Antonio];

1.3.That the [petitioner] has valid counterclaims against [Serafin] for moral damages of P 5,000,000[.00]; exemplary
damages of P 1,200,000[.00]; and Attorney’s fees of P 50,000[.00]; on the ground that [Serafin] maliciously and
deliberately presented to this Honorable Court the FALSIFIED AND FICTITIOUS ‘deed of sale’ PURPORTEDLY executed
by [Antonio] in favor of [Francisco];

1.4.That the [petitioner] has valid cross[-]claims against Cross-defendants Lim Sing Chan alias Henry Lim whose real
name is Henry Lim Ormoc, and [Leopolda] for moral damages of P 5,000,000[.00] each, attorney’s fees of P 50,000[.00]
each, and exemplary damages of P 1,000,000[.00] for [Henry] and P 1,600,000[.00] for [Leopolda] because [Henry] and
[Leopolda] connived with each other to defraud the estate of [Antonio] on the ground that [Henry] MISREPRESENTED
himself as an heir of [Antonio] while [Leopolda] has KNOWLEDGE of such MISREPRESENTATION;

1.5.That the [petitioner] manifest[s] to this Honorable Court of his preference that the above-counterclaims and
cross-claims be resolved in the present case[.]26

The petitioner further averred that the transfer of Antonio’s title under TCT No. T-0500 in the name of Serafin is irregular
and illegal since the true owner’s copy of TCT No. T-0500 remained in his possession.

Henry continued to remain silent.

On October 10, 2001, Serafin filed his Reply27 to the comment/opposition of the petitioner. He substantially averred that:

1.With the end in view of registering Lot 5357 in his name, he instituted the instant case due to the existence of certain
documents affecting his title thereto, namely: Henry’s Affidavit of Self-Adjudication with Deed of Sale dated August 2,
1996 naming Leopolda as the buyer, and Tax Declaration No. 01532 issued in the name of the latter;

2.Under his Affidavit of Self-Adjudication, Henry already transferred whatever right and interest he had on the subject lot
to Leopolda. On the other hand, by reason of the amicable settlement between him (Serafin) and Leopolda, the latter
waived and abandoned all her rights to Lot 5357. Ergo, as far as Leopolda is concerned, her waiver negated all the legal
consequences of Tax Declaration No. 01532 and Henry’s Affidavit of Self-Adjudication. Since the same were the very
documents that cast clouds on his (Serafin) title over Lot 5357, his main causes of action in the case at bench had
become moot and academic as his title to the said lot had been quieted;

3.The petitioner was impleaded because of the following points: a) he alleged that he is one of the heirs of the late
Antonio; b) he contested the claim of Henry that the latter is the only surviving heir of said decedent, and prayed upon the
court to declare Henry as an impostor; and c) he challenged the genuineness and due execution of the deed of absolute
sale between Antonio and Spouses Cabansag;

4.Aside from his claim for damages, the petitioner’s counterclaim sought the nullification of the Deed of Absolute Sale
dated January 8, 1966 between Antonio and Spouses Cabansag which required the impleading of persons who were not
parties in the case. These persons included Spouses Cabansag who was indispensable party to any action for the
annulment of the deed which was executed in their favor. However, to implead the said persons, there was a need to
summon them so that the court can acquire jurisdiction over them - and in order that they can be summoned, there was a
need for the petitioner to file a formal complaint against them;

5.Moreover, the cross-claim of the petitioner against Henry can also be resolved in a separate action for the declaration of
the true heirs of Antonio wherein all the heirs of the latter will be impleaded, and where the petitioner can prove that he
was indeed one of the heirs of said decedent – especially so that there is yet no judicial or extra-judicial declaration as to
who were Antonio’s heirs;

6.The dismissal of the case will not affect the rights of the petitioner because whatever claim he had on the subject lot and
against any party may be ventilated in an appropriate and separate action.

On November 6, 2001, the petitioner, through counsel, filed his

Motion to Implead Indispensable Parties and Supplemental Opposition to Joint Motion to Dismiss.28 Invoking Section
1129 of Rule 3 of the Rules of Court, the petitioner averred that there is a need to implead Spouses Cabansag in order that
a final determination of all the issues could be had in the case.

Acting on the Joint Motion to Dismiss, the RTC issued the assailed Order30 dated April 25, 2002 granting the same and
denying the petitioner’s motion to implead Spouses Cabansag. The order is quoted as follows:

Going over the arguments of the parties, the Court finds the arguments of the movants as tenable. For what is the use of
so continuously litigating this case when [Serafin] admits and confirms that the principal reliefs he prayed for have already
been met or satisfied as his title to the property in question has already been quieted with him having "already secured a
certificate of title to Lot No. 5357 in his name dated July 26, 2001, and has also agreed for the cancellation of the same,
and for the issuance of a new one, over said Lot 5357, in their common names." In fact, even without said reliefs having
been met or satisfied, nobody, not even the courts of justice, can compel a party-litigant in a civil action like [Serafin] to so
continuously litigate his case if he does not want to anymore.

Finding therefore, the subject motion to dismiss to be proper and in order, this case is ordered dismissed so with the
respective counterclaims of the defendants. Considering however, that [the petitioner] is not a party and even opposed the
subject motion to dismiss, the dismissal of his counterclaims and cross-claim is without prejudice to give him his day in
court. And with this pronouncement of dismissal, the motion to implead indispensable parties of [the petitioner] becomes
moot and academic and therefore is denied.31

On May 30, 2002, the petitioner filed a Motion for Reconsideration32 which was denied in the Order33 dated October 21,
2002.
Aggrieved, the petitioner went up to this Court via a petition for review on certiorari under Rule 45 raising the lone
assignment of error that:

THE LOWER COURT ERRED IN DISMISSING CIVIL CASE 4786-L UPON A JOINT MOTION TO DISMISS FILED BY
THE RESPONDENTS WHO ARE PLAINTIFF AND ONE OF THE DEFENDANTS, RESPECTIVELY, IN THE
AFOREMENTIONED CASE DESPITE THE OPPOSITION BY HEREIN PETITIONER AND THE MANIFESTATION OF
THE LATTER OF HIS PREFERENCE MADE WITHIN FIFTEEN (15) DAYS FROM THE JOINT MOTION TO DISMISS,
TO HAVE HIS COUNTERCLAIM, AS WELL AS HIS CROSS-CLAIM, PROSECUTED IN THE SAME ACTION, IN
ACCORDANCE WITH SECTION 2, RULE 17 OF THE 1997 RULES OF CIVIL PROCEDURE. 34

The petitioner faults the RTC for dismissing the case in its entirety in spite of his counterclaim and cross-claim. He asserts
that within 15 days from notice of the filing of the joint motion to dismiss, he filed his opposition thereto and expressed his
preference to have his counterclaim and cross-claim be resolved in the same action. Therefore, pursuant to the provisions
of Section 2, Rule 17 of the Rules of Court, his timely expression of such preference should be enough for the trial court
not to dismiss the case in its entirety, and to limit its action to the dismissal of the complaint.

