PEDRO T. SANTOS, JR., G.R. No.

170943
Petitioner,
Present:
PUNO, C.J., Chairperson,
CARPIO,
- v e r s u s - CORONA,
AZCUNA and
LEONARDO-DE CASTRO, JJ.
PNOC EXPLORATION
CORPORATION,
Respondent. Promulgated:
September 23, 2008
x---------------------------------------------------x
DECISION
CORONA, J.:
This is a petition for review1 of the September 22, 2005 decision2 and December 29, 2005
resolution3 of the Court of Appeals in CA-G.R. SP No. 82482.
On December 23, 2002, respondent PNOC Exploration Corporation filed a complaint for a sum of
money against petitioner Pedro T. Santos, Jr. in the Regional Trial Court of Pasig City, Branch 167.
The complaint, docketed as Civil Case No. 69262, sought to collect the amount of P698,502.10
representing petitioners unpaid balance of the car loan4 advanced to him by respondent when he
was still a member of its board of directors.
Personal service of summons to petitioner failed because he could not be located in his last known
address despite earnest efforts to do so. Subsequently, on respondents motion, the trial court
allowed service of summons by publication.
Respondent caused the publication of the summons in Remate, a newspaper of general circulation
in the Philippines, on May 20, 2003. Thereafter, respondent submitted the affidavit of publication of
the advertising manager of Remate5 and an affidavit of service of respondents employee6 to the
effect that he sent a copy of the summons by registered mail to petitioners last known address.

When petitioner failed to file his answer within the prescribed period, respondent moved that the
case be set for the reception of its evidence ex parte. The trial court granted the motion in an order
dated September 11, 2003.
Respondent proceeded with the ex parte presentation and formal offer of its evidence. Thereafter,
the case was deemed submitted for decision on October 15, 2003.
On October 28, 2003, petitioner filed an "Omnibus Motion for Reconsideration and to Admit Attached
Answer." He sought reconsideration of the September 11, 2003 order, alleging that the affidavit of
service submitted by respondent failed to comply with Section 19, Rule 14 of the Rules of Court as it
was not executed by the clerk of court. He also claimed that he was denied due process as he was
not notified of the September 11, 2003 order. He prayed that respondents evidence ex parte be
stricken off the records and that his answer be admitted.
Respondent naturally opposed the motion. It insisted that it complied with the rules on service by
publication. Moreover, pursuant to the September 11, 2003 order, petitioner was already deemed in
default for failure to file an answer within the prescribed period.
In an order dated February 6, 2004, the trial court denied petitioners motion for reconsideration of
the September 11, 2003 order. It held that the rules did not require the affidavit of complementary
service by registered mail to be executed by the clerk of court. It also ruled that due process was
observed as a copy of the September 11, 2003 order was actually mailed to petitioner at his last
known address. It also denied the motion to admit petitioners answer because the same was filed
way beyond the reglementary period.
Aggrieved, petitioner assailed the September 11, 2003 and February 6, 2004 orders of the trial court
in the Court of Appeals via a petition for certiorari. He contended that the orders were issued with
grave abuse of discretion. He imputed the following errors to the trial court: taking cognizance of the
case despite lack of jurisdiction due to improper service of summons; failing to furnish him with
copies of its orders and processes, particularly the September 11, 2003 order, and upholding
technicality over equity and justice.
During the pendency of the petition in the Court of Appeals, the trial court rendered its decision in
Civil Case No. 69262. It ordered petitioner to pay P698,502.10 plus legal interest and costs of suit.7
Meanwhile, on September 22, 2005, the Court of Appeals rendered its decision8 sustaining the
September 11, 2003 and February 6, 2004 orders of the trial court and dismissing the petition. It
denied reconsideration.9 Thus, this petition.
Petitioner essentially reiterates the grounds he raised in the Court of Appeals, namely, lack of
jurisdiction over his person due to improper service of summons, failure of the trial court to furnish
him with copies of its orders and processes including the September 11, 2003 order and preference
for technicality rather than justice and equity. In particular, he claims that the rule on service by
publication under Section 14, Rule 14 of the Rules of Court applies only to actions in rem, not
actions in personam like a complaint for a sum of money. He also contends that the affidavit of
service of a copy of the summons should have been prepared by the clerk of court, not respondents
messenger.
The petition lacks merit.
ProprietyOf

Service By Publication
Section 14, Rule 14 (on Summons) of the Rules of Court provides:
SEC. 14. Service upon defendant whose identity or whereabouts are unknown. In any
action where the defendant is designated as an unknown owner, or the like, or whenever his
whereabouts are unknown and cannot be ascertained by diligent inquiry, service may, by
leave of court, be effected upon him by publication in a newspaper of general circulation and
in such places and for such times as the court may order. (emphasis supplied)
Since petitioner could not be personally served with summons despite diligent efforts to locate his
whereabouts, respondent sought and was granted leave of court to effect service of summons upon
him by publication in a newspaper of general circulation. Thus, petitioner was properly served with
summons by publication.
Petitioner invokes the distinction between an action in rem and an action in personam and claims
that substituted service may be availed of only in an action in rem. Petitioner is wrong. Thein rem/in
personam distinction was significant under the old rule because it was silent as to the kind of action
to which the rule was applicable.10 Because of this silence, the Court limited the application of the old
rule to in rem actions only.11
This has been changed. The present rule expressly states that it applies "[i]n any action where the
defendant is designated as an unknown owner, or the like, or whenever his whereabouts are
unknown and cannot be ascertained by diligent inquiry." Thus, it now applies to any action,
whether in personam, in rem or quasi in rem.12
Regarding the matter of the affidavit of service, the relevant portion of Section 19,13 Rule 14 of the
Rules of Court simply speaks of the following:
an affidavit showing the deposit of a copy of the summons and order for publication in the post
office, postage prepaid, directed to the defendant by registered mail to his last known address.
Service of summons by publication is proved by the affidavit of the printer, his foreman or principal
clerk, or of the editor, business or advertising manager of the newspaper which published the
summons. The service of summons by publication is complemented by service of summons
by registered mail to the defendants last known address. This complementary service is evidenced
by an affidavit "showing the deposit of a copy of the summons and order for publication in the post
office, postage prepaid, directed to the defendant by registered mail to his last known address."
The rules, however, do not require that the affidavit of complementary service be executed by the
clerk of court. While the trial court ordinarily does the mailing of copies of its orders and processes,
the duty to make the complementary service by registered mail is imposed on the party who resorts
to service by publication.
Moreover, even assuming that the service of summons was defective, the trial court acquired
jurisdiction over the person of petitioner by his own voluntary appearance in the
action against him. In this connection, Section 20, Rule 14 of the Rules of Court states:
SEC. 20. Voluntary appearance. The defendants voluntary appearance in the action shall be
equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside

from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary
appearance. (emphasis supplied)
Petitioner voluntarily appeared in the action when he filed the "Omnibus Motion for Reconsideration
and to Admit Attached Answer."14 This was equivalent to service of summons and vested the trial
court with jurisdiction over the person of petitioner.
EntitlementTo
Notice Of Proceedings
The trial court allowed respondent to present its evidence ex parte on account of petitioners failure
to file his answer within the prescribed period. Petitioner assails this action on the part of the trial
court as well as the said courts failure to furnish him with copies of orders and processes issued in
the course of the proceedings.
The effects of a defendants failure to file an answer within the time allowed therefor are governed by
Sections 3 and 4, Rule 9 (on Effect of Failure to Plead) of the Rules of Court:
SEC. 3. Default; declaration of. If the defending party fails to answer within the time allowed
therefor, the court shall, upon motion of the claiming party with notice to the defending party,
and proof of such failure, declare the defending party in default. Thereupon, the court shall
proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the
court in its discretion requires the claimant to submit evidence. Such reception of evidence may be
delegated to the clerk of court.
SEC. 4. Effect of order of default. A party in default shall be entitled to notice of subsequent
proceedings but not to take part in the trial. (emphasis supplied)
If the defendant fails to file his answer on time, he may be declared in default upon motion of the
plaintiff with notice to the said defendant. In case he is declared in default, the court shall proceed to
render judgment granting the plaintiff such relief as his pleading may warrant, unless the court in its
discretion requires the plaintiff to submit evidence. The defaulting defendant may not take part in the
trial but shall be entitled to notice of subsequent proceedings.
In this case, even petitioner himself does not dispute that he failed to file his answer on time. That
was in fact why he had to file an "Omnibus Motion for Reconsideration and to Admit Attached
Answer." But respondent moved only for the ex parte presentation of evidence, not for the
declaration of petitioner in default. In its February 6, 2004 order, the trial court stated:
The disputed Order of September 11, 2003 allowing the presentation of evidence ex-parte precisely
ordered that "despite and notwithstanding service of summons by publication, no answer has been
filed with the Court within the required period and/or forthcoming.["] Effectively[,] that was a finding
that the defendant [that is, herein petitioner] was in default for failure to file an answer or any
responsive pleading within the period fixed in the publication as precisely the defendant [could
not] be found and for which reason, service of summons by publication was ordered. It is simply
illogical to notify the defendant of the Order of September 11, 2003 simply on account of the reality
that he was no longer residing and/or found on his last known address and his whereabouts
unknown thus the publication of the summons. In other words, it was reasonable to expect that the
defendant will not receive any notice or order in his last known address. Hence, [it was] impractical
to send any notice or order to him. Nonetheless, the record[s] will bear out that a copy of the

order of September 11, 2003 was mailed to the defendant at his last known address but it was
not claimed. (emphasis supplied)
As is readily apparent, the September 11, 2003 order did not limit itself to permitting respondent to
present its evidence ex parte but in effect issued an order of default. But the trial court could not
validly do that as an order of default can be made only upon motion of the claiming party.15 Since no
motion to declare petitioner in default was filed, no default order should have been issued.
To pursue the matter to its logical conclusion, if a party declared in default is entitled to notice of
subsequent proceedings, all the more should a party who has not been declared in default be
entitled to such notice. But what happens if the residence or whereabouts of the defending party is
not known or he cannot be located? In such a case, there is obviously no way notice can be sent to
him and the notice requirement cannot apply to him. The law does not require that the impossible be
done.16 Nemo tenetur ad impossibile. The law obliges no one to perform an impossibility.17 Laws and
rules must be interpreted in a way that they are in accordance with logic, common sense, reason
and practicality.18
Hence, even if petitioner was not validly declared in default, he could not reasonably demand that
copies of orders and processes be furnished him. Be that as it may, a copy of the September 11,
2003 order was nonetheless still mailed to petitioner at his last known address but it was unclaimed.
CorrectnessOf
Non-Admission Of Answer
Petitioner failed to file his answer within the required period. Indeed, he would not have moved for
the admission of his answer had he filed it on time. Considering that the answer was belatedly filed,
the trial court did not abuse its discretion in denying its admission.
Petitioners plea for equity must fail in the face of the clear and express language of the rules of
procedure and of the September 11, 2003 order regarding the period for filing the answer. Equity is
available only in the absence of law, not as its replacement.19 Equity may be applied only in the
absence of rules of procedure, never in contravention thereof.
WHEREFORE, the petition is hereby DENIED.
Costs against petitioner.
SO ORDERED.

TERESITA MONZON,
Petitioner,
- versus SPS. JAMES & MARIA ROSA NIEVES RELOVA and SPS. BIENVENIDO & EUFRACIA PEREZ,
Respondents.

- versus ADDIO PROPERTIES, INC.,

Intervenor.

G.R. No. 171827

Present:
YNARES-SANTIAGO, J.,
Chairperson,
AUSTRIA-MARTINEZ,
CHICO-NAZARIO,
NACHURA, and
REYES, JJ.
Promulgated:
September 17, 2008
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
CHICO-NAZARIO, J.:
This is a Petition for Review on Certiorari assailing the Decision1 of the Court of Appeals dated 27
September 2005 and its Resolution dated 7 March 2006 in CA-G.R. CV No. 83507 affirming the Decision
of the Regional Trial Court (RTC) of Tagaytay City, Branch 18.
The factual and procedural antecedents of this case are as follows:
On 18 October 2000, the spouses James and Maria Rosa Nieves Relova and the spouses Bienvenido and
Eufracia Perez, respondents before this Court, filed against Atty. Ana Liza Luna, Clerk of Court of Branch
18 of the RTC of Tagaytay City, and herein petitioner Teresita Monzon an initiatory pleading captioned
as a Petition for Injunction. The case, which was filed before the same Branch 18 of the RTC of Tagaytay
City, was docketed as Civil Case No. TG-2069.
In their Petition for Injunction, respondents alleged that on 28 December 1998, Monzon executed a
promissory note in favor of the spouses Perez for the amount of P600,000.00, with interest of five
percent per month, payable on or before 28 December 1999. This was secured by a 300-square meter
lot in Barangay Kaybagal, Tagaytay City. Denominated as Lot No. 2A, this lot is a portion of Psu-232001,

covered by Tax Declaration No. 98-008-1793. On 31 December 1998, Monzon executed a Deed of
Absolute Sale over the said parcel of land in favor of the spouses Perez.
Respondents also claim in their Petition for Injunction that on 29 March 1999, Monzon executed
another promissory note, this time in favor of the spouses Relova for the amount of P200,000.00 with
interest of five percent per month payable on or before 31 December 1999. This loan was secured by a
200 square meter lot, denominated as Lot No. 2B, another portion of the aforementioned Psu-232001
covered by Tax Declaration No. 98-008-1793. On 27 December 1999, Monzon executed a Deed of
Conditional Sale over said parcel of land in favor of the spouses Relova.
On 23 October 1999, the Coastal Lending Corporation extrajudicially foreclosed the entire 9,967-square
meter property covered by Psu-232001, including the portions mortgaged and subsequently sold to
respondents. According to the Petition for Injunction, Monzon was indebted to the Coastal Lending
Corporation in the total amount of P3,398,832.35. The winning bidder in the extrajudicial foreclosure,
Addio Properties Inc., paid the amount of P5,001,127.00, thus leaving a P1,602,393.65 residue.
According to respondents, this residue amount, which is in the custody of Atty. Luna as Branch Clerk of
Court, should be turned over to them pursuant to Section 4, Rule 68 of the Revised Rules of Civil
Procedure. Thus, respondents pray in their Petition for Injunction for a judgment (1) finding Monzon
liable to the spouses Perez in the amount of P1,215,000.00 and to the spouses Relova in the amount of
P385,000.00; (2) ordering Atty. Luna to deliver said amounts to respondents; and (3) restraining Atty.
Luna from delivering any amount to Monzon pending such delivery in number (2).
Monzon, in her Answer, claimed that the Petition for Injunction should be dismissed for failure to state a
cause of action.
Monzon likewise claimed that respondents could no longer ask for the enforcement of the two
promissory notes because she had already performed her obligation to them by dacion en pago as
evidenced by the Deed of Conditional Sale and the Deed of Absolute Sale. She claimed that petitioners
could still claim the portions sold to them if they would only file the proper civil cases. As regards the
fund in the custody of Atty. Luna, respondents cannot acquire the same without a writ of preliminary
attachment or a writ of garnishment in accordance with the provisions of Rule 57 and Section 9(c), Rule
39 of the Revised Rules of Civil Procedure.
On 5 December 2001, the RTC, citing the absence of petitioner and her counsel on said hearing date
despite due notice, granted an oral Motion by the respondents by issuing an Order allowing the ex parte
presentation of evidence by respondents.2
On 1 April 2002, the RTC rendered a Decision in favor of respondents. The pertinent portions of the
Decision are as follows:
That [petitioner] Teresita Monzon owes [herein respondents] certain sums of money is indisputable.
Even [Monzon] have admitted to this in her Answer. [Respondents] therefore are given every right to
get back and collect whatever amount they gave [Monzon] together with the stipulated rate of interest.
Likewise, it has been established that [petitioner] Teresita Monzon has the amount of P1,602,393.65 in
the possession of the Clerk of Court, Atty. Ana Liza M. Luna. This amount, as is heretofore stated,
represented the balance of the foreclosure sale of *Monzons+ properties.

By way of this petition, [respondents] would want to get said amount so that the same can be applied as
full payment of *petitioners+ obligation. That the amount should be divided between the *respondents+
in the amount they have agreed between themselves; [respondent] spouses Relova to receive the
amount of P400.00.00, while the spouses Perez shall get the rest.
WHEREFORE, judgment is hereby rendered ordering the x x x Clerk of Court, Atty. Ana Liza M. Luna, to
deliver unto [herein respondents] the amount of P1,602,393.65 plus whatever interest she may received
if and when the said amount has been deposited in any banking institution.3
The Decision also mentioned that the Order allowing the ex parte presentation of evidence by
respondents was due to the continuous and incessant absences of petitioner and counsel.4
On 25 April 2002, Monzon filed a Notice of Appeal, which was approved by the trial court. Monzon
claims that the RTC gravely erred in rendering its Decision immediately after respondents presented
their evidence ex parte without giving her a chance to present her evidence, thereby violating her right
to due process of law.
On 14 June 2002, Addio Properties, Inc. filed before the trial court a Motion for Intervention, which was
granted by the same court on 12 July 2002.
On 27 September 2005, the Court of Appeals rendered the assailed Decision dismissing the appeal.
According to the Court of Appeals, Monzon showed tepid interest in having the case resolved with
dispatch. She, thus, cannot now complain that she was denied due process when she was given ample
opportunity to defend and assert her interests in the case. The Court of Appeals reminded Monzon that
the essence of due process is reasonable opportunity to be heard and submit evidence in support of
ones defense. What the law proscribes is lack of opportunity to be heard. Monzons Motion for
Reconsideration was denied in a Resolution dated 7 March 2006.
On 27 March 2006, Monzon filed the instant Petition for Review on Certiorari under Rule 45 of the Rules
of Court.
Monzon claims anew that it was a violation of her right to due process of law for the RTC to render its
Decision immediately after respondents presented their evidence ex parte without giving her a chance
to present her evidence. Monzon stresses that she was never declared in default by the trial court. The
trial court should have, thus, set the case for hearing for the reception of the evidence of the defense.
She claims that she never waived her right to present evidence.
Monzon argues that had she been given the opportunity to present her evidence, she would have
proven that (1) respondents Exhibit A (mortgage of land to the spouses Relova) had been novated by
respondents Exhibit B (sale of the mortgage land to the spouses Relova); (2) respondents Exhibit C
(mortgage of land to the spouses Perez) had been novated by respondents Exhibit B (sale of the
mortgage land to the spouses Perez); and (3) having executed Exhibits "B" and "D," Monzon no longer
had any obligation towards respondents.
The Order by the trial court which allowed respondents to present their evidence ex parte states:
In view of the absence of [Monzon] as well as her counsel despite due notice, as prayed for by counsel
for by [respondents herein+, let the reception of *respondents+ evidence in this case be held ex-parte

before a commissioner who is the clerk of court of this Court, with orders upon her to submit her report
immediately upon completion thereof.5
It can be seen that despite the fact that Monzon was not declared in default by the RTC, the RTC
nevertheless applied the effects of a default order upon petitioner under Section 3, Rule 9 of the Rules
of Court:
SEC. 3. Default; declaration of.Ifthe defending party fails to answer within the time allowed therefor,
the court shall, upon motion of the claiming party with notice to the defending party, and proof of such
failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment
granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires
the claimant to submit evidence. Such reception of evidence may be delegated to the clerk of court.
(a) Effect of order of default.Aparty in default shall be entitled to notice of subsequent proceedings
but not to take part in the trial.
In his book on remedial law, former Justice Florenz D. Regalado writes that failure to appear in hearings
is not a ground for the declaration of a defendant in default:
Failure to file a responsive pleading within the reglementary period, and not failure to appear at the
hearing, is the sole ground for an order of default (Rosario, et al. vs. Alonzo, et al., L-17320, June 29,
1963), except the failure to appear at a pre-trial conference wherein the effects of a default on the
part of the defendant are followed, that is, the plaintiff shall be allowed to present evidence ex parte
and a judgment based thereon may be rendered against the defendant (Section 5, Rule 18).6 Also, a
default judgment may be rendered, even if the defendant had filed his answer, under the circumstance
in Sec. 3(c), Rule 29.7
Hence, according to Justice Regalado, the effects of default are followed only in three instances:
(1) when there is an actual default for failure to file a responsive pleading;
(2) failure to appear in the pre-trial conference; and
(3) refusal to comply with modes of discovery under the circumstance in Sec. 3(c), Rule 29.
In Philippine National Bank v. De Leon,8 we held:
We have in the past admonished trial judges against issuing precipitate orders of default as these have
the effect of denying a litigant the chance to be heard, and increase the burden of needless litigations in
the appellate courts where time is needed for more important or complicated cases. While there are
instances when a party may be properly defaulted, these should be the exception rather than the rule,
and should be allowed only in clear cases of obstinate refusal or inordinate neglect to comply with the
orders of the court (Leyte vs. Cusi, Jr., 152 SCRA 496; Tropical Homes, Inc. vs. Hon. Villaluz, et al., G.R.
No. L-40628, February 24, 1989).
It is even worse when the court issues an order not denominated as an order of default, but provides for
the application of effects of default. Such amounts to the circumvention of the rigid requirements of a
default order, to wit: (1) the court must have validly acquired jurisdiction over the person of the
defendant either by service of summons or voluntary appearance; (2) the defendant failed to file his
answer within the time allowed therefor; and (3) there must be a motion to declare the defendant in
default with notice to the latter.9 In the case at bar, petitioner had not failed to file her answer. Neither

was notice sent to petitioner that she would be defaulted, or that the effects of default shall be imposed
upon her. "Mere non-appearance of defendants at an ordinary hearing and to adduce evidence does not
constitute default, when they have already filed their answer to the complaint within the reglementary
period. It is error to default a defendant after the answer had already been filed. It should be borne in
mind that the policy of the law is to have every litigants case tried on the merits as much as possible; it
is for this reason that judgments by default are frowned upon."10
Does this mean that defendants can get away with failing to attend hearings despite due notice? No, it
will not. We agree with petitioner that such failure to attend, when committed during hearing dates
for the presentation of the complainants evidence, would amount to the waiver of such defendants
right to object to the evidence presented during such hearing, and to cross-examine the witnesses
presented therein. However, it would not amount to a waiver of the defendants right to present
evidence during the trial dates scheduled for the reception of evidence for the defense. It would be an
entirely different issue if the failure to attend of the defendant was on a hearing date set for the
presentation of the evidence of the defense, but such did not occur in the case at bar.
In view of the foregoing, we are, therefore, inclined to remand the case to the trial court for reception of
evidence for the defense. Before we do so, however, we need to point out that the trial court had
committed another error which we should address to put the remand in its proper perspective. We refer
to Monzons argument as early as the Answer stage that respondents Petition for Injunction had failed
to state a cause of action.
Section 4, Rule 68 of the Rules of Court, which is the basis of respondents alleged cause of action
entitling them to the residue of the amount paid in the foreclosure sale, provides as follows:
SEC. 4. Disposition of proceeds of sale.Theamount realized from the foreclosure sale of the mortgaged
property shall, after deducting the costs of the sale, be paid to the person foreclosing the mortgage, and
when there shall be any balance or residue, after paying off the mortgage debt due, the same shall be
paid to junior encumbrancers in the order of their priority, to be ascertained by the court, or if there be
no such encumbrancers or there be a balance or residue after payment to them, then to the mortgagor
or his duly authorized agent, or to the person entitled to it.
However, Rule 68 governs the judicial foreclosure of mortgages. Extra-judicial foreclosure of mortgages,
which was what transpired in the case at bar, is governed by Act No. 3135,11 as amended by Act No.
4118,12 Section 6 of Republic Act No. 7353, Section 18 of Republic Act No. 7906, and Section 47 of
Republic Act No. 8791. A.M. No. 99-10-05-0, issued on 14 December 1999, provides for the procedure to
be observed in the conduct of an extrajudicial foreclosure sale. Thus, we clarified the different types of
sales in Supena v. Dela Rosa, 13 to wit:
Any judge, worthy of the robe he dons, or any lawyer, for that matter, worth his salt, ought to know that
different laws apply to different kinds of sales under our jurisdiction. We have three different types of
sales, namely: an ordinary execution sale, a judicial foreclosure sale, and an extrajudicial foreclosure
sale. An ordinary execution sale is governed by the pertinent provisions of Rule 39 of the Rules of Court
on Execution, Satisfaction and Effect of Judgments. Rule 68 of the Rules, captioned Foreclosure of
Mortgage, governs judicial foreclosure sales. On the other hand, Act No. 3135, as amended by Act No.
4118, otherwise known as "An Act to Regulate the Sale of Property under Special Powers Inserted in or
Annexed to Real Estate Mortgages," applies in cases of extrajudicial foreclosure sales of real estate
mortgages.

Unlike Rule 68, which governs judicial foreclosure sales, neither Act No. 3135 as amended, nor A.M. No.
99-10-05-0 grants to junior encumbrancers the right to receive the balance of the purchase price. The
only right given to second mortgagees in said issuances is the right to redeem the foreclosed property
pursuant to Section 6 of Act No. 3135, as amended by Act No. 4118, which provides:
Sec. 6. Redemption. In all cases in which an extrajudicial sale is made under the special power
hereinbefore referred to, the debtor, his successors in interest or any judicial creditor or judgment
creditor of said debtor, or any person having a lien on the property subsequent to the mortgage or deed
of trust under which the property is sold, may redeem the same at any time within the term of one year
from and after the date of the sale; and such redemption shall be governed by the provisions of sections
four hundred and sixty-four to four hundred and sixty- six,14 inclusive, of the Code of Civil Procedure, in
so far as these are not inconsistent with this Act.
Even if, for the sake of argument, Rule 68 is to be applied to extrajudicial foreclosure of mortgages, such
right can only be given to second mortgagees who are made parties to the (judicial) foreclosure. While a
second mortgagee is a proper and in a sense even a necessary party to a proceeding to foreclose a first
mortgage on real property, he is not an indispensable party, because a valid decree may be made, as
between the mortgagor and the first mortgagee, without regard to the second mortgage; but the
consequence of a failure to make the second mortgagee a party to the proceeding is that the lien of the
second mortgagee on the equity of redemption is not affected by the decree of foreclosure.15
A cause of action is the act or omission by which a party violates the right of another.16 A cause of
action exists if the following elements are present: (1) a right in favor of the plaintiff by whatever means
and under whatever law it arises or is created; (2) an obligation on the part of the named defendant to
respect or not to violate such right; and (3) an act or omission on the part of such defendant violative of
the right of plaintiff or constituting a breach of the obligation of defendant to the plaintiff for which the
latter may maintain an action for recovery of damages.17 In view of the foregoing discussions, we find
that respondents do not have a cause of action against Atty. Ana Liza Luna for the delivery of the subject
amounts on the basis of Section 4, Rule 68 of the Rules of Court, for the reason that the foregoing Rule
does not apply to extrajudicial foreclosure of mortgages.
In Katon v. Palanca, Jr.,18 we held that where prescription, lack of jurisdiction or failure to state a cause
of action clearly appears from the complaint filed with the trial court, the action may be dismissed motu
proprio, even if the case has been elevated for review on different grounds. However, while the case
should indeed be dismissed insofar as Atty. Luna is concerned, the same is not necessarily true with
respect to Monzon. Other than respondents prayer that the amount due to respondents be delivered
by Atty. Luna to them, they also pray for a judgment declaring Monzon liable for such amounts. Said
prayer, as argued by Monzon herself, may constitute a cause of action for collection of sum of money
against Monzon.
The rule is now settled that a mortgage creditor may elect to waive his security and bring, instead, an
ordinary action to recover the indebtedness with the right to execute a judgment thereon on all the
properties of the debtor including the subject matter of the mortgage, subject to the qualification that if
he fails in the remedy elected by him, he cannot pursue further the remedy he has waived.19
However, due to the fact that construing respondents Petition for Injunction to be one for a collection
of sum of money would entail a waiver by the respondents of the mortgage executed over the subject

properties, we should proceed with caution before making such construction. We, therefore, resolve
that upon the remand of this case to the trial court, respondents should be ordered to manifest whether
the Petition for Injunction should be treated as a complaint for the collection of a sum of money.
If respondents answer in the affirmative, then the case shall proceed with the presentation of the
evidence for the defense. If Monzon would be successful in proving her defense of dacion en pago,
there would, in effect, be a double sale of the mortgaged properties: the same properties were sold to
both respondents and to herein intervenor Addio Properties, Inc. If, pursuant to the rules on double
sales, respondents are entitled to the properties, their remedy is to file the proper action to recover
possession. If, pursuant to said rules, Addio Properties, Inc. is entitled to the properties, respondents
remedy is to file an action for damages against Monzon.
If respondents answer in the negative, the case shall be dismissed, without prejudice to the exercise of
respondents rights as mortgage creditors. If respondents mortgage contract was executed before the
execution of the mortgage contract with Addio Properties, Inc., respondents would be the first
mortgagors. Pursuant to Article 212620 of the Civil Code, they would be entitled to foreclose the
property as against any subsequent possessor thereof. If respondents mortgage contract was executed
after the execution of the mortgage contract with Addio Properties, Inc., respondents would be the
second mortgagors. As such, they are entitled to a right of redemption pursuant to Section 6 of Act No.
3135, as amended by Act No. 4118.
WHEREFORE, the Decision of the Court of Appeals dated 27 September 2005 and its Resolution dated 7
March 2006 are REVERSED and SET ASIDE. The Petition for Injunction in Civil Case No. TG-2069 is hereby
ordered DISMISSED insofar as Atty. Ana Liza Luna is concerned. The Petition for Injunction in Civil Case
No. TG-2069, insofar as petitioner Teresita Monzon is concerned, is ordered REMANDED to the Regional
Trial Court of Tagaytay City for further proceedings. Upon such remand, the Regional Trial Court of
Tagaytay City shall issue an Order to respondents, the spouses James and Maria Rosa Nieves Relova and
the spouses Bienvenido and Eufracia Perez, to manifest whether the Petition for Injunction should be
treated as a complaint for the collection of a sum of money.
If respondents answer in the affirmative, the Regional Trial Court shall set the case for hearing for the
presentation of the evidence for the defense. If respondents answer in the negative, the case shall be
dismissed, without prejudice to the exercise of respondents rights as mortgage creditors. No costs.
SO ORDERED.

G.R. No. 174414

March 14, 2008

ELMER F. GOMEZ, Petitioner,

vs.
MA. LITA A. MONTALBAN, Respondent.
DECISION
CHICO-NAZARIO, J.:

This Petition for Review on Certiorari seeks to reverse (1) the Order1 dated 20 June 2006 of the
Regional Trial Court (RTC) of Davao City, Branch 13, which granted herein respondent Ma. Lita A.
Montalbans Petition for Relief from Judgment and dismissed Civil Case No. 29,717-03 for lack of
jurisdiction; and (2) the Order2 dated 2 August 2006 denying herein petitioner Elmer F. Gomezs
Motion for Reconsideration thereof .
On 30 May 2003, petitioner filed a Complaint3 with the RTC for a sum of money, damages and
payment of attorneys fees against respondent, docketed as Civil Case No. 29,717-03. The
Complaint alleged, among other things, that: on or about 26 August 1998, respondent obtained a
loan from petitioner in the sum of P40,000.00 with a voluntary proposal on her part to pay 15%
interest per month; upon receipt of the proceeds of the loan, respondent issued in favor of petitioner,
as security, Capitol Bank Check No. 0215632, postdated 26 October 1998, in the sum
of P46,000.00, covering the P40,000.00 principal loan amount and P6,000.00 interest charges for
one month; when the check became due, respondent failed to pay the loan despite several
demands; thus, petitioner filed the Complaint praying for the payment of P238,000.00, representing
the principal loan and interest charges, plus 25% of the amount to be awarded as attorneys fees, as
well as the cost of suit.
Summons was served, but despite her receipt thereof, respondent failed to file her Answer.
Consequently, she was declared4 in default and upon motion, petitioner was allowed to present
evidence ex parte.
After considering the evidence presented by petitioner, the RTC rendered a Decision5 on 4 May
2004 in his favor, the fallo of which reads:
WHEREFORE, IN VIEW OF THE FOREGOING, the Court hereby decides this case in favor of
[herein petitioner] and against [herein respondent], ordering [respondent] to pay [petitioner] the
following amounts:
1. P40,000.00 representing the principal amount of the loan;
2. P57,600.00 representing interest at the rate of 24% per annum reckoned from August 26,
1998 until the present; and
3. P15,000.00 representing attorneys fees.
On 28 May 2004, respondent filed a Petition for Relief from Judgment6 alleging that there was no
effective service of summons upon her since there was no personal service of the same. The
summons was received by one Mrs. Alicia dela Torre, who was not authorized to receive summons
or other legal pleadings or documents on respondents behalf. Respondent attributes her failure to
file an Answer to fraud, accident, mistake or excusable negligence. She claimed that she had good
and valid defenses against petitioner and that the RTC had no jurisdiction as the principal amount
being claimed by petitioner was only P40,000.00, an amount falling within the jurisdiction of the
Municipal Trial Court (MTC).
After petitioner filed his Answer7 to the Petition for Relief from Judgment and respondent her
Reply,8 the said Petition was set for hearing.
After several dates were set and called for hearing, respondent, thru counsel, failed to appear
despite being duly notified; hence, her Petition for Relief was dismissed9 for her apparent lack of
interest to pursue the petition.

Respondent filed a Motion for Reconsideration10 of the dismissal of her Petition for Relief, stating that
her counsels failure to appear was not intentional, but due to human shortcomings or frailties,
constituting honest mistake or excusable negligence.
On 18 November 2005, the RTC granted11 respondents motion for reconsideration, to wit:
In regard to the motion for reconsideration file by [herein respondent] of the order of the court
dismissing her petition for relief from judgment, the court, in the interest of justice, shall give
[respondent] one more chance to present the merits of her position in a hearing. The dismissal of the
petition is therefore reconsidered and set aside.
On 20 June 2006, the RTC granted respondents Petition for Relief from Judgment and set aside its
Decision dated 4 May 2004 on the ground of lack of jurisdiction. The fallo of the assailed RTC Order
reads:
WHEREFORE, the petition for relief is hereby GRANTED. The decision of this court dated May 4,
2004 is RECONSIDERED and set aside for lack of jurisdiction on the part of the court, without
prejudice to the case being refiled in the proper Municipal Trial Courts.12
Petitioner filed a motion for reconsideration of the afore-quoted Order, but the same was denied by
the RTC in another Order13 dated 2 August 2006.
Hence, the present Petition filed directly before this Court.
In his Memorandum,14 petitioner raises the following issues for the Courts consideration:
1. Whether or not the Regional Trial Court has jurisdiction over this case for sum of money,
damages and attorneys fees where the principal amount of the obligation is P40,000.00 but
the amount of the demand per allegation of the complaint is P238,000.00;
2. Whether or not respondents relief from judgment is proper during the period for filing a
motion for reconsideration and appeal.
Before the Court dwells on the principal issues, a few procedural matters must first be resolved.
Section 2(c), Rule 41 of the Rules of Court categorically provides that in all cases where only
questions of law are raised, the appeal from a decision or order of the RTC shall be to the Supreme
Court by petition for review oncertiorari in accordance with Rule 45.15
The distinction between questions of law and questions of fact has long been settled. A question of
law exists when the doubt or controversy concerns the correct application of law or jurisprudence to
a certain set of facts; or when the issue does not call for an examination of probative value of the
evidence presented, the truth or falsehood of facts being admitted. A question of fact exists when the
doubt or difference arises as to the truth or falsehood of facts or when the query invites calibration of
the whole evidence considering mainly the credibility of witnesses, the existence and relevancy of
specific surrounding circumstances, as well as their relation to each other and to the whole, and the
probability of the situation.16
Simple as it may seem, determining the true nature and extent of the distinction is sometimes
complicated. In a case involving a "question of law," the resolution of the issue must rest solely on
what the law provides on the given set of circumstances. Once it is clear that the issue invites a

review of the evidence presented, the question posed is one of fact. If the query requires a reevaluation of the credibility of witnesses, or the existence or relevance of surrounding circumstances
and their relation to each other, the issue in that query is factual.17
The first issue raised in the present petition is one of jurisdiction of the court over the subject matter meaning, the nature of the cause of action and of the relief sought. Jurisdiction is the right to act or
the power and authority to hear and determine a cause. It is a question of law.18 The second issue
refers to the aptness of the grant of a Petition for Relief from Judgment. These questions are
undoubtedly one of law, as they concern the correct interpretation or application of relevant laws and
rules, without the need for review of the evidences presented before the court a quo.
1avv phi 1

Thus, with only questions of law raised in this Petition, direct resort to this Court is proper.19
The Court shall now discuss whether the RTC has jurisdiction over Civil Case No. 29,717-03.
Petitioners Complaint before the RTC reads:
3. On or about August 26, 1998, [herein respondent] obtained from the [herein petitioner] a
loan for the principal sum of FORTY THOUSAND PESOS (P40,000.00) with a voluntary
proposal on her part to pay as much as 15% interest per month. Machine copy of Cash
Voucher dated August 26, 1998 is herewith attached as Annex "A".
4. Upon receipt of the proceeds of the said loan, [respondent] issued in favor of the Plaintiff
Capitol Bank Check with check nos. 0215632 postdated on October 26, 1998 for the sum of
Forty Six Thousand Pesos (P46,000.00) as security on the loan with P6,000.00 as the first
month of interest charges. When the check became due, [respondent] defaulted to pay her
loan despite several allowances of time and repeated verbal demands from the [petitioner].
The said check was later on dishonored for the reason: "Account Closed". Machine copy of
Capitol Bank Check wit nos. 0215632 is herewith attached as Annex "B".
5. On July 4, 2002, [petitioner] engaged the services of the undersigned counsel to collect
the account of the [respondent]; thus, on the same day, a demand letter was sent to and
received by her on July 9, 2002. And despite receipt thereof, she failed and continues to
evade the payment of her obligations to the damage and prejudice of the [petitioner]. Thus,
as of July 4, 2002, [respondent]s loan obligation stood at TWO HUNDRED THIRTY EIGHT
THOUSAND PESOS (P 239,000.00), inclusive of interest charges for 32 months. Machine
copy of Demand Letter and its registry receipt and return card is herewith attached as
Annexes "C"; "C-1" and C-2", respectively.
6. In view of [respondent]s refusal to pay her loan, [petitioner] is constrained to engage the
services of counsel to initiate the instant action for a fee of 25% for whatever amounts is
collected as flat attorneys fee. [Petitioner] will likewise incur damages in the form of docket
fees.
PRAYER
WHERFORE, it is respectfully prayed of the Honorable Court that Decision be rendered ordering the
[respondent] to pay [petitioner] as follows:
1. The amount of P238,000.00 with interest charges at the sound discretion of the Honorable
Court starting on July 4, 2002 until paid in full;

2. The sum equivalent to 25 % of the amount awarded as attorneys fee;

3. Cost of suit;
4. Other relief that the Honorable Court may find just and equitable under the premises are
likewise prayed for.20 [Emphasis ours.]
The Court gleans from the foregoing that petitioners cause of action is the respondents violation of
their loan agreement.21 In that loan agreement, respondent expressly agreed to pay the principal
amount of the loan, plus 15% monthly interest. Consequently, petitioner is claiming and praying for
in his Complaint the total amount ofP238,000.00, already inclusive of the interest on the loan which
had accrued from 1998. Since the interest on the loan is a primary and inseparable component of
the cause of action, not merely incidental thereto, and already determinable at the time of filing of the
Complaint, it must be included in the determination of which court has the jurisdiction over
petitioners case. Using as basis the P238,000.00 amount being claimed by petitioner from
respondent for payment of the principal loan and interest, this Court finds that it is well within the
jurisdictional amount fixed by law for RTCs. 22
There can be no doubt that the RTC in this case has jurisdiction to entertain, try, and decide the
petitioners Complaint.
To this Court, it is irrelevant that during the course of the trial, it was proven that respondent is only
liable to petitioner for the amount of P40,000.00 representing the principal amount of the
loan; P57,000.00 as interest thereon at the rate of 24% per annum reckoned from 26 August 1998
until the present; and P15,000.00 as attorneys fees. Contrary to respondents contention, jurisdiction
can neither be made to depend on the amount ultimately substantiated in the course of the trial or
proceedings nor be affected by proof showing that the claimant is entitled to recover a sum in excess
of the jurisdictional amount fixed by law. Jurisdiction is determined by the cause of action as alleged
in the complaint and not by the amount ultimately substantiated and awarded.23
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 plaintiffs cause of action.24 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.25 The averments in the complaint and the character of the relief
sought are the ones to be consulted.26 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.27
On the propriety of the granting by the RTC of respondents Petition for Relief from Judgment, the
Court finds and so declares that the RTC did indeed commit an error in doing so.
First of all, a petition for relief under Rule 38 of the Rules of Court is only available against a final
and executory judgment.28 Since respondent allegedly29 received a copy of the Decision dated 4
May 2004 on 14 May 2004, and she filed the Petition for Relief from Judgment on 28 May 2004,
judgment had not attained finality. The 15-day period to file a motion for reconsideration or appeal
had not yet lapsed. Hence, resort by respondent to a petition for relief from judgment under
Rule 38 of the Rules of Court was premature and inappropriate.
Second, based on respondents allegations in her Petition for Relief before the RTC, she had no
cause of action for relief from judgment.

Section 1 of Rule 38 provides:

SECTION 1. Petition for relief from judgment, order, or other proceedings. When a judgment or
final order is entered, or any other proceeding is thereafter taken against a party in any court through
fraud, accident, mistake, or excusable negligence, he may file a petition in such court and in the
same case praying that the judgment, order or proceeding be set aside.
Under Section 1, Rule 38 of the Rules of Court, the court may grant relief from judgment only
"[w]hen a judgment or final order is entered, or any other proceeding is taken against a party in any
court through fraud, accident, mistake, or excusable negligence x x x."
In her Petition for Relief from Judgment before the RTC, respondent contended that judgment was
entered against her through "mistake or fraud," because she was not duly served with summons as it
was received by a Mrs. Alicia dela Torre who was not authorized to receive summons or other legal
processes on her behalf.
As used in Section 1, Rule 38 of the Rules of Court, "mistake" refers to mistake of fact, not of law,
which relates to the case.30 The word "mistake," which grants relief from judgment, does not apply
and was never intended to apply to a judicial error which the court might have committed in the trial.
Such errors may be corrected by means of an appeal.31This does not exist in the case at bar,
because respondent has in no wise been prevented from interposing an appeal.
"Fraud," on the other hand, must be extrinsic or collateral, that is, the kind which prevented the
aggrieved party from having a trial or presenting his case to the court,32or was used to procure the
judgment without fair submission of the controversy.33This is not present in the case at hand as
respondent was not prevented from securing a fair trial and was given the opportunity to present her
case.
Negligence to be excusable must be one which ordinary diligence and prudence could not have
guarded against.34 Under Section 1, the "negligence" must be excusable and generally imputable to
the party because if it is imputable to the counsel, it is binding on the client.35 To follow a contrary
rule and allow a party to disown his counsels conduct would render proceedings indefinite, tentative,
and subject to reopening by the mere subterfuge of replacing counsel. What the aggrieved litigant
should do is seek administrative sanctions against the erring counsel and not ask for the reversal of
the courts ruling.36
Third, the certificate of service of the process server of the court a quo is prima facie evidence of the
facts as set out therein.37 According to the Sheriffs Return of Service,38 summons was issued and
served on respondent thru one Mrs. Alicia dela Torre, thus:
"THIS IS TO CERTIFY that on June 25, 2003 at around 1:45 p.m. the undersigned sheriff caused
the service of summons issued in the above-entitled case together with attached complaints and
annexes for and in behalf of defendant [respondent] thru a certain Mrs. Alicia Dela Torre inside their
compound at the given address who acknowledged receipt by signature and notation of said dela
Torre appearing thereof.
Wherefore, this summons is respectfully returned to the Honorable Regional Trial Court, Branch 13,
Davao City, duly SERVED for its records and information."
Finally, even assuming arguendo that the RTC had no jurisdiction over respondent on account of the
non-service upon her of the summons and complaint, the remedy of the respondent was to file a
motion for the reconsideration of the 4 May 2004 Decision by default or a motion for new trial

within 15 days from receipt of notice thereof. This is also without prejudice to respondents right
to file a petition for certiorari under Rule 65 of the Rules of Court for the nullification of the order of
default of the court a quo and the proceedings thereafter held including the decision, the writ of
execution, and the writ of garnishment issued by the RTC, on the ground that it acted without
jurisdiction.39 Unfortunately, however, respondent opted to file a Petition for Relief from the Judgment
of the RTC, which, as the Court earlier determined, was the wrong remedy.
In Tuason v. Court of Appeals,40 the Court explained the nature of a petition for relief from judgment:
A petition for relief from judgment is an equitable remedy that is allowed only in exceptional cases
where there is no other available or adequate remedy. When a party has another remedy
available to him, which may be either a motion for new trial or appeal from an adverse
decision of the trial court, and he was not prevented by fraud, accident, mistake or excusable
negligence from filing such motion or taking such appeal, he cannot avail himself of this
petition. Indeed, relief will not be granted to a party who seeks avoidance from the effects of the
judgment when the loss of the remedy at law was due to his own negligence;otherwise the petition
for relief can be used to revive the right to appeal which had been lost thru inexcusable
negligence. (Emphasis and underscoring supplied; citations omitted)
In the case at bar, there being no fraud, accident, mistake, or excusable negligence that would have
prevented petitioner from filing either a motion for reconsideration or a petition for review on
certiorari of the 4 May 2004 Decision of the RTC, her resort to a Petition for Relief from Judgment
was unwarranted.
This Court also notes that when respondent was declared in default for her failure to file an Answer
to the Complaint, she did not immediately avail herself of any of the remedies provided by law. Lina
v. Court of Appeals41enumerates the remedies available to a party declared in default:
a) The defendant in default may, at any time after discovery thereof and before judgment, file
a motion, under oath, to set aside the order of default on the ground that his failure to answer
was due to fraud, accident, mistake or excusable negligence, and that he has a meritorious
defense (Sec. 3, Rule 18 [now Sec. 3(b), Rule 9]);
b) If the judgment has already been rendered when the defendant discovered the default, but
before the same has become final and executory, he may file a motion for new trial under
Section 1 (a) of Rule 37;
c) If the defendant discovered the default after the judgment has become final and executory,
he may file a petition for relief under Section 2 [now Section 1] of Rule 38; and
d) He may also appeal from the judgment rendered against him as contrary to the evidence
or to the law, even if no petition to set aside the order of default has been presented by him
(Sec. 2, Rule 41). (Emphasis added)
In addition, and as this Court earlier mentioned, a petition for certiorari to declare the nullity
of a judgment by default is also available if the trial court improperly declared a party in
default, or even if the trial court properly declared a party in default, if grave abuse of
discretion attended such declaration.42
If respondent is really vigilant in protecting her rights, she should have exhausted all the legal
remedies above-mentioned to nullify and set aside the order of default against her, and should no
longer have waited for the judgment to be rendered. Respondent does not deny that she did receive

the summons, although she alleges that it was not properly served upon her, yet she chose to sit on
her rights and did not act immediately. For respondents failure to act with prudence and diligence in
protecting her rights, she cannot now elicit this Courts sympathy.
Respondents petition for relief from judgment is clearly without merit and should not have been
granted by the RTC.
WHEREFORE, the instant petition is herby GRANTED. Consequently, the Decision dated 4 May
2006 of the Regional Trial Court of Davao, Branch 13, in Civil Case No. 29,717-03 is hereby
REINSTATED and the Order dated 20 June 2006 granting the petition for relief from judgment is
hereby SET ASIDE.
SO ORDERED.
G.R. No. 151098

March 21, 2006

ERLINDA GAJUDO, FERNANDO GAJUDO, JR., ESTELITA GAJUDO, BALTAZAR GAJUDO and
DANILO ARAHAN CHUA, Petitioners,
vs.
TRADERS ROYAL BANK,1Respondent.
DECISION
PANGANIBAN, CJ:
The mere fact that a defendant is declared in default does not automatically result in the grant of the
prayers of the plaintiff. To win, the latter must still present the same quantum of evidence that would
be required if the defendant were still present. A party that defaults is not deprived of its rights,
except the right to be heard and to present evidence to the trial court. If the evidence presented does
not support a judgment for the plaintiff, the complaint should be dismissed, even if the defendant
may not have been heard or allowed to present any countervailing evidence.
The Case
Before us is a Petition for Review2 under Rule 45 of the Rules of Court, assailing the June 29, 2001
Decision3 and December 6, 2001 Resolution4 of the Court of Appeals (CA) in CA-GR CV No. 43889.
The CA disposed as follows:
"UPON THE VIEW WE TAKE OF THIS CASE, THUS, the partial judgment appealed from, must be,
as it hereby is, VACATED and SET ASIDE, and another one entered DISMISSING the complaint at
bench. Without costs."5
The assailed Resolution denied petitioners Motion for Reconsideration6 for lack of merit.
The Facts
The CA narrated the facts as follows:
"[Petitioners] filed a complaint before the Regional Trial Court of Quezon City, Branch 90, against
[respondent] Traders Royal Bank, the City Sheriff of Quezon City and the Register of Deeds of
Quezon City. Docketed thereat as Civil Case No. Q-41203, the complaint sought the annulment of

the extra-judicial foreclosure and auction sale made by [the] city sheriff of Quezon City of a parcel of
land covered by TCT No. 16711 of the Register of Deeds of Quezon City, the conventional
redemption thereof, and prayed for damages and the issuance of a writ of preliminary injunction.
"The complaint alleged that in mid 1977[, Petitioner] Danilo Chua obtained a loan from [respondent]
bank in the amount of P75,000.00 secured by a real estate mortgage over a parcel of land covered
by TCT No. 16711, and owned in common by the [petitioners]; that when the loan was not paid,
[respondent] bank commenced extra-judicial foreclosure proceedings on the property; that the
auction sale of the property was set on 10 June 1981, but was reset to 31 August 1981, on
[Petitioner Chuas] request, which, however, was made without the knowledge and conformity of the
other [petitioners]; that on the re-scheduled auction sale, [the] Sheriff of Quezon City sold the
property to the [respondent] bank, the highest bidder therein, for the sum of P24,911.30; that the
auction sale was tainted with irregularity because, amongst others, the bid price was shockingly or
unconscionably, low; that the other [petitioners] failed to redeem the property due to their lack of
knowledge of their right of redemption, and want of sufficient education; that, although the period of
redemption had long expired, [Petitioner] Chua offered to buy back, and [respondent] bank also
agreed to sell back, the foreclosed property, on the understanding that Chua would pay [respondent]
bank the amount of P40,135.53, representing the sum that the bank paid at the auction sale, plus
interest; that [Petitioner] Chua made an initial payment thereon in the amount of P4,000.00, covered
by Interbank Check No. 09173938, dated 16 February 1984, duly receipted by [respondent] bank;
that, in a sudden change of position, [respondent] bank wrote Chua, on 20 February 1984, asking
that he could repurchase the property, but based on the current market value thereof; and that
sometime later, or on 22 March 1984, [respondent] bank wrote Chua anew, requiring him to tender a
new offer to counter the offer made thereon by another buyer.
"Traversing [petitioners] complaint, [respondent] bank, upon 05 July 1984, filed its answer with
counterclaim, thereunder asserting that the foreclosure sale of the mortgaged property was done in
accordance with law; and that the bid price was neither unconscionable, nor shockingly low; that
[petitioners] slept on their rights when they failed to redeem the property within the one year
statutory period; and that [respondent] bank, in offering to sell the property to [Petitioner] Chua on
the basis of its current market price, was acting conformably with law, and with legitimate banking
practice and regulations.
"Pre-trial having been concluded, the parties entered upon trial, which dragged/lengthened to
several months due to postponements. Upon 11 June 1988, however, a big conflagration hit the City
Hall of Quezon City, which destroyed, amongst other things, the records of the case. After the
records were reconstituted, [petitioners] discovered that the foreclosed property was sold by
[respondent] bank to the Ceroferr Realty Corporation, and that the notice of lis pendens annotated
on the certificate of title of the foreclosed property, had already been cancelled. Accordingly,
[petitioners], with leave of court, amended their complaint, but the Trial Court dismissed the case
without prejudice due to [petitioners] failure to pay additional filing fees.
"So, upon 11 June 1990, [petitioners] re-filed the complaint with the same Court, whereat it was
docketed as Civil Case No. 90-5749, and assigned to Branch 98: the amended complaint
substantially reproduced the allegations of the original complaint. But [petitioners] this time
impleaded as additional defendants the Ceroferr Realty Corporation and/or Cesar Roque, and Lorna
Roque, and included an additional cause of action, to wit: that said new defendants conspired with
[respondent] bank in [canceling] the notice of lis pendens by falsifying a letter sent to and filed with
the office of the Register of Deeds of Quezon City, purportedly for the cancellation of said notice.
"Summons was served on [respondent] bank on 26 September 1990, per Sheriffs Return dated 08
October 1990. Supposing that all the defendants had filed their answer, [petitioners] filed, on 23

October 1991, a motion to set case for pre-trial, which motion was, however, denied by the Trial
Court in its Order of 25 October 1991, on the ground that [respondent] bank has not yet filed its
answer. On 13 November 1991[, petitioners] filed a motion for reconsideration, thereunder alleging
that they received by registered mail, on 19 October 1990, a copy of [respondent] banks
answer with counterclaim, dated 04 October 1990, which copy was attached to the motion. In
its Order of 14 November 1991, the trial Court denied for lack of merit, the motion for
reconsideration, therein holding that the answer with counterclaim filed by [respondent] bank
referred to another civil case pending before Branch 90 of the same Court.
"For this reason, [petitioners] filed on 02 December 1991 a motion to declare [respondent]
bank in default, thereunder alleging that no answer has been filed despite the service of
summons on it on 26 September 1990.
"On 13 December 1991, the Trial Court declared the motion submitted for resolution upon
submission by [petitioners] of proof of service of the motion on [respondent] bank.
"Thus, on 16 January 1992, upon proof that [petitioners] had indeed served [respondent] bank with a
copy of said motion, the Trial Court issued an Order of default against [respondent] bank.
"Upon 01 December 1992, on [petitioners] motion, they were by the Court allowed to present
evidence ex parte on 07 January 1993, insofar as [respondent] bank was concerned.
"Thereafter, or on 08 February 1993, the Trial Court rendered the new questioned partial decision.7
"Aggrieved, [respondent] bank filed a motion to set aside [the] partial decision by default
against Traders Royal Bank and admit [respondent] Traders Royal Banks x x x Answer with
counterclaim: thereunder it averred, amongst others, that the erroneous filing of said answer
was due to an honest mistake of the typist and inadvertence of its counsel.
"The [trial court] thumbed down the motion in its Order of 26 July 1993."8
Respondent bank appealed the Partial Decision9 to the CA. During the pendency of that appeal,
Ceroferr Realty Corporation and/or Cesar and/or Lorna Roque filed a Manifestation with
Motion10 asking the CA to discharge them as parties, because the case against them had already
been dismissed on the basis of their Compromise Agreement11 with petitioners. On May 14, 1996,
the CA issued a Resolution12 granting Ceroferr et al.s Manifestation with Motion to discharge
movants as parties to the appeal. The Court, though, deferred resolution of the matters raised in the
Comment13 of respondent bank. The latter contended that the Partial Decision had been novated by
the Compromise Agreement, whose effect of res judicata had rendered that Decision functus officio.
Ruling of the Court of Appeals
The CA ruled in favor of respondent bank. Deemed, however, to have rested on shaky ground was
the latters "Motion to Set Aside Partial Decision by Default Against Traders Royal Bank and Admit
Defendant Traders Royal Banks Answer."14 The reasons offered by the bank for failing to file an
answer were considered by the appellate court to be "at once specious, shallow and sophistical and
can hardly be dignified as a mistake or excusable negligence, which ordinary prudence could not
have guarded against."15
In particular, the CA ruled that the erroneous docket number placed on the Answer filed before the
trial court was not an excusable negligence by the banks counsel. The latter had a bounden duty to

be scrupulously careful in reviewing pleadings. Also, there were several opportunities to

discover and rectify the mistake, but these were not taken. Moreover, the banks Motion to
Set Aside the Partial Decision and to Admit [the] Answer was not accompanied by an affidavit
of merit. These mistakes and the inexcusable negligence committed by respondents lawyer were
binding on the bank.
On the issue of whether petitioners had convincingly established their right to relief, the
appellate court held that there was no ground to invalidate the foreclosure sale of the
mortgaged property. First, under Section 3 of Act No. 3135, an extrajudicial foreclosure sale did
not require personal notice to the mortgagor. Second, there was no allegation or proof of
noncompliance with the publication requirement and the public posting of the notice of sale, provided
under Act No. 3135, as amended. Third, there was no showing of inadequacy of price as no
competent evidence was presented to show the real market value of the land sold or the readiness
of another buyer to offer a price higher than that at which the property had been sold.
Moreover, petitioners failed to prove that the bank had agreed to sell the property back to
them. After pointing out that the redemption period had long expired, respondents written
communications to Petitioner Chua only showed, at most, that the former had made a proposal for
the latter to buy back the property at the current market price; and that Petitioner Chua was
requested to make an offer to repurchase the property, because another buyer had already made an
offer to buy it. On the other hand, respondent noted that the Interbank check for P4,000 was for
"deposit only." Thus, there was no showing that the check had been issued to cover part of the
repurchase price.
The appellate court also held that the Compromise Agreement had not resulted in the novation of
the Partial Decision, because the two were not incompatible. In fact, the bank was not even a party
to the Agreement. Petitioners recognition of Ceroferrs title to the mortgaged property was intended
to preclude future litigation against it.
Hence this Petition.16
Issues
In their Memorandum, petitioners raise the following issues:
"1. Whether or not the Respondent Court of Appeals erred in failing to apply the provisions of
Section 3, Rule 9 of the 1997 Rules of Civil Procedure [and in applying instead] the rule on
preponderance of evidence under Section 1, Rule 133 of the Rules of Court.
"2. Whether or not the respondent appellate court failed to apply the conventional redemption rule
provided for under Article 1601 of the New Civil Code.
"3. Whether or not this Honorable Court can exercise its judicial prerogative to evaluate the findings
of facts."17
The first issue is one of law and may be taken up by the Court without hindrance, pursuant to
Section 1 of Rule 45 of the Rules of Court.18 The second and the third issues, however, would entail
an evaluation of the factual findings of the appellate court, a function ordinarily not assumed by this
Court, unless in some excepted cases. The Court will thus rule on the first issue before addressing
the second and the third issues jointly.

The Courts Ruling

The Petition has no merit.
First Issue:
Quantum of Proof
Petitioners challenge the CA Decision for applying Section 3 of Rule 9 of the Rules of Court, rather
than Section 1 of Rule 133 of the same Rules. In essence, petitioners argue that the quantum of
evidence for judgments flowing from a default order under Section 3 of Rule 9 is not the same as
that provided for in Section 1 of Rule 133.
For ease of discussion, these two rules will be reproduced below, starting with Section 3 of Rule 9 of
the Rules of Court:
"Sec. 3. Default; declaration of. If the defending party fails to answer within the time allowed
therefor, the court shall, upon motion of the claiming party with notice to the defending party, and
proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to
render judgment granting the claimant such relief as his pleading may warrant, unless the court in its
discretion requires the claimant to submit evidence. Such reception of evidence may be delegated to
the clerk of court.
"(a) Effect of order of default. A party in default shall be entitled to notice of subsequent
proceedings but not to take part in the trial.
"(b) Relief from order of default. A party declared in default may at any time after notice
thereof and before judgment file a motion under oath to set aside the order of default upon
proper showing that his failure to answer was due to fraud, accident, mistake or excusable
negligence and that he has a meritorious defense. In such case, the order of default may be
set aside on such terms and conditions as the judge may impose in the interest of justice.
"(c) Effect of partial default. When a pleading asserting a claim states a common cause of
action against several defending parties, some of whom answer and the others fail to do so,
the court shall try the case against all upon the answers thus filed and render judgment upon
the evidence presented.
"(d) Extent of relief to be awarded. A judgment rendered against a party in default shall not
exceed the amount or be different in kind from that prayed for nor award unliquidated
damages.
"(e) Where no defaults allowed. If the defending party in an action for annulment or
declaration of nullity of marriage or for legal separation fails to answer, the court shall order
the prosecuting attorney to investigate whether or nor a collusion between the parties exists,
and if there is no collusion, to intervene for the State in order to see to it that the evidence
submitted is not fabricated."
We now quote Section 1 of Rule 133:
"SECTION 1. Preponderance of evidence, how determined. In civil cases, the party having the
burden of proof must establish his case by a preponderance of evidence. In determining where
the preponderance or superior weight of evidence on the issues involved lies, the court may

consider all the facts and circumstances of the case, the witnesses manner of testifying, their
intelligence, their means and opportunity of knowing the facts to which they are testifying, the nature
of the facts to which they testify, the probability or improbability of their testimony, their interest or
want of interest, and also their personal credibility so far as the same may legitimately appear upon
the trial. The court may also consider the number of witnesses, though the preponderance is not
necessarily with the greater number."
Between the two rules, there is no incompatibility that would preclude the application of either one of
them. To begin with, Section 3 of Rule 9 governs the procedure which the trial court is directed to
take when a defendant fails to file an answer. According to this provision, the court "shall
proceed to render judgment granting the claimant such relief as his pleading may warrant,"
subject to the courts discretion on whether to require the presentation of evidence ex parte.
The same provision also sets down guidelines on the nature and extent of the relief that may be
granted. In particular, the courts judgment "shall not exceed the amount or be different in kind from
that prayed for nor award unliquidated damages."
As in other civil cases, basic is the rule that the party making allegations has the burden of proving
them by a preponderance of evidence.19 Moreover, parties must rely on the strength of their own
evidence, not upon the weakness of the defense offered by their opponent.20 This principle holds
true, especially when the latter has had no opportunity to present evidence because of a default
order. Needless to say, the extent of the relief that may be granted can only be as much as has been
alleged and proved21 with preponderant evidence required under Section 1 of Rule 133.
Regarding judgments by default, it was explained in Pascua v. Florendo22 that complainants are
not automatically entitled to the relief prayed for, once the defendants are declared in default.
Favorable relief can be granted only after the court has ascertained that the relief is
warranted by the evidence offered and the facts proven by the presenting party. In Pascua,
this Court ruled that "x x x it would be meaningless to require presentation of evidence if every time
the other party is declared in default, a decision would automatically be rendered in favor of the nondefaulting party and exactly according to the tenor of his prayer. This is not contemplated by the
Rules nor is it sanctioned by the due process clause."23
The import of a judgment by default was further clarified in Lim Tanhu v. Ramolete.24 The following
disquisition is most instructive:
"Unequivocal, in the literal sense, as these provisions [referring to the subject of default then under
Rule 18 of the old Rules of Civil Procedure] are, they do not readily convey the full import of what
they contemplate. To begin with, contrary to the immediate notion that can be drawn from their
language, these provisions are not to be understood as meaning that default or the failure of the
defendant to answer should be interpreted as an admission by the said defendant that the plaintiffs
cause of action find support in the law or that plaintiff is entitled to the relief prayed for. x x x.
xxxxxxxxx
"Being declared in default does not constitute a waiver of rights except that of being heard and of
presenting evidence in the trial court. x x x.
"In other words, a defaulted defendant is not actually thrown out of court. While in a sense it may be
said that by defaulting he leaves himself at the mercy of the court, the rules see to it that any
judgment against him must be in accordance with law. The evidence to support the plaintiffs
cause is, of course, presented in his absence, but the court is not supposed to admit that
which is basically incompetent. Although the defendant would not be in a position to object,

elementary justice requires that only legal evidence should be considered against him. If the
evidence presented should not be sufficient to justify a judgment for the plaintiff, the
complaint must be dismissed. And if an unfavorable judgment should be justifiable, it cannot
exceed in amount or be different in kind from what is prayed for in the complaint."25
In sum, while petitioners were allowed to present evidence ex parte under Section 3 of Rule 9, they
were not excused from establishing their claims for damages by the required quantum of proof under
Section 1 of Rule 133. Stated differently, any advantage they may have gained from the ex parte
presentation of evidence does not lower the degree of proof required. Clearly then, there is no
incompatibility between the two rules.
Second and Third Issues:
Review of the Evidence
Petitioners urge this Court to depart from the general rule that the lower courts findings of fact are
not reviewable in a petition for review.26 In support of their plea, they cite the conflicting findings of
the trial and the appellate courts, as well as the alleged conjectures and surmises made by the CA in
arriving at its Decision.
Indeed, the differences between the findings of the two courts a quo, leading to entirely disparate
dispositions, is reason enough for this Court to review the evidence in this case.27 Whether the CA
indulged in surmises and conjectures when it issued the assailed Decision will thus be determined.
At the outset, it behooves this Court to clarify the CAs impression that no evidence was presented in
the case which might have contributed to petitioners challenge to its Decision. The appellate courts
observation was based on the notation by the lower courts clerk of court that there were no separate
folders for exhibits and transcripts, because "there was no actual hearing conducted in this case."28
True, there was no hearing conducted between petitioners and respondent, precisely because the
latter had been declared in default, and petitioners had therefore been ordered to present their
evidence ex parte. But the absence of a hearing did not mean that no evidence was presented. The
Partial Decision dated February 8, 1993, in fact clearly enumerated the pieces of evidence adduced
by petitioners during the ex parte presentation on January 7, 1993. The documentary evidence they
presented consisted of the following:
1. A copy of respondent banks Petition for the extrajudicial foreclosure and auction sale of
the mortgaged parcel of land29
2. The Certificate of Sale that was a consequence of the foreclosure sale30
3. A Statement of Account dated February 15, 1984, showing Petitioner Chuas outstanding
debt in the amount of P40,135.5331
4. A copy of the Interbank check dated February 16, 1984, in the amount of P4,00032
5. The Official Receipt issued by the bank acknowledging the check33
6. The banks letter dated February 20, 1984, advising Petitioner Chua of the sale of the
property at an extrajudicial public auction; the lapse of the period of redemption; and an
invitation to purchase the property at its current market price34

7. Another letter from the bank dated March 22, 1984, inviting Petitioner Chua to submit,
within five days, an offer to buy the same property, which another buyer had offered to buy35
8. A copy of the Notice of Lis Pendens, the filing of which was done after that of the
Amended Complaint36
9. A copy of the title showing the inscription of the Notice of Lis Pendens37
10. A copy of the Absolute Deed of Sale to Cerrofer38
11. A copy of a letter dated August 29, 1986, made and signed by petitioners counsel,
requesting the cancellation of the Notice of Lis Pendens39
12. A copy of a page of the Memorandum of Encumbrance from TCT No. (314341) 7778/T3940
Having clarified this matter, we proceed to review the facts.
Petitioners do not deny that the one-year period for legal redemption had already lapsed when
respondent bank supposedly offered to sell the property in question. The records clearly show that
the Certificate of Sale following the extrajudicial public auction of the property was registered on
June 21, 1982, the date from which the legal redemption period was to be reckoned.41 Petitioners
insist, though, that they had the right to repurchase the property through conventional redemption,
as provided under Article 1601 of the Civil Code, worded as follows:
"ART. 1601. Conventional redemption shall take place when the vendor reserves the right to
repurchase the thing sold, with the obligation to comply with the provisions of Article 1616 and other
stipulations which may have been agreed upon."
It is true that the one-year period of redemption provided in Act No. 3135, as amended -- the law
under which the property here was sold in a foreclosure sale -- is only directory and, as such can be
extended by agreement of the parties.42 However, it has also been held that for legal redemption to
be converted into conventional redemption, two requisites must be established: 1) voluntary
agreement of the parties to extend the redemption period; and 2) the debtors commitment to pay the
redemption price on a fixed date.43 Thus, assuming that an offer was made to Petitioner Chua to buy
back the property after the lapse of the period of legal redemption, petitioners needed to show that
the parties had agreed to extend the period, and that Petitioner Chua had committed to pay the
redemption price on a fixed date.
The letters sent by the bank to Petitioner Chua on February 20 and March 22, 1984, do not
convincingly show that the parties arrived at a firm agreement for the repurchase of the property.
What can be gleaned from the February 20 letter is that Petitioner Chua proposed to pay the
redemption price for the property, but that the bank refused to accede to his request, because the
one-year redemption period had already lapsed.44 The bank, though, had offered to sell back the
property to him at the current market value. Indeed, an examination of his earlier letter of February
17, 1984, readily reveals that he expressed willingness to settle his account with the bank, but that
his "present financial situation precludes [him] from effecting an immediate settlement x x x."45
On the other hand, the letter dated March 22, 1984, clearly states that "x x x the Bank rejected [his]
request to redeem said property due to [the] lapse of [the] one (1) year legal redemption
period."46 Nonetheless, he was "[invited] to submit an offer to buy the same property in five (5) days

from receipt [of the letter]."47 Petitioner Chua was also informed that the bank had received an offer
to purchase the foreclosed property. As to the P4,000 check enclosed in his proposal dated
February 17, 1984, as a token of his good faith, he was advised that the amount was still
outstanding in the books of the bank and could be claimed by him if he thought the invitation was not
feasible.
More important, there was no showing that petitioners had committed to pay the redemption price on
a fixed date. True, Petitioner Chua had attempted to establish a previous agreement to repurchase
the property for less than its fair market value. He had submitted in evidence a Statement of
Account48 dated February 15, 1984, showing a balance of P40,135.53; the Interbank check dated
February 16, 1984 , for P4,000, which was deposited to the account of respondent bank;49 and the
Official Receipt for the check.50
Granting that these documents evinced an agreement, petitioners were still unable to establish a
firm commitment on their part to pay the redemption price on a fixed date. On the contrary, the
February 17 letter of Petitioner Chua to the bank clearly manifested that he was not capable of
paying the account immediately. For this reason, he proposed to pay in "three or four installments"
without a specification of dates for the payments, but with a plea for a reduction of the interest
charges. That proposal was rejected.
Indeed, other than the Interbank check marked "for deposit" by respondent bank, no other evidence
was presented to establish that petitioners had offered to pay the alleged redemption price
of P40,135.53 on a fixed date. For that matter, petitioners have not shown that they tendered
payment of the balance and/or consigned the payment to the court, in order to fulfill their part of the
purported agreement. These remedies are available to an aggrieved debtor under Article 1256 of the
Civil Code,51 when the creditor unjustly refuses to accept the payment of an obligation.
The next question that presents itself for resolution is the propriety of the CAs ruling vacating the
Partial Decision of the regional trial court (RTC) and dismissing the case. To recall, the RTC had
resolved to withhold a ruling on petitioners right to redeem conventionally and/or order the
reconveyance of the property in question, pending a determination of the validity of the sale to
Cerrofer Realty Corporation and Spouses Cesar and Lorna Roque. The trial court, however, granted
the prayer for damages against respondent bank. The RTC ruled as follows:
"The evidence presented by [petitioners] in so far as the cause of action against [respondent]
Traders Royal Bank is concerned are preponderant to support the claims of the [petitioners].
However, in view of the fact that the property subject matter of this case has already been conveyed
to defendant Cerrofer Realty Corporation thus the issue as to whether or not the said conveyance or
sale is valid is sill pending between the [petitioners] and [respondents] Cerrofer Realty Corporation
and Cesar Roque and Lorna Roque. Hence, this Court resolves to grant the prayer for damages
against Traders Royal Bank.
"The claims of the [petitioners] as against [respondent] Traders Royal Bank having been established
and proved by evidence, judgment is hereby rendered ordering [respondent] Traders Royal Bank to
pay [petitioners] actual damage or the market value of the land in question in the sum
of P500,000.00; the sum of P70,000.00 as compensatory damages; the sum of P200,000.00 to the
heirs of [petitioner] Danilo Chua; and attorneys fees in the sum of P30,000.00."52
In the light of the pending issue as to the validity of the sale of the property to the third parties
(Cerrofer Realty Corporation and Spouses Roque), the trial court properly withheld judgment on the
matter and thus left the prayer for damages as the sole issue for resolution.

To adjudge damages, paragraph (d) of Section 3 of Rule 9 of the Rules of Court provides that a
judgment against a party in default "shall not exceed the amount or be different in kind from that
prayed for nor award unliquidated damages." The proscription against the award of unliquidated
damages is significant, because it means that the damages to be awarded must be proved
convincingly, in accordance with the quantum of evidence required in civil cases.
Unfortunately for petitioners, the grant of damages was not sufficiently supported by the
evidence for the following reasons.
First, petitioners were not deprived of their property without cause. As correctly pointed out by the
CA, Act No. 3135, as amended, does not require personal notice to the mortgagor.53 In the present
case, there has been no allegation -- much less, proof -- of noncompliance with the requirement of
publication and public posting of the notice of sale, as required by ct No. 3135. Neither has there
been competent evidence to show that the price paid at the foreclosure sale was inadequate.54 To be
sure, there was no ground to invalidate the sale.
Second, as previously stated, petitioners have not convincingly established their right to damages on
the basis of the purported agreement to repurchase. Without reiterating our prior discussion on this
point, we stress that entitlement to actual and compensatory damages must be proved even under
Section 3 of Rule 9 of the Rules of Court. The same is true with regard to awards for moral damages
and attorneys fees, which were also granted by the trial court.
In sum, petitioners have failed to convince this Court of the cogency of their position, notwithstanding
the advantage they enjoyed in presenting their evidence ex parte. Not in every case of default by the
defendant is the complainant entitled to win automatically.
WHEREFORE, this Petition is hereby DENIED and the assailed Decision and Resolution
AFFIRMED. Costs against petitioners.
SO ORDERED.

G.R. No. 158401

January 28, 2008

PHILIPPINE PORTS AUTHORITY, petitioner,

vs.
WILLIAM GOTHONG & ABOITIZ (WG&A), INC., respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
This resolves the Petition for Review on Certiorari filed by the Philippine Ports Authority (petitioner)
seeking the reversal of the Decision1 of the Court of Appeals (CA) promulgated on October 24, 2002
and its Resolution dated May 15, 2003.
The antecedent facts are accurately narrated by the CA as follows:
Petitioner William Gothong & Aboitiz, Inc. (WG&A for brevity), is a duly organized domestic
corporation engaged in the shipping industry. Respondent Philippine Ports Authority (PPA for
brevity), upon the other hand, is a government-owned and controlled company created and
existing by virtue of the provisions of P.D. No. 87 and mandated under its charter to operate
and administer the country's sea port and port facilities.
After the expiration of the lease contract of Veterans Shipping Corporation over the Marine
Slip Way in the North Harbor on December 31, 2000, petitioner WG&A requested
respondent PPA for it to be allowed to lease and operate the said facility. Thereafter, then
President Estrada issued a memorandum dated December 18, 2000 addressed to the
Secretary of the Department of Transportation and Communication (DOTC) and the General
Manager of PPA, stating to the effect that in its meeting held on December 13, 2000, the
Economic Coordinating Council (ECC) has approved the request of petitioner WG&A to
lease the Marine Slip Way from January 1 to June 30, 2001 or until such time that
respondent PPA turns over its operations to the winning bidder for the North Harbor
Modernization Project.
Pursuant to the said Memorandum, a Contract of Lease was prepared by respondent PPA
containing the following terms:
1. The lease of the area shall take effect on January 1 to June 30, 2001 or until such
time that PPA turns over its operation to the winning bidder for the North Harbor
modernization;
2. You shall pay a monthly rental rate of P12.15 per square meter or an aggregate
monthly rental amount of P886,950.00;
3. All structures/improvements introduced in the leased premises shall be turned
over to PPA;
4. Water, electricity, telephone and other utility expenses shall be for the account of
William, Gothong & Aboitiz, Inc.;
5. Real Estate tax/insurance and other government dues and charges shall be borne
by WG&A.

The said contract was eventually conformed to and signed by the petitioner company,
through its President/Chief Executive Officer Endika Aboitiz, Jr. Thereafter, in accordance
with the stipulations made in the lease agreement, PPA surrendered possession of the
Marine Slip Way in favor of the petitioner.
However, believing that the said lease already expired on June 30, 2001, respondent PPA
subsequently sent a letter to petitioner WG&A dated November 12, 2001 directing the latter
to vacate the contested premises not later than November 30, 2001 and to turnover the
improvements made therein pursuant to the terms and conditions agreed upon in the
contract.
In response, petitioner WG&A wrote PPA on November 27, 2001 urging the latter to
reconsider its decision to eject the former. Said request was denied by the PPA via a letter
dated November 29, 2001.
On November 28, 2001, petitioner WG&A commenced an Injunction suit before the Regional
Trial Court of Manila. Petitioner claims that the PPA unjustly, illegally and prematurely
terminated the lease contract. It likewise prayed for the issuance of a temporary restraining
order to arrest the evacuation. In its complaint, petitioner also sought recovery of damages
for breach of contract and attorney's fees.
On December 11, 2001, petitioner WG&A amended its complaint for the first time. The
complaint was still denominated as one for Injunction with prayer for TRO. In the said
amended pleading, the petitioner incorporated statements to the effect that PPA is already
estopped from denying that the correct period of lease is "until such time that the North
Harbor Modernization Project has been bidded out to and operations turned over to the
winning bidder. It likewise included, as its third cause of action, the additional relief in its
prayer, that should the petitioner be forced to vacate the said facility, it should be deemed as
entitled to be refunded of the value of the improvements it introduced in the leased property.
Following the first amendment in the petitioner's complaint, respondent PPA submitted its
answer on January 23, 2002. Meanwhile, the TRO sought by the former was denied by the
trial court by way of an order dated January 16, 2002.
Petitioner later moved for the reconsideration of the said Order on February 11, 2002.
Shortly thereafter, petitioner filed a Motion to Admit Attached Second Amended Complaint.
This time, however, the complaint was already captioned as one for Injunction with Prayer for
Temporary Restraining Order and/or Writ of Preliminary Injunction and damages and/or for
Reformation of Contract. Also, it included as its fourth cause of action and additional relief in
its prayer, the reformation of the contract as it failed to express or embody the true intent of
the contracting parties.
The admission of the second amended complaint met strong opposition from the respondent
PPA. It postulated that the reformation sought for by the petitioner constituted substantial
amendment, which if granted, will substantially alter the latter's cause of action and theory of
the case.
On March 22, 2002, the respondent judge issued an Order denying the Admission of the
Second Amended Complaint. Petitioner filed a motion for reconsideration of the aforesaid
order but the same was again denied in an order dated April 26, 2002.2

Herein respondent WG&A then filed a petition for certiorari with the CA seeking the nullification of
the aforementioned RTC orders.
In its Decision dated October 24, 2002, the CA granted respondent's petition, thereby setting aside
the RTC orders and directing the RTC to admit respondent's second amended complaint pursuant to
Section 3, Rule 10 of the 1997 Rules of Civil Procedure. Petitioner moved for reconsideration but the
same was denied per Resolution dated May 15, 2003.
Hence, the present petition where the only issue raised is whether the CA erred in ruling that the
RTC committed grave abuse of discretion when it denied the admission of the second amended
complaint.
The Court finds the petition without merit.
The CA did not err in finding that the RTC committed grave abuse of discretion in issuing the Order
dated March 22, 2002 denying the admission of respondent's second amended complaint.
The RTC applied the old Section 3, Rule 10 of the Rules of Court:
Section 3. Amendments by leave of court. after the case is set for hearing, substantial
amendments may be made only upon leave of court. But such leave may be refused if it
appears to the court that the motion was made with intent to delay the action or that the
cause of action or defense is substantially altered. Orders of the court upon the matters
provided in this section shall be made upon motion filed in court, and after notice to the
adverse party, and an opportunity to be heard.
instead of the provisions of the 1997 Rules of Civil Procedure, amending Section 3, Rule 10, to wit:
SECTION 3. Amendments by leave of court. Except as provided in the next preceding
section, substantial amendments may be made only upon leave of court. But such
leave may be refused if it appears to the court that the motion was made with intent to
delay. Orders of the court upon the matters provided in this section shall be made upon
motion filed in court, and after notice to the adverse party, and an opportunity to be heard.
The Court has emphasized the import of Section 3, Rule 10 of the 1997 Rules of Civil Procedure
in Valenzuela v. Court of Appeals,3 thus:
Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil Procedure amended the former
rule in such manner that the phrase "or that the cause of action or defense is substantially
altered" was stricken-off and not retained in the new rules. The clear import of such
amendment in Section 3, Rule 10 is that under the new rules, "the amendment may
(now) substantially alter the cause of action or defense." This should only be true,
however, when despite a substantial change or alteration in the cause of action or defense,
the amendments sought to be made shall serve the higher interests of substantial justice,
and prevent delay and equally promote the laudable objective of the rules which is to secure
a "just, speedy and inexpensive disposition of every action and proceeding."4
The application of the old Rules by the RTC almost five years after its amendment by the 1997
Rules of Civil Procedure patently constitutes grave abuse of discretion.

