7. EXPRESS PADALA (ITALIA) S.P.A.

, now BDO REMITTANCE (ITALIA)

S.P.A., petitioner, vs. HELEN M. OCAMPO, respondent.
G.R. No. 202505 | September 6, 2017
Ponente: Jardeleza, J.

FACTS:
 September 2002: BDO Remittance, a corporation with principal office in Italy, hired
respondent Ocampo as a remittance processor.
 February 2004: She was dismissed for misappropriating the sum of €24,035.60 by falsifying
invoices of money payments relating to customers' money transfer orders from February to
December 2003.
 BDO Remittance filed a criminal complaint against Ocampo for the same acts before the
Court of Turin, Italy. Ocampo pleaded guilty to the offense charged.
 April 13, 2005: The Honorable Court of Turin convicted and sentenced her to suffer
imprisonment of six months and a penalty of €300.00, but granted her the benefit of
suspension of the enforcement of sentence on account of her guilty plea.
 RTC of Mandaluyong City, Branch 212
 September 22, 2008: BDO Remittance filed a petition for recognition of foreign
judgment. BDO Remittance prayed for the recognition of the Court of Turin Decision
and the cancellation or restriction of Ocampo's Philippine passport by the Department of
Foreign Affairs (DFA).
 November 21, 2008: The sheriff attempted to personally serve the summons on Ocampo
in her local address alleged in the petition located in San Bernardo Village, Darasa,
Tanauan, Batangas. The barangay officials pointed him to the house belonging to
Ocampo’s father and occupied by Victor P. Macahia, Ocampo’s uncle. Macahia informed
the sheriff that Ocampo and her family were already in Italy, and that he was only a
caretaker of the house. The sheriff then proceeded to serve the summons upon Macahia.
 After Ocampo failed to file an answer, BDO Remittance filed a motion to declare
Ocampo in default. The RTC granted the motion and allowed BDO Remittance to
present evidence ex parte.
 September 14, 2009: The RTC rendered a Decision in favor of BDO Remittance:
1) Recognizing the Court of Turin Decision as valid and binding in the Philippines, and
2) Ordering the DFA to cancel or restrict Ocampo’s Philippine passport and not to allow its
renewal until she has served her sentence.
 February 11, 2010: Ocampo’s mother received a copy of the RTC Decision and forwarded it
to Ocampo. The period of appeal lapsed.
 CA
 April 12, 2010: Ocampo’s counsel filed a petition for certiorari under Rule 65,
principally arguing that the RTC acted in grave abuse of discretion in recognizing and
ordering the enforcement of the Court of Turin Decision.
 January 5, 2012: The CA ruled in favor of Ocampo:
1) It revoked the order to cancel or restrict Ocampo's Philippine passport.
2) It held that since Ocampo's whereabouts were unknown, summons should have been
served in accordance with Section 14, Rule 14 of the Rules of Civil Procedure instead
of the substituted service of summons under Section 7 of Rule 14. Thus, the RTC did not
acquire jurisdiction over Ocampo, and the RTC Decision against her was null and void.

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 3) It also found that the RTC acted in grave abuse of discretion when it recognized a
foreign judgment of a criminal case and ordered the DFA to restrict or cancel Ocampo's
passport.
 The CA denied BDO Remittance’s motion for reconsideration.
 SC
 BDO Remittance filed a petition for review on certiorari under Rule 45.
 The SC denied the petition.

ISSUE: WON service of summons was validly effected upon respondent, who lives in Italy,
through substituted service

HELD/RULING: (Leonardo-de Castro, Del Castillo, and Tijam, JJ., concur. Sereno, C.J., on
official leave.)
 NO. Since Ocampo's whereabouts were unknown and could not be ascertained by diligent
inquiry, service of summons should be effected only by publication in a newspaper of
general circulation (and extraterritorial service). If a defendant has not been validly
summoned, the court acquires no jurisdiction over his person, and a judgment rendered
against him is void. Since the RTC never acquired jurisdiction over the person of Ocampo,
the judgment rendered by the court could not be considered binding upon her.
 The general rule in this jurisdiction is that summons must be served personally on the
defendant (Section 6, Rule 14 of the Rules of Court).
When the defendant cannot be served personally within a reasonable time after efforts to
locate him have failed, the rules allow summons to be served by substituted service.
Substituted service is effected by leaving copies of the summons at:
1) the defendant's residence with some person of suitable age and discretion then
residing therein, or
2) the defendant's office or regular place of business with some competent person in
charge thereof.
Substituted service presupposes that the place where the summons is being served is the
defendant's current residence or office/regular place of business. Thus, where the
defendant neither resides nor holds office in the address stated in the summons,
substituted service cannot be resorted to.
When the defendant's whereabouts are unknown and cannot be ascertained by diligent
inquiry, the rules allow service of summons by publication. The diligence requirement
means that there must be prior resort to personal service under Section 7 and substituted
service under Section 8, and proof that these modes were ineffective before summons by
publication may be allowed. This mode also requires the plaintiff to file a written motion
for leave of court to effect service of summons by publication, supported by affidavit of
the plaintiff or some person on his behalf, setting forth the grounds for the application.
 The sheriff’s report categorically stated that Ocampo and her family were already in
Italy, without identifying any specific address. Even BDO Remittance itself admitted
in its petition for recognition that Ocampo's "whereabouts in Italy are no longer
certain." This was the reason why in alleging the two addresses of Ocampo, one in

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 Italy and one in the Philippines, BDO Remittance used the phrase "last known
[address]" instead of the usual "resident of." Not being a resident of the address where
the summons was served, the substituted service of summons was ineffective.
Accordingly, the RTC did not acquire jurisdiction over the person of Ocampo.
 BDO Remittance's reliance on Palma v. Galvez (G.R. No. 165273, March 10, 2010, 615
SCRA 86) was misplaced, because that case involved service of summons to a person
who was temporarily out of the country.

Petition was denied.

The CA’s Decision dated January 5, 2012 and Resolution dated June 27, 2012 were affirmed
insofar as there was no valid service of summons.
The RTC’s Decision was declared void.

8. REPUBLIC OF THE PHILIPPINES, petitioner, vs. ALFREDO R. DE BORJA, respondent.

G.R. No. 187448 | January 9, 2017
Ponente: Caguioa, J.