Preliminarily, the respondents question the petitioner’s recourse to this Court in filing the instant petition alleging that no
appeal may be taken from an order of the RTC dismissing an action without prejudice.35 Nonetheless, the Rules of Court
do not prohibit any of the parties from filing a Rule 45 petition with this Court in case only questions of law are raised or
involved.36 In Bukidnon Doctors’ Hospital, Inc. v. Metropolitan Bank & Trust Co.,37 the Court explained that:

Section 2(c), Rule 41 of the Rules of Court categorically provides that in all cases where only questions of law are raised,
the appeal from a decision or order of the Regional Trial Court shall be to the Supreme Court by petition for review on
certiorari in accordance with Rule 45. Section 2(c) of Rule 41 of the Rules of Court reads:

SEC. 2. Modes of appeal. –

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

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

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

Section 1 of Rule 45 provides:

SECTION 1. Filing of petition with Supreme Court.

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

A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a
certain set of facts; or when the issue does not call for an examination of the probative value of the evidence presented,
the truth or falsehood of facts being admitted. A question of fact exists when the doubt or difference arises as to the truth
or falsehood of facts or when the query invites calibration of the whole evidence considering mainly the credibility of the
witnesses, the existence and relevancy of specific surrounding circumstances, as well as their relation to each other and
to the whole, and the probability of the situation.38 (Citation omitted)

Considering that the issue in the instant case is clearly one of law as it calls for the correct application of the Rules of
Court, the petitioner’s direct resort to this Court is proper.

The Court now looks into the propriety of the order of the RTC in dismissing the case. Needless to state, the Court is
again confronted with the issue of whether the dismissal of the complaint, specifically upon motion of the plaintiff under
Section 2 of Rule 17 of the Rules of Court also calls for the dismissal of the defendant’s counterclaim, as in the case at
bar.

Rule 17 of the Rules of Civil Procedure provides the following:

SECTION 1. Dismissal upon notice by plaintiff. – A complaint may be dismissed by the plaintiff by filing a notice of
dismissal at any time before service of the answer or of a motion for summary judgment. Upon such notice being filed, the
court shall issue an order confirming the dismissal. Unless otherwise stated in the notice, the dismissal is without
prejudice, except that a notice operates as an adjudication upon the merits when filed by a plaintiff who has once
dismissed in a competent court an action based on or including the same claim.

SECTION 2. Dismissal upon motion of plaintiff. – Except as provided in the preceding section, a complaint shall not be
dismissed at the plaintiff’s instance save upon approval of the court and upon such terms and conditions as the court
deems proper. If a counterclaim has been pleaded by a defendant prior to the service upon him of the plaintiff’s motion for
dismissal, the dismissal shall be limited to the complaint. The dismissal shall be without prejudice to the right of the
defendant to prosecute his counterclaim in a separate action unless within fifteen (15) days from notice of the motion he
manifests his preference to have his counterclaim resolved in the same action. Unless otherwise specified in the order, a
dismissal under this paragraph shall be without prejudice. A class suit shall not be dismissed or compromised without the
approval of the court.

SECTION 3. Dismissal due to fault of plaintiff. – If, for no justifiable cause, the plaintiff fails to appear on the date of the
presentation of his evidence in chief on the complaint, or to prosecute his action for an unreasonable length of time, or to
comply with these Rules or any order of the court, the complaint may be dismissed upon motion of the defendant or upon
the court’s own motion, without prejudice to the right of the defendant to prosecute his counterclaim in the same or in a
separate action. This dismissal shall have the effect of an adjudication upon the merits, unless otherwise declared by the
court.

SECTION 4. Dismissal of counterclaim, cross-claim, or third- party complaint. – The provisions of this Rule shall apply to
the dismissal of any counterclaim, cross-claim, or third-party complaint. A voluntary dismissal by the claimant by notice as
in Section 1 of this Rule, shall be made before a responsive pleading or a motion for summary judgment is served or, if
there is none, before the introduction of evidence at the trial or hearing.

The RTC granted the Joint Motion to Dismiss upon the behest of Serafin, the plaintiff therein on the main ground that the
case had become moot and academic since his title to Lot 5357 had been allegedly quieted and the reliefs prayed for
were obtained. In the Order dated October 21, 2002 denying the motion for reconsideration, the RTC elucidated that:

The Court in issuing the dismissal order dated April 25, 2002 had already made its position on the matter very clearly such
that it finds no reason to disturb the subject order. As clarified, a party-litigant in a civil action like the plaintiff herein,
cannot be compelled to so continuously litigate his case if he does not want to anymore as was obtaining in this case.
More so that the principal reliefs prayed for in the complaint had already been served as was so admitted by the plaintiff.
Being so, this Court finds it repugnant to go on with the hearing of movant’s-defendant’s counterclaim for what is to be
countered by the movant when the claim of the plaintiff, at his own instance, had already been dismissed it having been
served and satisfied as aforestated. And this is so because what is contemplated under the Rules authorizing the hearing
of defendant’s counterclaim is when the dismissal is not at the instance of the plaintiff.39
As can be gleaned from the assailed orders, the RTC erred when it dismissed the case when the present rules state that
the dismissal shall be limited only to the complaint. A dismissal of an action is different from a mere dismissal of the
1âwphi 1

complaint. For this reason, since only the complaint and not the action is dismissed, the defendant in spite of said
dismissal may still prosecute his counterclaim in the same action.40 The case of Pinga v. Heirs of German Santiago41 is
quite instructive which this Court finds worth reiterating. In Pinga, the Court clearly stated that the dismissal of the
complaint does not necessarily result to the dismissal of the counterclaim, abandoning the rulings in Metals Engineering
Resources Corporation v. Court of Appeals,42 International Container Terminal Services, Inc. v. Court of Appeals,43 and BA
Finance Corporation v. Co.44 The Court held that:

At present, even Section 2, concerning dismissals on motion of the plaintiff, now recognizes the right of the defendant to
prosecute the counterclaim either in the same or separate action notwithstanding the dismissal of the complaint, and
without regard as to the permissive or compulsory nature of the counterclaim.