WHEREFORE, the petition is DENIED for lack of merit. The Decision of the Court of Appeals
promulgated on October 24, 2002 and its Resolution dated May 15, 2003 are hereby AFFIRMED in
toto.
SO ORDERED.
G.R. No. 148120

October 24, 2003

RODRIGO QUIRAO, MONICA QUIRAO, ROBERTO QUIRAO, EDILBERTO QUIRAO, JESUS

GOLE, GERARDO QUIRAO, LAMBERTO VALDEZ & FEDERICO QUIRAO, petitioners,
vs.
LYDIA QUIRAO & LEOPOLDO QUIRAO, JR., respondents.
DECISION
PUNO, J.:
The issue in this Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court is
whether Branch 21 of the Regional Trial Court of Mambusao, Capiz should admit the amended
answer of petitioners.
Respondents Lydia Quirao and Leopoldo Quirao, Jr. filed before the trial court a complaint for
recovery of possession, ownership and damages against petitioners Rodrigo Quirao, Monica Quirao,
Roberto Quirao, Edilberto Quirao, Gerardo Quirao, Jesus Gole, Lamberto Valdez, Federico Quirao
and Avelino Ngitngit.1Respondents claimed that the late Leopoldo Quirao was the owner of the
sugarland, subject matter of the controversy. Respondent Lydia is his widow, while Leopoldo, Jr. is
his legitimate son and compulsory heir. They alleged that in 1988, petitioners forcibly took
possession of the sugarland and appropriated for themselves its income. They prayed for the
issuance of a writ of Preliminary Mandatory Injunction for petitioners to vacate the property.2
In their Answer, petitioners claimed that the subject property was owned by their grandfather,
Segundo Clarito; that petitioner Rodrigo Quirao had been in possession of the land even before the
Second World War; and that Leopoldo Quirao never possessed it. They further alleged that
petitioners Jesus Gole, Avelino Ngitngit and Lamberto Valdez were recipients of Emancipation
Patents issued by the government.3
A few months after their Answer, petitioners filed a Motion to Dismiss the complaint citing a Deed of
Extra-Judicial Partition with Sale of the subject property purportedly executed by respondents in
favor of a certain Carlito de Juan ("de Juan"). Petitioners contended that since respondents no
longer own the property, they lack the standing to file the complaint.4 They further alleged that it was
only after they filed their Answer that they learned of the existence of the deed. The trial court denied
the motion to dismiss for lack of merit.5
The case underwent pre-trial. Petitioners' second counsel, who took over the case, filed an amended
pre-trial brief which reiterated the allegation that respondents were not the real parties in interest as
they had sold the property to de Juan. Trial ensued and after respondents rested their case,
petitioners filed a "Motion for Leave of Court to Admit Attached Amended Answer."6 They sought the
amendment of their Answer by adding the alternative defense that even if respondents were the
owners of the property by inheritance from Leopoldo Quirao, they (respondents) executed a Deed of
Extra-Judicial Partition of Property with Sale in favor of de Juan. They further claimed that in turn, de
Juan sold part of the property to them.7 The second sale appears to be evidenced by a Deed of

Sale8 involving part of the subject property executed by de Juan and petitioners. It also appears that
Rodrigo made a partial payment of P50,000.00, evidenced by the receipt signed by de Juan.9
Respondents opposed the motion on the grounds that: (1) it is dilatory and (2) the amendments are
substantial and cannot be allowed as the parties have already undergone a pre-trial conference.10
The motion was again denied by the trial court. It ratiocinated that the amendments will prejudice the
respondents since they had already rested their case and the alleged facts were already existing
and known to the petitioners when they filed their answer.11 Petitioners' motion for
reconsideration12 was likewise denied.13
1awphi1.nt

Petitioners repaired to the Court of Appeals which also dismissed their petition for lack of merit. The
appellate court ruled that the amendments are basically the same issues raised in their motion to
dismiss and are substantial ones which may properly be refused. It cited Batara vs. Court of
Appeals,14 where we held that the negligence and ignorance of petitioners' previous counsels cannot
qualify as "transcendental matters" which can outweigh technicalities.15 Petitioners filed a motion for
reconsideration16 but their efforts were in vain.17 Thus, this petition based on the following grounds:
A. THE OMISSION AND INACTION SEPARATELY AND INDIVIDUALLY COMMITTED BY
EACH OF PETITIONERS' THREE PREVIOUS LAWYERS CONSTITUTE MERELY SIMPLE
NEGLIGENCE WHICH, AS A GENERAL RULE, SHOULD BIND THEM. HOWEVER, WHEN
PUT AND CONSIDERED TOGETHER, SUCH OMISSION AND INACTION ARE
TRANSFORMED INTO AND COULD BE RIGHTFULLY CONSIDERED AS GROSS AND
RECKLESS AND, HENCE, SHOULD NOT AND COULD NEVER BIND THEM. IT IS
HUMBLY SUBMITTED THAT EVEN AT THIS LATE STAGE OF THE PROCEEDING, THE
AMENDMENTS SOUGHT TO BE INTRODUCED IN THE ORIGINAL ANSWER MAY STILL
BE LAWFULLY ALLOWED; OTHERWISE, PETITIONERS WOULD BE DEPRIVED OF
THEIR PROPERTY WITHOUT DUE PROCESS OF LAW;
B. IN THE HIGHER INTEREST OF SUBSTANTIAL JUSTICE, THE AMENDMENTS
SOUGHT TO BE INTRODUCED IN THE ORIGINAL ANSWER SHOULD HAVE BEEN
LIBERALLY ALLOWED SINCE THIS COURSE OF ACTION WOULD RESULT IN THE
RESOLUTION OF THE CASE BELOW BASED ON PURE MERITS, RATHER THAN ON
PURE TECHNICALITY. MOREOVER, THE RIGHTS OF RESPONDENTS COULD BE
AMPLY PROTECTED, AND WHATEVER DELAY HAS ALREADY BEEN INCURRED IS
NEVER SOLELY ATTRIBUTABLE TO PETITIONERS;
C. THE COURT A QUO HAS LIBERALLY CONSTRUED THE RULES IN FAVOR OF
RESPONDENTS AND STRICTLY CONSTRUED THEM AGAINST PETITIONERS; and
D. IN ITS DECISION, THE COURT OF APPEALS COMMITTED THE FOLLOWING
ERRORS: 1) IT RULED THAT THE MATTER SOUGHT TO BE INTRODUCED IN THE
ORIGINAL ANSWER IS THE SAME ISSUE ALLEGED IN PETITIONERS' MOTION TO
DISMISS WHICH WAS DENIED BY THE COURT A QUO; 2) IT FAILED TO DISCUSS THE
THIRD GROUND EVEN AS THIS WAS EXPLICITLY RAISED BEFORE IT; AND 3) IT
APPLIED THE JURISPRUDENCE LAID IN (sic) DOWN IN THE BATARA CASE.18
The Rules of Court allow amendments of pleadings as a matter of right before a responsive pleading
is served;19otherwise, leave of court must first be obtained.20
Our case law teaches us that amendments to pleadings are favored and should be liberally allowed
in furtherance of justice. This liberality is greatest in the early stages of a lawsuit, decreases as it

progresses, and changes at times to a strictness amounting to a prohibition. Amendments are

likewise subject to the limitation that they are not dilatory.21 Thus, trial courts are given the discretion
to grant leave of court to file amended pleadings, and their exercise of this discretion will normally
not be disturbed on appeal, unless there is evident abuse thereof.22
In the case at bar, petitioners filed their motion for leave of court to admit amended answer only after
respondents have rested their case. Petitioners argue that the error was due to the oversight of the
three previous counsels. Petitioners' fourth counsel also claims that he learned of the alternative
defense late as his clients (petitioners herein) did not inform him of the Deed of Sale.23 Allegedly,
they relied on the advice of their previous counsels that the said deed of sale "was a mere scrap of
paper because it was not signed by Carlito de Juan."24Respondents contend that petitioners' motion
is too late in the day.
Petitioners' motion for admission of amended answer may be a little tardy but this by itself is not a
cause for its denial. Their amended answer alleges that respondents no longer own the subject
property having sold the same to de Juan who, in turn, sold the property to petitioners. These
allegations, if correct, are vital to the disposition of the case at bar. The interest of justice and equity
demand that they be considered to avoid a result that is iniquitous. Truth cannot be barred by
technical rules. For this reason, our ruling case law holds that amendments to pleadings are
generally favored and should be liberally allowed in furtherance of justice so that every case may so
far as possible be determined on its real facts and in order to prevent the circuity of action.25
1vvphi 1.nt

We should always bear in mind that rules of procedure are mere tools designed to facilitate the
attainment of justice. Their strict and rigid application especially on technical matters, which tends to
frustrate rather than promote substantial justice, must be avoided. Technicality, when it deserts its
proper office as an aid to justice and becomes its great hindrance and chief enemy, deserves scant
consideration from the courts.26
IN VIEW WHEREOF, the petition is GRANTED. Branch 21 of the Regional Trial Court of Mambusao,
Capiz is directed to admit the amended answer.
SO ORDERED.
G.R. No. 148361 November 29, 2005
RAFAEL BAUTISTA and LIGAYA ROSEL, Petitioners,
vs.
MAYA-MAYA COTTAGES, INC., Respondent.
RESOLUTION
SANDOVAL GUTIERREZ, J.:
For our resolution is the instant petition for review on certiorari assailing the Decision1 and
Resolution of the Court of Appeals, dated November 24, 2000 and May 30, 2001, respectively, in
CA-G.R. SP No. 43574.
The facts are:
Spouses Rafael and Ligaya Bautista, petitioners herein, are the registered owners of a 3,856-square
meter lot located at Natipuan, Nasugbu, Batangas, as evidenced by Original Certificate of Title

(OCT) No. P-1436 issued in their names on January 15, 1989 by the Register of Deeds, same
province.
On May 13, 1996, Maya-Maya Cottages, Inc. (MMCI), respondent, filed with the Regional Trial Court
(RTC) of Nasugbu, Batangas a complaint for cancellation of petitioners title and damages, with
application for a preliminary injunction, docketed as Civil Case No. 371. Respondent alleged inter
alia that "without any color of right and through dubious means," petitioners were able to obtain OCT
No. P-1436 in their names.
On May 29, 1996, petitioners filed a motion to dismiss the complaint on the ground that it does not
state a cause of action. They averred that respondent is a private corporation, hence, disqualified
under the Constitution2 from acquiring public alienable lands except by lease. Respondent cannot
thus be considered a real party in interest.
In its Order dated August 30, 1996, the trial court granted the motion to dismiss, holding that since
the property is an alienable public land, respondent is not qualified to acquire it except by lease.
Thus, it has no cause of action.
Respondent then filed a motion for reconsideration with motion for leave to file an amended
complaint for quieting of title. Respondent alleged that the technical description in petitioners title
does not cover the disputed lot.
Thereupon, petitioners filed their opposition, contending that the amended complaint does not also
state a cause of action and if admitted, respondents theory of the case is substantially modified.
On November 18, 1996, the trial court issued an Order denying petitioners motion to dismiss, thus,
reversing its Order of August 30, 1996 dismissing the complaint in Civil Case No. 371.
Petitioners then filed with the Court of Appeals a special civil action for certiorari and prohibition,
docketed as CA-G.R. SP No. 43574. They alleged that the amended complaint does not cure the
defect in the original complaint which does not state a cause of action. Clearly, in admitting
respondents amended complaint, the trial court committed grave abuse of discretion amounting to
lack or excess of jurisdiction.
On November 24, 2000, the Court of Appeals rendered a Decision dismissing the petition
for certiorari and prohibition.
Petitioners filed a motion for reconsideration but was denied by the Appellate Court in its Resolution
of May 30, 2001.
Hence, the instant petitioner for review on certiorari.
The sole issue for our resolution is whether the Court of Appeals erred in holding that the trial court
did not commit grave abuse of discretion amounting to lack or excess of jurisdiction in admitting
respondents amended complaint.
Section 2, Rule 10 of the 1997 Rules of Civil Procedure, as amended, provides:
"SEC. 2. Amendments as a matter of right. A party may amend his pleading once as a matter of
right at any time before a responsive pleading is served or, in the case of a reply, at any time
within ten (10) days after it is served."

The above provision clearly shows that before the filing of any responsive pleading, a party has
theabsolute right to amend his pleading, regardless of whether a new cause of action or change in
theory is introduced. It is settled that a motion to dismiss is not the responsive pleading
contemplated by the Rule.3 Records show that petitioners had not yet filed a responsive pleading to
the original complaint in Civil Case No. 371. What they filed was a motion to dismiss. It follows that
respondent, as a plaintiff, may file an amended complaint even after the original complaint was
ordered dismissed, provided that the order of dismissal is not yet final,4 as in this case.
Verily, the Court of Appeals correctly held that in issuing the assailed Order admitting the amended
complaint, the trial court did not gravely abuse its discretion. Hence, neither certiorari nor prohibition
would lie.
As to petitioners contention that respondent corporation is barred from acquiring the subject lot,
suffice it to say that this is a matter of defense which can only be properly determined during the fullblown trial of the instant case.
WHEREFORE, the petition is DENIED. The challenged Decision and Resolution of the Court of
Appeals in CA-G.R. SP No. 43574 are AFFIRMED IN TOTO. Costs against petitioners.
SO ORDERED.

G.R. No. 154096

August 22, 2008

IRENE MARCOS-ARANETA, DANIEL RUBIO, ORLANDO G. RESLIN, and

JOSE G. RESLIN,petitioners,
vs.
COURT OF APPEALS, JULITA C. BENEDICTO, and FRANCISCA
BENEDICTO-PAULINO,respondents.
DECISION
VELASCO, JR., J.:
The Case
This Petition for Review on Certiorari under Rule 45 assails and seeks to
nullify the Decision1 dated October 17, 2001 of the Court of Appeals (CA) in
CA-G.R. SP No. 64246 and its Resolution2 of June 20, 2002 denying
petitioners' motion for reconsideration. The assailed CA decision annulled and
set aside the Orders dated October 9, 2000, December 18, 2000, and March
15, 2001 of the Regional Trial Court (RTC), Branch 17 in Batac, Ilocos Norte
which admitted petitioners' amended complaint in Civil Case Nos. 3341-17
and 3342-17.
The Facts

Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto, now

deceased, and his business associates (Benedicto Group) organized Far East
Managers and Investors, Inc. (FEMII) and Universal Equity Corporation
(UEC), respectively. As petitioner Irene Marcos-Araneta would later allege,
both corporations were organized pursuant to a contract or arrangement
whereby Benedicto, as trustor, placed in his name and in the name of his
associates, as trustees, the shares of stocks of FEMII and UEC with the
obligation to hold those shares and their fruits in trust and for the benefit of
Irene to the extent of 65% of such shares. Several years after, Irene, through
her trustee-husband, Gregorio Ma. Araneta III, demanded the reconveyance
of said 65% stockholdings, but the Benedicto Group refused to oblige.
In March 2000, Irene thereupon instituted before the RTC two similar
complaints for conveyance of shares of stock, accounting and
receivership against the Benedicto Group with prayer for the issuance of a
temporary restraining order (TRO). The first, docketed as Civil Case No.
3341-17, covered the UEC shares and named Benedicto, his daughter, and at
least 20 other individuals as defendants. The second, docketed as Civil Case
No. 3342-17, sought the recovery to the extent of 65% of FEMII shares held
by Benedicto and the other defendants named therein.
Respondent Francisca Benedicto-Paulino,3 Benedicto's daughter, filed a
Motion to Dismiss Civil Case No. 3341-17, followed later by an Amended
Motion to Dismiss. Benedicto, on the other hand, moved to dismiss4 Civil
Case No. 3342-17, adopting in toto the five (5) grounds raised by Francisca in
her amended motion to dismiss. Among these were: (1) the cases involved an
intra-corporate dispute over which the Securities and Exchange Commission,
not the RTC, has jurisdiction; (2) venue was improperly laid; and (3) the
complaint failed to state a cause of action, as there was no allegation therein
that plaintiff, as beneficiary of the purported trust, has accepted the trust
created in her favor.
To the motions to dismiss, Irene filed a Consolidated Opposition, which
Benedicto and Francisca countered with a Joint Reply to Opposition.
Upon Benedicto's motion, both cases were consolidated.
During the preliminary proceedings on their motions to dismiss, Benedicto and
Francisca, by way of bolstering their contentions on improper venue,
presented the Joint Affidavit5 of Gilmia B. Valdez, Catalino A. Bactat, and
Conchita R. Rasco who all attested being employed as household staff at the
Marcos' Mansion in Brgy. Lacub, Batac, Ilocos Norte and that Irene did not

maintain residence in said place as she in fact only visited the mansion twice
in 1999; that she did not vote in Batac in the 1998 national elections; and that
she was staying at her husband's house in Makati City.
Against the aforesaid unrebutted joint affidavit, Irene presented her PhP 5
community tax certificate6(CTC) issued on "11/07/99" in Curimao, Ilocos Norte
to support her claimed residency in Batac, Ilocos Norte.
In the meantime, on May 15, 2000, Benedicto died and was substituted by his
wife, Julita C. Benedicto, and Francisca.
On June 29, 2000, the RTC dismissed both complaints, stating that these
partly constituted "real action," and that Irene did not actually reside in Ilocos
Norte, and, therefore, venue was improperly laid. In its dismissal order,7 the
court also declared "all the other issues raised in the different Motions to
Dismiss x x x moot and academic."
From the above order, Irene interposed a Motion for Reconsideration8 which
Julita and Francisca duly opposed.
Pending resolution of her motion for reconsideration, Irene filed on July 17,
2000 a Motion (to Admit Amended Complaint),9 attaching therewith a copy of
the Amended Complaint10 dated July 14, 2000 in which the names of Daniel
Rubio, Orlando G. Reslin, and Jose G. Reslin appeared as additional
plaintiffs. As stated in the amended complaint, the added plaintiffs, all from
Ilocos Norte, were Irene's new trustees. Parenthetically, the amended
complaint stated practically the same cause of action but, as couched, sought
the reconveyance of the FEMII shares only.
During the August 25, 2000 hearing, the RTC dictated in open court an order
denying Irene's motion for reconsideration aforementioned, but deferred
action on her motion to admit amended complaint and the opposition
thereto.11
On October 9, 2000, the RTC issued an Order12 entertaining the amended
complaint, dispositively stating:
WHEREFORE, the admission of the Amended Complaint being tenable
and legal, the same is GRANTED.
Let copies of the Amended Complaint be served to the defendants who are
ordered to answer within the reglementary period provided by the rules.

The RTC predicated its order on the following premises:

(1) Pursuant to Section 2, Rule 10 of the Rules of Court,13 Irene may opt to
file, as a matter of right, an amended complaint.
(2) The inclusion of additional plaintiffs, one of whom was a Batac, an Ilocos
Norte resident, in the amended complaint setting out the same cause of action
cured the defect of improper venue.
(3) Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4 allow the filing of the
amended complaint in question in the place of residence of any of Irene's coplaintiffs.
In time, Julita and Francisca moved to dismiss the amended complaint, but
the RTC, by Order14 dated December 18, 2000, denied the motion and
reiterated its directive for the two to answer the amended complaint.
In said order, the RTC stood pat on its holding on the rule on amendments of
pleadings. And scoffing at the argument about there being no complaint to
amend in the first place as of October 9, 2000 (when the RTC granted the
motion to amend) as the original complaints were dismissed with finality
earlier, i.e., on August 25, 2000 when the court denied Irene's motion for
reconsideration of the June 29, 2000 order dismissing the original complaints,
the court stated thusly: there was actually no need to act on Irene's motion to
admit, it being her right as plaintiff to amend her complaints absent any
responsive pleading thereto. Pushing its point, the RTC added the observation
that the filing of the amended complaint on July 17, 2000 ipso
facto superseded the original complaints, the dismissal of which, per the June
29, 2000 Order, had not yet become final at the time of the filing of the
amended complaint.
Following the denial on March 15, 2001 of their motion for the RTC to
reconsider its December 18, 2000 order aforestated, Julita and Francisca, in a
bid to evade being declared in default, filed on April 10, 2001 their Answer to
the amended complaint.15 But on the same day, they went to the CA via a
petition for certiorari, docketed as CA-G.R. SP No. 64246, seeking to nullify
the following RTC orders: the first, admitting the amended complaint; the
second, denying their motion to dismiss the amended complaint; and the third,
denying their motion for reconsideration of the second issuance.
Inasmuch as the verification portion of the joint petition and the certification on
non-forum shopping bore only Francisca's signature, the CA required the joint

petitioners "to submit x x x either the written authority of Julita C. Benedicto to

Francisca B. Paulino authorizing the latter to represent her in these
proceedings, or a supplemental verification and certification duly signed by x x
x Julita C. Benedicto."16Records show the submission of the corresponding
authorizing Affidavit17 executed by Julita in favor of Francisca.
Later developments saw the CA issuing a TRO18 and then a writ of preliminary
injunction19 enjoining the RTC from conducting further proceedings on the
subject civil cases.
On October 17, 2001, the CA rendered a Decision, setting aside the assailed
RTC orders and dismissing the amended complaints in Civil Case Nos. 334117 and 3342-17. The fallo of the CA decision reads:
WHEREFORE, based on the foregoing premises, the petition is hereby
GRANTED. The assailed Orders admitting the amended complaints are
SET ASIDE for being null and void, and the amended complaints a
quo are, accordingly, DISMISSED.20
Irene and her new trustees' motion for reconsideration of the assailed decision
was denied through the equally assailed June 20, 2002 CA Resolution.
Hence, this petition for review is before us.
The Issues
Petitioners urge the setting aside and annulment of the assailed CA decision
and resolution on the following submissions that the appellate court erred in:
(1) allowing the submission of an affidavit by Julita as sufficient compliance
with the requirement on verification and certification of non-forum shopping;
(2) ruling on the merits of the trust issue which involves factual and evidentiary
determination, processes not proper in a petition for certiorari under Rule 65
of the Rules of Court; (3) ruling that the amended complaints in the lower
court should be dismissed because, at the time it was filed, there was no more
original complaint to amend; (4) ruling that the respondents did not waive
improper venue; and (5) ruling that petitioner Irene was not a resident of
Batac, Ilocos Norte and that none of the principal parties are residents of
Ilocos Norte.21
The Court's Ruling
We affirm, but not for all the reasons set out in, the CA's decision.

First Issue: Substantial Compliance with the Rule

on Verification and Certification of Non-Forum Shopping
Petitioners tag private respondents' petition in CA-G.R. SP No. 64246 as
defective for non-compliance with the requirements of Secs. 422 and 523 of
Rule 7 of the Rules of Court at least with regard to Julita, who failed to sign
the verification and certification of non-forum shopping. Petitioners thus fault
the appellate court for directing Julita's counsel to submit a written authority
for Francisca to represent Julita in the certiorari proceedings.
We are not persuaded.
Verification not Jurisdictional; May be Corrected
Verification is, under the Rules, not a jurisdictional but merely a formal
requirement which the court maymotu proprio direct a party to comply with or
correct, as the case may be. As the Court articulated inKimberly Independent
Labor Union for Solidarity, Activism and Nationalism (KILUSAN)-Organized
Labor Associations in Line Industries and Agriculture (OLALIA) v. Court
of Appeals:
V]erification is a formal, not a jurisdictional requisite, as it is mainly intended to secure an assurance that the
allegations therein made are done in good faith or are true and correct and not mere speculation. The Court
may order the correction of the pleading, if not verified, or act on the unverified pleading if the attending
circumstances are such that a strict compliance with the rule may be dispensed with in order that the ends of
justice may be served.24

Given this consideration, the CA acted within its sound discretion in ordering
the submission of proof of Francisca's authority to sign on Julita's behalf and
represent her in the proceedings before the appellate court.
Signature by Any of the Principal Petitioners is Substantial Compliance
Regarding the certificate of non-forum shopping, the general rule is that all the
petitioners or plaintiffs in a case should sign it.25 However, the Court has time
and again stressed that the rules on forum shopping, which were designed to
promote the orderly administration of justice, do not interdict substantial
compliance with its provisions under justifiable circumstances.26 As has been
ruled by the Court, the signature of any of the principal petitioners27 or
principal parties,28 as Francisca is in this case, would constitute a substantial
compliance with the rule on verification and certification of non-forum
shopping. It cannot be overemphasized that Francisca herself was a principal

party in Civil Case No. 3341-17 before the RTC and in the certiorari
proceedings before the CA. Besides being an heir of Benedicto, Francisca,
with her mother, Julita, was substituted for Benedicto in the instant case after
his demise.
And should there exist a commonality of interest among the parties, or where
the parties filed the case as a "collective," raising only one common cause of
action or presenting a common defense, then the signature of one of the
petitioners or complainants, acting as representative, is sufficient compliance.
We said so in Cavile v. Heirs of Clarita Cavile.29 Like Thomas Cavile, Sr. and
the other petitioners in Cavile, Francisca and Julita, as petitioners before the
CA, had filed their petition as a collective, sharing a common interest and
having a common single defense to protect their rights over the shares of
stocks in question.
Second Issue: Merits of the Case cannot be Resolved
on Certiorari under Rule 65
Petitioners' posture on the second issue is correct. As they aptly pointed out,
the CA, in the exercise of its certiorari jurisdiction under Rule 65, is limited to
reviewing and correcting errors of jurisdiction only. It cannot validly delve into
the issue of trust which, under the premises, cannot be judiciously resolved
without first establishing certain facts based on evidence.
Whether a determinative question is one of law or of fact depends on the
nature of the dispute. A question of law exists when the doubt or controversy
concerns the correct application of law or jurisprudence to a certain given set
of facts; or when the issue does not call for an examination of the probative
value of the evidence presented, the truth or falsehood of facts being
admitted. A question of fact obtains when the doubt or difference arises as to
the truth or falsehood of facts or when the query invites the calibration of the
whole evidence considering mainly the credibility of the witnesses, the
existence and relevancy of specific surrounding circumstances, as well as
their relation to each other and to the whole, and the probability of the
situation.30
Clearly then, the CA overstepped its boundaries when, in disposing of private
respondents' petition for certiorari, it did not confine itself to determining
whether or not lack of jurisdiction or grave abuse of discretion tainted the
issuance of the assailed RTC orders, but proceeded to pass on the factual
issue of the existence and enforceability of the asserted trust. In the process,
the CA virtually resolved petitioner Irene's case for reconveyance on its

substantive merits even before evidence on the matter could be adduced.

Civil Case Nos. 3341-17 and 3342-17 in fact have not even reached the pretrial stage. To stress, the nature of the trust allegedly constituted in Irene's
favor and its enforceability, being evidentiary in nature, are best determined
by the trial court. The original complaints and the amended complaint certainly
do not even clearly indicate whether the asserted trust is implied or express.
To be sure, an express trust differs from the implied variety in terms of the
manner of proving its existence.31 Surely, the onus of factually determining
whether the trust allegedly established in favor of Irene, if one was indeed
established, was implied or express properly pertains, at the first instance, to
the trial court and not to the appellate court in a special civil action for
certiorari, as here. In the absence of evidence to prove or disprove the
constitution and necessarily the existence of the trust agreement between
Irene, on one hand, and the Benedicto Group, on the other, the appellate
court cannot intelligently pass upon the issue of trust. A pronouncement on
said issue of trust rooted on speculation and conjecture, if properly
challenged, must be struck down. So it must be here.
Third Issue: Admission of Amended Complaint Proper
As may be recalled, the CA veritably declared as reversibly erroneous the
admission of the amended complaint. The flaw in the RTC's act of admitting
the amended complaint lies, so the CA held, in the fact that the filing of the
amended complaint on July 17, 2000 came after the RTC had ordered with
finality the dismissal of the original complaints. According to petitioners,
scoring the CA for its declaration adverted to and debunking its posture on the
finality of the said RTC order, the CA failed to take stock of their motion for
reconsideration of the said dismissal order.
We agree with petitioners and turn to the governing Sec. 2 of Rule 10 of the
Rules of Court which provides:
SEC. 2. Amendments as a matter of right. -- A party may amend his
pleading once as a matter of right at any time before a responsive
pleading is served or in the case of a reply, at any time within ten (10)
days after it is served.
As the aforequoted provision makes it abundantly clear that the plaintiff may
amend his complaint once as a matter of right, i.e., without leave of court,
before any responsive pleading is filed or served. Responsive pleadings are
those which seek affirmative relief and/or set up defenses,32 like an answer. A
motion to dismiss is not a responsive pleading for purposes of Sec. 2 of Rule

10.33 Assayed against the foregoing perspective, the RTC did not err in
admitting petitioners' amended complaint, Julita and Francisca not having yet
answered the original complaints when the amended complaint was filed. At
that precise moment, Irene, by force of said Sec. 2 of Rule 10, had, as a
matter of right, the option of amending her underlying reconveyance
complaints. As aptly observed by the RTC, Irene's motion to admit amended
complaint was not even necessary. The Court notes though that the RTC has
not offered an explanation why it saw fit to grant the motion to admit in the first
place.
In Alpine Lending Investors v. Corpuz, the Court, expounding on the propriety
of admitting an amended complaint before a responsive pleading is filed,
wrote:
W]hat petitioner Alpine filed in Civil Case No. C-20124 was a motion to dismiss, not an answer. Settled is
the rule that a motion to dismiss is not a responsive pleading for purposes of Section 2, Rule 10. As no
responsive pleading had been filed, respondent could amend her complaint in Civil Case No. C-20124 as a
matter of right. Following this Court's ruling in Breslin v. Luzon Stevedoring Co. considering that
respondent has the right to amend her complaint, it is the correlative duty of the trial court to accept the
amended complaint; otherwise, mandamus would lie against it. In other words, the trial court's duty to admit
the amended complaint was purely ministerial. In fact, respondent should not have filed a motion to admit
her amended complaint.34

It may be argued that the original complaints had been dismissed through the
June 29, 2000 RTC order. It should be pointed out, however, that the finality
of such dismissal order had not set in when Irene filed the amended complaint
on July 17, 2000, she having meanwhile seasonably sought reconsideration
thereof. Irene's motion for reconsideration was only resolved on August 25,
2000. Thus, when Irene filed the amended complaint on July 17, 2000, the
order of dismissal was not yet final, implying that there was strictly no legal
impediment to her amending her original complaints.35
Fourth Issue: Private Respondents did not Waive Improper Venue
Petitioners maintain that Julita and Francisca were effectively precluded from
raising the matter of improper venue by their subsequent acts of filing
numerous pleadings. To petitioners, these pleadings, taken together, signify a
waiver of private respondents' initial objection to improper venue.
This contention is without basis and, at best, tenuous. Venue essentially
concerns a rule of procedure which, in personal actions, is fixed for the
greatest convenience possible of the plaintiff and his witnesses. The ground of

improperly laid venue must be raised seasonably, else it is deemed waived.

Where the defendant failed to either file a motion to dismiss on the ground of
improper venue or include the same as an affirmative defense, he is deemed
to have waived his right to object to improper venue.36In the case at bench,
Benedicto and Francisca raised at the earliest time possible, meaning "within
the time for but before filing the answer to the complaint,"37 the matter of
improper venue. They would thereafter reiterate and pursue their objection on
venue, first, in their answer to the amended complaints and then in their
petition for certiorari before the CA. Any suggestion, therefore, that Francisca
and Benedicto or his substitutes abandoned along the way improper venue as
ground to defeat Irene's claim before the RTC has to be rejected.
Fifth Issue: The RTC Has No Jurisdiction
on the Ground of Improper Venue
Subject Civil Cases are Personal Actions
It is the posture of Julita and Francisca that the venue was in this case
improperly laid since the suit in question partakes of a real action involving
real properties located outside the territorial jurisdiction of the RTC in Batac.
This contention is not well-taken. In a personal action, the plaintiff seeks the
recovery of personal property, the enforcement of a contract, or the recovery
of damages.38 Real actions, on the other hand, are those affecting title to or
possession of real property, or interest therein. In accordance with the
wordings of Sec. 1 of Rule 4, the venue of real actions shall be the proper
court which has territorial jurisdiction over the area wherein the real property
involved, or a portion thereof, is situated. The venue of personal actions is the
court 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 nonresident defendant where he may be found, at the election of the plaintiff.39
In the instant case, petitioners are basically asking Benedicto and his Group,
as defendants a quo, to acknowledge holding in trust Irene's purported 65%
stockownership of UEC and FEMII, inclusive of the fruits of the trust, and to
execute in Irene's favor the necessary conveying deed over the said 65%
shareholdings. In other words, Irene seeks to compel recognition of the trust
arrangement she has with the Benedicto Group. The fact that FEMII's assets
include real properties does not materially change the nature of the action, for
the ownership interest of a stockholder over corporate assets is only inchoate
as the corporation, as a juridical person, solely owns such assets. It is only
upon the liquidation of the corporation that the stockholders, depending on the

type and nature of their stockownership, may have a real inchoate right over
the corporate assets, but then only to the extent of their stockownership.
The amended complaint is an action in personam, it being a suit against
Francisca and the late Benedicto (now represented by Julita and Francisca),
on the basis of their alleged personal liability to Irene upon an alleged trust
constituted in 1968 and/or 1972. They are not actions in rem where the
actions are against the real properties instead of against persons.40 We
particularly note that possession or title to the real properties of FEMII and
UEC is not being disputed, albeit part of the assets of the corporation happens
to be real properties.
Given the foregoing perspective, we now tackle the determinative question of
venue in the light of the inclusion of additional plaintiffs in the amended
complaint.
Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of Rule 4
We point out at the outset that Irene, as categorically and peremptorily found
by the RTC after a hearing, is not a resident of Batac, Ilocos Norte, as she
claimed. The Court perceives no compelling reason to disturb, in the confines
of this case, the factual determination of the trial court and the premises
holding it together. Accordingly, Irene cannot, in a personal action,
contextually opt for Batac as venue of her reconveyance complaint. As to her,
Batac, Ilocos Norte is not what Sec. 2, Rule 4 of the Rules of Court adverts to
as the place "where the plaintiff or any of the principal plaintiffs resides" at the
time she filed her amended complaint. That Irene holds CTC No.
1701945141 issued sometime in June 2000 in Batac, Ilocos Norte and in which
she indicated her address as Brgy. Lacub, Batac, Ilocos is really of no
moment. Let alone the fact that one can easily secure a basic residence
certificate practically anytime in any Bureau of Internal Revenue or treasurer's
office and dictate whatever relevant data one desires entered, Irene procured
CTC No. 17019451 and appended the same to her motion for reconsideration
following the RTC's pronouncement against her being a resident of Batac.
Petitioners, in an attempt to establish that the RTC in Batac, Ilocos Norte is
the proper court venue, asseverate that Batac, Ilocos Norte is where the
principal parties reside.
Pivotal to the resolution of the venue issue is a determination of the status of
Irene's co-plaintiffs in the context of Secs. 2 and 3 of Rule 3 in relation to Sec.
2 of Rule 4, which pertinently provide as follows:

Rule 3
PARTIES TO CIVIL ACTIONS
SEC. 2. Parties in interest. -- A real party in interest is the party who
stands to be benefited or injured by the judgment in the suit, or the party
entitled to the avails of the suit. Unless otherwise authorized by law or
these Rules, every action must be prosecuted or defended in the name
of the real party in interest.
SEC. 3. Representatives as parties. -- Where the action is allowed to be
prosecuted or defended by a representative or someone acting in a
fiduciary capacity, the beneficiary shall be included in the title of the
case and shall be deemed to be the real party in interest. A
representative may be a trustee of an express trust, a guardian, an
executor or administrator, or a party authorized by law or these Rules.
An agent acting in his own name and for the benefit of an undisclosed
principal may sue or be sued without joining the principal except when
the contract involves things belonging to the principal.
Rule 4
VENUE OF ACTIONS
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.
Venue is Improperly Laid
There can be no serious dispute that the real party-in-interest plaintiff is Irene.
As self-styled beneficiary of the disputed trust, she stands to be benefited or
entitled to the avails of the present suit. It is undisputed too that petitioners
Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin, all from Ilocos Norte,
were included as co-plaintiffs in the amended complaint as Irene's new
designated trustees. As trustees, they can only serve as mere representatives
of Irene.
Upon the foregoing consideration, the resolution of the crucial issue of
whether or not venue had properly been laid should not be difficult.

Sec. 2 of Rule 4 indicates quite clearly that when there is more than one
plaintiff in a personal action case, the residences of the principal parties
should be the basis for determining proper venue. According to the late
Justice Jose Y. Feria, "the word 'principal' has been added [in the uniform
procedure rule] in order to prevent the plaintiff from choosing the residence of
a minor plaintiff or defendant as the venue."42 Eliminate the qualifying term
"principal" and the purpose of the Rule would, to borrow from Justice
Regalado, "be defeated where a nominal or formal party is impleaded in the
action since the latter would not have the degree of interest in the subject of
the action which would warrant and entail the desirably active participation
expected of litigants in a case."43
Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342-17, Irene
stands undisputedly as the principal plaintiff, the real party-in-interest.
Following Sec. 2 of Rule 4, the subject civil cases ought to be commenced
and prosecuted at the place where Irene resides.
Principal Plaintiff not a Resident in Venue of Action
As earlier stated, no less than the RTC in Batac declared Irene as not a
resident of Batac, Ilocos Norte. Withal, that court was an improper venue for
her conveyance action.
The Court can concede that Irene's three co-plaintiffs are all residents of
Batac, Ilocos Norte. But it ought to be stressed in this regard that not one of
the three can be considered as principal party-plaintiffs in Civil Case Nos.
3341-17 and 3342-17, included as they were in the amended complaint as
trustees of the principal plaintiff. As trustees, they may be accorded, by virtue
of Sec. 3 of Rule 3, the right to prosecute a suit, but only on behalf of the
beneficiary who must be included in the title of the case and shall be deemed
to be the real party-in-interest. In the final analysis, the residences of Irene's
co-plaintiffs cannot be made the basis in determining the venue of the subject
suit. This conclusion becomes all the more forceful considering that Irene
herself initiated and was actively prosecuting her claim against Benedicto, his
heirs, assigns, or associates, virtually rendering the impleading of the trustees
unnecessary.
And this brings us to the final point. Irene was a resident during the period
material of Forbes Park, Makati City. She was not a resident of Brgy. Lacub,
Batac, Ilocos Norte, although jurisprudence44 has it that one can have several
residences, if such were the established fact. The Court will not speculate on
the reason why petitioner Irene, for all the inconvenience and expenses she

and her adversaries would have to endure by a Batac trial, preferred that her
case be heard and decided by the RTC in Batac. On the heels of the
dismissal of the original complaints on the ground of improper venue, three
new personalities were added to the complaint doubtless to insure, but in vain
as it turned out, that the case stays with the RTC in Batac.
Litigants ought to bank on the righteousness of their causes, the superiority of
their cases, and the persuasiveness of arguments to secure a favorable
verdict. It is high time that courts, judges, and those who come to court for
redress keep this ideal in mind.
WHEREFORE, the instant petition is hereby DISMISSED. The Decision and
Resolution dated October 17, 2001 and June 20, 2002, respectively, of the CA
in CA-G.R. SP No. 64246, insofar as they nullified the assailed orders of the
RTC, Branch 17 in Batac, Ilocos Norte in Civil Case Nos. 3341-17 and 334217 on the ground of lack of jurisdiction due to improper venue, are
hereby AFFIRMED. The Orders dated October 9, 2000, December 18, 2000,
and March 15, 2001 of the RTC in Civil Case Nos. 3341-17 and 3342-17 are
accordingly ANNULLED and SET ASIDE and said civil cases
are DISMISSED.
Costs against petitioners.
SO ORDERED.
G.R. No. 158674 October 17, 2005
LAPRECIOSISIMA CAGUNGUN, REMEDIOS L. CAGUNGUN, JESUS L. CAGUNGUN, VICENTE
L. CAGUNGUN, JR., RICARDO L. CAGUNGUN, EDUARDO L. CAGUNGUN, ROWENA L.
CAGUNGUN, ALVIN L. CAGUNGUN and ALMA L. CAGUNGUN, Petitioners,
vs.
PLANTERS DEVELOPMENT BANK, Respondent.
DECISION
CHICO-NAZARIO, J.:
Assailed in a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure
are the decision1 of the Court of Appeals dated 25 March 2002 that modified the decision of the
Regional Trial Court (RTC) of Olongapo City, Branch 74, in Civil Case No. 245-0-83, dated 26 June
1997, deleting the awards of moral and exemplary damages and finding that the mortgaged loan
was deemed paid and enjoining foreclosure, as well as reducing the awards for litigation fees and
expenses, and its Resolution2 dated 06 June 2003 denying petitioners Lapreciosisima Cagungun, et
al.s motion for reconsideration.
The antecedents are summarized by the Court of Appeals in its decision as follows:

On September 1, 1987, the spouses Vicente Cagungun and Lapreciosisima Cagungun (or the
Cagungun spouses) filed suit with the Regional Trial Court of Olongapo City against the Country
Development Bank (or COUNTRY), and which was docketed as Civil Case No. 245-083 and
assigned to Branch 74. Vicente Cagungun has since died and was substituted as plaintiff on August
8, 1984 by their children. On the other hand COUNTRY has entered into a merger and reflective of
this the party defendant has been changed to Planters Development Bank (or PLANTERS) on
September 1, 1987.
COUNTRY had opened an extension office in Olongapo City, and among their first customers were
the Cagungun spouses who had diverse business interests in the locality. They opened some
accounts, and for two (2) of which they were issued Savings Passbook No. 12241-16 in the name of
Purings Dry Goods and Savings Passbook No. 38470-29 in the names of V/L Cagungun.
It was claimed by the Cagungun spouses and testified to by them and their daughter-in-law Sarah
Cagungun, that because of the exigencies of their businesses that required daily deposits of the
proceeds and of the trust that they have reposed with COUNTRY and its personnel, they entrusted
and left with them their said savings pass books. At least once a day the Branch manager Ruperto
Reyes or a certain Bong and Ding would come to get their funds and with the agreement that these
would be rounded off and deposited to their account while the odd remainder would be applied to
their loan. The arrangement apparently went well, until March 1981 when the Cagungun spouses
received a letter from COUNTRY telling them that their loan is past due and payment was
demanded . . . or else. This prompted them to investigate, but this was tedious and difficult because
of lack of cooperation and even resistance from COUNTRY. But with the help of friends in high
places the Cagungun spouses were able to access and pry information that in the year 1979 on the
dates of October 8, 18, 20 and 31 and November 15, and December 4 and 8, with the use of
withdrawal slips a total of P220,000.00 was withdrawn from their Savings Passbook No. 12241-16.
These withdrawals were invalid for no such withdrawal was authorized, made or received by the
depositors, and the signatures of Vicente Cagungun on the slips were forgeries. This was confirmed
by Arcadio Ramos, Chief of the Questioned Documents Division of the NBI when these were
subjected to examination.
The side of PLANTERS was explicated by its employees, Internal Auditor Lilia Tactay, Branch
Manager Lolita Mendoza and Cashier Bella Lumanog. It was explained that the withdrawal
of P20,000.00 made on October 8, 1979 from Savings Account No. 12241-16 and the withdrawals of
a total of P30,000.00 from several of the other accounts of the spouses, were placed on time
deposits on the same date by Vicente Cagungun in five (5) accounts held with their children. The
other said withdrawals from Savings Account No. 12241-16 were made by Vicente Cagungun in
exchange for Managers Checks made in the names of payees Santiago Lee, Rosita Saldana,
Benito Yap and Joaquin Aganda.3
The lower court ruled, among other things, that the withdrawals from Savings Account No. 12241-16
through seven (7) withdrawal slips4 amounting to P220,000.00 were not made by petitioners as the
alleged signatures of Vicente Cagungun, Jr. appearing therein were falsified as confirmed by the
National Bureau of Investigation Handwriting Expert Arcadio Ramos. It likewise considered
petitioners to have paid their mortgage loan in the amount of P58,297.16 in view of their instruction
to respondent to apply their funds in Savings Account No. 38470-29 thereto which were adequate for
this purpose.
For not applying the savings of petitioners in Savings Account No. 38470-29 as payment to their
loan, thereby causing the threatened foreclosure of the real estate mortgage over their house and
lot, and for allowing the unauthorized withdrawals from Savings Account No. 12241-16 through
falsified withdrawal slips, the lower court held respondent liable to pay moral damages. For ignoring

the two (2) demand letters of petitioners, the demand letter of petitioners counsel and the
representations made by Pampanga Gov. Estelito Mendoza and Central Bank Governor Jaime
Laya, and for the attempt to cover up the misdeeds of its employees constituting malice and bad
faith, respondent was also ordered to pay exemplary damages as an example to others. On account
of these acts, respondent was also ordered to pay attorneys fees and the cost of suit.
In its decision5 dated 26 June 1997, the lower court disposed of the case in this wise:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant as
follows:
1.) Enjoining the defendant from foreclosing the mortgage of plaintiffs property located at No. 88
Gordon Avenue, Pag-asa, Olongapo City;
2.) Ordering the defendant to pay plaintiffs the amount of P220,000.00 actual damages representing
the total amount withdrawn from their accounts plus twelve (12%) per cent interest per annum from
the date of the filing of the complaint until it shall have been fully paid;
3.) Considering plaintiffs mortgaged account in the amount of P58,297.16 to have been paid;
4.) Ordering the defendant to pay plaintiffs the amount of P300,000.00 moral damages;
5.) Ordering the defendant to pay plaintiffs the amount of P300,000.00 exemplary damages; and
6.) Ordering defendant to pay plaintiffs the amount of P50,000.00 litigation expense, P50,000.00
attorneys fee plus the cost of suit.6
Aggrieved, respondent appealed to the Court of Appeals.
The Court of Appeals agreed that money was withdrawn from the deposits of petitioners without their
authority or knowledge, and that this was done by one or some of the personnel of respondent.
However, it held that petitioners are not free from the obligation to pay the admitted loan
(P58,297.16) for though the same was not paid for failure of respondent to comply with the
instruction to apply the remainder of the sums deposited to their loan, it remained admittedly an
unpaid obligation. It removed the awards for moral and exemplary damages and reduced the awards
for attorneys fees and litigation expenses.
The Court of Appeals promulgated its decision on 25 March 2002, the dispositive portion of which
reads:
WHEREFORE, the appealed decision is AFFIRMED, but with these MODIFICATONS (a) the
dispositions in Par. 1 and Par. 3 of the fallo deeming the mortgaged loan paid and enjoining
foreclosure, are DELETED; (b) the disposition in Par. 4 and Par. 5 of the fallo awarding moral and
exemplary damages, are DELETED; and (c) the awards of litigation fees and expenses are
REDUCED to a combined P30,000.00.7
The motion for reconsideration filed by petitioners was denied in a resolution dated 06 June 2003.8
Petitioners are now before us assailing the Decision and Resolution of the Court of Appeals when
the latter:

(A) DELETED THE PORTION OF THE RTC DECISION DECLARING THE MORTGAGED LOAN
PAID AND ENJOINING FORECLOSURE;
(B) DELETED THE AWARD OF MORAL AND EXEMPLARY DAMAGES; AND
(C) REDUCED THE LITIGATION FEES AND EXPENSES.9
Respondent filed a Comment10 on 04 September 2003 to which petitioners filed their Reply11 dated
06 February 2004.
On 06 December 2004, the Court gave due course to the petition and required the parties to submit
their respective memoranda within thirty (30) days from notice.12 Both parties complied.13
We first discuss the deletion made by the Court of Appeals of the awards of moral damages and
exemplary damages.
Petitioners maintain that the Court of Appeals erred in removing the award of moral damages
considering that it is settled jurisprudence that the same should be awarded when the injured party
suffers mental anguish and serious anxiety. They contend that the Court of Appeals failed to
appreciate the torment they suffered from the time they noticed their deposits were not properly
recorded until the receipt of respondents letter threatening the foreclosure of their residential house
and lot for a loan of P58,000.00. They narrated that respondent bank refused to give them copies of
the ledgers of their deposits as well as copies of the withdrawal slips. Despite the intercession of
Pampanga Governor Estelito Mendoza and Central Bank Governor Jaime Laya, respondent did not
give them copies of the ledgers and withdrawal slips. It was only after the Chief of the Criminal
Investigation Service (CIS) of the Philippine Constabulary sent two of his investigators, whom they
authorized to look into the records of their deposits, that they received copies thereof. They
discovered therein that the sum of P220,000.00 was withdrawn from their accounts by respondent
bank through its employees by falsifying the signatures of Vicente Cagungun, Jr. in seven
withdrawal slips. Despite the forgeries, they refused to acknowledge its liability. Thus, on 07
September 1983, in order to protect their rights, petitioners were forced to file the instant case with
prayer for issuance of a temporary restraining order and/or writ of preliminary injunction to enjoin the
foreclosure of their property. Petitioners insist that respondent, in allowing withdrawals in their
savings account without their authority or knowledge, is guilty of gross negligence to which it is liable
for moral damages.
On the other hand, respondent maintains that the Court of Appeals was correct in deleting the award
of moral damages.
Respondent argues that it should not be faulted if petitioners had to experience inconveniences in
acquiring copies of ledgers of their deposits as well as copies of the withdrawal slips since certain
banking procedures must be observed. It likewise faults petitioners for not strictly observing security
rules of financial institutions in the care and custody of their passbooks, as well as in the standard
operating procedure for deposits and withdrawals which led to the alleged improper recording of
deposits and the alleged losses they incurred. It stresses that passbooks should be securely kept by
the owner but, in the case of petitioners, they openly entrusted their passbooks to other people
leaving them totally unable to monitor their transactions. It added that there was absence of any
actual injury on the part of the petitioners. It asserts that it neither acted in bad faith nor took
advantage of petitioners deposit for its use and benefit. It claims that petitioners failed to establish
fraud on the part of respondent bank as to make it liable for the alleged improper recording of
deposits. It claims that petitioners failed to present in court the persons (Bong or Ding) to whom they
entrusted their money for deposit and to prove that Ruperto Reyes, then Officer-In-Charge (O-I-C) of

the Extension Office of Country Development Bank, defrauded them by facilitating withdrawals for
the benefit of the bank. No proof was adduced to show that they verified if the persons to whom they
delegated to make the deposits faithfully performed the tasks in accordance with their intentions.
Respondent insists that it is the negligence of petitioners, not fraud on its part, which was the reason
that petitioners deposits were not applied in accordance with their intentions resulting to the
(threatened) foreclosure of their mortgaged property.
From the foregoing reasons advanced by respondent bank, it is apparent that it is trying to pass all
the blame on petitioners for the unauthorized withdrawals amounting to P220,000.00 and the nonapplications of deposits to their loan.
This cannot be. The fact that petitioners left the custody of their passbooks to respondent, through
its employee O-I-C Ruperto Reyes, and that they entrusted to Bong or Ding their deposits will not
excuse respondent from being liable. Petitioners did these things because they trusted and
depended on respondent to take care of their accounts with it. If respondent bank was really strict in
enforcing the banking rule that the passbook must be kept by the depositor, why did it not do so? For
its failure, any anomaly or damage that might result therefrom should be borne by it.
We, likewise, find untenable respondents contention that petitioners should have presented O-I-C
Ruperto Reyes, Bong or Ding as witnesses to clear the air. On the contrary, it should have been
respondents duty to present these persons they being their employees. It should have presented
these people, especially O-I-C Ruperto Reyes, who had custody of the passbooks, to explain why
unauthorized withdrawals were made and why the instruction to apply petitioners deposit to their
loan was not complied with.
The bank was indeed grossly negligent when it allowed the sum of P220,000.00 to be withdrawn
through falsified withdrawal slips without petitioners authority and knowledge and its failure to
comply with petitioners instruction to apply their deposits on their loan. In so doing, respondent bank
breached the trust that petitioners reposed on it.
We agree in the findings of the two courts below that the unauthorized transactions were committed
by one or some of the employees of respondent bank for which it should be liable. The evidence
showed that respondent did not exercise the degree of diligence it ought to have exercised in
dealing with its clients -- diligence higher than that of a good father of a family. If only respondent
exercised such diligence, no anomaly or irregularity would have happened.
In the case of Philippine National Bank v. Pike,14 we discussed the degree of diligence imposed on
banks as follows:
With banks, the degree of diligence required, contrary to the position of petitioner PNB, is more than
that of a good father of a family considering that the business of banking is imbued with public
interest due to the nature of their functions. The stability of banks largely depends on the confidence
of the people in the honesty and efficiency of banks. Thus, the law imposes on banks a high degree
of obligation to treat the accounts of its depositors with meticulous care, always having in mind the
fiduciary nature of banking. Section 2 of Republic Act No. 8791, which took effect on 13 June 2000,
makes a categorical declaration that the State recognizes the "fiduciary nature of banking that
requires high standards of integrity and performance."
Though passed long after the unauthorized withdrawals in this case, the aforequoted provision is a
statutory affirmation of Supreme Court decisions already in esse at the time of such withdrawals. We
elucidated in the 1990 case of Simex International, Inc. v. Court of Appeals that "the bank is under

obligation to treat the accounts of its depositors with meticulous care, always having in mind the
fiduciary nature of their relationship."
Likewise, in the case of The Consolidated Bank and Trust Corporation v. Court of Appeals, we
clarified that said fiduciary relationship means that the banks obligation to observe "highest
standards of integrity and performance" is deemed written into every deposit agreement between a
bank and its depositor. The fiduciary nature of banking requires banks to assume a degree of
diligence higher than that of a good father of a family. Article 1172 of the New Civil Code states that
the degree of diligence required of an obligor is that prescribed by law or contract, and absent such
stipulation then the diligence of a family. In every case, the depositor expects the bank to treat his
account with utmost fidelity, whether such accounts consists only of a few hundred pesos or of
millions of pesos.
Settled is the rule that gross negligence of a bank in the handling of its clients deposit amounts to
bad faith that calls for an award of moral damages. Moral damages are meant to compensate the
claimant for any physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation and similar injuries unjustly caused.15
In the case at bar, the failure of the bank to prevent seven unauthorized withdrawals from the
deposits of petitioners and its non-compliance with petitioners instructions regarding the loan
payments constitute gross negligence which justifies the award of moral damages. As employer,
respondent is liable for the negligence or misdeed of its employees which caused petitioners to have
sleepless nights thinking about the threatened foreclosure of their house and lot. In addition, the way
respondent gave petitioners a hard time in securing copies of their withdrawal slips and ledgers of
their deposits is an indication of bad faith. Respondent could have easily cooperated with petitioners
by immediately furnishing the latter with documents they wanted. This was not to be. Written
communications from petitioners lawyers and from the Central Bank Governor were not sufficient in
order that respondent will provide petitioners with the documents they needed. It was only after two
agents of the CIS of the Philippine Constabulary went to the bank that respondent was obliged to
give petitioners what they were asking for.
In culpa contractual or breach of contract, as in the case16 before us, moral damages are
recoverable only if the defendant has acted fraudulently or in bad faith,17 or is found guilty of gross
negligence amounting to bad faith, or in wanton disregard of his contractual obligations.18
In fine, the requisites on award of moral damages would require, firstly, evidence of besmirched
reputation or physical, mental or psychological suffering sustained by the claimant; secondly, a
culpable act or omission factually established; thirdly, proof that the wrongful act or omission of the
defendant is the proximate cause of the damages sustained by the claimant; and fourthly, that the
case is predicated on any of the instances expressed or envisioned by Article 221919 and Article
2220 of the Civil Code.20
All these elements are present in the instant case.
There is no hard-and-fast rule in the determination of what would be a fair amount of moral damages
since each case must be governed by its own peculiar facts. The yardstick should be that it is not
palpably and scandalously excessive.21 We find the sum of P300,000.00 awarded by the lower
courts excessive. In our view, the award ofP100,000.00 as moral damages is reasonable and is in
accord with our rulings in similar cases involving banks negligence with regard to the accounts of
their depositors.22

Anent the removal by the Court of Appeals of the award of exemplary damages, we find the same to
be not in order.
The law allows the grant of exemplary damages to set an example for the public good.23 The banking
system has become an indispensable institution in the modern world and plays a vital role in the
economic life of every civilized society. Whether as mere passive entities for the safe-keeping and
saving of money or as active instruments of business and commerce, banks have attained a
ubiquitous presence among the people, who have come to regard them with respect and even
gratitude and most of all, confidence.24 For this reason, banks should guard against injury
attributable to negligence or bad faith on its part.25 The award of exemplary damages is warranted by
the failure of respondent bank to prevent the unauthorized withdrawals from petitioners deposits and
its failure to properly apply the latters deposits to their loan. We, however, find the P300,000.00
awarded by the lower court to be excessive and should accordingly be reduced to P50,000.00.
On the matter of attorneys fees and expenses of litigation, it is settled that the reasons or grounds
for the award thereof must be set forth in the decision of the court.26 An award of attorneys fees,
being an exception from the policy of not putting a premium or a penalty on the right to litigate, has
since been limited to the grounds specified by law.27 Article 220828 of the Civil Code enumerates the
instances where attorneys fees and expenses of litigation can be recovered.
In the case at bar, the RTC clearly stated in its decision that petitioners are entitled to attorneys fees
and litigation expenses because they were compelled to litigate in order to protect their interest. We
agree. Moreover, there being an award for exemplary damages, it follows that there should be an
award of attorneys fees and litigation expenses. However, the awards of P50,000.00 for attorneys
fees and P50,000.00 for litigation expenses by the RTC are too much, while the award
of P30,000.00 of the Court of Appeals for both is too small. In as much as this case has been
pending for more than twenty (20) years, the award of P25,000.00 for each will be sufficient.
Petitioners claim that the Court of Appeals erred in deleting the portions of the RTC decision
declaring their mortgage loan paid and enjoining foreclosure. They insist that they were able to prove
that the amounts ofP30,000.00 and P118,000.00 were respectively withdrawn from their accounts
(SA No. 38470-29 and No. 12241-16) and that same were not applied as payment for their loan.
They maintain that by adding together said amounts, the sum thereof is sufficient to pay their loan
and to consider the real estate mortgage as discharged.
Looking at the complaint filed by petitioners, there is no allegation that said amounts were withdrawn
from their accounts and that same were not applied as payments for their loan. Petitioners likewise
did not ask in their prayer that said amounts be returned to them or that they be used to off-set their
indebtedness to respondent. Moreover, when petitioners tried to prove this allegation, counsel for
respondent objected29 and attempted to have the testimony thereon stricken off the record on the
ground of allegata et probata.30
Under Section 5, Rule 10 of the Revised Rules of Court,31 if evidence is objected to at the trial on the
ground that it is not within the issues made by the pleadings, the Court may allow the pleadings to
be amended freely when the presentation of the merits of the action will be subserved thereby and
the admission of such evidence would not prejudice the objecting party in maintaining his action or
defense upon the merit. Said section reads:
Sec. 5. Amendment to conform to or authorize presentation of evidence. When issues not raised
by the pleadings are tried by express or implied consent of the parties, they shall be treated in all
respects, as if they had been raised in the pleadings. Such amendment of the pleadings as may be
necessary to cause them to conform to the evidence and to raise these issues may be made upon

motion of any party at any time, even after judgment but failure to amend does not affect the result of
the trial of these issues. If evidence is objected to at the trial on the ground that it is not within the
issues made by the pleadings, the court may allow the pleadings to be amended and shall do so
freely when presentation of the merits of the action will be subserved thereby and the objecting party
fails to satisfy the court that the admission of such evidence would prejudice him in maintaining his
action or defense upon the merits. The court may grant a continuance to enable the objecting party
to meet such evidence.
It is thus clear that when there is an objection on the evidence presented because it is not within the
issues made by the pleadings, an amendment must be made before accepting such evidence. If no
amendment is made, the evidence objected to cannot be considered. In the case before us, the trial
court, there being an objection on the evidence being presented by respondent, failed to order the
amendment of the complaint. Thus, we are constrained not to consider evidence regarding
the P30,000.00 and P118,000.00 allegedly withdrawn from their accounts. With this ruling, it follows
that the outstanding loan of petitioners in the amount of P58,297.16 remains unpaid.
As regards respondents right to exercise its right to foreclosure of the real estate mortgage on
petitioners property, we rule that respondent cannot exercise such right under the circumstances
obtaining. It will be the height of inequity if we allow such a thing. The evidence is clear that the sum
of P220,000.00 was withdrawn from petitioners deposits without their knowledge and authority. This
amount is more than sufficient to pay for the loan had it not been illegally withdrawn. Neither should
petitioners be held liable for any interest on the remaining balance of the loan considering that they
could have easily settled their obligation with respondent if they were not embroiled in the anomaly
caused by respondents employees. Finally, payment for the remaining balance of the loan
amounting to P58,297.16 should be deducted from the actual damages awarded by the court.
WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The 25 March 2002
decision of the Court of Appeals modifying the decision of the Regional Trial Court of Olongapo City
is AFFIRMED with MODIFICATIONS. As modified, respondent Planters Development Bank is
ordered to pay petitioners the following: (1) P220,000.00 as actual damages representing the total
amount withdrawn from petitioners accounts plus interest of 6% per annum to be computed from the
date of the filing of the complaint which interest rate shall become 12% per annum from the time of
finality of this judgment until actual payment; (2) P100,000.00 as moral damages; (3) P50,000.00 as
exemplary damages; and (4) P25,000.00 as attorneys fees and P25,000.00 for litigation expenses.
Respondent is enjoined from foreclosing the real estate mortgage on petitioners property located at
No. 88 Gordon Avenue, Pag-asa, Olongapo City. Payment for the outstanding loan of petitioners in
the amount of P58,297.16 shall be deducted from the damages awarded by the Court.
SO ORDERED.
G.R. No. 176339

January 10, 2011

DO-ALL METALS INDUSTRIES, INC., SPS. DOMINGO LIM and LELY KUNG LIM, Petitioners,
vs.
SECURITY BANK CORP., TITOLAIDO E. PAYONGAYONG, EVYLENE C. SISON, PHIL.
INDUSTRIAL SECURITY AGENCY CORP. and GIL SILOS, Respondents.
DECISION
ABAD, J.:

This case is about the propriety of awarding damages based on claims embodied in the plaintiffs
supplemental complaint filed without prior payment of the corresponding filing fees.
The Facts and the Case
From 1996 to 1997, Dragon Lady Industries, Inc., owned by petitioner spouses Domingo Lim and
Lely Kung Lim (the Lims) took out loans from respondent Security Bank Corporation (the Bank) that
totaled P92,454,776.45. Unable to pay the loans on time, the Lims assigned some of their real
properties to the Bank to secure the same, including a building and the lot on which it stands (the
property), located at M. de Leon St., Santolan, Pasig City.1
In 1998 the Bank offered to lease the property to the Lims through petitioner Do-All Metals
Industries, Inc. (DMI) primarily for business although the Lims were to use part of the property as
their residence. DMI and the Bank executed a two-year lease contract from October 1, 1998 to
September 30, 2000 but the Bank retained the right to pre-terminate the lease. The contract also
provided that, should the Bank decide to sell the property, DMI shall have the right of first refusal.
On December 3, 1999, before the lease was up, the Bank gave notice to DMI that it was preterminating the lease on December 31, 1999. Wanting to exercise its right of first refusal, DMI tried
to negotiate with the Bank the terms of its purchase. DMI offered to pay the Bank P8 million for the
property but the latter rejected the offer, suggestingP15 million instead. DMI made a second offer
of P10 million but the Bank declined the same.
While the negotiations were on going, the Lims claimed that they continued to use the property in
their business. But the Bank posted at the place private security guards from Philippine Industrial
Security Agency (PISA). The Lims also claimed that on several occasions in 2000, the guards, on
instructions of the Bank representatives Titolaido Payongayong and Evylene Sison, padlocked the
entrances to the place and barred the Lims as well as DMIs employees from entering the property.
One of the guards even pointed his gun at one employee and shots were fired. Because of this, DMI
was unable to close several projects and contracts with prospective clients. Further, the Lims alleged
that they were unable to retrieve assorted furniture, equipment, and personal items left at the
property.
The Lims eventually filed a complaint with the Regional Trial Court (RTC) of Pasig City for damages
with prayer for the issuance of a temporary restraining order (TRO) or preliminary injunction against
the Bank and its co-defendants Payongayong, Sison, PISA, and Gil Silos.2 Answering the complaint,
the Bank pointed out that the lease contract allowed it to sell the property at any time provided only
that it gave DMI the right of first refusal. DMI had seven days from notice to exercise its option. On
September 10, 1999 the Bank gave notice to DMI that it intended to sell the property to a third party.
DMI asked for an extension of its option to buy and the Bank granted it. But the parties could not
agree on a purchase price. The Bank required DMI to vacate and turnover the property but it failed
to do so. As a result, the Banks buyer backed-out of the sale. Despite what happened, the Bank and
DMI continued negotiations for the purchase of the leased premises but they came to no agreement.
The Bank denied, on the other hand, that its guards harassed DMI and the Lims. To protect its
property, the Bank began posting guards at the building even before it leased the same to DMI.
Indeed, this arrangement benefited both parties. The Bank alleged that in October of 2000, when the
parties could not come to an agreement regarding the purchase of the property, DMI vacated the
same and peacefully turned over possession to the Bank.
The Bank offered no objection to the issuance of a TRO since it claimed that it never prevented DMI
or its employees from entering or leaving the building. For this reason, the RTC directed the Bank to

allow DMI and the Lims to enter the building and get the things they left there. The latter claimed,
however, that on entering the building, they were unable to find the movable properties they left
there. In a supplemental complaint, DMI and the Lims alleged that the Bank surreptitiously took such
properties, resulting in additional actual damages to them of over P27 million.
The RTC set the pre-trial in the case for December 4, 2001. On that date, however, counsel for the
Bank moved to reset the proceeding. The court denied the motion and allowed DMI and the Lims to
present their evidence ex parte. The court eventually reconsidered its order but only after the
plaintiffs had already presented their evidence and were about to rest their case. The RTC declined
to recall the plaintiffs witnesses for cross- examination but allowed the Bank to present its
evidence.3 This prompted the Bank to seek relief from the Court of Appeals (CA) and eventually from
this Court but to no avail.4
During its turn at the trial, the Bank got to present only defendant Payongayong, a bank officer. For
repeatedly canceling the hearings and incurring delays, the RTC declared the Bank to have forfeited
its right to present additional evidence and deemed the case submitted for decision.
On September 30, 2004 the RTC rendered a decision in favor of DMI and the Lims. It ordered the
Bank to pay the plaintiffs P27,974,564.00 as actual damages, P500,000.00 as moral
damages, P500,000 as exemplary damages, and P100,000.00 as attorneys fees. But the court
absolved defendants Payongayong, Sison, Silos and PISA of any liability.
The Bank moved for reconsideration of the decision, questioning among other things the RTCs
authority to grant damages considering plaintiffs failure to pay the filing fees on their supplemental
complaint. The RTC denied the motion. On appeal to the CA, the latter found for the Bank, reversed
the RTC decision, and dismissed the complaint as well as the counterclaims.5 DMI and the Lims filed
a motion for reconsideration but the CA denied the same, hence this petition.
The Issues Presented
The issues presented in this case are:
1. Whether or not the RTC acquired jurisdiction to hear and adjudicate plaintiffs
supplemental complaint against the Bank considering their failure to pay the filing fees on the
amounts of damages they claim in it;
2. Whether or not the Bank is liable for the intimidation and harassment committed against
DMI and its representatives; and
3. Whether or not the Bank is liable to DMI and the Lims for the machineries, equipment, and
other properties they allegedly lost after they were barred from the property.
The Courts Rulings
One. On the issue of jurisdiction, respondent Bank argues that plaintiffs failure to pay the filing fees
on their supplemental complaint is fatal to their action.
But what the plaintiffs failed to pay was merely the filing fees for their Supplemental Complaint. The
RTC acquired jurisdiction over plaintiffs action from the moment they filed their original complaint
accompanied by the payment of the filing fees due on the same. The plaintiffs non-payment of the

additional filing fees due on their additional claims did not divest the RTC of the jurisdiction it already
had over the case.6
Two. As to the claim that Banks representatives and retained guards harassed and intimidated
DMIs employees and the Lims, the RTC found ample proof of such wrongdoings and accordingly
awarded damages to the plaintiffs. But the CA disagreed, discounting the testimony of the police
officers regarding their investigations of the incidents since such officers were not present when they
happened. The CA may be correct in a way but the plaintiffs presented eyewitnesses who testified
out of personal knowledge. The police officers testified merely to point out that there had been
trouble at the place and their investigations yielded their findings.
The Bank belittles the testimonies of the petitioners witnesses for having been presented ex parte
before the clerk of court. But the ex parte hearing, having been properly authorized, cannot be
assailed as less credible. It was the Banks fault that it was unable to attend the hearing. It cannot
profit from its lack of diligence.
Domingo Lim and some employees of DMI testified regarding the Bank guards unmitigated use of
their superior strength and firepower. Their testimonies were never refuted. Police Inspector Priscillo
dela Paz testified that he responded to several complaints regarding shooting incidents at the leased
premises and on one occasion, he found Domingo Lim was locked in the building. When he asked
why Lim had been locked in, a Bank representative told him that they had instructions to prevent
anyone from taking any property out of the premises. It was only after Dela Paz talked to the Bank
representative that they let Lim out.7
Payongayong, the Banks sole witness, denied charges of harassment against the Banks
representatives and the guards. But his denial came merely from reports relayed to him. They were
not based on personal knowledge.
1avv phil

While the lease may have already lapsed, the Bank had no business harassing and intimidating the
Lims and their employees. The RTC was therefore correct in adjudging moral damages, exemplary
damages, and attorneys fees against the Bank for the acts of their representatives and building
guards.
Three. As to the damages that plaintiffs claim under their supplemental complaint, their stand is that
the RTC committed no error in admitting the complaint even if they had not paid the filing fees due
on it since such fees constituted a lien anyway on the judgment award. But this after-judgment lien,
which implies that payment depends on a successful execution of the judgment, applies to cases
where the filing fees were incorrectly assessed or paid or where the court has discretion to fix the
amount of the award.8 None of these circumstances obtain in this case.
Here, the supplemental complaint specified from the beginning the actual damages that the plaintiffs
sought against the Bank. Still plaintiffs paid no filing fees on the same. And, while petitioners claim
that they were willing to pay the additional fees, they gave no reason for their omission nor offered to
pay the same. They merely said that they did not yet pay the fees because the RTC had not
assessed them for it. But a supplemental complaint is like any complaint and the rule is that the filing
fees due on a complaint need to be paid upon its filing.9 The rules do not require the court to make
special assessments in cases of supplemental complaints.
To aggravate plaintiffs omission, although the Bank brought up the question of their failure to pay
additional filing fees in its motion for reconsideration, plaintiffs made no effort to make at least a late
payment before the case could be submitted for decision, assuming of course that the prescription of
their action had not then set it in. Clearly, plaintiffs have no excuse for their continuous failure to pay

the fees they owed the court. Consequently, the trial court should have treated their Supplemental
Complaint as not filed.
Plaintiffs of course point out that the Bank itself raised the issue of non-payment of additional filing
fees only after the RTC had rendered its decision in the case. The implication is that the Bank should
be deemed to have waived its objection to such omission. But it is not for a party to the case or even
for the trial court to waive the payment of the additional filing fees due on the supplemental
complaint. Only the Supreme Court can grant exemptions to the payment of the fees due the courts
and these exemptions are embodied in its rules.
Besides, as correctly pointed out by the CA, plaintiffs had the burden of proving that the movable
properties in question had remained in the premises and that the bank was responsible for their loss.
The only evidence offered to prove the loss was Domingo Lims testimony and some undated and
unsigned inventories. These were self-serving and uncorroborated.
WHEREFORE, the Court PARTIALLY GRANTS the petition and REINSTATES with modification the
decision of the Regional Trial Court of Pasig City in Civil Case 68184. The Court DIRECTS
respondent Security Bank Corporation to pay petitioners DMI and spouses Domingo and Lely Kung
Lim damages in the following amounts: P500,000.00 as moral damages, P500,000.00 as exemplary
damages, and P100,000.00 for attorneys fees. The Court DELETES the award of actual damages
of P27,974,564.00.
SO ORDERED.
G.R. No. 144697

December 10, 2003

RODOLFO ALARILLA, SR., ROSARIO G. ALARILLA, RODOLFO G. ALARILLA, JR., RODERICK

G. ALARILLA, RAINIER G. ALARILLA, RANDY G. ALARILLA, MA. ROSELLE G. ALARILLAPARAYNO and ALEJANDRO PARAYNO, JR., petitioners,
vs.
REYNALDO C. OCAMPO, respondent.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari of the Decision1 of the Court of Appeals in CA-G.R. CV No.
53559 affirming the Orders of the Regional Trial Court of Manila, Branch 4, dated February 8, 1996
and May 20, 1996 in LRC Cad. Record No. 291.
The Antecedents
Spouses Isidro de Guzman and Andrea E. Enriquez were the owners in fee simple of a parcel of
land, with an area of 128.40 square meters located in Fabie Street, Pedro Gil, Paco, Manila, and
covered by Transfer Certificate of Title No. 94754 of the Register of Deeds of Manila. The Spouses
De Guzman thereafter constructed a house thereon, with postal address at No. 1526 1st Street,
Fabie Estate, Pedro Gil, Paco, Manila.
On March 17, 1982, Andrea died intestate and was survived by Isidro and their daughter Rosario de
Guzman, married to Rodolfo Alarilla, Sr. They executed a real estate mortgage over the property in
favor of Spouses Reynaldo C. Ocampo and Josephine C. Llave as security for the payment of their

loan. On July 15, 1995, Isidro de Guzman died intestate and was survived by Rosario de Guzman
and her children by Rodolfo Alarilla, Sr. When the mortgagors-debtors failed to pay the loan despite
demands, the Spouses Ocampo filed a petition for the extrajudicial foreclosure of the real estate
mortgage with the Clerk of Court of the Regional Trial Court of Manila, who was also the Ex-Officio
City Sheriff. The property was sold at public auction on July 13, 1994 with the Spouses Ocampo as
the highest bidder for P515,430.76. The Ex-Officio Sheriff executed a certificate of sale over the
property also on the said date. The certificate of sale was registered with the Office of the City
Register of Deeds on September 2, 1994. Upon the failure to redeem the property, the Spouses
Ocampo executed an affidavit of consolidation of title. Transfer Certificate of Title No. 224439 was
issued to and under their names on October 3, 1995.
On October 17, 1995, Spouses Rodolfo Alarilla, Sr. and their children: Spouses Alejandro Parayno,
Jr. and Ma. Roselle Alarilla, Rodolfo Alarilla, Jr., Roderick G. Alarilla, Rainier Alarilla and Randy
Alarilla filed a complaint against the Spouses Ocampo and the Ex-Officio Sheriff with the Regional
Trial Court of Manila. The complaint, docketed as Civil Case No. 95-75769, alleged inter alia that (a)
by virtue of the Family Code of the Philippines, the property sold at public auction was constituted as
a family home; (b) Isidro de Guzman failed to liquidate the family home after the death of Andrea as
required by the Family Code of the Philippines, which rendered the real estate mortgage executed in
favor of the Spouses Ocampo null and void; (c) upon the demise of Isidro de Guzman on July 15,
1995, the plaintiffs depended on their parents, the Spouses Rodolfo Alarilla, Sr. for support; (d) the
plaintiffs offered to redeem the property for P356,427.91 to the Spouses Reynaldo Ocampo before
the lapse of the one-year redemption period, but the latter refused to accept the same; (e) the Sheriff
sold the property for an amount in excess of P401,162.96, the correct amount owed the plaintiffs,
thus rendering the sale null and void; (f) the plaintiffs offered to redeem the property for the correct
amount due on September 1, 1995, but the defendants refused to accept the same; hence, the
period for redemption had not yet expired.
The plaintiffs prayed for the issuance of a writ of preliminary injunction to enjoin the sheriff from
implementing the writ of possession issued by the RTC, Branch 4. The plaintiffs, thus, prayed that
after due proceedings:
WHEREFORE, and based on the foregoing premises, plaintiffs most respectfully pray that:
A. Judgment be rendered declaring the Certificate of Sale and any Deed for that matter that
is subsequently issued as null and void;
B. The defendants be ordered to pay the plaintiffs the sum of Three Hundred Thousand
Pesos, Philippine currency, plus the additional sum of P45,000.00 to answer for exemplary
damage and actual expenses incurred in maintaining the suit, respectively;
C. In said judgment, an order be issued making the injunction earlier issued permanent;
D. Declaring also that the Family Home comprised of Lot 21 and plaintiffs residence thereat
be declared free from any encumbrances, foreclosure sale, Certificate of Sale and Definite
Deed of Sale.2
On November 27, 1995, Reynaldo Ocampo filed a petition for a writ of possession in LRC Cad. No.
291 with the Regional Trial Court of Manila, Branch 4. There was no opposition to the petition. The
petitioner adduced evidence ex-parte in support thereof and on February 8, 1996, the court issued
an order granting the petition and a writ of possession.

The plaintiffs filed an amended complaint praying that after due proceedings, judgment be rendered
in their favor, thus:
WHEREFORE, and foregoing premises considered, the plaintiffs most respectfully pray that:
A. Judgment be rendered declaring the Certificate of Sale, the Definite Deed of Sale and the
Transfer Certificate of Title No. 224439 issued to the defendants as null and void;
B. In [the] same judgment, an order cancelling Transfer Certificate of Title No. 224439 in the
name of said defendants be issued to the Register of Deeds, City of Manila;
C. The defendants shall be ordered also to pay the plaintiffs the damages in the total sum of
FOUR HUNDRED THIRTY-SIX (P436,000.00) THOUSAND PESOS, Philippine currency;
D. The injunction earlier issued be ordered to be permanent;
E. In [the] said judgment, the Family Home of the plaintiffs comprised as Lot 21 and the
plaintiffs residence thereat be declared free from any encumbrances, foreclosure sale,
Certificate of Sale, Definite Deed of Sale, attachment and the null and void Transfer
Certificate of Title No. 224439 aforementioned and any other document that may later on be
shown as affecting the same Family Home.3
In a parallel move, Rodolfo Alarilla, Sr. filed on March 25, 1996 in LRC Cad. No. 291 a motion to set
aside the Order dated February 8, 1996 and to dismiss the petition for a writ of possession. On May
20, 1996, the court issued an Order in LRC Cad. No. 291 denying the motion. The movants
appealed the order to the Court of Appeals which rendered a Decision on February 17, 2000
affirming the assailed order. The movants-appellants received a copy of the decision of the CA on
March 3, 2000. On March 20, 2000, they filed a motion for the reconsideration of the decision. On
August 17, 2000, the CA issued a resolution denying the motion of the appellants. The latter
received a copy of the said resolution on September 4, 2000 and on September 19, 2000, the
appellants, now petitioners, filed with this Court a motion for extension of thirty days within which to
file a petition for review of the decision of the CA.
In their petition at bar, the petitioners assailed the decision of the CA contending that:
THE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE NOT HERETOFORE
IN ACCORD WITH THE APPLICABLE DECISION OF THE SUPREME COURT PARTICULARLY IN
THE INTERPRETATION OF ART. 158 OF THE FAMILY CODE IN RELATION TO ART. 153
THEREOF WHERE THE FAMILY RESIDENCE OF PETITIONERS/BENEFICIARIES IS
CONSTITUTED BY OPERATION OF LAW AS FAMILY HOME.4
The petitioners assert that the real estate mortgage executed by the Spouses De Guzman on March
9, 1993 is null and void for failure to secure the conformity of the beneficiaries of the family home as
required by Article 158 of the Family Code of the Philippines. Although the respondents are entitled
to a writ of possession under Section 7 of Act No. 3135, the said provision has been repealed by the
Family Code of the Philippines, as provided for in Article 211 thereof. The petitioners also contend
that the petitioners cannot be ousted from the property without the respondents filing an ordinary
action for the recovery of possession of the same, to give the mortgagors an opportunity to be heard
not only on the issue of possession of the property but also on the obligations of the mortgagors
under the real estate mortgage.

For its part, the CA noted that:

After expiration of the redemption period without redemption being made, the writ must issue in
order to place the buyer in possession of the foreclosed property (Veloso, et al. vs. Intermediate
Appellate Court, supra). The right to such possession is absolute; it may be obtained thru a writ
which may be applied for ex-parte pursuant to Sec. 7 of Act No. 3135, as amended (Navarra vs.
Court of Appeals, 204 SCRA 850).
The subject property was not redeemed within the one-year period. Being the successful bidder in
the foreclosure sale, appellee had consolidated ownership over the property, for which TCT No.
224439 was issued to him. In IFC Service Leasing and Acceptance Corp. vs. Nera (19 SCRA 181),
the Supreme Court stated that "if under Section 7 of Act No. 3135, the court has the power, on the
ex-parte application of the purchaser, to issue a writ of possession during the period of redemption,
there is no reason why it should not also have the same power after the expiration of that period,
especially where, as in this case, a new title has already been issued in the name of the purchaser."5
The respondents posit that the decision of the CA had become final and executory when the
petitioners filed their motion for reconsideration of the decision only on March 20, 2000 or seventeen
(17) days after being served a copy of the said decision. Furthermore, the CA did not commit any
reversible error in its decision on the merits of the petition.
By way of riposte, the petitioners aver that March 18, 2000, the last day to file a motion for
reconsideration of the decision of the CA, fell on a Saturday. Hence, they had until March 20, 2000,
the first regular working day, to file the said motion. However, the respondents did not raise the issue
in the CA, and raising the issue now in this case is but a mere afterthought. In any event, the
petitioners argue that their failure to seasonably file their motion for reconsideration is a mere
procedural lapse; hence, it should not prevail over their right to appeal from the assailed decision of
the CA.
The petition has no merit.
The parties raised two issues in this case: (a) whether the petitioners motion for reconsideration of
the decision of the CA was filed out of time; and (b) on its merits, whether the petition should be
granted.
The petitioners motion for reconsideration
of the CA decision was filed within the
reglementary period therefor.
Section 1, Rule 22 of the Rules of Court, as amended, and as applied in several cases, provides that
where the last day of the period for doing an act as provided by law falls on a Saturday, a Sunday or
a legal holiday in the place where the court sits, the time should not run until the next working day. In
this case, the petitioners had until March 18, 2000 within which to file their motion for the
reconsideration of the decision of the CA. Since March 18, 2000 was a Saturday, the petitioners had
until March 20, 2000, the next working day thereafter, to file their motion. The petitioners filed their
motion on the said date; hence, the motion was filed within the reglementary period therefor.6
The petition, however, stands to
fail on the merits.
The petition is bereft of merit, and is hereby denied due course.

