Biaco v Philippine Countryside Rural Bank

515 SCRA 106 - Civil Procedure In rem vs In personam proceedings Service of Summons
Resident Defendant Extrinsic Fraud
Ernesto Biaco, husband of Teresa Biaco, acquired several loans from Philippine Countryside Rural Bank
(PCRB) from 1996 to 1998. To secure the loans, he mortgaged certain property in favor of the bank. He was
able to pay loans from 1996 to 1997 but he defaulted in loans obtained in 1998 which amounted to more than a
million pesos.
Eventually, PCRB filed a complaint for foreclosure against the spouses Biaco. Summons were issued
by the trial judge. The Sherriff served the summons to Ernesto at the latters office. No summons was served to
Teresa.
Ernesto did not file a responsive pleading (so did Teresa because she was not aware sans the summons
being served her). The case was heard ex-parte and the spouses were ordered to satisfy the debt and failure to do
so will authorize the Sheriff to auction the mortgaged the property.
Eventually, the mortgaged property was auctioned for P150k which is not sufficient to cover the P1 M+
debt. Upon motion by PCRB, a notice of levy was issued against the personal properties of Teresa to satisfy the
deficiency.
It was only at this point that Teresa learned of the previous ex parte proceedings. She then sought to
have the judgment annulled as she now claims that she was deprived of due process when she did not receive
summons; that it was only her husband who received the summons; that there was extrinsic fraud because her
husband deliberately hid the fact of the foreclosure proceeding.
PRCB argued that the foreclosure proceeding is an action quasi in rem, hence Teresas participation is
not required so long as the court acquires jurisdiction over the res which is what happened in the case at bar;
that Teresa cannot invoke extrinsic fraud because such situation cannot occur in her case because she is a co-
defendant of Ernesto.
ISSUE: Whether or not the judgment of the trial court should be annulled.
HELD: Yes. It is admitted that the proceeding is a quasi in rem proceeding and that the presence of
Teresa is not required because the trial court was able to acquire jurisdiction over the res (mortgaged property).
HOWEVER, her constitutional right to due process is superior over the procedural matters mentioned. Her right
to due process was violated when she did not receive summons. Teresa, as a resident defendant, who does not
voluntary appear in court must be personally served with summons as provided under Section 6, Rule 14 of the
Rules of Court. Even if the action is quasi in rem, personal service of summons is essential in order to afford her
due process. The substituted service made by the sheriff at her husbands office cannot be deemed proper
service absent any explanation that efforts had been made to personally serve summons upon her but that such
efforts failed. Further, the order of the trial court compelling Teresa to pay off the debt using her personal
property is a judgment in personam which the court cannot do because it only acquired jurisdiction over the res
and not over the person of Teresa.
On the issue of extrinsic fraud, the Court of Appeals, agreeing with PCRB, is correct that there is none
in the case at bar. Extrinsic fraud exists when there is a fraudulent act committed by the prevailing party outside
of the trial of the case, whereby the defeated party was prevented from presenting fully his side of the case by
fraud or deception practiced on him by the prevailing party. Extrinsic fraud is present where the unsuccessful
party had been prevented from exhibiting fully his case, by fraud or deception practiced on him by his
opponent, as by keeping him away from court, a false promise of a compromise; or where the defendant never
had knowledge of the suit, being kept in ignorance by the acts of the plaintiff; or where an attorney fraudulently
or without authority assumes to represent a party and connives at his defeat; or where the attorney regularly
employed corruptly sells out his clients interest to the other side. The above is not applicable in the case of
Teresa. It was not PCRB which made any fraud. It should be noted that spouses Biaco were co-defendants in
the case and shared the same interest.



Republic of the Philippines
SUPREME COURT
Manila
SECOND DIVISION
G.R. No. 161417 February 8, 2007
MA. TERESA CHAVES BIACO, Petitioner,
vs.
PHILIPPINE COUNTRYSIDE RURAL BANK, Respondent.
D E C I S I O N
TINGA, J .:
Petitioner, Ma. Teresa Chaves Biaco, seeks a review of the Decision
1
of the Court of Appeals in CA-G.R. No. 67489
dated August 27, 2003, which denied her petition for annulment of judgment, and the Resolution
2
dated December
15, 2003 which denied her motion for reconsideration.
The facts as succinctly stated by the Court of Appeals are as follows:
Ernesto Biaco is the husband of petitioner Ma. Teresa Chaves Biaco. While employed in the Philippine Countryside
Rural Bank (PCRB) as branch manager, Ernesto obtained several loans from the respondent bank as evidenced by
the following promissory notes:
Feb. 17, 1998 P 65,000.00
Mar. 18, 1998 30,000.00
May 6, 1998 60,000.00
May 20, 1998 350,000.00
July 30, 1998 155,000.00
Sept. 8, 1998 40,000.00
Sept. 8, 1998 120,000.00
As security for the payment of the said loans, Ernesto executed a real estate mortgage in favor of the bank covering
the parcel of land described in Original Certificate of Title (OCT) No. P-14423. The real estate mortgages bore the
signatures of the spouses Biaco.
When Ernesto failed to settle the above-mentioned loans on its due date, respondent bank through counsel sent him
a written demand on September 28, 1999. The amount due as of September 30, 1999 had already reached ONE
MILLION EIGHTY THOUSAND SIX HUNDRED SEVENTY SIX AND FIFTY CENTAVOS (P1,080,676.50).
The written demand, however, proved futile.
On February 22, 2000, respondent bank filed a complaint for foreclosure of mortgage against the spouses Ernesto
and Teresa Biaco before the RTC of Misamis Oriental. Summons was served to the spouses Biaco through Ernesto
at his office (Export and Industry Bank) located at Jofelmor Bldg., Mortola Street, Cagayan de Oro City.
Ernesto received the summons but for unknown reasons, he failed to file an answer. Hence, the spouses Biaco
were declared in default upon motion of the respondent bank. The respondent bank was allowed to present its
evidence ex parte before the Branch Clerk of Court who was then appointed by the court as Commissioner.
Arturo Toring, the branch manager of the respondent bank, testified that the spouses Biaco had been obtaining
loans from the bank since 1996 to 1998. The loans for the years 1996-1997 had already been paid by the spouses
Biaco, leaving behind a balance of P1,260,304.33 representing the 1998 loans. The amount being claimed is
inclusive of interests, penalties and service charges as agreed upon by the parties. The appraisal value of the land
subject of the mortgage is only P150,000.00 as reported by the Assessors Office.
Based on the report of the Commissioner, the respondent judge ordered as follows:
WHEREFORE, judgment is hereby rendered ordering defendants spouses ERNESTO R. BIACO and MA.
THERESA [CHAVES] BIACO to pay plaintiff bank within a period of not less than ninety (90) days nor more than
one hundred (100) days from receipt of this decision the loan of ONE MILLION TWO HUNDRED SIXTY
THOUSAND THREE HUNDRED FOUR PESOS and THIRTY THREE CENTAVOS (P1,260,304.33) plus litigation
expenses in the amount of SEVEN THOUSAND SIX HUNDRED FORTY PESOS (P7,640.00) and attorneys fees in
the amount of TWO HUNDRED FIFTY TWO THOUSAND THIRTY PESOS and FORTY THREE CENTAVOS
(P252,030.43) and cost of this suit.
In case of non-payment within the period, the Sheriff of this Court is ordered to sell at public auction the mortgaged
Lot, a parcel of registered land (Lot 35802, Cad. 237 {Lot No. 12388-B, Csd-10-002342-D}), located at Gasi,
Laguindingan, Misamis Oriental and covered by TCT No. P-14423 to satisfy the mortgage debt, and the surplus if
there be any should be delivered to the defendants spouses ERNESTO and MA. THERESA [CHAVES] BIACO. In
the event however[,] that the proceeds of the auction sale of the mortgage[d] property is not enough to pay the
outstanding obligation, the defendants are ordered to pay any deficiency of the judgment as their personal liability.
SO ORDERED.
On July 12, 2000, the sheriff personally served the above-mentioned judgment to Ernesto Biaco at his office at
Export and Industry Bank. The spouses Biaco did not appeal from the adverse decision of the trial court. On
October 13, 2000, the respondent bank filed an ex parte motion for execution to direct the sheriff to sell the
mortgaged lot at public auction. The respondent bank alleged that the order of the court requiring the spouses Biaco
to pay within a period of 90 days had passed, thus making it necessary to sell the mortgaged lot at public auction, as
previously mentioned in the order of the court. The motion for execution was granted by the trial court per Order
dated October 20, 2000.
On October 31, 2000, the sheriff served a copy of the writ of execution to the spouses Biaco at their residence in
#92 9th Street, Nazareth, Cagayan de Oro City. The writ of execution was personally received by Ernesto. By virtue
of the writ of execution issued by the trial court, the mortgaged property was sold at public auction in favor of the
respondent bank in the amount of ONE HUNDRED FIFTY THOUSAND PESOS (P150,000.00).
The amount of the property sold at public auction being insufficient to cover the full amount of the obligation, the
respondent bank filed an "ex parte motion for judgment" praying for the issuance of a writ of execution against the
other properties of the spouses Biaco for the full settlement of the remaining obligation. Granting the motion, the
court ordered that a writ of execution be issued against the spouses Biaco to enforce and satisfy the judgment of the
court for the balance of ONE MILLION THREE HUNDRED SIXTY NINE THOUSAND NINE HUNDRED SEVENTY
FOUR PESOS AND SEVENTY CENTAVOS (P1,369,974.70).
The sheriff executed two (2) notices of levy against properties registered under the name of petitioner Ma. Teresa
Chaves Biaco. However, the notices of levy were denied registration because Ma. Teresa had already sold the two
(2) properties to her daughters on April 11, 2001.
3