In his commentaries on the 1997 Rules of Civil Procedure, Justice Regalado expounds on the effects of the amendments
to Section 2 and 3 of Rule 17:

2. Under this revised section [2], where the plaintiff moves for the dismissal of his complaint to which a counterclaim has
been interposed, the dismissal shall be limited to the complaint. Such dismissal shall be without prejudice to the right of
the defendant to either prosecute his counterclaim in a separate action or to have the same resolved in the same action.
Should he opt for the first alternative, the court should render the corresponding order granting and reserving his right to
prosecute his claim in a separate complaint. Should he choose to have his counterclaim disposed of in the same action
wherein the complaint had been dismissed, he must manifest such preference to the trial court within 15 days from notice
to him of plaintiff’s motion to dismiss. These alternative remedies of the defendant are available to him regardless of
whether his counterclaim is compulsory or permissive. x x x.45 (Italics in the original)

In the instant case, the petitioner’s preference to have his counterclaim (and cross-claims) be prosecuted in the same
action was timely manifested. The records show that Serafin and Leopolda furnished the petitioner’s counsel with a copy
of their Joint Motion to Dismiss by posting it (via registered mail) on September 19, 2001.46 Said motion was filed in court
the following day.47 On October 4, 2001, the petitioner filed his Opposition/Comment thereto.48Copies of the said opposition
were personally served upon the opposing parties on the same date.49 In paragraph 1.550 of said opposition, the petitioner
expressed his preference to have his counterclaim and cross-claim prosecuted in the same case, as he thus stated:

1.5 That the undersigned defendant manifest to this Honorable Court of his preference that the above[ ]counterclaims and
cross-claims be resolved in the present case.51

There are valid reasons why the petitioner vehemently objected to the dismissal of the case upon the joint motion of
Serafin and Leopolda and insisted to have his counterclaim prosecuted in the same action.

Serafin instituted the instant case due to the existence of certain documents affecting his title, namely: Henry’s Affidavit of
Self-Adjudication with Deed of Sale which names Leopolda as the buyer; and Tax Declaration No. 01532 which was
issued in the name of the latter. In his Affidavit of Self-Adjudication, Henry transferred whatever right and interest he had
on the subject lot to Leopolda. Subsequently, by reason of the amicable settlement between Serafin and Leopolda, the
latter waived and abandoned all her rights to Lot 5357.

On the other hand, the petitioner asserts that the subject property was never transferred nor encumbered to any person
during Antonio’s lifetime. He insists that the deed of sale in favor of Spouses Cabansag is simulated and spurious, and
was intended to defraud the estate of Antonio. Further, he asserts that said Spouses Cabansag are mere creations of
Serafin.

Forthwith, the foregoing contentions touch on the very merits of the case which this Court is not prepared to rule upon for
want of sufficient factual basis since this case was dismissed by the RTC even before the parties were able to present
their evidence on the merits. Nonetheless, the records show that Serafin had been aware of the petitioner’s claim over the
property as descendants of Antonio and Dy Ochay even before the institution of this case, which was why he impleaded
the petitioner in this case. Then, the Joint Motion to Dismiss was filed by Serafin and Leopolda on the ground that both
parties were able to settle their differences. It is rather intriguing that in said joint motion, it was alleged that Serafin was
already able to secure a certificate of title in his name dated July 26, 2001 and that both parties agreed for its cancellation
and have a title over said property issued in their common names.52Clearly, the petitioner was peremptorily left out of the
picture. From the case’s inception, the petitioner’s interests and that of his siblings over the subject property were
vigilantly defended as evidenced by the numerous and exchange of pleadings made by the parties. It can not therefore be
denied that the petitioner has certainly valid defenses and enforceable claims against the respondents for being dragged
into this case. Thus, the petitioner’s manifestation of his preference to have his counterclaim prosecuted in the same
action is valid and in accordance with Section 2, Rule 17 of the Rules of Court.

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The Orders dated April 25, 2002 and
October 21, 2002 of the Regional Trial Court ofLapu-lapu City, Branch 27 in Civil Case No. 4786-L are MODIFIEDthatin
the counterclaim of Lim Teck Chuan as defendant in Civil Case No. 4786-L is REINSTATED. The Regional Trial Court is
ORDERED to hear and decide Lim Teck Chuan's counterclaim with dispatch.

SO ORDERED.

A.C. No. 7353

NELSON P. VALDEZ, Petitioner,

vs.
ATTY. ANTOLIN ALLYSON DABON, JR., Respondent.

DECISION

Per Curiam:

This is an administrative complaint for disbarment filed by Nelson P. Valdez (Nelson) against Atty. Antolin Allyson M.
Dabon, Jr. (Atty. Dabon) anchored on the ground of grossly immoral and indecent conduct which transgressed the high
moral standards required for membership in the Bar.

The Position of the Complainant

Complainant Nelson charged respondent Atty. Dabon, a Division Clerk of Court of the Court of Appeals (CA), with gross
immorality for allegedly carrying on an adulterous relationship with his wife, Sonia Romero Valdez (Sonia), which was
made possible by sexual assaults and maintained through threat and intimidation.

In his Affidavit-Complaint,1 dated September 13, 2006, Nelson averred, among others, that he married Sonia on January
28, 1998 in Paniqui, Tarlac; that Sonia was employed as Court Stenographer of the CA from 1992 until her resignation on
May 15, 2006;2 that Sonia admitted to have had an adulterous and immoral relationship with Atty. Dabon, from 2000 to
2006, a span of more than five years; that he came to know of the relationship only on April 18, 2006 after receiving an
anonymous text message hinting/stating about the existence of an illicit affair between the two; and that initially, Sonia
denied the affair but eventually broke down and admitted her sexual liaison with Atty. Dabon when confronted with a text
message he received from Atty. Jocelyn Dabon (Atty. Joy), the wife of the respondent, on May 4, 2006 at about 9:47
o'clock in the morning, which stated:

Nelson, Jun and I were separating I will file an annulment anytime soon, although I'm in great pain, I ask for your apology
and forgiveness for everything he is leaving for US and I hope he evolves into a strong and mature person there. D cya
masamang tao, just emotional and easily manipulated. Sana don't blame him entirely bee. he is d type that never initiate
things. He is passive and tame. He was honest with me and I hope Sonia would find d courage to tell d truth to you. I just
pray for peace and fresh start for all of us. I just want to go on with my life and use above all these for my son's sake. I
love jun and I appeal to you n asana wala ka maisip sa atin lahat. Just as I have accepted everything. Salamat sa
panahon at pangunawa. God bless.3

Nelson also asserted that Sonia confessed her infidelity and described her extramarital affair with Atty. Dabon to have
been attended by sexual assaults and maintained through intimidation and threats of exposure, humiliation and
embarrassment.

