PREMIERE DEVELOPMENT BANK, petitioner, vs.
existing loan obligations of Arizona in an amount not to
ALFREDO C. FLORES, in his Capacity as Presiding Judge of
Regional Trial Court of Pasig City, Branch 167, ARIZONA
TRANSPORT CORPORATION and PANACOR MARKETING
CORPORATION, respondents.
This is a Rule 45 petition for review1 of the Court of Appeals’
decision2 in CA-G.R. SP No. 92908 which affirmed the Regional
Trial Court’s (RTC’s) orders3 granting respondent corporations’
motion for execution of the Court’s 14 April 2004 decision in
G.R. No. 1593524 and denying5 petitioner Premiere
Development Bank’s motion for reconsideration, as well as the
appellate court’s resolution6 denying Premiere Development
Bank’s motion for reconsideration.
The factual antecedents of the case, as found by the Court in
G.R. No. 159352, are as follows:
The undisputed facts show that on or about October 1994,
Panacor Marketing Corporation (Panacor for brevity), a newly-
formed corporation, acquired an exclusive distributorship of
products manufactured by Colgate Palmolive Philippines, Inc.
(Colgate for short). To meet the capital requirements of the
exclusive distributorship, which required an initial inventory
level of P7.5 million, Panacor applied for a loan of P4.1 million
with Premiere Development Bank. After an extensive study of
Panacor’s creditworthiness, Premiere Bank rejected the loan
application and suggested that its affiliate company, Arizona
Transport Corporation (Arizona for short), should instead apply
for the loan on condition that the proceeds thereof shall be
made available to Panacor. Eventually, Panacor was granted
a P4.1 million credit line as evidenced by a Credit Line
Agreement. As suggested, Arizona, which was an existing loan
client, applied for and was granted a loan of P6.1 million, P3.4
million of which would be used to pay-off its existing loan
accounts and the remaining P2.7 million as credit line of
Panacor. As security for the P6.1 million loan, Arizona,
represented by its Chief Executive Officer Pedro Panaligan and
spouses Pedro and Marietta Panaligan in their personal
capacities, executed a Real Estate Mortgage against a parcel of
land covered by TCT No. T-3475 as per Entry No. 49507 dated
October 2, 1995.
Since the P2.7 million released by Premiere Bank fell short of
the P4.1 million credit line which was previously approved,
Panacor negotiated for a take-out loan with IBA-Finance
Corporation (hereinafter referred to as IBA-Finance) in the sum
of P10 million, P7.5 million of which will be released outright
in order to take-out the loan from Premiere Bank and the
balance of P2.5 million (to complete the needed capital of P4.1
million with Colgate) to be released after the cancellation by
Premiere of the collateral mortgage on the property covered
by TCT No. T-3475. Pursuant to the said take-out agreement,
IBA-Finance was authorized to pay Premiere Bank the prior
1
exceed P6 million.
On October 5, 1995, Iba-Finance sent a letter to Ms. Arlene R.
Martillano, officer-in-charge of Premiere Bank’s San Juan
Branch, informing her of the approved loan in favor of Panacor
and Arizona, and requesting for the release of TCT No. T-3475.
Martillano, after reading the letter, affixed her signature of
conformity thereto and sent the original copy to Premiere
Bank’s legal office. x x x
On October 12, 1995, Premiere Bank sent a letter-reply to
[IBA]-Finance, informing the latter of its refusal to turn over
the requested documents on the ground that Arizona had
existing unpaid loan obligations and that it was the bank’s
policy to require full payment of all outstanding loan
obligations prior to the release of mortgage documents.
Thereafter, Premiere Bank issued to IBA-Finance a Final
Statement of Account showing Arizona’s total loan
indebtedness. On October 19, 1995, Panacor and Arizona
executed in favor of IBA-Finance a promissory note in the
amount of P7.5 million. Thereafter, IBA-Finance paid to
Premiere Bank the amount of P6,235,754.79, representing the
full outstanding loan account of Arizona. Despite such
payment, Premiere Bank still refused to release the requested
mortgage documents specifically, the owner’s duplicate copy
of TCT No. T-3475.
On November 2, 1995, Panacor requested IBA-Finance for the
immediate approval and release of the remaining P2.5 million
loan to meet the required monthly purchases from Colgate.
IBA-Finance explained however, that the processing of
the P2.5 million loan application was conditioned, among
others, on the submission of the owner’s duplicate copy of TCT
No. 3475 and the cancellation by Premiere Bank of Arizona’s
mortgage. Occasioned by Premiere Bank’s adamant refusal to
release the mortgage cancellation document, Panacor failed to
generate the required capital to meet its distribution and sales
targets. On December 7, 1995, Colgate informed Panacor of its
decision to terminate their distribution agreement.
On March 13, 1996, Panacor and Arizona filed a complaint for
specific performance and damages against Premiere Bank
before the Regional Trial Court of Pasig City, docketed as Civil
Case No. 65577.
On June 11, 1996, IBA-Finance filed a complaint-in-
intervention praying that judgment be rendered ordering
Premiere Bank to pay damages in its favor.
On May 26, 1998, the trial court rendered a decision in favor
of Panacor and IBA-Finance, the decretal portion of which
reads: x x x
Premiere Bank appealed to the Court of Appeals contending
that the trial court erred in finding, inter alia, that it had
maliciously downgraded the credit-line of Panacor from P4.1
million to P2.7 million.
In the meantime, a compromise agreement was entered into
between IBA-Finance and Premiere Bank whereby the latter
agreed to return without interest the amount
of P6,235,754.79 which IBA-Finance earlier remitted to
Premiere Bank to pay off the unpaid loans of Arizona. On
March 11, 1999, the compromise agreement was approved.
On June 18, 2003, a decision was rendered by the Court of
Appeals which affirmed with modification the decision of the
trial court, the dispositive portion of which reads:7 x x x
Incidentally, respondent corporations received a notice of
sheriff’s sale during the pendency of G.R. No. 159352.
Respondent corporations were able to secure an injunction
from the RTC but it was set aside by the Court of Appeals in a
decision dated 20 August 2004.8 The appellate court denied
respondent corporations’ motion for reconsideration in a
resolution dated 5 November 2004.9
The Court, in a resolution dated 16 February 2005, did not give
due course to the petition for review of respondent
corporations as it did not find any reversible error in the
decision of the appellate court.10 After the Court had denied
with finality the motion for reconsideration, 11 the mortgaged
property was purchased by Premiere Development Bank at the
foreclosure sale held on 19 September 2005
for P6,600,000.00.12
Respondent corporations filed a motion for execution dated 25
August 200513 asking for the issuance of a writ of execution of
our decision in G.R. No. 159352 where we
awarded P800,000.00 as damages in their favor.14 The RTC
granted the writ of execution sought. The Court of Appeals
affirmed the order.Hence, the present petition for review.
The only question before us is the propriety of the grant of the
writ of execution by the RTC.
Premiere Development Bank argues that the lower courts
should have applied the principles of compensation or set-off
as the foreclosure of the mortgaged property does not
preclude it from filing an action to recover any deficiency from
respondent corporations’ loan. It allegedly did not file an
action to recover the loan deficiency from respondent
corporations because of the pending Civil Case No. MC03-2202
filed by respondent corporations before the RTC of
Mandaluyong City entitled Arizona Transport Corp. v. Premiere
Development Bank. That case puts into issue the validity of
Premiere Development Bank’s monetary claim against
respondent corporations and the subsequent foreclosure sale
2
of the mortgaged property. Premiere Development Bank
allegedly had wanted to wait for the resolution of the civil case
before it would file its deficiency claims against respondent
corporations. Moreover, the execution of our decision in G.R.
No. 159352 would allegedly be iniquitous and unfair since
respondent corporations are already in the process of winding
up.15
The Court finds the petition unmeritorious. A judgment
becomes "final and executory" by operation of law. In such a
situation, the prevailing party is entitled to a writ of execution,
and issuance thereof is a ministerial duty of the court. 16 This
policy is clearly and emphatically embodied in Rule 39, Section
1 of the Rules of Court, to wit:
SECTION 1. Execution upon judgments or final orders.
― Execution shall issue as a matter of right, on motion, upon a
judgment or order that disposes of the action or proceeding
upon the expiration of the period to appeal therefrom if no
appeal has been duly perfected.
If the appeal has been duly perfected and finally resolved, the
execution may forthwith be applied for in the court of origin,
on motion of the judgment obligee, submitting therewith
certified true copies of the judgment or judgments or final
order or orders sought to be enforced and of the entry thereof,
with notice to the adverse party.
The appellate court may, on motion in the same case, when
the interest of justice so requires, direct the court of origin to
issue the writ of execution. (Emphasis supplied.)
Jurisprudentially, the Court has recognized certain exceptions
to the rule as where in cases of special and exceptional nature
it becomes imperative in the higher interest of justice to direct
the suspension of its execution; whenever it is necessary to
accomplish the aims of justice; or when certain facts and
circumstances transpired after the judgment became final
which could render the execution of the judgment unjust.17
None of these exceptions avails to stay the execution of this
Court’s decision in G.R. No. 159352. Premiere Development
Bank has failed to show how injustice would exist in executing
the judgment other than the allegation that respondent
corporations are in the process of winding up. Indeed, no new
circumstance transpired after our judgment had become final
that would render the execution unjust.
The Court cannot give due course to Premiere Development
Bank’s claim of compensation or set-off on account of the
pending Civil Case No. MC03-2202 before the RTC of
Mandaluyong City. For compensation to apply, among other
requisites, the two debts must be liquidated and demandable
already.18
A distinction must be made between a debt and a mere claim. dissolution of the corporation would not serve as an effective
A debt is an amount actually ascertained. It is a claim which has bar to the enforcement of rights for or against it.
been formally passed upon by the courts or quasi-judicial
As early as 1939,23 this Court held that, although the time
bodies to which it can in law be submitted and has been
during which the corporation, through its own officers, may
declared to be a debt. A claim, on the other hand, is a debt in
conduct the liquidation of its assets and sue and be sued as a
embryo. It is mere evidence of a debt and must pass thru the
corporation is limited to three years from the time the period
process prescribed by law before it develops into what is
of dissolution commences, there is no time limit within which
properly called a debt.19 Absent, however, any such categorical
the trustees must complete a liquidation placed in their hands.
admission by an obligor or final adjudication, no legal
What is provided in Section 12224 of the Corporation Code is
compensation or off-set can take place. Unless admitted by a
that the conveyance to the trustees must be made within the
debtor himself, the conclusion that he is in truth indebted to
three-year period. But it may be found impossible to complete
another cannot be definitely and finally pronounced, no
the work of liquidation within the three-year period or to
matter how convinced he may be from the examination of the
reduce disputed claims to judgment. The trustees to whom the
pertinent records of the validity of that conclusion the
corporate assets have been conveyed pursuant to the
indebtedness must be one that is admitted by the alleged
authority of Section 122 may sue and be sued as such in all
debtor or pronounced by final judgment of a competent
matters connected with the liquidation.
court.20 At best, what Premiere Development Bank has against
respondent corporations is just a claim, not a debt. At worst, it Furthermore, Section 145 of the Corporation Code clearly
is a speculative claim. provides that "no right or remedy in favor of or against any
corporation, its stockholders, members, directors, trustees, or
The alleged deficiency claims of Premiere Development Bank
officers, nor any liability incurred by any such corporation,
should have been raised as a compulsory counterclaim before
stockholders, members, directors, trustees, or officers, shall be
the RTC of Mandaluyong City where Civil Case No. MC03-2202
removed or impaired either by the subsequent dissolution of
is pending. Under Section 7, Rule 6 of the 1997 Rules of Civil
said corporation." Even if no trustee is appointed or designated
Procedure, a counterclaim is compulsory when its object
during the three-year period of the liquidation of the
"arises out of or is necessarily connected with the transaction
corporation, the Court has held that the board of directors may
or occurrence constituting the subject matter of the opposing
be permitted to complete the corporate liquidation by
party’s claim and does not require for its adjudication the
continuing as "trustees" by legal implication.25 Therefore, no
presence of third parties of whom the court cannot acquire
injustice would arise even if the Court does not stay the
jurisdiction". In Quintanilla v. CA21 and reiterated in Alday v.
execution of G.R. 159352.
FGU Insurance Corporation,22 the "compelling test of
compulsoriness" characterizes a counterclaim as compulsory if Although it is commendable for Premiere Development Bank
there should exist a "logical relationship" between the main in offering to deposit with the RTC the P800,000.00 as an
claim and the counterclaim. There exists such a relationship alternative prayer, the Court cannot allow it to defeat or
when conducting separate trials of the respective claims of the subvert the right of respondent corporations to have the final
parties would entail substantial duplication of time and effort and executory decision in G.R. No. 159352 executed. The offer
by the parties and the court; when the multiple claims involve to deposit cannot suspend the execution of this Court’s
the same factual and legal issues; or when the claims are decision for this cannot be deemed as consignation.
offshoots of the same basic controversy between the parties. Consignation is the act of depositing the thing due with the
Clearly, the recovery of Premiere Development Bank’s alleged court or judicial authorities whenever the creditor cannot
deficiency claims is contingent upon the case filed by accept or refuses to accept payment, and it generally requires
respondent corporations; thus, conducting separate trials a prior tender of payment. In this case, it is Premiere
thereon will result in a substantial duplication of the time and Development Bank, the judgment debtor, who refused to pay
effort of the court and the parties. respondent corporations P800,000.00 and not the other way
around. Neither could such offer to make a deposit with the
The fear of Premiere Development Bank that they would have
RTC provide a ground for this Court to issue an injunctive relief
difficulty collecting its alleged loan deficiencies from
in this case.
respondent corporations since they were already involuntarily
dissolved due to their failure to file reportorial requirements
with the Securities and Exchange Commission is neither here
nor there. In any event, the law specifically allows a trustee to
manage the affairs of the corporation in liquidation, and the

3
MERLINDA L. DAGOOC, complainant, vs. ROBERTO A.
ERLINA, Sheriff IV, RTC, Branch 40, Tandag, Surigao del
Sur, respondent.
This is a complaint for misconduct and ignorance of the law
filed by Merlinda L. Dagooc of Diatagon, Lianga, Surigao del
Sur, against deputy sheriff Roberto A. Erlina of the Regional
Trial Court, Branch 40, Tandag, Surigao del Sur.
Complainant alleged that she was the plaintiff in Civil Case No.
L-695 before the Regional Trial Court, Branch 28, Diatagon,
Lianga, Surigao del Sur. The court rendered judgment by
compromise agreement which immediately became final and
executory. Complainant moved for the execution of the
decision and, on February 28, 2002, a writ of execution was
issued which was endorsed to respondent deputy sheriff Erlina
for execution. The defendants, however, could not pay the
money judgment. Instead of levying on the properties of the
defendants to satisfy the judgment, however, sheriff Erlina
asked them to execute promissory notes in favor of
complainant which he asked the latter to collect from the
defendants. Complainant further alleged that respondent
sheriff indicated in his return of service that defendants were
insolvent. But upon verification with the assessors office of
Tandag, Surigao del Sur, complainant discovered that
defendants owned real properties, as evidenced by the real
property field appraisal and assessment sheet.
In his comment, respondent sheriff averred that he served a
copy of the writ of execution on the defendants but they could
not pay the money judgment despite repeated demands. So he
went to the residence of the defendants to levy on some of
their personal properties but he found them to be exempt
from execution pursuant to Section 13, Rule 39 of the Rules of
Court. He then went to the office of the provincial assessor to
verify if the defendants owned real properties which he could
levy on. He alleged that he was given a certification that there
was none. So he made a return of service stating that
defendants were insolvent. He denied calling up complainant
for her to collect defendants payment by means of promissory
notes. But he advised her to secure an alias writ of execution
so he could eventually go after defendants real properties in
Tandag, Surigao del Sur.
We referred the complaint to the Office of the Court
Administrator (OCA) for review, evaluation and
recommendation. The OCA found the complaint meritorious
and respondent sheriff guilty of misconduct and gross
ignorance of the law. It recommended that respondent be
fined P5,000, with a warning that the commission of a similar
act in the future shall be dealt with more severely.
We find it strange and highly unusual, to say the least, that
respondent sheriff did not know his duties and functions under
4
Section 9, Rule 39 of the Revised Rules of Court which clearly
states how the execution of money judgments should be
made.
Section 9. Execution of judgments for money, how enforced. (a)
Immediate payment on demand. The officer shall enforce an
execution of a judgment for money by demanding from the
judgment obligor the immediate payment of the full amount
stated in the writ of execution and all lawful fees. The
judgment obligor shall pay in cash, certified bank check
payable to the judgment obligee, or any other form of
payment acceptable to the latter, the amount of the judgment
debt under proper receipt directly to the judgment obligee or
his authorized representative if present at the time of
payment. The lawful fees shall be handed under proper receipt
to the executing sheriff who shall turn over the said amount
within the same day to the clerk of court of the court that
issued the writ. (emphasis ours)
The law mandates that in the execution of a money judgment,
the judgment debtor shall pay either in cash, certified bank
check payable to the judgment obligee, or any other form of
payment acceptable to the latter. Nowhere does the law
mention promissory notes as a form of payment. The only
exception is when such form of payment is acceptable to the
judgment debtor. But it was obviously not acceptable to
complainant, otherwise she would not have filed this case
against respondent sheriff. In fact, she objected to it because
the promissory notes of the defendants did not satisfy the
money judgment in her favor.
If the judgment debtor cannot pay all or part of the obligation
in cash, certified bank check or other mode of payment
acceptable to the judgment obligee, the money judgment shall
be satisfied by levying on the properties of the judgment
debtor. Thus,
Section 9(b) Satisfaction by levy. If the judgment obligor
cannot pay all or part of the obligation in cash, certified bank
check or other mode of payment acceptable to the judgment
obligee, the officer shall levy upon the properties of the
judgment obligor of every kind and nature whatsoever which
may be disposed of for value and not otherwise exempt from
execution giving the latter the option to immediately choose
which property or part thereof may be levied upon, sufficient
to satisfy the judgment. If the judgment obligor does not
exercise the option, the officer shall first levy on the personal
properties, if any, and then on the real properties if the
personal properties are insufficient to answer for the
judgment.
Levy is defined as the act or acts by which an officer of the law
and court sets apart or appropriates a part or the whole of the
losers (judgment debtors) property for the purpose of
eventually conducting an execution sale to the end that the
writ of execution may be satisfied, and the judgment debt,
paid.[2] However, not all of the judgment debtors properties
may be levied upon because the law exempts some of them
from execution.[3] But the right of exemption from execution is
a personal privilege granted to the judgment debtor and, as
such, it must be claimed not by the sheriff but by the judgment
debtor himself at the time of the levy or within a reasonable
period thereafter.[4]
Respondent sheriff not only failed to levy on the properties of
the judgment debtor when they could not pay the money
judgment in cash but also claimed the exemption for them. His
conduct blatantly manifested his incompetence and ineptitude
in discharging his functions. Moreover, respondent sheriff was
seriously remiss in his duties when he stated in his return of
service that the defendants were insolvent without first
diligently verifying such fact. As it turned out, the defendants
had real properties he could have levied on to satisfy the
money judgment.
But even assuming that the defendants/judgment debtors
were insolvent, respondent sheriff should have garnished their
salaries (being paid employees) to enforce the judgment in the
subject case as provided for in Section 9(c), Rule 39 of the
Revised Rules of Court.
(c) Garnishment of debts and credits. The officer may levy on
debts due the judgment obligor and other credits, including
bank deposits, financial interests, royalties, commissions and
other personal property not capable of manual delivery in the
possession or control of third parties. Levy shall be made by
serving notice upon the person owing such debts or having in
his possession or control such credits to which the judgment
obligor is entitled. The garnishment shall cover only such
amount as will satisfy the judgment and all lawful fees.
Either to desperately cover his tracks after it was pointed out
to him that the defendants were not insolvent at all or out of
sheer ignorance of the law, respondent sheriff advised
complainant to file a motion for the issuance of an alias writ of
execution allegedly so that he could levy on the properties of
the defendants. But there was no need for an alias writ of
execution for him to levy on the real properties of the
defendants. The life of the writ was for five years and the
judgment of the court had not yet been fully satisfied. Section
14, Rule 39 of the Revised Rules of Court states that:
Section 14. Return of writ of execution. The writ of execution
shall be returnable to the court issuing it immediately after the
judgment has been satisfied in part or in full. If the judgment
cannot be satisfied in full within thirty (30) days after his
receipt of the writ, the officer shall report to the court and
state the reason therefor. Such writ shall continue in effect
5
during the period within which the judgment may be enforced
by motion. The officer shall make a report to the court every
thirty (30) days on the proceedings taken thereon until the
judgment is satisfied in full, or its effectivity expires. x x x
(emphasis ours)
Sheriffs, as public officers, are repositories of public trust and
are under obligation to perform the duties of their office
honestly, faithfully and to the best of their ability. They are
bound to use utmost skill and diligence in the performance of
their official duties particularly where the rights of individuals
may be jeopardized by their neglect.[5] Here, we find
respondent sheriff utterly wanting in zeal and dedication. He
was highly incompetent, downright inefficient and grossly
ignorant of the law when he did not faithfully execute the writ
of execution to the prejudice of complainant.
Considering that respondent sheriffs primary duty was the
execution of the writ strictly according to its terms, there was
apparently more than mere harmless ignorance involved here,
which makes us wonder about the very lame and docile
penalty of P5,000 being recommended by the OCA. Applying
Rule 4, Section 52 B(2) of the Revised Uniform Rules on
Administrative Cases in the Civil Service, we find respondent
guilty of inefficiency and incompetence in the performance of
his official duties and suspend him from the service for one (1)
year.
WHEREFORE, in view of the foregoing, we find respondent
sheriff ROBERTO A. ERLINA of the Regional Trial Court, Branch
40, Tandag, Surigao del Sur, GUILTY of inefficiency and
incompetence in the performance of his official duties. He is
hereby SUSPENDED from the service for one (1) year and
WARNED that the commission of a similar act in the future
shall be dealt with more severely.
DIONISIO FIESTAN and JUANITA ARCONADO, petitioners vs.
COURT OF APPEALS; DEVELOPMENT BANK OF THE
PHILIPPINES, LAOAG CITY BRANCH; PHILIPPINE NATIONAL
BANK, VIGAN BRANCH, ILOCOS SUR, FRANCISCO PERIA and
REGISTER OF DEEDS OF ILOCOS SUR, respondents.
In this petition for review on certiorari, petitioners spouses
Dionisio Fiestan and Juanita Arconada owners of a parcel of
land (Lot No. 2B) situated in Ilocos Sur covered by TCT T-13218
which they mortgaged to the Development Bank of the
Philippines (DBP) as security for their P22,400.00 loan, seek the
reversal of the decision of the Court of Appeals 1 dated June 5,
1987 affirming the dismissal of their complaint filed against the
Development Bank of the Philippines, Laoag City Branch,
Philippine National Bank, Vigan Branch, Ilocos Sur, Francisco
Peria and the Register of Deeds of Ilocos Sur, for annulment of
sale, mortgage, and cancellation of transfer certificates of title.
Records show that Lot No. 2-B was acquired by the DBP as the
highest bidder at a public auction sale on August 6, 1979 after
it was extrajudicially foreclosed by the DBP in accordance with
Act No. 3135, as amended by Act No. 4118, for failure of
petitioners to pay their mortgage indebtedness. A certificate
of sale was subsequently issued by the Provincial Sheriff of
Ilocos Sur on the same day and the same was registered on
September 28, 1979 in the Office of the Register of Deeds of
Ilocos Sur. Earlier, or on September 26, 1979, petitioners
executed a Deed of Sale in favor of DBP which was likewise
registered on September 28, 1979.
Upon failure of petitioners to redeem the property within the
one (1) year period which expired on September 28, 1980,
petitioners' TCT T-13218 over Lot No. 2-B was cancelled by the
Register of Deeds and in lieu thereof TCT T-19077 was issued
to the DBP upon presentation of a duly executed affidavit of
consolidation of ownership.
On April 13,1982, the DBP sold the lot to Francisco Peria in a
Deed of Absolute Sale and the same was registered on April 15,
1982 in the Office of the Register of Deeds of Ilocos Sur.
Subsequently, the DBP's title over the lot was cancelled and in
lieu thereof TCT T-19229 was issued to Francisco Peria.
After title over said lot was issued in his name, Francisco Peria
secured a tax declaration for said lot and accordingly paid the
taxes due thereon. He thereafter mortgaged said lot to the
PNB Vigan Branch as security for his loan of P115,000.00 as
required by the bank to increase his original loan from
P49,000.00 to P66,000.00 until it finally reached the approved
amount of P115,000.00. Since petitioners were still in
possession of Lot No. 2-B, the Provincial Sheriff ordered them
to vacate the premises.
On the other hand, petitioners filed on August 23, 1982 a
complaint for annulment of sale, mortgage and cancellation of
transfer certificates of title against the DBP-Laoag City, PNB
Vigan Branch, Ilocos Sur, Francisco Peria and the Register of
Deeds of Ilocos Sur, docketed as Civil Case No. 3447-V before
the Regional Trial Court of Vigan, Ilocos Sur.
After trial, the RTC of Vigan, Ilocos Sur, Branch 20, rendered its
decision 2 on November 14, 1983 dismissing the complaint,
declaring therein, as valid the extrajudicial foreclosure sale of
the mortgaged property in favor of the DBP as highest bidder
in the public auction sale held on August 6, 1979, and its
subsequent sale by DBP to Francisco Peria as well as the real
estate mortgage constituted thereon in favor of PNB Vigan as
security for the P115,000.00 loan of Francisco Peria.
The Court of Appeals affirmed the decision of the RTC of Vigan,
Ilocos Sur on June 20, 1987.
6
The motion for reconsideration having been denied 3 on
January 19, 1988, petitioners filed the instant petition for
review on certiorari with this Court. Petitioners seek to annul
the extrajudicial foreclosure sale of the mortgaged property on
August 6, 1979 in favor of the Development Bank of the
Philippines (DBP) on the ground that it was conducted by the
Provincial Sheriff of Ilocos Sur without first effecting a levy on
said property before selling the same at the public auction sale.
Petitioners thus maintained that the extrajudicial foreclosure
sale being null and void by virtue of lack of a valid levy, the
certificate of sale issued by the Provincial Sheriff cannot
transfer ownership over the lot in question to the DBP and
consequently the deed of sale executed by the DBP in favor of
Francisco Peria and the real estate mortgage constituted
thereon by the latter in favor of PNB Vigan Branch are likewise
null and void.
The Court finds these contentions untenable. The formalities
of a levy, as an essential requisite of a valid execution sale
under Section 15 of Rule 39 and a valid attachment lien under
Rule 57 of the Rules of Court, are not basic requirements
before an extrajudicially foreclosed property can be sold at
public auction. At the outset, distinction should be made of the
three different kinds of sales under the law, namely: an
ordinary execution sale, a judicial foreclosure sale, and an
extrajudicial foreclosure sale, because a different set of law
applies to each class of sale mentioned. An ordinary execution
sale is governed by the pertinent provisions of Rule 39 of the
Rules of Court. Rule 68 of the Rules of Court applies in cases of
judicial foreclosure sale. On the other hand, Act No. 3135, as
amended by Act No. 4118 otherwise known as "An Act to
Regulate the Sale of Property under Special Powers Inserted in
or Annexed to Real Estate Mortgages" applies in cases of
extrajudicial foreclosure sale.
The case at bar, as the facts disclose, involves an extrajudicial
foreclosure sale. The public auction sale conducted on August
6, 1979 by the Provincial Sheriff of Ilocos Sur refers to the
"sale" mentioned in Section 1 of Act No. 3135, as amended,
which was made pursuant to a special power inserted in or
attached to a real estate mortgage made as security for the
payment of money or the fulfillment of any other obligation. It
must be noted that in the mortgage contract, petitioners, as
mortgagor, had appointed private respondent DBP, for the
purpose of extrajudicial foreclosure, "as his attorney-in-fact to
sell the property mortgaged under Act No. 3135, as amended,
to sign all documents and perform any act requisite and
necessary to accomplish said purpose .... In case of foreclosure,
the Mortgagor hereby consents to the appointment of the
mortgagee or any of its employees as receiver, without any
bond, to take charge of the mortgaged property at once, and
to hold possession of the same ... 4
There is no justifiable basis, therefore, to apply by analogy the
provisions of Rule 39 of the Rules of Court on ordinary
execution sale, particularly Section 15 thereof as well as the
jurisprudence under said provision, to an extrajudicial
foreclosure sale conducted under the provisions of Act No.
3135, as amended. Act No. 3135, as amended, being a special
law governing extrajudicial foreclosure proceedings, the same
must govern as against the provisions on ordinary execution
sale under Rule 39 of the Rules of Court.
