RULE 15 MOTIONS PURITA DE LA PEA, JUDGE VIVENCIO S. BACLIG, RTC-Br. 2, Balanga, Bataan, petitioners, vs. PEDRO R.

DE LA PEA, BENJAMIN P. BRIONES, SPOUSES JULIA DE LA PEA and JOSE ALBERTO, GODOFREDO, VIRGINIA, and MARIA, all surnamed DE LA PEA, and the COURT OF APPEALS-Fourth Division, respondents. Petition for review on Certiorari FACTS: Complaint was filed against petitioner Purita de la Pea by Pedro R. de la Pea, Benjamin P. Briones, spouses Julia de la Pea and Jose Alberto, Godofredo de la Pea, Virginia de la Pea and Maria de la Pea in the RTC of Balanga, Bataan, seeking: (a) the annulment of the deed of sale and deed of extrajudicial partition executed between Fortunata de la Pea and Purita de la Pea; (b) the partition of the estates of Fortunata de la Pea and Gavina de la Pea, and; (c) the award in their favor of actual, moral and exemplary damages, attorney's fees, litigation expenses and costs of the suit. Petitioner filed a Motion for Bill of Particulars praying that all the heirs of Gavina and Fortunata and the entire estate of each be properly included and defined. GRANTED. The bill of particulars was filed. Petitioner Purita de la Pea filed her Answer with Counterclaim. On 27 July 1988 and 21 September 1988 the parties entered into partial compromise agreements. They agreed to settle their respective claims regarding Lot No. 524 and to dispense with the intervention earlier filed by Danilo Cruz. Judge Vivencio S. Baclig dismissed the complaints. Respondents herein as plaintiffs before the trial court received copy of the aforesaid decision on 2 July 1993. On 15 July 1993, plaintiffs filed their MR which is now being assailed as pro forma since it did not contain a notice of hearing. DENIED. No cogent and compelling reason to warrant the reversal or modification of the decision sought to be reconsidered. Consequently, on 20 August 1993, plaintiffs filed a Notice of Appeal and/or Extension of Time to File Appeal. DENIED!!! Period to appeal had already lapsed as it was not tolled by the motion for reconsideration earlier filed, the latter being pro forma for lack of a notice of hearing. With regard defendant's motion for execution, the court a quo found no necessity to issue a writ considering its earlier ruling dismissing plaintiffs' complaint and defendant's counterclaim. The Court of Appeals: null and void the order of the trial court declaring private respondents' motion for reconsideration pro forma. Petitioner moved to reconsider the ruling of the Court of Appeals and reiterating her claim that a motion for reconsideration without a notice of hearing was a mere scrap of paper hence it did not warrant the attention of the court. DENIED! The motion for reconsideration was not a mere scrap of paper so that the notice of appeal was timely filed. The requirements laid down in Sec. 5 of Rule 15 of the Rules of Court that the notice shall be directed to the parties concerned, and shall state the time and place for the hearing of the motion, are mandatory. If not religiously complied with, they render the motion pro forma. As such the motion is a useless piece of paper that will not toll the running of the prescriptive period. In the instant case, there is no dispute that the motion for reconsideration filed by the plaintiffs did not contain any notice of hearing. It was therefore pro forma, hence it did not suspend the running of the prescriptive period. The copy of the decision was received on 2 July 1993. Consequently, respondents had until 17 July 1993 within which to file their notice of appeal. Since they filed their Notice of Appeal and/or Motion for Extension of Time to File Appeal on 20 August 1993 or 49 days after receipt of the decision, the appeal was clearly filed out of time. On that date the decision of the court a quo already attained finality 34 days earlier, hence, could no longer be reviewed much less modified on appeal. The filing of the Notice of Appeal and/or Extension of Time to File Appeal was a futile exercise. There was no longer any period to appeal nor a decision that could still be appealed.

FLORANTE F. MANACOP, petitioner, vs.COURT OF APPEALS and F.F. CRUZ & CO., INC., respondents. FACTS: * respondent corp filed a complaint for a sum of money, with a prayer for preliminary attachment, against a land in Quezon City owned by Manacop Construction President Florante F. Manacop for failure to pay the sub-contract cost pursuant to a deed of assignment signed between petitioner's corporation and private respondent. * respondent submitted an amended complaint intended to substitute Manacop Construction with Florante F. Manacop as defendant who is "doing business under the name and style of F.F. Manacop Construction Co., Inc.". *summons to the substituted defendant below was granted *petitioner filed his answer to the amended complaint * Petitioner filed Omnibus Motion on September 5, 1990grounded on (1) irregularity that attended the issuance of the disputed writ inspite the absence of an affidavit therefor; (2) the feasibility of utilizing the writ prior to his submission as party-defendant, and (3) exemption from attachment of his family home- denied CA A petition for certiorari w filed by petitioner-dismissed; MR- denied Hence he went to Sc..

ISSUE:Did respondent court err in dismissing the challenge posed by petitioner against the denial of his omnibus motion?

ISSUE: Whether the motion complied with the requirements stated in Section 4 & 5, Section 15 of Rules of Court? RULING: NOOOOOOOOOOOOOOO!

RULING: NO Petitioner harps on the supposition that the appellate court should not have pierced the veil of corporate fiction because he is distinct from the personality of his corporation and, therefore, the writ of attachment issued against the corporation cannot be used to place his own family home in custodia legis. This puerile argument must suffer rejection since the doctrine in commercial law adverted to and employed in exculpation by petitioner, during the pendency of his petition for certiorari in the appellate court and even at this stage, may not be permitted to simply sprout from nowhere for such subtle experiment is prescribed by the omnibus motion rule under Section 8, Rule 15 of the Revised Rules of Court, thus:

A motion attacking a pleading or a proceeding shall include all objections then available, and all objections not so included shall be deemed waived. The spirit that surrounds the foregoing statutory norm is to require the movant to raise all available exceptions for relief during a single opportunity so that multiple and piece-meal objections may be avoided. petitioner also seeks to capitalize that ipso facto took place when the complaint against him was amended. He proffers the idea that the extinction of a complaint via a superseding one carries with it the cessation of the ancilliary writ of preliminary attachment. We could have agreed with petitioner along this line had he expounded the adverse aftermath of an amended complaint in his omnibus motion. But the four corners of his motion in this respect filed on September 5, 1990 are circumscribed by other salient points set forth by Us relative to the propriety of the assailed writ itself. This being so, petitioner's eleventh hour effort in pressing a crucial factor for exculpation must be rendered ineffective and barred by the omnibus motion rule. G.R. No. L-51458 July 19, 1982 MANUEL YAP, petitioner, vs. HON. COURT OF APPEALS, RAYMOND AND LYDIA TOMASSI, respondents. Facts: RTC On September 11, 1973, Respondents spouses Tomassi, filed a complaint for Damages against petitioner Manuel Yap. Yap filed his Answer with Special Defenses and Counterclaim. On January 31, 1978, TC ordered Yap to pay respondents. Copy of the Decision was received by petitioner-defendant on February 10, 1978. He filed, on March 2, 1978, a Notice of appeal, and on March 7, 1978, a Cash Appeal Bond and Motion for Extension of twenty days from March 13, 1978 (or until April 2, 1978) within which to file his Record on Appeal. Said Motion was not acted upon by the TC. On March 30, 1978 - petitioner submitted his Record on Appeal and also filed a Motion for the Issuance of Writ of Execution alleging that the Decision had already become final and executory as petitioner's Motion for extension of time to file Record on Appeal failed to comply with the requirements of the Rules of Court on Motions, and therefore, did not toll the running of the period to perfect an appeal. On April 24, 1978 - TC disapproved petitioner's Record on Appeal. MR denied

SC - Petition for Review on Certiorari

ISSUE: WON the Motion for extension should mandatorily comply with the requirements of the Rules on Motions (RULE 15) before the same may be acted upon by the TC? HELD: NO. Sections 4, 5 and 6 of Rule 15 provide: Section 4. Notice.-Notice of a motion shag be served by the applicant to all parties concerned at least three days before the hearing thereof, together with a copy of the motion, and other papers accompanying it. The Court, however, for good cause may hear a motion on shorter notice, specially on matters which the Court may dispose of on its own motion. Section 5. Contents of Notice.-The notice shall be directed to the parties concerned, and shall state the time and place for the hearing of the motion. Section 6. Proof of service to be filed with motion.-No motion shall be acted upon by the court, without proof of service of the notice hereof, except when the court is satisfied that the rights of the adverse party or parties are not affected. As a general rule, notice of motion is required where a party has a right to resist the relief sought by the motion and principles of natural justice demand that his right be not affected without an opportunity to be heard. The three-day-notice required by law is intended not for the benefit of the movant but to avoid surprises upon the adverse party and to give the latter time to study and meet the arguments of the motion. The Motion in question does not affect the substantive rights of private respondents as it merely seeks to extend the period to file the Record on Appeal, which extension may be granted by the Trial Court upon application made prior to the expiration of the original period. Neither was there any claim that said Motion, which was grounded on justifiable reason, was interposed to delay the appeal. Dismissal of appeals on purely technical grounds is frowned upon as the policy of the Court is to encourage the hearing of appeals on the merits. Litigants should be afforded every opportunity to establish the merits of their cases without the constraints of technicalities. IGMEDIO AZAJAR, petitioner, vs.

CA

CA dismissed Petition for "Certiorari and Mandamus" Record on Appeal as the same was filed beyond the prescribed period. MR denied

THE HONORABLE COURT OF APPEALS (Second Division) and CHAM SAMCO & SONS, INC., respondents.

Facts:

PETITION to review the resolution of the Court of Appeals. Petitioner seeks reversal of the Resolution of the respondent Court of Appeals setting aside the judgment by default rendered against private respondent by the Court of First Instance, and directing that said respondent be allowed to file its answer to the complaint and after joinder of issues. This case originated from a complaint filed by petitioner Igmedio Azajar against respondent Cham Samco and Sons, Inc., in the Court of First Instance of Camarines Sur. Azajars claim, briefly, is that he had purchased from defendant (Cham Samco), thru the latters agent, 100 Kegs of nails of various sizes, specified in one of Cham Samcos printed order forms, and had given to the agent Pl8,000.00 in full payment thereof; but in breach of contract, Cham Samco had offered to deliver only a part of the quantity ordered. Cham Samco filed a motion to dismiss on two grounds: failure of the complaint to state a cause of actionthe complaint's language indicating not a perfected sale but merely an offer to buy by plaintiff that was partly accepted by defendant, and failing to show that as explicitly required by the order form, prices had been confirmed by Cham Samcos Manila Office," and that venue was improperly laidCham Samcos invariable condition in transactions of this nature, as Azajar well knew from many such transactions in the past, being that any legal action thereon must be instituted in the City of Manila."

Cham Samco went to the Court of Appeals on certiorari asserting that the trial court acted with grave abuse of discretion amounting to lack of jurisdiction in declaring it in default and then rendering judgment by default. The petition was dismissed for lack of merit by the Court of Appels But on motion for reconsideration seasonably presented, the Court of Appeals reversed itself. It set aside the Trial Courts order of judgment by default, and Order denying Cham Samcos motion for new trial, and directed the lower Court to allow Cham Samco to file its answer to the coinplaint and upon due joinder of issues, to try and decide the case on the merits. It was wrong, of course, for Cham Samco to have failed to set its motion to dismiss for hearing on a specified date and time. The law explicitly requires that notice of a motion shall be served by the appellant to ail parties concerned at least three (3) days before the hearing thereof, together with a copy of the motion, and of any affidavits and other papers accompanying it; and that the notice shall be directed to the parties concerned, stating the time and place for the hearing of the motion. The uniform holding of this Court has been that a failure to comply with the requirement is a fatal flaw. Such notice is required to avoid surprises upon the opposite party and give the latter time to study and meet the arguments of the motion, as well as to determine or make determinable the time of submission of the motion for resolution.

Ruling: Cham Samcos belief that it was not necessary that its motion to dismiss be set for hearing was avowedly engendered by two factors, namely:

The motion to dismiss contained a notice addressed to the Clerk of Court. It is this notice that has given rise to the controversy at bar. Contending that such a notice was fatally defective and rendered the Motion to Dismiss incapable of tolling the period to answer, Azajar filed a motion to declare Cham Samco in default, which the Court granted. The Court pronounced Cham Samco in default and allowed Azajar to present evidence ex-parte. Defendant thru counsel, instead of filing an answer to the complaint, filed a Motion to Dismiss which, in legal contemplation, is not a motion at all because the notice therein is directed to the Clerk of Court instead of to the party concerned without the requisite notice of time and place of hearing the filing thereof did not suspend the running of the period to file the required responsive pleading. That seventeen (17) days had lapsed and defendant failed to file any responsive pleading. The Trial Court rendered judgment by default against defendant Cham Samco. Cham Samco filed a Motion for New Trial. It contended that its failure to observe the rules governing notice of motions was due to excusable negligence, because the grounds alleged in the Motion to Dismiss were all in such nature and character that addressed themselves to a motu proprio resolution by the court and thus rendered a hearing dispensable. It also alleged certain defenses available to it which if duly alleged and proven, would absolve it from all liability. This motion was denied.

1) the fact that while the Rules of Court specify the motions which can be heard only with prior service upon adverse parties,"15 said Rules do not point out which written motions may be ex parte, preferring, it appears, to leave to the court, in motions other than those specified, the discretion either to ex parte resolve* * or to call the parties to a hearing * *;and 2) the further fact that its motion to dismiss was based on two grounds on which a hearing was superfluous, the first, failure of the complaint to state a cause of action, being determinable exclusively from the allegations of the complaint and no evidence being allowable thereon; and the second, that venue is improperly laid, being resolvable exclusively on the basis of documents annexed to the motion.17

These considerations, to be sure, did not erase movants duty to give notice to the adverse party of the date and time of the hearing on its motion, the purpose of said notice being, as already stressed, not only to give the latter time to oppose the motion if so minded, but also to determine the time of its submission for resolution. Without such notice, the occasion would not arise to determine with reasonable certitude whether and within what time the adverse party would respond to the motion, and when the motion might already be resolved by the Court. The duty to give that notice is imposed on the movant, not on the Court. Withal, the reasons for Cham Samcos erroneous notion of the dispensability of a hearing on its motion to dismiss are not utterly without plausibility. This circumstance, taken together with the fact, found by the

Intermediate Appellate Court and not disputed by petitioner Azajar, that Cham Samco has meritorious defenses which if proven would defeat Azajars claim against it WHEREFORE, the Resolutions of the Court of Appeals appealed from, are affirmed. Costs against petitioner. G.R. No. 167471 February 5, 2007

Issue: Whether the lack of notice of hearing in the Motion for Extension of Time to file Memorandum on Appeal is fatal, such that the filing of the motion is a worthless piece of paper. Held: No. Procedural due process was substantially complied with by respondent.

GLICERIA SARMIENTO, Petitioner, vs. EMERITA ZARATAN, Respondent. Facts:

On 2 September 2002, petitioner Gliceria Sarmiento filed an ejectment case against respondent Emerita Zaratan, in the Metropolitan Trial Court. On 31 March 2003, the MeTC rendered a decision in favor of petitioner. Respondent filed her notice of appeal. Thereafter, the case was raffled to the RTC of Quezon City, Branch 223. In the Notice of Appealed Case, the RTC directed respondent to submit her memorandum. Respondents counsel having received the notice on 19 May 2003, he had until 3 June 2003 within which to file the requisite memorandum. But on 3 June 2003, he filed a Motion for Extension of Time of five days due to his failure to finish the draft of the said Memorandum. He cited as reasons for the delay of filing his illness for one week, lack of staff to do the work due to storm and flood compounded by the grounding of the computers because the wirings got wet. But the motion remained unacted. On 9 June 2003, respondent filed her Memorandum. On 19 June 2003, the RTC dismissed the appeal. Respondent moved for the Reconsideration. But was denied by the RTC. In the main, respondents Motion for Reconsideration is premised on the argument that she filed a timely "Motion for Extension of Time To File Memorandum," dated and filed on June 3, 2003, but that her motion was not acted upon by this Court. o She adds that her appeal memorandum was filed well within the period sought by her in her "Motion for Extension of Time to File Memorandum" so that her appeal should not have been dismissed. RTC stated that it did not take cognizance of defendant-appellants "Motion for Extension of Time to File Memorandum," and rightly so, because it did not contain a notice of hearing as required by Sections 4 and 5, Rule 15 of the Rules of Court, an omission for which it could offer no explanation. Aggrieved, respondent filed a Petition for Certiorari in the Court of Appeals, which was granted. The appellate court nullified and set aside the orders of the RTC and ordered the reinstatement of respondents appeal. Consequently, respondents appeal memorandum was admitted and the case remanded to the RTC for further proceedings. Hence, this appeal by petitioner.

Petitioner avers that, because of the failure of respondent to include a Notice of Hearing in her Motion for Extension of Time to file Memorandum on Appeal in the RTC, the latters motion is a worthless piece of paper with no legal effect. The three-day notice required by law is intended not for the benefit of the movant but to avoid surprises upon the adverse party and to give the latter time to study and meet the arguments of the motion. o Principles of natural justice demand that the right of a party should not be affected without giving it an opportunity to be heard. o The test is the presence of the opportunity to be heard, as well as to have time to study the motion and meaningfully oppose or controvert the grounds upon which it is based.

There are, indeed, reasons which would warrant the suspension of the Rules: a) the existence of special or compelling circumstances, b) the merits of the case, c) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of rules, d) a lack of any showing that the review sought is merely frivolous and dilatory, and e) the other party will not be unjustly prejudiced thereby. Elements or circumstances (c), (d) and (e) exist in the present case. The suspension of the Rules is warranted in this case. The motion in question does not affect the substantive rights of petitioner as it merely seeks to extend the period to file Memorandum. The required extension was due to respondents counsels illness, la ck of staff to do the work due to storm and flood, compounded by the grounding of the computers. There is no claim likewise that said motion was interposed to delay the appeal. As it appears, respondent sought extension prior to the expiration of the time to do so and the memorandum was subsequently filed within the requested extended period. Under the circumstances, substantial justice requires that we go into the merits of the case to resolve the issue of who is entitled to the possession of the land in question. Further, it has been held that a "motion for extension of time x x x is not a litigated motion where notice to the adverse party is necessary to afford the latter an opportunity to resist the application, but an ex parte motion made to the court in behalf of one or the other of the parties to the action, in the absence and usually without the knowledge of the other party or parties."

As a general rule, notice of motion is required where a party has a right to resist the relief sought by the motion and principles of natural justice demand that his rights be not affected without an opportunity to be heard. It has been said that "ex parte motions are frequently permissible in procedural matters, and also in situations and under circumstances of emergency; and an exception to a rule requiring notice is sometimes made where notice or the resulting delay might tend to defeat the objective of the motion." Dismissal of appeals purely on technical grounds is frowned upon, and the rules of procedure ought not to be applied in a very rigid, technical sense, for they are adopted to help secure, not override, substantial justice, and thereby defeat their very aims. As has been the constant rulings of the Court, every party-litigant should be afforded the amplest opportunity for the proper and just disposition of his cause, free from constraints of technicalities. Parenthetically, it must be noted also that when the appeal was dismissed on 19 June 2003, the memorandum was already filed in court on 9 June 2003.

Held:

1.

No. In the absence of any palpable error, RTC and the CA exercised their discretion in opting for a liberal rather than a strict application of the rules on notice of hearing. It must be stressed that there are no vested right to technicalities. The requirement of a notice of hearing in every contested motion is part of due process of law. The notice alerts the opposing party of a pending motion in court and gives him an opportunity to oppose it. What the rule forbids is not the mere absence of a notice of hearing in a contested motion but the unfair surprise caused by the lack of notice. It is the dire consequences which flow from the procedural error which is proscribed. If the opposing party is given a sufficient opportunity to oppose a defective motion, the procedural lapse is deemed cured and the intent of the rule is substantially complied. Rules of procedure, and this includes the three (3) days notice requirement, are liberally construed in order to promote their object and to assist the parties in obtaining just, speedy, and inexpensive determination of every action and proceeding (Section 2, Rule 1, Rules of Court). Court made it clear that lapses in the literal observance of a rule of procedure may be overlooked when they have not prejudiced the adverse party and have not deprived the court of its authority.

ANECO REALTY AND DEVELOPMENT CORPORATION, PETITIONER, VS. LANDEX DEVELOPMENT CORPORATION, RESPONDENT Facts: Aneco filed an injunction case with damages before the RTC inorder to restrain Landex from constructing a concrete fence on its lot claiming that they were deprived access to their property. Landex on its Answer claimed that said fence does not deprive Aneco access to their property since the initial subdivision plan agreed by Aneco and its original owner FHDI, will no longer be continued as also defined in the Deed of Sale. RTC- Ruled infavor of Aneco. Landex moved to reconsider but failed to include a notice of hearing. RTC set a hearing for the said MR. Aneco failed to attend. RTC gave Aneco additional time to comment. RTC- issued an order denying Anecos motion for execution. RTC- issued an order granting the motion for reconsideration of Landex and dismissed the complaint of Aneco. Aneco appealed to the CA. CA- affirmed the decision of the RTC on the ground that Aneco is aware that the lots sold to them is no longer a subdivision lot thus the road in dispute ceases to be a road lot. Aneco moved for reconsideration. Denied. Hence this appeal under Rule 45 Issue: W/N CA erred in liberally applying Section 5 of Rule 15 regarding notice of hearing when it admitted Landex motion despite its lack of notice of hearing. W/N Aneco may enjoin Landex from constructing a concrete wall on its own property. FACTS:

2.

No. Aneco failed to prove any legal right to prevent, much less restrain, Landex from fencing its own property. Article 430 of the Civil Code gives every owner the right to enclose or fence his land or tenement by means of walls, ditches, hedges or any other means. The right to fence flows from the right of ownership. As owner of the land, Landex may fence his property subject only to the limitations and restrictions provided by law June 18, 2010 REYES, Petitioner,

G.R. No. 169135

JOSE DELOS vs. JOSEPHINE ANNE B. RAMNANI, Respondent.

1977 RTC rendered a decision in favor of the respondent 1978 writ of execution was issued and a bidding and auction sale over a certain property was conducted. o respondent was the highest bidder. A certificate of sale was issued and annotated in favor of the respondent. 2004 respondent filed a motion for the issuance of an order directing the sheriff to execute the final certificate in her favor. Petitioner opposed stating that: o Subject motion was not accompanied by a notice of hearing o 1977 decision cannot be executed as it is barred by prescription

ISSUE: Whether the subject motion was defective for lack of a notice of hearing? RULING: NO! Motion was valid. The subject motion is a non-litigious motion. While, as a general rule, all written motions should be set for hearing under Section 4 Rule 15 of the Rules of Court, excepted from this rule are nonlitigious motions or motions which may be acted upon by the court without prejudicing the rights of the adverse party. Respondent is entitled to the issuance of the final certificate of sale as a matter of right and petitioner is powerless to oppose the same. The subject motion falls under the class of non-litigious motions. FAUSTO R. PREYSLER, JR., vs. MANILA SOUTHCOAST DEVELOPMENT CORPORATION, FACTS: **MTC-Batangas > petitioner Fausto R. Preysler, Jr. filed a complaint for forcible entry against respondent Manila Southcoast Development Corporation. > the MTC ruled in favor of petitioner and ordered respondent to vacate the disputed land ** RTC > Respondent appealed to RTC which reversed the MTC decision and dismissed petitioners complaint > MR was filed by petitioner which was set for hearing on 26 February 2004 a copy of the MR was sent to respondents counsel by registered mail on 23 February 2004. >During the 26 February 2004 scheduled hearing of the motion, the RTC judge reset the hearing to 2 April 2004 because the courts calendar could not accommodate the hearing of the motion. All the parties were notified of the schedule for the next hearing. > 3 March 2004, or 6 days after the scheduled hearing on 26 February 2004, that respondents counsel received a copy of petitioners Motion for Reconsideration.The rescheduled hearing on 2 April 2004 was again reset on 7 May 2004 because the RTC judge was on official leave. >The 7 May 2004 hearing was further reset to 6 August 2004. >After the hearing, respondent filed its Motion to Dismiss dated 9 August 2004,claiming that non-compliance with the three-day notice rule did not toll the running of the period of appeal. > On 4 October 2004, the RTC denied petitioner's MR for failure to appeal within the 15 days reglementary period and ruled MR was fatally flawed for failure to observe the three-day notice rule. >Petitioner filed an Omnibus Motion for Reconsideration of the Order-denied CA Petitioner then filed a petition for certiorari with the Court of Appeals, alleging that the RTC committed grave abuse of discretion in dismissing the Motion for Reconsideration and Omnibus Motion for petitioners alleged failure to observe the three-day notice rule. > CA dismissed the petition and ruled that the three-day notice rule under Sections 4, 5, and 6 of Rule 15 of the Rules of Court is mandatory and non-compliance therewith is fatal and renders the motion pro forma. > MR denied , henceforth petitioner went to SC

RULING: (read sections 4,5,6, of R.15) The three-day notice rule is not absolute. A liberal construction of the procedural rules is proper where the lapse in the literal observance of a rule of procedure has not prejudiced the adverse party and has not deprived the court of its authority. Jehan Shipping Corporation v. National Food Authority,[14] the Court held that despite the lack of notice of hearing in a Motion for Reconsideration, there was substantial compliance with the requirements of due process where the adverse party actually had the opportunity to be heard and had filed pleadings in opposition to the motion. The Court held under Sections 4 and 5 of Rule 15 of the Rules of Court, mandatory is the requirement in a motion, which is rendered defective by failure to comply with the requirement. As a rule, a motion without a notice of hearing is considered pro forma and does not affect the reglementary period for the appeal or the filing of the requisite pleading. >> three-day notice required by the Rules is not intended for the benefit of the movant. Rather, the requirement is for the purpose of avoiding surprises that may be sprung upon the adverse party, who must be given time to study and meet the arguments in the motion before a resolution of the court. Principles of natural justice demand that the right of a party should not be affected without giving it an opportunity to be heard.The test is the presence of opportunity to be heard, as well as to have time to study the motion and meaningfully oppose or controvert the grounds upon which it is based. >>>>WON RTC erred in dismissing MR which was affirmed by CA?YES RTC gave petitioner ten days within which to comment on respondents Motion for Reconsideration. Petitioner filed its Opposition to the Motion on November 26, 2001. In its 14-page Opposition, it not only pointed out that the Motion was defective for not containing a notice of hearing and should then be dismissed outright by the court; it also ventilated its substantial arguments against the merits of the Motion and of the Supplemental Motion for Reconsideration. Notably, its arguments were recited at length in the trial courts January 8, 2002 Joint Resolution. Nevertheless, the court proceeded to deny the Motions on the sole ground that they did not contain any notice of hearing. The requirement of notice of time and hearing in the pleading filed by a party is necessary only to apprise the other of the actions of the former. Under the circumstances of the present case, the purpose of a notice of hearing was served. Court of Appeals erred in ruling that petitioner failed to comply with the three-day notice rule because although respondent received petitioners Motion for Reconsideration six days after the scheduled hearing on 26 February 2004, the said hearing was reset three (3) times with due notice to the parties. Thus, it was only on 6 August 2004, or more than five months after respondent received a copy of petitioners Motion for Reconsideration, that the motion was heard by the RTC. Clearly, respondent had more than sufficient time to oppose petitioners Motion for Reconsideration. In fact, respondent did oppose the motion when it filed its Motion to Dismiss dated 9 August 2004. THUS, there was substantial compliance with procedural due process. Instead of dismissing petitioners Motion for Reconsideration based merely on the alleged procedural lapses, the RTC should have resolved the motion based on the merits. >>>>WON RTC Erred in dismissing Omnibus Motion? YES RTC erred in dismissing petitioners Omnibus Motion for allegedly failing to comply with the three -day notice requirement. The RTC found that the notice of hearing of petitioners Omnibus Motion which was set to be heard on 12 November 2004 was received by respondent on 9 November 2004. Section 4 of Rule 15 provides that [e]very written motion required to be heard and the notice of the hearing thereof shall be served in such a manner as to ensure its receipt by the other party at least three (3) days before the date of the hearing, unless the court for good cause sets the hearing on shorter notice. Thus, the date of the hearing should be at least three days after receipt of the notice of hearing by the other parties. In this case, the petitioners Omnibus Motion was set for heari ng on 12 November 2004. Thus, to comply with the notice requirement, respondent should have received the notice of the hearing at least three days before 12 November 2004, which is 9 November 2004. Clearly, respondents receipt on 9 November 2004 (Tuesday) of

ISSUE: WON 3 day notice rule is absolute?NO

the notice of hearing of the Omnibus Motion which was set to be heard on 12 November 2004 (Friday), was within the required minimum three-days notice. As explained by Retired Justice Jose Y. Feria in his book, Civil Procedure Annotated, when the notice of hearing should be given: The ordinary motion day is Friday. Hence, the notice should be served by Tuesday at the latest, in order that the requirement of the three days may be complied with. If notice be given by ordinary mail, it should be actually received by Tuesday, or if not claimed from the post office, the date of the first notice of the postmaster should be at least five (5) days before Tuesday. WHEREFORE, we GRANT the petition. RULE 16 MOTION TO DISMISS (This is a VERY long case... yung other issue is about the validity of search warrant which the SC upheld pero di ko na nilagay dahil obiter dictum lang yun for our civ pro topic) G.R. No. 110318 August 28, 1996 COLUMBIA PICTURES, INC., ORION PICTURES CORPORATION, PARAMOUNT PICTURES CORPORATION, TWENTIETH CENTURY FOX FILM CORPORATION, UNITED ARTISTS CORPORATION, UNIVERSAL CITY STUDIOS, INC., THE WALT DISNEY COMPANY, and WARNER BROTHERS, INC., petitioners, vs. COURT OF APPEALS, SUNSHINE HOME VIDEO, INC. and DANILO A. PELINDARIO, respondents.

absence of a license to do business. Consequently, they have no right to ask for the issuance of a search warrant. The Corporation Code provides: Sec. 133. Doing business without a license. No foreign corporation transacting business in the Philippines without a license, or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine courts or administrative tribunals on any valid cause of action recognized under Philippine laws.

ISSUE: WON case should be dismissed for petitioners lack of legal capacity to sue? Held: NO. (It is merely respondents procedural tactic) Lack of legal capacity to sue means that the plaintiff is not in the exercise of his civil rights, or does not have the necessary qualification to appear in the case, or does not have the character or representation he claims. On the other hand, a case is dismissible for lack of personality to sue upon proof that the plaintiff is not the real party in interest, hence grounded on failure to state a cause of action.

FACTS: Petitioners are foreign corporations not licensed to do business in the Philippines. Complainants (herein petitioners) lodged a formal complaint with the NBI for violation of PD No. 49 (Decree on Protection of Intellectual Property), as amended, and sought its assistance in their anti-film piracy drive. Among the grounds of respondents for a motion to dismiss under the Rules of Court are lack of legal capacity to sue and that the complaint states no cause of action. Private respondents aver that being foreign corporations, petitioners should have such license to be able to maintain an action in Philippine courts. In so challenging petitioners' personality to sue, private respondents point to the fact that petitioners are the copyright owners or owners of exclusive rights of distribution in the Philippines of copyrighted motion pictures or films, and also to the appointment of Atty. Rico V. Domingo as their attorney-in-fact, as being constitutive of "doing business in the Philippines" under Section 1 (f)(1) and (2), Rule 1 of the Rules of the Board of Investments. As foreign corporations doing business in the Philippines, Section 133 of Batas Pambansa Blg. 68, or the Corporation Code of the Philippines, denies them the right to maintain a suit in Philippine courts in the

The term "lack of capacity to sue" should not be confused with the term "lack of personality to sue." While the former refers to a plaintiff's general disability to sue, such as on account of minority, insanity, incompetence, lack of juridical personality or any other general disqualifications of a party, the latter refers to the fact that the plaintiff is not the real party in interest. Correspondingly, "lack of capacity to sue" can be a ground for a motion to dismiss based on the ground of lack of legal capacity to sue (Rule 16 Section 1(d)); whereas the term "lack of personality to sue" can be used as a ground for a motion to dismiss based on the fact that the complaint, on the face thereof, evidently states no cause of action. (Rule 16 Section 1(g)); The ground available for barring recourse to our courts by an unlicensed foreign corporation doing or transacting business in the Philippines should properly be "lack of capacity to sue," NOT "lack of personality to sue." Certainly, a corporation whose legal rights have been violated is undeniably such, if not the only, real party in interest to bring suit thereon although, for failure to comply with the licensing requirement, it is not capacitated to maintain any suit before our courts. This Court's REJECTS the common procedural tactics of erring local companies which, when sued by unlicensed foreign corporations not engaged in business in the Philippines, invoke the latter's supposed lack of capacity to sue. The doctrine of lack of capacity to sue based on failure to first acquire a local license is based on considerations of public policy. It was never intended to favor nor insulate from suit

unscrupulous establishments or nationals in case of breach of valid obligations or violation of legal rights of unsuspecting foreign firms or entities simply because they are not licensed to do business in the country. G.R. No. 152496. July 30, 2009.*

Petitioners then filed their Additional Comment on the Motion to Dismiss, Supplemental Motion to Dismiss and Comment on the Second Supplemental Motion to Dismiss. The trial court sustained the respondents and dismissed the complaint for lack of jurisdiction over the persons of respondents as defendants. Aggrieved, petitioners filed before the CA a Petition for Certiorari, seeking the nullification of the RTC Orders, on the ground that the said orders were issued with grave abuse of discretion.

SPOUSES GERMAN ANUNCIACION and ANA FERMA ANUNCIACION and GAVINO G. CONEJOS, petitioners, vs. PERPETUA M. BOCANEGRA and GEORGE M. BOCANEGRA, respondents. Facts: PETITION for review on certiorari of the decision and resolution of the Court of Appeals. This is a petition for review on certiorari, assailing the Decision, and the Resolution, of the Court of Appeals (CA) in CA-G.R. SP No. 65516. The CA decision affirmed the Orders of the Regional Trial Court (RTC) of Manila, Branch 40 in Civil Case No. 00-98813 which dismissed the complaint for Quieting of Title and Cancellation of TCT No. 122452 of petitioner Spouses German Anunciacion and Ana Ferma Anunciacion and their co-petitioner, Gavino G. Conejos. Petitioners filed before the RTC, Manila, a complaint for Quieting of Title and Cancellation of TCT No. 122452, docketed as Civil Case No. 00-98813. The complaint averred that defendants (respondents) may be served with summons and legal processes through Atty. Rogelio G. Pizarro, Jr., with office address at 2830 Juan Luna St., Tondo, Manila. The summons, together with the copies of the complaint, were then served on Atty. Pizarro. The record shows that before the filing of the said complaint, Atty. Pizarro wrote a demand letter on behalf of respondents and addressed to petitioner German Anunciacion, among others, demanding that they vacate the land owned by his clients (respondents), who needed the same for their own use.

The CA dismissed the petition upon finding that there was no waiver of the ground of lack of jurisdiction on the part of respondents in the form of voluntary appearance. Applying Section 20, Rule 14 of the 1997 Rules of Civil Procedure, the CA held that although the grounds alleged in the two (2) earlier Motion to Dismiss and Supplemental Motion to Dismiss were lack of cause of action and failure to pay the required filing fee, the filing of the said motions did not constitute a waiver of the ground of lack of jurisdiction on their persons as defendants. The CA then concluded that there was no voluntary appearance on the part of respondents/defendants despite the filing of the aforesaid motions. The CA also rejected petitioners contention that the service made to Atty. Rogelio Pizarro, Jr. was deemed service upon respondents/defendants. In the case at bench, service upon Atty. Pizarro did not fall under the aforequoted rule and therefore cannot qualify as substituted service. Since the service made by Petitioners was defective, the Public Respondent court never did acquire jurisdiction over the persons of defendants and therefore correctly ordered the dismissal of the complaint. Petitioners moved for a reconsideration of the decision but it, too, was denied by the CA in its Resolution. Hence, the instant petition. The Court gave due course to the petition and required the parties to submit their respective memoranda. In compliance, the respondents filed their Memorandum, while the petitioners filed their Memorandum.

Respondents, through their counsel, Atty. Norby C. Caparas, Jr., filed a Motion to Dismiss on the ground that the complaint stated no cause of action. Petitioners filed their Comment on the Motion to Dismiss. A Supplemental Motion to Dismiss and Reply to the Comment on the Motion to Dismiss was filed by respondents, alleging an additional ground that petitioners failed to pay the required filing fee. The petitioners filed, their Opposition to the Supplemental Motion to Dismiss and Comment to the Reply to the Comment on the Motion to Dismiss. Thereafter, respondents filed a Second Supplemental Motion to Dismiss and Manifestation citing the following grounds: 1.) That the court has no jurisdiction over the person of the defending party. 2.) That the court has no jurisdiction over the subject matter of the claim. 3.) That the pleading asserting the claim states no cause of action.

