G.R. No. 195592 September 5, 2012
00
MAGDIWANG REALTY CORPORATION, RENATO P. DRAGON and
ESPERANZA TOLENTINO, Petitioners, vs.
THE MANILA BANKING CORPORATION, substituted by FIRST
SOVEREIGN ASSET MANAGEMENT (SPV-AMC), INC., Respondent.
REYES, J.:
This resolves the petition for review on certiorari filed under Rule 45
of the Rules of Court which questions. the Decision1 dated October
11, 201 0 and Resolution2 dated January 31, 2011 of the Court of
Appeals (CA) in CA-G .R. CV No. 90098 entitled The Manila Banking
Corporation, substituted by First Sovereign Asset Management, Inc.,
Plaintiff-Appellee, v. Magdiwang Realty Corporation, Renata P.
Dragon and Esperanza Tolentino, Defendants-Appellants.
The Factual Antecedents
The case stems from a complaint3 for sum of money filed on April
18, 2000 before the Regional Trial Court (RTC), Makati City by herein
respondent, The Manila Banking Corporation (TMBC), against herein
petitioners, Magdiwang Realty Corporation (Magdiwang), Renato P.
Dragon (Dragon) and Esperanza Tolentino (Tolentino), after said
petitioners allegedly defaulted in the payment of their debts under
the five promissory notes4 they executed in favor of TMBC, which
contained the following terms:
Maturity Date Amount
Promissory Note No. 4953December 27, 1976 Php500,000.00
Promissory Note No. 10045 March 27, 1982 Php500,000.
Promissory Note No. 10046 March 27, 1982 Php500,000.00
Promissory Note No. 10047 March 27, 1982 Php500,000.00
Promissory Note No. 10048 March 27, 1982 Php500,000.00
All promissory notes included stipulations on the payment of
interest and additional charges in case of default by the debtors.
Despite several demands for payment made by TMBC, the
petitioners allegedly failed to heed to the bank’s demands,
prompting the filing of the complaint for sum of money. The case
was docketed as Civil Case No. 00-511 and raffled to Branch 148 of
the RTC of Makati City.
Instead of filing a responsive pleading with the trial court, the
petitioners filed on October 12, 2000, which was notably beyond
the fifteen (15)-day period allowed for the filing of a responsive
pleading, a Motion for Leave to Admit Attached Motion to Dismiss5
and a Motion to Dismiss,6 raising therein the issues of novation,
lack of cause of action against individuals Dragon and Tolentino, and
the impossibility of the novated contract due to a subsequent act of
the Congress. The motions were opposed by the respondent TMBC,
via its Opposition7 which likewise asked that the petitioners be
declared in default for their failure to file their responsive pleading
within the period allowed under the law.
Acting on these incidents, the RTC issued an Order8 on July 5, 2001
declaring the petitioners in default given the following findings:
The record shows that as per Officer’s Return dated 19 September
2000, summons were served on even date by way of substituted
service. Summons were received by a certain LINDA G. MANLIMOS,
a person of sufficient age and discretion then working/residing at
the address indicated in the Complaint at No. 15 Tamarind St.,
Forbes Park, Makati City.
Consequently, in accordance with the Rules, defendants should
have filed an Answer or Motion to Dismiss or any responsive
pleading for that matter within the reglementary period, which is
fifteen (15) days from receipt of Summons and a copy of the
complaint with attached annexes. Accordingly, defendants should
have filed their responsive pleading on October 2, 2000 but no
pleading was filed on the aforesaid date, not even a Motion for
Extension of Time. Instead, defendant’s Motion to Dismiss found its
way into the court only on the 13th day of October, clearly beyond
the period contemplated by the Rules. A perusal of the Motion for
Leave to Admit the Motion to Dismiss filed by defendants reveals
that the case, as claimed by the counsel for defendants, was just
referred to the counsel only on October 10, and further insinuated
that the Motion to Dismiss was only filed on the said date in view of
the complicated factual and legal issues involved. While this Court
appreciates the efforts and tenacity shown by defendants’ counsel
for having prepared a [lengthy] pleading for his clients in so short a
time, the Court will have to rule that the Motion to Dismiss was
nonetheless filed out of time, hence, there is sufficient basis to
declare defendants in default. x x x.9
The decretal portion of the Order then reads:
WHEREFORE, premises considered, defendants’ Motion to Dismiss
is hereby treated as a pleading which has not been filed at all and
cannot be ruled upon by the Court anymore for the same has been
filed out of time. Plaintiff’s prayer to declare defendants in default is
hereby GRANTED, and as a consequence, defendants are hereby
declared in DEFAULT.
SO ORDERED.10
The petitioners’ motion for reconsideration was denied by the trial
court in its Order11 dated August 2, 2005. The ex parte
presentation of evidence by the bank before the trial court’s
Presiding Judge was scheduled in the same Order.
Unsatisfied with the RTC orders, the petitioners filed with the CA a
petition for certiorari, which was docketed as CA-G.R. SP No. 91820.
In a Decision12 dated December 2, 2006, the CA affirmed the RTC
orders after ruling that the trial court did not commit grave abuse of
discretion when it declared herein petitioners in default. The denial
of petitioners’ motion for reconsideration prompted the filing of a
petition for review on certiorari before this Court, which, through its
Resolutions dated March 5, 200813 and June 25, 2008,14 denied
the petition for lack of merit.
In the meantime, TMBC’s presentation of evidence ex parte
proceeded before Presiding Judge Oscar B. Pimentel of the RTC of
Makati City.
The Ruling of the RTC
On May 20, 2007, the RTC rendered its Decision15 in favor of TMBC
and against herein petitioners. The decision’s dispositive portion
reads:
WHEREFORE, premises considered, judgment is hereby rendered in
favor of the plaintiff as against:
1. Defendant Magdiwang Realty Corporation, requiring said
defendant to pay plaintiff the sum of P 500,000.00 as indicated in
Promissory Note No. 4953;
2. Requiring defendant Magdiwang Realty Corporation to pay the
plaintiff interest to the principal loan at the rate of 14% per annum
from 27 December 1976 until the amount is paid;
3. Requiring the defendant Magdiwang Realty Corporation to pay
plaintiff penalty charges of 4% per annum from December 27, 1976
until the whole amount is paid; and
4. Requiring defendant Magdiwang Realty Corporation to pay
plaintiff attorney’s fees equivalent to 10% of the total outstanding
obligation.
Further, judgment is rendered in favor of plaintiff and against
defendants Magdiwang Realty Corporation, Renato Dragon and
Esperanza Tolentino ordering said defendants to jointly and
severally pay the plaintiff the following:
1. The principal amount of P 500,000.00 as indicated in Promissory
Note No. 10045;
2. To pay the principal amount of P 500,000.00 as indicated in
Promissory Note No. 10046;
3. To pay the principal amount of P 500,000.00 as indicated in
Promissory Note No. 10047;
4. To pay the principal amount of P 500,000.00 as indicated in
Promissory Note No. 10048;
5. To pay interest in the principal loan at the rate of sixteen (16%)
percent per annum as stipulated in PN Nos. 10045, 10046, 10047
and 10048 from March 27, 1981 until the whole amount is paid;
6. To pay penalty at the rate of one percent a month (1%) on the
principal amount [of] loan plus unpaid interest at the rate of 16%
per annum in PN Nos. 10045, 10046, 10047 and 10048 starting from
March 27, 1981 until the whole amount is paid; and
7. To pay 10% of the total amount due and outstanding under PN
Nos. 10045, 10046, 10047 and 10048 as attorney’s fees.
Costs against the defendants.