In that sense, the case of Aparri vs. Court Of Appeals, 13 SCRA
611 (1965), cited by petitioners, must be distinguished from
the instant case. On the question of what should be done in
the event the highest bid made for the property at the
extrajudicial foreclosure sale is in excess of the mortgage debt,
this Court applied the rule and practice in a judicial foreclosure
sale to an extrajudicial foreclosure sale in a similar case
considering that the governing provisions of law as mandated
by Section 6 of Act No. 3135, as amended, specifically Sections
29, 30 and 34 of Rule 39 of the Rules of Court (previously
Sections 464, 465 and 466 of the Code of Civil Procedure) are
silent on the matter. The said ruling cannot, however, be
construed as the legal basis for applying the requirement of a
levy under Section 15 of Rule 39 of the Rules of Court before
an extrajudicially foreclosed property can be sold at public
auction when none is expressly required under Act No. 3135,
as amended.
Levy, as understood under Section 15, Rule 39 of the Rules of
Court in relation to execution of money judgments, has been
defined by this Court as the act whereby a sheriff sets apart or
appropriates for the purpose of satisfying the command of the
writ, a part or the whole of the judgment-debtor's property. 5
In extrajudicial foreclosure of mortgage, the property sought
to be foreclosed need not be identified or set apart by the
sheriff from the whole mass of property of the mortgagor for
the purpose of satisfying the mortgage indebtedness. For, the
essence of a contract of mortgage indebtedness is that a
property has been identified or set apart from the mass of the
property of the debtor-mortgagor as security for the payment
of money or the fulfillment of an obligation to answer the
amount of indebtedness, in case of default of payment. By
virtue of the special power inserted or attached to the
mortgage contract, the mortgagor has authorized the
mortgagee-creditor or any other person authorized to act for
him to sell said property in accordance with the formalities
required under Act No. 3135, as amended.
The Court finds that the formalities prescribed under Sections
2, 3 and 4 of Act No. 3135, as amended, were substantially
complied with in the instant case. Records show that the
notices of sale were posted by the Provincial Sheriff of Ilocos
Sur and the same were published in Ilocos Times, a newspaper
7
of general circulation in the province of Ilocos Sur, setting the
date of the auction sale on August 6, 1979 at 10:00 a.m. in the
Office of the Sheriff, Vigan, Ilocos Sur. 6
The nullity of the extrajudicial foreclosure sale in the instant
case is further sought by petitioners on the ground that the
DBP cannot acquire by purchase the mortgaged property at
the public auction sale by virtue of par. (2) of Article 1491 and
par. (7) of Article 1409 of the Civil Code which prohibits agents
from acquiring by purchase, even at a public or judicial auction
either in person or through the mediation of another, the
property whose administration or sale may have been
entrusted to them unless the consent of the principal has been
given.
The contention is erroneous. The prohibition mandated by par.
(2) of Article 1491 in relation to Article 1409 of the Civil Code
does not apply in the instant case where the sale of the
property in dispute was made under a special power inserted
in or attached to the real estate mortgage pursuant to Act No.
3135, as amended. It is a familiar rule of statutory construction
that, as between a specific statute and general statute, the
former must prevail since it evinces the legislative intent more
clearly than a general statute does. 7 The Civil Code (R.A. 386)
is of general character while Act No. 3135, as amended, is a
special enactment and therefore the latter must prevail. 8
Under Act No. 3135, as amended, a mortgagee-creditor is
allowed to participate in the bidding and purchase under the
same conditions as any other bidder, as in the case at bar, thus:
Section 5. At any sale, the creditor, trustee, or other person
authorized to act for the creditor, may participate in the
bidding and purchase under the same conditions as any other
bidder, unless the contrary has been expressly provided in the
mortgage or trust deed under which the sale is made.
In other words, Section 5 of Act No. 3135, as amended, creates
and is designed to create an exception to the general rule that
a mortgagee or trustee in a mortgage or deed of trust which
contains a power of sale on default may not become the
purchaser, either directly or through the agency of a third
person, at a sale which he himself makes under the power.
Under such an exception, the title of the mortgagee-creditor
over the property cannot be impeached or defeated on the
ground that the mortgagee cannot be a purchaser at his own
sale.
Needless to state, the power to foreclose is not an ordinary
agency that contemplates exclusively the representation of
the principal by the agent but is primarily an authority
conferred upon the mortgagee for the latter's own protection.
It is an ancillary stipulation supported by the same cause or
consideration for the mortgage and forms an essential and
inseparable part of that bilateral agreement. 9 Even in the
absence of statutory provision, there is authority to hold that
a mortgagee may purchase at a sale under his mortgage to
protect his own interest or to avoid a loss to himself by a sale
to a third person at a price below the mortgage debt. 10 The
express mandate of Section 5 of Act No. 3135, as amended,
amply protects the interest of the mortgagee in this
jurisdiction.
THE MANILA REMNANT CO., INC., petitioner, vs.
HON. COURT OF APPEALS, AND SPS. OSCAR C. VENTANILLA
AND CARMEN GLORIA DIAZ, respondents.
The present petition is an offshoot of our decision in Manila
Remnant Co., Inc., (MRCI) v. Court of Appeals, promulgated on
November 22, 1990.
That case involved parcels of land in Quezon City which were
owned by petitioner MRCI and became the subject of its
agreement with A.U. Valencia and Co., Inc., (AUVCI) by virtue
of which the latter was to act as the petitioner's agent in the
development and sale of the property. For a stipulated fee,
AUVCI was to convert the lands into a subdivision, manage the
sale of the lots, execute contracts and issue official receipts to
the lot buyers. At the time of the agreement, the president of
both MRCI and AUVCI was Artemio U. Valencia.
Pursuant to the above agreement, AUVCI executed two
contracts to sell dated March 3, 1970, covering Lots 1 and 2,
Block 17, in favor of spouses Oscar C. Ventanilla and Carmen
Gloria Diaz for the combined contract price of P66,571.00,
payable monthly in ten years. After ten days and without the
knowledge of the Ventanilla couple, Valencia, as president of
MRCI, resold the same parcels to Carlos Crisostomo, one of his
sales agents, without any consideration. Upon orders of
Valencia, the monthly payments of the Ventanillas were
remitted to the MRCI as payments of Crisostomo, for which
receipts were issued in his name. The receipts were kept by
Valencia without the knowledge of the Ventanillas and
Crisostomo. The Ventanillas continued paying their monthly
installments.
On May 30, 1973, MRCI informed AUVCI that it was
terminating their agreement because of discrepancies
discovered in the latter's collections and remittances. On June
6, 1973, Valencia was removed by the board of directors of
MRCI as its president.
On November 21, 1978, the Ventanilla spouses, having learned
of the supposed sale of their lots to Crisostomo, commenced
an action for specific performance, annulment of deeds, and
damages against Manila Remnant Co., Inc., A.U. Valencia and
Co., Inc., and Carlos Crisostomo. It was docketed as Civil Case
No. 26411 in the Court of First Instance of Quezon City, Branch
7-B.
8
On November 17, 1980, the trial court rendered a decision
declaring the contracts to sell in favor of the Ventanillas valid
and subsisting, and annulling the contract to sell in favor of
Crisostomo. It ordered the MRCI to execute an absolute deed
of sale in favor of the Ventanillas, free from all liens and
encumbrances. Damages and attorney's fees in the total
amount of P210,000.00 were also awarded to the Ventanillas
for which the MRCI, AUVCI, and Crisostomo were held
solidarily liable.
The lower court ruled further that if for any reason the transfer
of the lots could not be effected, the defendants would be
solidarily liable to the Ventanillas for reimbursement of the
sum of P73,122.35, representing the amount paid for the two
lots, and legal interest thereon from March 1970, plus the
decreed damages and attorney's fees. Valencia was also held
liable to MRCI for moral and exemplary damages and
attorney's fees.
From this decision, separate appeals were filed by Valencia and
MRCI. The appellate court, however, sustained the trial
court in toto.
MRCI then filed before this Court a petition for certiorari to
review the portion of the decision of the Court of Appeals
upholding the solidary liability of MRCI, AUVCI and Carlos
Crisostomo for the payment of moral and exemplary damages
and attorney's fees to the Ventanillas.
On November 22, 1990, this Court affirmed the decision by the
Court of Appeals and declared the judgment of the trial court
immediately executory.
The Present Case. On January 25, 1991, the spouses Ventanilla
filed with the trial court a motion for the issuance of a writ of
execution in Civil Case No. 26411. The writ was issued on May
3, 1991, and served upon MRCI on May 9, 1991.
In a manifestation and motion filed by MRCI with the trial court
on May 24, 1991, the petitioner alleged that the subject
properties could not be delivered to the Ventanillas because
they had already been sold to Samuel Marquez on February 7,
1990, while their petition was pending in this Court.
Nevertheless, MRCI offered to reimburse the amount paid by
the respondents, including legal interest plus the aforestated
damages. MRCI also prayed that its tender of payment be
accepted and all garnishments on their accounts lifted.
The Ventanillas accepted the amount of P210,000.00 as
damages and attorney's fees but opposed the reimbursement
offered by MRCI in lieu of the execution of the absolute deed
of sale. They contended that the alleged sale to Samuel
Marquez was void, fraudulent, and in contempt of court and
that no claim of ownership over the properties in question had
ever been made by Marquez.
On July 19, 1991, Judge Elsie Ligot-Telan issued the following
order:
To ensure that there is enough amount to cover the value of
the lots involved if transfer thereof to plaintiff may no longer
be effected, pending litigation of said issue, the garnishment
made by the Sheriff upon the bank account of Manila Remnant
may be lifted only upon the deposit to the Court of the amount
of P500,000.00 in cash.
MRCI then filed a manifestation and motion for
reconsideration praying that it be ordered to reimburse the
Ventanillas in the amount of P263,074.10 and that the
garnishment of its bank deposit be lifted. This motion was
denied by the trial court in its order dated September 30, 1991.
A second manifestation and motion filed by MRCI was denied
on December 18, 1991. The trial court also required MRCI to
show cause why it should not be cited for contempt for
disobedience of its judgment.
These orders were questioned by MRCI in a petition
for certiorari before the respondent court on the ground that
they were issued with grave abuse of discretion.
The Court of Appeals ruled that the contract to sell in favor of
Marquez did not constitute a legal impediment to the
immediate execution of the judgment. Furthermore, the cash
bond fixed by the trial court for the lifting of the garnishment
was fair and reasonable because the value of the lot in
question had increased considerably. The appellate court also
set aside the show-cause order and held that the trial court
should have proceeded under Section 10, Rule 39 of the Rules
of Court and not Section 9 thereof.1
In the petition now before us, it is submitted that the trial court
and the Court of Appeals committed certain reversible errors
to the prejudice of MRCI.
The petitioner contends that the trial court may not enforce it
garnishment order after the monetary judgment for damages
had already been satisfied and the amount for reimbursement
had already been deposited with the sheriff. Garnishment as a
remedy is intended to secure the payment of a judgment debt
when a well-founded belief exists that the erring party will
abscond or deliberately render the execution of the judgment
nugatory. As there is no such situation in this case, there is no
need for a garnishment order.
It is also averred that the trial court gravely abused its
discretion when it arbitrarily fixed the amount of the cash bond
for the lifting of the garnishment order at P500,000.00.
MRCI further maintains that the sale to Samuel Marquez was
valid and constitutes a legal impediment to the execution of
the absolute deed of sale to the Ventanillas. At the time of the
9
sale to Marquez, the issue of the validity of the sale to the
Ventanillas had not yet been resolved. Furthermore, there was
no specific injunction against the petitioner re-selling the
property.
Lastly, the petitioner insists that Marquez was a buyer in good
faith and had a right to rely on the recitals in the certificate of
title. The subject matter of the controversy having passed to
an innocent purchaser for value, the respondent court erred in
ordering the execution of the absolute deed of sale in favor of
the Ventanillas.
For their part, the respondents argue that the validity of the
sale to them had already been established even while the
previous petition was still pending resolution. That petition
only questioned the solidary liability of MRCI to the
Ventanillas. The portion of the decision ordering the MRCI to
execute an absolute deed of sale in favor of the Ventanillas
became final and executory when the petitioner failed to
appeal it to the Supreme Court. There was no need then for an
order enjoining the petitioner from re-selling the property in
litigation.
They also point to the unusual lack of interest of Marquez in
protecting and asserting his right to the disputed property, a
clear indication that the alleged sale to him was merely a ploy
of the petitioner to evade the execution of the absolute deed
of sale in their favor.
The petition must fail. The validity of the contract to sell in
favor of the Ventanilla spouses is not disputed by the parties.
Even in the previous petition, the recognition of that contract
was not assigned as error of either the trial court or appellate
court. The fact that the MRCI did not question the legality of
the award for damages to the Ventanillas also shows that it
even then already acknowledged the validity of the contract to
sell in favor of the private respondents.
On top of all this, there are other circumstances that cast
suspicion on the validity, not to say the very existence, of the
contract with Marquez.
First, the contract to sell in favor of Marquez was entered into
after the lapse of almost ten years from the rendition of the
judgment of the trial court upholding the sale to the
Ventanillas.
Second, the petitioner did not invoke the contract with
Marquez during the hearing on the motion for the issuance of
the writ of execution filed by the private respondents. It
disclosed the contract only after the writ of execution had
been served upon it.
Third, in its manifestation and motion dated December 21,
1990, the petitioner said it was ready to deliver the titles to the
Ventanillas provided that their counterclaims against private
respondents were paid or offset first. There was no mention of
the contract to sell with Marquez on February 7, 1990.
Fourth, Marquez has not intervened in any of these
proceedings to assert and protect his rights to the subject
property as an alleged purchaser in good faith.
At any rate, even if it be assumed that the contract to sell in
favor of Marquez is valid, it cannot prevail over the final and
executory judgment ordering MRCI to execute an absolute
deed of sale in favor of the Ventanillas. No less importantly,
the records do not show that Marquez has already paid the
supposed balance amounting to P616,000.00 of the original
price of over P800,000.00.2
The Court notes that the petitioner stands to benefit more
from the supposed contract with Marquez than from the
contract with the Ventanillas with the agreed price of only
P66,571.00. Even if it paid the P210,000.00 damages to the
private respondents as decreed by the trial court, the
petitioner would still earn more profit if the Marquez contract
were to be sustained.
We come now to the order of the trial court requiring the
posting of the sum of P500,000.00 for the lifting of its
garnishment order.
While the petitioners have readily complied with the order of
the trial court for the payment of damages to the Ventanillas,
they have, however, refused to execute the absolute deed of
sale. It was for the purpose of ensuring their compliance with
this portion of the judgment that the trial court issued the
garnishment order which by its term could be lifted only upon
the filling of a cash bond of P500,000.00.
The petitioner questions the propriety of this order on the
ground that it has already partially complied with the
judgment and that it has always expressed its willingness to
reimburse the amount paid by the respondents. It says that
there is no need for a garnishment order because it is willing
to reimburse the Ventanillas in lieu of execution of the
absolute deed of sale.
The alternative judgment of reimbursement is applicable only
if the conveyance of the lots is not possible, but it has not been
shown that there is an obstacle to such conveyance. As the
main obligation of the petitioner is to execute the absolute
deed of sale in favor of the Ventanillas, its unjustified refusal
to do so warranted the issuance of the garnishment order.
Garnishment is a species of attachment for reaching credits
belonging to the judgment debtor and owing to him from a
stranger to the litigation.3 It is an attachment by means of
which the plaintiff seeks to subject to his claim property of the
10
defendant in the hands of a third person or money owed by
such third person or garnishee to the defendant. 4The rules on
attachment also apply to garnishment proceedings.
A garnishment order shall be lifted if it established that: b(a)
the party whose accounts have been garnished has posted a
counterbond or has made the requisite cash deposit; 5
(b) the order was improperly or irregularly issued6 as where
there is no ground for garnishment 7 or the affidavit and/or
bond filed therefor are defective or insufficient;8
(c) the property attached is exempt from execution, hence
exempt from preliminary attachment9 or
(d) the judgment is rendered against the attaching or
garnishing creditor.10
Partial execution of the judgment is not included in the above
enumeration of the legal grounds for the discharge of a
garnishment order. Neither does the petitioner's willingness to
reimburse render the garnishment order unnecessary. As for
the counterbond, the lower court did not err when it fixed the
same at P500,000.00. As correctly pointed out by the
respondent court, that amount corresponds to the current fair
market value of the property in litigation and was a reasonable
basis for determining the amount of the counterbond.
Regarding the refusal of the petitioner to execute the absolute
deed of sale, Section 10 of Rule 39 of the Rules of Court reads
as follows: Sec. 10. Judgment for specific act; vesting title — If
a judgment directs a party to execute a conveyance of land, or
to deliver deeds or other documents, or to perform any other
specific act, and the party fails to comply within the time
specified, the court may direct the act to be done at the cost
of the disobedient party by some other person appointed by
the court and the act when so done shall have like effect as if
done by the party. If real or personal property is within the
Philippines, the court in lieu of directing a conveyance thereof
may enter judgment divesting the title of any party and vesting
it in others and such judgment shall have the force and effect
of a conveyance executed in due form of law.
Against the unjustified refusal of the petitioner to accept
payment of the balance of the contract price, the remedy of
the respondents is consignation, conformably to the following
provisions of the Civil Code:
Art. 1256. If the creditor to whom tender of payment has been
made refuses without just cause to accept it, the debtor shall
be released from responsibility by the consignation of the
thing or sum due. . .
Art. 1258. Consignation shall be made by depositing the things
due at the disposal of the judicial authority, before whom the
tender of payment shall be proved, in a proper case, and the
announcement of the consignation in other cases.
The consignation having been made, the interested parties
shall also be notified thereof.
Art. 1260. Once the consignation has been duly made, the
debtor may ask the judge to order the cancellation of the
obligation.
Accordingly, upon consignation by the Ventanillas of the sum
due, the trial court may enter judgment canceling the title of
the petitioner over the property and transferring the same to
the respondents. This judgment shall have the same force and
effect as conveyance duly executed in accordance with the
requirements of the law.
In sum, we find that: 1. No legal impediment exists to the
execution, either by the petitioner or the trial court, of an
absolute deed of sale of the subject property in favor of the
respondent Ventanillas; and
2. The lower court did not abuse its discretion when it required
the posting of a P500,000.00 cash bond for the lifting of the
garnishment order.
SPOUSES ENRICO MALONZO and AVELINA MALONZO,
BARBARA BROWN, and BONIFACIA MONZON, petitioners, vs.
HON. HERMINIO MARIANO, Judge, CFI, Manila, Br. IV, BANCO
FILIPINO SAVINGS AND MORTGAGE BANK and THE CITY
SHERIFF OF MANILA, respondents.
The principal issue raised in the special civil action of
prohibition at bar is whether or not a writ of possession issued
by a Court of First Instance (Regional Trial Court) in accordance
with Act 3135, to give possession of property sold at an
extrajudicial foreclosure sale to the purchaser thereof, may be
enforced against persons other than the mortgagor
The property in question consists of two (2) parcels of land and
the apartment and commercial building thereon standing,
located at R. Magsaysay Boulevard, Sta. Mesa, Manila. A
mortgage was constituted over this property by its owner
then, Universal Ventures, Inc., in favor of Banco Filipino
Mortgage & Savings Bank, as security for the payment of a loan
of P350,000.00. 1 The mortgage deed authorized the extra-
judicial foreclosure of the property in the event of default in
the repayment of the loan. It was later amended to extend to
and cover an additional and total consolidated loan of
P400,000.00. 2 Universal Ventures, Inc. failed to repay the
loan. Consequently, Banco Filipino caused the extra-judicial
foreclosure of the property by the City Sheriff of Manila. The
foreclosure sale took place in due course; the mortgaged
property was struck off to the bank, as highest bidder, and the
bank registered the sheriff's certificate of sale with the
11
Register of Deeds of Manila and on July 27, 1976 obtained a
certificate of title in its name, numbered 122496, in lieu of that
of the mortgagor, which was accordingly cancelled. 3
On the same day that title was issued to it, Banco Filipino filed
a petition for a writ of possession with the Court of First
Instance of Manila.4 The petition recited the foregoing facts
and the additional circumstances that (1) the mortgagor,
Universal Ventures, Inc., had failed to redeem the property
within the one-year period allowed by law, and (2) the
mortgagor was still in possession of the property, as well as
certain other persons claiming rights under said mortgagor
although said rights had not been recorded in the Register of
Deeds, and prayed —
. . . that after due notice and hearing, ... (the) Court forthwith
issue in accordance with Section 7 of Act No. 3135, as amended
by Act No. 4118, a writ of possession of the property in favor
of the petitioner and against the respondent and all persons
claiming under it, to vacate the premises ... covered by and
embraced in (the mortgagor's title,) Transfer Certificate of Title
No. 67992 of the Register of Deeds of Manila.
Among the persons named in the petition as "claiming (rights)
under" Universal Ventures, Inc., were petitioners Avelina
Malonzo, Barbara Brown, and Bonifacia Monzon. 5 The
petition contained a "Notification" addressed to the Clerk of
Court to set the hearing thereon on July 30, 1976 at 9:00
o'clock in the morning; and copies were served on the
Universal Ventures, Inc. and the persons alleged to be claiming
rights under it. 6
After hearings were had on the petition, Judge Herminio
Mariano issued the order now assailed, under date of
September 20, 1979, the dispositive portion whereof reads as
follows:7
WHEREFORE, let the corresponding Writ of Possession be
issued directing the Sheriff of Manila or his duly authorized
representative to place the herein petitioner in actual
possession of the foreclosed properties described in Transfer
Certificate of Title No. 67992 and to eject therefrom the herein
respondent, its officers, agents and other persons claiming
under said respondent.
The writ of possession issued on March 4, 1980 and on the
strength thereof, the Sheriff of Manila attempted to evict the
persons in occupancy of the property. 8
Three of the persons sought to be evicted, Enrico Malonzo,
husband of Avelina Malonzo, Barbara Brown, and Bonifacia
Monzon, filed suit against Banco Filipino and the City Sheriff in
the same Court of First Instance of Manila seeking to
perpetually restrain the enforcement of the writ of possession
against them, and to recover damages resulting from the
defendants' attempts to enforce it. 9 The action was docketed
as Civil Case No. 132075. In their complaint, they alleged that
they were occupying their respective premises in the
foreclosed property "by virtue of a verbal lease contract with
Universal Ventures, lnc.," that "there being no ejectment case
filed against them neither were they made a party to the
Petition for Writ of Possession of defendant BANCO FILIPINO
..." they were entitled to remain in possession and could not
be ousted under the writ of possession; moreover, "under
Presidential Decree No. 20 and Batas Pambansa Blg. 25,
transfer of ownership whether by virtue of sale or mortgage
will not be a ground for ejectment."
Fourteen (14) days later, these same persons — Enrico
Malonzo, Barbara Brown and Bonifacia Monzon — and Enrico's
wife, Avelina Malonzo, instituted a second action, this time, a
special civil action for prohibition, commenced in this Court by
petition dated June 6, 1980. Named respondents were the
same defendants in Civil Case No. 132075 — Banco Filipino and
the City Sheriff of Manila — as well as Judge Mariano, who had
issued the writ of possession. The petition recited substantially
the same facts as those set out in the complaint in Civil Case
No. 132075, and submitted the same thesis, that they could
not be evicted from the premises "there being no ejectment
case filed against them neither were they made a party to the
petition for writ of possessioned filed by respondent Bank," and
"under Presidential Decree No. 20 and further reiterated in
Batas Pambansa Bilang 25, transfer of ownership whether by
virtue of sale or mortgage will not be a ground for ejectment ...
.
Section 7 of Act 3135, as amended by Act 4118, grants to the
purchaser at an extra-judicial foreclosure sale, an absolute
right to possession of the property sold during the one-year
period of redemption and a fortiori after the lapse of said
period without any redemption being made. 10 Possession may
be obtained under a writ which may be applied for ex parte.
Section 7 reads as follows:
SEC. 7. In any sale made under the provisions of this Act, the
purchaser may petition the Court of First Instance of the
province or place where the property or any part thereof is
situated, to give him possession thereof during the redemption
period, furnishing bond in an amount equivalent to the use of
the property for a period of twelve months, to indemnify the
debtor in case it be shown that the sale was made without
violating the mortgage or without complying with the
requirements of this Act. Such petition shall be made under
oath and filed in form of an ex parte motion in the registration
or cadastral proceedings if the property is registered, or in
special proceedings in the case of property registered under
the Mortgage Law or under section one hundred and ninety-
four of the Administrative Code or of any other real property
12
encumbered with a mortgage duly registered in the office of
any register of deeds in accordance with any existing law, and
in each case the clerk of the court shall, upon the filing of such
petition, collect the fees specified in paragraph eleven of
section one hundred and fourteen of Act Numbered Four
hundred and ninety-six, as amended by Act Numbered
Twenty-eight hundred and sixty-six, and the court shall, upon
approval of the bond, order that a writ of possession issue,
addressed to the sheriff of the province in which the property
is situated, who shall execute said order immediately.
There being no dispute about the fact that no redemption had
been made within one (1) year from registration of the
extrajudicial foreclosure sale, there can be no question about
the absolute right of Banco Filipino, as purchaser, to a writ of
possession, 11 or stated otherwise, the ministerial duty of the
Court to issue the writ, 12 upon mere motion, without need of
instituting a separate action for the purpose .13 The question is
whether or not that writ of possession which — is the final
process to carry out or consummate the extra-judicial
foreclosure of the mortgage — may be enforced by the sheriff
against persons other than the mortgagor who are in
occupancy of the foreclosed property. To this question this
Court has already had occasion to give an affirmative answer,
grounded particularly on the provisions of Section 35, Rule 39
of the Rules of Court which are inter alia suppletory to act
3135. 14
Under section 6 of Act No. 3135 and Sections 29 to 31 and
Section 35 Rule 39 of the Revised Rules of Court, in case of an
extra-judicial foreclosure of a real estate mortgage, the
possession of the property sold may be given to the purchaser
by the sheriff after the period of redemption had
expired, unless a third person is actually holding the property
adversely to the mortgagor. An ordinary action for the
recovery of possession is not necessary. There is no law in this
jurisdiction whereby the purchaser at a sheriffs sale of real
property is obliged to bring a separate and independent suit
for possession after the one year period for redemption has
expired and after he has obtained the sheriffs final certificate
of sale. (Tan Soo Huat vs. Ongwico 63 Phil. 746, 749). The same
rule was followed in a judicial foreclosure of mortgage and in
an execution sale (Rivera vs. Court of First Instance of Nueva
Ecija, 61 Phil. 201 and Republic vs. Nable, L-4979, April 30,
1952). If the court can issue a writ of possession during the
period of redemption there is no reason why it should not also
have the same power after the expiration of that period.15
The petitioners cannot be deemed third parties "actually
holding the property adversely" to the mortgagor. They derive
their rights to the possession of the property exclusively from
the mortgagor, in virtue of verbal agreements of lease. They
derive their rights to the possession of the property exclusively
from the mortgagor, in virtue of verbal agreements of lease.
They were lessees at the time that the property occupied by
them was mortgaged by their lessor to respondent Banco
Filipino. And of that mortgage they were charged with
constructive knowledge upon its registration in the Registry of
Property, if they did not indeed, actually know of it. The right
pertaining to them in this situation was that of being notified
of the application for a writ of possession and of being
accorded an opportunity at a hearing to oppose the same, as
by showing that they were "actually holding the property
adversely" to the mortgagor. That right was duly accorded to
them. They were served with copies of the motion or petition
for issuance of the writ of possession and had ample
opportunity to oppose the same, to persuade the Court that
the writ should not issue or be executed against them. The
proceedings showed that, by their own assertions, they were
not holding the property adversely to the mortgagor, but were
exercising rights under, derived from, said mortgagor, who was
their lessor. Upon the cessation of their lessor's rights over the
property, their own also ceased. The writ of possession was
therefore properly enforceable against them.
The situation is not significantly different from that
contemplated by Section 49 (b) of Rule 39, declaring a final and
executory judgment or order conclusive and hence
enforceable not only against the parties but also "their
successors in interest by title subsequent to the
commencement of the action or special proceeding." Pursuant
to this provision, a judgment in personam directing a party to
deliver possession of property to another is binding not only
against the former but also against his successors in interest by
title subsequent to the commencement of the action, i.e.,
those whose possessory rights are derived from him, 16 e.g.,
lessees, possessors by tolerance, assignees. As regards the
latter, it is not required that a separate action be instituted
against them to litigate the issue of possession; due process is
satisfied by holding a hearing, with notice to them, on the
nature of their possession, and thereafter denying or acceding
to the enforcement of a writ of possession against them as the
findings at said hearing shall warrant. 17
WHEREFORE, the petition is DISMISSED for lack of merit, and
the case is remanded to the Court a quo with instructions to
forthwith issue in favor of respondent bank an alias writ of
possession enforceable against the petitioners or their
successors in interest, and all other persons claiming under, or
not otherwise actually holding the property adversely to, the
mortgagor, Universal Ventures, Inc. Costs against petitioners.