Ruling: We find merit in the petition. Respondents, through counsel, filed a motion to dismiss, with only one ground, i.e., that the pleading asserting the claim states no cause of action. Under this ground, respondents raised the issues quoted hereunder: I. Defendants anchored their complaint on a WRONG Decree of Registration;

II. The Government of the Republic of the Philippines has recognized the authenticity of TCT No. 122452; and

III. Plaintiffs do NOT have the legal personality to quiet the title of the subject property. The filing of the above-mentioned Motion to Dismiss, without invoking the lack of jurisdiction over the person of the respondents, is deemed a voluntary appearance on the part of the respondents under the aforequoted provision of the Rules. The same conclusion can be drawn from the filing of the Supplemental Motion to Dismiss and Reply to the Comment on the Motion to Dismiss which alleged, as an additional ground for the dismissal of petitioners complaint, the failure of plaintiffs to pay the required filing fee again but failed to raise the alleged lack of jurisdiction of the court over the person of the respondents.

G.R. No. 176014

September 17, 2009

ALICE VITANGCOL and NORBERTO VITANGCOL, Petitioners, vs. NEW VISTA PROPERTIES, INC., MARIA ALIPIT, REGISTER OF DEEDS OF CALAMBA, LAGUNA, and the HONORABLE COURT OF APPEALS Respondents. Facts:

It was only in respondents Second Supplemental Motion to Dismiss dated November 27, 2000 that respondents for the first time raised the courts lack of jurisdiction over their person as defendants on the ground that summons were allegedly not properly served upon them. The filing of the said Second Supplemental Motion to Dismiss did not divest the court of its jurisdiction over the person of the respondents who had earlier voluntarily appeared before the trial court by filing their motion to dismiss and the supplemental motion to dismiss. The dismissal of the complaint on the ground of lack of jurisdiction over the person of the respondents after they had voluntarily appeared before the trial court clearly constitutes grave abuse of discretion amounting to lack of jurisdiction or in excess of jurisdiction on the part of the RTC. Quite apart from their voluntary appearance, respondents Supplemental Motion to Dismiss and Second Supplemental Motion to Dismiss were clearly in violation of Rule 15, Section 8 in relation to Rule 9, Section 1 of the Rules. Respondents failure to raise the alleged lack of jurisdiction over their persons in their very first motion to dismiss was fatal to their cause. They are already deemed to have waived that particular ground for dismissal of the complaint. The trial court plainly abused its discretion when it dismissed the complaint on the ground of lack of jurisdiction over the person of the defendants. Under the Rules, the only grounds the court could take cognizance of, even if not pleaded in the motion to dismiss or answer, are: (a) lack of jurisdiction over the subject matter; (b) existence of another action pending between the same parties for the same cause; and (c) bar by prior judgment or by statute of limitations. We likewise cannot approve the trial courts act of entertaining supplemental motions to dismiss which raise grounds that are already deemed waived. To do so would encourage lawyers and litigants to file piecemeal objections to a complaint in order to delay or frustrate the prosecution of the plaintiffs cause of action. To be sure, a trial court should be cautious before dismissing complaints on the sole ground of improper service of summons considering that it is well within its discretion to order the issuance and service of alias summons on the correct person in the interest of substantial justice. Accordingly, the Court finds that the CA erred in dismissing the petition and affirming the challenged orders of the RTC which dismissed the complaint on the ground of lack of jurisdiction over the person of the respondents who were the defendants. WHEREFORE, the petition is hereby GRANTED. The CAs Decision and the Resolution in CA -G.R. SP No. 65516 affirming the Orders of the RTC in Civil Case No. 00-98813 are reversed and set aside. Consequently, Civil Case No. 00-98813 is hereby ordered REINSTATED.

Subject of the instant controversy is lot in the name of Maria A. Alipit and Clemente A. Alipit, married to Milagros. On June 18, 1989, Maria and Clemente A. Alipit, with the marital consent of the latters wife, executed a Special Power of Attorney (SPA) constituting Milagros A. De Guzman as their attorneyin-fact to sell their property. Pursuant to her authority under the SPA, De Guzman executed a Deed of Absolute Sale conveying to New Vista Properties, Inc. (New Vista) a parcel of land with an area of 242,540 square meters situated in Calamba, Laguna. In the deed, however, the lot thus sold was described as lot no. 1702. Following the sale, New Vista immediately entered the subject lot, fenced it with cement posts and barbed wires, and posted a security guard to deter trespassers. SC interpose at this point the observation that the property delivered to and occupied by New Vista was denominated in the SPA as Lot No. 1735, while in the deed of absolute sale in favor of New Vista the object of the purchase is described as Lot No. 1702. The controversy arose more than a decade later when respondent New Vista learned that the parcel of land it paid for and occupied, i.e., Lot No. 1702, was being claimed by petitioners Vitangcol on the strength of a Deed of Absolute Sale for Lot No. 1702 entered into on August 14, 2001 by and between Vitangcol and Maria Alipit. New Vista lost no time in protecting its rights by, first, filing a notice of adverse claim over the certificate of title, followed by commencing a suit for quieting of title before the RTC. Vitangcol moved to dismiss the complaint which New Vista duly opposed. An exchange of pleadings then ensued. On June 27, 2003, or before Maria Alipit and Vitangcol could answer, New Vista filed an amended complaint, appending thereto a copy of the 1989 deed of absolute sale De Guzman, as agent authorized agent of the Alipits, executed in its favor. Thereafter, Vitangcol filed a motion to dismiss, followed by a similar motion interposed by Maria Alipit which New Vista countered with an opposition. Unlike in its original complaint, New Vistas amended complaint did not have, as attachment, the SPA. (PLS. TAKE NOTE) It, however, averred that Clemente and Maria Alipit had ratified and validated the sale of Lot No. 1702 by their having delivered possession of said lot to New Vista after receiving and retaining the purchase price therefor.

Ruling of the RTC The trial court denied Vitangcols and Maria Alipits separate motions to dismiss the amended complaint. As there held by the RTC, the amended complaint sufficiently stated a cause of action.

From the above order, Vitangcol sought reconsideration. RTC granted reconsideration and dismissed the amended complaint. In reversing itself, the RTC made much of the fact that New Vista did not attach the SPA to the amended complaint. To the RTC, this omission is fatal to New Vistas cause of action for quieting of title, citing in this regard the pertinent rule when an action is based on a document. Aggrieved, New Vista interposed an appeal before the CA.

Barraza v Campos Facts:

Ruling of the CA CA reversed the RTC Order, reinstating New Vistas amended complaint for quieting of title, and directing Vitangcol and Maria Alipit to file their respective answers thereto. CA denied Vitangcols motion for reconsideration. Hence, the instant petition.

Issue: Whether lack of cause of action is a ground for a dismissal of the complaint through a motion to dismiss under Rule 16 of the ROC. Held: No.

Lack of cause of action is not a ground for a dismissal of the complaint through a motion to dismiss under Rule 16 of the Rules of Court. For the determination of a lack of cause of action can only be made during and/or after trial. What is dismissible via that mode is FAILURE OF THE COMPLAINT TO STATE A CAUSE OF ACTION Sec. 1(g) of Rule 16 of the Rules of Court provides that a motion may be made on the ground "that the pleading asserting the claim states no cause of action." The rule is that in a motion to dismiss, a defendant hypothetically admits the truth of the material allegations of the ultimate facts contained in the plaintiffs complaint. When a motion to dismiss is grounded on the failure to state a cause of action, a ruling thereon should, as a rule, be based only on the facts alleged in the complaint. However, this principle of hypothetical admission admits of exceptions. Among others, there is no hypothetical admission of conclusions or interpretations of law which are false; legally impossible facts; facts inadmissible in evidence; facts which appear by record or document included in the pleadings to be unfounded; allegations which the court will take judicial notice are not true; and where the motion to dismiss was heard with submission of evidence which discloses facts sufficient to defeat the claim. New Vistas threshold contention that De Guzmans SPA to sell should not be considered for not having been incorporated as part of its amended complaint is incorrect since Vitangcol duly submitted that piece of document in court in the course of the June 7, 2004 hearing on the motion to dismiss. Thus, the trial court acted within its discretion in considering said SPA relative to the motion to dismiss the amended complaint. The trial court, however, erred in ruling that, taking said SPA into account, the amended complaint stated no cause of action. Indeed, upon a consideration of the amended complaint, its annexes, with the June 18, 1989 SPA thus submitted, the Court is inclined, in the main, to agree with the appellate court that the amended complaint sufficiently states a cause of action.

The petition at bar evolved from a dispute between brother and sister over the use of the business name or style "GATCHALIAN THE HOUSE OF NATIVE LECHON Alleging grave abuse of discretion amounting to lack of jurisdiction on the part of respondent Presiding Judge, spouses-petitioners, through the remedy of certiorari under Rule 65, Revised Rules of Court, prayed for the annulment of the latter's judgment by default Private respondent filed a Complaint for damages based on defendants' (petitioners herein) use of plaintiff's (now private respondent) trade name and style of "Gatchalian-The House of Native Lechon and Restaurant" Petitioners as defendants therein filed an "Urgent Ex- Parte Motion" for extension of time of 15 days within which to file an Answer which the Court granted Instead of filing the Answer within the extended period of fifteen (15) days, defendants filed through their counsel, Atty, Esmeraldo M. Gatchalian, a "Motion to Dismiss Complaint Together With Prayer for Preliminary Injunction o That the complaint states no cause of action o That venue is improperly laid o That there is another action pending between the same parties for the same cause of action Private respondent filed an "Ex-Parte Motion to Declare Defendants in Default" on o that the defendants failed to file an answer within the reglementary period Court finding the reasons stated in the "Ex-Parte Motion to Declare Defendants in Default" filed by plaintiff, through counsel to be well-taken, granted said motion and allowed the plaintiff to present evidence exparte Respondent judge rendered his decision in favor of the plaintiff Defendants through counsel moved for the reconsideration of the court's order o defendants were denied of their rights of procedural due process o defendants were also denied of their day in court Court denied defendants' motion for reconsideration Upon an "Ex-Parte Motion for Issuance of Writ of Execution", the Court in its Order granted the motion and caused the issuance of a writ of execution Defendants through a new counsel, Atty. M. Castillo, filed an "Urgent Omnibus Motion" o Court denied defendants' Omnibus Motion Hence this petition

Issue:

W/N instead of filing an answer, the act of filing a motion to dismiss the compliant was proper

Held:

This is clearly allowed under Section 1, Rule 16, Rules of Court

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A motion to dismiss is the usual, proper and ordinary method of testing the legal sufficiency of a complaint. The issue raised by a motion to dismiss is similar to that formerly raised by a demurrer under the Code of Civil Procedure A motion to dismiss under any of the grounds enumerated in Sec. 1, Rule 8 (now Sec. 1, Rule 16) of the Rules of Court, must be filed within the time for pleading, that is, within the time to answer Private respondents' argument that although a motion to dismiss interrupts the running of the period within which to file an answer, this refers to the original period of fifteen (15) days within which to file the responsive pleading and not to the extension of time within which to file the answer, is without merit. There is nothing in the Rules which provide, directly or indirectly, that the interruption of the running of the period within which to file an answer when a motion to dismiss the complaint is filed and pending before the court, refers only to the original period of fifteen (15) days and not to the extension of time to file the answer as granted by the court. It may be true that under Section 4 of Rule 16, if the motion to dismiss is denied or if the termination thereof is deferred, themovant shall file his answer within the time prescribed by Rule 11, computed from the time he received notice of the denial or deferment, unless the court provides a different period This Section 1 of Rule 11 in relation to Section 4 of Rule 16 allows the defendant to file his answer not only within the original fifteen (15) days period but also within "a different period (as) fixed by the court. " Without resolving petitioners' Motion to Dismiss the Complaint, respondent Judge declared defendant in default in his Order of December 1, 1978. This is clearly in contravention of the Rules for under Section 3, Rule 16, the court after hearing may deny or grant the motion or allow amendment of pleading, or may defer the hearing and determination of the motion until the trial if the ground alleged therein does not appear to be indubitable. And it is only from the time that the movant receives notice of the denial or deferment of the motion to dismiss that the period within which he shall file his answer is computed, which period is prescribed by Rule 11, unless the court provides a different period Simeon Mandae, plaintiff and appellant, vs. Eustaquio Gumarad and Regino Lagundino, defendants and appellees "It appearing that the motion to dismiss was filed before the expiration of the period for filing defendants' answer as extended by the court, there was no legal reason for declaring defendants in default. " Epang vs. Ortin de Layco "The petitioner having filed a motion to dismiss, he was entitled to have that motion resolved before being required to answer, since a motion to dismiss interrupts the time to plead. It follows, therefore, that the petitioner was incorrectly declared in default, and the holding of the trial of the case on the merits in his absence, without notice to him of the day of the hearing, was a denial of due process. Consequently, the decision of the Court of Industrial Relations was invalid and must be set aside." CARMELITA T. PANGANIBAN, petitioner, vs.

PILIPINAS SHELL PETROLEUM CORPORATION, respondent. FACTS: Petitioner entered into a Sublease and Dealer Agreement (SLDA) with Respondent o Respondent leased a gasoline station o Respondent is not the owner of the lot subject of the lease; Respondent is only leasing the lot from the owner, Serafin Vasquez, pursuant to a lease agreement effective for 15 years. In a letter, private respondent notified petitioner that the SLDA was expiring. Believing that the SLDA had not yet expired and was still effective until December 31, 2002, petitioner continued to pay rentals for the gasoline station. o Private respondent refused to accept the payments. Petitioner filed a Petition for Declaratory Relief with the RTC of Makati o Respondent filed an Answer. Respondent filed an Unlawful Detainer case against Petitioner with the MTC of Caloocan o 8 months after filing its Answer, Respondent filed a Manifestation with Motion to Dismiss. Private respondent claimed that the issue of the renewal of the lease should be raised in the unlawful detainer case pending before the Metropolitan Trial Court. Petitioner moved for the suspension of the proceedings since the other case filed with the Regional Trial Court involved the same parties and issues. DENIED MTC decided in favor of the Respondents (Unlawful Detainer case) o Ordered Petitioner to vacate the premises and surrender possession thereof and to pay Respondents Petitioner appealed from the said decision which is now pending with the RTC of Caloocan RTC ordered the dismissal of the Petition for Declaratory Relief o Considering that there has been a breach of the SLDA and that an ejectment case has been filed, this petition is no longer proper RTC denied the MR of Petitioner for failure of the latter to appear at the hearing Petitioner filed a petition for review under Rule 45 of the Rules of Court with the Supreme Court o SC issued a Resolution referring the said Petition to the CA CA denied the petition o Denied the Petition for Declaratory Relief on the ground of litis pendentia The case of Declaratory Relief should be abated in favor of the case for Unlawful Detainer o With regard to Petitioners contention that it is this Court which has jurisdiction over her petition, the CA pointed out that it was merely yiel ding to the Courts order; Accordingly, the CA has concurrent jurisdiction with this Court and there is no special reason for this Court to take Cognizance of the case

ISSUE: Whether the CA erred in affirming the dismissal of the case on the ground of litis pendentia which was filed long after the Respondent filed its Answer? RULING: Close but no cigar. NO!

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The Court of Appeals applied Rosales and University Physicians Services, Inc. in sustaining the dismissal of the action for declaratory relief to give way to the ejectment suit. o Rosales Case: Lessee filed an action for continued enforcement of the lease contract Lessor filed a case for unlawful detainer Lessor filed a MTD the complaint of the Lessee because of the pendency of the ejectment case Lesse filed a MTD for the dismissal of the ejectment case also on the ground of litis pendentia contending that the case he file earlier should be entertained first Court held that if the plaintiff has any right to the extension of the lease at all, such right is a proper and legitimate issue that could be raised in the unlawful detainer case because it may be used as a defense to the action.' In other words, the matter raised in the Court of First instance of Cavite may be threshed out in the ejectment suit, in consonance with the principle prohibiting multiplicity of suits. And the mere fact that the unlawful detainer case was filed later, would not change the situation to depart from the application of the foregoing rule o University Physician Services Case: The issue of whether private respondent had the right to occupy the subject apartment unit should therefore be properly threshed out in an ejectment suit and not in an action for damages where the question of possession is likewise the primary issue to be resolved The requirement that a motion to dismiss should be filed within the time for filing the answer is not absolute. Even after an answer has been filed, a defendant can still file a motion to dismiss on the following grounds: (1) Lack of jurisdiction, (2) Litis pendentia, (3) Lack of cause of action, and; (4) Discovery during trial of evidence that would constitute a ground for dismissal Litis pendentia is also one of the grounds that authorize a court to dismiss a case motu proprio. In this case, the bona fide existence of litis pendentia is beyond dispute. Requisites of litis pendentia: (1) (2) (3) The identity of parties, or at least such as representing the same interests in both actions; The identity of rights asserted and relief prayed for, the relief being founded on the same facts; The identity of the two cases such that judgment in one, regardless of which party is successful, would amount to res judicata in the other

We have set the relevant factors that a court must consider when it has to determine which case should be dismissed given the pendency of two actions: i. ii. The date of filing, with preference generally given to the first action filed to be retained Whether the action sought to be dismissed was filed merely to preempt the latter action or to anticipate its filing and lay the basis for its dismissal Whether the action is the appropriate vehicle for litigating the issues between the parties

iii.

The mere fact that the action for declaratory relief was filed earlier than the case for unlawful detainer does not necessarily mean that the first case will be given preference. In Cruz v. Court of Appeals, we have ruled that the earlier case can be dismissed in favor of the later case if the later case is the more appropriate forum for the ventilation of the issues between the parties. Clearly, the interpretation of a provision in the SLDA as to when the SLDA would expire is the key issue that would determine petitioner's right to possess the gasoline service station. When the primary issue to be resolved is physical possession, the issue should be threshed out in the ejectment suit, and not in any other case such as an action for declaratory relief to avoid multiplicity of suits. Moreover, the Metropolitan Trial Court had already resolved the unlawful detainer case in favor of private to respondent even before the Regional Trial Court dismissed the action for declaratory relief. It would have been an exercise in futility for the Regional Trial Court to continue the proceedings in the action for declaratory relief when the Metropolitan Trial Court had already ruled that the term of the SLDA was for only five years. Also, the decision of the MTC would amount to res judicata should it attain finality. Laches definitely had not yet set in when private respondent filed the unlawful detainer case 269 days after the expiration of the SLDA. Private respondent did not sleep on its right when it filed the unlawful detainer case well within the prescriptive period for filing the action Private respondent therefore shall one year or 365 days from July 31, 1995 to file the case for unlawful detainer; The expiration of the term of the lease immediately gives rise to a cause of action, of which a demand is no longer necessary. BA finance v hon. Pineda cfi- rizal judge and Antonio sy respondents FACTS: CFI- NUEVA ECIJA (1st case) Private respondent Antonio Sy was adjudged liable in favor of the plaintiffs in Civil Case for damages resulting from a vehicular accident involving a cargo truck supposedly owned by him. CFI-RIZAL (2nd case) magulo na facts... -SY filed civil case which was assigned to the sala presided over by the respondent Judge (di sinabi sa case kong anung cv case )Claiming that the adverse decision in 1st case was due to the mishandling of the same by the counsel who represented him therein -defendants 2nd case were petitioner BA Finance Corporation whom private respondent claims to be the real owner of the cargo truck involved in the accident; the Metro-Taisho Insurance Corporation, which issued the insurance policy covering the same; Atty. Ireneo Calderon, the counsel who represented him in 1st case; and Robert Chua, the driver of the other vehicle that figured in the accident

Petitioner questions the preference given by the RTC and the CA to the unlawful detainer case filed by private respondent. Petitioner maintains that based on priority in time, the action for declaratory relief, the case filed earlier, should not have been abated in favor of the ejectment suit, a case filed much later. Litis pendentia as a ground for the dismissal of a civil action refers to that situation wherein another action is pending between the same parties for the same cause of actions and that the second action becomes unnecessary and vexatious.

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-Petitioner BA Finance Corporation was served summons , Eleven days later, petitioner, through counsel, filed a motion for extension of time to file answer and/or motion to dismiss -the respondent Judge gave the petitioner a period of 15 days, counted from January 2, 1982 and to expire on January 18, 1982 (sic), within which to file its answer or motion to dismiss the complaint. -On January 13, 1982, petitioner filed a motion to dismiss on the ground that the complaint states no cause of action- DENIED, for being "devoid of merit." -Petitioner filed MR of the order dated March 1, 1982. - respondent filed motion to strike out the petitioner's motion for reconsideration on the alleged ground that the motion for reconsideration was filed out of time. It was argued by counsel for the private respondent that when the petitioner filed its motion to dismiss on January 13, 1982, it had already used 11 days out of the 15 days' extension granted to it by the Court in the order of January 4, 1982; that having received the order denying its motion to dismiss on March 8, 1982, the petitioner had only the remainder of 4 days or up to March 12, 1982 within which to file its answer to the complaint; consequently, the filing of the motion for reconsideration on March 17, 1982 was already beyond the reglementary period for filing the answer- granted and petitioner was declared in default. -On April 19, 1982, the petitioner filed a motion to lift order of default- denied - petitioner filed MR of default order- granted and ordering it to file its answer to the complaint within 15 days from notice thereof. The petitioner had by then, or on May 11, 1982, already filed its answer. -MR- judge reversed its decision on default The proceedings taken subsequent thereto are not clear from the record. RTC ruled that for respondents and ordered the defendants therein, including herein petitioner, but excluding Atty. Ireneo Calderon, to pay unto the private respondent the total sum of P 228,255.64 as moral and exemplary damages, and attorney's fees. the provision in question, Section 4 of Rule 16 of the Rules of Court SEC. 4. Time to plead. If the motion to dismiss is denied or if determination thereof is deferred, the movant shall file his answer within the period prescribed by Rule 11, computed from the time he received notice of the denial or deferment, unless the court provides a different period.

answer respondent Judge stubbornly persisted in maintaining his view that the answer of the respondent to the complaint was filed out of time by alleging two new grounds, namely: (1) the motion for reconsideration filed by the petitioner against the denial of its motion to dismiss is a mere scrap of paper for lack of proof of service; and (2) the motion for reconsideration filed by the petitioner against the order of May 4, 1982 which denied the petitioner's motion to lift order of default is pro-forma for being Identical to petitioner's opposition to the plaintiff's motion to declare the petitioner in default. The lack of palpable merit of said grounds leads to a natural impression that the respondent Judge was determined to prevent the petitioner from being given a chance to defend itself in the case filed against it by the private respondent, contrary to repeated exhortations and pronouncements from the Supreme Court frowning upon judgments by default on purely technical grounds. The new arguments resorted to by the respondent Judge were not even mentioned in the motion of the private respondent to strike out the answer, nor were they mentioned by the respondent Judge in his first order declaring the petitioner in default. The motion to strike out filed by the private respondent and the order of respondent Judge dated April 5, 1982 declaring the petitioner in default made reference only to the alleged fact that the motion for reconsideration of the denial of the motion to dismiss was filed beyond the reglementary period. Such ground, as aforementioned, had been acknowledged by the respondent Judge himself in his order of July 14, 1982 to be erroneous. The allegation that the motion for reconsideration of the denial of the motion to dismiss filed by the petitioner lacks the requisite notice of hearing and proof of service is a factual distortion. On page 4 of said motion for reconsideration which has been attached as Annex "F" of the petition ,it clearly appears that the petitioner's counsel set the said motion for hearing on April 16, 1982 and that a copy of the same was sent by registered mail to the counsel for the private respondent on March 17, 1982. The private respondent filed a motion to strike out the said motion for reconsideration thereby showing that private A. respondent had notice of the motion for reconsideration long before the scheduled hearing thereof on April 16, 1982. The imputation that the motion to reconsider the order of May 4, 1982 which denied the petitioner's motion to lift order of default is pro-forma reveals a misconception of the concept of pro-forma motions for reconsideration. It is not every motion for reconsideration that reiterates grounds or arguments aired in a previous motion that may be declared pro-forma. It will be noted that the motion for reconsideration herein involved is of an interlocutory order, and not of a final judgment or final order. There should be a distinction in determining whether a motion for reconsideration may be declared pro-forma depending on whether it is directed against a final judgment or order, or only against an interlocutory order. In the case of the former, a repetition of arguments or grounds already sufficiently discussed in prior incidents may properly be categorized as being merely for purposes of delay. In the case of interlocutory orders, a reiteration of the ground or argument previously advanced is not necessarily indicative that the movant filed the motion merely for gaining delay. It must be remembered that, normally, when an interlocutory order is sought to be reviewed or annulled by means of any of the extra legal remedies of prohibition or certiorari, it is required that a motion for reconsideration of the question order must first be filed, such being considered a speedy and adequate remedy at law which must first be resorted to as a condition precedent for filing of any of such proceedings (Secs. 1 and 2, Rule 65, Rules of Court). There is no similar requirement in taking an appeal from a final judgment or order should the questioned interlocutory order be subject to attack only on one ground, as in the case of the default declaration herein involved, a motion for reconsideration against the order complained of would necessarily and inevitably contain a repetition of the ground previously alleged. In so doing, the movant is praying the court to give his motion a second look, in the hope that the court would realize its supposed error, correct the same, and thereby preclude the necessity of seeking relief in a higher tribunal. WHEREFORE, the petition is hereby granted. G.R. No. 94733 February 17, 1993

ISSUE:WON judge erred in declaring petitioner in default?YES RULING: It is undisputed that the petitioner was given an extension of time within which to file its answer which was to expire on January 18, 1982. On January 13, 1982, it filed a motion to dismiss which was denied, and notice of which was served on the petitioner on March 8, 1982. When the petitioner filed a motion for reconsideration on March 17, 1982, it was well within the 15-day period within which to file the answer counted from the date it received notice of the denial of its motion to dismiss which was on March 8, 1982. Yet, on the erroneous belief that the petitioner had only to its credit the balance of the period to answer that it did not consume by the time it filed its motion to dismiss, the respondent Judge ruled that the filing of the motion for reconsideration on March 17, 1982 was already beyond the reglementary period and forthwith declared tile defendant in default. After declaring the petitioner in default in the order of April 5, 1982 and after denying the motion to lift order of default in the order of May 4, 1982, the respondent Judge made a complete turnabout in his order of June 10, 1982 by setting aside the default declaration of the petitioner, giving no reason therefor except the catch phrase "in the interest of justice." Then, another change of mind on the part of the respondent Judge was manifested in his order of July 14, 1982 which reiterated the order of April 5, 1982 declaring the petitioner in default. This time, the respondent Judge woke up to his mistake and ruled that the petitioner had 15 days from the date it received notice of tile denial of its motion to dismiss on March 11, 1982 within which to file its

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MUNICIPALITY OF BIAN, LAGUNA, represented by Hon. Bayani Alonte, Municipal Mayor of Bian, Laguna, petitioner, vs. HON. COURT OF APPEALS and JESUS M. GARCIA, respondents. Facts: On September 27, 1989, petitioner filed Civil Case No. 2473 for unlawful detainer, with a prayer for a writ of preliminary mandatory injunction, against private respondent alleging that it was no longer amenable to the renewal of its 25-year lease contract because of its pressing need to use the subject lot for national and provincial offices. In respondents answer, he contends that the contract of lease had not yet expired and, assuming that it had expired, he has exercised his option to stay in the premises for another 25 years as expressly provided in the said contract. Petitioner filed its reply to private respondent's answer. On October 16, 1989, private respondent filed this time a "Motion for Preliminary Hearing as if a Motion to Dismiss Has Been Filed" on the ground that the complaint states no cause of action, reiterating its argument that the original term of 25 years stipulated in the contract of lease had not yet expired and that, at any rate, under said contract he has the exclusive option to renew the same for another 25 years. On October 26, 1989, MTC - ordered respondent to vacate the premises subject of the ejectment case. On November 8, 1989, private respondent filed a "Manifestation/Motion" before said trial court praying that the issues raised in the motion for preliminary hearing, apparently because it was in the nature of a motion to dismiss, be first resolved instead of rendering judgment on the pleadings. Thereafter, on November 10, 1989, private respondent received a copy of the October 26, 1989 decision of the MTC, hence he filed a notice of appeal to the RTC. --------- I added this discussion about rule 15 kasi baka biglang itanong-----RTC granted petitioner's motion for discretionary execution and issued a writ of execution

ISSUE: WON MTC committed a grave abuse of discretion or exceeded its jurisdiction when it failed to conduct a preliminary hearing, as prayed for in private respondent's "Motion for Preliminary Hearing as if a Motion to Dismiss Has Been Filed," before summarily rendering judgment on the merits of the case HELD: NO. The said motion of private respondent is anchored on the ground that the complaint allegedly states no cause of action since the original term of 25 years stipulated in the contract of lease had not yet expired and assuming that it had expired, private respondent had made known to petitioner his exclusive option to renew it for another 25 years. Section 5, Rule 16 of the Rules of Court (old rule pa to...) pertinently provides: Sec. 5. Pleading grounds as affirmative defenses. Any of the grounds for dismissal provides for in this Rule, except improper venue, preliminary hearing MAY be had thereon as if a motion to dismiss had been filed. The aforequoted provision allows the grounds for a motion to dismiss to be set up as affirmative defenses in the answer if no motion to dismiss has been filed. However, contrary to the claim of private respondent, the preliminary hearing permitted under the said provision is NOT mandatory even when the same is prayed for. It rests largely on the sound discretion of the trial court. The use of the word "may" in said provision shows that such a hearing is not a matter of right demandable from the trial court. Where the provision reads "may," this word shows that it is not mandatory but discretional. It is an auxiliary verb indicating liberty, opportunity, permission and possibility. G.R. No. 109068. January 10, 1994.* GAUDENCIO GUERRERO, petitioner, vs. REGIONAL TRIAL COURT OF ILOCOS NORTE, BR. XVI, JUDGE LUIS B. BELLO, JR., PRESIDING, AND PEDRO G. HERNANDO, respondents. Facts: PETITION for review of the orders of the Regional Trial Court of Ilocos Norte.

On December 29, 1989, respondent filed with the CA a petition for certiorari, with a prayer for the issuance of a writ of preliminary injunction, assailing the aforesaid order of execution pending appeal on the ground that petitioner failed to furnish private respondent with a copy of the motion contrary to Section 6, Rule 15 of the Rules of Court, hence the invalidity of the lower court's order which granted the writ of execution. CA - set aside the questioned order for being violative of the requirement in Section 6, Rule 15 of the Rules of Court which provides that no motion shall be acted upon by the court without proof of prior notice thereof to the adverse party. MR denied. ----------- RTC and CA ruled only on the issue under rule 15 so petitioner filed this certiorari in SC-------

Filed by petitioner as an accion publiciana against private respondent, this case assumed another dimension when it was dismissed by respondent Judge on the ground that the parties being brothers-in-law the complaint should have alleged that earnest efforts were first exerted towards a compromise. Admittedly, the complaint does not allege that the parties exerted earnest efforts towards a compromise and that the same failed. However, private respondent Pedro G. Hernando apparently overlooked this alleged defect since he did not file any motion to dismiss nor attack the complaint on this ground in his answer. It was only at the pre-trial conference, that the relationship of petitioner Gaudencio Guerrero and respondent Hernando was noted by respondent Judge Luis B. Bello, Jr., they being married to half-sisters hence are brothers-in-law, and on the basis thereof respondent Judge gave petitioner five (5) days to file his motion and amended complaint to allege that the parties were very close relatives, their respective wives being sisters,

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and that the complaint to be maintained should allege that earnest efforts towards a compromise were exerted but failed. Apparently, respondent Judge considered this deficiency a jurisdictional defect. Guerrero moved to reconsider the Order claiming that since brothers by affinity are not members of the same family, he was not required to exert efforts towards a compromise. Guerrero likewise argued that Hernando was precluded from raising this issue since he did not file a motion to dismiss nor assert the same as an affirmative defense in his answer. Respondent Judge denied the motion for reconsideration holding that [f]ailure to allege that earnest efforts towards a compromise is jurisdictional such that for failure to allege same the court would be deprived of its jurisdiction to take cognizance of the case. He warned that unless the complaint was amended within five (5) days the case would be dismissed. The 5-day period having expired without Guerrero amending his complaint, respondent Judge dismissed the case, declaring the dismissal however to be without prejudice. Guerrero appeals by way of this petition for review the dismissal by the court a quo. He raises these legal issues: (a) whether brothers by affinity are considered members of the same family contemplated in Art. 217, par. (4), and Art. 222 of the New Civil Code, as well as under Sec. 1, par. (j), Rule 16, of the Rules of Court requiring earnest efforts towards a compromise before a suit between them may be instituted and maintained; and, (b) whether the absence of an allegation in the complaint that earnest efforts towards a compromise were exerted, which efforts failed, is a ground for dismissal for lack of jurisdiction.

In his Comment, Hernando argues that x x x x although both wives of the parties were not impleaded, it remains a truism that being spouses of the contending parties, and the litigation involves ownership of real property, the spouses interest and participation in the land in question cannot be denied, making the suit s till a suit between half-sisters x x x x

Finding this argument preposterous, Guerrero counters in his Reply that his wife has no actual interest and participation in the land subject of the xxx suit, which the petitioner bought, according to his complaint, before he married his wife. This factual controversy however may be best left to the court a quo to resolve when it resumes hearing the case. WHEREFORE, the petition is GRANTED and the appealed Orders are SET ASIDE. The Regional Trial Court of Laoag City, Branch 16, or whichever branch of the court the case may now be assigned, is directed to continue with Civil Case No. 10084-16 with deliberate dispatch. SO ORDERED. G.R. No. L-45107 November 11, 1991 BENEDICTO RAMOS, petitioner, vs. HON. ELVIRO L. PERALTA, Presiding Judge, Branch XVII, Court of First Instance of Manila, SPOUSES JUVENCIO ORTANEZ and JULIANA S. ORTANEZ, MINDANAO INSURANCE CO., INC. and P. R. ROMAN, INC., respondents. Facts:

Ruling: Considering that Art. 151 herein-quoted starts with the negative word No, the requirement is mandatory that the complaint or petition, which must be verified, should allege that earnest efforts towards a compromise have been made but that the same failed, so that, [i]f it is shown that no such efforts were in fact made, the case must be dismissed. Further, Art. 151 is complemented by Sec. 1, par. (j), Rule 16, of the Rules of Court which provides as a ground for a motion to dismiss (t)hat the suit is between members of the same family and no earnest efforts towards a compromise have been made. But the instant case presents no occasion for the application of the above-quoted provisions. As early as two decades ago, we already ruled in Gay on v. Gayon that the enumeration of brothers and sisters as members of the same family does not comprehend sisters-in-law. In that case, then Chief Justice Concepcion emphasized that sisters-in-law (hence, also brothers-in-law) are not listed under Art. 217 of the New Civil Code as members of the same family. Since Art. 150 of the Family Code repeats essentially the same enumeration of members of the family, we find no reason to alter existing jurisprudence on the matter. Consequently, the court a quo erred in ruling that petitioner Guerrero, being a brother-in-law of private respondent Hernando, was required to exert earnest efforts towards a compromise before filing the present suit. Petitioner started occupying the Salgado fishpond in 1964 by virtue of a lease contract executed in his favor by private respondents spouses Juvencio and Juliana Ortanez. Unknown to petitioner, title to said property was in the name of Philippine International Surety Co., Inc., a corporation founded, organized and 99.5%-owned by the Salgado spouses. Later renamed Mindanao Insurance Co., Inc., said corporation was placed under receivership and liquidation on June 20, 1968. Thereafter on February 23, 1976, respondent P. R. Roman, Inc. purchased from Mindanao Insurance the Salgado fishpond. The deed of sale was signed by the receiver and duly approved by the liquidation court. Apparently due to this development, the spouses Ortanez refused to accept from petitioner the advance rentals on the fishpond due on March 15, 1976 in the amount of P30,000.00. On or about May 1, 1976, petitioner received a letter from Don Pablo R. Roman informing him of the latter's acquisition of the fishpond and intention to take possession thereof. In his letter-reply, petitioner reminded Mr. Roman of his lease contract over the fishpond and refused to consent to the intended take over. Notwithstanding petitioner's objection, P. R. Roman, Inc. took over possession of the fishpond. On August 2, 1976, petitioner filed before the CFI of Manila an action against private respondents Juvencio and Juliana Ortanez, Mindanao Insurance and P. R. Roman, Inc. for consignation of the

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sum of P70,000.00 representing advance rentals on the fishpond which he had previously tendered to, but refused by the spouses Ortanez and Pablo Roman. P. R. Roman, Inc. filed a motion to dismiss on the grounds that venue was improperly laid, the complaint states no cause of action and the court has no jurisdiction over the subject of the action or suit. In its motion to dismiss, P. R. Roman, Inc. cited the pendency before the then CFI of Bataan of Civil Case No 4102 instituted by P.R. Roman, Inc. against petitioner Benedicto Ramos on August 13, 1976 to quiet its title over the Salgado fishpond. (PLS. TAKE NOTE) Respondent CFI of Manila issued an order dismissing consignation case. o for the reason, principally, that there is already a case pending between the same parties and for the same cause in Court of First Instance of Bataan, which is precisely for the ownership of the subject matter of the property allegedly leased to the plaintiff herein. o In the said case, the defendant therein, Benedicto Ramos, who is the plaintiff in the case at bar, filed a motion for leave to file a third-party complaint against the spouses surnamed Ortanez and the Mindanao Insurance Company Inc. o All the issues respecting the fishpond, including the lease contract, are necessarily involved in the case pending now in Bataan. o Petitioner moved for reconsideration, but was unsuccessful. Hence this petition FOR REVIEW ON CERTIORARI.