Petitioner sought the annulment of the Regional Trial Court decision contending that extrinsic fraud prevented her
from participating in the judicial foreclosure proceedings. According to her, she came to know about the judgment in
the case only after the lapse of more than six (6) months after its finality. She claimed that extrinsic fraud was
perpetrated against her because the bank failed to verify the authenticity of her signature on the real estate
mortgage and did not inquire into the reason for the absence of her signature on the promissory notes. She
moreover asserted that the trial court failed to acquire jurisdiction because summons were served on her through
her husband without any explanation as to why personal service could not be made.
The Court of Appeals considered the two circumstances that kept petitioner in the dark about the judicial foreclosure
proceedings: (1) the failure of the sheriff to personally serve summons on petitioner; and (2) petitioners husbands
concealment of his knowledge of the foreclosure proceedings. On the validity of the service of summons, the
appellate court ruled that judicial foreclosure proceedings are actions quasi in rem. As such, jurisdiction over the
person of the defendant is not essential as long as the court acquires jurisdiction over the res.Noting that the
spouses Biaco were not opposing parties in the case, the Court of Appeals further ruled that the fraud committed by
one against the other cannot be considered extrinsic fraud.
Her motion for reconsideration having been denied, petitioner filed the instant Petition for Review,
4
asserting that
even if the action is quasi in rem, personal service of summons is essential in order to afford her due process. The
substituted service made by the sheriff at her husbands office cannot be deemed proper service absent any
explanation that efforts had been made to personally serve summons upon her but that such efforts failed. Petitioner
contends that extrinsic fraud was perpetrated not so much by her husband, who did not inform her of the judicial
foreclosure proceedings, but by the sheriff who allegedly connived with her husband to just leave a copy of the
summons intended for her at the latters office.
Petitioner further argues that the deficiency judgment is a personal judgment which should be deemed void for lack
of jurisdiction over her person.
Respondent PCRB filed its Comment,
5
essentially reiterating the appellate courts ruling. Respondent avers that
service of summons upon the defendant is not necessary in actions quasi in rem it being sufficient that the court
acquire jurisdiction over the res. As regards the alleged conspiracy between petitioners husband and the sheriff,
respondent counters that this is a new argument which cannot be raised for the first time in the instant petition.
We required the parties to file their respective memoranda in the Resolution
6
dated August 18, 2004. Accordingly,
petitioner filed her Memorandum
7
dated October 10, 2004, while respondent filed its Memorandum for
Respondent
8
dated September 9, 2004.
Annulment of judgment is a recourse equitable in character, allowed only in exceptional cases as where there is no
available or other adequate remedy. Jurisprudence and Sec. 2, Rule 47 of the 1997 Rules of Civil Procedure (Rules
of Court) provide that judgments may be annulled only on grounds of extrinsic fraud and lack of jurisdiction or denial
of due process.
9

Petitioner asserts that extrinsic fraud consisted in her husbands concealment of the loans which he obtained from
respondent PCRB; the filing of the complaint for judicial foreclosure of mortgage; service of summons; rendition of
judgment by default; and all other proceedings which took place until the writ of garnishment was served.
10

Extrinsic fraud exists when there is a fraudulent act committed by the prevailing party outside of the trial of the case,
whereby the defeated party was prevented from presenting fully his side of the case by fraud or deception practiced
on him by the prevailing party.
11
Extrinsic fraud is present where the unsuccessful party had been prevented from
exhibiting fully his case, by fraud or deception practiced on him by his opponent, as by keeping him away from court,
a false promise of a compromise; or where the defendant never had knowledge of the suit, being kept in ignorance
by the acts of the plaintiff; or where an attorney fraudulently or without authority assumes to represent a party and
connives at his defeat; or where the attorney regularly employed corruptly sells out his clients interest to the other
side. The overriding consideration is that the fraudulent scheme of the prevailing litigant prevented a party from
having his day in court.
12