FACTS:
 Geronimo Z. Velasco was the President and Chairman of the Board of Directors of the
Philippine National Oil Company (PNOC). The PNOC regularly entered into charter
agreements with vessels. Pursuant to industry practice, vessel owners would pay "address
commissions" to PNOC as charterer, amounting to 5% of the total freight.
 Sandiganbayan
 September 20, 1991: Petitioner Republic, represented by the Presidential Commission on
Good Government (PCGG), filed a Complaint for "Accounting, Reconveyance,
Forfeiture, Restitution, and Damages" (Civil Case No. 0003) before the Sandiganbayan
for the recovery of ill-gotten assets allegedly amassed by the individual respondents
therein, singly or collectively, during the administration of the late President Ferdinand
E. Marcos.
- The respondents in Civil Case No. 0003 were the following:
1) Geronimo Z. Velasco*
2) Ferdinand E. Marcos
3) Imelda R. Marcos
4) Alfredo R. De Borja*
5) Epifanio Verano*
6) Gervel, Inc.
7) Telin Development Corporation
8) Republic Glass Corporation
9) Nobel (Phils.), Inc.
10) ACI Philippines, Inc.
11) Private Investments Co. for Asia
12) Central Azucarera De Danao
13) Malaganas Coal Mining Corporation
14) S.A. (Panama)

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 15) Decision Research Management (Hongkong)*
16) Atlantic Management Corp. (USA).
- The allegations against Velasco and De Borja, Velasco’s nephew, were the following:
1) During the tenure of Velasco, no address commissions were remitted to PNOC.
Instead, starting 1979, the percentage of the address commission no longer
appeared in the charter contracts. The words "as agreed upon" were substituted
therefor, per Velasco’s instructions. As a result, the supposed address
commissions were remitted to the account of Decision Research Management
Company (DRMC), which was the alleged conduit for address commissions.
2) Velasco diverted government funds by entering into several transactions
involving the purchase of crude oil tankers and by reason of which he received
bribes, kickbacks, or commissions in exchange for the granting of permits,
licenses, and/or charters to oil tankers to service PNOC.
3) De Borja collected the address commissions in behalf of Velasco.
4) De Borja acted as Velasco's dummy, nominee, and/or agent for corporations he
owned and/or controlled, such as DRMC.
- Petitioner presented the testimony of Verano, the Vice President of PNOC and
alleged negotiator for PNOC with respect to the chartered vessels, to prove that, on
two occasions, Velasco instructed Verano to deliver to De Borja envelopes containing
money which constituted commissions given by ship brokers.
Petitioner also presented the affidavit of Jose M. Reyes to prove De Borja's
participation in the alleged utilization of public funds.
 March 6, 1995: Petitioner submitted its Formal Offer of Evidence.
 March 21, 1995: In the SB’s Resolution, the PCGG granted full immunity from criminal
prosecution to Verano in exchange for his testimony.
 April 15, 2005: De Borja filed his Demurrer to Evidence, stating that:
1) Verano testified that he delivered an envelope to Velasco who, in turn, instructed
him to deliver the same to De Borja;
2) Verano admitted that the envelope was sealed;
3) Verano did not open the envelope and therefore had no knowledge of the contents
thereof;
4) Verano did not personally deliver the envelope to De Borja; and
5) Verano did not confirm whether De Borja in fact received the said envelope.
 May 9, 2005: Petitioner filed a Comment/Opposition.
 June 2, 2005: De Borja filed a Reply.
 July 31, 2008: In its Resolution, the SB found that the evidence presented was
insufficient to support a claim for damages against De Borja, thereby granting
respondent De Borja's Demurrer to Evidence.
- The SB ratiocinated:
1) Upon cross-examination, Verano admitted that he did not know for a fact that De
Borja actually received the envelopes.
2) Jose M. Reyes never testified in open court, as he had a heart attack 2 days before
he was scheduled to take the witness stand.
 August 15, 2008: Petitioner filed its Motion for Reconsideration.
 March 25, 2009: In its Resolution, the SB denied petitioner’s MR.
 SC

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  Petitioner filed an Appeal by Certiorari under Rule 45 of the Rules of Court, solely with
respect to De Borja’s liability.
 July 15, 2009: In a Resolution, the SC required De Borja to file a Comment.
 September 11, 2009: De Borja filed his Comment, reiterating the insufficiency of the
evidence adduced before the SB.
 June 10, 2010: Petitioner filed its Reply.
 June 7, 2011: De Borja filed a Motion for Early Resolution, which was noted by the SC
in its Resolution dated August 10, 2011.
- June 16, 2011: Parenthetically, the SB rendered a Decision dismissing Civil Case No.
0003 with respect to the remaining respondents therein.
 This was the subject of an appeal before the SC (G.R. No. 199323).
 July 28, 2014: The SC rendered a Resolution denying the appeal, and an Entry of
Judgment was made with respect to G.R. No. 199323.
 December 6, 2016: De Borja filed a Motion to Dismiss on the ground that the present
petition had been rendered moot and academic because of the Entry of Judgment, which
affirmed the SB’s June 16, 2011 Decision and November 15, 2011 Resolution that
dismissed Civil Case No. 0003.

ISSUE: WON the SB committed reversible error in granting De Borja's Demurrer to Evidence

HELD/RULING: (Sereno, C.J., Leonardo-de Castro, Del Castillo and Perlas-Bernabe, JJ.)
 NO. The evidence adduced was wholly insufficient to support the allegations of the
Complaint before the SB.
 A demurrer to evidence is a motion to dismiss on the ground of insufficiency of evidence. It
is a remedy available to the defendant, to the effect that the evidence produced by the
plaintiff is insufficient in point of law, whether true or not, to make out a case or sustain an
issue. The question in a demurrer to evidence is whether the plaintiff, by his evidence in
chief, had been able to establish a prima facie case.
"Burden of proof" is the duty to establish the truth of a given proposition or issue by such
quantum of evidence as the law demands in the case at which the issue arises. In civil cases,
the burden of proof is on the plaintiff to establish his case by preponderance of evidence, i.e.,
superior weight of evidence on the issues involved. "Preponderance of evidence" means
evidence which is of greater weight, or more convincing than that which is offered in
opposition to it.
In a demurrer to evidence, however, it is premature to speak of "preponderance of evidence"
because it is filed prior to the defendant's presentation of evidence; it is precisely the office of
a demurrer to evidence to expeditiously terminate the case without the need of the
defendant's evidence. Hence, what is crucial is the determination as to whether the
plaintiff's evidence entitles it to the relief sought.
 The SC concurred in the SB's observations pertaining to Verano's testimony. Relatedly, it
was further revealed during the cross-examination of Verano that in the first place,
Velasco did not even directly deal with brokers.
As to the affidavit of Jose M. Reyes, his non-appearance before the SB due to his
untimely demise rendered the same inadmissible in evidence for being hearsay.