Respondents contention:

Private respondents counter that while it may be true that theoretically, the main issue involved in a consignation case is whether or not the defendant is willing to accept the proffered payment, in the consignation case brought by petitioner, other issues were pleaded by petitioner himself, such as the validity and binding effect of the lease contract and the existence of the supposed obligor-obligee relationship. They further contend that a plaintiffs right of choice of venue is not absolute, but must invariably bow to the dismissal of the case because of litis pendentia which, in refutation of petitioner's argument, does not require that there is a prior pending action, merely that there is a pending action.

Issue: Whether petitioners contention is meritorious. Held: No.

Under the rules and jurisprudence, for litis pendentia to be invoked as a ground for the dismissal of an action, the concurrence of the following requisites is necessary: (a) Identity of parties or at least such as represent the same interest in both actions;

1. The respondent court erred in not holding that the only issue in consignation of funds is whether the defendant is willing to accept the proffered payment or not. 2. The respondent court erred in not holding that the prerogative of choosing the proper venue belongs to the plaintiff. 3. The respondent court erred in holding that the subsequent filing of Civil Case No. 4102 before the Court of First Instance of Bataan is a bar to the prosecution of Civil Case No. 103647 before it. Petitioners contention:

(b) Identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) The identity in the two cases should be such that the judgment that may be rendered in one would, regardless of which party is successful, amount to res judicata in the other. These requisites are present in the case at bar. It is worthwhile mentioning that in his basic petition for review, one of the assigned errors of petitioner is that the respondent court erred in not holding that the parties in quieting of title case are not the same as the parties in the consignation case. o However, in his brief, no further mention of this assigned error was made; a clear indication of petitioner's admission of the identity of parties in quieting case and consignation case, particularly as he filed a third party complaint in the quieting case against the spouses Ortanez and Mindanao Insurance. Anent the second element, petitioners contention that the only issue in a consignation case is whether or not the defendant is willing to accept the proffered payment is true only where there is no controversy with respect to the obligation sought to be discharged by such payment. o His consignation case, however, is not as simple. While ostensibly, the immediate relief sought for in his consignation case is to compel therein defendants to accept his advance rentals, the ultimate purpose of such action is to compel the new owner of the fishpond to recognize his leasehold rights and right of occupation. o In the last analysis, therefore, the issue involved in the consignation case is the right of possession over the fishpond intertwined with the validity and effectivity of the lease contract. o This is the same issue involved in quieting case.

Petitioner contends that the Bataan quieting-of-title case cannot serve as a bar to his Manila consignation Civil Case because they involve different issues. Quieting of title case deals with the question of ownership while the only issue involved in his consignation case is whether or not the defendant is willing to accept the proffered payment. In fact, petitioner posits, the action to quiet title is a useless futile exercise as he does not question P. R. Roman Inc.'s ownership of the fishpond under consideration, but merely wishes to assert his leasehold and possessory rights over said property under the "Kasunduan sa Pag-upa." He further contends that compelling him to litigate before the Bataan court would render nugatory his right as a plaintiff to choose the venue of his action. Besides, Consignation case was filed on August 2, 1976, ahead of Quieting of title case which was filed on a much later date, August 13, 1976, after the Manila CFI had already acquired jurisdiction over the consignation case.

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Although an action for quieting of title refers to ownership, P. R. Roman, Inc. in its complaint in the quieting case also raised its right of possession over the fish pond.

RES JUDICATA Whatever decision may be handed down in The Quieting case would constitute res judicata in the consignation case is beyond cavil. Should the Bataan court rule that the lease contract is valid and effective against P. R. Roman, Inc., the petitioner can compel it to accept his proffered payment of rentals; otherwise, he may not do so.

VENUE Petitioner next contends that the dismissal of the consignation case deprived him of his right to choose the venue of his action. Verily, the rules on the venue of personal actions are laid down generally for the convenience of the plaintiff and his witnesses. But this right given to the plaintiff is not immutable. It must yield to the greater interest of the orderly administration of justice, which as in this case, may call for the dismissal of an action on the basis of litis pendentia to obviate the possibility of conflicting decisions being rendered by two different courts. The Rules of Court are not perfect. It does not pretend to be able to make everyone happy simultaneously or consecutively or all the time. Even the Rules of Court has hierarchy of values; thus, the choice of venue may bow to dismissal of the case because of litis pendentia. At any rate, petitioner cannot complain of any inconvenience arising from the dismissal of the consignation case. Being the defendant in the quieting of title case, he cannot but litigate before the Bataan court, and bringing his consignation case before the same court would actually save him time, effort and litigation expenses.

Petitioner then filed with the RTC, Quezon City, a complaint against respondent for a sum of money. The trial Court issued an Order dismissing the complaint motu proprio on ground of lack of jurisdiction and improper venue because the plaintiff corporation has its principal office at Pasig City and the defendant is from Laoag City. Petitioner filed a MR together with an amended complaint alleging that the parties agreed that the proper venue for any dispute relative to the transaction is Quezon City. The trial court granted the motion and admitted petitioners amended complaint. Summons was served upon respondent but failed to file an answer seasonably. Upon motion of the petitioner, the trial court issued an Order declaring him in default and allowing petitioner to present its evidence ex parte. However, the trial court was still unsure whether venue was properly laid, thus it issued an order directing petitioner to file a memorandum of authorities on whether it can file a complaint in QC. Subsequently the trial court again issued an order dismissing the complaint on the ground of improper venue for the reason that there is no connection whatsoever between QC and the parties. The official place of business is Pasig and the defendants residence is Laoag City were all stipulated in the Complaint. But the stipulation of the proper filing is at the back of the delivery receipt saying that the venue shall be in QC was not stated in the complaint nor admitted to have been signed by the defendant. Petitioner filed a MR but was denied by the trial court. Petitioner then filed with the CA a petition for review. But it was dismissed due to petitioners failure to attach an explanation why copies of the petition were not served by personal service but by registered mail, in violation of Sec. 11, Rule 14 of 1997 Rules of Civil Procedure. Petitioner filed a MR but it was also denied. Hence, this petition for Review on Certiorari under Rule 45.

Issue: W/N the trial court may dismiss motu proprio petitioners complaint on the ground of improper venue. Held: No trial court cannot motu proprio dismiss petitioners complain on the ground of improper venue. Clearly, in personal actions, the plaintiff may commence an action either in the place of his or her residence or the place where the defendant resides. However, the parties may agree to a specific venue which could be in a place where neither of them resides. Sec. 1, Rule 9 of the same Rules provides for instances when the trial court may motu proprio dismiss a claim, thus: Section 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim. In Dacoycoy v. Intermediate Appellate Court, this Court held that a trial court may not motu proprio dismiss a complaint on the ground of improper venue because justice and fairness take primary importance and the fact that the defendant failed to challenge the venue in a motion to dismiss, thus he cannot on appeal or in a special action be permitted to challenge the wrong venue, which is deemed waived. In Rudolf Lietz Holdings Inc. v. Registry of Deeds of Paraaque, the Court likewise held that a trial court may not motu proprio dismiss a complaint on the ground of improper venue, thus: Rule 9, Section 1 of the 1997 Rules of Civil Procedure states that defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. The court may only dismiss an action motu proprio in case of lack of jurisdiction over the subject matter, litis pendentia, res judicata and prescription. Therefore, the trial court in this case erred when it dismissed the petition motu

LITIS PENDENCIA

Finally, the rule on litis pendentia does not require that the later case should yield to the earlier case. What is required merely is that there be another pending action, not a prior pending action. Considering the broader scope of inquiry involved in the quieting of title case and the location of the property involved, no error was committed by the lower court in deferring to the Bataan court's jurisdiction.

Universal Robina Corporation vs Albert Lim GR 154338 October 5, 2007 Facts:

Petitioner sold to respondent grocery products in the total amount of P808,059.88. After tendering partial payments, respondent refused to settle his obligation despite petitioners repeated demands.

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proprio. It should have waited for a motion to dismiss or a responsive pleading from respondent, raising the objection or affirmative defense of improper venue, before dismissing the petition. Petition for Review is Granted G.R. No. 156164 September 4, 2009

The public respondents committed grave abuse of discretion in dismissing the criminal complaints for violation of P.D. No. 957 on the ground that jurisdiction lies with the HLURB. Nothing in P.D. No. 957 vests the HLURB with jurisdiction to impose the Section 39 criminal penalties. What the Decree provides is the authority of the HLURB to impose administrative fines under Section 38. We hold that the public respondent prosecutors should have made a determination of probable cause in the complaint before them, instead of simply dismissing it for prematurity. The implementing rules themselves expressly acknowledge that two separate remedies with differing consequences may be sought under the Decree, specifically, the administrative remedy and criminal prosecution. The determination of the criminal liability lies within the realm of criminal procedure as embodied in the Rules of Court. Petitioners raise a pure question of law involving jurisdiction over criminal complaints for violation of P.D. No. 957. Present case requires prompt action because public interest and welfare are involved in subdivision and condominium development. We stress that the immediate recourse to this Court that this Decision allows should not serve as a precedent in other cases where the prosecutor dismisses a criminal complaint, whether under P.D. No. 957 or any other law. Recourse to (a) the filing a motion for reconsideration with the City or Provincial Prosecutor, (b) the filing a petition for review with the Secretary of the DOJ, (c) the filing a motion for reconsideration of any judgment rendered by the DOJ, and (d) intermediate recourse to the CA, are remedies that the dictates of orderly procedure and the hierarchy of authorities cannot dispense with. Only the extremely peculiar circumstances of the present case compelled us to rule as we did; thus our ruling in this regard is a rare one that should be considered pro hac vice. SUSIE CHAN-TAN v JESSE C. TAN, FACTS: * Petitioner and respondent were married but later petitioner filed a case for the annulment of the marriage under Article 36 of the Family Code. The parties submitted to the court a compromise agreement approved * RTC -rendered a decision declaring the marriage void under Article 36 of the Family Code on the ground of mutual psychological incapacity of the parties. The trial court incorporated in its decision the compromise agreement of the parties on the issues of support, custody, visitation of the children, and property relations. *petitioner left the country bringing the children with her. *Respondent filed an omnibus motion seeking in the main custody of the children. The evidence presented by respondent established that petitioner brought the children out of the country without his knowledge and without prior authority of the trial court; petitioner failed to pay the P8,000,000 remaining balance for the Megaworld property which, if forfeited would prejudice the interest of the children; and petitioner failed to turn

SPS. LEONARDO AND MILAGROS CHUA, Petitioners, vs. HON. JACINTO G. ANG, DENNIS R. PASTRANA, IN THEIR CAPACITIES AS CITY AND ASSISTANT PROSECUTOR OF PASIG, RESPECTIVELY, FERDINAND T. SANTOS, ROBERT JOHN L. SOBREPEA, * NOEL M. CARIO, ROBERTO S. ROCO, ALICE ODCHIQUE-BONDOC, ROMULO T. SANTOS AND ENRIQUE A. SOBREPEA, JR., Respondents. (Guys ang labo ng case na to it did not mention anything about Rule 16.) Petition for certiorari filed by the spouses Leonardo and Milagros Chua. FACTS:

Petitioners (as buyers) and Fil-Estate Properties, Inc. (FEPI, as developers) executed a Contract to Sell a condominium unit. Despite the lapse of 3 years, FEPI failed to construct and deliver the contracted condominium unit to the petitioners. Petitioners filed on September 3, 2002 a Complaint-Affidavit before the Office of the City Prosecutor of Pasig City accusing the private respondents, as officers and directors of FEPI, of violating P.D. No. 957. The petitioners alleged that the private respondents did not construct and failed to deliver the contracted condominium unit to them and did not register the Contract to Sell with the Register of Deeds. Of the 7 private respondents, only private respondent Alice Odchique-Bondoc filed a CounterAffidavit. She countered that the City Prosecutor has no jurisdiction over the case since it falls under the exclusive jurisdiction of the HLURB. Assistant City Prosecutor Dennis R. Pastrana and Pasig City Prosecutor Jacinto G. Ang (public respondents), dismissed the complaint for being premature. o The Resolution held that it is the HLURB that has exclusive jurisdiction over cases involving real estate business and practices.

ISSUE: Whether the jurisdiction to entertain criminal complaints is lodged with the city prosecutor and that the jurisdiction of the HLURB under P.D. No. 957 is limited to the enforcement of contractual rights, not the investigation of criminal complaints? RULING: Yes.

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over to respondent documents and titles in the latters name-GRANTED *Petitioner filed MR alleging denial of due process on account of accident, mistake, or excusable negligenceDENIED which was filed beyond the 15-day reglementary period. It also declared petitioner in contempt of court for non-compliance with the partial judgment and the 17 May 2004 resolution. *petitioner filed a motion to dismiss and a motion for reconsideration of the Resolution. She claimed she was no longer interested in the suit. Petitioner stated that the circumstances in her life had led her to the conclusion that withdrawing the petition was for the best interest of the children. She prayed that an order be issued vacating all prior orders and leaving the parties at the status quo ante the filing of the suit-DENIED It held that the 30 March 2004 decision and the 17 May 2004 resolution had become final and executory upon the lapse of the 15-day reglementary period without any timely appeal having been filed by either party. The Courts Ruling: The petition has no merit. *** Petitioner further claims the trial court erred in applying to her motion to dismiss Section 7 of the Rule on the Declaration of Absolute Nullity of Void Marriages and Annulment of Voidable Marriages. Petitioner argues that if indeed the provision is applicable, the same is unconstitutional for setting an obstacle to the preservation of the family. ***Respondent stresses neither petitioner nor her counsel appeared in court at the hearings on respondent's omnibus motion or on petitioners motion to dismiss. SEC. 7. Motion to dismiss. No motion to dismiss the petition shall be allowed except on the ground of lack of jurisdiction over the subject matter or over the parties; provided, however, that any other ground that might warrant a dismissal of the case may be raised as an affirmative defense in an answer. The clear intent of the provision is to allow the respondent to ventilate all possible defenses in an answer, instead of a mere motion to dismiss, so that judgment may be made on the merits. In construing a statute, the purpose or object of the law is an important factor to be considered. Further, the letter of the law admits of no other interpretation but that the provision applies only to a respondent, not a petitioner. Only a respondent in a petition for the declaration of absolute nullity of void marriage or the annulment of voidable marriage files an answer where any ground that may warrant a dismissal may be raised as an affirmative defense pursuant to the provision. The only logical conclusion is that Section 7 of the Rule does not apply to a motion to dismiss filed by the party who initiated the petition for the declaration of absolute nullity of void marriage or the annulment of voidable marriage. Since petitioner is not the respondent in the petition for the annulment of the marriage, Section 7 of the Rule does not apply to the motion to dismiss filed by her. Section 7 of the Rule not being applicable, petitioners claim that it is unconstitutional for allegedly setting an obstacle to the preser vation of the family is without basis. Section 1 of the Rule states that the Rules of Court applies suppletorily to a petition for the declaration of absolute nullity of void marriage or the annulment of voidable marriage. In this connection, Rule 17 of the Rules of Court allows dismissal of the action upon notice or upon motion of the plaintiff, to wit: 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. x x x Section 2. Dismissal upon motion of plaintiff. Except as provided in the preceding section, a complaint shall not be dismissed at the plaintiffs instance save upon approval of the court and upon such terms and conditions as the court deems proper. x x x (Emphasis supplied) However, when petitioner filed the motion to dismiss on 4 November 2004, the 30 March 2004 decision and the 17 May 2004 resolution of the trial court had long become final and executory upon the lapse of the

15-day reglementary period without any timely appeal having been filed by either party. The 30 March 2004 decision and the 17 May 2004 resolution may no longer be disturbed on account of the belated motion to dismiss filed by petitioner. The trial court was correct in denying petitioners motion to dismiss. Nothing is more settled in law than that when a judgment becomes final and executory, it becomes immutable and unalterable. WHEREFORE, we DENY the petition for review. -----------------------------FULL TEXT-------------------------------------------

JOSE DELOS REYES, petitioner, vs. JOSEPHINE ANNE B. RAMNANI, respondent.

DECISION

DEL CASTILLO, J p: A judgment debt is enforced by the levy and sale of the debtor's property. 1 The issuance of the final certificate of sale to the purchaser at the execution sale is a mere formality upon the debtor's failure to redeem the property within the redemption period. EACIaT This Petition for Review on Certiorari seeks to reverse and set aside the May 13, 2005 Decision 2 of the Court of Appeals (CA) in CA-G.R. SP No. 87972, which affirmed the August 19, 2004 3 and November 10, 2004 4 Orders of the Regional Trial Court (RTC) of Pasig City, Branch 159 in Civil Case No. 24858. Also assailed is the August 3, 2005 Resolution 5denying petitioner's motion for reconsideration.

Factual Antecedents
On October 11, 1977, the trial court rendered a Decision in Civil Case No. 24858 in favor of respondent Josephine Anne B. Ramnani. Thereafter, a writ of execution was issued by the trial court. On June 6, 1978, then Branch Sheriff Pedro T. Alarcon conducted a public bidding and auction sale over the property covered by Transfer Certificate of Title (TCT) No. 480537 (subject property) during which respondent was the highest bidder. Consequently, a certificate of sale was executed in her favor on even date. On November 17, 1978, a writ of possession was issued by the trial court. On March 8, 1990, the certificate of sale was annotated at the back of TCT No. 480537. Thereafter, the taxes due on the sale of the subject property were paid on September 26, 2001. aESTAI On February 17, 2004, respondent filed a motion (subject motion) for the issuance of an order directing the sheriff to execute the final certificate of sale in her favor. Petitioner opposed on the twin grounds that the subject motion was not accompanied by a notice of hearing and that the trial court's October 11, 1977 Decision can no longer be executed as it is barred by prescription.

Ruling of the Regional Trial Court

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In its August 19, 2004 Order, the trial court granted the motion: WHEREFORE, premises considered, the motion is hereby GRANTED; and this Court hereby directs the Branch Sheriff of this Court to issue the corresponding Final Certificate of Sale in the above-entitled case in accordance with the rules immediately upon receipt hereof. SO ORDERED. 6 The trial court ruled that the prescription for the issuance of a writ of execution is not applicable in this case. Less than a year from the October 11, 1977 Decision, respondent exercised her right to enforce the same through the levy and sale of the subject property on June 6, 1978. Although the certificate of sale was annotated on TCT No. 480537 only on March 8, 1990, petitioner did not exercise his right to redeem the subject property within one year from said registration. Thus, what remains to be done is the issuance of the final certificate of sale which was, however, not promptly accomplished at that time due to the demise of the trial court's sheriff. The issuance of the final certificate of sale is a ministerial duty of the sheriff in order to complete the already enforced judgment. Petitioner moved for reconsideration which was denied by the trial court in its November 10, 2004 Order. Petitioner thereafter sought review via certiorari before the CA.

Petitioner contends that the motion dated February 16, 2004 filed by respondent to compel the sheriff to execute the final certificate of sale is fatally defective because it does not contain a notice of hearing. He further claims that the subject motion seeks to enforce the trial court's October 11, 1977 Decision which can no longer be done because 27 years have elapsed from the finality of said Decision.

Respondent's Arguments
Respondent contends that the subject motion is a non-litigious motion and that petitioner was not denied due process because he was given an opportunity to be heard by the trial court. She also points out that said motion is not barred by prescription, laches and estoppel considering that the levy and sale of the subject property was conducted on June 6, 1978 and petitioner failed to redeem the same. Our Ruling The petition lacks merit.

Respondent is entitled to the issuance of the final certificate of sale as a matter of right.
Petitioner, in essence, argues that the October 11, 1977 Decision was not timely executed because of respondent's failure to secure the final certificate of sale within 10 years from the entry of said judgment. This is erroneous. It is not disputed that shortly after the trial court rendered the aforesaid judgment, respondent moved for execution which was granted by the trial court. On June 6, 1978, the subject property was sold on execution sale. Respondent emerged as the highest bidder, thus, a certificate of sale was executed by the sheriff in her favor on the same day. As correctly held by the trial court, the October 11, 1977 Decision was already enforced when the subject property was levied and sold on June 6, 1978 which is within the five-year period for the execution of a judgment by motion under Section 6, 9 Rule 39 of the Rules of Court. It is, likewise, not disputed that petitioner failed to redeem the subject property within one year from the annotation of the certificate of sale on TCT No. 480537. The expiration of the one-year redemption period foreclosed petitioner's right to redeem the subject property and the sale thereby became absolute. The issuance thereafter of a final certificate of sale is a mere formality and confirmation of the title that is already vested in respondent. 10 Thus, the trial court properly granted the motion for issuance of the final certificate of sale. As to petitioner's claim that the subject motion is defective for lack of a notice of hearing, the CA correctly ruled that the subject motion is a non-litigious motion. While, as a general rule, all written motions should be set for hearing under Section 4, 11 Rule 15 of the Rules of Court, excepted from this rule are non-litigious motions or motions which may be acted upon by the court without prejudicing the rights of the adverse party. 12 As already discussed, respondent is entitled to the issuance of the final certificate of sale as a matter of right and petitioner is powerless to oppose the same. 13 Hence, the subject motion falls under the class of non-litigious motions. At any rate, the trial court gave petitioner an opportunity to oppose the subject motion as in fact he filed a Comment/Opposition 14 on March 1, 2004 before the trial court. Petitioner cannot, therefore, validly claim that he was denied his day in court. WHEREFORE, the petition is DENIED. The May 13, 2005 Decision and August 3, 2005 Resolution of the Court of Appeals in CA-G.R. SP No. 87972 are AFFIRMED. TaHIDS

Ruling of the Court of Appeals

The CA denied the petition in its assailed May 13, 2005 Decision: WHEREFORE, premises considered, the petition is hereby DENIED. The orders dated August 19, 2004 and November 10, 2004 of the RTC, Branch 159, Pasig City in Civil Case No. 24858 are hereby AFFIRMED. SO ORDERED. 7 In affirming the ruling of the trial court, the CA noted that the subject motion is a non-litigious motion, hence, the three-day notice rule does not apply. Further, it agreed with the trial court that the issuance of the final certificate of sale is not barred by prescription, laches or estoppel because the October 11, 1977 Decision was already executed through the levy and sale of the subject property on June 6, 1978. Respondent is entitled to the issuance of the final certificate of sale as a matter of right because petitioner failed to redeem the subject property. ETHaDC Issues 1.Whether the trial court acted with grave abuse of discretion amounting to lack or excess of jurisdiction in taking cognizance of the fatally defective motion and the subsequent issuance of the Orders dated August 19, 2004 and November 10, 2004; 2.Whether respondent is barred by prescription, laches or estoppel. 8

Petitioner's Arguments

20

Costs against petitioner. SO ORDERED.

Respondents subsequently assailed the trial court's Orders of May 16, 2006 and August 9, 2006 via certiorari to the Court of Appeals which, by the challenged Decision of February 26, 2007, annulled the trial court's orders, disposing as follows: WHEREFORE, premises considered, the petition is GRANTED. The Orders dated May 16, 2006 and August 9, 2006 issued by the Hon. Omar T. Viola are hereby ANNULLED and SET ASIDE. Accordingly, private respondent is declared IN DEFAULT and the Answer filed by private respondent is ordered EXPUNGED from the records of the case. The case is REMANDED to the Regional Trial Court, Branch 57, Angeles City, for further proceedings. ISCHET SO ORDERED. 9 (Emphasis in the original, underscoring supplied) DECISION Petitioner's Motion for Reconsideration having been denied by Resolution of May 16, 2007, it filed the present Petition for Review (with Prayer for the Issuance of Temporary Restraining Order/Preliminary Injunction) which ascribes error to the Court of Appeals in: . . . DECLARING PNB IN DEFAULT AND ORDERING THAT THE ANSWER FILED IN THE RTC BE EXPUNGED FROM THE RECORDS OF THE CASE [AND] . . . ANNULLING AND SETTING ASIDE THE ORDERS DATED MAY 16, 2006 AND AUGUST 9, 2006 OF THE RTC. 10 The petition fails. Petitioner's Motion for Extension of Time to File Answer was laden with glaring lapses. IHcSCA Petitioner had, following the reglementary 15-day period after service of summons (unless a different period is fixed by the court), 11 until May 5, 2006 within which to file an Answer or appropriate pleading. It filed the Motion for Extension, however, via a private courier on May 14, 2006, which was received by the trial court on May 15, 2006 or ten days late. It is a basic rule of remedial law that a motion for extension of time to file a pleading must be filed before the expiration of the period sought to be extended. 12 The court's discretion to grant a motion for extension is conditioned upon such motion's timeliness, the passing of which renders the court powerless to entertain or grant it. 13 Since the motion for extension was filed after the lapse of the prescribed period, there was no more period to extend. IEHaSc Petitioner was not candid enough to aver in the Motion for Extension that the period had lapsed, as it still toyed with the idea that it could get away with it. The allegations therein were crafted as if the said motion was timely filed. Notably, the May 16, 2006 Order expressed no inkling that the motion was filed out of time. The trial court either was deceived by or it casually disregarded the apparent falsity foisted by petitioner. Lest this Court be similarly deceived, it is imperative to carefully examine the facts. By petitioner's allegation in its Motion for Extension, it received the summons on April 24, 2006. This is belied by the Process Server's Return, which indicates that petitioner received the summons on April 20, 2006. Petitioner's counsel was to later clarify that it was only on April 24, 2006 that she received copies of the summons and complaint which were faxed from petitioner's main office. ACcaET

PHILIPPINE NATIONAL BANK, petitioner, vs. DEANG MARKETING CORPORATION and BERLITA DEANG, respondents.

CARPIO-MORALES, J p: The Philippine National Bank (petitioner) assails the February 26, 2007 Decision 1 and the May 16, 2007 Resolution 2 of the Court of Appeals, which set aside the Orders of May 16, 2006 and August 9, 2006 of the Regional Trial Court (RTC) of Angeles City, Branch 57, and consequently declared petitioner in default. ADHCSE Respondents Deang Marketing Corporation and Berlita Deang filed before the RTC of Angeles City a Complaint 3 against petitioner, docketed as Civil Case No. 12686, for reformation of contract and specific performance, claiming that a dacion en pago arrangement in the February 21, 2005 Consolidation and Restructuring Agreement 4 forged by them transformed respondents' outstanding loan obligations into a 7year term loan of P36,483,699.45. Summons was served on petitioner on April 20, 2006. 5 On May 15, 2006, respondents filed a Motion to Declare Defendant[-herein petitioner] in Default, 6 which they set for hearing on May 24, 2006. On even date, the trial court received petitioner's Motion for Extension of Time [30 days up to June 11, 2006] to File Answer 7 dated May 5, 2006. The following day, May 16, 2006 or eight days prior to the slated hearing of respondents' Motion to Declare [Petitioner] in Default, the trial court issued an Order denying said motion and granting petitioner's Motion for Extension of Time to File Answer. To the trial court's Order respondents filed a Motion for Reconsideration. AHCcET In the meantime, petitioner filed its Answer to the Complaint on May 25, 2006. The trial court, by Order of August 9, 2006, 8 denied respondents' Motion for Reconsideration of its May 16, 2006 Order denying their Motion to Declare petitioner in default and granting the latter's Motion for Extension.

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In requesting for a 30-day extension or until June 11, 2006 to file answer, petitioner apparently reckoned the date from which the extension would start on May 12, 2006, which was not the last day of the 15-day period sought to be extended, it being May 5, 2006. By computation, petitioner actually sought more than 30 days, contrary to the period of extension it purportedly requested. The counting of the period was erroneous, even if one uses the material dates alleged by petitioner. 14 Petitioner clearly disregarded elementary rules 15 and jurisprudence 16 on the matter. ECTHIA The flaws in petitioner's moves/representations reinforce respondents' claim that the Motion for Extension was "cunningly" dated May 5, 2006 (the last day to file a responsive pleading) to make it appear that it was timely filed, although it was transmitted only on May 14, 2006. Petitioner's allegation that the Motion it filed was the one actually prepared and signed on May 5, 2006 17 contradicts its earlier claim in its Opposition to the Motion to Declare [It] in Default that "[s]hort of time in coming up with [herein petitioner's] Answer on April 28, 2006", its counsel caused to be prepared a Motion for Extension of Time to File Answer which was, however, misplaced, and upon discovery thereof "another motion for extension was immediately caused to be prepared and filed". 18 More. Petitioner served and filed the Motion for Extension through a private courier, LBC, a mode not recognized by the rules. 19 Explanation for availing such mode was not stated in the Motion. 20 The mode was, nonetheless, clearly unjustifiable, considering that (a) petitioner's handling counsel was based in nearby San Fernando; (b) postal registry service is, for lack of explanation to the contrary, available in Pampanga; 21 (c) urgency is out of the equation because the official date of filing done via private messengerial service is the date of actual receipt of the court, 22 and had the motion been personally filed the following day (May 15, 2006), it would have reached the court earlier. It thus shows that the mode was utilized to obscure any indication that the motion was filed out of time. aCSDIc In denying respondents' Motion for Reconsideration of its grant of petitioner's Motion for Extension, the trial court ruled that it was inclined to reconsider or lift an order of default. 23 By such ruling, the trial court preempted the dictates of orderly procedure by unduly anticipating and signifying a slant toward the remedies and arguments yet to be availed of and raised by petitioner. Petitioner can not harp on Indiana Aerospace University v. Comm. on Higher Educ . 24 which it cites. In that case, the Answer had already been filed albeit after the 15-day period, but before the defendants were declared in default. In the present case, had the hearing on the Motion to Declare Petitioner in Default pushed through on May 24, 2006, the trial court would have readily noticed that no Answer had yet been filed on said date, the Answer having been filed, as earlier stated, only on May 25, 2006. Neither can petitioner harp on Sps. Ampeloquio, Sr. v. Court of Appeals, 25 for the Court therein held that it is within the discretion of the trial court to permit the filing of an answer even beyond the reglementary period, provided that there isjustification for the belated action and there is no showing that the defendant intended to delay the case. Thus, in that case, the therein defendant-respondent deferred the submission of a prepared Answer as it awaited the trial court's resolution on its motion to dismiss, which resolution had, it turned out, been priorly issued, a copy of which was, however, mistakenly addressed to another counsel. TSIDaH In the present case, no satisfactory reason was adduced to justify the tardiness of the Answer and no compelling reason was given to justify its admission. The intention to delay was rather obvious. It is not amiss to mention at this juncture that the Court's attention has been drawn to the fact that petitioner's counseleven notarized the Verification of respondents' Complaint as well as the Corporate Secretary's Certificate as early as April 10, 2006. By such act, which is irregular, to say the least, petitioner's

counsel was even made aware in advance of the impending filing of the case against her client-herein petitioner. AEIHaS Moreover, petitioner's handling counsel belongs to its Legal Department which monitors its pending cases and oversees a network of lawyers. On petitioner's counsel's belated and trite allegation of heavy volume of work which called for the filing of the Motion for Extension, nowhere is it therein claimed that there was heavy volume of work in other equally important cases. 26 With the implication that petitioner had been all the while preparing an Answer, it defies comprehension how petitioner still attributes the delay to "inadvertence", "honest oversight" and "simple remission" in its having allegedly misplaced the Motion for Extension. 27

The Court thus finds petitioner's negligence inexcusable, as the circumstances behind and the reasons for the delay are detestable. Rules of procedure, especially those prescribing the time within which certain acts must be done, have often been held as absolutely indispensable to the prevention of needless delays and to the orderly and speedy discharge of business. The bare invocation of "the interest of substantial justice" is not a magic wand that will automatically compel this Court to suspend procedural rules. 28 Under Rule 1, Section 6 of the 1997 Rules of Civil Procedure, liberal construction of the rules is the controlling principle to effect substantial justice. Thus, litigations should, as much as possible, be decided on their merits and not on technicalities. This does not mean, however, that procedural rules are to be ignored or disdained at will to suit the convenience of a party. Procedural law has its own rationale in the orderly administration of justice, namely, to ensure the effective enforcement of substantive rights by providing for a system that obviates arbitrariness, caprice, despotism, or whimsicality in the settlement of disputes. Hence, it is a mistake to suppose that substantive law and procedural law are contradictory to each other, or as often suggested, that enforcement of procedural rules should never be permitted if it would result in prejudice to the substantive rights of the litigants. Litigation is not a game of technicalities, but every case must be prosecuted in accordance with the prescribed procedure so that issues may be properly presented and justly resolved. Hence, rules of procedure must be faithfully followed except only when for persuasive reasons, they may be relaxed to relieve a litigant of an injustice not commensurate with his failure to comply with the prescribed procedure. Concomitant to a liberal application of the rules of procedure should be an effort on the part of the party invoking liberality to explain his failure to abide by the rules. 29 (Underscoring supplied) Given the foregoing circumstances, Justice Presbitero Velasco, Jr., in his Dissenting Opinion, still finds "exceptional circumstances" that warrant this Court to suspend its rules and accord liberality to petitioner, citing Section 11, Rule 11 of the Rules of Court, which reads:

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Upon motion and on such terms as may be just, the court may extend the time to plead provided in these Rules. The court may also, upon like terms, allow an answer or other pleading to be filed after the time fixed by these Rules. (Emphasis and underscoring supplied) AcTHCE From the foregoing discussion, it is unimaginable how "such terms as may be just" may be applied in petitioner's favor. Under the stated premises, to grant the petition along the lines of liberality is to countenance the context of fibs and flaws. Obviously grasping straws in its final pitch to win the court's leniency, petitioner employed a ploy to conceal not just the lapse of time but also the serious lapses of non-compliance with basic rules. The scheme insults the intelligence of the Court. While the Court frowns upon default judgments, it does not condone gross transgressions of the rules and perceptible vestiges of bad faith. Good faith is central to the concept of "excusable neglect" justifying failure to answer. 30 An attempt to cover up the procedural lapses and obscure the technical imperfections negates good faith on the part of the party imploring the accommodating arm of the court. cDICaS In his Dissenting Opinion, Justice Velasco proffers that the complaint centers on the interpretation of a contract which can only be determined if the parties are heard in the course of trial. There is no arguing that all complaints of whatever nature can only be determined if the parties are heard. There is, however, a standing rule set in place for a declaration of default, in cases where there is no justification for the belated action, and there is showing that the defendant intended to delay the case. In this case, the party lackadaisically squandered its opportunity to file a responsive pleading and, worse, made deceptive moves in an obvious attempt to redeem itself. The Court is duty-bound to observe its rules and procedures and uphold the noble purpose behind their issuance. Rules are laid down for the benefit of all and should not be made dependent upon a suitor's sweet time and own bidding. 31 In preliminarily assessing the merits of the case, the Court is merely tasked to consider whether the reception of defendant's evidence would serve a practical purpose, considering that respondents had, during the pendency of the case, concluded the ex-parte presentation of evidence. 32 Accordingly, after carefully reviewing petitioner's Answer and Pre-Trial Brief, the Court finds that to re-open the presentation of evidence just to ventilate the defense of mere denial that there exists no dacion en pago and to present the written agreement, the existence of which is already admitted by respondents, would serve no practical purpose. cSIACD If petitioner is confident that the complaint lacks merit, then it need not worry because once the defendant is declared in default, the plaintiff is not automatically entitled to the relief prayed for. Favorable relief can be granted only after it has been ascertained that it is warranted by the evidence offered and the facts proven by the presenting party. 33 In any event, petitioner, even if declared in default, is not deprived of his right to appeal the decision of the trial court. 34

To emphasize, the case does not involve any outright deprivation of life, liberty or property. Contrary to what is being depicted, intimated or romanticized, petitioner does not stand to lose P36,483,699.45 regardless of the characterization of the commercial transaction entered into by the parties. The amount is secured by mortgages over prime real properties, which is precisely the subject of the alleged dacion en pago. STECDc WHEREFORE, the petition is DENIED. SO ORDERED.

Quisumbing and Brion, JJ., concur. Tinga, J., joins Justice Velasco's dissent. Velasco, Jr., J., pls. see dissenting opinion.