First. The one-year period for the petitioners to redeem the mortgaged property had already
lapsed. Title to the property had already been consolidated under the name of the
respondent. As the owner of the property, the respondent is entitled to its possession as a
matter of right.7 The issuance of a writ of possession over the property by the court is merely
a ministerial function. There is no need for the respondent to file an action to evict the
petitioners from the property and himself take possession thereof.
Second. Any question regarding the validity of the mortgage or its foreclosure cannot be a
legal ground for refusing the issuance of a writ of possession. Regardless of whether or not
there is a pending action for the nullification of the sale at public auction, or the foreclosure
itself, or even for the nullification of the real estate mortgage executed by the petitioners over
the property, the respondent as purchaser at public auction is entitled to a writ of possession
without prejudice to the outcome of the action filed by the petitioners with the Regional Trial
Court of Manila docketed as Civil Case No. 95-75769.8
Third. The writ of possession issued by the trial court must be enforced without delay. It
cannot be stymied or thwarted by the petitioners by raising issues already raised by them in
Civil Case No. 95-75769.
1w phi 1

Fourth. The petitioners did not even oppose the petition for a writ of possession filed by the
respondent in the court a quo. Instead, they filed the complaint for the nullification of the
foreclosure proceedings, the sale at public auction and the nullification of TCT No. T-224439
issued by the Register of Deeds of Manila in the name of the respondent, with a plea for
injunctive relief.
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. Costs against the petitioners.
SO ORDERED.
G.R. No. 75311 October 18, 1988
ROSITA ZAFRA BANTILLO, petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT and ELSA MANIQUIS-SUMCAD respondent.
Littie Sarah A. Agdeppa for petitioner.
Isidro T. Barcelona for private respondent.
Lino R. Casabas Jr. collaborating counsel for private respondent.

FELICIANO, J.:
The subject of the present Petition for Review is the Decision 1 dated 3 April 1986 of the then
intermediate Appellate Court in AC-G.R. CV 05774 (entitled "Rosita Zafra Bantillo, for herself and in
representation of the Heirs of Spouses Candida Zafra. and Maria Pimentel Zafra, plaintiff-appellants,
versus Elsa Maniquis-Sumcad, defendant-appellee'). The appellate court affirmed a 2 August 1983 Order
of Branch 2 of the then Court of First Instance of North Cotabato, ordering (a) the dismissal of the

Complaint in Civil Case No. 161; and (b) the striking out of the Amended Complaint filed in the same
case.

The case at bar originated from a Complaint for Reconveyance 2 (docketed as Civil Case No. 161),
dated 19 April 1982, filed by petitioner Rosita Zafra Bantillo against respondent Elsa Maniquis-Sumcad
with the Court of First Instance of North Cotabato. The action involved a 240 square meter parcel of land
(Lot No. 63, BSD-11551) situated in the poblacion of Midsayap, North Cotabato. In the Complaint, it was
alleged that petitioner Bantillo (plaintiff below) "is the surviving heir" of the deceased spouses, Candido
Zafra and Maria Pimental Zafra; that the Zafra spouses had occupied and possessed Lot No. 63 "under
claim of ownership since 1950;" that petitioner, as surviving heir and in representation of the heirs of [the
Zafra] spouses," had been in open and continuous possession and occupation of Lot No. 63 ever since
the death of the spouses; that by virtue of Original Certificate of Title No. P35267 issued in the name of
respondent Sumcad, respondent had claimed ownership of the disputed land and had sought petitioner's
removal therefrom; and that respondent had rejected demands to reconvey the land to petitioner.

Respondent Sumcad (defendant below) filed a "Motion for Bill of Particulars 3 in response to the
complaint. In that motion, respondent Sumcad requested that petitioner Bantillo be directed by the court:
(a) 'to specify what kind of surviving heir she is ...;" and (b) "to specify by what right or authority she
represents the so-called 'heirs of the spouses Candido Zafra and Maria Pimentel Zafra ... and [to show]
the papers under which she is authorized to represent them in court, and also (to specify and Identify
these other heirs by name and the nature of their heirship.'

On 16 June 1982, petitioner Bantillo questioned the propriety of respondent Sumcad's

motion. 4 Petitioner Bantillo alleged that the matters mentioned in the "Motion for Bill of Particulars" were
not essential to enable respondent Sumcad to file an answer to the complaint, that such matters are not
proper subjects of a motion for bill of particulars.

The subsequent facts, which are stated in the appellate court's decision presently under review, are
not disputed:
In response to a motion for a bill of particulars, regarding the complaint filed by the
plaintiff, the latter's counsel manifested in open court that she was willing to specify
the names of the heirs allegedly being represented by plaintiff Rosita Bantillo as well
as to submit the special power of attorney executed by said heirs in plaintiffs favor.
Hence, the court a quo issued the following Order dated July 5, 1982:
This is a hearing on the motion for bill of particulars and the
opposition thereto. The counsel for the plaintiff agreed to specify the
names of the heirs and to submit a special power of attorney
executed by said heirs in favor of the first-named plaintiff, Rosita
Zafra Bantillo. After the amendments made by the counsel, the
counsel is directed to furnish the counsel for the defendant a copy of
the said amendments.
Defendant is given en (15) days from the receipt of the copy of the
amended complaint within which to file the defendant's responsive
pleading.
The pre-trial will be set as soon as the proper amendments [are]
submitted.
SO ORDERED. (P. 46, Records)

On September 3, 1982, counsel for the defendant filed a motion to dismiss. In

support of the motion, it was pointed out that the plaintiff had not as yet submitted her
amended complaint as directed by the court. Neither had the plaintiff complied with
the July 5, 1982 Order of said court directing her to specify the other Bantillo heirs
and to produce the special power of attorney authorizing her to represent their heirs
in the action.
Plaintiff filed an Opposition to the Motion to dismiss. The Opposition stated, among
other things, "that the delay was due to the fact that this Honorable Court (had) for
quite a time no presiding judge, so that even if said pleading be filed, it still could not
be acted upon." Attached to the Opposition was an amended complaint. 5
Reacting to the Opposition, defendant on July 5, 1983 interposed a Rejoinder with
Motion to Strike Out/Dismiss Plaintiffs Pleadings, pointing out therein that the
plaintiffs compliance with the court's Order was made more than one year from the
issuance of the said Order. Invoking Section l(c), Rule 12 of the Rules of Court which
grants a party only a ten-day period within which to respond to a bill of particulars,
the defendant denounced plaintiffs tardy compliance as an outright sham and a mere
ploy intended to outsmart this Honorable Court and the parties.
Not to be outdone, plaintiff through her counsel filed a Rejoinder to the Opposition to
the Motion to Dismiss, arguing that the late compliance to [sic] the lower court's July
5, 1982 Order was excusable under Section 1, Rule 10 of the Rules of Court which
allows amendment of pleadings without regard for mere technicalities.
On August 2, 1983, the court a quo issued the Order which is the subject of this
present Appeal. In this Order the lower court decreed as follows:
WHEREFORE, the Court, finding the Motion to Strike Out/ Dismiss Plaintiffs
Pleadings, filed by the Defendant's Counsel meritorious, grants the same and orders
the dismissal of the complaint and the striking out of the amended complaint, with
costs.
SO ORDERED. (P. 49, Ibid.)
In her appeal, the plaintiff alleges five (5) errors purportedly committed by the lower
court. However, for purposes of resolving the appeal, We deem it necessary only to
consider the first two (2) assignments of error, namely: The court a quo erred:
I. In striking [out] the amended complaint on the grounds:
A. That it must follow the agreement embodied in the
Order of the Court dated July 5, 1982;
B. That the amended complaint must be filed 'at
anytime within ten (10) days after it is served
II. In dismissing the complaint for plaintiffs failure to comply with the
Orders of the court.
xxx xxx xxx

The trial and appellate courts both held that dismissal of petitioner Bantillo's complaint in this case
was warranted as she had been "guilty of an unreasonable delay in complying with the July 5, 1982
Order of the (trial] court.' The appellate court cited in this connection Section l(c) of Rule 12 of the
Revised Rules of Court under which petitioner Bantillo had ten (10) days from notice of the trial
court's Order of 5 July 1982or until 15 July 1982within which to comply with the directives
contained in that order. In addition, both courts held that the amended complaint should have been
filed, at the very least, within a "seasonable" time and in a manner consistent with "[petitioner's]
agreement as embodied in the Order of the [trial] court dated July 5, 1982." Finally, it was noted that
the alleged vacancy at Branch 18 of the Regional Trial Court (which succeeded Branch 2 of the
Court of First Instance) of North Cotabato at Midsayap lasted only from 18 January 1983 until 29
March 1983, or for a period of just a little over two (2) months. This latter circumstance further
convinced the two (2) courts that petitioner Bantillos amended complaint, which was submitted to the
trial court on 22 June 1983, had not been filed seasonably.
The present Petition for Review was received by this Court on 1 August 1986. Respondent filed an
Answer 6 on 28 October 1986, to which petitioner submitted a Reply. 7 In a Resolutions 8 dated 27 July
1987, the Court, without giving due course to the Petition, required the parties to submit their respective
Memoranda.

Petitioner Bantillo contests the application in this case of Section 1 of Rule 12 of the Revised Rules
of Court, alleging once more that the matters mentioned in respondent Sumcads disputed motion
are "not within the scope and ambit of a bill of particulars." Petitioner also alleges that "there was
really no bill of particulars required of (petitioner)" by the trial court. Furthermore, it is contended that
Rule 10 of the Rules of Court is the applicable provision here.
1. Section 1, Rule 12 of the Re Rules of Court reads, in part:
Section 1. Motion for bill of particulars.Before responding to a pleading or, if no
responsive pleading is permitted by these rules, within ten (10) days after service of
the pleading upon him, a party may move for a more definite statement or for a bill of
part of any matter which is not averred with sufficient definiteness or particularity to
enable him properly to prepare his responsive pleading or to prepare for trial. Such
motion shall point out the defects complained of and the details desired.
xxx xxx xxx
(Emphasis supplied)
Under this Rule, the remedy available to a party who seeks clarification of any issue or matter
vaguely or obscurely pleaded by the other party, is to file a motion, either for "a more definite
statement" or for a bill of particulars. An order directing the submission of such statement or bill,
further, is proper where it enables the party movant intelligently to prepare a responsive pleading, or
adequately to prepare for trial.
The title of the (original) Complaint in Civil Case No. 161 expressly stated that petitioner Bantillo had
then brought suit "for herself and in representation of the Heirs of Spouses Candido Zafra and Maria
Pimentel Zafra." In paragraphs 2 and 3 of the Complaint, petitioner Bantillo alleged her capacity
personally to maintain the judicial action for reconveyance, manifesting that she is the "surviving
heir" of the Zafra spouses, the alleged original owners of the land under litigation. The Court notes,
however, the absolute lack of allegations in the Complaint regarding the petitioner's capacity or
authority to bring suit in behalf of her alleged co-heirs and co-plaintiffs. On this matter, Section 4 of
Rule 8 of the Revised Rules of Court specifically provides:

Section 4. Capacity.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 or the legal
existence of an organized association of persons that is made a party, must be
averred. A party desiring to raise an issue as to the legal existence of any party or
the capacity of any party to sue or be sued in a representative capacity, shall do so
by specific denial, which shall include such supporting particulars as are peculiarly
within the pleader's knowledge. (Emphasis supplied)
Petitioner Bantillo having failed to allege in her Complaint a factual matter which, under the
Rules, must be alleged or pleaded, respondent Sumcad was not unjustified in moving for clarification
of such matter. Knowledge of the identity or identities of petitioner's alleged co-heirs and co-plaintiffs
and, more importantly, of the basis of petitioner's claimed authority to represent the latter, would
obviously be useful to respondent in the preparation of a responsive pleading, respondent Sumcad
should be given sufficient opportunity intelligently to contest these matters and possibly to raise the
same as issues in her Answer. The Court hence believes that the "Motion for Bill of Particulars" filed
by respondent Sumcad was not improper.
2. The first paragraph of the disputed 5 July 1982 Order (quoted supra, pp. 3-4) of the trial court in
Civil Case No. 161 states that petitioner Bantillo, through counsel, had agreed to specify the names
of her alleged co-heirs and to submit a special power of attorney authorizing her to represent said
co-heirs in the action for reconveyance. Petitioner's counsel was also directed to furnish
respondent's counsel with a copy of the corresponding "amendments." The second paragraph of the
Order continued:
Defendant is given fifteen (15) days from receipt of the copy of the amended
complaint within which to file the defendant's responsive pleadings. (Emphasis
supplied)
As pointed out by petitioner in her Memorandum, the trial court did not in its Order of 5 July 1982
expressly direct petitioner Bantillo to submit a bill of particulars. What was in fact required of
petitioner was an amended complaint, which would incorporate the "amendments" mentioned in the
first paragraph of the Order. This singular circumstance, however, does not preclude application in
this case of Rule 12, Section l(c) of which provides:
xxx xxx xxx
(c) Refusal.If an order of the court to make a pleading more definite and certain or
for a bill of particulars is not obeyed within ten (10) days after notice of the order or
within such other time as the court may fix, the court may order the striking out of the
pleading to which the motion was directed or make such other order as it deems just.
It may, upon motion, set aside the order, or modify it in the interest of justice.
(Emphasis supplied)
Under the above provision, the court may upon motion in appropriate cases direct the adverse party
(a) to file a bill of particulars, or (b) to make the pleading referred to in the motion more definite and
certain, either by amending or supplementing the same. The trial court's disputed Order of 5 July
1982 falls squarely within the second category. As the Order itself did not specify the period for
compliance with its terms, petitioner Bantillo was bound to comply therewith within ten (10) days
from notice thereof, i.e., on or before 15 July 1982.
3. Petitioner Bantillo's reliance on Section 2, Rule 10 of the Revised Rules of Courtwhich allows
amendment of pleadings once as a matter of course is served.is misplaced. That provision does

not apply in situations where it is the court itself that orders a party litigant to amend his or her
pleading. Where, as in the case at bar, the trial court orders the amendment after a motion for a bill
of particulars has been filed by the adverse party and heard by the court, the applicable provision is
Section 1 of Rule 12 of the Rules of Court: the amended pleading must be filed within the time fixed
by the court, or absent such a specification of time, within ten (10) days from notice of the order.
4. The record shows that petitioner Bantillo filed her Amended Complaint with the trial court only on
22 June 1983, or more than eleven (11) months after the reglementary period of ten (10) days had
expired. The trial judge found no merit in the reasons advanced by petitioner Bantillo for such delay
and dismissed the Complaint, declaring that an "unreasonable length of time" had already elapsed.
There is of course no question that petitioner's Amended Complaint was filed out of time.
Nonetheless the Court believes that in the interest of substantial and expeditious justice, 9 the
Amended Complaint should not have been dismissed and ordered stricken from the record. In the first
place, the amendment of the original complaint consisted simply of deletion of any reference to "other
heirs" of the Zafra spouses as co-plaintiffs in the action for reconveyance; petitioner, in other words,
clarified that she alone was plaintiff and heir and therefore was no longer suing also in a representative
capacity. This amendment, in the second place, imposed no substantial prejudice upon respondent
Sumcad and was thus formal in character. 10 As a matter of fact, Sumcad had not yet filed any responsive
pleading at all and had not disclosed the nature and basis of her own claim of ownership of Lot No. 63.
The issues had not yet been joined. Thirdly, the Amended Complaint was already before the trial court
and it could have and should have proceeded with the case.

Alternatively, if it be assumed that the Amended Complaint was properly dismissed, such dismissal
should not, for the same reasons of substantial and expeditious justice, be deemed as having the
effect of an adjudication upon the merits and hence should be regarded as without prejudice to
petitioner's right to re-file her complaint in its amended form. Under this alternative hypothesis, to
require petitioner to re-file her complaint in a new action, would appear little more than compelling
her to go through an Idle ceremony. Under either view, therefore, the trial court should have
admitted the Amended Complaint instead of striking it off the record. Public policy favors the
disposition of claims brought to court on their merits, rather than on any other basis. 11 The trial
court's discretion should have been exercised comformably with that public policy.

ACCORDINGLY, the appellate court's Decision appealed from is REVERSED and the Regional Trial
Court, Branch 18, of North Cotabato at Midsayap, is DIRECTED to admit petitioner's Amended
Complaint and promptly to resume proceedings in Civil Case No. 161. This Resolution is
immediately executory. No pronouncement as to costs.
Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur.
G.R. No. 148154

December 17, 2007

REPUBLIC OF THE PHILIPPINES, represented by the Presidential Commission on Good

Government (PCGG), petitioner,
vs.
SANDIGANBAYAN (Second Division) and FERDINAND R. MARCOS, JR. (as executor of the
estate of FERDINAND E. MARCOS), respondents.
RESOLUTION
QUISUMBING, J.:

The propriety of filing and granting of a motion for a bill of particulars filed for the estate of a
defaulting and deceased defendant is the main issue in this saga of the protracted legal battle
between the Philippine government and the Marcoses on alleged ill-gotten wealth.
This special civil action for certiorari1 assails two resolutions of the Sandiganbayan ("anti-graft court"
or "court") issued during the preliminary legal skirmishes in this 20-year case:2 (1) the January 31,
2000 Resolution3 which granted the motion for a bill of particulars filed by executor Ferdinand R.
Marcos, Jr. (respondent) on behalf of his father's estate and (2) the March 27, 2001
Resolution4 which denied the government's motion for reconsideration.
From the records, the antecedent and pertinent facts in this case are as follows:
The administration of then President Corazon C. Aquino successively sued former President
Ferdinand E. Marcos and former First Lady Imelda Romualdez-Marcos (Mrs. Marcos), and their
alleged cronies or dummies before the anti-graft court to recover the alleged ill-gotten wealth that
they amassed during the former president's 20-year rule. Roman A. Cruz, Jr. (Cruz), then president
and general manager of the Government Service Insurance System (GSIS); president of the
Philippine Airlines (PAL); chairman and president of the Hotel Enterprises of the Philippines, Inc.,
owner of Hyatt Regency Manila; chairman and president of Manila Hotel Corporation; and chairman
of the Commercial Bank of Manila (CBM), is the alleged crony in this case.
On July 21, 1987, the Presidential Commission on Good Government (PCGG), through the Office of
the Solicitor General, filed a Complaint5 for reconveyance, reversion, accounting, restitution and
damages alleging that Cruz and the Marcoses stole public assets and invested them in several
institutions here and abroad. Specifically, Cruz allegedly purchased, in connivance with the
Marcoses, assets whose values are disproportionate to their legal income, to wit: two residential lots
and two condominiums in Baguio City; a residential building in Makati; a parcel of land and six
condominium units in California, USA; and a residential land in Metro Manila. The PCGG also
prayed for the payment of moral damages of P50 billion and exemplary damages of P1 billion.
On September 18, 1987, Cruz filed an Omnibus Motion to Dismiss, strike out averments in the
complaint, and for a bill of particulars.6
On April 18, 1988, the court ordered that alias summonses be served on the Marcoses who were
then in exile in Hawaii.7 The court likewise admitted the PCGG's Expanded Complaint8 dated April
25, 1988, then denied Cruz's omnibus motion on July 28, 1988 after finding that the expanded
complaint sufficiently states causes of action and that the matters alleged are specific enough to
allow Cruz to prepare a responsive pleading and for trial.9 On September 15, 1988, Cruz filed his
answer ad cautelam.10
On November 10, 1988, the alias summonses on the Marcoses were served at 2338 Makiki Heights,
Honolulu, Hawaii.11 The Marcoses, however, failed to file an answer and were accordingly declared
in default by the anti-graft court on April 6, 1989.12 In Imelda R. Marcos, et al. v. Garchitorena, et
al.,13 this Court upheld the validity of the Marcoses' default status for failure to file an answer within
60 days from November 10, 1988 when the alias summonses were validly served in their house
address in Hawaii.
On September 29, 1989, former President Marcos died in Hawaii. He was substituted by his estate,
represented by Mrs. Marcos and their three children, upon the motion of the PCGG.14
On July 13, 1992, Mrs. Marcos filed a Motion to Set Aside Order of Default,15 which was granted by
the anti-graft court on October 28, 1992.16 In Republic v. Sandiganbayan,17 this Court affirmed the

resolution of the anti-graft court, ruling that Mrs. Marcos had a meritorious defense, and that failure
of a party to properly respond to various complaints brought about by the occurrence of
circumstances which ordinary prudence could not have guarded against, such as being barred from
returning to the Philippines, numerous civil and criminal suits in the United States, deteriorating
health of her husband, and the complexities of her legal battles, is considered as due to fraud,
accident and excusable negligence.18
On September 6, 1995, Mrs. Marcos filed her answer,19 arguing that the former President Marcos'
wealth is not ill-gotten and that the civil complaints and proceedings are void for denying them due
process. She also questioned the legality of the PCGG's acts and asked for P20 billion moral and
exemplary damages and P10 million attorney's fees.
On January 11, 1999, after pre-trial briefs had been filed by Cruz, the PCGG, and Mrs. Marcos, the
court directed former President Marcos' children to appear before it or it will proceed with pre-trial
and subsequent proceedings.20
On March 16, 1999, respondent filed a Motion for Leave to File a Responsive Pleading as executor
of his late father's estate.21 The PCGG opposed the motion, citing as ground the absence of a
motion to set aside the default order or any order lifting the default status of former President
Marcos.22
On May 28, 1999, the court granted respondent's motion:
xxxx
The Court concedes the plausibility of the stance taken by the Solicitor General that the
default Order binds the estate and the executor for they merely derived their right, if any,
from the decedent. Considering however the complexities of this case, and so that the case
as against the other defendants can proceed smoothly as the stage reached to date is only a
continuation of the pre-trial proceedings, the Court, in the interest of justice and conformably
with the discretion granted to it under Section 3 of Rule 9 of the Rules of Court hereby
accords affirmative relief to the prayer sought in the motion.
Accordingly, Ferdinand R. Marcos, Jr.[,] as executor of the [estate of] deceased defendant
Ferdinand E. Marcos[,] is granted a period of ten (10) days from receipt of this Resolution
within which to submit his Responsive Pleading.
x x x x23
Respondent asked for three extensions totaling 35 days to file an answer. The court granted the
motions and gave him until July 17, 1999 to file an answer. But instead of filing an answer,
respondent filed on July 16, 1999, a Motion For Bill of Particulars,24 praying for clearer statements of
the allegations which he called "mere conclusions of law, too vague and general to enable
defendants to intelligently answer."
The PCGG opposed the motion, arguing that the requested particulars were evidentiary matters; that
the motion was dilatory; and that it contravened the May 28, 1999 Resolution granting respondent's
Motion for Leave to File a Responsive Pleading.25
The anti-graft court, however, upheld respondent, explaining that the allegations against former
President Marcos were vague, general, and were mere conclusions of law. It pointed out that the

accusations did not specify the ultimate facts of former President Marcos' participation in Cruz's
alleged accumulation of ill-gotten wealth, effectively preventing respondent from intelligently
preparing an answer. It noted that this was not the first time the same issue was raised before it, and
stressed that this Court had consistently ruled in favor of the motions for bills of particulars of the
defendants in the other ill-gotten wealth cases involving the Marcoses.
The fallo of the assailed January 31, 2000 Resolution reads:
WHEREFORE, the defendant-movant's motion for bill of particulars is hereby GRANTED.
Accordingly, the plaintiff is hereby ordered to amend pars. 9 and Annex "A", 12 (a) to (e), and
19 in relation to par-3 of the PRAYER, of the Expanded Complaint, to allege the ultimate
facts indicating the nature, manner, period and extent of participation of Ferdinand E. Marcos
in the acts referred to therein, and the amount of damages to be proven during trial,
respectively, within fifteen (15) days from receipt of this resolution[.]
SO ORDERED.26
Not convinced by petitioner's Motion for Reconsideration,27 the court ruled in the assailed March 27,
2001 Resolution that the motion for a bill of particulars was not dilatory considering that the case
was only at its pre-trial stage and that Section 1,28 Rule 12 of the 1997 Rules of Civil Procedure
allows its filing.
In urging us to nullify now the subject resolutions, petitioner, through the PCGG, relies on two
grounds:
i.
The motion for bill of particulars contravenes section 3, rule 9 of the 1997 rules [OF] civil
procedure.
ii.
The motion for bill of particulars is patently dilatory and bereft of any basis.29
Invoking Section 3,30 Rule 9 of the 1997 Rules of Civil Procedure, petitioner argues that since the
default order against former President Marcos has not been lifted by any court order, respondent
cannot file a motion for a bill of particulars. Petitioner stresses that respondent did not file a motion to
lift the default order as executor of his father's estate; thus, he and the estate cannot take part in the
trial.
Petitioner also contends that respondent was granted leave to file an answer to the expanded
complaint, not a motion for a bill of particulars. The anti-graft court should not have accepted the
motion for a bill of particulars after he had filed a motion for leave to file responsive pleading and
three successive motions for extension as the motion for a bill of particulars is dilatory. Petitioner
insists that respondent impliedly admitted that the complaint sufficiently averred factual matters with
definiteness to enable him to properly prepare a responsive pleading because he was able to
prepare a draft answer, as stated in his second and third motions for extension. Petitioner adds that
the factual matters in the expanded complaint are clear and sufficient as Mrs. Marcos and Cruz had
already filed their respective answers.

Petitioner also argues that if the assailed Resolutions are enforced, the People will suffer irreparable
damage because petitioner will be forced to prematurely divulge evidentiary matters, which is not a
function of a bill of particulars. Petitioner maintains that paragraph 12, subparagraphs a to e,31 of the
expanded complaint "illustrate the essential acts pertaining to the conspirational acts" between Cruz
and former President Marcos. Petitioner argues that respondent erroneously took out of context the
phrase "unlawful concert" from the rest of the averments in the complaint.
Respondent, for his part, counters that this Court had compelled petitioner in several ill-gotten wealth
cases involving the same issues and parties to comply with the motions for bills of particulars filed by
other defendants on the ground that most, if not all, of the allegations in the similarly worded
complaints for the recovery of alleged ill-gotten wealth consisted of mere conclusions of law and
were too vague and general to enable the defendants to intelligently parry them.
Respondent adds that it is misleading for the Government to argue that the default order against his
father stands because the May 28, 1999 Resolution effectively lifted it; otherwise, he would not have
been called by the court to appear before it and allowed to file a responsive pleading. He stresses
that the May 28, 1999 Resolution remains effective for all intents and purposes because petitioner
did not file a motion for reconsideration.
Respondent likewise denies that his motion for a bill of particulars is dilatory as it is petitioner's
continued refusal to submit a bill of particulars which causes the delay and it is petitioner who is
"hedging, flip-flopping and delaying in its prosecution" of Civil Case No. 0006. His draft answer
turned out "not an intelligent" one due to the vagueness of the allegations. He claims that petitioner's
actions only mean one thing: it has no specific information or evidence to show his father's
participation in the acts of which petitioner complains.
In its Reply,32 petitioner adds that the acts imputed to former President Marcos were acts that Cruz
committed in conspiracy with the late dictator, and which Cruz could not have done without the
participation of the latter. Petitioner further argues that conspiracies need not be established by
direct evidence of the acts charged but by a number of indefinite acts, conditions and circumstances.
In a nutshell, the ultimate issue is: Did the court commit grave abuse of discretion amounting to lack
or excess of jurisdiction in granting respondent's motion for a bill of particulars as executor of former
President Marcos' estates considering that the deceased defendant was then a defaulting defendant
when the motion was filed?
We rule in the negative, and dismiss the instant petition for utter lack of merit.
Under the Rules of Court, a defending party may be declared in default, upon motion and notice, for
failure to file an answer within the allowable period. As a result, the defaulting party cannot take part
in the trial albeit he is entitled to notice of subsequent proceedings.33
The remedies against a default order are: (1) a motion to set aside the order of default at any time
after discovery thereof and before judgment on the ground that the defendant's failure to file an
answer was due to fraud, accident, mistake or excusable neglect and that the defendant has a
meritorious defense; (2) a motion for new trial within 15 days from receipt of judgment by default, if
judgment had already been rendered before the defendant discovered the default, but before said
judgment has become final and executory; (3) an appeal within 15 days from receipt of judgment by
default; (4) a petition for relief from judgment within 60 days from notice of judgment and within 6
months from entry thereof; and (5) a petition for certiorari in exceptional circumstances.34

In this case, former President Marcos was declared in default for failure to file an answer. He died in
Hawaii as an exile while this case was pending, since he and his family fled to Hawaii in February
1986 during a people-power revolt in Metro Manila. His representatives failed to file a motion to lift
the order of default. Nevertheless, respondent, as executor of his father's estate, filed a motion for
leave to file a responsive pleading, three motions for extensions to file an answer, and a motion for
bill of particulars all of which were granted by the anti-graft court.
Given the existence of the default order then, what is the legal effect of the granting of the motions to
file a responsive pleading and bill of particulars? In our view, the effect is that the default order
against the former president is deemed lifted.
Considering that a motion for extension of time to plead is not a litigated motion but an ex parte one,
the granting of which is a matter addressed to the sound discretion of the court; that in some cases
we have allowed defendants to file their answers even after the time fixed for their presentation; that
we have set aside orders of default where defendants' failure to answer on time was excusable; that
the pendency of the motion for a bill of particulars interrupts the period to file a responsive pleading;
and considering that no real injury would result to the interests of petitioner with the granting of the
motion for a bill of particulars, the three motions for extensions of time to file an answer, and the
motion with leave to file a responsive pleading, the anti-graft court has validly clothed respondent
with the authority to represent his deceased father. The only objection to the action of said court
would be on a technicality. But on such flimsy foundation, it would be erroneous to sacrifice the
substantial rights of a litigant. Rules of procedure should be liberally construed to promote their
objective in assisting the parties obtain a just, speedy and inexpensive determination of their case.35
While it is true that there was no positive act on the part of the court to lift the default order because
there was no motion nor order to that effect, the anti-graft court's act of granting respondent the
opportunity to file a responsive pleading meant the lifting of the default order on terms the court
deemed proper in the interest of justice. It was the operative act lifting the default order and thereby
reinstating the position of the original defendant whom respondent is representing, founded on the
court's discretionary power to set aside orders of default.
It is noteworthy that a motion to lift a default order requires no hearing; it need be under oath only
and accompanied by an affidavit of merits showing a meritorious defense.36 And it can be filed "at
any time after notice thereof and before judgment." Thus, the act of the court in entertaining the
motions to file a responsive pleading during the pre-trial stage of the proceedings effectively meant
that respondent has acquired a locus standi in this case. That he filed a motion for a bill of
particulars instead of an answer does not pose an issue because he, as party defendant
representing the estate, is allowed to do so under the Rules of Court to be able to file an intelligent
answer. It follows that petitioner's filing of a bill of particulars in this case is merely a condition
precedent to the filing of an answer.
Indeed, failure to file a motion to lift a default order is not procedurally fatal as a defaulted party can
even avail of other remedies mentioned above.
As default judgments are frowned upon, we have been advising the courts below to be liberal in
setting aside default orders to give both parties every chance to present their case fairly without
resort to technicality.37 Judicial experience shows, however, that resort to motions for bills of
particulars is sometimes intended for delay or, even if not so intended, actually result in delay since
the reglementary period for filing a responsive pleading is suspended and the subsequent
proceedings are likewise set back in the meantime. As understood under Section 1 of Rule 12,
mentioned above, a motion for a bill of particulars must be filed within the reglementary period for
the filing of a responsive pleading to the pleading sought to be clarified. This contemplates pleadings

which arerequired by the Rules to be answered under pain of procedural sanctions, such as default
or implied admission of the facts not responded to.38
But as defaulted defendants are not actually thrown out of court because the Rules see to it that
judgments against them must be in accordance with the law and competent evidence, this Court
prefers that the lifting of default orders be effected before trial courts could receive plaintiffs'
evidence and render judgments. This is so since judgments by default may result in considerable
injustice to defendants, necessitating careful and liberal examination of the grounds in motions
seeking to set them aside. The inconvenience and complications associated with rectifying resultant
errors, if defendant justifies his omission to seasonably answer, far outweigh the gain in time and
dispatch of immediately trying the case.39 The fact that former President Marcos was in exile when
he was declared in default, and that he later died still in exile, makes the belated filing of his answer
in this case understandably excusable.
The anti-graft court required the Marcos siblings through its January 11, 1999 Order40 to substitute
for their father without informing them that the latter was already declared in default. They were
unaware, therefore, that they had to immediately tackle the matter of default. Respondent, who
stands as the executor of their father's estate, could assume that everything was in order as far as
his standing in court was concerned. That his motion for leave to file a responsive pleading was
granted by the court gave him credible reason not to doubt the validity of his legal participation in this
case. Coupled with his intent to file an answer, once his motion for a bill of particulars is sufficiently
answered by petitioner, the circumstances abovementioned warrant the affirmation of the anti-graft
court's actions now being assailed.
As to the propriety of the granting of the motion for a bill of particulars, we find for respondent as the
allegations against former President Marcos appear obviously couched in general terms. They do
not cite the ultimate facts to show how the Marcoses acted "in unlawful concert" with Cruz in illegally
amassing assets, property and funds in amounts disproportionate to Cruz's lawful income, except
that the former President Marcos was the president at the time.
The pertinent allegations in the expanded complaint subject of the motion for a bill of particulars read
as follows:
11. Defendant Roman A. Cruz, Jr. served as public officer during the Marcos administration.
During his . . . incumbency as public officer, he acquired assets, funds and other property
grossly and manifestly disproportionate to his salaries, lawful income and income from
legitimately acquired property.
12. . . . Cruz, Jr., in blatant abuse of his position as Chairman and General Manager of the
Government Service Insurance System (GSIS), as President and Chairman of the Board of
Directors of the Philippine Airlines (PAL), and as Executive Officer of the Commercial Bank
of Manila, by himself and/or in unlawful concert with defendants Ferdinand E. Marcos and
Imelda R. Marcos, among others:
(a) purchased through Arconal N.V., a Netherland-Antilles Corporation, a lot and building
located at 212 Stockton St., San Francisco, California, for an amount much more than the
value of the property at the time of the sale to the gross and manifest disadvantageous (sic)
to plaintiff.
GSIS funds in the amount of $10,653,350.00 were used for the purchase when under the
right of first refusal by PAL contained in the lease agreement with Kevin Hsu and his wife,
the owners of the building, a much lower amount should have been paid.

For the purchase of the building, defendant Cruz allowed the intervention of Sylvia Lichauco
as broker despite the fact that the services of such broker were not necessary and even
contrary to existing policies of PAL to deal directly with the seller. The broker was paid the
amount of $300,000.00 resulting to the prejudice of GSIS and PAL.
(b) Converted and appropriated to . . . own use and benefit funds of the Commercial Bank of
Manila, of which he was Executive Officer at the time.
He caused the disbursement from the funds of the bank of among others, the amount
of P81,152.00 for personal services rendered to him by one Brenda Tuazon.
(c) Entered into an agency agreement on behalf of the Government Service Insurance
System with the Integral Factors Corporation (IFC), to solicit insurance, and effect
reinsurance on behalf of the GSIS, pursuant to which agreement, IFC effected a great part of
its reinsurance with INRE Corporation, which, was a non-insurance company registered in
London[,] with defendant . . . Cruz, Jr., as one of its directors.
IFC was allowed to service accounts emanating from government agencies like the Bureau
of Buildings, Philippine National Oil Corporation, National Power Corporation, Ministry of
Public Works and Highways which under the laws are required to insure with and deal
directly with the GSIS for their insurance needs. The intervention of IFC to service these
accounts caused the reduction of premium paid to GSIS as a portion thereof was paid to
IFC.
(d) Entered into an agreement with the Asiatic Integrated Corporation (AIC) whereby the
GSIS ceded, transferred, and conveyed property consisting of five (5) adjoining parcels of
land situated in Manila covered by Transfer Certificates of Title (TCT) Nos. 49853, 49854,
49855 and 49856 to AIC in exchange for AIC property known as the Pinugay Estate located
at Tanay, Rizal, covered by TCT No. 271378, under terms and conditions grossly and
manifestly disadvantageous to the government.
The appraised value of the GSIS parcels of land was P14,585,600.00 as of June 25, 1971
while the value of the Pinugay Estate was P2.00 per square meter or a total amount
of P15,219,264.00. But in the barter agreement, the Pinugay Estate was valued at P5.50 per
square meter or a total of P41,852,976.00, thus GSIS had to pay AIC P27,287,976.00, when
it was GSIS which was entitled to payment from AIC for its failure to pay the rentals of the
GSIS property then occupied by it.
(e) purchased three (4) (sic) additional Airbus 300 in an amount much more than the market
price at the time when PAL was in deep financial strain, to the gross and manifest
disadvantage of Plaintiff.
On October 29, 1979, defendant Cruz, as President and Chairman of the Board of Directors
of . . . (PAL) authorized the payment of non-refundable deposit of U.S. $200,000.00 even
before a meeting of the Board of Directors of PAL could deliberate and approve the
purchase.41
In his motion for a bill of particulars, respondent wanted clarification on the specific nature, manner
and extent of participation of his father in the acquisition of the assets cited above under Cruz;
particularly whether former President Marcos was a beneficial owner of these properties; and the
specific manner in which he acquired such beneficial control.

Also, respondent wanted to know the specific nature, manner, time and extent of support,
participation and collaboration of his father in (1) Cruz's alleged "blatant abuse" as GSIS president
and general manager, PAL president and chairman of the board, and executive officer of the CBM;
(2) the purchase of a lot and building in California using GSIS funds and Cruz's allowing Lichauco as
broker in the sale of the lot and building contrary to PAL policies; (3) Cruz's appropriating to himself
CBM funds; (4) Cruz's disbursement of P81,152 CBM funds for personal services rendered to him by
Tuazon; (5) Cruz's entering into an agency agreement for GSIS with IFC to solicit, insure, and effect
reinsurance of GSIS, as result of which IFC effected a great part of its reinsurance with INRE
Corporation, a London-registered non-insurance company, of which Cruz was one of the directors;
(6) Cruz's allowing IFC to service the accounts emanating from government agencies which were
required under the law to insure and deal directly with the GSIS for their insurance needs; (7) the
GSIS-AIC agreement wherein GSIS ceded and conveyed to AIC five parcels of land in Manila in
exchange for AIC's Pinugay Estate in Tanay, Rizal; (8) PAL's purchase of three Airbus 300 jets for a
higher price than the market price; and (9) if former President Marcos was connected in any way to
IFC and INRE Corporation. Respondent likewise asked, what is the specific amount of damages
demanded?
The 1991 Virata-Mapa Doctrine42 prescribes a motion for a bill of particulars, not a motion to dismiss,
as the remedy for perceived ambiguity or vagueness of a complaint for the recovery of ill-gotten
wealth,43 which was similarly worded as the complaint in this case. That doctrine provided protective
precedent in favor of respondent when he filed his motion for a bill of particulars.
While the allegations as to the alleged specific acts of Cruz were clear, they were vague and unclear
as to the acts of the Marcos couple who were allegedly "in unlawful concert with" the former. There
was no factual allegation in the original and expanded complaints on the collaboration of or on the
kind of support extended by former President Marcos to Cruz in the commission of the alleged
unlawful acts constituting the alleged plunder. All the allegations against the Marcoses, aside from
being maladroitly laid, were couched in general terms. The alleged acts, conditions and
circumstances that could show the conspiracy among the defendants were not particularized and
sufficiently set forth by petitioner.
That the late president's co-defendants were able to file their respective answers to the complaint
does not necessarily mean that his estate's executor will be able to file an equally intelligent answer,
since the answering defendants' defense might be personal to them.
In dismissing this petition, Tantuico, Jr. v. Republic44 also provides us a cogent jurisprudential guide.
There, the allegations against former President Marcos were also conclusions of law unsupported by
factual premises. The particulars prayed for in the motion for a bill of particulars were also not
evidentiary in nature. In that case, we ruled that the anti-graft court acted with grave abuse of
discretion amounting to lack or excess of jurisdiction in denying an alleged crony's motion for a bill of
particulars on a complaint with similar tenor and wordings as in the case at bar.
Likewise we have ruled in Virata v. Sandiganbayan45 (1993) that Tantuico's applicability to that case
was "ineluctable," and the propriety of the motion for a bill of particulars under Section 1, Rule 12 of
the Revised Rules of Court was beyond dispute.46
In 1996, in the similar case of Republic v. Sandiganbayan (Second Division),47 we also affirmed the
resolutions of the Sandiganbayan granting the motion for a bill of particulars of Marcos' alleged
crony, business tycoon Lucio Tan.48
Phrases like "in flagrant breach of public trust and of their fiduciary obligations as public officers with
grave and scandalous abuse of right and power and in brazen violation of the Constitution and laws,"

"unjust enrichment," "embarked upon a systematic plan to accumulate ill-gotten wealth," "arrogated
unto himself all powers of government," are easy and easy to read; they have potential media
quotability and they evoke passion with literary flair, not to mention that it was populist to flaunt those
statements in the late 1980s. But they are just that, accusations by generalization. Motherhood
statements they are, although now they might be a politically incorrect expression and an affront to
mothers everywhere, although they best describe the accusations against the Marcoses in the case
at bar.
In Justice Laurel's words, "the administration of justice is not a matter of guesswork."49 The name of
the game is fair play, not foul play. We cannot allow a legal skirmish where, from the start, one of the
protagonists enters the arena with one arm tied to his back.50 We must stress anew that the
administration of justice entails a painstaking, not haphazard, preparation of pleadings.
The facile verbosity with which the legal counsel for the government flaunted the accusation of
excesses against the Marcoses in general terms must be soonest refurbished by a bill of particulars,
so that respondent can properly prepare an intelligent responsive pleading and so that trial in this
case will proceed as expeditiously as possible. To avoid a situation where its pleadings may be
found defective, thereby amounting to a failure to state a cause of action, petitioner for its part must
be given the opportunity to file a bill of particulars. Thus, we are hereby allowing it to supplement its
pleadings now, considering that amendments to pleadings are favored and liberally allowed
especially before trial.
Lastly, the allowance of the motion for a more definite statement rests with the sound discretion of
the court. As usual in matters of a discretionary nature, the ruling of the trial court will not be
reversed unless there has been a palpable abuse of discretion or a clearly erroneous order.51 This
Court has been liberal in giving the lower courts the widest latitude of discretion in setting aside
default orders justified under the right to due process principle. Plain justice demands and the law
requires no less that defendants must know what the complaint against them is all about.52
What is important is that this case against the Marcoses and their alleged crony and dummy be
decided by the anti-graft court on the merits, not merely on some procedural faux pas. In the interest
of justice, we need to dispel the impression in the individual respondents' minds that they are being
railroaded out of their rights and properties without due process of law.
WHEREFORE, finding no grave abuse of discretion on the part of the Sandiganbayan in granting
respondent's Motion for Bill of Particulars, the petition is DISMISSED. The Resolutions of the
Sandiganbayan dated January 31, 2000 and March 27, 2001 in Civil Case No. 0006 are AFFIRMED.
Petitioner is ordered to prepare and file a bill of particulars containing the ultimate facts as prayed for
by respondent within twenty (20) days from notice.
SO ORDERED.
G.R. No. 164947

January 31, 2006

SONIA MACEDA ALIAS SONIALITA MACEDA AND GEMMA MACEDAMACATANGAY, Petitioners,

vs.
ENCARNACION DE GUZMAN VDA. DE MACATANGAY, Respondent.
DECISION
CARPIO MORALES, J.:

Petitioner Sonia Maceda (Sonia) and Bonifacio Macatangay (Macatangay) contracted marriage on
July 26, 1964.1The union bore one child, petitioner Gemma Macatangay (Gemma), on March 27,
1965.2
The couple separated not long after the marriage.
In 1967, the couple executed a Kasunduan3 whereby they agreed to live separately.
Macatangay soon lived with Carmen Jaraza (Carmen).
After the death on December 7, 1998 of Macatangay who was a member of the Social Security
System (SSS) or on December 14, 1998, his common-law wife Carmen filed a death benefit
application before the SSS Lucena Branch. The SSS denied4 her application, it ruling that it is
Macatangays wife who is his primary beneficiary.
On January 9, 1999, petitioner Sonia filed before the SSS a death benefit application.
Macatangays children with his common-law wife Carmen, namely Jay, Elena, and Joel, aged 27,
31, and 29 years old, respectively, also filed in 19995 separate applications for death benefits
following the SSS denial of their mothers application.
On September 10, 1999, the SSS denied Macatangays illegitimate childrens claim on the ground
that under Republic Act 8282, "THE SOCIAL SECURITY ACT OF 1997," it is the dependent spouse,
until he or she remarries, who is the primary beneficiary of the deceased member.6
Petitioner Sonias application for death benefit was approved on December 20, 1999. She received a
lump sum amount of P33,000 representing "pensions" 7 from the SSS.
On February 22, 2000, Macatangays mother, herein respondent Encarnacion de Guzman, filed a
petition before the Social Security Commission (SSC) in Makati City8 against herein petitioners Sonia
and Gemma, for the grant to her of social security benefits, she claiming that her son designated her
and his three illegitimate children as his beneficiaries under the SSS;9 she was made to sign a
document regarding the distribution of benefits of Macatangay by SSS Lucena Branch Chief Atty.
Corazon M. Villamayor who, however, did not furnish her a copy thereof nor inform her of its
nature;10 and after she signed the document, the three illegitimate children received notices denying
their application for death benefits.11
The SSS office in Quezon City filed a petition-in-intervention in the petition filed by respondent
before the SSC in Makati City.12
In her position paper, respondent contended as follows:
[I]n the present case, the agreement of the spouses to live separately four (4) months after their
marriage and which agreement was finally made in writing before the Barangay will unquestionably
show that Sonia or Sonialita Maceda was not dependent upon the late member for support and
therefore cannot be considered as his primary beneficiary under the aforesaid law. Said agreement,
though proscribed by law by reasons of public policy, was a mutual agreement short of a court
decree for legal separation and will not in any way change the fact that the two lived separately. This
under any circumstances will dispute the presumption of the dependency for support arising from the
legitimacy of the marital union as reasoned out by the SSS in their Petition for
Intervention.13 (Emphasis and underscoring supplied)

Petitioners, on the other hand, hinged their claim on Section 8(e) and (k) of The Social Security Act
of 1997. Thus they argued:
Section 8 (e) and (k) of Republic Act 8282 is crystal clear on who should be Bonifacio De Guzman
Macatangays beneficiary, thus:
(e) Dependents The dependents shall be the following:
(1) The legal spouse entitled by law to receive support from the member;
(2) The legitimate, legitimated or legally adopted, and illegitimate child who is
unmarried, not gainfully employed and has not reached twenty-one years (21) of age,
or if over twenty-one (21) years of age, he is congenitally or while still a minor has
been permanently incapacitated and incapable of self-support, physically or mentally,
and
(3) The parent who is receiving regular support from the member.
(k) Beneficiaries The dependent spouse until he or she remarries, the dependent
legitimate, legitimated or legally adopted, and illegitimate children, who shall be the primary
beneficiaries of the member; Provided, That the dependent illegitimate children shall be
entitled to fifty percent (50%) of the share of the legitimate, legitimated or legally adopted
children: Provided, further, That in the absence of the dependent legitimate, legitimated or
legally adopted children of the member, his/her dependent illegitimate children shall be
entitled to one hundred percent (100%) of the benefits. In their absence, the dependent
parents who shall be the second beneficiaries of the member. In the absence of all the
foregoing, any other person designated by the member as his/her secondary beneficiary.
(Underscoring and emphasis in the original)14
As for the SSS, it argued that:
[T]o be considered dependent for support, a surviving spouse of a member must only show
that she is entitle[d] for support from the member by virtue of a valid marriage. The surviving
spouse is not required to show that he/she actually received support from the
member during his/her lifetime. Her dependency for support is actually presumed from the
legitimacy of the marital union.15 (Emphasis and underscoring supplied)
The SSC, taking the Kasunduan16 as proof that Sonia was no longer dependent for support on
Bonifacio,17 and declaring that the SSS Lucena Branch acted in good faith in granting the benefits to
Sonia, granted respondents petition by Resolution of November 14, 2001.18 It accordingly disposed
as follows:
IN VIEW OF ALL THE FOREGOING, the Commission hereby orders respondent Sonia (Sonialita)
Macatangay to refund the monthly pensions paid to her by mistake and for the SSS to collect the
same immediately upon receipt hereof.
Meanwhile, the System is ordered to grant the SS lump sum death benefits of member Bonifacio
Macatangay to designated beneficiaries Encarnacion Macatangay, Elena, Joel, and Jay
Macatangay, subject to existing rules and regulations.
SO ORDERED.19 (Underscoring supplied)

Petitioners motion for reconsideration20 of the SSC Resolution was denied by Order of August 14,
2002.21
Petitioners thereupon filed a petition for review,22 docketed as CA G.R. No. 73038, before the Court
of Appeals which dismissed it outright, by the present challenged Resolution of October 21,
2002,23 on the following procedural grounds:
A perusal of the petition however shows that there was no written explanation as to why respondents
were not personally served copies of the petition as required under Section 11, Rule 13 of the 1997
Rules of Civil Procedure.
Also, the petition is not accompanied by copies of the pleadings and documents relevant and
pertinent thereto(i.e., position papers filed by the parties before the SSC, motion to dismiss filed by
petitioner before the SSC) as required under Section 6, Rule 43 of the 1997 Rules of Civil
Procedure.
Finally, petitioners counsel failed to comply with the requirements under Bar Matter No. 287 which
requires that "all lawyers shall indicate in all pleadings, motions and papers signed and filed by them
the number and date of their official receipt indicating payment of their annual membership dues to
the Integrated Bar of the Philippines for the current year x x x." In the instant petition, Atty. Calayan
failed to indicate the number and date of the official receipt evidencing payment of IBP
dues.24 (Italics in the original; underscoring supplied)
Via an Omnibus Motion,25 petitioners prayed the Court of Appeals to (a) RECONSIDER its
Resolution dated October 21, 2002 dismissing the Petition for Review; and (b) ADMIT the thereto
attached certified true copies of the parties Position Papers and the petitioners Motion to Dismiss
filed with the SSC,26 the Certificate of Life Membership of their counsel Atty. Ronaldo Antonio
Calayan,27 and the Official Receipt showing said counsels payment of lifetime membership fee to
the Integrated Bar of the Philippines.28
The Court of Appeals, finding no substantial compliance by petitioners with the requirement in
Section 11, Rule 13 of the 1997 Rules of Civil Procedure reading:
Section 11. Priorities in Modes of Service and Filing Whenever practicable, the service and filing of
pleadings and other papers shall be done personally. Except with respect to papers emanating from
the court, a resort to other modes must be accompanied by a written explanation why the service or
filing was not done personally. A violation of this rule may cause to consider the paper as not filed.,
denied the Omnibus Motion by Resolution of August 4, 2004.29
Hence, the present Petition for Review30 faulting the appellate court as follows:
I. THE HONORABLE COURT OF APPEALS ERRED IN STRICTLY ADHERING TO
TECHNICALITIES, RATHER THAN IN SUBSTANTIAL COMPLIANCE, IN THE APPLICATION OF
THE PROVISIONS OF THE 1997 RULES ON CIVIL PROCEDURE.
II. THE CIRCUMSTANCES PREVAILING IN THIS PETITION FIND SUPPORT IN DECISIONS OF
THIS HONORABLE COURT IN FAVOR OF THE REVERSAL OF THE COURT OF APPEALS
DECISION UNDER REVIEW.31(Underscoring supplied)

Petitioners posit that they complied substantially with Section 11, Rule 13 of the Rules of Court, as
follows:
Sonias affidavit of service clearly shows the impracticability of personal service of copies of the
petition to the adverse parties. Manifest in the same affidavit is the intervenor Social Security
Systems address in Quezon City; that of the private respondents lawyer in Lopez, Quezon, and that
of Social Security Commission in Makati City. Sonias counsels address is Lucena City. The
distance between these addresses, it is most respectfully submitted as a matter of judicial notice,
may be construed as more than competent indicia as to why Sonia resorted to service by
mail.32 (Underscoring supplied)
And they cite jurisprudence calling for a liberal interpretation of the Rules in the interest of
substantial justice,33specifically Barnes v. Reyes34 which classifies Section 11, Rule 13 of the Rules
as a directory, rather than a mandatory, rule.
The petition is meritorious.
In Solar Team Entertainment, Inc. v. Ricafort,35 this Court, passing upon Section 11 of Rule 13 of the
Rules of Court, held that a court has the discretion to consider a pleading or paper as not filed if said
rule is not complied with.
Personal service and filing are preferred for obvious reasons. Plainly, such should expedite action
or resolution on a pleading, motion or other paper; and conversely, minimize, if not eliminate, delays
likely to be incurred if service or filing is done by mail, considering the inefficiency of the postal
service. Likewise, personal service will do away with the practice of some lawyers who, wanting to
appear clever, resort to the following less than ethical practices: (1) serving or filing pleadings by
mail to catch opposing counsel off-guard, thus leaving the latter with little or no time to prepare, for
instance, responsive pleadings or an opposition; or (2) upon receiving notice from the post office that
the registered containing the pleading of or other paper from the adverse party may be claimed,
unduly procrastinating before claiming the parcel, or, worse, not claiming it at all, thereby causing
undue delay in the disposition of such pleading or other papers.
If only to underscore the mandatory nature of this innovation to our set of adjective rules requiring
personal service whenever practicable, Section 11 of Rule 13 then gives the court
the discretion to consider a pleading or paper as not filed if the other modes of service or
filing were not resorted to and no written explanation was made as to why personal service
was not done in the first place. The exercise of discretion must, necessarily consider the
practicability of personal service, for Section 11 itself begins with the clause "whenever
practicable".
We thus take this opportunity to clarify that under Section 11, Rule 13 of the 1997 Rules of Civil
Procedure, personal service and filing is the general rule, and resort to other modes of service and
filing, the exception. Henceforth, whenever personal service or filing is practicable, in the light of the
circumstances of time, place and person, personal service or filing is mandatory. Only when
personal service or filing is not practicable may resort to other modes be had, which must then be
accompanied by a written explanation as to why personal service or filing was not practicable to
begin with. In adjudging the plausibility of an explanation, a court shall likewise consider the
importance of the subject matter of the case or the issues involved therein, and the prima facie merit
of the pleading sought to be expunged for violation of Section 11.36 (Emphasis and underscoring
supplied)

In Musa v. Amor, this Court, on noting the impracticality of personal service, exercised its discretion
and liberally applied Section 11 of Rule 13:37
As [Section 11, Rule 13 of the Rules of Court] requires, service and filing of pleadings must be done
personally whenever practicable. The court notes that in the present case, personal service
would not be practicable. Considering the distance between the Court of Appeals and
Donsol, Sorsogon where the petition was posted, clearly, service by registered mail [sic]
would have entailed considerable time, effort
and expense. A written explanation why service was not done personally might have been
superfluous. In any case, as the rule is so worded with the use of "may", signifying permissiveness,
a violation thereof gives the court discretion whether or not to consider the paper as not filed. While it
is true that procedural rules are necessary to secure an orderly and speedy administration of
justice, rigid application of Section 11, Rule 13 may be relaxed in this case in the interest of
substantial justice.38 (Emphasis and underscoring supplied)
In the case at bar, the address of respondents counsel is Lopez, Quezon, while petitioner Sonias
counsels is Lucena City.39 Lopez, Quezon is 83 kilometers away from Lucena City.40 Such distance
makes personal service impracticable. As in Musa v. Amor,41 a written explanation why service was
not done personally "might have been superfluous."
As this Court held in Tan v. Court of Appeals,42 liberal construction of a rule of procedure has been
allowed where, among other cases, "the injustice to the adverse party is not commensurate with the
degree of his thoughtlessness in not complying with the procedure prescribed."
Without preempting the findings of the Court of Appeals on the merits of petitioners petition in CA
G.R. No. 73038, if petitioners allegations of fact and of law therein are true and the outright
dismissal of their petition is upheld without giving them the opportunity to prove their allegations,
petitioner Sonia would be deprived of her rightful death benefits just because
of the Kasunduan she forged with her husband Macatangay which contract is, in the first place,
unlawful.43 The resulting injustice would not be commensurate to petitioners counsels
"thoughtlessness" in not explaining why respondents were not personally served copies of the
petition.
WHEREFORE, the petition is GRANTED. The Resolutions of the Court of Appeals dated October
21, 2002 and August 4, 2004 in CA G.R. No. 73038 are REVERSED and SET ASIDE.
Let the records of the case be REMANDED to the Court of Appeals which is DIRECTED to take
appropriate action on petitioners petition for review in light of the foregoing discussions.
SO ORDERED.
G.R. No. 138500 September 16, 2005
ANDY QUELNAN, Petitioners,
vs.
VHF PHILIPPINES, Respondent.
DECISION

GARCIA, J.:
Under consideration is this petition for review on certiorari to nullify and set aside the decision1 dated
September 17, 1997 of the Court of Appeals (CA) in CA-G.R. No. SP-41942, and its
resolution2 dated April 27, 1999, denying petitioners motion for reconsideration.
The factual backdrop:
In an ejectment suit (Civil Case No. 139649-CV) filed by respondent VHF Philippines, Inc. against
petitioner Andy Quelnan, involving a condominium unit at the Legaspi Towers 300 at Roxas
Boulevard, Manila which respondent claimed to have been leased by petitioner, the Metropolitan
Trial Court (MeTC) of Manila, on its finding that "summons together with a copy of the complaint was
served [on petitioner] thru his wife on August 25, 1992 by substituted service" and that petitioner
"failed to file his answer within the reglementary period", came out with adecision dated November
23, 19923 rendering judgment for respondent, as follows:
WHEREFORE, premises considered, judgment is hereby rendered in favor of [respondent] and
against herein [petitioner] ordering the latter to vacate the premises located at Unit 20-G Legaspi
Towers 300, Vito Cruz, corner Roxas Blvd., Manila and restore possession of the same to
[respondent]; ordering [petitioner] to pay [respondent] the amount of P1,077,497.77 as of June 1992
and the further sum of P25,000.00 and P1,500.00 as monthly rental for the condominium unit and
parking lot respectively with legal interest thereon and to pay the sum of P15,000.00 as and for
attorneys fees with costs against defendant.
SO ORDERED. (Words in bracket ours).
Copy of the aforementioned decision was served on petitioner by registered mail but the same was
returned unclaimed on account of petitioners failure to claim the same despite the postmasters
three (3) successive notices on November 25, 1992, December 7, 1992 and December 11, 1992.
No appeal having been taken by the petitioner, the MeTC decision became final and executory.
On May 18, 1993, a writ of execution, a notice of levy and a notice to vacate were served on
petitioners wife who acknowledged receipt thereof.
On May 24, 1993, petitioner filed with the Regional Trial Court (RTC) at Manila a Petition for Relief
from Judgment With Prayer for Preliminary Injunction and/or temporary restraining
order,4 thereunder alleging, inter alia, that he was never served with summons and was completely
unaware of the proceedings in the ejectment suit, adding that he learned of the judgment rendered
thereon only on May 18, 1993 when a notice of levy on execution came to his knowledge. He thus
prayed the RTC to annul and set aside the MeTC decision and the writs issued in connection
therewith.
In a decision dated June 3, 1996,5 the RTC granted petitioners petition for relief and set aside the
MeTC decision. The RTC explained that petitioner had been unduly deprived of a hearing and had
been prevented from taking an appeal for the reason that petitioners wife, in a fit of anger, tore the
summons and complaint in the ejectment suit in the heat of a marital squabble. To the RTC, this
constituted excusable negligence as would justify the filing of the petition for relief from judgment.
Respondent sought reconsideration of the RTC decision but its motion was denied by said court in
its order of July 5, 1996.6

Therefrom, respondent directly went to this Court on a petition for review, which petition was
remanded by this Court to the Court of Appeals (CA), whereat the same was docketed as CA-G.R.
SP No. 41942.
As stated at the threshold hereof, the appellate court, in a decision dated September 17,
1997,7 upon a finding that petitioners petition for relief was filed with the RTC beyond the 60-day
mandatory period therefor under Section 3, Rule 38 of the Rules of Court, reversed and set aside
the RTC decision and reinstated that of the MeTC, thus:
WHEREFORE, the petition is GRANTED. The decision dated June 3, 1996 of the Regional Trial
Court of Manila, Branch 16 is SET ASIDE. The decision dated November 23, 1992 of the
Metropolitan Trial Court of Manila, Branch 30 is REINSTATED. No costs.
SO ORDERED.
In time, petitioner moved for a reconsideration but his motion was denied by the appellate court in its
resolution of April 27, 1999.8
With this turn of events, petitioner is now the one with us via the present recourse urging us to nullify
and set aside the assailed decision and resolution of the Court of Appeals on the following grounds:
A. THE RESPONDENT IN ITS PETITION FOR CERTIORARI BEFORE THE COURT OF APPEALS
DID NOT QUESTION THE ORDERS OF THE REGIONAL TRIAL COURT OF MANILA DATED
OCTOBER 26, 1995 AND JANUARY 26, 1996.
B. THE METROPOLITAN TRIAL COURT OF MANILA NEVER ACQUIRED JURISDICTION OVER
THE PETITIONER, HENCE ITS DECISION CANNOT BECOME FINAL AND EXECUTORY.
C. THE FINDINGS OF FACT OF THE METROPOLITAN TRIAL COURT ARE NOT SUPPORTED
BY THE EVIDENCE ON RECORD AND CANNOT BE CONSIDERED AS FINAL AND
CONCLUSIVE.9
As we see it, the principal questions to be resolved are: (1) if a party fails to claim his copy of the
adverse decision which was sent through registered mail, when is he deemed to have knowledge of
said decision? (2) will the presumption of completeness of service of a registered mail matter under
Rule 13, Section 10 of the 1997 Rules of Civil Procedure10 apply in relation to the 60-day period for
filing a petition for relief from judgment under Rule 38, Section 3 of the Rules?
It is petitioners posture that the 60-day period for filing a petition for relief from judgment must be
reckoned from the time a party acquired knowledge of the judgment. Hence, prescinding from his
premise that he became aware of the MeTC decision only on May 18, 1993 when a notice to pay
and vacate was served on him by the sheriff, petitioner submits that his petition for relief from
judgment was timely filed on May 24, 1993.
We are not persuaded.
Relief from judgment under Rule 38 is a legal remedy whereby a party seeks to set aside a judgment
rendered against him by a court whenever he was unjustly deprived of a hearing or was prevented
from taking an appeal, in either case, because of fraud, accident, mistake or excusable neglect.11
Section 3 of Rule 38 reads:

SEC. 3. Time for filing petition; contents and verification. A petition provided for in either of the
preceding sections of this Rule must be verified, filed within sixty (60) days after the petitioner
learns of the judgment, final order, or other proceeding to be set aside, and not more than six
(6) months after such judgment or final order was entered, or such proceeding was taken; and
must be accompanied with affidavits, showing the fraud, accident, mistake or excusable negligence
relied upon and the facts constituting the petitioners good and substantial cause of action or
defense, as the case may be. (Emphasis supplied)
Clear it is from the above that a petition for relief from judgment must be filed within: (a) 60 days
from knowledge of judgment, order or other proceedings to be set aside; and (b) six (6) months from
entry of such judgment, order or other proceeding. These two periods must concur. Both periods are
also not extendible and never interrupted.12Strict compliance with these periods stems from the
equitable character and nature of the petition for relief. Indeed, relief is allowed only in exceptional
cases as when there is no other available or adequate remedy. As it were, a petition for relief is
actually the "last chance" given by law to litigants to question a final judgment or order. And failure to
avail of such "last chance" within the grace period fixed by the Rules is fatal.13
We do not take issue with petitioner that the 60-day period under Section 3, Rule 38, supra should
be reckoned from the time the aggrieved party has knowledge of the judgment. The Rule expressly
says so. We cannot, however, go along with his contention that it was only on May 18, 1993 when
he became aware of the judgment subject of his petition for relief.
The records clearly reveal that a copy of the MeTC decision was sent to petitioner through registered
mail at his given address on November 25, 1992. It should be noted that petitioner was not
represented by counsel during the proceedings before the MeTC. The first notice to him by the
postmaster to check his mail was on November 25, 1992. Thereafter, subsequent notices were sent
by the postmaster on December 7, 1992 and December 11, 1992. For sure, a certification that the
registered mail was unclaimed by the petitioner and thus returned to the sender after three
successive notices was issued by the postmaster. Hence, service of said MeTC decision became
effective five (5) days after November 25, 1992, or on November 30, 1992, conformably with Rule
13, Section 10 of the 1997 Rules of Civil Procedure, which reads:
SEC. 10. Completeness of Service. Personal service is complete upon actual delivery. Service by
ordinary mail is complete upon the expiration of ten (10) days after mailing, unless the court
otherwise provides. Service by registered mail is complete upon actual receipt by the
addressee, or after five (5) days from the date he received the first notice of the postmaster,
whichever date is earlier. (Emphasis supplied)
There is no doubt that under the Rules, service by registered mail is complete upon actual receipt by
the addressee. However, if the addressee fails to claim his mail from the post office within five (5)
days from the date of the first notice, service becomes effective upon the expiration of five (5) days
therefrom.14 In such a case, there arises a presumption that the service was complete at the end of
the said five-day period. This means that the period to appeal or to file the necessary pleading
begins to run after five days from the first notice given by the postmaster. This is because a party is
deemed to have received and to have been notified of the judgment at that point.
With the reality that petitioner was first notified by the postmaster on November 25, 1992, it follows
that service of a copy of the MeTC decision was deemed complete and effective five (5) days
therefrom or on November 30, 1992. Necessarily, the 60-day period for filing a petition for relief
must be reckoned from such date (November 30, 1992) as this was the day when actual receipt by
petitioner is presumed. In short, petitioner was deemed to have knowledge of the MeTC decision on
November 30, 1992. The 60-day period for filing a petition for relief thus expired on January 29,

1993. Unfortunately, it was only on May 24, 1993, or 175 days after petitioner was deemed to have
learned of the judgment that he filed his petition for relief with the RTC. Indubitably, the petition was
filed way beyond the 60-day period provided by law.
Moreover, the records are bereft of any showing why petitioner failed to claim his copy of the MeTC
decision. For sure, petitioner has not offered any explanation as to why he was not able to obtain a
copy of said decision despite the three notices sent to him by the postmaster. The failure to claim a
registered mail matter of which notice had been duly given by the postmaster is not an excusable
neglect that would warrant the reopening of a decided case.15
The RTC, in giving due to petitioners petition for relief, ruled that the presumption of completeness
of service does not find application in this case for purposes of reckoning the 60-day period because
the said 60-day period starts only after the aggrieved party learns of the judgment. It opined that
herein petitioner never acquired knowledge of the MeTC judgment due to the excusable neglect of
his wife who destroyed and threw away the summons and complaint in the ejectment suit.
We disagree. As correctly pointed out by the appellate court, to which we are in full accord:
xxx. The view espoused by the RTC is not only subject to abuse by any party by deliberately
delaying the reckoning of the 60-day period but is also contrary to jurisprudence. xxx.
xxx xxx xxx
Nonetheless, the RTC granted Quelnans relief from judgment without sufficient basis. What it
considered as perhaps excusable negligence is the act of Quelnans wife in tearing the
summons/complaint because of marital disharmony. This is extending a plethora of leniency of the
rules to the point of defeating justice to the other party. xxx.
To stress, Rule 13 is intended to embrace and govern the filing of all pleadings, judgments, orders,
notices and other papers, as well as the service thereof.16 Whenever necessary and expedient, the
presumption of completeness of service ought to be applied, as in this case. While it is true that the
rule on completeness of service by registered mail only provides for a disputable presumption, the
burden is on petitioner to show that the postmasters notice never reached him and that he did not
acquire knowledge of the judgment. Sadly, petitioner failed to discharge his burden. In fact,
petitioners denial of receipt of the notice is belied by the postmasters certification that the mail was
not claimed by petitioner despite the three notices to him. In the situation obtaining in this case, the
postmasters certification is the best evidence to prove that the first notice was sent and delivered to
the addressee.17
Similarly, the Court cannot accept petitioners argument that the MeTC decision could not become
final and executory because that court never acquired jurisdiction over his person by reason of his
wifes act of tearing the summons and complaint for ejectment. The records show that the service of
summons upon petitioners wife was effected in accordance with Section 7 of Rule 14 of the 1997
Rules of Civil Procedure,18 the law that provides for substituted service of summons.
Given the above, it is safe to conclude that the MeTC decision became final on December 15, 1992,
or fifteen (15) days from November 30, 1992 when the postmasters first notice of November 25,
1992 was deemed served. Obviously, petitioner cannot question by his belated petition for relief the
effects of the final and executory judgment in the ejectment suit. He cannot, by that petition, render
the final judgment abortive and impossible of execution. The Court has invariably held that the
doctrine of finality of judgments is grounded on fundamental considerations of public policy and
sound practice that at the risk of occasional error, judgments of courts must become final at some

definite date fixed by law.19 The Court views with disfavor the unjustified delay in the enforcement of
the final orders and decision in this case. Once a judgment becomes final and executory, the
prevailing party should not be denied the fruits of his victory by some subterfuge devised by the
losing party.20
Verily, relief will not be granted to a party who seeks to be relieved from the effects of a judgment
when the loss of the remedy at law was due to his own negligence or a mistaken mode of procedure;
otherwise, petitions for relief will be tantamount to reviving the right of appeal which has already
been lost.21 It is a well-known maxim that "equity aids the vigilant, not those who slumber on their
rights."22
WHEREFORE, the present petition is DENIED and the challenged decision and resolution of the
Court of AppealsAFFIRMED.
Costs against petitioner.
SO ORDERED.
G.R. No. 169122

February 2, 2010

MARCELINO DOMINGO, Petitioner,

vs.
COURT OF APPEALS, AGAPITA DOMINGO, ANA DOMINGO, HEIRS OF GAUDENCIO
DOMINGO, namely: DOROTEO DOMINGO, JULITA DOMINGO, AMANDO DOMINGO, and
ARCEL DOMINGO; HEIRS OF JULIAN DOMINGO, namely: JULIAN DOMINGO, JR. and
PONCIANO DOMINGO; HEIRS OF EDILBERTA DOMINGO, namely: ANITA DOMINGO and
ROSIE DOMINGO; HEIR OF FELIPE DOMINGO, namely: LORNA DOMINGO; and HEIRS OF
GERONIMO DOMINGO, namely: EMILY DOMINGO and ARISTON DOMINGO represented by
ROLANDO DOMINGO, Respondents.
RESOLUTION
CARPIO, J.:
This is a petition1 for certiorari under Rule 65 of the Rules of Court. The petition challenges the 5
April2 and 10 June3 2005 Resolutions of the Court of Appeals in CA-G.R. SP No. 89023. The Court
of Appeals dismissed the petition4 for certiorari, with prayer for issuance of a temporary restraining
order, filed by Marcelino Domingo (Marcelino) for failure to serve the pleadings personally and for
failure to provide a written explanation why the service was not done personally.
Before he died, Julio Domingo (Julio) allegedly executed a Deed of Absolute Sale over a 4.1358hectare parcel of land in favor of Marcelinos wife, Carmelita Mananghaya (Mananghaya). The
property was situated in Burgos, Sto. Domingo, Nueva Ecija, and was covered by Transfer
Certificate of Title No. NT-87365.
Agapita and Ana Domingo, and the heirs of Gaudencio, Julian, Edilberta, Modesta, Felipe, and
Geronimo Domingo (the Domingos) filed before the Regional Trial Court (RTC), Judicial Region 3,
Branch 37, Baloc, Sto. Domingo, Nueva Ecija, a complaint against Marcelino and Mananghaya for
the annulment of the Deed of Absolute Sale. The Domingos alleged that Julios signature in the deed
was forged.

In its 3 November 1993 Decision,5 the RTC held that Julios signature in the Deed of Absolute Sale
was forged; thus, the deed was void. The RTC ordered Marcelino and Mananghaya to deliver
possession of the property to the Domingos.
Marcelino and Mananghaya appealed the 3 November 1993 Decision to the Court of Appeals. In its
14 July 2000 Decision, the Court of Appeals dismissed the appeal. The 14 July 2000 Decision
became final and executory. Thus, on 4 August 2003, the RTC issued a writ of execution. On 25
August 2003, the Domingos gained possession of the property.
Marcelino filed with the Department of Agrarian Reform (DAR) a petition6 dated 25 August 2003
praying that he be declared the tenant-beneficiary of the property.
Around April 2004, Marcelino reentered and retook possession of the property. The Domingos filed
before the RTC a motion to cite Marcelino in contempt. Marcelino and Mananghaya filed before the
Court of Appeals a petition,7 dated 28 April 2004, for certiorari, prohibition and mandamus. They
prayed that:
1. Pending hearing a preliminary injunction be issued against the [RTC] enjoining and
prohibiting to implement the writ of executed [sic] (Exh. M);
2. Annulling the writ of execution dated August 23, 2003;
3. Annulling the last portion of the decision in Civil Case No. 1218 which states: ["]to deliver
the possession of the land in question to the plaintiffs. (par. 5 Decision dated November 3,
1993)."
4. Ordering the denial and or dismissal of the motion for contempt filed by the private
respondent against the petitioners.8
In its 26 May 2004 Order, the RTC found Marcelino in contempt, fined him P25,000 and ordered his
arrest and imprisonment. However, the sheriff of the RTC no longer served the 26 May 2004 Order
because Marcelino declared in writing that he would deliver possession of the property to the
Domingos. In its 8 June 2004, Resolution,9 the Court of Appeals dismissed outright Marcelino and
Mananghayas 28 April 2004 petition.
Later, however, Marcelino employed six men to reenter the property. On 14 June 2004, the RTC
issued warrants of arrest against Marcelino and the six men. Marcelino and a certain Genero
Salazar (Salazar) were arrested and were detained at the Philippine National Police station in Sto.
Domingo, Nueva Ecija. On 17 and 23 June 2004, Genero and Marcelino, respectively, were
released after declaring in writing that they would no longer interfere with the Domingos possession
of the property. The RTC warned Marcelino that a warrant for his arrest shall be deemed
automatically issued if he reenters the property.
In its 4 October 2004 Order,10 the DAR granted Marcelinos 25 August 2003 petition, placed 10.0108
hectares of land including the property under the coverage of Republic Act (RA) No. 6657, and
named Marcelino as one of the tenant-beneficiaries. Agapita Domingo (Agapita) filed a motion for
reconsideration of the 4 October 2004 Order. Marcelino reentered and retook possession of the
property.
The Domingos filed before the RTC another motion to cite Marcelino in contempt, and for the
issuance of a warrant for his arrest. In its 23 December 2004 Order,11 the RTC stated that:

In the partial return, dated December 9, 2004, of Sheriff Crispino Magbitang acting per order, dated
December 1, 2004 of this Court, he confirmed that when he went to the subject property on
December 7, 2004, about 3:00 p.m., he saw six (6) men "tilling and plowing the land-in-question" but
who, upon seeing him, stopped working, gathered their agricultural implements and left. x x x
Dorenzo Domingo, brother of defendant Marcelino Domingo, confirmed to the sheriff the re-entry on
the land in question by his brother, the barangay captain of the place where said land is situated,
who bragged of an alleged decision of the DARAB regional office in San Fernando City, Pampanga,
making him the legal owner of the subject land.
The evidence of the plaintiffs also showed that defendant Marcelino Domingo had actually fenced
the subject property.
This Court, notwithstanding its already final order of May 26, 2004, finding and declaring defendant
Marcelino Domingo in contempt of court as well as the order of June 23, 2004 wherein it warned of
the automatic re-issuance of a warrant of arrest against him and any other acting in his behalf in the
event of reentry and retaking possession of the subject property, set the present motion for hearing
on December 15, 2004 to afford defendant Marcelino Domingo the opportunity to explain his side
even only for the purpose of mitigating the legal consequences of his very stubborn arrogance that
amounted to open defiance of the power of contempt of this Court.
Unfortunately, not only did defendant Marcelino Domingo refuse to receive the notice of the hearing
set on December 15, 2004, but he actually disregarded it by failing to appear on said date.
Again, to give the defendant another chance, the hearing set on December 15, 2004 was reset to
December 20, 2004, as requested by defendants counsel Atty. Restituto M. David x x x but again,
none of them appeared on said date nor file [sic] any comment on the same.
With defendant Marcelino Domingos cavalier attitude towards it, this Court now feels its authority
ignored and belittled and its power of contempt challenged and tested of its worth by said defendant
who, ironically, as barangay head and, as such, a person in authority himself, should first be the
paragon in upholding the rule of law.
Even if granted that defendant Marcelino Domingo had awarded [sic] ownership of the subject land
by the DARAB, still he could not have taken the law in his own hands by simply taking over thereof
without any judicial order and thereby ousting therefrom the plaintiffs who [sic], this Court, had given
legal possession thereof pursuant to a decision of the Court of Appeals which had already long
become final and executory.
WHEREFORE, premises considered, the present motion is granted:
1. Ordering the issuance of a continuing warrant of arrest and detention of defendant
Marcelino Domingo at the Nueva Ecija Provincial Jail, Caalibangbangan, Cabanatuan City
for a period of Thirty (30) days until further order from this Court;
2. Ordering defendant Marcelino Domingos further detention at the said jail until he shall
have effectively surrendered and redelivered possession of the subject property to the
plaintiffs;
3. Ordering the forfeiture in favor of the plaintiffs of all the movable improvements put or
introduced on the subject property by defendant Marcelino Domingo;

4. Ordering the issuance of a writ of execution for the satisfaction of the fine of P25,000.00
per the Order, dated May 26, 2004[;]
5. Ordering the issuance of a [sic] continuing warrants for the arrest of all other persons
working, cultivating, tilling and planting on the subject landholding in behalf of defendant
Marcelino Domingo, and under his control, direction and supervision.12
Marcelino filed a motion for reconsideration of the 23 December 2004 Order.
In its 17 February 2005 Order,13 the DAR granted Agapitas motion for reconsideration and set aside
the 4 October 2004 Order. The DAR held that the property was not covered by RA No. 6657
because it was less than five hectares. The DAR stated that:
From the documents submitted by the movant, it appears that the subject property of 4.1358
hectares covered by TCT No. 87365 is the only landholdings owned by Julio Domingo. He was only
an administrator of the 5.8831 hectares, therefore, the 4.1358 hectares cannot be covered by land
reform law either under PD 27/RA 6657 since the same is way below the ceiling mandated by
agrarian reform law.14
In its 4 March 2005 Order,15 the RTC denied Marcelinos motion for reconsideration. The RTC held
that:
In his Sinumpaang Salaysay of June 22, 2004 on the basis of which this Court ordered his release
from jail, defendant Marcelino never mentioned anything about the distinction of his possession of
the subject property between that in the concept of owner and in the concept of a tenant-lessee.
Even if he did, that would not have mattered because the concept of possession in the instance [sic]
case was never in issue. Besides, his undertaking in the said sworn statement was clearly worded
that he would never again re-enter or retake possession of the subject land either by himself of [sic]
by his agents and he would bar others from entering the same.
It will now appear that he had foisted a contumacious lie to this Court with his declaration in the said
sworn statement to obtain his release from jail. This warrant his being cited for another contempt of
this Court.
Actually even if defendant Marcelino had been awarded ownership of the subject land by the
DARAB, still he could not have taken the law in his own hands by simply taking over thereof without
any judicial order and thereby ousting therefrom the plaintiffs who [sic], this Court, had given legal
possession thereof pursuant to a decision of the Court of Appeals which had already long become
final and executory.
But the fact is, the Order of the DARAB relied upon by the defendant Marcelino did not grant him any
specific portion of the land declared to be within the coverage of PD27/RA 6657 because the same
was yet, by its terms, to be distributed to the qualified beneficiaries thereof and defendant Marcelino
being only one of such beneficiaries.
What accentuates defendant Marcelino contemnary [sic] act of reentering and retaking possession
of the subject land was the fact that he did so without even waiting for the finality of the order relied
upon by him. As it has turned out the DAR Region III had reversed its order of October 4, 2004 in
another order, dated February 17, 2005, copy of which was presented by the plaintiff to this Court by
way of manifestation filed on February 23, 2005, "SETTING ASIDE the Order, dated October 4,
2004, and a new one is hereby issued DENYING the petition for coverage filed by Marcelino
Domingo for utter lack of merit".