The Petition was denied.

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The Resolutions dated July 31, 2008 and March 25, 2009 of the Sandiganbayan-First Division in
Civil Case No. 0003 were affirmed.

***NOTES:
 The SC stated that the resolution of the question (regarding the propriety of the trial court’s granting of a
demurrer to evidence) involves factual questions which are not the proper subject of a petition for review under
Rule 45, the same being limited only to questions of law.
 Anent De Borja’s claim that the Petition had already been rendered moot and academic due to the SB’s dismissal
of Civil Case No. 0003, the same lacked merit. A dismissal on the basis of a demurrer to evidence is similar to a
judgment; it is a final order ruling on the merits of a case. Hence, when petitioner brought the instant appeal
before the SC, the same was limited to De Borja's liability alone. In this regard, the propriety of the SB's granting
of De Borja's Demurrer to Evidence is separate and distinct from the subject matter of the appeal in G.R. No.
199323, i.e., liability of Velasco, et al.

9. ILOILO JAR CORPORATION, petitioner, vs. COMGLASCO CORPORATION/AGUILA

GLASS, respondent.
G.R. No. 219509 | January 18, 2017
Ponente: Mendoza, J.

FACTS:
 August 16, 2000: Petitioner, as lessor, and respondent, as lessee, entered into a lease contract
over a portion of a warehouse building, with an estimated floor area of 450 square meters,
located on a parcel of land identified as Lot 2-G-1-E-2 in Barangay Lapuz, La Paz District,
Iloilo City. The term of the lease was 3 years or until August 15, 2003.
 December 1, 2001: Comglasco requested for the pre-termination of the lease effective on the
same date. Iloilo Jar rejected the request on the ground that the pre-termination of the lease
contract was not stipulated therein.
 January 15, 2002: Comglasco removed all its stock, merchandise and equipment from the
leased premises. From the time of the withdrawal of the equipment, and notwithstanding
several demand letters, Comglasco no longer paid all rentals accruing from the said date.
 September 14, 2003: Iloilo Jar sent a final demand letter to Comglasco, but it was again
ignored.
 RTC of Iloilo City, Branch 37
 October 10, 2003: Iloilo Jar filed a civil action for breach of contract and damages.
 June 28, 2004: Comglasco filed its Answer. It made the following arguments:
1) By virtue of Article 1267 of the NCC, it was released from its obligation from the
lease contract. The aforesaid provision states, to wit:
Article 1267. When the service has become so difficult as to be manifestly beyond the
contemplation of the parties, the obligor may also be released therefrom, in whole or in
part.

It explained that the consideration had become so difficult due to the global and
regional economic crisis that had plagued the economy.
2) Indeed, it had removed its stocks and merchandise. However, it was wrong to say
that it had refused to pay rentals, because the lease contract was already deemed
terminated.
3) Though it received the demand letters, it did not amount to a refusal to pay the rent,
because the lease contract had been pre-terminated in the first place.

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  July 15, 2004: Iloilo Jar filed its Motion for Judgment on the Pleadings arguing:
1) Comglasco's Answer materially admitted the allegations of petitioner's complaint,
particularly that:
a) Comglasco had removed its merchandise from the lease premises.
b) After receiving petitioner’s demand letters, it had failed to pay subsequent
rentals.
2) Comglasco cannot rely on Article 1267 because it does not apply to lease contracts,
which involve an obligation to give (and not an obligation to do).
 August 18, 2004: In its Order, the RTC granted petitioner’s motion.
 Comglasco moved for reconsideration.
 January 24, 2005: In its Order, the RTC denied respondent’s motion.
 February 17, 2005: After formal defects in the original order were raised, the RTC issued
an Amended Order wherein it made the following changes:
1) Unpaid rentals = from P1,333,200.00 to P333,300.00,
2) Attorney's fees = from P200,000.00 to P75,000.00,
3) Litigation expenses = from P50,000.00 to P30,000.00, and
4) Exemplary damages = from P400,000.00 to P200,000.00.
 Comglasco filed an Appeal before the CA.
 CA
 January 30, 2015: In its Decision, the CA reversed the RTC’s Amended Order. It said
that judgment on the pleadings was improper; Comglasco's Answer tendered an issue
considering that Iloilo Jar's material allegations were specifically denied therein. Even if
the same were not specifically denied, the Answer raised an affirmative issue which was
factual in nature. It remanded the records to the RTC for the conduct of further
proceedings.
 Petitioner moved for reconsideration.
 June 17, 2015: In its Resolution, the CA denied petitioner’s motion.
 Petitioner filed a petition for review on certiorari.
 February 11, 2016: Comglasco filed its Comment, stating:
1) Its Answer raised material defenses. Thus, judgment on the pleadings was improper,
because it may be had only when the Answer fails to tender an issue or otherwise
admits the material allegations of the adverse party's pleading.
2) Even if the complaint’s allegations were deemed admitted, the affirmative defenses
it raised gave rise to factual controversies or issues which should be subject to a trial.
 September 28, 2016: Petitioner filed its Reply.

ISSUE: WON judgment on the pleadings was proper

HELD/RULING: (Carpio, Peralta, Leonen and Jardeleza, JJ.)

 NO. However, while respondent was correct in saying that the RTC’s judgment on the
pleadings was improper, petitioner was nonetheless entitled to recover unpaid rentals and
attorney’s fees through a summary judgment.
 While Comglasco admitted that it had removed its stocks from the leased premises and had
received the demand letter for rental payments, it argued that the lease contract had been
pre-terminated, because the consideration thereof had become so difficult to comply with in
light of the economic crisis then existing. Thus, judgment on the pleadings was improper,
because Comglasco's Answer raised an affirmative defense.

