Republic of the Philippines

Supreme Court
Manila
SECOND DIVISION

PHILIPPINE TOURISM G.R. No. 176628

AUTHORITY,
Petitioner,
Present:
CARPIO, J., Chairperson,
BRION,
- versus - PEREZ,
SERENO, and
REYES, JJ.
Promulgated:
PHILIPPINE GOLF DEVELOPMENT
& EQUIPMENT, INC., March 19, 2012
Respondent.
x------------------------------------------------------------------------------------x
R ES OLUTION
BRION, J.:
Before this Court is a petition for certiorari, under Rule 65 of the 1997 Rules of Civil Procedure, to annul the
decision[1] dated December 13, 2006 of the Court of Appeals(CA) in CA G.R. SP No. 90402. This CA decision dismissed the petition
for annulment of judgment which sought to set aside the decision [2] of the Regional Trial Court (RTC)of Muntinlupa City, Branch 203,
in Civil Case No. 03-212. The RTC held the Philippine Tourism Authority (PTA) liable for its unpaid obligation to Philippine Golf
Development & Equipment, Inc. (PHILGOLF).
FACTUAL BACKGROUND
On April 3, 1996, PTA, an agency of the Department of Tourism, whose main function is to bolster and promote tourism, entered into
a contract with Atlantic Erectors, Inc. (AEI)for the construction of the Intramuros Golf Course Expansion Projects (PAR 60-66) for a
contract price of Fifty-Seven Million Nine Hundred Fifty-Four Thousand Six Hundred Forty-Seven and 94/100 Pesos
(P57,954,647.94).
The civil works of the project commenced. Since AEI was incapable of constructing the golf course aspect of the project, it
entered into a sub-contract agreement with PHILGOLF, a duly organized domestic corporation, to build the golf course amounting to
Twenty-Seven Million Pesos (P27,000,000.00). The sub-contract agreement also provides that PHILGOLF shall submit its progress
billings directly to PTA and, in turn, PTA shall directly pay PHILGOLF.[3]
On October 2, 2003, PHILGOLF filed a collection suit against PTA amounting to Eleven Million Eight Hundred Twenty
Thousand Five Hundred Fifty and 53/100 Pesos (P11,820,550.53), plus interest, for the construction of the golf course. Within the
period to file a responsive pleading, PTA filed a motion for extension of time to file an answer.
On October 30, 2003, the RTC granted the motion for extension of time. PTA filed another motion for extension of time to
file an answer. The RTC again granted the motion.
Despite the RTCs liberality of granting two successive motions for extension of time, PTA failed to answer the complaint.
Hence, on April 6, 2004, the RTC rendered a judgment of default, ruling as follows:

WHEREFORE, judgment is hereby rendered, ordering the defendant to pay plaintiff:

1.

2.

The amount of Eleven Million, Eight Hundred Twenty Thousand, Five Hundred Fifty
Pesos and Fifty Three Centavos (P11,820,550.53), representing defendants outstanding
obligation, plus interest thereon of twelve percent (12%) per annum from the time the
unpaid billings of plaintiff were due for payment by the defendant, until they are fully
paid.
The amount of Two Hundred Thousand Pesos (P200,000.00), as attorneys fees.

3.

The amount of One Hundred Twenty Eight Thousand, Five Hundred Twenty Nine
Pesos and Fourteen Centavos (P128,529.14), as filing fees and other costs of litigation.

4.

The amount of Three Hundred Thousand Pesos (P300,000.00), as moral damages.

5.

The amount of One Hundred Fifty Thousand (Pesos (P150,000.00), as nominal

damages, and

6.

The amount of Two Hundred Fifty Thousand Pesos (P250,000.00), as exemplary

damages.

SO ORDERED.[4]

On July 11, 2005, PTA seasonably appealed the case to the CA. But before the appeal of PTA could be perfected, PHILGOLF
already filed a motion for execution pending appeal with the RTC. The RTC, in an Order dated June 2, 2004, granted the motion and a
writ of execution pending appeal was issued against PTA. On June 3, 2004, a notice of garnishment was issued against PTAs bank
account at the Land Bank of the Philippines, NAIA-BOC Branch to fully satisfy the judgment.
PTA filed a petition for certiorari with the CA, imputing grave abuse of discretion on the part of the RTC for granting the
motion for execution pending appeal. The CA ruled in favor of PTA and set aside the order granting the motion for execution pending
appeal.
On July 11, 2005, PTA withdrew its appeal of the RTC decision and, instead, filed a petition [5] for annulment of judgment
under Rule 47 of the Rules of Court. The petition for annulment of judgment was premised on the argument that the gross negligence
of PTAs counsel prevented the presentation of evidence before the RTC.
On December 13, 2006, the CA dismissed the petition for annulment of judgment for lack of merit. PTA questions this CA
action in the present petition for certiorari.
THE PETITION
The petition cites three arguments: first, that the negligence of PTAs counsel amounted to an extrinsic fraud warranting an
annulment of judgment; second, that since PTA is a government entity, it should not be bound by the inactions or negligence of its
counsel; and third, that there were no other available remedies left for PTA but a petition for annulment of judgment.
OUR RULING
We find the petition unmeritorious.
The Rules of Court specifically provides for deadlines in actions before the court to ensure an orderly disposition of cases.
PTA cannot escape these legal technicalities by simply invoking the negligence of its counsel. This practice, if allowed, would defeat
the purpose of the Rules on periods since every party would merely lay the blame on its counsel to avoid any liability. The rule is that
a client is bound by the acts, even mistakes, of his counsel in the realm of procedural technique[,]and unless such acts involve gross
negligence that the claiming party can prove, the acts of a counsel bind the client as if it had been the latters acts. [6]
In LBC Express - Metro Manila, Inc. v. Mateo, [7] the Court held that [g]ross negligence is characterized by want of even slight
care, acting or omitting to act in a situation where there is a duty to act, not inadvertently but willfully and intentionally with a

conscious indifference to consequences insofar as other persons may be affected. This cannot be invoked in cases where the counsel is
merely negligent in submitting his required pleadings within the period that the rules mandate.
It is not disputed that the summons together with a copy of the complaint was personally served upon, and received by PTA
through its Corporate Legal Services Department, on October 10, 2003.[8] Thus, in failing to submit a responsive pleading within the
required time despite sufficient notice, the RTC was correct in declaring PTA in default.
There was no extrinsic fraud
Extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation which is committed outside of the trial of the case,
whereby the unsuccessful party has been prevented from exhibiting fully his case, by fraud or deception practiced on him by his
opponent.[9] Under the doctrine of this cited case, we do not see the acts of PTAs counsel to be constitutive of extrinsic fraud.
The records reveal that the judgment of default [10] was sent via registered mail to PTAs counsel. However, PTA never availed of the
remedy of a motion to lift the order of default. [11] Since the failure of PTA to present its evidence was not a product of any fraudulent
acts committed outside trial, the RTC did not err in declaring PTA in default.
Annulment of judgment is not
the proper remedy
PTAs appropriate remedy was only to appeal the RTC decision. Annulment of Judgment under Rule 47 of the Rules of Court is a
recourse equitable in character and allowed only in exceptional cases where the ordinary remedies of new trial, appeal, petition for
relief or other appropriate remedies are no longer available through no fault of petitioner.[12]
In this case, appeal was an available remedy. There was also no extraordinary reason for a petition for annulment of
judgment, nor was there any adequate explanation on why the remedy for new trial or petition for relief could not be used. The Court
is actually at a loss why PTA had withdrawn a properly filed appeal and substituted it with another petition, when PTA could have
merely raised the same issues through an ordinary appeal.
PTA was acting in a proprietary
character
PTA also erred in invoking state immunity simply because it is a government entity. The application of state immunity is
proper only when the proceedings arise out of sovereign transactions and not in cases of commercial activities or economic affairs.
The State, in entering into a business contract, descends to the level of an individual and is deemed to have tacitly given its consent to
be sued.[13]
Since the Intramuros Golf Course Expansion Projects partakes of a proprietary character entered into between PTA and
PHILGOLF, PTA cannot avoid its financial liability by merely invoking immunity from suit.
A special civil action for certiorari
under Rule 65 is proper only when
there is no other plain, speedy, and
adequate remedy
Lastly, a special civil action under Rule 65 of the Rules of Court is only available in cases when a tribunal, board or officer exercising
judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting
to lack or excess of jurisdiction, and there is no appeal, or any plain, speedy, and adequate remedy in the ordinary course of law. It is
not a mode of appeal, and cannot also be made as a substitute for appeal. It will not lie in cases where other remedies are available
under the law.
In Land Bank of the Philippines v. Court of Appeals,[14] the Court had the occasion to state:
The general rule is that a [certiorari] will not issue where the remedy of appeal is available to the aggrieved
party. The remedies of appeal in the ordinary course of law and that ofcertiorari under Rule 65 of the Revised Rules
of Court are mutually exclusive and not alternative or cumulative. Hence, the special civil action
for certiorari under Rule 65 is not and cannot be a substitute for an appeal, where the latter remedy is available. xxx
xxxx
The proper recourse of the aggrieved party from a decision of the CA is a petition for review
on certiorari under Rule 45 of the Revised Rules of Court. On the other hand, if the error subject of the recourse is
one of jurisdiction, or the act complained of was perpetrated by a quasi-judicial officer or agency with grave abuse

