G.R. No.

L-17427 July 31, 1962

RODRIGO ACOSTA, petitioner,

vs.
PEOPLE OF THE PHILIPPINES, respondent.

Rodrigo Acosta for and in his own behalf as petitioner.

Office of the Solicitor General for respondent.

CONCEPCION, J.:

Appeal by certiorari, taken by Rodrigo Acosta, from a decision of the Court of Appeals remanding
this case to the court of origin for retrial and the rendition of judgment in accordance with the
evidence that the parties may then present.

It appears that on January 2, 1951, an information for malversation of public funds thru reckless
negligence was filed, with the Court of First Instance of Bukidnon, against petitioner Rodrigo
Acosta, for having allegedly made, as Provincial Treasurer of Bukidnon, "irregular and excessive
purchases of supplies, materials, equipment and printed forms from private dealers for the use of
the province", and against Leonardo Avila, for having, as Provincial Auditor of the same province,
"passed in audit the corresponding vouchers covering the payments for such purchases."
Subsequently, the information was amended to include as defendants three (3) private dealers,
namely, C. Silvestre, E. M. Haravata and Victoriano C. Arias, who had allegedly been able to
collect payment upon said purchases. Still later, however, the prosecution filed a second amended
information excluding said dealers from the charge.

The trial under this second amended information, in connection with which Acosta and Avila had
entered a plea of not guilty, began on June 19, 1952 and ended on July 28, of the same year.
However, the trial Judge, Hon. Jose P. Veluz, retired from the service without having decided the
case. His successor in office, Hon. Vicente Abad Santos, Judge, "found the transcript of 482 pages
prepared by stenographer Celestino Suarez" replete with "omissions and also inaccuracies which
had been indicated by means of marginal notes on the pages mentioned in" an "order of September
25, 1957." Judge Abad Santos directed, therefore, said stenographer "to re-transcribe his notes and
to submit the "new transcript as well as the first transcript" not later than forty days after receipt
of a copy of said order". But, "instead of re-transcribing his notes . . ., Mr. Suarez merely made
corrections in handwriting and inserted some supplemental transcripts in the original transcripts".
Upon reading those supplemental typed transcripts, particularly the portion covering the cross-
examination of witness Pedro Palafox by defense counsel Cipriano Asada, Judge Abad Santos
noticed, however, that it was still "full of inaccuracies". Accordingly, he ordered the stenographer
to read his notes in his (Judge Abad Santos) chamber, in order that the necessary corrections could
be made on the transcript. Upon going over said notes, it appeared that said portion "consisted of
eleven pages although the transcript thereof was spread to eight pages only". Hence, Suarez was
ordered to further transcribe what had thus been omitted. What is more, in order that he could
decide the case with a "clear conscience", Judge Abad Santos bade Suarez to stay in his (Judge
Abad Santos') office in order to read his (Suarez) notes from the beginning, with stenographer
Montes checking the transcript already made. Although he did not immediately reveal his
objection thereto, Suarez later refused to work in said office stating that "it made him dizzy to
come up and" that "besides he was going to resign or retire" and then asked to be allowed to do
his work in the first floor of the court house. Instead of granting his request, Judge Abad Santos
recommended to the Department of Justice, in order to avoid further delay in the disposition of the
case, (a) that any application for retirement or resignation that may be submitted by Suarez be
denied; and (b) that payment of his salary be suspended until otherwise recommended, after
compliance with the order that he should work in the office of the Judge, provided that the result
of his work is satisfactory. Eventually, the transcript of the stenographic notes, certified to be "true
and correct", consisted of 658 pages as compared to only 482 pages found by Judge Abad Santos
on September 9, 1957.

Meanwhile, Judge Abad Santos had resigned leaving the case undecided. He was succeeded in
office by Hon. Abudio Arrieta, Judge, who, on October 27, 1958, rendered a decision convicting
the defendants as charged and sentencing each to an indeterminate penalty ranging from eleven
(11) years, six (6) months and twenty (20) days of prision mayor to sixteen (16) years, five (5)
months and eleven (11) days of reclusion temporal, to pay a fine of P28,808.86, representing one-
half of the total sum allegedly misappropriated, as well as to jointly and severally indemnify the
province of Bukidnon in the sum of P62,955.06, without subsidiary imprisonment in case of
insolvency, to perpetual disqualification and to pay the costs.

Both defendants appealed from this decision to the Court of Appeals and urged the same to acquit
them upon the ground, among others, that said decision was based on incomplete and tampered
transcript, upon which a conviction beyond reasonable doubt could not be predicated. Acosta,
moreover, claimed that his constitutional right to a speedy trial had been violated. On July 2, 1960,
the Court of Appeals rendered its decision, from which we quote:

. . . on the basis of available transcript, (which originally contains 482 pages and when
retranscribed and corrected it consists of 658 pages), indicating that irregularities in taking
the notes and in transcription thereof were committed, we can not see our way clear to
pronounce either were conviction or acquittal in this case. Indeed, the evidence in this case
is not quite accurate or reliable for the reasons already underscored earlier. Since the crime
with which the accused were charged carries a stiff penalty and that it is one that should be
fully prosecuted for being highly undesirable, if not immoral, we prefer to subordinate
acquittal or conviction to time. Stated otherwise, we are of the opinion that the ends of
justice, both to the government and to the accused, would be better served if further
proceedings will take place in order that this case could be decided satisfactorily once and
for all.

From the "corrected" transcript, we gathered that counsel for accused Leonardo Avila in
the court below incurred certain inconsistencies, to wit:

(1) Your Honor please, without renouncing or waiving our rights to present evidence for
the defense of the accused Leonardo Avila, . . . we move for the dismissal of this case on
two grounds:

xxx xxx xxx

 (2) As regards the accused Avila, Your Honor, we waive our right to present evidence on
his defense and we submit the case for decision with the evidence presented by the Fiscal,
and we beg to allow us to withdraw insofar as the accused Avila is concerned we
beg to leave the courtroom.

(3) We do not ask for a separate trial, Your Honor, in order to obviate duplicity of questions,
but now we will ask for a separate defense.

(4) And that is within the lookout of the defense, Your Honor, and we reiterate our motion
to leave this Honorable Court to allow us to leave the courtroom, and consider our case
closed. (t.s.n., pp. 545, 554, & 558.)

On appeal, counsel for appellant Leonardo Avila filed a motion for new trial, because of
the aforequoted statements and of the erroneous and incomplete transcript of the trial
stenographer. The motion was, however, denied (Rec. 3rd Div., Feb. 12, 1959). Appellate
Courts have that broad power to order new trial without specifying the grounds thereof in
order to avoid a miscarriage of justice. The grounds upon which courts of first instance
may grant a new trial are limited (Pls. see Sec. 5, Rule 117, Rules of Court), but appellate
courts, under Section 14, Rule 120 are authorized to remand a case to a court of first
instance for new trial or retrial, without specifying, and, hence, without limiting, the
grounds upon which the action may be predicated. And pursuant to Section 11, Rule 120,
of the Rules of Court, an appellate court may . . . remand a case to a court of first instance
for new trial or retrial . . . .

WHEREFORE, the record of this case is ordered remanded to the court of origin for retrial
and another judgment be rendered in accordance with the evidence that the parties
concerned may desire to present.

Acosta sought a reconsideration of this decision, which was denied. Hence, his present appeal by
certiorari.

Petitioner maintains that the Court of Appeals erred in ordering a retrial, instead of acquitting him,
not only because he had been deprived of the constitutional right to a speedy trial, but, also, because
a retrial would be impractical, oppressive and expensive, apart from amounting to a denial of
justice, for a principal witness for the defense, one Justiniano B. Castillo, had allegedly died on
December 24, 1957, and his other witnesses may no longer be available.

It should be noted that the original information in this case was filed on January 2, 1951 and that
the trial of the reception of the evidence for both parties commenced on June 19, 1952 and was
finished on July 18 of the same year. Petitioner does not contend that there has been any undue
delay in this part of the proceedings. His alleged deprivation of the right to a speedy trial is
anchored on the fact that the decision of the lower court was rendered over six (6) years later. In
this connection, the Court of Appeals aptly observed:

. . . True enough that judgment was pronounced after almost six years. But "the
constitutional right to a public and speedy trial does not extend to the act of pronouncement
 of sentenced" (Reed vs. State, 147 Ind., N. E., 135, 136). It has been said that "trial and
judgment are two different stages of a judicial proceeding: the former is provided for in
Rule 115, and the latter is covered by Rule 116, of the Rule of Court. (Talabon v. Iloilo
Prov. Warden, 78 Phil., 600). And "the period of the trial terminates when the judgment
begins" (Felismino vs. Gloria, 47 Phil., 967). Therefore, and since the accused did not avail
themselves of the writ of mandamus to compel the trial judge or his successor to pronounce
the corresponding judgement, it may be said in the light of the ruling laid down in the case
of Talabon vs. Iloilo Prov. Warden, infra, that they had waived their right to a speedy trial.

Indeed:

No general principle fixes the exact time within which a trial must be had to satisfy the
requirement of a speedy trial. The right to a speedy trial is necessarily relative; it is
consistent with delays, and whether such a trial is afforded must be determined in the light
of the circumstances of each particular case as a matter of judicial discretion. It is generally
said that a speedy trial is one had as soon after indictment as the prosecution can with
reasonable diligence prepare for it, regard being had to the terms of court, a trial conducted
according to fixed rules, regulations and proceedings of law, free from vexations,
capricious, and oppressive delays. One accused of crime is not entitled to a trial
immediately on his arrest or accusation, he must wait a regular term of the court until an
indictment is found and presented if the case is one wherein the trial is on indictment, and
until the prosecution has had reasonable time to prepare for the trial. (22 C.J.S., 715-716.)

Under constitutional provision securing to accused "the right to a public trial", or a "speedy
trial", is has been held that the formal declaration of sentence is no part of the trial. (24
C.J.S., 16.)

Moreover, the delay in the rendition of the decision of the court of first instance was due to
circumstances beyond the control of the judges who presided the same. Judge Veluz, who received
the evidence, was automatically retired owing to his age. Judge Abad Santos, who succeeded him,
could not decide the case because he found the transcript to be inaccurate and he had to make
disciplinary measures in order to compel stenographer Suarez to retranscribe his notes. By the time
this was done, Judge Abad Santos was no longer in the service. Hence, his successor Judge Arrieta
was the one who rendered the decision of the lower court.

Upon the other hand, we cannot, in the exercise of our jurisdiction on appeal by certiorari, absolve
the petitioner of the crime charged against him, for there are no findings of fact in the decision of
the Court of Appeals upon which this Court could base a judgement of acquittal. Moreover, the
opinion of the Court of Appeals to the effect that the transcript of the stenographic notes taken
during the trial of this case in the court of first instance does not reflect faithfully what transpired
during said trial is, apart from being shared by petitioner herein, conclusive upon us. Under these
circumstances, we should not interfere in the exercise of discretion by the Court of Appeals. In the
language of Corpus Juris:

Under a statute which provides that a person restrained of his liberty is entitled to certiorari
to inquire into the cause of his imprisonment, certiorari does not lie to review a
 determination in a criminal case where relator was discharged from custody under a bail
bond. The reason for such a rule is that the relator, therefore, was not restrained of his
liberty. The imprisonment or restraint in his liberty within the meaning of this section, is
an actual physical restraint by which the liberty of the individuals is in some way interferred
with. A person cannot be said to be restrained in his liberty when he can do what and go
where he pleases. The mere fact his bail has authority to surrender him to custody at any
time is not a restrained in his liberty. . . . If the relation should be surrendered by his bail,
and thus be actually in custody, he would be entitled to have the cause of his detention
reviewed; but until there is an actual restraint of his liberty, he is not entitled to either of
these writs (certiorari or habeas corpus) . . . . (17 Corpus Juris, pp. 18-19.)

We are not unaware of the possible disadvantages to which petitioner might be placed in the event
of a retrial, but we are not in a position now to determine the facts of such disadvantages. In fact,
the very petitioner has not particularized the evidence which not be available to him at a retrial,
aside from the circumstances that the prosecution may then be similarly handicapped. In any event,
when the retrial takes place, petitioner may point out what evidence he can no longer present and
why, and the Court should then considered the effect thereof upon the question of guilt or
innocence of petitioner herein.

WHEREFORE, the decision of the Court of Appeals is hereby affirmed, and the case remanded to
the Court of First Instance of Bukidnon for further proceedings in compliance therewith. It is so
ordered.

G.R. No. 122539 March 4, 1999

JESUS V. TIOMICO, petitioner,

vs.
THE HON. COURT OF APPEALS (FORMER FIFTH DIVISION) and PEOPLE OF THE PHILIPPINES,
respondent.

PURISIMA, J.:

This is a petition for review by certiorari under Section 2, Rule 125, in relation to Section 1, Rule
45 of the Rules of Court to correct, reverse and annul the decision 1 of the Court of Appeals which
affirmed the judgment 2 of the trial court convicting the petitioner herein for a violation of the
Trust Receipts Law.

Petitioner Jesus V. Tiomico, (Tiomico) opened a Letter of Credit with the Bank of the Philippine
Islands (BPI) for $5,600 to be used for the importation of two (2) units of Forklifts, Shovel loader
and a truck mounted with crane. On October 29, 1982, the said machineries were received by
the accused, as evidenced by the covering trust receipt. Upon maturity of the trust receipt, on
December 28, 1982, he made a partial payment of US$855.94, thereby leaving an unpaid
obligation of US$4,770.46. As of December 21, 1989, Tiomico owed BPI US$4,770.46, or
P109,386.65, computed at P22.93 per US dollar, the rate of exchange at the time. Failing to pay
the said amount or to deliver subject machineries and equipments, despite several demands, the
International Operations Department of BPI referred the matter to the Legal Department of the
bank. But the letter of demand sent to him notwithstanding, Tiomico failed to satisfy his
monetary obligation sued upon.

Consequently, he was accused of a violation of PD 115, otherwise known as the Trust Receipts
Law, under an Information 3 alleging:

That on or about the 29th day of October, 1982, in the Municipality of Makati, Metro, Manila,
Philippines, and within the jurisdiction of this Honorable Court, the above-named accused,
executed a Trust Receipt Agreement for and in behalf of Paramount Calibrators Merchandising
of which he is the sole proprietor in favor of the Bank of the Philippine Islands. In consideration
of the receipt by the said accused of three (3) bares one unit Forklift Model FD-30 Toyota Branch
2-J70 Hp and one unit Forklift Model LM-301 Toyota Branch 2-J 70 Hp and one unit shovel loader
Model SOT 130 HP, 6 Cyl-LC #2-16860, for which there is now due the sum of US$5600.00,
wherein the accused agreed to sell the same and with the express obligation to remit to the
complainant-bank the proceeds of the sale, and/or to turn over the same if not sold, on demand,
but the accused once in possession of the said items, far from complying with his obligation, with
unfaithfulness and abuse of confidence, did then and there wilfully, unlawfully and feloniously
misappropriate, misapply and convert the same to his own personal use and benefit despite
repeated demands, failed and refused and still fails and refuses account for and/or remit the
proceeds of the sale thereof, to the damage and prejudice of the said complainant-bank as
represented by Lourdes V. Palomo in the aforementioned amount of US $5600 or its equivalent
in Philippine currency.

Contrary to law.

Arraigned thereunder, Tiomico entered a plea of Not Guilty, at which juncture, Assistant
Provincial Prosecutor John B. Egana manisfested that he was authorizing the private prosecutor,
Atty. Jose B. Soncuya, to prosecute the case subject to his direction, supervision and control.

On October 16, 1989, Gretel S. Donato was presented to testify for the prosecution. According
to her, she worked for the Bank of the Philippine Islands (BPI) in 1981 and in 1982, she was
assigned as one of the Letter of Credit processors in the International Operations Department of
BPI. Her duty, among others, was to process letter of credit applications which included that of
Tiomico. The trust receipt executed by the latter was given to her as part of the documents
supporting his Letter of Credit.

The following documents presented in the course of the testimony of Donato were identified by
her as follows:
(1) Exhibit "A" Letter of Credit;

(2) Exhibit "B" Pro Forma Invoice;

(3) Exhibit "C" Letter of Credit Confirmation;

(4) Exhibit "D" Trust Receipt; Exhibit D1-D4 signatures thereon;

(5) Exhibit "E" Statement of Account, the amount of P306,708.17 appearing therein, as Exhibit
E-1, and the signature thereto of an unidentified bank officer, as Exhibit E-2;

(6) Exhibit "F" Letter of Demand of the bank's legal department; a return card, as Exhibit F-1,
and the signature of the addressee's agent, as Exhibit F-1 A.

Counsel for petitioner objected to the admission of Exhibits "A", "B", "C" and "D" on the ground
that witness failed to identify the said documents inasmuch as her testimony regarding the
signatures appearing therein were evidently hearsay. But the trial court admitted the said
documentary evidence, despite the objections raised thereto by the defense. Thereafter, the
prosecution rested.

After the People rested its case, petitioner begged leave to file a demurrer to the evidence,
theorizing that the evidence on record does not suffice to prove beyond reasonable doubt the
accusation against him. But instead of granting the said motion of the defense, the trial court
ordered a re-opening of the case, so as to enable the prosecution to adduce more evidence. The
defense objected but to no avail. The trial court proceeded with the continuation of trial "in the
interest of justice".

On September 5, 1990, the-lower court denied the demurrer to evidence. The Motion for
Reconsideration of the defense met the same fate. It was denied. The case was then set for
continuation of trial on December 12, 1990. Reception of evidence for the defense was set on
January 7, 1991. But on January 4, 1991, three days before the scheduled continuation of trial,
the defense counsel filed an Urgent Motion for Postponement for the given reason that he had
to appear before Branch 12 of the Metropolitan Trial Court of Manila on January 7, 1991.

On January 7, 1991, the lower court denied the Urgent Motion for Postponement and adjudged
petitioner to have waived the right to introduce evidence on his behalf.

On January 30, 1991, the trial court promulgated its decision finding petitioner guilty of a
violation of PD 115, and sentencing him accordingly.

On appeal, the Court of Appeals came out with a judgment of affirmance, the dispositive portion
which, is to the following effect:
WHEREFORE, the Court finds JESUS V. TIOMICO guilty beyond reasonable doubt of violation of
PD 115 and is hereby sentenced to suffer an indeterminate penalty of ten (10) years of prision
mayor as minimum, to fifteen (15) years of reclusion temporal as maximum; to indemnify Bank
of the Philippine Islands the sum of P109,386.65 and to pay the costs.

Undaunted, petitioner found his way to this Court via the Petition for Review by Certiorari at bar,
seeking to annul the decision 5 of the Court of Appeals; raising as issues:

(1) WHETHER OR NOT PD 115 OR TRUST RECEIPTS LAW IS UNCONSTITUTIONAL;

(2) WHETHER OR NOT A TESTIMONY CAN BE ADMITTED DESPITE THE ABSENCE OF FORMAL
OFFER AS REQUIRED BY SECTIONS 34 AND 35, RULE 132, OF THE REVISED RULES OF COURT;

(3) WHETHER OR NOT THE TESTIMONY OF WITNESS WITH REGARD TO THE LETTER OF CREDIT
AND OTHER DOCUMENT IS HEARSAY AND;

(4) WHETHER OR NOT THERE WAS DEPRIVATION OF DUE PROCESS ON THE RIGHTS OF THE
ACCUSED WHEN THE TRIAL COURT DENIED THE MOTION FOR POSTPONEMENT BY THE DEFENSE
COUNSEL.

As regards the first issue, the Court has repeatedly upheld the validity of the Trust Receipts Law
and consistently declared that the said law does not violate the constitutional proscription
againts imprisonment for non-payment of debts. (People vs. Cuevo, 104 SCRA 312; People vs.
Nitafan, 207 SCRA 726; Lee vs. Rodil, 175 SCRA 100). Such pronouncement was thoroughly
explained in Lee vs. Rodil (supra) thus:

Verily, PD 115 is a declaration by the legislative authority that, as a matter of public policy, the
failure of a person to turn over the proceeds of the sale of goods covered by a trust receipt or to
return said goods if not sold is a public nuisance to be abated by the imposition of penal sanctions.
As held in Lozano vs. Martinez (146 SCRA 323, 338):

. . . certainly, it is within the authority of the lawmaking body to prescribe certain act deemed
pernicious and inimical to public welfare. Acts mala in se are not the only acts that the law can
punish. An act may not be considered by society as inherently wrong, hence, not malum in se,
but because of the harm that it inflicts on the community, it can be outlawed and criminally
punished as malum prohibitum. The State can do this in the exercise of its police power.

In fine, PD 115 is a valid exercise of police power and is not repugnant to the constitutional
provision of non-imprisonment for non-payment of debt.

In a similar vein, the case of People vs. Nitafan (supra) held:

The Trust Receipts Law punishes the dishonesty and abuse of confidence in the handling of
money or goods to the prejudice of another regardless of whether the latter is the owner or not.
The law does not seek to enforce payment of a loan. Thus, there can be no violation of the right
against imprisonment for non-payment of a debt.

Anent the second issue, the pivotal question is: Should the testimony of a witness be admitted
despite the failure of the proponent to offer it formally in evidence, as required by Section 34 of
Rule 132 6? We rule on this issue in the affirmative.

Records disclose that the private prosecutor stated the purpose of the testimony in question
although he did not formally offer the same. The proceedings 7 went on as follows:

ATTY. SONCUYA:

The purpose of the testimony of the witness is to prove that the accused applied for a letter of
credit, for the opening of a letter of credit and for the importation of machinery from Japan and
that those machinery were delivered and received by the accused as evidenced by the trust
receipt and that the accused failed to comply with the terms and conditions of the said trust
receipt, your Honor.

COURT:

All right, proceed.

As aptly stressed by the Solicitor General in his Comment, 8 "the absence of the words, 'we are
formally offering the testimony for the purpose of . . .'" should be considered merely as an
excusable oversight on the part of the private prosecutor.

It should be borne in mind that the rationale behind Section 34 of Rule 132 9 is to inform the
Court of the purpose of the testimony, to enable the judge to rule whether the said testimony is
necessary or is irrelevant or immaterial.

In the case under scrutiny, since the purpose of subject testimony was succinctly stated, the
reason behind the requirement for its formal offer has been substantially complied with. What
the defense counsel should have done should have been to interpose his objection the moment
the private respondent was called to testify, on the ground that there was no prior offer made
by the proponent. 10

The tendency of the rules on evidence, is towards substantial justice rather than strict adherence
to technicalities. To condemn the disputed testimony as inadmissible due to the failure of the
private prosecutor to properly observe the rules on presentation of evidence, would render
nugatory, and defeat the proceedings before the lower court.

On the third issue whether or not the witness can testify on subject documents introduced as
evidence despite her admission that she did not see the accused sign the said exhibits, we
likewise rule in the affirmative.
As aptly held by the appellate court: 11

Gretel Donato testified that she was not present when appellant affixed his signature on the
documents in question (p. 22 ibid). She, however, identified the signatures thereon (Exhs. "A-1",
"A-2", "D-1", "D-2" and "D-3", Letter of Credit; Exhibit B Pro Forma Invoice; Exhibit C Letter
of Credit Confirmation; Exhibit D-Trust Receipt; Exhibit D1-D4 signatures thereon; pp. 129 and
132 of Orig. Rec.) as those of the appellant Jesus V. Tiomico arising from her familiarity therewith
inasmuch as she was the one who processed the papers pertinent to the transactions between
the appellant and the complainant bank (TSN, Feb. 5, 1990, pp 4-6). Her testimony, therefore,
cannot be considered hearsay because it is principally based on her personal knowledge of bank
transactions and the documents and records which she processes in the regular course of the
bank's business operations.

It is not essential to the competence of a lay witness to express opinions on the genuineness of
handwritings that he did see the person in question
write.12 It is enough that the witness has so adopted the same into business transactions as to
induce a reasonable presumption and belief of genuineness of the document. This is due to the
fact that in the ordinary course of business, documents purporting to be written or signed by that
person have been habitually submitted to the witness, or where knowledge of handwriting is
acquired by him in an official capacity. 13

Did the witness gain familiarity with the signature of the accused? The answer is yes. Exhibits "A"
to "D": Letter of Credit, Pro-Forma Invoice, Letter of Credit Confirmation and Trust Receipt,
respectively, were all familiar to the witness since the said documents bearing the signature of
the accused were all submitted to her for processing. It is therefore beyond cavil that she
acquired sufficient familiarity to make witness competent to testify on the signatures appearing
in subject documents. From the time of the application to its approval and when Tiomico
defaulted, she (witness) was the one who had overseen the transactions and recommended the
actions to be taken thereon. As a matter of fact, she was the one who referred the failure of
Tiomico to pay his balance to Tiomico to pay his balance to the Legal Department of BPI,
prompting the said legal department to send him (Tiomico) a demand letter.

Furthermore, whether there was due execution or authencity of such documents was impliedly
admitted by the accused. On this point, we quote with approval the conclusion reached by the
Court of Appeals, to wit: 14

On the other hand, appellant impliedly admitted the due execution of the assailed documents
considering that he did not deny the fact that he opened a letter of credit. Neither did he deny
that the signature appearing thereon is his. What appellant intended to dispute was merely the
balance of his past due account with the complainant bank, thus:

COURT
Denied.

What is the defense of the accused?

Denial that he opened the letter of credit.

ATTY. EBRO

No, you honor.

COURT: What is the defense?

xxx xxx xxx

ATTY. EBRO.

Q: Now you identified signatures allegedly of the accused on Exhibit A, which is the
application for the letter of credit, I ask you Miss Donato, were you personally present when
this signature was affixed to the document?

A: (witness going over Exhibit A) I was the one of the ones who processed the letter of credit.

ATTY. EBRO

May we ask for an order directing that the witness respond to my question.

COURT

Just answer the question.

WITNESS

A: No, sir.

COURT

Does the accused deny the signature?

ATTY. EBRO

No, your Honor. I am just showing also that she has been exaggerating.

(TSN, Feb. 5, 1990, pp. 12-13, p. 22)

In light of the foregoing, it stands to reason and conclude that the documents under scrutiny are
admissible in evidence, as held by the trial court.