SO ORDERED.16
The petitioners’ motion for reconsideration was denied by the trial
court via its Order17 dated November 5, 2007. Feeling aggrieved,
the petitioners appealed to the CA, imputing error on the part of
the trial court in: (1) not declaring that TMBC’s cause of action was
already barred by the statute of limitations; (2) declaring herein
petitioners liable to pay TMBC despite the alleged novation of the
subject obligations; (3) declaring TMBC entitled to its claims despite
the alleged failure of the bank to substantiate its claims; (4)
declaring TMBC entitled to attorney’s fees and litigation expenses;
and (5) declaring herein petitioners in default.
While appeal was pending before the appellate court, TMBC and
First Sovereign Asset Management (SPV-AMC), Inc. (FSAMI) filed a
Joint Motion for Substitution, asking that TMBC be substituted by
FSAMI after the former executed in favor of the latter a Deed of
Assignment covering all of its rights, title and interest over the loans
subject of the case.
The Ruling of the CA
On October 11, 2010, the CA rendered its Decision18 dismissing the
petitioners’ appeal. The decision’s dispositive portion reads:
WHEREFORE, in view of the foregoing premises, the appeal filed in
this case is hereby DENIED and, consequently, DISMISSED. The
assailed Decision dated May 20, 2007 and Order dated November 5,
2007 of the Regional Trial Court, Branch 148, in Makati City in Civil
Case No. 00-511 are hereby AFFIRMED.
SO ORDERED.19
On the issue of prescription, the CA cited the rule that the
prescriptive period is interrupted in any of the following instances:
(1) when an action is filed before the court; (2) when there is a
written extrajudicial demand by the creditors; and (3) when there is
any written acknowledgment of the debt by the debtor. The
appellate court held:
As shown by the evidence, we arrived at the conclusion that the
prescriptive period was legally interrupted on September 19, 1984
when the defendants-appellants, through several letters, proposed
for the restructuring of their loans until the plaintiff-appellee sent
its final demand letter on September 10, 1999. Indeed, the period
during which the defendants-appellants were seeking
reconsideration for the non-settlement of their loans and proposing
payment schemes of the same should not be reckoned against it.
When prescription is interrupted, all the benefits acquired so far
from the lapse of time cease and, when prescription starts anew, it
will be entirely a new one. This concept should not be equated with
suspension where the past period is included in the computation
being added to the period after prescription is resumed.
Consequently, when the plaintiff-appellee sent its final demand
letter to the defendants appellants, thus, foreclosing all possibilities
of reaching a settlement of the loans which could be favorable to
both parties, the period of ten years within which to enforce the
five promissory notes under Article 1142 of the New Civil Code
began to run again and, therefore, the action filed on April 18, 2000
to compel the defendants-appellants to pay their obligations under
the promissory notes had not prescribed. The written
communications of the defendants-appellants proposing for the
restructuring of their loans and the repayment scheme are, in our
view, synonymous to an express acknowledgment of the obligation
and had the effect of interrupting the prescription. x x x.20 (Citation
omitted)
The defense of novation was also rejected by the CA, citing the
absence of two requirements for a valid novation, namely: (1) the
clear and express release of the original debtor from the obligation
upon the assumption by the new debtor of the obligation; and (2)
the consent of the creditor thereto.
A motion for reconsideration filed by the petitioners was denied by
the CA in its Resolution21 dated January 31, 2011. Hence, the
present petition for review on certiorari.
The Present Petition
The petitioners present the following grounds to support their
petition:
1. THE COURT OF APPEALS ERRED WHEN IT HELD THAT THE
PRESCRIPTIVE PERIOD WAS LEGALLY INTERRUPTED ON 19
SEPTEMBER 1984 WHEN PETITIONERS, THROUGH SEVERAL LETTERS,
PROPOSED FOR THE RESTRUCTURING OF THEIR LOANS UNTIL THE
RESPONDENT SENT ITS FINAL DEMAND LETTER ON 10 SEPTEMBER
1999.
2. THE COURT OF APPEALS ERRED WHEN IT HELD THAT THE
PRINCIPLE OF NOVATION BY THE SUBSTITUTION OF DEBTORS WAS
ERRONEOUSLY EMPLOYED BY THE PETITIONERS TO EXTRICATE
THEMSELVES FROM THEIR OBLIGATION TO RESPONDENT.
3. THE COURT OF APPEALS ERRED WHEN IT AFFIRMED THE TRIAL
COURT’S RULING HOLDING THAT PETITIONERS ARE LIABLE FOR
ATTORNEY’S FEES.22
This Court’s Ruling
The petition is dismissible.
At the outset, we explain that based on the issues being raised by
the petitioners, together with the arguments and the evidence
being invoked in support thereof, we hold that the petition involves
questions of fact that are beyond the ambit of a petition for review
on certiorari. Section 1, Rule 45 of the Rules of Court, as amended,
reads:
Sec. 1. Filing of petition with Supreme Court. – A party desiring to
appeal by certiorari from a judgment, final order or resolution of the
Court of Appeals, the Sandiganbayan, the Court of Tax Appeals, the
Regional Trial Court or other courts, whenever authorized by law,
may file with the Supreme Court a verified petition for review on
certiorari. The petition may include an application for a writ of
preliminary injunction or other provisional remedies and shall raise
only questions of law, which must be distinctly set forth. The
petitioner may seek the same provisional remedies by verified
motion filed in the same action or proceeding at any time during its
pendency. (Emphasis ours)
Section 1, Rule 45 then categorically states that a petition for review
on certiorari shall raise only questions of law, which must be
distinctly set forth. A question of law arises when there is doubt as
to what the law is on a certain state of facts, while there is a
question of fact when the doubt arises as to the truth or falsity of
the alleged facts. For a question to be one of law, the same must
not involve an examination of the probative value of the evidence
presented by the litigants or any of them. The resolution of the
issue must rest solely on what the law provides on the given set of
circumstances. Once it is clear that the issue invites a review of the
evidence presented, the question posed is one of fact.23
On the first issue of prescription, the petitioners argue that there
was no written extrajudicial demand by the creditor TMBC that
could have validly interrupted the ten (10)-year prescriptive
period.24 They claim, among other things, that the bank failed to
prove that it sent the demand letter dated September 10, 1999 to
the petitioners, and that it was actually received by said petitioners.
The petitioners also question the several other letters supposedly
exchanged between the parties. These contentions are now being
raised even after the trial court that admitted the evidence of the
respondent has categorically declared in its Decision dated May 20,
2007 the fact of the respondent’s service, and the petitioners’
receipt, of the demands.25 In its Order dated November 5, 2007,
the trial court had also cited the several other correspondences
exchanged between the parties, including the letters of November
14, 1984, March 24, 1987, February 14, 1990 and September 10,
1999 that negated the defenses of prescription and novation.26
On appeal, these factual findings were even affirmed by the CA,
which again cited the several letters exchanged between the parties
in relation to the subject debts, and which correspondences were
declared to have effectively interrupted the running of the
prescriptive period to initiate the action for sum of money against
the petitioners.
Applying the guidelines laid down by jurisprudence on the criteria
for distinguishing a question of law from a question of fact, it is clear
that the petitioners are now asking this Court to determine a
question of fact, as their arguments delve on the truth or falsity of
the trial and appellate courts’ factual findings, the existence and
authenticity of the respondent’s documentary evidence, as well as
the truth or falsity of the TMBC’s narration of facts in their
complaint and the testimonial evidence presented before the
Presiding Judge in support of said allegations.