In her own Affidavit,4 dated September 13, 2006 and attached to the complaint, Sonia narrated that her illicit relationship
with Atty. Dabon started sometime in November 2000 and ended in March 2006 when she, bothered by her conscience,
decided to break it off; that Atty. Dabon relentlessly pursued her for years and even admitted that he fell in love with her
the first time he laid eyes on her; that on November 13, 2000, Atty. Dabon lured her to what appeared to be a mere
friendly lunch date, managed to put sleep-inducing drug into her food or drink causing her to feel drowsy and weak and,
thereafter, brought her to Victoria Court Motel where he sexually molested her while she was asleep; that she opted to
keep silent about the incident for fear of its adverse repercussions of shame and embarrassment to her and her family;
that she pleaded with Atty. Dabon to leave her and forget what had happened, but the respondent instead taunted her by
laughing at her misery; that since then, Atty. Dabon succeeded in having repeated carnal knowledge of her once or twice
a week through intimidation and threats; that Atty. Dabon threatened her that he would tell everyone that she had been
playing around with him, if she would not yield to his lascivious cravings; and that she suffered in silence for years and
submitted herself to the bestial desires of Atty. Dabon, until she even thought that she was in love with him.

Sonia further claimed that after years of living in deception and infidelity, she decided to call it quits with Atty. Dabon
sometime in March 2006 but he could not let go of their relationship; that Atty. Dabon started pestering and threatening
her through phone calls and handwritten messages in vile attempts to persuade her to continue their illicit affair; that
despite their break-up, Atty. Dabon still pursued his lustful quest by bringing her to Anito Motel, along Quirino A venue on
March 10, 2006, but she foiled his plan when she went ballistic prompting the respondent to drive her back to the CA; that
on March 13, 2006, Atty. Dabon forcibly boarded her car and pleaded for forgiveness and reconciliation but she remained
firm in her resolve to end the affair; that she had to seek the assistance of her officemates, Atty. Heiddi Venecia
Barrozo (Atty. Barrozo) and Atty. Aileen T. Ligot (Atty. Ligot), just to convince Atty. Dabon to alight from her car as the
said incident had already drawn the attention of several employees within the vicinity of the CA parking lot; that Atty.
Dabon used the members of his staff to relay his messages and deliver his handwritten letters to her; that Atty. Dabon,
angered by her repeated rejection, went berserk and sent her a letter which stated, among others, that he could no longer
stand her constant avoidance of him and that he would divulge their illicit relationship to her husband; that it numbed her
with fright, so she called Atty. Joy, without disclosing her identity, and told her that Atty. Dabon was harassing an
employee at the CA; that Atty. Dabon sent a text message to Nelson telling him of the extramarital affair; that Atty. Joy
called up Nelson and informed him that her husband, Atty. Dabon, had confessed to her the illicit relationship; and that
when she was asked by Nelson, she initially denied the affair for fear of reprisal but, afterwards, admitted the truth and
explained to him that she was merely a victim of Atty. Dabon's threat and intimidation which led to their illicit relationship.

Nels on further stated that Atty. Dabon' s willful, flagrant and shameless conduct was in gross defiance of the customs,
values and sense of morality of the community. He prayed for the disbarment of Atty. Dabon whose immoral acts showed
his lack of moral character, honesty, probity, and good demeanor and, hence, unworthy to continue as an officer of the
court. Nelson alleged that he had previously filed an administrative complaint for "Gross Immorality" against Atty. Dabon
before the CA.

Together with Sonia's Affidavit, Nelson also attached to his AffidavitComplaint for disbarment, the Joint Affidavit5executed
by Atty. Barrozo and Atty. Ligot on May 19, 2006; the Affidavit6 of Virginia D. Ramos (Ramos), dated May 19, 2006; and
the Affidavit7 of Marie Iris Magdalene Minerva (Minerva), dated May 22, 2006, wherein the said affiants corroborated the
declaration of Sonia in her affidavit.
The Position of Atty. Dabon

Respondent Atty. Dabon strongly refuted the accusation against him claiming that the same was baseless and unfounded
and that the complaint for disbarment was merely calculated to harass, annoy and besmirch his reputation.

In his Comment,8 Atty. Dabon denied the charges of grossly immoral and unlawful acts through sexual assaults, abuses,
threats and intimidation. He posited that the allegations of spouses Nelson and Sonia in their respective affidavits were
nothing but pure fabrication solely intended to malign his name and honor. In support of his prayer for the dismissal of the
present disbarment case, Atty. Dabon proffered the following arguments:

First, complainant Nelson had no personal knowledge of the alleged illicit relationship between him and Sonia. He relied
heavily on the sworn statement of Sonia which was replete with inconsistencies and incredible and preposterous claims
which defied logic and common sense, thus, revealing the fallacy of the subject complaint. He contended that it was highly
improbable for him, a married lawyer at that, to suddenly turn crazy and abandon all cares just to satisfy his purported
lustful hungerness by sexually assaulting Sonia, "an ordinary plain-looking 43-year old woman with two (2) teen aged
children."9

Second, nowhere in the administrative complaint of Nelson previously filed before the CA was there any mention of any
sexual assault he allegedly committed against Sonia or of an adulterous relationship that was maintained through threats
and intimidation. Surprisingly, such allegations were included in the present complaint for disbarment. He also pointed out
that Nelson did not attach to his administrative complaint before the CA the September 13, 2006 Affidavit of Sonia
containing grave imputations against him. Such omissions were indicative that the serious charges against him were mere
concoctions and afterthoughts designed to attain Nelson's desire to come up with a graver accusation against him. The
filing of the complaint for disbarment was motivated by vengeance against him as Nelson was consummed by his
suspicion that he had seduced Sonia which led to the deterioration of their marriage. He was a victim caught in the
crossfire between the troubled couple, Nelson and Sonia.

Third, there was no truth to Sonia's allegation that he was attracted to her from the first time he saw her much less
pursued her relentlessly. He and Sonia were just close friends. He was Sonia's confidante. She would usually confide in
him her personal woes and problems especially those concerning her husband, Nelson. It was Sonia who aggressively
sought his companionship and frequented his office, bringing food, fruits and other goodies. The said visits were attested
to by Mary Jane Tulalian and Imelda Adan in their respective affidavits,10 both dated April 30, 2008. His friendship with
Sonia turned sour when she learned of his plan to settle for good in the Unites States with his family. Sonia began to
avoid him. He exerted efforts to make her understand his decision, but to no avail.