Anent the fourth issue, petitioner theorizes that the denial of the motion for postponement sent
in by his lawyer violated his constitutional right to due process.

It should be stressed that subject Urgent Motion for Postponement was not the first motion for
resetting ever presented by the counsel for petitioner. On December 12, 1990, upon motion of
the latter, and without objection on the part of the prosecution, the reception of evidence for
the defense was reset once more to January 7, 1991, at 8:30 in the morning.

The most basic tenet of due process is the right to be heard. Where a party had been afforded
an opportunity to participate in the proceedings but failed to do so, he cannot complain of
deprivation of due process. 15 Due process is satisfied as long as the party is accorded an
opportunity to be heard. If it is not availed of, it is deemed waived or forfeited without violating
the Bill of Rights. 16

It is further theorized by petitioner that the lower court should have at least granted him another
trial date so as to enable him to present his evidence, so that the denial of his Urgent Motion for
Postponement infringed his constitutional right to be heard by himself and by counsel. 17 This
submission is unsustainable.

When an accused is accorded a chance to present evidence on his behalf but due to his repeated
unjustifiable failure to appear at the trial without any justification, the lower court order's the
case submitted for decision on the basis of the evidence on record, said judicial action is not
tainted with grave abuse of discretion because in such a case, the accused is deemed to have
waived the right to adduce evidence on his behalf. 18

Furthermore, records show that in this case the defense counsel did not even bother to appear
for the scheduled reception of evidence for his client on January 7, 1991, notwithstanding the
fact that the trial court did not act upon, much less grant, the Urgent Motion for Postponement
which he filed on January 4, 1991. Lawyers should never presume that their motions for
postponement would be granted. 19

A motion for continue or postponement is not a matter of right. It is addressed to the sound
discretion of the Court. Action thereon will not be disturbed by appellate courts, in the absence
of clear and manifest abuse of discretion resulting in a denial of substantial justice. 20

Motions for postponement are generally frowned upon by Courts if there is evidence of bad faith,
malice or inexcusable negligence on the part of the movant.21 The inadvertence of the defense
of the defense counsel in failing to take note of the trial dates and in belatedly informing the trial
court of any conflict in his schedules of trial or court appearances, constitutes inexcusable
negligence. It should be borne in mind that a client is bound by his counsel's conduct, negligence
and mistakes in handling the case. 22
As gleanable from the records:

. . . Attached to the motion is the Order of said court dated November 19, 1990. Obviously, when
the case was called on December 12, 1990, the counsel for the accused had already known of the
scheduled hearing before the Metropolitan Trial Court, yet he agreed to the hearing on January
7, 1991. Counsel's conduct is not consistent with the thrust of the Judiciary to expedite the
termination of cases under the Mandatory Continuous Trial . . . 23

A lawyer as an officer of the court is part of the judicial machinery in the administration of justice.
As such, he has a responsibility to assist in the proper and sound administration of justice. Like
the court itself, he is an instrument to advance its ends and the speedy, efficient, impartial,
correct and inexpensive adjudication of cases. A lawyer should not only help to attain these
objectives. He should also avoid improper practices that impede, obstruct or prevent their
realization, charged as he is with the primary task of assisting the court in the speedy and efficient
administration of justice. 24

Petitioner invites attention to the Affidavit of Desistance by the Bank of the Philippine Islands
(BPI). This issue raised by the petitioner cannot be entertained as it was only raised for the first
time on appeal. 25

Considering that the assailed decision is firmly anchored on prevailing law and established
jurisprudence, the Court cannot help but deny the petition.

WHEREFORE, the petition is DENIED and the decision of the Court of Appeals, dated May 31,
1995, affirming the judgment of conviction rendered on January 28, 1991 by the court of origin
AFFIRMED. No pronouncement as to costs.

[G.R. NO. 155483 : April 27, 2007]

EIRS OF PEDRO PASAG, represented by EUFREMIO PASAG; HEIRS OF MARIA PASAG,

represented by EPIFANIA LUMAGUI; HEIRS OF JUANITA PASAG, represented by ASUNCION
ORTIOLA; HEIRS OF ISIDRO PASAG, represented by VIRGINIA P. MENDOZA; HEIRS OF BASILIO
PASAG, represented by MILAGROSA P. NABOR; and HEIRS OF FORTUNATA PASAG,
represented by FLORENTINA S. MEMBRERE, Petitioners, v. Sps. LORENZO and FLORENTINA
PAROCHA, PRISCILLA P. ABELLERA, and MARIA VILORIA PASAG, Respondents.

The rule on formal offer of evidence is not a trivial matter. Failure to make a formal offer within
a considerable period of time shall be deemed a waiver to submit it. Consequently, as in this case,
any evidence that has not been offered shall be excluded and rejected.
The Case

The present Petition for Review on Certiorari under Rule 45 seeks the annulment of the February
15, 2002 Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 68544, and its September 6,
2002 Resolution2 denying petitioners' Motion for Reconsideration. In effect, petitioners entreat
this Court to nullify the February 24, 2000 Resolution of the Urdaneta City Regional Trial Court
(RTC), Branch 45 in Civil Case No. U-5743, granting the demurrer to evidence filed by respondents
and dismissing their Complaint, which ruling was upheld by the CA.

The Facts

The instant case arose from a Complaint for Declaration of Nullity of Documents and Titles,
Recovery of Possession and Ownership, Reconveyance, Partition and Damages filed by
petitioners at the Urdaneta City RTC of Pangasinan against respondents. Petitioners alleged a
share over three (3) properties owned by respondents, which formed part of the estate of
petitioners' deceased grandparents, Benito and Florentina Pasag. They averred that Benito and
Florentina Pasag died intestate, thus, leaving behind all their properties to their eight (8) children
Pedro, Isidro, Basilio, Severino, Bonifacio, Maria, Juanita, and Fortunata. However, Severino, the
predecessor of respondents, claimed in an affidavit of self-adjudication that he is the sole, legal,
and compulsory heir of Benito and Florentina Pasag. Consequently, he was able to appropriate
to himself the properties covered by Original Certificates of Title (OCT) Nos. 2983 and 1887.
Thereafter, Severino executed a deed of absolute sale over the said properties in favor of his
daughter, respondent Florentina Parocha. Moreover, petitioners alleged that Severino used the
same affidavit of self-adjudication to secure a free patent over an agricultural land that had long
been under the possession of Benito and Florentina Pasag.

In denying the material allegations in the Complaint, respondents averred in their Answer that
the properties left behind by the spouses Benito and Florentina Pasag had already been
partitioned among their eight (8) surviving children. They claimed that the parcels of land covered
by OCT Nos. 2983 and 1887 are Bonifacio's share of which he later on renounced in a Quitclaim
Deed in favor of his brother, Severino. As regards the parcel of land covered by OCT No. P-20607,
respondents asserted that the said land had been in Severino's possession and occupation since
1940, thus, giving him the right to apply for and be granted a free patent over it. Having complied
with the requirements of law, Severino's title had now become indefeasible.

The trial of the case commenced on March 19, 1996. On March 9, 1999, petitioners rested their
case and were granted ten (10) days within which to submit their formal offer of documentary
exhibits. However, petitioners failed to submit the said pleading within the required period.

On April 19, 1999, petitioners asked the trial court to give them until May 11, 1999 to submit
their offer of evidence; and it subsequently granted their motion. However, on May 11, 1999,
they again failed to submit their offer of evidence and moved for another extension of five (5)
days.
Unfortunately, petitioners still failed to submit their formal offer of evidence within the extended
period. Consequently, in its June 17, 1999 Order,3 the trial court deemed waived petitioners' right
to make their formal offer of evidence.

On July 27, 1999, petitioners moved for the admission of their offer of evidence. On September
1, 1999, however, the trial court issued an Order4 denying petitioners' formal offer of evidence
for their "consistent failure"5 to submit it.

On October 28, 1999, respondents filed a Motion to Dismiss on Demurrer to Evidence.

On February 24, 2000, in its Resolution,6 the trial court granted respondents' demurrer to
evidence and ordered the dismissal of the Complaint. Petitioners' Motion for Reconsideration
was denied for lack of merit.

Petitioners appealed the case to the CA.

The Ruling of the Court of Appeals

Affirming the ruling of the trial court, the CA held that petitioners failed to prove their claim by a
preponderance of evidence. It observed that "no concrete and substantial evidence was adduced
by [petitioners]"7 to substantiate their allegation that Severino, the predecessor of respondents,
fraudulently executed an affidavit of self-adjudication in order to exclude petitioners from the
settlement of the estate of Benito and Florentina Pasag.

The Issues

Petitioners submit the following issues for our consideration:

I.

The Hon. Court of Appeals committed reversible error in affirming the Decision of the Court a
quo despite the gross negligence of their counsel thus depriving their rights to due process.

II.

The Court of Appeals committed reversible error in affirming the Decision of the trial court
instead of remanding the case for further proceedings to clearly establish their respective claims
on the subject properties.8

Simply stated, the issues revolve on the propriety of the following: (1) waiver of petitioners' offer
of documentary evidence; and (2) dismissal of the Complaint on a demurrer to evidence.

The Court's Ruling

The petition has no merit.

Waiver of the Offer of Evidence

The Rules of Court provides that "the court shall consider no evidence which has not been
formally offered."9 A formal offer is necessary because judges are mandated to rest their findings
of facts and their judgment only and strictly upon the evidence offered by the parties at the
trial.10 Its function is to enable the trial judge to know the purpose or purposes for which the
proponent is presenting the evidence.11 On the other hand, this allows opposing parties to
examine the evidence and object to its admissibility. Moreover, it facilitates review as the
appellate court will not be required to review documents not previously scrutinized by the trial
court.12

Strict adherence to the said rule is not a trivial matter. The Court in Constantino v. Court of
Appeals13 ruled that the formal offer of one's evidence is deemed waived after failing to submit
it within a considerable period of time. It explained that the court cannot admit an offer of
evidence made after a lapse of three (3) months because to do so would "condone an inexcusable
laxity if not non-compliance with a court order which, in effect, would encourage needless delays
and derail the speedy administration of justice."14

Applying the aforementioned principle in this case, we find that the trial court had reasonable
ground to consider that petitioners had waived their right to make a formal offer of documentary
or object evidence. Despite several extensions of time to make their formal offer, petitioners
failed to comply with their commitment and allowed almost five months to lapse before finally
submitting it. Petitioners' failure to comply with the rule on admissibility of evidence is anathema
to the efficient, effective, and expeditious dispensation of justice. Under the Rule on guidelines
to be observed by trial court judges and clerks of court in the conduct of pre-trial and case of
deposition and discovery measures,15 it is provided that:

On the last hearing day allotted for each party, he is required to make his formal offer of evidence
after the presentation of his last witness and the opposing party is required to immediately
interpose his objection thereto. Thereafter the judge shall make the ruling on the offer of
evidence in open court. However, the judge has the discretion to allow the offer of evidence in
writing in conformity with Section 35, Rule 132[.]

On the other hand, Section 35 of Rule 132 of the Rules of Court provides that "documentary and
object evidence shall be offered after the presentation of a party's testimonial evidence." It
requires that "such offer shall be done orally unless allowed by the Court to be done in writing."

The pre-trial guidelines and Sec. 35 of Rule 132 jointly considered, it is made clear that the party
who terminated the presentation of evidence must make an oral offer of evidence on the very
day the party presented the last witness. Otherwise, the court may consider the party's
documentary or object evidence waived. While Sec. 35 of Rule 132 says that the trial court may
allow the offer to be done in writing, this can only be tolerated in extreme cases where the object
evidence or documents are large in number' 'say from 100 and above, and only where there is
unusual difficulty in preparing the offer.

The party asking for such concession should however file a motion, pay the filing fee, set the date
of the hearing not later than 10 days after the filing of the motion, 16 and serve it on the address
of the party at least three (3) days before the hearing.17 In short, it is a litigated motion and cannot
be done ex parte. Counsels for parties should not however rely on the benevolence of the trial
court as they are expected to have thoroughly and exhaustively prepared for all possible pieces
of evidence to be presented and the purposes for which they will be utilized. As a matter of fact,
the draft of the offer of evidence can already be prepared after the pre-trial order is issued, for,
then, the counsel is already fully aware of the documentary or object evidence which can be put
to use during trial. Remember that under the pre-trial guidelines, the trial court is ordered to
integrate in the pre-trial order the following directive:

No evidence shall be allowed to be presented and offered during the trial in support of a party's
evidence-in-chief other than those that had been identified below and pre-marked during the
pre-trial. Any other evidence not indicated or listed below shall be considered waived by the
parties. However, the Court, in its discretion, may allow introduction of additional evidence in
the following cases: (a) those to be used on cross-examination or re-cross-examination for
impeachment purposes; (b) those presented on re-direct examination to explain or supplement
the answers of a witness during the cross-examination; (c) those to be utilized for rebuttal or sur-
rebuttal purposes; and (d) those not available during the pre-trial proceedings despite due
diligence on the part of the party offering the same.18

It is apparent from the foregoing provision that both parties should obtain, gather, collate, and
list all their respective pieces of evidence whether testimonial, documentary, or object even prior
to the preliminary conference before the clerk of court or at the latest before the scheduled pre-
trial conference. Otherwise, pieces of evidence not identified or marked during the pre-trial
proceedings are deemed waived and rendered inutile. The parties should strictly adhere to the
principle of "laying one's cards on the table." In the light of these issuances and in order to obviate
interminable delay in case processing, the parties and lawyers should closely conform to the
requirement that the offer of evidence must be done orally on the day scheduled for the
presentation of the last witness.

Thus, the trial court is bound to consider only the testimonial evidence presented and exclude
the documents not offered. Documents which may have been identified and marked as exhibits
during pre-trial or trial but which were not formally offered in evidence cannot in any manner be
treated as evidence. Neither can such unrecognized proof be assigned any evidentiary weight
and value. It must be stressed that there is a significant distinction between identification of
documentary evidence and its formal offer. The former is done in the course of the pre-trial, and
trial is accompanied by the marking of the evidence as an exhibit; while the latter is done only
when the party rests its case.19 The mere fact that a particular document is identified and marked
as an exhibit does not mean that it has already been offered as part of the evidence.20 It must be
emphasized that any evidence which a party desires to submit for the consideration of the court
must formally be offered by the party; otherwise, it is excluded and rejected. 21

Dismissal of the Complaint on a Demurrer to Evidence

Having established that the documentary evidence of petitioners is inadmissible, this Court is
now tasked to determine the propriety of the dismissal of the Complaint on a demurrer to
evidence.

A demurrer to evidence is an instrument for the expeditious termination of an action; 22 thus,

abbreviating judicial proceedings.23 It is defined as "an objection or exception by one of the
parties in an action at law, to the effect that the evidence which his adversary produced is
insufficient in point of law (whether true or not) to make out his case or sustain the issue."24 The
demurrer challenges the sufficiency of the plaintiff's evidence to sustain a verdict. 25 In passing
upon the sufficiency of the evidence raised in a demurrer, the court is merely required to
ascertain whether there is competent or sufficient proof to sustain the indictment or to support
a verdict of guilt.26

In the present case, we have thoroughly reviewed the records and are convinced that petitioners
have failed to sufficiently prove their allegations. It is a basic rule in evidence that the burden of
proof lies on the party who makes the allegations.27 However, petitioners did not substantiate
their allegations and merely argued that the Complaint should be "threshed out in a full blown
trial in order to establish their respective positions on issues [which are] a matter of judicial
appreciation."28

Regardless of the bare argument of petitioners, however, we find that the trial and appellate
courts were correct in dismissing the Complaint. The allegation that Severino fraudulently
excluded the other heirs of Benito and Florentina Pasag in the settlement of the latter's estate
was not supported by concrete evidence. While petitioners maintain that the estate of Benito
and Florentina was never partitioned among their heirs, the testimony of their witness, Eufemio
Pasag, proves otherwise. Significantly, during cross-examination, Eufemio admitted that the
children of Benito and Florentina, including the father of petitioners, had received properties as
inheritance from the said spouses. He testified, thus:

Q Are you aware that there are eight (8) children of the spouses Benito and Faustina
Pasag?cralaw library

A Yes, sir.

Q And one of whom is Bonifacio Pasag?cralaw library

A Yes, sir.

Q And one of whom is Severino Pasag?cralaw library

A Yes, sir.

Q Are you likewise aware, Mr. Witness, that after the death of the spouses Benito and Faustina
Pasag, there was no last will and testament?cralaw library

A Yes, sir.

Q And of course, you are aware that there are properties left by the said spouses, is that
right?cralaw library

A Yes, sir.

Q And in fact, your father Pedro Pasag has already a title in his name of the properties left by the
spouses to Pedro Pasag, is that right?cralaw library

A Yes, sir.

Q And in fact, it is where your house was situated or erected among those properties that was
given to your father, is that right?cralaw library

A Yes, sir.

Q And of course you are aware that likewise Severino Pasag, after the death of the spouses Benito
and Faustina Pasag, acquired some properties as inheritance, is that right?cralaw library

A Yes, sir.

x x x

Q And you also agree with me that Isidro Pasag, Juanito Bustillo, Fortunata Savellano, Basilio
Pasag, and Maria Lumague and the other brothers and sisters of your father likewise received
property of their own as a result of the death of your grandfather, is that right?cralaw library

A Yes, sir.29

It must be stressed that fraud is not presumed; and it must be proved by clear and convincing
evidence,30 and not by mere conjectures or speculations.31 No such evidence was presented in
this case to sustain petitioners' allegations.

WHEREFORE, we DENY the petition and AFFIRM the assailed February 15, 2002 Decision and
September 6, 2002 Resolution of the CA, with costs against petitioners.
G.R. No. L-41795 August 29, 1980

PHILIPPINE BANK OF COMMUNICATIONS, petitioner,

vs.
HON. JUAN F. ECHIVERRI, in his capacity as Presiding Judge of Branch XIV of
the Court of First Instance of Manila, ENRIQUE LORENZO y JIONGCO, CONRADO
GALVEZ y CERVANTES, FAUSTINO CARLOS y RAMOS, ARSENIO LORENZO y
VILLALUZ, ILDEFONSO CARIO y MARASIGAN, FELIZARDO ALBAIRA and
RICARDO CARLOS. respondents.

TEEHANKEE, J.:

The Court sets aside the decision of respondent court insofar as it modifies and alters the
compromise agreement freely entered into between petitioner bank and private respondents by
deleting the concessions made by respondents. The validity of the compromise agreement in toto
is upheld, since its provisions are not prohibited by law nor condemned by judicial decision nor
contrary to morals, good customs and public policy. By virtue of the fundamental precept that a
compromise agreement is a contract between the parties and has upon them the effect and
authority of res judicata, the courts cannot impose upon them a judgment different from their
real agreement or against the very terms and conditions thereof.

On May 29, 1974, the Philippine Bank of Communications (PBCOM for short), a banking
corporation duly organized and existing under the laws of the Philippines that has been engaged
in normal commercial banking transactions since 1939, filed a complaint for the recovery, jointly
and severally from therein defendants, of over P25 million allegedly embezzled from it over a
period of 16 years by its said employees defendants, Yu Chiao Chin, alias Nelson Yu, assistant
manager, in-charge of the Auditing Department; Paulino How, manager of the Business
Development Department; Faustino Carlos, Ildefonso Carino, Conrado Galvez, Arsenic Lorenzo,
Enrique Lorenzo, Ricardo Carlos, Victoriano Salvador and Felizardo Albaira, bookkeepers. 1

PBCOM prayed for full restitution of the amount embezzled, and payment of attorney's fees and
exemplary damages. Upon its application, the trial court issued writs of attachment and, through
the City Sheriff of Manila, attached various real and personal properties of the. defendants.

Separately, each of the defendants, except Victoriano Salvador who died in the meantime, filed
responsive pleadings, either an answer or a motion to dismiss, the last of which was filed on
August 15, 1974.
Months later, or on March 10, 1975, the parties executed a compromise agreement, the
substantial provisions of which read:

WHEREAS, in said civil action, plaintiff BANK has asserted a claim against the
PARTIES OF THE SECOND PART in the total

posting "phony" or non-existing deposits on accounts opened with PBCOM under various names
and later withdrawing the amounts represented b), such phony deposits, thereby creating
unauthorized and unapproved overdrafts which were, through the concerted action of the
defendants, concealed from the management of PBCOM; and b) making withdrawals on
uncollected deposits. Defendants' schemes are more particularly described by them in their
sworn statements attached as annexes to this complaint.

5. It was only on April 7, 1974 that this embezzlement was discovered by PBCOM
when defendant Yu Chiao Chin confessed the fraud to the officials of the bank and
at the same Lime made an offer to restore the amount embezzled provided that
he and the other herein defendants would not be prosecuted by the bank.

6. On various dates also, all the herein defendants gave sworn statements to the
Philippine Constabulary ...

7. PBCOM's own investigation disclosed the loss of P25,278,780.93 and the

evidence on hand established the accountability of the herein defendants for the
said amount.

8. PBCOM demanded from the herein defendants full restitution of the amount of
P25,278,780.93 but defendants failed and continue to fail to comply with such
demands of PBCOM, to the damage and prejudice of PBCOM.

xxx xxx xxx

(Record, pp. 60-61; Emphasis supplied) amount of P25,278,780.93, exclusive of

interests, attorney's fees and costs of suit;

WHEREAS, the parties hereto are most desirous and interested that the aforesaid
litigations be terminated and by this Agreement it is their intention that all claims
therein and au disputes and differences between the parties thereto be settled
and compromised to their mutual satisfaction;

WHEREAS, in consideration of the agreement on the part of the BANK to dismiss

with prejudice the above-mentioned civil action and to waive all its rights and
causes of action against all the defendants therein, the PARTIES OF THE SECOND
PART are willing to acknowledge and assume certain obligations, make certain
concessions and undertake to perform certain acts for the benefit of the BANK
under such terms and conditions as hereafter specified.

NOW, THEREFORE. for and in consideration of the foregoing premises and the
mutual covenants and agreements to be performed, one for the other, as
hereinafter set forth, the parties hereto do hereby stipulate and agree as follows:

1. Yu Chiao Chin, one of the PARTIES OF THE SECOND PART, hereby acknowledges
that he is indebted and liable to the BANK in the total sum of P6,610,000.00.

2. Paulino L. How, also one of the PARTIES OF THE SECOND PART, likewise hereby
acknowledges that he is indebted and liable to the BANK in the total amount of
P600,000.00.

3. Yu Chiao Chin hereby binds himself to pay to the BANK, without need of further
demand, the aforesaid sum of P6,610,000.00 under the following terms and
conditions:

xxx xxx xxx

4. Paulino L. How hereby binds himself to pay to the BANK, without reed of further
demand, the aforesaid sum of P600,000.00 under the following terms and
conditions:

xxx xxx xxx

5. Yu Chiao Chin and Paulino L. How agree to nominate and submit to the
satisfaction of the Bank such persons of reputable name and character who shall,
together with them and upon the execution of this Agreement, jointly and
severally, execute and sign, such promissory notes, deeds, documents or
instruments as may be necessary to insure and/or secure the payment of the
remaining balance of their obligation to the BANK as hereinabove set forth and
thus give effect to and fully implement the terms and conditions of this
Agreement.

6. The parties hereto agree that all such promissory notes, deeds, documents or
instruments which shall be executed under and by virtue of the preceding
paragraph shall form part of this Compromise Agreement and that whatever
Judgment which may be rendered by the CFI of Manila on the basis of the
Compromise Agreement shall be deemed to extend to and include any and all
undertakings and commitments made by the signatories thereto as part of the
judgment, it being expressly understood and agreed by the parties hereto, that
the undertaking to be done and the promises to be made by the third persons
 referred to above constitute an essential consideration for the promises,
covenants and undertaking by the BANK under and by virtue of this Agreement.

7. THE PARTIES OF THE SECOND PART, namely, Yu Chiao Chin alias Nelson Yu,
Enrique Lorenzo y Jiongco, Conrado Galvez y Cervantes, Faustino Carlos y Ramos,
Arsenio Lorenzo y Villaluz, Ildefonso Carino y Marasigan, Felizardo Albaira, Ricardo
Carlos, Paulino L. How, hereby agree to voluntarily resign from the BANK and to
execute the corresponding quitclaims waiving whatever rights they may have
against the BANK arising from their employment and/or in connection with the
case and criminal charge hereinabove mentioned Said quitclaims shall include a
waiver of all the benefits, interests, participation, contributions and any other
rights that they may have under both the Staff Provident Fund and the Retirement
Plan of the PARTY OF THE FIRST PART.

8. In consideration of the foregoing undertaking assumed by the PARTIES OF THE

SECOND PART, the BANK hereby discharges forever the defendants from any and
all obligations and liabilities arising from the aforementioned civil case.

9. The parties shall file the appropriate motions in Court praying for the rendition
of a judgment in the aforementioned civil case based on the terms and conditions
of this Agreement.

10. The PARTIES OF THE SECOND PART hereby represent and warrant that they
have not participated, singly or collectively, in any transaction or dealings which
may be prejudicial to the BANK other than those related to or included in the
afore-mentioned civil case and criminal charge and which have already been
disclosed or are already known to the BANK. It is expressly agreed that this
'Compromise Agreement' shall not in any manner bar or preclude the BANK from
asserting its rights against the PARTIES OF THE SECOND PART in the event that the
BANK subsequently discovers such other transactions or dealings in which any or
all the PARTIES OF THE SECOND PART are directly or indirectly involved and which
are prejudicial to the BANK's interest." 2

The Agreement was signed by the PBCOM represented by its president, Edward S. Go, as PARTY
OF THE FIRST PART and each of the defendants in his own behalf as PARTIES OF THE SECOND
PART.

On March 17, 1975, the counsel for the PBCOM on one hand, and the counsels for each of the
defendants on the other, jointly filed a "Motion for Judgment on the Basis of Attached
Compromise Agreement."

On April 17, 1975, respondent judge issued an order resetting the hearing or the motion for
judgment on the basis of the compromise agreement and at the same time making the
observation motu proprio that "there are certain objectionable features concerning the
compromise agreement, as submitted, such as matters pertaining to a proposed compromise
involving the criminal aspect of the case, 'Which is contrary to law. Therefore, the parties who
have already signed the said compromise agreement are hereby instructed to go over the same
and see how it could be properly approved by the Court, taking into consideration the provisions
of law as well as public morals and policy."