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  Section 1, Rule 34 of the Revised Rules of Court governs motions for judgment on the
pleadings. It reads:
SECTION 1. Judgment on the pleadings. — Where an answers fails to tender an issue, or
otherwise admits the material allegations of the adverse party's pleading, the court
may, on motion of that party, direct judgment on such pleading. However, in actions for
declaration of nullity or annulment of marriage or for legal separation, the material facts
alleged in the complaint shall always be proved. [Emphasis supplied]

On the other hand, under Rule 35 of the Rules of Court, a party may move for
summary judgment if there are no genuine issues raised.
In Basbas v. Sayson, the Court said, to wit:
Simply stated, what distinguishes a judgment on the pleadings from a summary
judgment is the presence of issues in the Answer to the Complaint. When the Answer
fails to tender any issue, that is, if it does not deny the material allegations in the
complaint or admits said material allegations of the adverse party's pleadings by
admitting the truthfulness thereof and/or omitting to deal with them at all, a judgment on
the pleadings is appropriate. On the other hand, when the Answer specifically denies
the material averments of the complaint or asserts affirmative defenses, or in other
words raises an issue, a summary judgment is proper provided that the issue raised is
not genuine. "A 'genuine issue' means an issue of fact which calls for the presentation of
evidence, as distinguished from an issue which is fictitious or contrived or which does not
constitute a genuine issue for trial." X X X [Emphases supplied]

 Still, although resort to judgment on the pleadings might have been improper, there was no
need to remand the case to the RTC for further proceedings. A full blown trial would
needlessly prolong the proceedings where a summary judgment would suffice.
 In Wood Technology Corporation v. Equitable Banking Corporation, the Court ruled that
summary judgment may be availed if no genuine issue for trial is raised. In that case,
the RTC originally rendered a judgment on the pleadings but was corrected by the Court
to be a summary judgment because of the issue presented by the affirmative defense
raised therein. Still, the Court ruled in favor of the complainant therein, because there
was no genuine issue raised.
Similar to Wood Technology, the RTC’s judgment in this case was a summary judgment,
because Comglasco's Answer raised an affirmative defense. Yet, no genuine issue was
raised, because: (1) there was no issue of fact which needed presentation of evidence,
and (2) the affirmative defense Comglasco invoked was inapplicable in the case.
It was undisputed that Comglasco removed its merchandise from the leased premises
and stopped paying rentals thereafter. Thus, there was no question of fact which must
be resolved in trial. What was to be resolved was whether Comglasco was justified in
treating the lease contract terminated due to the economic circumstances then prevalent.
Article 1267 applies only to obligations to do and not to obligations to give. Thus,
in Philippine National Construction Corporation v. Court of Appeals, the Court expounded:
An obligation "to do" includes all kinds of work or service; while an obligation "to give" is
a prestation which consists in the delivery of a movable or an immovable thing in order to
create a real right, or for the use of the recipient, or for its simple possession, or in order to
return it to its owner.
The obligation to pay rentals or deliver the thing in a contract of lease falls within
the prestation "to give"; xxx
The principle of rebus sic stantibus neither fits in with the facts of the case. Under this
theory, the parties stipulate in the light of certain prevailing conditions, and once these
conditions cease to exist, the contract also ceases to exist. xxx

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 This article, which enunciates the doctrine of unforeseen events, is not, however, an
absolute application of the principle of rebus sic stantibus, which would endanger the
security of contractual relations. The parties to the contract must be presumed to have
assumed the risks of unfavorable developments. It is therefore only in absolutely
exceptional changes of circumstances that equity demands assistance for the
debtor. [Emphases and Underscoring supplied]

Considering that Comglasco's obligation of paying rent was not an obligation to do, it
could not rightfully invoke Article 1267 of the NCC. Also, the reason of financial
struggles due to an economic crisis is not enough for the courts to grant reprieve from
contractual obligations.
Thus, the RTC was correct in ordering Comglasco to pay the unpaid rentals. Iloilo Jar
was entitled to attorney's fees, because it incurred expenses to protect its interest.
Further, the interest rate should be modified pursuant to recent jurisprudence. The
monetary awards should be subject to 12% interest per annum until June 30, 2013 and
6% per annum from July 1, 2013 until fully satisfied.

Petition was granted in spite of the late filing of the petition for review.
The CA’s Decision and Resolution were reversed and set aside.
The RTC’s Amended Order was affirmed with modification in that the award of exemplary
damages and litigation expenses were deleted.
Petitioner’s counsel was admonished for his repeated failure to observe the rules of procedure.

***NOTES:
 The award of exemplary damages was deleted, because it may be recovered in contractual obligations if the
defendant acted in wanton or fraudulent, reckless, oppressive or malevolent manner. Comglasco defaulted in its
obligation to pay the rentals by reason of its erroneous belief that the lease contract was pre-terminated because
of the economic crisis. The same, however, did not prove that Comglasco acted in wanton or fraudulent,
reckless, oppressive or malevolent manner.

10. SPOUSES FIRMO S. ROSARIO and AGNES ANNABELLE DEAN-

ROSARIO, petitioners, vs. PRISCILLA P. ALVAR, respondent.
G.R. No. 212731 | September 6, 2017
Ponente: Del Castillo, J.

FACTS:
 On separate dates in 1989, petitioner Agnes borrowed P600,000.00 from respondent, and it
was secured by real estate mortgages over 2 parcels of land covered by TCT Nos. 167438
(residence of petitioner spouses Agnes and Firmo Rosario) and 167439 (a five-door rental
apartment).
- Petitioners lived at No. 2703 Apolinario corner General Capinpin Streets, Bangkal,
Makati City.
 December 1990: The mortgages were discharged.
 March 16, 1992 and July 17, 1992: Agnes executed 2 Deeds of Absolute Sale over the 2 lots
in favor of Priscilla's daughter, Evangeline Arceo, for P900,000.00 each.
 Evangeline later sold the lots to Priscilla also for P900,000.00 each.