Fourth, the cards expressing Sonia's affection towards him as well as the expensive gifts she gave him belied her claim
that she was sexually assaulted and that she resisted his alleged sexual advances.

Fifth, it was unlikely that Sonia would not tell anyone the grave injustice and abuses that she allegedly suffered in his
hands or report the matter to the police considering her length of service in the Judiciary and her familiarity on how the
criminal justice system worked.

Sixth, he denied Nelson's allegation that he confessed to his wife, Atty. Joy, his illicit relationship with Sonia. He also
denied that the alleged text messages, quoted by Nelson and Sonia in their respective affidavits, were sent by him or his
wife. All were part of an elaborate scheme to force him to immediately resign as Division Clerk of Court from the CA.

Lastly, it was not true that he harassed Sonia through text messages and phone calls. It was he who was the victim of
harassment from Nelson, who orchestrated a series of events that compelled him to leave the country earlier than
scheduled for fear that an untoward incident might happen to him.

On August 15, 2007, the Court referred the case to the Integrated Bar of the Philippines (IBP) for investigation, report and
recommendation.11
After the parties had submitted their respective verified position papers, Investigating Commissioner Manuel T.
Chan (Investigating Commissioner Chan) of the IBP Commission on Bar Discipline (IBP-CBD) rendered his Report and
Recommendation,12 dated October 2, 2008, finding that the charge against respondent Atty. Dabon had been sufficiently
proven. The recommendatory portion of the report reads:

WHEREFORE, this Commissioner, after a thorough and exhaustive review of the facts and applicable legal provisions,
recommends that respondent be found guilty of gross immoral conduct and, accordingly, be disbarred and dropped from
the Roll of Attorneys.13

On December 11, 2008, the Board of Governors of the IBP adopted and approved the recommendation and issued
Resolution No. XVIII-2008- 653, the pertinent portion of which reads:

RESOLVED to ADOPT and APPROVE, as it is hereby unanimously ADOPTED and APPROVED the Report and
Recommendation of the Investigating Commissioner of the aboveentitled case, herein made part of this Resolution as
Annex "A"; and, finding the recommendation fully supported by the evidence on record and the applicable laws and rules,
and finding Respondent guilty of gross immoral conduct, Atty. Antolin Allyson M. Dabon, Jr. is hereby DISBARRED and
his name be stricken off from the Roll of Attorneys.14

Atty. Dabon filed a motion for reconsideration of Resolution No. XVIII-2008-653, but it was denied by the IBP Board of
Governors in its Resolution No. XX-2012-550,15 dated December 14, 2012.

After due consideration, the Court resolves to adopt the findings and recommendation of the IBP-CBD.

Lawyers have been repeatedly reminded by the Court that possession of good moral character is both a condition
precedent and a continuing requirement to warrant admission to the Bar and to retain membership in the legal profession.
This proceeds from the lawyer's bounden duty to observe the highest degree of morality in order to safeguard the Bar's
integrity,16 and the legal profession exacts from its members nothing less. Lawyers are called upon to safeguard the
integrity of the Bar, free from misdeeds and acts constitutive of malpractice. Their exalted positions as officers of the court
demand no less than the highest degree of morality.17

The Court explained in Arnobit v. Atty. Arnobit18 that "as officers of the court, lawyers must not only in fact be of good
moral character but must also be seen to be of good moral character and leading lives in accordance with the highest
moral standards of the community. A member of the bar and an officer of the court is not only required to refrain from
adulterous relationships or keeping a mistress but must also so behave himself as to avoid scandalizing the public by
creating the impression that he is flouting those moral standards." Consequently, any errant behavior of the lawyer, be it in
his public or private activities, which tends to show deficiency in moral character, honesty, probity or good demeanor, is
sufficient to warrant suspension or disbarment.19

In the case at bench, the Court subscribes to the IBP's opinion that there was substantial evidence showing that Atty.
Dabon did have an illicit relationship with Nelson's legal wife.

To begin with, the Court notes from the respondent's Comment that he appeared to be perplexed as to whether or not he
would admit his extramarital liaisons with Sonia. As Investigating Commissioner Chan stated in his report, Atty. Dabon
interposed a blanket denial of the romantic involvement but at the same time, he seemed to have tacitly admitted the illicit
affair only that it was not attended by sexual assaults, threats and intimidations. The Court also observed that he devoted
considerable effort to demonstrate that the affair did not amount to gross immoral conduct and that no sexual abuse,
threat or intimidation was exerted upon the person of Sonia, but not once did he squarely deny the affair itself.

In other words, the respondent's denial is a negative pregnant, a denial coupled with the admission of substantial facts in
the pleading responded to which are not squarely denied. Stated otherwise, a negative pregnant is a form of negative
expression which carries with it an affirmation or at least an implication of some kind favorable to the adverse party.
Where a fact is alleged with qualifying or modifying language and the words of the allegation as so qualified or modified
are literally denied, it has been held that the qualifying circumstance alone is denied while the fact itself is admitted.20 It is
clear from Atty. Dabon's Comment that his denial only pertained as to the existence of a forced illicit relationship. Without
a categorical denial thereof, he is deemed to have admitted his consensual affair with Sonia.

More telling of the existence of a romantic relationship are the notes and cards21 that Sonia sent to Atty. Dabon containing
personal and intimate messages in her own handwriting. The messages conveyed Sonia's affection towards him as she
even referred to him as "hon" or "honey." There were also gifts she gave him on special occasions such as signature
shoes, watch and shirts. It also appeared that Sonia frequently visited him in his office either to bring him food, fruits and
other goodies or to invite him to lunch which apparently displayed her emotional attachment to him. Curiously, the
foregoing was never refuted by Sonia. Such "ego-boosting admissions"22 of Atty. Dabon indeed proved that a consensual
relationship between him and Sonia existed.

It has not escaped the Court's attention either that Atty. Dabon really tried hard to win back Sonia because he could not let
go of their relationship, even to the point of pestering her with his persistent pleas for reconciliation.

In one instance, Atty. Dabon boarded Sonia's car and refused to alight unless she would talk to him. Sonia had to seek
the assistance of her officemates, Atty. Barrazo and Atty. Ligot, who pleaded with him to alight from the vehicle. Moreover,
Atty. Dabon made several attempts to communicate with Sonia in the hope of rekindling their relationship through letters
and phone calls but she remained firm in her stand to avoid him. Such incident was recounted by Ramos and Minerva in
their respective affidavits.

Incidentally, vis-a-vis Nelson's overwhelming evidence of said harassments, he offered only denials which was self-
serving and weak under the law on evidence. Other than his general claim that Atty. Barrazo, Atty. Ligot, Ramos, and
Minerva were biased witnessess because they were former officemates of Sonia, the respondent did not even bother to
proffer his own version of the supposed harassment incidents.