Similarly, the issue of the alleged novation involves a question of
fact, as it necessarily requires a factual determination on the
existence of the following requisites of novation: (1) there must be a
previous valid obligation; (2) the parties concerned must agree to a
new contract; (3) the old contract must be extinguished; and (4)
there must be a valid new contract.27 Needless to say, the
respondent’s entitlement to attorney’s fees also depends upon the
questioned factual findings.
The settled rule is that conclusions and findings of fact of the trial
court are entitled to great weight on appeal and should not be
disturbed unless for strong and cogent reasons because the trial
court is in a better position to examine real evidence, as well as
observe the demeanor of the witnesses while testifying in the case.
The fact that the CA adopted the findings of fact of the trial court
makes the same binding upon this Court.28 The Supreme Court is
not a trier of facts. It is not our function to review, examine and
evaluate or weigh the probative value of the evidence presented. A
question of fact would arise in such event.29 Although
jurisprudence admits of several exceptions to the foregoing rules,
the present case does not fall under any of them.
Even granting that the issues being raised by the petitioners may
still be validly entertained by this Court through the instant petition
for review on certiorari, we hold that their arguments and defenses
are bound to fail for lack of merit.
Significantly, the petitioners failed to file their answer to TMBC’s
complaint within the reglementary period allowed under the Rules
of Court. The validity of the trial court’s declaration of their default
is a settled matter, following the denial of the petitions previously
brought by the petitioners before the CA and this Court questioning
it. As correctly stated by the CA in the Decision dated October 11,
2010:
At the outset, it behooves this Court to accentuate that the Order of
the trial court declaring the defendants-appellants in default for
their failure to file their responsive pleading to the complaint within
the period prescribed under Section 3 of Rule 9 of the Revised Rules
of Court had been declared final and beyond review already by the
Supreme Court through its Resolution dated March 5, 2008 and
June 25, 2008. Judicial decisions of the Supreme Court, as the final
arbiter of any justiciable controversy, assume the same authority as
the law itself. Thus, the issue raised by the defendants-appellants
questioning the wisdom of the trial court’s decision in declaring
them in default is now rendered moot and academic by the
aforecited Supreme Court resolutions.30
The petitioners’ default by their failure to file their answer led to
certain consequences. Where defendants before a trial court are
declared in default, they thereby lose their right to object to the
reception of the plaintiff’s evidence establishing his cause of
action.31 This is akin to a failure to, despite due notice, attend in
court hearings for the presentation of the complainant’s evidence,
which absence would amount to the waiver of such defendant’s
right to object to the evidence presented during such hearing, and
to cross-examine the witnesses presented therein.32
Taking into consideration the bank’s allegations in its complaint and
the totality of the evidence presented in support thereof, coupled
with the said circumstance that the petitioners, by their own
inaction, failed to make their timely objection or opposition to the
evidence, both documentary and testimonial, presented by TMBC to
support its case, we find no cogent reason to reverse the trial and
appellate courts’ findings. We stress that in civil cases, the party
having the burden of proof must establish his case only by a
preponderance of evidence. Preponderance of evidence is the
weight, credit, and value of the aggregate evidence on either side
and is usually considered to be synonymous with the term "greater
weight of evidence" or "greater weight of the credible evidence."
Preponderance of evidence is a phrase which, in the last analysis,
means probability to truth. It is evidence which is more convincing
to the court as worthier of belief than that which is offered in
opposition thereto.33
We agree with the trial and appellate courts, for as the records
bear, that the ten (10)-year prescriptive period to file an action
based on the subject promissory notes was interrupted by the
several letters exchanged between the parties. This is in conformity
with the second and third circumstances under Article 1155 of the
New Civil Code (NCC) which provides that the prescription of actions
is interrupted when: (1) they are filed before the court; (2) there is a
written extrajudicial demand by the creditors; and (3) there is any
written acknowledgment of the debt by the debtor. In TMBC’s
complaint against the petitioners, the bank sufficiently made the
allegations on its service and the petitioners’ receipt of the subject
demand letters, even attaching thereto copies thereof for the trial
court’s consideration. Thus, the complaint states in part:
23. However, despite numerous demands by plaintiff for the
payment of the loan obligations obtained by defendants and
evidenced by the five Promissory Notes, defendants MAGDIWANG,
Dragon and Tolentino failed to settle their obligations with plaintiff.
Copies of plaintiff’s demand letters with respect to the five
Promissory Notes (PN Nos. 4953, 10045, 10046, 10047, 10048) duly
received by defendants, as well as defendants letters in reply to the
demand letters and requesting for restructuring of loan or extension
of time to pay the same are herewith attached as Annexes "F" to
"O", respectively, and made integral parts of this Complaint.34
During the bank’s presentation of evidence ex parte, the testimony
of witness Mr. Megdonio Isanan was also offered to further support
the claim on the demand made by the bank upon the petitioners. In
the absence of a timely objection from the petitioners on these
claims, no error can be imputed on the part of the trial court, and
even the appellate court, in taking due consideration thereof.
As against the bare denial belatedly made by the petitioners of their
receipt of the written extrajudicial demands made by TMBC,
especially of the letter of September 10, 1999 which was the
written demand sent closest in time to the institution of the civil
case, the appreciation of evidence and pronouncements of the trial
court in its Order dated November 5, 2007 shall stand, to wit:
In the 14 November 1984 Letter of Kalilid Wood Industries, Inc.,
through Mr. Uriel Balboa, the counter-offer of the plaintiff was
acknowledged but Kalilid, while manifesting that the counter offer is
acceptable, made some reservations and other conditions which
likewise constitute as counter offers. Hence, no meeting of the
minds happened regarding the restructuring of the loan. Likewise,
based on this letter, the debt was also acknowledged. Another
letter dated 24 March 1987 was issued and a repayment plan has
been proposed by the Magdiwang Realty Corporation. There was
also a correspondence dated February 14, 1990 from defendant
Renato P. Dragon’s Office regarding the obligation. While a demand
letter dated September 1999 was given by the plaintiff to the
defendants. Hence, from all indications, the prescription of the
obligation does not set in.35
In addition to these, we take note that letters prior to the letter of
September 1999 also form part of the case records, and the
existence of said letters were not directly denied by the petitioners.
The following letters that form part of the complaint and included in
TMBC’s formal offer of exhibits were correctly claimed by the
respondents in their Comment36 as also containing the petitioners’
acknowledgment of their debts and TMBC’s demand to its debtors:
(1) Exhibit "M-29", which is a letter dated January 4, 1995
requesting for an updated Statement of Account of the corporations
owned by petitioner Dragon, including the account of petitioner
Magdiwang; and (2) Exhibit "M-30", which is the letter dated
January 12, 1995 from the Office of the Statutory Receiver of TMBC
and providing the Statements of Account requested for in the letter
of January 4, 1995. Significantly, the petitioners failed to adequately
negate the authority of the first letter’s signatory to act for and on
behalf of the petitioners, the reasonable conclusion being that said
signatory and the company it represented were designated by the
petitioners, as the debtors in the loans therein indicated, to deal
with the TMBC.
On the issue of novation, no evidence was presented to adequately
establish that such novation ensued.1âwphi1 What the letters being
invoked by the petitioners as supposedly establishing novation only
indicate that efforts on a repayment scheme were exerted by the
parties. However, nowhere in the records is it indicated that such
novation ever materialized.
Regarding the award of attorney’s fees, the applicable provision is
Article 2208(2) of the NCC which allows the grant thereof when the
defendants’ act or omission compelled the plaintiff to litigate or to
incur expenses to protect its interest. Considering the circumstances
that led to the filing of the complaint in court, and the clear refusal
of the petitioners to satisfy their existing debt to the bank despite
the long period of time and the accommodations granted to it by
the respondent to enable them to satisfy their obligations, we agree
that the respondent was compelled by the petitioners' acts to
litigate for the protection of the bank's interests, making the award
of attorney's fees proper.