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 April 27, 1994: Priscilla sent a demand letter to petitioner spouses Rosario asking them to
vacate Lot 1.
 RTC of Makati City, Branch 150
 Petitioners filed a Complaint for Declaration of Nullity of Contract of Sale and
Mortgage, Cancellation of Transfer Certificates of Title and Issuance of new TCTs
with Damages against respondent.
- Petitioners alleged that Priscilla deceived Agnes into signing the Deeds of Absolute
Sale in favor of Evangeline, as Agnes merely intended to renew the mortgages over
the 2 lots.
 Priscilla filed a Complaint for Recovery of Possession. She claimed that:
1) She was the absolute owner of the subject lots.
2) Agnes sold the lots, because she was in dire need of money.
 The cases were consolidated.
 April 4, 2003: The RTC rendered a Decision ordering petitioners to vacate the house and
lot and to restore possession to respondent.
 CA
 November 15, 2006: In its Decision, the CA ruled that the contracts were deemed
equitable mortgages pursuant to Article 1602 of the NCC, which states:
Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of the following
cases:
(1) When the price of a sale with right to repurchase is unusually inadequate;
(2) When the vendor remains in possession as lessee or otherwise;
(3) When upon or after the expiration of the right to repurchase another instrument
extending the period of redemption or granting a new period is executed;
(4) When the purchaser retains for himself a part of the purchase price;
(5) When the vendor binds himself to pay the taxes on the thing sold;
(6) In any other case where it may be fairly inferred that the real intention of the parties is
that the transaction shall secure the payment of a debt or the performance of any other
obligation.
In any of the foregoing cases, any money, fruits, or other benefit to be received by the
vendee as rent or otherwise shall be considered as interest which shall be subject to the usury
laws.

It disposed of the case in the following manner:

1) Titles to the subject lots actually remained with Agnes as owner-mortgagor. The
mortgagee does not automatically become the owner of the mortgaged property; the
ownership thereof remains with the mortgagor. TCT No. 167438 and TCT No. 167439
issued in Agnes’ name were reinstated.
2) Petitioners’ prayer for the nullification of the Deeds of Absolute Sale and the
Mortgage was denied. Although the subject deeds of sale in favor of Evangeline
were actually for mortgage, said type of simulation of contracts did not result in the
nullification of the deeds but required the reformation of the instrument, pursuant to
Article 1365 of the NCC. The provision states:
Article 1365. If two parties agree upon the mortgage or pledge of real or personal
property, but the instrument states that the property is sold absolutely or with a right of
repurchase, reformation of the instrument is proper.

3) Absent any proof that petitioners had fully paid their loans to Priscilla, Priscilla had
the right to seek the foreclosure of the 2 lots if petitioners would fail to pay their
loans of P1.8 Million, the amounts appearing in the Deeds of Absolute Sale.

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  Since the parties did not file a motion for reconsideration or an appeal, the CA Decision
became final and executory.
 October 17, 2007: Priscilla sent a letter to Agnes demanding payment.
 RTC of Makati, Branch 148
 Priscilla filed a Complaint for Judicial Foreclosure of Real Estate Mortgage.
 Petitioners moved for the dismissal of the Complaint, but it was denied.
 Petitioners filed a Petition for Certiorari before the CA questioning the denial of their
Motion to Dismiss.
 May 5, 2009: Priscilla filed a Motion to Declare Defendants in Default for the
petitioners’ failure to file an Answer within the reglementary period. This was granted
by the RTC.
 May 25, 2010: The CA rendered a Decision dismissing the spouses’ previously filed
Petition for Certiorari for lack of merit.
 September 5, 2011: The SC issued a Resolution denying the spouses’ Petition for Review
on Certiorari.
 January 25, 2012: The RTC rendered a Decision in favor of Priscilla.
1) The spouses were ordered to pay the following sums to Priscilla:
a) P1,800,000.00 as the aggregate amount of their obligation to Priscilla, plus 12%
legal interest per annum from the time of demand on October 18, 2007 until the
obligation is fully paid;
b) P62,903.88 as reimbursement for payment of real property taxes due on the
subject lots;
c) P200,000.00 as attorney's fees; and
d) P200,000.00 as litigation expenses.
2) In default of such payment, the 2 parcels of land, including its improvements, would
be sold to realize the mortgage debt and costs.
 CA
 May 27, 2014: The CA affirmed the RTC’s Decision with modifications:
1) The interest rate imposed would be 6% per annum in accordance with Bangko
Sentral ng Pilipinas (BSP) Circular No. 799, Series of 2013; and
2) The attorney's fees and litigation expenses were reduced to P50,000.00.
 SC
 Petitioners filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court.
They made the following arguments:
1) Priscilla had no legal personality to institute the judicial foreclosure proceedings as
the Deeds of Absolute Sale, which were deemed equitable mortgages, were executed
by them in favor of Evangeline, not Priscilla.
2) The obligation of P1.8 million had no legal and factual bases as the only loan that
they obtained was in the amount of P600,000.00.
3) Before the subject lots can be judicially foreclosed, a reformation of the fake and
simulated Deeds of Absolute Sale must first be done to enable them to present
documentary and parol evidence.
 Respondent said:
1) She has legal personality to institute the foreclosure proceedings pursuant to the
CA’s November 15, 2006 Decision.
2) The spouses’ indebtedness was established in the said Decision, which had long
attained finality.

By: MP Rafols Page 11

 3) The loan had not been paid.
4) The judicial foreclosure was not based on the old mortgages that had been
discharged but instead, on the Deeds of Absolute Sale, which were considered as
equitable mortgages in the same Decision.
5) Reformation of the instruments was unnecessary, for the declaration in the
aforementioned Decision was sufficient.