It is now very clear to this Court that defendant Marcelinos re-entry and retaking possession and
cultivation of the subject land was sheer display of stubborn arrogance and an open, deliberate and
contemptuous defiance of its order and processes.
WHEREFORE, premises considered, the Motion for Reconsideration of defendant Marcelino
Domingo is hereby denied and further ordering that:
1. The order granting the issuance of a warrant of arrest against defendant Marcelino
Domingo is hereby maintained;
2. Defendant Marcelino Domingo is again found and declared in contempt of Court and
penalized with imprisonment of Twenty (20) days;
3. Defendant Marcelino Domingos further detention at the Nueva Ecija Provincial Jail until
he shall have effectively surrendered and redelivered possession of the subject land to
plaintiffs;
4. Ordering the forfeiture in favor of the plaintiffs of all the movable improvements put or
introduced on the subject property by defendant Marcelino Domingo[;]
5. Ordering the issuance of a writ of execution for the satisfaction of The fine of P25,000.00
per the Order, dated May 26, 2004[;]
6. Ordering the issuance of a continuing warrants [sic] for the arrest of all other persons
working, cultivating, tilling and planting on the subject landholding in behalf of defendant
Marcelino Domingo, and under his control, direction and supervision.16
Marcelino filed before the Court of Appeals a petition for certiorari under Rule 65 of the Rules of
Court, dated 21 March 2005, with prayer for the issuance of a temporary restraining order. Marcelino
alleged that the RTC had no jurisdiction to order him to deliver possession of the property to the
Domingos and that the RTC gravely abused its discretion in finding him in contempt.
In its 5 April 2005 Resolution, the Court of Appeals dismissed outright Marcelinos petition. The
Court of Appeals held that:
This petition for certiorari faces outright dismissal for three (3) fundamental reasons, namely:
(1) There is no written explanation to justify service by mail in lieu of the preferred mode of
personal service, this in violation of Section 11, Rule 13, of the [Rules of Court] x x x.
Net result: The petition is deemed NOT filed.
(2) The following copies of pertinent pleadings and orders that would support the allegations
in the petition have not been attached thereto as annexes, to wit:
(a) The complaint for annulment of sale with damages filed with the Regional Trial
Court, Branch 37, Baloc, Sto. Domingo, Nueva Ecija;
(b) The RTC decision of November 3, 1993;

(c) The petition for coverage under PD 27 filed with DAR, Regional Office, San
Fernando, Pampanga;
(d) The October 4, 2004 DAR order;
(e) The motion for reconsideration filed with DAR, Reg. III, San Fernando,
Pampanga;
(f) DAR order of February 17, 2005; and,
(g) The notice of appeal filed on March 8, 2005.
this in violation of Section 3, Rule 46 of the 1997 Rules x x x.
(3) The prayer for temporary restraining order failed to manifest willingness to post the
necessary injunctive bond, in violation of Section 4, Rule 58.17
Marcelino filed a motion18 for reconsideration of the 5 April 2005 Resolution. In its 10 June 2005
Resolution, the Court of Appeals denied the motion. The Court of Appeals held that Marcelinos
"failure to file a written explanation to justify service by mail in lieu of the preferred mode of personal
service is an absolutely insurmountable obstacle to the success of this motion for
reconsideration."19 Marcelino filed another motion20 for reconsideration. In its 19 July 2005
Resolution, the Court of Appeals noted the motion. The Court of Appeals held that, "We cannot
accept the motion for reconsideration for the reason that a second motion for reconsideration of a
final order is a prohibited pleading."21
Hence, the present petition. Marcelino alleges that the Court of Appeals gravely abused its discretion
in dismissing the 21 March 2005 petition. He states that:
While it is true that petitioner failed to incorporate a written explanation to justify service by mail in
lieu of the preferred mode of personal service in his Petition, it was grave abuse of discretion for
public respondent Court of Appeals to dismiss his Petition on this ground. x x x [L]itigations should
be decided as much as possible on their merits rather than technicalities x x x.
x x x Section 11, Rule 13 of the 1997 Rules of Civil Procedure is "merely directory" and it is
incumbent upon the court to use its discretion in determining whether substantial justice will be
served (or rights unjustifiably prejudiced) if it resolves to dismiss a petition because of noncompliance with a mere directory rule.22
The petition is unmeritorious. Section 11, Rule 13 of the Rules of Court states:
SEC. 11. Priorities in modes of service and filing. Whenever practicable, the service and filing of
pleadings and other papers shall be done personally. Except with respect to papers emanating from
the court, a resort to other modes must be accompanied by a written explanation why the service or
filing was not done personally. A violation of this Rule may be cause to consider the paper as not
filed.
Section 11 is mandatory. In Solar Team Entertainment, Inc. v. Judge Ricafort,23 the Court held that:
Pursuant x x x to Section 11 of Rule 13, service and filing of pleadings and other papers must,
whenever practicable, be done personally; and if made through other modes, the party

concerned must provide a written explanation as to why the service or filing was not done
personally. x x x
Personal service and filing are preferred for obvious reasons. Plainly, such should expedite action or
resolution on a pleading, motion or other paper; and conversely, minimize, if not eliminate, delays
likely to be incurred if service or filing is done by mail, considering the inefficiency of postal service.
Likewise, personal service will do away with the practice of some lawyers who, wanting to appear
clever, resort to the following less than ethical practices: (1) serving or filing pleadings by mail to
catch opposing counsel off-guard, thus leaving the latter with little or no time to prepare, for instance,
responsive pleadings or an opposition; or (2) upon receiving notice from the post office that the
registered parcel containing the pleading of or other paper from the adverse party may be claimed,
unduly procrastinating before claiming the parcel, or, worse, not claiming it at all, thereby causing
undue delay in the disposition of such pleading or other papers.
1avv phi1

If only to underscore the mandatory nature of this innovation to our set of adjective rules
requiring personal service whenever practicable, Section 11 of Rule 13 then gives the court
the discretion to consider a pleading or paper as not filed if the other modes of service or
filing were resorted to and no written explanation was made as to why personal service was
not done in the first place. The exercise of discretion must, necessarily, consider the practicability
of personal service, for Section 11 itself begins with the clause "whenever practicable."
We thus take this opportunity to clarify that under Section 11, Rule 13 of the 1997 Rules of Civil
Procedure,personal service and filing is the general rule, and resort to other modes of service
and filing, the exception. Henceforth, whenever personal service or filing is practicable, in
light of the circumstances of time, place and person, personal service or filing is mandatory.
Only when personal service or filing is not practicable may resort to other modes be had,
which must then be accompanied by a written explanation as to why personal service or
filing was not practicable to begin with. In adjudging the plausibility of an explanation, a court
shall likewise consider the importance of the subject matter of the case or the issues involved
therein, and the prima facie merit of the pleading sought to be expunged for violation of Section 11.
This Court cannot rule otherwise, lest we allow circumvention of the innovation introduced by the
1997 Rules in order to obviate delay in the administration of justice.
xxxx
x x x [F]or the guidance of the Bench and Bar, strictest compliance with Section 11 of Rule 13
is mandated.24 (Emphasis supplied)
In petitions for certiorari, procedural rules must be strictly observed. In Athena Computers, Inc. v.
Reyes,25 the Court held that:
Certiorari, being an extraordinary remedy, the party who seeks to avail of the same must strictly
observe the rules laid down by law.
xxxx
The acceptance of a petition for certiorari as well as the grant of due course thereto is, in general,
addressed to the sound discretion of the court. Although the court has absolute discretion to reject
and dismiss a petition forcertiorari, it does so only x x x when there are procedural errors, like
violations of the Rules of Court.26

Liberal application of procedural rules is allowed only when two requisites are present: (1) there is a
plausible explanation for the non-compliance, and (2) the outright dismissal would defeat the
administration of justice. InTible & Tible Company, Inc. v. Royal Savings and Loan Association,27 the
Court held that "the two pre-requisites for the relaxation of the rules are: (1) justifiable cause or
plausible reason for non-compliance; and (2) compelling reason to convince the court that outright
dismissal of the petition would seriously impair the orderly administration of justice."28 Both requisites
are lacking in the present case.
WHEREFORE, we DISMISS the petition. We AFFIRM the 5 April and 10 June 2005 Resolutions of
the Court of Appeals in CA-G.R. SP No. 89023.
SO ORDERED.
G.R. No. 175334

March 26, 2008

SPS. DOMINGO M. BELEN and DOMINGA P. BELEN, herein represented by their attorney-infact NERY B. AVECILLA, Petitioners,
vs.
HON. PABLO R. CHAVEZ, Presiding Judge, RTC-Branch 87, Rosario, Batangas and all other
persons acting under his orders and SPS. SILVESTRE N. PACLEB and PATRICIA A. PACLEB,
represented herein by their attorney-in-fact JOSELITO RIOVEROS, Respondents.
DECISION
TINGA, J.:
This is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure assailing
the Decision1 and Resolution2 of the Court of Appeals in CA-G.R. SP No. 88731. The appellate
courts decision dismissed the petition for certiorari which sought to nullify the orders of the Regional
Trial Court (RTC) of Rosario, Batangas, Branch 87, denying herein petitioners motion to quash writ
of execution and their motion for reconsideration. The Court of Appeals resolution denied
petitioners motion for reconsideration of the decision.
The instant petition originated from the action for the enforcement of a foreign judgment against
herein petitioners, spouses Domingo and Dominga Belen, filed by private respondent spouses
Silvestre and Patricia Pacleb, represented by their attorney-in-fact, Joselito Rioveros, before the
RTC of Rosario, Batangas.
The complaint alleged that private respondents secured a judgment by default in Case No.
NC021205 rendered by a certain Judge John W. Green of the Superior Court of the State of
California. The judgment ordered petitioners to pay private respondents the amount of $56,204.69
representing loan repayment and share in the profits plus interest and costs of suit. The summons
was served on petitioners address in San Gregorio, Alaminos, Laguna, as was alleged in the
complaint, and received by a certain Marcelo M. Belen.
On 5 December 2000, Atty. Reynaldo Alcantara entered his appearance as counsel for petitioners,
stating that his legal services were retained at the instance of petitioners relatives. Atty. Alcantara
subsequently filed an answer, alleging that contrary to private respondents averment, petitioners
were actually residents of California, USA. The answer also claimed that petitioners liability had
been extinguished via a release of abstract judgment issued in the same collection case.

In view of petitioners failure to attend the scheduled pre-trial conference, the RTC ordered the ex
partepresentation of evidence for private respondents before the branch clerk of court. On 16 March
2001, before the scheduled ex parte presentation of evidence, Atty. Alcantara filed a motion to
dismiss, citing the judgment of dismissal issued by the Superior Court of the State of California,
which allegedly dismissed Case No. NC021205. The RTC held in abeyance the ex
parte presentation of evidence of private respondents and the resolution of Atty. Alcantaras motion
pending the submission of a copy of the judgment of dismissal.
For failure to present a copy of the alleged judgment of dismissal, the RTC denied the motion to
dismiss in an Order dated 19 February 2002. Through a motion, Atty. Alcantara sought the
reinstatement of the motion to dismiss by attaching a copy of the said foreign judgment.
For their part, private respondents filed a motion for the amendment of the complaint. The amended
complaint attached to the motion averred that private respondents were constrained to withdraw
their complaint against petitioners from the California court because of the prohibitive cost of
litigation, which withdrawal was favorably considered by said court. The amended complaint prayed
for judgment ordering petitioners to satisfy their obligation to private respondents in the amount
of P2,810,234.50.
The answer to the amended complaint raised the defenses of lack of cause of action, res
judicata and lack of jurisdiction over the subject matter and over the persons of the defendants since
the amended complaint had raised an entirely new cause of action which should have been
ventilated in another complaint.
Petitioners and Atty. Alcantara failed to appear at the rescheduled pre-trial conference. Thus, the
RTC declared petitioners in default and allowed private respondents to present evidence ex parte.
On 15 March 2003, Atty. Alcantara passed away without the RTC being informed of such fact until
much later.
On 5 August 2003, the RTC rendered a Decision, the dispositive portion of which reads:
WHEREFORE, in view of the foregoing, the defendants are hereby directed to pay the plaintiffs the
following, to wit:
a) The amount of P656,688.00 (equivalent to $27,362.00) in an exchange ratio of One (1)
dollar is toP24.00 Philippine Currency;
b) Plus 30% of P656,688.00 which is P197,006.40;
c) Plus P1,576,051.20 (30% for eight (8) years, 1995-2003); and
d) Plus 12% per annum as interest of the principal obligation (P656,688.00) from 1995 to
2003;
SO ORDERED.3
A copy of the RTC decision intended for Atty. Alcantara was returned with the notation "Addressee
Deceased." A copy of the RTC decision was then sent to the purported address of petitioners in San
Gregorio, Alaminos, Laguna and was received by a certain Leopoldo Avecilla on 14 August 2003.
Meanwhile, immediately after the promulgation of the RTC decision, private respondents filed an ex-

parte motion for preliminary attachment which the RTC granted in its Order dated 15 September
2003.
On 24 November 2003, private respondents sought the execution of the RTC decision. In its Order
dated 10 December 2003, the RTC directed the issuance of a writ of execution. Upon the issuance
of a writ of execution, the real properties belonging to petitioners were levied upon and the public
auction scheduled on 15 January 2004.
On 16 December 2003, Atty. Carmelo B. Culvera entered his appearance as counsel for petitioners.
On 22 December 2003, Atty. Culvera filed a Motion to Quash Writ of Execution (With Prayer to Defer
Further Actions). On 6 January 2004, he filed a Notice of Appeal from the RTC Decision averring
that he received a copy thereof only on 29 December 2003.
In an Order dated 7 July 2004, the RTC denied the motion seeking the quashal of the writ of
execution.4Subsequently, the RTC denied Atty. Culveras motion for reconsideration of said order.
Thus, petitioners filed a Rule 65 petition before the Court of Appeals, imputing on the RTC grave
abuse of discretion tantamount to lack or excess of jurisdiction (1) in rendering its decision although
it had not yet acquired jurisdiction over their persons in view of the improper service of summons; (2)
in considering the decision final and executory although a copy thereof had not been properly served
upon petitioners; (3) in issuing the writ of execution before the decision had become final and
executory and despite private respondents failure to comply with the procedural requirements in
filing the motion for the issuance of the said writ; and (4) in denying petitioners motion to quash the
writ of execution and notice of appeal despite sufficient legal bases in support thereof.
On 31 July 2006, the Court of Appeals rendered the assailed Decision dismissing the petition for
certiorari. On 3 November 2006, it issued the assailed Resolution denying petitioners motion for
reconsideration.
Hence, the instant petition, attributing to the Court of Appeals the following errors:
THE COURT OF APPEALS COMMITTED SERIOUS ERRORS [OF] LAW IN RULING THAT THE
TRIAL COURT ACTED WITHIN ITS JURISDICTION OR DID NOT COMMIT GRAVE ABUSE OF
DISCRETION WHEN IT CONSIDERED THE APPEARANCE OF THE COUNSEL AS THEIR
SUBMISSION TO THE JURISDICTION OF THE TRIAL COURT ALTHOUGH SUCH APPEARANCE
OF THE SAID COUNSEL WAS WITHOUT THEIR EXPRESS AUTHORITY BUT WAS DONE BY
THEIR ALLEGED RELATIVES.
THE COURT OF APPEALS COMMITTED SERIOUS ERRORS [OF] LAW WHEN IT RULED THAT
THE DECISION OF THE TRIAL COURT WAS DULY SERVED UPON THE PETITIONERS
THROUGH THEIR ALLEGED RELATIVES ALTHOUGH THE RECORDS OF THIS CASE CLEARLY
SHOWS THAT THE SAID PETITIONERS ARE RESIDENTS OF UNITED STATES OF AMERICA.5
In a Resolution dated 22 January 2007, the Court denied the petition because it is not accompanied
by a valid verification and certification of non-forum shopping. Petitioners sought reconsideration,
which the Court granted in a Resolution dated 16 April 2007. The Court also ordered the
reinstatement of the petition and the filing of a comment.
The instant petition raises two issues, thus: (1) whether the RTC acquired jurisdiction over the
persons of petitioners through either the proper service of summons or the appearance of the late
Atty. Alcantara on behalf of petitioners and (2) whether there was a valid service of the copy of the
RTC decision on petitioners.

On one hand, courts acquire jurisdiction over the plaintiffs upon the filing of the complaint. On the
other hand, jurisdiction over the defendants in a civil case is acquired either through the service of
summons upon them or through their voluntary appearance in court and their submission to its
authority. As a rule, if defendants have not
been summoned, the court acquires no jurisdiction over their person, and a judgment rendered
against them is null and void. To be bound by a decision, a party should first be subject to the courts
jurisdiction.6
In Asiavest Limited v. Court of Appeals,7 the Court underscored the necessity of determining first
whether the action is in personam, in rem or quasi in rem because the rules on service of summons
under Rule 14 of the Rules of Court of the Philippines apply according to the nature of the
action.8 The Court elaborated, thus:
In an action in personam, jurisdiction over the person of the defendant is necessary for the court to
validly try and decide the case. Jurisdiction over the person of a resident defendant who does not
voluntarily appear in court can be acquired by personal service of summons as provided under
Section 7, Rule 14 of the Rules of Court. If he cannot be personally served with summons within a
reasonable time, substituted service may be made in accordance with Section 8 of said Rule. If he is
temporarily out of the country, any of the following modes of service may be resorted to: (1)
substituted service set forth in Section 8; (2) personal service outside the country, with leave of
court; (3) service by publication, also with leave of court; or (4) any other manner the court may
deem sufficient.
However, in an action in personam wherein the defendant is a non-resident who does not
voluntarily submit himself to the authority of the court, personal service of summons within
the state is essential to the acquisition of jurisdiction over her person. This method of service
is possible if such defendant is physically present in the country. If he is
not found therein, the court cannot acquire jurisdiction over his person and therefore cannot
validly try and decide the case against him. An exception was laid down in Gemperle v.
Schenker wherein a non-resident was served with summons through his wife, who was a
resident of the Philippines and who was his representative and attorney-in-fact in a prior civil
case filed by him; moreover, the second case was a mere offshoot of the first case.
On the other hand, in a proceeding in rem or quasi in rem, jurisdiction over the person of the
defendant is not a prerequisite to confer jurisdiction on the court provided that the court acquires
jurisdiction over the res. Nonetheless, summons must be served upon the defendant not for the
purpose of vesting the court with jurisdiction but merely for satisfying the due process requirements.
Thus, where the defendant is a non-resident who is not found in the Philippines and (1) the action
affects the personal status of the plaintiff; (2) the action relates to, or the subject matter of which is
property in the Philippines in which the defendant has or claims a lien or interest; (3) the action
seeks the exclusion of the defendant from any interest in the property located in the Philippines; or
(4) the property of the defendant has been attached in the Philippines service of summons may be
effected by (a) personal service out of the country, with leave of court; (b) publication, also with leave
of court; or (c) any other manner the court may deem sufficient.9
The action filed against petitioners, prior to the amendment of the complaint, is for the enforcement
of a foreign judgment in a complaint for breach of contract whereby petitioners were ordered to pay
private respondents the monetary award. It is in the nature of an action in personam because private
respondents are suing to enforce their personal rights under said judgment.

Applying the foregoing rules on the service of summons to the instant case, in an action in
personam, jurisdiction over the person of the defendant who does not voluntarily submit himself to
the authority of the court is necessary for the court to validly try and decide the case through
personal service or, if this is not possible and he cannot be personally served, substituted service as
provided in Rule 14, Sections 6-7.10
In an action strictly in personam, personal service on the defendant is the preferred mode of service,
that is, by handing a copy of the summons to the defendant in person. If the defendant, for justifiable
reasons, cannot be served with the summons within a reasonable period, then substituted service
can be resorted to. While substituted service of summons is permitted, "it is extraordinary in
character and in derogation of the usual method of service."11
If defendant cannot be served with summons because he is temporarily abroad, but otherwise he is
a Philippine resident, service of summons may, by leave of court, be effected out of the Philippines
under Rule 14, Section 15. In all of these cases, it should be noted, defendant must be a resident of
the Philippines, otherwise an action in personam cannot be brought because jurisdiction over his
person is essential to make a binding decision.12
However, the records of the case reveal that herein petitioners have been permanent residents of
California, U.S.A. since the filing of the action up to the present. From the time Atty. Alcantara filed
an answer purportedly at the instance of petitioners relatives, it has been consistently maintained
that petitioners were not physically present in the Philippines. In the answer, Atty. Alcantara had
already averred that petitioners were residents of California, U.S.A. and that he was appearing only
upon the instance of petitioners relatives.13 In addition, private respondents attorney-in-fact, Joselito
Rioveros, testified during the ex parte presentation of evidence that he knew petitioners to be former
residents of Alaminos, Laguna but are now living in California, U.S.A.14 That being the case, the
service of summons on petitioners purported address in San Gregorio, Alaminos, Laguna was
defective and did not serve to vest in court jurisdiction over their persons.
Nevertheless, the Court of Appeals correctly concluded that the appearance of Atty. Alcantara and
his filing of numerous pleadings were sufficient to vest jurisdiction over the persons of petitioners.
Through certain acts, Atty. Alcantara was impliedly authorized by petitioners to appear on their
behalf. For instance, in support of the motion to dismiss the complaint, Atty. Alcantara attached
thereto a duly authenticated copy of the judgment of dismissal and a photocopy
of the identification page of petitioner Domingo Belens U.S. passport. These documents could have
been supplied only by petitioners, indicating that they have consented to the appearance of Atty.
Alcantara on their behalf. In sum, petitioners voluntarily submitted themselves through Atty.
Alcantara to the jurisdiction of the RTC.
We now come to the question of whether the service of a copy of the RTC decision on a certain
Teodoro Abecilla is the proper reckoning point in determining when the RTC decision became final
and executory.
The Court of Appeals arrived at its conclusion on the premise that Teodoro Abecilla acted as
petitioners agent when he received a copy of the RTC decision. For their part, private respondents
contend that the service of a copy of the RTC decision on Atty. Alcantara, notwithstanding his
demise, is valid. On the other hand, petitioners reiterate that they are residents of California, U.S.A.
and thus, the service of the RTC decision of a residence which is not theirs is not proper.
As a general rule, when a party is represented by counsel of record, service of orders and notices
must be made upon said attorney and notice to the client and to any other lawyer, not the counsel of

record, is not notice in law. The exception to this rule is when service upon the party himself has
been ordered by the court.15 In cases where service was made on the counsel of record at his given
address, notice sent to petitioner itself is not even necessary.16
The following provisions under Rule 13 of the Rules of Court define the proper modes of service of
judgments:
SEC. 2. Filing and service, defined.x x x
Service is the act of providing a party with a copy of the pleading or paper concerned. x x x
SEC. 5. Modes of service.Service of pleadings, motions, notices, orders, judgments and other
papers shall be made either personally or by mail.
SEC. 9. Service of judgments, final orders or resolutions. Judgments, final orders or resolutions
shall be served either personally or by registered mail. When a party summoned by publication has
failed to appear in the action, judgments, final orders or resolutions against him shall be served upon
him also by publication at the expense of the prevailing party.
SEC. 6. Personal service. Service of the papers may be made by delivering personally a copy to
the party or his counsel, or by leaving it in his office with his clerk or with a person having charge
thereof. If no person is found in his office, or his office is not known, or he has no office, then by
leaving the copy, between the hours of eight in the morning and six in the evening, at the partys or
counsels residence, if known, with a person of sufficient age and discretion then residing therein.
SEC. 7. Service by mail. Service by registered mail shall be made by depositing the copy in the
post office, in a sealed envelope, plainly addressed to the party or his counsel at his office, if known,
otherwise at his residence, if known, with postage fully pre-paid, and with instructions to the
postmaster to return the mail to the sender after ten (10) days if undelivered. If no registry service is
available in the locality of either the sender or the addressee, service may be done by ordinary mail.

lavvphil

SEC. 8. Substituted service. If service of pleadings, motions, notices, resolutions, orders and other
papers cannot be made under the two preceding sections, the office and place of residence of the
party or his counsel being unknown, service may be made by delivering the copy to the clerk of
court, with proof of failure of both personal service and service by mail. The service is complete at
the time of such delivery.
In the instant case, a copy of the RTC decision was sent first to Atty. Alcantara, petitioners counsel
of record. However, the same was returned unserved in view of the demise of Atty. Alcantara. Thus,
a copy was subsequently sent to petitioners "last known address in San Gregorio, Alaminos,
Laguna," which was received by a certain Leopoldo Avecilla.
Undoubtedly, upon the death of Atty. Alcantara, the lawyer-client relationship between him and
petitioners has ceased, thus, the service of the RTC decision on him is ineffective and did not bind
petitioners.
The subsequent service on petitioners purported "last known address" by registered mail is also
defective because it does not comply with the requisites under the aforequoted Section 7 of Rule 13
on service by registered mail. Section 7 of Rule 13 contemplates service at the present address of
the party and not at any other address of the party. Service at the partys former address or his last
known address or any address other than his present address does not qualify as substantial

compliance with the requirements of Section 7, Rule 13. Therefore, service by registered mail
presupposes that the present address of the party is known and if the person who receives the same
is not the addressee, he must be duly authorized by the former to receive the paper on behalf of the
party.
Since the filing of the complaint, petitioners could not be physically found in the country because
they had already become permanent residents of California, U.S.A. It has been established during
the trial that petitioners areformer residents of Alaminos, Laguna, contrary to the averment in the
complaint that they reside and may be served with court processes thereat. The service of the RTC
decision at their former address in Alaminos, Laguna is defective and does not bind petitioners.
On many occasions,17 the Court has strictly construed the requirements of the proper service of
papers and judgments. Both in Heirs of Delos Santos v. Del Rosario18 and Tuazon v. Molina,19 the
service of the trial courts decision at an adjacent office and the receipt thereof by a person not
authorized by the counsel of record was held ineffective. Likewise, the service of the decision made
at the ground floor instead of at the 9th floor of a building in the address on record of petitioners
counsel, was held invalid in PLDT v. NLRC.20 In these cases, there was no constructive service of
the decision even if
the service was made at the offices adjacent to the address on record of the parties counsels and
even if the copies eventually found their way to persons duly authorized to receive them.
In view of the foregoing, the running of the fifteen-day period for appeal did not commence upon the
service of the RTC decision at the address on record of Atty. Alcantara or at the Laguna address. It
is deemed served on petitioners only upon its receipt by Atty. Culvera on 29 December 2003.
Therefore, the filing of the Notice of Appeal on 06 January 2004 is within the reglementary period
and should be given due course.
WHEREFORE, the instant petition for review on certiorari is GRANTED and the Decision and
Resolution of the Court of Appeals in CA-G.R. SP No. 88731 are REVERSED and SET ASIDE.
Accordingly, the orders dated 7 July 2004 and 2 February 2005 of the Regional Trial Court of
Rosario. Batangas, Branch 87 are SET ASIDE. The RTC is also ordered to GIVE DUE COURSE to
the Notice of Appeal filed by Atty. Culvera on 06 January 2004 . Costs against private respondents.
SO ORDERED.
G.R. No. 175891

January 12, 2010

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.
RESINS, INCORPORATED, Respondent.
DECISION
CARPIO, J.:
The Case
G.R. No. 175891 is a petition for review1 assailing the Decision2 promulgated on 25 May 2006 by the
Court of Appeals (CA) in CA-G.R. SP No. 78516. The appellate court denied the petition filed by the
Republic of the Philippines (Republic) through the Office of the Solicitor General (OSG). The

appellate court found no grave abuse of discretion on the part of the Regional Trial Court of Misamis
Oriental, Branch 20, Cagayan de Oro City (RTC) in rendering its 17 March 19933 Judgment and 17
January 19944 Amended Judgment, as well as in issuing its 7 July 19995 and 28 May 20036 Orders
in Land Registration Case No. N-91-012, LRA Record No. N-62407. The RTC allowed the Land
Registration Authority (LRA) to issue a Decree of Registration in favor of Resins, Incorporated
(Resins, Inc.) over eight lots in Jasaan, Misamis Oriental after the RTCs Judgment7 dated 17 March
1993 became final and executory.
The Facts
The appellate court narrated the facts as follows:
On 17 October 1991, [Resins, Inc.] filed x x x Land Registration Case [No. N-91-012] before the
[RTC] for judicial confirmation of title over eight (8) parcels of land situated in the Municipality of
Jasaan, Misamis Oriental. The initial hearing for said case was originally set on 4 February 1992.
Prior to said date of hearing, the [LRA] filed with the [RTC] a report recommending that an Order be
issued to [Resins, Inc.] directing it to submit the names and complete postal addresses of the
adjoining lot owners, and that after complying with the said Order, the initial hearing be reset "on a
date consistent with LRC Circular No. 353."
Pursuant to the LRA recommendation, the application for original registration of titles was amended.
Thereupon, the [RTC] issued an Order dated 17 January 1992 setting the initial hearing on 30 April
1992.
On 10 February 1992, the OSG entered its appearance as counsel of the Republic x x x. In its notice
of appearance, the [OSG] manifested thus:
The City Prosecutor of Cagayan de Oro City has been authorized to appear in this case and,
therefore, should also be furnished notices of hearings, orders, resolutions, decisions, processes.
However, as the Solicitor General retains supervision and control of the representation in this case
and has to approve withdrawal of the case, non-appeal or other actions which appear to compromise
the interests of the Government, only notices of orders, resolutions, and decisions served on him will
bind the party represented.
On 27 February 1992, the OSG received the notice of initial hearing of the application. The notice of
the initial hearing was also served on the Regional Executive Director of the Department of
Environment and Natural Resources, the Secretary of the Department of Public Works and
Highways, the Director of the Bureau of Mines, the Director of the Bureau of Fisheries and Aquatic
Resources, the Secretary of the Department of Agrarian Reform, the Director of the Forest
Management Bureau, the Provincial Governor, the Provincial Fiscal, the Provincial Treasurer, the
Provincial Engineer, the Public Works and Highways District Engineer, the Community Environment
and Natural Resources Officer, Land Management Sector, the Municipal Mayor, the Municipal
Council of Jasaan, Misamis Oriental, the adjoining lot owners, and to all whom it may concern.
The notice of initial hearing was published in the 16 March 1992 issue of the Official Gazette and the
11 March 1992 issue of the Golden Chronicle pursuant to Section 23 of Presidential Decree No.
1529. On 19 March 1992, the City Sheriff posted the notice on the parcels of land sought to be
registered, at the municipality building, and in conspicuous places in the Municipality of Jasaan,
Misamis Oriental.

During the initial hearing on 30 April 1992, the [RTC] issued an Order of general default against the
whole world except against [the Republic] who had filed its opposition to the application and one
RENATO BAUTISTA who intimated to the [RTC] that he would file his opposition.
Subsequent hearings were conducted on the following dates: 16 July 1992, 23 July 1992, 15
September 1992, and 16 December 1992.
On 08 January 1993, [Resins, Inc.] filed Applicants Formal Offer of Documentary Evidence.
On 04 February 1993, the [RTC] issued an Order which states:
Considering the fact that all the exhibits of the applicant Resins, Incorporated were duly identified
and attested to by the witnesses for the applicant and considering the fact that no opposition was
filed by the government to the said exhibits, all the exhibits of the applicant from Exhibits "A" to "N,"
inclusive, are hereby admitted as part of the testimonies of the witnesses for the applicant.
SO ORDERED.8
The Regional Trial Courts Ruling
On 17 March 1993, the RTC rendered its Judgment9 in favor of Resins, Inc. The dispositive portion
reads:
In [v]iew of the [f]oregoing, judgment is hereby rendered finding applicant Resins Incorporated, as
owner in fee simple of all the lots sought to be registered Lot 980, Cad-367, Lot 1371, Cad-367,
Lot 1372, Cad-367, Lot 1373, Cad-367, Lot 1417, Cad-367, Lot 3462, Cad-267, Lot 3463, Cad-367,
and Lot 3465, Cad-367, all of Jasaan Cadastre and having registerable [sic] titles thereto, hereby
decreeing that Lot Nos. 980, 1371, 1372, 1373, 1417, 3462, 3463, and 3465 be registered in the
name of Resins Incorporated, a corporation organized pursuant to the laws of the Philippines with its
main office located at Jasaan, Misamis Oriental, in accordance with the technical descriptions
correspondingly marked as Exhibits A-2, B-2, C-2, D-2, E-2, F-2, G-2, and H-2.
SO ORDERED.10
Despite the favorable judgment, Resins, Inc., was unable to have the lots registered in its name
because of typographical errors in the RTCs 17 March 1993 Judgment. On 6 January 1994, Resins,
Inc. moved to correct the typographical errors and alleged:
1. That on March 17, 1993, the [RTC] rendered judgment approving the above-captioned
application;
2. That up to the present no decree of registration has been issued and upon inquiry from the
[LRA] [Resins, Inc.] learned that the reason is because [sic] there are two (2) typographical
errors in the judgment, to wit:
a. Lot No. 3464 appearing on page 2, subpar[.] (g), line 1 should be Lot 3463
because par. 1 on the application shows that the 7th lot applied for is Lot 3463;
b. That material omissions were made on page 4, line 31 as follow[s]:
ORIGINAL WORDINGS:

"poses per Tax Dec. Nos. 858391 and 09352 marked Cad-367, Jasaan"
which should read as follows after supplying the omissions:
"poses per Tax Dec. Nos. 858391 and 09352 marked Exhs. E-3 and E-6, that Lot 3463, Cad-367,
Jasaan"11
The RTC issued an Amended Judgment12 on 17 January 1994. However, only the error on page 2
was corrected and the error on page 4 remained. Upon yet another motion of Resins, Inc., the RTC
issued another Amended Judgment on 16 March 1994 which corrected both errors. The OSG
received a copy of the Amended Judgment on 2 May 1994, and filed a notice of appeal on 12 May
1994. Resins, Inc. filed a second motion to order the LRA to issue a decree of registration in its
favor.
On 7 July 1999, the RTC issued an Order13 granting Resins, Inc.s motion. The Order reads, thus:
Submitted before this court is the "Second Motion to Order the LRA to Issue a Decree of
Registration, etc." dated May 10, 1999 and filed on June 14, 1999 praying that
"1. The appeal filed by the [OSG] on May 12, 1994 or more than one (1) year from receipt of
the original judgment, be ordered dismissed;
"2. Another order be issued directing the LRA to issue a decree of registration for the eight
(8) lots enumerated in par. 1 hereof, based on the Amended Judgment dated March 16,
1994 and for other reliefs due under the premises."
Despite notice to the Solicitor General[,] he or his representative did not appear in the hearing of
June 18, 1999, nor did he file an opposition to the motion.
The Court finds the motion meritorious. The motion is granted. Hence, the [OSG]s appeal of May
12, 1999 is dismissed. The Land Registration Authority (LRA) is hereby directed to issue a decree of
registration in favor of [Resins, Inc.] for Lots 986, 1371, 1372, 1373, 1417, 3462, 3463, and 3465,
CAD-367 of the Jasaan Cadastre after the judgment dated March 17, 1993 became final and
executory.
SO ORDERED.
The Republic filed a Motion for Reconsideration14 of the 7 July 1999 Order. The Republic alleged
that the OSG was never furnished a copy of the alleged original decision. The Republic cited Resins,
Inc.s Motion to Dismiss Appeal,15 which stated "[t]hat the original judgment of this case was issued
on March 19, 1993, copy of which was furnished to the Office of the Solicitor General c/o the City
Prosecutor who was delegated to represent the former during the proceedings." Therefore, the 17
March 1993 Judgment never acquired finality with respect to the Republic.
Resins, Inc. filed an Opposition to the Motion for Reconsideration16 on 19 August 1999. Resins, Inc.
stated that the OSG was furnished a copy of the 17 March 1993 decision. The OSG received the
decision on 6 April 1993, as certified by the RTC Clerk of Court,17 and as evidenced by post office
return slips.18
On 28 May 2003, the RTC issued yet another Order.19 Said Order reads, thus:

For resolution is the motion for reconsideration filed by the oppositor Republic of the Philippines
represented by the Office of the Solicitor General of the order dismissing the notice of appeal filed by
the said oppositor alleging that the Republic was never furnished copy of the judgment dated March
17, 1993 and that an amended order of the decision is entirely new which supersedes the original
decision.
The motion was vehemently opposed by the applicant alleging that the Cagayan de Oro City
Prosecutor received copy of the said judgment on March 29, 1993 while the Office of the Solicitor
General, the Land Registration Authority, and the Bureau of Lands received copy of the judgment on
April 6, 1993.
The records of the case shows [sic] that indeed these offices received the copy of the judgment as
mentioned in the opposition per return slips attached to the records. Since there is no appeal filed
within 30 days from receipt of the judgment, the judgment of this Court therefore has already
become final and executory.
Anent the issue that the amended judgment supersedes the original judgment and as correctly
pointed out by the applicant, the amendment pertains to harmless clerical errors in pages 2 and 4 of
the original judgment but the dispositive portion confirming applicants ownership over the lots was
not changed.
The Republic then filed a Petition for Certiorari and Prohibition20 with prayer for temporary restraining
order and/or writ of preliminary injunction. The Republic sought to nullify, set aside, and prevent the
implementation of the RTCs Orders dated 7 July 1999 and 28 May 2003; as well as to nullify and
set aside the Judgment dated 17 March 1993 and the Amended Judgment dated 17 January 1994.
The Republic claimed that the entries in the logbook of the OSGs Docket Division do not indicate
that the 17 March 1993 Judgment was ever received by the OSG and actually transmitted to the
lawyers assigned to represent the Republic in the present case.
The Ruling of the Court of Appeals
On 25 May 2006, the CA rendered its Decision21 and denied the Republics petition. The CA saw no
grave abuse of discretion in the RTCs dismissal of the Republics appeal, which appeal was based
on the OSGs alleged non-receipt of its copy of the original Judgment.
The CA found that the records of the case show that the OSG indeed received its copy of the
original Judgment on 6 April 1993 as the return slip clearly indicated the date of service on the OSG.
The OSG did not file an appeal within the reglementary period; hence, the RTC ruled that the
Judgment is already final and executory. The CA also rejected the OSGs desire for examination of
entries in the OSGs logbook as well as the affidavit of its bookbinder. The CA ruled that evaluation
of evidentiary matters is beyond the province of a writ of certiorari. Moreover, even if the evidence
were considered, the same should still be rejected because the OSG failed to show that the
bookbinder had authority to record and keep legal custody of the logbook. Finally, the CA ruled that
the only issue in a petition for certiorari is lack or excess or grave abuse of discretion. Thus, the
OSGs contention that the State cannot be put in estoppel by the mistakes of its agents is misplaced.
The Issues
The Republic enumerated the following grounds to support its Petition:
I. The Court of Appeals gravely erred in not holding that the RTC of Misamis Oriental, Branch
20 acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it

dismissed [the Republics] notice of appeal (in its Order dated July 7, 1999) and
subsequently denied [the Republics] motion for reconsideration of such dismissal (in its
Order dated May 28, 2003) because of the clear showing that the OSG, as [the Republics]
statutory counsel, was not actually notified of and/or had not received a copy of the original
Judgment dated March 17, 2003 in Land Registration Case No. N-91-912.
II. The Court of Appeals has gravely erred in not holding that the RTC of Misamis Oriental,
Branch 20 acted with grave abuse of discretion amounting to lack or excess of jurisdiction in
issuing the July 7, 1999 and May 28, 2003 Orders which unduly deprived petitioner of its
opportunity to interpose an appeal from the original Judgment dated March 17, 1993 and/or
Amended Judgment dated January 17, 1994 in the subject land registration case which
found respondent-applicant Resins Incorporated to have registrable title to all the eight (8)
lots applied for despite lack of clear factual and legal basis to support the conclusion that
"applicant and his predecessor-in-interest had openly, continuosly [sic], adversely and
uninterruptedly been in possession of the lots as owned for about 40 years prior to filing of
the application.22
The Courts Ruling
The petition is meritorious. We rule that Resins, Inc. failed to prove that the Republic, via the OSG,
indeed received the 17 March 1993 Judgment.
At the time of the promulgation of the trial courts judgment, the applicable rules were those of the
Revised Rules of Court. Pertinent portions of these sections are quoted below:
Sec. 5. Service by registered or ordinary mail. If service is not made personally, service by
registered mail shall be required if registry service exists in the locality; otherwise service may be
made by depositing the copy in the post office, in a sealed envelope, plainly addressed to the party
or his attorney at his office, if known, otherwise at his residence, if known, with postage fully prepaid,
and with instructions to the postmaster to return the mail to the sender after ten (10) days if
undelivered.23
Sec. 7. Service of judgments, final orders or resolutions. Judgments, final orders or resolutions
shall be served either personally or registered mail. x x x24
Sec. 8. Completeness of service. x x x Service by registered mail is complete upon actual receipt
by the addressee, but if he fails to claim his mail from the post office within five (5) days from the
date of first notice of the postmaster, service shall take effect at the expiration of such time.25
Sec. 10. Proof of service. x x x If the service is by ordinary mail, proof thereof shall consist of an
affidavit of the person mailing of facts showing compliance with section 5 of this rule. If service is
made by registered mail, proof shall be made by such affidavit and the registry receipt issued by the
mailing office. The registry return card shall be filed immediately upon its receipt by the sender, or in
lieu thereof the letter unclaimed together with the certified or sworn copy of the notice given by the
postmaster to the addressee.26
When service of notice is an issue, the rule is that the person alleging that the notice was served
must prove the fact of service. The burden of proving notice rests upon the party asserting its
existence.27 In civil cases, service made through registered mail is proved by the registry receipt
issued by the mailing office and an affidavit of the person mailing of facts showing compliance with
Section 13, Rule 13 of the 1997 Rules on Civil Procedure.28

The OSG insists that it did not actually receive a copy of the 17 March 1993 Judgment. The OSG
received a certified copy of the 17 March 1993 Judgment only after its 24 June 2003 written request
to the Assistant City Prosecutor of Cagayan de Oro. The OSG presented a certified photocopy of the
page of the OSGs Docket Division Log Book listing the orders, pleadings, and other papers received
by the OSG pertaining to the present case. The last document on the case received by the OSG
before the receipt of the Amended Judgment on 2 May 1994 was an Order dated 26 December 1992
and received on 13 January 1993. There was no record of the Judgment dated 17 March 1993.
Because of this non-receipt, the Republic was deprived of the opportunity to appeal or to ask for
reconsideration of the judgment. The OSG filed a notice of appeal on 12 May 1994, only after its
receipt of the Amended Judgment.
1avvphi 1

Resins, Inc., on the other hand, asserts that the certification of the RTC Clerk of Court and
photocopies of the return slips from the post office are sufficient to prove that the OSG indeed
received the 17 March 1993 Judgment.
Resins, Inc.s argument must fail.
OSGs denial of receipt of the 17 March 1993 Judgment required Resins, Inc. to show proof that the
Judgment was sent through registered mail and that it was received by the Republic. While the
certification from the RTC Clerk of Court and photocopies of the return slips prove that the Republic
was served the judgment, it does not follow that the Republic, via the OSG, actually received the
judgment. Receipts for registered letters and return receipts do not prove themselves, they must be
properly authenticated in order to serve as proof of receipt of the letters.29Resins, Inc. also did not
show a certification from the postmaster that notice was duly issued and delivered to the OSG such
that service by registered mail may be deemed completed. It cannot be stressed enough that "it is
the registry receipt issued by the mailing office and the affidavit of the person mailing, which proves
service made through registered mail."30 Absent one or the other, or worse both, there is no proof of
service.31
Mere certification of the RTC Clerk of Court is insufficient because the Clerk of Court may not be the
person who did the mailing. The certification in this case is also not under oath. There must be an
affidavit of the person who actually did the mailing. In the present case, the certification of the Clerk
of Court states:
CERTIFICATION
This certifies that the original carbon copy of the Judgment of the above-entitled case appearing on
pages 484-488 dated March 17, 1993 was received by the Office of the Solicitor-General on April 6,
1993 as per return slip. A copy of which is attached herewith.
Posted on this 13th day of August, 1999 in the city of Cagayan de Oro.
TAUMATURGO U. MACABINLAR
Clerk of Court V32
It is clear that the certification does not state that the Clerk of Court did the mailing. Mere
photocopies of the return slips are also insufficient. The original copies of the registry receipt or, in
lieu thereof, the unclaimed notice and a certification from the postmaster of the issuance of notice,
should be presented. Indeed, we declared in Delgado v. Hon. P.C. Ceniza, et al. that:

We find that the service of the judgment rendered in the case suffers from two defects,
namely, there is no affidavit of the clerk of court, the person mailing, and there is no registry
return card, or a certified or sworn copy of the notice given by the postmaster to the
addressee.33 (Emphasis supplied)
While we concede that there may be a presumption of regularity, in the ordinary course of events,
that the RTC Clerk of Court sent the 17 March 1993 Judgment to the OSG, such presumption should
fail when the OSG itself denies receipt. When the service of the judgment is questioned, such as in
the present case, there is a need to present both the registry receipt issued by the mailing
office and the affidavit of the person mailing. Since the OSG presented proof of non-receipt, it
became incumbent upon Resins, Inc. to prove receipt, which Resins, Inc. failed to do.
WHEREFORE, we GRANT the petition. The Decision of the Court of Appeals in CA-G.R. SP No.
78516 promulgated on 25 May 2006 is REVERSED and SET ASIDE. The Regional Trial Court of
Misamis Oriental, Branch 20, Cagayan de Oro City is directed to hear the appeal of the Republic of
the Philippines in Land Registration Case No. N-91-012, LRA Record No. N-62407.
SO ORDERED.
G.R. NO. 141484 November 11, 2005
GCP-MANNY TRANSPORT SERVICES,* INC., Petitioner,
vs.
HON. ABRAHAM Y. PRINCIPE**, Presiding Judge, Regional Trial Court, Branch 2, Tuguegarao,
Cagayan, CAGAYAN PROVINCIAL SHERIFF or his deputies, and NELSON
RECOLIZADO, Respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
GCP-Manny Transport Services, Inc. is now before this Court on a petition for review
on certiorari seeking the reversal of the Decision1 of the Court of Appeals (CA) in CA-G.R. SP. No.
43441 promulgated on May 26, 1999 and the Resolution2 dated December 29, 1999.
The antecedent facts, as summarized by the CA, are as follows:
On April 18, 1990, private respondent filed the herein complaint for damages docketed as Civil Case
No. 4142 for physical injuries sustained by him as a passenger of petitioners bus.
On November 2, 1995, respondent court3 rendered a decision in favor of the private respondent
ordering the petitioner to pay the former the amount of P58,207.35 as actual and compensatory
damages; P150,000.00 as moral damages; P10,000.00 as exemplary damages and P10,000.00 as
attorneys fees, and costs. Copy of the decision sent to petitioner was returned for the reason that it
had "moved" (residence), while copy sent to Atty. Arnold M. Aquino, then petitioners counsel, was
returned "unserved" being unclaimed. Petitioner states that a copy of the decision was personally
delivered by the Civil Docket Clerk of the trial court on Atty. Aquino who had refused to receive the
same saying he was no longer counsel for the petitioner, although no notice of withdrawal as
counsel was filed by him in court.

On April 11, 1996, private respondent filed a motion for execution of the judgment, copy furnished to
Atty. Arnold M. Aquino and petitioner which the court granted on October 9, 1996. The assailed writ
of execution was correspondingly issued, which petitioner received on October 30, 1996.
On November 5, 1996, Atty. Jose de Luna entered his appearance as new counsel for the petitioner
with motion for reconsideration of the order dated October 9, 1996 granting the motion for execution
or the quashal of the writ of execution on the ground that petitioner had not been duly notified of the
decision.
On November 9, 1996, petitioner received a Notice of Demand for Payment from the deputies of the
Ex-officio Sheriff of the RTC of Cagayan attaching thereto copies of the writ of execution and the
decision. On November 14, 1996, petitioner filed a Notice of Appeal. Two(2) months later, on
January 23, 1997, the respondent court issued the assailed resolution denying petitioners motion for
reconsideration or to quash writ of execution.4 (citations omitted)
Petitioner went to the CA on a petition for certiorari claiming that the denial of the respondent Judge
of its motion for reconsideration was tainted with grave abuse of discretion since he was not duly
notified of the decision and there is no legal and factual basis for the issuance of the writ of
execution.5 The appellate court found no such abuse of discretion and dismissed the petition.6 It
likewise denied petitioners motion for reconsideration.7
Hence, the present petition for review on certiorari alleging that:
I
THE COURT OF APPEALS COMMITED A GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OF JURISDICTION OR IN EXCESS OF IT IN FINDING THAT THE UNJUSTIFIABLE
REFUSAL OF PETITIONERS COUNSEL ON RECORD TO RECEIVE IN OPEN COURT A COPY
OF THE SUBJECT DECISION IS ONLY A MERE NEGLIGENCE OF COUNSEL AND
THEREFORE, BINDS PETITIONER, HENCE, THE DECISION HAD BECOME FINAL AND
EXECUTORY.
II
THE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION IN AFFIRMING THE
DECISION OF RESPONDENT JUDGE, BY CITING JURISPRUDENCE ON "NEGLIGENCE OF
COUNSEL BINDS HIS CLIENT" WHICH IS NOT APPLICABLE IN THE INSTANT CASE BECAUSE
THEY HAVE DIFFERENT FACTS.8
Petitioner argues that: when a copy of the decision which the court sent to Atty. Aquino was returned
to sender, respondent Judge resorted in causing the service of the decision to said counsel in open
court, as petitioners counsel on record, when said lawyer appeared in the sala of respondent Judge
for another case; petitioner should be deemed as having no notice of the trial court decision since its
counsel, who had not withdrawn as such, refused to receive a copy of the same; such act of its
counsel constitutes gross negligence which does not bind petitioner; there was also no valid service
to Atty. Aquino because when he refused to receive a copy of the decision, what the civil docket
clerk of the trial court should have done under the premises was to resort to substituted service;
since there was no notice to petitioner regarding the trial court decision, the issuance of the writ of
execution and the denial of petitioners notice of appeal by respondent Judge are null and void; and
the case of Peoples Homesite and Housing Corp. vs. Tiongco9 held that when the lawyer failed to
notify his client about the receipt of the decision, such lawyer is irresponsible and notice to him is not
notice to client, such as in the case at bar.10

Petitioner prays that the decision and the resolution promulgated by the CA be reversed; that an
order be issued nullifying the writ of execution issued by respondent Judge; and that the notice of
appeal of petitioner be granted as it has a very meritorious defense based on fortuitous event.11
Respondent in his Comment contends that: since Atty. Aquino is the counsel of petitioner from the
trial up to its termination and there is nothing in the record to show that he withdrew as counsel of
petitioner, the copy of the decision mailed to him by registered mail although returned unserved is
sufficient to serve as notice to him and to his client following Sec. 5 of Rule 13 of the Rules of Court;
it was the duty of petitioner to notify the court that Atty. Aquino was no longer its lawyer; petitioner
was negligent in hiring a new counsel more than a year from July 1995 when Atty. Aquino was no
longer its lawyer; the implication is that Atty. Aquino was still its counsel when the decision was
rendered and when a copy of the decision was sent to him by registered mail since it is elementary
that if a lawyer is going to withdraw as counsel for his client, he should file a motion to withdraw as
such with the conformity of the client; in this case, Atty. Aquino did not file any motion to withdraw as
counsel for the petitioner thus he remained to be counsel of record of petitioner especially since it
was only on October 26, 1996 when the services of Atty. Jose de Luna was engaged by petitioner;
and the writ of execution issued is valid and proper considering that the decision of the court has
already become final and executory.12
Before going to the merits, this Court reiterates the distinction between petition for review
on certiorari under Rule 45 and petition for certiorari under Rule 65. It should be recalled that a
petition under Rule 45 brings up for review errors of judgment while a petition under Rule 65
concerns errors of jurisdiction or grave abuse of discretion amounting to lack or excess of
jurisdiction. Grave abuse of discretion is not an allowable ground under Rule 45. However, a petition
for review on certiorari under Rule 45 may be considered as a petition for certiorari under Rule 65
where it is alleged that the respondents abused their discretion in their questioned actions.13 Such is
the case at bar.
It is petitioners position that the CA committed grave abuse of discretion in finding that the
unjustifiable refusal of its counsel on record to receive in open court a copy of the subject decision is
only mere negligence of counsel which binds it. It then contends that the writ of execution should be
quashed because the decision of the trial court had not become final and executory due to nonservice of the decision upon its counsel.
The Court does not agree.
Jurisprudence is replete with pronouncements that clients are bound by the actions of their counsel
in the conduct of their case.14 If it were otherwise, and a lawyers mistake or negligence was
admitted as a reason for the opening of a case, there would be no end to litigation so long as
counsel had not been sufficiently diligent or experienced or learned.15
The only exception to the general rule is when the counsels actuations are gross or palpable,
resulting in serious injustice to client, that courts should accord relief to the party.16 Indeed, if the
error or negligence of the counsel did not result in the deprivation of due process to the client,
nullification of the decision grounded on grave abuse of discretion is not warranted.17
In this case, while Atty. Aquino, counsel of petitioner, was far from being vigilant in protecting the
interest of his client, his infractions cannot be said to have deprived petitioner of due process that
would justify deviation from the general rule that clients are bound by the actions of their counsel.
As may be gleaned from the records, petitioner was able to actively participate in the proceedings a
quo. It was duly represented by counsel during the trial. While it may have lost its right to appeal, it

was not denied its day in court. As enunciated by this Court, the right to appeal is not a natural right
or a part of due process but only a statutory privilege and may be exercised only in the manner and
in accordance with the provisions of law. 18 As long as a party is given the opportunity to defend its
interests in due course, it would have no reason to complain, for it is the opportunity to be heard that
makes up the essence of due process.19
The Court has also held that when petitioner is at fault or not entirely blameless, there is no reason
to overturn well-settled jurisprudence or to interpret the rules liberally in its favor.20 Where petitioner
failed to act with prudence and diligence, its plea that it was not accorded the right to due process
cannot elicit this Courts approval or even sympathy.21 It is petitioners duty, as a client, to be in touch
with his counsel so as to be constantly posted about the case.22 It is mandated to inquire from its
counsel about the status and progress of the case from time to time and cannot expect that all it has
to do is sit back, relax and await the outcome of the case.23It is also its responsibility, together with
its counsel, to devise a system for the receipt of mail intended for them.24
Petitioner was wanting in all these areas. Not only did it fail to regularly check on the status of the
case, it also failed to ensure that it could be notified of the decision as soon as it was promulgated.
Petitioner did not inform the court that it has severed its relationship with Atty. Aquino, its counsel of
record.25 Thus, insofar as the trial court was concerned, Atty. Aquino was still its counsel. Neither did
it hire a new lawyer soon after Atty. Aquino allegedly ceased to be its counsel. Atty. Jose de Luna,
its subsequent lawyer, stated that his services were engaged by petitioner only on October 26, 1996
or a year after the decision was rendered by the trial court, while Atty. Aquino is supposed to have
resigned as petitioners counsel in July of 1995 or three months before the questioned decision was
promulgated.26 Insofar as petitioner is concerned, it knew that it did not have any counsel when the
decision of the trial court was due for promulgation yet it did not engage the services of a new one to
safeguard its interests.
Petitioner also claims that it had no valid notice of the trial court decision therefore the writ of
execution subsequently issued by the respondent Judge is null and void; and claims that the trial
court should have resorted to substituted service when its counsel on record refused to receive a
copy of the decision.
Such claims have no merit.
The fact that Atty. Aquino refused to receive a copy of the decision and no substituted service was
effected does not erase the fact that a copy of the trial court decision had earlier been sent by
registered mail to Atty. Aquino which was returned for the reason that he has moved.27 This is
sufficient service of the decision on petitioner since service upon counsel of record at his given
address is service to petitioner.28 As explained in Macondray & Co., Inc. vs. Provident Insurance
Corp.:29
If counsel moves to another address without informing the court of that change, such omission or
neglect is inexcusable and will not stay the finality of the decision. "The court cannot be expected to
take judicial notice of the new address of a lawyer who has moved or to ascertain on its own whether
or not the counsel of record has been changed and who the new counsel could possibly be or where
he probably resides or holds office."30
The rule is that when a party is represented by counsel in an action in court, notices of all kinds
including motions, pleadings and orders must be served on the counsel. And notice to such counsel
is notice to the client.31 Notice sent to counsel of record is binding upon the client and the neglect or
failure of counsel to inform him of an adverse judgment resulting in the loss of his right to appeal is
not a ground for setting aside a judgment, valid and regular on its face.32

While the rule admits of exceptions, in order to prevent a miscarriage of justice,33 no such
circumstance is here present as petitioner was duly accorded due process.
This Court has also held that in cases where service was made on the counsel of record at his given
address, notice sent to petitioner itself is not even necessary.34 Even then, in the present case, the
trial court had sent a copy of the decision to petitioners known address which was returned however
for the reason that it has moved.35
Petitioner also claims that the ruling of the Court in Peoples Homesite & Housing Corp. vs.
Tiongco36 should be applied in the present case.
The Court disagrees. The differences in Peoples Homesite with the case at bar are apparent.
In Peoples Homesite, the counsel failed to inform the petitioners of the scheduled hearing and the
case was heard in their absence. The counsel also did not inform the petitioners that he had
received a copy of the decision neither did he file a motion for reconsideration or a petition to set
aside judgment to protect the interests of his clients. As soon as petitioners learned of the decision
they contacted their counsel and failing to do so, hired the services of a new one. When asked to
explain, the counsel merely said that he did not inform the petitioners because the case escaped his
attention. Because of these actions, the Court found that there was "something fishy and
suspicious." Indeed, there was nothing which could have prevented the petitioners from attending
the trial of the case themselves or moved for a reconsideration of the decision or took the necessary
appeal from the judgment if only their counsel had informed them of the courts processes.37
In this case, petitioner was able to actively defend its case in court. It also knew that Atty. Aquino
was no longer its counsel months before the decision was rendered, unlike in Peoples Homesite,
yet it did not take steps to hire a new one to protect its interests.
The trial court was therefore correct when it denied petitioners motion for reconsideration of the
order issuing the writ of execution. As ably discussed by respondent Judge in his resolution:
The sole issue to be resolved in the case at bar is whether or not there was a valid service of the
courts decision to defendants herein and their former counsel.
Defendants main theory is that there was no valid service of the decision to them by registered mail,
and that, neither was there a valid service of the decision to their former counsel, Atty. Arnold
Aquino, who refused to receive it when the Civil Docket Clerk of this court personally handed a copy
of the decision to him.
Section 7, Rule 13 of the Rules of Court provides as follows:
Section 7 Service of Final orders of Judgments.
Final orders of Judgments shall be served either personally or by registered mail xxx
For the Rule to apply, service must have been made on the counsel de parte (FOJAS VS.
NAVARRO, L-26365, April 30, 1970) and if it was sent to his address on record and he fails to
receive it for causes imputable to him it is not necessary to effect further service upon the party he
represent (MAGNO, ET AL VS. C.A., et al. G.R. No. 58781, July 31, 1987).

As borne by the records itself, a copy of this courts decision was sent thru registered mail on
December 6, 1995 to Atty. Arnold Aquino, who was at that time defendants counsel of record, at his
given address on record but the same was returned with the annotation on the envelope that said
counsel had "moved". A separate copy of the decision was later sent thru registered mail to the
defendant GCP Manny Transport Service, Inc. at its given address on record but was also returned
to the Court with the same annotation that said defendant had "moved". It is not disputed that the
address on record of Atty. Arnold Aquino and GCP Manny Transport Service Inc. is 1310 Espaa
Corner Galicia St., Sampaloc, Manila. It was there where copies of the decision were sent.
In the case of Magno, et al. vs. C.A., et al., (G.R. No. 58781, July 31, 1978 [sic]) it was held that:
"(But) where a copy of the decision was sent to counsel at his address of record but the same was
not received because he moved to another address without informing the court thereof, such
omission or neglect will not stay the finality of the decision."
Neither Atty. Arnold Aquino or defendant GCP Manny Transport Service, Inc. informed the court of
their change of address. Naturally, copies of the decision in this case were sent at their address of
record. It is not incumbent upon the court to determine the new address of party-litigants. On the
contrary, it is the duty of the parties to inform the court of such change address. Moreover, notices of
the court processes are ordinarily taken cared of by clerks who are naturally guided by addresses of
record. To require the court and its personnel before sending out the notices to be continuously
checking the records and the various addresses from which a counsel may have filed his pleadings
and sending them to such addresses instead of his address of record is to show (sic) confusion and
add an intolerable burden which is not permitted by the Rules of Court (INANA VS. GARCIA 25
SCRA 801, see Rule 7, Sec. 5, Rule 13, Sec.5).
Notwithstanding separate service of copy of decision to herein defendant GCP Manny Transport
Inc., and its counsel de parte thru registered mail, the Court, likewise, available of personal service
of decision pursuant to Section 7 of said Rule 13.
Be it noted that the Civil Docket Clerk personally handed a copy of the decision to Atty. Arnold
Aquino who was in court but who refused to receive it alleging that he is no longer the counsel for
the defendant. However, at the time of such service, Atty. Aquino remained to be defendants
counsel of record since he did not formally withdraw as counsel for the GCP Manny Transport Inc. It
has been held time and again that personal service of decision cannot be avoided by counsels
declining to accept it and service is deemed complete regardlessof such refusal to accept. And
notice to counsel operates as notice to clients.
It is now too late for herein defendants to advance the theory that they have not received a copy of
the decision in this case, especially if the records thereof, would show otherwise. The Court was not
amiss in seeing to it that its final orders and judgment were duly served or furnished the partylitigants and their respective counsels and if they refuse to receive the same, they must suffer the
consequences thereof. The decision rendered by this Court has already attained finality, hence, may
no longer be set aside not even reconsidered without militating against the provisions of our
procedural laws.38
As a final note, let it be emphasized that before a counsel of record may be considered relieved of
his responsibility as such counsel on account of withdrawal, it is necessary that Section 26, Rule 138
of the Rules of Court, to wit:
Section 26 Change of Attorneys An attorney may retire at anytime from an action or special
proceeding, by the written consent of his client filed in court. He may also retire at anytime from an

action or special proceeding, without the consent of his client, should the court, on notice to the
client and attorney, and on hearing, determine that he ought to be allowed to retire. In case of
substitution, the name of the attorney newly employed shall be entered on the docket of the court in
place of the former one, and the written notice of the change shall be given to the adverse party.

should be observed. Unless said procedure is complied with, the counsel of record is regarded as
the counsel who should be served with copies of the judgments, orders and pleadings and who
should be held responsible for the case.39 Indeed, a lawyers withdrawal as counsel must be made in
a formal petition filed in the case, without which, notice of judgment rendered in the case served on
the counsel of record, is, for all legal purposes, notice to the client, the date of receipt of which is
considered the starting point from which the period of appeal prescribed by law shall begin to
run.40 Petitioner having failed to appeal in due time, the trial court did not commit any error or grave
abuse of discretion in granting the motion for execution.
WHEREFORE, the petition is hereby DISMISSED for lack of merit.
Costs against petitioner.
SO ORDERED.
G.R. no. 169970

January 20, 2009

PROTACIO VICENTE AND DOMINGA VICENTE, represented by Rondolf Vicente, Petitioners,

vs.
DELIA SOLEDAD AVERA and RONBERTO VALINO, Sheriff IV, Regional Trial Court, Branch
70, Pasig City,Respondents.
DECISION
PUNO, C.J.:
This Petition for Review on Certiorari seeks to set aside the Decision1 and Resolution2 of the Court of
Appeals (CA), dated June 16, 2005 and October 4, 2005 respectively, in CA-G.R. CV No. 79327,
which reversed the Decision3 of the Regional Trial Court (RTC), Branch 208, Mandaluyong City,
dated March 30, 2003.
Jovencio Rebuquiao was the registered owner of the property in dispute, then covered by Transfer
Certificate of Title (TCT) No. 34351.4 On October 1, 1987, Rebuquiao executed a Deed of Absolute
Sale in favor of petitioners, spouses Protacio Vicente and Dominga Vicente, over the property in
dispute.5 Respondent Delia Soledad Avera alleges that on October 9, 1987, Jose Rebuquiao,
pursuant to a Special Power of Attorney granted to him by Jovencio Rebuquiao, executed a Deed of
Absolute Sale with Assumption of Mortgage in favor of Roberto Domingo, Averas spouse at the
time, and herself.6
On May 29, 1991, Avera filed a Petition for Declaration of Nullity of Marriage before the RTC, Branch
70, Pasig City, entitled "Delia Soledad Domingo, etc. v. Roberto Domingo" and docketed as JDRC
Case No. 1989-J (JDRC case).7 In this case, Avera asserted exclusive ownership over the property
in dispute.8 On January 23, 1992, a notice of lis pendens was inscribed on TCT No. 34351,
pertaining to the JDRC case pending at the time.9

Since 1997, petitioners possessed the property in dispute.10 On July 22, 1998, TCT No. 34351 was
cancelled, and in lieu thereof, the Registry of Deeds issued petitioners TCT No. 14216 for the
property in dispute, on the basis of the deed of sale executed on October 1, 1987.11 The notice of lis
pendens was carried over to TCT No. 14216.12
On November 28, 1994, the RTC, Branch 70, Pasig City, rendered a Decision in the JDRC case,
declaring the marriage of Avera and Domingo void and ordering the property acquired during their
cohabitation to be put in the custody of Avera, including the property in dispute.13 After the decision
in the JDRC case became final and executory, the RTC, Branch 70, Pasig City, issued a Writ of
Execution.14 On June 13, 2001, the same trial court issued an Alias Writ of Execution, which reads:
Movant declared in her motion that the said property is now registered in the name of another
person, namely, Protacio Vicente, under TCT No. 14216 of the Register of Deeds of Mandaluyong
City. It appearing, however, that the transfer was made notwithstanding the annotation thereon of
the notice of lis pendens that the same property is the subject of the instant case, it can still be the
subject of a writ of execution to satisfy the judgment in favor of herein petitioner.
WHEREFORE, let an alias writ of execution be issued over Transfer Certificate of Title No. 34351,
now covered by TCT No. 14216 of the Register of Deeds of Mandaluyong City.
1avv phil.zw+

SO ORDERED.15
Pursuant to the Alias Writ of Execution, respondent Ronberto Valino, in his capacity as Sheriff IV of
the RTC, Branch 70, Pasig City, served a Notice to Vacate dated August 15, 2001, on
petitioners.16 On August 17, 2001, petitioners filed an Affidavit of Third Party Claim before the RTC,
Branch 70, Pasig City.17
On August 22, 2001, petitioners filed a Complaint for Injunction with Prayer for a Temporary
Restraining Order (TRO) before the RTC, Branch 208, Mandaluyong City, to enjoin Sheriff Valino
from implementing the alias writ of execution.18 On September 4, 2001, the trial court issued a
TRO19 and, on May 29, 2002, a Writ of Preliminary Injunction, enjoining respondents from enforcing
the notice to vacate.20 On March 30, 2003, it rendered a decision, the dispositive portion of which
reads:
WHEREFORE, judgment is hereby rendered making the writ of preliminary injunction PERMANENT.
Defendants counterclaims are hereby dismissed for lack of merit.
SO ORDERED.21
It held that petitioners were entitled to permanent injunction considering the following: (1) it is
undisputed that petitioners are the registered owners of the subject property, which certificate of title
confers upon them conclusive ownership of the property; and (2) the writ of execution issued in the
JDRC case could only be issued against a party to the action, and thus not to the petitioners.22
On appeal, the CA reversed and set aside the decision of the RTC, Branch 208, Mandaluyong
City.23 The CA held that petitioners are bound by the outcome of the JDRC case, because the
annotation of the notice of lis pendens (January 23, 1992) was ahead of petitioners registration of
the deed of sale executed on October 1, 1987 (July 22, 1998).24 Petitioners filed a Motion for
Reconsideration, which the CA denied.25

Petitioners raise the following issues before this Court:

I
The CA erred in ordering the dismissal of the complaint for injunction despite the fact that the
Petitioners are the registered owners of the property and as such cannot be evicted out therefrom
unless:
A. the sale from which they based their acquisition is declared void.
B. the title issued in their names based on the Deed of Sale is likewise declared void.
II
The CA erred in dismissing the complaint because in so doing, it made an implied recognition that a
real property titled under the torrens system may be attacked collaterally in contravention of law and
established jurisprudence[.]
III
The CA erred in concluding that the Petitioners are bound by the lis pendens it being clear that the
property was acquired long before the lis pendens was annotated. Petitioners (sic) became owners
of the property on October 1, 1987 and not on July 20, 1998 when their ownership was merely
confirmed by the title issued by the Office of the Register of Deeds.
Petitioners maintain that as the registered owners and actual possessors of the property in dispute,
they are entitled to a writ of injunction that will prevent the implementation of the writ of execution
corresponding to the JDRC case.
Respondents assert that petitioners are not entitled to the writ of injunction, because the petitioners
are subject to the outcome of the JDRC case and thus the implementation of the writ of execution
due to the notice of lis pendens annotated on their TCT. They further allege: (1) that there was no
sale by Rebuquiao in favor of petitioners on October 1, 1987; and (2) if there was a sale, the same
happened in 1997, the year petitioners registered the deed of sale executed in their favor.26
The core issue in the case at bar is whether injunction lies in favor of the petitioners to prevent the
respondents from interfering in the exercise of their rights over the property in dispute.
We find merit in the petition.
Injunction, as a preservative remedy, aims to protect substantive rights and interests.27 To be entitled
to a writ of injunction, the complainant must establish the following requisites: (1) there must be a
right in esse or the existence of a right to be protected; and (2) the act against which injunction is to
be directed is a violation of such right.28 The grant of the writ is conditioned on the existence of the
complainants clear legal right, which means one clearly founded in or granted by law or is
"enforceable as a matter of law."29
As the registered owners and actual possessors of the property in question, petitioners have a clear
legal right to the property in dispute. Section 51 of Presidential Decree (P.D.) No. 1529 provides that
registration is the operative act that conveys or affects registered land as against third
persons.30 Thus, a TCT is the best proof of ownership of land.31 In the case at bar, it is undisputed

that petitioners are the registered owners and actual possessors of the subject property. Moreover,
as the registered owners, petitioners have the right to the possession of the property, which is one of
the attributes of ownership.32
It was erroneous for respondents to assail the deed of sale executed on October 1, 1987 in favor of
petitioners, because this constitutes a collateral attack on petitioners TCT. Section 48 of P.D. No.
1529 prohibits a collateral attack on a Torrens title.33 This Court has held that a petition which, in
effect, questioned the validity of a deed of sale for registered land constitutes a collateral attack on a
certificate of title.34 In the case at bar, respondents allegation, that the deed of sale executed on
October 1, 1987 in favor of petitioners does not exist, clearly constitutes a collateral attack on a
certificate of title. The allegation of the inexistence of the deed of sale in effect attacks the validity of
the TCT issued in the petitioners names.
Petitioners title to the property in dispute is not subject to the outcome of the litigation covered by
the notice of lis pendens annotated on January 23, 1992. Section 24, Rule 14 of the 1964 Rules of
Civil Procedure provides that a purchaser of the property affected by the notice of lis pendens is
deemed to have constructive notice of the pendency of the action only from the time of filing such
notice.35 Section 14, Rule 13 of the 1997
Rules of Civil Procedure reiterates this rule.36 Thus, a notice of lis pendens affects a
transferee pendente lite, who by virtue of the notice, is bound by any judgment, which may be
rendered for or against the transferor, and his title is subject to the results of the pending litigation.37
A notice of lis pendens neither affects the merits of a case nor creates a right or a lien.38 It serves to
protect the real rights of the registrant while the case involving such rights is pending
resolution.39 While the notice of lis pendens remains on a certificate of title, the registrant could rest
secure that he would not lose the property or any part of it during the litigation.40 Once a notice of lis
pendens has been duly registered, any subsequent transaction affecting the land involved would
have to be subject to the outcome of the litigation. For this reason, the Court has pronounced that a
"purchaser who buys registered land with full notice of the fact that it is in litigation between the
vendor and a third party stands in the shoes of his vendor and his title is subject to the incidents and
result of the pending litigation."41
In the case at bar, the notice of lis pendens does not affect petitioners title to the property in dispute.
A notice oflis pendens concerns litigation between a transferor and a third party, where the
transferee who acquires land with a notice of lis pendens annotated on the corresponding certificate
of title stands in the shoes of his predecessor and in which case the transferees title is subject to the
results of the pending litigation. The notice of lis pendensdoes not concern litigation involving
Rebuquiao, who transferred his title to the property in dispute to petitioners, and his title. The notice
of lis pendens pertains to the JDRC case, an action for nullity of the marriage between Avera and
Domingo. Since Rebuquiaos title to the property in dispute is not subject to the results of the JDRC
case, petitioners title to the same property is also not subject to the results of the JDRC case.
To determine whether the second requisite for granting a writ of injunction exists, that the act against
which injunction is to be directed is a violation of the complainants right, we must examine the
implications regarding the implementation of the writ of execution over TCT No. 14216. Pursuant to
this writ of execution, Sheriff Valino served petitioners with a notice to vacate.
If allowed to be carried out, the act against which the injunction is directed, the implementation of the
writ of execution, would violate petitioners rights as the registered owners and actual possessors of
the property in dispute. The registered owner has the right to possess and enjoy his property,
without any limitations other than those imposed by law.42 The implementation of the writ of

execution would unduly deprive petitioners, as the registered owners, of their right to possess the
subject property, which is one of the attributes of ownership.43
We must stress that until petitioners title is annulled in a proper proceeding, Avera has no
enforceable right over the property in dispute. At this point, petitioners possession of the subject
property must be respected. Since Avera failed to prove her indubitable right over the subject
property, we rule that petitioners possess a clear and unmistakable right over the property in dispute
that requires the issuance of a writ of injunction to prevent any damage to their interests as
registered owners.
IN VIEW WHEREOF, the petition is GRANTED. The Decision and Resolution of the Court of
Appeals in CA-G.R. CV No. 79327, dated June 16, 2005 and October 4, 2005 respectively, are
REVERSED and SET ASIDE.
SO ORDERED.