In light of the above disquisition, the Court finds Sonia's allegation that the illicit relationship was made possible by sexual
assaults and maintained through threat and intimidations, to be untrue. Certainly, a sexually abused woman could not be
expected to lavish her oppressor with expensive gifts or pay him affectionate compliments or words of endearment. The
natural reaction of a victim of a sexual molestation would be to avoid her ravisher. In this case, however, it appeared that
Sonia continually remained in the company of Atty. Dabon for more than five years, even inviting him for lunch-outs and
frequenting his office to bring food whenever the latter was preoccupied with his workload and could not go out with her to
eat. Verily, Sonia's actuations towards Atty. Dabon are in stark contrast to the expected demeanor of one who had been
repeatedly sexually abused.

Further, the Court cannot fathom why Sonia never reported the alleged sexual abuse to the police, if such was the truth.
She could have placed the respondent behind bars and put an end to her claimed misery. Also, the Court cannot lend
credence to Sonia's claim that she merely succumbed to the respondent's sexual advances because of his continuous
threats of public exposure and humiliation. It must be stressed that Atty. Dabon would be in a much more precarious
situation if he would carry out such threats, as this would exposed himself to countless criminal and administrative
charges. The Court believes that Nelson's allegation of sexual assaults and continuing threat and intimidation was not
established by clear preponderant evidence. The Court is left with the most logical conclusion that Sonia freely and
wittingly entered into an illicit and immoral relationship with Atty. Dabon sans any threat and intimidation.

Consequently, the Court quotes with approval the following observations of Investigating Commissioner Chan on this
score, thus:

Sorting out the maze of technicalities, denials and evasions of the respondent as well as the oftentimes exaggerated
language of complainant or his wife, Sonia, and the self-exculpatory declarations of Sonia, this Commissioner considers
the following facts as established:
1. Respondent and Sonia are both married, not to each other, but to other persons, and each is aware of this fact, or
should have known such fact at the start of their illicit relationship because they were officemates at that time;

2. Respondent and Sonia engaged in an intimate and sexual relationship, intermittent perhaps, for a period of about six
years starting 2000 up to 2006;

3. Respondent and Sonia, despite protestations of Sonia that respondent assaulted her using drugs and employing
threats and blackmail to maintain the relationship, appeared to have entered into such illicit relationship voluntarily and
also appeared to have been fueled by their deep emotional needs, if not mutual lust, as shown by the fact that the illicit
relationship lasted for six long years;

4. Respondent and Sonia, despite the protestation of Sonia to the contrary, were not really ready to give up the illicit
relationship even if they were fully aware of its immorality or its devastating effect on their respective marriages and
careers as shown by the fact that both respondent and Sonia did not voluntarily confess to their respective spouses their
dark secret, but were only discovered by complainant through other channels.23

For what ethical breaches then may Atty. Dabon be held liable?

The Code of Professional Responsibility provides:

Rule 1.01- A lawyer shall not engage in unlawful, dishonest, immoral or deceitful conduct.

Canon 7- A lawyer shall at all times uphold the integrity and dignity of the legal profession, and support the activities of the
Integrated Bar.

Rule 7.03- A lawyer shall not engage in conduct that adversely reflects on his fitness to practice law, nor should he,
whether in public or private life, behave in a scandalous manner to the discredit of the legal profession.

Morality in our liberal society today is probably a far cry from what it used to be. Notwithstanding this permissiveness,
1av vphi1

lawyers, as keepers of public faith, are burdened with a high degree of social responsibility and, hence, must handle their
personal affairs with greater caution.24 Indeed, those who have taken the oath to assist in the dispensation of justice
should be more possessed of the consciousness and the will to overcome the weakness of the flesh.

It has been repeatedly held that to justify suspension or disbarment, the act complained of must not only be immoral,
but grossly immoral.25 A grossly immoral act is one that is so corrupt as to constitute a criminal act, or so unprincipled as to
be reprehensible to a high degree or committed under such scandalous or revolting circumstances as to shock the
common sense of decency. It is willful, flagrant, or shameless as to show indifference to the opinion of good and
respectable members of the community.26

In the case at bench, Atty. Dabon's intimate relationship with a woman other than his wife showed his moral indifference
to the opinion of the good and respectable members of the community. It manifested his disrespect for the laws on the
sanctity of marriage and for his own marital vow of fidelity. It showed his utmost moral depravity and low regard for the
fundamental ethics of his profession. Indeed, he has fallen below the moral bar. Such detestable behavior warrants a
disciplinary sanction. Even if not all forms of extramarital relations are punishable under penal law, sexual relations
outside of marriage are considered disgraceful and immoral as they manifest deliberate disregard of the sanctity of
marriage and the marital vows protected by the Constitution and affirmed by our laws.27

In Advincula v. Macabata,28 the Court elucidated as to what disciplinary sanction should be imposed against a lawyer
found guilty of misconduct. Thus:
Xxx. When deciding upon the appropriate sanction, the Court must consider that the primary purposes of disciplinary
proceedings are to protect the public; to foster public confidence in the Bar; to preserve the integrity of the profession; and
to deter other lawyers from similar misconduct. Disciplinary proceedings are means of protecting the administration of
justice by requiring those who carry out this important function to be competent, honorable and reliable men in whom
courts and clients may repose confidence. While it is discretionary upon the Court to impose a particular sanction that it
may deem proper against an erring lawyer, it should neither be arbitrary and despotic nor motivated by personal animosity
or prejudice, but should ever be controlled by the imperative need to scrupulously guard the purity and independence of
the bar and to exact from the lawyer strict compliance with his duties to the court, to his client, to his brethren in the
profession and to the public.

The power to disbar or suspend ought always to be exercised on the preservative and not on the vindictive principle, with
great caution and only for the most weighty reasons and only on clear cases of misconduct which seriously affect the
standing and character of the lawyer as an officer of the court and member of the Bar. Only those acts which cause loss
of moral character should merit disbarment or suspension, while those acts which neither affect nor erode the moral
character of the lawyer should only justify a lesser sanction unless they are of such nature and to such extent as to clearly
show the lawyer's unfitness to continue in the practice of law. The dubious character of the act charged as well as the
motivation which induced the lawyer to commit it must be clearly demonstrated before suspension or disbarment is meted
out. The mitigating or aggravating circumstances that attended the commission of the offense should also be considered.