CITY OF NAGA VS. ASUNCION
This petition for certiorari and prohibition under Rule 65 of the
Rules of Court seeks the reversal of the
Resolution[1] dated August 16, 2006 of the Court of Appeals in
13
CA-G.R. SP No. 90547 which denied the Application for a Writ
of Preliminary Prohibitory Injunction[2] filed by petitioner.
Challenged as well is the Order[3] dated August 17, 2006 of the
Regional Trial Court (RTC) of Naga City, Branch 26 in Civil Case
No. RTC 2005-0030 for unlawful detainer which granted
respondents Motion to Issue Writ of Execution[4] filed on August
16, 2005 and denied petitioners Motion for Inhibition[5] filed
on June 27, 2005. Concomitantly, the processes issued to
enforce said Order are equally assailed, namely: the Writ of
Execution Pending Appeal[6] dated August 22, 2006; the Notice
to Vacate[7] dated August 23, 2006; and the Notice of
Garnishment[8] dated August 23, 2006.
The facts as culled from the rollo of this petition and from the
averments of the parties to this petition are as follows:
Macario A. Mariano and Jose A. Gimenez were the registered
owners of a 229,301-square meter land covered by Transfer
Certificate of Title (TCT) No. 671[9] located in NagaCity. The
land was subdivided into several lots and sold as part of City
Heights Subdivision (CHS).
In a Letter[10] dated July 3, 1954, the officers of CHS offered to
construct the Naga City Hall on a two (2)-hectare lot within the
premises of the subdivision. Said lot was to be designated as
an open space for public purpose and donated to petitioner in
accordance with the rules and regulations of the National
Urban Planning Commission. By Resolution No.
75[11] dated July 12, 1954, the Municipal Board of Naga City
(Municipal Board) asked CHS to increase the area of the land
to four (4) hectares. Accordingly, CHS amended its offer to five
(5) hectares.
On August 11, 1954, the Municipal Board adopted Resolution
No. 89[12] accepting CHS amended offer. Mariano and Gimenez
thereafter delivered possession of the lots described as Blocks
25 and 26 to the City Government of Naga (city government).
Eventually, the contract for the construction of the city hall
was awarded by the Bureau of Public Works through public
bidding to Francisco O. Sabaria, a local contractor. This
prompted Mariano and Gimenez to demand the return of the
parcels of land from petitioner. On assurance, however, of
then Naga City Mayor Monico Imperial that petitioner will buy
the lots instead, Mariano and Gimenez allowed the city
government to continue in possession of the land.
On September 17, 1959, Mariano wrote a letter[13] to Mayor
Imperial inquiring on the status of the latters proposal for the
city government to buy the lots instead. Then, through a
note[14] dated May 14, 1968, Mariano directed Atty. Eusebio
Lopez, Jr., CHS General Manager, to disregard the proposed
donation of lots and insist on Mayor Imperials offer for the city
government to purchase them.
On December 2, 1971, Macario A. Mariano died. Meanwhile,
the city government continued in possession of the lots, and
constructed the Naga City Hall on Block 25 and the public
market on Block 26. It also conveyed to other government
offices[15] portions of the land which at present, house the
National Bureau of Investigation (NBI), Land Transportation
Office, and Hall of Justice, among others.
In a Letter[16] dated September 3, 2003, Danilo D. Mariano, as
administrator and representative of the heirs of Macario A.
Mariano, demanded from petitioner the return of Blocks 25
and 26 to CHS. Alas, to no avail.
Thus, on February 12, 2004, respondent filed a
Complaint[17] for unlawful detainer against petitioner before
the Municipal Trial Court (MTC) of Naga City, Branch 1. In a
Decision[18] dated February 14, 2005 of the MTC in Civil Case
No. 12334, the MTC dismissed the case for lack of jurisdiction.
It ruled that the citys claim of ownership over the lots posed
an issue not cognizable in an unlawful detainer case.
On appeal, the RTC reversed the court a quo by
Decision[19] dated June 20, 2005 in Civil Case No. RTC 2005-
0030. It directed petitioner to surrender physical possession of
the lots to respondents with forfeiture of all the
improvements, and to pay P2,500,000.00 monthly as
reasonable compensation for the use and occupation of the
land; P587,159.60 as attorneys fees; and the costs of suit.
On June 27, 2005, petitioner filed a Motion for Inhibition
against Presiding RTC Judge Filemon B. Montenegro for alleged
bias and partiality. Then, petitioner moved for
reconsideration/new trial of the June 20, 2005 Decision.
On July 15, 2005, the RTC denied both motions.
On July 22, 2005, petitioner filed a Petition for Review with
Very Urgent Motion/Application for Temporary Restraining
Order and Writ of Preliminary Prohibitory Injunction[20] with
the Court of Appeals. Respondents thereafter filed a Motion to
Issue Writ of Execution.
On October 13, 2005, respondents manifested that they will
not seek execution against the NBI, City Hall and Hall of Justice
in case the writ of preliminary injunction is denied. On August
16, 2006, the appellate court issued the challenged Resolution,
the decretal portion of which reads:
WHEREFORE, based on the foregoing premises, and in the
absence of any immediate threat of grave and irreparable
injury, petitioners prayer for issuance of a writ of preliminary
injunction is hereby DENIED. Petitioner had already filed its
Memorandum. Hence, the private respondents are given
fifteen (15) days from notice within which to submit their
Memorandum. SO ORDERED.[21]
14
On August 17, 2006, the RTC issued the assailed Order, thus:
WHEREFORE, let the corresponding Writ of Execution Pending
Appeal be issued in this case immediately pursuant to Sec. 21,
Rule 70. However, in view of the MANIFESTATION of plaintiffs
dated October 13, 2005 that they will not take possession of
the land and building where the City Hall, Hall of Justice and
National Bureau of Investigation are located while this case is
still pending before the Court of Appeals, this writ of execution
shall be subject to the above-cited exception.
The Sangguniang [Panlungsod] of Naga City is hereby directed
to immediately appropriate the necessary amount of
[P]2,500,000.00 per month representing the unpaid rentals
reckoned from November 30, 2003 up to the present from its
UNAPPROPRIATED FUNDS to satisfy the claim of the plaintiffs,
subject to the existing accounting and auditing rules and
regulations. SO ORDERED.[22]
Consequently, Clerk of Court Atty. Jesus Mampo issued a writ
of execution pending appeal. Sheriff Jorge B. Lopez on the
other hand, served a notice to vacate on respondents, and a
notice of garnishment on Land Bank, Naga City Branch.
Hence, this petition for certiorari and prohibition. On August
28, 2006, we issued a Temporary Restraining Order[23] to
maintain the status quo pending resolution of the petition.
Petitioner raises the following issues for our consideration:
I.WHETHER OR NOT PETITIONER CAN VALIDLY AVAIL OF THE
EXTRAORDINARY WRITS OF CERTIORARI AND PROHIBITION IN
ASSAILING THE CHALLENGED RESOLUTION, ORDERS AND
NOTICES.
II.WHETHER OR NOT PETITIONER IS GUILTY OF FORUM-
SHOPPING.
III.WHETHER OR NOT PUBLIC RESPONDENT JUDGE
COMMITTED GRAVE ABUSE OF DISCRETION IN ALLOWING THE
IMMEDIATE EXECUTION OF ITS JUDGMENT
NOTWITHSTANDING THE CATASTROPHIC CONSEQUENCES IT
WILL BEAR ON THE DELIVERY OF BASIC GOVERNMENTAL
SERVICES TO THE GOOD CITIZENS OF NAGA CITY; THE
INCONCLUSIVENESS OF PRIVATE RESPONDENTS TITLE AND
CLAIM OF POSSESSION OVER THE SUBJECT PROPERTY; AND
THE IMPUTATION OF BIAS AND PARTIALITY AGAINST PUBLIC
RESPONDENT JUDGE.
IV.WHETHER OR NOT PUBLIC RESPONDENTS JUDGE FILEMON
B. MONTENEGRO, ATTY. JESUS MAMPO AND SHERIFF JORGE
B. LOPEZ EXCEEDED THEIR AUTHORITY AND/OR COMMITTED
GRAVE ABUSE OF DISCRETION IN TRYING TO EVICT PETITIONER
AND VARIOUS DEPARTMENTS AND OFFICES THEREOF FROM
THE SUBJECT PROPERTY.
V.WHETHER OR NOT PUBLIC RESPONDENT JUDGE FILEMON B.
MONTENEGRO EXCEEDED HIS JURISDICTION AND/OR
COMMITTED GRAVE ABUSE OF DISCRETION IN DIRECTING
PETITIONER TO PAY PRIVATE RESPONDENTS MONTHLY
RENTALS OF ABOUT [P]81,500,000.00.
VI.WHETHER OR NOT THE ORDER DIRECTING PETITIONER TO
PAY PRIVATE RESPONDENT MONTHLY RENTALS
[DISREGARDED] THE HONORABLE COURTS ADMINISTRATIVE
CIRCULAR NO. 10-2000 AND THE LAW AND THE
JURISPRUDENCE CITED THEREIN.
VII.WHETHER OR NOT PUBLIC RESPONDENTS JUDGE FILEMON
B. MONTENEGRO, ATTY. JESUS MAMPO AND SHERIFF JORGE
B. LOPEZ EXCEEDED THEIR AUTHORITY AND/OR COMMITTED
GRAVE ABUSE OF DISCRETION IN CAUSING THE GARNISHMENT
OF PETITIONERS ACCOUNT WITH LAND BANK OF
THE PHILIPPINES.
VIII.WHETHER OR NOT THE HONORABLE COURT OF APPEALS
COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO
LACK OR EXCESS OF JURISDICTION IN DENYING THE
PETITIONERS APPLICATION FOR WRIT OF PRELIMINARY
PROHIBITORY INJUNCTION.[24]
The pertinent issues, in our view, are as follows: (1) whether
petitioner availed of the proper remedy to contest the
disputed order, resolution, and notices; (2) whether petitioner
was guilty of forum-shopping in filing the instant petition
pending the petition for review before the Court of Appeals;
(3) whether RTC Judge Montenegro committed grave abuse of
discretion in granting execution pending appeal; and (4)
whether the Court of Appeals committed grave abuse of
discretion in denying petitioners application for a writ of
preliminary injunction.
Petitioner City of Naga ascribes grave abuse of discretion on
Judge Montenegro for allowing execution pending appeal and
for refusing to inhibit himself from the proceedings. It
contends that its claim of ownership over the lots behooved
the RTC of jurisdiction to try the illegal detainer case.
Granting arguendo that the RTC had jurisdiction and its
judgment was immediately executory, petitioner insists that
the circumstances in the case at bar warranted against it. For
one, the people of Naga would be deprived of access to basic
social services even before respondents right to possess the
land has been conclusively established. The City of Naga assails
the validity of the order of execution issued by the court
inasmuch as it excluded the NBI, City Hall and Hall of Justice
from its coverage; ordered garnishment of government funds;
and directed the Sangguniang Panlungsodto appropriate
money in violation of the Supreme Court Administrative
Circular No. 10-2000.[25] Petitioner likewise claims that Atty.
Jesus Mampo and Sheriff Jorge B. Lopez acted with manifest
15
abuse when they issued the writ of execution pending appeal,
and served notice to vacate and notice of garnishment,
respectively.
Finally, petitioner imputes grave abuse of discretion on the
Court of Appeals for denying its application for a writ of
preliminary injunction. The appellate tribunal struck down
petitioners application pending resolution by the RTC of
respondents motion to execute its June 20, 2005 Decision.
Also, it found no merit in petitioners claim that grave and
irreparable injury will result to the City of Naga by the
implementation of said decision. Nevertheless, it excused the
NBI, Naga City Hall and Hall of Justice from execution.
For their part, respondents (Marianos) call for the dismissal of
the instant petition on the ground of forum-shopping. They
aver that the petition for review in the Court of Appeals and
the present petition are but similar attempts to stop the
immediate enforcement of the June 20, 2005 RTC Decision.
They add that the court a quo merely acted in obedience to the
provisions of Section 21[26] of Rule 70 of the Rules of Court
when it ordered execution. Thus, the writ of execution, notice
to vacate and notice of garnishment are also valid as incidents
of the August 17, 2006 RTC Order. Respondents agree with the
appellate court that there is no immediate threat of grave and
irreparable injury to petitioner. In any case, the Marianos
suggest that petitioner just seek reparation for damages
should the appellate court reverse the RTC. Lastly,
respondents allege that the court a quo correctly ruled on the
merits despite its finding that the MTC erroneously dismissed
the unlawful detainer case for lack of jurisdiction. The MTC
based its decision on the affidavits and position papers
submitted by the parties.
The petition is partly meritorious. In the interest of justice, we
decided to give due course to the petition for certiorari and
prohibition concerning the August 17, 2006 Order of the RTC.
As a rule, petitions for the issuance of such extraordinary writs
against an RTC should be filed with the Court of Appeals. A
direct invocation of this Courts original jurisdiction to issue
these writs should be allowed only when there are special and
important reasons therefor, clearly and specifically set out in
the petition.[27] Under the present circumstance however, we
agree to take cognizance of this case as an exception to the
principle of hierarchy of courts.[28] For while it has been held
by this Court that a motion for reconsideration is a
condition sine qua non for the grant of a writ of certiorari,
nevertheless such requirement may be dispensed with where
there is an urgent necessity for the resolution of the question
and any further delay would prejudice the interests of the
Government.[29] Such is the situation in the case at bar.
Thus, we find no merit in respondents contention that
petitioner erred in its choice of remedy before this Court.
Under Section 1(c) and (f),[30] Rule 41 of the Rules of Court, no
appeal may be taken from an interlocutory order and an order
of execution, respectively. An interlocutory order is one which
does not dispose of the case completely but leaves something
to be decided upon.[31] Such is the nature of an order granting
or denying an application for preliminary injunction; hence,
not appealable.[32] The proper remedy, as petitioner did in this
case, is to file a petition for certiorari and/or prohibition under
Rule 65.
Nor can we agree that petitioner was guilty of forum-shopping.
Under the Same Objective Standard enunciated in the case
of First Philippine International Bank v. Court of Appeals,[33] the
filing by a party of two apparently different actions, but with
the same objective, constitutes forum- shopping.[34] Here, the
special civil action of certiorari before us is an independent
action. The ultimate purpose of such action is to keep the
inferior tribunal within the bounds of its jurisdiction or relieve
parties from arbitrary acts of the court.[35] In contrast, the
petition for review before the Court of Appeals under Rule 42
involves an evaluation of the case on the merits. Clearly,
petitioner did not commit forum-shopping.
Now, we shall proceed to resolve the contentious issues in this
case.
Section 21, Rule 70 of the Rules of Court is pertinent: SEC.
21. Immediate execution on appeal to Court of Appeals or
Supreme Court. The judgment of the Regional Trial Court
against the defendant shall be immediately executory, without
prejudice to a further appeal that may be taken therefrom.
Thus, the judgment of the RTC against the defendant in an
ejectment case is immediately executory. Unlike Section
19,[36] Rule 70 of the Rules, Section 21 does not provide a
means to prevent execution; hence, the courts duty to order
such execution is practically ministerial.[37] Section 21 of Rule
70 presupposes that the defendant in a forcible entry or
unlawful detainer case is unsatisfied with the judgment of the
RTC and decides to appeal to a superior court. It authorizes the
RTC to immediately issue a writ of execution without prejudice
to the appeal taking its due course. Nevertheless, it should be
stressed that the appellate court may stay the said writ should
circumstances so require.[38]
Petitioner herein invokes seasonably the exceptions to
immediate execution of judgments in ejectment cases cited
in Hualam Construction and Devt. Corp. v. Court of
Appeals[39] and Laurel v. Abalos,[40] thus: Where supervening
events (occurring subsequent to the judgment) bring about a
material change in the situation of the parties which makes the
execution inequitable, or where there is no compelling
urgency for the execution because it is not justified by the
16
prevailing circumstances, the court may stay immediate
execution of the judgment.
Noteworthy, the foregoing exceptions were made in reference
to Section 8,[42] Rule 70 of the old Rules of Court which has
been substantially reproduced as Section 19, Rule 70 of the
1997 Rules of Civil Procedure. Therefore, even if the appealing
defendant was not able to file a supersedeas bond, and make
periodic deposits to the appellate court, immediate execution
of the MTC decision is not proper where the circumstances of
the case fall under any of the above-mentioned exceptions.
Yet, Section 21, Rule 70 of the Rules does not provide for a
procedure to avert immediate execution of an RTC decision.
This is not to say that the losing defendant in an ejectment case
is without recourse to avoid immediate execution of the RTC
decision. The defendant may, as in this case, appeal said
judgment to the Court of Appeals and therein apply for a writ
of preliminary injunction. Thus, as held in Benedicto v. Court of
Appeals,[43] even if RTC judgments in unlawful detainer cases
are immediately executory, preliminary injunction may still be
granted.[44]
In the present case, the Court of Appeals denied petitioners
application for a writ of preliminary injunction because the RTC
has yet to rule on respondents Motion to Issue Writ of
Execution. Significantly, however, it also made a finding that
said application was without merit. On this score, we are
unable to agree with the appellate court.
A writ of preliminary injunction is available to prevent
threatened or continuous irremediable injury to parties before
their claims can be thoroughly studied and adjudicated. Its sole
objective is to preserve the status quo until the merits of the
case can be heard fully.[45] Status quo is the last actual,
peaceable and uncontested situation which precedes a
controversy.[46]
As a rule, the issuance of a preliminary injunction rests entirely
within the discretion of the court taking cognizance of the case
and will not be interfered with, except in cases of manifest
abuse.[47] Grave abuse of discretion implies a capricious and
whimsical exercise of judgment tantamount to lack or excess
of jurisdiction. The exercise of power must have been done in
an arbitrary or a despotic manner by reason of passion or
personal hostility. It must have been so patent and gross as to
amount to an evasion of positive duty or a virtual refusal to
perform the duty enjoined or to act at all in contemplation of
law.[48]
Considering the circumstances in this case, we find that the
Court of Appeals abused its discretion when it denied
petitioners application for a writ of preliminary injunction
because of the pendency of respondents Motion to Issue Writ
of Execution with the RTC, but ruled on the merits of the
application at the same time. At most, the appellate court
should have deferred resolution on the application until the
RTC has decided on the motion for execution pending appeal.
Moreover, nothing in the rules allow a qualified execution
pending appeal that would have justified the exclusion of the
NBI, City Hall and Hall of Justice from the effects of the writ.
In any case, we have ploughed through the records of this case
and we are convinced of the pressing need for a writ of
preliminary injunction. Be it noted that for a writ of preliminary
injunction to be issued, the Rules of Court do not require that
the act complained of be in clear violation of the rights of the
applicant. Indeed, what the Rules require is that the act
complained of be probably in violation of the rights of the
applicant. Under the Rules, probability is enough basis for
injunction to issue as a provisional remedy.This situation is
different from injunction as a main action where one needs to
establish absolute certainty as basis for a final and permanent
injunction.[49]
Thus, we have stressed the foregoing distinction to justify the
issuance of a writ of preliminary injunction in actions for
unlawful detainer: ...Where the action, therefore, is one of
illegal detainer, as distinguished from one of forcible entry,
and the right of the plaintiff to recover the premises is seriously
placed in issue in a proper judicial proceeding, it is more
equitable and just and less productive of confusion and
disturbance of physical possession, with all its concomitant
inconvenience and expenses. For the Court in which the issue
of legal possession, whether involving ownership or not, is
brought to restrain, should a petition for preliminary injunction
be filed with it, the effects of any order or decision in the
unlawful detainer case in order to await the final judgment in
the more substantive case involving legal possession or
ownership. It is only where there has been forcible entry that
as a matter of public policy the right to physical possession
should be immediately set at rest in favor of the prior
possession regardless of the fact that the other party might
ultimately be found to have superior claim to the premises
involved, thereby to discourage any attempt to recover
possession thru force, strategy or stealth and without resorting
to the courts.[50]
Needless to reiterate, grave and irreparable injury will be
inflicted on the City of Naga by the immediate execution of
the June 20, 2005 RTC Decision. Foremost, as pointed out by
petitioner, the people of Naga would be deprived of access to
basic social services. It should not be forgotten that the land
subject of the ejectment case houses government offices
which perform important functions vital to the orderly
operation of the local government. As regards the garnishment
of Naga Citys account with the Land Bank, the rule is and has
always been that all government funds deposited in official
17
depositary of the Philippine Government by any of its agencies
or instrumentalities, whether by general or special deposit,
remain government funds. Hence, they may not be subject to
garnishment or levy, in the absence of corresponding
appropriation as required by law.[51] For this reason, we hold
that the Notice of Garnishment dated August 23, 2006 is void.
Anent Judge Montenegros refusal to recuse himself from the
proceedings, we find no grave abuse of discretion. We have
held time and again that inhibition must be for just and valid
causes. The mere imputation of bias and partiality is not
enough ground for judges to inhibit, especially when the
charge is without sufficient basis. This Court has to be shown
acts or conduct clearly indicative of arbitrariness or prejudice
before it can brand concerned judges with the stigma of bias
and partiality. Bare allegations of partiality will not suffice in
the absence of clear and convincing evidence to overcome the
presumption that the judge will undertake his noble role to
dispense justice according to law and evidence without fear
and favor.[52] The Resolution[53] of the Court En Banc
dated June 27, 2006 which dismissed the complaint filed by
Mayor Jesse Robredo against Judge Montenegro served to
negate petitioners allegations. Nevertheless, when the ground
sought for the judges inhibition is not among those
enumerated in Section 1,[54] Rule 137 of the Rules of Court, a
judge may, in the exercise of his sound discretion, disqualify
himself from sitting in a case, for just or valid reasons.
Similarly, in our view, the charge of grave abuse of discretion
against Clerk of Court Atty. Jesus Mampo and Sheriff Jorge B.
Lopez cannot prosper. When Judge Montenegroissued the
order directing the issuance of a writ of execution, Atty. Jesus
Mampo was left with no choice but to issue the writ. Such was
his ministerial duty in accordance with Section 4,[55] Rule 136
of the Rules of Court.[56] In the same vein, when the writ was
placed in the hands of Sheriff Lopez, it was his duty, in the
absence of instructions to the contrary, to proceed with
reasonable celerity and promptness to implement it in
accordance with its mandate. It is elementary that a sheriffs
duty in the execution of the writ is purely ministerial; he is to
execute the order of the court strictly to the letter. He has no
discretion whether to execute the judgment or not. The rule
may appear harsh, but such is the rule we have to observe. [57]
WHEREFORE, the instant petition is PARTLY GRANTED, and it
is hereby ORDERED that: (A) The Resolution dated August 16,
2006 of the Court of Appeals in CA-G.R. SP No. 90547
is REVERSED and SET ASIDE. The Court of Appeals
is ORDERED to issue a writ of preliminary injunction to restrain
the execution of the Decision dated June 20, 2005 of the
Regional Trial Court, Branch 26, Naga City pending resolution
of the petition for review before it;
(B) The Writ of Execution Pending Appeal dated August 22,
2006, Notice to Vacate dated August 23, 2006, and the Notice
of Garnishment dated August 23, 2006 are SET ASIDE.
Lastly, the Court of Appeals is hereby ENJOINED to resolve the
pending petition for review before it, CA-G.R. SP No. 90547,
without further delay, in a manner not inconsistent with this
Decision.
RICARDO S. SILVERIO, JR., ESSES DEVELOPMENT
CORPORATION, and TRI-STAR FARMS, INC., petitioners, vs.
FILIPINO BUSINESS CONSULTANTS, INC., respondent.
The Case. Before us is a petition for review of the Order of the
Regional Trial Court, Fourth Judicial Region, Branch XI, Balayan,
Batangas (RTC Balayan) dated 26 May 2000.[1] The order
suspended the enforcement of the writ of possession that the
RTC Balayan had previously issued in favor of petitioners
Ricardo S. Silverio, Jr. (Silverio, Jr.), Esses Development
Corporation (Esses) and Tri-Star Farms, Inc. (Tri-Star). Filipino
Business Consultants, Inc. (FBCI), now Filipino Vastland
Company, Inc. sought to suspend the writ of possession on the
ground of a supervening event. FBCI claimed that it had just
acquired all the stocks of Esses and Tri-Star. As the new owner
of Esses and Tri-Star, FBCI asserted its right of possession to
the disputed property. Petitioners Silverio, Jr., Esses and Tri-
Star question the RTC Balayans suspension of the writ of
possession and its jurisdiction to hold hearings on the
supervening event.
The Antecedent Facts. The parties are wrangling over
possession of a 62 hectare-land in Calatagan, Batangas
(Calatagan Property). Silverio, Jr. is the President of Esses and
Tri-Star. Esses and Tri-Star were in possession of the Calatagan
Property, covered by TCT No. T-55200 and registered in the
names of Esses and Tri-Star.
On 22 September 1995, Esses and Tri-Star executed a Deed of
Sale with Assumption of Mortgage in favor of FBCI. Esses and
Tri-Star failed to redeem the Calatagan Property.
On 27 May 1997, FBCI filed a Petition for Consolidation of Title
of the Calatagan Property with the RTC Balayan.[2]
FBCI obtained a judgment by default. Subsequently, TCT No. T-
55200 in the names of Esses and Tri-Star was cancelled and TCT
No. T-77656 was issued in FBCIs name. On 20 April 1998, the
RTC Balayan issued a writ of possession in FBCIs favor. FBCI
then entered the Calatagan Property.
When Silverio, Jr., Esses and Tri-Star learned of the judgment
by default and writ of possession, they filed a petition for relief
from judgment and the recall of the writ of possession. Silverio,
Jr., Esses and Tri-Star alleged that the judgment by default is
18
void because the RTC Balayan did not acquire jurisdiction over
them. FBCI allegedly forged the service of summons on them.
On 28 December 1998, the RTC Balayan nullified and set aside
the judgment by default and the writ of possession. The RTC
Balayan found that the summons and the complaint were not
served on Silverio, Jr., Esses and Tri-Star. The RTC Balayan
directed the service of summons anew on Silverio, Jr., Esses
and Tri-Star.
The RTC Balayan denied FBCIs motion for reconsideration of
the order. FBCI then filed a petition for certiorari with the
Court of Appeals questioning the RTC Balayans 28 December
1998 Order.[3] On 28 April 2000, the Court of Appeals denied
FBCIs petition. The Court of Appeals also denied FBCIs motion
for reconsideration. On 13 August 2001, the Supreme Court
denied FBCIs petition.
On 14 April 1999, the RTC Balayan modified its 28 December
1998 Order by upholding FBCIs possession of the Calatagan
Property. The RTC Balayan ruled that FBCI could not be
deprived of possession of the Calatagan Property because FBCI
made substantial improvements on it. Possession could revert
to Silverio, Jr., Esses and Tri-Star only if they reimburse FBCI.
The RTC Balayan gave Silverio, Jr., Esses and Tri-Star 15 days to
file their responsive pleadings.
Silverio, Jr., Esses and Tri-Star moved for the partial
reconsideration of the 14 April 1999 Order. Silverio, Jr., Esses
and Tri-Star argued that since the judgment by default was
nullified, they should be restored to their possession of the
Calatagan Property. FBCI did not file any opposition to the
motion.
On 9 November 1999, the RTC Balayan reversed its 14 April
1999 Order by holding that Silverio, Jr., Esses and Tri-Star had
no duty to reimburse FBCI. The RTC Balayan pointed out that
FBCI offered no evidence to substantiate its claim for
expenses. The 9 November 1999 Order also restored
possession of the Calatagan Property to Silverio, Jr., Esses and
Tri-Star pursuant to Rule 39, Section 5 of the 1997 Rules of Civil
Procedure. This provision provides for restitution in case of
reversal of an executed judgment. On 7 January 2000, the RTC
Balayan denied FBCIs motion for reconsideration.
On 8 May 2000, the RTC Balayan issued the writ of possession
to Silverio, Jr., Esses and Tri-Star.
On 12 May 2000, FBCI filed with the RTC Balayan a
Manifestation and Motion to Recall Writ of Possession on the
ground that the decision of the Court of Appeals in CA-G.R. SP
No. 56924 was not yet final and FBCIs motion for
reconsideration was still pending. The RTC Balayan set the
hearing on 26 May 2000.
On 23 May 2000, FBCI filed with the RTC Balayan an Urgent Ex-
Parte Motion to Suspend Enforcement of Writ of Possession.
FBCI pointed out that it is now the new owner of Esses and Tri-
Star having purchased the substantial and controlling shares of
stocks[4] of the two corporations.