G.R. No. 127692

March 10, 2004

FORTUNATO GOMEZ and AURORA GOMEZ, petitioners,

vs.
COURT OF APPEALS, ADOLFO TROCINO and MARIANO TROCINO, respondents.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a petition for review on certiorari under Rule 45 of the Rules of Court assailing
the decision1 of the Court of Appeals dated September 30, 1996, in CA-G.R. SP No. 40067,
nullifying the decision and orders of the Regional Trial Court of Cebu City (Branch 10) in Civil Case
No. CEB-11103, for want of jurisdiction.
Civil Case No. CEB-11103 is an action for specific performance and/or rescission filed by herein
petitioners, spouses Fortunato and Aurora Gomez, against the heirs of Jesus J. Trocino, Sr., which
include herein respondents and their mother Caridad Trocino.2
Filed on December 16, 1991, the complaint alleges: Some time in 1975, the spouses Jesus and
Caridad Trocino mortgaged two parcels of land covered by TCT Nos. 10616 and 31856 to Dr.
Clarence Yujuico. The mortgage was subsequently foreclosed and the properties sold at public
auction on July 11, 1988, and before the expiry of the redemption period, the spouses Trocino sold
the property to petitioners on December 12, 1989, who in turn, redeemed the same from Dr. Yujuico.
The spouses Trocino, however, refused to convey ownership of the properties to petitioners, hence,
the complaint.
On January 10, 1992, the trial courts Process Server served summons on respondents, in the
manner described in his "Return of Service," to wit:
Respectfully returned to the Branch Clerk of Court, Regional Trial Court of Cebu, Branch 10, the
herein attached original summons issued in the above-entitled case with the information that on
January 8, 1992 summons and copies of the complaint were served to the defendants Jacob, Jesus

Jr., Adolfo, Mariano, Consolacion, Alice, Racheal thru defendant Caridad Trocino at their given
address at Maria Cristina Extension (besides Sacred Heart School for Girls), Cebu City, evidence by
her signature found at the lower portion of the original summons.3
WHEREFORE I, respectfully return the original summons duly served to the court of origin.
Cebu City, Philippines, January 10, 1992.
(signed)
DELFIN D. BARNIDO
RTC Process Server
On January 27, 1992, the defendants, through their counsel Atty. Expedito P. Bugarin, filed their
Answer. Defendant Caridad A. Trocino, respondents mother, verified said pleading.4
After trial on the merits, the RTC rendered its decision on March 1993, with the following disposition:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and
against the defendants.
The latter are hereby ordered to jointly and severally execute a Deed of Sale in favor of the plaintiffs
and to deliver the owners duplicate copies of TCT Nos. 10616 and 31856, covering the properties
sold, to the plaintiffs within ten (10) days from the finality of the judgment, after which plaintiffs shall
pay in turn to the defendants the balance of P2,000,000.00. Otherwise, the sale is rescinded and
revoked and the defendants are directed to return to the plaintiffs the amount of P500,000.00, with
interest of 12% per annum computed from December 6, 1989, until the full amount is paid.
In addition thereto, defendants are to pay jointly and severally to the plaintiffs, the amount
of P50,000.00 as moral damages; P20,000.00 as exemplary damages; P40,000.00 by way of
attorneys fees; and P10,000.00 as litigation expenses.
SO ORDERED.5
Due to the defendants failure to deliver the owners duplicate of TCT Nos. 10616 and 31856, the
RTC issued an order on August 29, 1995 declaring said titles null and void, and ordering the
Register of Deeds of Cebu City to issue new titles in the name of herein petitioners.6
Thereafter, or on March 13, 1996, respondents Adolfo and Mariano Trocino filed with the Court of
Appeals, a petition for the annulment of the judgment rendered by the RTC-Cebu (Branch 10) in Civil
Case No. CEB-11103. Private respondents alleged that the trial courts decision is null and void on
the ground that it did not acquire jurisdiction over their persons as they were not validly served with a
copy of the summons and the complaint. According to them, at the time summons was served on
them, Adolfo Trocino was already in Ohio, U.S.A., and has been residing there for 25 years, while
Mariano Trocino was in Talibon, Bohol, and has been residing there since 1986. They also refuted
the receipt of the summons by Caridad A. Trocino, and the representation made by Atty. Bugarin in
their behalf. Respondents also contended that they have a meritorious defense.7 Petitioners filed
their Comment/Answer to the petition.8
On September 30, 1996, the Court of Appeals issued the assailed Decision granting the petition and
annulling the decision of the RTC-Cebu (Branch 10). The decretal portion of the decision reads:

WHEREFORE, the decision of the Regional Trial Court of Cebu City, Branch 10, in Civil Case No.
CEB-11103 as well as all Orders issued to implement the same are hereby ANNULLED AND SET
ASIDE. The Register of Deeds of Cebu City is hereby ENJOINED from cancelling Transfer
Certificates of Title Nos. 10616 and 31856. No pronouncement as to costs.
SO ORDERED.9
Their motion for reconsideration having been denied by the Court of Appeals, petitioners filed the
present petition, setting forth the following assignment of errors:
I. THE COURT OF APPEALS ERRED IN FINDING LACK OF PRIOR KNOWLEDGE ON THE PART
OF RESPONDENTS TROCINO, REGARDING THE PROCEEDINGS BEFORE THE RTC OF CEBU
CITY AND IN NOT DISMISSING THE PETITION FOR VIOLATION OF SUPREME COURT
CIRCULAR 04-94.
II. THE COURT OF APPEALS ERRED IN DECLARING THE NEED FOR PERSONAL AND/OR
EXTRATERRITORIAL SERVICE OF SUMMONS, DESPITE THE NATURE OF THE CAUSE OF
ACTION BEING ONE IN REM.
III. THE COURT OF APPEALS ERRED IN ANNULLING THE JUDGMENT, CAUSING FURTHER
USELESS LITIGATION AND UNNECESSARY EXPENSE ON PETITIONERS AND
RESPONDENTS, ESPECIALLY SINCE RESPONDENTS HAVE NOT SHOWN ANY VALID
DEFENSE AS GROUND FOR REVERSAL OF JUDGMENT OF THE RTC.
IV. THE COURT OF APPEALS ERRED IN RULING THAT ITS JUDGMENT IS APPLICABLE IN
FAVOR OF CARIDAD TROCINO.10
Summons is a writ by which the defendant is notified of the action brought against him. Service of
such writ is the means by which the court acquires jurisdiction over his person.11 Any judgment
without such service in the absence of a valid waiver is null and void.12
The resolution of the present petition hinges on the issue of whether or not summons was effectively
served on respondents. If in the affirmative, the trial court had validly acquired jurisdiction over their
persons and therefore its judgment is valid.
To resolve whether there was valid service of summons on respondents, the nature of the action
filed against them must first be determined. As the Court explained in Asiavest Limited vs. Court of
Appeals, it will be helpful to determine first whether the action is in personam, in rem, or quasi in rem
because the rules on service of summons under Rule 14 of the Rules of Court of the Philippines
apply according to the nature of the action.13
In actions in personam, summons on the defendant must be served by handing a copy thereof to the
defendant in person, or, if he refuses to receive it, by tendering it to him. This is specifically provided
in Section 7, Rule 14 of the Rules of Court,14 which states:
SEC. 7. Personal service of summons.-- The summons shall be served by handing a copy thereof to
the defendant in person or, if he refuses to receive it, by tendering it to him.
If efforts to find defendant personally makes prompt service impossible, substituted service may be
effected by leaving copies of the summons at the defendant's dwelling house or residence with some
person of suitable age and discretion then residing therein, or by leaving the copies at the

defendant's office or regular place of business with some competent person in charge thereof.15 In
substituted service, it is mandated that the fact of impossibility of personal service should be
explained in the proof of service.16
When the defendant in an action in personam is a non-resident who does not voluntarily submit
himself to the authority of the court, personal service of summons within the State is essential to the
acquisition of jurisdiction over his person. This cannot be done if the defendant is not physically
present in the country, and thus, the court cannot acquire jurisdiction over his person and therefore
cannot validly try and decide the case against him.17 An exception was accorded in Gemperle vs.
Schenker wherein service of summons through the non-residents wife, who was a resident of the
Philippines, was held valid, as the latter was his representative and attorney-in-fact in a prior civil
case filed by the non-resident, and the second case was merely an offshoot of the first case.18
Meanwhile, in actions in rem or quasi in rem, jurisdiction over the person of the defendant is not a
prerequisite to confer jurisdiction on the court provided that the court acquires jurisdiction over the
res, although summons must be served upon the defendant in order to satisfy the due process
requirements.19 Thus, where the defendant is a non-resident who is not found in the Philippines, and
(1) the action affects the personal status of the plaintiff; (2) the action relates to, or the subject matter
of which is property in the Philippines in which the defendant has or claims a lien or interest; (3) the
action seeks the exclusion of the defendant from any interest in the property located in the
Philippines; or (4) the property of the defendant has been attached in the Philippines, summons may
be served extraterritorially by (a) personal service out of the country, with leave of court; (b)
publication, also with leave of court; or (c) any other manner the court may deem sufficient.20
In the present case, petitioners cause of action in Civil Case No. CEB-11103 is anchored on the
claim that the spouses Jesus and Caridad Trocino reneged on their obligation to convey ownership
of the two parcels of land subject of their sale. Thus, petitioners pray in their complaint that the
spouses Trocino be ordered to execute the appropriate deed of sale and that the titles be delivered
to them (petitioners); or in the alternative, that the sale be revoked and rescinded; and spouses
Trocino ordered to return to petitioners their down payment in the amount of P500,000.00 plus
interests. The action instituted by petitioners affect the parties alone, not the whole world. Hence, it
is an action in personam, i.e., any judgment therein is binding only upon the parties properly
impleaded.21
Contrary to petitioners belief, the complaint they filed for specific performance and/or rescission is
not an action in rem. While it is a real action because it affects title to or possession of the two
parcels of land covered by TCT Nos. 10616 and 31856, it does not automatically follow that the
action is already one in rem. In Hernandez vs. Rural Bank of Lucena, Inc., the Court made the
following distinction:
In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of a
contract or the recovery of damages. In a real action, the plaintiff seeks the recovery of real property,
or, as indicated in section 2(a) of Rule 4, a real action is an action affecting title to real property or for
the recovery of possession, or for partition or condemnation of, or foreclosure of a mortgage on, real
property.
An action in personam is an action against a person on the basis of his personal liability, while an
action in rem is an action against the thing itself, instead of against the person. Hence, a real action
may at the same time be an action in personam and not necessarily an action in rem.22
The objective sought in petitioners complaint was to establish a claim against respondents for their
alleged refusal to convey to them the title to the two parcels of land that they inherited from their

father, Jesus Trocino, who was one of the sellers of the properties to petitioners. Hence, to repeat,
Civil Case No. CEB-11103 is an action in personam because it is an action against persons, namely,
herein respondents, on the basis of their personal liability. As such, personal service of summons
upon the defendants is essential in order for the court to acquire of jurisdiction over their
persons.23
A distinction, however, must be made with regard to service of summons on respondents Adolfo
Trocino and Mariano Trocino. Adolfo Trocino, as records show, is already a resident of Ohio, U.S.A.
for 25 years. Being a non-resident, the court cannot acquire jurisdiction over his person and validly
try and decide the case against him.
On the other hand, Mariano Trocino has been in Talibon, Bohol since 1986. To validly acquire
jurisdiction over his person, summons must be served on him personally, or through substituted
service, upon showing of impossibility of personal service. Such impossibility, and why efforts
exerted towards personal service failed, should be explained in the proof of service. The pertinent
facts and circumstances attendant to the service of summons must be stated in the proof of service
or Officers Return. Failure to do so would invalidate all subsequent proceedings on jurisdictional
grounds.24
In the present case, the process server served the summons and copies of the complaint on
respondents Jacob, Jesus, Jr., Adolfo, Mariano, Consolacion, Alice and Racheal,25 through their
mother, Caridad Trocino.26 The return did not contain any particulars as to the impossibility of
personal service on Mariano Trocino within a reasonable time. Such improper service renders the
same ineffective.
Due process of law requires personal service to support a personal judgment, and, when the
proceeding is strictly in personam brought to determine the personal rights and obligations of the
parties, personal service within the state or a voluntary appearance in the case is essential to the
acquisition of jurisdiction so as to constitute compliance with the constitutional requirement of due
process.27
Moreover, inasmuch as the sheriffs return failed to state the facts and circumstances showing the
impossibility of personal service of summons upon respondents within a reasonable time, petitioners
should have sought the issuance of an alias summons. Under Section 5, Rule 14 of the Rules of
Court, alias summons may be issued when the original summons is returned without being served
on any or all of the defendants.28 Petitioners, however, did not do so, and they should now bear the
consequences of their lack of diligence.
The fact that Atty. Expedito Bugarin represented all the respondents without any exception does not
transform the ineffective service of summons into a valid one. It does not constitute a valid waiver or
even a voluntary submission to the trial courts jurisdiction. There was not even the slightest proof
showing that respondents authorized Atty. Bugarins appearance for and in their behalf. As found by
the Court of Appeals:
While Caridad Trocino may have engaged the services of Atty. Bugarin, it did not necessarily mean
that Atty. Bugarin also had the authority to represent the defendant heirs. The records show that in
all the pleadings which required verification, only Caridad Trocino signed the same. There was never
a single instance where defendant heirs signed the pleading. The fact that a pleading is signed by
one defendant does not necessarily mean that it is binding on a co-defendant. Furthermore, Caridad
Trocino represented herself as the principal defendant in her Motion to Withdraw Appeal. (Rollo, p.
80)

Since the defendant heirs are co-defendants, the trial court should have verified the extent of Atty.
Bugarins authority when petitioners failed to appear as early as the pre-trial stage, where the parties
are required to appear. The absence of the defendant heirs should have prompted the trial court to
inquire from the lawyer whether he was also representing the other petitioners. As co-defendant and
co-heirs over the disputed properties, the defendant heirs had every right to be present during the
trial. Only Caridad Trocino appeared and testified on her own behalf. All the defenses raised were
her own, not the defendant heirs.29
Consequently, the judgment sought to be executed against respondents were rendered without
jurisdiction as there was neither a proper service of summons nor was there any waiver or voluntary
submission to the trial courts jurisdiction. Hence, the same is void, with regard to private
respondents except Caridad Trocino.
It must be pointed out that while it was the spouses Jesus and Caridad Trocino who sold the
properties to petitioners, their right to proceed against Jesus Trocino when he died was passed on to
his heirs, which includes respondents and Caridad Trocino. Such transmission of right occurred by
operation of law, more particularly by succession, which is a mode of acquisition by virtue of which
the property, rights and obligations to the extent of the value of the inheritance of a person are
transmitted.30 When the process server personally served the summons on Caridad Trocino, the trial
court validly acquired jurisdiction over her person alone. Hence, the trial courts decision is valid and
binding with regard to her, but only in proportion to Caridad Trocinos share. As aptly stated by the
Court of Appeals:
This Courts decision is therefore applicable to all the defendant heirs with the exception of
defendant Caridad Trocino considering that it was the latter who entered into the alleged sale
without the consent of her husband. She is therefore estopped from questioning her own authority to
enter into the questioned sale. Moreover, Caridad Trocino was validly served with summons and
was accorded due process.31
WHEREFORE, the petition for review is DENIED. The decision of the Court of Appeals in CA-G.R.
SP No. 40067 is AFFIRMED.
Costs against petitioners.
SO ORDERED.
G.R. No. 177598

October 17, 2008

ROBERT SAN PEDRO, petitioner,

vs.
WILLY ONG and NORMITA CABALLES, respondents.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court, filed by petitioner Robert San Pedro (San Pedro), seeking to reverse and set aside the
Decision1 of the Court of Appeals dated 29 December 2006 and its Resolution2 dated 13 April 2007
in CA-G.R. CV No. 79399. In its assailed Decision, the Court of Appeals reversed the
Decision3 dated 21 February 2003 of the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 19,

in Civil Case No. 515-M-99, declaring, inter alia, that the deeds of real estate mortgage constituted
on the subject properties are null and void; while, in its assailed Resolution, the appellate court
denied San Pedros Motion for Reconsideration.
The factual and procedural antecedents of this case are as follows:
On 3 April 1996, San Pedro purchased from the spouses Guillermo Narciso and Brigida Santiago
(spouses Narciso) two parcels of land (subject properties) covered by Transfer Certificates of Title
TCTs No. T-82381 and No. T-82382 of the Registry of Deeds of Bulacan, with areas of about 200
square meters and 150 square meters, respectively. San Pedro bought the subject properties
for P35,000.00, as evidenced by Deeds of Sale executed in his favor by the spouses Narciso on 8
April 1996.4
In order to transfer in his name the TCTs covering the subject properties, and upon the spouses
Narcisos recommendation, San Pedro hired the services of Adora Dela Pea (Dela Pea) who is
known to be very familiar with the intricacies of real property transfers.5
After sometime, San Pedro inquired with the Registry of Deeds of Bulacan as to the status of his
application for the issuance in his name of new TCTs for the subject properties. He was surprised to
find out, however, that the subject properties were still registered in the names of the Narciso
spouses and were mortgaged to Willy Ong (Ong).6
According to the annotation stamped at the back of TCTs No. T-82381 and No. T-82382, the
spouses Narciso, on 23 July 1998, executed Special Powers of Attorney (SPAs) authorizing Dela
Pea to mortgage the subject properties to Ong. The SPAs were procured by Dela Pea from the
spouses Narciso with the help of one Rufino Landayan, a tricycle driver who accompanied Dela
Pea to the spouses Narcisos residence. San Pedro found out that it was Normita Caballes
(Caballes), Ongs agent, who caused the registration of the mortgages with the Registry of Deeds of
Bulacan and the annotation thereof on the TCTs of the spouses Narciso.7
In order to free the subject properties from the said encumbrances, San Pedro filed with the RTC on
7 May 1999 a Petition for Nullification of Mortgage with Damages against the spouses Narciso, Dela
Pea, Landayan, Ong, and Caballes, docketed as Civil Case No. 515-M-99.
On 14 May 1991, the RTC issued summons to spouses Narciso, Dela Pea, Landayan, Ong, and
Caballes, directing them to file their Answers to San Pedros Petition in Civil Case No. 515-M-99. On
the same day, the Sheriff served the summons on all concerned as evidenced by the Sheriffs
Return,8 which reads:
SERVICE RETURN
THIS IS TO CERTIFY that on 14th day of May 1999, the undersigned served a copies (sic) of
Summons in connection in (sic) the above-entitled case accompanying (sic) by the Complaints with
annexes attached thereto upon defendants, at their given address, to wit:
Spouses Brigida Santiago &
Guillermo Narciso

thru their son Jaime Narciso/

Received & sign

Adora Dela Pea

Rufino Landayan
Normita Caballes &
Willy Ong

thru her sister-in-law/

Received but refused to sign

thru his son Christopher

Landayan/received & sign

thru Paul Caballes son of

Normita Caballes/received
& sign

The original copy of Summons is, therefore, respectfully returned DULY SERVED.
While the spouses Narciso, Landayan, Ong, and Caballes separately filed their Answers in
accordance with the summons, thereby voluntarily submitting themselves to the jurisdiction of the
RTC, Dela Pea failed to do so and she was, thus, declared by the RTC to be in default.
In their Answer,9 the spouses Narciso admitted to selling the subject properties to San Pedro, and
denied authorizing the mortgage of the same to Ong. Their signatures on the SPAs were
fraudulently secured by Dela Pea who misrepresented to them that such document was necessary
to facilitate the transfer of the TCTs of the subject properties to San Pedro. The spouses Narciso
denied that they participated in or benefited from the loan obligation obtained by Dela Pea from
Ong.
For their part, Caballes and Ong raised in their Joint Answer10 the defense of mortgagee-in-goodfaith. They claimed that they both relied in good faith on the SPAs granting Dela Pea the authority
to mortgage the subject properties since there was nothing on the face thereof which would have
raised their suspicion as to the authenticity of the document. Ong alleged that the subject properties
were used by Dela Pea as collateral for the loan, amounting to P170,000.00, which she obtained
from Ong. Since the said loan obligation already became due and demandable, Ong sought the
foreclosure of the subject properties. During the auction sale, Ong emerged as the highest bidder
but the TCTs of the subject properties were not yet transferred to his name.
Landayan, in his Answer,11 denied any participation in the procurement of the SPAs or in the
mortgage of the subject properties, except that he was hired by Dela Pea to bring her to the
spouses Narcisos residence at the time the alleged SPAs were fraudulently procured.
After the Pre-Trial Conference, trial on the merits ensued.
During the trial, San Pedro presented Landayan to testify in his favor. According to Landayan, he
came to know Dela Pea when the latter hired his tricycle. Landayan took Dela Pea and a woman,
whom he identified as Caballes sister, to the residence of the spouses Narciso to secure Guillermo
Narcisos signature on a certain document. While Dela Pea and Caballes sister were inside the
spouses Narcisos house, Caballes was waiting for them outside in a white car. After a few minutes,
Dela Pea and Caballes sister came out, and together with Caballes, they visited and inspected the
subject properties; after which, Dela Pea and Caballes sister proceeded to a restaurant to try and
secure Brigida Santiagos signature on the document they carried. After somebody signed the
document for Brigida Santiago, Dela Pea asked Landayan to sign the same as witness, to which he
obliged.12
San Pedro himself took the witness stand. He testified that he bought the subject properties from the
spouses Narciso for P35,000.00. After the execution of the Deeds of Sale and payment of the

purchase price to the spouses Narciso, possession of the subject properties were turned over to
him. San Pedro started to build his dream house on the subject properties, spending
about P2,000,000.00 thereon, only to find out later on that the subject properties on which his house
was built was encumbered by Dela Pea to Ong on the strength of the SPAs executed by the
spouses Narciso in Dela Peas favor. When San Pedro confronted the spouses Narciso about the
mortgages, they denied authorizing the same.13
San Pedros sister, Luz San Pedro Tominago (Tominago), narrated before the RTC that on 31
March 1991, she filed a complaint against Dela Pea before the Philippine National Police (PNP)
Station in Balagtas, Bulacan for the latters failure to effect the transfer of the TCTs of the subject
properties in San Pedros name, as she was obliged to do. Tominago filed the complaint on behalf of
San Pedro, who was working abroad.14
Finally, a document examiner and handwriting expert from the National Bureau of Investigation (NBI)
was also presented as a witness for San Pedro. He confirmed that the signature of Guillermo
Narciso on one of the SPAs was forged, while the signatures of his wife Brigida Santiago on both
SPAs were spurious.15
After San Pedro presented his evidence, Ong and Caballes filed a demurrer to evidence,
questioning the lack of jurisdiction of the RTC over the person of Dela Pea. Since Dela Pea was
an indispensable party in the case, they claimed that no final determination of the same could be
arrived at without the said court acquiring jurisdiction over Dela Pea.16
In an Order dated 24 August 2001, the RTC denied the demurrer to evidence filed by Ong and
Caballes. Hence, trial proceeded with the presentation of evidence by the defense.
Ong testified for the defense that Caballes informed him that she knew of two parcels of land in
Bulacan that were being offered as collaterals for a loan. When Ong expressed interest in the
subject properties, Caballes showed him copies of the SPA executed by the spouses Narciso in
favor of Dela Pea. Ong then instructed Caballes to verify with the Registry of Deeds whether the
spouses Narciso were the real owners of the subject properties and whether their TCTs were clean.
Caballes returned with certified true copies of the TCTs which were in the names of the spouses
Narciso and bore no encumbrances. Satisfied with the documents, Ong agreed to release the
amount of P170,000.00 as loan, secured by the subject properties. Ong admitted that he was not
able to personally talk to Dela Pea or to the spouses Narciso. All negotiations pertaining to the loan
and mortgages were transacted through Caballes.17
Caballes also offered her testimony, in which she stated that she came to know Dela Pea because
the latter was looking for someone who can grant her a loan with the subject properties as collateral.
Dela Pea was armed with the SPAs from the spouses Narciso authorizing her to mortgage the
subject properties. After Caballes examined the documents, she proceeded to the Registry of Deeds
of Bulacan to verify the status and ownership of the subject properties. After she found out that the
TCTs were in the name of the spouses Narciso and were clean, Caballes went to Ong who released
the money for the loan. Dela Pea issued nine post-dated checks to Ong as payment for her loan
obligation. All nine checks were dishonored by the drawee bank when presented for payment
because Dela Peas account was already closed. Ong, thus, instituted before the Municipal Trial
Court (MTC) of Balagtas, Bulacan, a case against Dela Pea for violation of Batas Pambansa Blg.
22.18
On 21 February 2003, the RTC rendered a Decision in Civil Case No. 515-M-99, declaring null and
void the mortgages constituted over the subject properties in Ongs favor. According to the court a
quo, Ong and Caballes failed to exercise reasonable degree of diligence before they entered into

mortgage contracts with Dela Pea, who was not the registered owner of the properties being
mortgaged and was only purportedly authorized by the registered owners thereof. The RTC, thus,
ruled:
WHEREFORE, judgment is hereby rendered as follows:
1. Declaring [San Pedro] the legal and rightful owner of the two (2) parcels of land subject of this
litigation, covered by TCT No. T-82381 and TCT No. 82382 presently in the name of [the spouses
Narciso].
2. Adjudging the sale by [the spouses Narciso] to [San Pedro], legal, valid, subsisting and in all
respect enforceable.
3. Resolving to declare the Special Power[s] of Attorney constituted in favor of [Dela Pea] null and
void.
4. Declaring the Deeds of Mortgage purportedly executed by [Dela Pea] as Attorney-in-fact of [the
spouses Narciso], in favor of [Ong] constituted in [sic] TCT No. T-82381 and TCT No. 82382 void ab
initio.
5. Ordering the Registry of Deeds for the Province of Bulacan to cancel the recordings of mortgages
in favor of Ong constituted in [sic] TCT No. 82381 and TCT No. 82382 as well as any annotation of
foreclosure proceedings if there are any by [Ong].
6. Ordering [Ong] to return to [San Pedro] the owners duplicate copy of TCT No. 82381 and TCT
No. 82382 which are presently in his possession.
7. Ordering [Dela Pea] to pay [Ong] the sum of P245,000.00 plus legal interest from September,
1998 until the whole obligation is fully extinguished.
All other claims, counterclaims and cross claims are ordered denied for lack of merit.19
Without filing any Motion for Reconsideration before the RTC, Ong and Caballes appealed the
adverse RTC Decision to the Court of Appeals, assigning as error the lack of jurisdiction of the RTC
over the person of Dela Pea which rendered all the proceedings held before said court fatally
defective. Their appeal was docketed as CA-G.R. CV No. 79399.
In a Decision20 dated 29 December 2006, the Court of Appeals granted the appeal of Ong and
Caballes, and accordingly reversed the RTC Decision dated 21 February 2003. The appellate court
justified its reversal of the ruling of the RTC on its finding that the service of summons on Dela Pea
was invalid; thus, the RTC did not acquire jurisdiction over her person. The substituted service of
summons employed by the Sheriff was ineffective for failure to comply with the statutory
requirements before such mode of service could be resorted to. The Sheriff in the present case used
substituted service without even showing that Dela Pea could not be served personally with the
summons within reasonable time. Since Dela Pea was an indispensable party to the controversy,
without her no final determination of the case can be had. Thus, the dispositive portion of the
assailed Court of Appeals Decision reads:
WHEREFORE, all the above premises considered, the Decision, dated February 21, 2003, of the
Regional Trial Court of Malolos, Bulacan, Branch 19, is hereby set aside for want of jurisdiction. The
instant case is hereby remanded to the court a quo for appropriate proceedings. No costs.21

The Motion for Reconsideration filed by San Pedro was denied by the Court of Appeals in its
Resolution22 dated 13 April 2007 for the issues raised therein were already sufficiently threshed out
in its Decision.
San Pedro is now before this Court assailing the adverse decision rendered by the Court of
Appeals.23 For the resolution of this Court are the following issues:
I.
WHETHER OR NOT THE RTC HAS JURISDICTION TO HEAR AND DECIDE THE CASE FILED
BY SAN PEDRO.
II.
WHETHER OR NOT DE LA PEA IS AN INDISPENSABLE PARTY TO THE CASE.
III.
WHETHER OR NOT ONG WAS MORTGAGEE-IN-GOOD FAITH.
Vital to the resolution of the present controversy are the questions on whether there was a valid
service of summons upon Dela Pea; and if there was none, whether the improper service of
summons on Dela Pea invalidates the entire proceedings before the court a quo.
Summons is a writ by which the defendant is notified of the action brought against him. Service of
such writ is the means by which the court may acquire jurisdiction over his person. Any judgment
without such service in the absence of a valid waiver is null and void.24
To provide perspective, it is crucial to determine first whether the action is in personam, in rem,
or quasi in rembecause the rules on service of summons under Rule 14 of the Revised Rules of
Court apply according to the nature of the action.25
In the case at bar, Civil Case No. 515-M-99, instituted by San Pedro, is anchored on his claim that
he is the real and rightful owner of the subject properties, thus, no one else has the right to mortgage
them. The real estate mortgages constituted on the subject properties in favor of Ong, annotated on
their TCTs, are encumbrances on said properties, which may be considered a cloud on San Pedros
title thereto.
Such cloud may be removed or San Pedros title quieted under Article 476 of the Civil Code, which
reads:
Art. 476. Whenever there is a cloud on title to real property or any interest therein, by reason of any
instrument, record, claim, encumbrance or proceeding which is apparently valid or effective but is in
truth and in fact invalid, ineffective, voidable, or unenforceable, and may be prejudicial to said title,
an action may be brought to remove such cloud or to quiet the title.
An action may also be brought to prevent a cloud from being cast upon title to real property or any
interest therein. (Emphasis ours.)
San Pedro alleged in his Petition in Civil Case No. 515-M-99 that the mortgages in favor of Ong
may, at first, appear valid and effective, but are actually invalid or voidable for having been made

without the knowledge and authority of the spouses Narciso, the registered owners of the subject
properties and San Pedros predecessors-in-interest. In asking the cancellation of the mortgages on
the TCTs of the subject properties, San Pedro was ultimately asking the RTC to remove a cloud on
his title to the same. It is, thus, irrefragable that Civil Case No. 515-M-99 is an action for quieting of
title.
Significantly, suits to quiet title are characterized as proceedings quasi in rem. Technically, they are
neither in remnor in personam. In an action quasi in rem, an individual is named as defendant.
However, unlike suits in rem, aquasi in rem judgment is conclusive only between the parties. A
proceeding quasi in rem is one brought against persons seeking to subject the property of such
persons to the discharge of the claims assailed. 26
In an action quasi in rem, an individual is named as defendant and the purpose of the proceeding is
to subject his interests therein to the obligation or loan burdening the property. Actions quasi in
rem deal with the status, ownership or liability of a particular property but which are intended to
operate on these questions only as between the particular parties to the proceedings and not to
ascertain or cut off the rights or interests of all possible claimants. The judgments therein are binding
only upon the parties who joined in the action.27
According to Section 6, Rule 14 of the Revised Rules of Court, summons on the defendant in
actions in personammust be served by handing a copy thereof to the defendant in person, or, if he
refuses to receive it, by tendering it to him.28 Meanwhile, in actions in rem or quasi in rem, jurisdiction
over the person of the defendant is not a prerequisite to confer jurisdiction on the court provided that
the court acquires jurisdiction over the res, although summons must be served upon the defendant
in order to satisfy the due process requirements.29
In Alba v. Court of Appeals, 30 the Court further elucidated that:
In an action in personam, jurisdiction over the person of the defendant is necessary for the court to
validly try and decide the case. In a proceeding in rem or quasi in rem, jurisdiction over the person
of the defendant is not a prerequisite to confer jurisdiction on the court, provided that the latter
hasjurisdiction over the res. Jurisdiction over the res is acquired either (a) by the seizure of the
property under legal process, whereby it is brought into actual custody of the law; or (b) as a result
of the institution of legal proceedings, in which the power of the court is recognized and
made effective. The service of summons or notice to the defendant is not for the purpose of vesting
the court with jurisdiction but merely for satisfying the due process requirements. (Emphasis
supplied.)
Given that Civil Case No. 515-M-99 is a an action for quieting of title, settled to be quasi in rem, the
RTC was not required to acquire jurisdiction over the persons of the defendants, it being sufficient
for the said court to acquire jurisdiction over the subject matter of the case. By San Pedros
institution of Civil Case No. 515-M-99, the RTC already acquired jurisdiction over the subject
properties the res. Therefore, the service of summons to the defendants in said case, including
Dela Pea, did not affect the jurisdiction of the RTC to hear and decide Civil Case No. 515-M-99,
and did not invalidate the proceedings held therein on the basis of jurisdiction.
Admittedly, there was a defect in the service of the summons on Dela Pea. The Sheriff immediately
resorted to substituted service of summons on Dela Pea without attempting first to effect personal
service within reasonable time. The Sheriffs Return31 merely stated that he served a copy of the
summons on Dela Peas sister-in-law who refused to sign the same.

Personal service of summons is preferred to substitute service. Only if the former cannot be made
promptly can the process server resort to the latter. Moreover, the proof of service of summons must
(a) indicate the impossibility of service of summons within a reasonable time; (b) specify the efforts
exerted to locate the defendant; and (c) state that the summons was served upon a person of
sufficient age and discretion who is residing in the address, or who is in charge of the office or
regular place of business, of the defendant. It is likewise required that the pertinent facts proving
these circumstances be stated in the proof of service or in the officers return. The failure to comply
faithfully, strictly and fully with all the foregoing requirements of substituted service renders the
service of summons ineffective.32 Indisputably, the Sheriff did not comply with any of the foregoing
requirements, thus, rendering his service of summons on Dela Pea invalid.
Nonetheless, the improper service of summons on Dela Pea did not void the proceedings
conducted by the RTC in Civil Case No. 515-M-99, for lack of jurisdiction. As the Court has
underscored herein, in quasi in remproceedings, the court need not acquire jurisdiction over the
persons of the defendants, for as long as it has acquired jurisdiction over the res. The defect in the
service of summons merely infringed Dela Peas right to due process that precluded the RTC from
rendering a valid judgment with respect to her personal liability. And since Dela Peas right to due
process is personal and pertains to her alone, it could not be invoked by her other co-defendants in
Civil Case No. 515-M-99 so as to escape the judgment of liability against them.
Contrary to the pronouncement of the Court of Appeals, Dela Pea was not an indispensable party
to this case, without whom, no final conclusion of the case can be arrived at.
The Court defined indispensable party in Philippine National Bank v. Heirs of Estanislao Militar and
Deogracias Militar, 33 as follows:
An indispensable party is one whose interest will be affected by the court's action in the
litigation, and without whom no final determination of the case can be had. The party's interest
in the subject matter of the suit and in the relief sought are so inextricably intertwined with the other
parties' (sic) that his legal presence as a party to the proceeding is an absolute necessity. In his
absence there cannot be a resolution of the dispute of the parties before the court which is effective,
complete, or equitable.
Conversely, a party is not indispensable to the suit if his interest in the controversy or subject matter
is distinct and divisible from the interest of the other parties and will not necessarily be prejudiced by
a judgment which does complete justice to the parties in court. He is not indispensable if his
presence would merely permit complete relief between him and those already parties to the action or
will simply avoid multiple litigation. (Emphasis supplied.)
Evidently, Dela Pea does not fall within the definition of an indispensable party. As the Court has
explained, Civil Case No. 515-M-99 is an action for quieting of title, intended to remove any cloud
upon San Pedros title to the subject properties. The real estate mortgages in favor of Ong annotated
on the TCTs of the subject properties constitute the cloud to be removed. Thus, the crux of the
controversy is the title of San Pedro to the subject properties vis--vis that of Ong, for the
determination of which, Dela Peas participation is not an absolute necessity. The judgment of the
RTC upholding San Pedros title to the subject properties over Ongs, or even if it were the other way
around, would not have affected Dela Pea, because Dela Pea never claimed title to the subject
properties; she only misrepresented that she had authority to mortgage the same on behalf of the
registered owners, namely, the spouses Narciso. After she successfully, albeit, fraudulently,
obtained the loan using the subject properties as mortgage, her interest in the same had ended. She
may have perpetrated fraud for which she may be held liable but, clearly, these may be established
in a separate and subsequent case. Her presence in the proceedings before the RTC would have

only permitted complete relief since the said court could have already determined therein her liability
for the damages she had caused to any of the parties, but it does not make her presence
indispensable.
San Pedros title proved to be superior to that of Ongs. The subject properties were sold to him prior
to the mortgage of the same to Ong. The spouses Narciso, registered owners of the subject
properties, admitted the sale thereof to San Pedro and denied giving any authority to Dela Pea to
mortgage the said properties. An expert witness affirmed that the signature of Guillermo Narciso on
one of the purported SPAs in favor of Dela Pea was forged, while the signatures of his wife Brigida
Santiago on both SPAs were spurious. Ong and Caballes cannot even point out any defect in San
Pedros title to the subject properties. Ong can only assert better right to the same as allegedly a
mortgagee in good faith.
However, the well-entrenched legal principle in our jurisprudence requires a higher degree of
diligence to be exercised by the mortgagee when he is not directly dealing with the registered owner
of real property. As the Court enunciated in Abad v. Guimba34:
While one who buys from the registered owner does not need to look behind the certificate of title,
one who buys from one who is not the registered owner is expected to examine not only the
certificate of title but all factual circumstances necessary for [one] to determine if there are any flaws
in the title of the transferor, or in [the] capacity to transfer the land. Although the instant case does
not involve a sale but only a mortgage, the same rule applies inasmuch as the law itself includes a
mortgagee in the term "purchaser."
The Court has stressed time and again that every person dealing with an agent is put upon inquiry,
and must discover upon his peril the authority of the agent, and this is especially true where the act
of the agent is of unusual nature. If a person makes no inquiry, he is chargeable with knowledge of
the agents authority, and his ignorance of that authority will not be any excuse.35
In the more recent case of Bank of Commerce v. San Pablo, Jr.,36 the Court elucidated:
The Bank of Commerce clearly failed to observe the required degree of caution in ascertaining the
genuineness and extent of the authority of Santos to mortgage the subject property. It should not
have simply relied on the face of the documents submitted by Santos, as its undertaking to lend a
considerable amount of money required of it a greater degree of diligence. That the person
applying for the loan is other than the registered owner of the real property being mortgaged
should have already raised a red flag and which should have induced the Bank of Commerce
to make inquiries into and confirm Santos authority to mortgage the Spouses San Pablos
property. A person who deliberately ignores a significant fact that could create suspicion in
an otherwise reasonable person is not an innocent purchaser for value(Emphasis ours.)
Considering Ongs undue haste in granting the loan without inquiring into the ownership of the
subject properties being mortgaged, as well as the authority of the supposed agent to constitute the
mortgages on behalf of the owners, he cannot be considered a mortgagee-in-good-faith. Ongs
averment that he exercised prudence in the loan-mortgage transaction is debunked by his own
admission that he merely relied on Caballes representations thereon, without personally meeting or
speaking with Dela Pea, the supposed agent, or the spouses Narciso, the registered owners of the
subject properties. Although he instructed Caballes to check the TCTs of the subject properties, he
did not bother to personally meet Dela Pea and ascertain the genuineness and authenticity of the
latters authority to mortgage the same on behalf of the spouses Narciso especially considering that
the one mortgaging the property is not the registered owner.

The real estate mortgages constituted on the subject properties based on false and fraudulent SPAs
are void ab initio. In Veloso and Rosales v. La Urbana,37 the Court ruled that forged powers of
attorney are without force and effect and, thus, nullified the mortgage constituted on the strength
thereof:
In view of the forgoing facts, the court held that pursuant to Article 1714 of the Civil Code and under
the Torrens Act in force in this jurisdiction, the forged powers of attorney prepared by Del Mar were
without force and effect and that the registration of the mortgages constituted by virtue thereof were
likewise null and void and without force and effect, and that they could not in any way prejudice the
rights of the plaintiff as the registered owner of her participations in the properties in question.
Consequently, the foreclosure proceedings on the mortgaged properties are likewise void ab initio.
Since Ong cannot be deemed a mortgagee-in-good-faith nor an innocent purchaser for value of the
subject properties at the auction sale thereof, his claim to the said properties cannot prevail over that
of San Pedro. The Courts ruling, however, is without prejudice to the right of Ong to proceed against
those who perpetrated the fraud to his prejudice.
WHEREFORE, in view of the foregoing, the instant Petition is GRANTED. The Decision dated 29
December 2006 rendered by the Court of Appeals in CA-G.R. CV No. 79399
is REVERSED and SET ASIDE. The Decision dated 21 February 2003 of the Regional Trial Court of
Malolos, Bulacan, Branch 19, in Civil Case No. 515-M-99, is hereby REINSTATED with the
modification that the portion ordering Adora Dela Pea to pay Willy G. Ong the sum of P245,000.00
plus legal interest, is DELETED.
SO ORDERED.
G.R. No. 170926

September 15, 2006

GUIGUINTO CREDIT COOPERATIVE, INC. (GUCCI), petitioner,

vs.
AIDA TORRES, NONILO TORRES and SHERYL ANN TORRES-HOLGADO, respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court seeks to annul and set aside
the Decision of the Court of Appeals dated August 24, 20051 in CA-G.R. SP No. 89974, declaring the
Decision of the Regional Trial Court of Bulacan, Branch 14, dated September 15, 20042 in Civil Case
No. 232-M-2003 null and void for having been rendered without jurisdiction, and its Resolution dated
December 9, 2005,3 denying petitioners motion for reconsideration.
Respondents are members of Guiguinto Credit Cooperative, Inc. (GUCCI). They availed of loans
from the cooperative but were unable to pay on the due dates despite demands. Hence, on March
24, 2003, petitioner filed a complaint before the Regional Trial Court of Bulacan for collection of sum
of money and damages which was docketed as Civil Case No. 232-M-2003 and raffled to Branch 14.
Summons against respondents were served through a certain Benita S. Pagtalunan who received
the same on April 22, 2003.4 The Return of Summons was filed on April 24, 2003 by Process Server
Valeriano P. Badato which stated:

RESPECTFULLY RETURNED to the Honorable Court the herein Summons, together with
their Complaints and Annexes in connection with the service of the same with the information
that it was received by Ms. BENITA C. PAGTALUNAN secretary of the defendants on April
22, 2003 at their given address.
PROOF OF SERVICE CAN BE FOUND on the original copy of Summons as shown by her
signature therein.
RESPECTFULLY SUBMITTED.
Malolos, Bulacan, April 24, 2003.
(Sgd.) VALERIANO P. BADATO
Process Server5
On November 18, 2003, petitioner filed a motion to declare respondents in default which was
granted by the trial court thus:
Submitted is a Motion to Declare Defendants in Default [f]iled by plaintiffs through counsel,
Atty. Jose I. dela Rama, Jr.
Records show that on April 22, 2003, Summons together with the complaint and its annexes
were served to defendants Aida Torres, Nonilo Torres and Sheryl Ann Torres through their
Secretary Ms. Benita C. Pagtalunan per process Servers Return dated April 24, 2003.
Despite receipt of the same defendants failed to file their Answer and/or responsive pleading
within the reglementary period.
WHEREFORE, in view of the foregoing premises, the Motion to Declare Defendants in
default is GRANTED. The defendants are hereby declared in default.
The plaintiff is hereby allowed to present its evidence ex-parte before the court on February
10, 2004 at 8:30 a.m.
SO ORDERED.6
After presenting petitioners evidence ex-parte, the trial court rendered judgment on September 15,
2004, the dispositive portion of which reads:
ACCORDINGLY, judgment is hereby rendered, ordering the defendants to pay plaintiff the
following:
1. For Aida Torres:
a. The amount of P163,516.80 from April, 2004 plus legal interest until the said amount is
fully paid;
2. For Nonilo Torres:
a. The amount of P278,151.58 from April, 2004 plus legal interest until the said amount is
fully paid;

3. For Sheryl Ann Torres:

a. The amount of P15,903.93 from April, 2004 plus legal interest until the said amount is fully
paid;
4. To pay P10,000.00, jointly and severally, as attorneys fees.
5. Costs of suit.
SO ORDERED.7
Petitioner thereafter moved for the issuance of a writ of execution, which was granted and
accordingly, the writ of execution was issued on even date.8
On May 4, 2005, Sheriff Felixberto L. Samonte levied respondents house and lot covered by
Transfer Certificate of Title No. RT-22289 (T-285668) and the same was scheduled to be sold at
public auction on June 7, 2005 when the Court of Appeals issued a temporary restraining order.9
On August 24, 2005, the Court of Appeals annulled the judgment of the trial court on the ground that
it did not acquire jurisdiction over the persons of respondents since they were not validly served with
summons and neither did they voluntarily appear in court.10 According to the appellate court, the
service of summons to Pagtalunan was in violation of Section 6, Rule 14 of the Rules of Court
because there was no explanation why resort to substituted service of summons was made. Thus,
the appellate court held that respondents were deprived of their right to due process.
The Court of Appeals denied petitioners motion for reconsideration,11 hence, this petition on the
following assignment of errors:
I
The Court of Appeals erred when it granted the Annulment of Judgment despite the active
participation of the respondents in the court proceeding without questioning the jurisdiction of
the Court.
II
The Court of Appeals erred when it granted the Annulment of Judgment despite the
availability of legal remedies provided for by law. Hence, respondents are barred by estoppel
and laches to question the jurisdiction of the court.
III
The Court of Appeals erred when it dismissed the Complaint and absolved the respondents
of any civil liability to the Cooperative without evidence having been presented in the Court of
Appeals. The Court of Appeals likewise erred when it acted beyond what is being prayed
for.12
Petitioner alleges that the trial court rightly assumed jurisdiction over the persons of respondents,
asserting that No. 180 San Vicente Ferrer St., Rosaryville Subd., Sta. Cruz, Guiguinto, Bulacan, is
the residence of all the respondents as shown in (a) the Affidavit of Merit of Sheryl Ann Torres
attached to the Petition, (b) the Special Power of Attorney executed by Nonilo and Aida Torres and

(c) the Verification/Certification executed under oath by Sheryl Ann Torres.13 Petitioner asserts that
the service of summons to Pagtalunan at the same address was valid pursuant to the rules and
applicable jurisprudence.
Petitioner avers that respondents cannot avail of the remedy of annulment of judgment under Rule
47 since there are other available remedies under the Rules of Court,14 such as a motion for new trial
or reconsideration, petition for relief from judgment, or an original action for certiorari under Rule 65.
Finally, petitioner asserts that the Court of Appeals erred in concluding that the obligations of the
respondents are guaranteed by their co-signors capital investments. It claims that the appellate
court completely disregarded that the co-signors in the persons of Danilo Santos and Carmelita
Reyes had withdrawn their capital shares in the cooperative. The Court of Appeals, according to
petitioner, concluded that the obligations of the respondents were already paid, without the latter
having presented any proof or evidence to that effect.15
On the other hand, respondents argue that the Court of Appeals did not commit reversible error
when it granted the annulment of judgment considering that the trial court, which rendered the
judgment, lacked jurisdiction over their persons. They were not validly served with summons nor did
they voluntarily appear and submit themselves to the jurisdiction of the trial court. Neither did they
actively participate in the proceedings conducted therein. Respondents assert that their right to due
process was violated when the trial court rendered the questioned decision.16
Respondents also aver that the filing of the petition for annulment of judgment is proper there being
no recourse to the ordinary remedies of new trial, appeal, petition for relief or other appropriate
remedies, which are no longer available through no fault of their own. They assert that laches and
estoppel are not applicable to the case at bar.17
The issues to be resolved are: (a) whether summons was validly served on the respondents; and (b)
whether the judgment of the trial court was correctly annulled by the Court of Appeals.
Summons is a writ by which the defendant is notified of the action brought against him. Service of
such writ is the means by which the court acquires jurisdiction over his person.18 Jurisdiction over the
person of the defendant is acquired through coercive process, generally by the service of summons
issued by the court, or through the defendants voluntary appearance or submission to the court.
Where the defendant is a natural person, service may be personal, substituted, by publication and
such other mode of service as the court may deem sufficient.
In an action in personam, jurisdiction over the person of the defendant is necessary for the court to
validly try and decide the case. Jurisdiction over the person of a resident defendant who does not
voluntarily appear in court can be acquired by personal service of summons as provided under
Section 7, Rule 14 of the Rules of Court. If he cannot be personally served with summons within a
reasonable time, substituted service may be made in accordance with Section 8 of the said Rule. If
he is temporarily out of the country, any of the following modes of service may be resorted to: (1)
substituted service set forth in Section 8; (2) personal service outside the country, with leave of
court; (3) service by publication, also with leave of court; or (4) any other manner the court may
deem sufficient.19
In these types of civil actions, summons on the defendant must be served by handing a copy thereof
to the defendant in person, or in case of refusal, by tendering it to him. If efforts to find defendant
personally makes prompt service impossible, service may be effected by leaving copies of the
summons at the defendants dwelling house or residence with some person of suitable age and

discretion residing therein, or by leaving the copies at the defendants office or regular place of
business with some competent person in charge thereof.20 The proper service of summons is a
critical step in litigation because upon such service rests the courts acquisition of jurisdiction over
the person of the defendant. In the absence of a valid waiver, trial and judgment without such
service are null and void.
In the instant case, the Court of Appeals correctly ruled that since substituted service was availed of
in lieu of personal service, there should be a report stating that Pagtalunan was one with whom
respondents had a relationship of trust and confidence that would ensure that the latter will receive
or be notified of the summons issued in their names. This is because substituted service may only
be availed of when the respondents could not be served personally within a reasonable period of
time, and such impossibility of prompt service must be shown by stating that earnest efforts have
been made to find the respondents personally and that such efforts have failed. Such requirements
under Sections 6 and 7 of Rule 14 must be followed strictly, faithfully and fully in order not to deprive
any person of his property by violating his constitutional right to due process. The statutory
requirements of substituted service must be strictly construed since it is an extraordinary method of
service in derogation of personal service of summons, availed of only under certain conditions
imposed by the Rules of Court. Any substituted service other than that authorized under Section 7 is
deemed ineffective and contrary to law.
Granting that Pagtalunan is the personal secretary of Aida Torres, as appearing in the Affidavit of
Merit of Sheryl Ann Torres and attached to the Petition of Annulment filed before the Court of
Appeals, there is no showing that the former had indeed a relationship of trust and confidence with
the three respondents. It appears that the process server hastily and capriciously resorted to
substituted service of summons without ascertaining the whereabouts of the respondents. Such
service of summons is not binding upon respondents Nonilo and Sheryl Ann Torres whose
relationship with Pagtalunan was neither readily ascertained nor adequately explained in the Return
of Summons. Also, no earnest efforts were made to locate respondent Aida Torres who was
allegedly working abroad at the time summons was served on her person. No explanation why
substituted service was resorted to through Pagtalunan was stated in the Return.
The Return of Summons by the process server showed that no effort was exerted and no positive
step was taken to locate and serve the summons personally on respondents. Without specifying the
details of the attendant circumstances or of the efforts exerted to serve the summons, a general
statement that such efforts were made will not suffice for purposes of complying with the rules of
substituted service of summons.
It must be emphasized that personal service of summons is the mode which must be adopted
whenever practicable. It ought to be effected either by handing a copy thereof to the defendant in
person, or if he refuses, by tendering it to him.
In Ang Ping v. Court of Appeals,21 we ruled:
Jurisdiction over the person of the defendant in civil cases is acquired either by his voluntary
appearance in court and his submission to its authority or by service of summons. x x x
Well-settled is the rule that summons must be served upon the defendant himself. It is only
when the defendant cannot be served personally within a reasonable time that substituted
service may be resorted to and such impossibility of prompt service should be shown by
stating that efforts have been made to find the defendant personally and that such efforts
have failed. This is necessary because substituted service is in derogation of the usual
method of service. It is a method extraordinary in character and hence may be used only as

prescribed and in the circumstances authorized by statute. The statutory requirements of

substituted service must be followed strictly, faithfully and fully, and any substituted service
other than that authorized by statute is considered ineffective.
It should be emphasized that the service of summons is not only required to give the court
jurisdiction over the person of the defendant, but also to afford the latter an opportunity to be
heard on the claim made against him. Thus, compliance with the rules regarding the service
of summons is as much an issue of due process as of jurisdiction.22
In Avon Insurance PLC v. Court of Appeals,23 we held:
Fundamentally, the service of summons is intended to give official notice to the defendant or
respondent that an action has been commenced against it. The defendant or respondent is
thus put on guard as to the demands of the plaintiff as stated in the complaint. The service of
summons upon the defendant becomes an important element in the operation of a courts
jurisdiction upon a party to a suit, as service of summons upon the defendant is the means
by which the court acquires jurisdiction over his person. Without service of summons, or
when summons are improperly made, both the trial and the judgment, being in violation of
due process, are null and void, unless the defendant waives the service of summons by
voluntarily appearing and answering the suit.
When a defendant voluntarily appears, he is deemed to have submitted himself to the
jurisdiction of the court. This is not, however, always the case. Admittedly, and without
subjecting himself to the courts jurisdiction, the defendant in an action can, by special
appearance object to the courts assumption on the ground of lack of jurisdiction. If he so
wishes to assert this defense, he must do so seasonably by motion for the purpose of
objecting to the jurisdiction of the court, otherwise, he shall be deemed to have submitted
himself to that jurisdiction. x x x
xxxx
If the defendant, besides setting up in a motion to dismiss his objection to the jurisdiction of
the court, alleges at the same time any other ground for dismissing the action, or seeks an
affirmative relief in the motion, he is deemed to have submitted himself to the jurisdiction of
the court.24
In Laus v. Court of Appeals,25 we reiterated that substituted service must: (a) indicate the
impossibility of service of summons within a reasonable time, (b) specify the efforts exerted to locate
the petitioners, and (c) state that it was served on a person of sufficient age and discretion residing
therein.26 We held that the pre-condition that substituted service may be resorted to only if personal
service cannot be made "within a reasonable time" must be strictly followed.
In the instant case, there was an undue, if not indecent, haste to serve the summons at the first
attempt without making sure that personal service was an impossibility because either the
respondents had left for a foreign country or an unknown destination with no definite date of
returning within a reasonable period, or had gone into hiding to avoid service of any process from
the courts. Since the substituted service was not validly effected, the trial court did not acquire
jurisdiction over the persons of the respondents. The order of default, the judgment by default, the
writ of execution issued by it, as well as the auction sale of the respondents properties levied on
execution are, therefore, null and void.

Statutes prescribing modes other than personal service of summons must be strictly complied with
to give the court jurisdiction, and such compliance must appear affirmatively on the return.27
In the case of Jose v. Boyon,28 we observed:
In the instant case, it appears that the process server hastily and capriciously resorted to
substituted service of summons without actually exerting any genuine effort to locate
respondents. A review of the records reveals that the only effort he exerted was to go to No.
32 Ariza Drive, Camella Homes, Alabang on July 22, 1998, to try to serve the summons
personally on respondents. While the Return of Summons states that efforts to do so were
ineffectual and unavailing because Helen Boyon was in the United States and Romeo Boyon
was in Bicol, it did not mention exactly what efforts if any were undertaken to find
respondents. Furthermore, it did not specify where or from whom the process server
obtained the information on their whereabouts. x x x
xxxx
The Return of Summons shows no effort was actually exerted and no positive step taken by
either the process server or petitioners to locate and serve the summons personally on
respondents. At best, the Return merely states the alleged whereabouts of respondents
without indicating that such information was verified from a person who had knowledge
thereof. Certainly, without specifying the details of the attendant circumstances or of the
efforts exerted to serve the summons, a general statement that such efforts were made will
not suffice for purposes of complying with the rules of substituted service of summons.29
We explained in Venturanza v. Court of Appeals30 how the impossibility of personal service should
be shown by the process server:
The substituted service should be availed only when the defendant cannot be served
promptly in person. Impossibility of prompt service should be shown by stating the efforts
made to find the defendant personally and the failure of such efforts. The statement should
be made in the proof of service. This is necessary because substituted service is in
derogation of the usual method of service. It has been held that substituted service is a
method extraordinary in character, and hence may be used only as prescribed in the
circumstances authorized by statute. Thus, the statutory requirements of substituted service
must be followed strictly, faithfully, and any substituted service other than that authorized by
the statute is considered ineffective.31
Jurisdiction over the persons of the respondents never vested with the trial court since the manner of
substituted service by the process server is deemed invalid and ineffective. Clearly, there was a
violation of due process because of the defective service of summons. The judgment of the trial
court should be annulled on the ground of lack of jurisdiction, since the respondents were not
properly notified of the action filed against them, and denied them the chance to answer the
complaint before the court, thus depriving them of an opportunity to be heard.
Under Section 2 of Rule 47, judgments may be annulled on grounds of extrinsic fraud and lack of
jurisdiction, which refers to either lack of jurisdiction over the person of the defending party or over
the subject matter of the claim.32 A judgment of annulment sets aside the questioned judgment or
final order or resolution and renders the same null and void, without prejudice to the original action
being refiled in the proper court.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated August 24, 2005
in CA-G.R. SP No. 89974, annulling the decision of the Regional Trial Court of Bulacan, Branch 14,
dated September 15, 2004 in Civil Case No. 232-M-2003 for having been rendered without
jurisdiction and the Resolution dated and December 9, 2005, denying the motion for reconsideration,
are AFFIRMED.
No costs.
SO ORDERED.
G.R. No. 155392

December 6, 2006

ERLINDA GUANZON, petitioner,

vs.
ANDREW P. ARRADAZA, FRANCISCA MAIDIN and ERLINDA LEBITA, respondents.

DECISION

CHICO-NAZARIO, J.:
Respondent Andrew B. Arradaza filed with the Metropolitan Trial Court (MeTC) of Manila, Branch
13, an Amended Complaint1 against Francisca Maidin and Erlinda Lebita, Reynaldo Lebita, Erlinda
Guanzon and Ruel Escarilla for Damages. He alleged that on 22 May 1995 at around 2:45 A.M., he
boarded a jeepney that was cruising along Magsaysay Boulevard near Pureza Street, Manila.
Respondent sat at the jeepneys rear portion.
The Amended Complaint further alleged that the jeepney was owned and operated by Francisca
Maidin (Maidin) and Erlinda Lebita (Erlinda) with plate number NVD 734. Erlindas husband,
defendant Reynaldo Lebita (Reynaldo) was behind the wheel of the jeepney. Meanwhile, following
the jeepney was a dump truck with plate number PCP 827 registered in the name of Erlinda
Guanzon (Guanzon). On its wheel was defendant Ruel Escarilla (Escarilla). As neither of the two
drivers were willing to give way to the other, the two vehicles collided.
Owing to the said accident, respondent sustained injuries which required his confinement at the
Orthopedic Hospital where he incurred medical expenses in the amount of seven thousand pesos
(P7,000.00). He contends that defendant Reynaldo Lebita failed to exercise diligence in the
operation of his vehicle while defendant Guanzon, the registered owner of the dump truck, failed to
exercise due diligence in the selection and hiring of her driver in the person of Escarilla. Despite
several demands, the defendants failed to reimburse the respondent for his actual damages. He
claims,2 that, he had since been absent from his work as a service crew member of a fastfood
restaurant earning a salary of P145.00 per day and had been unable to enroll as an Engineering
student in the 5th year.
Defendants Maidin and Erlinda filed their Answer with cross-claim3 against Escarilla and Guanzon,
substantially arguing that it was defendant Escarilla who was at fault and whose negligence was the

proximate and immediate cause of the accident and that Escarillas employer, Guanzon, failed to
exercise the diligence of a good father of the family in the selection and hiring of Escarilla.
Defendant Reynaldo Lebita also filed his Answer with cross-claim4 against Escarilla and Guanzon
Lime Development Co. owned by defendant Guanzon.
Summons was not served on Escarilla apparently on the ground that he was "no longer connected
with the firm" Guanzon Lime and Development Co.
Defendant Guanzon was furnished on 13 June 1996 with copies of the amended complaint and
other pertinent papers via substituted service through a certain Susan Ador, after attempts exerted
to cause personal service failed.5 For having failed to file an answer, Guanzon was declared in
default in an Order dated 12 July 1996.
Almost two years later, defendant Guanzon argued through a Motion to Dismiss6 dated 9 July 1998
that the court did not acquire jurisdiction over her person by reason of defective service of summons.
The Motion to Dismiss was denied by the MeTC in an Order dated 7 August 1998.7 Guanzon filed a
Motion for Reconsideration8 which the MeTC denied in the Order dated 5 October 1998.9
After hearing, the MeTC in its judgment10 dated 12 April 1999, held:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff, ordering defendants
Francisca Maidin, Reynaldo Lebita, and Erlinda Guanzon, to pay, jointly and severally, the
following amount:
1. TWO THOUSAND ONE HUNDRED THREE PESOS AND TEN CENTAVOS
(P2,103.10) as actual medical expenses;
2. SIX THOUSAND NINE HUNDRED SIXTY PESOS (P6,960.00) as loss of earning
capacity for the two remaining months of the plaintiffs contract;
3. FOUR HUNDRED FIFTEEN PESOS (P415.00) as litigation expenses;
4. THIRTY THOUSAND PESOS (P30,000.00) as moral damages.
On defendant Francisca Maidin, Erlinda Lebita, and Reynaldo Lebitas cross-claim against
defendant Erlinda Guanzon, answering defendants can recover from Erlinda Guanzon the amount
they will pay to the plaintiff.11
Defendant Guanzon appealed to the Regional Trial Court (RTC) of Manila.12 In a Decision13 of the
RTC dated 9 August 1999, it affirmed the decision of the MeTC.14
From the decision of the RTC, defendant Erlinda Guanzon filed a Petition for Review before the
Court of Appeals15 on the single issue of the correctness of service of summons on her person. In a
Decision16 of the Court of Appeals dated 30 August 2002, the petition of defendant Guanzon was
denied and dismissed.
Defendant Guanzon is now before this Court on Petition for Review on Certiorari submitting the
same issue that:

THE COURT OF APPEALS ERRED IN NOT GIVING DUE COURSE TO AND IN DENYING
THE PETITION FOR REVIEW DESPITE THE FACT THAT THE SHERIFFS RETURN
CLEARLY SHOWED THAT THE SUBSTITUTED SERVICE OF SUMMONS ON THE
PETITIONER WAS DEFECTIVE AND PRODUCED NO EFFECT OTHER THAN NULLITY
OF THE PROCEEDING.17
We deny the Petition.
Records clearly show that defendant Guanzon was declared in default by the MeTC on 12 July 1996
for failure to file an Answer within the reglementary period.18
First off, in Cerezo v. Tuazon,19 the Court reiterated the remedies available to a party declared in
default:
a) The defendant in default may, at any time after discovery thereof and before judgment, file
a motion under oath to set aside the order of default on the ground that his failure to
answer was due to fraud, accident, mistake or excusable negligence, and that he has a
meritorious defense (Sec. 3, Rule 18 [now Sec. 3(b), Rule 9]);
b) If the judgment has already been rendered when the defendant discovered the default, but
before the same has become final and executory, he may file a motion for new trial under
Section 1(a) of Rule 37;
c) If the defendant discovered the default after the judgment has become final and executory,
he may file apetition for relief under Section 2 [now Section 1] of Rule 38; and
d) He may also appeal from the judgment rendered against him as contrary to the evidence
or to the law, even if no petition to set aside the order of default has been presented by him
(Sec. 2, Rule 41).
Moreover, a Petition for Certiorari to declare the nullity of a judgment by default is also available if
the trial court improperly declared a party in default, or even if the trial court properly declared a
party in default, if grave abuse of discretion attended such declaration.20
Instead of resorting to the above remedies, defendant Guanzon filed on 9 July 1998 or almost two
years after having been declared in default, a Motion to Dismiss the complaint predicated on
defective service of summons.
In any event, we rule that there was proper service of summons on defendant Guanzon and that the
court a quo properly took cognizance of the case.
It appears that a document from the Land Transportation Commission reveals that the motor vehicle
registration of the Isuzu dump truck then driven by Escarilla is under the name of Erlinda A.
Guanzon as owner with address at 22 Sapocoy St., Bo. Manresa, Quezon City. Thus, summons was
first attempted to be served personally on Guanzon at such address.21 However, the attempt failed
for the reason that she was unknown at said address.
Thereafter, further inquiry was made on Guanzons real address. A General Information Sheet
obtained from the Securities and Exchange Commission (SEC), shows that Erlinda Guanzon,
director of Guanzon Lime Development Company, Inc., is a resident of 478 Rizal Ave. Ext.,
Caloocan City. Hence, summons was effected by way of substituted service. Apparently, Guanzon

was not in the premises at that time, so the service was made on a certain Susan Ador, of suitable
age, and working within the premises.
The Sheriffs Return reads:
The undersigned sheriff respectfully states:
That the Summons together with the copy of Complaint and Annexes issued in the aboveentitled case was served in the following manner to wit:
Defendant Erlinda Guanzon of 478 Rizal Avenue Ext., Kalookan City, was served with copies
of Complaint/Annexes/Summons on June 13, 1996 by substituted service thru Susan Ador,
who is of suitable age, presently employed where defendant Erlinda Guanzon is also
working, affixed her signature as evidenced (sic) for the receipt thereof.
Defendant Ruel D. Escarilla of the given address was not served with the copy of Summons
with Complaint with Annexes for reason that he is no longer connected with the firm.
Several attempts were being made by the undersigned to serve the Summons to both
defendants personally but to no avail, hence the same was served by substituted services
pursuant of Sec. 8 (a) and (b) Rule 14, Rules of Court in the Phil.22
We find that the service of summons upon the petitioner, first attempted by personal service, and
subsequently by substituted service, more than meets the requirement set by the Rules of Court and
the due process clause.
Summons is the writ by which the defendant is notified of the action brought against him. Service of
such writ is the means by which the court may acquire jurisdiction over his person.23 As a rule,
summons should be personally served on the defendant. It is only when summons cannot be served
personally within a reasonable period of time that substituted service may be resorted to.
Secs. 6 and 7, Rule 14 of the Rules of Court, provides:
SEC. 6. Service in person on defendant. Whenever practicable, the summons shall be
served by handing a copy thereof to the defendant in person, or, if he refuses to receive and
sign for it, by tendering it to him.
SEC. 7. Substituted service. If, for justifiable causes, the defendant cannot be served
within a reasonable time as provided in the preceding section, service may be effected (a) by
leaving copies of the summons at the defendants residence with some person of suitable
age and discretion then residing therein, or (b) by leaving the copies at defendants office or
regular place of business with some competent person in charge thereof.
The rules specify two modes for effecting substituted service of summons, to wit:
a) by leaving copies of the summons at the defendants residence with some person of
suitable age and discretion then residing therein, or
b) by leaving the copies at defendants office or regular place of business with some
competent person in charge thereof.24

The certificate of service of the process server of the court a quo is prima facie evidence of the facts
as set out therein.25 This is fortified by the presumption of the regularity of performance of official
duty. To overcome the presumption of regularity of official functions in favor of such sheriffs return,
the evidence against it must be clear and convincing. Sans the requisite quantum of proof to the
contrary, the presumption stands deserving of faith and credit.
Substituted service is valid service expressly authorized by the Rules. It is allowed when the
defendant cannot be served personally within a reasonable time, in which event, service may be
effected by leaving copies of the summons at defendants dwelling house or residence with some
person of suitable age and discretion then residing therein, or at his office or regular place of
business with some competent person in charge thereof. It is not necessary that the person in
charge of the defendants regular place of business be specifically authorized to receive the
summons. It is enough that he appears to be in charge.26
The constitutional requirement of due process exacts that the service be such as may be reasonably
expected to give the notice desired. Once the service provided by the rules reasonably
accomplishes that end, the requirement of justice is answered; the traditional notions of fair play are
satisfied and due process is served.27
WHEREFORE, premises considered, the instant Petition is Denied for lack of merit. The Decision of
the Court of Appeals dated 30 August 2002 affirming the Decision of the Regional Trial Court of
Manila, Branch 30, dated 9 August 1999 and the Decision of the Metropolitan Trial Court of Manila,
Branch 13, dated 12 April 1999 isAFFIRMED.
SO ORDERED.

G.R. No. 159421

August 20, 2008

BENEDICTO B. POTENCIANO II, petitioner,

vs.
GREGORY P. BARNES, respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review1 of the Decision2 dated 26 August 2002 and the
Resolution dated 8 August 2003 of the Court of Appeals in CA-G.R. SP No.
68359.
The Facts
In February 2000, GP Barnes Group of Companies hired petitioner Benedicto
B. Potenciano II (Potenciano) as a member of the Management Committee of
the Barnes Marketing Concept which held office in Ortigas Center, Pasig City.

Potenciano was also designated as one of the managers of the London

Underground Bar and Restaurant, another member-company of GP Barnes
Group of Companies. In February 2001, Potenciano was assigned as
Operations Manager of Executive Dinner Club International, also a membercompany of GP Barnes Group of Companies.
On 9 May 2001, Potenciano filed with the Regional Trial Court of Muntinlupa
City, Branch 276 (trial court) a complaint for damages against respondent
Gregory P. Barnes (Barnes), the owner and president of GP Barnes Group of
Companies, for alleged harassment and maltreatment.
On 11 May 2001, a certain Jaime S. Herrera (Mr. Herrera), a representative of
E. Himan Law Office, secured from the trial court copies of the complaint with
annexes and the summons intended for Barnes. Mr. Herrera indicated on the
courts copy of the summons that E. Himan Law Office was Barnes counsel.
On the same date, the deputy sheriff issued a Return of Summons.
On 16 June 2001, Potenciano filed a motion to declare Barnes in default. On
22 June 2001, E. Himan Law Office, represented by Atty. Jose Valentino G.
Dave (Atty. Dave), by way of special appearance for the sole purpose of
questioning the validity of the service of summons, filed its
Comment/Manifestation, manifesting that the law office does not represent
Barnes because he has not yet engaged the services of the law office. Hence,
the law office has no authority to bind Barnes.
On 12 July 2001, the trial court issued an Order of Default. On 30 July 2001,
E. Himan Law Office, represented by Atty. Dave, by way of special
appearance, filed an urgent motion for reconsideration of the default order,
which the trial court denied.
On 8 August 2001, the trial court rendered a resolution, the dispositive portion
of which reads:
Prescinding, judgment is rendered for Plaintiff [Benedicto B. Potenciano
II], declaring Defendant Gregory Paul Barnes, by himself and severally,
jointly with his companies, being GP Barnes Group of Companies,
Barnes Marketing Concept, London Underground Bar and Restaurant
and Executive Dinner Club International, with which Plaintiff was
connected or working with, for sometime during his employment with
Mr. Barnes, for damages and are therefore directed to personally, jointly
and severally pay Plaintiff as follows:

1. One Million Pesos (P1,000,000.00) as and by way of moral damages;

2. Four Hundred Thousand Pesos (P400,000.00) as and by way of
nominal damages;
3. Four Hundred Thousand Pesos (P400,000.00) as and by way of
exemplary damages;
4. Two Hundred Thousand Pesos (P200,000.00) and Three Thousand
Pesos (P3,000.00) per appearance, as and by way of attorneys fees;
and
5. Costs of the suit.
It is SO ORDERED.3
On 16 August 2001, Potenciano filed a Motion for Execution Pending Appeal.
On 25 August 2001, Barnes, now formally represented by Diores Law Offices,
filed a Motion for New Trial as Remedy Against Judgment by Default with
Opposition to Execution Pending Appeal, which the trial court denied on 25
September 2001. Barnes moved for reconsideration, which the trial court
denied in its Order dated 26 October 2001.
Barnes filed a Petition for Certiorari, Prohibition, and Mandamus, with prayer
for a temporary restraining order or preliminary prohibitory injunction, praying
for the nullification of the following orders and resolution of the trial court: (1)
Order dated 12 July 2001; (2) Resolution dated 8 August 2001; (3) Order
dated 25 September 2001; and (4) Order dated 26 October 2001.
On 26 August 2002, the Court of Appeals rendered a decision, the dispositive
portion of which reads:
WHEREFORE, premises considered, the PETITION FOR
CERTIORARI, PROHIBITION and MANDAMUS is hereby GRANTED.
Accordingly, the Orders dated July 12, 2001, September 25, 2001 and
October 26, 2001 and Resolution dated August 8, 2001 are hereby
declared NULL AND VOID.
Let the entire record of the case be remanded to the court a quo for
further proceedings.

The application for issuance of a temporary restraining order and/or

preliminary prohibitory injunction is hereby declared moot and
academic.
SO ORDERED.4
Potenciano moved for reconsideration, which the Court of Appeals denied.
Hence, this petition for review.
The Ruling of the Trial Court
In its Order dated 25 September 2001, the trial court denied Barnes Motion
for New Trial. The trial court held that the sheriff did not commit fraud when he
certified in his Return of Summons that Barnes was duly served with the
summons when a representative of E. Himan Law Office, claiming as counsel
of Barnes, secured a copy of the summons and the complaint against Barnes.
The trial court ruled that when E. Himan Law Office received the copy of the
complaint and the summons, it was acting on behalf of Barnes. Thus, Barnes
was duly served with the summons through the voluntary appearance of his
counsel on his behalf.
The Ruling of the Court of Appeals
The Court of Appeals held that there was no valid service of summons since
neither Mr. Herrera nor E. Himan Law Office was the defendant. When Mr.
Herrera, as a representative of E. Himan Law Office, received a copy of the
summons, Barnes had not yet engaged the services of E. Himan Law Office.
The Court of Appeals ruled that the sheriff did not exert any effort to comply
with Section 6, Rule 14 of the Rules of Court, either by handing a copy of the
summons to Barnes in person and should Barnes refuse to receive and sign
the summons, by tendering it to him. Since there was no valid service of
summons on Barnes, the trial court therefore did not acquire jurisdiction over
Barnes.
The Issues
Potenciano raises the following issues:
1. Whether the Court of Appeals committed grievous error of law when it
impliedly ruled in favor of the propriety of the remedy of special civil
action of certiorari, prohibition, and mandamus; and

2. Whether the Court of Appeals committed grievous error of law when it

ruled that the trial court did not acquire jurisdiction over the person of
the respondent, and rendered the trial courts proceedings null and
void.5
The Ruling of the Court
We find the petition without merit.
Service of summons on the defendant is the means by which the court
acquires jurisdiction over the defendant.6 Summons serves as a notice to the
defendant that an action has been commenced against him, thereby giving
him the opportunity to be heard on the claim made against him.7 This is in
accordance with the constitutional guaranty of due process of law which
requires notice and an opportunity to be heard and to defend oneself.
Section 6, Rule 14 of the Rules of Court underscores the importance of actual
delivery or tender of the summons to the defendant himself:
Section 6. Service in person on defendant. Whenever practicable, the
summons shall be served by handing a copy thereof to the defendant in
person, or if he refuses to receive and sign for it, by tendering it to him.
Under this provision, service of summons should be made on the defendant
himself. However, if for justifiable reasons the defendant cannot be served in
person within a reasonable time, substituted service of summons is proper.
Thus, Section 7, Rule 14 of the Rules of Court provides:
Section 7. Substituted service. If, for justifiable causes, the defendant
cannot be served within a reasonable time as provided in the preceding
section, service may be effected (a) by leaving copies of the summons
at the defendants residence with some person of suitable age and
discretion then residing therein, or (b) by leaving the copies at
defendants office or regular place of business with some competent
person in charge thereof.
In this case, there was no attempt whatsoever on the part of the deputy sheriff
to serve the summons on Barnes himself, who was the defendant in the
complaint. The deputy sheriff just handed a copy of the summons, complaint,
and the annexes to a certain Mr. Herrera who is a representative of E. Himan
Law Office, which claimed to be the counsel of Barnes. The Return of
Summons of the trial courts deputy sheriff reads:

THIS IS TO CERTIFY that on May 11, 2001, Mr. Jaime S. Herrera Jr.
came to this branch asking a copy of the Summons together with the
Complaint and its annexes on the above-entitled case and when asked
what is his participation in this case he answered that he is the
representative of E. Himan Law Office, the counsel for the defendant
Gregory Paul Barnes.
That he was told by the said Law Office to come to Branch 276, R.T.C.
Muntinlupa to get the copy of the Summons and the Complaint and its
annexes, so that the undersigned give [sic] him the said documents, as
evidenced by his signature appearing on the original Summons.
Wherefore said original copy of Summons is hereto attached to the
record of the above-entitled case DULY SERVED.8
Clearly, there was no service of summons on Barnes himself. The handing of
a copy to Mr. Herrera cannot even qualify as substituted service under
Section 7 of Rule 14. The requisites of substituted service of summons are:
(1) the defendant cannot be served personally within a reasonable time; and
(2) the impossibility of prompt service should be shown by stating the efforts
made to find the defendant personally and the fact that such efforts failed, and
this statement should be made in the proof of service.9In this case, the deputy
sheriff never made any effort to serve the summons on Barnes himself.
Neither was the copy of the summons served at Barnes residence nor at his
office or regular place of business, as provided under Section 7 of Rule 14.
The deputy sheriff just handed a copy of the summons to a messenger of E.
Himan Law Office who came to the office of the trial court claiming that E.
Himan Law Office was the counsel of Barnes. Giving a copy of the summons
to a messenger of a law firm, which was not even the counsel of the
defendant, cannot in any way be construed as equivalent to service of
summons on the defendant.
Since there was no service of summons on Barnes, the trial court never
acquired jurisdiction over Barnes and the trial courts order of default and the
judgment by default are void.10 The trial court should have refrained from
issuing the default order when E. Himan Law Office manifested that it did not
represent Barnes who had not engaged its services. It would have been more
prudent for the trial court at that point to order the deputy sheriff to serve the
summons on Barnes himself by handing it to him personally.
Other than valid service of summons on the defendant, the trial court can still
acquire jurisdiction over the defendant by his voluntary appearance,11 in

accordance with Section 20, Rule 14 of the Rules of Court.12However, this is

not the case here. There is no evidence on record that Barnes authorized E.
Himan Law Office to represent him in the case. In fact, E. Himan Law Office
filed a Comment/Manifestation to the Motion to Declare Defendant in Default,
alleging that Barnes had not yet engaged the services of E. Himan Law Office,
which could not therefore represent Barnes. Thus, the receipt of the summons
by E. Himan Law Office and its filing of a Comment/Manifestation to the
Motion to Declare Defendant in Default cannot be considered as voluntary
appearance on the part of Barnes.
It was only on 15 August 2001 that Barnes made his first appearance in the
trial court by filing a Motion for New Trial through his counsel of record, Diores
Law Offices. The motion was precisely to question the validity of the order of
default and the subsequent judgment for lack of jurisdiction over the person of
the defendant.
This case is similar to the case of Cavili v. Hon. Vamenta, Jr.,13 where
summons was served only on one of the defendants. The two other
defendants were not served with summonses and neither did they authorize
the counsel of the other defendant to represent them in the case. The Court
held:
As shown in the return of the service of summons (Annex "B" of
Petition), which is not contested by the respondents, summons was
served on defendant Perfecta Cavili in Bayawan, Negros Oriental, but
not on defendants Quirino and Primitivo Cavili who were then staying in
Kabankalan, Negros Occidental. While Perfecta Cavilis counsel, Atty.
Jose Alamillo, filed in behalf of all the three defendants a motion for
extension of time to file an answer upon assurance of Perfecta Cavili
that she would summon her brothers, Quirino and Primitivo to Bayawan
to authorize him to represent them in the case, said counsel later on
manifested before the Court of First Instance of Negros Oriental
that he desisted from further appearing in the case since Perfecta
Cavilis assurance that he would be authorized by the other two
defendants to represent them in the case was never carried out.
The motion for extension of time to file an answer cannot, thus, be
construed as a voluntary appearance in the case by the defendants
Quirino and Primitivo Cavili.
Neither can the motion for new trial filed later by Atty. Reuben A.
Espancho on behalf of the Cavili brothers cure the jurisdictional
defect brought about by the non-service of summons on them

precisely because the motion was predicated on such lack and

was intended to secure for said defendants the opportunity to be
heard in a new trial. It cannot be construed as a waiver of the right
to be heard.14 (Emphasis supplied)
Thus, since the trial court never acquired jurisdiction over Barnes, either by
personal or substituted service of summons or by Barnes voluntary
appearance in court and submission to its authority, the trial courts order of
default and the succeeding judgment are void for lack of jurisdiction over the
person of the defendant. The trial court should have granted Barnes Motion
for New Trial to afford him due process of law. The appellate court was
therefore correct in granting the petition for certiorari, prohibition and
mandamus.
WHEREFORE, we DENY the petition. We AFFIRM the Decision dated 26
August 2002 and the Resolution dated 8 August 2003 of the Court of Appeals
in CA-G.R. SP No. 68359.
SO ORDERED.
G.R. No. 170122

October 12, 2009

CLARITA DEPAKAKIBO GARCIA, Petitioner,

vs.
SANDIGANBAYAN and REPUBLIC OF THE PHILIPPINES, Respondents.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 171381
CLARITA DEPAKAKIBO GARCIA, Petitioner,
vs.
SANDIGANBAYAN and REPUBLIC OF THE PHILIPPINES, Respondents.
DECISION
VELASCO, JR., J.:
The Case
Before us are these two (2) consolidated petitions under Rule 65, each interposed by petitioner
Clarita D. Garcia, with application for injunctive relief. In the first petition for mandamus and/or
certiorari, docketed as G.R. No. 170122, petitioner seeks to nullify and set aside the August 5, 2005
Order,1 as reiterated in another Order dated August 26, 2005, both issued by the Sandiganbayan,
Fourth Division, which effectively denied the petitioners motion to dismiss and/or to quash Civil
Case No. 0193, a suit for forfeiture commenced by the Republic of the Philippines against the
petitioner and her immediate family. The second petition for certiorari, docketed as G.R. No. 171381,

seeks to nullify and set aside the November 9, 2005 Resolution2 of the Sandiganbayan, Fourth
Division, insofar as it likewise denied the petitioners motion to dismiss and/or quash Civil Case No.
0196, another forfeiture case involving the same parties but for different properties.
The Facts
To recover unlawfully acquired funds and properties in the aggregate amount of PhP
143,052,015.29 that retired Maj. Gen. Carlos F. Garcia, his wife, herein petitioner Clarita, children
Ian Carl, Juan Paulo and Timothy Mark (collectively, the Garcias) had allegedly amassed and
acquired, the Republic, through the Office of the Ombudsman (OMB), pursuant to Republic Act No.
(RA) 1379,3 filed with the Sandiganbayan (SB) on October 29, 2004 a petition for the forfeiture of
those properties. This petition, docketed as Civil Case No. 0193, was eventually raffled to the
Fourth Division of the anti-graft court.
Civil Case No. 0193 was followed by the filing on July 5, 2005 of another forfeiture case, docketed
as Civil Case No. 0196, this time to recover funds and properties amounting to PhP 202,005,980.55.
Civil Case No. 0196 would eventually be raffled also to the Fourth Division of the SB. For
convenience and clarity, Civil Case No. 0193 shall hereinafter be also referred to as Forfeiture I and
Civil Case No. 0196 as Forfeiture II.
Prior to the filing of Forfeiture II, but subsequent to the filing of Forfeiture I, the OMB charged the
Garcias and three others with violation of RA 7080 (plunder) under an Information dated April 5,
2005 which placed the value of the property and funds plundered at PhP 303,272,005.99. Docketed
as Crim. Case No. 28107, the Information was raffled off to the Second Division of the SB. The
plunder charge, as the parties pleadings seem to indicate, covered substantially the same
properties identified in both forfeiture cases.
After the filing of Forfeiture I, the following events transpired in relation to the case:
(1) The corresponding summons were issued and all served on Gen. Garcia at his
place of detention. Per the Sheriffs Return4 dated November 2, 2005, the summons were
duly served on respondent Garcias. Earlier, or on October 29, 2004, the SB issued a writ of
attachment in favor of the Republic, an issuance which Gen. Garcia challenged before this
Court, docketed as G.R. No. 165835.
Instead of an answer, the Garcias filed a motion to dismiss on the ground of the SBs lack of
jurisdiction over separate civil actions for forfeiture. The OMB countered with a motion to
expunge and to declare the Garcias in default. To the OMBs motion, the Garcias interposed
an opposition in which they manifested that they have meanwhile repaired to the Court
on certiorari, docketed as G.R. No. 165835 to nullify the writ of attachment SB issued in
which case the SB should defer action on the forfeiture case as a matter of judicial courtesy.
(2) By Resolution5 of January 20, 2005, the SB denied the motion to dismiss; declared the
same motion aspro forma and hence without tolling effect on the period to answer. The same
resolution declared the Garcias in default.
Another resolution6 denied the Garcias motion for reconsideration and/or to admit answer,
and set a date for the ex-parte presentation of the Republics evidence.
A second motion for reconsideration was also denied on February 23, 2005, pursuant to the
prohibited pleading rule.

(3) Despite the standing default order, the Garcias moved for the transfer and consolidation
of Forfeiture I with the plunder case which were respectively pending in different divisions of
the SB, contending that such consolidation is mandatory under RA 8249.7
On May 20, 2005, the SB 4th Division denied the motion for the reason that the forfeiture
case is not the corresponding civil action for the recovery of civil liability arising from the
criminal case of plunder.
(4) On July 26, 2005, the Garcias filed another motion to dismiss and/or to quash Forfeiture I
on, inter alia, the following grounds: (a) the filing of the plunder case ousted the SB 4th
Division of jurisdiction over the forfeiture case; and (b) that the consolidation is imperative in
order to avoid possible double jeopardy entanglements.
By Order8 of August 5, 2005, the SB merely noted the motion in view of movants having been
declared in default which has yet to be lifted.
It is upon the foregoing factual antecedents that petitioner Clarita has interposed her first special civil
action for mandamus and/or certiorari docketed as G.R. No. 170122, raising the following issues:
I. Whether or not the [SB] 4th Division acted without or in excess of jurisdiction or with grave abuse
of discretion x x x in issuing its challenged order of August 5, 2005 and August 26 2005 that merely
"Noted without action," hence refused to resolve petitioners motion to dismiss and/or to quash by
virtue of petitioners prior default in that:
A. For lack of proper and valid service of summons, the [SB] 4th Division could not have
acquired jurisdiction over petitioners, [and her childrens] x x x persons, much less make
them become the true "parties-litigants, contestants or legal adversaries" in forfeiture I. As
the [SB] has not validly acquired jurisdiction over the petitioners [and her childrens] x x x
persons, they could not possibly be declared in default, nor can a valid judgment by default
be rendered against them.
B. Even then, mere declaration in default does not per se bar petitioner from challenging the
[SB] 4th Divisions lack of jurisdiction over the subject matter of forfeiture I as the same can
be raised anytime, even after final judgment. In the absence of jurisdiction over the subject
matter, any and all proceedings before the [SB] are null and void.
C. Contrary to its August 26, 2005 rejection of petitioners motion for reconsideration of the
first challenged order that the issue of jurisdiction raised therein had already been passed
upon by [the SB 4th Divisions] resolution of May 20, 2005, the records clearly show that the
grounds relied upon by petitioner in her motion to dismiss and/or to quash dated July 26,
2005 were entirely different, separate and distinct from the grounds set forth in petitioners
manifestation and motion [to consolidate] dated April 15, 2005 that was denied by it per its
resolution of May 20, 2005.
D. In any event, the [SB] 4th Division has been ousted of jurisdiction over the subject matter
of forfeiture I upon the filing of the main plunder case against petitioner that mandates the
automatic forfeiture of the subject properties in forfeiture cases I & II as a function or adjunct
of any conviction for plunder.
E. Being incompatible, the forfeiture law (RA No. 1379 [1955]) was impliedly repealed by the
plunder law (RA No. 7080 [1991]) with automatic forfeiture mechanism.