ISSUE: WON the CA erred in dismissing the appeal

HELD/RULING: (Leonardo-de Castro, Perlas-Bernabe and Jardeleza, JJ., concur. Sereno, C.J., on
official leave.)
 NO.
 Under the doctrine of conclusiveness of judgment, facts and issues actually and directly
resolved in a former suit cannot again be raised in any future case between the same parties,
even if the latter suit may involve a different claim or cause of action.
In the present case, there was res judicata by conclusiveness of judgment as to the issues
pertaining to the existence of the loan and the legal personality of Priscilla to file a case for
judicial foreclosure.
Unlike res judicata by prior judgment, where there is identity of parties, subject matter, and
causes of action, there is only identity of parties and subject matter in res judicata by
conclusiveness of judgment. Since there is no identity of cause of action, the judgment in
the first case is conclusive only as to those matters actually and directly controverted and
determined. Thus, there is res judicata by conclusiveness of judgment when all the
following elements are present:
1) the judgment sought to bar the new action must be final;
2) the decision must have been rendered by a court having jurisdiction over the subject
matter and the parties;
3) the disposition of the case must be a judgment on the merits; and
4) there must be as between the first and second action, identity of parties, but not identity
of causes of action.
 In this case, all the elements were present. First, the November 15, 2006 Decision had
attained finality due to the parties’ failure to file a motion for reconsideration or an
appeal. Second, the said decision was rendered by a court having jurisdiction over the
subject matter and the parties. Third, the said decision disposed of the case on the
merits. Fourth, there was, as between the previous case and the instant case, an identity
of parties.
Thus, petitioners (as well as their privies and successors-in-interest) were estopped from
raising issues that were already adjudged in the November 15, 2006 Decision.
 The November 15, 2006 Decision’s pronouncement that the parties' intention was to execute
an equitable mortgage was sufficient reformation of such instrument.
Reformation of an instrument is a remedy in equity where a written instrument already
executed is allowed by law to be reformed or construed to express or conform to the real
intention of the parties. The rationale of the doctrine is that it would be unjust and
inequitable to allow the enforcement of a written instrument that does not express or reflect
the real intention of the parties.
 The CA had ruled that the Deeds of Absolute Sale were actually mortgages, and absent
any proof that petitioners had fully paid their obligation, respondent may seek the

By: MP Rafols Page 12

 foreclosure of the subject lots. In effect, the CA had reformed the instruments based on
the true intention of the parties. Thus, the filing of a separate complaint for reformation
of instrument was unnecessary, because it would only be redundant and a waste of
time.

Petition was denied.

The CA’s May 27, 2014 Decision was affirmed.

11. ROBERTO A. TORRES, IMMACULADA TORRES-ALANON, AGUSTIN TORRES, and

JUSTO TORRES, JR., petitioners, vs. ANTONIA F. ARUEGO, respondent.
G.R. No. 201271 | September 20, 2017
Ponente: Del Castillo, J.

NOTE: The action Petition for Review on Certiorari (Rule 45) was for the dismissal of their Petition for Certiorari (Rule
65) and denial of their Motion for Reconsideration.

FACTS:
 RTC of Manila
 March 7, 1983: Antonia and Evelyn Aruego were the alleged illegitimate children of the
deceased Jose M. Aruego with Luz Fabian. They filed a Complaint via their mother and
guardian ad litem Luz Fabian for “Compulsory Recognition and Enforcement of
Successional Rights” against Jose E. Aruego, Jr. and the five minor children of Gloria A.
Torres. The Torres party denied the allegations and disputed the claims that Antonia
and Evelyn are the illegitimate children of the deceased Aruego.
 June 15, 1992: The trial court ruled that Antonia Aruego was the illegitimate daughter of
Jose Aruego and Luz Fabian, but Evelyn was not. Antonia was deemed entitled to a
share equal to ½ portion of share of Aruego’s legitimate children. Petitioners were
ordered to recognize Antonia as an illegitimate daughter of Jose Aruego.
 January 14, 1993: Petitioners filed a Motion for Partial Reconsideration which was
denied by the trial court.
 February 12, 1993: Petitioners filed a Notice of Appeal.
 February 26, 1993: The Notice of Appeal was denied due course for being filed out of
time.
 CA
 Petitioners subsequently filed a Motion for Prohibition and Certiorari with Prayer for a
Preliminary Injunction, which was dismissed for lack of merit in the CA’s August 31,
1993 Decision.
 October 13, 1993: In a Resolution, the CA denied petitioners’ Motion for
Reconsideration.
 SC
 December 3, 1993: Petitioners filed a Petition for Review on Certiorari.
 March 13, 1996: The SC denied the petition and affirmed the CA’s Decision and
Resolution.
 RTC of Manila

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  December 4, 1996: The RTC of Manila issued a Writ of Execution to execute its June 15,
1992 Decision.
 August 15, 1997: Respondent (Antonia) filed a Motion for Partition.
 November 6, 1997: Respondent filed a Motion to Implement Decision.
 December 5, 1997: The Motion to Implement Decision was granted.
 RTC of Quezon City
 December 12, 1998: Petitioners filed a Verified Complaint (Civil Case No. Q-98-36300)
seeking to nullify the Deed of Absolute Sale dated May 14, 1998 (and the corresponding
TCTs issued in relation thereto), which was executed by respondent in favor of Sharon
Cuneta, Inc. covering a property enumerated in the RTC of Manila’s June 15, 1992
Decision as part of the properties comprising deceased Aruego’s estate.
 RTC of Manila
 July 1, 1999: Respondent filed a new Motion for Partition.
 November 8, 1999: In view of the pendency of Civil Case No. Q-98-36300, the RTC
resolved to defer the resolution of the new Motion for Partition on the ground that the
controversy involved in the Quezon City RTC would constitute a prejudicial question to
the issue involved in the Motion for Partition.
 March 21, 2000: Respondent’s Motion for Reconsideration was denied.
 CA
 March 23, 2004: Respondent’s Petition for Certiorari was granted. The CA’s Decision
became final and executory for petitioners’ failure to appeal therefrom.
 RTC of Manila
 Once again, respondent moved for Partition. Petitioners opposed the motion arguing in
the main that the partition of Aruego’s estate could not take place by virtue of
respondent's mere motion considering that:
1) there was no conclusive adjudication of the ownership of the properties declared as
constituting the estate of Jose Aruego, and
2) all the identities of his heirs had yet to be determined.
 July 23, 2009: The lower court granted respondent’s motion.
 Petitioners filed a Motion for Reconsideration, which was denied.
 CA
 September 12, 2011: Petitioners’ Petition for Certiorari was dismissed.
 March 26, 2012: Petitioners’ Motion for Reconsideration was also denied.
 SC
 Petitioners filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court.
- They assailed the CA’s Resolutions on the principal ground that the Court erred in
applying the doctrine of immutability of final judgments and the exceptions
thereto. Citing Heirs of Francisco v. Hon. Muñoz-Palma, petitioners contended that the
exceptions are:
1) When the order of execution varies or tends to vary the tenor of the judgment,
and
2) When the terms of the judgment are not clear enough that there remains room for
interpretation thereof by the trial court.
Petitioners claimed that the terms of the RTC of Manila’s June 15, 1992 Decision were
unclear as it admitted different interpretations. That is:
1) Respondent believed that the “½ portion” should be taken from the “whole
estate,” whereas

By: MP Rafols Page 14

 2) Petitioners hold that the “½ portion” refers to “½ of the share of each legitimate
descendant of Aruego.”
 Respondent argued:
1) The RTC of Manila’s June 15, 1992 Decision had already attained finality more than
20 years ago for petitioners’ failure to timely appeal therefrom.
2) There was no ambiguity in the Decision’s dispositive portion, for it clearly identified
the properties of the estate and respondent’s share therein. Petitioners failed to raise
their objections on these matters in their Motion for Partial Reconsideration, on
appeal, and via certiorari.
3) The RTC’s July 23, 2009 Order giving due course to respondent’s Motion for
Partition merely implemented its final and executory June 15, 1992 Decision.