On the 26 May 2000 hearing, FBCI reiterated its claim of a
supervening event, its ownership of Esses and Tri-Star. FBCI
informed the RTC Balayan that a new board of directors for
Esses and Tri-Star had been convened following the
resignation of the members of the board of directors. The
previous actions of the former board of directors have been
abandoned and the services of Atty. Vicente B. Chuidian, the
counsel of petitioners Silverio, Jr., Esses and Tri-Star, have
been terminated.
On the same day, the RTC Balayan issued the order suspending
the writ of possession it had earlier issued to Silverio, Jr., Esses
and Tri-Star. The RTC Balayan reasoned that it would violate
the law on forum shopping if it executed the writ while FBCIs
motion for reconsideration of the Court of Appeals decision
and urgent motion to suspend the issuance of the writ of
possession remained pending with the Court of Appeals. The
RTC Balayan noted that because of FBCIs strong resistance,
Silverio, Jr., Esses and Tri-Star have still to take possession of
the Calatagan Property. More than ten days had already
passed from the time that the RTC Balayan had issued the writ
of possession. FBCI had barricaded the Calatagan Property,
threatening bloodshed if possession will be taken away from
it. The RTC Balayan believed that if it would not restrain
Silverio, Jr., Esses and Tri-Star from taking possession of the
Calatagan Property, a violent confrontation between the
parties might erupt as reported in the Tempo newspaper in its
26 May 2000 issue. Without issuing a restraining order, the
RTC Balayan suspended the writ by requesting the counsel of
Silverio, Jr., Esses and Tri-Star to allow the court to study the
voluminous records of the case, which are to be presented at
the hearing on 16 June 2000. The hearing would determine the
existence of a supervening event.
On 15 June 2000, the RTC Balayan issued an Order cancelling
the 16 June 2000 hearing so that the Court of Appeals could
resolve the issue regarding the existence of a supervening
event. However, the RTC Balayan declared that the suspension
of the writ of possession would be lifted on 17 June 2000.
On 8 August 2000, Silverio, Jr., Esses and Tri-Star filed a
complaint for annulment of contracts with damages with the
Regional Trial Court of Las Pias City, Branch 275 (RTC Las
Pias).[5]
Issues Silverio, Jr., Esses and Tri-Star argue that: I.An ex
parte motion cannot legally constitute an initiatory basis for
the RTC Balayan to conduct additional hearings in order to
19
validate certain new allegations. Neither can said ex
parte motion be the basis for the suspension of a writ of
possession being implemented.
II.When the RTC Balayan suspended the writ of possession, it
was barred from hearing intra-corporate disputes. And though
Congress has now amended our law on the matter, the RTC still
cannot proceed because of due process and res
judicata reasons.
III.A final and executory judgment cannot be enjoined except
by an appropriate petition for relief, a direct attack in another
action or a collateral act in another action.
IV. Respondent FBCI is asking for a suspension of the writ of
possession while at the same time threatening violence if the
writ of possession were to be implemented. The RTC Balayan
had no lawful basis to suspend the writ under these admitted
circumstances.
V. Respondent has not directly answered petitioners legal
theory. The petition is founded on admitted facts upon which
relief is sought under Rule 45. Respondent has altered these
facts presenting its so called counterstatements of facts and
issues which involve questions of fact that are still litis
pendentia at the RTC Balayan. And which even involve an
attempt to vary res judicata.
VI. Contrary to respondents claims, that the RTC order of 15
June 2000 has rendered this case moot and academic quite on
the contrary said order calls upon the Supreme Court to decide
whether or not, the RTC Balayan may continue to conduct its
hearings on suspending the writ of possession.
VII. Respondents theory that an order suspending a writ of
possession is interlocutory in nature, and therefore
inappealable, is not supported by jurisprudence.
VIII. Respondents views on when suspending a writ of
execution is appropriate would make the exception as rule.
And respondents reliance on Flores vs. CA, et al. is totally
misplaced. In the Flores case, the party being dispossessed was
a judgment creditor, who was admitted by the adverse party
to be the owner.
IX. The question of jus possessionis on the Calatagan Property
is already res judicata while the question of jus possidendi is
still under litis pendentia. For that reason, respondent has lost
all his legal options in retaining the property procured under a
faked service of summons.
X. Respondents arguments in his 11-06-01 Memo on (a) forum
shopping, (b) petitioners lack of capacity to sue, (c) service of
summons already served (d) no intra-corporate dispute and (e)
the relief herein preempted by events are ratiocinations of
miniscule weight, meriting only the slightest comment.[6]
FBCI raises the following issues: 1. Whether the present case
has been rendered moot and academic by the Order of the RTC
Balayan dated 15 June 2000 and the filing of an action with the
Regional Trial Court of Las Pias City; 2. Whether the present
appeal should be dismissed on the ground of forum shopping;
3. Whether the RTC Balayan had the authority to suspend
enforcement of the writ of possession and to conduct hearings
on a new set of facts; 4. Whether the present case involves an
intra-corporate controversy; 5. Whether appeal
by certiorari under Rule 45 is the proper remedy under the
given facts of the case.[7]
The Ruling of the Court The petition has merit.
Procedural Issues. Before resolving the threshold issue, which
is the existence of a supervening event, we first address the
following procedural issues: (1) whether appeal is the proper
remedy against an order suspending the execution of a writ of
possession; (2) whether the issue of possession was mooted by
the 15 June 2000 Order of the RTC Balayan; and (3) whether
the filing of a civil case with the RTC Las Pias constitutes forum
shopping.
First, interlocutory orders are those that determine incidental
matters that do not touch on the merits of the case or put an
end to the proceedings.[8] The proper remedy to question an
improvident interlocutory order is a petition
for certiorari under Rule 65, not Rule 45.[9] A petition for
review under Rule 45 is the proper mode of redress to question
final judgments.[10]
An order staying the execution of the writ of possession is an
interlocutory order.[11] Clearly, this order cannot be appealed.
A petition for certiorari was therefore the correct remedy.
Moreover, Silverio, Jr., Esses and Tri-Star pointed out that the
RTC Balayan acted on an ex-parte motion to suspend the writ
of possession, which is a litigious matter, without complying
with the rules on notice and hearing. Silverio, Jr., Esses and Tri-
Star also assail the RTC Balayans impending move to accept
FBCIs evidence on its subsequent ownership of Esses and Tri-
Star. In effect, Silverio, Jr., Esses and Tri-Star accuse the RTC
Balayan of acting without or in excess of jurisdiction or with
grave abuse of discretion, which is within the ambit
of certiorari.
However, in the exercise of our judicial discretion, we will treat
the appeal as a petition under Rule 65.[12] Technical rules must
be suspended whenever the purposes of justice warrant it,
such as in this case where substantial and important issues
await resolution.
Second, the RTC Balayans 15 June 2000 Order lifting the
suspension of the writ of possession was issued to correct its
action on FBCIs ex-parte motion, which did not have the
required notice and hearing. This issue has thus become a fait
20
accompli. However, while the 15 June 2000 Order is supposed
to have mooted the suspension of the execution of the writ of
possession by lifting the suspension on 17 June 2000, Silverio,
Jr., Esses and Tri-Star claim that the writ has not been executed
in their favor. Thus, the issues in this petition are far from being
moot. Also, the existence of a supervening event is another
issue that must be resolved since the RTC Balayan had instead
submitted to the higher courts the resolution of this issue.
Third, Silverio, Jr., Esses and Tri-Star are not guilty of forum
shopping for filing another action against FBCI with the RTC Las
Pias during the pendency of this case with the RTC
Balayan. Forum shopping consists of filing multiple suits
involving the same parties for the same cause of action, either
simultaneously or successively, to obtain a favorable
judgment.[13]
The parties and cause of action in the present case before the
RTC Balayan and in the case before the RTC Las Pias are
different. The present case was filed by FBCI against Silverio,
Jr., Esses and Tri-Star for the consolidation of title over the
Calatagan Property. On the other hand, the case before the
RTC Las Pias was filed by Silverio, Jr., Esses and Tri-Star against
FBCI and other defendants for the annulment of contract with
damages, tort and culpa aquiliana (civil fraud).
In its complaint before the RTC Las Pias, Silverio, Jr., Esses and
Tri-Star informed the court that there is a pending case with
the RTC Balayan over the Calatagan Property.[14] Silverio, Jr.,
Esses and Tri-Star made it clear in the complaint that the case
before the RTC Las Pias will focus on the Makati Tuscany
property and any reference to the Calatagan Property is meant
to serve only as proof or evidence of the plan, system, scheme,
habit, etc., lurking behind defendants interlocking acts
constituting interlocking tort and interlocking fraud.[15] Clearly,
FBCIs claim of forum shopping against Silverio, Jr., Esses and
Tri-Star has no basis.
No Supervening Event in this Case. FBCI took possession of the
Calatagan Property after the RTC Balayan rendered a judgment
by default in FBCIs favor. The judgment by default was nullified
after the RTC Balayan found out that the service of summons
on Silverio, Jr., Esses and Tri-Star was procured fraudulently.
The RTC Balayan thus recalled the writ of possession it had
issued to FBCI. Silverio, Jr., Esses and Tri-Star were served
anew with summons. The RTC Balayan restored possession of
the Calatagan Property to Silverio, Jr., Esses and Tri-Star as
restitution resulting from the annulment of the judgment by
default. The order restoring possession of the Calatagan
Property to Silverio, Jr., Esses and Tri-Star has attained
finality. This case then proceeded to pre-trial.
FBCI has resisted the enforcement of the writ of possession by
barricading the Calatagan Property and threatening violence if
its possession of the property is taken away from it. To avoid The order of restitution placed the parties in the situation prior
bloodshed, as FBCI also claimed that Silverio, Jr. had armed to the RTC Balayans rendition of the void judgment by default.
civilians threatening to shoot FBCIs representatives,[16] the RTC Title to the Calatagan Property is still in the names of Esses and
Balayan momentarily suspended the execution of the writ. The Tri-Star. Possession of the Calatagan Property must revert to
RTC Balayan also had to rule on FBCIs claim of a supervening Esses and Tri-Star as legal owners of the property.
event that would allegedly make the execution of the writ
However, with the reinstitution of the case for consolidation of
absurd,[17] as FBCI alleges it now owns the controlling interest
title with the RTC Balayan, possession of the Calatagan
in Esses and Tri-Star. The RTC Balayan lifted the suspension of
Property is now subject to the outcome of the case.
the writ but it cancelled the hearings on the supervening event
Nonetheless, while this case is still under litigation it is only in
to give way to the Court of Appeals action on this issue. The
the pre-trial stage Esses and Tri-Star in whose names the
RTC Balayan decided to await the appellate courts resolution
Calatagan Property is titled and in whose favor the order of
because it did not want to violate the rule against forum
restitution was issued, are the ones entitled to possession of
shopping.
the property.
Silverio, Jr., Esses and Tri-Star argue that the RTC Balayan has
We do not agree with Silverio, Jr., Esses and Tri-Stars assertion
no power to conduct hearings on the supervening event
that the RTC Balayan has no power to conduct a hearing on the
because res judicata has set in on the issue. They also contend
existence of a supervening event because of res judicata. Res
that the supervening event is an intra-corporate controversy
judicata does not set in where the court is without jurisdiction
that is within the jurisdiction of the Securities and Exchange
over the subject or person, and therefore, the judgment is a
Commission, not the trial court. Silverio, Jr., Esses and Tri-Star
nullity[23] such as the judgment by default in this case. The
point out that despite the lifting of the suspension RTC Balayan
order that voided the judgment by default and the order of
has still to execute the writ of possession in their favor. On the
restitution merely recognized the nullity of the judgment by
other hand, FBCI maintains that its acquisition of Esses and Tri-
default. The orders did not adjudicate on the merits of the
Star is a supervening event, which the RTC Balayan could hear
case. Since res judicata had not set in, the case was tried anew
and is sufficient ground to stay the execution of the writ of
upon the proper service of summons on Silverio, Jr., Esses and
possession.
Tri-Star.
We rule in favor of Silverio, Jr., Esses and Tri-Star. The court
Moreover, it is the court issuing the writ of possession that has
may stay immediate execution of a judgment when
control and supervision over its processes.[24] The RTC Balayan
supervening events, occurring subsequent to the judgment,
can therefore hear the evidence on the existence of a
bring about a material change in the situation of the
supervening event, provided the subject matter is within the
parties.[18] To justify the stay of immediate execution, the
jurisdiction of the court, as this could affect the execution of
supervening events must have a direct effect on the matter
the writ of possession.
already litigated and settled.[19] Or, the supervening events
must create a substantial change in the rights or relations of We are, therefore, dismayed with the RTC Balayans referral of
the parties which would render execution of a final judgment the existence of the supervening event to the higher courts.
unjust, impossible or inequitable making it imperative to stay Courts must not shirk from their duty to rule on an issue. The
immediate execution in the interest of justice.[20] duty of the appellate or higher courts is to review the findings
and rulings of the lower courts, not to issue advisories. Courts
In this case, there is no judgment on the merits, only a
must execute its processes and should not succumb to threats
judgment on a technicality. Even then, the judgment of default
by any of the parties to resort to violence in case of such
rendered in FBCIs favor was voided because the RTC Balayan
enforcement. Had the RTC Balayan immediately passed upon
did not acquire jurisdiction over Silverio, Jr., Esses and Tri-Star
FBCIs allegation of a supervening event, it would have been
due to a fraudulent service of summons. The case for
apparent that this claim is without merit. The RTC Balayan
consolidation of title, from which this petition stemmed, is in
should have then enforced posthaste the writ of possession in
fact still being litigated before the RTC Balayan.
Silverio, Jr., Esses and Tri-Stars favor.
The issuance of the writ of possession in favor of Silverio, Jr.,
FBCIs acquisition of the substantial and controlling shares of
Esses and Tri-Star is also not a judgment on the merits.[21] A
stocks[25] of Esses and Tri-Star does not create a substantial
writ of possession is an order whereby the sheriff is
change in the rights or relations of the parties that would
commanded to place a person in possession of real or personal
entitle FBCI to possession of the Calatagan Property, a
property. [22] The issuance of the writ of possession to Silverio,
corporate property of Esses and Tri-Star. Esses and Tri-Star,
Jr., Esses and Tri-Star is but an order of restitution a
just like FBCI, are corporations. A corporation has a personality
consequence of the nullification of the judgment by default.
21
distinct from that of its stockholders. As early as the case
of Stockholders of F. Guanzon and Sons, Inc. v. Register of
Deeds of Manila,[26] the Court explained the principle of
separate juridical personality in this wise:
A corporation is a juridical person distinct from the members
composing it. Properties registered in the name of the
corporation are owned by it as an entity separate and distinct
from its members. While shares of stock constitute personal
property, they do not represent property of the
corporation. The corporation has property of its own which
consists chiefly of real estate (Nelson v. Owen, 113 Ala., 372,
21 So. 75; Morrow v. Gould, 145 Iowa 1, 123 N.W. 743). A share
of stock only typifies an aliquot part of the corporation's
property, or the right to share in its proceeds to that extent
when distributed according to law and equity (Hall & Faley v.
Alabama Terminal, 173 Ala 398, 56 So., 235), but its holder is
not the owner of any part of the capital of the corporation
(Bradley v. Bauder, 36 Ohio St., 28). Nor is he entitled to the
possession of any definite portion of its property or assets
(Gottfried v. Miller, 104 U.S., 521; Jones v. Davis, 35 Ohio St.,
474). The stockholder is not a co-owner or tenant in common
of the corporate property (Harton v. Hohnston, 166 Ala., 317,
51 So., 992).
Thus, FBCIs alleged controlling shareholdings in Esses and Tri-
Star merely represent a proportionate or aliquot interest in the
properties of the two corporations. Such controlling
shareholdings do not vest FBCI with any legal right or title to
any of Esses and Tri-Stars corporate properties. As a
stockholder, FBCI has an interest in Esses and Tri-Stars
corporate properties that is only equitable or beneficial in
nature. Even assuming that FBCI is the controlling shareholder
of Esses and Tri-Star, it does not legally make it the owner of
the Calatagan Property, which is legally owned by Esses and
Tri-Star as distinct juridical persons. As such, FBCI is not
entitled to the possession of any definite portion of the
Calatagan Property or any of Esses and Tri-Stars properties or
assets. FBCI is not a co-owner or tenant in common of the
Calatagan Property or any of Esses and Tri-Stars corporate
properties.
We see no reason why the execution of the writ of possession
has been long delayed. Possession of the Calatagan Property
must be restored to Esses and Tri-Star through their
representative, Silverio, Jr. There is no proof on record that
Silverio, Jr. has ceased to be the representative of Esses and
Tri-Star in this case.
WHEREFORE, we GRANT the petition. The Regional Trial Court,
Branch XI, Balayan, Batangas is ordered to immediately
execute the writ of possession in Civil Case No. 3356 in favor
of Esses Development Corporation and Tri-Star Farms, Inc.
through their representative, Ricardo S. Silverio, Jr. No costs.
22
VICTORIANO M. ENCARNACION, petitioner, vs. NIEVES
AMIGO, respondent.
This petition for review assails the June 30, 2005 Decision 1 of
the Court of Appeals in CA-G.R. SP No. 73857, ordering the
remand of Civil Case No. Br. 20-1194 to the Regional Trial Court
of Cauayan, Isabela, Branch 20, for further proceedings.
The antecedent facts are as follows:
Petitioner Victoriano M. Encarnacion is the registered owner
of Lot No. 2121-B-1, consisting of 100 square meters and
covered by TCT No. T-256650; and Lot No. 2121-B-2 consisting
of 607 square meters with TCT No. T-256651, located at
District 1, National Hi-way, Cauayan, Isabela. Said two lots
originally form part of Lot No. 2121, a single 707 square meter
track of land owned by Rogelio Valiente who sold the same to
Nicasio Mallapitan on January 18, 1982. On March 21, 1985,
Mallapitan sold the land to Victoriano Magpantay. After the
death of the latter in 1992, his widow, Anita N. Magpantay
executed an Affidavit of Waiver2 on April 11, 1995 waving her
right over the property in favor of her son-in-law, herein
petitioner, Victoriano Encarnacion. Thereafter, the latter
caused the subdivision of the land into two lots3 and the
issuance of titles in his name on July 18, 1996.4
Respondent Nieves Amigo allegedly entered the premises and
took possession of a portion of the property sometime in 1985
without the permission of the then owner, Victoriano
Magpantay. Said occupation by respondent continued even
after TCT Nos. T-256650 and T-256651 were issue to
petitioner.
Consequently, petitioner, through his lawyer sent a
letter5 dated Febuary 1, 2001 demanding that the respondent
vacate the subject property. As evidenced by the registry
return receipt, the demand letter was delivered by registered
mail to the respondent on February 12, 2001. Notwithstanding
receipt of the demand letter, respondent still refused to vacate
the subject property. Thereafter, on March 2, 2001, petitioner
filed a complaint6 for ejectment, damages with injunction and
prayer for restraining order with the Municipal Trial Court in
Cities of Isabela which was docketed as CV-01-030. In his
Answer, respondent alleged that he has been in actual
possession and occupation of a portion of the subject land
since 1968 and that the issuance of Free Patent and titles in
the name of petitioner was tainted with irregularities.7
On October 24, 2001, the Municipal Trial Court in Cities
rendered judgment, which reads:
WHERE[FO]RE, there being a preponderance of evidence, a
JUDGMENT is hereby rendered in favor of the plaintiff
VICTORIANO M. ENCARNACION and against the defendant
NIEVES AMIGOE (sic) as follows:
a) ORDERING the defendant to vacate the portion of the
parcels of land described in Transfer Certificates of Title Nos.
T-256650 and T-256651 he is now occupying and surrender it
to the plaintiff;
b) ORDERING the defendant to pay the plaintiff the sum of FIVE
THOUSAND PESOS (P5,000) as attorney's fees, and
c) ORDERING the defendant to pay rentals equivalent [to]
P500.00 per month from February, 2001 until the portion of
the land occupied by him is surrendered to the plaintiff. COSTS
against the defendant. SO ORDERED.8
On appeal, the Regional Trial Court of Cauayan, Isabela, Branch
20, ruled as follows: WHEREFORE, judgment is hereby
rendered dismissing the case on the ground that as the
Municipal Court had no jurisdiction over the case, this Court
acquired no appellate jurisdiction thereof. Costs against
plaintiff-appellee.
Aggrieved, petitioner filed a petition for review 10 under Rule
42 of the Rules of Court before the Court of Appeals which
promulgated the assailed Decision remanding the case to the
Regional Trial Court. The dispositive portion thereof reads:
WHEREFORE, premises considered, this case is hereby
REMANDED to Branch 20, Regional Trial Court of Cauayan,
Isabela for further proceedings.
Hence the present petition raising the sole issue:
[WHETHER] THE COURT OF APPEALS ERRED IN HOLDING THAT
THE PROPER ACTION IN THIS CASE IS ACCION PUBLICIANA AND
NOT UNLAWFUL DETAINER AS DETERMINED BY THE
ALLEGATIONS IN THE COMPLAINT FILED BY PETITIONER.12
The petition lacks merit. In this jurisdiction, the three kinds of
actions for the recovery of possession of real property are:
1. Accion interdictal, or an ejectment proceeding which may be
either that for forcible entry (detentacion) or unlawful
detainer (desahucio), which is a summary action for recovery
of physical possession where the dispossession has not lasted
for more than one year, and should be brought in the proper
inferior court;
2. Accion publiciana or the plenary action for the recovery of
the real right of possession, which should be brought in the
proper Regional Trial Court when the dispossession has lasted
for more than one year; and
3. Accion reinvindicatoria or accion de reivindicacion, which is
an action for the recovery of ownership which must be brought
in the proper Regional Trial Court.13
Based on the foregoing distinctions, the material element that
determines the proper action to be filed for the recovery of the
possession of the property in this case is the length of time of
23
dispossession. Under the Rules of Court, the remedies of
forcible entry and unlawful detainer are granted to a person
deprived of the possession of any land or building by force,
intimidation, threat, strategy, or stealth, or a lessor, vendor,
vendee, or other person against whom the possession of any
land or building is unlawfully withheld after the expiration or
termination of the right to hold possession by virtue of any
contract, express or implied, or the legal representatives or
assigns of any such lessor, vendor, vendee, or other person.
These remedies afford the person deprived of the possession
to file at any time within one year after such unlawful
deprivation or withholding of possession, an action in the
proper Municipal Trial Court against the person or persons
unlawfully withholding or depriving of possession, or any
person or persons claiming under them, for the restitution of
such possession, together with damages and costs.14 Thus, if
the dispossession has not lasted for more than one year, an
ejectment proceeding is proper and the inferior court acquires
jurisdiction. On the other hand, if the dispossession lasted for
more than one year, the proper action to be filed is an accion
publiciana which should be brought to the proper Regional
Trial Court.
After a careful evaluation of the evidence on record of this
case, we find that the Court of Appeals committed no
reversible error in holding that the proper action in this case
is accion publiciana; and in ordering the remand of the case to
the Regional Trial Court of Cauayan, Isabela, Branch 20, for
further proceedings.
Well settled is the rule that jurisdiction of the court over the
subject matter of the action is determined by the allegations
of the complaint at the time of its filing, irrespective of
whether or not the plaintiff is entitled to recover upon all or
some of the claims asserted therein. What determines the
jurisdiction of the court is the nature of the action pleaded as
appearing from the allegations in the complaint. The
averments therein and the character of the relief sought are
the ones to be consulted.15 On its face, the complaint must
show enough ground for the court to assume jurisdiction
without resort to parol testimony.16
From the allegations in the complaint, it appears that the
petitioner became the owner of the property on April 11, 1995
by virtue of the waiver of rights executed by his mother-in-law.
He filed the complaint for ejectment on March 2, 2001 after
his February 1, 2001 letter to the respondent demanding that
the latter vacate the premises remained unheeded. While it is
true that the demand letter was received by the respondent
on February 12, 2001, thereby making the filing of the
complaint for ejectment fall within the requisite one year from
last demand for complaints for unlawful detainer, it is also
equally true that petitioner became the owner of the subject
lot in 1995 and has been since that time deprived possession
of a portion thereof. From the date of the petitioner's
dispossession in 1995 up to his filing of his complaint for
ejectment in 2001, almost 6 years have elapsed. The length of
time that the petitioner was dispossessed of his property made
his cause of action beyond the ambit of an accion
interdictal and effectively made it one for accion publiciana.
After the lapse of the one-year period, the suit must be
commenced in the Regional Trial Court via an accion
publiciana which is a suit for recovery of the right to possess.
It is an ordinary civil proceeding to determine the better right
of possession of realty independently of title. It also refers to
an ejectment suit filed after the expiration of one year from
the accrual of the cause of action or from the unlawful
withholding of possession of the realty.17
Previously, we have held that if the owner of the land knew
that another person was occupying his property way back in
1977 but the said owner only filed the complaint for ejectment
in 1995, the proper action would be one for accion
publiciana and not one under the summary procedure on
ejectment. As explained by the Court:
We agree with the Court of Appeals that if petitioners are
indeed the owners of the subject lot and were unlawfully
deprived of their right of possession, they should present their
claim before the regional trial court in an accion publiciana or
an accion reivindicatoria, and not before the metropolitan trial
court in a summary proceeding for unlawful detainer or
forcible entry. For even if one is the owner of the property, the
possession thereof cannot be wrested from another who had
been in physical or material possession of the same for more
than one year by resorting to a summary action for
ejectment.18
Hence, we agree with the Court of Appeals when it declared
that: The respondent's actual entry on the land of the
petitioner was in 1985 but it was only on March 2, 2001 or
sixteen years after, when petitioner filed his ejectment case.
The respondent should have filed an accion publiciana case
which is under the jurisdiction of the RTC.
However, the RTC should have not dismissed the case.
Section 8, Rule 40 of the Rules of Court provides: SECTION 8.
Appeal from orders dismissing case without trial; lack of
jurisdiction. — If an appeal is taken from an order of the lower
court dismissing the case without a trial on the merits, the
Regional Trial Court may affirm or reverse it, as the case may
be. In case of affirmance and the ground of dismissal is lack of
jurisdiction over the subject matter, the Regional Trial Court, if
it has jurisdiction thereover, shall try the case on the merits as
if the case was originally filed with it. In case of reversal, the
case shall be remanded for further proceedings.
24
If the case was tried on the merits by the lower court without
jurisdiction over the subject matter, the Regional Trial Court on
appeal shall not dismiss the case if it has original jurisdiction
thereof, but shall decide the case in accordance with the
preceding section, without prejudice to the admission of
amended pleadings and additional evidence in the interest of
justice.
The RTC should have taken cognizance of the case. If the case
is tried on the merits by the Municipal Court without
jurisdiction over the subject matter, the RTC on appeal may
no longer dismiss the case if it has original jurisdiction
thereof. Moreover, the RTC shall no longer try the case on the
merits, but shall decide the case on the basis of the evidence
presented in the lower court, without prejudice to the
admission of the amended pleadings and additional evidence
in the interest of justice.19
WHEREFORE, the petition is DENIED. The Decision of the Court
of Appeals dated June 30, 2005 in CA-G.R. SP No. 73857
ordering the remand of Civil Case No. Br. 20-1194 to the
Regional Trial Court of Cauayan, Isabela, Branch 20, for further
proceedings, is AFFIRMED.
NEYPES VS. CA
Petitioners Domingo Neypes, Luz Faustino, Rogelio Faustino,
Lolito Victoriano, Jacob Obania and Domingo Cabacungan filed
an action for annulment of judgment and titles of land and/or
reconveyance and/or reversion with preliminary injunction
before the Regional Trial Court, Branch 43, of Roxas, Oriental
Mindoro, against the Bureau of Forest Development, Bureau
of Lands, Land Bank of the Philippines and the heirs of
Bernardo del Mundo, namely, Fe, Corazon, Josefa, Salvador
and Carmen.
In the course of the proceedings, the parties (both petitioners
and respondents) filed various motions with the trial court.
Among these were: (1) the motion filed by petitioners to
declare the respondent heirs, the Bureau of Lands and the
Bureau of Forest Development in default and (2) the motions
to dismiss filed by the respondent heirs and the Land Bank of
the Philippines, respectively.
In an order dated May 16, 1997, the trial court, presided by
public respondent Judge Antonio N. Rosales, resolved the
foregoing motions as follows: (1) the petitioners motion to
declare respondents Bureau of Lands and Bureau of Forest
Development in default was granted for their failure to file an
answer, but denied as against the respondent heirs of del
Mundo because the substituted service of summons on them
was improper; (2) the Land Banks motion to dismiss for lack of
cause of action was denied because there were hypothetical
admissions and matters that could be determined only after
trial, and (3) the motion to dismiss filed by respondent heirs of
del Mundo, based on prescription, was also denied because
there were factual matters that could be determined only after
trial.[1]
The respondent heirs filed a motion for reconsideration of the
order denying their motion to dismiss on the ground that the
trial court could very well resolve the issue of prescription from
the bare allegations of the complaint itself without waiting for
the trial proper.