On April 26, 1975, tile parties the PBCOM, thru its president, and the defendants in their own
behalf and each assisted by counsel 3 submitted a manifestation and motion in order to have the
phrase "and criminal charge hereinabove mentioned" (contained in paragraph 7 of the
Compromise Agreement) and "and criminal charge" (contained in paragraph 10 of the
Compromise Agreement), supra, deleted and praying that judgment be rendered on the basis
of the Compromise Agreement as thus modified.

On May 12, 1975, the defendant Conrado Galvez thru his counsel filed a Manifestation pointing
out two alleged objectionable features in the compromise agreement signed by him, which he
claimed to be "contrary to law, public policy and decency," namely, the provision thereof to the
effect that said agreement even after its approval by the court shall be without prejudice to
charging anew the same defendants on the basis of other anomalies which might be discovered
in the bank thereafter, contrary to his expectation that the dismissal of the present criminal and
civil cases would terminate with finality any and all litigations between the parties; and the
provision regarding quitclaim where said defendant would be considered as having voluntarily
resigned, waiving his right to reinstatement in the service, his right to retirement with the
corresponding gratuity or compensation and his right to receive the benefits under the Staff
Provident Fund. But said defendant made no claim that he did not voluntarily sign the
compromise or that Ws consent had been obtained through mistake, violence or fraud. 4 In fact,
he based his objection on his claim that "it was the plaintiff, from the outset, who persuaded
Galvez to turn state witness and promised him reciprocal benefits should he agree to become
such, and to which Galvez agreed and had done his part, but plaintiff had reneged on its promise
and commitment. ... 5

Countering the manifestation of Conrado Galvez, PBCOM thru counsel maintained the legality
and validity of' the quitclaim duly signed by said Galvez. As to the terms of the, Agreement, viz.
that it "shall not in any manner bar or preclude the Bank from asserting the rights against the
PARTIES OF THE SECOND PART in the event that the Bank subsequently discovers such other
transactions on, dealings ill which any or all the PARTIES OF THE SECOND PART are directly or
indirectly involved and which are prejudicial to the Bank's interest," said counsel explained that
the agreement was intended by the bank to cover only such matters of transactions which were
known or disclosed to it by the defendants and not those of which it had no knowledge at the
time of execution thereof.

On July 3, 1975, respondent judge issued an order setting the case for hearing "at which all the
parties will be afforded the opportunity to individually show whether or not there is sufficient
basis for the quitclaims in question viewed from the standpoint of law, public policy and morals
vis-a-vis employer-employee relations ...", citing as grounds therefor the following.
 We note the laudable objectives of the parties herein in entering into the
Compromise Agreement under consideration: i.e., to terminate the above-
captioned case and by this agreement to settle and compromise to their mutual
satisfaction, all claims therein, and all disputes and differences between the
parties. (Par. 3, page 2, Compromise Agreement)

We observe, however, that aside from the foregoing latent infirmities of the
Compromise Agreement, there obviously was an imbalance of the treatment of
the defendants, Faustino Carlos, Ildefonso Carino, Conrado Galvez, Ricardo Carlos
and Arsenio Lorenzo, in contrast to principal defendants Yu Chiao Chin alias
Nelson Yu, who had reiterated his admission made in his sworn statement taken
at Camp Crame, Quezon City that he was responsible and liable to the plaintiff-
bank for the loss/defraudation of at least P5,610,000.00, or a portion only of the
P14 million he admitted in his Sworn Statement at Camp Crame, Quezon City. In
the same manner, defendant Paulino How, admitted responsibility for
P600,000.00.

xxx xxx xxx

While Compromises are encouraged and normally courts approve compromise

agreements as a matter of course, nonetheless, courts are not rubber stamps
mechanically approving whatever litigants submit to them labelled as a'
compromise agreement'. They must examine if it is not contrary to law, public
order, public policy, morals and good customs.

Respondent judge further advanced his own appraisal that the compromise agreement was
"unfair" and "one-sided", and directed the parties once more to "reconsider ... and reform" the
waiver and quitclaim provisions of paragraph 7 thereof, as follows:

It will be noted that of the several defendants, Yu Chiao Chin and Paulino L. How
both acknowledged their liability to plaintiff, the former in the sum of
P5,610,000.00 and the latter in the sum of P600,000.00. (Paragraphs I to 6 of the
compromise agreement) As to them, there would appear to be sufficient basis for
the waiver.

There is no such acknowledgment on the part of the other defendants. On the

other hand, defendants Yu Chiao Chin and Paulino L. How admitted sole and
exclusive liability for the misdeeds, and absolved the other defendants (all minor
employees then under them) of any responsibility thereon. There is no reason on
the basis of the record why the benefits owing to such other defendants-
employees should be waived under paragraph 7 of the Compromise Agreement.

The Court cannot close its eyes either to the fact that there is no concession at all
appearing to move to the defendants. An examination of the record, including the
 numerous statements attached to the complaint, shows how unfair the one-sided
compromise agreement is to the defendants specially to those who appear to
have a very tenuous to the irregularities in question.

xxx xxx xxx

Dropping the complaint is not enough, at least in this case, for all compromises
are supposed to terminate litigation; it is only when the parties make reciprocal
concessions that a litigation already commenced can be put to an end by means
of a compromise. Here there is no premise satisfactorily articulated to justify the
compromise from the standpoint of the defendants-employees save possibly Yu
Chiao Chin alias Nelson Yu and Paulino How.

The Court shall endeavor to persuade the litigants in a civil case to agree upon
some fair compromise.' Article 2029, Civil Code. (emphasis supplied.) It is hard to
see how the subject compromise can be considered fair. The Court has given the
parties time to re-examine the agreement but is not persuaded that the
agreement is indeed fair insofar as paragraph 7 thereof is concerned, said clause
not having been affected in said reexamination. Unfortunately, only the
objectionable feature on compounding a criminal offense was addressed by the
parties in response to the court's directives of April 17, 1975 and May 8, 1975. The
portion on waiver of the employees' benefits remains in its unsatisfactory and
troubling condition.

The parties must be directed once more to reconsider said paragraph 7 of the
compromise agreement and reform or supplement it, for, as it is written, it is hard
to see how the court can approve it. A compromise agreement 'will not be set
aside where the rights of the parties may be protected by a reformation,' 15 C.J.S.
243.

Thereafter, PBCOM filed its written comments on July 24, 1975, reiterating its stand on the
validity of the compromise agreement. Only two of the defendants, Ricardo Carlos and Conrado
Galvez, filed their replies. Ricardo Carlos manifested that he signed the compromise "so as to
show pakikisama to his co-defendants and to get the matter over and done with. He is by no
means repudiating his signature ..." and while admitting that he received certain small amounts
from Mr. How and Mr. Yu. that he was leaving the matter to the discretion of the court, as
summarized by respondent judge himself in his appealed decision. 6 The position of Conrado
Galvez who had agreed to be a state witness has already been stated hereinabove.

On July 25, 1975, respondent court handed down its "partial decision" approving in toto (without
modification and alteration) the compromise agreement as to defendant Paulino L. How and
finding therein "nothing contrary to law, morals and public policy, as follows:
 In the light of all the foregoing, the Court finds nothing in the above-quoted
provisions of the Compromise Agreement pertaining to defendant Paulino L. How,
to be contrary to law, morals, and public policy, hence, same is hereby granted
and approved.

Judgment is hereby rendered approving the above-quoted Compromise

Agreement between the plaintiff and defendant Paulino L. How and ordering the
parties to comply strictly with the terms and conditions thereof without
pronouncement as to costs.

The attachment on the properties of defendant Paulino L. How is hereby lifted. 7

On September 30, 1975, respondent judge rendered a 68 page decision as to au the other
defendants, repeating the observations he made in his earlier order dated July 3, 1975, although
along a more lengthy and ramified vein. 7-a

Although the issues had not been completely joined, and without any trial or reception of
evidence, respondent judge made in his decision extensive "findings" and conclusions of fact on
the basis of the controverted allegations in the parties' pleadings. Nevertheless, respondent
judge could not avoid stating in his decision that "(T)he findings of the independent auditors,
SYCIP, GORRES, VELAYO & CO. indicated the defrauded loss was about P25 million The admissions
of the several defendants-bookkeepers approximated this finding, i.e. P21 million alone by Nelson
Yu," 8 after recounting the defraudation schemes of those who he called the "principal
defendants" who connived with herein respondents-defendants who as bookkeepers covered up
in their respective books the amounts defrauded.

Invoking his earlier Order of July 3, 1975 wherein he had prejudged the compromise agreement
to be "unfair" and "one-sided", despite which the parties had not heeded his directive therein
"to reconsider and reform" the waiver and quitclaim provisions in paragraph 7 thereof,
respondent judge ordered the deleting and striking out of said provisions insofar as herein
respondents-defendants were concerned declaring them to be "contrary to law, morals, good
customs, public policy and public order" and "considered inexistent and void from the beginning,"
yet approving the very same compromise agreement in toto without any deletion or modification
as to the defendant Yu Chiao Chin alias Nelson Yu (in the same manner that he had approved in
toto the same compromise agreement as to the defendant Paulino How in his earlier "partial
decision" of July 25, 1975, as follows:

After a careful study of the records, as well as the oral and written manifestations
made by the parties, thru their respective counsel, the Court is of the opinion that
paragraph 7 of the Compromise Agreement, insofar as it refers and includes the
names of defendants-bookkeepers, Enrique Lorenzo y Jiongco, Conrado Galvez y
Cervantes, Faustino Carlos y Ramos, Arsenio Lorenzo Villaluz, Ildefonso Carino y
Marasigan, Felizardo Albaira, and Ricardo Carlos, transgresses the law, its cause,
 object and purpose is contrary to law, morals good customs public policy and
public order and, therefore, is considered inexistent and void from the beginning.

Except, therefore, with this modification, which even if included in said

Compromise Agreement, but being considered inexistent and void from the
beginning, the Compromise Agreement could be approved and made the basis of
judgment of the above-entitled case. being, as thus modified, not contrary to law,
morals, good customs, public policy and public order.

WHEREFORE, judgment is hereby, rendered approving the above- quoted

Compromise Agreement, as modified thusly, to wit:

(a) delete the phrase 'and criminal charge herein abovementioned' found in
paragraph 7, page 5 and the phrase land criminal charge' found in paragraph 10,
page 6, and

(b) delete the names of all the defendants-bookkeepers appearing in paragraph 7,

page 5 of the Compromise Agreement, namely, Enrique Lorenzo y Jiongco,
Conrado Galvez y Cervantes, Faustino Carlos y Ramos, Arsenio Lorenzo y Villaluz,
Ildefonso Carino y Marasigan, Felizardo Albairra, and Ricardo Carlos,

as entered into between the plaintiff-bank and the defendants hereto. (with the exception of
principal defendant Paulino L. How, whose case had been disposed of in a separate partial
decision previously) and ordering the parties to comply strictly with the terms and conditions
thereof without pronouncement as to costs.

The attachments on the properties of all the defendants are hereby dissolved, discharged and
lifted. 9

Hence, the present petition which we find to be meritorious.

1. Contrary to the bare conclusion of respondent judge ordering the deletion of the names of
herein respondents-defendants from the above-quoted Paragraph 7 of the compromise
agreement, whereby he would free them from their agreement of voluntarily resigning from
petitioner bank and waiving whatever rights they may have against petitioner arising from their
employment or the case, including all benefits and rights under petitioner's Staff Provident Fund
and retirement plan in consideration of petitioner's agreement to dismiss the P25 million case
against them and discharging them from all obligations and liabilities thereunder, there is nothing
in said resignation and waiver undertakings of respondents that "transgresses the law" or is
"contrary to law, morals, good customs, public policy and public order and, therefore is
considered inexistent and void from the beginning" and no such law or authority was cited by
respondent judge or respondents to justify or support his erroneous assertion.
Respondent judge's "finding" that herein respondents-bookkeepers "all occupied an inferior
position in the negotiations on the Compromise Agreement in question, with respect to the
plaintiff-bank and/or together with principal defendants Yu Chiao Chin alias Nelson Yu and
Paulino L. How. Be it remembered that these principal defendants as early- as the year 1970, long
before the Complaint herein was filed, had admitted in writing and 'assumed full responsibility
for whatever consequences may arise and that we declare the bookkeepers free from all
responsibility, 10 or even his pre-judged subjective perception in his earlier Order of July 3, 1975
hereinabove quoted that "there was obviously an imbalance in [their] treatment" in the "unfair"
and "one-sided compromise agreement" do not at all warrant his rash deletion of the
respondents' reciprocal undertaking in exchange of petitioner's dismissal of the case and waiver
of its claims as "contrary to law, morals, good customs, public policy and public order." This is so,
particularly considering that respondent judge approved the very same compromise agreement
in toto without any deletion of the provisions in question as to defendants How and Yu, who were
charged in the complaint below together with herein respondents-defendants as having connived
and acted in concert with each other to defraud petitioner of some P25 million and respondent
judge in his above-quoted "findings" found that "the admissions of the several defendants-
bookkeepers I herein respondents] approximated this finding [of P25 million defrauded loss
found by Sycip, Gorres, Velayo & Co., the independent auditors]; i.e. P21 million alone by Nelson
Yu." All of them being similarly situated and having been charged with connivance and conspiracy
.n carrying out through the years the huge defraudation of petitioner, respondent judge could
not arbitrarily declare the provisions in question void as to the herein seven respondents-
conspirators and valid as t6 the two others above named.

2. Far from being "one-sided" and "unfair", it thus appears that in exchange of herein
respondents' voluntary resignation (which employment they could not have clung to anyway
considering the huge defraudation of over P25 million carried out with their connivance and
covered by their admissions, as per respondent judge's own "findings" in his decision, supra, 11
which certainly would warrant their dismissal even on the mere ground of total loss of trust and
confidence) and waiver of any dubious rights arising from their employment and the case below,
including all benefits and rights under petitioner's Staff Provident Fund and retirement plan
(which they would nevertheless have lost and forfeited upon separation from the service 12 all
of which involved petty amounts compared to the over P25 million sought to be recovered by
petitioner, herein respondents got a pretty good deal. Petitioner in consideration thereof and
probably realizing the futility of collecting any amount from them, agreed to dismiss the case
against them and discharge them from all liability and required no assumption of monetary
liability from them contenting itself with the much lesser amounts of P600,000.00 and
P6,610,000.00 undertaken to be paid it by the defendants Paulino How and Yu Chiao Chin alias
Nelson Yu, respectively. This is the whole essence of a compromise as provided in Article 2028 of
the Civil Code whereby the parties, by making reciprocal concessions, whether of greater benefit
or not to one or the other party, avoid a litigation or put an end to one already commenced. 13

3. The parties therefore have every freedom to enter into a compromise agreement, as in any
other contract, the only exceptions being certain prohibited subjects of compromise such as the
civil status of persons as provided in Article 2035 of the Civil Code (none of which is applicable
here) 14 and the general restriction in Article 1306 of the Civil Code that 'The contracting parties
may establish such stipulations, clauses, terms and conditions as they may deem convenient,
provided they are not contrary to law, morals, good customs, public order, or public policy.

The law and the precepts of morals or good customs need no definition. They need only to be
cited and none has or can be cited as being transgressed by the cited provisions in question. As
to the remaining fields of public order and public policy, the Court has since the early case of
Ferrazzini vs. Gsell 15 pointed out that the two terms are practically equivalent, citing Manresa
that "Public policy (order publico) which does not here signify the material keeping of public
order represents in the law of persons the public, social and legal interest, that which is
permanent and essential of the institutions, that which. even in favoring an individual in whom
the right lies, cannot be left to his own will." The Code Commission however in drafting our
present Code included the two terms, stating ill its report that "Public order, which is found in
the Spanish Civil Code, is not as broad as public policy, as the latter may refer not only to public
safety but also, to considerations which are moved by the common good. 16

In Gabriel vs. Monte de Piedad 17, the Court enjoined that "courts should not rashly extend the
rule which holds that a contract is void as against public policy" and laid down the following
criteria: "The term 'public policy' is vague and uncertain in meaning, floating and changeable in
connotation. It may be said, however, that, in general, a contract which is neither prohibited by
law nor condemned by judicial decision, nor contrary to public morals, contravenes no public
policy. In the absence of express legislation or constitutional prohibition, a court, in order to
declare a contract void as against public policy, must find that the contract as to the consideration
or thing to be done, has a tendency to injure the public, is against the public good, or contravenes
some established interests of society, or is inconsistent with sound policy and good morals, or
tends clearly to undermine the security of individual rights, whether of personal liability or of
private property. Examining the contract at bar, we are of the opinion that it does not in any way
militate against the public good. Neither does it contravene the policy of the law nor the
established interests of society.

Thus, the provisions in question which are neither prohibited by law nor condemned by judicial
decision nor contrary to morals and good customs cannot be said to contravene any public policy
or to militate against the public good.

4. The Civil Code in fact contains salutary provisions that encourage and favor compromises and
does not even require judicial approval. As the Court held in Cochingyan vs. Cloribel 18 "Pursuant
to Article 2037 of the Civil Code, 'A compromise has upon the parties the effect and authority of
res judicata ...' and this is true even if the compromise is not judicially approved." Article 2032 of
the Civil Code provides only that "the court's approval is necessary in compromises entered into
by guardians, parents, absentee's representatives, and administrators or executors of decedents'
estates," and in no other case. Thus, parties-litigants who have arrived at a compromise have
many times simply asked for and obtained the courts' dismissal of their suit without submitting
their compromise agreement for judicial approval. Procedurally, it is preferable that such
approval be obtained, since as was held in Piano vs. Cayanong, 19 "The agreement ha(s) upon
the parties the effect and authority of res judicata (Art. 2037, New Civil Code; Yboleon v. Sison,
59 Phil. 281, 290; Hernandez vs. Barcelon, 23 Phil. 599, 607; De Jesus v. Go Quiolay, 65 Phil. 476,
482; Meneses v. De la Rosa, 77 Phil. 34, 38; Salazar v. Jarabe, 48 O.G. 2708, 2712; Morales v.
Fontanos, 64 Phil. 19, 21), and the judgment rendered thereon ha(s) the authority of res judicata
from the moment it (is) rendered ... and such judgment is more than a mere contract binding the
parties because having the sanction of the court, and entered as its determination of the
controversy, it has all the force and effect of any other judgment, it being conclusive upon the
parties and their privies (Marquez vs. Marquez, 73 Phil. 74)" and as provided by Article 2037,
execution lies to exact compliance only with a judicial compromise. Article 2029 of the Civil Code
provides further that "The court shall endeavor to persuade the litigants in a civil case to agree
upon some fair compromise," and Articles 2039 and 2031 thereof provide for the suspension of
pending actions and mitigation of damages to the losing party who has shown a sincere desire
for a Compromise, in line with the Code's policy of encouraging amicable settlements.

5. It is settled jurisprudence that neither the courts nor quasi-judicial bodies can impose upon
the parties a judgment different from their compromise agreement (which as a valid contract is
the law between the parties themselves) or against the very terms and conditions of their
agreement.

We thus held in Municipal Board of Cabanatuan City vs. Samahang Magsasaka, Inc. 20 that "a
judicial or quasi-judicial body cannot impose upon the parties a judgment different from their
real agreement or against the very terms and conditions of the amicable settlement entered into
by them, without running the risk of contravening the universally established principle that a
contract is the law between the parties."

We stressed therein that "(T)his Court, time and again, has ruled that a compromise agreement
entered into by party-litigants, when not contrary to law, public order, public policy, morals, or
good custom is a valid contract which is the law between the parties themselves. (Juan-Marcelo,
et al. vs. Go Kim Pah, et al., 22 SCRA 309). It follows, therefore, that a compromise agreement,
not tainted with infirmity, irregularity, fraud or illegality, is the law between the parties who are
duty bound to abide by it and observe strictly its terms and conditions. It is incumbent upon the
courts of justice to help develop and inculcate in the minds of the parties- litigants proper respect
for, and obedience to, the terms and conditions of this kind of mutual agreement whenever it
does not exhibit any feature or taint of illegality or fraud. Thus we would be enhancing the
salutary provisions of Section 1, Rule 20, of the

Revised Rules of Court and Article 2029, New Civil Code, which entrust to the courts the function
of enabling party-litigants in a civil suit to reach an amicable settlement of their disputes," and
cited our previous ruling in Castro vs Castro 21 that

... Es principio universalmente establecido que el convenio es ley entre las partes.
No debe imponerse un criterio por mas acertado que fuese sobre el verdadero
contrato de las Partes. Que utilidad puede proporcionar la disposicion del articulo
2029 del nuevo codigo civil que encomienda al Juzgado la funcion de persuader a
 los litigantes en un asunto civil a que procuren illegar a un arreglo si, despues de
todo, el criterio del tribunal se ha de imponer sobre su convenio?

The only case where the court may validly intervene is "ff the parties and their counsel are to do
it ... to assist them in attaining precision and accuracy of language that would more or less make
it certain that any dispute as to the matters being settled would not recur, much less give rise to
a new controversy. 22

6. As held in the case of Gonzales vs Gonzales, 23 the court cannot deny their approval to a
compromise agreement, voluntarily entered into by the parties, where there is no valid serious
objection, since "(T)he agreement, therefore, partaking of the nature of a contract, is subject to
the same legal provision providing for the validity, enforcement, rescission or annulment of
ordinary contracts. In entering in said compromise, the parties were free to make any stipulation
not contrary to law, public interest, or principles of morality, as much as in any other contract."

As stated above, supra, 24 only two of herein respondent's, namely, Conrado Galvez and Ricardo
Carlos, had presented manifestations as to the "objectionable features" of the compromise
agreement signed by them both following respondent judge's telegraphed but baseless
observations in his Orders of April 17, 1975 and July 3, 1975 as to the waiver and quitclaim
provisions being "contrary to law, morals and public policy," with Galvez complaining about
petitioner having reneged on its alleged promise to give him reciprocal benefits in exchange of
his agreement to turn state witness.

Aside from the totally untenable position in which respondent judge placed himself by declaring
the provisions of paragraph 7 of the compromise agreement void as to herein respondents but
valid in toto as to the defendants Paulino How and Yu Chiao Chin alias Nelson Yu, his decision
would arbitrarily substitute his own terms for that agreed upon by the parties to the compromise
agreement and baselessly free herein respondents from their undertaking thereunder. With their
names ordered deleted from paragraph 7 of the compromise, they would be bound to no
concession nor obligation (notwithstanding that pursuant thereto they had in fact executed the
corresponding waiver and quitclaim therein provided), while petitioner had complied with its
part and discharged them from all obligations and liabilities, despite their admission of
complicity, pursuant to paragraph 8 of the same agreement (subject only to the express
exception that petitioner was not waiving its rights as to any other anomalies which might
subsequently be discovered, notwithstanding respondents' warranty that they had not
participated in any such prejudicial transactions other than those related to or included in the
civil case and criminal charge).

7. There can be no question that the parties voluntarily executed and entered into the
compromise agreement. The record shows that all of the parties personally signed the
agreement. 25 Respondents' voluntary consent to said agreement and its due execution with
assistance of counsel was confirmed when a week thereafter, their respective-counsels all signed
the "Motion for Judgment on the Basis of the Attached Compromise Agreement. 26 The
signatures of the parties, petitioner and respondents, and those of their respective counsels,
were again affixed on the Manifestation and Motion dated April 26, 1975, reiterating their prayer
for approval of the compromise agreement as modified pursuant to respondent judge's Order of
April 17, 1978. 27 Thus, not one of herein respondents had ever assailed the compromise
agreement as not having been freely or voluntarily entered into.

When respondent judge issued his Order for hearing of April 26, 1975 advancing his own
observation as to "certain objectionable features" and mentioning that the compromise referred
to compounding a felony, which is contrary to law and directing the parties to go over the same
again so that he could approve the same "taking into consideration the provisions of law, as well
as public morals and policy," supra, 28 the parties deferred thereto by filing their said
Manifestation and Motion of April 26, 1975, wherein they prayed that "The phrase 'and criminal
charge herein above mentioned' found in paragraph 7, page 5 and the phrase land criminal
charge' found in paragraph 10, page 6 of the Compromise Agreement be deleted from the said
Compromise Agreement dated March 10, 1975," and reiterated the prayer for judgment on the
basis of the compromise agreement, as thus modified. They made of record, though, that
respondent judge's view was in error, thus:

5. The parties wish to state that the reference to a criminal charge in the said paragraphs is pure
oversight on inadvertence inasmuch as there is no criminal charge mentioned in the paragraphs
preceding paragraphs 7 and 10 of the Compromise Agreement and consequently the phrase
'criminal charge hereinabove mentioned' is meaningless. Besides, it has not been the intention
of the parties to compromise 'the criminal aspect of the case', not only because it would be
contrary to law to do so but principally because the defendants are fully aware that such a
compromise may be taken as an admission of guilt and the defendants entered into the
'Compromise Agreement' dated March 10, 1975 with the clear understanding that by so entering
into such agreement, they are not admitting nor are they deemed to admit the commission of
any criminal act.

Notwithstanding respondent judge's said Order and subsequent Order of July 3, 1975 setting the
case anew for hearing and directing the parties once more "to reconsider ... and reform" the
waiver and quitclaim provisions of paragraph 7 of the compromise agreement and flatly
announcing that the modification deleting all reference to the criminal charge was
"unsatisfactory" and that "dropping the complaint is not enough" concession for herein
respondents, the stark fact remains that not one of respondents ever repudiated the compromise
agreement nor moved to set aside or annul the same because of alleged fraud, violence or
vitiated consent - which is the remedy available in such cases under Article 2038 of the Civil Code.
29

All that respondents ever asserted, following respondent judge's line, was that the waiver and
quitclaim provisions constituting their reciprocal concession was "contrary to law, morals, good
customs, public policy and public order" which we have held to be totally untenable.

ACCORDINGLY, the modification of and deletions from the compromise agreement ordered in
respondent judge's decision are hereby set aside as null and void, and in lieu thereof, judgment
is hereby rendered approving the compromise agreement in toto. Without pronouncement as to
costs.