F. Since the sought forfeiture includes properties purportedly located in the USA, any penal
conviction for forfeiture in this case cannot be enforced outside of the Philippines x x x.
G. Based on orderly procedure and sound administration of justice, it is imperative that the
matter of forfeiture be exclusively tried in the main plunder case to avoid possible double
jeopardy entanglements, and to avoid possible conflicting decisions by 2 divisions of the [SB]
on the matter of forfeiture as a penal sanction.9 (Emphasis added.)
With respect to Forfeiture II, the following events and proceedings occurred or were taken after the
petition for Forfeiture II was filed:
(1) On July 12, 2005, the SB sheriff served the corresponding summons. In his return of July
13, 2005, the sheriff stated giving the copies of the summons to the OIC/Custodian of
the PNP Detention Center who in turn handed them to Gen. Garcia. The general signed
his receipt of the summons, but as to those pertaining to the other respondents, Gen. Garcia
acknowledged receiving the same, but with the following qualifying note: "Im receiving the
copies of Clarita, Ian Carl, Juan Paolo & Timothy but these copies will not guarantee it
being served to the above-named (sic)."
(2) On July 26, 2005, Clarita and her children, thru special appearance of counsel, filed a
motion to dismiss and/or to quash Forfeiture II primarily for lack of jurisdiction over their
persons and on the subject matter thereof which is now covered by the plunder case.
To the above motion, the Republic filed its opposition with a motion for alternative
service of summons. The motion for alternative service would be repeated in another
motion of August 25, 2005.
(3) By Joint Resolution of November 9, 2005, the SB denied both the petitioners motion to
dismiss and/or to quash and the Republics motion for alternative service of summons.
On January 24, 2006, the SB denied petitioners motion for partial reconsideration.10
From the last two issuances adverted to, Clarita has come to this Court via the instant petition for
certiorari, docketed as GR No. 171381. As there submitted, the SB 4th Division acted without or in
excess of jurisdiction or with grave abuse of discretion in issuing its Joint Resolution dated
November 9, 2005 and its Resolution of January 24, 2006 denying petitioners motion to dismiss
and/or to quash in that:
A. Based on its own finding that summons was improperly served on petitioner, the [SB]
ought to have dismissed forfeiture II for lack of jurisdiction over petitioners person x x x.
B. By virtue of the plunder case filed with the [SB] Second Division that mandates the
automatic forfeiture of unlawfully acquired properties upon conviction, the [SB] Fourth
Division has no jurisdiction over the subject matter of forfeiture.
C. Being incompatible, the forfeiture law (RA No. 1379 [1955]) was impliedly repealed by the
plunder law (RA No. 7080 [1991]) with automatic forfeiture mechanism.
D. Based on orderly procedure and sound administration of justice, it is imperative that the
matter of forfeiture be exclusively tried in the main plunder case to avoid possible double

jeopardy entanglements and worse conflicting decisions by 2 divisions of the Sandiganbayan

on the matter of forfeiture as a penal sanction.11 (Emphasis added.)
Per Resolution of the Court dated March 13, 2006, G.R. No. 170122 and G.R. No. 171381 were
consolidated.
The Courts Ruling
The petitions are partly meritorious.
The core issue tendered in these consolidated cases ultimately boils down to the question of
jurisdiction and may thusly be couched into whether the Fourth Division of the SB has acquired
jurisdiction over the person of petitionerand her three sons for that matterconsidering
that, first, vis--vis Civil Case Nos. 0193 (Forfeiture I) and 0196 (Forfeiture II), summons against her
have been ineffectively or improperly served and, second, that the plunder caseCrim. Case No.
28107has already been filed and pending with another division of the SB, i.e., Second Division of
the SB.
Plunder Case in Crim. Case No. 28107 Did Not Absorb the Forfeiture Cases in Civil Case Nos.
0193 and 0196
Petitioner maintains that the SB 4th Division has no jurisdiction over the subject matter of Forfeitures
I and II as both cases are now covered or included in the plunder case against the Garcias. Or as
petitioner puts it a bit differently, the filing of the main plunder case (Crim. Case No. 28107), with its
automatic forfeiture mechanism in the event of conviction, ousted the SB 4th Division of its
jurisdiction over the subject matter of the forfeiture cases. The inclusion of the forfeiture cases with
the plunder case is necessary, so petitioner claims, to obviate possible double jeopardy
entanglements and colliding case dispositions. Prescinding from these premises, petitioner would
ascribe grave abuse of discretion on the SB 4th Division for not granting its separate motions to
dismiss the two forfeiture petitions and/or to consolidate them with the plunder case on the foregoing
ground.
Petitioners contention is untenable. And in response to what she suggests in some of her pleadings,
let it be stated at the outset that the SB has jurisdiction over actions for forfeiture under RA 1379,
albeit the proceeding thereunder is civil in nature. We said so in Garcia v. Sandiganbayan12 involving
no less than petitioners husband questioning certain orders issued in Forfeiture I case.
Petitioners posture respecting Forfeitures I and II being absorbed by the plunder case, thus
depriving the 4th Division of the SB of jurisdiction over the civil cases, is flawed by the assumptions
holding it together, the first assumption being that the forfeiture cases are the corresponding civil
action for recovery of civil liability ex delicto. As correctly ruled by the SB 4th Division in its May 20,
2005 Resolution,13 the civil liability for forfeiture cases does not arise from the commission of a
criminal offense, thus:
Such liability is based on a statute that safeguards the right of the State to recover unlawfully
acquired properties. The action of forfeiture arises when a "public officer or employee [acquires]
during his incumbency an amount of property which is manifestly out of proportion of his salary x x x
and to his other lawful income x x x."14 Such amount of property is then presumed prima facie to
have been unlawfully acquired.15 Thus "if the respondent [public official] is unable to show to the
satisfaction of the court that he has lawfully acquired the property in question, then the court shall
declare such property forfeited in favor of the State, and by virtue of such judgment the property
aforesaid shall become property of the State.16 x x x (Citations in the original.)

Lest it be overlooked, Executive Order No. (EO) 14, Series of 1986, albeit defining only the
jurisdiction over cases involving ill-gotten wealth of former President Marcos, his immediate family
and business associates, authorizes under its Sec. 317 the filing of forfeiture suits under RA 1379
which will proceed independently of any criminal proceedings. The Court, in Republic v.
Sandiganbayan,18 interpreted this provision as empowering the Presidential Commission on Good
Government to file independent civil actions separate from the criminal actions.
Forfeiture Cases and the Plunder Case Have Separate Causes of Action; the Former Is Civil in
Nature while the Latter Is Criminal
It bears stressing, as a second point, that a forfeiture case under RA 1379 arises out of a cause of
action separate and different from a plunder case, thus negating the notion that the crime of plunder
charged in Crim. Case No. 28107 absorbs the forfeiture cases. In a prosecution for plunder, what is
sought to be established is the commission of the criminal acts in furtherance of the acquisition of illgotten wealth. In the language of Sec. 4 of RA 7080, for purposes of establishing the crime of
plunder, it is "sufficient to establish beyond reasonable doubt a pattern of overt or criminal acts
indicative of the overall unlawful scheme or conspiracy [to amass, accumulate or acquire ill-gotten
wealth]." On the other hand, all that the court needs to determine, by preponderance of evidence,
under RA 1379 is the disproportion of respondents properties to his legitimate income, it being
unnecessary to prove how he acquired said properties. As correctly formulated by the Solicitor
General, the forfeitable nature of the properties under the provisions of RA 1379 does not proceed
from a determination of a specific overt act committed by the respondent public officer leading to the
acquisition of the illegal wealth.19
Given the foregoing considerations, petitioners thesis on possible double jeopardy entanglements
should a judgment of conviction ensue in Crim. Case 28107 collapses entirely. Double jeopardy, as
a criminal law concept, refers to jeopardy of punishment for the same offense,20 suggesting that
double jeopardy presupposes two separate criminal prosecutions. Proceedings under RA 1379 are,
to repeat, civil in nature. As a necessary corollary, one who is sued under RA 1379 may be
proceeded against for a criminal offense. Thus, the filing of a case under that law is not barred by
the conviction or acquittal of the defendant in Crim. Case 28107 for plunder.
Moreover, given the variance in the nature and subject matter of the proceedings between the
plunder case and the subject forfeiture cases, petitioners apprehension about the likelihood of
conflicting decisions of two different divisions of the anti-graft court on the matter of forfeiture as a
penal sanction is specious at best. What the SB said in this regard merits approving citation:
On the matter of forfeiture as a penal sanction, respondents argue that the division where the
plunder case is pending may issue a decision that would collide or be in conflict with the decision by
this division on the forfeiture case. They refer to a situation where this Courts Second Division may
exonerate the respondents in the plunder case while the Fourth Division grant the petition for
forfeiture for the same properties in favor of the state or vice versa.
Suffice it to say that the variance in the decisions of both divisions does not give rise to a conflict.
After all, forfeiture in the plunder case requires the attendance of facts and circumstances separate
and distinct from that in the forfeiture case. Between the two (2) cases, there is no causal connection
in the facts sought to be established and the issues sought to be addressed. As a result, the
decision of this Court in one does not have a bearing on the other.
There is also no conflict even if the decisions in both cases result in an order for the forfeiture of the
subject properties. The forfeiture following a conviction in the plunder case will apply only to those ill-

gotten wealth not recovered by the forfeiture case and vise (sic) versa. This is on the assumption
that the information on plunder and the petition for forfeiture cover the same set of properties.21
RA 7080 Did Not Repeal RA 1379
Petitioner takes a different tack in her bid to prove that SB erred in not dismissing Forfeitures I and II
with her assertion that RA 7080 impliedly repealed RA 1379. We are not convinced.
Nowhere in RA 7080 can we find any provision that would indicate a repeal, expressly or impliedly,
of RA 1379. RA 7080 is a penal statute which, at its most basic, aims to penalize the act of any
public officer who by himself or in connivance with members of his family amasses, accumulates or
acquires ill-gotten wealth in the aggregate amount of at least PhP 50 million. On the other hand, RA
1379 is not penal in nature, in that it does not make a crime the act of a public official acquiring
during his incumbency an amount of property manifestly out of proportion of his salary and other
legitimate income. RA 1379 aims to enforce the right of the State to recover the properties which
were not lawfully acquired by the officer.
It has often been said that all doubts must be resolved against any implied repeal and all efforts
should be exerted to harmonize and give effect to all laws and provisions on the same subject. To be
sure, both RA 1379 and RA 7080 can very well be harmonized. The Court perceives no
irreconcilable conflict between them. One can be enforced without nullifying the other.
Sandiganbayan Did Not Acquire Jurisdiction over the Persons of Petitioner and Her Children
On the issue of lack of jurisdiction, petitioner argues that the SB did not acquire jurisdiction over her
person and that of her children due to a defective substituted service of summons. There is merit in
petitioners contention.
1 a vv p h i 1

Sec. 7, Rule 14 of the 1997 Revised Rules of Civil Procedure clearly provides for the requirements
of a valid substituted service of summons, thus:
SEC. 7. Substituted service.If the defendant cannot be served within a reasonable time as
provided in the preceding section [personal service on defendant], service may be effected (a) by
leaving copies of the summons at the defendants residence with some person of suitable age and
discretion then residing therein, or (b) by leaving the copies at defendants office or regular place of
business with some competent person in charge thereof.
It is basic that a court must acquire jurisdiction over a party for the latter to be bound by its decision
or orders. Valid service of summons, by whatever mode authorized by and proper under the Rules,
is the means by which a court acquires jurisdiction over a person.22
In the instant case, it is undisputed that summons for Forfeitures I and II were served personally on
Maj. Gen. Carlos Flores Garcia, who is detained at the PNP Detention Center, who acknowledged
receipt thereof by affixing his signature. It is also undisputed that substituted service of summons for
both Forfeitures I and II were made on petitioner and her children through Maj. Gen. Garcia at the
PNP Detention Center. However, such substituted services of summons were invalid for being
irregular and defective.
In Manotoc v. Court of Appeals,23 we broke down the requirements to be:

(1) Impossibility of prompt personal service, i.e., the party relying on substituted service or
the sheriff must show that defendant cannot be served promptly or there is impossibility of
prompt service within a reasonable time. Reasonable time being "so much time as is
necessary under the circumstances for a reasonably prudent and diligent man to do,
conveniently, what the contract or duty requires that should be done, having a regard for the
rights and possibility of loss, if any[,] to the other party."24 Moreover, we indicated therein that
the sheriff must show several attempts for personal service of at least three (3) times on at
least two (2) different dates.
(2) Specific details in the return, i.e., the sheriff must describe in the Return of Summons the
facts and circumstances surrounding the attempted personal service.
(3) Substituted service effected on a person of suitable age and discretion residing at
defendants house or residence; or on a competent person in charge of defendants office or
regular place of business.
From the foregoing requisites, it is apparent that no valid substituted service of summons was made
on petitioner and her children, as the service made through Maj. Gen. Garcia did not comply with the
first two (2) requirements mentioned above for a valid substituted service of summons. Moreover,
the third requirement was also not strictly complied with as the substituted service was made not at
petitioners house or residence but in the PNP Detention Center where Maj. Gen. Garcia is detained,
even if the latter is of suitable age and discretion. Hence, no valid substituted service of summons
was made.
The stringent rules on valid service of summons for the court to acquire jurisdiction over the person
of the defendants, however, admits of exceptions, as when the party voluntarily submits himself to
the jurisdiction of the court by asking affirmative relief.25 In the instant case, the Republic asserts that
petitioner is estopped from questioning improper service of summons since the improvident service
of summons in both forfeiture cases had been cured by their (petitioner and her children) voluntary
appearance in the forfeiture cases. The Republic points to the various pleadings filed by petitioner
and her children during the subject forfeiture hearings. We cannot subscribe to the Republics views.
Special Appearance to Question a Courts Jurisdiction Is Not Voluntary Appearance
The second sentence of Sec. 20, Rule 14 of the Revised Rules of Civil Procedure clearly provides:
Sec. 20. Voluntary appearance.The defendants voluntary appearance in the action shall be
equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside
from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary
appearance. (Emphasis ours.)
Thus, a defendant who files a motion to dismiss, assailing the jurisdiction of the court over his
person, together with other grounds raised therein, is not deemed to have appeared voluntarily
before the court. What the rule on voluntary appearancethe first sentence of the above-quoted
rulemeans is that the voluntary appearance of the defendant in court is without qualification, in
which case he is deemed to have waived his defense of lack of jurisdiction over his person due to
improper service of summons.
The pleadings filed by petitioner in the subject forfeiture cases, however, do not show that she
voluntarily appeared without qualification. Petitioner filed the following pleadings in Forfeiture I: (a)
motion to dismiss; (b) motion for reconsideration and/or to admit answer; (c) second motion for
reconsideration; (d) motion to consolidate forfeiture case with plunder case; and (e) motion to

dismiss and/or to quash Forfeiture I. And in Forfeiture II: (a) motion to dismiss and/or to quash
Forfeiture II; and (b) motion for partial reconsideration.
The foregoing pleadings, particularly the motions to dismiss, were filed by petitioner solely
for special appearance with the purpose of challenging the jurisdiction of the SB over her
person and that of her three children. Petitioner asserts therein that SB did not acquire jurisdiction
over her person and of her three children for lack of valid service of summons through improvident
substituted service of summons in both Forfeiture I and Forfeiture II. This stance the petitioner never
abandoned when she filed her motions for reconsideration, even with a prayer to admit their
attached Answer Ex Abundante Ad Cautelam dated January 22, 2005 setting forth affirmative
defenses with a claim for damages. And the other subsequent pleadings, likewise, did not abandon
her stance and defense of lack of jurisdiction due to improper substituted services of summons in the
forfeiture cases. Evidently, from the foregoing Sec. 20, Rule 14 of the 1997 Revised Rules on Civil
Procedure, petitioner and her sons did not voluntarily appear before the SB constitutive of or
equivalent to service of summons.
Moreover, the leading La Naval Drug Corp. v. Court of Appeals26 applies to the instant case. Said
case elucidates the current view in our jurisdiction that a special appearance before the court
challenging its jurisdiction over the person through a motion to dismiss even if the movant invokes
other groundsis not tantamount to estoppel or a waiver by the movant of his objection to
jurisdiction over his person; and such is not constitutive of a voluntary submission to the jurisdiction
of the court.
Thus, it cannot be said that petitioner and her three children voluntarily appeared before the SB to
cure the defective substituted services of summons. They are, therefore, not estopped from
questioning the jurisdiction of the SB over their persons nor are they deemed to have waived such
defense of lack of jurisdiction. Consequently, there being no valid substituted services of summons
made, the SB did not acquire jurisdiction over the persons of petitioner and her children. And
perforce, the proceedings in the subject forfeiture cases, insofar as petitioner and her three children
are concerned, are null and void for lack of jurisdiction. Thus, the order declaring them in default
must be set aside and voided insofar as petitioner and her three children are concerned. For the
forfeiture case to proceed against them, it is, thus, imperative for the SB to serve anew summons or
alias summons on the petitioner and her three children in order to acquire jurisdiction over their
persons.
WHEREFORE, the petitions for certiorari and mandamus are PARTIALLY GRANTED. The
Sandiganbayan, Fourth Division has not acquired jurisdiction over petitioner Clarita D. Garcia and
her three children. The proceedings in Civil Case Nos. 0193 and 0196 before the Sandiganbayan,
Fourth Division, insofar as they pertain to petitioner and her three children, are VOID for lack of
jurisdiction over their persons. No costs.
SO ORDERED.
G.R. No. 156759

June 5, 2013

ALLEN A. MACASAET, NICOLAS V. QUIJANO, JR., ISAIAS ALBANO, LILY REYES, JANET
BAY, JESUS R. GALANG, AND RANDY HAGOS, Petitioners,
vs.
FRANCISCO R. CO, JR., Respondent.
DECISION

BERSAMIN, J.:
To warrant the substituted service of the summons and copy of the complaint, the serving officer
must first attempt to effect the same upon the defendant in person. Only after the attempt at
personal service has become futile or impossible within a reasonable time may the officer resort to
substituted service.
The Case
Petitioners defendants in a suit for libel brought by respondent appeal the decision promulgated
on March 8, 20021 and the resolution promulgated on January 13, 2003,2 whereby the Court of
Appeals (CA) respectively dismissed their petition for certiorari, prohibition and mandamus and
denied their motion for reconsideration. Thereby, the CA upheld the order the Regional Trial Court
(RTC), Branch 51, in Manila had issued on March 12, 2001 denying their motion to dismiss because
the substituted service of the summons and copies of the complaint on each of them had been valid
and effective.3
Antecedents
On July 3, 2000, respondent, a retired police officer assigned at the Western Police District in
Manila, sued Abante Tonite, a daily tabloid of general circulation; its Publisher Allen A. Macasaet; its
Managing Director Nicolas V. Quijano; its Circulation Manager Isaias Albano; its Editors Janet Bay,
Jesus R. Galang and Randy Hagos; and its Columnist/Reporter Lily Reyes (petitioners), claiming
damages because of an allegedly libelous article petitioners published in the June 6, 2000 issue of
Abante Tonite. The suit, docketed as Civil Case No. 00-97907, was raffled to Branch 51 of the RTC,
which in due course issued summons to be served on each defendant, including Abante Tonite, at
their business address at Monica Publishing Corporation, 301-305 3rd Floor, BF Condominium
Building, Solana Street corner A. Soriano Street, Intramuros, Manila.4
In the morning of September 18, 2000, RTC Sheriff Raul Medina proceeded to the stated address to
effect the personal service of the summons on the defendants. But his efforts to personally serve
each defendant in the address were futile because the defendants were then out of the office and
unavailable. He returned in the afternoon of that day to make a second attempt at serving the
summons, but he was informed that petitioners were still out of the office. He decided to resort to
substituted service of the summons, and explained why in his sheriffs return dated September 22,
2005,5 to wit:
SHERIFFS RETURN
This is to certify that on September 18, 2000, I caused the service of summons together with copies
of complaint and its annexes attached thereto, upon the following:
1. Defendant Allen A. Macasaet, President/Publisher of defendant AbanteTonite, at Monica
Publishing Corporation, Rooms 301-305 3rd Floor, BF Condominium Building, Solana corner
A. Soriano Streets, Intramuros, Manila, thru his secretary Lu-Ann Quijano, a person of
sufficient age and discretion working therein, who signed to acknowledge receipt thereof.
That effort (sic) to serve the said summons personally upon said defendant were made, but
the same were ineffectual and unavailing on the ground that per information of Ms. Quijano
said defendant is always out and not available, thus, substituted service was applied;
2. Defendant Nicolas V. Quijano, at the same address, thru his wife Lu-Ann Quijano, who
signed to acknowledge receipt thereof. That effort (sic) to serve the said summons

personally upon said defendant were made, but the same were ineffectual and unavailing on
the ground that per information of (sic) his wife said defendant is always out and not
available, thus, substituted service was applied;
3. Defendants Isaias Albano, Janet Bay, Jesus R. Galang, Randy Hagos and Lily Reyes, at
the same address, thru Rene Esleta, Editorial Assistant of defendant AbanteTonite, a person
of sufficient age and discretion working therein who signed to acknowledge receipt thereof.
That effort (sic) to serve the said summons personally upon said defendants were made, but
the same were ineffectual and unavailing on the ground that per information of (sic) Mr.
Esleta said defendants is (sic) always roving outside and gathering news, thus, substituted
service was applied.
Original copy of summons is therefore, respectfully returned duly served.
Manila, September 22, 2000.
On October 3, 2000, petitioners moved for the dismissal of the complaint through counsels special
appearance in their behalf, alleging lack of jurisdiction over their persons because of the invalid and
ineffectual substituted service of summons. They contended that the sheriff had made no prior
attempt to serve the summons personally on each of them in accordance with Section 6 and Section
7, Rule 14 of the Rules of Court. They further moved to drop Abante Tonite as a defendant by virtue
of its being neither a natural nor a juridical person that could be impleaded as a party in a civil action.
At the hearing of petitioners motion to dismiss, Medina testified that he had gone to the office
address of petitioners in the morning of September 18, 2000 to personally serve the summons on
each defendant; that petitioners were out of the office at the time; that he had returned in the
afternoon of the same day to again attempt to serve on each defendant personally but his attempt
had still proved futile because all of petitioners were still out of the office; that some competent
persons working in petitioners office had informed him that Macasaet and Quijano were always out
and unavailable, and that Albano, Bay, Galang, Hagos and Reyes were always out roving to gather
news; and that he had then resorted to substituted service upon realizing the impossibility of his
finding petitioners in person within a reasonable time.
On March 12, 2001, the RTC denied the motion to dismiss, and directed petitioners to file their
answers to the complaint within the remaining period allowed by the Rules of Court,6 relevantly
stating:
Records show that the summonses were served upon Allen A. Macasaet, President/Publisher of
defendant AbanteTonite, through LuAnn Quijano; upon defendants Isaias Albano, Janet Bay, Jesus
R. Galang, Randy Hagos and Lily Reyes, through Rene Esleta, Editorial Assistant of defendant
Abante Tonite (p. 12, records). It is apparent in the Sheriffs Return that on several occasions, efforts
to served (sic) the summons personally upon all the defendants were ineffectual as they were
always out and unavailable, so the Sheriff served the summons by substituted service.
Considering that summonses cannot be served within a reasonable time to the persons of all the
defendants, hence substituted service of summonses was validly applied. Secretary of the President
who is duly authorized to receive such document, the wife of the defendant and the Editorial
Assistant of the defendant, were considered competent persons with sufficient discretion to realize
the importance of the legal papers served upon them and to relay the same to the defendants
named therein (Sec. 7, Rule 14, 1997 Rules of Civil Procedure).
WHEREFORE, in view of the foregoing, the Motion to Dismiss is hereby DENIED for lack of merit..

Accordingly, defendants are directed to file their Answers to the complaint within the period still open
to them, pursuant to the rules.
SO ORDERED.
Petitioners filed a motion for reconsideration, asserting that the sheriff had immediately resorted to
substituted service of the summons upon being informed that they were not around to personally
receive the summons, and that Abante Tonite, being neither a natural nor a juridical person, could
not be made a party in the action.
On June 29, 2001, the RTC denied petitioners motion for reconsideration.7 It stated in respect of the
service of summons, as follows:
The allegations of the defendants that the Sheriff immediately resorted to substituted service of
summons upon them when he was informed that they were not around to personally receive the
same is untenable. During the hearing of the herein motion, Sheriff Raul Medina of this Branch of the
Court testified that on September 18, 2000 in the morning, he went to the office address of the
defendants to personally serve summons upon them but they were out. So he went back to serve
said summons upon the defendants in the afternoon of the same day, but then again he was
informed that the defendants were out and unavailable, and that they were always out because they
were roving around to gather news. Because of that information and because of the nature of the
work of the defendants that they are always on field, so the sheriff resorted to substituted service of
summons. There was substantial compliance with the rules, considering the difficulty to serve the
summons personally to them because of the nature of their job which compels them to be always out
and unavailable. Additional matters regarding the service of summons upon defendants were
sufficiently discussed in the Order of this Court dated March 12, 2001.
Regarding the impleading of Abante Tonite as defendant, the RTC held, viz:
"Abante Tonite" is a daily tabloid of general circulation. People all over the country could buy a copy
of "Abante Tonite" and read it, hence, it is for public consumption. The persons who organized said
publication obviously derived profit from it. The information written on the said newspaper will affect
the person, natural as well as juridical, who was stated or implicated in the news. All of these facts
imply that "Abante Tonite" falls within the provision of Art. 44 (2 or 3), New Civil Code. Assuming
arguendo that "Abante Tonite" is not registered with the Securities and Exchange Commission, it is
deemed a corporation by estoppels considering that it possesses attributes of a juridical person,
otherwise it cannot be held liable for damages and injuries it may inflict to other persons.
Undaunted, petitioners brought a petition for certiorari, prohibition, mandamusin the CA to nullify the
orders of the RTC dated March 12, 2001 and June 29, 2001.
Ruling of the CA
On March 8, 2002, the CA promulgated its questioned decision,8 dismissing the petition for certiorari,
prohibition, mandamus, to wit:
We find petitioners argument without merit. The rule is that certiorari will prosper only if there is a
showing of grave abuse of discretion or an act without or in excess of jurisdiction committed by the
respondent Judge. A judicious reading of the questioned orders of respondent Judge would show
that the same were not issued in a capricious or whimsical exercise of judgment. There are factual
bases and legal justification for the assailed orders. From the Return, the sheriff certified that "effort
to serve the summons personally xxx were made, but the same were ineffectual and unavailing xxx.

and upholding the trial courts finding that there was a substantial compliance with the rules that
allowed the substituted service.
Furthermore, the CA ruled:
Anent the issue raised by petitioners that "Abante Tonite is neither a natural or juridical person who
may be a party in a civil case," and therefore the case against it must be dismissed and/or dropped,
is untenable.
The respondent Judge, in denying petitioners motion for reconsideration, held that:
xxxx
Abante Tonites newspapers are circulated nationwide, showing ostensibly its being a corporate
entity, thus the doctrine of corporation by estoppel may appropriately apply.
An unincorporated association, which represents itself to be a corporation, will be estopped from
denying its corporate capacity in a suit against it by a third person who relies in good faith on such
representation.
There being no grave abuse of discretion committed by the respondent Judge in the exercise of his
jurisdiction, the relief of prohibition is also unavailable.
WHEREFORE, the instant petition is DENIED. The assailed Orders of respondent Judge are
AFFIRMED.
SO ORDERED.9
On January 13, 2003, the CA denied petitioners motion for reconsideration.10
Issues
Petitioners hereby submit that:
1. THE COURT OF APPEALS COMMITTED AN ERROR OF LAW IN HOLDING THAT THE
TRIAL COURT ACQUIRED JURISDICTION OVER HEREIN PETITIONERS.
2. THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR BY SUSTAINING THE
INCLUSION OF ABANTE TONITE AS PARTY IN THE INSTANT CASE.11
Ruling
The petition for review lacks merit.
Jurisdiction over the person, or jurisdiction in personam the power of the court to render a personal
judgment or to subject the parties in a particular action to the judgment and other rulings rendered in
the action is an element of due process that is essential in all actions, civil as well as criminal,
except in actions in rem or quasi in rem. Jurisdiction over the defendantin an action in rem or quasi
in rem is not required, and the court acquires jurisdiction over an actionas long as it acquires
jurisdiction over the resthat is thesubject matter of the action. The purpose of summons in such

action is not the acquisition of jurisdiction over the defendant but mainly to satisfy the constitutional
requirement of due process.12
The distinctions that need to be perceived between an action in personam, on the one hand, and an
action inrem or quasi in rem, on the other hand, are aptly delineated in Domagas v. Jensen,13 thusly:
The settled rule is that the aim and object of an action determine its character. Whether a
proceeding is in rem, or in personam, or quasi in rem for that matter, is determined by its nature and
purpose, and by these only. A proceeding in personam is a proceeding to enforce personal rights
and obligations brought against the person and is based on the jurisdiction of the person, although it
may involve his right to, or the exercise of ownership of, specific property, or seek to compel him to
control or dispose of it in accordance with the mandate of the court. The purpose of a proceeding in
personam is to impose, through the judgment of a court, some responsibility or liability directly upon
the person of the defendant. Of this character are suits to compel a defendant to specifically perform
some act or actions to fasten a pecuniary liability on him. An action in personam is said to be one
which has for its object a judgment against the person, as distinguished from a judgment against the
property to determine its state. It has been held that an action in personam is a proceeding to
enforce personal rights or obligations; such action is brought against the person. As far as suits for
injunctive relief are concerned, it is well-settled that it is an injunctive act in personam. In Combs v.
Combs, the appellate court held that proceedings to enforce personal rights and obligations and in
which personal judgments are rendered adjusting the rights and obligations between the affected
parties is in personam. Actions for recovery of real property are in personam.
On the other hand, a proceeding quasi in rem is one brought against persons seeking to subject the
property of such persons to the discharge of the claims assailed. In an action quasi in rem, an
individual is named as defendant and the purpose of the proceeding is to subject his interests
therein to the obligation or loan burdening the property. Actions quasi in rem deal with the status,
ownership or liability of a particular property but which are intended to operate on these questions
only as between the particular parties to the proceedings and not to ascertain or cut off the rights or
interests of all possible claimants. The judgments therein are binding only upon the parties who
joined in the action.
As a rule, Philippine courts cannot try any case against a defendant who does not reside and is not
found in the Philippines because of the impossibility of acquiring jurisdiction over his person unless
he voluntarily appears in court; but when the case is an action in rem or quasi in rem enumerated in
Section 15, Rule 14 of the Rules of Court, Philippine courts have jurisdiction to hear and decide the
case because they have jurisdiction over the res, and jurisdiction over the person of the non-resident
defendant is not essential. In the latter instance, extraterritorial service of summons can be made
upon the defendant, and such extraterritorial service of summons is not for the purpose of vesting
the court with jurisdiction, but for the purpose of complying with the requirements of fair play or due
process, so that the defendant will be informed of the pendency of the action against him and the
possibility that property in the Philippines belonging to him or in which he has an interest may be
subjected to a judgment in favor of the plaintiff, and he can thereby take steps to protect his interest
if he is so minded. On the other hand, when the defendant in an action in personam does not reside
and is not found in the Philippines, our courts cannot try the case against him because of the
impossibility of acquiring jurisdiction over his person unless he voluntarily appears in court.14
As the initiating party, the plaintiff in a civil action voluntarily submits himself to the jurisdiction of the
court by the act of filing the initiatory pleading. As to the defendant, the court acquires jurisdiction
over his person either by the proper service of the summons, or by a voluntary appearance in the
action.15

Upon the filing of the complaint and the payment of the requisite legal fees, the clerk of court
forthwith issues the corresponding summons to the defendant.16 The summons is directed to the
defendant and signed by the clerk of court under seal. It contains the name of the court and the
names of the parties to the action; a direction that the defendant answers within the time fixed by the
Rules of Court; and a notice that unless the defendant so answers, the plaintiff will take judgment by
default and may be granted the relief applied for.17 To be attached to the original copy of the
summons and all copies thereof is a copy of the complaint (and its attachments, if any) and the
order, if any, for the appointment of a guardian ad litem.18
The significance of the proper service of the summons on the defendant in an action in personam
cannot be overemphasized. The service of the summons fulfills two fundamental objectives, namely:
(a) to vest in the court jurisdiction over the person of the defendant; and (b) to afford to the
defendant the opportunity to be heard on the claim brought against him.19 As to the former, when
jurisdiction in personam is not acquired in a civil action through the proper service of the summons
or upon a valid waiver of such proper service, the ensuing trial and judgment are void.20 If the
defendant knowingly does an act inconsistent with the right to object to the lack of personal
jurisdiction as to him, like voluntarily appearing in the action, he is deemed to have submitted himself
to the jurisdiction of the court.21 As to the latter, the essence of due process lies in the reasonable
opportunity to be heard and to submit any evidence the defendant may have in support of his
defense. With the proper service of the summons being intended to afford to him the opportunity to
be heard on the claim against him, he may also waive the process.21 In other words, compliance with
the rules regarding the service of the summons is as much an issue of due process as it is of
jurisdiction.23
Under the Rules of Court, the service of the summons should firstly be effected on the defendant
himself whenever practicable. Such personal service consists either in handing a copy of the
summons to the defendant in person, or, if the defendant refuses to receive and sign for it, in
tendering it to him.24 The rule on personal service is to be rigidly enforced in order to ensure the
realization of the two fundamental objectives earlier mentioned. If, for justifiable reasons, the
defendant cannot be served in person within a reasonable time, the service of the summons may
then be effected either (a) by leaving a copy of the summons at his residence with some person of
suitable age and discretion then residing therein, or (b) by leaving the copy at his office or regular
place of business with some competent person in charge thereof.25 The latter mode of service is
known as substituted service because the service of the summons on the defendant is made
through his substitute.
It is no longer debatable that the statutory requirements of substituted service must be followed
strictly, faithfully and fully, and any substituted service other than that authorized by statute is
considered ineffective.26 This is because substituted service, being in derogation of the usual method
of service, is extraordinary in character and may be used only as prescribed and in the
circumstances authorized by statute.27 Only when the defendant cannot be served personally within
a reasonable time may substituted service be resorted to. Hence, the impossibility of prompt
personal service should be shown by stating the efforts made to find the defendant himself and the
fact that such efforts failed, which statement should be found in the proof of service or sheriffs
return.28Nonetheless, the requisite showing of the impossibility of prompt personal service as basis
for resorting to substituted service may be waived by the defendant either expressly or impliedly.29
There is no question that Sheriff Medina twice attempted to serve the summons upon each of
petitioners in person at their office address, the first in the morning of September 18, 2000 and the
second in the afternoon of the same date. Each attempt failed because Macasaet and Quijano were
"always out and not available" and the other petitioners were "always roving outside and gathering
news." After Medina learned from those present in the office address on his second attempt that
there was no likelihood of any of petitioners going to the office during the business hours of that or

any other day, he concluded that further attempts to serve them in person within a reasonable time
would be futile. The circumstances fully warranted his conclusion. He was not expected or required
as the serving officer to effect personal service by all means and at all times, considering that he
was expressly authorized to resort to substituted service should he be unable to effect the personal
service within a reasonable time. In that regard, what was a reasonable time was dependent on the
circumstances obtaining. While we are strict in insisting on personal service on the defendant, we do
not cling to such strictness should the circumstances already justify substituted service instead. It is
the spirit of the procedural rules, not their letter, that governs.30
In reality, petitioners insistence on personal service by the serving officer was demonstrably
superfluous. They had actually received the summonses served through their substitutes, as borne
out by their filing of several pleadings in the RTC, including an answer with compulsory counterclaim
ad cautelam and a pre-trial brief ad cautelam. They had also availed themselves of the modes of
discovery available under the Rules of Court. Such acts evinced their voluntary appearance in the
action.
Nor can we sustain petitioners contention that Abante Tonite could not be sued as a defendant due
to its not being either a natural or a juridical person. In rejecting their contention, the CA categorized
Abante Tonite as a corporation by estoppel as the result of its having represented itself to the
reading public as a corporation despite its not being incorporated. Thereby, the CA concluded that
the RTC did not gravely abuse its discretion in holding that the non-incorporation of Abante Tonite
with the Securities and Exchange Commission was of no consequence, for, otherwise, whoever of
the public who would suffer any damage from the publication of articles in the pages of its tabloids
would be left without recourse. We cannot disagree with the CA, considering that the editorial box of
the daily tabloid disclosed that basis, nothing in the box indicated that Monica Publishing Corporation
had owned Abante Tonite.
WHEREFORE, the Court AFFIRMS the decision promulgated on March 8, 2002; and ORDERS
petitioners to pay the costs of suit.
SO ORDERED.

AM No. 11-3-6-SC; new rule on service of summons on foreign juridical entities.

AM. No. 11-3-6-SC
AMENDMENT OF SECTION 12, RULE 14
OF THE RULES OF COURT ON SERVICE UPON
FOREIGN PRIVATE JURIDICAL ENTITY
Section 12, Rule 14 of the Rules of Court is hereby amended to read
as follows:
"SEC. 12. Service upon foreign private juridical entity.
When the defendant is a foreign private juridical entity which
has transacted business in the Philippines, service may be made
on its resident agent designated in accordance with law for that
purpose, or, i f there be no such agent, on the government
official designated by law to that effect, or on any of its officers
or agents within the Philippines.
If the foreign private juridical entity is not registered in

the Philippines or has no resident agent, service may, with leave

of court, be effected out of the Philippines through any of the
following means:
a) B y personal service coursed through the
appropriate court in the foreign country with the
assistance of the Department of Foreign Affairs;
b) B y publication once in a newspaper of general
circulation in the country where the defendant may be
found and by serving a copy of the summons and the
court order by-registered mail at the last known address
of the defendant;
c) B y facsimile or any recognized electronic
means that could generate proof of service; or
d) B y such other means as the court may in its
discretion direct."
This rule shall take effect fifteen (15) days after publication in a
newspaper of general circulation in the Philippines.
March 15, 2011

G.R. No. 165016

June 17, 2008

DOLORES MONTEFALCON & LAURENCE MONTEFALCON, petitioners,

vs.
RONNIE S. VASQUEZ, respondent.
DECISION
QUISUMBING, J.:
This petition for review assails the September 29, 2003 Decision1 and the July 19, 2004
Resolution2 of the Court of Appeals in CA-G.R. CV No. 71944, which had reversed the May 28, 2001
Decision3 of the Regional Trial Court (RTC), Branch 19, of Naga City in Civil Case No. RTC '994460.
The facts culled from the records are as follows.
In 1999, petitioner Dolores P. Montefalcon filed a Complaint4 for acknowledgment and support
against respondent Ronnie S. Vasquez before the RTC of Naga City. Alleging that her son Laurence
is the illegitimate child of Vasquez, she prayed that Vasquez be obliged to give support to copetitioner Laurence Montefalcon, whose certificate of live birth he signed as father.5 According to
petitioners, Vasquez only gave a total of P19,000 as support for Laurence since Laurence was born

in 1993. Vasquez allegedly also refused to give him regular school allowance despite repeated
demands. Petitioner Dolores added that she and Vasquez are not legally married, and that Vasquez
has his own family.
A sheriff tried to serve the summons and complaint on Vasquez in Aro-aldao, Nabua, Camarines
Sur. Vasquez's grandfather received them as Vasquez was in Manila. Vasquez's mother returned
the documents to the clerk of court, who informed the court of the non-service of summons.6
Petitioners then filed a motion to declare Vasquez in default. The court denied it for lack of proper
service of summons.7
In 2000, the court issued an alias summons on Vasquez at "10 Int. President Garcia St., Zone 6,
Signal Village, Taguig, Metro Manila" upon petitioners' motion. Albeit a Taguig deputy sheriff served
it by substituted service on Vasquez's caretaker Raquel Bejer, the sheriff's return incorrectly stated
"Lazaro" as Vasquez's surname.8
Another alias summons9 was issued, also received by Bejer. The second sheriff's return states:
THIS IS TO CERTIFY THAT on the 19th day of July 2000 the undersigned sheriff caused the
service of summons issued by the court in the above-entitled case together with the copy of
the complaint and annexes attached thereon upon defendant RONNIE S. VASQUEZ, by
substituted service, thru his caretaker, RAQUEL BEJER, a person of sufficient discretion,
who acknowledged the receipt thereof at No. 10 Int. President Garcia St. Zone 6, Signal
Village, Taguig, Metro Manila, as evidenced by her signature appearing at the lower portion
of the original copy of summons.
WHEREFORE, said summons is hereby returned to the court of origin DULY SERVED for its
records and information.
Taguig for Naga City, July 19, 2000
(SGD.)
ERNESTO G. RAYMUNDO, JR.,
Deputy Sheriff
MTC BR 74
Taguig, Metro Manila10
On petitioners' motion, the trial court declared Vasquez in default for failure to file an answer despite
the substituted service of summons. Vasquez was furnished with court orders and notices of the
proceedings at his last known address, but these were returned as he had allegedly moved to
another place and left no new address.11
In 2001, the court granted petitioners' prayers, explaining that they had no ill-motive and that Dolores
gave a truthful testimony. The court added that Vasquez admitted the truth of the allegations by his
silence. It further explained that Laurence's certificate of live birth, being a public document, is
irrefutably a prima facie evidence of illegitimate filiation. The trial court decreed:
WHEREFORE, by preponderant evidence, judgment is hereby rendered in favor of the
plaintiffs Dolores Montefalcon and her minor child Laurence Montefalcon and against
defendant Ronnie S. Vasquez who is hereby ordered to:

1. Acknowledge plaintiff Laurence Montefalcon as his illegitimate child with Dolores

Montefalcon;
2. Give support to the said minor in the amount of FIVE THOUSAND (P5,000.00) PESOS
monthly commencing on June 1, 1993, the past support for eight (8) years in the amount of
FOUR HUNDRED EIGHTY THOUSAND (P480,000.00) PESOS less the amount of
NINETEEN THOUSAND (P19,000.00) PESOS previously given, shall be paid promptly and
the monthly support of FIVE THOUSAND (P5,000.00) PESOS shall be paid not later than
the end of each month beginning on July 31, 2001 and every end of the month thereafter as
prayed for in the complaint; and
3. Pay the sum of TEN THOUSAND (P10,000.00) PESOS and THREE THOUSAND
(P3,000.00) PESOS as attorney's and appearance fees, respectively, and litigation expenses
of ONE THOUSAND (P1,000.00) PESOS.
SO ORDERED.12
In the same year, Vasquez surfaced. He filed a notice of appeal to which petitioners opposed.
Appeal was granted by the court.13 Before the appellate court, he argued that the trial court erred in
trying and deciding the case as it "never" acquired jurisdiction over his person, as well as in
awarding P5,000-per-month support, which was allegedly "excessive and exorbitant." The appellate
court noted that the service of summons on Vasquez was "defective" as there was no explanation of
impossibility of personal service and an attempt to effect personal service, and decreed as follows:
WHEREFORE, based on the foregoing premises, the instant appeal is GRANTED. The
appealed May 28, 2001 Decision of the Regional Trial Court of Naga City in Civil Case No.
RTC '99-4460 is hereby NULLIFIEDand SET ASIDE. Accordingly, let this case
be REMANDED to the court a quo for further proceedings.
SO ORDERED.14
Petitioners argued in their motion for reconsideration15 that any attempt at personal service of
summons was needless as Vasquez already left for abroad. The appellate court, however, denied
the motion. Hence, this petition.
Petitioners assign two appellate court errors:
I.
THE COURT OF APPEALS ERRED IN HOLDING THAT THE RESPONDENT IN THIS
CASE WAS NOT VALIDLY SERVED WITH THE SUMMONS AND COMPLAINT IN CIVIL
CASE NO. RTC '99-4460; AND THAT
II.
THE COURT OF APPEALS ERRED IN ANNUL[L]ING AND SETTING ASIDE THE TRIAL
COURT'S DECISION (ANNEX "B") FOR LACK OF JURISDICTION.16
Petitioners justify the validity of substituted service as Vasquez had left as overseas seafarer when
the sheriff served the summons on July 19, 2000 in Taguig. Noting that Vasquez's seaman's book

indicated that he left the country on January 24, 2000 and came back on October 12, 2000, they
criticize the appellate court for anchoring its rulings on mere technicality.
Vasquez counters that because he was abroad, service of summons should have been personal or
by publication as substituted service is proper only if a defendant is in the country. Vasquez also
added that the sheriff's return did not state that he exerted efforts to personally serve the
summons.17
In their reply, petitioners insist that a substituted service is the normal method if one is temporarily
away from the country as personal service abroad or by publication are not ordinary means of
service.18
Simply put, the issues now for resolution are: (1) whether there is a valid substituted service of
summons on Vasquez to clothe the trial court with jurisdiction over his person; and (2) whether he is
obliged to give support to co-petitioner Laurence.
To acquire jurisdiction over the person of a defendant, service of summons must be personal,19 or if
this is not feasible within a reasonable time, then by substituted service.20 It is of judicial notice that
overseas Filipino seafarers are contractual employees. They go back to the country once their
contracts expire, and wait for the signing of another contract with the same or new manning agency
and principal if they wish. It is therefore common knowledge that a Filipino seaman often has a
temporary residence in the urban areas like Metro Manila, where majority of the manning agencies
hold offices, aside from his home address in the province where he originates. In this case,
respondent Vasquez hails from Camarines Sur but he has lived in Taguig City when the complaint
was filed. Notice may then be taken that he has established a residence in either place. Residence
is a place where the person named in the summons is living at the time when the service was made,
even though he was temporarily abroad at the time. As an overseas seafarer, Vasquez was a
Filipino resident temporarily out of the country. Hence, service of summons on him is governed by
Rule 14, Section 16 of the Rules of Court:
SEC. 16. Residents temporarily out of the Philippines. When any action is commenced
against a defendant who ordinarily resides within the Philippines, but who is temporarily out
of it, service may, by leave of court, be also effected out of the Philippines, as under
the preceding section. (Emphasis supplied.)
The preceding section referred to states:
SEC. 15. Extraterritorial service. When the defendant does not reside and is not found in
the Philippines, and the action affects the personal status of the plaintiff or relates to, or the
subject of which is, property within the Philippines, in which the defendant has or claims a
lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in
part, in excluding the defendant from any interest therein, or the property of the defendant
has been attached within the Philippines, service may, by leave of court, be effected out of
the Philippines by personal service as under section 6; or by publication in a newspaper of
general circulation in such places and for such time as the court may order, in which case a
copy of the summons and order of the court shall be sent by registered mail to the last
known address of the defendant, or in any other manner the court may deem sufficient. Any
order granting such leave shall specify a reasonable time, which shall not be less than sixty
(60) days after notice, within which the defendant must answer.

Because Section 16 of Rule 14 uses the words "may" and "also," it is not mandatory. Other methods
of service of summons allowed under the Rules may also be availed of by the serving officer on a
defendant-seaman.
Ideally, Vasquez must be personally served summons. But was personal service of summons
practicable? Conversely, was substituted service of summons justified?
Obviously, personal service of summons was not practicable since the defendant was temporarily
out of the country. To proceed with personal service of summons on a defendant-seaman who went
on overseas contract work would not only be impractical and futile it would also be absurd.
The impossibility of prompt personal service was shown by the fact that the Naga City-based sheriff
purposely went to a barrio in Camarines Sur to serve the summons personally on Vasquez. When
service of summons failed, said sheriff ascertained the whereabouts of Vasquez. Upon being
informed that Vasquez was in Manila, the Naga court commissioned a Taguig City-based sheriff to
serve the summons. Both the Naga and Taguig sheriffs inquired about Vasquez's whereabouts,
signifying that they did not immediately resort to substituted service. There was no undue haste in
effecting substituted service. The fact that the Naga court allowed a reasonable time to locate
Vasquez to as far as Taguig shows that there was indeed no precipitate haste in serving the
summons.
In this case, we agree that the substituted service in Taguig was valid and justified because previous
attempts were made by the sheriffs to serve the summons, but to no avail. Diligent efforts were
evidently exerted in the conduct of the concerned sheriffs in the performance of their official duty.
Also, the person who received the alias summons was of suitable age and discretion, then residing
at Vasquez's dwelling. There is no quarrel that it was really Vasquez's residence, as evidenced by
his employment contract, executed under the supervision and authority of the Philippine Overseas
Employment Administration (POEA). Vasquez cannot deny that in his contract of employment and
seafarer's information sheet, both bearing POEA's letterhead, his address in Metro Manila was what
was correctly mentioned in the alias summons that Bejer received. She must have informed
Vasquez one way or another of the suit upon his return in October 2000 after finishing his ninemonth contract with Fathom Ship Management.
Thus, it is reasonable to conclude that he had enough time to have the default order set aside. The
default judgment was rendered on May 28, 2001. He also had enough time to file a motion for
reconsideration. But he did nothing. The interregnum between the first but failed attempt at personal
service by the RTC of Naga City in Vasquez's place in Camarines Sur to the final substituted service
in Metro Manila by a Taguig RTC sheriff was almost eight months, a reasonable time long enough to
conclude that personal service had failed and was futile.
Montalban v. Maximo21 offers a rational and logical solution of the issue. We held in said case that
the normal method of service of summons on one temporarily absent is by substituted service
because personal service abroad and service by publication are not ordinary means of summoning
defendants. Summons in a suit in personam against a temporarily absent resident may be by
substituted service as domiciliaries of a State are always amenable to suits in personam therein.22
"Residence" is the place where the person named in the summons is living at the time when the
service is made, even though he may be temporarily out of the country at the time. A plaintiff is
merely required to know the defendant's residence, office or regular business place. He need not
know where a resident defendant actually is at the very moment of filing suit. He is not even dutybound to ensure that the person upon whom service was actually made delivers the summons to the

defendant or informs him about it. The law presumes that for him. It is immaterial that defendant
does not receive actual notice.
As well said in Montalban:
. . . A man temporarily absent from this country leaves a definite place of residence, a
dwelling where he lives, a local base, so to speak, to which any inquiry about him may be
directed and where he is bound to return. Where one temporarily absents himself, he leaves
his affairs in the hands of one who may be reasonably expected to act in his place and
stead; to do all that is necessary to protect his interests; and to communicate with him from
time to time any incident of importance that may affect him or his business or his affairs. It is
usual for such a man to leave at his home or with his business associates information as to
where he may be contacted in the event a question that affects him crops up. If he does not
do what is expected of him, and a case comes up in court against him, he cannot in justice
raise his voice and say that he is not subject to the processes of our courts. He cannot stop a
suit from being filed against him upon a claim that he cannot be summoned at his dwelling
house or residence or his office or regular place of business.
Not that he cannot be reached within a reasonable time to enable him to contest a suit
against him. There are now advanced facilities of communication. Long distance telephone
calls and cablegrams make it easy for one he left behind to communicate with him.23
Aside from, at present, various forms of texting and short message services by the ubiquitous
cellular phones.
More importantly, the letter of the law must yield to its spirit. The absence in the final sheriff's return
of a statement about the impossibility of personal service does not conclusively prove that the
service is invalid. Such failure should not unduly prejudice petitioners if what was undisclosed was in
fact done. Proof of prior attempts at personal service may have been submitted by the plaintiff during
the hearing of any incident assailing the validity of the substituted service24 had Vasquez surfaced
when the case was heard. In fact, he was declared in default. It was only when a judgment against
him was rendered by the trial court that he questioned the validity of service of summons before the
appellate court. Such failure to appear, and then later to question the court's jurisdiction over his
person, should not be taken against herein petitioners.
Between Vasquez's self-serving assertion that he only came to know of the case when his mother
told him about the trial court's decision and the sheriff's return on the substituted service which
carries a presumption of regularity, the latter is undoubtedly deserving of more faith and credit. The
sheriff's certificate of service of summons is prima facie evidence of the facts set out in it. Only clear
and convincing evidence may overcome its presumption of regularity. Given the circumstances in
the present case, we agree that the presumption of regularity in the performance of duty on the part
of the sheriff stands.25
On the second issue, the trial court's order must also be sustained. Co-petitioner Laurence is legally
entitled to support from the respondent, and the amount of P5,000 monthly set by the trial court is
neither excessive nor unreasonable.
Article 17526 of the Family Code of the Philippines mandates that illegitimate filiation may be
established in the same way and on the same evidence as legitimate children. Under Article
172,27 the filiation of legitimate children is established by any of the following: (1) through record of
birth appearing in the civil register or a final order; or (2) by admission of filiation in a public
document or private handwritten instrument and signed by the parent concerned; or in default of

these two, by open and continuous possession of the status of a legitimate child or by any other
means allowed by the Rules of Court and special laws.
Laurence's record of birth is an authentic, relevant and admissible piece of evidence to prove
paternity and filiation. Vasquez did not deny that Laurence is his child with Dolores. He signed as
father in Laurence's certificate of live birth, a public document. He supplied the data entered in it.
Thus, it is a competent evidence of filiation as he had a hand in its preparation. In fact, if the child
had been recognized by any of the modes in the first paragraph of Article 172, there is no further
need to file any action for acknowledgment because any of said modes is by itself a consummated
act.28
As filiation is beyond question, support follows as matter of obligation. Petitioners were able to prove
that Laurence needs Vasquez's support and that Vasquez is capable of giving such support. Dolores
testified that she spent around P200,000 for Laurence; she spends P8,000 a month for his schooling
and their subsistence. She told the lower court Vasquez was earning US$535 monthly based on his
January 10, 2000 contract of employment29 with Fathom Ship Management and his seafarer
information sheet.30 That income, if converted at the prevailing rate, would be more than sufficient to
cover the monthly support for Laurence.
Under Article 195 (4)31 of the Family Code, a parent is obliged to support his illegitimate child. The
amount is variable. There is no final judgment thereof as it shall be in proportion to the resources or
means of the giver and the necessities of the recipient.32 It may be reduced or increased
proportionately according to the reduction or increase of the necessities of the recipient and the
resources or means of the person obliged to support.33Support comprises everything indispensable
for sustenance, dwelling, clothing, medical attendance, education and transportation, in keeping with
the financial capacity of the family.34 Under the premises, the award of P5,000 monthly support to
Laurence is reasonable, and not excessive nor exorbitant.
In sum, we rule that the Court of Appeals erred in invalidating the substituted service of summons
and remanding the case. As there was valid substituted service of summons under the
circumstances of this case, the lower court acquired jurisdiction over his person and correctly
ordered him to pay past and present monthly support to his illegitimate child as well as attorney's
fees and litigation expenses to petitioners.
WHEREFORE, the petition is GRANTED. The Decision dated September 29, 2003 and Resolution
dated July 19, 2004 of the Court of Appeals in CA-G.R. CV No. 71944 are REVERSED and SET
ASIDE. The Decision dated May 28, 2001 of the Regional Trial Court, Branch 19, Naga City in Civil
Case No. RTC '99-4460 is herebyREINSTATED.
Costs against respondent.
SO ORDERED.
G.R. No. 172242

August 14, 2007

PERKIN ELMER SINGAPORE PTE LTD., Petitioner,

vs.
DAKILA TRADING CORPORATION, Respondent.
DECISION

CHICO-NAZARIO, J.:
The case before this Court is a Petition for Review1 on Certiorari under Rule 45 of the 1997 Revised
Rules of Civil Procedure seeking to annul and set aside the Decision,2 dated 4 April 2006, of the
Court of Appeals in CA-G.R. SP No. 78981, which affirmed the Orders, dated 4 November
20023 and 20 June 2003,4 of the Mandaluyong City Regional Trial Court (RTC), Branch 212, in Civil
Case No. MC99-605, which, in turn, denied the Motion to Dismiss and subsequent Motion for
Reconsideration of herein petitioner Perkin Elmer Singapore Pte Ltd.
Petitioner is a corporation duly organized and existing under the laws of Singapore. It is not
considered as a foreign corporation "doing business" in the Philippines. Herein respondent Dakila
Trading Corporation is a corporation organized and existing under Philippine laws, and engaged in
the business of selling and leasing out laboratory instrumentation and process control
instrumentation, and trading of laboratory chemicals and supplies.
The antecedents of the present case are as follows:
Respondent entered into a Distribution Agreement5 on 1 June 1990 with Perkin-Elmer Instruments
Asia Pte Ltd. (PEIA), a corporation duly organized and existing under the laws of Singapore and
engaged in the business of manufacturing, producing, selling or distributing various
laboratory/analytical instruments. By virtue of the said agreement, PEIA appointed the respondent as
the sole distributor of its products in the Philippines. The respondent was likewise granted the right
to purchase and sell the products of PEIA subject to the terms and conditions set forth in the
Distribution Agreement. PEIA, on the other hand, shall give respondent a commission for the sale of
its products in the Philippines.
Under the same Distribution Agreement, respondent shall order the products of PEIA, which it shall
sell in the Philippines, either from PEIA itself or from Perkin-Elmer Instruments (Philippines)
Corporation (PEIP), an affiliate of PEIA. PEIP is a corporation duly organized and existing under
Philippine laws, and involved in the business of wholesale trading of all kinds of scientific,
biotechnological, and analytical instruments and appliances. PEIA allegedly owned 99% of the
shares of PEIP.
On 2 August 1997, however, PEIA unilaterally terminated the Distribution Agreement, prompting
respondent to file before the RTC of Mandaluyong City, Branch 212, a Complaint6 for Collection of
Sum of Money and Damages with Prayer for Issuance of a Writ of Attachment against PEIA and
PEIP, docketed as Civil Case No. MC99-605.
The RTC issued an Order,7 dated 26 March 1999, denying respondents prayer for the issuance of a
writ of attachment. The respondent moved for the reconsideration of the said Order but it was denied
in another Order, dated 11 January 2000.8
Respondent then filed Ex-Parte Motions for Issuance of Summons and for Leave of Court to
Deputize Respondents General Manager, Richard A. Tee, to Serve Summons Outside of the
Philippines,9 which the RTC granted in its Order, dated 27 April 2000.10 Thus, an Alias Summons,
dated 4 September 2000, was issued by the RTC to PEIA. But the said Alias Summons was served
on 28 September 2000 and received by Perkinelmer Asia, a Singaporean based sole proprietorship,
owned by the petitioner and, allegedly, a separate and distinct entity from PEIA.
PEIP moved to dismiss11 the Complaint filed by respondent on the ground that it states no cause of
action. Perkinelmer Asia, on the other hand, through its counsel, sent letters, dated 12 October

200012 and 15 November 2000,13 to the respondent and to the RTC, respectively, to inform them of
the wrongful service of summons upon Perkinelmer Asia.
Accordingly, respondent filed an Ex-Parte Motion to Admit Amended Complaint, together with the
Amended Complaint claiming that PEIA had become a sole proprietorship14 owned by the petitioner,
and subsequently changed its name to Perkinelmer Asia. Being a sole proprietorship of the
petitioner, a change in PEIAs name and juridical status did not detract from the fact that all its due
and outstanding obligations to third parties were assumed by the petitioner. Hence, in its Amended
Complaint15 respondent sought to change the name of PEIA to that of the petitioner. In an Order,
dated 24 July 2001,16 the RTC admitted the Amended Complaint filed by the respondent.
Respondent then filed another Motion17 for the Issuance of Summons and for Leave of Court to
Deputize Respondents General Manager, Richard A. Tee, to Serve Summons Outside the
Philippines. In another Order, dated 4 March 2002,18 the RTC deputized respondents General
Manager to serve summons on petitioner in Singapore. The RTC thus issued summons19 to the
petitioner. Acting on the said Order, respondents General Manager went to Singapore and served
summons on the petitioner.
Meanwhile, in an Order, dated 10 October 2001, the RTC denied the Motion to Dismiss filed by
PEIP, compelling the latter to file its Answer to the Amended Complaint.
Petitioner subsequently filed with the RTC a Special Appearance and Motion to
Dismiss20 respondents Amended Complaint on 30 May 2002 based on the following grounds: (1) the
RTC did not acquire jurisdiction over the person of the petitioner; (2) the respondent failed to state a
cause of action against the petitioner because it is not the real party-in-interest; (3) even assuming
arguendo that the respondent correctly filed the case against the petitioner, the Distribution
Agreement which was the basis of its claim grants PEIA the right to terminate the contract at any
time; and (4) the venue was improperly laid. The RTC in its Order, dated 4 November 2002, denied
petitioners Motion to Dismiss, ratiocinating as follows:
Prescinding from the above arguments of both parties, the [RTC] is inclined to DENY the Motion to
Dismiss.
A careful scrutiny on (sic) the allegation in the (Amended) Complaint would show that [herein
respondent] alleges ownership by the [herein petitioner] of shares of stocks in the [PEIP]. Such
allegation of ownership of shares of stocks by the [petitioner] would reveal that there is an allegation
of personal property in the Philippines. Shares of stocks represent personal property of the
shareholder. Thus, it follows that even though the Amended Complaint is primarily for damages, it
does relate to a property of the [petitioner], to which the latter has a claim interest (sic), or an actual
or contingent lien, which will make it fall under one of the requisite (sic) for extraterritorial service
under Section 15, Rule 14, of the Rules of Court. Thus, it could be gainfully said that the summons
had been validly served for [RTC] to acquire jurisdiction over the [petitioner].
The [petitioner] hinges its dismissal on the failure of the [respondent] to state a cause of action. The
[RTC] would like to emphasize that in a Motion to Dismiss, it hypothetically admits the truth of the
facts alleged in a complaint.
When the ground for dismissal is that the complaint states no cause of action, such fact can be
determined only from the facts alleged in the complaint x x x and from no other x x x and the Court
cannot consider other matters aliunde x x x. This implies that the issue must be passed upon on the
basis of the allegations and declare them to be false, otherwise it would be a procedural error and a
denial of due process to the [respondent] x x x.

The three (3) essential elements of a cause of action are the following:
a) The plaintiffs legal rights;
b) A correlative obligation of the defendant;
c) The omission of the defendant in violation of the legal rights.
A cursory reading of the Amended Complaint would reveal that all of the essential elements of a
cause of action are attendant in the Amended Complaint.
As for the contention that venue was improperly laid, x x x, the [RTC] in its ultimate desire that the
ends of justice could be served in its fullest, cannot rule that venue was improperly laid.
xxxx
The stipulation as to the venue of a prospective action does not preclude the filing of the suit in the
residence of the [respondent] under Section 2, Rule 4, Rules of Court, especially where the venue
stipulation was imposed by the [petitioner] for its own benefits.
xxxx
The [RTC] further believes that it is imperative that in order to ferret out the truth, a full-blown trial is
necessary for parties to be able to prove or disprove their allegations.21
Petitioner moved for the reconsideration of the aforesaid Order but, it was denied by the RTC in its
Order, dated 20 June 2003.
Consequently, petitioner filed a Petition for Certiorari under Rule 65 of the 1997 Revised Rules of
Civil Procedure with application for temporary restraining order and/or preliminary injunction before
the Court of Appeals alleging that the RTC committed grave abuse of discretion amounting to lack or
excess of jurisdiction in refusing to dismiss the Amended Complaint. The Court of Appeals never
issued any temporary restraining order or writ of injunction. On 4 April 2006, the Court of Appeals
rendered a Decision affirming the RTC Orders of 4 November 2002 and 20 June 2003.
This brings us to the present Petition before this Court wherein petitioner raised the following issues.
I.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN NOT
RULING THAT THE SERVICE OF SUMMONS ON PETITIONER WAS DEFECTIVE AND THAT
THE TRIAL COURT THUS FAILED TO ACQUIRE JURISDICTION OVER THE PERSON OF THE
PETITIONER.
II.
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE ERROR IN RULING
THAT THE "SOLE ISSUE" IN THE PETITION FOR CERTIORARI FILED BEFORE IT IS THE
QUESTION OF WHETHER THE TRIAL COURT ACQUIRED JURISDICTION OVER THE PERSON
OF THE PETITIONER THROUGH THE EXTRATERRITORIAL SERVICE OF SUMMONS.

A.
WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE GRANTED THE
PETITION FOR CERTIORARI AND REVERSED THE RTC ORDERS ON THE GROUND
THAT THE AMENDED COMPLAINT FAILED TO STATE A CAUSE OF ACTION AGAINST
PETITIONER.
1. BASED ON THE ALLEGATIONS IN THE EX-PARTE MOTION TO ADMIT
AMENDED COMPLAINT, AMENDED COMPLAINT, AND ALL DOCUMENTS
ATTACHED AND/OR RELATED THERETO, PETITIONER IS NOT THE REAL
PARTY-IN-INTEREST DEFENDANT IN THE CASE BELOW.
2. ASSUMING ARGUENDO THAT RESPONDENT DAKILA FILED THIS CASE
AGAINST THE CORRECT [PARTY], INASMUCH AS THE DISTRIBUTION
AGREEMENT DATED 1 JUNE 1990 GRANTS [PEIA] THE RIGHT TO TERMINATE
THE CONTRACT AT ANY TIME, RESPONDENT DAKILA FAILS TO STATE A
CAUSE OF ACTION IN THE CASE BELOW.
B.
WHETHER OR NOT THE COURT OF APPEALS SHOULD HAVE GRANTED THE
PETITION FOR CERTIORARI AND REVERSED THE RTC ORDERS ON THE GROUND
OF IMPROPER VENUE.
III.
WHETHER OR NOT PETITIONER IS ENTITLED TO A TEMPORARY RESTRAINING ORDER
AND/OR WRIT OF INJUNCTION.
The foregoing issues raised by petitioner essentially requires this Court to make a determination of
the (1) proper service of summons and acquisition of jurisdiction by the RTC over the person of the
petitioner; (2) existence of a cause of action against petitioner in respondents Amended Complaint;
and (3) proper venue for respondents civil case against petitioner.
Petitioner contends that Civil Case No. MC99-605 involves an action for collection of sum of money
and damages arising from the alleged breach of the Distribution Agreement. The action is one in
personam, or an action against a person based on his personal liability; and for the court a quo to
acquire jurisdiction over the person of the petitioner, personal service of summons, and not
extraterritorial service of summons, must be made within the state even if the petitioner is a nonresident. Petitioner avers that extraterritorial service of summons stated under Section 15, Rule 14 of
the 1997 Revised Rules of Civil Procedure, is only proper in in rem and quasi in rem cases; thus,
resort to an extraterritorial service of summons in the case at bar was erroneous. Petitioner
asseverates that the allegations in the respondents Amended Complaint that the petitioner has
personal properties within the Philippines does not make the present case one that relates to, or the
subject of which is, property within the Philippines warranting the extraterritorial service of summons
under Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure. Petitioner states that for an
action to be considered as one that relates to, or the subject of which is, property within the
Philippines, the main subject matter of the action must be the property within the Philippines itself,
and such was not the situation in this case. Likewise, the prayer in respondents Amended
Complaint for the issuance of a writ of attachment over the personal property of PEIP, which is 99%
owned by petitioner (as the supposed successor of PEIA), did not convert the action from one in
personam to one that is quasi in rem. Also, the petitioner points out that since the respondents

prayer for the issuance of a writ of attachment was denied by the RTC in its Order, dated 26 March
1999, then the nature of Civil Case No. MC99-605 remains in personam, contrary to the ruling of the
Court of Appeals that by the attachment of the petitioners interest in PEIP the action in personam
was converted to an action quasi in rem. Resultantly, the extraterritorial service of summons on the
petitioner was not validly effected, and did not give the RTC jurisdiction over the petitioner.
Petitioner further argues that the appellate court should have granted its Petition for Certiorari on the
ground that the RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction
in refusing to dismiss respondents Amended Complaint for failure to state a cause of action against
petitioner which was not the real party-in-interest in Civil Case No. MC99-605. Petitioner claims that
it had never used the name PEIA as its corporate name, and neither did it change its name from that
of PEIA. Petitioner stresses that PEIA is an entirely different corporate entity that is not connected in
whatever manner to the petitioner. Even assuming arguendo that petitioner is the real party-ininterest in Civil Case No. MC99-605 or that petitioner and PEIA are one and the same entity,
petitioner still avows that the respondent failed to state a cause of action against it because the
Distribution Agreement expressly grants PEIA the right to terminate the said contract at any time.
Lastly, it is the contention of the petitioner that the appellate court should have granted its Petition for
Certiorari because the RTC committed grave abuse of discretion amounting to lack or excess of
jurisdiction in refusing to dismiss Civil Case No. MC99-605 for having been filed in an improper
venue. Petitioner asserts that in the Distribution Agreement entered into between the respondent
and PEIA, both had mutually agreed to the exclusive jurisdiction of the courts of Singapore or of the
Philippines as elected by PEIA. Absent any waiver by PEIA of its right to choose the venue of the
dispute, the Complaint filed by the respondent before the RTC in the Philippines should have been
dismissed on the ground of improper venue.
The Petition is meritorious.
Jurisdiction is the power with which courts are invested for administering justice; that is, for hearing
and deciding cases. In order for the court to have authority to dispose of the case on the merits, it
must acquire jurisdiction over the subject matter and the parties.22
Jurisdiction of the court over the subject matter is conferred only by the Constitution or by law. It is
determinable on the basis of allegations in the complaint.23
Courts acquire jurisdiction over the plaintiffs upon the filing of the complaint, while jurisdiction over
the defendants in a civil case is acquired either through the service of summons upon them in the
manner required by law or through their voluntary appearance in court and their submission to its
authority. If the defendants have not been summoned, unless they voluntarily appear in court, the
court acquires no jurisdiction over their persons and a judgment rendered against them is null and
void. To be bound by a decision, a party should first be subjected to the courts jurisdiction.24
Thus, one of the modes of acquiring jurisdiction over the person of the defendant or respondent in a
civil case is through service of summons. It is intended to give notice to the defendant or respondent
that a civil action has been commenced against him. The defendant or respondent is thus put on
guard as to the demands of the plaintiff or the petitioner.25
The proper service of summons differs depending on the nature of the civil case instituted by the
plaintiff or petitioner: whether it is in personam, in rem, or quasi in rem. Actions in personam, are
those actions brought against a person on the basis of his personal liability; actions in rem are
actions against the thing itself instead of against the person; and actions are quasi in rem, where an

individual is named as defendant and the purpose of the proceeding is to subject his or her interest
in a property to the obligation or loan burdening the property.26
Under Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure, there are only four
instances wherein a defendant who is a non-resident and is not found in the country may be served
with summons by extraterritorial service, to wit: (1) when the action affects the personal status of the
plaintiff; (2) when the action relates to, or the subject of which is property, within the Philippines, in
which the defendant claims a lien or an interest, actual or contingent; (3) when the relief demanded
in such action consists, wholly or in part, in excluding the defendant from any interest in property
located in the Philippines; and (4) when the defendant non-residents property has been attached
within the Philippines. In these instances, service of summons may be effected by (a) personal
service out of the country, with leave of court; (b) publication, also with leave of court; or (c) any
other manner the court may deem sufficient.27
Undoubtedly, extraterritorial service of summons applies only where the action is in rem or quasi in
rem, but not if an action is in personam.
When the case instituted is an action in rem or quasi in rem, Philippine courts already have
jurisdiction to hear and decide the case because, in actions in rem and quasi in rem, jurisdiction over
the person of the defendant is not a prerequisite to confer jurisdiction on the court, provided that the
court acquires jurisdiction over the res.28 Thus, in such instance, extraterritorial service of summons
can be made upon the defendant. The said extraterritorial service of summons is not for the purpose
of vesting the court with jurisdiction, but for complying with the requirements of fair play or due
process, so that the defendant will be informed of the pendency of the action against him and the
possibility that property in the Philippines belonging to him or in which he has an interest may be
subjected to a judgment in favor of the plaintiff, and he can thereby take steps to protect his interest
if he is so minded.29 On the other hand, when the defendant or respondent does not reside and is not
found in the Philippines,30 and the action involved is in personam, Philippine courts cannot try any
case against him because of the impossibility of acquiring jurisdiction over his person unless he
voluntarily appears in court.31
In the case at bar, this Court sustains the contention of the petitioner that there can never be a valid
extraterritorial service of summons upon it, because the case before the court a quo involving
collection of a sum of money and damages is, indeed, an action in personam, as it deals with the
personal liability of the petitioner to the respondent by reason of the alleged unilateral termination by
the former of the Distribution Agreement. Even the Court of Appeals, in its Decision dated 4 April
2004, upheld the nature of the instant case as an action in personam. In the said Decision the
appellate court ruled that:
In the instant petition, [respondents] cause of action in Civil Case No. MC99-605 is anchored on the
claim that petitioner unilaterally terminated the Distribution Agreement. Thus, [respondent] prays in
its [C]omplaint that "Upon the filing of the Complaint, issue an Order fixing the amount of the bond
and issue a writ of attachment requiring the sheriff to attach the properties of [Perkin-Elmer
Philippines], which are not exempt from execution, and as much as may be sufficient to satisfy
[respondents] demands."
The action instituted by [respondent] affects the parties alone, not the whole world. Hence, it is an
action in personam, i.e., any judgment therein is binding only upon the parties properly impleaded.
xxxx

The objective sought in [respondents] [C]omplaint was to establish a claim against petitioner for its
alleged unilateral termination of [D]istribution [A]greement. Hence, to repeat, Civil Case No. MC99605 is an action in personam because it is an action against persons, namely, herein petitioner, on
the basis of its personal liability. As such, personal service of summons upon the [petitioner] is
essential in order for the court to acquire of (sic) jurisdiction over [its person].32 (Emphasis supplied.)
Thus, being an action in personam, personal service of summons within the Philippines is necessary
in order for the RTC to validly acquire jurisdiction over the person of the petitioner, and this is not
possible in the present case because the petitioner is a non-resident and is not found within the
Philippines. Respondents allegation in its Amended Complaint that petitioner had personal property
within the Philippines in the form of shares of stock in PEIP did not make Civil Case No. MC99-605
fall under any of the four instances mentioned in Section 15, Rule 14 of the Rules of Court, as to
convert the action in personam to an action in rem or quasi in rem and, subsequently, make the
extraterritorial service of summons upon the petitioner valid.
It is incorrect for the RTC to have ruled that the allegations made by the respondent in its Amended
Complaint, which is primarily for collection of a sum of money and damages, that the petitioner owns
shares of stock within the Philippines to which the petitioner claims interest, or an actual or
contingent lien, would make the case fall under one of the aforesaid instances wherein
extraterritorial service of summons under Section 15, Rule 14 of the 1997 Revised Rules of Civil
Procedure, would be valid. The RTC in arriving at such conclusions relied on the second instance,
mentioned under Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure (i.e., when the
action relates to, or the subject of which is property, within the Philippines, in which the defendant
claims a lien or interest, actual or contingent), where extraterritorial service of summons can be
properly made. However, the aforesaid second instance has no application in the case before this
Court. Primarily, the Amended Complaint filed by the respondent against the petitioner was for the
collection of sum of money and damages. The said case was neither related nor connected to any
property of the petitioner to which it claims a lien or interest. The action for collection of a sum of
money and damages was purely based on the personal liability of the petitioner towards the
respondent. The petitioner is correct in saying that "mere allegations of personal property within the
Philippines does not necessarily make the action as one that relates to or the subject of which is,
property within the Philippines as to warrant the extraterritorial service of summons. For the action to
be considered one that relates to, or the subject of which, is the property within the Philippines, the
main subject matter of the action must be the property itself of the petitioner in the Philippines." By
analogy, an action involving title to or possession of real or personal property -- such as the
foreclosure of real estate or chattel mortgage where the mortgagor does not reside or is not found in
the Philippines -- can be considered as an action which relates to, or the subject of which is, property
within the Philippines, in which the defendant claims a lien or interest, actual or contingent; and in
such instance, judgment will be limited to the res.33
Moreover, the allegations made by the respondent that the petitioner has property within the
Philippines were in support of its application for the issuance of a writ of attachment, which was
denied by the RTC. Hence, it is clear from the foregoing that the Complaint filed by the respondent
against the petitioner does not really relate to, or the subject of which is, property within the
Philippines of the petitioner.
This Court also finds error in the Decision of the Court of Appeals. It is provided for in the said
Decision, thus:
However, let it be emphasized that in the [C]omplaint filed before the trial court, [respondent] prayed
that "Upon the filing of the Complaint, issue an Order fixing the amount of the bond and issue a writ

of attachment requiring the sheriff to attach the properties of [Perkin-Elmer Philippines], which are
not exempt from execution, and as much as may be sufficient to satisfy [respondents] demands.
In other words, although the [C]omplaint before the trial court does not involve the personal status of
the [respondent], nevertheless, the case involves property within the Philippines in which the
[petitioner] has or claim an interest, or which the [respondent] has attached, which is one of the
instances where extraterritorial service of summons is proper.
xxxx
Hence, it is submitted that one of the instances when exterritorial service of summons under Section
15, Rule 14 of the Rules of Court is proper may be considered to have been met. This is because
the [C]omplaint for collection of sum of money which is an action in personam was converted into an
action quasi in rem by the attachment of [petitioners] interest in [Perkin-Elmer
Philippines].34 (Emphasis supplied.)
Respondents allegation in its Amended Complaint that petitioner had personal property within the
Philippines in the form of shares of stock in PEIP does not convert Civil Case No. MC99-605 from an
action in personam to one quasi in rem, so as to qualify said case under the fourth instance
mentioned in Section 15, Rule 14 of the 1997 Revised Rules of Civil Procedure (i.e., when the nonresident defendants property has been attached within the Philippines), wherein extraterritorial
service of summons upon the petitioner would have been valid. It is worthy to note that what is
required under the aforesaid provision of the Revised Rules of Civil Procedure is not a mere
allegation of the existence of personal property belonging to the non-resident defendant within the
Philippines but, more precisely, that the non-resident defendants personal property located within
the Philippines must have been actually attached. This Court in the case of Venturanza v. Court of
Appeals35 ruled that when the attachment was void from the beginning, the action in personam which
required personal service of summons was never converted into an action in rem where service by
publication would have been valid. Hence, the appellate court erred in declaring that the present
case, which is an action in personam, was converted to an action quasi in rem because of
respondents allegations in its Amended Complaint that petitioner had personal property within the
Philippines.
Glaringly, respondents prayer in its Amended Complaint for the issuance of a writ of attachment
over petitioners purported shares of stock in PEIP located within the Philippines was denied by the
court a quo in its Order dated 26 March 1999. Respondents Motion for Reconsideration of the said
Order was likewise denied by the RTC in its subsequent Order, dated 11 January 2000. Evidently,
petitioners alleged personal property within the Philippines, in the form of shares of stock in PEIP,
had not been attached; hence, Civil Case No. MC99-605, for collection of sum of money and
damages, remains an action in personam. As a result, the extraterritorial service of summons was
not validly effected by the RTC against the petitioner, and the RTC thus failed to acquire jurisdiction
over the person of the petitioner. The RTC is therefore bereft of any authority to act upon the
Complaint filed before it by the respondent insofar as the petitioner is concerned.
If there was no valid summons served upon petitioner, could RTC have acquired jurisdiction over the
person of the petitioner by the latters voluntary appearance? As a rule, even if the service of
summons upon the defendant or respondent in a civil case is defective, the court can still acquire
jurisdiction over his person when he voluntary appears in court or submits himself to its authority.
Nonetheless, voluntary appearance, as a mode of acquiring jurisdiction over the person of the
defendant, is likewise inapplicable in this case.

It is settled that a party who makes a special appearance in court for the purpose of challenging the
jurisdiction of said court, based on the invalidity of the service of summons, cannot be considered to
have voluntarily submitted himself to the jurisdiction of the court.36 In the present case, petitioner has
been consistent in all its pleadings in assailing the service of summons upon it and the jurisdiction of
the RTC over its person. Thus, the petitioner cannot be declared in estoppel when it filed an Answer
ad cautelam with compulsory counterclaim before the RTC while the instant Petition was still
pending before this Court. The petitioner was in a situation wherein it had no other choice but to file
an Answer; otherwise, the RTC would have already declared that petitioner had waived its right to
file responsive pleadings.37 Neither can the compulsory counterclaim contained in petitioners
Answer ad cautelam be considered as voluntary appearance of petitioner before the RTC. Petitioner
seeks to recover damages and attorneys fees as a consequence of the unfounded suit filed by
respondent against it. Thus, petitioners compulsory counterclaim is only consistent with its position
that the respondent wrongfully filed a case against it and the RTC erroneously exercised jurisdiction
over its person.
Distinction must be made in Civil Case No. MC99-605 as to the jurisdiction of the RTC over
respondents complaint and over petitioners counterclaim -- while it may have no jurisdiction over
the former, it may exercise jurisdiction over the latter. The compulsory counterclaim attached to
petitioners Answer ad cautelam can be treated as a separate action, wherein petitioner is the
plaintiff while respondent is the defendant.38 Petitioner could have instituted a separate action for the
very same claims but, for the sake of expediency and to avoid multiplicity of suits, it chose to
demand the same in Civil Case No. MC99-605.39 Jurisdiction of the RTC over the subject matter and
the parties in the counterclaim must thus be determined separately and independently from the
jurisdiction of the same court in the same case over the subject matter and the parties in
respondents complaint.
Moreover, even though the petitioner raised other grounds in its Motion to Dismiss aside from lack of
jurisdiction over its person, the same is not tantamount to its voluntary appearance or submission to
the authority of the court a quo. While in De Midgely v. Ferandos,40 it was held that, in a Motion to
Dismiss, the allegation of grounds other than lack of jurisdiction over the person of the defendant,
including a prayer "for such other reliefs as" may be deemed "appropriate and proper" amounted to
voluntary appearance, such ruling must be deemed superseded by the declaration of this Court in La
Naval Drug Corporation v. Court of Appeals41 that estoppel by jurisdiction must be unequivocal and
intentional. It would be absurd to hold that petitioner unequivocally and intentionally submitted itself
to the jurisdiction of the court by seeking other reliefs to which it might be entitled when the only
relief that it could properly ask from the trial court is the dismissal of the complaint against it.42 Thus,
the allegation of grounds other than lack of jurisdiction with a prayer "for such other reliefs" as may
be deemed "appropriate and proper" cannot be considered as unequivocal and intentional estoppel.
Most telling is Section 20, Rule 14 of the Rules of Court, which expressly provides:
SEC. 20. Voluntary appearance. - The defendants voluntary appearance in the action shall be
equivalent to service of summons. The inclusion in a motion to dismiss of other grounds aside from
lack of jurisdiction over the person of the defendant shall not be deemed a voluntary
appearance.43 (Emphasis supplied.)
In sum, this Court finds that the petitioner did not submit itself voluntarily to the authority of the court
a quo; and in the absence of valid service of summons, the RTC utterly failed to acquire jurisdiction
over the person of the petitioner.
Anent the existence of a cause of action against petitioner and the proper venue of the case, this
Court upholds the findings of the RTC on these issues.