In an order[2] dated February 12, 1998, the trial court
dismissed petitioners complaint on the ground that the action
had already prescribed. Petitioners allegedly received a copy
of the order of dismissal on March 3, 1998 and, on the 15th day
thereafter or on March 18, 1998, filed a motion for
reconsideration. On July 1, 1998, the trial court issued another
order dismissing the motion for reconsideration [3] which
petitioners received on July 22, 1998. Five days later, on July
27, 1998, petitioners filed a notice of appeal[4] and paid the
appeal fees on August 3, 1998.
On August 4, 1998, the court a quo denied the notice of
appeal, holding that it was filed eight days late.[5] This was
received by petitioners on July 31, 1998. Petitioners filed a
motion for reconsideration but this too was denied in an order
dated September 3, 1998.[6]
Via a petition for certiorari and mandamus under Rule 65 of
the 1997 Rules of Civil Procedure, petitioners assailed the
dismissal of the notice of appeal before the Court of Appeals.
In the appellate court, petitioners claimed that they had
seasonably filed their notice of appeal. They argued that the
15-day reglementary period to appeal started to run only on
July 22, 1998 since this was the day they received the final
order of the trial court denying their motion for
reconsideration. When they filed their notice of appeal on July
27, 1998, only five days had elapsed and they were well within
the reglementary period for appeal.[7]
On September 16, 1999, the Court of Appeals (CA) dismissed
the petition. It ruled that the 15-day period to appeal should
have been reckoned from March 3, 1998 or the day they
received the February 12, 1998 order dismissing their
complaint. According to the appellate court, the order was the
final order appealable under the Rules. It held further:
Perforce the petitioners tardy appeal was correctly dismissed
for the (P)erfection of an appeal within the reglementary
period and in the manner prescribed by law is jurisdictional
and non-compliance with such legal requirement is fatal and
effectively renders the judgment final and executory.[8]
25
Petitioners filed a motion for reconsideration of the
aforementioned decision. This was denied by the Court of
Appeals on January 6, 2000.
In this present petition for review under Rule 45 of the Rules,
petitioners ascribe the following errors allegedly committed by
the appellate court:
I THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING
THE PETITIONERS PETITION FOR CERTIORARI AND
MANDAMUS AND IN AFFIRMING THE ORDER OF THE HON.
JUDGE ANTONIO N. ROSALES WHICH DISMISSED THE
PETITIONERS APPEAL IN CIVIL CASE NO. C-36 OF THE
REGIONAL TRIAL COURT, BRANCH 43, ROXAS, ORIENTAL
MINDORO, EVEN AFTER THE PETITIONERS HAD PAID THE
APPEAL DOCKET FEES.
II THE HONORABLE COURT OF APPEALS LIKEWISE ERRED IN
RULING AND AFFIRMING THE DECISION OR ORDER OF THE
RESPONDENT HON. ANTONIO M. ROSALES THAT PETITIONERS
APPEAL WAS FILED OUT OF TIME WHEN PETITIONERS
RECEIVED THE LAST OR FINAL ORDER OF THE COURT ON JULY
22, 1998 AND FILED THEIR NOTICE OF APPEAL ON JULY 27,
1998 AND PAID THE APPEAL DOCKET FEE ON AUGUST 3, 1998.
III THE HONORABLE COURT OF APPEALS FURTHER ERRED IN
RULING THAT THE WORDS FINAL ORDER IN SECTION 3, RULE
41, OF THE 1997 RULES OF CIVIL PROCEDURE WILL REFER TO
THE [FIRST] ORDER OF RESPONDENT JUDGE HON. ANTONIO M.
MORALES DATED FEBRUARY 12, 1998 INSTEAD OF THE LAST
AND FINAL ORDER DATED JULY 1, 1998 COPY OF WHICH WAS
RECEIVED BY PETITIONERS THROUGH COUNSEL ON JULY 22,
1998.
IV. THE HONORABLE COURT OF APPEALS FINALLY ERRED IN
FINDING THAT THE DECISION IN THE CASE OF DENSO, INC. V.
IAC, 148 SCRA 280, IS APPLICABLE IN THE INSTANT CASE
THEREBY IGNORING THE PECULIAR FACTS AND
CIRCUMSTANCES OF THIS CASE AND THE FACT THAT THE SAID
DECISION WAS RENDERED PRIOR TO THE ENACTMENT OF THE
1997 RULES OF CIVIL PROCEDURE.[9]
The foregoing issues essentially revolve around the period
within which petitioners should have filed their notice of
appeal.
First and foremost, the right to appeal is neither a natural right
nor a part of due process. It is merely a statutory privilege and
may be exercised only in the manner and in accordance with
the provisions of law. Thus, one who seeks to avail of the right
to appeal must comply with the requirements of the Rules.
Failure to do so often leads to the loss of the right to
appeal.[10] The period to appeal is fixed by both statute and
procedural rules. BP 129,[11] as amended, provides:
Sec. 39. Appeals. The period for appeal from final orders,
resolutions, awards, judgments, or decisions of any court in all
these cases shall be fifteen (15) days counted from the notice
of the final order, resolution, award, judgment, or decision
appealed from. Provided, however, that in habeas corpus
cases, the period for appeal shall be (48) forty-eight hours from
the notice of judgment appealed from. x x x
Rule 41, Section 3 of the 1997 Rules of Civil Procedure states:
SEC. 3. Period of ordinary appeal. ― The appeal shall be taken
within fifteen (15) days from the notice of the judgment or
final order appealed from. Where a record on appeal is
required, the appellant shall file a notice of appeal and a record
on appeal within thirty (30) days from the notice of judgment
or final order.
The period to appeal shall be interrupted by a timely motion
for new trial or reconsideration. No motion for extension of
time to file a motion for new trial or reconsideration shall be
allowed. (emphasis supplied)
Based on the foregoing, an appeal should be taken within 15
days from the notice of judgment or final order appealed from.
A final judgment or order is one that finally disposes of a case,
leaving nothing more for the court to do with respect to it. It is
an adjudication on the merits which, considering the evidence
presented at the trial, declares categorically what the rights
and obligations of the parties are; or it may be an order or
judgment that dismisses an action.[12]
As already mentioned, petitioners argue that the order of July
1, 1998 denying their motion for reconsideration should be
construed as the final order, not the February 12, 1998 order
which dismissed their complaint. Since they received their
copy of the denial of their motion for reconsideration only on
July 22, 1998, the 15-day reglementary period to appeal had
not yet lapsed when they filed their notice of appeal on July
27, 1998.
What therefore should be deemed as the final order, receipt
of which triggers the start of the 15-day reglementary period
to appeal the February 12, 1998 order dismissing the
complaint or the July 1, 1998 order dismissing the MR?
In the recent case of Quelnan v. VHF Philippines, Inc.,[13] the
trial court declared petitioner Quelnan non-suited and
accordingly dismissed his complaint. Upon receipt of the order
of dismissal, he filed an omnibus motion to set it aside. When
the omnibus motion was filed, 12 days of the 15-day period to
appeal the order had lapsed. He later on received another
order, this time dismissing his omnibus motion. He then filed
his notice of appeal. But this was likewise dismissed ― for
having been filed out of time.
26
The court a quo ruled that petitioner should have appealed
within 15 days after the dismissal of his complaint since this
was the final order that was appealable under the Rules. We
reversed the trial court and declared that it was the denial of
the motion for reconsideration of an order of dismissal of a
complaint which constituted the final order as it was what
ended the issues raised there.
This pronouncement was reiterated in the more recent case
of Apuyan v. Haldeman et al.[14] where we again considered
the order denying petitioner Apuyans motion for
reconsideration as the final order which finally disposed of the
issues involved in the case.
Based on the aforementioned cases, we sustain petitioners
view that the order dated July 1, 1998 denying their motion for
reconsideration was the final order contemplated in the Rules.
We now come to the next question: if July 1, 1998 was the start
of the 15-day reglementary period to appeal, did petitioners in
fact file their notice of appeal on time?
Under Rule 41, Section 3, petitioners had 15 days from notice
of judgment or final order to appeal the decision of the trial
court. On the 15thday of the original appeal period (March 18,
1998), petitioners did not file a notice of appeal but instead
opted to file a motion for reconsideration. According to the
trial court, the MR only interrupted the running of the 15-day
appeal period.[15] It ruled that petitioners, having filed their MR
on the last day of the 15-day reglementary period to appeal,
had only one (1) day left to file the notice of appeal upon
receipt of the notice of denial of their MR. Petitioners,
however, argue that they were entitled under the Rules to
a fresh period of 15 days from receipt of the final order or the
order dismissing their motion for reconsideration.
In Quelnan and Apuyan, both petitioners filed a motion for
reconsideration of the decision of the trial court. We ruled
there that they only had the remaining time of the 15-day
appeal period to file the notice of appeal. We consistently
applied this rule in similar cases,[16] premised on the long-
settled doctrine that the perfection of an appeal in the manner
and within the period permitted by law is not only mandatory
but also jurisdictional.[17] The rule is also founded on deep-
seated considerations of public policy and sound practice that,
at risk of occasional error, the judgments and awards of courts
must become final at some definite time fixed by law.[18]
Prior to the passage of BP 129, Rule 41, Section 3 of the 1964
Revised Rules of Court read: Sec. 3. How appeal is
taken. Appeal maybe taken by serving upon the adverse
party and filing with the trial court within thirty (30) days
from notice of order or judgment, a notice of appeal, an
appeal bond, and a record on appeal. The time during which
a motion to set aside the judgment or order or for new trial has
been pending shall be deducted, unless such motion fails to The Supreme Court may promulgate procedural rules in all
satisfy the requirements of Rule 37. courts.[26] It has the sole prerogative to amend, repeal or even
establish new rules for a more simplified and inexpensive
But where such motion has been filed during office hours of
process, and the speedy disposition of cases. In the rules
the last day of the period herein provided, the appeal must be
governing appeals to it and to the Court of Appeals, particularly
perfected within the day following that in which the party
Rules 42,[27] 43[28] and 45,[29] the Court allows extensions of
appealing received notice of the denial of said
time, based on justifiable and compelling reasons, for parties
motion.[19] (emphasis supplied)
to file their appeals. These extensions may consist of 15 days
According to the foregoing provision, the appeal period or more.
previously consisted of 30 days. BP 129, however, reduced this
To standardize the appeal periods provided in the Rules and
appeal period to 15 days. In the deliberations of the
to afford litigants fair opportunity to appeal their cases, the
Committee on Judicial Reorganization[20] that drafted BP 129,
Court deems it practical to allow a fresh period of 15 days
the raison d etre behind the amendment was to shorten the
within which to file the notice of appeal in the Regional Trial
period of appeal[21] and enhance the efficiency and
Court, counted from receipt of the order dismissing a motion
dispensation of justice. We have since required strict
for a new trial or motion for reconsideration.
observance of this reglementary period of appeal. Seldom
have we condoned late filing of notices of appeal, [22] and only Henceforth, this fresh period rule shall also apply to Rule 40
in very exceptional instances to better serve the ends of governing appeals from the Municipal Trial Courts to the
justice. Regional Trial Courts; Rule 42 on petitions for review from the
Regional Trial Courts to the Court of Appeals; Rule 43 on
In National Waterworks and Sewerage Authority and Authority
appeals from quasi-judicial agencies[31] to the Court of Appeals
v. Municipality of Libmanan,[23] however, we declared that
and Rule 45 governing appeals by certiorari to the Supreme
appeal is an essential part of our judicial system and the rules
Court.[32] The new rule aims to regiment or make the appeal
of procedure should not be applied rigidly. This Court has on
period uniform, to be counted from receipt of the order
occasion advised the lower courts to be cautious about not
denying the motion for new trial, motion for reconsideration
depriving a party of the right to appeal and that every party
(whether full or partial) or any final order or resolution.
litigant should be afforded the amplest opportunity for the
proper and just disposition of his cause, free from the We thus hold that petitioners seasonably filed their notice of
constraint of technicalities. appeal within the fresh period of 15 days, counted from July
22, 1998 (the date of receipt of notice denying their motion for
In de la Rosa v. Court of Appeals,[24] we stated that, as a rule,
reconsideration). This pronouncement is not inconsistent with
periods which require litigants to do certain acts must be
Rule 41, Section 3 of the Rules which states that the appeal
followed unless, under exceptional circumstances, a delay in
shall be taken within 15 days from notice of judgment or final
the filing of an appeal may be excused on grounds of
order appealed from. The use of the disjunctive word or
substantial justice. There, we condoned the delay incurred by
signifies disassociation and independence of one thing from
the appealing party due to strong considerations of fairness
another. It should, as a rule, be construed in the sense in which
and justice.
it ordinarily implies.[33] Hence, the use of or in the above
In setting aside technical infirmities and thereby giving due provision supposes that the notice of appeal may be filed
course to tardy appeals, we have not been oblivious to or within 15 days from the notice of judgment or within 15 days
unmindful of the extraordinary situations that merit liberal from notice of the final order, which we already determined to
application of the Rules. In those situations where refer to the July 1, 1998 order denying the motion for a new
technicalities were dispensed with, our decisions were not trial or reconsideration.
meant to undermine the force and effectivity of the periods set
Neither does this new rule run counter to the spirit of Section
by law. But we hasten to add that in those rare cases where
39 of BP 129 which shortened the appeal period from 30 days
procedural rules were not stringently applied, there always
to 15 days to hasten the disposition of cases. The original
existed a clear need to prevent the commission of a grave
period of appeal (in this case March 3-18, 1998) remains and
injustice. Our judicial system and the courts have always tried
the requirement for strict compliance still applies. The fresh
to maintain a healthy balance between the strict enforcement
period of 15 days becomes significant only when a party opts
of procedural laws and the guarantee that every litigant be
to file a motion for new trial or motion for reconsideration. In
given the full opportunity for the just and proper disposition of
this manner, the trial court which rendered the assailed
his cause.[25]
decision is given another opportunity to review the case and,
in the process, minimize and/or rectify any error of judgment.
27
While we aim to resolve cases with dispatch and to have
judgments of courts become final at some definite time, we
likewise aspire to deliver justice fairly.
In this case, the new period of 15 days eradicates the
confusion as to when the 15-day appeal period should be
counted from receipt of notice of judgment (March 3, 1998) or
from receipt of notice of final order appealed from (July 22,
1998).
To recapitulate, a party litigant may either file his notice of
appeal within 15 days from receipt of the Regional Trial Courts
decision or file it within 15 days from receipt of the order (the
final order) denying his motion for new trial or motion for
reconsideration. Obviously, the new 15-day period may be
availed of only if either motion is filed; otherwise, the decision
becomes final and executory after the lapse of the original
appeal period provided in Rule 41, Section 3.
Petitioners here filed their notice of appeal on July 27, 1998 or
five days from receipt of the order denying their motion for
reconsideration on July 22, 1998. Hence, the notice of appeal
was well within the fresh appeal period of 15 days, as already
discussed.[34]
We deem it unnecessary to discuss the applicability of Denso
(Philippines), Inc. v. IAC[35] since the Court of Appeals never
even referred to it in its assailed decision.
WHEREFORE, the petition is hereby GRANTED and the
assailed decision of the Court of Appeals REVERSED and SET
ASIDE. Accordingly, let the records of this case be remanded
to the Court of Appeals for further proceedings
TRANS INTERNATIONAL, petitioner, vs. THE COURT OF
APPEALS; NATIONAL POWER CORPORATION; PERLA A.
SEGOVIA and GILBERTO PASTORAL, respondents.
Challenged in this petition for review by way of certiorari is the
decision[1] of the Court of Appeals which set aside the order of
the trial court and directed the latter to give due course to the
notice of appeal of respondents. The motion for
reconsideration filed by petitioner was likewise denied on
January 31, l997.[2]
The facts which gave rise to the instant petition are as follows;
Petitioner Trans International filed a complaint for damages
against respondent National Power Corporation (NAPOCOR for
brevity) and two of its principal officers arising from the
rescission of a contract for the supply and delivery of
woodpoles before the Regional Trial Court of Quezon City
which was docketed as Civil Case No. Q-94-20960.
On May 22, l996, the trial court rendered a decision sustaining
the claim of petitioner corporation.[3] It awarded to petitioner
28
the following amounts: $1,325,703.65 representing the
amount of profit which it could have enjoyed had the contract
been observed; $10,000.00 for expenses incurred by
petitioners local agent in the preparation and execution of the
contract; P932,102.53 representing the combined premium
paid by petitioner for the bidders bond, performance bond and
surety bond; and P200,000.00 as attorneys fees.
A copy of the aforesaid decision was received by respondents
on June 6, l996. On June 19, l996, respondents filed their
motion for reconsideration alleging in the main that certain
facts were overlooked, ignored or wrongly appreciated by the
trial court.[4] An opposition to said motion was filed by
petitioner on July 11, l996.[5] On August 2, l996, the trial court
issued an order denying the motion for reconsideration. [6] A
copy of the aforesaid order was personally delivered to
respondent NAPOCORS office on August 23, l996 (Friday) and
was received by Ronald T. Lapuz, a clerk assigned at the office
of the VP-General Counsel.
Considering that it was almost 5:00 p.m., Lapuz placed the said
order inside the drawer of his table. However, on August 26
and 27, l996 (Monday and Tuesday, respectively) said clerk was
unable to report for work due to an illness he suffered as a
result of the extraction of his three front teeth. Said order was
retrieved from his drawer only in the afternoon of the 27th and
was immediately forwarded to the secretary of Atty. Wilfredo
J. Collado, counsel for the respondents. At 3:10 p.m. that same
day, respondents thru counsel filed their notice of appeal. [7]
On August 29, l996, petitioner filed a motion for execution
before the trial court contending that its decision dated May
22, l996 had become final and executory since respondents
failed to make a timely appeal and praying for the issuance of
an order granting the writ of execution.[8] On the other hand,
respondents filed an opposition thereto alleging therein that
the cause of their failure to make a timely appeal was due to
unforeseeable oversight and accident on the part of their
employee who was unable to report for work because of
illness.[9] On September 9, l996 petitioner filed a reply to said
opposition.[10] On September 11, l996 respondents counsel
filed a supplemental opposition to the motion for execution
attaching thereto the affidavit of Lapuz.[11] Finally, on
September 18, l996, respondents filed their rejoinder to said
reply.[12]
On September 13, l996, the trial court issued an order denying
respondents notice of appeal and granting the motion for
execution filed by petitioner, the dispositive portion of which
reads, to wit: WHEREFORE, the foregoing circumstances
having been considered, this Court is constrained to DENY
defendants NOTICE OF APPEAL for having been filed out of
time.
Consequently, plaintiffs motion for execution of the Courts
decision dated May 22, l996 is hereby GRANTED, let a Writ of
Execution be issued the same to be enforced by deputy sheriff
Efren V. Cachero. SO ORDERED.[13]
On September 20, l996, respondents filed a petition
for certiorari before the Court of Appeals questioning the
validity of the issuance of the aforesaid order on the ground
that the denial of their notice of appeal was on the basis of a
mere technicality and that the writ of execution should not
have been issued since there are strong considerations which
militate the strict application of the rules on
procedure.[14] Petitioner corporation filed its comment to the
petition dated September 25, l996 claiming that the event
which happened in respondents office does not amount to an
honest mistake nor an unavoidable accident that would legally
excuse their neglect.[15]
On October 21, l996, the respondent Court rendered its
decision, the dispositive portion of which reads, to wit:
WHEREFORE, the petition is GRANTED DUE COURSE. The
assailed order dated September 13, l996 is ANNULLED and SET
ASIDE. Respondent court is ordered to give due course to
petitioners appeal.
The motion for reconsideration filed by petitioner corporation
was denied for lack of merit, hence, a recourse to this court on
a petition for review by way of a petition for certiorari.[16]
Petitioner avers that the respondent court committed grave
abuse of discretion amounting to lack or excess in jurisdiction
when it gave due course to the petition of respondents
considering their admission that the notice of appeal was
belatedly filed before the trial court. Since the ground
submitted by respondents for their late filing does not
constitute excusable neglect then the respondent court
allegedly grievously erred in admitting the same. Furthermore,
petitioner argues that appeal is not a natural right and is
merely a statutory privilege which must be exercised within
and in the manner provided by law. Failure to do so is fatal and
the right of appeal would be lost. Respondents, while
admitting that the appeal was filed out of time, maintain that
the rules on appeal should not be construed in such a manner
as to give way to its rigid application without even considering
the circumstances which led to the belated filing of the notice
of appeal. In fact, it is argued, this Court has on several
occasions, recognized the need to relax the stringent rules on
appeal on reasons of equity and substantial justice.We find for
the respondent.
The general rule holds that the appellate jurisdiction of the
courts is conferred by law, and must be exercised in the
manner and in accordance with the provisions thereof and
such jurisdiction is acquired by the appellate court over the
29
subject matter and parties by the perfection of the
appeal.[17] The party who seeks to avail of the same must
comply with the requirements of the rules. Failing to do so, the
right to appeal is lost.[18] In fact, it has been long recognized
that strict compliance with the Rules of Court is indispensable
for the prevention of needless delays and for the orderly and
expeditious dispatch of judicial business.[19]
Nonetheless, this court has on several occasions relaxed this
strict requirement. In the case of Toledo, et al.
vs. Intermediate Appellate Court, et al.,[20] we allowed the
filing of an appeal where a stringent application of the rules
would have denied it, but only when to do so would serve the
demands of substantial justice and in the exercise of our equity
jurisdiction. Thus, for a party to seek exception for its failure to
comply strictly with the statutory requirements for perfecting
its appeal, strong compelling reasons such as serving the ends
of justice and preventing a grave miscarriage thereof must be
shown, in order to warrant the Courts suspension of the
rules.[21] Indeed, the court is confronted with the need to
balance stringent application of technical rules vis-a-vis strong
policy considerations of substantial significance to relax said
rules based on equity and justice.
The case at bench squarely meets the requisites postulated by
the aforequoted rule. If respondents right to appeal would be
curtailed by the mere expediency of holding that they had
belatedly filed their notice of appeal, then this Court as the
final arbiter of justice would be deserting its avowed objective,
that is to dispense justice based on the merits of the case and
not on a mere technicality. Needless to say, the peculiar
circumstances attendant in this case strongly demands a
review of the decision of the trial court. As aptly observed by
the respondent court, to wit:
In this case, the one-day delay in filing the notice of appeal was
due to an unforeseen illness of the receiving clerk Ronald
Lapuz in the office of the General Counsel of petitioner
NAPOCOR. As stated in the affidavit of said clerk, which was
presented to the trial court, he received a copy of the Order of
respondent judge dated August 2, 1996 at 4:54 p.m., Friday,
August 23, 1996; since it was already almost 5:00 p.m., he
placed the said order inside the drawer of his table together
with some other documents, intending to deliver it to the
handling lawyer, Atty. Collado, who had given him instructions
to deliver immediately to his secretary any order on the case;
he was unable to report for work the following Monday
because of severe pain in the front jaw as a result of the
extraction of three front teeth, and was absent for two days,
August 26 and 27. when the Order was retrieved on August
27th, the notice of appeal was promptly filed in the afternoon,
at 3:10 p.m., of the same day.
The delay was properly explained and sufficiently justified;
considerations of substantial justice and equity strongly argue
against a rigid enforcement of the technical rules of procedure,
considering not only that the delay was only for one day, and
the petitioners have pleaded an unforeseeable oversight and
illness on the part of the receiving clerk, as an excuse. More
important, the decision sought to be appealed from awarded
an enormous sum in the amount of P37,554,414.99, by way of
damages arising from the rescission of the contract with
private respondents, and legal and factual bases for the
awards, and the 12% interest thereon, are being questioned,
on the ground among others, that the amount awarded for
unrealized profits ($1,325,703.68) was bigger than the amount
prayed for in the complaint ($788,700.00) [See Motion for
Reconsideration, Annex C of Petition]. to insist that the one-
day delay in filing the appeal despite the plausible reason
adduced therefor is a fatal mistake due alone to the negligence
of counsel is to insist on a rigid application of the rules, which
as repeatedly enunciated by the Supreme court, should help
secure, not override substantial justice.[22]
Verily, the respondent courts pronouncement cannot be more
emphatic in view of the instances wherein we allowed the
filing of an appeal in certain cases where a narrow and
stringent application of the rules would have denied it. Indeed,
the allowance thereof would fully serve the demands of
substantial justice in the exercise of the Courts equity
jurisdiction. Thus, in Castro vs. Court of Appeals,[23] and
reiterated in the case of Velasco vs. Gayapa, Jr.[24], the Court
stressed the importance and objective of appeal, to wit:
An appeal is an essential part of our judicial system. We have
advised the courts to proceed with caution so as not to deprive
a party of the right to appeal (National Waterworks and
Sewerage Authority vs. Municipality of Libmanan, 97 SCRA
138) and instructed that every party litigant should be afforded
the amplest opportunity for the proper and just disposition of
his cause, freed from the constraints of technicalities (A-One
Feeds, Inc. vs. Court of Appeals, 100 SCRA 590).
The rules of procedure are not to be applied in a very rigid and
technical sense. The rules of procedure are used only to help
secure, not override substantial justice.(Gregorio vs. Court of
Appeals, 72 SCRA 120) Therefore, we ruled in
Republic vs. Court of Appeals (83 SCRA 453) that a six-day
delay in the perfection of appeal does not warrant a dismissal.
And again in Ramos vs. Bagasao, (96 SCRA 395), this Court held
that the delay of four (4) days in filing the notice of appeal and
a motion for extension of time to file a record on appeal can
be excused on the basis of equity.
The emerging trend in the rulings of this Court is to afford
every party-litigant the amplest opportunity for the proper and
30
just determination of his cause, free from the constraints of
technicalities.[25]
Time and again, we have consistently held that rules must not
be applied rigidly so as not to override substantial justice.[26] In
Segunda Santiago and Valerio Flores vs. Pablo Valenzuela and
Moises Pardo[27], the court ruled that: The court may extend
the time or allow the perfection of the appeal beyond the
prescribed period if it be satisfactorily shown that there is
justifiable reason, such as fraud, accident, mistake or
excusable negligence, or similar supervening casualty, without
fault of the appellant, which the court may deem sufficient
reason for relieving him from the consequences of his failure
to comply strictly with the law. In such case the appeal is
deemed taken and perfected on time, and the appellate court
acquires appellate jurisdiction.
In essence, the court is convinced that the test for substantial
justice and equity considerations have been adequately met by
respondents to overcome the one day delay in the perfection
of their appeal. Considering the factual and legal milieu
obtaining in the case at bench, the petition must be denied.
WHEREFORE, IN VIEW OF THE FOREGOING, finding no
reversible error in the decision of the Court of Appeals, the
petition is hereby DENIED for lack of merit.
ROSS RICA SALES CENTER VS. ONG
In a Decision[1] dated 6 January 1998, the Former First Division of the
Court of Appeals overturned the decisions of the Municipal Trial Court
(MTC) and the Regional Trial Court (RTC) of Mandaue City, ruling
instead that the MTC had no jurisdiction over the subject complaint
for unlawful detainer. This petition for review prays for the reversal
of the aforesaid Court of Appeals Decision.
The case originated from a complaint for ejectment filed by
petitioners against respondents, docketed as Civil Case No. 2376,
before the MTC of Mandaue City, Branch I. In the complaint,
petitioners alleged the fact of their ownership of three (3) parcels of
land covered by Transfer Certificates of Title (TCT) Nos. 36466, 36467
and 36468. Petitioners likewise acknowledged respondent Elizabeth
Ongs ownership of the lots previous to theirs. On 26 January 1995,
Atty. Joseph M. Baduel, representing Mandaue Prime Estate Realty,
wrote respondents informing them of its intent to use the lots and
asking them to vacate within thirty (30) days from receipt of the
letter. But respondents refused to vacate, thereby unlawfully
withholding possession of said lots, so petitioners alleged.
Ross Rica Sales Center, Inc. and Juanito King and Sons, Inc.
(petitioners) had acquired the lands from Mandaue Prime Estate
Realty through a sale made on 23 March 1995. In turn, it appears that
Mandaue Prime Estate Realty had acquired the properties from the
respondents through a Deed of Absolute Sale dated 14 July 1994.
However, this latter deed of sale and the transfers of title
consequential thereto were subsequently sought to be annulled by
respondents in a complaint filed on 13 February 1995 before the
Mandaue RTC against Mandaue Prime Estate Realty.[2] Per record,
this case is still pending resolution.
Meanwhile, the MYC resolved the ejectment case on 24 April 1996,
with the decision ordering respondents to vacate the premises in
question and to peacefully turn over possession thereof to
petitioners.
On appeal, the RTC rendered on 1 March 1997 a judgment affirming
the MTCs decision in its entirety. On 8 May 1997, respondents filed a
notice of appeal. However, on the following day, they filed a motion
for reconsideration.