ISSUE: WON the court a quo’s June 15, 1992 Decision, which attained finality more than 20
years ago, may still be subject to review and modification by the SC

HELD/RULING: (Leonardo-De Castro, Jardeleza and Tijam, JJ., concur. Sereno, C.J., on official
leave.)
 NO. A judgment becomes “final and executory” by operation of law. Finality becomes a fact
when the reglementary period to appeal lapses and no appeal is perfected within such
period. As a consequence, no court (not even the Supreme Court) can exercise appellate
jurisdiction to review a case or modify a decision that has become final. This is the doctrine
of immutability of judgments.
The only recognized exceptions to the general rule are the correction of clerical errors, the
so-called nunc pro tunc entries which cause no prejudice to any party, void judgments, and
whenever circumstances transpire after the finality of the decision rendering its execution
unjust and inequitable.
 Petitioners' reliance on Heirs of Francisco v. Hon. Muñoz-Palma was misplaced. In the Heirs of
Francisco case, on appeal was an order of execution, which although generally not
appealable, was allowed because the Court found that the Project of Partition submitted to
implement the decision was not in accordance with the final decision in the case. The Order
approving the Project of Partition becomes subject to review and whatever error may have
been committed in arriving thereat is correctible by appeal. In the earlier case of Castro v.
Surtida, it was held that an appeal from an order of execution would be allowed as an
exception to the general rule so that the appellate tribunal might pass upon the legality and
the correctness of the said order.
In contrast, what petitioners in the present case sought was an order from the court to allow
them to present evidence with regard to the properties comprising the estate of Aruego and
the heirs who were to share in the inheritance. This was, in effect, an appeal from the June
15, 1992 Decision which had long become final and executory, and not from an order of
execution which was yet to be carried out, thru a Project of Partition still to be submitted to
and approved by the court.
 There was no ambiguity in the dispositive portion of the RTC of Manila’s June 15, 1992
Decision. The question as to what properties had been deemed included in the estate of Jose
Aruego, Sr. had already been settled when the court a quo finally resolved the main
controversy on June 15, 1992.
Respondent had offered in evidence the certificates of title to the properties allegedly
comprising Aruego’s estate. Petitioners had also presented and formally offered their own

By: MP Rafols Page 15

 evidence but did not present anything to rebut respondent’s evidence. Her offer of evidence
went unopposed. In short, petitioners had ample opportunity to present their countervailing
evidence during trial. Furthermore, they failed to raise the issue in their Motion for Partial
Reconsideration and their appeal therefrom. It is now much too late in the day to present the
evidence that they should have presented way back then.
Moreover, petitioners actively participated in the trial of the case. The active participation of
a party before a court is tantamount to recognition of that court's jurisdiction and
willingness to abide by the court's resolution of the case.

Petition for Review on Certiorari was denied.

The CA’s assailed Resolutions were affirmed.

12. BACLARAN MARKETING CORPORATION, petitioner, vs. FERNANDO C. NIEVA and

MAMERTO SIBULO, JR., respondents.
G.R. No. 189881 | April 19, 2017
Ponente: Jardeleza, J.

FACTS:
 BMC was a domestic corporation engaged in the distribution, marketing, and delivery of
cement. It owned a 10-wheeler truck, which was driven by its employee Ricardo Mendoza.
The truck figured in a vehicular collision in Taytay, Rizal with a car owned and driven by
Mamerto Sibulo, Jr.
 RTC of Antipolo, Branch 74
 A Complaint for damages was filed against BMC and Mendoza.
 November 21, 1990: The court ruled in favor of BMC and Mendoza, because it found
that the damage which Sibulo suffered was due to his own reckless imprudence.
 CA
 May 9, 2005: On appeal, the CA held that Mendoza’s negligence caused the collision. It
awarded damages in the amount of P765,159.55 to Sibulo.
 No Motion for Reconsideration was filed by BMC or Mendoza. On June 12, 2005, the
decision became final and executory.
 RTC of Antipolo
 January 16, 2006: The court issued a Writ of Execution.
 February 23, 2006: Upon Sibulo’s motion, the court directed the Deputy Sheriff to
implement the Writ of Execution on BMC’s real properties, as BMC had no personal
properties. The sheriff levied upon BMC’s real property in Parañaque City.
 April 17, 2006: Fernando Nieva emerged as the highest bidder at the public auction of
the property and its improvements. He paid P800,000.00.
 BMC failed to redeem the property within 1 year from the sale.
 RTC of Parañaque City, Branch 257
 Nieva consolidated his ownership over the property. A new title was issued in Nieva’s
name. The court’s Decision became final on May 8, 2008.
 Nieva filed a Petition for Issuance of a Writ of Possession over the property. It was
granted on January 26, 2009.