of discretion amounting to lack or excess of jurisdiction, the proper remedy available to the aggrieved party is a
petition for certiorari under Rule 65 of the said Rules. [emphases supplied; citations omitted]

In sum, PTA had the remedy of appealing the RTC decision to the CA and, thereafter, to us. Under the circumstances, we find
no adequate reason to justify the elevation of this case to the CA and then to us, under Rule 65 of the Rules of Court.
WHEREFORE, premises considered, we hereby DISMISS the petition for certiorari. No costs.
SO ORDERED.

ARTURO D. BRION
Associate Justice
WE CONCUR:

ANTONIO T. CARPIO
Associate Justice
Chairperson

JOSE PORTUGAL PEREZ

Associate Justice

MARIA LOURDES P. A. SERENO

Associate Justice

BIENVENIDO L. REYES
Associate Justice
AT T E S TAT I O N
I attest that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the
opinion of the Courts Division.
ANTONIO T. CARPIO
Associate Justice
Chairperson, Second Division

C E R T I F I C AT I O N
Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson's Attestation, I certify that the conclusions in the
above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Courts Division.

RENATO C. CORONA
Chief Justice

[1]

Penned by Associate Justice Rosmari D. Carandang, and concurred in by Associate Justices Remedios A. Salazar-Fernando and
Monina Arevalo-Zenarosa; rollo, pp. 86-95.
[2]
Dated April 6, 2004; id. at 26-33.
[3]
Id. at 88.
[4]
Id. at 33.
[5]
Dated July 5, 2005.
[6]
Labao v. Flores, G.R. No. 187984, November 15, 2010, 634 SCRA 723, 733.
[7]
G.R. No. 168215, June 9, 2009, 589 SCRA 33, 37.
[8]
Rollo, p. 28.
[9]
City Government of Tagaytay v. Guerrero, G.R. Nos. 140743, 140745 and 141451-52, September 17, 2009, 600 SCRA 33, 61.
[10]
Dated February 17, 2004.
[11]
Rollo, p. 46.
[12]
City Government of Tagaytay v. Guerrero, supra note 8, at 51.
[13]
United States of America v. Ruiz, No. L-35645, May 22, 1985, 136 SCRA 487.
[14]
456 Phil. 755, 785-787 (2003).

FIRST DIVISION
[G.R. Nos. 149797-98. February 13, 2004]
NANCY L. TY, petitioner, vs. BANCO FILIPINO SAVINGS AND MORTGAGE BANK, COURT OF APPEALS and HON.
PATERNO V. TAC-AN, in his capacity as the Presiding Judge of RTC Batangas City, Branch 84, respondents.
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review on certiorari under Rule 45 of the Rules of Court seeking to set aside and reverse the June 7, 2001
Decision[1] of the Court of Appeals in CA-G.R. SP Nos. 59173 & 59576 which dismissed the petition for certiorari and prohibition
filed by petitioner and affirmed the assailed Orders dated April 14, 2000 and May 8, 2000.
On August 16, 1995, respondent Banco Filipino Savings and Mortgage Bank (Banco Filipino, for brevity) filed with the
Regional Trial Court of Batangas City, Branch 84, presided by respondent Judge Paterno V. Tac-an, an action for reconveyance of real
property against petitioner Nancy Ty, together with Tala Realty Services Corporation, Pedro B. Aguirre, Remedios A. Dupasquier,
Pilar D. Ongking, Elizabeth H. Palma, Dolly W. Lim, Cynthia E. Mesina, Rubencito M. Del Mundo, and Add International Services,
Inc. (hereinafter collectively referred to as Tala, et al.).
On November 15, 1995, Tala, et al. filed a motion to dismiss the complaint on the ground of lack of jurisdiction. Respondent
judge granted the motion and dismissed the complaint. However, on a motion for reconsideration by Banco Filipino, the complaint
was reinstated.[2]
Tala, et al., with the exception of Nancy Ty[3] and Cynthia Mesina,[4] filed a motion for reconsideration, which was however
denied in an Order dated June 3, 1996. The pertinent portion of the Order reads:
On the Motion for Reconsideration filed by defendants, except Nancy Ty and Cynthia Mesina, the record shows that the Motion for
Reconsideration filed by the plaintiff dated February 23, 1996 was sent by mail on February 2, 1996 to this Court and received by the
Court on March 5, 1996. The copy of the said Motion for Reconsideration was furnished to Alampay Gatchalian Mawis Carranza and

Alampay, Counsels for the defendants at their address in Makati City on February 26, 1996. The copy sent to the Court was received
on March 5, 1996. It could safely (sic) assumed that copy sent to the defendants counsel at the nearer address at Makati City even
before March 5, 1996 or on March 1, 1996, at least 4 days in transit. In the normal course of events or as a matter of practice, counsels
file comments or opposition to Motions without need of Court orders. So, from March 1, 1996, they could have filed comment and
opposition within 10 days therefrom, or on March 11, 1996 without awaiting for a Court order. The Court does not believe that the
said motion for reconsideration was received by said defendants counsel on March 28, 1996 or one month and 2 days after mailing by
plaintiffs counsel. The extension of 5 days given to defendants contained in the Order of March 7, 1996 was only a matter of grace
extended by the court, a reminder that their opposition must be forthcoming. Lawyers must be vigilant in the defense of their clients. x
x x. (Underscoring supplied)
On July 8, 1996, petitioner and Tala, et al. filed their respective answers to the complaint. Two days later, Tala, et al. also filed a
motion to suspended proceedings, on the ground that an appeal by Banco Filipino to the April 1, 1996 Order of the respondent court is
still pending resolution. The motion to suspend proceedings was, however, denied by respondent court.
On October 21, 1996, Banco Filipino moved for an order directing Tala, et al. to produce or make available books, documents
and other papers relevant to the case.[5] Notwithstanding Tala, et al.s opposition thereto, the trial court directed Tala, et al. to produce
certain documents within a specified period of time, despite failure by Banco Filipino to tender the costs for such production and
inspection. In its Order dated November 20, 1996, the trial court justified Banco Filipinos failure to advance the expenses of
production and inspection in this wise:[6]
Further to the Order dated November 1996, requiring the defendant Tala to produce certain documents within the specified period of
time, for those documents in which the defendant is bound to keep by law or regulation, their production cannot be the subject of
assessment for cost against plaintiff-movant. Otherwise, cost maybe assessed and billed but the same shall be submitted to the Court
for approval. x x x.
Thereafter, Taal, et al. filed their motion for reconsideration to the afore-quoted Order, on January 14 1997.
In the meantime, on December 20 1996, Banco Filipino filed a manifestation/omnibus motion [7] praying, among others, for the
declaration of certain allegations and propositions as being factually established and for the allegations/defenses in Tala, et al.s answer
to be stricken out.
The trial court granted Banco Filipinos motion to declare certain facts as established in an Order on February 26, 1998, the
dispositive portion of which provides:[8]
Premises considered, and pursuant to Rules 27 and Section 3, Rule 29 of the Revised Rules of Court, this Court hereby:
A) Declares
1) as having been established the fact that defendant TALA did not have the financial capacity to acquire by
purchase the disputed Batangas property at the time of their acquisition;
2) as having been established the fact that TALA had not the means of acquiring the Batangas property other than
through the advanced rental payments made by plaintiff;
3) as having been established the fact that the Batangas property had merely been transferred by way of trust to
TALA, as trustee for the benefit of the plaintiff, which was there as purchaser of the property;
4) prohibits defendant TALA from introducing any evidence contrary to sections (1), (2) and (3) of paragraph A,
above.
B) Strikes out allegations/defenses in defendant TALAs Answer and/or other pertinent pleadings averring that:
1) TALA is an independent corporation, not a trustee of the plaintiff;