Separate Opinions

VELASCO, JR., J., dissenting: I find attendant in the case at bar exceptional circumstances which far outweigh a strict application of the rules of procedure. These circumstances include the resulting injustice due to the gross negligence of petitioner's counsel, the considerable sum which is the object of the prestation involved, and the necessity of taking into account all relevant evidence, especially those of petitioner's, in order to ascertain the true intent of the parties to the contract. With all due respect, I submit that the petition should be granted for the following reasons: 1.The Court under Sec. 11, Rule 11 has the discretion to allow an answer filed after the time fixed by the Rules. The ruling in the main case turns on a technicality. It holds that petitioner, Philippine National Bank (PNB), failed to file an Answer within the reglementary period. The facts, as found by the majority, are as follows: Respondents Deang Marketing Corporation and Berlita Deang filed before the Regional Trial Court (RTC) in Angeles City a complaint for reformation of contract and specific performance, claiming that a dacion en pago arrangement with PNB altered their outstanding loan obligations into a seven-year term loan in the amount of PhP36,483,699.45. The Process Server's Return shows that PNB was served with summons on April 20, 2006 1 through PNB's Chief Legal Counsel in Pasay City. The PNB Branch concerned, PNB San Fernando City, Pampanga, claimed that it received the summons from its head office only on April 24, 2006. aSTAcH Counting from April 20, 2006, PNB had 15 days, or until May 5, 2006, within which to file an Answer. PNB, however, filed a Motion for Extension of Time to File an Answer only on May 15, 2006. This was granted by the RTC, thereby giving PNB until June 11, 2006 to file an Answer. PNB filed its Answer on May 25, 2006.

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Even if the original 15-day period to file an Answer is reckoned from April 20, 2006 and the said period was extended up to June 4, 2006, the filing of the answer on May 25, 2006 can be considered as within the extended period of 30 days in the higher interests of justice. On May 15, 2006, respondents filed a Motion to Declare PNB in Default. On the same date, the RTC received PNB's Motion for Extension of Time to File an Answer. The next day, or on May 16, 2006, the RTC issued an Order denying the Motion to Declare PNB in Default and granting a 30-day extension of time to file an Answer in favor of PNB. The Order of the RTC granting an extension to file an Answer in favor of PNB is in accord with Section 11, Rule 11:

Case law provides that among the requisites of a valid dation in payment, there must be an agreement between the creditor and debtor that the obligation is immediately extinguished by reason of the performance of a prestation different from that due. 7 As aforementioned, the main issue is whether or not there is such an agreement to a dacion en pago. This can only be resolved by hearing the parties and allowing them to present evidence in a full-blown trial, for the law provides that "in order to judge the intention of the contracting parties, their contemporaneous and subsequent acts shall be principally considered." 8 It would be unfair and unjust to declare PNB in default and preclude it from presenting evidence on the import of the contract when it is respondents themselves who are the parties ascribing a different meaning to the written contract. When the terms of an agreement have been reduced to writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement. 9 This rule, also known as the Parol evidence Rule, is the general rule. Stated otherwise, a written contract embodies the intention of the parties. To go beyond the four corners of the document is an exception to the general rule, such that a party may present evidence to modify, explain, or add to the terms of written agreement if the party puts in issue in the pleading the existence of other terms agreed to after the execution of the written agreement. To determine whether or not the terms of the agreement between the parties have been changed necessitates that before the court steps in, it must consider the intent of the parties and the surrounding reasons and circumstances bearing on the total import of their true intention. aTcHIC 3.The Rules of Court should be given a liberal construction in this case for two compelling reasons, namely: (a) the gross negligence of PNB's counsel led to PNB's grave prejudice; and (b) PNB's cause appears to be meritorious. Gross Negligence of PNB's Counsel There is a range of reasons which may provide justification for a court to resist a strict adherence to procedure, such as: (1) matters of life, liberty, honor, or property; (2) counsel's negligence without any participatory negligence on the part of the client; (3) the existence of special or compelling circumstances; (4) the merits of the case; (5) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules; (6) a lack of any showing that the review sought is merely frivolous and dilatory; and (7) the other party will not be unjustly prejudiced thereby. 10 The Rules is to be liberally construed in order to promote its objective of securing a just, speedy, and inexpensive disposition 11 of the subject complaint, especially in this case where it can be conceded that petitioner's counsel, Atty. Elenita Quinsay, is guilty of gross negligence in handling PNB's case. DHCSTa After the summons was received by PNB San Fernando City from its main office on April 20, 2006, Atty. Quinsay failed to act on it immediately. The confusion on which reglementary period to reckon the extension from was caused by her claim of receiving the summons on April 24 from the PNB main branch. She should have known that April 20 was the official date of receipt of her client of the summons. She should then have acted accordingly. These acts of negligence have led to the prejudice of PNB. As a general rule, the negligence of counsel binds the client, except in the following instances: (1) where reckless or gross negligence of counsel deprives the client of due process of law; (2) when its application will result in outright deprivation of the client's liberty or property; or (3) where the interests of justice so require. In such cases, courts must step in and accord relief to a party-litigant. 12 The gross negligence of petitioner's counsel amounted to an abandonment or total disregard of its case. DICcTa

Extension of time to plead. Upon motion and on such terms as may be just, the
court may extend the time to plead provided in these Rules. caTIDE

The court may also, upon like terms, allow an answer or other pleading to be filed after the time fixed by these Rules. (Emphasis supplied.) Plainly the matter of admitting an answer filed beyond the reglementary period of fifteen (15) days is DISCRETIONARY on the trial court. Discretion is the power exercised by courts to determine questions arising in the trial of a case to which no rule of law is applicable but which, from their nature and circumstances of the case, are controlled by personal judgment and not by fixed rules of law. 2 Discretion which a judge may exercise means sound discretion exercised, not arbitrarily or willfully, but with regard to what is right and equitable under the circumstances and the law, and directed by the judge's reason and conscience to just result. 3 In its Order of August 9, 2006, the RTC stood by its Order of May 16, 2006 and reasoned that "it would be best if this case will go to trial on the merits rather than ruling in favor of plaintiffs in declaring PNB in default. The Court still believes that its Order serves not the parties, but the ends of justice." 4 The RTC itself saw the need for the subject of the complaint to be exhaustively weighed and discussed, which is related to the second reason for my dissent. Under the circumstances, it is not difficult to say that the trial court acted properly and fairly in allowing the tardy filing of PNB's answer especially considering that a decision has not yet been rendered in the case. To allow the answer and to afford PNB the opportunity to adduce evidence is but in keeping with the norms of fair play. It will grant said party a sporting chance to convince the court of its proposition. There is nothing arbitrary nor whimsical in the challenged order.

2.The complaint centers on the interpretation of a contract, which can only be determined if the parties are heard in the course of trial. Respondents seek in the RTC the reformation of the loan contract extended by PNB, alleging that there has been adacion en pago agreement involving the amount of PhP36,483,699.45. PNB refutes this. 5 It claims that after the Consolidation and Restructuring Agreement was signed between the parties, respondents offered in a letter the possibility of turning the agreement into a dacion en pago, but no such new agreement was entered into. cIECaS Even respondents admit that its claim of dacion en pago was not expressed in its written agreement with PNB. 6 Thus, the substantive issue is, what was the true agreement of the parties?

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The Court noted that respondents had, during the pendency of this case, concluded the ex-parte presentation of evidence. 13 Since there is no decision rendered yet in the first instance, there is no prejudice that would result on the part of respondents should PNB be allowed to adduce evidence on its behalf. PNB's Defense Necessitates Presentation of Evidence PNB's defense justifies a liberal application of the Rules for respondents seek in the RTC the reformation of the loan contract extended by PNB, alleging that there has been a dacion en pago agreement involving the amount of PhP36,483,699.45. PNB vehemently denies any such reformation and asserts the primacy of its written Consolidation and Restructuring Agreement with the respondents. Respondents are claiming the exception to the parol evidence rule. 14Thus, the substantive issue revolves on the true agreement of the parties. This cannot be resolved without hearing both of the parties to the contract. Based on the pleadings, PNB strongly asserts that the Consolidation and Restructuring Agreement is the true agreement between the parties. It is supported by the best evidence of the agreement, the written contract itself, while respondents' claim is anchored on evidence beyond the four corners of the written contract. For us to deprive PNB of the opportunity to refute the respondents' claim is not only unfair but also unjust. DCcTHa The Rules of Court was conceived and promulgated to set forth guidelines in the dispensation of justice, but not to bind and chain the hand that dispenses it, for otherwise, courts will be mere slaves to or robots of technical rules, shorn of judicial discretion. That is precisely why courts, in rendering justice, have always been, as they in fact ought to be, conscientiously guided by the norm that on the balance, technicalities take a backseat to substantive rights, and not the other way around. 15 Circumspect leniency will give the appellant the fullest opportunity to establish the merits of the appellant's complaint rather than to lose life, liberty, honor, or property on technicalities. 16 The rules of procedure should be viewed as mere tools designed to aid the courts in the speedy, just, and inexpensive determination of the cases before them. Liberal construction of the rules and the pleadings is the controlling principle to effect substantial justice. 17 In light of the foregoing reasons, I vote to GRANT the petition.

ABAD SANTOS, J p: This is a petition to review, set aside certain orders and restrain the respondent judge from trying Civil Case No. 779-M of the defunct Court of First Instance of Rizal. The factual background is as follows: At times material to this case, the United States of America had a naval base in Subic, Zambales. The base was one of those provided in the Military Bases Agreement between the Philippines and the United States. Sometime in May, 1972, the United States invited the submission of bids for the following projects: 1.Repair fender system, Alava Wharf at the U.S. Naval Station Subic Bay, Philippines. 2.Repair typhoon damage to NAS Cubi shoreline; repair typhoon damage to shoreline revetment, NAVBASE Subic; and repair to Leyte Wharf approach, NAVBASE Subic Bay, Philippines. LLpr Eligio de Guzman & Co., Inc. responded to the invitation and submitted bids. Subsequent thereto, the company received from the United States two telegrams requesting it to confirm its price proposals and for the name of its bonding company. The company complied with the requests. [In its complaint, the company alleges that the United States had accepted its bids because "A request to confirm a price proposal confirms the acceptance of a bid pursuant to defendant United States' bidding practices." (Rollo, p. 30.) The truth of this allegation has not been tested because the case has not reached the trial stage.] In June, 1972, the company received a letter which was signed by William I. Collins, Director, Contracts Division, Naval Facilities Engineering Command, Southwest Pacific, Department of the Navy of the United States, who is one of the petitioners herein. The letter said that the company did not qualify to receive an award for the projects because of its previous unsatisfactory performance rating on a repair contract for the sea wall at the boat landings of the U.S. Naval Station in Subic Bay. The letter further said that the projects had been awarded to third parties. In the abovementioned Civil Case No. 779-M, the company sued the United States of America and Messrs. James E. Galloway, William I. Collins and Robert Gohier all members of the Engineering Command of the U.S. Navy. The complaint is to order the defendants to allow the plaintiff to perform the work on the projects and, in the event that specific performance was no longer possible, to order the defendants to pay damages. The company also asked for the issuance of a writ of preliminary injunction to restrain the defendants from entering into contracts with third parties for work on the projects. The defendants entered their special appearance "for the purpose only of questioning the jurisdiction of this court over the subject matter of the complaint and the persons of defendants, the subject matter of the complaint being acts and omissions of the individual defendants as agents of defendant United States of America, a foreign sovereign which has not given her consent to this suit or any other suit for the causes of action asserted in the complaint." (Rollo, p. 50.) Subsequently the defendants filed a motion to dismiss the complaint which included an opposition to the issuance of the writ of preliminary injunction. The company opposed the motion. The trial court denied the motion and issued the writ. The defendants moved twice to reconsider but to no avail. Hence the instant

UNITED STATES OF AMERICA, CAPT. JAMES E. GALLOWAY, WILLIAM I. COLLINS and ROBERT GOHIER, petitioners, vs. HON. V.M. RUIZ, Presiding Judge of Branch XV, Court of First Instance of Rizal and ELIGIO DE GUZMAN & CO., INC., respondents.

Sycip, Salazar, Luna & Manalo & Feliciano Law Office for petitioners. Albert, Vergara, Benares, Perlas & Dominguez Law Office for respondents.

DECISION

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petition which seeks to restrain perpetually the proceedings in Civil Case No. 779-M for lack of jurisdiction on the part of the trial court. The petition is highly impressed with merit. LexLib The traditional rule of State immunity exempts a State from being sued in the courts of another State without its consent or waiver. This rule is a necessary consequence of the principles of independence and equality of States. However, the rules of International Law are not petrified; they are constantly developing and evolving. And because the activities of states have multiplied, it has been necessary to distinguish them between sovereign and governmental acts (jure imperii) and private, commercial and proprietary acts (jure gestionis). The result is that State immunity now extends only to acts jure imperii. The restrictive application of State immunity is now the rule in the United States, the United Kingdom and other states in western Europe. (See Coquia and Defensor-Santiago, Public International Law, pp. 207-209 [1984].) 2006cdtai The respondent judge recognized the restrictive doctrine of State immunity when he said in his Order denying the defendants' (now petitioners) motion: "A distinction should be made between a strictly governmental function of the sovereign state from its private, proprietary or non-governmental acts." (Rollo, p. 20.) However, the respondent judge also said: "It is the Court's considered opinion that entering into a contract for the repair of wharves or shoreline is certainly not a governmental function altho it may partake of a public nature or character. As aptly pointed out by plaintiff's counsel in his reply citing the ruling in the case of Lyons, Inc., [104 Phil. 594 (1958)], and which this Court quotes with approval, viz.: 'It is however contended that when a sovereign state enters into a contract with a private person, the state can be sued upon the theory that it has descended to the level of an individual from which it can be implied that it has given its consent to be sued under the contract. . . . xxx xxx xxx 'We agree to the above contention, and considering that the United States government, through its agency at Subic Bay, entered into a contract with appellant for stevedoring and miscellaneous labor services within the Subic Bay Area, a U.S. Naval Reservation, it is evident that it can bring an action before our courts for any contractual liability that political entity may assume under the contract. The trial court, therefore, has jurisdiction to entertain this case . . .'" (Rollo, pp. 20-21.) The reliance placed on Lyons by the respondent judge is misplaced for the following reasons: In Harry Lyons, Inc. vs. The United States of America supra, plaintiff brought suit in the Court of First Instance of Manila to collect several sums of money on account of a contract between plaintiff and defendant. The defendant filed a motion to dismiss on the ground that the court had no jurisdiction over defendant and over the subject matter of the action. The court granted the motion on the grounds that: (a) it had no jurisdiction over the defendant who did not give its consent to the suit; and (b) plaintiff failed to exhaust the administrative remedies provided in the contract. The order of dismissal was elevated to this Court for review. cdrep In sustaining the action of the lower court, this Court said:

"It appearing in the complaint that appellant has not complied with the procedure laid down in Article XXI of the contract regarding the prosecution of its claim against the United States Government, or, stated differently, it has failed to first exhaust its administrative remedies against said Government, the lower court acted properly in dismissing this case." (At p. 598.) It can thus be seen that the statement in respect of the waiver of State immunity from suit was purely gratuitous and, therefore, obiter so that it has no value as an imperative authority. The restrictive application of State immunity is proper only when the proceedings arise out of commercial transactions of the foreign sovereign, its commercial activities or economic affairs. Stated differently, a State may be said to have descended to the level of an individual and can thus be deemed to have tacitly given its consent to be sued only when it enters into business contracts. It does not apply where the contract relates to the exercise of its sovereign functions. In this case the projects are an integral part of the naval base which is devoted to the defense of both the United States and the Philippines, indisputably a function of the government of the highest order; they are not utilized for nor dedicated to commercial or business purposes. That the correct test for the application of State immunity is not the conclusion of a contract by a State but the legal nature of the act is shown in Syquia vs. Lopez, 84 Phil. 312 (1949). In that case the plaintiffs leased three apartment buildings to the United States of America for the use of its military officials. The plaintiffs sued to recover possession of the premises on the ground that the term of the leases had expired, They also asked for increased rentals until the apartments shall have been vacated. The defendants who were armed forces officers of the United States moved to dismiss the suit for lack of jurisdiction on the part of the court. The Municipal Court of Manila granted the motion to dismiss; sustained by the Court of First Instance, the plaintiffs went to this Court for review on certiorari. In denying the petition, this Court said: "On the basis of the foregoing considerations we are of the belief and we hold that the real party defendant in interest is the Government of the United States of America; that any judgment for back or increased rentals or damages will have to be paid not by defendants Moore and Tillman and their 64 co-defendants but by the said U.S. Government. On the basis of the ruling in the case of Land vs. Dollar already cited, and on what we have already stated, the present action must be considered as one against the U.S. Government. It is clear that the courts of the Philippines including the Municipal Court of Manila have no jurisdiction over the present case for unlawful detainer. The question of lack of jurisdiction was raised and interposed at the very beginning of the action. The U.S. Government has not given its consent to the filing of this suit which is essentially against her, though not in name. Moreover, this is not only a case of a citizen filing a suit against his own Government without the latter's consent but it is of a citizen filing an action against a foreign government without said government's consent, which renders more obvious the lack of jurisdiction of the courts of his country. The principles of law behind this rule are so elementary and of such general acceptance that we deem it unnecessary to cite authorities in support thereof." (At p. 323.) LLphil

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In Syquia, the United States concluded contracts with private individuals but the contracts notwithstanding the United States was not deemed to have given or waived its consent to be sued for the reason that the contracts were for jure imperii and not for jure gestionis. WHEREFORE, the petition is granted; the questioned orders of the respondent judge are set aside and Civil Case No. 779-M is dismissed. Costs against the private respondent. SO ORDERED.

Balanga, Bataan for the Cancellation of Transfer Certificate of Title No. 137466, docketed as Civil Case No. 438-ML. Summons was, thereafter, served to petitioner through her mother, Anita Padlan. On December 13, 1999, respondents moved to declare petitioner in default and prayed that they be allowed to present evidence ex parte. 4 On January 17, 2000, petitioner, through counsel, filed an Opposition to Declare Defendant in Default with Motion to Dismiss Case for Lack of Jurisdiction Over the Person of Defendant. 5 Petitioner claimed that the court did not acquire jurisdiction over her, because the summons was not validly served upon her person, but only by means of substituted service through her mother. Petitioner maintained that she has long been residing in Japan after she married a Japanese national and only comes to the Philippines for a brief vacation once every two years. On April 5, 2001, Charlie Padlan, the brother of petitioner, testified that his sister is still in Japan and submitted a copy of petitioner's passport and an envelope of a letter that was allegedly sent by his sister. Nevertheless, on April 5, 2001, the RTC issued an Order 6 denying petitioner's motion to dismiss and declared her in default. Thereafter, trial ensued. On July 1, 2005, the RTC rendered a Decision 7 finding petitioner to be a buyer in good faith and, consequently, dismissed the complaint.

EDITHA PADLAN, petitioner, vs. ELENITA DINGLASAN and FELICISIMO DINGLASAN,respondents.

DECISION Not satisfied, respondents sought recourse before the CA, docketed as CA-G.R. No. CV No. 86983. On June 29, 2007, the CA rendered a Decision 8 in favor of the respondent. Consequently, the CA reversed and set aside the Decision of the RTC and ordered the cancellation of the TCT issued in the name of Lorna and the petitioner, and the revival of respondents' own title, to wit: WHEREFORE, in view of the foregoing, the Decision dated July 1, 2005 of the Regional Trial Court, Third Judicial Region, Branch 4, Mariveles, Bataan (Stationed in Balanga, Bataan) in Civil Case No. 438-ML is herebyREVERSED and SET ASIDE. The Transfer Certificate of Title No. 134932 issued in the name of Lorna Ong and Transfer Certificate of Title No. 137466 issued in the name of defendant-appellee Editha Padlan are CANCELLED and Transfer Certificate of Title No. 134785 in the name of the plaintiffs-appellants is REVIVED. aCTHDA SO ORDERED. 9 The CA found that petitioner purchased the property in bad faith from Lorna. The CA opined that although a purchaser is not expected to go beyond the title, based on the circumstances surrounding the sale, petitioner should have conducted further inquiry before buying the disputed property. The fact that Lorna bought a 5,000-square-meter property for only P4,000.00 and selling it after four months for the same amount should have put petitioner on guard. With the submission of the Judgment in Criminal Case No. 4326 rendered by the RTC, Branch 2, Balanga, Bataan, entitled People of the Philippines v. Maura Passion 10 and the testimonies of respondents, the CA concluded that respondents sufficiently established that TCT No. 134932 issued in the name of Lorna and TCT No. 137466 issued in the name of petitioner were fraudulently issued and, therefore, null and void.

PERALTA, J p: This is a petition for review on certiorari assailing the Decision 1 dated June 29, 2007 of the Court of Appeals (CA) in CA-G.R. CV No. 86983, and the Resolution 2 dated October 23, 2007 denying petitioner's Motion for Reconsideration. 3 The factual and procedural antecedents are as follows: Elenita Dinglasan (Elenita) was the registered owner of a parcel of land designated as Lot No. 625 of the Limay Cadastre which is covered by Transfer Certificate of Title (TCT) No. T-105602, with an aggregate area of 82,972 square meters. While on board a jeepney, Elenita's mother, Lilia Baluyot (Lilia), had a conversation with one Maura Passion(Maura) regarding the sale of the said property. Believing that Maura was a real estate agent, Lilia borrowed the owner's copy of the TCT from Elenita and gave it to Maura. Maura then subdivided the property into several lots from Lot No. 625-A to Lot No. 625-O, under the name of Elenita and her husband Felicisimo Dinglasan (Felicisimo). Through a falsified deed of sale bearing the forged signature of Elenita and her husband Felicisimo, Maura was able to sell the lots to different buyers. On April 26, 1990, Maura sold Lot No. 625-K to one Lorna Ong (Lorna), who later caused the issuance of TCT No. 134932 for the subject property under her name. A few months later, or sometime in August 1990, Lorna sold the lot to petitioner Editha Padlan for P4,000.00. Thus, TCT No. 134932 was cancelled and TCT No. 137466 was issued in the name of petitioner. HESIcT After learning what had happened, respondents demanded petitioner to surrender possession of Lot No. 625K, but the latter refused. Respondents were then forced to file a case before the Regional Trial Court (RTC) of

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Aggrieved, petitioner filed a Motion for Reconsideration. Petitioner argued that not only did the complaint lacks merit, the lower court failed to acquire jurisdiction over the subject matter of the case and the person of the petitioner. On October 23, 2007, the CA issued a Resolution 11 denying the motion. The CA concluded that the rationale for the exception made in the landmark case of Tijam v. Sibonghanoy 12 was present in the case. It reasoned that when the RTC denied petitioner's motion to dismiss the case for lack of jurisdiction, petitioner neither moved for a reconsideration of the order nor did she avail of any remedy provided by the Rules. Instead, she kept silent and only became interested in the case again when the CA rendered a decision adverse to her claim. Hence, the petition assigning the following errors: I WHETHER OR NOT THE HONORABLE COURT HAS JURISDICTION OVER THE PERSON OF THE PETITIONER. II WHETHER OR NOT THE HONORABLE COURT HAS JURISDICTION OVER THE SUBJECT MATTER OF THE CASE. HCacTI III WHETHER OR NOT PETITIONER IS A BUYER IN GOOD FAITH AND FOR VALUE. 13 Petitioner maintains that the case of Tijam v. Sibonghanoy finds no application in the case at bar, since the said case is not on all fours with the present case. Unlike in Tijam, wherein the petitioner therein actively participated in the proceedings, petitioner herein asserts that she did not participate in any proceedings before the RTC because she was declared in default. Petitioner insists that summons was not validly served upon her, considering that at the time summons was served, she was residing in Japan. Petitioner contends that pursuant to Section 15, Rule 14 of the Rules of Civil Procedure, when the defendant does not reside in the Philippines and the subject of the action is property within the Philippines of the defendant, service may be effected out of the Philippines by personal service or by publication in a newspaper of general circulation. In this case, summons was served only by substituted service to her mother. Hence, the court did not acquire jurisdiction over her person. Also, petitioner posits that the court lacks jurisdiction of the subject matter, considering that from the complaint, it can be inferred that the value of the property was only P4,000.00, which was the amount alleged by respondents that the property was sold to petitioner by Lorna. Finally, petitioner stresses that she was a buyer in good faith. It was Maura who defrauded the respondents by selling the property to Lorna without their authority.

Respondents, on the other hand, argue that the CA was correct in ruling in their favor. The petition is meritorious. Respondents filed the complaint in 1999, at the time Batas Pambansa Blg. (BP) 129, the Judiciary Reorganization Act of 1980, was already amended by Republic Act (RA) No. 7691, An Act Expanding the Jurisdiction of the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts , amending for the purpose BP Blg. 129. 14 Section 1 of RA 7691, amending BP Blg. 129, provides that the RTC shall exercise exclusive original jurisdiction on the following actions: IcHTAa Section 1.Section 19 of Batas Pambansa Blg. 129, otherwise known as the "Judiciary Reorganization Act of 1980," is hereby amended to read as follows: Sec. 19.Jurisdiction in civil cases. Regional Trial Courts shall exercise exclusive original jurisdiction: (1)In all civil actions in which the subject of the litigation is incapable of pecuniary estimation; (2)In all civil actions which involve the title to, or possession of, real property, or any interest therein, where the assessed value of the property involved exceeds Twenty Thousand Pesos (P20,000.00) or for civil actions in Metro Manila, where such value exceeds Fifty Thousand Pesos (P50,000.00), except actions for forcible entry into and unlawful detainer of lands or buildings, original jurisdiction over which is conferred upon the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts; . . . Section 3 of RA 7691 expanded the exclusive original jurisdiction of the first level courts, thus: Section 3.Section 33 of the same law [BP Blg. 129] is hereby amended to read as follows: Sec. 33.Jurisdiction of Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in Civil Cases. Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts shall exercise: xxx xxx xxx (3)Exclusive original jurisdiction in all civil actions which involve title to, or possession of, real property, or any interest therein where the assessed value of the property or interest therein does not exceed Twenty Thousand Pesos (P20,000.00) or, in civil actions in Metro Manila, where such assessed value does not exceed Fifty Thousand Pesos (P50,000.00)

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exclusive of interest, damages of whatever kind, attorney's fees, litigation expenses and costs: Provided, That in cases of land not declared for taxation purposes, the value of such property shall be determined by the assessed value of the adjacent lots. AIHECa Respondents filed their Complaint with the RTC; hence, before proceeding any further with any other issues raised by the petitioner, it is essential to ascertain whether the RTC has jurisdiction over the subject matter of this case based on the above-quoted provisions. However, in order to determine which court has jurisdiction over the action, an examination of the complaint is essential. Basic as a hornbook principle is that jurisdiction over the subject matter of a case is conferred by law and determined by the allegations in the complaint which comprise a concise statement of the ultimate facts constituting the plaintiff's cause of action. The nature of an action, as well as which court or body has jurisdiction over it, is determined based on the allegations contained in the complaint of the plaintiff, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. The averments in the complaint and the character of the relief sought are the ones to be consulted. Once vested by the allegations in the complaint, jurisdiction also remains vested irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. 15 What determines the jurisdiction of the court is the nature of the action pleaded as appearing from the allegations in the complaint. The averments therein and the character of the relief sought are the ones to be consulted. 16 Respondents' Complaint 17 narrates that they are the duly registered owners of Lot No. 625 of the Limay Cadastre which was covered by TCT No. T-105602. Without their knowledge and consent, the land was divided into several lots under their names through the fraudulent manipulations of Maura. One of the lots was Lot 625-K, which was covered by TCT No. 134785. On April 26, 1990, Maura sold the subject lot to Lorna. By virtue of the fictitious sale, TCT No. 134785 was cancelled and TCT No. 134932 was issued in the name of Lorna. Sometime in August 1990, Lorna sold the lot to petitioner for a consideration in the amount of P4,000.00. TCT No. 134932 was later cancelled and TCT No. 137466 was issued in the name of petitioner. Despite demands from the respondents, petitioner refused to surrender possession of the subject property. Respondents were thus constrained to engage the services of a lawyer and incur expenses for litigation. Respondents prayed for the RTC (a) to declare TCT No. 137466 null and to revive TCT No. T-105602 which was originally issued and registered in the name of the respondents; and (b) to order petitioner to pay attorney's fees in the sum of P50,000.00 and litigation expenses of P20,000.00, plus cost of suit. 18 An action "involving title to real property" means that the plaintiff's cause of action is based on a claim that he owns such property or that he has the legal rights to have exclusive control, possession, enjoyment, or disposition of the same. Title is the "legal link between (1) a person who owns property and (2) the property itself." "Title" is different from a "certificate of title" which is the document of ownership under the Torrens system of registration issued by the government through the Register of Deeds. While title is the claim, right or interest in real property, a certificate of title is the evidence of such claim. 19

From the Complaint, the case filed by respondent is not simply a case for the cancellation of a particular certificate of title and the revival of another. The determination of such issue merely follows after a court of competent jurisdiction shall have first resolved the matter of who between the conflicting parties is the lawful owner of the subject property and ultimately entitled to its possession and enjoyment. The action is, therefore, about ascertaining which of these parties is the lawful owner of the subject lot, jurisdiction over which is determined by the assessed value of such lot. 20 In no uncertain terms, the Court has already held that a complaint must allege the assessed value of the real property subject of the complaint or the interest thereon to determine which court has jurisdiction over the action. 21 In the case at bar, the only basis of valuation of the subject property is the value alleged in the complaint that the lot was sold by Lorna to petitioner in the amount of P4,000.00. No tax declaration was even presented that would show the valuation of the subject property. In fact, in one of the hearings, respondents' counsel informed the court that they will present the tax declaration of the property in the next hearing since they have not yet obtained a copy from the Provincial Assessor's Office. 22 However, they did not present such copy. IESTcD To reiterate, where the ultimate objective of the plaintiffs is to obtain title to real property, it should be filed in the proper court having jurisdiction over the assessed value of the property subject thereof. 23 Since the amount alleged in the Complaint by respondents for the disputed lot is only P4,000.00, the MTC and not the RTC has jurisdiction over the action. Therefore, all proceedings in the RTC are null and void. 24 Consequently, the remaining issues raised by petitioner need not be discussed further. WHEREFORE, the petition is GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 86983, dated June 29, 2007, and its Resolution dated October 23, 2007, are REVERSED and SET ASIDE. The Decision of the Regional Trial Court, dated July 1, 2005, is declared NULL and VOID. The complaint in Civil Case No. 438-ML is dismissed without prejudice. SO ORDERED.

UNIVERSAL ROBINA CORPORATION, petitioner, vs. ALBERT LIM, doing business under the name and style "New H-R Grocery," respondent.

DECISION

SANDOVAL-GUTIERREZ, J p: In the present controversy, before the relief prayed for by the respondents in their complaint can be granted, the issue of who between the two contending parties has the valid title to the subject lot must first be determined before a determination of who between them is legally entitled to the certificate of title covering the property in question. Before us is a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, assailing the Resolutions dated January 16, 2002 and July 1, 2002 of the Court of Appeals in CAG.R. SP No. 67368.

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The present controversy stemmed from a contract of sale between Universal Robina Corporation, petitioner, and Albert Lim, respondent. Pursuant to the contract, petitioner sold to respondent grocery products in the total amount of P808,059.88. After tendering partial payments, respondent refused to settle his obligation despite petitioner's repeated demands. Thus, on May 31, 1999, petitioner filed with the Regional Trial Court, Branch 227, Quezon City, a complaint against respondent for a sum of money, docketed as Civil Case No. Q-99-37791. 1 On June 22, 1999, the trial court issued an Order dismissing the complaint motu proprio on grounds of lack of jurisdiction and improper venue, thus: The case is misplaced with respect to jurisdiction and venue. There is not even a remote connection by the parties to Quezon City, where this Regional Trial Court sits, the plaintiff corporation has principal office at Pasig City and the defendant is, as provided in the complaint, from Laoag City. Wherefore, premises considered, this case is hereby DISMISSED without prejudice for improper venue and for lack of jurisdiction. 2 Accordingly, petitioner filed a motion for reconsideration together with an amended complaint alleging that the parties agreed that the proper venue for any dispute relative to the transaction is Quezon City. In an Order dated October 11, 1999, the trial court granted the motion and admitted petitioner's amended complaint. On December 6, 1999, summons was served upon respondent. For his failure to file an answer seasonably and upon motion of petitioner, the trial court issued an Order dated September 12, 2000 declaring him in default and allowing petitioner to present its evidence ex parte. 3 However, on April 17, 2001, the trial court, still unsure whether venue was properly laid, issued an Order directing petitioner to file a memorandum of authorities on whether it can file a complaint in Quezon City. 4 Subsequently, on May 11, 2001, the trial court again issued an Order dismissing the complaint on the ground of improper venue, thus: It appears that there is no connection whatsoever between Quezon City and the parties. Plaintiff's official place of business is in Pasig whereas the defendant's residence is stated to be in Laoag City both stipulated in the Complaint. The filing is based on the stipulation at the back of the delivery receipt that venue shall be in Quezon City which is not even stated in the Complaint nor admitted to have been signed by the defendant. WHEREFORE, premises considered, venue is hereby declared to have been improperly laid. This case is hereby dismissed without prejudice to filing in the proper venue. 5 Petitioner filed a motion for reconsideration but it was denied by the trial court in its Resolution dated August 15, 2001.6

Petitioner then filed with the Court of Appeals a petition for review. But it was dismissed due to petitioner's failure to attach thereto an explanation why copies of the petition were not served by personal service but by registered mail, in violation of Section 11, Rule 14 of the 1997 Rules of Civil Procedure, as amended. 7 Petitioner filed a motion for reconsideration but it was likewise denied by the appellate court in a Resolution dated July 1, 2002, thus: After a careful assessment of the petitioner's motion for reconsideration of the Resolution dated March 21, 2002 dismissing the instant case for failure to comply with Section 11, Rule 14, this Court finds the reasons therein alleged to be not welltaken. Moreover, Supreme Court Circular No. 1-88 and Administrative Circular No. 3-96, provide that subsequent compliance with the requirements of a petition for review/certiorari shall not warrant reconsideration of the order of dismissal unless the court is fully satisfied that the non-compliance with the said requirements was not in any way attributable to the party, despite due negligence on his part, and that there are highly justifiable and compelling reasons for the court to make such other disposition as it may deem just and equitable. We find such reasons wanting in the present case. Besides, after a restudy of the facts, law and jurisprudence, as well as the dispositions already contained in the assailed Resolutions of public respondent, we find the present petition for certiorari to be patently without merit, and the questions raised therein are too unsubstantial to require consideration. WHEREFORE, the motion for reconsideration is hereby DENIED for utter lack of merit. 8 Hence, this petition. The fundamental issue being raised is whether the trial court may dismiss motu proprio petitioner's complaint on the ground of improper venue. Sections 2 and 4, Rule 4 of the same Rules provide: Sec. 2.Venue of personal actions. All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff. Sec. 4.When Rule not applicable. This Rule shall not apply (a)In those cases where a specific rule or law provides otherwise; or

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(b)Where the parties have validly agreed in writing before the filing of the action on the exclusive venue thereof. Clearly, in personal actions, the plaintiff may commence an action either in the place of his or her residence or the place where the defendant resides. However, the parties may agree to a specific venue which could be in a place where neither of them resides. Corollarily, Section 1, Rule 9 of the same Rules provides for the instances when the trial court may motu proprio dismiss a claim, thus: Section 1.Defenses and objections not pleaded. Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim. Implicit from the above provision is that improper venue not impleaded in the motion to dismiss or in the answer is deemed waived. Thus, a court may not dismiss an action motu proprio on the ground of improper venue as it is not one of the grounds wherein the court may dismiss an action motu proprio on the basis of the pleadings. In Dacoycoy v. Intermediate Appellate Court, 9 this Court held that a trial court may not motu proprio dismiss a complaint on the ground of improper venue, thus: Dismissing the complaint on the ground of improper venue is certainly not the appropriate course of action at this stage of the proceedings, particularly as venue, in inferior courts as well as in the courts of first instance (now RTC), may be waived expressly or impliedly. Where the defendant fails to challenge timely the venue in a motion to dismiss as provided by Section 4 of Rule 4 of the Rules of Court, and allows the trial to be held and a decision to be rendered, he cannot on appeal or in a special action be permitted to belatedly challenge the wrong venue, which is deemed waived. Indeed, it was grossly erroneous for the trial court to have taken a procedural short-cut by dismissing motu proprio the complaint on the ground of improper venue without first allowing the procedure outlined in the rules of court to take its proper course. Although we are for the speedy and expeditious resolution of cases, justice and fairness take primary importance. The ends of justice require that respondent trial court faithfully adhere to the rules of procedure to afford not only the defendant, but the plaintiff as well, the right to be heard on his cause. In Rudolf Lietz Holdings Inc. v. Registry of Deeds of Paraaque , 10 the Court likewise held that a trial court may not motu proprio dismiss a complaint on the ground of improper venue, thus: Rule 9, Section 1 of the 1997 Rules of Civil Procedure states that defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. The court may only dismiss an action motu proprio in case of lack of jurisdiction over the subject matter, litis pendentia, res judicata and

prescription. Therefore, the trial court in this case erred when it dismissed the petition motu proprio. It should have waited for a motion to dismiss or a responsive pleading from respondent, raising the objection or affirmative defense of improper venue, before dismissing the petition . In the instant case, respondent, despite proper service of summons, failed to file an answer and was thus declared in default by the trial court. Verily, having been declared in default, he lost his standing in court and his right to adduce evidence and present his defense, 11 including his right to question the propriety of the venue of the action. WHEREFORE, the Petition for Review is GRANTED. The assailed Resolutions of the Court of Appeals in CAG.R. SP No. 67368 are REVERSED. The Regional Trial Court, Branch 227, Quezon City is ordered to REINSTATE Civil Case No. Q-99-37791 and conduct an ex parte hearing for the reception of petitioner's evidence and dispose of the case with dispatch. SO ORDERED.