The penalty for maintaining an illicit relationship may either be suspension or disbarment, depending on the
circumstances of the case.29 In case of suspension, the period would range from one year30 to indefinite suspension, as in
the case of Cordova v. Cordova,31 where the lawyer was found to have maintained an adulterous relationship for two years
and refused to support his family. On the other hand, there is a string of cases where the Court meted out the extreme
penalty of disbarment, to wit:

In Toledo v. Toledo,32 a lawyer was disbarred from the practice of law, when he abandoned his lawful wife and cohabited
with another woman who had borne him a child.

In Obusan v. Obusan, Jr.,33 a lawyer was disbarred after the complainant proved that he had abandoned her and
maintained an adulterous relationship with a married woman. The Court declared that the respondent failed to maintain
the highest degree of morality expected and required of a member of the Bar.

In Cojuangco, Jr. v. Palma,34 the respondent lawyer was disbarred when he abandoned his lawful wife and three children,
lured an innocent woman into marrying him and misrepresented himself as a "bachelor" so he could contract marriage in
a foreign land.

In Dantes v. Dantes,35 disbarment was imposed as a penalty on the respondent lawyer who maintained illicit relationships
with two different women during the subsistence of his marriage to the complainant. The Complainant's testimony, taken
in conjunction with the documentary evidence, sufficiently established that the respondent breached the high and exacting
moral standards set for members of the law profession.

In Villatuya v. Tabalingcos,36 the respondent lawyer was disbarred because he was found to have entered into marriage
twice while his first marriage was still subsisting. The Court declared that he exhibited a deplorable lack of that degree of
morality required of him as a member of the Bar. He made a mockery of marriage, a sacred institution demanding respect
and dignity.

In the case at bench, Atty. Dabon's misconduct and unrepentant demeanor clearly showed a serious flaw in his character,
his moral indifference to the sanctity of marriage and marital vows, and his outright defiance of established norms. All
these could not but put the legal profession in disrepute and place the integrity of the administration of justice in peril.
Accordingly, the Court finds the need for the imposition of the extreme administrative penalty of disbarment.
WHEREFORE, finding the respondent Atty. Antolin Allyson M. Dabon, Jr. GUILTY of Gross Immorality, the Court
hereby DISBARS him from the practice of law.

Let respondent's name be stricken from the Roll of Attorneys immediately. Furnish the Bar Confidant, the Integrated Bar
of the Philippines and all court throughout the country with copies of this Decision.

SO ORDERED.

G.R. No. 142896 September 12, 2007

CANELAND SUGAR CORPORATION, petitioners,

vs.
HON. REYNALDO M. ALON, LAND BANK OF THE PHILIPPINES, and ERIC B. DE VERA, respondents.

DECISION

AUSTRIA-MARTINEZ, J.:

On July 15, 1999, Caneland Sugar Corporation (petitioner) filed with the Regional Trial Court (RTC) of Silay City, Branch
40, a complaint for damages, injunction, and nullity of mortgage against the Land Bank of the Philippines (respondent)
and Sheriff Eric B. de Vera, docketed as Civil Case No. 2067-40, praying for the following reliefs: issuance of a temporary
restraining order enjoining respondent and the Sheriff from proceeding with the auction sale of petitioner’s property;
declaration of nullity of any foreclosure sale to be held; declaration of nullity of the mortgage constituted over petitioner’s
property covered by TCT No. T-11292 in favor of respondent; and award of damages.1

On July 21, 1999, the RTC issued an Order holding in abeyance the auction sale set on July 23, 1999, as agreed upon by
the parties.2 Notwithstanding said directive, another foreclosure sale was scheduled on October 15, 1999. Per RTC Order
dated October 14, 1999, the October 15 scheduled sale was held in abeyance; but re-scheduled the sale on November
15, 1999, for the following reasons:

However, P.D. 385 provides that it shall be mandatory for government financial institution to foreclose collaterals and/or
securities for any loan, credit accommodations and/or guarantees granted by them whenever the arrearages on such
account, including accrued interest and other charges amount to at least 20% of the total outstanding obligation as
appearing in the books of the financial institution. Moreover, no restraining order, temporary or permanent injunction shall
be issued by the court against any government financial institution in any action taken by such institution in compliance
with the mandatory foreclosure provided by said law. x x x The defendant Land Bank of the Philippines and Eric B. De
Vera, Sheriff of this Court, are hereby authorized to proceed with the extrajudicial foreclosure sale on November 15,
1999.3

Petitioner filed a Motion for Reconsideration of the trial court’s Order, but this was denied per Order dated November 8,
1999.4

Petitioner then filed with the Court of Appeals (CA) a Petition for Certiorari and Prohibition with Injunction, docketed as
CA-G.R. SP No. 56137. In a Decision5 dated March 22, 2000, the CA, finding that the RTC did not commit any grave
abuse of discretion, denied due course and dismissed the petition for lack of merit.6 Petitioner sought reconsideration of
the Decision, which was eventually denied by the CA in a Resolution dated April 17, 2000.7

Hence, the present Petition for Review on Certiorari under Rule 45 of the Rules of Court.

Petitioner contends in the main that the RTC’s act of authorizing the foreclosure of its property amounts to a prejudgment
of the case since it amounts to a ruling that respondent has a valid mortgage in its favor. Petitioner also argues, among
others, that Presidential Decree (P.D.) No. 385 is not applicable inasmuch as at the time of the lease to Sunnix, Inc., the
management and control of its operations has already been virtually taken over by respondent.

On the other hand, respondent maintains that: P.D. No. 385 prohibits the issuance of an injunctive order against
government financial institutions; the CA did not commit any grave abuse of discretion; the RTC Order merely dealt with
the propriety of the injunctive order and not the validity of the mortgage; and the issue of the propriety of the injunctive
order has been rendered moot and academic by the foreclosure sale conducted and the issuance of a certificate of sale
by the sheriff.8

Based on the arguments of the parties, the principal issue is whether the CA erred in finding that the RTC did not commit
grave abuse of discretion in not enjoining the extrajudicial foreclosure of the properties subject of this case.