2) TALA acquired the Batangas property independently and using its own funds through armslength transaction;
3) TALA is the full and absolute owner of the disputed property.
Meanwhile, Tala, et al. failed to produce the requested documents. In a Supplemental Order dated April 15, 1998, Tala, et al.
were directed to produce additional documents. The Supplemental Order reads:[9]
Further to the Order dated February 26, 1998 and considering that the documents presented so far by the defendant Tala are not
complete in relation to those itemized in the said Order, defendant Tala is further ordered to produce the following documents from
1979 to 1985:
1. records of stocks subscribed, paid-in and issued;
2. for loans payable leasees deposit, subsidiary ledger, evidence of indebtedness;
3. for lands purchased, the deeds of sale.
xxxxxxxxx
On May 4, 1998, Banco Filipinos urgent motion to reset hearing and for extension of time to appoint a commissioner, through its
special counsel, was granted. On May 11, 1999, Banco Filipino was directed to present its next witness. [10]
Thereafter, Banco Filipino formally offered its exhibits, all of which were admitted by the trial court. [11] Tala, et al.s motion for
reconsideration of the order admitting the said exhibits was denied. Banco Filipinos motion to withdraw certain exhibits was granted.
Thereafter, Tala, et al. filed a motion for the voluntary inhibition and/or disqualification of respondent judge Tac-an on the
grounds of manifest prejudgment and partiality.
On April 14, 2000, respondent judge denied the motion for inhibition and ruled that all the Orders of the court were based on
facts and applicable law and jurisprudence. Respondent judge likewise reprimanded Tala, et al. for filing several motions designed to
delay the proceedings.[12]
Separate motions for reconsideration were filed by Nancy Ty and Tala, et al., but the same were denied by the trial court in an
Order dated May 8, 2000.
Dissatisfied, Nancy Ty and Tala, et al. filed separate petitions for certiorari and prohibition with the Court of Appeals, docketed
as CA-G.R. SP No. 59576 and CA-G.R. SP No. 59173, assailing the two Orders of respondent judge dated April 14, 2000 and May 8,
2000.
In a consolidated Decision dated June 7, 2000, the appellate court dismissed the two petitions and affirmed the assailed Orders
by respondent judge.[13]
Hence, the instant petition, based on the following grounds:
I
THE COURT OF APPEALS DEPARTED FROM THE ACCEPTED AND USUAL COURSE OF JUDICIAL PROCEEDINGS,
THUS CALLING FOR THE EXERCISE OF THIS HONORABLE COURTS POWER OF SUPERVISION AND REVIEW, WHEN
IT CHOSE TO EXAMINE ONLY SOME, NOT ALL, OF THE ASSAILED ORDERS OF JUDGE TAC-AN, WHICH, TAKEN
COLLECTIVELY AND NOT INDIVIDUALLY, DEMONSTRATE A STRONG BIAS AND ANIMOSITY AGAINST PETITIONER
AND TALA ET AL AND REVEAL AN OBVIOUS PARTIALITY IN FAVOR OF BANCO FILIPINO.
II

THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH LAW AND JURISPRUDENCE
WHEN IT REFUSED TO APPLY, OR EVEN CONSIDER THE APPLICATION OF THE DOCTRINES LAID DOWN BY THIS
HONORABLE COURT IN FECUNDO V. BERJAMEN, LUQUE V. KAYANAN AND OTHER SETTLED JURISPRUDENCE. AS
A CONSEQUENCE, THE COURT OF APPEALS ERRONEOUSLY FAILED TO CONCLUDE THAT THE INTEMPERATE AND
ACCUSATORY LANGUAGE OF JUDGE TAC-AN IN HIS ORDER DATED 14 APRIL 2000 IS A MANIFESTATION OF THE
LATTERS EXASPERATION BORDERING ON INDIGNATION AT THE PETITIONER WHICH MAY UNNECESSARILY
CLOUD HIS IMPARTIALITY AND WHICH WARRANTS HIS VOLUNTARY INHIBITION.
III
THE COURT OF APPEALS DECIDED A QUESTION OF SUBSTANCE NOT IN ACCORD WITH SETTLED JURISPRUDENCE
WHEN IT AFFIRMED THE ORDERS OF THE LOWER COURT AND FOUND THAT THE ASSAILED ORDER DATED 20
MARCH 2000 DID NOT BETRAY THAT JUDGE TAC-AN HAD ALREADY PREJUDGED THE CASE PENDING BEFORE RTC
BATANGAS BRANCH 84.
IV
THE COURT OF APPEALS DEPARTED FROM THE CONSTITUTIONALLY MANDATED, ACCEPTED AND USUAL COURSE
OF JUDICIAL PROCEEDINGS, OR AT LEAST SANCTIONED SUCH DEPARTURE BY JUDGE TAC-AN, WHEN IT
DELIBERATELY SELECTED ONLY A FEW OF THE BADGES OF BIAS, HOSTILITY AND PREJUDGMENT CITED BY THE
PETITIONER AND, WORSE, WHEN IT WILLFULLY FAILED TO RESOLVE ISSUES RAISED IN PETITIONERS AND TALA
ET ALS RESPECTIVE PETITIONS FOR CERTIORARI AND MOTION FOR RECONSIDERATION
V
THE COURT OF APPEALS GRAVELY ERRED WHEN IT CONCLUDED THAT PETITIONERS OMNIBUS MOTION WAS
INTENDED TO DELAY THE PROCEEDINGS BEFORE THE TRIAL COURT AND NOT TO AVAIL OF THE LEGAL
REMEDIES PROVIDED BY THE RULES OF COURT TO ENSURE THAT HER CONSTITUTIONAL RIGHT TO DUE PROCESS
IS PROTECTED AND GUARANTEED.[14]
For resolution is the issue of whether or not respondent judge committed grave abuse of discretion in denying the motion for
voluntary inhibition.
Petitioner argues that, by selectively appreciating some, and not all, of the orders of respondent judge cited as badges of hostility,
bias and prejudgment, the appellate court departed from the accepted and usual course of judicial proceedings and disregarded
principles laid down by jurisprudence.
Petitioner asserts that the Orders which were issued by respondent judge demonstrated his predilection to act with bias in favor
of Banco Filipino and manifested his escalating hostility and animosity towards petitioner and her co-defendants, Tala, et al.
In regard to the Order dated June 3, 1996, petitioner contends that it was not Tala, et al. but Banco Filipino, which was duty
bound to establish the date of actual receipt of its motion for reconsideration. She complains that respondent judge contravened the
express provisions of the Rules of Court when he unilaterally relieved Banco Filipino of its statutory obligation to prove service of its
motion for reconsideration and, instead, applied, x x x a so-called safe assumption in determining when petitioner and her codefendants should have received the same.[15] Moreover, she takes offense to the respondent judges statement that he did not believe
Tala, et al.s claim of receipt of the pleading on 28 March 1996, thus, in effect branding them as liars.
Rule 13, Section 8, of the Rules of Court provides that 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 the first notice of the postmaster,
service shall take effect at the expiration of such time.
In the case at bar, there is no postmasters certification that the registered mail was unclaimed by the addressee and thus returned
to the sender, after first notice was sent to and received by addressee on a specified date. Absent such notice, the disputable