FELICISSIMA GALINDO, NESTOR GALINDO, BEATRIZ GALINDO, CATALINA GALINDO, DANILO GALINDO, LIBRADA GALINDO, CESAR GALINDO, JUANITA GALINDO RIVERA and/or THE REGISTER OF DEEDS OF MEYCAUAYAN, BULACAN, petitioners, vs. HEIRS OF MARCIANO A. ROXAS, represented by Reginald S. Roxas, respondents.

DECISION

CALLEJO, SR., J p: When Marciano A. Roxas died intestate on June 4, 1950, he was survived by his widow, Cirila Roxas and their nine children, namely, Maximiano, Virginia, Benjamin, Eleazar, Elisa, Prescilla, Fortunato, Lydia and Uriel, all surnamed Roxas; and the children of their son Vicente, who predeceased Marciano, namely, Rosalinda, Vicente, Jr. and Sergio, all surnamed Roxas. On April 14, 1955, the said heirs filed an action for specific performance against the heirs of Gregorio Galindo, namely, Florencio, Felisa, Mercedes and Urbano, all surnamed Galindo, including his grandson Federico de Guzman, with the then Court of First Instance (CFI) of Bulacan to compel the latter to execute a deed of absolute sale over Lot 1048 located in Sta. Maria, Bulacan. The said lot had an area of 48,089 square meters and was covered by Transfer Certificate of Title (TCT) No. T-2145. The case was docketed as Civil Case No. 1067. After the trial, the following facts emerged: Lot 1048 which formed part of the Sta. Maria de Pandi Estate was possessed by the late Gregorio Galindo who, during his lifetime, had been paying rentals thereon to the government. On July 5, 1911, the Government of the Philippines, through the

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then Acting Director of Lands, agreed to sell to Gregorio Galindo the said Lot 1048 for the sum of P859.50 payable in annual installments of P42.00 (Exhibit "F"). On July 4, 1916, Gregorio Galindo died intestate leaving as his only heirs his children Florencio, Felisa, Mercedes and Urbano, all surnamed Galindo, and a grandson Federico de Guzman. Subsequently on December 1, 1916, Florencio, Felisa, Mercedes, all surnamed Galindo, and Federico de Guzman, represented by his father Luis de Guzman, sold whatever rights and interests Gregorio Galindo had in Lot 1048 in favor of Marciano A. Roxas (Exhibit "B," deposition). Urbano Galindo, being then a minor, did not sign the document. In the said document, the signatories thereto obligated themselves to transfer the land to Marciano A. Roxas as soon as it would become feasible to do so, and as security that Urbano Galindo would ratify the same upon reaching the age of majority, Florencio Galindo ceded to Marciano A. Roxas title to Lot 833. Since the execution of the document Exhibit "B"deposition, possession and enjoyment of Lot 1048 were immediately transferred to Marciano A. Roxas but the possession and enjoyment of Lot 833, although given as security by Florencio Galindo, remained in the latter. On May 23, 1931, Urbano Galindo, who was a minor at the time of the execution of the first document, executed an affidavit signifying his conformity to the sale executed by his brother and sisters. Since Marciano A. Roxas took possession of Lot 1048 he had been religiously paying the installments due to the government (Exhibits "G," "G-1" to "G10"). While the receipts for payment of the installments due to the government were issued in the name of Gregorio Galindo, yet the property had been declared for tax purposes in the name of Marciano A. Roxas who paid the real estate taxes thereon during his lifetime. On February 13, 1948, Transfer Certificate of Title No. T-2145 covering the property in question was issued by the Register of Deeds of Bulacan in the name of the legal heirs of Gregorio Galindo. This, on account of the fact that the sale of the right of Gregorio Galindo made by his heirs in favor of Marciano A. Roxas was not registered with the Bureau of Lands because of the minority of Urbano Galindo at the time. aDcTHE In the light of the facts and circumstances surrounding this case, the Court is convinced that plaintiffs are entitled to the title over Lot 1048. Plaintiffs' Exhibit "B"deposition which is the "Documento de Compromiso" clearly states that the signatories thereto sold whatever rights they have to the property in favor of plaintiffs' predecessor Marciano A. Roxas, obligating themselves to execute the final deed of sale must have been occasioned by the minority of Urbano Galindo who was not made a signatory to the document. But on May 23, 1931, when Urbano Galindo was already of age, he ratified the actuation of his brother and sisters by executing an affidavit whereby he signified that he was agreeable thereto. Since 1931 up to the date of the filing of the complaint, 24 years had elapsed without any of the defendants having taken any step to nullify the two documents aforementioned. Florencio Galindo's testimony contained in his deposition taken at the instance of plaintiffs is quite enlightening to the mind of the Court. He had acknowledged in all sincerity that he and his brother and sisters have, indeed, sold their rights to Lot 1048 in favor of Marciano A. Roxas. Without prejudice, therefore, to defendants taking the necessary legal steps to recover title to Lot 833 which admittedly was only placed as guarantee that defendant Urbano Galindo would ratify the sale made by his brother and sisters. 1 On August 12, 1965, the trial court rendered judgment 2 in favor of the plaintiffs. The fallo of the decision reads:

WHEREFORE, judgment is hereby rendered in favor of plaintiffs, ordering the defendants to execute in favor of the heirs of Marciano A. Roxas a deed of absolute sale transferring to the latter Lot 1048 of the Sta. Maria de Pandi Estate. Without costs. SO ORDERED. 3 The defendants appealed to the Court of Appeals (CA) which docketed the appeal as CA-G.R. No. 37697-R. The CA rendered judgment 4 on February 5, 1973, affirming the decision of the CFI. The decision became final and executory. However, the said decision was not enforced under Section 10, Rule 39 of the Rules of Court. In the meantime, Urbano Galindo died intestate. On December 16, 1997, Felicissima, the widow of Urbano, and their children, Nestor, Juanita, Beatriz, Catalina, Danilo, Librada and Cesar, all surnamed Galindo, executed an "Extrajudicial Settlement of the Estate of the Deceased Urbano Galindo and/or the Deceased Gregorio Galindo with Waiver of Rights"5 in which they adjudicated unto themselves, as owners, the undivided rights and interests which they claimed Urbano had over Lot 1048. In the said deed, they also waived their respective claims over the lot in favor of Juanita Galindo Rivera. The latter, as one of the legal heirs of Gregorio, undertook to preserve the property left by the said deceased and, thereafter, executed an affidavit of loss of the owner's copy of TCT No. T-2145 6 and, on the basis thereof, secured TCT No. 335593(M) over the property in her name on September 8, 1998. 7 On April 7, 1999, a complaint was filed by the Heirs of Marciano Roxas, through Reginald S. Roxas, as plaintiffs, against Juanita Galindo Rivera in the Regional Trial Court (RTC) of Bulacan, for annulment of documents, cancellation of title and damages with prayer for a writ of preliminary injunction. The complaint alleged, inter alia, that: Reginald S. Roxas was the representative of the heirs of Marciano Roxas who died on June 4, 1950, namely, Maximiano Roxas, Benjamin Roxas, Eleazar Roxas, Lydia Roxas, Prescilla Roxas-de Perio, Virginia Roxas-Santos and Uriel Roxas, now all deceased; and Elisa Roxas Medina and Fortunato Roxas; Reginald Roxas was one of the eight children of the deceased Eleazar Roxas; the extrajudicial settlement of the estates of the deceased Gregorio and Urbano Galindo executed in favor of the defendant, the affidavit of loss executed by her and TCT No. 335593(M) issued by the Register of Deeds are null and void for being contrary to the decision of the CFI in Civil Case No. 1067 declaring Marciano Roxas to be the lawful owner of the property, which was affirmed by the CA in CA-G.R. No. 37697-R and had long become final and executory. cTCaEA The defendant filed a motion to dismiss the complaint on the following grounds: I.THAT THE PLAINTIFFS HAVE NO LEGAL CAPACITY TO SUE. II.THAT THE CAUSE OF ACTION IS BARRED BY STATUTE OF LIMITATIONS. On the first ground, the defendant alleged that there was no allegation in the complaint that the heirs of Marciano Roxas had authorized Reginald S. Roxas to file the complaint against her in their behalf. On the second ground, the defendant alleged that the plaintiffs' cause of action based on the decision of the CFI dated August 12, 1965 and affirmed by the CA, on February 5, 1973, not having been enforced was barred by the statute of limitations. Citing Article 1144 of the New Civil Code, the defendant argued that the

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plaintiffs should have filed their complaint within ten years from the finality of the said decision of the CFI. The defendant, likewise, cited the decision of this Court in Heirs of Juan Sindiong v. Committee on Burnt Areas and Improvements of Cebu 8 to support her submission that a final and executory decision must be enforced within ten years from the finality thereof. The trial court issued an Order denying the motion on September 7, 1999. It ruled that based on the plaintiffs' allegation in the complaint that they were the legitimate children of the deceased Marciano Roxas, such plaintiffs are the real parties-in-interest. On the second ground, the trial court ruled that the complaint of the plaintiffs was an action for quieting of title, the prescriptive period for which commenced only in 1998. In her motion for the reconsideration of the order, the defendant averred, this time, that the action of the plaintiffs was one for the enforcement of a constructive trust which prescribed in ten years. The defendant also reiterated her original submission that the complaint was one to enforce the decision of the CFI which was affirmed by the CA; hence, it prescribes within ten years from the finality of the said decision. She also maintained that the action was barred by the decision of the RTC and the CA.

While we agree with the respondents' premise that the petitioners herein, except petitioner Juanita Galindo Rivera, were not parties-defendants in the RTC and parties-petitioners in the CA, and, as a general rule, are not proper parties as petitioners in this case, the Court finds and so holds that they are indispensable parties and should be impleaded as parties-petitioners in this case. The general rule is that only those parties in a case and their privies and successors-in-interest are bound by the order or decision of the trial court. Persons or entities who are not parties to the case are not and should not be bound or adversely affected by the said order or decision; otherwise, they will be deprived of their right to due process. Since the petitioners, except petitioner Juanita Galindo Rivera, were not parties in the RTC and in the CA, they are not bound by the assailed orders of the RTC and the decision of the CA against petitioner Juanita Galindo Rivera; hence, they are not the proper parties to appeal from and assail the said orders of the RTC and the decision of the CA. It bears stressing, however, that the respondents, the plaintiffs in the RTC, sought the nullification of the "Extrajudicial Settlement of the Estate of the Deceased Urbano Galindo and/or the Deceased Gregorio Galindo with Waiver of Rights" executed by all the petitioners in which they adjudicated unto themselves as co-owners thereof the rights and interests which they claimed the deceased Urbano Galindo had over Lot 1048 covered by TCT No. 335593(M) which was issued to and under the name of petitioner Juanita Galindo Rivera on the basis of the said deed, and the retention of TCT No. T-2145 under the names of the heirs of Gregorio Galindo. Thus, all the petitioners, who executed the said deed, are indispensable parties as parties-defendants in the RTC and as parties-petitioners in the CA under Section 7, Rule 3 11 of the Rules of Court, and should have been impleaded by the respondents in their complaint. Without the presence of the said petitioners as defendants, the trial court could not validly render judgment and grant relief to the respondents. The failure of the respondents to implead all the petitioners as parties-defendants constituted a legal obstacle to the trial court and the appellate court's exercise of judicial power over the said cases and rendered any orders or judgments rendered therein a nullity. 12 The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act, not only as to the absent parties but even as to those present. 13 The RTC should have ordered the dismissal of the complaint. 14 The petitioners themselves must have realized the need to join petitioner Juanita Galindo Rivera as a partypetitioner without waiting for the court to order the same because they eventually joined petitioner Juanita Galindo Rivera as such party. ETHSAI The respondents even failed to implead the seven brothers/sisters of respondent Reginald Roxas, all of whom inherited the undivided share of their father Eleazar Roxas in the property subject of the deed of extrajudicial settlement, as well as the children of their uncle Vicente Roxas, namely, Rosalinda, Vicente, Jr. and Sergio, all surnamed Roxas. Respondent Reginald Roxas, his siblings and the children of Vicente Roxas were co-owners of the property; hence, they are, likewise, indispensable parties as plaintiffs in the RTC. 15 Their absence warranted the dismissal of the complaint as well. On the second issue, we agree with the petitioners that the RTC committed a grave abuse of its discretion amounting to excess or lack of jurisdiction in denying their motion to dismiss the complaint on the ground of the respondents' failure, as plaintiffs, to sufficiently allege in their complaint and prove that Reginald Roxas had the representative capacity to sue as such representative of all the heirs of the deceased Marciano Roxas. Section 1, Rule 3 16 of the Rules of Court provides that only persons or juridical persons or entities authorized by law may be parties in a civil action. Section 4, Rule 8 17 of the said Rules further provides that facts showing the capacity of a party to sue or be sued or the authority of a party to sue or be sued in a representative capacity must be averred in the complaint. In order to maintain an action in a court of justice, the plaintiff must have an actual legal existence, that is, he or she or it must be a person in law and possessed of a legal entity as either a natural or an artificial person, and no suit can lawfully be prosecuted in

The trial court denied the motion of the defendant in its Order 9 dated November 26, 1999. TADaCH The defendant, now the petitioner, joined by Felicissima, Nestor, Beatriz, Catalina, Danilo, Librada and Cesar, all surnamed Galindo, filed a petition for certiorari in the CA, assailing the September 7, 1999 and the November 26, 1999 Orders of the trial court. However, the CA rendered judgment 10 on April 4, 2001, denying due course and dismissing the petition, on the ground that the petitioners failed to show that the RTC committed a grave abuse of discretion in denying the motion to dismiss. The appellate court, likewise, ruled that even if the assailed orders of the RTC were erroneous, the same were merely errors of judgment, correctable through an appeal by writ of error. The petitioners now seek relief from the Court via a petition for review on certiorari, contending that the CA erred in denying due course and dismissing their petition for certiorari. In support of their petition at bar, the petitioners reiterated the same grounds and arguments which they raised in the CA. In their comment on the petition, the respondents assert that the petitioners, except petitioner Juanita Galindo Rivera, were not parties in the RTC and the CA; hence, are not proper parties as petitioners. They also aver that the grounds raised by the petitioners in their petition are factual, besides being matters of defense which should be threshed out and resolved only after trial. The issues for resolution are the following: (1) whether Felicissima, Nestor, Beatriz, Catalina, Danilo, Librada and Cesar, all surnamed Galindo, are proper parties as petitioners in this case; and (b) whether the trial court committed a grave abuse of its discretion in denying petitioner Juanita Galindo Rivera's motion to dismiss on the ground that Reginald S. Roxas had no legal capacity to sue for and in behalf of the heirs of Marciano Roxas, and that the action of the respondents had already prescribed when they filed their complaint on April 7, 1999. HAaECD On the first issue, the respondents aver that of the eight petitioners in this case, only petitioner Juanita Galindo Roxas was the petitioner in the CA and the sole defendant-movant in the RTC. The seven other petitioners were not parties in the CA and in the RTC. Hence, the respondents aver, the said seven petitioners are not bound by the orders of the trial court; as such, they are not the proper parties in this case as petitioners.

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the name of that person. 18 The party bringing suit has the burden of proving the sufficiency of the representative character that he claims. If a complaint is filed by one who claims to represent a party as plaintiff but who, in fact, is not authorized to do so, such complaint is not deemed filed and the court does not acquire jurisdiction over the complaint. An unauthorized complaint does not produce any legal effect. 19 Corollary, the defendants can assail the facts alleged in the complaint through a motion to dismiss on the ground that the plaintiff has no capacity to sue under Section 1(d) of Rule 16 of the Rules of Court, that is, that he does not have the representative he claims. 20 Section 1, Rule 7 21 of the Rules of Court, likewise, provides that the names of the parties should be included in the caption of the original complaint. cSATDC In this case, the caption of the complaint of the respondents states that the "Heirs of Marciano Roxas," represented by Reginald S. Roxas, are the plaintiffs. The following were, likewise, alleged in the body of the complaint: 1.That plaintiffs' representative, Reginald S. Roxas, is of legal age, married, and a resident of 36 Narcissus St., Roxas District, Quezon City; whereas, defendant is of legal age, married, and a resident of Alley Guevarra St., Pag-asa, Obando, Bulacan, where she may be served with summons and other processes of this Court; 2.That the Register of Deeds of Meycauayan, Bulacan, is impleaded in his official capacity to accord complete relief where it may be served with summons at its office address at Meycauayan, Bulacan; 3.That plaintiffs are the legitimate children of the late Marciano A. Roxas, namely: Maximiano Roxas (deceased), Benjamin Roxas (deceased), Eleazar Roxas (deceased), Lydia Roxas, Prescilla Roxas-De Perio (deceased), Elisa Roxas-Medina, Virginia Roxas-Santos (deceased), Uriel Roxas (deceased) and Fortunato Roxas; plaintiffs' representative, Reginald S. Roxas, is one of the eight (8) children of the said deceased Eleazar Roxas; 4.That the said late Marciano A. Roxas (died on June 4, 1950) is an owner of a parcel of land consisting of 48,089 sq.m., more or less, under Lot No. 1048 of the Sta. Maria de Pandi Estate situated at Sta. Maria, Bulacan, as evidenced by a Decision dated August 12, 1965 rendered by the then Court of First Instance of Malolos, Bulacan, under Civil Case No. 1067 and billed as "Heirs of M. Roxas vs. F. Galindo, et al." for Specific Performance, copy of a certified xerox copy of the same is attached hereto and marked as Annex "A" and submarkings. 22 As gleaned from the averments of the complaint, of the nine plaintiffs, six are already deceased, namely, Maximiano Roxas, Benjamin Roxas, Eleazar Roxas, Prescilla Roxas-de Perio, Virginia Roxas-Santos and Uriel Roxas. There is no allegation in the complaint that a special proceeding to settle the estate of the said deceased had been filed and was pending. Indeed, neither a dead person nor his estate may be a partyplaintiff in a court action. 23 As explained by this Court:

the court. An action begun by a decedent's estate cannot be said to have been begun by a legal person, since an estate is not a legal entity; such an action is a nullity and a motion to amend the party plaintiff will not, likewise, lie, there being nothing before the court to amend. Considering that capacity to be sued is a correlative of the capacity to sue, to the same extent, a decedent does not have the capacity to be sued and may not be named a party defendant in a court action. 24 In fine, the deceased Maximiano, Benjamin, Eleazar and Uriel, all surnamed Roxas, Prescilla Roxas-de Perio and Virginia Roxas-Santos have no capacity to sue and may not be sued as parties-plaintiffs. Neither does respondent Reginald Roxas have the capacity to represent the said deceased as party-plaintiff, nor is there any allegation in the complaint that Lydia Roxas, Elisa Medina and Fortunato Roxas are of legal age and have the capacity to sue. IaHCAD We agree with the ruling of the trial court that the action of the respondents against petitioner Juanita Galindo Rivera was one for quieting of title under the second paragraph of Rule 63 of the Rules of Court 25 and not one for the enforcement of the decision of the CFI in Civil Case No. 1067. It bears stressing that the nature of an action and the court which has jurisdiction over the case are determined by the material allegations of the complaint, the law existing at the time of the filing of the action and the character of the relief prayed for by the plaintiff irrespective of whether or not the plaintiff is entitled to such relief prayed for. The jurisdiction of the court cannot be made to depend upon the consent or waiver of the parties. 26 Neither is the caption of the complaint determinative of the nature of an action. In this case, the respondents alleged the following in the complaint: 1.That plaintiffs' representative, Reginald S. Roxas, is of legal age, married, and a resident of 36 Narcissus St., Roxas District, Quezon City; whereas, defendant is of legal age, married, and a resident of Alley Guevarra St., Pag-asa, Obando, Bulacan, where she may be served with summons and other processes of this Court; 2.That the Register of Deeds of Meycauayan, Bulacan, is impleaded in his official capacity to accord complete relief where it may be served with summons at its office address at Meycauayan, Bulacan; 3.That plaintiffs are the legitimate children of the late Marciano A. Roxas, namely: Maximiano Roxas (deceased), Benjamin Roxas (deceased), Eleazar Roxas (deceased), Lydia Roxas, Prescilla Roxas-De Perio (deceased), Elisa Roxas-Medina, Virginia Roxas-Santos (deceased), Uriel Roxas (deceased) and Fortunato Roxas; plaintiffs' representative, Reginald S. Roxas, is one of the eight (8) children of the said deceased Eleazar Roxas; 4.That the said late Marciano A. Roxas (died on June 4, 1950) is an owner of a parcel of land consisting of 48,089 sq.m., more or less, under Lot No. 1048 of the Sta. Maria de Pandi Estate situated at Sta. Maria, Bulacan, as evidenced by a Decision dated August 12, 1965 rendered by the then Court of First Instance of Malolos, Bulacan, under Civil Case No. 1067 and billed as "Heirs of M. Roxas vs. F. Galindo, et al." for Specific Performance, copy of a certified xerox copy of the same is attached hereto and marked as Annex "A" and submarkings; acADIT

. . . A deceased person does not have such legal entity as is necessary to bring action so much so that a motion to substitute cannot lie and should be denied by

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5.That the said Decision (Annex "A" of the complaint) was affirmed by the Court of Appeals in its Decision on February 5, 1973, copy of a certified xerox copy the latter decision is attached hereto and marked as Annex "B" and submarkings; 6.That in the said Decision (Annex "A" of the Complaint), defendants therein, F. Galindo, et al., were ordered to execute in favor of the plaintiffs therein, heirs of Marciano A. Roxas, a deed of absolute sale transferring to the latter Lot No. 1048 of the Sta. Maria de Pandi Estate; 7.That the said parcel of land was previously registered under T.C.T. No. T-2145 under the name of the legal Heirs of Gregorio Galindo but the same was not cancelled as the defendants in the said civil case, despite demands were made, failed and refused to execute the deed of absolute sale in favor of the plaintiffs therein, copy of a certified xerox copy of said title is attached hereto and marked as Annex "C" and submarkings; 8.That in 1998, plaintiffs discovered that the said parcel of land is now under the name of the defendant under T.C.T. No. T-335593(M), copy of a certified xerox copy of which is attached hereto and marked as Annexes "D" and "D-1"; 9.That after verification was made in the Register of Deeds of Meycauayan, Bulacan, plaintiffs discovered that the defendant had submitted a document billed as "Extra-Judicial Settlement of Estate of the Deceased Urbano Galindo and/or the Deceased Gregorio Galindo with Waiver of Rights" purportedly executed in 1997 by the heirs of Urbano Galindo and by defendant herself, despite the existence of the said decision (Annex "A" of the Complaint) copy of said settlement as well as supporting documents thereto are attached hereto and marked as Annex "E" and submarkings; 10.That the said settlement (Annex "E" of the Complaint) is of no legal force and effect as the parties thereto, including the defendant, were fully aware of infirmity or flaw in their title by virtue of the said final decision (Annex "A" of the Complaint); cDACST 11.That plaintiffs also found out that defendant had executed an Affidavit of Loss on February 3, 1998 purportedly to support the said settlement (Annex "E") and, consequently, to cancel the previous title (Annex "C") and a new one be issued (Annex "D") in her name, all of which were employed by her in violation of law; copy of the certified xerox copy of said Affidavit is attached hereto and marked as Annex "F"; 12.That all the allegations stated by the defendant in her affidavit (Annex "F") were all lies and surreptitiously made to render ineffective the said decision (Annex "A") to the damage and prejudice of the plaintiffs; 13.That TCT No. T-335593(M) (Annex "D" of the Complaint) is, likewise, null and void, being a resultant of an invalid document;

14.That, by reason of the foregoing unlawful acts of the defendant, plaintiffs suffered sleepless nights, serious anxiety and similar feelings the amount of which, if quantified in terms of money, would be not less than P50,000.00 as moral damages; 15.That to give other persons similarly inclined as that of the defendant, the amount of P50,000.00 shall be awarded by way of exemplary damages; 16.That by reason of the foregoing unlawful acts of the defendant, plaintiffs were constrained to hire the services of the undersigned for an agreed amount of P20,000.00 as acceptance fee plus P2,000.00 per court appearance. 27 The respondents, thereafter, prayed that, after due hearing, they be granted the following reliefs: WHEREFORE, premises considered, it is most respectfully prayed, after due hearing and judgment, that: a)Upon filing of the complaint, a temporary restraining order be issued directing defendant and all persons acting in her behalf to refrain from selling the subject property; CacTSI b)After due hearing, a writ of preliminary injunction be issued; c)Annulling the Extrajudicial Settlement of the Estate of the Deceased Urbano Galindo and/or the Deceased Gregorio Galindo with Waiver of Rights (Annex "E" of the Complaint), and the Affidavit of Loss dated February 3, 1998 executed by the defendant (Annex "F" of the Complaint); d)Cancelling TCT No. T-335593(M) issued in the name of the defendant (Annex "D" of the Complaint); e)Restoring TCT No. T-2145 under the name of the legal Heirs of Gregorio Galindo (Annex ''C" of the Complaint); and f)To pay plaintiffs the amount of P50,000.00 as moral damages; P50,000.00 as exemplary damages; P20,000.00 plus P2,000.00 per court appearance and attorney's fees and the cost of this suit. Plaintiffs further pray for such other reliefs just and equitable under the premises. 28 As gleaned from the averments of the complaint, the respondents herein, who were the plaintiffs in the RTC, sought to quiet their ownership over the property and remove any cloud thereon caused by (a) the Deed of Extrajudicial Settlement of the Estate of Gregorio and Urbano Galindo executed by the petitioners; (b) the Affidavit of Loss executed by petitioner Juanita Galindo Rivera; and (c) the issuance of TCT No. 335593(M) in favor of the latter.

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While it may be true that the respondents prayed, in their complaint, that the said deed and TCT No. 335593(M) be nullified by the court, it cannot thereby be concluded that the action of the respondents was for the enforcement of the decision of the CFI in Civil Case No. 1067. The respondents, in fact, did not pray, in their complaint, that the petitioners be ordered to execute a deed of absolute sale over the property as decreed in the decision of the CFI in Civil Case No. 1067; that the property covered by the said title be reconveyed to them; or that a new title over the property be issued to under their names as owners thereof. The plea of the respondents for the nullification of the said deed and title is but the consequences of and incidental to their plea that their ownership over the lot be not clouded by the contrary claim of the petitioners. It must be stressed that an action to quiet title is imprescriptible. 29 IN LIGHT OF ALL THE FOREGOING, the petition is GRANTED. The Decision of the Regional Trial Court and the assailed Decision of the Court of Appeals are REVERSED AND SET ASIDE. The Regional Trial Court of Bulacan is ordered to dismiss the complaint. No costs. caCTHI SO ORDERED.

quite constricted. His contention that the only issue in a consignation case is whether or not the defendant is willing to accept the proffered payment is true only where there is no controversy with respect to the obligation sought to be discharged by such payment. His consignation case, however, is not as simple. While ostensibly, the immediate relief sought for in his consignation case is to compel therein defendants to accept his advance rentals, the ultimate purpose of such action is to compel the new owner of the fishpond to recognize his leasehold rights and right of occupation. In the last analysis, therefore, the issue involved in Civil Case No. 103647 is the right of possession over the fishpond intertwined with the validity and effectivity of the lease contract. This is the same issue involved in Civil Case No. 4102. Although an action for quieting of title refers to ownership, P. R. Roman, Inc. in its complaint in Civil Case No. 4102. Thus, while the respondent court in the assailed order of dismissal dated August 27, 1976 described Civil Case No. 4102 as "precisely for the ownership of the subject matter of the property allegedly leased to the plaintiff herein," its order dated October 22, 1976 denying petitioner's motion for reconsideration. That whatever decision may be handed down in Civil Case No. 4102 would constitute res judicata in Civil Case No. 103647 is beyond cavil. Should the Bataan court rule that the lease contract is valid and effective against P. R. Roman, Inc., then petitioner can compel it to accept his proffered payment of rentals; otherwise, he may not do so. 4.ID.; ID.; ID.; GRANTING THEREOF ON THE GROUND OF LITIS PENDENTIA; DOES NOT DEPRIVE A PARTY OF THE RIGHT TO CHOOSE THE VENUE OF HIS ACTION. Petitioner next contends that the dismissal of Civil Case No. 103647 deprived him of his right to choose the venue of his action. Verily, the rules on the venue of personal actions are laid down generally for the convenience of the plaintiff and his witnesses. But, as observed by private respondents, this right given to the plaintiff is not immutable. It must yield to the greater interest of the orderly administration of justice, which as in this case, may call for the dismissal of an action on the basis of litis pendentia to obviate the possibility of conflicting decisions being rendered by two different courts. As private respondents would put it, "(T)he Rules of Court are not perfect. It does not pretend to be able to make everyone happy simultaneously or consecutively or all the time. Even the Rules of Court has hierarchy of values; thus, the choice of venue may bow to dismissal of the case because of litis pendentia. At any rate, petitioner cannot complain of any inconvenience arising from the dismissal of Civil Case No. 103647. Being the defendant in Civil Case No. 4102, he cannot but litigate before the Bataan court, and bringing his consignation case before the same court would actually save him time, effort and litigation expenses.

BENEDICTO RAMOS, petitioner, vs. HON. ELVIRO L. PERALTA, Presiding Judge, Branch XVII, Court of First Instance of Manila, SPOUSES JUVENCIO ORTANEZ and JULIANA S. ORTANEZ, MINDANAO INSURANCE CO., INC. and P. R. ROMAN, INC., respondents.

Angel Suntay, Jr. and Renato M. Coronado for petitioner. Tolentino, Garcia, Cruz & Reyes for respondents Ortanez.

SYLLABUS

DECISION

1.REMEDIAL LAW; CIVIL PROCEDURE; MOTION TO DISMISS, LITIS PENDENTIA AS A GROUND; REQUISITES. Under the rules and jurisprudence, for litis pendentia to be invoked as a ground for the dismissal of an action, the concurrence of the following requisites is necessary: (a) Identity of parties or at least such as represent the same interest in both actions; (b) Identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) The identity in the two cases should be such that the judgment that may be rendered in one would, regardless of which party is successful, amount to res judicata in the other. 2.ID.; ID.; ID.; ID.; ID.; IDENTITY OF PARTIES; PRESENT IN CASE AT BAR. It is worthwhile mentioning that in his basic petition for review, one of the assigned errors of petitioner is that the respondent court erred in not holding that the parties in Civil Case No. 4102 are not the same as the parties in Civil Case No. 103647. However, in his brief, no further mention of this assigned error was made; a clear indication of petitioner's admission of the identity of parties in Civil Case No. 4102 and Civil Case No. 103647, particularly as he filed a third party complaint in Civil Case No. 4102 against the spouses Ortanez and Mindanao Insurance. 3.ID.; ID.; ID.; ID.; ID.; IDENTITY OF RIGHTS ASSERTED AND RELIEF PRAYED FOR; PRESENT IN CASE AT BAR. We agree with private respondents' observation that petitioners approach to his consignation case is

FERNAN, C .J p: Put in issue in this petition for review on certiorari is the propriety of the dismissal by the then Court of First Instance of (CFI) of Manila, Branch XVII of petitioner's action for consignation of the sum of P70,000.00 representing advance rentals for the 101-hectare Salgado fishpond located in Bo. Balut, Pilar, Bataan. Petitioner started occupying the Salgado fishpond in 1964 by virtue of a lease contract executed in his favor by private respondents spouses Juvencio and Juliana Ortanez. The original lease for a term of five (5) years from January 1, 1964 to January 1, 1990, was renewed several times, the last renewal being on June 28, 1974 under a "Kasunduan sa Pag-upa" for a period of three (3) years starting January 1, 1975 to December 31, 1977. cdphil Unknown to petitioner, title 1 to said property was in the name of Philippine International Surety Co., Inc., a corporation founded, organized and 99.5%-owned by the Salgado spouses. Later renamed Mindanao

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Insurance Co., Inc., 2 said corporation was placed under receivership and liquidation on June 20, 1968 in Civil Case No. Q-10664 of the then CFI of Rizal, Branch IV, Quezon City, upon application of Insurance Commissioner Gregoria Cruz-Ansaldo who was appointed receiver. Thereafter on February 23, 1976, respondent P. R. Roman, Inc. purchased from Mindanao Insurance the Salgado fishpond for P950,000.00. The deed of sale was signed by the receiver and duly approved by the liquidation court. Apparently due to this development, the spouses Ortanez refused to accept from petitioner the advance rentals on the fishpond due on March 15, 1976 in the amount of P30,000.00. On or about May 1, 1976, petitioner received a letter from Don Pablo R. Roman informing him of the latter's acquisition of the fishpond and intention to take possession thereof on May 16, 1976. In his letter-reply, petitioner reminded Mr. Roman of his lease contract over the fishpond and refused to consent to the intended take over. Notwithstanding petitioner's objection, P. R. Roman, Inc. took over possession of the fishpond. On August 2, 1976, petitioner filed before the CFI of Manila the aforesaid complaint, docketed as Civil Case No. 103647,3 against private respondents Juvencio and Juliana Ortanez, Mindanao Insurance and P. R. Roman, Inc. for consignation of the sum of P70,000.00 representing advance rentals on the fishpond in the amounts of P30,000.00 and P40,000.00 respectively due on March 15, 1976 and June 15, 1976, which he had previously tendered to, but refused by the spouses Ortanez and Pablo Roman. P. R. Roman, Inc. filed a motion to dismiss on the grounds that venue was improperly laid, the complaint states no cause of action and the court has no jurisdiction over the subject of the action or suit. In its motion to dismiss, P. R. Roman, Inc. cited the pendency before the then CFI of Bataan of Civil Case No. 4102 instituted by P.R. Roman, Inc. against petitioner Benedicto Ramos on August 13, 1976 to quiet its title over the Salgado fishpond. On August 27, 1976, respondent CFI of Manila issued an order 4 dismissing Civil Case No. 103647, stating in part: Without discussing in detail the grounds mentioned above, the Court really sees that this case should be dismissed not only insofar as against P. R. Roman, Inc. but also as against the other defendants mentioned above for the reason, principally, that there is already a case pending between the same parties and for the same cause in Civil Case No. 4102 of Branch II of the Court of First Instance of Bataan, entitled P. R. Roman, Inc. vs. Benedicto Roman, which is precisely for the ownership of the subject matter of the property allegedly leased to the plaintiff herein (Exhibit "A"-Motion). In the said case, the defendant therein, Benedicto Ramos, who is the plaintiff in the case at bar, filed a motion for leave to file a thirdparty complaint against the spouses surnamed Ortanez and the Mindanao Insurance Company, Inc. All the issues respecting the fishpond, including the lease contract, are necessarily involved in the case pending now in Bataan. Aside from the above, the Court cannot decide this case because it cannot pre-empt the Court of Bataan on whether or nor the P. R. Roman, Inc. is already the owner because if it finds that the said defendant P. R. Roman, Inc. is really the owner of the fishpond, there is no more lease for which rentals are to be paid." Petitioner moved for reconsideration, but was unsuccessful, the court a quo, standing "pat on its previous order and reiterat(ing) its dismissal of the case, without costs." 5

Hence this petition anchored on the following ascribed errors of law. 6 1.The respondent court erred in not holding that the only issue in consignation of funds is whether the defendant is willing to accept the proffered payment or not. Cdpr 2.The respondent court erred in not holding that the prerogative of choosing the proper venue belongs to the plaintiff. 3.The respondent court erred in holding that the subsequent filing of Civil Case No. 4102 before the Court of First Instance of Bataan is a bar to the prosecution of Civil Case No. 103647 before it.