With these considerations, the appellate court acted well in ruling that there was no fraud perpetrated by respondent
bank upon petitioner, noting that the spouses Biaco were co-defendants in the case and shared the same interest.
Whatever fact or circumstance concealed by the husband from the wife cannot be attributed to respondent bank.
Moreover, petitioners allegation that her signature on the promissory notes was forged does not evince extrinsic
fraud. It is well-settled that the use of forged instruments during trial is not extrinsic fraud because such evidence
does not preclude the participation of any party in the proceedings.
13

The question of whether the trial court has jurisdiction depends on the nature of the action, i.e., whether the action
is in personam, in rem, or quasi in rem. The rules on service of summons under Rule 14 of the Rules of Court
likewise apply according to the nature of the action.
An action in personam is an action against a person on the basis of his personal liability. An action in rem is an
action against the thing itself instead of against the person. An action quasi in rem is one wherein an individual is
named as defendant and the purpose of the proceeding is to subject his interest therein to the obligation or lien
burdening the property.
14

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 court acquires jurisdiction over the res. Jurisdiction
over the res is acquired either (1) by the seizure of the property under legal process, whereby it is brought into
actual custody of the law; or (2) as a result of the institution of legal proceedings, in which the power of the court is
recognized and made effective.
15

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.
16

A resident defendant who does not voluntarily appear in court, such as petitioner in this case, must be personally
served with summons as provided under Sec. 6, Rule 14 of the Rules of Court. If she cannot be personally served
with summons within a reasonable time, substituted service may be effected (1) by leaving copies of the summons
at the defendants residence with some person of suitable age and discretion then residing therein, or (2) by leaving
the copies at defendants office or regular place of business with some competent person in charge thereof in
accordance with Sec. 7, Rule 14 of the Rules of Court.
In this case, the judicial foreclosure proceeding instituted by respondent PCRB undoubtedly vested the trial court
with jurisdiction over the res. A judicial foreclosure proceeding is an action quasi in rem. As such, jurisdiction over
the person of petitioner is not required, it being sufficient that the trial court is vested with jurisdiction over the
subject matter.
There is a dimension to this case though that needs to be delved into. Petitioner avers that she was not personally
served summons. Instead, summons was served to her through her husband at his office without any explanation as
to why the particular surrogate service was resorted to. The Sheriffs Return of Service dated March 21, 2000 states:
x x x x
That on March 16, 2000, the undersigned served the copies of Summons, complaint and its annexes to the
defendants Sps. Ernesto R. & Ma. Teresa Ch. Biaco thru Ernesto R. Biaco[,] defendant of the above-entitled case at
his office EXPORT & INDUSTRY BANK, Jofelmore Bldg.[,] Mortola St., Cagayan de Oro City and he acknowledged
receipt thereof as evidenced with his signature appearing on the original copy of the Summons.
17
[Emphasis
supplied]
Without ruling on petitioners allegation that her husband and the sheriff connived to prevent summons from being
served upon her personally, we can see that petitioner was denied due process and was not able to participate in
the judicial foreclosure proceedings as a consequence. The violation of petitioners constitutional right to due
process arising from want of valid service of summons on her warrants the annulment of the judgment of the trial
court.
There is more, the trial court granted respondent PCRBs ex-parte motion for deficiency judgment and ordered the
issuance of a writ of execution against the spouses Biaco to satisfy the remaining balance of the award. In short, the
trial court went beyond its jurisdiction over the res and rendered a personal judgment against the spouses Biaco.
This cannot be countenanced.1awphil. net
In Sahagun v. Court of Appeals,
18
suit was brought against a non-resident defendant, Abelardo Sahagun, and a writ
of attachment was issued and subsequently levied on a house and lot registered in his name. Claiming ownership of
the house, his wife, Carmelita Sahagun, filed a motion to intervene. For failure of plaintiff to serve summons
extraterritorially upon Abelardo, the complaint was dismissed without prejudice.
Subsequently, plaintiff filed a motion for leave to serve summons by publication upon Abelardo. The trial court
granted the motion. Plaintiff later filed an amended complaint against Abelardo, this time impleading Carmelita and
Rallye as additional defendants. Summons was served on Abelardo through publication in the Manila Evening Post.
Abelardo failed to file an answer and was declared in default. Carmelita went on certiorari to the Court of Appeals
assailing as grave abuse of discretion the declaration of default of Abelardo. The Court of Appeals dismissed the
petition and denied reconsideration.
In her petition with this Court, Carmelita raised the issue of whether the trial court acquired jurisdiction over her
husband, a non-resident defendant, by the publication of summons in a newspaper of general circulation in the
Philippines. The Court sustained the correctness of extrajudicial service of summons by publication in such
newspaper.
The Court explained, citing El Banco Espaol-Filipino v. Palanca,
19
that foreclosure and attachment proceedings are
both actions quasi in rem. As such, jurisdiction over the person of the (non-resident) defendant is not essential.
Service of summons on a non-resident defendant who is not found in the country is required, not for purposes of
physically acquiring jurisdiction over his person but simply in pursuance of the requirements of fair play, so that he
may be informed of the pendency of the action against him and the possibility that property belonging to him or in
which he has an interest may be subjected to a judgment in favor of a resident, and that he may thereby be
accorded an opportunity to defend in the action, should he be so minded.
Significantly, the Court went on to rule, citing De Midgely v. Ferandos, et. al.
20
and Perkins v. Dizon, et al.
21
that in a
proceeding in rem or quasi in rem, the only relief that may be granted by the court against a defendant over whose
person it has not acquired jurisdiction either by valid service of summons or by voluntary submission to its
jurisdiction, is limited to the res.
Similarly, in this case, while the trial court acquired jurisdiction over the res, its jurisdiction is limited to a rendition of
judgment on the res. It cannot extend its jurisdiction beyond the res and issue a judgment enforcing petitioners
personal liability. In doing so without first having acquired jurisdiction over the person of petitioner, as it did, the trial
court violated her constitutional right to due process, warranting the annulment of the judgment rendered in the
case.
WHEREFORE, the instant petition is GRANTED. The Decision dated August 27, 2003 and the Resolution dated
December 15, 2003 of the Court of Appeals in CA-G.R. SP No. 67489 are SET ASIDE. The Judgment dated July
11, 2000 and Order dated February 9, 2001 of the Regional Trial Court of Cagayan de Oro City, Branch 20, are
likewise SET ASIDE.
SO ORDERED.





Republic of the Philippines
Supreme Court
Manila


FIRST DIVISION


CITY OF DUMAGUETE, herein
Represented by City Mayor,
Agustin R. Perdices,
Petitioner,



- versus -



PHILIPPINE PORTS
AUTHORITY,
Respondent.
G.R. No. 168973

Present:

CORONA, C.J.,
Chairperson,
LEONARDO-DE CASTRO,
BERSAMIN,
DEL CASTILLO, and
VILLARAMA, JR., JJ.