By: MP Rafols Page 16

  The court issued a Writ of Possession and a Notice to Vacate against BMC on March 12
and 22, 2009 respectively.
 CA
 BMC filed a Petition for Annulment of Judgment. It prayed for the annulment of the
following orders and decisions:
1) Writ of Execution of the RTC of Antipolo;
2) Order of the RTC of Antipolo ordering the implementation of the writ of execution
over BMC’s real properties;
3) Auction sale;
4) Decision of the RTC of Parañaque cancelling BMC’s TCT;
5) Decision of the RTC of Parañaque ordering the issuance of a Writ of Possession.
BMC alleged that its counsel, Atty. Isagani Rizon, committed acts of gross and
inexcusable negligence constituting “extrinsic fraud,” which deprived it of due process
and an opportunity to present its side. It discovered the fraud only in December 2008
when its representatives tried to pay the real estate tax on the property, only to learn
that the title to it had already been transferred to Nieva. It did not know that Sibulo had
appealed the Antipolo Court’s 1990 Decision to the CA.
 August 26, 2009: In its Resolution, the CA denied BMC’s petition. It ruled that the
remedy of annulment of judgment was not available to BMC because:
1) Extrinsic fraud refers to a fraud perpetrated by the prevailing party, not by the
unsuccessful party’s own counsel.
2) BMC was bound by the negligence of Atty. Rizon, because it was negligent for not
checking on the status of the case. It also did not inform the Antipolo Court of its
change of address.
3) A writ of execution or auction sale are not in the nature of a final judgment, order, or
resolution, hence, they cannot be the subject of an action to annul judgment.
 BMC moved for reconsideration. It was denied.
 SC
 BMC filed a Petition for Review on Certiorari.

ISSUE: WON the CA erred in dismissing BMC's petition for annulment of judgment

HELD/RULING: (Velasco, Jr., Bersamin, Leonen, and Tijam, JJ.)

 NO. Rule 47 of the Rules of Court governs actions for the annulment of final judgments,
orders, or resolutions of regional trial courts in civil actions on the grounds of extrinsic
fraud, lack of jurisdiction, or lack of due process. It is a recourse equitable in character,
allowed only in exceptional cases where there is no available or other adequate remedy. Its
objective is to set aside a final and executory judgment, which is not void upon its face, but
is entirely regular in form, and whose alleged defect is not apparent upon its face or from
the recitals contained in the judgment. Since it disregards the time-honored rule of
immutability and unalterability of final judgments, the Rules of Court impose stringent
requirements before a litigant may avail of it. A petitioner must comply with the statutory
requirements as set forth under Rule 47. These are:
1) The remedy is available only when the petitioner can no longer resort to the ordinary
remedies of new trial, appeal, petition for relief or other appropriate remedies through
no fault of the petitioner;

By: MP Rafols Page 17

 2) The grounds for the action of annulment of judgment are limited to either extrinsic fraud
or lack of jurisdiction;
3) The action must be filed within 4 years from the discovery of the extrinsic fraud; and if
based on lack of jurisdiction, must be brought before it is barred by laches or estoppel;
and
4) The petition must be verified, and should allege with particularity the facts and the law
relied upon for annulment, as well as those supporting the petitioner’s good and
substantial cause of action or defense, as the case may be.
BMC’s petition for annulment of judgment fails to meet the first and second requisites.
 A final judgment or order is one that finally disposes of a case, leaving nothing more for the
court to do in respect thereto. This may be an adjudication on the merits which, on the basis
of the evidence presented at the trial, declares categorically what the rights and obligations
of the parties are and which party is in the right, or a judgment or order that dismisses an
action on the ground of res judicata or prescription. In contrast, an interlocutory order does
not dispose of a case completely but leaves something to be done upon its merits.
In Guiang v. Co, the Court declared, to wit:
The rule does not apply to an action to annul the levy and sale at public auction of petitioner’s
properties or the certificate of sale executed by the deputy sheriff over said properties. Neither
does it apply to an action to nullify a writ of execution because a writ of execution is not a final
order or resolution, but is issued to carry out the mandate of the court in the enforcement of a
final order or of a judgment. It is a judicial process to enforce a final order or judgment against
the losing party. (Emphasis supplied)

Corollarily, an order implementing a writ of execution issued over certain real properties is
also not a final order as it merely enforces a judicial process over an identified object.
Closely related to a writ of execution is a writ of possession which is a writ of execution
employed to enforce a judgment to recover the possession of land. It commands the sheriff
to enter the land and give its possession to the person entitled under the judgment. It is
merely a judicial process to enforce a final order against the losing party. Thus, the Decision
of the Antipolo Court ordering the issuance of writ of possession was also not amenable to
an action for annulment of judgment.
In fine, only the Decision of the Parañaque Court ordering the cancellation of BMC's title
over the property qualifies as a final judgment. It is a judgment on the merits declaring who
between Nieva and BMC has the right over the title to the property. Therefore, it may be the
subject of an action for annulment of judgment. However, BMC failed to prove that any of
the grounds for annulment were present in this case.
 Rule 47, Section 2 provides extrinsic fraud and lack of jurisdiction as the exclusive grounds
for the remedy of annulment of judgment. Case law, however, recognizes a third ground:
denial of due process of law.
BMC invoked extrinsic fraud and lack of due process as its grounds.
 Extrinsic fraud refers to a fraud committed to the unsuccessful party by his opponent
preventing him from fully exhibiting his case by keeping him away from court; a false
promise of a compromise; where the defendant never had knowledge of the suit, being
kept in ignorance by the acts of the plaintiff; or when an attorney fraudulently or
without authority connives at his defeat.
In Pinausukan Seafood House v. Far East Bank & Trust Company, the Court held that a
lawyer's neglect in keeping track of the case and his failure to apprise his client of the
developments of the case do not constitute extrinsic fraud. The fraud must emanate

By: MP Rafols Page 18

 from the act of the adverse party and must be of such nature as to deprive petitioner of
its day in court.
Here, BMC neither alleged nor proved that the gross negligence of its former counsel
was done in connivance with Nieva or Sibulo. Furthermore, based on the Pinausukan
case, Atty. Rizon’s acts did not count as extrinsic fraud.
 Anent BMC’s contention that it was denied due process due to Atty. Rizon’s gross
negligence, the Court said:
1) The counsel’s negligence binds the client, except in cases where the gross negligence
of the lawyer deprived his client of due process of law. However, mere allegation of
gross negligence does not suffice. For the exception to apply, the client must prove
by clear and convincing evidence that he was maliciously deprived of information
that he could not have acted to protect his interests. The error of his counsel must
have been both palpable and maliciously exercised that it could viably be the basis
for a disciplinary action.
- BMC failed to allege and prove that Atty. Rizon was motivated by malice in
failing to inform it of Sibulo's appeal.
2) Also, the counsel’s gross negligence must not be accompanied by the client’s own
negligence.
- BMC admitted that after obtaining a favorable decision from the Antipolo Court,
it did not bother to check the status of the case. It should have asked for evidence
or proof that the decision was already final.

Petition was denied.

The CA’s Resolutions were affirmed.

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