Petitioner contends that the Bataan quieting-of-title Civil Case No. 4102 cannot serve as a bar to his Manila consignation Civil Case No. 103647 because they involve different issues. Civil Case No. 4102 deals with the question of ownership while the only issue involved in his consignation case is whether or not the defendant is willing to accept the proffered payment. In fact, petitioner posits, the action to quiet title is a useless futile exercise as he does not question P. R. Roman Inc.'s ownership of the fishpond under consideration, but merely wishes to assert his leasehold and possessory rights over said property under the "Kasunduan sa Pagupa." He further contends that compelling him to litigate before the Bataan court would render nugatory his right as a plaintiff to choose the venue of his action. Besides, Civil Case No. 103647 was filed on August 2, 1976, ahead of Civil Case No. 4102 which was filed on a much later date, August 13, 1976, after the Manila CFI had already acquired jurisdiction over Civil Case No. 103647. Private respondents counter that the view taken by petitioner of the Manila consignation case is quite limited and bookish, because while it may be true that theoretically, the main issue involved in a consignation case is whether or not the defendant is willing to accept the proffered payment, in the consignation case brought by petitioner, other issues were pleaded by petitioner himself, such as the validity and binding effect of the lease contract and the existence of the supposed obligor-obligee relationship. They further contend that a plaintiffs right of choice of venue is not absolute, but must invariably bow to the dismissal of the case because of litis pendentia which, in refutation of petitioner's argument, does not require that there is a prior pending action, merely that there is a pending action. We find for respondents. Under the rules and jurisprudence, for litis pendentia to be invoked as a ground for the dismissal of an action, the concurrence of the following requisites is necessary: (a) Identity of parties or at least such as represent the same interest in both actions; (b) Identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) The identity in the two cases should be such that the judgment that may be rendered in one would, regardless of which party is successful, amount to res judicata in the other. 7 These requisites are present in the case at bar. It is worthwhile mentioning that in his basic petition for review, one of the assigned errors of petitioner is that the respondent court erred in not holding that the parties in Civil Case No. 4102 are not the same as the parties in Civil Case No. 103647. 8 However, in his brief, no further mention of this assigned error was made; a clear indication of petitioner's admission of the identity of parties in Civil Case No. 4102 and Civil Case No. 103647, particularly as he filed a third party complaint in Civil Case No. 4102 against the spouses Ortanez and Mindanao insurance.

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Anent the second element, we agree with private respondents' observation that petitioners approach to his consignation case is quite constricted. His contention that the only issue in a consignation case is whether or not the defendant is willing to accept the proffered payment is true only where there is no controversy with respect to the obligation sought to be discharged by such payment. His consignation case, however, is not as simple. While ostensibly, the immediate relief sought for in his consignation case is to compel therein defendants to accept his advance rentals, the ultimate purpose of such action is to compel the new owner of the fishpond to recognize his leasehold rights and right of occupation. In the last analysis, therefore, the issue involved in Civil Case No. 103647 is the right of possession over the fishpond intertwined with the validity and effectivity of the lease contract. Cdpr This is the same issue involved in Civil Case No. 4102. Although an action for quieting of title refers to ownership, P. R. Roman, Inc. in its complaint 9 in Civil Case No. 4102 alleged: 5.There is a cloud on the aforesaid titles of plaintiff on the said agricultural land, marked Annexes "A", "B" and "C" hereof, as well as on its right of possession over that real property by reason of a certain "Kasunduan sa Pagupa" (Contract of Lease) dated June 28, 1974 executed by and between the spouses Jovencio Ortanez and Juliana S. Ortanez purportedly as "may-ari/Nagpapaupa" (owner/lessor) and the defendant as lessee, which instrument is apparently valid or effective but in truth and in fact invalid, ineffective, voidable or unenforceable, and is prejudicial to the said titles of plaintiff as well as to its right of possession over the same fishpond/agricultural land in Barrio Balut, Pilar, Bataan. Thus, while the respondent court in the assailed order of dismissal dated August 27, 1976 described Civil Case No. 4102 as "precisely for the ownership of the subject matter of the property allegedly leased to the plaintiff herein," 10 its order dated October 22, 1976 denying petitioner's motion for reconsideration, more perceptively stated. 11 "In Civil Case No. 4102 of the Court of First Instance of Bataan, entitled P. R. Roman, Inc. vs. Benedicto Ramosone of the principal issues is the possession of the fishpond subject matter of the lease supposed rents of which are supposed to be consignated in the instant case, plaintiff P. R. Roman, Inc. there, claiming to be entitled to the possession of said property as owner under a certificate of title and defendant Benedicto Ramos, plaintiff here, anchoring his claim of possession upon his lease with the Ortanez spouses against whom, on his motion, he filed a third party complaint in which he prayed in the alternative, that should he lose possession of the fishpond in favor of P. R. Roman, Inc., the Ortanezes should be condemned to reimburse him the rentals he has already paid for the unexpired portion of the lease. The issue of whether or not the lease subsists even as regards P. R. Roman, Inc., for it is the view of Ramos that it bought the property with knowledge of the lease, is squarely planted in the case before the Court of First Instance of Bataan, and, consequently, the more appropriate court with which rents are to be consignated. . . . " That whatever decision may be handed down in Civil Case No. 4102 would constitute res judicata in Civil Case No. 103647 is beyond cavil. Should the Bataan court rule that the lease contract is valid and effective against P. R. Roman, Inc., then petitioner can compel it to accept his proffered payment of rentals; otherwise, he may not do so. Petitioner next contends that the dismissal of Civil Case No. 103647 deprived him of his right to choose the venue of his action. Verily, the rules on the venue of personal actions are laid down generally for the

convenience of the plaintiff and his witnesses. But, as observed by private respondents, this right given to the plaintiff is not immutable. It must yield to the greater interest of the orderly administration of justice, which as in this case, may call for the dismissal of an action on the basis of litis pendentiato obviate the possibility of conflicting decisions being rendered by two different courts. 12 As private respondents would put it, "(T)he Rules of Court are not perfect. It does not pretend to be able to make everyone happy simultaneously or consecutively or all the time. Even the Rules of Court has hierarchy of values; thus, the choice of venue may bow to dismissal of the case because of litis pendentia. 13 At any rate, petitioner cannot complain of any inconvenience arising from the dismissal of Civil Case No. 103647. Being the defendant in Civil Case No. 4102, he cannot but litigate before the Bataan court, and bringing his consignation case before the same court would actually save him time, effort and litigation expenses. Finally, the rule on litis pendentia does not require that the later case should yield to the earlier case. What is required merely is that there be another pending action, not a prior pending action. Considering the broader scope of inquiry involved in Civil Case No. 4102 and the location of the property involved, no error was committed by the lower court in deferring to the Bataan court's jurisdiction. Cdpr WHEREFORE, the assailed decision dated August 27, 1976 of the then Court of First Instance of Manila, Branch XVII, is AFFIRMED in toto. This decision is immediately executory, with costs against petitioner. SO ORDERED.

CATALINA B. CHU, THEANLYN B. CHU, THEAN CHING LEE B. CHU, THEAN LEEWN B. CHU, and MARTIN LAWRENCE B. CHU, petitioners, vs. SPOUSES FERNANDO C. CUNANAN and TRINIDAD N. CUNANAN, BENELDA ESTATE DEVELOPMENT CORPORATION, and SPOUSES AMADO E. CARLOS and GLORIA A. CARLOS, respondents.

DECISION

BERSAMIN, J p: If two or more suits are instituted on the basis of the same cause of action, the filing of one or a judgment upon the merits in any one is available as a ground for the dismissal of the others. 1 We review the decision promulgated on November 19, 2002, 2 whereby the Court of Appeals (CA) dismissed the petitioners' amended complaint in Civil Case No. 12251 of the Regional Trial Court, Branch 41, in San Fernando City, Pampanga (RTC) for being barred by res judicata. Antecedents

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On September 30, 1986, Spouses Manuel and Catalina Chu (Chus) executed a deed of sale with assumption of mortgage3 involving their five parcels of land situated in Saguin, San Fernando City, Pampanga, registered under Transfer Certificate of Title (TCT) No. 198470-R, TCT No. 198471-R, TCT No. 198472-R, TCT No. 198473-R, and TCT No. 199556-R, all of the Office of the Registry of Deeds of the Province of Pampanga, in favor of Trinidad N. Cunanan (Cunanan) for the consideration of P5,161,090.00. They also executed a socalled side agreement, whereby they clarified that Cunanan had paid only P1,000,000.00 to the Chus despite the Chus, as vendors, having acknowledged receiving P5,161,090.00; that the amount of P1,600,000.00 was to be paid directly to Benito Co and to Security Bank and Trust Company (SBTC) in whose favor the five lots had been mortgaged; and that Cunanan would pay the balance of P2,561.90.00 within three months, with a grace period of one month subject to 3%/month interest on any remaining unpaid amount. The parties further stipulated that the ownership of the lots would remain with the Chus as the vendors and would be transferred to Cunanan only upon complete payment of the total consideration and compliance with the terms of the deed of sale with assumption of mortgage. 4 Thereafter, the Chus executed a special power of attorney authorizing Cunanan to borrow P5,161,090.00 from any banking institution and to mortgage the five lots as security, and then to deliver the proceeds to the Chus net of the balance of the mortgage obligation and the downpayment. 5 Cunanan was able to transfer the title of the five lots to her name without the knowledge of the Chus, and to borrow money with the lots as security without paying the balance of the purchase price to the Chus. She later transferred two of the lots to Spouses Amado and Gloria Carlos (Carloses) on July 29, 1987. As a result, on March 18, 1988, the Chus caused the annotation of an unpaid vendor's lien on three of the lots. Nonetheless, Cunanan still assigned the remaining three lots to Cool Town Realty on May 25, 1989 despite the annotation. 6 cHECAS In February 1988, the Chus commenced Civil Case No. G-1936 in the RTC to recover the unpaid balance from Spouses Fernando and Trinidad Cunanan (Cunanans). Five years later, on April 19, 1993, the Chus amended the complaint to seek the annulment of the deed of sale with assumption of mortgage and of the TCTs issued pursuant to the deed, and to recover damages. They impleaded Cool Town Realty and Development Corporation (Cool Town Realty), and the Office of the Registry of Deeds of Pampanga as defendants in addition to the Cunanans. 7 Considering that the Carloses had meanwhile sold the two lots to Benelda Estate Development Corporation (Benelda Estate) in 1995, the Chus further amended the complaint in Civil Case No. G-1936 to implead Benelda Estate as additional defendant. In due course, Benelda Estate filed its answer with a motion to dismiss, claiming, among others, that the amended complaint stated no cause of action because it had acted in good faith in buying the affected lots, exerting all efforts to verify the authenticity of the titles, and had found no defect in them. After the RTC denied its motion to dismiss, Benelda Estate assailed the denial on certiorari in the CA, which annulled the RTC's denial for being tainted with grave abuse of discretion and dismissed Civil Case No. G-1936 as against Benelda Estate. On March 1, 2001, the Court upheld the dismissal of Civil Case No. G-1936 in G.R. No. 142313 entitled Chu, Sr. v. Benelda Estate Development Corporation. 8 On December 2, 1999, the Chus, the Cunanans, and Cool Town Realty entered into a compromise agreement, 9 whereby the Cunanans transferred to the Chus their 50% share in "all the parcels of land situated in Saguin, San Fernando, Pampanga" registered in the name of Cool Town Realty "for and in consideration of the full settlement of their case." The RTC approved the compromise agreement in a partial decision dated January 25, 2000. 10 Thereafter, on April 30, 2001, the petitioners herein (i.e., Catalina Chu and her children) brought another suit, Civil Case No. 12251, against the Carloses and Benelda Estate, 11 seeking the cancellation of the TCTs of the two lots in the name of Benelda Estate, and the issuance of new TCTs in their favor, plus damages.

The petitioners amended their complaint in Civil Case No. 12251 on February 4, 2002 to implead the Cunanans as additional defendants. 12 The Cunanans moved to dismiss the amended complaint based on two grounds, namely: ( a) bar by prior judgment, and (b) the claim or demand had been paid, waived, and abandoned. Benelda Estate likewise moved to dismiss the amended complaint, citing as grounds: ( a) forum shopping; (b) bar by prior judgment, and (c) failure to state a cause of action. On their part, the Carloses raised affirmative defenses in their answer, namely: (a) the failure to state a cause of action; (b) res judicata or bar by prior judgment; and (c) bar by statute of limitations. On April 25, 2002, the RTC denied both motions to dismiss, 13 holding that the amended complaint stated a cause of action against all the defendants; that the action was not barred by res judicata because there was no identity of parties and subject matter between Civil Case No. 12251 and Civil Case No. G-1936; and that the Cunanans did not establish that the petitioners had waived and abandoned their claim or that their claim had been paid by virtue of the compromise agreement, pointing out that the compromise agreement involved only the three parcels of land registered in the name of Cool Town Realty. 14 The Cunanans sought reconsideration, but their motion was denied on May 31, 2002. 15 On September 2, 2002, the Cunanans filed a petition for certiorari in the CA (SP-72558), assailing the RTC's denial of their motion to dismiss and motion for reconsideration. 16 On November 19, 2002, the CA promulgated its decision, 17 granting the petition for certiorari and nullifying the challenged orders of the RTC. The CA ruled that the compromise agreement had ended the legal controversy between the parties with respect to the cause of action arising from the deed of sale with assumption of mortgage covering all the five parcels of land; that Civil Case No. G-1936 and Civil Case No. 12251 involved the violation by the Cunanans of the same legal right under the deed of sale with assumption of mortgage; and that the filing of Civil Case No. 12251 contravened the rule against splitting of a cause of action, and rendered Civil Case No. 12251 subject of a motion to dismiss based on bar by res judicata. The CA disposed thusly: HaTAEc WHEREFORE, premises considered, the present petition for certiorari is hereby GIVEN DUE COURSE and the writ prayed for, accordingly GRANTED. Consequently, the challenged Orders of the respondent court denying the motions to dismiss are hereby ANNULLED and SET ASIDE and a new one is hereby rendered DISMISSING the Amended Complaint in Civil Case No. 12251. No costs. SO ORDERED. 18 Hence, this appeal. Issue Was Civil Case No. 12251 barred by res judicata although the compromise agreement did not expressly include Benelda Estate as a party and although the compromise agreement made no reference to the lots now registered in Benelda Estate's name?

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Ruling We deny the petition for review. I The petitioners contend that the compromise agreement did not apply or extend to the Carloses and Benelda Estate; hence, their Civil Case No. 12251 was not barred by res judicata. We disagree. A compromise agreement is a contract whereby the parties, by making reciprocal concessions, avoid a litigation or put an end to one already commenced. 19 It encompasses the objects specifically stated therein, although it may include other objects by necessary implication, 20 and is binding on the contracting parties, being expressly acknowledged as a juridical agreement between them. 21 It has the effect and authority of res judicata upon the parties. 22 In the construction or interpretation of a compromise agreement, the intention of the parties is to be ascertained from the agreement itself, and effect should be given to that intention. 23 Thus, the compromise agreement must be read as a whole. The following pertinent portions of the compromise agreement indicate that the parties intended to thereby settle alltheir claims against each other, to wit: 1.That the defendants SPOUSES TRINIDAD N. CUNANAN and FERNANDO C. CUNANAN for and in consideration of the full settlement of their case in the above-entitled case, hereby TRANSFER, DELIVER, and CONVEY unto the plaintiffs all their rights, interest, benefits, participation, possession and ownership which consists of FIFTY (50%) percent share on all the parcels of land situated in Saguin, San Fernando Pampanga now registered in the name of defendant, COOL TOWN REALTY & DEVELOPMENT CORPORATION, as particularly evidenced by the corresponding Transfer Certificates of Titles . . . xxx xxx xxx 6.That the plaintiffs and the defendant herein are waiving, abandoning, surrendering, quitclaiming, releasing, relinquishing any and all their respective claims against each other as alleged in the pleadings they respectively filed in connection with this case. 24 (bold emphasis supplied) The intent of the parties to settle all their claims against each other is expressed in the phrase any and all

WHEREAS, the VENDORS are willing to sell the above-described properties and the VENDEE is willing to buy the same at FIFTY FIVE (P55.00) PESOS, Philippine Currency, per square meter, or a total consideration of FIVE MILLION ONE HUNDRED SIXTY ONE THOUSAND and NINETY (P5,161,090.00) PESOS, Philippine Currency. 25 IcAaEH To limit the compromise agreement only to the three lots mentioned therein would contravene the avowed objective of Civil Case No. G-1936 to enforce or to rescind the entire deed of sale with assumption of mortgage. Such interpretation is akin to saying that the Cunanans separately sold the five lots, which is not the truth. For one, Civil Case No. G-1936 did not demand separate amounts for each of the purchased lots. Also, the compromise agreementdid not state that the value being thereby transferred to the petitioners by the Cunanans corresponded only to that of the three lots. Apparently, the petitioners were guilty of splitting their single cause of action to enforce or rescind the deed of sale with assumption of mortgage. Splitting a single cause of action is the act of dividing a single or indivisible cause of action into several parts or claims and instituting two or more actions upon them. 26 A single cause of action or entire claim or demand cannot be split up or divided in order to be made the subject of two or more different actions. 27 Thus, Section 4, Rule 2 of the Rules of Court expressly prohibits splitting of a single cause of action, viz.: Section 4.Splitting a single cause of action; effect of. If two or more suits are instituted on the basis of the same cause of action, the filing of one or a judgment upon the merits in any one is available as a ground for the dismissal of the others. (4a) The petitioners were not at liberty to split their demand to enforce or rescind the deed of sale with assumption of mortgage and to prosecute piecemeal or present only a portion of the grounds upon which a special relief was sought under the deed of sale with assumption of mortgage, and then to leave the rest to be presented in another suit; otherwise, there would be no end to litigation. 28 Their splitting violated the policy against multiplicity of suits, whose primary objective was to avoid unduly burdening the dockets of the courts. Their contravention of the policy merited the dismissal of Civil Case No. 12251 on the ground of bar by res judicata.

Res judicata means a matter adjudged, a thing judicially acted upon or decided; a thing or matter settled by judgment.29 The doctrine of res judicata is an old axiom of law, dictated by wisdom and sanctified by age,
and founded on the broad principle that it is to the interest of the public that there should be an end to litigation by the same parties over a subject once fully and fairly adjudicated. It has been appropriately said that the doctrine is a rule pervading every well-regulated system of jurisprudence, and is put upon two grounds embodied in various maxims of the common law: the one, public policy and necessity, which makes it to the interest of the State that there should be an end to litigation interest reipublicae ut sit finis litium; the other, the hardship on the individual that he should be vexed twice for one and the same cause nemo debet bis vexari pro una et eadem causa. A contrary doctrine would subject the public peace and quiet to the will and neglect of individuals and prefer the gratification of the litigious disposition on the part of suitors to the preservation of the public tranquillity and happiness. 30 Under the doctrine of res judicata, a final judgment or decree on the merits rendered by a court of competent jurisdiction is conclusive of the rights of the parties or their privies in all later suits and on all points and matters determined in the previous suit. 31 The foundation principle upon which the doctrine rests is that the parties ought not to be permitted to litigate the same issue more than once; that when a right or fact has been judicially tried and determined by a court of competent jurisdiction, so long as it remains unreversed, should be conclusive upon the parties and those in privity with them in law or estate. 32

their respective claims against each other as alleged in the pleadings they respectively filed in connection with this case, which was broad enough to cover whatever claims the petitioners might assert based on the deed of sale with assumption of mortgage.
There is no question that the deed of sale with assumption of mortgage covered all the five lots, to wit:

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Yet, in order that res judicata may bar the institution of a subsequent action, the following requisites must concur: (a) the former judgment must be final; (b) it must have been rendered by a court having jurisdiction of the subject matter and the parties; (c) it must be a judgment on the merits; and (d) there must be between the first and second actions (i) identity of parties, (ii) identity of the subject matter, and ( iii) identity of cause of action. 33 The first requisite was attendant. Civil Case No. G-1936 was already terminated under the compromise agreement, for the judgment, being upon a compromise, was immediately final and unappealable. As to the second requisite, the RTC had jurisdiction over the cause of action in Civil Case No. G-1936 for the enforcement or rescission of the deed of sale with assumption of mortgage, which was an action whose subject matter was not capable of pecuniary estimation. That the compromise agreement explicitly settled the entirety of Civil Case No. G-1936 by resolving all the claims of the parties against each other indicated that the third requisite was also satisfied. 34 But was there an identity of parties, of subject matter, and of causes of action between Civil Case No. G-1936 and Civil Case No. 12251? There is identity of parties when the parties in both actions are the same, or there is privity between them, or they are successors-in-interest by title subsequent to the commencement of the action litigating for the same thing and under the same title and in the same capacity. 35 The requirement of the identity of parties was fully met, because the Chus, on the one hand, and the Cunanans, on the other hand, were the parties in both cases along with their respective privies. The fact that the Carloses and Benelda Estate, defendants in Civil Case No. 12251, were not parties in thecompromise agreement was inconsequential, for they were also the privies of the Cunanans as transferees and successors-in-interest. It is settled that the absolute identity of parties was not a condition sine qua non for res judicatato apply, because a shared identity of interest sufficed. 36 Mere substantial identity of parties, or even community of interests between parties in the prior and subsequent cases, even if the latter were not impleaded in the first case, was sufficient. 37 AIDTHC As to identity of the subject matter, both actions dealt with the properties involved in the deed of sale with assumption of mortgage. Identity of the causes of action was also met, because Case No. G-1936 and Civil Case No. 12251 were rooted in one and the same cause of action the failure of Cunanan to pay in full the purchase price of the five lots subject of the deed of sale with assumption of mortgage. In other words, Civil Case No. 12251 reprised Civil Case No. G-1936, the only difference between them being that the petitioners alleged in the former that Benelda Estate was "not also a purchaser for value and in good faith." 38 In fine, the rights and obligations of the parties vis--vis the five lots were all defined and governed by the deed of sale with assumption of mortgage, the only contract between them. That contract was single and indivisible, as far as they were concerned. Consequently, the Chus could not properly proceed against the respondents in Civil Case No. 12251, despite the silence of the compromise agreement as to the Carloses and Benelda Estate, because there can only be one action where the contract is entire, and the breach total, and the petitioners must therein recover all their claims and damages. 39 The Chus could not be permitted to split up a single cause of action and make that single cause of action the basis of several suits. 40 WHEREFORE, we deny the petition for review on certiorari, and affirm the decision promulgated in CA-G.R. SP No. 72558. The petitioners shall pay the costs of suit. SO ORDERED.

PRINT HIGHLIGHTS OFF CROSS-REFERENCE ON CITED IN ADD BOOKMARK DECISION

SECOND DIVISION

[G.R. No. 175666. July 29, 2013.]

MANILA BANKERS LIFE INSURANCE CORPORATION, petitioner, vs. CRESENCIA P. ABAN,respondent.

DECISION

DEL CASTILLO, J p: The ultimate aim of Section 48 of the Insurance Code is to compel insurers to solicit business from or provide insurance coverage only to legitimate and bona fide clients, by requiring them to thoroughly investigate those they insure within two years from effectivity of the policy and while the insured is still alive. If they do not, they will be obligated to honor claims on the policies they issue, regardless of fraud, concealment or misrepresentation. The law assumes that they will do just that and not sit on their laurels, indiscriminately soliciting and accepting insurance business from any Tom, Dick and Harry. Assailed in this Petition for Review on Certiorari 1 are the September 28, 2005 Decision 2 of the Court of Appeals (CA) in CA-G.R. CV No. 62286 and its November 9, 2006 Resolution 3 denying the petitioner's Motion for Reconsideration. 4

Factual Antecedents
On July 3, 1993, Delia Sotero (Sotero) took out a life insurance policy from Manila Bankers Life Insurance Corporation (Bankers Life), designating respondent Cresencia P. Aban (Aban), her niece, 5 as her

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beneficiary. Petitioner issued Insurance Policy No. 747411 (the policy), with a face value of P100,000.00, in Sotero's favor on August 30, 1993, after the requisite medical examination and payment of the insurance premium. 6 On April 10, 1996, 7 when the insurance policy had been in force for more than two years and seven months, Sotero died. Respondent filed a claim for the insurance proceeds on July 9, 1996. Petitioner conducted an investigation into the claim, 8 and came out with the following findings: AHSEaD 1.Sotero did not personally apply for insurance coverage, as she was illiterate; 2.Sotero was sickly since 1990; 3.Sotero did not have the financial capability to pay the insurance premiums on Insurance Policy No. 747411; 4.Sotero did not sign the July 3, 1993 application for insurance; 9 [and] 5.Respondent was the one who filed the insurance application, and . . . designated herself as the beneficiary. 10 For the above reasons, petitioner denied respondent's claim on April 16, 1997 and refunded the premiums paid on the policy. 11 On April 24, 1997, petitioner filed a civil case for rescission and/or annulment of the policy, which was docketed as Civil Case No. 97-867 and assigned to Branch 134 of the Makati Regional Trial Court. The main thesis of the Complaint was that the policy was obtained by fraud, concealment and/or misrepresentation under the Insurance Code, 12 which thus renders it voidable under Article 1390 13 of the Civil Code. Respondent filed a Motion to Dismiss 14 claiming that petitioner's cause of action was barred by prescription pursuant to Section 48 of the Insurance Code, which provides as follows: Whenever a right to rescind a contract of insurance is given to the insurer by any provision of this chapter, such right must be exercised previous to the commencement of an action on the contract. After a policy of life insurance made payable on the death of the insured shall have been in force during the lifetime of the insured for a period of two years from the date of its issue or of its last reinstatement, the insurer cannot prove that the policy is void ab initio or is rescindible by reason of the fraudulent concealment or misrepresentation of the insured or his agent. AHDacC During the proceedings on the Motion to Dismiss, petitioner's investigator testified in court, stating among others that the insurance underwriter who solicited the insurance is a cousin of respondent's husband, Dindo

Aban, 15 and that it was the respondent who paid the annual premiums on the policy. 16

Ruling of the Regional Trial Court

On December 9, 1997, the trial court issued an Order 17 granting respondent's Motion to Dismiss, thus: WHEREFORE, defendant CRESENCIA P. ABAN's Motion to Dismiss is hereby granted. Civil Case No. 97-867 is hereby dismissed. SO ORDERED. 18 In dismissing the case, the trial court found that Sotero, and not respondent, was the one who procured the insurance; thus, Sotero could legally take out insurance on her own life and validly designate as she did respondent as the beneficiary. It held further that under Section 48, petitioner had only two years from the effectivity of the policy to question the same; since the policy had been in force for more than two years, petitioner is now barred from contesting the same or seeking a rescission or annulment thereof. Petitioner moved for reconsideration, but in another Order 19 dated October 20, 1998, the trial court stood its ground. Petitioner interposed an appeal with the CA, docketed as CA-G.R. CV No. 62286. Petitioner questioned the dismissal of Civil Case No. 97-867, arguing that the trial court erred in applying Section 48 and declaring that prescription has set in. It contended that since it was respondent and not Sotero who obtained the insurance, the policy issued was rendered void ab initio for want of insurable interest.

Ruling of the Court of Appeals

On September 28, 2005, the CA issued the assailed Decision, which contained the following decretal portion: WHEREFORE, in the light of all the foregoing, the instant appeal is DISMISSED for lack of merit. SO ORDERED. 20 CIaDTE The CA thus sustained the trial court. Applying Section 48 to petitioner's case, the CA held that petitioner may no longer prove that the subject policy was void ab initio or rescindible by reason of fraudulent concealment or misrepresentation after the lapse of more than two years from its issuance. It ratiocinated that petitioner was equipped with ample means to determine, within the first two years of the policy, whether fraud, concealment or misrepresentation was present when the insurance coverage was obtained. If it failed to do so within the statutory two-year period, then the insured must be protected and allowed to claim upon the policy. Petitioner moved for reconsideration, 21 but the CA denied the same in its November 9, 2006 Resolution. 22 Hence, the present Petition.

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Issues Petitioner raises the following issues for resolution: ScTIAH I [WHETHER] THE COURT OF APPEALS ERRED IN SUSTAINING THE ORDER OF THE TRIAL COURT DISMISSING THE COMPLAINT ON THE GROUND OF PRESCRIPTION IN CONTRAVENTION (OF) PERTINENT LAWS AND APPLICABLE JURISPRUDENCE. II [WHETHER] THE COURT OF APPEALS ERRED IN SUSTAINING THE APPLICATION OF THE INCONTESTABILITY PROVISION IN THE INSURANCE CODE BY THE TRIAL COURT. III [WHETHER] THE COURT OF APPEALS ERRED IN DENYING PETITIONER'S MOTION FOR RECONSIDERATION. 23

voidable. On the issue of insurable interest, respondent echoes the CA's pronouncement that since it was Sotero who obtained the insurance, insurable interest was present. Under Section 10 of the Insurance Code, Sotero had insurable interest in her own life, and could validly designate anyone as her beneficiary. Respondent submits that the CA's findings of fact leading to such conclusion should be respected. Our Ruling The Court denies the Petition. The Court will not depart from the trial and appellate courts' finding that it was Sotero who obtained the insurance for herself, designating respondent as her beneficiary. Both courts are in accord in this respect, and the Court is loath to disturb this. While petitioner insists that its independent investigation on the claim reveals that it was respondent, posing as Sotero, who obtained the insurance, this claim is no longer feasible in the wake of the courts' finding that it was Sotero who obtained the insurance for herself. This finding of fact binds the Court. SHaIDE With the above crucial finding of fact that it was Sotero who obtained the insurance for herself petitioner's case is severely weakened, if not totally disproved. Allegations of fraud, which are predicated on respondent's alleged posing as Sotero and forgery of her signature in the insurance application, are at once belied by the trial and appellate courts' finding that Sotero herself took out the insurance for herself. "[F]raudulent intent on the part of the insured must be established to entitle the insurer to rescind the contract." 27 In the absence of proof of such fraudulent intent, no right to rescind arises. Moreover, the results and conclusions arrived at during the investigation conducted unilaterally by petitioner after the claim was filed may simply be dismissed as self-serving and may not form the basis of a cause of action given the existence and application of Section 48, as will be discussed at length below. Section 48 serves a noble purpose, as it regulates the actions of both the insurer and the insured. Under the provision, an insurer is given two years from the effectivity of a life insurance contract and while the insured is alive to discover or prove that the policy is void ab initio or is rescindible by reason of the fraudulent concealment or misrepresentation of the insured or his agent. After the two-year period lapses, or when the insured dies within the period, the insurer must make good on the policy, even though the policy was obtained by fraud, concealment, or misrepresentation. This is not to say that insurance fraud must be rewarded, but that insurers who recklessly and indiscriminately solicit and obtain business must be penalized, for such recklessness and lack of discrimination ultimately work to the detriment of bona fide takers of insurance and the public in general. Section 48 regulates both the actions of the insurers and prospective takers of life insurance. It gives insurers enough time to inquire whether the policy was obtained by fraud, concealment, or misrepresentation; on the other hand, it forewarns scheming individuals that their attempts at insurance fraud would be timely uncovered thus deterring them from venturing into such nefarious enterprise. At the same time, legitimate policy holders are absolutely protected from unwarranted denial of their claims or delay in the collection of insurance proceeds occasioned by allegations of fraud, concealment, or misrepresentation by insurers, claims which may no longer be set up after the two-year period expires as ordained under the law. Thus, the self-regulating feature of Section 48 lies in the fact that both the insurer and the insured are given

Petitioner's Arguments
In praying that the CA Decision be reversed and that the case be remanded to the trial court for the conduct of further proceedings, petitioner argues in its Petition and Reply 24 that Section 48 cannot apply to a case where the beneficiary under the insurance contract posed as the insured and obtained the policy under fraudulent circumstances. It adds that respondent, who was merely Sotero's niece, had no insurable interest in the life of her aunt. Relying on the results of the investigation that it conducted after the claim for the insurance proceeds was filed, petitioner insists that respondent's claim was spurious, as it appeared that Sotero did not actually apply for insurance coverage, was unlettered, sickly, and had no visible source of income to pay for the insurance premiums; and that respondent was an impostor, posing as Sotero and fraudulently obtaining insurance in the latter's name without her knowledge and consent. ESTAIH Petitioner adds that Insurance Policy No. 747411 was void ab initio and could not have given rise to rights and obligations; as such, the action for the declaration of its nullity or inexistence does not prescribe. 25

Respondent's Arguments
Respondent, on the other hand, essentially argues in her Comment 26 that the CA is correct in applying Section 48. She adds that petitioner's new allegation in its Petition that the policy is void ab initio merits no attention, having failed to raise the same below, as it had claimed originally that the policy was merely

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the assurance that any dishonest scheme to obtain life insurance would be exposed, and attempts at unduly denying a claim would be struck down. Life insurance policies that pass the statutory two-year period are essentially treated as legitimate and beyond question, and the individuals who wield them are made secure by the thought that they will be paid promptly upon claim. In this manner, Section 48 contributes to the stability of the insurance industry. aSACED Section 48 prevents a situation where the insurer knowingly continues to accept annual premium payments on life insurance, only to later on deny a claim on the policy on specious claims of fraudulent concealment and misrepresentation, such as what obtains in the instant case. Thus, instead of conducting at the first instance an investigation into the circumstances surrounding the issuance of Insurance Policy No. 747411 which would have timely exposed the supposed flaws and irregularities attending it as it now professes, petitioner appears to have turned a blind eye and opted instead to continue collecting the premiums on the policy. For nearly three years, petitioner collected the premiums and devoted the same to its own profit. It cannot now deny the claim when it is called to account. Section 48 must be applied to it with full force and effect. The Court therefore agrees fully with the appellate court's pronouncement that [t]he "incontestability clause" is a provision in law that after a policy of life insurance made payable on the death of the insured shall have been in force during the lifetime of the insured for a period of two (2) years from the date of its issue or of its last reinstatement, the insurer cannot prove that the policy is void ab initio or is rescindible by reason of fraudulent concealment or misrepresentation of the insured or his agent. The purpose of the law is to give protection to the insured or his beneficiary by limiting the rescinding of the contract of insurance on the ground of fraudulent concealment or misrepresentation to a period of only two (2) years from the issuance of the policy or its last reinstatement. The insurer is deemed to have the necessary facilities to discover such fraudulent concealment or misrepresentation within a period of two (2) years. It is not fair for the insurer to collect the premiums as long as the insured is still alive, only to raise the issue of fraudulent concealment or misrepresentation when the insured dies in order to defeat the right of the beneficiary to recover under the policy. At least two (2) years from the issuance of the policy or its last reinstatement, the beneficiary is given the stability to recover under the policy when the insured dies. The provision also makes clear when the two-year period should commence in case the policy should lapse and is reinstated, that is, from the date of the last reinstatement. cSIACD After two years, the defenses of concealment or misrepresentation, no matter how patent or well-founded, will no longer lie. Congress felt this was a sufficient answer to the various tactics employed by insurance companies to avoid liability. The so-called "incontestability clause" precludes the insurer from raising the

defenses of false representations or concealment of material facts insofar as health and previous diseases are concerned if the insurance has been in force for at least two years during the insured's lifetime. The phrase "during the lifetime" found in Section 48 simply means that the policy is no longer considered in force after the insured has died. The key phrase in the second paragraph of Section 48 is "for a period of two years." As borne by the records, the policy was issued on August 30, 1993, the insured died on April 10, 1996, and the claim was denied on April 16, 1997. The insurance policy was thus in force for a period of 3 years, 7 months, and 24 days. Considering that the insured died after the two-year period, the plaintiff-appellant is, therefore, barred from proving that the policy is void ab initio by reason of the insured's fraudulent concealment or misrepresentation or want of insurable interest on the part of the beneficiary, herein defendant-appellee. Well-settled is the rule that it is the plaintiff-appellant's burden to show that the factual findings of the trial court are not based on substantial evidence or that its conclusions are contrary to applicable law and jurisprudence. The plaintiffappellant failed to discharge that burden. 28 ETaSDc Petitioner claims that its insurance agent, who solicited the Sotero account, happens to be the cousin of respondent's husband, and thus insinuates that both connived to commit insurance fraud. If this were truly the case, then petitioner would have discovered the scheme earlier if it had in earnest conducted an investigation into the circumstances surrounding the Sotero policy. But because it did not and it investigated the Sotero account only after a claim was filed thereon more than two years later, naturally it was unable to detect the scheme. For its negligence and inaction, the Court cannot sympathize with its plight. Instead, its case precisely provides the strong argument for requiring insurers to diligently conduct investigations on each policy they issue within the two-year period mandated under Section 48, and not after claims for insurance proceeds are filed with them. Besides, if insurers cannot vouch for the integrity and honesty of their insurance agents/salesmen and the insurance policies they issue, then they should cease doing business. If they could not properly screen their agents or salesmen before taking them in to market their products, or if they do not thoroughly investigate the insurance contracts they enter into with their clients, then they have only themselves to blame. Otherwise said, insurers cannot be allowed to collect premiums on insurance policies, use these amounts collected and invest the same through the years, generating profits and returns therefrom for their own benefit, and thereafter conveniently deny insurance claims by questioning the authority or integrity of their own agents or the insurance policies they issued to their premium-paying clients. This is exactly one of the schemes which Section 48 aims to prevent. Insurers may not be allowed to delay the payment of claims by filing frivolous cases in court, hoping that the inevitable may be put off for years or even decades by the pendency of these unnecessary court cases. In the meantime, they benefit from collecting the interest and/or returns on both the premiums previously paid by the insured and the insurance proceeds which should otherwise go to their beneficiaries. The business of insurance is a highly regulated commercial activity in the country, 29 and is imbued with public interest. 30 "[A]n insurance contract is a contract of adhesion which must be construed liberally in favor of the insured and strictly against the insurer in order to safeguard the [former's] interest." 31 cHCIDE WHEREFORE, the Petition is DENIED. The assailed September 28, 2005 Decision and the November 9,

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2006 Resolution of the Court of Appeals in CA-G.R. CV No. 62286 are AFFIRMED. SO ORDERED.

the action was filed beyond the one year prescriptive period, Wallem argued that Cua's action has been barred. Cua filed an opposition to Wallem's motion to dismiss, denying the latter's claim of prescription. 12 Cua referred to theAugust 10, 1990 telex message sent by Mr. A.R. Filder of Thomas Miller, 13 manager of the UK P&I Club, 14 which stated that Advance Shipping agreed to extend the commencement of suit for 90 days, from August 14, 1990 to November 12, 1990; the extension was made with the concurrence of the insurer of the vessel, the UK P&I Club. A copy of the August 10, 1990 telex was supposedly attached to Cua's opposition. On February 11, 1992, Wallem filed an omnibus motion, 15 withdrawing its motion to dismiss and adopting instead the arguments in Advance Shipping's motion to dismiss. It made an express reservation, however, that it was not waiving "the defense of prescription and will allege as one of its defenses, such defense of prescription and/or laches in its Answer should this be required by the circumstances[.]" 16 Accordingly, in an order dated June 5, 1992, 17 the RTC resolved that "the Court need not act on the Motion to Dismiss filed by the defendant Wallem Philippines Shipping, Inc.[,]" 18 and required the defendants therein to file their Answer. After trial on the merits, the RTC issued its decision on December 28, 1995, 19 ordering the respondents jointly and severally liable to pay as damages to Cua: l.the amount of P2,030,000.00, plus interests until the same is fully paid; 2.the sum of P100,000.00 as attorney's fees; and 3.the costs of [the] suit, cEDaTS

BENJAMIN CUA (CUA HIAN TEK), petitioner, vs. WALLEM PHILIPPINES SHIPPING, INC. and ADVANCE SHIPPING CORPORATION , respondents.