On 23 June 1997, the RTC issued an Order which concurrently gave
due course to respondents notice of appeal filed on 8 May 1997;
denied their motion for reconsideration dated 9 May 1997,[3] and
granted petitioners motion for immediate execution pending appeal.
In a Petition for Certiorari with Injunction filed with the Court of
Appeals and treated as a Petition for Review, the appellate court ruled
that the MTC had no jurisdiction over said case as there was no
contract between the parties, express or implied, as would qualify the
same as one for unlawful detainer. Thus, the assailed Orders of the
MTC and RTC were set aside.
Petitioners then took this recourse via Petition for Review under Rule
45 of the Rules of Court. The principal issues raised before this Court
are: (i) whether the RTC decision has already become final and
executory at the time the petition for review was filed; (ii) whether
the allegations in the complaint constitute a case for unlawful
detainer properly cognizable by the MTC; and, (iii) whether
petitioners, as registered owners, are entitled to the possession of the
subject premises. We resolve the first argument to be without merit.
The following sequence of events is undisputed:
(1) On 1 March 1997, the RTC rendered the
questioned decision affirming the judgment of the MTC.
(2) On 28 April 1997, respondents received a
copy of the aforementioned decision. (3) On
8 May 1997, respondents filed a Notice of Appeal with the RTC.
(4) On 9 May 1997, respondents filed
likewise with the RTC a Motion for Reconsideration of the
aforementioned 1 March 1997 decision.
(5) On 23 June 1997, the RTC of Mandaue
issued an Order denying respondents Motion for
Reconsideration.(6) On 9 July 1997,
respondents received a copy of the aforementioned 23 June
1997 Order. (7) On 24 July 1997,
respondents filed with the Court of Appeals their motion for an
additional period of ten (10) days within which to file their Petition for
Review.(8) On 30 July 1997, respondents
filed with the Court of Appeals their Petition for Review.
Petitioners assert that the Petition for Review was filed beyond the
fifteen (15)-day period for appeal. They theorize that the period
started running on 28 April 1995, the date of receipt of the RTC
decision, and ended on 13 May 1997. According to them, this
reglementary period could not have been interrupted by the filing on
9 May 1997 of the Motion for Reconsideration because of the filing
one day earlier of the Notice of Appeal. This Notice of Appeal dated 8
31
May 1997, albeit the wrong mode of appeal, expressly manifested
their intention to file a petition for review to either the Court of
Appeals or the Supreme Court.[4]
Petitioners further argue that respondents, after having filed
the Notice of Appeal which was given due course by the RTC, cannot
take an inconsistent stand such as filing a Motion for Reconsideration.
Such filing, therefore, did not toll the fifteen (15)-day period which
started running from the date of receipt of the RTC decision on 28
April 1997 and ended on 13 May 1997.
Respondents, in their Comment,[5] submit that the filing of the Notice
of Appeal dated 8 May 1997 was improper, and as such did not
produce any legal effect. Therefore, the filing of the Motion for
Reconsideration immediately on the following day cured this defect.
The RTC refused to subscribe respondents position. It justified the
denial of the Motion for Reconsideration on the ground that the
respondents had already filed a Notice of Appeal. The Order dated 23
June 1997 stated:
On record is a Notice of Appeal by Certiorari filed by Defendants on
May 8, 1997. Likewise filed by Defendants on May 9, 1997 is a Motion
for Reconsideration.
Considering the Notice of Appeal filed earlier which the court hereby
approves, the Motion for Reconsideration is DENIED.
The Motion for Immediate Execution Pending Appeal being
meritorious, is GRANTED.[6] (Emphasis in the original.)
Strangely enough, the Court of Appeals passed no comment on this
point when it took cognizance of respondents position and reversed
the RTC. But does this necessarily mean that the RTC was correct
when it declared that the Motion for Reconsideration was barred by
the filing of the Notice of Appeal, no matter how erroneous the latter
mode was?
Rule 42 governs the mode of appeal applicable in this case. Sec. 1
provides: Section 1. How appeal taken; time for filing. -- A party
desiring to appeal from a decision of the RTC rendered in the exercise
of its appellate jurisdiction may file a verified petition for review with
the Court of Appeals, paying at the same time to the clerk of said court
the corresponding docket and other lawful fees, depositing the
amount of P500.00 for costs, and furnishing the Regional Trial Court
and the adverse party with a copy of the petition. The petition shall
be filed and served within fifteen (15) days from notice of the decision
sought to be reviewed or of the denial of petitioners motion for new
trial or reconsideration filed in due time after judgment. Upon proper
motion and the payment of the full amount of the docket and other
lawful fees and the deposit for costs before the expiration of the
reglementary period, the Court of Appeals may grant an additional
period of fifteen (15) days only within which to file the petition for
review. No further extension shall be granted except for the most
compelling reason and in no case to exceed fifteen (15) days.
Since the unlawful detainer case was filed with the MTC and affirmed
by the RTC, petitioners should have filed a Petition for Review with
the Court of Appeals and not a Notice of Appeal with the RTC.
However, we consider this to have been remedied by the timely filing
of the Motion for Reconsideration on the following day. Section 3,
Rule 50 of the Rules of Court allows the withdrawal of appeal at any
time, as a matter of right, before the filing of the appellees brief.
Applying this rule contextually, the filing of the Motion for
Reconsideration may be deemed as an effective withdrawal of the
defective Notice of Appeal.
Perforce, the period of appeal was tolled by the Motion for
Reconsideration and started to run again from the receipt of the order
denying the Motion for Reconsideration. A Motion for Additional Time
to File the Petition was likewise filed with the Court of Appeals.
Counting fifteen (15) days from receipt of the denial of the Motion for
Reconsideration and the ten (10)-day request for additional period, it
is clear that respondents filed their Petition for Review on time.
Petitioners invoke to the ruling in People v. De la Cruz[7] that once a
notice of appeal is filed, it cannot be validly withdrawn to give way to
a motion for reconsideration. The factual circumstances in the two
cases are different.
De la Cruz is a criminal case, governed by criminal procedure. Section
3, Rule 122 of the Rules of Court provides that the proper mode of
appeal from a decision of the RTC is a notice of appeal and an appeal
is deemed perfected upon filing of the notice of appeal.
In the case at bar, a petition for review before the Court of Appeals is
the proper mode of appeal from a decision of the RTC. Since the filing
of the notice of appeal is erroneous, it is considered as if no appeal
was interposed.
Now on the second and more important issue raised by petitioners:
whether the Complaint satisfies the jurisdictional requirements for a
case of unlawful detainer properly cognizable by the MTC.
The MTC considered itself as having jurisdiction over the ejectment
complaint and disposed of the same in favor of petitioners. Said ruling
was affirmed by the RTC. The Court of Appeals reversed the lower
courts and found the complaint to be one not for unlawful detainer
based on two (2) grounds, namely: that the allegations fail to show
that petitioners were deprived of possession by force, intimidation,
threat, strategy or stealth; and that there is no contract, express or
implied, between the parties as would qualify the case as one of
unlawful detainer.
We disagree with the Court of Appeals. The complaint for unlawful
detainer contained the following material allegations: 3. That
plaintiffs are the owners of Lot No. 2, which is covered by T.C.T. No.
36466 of the Register of Deeds of Mandaue City, Lot No. 1-A which is
covered by T.C.T. No. 36467 of the Register of Deeds of Mandaue City
and Lot No. 86-A which is covered by T.C.T. No. 36468 of the Register
of Deeds of Mandaue City, all situated in the City of Mandaue. Copies
of said Transfer Certificate of Titles are hereto attached as Annexes A,
B, and C respectively and made an integral part hereof;
4. That defendant Elizabeth Ong is the previous registered owner
of said lots; 5. That as the previous registered owner of said lots,
defendant Elizabeth Ong and her husband and co-defendant Jerry
Ong have been living in the house constructed on said lots;
6. That on May 6, 1995, plaintiffs, through the undersigned
counsel, wrote defendants a letter informing them or their intent to
use said lots and demanded of them to vacate said lots within 30 days
from receipt of said letter. Copy of said letter is hereto attached as
32
Annex D and made an integral part thereof; 7. That despite
demand to vacate, the defendants have refused and still refuse to
vacate said lots, thus, unlawfully withholding possession of said lots
from plaintiffs and depriving plaintiffs of the use of their lots;
8. That in unlawfully withholding the possession of said lots from
the plaintiffs, plaintiffs have suffered damages in the form of
unearned rentals in the amount of P10,000.00 a month
[8]Well-settled is the rule that what determines the nature of an
action as well as which court has jurisdiction over it are the allegations
of the complaint and the character of the relief sought.[9]
Respondents contend that the complaint did not allege that
petitioners possession was originally lawful but had ceased to be so
due to the expiration of the right to possess by virtue of any express
or implied contract.
The emphasis placed by the Court of Appeals on the presence of a
contract as a requisite to qualify the case as one of unlawful detainer
contradicts the various jurisprudence dealing on the matter.
In Javelosa v. Court of the Appeals,[10] it was held that the allegation
in the complaint that there was unlawful withholding of possession is
sufficient to make out a case for unlawful detainer. It is equally settled
that in an action for unlawful detainer, an allegation that the
defendant is unlawfully withholding possession from the plaintiff is
deemed sufficient, without necessarily employing the terminology of
the law.[11]
Hence, the phrase "unlawful withholding" has been held to imply
possession on the part of defendant, which was legal in the beginning,
having no other source than a contract, express or implied, and which
later expired as a right and is being withheld by
defendant.[12] In Rosanna B. Barba v. Court of Appeals,[13] we held
that a simple allegation that the defendant is unlawfully withholding
possession from plaintiff is sufficient.
Based on this premise, the allegation in the Complaint that: . . . .
despite demand to vacate, the defendants have refused and still
refuse to vacate said lots, thus, unlawfully withholding possession of
said lots from plaintiffs and depriving plaintiffs of the use of their
lots;[14] is already sufficient to constitute an unlawful detainer case.
In the subject complaint, petitioners alleged that they are the
registered owners of the lots covered by TCT Nos. 36466, 36467 and
36468. By their implied tolerance, they have allowed respondents,
the former owners of the properties, to remain therein. Nonetheless,
they eventually sent a letter to respondents asking that the latter
vacate the said lots. Respondents refused, thereby depriving
petitioners of possession of the lots. Clearly, the complaint
establishes the basic elements of an unlawful detainer case, certainly
sufficient for the purpose of vesting jurisdiction over it in the MTC.
Respondents would like to capitalize on the requisites as cited in the
case of Raymundo dela Paz v. Panis.[15] But the citation is a mere
reiteration of Sec. 1, Rule 70[16] of the Rules of Court. The case doesid
not provide for rigid standards in the drafting of the ejectment
complaint. The case of Co Tiamco v. Diaz[17] justifies a more liberal
approach, thus: . . . The principle underlying the brevity and simplicity
of pleadings in forcible entry and unlawful detainer cases rests upon
considerations of public policy. Cases of forcible entry and detainer
are summary in nature, for they involve perturbation of social order
which must be restored as promptly as possible and, accordingly,
technicalities or details of procedure should be carefully avoided. [18]
Moreover, petitioners fail to mention any of the incidents of the
pending case involving the annulment of deed of sale and title over
said property. Petitioners know better than to question this in an
ejectment proceeding, which brings us to the nature of the action in
this case.
Respondents insist that the RTC, and not the MTC, had jurisdiction
over the action, it being an accion reivindicatoria according to them,
on the ground that petitioners were constantly claiming ownership
over the lands in the guise of filing an action for ejectment. In
their Comment,[19]respondents maintain that they occupy the subject
lots as the legal owners. Petitioners, on the other hand, are seeking
recovery of possession under a claim of ownership which is
tantamount to recovery of possession based on alleged title to the
lands, and therefore is within the original jurisdiction of the RTC, so
respondents conclude.
This contention is not tenable. The issue involved in accion
reivindicatoria is the recovery of ownership of real property. This
differs from accion publiciana where the issue is the better right of
possession or possession de jure, and accion interdictal where the
issue is material possession or possession de facto. In an action for
unlawful detainer, the question of possession is primordial while the
issue of ownership is generally unessential.[20]
Neither the allegation in petitioners complaint for ejectment nor the
defenses thereto raised by respondents sufficiently convert this case
into an accion reivindicatoria which is beyond the province of the
MTC to decide. Petitioners did not institute the complaint for
ejectment as a means of claiming or obtaining ownership of the
properties. The acknowledgment in their pleadings of the fact of prior
ownership by respondents does not constitute a recognition of
respondents present ownership. This is meant only to establish one
of the necessary elements for a case of unlawful detainer, specifically
the unlawful withholding of possession. Petitioners, in all their
pleadings, only sought to recover physical possession of the subject
property. The mere fact that they claim ownership over the parcels of
land as well did not deprive the MTC of jurisdiction to try the
ejectment case.
Even if respondents claim ownership as a defense to the complaint
for ejectment, the conclusion would be the same for mere assertion
of ownership by the defendant in an ejectment case will not therefore
oust the municipal court of its summary jurisdiction. [21] This Court
in Ganadin v. Ramos[22] stated that if what is prayed for is ejectment
or recovery of possession, it does not matter if ownership is claimed
by either party. Therefore, the pending actions for declaration of
nullity of deed of sale and Transfer Certificates of Title and quieting of
title in Civil Case No. MAN-2356 will not abate the ejectment
case.In Drilon v. Gaurana,[23] this Court ruled that the filing of an
action for reconveyance of title over the same property or for
annulment of the deed of sale over the land does not divest the MTC
of its jurisdiction to try the forcible entry or unlawful detainer case
before it, the rationale being that, while there may be identity of
parties and subject matter in the forcible entry case and the suit for
33
annulment of title and/or reconveyance, the rights asserted and the
relief prayed for are not the same.[24]
In Oronce v. Court of Appeals,[25] this Court held that the fact that
respondents had previously filed a separate action for the
reformation of a deed of absolute sale into one of pacto de retro sale
or equitable mortgage in the same
Court of First Instance is not a valid reason to frustrate the summary
remedy of ejectment afforded by law to the plaintiff. Consequently,
an adjudication made in an ejectment proceeding regarding the issue
of ownership should be regarded as merely provisional and,
therefore, would not bar or prejudice an action between the same
parties involving title to the land. The foregoing doctrine is a
necessary consequence of the nature of forcible entry and unlawful
detainer cases where the only issue to be settled is the physical or
material possession over the real property, that is, possession de
facto and not possession de jure.
The Court reiterated this in the case of Tecson v. Gutierrez[26] when it
ruled: We must stress, however, that before us is only the initial
determination of ownership over the lot in dispute, for the purpose
of settling the issue of possession, although the issue of ownership is
inseparably linked thereto. As such, the lower court's adjudication of
ownership in the ejectment case is merely provisional, and our
affirmance of the trial courts' decisions as well, would not bar or
prejudice an action between the same parties involving title to the
property, if and when such action is brought seasonably before the
proper forum.
MACAWIWILI GOLD MINING AND DEVELOPMENT CO., INC.
and OMICO MINING AND INDUSTRIAL
CORPORATION, petitioners, vs. COURT OF APPEALS and
PHILEX MINING CORPORATION, respondents.
This is a petition for certiorari to set aside the resolution, dated
April 12, 1994, of the Tenth Division of the Court of Appeals in
CA-G.R. CV No. 42120, denying petitioners motion to dismiss
the appeal of private respondent from a ruling of the trial
court.[1]
The antecedent facts are as follows: On October 16, 1992,
respondent Philex Mining Corporation filed a complaint for
expropriation against petitioners Macawiwili Gold Mining and
Development Co., Inc. and Omico Mining & Industrial
Corporation. The complaint, entitled Philex Mining
Corporation v. Macawiwili Gold Mining and Development Co.,
Inc., et al., was filed before the Regional Trial Court of La
Trinidad, Benguet, where it was docketed as Civil Case No. 92-
CV-0727.
Based on 53 of P.D. No. 463, Philex Mining sought to
expropriate 21.9 hectares of petitioners mining areas where
the latters Macawiwili claims are located. Philex Mining
likewise moved for the issuance of a writ of preliminary
injunction to enjoin petitioners from ejecting it (Philex Mining)
from the mining areas sought to be expropriated.
Although a temporary restraining order was initially issued by
the Regional Trial Court of La Trinidad, Branch X, on November
11, 1992, it denied respondents application for a preliminary
injunction.
On February 18, 1993, the trial court, acting on the motion of
petitioners, dismissed the complaint of Philex Mining. In its
resolution, the trial court stated:[2]
To better appreciate the incident submitted for resolution, a
review of the antecedent facts which gave rise to this case is in
order.
The decision of the Supreme Court dated October 2, 1991 in
Poe Mining Association vs. Garcia, 202 SCRA 222 upheld the
decision of the then Minister of Natural Resources which was
affirmed by the Office of the President. This decision
recognized the possessory rights of defendants Macawiwili
and Omico over their mining claims located at Tuba and Itogon,
Benguet as against Poe Mining Association and plaintiff herein
Philex Mining Corporation as operator. However, on the
surface of 21.9 hectares of these mining claims awarded to
defendants Macawiwili and Omico, we find improvements of
the plaintiff consisting of a network of roads, a motorpool
facility, a tailings dam and three bunkhouses. The Department
of Environment and Natural Resources - Cordillera
Administrative Region (DENR-CAR), in pursuance of the
Supreme Court decision is poised to order the removal or
demolition of plaintiffs improvements and to hand possession
of the area to defendants Macawiwili and Omico. Plaintiff,
while admitting the possessory rights of defendant mining
companies, stresses that the improvements already existing
thereon are vital to the conduct of its mining operations
particularly, its Nevada claims. Thus, it came to court seeking
the expropriation of this area pursuant to Section 59 of
Presidential Decree No. 463.
The conflict between the plaintiff and defendant mining
companies spans a period of almost 23 years until finally, it
reached the Supreme Court, the final arbiter of all
disputes. The Supreme Court has spoken and it has awarded to
defendants Macawiwili and Omico the portion sought to be
expropriated by the plaintiff.
Can this Court now grant to plaintiff the right to expropriate
the very land which has been denied it by the decision of the
highest court of the land?
This Court believes not. To do so would not only be
presumptious of this Court but a patent defiance of the
decision of the highest tribunal.
The plaintiff states that the expropriation is necessary in order
for it to continue with the operation of its Nevada claims. The
improvements now existing on the land sought to be
34
expropriated consists of a network of roads constructed
sometime in 1958, a motorpool facility built in 1963, a tailings
dam and three (3) two-storey concrete bunkhouses. It is thus
clear that these improvements have been existing for quite
sometime now. Aware that these improvements are essential
to their mining operations, plaintiff should have initiated
expropriation proceedings long before it even started putting
up said improvements. Why exercise the right of eminent
domain only now that the land has been adjudged in favor of
defendant mining companies by no less than the Supreme
Court? It seems the plaintiff, mindful of the Supreme Court
decision, would now look for avenues of escape to evade the
repercussions of such a decision. What it has not achieved
through the decision, it tries to gain through the power of
eminent domain. Clearly, this is forum-shopping, plain and
simple. Stripped of all its legal niceties, this expropriation
proceeding is patently a last ditch effort on the part of the
plaintiff to overcome the adverse effects of the Supreme Court
decision.
Can this Court countenance such a procedure under the guise
of the legal process of expropriation? No. To agree to it would
be to encourage forum-shopping which is abhorred as there
will no longer be any end to any litigation.
Nevertheless, plaintiff asserts that its right to expropriate is
distinct and separate from the rights of Macawiwili and Omico
under the Supreme Court decision, anchoring said right on
Section 59 of Presidential Decree No. 463 which states:
SEC. 59. Eminent Domain. - When the claim owner or an
occupant or owner of private lands refuses to grant to another
claim owner or lessee the right to build, construct or install any
of the facilities mentioned in the next preceding section, the
claim owner or lessee may prosecute an action for eminent
domain under the Rules of Court in the Court of First Instance
of the province where the mining claims involved are
situated. In the determination of the just compensation due
the claim owner or owner or occupant of the land, the court
shall appoint at least one duly qualified mining engineer or
geologist to be recommended by the Director as one of the
commissioners.
There are two (2) stages in every action of expropriation. The
first is concerned with the determination of the authority of
the plaintiff to exercise the power of eminent domain and the
propriety of its exercise in the context of the facts involved in
the suit. It ends either with an order of dismissal or an order of
condemnation. The second phase of the eminent domain
action is concerned with the determination by the court of the
just compensation for the property sought to be taken
(Municipality of Bian vs. Hon. Jose Mar Garcia, et al., 180 SCRA
576 as quoted in National Power Corporation vs. Jocson, G.R.
Nos. 94193-99, February 25, 1992, 206 SCRA 520).
Going to the first stage of the expropriation proceeding in the
case at bar, the question is: Is the right to expropriate granted
to mining companies under Section 59 of P.D. No. 463 an
absolute right?
An examination of Presidential Decree No. 463 would readily
show that Section 59 upon which plaintiff asserts its right to
expropriate is found under Chapter XI with the heading
Auxiliary Mining Rights. From the title alone, it would seem
that the right to expropriate is not an absolute one but a mere
auxiliary right. The right of eminent domain granted to mining
companies is given in aid of its mining operations and not as a
matter of right. Thus, it should be construed strictly against the
mining company seeking the right. Thus, taking into context
the antecedent facts arising from this case, is it proper for
plaintiff to exercise the power of eminent domain?
Absolutely not. But, granting arguendo that the right of
expropriation can be awarded to plaintiff, a bigger question
arises on whether a mining company can expropriate land
belonging to another mining company. It would be absurd if
not ridiculous. In the first place, the land would no longer be
subject to expropriation. Expropriation demands that the land
be private land. When the Supreme Court awarded the
possessory rights over the land subject of this case to
defendants Macawiwili and Omico, it has stripped said land of
its private character and gave it its public character, that is, to
be utilized for mining operations. Although property already
devoted to public use is still subject to expropriation, this must
be done directly by the national legislature or under a specific
grant of authority to the delegate (Constitutional Law by
Isagani Cruz, 1989 edition, page 64). Section 59 of Presidential
Decree No. 463 is not a specific grant of authority given to
plaintiff but a mere general authority which will not suffice to
allow plaintiff to exercise the power of eminent domain.
The plaintiff also states that it does not question the mining
rights of defendant mining companies over the area as it is only
interested in the surface rights as this is where its
improvements are located. But this is an illusory dream which
cannot be given reality by this Court. It is a well-known
principle that the owner of a piece of land has rights not only
to its surface but also to everything underneath and the
airspace above it to a reasonable height (Art. 437, Civil Code of
the Philippines). The surface area cannot be segregated from
the subjacent minerals. There is no dividing line between the
surface and what is underneath that one can categorically
state that one belongs to the plaintiff while the other forms
part of the property of the defendant mining companies. For
that is in effect what the plaintiff wants, just the surface area
where its improvements are. It would be like dismembering a
human body of a lady and awarding the upper part including
her bosom to someone while giving the lower part to another,
35
making it a useless proposition to either one. For how can
defendant mining companies operate their mining claims
when the surface belongs to somebody else and for that
matter, how will the plaintiff improve the surface area without
affecting what is underneath?
As the Supreme Court stated in the case of Republic vs. Court
of Appeals, No. L-43938, April 15, 1988, 160 SCRA 228: Under
the (no- conflict) theory of the respondent court, the surface
owner will be planting on the land while the mining locator will
be boring tunnels underneath. The farmer cannot dig a well
because he may interfere with the mining operations below
and the miner cannot blast a tunnel lest he destroys the crops
above. How deep can the farmer, and how high can the miner,
go without encroaching on each others right? Where is the
dividing line between the surface and sub-surface rights? The
Court feels that the rights over the land are indivisible and that
the land itself cannot be half agricultural and half mineral. The
classification must be categorical; the land must be either
completely mineral or completely agricultural.
All told, it is clear that plaintiff has not shown that it has the
right to expropriate the land subject of this case. Moreover,
that land has been placed out of its reach by the Supreme
Court decision when it awarded it to defendants Macawiwili
and Omico. Both plaintiff and defendants are engaged in
mining, and the Supreme Court has adjudged defendant
mining companies to be the owner of the land. This Court now,
on the ground of the exercise of the power of eminent domain,
cannot and will not overwhelm said decision by awarding it to
plaintiff.
As the other motions have become moot and academic, this
Court will no longer delve into them. However, as to the
motion for reduction of deposit, the Court will make its last
point. In the case of National Power Corporation vs.
Jocson, supra, the Supreme Court made this pronouncement:
Presidential Decree No. 42 requires the petitioner, to deposit
with the Philippine National Bank in its main office or any of its
branches or agencies, an amount equivalent to the assessed
valued of the property for purposes of taxation. This assessed
value is that indicated in the tax declaration. P.D. No. 42
repealed the provisions of Rule 67 of the Rules of Court and
any other existing law contrary to or inconsistent with
it. Accordingly, it repealed Section 2 of Rule 67 insofar as the
determination of the provisional value, the form of payment
and the agency with which the deposit shall be made, are
concerned. P.D. No. 42, however effectively removes the
discretion of the court in determining the provisional
value. What is to be deposited is an amount equivalent to the
assessed value for taxation purposes. No hearing is required
for that purpose. All that is needed is notice to the owner of
the property sought to be condemned.
Thus, the plaintiff is right in depositing the assessed value of
the property as appearing on the tax declaration of defendant
Macawiwili as the provisional value of the land sought to be
expropriated. While this case remains pending, the plaintiff
may then withdraw the balance of the Two Million Pesos
(P2,000,000.00) from the Philippine National Bank after
deducting the provisional value of the land amounting to Forty
Eight Thousand Six Hundred Pesos (P48,600.00).
WHEREFORE, premises considered, the Motion to Dismiss filed
by defendants Macawiwili Gold Mining and Development
Mining Co., Inc. and Omico Mining and Industrial Corporation
is granted. This case is hereby DISMISSED without
pronouncement as to costs.
Philex Mining moved for a reconsideration, but its motion was
denied. It then appealed to the Court of Appeals.
On February 16, 1994, petitioners filed a Motion to Dismiss
Appeal on the ground that only questions of law were involved
and, therefore, the appeal should be to the Supreme
Court.However, the appellate court denied petitioners motion
in a resolution, dated April 12, 1994. Without filing a motion
for reconsideration, petitioners filed the instant petition for
certiorari.
Respondent Philex Mining seeks the dismissal of the petition
on the ground that petitioner should have filed a motion for
reconsideration giving the appellate court an opportunity to
correct itself.
Rule 65, 1 of the 1964 Rules of Court in part provides: Section
1. Petition for certiorari. - When any tribunal, board or officer
exercising judicial functions has acted without or in excess of
its or his jurisdiction, or with grave abuse of discretion and
there is no appeal, nor any plain, speedy, and adequate
remedy in the ordinary course of law, a person aggrieved
thereby may file a verified petition in the proper court, alleging
the facts with certainty and praying that judgment be rendered
annulling or modifying the proceedings, as the law requires, of
such tribunal, board or officer.
With some modifications, Rule 65, 1 of the 1997 Rules of Civil
Procedure similarly provides: Section 1. Petition for certiorari.
- When any tribunal, board or officer exercising judicial or
quasi-judicial functions has acted without or in excess of its or
his jurisdiction, or with grave abuse of discretion amounting to
lack or excess of jurisdiction, and there is no appeal, nor any
plain, speedy, and adequate remedy in the ordinary course of
law, a person aggrieved thereby may file a verified petition in
the proper court, alleging the facts with certainty and praying
that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting
such incidental reliefs as law and justice may require.[3]
36
It is settled that the writ of certiorari lies only when petitioner
has no other plain, speedy, and adequate remedy in the
ordinary course of law. Thus, a motion for reconsideration, as
a general rule, must be filed before the tribunal, board, or
officer against whom the writ of certiorari is sought.
Ordinarily, certiorari as a special civil action will not lie unless
a motion for reconsideration is first filed before the
respondent tribunal, to allow it an opportunity to correct its
assigned errors.[4]
This rule, however, is not without exceptions. In Pajo v. Ago
and Ortiz[5] we held: Respondent contends that petitioners
should have filed a motion for reconsideration of the order in
question, or asked for the dissolution of the preliminary
injunction issued by the trial court, before coming to us.
This is not always so. It is only when the questions are raised
for the first time before this Court in a certiorari proceeding
that the writ shall not issue unless the lower court had first
been given the opportunity to pass upon the same. In fine,
when the questions raised before this Court are the same as
those which have been squarely raised in and passed upon by,
the court below, the filing of a motion for reconsideration in
said court before certiorari can be instituted in this Court, is no
longer prerequisite.
In Locsin v. Climaco[6] it was stated: When a definite question
has been properly raised, argued, and submitted to a lower
court, and the latter has decided the question, a motion for
reconsideration is no longer necessary as a condition
precedent to the filing of a petition for certiorari in this Court.