WHEREFORE, premises considered, the instant petition is hereby

DENIED. The Decision dated October 11, 2010 and Resolution dated
January 31, 2011 of the Court of Appeals in CA-G.R. CV No. 90098
are hereby AFFIRMED.

SO ORDERED
A.M. No. MTJ-11-1779 July 16, 2012
MURPHY CHU/ATGAS TRADERS and MARINELLE P. CHU,
Complainants, vs.
HON. MARIO B. CAPELLAN, Assisting Judge, Metropolitan Trial
Court (MeTC), Branch 40, Quezon City, Respondent.
BRION, J.:
In a verified complaint dated September 14, 2009 filed before the
Office of the Court Administrator (OCA), the spouses Murphy and
Marinelle P. Chu and ATGAS Traders (complainants) charged Judge
Mario B. Capellan (respondent), Assisting Judge of the Metropolitan
Trial Court (MeTC), Branch 40, Quezon City, with Gross Ignorance of
the Law, Partiality and Grave Abuse of Decision.1
BACKGROUND FACTS
On March 22, 2007, spouses Ofelia and Rafael Angangco filed
before the MeTC, Branch 40, Quezon City, an unlawful detainer
complaint, with application for the issuance of a writ of preliminary
mandatory injunction (PMI) against the complainants.2 The
complainants filed their answer with compulsory counterclaim on
March 30, 2007.
The respondent heard the application for the issuance of a writ of
PMI on April 11, 2007,4 November 20, 2007,5 December 11, 2007,6
February 12, 2008,7 and April 22, 2008.8 He later set the unlawful
detainer case for preliminary conference on June 24, 2008, but
rescheduled it to August 26, 2008 due to the still pending
application for a writ of PMI.9
In an order dated October 7, 2008,10 the respondent denied the
application for a writ of PMI and set the case for preliminary
conference on November 25, 2008. On this date, the respondent
referred the case for mediation,11 so the preliminary conference
was again reset to December 9, 2008.12
On November 21, 2008, the spouses Angangco filed their pre-trial
brief.13 The complainants, on the other hand, did not file their pre-
trial brief.
During the December 9, 2008 preliminary conference, the
complainants moved for the consignation of several checks as
payment for the amounts they owed to the spouses Angangco, for
which the respondent set clarificatory hearings on January 23 and
30, 2009.14 The preliminary conference finally took place on
February 3, 2009.15
During the February 3, 2009 preliminary conference, the
complainants moved to dismiss the unlawful detainer complaint on
the grounds that: (1) the spouses Angangco failed to comply with
the required barangay conciliation and to implead the other co-
owners of the property subject of the unlawful detainer case; and
(2) the MeTC had no jurisdiction to issue a writ of PMI. On the other
hand, the spouses Angangco orally moved to declare the
complainants in default for their failure to file a pre-trial brief.16
On February 26, 2009, the respondent issued the assailed joint
order17 which submitted the unlawful detainer case for decision
based on the facts alleged in the unlawful detainer complaint.
The complainants moved for reconsideration, but the respondent
denied their motion.18 The complainants thereupon filed the
present administrative complaint against the respondent. They also
filed a motion asking for the respondent’s inhibition from the
unlawful detainer case.19 The respondent eventually inhibited
himself from the case in an order dated September 8, 2009.20
COMPLAINT AGAINST THE RESPONDENT
The complainants allege that the respondent had no basis to
declare them in default because no notice of preliminary
conference was issued to them.21 They argue that the issuance of a
notice of preliminary conference is mandatory and its non-issuance
may be punishable under Section 2, Rule 11 of Supreme Court
Administrative Memorandum (A.M.) No. 01-2-04, which provides:
SEC. 2. Disciplinary sanctions on the judge. – The presiding judge
may, upon a verified complaint filed with the Office of the Court
Administrator, be subject to disciplinary action under any of the
following cases:
(2) Failure to issue a pre-trial order in the form prescribed in these
Rules.
Also, the complainants allege that the respondent erred in
entertaining the oral motion to declare the defendants in default; in
incurring delay in setting the unlawful detainer case for preliminary
conference; and in not dismissing the unlawful detainer complaint
for the spouses Angangco’s failure to personally appear during the
mediation proceedings. The complainants also allege that these acts
of the respondent clearly showed the latter’s bias and partiality
towards the plaintiffs.
THE RESPONDENT’S ANSWER
In his answer with counter-charge,22 the respondent argues that he
did not commit any violation for failing to issue a notice of
preliminary conference because there is nothing in the 1991
Revised Rules on Summary Procedure or the Rules of Court,
particularly in Section 6, Rule 18, that requires him to issue a notice
of preliminary conference, in addition to his order setting the case
for preliminary conference. He claims that, despite the lack of
notice, both parties were duly informed of the preliminary
conference on November 25, 2008 through his order dated October
7, 2008; thus, to issue a notice at that time would only be
superfluous.
The respondent adds that the complainants’ citation of Supreme
Court A.M. No. 01-2-04 was misplaced; that the said memorandum
applies exclusively to cases involving intra-corporate controversies,
not to ejectment cases, and subjects a judge to disciplinary action
for his failure to issue a pre-trial order, not for failure to issue a
notice of preliminary conference.
On the complainants’ other allegations, the respondent argues that
he could not be faulted for not dismissing the unlawful detainer
complaint due to the alleged failure of the spouses Angangco to
personally appear at the mediation proceedings because he could
not have known of their non-appearance during that time, as he
was informed of what happened during the mediation proceedings
only after their conclusion. He also states that it would be unfair to
allow the complainants, who actively participated in the mediation
proceedings, to now impugn their dealings with and the authority of
the lawyer who attended the mediation in behalf of the spouses
Angangco.
Ultimately, the respondent prayed for the dismissal of the
administrative complaint, as it is nothing but an insidious attempt
by the complainants to harass him and to conceal their negligence
in not filing a pre-trial brief.
THE OCA’S RECOMMENDATION
In a report dated November 11, 2010,23 the OCA finds no merit in
some of the complainants’ allegations.
First, the OCA remains unconvinced that the complainants’ rights to
due process were violated because of the lack of notice of
preliminary conference; that the complainants could not feign
ignorance of the scheduled date of preliminary conference and their
need to file a pre-trial brief since they received copies of the
respondent’s order dated October 7, 2008 and of the other party’s
pre-trial brief before the scheduled preliminary conference on
November 25, 2008; and that the complainants were also present in
court during the times the preliminary conference was repeatedly
reset to later dates. Considering these circumstances, the OCA
opines that the complainants were merely finding an excuse to
justify their negligence as they were afforded enough opportunity
to submit their pre-trial brief, but they still failed to do so.
Second, the OCA agrees with the respondent that Supreme Court
A.M. No. 01-2-04 is inapplicable to the subject unlawful detainer
case as it pertains to the Proposed Interim Rules of Procedure
Governing Intra-Corporate Controversies under Republic Act (R.A.)
No. 8799.
Third, the OCA belies the complainants’ allegation that the
respondent entertained the spouses Angangco’s oral motion to
declare defendants in default. While the complainants were correct
that a motion to declare defendants in default is a prohibited
pleading under the 1991 Revised Rules on Summary Procedure; the
respondent, in issuing the assailed joint order dated February 26,
2009, did not rule on the basis of the oral motion but relied on
Section 8, Rule 70, in relation to Section 6, Rule 18 of the Rules of
Court, which provides:
Sec. 8. Preliminary conference; appearance of parties. – Not later
than thirty (30) days after the last answer is filed, a preliminary
conference shall be held. The provisions of Rule 18 on pre-trial shall
be applicable to the preliminary conference unless inconsistent with
the provisions of this Rule.