presumption of completeness of service does not arise and by implication, respondent judge could not presume actual receipt by
addressee.
Petitioner also alleges that the Order dated November 20, 1996 is another indicium of respondent judges manifest partiality when
he granted the motion for production of documents despite failure by Banco Filipino to advance the cost for such production and
inspection. The respondent judge justified his Order with a sweeping declaration that the amount is insignificant by any standard and
could readily been resolved between the parties involved. Records reveal that Tala did not charge Banco Filipino for the documents it
eventually produced pursuant to the motion for production.[16]
Respondent judges peremptory act of absolving Banco Filipino from paying the expenses for the production of documents is
disturbing for its lack of basis. There was no basis for respondent judge to conclude that the amount involved was insignificant
considering that, as the records would show, no reference of any amount was made by the parties. Moreover, his categorical
declaration that Tala, et al. did not bother to charge Banco Filipino the amount of expenses runs counter to the evidence at hand. In
opposing the motion for the production of documents,[17] Tala, et al. cited, as one of their grounds, the excessive expense it would incur
in case the motion would be granted. Sound judicial action dictates that he should have inquired first into the validity of Tala, et al.s
claim, whose rights were bound to be affected, instead of making a sweeping and dismissive Order exempting Banco Filipino from
complying with its legal obligation.
Petitioner also assails the Orders dated: (1) April 15, 1998 Order directing Tala, et al. to produce certain documents not requested
by Banco Filipino; and (2) May 11, 1999 Order directing Banco Filipino to present its witness.
The role of the trial judge in the conduct of judicial proceedings should only be confined to promote the expeditious resolution of
controversies and prevent unnecessary waste of time or to clear up some obscurity. There is, however, undue interference where the
judges participation in the conduct of the trial tends to build or bolster a case for one of the parties. This is enjoined by the Code of
Judicial Conduct, Rule 3.06 which provides:
While a judge may, to promote justice, prevent waste of time or clear up some obscurity, properly intervene in the presentation of
evidence during the trial, it should always be borne in mind that undue interference may prevent the proper presentation of the cause
or the ascertainment of truth.
There is undue interference if the judge, as in the instant case, orders the presentation of specific documentary evidence without a
corresponding motion from any party, or directs a party when and who to present as a witness and what matters such witness will
testify on. To our mind, respondent judge transgressed the boundaries of impartiality when he suggested to Banco Filipino what
evidence to present to prove its case. While the trial court may interfere in the manner of presenting evidence in order to promote the
orderly conduct of the trial, the final determination of what evidence to adduce is the sole prerogative of the contending parties.
Courts, while not unmindful of their primary duty to administer justice, without fear or favor, and to dispose of cases speedily and in
as inexpensive a manner as is possible for the court and the parties, should refrain from showing any semblance of bias or more or less
partial attitude in order not to create any false impression in the minds of the litigants. For obvious reasons, it is the bounden duty of
all to strive for the preservation of the peoples faith in our courts.[18]
Petitioner also questions the manner with which respondent judge resolved Banco Filipinos formal offer of exhibits. The records
show that on November 29, 1999, petitioner filed her comment on Banco Filipinos formal offer of exhibits. On December 8, 1999,
respondent judge granted Banco Filipino and Tala, et al. five (5) days each within which to file their respective reply and rejoinders.
On December 9, 1999, Tala, et al. filed their comment. Yet the next day, December 10, respondent judge, without awaiting the reply
and rejoinders of the parties, issued an order admitting all the exhibits offered.
The seeming haste with which respondent judge resolved Banco Filipinos formal offer of exhibits cannot simply be ignored. It is
true, as the appellate court observed, that the filing of a reply lies in the sound discretion of the court. What is objectionable, however,
is that respondent judge expressly granted the parties a period of time within which to file their respective pleadings, only to disregard
in the end, the period he himself had set and, thus deprived the parties an opportunity to ventilate their respective sides and render the
issues clearer.

Finally, petitioner argues that respondent judge prejudged the case when he issued the March 20, 2000 Order. She claims that the
Order, which categorically and unqualifiedly stated the existence of an implied trust, rendered a definite resolution of one of the
principal issues in the main case without awaiting her and Tala, et al.s evidence.
In his April 14, 2000 Order, respondent judge brushed aside petitioners argument by declaring that the finding is only
interlocutory because this can be rebutted by the defendants x x x. Necessarily, the Court must make an initial assessment of the
evidence as presented by the plaintiff if they constitute prima facie evidence x x x.
There is no rule of procedure that requires a judge to conclude, out of necessity, the existence of a prima facie case on the basis
alone of the evidence presented by the plaintiff. As correctly pointed out by petitioner, it is only when the plaintiff demurs to evidence
that the trial court may rule on the case before the defense presents its evidence. Moreover, the assailed Order, being interlocutory in
nature, is not the final decision. As such, it is inappropriate for respondent judge to rule, in an interlocutory order, on the principal
issue that effectively disposes of the merits of the case. In the interest of substantial justice, the issue of whether or not there is a trust
relationship between the parties must be threshed out in a full-dress hearing and not merely in an interlocutory Order.
It is of utmost importance that a judge must preserve the trust and confidence reposed in him by the parties as an impartial,
unbiased and dispassionate dispenser of justice. When he conducts himself in a manner that gives rise, fairly or unfairly, to perceptions
of bias, such faith and confidence are eroded. His decisions, whether right or wrong, will always be under suspicion of irregularity. In
the case of Bautista v. Rebueno,[19] we stated:
. . . The Judge must maintain and preserve the trust and faith of the parties litigants. He must hold himself above reproach and
suspicion. At the very first sign of lack of faith and trust to his actions, whether well grounded or not, the Judge has no other
alternative but inhibit himself from the case. A judge may not be legally prohibited from sitting in a litigation, but when circumstances
appear that will induce doubt to his honest actuations and probity in favor of either party, or incite such state of mind, he should
conduct a careful self-examination. He should exercise his discretion in a way that the people's faith in the Courts of Justice is not
impaired. The better course for the Judge under such circumstances is to disqualify himself. That way, he avoids being misunderstood,
his reputation for probity and objectivity is preserved. What is more important, the ideal of impartial administration of justice is lived
up to. (Underscoring supplied)
In the case at bar, the consistency and regularity with which respondent judge issued the assailed directives gives rise, not to a
fanciful suggestion or to a superficial impression of partiality, but to a clear and convincing proof of bias and prejudice. While we are
not unmindful of this Courts previous pronouncements that to warrant the judges inhibition from the case, bias or prejudice must be
shown to have stemmed from an extra-judicial or extrinsic source, [20] this rule does not apply where the judge, as in the instant case,
displays an inordinate predisposition to deviate from established procedural precepts that demonstrate obvious partiality in favor of
one party. It is also true that the Supreme Court, on several occasions, ruled that the issuance of the complained orders and decision
that pertain to the judges judicial functions may not be proper considerations to charge a judge of bias though these acts may be
erroneous.[21] However, where said complained orders, taken not singly but collectively, ineluctably show that the judge has lost the
cold neutrality of an impartial magistrate, due process dictates that he voluntarily inhibits himself from the case.
WHEREFORE, in view of the foregoing, the petition is GRANTED. The June 7, 2001 Decision of the Court of Appeals in CAG.R. SP Nos. 59173 & 59576 which dismissed the petition for certiorari and prohibition filed by petitioner and affirmed the Orders
dated April 14, 2000 and May 8, 2000 is REVERSED and SET ASIDE. Respondent judge is directed to inhibit himself from
presiding in Civil Case No. 4521. The Executive Judge of the Regional Trial Court of Batangas City is directed to re-raffle the said
case to another judge.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Carpio, and Azcuna, JJ., concur.
Panganiban, J., no part. Former counsel of a party.

FIRST DIVISION
SOCIAL SECURITY COMMISSION,
Petitioner,

G.R. No. 167050

Present:

-versus-

RIZAL
POULTRY
and
LIVESTOCK
ASSOCIATION, INC., BSD AGRO INDUSTRIAL
DEVELOPMENT
CORPORATION
and
BENJAMIN SAN DIEGO,
Respondents.