Dismissal of a Complaint for failure to state a cause of action is provided for by the Rules of
Court.44 When a Motion to Dismiss is grounded on the failure to state a cause of action, a ruling
thereon should be based only on the facts alleged in the complaint. The court must pass upon this
issue based solely on such allegations, assuming them to be true. For it to do otherwise would be a
procedural error and a denial of plaintiffs right to due process.45 While, truly, there are wellrecognized exceptions46 to the rule that the allegations are hypothetically admitted as true and
inquiry is confined to the face of the complaint,47 none of the exceptions apply in this case. Hence,
the general rule applies. The defense of the petitioner that it is not the real party-in-interest is
evidentiary in nature which must be proven in trial. The appellate court, then, cannot be faulted for
not granting petitioners Motion to Dismiss on the ground of failure to state a cause of action.
In the same way, the appellate court did not err in denying petitioners Motion to Dismiss Civil Case
No. MC99-605 on the ground of improper venue. In arriving at such conclusion, this Court quotes
with approval the following ratiocination of the RTC:
As for the contention that venue was improperly laid, x x x, the [trial court] in its ultimate desire that
the ends of justice could be served in its fullest, cannot rule that venue was improperly laid.
xxxx
The stipulation as to the venue of a prospective action does not preclude the filing of the suit in the
residence of the [respondent] under Section 2, Rule 4, Rules of Court, especially where the venue
stipulation was imposed by the [petitioner] for its own benefits.48 (Emphasis supplied.)
Despite the venue stipulation found in the Distribution Agreement stipulating that the exclusive
jurisdiction over disputes arising from the same shall lie in the courts of Singapore or of the Territory
(referring to the Philippines), whichever is elected by PEIA (or petitioner, as PEIAs alleged
successor), the RTC of the Philippines cannot be considered as an improper venue. Truly, the venue
stipulation used the word "exclusive," however, a closer look on the Distribution Agreement would
reveal that the venue stipulation was really in the alternative i.e., courts of Singapore or of the
Territory, meaning, the Philippines; thus, the court a quo is not an improper venue for the present
case.
Nonetheless, it bears to emphasize that despite our findings that based on the allegations in
respondents Complaint in Civil Case No. MC99-605, respondent appears to have a cause of action
against the petitioner and that the RTC is the proper venue for the said case, Civil Case No. MC99605 is still dismissible, for the RTC never acquired jurisdiction over the person of the petitioner. The
extraterritorial service of summons upon the petitioner produces no effect because it can only be
done if the action is in rem or quasi in rem. The case for collection of sum of money and damages
filed by the respondent against the petitioner being an action in personam, then personal service of
summons upon the petitioner within the Philippines is essential for the RTC to validly acquire
jurisdiction over the person of the petitioner. Having failed to do so, the RTC can never subject
petitioner to its jurisdiction. The mere allegation made by the respondent that the petitioner had
shares of stock within the Philippines was not enough to convert the action from one in personam to
one that was quasi in rem, for petitioners purported personal property was never attached; thus, the
extraterritorial service of summons upon the petitioner remains invalid. In light of the foregoing
findings, this Court concludes that the RTC has no power to hear and decide the case against the
petitioner, because the extraterritorial service of summons was not validly effected upon the
petitioner and the RTC never acquired jurisdiction over its person.
Finally, as regards the petitioners counterclaim, which is purely for damages and attorneys fees by
reason of the unfounded suit filed by the respondent against it, it has long been settled that the same

truly falls under the classification of compulsory counterclaim and it must be pleaded in the same
action, otherwise, it is barred.49 In the case at bar, this Court orders the dismissal of the Complaint
filed by the respondent against the petitioner because the court a quo failed to acquire jurisdiction
over the person of the latter. Since the Complaint of the respondent was dismissed, what will happen
then to the counterclaim of the petitioner? Does the dismissal of the complaint carry with it the
dismissal of the counterclaim?
In the cases of Metal Engineering Resources Corp. v. Court of Appeals,50 International Container
Terminal Services, Inc. v. Court of Appeals,51 and BA Finance Corporation v. Co.,52 the Court ruled
that if the court does not have jurisdiction to entertain the main action of the case and dismisses the
same, then the compulsory counterclaim, being ancillary to the principal controversy, must likewise
be dismissed since no jurisdiction remained for any grant of relief under the counterclaim.53 If we
follow the aforesaid pronouncement of the Court in the cases mentioned above, the counterclaim of
the herein petitioner being compulsory in nature must also be dismissed together with the Complaint.
However, in the case of Pinga vs. Heirs of German Santiago,54 the Court explicitly expressed that:
Similarly, Justice Feria notes that "the present rule reaffirms the right of the defendant to move for
the dismissal of the complaint and to prosecute his counterclaim, as stated in the separate opinion
[of Justice Regalado in BA Finance]. Retired Court of Appeals Justice Hererra pronounces that the
amendment to Section 3, Rule 17 [of the 1997 Revised Rules of Civil Procedure] settles that
"nagging question "whether the dismissal of the complaint carries with it the dismissal of the
counterclaim, and opines that by reason of the amendments, the rulings in Metals Engineering,
International Container, and BA Finance "may be deemed abandoned." x x x.
x x x, when the Court promulgated the 1997 Rules of Civil Procedure, including the amended Rule
17, those previous jural doctrines that were inconsistent with the new rules incorporated in the 1997
Rules of Civil Procedure were implicitly abandoned insofar as incidents arising after the effectivity of
the new procedural rules on 1 July 1997. BA Finance, or even the doctrine that a counterclaim may
be necessarily dismissed along with the complaint, clearly conflicts with the 1997 Rules of Civil
Procedure. The abandonment of BA Finance as doctrine extends as far back as 1997, when the
Court adopted the new Rules of Civil Procedure. If, since then, abandonment has not been affirmed
in jurisprudence, it is only because no proper case has arisen that would warrant express
confirmation of the new rule. That opportunity is here and now, and we thus rule that the dismissal of
a complaint due to fault of the plaintiff is without prejudice to the right of the defendant to
prosecute any pending counterclaims of whatever nature in the same or separate action. We confirm
that BA Finance and all previous rulings of the Court that are inconsistent with this present holding
are now abandoned.55 [Emphasis supplied].
It is true that the aforesaid declaration of the Court refers to instances covered by Section 3, Rule 17
of the 1997 Revised Rules of Civil Procedure56 on dismissal of the complaint due to the fault of the
plaintiff. Nonetheless, it does not also preclude the application of the same to the instant case just
because the dismissal of respondents Complaint was upon the instance of the petitioner who
correctly argued lack of jurisdiction over its person.
Also in the case of Pinga v. Heirs of German Santiago, the Court discussed the situation wherein the
very filing of the complaint by the plaintiff against the defendant caused the violation of the latters
rights. As to whether the dismissal of such a complaint should also include the dismissal of the
counterclaim, the Court acknowledged that said matter is still debatable, viz:
Whatever the nature of the counterclaim, it bears the same integral characteristics as a complaint;
namely a cause (or causes) of action constituting an act or omission by which a party violates the
right of another. The main difference lies in that the cause of action in the counterclaim is maintained

by the defendant against the plaintiff, while the converse holds true with the complaint. Yet, as with a
complaint, a counterclaim without a cause of action cannot survive.
x x x if the dismissal of the complaint somehow eliminates the cause(s) of the counterclaim, then the
counterclaim cannot survive. Yet that hardly is the case, especially as a general rule. More often
than not, the allegations that form the counterclaim are rooted in an act or omission of the plaintiff
other than the plaintiffs very act of filing the complaint. Moreover, such acts or omissions imputed to
the plaintiff are often claimed to have occurred prior to the filing of the complaint itself. The only
apparent exception to this circumstance is if it is alleged in the counterclaim that the very act of the
plaintiff in filing the complaint precisely causes the violation of the defendants rights. Yet even in
such an instance, it remains debatable whether the dismissal or withdrawal of the complaint is
sufficient to obviate the pending cause of action maintained by the defendant against the plaintiff.57
1awphi 1

Based on the aforequoted ruling of the Court, if the dismissal of the complaint somehow eliminates
the cause of the counterclaim, then the counterclaim cannot survive. Conversely, if the counterclaim
itself states sufficient cause of action then it should stand independently of and survive the dismissal
of the complaint. Now, having been directly confronted with the problem of whether the compulsory
counterclaim by reason of the unfounded suit may prosper even if the main complaint had been
dismissed, we rule in the affirmative.
It bears to emphasize that petitioners counterclaim against respondent is for damages and
attorneys fees arising from the unfounded suit. While respondents Complaint against petitioner is
already dismissed, petitioner may have very well already incurred damages and litigation expenses
such as attorneys fees since it was forced to engage legal representation in the Philippines to
protect its rights and to assert lack of jurisdiction of the courts over its person by virtue of the
improper service of summons upon it. Hence, the cause of action of petitioners counterclaim is not
eliminated by the mere dismissal of respondents complaint.
It may also do well to remember that it is this Court which mandated that claims for damages and
attorneys fees based on unfounded suit constitute compulsory counterclaim which must be pleaded
in the same action or, otherwise, it shall be barred. It will then be iniquitous and the height of
injustice to require the petitioner to make the counterclaim in the present action, under threat of
losing his right to claim the same ever again in any other court, yet make his right totally dependent
on the fate of the respondents complaint.
If indeed the Court dismisses petitioners counterclaim solely on the basis of the dismissal of
respondents Complaint, then what remedy is left for the petitioner? It can be said that he can still file
a separate action to recover the damages and attorneys fees based on the unfounded suit for he
cannot be barred from doing so since he did file the compulsory counterclaim in the present action,
only that it was dismissed when respondents Complaint was dismissed. However, this reasoning is
highly flawed and irrational considering that petitioner, already burdened by the damages and
attorneys fees it may have incurred in the present case, must again incur more damages and
attorneys fees in pursuing a separate action, when, in the first place, it should not have been
involved in any case at all.
Since petitioners counterclaim is compulsory in nature and its cause of action survives that of the
dismissal of respondents complaint, then it should be resolved based on its own merits and
evidentiary support.
WHEREFORE, premises considered, the instant Petition is hereby GRANTED. The Decision of the
Court of Appeals, dated 4 April 2006, in CA-G.R. SP No. 78981, affirming the Orders, dated 4
November 2002 and 20 June 2003, of the Regional Trial Court of Mandaluyong City, Branch 212, in

Civil Case No. MC99-605, is hereby REVERSED AND SET ASIDE. Respondents Amended
Complaint in Civil Case No. MC99-605 as against the petitioner is hereby ordered DISMISSED, and
all the proceedings against petitioner in the court a quo by virtue thereof are hereby DECLARED
NULL AND VOID. The Regional Trial Court of Mandaluyong City, Branch 212, is DIRECTED to
proceed without further delay with the resolution of respondents Complaint in Civil Case No. MC99605 as to defendant PEIP, as well as petitioners counterclaim. No costs.
SO ORDERED.

G.R. No. 175587

September 21, 2007

PHILIPPINE COMMERCIAL INTERNATIONAL BANK, Petitioner,

vs.
JOSEPH ANTHONY M. ALEJANDRO, Respondent.
DECISION
YNARES-SANTIAGO, J.:
This petition for review assails the May 31, 2006 Decision1 of the Court of Appeals in CA-G.R. CV
No. 78200 affirming the August 30, 2000 Decision2 of the Regional Trial Court of Makati, which
granted respondent Joseph Anthony M. Alejandros claim for damages arising from petitioner
Philippine Commercial International Banks (PCIB) invalid garnishment of respondents deposits.
On October 23, 1997, petitioner filed against respondent a complaint3 for sum of money with prayer
for the issuance of a writ of preliminary attachment. Said complaint alleged that on September 10,
1997, respondent, a resident of Hong Kong, executed in favor of petitioner a promissory note
obligating himself to payP249,828,588.90 plus interest. In view of the fluctuations in the foreign
exchange rates which resulted in the insufficiency of the deposits assigned by respondent as
security for the loan, petitioner requested the latter to put up additional security for the loan.
Respondent, however, sought a reconsideration of said request pointing out petitioners alleged
mishandling of his account due to its failure to carry out his instruction to close his account as early
as April 1997, when the prevailing rate of exchange of the US Dollar to Japanese yen was
US$1.00:JPY127.50.4 It appears that the amount of P249,828,588.90 was the consolidated amount
of a series of yen loans granted by petitioner to respondent during the months of February and April
1997.5
In praying for the issuance of a writ of preliminary attachment under Section 1 paragraphs (e) and (f)
of Rule 57 of the Rules of Court, petitioner alleged that (1) respondent fraudulently withdrew his
unassigned deposits notwithstanding his verbal promise to PCIB Assistant Vice President Corazon
B. Nepomuceno not to withdraw the same prior to their assignment as security for the loan; and (2)
that respondent is not a resident of the Philippines. The application for the issuance of a writ was
supported with the affidavit of Nepomuceno.6
On October 24, 1997, the trial court granted the application and issued the writ ex parte7 after
petitioner posted a bond in the amount of P18,798,734.69, issued by Prudential Guarantee &
Assurance Inc., under Bond No. HO-46764-97. On the same date, the bank deposits of respondent
with Rizal Commercial Banking Corporation (RCBC) were garnished. On October 27, 1997,

respondent, through counsel, filed a manifestation informing the court that he is voluntarily
submitting to its jurisdiction.8
Subsequently, respondent filed a motion to quash9 the writ contending that the withdrawal of his
unassigned deposits was not fraudulent as it was approved by petitioner. He also alleged that
petitioner knew that he maintains a permanent residence at Calle Victoria, Ciudad Regina, Batasan
Hills, Quezon City, and an office address in Makati City at the Law Firm Romulo Mabanta
Buenaventura Sayoc & De los Angeles, 10 where he is a partner. In both addresses, petitioner
regularly communicated with him through its representatives. Respondent added that he is the
managing partner of the Hong Kong branch of said Law Firm; that his stay in Hong Kong is only
temporary; and that he frequently travels back to the Philippines.
On December 24, 1997, the trial court issued an order quashing the writ and holding that the
withdrawal of respondents unassigned deposits was not intended to defraud petitioner. It also found
that the representatives of petitioner personally transacted with respondent through his home
address in Quezon City and/or his office in Makati City. It thus concluded that petitioner
misrepresented and suppressed the facts regarding respondents residence considering that it has
personal and official knowledge that for purposes of service of summons, respondents residence
and office addresses are located in the Philippines. The dispositive portion of the courts decision is
as follows:
WHEREFORE, the URGENT MOTION TO QUASH, being meritorious, is hereby GRANTED, and
the ORDER of 24 October 1997 is hereby RECONSIDERED and SET ASIDE and the WRIT OF
attachment of the same is hereby DISCHARGED.
SO ORDERED.11
With the denial12 of petitioners motion for reconsideration, it elevated the case to the Court of
Appeals (CA-G.R. SP No. 50748) via a petition for certiorari. On May 10, 1999, the petition was
dismissed for failure to prove that the trial court abused its discretion in issuing the aforesaid
order.13 Petitioner filed a motion for reconsideration but was denied on October 28, 1999.14 On
petition with this Court, the case was dismissed for late filing in a minute resolution (G.R. No.
140605) dated January 19, 2000.15 Petitioner filed a motion for reconsideration but was
likewise denied with finality on March 6, 2000.16
Meanwhile, on May 20, 1998, respondent filed a claim for damages in the amount of P25 Million17 on
the attachment bond (posted by Prudential Guarantee & Assurance, Inc., under JCL(4) No. 01081,
Bond No. HO-46764-97) on account of the wrongful garnishment of his deposits. He presented
evidence showing that hisP150,000.00 RCBC check payable to his counsel as attorneys fees, was
dishonored by reason of the garnishment of his deposits. He also testified that he is a graduate of
the Ateneo de Manila University in 1982 with a double degree of Economics and Management
Engineering and of the University of the Philippines in 1987 with the degree of Bachelor of Laws.
Respondent likewise presented witnesses to prove that he is a well known lawyer in the business
community both in the Philippines and in Hong Kong.18 For its part, the lone witness presented by
petitioner was Nepomuceno who claimed that she acted in good faith in alleging that respondent is a
resident of Hong Kong.19
On August 30, 2000, the trial court awarded damages to respondent in the amount of P25 Million
without specifying the basis thereof, thus:
WHEREFORE, premises above considered, and defendant having duly established his claim in the
amount ofP25,000,000.00, judgment is hereby rendered ordering Prudential Guarantee &

[Assurance] Co., which is solidarily liable with plaintiff to pay defendant the full amount of bond under
Prudential Guarantee & Assurance, Inc. JCL(4) No. 01081, [Bond No. HO-46764-97], dated 24
October 1997 in the amount of P18,798,734.69. And, considering that the amount of the bond is
insufficient to fully satisfy the award for damages, plaintiff is hereby ordered to pay defendant the
amount of P6,201,265.31.
SO ORDERED.20
The trial court denied petitioners motion for reconsideration on October 24, 2000.21
Petitioner elevated the case to the Court of Appeals which affirmed the findings of the trial court. It
held that in claiming that respondent was not a resident of the Philippines, petitioner cannot be said
to have been in good faith considering that its knowledge of respondents Philippine residence and
office address goes into the very issue of the trial courts jurisdiction which would have been
defective had respondent not voluntarily appeared before it.
The Court of Appeals, however, reduced the amount of damages awarded to petitioner and specified
their basis. The dispositive portion of the decision of the Court of Appeals states:
WHEREFORE, the appeal is PARTIALLY GRANTED and the decision appealed from is hereby
MODIFIED. The award of damages in the amount of P25,000,000.00 is deleted. In lieu thereof,
Prudential Guarantee & [Assurance, Inc.], which is solidarily liable with appellant [herein petitioner],
is ORDERED to pay appellee [herein respondent] P2,000,000.00 as nominal
damages; P5,000,000.00 as moral damages; and P1,000,000.00 as attorneys fees, to be satisfied
against the attachment bond under Prudential Guarantee & Assurance, Inc. JCL (4) No. 01081.
SO ORDERED.22
Both parties moved for reconsideration. On November 21, 2006, the Court of Appeals denied
petitioners motion for reconsideration but granted that of respondents by ordering petitioner to pay
additional P5Million as exemplary damages.23
Hence, the instant petition.
At the outset, it must be noted that the ruling of the trial court that petitioner is not entitled to a writ of
attachment because respondent is a resident of the Philippines and that his act of withdrawing his
deposits with petitioner was without intent to defraud, can no longer be passed upon by this Court.
More importantly, the conclusions of the court that petitioner bank misrepresented that respondent
was residing out of the Philippines and suppressed the fact that respondent has a permanent
residence in Metro Manila where he may be served with summons, are now beyond the power of
this Court to review having been the subject of a final and executory order. Said findings were
sustained by the Court of Appeals in CA-G.R. SP No. 50784 and by this Court in G.R. No. 140605.
The rule on conclusiveness of judgment, which obtains under the premises, precludes the relitigation
of a particular fact or issue in another action between the same parties even if based on a different
claim or cause of action. The judgment in the prior action operates as estoppel as to those matters in
issue or points controverted, upon the determination of which the finding or judgment was rendered.
The previous judgment is conclusive in the second case, as to those matters actually and directly
controverted and determined.24 Hence, the issues of misrepresentation by petitioner and the
residence of respondent for purposes of service of summons can no longer be questioned by
petitioner in this case.

The core issue for resolution is whether petitioner bank is liable for damages for the improper
issuance of the writ of attachment against respondent.
We rule in the affirmative.
Notwithstanding the final judgment that petitioner is guilty of misrepresentation and suppression of a
material fact, the latter contends that it acted in good faith. Petitioner also contends that even if
respondent is considered a resident of the Philippines, attachment is still proper under Section 1,
paragraph (f), Rule 57 of the Rules of Court since he (respondent) is a resident who is temporarily
out of the Philippines upon whom service of summons may be effected by publication.
Petitioners contentions are without merit.
While the final order of the trial court which quashed the writ did not categorically use the word "bad
faith" in characterizing the representations of petitioner, the tenor of said order evidently considers
the latter to have acted in bad faith by resorting to a deliberate strategy to mislead the court. Thus
In the hearings of the motion, and oral arguments of counsels before the Court, it appears that
plaintiff BANK through its contracting officers Vice President Corazon B. Nepomuceno and
Executive Vice President Jose Ramon F. Revilla, personally transacted with defendant mainly
through defendants permanent residence in METRO-MANILA, either in defendants home address
in Quezon City or his main business address at the Romulo Mabanta Buenaventura Sayoc & Delos
Angeles in MAKATI and while at times follow ups were made through defendants temporary home
and business addresses in Hongkong. It is therefore clear that plaintiff could not deny their personal
and official knowledge that defendants permanent and official residence for purposes of service of
summons is in the Philippines. In fact, this finding is further confirmed by the letter of Mr. JOHN
GOKONGWEI, JR. Chairman, Executive Committee of plaintiff BANK, in his letter dated 6 October
1997 on the subject loan to defendant of the same law firm was addressed to the ROMULO LAW
FIRM in MAKATI.
[Anent the] second ground of attachment x x x [t]he Court finds that the amount withdrawn was not
part of defendants peso deposits assigned with the bank to secure the loan and as proof that the
withdrawal was not intended to defraud plaintiff as creditor is that plaintiff approved and allowed said
withdrawals. It is even noted that when the Court granted the prayer for attachment it was mainly on
the first ground under Section 1(f) of Rule 57 of the 1997 Rules of Civil Procedure, that defendant
resides out of the Philippines.
On the above findings, it is obvious that plaintiff already knew from the beginning the deficiency of its
second ground for attachment [i.e.,] disposing properties with intent to defraud his creditors, and
therefore plaintiff had to resort to this misrepresentation that defendant was residing out of the
Philippines and suppressed the fact that defendants permanent residence is in METRO MANILA
where he could be served with summons.
On the above findings, and mainly on the misrepresentations made by plaintiff on the grounds for the
issuance of the attachment in the verified complaint, the Court concludes that defendant has duly
proven its grounds in the MOTION and that plaintiff is not entitled to the attachment.25
Petitioner is therefore barred by the principle of conclusiveness of judgment from again invoking
good faith in the application for the issuance of the writ. Similarly, in the case of Hanil Development
Co., Ltd. v. Court of Appeals,26the Court debunked the claim of good faith by a party who maliciously
sought the issuance of a writ of attachment, the bad faith of said party having been previously
determined in a final decision which voided the assailed writ. Thus

Apropos the Application for Judgment on the Attachment Bond, Escobar claims in its petition that the
award of attorneys fees and injunction bond premium in favor of Hanil is [contrary] to law and
jurisprudence. It contends that no malice or bad faith may be imputed to it in procuring the writ.
Escobars protestation is now too late in the day. The question of the illegality of the attachment and
Escobars bad faith in obtaining it has long been settled in one of the earlier incidents of this case.
The Court of Appeals, in its decision rendered on February 3, 1983 in C.A.-G.R. No. SP-14512,
voided the challenged writ, having been issued with grave abuse of discretion. Escobars bad faith in
procuring the writ cannot be doubted. Its Petition for the Issuance of Preliminary Attachment made
such damning allegations that: Hanil was already able to secure a complete release of its final
collection from the MPWH; it has moved out some of its heavy equipments for unknown destination,
and it may leave the country anytime. Worse, its Ex Parte Motion to Resolve Petition alleged that
"after personal verification by (Escobar) of (Hanils) equipment in Cagayan de Oro City, it appears
that the equipments were no longer existing from their compound." All these allegations of Escobar
were found to be totally baseless and untrue.
Even assuming that the trial court did not make a categorical pronouncement of misrepresentation
and suppression of material facts on the part of petitioner, the factual backdrop of this case does not
support petitioners claim of good faith. The facts and circumstances omitted are highly material and
relevant to the grant or denial of writ of attachment applied for.
Finally, there is no merit in petitioners contention that respondent can be considered a resident who
is temporarily out of the Philippines upon whom service of summons may be effected by publication,
and therefore qualifies as among those against whom a writ of attachment may be issued under
Section 1, paragraph (f), Rule 57 of the Rules of Court which provides:
(f) In an action against a party x x x on whom summons may be served by publication.
In so arguing, petitioner attempts to give the impression that although it erroneously invoked the
ground that respondent does not reside in the Philippines, it should not be made to pay damages
because it is in fact entitled to a writ of attachment had it invoked the proper ground under Rule 57.
However, even on this alternative ground, petitioner is still not entitled to the issuance of a writ of
attachment.
The circumstances under which a writ of preliminary attachment may be issued are set forth in
Section 1, Rule 57 of the Rules of Court, to wit:
SEC. 1. Grounds upon which attachment may issue. At the commencement of the action or at
any time before entry of judgment, a plaintiff or any proper party may have the property of the
adverse party attached as security for the satisfaction of any judgment that may be recovered in the
following cases:
(a) In an action for the recovery of a specified amount of money or damages, other than
moral and exemplary, on a cause of action arising from law, contract, quasi-contract, delict or
quasi-delict against a party who is about to depart from the Philippines with intent to defraud
his creditors;
(b) In an action for money or property embezzled or fraudulently misapplied or converted to
his own use by a public officer, or an officer of a corporation or an attorney, factor, broker,
agent, or clerk, in the course of his employment as such, or by any other person in a
fiduciary capacity, or for a willful violation of duty;

(c) In an action to recover the possession of personal property unjustly or fraudulently taken,
detained, or converted, when the property, or any part thereof, has been concealed,
removed, or disposed of to prevent its being found or taken by the applicant or an authorized
person;
(d) In an action against a party who has been guilty of a fraud in contracting the debt or
incurring the obligation upon which the action is brought, or in the performance thereof;
(e) In an action against a party who has removed or disposed of his property, or is about to
do so, with intent to defraud his creditors;
(f) In an action against a party who resides out of the Philippines, or on whom summons may
be served by publication.
The purposes of preliminary attachment are: (1) to seize the property of the debtor in advance of
final judgment and to hold it for purposes of satisfying said judgment, as in the grounds stated in
paragraphs (a) to (e) of Section 1, Rule 57 of the Rules of Court; or (2) to acquire jurisdiction over
the action by actual or constructive seizure of the property in those instances where personal or
substituted service of summons on the defendant cannot be effected, as in paragraph (f) of the same
provision.27
Corollarily, in actions in personam, such as the instant case for collection of sum of
money,28 summons must be served by personal or substituted service, otherwise the court will not
acquire jurisdiction over the defendant. In case the defendant does not reside and is not found in the
Philippines (and hence personal and substituted service cannot be effected), the remedy of the
plaintiff in order for the court to acquire jurisdiction to try the case is to convert the action into a
proceeding in rem or quasi in rem by attaching the property of the defendant.29 Thus, in order to
acquire jurisdiction in actions in personam where defendant resides out of and is not found in the
Philippines, it becomes a matter of course for the court to convert the action into a proceeding in
rem or quasi in rem by attaching the defendants property. The service of summons in this case
(which may be by publication coupled with the sending by registered mail of the copy of the
summons and the court order to the last known address of the defendant), is no longer for the
purpose of acquiring jurisdiction but for compliance with the requirements of due process.30
However, where the defendant is a resident who is temporarily out of the Philippines, attachment of
his/her property in an action in personam, is not always necessary in order for the court to acquire
jurisdiction to hear the case.
Section 16, Rule 14 of the Rules of Court reads:
Sec. 16. Residents temporarily out of the Philippines. When an action is commenced against a
defendant who ordinarily resides within the Philippines, but who is temporarily out of it, service may,
by leave of court, be also effected out of the Philippines, as under the preceding section.
The preceding section referred to in the above provision is Section 15 which provides for
extraterritorial service (a) personal service out of the Philippines, (b) publication coupled with the
sending by registered mail of the copy of the summons and the court order to the last known
address of the defendant; or (c) in any other manner which the court may deem sufficient.
In Montalban v. Maximo,31 however, the Court held that substituted service of summons (under the
present Section 7, Rule 14 of the Rules of Court) is the normal mode of service of summons that will
confer jurisdiction on the court over the person of residents temporarily out of the Philippines.

Meaning, service of summons may be effected by (a) leaving copies of the summons at the
defendants residence with some person of suitable discretion residing therein, or (b) by leaving
copies at the defendants office or regular place of business with some competent person in charge
thereof.32 Hence, the court may acquire jurisdiction over an action in personam by mere substituted
service without need of attaching the property of the defendant.
The rationale in providing for substituted service as the normal mode of service for residents
temporarily out of the Philippines, was expounded in Montalban v. Maximo,33 in this wise:
A man temporarily absent from this country leaves a definite place of residence, a dwelling where he
lives, a local base, so to speak, to which any inquiry about him may be directed and where he is
bound to return. Where one temporarily absents himself, he leaves his affairs in the hands of one
who may be reasonably expected to act in his place and stead; to do all that is necessary to protect
his interests; and to communicate with him from time to time any incident of importance that may
affect him or his business or his affairs. It is usual for such a man to leave at his home or with his
business associates information as to where he may be contacted in the event a question that
affects him crops up.
Thus, in actions in personam against residents temporarily out of the Philippines, the court need not
always attach the defendants property in order to have authority to try the case. Where the plaintiff
seeks to attach the defendants property and to resort to the concomitant service of summons by
publication, the same must be with prior leave, precisely because, if the sole purpose of the
attachment is for the court to acquire jurisdiction, the latter must determine whether from the
allegations in the complaint, substituted service (to persons of suitable discretion at the defendants
residence or to a competent person in charge of his office or regular place of business) will suffice,
or whether there is a need to attach the property of the defendant and resort to service of summons
by publication in order for the court to acquire jurisdiction over the case and to comply with the
requirements of due process.
In the instant case, it must be stressed that the writ was issued by the trial court mainly on the
representation of petitioner that respondent is not a resident of the Philippines.34 Obviously, the trial
courts issuance of the writ was for the sole purpose of acquiring jurisdiction to hear and decide the
case. Had the allegations in the complaint disclosed that respondent has a residence in Quezon City
and an office in Makati City, the trial court, if only for the purpose of acquiring jurisdiction, could have
served summons by substituted service on the said addresses, instead of attaching the property of
the defendant. The rules on the application of a writ of attachment must be strictly construed in favor
of the defendant. For attachment is harsh, extraordinary, and summary in nature; it is a rigorous
remedy which exposes the debtor to humiliation and annoyance.35 It should be resorted to only when
necessary and as a last remedy.
It is clear from the foregoing that even on the allegation that respondent is a resident temporarily out
of the Philippines, petitioner is still not entitled to a writ of attachment because the trial court could
acquire jurisdiction over the case by substituted service instead of attaching the property of the
defendant. The misrepresentation of petitioner that respondent does not reside in the Philippines
and its omission of his local addresses was thus a deliberate move to ensure that the application for
the writ will be granted.
In light of the foregoing, the Court of Appeals properly sustained the finding of the trial court that
petitioner is liable for damages for the wrongful issuance of a writ of attachment against respondent.
Anent the actual damages, the Court of Appeals is correct in not awarding the same inasmuch as
the respondent failed to establish the amount garnished by petitioner. It is a well settled rule that one

who has been injured by a wrongful attachment can recover damages for the actual loss resulting
therefrom. But for such losses to be recoverable, they must constitute actual damages duly
established by competent proofs, which are, however, wanting in the present case.36
Nevertheless, nominal damages may be awarded to a plaintiff whose right has been violated or
invaded by the defendant, for the purpose of vindicating or recognizing that right, and not for
indemnifying the plaintiff for any loss suffered by him. Its award is thus not for the purpose of
indemnification for a loss but for the recognition and vindication of a right. Indeed, nominal damages
are damages in name only and not in fact.37 They are recoverable where some injury has been done
but the pecuniary value of the damage is not shown by evidence and are thus subject to the
discretion of the court according to the circumstances of the case.38
In this case, the award of nominal damages is proper considering that the right of respondent to use
his money has been violated by its garnishment. The amount of nominal damages must, however,
be reduced from P2 million to P50,000.00 considering the short period of 2 months during which the
writ was in effect as well as the lack of evidence as to the amount garnished.
1w phi 1

Likewise, the award of attorneys fees is proper when a party is compelled to incur expenses to lift a
wrongfully issued writ of attachment. The basis of the award thereof is also the amount of money
garnished, and the length of time respondents have been deprived of the use of their money by
reason of the wrongful attachment.39 It may also be based upon (1) the amount and the character of
the services rendered; (2) the labor, time and trouble involved; (3) the nature and importance of the
litigation and business in which the services were rendered; (4) the responsibility imposed; (5) the
amount of money and the value of the property affected by the controversy or involved in the
employment; (6) the skill and the experience called for in the performance of the services; (7) the
professional character and the social standing of the attorney; (8) the results secured, it being a
recognized rule that an attorney may properly charge a much larger fee when it is contingent than
when it is not.40
All the aforementioned weighed, and considering the short period of time it took to have the writ
lifted, the favorable decisions of the courts below, the absence of evidence as to the professional
character and the social standing of the attorney handling the case and the amount garnished, the
award of attorneys fees should be fixed not at P1 Million, but only at P200,000.00.
The courts below correctly awarded moral damages on account of petitioners misrepresentation and
bad faith; however, we find the award in the amount of P5 Million excessive. Moral damages are to
be fixed upon the discretion of the court taking into consideration the educational, social and
financial standing of the parties.41Moral damages are not intended to enrich a complainant at the
expense of a defendant.42 They are awarded only to enable the injured party to obtain means,
diversion or amusements that will serve to obviate the moral suffering he has undergone, by reason
of petitioners culpable action. Moral damages must be commensurate with the loss or injury
suffered. Hence, the award of moral damages is reduced to P500,000.00.
Considering petitioners bad faith in securing the writ of attachment, we sustain the award of
exemplary damages by way of example or correction for public good. This should deter parties in
litigations from resorting to baseless and preposterous allegations to obtain writs of attachments.
While as a general rule, the liability on the attachment bond is limited to actual (or in some cases,
temperate or nominal) damages, exemplary damages may be recovered where the attachment was
established to be maliciously sued out.43 Nevertheless, the award of exemplary damages in this case
should be reduced from P5M to P500,000.00.

Finally, contrary to the claim of petitioner, the instant case for damages by reason of the invalid
issuance of the writ, survives the dismissal of the main case for sum of money. Suffice it to state that
the claim for damages arising from such wrongful attachment may arise and be decided separately
from the merits of the main action.44
WHEREFORE, the petition is PARTIALLY GRANTED. The May 31, 2006 Decision of the Court of
Appeals in CA-G.R. CV No. 78200 is AFFIRMED with MODIFICATIONS. As modified, petitioner
Philippine Commercial International Bank is ordered to pay respondent Joseph Anthony M.
Alejandro the following amounts: P50,000.00 as nominal damages, P200,000.00 as attorneys fees;
and P500,000.00 as moral damages, and P500,000.00 as exemplary damages, to be satisfied
against the attachment bond issued by Prudential Guarantee & Assurance Inc.,45 under JCL (4) No.
01081, Bond No. HO-46764-97.
No pronouncement as to costs.
SO ORDERED.
G.R. No. 166730

March 10, 2010

SPOUSES FERNANDO TORRES and IRMA TORRES, Petitioners,

vs.
AMPARO MEDINA and the EX-OFFICIO SHERIFF of the RTC of Quezon City, Respondents.
DECISION
PERALTA, J.:
Before this Court is a Petition for Review on certiorari,1 under Rule 45 of the Rules of Court, seeking
to set aside the August 30, 2004 Decision2 and January 18, 2005 Resolution3 of the Court of Appeals
(CA) in CA-G.R. CV No. 75847.
The facts of the case:
On July 28, 1994, respondent Amparo Medina (Medina) wrote a letter4 to the Office of the Sheriff,
Regional Trial Court (RTC) of Quezon City, applying for the extrajudicial foreclosure of mortgage of
the property of petitioner spouses Fernando and Irma Torres (Spouses Torres) which was covered
by Transfer Certificate of Title No. RT-61056 (354973) and which is subject of a Deed of
Mortgage5 dated December 20, 1993.
On May 27, 1997, the Office of the Ex-Officio Sheriff issued a Notice of Sheriffs Sale6 and, on June
30, 1997, sold at public auction the subject property to Medina being the highest bidder thereof. A
Certificate of Sale7 was thereafter issued to Medina.
On September 21, 1999, the Spouses Torres filed a Complaint8 before the RTC of Quezon City for
the declaration of nullity of the extrajudicial foreclosure of mortgage conducted by the Ex-Officio
Sheriff. The same was docketed as Civil Case No. Q-99-38781.
In their Complaint, the Spouses Torres raised the following causes of action, to wit:

a) the December 20, 1993 Deed of Real Estate Mortgage does not contain a period or term;
hence, performance of the obligation has not yet become due as there is a need for judicial
determination of the period or term;
b) the June 28, 1994 Statement of Account is not the loan contemplated by law; therefore, it
cannot serve as basis to foreclose extrajudicially the mortgage;
c) the credit transaction is either void or unenforceable due to breach of Section 6(a) of
Republic Act No. 3765, otherwise known as "The Truth in Lending Act";
d) Since appellee sued appellants for violation of Batas Pambansa Blg. 22, there could arise
a situation of double recovery of damages which is proscribed by law. If the extrajudicial
foreclosure will be allowed and if appellants will be made to pay the amount of the checks
subject of the criminal suit under B.P. Blg. 22, it would result in the unjust enrichment of
appellee.9
On July 20, 2000, Medina filed a Motion to Dismiss10 raising the grounds of res judicata and forum
shopping. Medina argued that the Spouses Torres had filed an earlier Complaint11 praying for the
annulment of the real estate mortgage involving the same property and which was docketed as Civil
Case No. Q-94-18962 before the RTC of Quezon City, Branch 216. Medina contended that said
complaint was already dismissed as evidenced by the RTCs Decision12 dated March 7, 1997.
On December 27, 2001, the RTC issued an Order13 granting Medinas motion to dismiss the
complaint. The RTC ruled that res judicata was present and that the Spouses Torres were guilty of
forum shopping, to wit:
Thus, it is plain from the foregoing that the present action is identical to the case filed by plaintiffs
against the defendant before the Regional Trial Court of Quezon City, Branch 216, hence, res
judicata lies. The decision of the Regional Trial Court of Quezon City, Branch 216, dated March 7,
1997, has become final; the aforesaid court which rendered said decision had jurisdiction over the
subject matter and the parties; the decision was on the merits; and there is an identity of parties,
subject matter and causes of action between the present action and the case before the Regional
Trial Court of Quezon City, Branch 216.
The Court also notes that while the plaintiffs here alleged separate causes of action in the instant
complaint, they are actually using the very same grounds they have brought before Branch 216 of
this Court to support their claim to annul the foreclosure proceedings. The validity of the real estate
mortgage is again being assailed to ask for the annulment of the foreclosure proceedings conducted
over the mortgaged property. It must be remembered that the validity of the real estate mortgage
has been sustained by the decision in Civil Case No. 94-18962 which decision has already attained
finality. The test of identity of causes of action lies not in the form of an action but on whether the
same evidence would support and establish the former and present causes of action. Plaintiffs
cannot avoid the application of res judicata by simply varying the form of their action or by adopting a
different method in presenting it.14
The Spouses Torres appealed to the CA, which, in similar fashion, ruled that res judicata had
already set in, the dispositive portion of which reads:
WHEREFORE, the Order dated December 27, 2001 is hereby AFFIRMED and the appeal is
DISMISSED. Costs against appellants.
SO ORDERED.15

The Spouses Torres then filed a Motion for Reconsideration16 dated August 30, 2004, which was,
however, denied by the CA in the Resolution17 dated January 18, 2005.
Hence, herein petition, with the Spouses Torres raising the following assignment of errors, to wit:
A. THE COURT OF APPEALS GRAVELY ERRED WHEN IT IGNORED THAT THE CAUSE
OF ACTION IN CIVIL CASE NO. Q-99-38781 AROSE MUCH LATER THAN THE CAUSE
OF ACTION IN CIVIL CASE NO. Q-94-18962. HENCE, FORUM SHOPPING AND RES
JUDICATA DO NOT APPLY.
A-1. ASSUMING WITHOUT ADMITTING THAT RES JUDICATA EXISTS IN THIS
CASE, THE SAME WILL NOT BE HONORED IF ITS APPLICATION WOULD
CONSTITUTE A SACRIFICE OF JUSTICE IN FAVOR OF TECHNICALITY;
B. THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO RULE THAT THE
CAUSES OF ACTION CANNOT BE IDENTICAL IF THE CAUSE OF ACTION IN ONE
AROSE AFTER THE JUDGMENT IN THE OTHER;
C. THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO RULE THAT THE
EXTRAJUDICIAL FORECLOSURE OF MORTGAGE INSTITUTED BY PRIVATE
RESPONDENT AMPARO MEDINA CONTRAVENES THE EQUITABLE PRINCIPLE OF
UNJUST ENRICHMENT CODIFIED UNDER ARTICLE 22 OF THE NEW CIVIL CODE, AND
WOULD AMOUNT TO DOUBLE RECOVERY EVEN AS THE B.P. BLG. 22 VIOLATIONS
ARE STILL PENDING IN THE METROPOLITAN TRIAL COURT OF QUEZON CITY;
D. THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO RULE THAT THE
PRIVATE RESPONDENT AMPARO MEDINA HAS ELECTED HER REMEDY WHEN SHE
SUED PETITIONER FERNANDO TORRES ON A B.P. BLG. 22 VIOLATION, AND
ENGAGED THE SERVICES OF A PRIVATE PROSECUTOR TO PROSECUTE THE SAME.
THE FILING OF THE B.P. BLG. 22 VIOLATION BARS AND EXCLUDES THE REMEDY OF
FORECLOSURE OF MORTGAGE.18
The petition is not meritorious.
At the crux of the controversy is the determination of whether or not res judicata bars the filing of
Civil Case No. Q-99-38781.
Civil Case No. Q-94-18962 vis-a-vis Civil Case No. Q-99-38781
As borne from the records of the case, the Spouses Torres first instituted Civil Case No. Q-94-18962
before the RTC of Quezon City, Branch 216, which, among others, prayed for the nullity of the real
estate mortgage, dated December 20, 1993.
On March 7, 1997, the RTC issued a Decision19 dismissing the complaint thereby upholding the
validity of the real estate mortgage, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered:
1. DISMISSING the plaintiffs complaint for lack of merit;

2. Ordering the plaintiffs, spouses Fernando Torres and Irma Torres, to pay defendant
Amparo Medina, the sum of FIFTY THOUSAND (P50,000.00) PESOS as and by way of
attorneys fees and to pay the costs of suit.
SO ORDERED.20
The Spouses Torres appealed said Decision to the CA.
On February 18, 1998, the CA issued a Resolution21 dismissing the appeal, the dispositive portion of
which reads:
WHEREFORE, IN VIEW OF ALL THE FOREGOING, the appellants motion for extension of time to
file appellants brief is hereby DENIED for being filed out of time. The appeal is hereby DISMISSED.
SO ORDERED.22
The Spouses Torres then filed a Motion for Reconsideration, which was, however, denied by the CA
in the Resolution23 dated August 6, 1998.
Aggrieved, the Spouses Torres then sought relief from this Court.
On July 5, 1999, the Courts First Division issued a Resolution24 denying the petition of the Spouses
Torres. On August 16, 1999, the First Division issued another Resolution25 denying the motion for
reconsideration. On September 7, 1999, an Entry of Judgment26 was rendered.
Res judicata literally means "a matter adjudged; a thing judicially acted upon or decided; a thing or
matter settled by judgment."27 Res judicata lays the rule that an existing final judgment or decree
rendered on the merits, and without fraud or collusion, by a court of competent jurisdiction, upon any
matter within its jurisdiction, is conclusive of the rights of the parties or their privies, in all other
actions or suits in the same or any other judicial tribunal of concurrent jurisdiction on the points and
matters in issue in the first suit.28
The elements of res judicata are:
(1) the judgment sought to bar the new action must be final;
(2) the decision must have been rendered by a court having jurisdiction over the subject
matter and the parties;
(3) the disposition of the case must be a judgment on the merits; and
(4) there must be as between the first and second action identity of parties, subject matter,
and causes of action.29
In their petition, the Spouses Torres do not dispute the presence of the first three elements. They,
however, dispute the presence of the last element, specifically arguing that the evidence necessary
to establish the cause of action in Civil Case No. Q-99-38781 is different from that of Civil Case No.
Q-94-18962. The Spouses Torres conclude that the evidence is not identical so as to place the
causes of action within the prohibition based on res judicata.30
This Court is not persuaded.

To reiterate, in Civil Case No. Q-99-38781, the Spouses Torres raised the following causes of
action:
a) the December 20, 1993 Deed of Real Estate Mortgage does not contain a period or term;
hence, performance of the obligation has not yet become due as there is a need for judicial
determination of the period or term;
b) the June 28, 1994 Statement of Account is not the loan contemplated by law; therefore, it
cannot serve as basis to foreclose extrajudicially the mortgage;
c) the credit transaction is either void or unenforceable due to breach of Section 6(a) of
Republic Act No. 3765, otherwise known as "The Truth in Lending Act";
d) Since appellee sued appellants for violation of Batas Pambansa Blg. 22, there could arise
a situation of double recovery of damages which is proscribed by law. If the extrajudicial
foreclosure will be allowed and if appellants will be made to pay the amount of the checks
subject of the criminal suit under B.P. Blg. 22, it would result in the unjust enrichment of
appellee.31
This Court has previously employed various tests in determining whether or not there is identity of
causes of action as to warrant the application of the principle of res judicata. One test of identity is
the "absence of inconsistency test" where it is determined whether the judgment sought will be
inconsistent with the prior judgment. If no inconsistency is shown, the prior judgment shall not
constitute a bar to subsequent actions.32
This Court finds that the first three causes of action inevitably deal with the validity of the real estate
mortgage. Although the Spouses Torres do not admit it, the conclusion is certain in that any
affirmative relief that this Court may grant on said causes of action would affect the validity of the
real estate mortgage; an issue which could no longer be revived, as the same has been settled.
In Civil Case No. Q-94-18962, the Spouses Torres already assailed the validity of the Real Estate
Mortgage dated December 20, 1993 as evidenced from the reliefs sought for by them, to wit:
WHEREFORE, premises considered, it is respectfully prayed of this Honorable Court to render
judgment as follows:
1. Declaring the x x x Deed of Real Estate Mortgage dated 20 December 1993 (Exhibit E)
void;
2. Declaring that x x x all RCBC checks issued pursuant to the Deed of Real Estate
Mortgage dated 20 December 1993 as likewise void;
3. Directing defendant Register of Deeds of Quezon City to cancel the annotation of the real
estate mortgage in TCT No. RT-61056; x x x 33
In dismissing the Complaint, the RTC decision in Civil Case No. 94-18962 was categorical in
upholding the validity of the instrument, to wit:
The contention that the Deed of Real Estate Mortgage dated December 20, 1993 should also be
annulled being the fruit of the previous voidable contracts deserves scant consideration. The same
was found to have the essential elements of a valid contract x x x.

xxxx
Corollarily, the Deed of Real Estate Mortgage, dated December 20, 1993, being perfectly valid,
defendant Amparo Medina has the right to its registration in her favor. x x x 34
It bears stressing that the doctrine of res judicata actually embraces two different concepts: (1) bar
by former judgment and (b) conclusiveness of judgment.
The second concept conclusiveness of judgment states that a fact or question which was in
issue in a former suit and was there 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 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.35
Based on the foregoing, the validity of the real estate mortgage can no longer be attacked, more so
because the decision in Civil Case No. Q-94-18962 has become final and Entry of Judgment has
already been entered in our books.
It therefore goes without saying that the foreclosure of the mortgage is a right given to Medina as the
same is embodied in the Deed of Real Estate Mortgage, to wit:
xxxx
That it is further understood that if the MORTGAGOR shall well and truly perform the obligation
above contracted then this Mortgage shall be null and void; otherwise, it shall remain in full force and
effect and may be foreclosed extrajudicially under Act 3135 as amended.36
Thus, this Court finds no error in the decisions of the lower court and the appellate court declaring
that there exists, in fact, res judicata. As succinctly put in FELS Energy, Inc. v. Province of
Batangas,37 res judicata, as a ground for dismissal, is based on two grounds, namely:
(1) public policy and necessity, which makes it to the interest of the State that there should be an
end to litigation --- republicae ut sit litium; and (2) the hardship on the individual of being vexed twice
for the same cause --- nemo debet bis vexari et eadem causa. A conflicting doctrine would subject
the public peace and quiet to the will and dereliction of individuals and prefer the regalement of the
litigious disposition on the part of suitors to the preservation of the public tranquility and happiness.38
Anent the fourth cause of action in Civil Case No. Q-99-38781, this Court finds that the Spouses
Torres had already raised, in Civil Case No. 94-18962, the fact that eleven (11) counts of Batas
Pambansa Bilang (B.P. Blg.) 22 violations are pending with Branch 36, Metropolitan Trial Court
(MeTC), Quezon City.39 Thus, the RTC is correct in its observation that res judicata lies, as the Rizal
Commercial Banking Corporation (RCBC) checks referred to in the complaint in Civil Case No. Q99-38781 are the very same documents subject of Civil Case No. Q-94-18962.40

The foregoing findings notwithstanding, the Spouses Torres contend that the election of Medina from
sue them for violation of B.P Blg. 22 bars Medina from the remedy of foreclosure of mortgage. The
Spouses Torres, citing Bank of America NT & SA v. American Realty Corporation (Bank of
America),41 thus argue:
x x x the remedies available to the mortgage creditor are deemed alternative and not cumulative.
Notably, an election of one remedy operates as a waiver of the other. For this purpose, a remedy is
deemed chosen upon the fling of the suit for collection or upon the filing of the complaint in an action
for foreclosure of mortgage, pursuant to the provision of Rule 68 of the 1997 Rules of Civil
Procedure. As to extrajudicial foreclosure, such remedy is deemed elected by the mortgage creditor
upon filing of the petition not with any court of justice but with the Office of the Sheriff of the province
where the sale is to be made, in accordance with the provisions of Act No. 3135, as amended by Act
No. 4118.42
The argument of the Spouses Torres is misplaced. The doctrine found in Bank of America, and in
related cases, finds no application to the case at bar, as the filing of a B.P. Blg. 22 case is not the
"collection suit" contemplated by law and jurisprudence, which bars a mortgagee from later on
electing to foreclose the mortgaged property.
Section 1 of B.P. Blg. 22 provides:
Section 1. Checks without sufficient funds. - Any person who makes or draws and issues any check
to apply on account or for value, knowing at the time of issue that he does not have sufficient funds
in or credit with the drawee bank for the payment of such check in full upon its presentment, which
check is subsequently dishonored by the drawee bank for insufficiency of funds or credit or would
have been dishonored for the same reason had not the drawer, without any valid reason, ordered
the bank to stop payment, shall be punished by imprisonment of not less than thirty days but not
more than one (1) year or by a fine of not less than but not more than double the amount of the
check which fine shall in no case exceed Two Hundred Thousand Pesos, or both such fine and
imprisonment at the discretion of the court.
It bears stressing that in Que v. People,43 this Court stated that the clear intention of the framers of
B.P. Blg. 22 is to make the mere act of issuing a worthless check malum prohibitum. In prosecutions
for violation of B.P. Blg. 22 therefore, prejudice or damage is not a pre-requisite for conviction. In the
later case of People v. Nitafan,44 this Court ruled that the agreement surrounding the issuance of the
checks need not be first looked into since the law has clearly provided that the mere issuance of any
kind of check, regardless of the intent of the parties, i.e., whether the check is intended merely to
serve as a guarantee or deposit, but which check is subsequently dishonored, makes the person
who issued the check liable. The intent of the law is to curb the proliferation of worthless checks as a
means of payment of obligations.
That B.P. Blg .22 is not the "collection suit" contemplated by law can be seen by the fact that the law
seeks to punish the mere issuance of a "bum" check notwithstanding the presence of damage or
prejudice to the offended party.
Lastly, the Spouses Torres also argue that the equitable principle of unjust enrichment bars the
extrajudicial foreclosure of the mortgage, in the wise:
If private respondent Amparo Medina were to be allowed the extrajudicial foreclosure that she
caused to be conducted, and eventually owned the properties covered by TCT No. RT-61056
(354973) and at the same time is awarded the sum of Php 4,730,000.00 (including interest) in the
eleven (11) counts of B.P. Blg. 22 violations now pending at the Metropolitan Trial Court of Quezon

City, Branch 36, then she would have recovered twice the same loan transaction that took place in
the first quarter of 1993. Private respondent Amparo Medina will be twice richer.45
Again, these arguments are misplaced. In Lazaro v. Court of Appeals,46 notwithstanding petitioner
Lazaros claim that she had already paid her obligation, this Court still found her liable for violation of
B.P Blg. 22, thus:
That the obligation of Marlyn Lazaro to complainant Chua has been extinguished by the conveyance
by the former of her car to Chua does not also justify the cancellation of the indemnity awarded. It
should be noted that BP 22 provides that a fine of not less than but not more than double the amount
of the dishonored check may be imposed by the court. In the case of Esler vs. Ledesma, this Court
stated that a fine is a pecuniary punishment imposed by a lawful tribunal upon a person convicted of
a crime. Clearly, the fine provided for in BP 22 was intended as an additional penalty for the act of
issuing a worthless check. This is the only logical conclusion, since the law does not require that
there be damage or prejudice to the individual complainant by reason of the issuance of the
worthless check.47
There can be no double compensation as the indemnity award is distinct from the underlying
obligation of the check. Thus, a person guilty of violating B.P Blg. 22 may be subject to imprisonment
or a fine at the discretion of the court and the fact that the underlying obligation has been paid is of
no moment. There will be instances, of course, that the court will also order the guilty party to pay
the face value of the check if the underlying obligation has not yet been satisfied; however, the same
will not apply to the case at bar, as Medina has already been compensated for the loan after
foreclosing the mortgage. The Spouses Torres will, therefore, only have to pay a fine or suffer
imprisonment if found guilty in their pending cases for violation of B.P. Blg. 22 subject to the rule of
preference embodied in Supreme Court Administrative Circular 12-2000.48
The Spouses Torres argue that res judicata should not apply if it will sacrifice justice to
technicality.49 Indeed, as cited by the Spouses Torres, this Court has on occasion disregarded the
application of res judicata, however, this Court finds that the same consideration should not be given
in herein petition.
In the first place, the Spouses Torres only filed their complaint in Civil Case No. Q-99-38781 after
more than two years had already lapsed from the time the ex-officio sheriff sold the property in
question at public auction. The foreclosure proceeding was an action in rem, and therefore, the
Spouses Torres cannot feign knowledge thereof. More importantly, the Spouses Torres were not
completely left without any remedy as they still had the right of redemption, which expired one year
from and after the date of the registration of the Certificate of Sale. In the absence of evidence to the
contrary, this Court must assume that no attempt to redeem the property was undertaken by the
Spouses Torres and that they simply allowed their right and remedy to lapse by their inaction.
In addition, the Spouses Torres have already lost their right to question the validity of the real estate
mortgage, for most part due to the negligence of their counsel.50 More importantly, the decision
upholding the validity of the real estate mortgage is already final; hence, the same can no longer be
questioned in another proceeding by simply varying the form of the action, or adopting a different
method of presenting their case.51
WHEREFORE, premises considered, the petition is DENIED. The August 30, 2004 Decision and
January 18, 2005 Resolution of the Court of Appeals in CA-G.R. CV No. 75847 are AFFIRMED.
SO ORDERED.

G.R. No. 169116

March 28, 2007

BANK OF THE PHILIPPINE ISLANDS, Petitioner,

vs.
SPS. IRENEO M. SANTIAGO and LIWANAG P. SANTIAGO, CENTROGEN, INC., REPRSENTED
BY EDWIN SANTIAGO, Respondent.
DECISION
CHICO-NAZARIO, J.:
Before this Court is a Petition for Review on Certiorari filed by petitioner Bank of the Philippine
Islands (BPI) seeking to reverse and set aside the Decision1 of the Court of Appeals dated 3 March
2005 and its Resolution2dated 28 July 2005 affirming the Order3 of the Regional Trial Court (RTC) of
Santa Cruz, Laguna, Branch 91, dated 20 March 2003 enjoining the extrajudicial foreclosure sale of
a parcel of land covered by Transfer Certificate of Title (TCT) No. T-131382 registered under the
name of Spouses Ireneo and Liwanag Santiago. The dispositive portion of the Court of Appeals
Decision reads:
WHEREFORE, premises considered, the petition is DISMISSED. The assailed orders dated March
20, 2003 and August 25, 2003 of the respondent court in Civil Case No. SC-4259 are hereby
AFFIRMED.
Petitioner BPI is a banking institution duly organized and existing as such under the Philippine laws.
Private respondent Centrogen, Inc. (Centrogen) is a domestic corporation engaged in
pharmaceutical business, duly organized and existing as such under the Philippine laws and
represented in this act by its President, Edwin Santiago, son of private respondents Spouses Ireneo
M. Santiago and Liwanag P. Santiago.
On several occasions, private respondent Centrogen obtained loans from Far East Bank and Trust
Company (FEBTC) in different amounts, the total of which reached the sum P4,650,000.00, as
evidenced by promissory notes executed by Edwin Santiago.
As a security for a fraction of the loan obligation, Ireneo M. Santiago executed a Real Estate
Mortgage over a parcel of land covered by TCT No. T-131382 registered under his name and
located at Sta Cruz, Laguna, with an area of 2,166 square meters (subject property).4 The mortgage
secured the principal loan in the amount ofP490,000.00. Later on, the same property secured
another loan obligation in the amount of P1,504,280.00.5
Subsequently, however, Centrogen incurred default and therefore the loan obligation became due
and demandable.
Meanwhile, FEBTC merged with the BPI with the latter as the surviving corporation. As a result, BPI
assumed all the rights, privileges and obligations of FEBTC.
On 13 December 2002, BPI filed an Extra-Judicial Foreclosure of Real Estate Mortgage6 over the
subject property before the RTC of Sta. Cruz, Laguna. In order to validly effect the foreclosure, a
Notice of Sale was issued by the Provincial Sheriff on 21 January 2003. On the same day, the
Spouses Santiago were served with the copy of the Notice of Sale.

Upon receipt of the Notice of Sale, the Spouses Santiago and Centrogen filed a Complaint seeking
the issuance of a Temporary Restraining Order and Preliminary and Final Injunction and in the
alternative, for the annulment of the Real Estate Mortgage with BPI.
The complaint alleged that the initial loan obligation in the amount of P490,000.00, including interest
thereon was fully paid as evidenced by Union Bank Check No. 0363020895 dated 20 December
2001 in the amount ofP648,521.51 with BPI as payee. Such payment notwithstanding, the amount
was still included in the amount of computation of the arrears as shown by the document of ExtraJudicial Foreclosure of Real Estate Mortgage filed by the latter.
In addition, the Spouses Santiago and Centrogen asseverated that the original loan agreement was
for the amount of Five Million Pesos. Such amount will be supposedly utilized to finance the
squalene project of the company. However, after the amount of Two Million Pesos was released and
was accordingly used in funding the erection of the structural details of the project, FEBTC, in gross
violation of the agreement, did not release the balance of Three Million Pesos that will supposedly
finance the purchase of machineries and equipment necessary for the operation. As a result, the
squalene project failed and the company groped for funds to pay its loan obligations.
On 27 February 2003, BPI was summoned to file and serve its Answer to the Complaint filed by
Spouses Santiago and Centrogen. On the same day, the Sheriff served a copy of the summons to
the Branch Manager of BPI Sta. Cruz, Laguna Branch, as evidenced by the Sheriffs Return,7 which
reads:
SHERIFFS RETURN
Respectfully returned the original summons and order dated February 2003 with the information that
on February 27, 2003 the undersigned served the copy of summons together with the corresponding
copy of complaint and its Annexes and order dated February 27, 2003, to defendants (sic) Bank of
the Philippine Islands (BPI) thru the manager Ms. Glona Ramos at Sta. Cruz Laguna Branch, at Sta.
Cruz, Laguna, to defendant Sheriff Marcial Opinion at the Office of the Provincial Sheriff of Laguna,
R.T.C. (sic) Sta. Cruz, Laguna as shown by their signatures on the original summons and order.
Instead of filing an Answer, BPI filed a Motion to Dismiss8 the complaint on the ground of lack of
jurisdiction over the person of the defendant and other procedural infirmities attendant to the filing of
the complaint. In its Motion to Dismiss, BPI claimed that the Branch Manager of its Sta. Cruz,
Laguna Branch, was not one of those authorized by Section 11, Rule 14 of the Revised Rules of
Court9 to receive summons on behalf of the corporation. The summons served upon its Branch
Manager, therefore, did not bind the corporation. In addition, it was alleged that the complaint filed
by the Spouses Santiago and Centrogen lacked a Certificate of Non-Forum Shopping10 and was
therefore dismissible. Finally, BPI underscored that the person who verified the complaint was not
duly authorized by Centrogens Board of Directors to institute the present action as required by
Section 23 of the Corporation Code.11
In an Order12 dated 28 February 2003, the RTC denied the Motion to Dismiss and emphasized that
the nature of the case merited its removal from the purview of Section 11, Rule 14 of the Revised
Rules of Court. Based on the provisions of Section 5, Rule 58 of the Revised Rules of Court,13 the
RTC declared that the instant Order is still valid and binding despite non-compliance with the
provisions of Section 11, Rule 14 of the same Rules. The dispositive portion of the Order reads:
WHEREFORE, premises considered, the motion to dismiss is hereby denied because of the
presence of extreme urgency wherein the Court has jurisdiction to act on the TRO despite lack of

proper service of summons. Let the instant case be called for summary hearing on plaintiffs
application for temporary restraining order.
After summary hearing on the Spouses Santiago and Centrogens application for Temporary
Restraining Order, the RTC, on 28 February 2003, issued an Order14 enjoining the Provincial Sheriff
from proceeding with the extra-judicial foreclosure sale of the subject property until the propriety of
granting a preliminary injunction is ascertained. The decretal portion of the said Order reads:
Wherefore, premises considered, the Court orders that pending the resolution of the plaintiffs prayer
for preliminary injunction:
1. The Defendant Provincial Sheriff, his deputies, employees, and agents are enjoined from
proceeding with the threatened extra-judicial foreclosure sale (to be conducted today) of the
parcel of land owned by plaintiffs Spouses Ireneo M. Santiago and Liwanag P. Santiago
located in (sic) Brgy. Sto. Angel Norte, Sta. Cruz, Laguna.
2. The application for a preliminary injunction is hereby set for hearing on March 10, 2003 at
1:30 pm. Further, the plaintiffs are hereby ordered to immediately file a bond amounting to
One Hundred Thousand Pesos (P100,000.00) to answer for damages that Defendant Bank
may sustain if the court should finally decide that the plaintiffs are not entitled thereto.
On 6 March 2003, the RTC ordered the service of new summons to BPI in accordance with the
provisions of the Revised Rules of Court. The aforesaid Order reads:
To avoid further argument as regards the proper service of summons to Defendant Bank, the Branch
Clerk of Court is hereby directed to issue another summons and serve copy of the same together
with the complaint and its annexes to any of the officers of the Defendant Bank as provided by the
rules of civil procedure.15
In compliance with the aforesaid Order, the Branch Clerk of Court caused the issuance of a new
summons on 7 March 2003, a copy of which was served upon the Office of the Corporate Secretary
of the BPI on 11 March 2003, as evidenced by the Sheriffs Return,16 which reads:
Sheriffs Return
This is to Certify that on March 11, 2003 the undersigned caused the service of summons together
with the copy of complaint and its annexes to defendant Bank of the Philippine Islands (BPI) and
receive (sic) by the Office of the Corporate Secretary dated March 11, 2003 at the BPI Building
Ayala Avenue, Makati City.
On 20 March 2003, the RTC issued an Order granting the application for the issuance of a Writ of
Preliminary Injunction filed by the Spouses Santiago and Centrogen. It enjoined the extra-judicial
foreclosure sale of the subject property pending resolution of the main action for Annulment of Real
Estate Mortgage or until further orders of the trial court. In issuing the Writ of Preliminary Injunction,
it rationalized that to allow the foreclosure without hearing the main case would work injustice to the
complainant and since Spouses Santiago and Centrogen claimed that the first loan in the amount
of P490,000.00 secured by the property subject of the extra-judicial sale had long been paid by
Centrogen through a Union Bank Check No. 0363020895 presented as evidence. The dispositive
part of the Order reads:

Wherefore, premises considered, the Court orders that pending the resolution of the main action for
the annulment of the real estate mortgage, etc., and /or order from this Court:
1. The Defendant Provincial Sheriff, his deputies, employees, and agents are enjoined from
proceeding with the threatened extra-judicial foreclosure sale of the parcel of land covered
by TCT No. T-131382 owned by Plaintiffs Spouses Ireneo M. Santiago and Liwanag P.
Santiago located in Brgy. Sto. Angel, Sta. Cruz, Laguna.
2. The bond in the amount of One Hundred Thousand (P100,000.00) Pesos ordered by the
Court to be posted by the plaintiffs to answer for damages that defendant bank may sustain if
the court should finally decide that the plaintiffs are entitled thereto still stands.
The Motion for Reconsideration filed by BPI was denied by the RTC in its Order17 dated 25 August
2003.
Aggrieved, BPI filed a Petition for Certiorari before the Court of Appeals seeking the reversal of the
adverse Orders of the RTC.
On 3 March 2005, the Court of Appeals rendered a Decision18 affirming the assailed Orders of the
RTC and dismissing the Petition for Certiorari filed by BPI. The Court of Appeals declared that
jurisdiction was acquired upon the service of new summons. Before the assailed Orders were
therefore issued, the RTC properly acquired jurisdiction over the person of BPI.
Undaunted, BPI filed this instant Petition for Review on Certiorari under Rule 45 of the Revised
Rules of Court. For our resolution are the following issues:
I.
WHETHER OR NOT THE RTC ACQUIRED JURISDICTION OVER THE PERSON OF BPI WHEN
THE ORIGINAL SUMMONS WAS SERVED UPON THE BRANCH MANAGER OF ITS STA. CRUZ,
LAGUNA BRANCH.
II.
WHETHER OR NOT THE RTC COMMITTED A GRAVE ABUSE OF DISCRETION IN ISSUING
THE WRIT OF PRELIMINARY INJUNCTION.
BPI vehemently insists that the court a quo did not acquire jurisdiction over its person and
consequently, the Order issued by the RTC, permanently enjoining the foreclosure sale, was
therefore void and does not bind BPI.
We are not persuaded.
The pertinent provision of the Revised Rules of Court provides:
Sec. 11, Rule 14. Service upon domestic private juridical entity When the defendant is a
corporation, partnership or association organized under the laws of the Philippines with a juridical
personality service may be made on the president, managing partner, general manager, corporate
secretary, treasurer or in-house counsel.

Basic is the rule that a strict compliance with the mode of service is necessary to confer jurisdiction
of the court over a corporation. The officer upon whom service is made must be one who is named
in the statute; otherwise, the service is insufficient.19 The purpose is to render it reasonably certain
that the corporation will receive prompt and proper notice in an action against it or to insure that the
summons be served on a representative so integrated with the corporation that such person will
know what to do with the legal papers served on him.
Applying the aforestated principle in the case at bar, we rule that the service of summons on BPIs
Branch Manager did not bind the corporation for the branch manager is not included in the
enumeration of the statute of the persons upon whom service of summons can be validly made in
behalf of the corporation. Such service is therefore void and ineffectual.
However, upon the issuance and the proper service of new summons on 11 March 2003, before
the Writ of Preliminary Injunction was issued on 20 March 2003, whatever defect attended the
service of the original summons, was promptly and accordingly cured.
It bears stressing, that on 7 March 2003, the Branch Clerk of Court issued a new summons which
was properly served upon BPIs Corporate Secretary on 11 March 2003, as evidenced by the
Sheriffs Return.
The subsequent service of summons was neither disputed nor was it mentioned by BPI except in a
fleeting narration of facts and therefore enjoys the presumption that official duty has been regularly
performed.20 The Process Servers Certificate of Service of Summons is a prima facie evidence of
facts set out in that certificate.21
Inarguably, before the Order granting the application for Writ of Preliminary Injunction was issued,
the RTC already acquired jurisdiction over the person of BPI by virtue of the new summons validly
served on the Corporate Secretary. The fact that the original summons was invalidly served is of no
moment since jurisdiction over BPI was subsequently acquired by the service of a new summons.
In the case of The Philippine American Life and General Insurance Company v. Brevea,[22] we
ruled:
A case should not be dismissed simply because an original summons was wrongfully
served. It should be difficult to conceive, for example, that when a defendant personally appears
before a Court complaining that he had not been validly summoned, that the case against him
should be dismissed. An alias summons can be actually served on said defendant.
xxxx
x x x It is not pertinent whether the summons is designated as an "original" or an "alias"
summons as long as it has adequately served its purpose. What is essential is that the
summons complies with the requirements under the Rules of Court and it has been duly
served on the defendant together with the prevailing complaint. x x x Moreover, the second
summons was technically not an alias summons but more of a new summons on the amended
complaint. It was not a continuation of the first summons considering that it particularly referred to
the amended complaint and not to the original complaint. (Emphases supplied.)
BPIs lamentation, at every turn, on the invalidity of the service of summons made on the Branch
Manager and its deliberate neglect to acknowledge the fact that a new summons was accordingly
served on its Corporate Secretary, is an attempt in futility to mislead this Court into believing that the

court a quo never acquired jurisdiction over the case and thus the issuance of the Writ of Preliminary
Injunction was invalid.
We are not drawn into petitioners sophistry.
In the case of G&G Trading Corporation v. Court of Appeals,23 this Court made the following
pronouncements:
Although it may be true that the service of summons was made on a person not authorized to
receive the same in behalf of the petitioner, nevertheless since it appears that the summons and
complaint were in fact received by the corporation through its said clerk, the Court finds that there
was substantial compliance with the rule on service of summons. x x x The need for speedy justice
must prevail over a technicality.
In explaining the test on the validity of service of summons, Justice Florenz Regalado24 stressed that
substantial justice must take precedence over technicality and thus stated:
The ultimate test on the validity and sufficiency on service of summons is whether the same and the
attachments thereto where ultimately received by the corporation under such circumstances that no
undue prejudice is sustained by it from the procedural lapse and it was afforded full opportunity to
present its responsive pleadings. This is but in accord with the entrenched rule that the ends of
substantial justice should not be subordinated to technicalities and, for which purpose, each case
should be examined within the factual milieu peculiar to it.
Prescinding from the above, we deem it best to underscore that there is no hard and fast rule
pertaining to the manner of service of summons. Rather, substantial justice demands that every
case should be viewed in light of the peculiar circumstances attendant to each.
In any event, as it is glaringly evident from the records of the case that jurisdiction over the person of
the defendant was validly acquired by the court by the valid service of a new summons before the
writ of preliminary injunction was issued and guided by jurisprudential pronouncements heretofore
adverted to, we hold that the proceedings attendant to the issuance of the writ of preliminary
injunction were regular.
Having settled this issue necessitates us to look into the propriety of the issuance of the Writ of
Preliminary Injunction.
BPI asserts that the RTC gravely abused its discretion in granting the Spouses Santiago and
Centrogens application for the Writ of Preliminary Injunction in the absence of showing that the latter
have a clear legal right sought to be protected.
Again, we do not agree.
An injunction is a preservative remedy for the protection of ones substantive right or interest; it is not
a cause of action by itself but merely a provisional remedy, an adjunct to the main suit.25 The
purpose of injunction is to prevent threatened or continuous irremediable injury to some of the
parties before their claims can be thoroughly studied and educated. Its sole aim is to preserve
the status quo until the merits of the case is heard fully.26
The issuance of the writ of preliminary injunction as an ancillary or preventive remedy to secure the
rights of a party in a pending case is entirely within the discretion of the court taking cognizance of

the case, the only limitation being that the discretion should be exercised based upon the grounds
and in a manner provided by law. Before a writ of preliminary injunction may be issued, the following
requisites must be complied with: (1) a right inesse or a clear or unmistakable right to be protected;
(2) violation of that right; and (3) that there is an urgent and permanent act and urgent necessity for
the writ to prevent serious damage.27
Verily, the aforestated requisites for the issuance of the Writ of Preliminary Injunction have been fully
complied with. The right of Spouses Santiago over the property clearly exists since they are the
registered owners thereof, and the existence of a Real Estate Mortgage does not undermine the
right of the absolute owner over the property. The violation of such right is manifest in the threatened
foreclosure proceedings commenced by BPI amidst the claim that the principal obligation has been
fully paid. Finally, to allow the foreclosure of the subject property without first calibrating the evidence
of opposing parties pertaining to the action for the annulment of mortgage would cause irreparable
damage to the registered owner.
The right of BPI to foreclose the subject property is under dispute upon the claim interposed by the
Spouses Santiago and Centrogen that payments for the loan secured by the property subject to the
threatened foreclosure proceedings were already made. To support their assertions, Spouses
Santiago and Centrogen presented as evidence Union Bank Check No. 0363020895 dated 20
December 2001 in the amount of P648,521.51, with BPI as payee. From this, we can deduce that
the right of BPI to foreclose the subject property is questionable. We cannot therefore allow the
foreclosure of the Real Estate Mortgage to proceed without first setting the main case for hearing so
that based on the evidence presented by the parties, the trial court can determine who between
them has the better right over the subject property. To rule otherwise would cause a grave
irreparable damage to the Spouses Santiago and Centrogen.
Parenthetically, this petition affords us the opportunity to once again reiterate the rule that the
issuance of the writ of preliminary injunction rests entirely within the discretion of the court and
generally not interfered with except in case of manifest abuse. The assessment and evaluation of
evidence in the issuance of the writ of preliminary injunction involve finding of facts ordinarily left to
the trial court for its conclusive determination.28
In Toyota Motor Phils. Corp. Workers Association v. Court of Appeals,29 citing Ubanes, Jr. v. Court
of Appeals,30we made the following declaration:
[T]he matter of the issuance of writ of a preliminary injunction is addressed to the sound discretion of
the trial court, unless the court commits a grave abuse of discretion. Grave abuse of discretion in the
issuance of writs of preliminary injunction implies a capricious and whimsical exercise of judgment
that is equivalent to lack of jurisdiction or whether the power is exercised in an arbitrary or despotic
manner by reason of passion, prejudice or personal aversion amounting to an evasion of positive
duty or to a virtual refusal to perform the duty enjoined, or to act at all in contemplation of law. x x x.
In the case at bar, after summary hearing and evaluation of evidence presented by both contending
parties, the RTC ruled that justice would be better served if status quo is preserved until the final
determination of the merits of the case, to wit:
For purposes of preliminary injunction, between the evidence presented by [the spouses Santiago
and Centrogen] and [BPI], the evidence of the former carries more weight. The evidence of [the
spouses Santiago and Centrogen] established that to allow extra-judicial foreclosure without hearing
the main action for the annulment of mortgage would probably work injustice to the plaintiffs and
would probably violate their rights over the subject lot.

Furthermore, this case involves complicated issues that must be resolved first before altering the
status quo. The issue of payment and non-payment of the loan and the issue of breach of the
second loan directly affect the rights of the plaintiffs over the subject lot. Hence, the last actual,
peaceable, uncontested status of the parties before the controversy must be preserved.
The unyielding posture of BPI that its right to foreclose the subject property was violated since it is
permanently barred from proceeding with the auction sale is patently erroneous. The RTC, in the
exercise of its discretion merely intended to preserve the status quo while the principal action for the
annulment of mortgage is heard with the end view that no irreversible damage may be caused to the
opposing parties. We find nothing whimsical, arbitrary or capricious in the exercise of the RTC of its
discretion.
WHEREFORE, IN VIEW OF THE FOREGOING, the instant petition is DENIED. The Decision dated
3 March 2005, and the Resolution dated 28 July 2005, rendered by the Court of Appeals in CA-G.R.
SP No. 80643, are herebyAFFIRMED. Costs against petitioner.
SO ORDERED.

G.R. No. 175109

August 6, 2008

PARAMOUNT INSURANCE CORP., petitioner,

vs.
A.C. ORDOEZ CORPORATION and FRANKLIN SUSPINE, respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review on certiorari seeks to annul and set aside the July 17,
2006 Decision1 of the Court of Appeals in CA-G.R. SP No. 93073, which
reversed and set aside the September 21, 2005 Decision of the Regional Trial
Court of Makati City, Branch 582 and reinstated the August 25, 2000 and
September 26, 2000 Orders of the Metropolitan Trial Court of Makati City,
Branch 66,3 which admitted respondents Answer and set the case for pretrial, as well as its October 12, 2006 Resolution4 denying the Motion for
Reconsideration.
Petitioner Paramount Insurance Corp. is the subrogee of Maximo Mata, the
registered owner of a Honda City sedan involved in a vehicular accident with a
truck mixer owned by respondent corporation and driven by respondent
Franklin A. Suspine on September 10, 1997, at Brgy. Panungyanan, Gen.
Trias, Cavite.
On February 22, 2000, petitioner filed before the Metropolitan Trial Court of
Makati City, a complaint for damages against respondents. Based on the

Sheriffs Return of Service, summons remained unserved on respondent

Suspine,5 while it was served on respondent corporation and received by
Samuel D. Marcoleta of its Receiving Section on April 3, 2000.6
On May 19, 2000, petitioner filed a Motion to Declare Defendants in Default;
however, on June 28, 2000, respondent corporation filed an Omnibus Motion
(And Opposition to Plaintiffs Motion to Declare Defendant in Default) alleging
that summons was improperly served upon it because it was made to a
secretarial staff who was unfamiliar with court processes; and that the
summons was received by Mr. Armando C. Ordoez, President and General
Manager of respondent corporation only on June 24, 2000. Respondent
corporation asked for an extension of 15 days within which to file an Answer.
Pending resolution of its first motion to declare respondents in default,
petitioner filed on June 30, 2000 a Second Motion to Declare Defendants in
Default.
On July 26, 2000, respondent corporation filed a Motion to Admit Answer
alleging honest mistake and business reverses that prevented them from
hiring a lawyer until July 10, 2000, as well as justice and equity. The Answer
with Counterclaim specifically denied liability, averred competency on the part
of respondent Suspine, and due selection and supervision of employees on
the part of respondent corporation, and argued that it was Maximo Mata who
was at fault.
On August 25, 2000, the Metropolitan Trial Court of Makati City, Branch 66,
issued an Order admitting the answer and setting the case for pre-trial, thus:
When this case was called for the hearing of Motion, the Courts attention was
brought to the Answer filed by the defendant.
WHEREFORE, in order to afford the defendants a day in Court,
defendants answer is admitted and the pre-trial is set for October 17,
2000 at 8:30 in the morning.
SO ORDERED.
Petitioner moved for reconsideration but it was denied. Thus, it filed a petition
for certiorari and mandamus with prayer for preliminary injunction and
temporary restraining order before the Regional Trial Court of Makati City.
Petitioner claimed that the Metropolitan Trial Court gravely abused its
discretion in admitting the answer which did not contain a notice of hearing,

contrary to Sections 4 and 5, Rule 15 of the Rules of Court. It also assailed

respondent corporations Omnibus Motion for being violative of Section 9,
Rule 15 because while it sought leave to file an answer, it did not attach said
answer but only asked for a 15-day extension to file the same. Petitioner also
averred that assuming the Omnibus Motion was granted, the Motion to Admit
Answer and the Answer with Counterclaim were filed 26 days beyond the
extension period it requested.
On October 16, 2000, the Regional Trial Court of Makati City, Branch 58
issued a temporary restraining order, and on May 22, 2001, issued a writ of
preliminary injunction. On September 21, 2005, the Regional Trial Court
rendered a Decision7 granting the petition, thus:
WHEREFORE, premises considered, the petition for certiorari and
mandamus is hereby GRANTED. The Orders of public respondent
dated August 25, 2000 and September 26, 2000 are hereby SET
ASIDE. The writ of preliminary injunction issued by this Court on May
22, 2001 is hereby made permanent.
The case is hereby remanded to the court a quo to act on petitioners
(plaintiffs) "Second motion to declare defendants in Default" dated June
29, 2000.
SO ORDERED.
Respondent corporation moved for reconsideration but it was denied; hence, it
appealed to the Court of Appeals which rendered the assailed Decision dated
July 17, 2006, thus:
By and large, We find no abuse of discretion committed by the first level
court in the contested orders.
IN VIEW OF ALL THE FOREGOING, the instant appeal is
hereby GRANTED, the challenged RTC Decision dated September 21,
2005 is hereby REVERSED and SET ASIDE, and a new one
entered REINSTATING the Orders dated August 25, 2000 and
September 26, 2000 of the Metropolitan Trial Court of Makati City. No
pronouncement as to cost.
SO ORDERED.