The failure of the plaintiff to appear in the preliminary conference
shall be cause for the dismissal of the complaint. The defendant
who appears in the absence of the plaintiff shall be entitled to
judgment on his counterclaim in accordance with the next
preceding section. All cross- claims shall be dismissed.
If a sole defendant shall fail to appear, the plaintiff shall likewise be
entitled to judgment in accordance with the next preceding section.
This procedure shall not apply where one of two or more
defendants sued under a common cause of action who had pleaded
a common defense shall appear at the preliminary conference.
Sec. 6. Pre-trial brief. - The parties shall file with the court and serve
on the adverse party, in such manner as shall ensure their receipt
thereof at least three (3) days before the date of the pre-trial, their
respective pre-trial briefs which shall contain, among others:
Failure to file the pre-trial brief shall have the same effect as failure
to appear at the pre-trial.
And even assuming that the respondent erred in issuing the assailed
joint order, the OCA opines that errors committed in the exercise of
adjudicative functions cannot be corrected through administrative
proceedings where judicial remedies are available; that there must
be a final declaration by the appellate court that the assailed order
is manifestly erroneous or impelled by ill-will, malice or other
similar motive.
The OCA, however, finds merit in the complainants’ allegation that
the respondent incurred delay in setting the case for preliminary
conference. The OCA finds that the respondent violated Section 7 of
the 1991 Revised Rules on Summary Procedure, which provides that
a preliminary conference shall be held not later than thirty (30) days
after the last answer is filed, and Rule 1.02, Canon 1 of the Code of
Judicial Conduct, which mandates that judges should administer
justice without delay. It opines that the respondent should have
facilitated the prompt disposition of the subject case and refrained
from postponing and resetting the case for preliminary conference
several times.
The OCA, then, recommends that the present administrative
complaint be redocketed as a regular administrative case and that
the respondent be reprimanded, considering that this was his first
offense, with a stern warning that a repetition of the same or
similar act shall be dealt with more severely.
In a Resolution dated January 19, 2011,25 we ordered the
administrative complaint against the respondent redocketed as a
regular administrative case and required the parties to manifest,
within ten (10) days from notice, whether they were willing to
submit the case for decision on the basis of the pleadings or records
filed and submitted.
Both the complainants and the respondent expressed their
willingness to submit the case for decision in their Manifestations
dated March 22, 201126 and August 29, 2011,27 respectively.
THE COURT’S RULING
We find the OCA’s findings to be well taken.
As the OCA recommends, we find no merit in the complainants’
allegations that the respondent committed gross ignorance of the
law, partiality and grave abuse of discretion in not issuing a notice
for the holding of the November 25, 2008 preliminary conference,
and in entertaining the spouses Angangco’s oral motion to declare
the defendants in default.
We find no violation committed by the respondent in not issuing a
notice for the November 25, 2008 preliminary conference because
his order dated October 7, 2008 already constituted sufficient
notice to the parties of the holding of such preliminary conference.
In the dispositive portion of said order, the respondent clearly set
the case for preliminary conference at exactly one o’clock in the
afternoon of November 25, 2008. And both parties in the subject
unlawful detainer case received copies of the respondent’s order.
Therefore, the complainants have no reason to argue that they
were denied their rights to due process in this instance.
On the complainants’ other contention, a close reading of the
assailed joint order dated February 26, 2009 would show that the
respondent did not actually entertain the oral motion to declare the
defendants in default filed by the spouses Angangco, to wit:
On the plaintiffs’ motion to declare defendants as in default, record
reveals that defendants have not filed any pre-trial brief with this
Court despite the directive setting the case for preliminary
conference and as mandated in the Notice of Pre-Trial Conference.
While a motion to declare defendants in default is prohibited in
unlawful detainer cases, (Section 3, Rule 70) the failure of the
defendants to file a pre-trial brief within the 3-day period before the
preliminary conference necessitates a judgment based on the facts
alleged in the Complaint. (Section 7, Rule 70[,] in relation to Section
8, Rule 70 and Section 6, Rule 18 of the Rules of Court) Thus, this
Court resolves and treats the oral motion of the plaintiffs to declare
defendants as in default as a Motion to render judgment and that
the instant case is now submitted for decision on the basis of the
facts alleged in the Complaint.28 (emphasis supplied)
As the OCA correctly observed, the respondent’s order in submitting
the unlawful detainer case for decision was not based on the
spouses Angangco’s oral motion, but was the inevitable result of the
complainants’ failure to file their pre-trial brief. Thus, contrary to
the complainants’ allegation, the respondent did not commit the
mistake of entertaining in the unlawful detainer case a motion to
declare the defendants in default, which is a prohibited pleading in
ejectment cases under Section 19, Rule IV of the 1991 Revised Rules
on Summary Procedure.29
We, likewise, dispel the complainants’ assertions that Supreme
Court A.M. No. 01-2-04 may be suppletorily applied to the subject
unlawful detainer case and that the failure of the spouses Angangco
to personally appear during the mediation proceedings should have
caused the dismissal of the unlawful detainer complaint.
Section 2, Rule 11 of Supreme Court A.M. No. 01-2-0430 cannot be
suppletorily applied to the subject unlawful detainer case. The cited
administrative memorandum specifically refers to the rules
governing intra-corporate controversies under R.A. No. 8799 and
applies only to the cases defined under Section 1, Rule 131 thereof,
which does not include ejectment cases. Also, there is nothing in
Supreme Court A.M. No. 01-2-04 that permits its suppletory
application to ejectment cases.
Regarding the complainants’ other assertion, we find that the
failure of the spouses Angangco to personally appear at the
mediation proceedings was not a ground to dismiss the subject
unlawful detainer complaint. In Senarlo v. Paderanga,32 we held
that the personal non-appearance of a party at mediation may be
excused when the representative, such as the party’s counsel, has
been duly authorized to enter into possible amicable settlement or
to submit to alternative modes of dispute resolution.33 In the
present case, the spouses Angangco were fully represented by their
lawyer during the mediation proceedings.
We now proceed to the administrative liability of the respondent.
The Revised Rules on Summary Procedure was promulgated to
achieve an expeditious and inexpensive determination of the cases
that it covers.34 In the present case, the respondent failed to abide
by this purpose in the way that he handled and acted on the subject
unlawful detainer case.
A review of the relevant background facts shows that the unlawful
detainer case against the complainants was filed on March 22, 2007
and the complainants filed their answer thereto on March 30, 2007.
Under Section 7 of the 1991 Revised Rules on Summary Procedure,
a preliminary conference should be held not later than thirty (30)
days after the last answer is filed.
The respondent set the case for preliminary conference only on
June 24, 2008, i.e., at a time way beyond the required thirty (30)-
day period.
Another of the respondent’s procedural lapses relates to the
frequent resetting of the date of the preliminary
conference.1âwphi1 The preliminary conference scheduled for June
24, 2008 was reset, for various reasons, to August 26, 2008,
November 25, 2008 and December 9, 2008, and was finally
conducted on February 3, 2009, or almost two (2) years after the
complainants filed their answer. Clearly, the respondent failed to
exert his authority in expediting the proceedings of the unlawful
detainer case. Sound practice requires a judge to remain, at all
times, in full control of the proceedings in his court and to adopt a
firm policy against unnecessary postponements.35
In numerous occasions, we admonished judges to be prompt in the
performance of their solemn duty as dispensers of justice because
undue delay in the administration of justice erodes the people’s
faith in the judicial system.36 Delay not only reinforces the belief of
the people that the wheels of justice in this country grind slowly; it
also invites suspicion, however unfair, of ulterior motives on the
part of the judge. Judges should always be mindful of their duty to
render justice within the periods prescribed by law.