CORONA, C.J.,
Chairperson
VELASCO, JR.,
LEONARDO-DE CASTRO,
PERALTA,* and
PEREZ, JJ.

Promulgated:

June 1, 2011
x ----------------------------------------------------------------------------------------x
DECISION
PEREZ, J.:
This petition for certiorari challenges the Decision[1] dated 20 September 2004 and Resolution[2] dated 9 February 2005 of the
Court of Appeals. The instant case stemmed from a petition filed by Alberto Angeles (Angeles) before the Social Security Commission
(SSC) to compel respondents Rizal Poultry and Livestock Association, Inc. (Rizal Poultry) or BSD Agro Industrial Development
Corporation (BSD Agro) to remit to the Social Security System (SSS) all contributions due for and in his behalf.Respondents
countered with a Motion to Dismiss[3] citing rulings of the National Labor Relations Commission (NLRC) and Court of Appeals
regarding the absence of employer-employee relationship between Angeles and the respondents.
As a brief backgrounder, Angeles had earlier filed a complaint for illegal dismissal against BSD Agro and/or its owner,
Benjamin San Diego (San Diego). The Labor Arbiter initially found that Angeles was an employee and that he was illegally
dismissed. On appeal, however, the NLRC reversed the Labor Arbiters Decision and held that no employer-employee relationship
existed between Angeles and respondents. The ruling was anchored on the finding that the duties performed by Angeles, such as
carpentry, plumbing, painting and electrical works, were not independent and integral steps in the essential operations of the company,
which is engaged in the poultry business.[4] Angeles elevated the case to the Court of Appeals via petition for certiorari. The appellate
court affirmed the NLRC ruling and upheld the absence of employer-employee relationship. [5]Angeles moved for reconsideration but it
was denied by the Court of Appeals.[6] No further appeal was undertaken, hence, an entry of judgment was made on 26 May 2001.[7]
At any rate, the SSC did not take into consideration the decision of the NLRC. It denied respondents motion to dismiss in an
Order dated 19 February 2002. The SSC ratiocinated, thus:
Decisions of the NLRC and other tribunals on the issue of existence of employer-employee relationship
between parties are not binding on the Commission. At most, such finding has only a persuasive effect and does not
constitute res judicata as a ground for dismissal of an action pending before Us. While it is true that the parties
before the NLRC and in this case are the same, the issues and subject matter are entirely different. The labor case is
for illegal dismissal with demand for backwages and other monetary claims, while the present action is for
remittance of unpaid SS[S] contributions. In other words, although in both suits the respondents invoke lack of
employer-employee relationship, the same does not proceed from identical causes of action as one is for violation of
the Labor Code while the instant case is for violation of the SS[S] Law.
Moreover, the respondents arguments raising the absence of employer-employee relationship as a defense
already traverse the very issues of the case at bar, i.e., the petitioners fact of employment and entitlement to SS[S]
coverage. Generally, factual matters should not weigh in resolving a motion to dismiss when it is based on the
ground of failure to state a cause of action, but rather, merely the sufficiency or insufficienciy of the allegations in
the complaint. x x x. In this respect, it must be observed that the petitioner very categorically set forth in his Petition,
that he was employed by the respondent(s) from 1985 to 1997.[8]

A subsequent motion for reconsideration filed by respondents was likewise denied on 11 June 2002. The SSC reiterated that
the principle of res judicata does not apply in this case because of the absence of the indispensable element of identity of cause of
action.[9]
Unfazed, respondents sought recourse before the Court of Appeals by way of a petition for certiorari. The Court of Appeals
reversed the rulings of the SSC and held that there is a common issue between the cases before the SSC and in the NLRC; and it is
whether there existed an employer-employee relationship between Angeles and respondents.Thus, the case falls squarely under the
principle of res judicata, particularly under the rule on conclusiveness of judgment, as enunciated in Smith Bell and Co. v. Court of
Appeals.[10]
The Court of Appeals disposed, thus:
WHEREFORE, the petition is GRANTED. The Order dated February 19, 2000 and the Resolution dated
June 11, 2002 rendered by public respondent Social Security Commissoin in SSC Case No. 9-15225-01 are
hereby REVERSED and SET ASIDE and the respondent commission is ordered to DISMISS Social Security
Commission Case No. 9-15225-01.[11]
After the denial of their motion for reconsideration in a Resolution [12] dated 9 February 2005, petitioner filed the instant
petition.
For our consideration are the issues raised by petitioner, to wit:
WHETHER OR NOT THE DECISION OF THE NLRC AND THE COURT OF APPEALS, FINDING NO
EMPLOYER-EMPLOYEE
RELATIONSHIP,
CONSTITUTES RES
JUDICATAAS
A RULE
ON
CONCLUSIVENESS OF JUDGMENT AS TO PRECLUDE THE RELITIGATION OF THE ISSUE OF
EMPLOYER-EMPLOYEE RELATIONSHIP IN A SUBSEQUENT CASE FILED BEFORE THE PETITIONER.
WHETHER OR NOT RESPONDENT COURT OF APPEALS MAY ORDER OUTRIGHT THE DISMISSAL OF
THE SSC CASE IN THE CERTIORARI PROCEEDINGS BEFORE IT.[13]
SSC maintains that the prior judgment rendered by the NLRC and Court of Appeals, that no employer-employee relationship
existed between the parties, does not have the force of res judicata by prior judgment or as a rule on the conclusiveness of judgment. It
contends that the labor dispute and the SSC claim do not proceed from the same cause of action in that the action before SSC is for
non-remittance of SSS contributions while the NLRC case was for illegal dismissal. The element of identity of parties is likewise
unavailing in this case, according to SSC. Aside from SSS intervening, another employer, Rizal Poultry, was added as respondent in
the case lodged before the SSC. There is no showing that BSD Agro and Rizal Poultry refer to the same juridical entity. Thus, the
finding of absence of employer-employee relationship between BSD Agro and Angeles could not automatically extend to Rizal
Poultry. Consequently, SSC assails the order of dismissal of the case lodged before it.
SSC also claims that the evidence submitted in the SSC case is different from that adduced in the NLRC case. Rather than
ordering the dismissal of the SSC case, the Court of Appeals should have allowed SSC to resolve the case on its merits by applying the
Social Security Act of 1997.
Respondents assert that the findings of the NLRC are conclusive upon the SSC under the principle of res judicata and in line
with the ruling in Smith Bell v. Court of Appeals. Respondents argue that there is substantially an identity of parties in the NLRC and
SSC cases because Angeles himself, in his Petition, treated Rizal Poultry, BSD Agro and San Diego as one and the same entity.
Respondents oppose the view proffered by SSC that the evidence to prove the existence of employer-employee relationship
obtaining before the NLRC and SSS are entirely different. Respondents opine that the definition of an employee always proceeds from
the existence of an employer-employee relationship.
In essence, the main issue to be resolved is whether res judicata applies so as to preclude the SSC from resolving anew the
existence of employer-employee relationship, which issue was previously determined in the NLRC case.
Res judicata embraces two concepts: (1) bar by prior judgment as enunciated in Rule 39, Section 47(b) of the Rules of Civil
Procedure; and (2) conclusiveness of judgment in Rule 39, Section 47(c).[14]
There is bar by prior judgment when, as between the first case where the judgment was rendered and the second case that is
sought to be barred, there is identity of parties, subject matter, and causes of action. In this instance, the judgment in the first case
constitutes an absolute bar to the second action.[15]
But where there is identity of parties in the first and second cases, but no identity of causes of action, the first judgment is
conclusive only as to those matters actually and directly controverted and determined and not as to matters merely involved therein.