And in Central Bank v. Cloribel,[7] it was explained: It is true that
Petitioner herein did not seek a reconsideration of the order
complained of, and that, as a general rule, a petition for
certiorari will not be entertained unless the respondent has
had, through a motion for reconsideration, a chance to correct
the error imputed to him. This rule is subject, however, to
exceptions, among which are the following, namely: 1) where
the issue raised is one purely of law; 2) where public interest is
involved; and 3) in case of urgency. These circumstances are
present in the case at bar.Moreover, Petitioner herein had
raised - in its answer in the main case and in the rejoinder to
the memorandum of the Banco Filipino in support of the
latters application for a writ of preliminary injunction - the very
same questions raised in the Petition herein. In other words,
Judge Cloribel has already had an opportunity to consider and
pass upon those questions, so that a motion for
reconsideration of his contested order would have served no
practical purpose. The rule requiring exhaustion of remedies
does not call for an exercise in futility.
The issues raised by petitioners in this petition are
substantially the same as those asserted by them in their
Motion to Dismiss Appeal, dated February 14, 1994, before the
Court of Appeals. The argument that respondent has no right
to expropriate petitioners mineral areas under Presidential
Decree No. 463 has already been raised, argued, and
submitted by petitioners for resolution by the appellate court
in their Motion to Dismiss Appeal. To further file a motion for
reconsideration before the Court of Appeals would simply be
to repeat their arguments. For this reason, we hold that
petitioners failure to file a motion for reconsideration is not
fatal to the allowance of their action.
We therefore come to the main question: Did the Court of
Appeals commit grave abuse of discretion in denying
petitioners Motion to Dismiss Appeal? We find that it did.
To begin with, the writ of certiorari lies when a court, in
denying a motion to dismiss, acts without or in excess of
jurisdiction or with grave abuse of discretion.[8] By grave abuse
of discretion is meant, such capricious and whimsical exercise
of judgment as is equivalent to lack of jurisdiction. The abuse
of discretion must be grave as where the power is exercised in
an arbitrary or despotic manner by reason of passion or
personal hostility and must be so patent and gross as to
amount to an evasion of positive duty or to a virtual refusal to
perform the duty enjoined by or to act all in contemplation of
law.[9]
Petitioners contend that the Court of Appeals gravely abused
its discretion in denying their motion to dismiss the
appeal. According to petitioners, respondents appeal raises
only questions of law and, therefore, it should be brought to
the Supreme Court by means of a petition for review on
certiorari and not, as Philex Mining did, by bringing an ordinary
appeal to the Court of Appeals. Petitioners argue that the
question whether respondent has a right to expropriate
petitioners mining areas under 59 of Presidential Decree No.
463 is a question of law.
On the other hand, Philex Mining maintains that the issues
raised in its appeal are factual and, therefore, the appellate
court is the proper forum for the ventilation of such issues.
Supreme Court Circular No. 2-90, which is based on the
Resolution of the Court En Banc in UDK-9748 (Anacleto Murillo
v. Rodolfo Consul), March 1, 1990, provides in 4(c) thereof:
c) Raising issues purely of law in the Court of Appeals, or appeal
by wrong mode. - If an appeal under Rule 41 is taken from the
regional trial court to the Court of Appeals and therein the
appellant raises only questions of law, the appeal shall be
dismissed, issues purely of law not being reviewable by said
Court. So, too, if an appeal is attempted from the judgment
rendered by a Regional Trial Court in the exercise of its
appellate jurisdiction by notice of appeal, instead of by petition
for review, the appeal is inefficacious and should be dismissed.
37
Thus, judgments of the regional trial courts in the exercise of
their original jurisdiction are to be elevated to the Court of
Appeals in cases where the appellant raises questions of fact
or mixed questions of fact and law. On the other hand, appeals
from judgments of the regional trial courts in the exercise of
their original jurisdiction must be brought directly to the
Supreme Court in cases where the appellant raises only
questions of law.
This procedure is now embodied in Rule 41, 2 of the 1997 Rules
of Civil Procedure which distinguishes the different modes of
appeal from judgments of regional trial courts as follows:
Modes of appeal.- (a) Ordinary appeal. - The appeal to the
Court to Appeals in cases decided by the Regional Trial Court
in the exercise of its original jurisdiction shall be taken by filing
a notice of appeal with the court which rendered the judgment
or final order appealed from and serving a copy thereof upon
the adverse party. No record on appeal shall be required
except in special proceedings and other cases of multiple or
separate appeals where the law or these Rules so require. In
such cases, the record on appeal shall be filed and served in
like manner.
(b) Petition for review. - The appeal to the Court of Appeals in
cases decided by the Regional Trial Court in the exercise of its
appellate jurisdiction shall be by petition for review in
accordance with Rule 42.
(c) Appeal by certiorari. - In all cases where only questions of
law are raised or involved, the appeal shall be to the Supreme
Court by petition for review on certiorari in accordance with
Rule 45.
On the other hand, Rule 42 provides that appeals from
judgments of the regional trial courts in the exercise of their
appellate jurisdiction must be brought to the Court of Appeals,
whether the appellant raises questions of fact, of law, or mixed
questions of fact and law.
The rules on appeals from the judgments of the regional trial
courts in civil cases may thus be summarized as follows:
(1) Original Jurisdiction - In all cases decided by the regional
trial courts in the exercise of their original jurisdiction, appeal
may be made to:
(a) Court of Appeals - where the appellant raises questions of
fact or mixed questions of fact and law, by filing a mere notice
of appeal.
(b) Supreme Court - where the appellant solely raises
questions of law, by filing a petition for review on certiorari
under Rule 45.
(2) Appellate Jurisdiction All appeals from judgments rendered
by the regional trial courts in the exercise of their appellate
jurisdiction, whether the appellant raises questions of fact, of
law, or mixed questions of fact and law, shall be by filing a
petition for review under Rule 42.
The question is whether the issues raised in the appeal of
respondent Philex Mining are questions of law or of fact.
[F]or 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. And the distinction
is well-known: There is a question of law in a given case when
the doubt or difference arises as to what the law is on a certain
state of facts; there is a question of fact when the doubt or
difference arises as to the truth or the falsehood of alleged
facts.[10]
Respondents assignment of errors[11] before the appellate
court should therefore be considered in order to determine
the nature of the questions therein raised. Respondent Philex
Mining argued before the Court of Appeals:
A. The trial court erred in finding that Philex has no right to
expropriate; P.D. 463 expressly grants to Philex, as operator of
the Nevada claims, the right of eminent domain.
B. The trial court erred in finding that Philex cannot
expropriate land belonging to a mining company; Section 59 in
relation to Section 58 of P.D. 463 allows an operator of a
mining claim to expropriate mining claims or lands owned,
occupied, or leased by other persons or claim owners.
C. The trial court erred in finding that Philex is attempting to
subvert the Supreme Court decision and is engaged in forum-
shopping. Philex is merely exercising its rights under the law.
D. The trial court erred in finding that the expropriation of the
land will divide the surface from the subsurface.
E. The trial court erred in dismissing the complaint. Philexs
alternative cause of action was disregarded.
The respondents arguments may thus be summarized as
follows: (1) Section 59, in relation to Section 53 of Presidential
Decree No. 463, expressly grants respondent the right to
expropriate mining claims or lands owned, occupied, or leased
by other persons once the conditions justifying expropriation
are present. The power of eminent domain expressly granted
under Sections 58 and 59 of P.D. No. 463 is not inferior to the
possessory right of other claimowners.[12]
(2) There is nothing absurd in allowing a mining company to
expropriate land belonging to another mining
company. Pursuant to the ruling laid down in Benguet
Consolidated, Inc. v. Republic,[13] land covered by mining claims
38
may be the subject of expropriation. Moreover, a general
grant of the power of eminent domain only means that the
court may inquire into the necessity of the expropriation.[14]
(3) Respondent could not be held guilty of forum-shopping or
subverting the Supreme Courts decision in Poe Mining v.
Garcia.[15] Forum-shopping, which refers to filing the same or
repetitious suits, is not resorted to in the present case since
respondent seeks to expropriate petitioners mining areas, not
as operator of the Poe mining claims, but as operator of the
Nevada mining claims.[16]
(4) Respondents expropriation of the land will not divide the
surface from the subsurface for the reason that respondent
seeks to expropriate all rights that petitioners, as well as the
Pigoro heirs, have over the 21.9 hectare area.[17]
(5) The trial court erred in disregarding respondents
alternative cause of action, even on the assumption that
respondent does not have the right to expropriate, for the
reason that an alternative statement in a pleading, if sufficient,
is not vitiated by the insufficiency of the other alternative
statements.[18]
The first four arguments advanced by respondent Philex
Mining raise the sole issue of whether it has, under Presidential
Decree No. 463, the right to expropriate the 21.9 hectare
mining areas where petitioners mining claims are located. On
the other hand, its final argument raises the issue of whether
the rules on the allegation of alternative causes of action in
one pleading under Rule 8, 1 of the Rules of Court are
applicable to special civil actions. These are legal questions
whose resolution does not require an examination of the
probative weight of the evidence presented by the parties but
a determination of what the law is on the given state of
facts. These issues raise questions of law which should be the
subject of a petition for review on certiorari under Rule 45 filed
directly with this Court. The Court of Appeals committed a
grave error in ruling otherwise.
SANTOS VS. GO
For our review on certiorari is the Decision[1] dated September
2, 2002 of the Court of Appeals in CA-G.R. SP No. 67388, as well
as its Resolution[2] dated November 12, 2002, denying
petitioners motion for reconsideration. The appellate court
dismissed the petition for review under Rule 43[3] of the 1997
Rules of Civil Procedure for being an erroneous mode of appeal
from the Resolution[4] of the Secretary of Justice. The Secretary
had modified the Resolution[5] of the Office of the City
Prosecutor of Pasig City in I.S. No. PSG 00-04-10205 and
directed the latter to file an information for estafa against
petitioners.
The petitioners are corporate directors and officers of Fil-
Estate Properties, Inc. (FEPI).
On October 17, 1995, FEPI allegedly entered into a Project
Agreement with Manila Southcoast Development Corporation
(MSDC), whereby FEPI undertook to develop several parcels of
land in Nasugbu, Batangas allegedly owned by MSDC. Under
the terms of the Agreement, FEPI was to convert an
approximate area of 1,269 hectares into a first-class
residential, commercial, resort, leisure, and recreational
complex. The said Project Agreement clothed FEPI with
authority to market and sell the subdivision lots to the public.
Respondent Wilson Go offered to buy Lot 17, Block 38 from
FEPI. Lot 17 measured approximately 1,079 square meters and
the purchase price agreed upon was P4,304,000. The Contract
to Sell signed by the parties was the standard, printed form
prepared by FEPI. Under the terms of said contract of
adhesion, Go agreed to pay a downpayment of P1,291,200 and
a last installment of P840,000 on the balance due on April 7,
1997. In turn, FEPI would execute a final Deed of Sale in favor
of Go and deliver to Go the owners duplicate copy of Transfer
Certificate of Title (TCT) upon complete payment of the
purchase price.
Go fully complied with the terms of the Contract. FEPI,
however, failed to develop the property. Neither did it release
the TCT to Go. The latter demanded fulfillment of the terms
and conditions of their agreement. FEPI balked. In several
letters to its clients, including respondent Go, FEPI explained
that the project was temporarily halted due to some claimants
who opposed FEPIs application for exclusion of the subject
properties from the coverage of the Comprehensive Agrarian
Reform Law (CARL). Further, FEPIs hands were tied by a cease
and desist order issued by the Department of Agrarian Reform
(DAR). Said order was the subject of several appeals now
pending before this Court. FEPI assured its clients that it had
no intention to abandon the project and would resume
developing the properties once the disputes had been settled
in its favor.
Go was neither satisfied nor assured by FEPIs statements and
he made several demands upon FEPI to return his payment
of the purchase price in full. FEPI failed to heed his demands.
Go then filed a complaint before the Housing and Land Use
Regulatory Board (HLURB). He likewise filed a separate
Complaint-Affidavit for estafa under Articles 316 [6] and
318[7] of the Revised Penal Code before the Office of the City
Prosecutor of Pasig City against petitioners as officers of FEPI.
The complaint for estafa averred that the Contract to Sell
categorically stated that FEPI was the owner of the property.
However, before the HLURB, FEPI denied ownership of the
realty. Go alleged that the petitioners committed estafa when
they offered the subject property for sale since they knew fully
39
well that the development of the property and issuance of its
corresponding title were impossible to accomplish, as the
ownership and title thereto had not yet been acquired and
registered under the name of FEPI at the time of sale. Thus,
FEPI had grossly misrepresented itself as owner at the time of
the sale of the subject property to him and when it received
from him the full payment, despite being aware that it was not
yet the owner.
Petitioners challenged the jurisdiction of the City Prosecutor of
Pasig City to conduct the preliminary investigation on the
ground that the complainant was not from Pasig City, the
contract was not executed nor were the payments made in
Pasig City. Besides, countered petitioners, none of the
elements of estafa under Articles 316 and 318 were present.
They averred that FEPI was not the owner of the project but
the developer with authority to sell under a joint venture with
MSDC, who is the real owner. They further denied that FEPI
ever made any written nor oral representation to Go that it is
the owner, pointing out that Go failed to positively identify
who made such misrepresentation to him nor did Go say
where the misrepresentation was made. According to
petitioner, there being neither deceit nor misrepresentation,
there could be no damage nor prejudice to respondent, and no
probable cause exists to indict the petitioners. Petitioners
likewise insisted that they could not be held criminally liable
for abiding with a cease-and-desist order of the DAR.
In his reply, Go stressed that the City Prosecutor of Pasig City
had jurisdiction over the case. He argued that the Contract to
Sell specifically provided that payment be made at FEPIs office
at Pasig City and the demand letters bore the Pasig City
address. He averred that FEPI could not disclaim ownership of
the project since the contract described FEPI as owner without
mentioning MSDC. Additionally, the acts executed by FEPI
appearing in the contract were the acts of an owner and not a
mere developer.
After the preliminary investigation, the City Prosecutor
resolved to dismiss the complaint for estafa, thus: Wherefore,
the case for estafa, under Articles 316 and 318 of the Revised
Penal Code, filed against the respondents Ferdinand Santos,
Robert [John] Sobrepea, Federico Campos, Polo Pantaleon and
Rafael Perez de Tagle, Jr. is dismissed for insufficiency of
evidence.[8]
The City Prosecutor found no misrepresentation stating that,
(1) the Contract to Sell did not mention FEPI as the owner of
the property; (2) since no Deed of Sale had been executed by
the parties, then petitioners are not yet bound to deliver the
certificate of title since under both the Contract to Sell and
Section 25[9] of Presidential Decree No. 957,[10] FEPI was bound
to deliver the certificate of title only upon the execution of a
contract of sale; and (3) the City Prosecutor disavowed any
jurisdiction since it is the HLURB, which has exclusive
jurisdiction over disputes and controversies involving the sale
of lots in commercial subdivision including claims involving
refunds under P.D. No. 1344.[11]
Go appealed the City Prosecutors Resolution to the
Department of Justice (DOJ), which, in turn reversed the City
Prosecutors findings, and held, to wit:
WHEREFORE, the questioned resolution is hereby MODIFIED.
The City Prosecutor of Pasig City is directed to file an
information for estafa defined and penalized under Art. 316,
par. 1 of the Revised Penal Code against respondents
Ferdinand Santos, Robert [John] Sobrepea, Federico Campos,
Polo Pantaleon and Rafael Perez De Tagle, Jr. and report the
action taken within ten (10) days from receipt hereof.
The DOJ found that there was a prima facie basis to hold
petitioners liable for estafa under Article 316 (1) of the Revised
Penal Code, pointing out that the elements of the offense were
present as evidenced by the terms of the Contract to Sell. It
ruled that under the Contract, the petitioners sold the
property to Go despite full knowledge that FEPI was not its
owner. The DOJ noted that petitioners did not deny the due
execution of the contract and had accepted payments of the
purchase price as evidenced by the receipts. Thus, FEPI was
exercising acts of ownership when it conveyed the property to
respondent Go. Acts to convey, sell, encumber or mortgage
real property are acts of strict ownership. Furthermore,
nowhere did FEPI mention that it had a joint venture with
MSDC, the alleged true owner of the property. Clearly,
petitioners committed acts of misrepresentation when FEPI
denied ownership after the perfection of the contract and the
payment of the purchase price. Since a corporation can only
act through its agents or officers, then all the participants in a
fraudulent transaction are deemed liable.
Accordingly, an Information for estafa was filed against
petitioners and Federico Campos and Polo Pantaleon before
the MTC of Pasig City. However, the arraignment was deferred
since Campos and Pantaleon filed a Motion for Judicial
Determination of Probable Cause, which was granted by the
trial court. Meanwhile petitioners herein filed with the Court
of Appeals, a petition for review docketed as CA-G.R. SP No.
67388. Accordingly, the trial court deferred the arraignment of
petitioners until the petition for review was resolved.
On September 2, 2002, the appellate court disposed of CA-G.R.
SP No. 67388 in this wise:
WHEREFORE, foregoing premises considered, the Petition,
HAVING NO MERIT, is hereby DENIED DUE COURSE AND
ORDERED DISMISSED, with cost to Petitioners. SO
ORDERED.[13]
40
The appellate court opined that a petition for review pursuant
to Rule 43 cannot be availed of as a mode of appeal from the
ruling of the Secretary of Justice because the Rule applies only
to agencies or officers exercising quasi-judicial functions. The
decision to file an information or not is an executive and not a
quasi-judicial function.
Herein petitioners seasonably moved for reconsideration, but
the motion was likewise denied by the Court of Appeals.
Hence, this petition based on the following grounds: (1) THE
COURT OF APPEALS ERRED IN RULING THAT RULE 43 OF THE
1997 RULES OF CIVIL PROCEDURE CANNOT BE AVAILED OF TO
APPEAL THE RESOLUTIONS OF THE SECRETARY OF JUSTICE.[14]
(2) THE DOJ SECRETARY ERRED WHEN IT FOUND PROBABLE
CAUSE AND RESOLVED TO FILE AN INFORMATION FOR ESTAFA
UNDER ART. 316, SEC. 1 OF THE REVISED PENAL CODE AGAINST
PETITIONERS, CONSIDERING THAT: (A) Petitioners did not
pretend that they, or FEPI, were the owners of the subject
property; (B) FEPI need not have been the owner at the time
the Contract to Sell was furnished to respondent Go; (C) There
was no prejudice caused to respondent Go; (D) There is no
personal act or omission constituting a crime ascribed to any
of the Petitioners, therefore, there can be no probable cause
against them; and (E) There was no deceit or even intent to
deceive.[15]
To our mind, the sole issue for resolution is whether a petition
for review under Rule 43 is a proper mode of appeal from a
resolution of the Secretary of Justice directing the prosecutor
to file an information in a criminal case. In the course of this
determination, we must also consider whether the conduct of
preliminary investigation by the prosecutor is a quasi-judicial
function.
Petitioners submit that there is jurisprudence to the effect that
Rule 43 covers rulings of the Secretary of Justice since during
preliminary investigations, the DOJs decisions are deemed as
awards, judgments, final orders or resolutions of or authorized
by any quasi-judicial agency in the exercise of its quasi-judicial
functions, and its prosecutorial offices are considered quasi-
judicial bodies/officers performing quasi-judicial functions.
Respondent counters that the herein petition is a dilatory
tactic and emphasizes that injunction will not lie to restrain
criminal prosecution.
Rule 43 of the 1997 Rules of Civil Procedure clearly shows that
it governs appeals to the Court of Appeals from decisions and
final orders or resolutions of the Court of Tax Appeals or quasi-
judicial agencies in the exercise of their quasi-judicial
functions. The Department of Justice is not among the
agencies[16] enumerated in Section 1 of Rule 43. Inclusio unius
est exclusio alterius.
We cannot agree with petitioners submission that a
preliminary investigation is a quasi-judicial proceeding, and
that the DOJ is a quasi-judicial agency exercising a quasi-
judicial function when it reviews the findings of a public
prosecutor regarding the presence of probable cause.
In Bautista v. Court of Appeals,[17] we held that a preliminary
investigation is not a quasi-judicial proceeding, thus:
[t]he prosecutor in a preliminary investigation does not
determine the guilt or innocence of the accused. He does not
exercise adjudication nor rule-making functions. Preliminary
investigation is merely inquisitorial, and is often the only
means of discovering the persons who may be reasonably
charged with a crime and to enable the fiscal to prepare his
complaint or information. It is not a trial of the case on the
merits and has no purpose except that of determining whether
a crime has been committed and whether there is probable
cause to believe that the accused is guilty thereof. While the
fiscal makes that determination, he cannot be said to be acting
as a quasi-court, for it is the courts, ultimately, that pass
judgment on the accused, not the fiscal.[18]
Though some cases[19] describe the public prosecutors power
to conduct a preliminary investigation as quasi-judicial in
nature, this is true only to the extent that, like quasi-judicial
bodies, the prosecutor is an officer of the executive
department exercising powers akin to those of a court, and the
similarity ends at this point.[20] A quasi-judicial body is as an
organ of government other than a court and other than a
legislature which affects the rights of private parties through
either adjudication or rule-making.[21] A quasi-judicial agency
performs adjudicatory functions such that its awards,
determine the rights of parties, and their decisions have the
same effect as judgments of a court. Such is not the case when
a public prosecutor conducts a preliminary investigation to
determine probable cause to file an information against a
person charged with a criminal offense, or when the Secretary
of Justice is reviewing the formers order or resolutions.
Since the DOJ is not a quasi-judicial body and it is not one of
those agencies whose decisions, orders or resolutions are
appealable to the Court of Appeals under Rule 43, the
resolution of the Secretary of Justice finding probable cause to
indict petitioners for estafa is, therefore, not appealable to the
Court of Appeals via a petition for review under Rule 43.
Accordingly, the Court of Appeals correctly dismissed
petitioners petition for review.
Notwithstanding that theirs is a petition for review properly
under Rule 45, petitioners want us to reverse the findings of
probable cause by the DOJ after their petition for review under
Rule 43 from the court a quo failed. This much we are not
41
inclined to do, for we have no basis to review the DOJs factual
findings and its determination of probable cause.
First, Rule 45 is explicit. This mode of appeal to the Supreme
Court covers the judgments, orders or resolutions of the
Court of Appeals, the Sandiganbayan, the Regional Trial Court
or any authorized court and should raise only pure question
of law. The Department of Justice is not a court.
Also, in this petition are raised factual matters for our
resolution, e.g. the ownership of the subject property, the
existence of deceit committed by petitioners on respondent,
and petitioners knowledge or direct participation in the
Contract to Sell. These are factual issues and are outside the
scope of a petition for review on certiorari. The cited questions
require evaluation and examination of evidence, which is the
province of a full-blown trial on the merits.
Second, courts cannot interfere with the discretion of the
public prosecutor in evaluating the offense charged. He may
dismiss the complaint forthwith, if he finds the charge
insufficient in form or substance, or without any ground. Or,
he may proceed with the investigation if the complaint in his
view is sufficient and in proper form.[22] The decision whether
to dismiss a complaint or not, is dependent upon the sound
discretion of the prosecuting fiscal and, ultimately, that of the
Secretary of Justice.[23] Findings of the Secretary of Justice are
not subject to review unless made with grave abuse of
discretion.[24] In this case, petitioners have not shown
sufficient nor convincing reason for us to deviate from
prevailing jurisprudence.
WHEREFORE, the instant petition is DENIED for lack of merit.
The Decision and the Resolution of the Court of Appeals in CA-
G.R. SP No. 67388, dated September 2, 2002 and November
12, 2002, respectively, are AFFIRMED.
GOVERNOR MANUEL M. LAPID, petitioner, vs. HONORABLE
COURT OF APPEALS, OFFICE OF THE OMBUDSMAN,
NATIONAL BUREAU OF INVESTIGATION, FACT-FINDING
INTELLIGENCE BUREAU (FFIB) of the Office of the
Ombudsman, DEPARTMENT OF INTERIOR AND LOCAL
GOVERNMENT, respondents.
Before us are the Motions for Reconsideration filed by the
National Bureau of Investigation and the Department of the
Interior and Local Government, represented by the Office of
the Solicitor-General, and the Office of the Ombudsman of our
5 April 2000 Resolution.[1] In this resolution, we ordered the
immediate reinstatement of petitioner Manuel Lapid to the
position of Governor of Pampanga as the respondents failed to
establish the existence of a law mandating the immediate
execution of a decision of the Office of the Ombudsman in an
administrative case where the penalty imposed is suspension
for one year.
The factual antecedents are as follows: On the basis of an
unsigned letter dated July 20, 1998, allegedly originating from
the Mga Mamamayan ng Lalawigan ng Pampanga, addressed
to the National Bureau of Investigation, the latter initiated an
open probe on the alleged illegal quarrying in Pampanga &
exaction of exorbitant fees purportedly perpetrated by
unscrupulous individuals with the connivance of high-ranking
government officials. The NBI Report was endorsed to the
respondent Ombudsman and was docketed as OMB-1-98-
2067.
On Oct. 26, 1998, a complaint was filed charging petitioner
Gov. Manuel M. Lapid, Vice-Governor Clayton Olalia, Provincial
Administrator Enrico Quiambao, Provincial Treasurer Jovito
Sabado, Mabalacat Municipal Mayor Marino Morales and
Senior Police Officer 4 Nestor Tadeo with alleged Dishonesty,
Grave Misconduct and Conduct Prejudicial to the Best Interest
of the Service for allegedly having conspired between and
among themselves in demanding and collecting from various
quarrying operators in Pampanga a control fee, control slip, or
monitoring fee of P120.00 per truckload of sand, gravel, or
other quarry material, without a duly enacted provincial
ordinance authorizing the collection thereof and without
issuing receipts for its collection. They were also accused of
giving unwarranted benefits to Nestor Tadeo, Rodrigo Rudy
Fernandez & Conrado Pangilinan who are neither
officials/employees of the Provincial Government. of
Pampanga nor quarry operators by allowing them to collect
the said amount which was over and above the P40.00
prescribed under the present provincial ordinance and in
allowing Tadeo, Fernandez and Pangilinan to sell and deliver to
various quarry operators booklets of official receipts which
were pre-stamped with SAND FEE P40.00.[2]
The Ombudsman issued an Order dated January 13, 1999
preventively suspending petitioner Lapid, Olalia, Quiambao,
Sabado, Morales and Tadeo for a period of six (6) months
without pay pursuant to Sec. 24 of RA 6770. On Jan. 19, 1999,
the Department of the Interior and Local Government
(hereinafter the DILG) implemented the suspension of
petitioner Lapid[3].
On November 22, 1999 the Ombudsman rendered a
decision[4] in the administrative case finding the petitioner
administratively liable for misconduct thus:
Wherefore, premises considered, respondent Manuel M.
Lapid, Clayton A. Olalia, Jovito S. Sabado and Nestor C. Tadeo
are hereby found guilty of misconduct for which they are
meted out the penalty of one (1) year suspension without pay
pursuant to section 25 (2) of R.A. 6770 (Ombudsman Act of
1989). Respondent Marino P. Morales is hereby exonerated
from the same administrative charge for insufficiency of
evidence. The complaint against respondent Enrico P.
42
Quiambao, who resigned effective June 30, 1998 was
dismissed on March 12, 1999, without prejudice to the
outcome of the criminal case.[5]
The copy of the said decision was received by counsel for the
petitioner on November 25, 1999 and a motion for
reconsideration was filed on November 29, 1999. The Office of
the Ombudsman, in an Order[6] dated 12 January 2000, denied
the motion for reconsideration.
Petitioner then filed a petition for review with the Court of
Appeals on January 18, 2000 praying for the issuance of a
temporary restraining order to enjoin the Ombudsman from
enforcing the questioned decision. The temporary restraining
order was issued by the appellate court on January 19, 2000.[7]
When the 60-day lifetime of the temporary restraining order
lapsed on March 19, 2000 without the Court of Appeals
resolving the prayer for the issuance of a writ of preliminary
injunction, a petition[8] for certiorari, prohibition
and mandamus was filed with this Court on March 20,
2000. The petition asked for the issuance of a temporary
restraining order to enjoin the respondents from enforcing the
assailed decision of the Ombudsman and prayed that after due
proceedings, judgment be rendered reversing and setting
aside the questioned decision (of the Ombudsman) dated
November 22, 1999 and the order dated January 12, 2000.[9]
On March 22, 2000 the Third Division of this Court issued a
Resolution requiring the respondents to comment on the
petition. That same day, the Court of Appeals issued a
resolution[10] denying the petitioners prayer for injunctive
relief. The following day, or on March 23, 2000, the DILG
implemented the assailed decision of the Ombudsman and the
highest ranking Provincial Board Member of Pampanga, Edna
David, took her oath of office as O.I.C.- Governor of the
Province of Pampanga.