SPOUSES ROQUE YU, SR. and ASUNCION YU and LEYTE LUMBER YARD &
HARDWARE CO., INC., petitioners,
vs.
BASILIO G. MAGNO CONSTRUCTION AND DEVELOPMENT ENTERPRISES, INC.
and THE ESTATE OF BASILIO G. MAGNO, respondents.

In this petition for review under Rule 45 of the Rules of Court, the spouses Roque Yu, Sr. and
Asuncion Yu, with co-petitioner Leyte Lumber Yard & Hardware, Co., Inc., (Leyte Lumber) assail
and seek to set aside the consolidated Decision1 dated October 20, 1998 of the Court of Appeals
(CA) in CA-G.R. CV Nos. 43714 and 43715, as reiterated in its Resolution2 of May 11, 1999, denying
the petitioners motion for reconsideration. CA-G.R. CV No. 43714 is an appeal by the spouses
Roque Yu, Sr. and Asuncion Yu from the decision of the Regional Trial Court (RTC) of Tacloban
City in its Civil Case No. 5823, while CA-G.R. CV No. 43715 is an appeal taken by Leyte Lumber
Yard from the decision of the same RTC in its Civil Case No. 5822.

The assailed CA decision holds petitioner Leyte Lumber liable to the herein respondents in Civil
Case No. 5822 for the amount of P631,235.61 with interest, and, on the same breath, holds the
respondents liable to petitioner spouses Roque Yu, Sr. and Asuncion Yu in Civil Case No. 5823 in
the amount of P625,000.00 with interest, and P50,000.00 as and by way of attorney's fees.

The facts:

The spouses Roque Yu, Sr. and Asuncion Yu are the controlling stockholders of Leyte Lumber, a
business enterprise engaged in the sale of lumber, building and electrical supplies and other
construction materials. During his lifetime, Engr. Basilio G. Magno (Magno) entered into a verbal
agreement with Leyte Lumber through Roque Yu, Sr., whereby the latter agreed to supply Magno
with building materials he may need in his construction business. The success of Magno's
business gave birth to the Basilio G. Magno Construction and Development Enterprises, Inc. (BG
Magno).

Owing to this fruitful relationship, the two (Roque Yu, Sr. and Magno) entered into a joint
venture, the Great Pacific Construction Company (GREPAC), with Yu as President and Magno as
Vice President.3

Magno, for what he obtained from Leyte Lumber, paid either in cash or by check. The relationship
between Yu and Magno began in 1975 and continued until Magno's death on August 21, 1978. 4
By the time the business relationship between Yu and Magno was coming to an end, the
respondents allege that the parties have dealt with each other to the amount of at least
P7,068,000.00.5

On January 30, 1979, in the RTC of Tacloban City, the petitioners instituted two (2) separate
complaints for sums of money with damages and preliminary attachment against the
respondents. One was Civil Case No. 5822,6 raffled to Branch 8 of the court, instituted by Leyte
Lumber against BG Magno and the Estate of Basilio Magno, to collect on the principal amount of
P1,270,134.87 for construction materials claimed to have been obtained on credit by BG Magno,
and the other was Civil Case No. 5823,7 raffled to Branch 6, filed by the Yu spouses against BG
Magno and the Estate of Basilio Magno, to collect upon loans and advances (P3,575,000.00)
allegedly made by the spouses to BG Magno.

As defendants in Civil Case No. 5823, the respondents moved to dismiss the case on the ground
that the claims must be pursued against the estate of the deceased Magno. The motion was
denied, and eventually the estate of Magno was dropped as party-defendant.

On the other hand, in Civil Case No. 5822, during the pretrial conference, the petitioners, as
plaintiffs in that case, proposed that a commissioner be appointed. The respondents as
defendants in the case interposed no objections, and so Atty. Romulo Tiu was appointed and
tasked with the duty to examine and make a detailed report on the documents and books of
account of the parties to determine the nature and extent of their respective claims and
liabilities.8 Atty. Tiu was later replaced by Mr. Uldarico Quintana, and finally by Mr. Ernesto C.
Silvano, who is a lawyer and an accountant9 by profession.

The commissioner prepared a summary of account receivables10 and submitted three reports:
the first, dated November 1, 1980; the second, dated February 19, 1981; and the third, dated
March 29, 1982.11 To these reports the parties submitted their respective comments and
objections.

During trial, the petitioners presented in Civil Case No. 5822 before Branch 8 three witnesses,
namely: petitioner Roque Yu, Sr., himself, Atty. Ernesto C. Silvano (the commissioner) and Yao
Ping Chan, cashier of Consolidated Bank and Trust Co., who testified merely on the circumstances
surrounding specific checks that were issued during the course of the transactions between the
parties. For their part, the respondents offered two witnesses: the widow Perpetua Magno and
commissioner Silvano.

As regards Civil Case No. 5823 before Branch 6, the petitioners presented three witnesses: Roque
Yu, Sr., Roque Yu, Jr., and senior bookkeeper Eduardo de Veyra of the Tacloban Branch of the
United Coconut Planters Bank. For their part, the respondents did not present a single witness,
but adopted their evidence presented in Civil Case No. 5822. They did not, however, make a
formal offer of their evidence in both cases.
On June 17, 1993, Branch 8 of the court rendered its decision12 in Civil Case No. 5822, the decretal
portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of the defendant and against the
plaintiff:

1. Dismissing the complaint;

2. Declaring that defendant had made overpayment to the plaintiff in the sum of
P620,239.61;

3. Ordering the plaintiff to return to the defendant the amount of P620,239.61

with interest of 12% per annum from the date hereof until fully paid;

4. Ordering the plaintiff to pay defendant the sum of P200,000.00 for exemplary
damages;

5. Ordering the plaintiff to pay defendant the sum of P50,000.00 for attorney's
fees and litigation expenses; and

6. Ordering plaintiff to pay the costs of this suit.

SO ORDERED.

Also, on the same date - June 17, 1993 - Branch 6 rendered its decision13 in Civil Case No. 5823,
the fallo of which reads:

WHEREFORE, judgment is hereby rendered in favor of the defendant and against the
plaintiffs:

1. Dismissing the plaintiffs' complaint;

2. Declaring that defendant had made overpayments to the plaintiffs in the sum
of P1,602,625.52;

3. Ordering plaintiffs to return to defendant the sum of P1,602,625.52 with 12%

interest per annum from the date hereof until fully paid;

4. The Writ of Attachment is hereby ordered immediately dissolved;

5. Ordering the plaintiffs to pay defendant the sum of P200,000.00 moral and
exemplary damages;
 6. Ordering the plaintiffs to pay defendant P100,000.00 attorney's fees and
litigation expenses;

7. Ordering plaintiffs to pay the costs of this suit.

SO ORDERED.

The two separate decisions of even date were penned by Judge Getulio M. Francisco, the
presiding judge of Branch 6 to which only Civil Case No. 5823 was raffled. In other words, Judge
Francisco of Branch 6 rendered the decision in Civil Case No. 5822 earlier raffled to and heard by
Branch 8 of which he was not the presiding judge. The parties did not move for a reconsideration
of the two decisions nor did they call the attention of Judge Francisco on the absence of an order
for consolidation of the two cases. Instead, they directly interposed their respective appeals to
the CA.

In the CA, the two cases on appeal, docketed as CA-G.R. CV Nos. 43714 (for Civil Case No. 5823)
and 4371514 (for Civil Case No. 5822), were consolidated.

On October 20, 1998, the CA rendered its questioned consolidated decision 15 dispositively
reading, thus:

WHEREFORE, premises considered, judgment is hereby rendered as follows:

In Civil Case No. 5822, the appealed decision is MODIFIED by declaring that defendant
B.G. Magno Construction and Development Enterprises, Inc., made an overpayment in
the amount of P631,235.61, instead of P620,239.61 as found by the court a quo, and
ordering plaintiff to return said amount to defendant, with interest of 12% per annum
from promulgation hereof until fully paid, and by DELETING the award of exemplary
damages in the sum of P200,000.00 in favor of defendant. Thus modified, the judgment
below is AFFIRMED in all other respects.

In Civil Case No. 5823, the appealed decision is REVERSED and SET ASIDE. Accordingly,
defendant B.G. Magno Construction and Development Enterprises, Inc. is ordered to pay
plaintiffs the sum of P625,000.00, with 12% interest per annum from promulgation hereof
until fully paid, and the further sum of P50,000.00 by way of attorney's fees, plus costs of
suit.

SO ORDERED.

With their motion for reconsideration having been denied by the CA through its Resolution of
May 11, 1999, the petitioners are now with this Court via the present recourse, submitting the
following arguments for our consideration:

A. Re: C.A.-G.R. CV No. 43714: (Civil Case No. 5823)

 1. THE COURT OF APPEALS COMMITTED GRAVE ERROR IN REFUSING TO EXCLUDE
EVIDENCE OFFERED TO RTC BRANCH 8, BUT NOT TO BRANCH 6, OF WHICH
EVIDENCE RTC BRANCH 6 IMPROPERLY TOOK JUDICIAL NOTICE.

2. ASSUMING FOR THE SAKE OF ARGUMENT THAT RTC BRANCH 6 COULD TAKE
JUDICIAL NOTICE OF EVIDENCE NOT OFFERED TO IT, NONETHELESS, SUCH
EVIDENCE SHOW THAT RESPONDENT B.G. MAGNO IS LIABLE TO PETITIONERS FOR
P3,675,000.00.

B. Re: C.A.-G.R. CV No. 43715: (Civil Case No. 5822)

1. THE COURT OF APPEALS COMMITTED GRAVE ERROR IN AFFIRMING THE

DECISION OF RTC BRANCH 6 BECAUSE THE LATTER HAD NO JURISDICTION OVER
CIVIL CASE NO. 5822 WHICH WAS TRIED IN ITS ENTIRETY BY RTC BRANCH 8.

2. THE COURT OF APPEALS COMMITTED GRAVE ERROR IN AFFIRMING THE

DECISION OF RTC BRANCH 6 BECAUSE BASED ON EVIDENCE PRESENTED TO RTC
BRANCH 8, NO COURT COULD HAVE DECIDED IN FAVOR OF RESPONDENTS.

In sum, the petitioners question, first, the propriety of the presiding judge of Branch 6 rendering
a decision in a case filed and heard in Branch 8. They claim that Branch 6 had no jurisdiction to
decide Civil Case No. 5822 pending in Branch 8 in the absence of a motion or order of
consolidation of the two cases; second, Branch 6 erred in considering the evidence presented in
Branch 8; and third, the preponderance of evidence in both cases warrants a resolution of the
cases in their favor.

The respondents, on the other hand, hold steadfast to the CAs finding of overpayment on their
part, and that Branch 6 had jurisdiction to render a decision in Civil Case No. 5822 of Branch 8
since the circumstance that the judge who penned the decision in both cases did not hear the
other case in its entirety is not a compelling reason to jettison his findings and conclusions.16

On the issue of Branch 6 taking judicial notice of the evidence presented in Branch 8, the
respondents argue that there was a previous agreement of the parties with respect to the same.

On the question of the propriety of Judge Francisco of Branch 6 formulating the decision in Civil
Case No. 5822 which was pending and tried in Branch 8, we declare that there was nothing
irregular in the procedure taken. The records show that there appears to have been a previous
agreement to either transfer or consolidate the two cases for decision by the presiding judge of
Branch 6. As found by the CA:

although Civil Case No. 5822 was raffled to and tried in Branch 8, the court a quo
issued joint orders dated February 16, 1993 and September 10, 1993 in Civil Case Nos.
5822 and 5823Recognizing the apparent transfer of Civil Case No. 5822 to the court a
quo, appellants [petitioners] counsel filed his formal appearance dated October 20, 1993
with Branch 6There is therefore no basis to appellants contention that the court a quo is devoid
of authority to decide Civil Case No. 5822.17

Indeed, when the respondents filed a Motion to Lift, Dissolve and Quash the Writs of Attachment
with Branch 6 on January 20, 1993, the caption thereof indicated the docket numbers of both
cases.18 Likewise, on October 29, 1993, when the petitioners' new counsel entered his Formal
Appearance, in the caption thereof was also written the docket numbers of both cases.19
Petitioners' previous counsel of longstanding (whose representation dates back to the filing of
the two complaints in 1979) filed his Motion to Withdraw as Counsel on October 30, 1993, and
the caption thereof similarly indicated the docket numbers of both cases.20 Subsequent orders of
the court which emanated from Branch 6 also bear, in the caption thereof, the titles and docket
numbers of both cases.21 In other words, as early as six months prior to the promulgation of Judge
Franciscos decisions in the two (2) cases, there appears to have been a transfer or consolidation
of said cases in Branch 6 and the parties knew of it, albeit the actual date when the two cases
were consolidated or transferred does not appear on record. Nonetheless, the fact remains that
no opposition or objection in any manner was registered by either of the parties to the same,
thereby evincing their consent thereto. It is, therefore, already too late in the day for the
petitioners to question the competence of Judge Francisco to render the separate decisions in
the two cases. To reecho what this Court has said before:

Petitioners may not now question the transfer or consolidation of the two cases on
appeal, for they knew of it and did not question the same in the court below. They may
not now make a total turn-around and adopt a contrary stance; more so when the
judgment issued is adverse to their cause.22

The next logical questions are: Is the consolidation of the two cases (Civil Case Nos. 5822 and
5823) a procedural step which the court a quo could have properly taken? Is it a remedy available
within the context of the surrounding circumstances?

We answer both questions in the affirmative. The two cases were filed just a few months apart; 23
they involve simple cases of collection of sums of money between identical parties and no other;
the respondents (as defendants therein) claim, in both cases, essentially the same defense, which
is overpayment; they cover the same period of transacting continuous business that spans four
years; they relate to simple issues of fact that are intimately related to each other; they entailed
the presentation of practically identical evidence and witnesses; in fact, a broad part of the
evidence and testimonies in one case was totally adopted or reproduced in the other by either
or both parties. And the trial court, being multi-sala courts, its Branches 6 and 8 possessed
jurisdiction to try either or both cases on their own.

A court may order several actions pending before it to be tried together where they arise
from the same act, event or transaction, involve the same or like issues, and depend
largely or substantially on the same evidence, provided that the court has jurisdiction over
the case to be consolidated and that a joint trial will not give one party an undue
advantage or prejudice the substantial rights of any of the parties (citing 1 CJS, 1347).
 Consolidation of actions is expressly authorized under Section 1, Rule 31 of the Rules of
Court:

"Section 1. Consolidation. When actions involving a common question of law or

fact are pending before the court, it may order a joint hearing or trial of any or all
the matters in issue in the actions; it may order all the actions consolidated; and
it may make such orders concerning proceedings therein as may tend to avoid
unnecessary costs or delay."

The obvious purpose of the above rule is to avoid multiplicity of suits, to guard against
oppression and abuse, to prevent delays, to clear congested dockets, to simplify the work
of the trial court; in short the attainment of justice with the least expense and vexation
to the parties litigants (citing 1 CJS 1342-1343).

Consolidation of actions is addressed to the sound discretion of the court, and its action
in consolidating will not be disturbed in the absence of manifest abuse of discretion. In
the instant case, respondent judge did not abuse his discretion in ordering the joint trial
of the two cases. There is no showing that such joint trial would prejudice any substantial
right of petitioner. Neither does the latter question the court's jurisdiction to try and
decide the two cases.24

Likewise, it became apparent that, after the commissioner filed his reports in court and the
parties their comments thereto, but before trial could commence, the claims and defenses of the
parties in Civil Case No. 5823 are covered by and may be threshed out by a consideration of the
evidence presented in Civil Case No. 5822 as well, which consisted mainly of the reports of the
commissioner. Based on the commissioners reports in the case pending in Branch 8 (Civil Case
No. 5822), the petitioners claims, including those in Branch 6, appear to have been paid; indeed,
this is in essence the defense of the respondents as set forth in their Answers to the two
complaints. Yet, despite all these, neither of the lawyers for the parties sought a consolidation of
the two cases, which would otherwise have been mandatory.

When two or more cases involve the same parties and affect closely related subject
matters, they must be consolidated and jointly tried, in order to serve the best interests
of the parties and to settle expeditiously the issues involved. Consolidation, when
appropriate, also contributes to the declogging of court dockets

Inasmuch as the binding force of the Dealership Agreement was put in question, it would
be more practical and convenient to submit to the Iloilo court all the incidents and their
consequences. The issues in both civil cases pertain to the respective obligations of the
same parties under the Dealership Agreement. Thus, every transaction as well as liability
arising from it must be resolved in the judicial forum where it is put in issue. The
consolidation of the two cases then becomes imperative to a complete, comprehensive
and consistent determination of all these related issues.
 Two cases involving the same parties and affecting closely related subject matters must
be ordered consolidated and jointly tried in court, where the earlier case was filed. The
consolidation of cases is proper when they involve the resolution of common questions
of law or facts.

Indeed, upon the consolidation of the cases, the interests of both parties in the two civil
cases will best be served and the issues involved therein expeditiously settled. After all,
there is no question on the propriety of the venue in the Iloilo case.25 (Emphasis supplied)

Consolidation of cases, when proper, results in the simplification of proceedings, which saves
time, the resources of the parties and the courts, and a possible major abbreviation of trial. It is
a desirable end to be achieved, within the context of the present state of affairs where court
dockets are full and individual and state finances are limited. It contributes to the swift
dispensation of justice, and is in accord with the aim of affording the parties a just, speedy, and
inexpensive determination of their cases before the courts. Another compelling argument that
weighs heavily in favor of consolidation is the avoidance of the possibility of conflicting decisions
being rendered by the courts in two or more cases which would otherwise require a single
judgment.26

In fine, we declare the consolidation of the two cases to have been made with regularity. To
quote what the Court has said in an earlier case:

The ordered consolidation of cases, to our mind, crystallizes into reality the thinking of
our predecessors that:

". . . The whole purpose and object of procedure is to make the powers of the
court fully and completely available for justice. The most perfect procedure that
can be devised is that which gives opportunity for the most complete and perfect
exercise of the powers of the court within the limitations set by natural justice. It
is that one which, in other words, gives the most perfect opportunity for the
powers of the court to transmute themselves into concrete acts of justice between
the parties before it. The purpose of such a procedure is not to restrict the
jurisdiction of the court over the subject matter, but to give it effective facility in
righteous action. It may be said in passing that the most salient objection which
can be urged against procedure today is that it so restricts the exercise of the
court's powers by technicalities that part of its authority effective for justice
between the parties is many times an inconsiderable portion of the whole. The
purpose of procedure is not to thwart justice. Its proper aim is to facilitate the
application of justice to the rival claims of contending parties. It was created not
to hinder and delay but to facilitate and promote the administration of justice. It
does not constitute the thing itself which courts are always striving to secure to
litigants. It is designed as the means best adapted to obtain that thing. In other
words, it is a means to an end. It is the means by which the powers of the court
are made effective in just judgments. When it loses the character of the one and
 takes on that of the other the administration of justice becomes incomplete and
unsatisfactory and lays itself open to grave criticism."27

Having given their assent to the consolidation of Civil Case Nos. 5822 and 5823, petitioners other
assignment of errors must fail. The evidence in each case effectively became the evidence for
both, and there ceased to exist any need for the deciding judge to take judicial notice of the
evidence presented in each case.

On the issue relative to the pecuniary liabilities of the parties in respect of their corresponding
claims and defenses, suffice it to state that this Court is not a trier of facts. The findings of fact of
the CA, supported as they are by the evidence on record, bind this Court.

Prefatorily, we restate the time-honored principle that in petitions for review under Rule
45 of the Rules of Court, only questions of law may be raised. It is not our function to
analyze or weigh all over again evidence already considered in the proceedings below,
our jurisdiction being limited to reviewing only errors of law that may have been
committed by the lower court. The resolution of factual issues is the function of lower
courts, whose findings on these matters are received with respect. A question of law
which we may pass upon must not involve an examination of the probative value of the
evidence presented by the litigants.28

We disagree, however, with the CA in holding the petitioners liable to the respondents in the
amount of P142,817.27 representing the unpaid account of GREPAC for filling materials delivered
to it by BG Magno. As it is, GREPAC possesses a distinct corporate personality separate from Leyte
Lumber whom BG Magno sought to be liable therefor. GREPACs own liabilities may not be made
chargeable against petitioner Leyte Lumber as the CA ruled after piercing the corporate veil of
GREPAC. To our mind, the situation does not call for a piercing of GREPACs corporate veil since
there is no clear and convincing evidence showing fraud and illegality in the formation and
operation of GREPAC. Quite the contrary, what has been proved suggests that GREPAC was a
product of the close business and personal ties that bound Roque Yu, Sr., and Magno during
better times. It was a bona fide joint venture between the two.

We cannot help but discern how the respondents were put to expense by the petitioners
mishandling of the cases in the trial courts. First of all is the petitioners filing of two (2) separate
actions of simple collection cases which were ultimately found to revolve essentially around the
same factual milieu. And, as soon as it became apparent that the two cases were inexorably
linked, it became the duty of the petitioners to seek a consolidation of the cases a quo. Yet they
did not; instead, they took advantage of every perceived technicality, all the way to this Court, in
order to defeat the respondents case. They vigorously opposed the adoption by the respondents
of the latters evidence in the other branch of the court, thereby advancing misleading arguments
for consolidation that had already occurred with their visible consent. They attribute error to the
trial courts "taking judicial notice" of the respondents evidence in the other court, when it no
longer was a proper argument in view of the resultant consolidation. We do not approve of the
practice of counsel employing subtlety, advancing gratuitous arguments that tend only to muddle
the issues, and seizing upon every opportunity to win the case for his client, when in the first
place the confusion in the proceedings was precipitated by his failure to act accordingly, as
counsel for the plaintiffs, in seeking the proper consolidation of the two cases. The result is a
simple collection case that has remained pending for twenty-seven years now.

Likewise, what the petitioners did in filing the two cases in different branches of the court may
be held to be tantamount to forum shopping which not only put the respondents to additional
unnecessary expense, but wasted the precious time of the courts as well.

Forum-shopping is a deplorable practice of litigants in resorting to two different fora for

the purpose of obtaining the same relief, to increase his or her chances of obtaining a
favorable judgment. What is pivotal to consider in determining whether forum shopping
exists or not is the vexation caused to courts and the parties-litigants by a person who
asks appellate courts and/or administrative entities to rule on the same related causes
and/or to grant the same or substantially the same relief, in the process creating the
possibility of conflicting decisions by the different courts or fora upon the same issues.29

Finally, we admonish RTC Branches 6 and 8 for the manner in which the case before each sala
was handled and conducted. We note the lack of an order of consolidation in the records of the
cases. As to Judge Franciscos two separate decisions, we do not perceive any advantage or
benefit derived from promulgating two separate decisions on the same day in the two cases that
have already been consolidated into one. Although we recognize no ill intent or attribute no
deliberate irregularity to the same, such demeanor can only breed suspicion and promote
distrust for our judicial institutions. A judge should avoid every situation where the propriety of
his conduct would be placed in question. His official acts must at all times be above reproach, 30
and they must be consistent with the proceedings taken in his court.

WHEREFORE, judgment is hereby rendered MODIFYING the assailed CA decision by SETTING

ASIDE and DELETING the award of the respondents counterclaim in the amount of P142,817.27
in Civil Case No. 5822; REITERATING the P50,000.00 award of attorneys fees and litigation
expenses in favor of the respondents in Civil Case No. 5822; and DELETING the award of
attorneys fees to the petitioners in Civil Case No. 5823. In all other respects, the assailed decision
is AFFIRMED.

[G.R. No. L-64250. September 30, 1983.]

SUPERLINES TRANSPORTATION CO., INC. and ERLITO LORCA, Petitioners, v.

HON. LUIS L. VICTOR, Judge Presiding over Branch XVI of the Regional Trial Court of
Cavite, TIMOTEA T. MORALDE, CAYETANO T. MORALDE, JR., ALEXANDER T.
MORALDE, EMMANUEL T. MORALDE, and JOCELYN MORALDE ABELLANA,
Respondents.
REMEDIAL LAW; ACTIONS; JUDICIAL ECONOMY AND ADMINISTRATION AS WELL
AS CONVENIENCE OF THE PARTIES; CONSIDERATIONS FOR CONSOLIDATION OF
CASES IN THE CASE AT BAR.

A petition for certiorari to set aside the decision of the Intermediate Appellate Court in CA-G.R.
No. SP-00708 entitled "Superlines Transportation Co., Inc., Et. Al. versus Hon. Luis L. Victor, Et
Al.," which affirmed the orders dated March 28 and April 27, 1983 of herein respondent Judge
Luis L. Victor in Civil Case No. N-4338 of the Regional Trial Court of Cavite, entitled "Timotea T.
Moralde, Et. Al. versus Pantranco South Express, Inc., Et. Al."cralaw virtua1aw library

On December 19, 1982, Bus No. 3008 of the Pantranco South Express, Inc., Pantranco for short,
driven by Rogelio Dillomas, collided with Bus No. 331 of the Superlines Transportation Co., Inc.,
Superlines for short, then driven by Erlito Lorca along the highway at Lumilang, Calauag, Quezon,
resulting in the instantaneous death of Cayetano P. Moralde, Sr., a passenger in the Pantranco
bus.cralawnad

On January 4, 1983, Superlines instituted an action for damages before the then Court of First
Instance of Quezon, Gumaca Branch, against Pantranco and Rogelio Dillomas, driver of said
Pantranco Bus No. 3008. In its complaint, docketed as Civil Case No. 1671-G, Superlines alleged
that the recklessness and negligence of the Pantranco bus driver was the proximate cause of the
accident and that there was want of diligence on the part of Pantranco in the selection and
supervision of its driver.

On February 11, 1983, private respondents Timotea T. Moralde, widow of the deceased Cayetano
P. Moralde, Sr., and her children, Cayetano, Jr., Alexander, Ramon, Emmanuel, all surnamed
Moralde, and Jocelyn M. Abellana, filed a complaint for damages, docketed as Civil Case No. N-
4338 of the Regional Trial Court of Cavite City, against Superlines and its driver, Erlito Lorca, as
well as Pantranco and its driver, Rogelio Dillomas. The cause of action pleaded against Superlines
was based on quasi-delict, while that against Pantranco, on culpa-contractual.