This is the concept of res judicata known as conclusiveness of judgment. Stated differently,any right, fact or matter in issue directly
adjudicated or necessarily involved in the determination of an action before a competent court in which judgment is rendered on the
merits is conclusively settled by the judgment therein and cannot again be litigated between the parties and their privies, whether or
not the claim, demand, purpose, or subject matter of the two actions is the same. [16]
Thus, 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 issue.[17]
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. Should
identity of parties, subject matter, and causes of action be shown in the two cases, then res judicata in its aspect as a bar by prior
judgment would apply. If as between the two cases, only identity of parties can be shown, but not identical causes of action, then res
judicata as conclusiveness of judgment applies.[18]
Verily, the principle of res judicata in the mode of conclusiveness of judgment applies in this case. The first element is
present in this case. The NLRC ruling was affirmed by the Court of Appeals. It was a judicial affirmation through a decision duly
promulgated and rendered final and executory when no appeal was undertaken within the reglementary period. The jurisdiction of the
NLRC, which is a quasi-judicial body, was undisputed. Neither can the jurisdiction of the Court of Appeals over the NLRC decision
be the subject of a dispute. The NLRC case was clearly decided on its merits; likewise on the merits was the affirmance of the NLRC
by the Court of Appeals.
With respect to the fourth element of identity of parties, we hold that there is substantial compliance.
The parties in SSC and NLRC cases are not strictly identical. Rizal Poultry was impleaded as additional respondent in the
SSC case. Jurisprudence however does not dictate absolute identity but only substantial identity. [19] There is substantial identity of
parties when there is a community of interest between a party in the first case and a party in the second case, even if the latter was not
impleaded in the first case.[20]
BSD Agro, Rizal Poultry and San Diego were litigating under one and the same entity both before the NLRC and the
SSC. Although Rizal Poultry is not a party in the NLRC case, there are numerous indications that all the while, Rizal Poultry was also
an employer of Angeles together with BSD Agro and San Diego. Angeles admitted before the NLRC that he was employed by BSD
Agro and San Diego from 1985 until 1997. [21] He made a similar claim in his Petition before the SSC including as employer Rizal
Poultry as respondent.[22] Angeles presented as evidence before the SSC his Identification Card and a Job Order to prove his
employment in Rizal Poultry. He clarified in his Opposition to the Motion to Dismiss [23] filed before SSC that he failed to adduce these
as evidence before the NLRC even if it would have proven his employment with BSD Agro. Most significantly, the three respondents,
BSD Agro, Rizal Poultry and San Diego, litigated as one entity before the SSC. They were represented by one counsel and they
submitted their pleadings as such one entity. Certainly, and at the very least, a community of interest exists among them. We therefore
rule that there is substantial if not actual identity of parties both in the NLRC and SSC cases.
As previously stated, an identity in the cause of action need not obtain in order to apply res judicata by conclusiveness of
judgment. An identity of issues would suffice.
The remittance of SSS contributions is mandated by Section 22(a) of the Social Security Act of 1997, viz:
SEC. 22. Remittance of Contributions. - (a) The contributions imposed in the preceding Section shall be
remitted to the SSS within the first ten (10) days of each calendar month following the month for which they are
applicable or within such time as the Commission may prescribe. Every employer required to deduct and to remit
such contributions shall be liable for their payment and if any contribution is not paid to the SSS as herein
prescribed, he shall pay besides the contribution a penalty thereon of three percent (3%) per month from the date the
contribution falls due until paid. x x x.
[24]

The mandatory coverage under the Social Security Act is premised on the existence of an employer-employee relationship.
This is evident from Section 9(a) which provides:
SEC. 9. Coverage. - (a) Coverage in the SSS shall be compulsory upon all employees not over sixty (60)
years of age and their employers: Provided, That in the case of domestic helpers, their monthly income shall not be
less than One thousand pesos (P1,000.00) a month x x x.

Section 8(d) of the same law defines an employee as any person who performs services for an employer in which either or
both mental or physical efforts are used and who receives compensation for such services, where there is an employer-employee
relationship. The illegal dismissal case before the NLRC involved an inquiry into the existence or non-existence of an employeremployee relationship. The very same inquiry is needed in the SSC case. And there was no indication therein that there is an essential
conceptual difference between the definition of employee under the Labor Code and the Social Security Act.
In the instant case, therefore, res judicata in the concept of conclusiveness of judgment applies. The judgment in the NLRC case
pertaining to a finding of an absence of employer-employee relationship between Angeles and respondents is conclusive on the SSC
case.
A case in point is Smith Bell and Co. v. Court of Appeals [25] which, contrary to SSC, is apt and proper reference. Smith Bell availed of
the services of private respondents to transport cargoes from the pier to the company's warehouse. Cases were filed against Smith Bell,
one for illegal dismissal before the NLRC and the other one with the SSC, to direct Smith Bell to report all private respondents to the
SSS for coverage. While the SSC case was pending before the Court of Appeals, Smith Bell presented the resolution of the Supreme
Court in G.R. No. L-44620, which affirmed the NLRC, Secretary of Labor, and Court of Appeals finding that no employer-employee
relationship existed between the parties, to constitute as bar to the SSC case. We granted the petition of Smith Bell and ordered the
dismissal of the case. We held that the controversy is squarely covered by the principle of res judicata, particularly under the rule on
conclusiveness of judgment. Therefore, the judgment in G.R. No. L-44620 bars the SSC case, as the relief sought in the latter case is
inextricably related to the ruling in G.R. No. L-44620 to the effect that private respondents are not employees of Smith Bell.
The fairly recent case of Co v. People,[26] likewise applies to the present case. An information was filed against Co by private
respondent spouses who claim to be employees of the former for violation of the Social Security Act, specifically for non-remittance
of SSS contributions. Earlier, respondent spouses had filed a labor case for illegal dismissal.The NLRC finally ruled that there was no
employer-employee relationship between her and respondent spouses. Co then filed a motion to quash the information, arguing that
the facts alleged in the Information did not constitute an offense because respondent spouses were not her employees. In support of her
motion, she cited the NLRC ruling. This Court applied Smith Bell and declared that the final and executory NLRC decision to the
effect that respondent spouses were not the employees of petitioner is a ruling binding in the case for violation of the Social Security
Act. The Court further stated that the doctrine of conclusiveness of judgment also applies in criminal cases. [27]
Applying the rule on res judicata by conclusiveness of judgment in conjunction with the aforecited cases, the Court of
Appeals aptly ruled, thus:
In SSC Case No. 9-15225-01, private respondent Angeles is seeking to compel herein petitioners to remit to
the Social Security System (SSS) all contributions due for and in his behalf, whereas in NLRC NCR CA 018066-99
(NLRC RAB-IV-5-9028-97 RI) private respondent prayed for the declaration of his dismissal illegal. In SSC No. 915225-01, private respondent, in seeking to enforce his alleged right to compulsory SSS coverage, alleged that he
had been an employee of petitioners; whereas to support his position in the labor case that he was illegally dismissed
by petitioners BSD Agro and/or Benjamin San Diego, he asserted that there was an employer-employee relationship
existing between him and petitioners at the time of his dismissal in 1997. Simply stated, the issue common to both
cases is whether there existed an employer-employee relationship between private respondent and petitioners at the
time of the acts complaint of were committed both in SSC Case No. 9-15225-01 and NLRC NCR CA 018066-99
(NLRC RAB-IV-5-9028-977-RI).
The issue of employer-employee relationship was laid to rest in CA GR. SP. No. 55383, through this Courts
Decision dated October 27, 2000 which has long attained finality. Our affirmation of the NLRC decision of May 18,
1999 was an adjudication on the merits of the case.
Considering the foregoing circumstances, the instant case falls squarely under the umbrage of res
judicata, particularly, under the rule on conclusiveness of judgment. Following this rule, as enunciated in Smith Bell
and Co. and Carriaga, Jr. cases, We hold that the relief sought in SSC Case No. 9-15225-01 is inextricably related
to Our ruling in CA GR SP No. 55383 to the effect that private respondent was not an employee of petitioners.[28]
The NLRC decision on the absence of employer-employee relationship being binding in the SSC case, we affirm the
dismissal by Court of Appeals of the SSC case.
WHEREFORE, premises considered, the petition is DENIED. The Court of Appeals Decision dated 20 September 2004, as
well as its Resolution dated 9 February 2005, is AFFIRMED.
SO ORDERED.