DECISION

BRION, J p: Petitioner Benjamin Cua invokes the Court's power of review, through a petition for review on certiorari, 1 to set aside the decision dated May 16, 2005 2 and the resolution dated January 31, 2006 3 of the Court of Appeals (CA) in CA-G.R. CV No. 53538. The CA rulings reversed the decision dated December 28, 1995 4 of the Regional Trial Court (RTC), Branch 31, Manila, in Civil Case No. 90-55098, where the RTC ordered the respondents, Wallem Philippines Shipping, Inc.(Wallem) and Advance Shipping Corporation (Advance Shipping), jointly and severally liable to pay damages in favor of Cua. THE FACTS

and dismissing the counterclaims of the respondents. On November 12, 1990, Cua filed a civil action for damages against Wallem and Advance Shipping before the RTC of Manila. 5 Cua sought the payment of P2,030,303.52 for damage to 218 tons and for a shortage of 50 tons of shipment of Brazilian Soyabean consigned to him, as evidenced by Bill of Lading No. 10. He claimed that the loss was due to the respondents' failure to observe extraordinary diligence in carrying the cargo. Advance Shipping (a foreign corporation) was the owner and manager of M/V Argo Trader that carried the cargo, while Wallem was its local agent. Advance Shipping filed a motion to dismiss the complaint, 6 assailing the RTC's jurisdiction over Cua's claim; it argued that Cua's claim should have first been brought to arbitration. Cua opposed Advance Shipping's argument; he contended that he, as a consignee, was not bound by the Charter Party Agreement, which was a contract between the ship owner (Advance Shipping) and the charterers. 7 The RTC initially deferred resolving the question of jurisdiction until after trial on the merits, 8 but upon motion by Advance Shipping, 9 the RTC ruled that Cua was not bound by the arbitration clause in the Charter Party Agreement. 10 ASaTHc In the meantime, Wallem filed its own motion to dismiss, 11 raising the sole ground of prescription. Section 3 (6) of the Carriage of Goods by Sea Act (COGSA) provides that "the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods." Wallem alleged that the goods were delivered to Cua on August 16, 1989, but the damages suit was instituted only on November 12, 1990 more than one year than the period allotted under the COGSA. Since The respondents filed an appeal with the CA, insisting that Cua's claim is arbitrable and has been barred by prescription and/or laches. 20 The CA found the respondents' claim of prescription meritorious after finding that the August 10, 1990 telex message, extending the period to file an action, was neither attached to Cua's opposition to Wallem's motion to dismiss, nor presented during trial. The CA ruled that there was no basis for the RTC to conclude that the prescriptive period was extended by the parties' agreement. Hence, it set aside the RTC decision and dismissed Cua's complaint. 21 Cua filed a motion for reconsideration 22 of the CA decision, which was denied by the CA in a resolution dated January 31, 2006. 23 Cua thus filed the present petition to assail the CA rulings. THE PARTIES' ARGUMENTS Cua contends that the extension of the period to file a complaint for damages was a fact that was already admitted by the respondents who may no longer assert the contrary, unless they sufficiently show that it was made through palpable mistake or that no admission was made. Cua points out that Wallem's motion to dismiss raised solely the issue of prescription, which he refuted by referring to the August 10, 1990 telex message extending the prescriptive period. Immediately after, Wallem withdrew its motion to dismiss. Cua thus attributes the withdrawal to an admission by Wallem of the existence of the August 10, 1990 telex message. Cua adds that Wallem's withdrawal of its motion to dismiss dispensed with the need for him to

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present as evidence the telex message, since the RTC ruled that there is no more need to act on the motion to dismiss. Cua, therefore, prays for the setting aside of the CA rulings and the reinstatement of the RTC decision. The respondents, on the other hand, deny that an admission was made with respect to the existence of the August 10, 1990 telex message. The telex message was never attached to Cua's opposition to Wallem's motion to dismiss, hence, there was no need for the respondents to deny its existence. They contend that Wallem's withdrawal of its motion to dismiss does not amount to an admission of the existence of the telex message, nor does it amount to a waiver of the defense for prescription. As stated in the June 5, 1992 Order of the RTC, the "defendant [referring to Wallem] moved for the withdrawal of the Motion to Dismiss without waiving the defense of prescription." 24 They thus pray for the denial of the petition. THE COURT'S RULING The basic issue presented by the case is whether Cua's claim for payment of damages against the respondents has prescribed. After considering the facts and the applicable law, the Court finds that Cua timely filed his claim before the trial court.

have been delivered."29 Jurisprudence, however, recognized the validity of an agreement between the carrier and the shipper/consignee extending the one-year period to file a claim. 30 The vessel MV Argo Trader arrived in Manila on July 8, 1989; Cua's complaint for damages was filed before the RTC of Manila on November 12, 1990. Although the complaint was clearly filed beyond the one-year period, Cua additionally alleged in his complaint (under paragraph 11) that "[t]he defendants . . . agreed to extend the time for filing of the action up to November 12, 1990." 31 DSEIcT The allegation of an agreement extending the period to file an action in Cua's complaint is a material averment that, under Section 11, Rule 8 of the Rules of Court, must be specifically denied by the respondents; otherwise, the allegation is deemed admitted. 32 A specific denial is made by specifying each material allegation of fact, the truth of which the defendant does not admit and, whenever practicable, setting forth the substance of the matters upon which he relies to support his denial. 33 The purpose of requiring the defendant to make a specific denial is to make him disclose the matters alleged in the complaint which he succinctly intends to disprove at the trial, together with the matter which he relied upon to support the denial. 34 A review of the pleadings submitted by the respondents discloses that they failed to specifically deny Cua's allegation of an agreement extending the period to file an action to November 12, 1990. Wallem's motion to dismiss simply referred to the fact that Cua's complaint was filed more than one year from the arrival of the vessel, but it did not contain a denial of the extension. 35 Advance Shipping's motion to dismiss, on the other hand, focused solely on its contention that the action was premature for failure to first undergo arbitration. 36 While the joint answer submitted by the respondents denied Cua's allegation of an extension, 37 they made no further statement other than a bare and unsupported contention that Cua's "complaint is barred by prescription and/or laches[.]" 38 The respondents did not provide in their joint answer any factual basis for their belief that the complaint had prescribed. We cannot consider the respondents' discussion on prescription in their Memorandum filed with the RTC, 39 since their arguments were based on Cua's supposed failure to comply with Article 366 of the Code of Commerce, not Section 3 (6) of the COGSA the relevant and material provision in this case. Article 366 of the Code of Commerce requires that a claim be made with the carrier within 24 hours from the delivery of the cargo; the respondents alleged that they were informed of the damage and shortage only on September 13, 1989, months after the vessel's arrival in Manila. Since the COGSA is the applicable law, the respondents' discussion to support their claim of prescription under Article 366 of the Code of Commerce would, therefore, not constitute a refutation of Cua's allegation of extension. Given the respondents' failure to specifically deny the agreement on the extension of the period to file an action, the Court considers the extension of the period as an admitted fact. This presumed admission is further bolstered by the express admission made by the respondents themselves in their Memorandum: SACHcD STATEMENT OF THE CASE 1.This case was filed by [the] plaintiff on 11 November 1990 within the extended period agreed upon by the parties to file suit. 40 (emphasis ours)

Prescription may be considered by the courts motu proprio if the facts supporting the ground are apparent from the pleadings or the evidence on record HCacTI
Section 1, Rule 16 of the Rules of Court 25 enumerates the grounds on which a motion to dismiss a complaint may be based, and the prescription of an action is included as one of the grounds under paragraph (f). The defendant may either raise the grounds in a motion to dismiss or plead them as an affirmative defense in his answer. 26 The failure to raise or plead the grounds generally amounts to a waiver, except if the ground pertains to (1) lack of jurisdiction over the subject matter, (2) litis pendentia, (3) res judicata, or (4) prescription. 27 If the facts supporting any of these four listed grounds are apparent from the pleadings or the evidence on record, the courts may consider these grounds motu proprioand accordingly dismiss the complaint. Accordingly, no reversible error may be attributed to the CA in considering prescription as a ground to dismiss Cua's action despite Wallem's supposed waiver of the defense. The Court, therefore, need not resolve the question of whether Wallem actually waived the defense of prescription; an inquiry into this question is useless, as courts are empowered to dismiss actions on the basis of prescription even if it is not raised by the defendant so long as the facts supporting this ground are evident from the records. In the present case, what is decisive is whether the pleadings and the evidence support a finding that Cua's claim has prescribed, and it is on this point that we disagree with the CA's findings. We find that the CA failed to appreciate the admissions made by the respondents in their pleadings that negate a finding of prescription of Cua's claim.

Respondents admitted the agreement extending the period to file the claim
The COGSA is the applicable law for all contracts for carriage of goods by sea to and from Philippine ports in foreign trade; 28 it is thus the law that the Court shall consider in the present case since the cargo was transported from Brazil to the Philippines. Under Section 3 (6) of the COGSA, the carrier is discharged from liability for loss or damage to the cargo "unless the suit is brought within one year after delivery of the goods or the date when the goods should

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The above statement is a clear admission by the respondents that there was indeed an agreement to extend the period to file the claim. In light of this admission, it would be unnecessary for Cua to present a copy of the August 10, 1990 telex message to prove the existence of the agreement. Thus, Cua timely filed a claim for the damage to and shortage of the cargo. WHEREFORE, the decision dated May 16, 2005 and the resolution dated January 31, 2006 of the Court of Appeals in CA-G.R. CV No. 53538 are SET ASIDE. The decision dated December 28, 1995 of the Regional Trial Court of Manila, Branch 31, in Civil Case No. 90-55098 is REINSTATED. Costs against the respondents. SO ORDERED.

Ed Enriquez (Enriquez), Vice-President of Swedish Match Sociedad Anonimas (SMSA) the management company of the Swedish Match group was commissioned and granted full powers to negotiate by SMNV, with the resulting transaction, however, made subject to final approval by the board. Enriquez was held under strict instructions that the sale of Phimco shares should be executed on or before 30 June 1990, in view of the tight loan covenants of SMNV. Enriquez came to the Philippines in November 1989 and informed the Philippine financial and business circles that the Phimco shares were for sale. cEISAD Several interested parties tendered offers to acquire the Phimco shares, among whom were the AFP Retirement and Separation Benefits System, herein respondent ALS Management & Development Corporation and respondent Antonio Litonjua (Litonjua), the president and general manager of ALS. In his letter dated 3 November 1989, Litonjua submitted to SMAB a firm offer to buy all of the latter's shares in Phimco and all of Phimco's shares in Provident Tree Farm, Inc. and OTT/Louie (Phils.), Inc. for the sum of P750,000,000.00. 5 Through its Chief Executive Officer, Massimo Rossi (Rossi), SMAB, in its letter dated 1 December 1989, thanked respondents for their interest in the Phimco shares. Rossi informed respondents that their price offer was below their expectations but urged them to undertake a comprehensive review and analysis of the value and profit potentials of the Phimco shares, with the assurance that respondents would enjoy a certain priority although several parties had indicated their interest to buy the shares. 6 Thereafter, an exchange of correspondence ensued between petitioners and respondents regarding the projected sale of the Phimco shares. In his letter dated 21 May 1990, Litonjua offered to buy the disputed shares, excluding the lighter division for US$30.6 million, which per another letter of the same date was increased to US$36 million. 7 Litonjua stressed that the bid amount could be adjusted subject to availability of additional information and audit verification of the company finances. Responding to Litonjua's offer, Rossi sent his letter dated 11 June 1990, informing the former that ALS should undertake a due diligence process or pre-acquisition audit and review of the draft contract for the Match and Forestry activities of Phimco at ALS' convenience. However, Rossi made it clear that at the completion of the due diligence process, ALS should submit its final offer in US dollar terms not later than 30 June 1990, for the shares of SMAB corresponding to ninety-six percent (96%) of the Match and Forestry activities of Phimco. Rossi added that in case the "global deal" presently under negotiation for the Swedish Match Lights Group would materialize, SMAB would reimburse up to US$20,000.00 of ALS' costs related to the due diligence process. 8 Litonjua in a letter dated 18 June 1990, expressed disappointment at the apparent change in SMAB's approach to the bidding process. He pointed out that in their 4 June 1990 meeting, he was advised that one final bidder would be selected from among the four contending groups as of that date and that the decision would be made by 6 June 1990. He criticized SMAB's decision to accept a new bidder who was not among those who participated in the 25 May 1990 bidding. He informed Rossi that it may not be possible for them to submit their final bid on 30 June 1990, citing the advice to him of the auditing firm that the financial statements would not be completed until the end of July. Litonjua added that he would indicate in their final offer more specific details of the payment mechanics and consider the possibility of signing a conditional sale at that time. 9 Two days prior to the deadline for submission of the final bid, Litonjua again advised Rossi that they would be unable to submit the final offer by 30 June 1990, considering that the acquisition audit of Phimco and the review of the draft agreements had not yet been completed. He said, however, that they would be able to

SWEDISH MATCH, AB, JUAN ENRIQUEZ, RENE DIZON, FRANCISCO RAPACON, FIEL SANTOS, BETH FLORES, LAMBRTO DE LA EVA, GLORIA REYES, RODRIGO ORTIZ, NICANOR ESCALANTE, PETER HODGSON, SAMUEL PARTOSA, HERMINDA ASUNCION, JUANITO HERRERA, JACOBUS NICOLAAS, JOSEPH PEKELHARING (now Representing himself without court sanction as "JOOST PEKELHARING)," MASSIMO ROSSI and ED ENRIQUEZ, petitioners,vs. COURT OF APPEALS, ALS MANAGEMENT & DEVELOPMENT CORPORATION and ANTONIO K. LITONJUA, respondents.

DECISION

TINGA, J p: Petitioners seek a reversal of the twin Orders 1 of the Court of Appeals dated 15 November 1996 2 and 31 January 1997,3 in CA-G.R. CV No. 35886, entitled "ALS Management et al., v. Swedish Match, AB et al." The appellate court overturned the trial court's Order 4 dismissing the respondents complaint for specific performance and remanded the case to the trial court for further proceedings. Swedish Match AB (hereinafter SMAB) is a corporation organized under the laws of Sweden not doing business in the Philippines. SMAB, however, had three subsidiary corporations in the Philippines, all organized under Philippine laws, to wit: Phimco Industries, Inc. (Phimco), Provident Tree Farms, Inc., and OTT/Louie (Phils.), Inc. Sometime in 1988, STORA, the then parent company of SMAB, decided to sell SMAB of Sweden and the latter's worldwide match, lighter and shaving products operation to Eemland Management Services, now known as Swedish Match NV of Netherlands, (SMNV), a corporation organized and existing under the laws of Netherlands. STORA, however, retained for itself the packaging business. SMNV initiated steps to sell the worldwide match and lighter businesses while retaining for itself the shaving business. SMNV adopted a two-pronged strategy, the first being to sell its shares in Phimco Industries, Inc. and a match company in Brazil, which proposed sale would stave-off defaults in the loan covenants of SMNV with its syndicate of lenders. The other move was to sell at once or in one package all the SMNV companies worldwide which were engaged in match and lighter operations thru a global deal (hereinafter, global deal).

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finalize their bid on 17 July 1990 and that in case their bid would turn out better than any other proponent, they would remit payment within ten (10) days from the execution of the contracts. 10 Enriquez sent notice to Litonjua that they would be constrained to entertain bids from other parties in view of Litonjua's failure to make a firm commitment for the shares of Swedish Match in Phimco by 30 June 1990. 11 In a letter dated 3 July 1990, Rossi informed Litonjua that on 2 July 1990, they signed a conditional contract with a local group for the disposal of Phimco. He told Litonjua that his bid would no longer be considered unless the local group would fail to consummate the transaction on or before 15 September 1990. 12 Apparently irked by SMAB's decision to junk his bid, Litonjua promptly responded by letter dated 4 July 1990. Contrary to his prior manifestations, he asserted that, for all intents and purposes, the US$36 million bid which he submitted on 21 May 1990 was their final bid based on the financial statements for the year 1989. He pointed out that they submitted the best bid and they were already finalizing the terms of the sale. He stressed that they were firmly committed to their bid of US$36 million and if ever there would be adjustments in the bid amount, the adjustments were brought about by SMAB's subsequent disclosures and validated accounts, such as the aspect that only ninety-six percent (96%) of Phimco shares was actually being sold and not one-hundred percent (100%). 13 More than two months from receipt of Litonjua's last letter, Enriquez sent a fax communication to the former, advising him that the proposed sale of SMAB's shares in Phimco with local buyers did not materialize. Enriquez then invited Litonjua to resume negotiations with SMAB for the sale of Phimco shares. He indicated that SMAB would be prepared to negotiate with ALS on an exclusive basis for a period of fifteen (15) days from 26 September 1990 subject to the terms contained in the letter. Additionally, Enriquez clarified that if the sale would not be completed at the end of the fifteen (15)-day period, SMAB would enter into negotiations with other buyers. 14 Shortly thereafter, Litonjua sent a letter expressing his objections to the totally new set of terms and conditions for the sale of the Phimco shares. He emphasized that the new offer constituted an attempt to reopen the already perfected contract of sale of the shares in his favor. He intimated that he could not accept the new terms and conditions contained therein. 15 On 14 December 1990, respondents, as plaintiffs, filed before the Regional Trial Court (RTC) of Pasig a complaint for specific performance with damages, with a prayer for the issuance of a writ of preliminary injunction, against defendants, now petitioners. The individual defendants were sued in their respective capacities as officers of the corporations or entities involved in the aborted transaction. Aside from the averments related to their principal cause of action for specific performance, respondents alleged that the Phimco management, in utter bad faith, induced SMAB to violate its contract with respondents. They contended that the Phimco management took an interest in acquiring for itself the Phimco shares and that petitioners conspired to thwart the closing of such sale by interposing various obstacles to the completion of the acquisition audit. 16Respondents claimed that the Phimco management maliciously and deliberately delayed the delivery of documents to Laya, Manabat, Salgado & Co. which prevented them from completing the acquisition audit in time for the deadline on 30 June 1990 set by petitioners. 17 Respondents added that SMAB's refusal to consummate the perfected sale of the Phimco shares amounted to an abuse of right and constituted conduct which is contrary to law, morals, good customs and public policy. 18

Respondents prayed that petitioners be enjoined from selling or transferring the Phimco shares, or otherwise implementing the sale or transfer thereof, in favor of any person or entity other than respondents, and that any such sale to third parties be annulled and set aside. Respondents also asked that petitioners be ordered to execute all documents or instruments and perform all acts necessary to consummate the sales agreement in their favor. AcHSEa Traversing the complaint, petitioners alleged that respondents have no cause of action, contending that no perfected contract, whether verbal or written, existed between them. Petitioners added that respondents' cause of action, if any, was barred by the Statute of Frauds since there was no written instrument or document evidencing the alleged sale of the Phimco shares to respondents. Petitioners filed a motion for a preliminary hearing of their defense of bar by the Statute of Frauds, which the trial court granted. Both parties agreed to adopt as their evidence in support of or against the motion to dismiss, as the case may be, the evidence which they adduced in support of their respective positions on the writ of preliminary injunction incident. In its Order dated 17 April 1991, the RTC dismissed respondents' complaint. 19 It ruled that there was no perfected contract of sale between petitioners and respondents. The court a quo said that the letter dated 11 June 1990, relied upon by respondents, showed that petitioners did not accept the bid offer of respondents as the letter was a mere invitation for respondents to conduct a due diligence process or pre-acquisition audit of Phimco's match and forestry operations to enable them to submit their final offer on 30 June 1990. Assuming that respondent's bid was favored by an oral acceptance made in private by officers of SMAB, the trial court noted, such acceptance was merely preparatory to a formal acceptance by the SMAB the acceptance that would eventually lead to the execution and signing of the contract of sale. Moreover, the court noted that respondents failed to submit their final bid on the deadline set by petitioners. DAESTI Respondents appealed to the Court of Appeals, assigning the following errors: A.THE TRIAL COURT EXCEEDED ITS AUTHORITY AND JURISDICTION WHEN IT ERRED PROCEDURALLY IN MOTU PROPIO (sic) DISMISSING THE COMPLAINT IN ITS ENTIRETY FOR "LACK OF A VALID CAUSE OF ACTION" WITHOUT THE BENEFIT OF A FULL-BLOWN TRIAL AND ON THE MERE MOTION TO DISMISS. B.THE TRIAL COURT ERRED IN IGNORING PLAINTIFF-APPELLANTS' CAUSE OF ACTION BASED ON TORT WHICH, HAVING BEEN SUFFICIENTLY PLEADED, INDEPENDENTLY WARRANTED A FULL-BLOWN TRIAL. C.THE TRIAL COURT ERRED IN IGNORING PLAINTIFFS-APPELLANTS' CAUSE OF ACTION BASED ON PROMISSORY ESTOPPEL WHICH, HAVING BEEN SUFFICIENTLY PLEADED, WARRANTED A FULL-BLOWN TRIAL, INDEPENDENTLY FOR THE OTHER CAUSES OF ACTION. D.THE TRIAL COURT JUDGE ERRED IN FORSWEARING JUDICIAL OBJECTIVITY TO FAVOR DEFENDANTS-APPELLEES BY MAKING UNFOUNDED FINDINGS, ALL IN VIOLATION OF PLAINTIFFS-APPELLANTS' RIGHT TO DUE PROCESS. 20 After assessing the respective arguments of the parties, the Court of Appeals reversed the trial court's decision. It ruled that the series of written communications between petitioners and respondents collectively constitute a sufficient memorandum of their agreement under Article 1403 of the Civil Code; thus,

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respondents' complaint should not have been dismissed on the ground that it was unenforceable under the Statute of Frauds. The appellate court opined that any document or writing, whether formal or informal, written either for the purpose of furnishing evidence of the contract or for another purpose which satisfies all the Statute's requirements as to contents and signature would be sufficient; and, that two or more writings properly connected could be considered together. The appellate court concluded that the letters exchanged by and between the parties, taken together, were sufficient to establish that an agreement to sell the disputed shares to respondents was reached. The Court of Appeals clarified, however, that by reversing the appealed decision it was not thereby declaring that respondents are entitled to the reliefs prayed for in their complaint, but only that the case should not have been dismissed on the ground of unenforceability under the Statute of Frauds. It ordered the remand of the case to the trial court for further proceedings. Hence, this petition. Petitioners argue that the Court of Appeals erred in failing to consider that the Statute of Frauds requires not just the existence of any note or memorandum but that such note or memorandum should evidence an agreement to sell; and, that in this case, there was no word, phrase, or statement in the letters exchanged between the two parties to show or even imply that an agreement had been reached for the sale of the shares to respondent. Petitioners stress that respondent Litonjua made it clear in his letters that the quoted prices were merely tentative and still subject to further negotiations between him and the seller. They point out that there was no meeting of the minds on the essential terms and conditions of the sale because SMAB did not accept respondents' offer that consideration would be paid in Philippine pesos. Moreover, Litonjua signified their inability to submit their final bid on 30 June 1990, at the same time stating that the broad terms and conditions described in their meeting were inadequate for them to make a response at that time so much so that he would have to await the corresponding specifics. Petitioners argue that the foregoing circumstances prove that they failed to reach an agreement on the sale of the Phimco shares. HEcaIC In their Comment, respondents maintain that the Court of Appeals correctly ruled that the Statute of Frauds does not apply to the instant case. Respondents assert that the sale of the subject shares to them was perfected as shown by the following circumstances, namely: petitioners assured them that should they increase their bid, the sale would be awarded to them and that they did in fact increase their previous bid of US$30.6 million to US$36 million; petitioners orally accepted their revised offer and the acceptance was relayed to them by Rene Dizon; petitioners directed them to proceed with the acquisition audit and to submit a comfort letter from the United Coconut Planters' Bank (UCPB); petitioner corporation confirmed its previous verbal acceptance of their offer in a letter dated 11 June 1990; with the prior approval of petitioners, respondents engaged the services of Laya, Manabat, Salgado & Co., an independent auditing firm, to immediately proceed with the acquisition audit; and, petitioner corporation reiterated its commitment to be bound by the result of the acquisition audit and promised to reimburse respondents' cost to the extent of US$20,000.00. All these incidents, according to respondents, overwhelmingly prove that the contract of sale of the Phimco shares was perfected. Further, respondents argued that there was partial performance of the perfected contract on their part. They alleged that with the prior approval of petitioners, they engaged the services of Laya, Manabat, Salgado & Co. to conduct the acquisition audit. They averred that petitioners agreed to be bound by the results of the audit and offered to reimburse the costs thereof to the extent of US$20,000.00. Respondents added that in compliance with their obligations under the contract, they have submitted a comfort letter from UCPB to show petitioners that the bank was willing to finance the acquisition of the Phimco shares. 21

The basic issues to be resolved are: (1) whether the appellate court erred in reversing the trial court's decision dismissing the complaint for being unenforceable under the Statute of Frauds; and (2) whether there was a perfected contract of sale between petitioners and respondents with respect to the Phimco shares. The Statute of Frauds embodied in Article 1403, paragraph (2), of the Civil Code 22 requires certain contracts enumerated therein to be evidenced by some note or memorandum in order to be enforceable. The term "Statute of Frauds" is descriptive of statutes which require certain classes of contracts to be in writing. The Statute does not deprive the parties of the right to contract with respect to the matters therein involved, but merely regulates the formalities of the contract necessary to render it enforceable. 23 Evidence of the agreement cannot be received without the writing or a secondary evidence of its contents. The Statute, however, simply provides the method by which the contracts enumerated therein may be proved but does not declare them invalid because they are not reduced to writing. By law, contracts are obligatory in whatever form they may have been entered into, provided all the essential requisites for their validity are present. However, when the law requires that a contract be in some form in order that it may be valid or enforceable, or that a contract be proved in a certain way, that requirement is absolute and indispensable. 24 Consequently, the effect of non-compliance with the requirement of the Statute is simply that no action can be enforced unless the requirement is complied with. 25 Clearly, the form required is for evidentiary purposes only. Hence, if the parties permit a contract to be proved, without any objection, it is then just as binding as if the Statute has been complied with. 26 The purpose of the Statute is to prevent fraud and perjury in the enforcement of obligations depending for their evidence on the unassisted memory of witnesses, by requiring certain enumerated contracts and transactions to be evidenced by a writing signed by the party to be charged. 27 However, for a note or memorandum to satisfy the Statute, it must be complete in itself and cannot rest partly in writing and partly in parol. The note or memorandum must contain the names of the parties, the terms and conditions of the contract, and a description of the property sufficient to render it capable of identification. 28 Such note or memorandum must contain the essential elements of the contract expressed with certainty that may be ascertained from the note or memorandum itself, or some other writing to which it refers or within which it is connected, without resorting to parol evidence. 29

Contrary to the Court of Appeals' conclusion, the exchange of correspondence between the parties hardly constitutes the note or memorandum within the context of Article 1403 of the Civil Code. Rossi's letter dated 11 June 1990, heavily relied upon by respondents, is not complete in itself. First, it does not indicate at what price the shares were being sold. In paragraph (5) of the letter, respondents were supposed to submit their final offer in U.S. dollar terms, at that after the completion of the due diligence process. The paragraph undoubtedly proves that there was as yet no definite agreement as to the price. Second, the letter does not state the mode of payment of the price. In fact, Litonjua was supposed to indicate in his final offer how and where payment for the shares was planned to be made. 30 Evidently, the trial court's dismissal of the complaint on the ground of unenforceability under the Statute of Frauds is warranted. 31 Even if we were to consider the letters between the parties as a sufficient memorandum for purposes of taking the case out of the operation of the Statute the action for specific performance would still fail. AcISTE

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A contract is defined as a juridical convention manifested in legal form, by virtue of which one or more persons bind themselves in favor of another, or others, or reciprocally, to the fulfillment of a prestation to give, to do, or not to do. 32There can be no contract unless the following requisites concur: (a) consent of the contracting parties; (b) object certain which is the subject matter of the contract; (c) cause of the obligation which is established. 33 Contracts are perfected by mere consent, which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. 34 Specifically, in the case of a contract of sale, required is the concurrence of three elements, to wit: (a) consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (b) determinate subject matter, and (c) price certain in money or its equivalent. 35 Such contract is born from the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. 36 In general, contracts undergo three distinct stages, to wit: negotiation; perfection or birth; and consummation. Negotiation begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of agreement of the parties. Perfection or birth of the contract takes place when the parties agree upon the essential elements of the contract. Consummation occurs when the parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof. 37 A negotiation is formally initiated by an offer. A perfected promise merely tends to insure and pave the way for the celebration of a future contract. An imperfect promise (policitacion), on the other hand, is a mere unaccepted offer. 38Public advertisements or solicitations and the like are ordinarily construed as mere invitations to make offers or only as proposals. At any time prior to the perfection of the contract, either negotiating party may stop the negotiation. 39 The offer, at this stage, may be withdrawn; the withdrawal is effective immediately after its manifestation, such as by its mailing and not necessarily when the offeree learns of the withdrawal. 40 An offer would require, among other things, a clear certainty on both the object and the cause or consideration of the envisioned contract. Consent in a contract of sale should be manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer. 41 Quite obviously, Litonjua's letter dated 21 May 1990, proposing the acquisition of the Phimco shares for US$36 million was merely an offer. This offer, however, in Litonjua's own words, "is understood to be subject to adjustment on the basis of an audit of the assets, liabilities and net worth of Phimco and its subsidiaries and on the final negotiation between ourselves." 42 Was the offer certain enough to satisfy the requirements of the Statute of Frauds? Definitely not. Litonjua repeatedly stressed in his letters that they would not be able to submit their final bid by 30 June 1990. 43 With indubitable inconsistency, respondents later claimed that for all intents and purposes, the US$36 million was their final bid. If this were so, it would be inane for Litonjua to state, as he did, in his letter dated 28 June 1990 that they would be in a position to submit their final bid only on 17 July 1990. The lack of a definite offer on the part of respondents could not possibly serve as the basis of their claim that the sale of the Phimco shares in their favor was perfected, for one essential element of a contract of sale was obviously wanting the price certain in money or its equivalent. The price must be certain, otherwise there is no true consent between the parties. 44 There can be no sale without a price. 45Quite recently, this Court reiterated the long-standing doctrine that the manner of payment of the purchase price is an essential element before a

valid and binding contract of sale can exist since the agreement on the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. 46 Granting arguendo, that the amount of US$36 million was a definite offer, it would remain as a mere offer in the absence of evidence of its acceptance. To produce a contract, there must be acceptance, which may be express or implied, but it must not qualify the terms of the offer. 47 The acceptance of an offer must be unqualified and absolute to perfect the contract. 48 In other words, it must be identical in all respects with that of the offer so as to produce consent or meeting of the minds. 49 Respondents' attempt to prove the alleged verbal acceptance of their US$36 million bid becomes futile in the face of the overwhelming evidence on record that there was in the first place no meeting of the minds with respect to the price. It is dramatically clear that the US$36 million was not the actual price agreed upon but merely a preliminary offer which was subject to adjustment after the conclusion of the audit of the company finances. Respondents' failure to submit their final bid on the deadline set by petitioners prevented the perfection of the contract of sale. It was not perfected due to the absence of one essential element which was the price certain in money or its equivalent. TAECaD At any rate, from the procedural stand point, the continuing objections raised by petitioners to the admission of parol evidence 50 on the alleged verbal acceptance of the offer rendered any evidence of acceptance inadmissible. Respondents' plea of partial performance should likewise fail. The acquisition audit and submission of a comfort letter, even if considered together, failed to prove the perfection of the contract. Quite the contrary, they indicated that the sale was far from concluded. Respondents conducted the audit as part of the due diligence process to help them arrive at and make their final offer. On the other hand, the submission of the comfort letter was merely a guarantee that respondents had the financial capacity to pay the price in the event that their bid was accepted by petitioners. The Statute of Frauds is applicable only to contracts which are executory and not to those which have been consummated either totally or partially. 51 If a contract has been totally or partially performed, the exclusion of parol evidence would promote fraud or bad faith, for it would enable the defendant to keep the benefits already derived by him from the transaction in litigation, and at the same time, evade the obligations, responsibilities or liabilities assumed or contracted by him thereby. 52 This rule, however, is predicated on the fact of ratification of the contract within the meaning of Article 1405 of the Civil Code either (1) by failure to object to the presentation of oral evidence to prove the same, or (2) by the acceptance of benefits under them. In the instant case, respondents failed to prove that there was partial performance of the contract within the purview of the Statute. Respondents insist that even on the assumption that the Statute of Frauds is applicable in this case, the trial court erred in dismissing the complaint altogether. They point out that the complaint presents several causes of action. caSDCA A close examination of the complaint reveals that it alleges two distinct causes of action, the first is for specific performance 53 premised on the existence of the contract of sale, while the other is solely for damages, predicated on the purported dilatory maneuvers executed by the Phimco management. 54 With respect to the first cause of action for specific performance, apart from petitioners' alleged refusal to honor the contract of sale which has never been perfected in the first place respondents made a number of averments in their complaint all in support of said cause of action. Respondents claimed that petitioners were guilty of promissory estoppel, 55 warranty breaches 56 and tortious conduct 57 in refusing to honor the

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alleged contract of sale. These averments are predicated on or at least interwoven with the existence or perfection of the contract of sale. As there was no such perfected contract, the trial court properly rejected the averments in conjunction with the dismissal of the complaint for specific performance.

affirmative defenses of lack of cause of action for failure to comply with the arbitration clause. The trial court denied the motions. Appeal was made to the Court of Appeals. Affirming the trial court, the Court of Appeals ruled that a preliminary hearing on affirmative defenses could not be allowed because a motion to dismiss had previously been filed. Further, it ruled that the arbitration clause did not bind the respondent. Hence, this recourse by petitioners. The two principal issues are: (1) the denial of petitioners' Motion For Preliminary Hearing; and (2) the propriety of the Court of Appeals' ruling regarding the arbitration clause. cTESIa The Supreme Court granted the petition and reversed the appealed decision. According to the Supreme Court, there was only one question, which could even be deemed to be the touchstone of the whole case. The trial court had no cogent reason to deny the motion for preliminary hearing. Verily, where a preliminary hearing appeared to suffice, there is no reason to go to trial. The Court of Appeals also erred in holding that the arbitration clause is not binding on the respondent. The crux of this case was on the denial of the motion for preliminary hearing, and not on the arbitration clause. There was no need to rule on the applicability of the arbitration clause.