On February 28, 1983, herein petitioners Superlines and its driver Erlito Lorca filed a motion to
dismiss in Civil Case No. N-4338 on the ground of pendency of another action, obviously referring
to Civil Case No. 1671-G pending before the Regional Trial Court of Quezon, Gumaca Branch.

Finding that the two cases (Civil Cases No. 1671-G and No. N-4338) involved different parties as
well as different causes of action, respondent Judge Luis Victor denied the motion to dismiss in
the challenged order of March 28, 1983. Superlines moved for a reconsideration, but the same
was denied on April 27, 1983.

Dissatisfied, Superlines filed with the Intermediate Appellate Court a petition for certiorari and
prohibition with preliminary injunction, which petition, however, was denied due course. Hence,
this present recourse.

It is suggested by petitioners that private respondents Moraldes should pursue their claim for
damages by intervening in the Gumaca action, pursuant to Sec. 2, Rule 12 of the Rules of Court
and in the light of Municipality of Hagonoy v. Secretary of Agriculture and Natural Resources [73
SCRA 507] and Orellano v. Alvestir [76 SCRA 536]. It is contended that since the right of private
respondents to claim damages is founded on the same facts involved in the Gumaca action, any
judgment rendered therein will amount to res judicata in the Cavite case, for whatever
adjudication is made in the former case between Pantranco and Superlines as regards either of
the parties culpability would set said issue at rest. Furthermore, such intervention would prevent
multiplicity of suits and avoid confusion that may arise should the trial courts render conflicting
decisions.chanroblesvirtualawlibrary

Petitioners stand is consistent with our ruling in the case of Marapao v. Mendoza, 119 SCRA 97,
where We held that:

"While respondent Castillo has not been impleaded in the Bohol case, she has similar interests
as Hotel de Mercedes, the defendant therein which is her employer. Petitioner and private
respondent both claim damages based on the same incident. A decision, whether in favor of
petitioner or private respondent in the Bohol case would amount to res judicata in the Cebu case.
Damages in favor of one party would preclude damages in favor of the other.

"There is an additional reason for dismissal and that is, to avoid multiplicity of suits. (Ago Timber
Co. v. Hon. Ruiz, Et Al., 21 SCRA 138 (1967); Erlanger v. Villamor, 98 Phil. 1003 (1956); Teodoro,
Jr. v. Mirasol, 99 Phil.150(1956).

"To protect the interests of respondent employee, she may intervene as a party in the Bohol case
and file a counterclaim for damages against petitioner."cralaw virtua1aw library

There is, however, a more pragmatic solution to the controversy at bar; and that is to consolidate
the Gumaca case with the Cavite case. Considerations of judicial economy and administration, as
well as the convenience of the parties for which the rules on procedure and venue were
formulated, dictate that it is the Cavite court, rather than the Gumaca court, which serves as the
more suitable forum for the determination of the rights and obligations of the parties concerned.

As observed by both the trial and appellate courts, to require private respondents who are all
residents of Kawit, Cavite, to litigate their claims in the Quezon Court would unnecessarily expose
them to considerable expenses. On the other hand, no like prejudice would befall the defendants
transportation companies if they were required to plead their causes in Cavite, for such change
of venue would not expose them to expenses which they are not already liable to incur in
connection with the Gumaca case. The objection interposed by Superlines that it has its offices
in Atimonan, Quezon, should not detract from the overall convenience afforded by the
consolidation of cases in the Cavite Court. For apart from the fact that petitioner and its driver
are represented by the same counsel with offices located in Manila, defendants transportation
companies can readily avail of their facilities for conveying their witnesses to the place of trial.

The ordered consolidation of cases, to our mind, crystallizes into reality the thinking of our
predecessors that:

". . . The whole purpose and object of procedure is to make the powers of the court fully and
completely available for justice. The most perfect procedure that can be devised is that which
gives opportunity for the most complete and perfect exercise of the powers of the court within
the limitations set by natural justice. It is that one which, in other words, gives the most perfect
opportunity for the powers of the court to transmute themselves into concrete acts of justice
between the parties before it. The purpose of such a procedure is not to restrict the jurisdiction
of the court over the subject matter, but to give it effective facility in righteous action. It may be
said in passing that the most salient objection which can be urged against procedure today is that
it so restricts the exercise of the courts powers by technicalities that part of its authority effective
for justice between the parties is many times an inconsiderable portion of the whole. The
purpose of procedure is not to thwart justice. Its proper aim is to facilitate the application of
justice to the rival claims of contending parties. It was created not to hinder and delay but to
facilitate and promote the administration of justice. It does not constitute the thing itself which
courts are always striving to secure to litigants. It is designed as the means best adapted to obtain
that thing. In other words, it is a means to an end. It is the means by which the powers of the
court are made effective in just judgments. When it loses the character of the one and takes on
that of the other the administration of justice becomes incomplete and unsatisfactory and lays
itself open to grave criticism." (Manila Railroad Co. v. Attorney-General, 20 Phil. 523)

WHEREFORE, the instant petition is hereby denied. Civil Case No. 1671-G of the Regional Trial
Court of Quezon is hereby ordered consolidated with Civil Case No. N-4338 pending before the
Regional Trial Court of Cavite. The Regional Trial Court of Quezon, Gumaca Branch, is directed to
transfer, without unnecessary delay, the records of Civil Case No. 1671-G to the Regional Court
of Cavite, Branch XVI.

G.R. No. L-6060 September 30, 1954

FERNANDO A. FROILAN, plaintiff-appellee,

vs.
PAN ORIENTAL SHIPPING CO., defendant-appellant,
REPUBLIC OF THE PHILIPPINES, intervenor-appellee.

Quisumbing, Sycip, Quisumbing and Salazar, for appellant.

Ernesto Zaragoza for appellee.
Hilarion U. Jarencio for the intervenor.

1. PLEADING AND PRACTICE; COMPLAINT IN INTERVENTION; COUNTERCLAIM NOT BARRED BY

PRIOR JUDGMENT FOR FAILURE TO APPEAL FROM DISMISSAL OF COMPLAINT IN INTERVENTION
WITH RESERVATION. An order dismissing the complaint in intervention after a counterclaim
has been filed but reserving the right of the defendant as against the intervenor, does not bar at
the defendant from proceeding with its counterclaim against the intervenor, notwithstanding the
failure of the defendant to appeal from said order.

2. ID.; ID.; ID.; COUNTERCLAIM FOR SPECIFIC PERFORMANCE STATES A CAUSE OF ACTION. The
complaint in the intervention sought to recover possession of the vessel in question from the
plaintiff, which claim is adverse to the position assumed by the defendant that it has a better
right to said possession than the plaintiff, on the theory that the latter had already lost his rights
over the same, and that, on the other hand, the defendant is relying on the charter contract
executed in its favor by the intervenor. Held: The counterclaim calls for specific performance on
the part of the intervenor and therefore states a cause of action.

The factual antecedents of this case are sufficiently recited in the brief filed by the intervenor-
appellee as follows:

1. On February 3, 1951, plaintiff-appellee, Fernando A. Froilan, filed a complaint against

the defendant-appellant, Pan Oriental Shipping Co., alleging that he purchased from the
Shipping Commission the vessel FS-197 for P200,000, paying P50,000 down and agreeing
to pay the balance in installments; that to secure the payment of the balance of the purchase
price, he executed a chattel mortgage of said vessel in favor of the Shipping Commission;
that for various reason, among them the non-payment of the installments, the Shipping
Commission took possession of said vessel and considered the contract of sale cancelled;
that the Shipping Commission chartered and delivered said vessel to the defendant-
appellant Pan Oriental Shipping Co. subject to the approval of the President of the
Philippines; that he appealed the action of the Shipping Commission to the President of the
Philippines and, in its meeting on August 25, 1950, the Cabinet restored him to all his rights
under his original contract with the Shipping Commission; that he had repeatedly
demanded from the Pan Oriental Shipping Co. the possession of the vessel in question but
the latter refused to do so. He, therefore, prayed that, upon the approval of the bond
accompanying his complaint, a writ of replevin be issued for the seizure of said vessel with
all its equipment and appurtenances, and that after hearing, he be adjudged to have the
rightful possession thereof (Rec. on App. pp. 2-8).

2. On February 3, 1951, the lower court issued the writ of replevin prayed for by Froilan
and by virtue thereof the Pan Oriental Shipping Co. was divested of its possession of said
vessel (Rec. on App. p. 47).

3. On March 1, 1951, Pan Oriental Shipping Co. filed its answer denying the right of
Froilan to the possession of the said vessel; it alleged that the action of the Cabinet on
August 25, 1950, restoring Froilan to his rights under his original contract with the
Shipping Commission was null and void; that, in any event, Froilan had not complied with
the conditions precedent imposed by the Cabinet for the restoration of his rights to the
vessel under the original contract; that it suffered damages in the amount of P22,764.59 for
wrongful replevin in the month of February, 1951, and the sum of P17,651.84 a month as
damages suffered for wrongful replevin from March 1, 1951; it alleged that it had incurred
necessary and useful expenses on the vessel amounting to P127,057.31 and claimed the
right to retain said vessel until its useful and necessary expenses had been reimbursed (Rec.
on App. pp. 8-53).

4. On November 10, 1951, after the leave of the lower court had been obtained, the
intervenor-appellee, Government of the Republic of the Philippines, filed a complaint in
intervention alleging that Froilan had failed to pay to the Shipping Commission (which
name was later changed to Shipping Administration) the balance due on the purchase price
of the vessel in question, the interest thereon, and its advances on insurance premium
totalling P162,142.95, excluding the dry-docking expenses incurred on said vessel by the
Pan Oriental Shipping Co.; that intervenor was entitled to the possession of the said vessel
either under the terms of the original contract as supplemented by Froilan's letter dated
January 28, 1949, or in order that it may cause the extrajudicial sale thereof under the
Chattel Mortgage Law. It, therefore, prayed that Froilan be ordered to deliver the vessel in
question to its authorized representative, the Board of Liquidators; that Froilan be declared
to be without any rights on said vessel and the amounts he paid thereon forfeited or
alternately, that the said vessel be delivered to the Board of Liquidators in order that the
intervenor may have its chattel mortgage extrajudicially foreclosed in accordance with the
provisions of the Chattel Mortgage Law; and that pending the hearing on the merits, the
said vessel be delivered to it (Rec. on App. pp. 54-66).

5. On November 29, 1951, the Pan Oriental Shipping Co. filed an answer to the complaint
in intervention alleging that the Government of the Republic of the Philippines was
obligated to deliver the vessel in question to it by virtue of a contract of bare-boat charter
with option to purchase executed on June 16, 1949, by the latter in favor of the former; it
also alleged that it had made necessary and useful expenses on the vessel and claimed the
right of retention of the vessel. It, therefore, prayed that, if the Republic of the Philippines
succeeded in obtaining possession of the said vessel, to comply with its obligations of
delivering to it (Pan Oriental Shipping co.) or causing its delivery by recovering it from
Froilan (Rec. on App. pp. 69-81).

6. On November 29, 1951, Froilan tendered to the Board of Liquidators, which was
liquidating the affairs of the Shipping Administration, a check in the amount of
P162,576.96 in payment of his obligation to the Shipping Administration for the said vessel
as claimed in the complaint in intervention of the Government of the Republic of the
Philippines. The Board of Liquidators issued an official report therefor stating that it was
a 'deposit pending the issuance of an order of the Court of First Instance of Manila' (Rec.
on App. pp. 92-93).

7. On December 7, 1951, the Government of the Republic of the Philippines brought the
matter of said payment and the circumstance surrounding it to the attention of the lower
court "in order that they may be taken into account by this Honorable Court in connection
 with the questions that are not pending before it for determination" (Rec. on App. pp. 82-
86).

8. On February 3, 1952, the lower court held that the payment by Froilan of the amount of
P162,576.96 on November 29, 1951, to the Board of Liquidators constituted a payment
and a discharge of Froilan's obligation to the Government of the Republic of the Philippines
and ordered the dismissal of the latter's complaint in intervention. In the same order, the
lower court made it very clear that said order did not pre-judge the question involved
between Froilan and the Oriental Shipping Co. which was also pending determination in
said court (Rec. on App. pp. 92-93). This order dismissing the complaint in intervention,
but reserving for future adjudication the controversy between Froilan and the Pan Oriental
Shipping Co. has already become final since neither the Government of the Republic of
the Philippines nor the Pan Oriental Shipping Co. had appealed therefrom.

9. On May 10, 1952, the Government of the Republic of the Philippines filed a motion to
dismiss the counterclaim of the Pan Oriental Shipping Co. against it on the ground that the
purpose of said counterclaim was to compel the Government of the Republic of the
Philippines to deliver the vessel to it (Pan Oriental Shipping Co.) in the event that the
Government of the Republic of the Philippines recovers the vessel in question from Froilan.
In view, however, of the order of the lower court dated February 3, holding that the
payment made by Froilan to the Board of Liquidators constituted full payment of Froilan's
obligation to the Shipping Administration, which order had already become final, the claim
of the Pan Oriental Shipping Co. against the Republic of the Philippines was no longer
feasible, said counterclaim was barred by prior judgment and stated no cause of action. It
was also alleged that movant was not subject to the jurisdiction of the court in connection
with the counterclaim. (Rec. on App. pp. 94-97). This motion was opposed by the Pan
Oriental Shipping Co. in its written opposition dated June 4, 1952 (Rec. on app. pp. 19-
104).

10. In an order dated July 1, 1952, the lower court dismissed the counterclaim of the Pan
Oriental Shipping Co. as prayed for by the Republic of the Philippines (Rec. on App. pp.
104-106).

11. It if from this order of the lower court dismissing its counterclaim against the
Government of the Republic of the Philippines that Pan Oriental Shipping Co. has
perfected the present appeal (Rec. on App. p. 107).

The order of the Court of First Instance of Manila, dismissing the counterclaim of the defendant
Pan Oriental Shipping Co., from which the latter has appealed, reads as follows:

This is a motion to dismiss the counterclaim interposed by the defendant in its answer to
the complaint in intervention.

"The counterclaim states as follows:

"COUNTERCLAIM
 "As counterclaim against the intervenor Republic of the Philippines, the defendant alleges:

"1. That the defendant reproduces herein all the pertinent allegations of the foregoing
answer to the complaint in intervention

"2. That, as shown by the allegations of the foregoing answer to the complaint in
intervention, the defendant Pan Oriental Shipping Company is entitled to the possession of
the vessel and the intervenor Republic of the Philippines is bound under the contract of
charter with option to purchase it entered into with the defendant to deliver that possession
to the defendant whether it actually has the said possession or it does not have that
possession from the plaintiff Fernando A. Froilan and deliver the same to the defendant;

"3. That, notwithstanding demand, the intervenor Republic of the Philippines has not to
date complied with its obligation of delivering or causing the delivery of the vessel to the
defendant Pan Oriental Shipping Company.1wphl.nt

"RELIEF

"WHEREFORE, the defendant respectfully prays that judgment be rendered ordering the
intervenor Republic of the Philippines alternatively to deliver to the defendants the
possession of the said vessel, or to comply with its obligation to the defendant or causing
the delivery to the latter of the said vessel by recovering the same from plaintiff, with costs.

"The defendant prays for such other remedy as the Court may deem just and
equitable in the premises."

The ground of the motion to dismiss are (a) That the cause of action is barred by prior
judgment; (b) That the counterclaim states no cause of action; and (c) That this Honorable
Court has no jurisdiction over the intervenor government of the Republic of the Philippines
in connection with the counterclaim of the defendant Pan Oriental Shipping Co.

The intervenor contends that the complaint in intervention having been dismissed and no
appeal having been taken, the dismissal of said complaint is tantamount to a judgment.

The complaint in intervention did not contain any claim whatsoever against the defendant
Pan Oriental Shipping Co.; hence, the counterclaim has no foundation.

The question as to whether the Court has jurisdiction over the intervenor with regard to the
counterclaim, the Court is of the opinion that it has no jurisdiction over said intervenor.

It appearing, therefore, that the grounds of the motion to dismiss are well taken, the
counterclaim of the defendant is dismissed, without pronouncement as to costs.

The defendant's appeal is predicated upon the following assignments of error:

I. The lower court erred in dismissing the counterclaim on the ground of prior judgment.
 II. The lower court erred in dismissing the counterclaim on the ground that the counterclaim
had no foundation because made to a complaint in intervention that contained no claim
against the defendant.

III. The lower court erred in dismissing the counterclaim on the ground of alleged lack of
jurisdiction over the intervenor Republic of the Philippines.

We agree with appellant's contention that its counterclaim is not barred by prior judgment (order
of February 8, 1952, dismissing the complaint in intervention), first, because said counterclaim
was filed on November 29, 1951, before the issuance of the order invoked; and, secondly, because
in said order of February 8, the court dismissed the complaint in intervention, "without, of course,
precluding the determination of the right of the defendant in the instant case," and subject to the
condition that the "release and cancellation of the chattel mortgage does not, however, prejudge
the question involved between the plaintiff and the defendant which is still the subject of
determination in this case." It is to be noted that the first condition referred to the right of the
defendant, as distinguished from the second condition that expressly specified the controversy
between the plaintiff and the defendant. That the first condition reserved the right of the defendant
as against the intervenor, is clearly to be deduced from the fact that the order of February 8
mentioned the circumstance that "the question of the expenses of drydocking incurred by the
defendant has been included in its counterclaim against the plaintiff," apparently as one of the
grounds for granting the motion to dismiss the complaint in intervention.

The defendant's failure to appeal from the order of February 8 cannot, therefore, be held as barring
the defendant from proceeding with its counterclaim, since, as already stated, said order preserved
its right as against the intervenor. Indeed, the maintenance of said right is in consonance with Rule
30, section 2, of the Rules of Court providing that "if a counterclaim has been pleaded by a
defendant prior to the service upon him of the plaintiff's motion to dismiss, the action shall not be
dismissed against the defendant's objection unless the counterclaim can remain pending for
independent adjudication by the court."

The lower court also erred in holding that, as the intervenor had not made any claim against the
defendant, the latter's counterclaim had no foundation. The complaint in intervention sought to
recover possession of the vessel in question from the plaintiff, and this claim is logically adverse
to the position assumed by the defendant that it has a better right to said possession than the
plaintiff who alleges in his complaint that he is entitled to recover the vessel from the defendant.
At any rate a counterclaim should be judged by its own allegations, and not by the averments of
the adverse party. It should be recalled that the defendant's theory is that the plaintiff had already
lost his rights under the contract with the Shipping Administration and that, on the other hand, the
defendant is relying on the charter contract executed in its favor by the intervenor which is bound
to protect the defendant in its possession of the vessel. In other words, the counterclaim calls for
specific performance on the part of the intervenor. As to whether this counterclaim is meritorious
is another question which is not now before us.

The other ground for dismissing the defendant's counterclaim is that the State is immune from suit.
This is untenable, because by filing its complaint in intervention the Government in effect waived
its right of nonsuability.
 The immunity of the state from suits does not deprive it of the right to sue private parties
in its own courts. The state as plaintiff may avail itself of the different forms of actions
open to private litigants. In short, by taking the initiative in an action against a private party,
the state surrenders its privileged position and comes down to the level of the defendant.
The latter automatically acquires, within certain limits, the right to set up whatever claims
and other defenses he might have against the state. The United States Supreme Court thus
explains:

"No direct suit can be maintained against the United States. But when an action is
brought by the United States to recover money in the hands of a party who has a
legal claim against them, it would be a very rigid principle to deny to him the right
of setting up such claim in a court of justice, and turn him around to an application
to Congress." (Sinco, Philippine Political Law, Tenth Ed., pp. 36-37, citing U. S.
vs. Ringgold, 8 Pet. 150, 8 L. ed. 899.)

It is however, contended for the intervenor that, if there was at all any waiver, it was in favor of
the plaintiff against whom the complaint in intervention was directed. This contention is untenable.
As already stated, the complaint in intervention was in a sense in derogation of the defendant's
claim over the possession of the vessel in question.

Wherefore, the appealed order is hereby reversed and set aside and the case remanded to the lower
court for further proceedings. So ordered, without costs.

G.R. No. L-38352 August 19, 1982

ADELA J. CAOS, petitioner,

vs.
HON. E.L. PERALTA, as Judge of the Court of First Instance of Davao del Sur and ROLANDO
APAS, respondents.

2. REMEDIAL LAW; CIVIL PROCEDURE; CONSOLIDATION EXPRESSLY AUTHORIZED

BY THE RULES. A court may order several actions pending before it to be tried together where
they arise from the same act, event or transaction, involve the same or like issues, and depend
largely or substantially on the same evidence, provided that the court has jurisdiction over the cases
to be consolidated and that a joint trial will not give one party an undue advantage or prejudice the
substantial rights of any of the parties. Consolidation of actions is expressly authorized under
Section 1, Rule 31 of the Rules of Court.

3. ID.; ID.; ID.; RATIONALE. The obvious purpose of the rule allowing consolidation is to
avoid multiplicity of suits to guard against oppression or abuse, to prevent delays, to clear
congested dockets, to simplify the work of the trial court; in short the attainment of justice with
the least expense and vexation to the parties litigants.
Petition to annul and set aside the order of the respondent Judge E.L. Peralta, presiding judge of
the Court of First Instance of Davao del Sur, ordering the consolidation and joint trial of Criminal
Case No. 326 and Civil Case No. 558.

The facts pertinent to this case are as follows: On December 23, 1971, petitioner Adela C. Caos
was charged in the Court of First Instance of Davao del Sur with violation of Section 3[a] of Rep.
Act No. 602, as amended, otherwise known as the Minimum Wage Law, for alleged non-payment
of the minimum wage to her employee, respondent Rolando Apas. The case was docketed as
Criminal Case No. 326.

On August 4, 1972, respondent Apas instituted an action against petitioner for collection of
differential, overtime and termination pay, plus damages, docketed as Civil Case No. 558 of the
same court. The complaint averred that respondent Apas had been employed by petitioner as
cashier in her gasoline station since August 1965 up until he was illegally dismissed on January
15, 1971; that during his employment, he was not paid the minimum wage or the overtime pay
prescribed by law, neither was he given termination pay after his dismissal. Respondent,
however, did not pray for reinstatement.

After joinder of issues, the provincial fiscal of Davao del Sur and respondent Apas filed a "motion
for consolidated trial" of the criminal and civil cases, alleging in support thereof

That the defendant in. each of the two cases is one and the same person; that the
complaining witness in the criminal case is also the plaintiff in the civil case; that
the nature of the issues, at least, the factual issues, in both cases are almost
Identical; and that the evidence in both cases would virtually be the same, so that
a conso-lidated trial of both cases would be conducive to the early termination of
the two cases and would greatly enhance the convenience of the parties and the
speedy administration of justice. 1

Acting on the motion, respondent judge issued the challenged order, directing the joint trial of
the two cases, in this wise: 1wph1.t

Since Rolando Apas, complainant, is not insisting on the trial of this case ahead of
his civil case against the accused, for practical purpose, that is, to save time and
effort of the parties and the court, the court is of the view that this case and the
civil case be jointly tried. We shall be shooting two birds with a single shot.

Petitioner moved for reconsideration of the order, but the same was denied.

Hence, this petition.

Petitioner contends that after the institution of Criminal Case No. 326, the proceedings in Civil
Case No. 558 should be suspended until final judgment in the criminal action has been rendered.
Petitioner relies on Section 3, pars. [a] and [b], Rule III of the Rules of Court, which we quote:
1wph1.t

[a] Criminal and civil actions arising from the same offense may be instituted
separately, but after the criminal action has been commenced the civil action can
not be instituted until final judgment has been rendered in the criminal action;

[b] After a criminal action has been commenced, no civil action arising from the
same offense can be prosecuted, and the same shall be suspended, in whatever
stage it may be found, until final judgment in the criminal proceedings has been
rendered;

The argument, fails to consider the provisions of Article 31 of the Civil Code. Civil Case No. 558 is
a separate and distinct action from Criminal Case No. 326. The former is based upon a contract
of services entered into by the parties, not upon the civil liability arising from the offense charged
in Criminal Case No. 326, i.e., non-payment of the minimum wage, punishable under Section 3
(a) of Rep. Act 602, as amended, in relation to Section 15 (a) of the same Act. 2 Being essentially
an action for enforcement of an obligation ex-contractu the civil case can proceed independently
of the latter, in accordance with Article 31 of the Civil Code: 1wph1.t

Art. 31. When the civil action is based on an obligation not arising from the act or
omission complained of as a felony, such civil action may proceed independently
of the criminal proceedings and regardless of the result of the latter.

But did respondent judge abuse his discretion in ordering the consolidation and joint trial of the
criminal and civil cases? A court may order several actions pending before it to be tried together
where they arise from the same act, event or transaction, involve the same or like issues, and
depend largely or substantially on the same evidence, provided that the court has jurisdiction
over the cases to be consolidated and that a joint trial will not give one party an undue advantage
or prejudice the substantial rights of any of the parties. 3 Consolidation of actions is expressly
authorized under Section 1, Rule 31 of the Rules of Court: 1wph1.t

Section 1. Consolidation. When actions involving a common question of law or

fact are pending before the court, it may order a joint hearing or trial of any or all
the matters in issue in the actions; it may order all the actions consolidated; and
it may make such orders concerning proceedings therein as may tend to avoid
unnecessary costs or delay.

The obvious purpose of the above rule is to avoid multiplicity of suits, to guard against oppression
and abuse, to prevent delays, to clear congested dockets, to simplify the work of the trial court;
in short the attainment of justice with the least expense and vexation to the parties litigants. 4
Consolidation of actions is addressed to the sound discretion of the court, and its action in
consolidating will not be disturbed in the absence of manifest abuse of discretion. In the instant
case, respondent judge did not abuse his discretion in ordering the joint trial of the two cases.
There is no showing that such joint trial would prejudice any substantial right of petitioner.
Neither does the latter question the court's jurisdiction to try and decide the two cases.

WHEREFORE, the petition is hereby dismissed with costs against petitioner. The lower court is
directed to proceed with the joint trial of the two cases without unnecessary delay.

CESAR NEPOMUCENO, LEON ARCILLAS and RUBEN AVENIDO, petitioners,

vs.
THE HON. COMMISSION ON ELECTIONS and OSCAR LASERNA, respondents.