Without first resolving the foregoing issue, the Court finds that the petition should be denied for the sole reason that the
act sought to be enjoined by petitioner is already fait accompli. In Transfield Philippines, Inc. v. Luzon Hydro
Corporation,9 the Court held that –

[I]njunction would not lie where the acts sought to be enjoined have already become fait accompli or an accomplished or
consummated act. In Ticzon v. Video Post Manila, Inc. this Court ruled that where the period within which the former
employees were prohibited from engaging in or working for an enterprise that competed with their former employer— the
very purpose of the preliminary injunction —has expired, any declaration upholding the propriety of the writ would be
entirely useless as there would be no actual case or controversy between the parties insofar as the preliminary injunction
is concerned.10

Records show that the foreclosure sale which petitioner sought to be enjoined by the RTC has already been carried out by
the Sheriff, and in fact, a Certificate of Sale dated June 26, 2000 was issued to respondent.11 There is, therefore, no more
actual case or controversy between the parties insofar as the RTC’s refusal to enjoin the sale is concerned, and any
resolution by the Court of the impropriety or propriety of the RTC’s refusal to issue any restraining or injunctive relief
against the foreclosure sale will serve no purpose but merely lend further addle to Civil Case No. 2067-40 pending before
the RTC.

Nevertheless, even if petitioner’s quest for the issuance of an injunctive relief has been rendered moot and academic by
the holding of the foreclosure sale and issuance of Certificate of Sale, the Court finds it necessary to resolve the merits of
the principal issue raised for the future guidance of both bench and bar. As the Court stated in Acop v. Guingona,
Jr.,12 "courts will decide a question otherwise moot and academic if it is ‘capable of repetition, yet evading review.’"

Petitioner does not dispute its loan obligation with respondent. Petitioner’s bone of contention before the RTC is that the
promissory notes are silent as to whether they were covered by the Mortgage Trust Indenture and Mortgage Participation
on its property covered by TCT No. T-11292.13 It does not categorically deny that these promissory notes are covered by
the security documents. These vague assertions are, in fact, negative pregnants, i.e., denials pregnant with the admission
of the substantial facts in the pleading responded to which are not squarely denied. As defined in Republic of the
Philippines v. Sandiganbayan,14 a negative pregnant is a "form of negative expression which carries with it an affirmation
or at least an implication of some kind favorable to the adverse party. It is a denial pregnant with an admission of the
substantial facts alleged in the pleading. Where a fact is alleged with qualifying or modifying language and the words of
the allegation as so qualified or modified are literally denied, has been held that the qualifying circumstances alone are
denied while the fact itself is admitted."

Petitioner’s allegations do not make out any justifiable basis for the granting of any injunctive relief. Even when the
mortgagors were disputing the amount being sought from them, upon the non-payment of the loan, which was secured by
the mortgage, the mortgaged property is properly subject to a foreclosure sale. This is in consonance with the doctrine
that to authorize a temporary injunction, the plaintiff must show, at least prima facie, a right to the final relief.15
The foregoing conclusion finds greater force in light of the provisions of P.D. No. 385,16 Section 1 of which, provides for a
mandatory foreclosure, viz.:

Section 1. It shall be mandatory for government financial institutions, after the lapse of sixty (60) days from the issuance of
this Decree, to foreclose the collaterals and/or securities for any loan, credit, accommodation, and/or guarantees granted
by them whenever the arrearages on such account, including accrued interest and other charges, amount to at least
twenty (20%) of the total outstanding obligations, including interest and other charges, as appearing in the books of
account and/or related records of the financial institution concerned. This shall be without prejudice to the exercise by the
government financial institution of such rights and/or remedies available to them under their respective contracts with their
debtors, including the right to foreclose on loans, credits, accommodations, and or guarantees on which the arrearages
are less than twenty percent (20%).

while Section 2 prohibits the issuance of restraining orders or injunctions against government financial institutions in any
foreclosure action taken by such institutions, to wit:

Section 2. No restraining order, temporary or permanent injunction shall be issued by the court against any government
financial institution in any action taken by such institution in compliance with the mandatory foreclosure provided in
Section 1 hereof whether such restraining order, temporary or permanent injunction is sought by the borrower(s) or any
third party or parties, except after due hearing in which it is established by the borrower and admitted by the government
financial institution concerned that twenty percent (20%) of the outstanding arrearages had been paid after the filing of
foreclosure proceedings.

Petitioner cannot find any solace in its contention that the case of Filipinas Marble Corporation v. Intermediate Appellate
Court17 is applicable to the present case. In Filipinas Marble, it was the DBP-imposed management of FMC that brought
the corporation to ruin, not to mention that there were prima facie findings of mismanagement and misappropriation of the
loan proceeds by DBP and Bancom. Moreover, the liability of FMC for the loan, which was the basis of the mortgage
being foreclosed, was not yet settled. These circumstances prompted the Court to grant an injunction against the
foreclosure sale. The Court ruled –

x x x P.D. 385 was never meant to protect officials of government lending institutions who take over the management of a
borrower corporation, lead that corporation to bankruptcy through mismanagement or misappropriation of its funds, and
who, after ruining it, use the mandatory provisions of the decree to avoid the consequences of their misdeeds.

The designated officers of the government financing institution cannot simply walk away and then state that since the
loans were obtained in the corporation’s name, then P.D. 385 must be peremptorily applied and that there is no way the
borrower corporation can prevent the automatic foreclosure of the mortgage on its properties once the arrearages reach
twenty percent (20%) of the total obligation no matter who was responsible.18

In the case at bench, petitioner does not deny its liability. While petitioner alleged that the management and control of its
operations has already been virtually taken over by respondent, thus, implying that it was respondent that caused
petitioner's present miserable financial state, this allegation is obviously merely an attempt to place itself under
the Filipinas Marble situation in order to preempt the operation of P.D. No. 385. Petitioner’s claim is more appropriately
threshed out and determined after trial on the merits.

The Court likewise cannot sustain petitioner's argument that the RTC’s refusal to grant any injunctive relief amounts to a
prejudgment of the issues before it. The RTC’s sole basis for allowing the foreclosure sale to proceed is P.D. No. 385. It
did not make any finding or disposition on the issue of the validity of the mortgage.

In any event, such issue of the validity of the mortgage, not to mention the issue of the nullity of the foreclosure sale as
well as petitioner’s prayer for damages, still has to be resolved in the trial court.

As ruled in Philippine National Bank v. Court of Appeals,19 to wit:

In the instant case, aside from the principal action for damages, private respondent sought the issuance of a temporary
restraining order and writ of preliminary injunction to enjoin the foreclosure sale in order to prevent an alleged irreparable
injury to private respondent. It is settled that these injunctive reliefs are preservative remedies for the protection of
substantive rights and interests. Injunction is not a cause of action in itself but merely a provisional remedy, an
adjunct to a main suit. When the act sought to be enjoined ha[d] become fait accompli, only the prayer for
provisional remedy should be denied. However, the trial court should still proceed with the determination of the
principal action so that an adjudication of the rights of the parties can be had.20 (Emphasis supplied)

WHEREFORE, the petition is DENIED.

Costs against petitioner.

SO ORDERED.

Ynares-Santiago, C