Sections 9 and 11, Rule 140 of the Rules of Court, as amended by
A.M. No. 01-8-10-SC,38 classifies undue delay in rendering a
decision or order as a less serious charge sanctioned by either (a)
suspension from office without salary and other benefits for not less
than one (1) or more than three (3) months, or (b) a fine of more
than Ten Thousand Pesos (P10,000.00) but not to exceed Twenty
Thousand Pesos (P20,000.00).
Considering that the respondent had been previously adjudged
guilty of the same offense,39 we impose upon him a maximum fine
of Twenty Thousand Pesos (P20,000.00). Again, we remind him that
a repetition of the same or similar offense will warrant the
imposition of a more severe penalty.
WHEREFORE, we find Judge Mario B. Capellan, Assisting Judge,
Metropolitan Trial Court, Branch 40, Quezon City, GUILTY of under
delay in rendering a decision or order and hereby impose upon him
a FINE of Twenty Thousand Pesos (P20,000.00).
SO ORDERED.
 G.R. No. 168053 : September 21, 2011
REBECCA T. ARQUERO, Petitioner, v. COURT OF APPEALS
FACTS:
Congress approved Republic Act (RA) No. 6765, wherein several
were converted into national schools and integrated with the
Palawan National School (PNS) in the City of Puerto Princesa,
Province of Palawan, as branches thereof. The law also provides
that the Palawan Integrated National Schools (PINS) shall be headed
by a Vocational School Superintendent (VSS) who shall be chosen
and appointed by the Secretary of the Department of Education,
Culture, and Sports (now the DepEd).
However, no VSS was appointed. Instead, then DECS Region IV
Office designated then PNS Principal Eugenio J. dela Cuesta in a
concurrent capacity as Officer-in-Charge (OIC) of the PINS. After the
retirement of Dela Cuesta, petitioner took over as Secondary School
Principal of the PNS.
Director Rexs successor, Pedro B. Trinidad placed all satellite schools
of the PINS under the direct supervision of the Schools Division
Superintendent for Palawan. This directive was later approved by
the DepEd. Petitioner was instructed to turn over the administration
and supervision of the PINS branches or units. In another
memorandum, Schools Division Superintendent Portia Gesilva was
designated as OIC of the PINS. These events prompted different
parties to institute various actions restraining the enforcement of
the DepEd orders.
Dr. Giron withdrew the designation of petitioner as OIC of the PINS,
enjoining her from submitting to the Regional Office all
appointments and personnel movement involving the PNS and the
satellite schools. Petitioner appealed to the Civil Service
Commission assailing the withdrawal of her designation as OIC of
the PINS. Petitioner filed a Motion for Reconsideration and/or
Clarification before the Office of the DepEd Secretary as to the
designation of private respondent.
Dr. Giron filed a formal charge against petitioner who continued to
defy the orders issued by the Regional Office relative to the exercise
of her functions as OIC of the PINS despite the designation of
private respondent as such. The administrative complaint charged
petitioner with grave misconduct, gross insubordination and
conduct prejudicial to the best interest of the service.
Petitioner filed the Petition for Quo Warranto with Prayer for
Issuance of Temporary Restraining Order and/or Injunctive Writ
before the RTC of Palawan against public and private respondents.
The Petitioner argued that the designation of private respondent
deprived her of her right to exercise her function and perform her
duties in violation of her right to security of tenure.
RTC rendered a Judgment by Default, declaring petitioner Rebecca
T. Arquero as the lawful Principal and Head of the Palawan
Integrated National High School who is lawfully entitled to manage
the operation and finances of the school subject to existing laws.
On appeal, the CA reversed and set aside the RTC decision.
ISSUE: Whether or not petitioner is the lawful Principal and Head of
the Palawan Integrated National High School who is lawfully entitled
to manage the operation and finances of the school subject to
existing laws?
HELD: Court of Appeals decision is sustained.
CONSTITUTIONAL LAW: public officers; appointments
As aptly observed by the CA, the law created two positions the VSS
and the principal or secondary school head teacher of each of the
units or branches of the integrated school. The legislators clearly
intended that the integrated schools shall be headed by a
superintendent. Admittedly, petitioner did not possess the
qualifications to hold the position and she was merely designated
by the DepEd as the OIC of the PINS. At that time, she held in a
concurrent capacity, the permanent position of principal of the PNS.
Having been appointed as OIC without the necessary qualifications,
petitioner held the position only in a temporary capacity. The
purpose of an acting or temporary appointment is to prevent a
hiatus in the discharge of official functions by authorizing a person
to discharge those functions pending the selection of a permanent
or another appointee. An acting appointee accepts the position on
the condition that he shall surrender the office once he is called to
do so by the appointing authority. Therefore, his term of office is
not fixed, but endures at the pleasure of the appointing authority.
The essence of an acting appointment is its temporariness and its
consequent revocability at any time by the appointing authority.
Thus, under RA 6765, petitioner can only insist on her security of
tenure as principal of the PNS but not as OIC of the integrated
school. Upon the withdrawal of her designation, her right to the
contested position ceased to exist.
DENIED.
Sun Insurance v Asuncion
G.R. Nos. 79937-38 February 13, 1989
Facts: Petitioner Sun Insurance (or SIOL) files a complaint for the
annulment of a decision on the consignation of fire insurance policy.
Subsequently, the Private Respondent (PR) files a complaint for the
refund of premiums and the issuance of a writ of preliminary
attachment in a civil case against SIOL. In addition, PR also claims for
damages, attorney’s fees, litigation costs, etc., however, the prayer
did not state the amount of damages sought although from the
body of the complaint it can be inferred to be in amount of P 50
million. Hence, PR originally paid only PhP 210.00 in docket fees.The
complaint underwent a number of amendments to make way for
subsequent re-assessments of the amount of damages sought as
well as the corresponding docket fees. The respondent
demonstrated his willingness to abide by the rules by paying the
additional docket fees as required.
Issue: Did the Court acquire jurisdiction over the case even if private
respondent did not pay the correct or sufficient docket fees?
YES.
It was held that it is not simply the filing of the complaint or
appropriate initiatory pleading, but the payment of the prescribed
docket fee, that vests a trial court with jurisdiction over the subject
matter or nature of the action. Where the filing of the initiatory
pleading is not accompanied by payment of the docket fee, the
court may allow payment of the fee within a reasonable time but in
no case beyond the applicable prescriptive or reglamentary period.
Same rule goes for permissive counterclaims, third party claims and
similar pleadings.
In herein case, obviously, there was the intent on the part of PR to
defraud the government of the docket fee due not only in the filing
of the original complaint but also in the filing of the second
amended complaint. However, a more liberal interpretation of the
rules is called for considering that, unlike in Manchester, the private
respondent demonstrated his willingness to abide by the rules by
paying the additional docket fees as required.
Where a trial court acquires jurisdiction in like manner, but
subsequently, the judgment awards a claim not specified in the
pleading, or if specified the same has been left for determination by
the court, the additional filing fee shall constitute a lien on the
judgment. It shall be the responsibility of the Clerk of Court or his
duly authorized deputy to enforce said lien and assess and collect
the additional fee.
G .R. No. 193857 : November 28, 2012
MA. MERCEDES L. BARBA, Petitioner, v. LICEO DE CAGAYAN
UNIVERSITY, Respondent.
FACTS: Petitioner Dr. Ma. Mercedes L. Barba (Barba) was the Dean
of the College of Physical Therapy of respondent Liceo de Cagayan
University, Inc. (Liceo).