1. REMEDIAL LAW; CIVIL PROCEDURE; DEMURRER TO EVIDENCE; CONSTRUED.

Section 1 of Rule 35 of the Rules of Court authorizes a judgment on the merits of the case without
the defendant having to submit evidence on his part as he would ordinarily have to do, if it is
shown by plaintiffs evidence that the latter is not entitled to the relief sought. The demurrer,
therefore, is an aid or instrument for the expeditious termination of an action, similar to a motion
to dismiss, which the court or tribunal may either grant or deny.

2. ID.; ID.; ID.; DENIAL; MERELY, INTERLOCUTORY IN CHARACTER. The

requirement of Section 1 of Rule 36 would only apply if the demurrer is granted, for in this event,
there would in fact be an adjudication on the merits of the case, leaving nothing more to be done,
except perhaps to interpose an appeal. However, a denial of the demurrer is not a final judgment,
but merely interlocutory in character as it does not finally dispose of the case, the defendant having
yet the right to present his evidence, as provided for under Section 1 of Rule 35 of the Rules of
Court.

3. ID.; SPECIAL CIVIL ACTION; CERTIORARI; FAILURE TO STATE THE FACTS AND
THE LAW ON WHICH AN ORDER DENYING A DEMURRER TO EVIDENCE IS BASED;
NOT A GRAVE ABUSE OF DISCRETION. In Estrada v. Sto. Domingo, 28 SCRA 890, We
have ruled that . . . Section 12, Anticle VIII (now Section 9, Article X) of the Constitution and
Section 1, Rule 36, Rules of Court, which require express findings of fact in a decision, have no
application to the questioned order. Here involved is not a decision on the merits but a mere order
upon a motion to reconsider. The challenged order being merely an interlocutory order and not a
final judgment or decision, no abuse of discretion was committed by respondent Comelec in its
failure to state the facts and the law on which its order denying petitioners demurrer to evidence
is based.

This is the third time that petitioners have come to this Court to challenge the actuations of the
respondent Commission on Elections in PDC Case No. 65, entitled "Oscar Laserna, Petitioner,
versus Cesar Nepomuceno, et al., Respondents."
Petitioners Cesar Nepomuceno, Leon Arcillas and Ruben Avenido were the official candidates of
the Nacionalista Party in the 1980 local elections for the positions of mayor, vicemayor and
member of the Sangguniang Bayan, respectively, of Sta. Rosa, Laguna. On January 14, 1980,
private respondent Oscar Laserna filed a petition before the COMELEC, docketed as PDC Case
No. 65, to disqualify petitioners on the ground of turncoatism. On January 25, 1980, the COMELEC
issued Resolution No. 8484, granting said petition, thereby denying due course to petitioners'
certificates of candidacy. Alleging denial of due process, petitioners assailed said resolution in a
petition for certiorari and prohibition with prayer for a temporary restraining order filed with this
Court on January 28, 1980 [G.R. Nos. 52427 and 52506]. We issued a restraining order enjoining
the COMELEC from enforcing Resolution No. 8484, by reason wherefore petitioners were allowed
to be voted for in the elections of January 30, 1980. It appears that in said elections, petitioners
won and were Proclaimed winners in their respective positions.

On May 15, 1980, We issued a Resolution in G.R. No. 52427 and G.R. No. 52506, setting aside the
challenged resolution and remanding the cases to respondent COMELEC "for a full dress hearing
in accordance with due process and to decide the cases as expeditiously as possible after giving
the parties full opportunity to present all evidence relevant to the issue of alleged turncoatism."

The COMELEC accordingly set PDC Case No. 65 for hearing on the merits. However, on July 17,
1980, petitioners filed a motion to dismiss the said case, alleging that it being a pre-election case,
the same should be dismissed, without prejudice to the filing of appropriate quo warrants
proceedings pursuant to Section 189 of the 1978 Election Code. Having obtained an unfavorable
ruling from the COMELEC, petitioners filed another petition with this Court, docketed as G.R. No.
54633, assailing the COMELEC's resolution which denied their motion to dismiss. On December
22, 1980, We dismissed this second petition, as follows:

... there is no legal basis for the allegation in the instant petition that this Court
"meant by said resolution that its reference therein to 'due process is the filing
of the proper petition in accordance with Section 189 and 190 of the 1978 Election
Code' and that the disqualification Case PDC No. 65 in the Comelec has become
functus officio after the election, proclamation and assumption to office of
petitioners herein, the Court resolved to DISMISS the petition. Had this Court
intended to convert the pre-proclamation proceedings in PDC Case No. 65 into
either a protest or a quo warrants, the resolution would have been so worded and
the case would not have been remanded to the COMELEC which has no
jurisdiction, as corrective pointed out by petitioners, over such protest or quo
warranty which belongs to the jurisdiction of the Courts of First Instance, Of
course, the resolution is without prejudice to petitioners choosing, if they prefer
to expedite proceedings, to abandon the pre-proclamation contest and instead
proceed directly to the Proper Court of First Instance with a protest or quo
warrants, as may be proper.

Likewise, denying the motion for reconsideration of the above Resolution on June 8, 1982, We
said:
 G.R. No. 54633 [Cesar Nepomuceno, et al., vs, Commission on Elections, et al.].
Acting or, the motion filed by petitioners for reconsideration of the resolution of
this Court of December 22, 1980, the Court resolved to DENY the same for lack of
merit. With the clarification made in sari resolution, it is now the law of the case
as to the parties herein that PDC No. 65 pending in the Comelec is a pre-
proclamation proceeding. However, the Court did not deem it wise to issue any
order disturbing the continuance in office of Petitioners precisely because they
are entitled to due process in the disqualification case PDC No. 65 This denial is
final ...

Thereafter, the Comelec proceeded to hear PDC Case No. 65, with petitioners' manifestation
'That "They do not waive their right to question the jurisdiction of the Comelec" having been
placed on record. After respondent Oscar Laserna had terminated the presentation of Ms
evidence, petitioners filed their respective Motions to Dismiss/Demurer to Evidence, which were
reasonably opposed by respondent Laserna. Rejoinders and memoranda were filed by the
parties, and on March 31, 1982, the Comelec issued the following order denying the demurrer to
evidence, to wit:

RESPONDENTS BY COUNSEL individually filed demurers to the evidence, to which

the petitioner did not lose time to oppose. lt is uniformly maintained by said
respondents that the evidence already adduced by the petitioner does not
establish a good cause to proceed against them, for which reason the petition as
against them should be dismiss. Petitioner disagreed, arguing otherwise.

The demurers should be DENIED. The Commission [Second Division] would rather
have the complete facts and evidence of the parties upon which to reach a
decision than prematurely go into it now upon the facts and evidence of the
petitioner only. The rationale behind such a procedure is to enable this Body to
properly adjudicate the case on its merits and to ventilate the adversary issues on
the basis of all the facts and evidence presented by the contending parties. [See
Singco vs. Costobolo, No. L-22506, Feb. 28, 1982] [Annex "L", Rollo, p. 89]

Petitioners' motions for reconsideration of the above order were likewise derived.

On April 15, 1982, petitioners filed with the Comelec another Motion to Dismiss, which was
denied in an order dated April 16, 1982. This order was designed for the division by presiding
commissioner Luis L. Lardizabal [Annex "T", Rollo. p. 126]. From these orders, petitioners come
to Us, alleging:

1. THAT THE COMELEC COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO AN ACT IN

EXCESS OF OR WITHOUT JURISDICTION IN REFUSING TO RESOLVE PETITIONERS' DEMURER TO
EVIDENCE BY WAY OF A JUDGMENT WHEREIN IT SHOULD STATE THE FACTS AND THE LAW ON
WHICH THE IS RESOLUTION IS BASED.
2. THAT THE RESPONDENT COMMITTED GRAVE ABUSE OF' DISCRETION, AMOUNTING TO LACK
OF JURISDICTION. IN DENYING PETITIONERS' MOTION TO DISMISS.

3. THAT THE RESPONDENT COMELEC COMMITTED GRAVE ABUSE OF DISCRETION, AMOUNTING

TO LACK OF JURISDICTION, IN PROMULGATING THE RESOLUTION OF APRIL 16, 1982 THROUGH
THE ACT OF ONLY ONE MEMBER OF A DIVISION.

Petitioners are obviously misled by the title of Rule 35 of the Rules of Court, "Judgment on
Demurer to Evidence." Said Rule, consisting of only one section, allows the defendant to move
for dismissal of the case after the plaintiff has presented his evidence on the ground of
insufficiency of evidence, and provides for the effects of the dismissal or non-dismissal, as the
case may be, on the right of the defendant to present his cause. Otherwise stated, it authorizes
a judgment on the merits of the case without the defendant having to submit evidence on his
part as the relief sought. The demurrer, therefore, is an aid or instrument for the expeditious
termination of an action, similar to a motion to dismiss, which the court or tribunal may either
grant or deny.

It is thus apparent that the requirement of Section 1 of Rule 36 1 would only apply if the demurrer
is granted, for in this event, there would in fact be an adjudication on the merits of the case,
leaving nothing more to be done, except perhaps to interpose an appeal. However, a denial of
the demurrer is not a final judgment, but merely interlocutory in character as it does not finally
dispose of the case, the defendant having yet the right to present his evidence, as provided for
under Section 1 of Rule 35.

In Estrada vs. Sto. Domingo, 2 We have ruled that "... Section 12, Article VIII, Constitution and
Section 1, Rule 36, Rules of Court, which require express findings of fact in a decision, have no
application to the questioned Order. Here involved is not a decision on the merits but a mere
order upon a motion to reconsider. The judge could simply dish out a routine capsule form order
denied for lack of merit' or 'motion for reconsideration denied.' And yet, that kind of order would
serve to immunize the judge against an unlawful neglect of duty charge. ..."

The challenged order being merely an interlocutory order and not a final judgment or decision,
no abuse of discretion was committed by respondent Comelec in its failure to state the facts and
the law on which its order denying petitioners' demurrer to evidence is based.

The second issue raised by petitioners hardly deserves serious consideration. It had long been
laid to rest in our Resolutions in G.R. No. 54633, and considering the number of times petitioners
have succeeded in suspending the proceedings before the COMELEC, their insistence on raising
said issue over and over again is an obvious dilatory tactic intended to frustrate this Court's
directive to respondent COMELEC to have the case heard and terminated as expeditiously as
possible.
Neither is there merit in petitioners' third contention that the order of April 16, 1982 signed for
the division by Presiding Commissioner Luis Lardizabal violated Sec. 3, Art. XII c of the
Constitution, which provides:

SECTION 3. The Commission on Elections may sit en banc or in three divisions. All
election cases may be heard and decided by divisions, except contests involving
Members of the National Assembly, which shall be heard and decided en banc.
Unless otherwise provided by law, all election cases shall be decided within ninety
days from the date of their submission for decision.

As aptly observed by the Solicitor General in his Comment,

It is plain that this provision refers to a decision on the merits of the case, where
the contending causes of the parties are decided with finality, one way or the
other. The fallacy of petitioners' contention is obvious. Their argument proceeds
from the erroneous premise that the April 16, 1982 resolution is a decision on the
merits.

Clearly, the said resolution is merely interlocutory, and being such, the Presiding
Commissioner of the Division is competent to sign said resolution alone
(Resolution No. 9805 dated June 18, 1980 of the Comelec).

WHEREFORE, the petitioner is hereby denied. Costs against petitioners.

G.R. No. 120334 January 20, 1998

NORTHWEST AIRLINES, INC. petitioner,

vs.
COURT OF APPEALS and ROLANDO I. TORRES, respondents.

G.R. No. 120337 January 20, 1998

ROLANDO I. TORRES, petitioner,

vs.
COURT OF APPEALS and NORTHWEST AIRLINES, INC., respondents.

Unable to accept the decision of the Court of Appeals in CA-G.R. CV No. 24068, 1 petitioner
Northwest Airlines, Inc., (hereafter NORTHWEST) and petitioner Rolando I. Torres (hereafter
TORRES) filed separate petitions for review under Rule 45 of the Rules of Court, which were
docketed as G.R. No. 120334 and G.R. No. 120337 and thereafter consolidated.
The antecedents of these cases were summarized by the Court of Appeals as follows:2

The plaintiff, [Torres], allegedly on a special mission to purchase firearms for the
Philippine Senate, purchased a round trip ticket from defendant [Northwest] for
his travel to Chicago and back to Manila. Via defendant's flight, plaintiff left for
United States.

After purchasing firearms and on the way back to Manila, plaintiff checked-in and
presented before defendant's representative his two identical baggage, one of
which contained firearms. Defendant's representative required the baggage to be
opened and the supporting evidence to be presented. Plaintiff showed them his
authorization from the Philippine government and the purchase receipts. Plaintiff
thereafter sealed the baggage and defendant's representative placed a red tag on
the baggage with firearms with the marking "CONTAINS FIREARMS".

Upon arrival in Manila on June 22, 1988 plaintiff was not able to claim one of his
baggages. Plaintiff was informed by defendant's representative that his baggage
containing firearms was recalled back to Chicago by defendant for US Customs
verification. A telex to this effect was shown to plaintiff.

On June 28, 1988, after being advised of the arrival of his other baggage, plaintiff
claimed and opened the baggage in the presence of defendant's representative
and found out that the firearms were missing. A Personal Property Missing
Damage Report was issued by defendant to plaintiff.

On account of continuous refusal of defendant to settle amicably, plaintiff then

prayed before the trial court that defendant be ordered to pay actual damages,
moral damages, temperate damages, exemplary damages and attorney's fees (pp.
1-6, Complaint; p. 1, Record).

In its answer, defendant pleaded: a) that it was the agents from the US Customs
who ordered for the return of the weapons which plaintiff checked-in; b) that
when opened in the presence of US Customs agents the box contained no
firearms; and c) that since the baggage which was returned back to Chicago did
not contain any firearms, then the baggage which plaintiff received upon arrival
in Manila must have contained the firearms (pp. 3-5, Answer; pp. 32-34, Record).

After plaintiff had presented its evidence, defendant filed a "Motion to Dismiss
(By Way of Demurrer to the Evidence with Motion for Summary Judgment)" dated
April 24, 1989.

In said motion, defendant moved for the "dismissal of the complaint in so far as it
prays for moral, exemplary and temperate damages and attorney's fees" and
further moved for "summary judgment to be rendered awarding the plaintiff
 $640.00 as actual damages." (Motion to Dismiss By Way of Demurrer to Evidence
with Motion for Summary Judgment; p. 115, Records).

Plaintiff on the other hand, offered no objection to the submission of the case for
decision but insisted that he is entitled to damages as prayed for (p. 1, Comment
on Defendant's Motion to Dismiss by Way of Demurrer to Evidence with Summary
Judgment; pp. 136-169, Records).

We add to this summary the following relevant matters:

NORTHWEST argued in its motion for summary judgment that the Warsaw Convention and the
contract of carriage limited its liability to US$640 and that the evidence presented by TORRES did
not entitle him to moral, exemplary, and temperate damages and attorney's fees.3

Instead of just ruling on NORTHWEST's Motion to Dismiss (By Way of Demurrer to Evidence) with
Motion for Summary Judgment, which it considered submitted for resolution in the order of 14
June 1989, 4 the trial court rendered on 13 September 1989 a full-blown decision 5 ordering
NORTHWEST to pay TORRES the following amounts:

1. The amount of $9,009.32, with legal interest thereon from the date of the filing
of the complaint, in its peso equivalent at the official rate of exchange at the time
payment is made, representing the value of the goods lost by the plaintiff;

2. The amount of P100,000.00 by way of attorney's fees;

3. The amount of P5,181.09 as filing fees paid by the plaintiff and the amount of
P20,000.00 for expenses of litigation, representing travel expenses and hotel
accommodations of plaintiff's counsels; and

4. The amount of P50,000.00 as moral damages.

The award of US$9,009.32, representing the value of the lost firearms, was grounded on the trial
court's finding that "the act of [NORTHWEST's] personnel in Tokyo or Narita Airport in just
guessing which baggage contained the firearms was careless and imprudent, amounting to
careless disregard for the safety of the luggage of the passenger." According to the trial court,
such act constituted willful misconduct which brought the case beyond the application of Section
22(2) of the Warsaw Convention, thereby depriving NORTHWEST of the limitation of the liability
provided for in said section.

The awards of attorney's fees and expenses of litigation were premised on NORTHWEST's having
ignored the demands of TORRES forcing the latter to litigate in order to assert his right. TORRES
was also awarded moral damages because of the "inconvenience, anxiety and worry" he suffered
by reason of NORTHWEST's unjustifiable refusal to settle his claim.
Both TORRES and NORTHWEST appealed from the decision to the Court of Appeals, which
docketed the case as CA-G.R. CV No. 24068. TORRES assailed the failure of the trial court to award
the actual, moral, and exemplary damages prayed for by him. 6 NORTHWEST, on the other hand,
alleged that in prematurely resolving the case on the merits the court prevented it from
presenting evidence, thereby denying it due process; and that even assuming that the trial court
could resolve the entire case on the merits, it erred in awarding damages, attorney's fees, and
expenses of litigation.7

In its Decision 8 of 14 September 1994, the Court of Appeals sustained the trial court's judgment
that TORRES was entitled to actual damages, since NORTHWEST had, in effect, admitted the loss
of the firearms when it insisted that its liability was limited to $9.07 per pound or $20 per kilo.
The appellate court then concluded that NORTHWEST's guessing of which luggage contained the
firearms amounted to willful misconduct under Section 25(1) of the Warsaw Convention which
entitled TORRES to claim actual damages in excess of the limitation provided for under Section
22(2) of said Convention.

Nevertheless, the Court of Appeals held that while the trial court properly ruled on the right of
TORRES to actual damages, it erred in determining by way of summary judgment the amount of
damages; for under Section 3 of Rule 34 of the Rules of Court, a summary judgment may be
rendered upon proper motion except as to the amount of damages.

As to the trial court's act of disposing of the entire case by way of summary judgment, the Court
of Appeals noted that NORTHWEST categorically moved for summary judgment only on the issue
of actual damages, but not on the claims for moral damages and attorney's fees. NORTHWEST
moved for the dismissal of the latter claims by way of demurrer to evidence. That being so, the
trial court could not, by way of summary judgment, dispose of the case on its entirety. Section 2
of Rule 34 of the Rules of Court required that summary judgment should be issued only after the
motion therefor has been heard. Since there was no such motion as to the claims for moral
damages and attorney's fees, no summary judgment thereon could be made.

Anent the demurrer to evidence, the Court of Appeals held that the trial court had to either grant
or deny it. If granted, no award therefor could have been validly made. If denied, then under
Section 1 of Rule 35 of the Rules of Court, NORTHWEST should have been allowed to present its
evidence, as it was not deemed to have waived that right. This section provided:

Sec. 1. Effect of judgment on demurrer to evidence. After the plaintiff has

completed the presentation of his evidence, the defendant without waiving his
right to offer evidence in the event the motion is not granted, may move for a
dismissal on the ground that upon facts and the law the plaintiff has shown no
right to relief. However, if the motion is granted and order of dismissal is reversed
on appeal, the movant loses his right to present evidence in his behalf.9
The Court of Appeals then held that since the demurrer was impliedly denied by the trial court,
NORTHWEST should have been allowed to present its evidence in accordance with the above
rule.

Accordingly, the Court of Appeals affirmed the trial court's finding as to the right of TORRES to
actual damages but set aside the rest of the appealed decision. It then remanded the case to the
court a quo for further proceedings.

On 23 May 1995, the Court of Appeals denied 10 NORTHWEST's motion for a partial
reconsideration of the decision.

Hence, the present petitions.

NORTHWEST contests the right of TORRES to actual damages on the following grounds: (1) the
loss of firearms was disputed; (2) the finding of willful misconduct was arbitrary; and (3) TORRES
failed to produce a United States license for the shipment of the firearms; hence, the importation
was illegal and no damages could arise therefrom.

TORRES, on the other hand, claims that the Court of Appeals erred (1) in setting aside the
appealed decision of the court a quo as to the awards of damages, attorney's fees, and cost of
suit; (2) in remanding the case to the court a quo for further proceedings; and (3) in failing to
award other damages for breach of contract and willful misconduct committed by Northwest for
mishandling the cargo.

NORTHWEST's Motion to Dismiss (By Way of Demurrer to Evidence) with Motion for Summary
Judgment involved two distinct and separate processes, viz: (1) demurrer to evidence, which was
then governed by Rule 35, now by Rule 33; and (2) motion for summary judgment, which was
then governed by Rule 34, now Rule 35, of the Rules of Court. The subject of the demurrer were
the claims for moral, exemplary, and temperate damages and attorney's fees; while the target of
the motion for summary judgment was the claim for actual damages.

We agree with the Court of Appeals in its holding that the trial court erred in deciding the entire
case on its merits. Indeed, as to the demurrer to evidence, the trial court should have been solely
guided by the procedure laid down in the abovementioned rule on demurrer to evidence. It had
no choice other than to grant or to deny the demurrer. It could not, without committing grave
abuse of discretion amounting to excess of jurisdiction, deny the motion and then forthwith grant
TORRES' claims on a finding that TORRES has established a preponderance of evidence in support
of such claims. In the instant case, the trial court did just that insofar as moral damages,
attorney's fees, and expenses of litigation were concerned. What it should have done was to
merely deny the demurrer and set a date for the reception of NORTHWEST's evidence in chief.

As to the motion for summary judgment, both the trial court and the Court of Appeals were in
error. Summary judgments were formerly governed by Rule 34 of the Rules of Court. The rule is
now Rule 35 of the 1987 Rules of Civil Procedure with the amendments allowing the parties to
submit not only affidavits but also depositions or admissions in support of their respective
contentions. 11 Motions for summary judgment may be filed by the claimant or by the defending
party. Sections 1, 2, and 3 of the old Rule 34, the governing law in this case, provided as follows:

Sec. 1. Summary judgment for claimant. A party seeking to recover upon a

claim, counterclaim, or cross-claim or to obtain a declaratory relief may, at any
time after the pleading in answer thereto has been served, move with supporting
affidavits for a summary judgment in his favor upon all or any part thereof.

Sec. 2. Summary judgment for defending party. A party against whom a claim,
counterclaim, or cross-claim is asserted or a declaratory relief is sought may, at
any time, move with supporting affidavits for a summary judgment in his favor as
to all or any part thereof.

Sec. 3. Motion and proceedings thereon. The motion shall be served at least ten
(10) days before the time specified for the hearing. The adverse party prior to the
day of hearing may serve opposing affidavits. After the hearing, the judgment
sought shall be rendered forthwith if the pleadings, depositions, and admissions
on file together with the affidavits, show that, except as to the amount of
damages, there is no genuine issue as to any material fact and that the moving
party is entitled to a judgment as a matter of law.

NORTHWEST, the defending party, moved for summary judgment on the claim for actual
damages after TORRES had presented his evidence in chief. This was allowed by Section 2 where
the motion may be filed "at any time," as distinguished from section 1 where the claimant, like
TORRES, may file the motion at any time after the answer is filed.

Summary judgment is allowed if, except as to the amount of damages, there is no genuine issue
as to any material fact and the moving party is entitled to a judgment as a matter of law.

In this case, NORTHWEST denied in its Answer the material allegations in the complaint and
asserted, in fact, that it was not liable for actual damages because the box containing the alleged
lost firearms was the one received by TORRES when he arrived in Manila. It likewise contended
that, even granting that the firearms were lost, its liability was limited by the Warsaw Convention
and the contract of transportation to $9.07 per pound, or a total of $640 as the box weighed 70
pounds. 12 It also denied having acted fraudulently or in bad faith. 13

In thus submitting for summary judgment the matter of its liability only to the maximum allowed
in Section 22(2) of the Warsaw Convention, NORTHWEST was deemed to have hypothetically
admitted arguendo that the firearms were lost. It did not waive the presentation of evidence that
it was not in fact liable for the alleged loss of firearms. And even if it was not liable beyond the
maximum provided in said Section 22(2). Notably, TORRES prayed for actual damages in the
amounts of (1) $9,009.32 representing the value of the lost firearms; and (2) P39,065 14
representing the cost of his place tickets.
Concretely the, there remained a genuine issue on the fact and amount of actual damages. The
motion for summary judgment was not therefore in order. NORTHWEST must have resorted to
it, in like manner as it did in filing the demurrer, to delay the progress of the trial of the case.
Verily, it was grave abuse of discretion on the part of the trial court to grant such motion and
award TORRES actual damages commensurate to the value of the firearms and based on his
evidence alone.

We, however, agree with both the trial court and the Court of Appeals that NORTHWEST's liability
for actual damages may not be limited to that prescribed in Section 22(2) of the Warsaw
Convention. In Alitalia v. Intermediate Appellate Court, 15 we held:

The [Warsaw] Convention does not operate as an exclusive enumeration of the

instances of an airline's liability, or as an absolute limit of the extent of that
liability. Such a proposition is not borne out by the language of the Convention, as
this Court has now, and at an earlier time, pointed out. Moreover, slight reflection
readily leads to the conclusion that it should be deemed a limit of liability only in
those cases where the cause of the death or injury to person, or destruction, loss
or damage to property or delay in its transport is not attributable to or attended
by any willful misconduct, bad faith, recklessness, or otherwise improper conduct
on the part of any official or employee for which the carrier is responsible, and
there is otherwise no special or extraordinary form of resulting injury. The
Convention's provisions, in short, do not "regulate or exclude liability for other
breaches of contract by the carrier" or misconduct of its officers and employees,
or for some particular or exceptional type of damage.

IN VIEW WHEREOF, judgment is hereby rendered (1) PARTLY GRANTING the petition in G.R. No.
120334 by setting aside that portion of the challenge decision of the Court of Appeals in CA-G.R.
CV No. 24068 affirming the summary judgment as to the right of respondent ROLANDO I. TORRES
to actual damages; (2) DENYING for want of merit the petition in G.R. No. 120337; and (3)
REMANDING this case to the trial court for the reception of the evidence for Northwest Airlines,
Inc. in Civil Case No. 88-46117 and, thereafter, for the rendition of the judgment therein on the
merits.