Promulgated:

August 24, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x


D E C I S I O N


LEONARDO-DE CASTRO, J .:


Before Us is a Petition for Review under Rule 45 of the Rules of Court assailing the
Decision
[1]
dated March 4, 2005 and Resolution
[2]
dated June 6, 2005 of the Court Appeals in
CA-G.R. SP No. 64379, which granted the Petition for Certiorari and Prohibition of respondent
Philippine Ports Authority and set aside the Orders dated December 7, 2000 and February 20,
2001 of the Regional Trial Court (RTC), Branch 44 of the City of Dumaguete in LRC Case No.
N-201.

The antecedent facts are as follows:

On October 14, 1998, petitioner City of Dumaguete, through Mayor Felipe Antonio B.
Remollo (Remollo), filed before the RTC an Application for Original Registration of Title over
a parcel of land with improvements, located at Barangay Looc, City of Dumaguete (subject
property), under the Property Registration Decree. The application was docketed as LRC Case
No. N-201.

Petitioner alleged in support of its application:

1. That the applicant, City of Dumaguete through its Honorable Mayor
Felipe Antonio B. Remollo, is the owner of the land subject of this application with all
improvements and buildings comprising the Engineers Compound where it is now
situated and has been in continuous occupation and possession of the same for more
than 30 years or from the year 1960 (Affidavit of Ownership executed by Felipe
Antonio G. Remollo, the City Mayor, dated August 21, 1998 herein attached as
ANNEX A). The said land consist of 5,410 square meters and is situated and
bounded and described as shown on the plan (true and photostatic copies of the
original plan marked Psu-07-006805 approved by the Regional Technical Director of
the [Department of Environment and Natural Resources] DENR, Regional Office,
Cebu City herein attached as ANNEX B) and technical descriptions attached hereto
(technical description attached as ANNEX C) and made a part hereof;

2. That said land at the last assessment for taxation was assessed
at P676,250, Philippine currency, with market value of P1,352,500.00, Philippine
currency. (Declaration of Real Property with the assessed and market values attached
as ANNEX D);

3. That to the best of my knowledge and belief, there is no mortgage or
encumbrance of any kind whatsoever affecting said land, nor another person having
any estate or interest therein, legal or equitable, in possession, remainder, reversion or
expectancy;

4. That the land was acquired by possessory title in open, continuous,
adverse occupation and possession in the concept of owner for more than thirty years
since 1960 (please refer to ANNEX A);

5. That the land is adjoined by the following:

NorthWest
NorthEast
SouthEast

All along line 1-2-3-4-5-6-7-8-9-10 by Flores Avenue, City Road and the
Dumaguete Port Road
SouthWest along line 10-1 by Plan Msi-V-20453

x x x x

8. That the land included is bounded on the West by Flores Avenue and on
the North by the City Road, all public highways and on the East by the Dumaguete
Port Road, a private road made part of the Port Zone.
[3]



In an Order
[4]
dated October 23, 1998, the RTC noted that:

A perusal of the records of the case shows that the annexes lack the following
copies:

a) two blue print copies of the approved plan;

b) two copies of the technical description of the lot sought to be
registered;

c) two copies of the Surveyors certificate;

d) a certificate in quadruplicate of the City Assessor of the assessed value
of the land;

e) all original muniments of title in the possession of the applicant which
prove ownership of the land;

f) two copies of the petition/application.

Further, the application did not state the number of the lot sought to be
registered, the number of parcels applied for, the improvements found thereon, and
indicate whether it claims a portion of the road which serves as a boundary line.

All these must be alleged in the petition so that the Court will know the nature
of the property.


The RTC explained that the extra copies submitted by petitioner shall be forwarded by
the RTC Clerk of Court to the Land Registration Commission (LRC) in Manila for
comment. Only thereafter would the RTC set the application for hearing.

Petitioner filed its Compliance
[5]
with the above-mentioned Order, submitting additional
copies of the required documents and clarifying thus:

1. The approved plan does not state the number of lot sought to be registered
because it is a public land, thus, only PSU-07-006805 appears on the plan
which is being applied for registration;
2. Only one (1) parcel of land is applied for by petitioners which consist of five
thousand four hundred ten (5,410) square meters, more or less;
3. The City Engineers Building within the City Engineers compound are the
only improvement found thereon; and
4. Petitioners do not claim any portion of the road which serves as a boundary
line.


The RTC accordingly set the initial hearing of LRC Case No. N-201 on April 12, 1999,
and sent notices to the parties.

The Republic of the Philippines, represented by the Director of Lands, and respondent,
represented by the Office of the Government Corporate Counsel, filed separate
Oppositions
[6]
to the application for registration of petitioner. Both the Republic and
respondent averred that petitioner may not register the subject property in its name since
petitioner had never been in open, continuous, exclusive, and notorious possession of the said
property for at least 30 years immediately preceding the filing of the application; and the subject
property remains to be a portion of the public domain which belongs to the Republic.

After several postponements of the scheduled hearings, petitioner presented the testimony
of its first witness, Engineer Rilthe P. Dorado (Engr. Dorado), on January 14, 2000. Engr.
Dorados examination on the witness stand was terminated on April 7, 2000. The presentation
of the other witnesses of petitioner was then scheduled to continue onJune 2, 2000.
[7]


However, before the next hearing, respondent filed a Motion to Dismiss,
[8]
seeking the
dismissal of LRC Case No. N-201 on the ground that the RTC lacked jurisdiction to hear and
decide the case. Respondent argued that Section 14(1) of Presidential Decree No. 1529,
otherwise known as the Property Registration Decree, refers only to alienable and disposable
lands of the public domain under a bona fide claim of ownership. The subject property in LRC
Case No. N-201 is not alienable and disposable, since it is a foreshore land, as explicitly
testified to by petitioners own witness, Engr. Dorado. A foreshore land is not
registerable. This was precisely the reason why, respondent points out, that the subject property
was included in Presidential Proclamation No. 1232 (delineating the territorial boundaries of the
Dumaguete Port Zone), so that the same would be administered and managed by the State,
through respondent, for the benefit of the people.