When Barba started working for Liceo, she was chosen as a scholar.
Her scholarship contract provides that after the duration of her
study, she shall serve the school in whatever position the school
desires for a period of not less than ten (10) years. After her
scholarship, she was appointed as the Dean of the College of
Physical Therapy.
In the school year 2003 to 2004, the College of Physical Therapy
suffered a dramatic decline in the number of enrollees from a total
of 1,121 students in the school year 1995 to 1996 to only 29
students in the first semester of school year 2003 to 2004.
Due to the low number of enrollees, Liceo decided to freeze the
operation of the College of Physical Therapy indefinitely. Thereafter,
the College of Physical Therapy ceased operations and Barba went
on leave without pay starting. Subsequently, Liceo sent Barba a
letter dated April 27, 2005 instructing Barba to return to work on
and report to Ma. Chona Palomares, the Acting Dean of the College
of Nursing, to receive her teaching load and assignment as a full-
time faculty member in that department. Barba did not report to
Palomares and requested for the processing of her separation
benefits in view of the closure of the College of Physical Therapy.
Another letter was sent to Barba but the latter still refused to return
to work. Hence, Liceo sent Barba a notice terminating her services
on the ground of abandonment.
Barba filed a complaint before the Labor Arbiter for illegal dismissal,
payment of separation pay and retirement benefits against Liceo.
She alleged that her transfer to the College of Nursing as a faculty
member is a demotion amounting to constructive dismissal.
The LA ruled that Barba was not constructively dismissed. The NLRC
reversed the LA. Liceo went to the CA and filed a Supplemental
Petition raising for the first time the issue of lack of jurisdiction of
the Labor Arbiter and the NLRC over the case. Liceo claimed that a
College Dean is a corporate officer under its by-laws and Barba was
a corporate officer of Liceo since her appointment was approved by
the board of directors. Thus, Liceo maintained that the jurisdiction
over the case is with the regular courts and not with the labor
tribunals.
In its original Decision, the CA reversed the NLRC resolutions. The
CA did not find merit in Liceo’s assertion in its Supplemental Petition
that the position of Barba as College Dean was a corporate office.
The CA further found that no constructive dismissal occurred nor
has Barba abandoned her work.
Unsatisfied, both Barba and Liceo sought reconsideration of the CA
decision. The CA reversed its earlier ruling. Hence, Barba filed the
present petition.
ISSUES:
1. Whether or not the labor tribunals have jurisdiction over Barba’s
complaint for constructive dismissal?
2. Whether or not Barba was constructively dismissed?
HELD: Petition is granted.
MERCANTILE LAW: corporate officers
FIRST ISSUE: Labor tribunals have jurisdiction over Barba’s
complaint.
Corporate officers are elected or appointed by the directors or
stockholders, and are those who are given that character either by
the Corporation Code or by the corporation’s by-laws. Section 25 of
the Corporation Code enumerates corporate officers as the
president, the secretary, the treasurer and such other officers as
may be provided for in the by-laws. In Matling Industrial and
Commercial Corporation v. Coros, the phrase “such other officers as
may be provided for in the by-laws” has been clarified, thus:
“Conformably with Section 25, a position must be expressly
mentioned in the By-Laws in order to be considered as a corporate
office. The rest of the corporate officers could be considered only as
employees of subordinate officials.”
However, an assiduous perusal of these documents does not
convince us that Barba occupies a corporate office position in the
university. In Liceo’s by-laws, there are four officers specifically
mentioned, namely, a president, a vice president, a secretary and a
treasurer. In addition, it is provided that there shall be other
appointive officials, a College Director and heads of departments
whose appointments, compensations, powers and duties shall be
determined by the board of directors. It is worthy to note that a
College Dean is not among the corporate officers mentioned in
Liceo’s by-laws. Barba was not directly elected nor appointed by the
board of directors to any corporate office but her appointment was
merely approved by the board together with the other academic
deans of respondent university in accordance with the procedure
prescribed in Liceo’s Administrative Manual. Though the board of
directors may create appointive positions other than the positions
of corporate officers, the persons occupying such positions cannot
be deemed as corporate officers as contemplated by Section 25 of
the Corporation Code. Thus, petitioner, being an employee of
respondent, her complaint for illegal/constructive dismissal against
respondent was properly within the jurisdiction of the Labor Arbiter
and the NLRC.
LABOR LAW: constructive dismissal
On the issue of constructive dismissal, we agree with the Labor
Arbiter and the appellate court’s earlier ruling that Barba was not
constructively dismissed. Barba’s letter of appointment specifically
appointed her as Dean of the College of Physical Therapy and
Doctor-in- Charge of the Rehabilitation Clinic “for a period of three
years effective July 1, 2002 unless sooner revoked for valid cause or
causes.” Evidently, Barba’s appointment as College Dean was for a
fixed term, subject to reappointment and revocation or termination
for a valid cause. When Liceo decided to close its College of Physical
Therapy due to drastic decrease in enrollees, Barba’s appointment
as its College Dean was validly revoked and her subsequent
assignment to teach in the College of Nursing was justified as it is
still related to her scholarship studies in Physical Therapy.
Particularly, for a transfer not to be considered a constructive
dismissal, the employer must be able to show that such transfer is
not unreasonable, inconvenient, or prejudicial to the employee.
Petition for review on certiorari is GRANTED.
Ma. Teresa Biaco vs Philippine Countryside Rural Bank
Ernesto Biaco, husband of Teresa Biaco, acquired several loans from
Philippine Countryside Rural Bank (PCRB) from 1996 to 1998. To
secure the loans, he mortgaged certain property in favor of the
bank. He was able to pay loans from 1996 to 1997 but he defaulted
in loans obtained in 1998 which amounted to more than a million
pesos.
Eventually, PCRB filed a complaint for foreclosure against the
spouses Biaco. Summons were issued by the trial judge. The Sherriff
served the summons to Ernesto at the latter’s office. No summons
was served to Teresa.
Ernesto did not file a responsive pleading (so did Teresa because
she was not aware sans the summons being served her). The case
was heard ex-parte and the spouses were ordered to satisfy the
debt and failure to do so will authorize the Sheriff to auction the
mortgaged the property.
Eventually, the mortgaged property was auctioned for P150k which
is not sufficient to cover the P1 M+ debt. Upon motion by PCRB, a
notice of levy was issued against the personal properties of Teresa
to satisfy the deficiency.
It was only at this point that Teresa learned of the previous ex parte
proceedings. She then sought to have the judgment annulled as she
now claims that she was deprived of due process when she did not
receive summons; that it was only her husband who received the
summons; that there was extrinsic fraud because her husband
deliberately hid the fact of the foreclosure proceeding.
PRCB argued that the foreclosure proceeding is an action quasi in
rem, hence Teresa’s participation is not required so long as the
court acquires jurisdiction over the res which is what happened in
the case at bar; that Teresa cannot invoke extrinsic fraud because
such situation cannot occur in her case because she is a co-
defendant of Ernesto.
ISSUE: Whether or not the judgment of the trial court should be
annulled.
HELD: Yes. It is admitted that the proceeding is a quasi in rem
proceeding and that the presence of Teresa is not required because
the trial court was able to acquire jurisdiction over the res
(mortgaged property). HOWEVER, her constitutional right to due
process is superior over the procedural matters mentioned. Her
right to due process was violated when she did not receive
summons. Teresa, as a resident defendant, who does not voluntary
appear in court must be personally served with summons as
provided under Section 6, Rule 14 of the Rules of Court. Even if the
action is quasi in rem, personal service of summons is essential in
order to afford her due process. The substituted service made by
the sheriff at her husband’s office cannot be deemed proper service
absent any explanation that efforts had been made to personally
serve summons upon her but that such efforts failed. Further, the
order of the trial court compelling Teresa to pay off the debt using
her personal property is a judgment in personam which the court
cannot do because it only acquired jurisdiction over the res and not
over the person of Teresa.