G.R. No. 161817 July 30, 2004

DANIEL D. CELINO, petitioner,

vs.
HEIRS OF ALEJO and TERESA SANTIAGO, respondents.
Before us is a petition for review of the Decision1 of the Court of Appeals promulgated on 28
October 2002 and its Resolution2 promulgated on 14 January 2004 denying petitioner's Motion for
Reconsideration.

The case stemmed from an action for Quieting of Title, Recovery of Possession and Damages with
Prayer for the Issuance of a Writ of Preliminary Mandatory Injunction filed by the heirs of Alejo
and Teresa Santiago against herein petitioner Daniel Celino.3 Petitioner filed a Motion to
Dismiss,4 alleging that complainant Juliet Santiago did not have the legal capacity to sue, since
she did not have the corresponding written authority to represent her co-plaintiffs, and since the
Complaint failed to state a cause of action. The trial court, presided by Judge Antonio C. Reyes,
denied the said motion on the ground that the issues posed by petitioner could best be resolved
during the trial.5 It likewise denied petitioner's motion for reconsideration.6

Thereafter, pre-trial was held. There, plaintiff Juliet Santiago presented through counsel, a copy of
the Special Power of Attorney7 executed by Virginia S. Robertson and Gloria S. Tinoyan, two of
the plaintiffs in the Complaint, authorizing counsels Juan Antonio R. Alberto III and Alexander
A. Galpo to represent them in the pre-trial of the case. Likewise submitted was a Special Power of
Attorney8 executed by Romeo Santiago, Juliet Santiago and Larry Santiago in favor of above-
named counsels to represent them in the pre-trial conference.

Trial ensued and plaintiffs therein, now respondents, presented their evidence. Petitioner filed a
Demurrer to Evidence,9 still on the ground of Juliet Santiago's alleged lack of legal capacity to
sue. Petitioner claimed that the evidence presented by Santiago should not be admitted since she
failed to present any evidence of authority to file the complaint for and in behalf of her co-
plaintiffs. In an Order dated 29 April 2002,10 Judge Reyes denied the Demurrer, stating that Juliet
Santiago had submitted the necessary authorization. On 10 July 2002, the Judge denied petitioner's
Motion for Reconsideration11 for lack of merit.12

Petitioner thereafter filed a Petition For Review on Certiorari,13 seeking to nullify and set aside
the 29 April 2002 and the 10 July 2002 orders of the trial court. In its Decision dated 28 October
2003, the Court of Appeals dismissed the petition, stating that petitioner's allegation of lack of
legal capacity to sue is not the ground contemplated by the Rules of Court to support an adverse
party's Demurrer to Evidence.14 Thereafter, petitioner filed his Motion for Reconsideration,15
which was denied for lack of merit.16

Petitioner now submits the following issues:

I. WHETHER OR NOT A DEMURRER TO EVIDENCE UNDER RULE 33 OF THE

REVISED RULES OF COURT MAY BE RESORTED TO WHEN CLEARLY THE
COMPLAINT (SIC) HAS NO AUTHORITY TO SUE FOR AND IN BEHALF OF HER
CO-PLAINTIFFS.

II. WHETHER OR NOT THE COMPLAINT MAY BE DISMISSED FOR FAILURE OF

CO-PLAINTIFFS TO EXECUTE AND SIGN THE CERTIFICATION AGAINST NON-
FORUM SHOPPING.17
A demurrer to evidence is a motion to dismiss on the ground of insufficiency of evidence and is
presented after the plaintiff rests his case.18 It is an objection by one of the parties in an action, to
the effect that the evidence which his adversary produced is insufficient in point of law, whether
true or not, to make out a case or sustain the issue.19 The evidence contemplated by the rule on
demurrer is that which pertains to the merits of the case.20 Thus, as correctly held by the Court of
Appeals, lack of legal capacity to sue is not a proper ground for a demurrer to evidence, pertaining
as it does to a technical aspect, and it having nothing to do with the evidence on the merits of the
complaint. Consequently, petitioner's Demurrer to Evidence and Motion for Reconsideration
should be denied, as the trial court did.

Anent the second issue, we hold that the Complaint may not be dismissed on account of the failure
of the other plaintiffs to execute and sign the certification against non-forum shopping.

Respondents herein are co-owners of two parcels of land owned by their deceased mother. The
properties were allegedly encroached upon by the petitioner. As co-owners of the properties, each
of the heirs may properly bring an action for ejectment,21 forcible entry and detainer,22 or any
kind of action for the recovery of possession of the subject properties. 23 Thus, a co-owner may
bring such an action, even without joining all the other co-owners as co-plaintiffs, because the suit
is deemed to be instituted for the benefit of all.24 However, if the action is for the benefit of the
plaintiff alone, such that he claims the possession for himself and not for the co-ownership, the
action will not prosper.25

It is clear from the Complaint that the same was made precisely to recover possession of the
properties owned in common, and as such, will redound to the benefit of all the co-owners. Indeed,
in the verification of the Complaint, Juliet Santiago claimed that she caused the preparation and
the filing of the said pleading as a co-owner of the subject properties and as a representative of the
other plaintiffs. Hence, the instant case may prosper even without the authorization from Juliet
Santiago's co-plaintiffs.

From the procedural perspective, the instant petition should also fail. Petitioner questioned Juliet
Santiago's authority to sue in behalf of his co-plaintiffs in his Motion to Dismiss dated 24 August
1999, which the lower court denied in its Order dated 16 March 2000. After filing a motion for
reconsideration dated 30 March 2000, as well as a Supplemental to Motion for Reconsideration
dated 11 April 2000,26 which the lower court denied in its Order dated 02 May 2000, he did
nothing until he filed the Demurrer to Evidence dated 11 February 2002. But that was after the
pre-trial and trial on the merits were conducted and plaintiffs had presented their evidence-in-chief.
On the assumption that the lower court committed grave abuse of discretion in denying the Motion
to Dismiss' petitioner as defendant should have filed the corresponding petition for certiorari under
Rule 65 of the Revised Rules of Court with the Court of Appeals. He failed to do so within the
period prescribed therefor, which is not later than sixty (60) days from notice of the order denying
the motion for reconsideration.27 Thus, it is clear that even his petition under Rule 65 before the
Court of Appeals was filed way out of time, it having been presented only on 31 July 2002.28

While the instant petition seeks only to resolve the above-stated issues, this Court will not close
its eyes to any irregularity or defect in any decision or disposition, which, if tolerated, may result
to confusion, and even injustice to any of the litigants.29
In the instant case, not only was the trial court miscreant in appreciating the documents presented
before it, it was also injudicious in its understanding of the nature of a demurrer to evidence.

Relying on the two Special Powers of Attorney presented by the plaintiff, the trial court denied
petitioner's Demurrer to Evidence in the following manner:

"Considering that plaintiff Juliet Santiago has submitted the necessary Special Power
of Authority from her co-plaintiffs authorizing her to institute the instant action
against the defendant, the Demurrer to Evidence is denied for lack of merit."30 (emphasis
supplied)

As correctly pointed out by the petitioner, the said instruments were grants of authority to plaintiffs'
counsel to represent them in the pre-trial conference and cannot in any way be constituted as a
source of authority for Juliet Santiago to be the legal representative of her co-heirs. As such,
plaintiff Juliet Santiago has not in fact presented any evidence supporting her claim that she is the
duly constituted representative of the other named plaintiffs in the Complaint. Despite the very
clear wording of the instruments, the trial court failed to appreciate the import of the same and
equated the Special Powers of Attorney executed in favor of counsel to an authorization in favor
of Juliet Santiago.

In this regard, Judge Antonio Reyes of the Regional Trial Court of Cebu is well-advised to be
prudent and meticulous in appreciating the documents and evidence presented before him. The
duty to be well-informed of the law and legal procedures is ingrained in the position of court judge.

WHEREFORE, the instant Petition is DENIED for lack of merit. The assailed Decision dated 28
October 2002 and the Resolution dated 14 January 2004 are hereby AFFIRMED. Costs against the
petitioner.

G.R. No. L-4229 May 29, 1952

DALMACIO FALCASANTOS, plaintiff-appellee,

vs.
HOW SUY CHING, ETC., defendant-appellant.

Abelardo A. Climaco for appellee.

Catis and Rubite for appellant.

PARAS, C. J.:

This is an action for legal redemption instituted in the Court of First Instance of Zamboanga by
Dalmacio Falcasantos against How Suy Ching, as administratrix of the estate of the deceased Tan
Kiok. The parties, without adducing any evidence, submitted the case on the pleadings. The court
rendered judgment in favor of the plaintiff, ordering the defendant to convey to the plaintiff all
the rights of the deceased Tan Kiok in Lots Nos. 154 and 52 mentioned in the complaint upon
payment of the sum of P420. From this judgment the defendant has appealed.

The complaint alleges that Lots Nos. 154 and 52 , with their improvements, located in the City of
Zamboanga and described in Original Certificates of Titles Nos. 7642 and 7291, respectively, of
the Office of the Registrar and Deeds of Zamboanga are the undivided property in equal share of
Leonarda Falcasantos, Dalmacio Falcasantos and Josefa Falcasantos; that on December 1, 1934,
and for the sum of P420, Leonarda Falcasantos, sold her rights to Tan Kiok, although the sale has
not as yet been registered; that the plaintiff has offered to redeem the property from the
defendant by paying to the later the sum of P420 which Tan Kiok paid to Leonarda Falcasantos;
that the defendant has refused to re-sell the property.

The defendant in her answer admits all the allegations of the complaint but sets up the defenses
that plaintiff's right of legal redemption is now barred by article 1524 of the old Civil Code,
because "the plaintiff has had knowledge of sale since long before nine days prior to the filling of
the complaint."

The lower court, in giving judgment for the plaintiff, relied on the fact that "the deed of sale
stated above was never and is not as yet registered in the office of the Register of Deeds, and
there is nothing in the record to show that the plaintiff had any knowledge of the sale since
certain date." Its conclusion is that "there is no doubt therefore that the period for the exercise
of the right of legal redemption by the plaintiff has not yet expired as it has already been stated
the deed of sale was never nor has as been registered in the office of the Register of Deeds."

It is already a rule in this jurisdiction that one who prays for judgment on the pleadings without
offering proof as to the truth of his own allegations, and without giving the opposing party an
opportunity to introduce evidence, must be understood to admit the truth of all the material and
relevant allegations of the opposing party, and to rest his motion for judgment on those
allegations taken together with such of his own as are admitted in the pleadings. (Evangelista vs.
De la Rosa,1 42 Off. Gaz., 2100; Aquino vs. Blanco,2 45 Off. Gaz., 2080; Bauermann vs. Casas, 10
Phil., 386.) As the parties had submitted the case at bar on the pleadings without introducing any
evidence, the plaintiff must be considered as having admitted the material allegation in the
answer that he had known of the sale in question long before nine days prior to the filing of the
complain. It may be argued that, under section 1 of Rule 11 of the Rules of Court, if the plaintiff
fails to make a reply, as in the case at bar, all the new matters alleged in the answer are deemed
controverted; but are of the opinion that said provision is not applicable to cases submitted on
the pleadings. The reason is obvious. Where the parties pursue the course of a regular trial, the
plaintiff may disprove by competent evidence any new matter alleged in the answer, while the
defendant may establish also by competent evidence his own allegation. In other words, the
opportunity is mutual for each party to prove or disprove any new fact deemed to be
controverted by the failure of the plaintiff to file a reply to an answer.
Article 1524 of the old Civil Code provides that "the right of legal redemption may not be
exercised except within nine days, counted from the inscription in the Registry, and, in the
absence thereof, from the time the redemptioner shall have had knowledge of the sale."

In Villasor vs. Medel, et al. * 46 Off. Gaz., Supp. No. 1, pp. 344, 348, citing Sempio vs. Del Rosario,
44 Phil., 1 we already had occasion to observe that: "The provision of this article which fixes the
period of nine days within which the right of legal redemption may be exercised has not been
repealed or modified by the Code of Civil Procedure of the Rules of Court. The right of legal
redemption and the right to commence actions are entirely different nature. The first is a
substantive right which, in the absence of the article, would never exist; the second restricts the
period in which the cause of action may be asserted." In the same case, we held that the starting
point of the 9-day period is registration or, in the absence of registration, knowledge of the
conveyance by the co-owners. It cannot be contended that the period starts from registration
only in respect of real property, because the article does not make any distinction. Indeed, in
commenting on the provision, Manresa states that absence of registration refers not only to the
case where the purchaser fails to register the conveyance, but also the case where registration is
not possible because the thing sold is personal property.

Por estas razones, el Codigo dice, refiriendose a la inscripcion, que, en su defecto, el plazo
se contara desde que el retrayente hubiera tenido conocimiento de la venta. Las palabras
"en su defecto" que hemos subrayado, entendemos que tienen la plenitud de su sentido;
es decir, que igualmente aluden al caso de que la inscripcion no exista por no haberla
solicitado el comprador, que a aquel otro en que la inscripcion no es posible por la
naturaleza mueble de la cosa vendida. (Manresa, Codigo Civil, 4th Ed. Vol. 10, p. 337.)

In view of our conclusion that the plaintiff must be held to have had knowledge of the sale in
question long before nine days prior to the filing of the complaint herein, his right of legal
redemption has been lost.

Even if it be assumed that a mere offer to redeem is sufficient under Article 1524, the complaint
is fatally defective and should be dismissed, because it contains no allegation that the offer to
redeem was made within nine days from registration/or the date the plaintiff had knowledge of
the sale in question.

The insinuation of the plaintiff that Tan Kiok could not validly purchase because he was not a
Filipino citizenwhich involves a constitutional question not even raised is the trial,deserves
no serious consideration, because the sale took place before the enforcement of the limitation
provided in the Constitution which does not have any retroactive effect. (El Banko Nacional
Filipino contra Sing, 69 Phil., 611.)

Wherefore, the decision appealed from is hereby reversed and the complaint dismissed, with
costs against the plaintiff-appellee. So ordered.
G.R. No. L-43886 July 19, 1989

IRENE DINO, petitioner,

vs.
HON. AUGUSTO L. VALENCIA in his capacity as Presiding Judge of the Court of First Instance of
Rizal, Quezon City, Branch XXXI and FRANCISCO L. ONG, respondents.

PADILLA, J.:

This is a petition for certiorari, mandamus and prohibition to annul and set aside the judgment
on the pleadings, dated 26 January 1976, rendered by the respondent Judge in Civil Case No. Q-
20350 as well as his order dated 14 April 1976 denying the petitioner's motion for
reconsideration, and to compel the said respondent Judge to allow her to, present evidence.

The record discloses the following facts:

Petitioner Irene Dino is the registered owner of a parcel of land together with all the
improvements thereon, situated at No. 94 West Kaunlaran Street, Philamlife Homes, Quezon
City, covered by Transfer Certificate of Title No. 140987 issued by the Register of Deeds of
Quezon City.

Private respondent Francisco L. Ong is the adverse claimant of the said parcel of land, having
filed an Affidavit of Adverse Claim with the Register of Deeds of Quezon City, as evidenced by
Entry No. 5608 on the said TCT No. 140987.

On 26 April 1974, private respondent executed a document entitled "AFFIDAVIT AND

MEMORANDUM OF QUITCLAIM," 1 wherein he waived and renounced all his claims, rights and
credits over and against the aforesaid parcel of land, the pertinent part of which reads as
follows:

2. That for and in consideration of the sum of NINETY THOUSAND PESOS,

payable as follows:

(a) Downpayment of FORTY THOUSAND PESOS (P40,000.00) on or before

February 15, 1974, receipt of which (sic) hereby acknowledged; and the future
sums covered by postdated checks in denominations of:

(b) TEN THOUSAND PESOS(Pl0,000.00)payable or redeemable on or before April

15, 1974; and,

(c) EIGHT THOUSAND PESOS (Pl0,000.00) (sic) EACH payable or redeemable on or

before the 15th of June, August, October, December of 1974 and February of
1975, respectively, and for a total of FORTY THOUSAND PESOS (P40,000.00),
I hereby waive and renounce forever and in a manner absolute all my claims, rights and credits
over and against the aforesaid parcel of land covered by Transfer Certificate of Title No. 140987
and likewise release the registered owner, IRENE DINO, her heirs, assigns, or representatives,
from all obligations including those credits (sic) claimant;

(3) That it is the essence of this Affidavit and Memorandum of Quitclaim that
should said IRENE DINO fail or refuse to comply with the payments stipulated
about (sic) or default in any single payment, then the full and existing balance
shall become due and demandable without further necessity of demand, and
that said IRENE DINO undertakes to pay the further sum of TWENTY THOUSAND
PESOS (P20,000.00) by way of liquidated damages;

(4) That this Affidavit and Memorandum of Quitclaim is executed for the sole
purpose of cancelling my adverse claim and the corresponding Entry thereof on
Transfer Certificate of Title No. 140987 and for no other purpose contrary to law;
as well as the Deed of Sale With Assumption of Mortgage dated September 21,
1970.'

Apparently, petitioner failed to comply with her obligations under the aforestated document,
for on 20 March 1975, private respondent filed with the Court of First Instance of Rizal, Quezon
City, Branch XXI, a complaint 2 against the petitioner for breach of contract and damages,
docketed therein as Civil Case No. Q-20350, alleging inter alia:

3. That, during the period from June 21, 1974 to February 21, 1975, Defendant
issued in favor of the Plaintiff herein, Philippine Commercial and Industrial Bank
(PCIB)-Greenhills Branch-Checks Nos. 14872 to 14876, inclusive, each in the
amount of P 8,000.00, all of which were dishonored by the drawee bank; the first
two, for having been 'drawn against insufficient funds' and the last three thereof,
for 'account closed';

4. That the aforementioned checks were drawn by the Defendant in payment to

the Plaintiff of the remaining P40,00.00 balance on a total amount of P90,000.00
which Defendant undertook to pay the Plaintiff in consideration on the latter's
executing the AFFIDAVIT AND MEMORANDUM OF QUITCLAIM (contents of
which are self-explanatory) dated February 26,1974, a xerox copy of which is
hereto attached as ANNEX 'A' and made an integral part hereof;

5. That Paragraph 3 thereof, to which Defendant conformed and accepted,

clearly states:

3. That it is the essence of this Affidavit and Memorandum of Quitclaim that

should said IRENE DINO fail or refuse to comply with the payments stipulated
above or defaulted (sic) in any single payment, then the full and existing balance
shall become due and demandable without further necessity of demand, and
 that said IRENE DINO undertakes to pay the further sum of TWENTY THOUSAND
PESOS (P20,000.00) by way of liquidated damages;

6. That when Defendant issued the checks mentioned in Par. 3 of this Complaint,
she was aware that she did not have sufficient funds with the drawee bank and
had already closed her account with the bank when the last three checks were
presented for payment;

7. That, in view thereof, the 'full and existing balance' of Defendant's obligation
to the Plaintiff, which now stands at P32,000.00 (one of the five dishonored
checks having been replaced with one good check), is now 'due and demandable
without further necessity of demand,' and Defendant is further obligated to pay
the Plaintiff the amount of P 20,000.00 by way of liquidated damages;

8. That, despite repeated demands by Plaintiff on the Defendant, the latter has
failed and still continues to fail to pay the P 52,000.00 due to the Plaintiff, in view
of which Plaintiff was constrained to file this case in Court to protect his rights
and was thus forced to engage the services of counsel and to defray the costs of
this suit."

In her answer, 3 petitioner alleged:

2. That she admits the allegations contained in paragraph 3 of the complaint

insofar only as the issuance of check Nos. 14872 to 14876 of the PCIB and that
they were at P8,000.00 each are concerned, but specifically denies the rest, the
truth being that not all of the said checks were dishonored by the bank, but only
four (4) and also that the original agreement of the parties as to the payment of
the said checks had already been novated and disregarded by the parties after
the issuance of the said checks and after the Affidavit and Memorandum of
Quitclaim dated February 26, 1974, had been signed and executed by the
parties, considering the fact that plaintiff agreed to the request of the defendant
not to deposit the said checks but wait for sometime to pay the said amount of
P40,000.00 in one lump sum, that as a matter of fact, defendant (sic) deposited
the said checks long, long after the supposed date of issuance of the same.

3. That she admits the allegations contained in paragraph 3 of the complaint

subject to the allegations contained in the next preceding paragraph.

4. That she admits the reproduction of No. 3 of the Affidavit and Memorandum
of Quitclaim insofar only as they are consistent with the contents of paragraph 3
of the said document and also subject to the allegations contained in paragraph
2 above.
 5. That she specifically denies the allegations contained in the paragraph 6 of the
complaint, the truth of the matter being that when said checks were issued, they
were postdated and plaintiff knew for a fact they did not have sufficient funds,
but plaintiff just the same accepted them subject to the conditions of availability
of funds by the plaintiff (sic). In other words said checks were issued only to
guarantee the payment of the P 40,000.00 but not as payment itself, that is why
plaintiff as a matter of fact agreed not to deposit the said checks until after
further notice from the defendant, as alleged in paragraph 2 above.

6. That she admits that the outstanding balance due the plaintiff is P 32,000.00
as alleged in paragraph 2 hereof, but denies specifically that they are now 'due
and demandable without further necessity of demand', the truth of the matter
being that said agreement was already novated and voided as alleged in
paragraph 2 above. (Par. 7, comp)

7. That she specifically denies the allegations contained in paragraph 8 of the

complaint the truth of the matter being those contained in paragraph 2 above."

Private respondent (as plaintiff) filed a reply, 4 alleging that petitioner should be declared in
default for having filed her answer on 1 September 1975, or two (2) days beyond the extended
period, or in the alternative, that a judgment on the pleadings be rendered at the pre-trial, for
the reason that the petitioner virtually admitted the material averments of the complaint,
having failed to deny under oath the genuineness and due execution of the Affidavit and
Memorandum of Quitclaim, as required by Sec. 8 of Rule 8 of the Rules of Court, and that
petitioner admitted in par. 6 of her answer that the outstanding balance due to him (private
respondent) is P32,000.00, which negates her gratuitous allegation that the said Affidavit and
Memorandum of Quitclaim was novated or voided.

During the pre-trial conference, petitioner through counsel, offered to pay her obligations by
monthly installments but the same was unacceptable to the private respondent; hence, the
pre-trial conference was considered terminated. Thereafter, private respondent's counsel
manifested in open court, and without objection on the part of petitioner's counsel, that he
was submitting for resolution by the court his alternative motions to declare petitioner in
default or for a judgment on the pleadings. Likewise, in open court, respondent judge denied
the private respondent's motion to declare petitioner in default but made it clear that he was
considering the alternative motion for a judgment on the pleadings, and gave petitioner
sufficient time to file a responsive pleading or opposition to the said motion. 5 Petitioner filed
an opposition 6 thereto, dated 22 November 1975, alleging that there is no room for a
judgment on the pleadings as her answer to the complaint tendered an issue, and that the
private respondent's reply is, in fact, a motion to declare petitioner in default or for a judgment
on the pleadings, and since said motion does not contain a notice of hearing, the same is
nothing but a useless piece of paper.

On 26 January, 1976 respondent ... pleadings 7 the dispositive part of which reads:
 WHEREFORE, judgment on the pleadings is hereby rendered in favor of the
plaintiff, ordering the defendant to pay him the balance of P32,000.00 plus
liquidated damages of P20,000.00, and cost of suit.8

Petitioner moved to reconsider, 9 which the private respondent opposed. 10 On 14 April 1976,
respondent Judge issued an order 11 denying the petitioner's motion for reconsideration.

Hence, petitioner filed the instant petition, claiming that respondent Judge acted in excess of
his jurisdiction or with grave abuse of discretion in rendering the judgment on the pleadings
and in issuing the order denying her motion for reconsideration, and that she has no remedy
nor any other plain, speedy and adequate remedy in the course of law except through the
present petition.

Petitioner maintains that her answer to the complaint tendered an issue, as it did not only deny
the material allegations contained therein but it also set up special as well as affirmative
defenses. Hence, she argues, there is no room for a judgment on the pleadings. 12

The petitioner's contention is untenable. Her defense that the original agreement of the parties
had already been novated and disregarded after the issuance of the checks mentioned in
private respondent's complaint and after the private respondent had executed and signed the
Affidavit and Memorandum of Quitclaim, 13 is a sham and false defense and did not tender an
issue that would require a hearing for the reception of evidence. It is a mere device or scheme
to avoid or delay the immediate payment of petitioner's obligation to the private respondent
under the Affidavit and Memorandum of Quitclaim. Thus, as aptly observed by the court a quo-

A novation under the rules of civil law, where the term has been introduced into
the modern nomenclature of our common law jurisprudence, was a mode of
extinguishing one obligation by another; the substitution, not of a new paper or
rate but of a new obligation in lieu of an old one, the effect of which was to pay,
dissolve or otherwise discharge it (ibid).

It will be noted that the original contract (Annex "A") was not actually altered or
changed. The defendant, as a matter of fact, and for all intents and purposes,
had issued checks in payment of her obligation as prestated by the contract but
asserts that the same were issued only to guarantee but not as a payment in
itself, but it is not denying the fact that one of the five checks were cashed, thus
making the balance of only P32,000.00, that is without mention the liquidated
damage of P20,000.00. The ambivalent attitude of the defendant could only
mean or should be construed as a mere pretense to avoid an immediate demand
for the payment of her obligation.

In order that an obligation may be extinguished by another which substitutes the

same, it is imperative that it be so declared in unequivocal terms, or that the old
 and new obligation be on every point incompatible with each other (Art. 1292-
New Civil Code.)

In the present case the contract referred to did not expressly extinguish the
obligation existing in said affidavit and memorandum of quitclaim. On the
contrary, it expressly recognized the obligation between the parties and
expressly provide a method by which the same shall be extinguished, which
method was expressly provided in the aforementioned contract, by means of
periodical payments.