Petitioners motion for reconsideration was denied. Hence, the instant petition
raising the following issues:
I. WHETHER THERE WAS VALID SERVICE OF SUMMONS ON
DEFENDANT AC ORDONEZ CONSTRUCTION CORPORATION.
II. WHETHER A PARTY WITHOUT CORPORATE EXISTENCE MAY
FILE AN APPEAL.
III. WHETHER THIS COURT ERRED IN NOT CALLING THE PARTIES
INTO MEDIATION.
IV. WHETHER THERE WAS FRAUD COMMITTED BY THE
PETITIONER IN ITS PLEADINGS.
The petition lacks merit.
Section 11, Rule 14 of the Rules of Court provides:
SEC. 11. Service upon domestic private juridical entity. When the
defendant is a corporation, partnership or association organized under
the laws of the Philippines with a juridical personality, service may be
made on the president, managing partner, general manager, corporate
secretary, treasurer, or in-house counsel.
Section 11, Rule 14 sets out an exclusive enumeration of the officers who can
receive summons on behalf of a corporation. Service of summons to someone
other than the corporations president, managing partner, general manager,
corporate secretary, treasurer, and in-house counsel, is not valid.
The designation of persons or officers who are authorized to receive
summons for a domestic corporation or partnership is limited and more clearly
specified in the new rule. The phrase agent, or any of its directors has been
conspicuously deleted.8 Moreover, the argument of substantial compliance is
no longer compelling. We have ruled that the new rule, as opposed to Section
13, Rule 14 of the 1964 Rules of Court, is restricted, limited and exclusive,
following the rule in statutory construction thatexpressio unios est exclusio
alterius. Had the Rules of Court Revision Committee intended to liberalize the
rule on service of summons, it could have done so in clear and concise
language. Absent a manifest intent to liberalize the rule, strict compliance with
Section 11, Rule 14 of the 1997 Rules of Civil Procedure is required.9

Thus, the service of summons to respondent corporations Receiving Section

through Samuel D. Marcoleta is defective and not binding to said corporation.
Moreover, petitioner was served with a copy of the Sheriffs Return which
states:
3. MANNER OF SERVICE: DULY SERVED thru SAMUEL D.
MARCOLETA (receiving section-A.C. Ordonez Construction Corp.,) and
who was authorized by A. C. Ordonez Construction Corp., management
to receive such court processes.
On its face, the return shows that the summons was received by an employee
who is not among the responsible officers enumerated by law. Such being
invalid, petitioner should have sought the issuance and proper service of new
summons instead of moving for a declaration of default.
Consequently, the motions for declaration of default filed on May 19, 2000 and
June 30, 2000 were both premature.
Thus, there was no grave abuse of discretion when the Metropolitan Trial
Court admitted respondent corporations Answer. Although it was filed beyond
the extension period requested by respondent corporation, however, Sec. 11,
Rule 11 grants discretion to the trial court to allow an answer or other pleading
to be filed after the reglementary period, upon motion and on such terms as
may be just. An answer should be admitted where it had been filed before the
defendant was declared in default and no prejudice is caused to plaintiff. The
hornbook rule is that default judgments are generally disfavored.10
There is likewise no merit in petitioners claim that respondent corporation
lacks legal personality to file an appeal. Although the cancellation of a
corporations certificate of registration puts an end to its juridical personality,
Sec. 122 of the Corporation Code, however provides that a corporation whose
corporate existence is terminated in any manner continues to be a body
corporate for three years after its dissolution for purposes of prosecuting and
defending suits by and against it and to enable it to settle and close its
affairs.11 Moreover, the rights of a corporation, which is dissolved pending
litigation, are accorded protection by law pursuant to Sec. 145 of the
Corporation Code, to wit:
Section 145. Amendment or repeal. No right or remedy in favor of or
against any corporation, its stockholders, members, directors,
trustees, or officers, nor any liability incurred by any such corporation,

stockholders, members, directors, trustees, or officers, shall be

removed or impaired either by the subsequent dissolution of said
corporation or by any subsequent amendment or repeal of this Code or
of any part thereof. (Emphasis ours)
Dissolution or even the expiration of the three-year liquidation period should
not be a bar to a corporations enforcement of its rights as a corporation.12
Finally, the decision to refer a case to mediation involves judicial discretion.
Although Sec. 9 B, Rule 141 of the Rules of Court, as amended by A. M. No.
04-2-04-SC, requires the payment of P1,000.00 as mediation fee upon the
filing of a mediatable case, petition, special civil action, comment/answer to
the petition or action, and the appellees brief, the final decision to refer a case
to mediation still belongs to the ponente, subject to the concurrence of the
other members of the division.
As clarified by A. M. No. 04-3-15 (Revised Guidelines for the Implementation
of Mediation in the Court of Appeals) dated March 23, 2004:
II. SELECTION OF CASES
Division Clerks of Court, with the assistance of the Philippine Mediation
Center (PMC), shall identify the pending cases to be referred to
mediation for the approval either of the Ponente for completion of
records, or, the Ponente for decision. Henceforth, the petitioner or
appellant shall specify by writing or by stamping on the right side of
the caption of the initial pleading (under the case number) that the case
is mediatable.
Any party who is interested to have the appealed case
mediated may also submit a written request in any form to the Court
of Appeals. If the case is eligible for mediation, the Ponente, with the
concurrence of the other members of the Division, shall refer the case to
the PMC. (Emphasis ours)
Thus, for cases pending at the time the said guidelines were issued, the
Division Clerks of Court, with the assistance of the Philippine Mediation
Center, shall identify the cases to be referred to mediation. Thereafter, the
petitioner or appellant shall specify, by writing or by stamping on the right side
of the caption of the initial pleading (under the case number), that the case is
mediatable. Further, any party who is interested to have the appealed case
mediated may also submit a "written request in any form to the Court of

Appeals." In the instant case, petitioner failed to write or stamp the notation
"mediatable" on its Memorandum of Appeal. Moreover, it failed to submit any
written request for mediation.
WHEREFORE, the petition is DENIED. The assailed Decision of the Court of
Appeals dated July 17, 2006 reinstating the August 25, 2000 and September
26, 2000 Orders of the Metropolitan Trial Court of Makati City, Branch 66
which admitted respondent corporations Answer and set the case for pre-trial,
as well as the Resolution dated October 12, 2006 denying the motion for
reconsideration, are AFFIRMED.
SO ORDERED.
G.R. No. 144662

October 13, 2003

SPOUSES EFREN MASON and DIGNA MASON, petitioners,

vs.
THE HONORABLE COURT OF APPEALS and COLUMBUS PHILIPPINES BUS
CORPORATION, respondents.
DECISION
QUISUMBING, J.:
This petition for review assails the decision,1 dated May 12, 2000, of the Court of Appeals and its
resolution2dated August 25, 2000 in CA-G.R. SP No. 54649 denying petitioners motion for
reconsideration. The decision set aside the decision3 of the Regional Trial Court of Pasay City,
Branch 112, in Civil Case No. 98-1567 and directed said court to conduct further proceedings on the
complaint for rescission of lease contract.
The antecedent facts of the case, as found by the Court of Appeals, are as follows:
Petitioners spouses Efren and Digna Mason owned two parcels of land located along Epifanio delos
Santos Avenue in Pasay City. On March 30, 1993, petitioners and private respondent Columbus
Philippines Bus Corporation (hereafter Columbus) entered into a lease contract, under which
Columbus undertook to construct a building worth ten million pesos (P10,000,000) at the end of the
third year of the lease. Because private respondent failed to comply with this stipulation, the
petitioners on November 13, 1998, filed a complaint for rescission of contract with damages against
private respondent before the Regional Trial Court of Pasay City, docketed as Civil Case No. 981567. Summons was served upon private respondent through a certain Ayreen Rejalde. While the
receiving copy of the summons described Rejalde as a secretary of Columbus, the sheriffs return
described Rejalde as a secretary to the corporate president, duly authorized to receive legal
processes.
Private respondent failed to file its answer or other responsive pleading, hence petitioners filed a
motion to declare private respondent in default. The motion was granted and petitioners were
allowed to present evidence ex-parte. Thereafter, the case was submitted for decision.
On April 22, 1999, the trial court rendered its decision whose dispositive portion reads:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and
against defendant declaring the contract of lease rescinded, terminated and cancelled, and ordering
defendant:
1. To pay plaintiffs the amount of P10 Million which is the value of the building which
defendant failed to construct on the leased properties, as and by way [of] actual damages;
2. To pay plaintiffs the amount of P63,862.57 beginning November 1998 until defendant and
the sub-lessee vacate the leased property by way of reasonable compensation for the use of
the properties;
3. and all other persons and entities claiming rights under it, to surrender possession to
plaintiffs and to vacate the leased premises;
4. to pay plaintiffs the amount of P300,000.00 as and by way of moral damages;
5. to pay plaintiffs the amount of P100,000.00 as and by way of exemplary damages;
6. to pay plaintiffs attorneys fees in the amount of P100,000.00; and
7. to pay the cost of suit.
SO ORDERED.4
That decision became final on May 12, 1999. The following day, private respondent filed a motion to
lift order of default, which was opposed by petitioners. The trial court ordered the parties to submit
their respective memoranda. However, without waiting for the same, the trial court on May 26, 1999,
denied the motion to lift order of default, thus:
It appearing that the decision rendered by this Court on April 27, 1999 became final and executory
on May 12, 1999, defendants Motion to Lift Order of Default is hereby DENIED. Concomitant
thereto, plaintiffs Motion for Execution is hereby GRANTED.
The Order of this Court on May 21, 1999 allowing the parties to file their respective memoranda
within ten (10) days from May 21, 1999 is hereby revoked and set aside, since the incidents can be
resolved based on the records.
WHEREFORE, let a writ of execution issue to enforce and implement the final and executory
decision rendered by this Court on April 27, 1999.
SO ORDERED.5
Private respondent filed a motion for reconsideration, which was denied. Undaunted, private
respondent filed a manifestation and motion to lift the writ of execution. It suffered the same fate as
the motion for reconsideration for being dilatory. The branch sheriff was directed to proceed with the
enforcement of the decision.
Private respondent appealed to the Court of Appeals, which ruled in its favor, thus:
WHEREFORE, the petition is GRANTED; the decision in Civil Case No. 98-1567 and all the
proceedings therein, including the order of default and writ of execution, are SET ASIDE. The court a

quo is ORDERED to require petitioner to file its answer and thereafter to conduct further appropriate
proceedings with reasonable dispatch.
SO ORDERED.6
The Court of Appeals held that the trial court erred when it denied private respondents motion to lift
order of default. The appellate court pointed out that private respondent was not properly served with
summons, thus it cannot be faulted if it failed to file an Answer. Section 11, 7 Rule 14 of the 1997
Rules of Civil Procedure requires that service of summons upon domestic private juridical entity shall
be made through its president, managing partner, general manager, corporate secretary, treasurer
or in-house counsel. Since service upon private respondent was made through a certain Ayreen
Rejalde, a mere filing clerk in private respondents office, as evidenced by the latters employment
record, such service cannot be considered valid. Consequently, the subsequent proceedings,
including the order of default, judgment by default and its execution, were also invalid because the
trial court did not acquire jurisdiction over private respondent. Besides, judgments by default are not
favored, especially so when there is a prima facie showing that the defaulting party has a meritorious
defense, which in this case was grounded on the contract of lease sued upon, said the Court of
Appeals.
Petitioner filed a motion for reconsideration, but to no avail. Hence, this petition for review averring
that the Court of Appeals erred in:
I. HOLDING THAT THERE WAS NO VALID SERVICE OF SUMMONS UPON PRIVATE
RESPONDENT COLUMBUS PHILIPPINES BUS CORPORATION
II. NOT HOLDING THAT THERE WAS VALID SERVICE OF SUMMONS CONFORMABLY WITH
THE SUBSTANTIAL COMPLIANCE RULE.
III. HOLDING THAT WITH THE ADOPTION OF SECTION 11, RULE 14 OF THE 1997 RULES
OF CIVIL PROCEDURE, THE SUBSTANTIAL COMPLIANCE RULE NO LONGER APPLIES.
IV. NOT HOLDING THAT JURISDICTION WAS ACQUIRED OVER PRIVATE RESPONDENT
COLUMBUS PHILIPPINES BUS CORPORATION AND THAT ITS MOTION TO LIFT ORDER OF
DEFAULT LACKS MERIT.8
The issues in this case may be succinctly stated as follows:
a. Whether there was valid service of summons on private respondent for the trial court to
acquire jurisdiction, and
b. Whether private respondents motion to lift order of default was in order.
On the first issue, petitioners contend that while Section 11, Rule 14 of the 1997 Rules of Civil
Procedure clearly specifies the persons authorized to receive summons on behalf of a private
juridical entity, said provision did not abandon or render inapplicable the substantial compliance rule.
Petitioners cite Millenium Industrial Commercial Corporation v. Tan,9 and maintain that this Court, by
referring to E.B Villarosa & Partner Co., Ltd. v. Judge Benito,10 effectively ruled that said provision is
the statement of the general rule on service of summons upon corporation and the substantial
compliance rule is the exception. Petitioners claim that this Court, in an array of cases, upheld the
substantial compliance rule when it allowed the validity of the service of summons on the
corporations employee other than those mentioned in the Rule where said summons and complaint

were in fact seasonably received by the corporation from said employee. Petitioners insist that
technicality must not defeat speedy justice.
Petitioners stress that even though the summons was received by a mere filing clerk in private
respondents corporation, there was substantial compliance with Section 11, Rule 14 because the
summons actually reached private respondent. This can be gleaned from private respondents
motion to lift order of default where private respondent did not question the validity of the service of
summons but explained in paragraph three thereof that its failure to answer the complaint was due
to its impression that the case would not be pursued by petitioners because the corporation already
made payments to them.11
From said averment, according to petitioners, private respondent in effect admitted that it received
the summons. Notwithstanding this, private respondent did not file its answer to the complaint, said
the petitioners. This is tantamount to negligence which the court cannot tolerate, petitioners
conclude. There being valid service of summons, the Regional Trial Court acquired jurisdiction over
private respondent, according to petitioners.
Petitioners further contend that the Court of Appeals reliance on E.B Villarosa & Partner Co., Ltd. v.
Judge Benito,12 in denying their motion for reconsideration was misplaced, because the factual
milieu in said case was different from that in the instant case. In Villarosa, according to them, there
was no showing of actual receipt by the defendant corporation of the summons while in this case,
private respondent actually received the summons.
Private respondent counters that nowhere in the Millenium case did this Court expressly state or
remotely imply that we have not abandoned the doctrine of substantial compliance. Private
respondent claims that petitioners misquoted the portion of the Millenium decision where this Court
cited the Villarosa case, to make it appear that the Villarosa ruling, which provides an interpretation
of Section 11, Rule 14 of the 1997 Rules of Civil Procedure, states the general rule on the service of
summons upon corporations where the substantial compliance rule is the exception. Private
respondent avers that what this Court discussed in the Millenium case was the rule on service of
summons under the old Rules of Court prior to the promulgation and effectivity of the 1997 Rules of
Civil Procedure. The Millenium case held that as a general rule, service upon one who is not
enumerated in Section 13,13 Rule 14 of the then Rules of Court is invalid, according to private
respondent. An exception is when the summons is actually received by the corporation, which
means that there was substantial compliance with the rule. Private respondent stresses that since
the exception referred to the old rule, it cannot be made to apply to the new rule, which clearly
specifies and limits the persons authorized to receive the summons in behalf of the corporation.
1a\^/phi 1.net

Neither can petitioners rely on Millenium to justify their theory, adds private respondent, because at
the time the complaint in this case was filed with the trial court, the 1997 Rules of Civil Procedure
were already in effect. The case law applicable in the instant case, contends private respondent, is
Villarosa which squarely provides for the proper interpretation of the new rule on the service of
summons upon domestic corporation, thus:
The designation of persons or officers who are authorized to accept summons for a domestic
corporation or partnership is now limited and more clearly specified in Section 11, Rule 14 of the
1997 Rules of Civil Procedure. The rule now states "general manager" instead of only "manager";
"corporate secretary" instead of "secretary"; and "treasurer" instead of "cashier." The phrase "agent,
or any of its directors" is conspicuously deleted in the new rule.14
According to private respondent, service through Ayreen Rejalde, a mere filing clerk of private
respondent and not one of those enumerated above, is invalid.

We find private respondents submission on this issue meritorious.

The question of whether the substantial compliance rule is still applicable under Section 11, Rule 14
of the 1997 Rules of Civil Procedure has been settled in Villarosa which applies squarely to the
instant case. In the said case, petitioner E.B. Villarosa & Partner Co. Ltd. (hereafter Villarosa) with
principal office address at 102 Juan Luna St., Davao City and with branches at 2492 Bay View Drive,
Tambo, Paraaque, Metro Manila and Kolambog, Lapasan, Cagayan de Oro City, entered into a
sale with development agreement with private respondent Imperial Development Corporation. As
Villarosa failed to comply with its contractual obligation, private respondent initiated a suit for breach
of contract and damages at the Regional Trial Court of Makati. Summons, together with the
complaint, was served upon Villarosa through its branch manager at Kolambog, Lapasan, Cagayan
de Oro City. Villarosa filed a Special Appearance with Motion to Dismiss on the ground of improper
service of summons and lack of jurisdiction. The trial court denied the motion and ruled that there
was substantial compliance with the rule, thus, it acquired jurisdiction over Villarosa. The latter
questioned the denial before us in its petition for certiorari. We decided in Villarosas favor and
declared the trial court without jurisdiction to take cognizance of the case. We held that there was no
valid service of summons on Villarosa as service was made through a person not included in the
enumeration in Section 11, Rule 14 of the 1997 Rules of Civil Procedure, which revised the Section
13, Rule 14 of the 1964 Rules of Court. We discarded the trial courts basis for denying the motion to
dismiss, namely, private respondents substantial compliance with the rule on service of summons,
and fully agreed with petitioners assertions that the enumeration under the new rule is restricted,
limited and exclusive, following the rule in statutory construction that expressio unios est exclusio
alterius. Had the Rules of Court Revision Committee intended to liberalize the rule on service of
summons, we said, it could have easily done so by clear and concise language. Absent a manifest
intent to liberalize the rule, we stressed strict compliance with Section 11, Rule 14 of the 1997 Rules
of Civil Procedure.
1awphi1.nt

Neither can herein petitioners invoke our ruling in Millenium to support their position for said case is
not on all fours with the instant case. We must stress that Millenium was decided when the 1964
Rules of Court were still in force and effect, unlike the instant case which falls under the new rule.
Hence, the cases15 cited by petitioners where we upheld the doctrine of substantial compliance must
be deemed overturned by Villarosa, which is the later case.
At this juncture, it is worth emphasizing that notice to enable the other party to be heard and to
present evidence is not a mere technicality or a trivial matter in any administrative or judicial
proceedings. The service of summons is a vital and indispensable ingredient of due process.16 We
will deprive private respondent of its right to present its defense in this multi-million peso suit, if we
disregard compliance with the rules on service of summons.
On the second issue, petitioners claim that private respondents motion to lift order of default was not
in order for it was filed late, contrary to the provision in sub-paragraph (b), Section 3,17 Rule 9 of the
1997 Rules of Civil Procedure, which requires filing of the motion after notice but before judgment.
Also, the motion was (a) not under oath; (b) did not show the fraud, accident, mistake or excusable
neglect that caused private respondents failure to answer; and (c) did not show private respondents
meritorious defense.
Private respondent, in turn, argues that since service upon it was invalid, the trial court did not
acquire jurisdiction over it. Hence, all the subsequent proceedings in the trial court are null and void,
including the order of default. This renders the second issue now moot and academic.
We find merit in private respondents submissions. Since we have ruled that service of summons
upon private respondent through its filing clerk cannot be considered valid, it necessarily follows

therefore that the Regional Trial Court of Pasay City did not acquire jurisdiction over private
respondent.18 Consequently, all the subsequent proceedings held before it, including the order of
default, are null and void.19 As private respondent points out, the second issue has become moot
and academic.
WHEREFORE, the instant petition is DENIED. The questioned decision, as well as the resolution, of
the Court of Appeals in CA-G.R. SP No. 54649 are AFFIRMED. Costs against petitioners.
SO ORDERED.
G.R. No. 131724

February 28, 2000

MILLENIUM INDUSTRIAL COMMERCIAL CORPORATION, petitioner,

vs.
JACKSON TAN, respondent.
MENDOZA, J.:
In December 1994, Millenium Industrial Commercial Corporation, petitioner herein, executed a Deed
of Real Estate Mortgage1 over its real property covered by TCT No. 24069 in favor of respondent
Jackson Tan. The mortgage was executed to secure payment of petitioner's indebtedness to
respondent in the amount of P2 million, without monthly interest, but which, at maturity date on June
10, 1995, was payable in the amount of P4 million.
1w phi 1.nt

On November 9, 1995, respondent filed against petitioner a complaint for foreclosure of mortgage in
the Regional Trial Court, Branch 6, Cebu City. On November 21, 1995, summons and a copy of the
complaint were served upon petitioner through a certain Lynverd Cinches, described in the sheriff's
return, dated November 23, 1995, as "a Draftsman, a person of sufficient age and (discretion)
working therein, he is the highest ranking officer or Officer-in-Charge of defendant's Corporation, to
receive processes of the Court."2
Petitioner moved for the dismissal of the complaint on the ground that there was no valid service of
summons upon it, as a result of which the trial court did not acquire jurisdiction over it. Petitioner
invoked Rule 14, 13 of the 1964 Rules of Court and contended that service on Lynverd Cinches, as
alleged in the sheriff's return, was invalid as he is not one of the authorized persons on whom
summons may be served and that, in fact, he was not even its employee.3
Petitioner also sought the dismissal of the complaint against it on the ground that it had satisfied its
obligation to respondent when the latter opted to be paid in shares of stock under the following
stipulation in the mortgage contract:
That in the remote possibility of failure on the part of the mortgagor to pay the mortgage
obligation and interest in cash, the MORTGAGEE at his option may demand that payment be
made in the form of shares of stock of Millenium Industrial Commercial Corporation totaling
at least 4,000,000 shares.4
Petitioner further prayed for "other reliefs just and equitable under the premises."5
On December 15, 1995, the trial court denied petitioner's Motion to Dismiss. Its order stated:

This refers to the Motion to Dismiss, dated December 4, 1995, by defendant anchored on the
following grounds:
1. That the Court had not acquired jurisdiction over the person of the defendant corporation
because summons was served upon a person who is not known to or an employee of the
defendant corporation.
2. That the obligation sought to be collected was already paid and extinguished.
By interposing the second ground, the defendant has availed of an affirmative defense on
the basis of which the Court has to hear and receive evidence. For the Court to validly
decide the said plea of the defendant it necessarily had to acquire jurisdiction over the
person of the defendant. Thus, defendant is considered to have then abandoned its first
ground and is deemed to have voluntarily submitted itself to the jurisdiction of the Court. It is
a legal truism that voluntary appearance cures the defect of the summons, if any. The
defendant's filing of the motion to dismiss by pleading therein the second ground amount to
voluntary appearance and it indeed cured the defeat.
Wherefore, Motion to Dismiss is hereby denied for lack of merit.6
Petitioner moved for reconsideration, but its motion was denied by the trial court in its order, dated
January 16, 1996, for failure of petitioner to raise any new ground. Petitioner then filed a petition
for certiorari in the Court of Appeals, assailing the aforesaid orders of the trial court.
On September 18, 1997, the Court of Appeals dismissed the petition.7 The appellate court ruled that
although petitioner denied Lynverd Cinches' authority to receive summons for it, its actual receipt of
the summons could be inferred from its filing of a motion to dismiss, hence, the purpose for issuing
summons had been substantially achieved. Moreover, it was held, by including the affirmative
defense that it had already paid its obligation and praying for other reliefs in its Motion to Dismiss,
petitioner voluntarily submitted to the jurisdiction of the court.8
Hence, this petition for review. Petitioner raises the following issues:
I. WHETHER OR NOT SERVICE OF SUMMONS UPON A MERE DRAFTSMAN WHO IS
NOT ONE OF THOSE UPON WHOM SUMMONS MAY BE SERVED IN CASE OF A
DEFENDANT CORPORATION AS MENTIONED IN THE RULES IS VALID.
II. WHETHER OR NOT THE INCLUSION OF ANOTHER AFFIRMATIVE RELIEF IN A
MOTION TO DISMISS ABANDONS AND WAIVES THE GROUND OF LACK OF
JURISDICTION OVER THE PERSON OF THE DEFENDANT THEREIN ALSO PLEADED
UNDER PREVAILING LAW AND JURISPRUDENCE.
III. WHETHER OR NOT THERE IS A LEGAL GROUND TO GRANT PETITIONER'S
MOTION TO DISMISS THE COMPLAINT BELOW.
First. Petitioner objects to the application of the doctrine of substantial compliance in the service of
summons for two reasons: (1) the enumeration of persons on whom service of summons on a
corporation may be effected in Rule 14, 13, is exclusive and mandatory; and (2) even assuming
that substantial compliance is allowed, its alleged actual receipt of the summons is based on an
unfounded speculation because there is nothing in the records to show that Lynverd Cinches
actually turned over the summons to any of the officers of the corporation.9Petitioner contends that it

was able to file a motion to dismiss only because of its timely discovery of the foreclosure suit
against it when it checked the records of the case in the trial court.
The contention is meritorious.
Summons is the means by which the defendant in a case is notified of the existence of an action
against him and, thereby, the court is conferred jurisdiction over the person of the defendant.10 If the
defendant is a corporation, Rule 14, 13 requires that service of summons be made upon the
corporation's president, manager, secretary, cashier, agent, or any of its directors.11 The rationale of
the rule is that service must be made on a representative so integrated with the corporation sued as
to make it a priori presumable that he will realize his responsibilities and know what he should do
with any legal papers received by him.12
Petitioner contends that the enumeration in Rule 14, 13 is exclusive and that service of summons
upon one who is not enumerated therein is invalid. This is the general rule.13 However, it is settled
that substantial compliance by serving summons on persons other than those mentioned in the
above rule may be justified. In G & G Trading Corporation v. Court of Appeals,14 we ruled that
although the service of summons was made on a person not enumerated in Rule 14, 13, if it
appears that the summons and complaint were in fact received by the corporation, there is
substantial compliance with the rule as its purpose has been attained.
In Porac Trucking, Inc. v. Court of Appeals,15 this Court enumerated the requisites for the application
of the doctrine of substantial compliance, to wit: (a) there must be actual receipt of the summons by
the person served,i.e., transferring possession of the copy of the summons from the Sheriff to the
person served; (b) the person served must sign a receipt or the sheriff's return; and (c) there must be
actual receipt of the summons by the corporation through the person on whom the summons was
actually served.16 The third requisite is the most important for it is through such receipt that the
purpose of the rule on the service of summons is attained.
In this case, there is no dispute that the first and second requisites were fulfilled. With respect to the
third, the appellate court held that petitioner's filing of a motion to dismiss the foreclosure suit is proof
that it received the copy of the summons and the complaint. There is, however, no direct proof of this
or that Lynverd Cinches actually turned over the summons to any of the officers of the corporation.
In contrast, in our cases applying the substantial compliance rule,17 there was direct evidence, such
as the admission of the corporation's officers, of receipt of summons by the corporation through the
person upon whom it was actually served. The question is whether it is allowable to merely infer
actual receipt of summons by the corporation through the person on whom summons was served.
We hold that it cannot be allowed. For there to be substantial compliance, actual receipt of summons
by the corporation through the person served must be shown. Where a corporation only learns of the
service of summons and the filing of the complaint against it through some person or means other
than the person actually served, the service of summons becomes meaningless. This is particularly
true in the present case where there is serious doubt if Lynverd Cinches, the person on whom
service of summons was effected, is in fact an employee of the corporation. Except for the sheriff's
return, there is nothing to show that Lynverd Cinches was really a draftsman employed by the
corporation.
Respondent casts doubt on petitioner's claim that it came to know about the summons and the
complaint against it only after it learned that there was a pending foreclosure of its mortgage. There
is nothing improbable about this claim. Petitioner was in default in the payment of its loan. It had
received demand letters from respondent. Thus, it had reason to believe that a foreclosure suit
would be filed against it. The appellate court was, therefore, in error in giving weight to respondent's

claims. Receipt by petitioner of the summons and complaint cannot be inferred from the fact that it
filed a Motion to Dismiss the case.
Second. We now turn to the issue of jurisdiction by estoppel. Both the trial court and the Court of
Appeals held that by raising the affirmative defense of payment and by praying for other reliefs in its
Motion to Dismiss, petitioner in effect waived its objection to the trial court's jurisdiction over it. We
think this is error.
Our decision in La Naval Drug Corporation v. Court of Appeals18 settled this question. The rule prior
to La Navalwas that if a defendant, in a motion to dismiss, alleges grounds for dismissing the action
other than lack of jurisdiction, he would be deemed to have submitted himself to the jurisdiction of
the court.19 This rule no longer holds true. Noting that the doctrine of estoppel by jurisdiction must be
unequivocal and intentional, we ruled in La Naval:
Jurisdiction over the person must be seasonably raised, i.e., that it is pleaded in a motion to
dismiss or by way of an affirmative defense. Voluntary appearance shall be deemed a waiver
of this defense. The assertion, however, of affirmative defenses shall not be construed as an
estoppel or as a waiver of such defense.20
Third. Finally, we turn to the effect of petitioner's prayer for "other reliefs" in its Motion to Dismiss.
In De Midgely v.Fernandos,21 it was held that, in a motion to dismiss, the allegation of grounds other
than lack of jurisdiction over the person of the defendant, including a prayer "for such other reliefs
as" may be deemed "appropriate and proper" amounted to voluntary appearance. This, however,
must be deemed superseded by the ruling in La Navalthat estoppel by jurisdiction must be
unequivocal and intentional. It would be absurd to hold that petitioner unequivocally and intentionally
submitted itself to the jurisdiction of the court by seeking other reliefs to which it might be entitled
when the only relief that it can properly ask from the trial court is the dismissal of the complaint
against it.
1wphi 1.nt

WHEREFORE, the decision of the Court of Appeals is REVERSED and the complaint against
petitioner is DISMISSED.
SO ORDERED.
G.R. No. 163785

December 27, 2007

KKK FOUNDATION, INC., Petitioner,

vs.
HON. ADELINA CALDERON-BARGAS, in her capacity as Presiding Judge of the REGIONAL
TRIAL COURT, Branch 78 of Morong, Rizal, SHERIFF IV SALES T. BISNAR, THE REGISTER
OF DEEDS FOR MORONG, RIZAL, and IMELDA A. ANGELES, Respondents.
DECISION
QUISUMBING, J.:
In this petition for review under Rule 45 of the Rules of Court, petitioner urges this Court to reverse
and set aside the Decision1 dated November 28, 2003, and the Resolution2 dated May 26, 2004, of
the Court of Appeals in CA-G.R. SP No. 73965.
The antecedent facts are as follows:

On March 1, 2002, petitioner KKK Foundation, Inc. filed a complaint for Annulment of Extra-judicial
Foreclosure of Real Estate Mortgage and/or Nullification of Sheriffs Auction Sale and Damages with
Prayer for the Issuance of Temporary Restraining Order and/or Writ of Preliminary
Injunction.3 Petitioner alleged that: (1) the auction sale was made with fraud and/or bad faith since
there was no public bidding; (2) the sheriff did not post the requisite Notice of Sheriffs Sale; (3) the
petition for extrajudicial foreclosure was fatally defective since it sought to foreclose properties of two
different entities; (4) the foreclosed properties were awarded and sold to Imelda A. Angeles for an
inadequate bid of only P4,181,450; and (5) the auction sale involved eight parcels of land covered by
individual titles but the same were sold en masse.
On March 7, 2002, Judge Adelina Calderon-Bargas issued a temporary restraining order preventing
Angeles from consolidating her ownership to the foreclosed properties. On even date, petitioner and
Angeles executed a Compromise Agreement wherein petitioner agreed to pay Angeles the bid price
of the eight parcels of land within 20 days. The parties then filed a Motion to Approve Compromise
Agreement.4
On April 1, 2002, petitioner filed an Urgent Ex-Parte Motion to Recall Compromise Agreement5 since
the other property owner and other trustees of petitioner were not consulted prior to the signing of
the agreement. Angeles opposed the motion.
On May 2, 2002, Judge Calderon-Bargas issued an Order,6 which reads in part:
xxxx
Record shows that the Urgent Ex-Parte Motion to Recall Compromise Agreement and Motion to
Approve Compromise Agreement both failed to comply with Sec[s]. 4 and 5, Rule 15 of the Civil
Procedure. Both proceedings have no specific date of hearing. The reason why the Motion to
Approve Compromise Agreement up to now has not yet been acted upon was that it has no date of
hearing.
WHEREFORE, the Urgent Ex-Parte Motion to Recall Compromise Agreement and the Motion to
[Approve] Compromise Agreement are considered mere scrap[s] of paper.
SO ORDERED.
In its Decision7 dated June 28, 2002, the trial court approved the Compromise Agreement, as
follows:
The parties, duly assisted by their respective counsels, submitted before this Court a Compromise
Agreement, as follows:
xxxx
[1.] The plaintiff shall pay to the defendant, Imelda Angeles, the amount of P5,500,000.00
representing the bid price for all the eight titles (TCT Nos. M-95417, 95419, 95418, 95420, 95421,
50889, 50890 and 50893) subject of the auction sale dated March 7, 2001 plus whatever taxes
[and/or] assessments and expenses of the public auction as prescribed under Act 3135, within
twenty (20) days from the signing of this compromise agreement. Said payment shall be considered
full settlement of all obligations stated under that Real Estate Mortgage, dated July 15, 1997and
that Deed of Assumption of Mortgage dated August 11, 1999.

2. Upon the payment of the afore-stated amount, the defendant shall make, sign, execute and
deliver to the plaintiff a Certificate of Deed of Redemption of all the above titles, and shall surrender
and deliver to the plaintiff all the eight titles mentioned above. The defendant shall also make, sign,
execute and deliver to the plaintiff a Deed of Cancellation of Mortgage annotated at the back of all
the eight titles above-mentioned. The defendant shall also return to the plaintiff all checks issued by
the plaintiff to the defendant as payment of its obligations.
xxxx
Finding the Compromise Agreement quoted above to be not contrary to law, morals, good customs
and public policy, the same is hereby APPROVED.
xxxx
Angeles then moved for the issuance of a writ of execution. On September 9, 2002, the trial court
required petitioner to comment on the motion within ten (10) days.8 On October 3, 2002, the trial
court directed the Clerk of Court to issue a writ of execution.9 On the same date, the trial court
received petitioners Motion for Extension of Time to File Comment with Entry of Appearance which
was denied on October 10, 2002.10 Petitioner then moved for reconsideration of the October 3, 2002
Order.
Petitioner came to the Court of Appeals via petition for certiorari alleging that Judge CalderonBargas committed grave abuse of discretion amounting to lack or excess of jurisdiction when: (1)
she issued the October 3, 2002 and the October 10, 2002 Orders even before petitioner could file its
comment; (2) she granted the Motion for Issuance of Writ of Execution although it lacked the
requisite notice of hearing; and (3) the writ of execution changed the tenor of the decision dated
June 28, 2002.
In dismissing the petition, the appellate court ruled that petitioner was not deprived of due process
when the trial court issued the October 3, 2002 and the October 10, 2002 Orders since it was given
sufficient time to file its comment. The appellate court did not rule on the second and third issues
after noting that petitioners motion for reconsideration of the October 3, 2002 Order had not yet
been resolved by the trial court. It did not resolve the issues even after the trial court denied
petitioners motion for reconsideration on December 12, 2003,11ratiocinating that the trial courts
denial of petitioners motion for reconsideration did not operate to reinstate the petition because at
the time it was filed, petitioner had no cause of action.
In the instant petition before us, petitioner alleges that the appellate court seriously erred:
I.
IN NOT HOLDING THAT PETITIONER WAS DENIED THE REQUISITE PROCEDURAL
DUE PROCESS WHEN PUBLIC RESPONDENT ISSUED THE QUESTIONED ORDERS OF
OCTOBER 3, 2002 AND OCTOBER 10, 2002 EVEN BEFORE PETITIONER COULD FILE
ITS COMMENT AND IN FURTHER ISSUING THE WRIT OF EXECUTION EVEN BEFORE
THE RESOLUTION OF THE PETITIONERS MOTION FOR RECONSIDERATION OF THE
ORDER OF OCTOBER 3, 2002.
II.

 IN NOT HOLDING THAT PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF

DISCRETION WHEN IT GRANTED PRIVATE RESPONDENTS MOTION FOR ISSUANCE
OF WRIT OF EXECUTION ALTHOUGH THE SAME WAS FILED WITHOUT AN
ACCOMPANYING NOTICE OF HEARING.
III.
IN NOT HOLDING THAT PUBLIC RESPONDENT COMMITTED GRAVE ABUSE OF
DISCRETION IN NOT HOLDING THAT EVEN ASSUMING THAT THE DECISION
RENDERED IN ACCORDANCE WITH THE COMPROMISE AGREEMENT IS VALID AND
BINDING UPON THE PETITIONER, THE WRIT OF EXECUTION ISSUED PURSUANT
THERETO IS VOID AS IT VARIES THE TENOR OF THE JUDGMENT.12
Simply, the issues are whether the trial court seriously erred: (1) in issuing the October 3, 2002 and
the October 10, 2002 Orders without awaiting petitioners comment; (2) in granting the Motion for
Issuance of Writ of Execution although it lacked the requisite notice of hearing; and (3) in issuing the
writ of execution since it varied the tenor of the decision dated June 28, 2002.
Petitioner contends that it was denied due process when the trial court granted Angeless Motion for
Issuance of Writ of Execution on October 3, 2002, despite its receipt of petitioners Motion for
Extension of Time to File Comment with Entry of Appearance on the same day. Further, Sheriff
Sales T. Bisnar served upon petitioner the Notice to Settle and/or Pay the Compromise Judgment
Amount although its motion for reconsideration of the October 3, 2002 Order was still pending.
Petitioner also argues that Angeless Motion for Issuance of Writ of Execution lacked the requisite
notice of hearing. Finally, petitioner claims that the writ of execution varied the tenor of the decision
dated June 28, 2002.
Respondent Angeles counters that petitioner was not denied due process since it was given ten (10)
days to comment on the Motion for Issuance of Writ of Execution which period had lapsed without
petitioner filing any comment. Petitioner filed its Motion for Extension of Time to File Comment with
Entry of Appearance only after the reglementary period had expired. Angeles further contends that
the Motion for Issuance of Writ of Execution contained the requisite notice of hearing. Finally, she
argues that the writ of execution did not vary the tenor of the decision dated June 28, 2002.
On the first issue, we note that in its September 9, 2002 Order, the trial court gave petitioner ten (10)
days to file its comment to Angeless Motion for Issuance of Writ of Execution. While petitioner
claims that it received the Order only on September 21, 2002, Angeles counters that petitioner
received it on September 12, 2002. We are more inclined to believe Angeless allegation since the
trial court itself declared in its Order dated October 10, 2002 that the Order dated September 9, 2002
was personally served upon petitioner on September 12, 2002.13 Thus, petitioner had until
September 22, 2002 within which to file its comment or to request for an extension of time.
Consequently, petitioners motion for extension and comment were not seasonably filed and such
procedural lapse binds petitioner.
Anent the second issue, we have consistently held that a motion which does not meet the
requirements of Sections 4 and 5 of Rule 1514 of the Rules of Court is considered a worthless piece
of paper, which the Clerk of Court has no right to receive and the trial court has no authority to act
upon. 15 Service of a copy of a motion containing a notice of the time and the place of hearing of that
motion is a mandatory requirement, and the failure of movants to comply with these requirements
renders their motions fatally defective. However, there are exceptions to the strict application of this
rule. These exceptions are: (1) where a rigid application will result in a manifest failure or
miscarriage of justice especially if a party successfully shows that the alleged defect in the

questioned final and executory judgment is not apparent on its face or from the recitals contained
therein; (2) where the interest of substantial justice will be served; (3) where the resolution of the
motion is addressed solely to the sound and judicious discretion of the court; and (4) where the
injustice to the adverse party is not commensurate with the degree of his thoughtlessness in not
complying with the procedure prescribed.16
A notice of hearing is an integral component of procedural due process to afford the adverse parties
a chance to be heard before a motion is resolved by the court. Through such notice, the adverse
party is given time to study and answer the arguments in the motion.17 Records show that while
Angeless Motion for Issuance of Writ of Execution contained a notice of hearing, it did not
particularly state the date and time of the hearing. However, we still find that petitioner was not
denied procedural due process. Upon receiving the Motion for Issuance of Writ of Execution, the trial
court issued an Order dated September 9, 2002 giving petitioner ten (10) days to file its comment.
The trial court ruled on the motion only after the reglementary period to file comment lapsed. Clearly,
petitioner was given time to study and comment on the motion for which reason, the very purpose of
a notice of hearing had been achieved.
The notice requirement is not a ritual to be followed blindly. Procedural due process is not based
solely on a mechanical and literal application that renders any deviation inexorably fatal. Instead,
procedural rules are liberally construed to promote their objective and to assist in obtaining a just,
speedy and inexpensive determination of any action and proceeding.18
1awphi1

On the last issue, we note that the Compromise Agreement approved by the trial court in its Decision
dated June 28, 2002 merely provided that petitioner would pay Angeles the bid price of P5,500,000,
for the eight parcels of land subject of the auction sale, within twenty (20) days. Upon payment,
Angeles would execute a Certificate of Deed of Redemption and a Deed of Cancellation of
Mortgage, and surrender to petitioner the titles to the eight parcels of land. Nevertheless, when the
trial court issued the writ of execution, the writ gave Sheriff Bisnar the option "to allow the
consolidation of the subject real properties in favor of the defendant Imelda Angeles."19
Undoubtedly, the writ of execution imposed upon petitioner an alternative obligation which was not
included or contemplated in the Compromise Agreement. While the complaint originally sought to
restrain Angeles from consolidating her ownership to the foreclosed properties, that has been
superseded by the Compromise Agreement. Therefore, the writ of execution which directed Sheriff
Bisnar to "cause the Register of Deeds of Morong, Rizal, to allow the consolidation of the subject
real properties in favor of the defendant Imelda Angeles" is clearly erroneous because the judgment
under execution failed to provide for consolidation.
Because the writ of execution varied the terms of the judgment and exceeded them, it had no
validity. The writ of execution must conform to the judgment which is to be executed, as it may not
vary the terms of the judgment it seeks to enforce. Neither may it go beyond the terms of the
judgment sought to be executed. Where the execution is not in harmony with the judgment which
gives it life and exceeds it, it has pro tanto no validity.20
WHEREFORE, the instant petition is PARTIALLY GRANTED. The Decision dated November 28,
2003 and the Resolution dated May 26, 2004 of the Court of Appeals in CA-G.R. SP No. 73965 are
MODIFIED such that the writ of execution issued on October 11, 2002 by Judge Adelina CalderonBargas is declared NULL and VOID.
Let this case be REMANDED to the Regional Trial Court of Morong, Rizal, Branch 78, which is
hereby ORDEREDto issue another writ of execution against petitioner KKK Foundation, Inc., in

conformity with the Decision dated June 28, 2002 of the trial court. This is without prejudice to filing a
new motion for consolidation by respondent Angeles.
No pronouncement as to costs.
SO ORDERED.

CAMARINES SUR IV ELECTRIC G.R. No. 167691

COOPERATIVE, INC.,
Petitioner,
Present:
PUNO, C.J., Chairperson,
CARPIO,
- v e r s u s - CORONA,
AZCUNA and
LEONARDO-DE CASTRO, JJ.
EXPEDITA L. AQUINO,
Respondent.
Promulgated:
September 23, 2008
x---------------------------------------------------x
RESOLUTION
CORONA, J.:
This petition for review on certiorari under Rule 45 of the Rules of Court seeks to set aside the
January 5, 2005 decision1 and March 22, 2005 resolution2 of the Court of Appeals (CA) in CA-G.R.
CV No. 81666.
Respondent Expedita L. Aquino bought several personal computers and leased a commercial
building in Tigaon, Camarines Sur for purposes of establishing a computer gaming business. She
had the electrical service in the building restored because the former tenant, a certain Mrs.
Paglinawan,3 had it disconnected when she gave up the occupancy thereof. Respondent paid the
reconnection fee as well as the fee corresponding to the electric consumption covering the period of

April 17, 2002 to May 16, 2002 to petitioner Camarines Sur IV Electric Cooperative, Inc. in Mrs.
Paglinawans name. However, respondent failed to pay the electric bills in the succeeding months.
Because of adverse reports, petitioner conducted an inspection of the electrical wiring of the leased
building, took pictures thereof and gave respondents overseer a report of pilferage of electricity with
the notation:
"Disconnected w/light/illegal tapping."
Petitioner alleged that respondent violated RA 78324 and required her to pay the differential billing
and penalty within 48 hours; otherwise, the electric service would be disconnected. A conciliatory
conference between the parties was held where petitioner presented respondent with two options:
deposit the differential billing of P3,367.00 to avoid disconnection during the pendency of the
criminal action to be filed by petitioner or pay the amount of the differential billing and the penalty of
P15,000.00, in which case the matter would be considered closed and the filing of a criminal case
dispensed with.
Respondent refused to choose any of the options as she felt that to do so would be tantamount to an
admission of guilt. Consequently, her electrical service was permanently disconnected on January
23, 2003.
Respondent filed a complaint for damages against petitioner in the Regional Trial Court (RTC). She
alleged that due to the disconnection of electrical services, her business operation was interrupted
causing her damages in the form of unrealized income, rentals paid for the premises she was unable
to use and renovation costs of the leased building.
Petitioner filed an answer with affirmative defenses. It alleged, among others, that the complaint
failed to state a cause of action. According to petitioner, no contract to supply electricity was entered
into between them. Thus, respondents complaint had no basis and should be dismissed.
Respondent subsequently amended her complaint. Petitioner still insisted on moving for its
dismissal, reiterating that the complaint stated no cause of action.
The trial court initially denied the motion to dismiss in an order dated July 10, 2003. It held that, as
respondent was in possession of the premises to which petitioner supplied electricity, there was, in a
way, a contract between the parties.
When petitioner moved for reconsideration, the court a quo, in its December 22, 2003 order, made a
turnaround and ruled in petitioners favor (second RTC order).5 It stated that respondents payment
of the reconnection fee did not suffice to create a new contract between the parties as the same was
made in Mrs. Paglinawans name, whose contract with petitioner was terminated upon the
disconnection of the electrical service.
Respondent received a copy of the second RTC order on December 23, 2003 and moved for
reconsideration thereof on January 5, 2004. Respondent mailed a copy of her motion for
reconsideration (with notice of hearing) to petitioners counsel only on the same date. The notice of
hearing indicated that the hearing of the motion was set on January 9, 2004. Petitioner filed an
opposition thereto, alleging, among others, that the motion should be denied as respondent did not
comply with the 3-day rule (as provided in the Rules of Court).

On February 3, 2004, the trial court denied respondents motion for reconsideration for lack of
merit.6 However, it was silent on the motions non-compliance with the 3-day rule.
Respondent filed an appeal in the CA on February 5, 2004, insisting that the complaint sufficiently
stated a cause of action for damages. For its part, petitioner reiterated its stand on the issue. It also
called the CAs attention to the alleged flaw in respondents motion for reconsideration in the
RTC. It argued that the motion was a pro forma motion (since it violated the 3-day rule) which should
have been dismissed outright by the trial court. Furthermore, it did not stop the running of the 15-day
period for respondent to appeal which should have been reckoned from her receipt of the second
RTC order on December 23, 2003. Consequently, her February 5, 2004 notice of appeal (which was
filed 44 days after she received a copy of the second RTC order) was filed late.
The appellate court held that the RTC erred in dismissing the complaint as indeed a cause of action
existed. The CA ruled that the matter of whether or not a contract, express or implied, existed
between the parties was a matter of defense that must be resolved in a trial on the merits. It stated
that such issue was not relevant in a motion to dismiss based on failure to state a cause of action.
However, it did not pass upon the issue relative to the timeliness of respondents appeal.
Petitioner filed a motion for reconsideration. It was denied. Hence, this petition.
The issues before us are: (1) whether or not respondents complaint for damages stated a cause of
action against petitioner and (2) whether or not respondents appeal in the CA was filed on time.
There is a cause of action when the following elements are present: (1) the legal right of the plaintiff;
(2) the correlative obligation of the defendant and (3) the act or omission of the defendant in violation
of said legal right.7 In determining the presence of these elements, only the facts alleged in the
complaint must be considered. The test is whether the court can render a valid judgment on the
complaint based on the facts alleged and the prayer asked for,8 such that the facts alleged in the
complaint, if true, would justify the relief sought. Only ultimate facts, not legal conclusions or
evidentiary facts, are considered for purposes of applying the test.9
Based on the allegations in the amended complaint, we hold that respondent stated a cause of
action for damages. Respondent was in possession of the property supplied with electricity by
petitioner when the electric service was disconnected. This resulted in the alleged injury complained
of which can be threshed out in a trial on the merits. Whether one is a party or not in a contract is not
determinative of the existence of a cause of action. Participation in a contract is not an element in
considering whether or not a complaint states a cause of action10 because even a third party outside
the contract can have a cause of action against either or both contracting parties.
Be that as it may, respondents appeal in the CA should have been denied outright for having been
filed out of time.
In its petition in this Court, petitioner insisted that respondent mailed a copy of her motion for
reconsideration (with notice of hearing) to its (petitioners) counsel only on January 5, 2004, although
the motion was already scheduled for hearing on January 9, 2004. Respondent should have
foreseen that the registered mail, which originated from Naga City, would not be able to reach the
law office of petitioners counsel in Manila at least 3 days before said date. As expected, the mail did
not reach petitioners counsel on time. In fact, he received it only on the day of the hearing
itself.11 Thus, respondents motion for reconsideration was fatally flawed for failure to comply with the
3-day rule under Section 4, Rule 15 of the Rules of Court. It did not toll the reglementary period for
respondent to appeal the RTCs decision.

We note that respondents comment did not even touch on the issues of the perceived deficiency in
her motion for reconsideration and the timeliness of her appeal in the CA. Although her
memorandum briefly discussed these issues, the same was insufficient as it merely reiterated the
statement of facts in her appellants brief in the CA (specifically, as to when she filed said motion in
the RTC). No discussion was proffered regarding the date of mailing of a copy of the assailed motion
to petitioners counsel. Furthermore, as if admitting her failure to comply with the mandatory rule on
notice of hearing, respondent invoked the much abused exhortation of losing litigants on the primacy
of substantial justice over mere technicalities.
Respondents arguments have no merit.
Section 4, Rule 15 of the Rules of Court provides:
Sec. 4. Hearing of Motion. Except for motions which the court may act upon without prejudicing the
rights of the adverse party, every motion shall be set for hearing by the applicant.
Every written motion required to be heard and the notice of hearing thereof shall be served in
such a manner as to ensure its receipt by the other party at least three (3) days before the
date of hearing, unless the court for good cause sets the hearing on shorter notice. (Emphasis
supplied)
Time and again, we have held that non-compliance with Section 4 of Rule 15 of the Rules of Court is
a fatal defect. A motion which fails to comply with said Rule is a mere scrap of paper. If filed, such
motion is not entitled to judicial cognizance.12 The fact that the RTC took cognizance of a defective
motion, such as requiring the parties to set it for hearing and denying the same for lack of merit, did
not cure the defect of said motion.13 It did not suspend the running of the period to appeal.14
Based on the foregoing, respondents defective motion for reconsideration did not stop the running
of her period to appeal. Thus, the appeal in the CA should have been dismissed outright as the
decision of the RTC had by then already become final and executory.
WHEREFORE, the petition is hereby GRANTED. The January 5, 2005 decision and March 22, 2005
resolution of the Court of Appeals are REVERSED and SET ASIDE and CA-G.R. CV No. 81666 is
ordered DISMISSED.
SO ORDERED.

G.R. No. 167471

February 5, 2007

GLICERIA SARMIENTO, Petitioner,

vs.
EMERITA ZARATAN, Respondent.

DECISION
CHICO-NAZARIO, J.:

This petition for Review on Certiorari under Rule 45 of the Rules of Court seeks to nullify the Court of
Appeals Decision1 in CA-G.R. SP No. 79001 entitled, "Emerita Zaratan v. Hon. Ramon A. Cruz, as
Presiding Judge of RTC, Quezon City, Branch 223, and Gliceria Sarmiento," dated 17 August 2004,
which reversed and set side the Orders dated 19 June 2003 and 31 July 2003 of the Regional Trial
Court (RTC) of Quezon City in Civil Case No. Q-03-49437, dismissing respondents appeal for
failure to file the memorandum within the period provided for by law.
On 2 September 2002, petitioner Gliceria Sarmiento filed an ejectment case2 against respondent
Emerita Zaratan, in the Metropolitan Trial Court (MeTC) of Quezon City, Branch 36, docketed as
Civil Case No. 29109.
On 31 March 2003, the MeTC rendered a decision in favor of petitioner, the dispositive portion of
which reads:
WHEREFORE, the Court finds that plaintiff has sufficiently established her causes against the
defendant and hereby order the defendant and all persons claiming rights under her:
1. to pay plaintiff the monthly rentals of P3,500.00 for the said premises from August 1, 2002
until defendant vacates the premises;
2. to pay plaintiff the sum of P20,000.00 plus P1,500.00 per appearance of counsel in court,
as and for attorneys fees; and
to pay the cost of suit.3
Respondent filed her notice of appeal.4 Thereafter, the case was raffled to the RTC of Quezon City,
Branch 223, docketed as Civil Case No. Q-03-49437.
In the Notice of Appealed Case,5 the RTC directed respondent to submit her memorandum in
accordance with the provisions of Section 7(b) of Rule 40 of the Rules of Court and petitioner to file
a reply memorandum within 15 days from receipt.
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.6 But the motion
remained unacted.
On 9 June 2003, respondent filed her Memorandum. On 19 June 2003, the RTC dismissed the
appeal as follows:
Record shows that defendant-appellant received the Notice of Appealed Case, through counsel, on
May 19, 2003 (Registry Return Receipt dated May 12, 2003, Record, back of p. 298). Thus, under
Section 7(b), Rule 40 of the 1997 Rules of Civil Procedure, she had fifteen (15) days or until June 3,
2003 within which to submit a memorandum on appeal. As further appears on record, however, the
required Memorandum was filed by defendant-appellant only on June 9, 2003 (Record, p. 623), or
six (6) days beyond the expiration of the aforesaid fifteen day period.
It should be stressed that while the rules should be liberally construed, the provisions on
reglemenatry periods are strictly applied as they are "deemed indispensable to the prevention of

needless delays and necessary to the orderly and speedy discharge of judicial business" (LegaspiSantos vs. Court of Appeals, G.R. No. 60577, October 11, 1983) and strict compliance therewith is
mandatory and imperative (FJR Garments Industries vs. Court of Appeals, G.R. No. L-49329, June
29, 1984). The same is true with respect to the rules on the manner and periods for perfecting
appeals (Gutierrez vs. Court of Appeals, L-25972, November 26, 1968).
Premises considered, the instant appeal is hereby DISMISSED. This renders academic defendantappellants application for a writ of preliminary injunction.7
1awphi 1.net

On the basis of the above-quoted Order, petitioner filed a Motion for Immediate Execution,8 while
respondent moved for the Reconsideration.9 Both motions were denied by the RTC on 31 July 2003.
The Order in part reads:
In the main, defendant-appellants 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. 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.
The argument is without merit. This Court 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. As declared in the case of Gozon, et al. v. court of Appeals (G.R. No.
105781, June 17, 1993);
xxx
It is well-entrenched in this jurisdiction that a motion does not meet the requirements of Sections 4
and 5 of Rule 15 of the Rules of Court is considered a worthless piece of paper which the clerk has
no right to receive, and the court has no authority to act upon.
xxx
Moreover, parties and counsel should not assume that courts are bound to grant the time they pray
for. A motion that is not acted upon in due time is deemed denied (Orosa vs. Court of Appeals, 261
SCRA 376 [1996]). Thus, defendant-appellants appeal was properly dismissed on account of her
failure to file an appeal memorandum within the fifteen (15) day period provided under Section 7(b),
Rule 40 of the 1997 Rules of Civil Procedure.
With regard to the "Motion for Immediate Execution," dated June 23, 2003, filed by plaintiff-appellee,
the rule is explicit that the execution of a judgment in an ejectment case, must be sought with the
inferior court which rendered the same. The appellate court which affirms a decision brought before
it on appeal cannot decree its execution in the guise of an execution of the affirming decision. The
only exception is when said appellate court grants an execution pending appeal, which is not the
case herein (City of Manila vs. Court of Appeals, 204 SCRA 362; Sy vs. Romero, 214 SCRA 187).10
Petitioner moved for reconsideration of the said Order, while respondent sought clarification on
whether the 31 July 2003 Order dismissing the appeal was anchored on Section (b), Rule 40 or
Section 7(c) of the same Rule.

On 27 August 2003, the RTC reconsidered its previous Order by granting petitioners motion for
Immediate Execution, but denied respondents Motion for Clarification, in this wise:
Section 21, Rule 70 of the Rules of Court provides that "the judgment of the Regional Trial Court
against the defendant shall be immediately executory, without prejudice to a further appeal that may
be taken therefrom. Pursuant to this Rule and taking into account the arguments of the plaintiff in her
"Urgent Motion for Reconsideration," the Court is inclined to grant the same. As further correctly
argued by the plaintiff, through counsel, during the hearing on her motion on August 15, 2003, the
cases of City of Manila v. Court of Appeals (204 SCRA 362) and Sy vs. Romero (214 SCRA 187)
cited in the July 31, 2003 Order refer to ejectment cases which has (sic) been decided with finality
and hence, inapplicable to this case where a further appeal is still available to the defendant. It
should likewise be noted that while the Supreme Court ruled in these cases that execution of a
judgment in an ejectment case must be sought with the inferior court which rendered the same, it
likewise provided that for an exception to this rule, that is, in cases where the appellate court grants
an execution pending appeal, as the case herein.
With regard to defendants Motion for Clarification, contained in her Opposition, the Court notes that
the issues raised therein have already been squarely dealt with in the July 31, 2003 Order. The
same must, therefore, be denied.11
Aggrieved, respondent filed a Petition for Certiorari in the Court of Appeals, which was granted in a
decision dated 17 August 2004. The appellate court nullified and set aside the 19 June 2003 and 31
July 2003 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.12
Petitioner filed a motion for reconsideration13 on 13 September 2004, followed by a Motion for
Inhibition14 of the members of the Eighth Division of the Court of Appeals on 20 September 2004.
Both motions were denied for lack of merit on 10 March 2005.15
Hence, this appeal by petitioner posing the following issues,16 thus:
1. Whether respondents petition for certiorari should have been dismissed in the first place;
2. Whether the trial court committed grave abuse of discretion in denying respondents
motion for extension;
3. Whether it is Section 19 of Rule 7 that applies, and not Section 21; and
4. Whether the Court of Appeals Justices should have inhibited themselves from further
proceeding with the subject case.
Stated otherwise, the main issue for resolution is whether the Court of Appeals committed a
reversible error of law in granting the Writ of Certiorari. In granting the petition, the Court of Appeals
ruled that the RTC erred in dismissing respondents appeal for failure to file the required
Memorandum within the period provided by law and in granting petitioners Motion for Immediate
Execution of the MeTC decision.
Before resolving the substantive issues raised by petitioner, the Court will first address the
procedural infirmities ascribed by petitioner. Petitioner assails the correctness and propriety of the

remedy resorted to by respondent by filing a Petition for Certiorari in the Court of Appeals. According
to petitioner, certiorari is not appropriate and unavailing as the proper remedy is an appeal.
It must be noted that respondents appeal in the RTC was dismissed for failure to file the required
memorandum within the period allowed by law, as the Motion for Extension of Time to file
Memorandum was not acted upon for failure to attach a notice of hearing. From the said dismissal,
respondent filed a Petition for Certiorari in the Court of Appeals.
Respondent correctly filed said petition pursuant to Section 41 of the Rules of Court, which provides:
Section 1. Subject of appeal. An appeal may be taken from a judgment or final order that completely
disposes of the case, or of a particular matter therein when declared by these Rules to be
appealable.
No appeal may be taken:
xxxx
(d) An order disallowing or dismissing an appeal;
xxxx
In all the above instances where the judgment or final order is not appealable, the aggrieved party
may file an appropriate civil action under Rule 65. (Underscoring supplied.)
Petitioner also contends that the Petition for Certiorari filed in the Court of Appeals should be
dismissed as the certification of non-forum shopping was defective. The verification in part reads:
I, EMERITA ZARATAN, of legal age, after having been duly sworn to, according to law, depose and
say:
That I, Emerita Zaratan is one of the respondent (sic) in the above entitled case, hereby declare, that
I have caused the preparation and filing of the foregoing Comment on the Petition; that I have read
all the allegations therein, which are true and correct to the best of my own knowledge.
That as respondent, I further certify that I have not commenced any other action or proceeding
involving the same issues in the foregoing Petition in the Court of Appeals, the Supreme Court, or
different Divisions thereof, respectively, or any tribunal, or agency; and should it be known that a
similar action or proceeding has been filed or is pending in any of the abovementioned Courts or
different Divisions thereof, the petitioner shall notify the Honorable Court to which this certification is
filed, within five (5) days from such notice. (Underscoring ours.)
Petitioner avers that respondent by stating in the above-quoted certification that she was the
respondent, while in truth she was the petitioner and by stating that respondent caused the
preparation of the comment on the petition, instead of the petition itself, indicate that respondent did
not understand what she was signing. The defect of the verification all renders the petition in the
Court of Appeals without legal effect and constitutes ground for its dismissal.
The contention is baseless.

The purpose of requiring a verification is to secure an assurance that the allegations of the petition
have been made in good faith, or are true and correct, not merely speculative. This requirement is
simply a condition affecting the form of pleadings and non-compliance therewith does not
necessarily render it fatally defective.17 Perusal of the verification in question shows there was
sufficient compliance with the requirements of the Rules and the alleged defects are not so material
as to justify the dismissal of the petition in the Court of Appeals. The defects are mere typographical
errors. There appears to be no intention to circumvent the need for proper verification and
certification, which are intended to assure the truthfulness and correctness of the allegations in the
petition and to discourage forum shopping.18
Now, the substantial issues.
Corollary to the dismissal of the appeal by the RTC is the question of 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.
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.
It is not disputed that respondent perfected her appeal on 4 April 2003 with the filing of her Notice of
Appeal and payment of the required docket fees. However, before the expiration of time to file the
Memorandum, she filed a Motion for Extension of Time seeking an additional period of five days
within which to file her Memorandum, which motion lacked the Notice of Hearing required by Section
4, Rule 15 of the 1997 Rules of Court which provides:
SEC. 4. Hearing of Motion. - Except for motions which the court may act upon without prejudicing
the rights of the adverse party, every written motion shall be set for hearing by the applicant.
Every written motion required to be heard and the notice of the hearing thereof shall be served in
such a manner as to ensure its receipt by the other party at least three (3) days before the date of
hearing, unless the court for good cause sets the hearing on shorter notice.
As may be gleaned above and as held time and again, the notice requirement in a motion is
mandatory. 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.19
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.20 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.21 Principles of natural justice demand that the right of a party should
not be affected without giving it an opportunity to be heard.22
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.23 Considering the
circumstances of the present case, we believe that procedural due process was substantially
complied with.
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.24 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, lack 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.25 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."26
It is well to remember that this Court, in not a few cases, has consistently held that cases shall be
determined on the merits, after full opportunity to all parties for ventilation of their causes and
defense, rather than on technicality or some procedural imperfections. In so doing, the ends of
justice would be better served.27 Furthermore, this Court emphasized its policy that technical rules
should accede to the demands of substantial justice because there is no vested right in
technicalities. Litigations, should, as much as possible, be decided on their merits and not on
technicality. 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 this Court, every party-litigant should be afforded the amplest opportunity for the
proper and just disposition of his cause, free from constraints of technicalities.28 Indeed, rules of
procedure are mere tools designed to expedite the resolution of cases and other matters pending in
court. A strict and rigid application of the rules that would result in technicalities that tend to frustrate
rather than promote justice must be avoided.29
The visible emerging trend is to afford every party-litigant the amplest opportunity for the proper and
just determination of his cause, free from constraints and 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.
On the issue of immediate execution of judgment.
The applicable provision is Section 19, Rule 70 of the Rules of Court, which reads:
SEC. 19. Immediate Execution of judgment; how to stay the same.- If judgment is rendered against
the defendant, execution shall issue immediately upon motion, unless an appeal has been perfected
and the defendant to stay execution files a sufficient supersedeas bond, approved by the Municipal
Trial Court and executed in favor of the plaintiff to pay the rents, damages, and costs accruing down

to the time of the judgment appealed from, and unless, during the pendency of the appeal, he
deposits with the appellate court the amount of rent due from time to time under the contract, if any,
as determined by the judgment of the Municipal Trial Court. x x x.
To stay the immediate execution of judgment in ejectment proceedings, Section 19 requires that the
defendant-appellant must (a) perfect his appeal, (b) file a supersedeas bond, and (c) periodically
deposit the rentals falling due during the pendency of the appeal.
As correctly observed by the Court of Appeals, execution pending appeal was premature as
respondent had already filed a supersedeas bond and the monthly rental for the current month of the
premises in question.30
The invocation of petitioner of the provisions of Section 21, Rule 70 of the Rules of Court, which
runs:
Sec. 21. Immediate execution on appeal to Court of Appeals or Supreme Court.- The judgment of
the Regional Trial Court against the defendant shall be immediately executory, without prejudice to a
further appeal that may be taken therefrom.
to justify the issuance of the writ of execution pending appeal in this case is misplaced.
A closer examination of the above-quoted provision reveals that said provision applies to decision of
the RTC rendered in its appellate jurisdiction, affirming the decision of the MeTC. In the case at bar,
the RTC order was an order dismissing respondents appeal based on technicality. It did not resolve
substantive matters delving on the merits of the parties claim in the ejectment case. Thus, the case
brought to the Court of Appeals was the dismissal of the appeal for failure to file the required
memorandum within the period provided by law, and not on the merits of the ejectment case.
Lastly, petitioner posited the view that the Court of Appeals justices should have inhibited
themselves because of bias and partiality for deciding the case within eight months and for being
very selective in discussing the issues.
We reject the proposition.
Inhibition must be for just and valid causes. The mere imputation of bias and partiality is not enough
ground for judges to inhibit, especially when the charge is without basis. This Court has to be shown
acts or conduct clearly indicative of arbitrariness or prejudice before it can brand them with the
stigma of bias and partiality.31 This Court has invariably held that for bias and prejudice to be
considered valid reasons for the voluntary inhibition of judges, mere suspicion is not enough. Bare
allegations of their partiality will not suffice "in the absence of clear and convincing evidence to
overcome the presumption that the judge will undertake his noble role to dispense justice according
to law and evidence and without fear and favor."32
There is no factual support to petitioners charge of bias and partiality. A perusal of the records of the
case fails to reveal that any bias or prejudice motivated the Court of Appeals in granting
respondents petition. Neither did this Court find any questionable or suspicious circumstances
leading to the issuance of the questioned decision, as suggested by petitioner.
The fact alone that the Court of Appeals decided the case within eight months does not in any way
indicate bias and partiality against petitioner. It is within the constitutional mandate to decide the
case within 12 months.33

As to petitioners allegation that the Court of Appeals was selective in choosing what issues to
resolve, it bears to stress again that "a judges appreciation or misappreciation of the sufficiency of
evidence x x x adduced by the parties, x x x, without proof of malice on the part of respondent judge,
is not sufficient to show bias and partiality."34 We also emphasized that "repeated rulings against a
litigant, no matter how erroneously, vigorously and consistently expressed, do not amount to bias
and prejudice which can be bases for the disqualification of a judge."35
IN ALL, petitioner utterly failed to show that the appellate court erred in issuing the assailed decision.
On the contrary, it acted prudently in accordance with law and jurisprudence.
WHEREFORE, the instant petition is hereby DENIED for lack of merit. The Decision dated 17
August 2004 and the Resolution dated 10 March 2005 of the Court of Appeals in CA-G.R. SP No.
79001 are hereby AFFIRMED. No costs.
SO ORDERED.

EN BANC

THE HON. ALBERTO ROMULO, Substituted by the HON. EDUARDO I. ERMITA, in his capacity as Executive
Secretary, THE OFFICE OF THE PRESIDENT, THE HON. LEANDRO MENDOZA, in his capacity as Secretary of
the Department of Transportation and Communication, THE DEPARTMENT OF TRANSPORTATION AND
COMMUNICATION (DOTC, THE CIVIL AERONAUTICS BOARD (CAB), and the CAB CHAIRMAN,
Petitioners,
- versus -

THE HON. JUDGE EDUARDO B. PERALTA, Presiding Judge of the Regional Trial Court, National Capital
Judicial Region, Branch 17, Manila, PAL EMPLOYEES ASSOCIATION (PALEA), NATIONAL LABOR UNION
and the NATIONAL FEDERATION OF LABOR UNIONS,
Respondents.
G.R. No. 165665

Present:
PUNO, C.J.,
QUISUMBING,
YNARES-SANTIAGO,
SANDOVAL-GUTIERREZ,
CARPIO,
AUSTRIA-MARTINEZ,
CORONA,
CARPIO MORALES,
CALLEJO, SR.,
AZCUNA,
TINGA,
NAZARIO,

GARCIA, and
VELASCO,JJ.

Promulgated:
January 31, 2007
x---------------------------------------------------------------------------------------------------------x
DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for certiorari filed under Rule 65 of the 1997 Rules of Civil Procedure, as amended,
seeking to set aside the Orders[1] of the Regional Trial Court (RTC), Branch 17, Manila, dated April 16,
2004, June 21, 2004, and September 3, 2004 in Civil Case No. 04-109201, entitled PAL Employees
Association (PALEA), et al. v. Alberto Romulo, in his capacity as Executive Secretary, et al.
While we could have dismissed this petition outright for violation of the principle of hierarchy of
courts,[2] however, we opted to resolve the same in the interest of speedy administration of justice.
On December 3, 2003, President Gloria Macapagal Arroyo issued Executive Order (E.O.) No. 253,[3]
providing for an open skies policy in the aviation industry. Pursuant to this E.O. the
DiosdadoMacapagalInternationalAirport at Clark Field, Pampanga and the Subic BayInternationalAirport
at Subic, Zambales were opened to international air cargo transportation providers and foreign airlines.
On February 23, 2004, the PAL Employees Association (PALEA), the National Labor Union (NLU), and the
National Federation of Labor Unions (NAFLU), as legitimate labor organizations representing the bulk of
workers in the local aviation industry, herein respondents, filed with the RTC, Branch 17, Manila a
petition for certiorari, prohibition, and injunction, assailing the constitutionality of E.O. No. 253.
Impleaded therein as respondents were then Executive Secretary Alberto Romulo, substituted
subsequently by Executive Secretary Eduardo I. Ermita, the Office of the President, Mr. Leandro
Mendoza, in his capacity as Secretary of the Department of Transportation and Communication (DOTC),
the DOTC, the Civil Aeronautics Board (CAB), and the CAB Chairman, herein petitioners.The petition,
docketed as Civil Case No. 04-109201, alleged that E.O. No.
253 is unconstitutional on the following grounds:

a) The power and authority to declare an open skies policy is a sole prerogative of Congress. By
providing for such a policy, the Executive Department usurped the authority of the Legislature in
contravention of the fundamental law;
b) E.O. No. 253 actually amends Republic Act (R.A.) No. 7227,[4] an action beyond the power of the
President, for it is only Congress which may amend laws;
c) E.O. No. 253 also amends and repeals parts of R.A. No. 776 creating the Civil Aeronautics Board;
and
d) E.O. No. 253 allows foreign airlines to operate as common carriers in Philippine territory without
complying with the requirements prescribed by the Constitution.

The Office of the Solicitor General (OSG), representing petitioners, filed a motion to dismiss the petition
in Civil Case No. 04-109201 for lack of cause of action.
On April 6, 2004, the OSG served by registered mail a copy of its motion upon Atty. Froilan M. Bacungan,
counsel for petitioners in Civil Case No. 04-109201 (now respondent labor unions).
On April 16, 2004, the trial court issued an Order denying the OSGs motion to dismiss, thus:

In the absence of proof of transmittal by registered mail of a copy of the subject Motion to Dismiss
dated April 5, 2004, addressed to the petitioners counsel, pursuant to the second paragraph of Section
4, Rule 15 of the 1997 Rules of Civil Procedure, the subject Motion to Dismiss dated April 5, 2004 from
the Office of the Solicitor General is hereby DENIED.
SO ORDERED.
On May 19, 2004, the OSG filed a motion for reconsideration. Attached thereto is a photocopy of
registry return receipt No. 4096.But this motion was denied by the trial court in its Order dated June 21,
2004, thus:
In the absence of any indication on the photocopy of the registry return receipt (Annex A, Motion for
Reconsideration dated May 17, 2004) that it was, in fact a copy of the Motion to Dismiss dated April 25,
2004 from the Office of the Solicitor General as supposedly addressed to petitioners counsel (Sapida v.
Villanueva, 48 SCRA 19, 23, 27, 29-30 [1972]), the Office of the Solicitor Generals Motion for
Reconsideration dated May 17, 2004 is hereby DENIED.
cralawSO ORDERED.
On July 28, 2004, the OSG again filed a motion for reconsideration.Attached thereto are the following:
(1) a certified photocopy of the OSGs original registry return receipt No. 4096; (2) a certified photocopy
of page 374, Official Records Book of the OSG Docket Division; and (3) the affidavit of Josephine S.
Masangkay-Bayongan, Records Officer III, OSG Docket Division, stating that the mail matter sent by the
OSG to Atty. Bacungan on April 6, 2004 was, in fact, a copy of the motion to dismiss the petition in Civil
Case No. 04-109201 dated April 5, 2004.
In its Order dated September 3, 2004, the trial court denied the OSGs second motion for
reconsideration, thus:
cralawIn view of the judicial admission on the face of the Motion for Reconsideration dated July 23,
2004, particularly paragraph 2 thereof to the effect that a copy of the Motion to Dismiss dated [April 5,
2004] was received by the petitioners counsel only on April 20, 2004 after the slated hearing thereof on
April 16, 2004, consistent with the caveat under Section 4, Rule 15 of the 1997 Rules of Civil Procedure,
the Motion for Reconsideration dated July 23, 2004 from the Office of the Solicitor General is hereby
DENIED.
xxx
Hence, the instant petition.Petitioners alleged that in denying their motion to dismiss, respondent trial
court acted with grave abuse of discretion.

As a general rule, an order denying a motion to dismiss is interlocutory and cannot be the subject of a
petition for certiorari, the remedy of the aggrieved party being to file an answer and interpose as a
defense the objections raised in his motion and in case of an adverse decision, to appeal in due
course.[5] An exception, however, may be made where the denial of the motion to dismiss was made
with grave abuse of discretion or without or in excess of jurisdiction.[6]chanroblesvirtuallawlibrary
In the instant case, there is no dispute that Atty. Bacungan, counsel for respondent labor unions,
received a copy of the OSGs motion to dismiss dated April 5, 2004 on April 20, 2004, or four (4) days
after it was set for hearing. Petitioners insist though that they sent a copy of their motion to him by
registered mail on April 6, 2004.
Sections 7, 10 and 13 of Rule 13, of the 1997 Rules of Civil Procedure, as amended, provide:
SEC. 7. Service by mail. Service by registered mail shall be made by depositing the copy in the post
office, in a sealed envelope, plainly addressed to the party or his counsel at his office, if known,
otherwise at his residence, if known, with postage fully prepaid, and with instructions to the postmaster
to return the mail to sender after ten (10) days if undelivered. If no registry service is available in the
locality of either the sender or the addressee, service may be done by ordinary mail.
SEC. 10. Completeness of service. Personal service is complete upon actual delivery. Service by ordinary
mail is complete upon the expiration of ten (10) days after mailing, unless the court otherwise provides.
Service by registered mail is complete upon actual receipt by the addressee, or after five (5) days from
the date he received the first notice of the postmaster, whichever date is earlier.
SEC. 13. Proof of service. Proof of personal service shall consist of a written admission of the party
served, or the official return of the server, or the affidavit of the party serving, containing a full
statement of the date, place, and manner of service. If the service is by ordinary mail, proof thereof shall
consist of an affidavit of the person mailing of facts showing compliance with section 7 of this Rule. If
service is made by registered mail, proof shall be made by such affidavit and the registry receipt issued
by the mailing office. The registry return card shall be filed immediately upon its receipt by the sender or
in lieu thereof, the unclaimed letter together with the certified or sworn copy of the notice given by the
postmaster to the addressee.

It is clear that where service of a pleading is by registered mail, proof of such service consists of the
following: (1) an affidavit of the person mailing the pleading containing a full statement of the date,
place, and manner of service; and (2) the registry receipt issued by the mailing office.
We recall that in their first motion for reconsideration, petitioners attached thereto only a photocopy of
registry return receipt No. 4096. The trial court declared it could not determine on its face whether the
registered matter was actually a copy of the motion to dismiss.
In Cayetano v. Cayetano,[7] we held that actual knowledge of a decision cannot be attributed to the
addressee of a registered matter where there is no showing that the registry notice itself contains any
indication that the registered matter is a copy of the decision or that the registry notice refers to the
case being ventilated.Then, in Sapida v. Villanueva,[8] citing Cayetano, we ruled that we could not justly
attribute to respondents actual knowledge of the order of denial of their motion for new trial through
registered mailbecause there is no showing that the registry notice itself or the envelope or the return

card for that matter contained any indication or annotation that the registered matter was indeed and
in fact a copy of the said order.
Anent the affidavit of Josephine S. Masangkay-Bayongan, she stated that On April 6, 2004, I caused to be
served by registered mail a copy of a Motion to Dismiss dated April 5, 2004 in Civil Case No. 04-109021
Clearly, she merely directed that the motion be served by registered mail. She did not actually post the
motion by registered mail. The rule requires that the affidavit must be executed by the person mailing
the motion.
In sum, registry return receipt No. 4096 does not indicate that what was mailed to Atty. Bacugan,
counsel for respondent labor unions, was a copy of petitioners motion to dismiss; and that Bayongans
affidavit shows she was not the one who mailed such copy.It follows that in dismissing the motion to
dismiss on the ground that a copy thereof was not validly served upon private respondents counsel,
respondent judge acted pursuant to the Rules.
There is grave abuse of discretion where the power is exercised in an arbitrary or despotic manner by
reason of passion or personal hostility which must be so patent and gross as to amount to an invasion of
positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of
law.[9]chanroblesvirtuallawlibrary
Indeed, no grave abuse of discretion can be discerned on the part of respondent court in issuing the
assailed Orders denying the OSGs motion to dismiss.
WHEREFORE, we DISMISS the petition and AFFIRM the assailed Orders of the Regional Trial Court,
Branch 17, Manila in Civil Case No. 04-109201. No costs.
SO ORDERED.

G.R. No. 182547

January 10, 2011

CHINA BANKING CORPORATION, Petitioner,

vs.
ARMI S. ABEL, Respondent.
DECISION
ABAD, J.:
This case is about the trial courts grant of a petition for the issuance of a writ of possession before
the possessor of the property could be heard on her opposition and its subsequent denial of her
motion for reconsideration.
The Facts and the Case
In a foreclosure sale, petitioner China Banking Corporation (China Bank) acquired title1 over
respondent Armi S. Abels property at La Vista Subdivision, Quezon City, she having failed to pay
her loan. To enforce its ownership, in January 2003 China Bank filed with the Regional Trial Court

(RTC) of Quezon City in LRC Case Q-16014(03) an ex parte petition for the issuance of a writ of
possession in its favor.
On October 2, 2003 the RTC rendered a decision, granting China Banks petition and directing the
issuance of a writ of possession over the property in its favor. Abel appealed from this decision but
lost her appeal2 in the Court of Appeals (CA). She filed a petition for review before this Court in G.R.
169229 but this, too, failed. She filed a motion for reconsideration and a second similar motion
without success. The Courts judgment became final and executory and, eventually, the record of
her case was remanded to the RTC for execution.
China Bank filed a motion for execution with the RTC, setting it for hearing on June 8, 2007. On
June 7, 2007 Abel filed a motion to cancel and reset the hearing on the ground that she needed
more time to comment on or oppose the banks motion. On June 8, 2007 the RTC granted her the
10-day period she asked but "from notice."
On June 19, 2007, noting Abels failure to file her opposition to or comment on the motion for
execution, the RTC issued an Order granting China Banks motion. After being served with the
notice to vacate, Abel filed on June 21, 2007 an omnibus urgent motion for reconsideration and to
admit her opposition to the banks motion for execution. She set her urgent motion for hearing on
June 29, 2007. On June 22, 2007, however, the day after receiving her motion, the RTC denied the
same for lack of merit.
On June 25, 2007 the sheriff implemented the writ against Abel and placed China Bank in
possession of the subject property. On even date, Abel filed a petition for certiorari with the CA in
CA-G.R. SP 99413, assailing the RTCs June 19 and 22, 2007 Orders. On July 2, 2007, a Saturday,
Abel took back possession of the premises on the strength of a Temporary Restraining Order (TRO)
that the CA issued on June 29, 2007.
On January 3, 2008 the CA rendered a decision,3 setting aside the assailed orders of the RTC.
China Bank moved for its reconsideration but the CA denied this in an April 9, 2008 Resolution.4 The
CA ruled that the RTC committed grave abuse of discretion in granting the banks motion for
execution, noting that the latter court gave Abel 10 days from notice of its order, not 10 days from
the issuance of such order, within which to file her opposition. Parenthetically, the shorter period was
what she asked for in her motion for postponement. But there was no proof, said the CA, as to when
Abel had notice of the RTCs June 8, 2007 Order as to determine when the 10-day period actually
began to run.
China Bank thus filed this petition for review on certiorari against the CA decision and resolution
denying its motion for reconsideration.
The Issue Presented
The issue in this case is whether or not the CA erred in setting aside the assailed RTCs June 19
and 22, 2007 Orders on the ground of failure to observe due process respecting Abels right to be
heard on the banks motion for execution.
The Courts Ruling
The CA erred in attributing grave abuse of discretion to the RTC. Although the RTC caused the
issuance of the writ of execution before it could establish that Abels 10 days "from notice" within
which to file her opposition had lapsed, she filed with that court on June 21, 2007 an urgent motion
for reconsideration with her opposition to the motion for execution attached. The Court, acting on her

motion, denied it on the following day, June 22, 2007. Any perceived denial of her right to be heard
on the banks motion for execution had been cured by her motion for reconsideration and the RTCs
action on the same.
1avv phi1

True, Abel gave notice to China Bank that she would submit her motion for reconsideration for the
RTCs consideration on June 29, 2007 but that notice is for the benefit of the bank, not for her, that it
may be heard on the matter. She cannot complain that the court acted on her motion more promptly
than she expected especially since she actually offered no legitimate reason for opposing the
issuance of a writ of possession in the banks favor.
Orders for the issuance of a writ of possession are issued as a matter of course upon the filing of the
proper motion and approval of the corresponding bond since no discretion is left to the court to deny
it.5 The RTCs issuance of such writ conformably with the express provisions of law cannot be
regarded as done without jurisdiction or with grave abuse of discretion. Such issuance being
ministerial, its execution by the sheriff is likewise ministerial.6 In truth, the bank has failed to take
possession of the property after more than seven years on account of Abels legal maneuverings.
ACCORDINGLY, the Court GRANTS the petition of China Banking Corporation, REVERSES and
SETS ASIDE the Court of Appeals decision dated January 3, 2008 and resolution dated April 9,
2008 in CA-G.R. SP 99413, and REINSTATES the orders of the Regional Trial Court (Branch 220)
in LRC Case Q-16014(03) dated June 19 and 22, 2007. With costs against respondent Armi S. Abel.
SO ORDERED.