JOSE PORTUGAL PEREZ

Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice
Chairperson

PRESBITERO J. VELASCO, JR. TERESITA J. LEONARDO-DE CASTRO

Associate Justice Associate Justice

DIOSDADO M. PERALTA
Associate Justice
C E R T I F I C AT I O N
Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision were
reached in consultation before the case was assigned to the writer of the opinion of the Court.

RENATO C. CORONA
Chief Justice

FIRST DIVISION
[G.R. No. 144882. February 04, 2005]
LUISA BRIONES-VASQUEZ, petitioner, vs. COURT OF APPEALS and HEIRS OF MARIA MENDOZA VDA. DE
OCAMPO, respondents.
DECISION
AZCUNA, J.:

This is a petition for certiorari under Rule 65 of the Rules of Civil Procedure, assailing the Resolution of the Court of Appeals in
CA-G.R. CV No. 39025, dated June 9, 2000, which denied petitioners motion for clarificatory judgment and the Resolution of the
Court of Appeals, dated August 3, 2000, which denied the motion for reconsideration.
Under an agreement denominated as a pacto de retro sale, Maria Mendoza Vda. De Ocampo acquired a parcel of land from Luisa
Briones. The latter thereunder reserved the right to repurchase the parcel of land up to December 31, 1970.[1]
Maria Mendoza Vda. De Ocampo passed away on May 27, 1979. [2] On June 14, 1990, Hipolita Ocampo Paulite and Eusebio
Mendoza Ocampo, the heirs of Maria Mendoza Vda. De Ocampo, filed a petition for consolidation of ownership, alleging that the
seller was not able to exercise her privilege to redeem the property on or before December 31, 1970.[3]
The Regional Trial Court (RTC) of Pili, Camarines Sur, Branch 32 rendered a Decision[4] on January 30, 1992 as follows:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1.
2.

3.

declaring that exh. A is a true pacto de retro sale;

declaring that the defendant can still redeem the property within 30 days from the finality of this judgment,
subject to the provisions of Art. 1616 of the New Civil Code;
No costs.

SO ORDERED.[5]
Plaintiffs therein -- herein private respondents -- appealed the RTC Decision to the Court of Appeals. [6] On June 29, 1995, the
Court of Appeals promulgated a Decision[7] and disposed of the case in the following manner:
THE FOREGOING CONSIDERED, the contested decision is hereby set aside; and declaring the 1970 sale with right of repurchase,
Exhibit A, as one of an equitable mortgage.
SO ORDERED.[8]
Respondents filed a motion for reconsideration which the Court of Appeals denied through a Resolution, [9] dated December 15,
1995. The Court of Appeals Decision became final and executory and entry of judgment was made on July 17, 1996. [10]
Subsequently, at the RTC, both petitioner and respondents filed their respective motions for a writ of execution. The RTC issued
a writ of execution. However, the writ was returned unserved per sheriffs return which reads as follows:
Respectfully returned to this Court thru the Clerk of Court VI, RTC, Pili, Camarines Sur the herein attached original copy of the Writ
of Execution issued in the above-entitled case with the following information, to wit:
That the plaintiffs [herein private respondents] were informed that the writ of execution was already issued for implementation and
that they should pay the necessary sheriffs and kilometrage fees;
That [one of] the plaintiff[s] came to the Office of the Clerk of Court VI but did not deposit any amount for the kilometrage fee and for
the expenses in the implementation of the said writ, but instead plaintiff said that he is not interested to implement such writ;
That the 60-day period within which the said writ should be implemented has already expired.
WHEREFORE, the original copy of the Writ of Execution is hereby returned unserved.
Cadlan, Pili, Camarines Sur July 8, 1997

For the Clerk of Court VI and

Ex-Officio Provincial Sheriff
by:
(signed)
EDDIE M. ROSERO
Sheriff IV[11]
Petitioner thereafter filed a motion for an alias writ of execution. This was granted by the RTC: [12]
ALIAS WRIT OF EXECUTION
T O : THE SHERIFF or any person authorized
to serve process, RTC, Br. 32, Pili, C.s.
THRU : THE CLERK OF COURT VI and EX-OFFICIO
PROVINCIAL SHERIFF
Regional Trial Court
Pili, Camarines Sur
GREETINGS:
WHEREAS, on January 20, 1992, a decision was rendered by this Court, the dispositive portion of which reads as
follows:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1.
2.

3.

declaring that Exh. A is a true pacto de retro sale;

declaring that the defendant can still redeem the property within 30 days from the finality of this
judgment, subject to the provisions of Art. 1616 of the New Civil Code.
No costs.

WHEREAS, in an order of this Court dated June 16, 1992, the notice of appeal filed by counsel for the defendant has been granted and
the Clerk of Court V of this Court transmitted the entire records of the case to the Court of Appeals, Manila;
WHEREAS, on June 29, 1995, a decision was rendered by the Court of Appeals, Manila, the dispositive portion of which reads as
follows:
THE FOREGOING CONSIDERED, the contested decision is hereby set aside; and declaring the 1970 sale with right of repurchase,
Exh. A as one of an equitable mortgage.
WHEREAS, on March 5, 1997, the Hon. Nilo A. Malanyaon, Presiding Judge of this Court issued an order granting the issuance of a
writ of execution, hereunder quoted as follows:

It appearing that the decision of the Court of Appeals had become final and executory, and an entry of final judgment had already been
issued by the Honorable Court of Appeals, let a writ of execution issue.
WHEREAS, on July 10, 1997, Sheriff Eddie M. Rosero submitted his return:
WHEREFORE, the original copy of the Writ of execution is hereby returned unserved.
WHEREAS, on July 18, 1997, the Hon. Nilo A. Malanyaon issued an Order:
The motion for issuance of alias writ of execution filed by counsel for the defendant, Atty. Lucille Fe R. Maggay-Principe, is hereby
granted.
Consequently, the Clerk of Court of this Court is directed to issue alias writ of execution.
WHEREFORE, you the Provincial Sheriff of Camarines Sur or his lawful deputy is hereby commanded to effect the satisfaction of the
above-quoted decision of the Honorable Court of Appeals, Manila. Return this writ to this Court within sixty (60) days from your
receipt hereof.
WITNESS THE HON. NILO A. MALANYAON, Judge of this Court, this 21st day of July, 1997, at Cadlan, Pili, Camarines Sur.
(Sgd.) LALAINE P. MONSERATE
Officer-In-Charge
Legal Researcher II
The Sheriff was unable to effect the satisfaction of the alias writ as stated in the sheriffs report, which is worded thus:
This is to report on the status of the implementation of the Alias Writ of Execution issued in the above-entitled case, to wit:
That on August 6, 1997 the plaintiff[s] represented by Sps. Policarpio Paulite and Hipolita Ocampo and Eusebio M. Ocampo
personally received copy of the Alias Writ of Execution but they refused to sign on the original copy of the said writ, together with the
letter of advise informing them to withdraw at any time the amount deposited to the Office of the Clerk of Court VI, RTC, Pili,
Camarines Sur by defendant Luisa Briones so that the mortgage may now be deemed released or cancelled.
That until this time the said plaintiff[s] failed and or did not bother to withdraw the said amount deposited by defendant Luisa Briones
despite letter of advice and the alias writ of execution having been personally received by them.
Cadlan, Pili, Camarines Sur September 9, 1997.
For the Clerk of Court and
Ex-Officio Sheriff
by:
(signed)
EDDIE M. ROSERO
Sheriff IV[13]