However, respondents' second cause of action due to the alleged malicious and deliberate delay of the Phimco management in the delivery of documents necessary for the completion of the audit on time, not being based on the existence of the contract of sale, could stand independently of the action for specific performance and should not be deemed barred by the dismissal of the cause of action predicated on the failed contract. If substantiated, this cause of action would entitle respondents to the recovery of damages against the officers of the corporation responsible for the acts complained of. Thus, the Court cannot forthwith order dismissal of the complaint without affording respondents an opportunity to substantiate their allegations with respect to its cause of action for damages against the officers of Phimco based on the latter's alleged self-serving dilatory maneuvers. WHEREFORE, the petition is in part GRANTED. The appealed Decision is hereby MODIFIED insofar as it declared the agreement between the parties enforceable under the Statute of Frauds. The complaint before the trial court is ordered DISMISSED insofar as the cause of action for specific performance is concerned. The case is ordered REMANDED to the trial court for further proceedings with respect to the cause of action for damages as above specified. cIECTH SO ORDERED.

SYLLABUS

CALIFORNIA AND HAWAIIAN SUGAR COMPANY; PACIFIC GULF MARINE, INC. and C.F. SHARP & COMPANY, petitioners, vs. PIONEER INSURANCE AND SURETY CORPORATION,respondent.

1.REMEDIAL LAW; CIVIL PROCEDURE; PRELIMINARY HEARING ON THE AFFIRMATIVE DEFENSES; ALLOWED ONLY WHEN NO MOTION TO DISMISS HAS BEEN FILED; EXCEPTION; RATIONALE; CASE AT BAR. Section 6, Rule 16 of the 1997 Rules, specifically provides that a preliminary hearing on the affirmative defenses may be allowed only when no motion to dismiss has been filed. Section 6, however, must be viewed in the light of Section 3 of the same Rule, which requires courts to resolve a motion to dismiss and prohibits them from deferring its resolution on the ground of indubitability. Clearly then, Section 6 disallows a preliminary hearing of affirmative defenses once a motion to dismiss has been filed because such defense should have already been resolved. In the present case, however, the trial court did not categorically resolve petitioners' Motion to Dismiss, but merely deferred resolution thereof. Indeed, the present Rules are consistent with Section 5, Rule 16 of the pre-1997 Rules of Court, because both presuppose that no motion to dismiss had been filed; or in the case of the pre-1997 Rules, if one has been filed, it has not been unconditionally denied. Hence, the ground invoked may still be pleaded as an affirmative defense even if the defendant's Motion to Dismiss has been filed but not definitely resolved, or if it has been deferred as it could be under the pre-1997 Rules. prLL 2.ID.; ID.; ID.; DENIAL THEREOF; WHEN CONSIDERED AS GRAVE ABUSE OF DISCRETION; RATIONALE; PRESENT IN CASE AT BAR. The more crucial question that we must settle here is whether the trial court committed grave abuse of discretion when it denied petitioners' Motion for a Preliminary Hearing on their affirmative defense of lack of cause of action. Undeniably, a preliminary hearing is not mandatory, but subject to the discretion of the trial court. In the light of the circumstances in this case, though, we find that the lower court committed grave abuse of discretion in refusing to grant the Motion. We note that the trial court deferred the resolution of petitioner's Motion to Dismiss because of a single issue. It was apparently unsure whether the charter party that the bill of lading referred to was indeed the Baltimore Berth Grain Charter Party submitted by petitioners. Considering that there was only one question, which may even be deemed to be the very touchstone of the whole case, the trial court had no cogent reason to deny the Motion for Preliminary Hearing. Indeed, it committed grave abuse of discretion when it denied a preliminary hearing on a simple issue of fact that could have possibly settled the entire case. Verily, where a preliminary hearing appears to suffice, there is no reason to go on to trial. One reason why dockets of trial courts are clogged is the unreasonable refusal to use a process or procedure, like a motion to dismiss, which is designed to abbreviate the resolution of a case. 3.CIVIL LAW; CONTRACTS; INSURANCE COMPANY AS SUBROGEE; WHEN RIGHT OF SUBROGATION ACCRUES. Citing Pan Malayan Insurance Corporation v. CA, it rules that the right of respondent insurance company as subrogee was not based on the charter party or any other contract; rather, it accrued upon the

Del Rosario & Del Rosario for petitioners. Astorga & Macamay Law Offices for respondent.

SYNOPSIS

In 1990, a cargo shipment was insured with private respondent against all risk. A shortage in weight was incurred during the discharging of the cargo from the vessel to the barges. Due to the alleged refusal of petitioners to settle their respective liabilities, the respondent insurer paid the consignee of the cargo. As subrogee of the consignee, private respondent filed a complaint for damages against herein petitioners. Instead of filing an answer, petitioners filed a motion to dismiss the case on the ground that the respondent's claim was premature the same being arbitrable as provided for in the contract. The RTC deferred the hearing on the motion to dismiss and directed the petitioners to file an answer, which the latter did. Petitioners filed an answer with counterclaim and crossclaim alleging therein that respondent did not comply with the arbitration clause of the charter party, hence, the complaint was prematurely filed. The court set the case for pre-trial, which was opposed by petitioners and they also filed a motion to set for preliminary hearing the

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payment of the insurance claim by private respondent to the insured consignee. There was nothing in Pan Malayan, however, that prohibited the applicability of the arbitration clause to the subrogee. That case merely discussed, inter alia, the accrual of the right of subrogation and the legal basis therefor. This issue is completely different from that of the consequences of such subrogation; that is, the rights that the insurer acquires from the insured upon payment of the indemnity. AaEcDS

"On November 11, 1992, [the RTC] issued an Order deferring the hearing on the Motion to Dismiss until the trial and directing petitioners to file their Answer. Petitioners then moved to reconsider said Order which was, however, denied by [the RTC] on the ground that the reason relied upon by herein petitioners in its Motion to Dismiss and Motion for Reconsideration [was] a matter of defense which they must prove with their evidence. "On August 20, 1993, petitioners filed their Answer with Counterclaim and Crossclaim alleging therein that plaintiff, herein respondent, did not comply with the arbitration clause of the charter party; hence, the complaint was allegedly prematurely filed. The trial court set the case for pre-trial on November 26, 1993. "On November 15 and 16, 1993, petitioners filed a Motion to Defer Pre-Trial and Motion to Set for Preliminary Hearing the Affirmative Defense of Lack of Cause of Action for Failure to comply with Arbitration Clause, respectively. Private respondent did not file an Opposition to the said Motion to Set for Preliminary Hearing. On December 28, 1993, [the RTC] issued an Order denying the Motion to Set for Preliminary Hearing. On February 2, 1994 petitioners filed a Motion for Reconsideration of the Order dated December 28, 1993. On February 11, 1994, [the RTC] issued an Order denying petitioners' Motion for Reconsideration. Hence, the instant petition." 5

DECISION

PANGANIBAN, J p: Under the pre-1997 Rules of Court, a preliminary hearing on affirmative defenses may be allowed when a motion to dismiss has not been filed or when, having been filed, it has not been denied unconditionally. Hence, if its resolution has merely been deferred, the grounds it invokes may still be raised as affirmative defenses, and a preliminary hearing thereon allowed.

The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the January 21, 1999 Decision of the Court of Appeals 1 (CA) in CA-GR SP No. 33723, as well as the July 6, 1999 CA Resolution 2 denying reconsideration. The challenged Decision, which sustained the Orders 3 of the Regional Trial Court of Makati City, disposed as follows: "WHEREFORE, [there being] no grave abuse of discretion on the part of public respondent, the instant petition is hereby DISMISSED." 4 (italics supplied)

Ruling of the Court of Appeals

Affirming the trial court, the CA held that petitioners cannot rely on Section 5, Rule 16 6 of the pre-1997 Rules of Court, 7because a Motion to Dismiss had previously been filed. Further, it ruled that the arbitration clause provided in the charter party did not bind respondent. It reasoned as follows: "Petitioners argue that [the RTC] committed grave abuse of discretion amounting to lack or excess of jurisdiction in denying the preliminary hearing of the affirmative defense of lack of cause of action for failure to comply with the arbitration clause. "Petitioners, in so filing the Motion to Set for Preliminary Hearing the Affirmative Defense of Lack of Cause of Action for Failure to Comply with Arbitration Clause, premised their alleged right to a preliminary hearing on the provision of Section 5, Rule 16 of the Old Rules of Court which provide[s]: 'Sec. 5.Pleading grounds as affirmative defenses. Any of the grounds for dismissal provided for in this rule, except improper venue, may be pleaded as an affirmative defense and a preliminary hearing may be had thereon as if a motion to dismiss had been filed.' "Petitioners' reliance on said provision is misplaced. The above-mentioned provision contemplates a situation where no motion to dismiss is filed. If a motion to dismiss has been filed, as in the case at bar, Section 5, Rule 16 of the Old Rules of Court will not come into play. Furthermore, the same provision gives the judge discretion whether to set for preliminary hearing the grounds for affirmative defenses.

The Facts
The facts, as summarized by the CA, are as follows: "On November 27, 1990, the vessel MV "SUGAR ISLANDER" arrived at the port of Manila carrying a cargo of soybean meal in bulk consigned to several consignees, one of which was the Metro Manila Feed Millers Association (Metro for [b]revity). Discharging of cargo from vessel to barges commenced on November 30, 1990. From the barges, the cargo was allegedly offloaded, rebagged and reloaded on consignee's delivery trucks. Respondent, however, claims that when the cargo [was] weighed on a licensed truck scale a shortage of 255.051 metric tons valued at P1,621,171.16 was discovered. The above-mentioned shipment was insured with private respondent against all risk in the amount of P19,976,404.00. Due to the alleged refusal of petitioners to settle their respective liabilities, respondent, as insurer, paid the consignee Metro Manila Feed Miller's Association. On March 26, 1992, as alleged subrogee of Metro, private respondent filed a complaint for damages against herein petitioners. Within the reglementary period to file an Answer, petitioners filed a Motion to Dismiss the complaint on the ground that respondent's claim is premature, the same being arbitrable. Private respondent filed its Opposition thereto and petitioners filed their Reply to Opposition.

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Respondent judge deferred the hearing and determination of the Motion to Dismiss until the trial since the ground relied upon by petitioners therein did not appear to be indubitable. Petitioners then filed their Answer as ordered by the Court again raising as an affirmative defense lack of cause of action for failure to comply with [the] arbitration clause, praying for the dismissal of the complaint against them, and filing afterwards a Motion to Set for Preliminary Hearing the Affirmative Defense of lack of Cause of Action. In effect, petitioners are asking the trial court to set aside its Order denying the Motion to Dismiss and Order denying the Motion for Reconsideration thereof. "Petitioners cannot do this. "The remedy of the aggrieved party in a denied motion to dismiss is to file an answer and interpose as defense or defenses, the objection or objections raised by him in said motion to dismiss, then proceed to trial and, in case of adverse decision, to elevate the entire case by appeal in due course. Petitioners could also resort to the extraordinary legal remedies of certiorari, prohibition and mandamus to question the denial of the motion to dismiss. As correctly ruled by the trial court in its Order dated June 30, 1993, denying the Motion for Reconsideration of the Order dated November 11, 1992 (denying the Motion to Dismiss) the ground relied upon by petitioners is a matter of defense which petitioners must prove with their evidence at the trial. "Petitioners in asking the lower court to set the case for preliminary hearing further argue that this would give the court and the parties a shorter time to resolve the matter and the case without a full blown trial. However, petitioners fail to realize that they themselves are delaying the determination and resolution of the issues involved by resorting to an improper remedy. "On the issue raised by petitioners that private respondent's claim is premature for failure to comply with [the] arbitration clause, we hold that the right of the respondent as subrogee, in filing the complaint against herein petitions is not dependent upon the charter party relied upon by petitioners; nor does it grow out of any privity contract or upon written assignment of claim. It accrues simply upon payment of the insurance claim by respondent as insurer to the insured. This was the pronouncement by the Supreme Court in the case of Pan Malayan Insurance Corp. vs. Court of Appeals, 184 SCRA 54, to wit: 'Payment by the insurer to the insured operates as an equitable assignment to the former of all the remedies which the latter may have against the third party whose negligence or wrongful (sic) caused the loss. The right of subrogation is not dependent upon, nor does it grow out of, any privity contract or upon written assignment of claim. It accrues simply upon payment of the insurance claim by the insurer." 8 Hence, this recourse. 9 caCSDT

"1.Whether or not insurers as subrogee of the consignee, is bound by the charter party which is incorporated and referred to in the bill of lading. 2.Whether or not the motion to dismiss should be granted on the ground that a condition precedent has not been complied with, based on the arbitration clause incorporated in the bill of lading. 3.Whether or not the Court of Appeals erred in holding that the trial court did not commit grave abuse of discretion in denying petitioners' motion for preliminary hearing. 4.Whether or not the trial court can defer the resolution of a motion to dismiss on the ground that the ground relied upon is indubitable. 5.Whether or not the petitioners have resorted to an improper remedy which makes them responsible for delaying the case." In the main, the two principal matters before us are: (1) the denial of petitioners' Motion for Preliminary Hearing and (2) the propriety of the CA ruling regarding the arbitration clause.

The Court's Ruling

The Petition is meritorious.

First Issue: Preliminary Hearing of Affirmative Defense

At the outset, we must emphasize that the crux of the present controversy is the trial court's Order denying petitioner's Motion to Set for Preliminary Hearing the affirmative defense of lack of cause of action. Not questioned here is the said court's Order holding in abeyance the hearing of petitioner's Motion to Dismiss.

Affirmative Defense May Be Raised

Still in effect when the case was before the trial court, Section 5, Rule 16 of the pre-1997 Rules of Court, reads: "Sec. 5.Pleading grounds as affirmative defenses. Any of the grounds for dismissal provided for in this Rule, except improper venue, may be pleaded as an affirmative defense, and a preliminary hearing may be had thereon as if a motion to dismiss had been filed." Respondent argues that the above provision cannot be applied, because petitioners have already filed a Motion to Dismiss.

The Issues
In their Memorandum, petitioners submit the following issues for our consideration: 10

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We disagree. Respondent relies on the amendments introduced in the 1997 Rules on Civil Procedure ("1997 Rules"), but ignores equally relevant provisions thereof, as well as the clear intendment of the pre-1997 Rules. True, Section 6, Rule 16 of the 1997 Rules, 11 specifically provides that a preliminary hearing on the affirmative defenses may be allowed only when no motion to dismiss has been filed. Section 6, however, must be viewed in the light of Section 3 of the same Rule, 12 which requires courts to resolve a motion to dismiss and prohibits them from deferring its resolution on the ground of indubitability. Clearly then, Section 6 disallows a preliminary hearing of affirmative defenses once a motion to dismiss has been filed because such defense should have already been resolved. In the present case, however, the trial court did not categorically resolve petitioners' Motion to Dismiss, but merely deferred resolution thereof. 13 Indeed, the present Rules are consistent with Section 5, Rule 16 of the pre-1997 Rules of Court, because both presuppose that no motion to dismiss had been filed; or in the case of the pre-1997 Rules, if one has been filed, it hasnot been unconditionally denied. 14 Hence, the ground invoked may still be pleaded as an affirmative defense even if the defendant's Motion to Dismiss has been filed but not definitely resolved, or if it has been deferred as it could be under the pre-1997 Rules. 15

arbitration clause to the subrogee. That case merely discussed, inter alia, the accrual of the right of subrogation and the legal basis therefor. 18 This issue is completely different from that of the consequences of such subrogation; that is, the rights that the insurer acquires from the insured upon payment of the indemnity.

WHEREFORE, the Petition is GRANTED and the appealed Decision is hereby REVERSED. The case is REMANDED to the trial court for preliminary hearing on petitioners' affirmative defense. No costs. SO ORDERED.

Denial of the Motion for a Preliminary Hearing Was a Grave Abuse of Discretion
The more crucial question that we must settle here is whether the trial court committed grave abuse of discretion when it denied petitioners' Motion for a Preliminary Hearing on their affirmative defense of lack of cause of action. Undeniably, a preliminary hearing is not mandatory, but subject to the discretion of the trial court. 16 In the light of the circumstances in this case, though, we find that the lower court committed grave abuse of discretion in refusing to grant the Motion. We note that the trial court deferred the resolution of petitioners' Motion to Dismiss because of a single issue. It was apparently unsure whether the charter party that the bill of lading referred to was indeed the Baltimore Berth Grain Charter Party submitted by petitioners. Considering that there was only one question, which may even be deemed to be the very touchstone of the whole case, the trial court had no cogent reason to deny the Motion for Preliminary Hearing. Indeed, it committed grave abuse of discretion when it denied a preliminary hearing on a simple issue of fact that could have possibly settled the entire case. Verily, where a preliminary hearing appears to suffice, there is no reason to go on to trial. One reason why dockets of trial courts are clogged is the unreasonable refusal to use a process or procedure, like a motion to dismiss, which is designed to abbreviate the resolution of a case.

SPS. ENRIQUETA RASDAS, and TOMAS RASDAS, SPS. ESPERANZA A. VILLA, and ERNESTO VILLA, and LOLITA GALLEN, petitioners, vs. JAIME ESTENOR, respondent.

DECISION

TINGA, J p: The main issue in this Petition for Review under Rule 45 is whether the complaint below is barred by res judicata. We find that res judicata indeed obtains in this case, albeit of a mode different from that utilized by the trial court and the Court of Appeals in dismissing the complaint. The antecedent facts, as culled from the assailed Decision 1 of the Court of Appeals Tenth Division, follow. The dispute centers on a parcel of land with an area of 703 square meters, situated in Ilagan, Isabela. On 29 October 1992, respondent as plaintiff filed a Complaint For Recovery Of Ownership And Possession With Damages against petitioners as defendants. The complaint was docketed as Civil Case No. 673 and tried by the Regional Trial Court (RTC) of Ilagan, Isabela, Branch 16. In the same complaint, respondent asserted that he was the owner of the subject property, which was then in the possession of petitioners. On 6 November 1995, the RTC decided Civil Case No. 673 in favor of petitioners. Respondent appealed the RTC decision before the Court of Appeals, and his appeal was docketed as CA-G.R. No. 52338. On 25 September 1997, the Court of Appeals reversed the judgment of the RTC, and declared respondent as the owner of the subject property. As a result, petitioners were ordered to vacate the land. The dispositive portion of the appellate court's decision reads:

Second Issue: The Arbitration Clause

The CA also erred when it held that the arbitration clause was not binding on respondent. We reiterate that the crux of this case is whether the trial court committed grave abuse of discretion in denying the aforecited Motion. There was neither need nor reason to rule on the applicability of the arbitration clause. Be that as it may, we find the CA's reasoning on this point faulty. Citing Pan Malayan Insurance Corporation v. CA 17 it ruled that the right of respondent insurance company as subrogee was not based on the charter party or any other contract; rather, it accrued upon the payment of the insurance claim by private respondent to the insured consignee. There was nothing in Pan Malayan, however, that prohibited the applicability of the

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WHEREFORE, the Decision of the trial court dated November 6, 1995 is REVERSED and SET ASIDE, and a new one is rendered declaring the plaintiff as the owner of the land in question; and ordering the defendants-appellees to vacate the same and jointly and severally to pay the plaintiff reasonable compensation of P300.00 a month for the use and enjoyment of the land from June 1991 up to the time the land is vacated; attorney's fees of P10,000.00 and litigation expenses of P5,000.00. ASICDH Costs against the defendants-appellees. SO ORDERED. 2 The decision became final and executory after a petition for certiorari assailing its validity was dismissed by this Court. 3Thereafter, a Writ of Execution and Writ of Demolition was issued against petitioners, who were ordered to demolish their houses, structures, and improvements on the property. Petitioners as plaintiffs then filed a Complaint dated 6 July 1999 against respondent for just compensation and preliminary injunction with temporary restraining order. The case was docketed as Civil Case No. 1090, and heard by the same RTC Branch 16 that ruled on the first complaint. Notwithstanding the earlier pronouncement of the Court of Appeals, petitioners asserted therein that they were the lawful owners of the subject property 4 , although they ultimately conceded the efficacy of the appellate court's final and executory decision. Still, they alleged that they were entitled to just compensation relating to the value of the houses they had built on the property, owing to their purported status as builders in good faith. They claimed that the Court of Appeals decision did not declare them as builders in bad faith, and thus, they were entitled to be reimbursed of the value of their houses before these could be demolished. 5They posited that without such reimbursement, they could not be ejected from their houses. Respondent as defendant countered with a Motion to Dismiss, arguing that petitioners' complaint was barred by res judicata, owing to the final and executory judgment of the Court of Appeals. The Motion to Dismiss was initially denied by the RTC in an Order dated 4 August 1999 6 , and pre-trial ensued. However, before trial proper could begin, respondent filed a motion for preliminary hearing on the affirmative defense of lack of jurisdiction and res judicata. This motion was resolved in an Order dated 16 February 2000, wherein the RTC declared itself "constrained to apply the principle of res judicata," thus reversing its earlier order. In doing so, the RTC concluded that the earlier decision of the Court of Appeals had already effectively settled that petitioners were in fact builders in bad faith. Citing Mendiola v. Court of Appeals, 7 the RTC held that the causes of action between the final judgment and the instant complaint of petitioners were identical, as it would entail the same evidence that would support and establish the former and present causes of action. Accordingly, the RTC ordered the dismissal of petitioners' complaint. The counsel for petitioners was likewise issued a warning for having violated the prohibition on forum-shopping on account of the filing of the complaint barred by res judicata. The finding of res judicata was affirmed by the Court of Appeals in its assailed Decision. It is this finding that is now subject to review by this Court. Petitioners argue that since respondents' Motion to Dismiss on the ground of res judicata had already been denied, the consequent preliminary hearing on the special defenses which precluded the dismissal of the complaint was null and void. 8 Petitioners also claim that there was no identity of causes of action in Civil Case No. 673, which concerned the ownership of the land, and in Civil Case No. 1090, which pertained to just compensation under Article 448 of the Civil Code. Even assuming that res judicata obtains, petitioners claim that the said rule may be disregarded if its application would result in grave injustice.

We observe at the onset that it does appear that the RTC's act of staging preliminary hearing on the affirmative defense of lack of jurisdiction and res judicata is not in regular order. Under Section 6, Rule 16 of the 1997 Rules of Civil Procedure, the allowance for a preliminary hearing, while left in the discretion of the court, is authorized only if no motion to dismiss has been filed but any of the grounds for a motion to dismiss had been pleaded as an affirmative defense in the answer. In this case, respondents had filed a motion to dismiss on the ground of res judicata, but the same was denied. They thus filed an answer alleging res judicata as a special affirmative defense, but later presented aMotion for Preliminary Hearing which was granted, leading to the dismissal of the case. HSCAIT The general rule must be reiterated that the preliminary hearing contemplated under Section 6, Rule 16 applies only if no motion to dismiss has been filed. This is expressly provided under the rule, which relevantly states "[i]f no motion to dismiss has been filed, any of the grounds for dismissal provided for in [Rule 16] may be pleaded as an affirmative defense in the answer and, in the discretion of the court, a preliminary hearing may be had thereon as if a motion to dismiss had been filed." An exception was carved out in California and Hawaiian Sugar Company v. Pioneer Insurance, 9wherein the Court noted that while Section 6 disallowed a preliminary hearing of affirmative defenses once a motion to dismiss has been filed, such hearing could nonetheless be had if the trial court had not categorically resolved the motion to dismiss. 10 Such circumstance does not obtain in this case, since the trial court had already categorically denied the motion to dismiss prior to the filing of the answer and the motion for preliminary hearing. We observe in this case that the judge who had earlier denied the motion to dismiss, Hon. Teodulo E. Mirasol, was different from the judge who later authorized the preliminary hearing, 11 Hon. Isaac R. de Alban, a circumstance that bears some light on why the RTC eventually changed its mind on the motion to dismiss. Still, this fact does not sanction the staging of a preliminary hearing on affirmative defenses after the denial of the motion to dismiss. If a judge disagrees with his/her predecessor's previous ruling denying a motion to dismiss, the proper recourse is not to conduct a preliminary hearing on affirmative defenses, but to utilize the contested ground as part of the basis of the decision on the merits. On the part of the movant whose motion to dismiss had already been filed and denied, the proper remedy is to file a motion for reconsideration of the denial of the motion. If such motion for reconsideration is denied, the ground for the dismissal of the complaint may still be litigated at the trial on the merits. Clearly, the denial of a motion to dismiss does not preclude any future reliance on the grounds relied thereupon. However, nothing in the rules expressly authorizes a preliminary hearing of affirmative defenses once a motion to dismiss has been filed and denied. Thus, the strict application of Section 6, Rule 16 in this case should cause us to rule that the RTC erred in conducting the preliminary hearing. However, there is an exceptional justification for us to overlook this procedural error and nonetheless affirm the dismissal of the complaint. The complaint in question is so evidently barred by res judicata, it would violate the primordial objective of procedural law to secure a just, speedy and inexpensive disposition of every action and proceeding 12 should the Court allow this prohibited complaint from festering in our judicial system. Indeed, the rule sanctioning the liberal construction of procedural rules is tailor-made for a situation such as this, when a by-the-numbers application of the rule would lead to absurdity, such as the continued litigation of an obviously barred complaint. Why is the subject complaint barred by res judicata? It is uncontroverted that in the decision by the Court of Appeals in Civil Case No. 673, it was observed: When the occupancy of the lot by Luis Aggabao which was transmitted to his son Vivencio Aggabao, and later transmitted to the latter's children . . . expired in April

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1965, the late Vivencio Aggabao verbally begged and pleaded to plaintiff-appellant that he be allowed to stay on the premises of the land in question as his children, herein appellees, were still studying and it would be very hard fro them to transfer residence at that time. The plaintiff, out of Christian fellowship and compassion, allowed the appellees to stay temporarily on the land in question. CSDAIa

different cause of action, while the judgment remains unreversed by proper authority. It has been held that in order that a judgment in one action can be conclusive as to a particular matter in another action between the same parties or their privies, it is essential that the issue be identical. If a particular point or question is in issue in the second action, and the judgment will depend on the determination of that particular point or question, a former judgment between the same parties or their privies will be final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit. Identity of cause of action is not required but merely identity of issues. 19 Stated differently, any right, fact, or matter in issue directly adjudicated or necessarily involved in the determination of an action before a competent court in which judgment is rendered on the merits is conclusively settled by the judgment therein and cannot again be litigated between the parties and their privies whether or not the claim, demand, purpose, or subject matter of the two actions is the same. 20 Indeed, in cases wherein the doctrine of "conclusiveness of judgment" is applicable, there is, as in the two cases subject of this petition, identity of parties but not of causes of action. The judgment is conclusive in the second case, only as to those matters actually and directly controverted and determined, and not as to matters merely involved therein. 21Herein, the fact that petitioners were in possession in bad faith as early as 1965 was already determined in the first case. In order that they could successfully litigate their second cause of action, petitioners will have to convince that they were in possession in good faith at the time they built their structures, an argument that deviates the previous determination made in the final judgment that resolved the first case. TaCIDS The reasons for establishing the principle of "conclusiveness of judgment" are founded on sound public policy, and to grant this petition would have the effect of unsettling this well-settled doctrine. It is allowable to reason back from a judgment to the basis on which it stands, upon the obvious principle that where a conclusion is indisputable, and could have been drawn only from certain premises, the premises are equally indisputable with the conclusion. 22 When a fact has been once determined in the course of a judicial proceeding, and a final judgment has been rendered in accordance therewith, it cannot be again litigated between the same parties without virtually impeaching the correctness of the former decision, which, from motives of public policy, the law does not permit to be done. 23 Contrary to the holdings of both courts below, in the case of Mendiola v. Court of Appeals 24 which they relied upon, this Court observed that the causes of action in the two cases involved were so glaringly similar that it had to affirm the dismissal of the second case by virtue of the "bar of former judgment rule." One final note. Petitioners, in their Reply before this Court, raise the argument that assuming that they were builders in bad faith, respondents should likewise be considered as being in bad faith, as the structures were built with their knowledge and without their opposition. That being the case, Article 453 of the Civil Code would apply to the effect both parties could thus be deemed as being in good faith. Accordingly, petitioners would still be entitled to compensation on the structures they built. We are disinclined to accord merit to this argument. For one, it was raised for the first time in the Reply before this Court. It was not even raised in the Complaint filed with the RTC, hence it could not be said that petitioners' cause of action is grounded on Article 453. Issues not previously ventilated cannot be raised for the first time on appeal 25 , much less when first proposed in the reply to the comment on the petition for review. Even assuming the issue is properly litigable, the Court can find no basis to declare that respondents were in bad faith as a matter of fact. Certainly, nothing in the first decision of the Court of Appeals conclusively establishes that claim, its factual determination being limited to the finding that

xxx xxx xxx In this case, the possession of the land by the appellees derived from their father Luis Aggabao from March 31, 1955 to March 31, 1965 was by virtue of a stipulation in the deed of sale (exh. G), while their possession derived from their father, Vivencio Aggabao, from March 31, 1965 to 1982 (the latter died in 1982) was only by tolerance because of the pleading of Vivencio Aggabao to the plaintiff-appellant that he be allowed to stay because of the children going to school. . . . 13 Evidently, the Court of Appeals had previously ruled in the first case that as early as 1965, the father of the petitioners (and their predecessor-in-interest) had already known that he did not own the property, and that his stay therein was merely out of tolerance. Such conclusion in fact bolstered the eventual conclusion that respondents were the owners of the land and that petitioners should vacate the same. This fact should be seen in conjunction with the findings of the RTC and the Court of Appeals in this case that the structures for which petitioners sought to be compensated were constructed in 1989 and 1990, or long after they had known they were not the owners of the subject property. These premises remaining as they are, it is clear that petitioners are not entitled to the just compensation they seek through the present complaint. Under Article 448 of the Civil Code, the builder in bad faith on the land of another loses what is built without right to indemnity. 14 Petitioners were in bad faith when they built the structures as they had known that the subject property did not belong to them. Are these conclusions though sufficient to justify dismissal on the ground of res judicata? The doctrine of res judicata has two aspects. 15 The first, known as "bar by prior judgment," or "estoppel by verdict," is the effect of a judgment as a bar to the prosecution of a second action upon the same claim, demand or cause of action. The second, known as "conclusiveness of judgment" or otherwise known as the rule of auter action pendant, ordains that issues actually and directly resolved in a former suit cannot again be raised in any future case between the same parties involving a different cause of action. 16 It has the effect of preclusion of issues only. 17 It appears that both the RTC and the Court of Appeals deemed that the first aspect of res judicata, "bar by prior judgment," applied in this case. 18 We hold that it is the second kind of res judicata, "conclusiveness of judgment," that barred the instant complaint. As previously explained by this Court: [C]onclusiveness of judgment states that a fact or question which was in issue in a former suit and there was judicially passed upon and determined by a court of competent jurisdiction, is conclusively settled by the judgment therein as far as the parties to that action and persons in privity with them are concerned and cannot be again litigated in any future action between such parties or their privies, in the same court or any other court of concurrent jurisdiction on either the same or

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petitioners alone were had been in possession of the property in bad faith. We are not wont to ascribe points of fact in the said decision which were not expressly established or affirmed. WHEREFORE, the petition is DENIED. Costs against petitioners. SO ORDERED.

[a]which of the contending trustees and officers are legally elected in accordance with the 1970 By-Laws; [b]whether the withdrawals and disbursements are in accordance with the By-Laws; [c]whether there was a complete, audited report and accounting of all the corporate funds; [d]whether respondents Gauuan, Villaluz, Arreola and the banks, are jointly and severally liable to indemnify the school for all sums of money withdrawn, disbursed, paid, diverted and unaccounted for without the approval and counter-signature of the chairman; [e]whether there was a demand of a right of inspection and a refusal to allow inspection, and TaDSHC [f]whether respondents are liable for damages. 6 In a motion 7 dated August 10, 2003, respondents sought the dismissal of the complaint or the issuance of a summary judgment dismissing the case. On February 16, 2004, the RTC denied 8 the motion on the ground that "there are several issues raised which would still need the presentation of evidence to determine the rights of the parties." A few years later, respondents-intervenors also sought the dismissal of the complaint in their Answer-in-Intervention with Motion to Dismiss 9 dated February 27, 2008 raising the lack of capacity, personality or authority to sue the individual petitioners in behalf of Aldersgate College, Inc. The RTC, in its February 6, 2009 Order, once more brushed aside the attempt to have the case dismissed. 10 Unfazed, the respondents-intervenors again filed in February 2010 a Motion to Withdraw and/or to Dismiss Case, 11 alleging that the case was instituted without any board resolution authorizing its filing and that the incumbent members of the Board of Trustees of petitioner Aldersgate College, Inc. had recently passed a resolution which sought the dismissal and/or withdrawal of the case. The RTC's Ruling

ALDERSGATE COLLEGE, INC., ARSENIO L. MENDOZA, IGNACIO A. GALINDEZ, WILSON E. SAGADRACA, and FILIPINAS MENZEN, petitioners, vs. JUNIFEN F. GAUUAN, ARTEMIO M. VILLALUZ, SR., TERESITA ARREOLA, FORTUNATA ANDAYA, SALVADOR C. AQUINO, ROBERTO M. TUGAWIN and JOSE O. RUPAC, respondents,

-and-

ALDERSGATE COLLEGE, INC., DR. WILLIE A. DAMASCO, REV. ELMER V. LUNA, JEMZ R. LUDAN, SAMUEL V. FULGENCIO, REV. ISMAEL A. DAMASCO, VICENTE V. RAMEL, SALVADOR C. AQUINO, CAMILO V. GALLARDO, NORMALITA C. ORDONEZ, and ARSENIO L. SOLIMEN,respondents-intervenors.

RESOLUTION

PERLAS-BERNABE, J p: This petition for review assails the March 30, 2010 Resolution 1 and June 29, 2010 Order 2 of the Regional Trial Court (RTC), Branch 28, Nueva Vizcaya in SEC Case No. 3972 which granted the Motion to Withdraw and/or to Dismiss Case filed by the respondents-intervenors composed of the incumbent members of the Board of Trustees of petitioner Aldersgate College, Inc. The Factual Antecedents Sometime in March 1991, petitioners Aldersgate College, Inc., Arsenio L. Mendoza, Ignacio A. Galindez, Wilson E. Sagadraca, and Filipinas Menzen, together with now deceased Justino R. Vigilia, Castulo Villanueva, Samuel F. Erana and Socorro Cabanilla, filed a case against the respondents before the Securities and Exchange Commission (SEC). 3When the SEC was reorganized pursuant to Republic Act 8799, 4 the case was transferred to the RTC of Nueva Vizcaya for further proceedings. 5 Pre-trial thereafter ensued and a Pre-Trial Order was issued enumerating the following issues:

On March 30, 2010, the RTC granted 12 the motion despite the opposition of the petitioners, and dismissed the case on the basis of the Resolution passed by the members of the Board of Trustees of petitioner Aldersgate College dated December 14, 2009 recommending the dismissal of the case. Petitioners' motion for reconsideration was denied in the RTC's June 29, 2010 Order. 13 Hence the instant petition. ICAcaH Issue Before the Court Petitioners raise the issue of whether or not the RTC erred in dismissing the case. The Court's Ruling

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The petition is meritorious. In an ordinary civil action, a motion to dismiss must generally be filed "within the time for but before filing the answer to the complaint" 14 and on the grounds enumerated in Section 1, Rule 16 of the Rules of Court, to wit: (a)That the court has no jurisdiction over the person of the defending party; (b)That the court has no jurisdiction over the subject matter of the claim; (c)That venue is improperly laid; (d)That the plaintiff has no legal capacity to sue; (e)That there is another action pending between the same parties for the same cause; (f)That the cause of action is barred by a prior judgment or by the statute of limitations; (g)That the pleading asserting the claim states no cause of action; (h)That the claim or demand set forth in the plaintiff's pleading has been paid, waived, abandoned, or otherwise extinguished; (i)That the claim on which the action is founded is unenforceable under the provisions of the statute of frauds; and (j)That a condition precedent for filing the claim has not been complied with. 15 cHCIEA The rule is, however, different with respect to intra-corporate controversies. Under Section 8, Rule 1 of the Interim Rules of Procedure for Intra-Corporate Controversies, 16 a motion to dismiss is a prohibited pleading. As this case involves an intra-corporate dispute, the motion to dismiss is undeniably a prohibited pleading. Moreover, the Court finds no justification for the dismissal of the case based on the mere issuance of a board resolution by the incumbent members of the Board of Trustees of petitioner corporation recommending its dismissal, especially considering the various issues raised by the parties before the court a quo. Hence, the RTC should not have entertained, let alone have granted the subject motion to dismiss. WHEREFORE, the petition is GRANTED. The assailed March 30, 2010 Resolution and June 29, 2010 Order of the Regional Trial Court, Branch 28, Nueva Vizcaya in SEC Case No. 3972 are REVERSED and SET ASIDE. The RTC isDIRECTED to proceed with the trial and to decide the case with dispatch.

SO ORDERED.

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