In its Terse Opposition to Oppositors Motion to Dismiss, petitioner claimed that the
subject property was a swamp reclaimed about 40 years ago, which it occupied openly,
continuously, exclusively, and notoriously under a bona fide claim of ownership. The technical
description and approved plan of the subject property showed that the said property was not
bounded by any part of the sea. Petitioner invoked Republic Act No. 1899,
[9]
which authorizes
chartered cities and municipalities to undertake and carry out, at their own expense, the
reclamation of foreshore lands bordering them; and grants said chartered cities and
municipalities ownership over the reclaimed lands. Presidential Proclamation No. 1232 is
immaterial to the present application for registration because it merely authorizes respondent to
administer and manage the Dumaguete Port Zone and does not confer upon respondent
ownership of the subject property.
[10]


Respondent filed a Reply/Rejoinder (To Applicants Opposition to Oppositors Motion to
Dismiss),
[11]
asserting that there are no factual or legal basis for the claim of petitioner that the
subject property is reclaimed land. Petitioner sought the original registration of its title over the
subject property acquired through alleged continuous possession for 30 years under Section
14(1) of the Property Registration Decree, and not through the reclamation of the said property
at its own expense under Republic Act No. 1899. The present claim of petitioner that the
subject property is reclaimed land should not be allowed for it would improperly change the
earlier theory in support of the application for registration. Respondent reiterated that the
subject property is foreshore land which cannot be registered; and that Presidential
Proclamation No. 1232 is very material to LRC Case No. N-201 because it confirms that areas
within the Dumaguete Port Zone, including the subject property, are not alienable and
disposable lands of the public domain.

On September 7, 2000, the RTC issued an Order
[12]
granting the Motion to Dismiss of
respondent based on the following ratiocination:

The Court agrees with [herein respondent] Philippine Ports Authority that the
basis of the [herein petitioners] application for original registration of the subject lot
is Section 14 of the Presidential Decree No. 1529, otherwise known as the Property
Registration Decree. A circumspect scrutiny of said Section readily shows that it
refers to alienable and disposable lands of the public domain as proper subjects of
registration, provided the applicant has met the other requirements such as open,
continuous, exclusive and notorious possession for at least thirty (30) years under a
bona fide claim of ownership.


It having been shown by [petitioners] own evidence that the lot subject of the
application for original registration is a foreshore land, and therefore not registerable
(Dizon, et al. vs. Bayona, et al., 98 SCRA 942, 944), the application must be denied.

Again as correctly argued by [respondent], [petitioners] reliance on Republic
Act 1899 which authorizes all municipalities and chartered cities to undertake and
carry out the reclamation by dredging, filling or other means of any foreshore lands
bordering them and which confers ownership on them of the lands so reclaimed, is
misplaced, as such has never been alleged in the application. It is fundamental that a
party cannot prove what it has not alleged in his complaint or application, as in this
case.

The admission by Engr. Dorado that there is no formal declaration from the
executive branch of government or law passed by Congress that the land in question is
no longer needed for public use or special industries x x x further militates against the
application.

Moreover, the authority granted to municipalities and chartered cities to
undertake and carry out at their own expense the reclamation by dredging, filling, or
other means, of any foreshore lands bordering them is for the purpose of establishing,
providing, constructing, maintaining, and repairing proper and adequate docking and
harbor facilities as such municipalities and chartered cities may determine in
consultation with the Secretary of Finance and the Secretary of Public Works and
Communications.

By its own evidence, [petitioner] has utilized the subject property allegedly
reclaimed by it as Office of the City Engineer and not as docking and harboring
facilities. [Petitioner] has failed to show that such reclamation was undertaken by it in
consultation with the Secretary of Finance and the Secretary of Public Works and
Communications.
[13]



The RTC decreed in the end that the instant application for original registration is
dismissed for lack of merit.
[14]


In its Motion for Reconsideration
[15]
and Supplemental Motion for
Reconsideration,
[16]
petitioner contended that the dismissal of its application was premature and
tantamount to a denial of its right to due process. It has yet to present evidence to prove factual
matters in support of its application, such as the subject property already being alienable and
disposable at the time it was occupied and possessed by petitioner.

Petitioner also pointed out that its witness, Engr. Dorado, testified only as to the
physical status of the land in question at the time when the cadastral survey of Dumaguete was
made sometime in 1916.
[17]
In fact, Engr. Dorado expressly testified that the subject property
was part of the shore or foreshore a long time ago[;]
[18]
and he did not testify at all that the
subject property was a foreshore lot at the time petitioner occupied and possessed the
same. The physical state of the subject property had already changed since 1916. It is now
within the alienable and disposable area as per the Land Classification Map No. 674, Project
No. 1-D, BL C-6, certified on July 3, 1927, of the Bureau of Lands, now Land Management
Sector of the Department of Environment and Natural Resources[,]
[19]
as verified and certified
by the Chief of the Map Projection Section, Land Management Sector, DENR Regional Office
in Cebu City, who has yet to take the witness stand before the RTC.

Petitioner insisted that the RTC should continue with the hearing of LRC Case No. N-201
and allow petitioner to present evidence that the subject property is reclaimed land. Petitioner
sufficiently alleged in its application for registration that it has been in open, continuous,
exclusive, and notorious possession of the [subject property] for more than thirty (30) years
under a bona fide claim of ownership.
[20]
In support of such allegation, petitioner must
necessarily prove that the subject property was previously a swampy area, which had to be
filled or reclaimed before the construction of the City Engineers Office building thereon.

Respondent based its Opposition (To Applicants Motion for Reconsideration dated
September 28, 2000)
[21]
and Opposition (To Applicants Supplemental Motion for
Reconsideration)
[22]
on technical and substantive grounds.

According to respondent, the Motion for Reconsideration of petitioner violated Sections 4
(Hearing of motion), 5 (Notice of hearing), and 6 (Proof of service necessary), Rule 15 of the
Rules of Court. Petitioner did not set its Motion for Reconsideration for hearing even when the
said Motion could not be considered as non-litigable. The RTC could not hear the motion for
reconsideration ex parte as they are prejudicial to the rights of respondent. Petitioner also failed
to comply with Section 11, Rule 13 of the Rules of Court when it did not attach to the Motion
for Reconsideration a written explanation why it did not resort to personal service of the said
Motion. Thus, respondent averred that the Motion for Reconsideration of petitioner should be
treated as a mere scrap of paper with no legal effect. It did not interrupt the reglementary period
to appeal and the RTC Order dated September 7, 2000, dismissing LRC Case No. N-201, had
already attained finality. Respondent also pointed out that the Supplemental Motion for
Reconsideration of petitioner suffered from the same fatal defects as the original Motion for
Reconsideration.

Respondent again posited that the subject property was foreshore land belonging to the
State and not subject to private appropriation, unless the same had already been declared by the
executive or legislative department of the national government as no longer needed for coast
guard service, public use, or special industries, and classified as alienable and disposable. Full-
blown trial in LRC Case No. N-201 was no longer necessary as the evidence so far presented by
petitioner had already established that the RTC lacked jurisdiction over the subject matter of the
case.

In its Order
[23]
dated November 16, 2000, the RTC initially agreed with respondent that
the Motion for Reconsideration of petitioner violated Sections 4, 5, and 6, Rule 15 and Section
11, Rule 13 of the Rules of Court. Resultantly, the Motion for Reconsideration of petitioner
was considered as not filed and did not toll the running of the period to file an appeal, rendering
final and executory the order of dismissal of LRC Case No. N-201.