For all the foregoing considerations, the court believes, and so holds, that the
aforementioned contract has never been altered, changed or novated. For what
the herein defendant actually did is not absolutely incompatible with the
prestation of the existing contract but rather she expressly ratified such
obligation through the issuance of postdated checks, some of which were cashed
and others not for reason of insufficiency of funds or 'account closed. 14

Besides, the private respondent's cause of action is based on the "Affidavit and Memorandum
of Quitclaim," the substance of which was properly alleged in the complaint, and copies
thereof, were attached thereto. Section 8, Rule 8 of the Rules of Court provides that when an
action is founded upon a written instrument, copied in or attached to the corresponding
pleading, the genuineness and due execution of the instrument shall be deemed admitted
unless the adverse party, under oath, specifically denies them. In the present case, the
petitioner is deemed to have admitted the genuineness and due execution of the "Affidavit and
Memorandum of Quitclaim" for her failure to deny the same under oath; consequently, the
judgment on the pleadings rendered by respondent Judge was proper. 15

In her memorandum, 16 petitioner further contends that the private respondent's reply should
not have been treated as a motion for a judgment on the pleadings for non-compliance with
the three-day notice rule and for lack of a notice of hearing. 17

Again, the petitioner's contention is devoid of merit. Section 1, Rule 19 of the Rules of Court
which states that where an answer "admits the material allegations of the adverse party's
pleading, the court may, on motion of that party, direct judgment on such pleading", does not
state whether the motion for judgment on the pleading may be considered ex-parte or only
after notice of hearing served on the adverse party. A motion for a judgment on the pleadings,
where the answer admits all the material averments of the complaint, as in the present case, is
one that may be considered ex-parte because, upon the particular facts thus presented and laid
before the court, the plaintiff is entitled to the judgment. 18 Besides, the purpose of the law in
requiring the filing of motions, at least three (3) days before the hearing thereof, is to avoid
suprises upon the opposite party and to give the latter time to study and meet the arguments
of the movant. 19 This purpose has been sufficiently complied with, the petitioner having filed
an opposition to the said motion.
At any rate, the questioned judgment on the pleadings is a final judgment; hence, it is
appealable. Petitioner therefore could have appealed from the aforesaid judgment, but she did
not. Having failed to appeal from the said judgment, she may not avail of the writ of certiorari
to offset the adverse effect of her omission. 20

WHEREFORE, the petition is this case is DISMISSED with costs against petitioner.

SO ORDERED.

G.R. No. L-40948 June 29, 1976

GREGORIO ESTRADA, petitioner,

vs.
HONORABLE FRANCISCO CONSOLACION, Judge of the Court of First Instance of Davao, Br. II,
CORAZON RAMIREZ UY, and LUCIO GALAURA, respondents.

Certiorari with prohibition to annul the Order, dated May 20, 1975, of the Court of First instance
of Davao in Civil Case No. 8739, which "decreed that defendants have judgment summarily
against the plaintiff for such amount as may be found due them for damages, to be ascertained
by trial upon that issue alone on June 9,1975 at 8:30 a.m.".

On February 14, 1975, petitioner Gregorio Estrada filed a complaint for damages against private
respondents Corazon Ramirez Uy and Lucio Galaura, owner and driver, respectively, of an AC
jeep, with Plate No. ZE-501, for breach of their obligations as a common carrier, in view of the
death of his wife while she was a passenger of the vehicle.

The complaint alleges that: on January 1, 1975, plaintiff's wife, Simeona Estrada, was a passenger
of the AC Jeep, with Plate No. ZE-501, owned and operated by defendant Corazon Ramirez Uy
and driven by defendant Lucio Galaura, while said jeep was cruising along Claro M. Recto Avenue,
heading towards the direction of the Jones Circle, Davao City the driver (Lucio Galaura) "without
regard for the safety of plaintiff's wife who was among his passengers and without taking the
necessary precaution" in accordance with the situation, bumped a Ford pick-up truck; as a
consequence of the incident, plaintiff's wife sustained a fractured left humerus, fat (pulmonary)
embolism and shock due to respiratory failure; she was brought to the San Pedro Hospital where
she died.

Plaintiff further alleged in his complaint that defendant Corazon Ramirez Uy, as owner of the AC
jeep and a common carrier, in violation of the contract of carriage, failed to safely conduct the
plaintiff's wife to her place of destination by reason on her "failure to exercise even the diligence
of a good father of a family" and her "gross and evident bad faith, malevolence and wantonnes"
in discharging her obligation as a common carrier. Plaintiff, therefore, asked for actual damages,
indemnification for the death of his wife, moral damages and attorney's fees in specified
amounts.

Defendants, in their answer, while admitting that plaintiff's wife was a passenger and that she
died as a result of the accident, alleged that the proximate and only cause of the accident was
the negligence of third persons (the drivers, Danilo Ang and Rodolfo D. Endino, of a Toyota pick-
up truck bearing Plate No. T-RU-221, and a Ford pick-up truck with Plate No. TRU-420,
respectively) over whom defendant Corazon Ramirez Uy had no supervision and control, and who
were then driving their respective vehicles at a fast rate of speed and from different directions,
as a result of which said vehicles collided, and because of that collision the. Ford pick-up truck
was deviated from its lane and hit the jeep of defendants. Defendants likewise set up a
counterclaim for damages by reason of plaintiff's institution of the clearly unfounded suit against
them.

ON April 16, 1975, respondents filed a motion for summary judgment against plaintiff on the
ground that there is no genuine issue as to any material fact in the case except as to the amount
of damages defendants are seeking from plaintiff by way of counterclaim. In support of their
motion for summary judgment, certain annexes to the answer were incorporated therein, as
follows:

(a) The sketch of the accident made by Traffic Investigator J. S. Formeloza of the
Davao City Police Department, marked as Annex "3" of the defendants' answer.

(b) Said investigator's affidavit detailing his findings upon investigation stating that
the pick-up with plate No. T-RU-420 upon reaching the intersection of Recto and
Bonifacio Streets collided with the pick-up with plate No. T-RU-221, and that upon
impact, the latter pick-up collided with the jeep driven by Lucio Galaura that was
coming from the opposite direction. (Annex "4" of defendants' answer)

(c) The respective sworn statements of the drivers of the two pick-ups (Danilo Ang
and Rodolfo Endino) taken by the Traffic Division of the Davao City Police
Department after the accident, marked as Annexes "5" and of the defendants'
answer wherein each driver respectively claimed that he exercised due care but
attributed to the other negligence as the cause of the collision; and

(d) The sworn statement of defendant driver (Lucio Galaura) of said A. C. Jeep,
likewise taken by the Traffic Division of the Davao City Police Department detailing
what he did in order to prevent or minimize damages to his vehicle and his
passengers, marked as Annex "7" of defendants' answer.

By means of the foregoing annexes, respondents sought to prove that they were relieved of any
liability to petitioner inasmuch as the accident which caused the death of petitioner's wife
"resulted from the negligence of third persons over whom defendants had no supervision or
control, namely, the drivers of the two pick-up trucks which collided at the intersection of C. M.
Recto Ave. and Bonifacio St., Davao City, as a result of which collision, one of them was deviated
from course to the lane where defendants' AC- Jeep was then travelling, where it also collided
with the latter."

Petitioner opposed the above motion, relying heavily on the presumption that in case of death
of the passenger, the common carrier is presumed "to have been at fault or to have acted
negligently," 1 unless the carrier proves that he has observed extraordinary diligence with due
regard to all the circumstances, which movants failed to do.

Notwithstanding the opposition filed by the plaintiffs, respondent Judge issued the order of May
20, 1975, stating, in part, as follows:

The Court has considered at length and thoroughly the pleadings in the action, the
affidavits and other pertinent annexes (Annexes 1 to 6), of the movants, and has
found that there is no genuine issue as to material fact and no controversial
question of fact to be submitted to the trial court, and has concluded that
defendants are entitled to a judgment as a matter of law except as to the amount
of damages recoverable.

It is therefore ordered and decreed that defendants have judgment summarily

against the plaintiff for such amount as may be found due them for damages, to
be ascertained by trial upon that issue alone on June 9, 1975 at 8:30 a.m.

A motion for reconsideration of the afore-quoted Order, on the ground that said Order, having
failed to state clearly and distinctly the facts and the law on which it is based, violated the
Constitution and the Rules of Court, was denied "for lack of merit" on June 9, 1975, hence the
present petition for certiorari with prohibition.

Pursuant to Section 2, Rule 34, of the Revised Rules, "A party against whom a claim, counterclaim,
or crossclaim is asserted or a declaratory relief is sought may, at any time, move with supporting
affidavits for a summary judgment in his favor as to all or any part thereof." 2 The defendant who
believes that he is entitled to a judgment either on the pleadings or on the basis of extrinsic facts
established by affidavits or depositions may move for summary judgment in his favor. 3 In other
words, when the moving party is a defending party, his pleadings, depositions or affidavits must
show that his defenses or denials are sufficient to defeat the claimant's claim. The affidavit
submitted by the party moving for summary judgment shall be by persons having personal
knowledge of the facts; it shall recite all material facts and show that there is no defense to the
cause of action or that the cause of action has no merits. 4 This motion shall be served on the
adverse party at least ten (10) days prior to the time specified in the hearing. The adverse party
may also, prior to said date, serve opposing affidavits. The opposing papers, including pleadings,
depositions, and affidavits must establish a genuine issue of fact in order to defeat a motion for
summary judgment. After hearing, the motion for summary judgment shall be granted if, on the
basis of all the papers and proofs submitted, the cause of action or defense shall be established
sufficiently to warrant the court as a matter of law in directing judgment in favor of any party.
The motion shall be denied if any party shall show facts sufficient to require a trial of any issue of
fact other than an issue as to the amount or extent of the damages. 5 This Summary Judgment
or Accelerated Judgment is a device for weeding out sham claims or defenses at an early stage
of the litigation, thereby avoiding the expense and loss of time involved in a trial. 6 The very
object is "to separate what is formal or pretended in denial or averment from what is genuine
and substantial, so that only the latter may subject a suitor to the burden of a trial. 7 In
conducting the hearing, the purpose of the judge is not to try the issue, but merely to determine
whether there is a meritorious issue to be tried. Where a motion is made for summary judgment,
such motion is not directed to the pleadings and deals only with the question of whether there
are triable issues of facts and where such issues exist summary judgment must be denied. 8
Summary judgment should not be granted where it fairly appears that there is a triable issue to
be tried. 9 "The Court should not pass, on questions of credibility or weight of evidence, and that
the summary judgment procedure 'should not be perverted to the trial of disputed questions of
fact upon affidavits". 10 The test, therefore, of a motion for summary judgment iswhether the
pleadings, affidavits and exhibits in support of the motions are sufficient to overcome the
opposing papers and to justify a finding as a matter of law that there is no defense to the action
or the claim is clearly meritorious. 11

In proceedings for summary judgment, the burden of proof is upon the plaintiff to prove the
cause of action and to show that the defense is interposed solely for the purpose of delay. 12
After plaintiff's burden has been discharged, defendant has the burden to show facts sufficient
to entitle him to defend. 13

Under the contract of carriage, private respondents assumed the express obligation to transport
the wife of petitioner to her destination safely and to observe extra ordinary diligence with due
regard for all the circumstances, and that any injury suffered by her in the course thereof, is
immediately attributable to the negligence of the carrier. 14 To overcome such presumption, it
must be shown that the carrier had observed the required extraordinary diligence, 15 which
means that the carrier must show the "utmost diligence of very cautious persons * * * as far as
human care and foresight can provide", 16 or that the accident was caused by a fortuitous event.
17 In order to constitute a caso fortuito that would exempt a person from responsibility, it is
necessary that (1) the event must be independent of the human will; (2) the occurrence must
render it impossible for the obligor to fulfill his obligation in a normal manner; and (3) the obligor
must be free of a concurrent or contributory fault or negligence. 18 It was precisely because of
the legal presumption that once a passenger in the course of travel is injured or does not reach
his destination safely, the carrier and the driver are presumed to be at fault, that private
respondents submitted affidavits to prove that the accident which resulted in the death of
petitioner's wife was due to the fault or negligence of the drivers of the two pickup trucks over
whom the carrier had no supervision or control. Having, therefore, shown prima facie that the
accident was due to a caso fortuito and that the driver of the respondent was free of concurrent
or contributory fault or negligence, it was incumbent upon petitioner to rebut such proof. Having
failed to do so, the defense of the carrier that the proximate cause of the accident was a caso
fourtuito remains unrebuted. We are not unmindful that the issue as to whether a carrier used
such reasonable precautions to avoid the accident as would ordinarily be used by careful, prudent
persons under like circumstances is a question essentially one of fact and, therefore, ordinarily
such issue must be decided at the trial. 19 But where, as in the case at bar, petitioner has not
submitted opposing affidavits to controvert private respondents' evidence that the driver of the
passenger jeepney was free of contributory fault as he stopped the jeepney to avoid the accident,
but in spite of such precaution the accident occurred, respondent Judge did not, therefore, act
arbitrarily in declaring in his Order of May 20, 1975, that "there is no genuine issue to any material
fact and no controversial question of fact to be submitted to the trial court." This was, however,
a mere interlocutory order directing that a hearing be conducted for the purpose of ascertaining
the amount or the assessment of damages which may be adjudged in favor of the prevailing
party. It is a determination of the court of a preliminary point or directing some steps in the
proceedings, but not a disposition of the merits. 20 "Upon the rendering of the assessment, the
Court shall direct the entry forthwith of the appropriate summary judgment." 21

In the absence of any findings of fact and conclusions of law, the aforesaid order of respondent
Judge cannot be considered a judgment. It has been held that "a trial court in granting summary
judgment should file findings of fact and conclusion of law or a memorandum opinion so as to
disclose grounds upon which the trial court reached its determination." 22 In this jurisdiction,
pursuant to Section 9 of Article X of the Constitution and the procedural rules, all judgments
determining the merits of cases should state clearly and distinctly the facts and the law on which
it is based. 23

There being no judgment, the present petition is, therefore, premature. Certainly, petitioner
could move for the setting aside of the aforesaid Order of May 20, 1975 by the presentation of
opposing affidavits showing that, other than the issue as to the amount or extent of damages,
there is a genuine issue of fact on the carrier's liability.

ACCORDINGLY, the petition for certiorari with prohibition is dismissed, without special
pronouncement as to costs.

G.R. No. 133801 June 27, 2000

LEY CONSTRUCTION AND DEVELOPMENT CORPORATION, SPOUSES MANUEL

T. LEY AND JANET T. LEY, petitioners,
vs.
UNION BANK OF THE PHILIPPINES, respondent.

MENDOZA, J.:

This is a petition for review of the decision1 of the Court of Appeals setting aside two orders of
the Regional Trial Court, Branch 134, Makati City, dated February 27, 1997 and June 6, 1997,
which respectively denied respondent's motion for execution and its motion for reconsideration
thereof.

The facts are as follows:

On October 7, 1991, respondent Union Bank of the Philippines filed a suit for collection of a sum
of money against petitioners Ley Construction and Development Corporation and spouses
Manuel T. Ley and Janet T. Ley. The case was filed in the Regional Trial Court, Makati City and
was afterward assigned to Judge Ignacio Capulong of Branch 134. Petitioner Ley Construction,
which is principally owned by the Ley spouses, had defaulted in the payment of three promissory
notes with a total value of P18,833,674.86, computed together with the stipulated interest as of
May 31, 1991. Respondent attached to its complaint the promissory notes, numbered 91-076,
91-476 and 91-477, which represent petitioners' withdrawals from its credit line with
respondent.1wphi1.nt

In their Answer, petitioners admitted having incurred the amount claimed by respondent but
averred that, after a series of meetings with the bank's officers, they were given additional time
to pay their obligation. They added that the three promissory notes annexed to the complaint
were in fact renewals of three previous promissory notes, numbered 90-671, 90-877 and 90-918,
which Ley Construction had originally issued.2 Petitioners did not, however, attach such
promissory notes nor any affidavit of the bank officials who gave them the alleged extension.

In the meantime, respondent filed a separate case (Civil Case No. 91-2829) against the Ley
spouses, James Co, Jr. and David Co for the rescission of the sale of real property. The case was
initially assigned to Branch 52 of the Regional Trial Court, Makati City, but on motion of
petitioners, was consolidated with the collection suit (Civil Case No. 91-2737) pending before
Branch 134.

On June 24, 1992, respondent filed a Motion for Partial Summary Judgment with respect to the
collection suit on the ground that the defense raised by petitioners in their Answer, i.e., that they
were granted a grace period within which to settle their obligation, was a sham and unsupported
by any corroborative evidence.3 Petitioners opposed the motion, insisting that their Answer
raised a genuine issue requiring a trial on the merits.4

On August 13, 1992, Judge Capulong issued an order denying respondent's motion.5 A copy of
the order was sent by registered mail to respondent's then counsel of record, Atty. Niceforo S.
Agaton, and was received by the addressee on August 25, 1992, as shown in the registry return
card.

In the meantime, a new presiding judge, Hon. Raul T. Arcangel, was appointed to Branch 134 to
replace Judge Capulong who had been assigned to Caloocan City. On January 26, 1996,
respondent, through its new counsel, Atty. Cynthia Prat, filed an ex-parte Motion to Resolve
Motion For Partial Summary Judgment of June 24, 1992. On March 14, 1996, Judge Arcangel
granted respondent's motion and ordered petitioners to pay, in solidum, the principal obligation
of P18,833,674.86, computed as of May 31, 1991, plus the agreed interest and penalty charges
that would accrue until the account was fully paid, and the amount equivalent to 10 percent
(10%) of said sum as attorney's fees and the costs.6 Petitioners twice moved for a
reconsideration, but on both occasions, Judge Arcangel denied reconsideration.

On September 13, 1996, respondent moved for the execution of Judge Arcangel's order which
had become final. By this time, Judge Capulong had been assigned back to Branch 134. On
February 27, 1997, he issued an order denying respondent's motion, citing as basis thereof the
earlier August 13, 1992 order he had issued denying the motion for summary judgment. On June
6, 1997, he denied respondent's motion for reconsideration.

Respondent filed a petition for certiorari in the Court of Appeals which, in its decision of February
11, 1998, set aside the trial court's orders denying respondent's motion for execution and
respondent's motion for reconsideration. Hence this petition.

The sole question be to resolved is whether the Court of Appeals erred in ruling that Judge
Capulong acted without or in excess of jurisdiction in denying respondents' motion for execution
of the summary judgment rendered by Judge Arcangel. We hold that the appellate court did not
err and that it correctly held that the trial court acted without jurisdiction in denying the
execution of the order of Judge Arcangel directing petitioners to pay the claim of respondent.

First. Petitioner contends that since counsel for respondent received a copy of Judge Capulong's
August 13, 1992 order denying respondent's motion for summary judgment but failed to take
action against it, the same became final and should, therefore, govern the subsequent
proceedings of the court.7

The contention is untenable. Judge Capulong's order of August 13, 1992 denying respondent's
motion for summary judgment is an interlocutory order which did not finally dispose of the case.8
An interlocutory order is always under the control of the court and may be modified or rescinded
upon sufficient grounds shown at any time before final judgment.9 This prescinds from a court's
inherent power to control its process and orders so as to make them conformable to law and
justice. 10 It is immaterial that the judge who exercises such powers is different from the one
who issued the rescinded or amended order since the former is not legally prevented from
revoking the interlocutory order of another judge in the very litigation subsequently assigned to
him for judicial action. 11 The only limitation is that the judge can not act with grave abuse of
discretion, or that no injustice results thereby. 12

On this premise, there is no question that, as presiding judge of Branch 143 assigned to replace
Judge Capulong, Judge Arcangel had authority to review prior interlocutory orders of the court
as he did when, in response to a new motion by respondent, he granted its motion for summary
judgment even though the motion had previously been denied by Judge Capulong. By granting
respondent's motion for summary judgment, Judge Arcangel in effect reconsidered the earlier
order of Judge Capulong denying such motion. Given the power of Judge Arcangel to reconsider
the previous order of Judge Capulong upon sufficient grounds shown at anytime before final
judgment, petitioners' lengthy discussion on whether respondent's counsel received a copy of
Judge Capulong's earlier order becomes immaterial.

Petitioners do not contend that by granting respondent's motion for summary judgment, Judge
Arcangel acted in excess or without jurisdiction or with grave abuse of discretion, or that they
suffered injustice as a result thereof. What they contend is that Judge Arcangel's resolution is
nevertheless void because it was allegedly issued by mistake.1avvphi1 In support of their
contention, they point out that Judge Arcangel did not even mention and expressly set aside in
his resolution the earlier August 13, 1992 order of Judge Capulong. 1

This contention is likewise without merit. There is no question that as presiding judge of Branch
134, Judge Arcangel had jurisdiction over the parties and of the subject matter of the case. Thus,
he did not only have authority to review prior interlocutory orders of the court, but he also had
the power to entertain and resolve motions presented before said court, as he did with respect
to respondent's motion to resolve its motion for summary judgment. Consequently, even
assuming that Judge Arcangel was unaware of the earlier order issued by Judge Capulong, this
fact does not render his subsequent resolution void. 14 In any case, if petitioners had seriously
doubted the validity of Judge Arcangel's decision, they should have questioned this in a petition
for certiorari. But this they failed to do. In none of their motions for reconsideration to Judge
Arcangel's resolution did petitioners invoke the August 13, 1992 order of Judge Capulong denying
respondent's motion for summary judgment. Neither did they appeal nor file a petition for
certiorari to question said ruling. Instead, they allowed the decision to become final and
executory. It is now too late for them to claim that the judgment is, after all, a nullity.

On the contrary, it was Judge Capulong, as found by the Court of Appeals, who acted without or
in excess of jurisdiction when he refused to order the execution of Judge Arcangel's summary
judgment on the merits. For indeed, a trial court cannot apart from reconsidering its decision,
15 granting new trial 16 or allowing a relief from judgment 17 review much less set aside a
decision on the merits. Such power pertains exclusively to the appellate
courts. 18 Judge Arcangel's resolution of March 14, 1996 granted all the reliefs prayed for by
respondent in its collection suit, i.e., it ordered petitioners to pay their indebtedness to
respondent together with penalties, interests and attorney's fees. It, thus, disposed of all the
issues and constitutes a judgment on the merits which finally determined the rights of the parties
upon the issues submitted by specifically granting the remedy sought by respondent. 19 Now,
once a judgment attains finality, it becomes the ministerial duty of the trial court to order its
execution. 20 The fact that this collection case is consolidated with Civil Case No. 91-2737 for
rescission of sale of real property is not a ground for staying the execution of the judgment
therein as the latter is an entirely different action which have no bearing on the other.

Second. The Court of Appeals correctly considered the case proper for summary judgment. The
pertinent provisions of Rule 35 state:

Sec. 1. Summary judgment for claimant. A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory relief may, at any time after the
 pleading in answer thereto has been served, move with supporting affidavits, depositions
or admissions for a summary judgment in his favor upon all or any part thereof.

Sec. 3. Motion and proceedings thereon. The motion shall be served at least ten (10)
days before the time specified for the hearing. The adverse party may serve opposing
affidavits, depositions or admissions at least three (3) days before the hearing. After the
hearing, the judgment sought shall be rendered forthwith if the pleadings, supporting
affidavits, depositions, and admission on file show that, except as to the amount of
damages, there is no genuine issue as to any material fact and that the moving party is
entitled to a judgment as a matter of law.

Under these provisions, a summary judgment is proper where, upon a motion filed after the
issues had been joined and on the basis of the pleadings and papers filed, the court finds that
there is no genuine issue as to any material fact except as to the amount of damages. A genuine
issue has been defined as an issue of fact which calls for the presentation of evidence, as
distinguished from an issue which is sham, fictitious, contrived and patently unsubstantial so as
not to constitute a genuine issue for trial. 21 In this case, the Court of Appeals succinctly stated
why there was no genuine issue raised: 22

[Petitioners] admitted their indebtedness . . . to [respondent]. The only defense

interposed by [them] was that [they], in a series of conferences made in the office of
[respondent] Corporation, were granted extensions of time within which to pay and/or
settle said accountabilities. However, [petitioners] failed to indicate and specify in their
Answer to the complaint who the officers were [through] whom [respondent] granted
extensions, when said extensions were granted and the periods of said extensions, if at
all they were granted. [Petitioners] did not even bother to submit any affidavits of . . .
[the] officers of [r]espondent Corporation alluded to by [them] in their Answer to enable
to the [trial court] to ascertain whether or not the defense of [petitioners] was, at least,
plausible and not contrived or sham. It would have been facile for [petitioners] to . . .
submit affidavits of said officers narrating particulars of the defense [raised] by [them],
specifically indicating the names and/or identities of the officers whom [they] allegedly
conferred. . . .

It is noteworthy that, in their present petition, petitioners are silent on the question of whether
summary judgment is proper in this case.

Admittedly, there is nothing in the records which indicates that Judge Arcangel conducted a
hearing before he resolved respondent's motion for summary judgment. Nevertheless, as
explained in Carcon Development Corporation v. Court of Appeals, 2 in proceedings for summary
judgment, the court is merely expected to act chiefly on the basis of what is in the records of the
case and that the hearing contemplated in the Rules is not de riguer as its purpose is merely to
determine whether the issues are genuine or not, and not to receive evidence on the issues set
up in the pleadings. 24
In the case at bar, petitioners' Answer to respondent's Complaint was not verified and was not
supported by any affidavit to support its allegation that petitioners were given an extension of
time to effect payment of their obligation. In view of the fact that they admitted having incurred
the obligation which is the basis of the complaint, a hearing would have served no pertinent
purpose. The records already provide sufficient basis for the court to resolve respondent's
motion. Thus, we find that even if the trial court did not conduct a hearing, this fact would not
affect the validity of the summary judgment rendered by Judge Arcangel.

Neither does the fact that respondent's motion to resolve its motion for summary judgment was
filed ex parte affect the validity of Judge Arcangel's resolution. The requirement in Rule 35, 3
that the opposing party be furnished a copy of the motion 10 days before the time specified for
the hearing applies to the motion for summary judgment itself and not to the motion to resolve
such motion. Notably, petitioners had, as far back as July 10, 1992, already filed its opposition to
respondent's motion for summary judgment. They twice sought reconsideration of the resolution
or summary judgment, albeit denied by the court on both occasions. Thus, it could not be said
that they were deprived of the opportunity to question the motion.

Third. It is noteworthy that although petitioners admit their liability to respondent, this case has
been pending in the courts for nine years (the complaint was filed on October 7, 1991). Even on
the ground of justice and speedy disposition alone, any further delay in the disposition of the
case, which would result were the judgment set aside, should be avoided.1wphi1.nt

WHEREFORE, the petition is DENIED.