On the issue of extrinsic fraud, the Court of Appeals, agreeing with
PCRB, is correct that there is none in the case at bar. Extrinsic fraud
exists when there is a fraudulent act committed by the prevailing
party outside of the trial of the case, whereby the defeated party
was prevented from presenting fully his side of the case by fraud or
deception practiced on him by the prevailing party. Extrinsic fraud is
present where the unsuccessful party had been prevented from
exhibiting fully his case, by fraud or deception practiced on him by
his opponent, as by keeping him away from court, a false promise of
a compromise; or where the defendant never had knowledge of the
suit, being kept in ignorance by the acts of the plaintiff; or where an
attorney fraudulently or without authority assumes to represent a
party and connives at his defeat; or where the attorney regularly
employed corruptly sells out his client’s interest to the other side.
The above is not applicable in the case of Teresa. It was not PCRB
which made any fraud. It should be noted that spouses Biaco were
co-defendants in the case and shared the same interest.
Oaminal vs Castillo : 152776 : October 8, 2003
FACTS: Petitioner filed a complaint for collection against
respondents with the RTC. The summons together with the
complaint was served upon the secretary of respondent.
Respondents filed their ‘Urgent Motion to Declare Service of
Summons Improper and Legally Defective’ alleging that the Sheriff’s
Return has failed to comply on substituted service of summons but
said motion was not heard due to the Judge’s absence. Petitioner
then filed an Omnibus Motion to Declare [Respondents] in Default
and to Render Judgment because no answer [was] filed by [the
latter]. The respondents filed Omnibus Motion Ad Cautelam to
Admit Motion to Dismiss and Answer with. The judge denied
[respondents’] Motion to Dismiss, and admitted [their] Answer.
However six months after admitting their answer, the judge ruled
that [respondents’] ‘Omnibus Motion Ad Cautelam to Admit Motion
to Dismiss and Answer with Counterclaim’ was filed outside the
period to file answer, hence he (1) denied the Motion to Admit
Motion to Dismiss and Answer; (2) declared [respondents] in
default; and (3) ordered [petitioner] to present evidence ex-parte
within ten days from receipt of [the] order, [failing] which, the case
will be dismissed.
ISSUE: WON respondents were properly declared in default?
HELD: NO. Respondents herein were declared in default by the trial
court on May 22, 2001, purportedly because of their delay in filing
an answer. Its unexpected volte face came six months after it had
ruled to admit their Answer on November 16, 2000. Indiana
Aerospace University v. Commission on Higher Education held that
no practical purpose was served in declaring the defendants in
default when their Answer had already been filed — albeit after the
15-day period, but before they were declared as such. Applying
that ruling to the present case, we find that respondents were,
therefore, imprudently declared in default.
Heirs of Favis v. Gonzales
G.R. No. 185922 : JANUARY 15, 2014
FACTS: Dr. Mariano Favis, Sr. (Dr. Favis) was married to Capitolina
Aguilar (Capitolina) with whom he had seven children. When
Capitolina died in March 1994. Dr. Favis married Juana Gonzalez
(Juana), his common-law wife with whom he sired one child,
Mariano G. Favis (Mariano). When Dr. Favis and Juana got married
in 1974, he executed an affidavit acknowledging Mariano as one of
his legitimate children. Mariano is married to Larcelita D. Favis
(Larcelita), with whom he has four children.
Dr. Favis died intestate on July 29, 1995. On October 16, 1994, prior
his death, he allegedly executed a Deed of Donation transferring
and conveying properties in favor of his grandchildren with Juana.
Claiming the said donation prejudiced their legitime, Dr. Favis
children with Capitolina, petitioners herein, filed an action for
annulment of the Deed of Donation, inventory, liquidation and
partition of property before the RTC against Juana, Sps. Mariano
and Larcelita and their grandchildren as respondents.
RTC nullified the Deed of Donation. The trial court found that Dr.
Favis, at the age of 92 and plagued with illnesses, could not have
had full control of his mental capacities to execute a valid Deed of
Donation.. Holding that the subsequent marriage of Dr. Favis and
Juana legitimated the status of Mariano, the trial court also
declared Juana and Mariano as compulsory heirs of Dr. Favis and
shall inherit in equal shares in the estate of the late Dr. Favis.
The CA motuproprio ordered the dismissal of the complaint for
failure of petitioners to make an averment that earnest efforts
toward a compromise have been made, as mandated by Article 151
of the Family Court.
Petitioners filed a motion for reconsideration contending that the
case is not subject to compromise as it involves future legitime.CA
rejected petitioners’ contention when it ruled that the prohibited
compromise is that which is entered between the decedent while
alive and compulsory heirs. The subject properties cannot be
considered as "future legitime" but are in fact, legitime, as the
instant complaint was filed after the death of the decedent.
ISSUE: Whether or not the appellate court may dismiss the order of
dismissal of the complaint for failure to allege therein that earnest
efforts towards a compromise have been madeas mandated by
Article 151 of the Family Court.
HELD: NO.The appellate court committed egregious error in
dismissing the complaint.The appellate court’s decision hinged on
Article 151 of the Family Code, which states that “No suit between
members of the same family shall prosper unless it should appear
from the verified complaint or petition that earnest efforts toward a
compromise have been made, but that the same have failed. If it is
shown that no such efforts were in fact made, the case must be
dismissed.”
The appellate court correlated this provision with Section 1, par. (j),
Rule 16 of the 1997 Rules of Civil Procedure, which provides:
Section 1. Grounds. - Within the time for but before filing the
answer to the complaint or pleading asserting a claim, a motion to
dismiss may be made on any of the following grounds:(j) That a
condition precedent for filing the claim has not been complied with.
The appellate courts reliance on this provision is misplaced. Rule 16
treats of the grounds for a motion to dismiss the complaint. It must
be distinguished from the grounds provided under Section 1, Rule 9
thereofwhich specifically deals with dismissal of the claim by the
court motuproprio. It provides for only four instances when the
court may motu proprio dismiss the claim, namely: (a) lack of
jurisdiction over the subject matter; (b) litispendentia; (c) res
judicata; and (d) prescription of action.
on the merits, no mention having been made about any defect in
the statement of a cause of action. In other words, no motion to
dismiss the complaint based on the failure to comply with a
condition precedent was filed in the trial court; neither was such
failure assigned as error in the appeal that respondent brought
before the Court of Appeals.
Therefore, the rule on deemed waiver of the non-jurisdictional
defense or objection is wholly applicable to respondent. If the
respondents as parties-defendants could not, and did not, after
filing their answer to petitioners’ complaint, invoke the objection of
absence of the required allegation on earnest efforts at a
compromise, the appellate court unquestionably did not have any
authority or basis to motupropio order the dismissal of petitioners
complaint.
The decision of the Court of Appeals is reversed and set aside and
the Judgment of the Regional Trial Court is AFFIRMED.

Failure to allege in the complaint that earnest efforts at a

compromise has been made but had failed is not one of the
exceptions. It is not a jurisdictional defect but merely a defect in the
statement of a cause of action.

In the case at hand, complaint of petitioners was answered by

respondents without a prior motion to dismiss having been filed.
The RTC decision in favor of the petitioners was appealed by
respondents at the CA on the basis of the alleged error in the ruling