However, after taking into consideration the Supplemental Motion for Reconsideration of
petitioner, the RTC issued another Order
[24]
dated December 7, 2000, setting aside its Order
dated September 7, 2000 in the interest of justice and resolving to have a full-blown proceeding
to determine factual issues in LRC Case No. N-201.

It was then the turn of respondent to file with the RTC a Motion for Reconsideration
[25]
of
the Order dated December 7, 2000. In an Order
[26]
dated February 20, 2001, the RTC denied
the motion of respondent and admitted the following:

A thorough review and perusal of the disputed order dated September 7,
2000 and December 7, 2000, whereby this Court dismissed [petitioners] petition for
registration of Lot No. 1, Dumaguete Cadastre, and later set aside the Order
of September 7, 2000, shows that there was honest mistake in declaring said lot 1, as a
shoreline. Indeed, the adjoining lots are already titled and bounded by a City Road. It
is not bounded by a sea. The Court wants to correct this error in its findings on the
September 7, 2000 Order, that Lot No. 1 is situated on the shoreline
of Dumaguete City. The Court simply committed an oversight on the petitioners
evidence that the lot in question is a foreshore land x x x when in fact it is not. And it
is for this reason that the court reconsidered and set aside said September 7, 2000
Order, to correct the same while it is true that said September 7, 2000 Order had
attained its finality, yet this Court cannot in conscience allow injustice to perpetuate in
this case and that hearing on the merits must proceed to determine the legality and
truthfulness of its application for registration of title.


Respondent sought recourse from the Court of Appeals by filing a Petition
for Certiorari and Prohibition under Rule 65 of the Rules of Court, docketed as CA-G.R. SP
No. 64379. Respondent challenged the RTC Orders dated December 7, 2000 and February 20,
2001 for having been issued by the RTC in grave abuse of discretion amounting to lack or
excess of jurisdiction. Respondent reiterated that the RTC Order dated September 7, 2000,
dismissing LRC Case No. N-201 had already attained finality. The defects of the Motion for
Reconsideration of petitioner rendered the same as a mere scrap of paper, which did not toll the
running of the prescriptive period to appeal the RTC Order datedSeptember 7, 2000.

The Court of Appeals, in its Decision dated March 4, 2005, found merit in the Petition of
respondent and set aside the RTC Orders dated December 7, 2000 and February 20, 2001. The
appellate court, in its Resolution dated June 6, 2005, denied the Motion for Reconsideration of
petitioner.

Hence, petitioner comes before us via the instant Petition for Review with the following
assignment of error:



GROUND FOR THE APPEAL

Error of law: The March 4, 2005 decision of the Court of Appeals and its
June 6, 2005 Resolution, erred on question of law in setting aside the Orders of the
Regional Trial Court, Branch 44, dated December 7, 2000 and February 20,
2001. The said Orders of the trial court were made in order to determine factual
issues and to correct its error in its findings on the September 7, 2000 Order. Thus, the
Court of Appeals decision is contrary to law, justice, equity and existing
jurisprudence.
[27]



Respondent insists on the strict application of Sections 4, 5, and 6, Rule 15 and Section
11, Rule 13 of the Rules of Court. Violations of the said rules were fatal to the Motion for
Reconsideration and Supplemental Motion for Reconsideration of the petitioner, and as a result,
the RTC Order dated September 7, 2000, dismissing LRC Case No. N-201, had already become
final and executory and, thus, beyond the jurisdiction of the RTC to set aside. Respondent
urges us to reject the plea of petitioner for a liberal application of the rules in the absence of a
compelling reason to do so.

We grant the Petition.

The grant of a petition for certiorari under Rule 65 of the Rules of Court requires grave
abuse of discretion amounting to lack or excess of jurisdiction. Grave abuse of discretion exists
where an act is performed with a capricious or whimsical exercise of judgment equivalent to
lack of jurisdiction. The abuse of discretion must be patent and gross as to amount to an
evasion of positive duty or to a virtual refusal to perform a duty enjoined by law, or to act at all
in contemplation of law, as where the power is exercised in an arbitrary and despotic manner by
reason of passion or personal hostility.
[28]


The Court of Appeals erred in granting the writ of certiorari in favor of respondent. The
RTC did not commit grave abuse of discretion when, in its Orders dated December 7, 2000 and
February 20, 2001, it set aside the order of dismissal of LRC Case No. N-201 and resolved to
have a full-blown proceeding to determine factual issues in said case.

Procedural rules were conceived to aid the attainment of justice. If a stringent application
of the rules would hinder rather than serve the demands of substantial justice, the former must
yield to the latter.
[29]
In Basco v. Court of Appeals,
[30]
we allowed a liberal application of
technical rules of procedure, pertaining to the requisites of a proper notice of hearing, upon
consideration of the importance of the subject matter of the controversy, as illustrated in well-
settled cases, to wit:

The liberal construction of the rules on notice of hearing is exemplified in Goldloop Properties,
Inc. v. CA:

Admittedly, the filing of respondent-spouses' motion for reconsideration did not
stop the running of the period of appeal because of the absence of a notice of hearing
required in Secs. 3, 4 and 5, Rule 15, of the Rules of Court. As we have repeatedly held, a
motion that does not contain a notice of hearing is a mere scrap of paper; it presents no
question which merits the attention of the court. Being a mere scrap of paper, the trial
court had no alternative but to disregard it. Such being the case, it was as if no motion for
reconsideration was filed and, therefore, the reglementary period within which
respondent-spouses should have filed an appeal expired on 23 November 1989.

But, where a rigid application of that rule will result in a manifest failure or
miscarriage of justice, then the rule may be relaxed, 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. Technicalities may thus be
disregarded in order to resolve the case. After all, no party can even claim a vested
right in technicalities. Litigations should, as much as possible, be decided on the
merits and not on technicalities.

Hence, this Court should not easily allow a party to lose title and ownership over
a party worth P4,000,000.00 for a measly P650,000.00 without affording him ample
opportunity to prove his claim that the transaction entered into was not in fact an absolute
sale but one of mortgage. Such grave injustice must not be permitted to prevail on the
anvil of technicalities.

Likewise, in Samoso v. CA, the Court ruled:

But time and again, the Court has stressed that the rules of procedure are not to
be applied in a very strict and technical sense. The rules of procedure are used only to
help secure not override substantial justice (National Waterworks & Sewerage System vs.
Municipality of Libmanan, 97 SCRA 138 [1980]; Gregorio v. Court of Appeals, 72
SCRA 120 [1976]). The right to appeal should not be lightly disregarded by a
stringent application of rules of procedure especially where the appeal is on its face
meritorious and the interests of substantial justice would be served by permitting
the appeal (Siguenza v. Court of Appeals, 137 SCRA 570 [1985]; Pacific Asia Overseas
Shipping Corporation v. National Labor Relations Commission, et al., G.R. No. 76595,
May 6, 1998). . . .