Unable to effect the execution of the Court of Appeals decision, petitioner filed with the RTC an omnibus motion, dated May 25,
1999, praying:
WHEREFORE, it is respectfully prayed that an order issue:
a) Declaring the equitable mortgage, Exhibit A, discharged;
b) Directing the issuance of a Writ of Possession against the plaintiffs for the delivery of possession of the land in question to the
defendant.[14]
The RTC denied the omnibus motion in an Order dated November 16, 1999, which states:
Acting on the omnibus motion of plaintiff dated 25 May 1999 and the opposition thereto of defendant, and considering that the
decision of the Court of Appeals referring the decision of this Court has become final and executory, hence, this Court can no longer
alter, modify or add anything thereto, the prayers set forth in the omnibus motion is, as it is, hereby denied.
SO ORDERED.[15]
Petitioner filed a motion for reconsideration [16] of the above Order, which was denied by the RTC in an Order dated February 23,
2000.[17]
Petitioner then filed a motion for clarificatory judgment, dated April 5, 2000, with the Court of Appeals. [18] The motion was
denied in a Resolution, dated June 9, 2000, which reads as follows:
The only issues that reached Us, through an appeal, was whether the 1970 Sale with Right of Repurchase was actually an equitable
mortgage. We ruled, it was, necessarily there is nothing to clarify.
If it is a matter however whether the prevailing party should be entitled to a right to repossess the property, then the remedy is not with
Us, but with the Court below.
For lack of merit, the Motion for Clarificatory Judgment is hereby DENIED.
SO ORDERED.[19]
Petitioner filed a motion for reconsideration of the above Resolution. The Court of Appeals denied the same in a Resolution
dated August 3, 2000.[20]
Petitioner now comes to this Court raising the following issues:
PETITIONER SUBMITS THAT THE PUBLIC RESPONDENT ACTED ARBITRARILY, WITH GRAVE ABUSE OF DISCRETION
AMOUNTING TO LACK OF JURISDICTION IN ISSUING THE FOLLOWING RESOLUTIONS:
A) RESOLUTION DATED JUNE 9, 2000, DENYING PETITIONERS MOTION FOR CLARIFICATORY JUDGMENT.
B) RESOLUTION DATED AUGUST 3, 2000, DENYING PETITIONERS MOTION FOR RECONSIDERATION. [21]
The sole issue is whether or not the Court of Appeals acted with grave abuse of discretion amounting to lack of jurisdiction in
refusing to grant petitioners motion for clarificatory judgment.
It must be noted, as narrated above, that the Decision of the Court of Appeals had already become final and executory at the time
that the motion for clarificatory judgment was filed. With regards to final judgments, this Court has pronounced that:

nothing is more settled in the law than that when a final judgment becomes executory, it thereby becomes immutable and unalterable.
The judgment may no longer be modified in any respect, even if the modification is meant to correct what is perceived to be an
erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by the Court rendering it or by
the highest Court of the land. The only recognized exceptions are the correction of clerical errors or the making of so-called nunc pro
tunc entries which cause no prejudice to any party, and, of course, where the judgment is void.[22]
As a general rule, therefore, final and executory judgments are immutable and unalterable except under the three exceptions
named above: a) clerical errors; b) nunc pro tunc entries which cause no prejudice to any party; and c) void judgments.
In the present case, petitioner claims the second exception, i.e., that her motion for clarificatory judgment is for the purpose of
obtaining a nunc pro tunc amendment of the final and executory Decision of the Court of Appeals.
Nunc pro tunc judgments have been defined and characterized by this Court in the following manner:
The office of a judgment nunc pro tunc is to record some act of the court done at a former time which was not then carried into the
record, and the power of a court to make such entries is restricted to placing upon the record evidence of judicial action which has
been actually taken. It may be used to make the record speak the truth, but not to make it speak what it did not speak but ought
to have spoken. If the court has not rendered a judgment that it might or should have rendered, or if it has rendered an
imperfect or improper judgment, it has no power to remedy these errors or omissions by ordering the entry nunc pro tunc of a
proper judgment. Hence a court in entering a judgment nunc pro tunc has no power to construe what the judgment means, but
only to enter of record such judgment as had been formerly rendered, but which had not been entered of record as
rendered. In all cases the exercise of the power to enter judgments nunc pro tunc presupposes the actual rendition of a judgment, and
a mere right to a judgment will not furnish the basis for such an entry. (15 R. C. L., pp. 622-623.)
The object of a judgment nunc pro tunc is not the rendering of a new judgment and the ascertainment and determination of
new rights, but is one placing in proper form on the record, the judgment that had been previously rendered, to make it speak
the truth, so as to make it show what the judicial action really was, not to correct judicial errors, such as to render a judgment
which the court ought to have rendered, in place of the one it did erroneously render, nor to supply nonaction by the court,
however erroneous the judgment may have been. (Wilmerding vs. Corbin Banking Co., 28 South., 640, 641; 126 Ala., 268.)
A nunc pro tunc entry in practice is an entry made now of something which was actually previously done, to have effect as of the
former date. Its office is not to supply omitted action by the court, but to supply an omission in the record of action really had,
but omitted through inadvertence or mistake. (Perkins vs. Haywood, 31 N. E., 670, 672.)
It is competent for the court to make an entry nunc pro tunc after the term at which the transaction occurred, even though the rights of
third persons may be affected. But entries nunc pro tunc will not be ordered except where this can be done without injustice to either
party, and as a nunc pro tunc order is to supply on the record something which has actually occurred, it cannot supply omitted
action by the court . . . (15 C. J., pp. 972-973.)[23]
From the above characterization of a nunc pro tunc judgment it is clear that the judgment petitioner sought through the motion
for clarificatory judgment is outside its scope. Petitioners did not allege that the Court of Appeals actually took judicial action and that
such action was not included in the Court of Appeals Decision by inadvertence. A nunc pro tunc judgment cannot correct judicial error
nor supply nonaction by the court.[24]
Since the judgment sought through the motion for clarificatory judgment is not a nunc pro tunc one, the general rule regarding
final and executory decisions applies. In this case, no motion for reconsideration having been filed after the Court of Appeals rendered
its decision on June 29, 1995 and an entry of judgment having been made on July 17, 1996, the same became final and executory and,
hence, is no longer susceptible to amendment. It, therefore, follows that the Court of Appeals did not act arbitrarily nor with grave
abuse of discretion amounting to lack of jurisdiction when it issued the aforementioned Resolution denying petitioners motion for
clarificatory judgment and the Resolution denying petitioners motion for reconsideration.
Nevertheless, for purposes of guiding the parties in the execution of the aforesaid Decision of the CA, without altering the same,
the following should be noted:

The Court of Appeals pronounced in its Decision that the contract between the parties is an equitable mortgage. Since the
contract is characterized as a mortgage, the provisions of the Civil Code governing mortgages apply. Article 2088 of the Civil Code
states:
The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Any stipulation to the contrary is
null and void.
This Court has interpreted this provision in the following manner:
The essence of pacto commissorio, which is prohibited by Article 2088 of the Civil Code, is that ownership of the security will pass to
the creditor by the mere default of the debtor (Guerrero v. Yigo, et al., 96 Phil. 37, 41-42; Puig v. Sellner, et al., 45 Phil. 286, 287
88) [25]
The only right of a mortgagee in case of non-payment of a debt secured by mortgage would be to foreclose the mortgage and have the
encumbered property sold to satisfy the outstanding indebtedness. The mortgagors default does not operate to vest in the mortgagee
the ownership of the encumbered property, for any such effect is against public policy, as enunciated by the Civil Code [26]
Applying the principle of pactum commissorium specifically to equitable mortgages, in Montevergin v. CA,[27] the Court
enunciated that the consolidation of ownership in the person of the mortgagee in equity, merely upon failure of the mortgagor in equity
to pay the obligation, would amount to a pactum commissorium. The Court further articulated that an action for consolidation of
ownership is an inappropriate remedy on the part of the mortgagee in equity. The only proper remedy is to cause the foreclosure of the
mortgage in equity. And if the mortgagee in equity desires to obtain title to the mortgaged property, the mortgagee in equity may buy it
at the foreclosure sale.
The private respondents do not appear to have caused the foreclosure of the mortgage much less have they purchased the
property at a foreclosure sale. Petitioner, therefore, retains ownership of the subject property. The right of ownership necessarily
includes the right to possess, particularly where, as in this case, there appears to have been no availment of the remedy of foreclosure
of the mortgage on the ground of default or non-payment of the obligation in question.
WHEREFORE, the petition for certiorari is DISMISSED. The parties are directed to proceed upon the basis of the final
Decision of the Court of Appeals, dated June 29, 1995, in CA-G.R. CV No. 39025, that the contract in question was an equitable
mortgage and not a sale.
No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Quisumbing, Ynares-Santiago, and Carpio, JJ., concur.