In the instant case, it is petitioner's life and liberty that is at stake. The trial
court has sentenced him to suffer the penalty of reclusion perpetua and his conviction
attained finality on the basis of mere technicality. It is but just, therefore, that
petitioner be given the opportunity to defend himself and pursue his appeal. To do
otherwise would be tantamount to grave injustice. A relaxation of the procedural
rules, considering the particular circumstances herein, is justified.
[31]
(Emphasis ours.)


In the case at bar, the Motion for Reconsideration and Supplemental Motion for
Reconsideration of petitioner, which sought the reversal of RTC Order dated September 7, 2000
dismissing LRC Case No. N-201, cite meritorious grounds that justify a liberal application of
procedural rules.

The dismissal by the RTC of LRC Case No. N-201 for lack of jurisdiction is patently
erroneous.

Basic as a hornbook principle is that jurisdiction over the subject matter of a case is
conferred by law and determined by the allegations in the complaint which comprise a concise
statement of the ultimate facts constituting the plaintiff's cause of action. The nature of an
action, as well as which court or body has jurisdiction over it, is determined based on the
allegations contained in the complaint of the plaintiff, irrespective of whether or not the plaintiff
is entitled to recover upon all or some of the claims asserted therein. The averments in the
complaint and the character of the relief sought are the ones to be consulted. Once vested by
the allegations in the complaint, jurisdiction also remains vested irrespective of whether or not
the plaintiff is entitled to recover upon all or some of the claims asserted therein.
[32]


As a necessary consequence, the jurisdiction of the court cannot be made to depend upon
the defenses set up in the answer or upon the motion to dismiss; for otherwise, the question of
jurisdiction would almost entirely depend upon the defendant. What determines the jurisdiction
of the court is the nature of the action pleaded as appearing from the allegations in the
complaint. The averments therein and the character of the relief sought are the ones to be
consulted.
[33]


Under Act No. 496, otherwise known as the Land Registration Act, as amended by Act
No. 2347, jurisdiction over all applications for registration of title to land was conferred upon
the Courts of First Instance (CFI) of the respective provinces in which the land sought to be
registered was situated. Jurisdiction over land registration cases, as in ordinary actions, is
acquired upon the filing in court of the application for registration, and is retained up to the end
of the litigation.
[34]


The land registration laws were updated and codified by the Property Registration
Decree, and under Section 17 thereof, jurisdiction over an application for land registration was
still vested on the CFI of the province or city where the land was situated, viz:

SEC. 17. What and where to file. The application for land registration shall
be filed with the Court of First Instance of the province or city where the land is
situated. The applicant shall file together with the application all original muniments
of titles or copies thereof and a survey plan of the land approved by the Bureau of
Lands.

The Clerk of Court shall not accept any application unless it is shown that the
applicant has furnished the Director of Lands with a copy of the application and all
annexes.


Batas Pambansa Blg. 129, otherwise known as The Judiciary Reorganization Act of
1980, created the RTC
[35]
in place of the CFI. Presently, jurisdiction over an application for
land registration remains with the RTC where the land is situated, except when such jurisdiction
is delegated by the Supreme Court to the Metropolitan Trial Court, Municipal Trial Courts, and
Municipal Circuit Trial Courts under certain circumstances.
[36]


It is not disputed that the Application for Original Registration of Title filed by petitioner
before the RTC of the City of Dumaguete conformed to Section 15 of the Property Registration
Decree, which prescribes the form and contents of such applications. In its Application,
petitioner prayed that its title to the subject property, which it repeatedly alleged to have
acquired through continuous and adverse possession and occupation of the said property for
more than 30 years or since 1960, be placed under the land registration laws. The allegations
and prayer in the Application of petitioner were sufficient to vest jurisdiction on the RTC over
the said Application upon the filing thereof.

Respondent sought the dismissal of LRC Case No. N-201 on the ground of lack of
jurisdiction, not because of the insufficiency of the allegations and prayer therein, but because
the evidence presented by petitioner itself during the trial supposedly showed that the subject
property is a foreshore land, which is not alienable and disposable. The RTC granted the
Motion to Dismiss of respondent in its Order dated September 7, 2000. The RTC went beyond
the allegations and prayer for relief in the Application for Original Registration of petitioner,
and already scrutinized and weighed the testimony of Engr. Dorado, the only witness petitioner
was able to present.

As to whether or not the subject property is indeed foreshore land is a factual issue which
the RTC should resolve in the exercise of its jurisdiction, after giving both parties the
opportunity to present their respective evidence at a full-blown trial. As we have explained in
the Estate of the Late Jesus S. Yujuico v. Republic
[37]
:

The plain import of Municipality of Antipolo is that a land registration court,
the RTC at present, has no jurisdiction over the subject matter of the application
which respondent Republic claims is public land. This ruling needs elucidation.

Firmly entrenched is the principle that jurisdiction over the subject matter is
conferred by law. Consequently, the proper CFI (now the RTC) under Section 14 of
PD 1529 (Property Registration Decree) has jurisdiction over applications for
registration of title to land.

x x x x

Conformably, the Pasig-Rizal CFI, Branch XXII has jurisdiction over the
subject matter of the land registration case filed by Fermina Castro, petitioners
predecessor-in-interest, since jurisdiction over the subject matter is determined by the
allegations of the initiatory pleading the application. Settled is the rule that the
authority to decide a case and not the decision rendered therein is what makes up
jurisdiction. When there is jurisdiction, the decision of all questions arising in the
case is but an exercise of jurisdiction.

In our view, it was imprecise to state in Municipality of Antipolo that the Land
Registration Court [has] no jurisdiction to entertain the application for registration of
public property x x x for such court precisely has the jurisdiction to entertain land
registration applications since that is conferred by PD 1529. The applicant in a land
registration case usually claims the land subject matter of the application as his/her
private property, as in the case of the application of Castro. Thus, the conclusion of
the CA that the Pasig-Rizal CFI has no jurisdiction over the subject matter of the
application of Castro has no mooring. The land registration court initially has
jurisdiction over the land applied for at the time of the filing of the
application. After trial, the court, in the exercise of its jurisdiction, can
determine whether the title to the land applied for is registerable and can be
confirmed. In the event that the subject matter of the application turns out to be
inalienable public land, then it has no jurisdiction to order the registration of the
land and perforce must dismiss the application.
[38]
(Emphasis ours.)


It is true that petitioner, as the applicant, has the burden of proving that the subject
property is alienable and disposable and its title to the same is capable of registration. However,
we stress that the RTC, when it issued its Order dated September 7, 2000, had so far heard only
the testimony of Engr. Dorado, the first witness for the petitioner. Petitioner was no longer
afforded the opportunity to present other witnesses and pieces of evidence in support of its
Application. The RTC Order dated September 7, 2000 already declaring the subject property
as inalienable public land, over which the RTC has no jurisdiction to order registration was
evidently premature.

The RTC Order dated September 7, 2000 has not yet become final and executory as
petitioner was able to duly file a Motion for Reconsideration and Supplemental Motion for
Reconsideration of the same, which the RTC eventually granted in its Order dated December 7,
2000. Admittedly, said motions filed by petitioner did not comply with certain rules of
procedure. Ordinarily, such non-compliance would have rendered said motions as mere scraps
of paper, considered as not having been filed at all, and unable to toll the reglementary period
for an appeal. However, we find that the exceptional circumstances extant in the present case
warrant the liberal application of the rules.

Also, the Motion for Reconsideration and Supplemental Motion for Reconsideration of
the Order dated September 7, 2000 filed by petitioner did not comply with Section 11, Rule 13
of the Rules of Court, for these did not include a written explanation why service or filing
thereof was not done personally. Nonetheless, in Maceda v. Encarnacion de Guzman Vda. de
Magpantay,
[39]
citing Solar Team Entertainment, Inc. v. Ricafort,
[40]
and Musa v. Amor,
[41]
we
explained the rationale behind said rule and the mandatory nature of the same, vis--vis the
exercise of discretion by the court in case of non-compliance therewith:

In Solar Team Entertainment, Inc. v. Ricafort, 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.

In Musa v. Amor, this Court, on noting the impracticality of personal service,
exercised its discretion and liberally applied Section 11 of Rule 13:

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.

In the case at bar, the address of respondents counsel is Lopez, Quezon, while
petitioner Sonias counsels is Lucena City. Lopez, Quezon is 83 kilometers away
from Lucena City. Such distance makes personal service impracticable. As in Musa
v. Amor, a written explanation why service was not done personally might have been
superfluous.
[42]
(Emphases supplied and citations omitted.)


Our ruling in the above-cited cases is relevant to the instant case. Counsel for petitioner
holds office in Dumaguete City, Negros Oriental, in the Visayas; while counsel for respondent
holds office in Quezon City, Metro Manila, in Luzon. Given the considerable distance between
the offices of these two counsels, personal service of pleadings and motions by one upon the
other was clearly not practicable and a written explanation as to why personal service was not
done would only be superfluous.
[43]
In addition, we refer once more to the merits of the Motion
for Reconsideration and Supplemental Motion for Reconsideration of the RTC Order
dated September 7, 2000 filed by petitioner, which justify the liberal interpretation of Section
11, Rule 13 of the Rules of Court in this case.

Jurisprudence confirms that the requirements laid down in Sections 4, 5, and 6, Rule 15
of the Rules of Court that the notice of hearing shall be directed to the parties concerned, and
shall state the time and place for the hearing of the motion, are mandatory. If not religiously
complied with, they render the motion pro forma. As such, the motion is a useless piece of
paper that will not toll the running of the prescriptive period.
[44]


Yet, again, there were previous cases with peculiar circumstances that had compelled us
to liberally apply the rules on notice of hearing and recognize substantial compliance with the
same. Once such case is Philippine National Bank v. Paneda,
[45]
where we adjudged:

Thus, even if the Motion may be defective for failure to address the notice of hearing
of said motion to the parties concerned, the defect was cured by the court's taking
cognizance thereof and the fact that the adverse party was otherwise notified of the
existence of said pleading. There is substantial compliance with the foregoing rules if
a copy of the said motion for reconsideration was furnished to the counsel of herein
private respondents.

In the present case, records reveal that the notices in the Motion were addressed
to the respective counsels of the private respondents and they were duly furnished
with copies of the same as shown by the receipts signed by their staff or agents.

Consequently, the Court finds that the petitioner substantially complied
with the pertinent provisions of the Rules of Court and existing jurisprudence on
the requirements of motions and pleadings.
[46]
(Emphasis supplied.)


It was not refuted that petitioner furnished respondent and respondent actually received
copies of the Motion for Reconsideration, as well as the Supplemental Motion for
Reconsideration of the RTC Order dated September 7, 2000 filed by petitioner. As a result,
respondent was able to file its Oppositions to the said Motions. The RTC, in issuing its Order
dated December 7, 2000, was able to consider the arguments presented by both sides. Hence,
there was substantial compliance by petitioner with the rules on notice of hearing for its Motion
for Reconsideration and Supplemental Motion for Reconsideration of the RTC Order dated
September 7, 2000. Respondent cannot claim that it was deprived of the opportunity to be
heard on its opposition to said Motions.

In view of the foregoing circumstances, the RTC judiciously, rather than abusively or
arbitrarily, exercised its discretion when it subsequently issued the Order dated December 7,
2000, setting aside its Order dated September 7, 2000 and proceeding with the trial in LRC
Case No. N-201.

WHEREFORE, the instant Petition for Review of petitioner City of Dumaguete is
hereby GRANTED. The Decision dated March 4, 2005 and Resolution dated June 6, 2005 of
the Court Appeals in CA-G.R. SP No. 64379 are SET ASIDE, and the Orders dated December
7, 2000 and February 20, 2001 of Branch 44 of the Regional Trial Court of the City of
Dumaguete in LRC Case No. N-201 are REINSTATED. The said trial court
is DIRECTED to proceed with the hearing of LRC Case No. N-201 with dispatch.

SO ORDERED.


Jurisprudence confirms that the requirements laid down in Sections 4, 5,
and 6, Rule 15 of the
Copyright 2012 CD Technologies Asia, Inc. and Accesslaw, Inc. Philippine
Law Encyclopedia 2012 80

Rules of Court that the notice of hearing shall be directed to the parties
concerned, and shall state the time and place for the hearing of the
motion, are mandatory. If not religiously complied with, they render the
motion pro forma. As such, the motion is a useless piece of paper that
will not toll the running of the prescriptive period. Yet, again, there
were previous cases with peculiar circumstances that had compelled us to
liberally apply the rules on notice of hearing and recognize substantial
compliance with the same. Once such case is Philippine National Bank v.
Paneda, (G.R. No. 149236, February 14, 2007) where we adjudged: Thus, even
if the Motion may be defective for failure to address the notice of
hearing of said motion to the parties concerned, the defect was cured by
the court's taking cognizance thereof and the fact that the adverse party
was otherwise notified of the existence of said pleading. There is
substantial compliance with the foregoing rules if a copy of the said
motion for reconsideration was furnished to the counsel of herein private
respondents. In the present case, records reveal that the notices in the
Motion were addressed to the respective counsels of the private
respondents and they were duly furnished with copies of the same as shown
by the receipts signed by their staff or agents. Consequently, the Court
finds that the petitioner substantially complied with the pertinent
provisions of the Rules of Court and existing jurisprudence on the
requirements of motions and pleadings.
City of Dumaguete vs. Phil. Ports Authority, G.R. No. 168973, August 24,
2011