On March 24, 2000 a Motion for Leave to File Supplement to
the Petition for Certiorari, Prohibition and Mandamus[11] and
the Supplement to the Petition[12] itself were filed in view of
the resolution of the Court of Appeals denying the petitioners
prayer for preliminary injunction. In addition to the arguments
raised in the main petition, the petitioner likewise raised in
issue the apparent pre-judgment of the case on the merits by
the Court of Appeals in its resolution denying the prayer for
preliminary injunction. In so doing, petitioner argued that the
respondent court exceeded the bounds of its jurisdiction.
Proceeding from the premise that the decision of the
Ombudsman had not yet become final, the petitioner argued
that the writs of prohibition and mandamus may be issued
against the respondent DILG for prematurely implementing
the assailed decision. Finally, the petitioner prayed for the
setting aside of the resolution issued by the Court of Appeals
dated March 22, 2000 and for the issuance of a new one
enjoining the respondents from enforcing the said decision or,
if it has already been implemented, to withdraw any action
already taken until the issue of whether or not the said
decision of the Ombudsman is immediately executory has
been settled.
The Solicitor-General and the Office of the Ombudsman filed
their respective comments[13]to the petition praying for the
dismissal thereof. Regarding the issue of the immediate
enforcement of the decision of the Ombudsman, the Solicitor-
General maintains that the said decision is governed by Section
12, Rule 43 of the Rules of Court and is therefore, immediately
executory. For its part, the Office of the Ombudsman
maintains that the Ombudsman Law and its implementing
rules are silent as to the execution of decisions rendered by the
Ombudsman considering that the portion of the said law cited
by petitioner pertains to the finality of the decision but not to
its enforcement pending appeal. The Office of the
Ombudsman also stated that it has uniformly adopted the
provisions in the Local Government Code and Administrative
Code that decisions in administrative disciplinary cases are
immediately executory.
[14]
The Solicitor-General filed an additional comment alleging
that the petitioner did not question the executory character of
the decision of the Ombudsman and that he is presenting this
argument for the first time before the Supreme Court. The
appellate court should be given an opportunity to review the
case from this standpoint before asking the Supreme Court to
review the resolutions of the Court of Appeals. The petitioner
filed a consolidated Reply[15] to the Comments of the
respondents.
After oral arguments before the Third Division of this Court on
5 April 2000, the Resolution[16] subject of the instant Motions
for Reconsideration was issued. The Resolution provides as
follows:
From the pleadings filed by the parties and after oral
arguments held on April 5, 2000, the petitioner represented by
Atty. Augusto G. Panlilio, the respondent Ombudsman
represented by its Chief Legal Counsel, and the National
Bureau of Investigation and the Department of the Interior and
Local Government represented by the Solicitor General, and
after due deliberation, the Court finds that the respondents
failed to establish the existence of a law mandating the
immediate execution of a decision of the Ombudsman in an
administrative case where the penalty imposed is suspension
for one year. The immediate implementation of the decision of
the Ombudsman against petitioner is thus premature.
WHEREFORE, the respondents are ordered to reinstate
effective immediately the petitioner to the position of
43
Governor of the Province of Pampanga. This case is hereby
remanded to the Court of Appeals for resolution of the appeal
in CA-GR. SP No. 564744 on the merits. Said court is hereby
directed to resolve the same with utmost deliberate dispatch.
This is without prejudice to the promulgation of an extended
decision. From this 5 April 2000 Resolution, the Offices of the
Solicitor-General and the Ombudsman filed the instant
motions for reconsideration.
The sole issue addressed by our 5 April 2000 Resolution is
whether or not the decision of the Office of the Ombudsman
finding herein petitioner administratively liable for misconduct
and imposing upon him a penalty of one (1) year suspension
without pay is immediately executory pending appeal.
Petitioner was administratively charged for misconduct under
the provisions of R.A. 6770, the Ombudsman Act of
1989. Section 27 of the said Act provides as follows:
Section 27. Effectivity and Finality of Decisions. All provisionary
orders of the Office of the Ombudsman are immediately
effective and executory.
A motion for reconsideration of any order, directive or decision
of the Office of the Ombudsman must be filed within five (5)
days after receipt of written notice and shall be entertained
only on the following grounds: Findings of fact of the Office of
the Ombudsman when supported by substantial evidence are
conclusive. Any order, directive or decision imposing the
penalty of public censure or reprimand, suspension of not
more than one months salary shall be final and unappealable.
In all administrative disciplinary cases, orders, directives or
decisions of the Office of the Ombudsman may be appealed to
the Supreme Court by filing a petition for certiorari within ten
(10) days from receipt of the written notice of the order,
directive or decision or denial of the motion for
reconsideration in accordance with Rule 45 of the Rules of
Court.
The Rules of Procedure of the Office of the
Ombudsman[17] likewise contain a similar provision. Section 7,
Rule III of the said Rules provides as follows: Sec. 7. Finality of
Decision where the respondent is absolved of the charge and
in case of conviction where the penalty imposed is public
censure or reprimand, suspension of not more than one
month, or a fine not equivalent to one month salary, the
decision shall be final and unappealable. In all other cases, the
decision shall become final after the expiration of ten (10) days
from receipt thereof by the respondent, unless a motion for
reconsideration or petition for certiorari, shall have been filed
by him as prescribed in Section 27 of R.A. 6770.
It is clear from the above provisions that the punishment
imposed upon petitioner, i.e. suspension without pay for one
year, is not among those listed as final and unappealable,
hence, immediately executory. Section 27 states that all
provisionary orders of the Office of the Ombudsman are
immediately effective and executory; and that any order,
directive or decision of the said Office imposing the penalty of
censure or reprimand or suspension of not more than one
months salary is final and unappealable. As such the legal
maxim inclusion unius est exclusio alterus finds
application. The express mention of the things included
excludes those that are not included. The clear import of these
statements taken together is that all other decisions of the
Office of the Ombudsman which impose penalties that are not
enumerated in the said section 27 are not final, unappealable
and immediately executory. An appeal timely filed, such as the
one filed in the instant case, will stay the immediate
implementation of the decision. This finds support in the Rules
of Procedure issued by the Ombudsman itself which states that
(I)n all other cases, the decision shall become final after the
expiration of ten (10) days from receipt thereof by the
respondent, unless a motion for reconsideration or petition
for certiorari(should now be petition for review under Rule 43)
shall have been filed by him as prescribed in Section 27 of R.A.
6770.
The Office of the Solicitor General insists however that the case
of Fabian vs. Desierto[18] has voided Section 27 of R.A. 6770 and
Section 7, Rule III of Administrative Order No. 07. As such, the
review of decisions of the Ombudsman in administrative cases
is now governed by Rule 43 of the 1997 Rules of Civil Procedure
which mandates, under Section 12[19] thereof, the immediately
executory character of the decision or order appealed from.
The contention of the Solicitor General is not well-taken. Our
ruling in the case of Fabian vs. Desierto invalidated Section 27
of Republic Act No. 6770 and Section 7, Rule III of
Administrative Order No.07 and any other provision of law
implementing the aforesaid Act only insofar as they provide for
appeals in administrative disciplinary cases from the Office of
the Ombudsman to the Supreme Court. The only provision
affected by the Fabian ruling is the designation of the Court of
Appeals as the proper forum and of Rule 43 of the Rules of
Court as the proper mode of appeal. All other matters included
in said section 27, including the finality or non-finality of
decisions, are not affected and still stand.
Neither can respondents find support in Section 12, Rule 43 of
the 1997 Rules of Civil Procedure which provides as follows:
Section 12. Effect of Appeal. The appeal shall not stay the
award, judgment, final order or resolution sought to be
reviewed unless the Court of Appeals shall direct otherwise
upon such terms as it may deem just.
44
On this point, respondents contend that considering the
silence of the Ombudsman Act on the matter of execution
pending appeal, the above-quoted provision of the Rules of
Court, which allegedly mandates the immediate execution of
all decisions rendered by administrative and quasi-judicial
agencies, should apply suppletorily to the provisions of the
Ombudsman Act. We do not agree.
A judgment becomes final and executory by operation of
law.[20] Section 27 of the Ombudsman Act provides that any
order, directive or decision of the Office of the Ombudsman
imposing a penalty of public censure or reprimand, or
suspension of not more than one months salary shall be final
and unappealable. In all other cases, the respondent therein
has the right to appeal to the Court of Appeals within ten (10)
days from receipt of the written notice of the order, directive
or decision. In all these other cases therefore, the judgment
imposed therein will become final after the lapse of the
reglementary period of appeal if no appeal is perfected [21] or,
an appeal therefrom having been taken, the judgment in the
appellate tribunal becomes final. It is this final judgment which
is then correctly categorized as a final and executory judgment
in respect to which execution shall issue as a matter of
right.[22] In other words, the fact that the Ombudsman Act
gives parties the right to appeal from its decisions should
generally carry with it the stay of these decisions pending
appeal. Otherwise, the essential nature of these judgments as
being appealable would be rendered nugatory.
The general rule is that judgments by lower courts or tribunals
become executory only after it has become final and
executory,[23] execution pending appeal being an exception to
this general rule. It is the contention of respondents however
that with respect to decisions of quasi-judicial agencies and
administrative bodies, the opposite is true. It is argued that the
general rule with respect to quasi-judicial and administrative
agencies is that the decisions of such bodies are immediately
executory even pending appeal.
The contention of respondents is misplaced. There is no
general legal principle that mandates that all decisions of
quasi-judicial agencies are immediately executory. Decisions
rendered by the Securities and Exchange Commission [24] and
the Civil Aeronautics Board,[25] for example, are not
immediately executory and are stayed when an appeal is filed
before the Court of Appeals. On the other hand, the decisions
of the Civil Service Commission, under the Administrative
Code[26], and the Office of the President under the Local
Government Code[27], which respondents cite, are immediately
executory even pending appeal because the pertinent laws
under which the decisions were rendered mandate them to be
so. The provisions of the last two cited laws expressly provide
for the execution pending appeal of their final orders or
decisions. The Local Government Code, under Section 68
thereof provides as follows:
Section 68. Execution Pending Appeal. An appeal shall not
prevent a decision from becoming final and executory. The
respondent shall be considered as having been placed under
preventive suspension during the pendency of an appeal in the
event he wins such appeal. In the event the appeal results in
an exoneration, he shall be paid his salary and such other
emoluments during the pendency of the appeal.
Similarly, Book V, Title I, Subtitle A, Chapter 6, Section 47, par.
(4) of the Administrative Code of 1987 provides:
(4) An appeal shall not stop the decision from being executory,
and in case the penalty is suspension or removal, the
respondent shall be considered as having been under
preventive suspension during the pendency of the appeal in
the event he wins an appeal.
Where the legislature has seen fit to declare that the decision
of the quasi-judicial agency is immediately final and executory
pending appeal, the law expressly so provides.
Section 12 of Rule 43 should therefore be interpreted as
mandating that the appeal will not stay the award, judgment,
final order or resolution unless the law directs otherwise.
Petitioner was charged administratively before the
Ombudsman and accordingly the provisions of the
Ombudsman Act should apply in his case. Section 68 of the
Local Government Code only applies to administrative
decisions rendered by the Office of the President or the
appropriate Sanggunian against elective local government
officials. Similarly, the provision in the Administrative Code of
1987 mandating execution pending review applies specifically
to administrative decisions of the Civil Service Commission
involving members of the Civil Service.
There is no basis in law for the proposition that the provisions
of the Administrative Code of 1987 and the Local Government
Code on execution pending review should be applied
suppletorily to the provisions of the Ombudsman Act as there
is nothing in the Ombudsman Act which provides for such
suppletory application. Courts may not, in the guise of
interpretation, enlarge the scope of a statute and include
therein situations not provided or intended by the
lawmakers. An omission at the time of enactment, whether
careless or calculated, cannot be judicially supplied however
later wisdom may recommend the inclusion.[28]
And while in one respect, the Ombudsman Law, the
Administrative Code of 1987 and the Local Government Code
are in pari materia insofar as the three laws relate or deal with
public officers, the similarity ends there. It is a principle in
45
statutory construction that where there are two statutes that
apply to a particular case, that which was specially designed
for the said case must prevail over the other.[29] In the instant
case, the acts attributed to petitioner could have been the
subject of administrative disciplinary proceedings before the
Office of the President under the Local Government Code or
before the Office of the Ombudsman under the Ombudsman
Act. Considering however, that petitioner was charged under
the Ombudsman Act, it is this law alone which should govern
his case.
Respondents, through the Office of the Solicitor General, argue
that the ruling against execution pending review of the
Ombudsmans decision grants a one-sided protection to the
offender found guilty of misconduct in office and nothing at all
to the government as the aggrieved party. The offender,
according to respondents, can just let the case drag on until
the expiration of his office or his reelection as by then, the case
against him shall become academic and his offense,
obliterated. As such, respondents conclude, the government is
left without further remedy and is left helpless in its own fight
against graft and corruption.
We find this argument much too speculative to warrant serious
consideration. If it perceived that the fight against graft and
corruption is hampered by the inadequacy of the provisions of
the Ombudsman Act, the remedy lies not with this Court but
by legislative amendment.
As regards the contention of the Office of the Ombudsman
that under Sec. 13(8), Article XI of the 1987 Constitution, the
Office of the Ombudsman is empowered to (p)romulgate its
rules of procedure and exercise such other powers or perform
such functions or duties as may be provided by law, suffice it
to note that the Ombudsman rules of procedure,
Administrative Order No. 07, mandate that decisions of the
Office of the Ombudsman where the penalty imposed is other
than public censure or reprimand, suspension of not more
than one month salary or fine equivalent to one month salary
are still appealable and hence, not final and executory. Under
these rules, which were admittedly promulgated by virtue of
the rule-making power of the Office of the Ombudsman, the
decision imposing a penalty of one year suspension without
pay on petitioner Lapid is not immediately executory.
CHINA ROAD AND BRIDGE CORPORATION, petitioner,
vs. COURT OF APPEALS (Special Seventh Division) and
JADE PROGRESSIVE SAVINGS AND MORTGAGE
BANK, respondents. BELLOSILLO, J.:
This is a petition for certiorari under Rule 65 of the 1997 Rules
of Civil Procedure praying for the nullification of
the Resolution of the Court of Appeals (Special Seventh
Division)dated 29 October 1998 denying petitioner's Motion to
Dismiss Appeal, and its Resolution dated 5 February 1999,
denying reconsideration thereof and for the dismissal of CA-
G.R. CV No. 57375.
CHINA ROAD AND BRIDGE CORPORATION (CRBC), petitioner, is
a corporation organized under the laws of the People's
Republic of China duly licensed by the Securities and Exchange
Commission to do business in the Philippines. It was awarded
by the Philippine Government the contract to construct the
EDSA Shaw
Boulevard Overpass in Mandaluyong, which it subcontracted
to Hi-Quality Builders and Traders, Inc. (HI-QUALITY), a
domestic corporation organized under the laws of the
Philippines.
On 17 October 1996 Helen Ambrosio, President of HI-QUALITY,
executed a Continuing Suretyship in favor of Jade Progressive
Savings and Mortgage Bank (JADEBANK) binding herself to pay
the "obligations of the Debtor (Hi-Quality) arising from all
credit accommodations extended by the Bank to the Debtor x
x x x presently or hereafter owing to the Bank, as appears in
theaccounts, books and records of the Bank whether direct or
indirect x x x x"
On 10 January 1997, in consideration of a loan
of P5,000,000.00, HI-QUALITY executed a Deed
Assignment in favor of JADEBANK with the approval of CRBC
where it assigned to JADEBANK "(a)ll monthly accomplishment
billings, the sums of money, credit, or receivables assigned, be
in the position (sic) of or due or to be due from China Road and
Bridge Corporation, arising from the subcontract agreement in
the construction of the EDSA/Shaw Blvd. Overpass Project x x
x x"[1]
On 17 January 1997 JADEBANK released to HI-
QUALITY P500,000.00 as part of the loan both parties earlier
contracted. As security for the loan, HI-QUALITY executed
Promissory Note No. JB BDO 15/97 promising to pay the loan
on 3 April 1997. It also indorsed to JADEBANK Check No.
0000270127 issued by CRBC on 31 March 1997 covering the
amount released, drawn on United Coconut Planters Bank
(UCPB), Mandaluyong Branch.
On 7 April 1997 JADEBANK released P250,000.00 for which HI-
QUALITY executed Promissory Note No. JB BDO 181/97
payable on 18 April 1997 and indorsed to JADEBANK Check No.
0000126132 issued by Helen Ambrosio on 18 April 1997
covering the amount released, drawn on Allied Banking
Corporation, Shaw Boulevard Branch (ALLIEDBANK).
On 21 March 1997 JADEBANK released P250,000.00 for which
HI-QUALITY executed Promissory Note No. JB BDO
150/97 payable on 5 May 1997 and indorsed to JADEBANK
ALLIEDBANK Check No. 0000126131 issued by Ambrosio dated
30 April 1997 for the same amount.
On 25 March 1997 JADEBANK released P400,000.00 for which
HI-QUALITY executed Promissory Note No. JB BDO 162/97
payable on 5 May 1997 and indorsed to JADEBANK Check No.
214179 issued by Ambrosio dated 30 April 1997 for the same
amount, drawn on Security Bank Corporation, Pateros Branch
(SECURITYBANK).
On 7 February 1997 JADEBANK released another P400,000.00
for which HI-QUALITY executed Promissory Note No. JB BDO
33/97 payable on 5 May 1997 and indorsed to JADEBANK UCPB
Check No. 270144 issued by CRBC.
On 17 February 1997 JADEBANK released P350,000.00 for
which HI-QUALITY executed Promissory Note No. JB BDO
45/97 payable on 5 May 1997 and indorsed to JADEBANK UCPB
Check No. 270147 issued by CRBC.
Finally, on 21 February 1997 JADEBANK released P250,000.00
for which HI-QUALITY executed Promissory Note No. JB BDO
75/97 payable on 5 May 1997 and indorsed to JADEBANK UCPB
Check No. 270551 issued by CRBC.
All the promissory notes executed by HI-QUALITY provided for
twenty-five percent (25%) interest per annum and a five
of
percent (5%) penalty per month in case of default. The amount
of each check corresponded to the amount released to HI-
QUALITY on the day the check was indorsed to JADEBANK.
When JADEBANK deposited the aforementioned checks for
payment, they were returned unpaid. The checks drawn on
UCPB were dishonored due to "Stop Payment" orders from the
drawer. The ALLIEDBANK checks were dishonored because the
account was closed on 19 February 1997. The SECURITYBANK
check was dishonored because the account had been closed
since the second quarter of 1996.
On 9 June 1997, after repeated demands for payment which
were unheeded, JADEBANK filed a case for collection against
HI-QUALITY, Helen Ambrosio and CRBC, with an application for
a writ of attachment against their
properties. The Complaint included as cause of action the first
four (4) checks indorsed by HI-QUALITY to JADEBANK and
alleging among others that the defendants conspired to
commit fraudulent acts in order to induce JADEBANK to grant
the loans to HI-QUALITY. Firstly, CRBC issued to HI-QUALITY
the UCPB check for P500,000.00 dated 31 March 1997 without
any intention of honoring the
check. JADEBANK alleged that CRBC knew fully well that the
check was to be used by HI-QUALITY as security for the loan
from JADEBANK. However, in violation of the Deed of
Assignment, CRBC gave to HI-QUALITY sums of money without
notice to or the consent of JADEBANK, thereby releasing funds
46
supposedly already assigned to JADEBANK for the payment of
HI-QUALITY's loans. Secondly, Helen Ambrosio, as President of
HI-QUALITY, issued the checks drawn on SECURITYBANK and
ALLIEDBANK after her accounts with these banks were closed,
thus revealing a fraudulent intention not to honor her
obligations even from their inception. She also executed
the Suretyship Agreement in favor of JADEBANK without any
intention of fulfilling her obligations.
On 17 June 1997 the trial court[2] issued a Writ of Preliminary
Attachment. On the same day, a Notice of Garnishment was
served on UCPB garnishing all the moneys of CRBC in the
bank. On 23 June 1997 CRBC filed a Motion for Discharge of
Attachment. On the same day a Notice of Levy on
Attachment was also served on CRBC. On 27 June 1997 the
preliminary attachment was discharged after CRBC posted a
counter-bond in the amount of P1,962,458.00. On 30 June
1997 JADEBANK filed an Amended Complaint to include the
loans contracted on 7, 17 and 21 February 1997 increasing the
total amount collectible to P3,437,424.42.
On 28 July 1997 CRBC filed a Motion to Dismiss the 30 May
1997 Complaint on the ground of lack of cause of
action. According to CRBC, the Deed of Assignment upon
which JADEBANK based its cause of action against CRBC, was
subject to the Sub-Contracting Agreement between CRBC and
HI-QUALITY -
Under these circumstances, until such time as Hi-Quality is able
to perform its obligations pursuant to the Sub-Contract
Agreement thereby entitling it to payment for services
rendered, China Road has no liability whatsoever in Hi-
Quality's favor. Corollarily, until this happens, Hi-Quality has
nothing to assign in favor of the plaintiff in the form of
collectibles/receivables from China Road pursuant to the Deed
of Assignment.[3]
CRBC also denied that the issuance of the checks to HI-
QUALITY was for the purpose of facilitating the loans in favor
of the latter, claiming that the checks were for the use of HI-
QUALITY alone, and not for any other purpose. In support of
this claim, CRBC asserted that "(n)owhere on the face of the
said check does the name of the plaintiff appear. Neither is it
accompanied by any document whatsoever specifically
evincing that the same was intended for delivery to
plaintiff." CRBC also denied that it had been releasing money
to HI-QUALITY, claiming that the latter had failed to comply
with its obligations to CRBC.
On 27 August 1997 the lower court granted the Motion to
Dismiss the complaint with respect to CRBC. Its Motion for
Reconsideration having been denied on 31 June 1997
JADEBANK appealed to the Court of Appeals under Rule 41 of
the Rules of Court. On 12 August 1997 CRBC filed with the
47
Court of Appeals a Motion to Dismiss Appeal asserting that"the
determination of whether the ultimate facts in
a Complaint state a cause of action against the defendant is a
pure question of law and does not involve any question of
fact."[4]According to CRBC, the proper mode of appeal was not
by way of ordinary appeal under Rule 41 but rather by way of
a petition for review on certiorari under Rule 45.
On 29 October 1998 the Court of Appeals (Special Seventh
Division) issued the assailed Resolution denying CRBC's Motion
to Dismiss, finding the appeal involved both questions of fact
and of law. On 5 February 1999 the appellate court denied
reconsideration; hence, this petition.
The only issue that needs to be resolved is whether the Court
of Appeals committed grave abuse of discretion amounting to
lack or excess of jurisdiction in denying petitioner's Motion to
Dismiss. In resolving the issue it is necessary to determine only
if private respondent's appeal to the Court of Appeals involved
purely questions of law, in which case the proper mode of
appeal would be a petition for review on certiorari to the
Supreme Court under Rule 45;[5] or questions of fact or mixed
questions of fact and law, in which case the proper mode
would be by ordinary appeal under Rule 41.
A question of law exists when there is doubt or controversy as
to what the law is on a certain state of facts, and there is a
question of fact when the doubt or difference arises as to the
truth or falsehood of facts,[6] or when the query necessarily
invites calibration of the whole evidence considering mainly
the credibility of witnesses, existence and relevancy of specific
surrounding circumstances, their relation to each other and to
the whole and probabilities of the situation.[7] Ordinarily, the
determination of whether an appeal involves only questions of
law or both questions of law and fact is best left to the
appellate court,[8] and all doubts as to the correctness of such
conclusions will be resolved in favor of the Court of
Appeals.[9]However, in the instant case, we find that there was
grave abuse of discretion on the part of respondent Court of
Appeals, hence, we grant the petition.
The ground for dismissal invoked by petitioner is that the
complaint of JADEBANK before the trial court stated no cause
of action, under Sec. 1, par. (g), Rule 16, the 1997 Revised Rules
of Civil Procedure. It is well settled that in a motion to dismiss
based on lack of cause of action, the issue is passed upon on
the basis of the allegations assuming them to be true.[10] The
court does not inquire into the truth of the allegations and
declare them to be false, otherwise it would be a procedural
error and a denial of due process to the plaintiff. Only the
statements in the complaint may be properly considered, and
the court cannot take cognizance of external facts or hold
preliminary hearings to ascertain their existence.[11] To put it
simply, the test for determining whether a complaint states or
does not state a cause of action against the defendants is
whether or not, admitting hypothetically the truth of the
allegations of fact made in the complaint, the judge may validly
grant the relief demanded in the complaint.[12]
In a motion to dismiss based on failure to state a cause of
action, there cannot be any question of fact or "doubt or
difference as to the truth or falsehood of facts," simply
because there are no findings of fact in the first place. What
the trial court merely does is to apply the law to the facts as
alleged in the complaint, assuming such allegations to be
true. It follows then that any appeal therefrom could only raise
questions of law or "doubt or controversy as to what the law is
on a certain state of facts." Therefore, a decision dismissing a
complaint based on failure to state a cause of action
necessarily precludes a review of the same decision on
questions of fact. One is the legal and logical opposite of the
other.
In resolving the Motion to Dismiss, the lower court ruled - As
alleged in the complaint, the plaintiff granted a loan to Hi-
Quality Builders and Traders, Inc. (HQ); that as security of the
payment of the loan, HQ assigned all its receivables from
China; that China gave HQ a check for P5,000,000.00 payable
to HQ; that in turn HQ gave the check to plaintiff; and that
plaintiff deposited said check which was returned for the
reason: "stop payment".
It is clear from the foregoing that there is no cause of action of
plaintiff against China. While there is a "delict" or "wrong"
committed, it was not committed against the rights of plaintiff
because it alleged none but against HQ. Therefore, the one
that has a cause of action against China is HQ.[13]
The Motion for Reconsideration filed by JADEBANK was
resolved by the trial court thuswise - (T)he plaintiff has a right
in the collection of the loan it granted to Hi-Quality Builders
but there is no corresponding allegation the (sic) China Road
has an obligation to pay such loan. All that is alleged is that
China Road agreed that Hi-Quality Builders will assign its
receivables from China Road and for that purpose appointed
plaintiff as Attorney-in-fact.
Had there been allegation to the effect that plaintiff, as
Attorney-in-fact, of Hi-Quality Builders collected from China
Road and that China Road refused to deliver the money due
Hi-Quality Builders then a cause of action would have arisen.[14]
It is clear from the foregoing that the lower court did not make
any finding of fact; rather, as was proper in a motion to dismiss
for this particular ground, it merely assumed the plaintiff's
allegations to be true. It did not evaluate the evidence of the
plaintiff nor did it pass upon the truth or falsity of the plaintiff's
allegations. What the lower court did was simply to apply the
law as to the facts borne out by the allegations in the
48
complaint. And it found that even assuming that all the
allegations of JADEBANK were true, it would still not be able to
collect from CRBC because based on the same allegations,
CRBC did not have any duty whatsoever to remit money to
JADEBANK. Whether this conclusion is correct or not is a totally
separate issue and is not before us for review at this time.
What is evident, however, is that such a conclusion could only
raise pure questions of law. It is perplexing to this Court then
why respondent appellate court found that there were
questions of fact to be answered in the appeal. It taxes the
imagination how a question of fact can arise from a
controversy that does not involve findings of fact.
JADEBANK in its Appellant's Brief raised the following
questions, which it erroneously designated as questions of
fact, in an attempt to place its appeal within the jurisdiction of
the Court of Appeals:
4.1.1. Whether or not the amended complaint together with
the Annexes attached and forming an integral part thereof,
states a sufficient cause of action against the defendant-
appellee;
4.1.2. Whether or not there was an unwarranted reversal of
the Honorable Regional Trial Court's Orders stating that the
complaint states a sufficient cause of action;
4.2.1. Whether or not the Motion to Dismiss the complaint can
be considered also as a Motion to Dismiss the Amended
Complaint.
We fail to see how these issues raised by JADEBANK could be
properly denominated questions of fact. The test of whether a
question is one of law or of fact is not the appellation given to
such question by the party raising the same; rather, it is
whether the appellate court can determine the issue raised
without reviewing or evaluating the evidence, in which case, it
is a question of law; otherwise, it is a question of
fact.[16] Applying the test to the instant case, it is clear that
private respondent raises pure questions of law which are not
proper in an ordinary appeal under Rule 41, but should be
raised by way of a petition for review on certiorari under Rule
45.
We agree with private respondent that in a motion to dismiss
due to failure to state a cause of action, the trial court can
consider all the pleadings filed, including annexes, motions and
the evidence on record.[17] However in so doing, the trial court
does not rule on the truth or falsity of such documents. It
merely includes such documents in the hypothetical
admission. Any review of a finding of lack of cause of action
based on these documents would not involve a calibration of
the probative value of such pieces of evidence but would only
limit itself to the inquiry of whether the law was properly
applied given the facts and these supporting
documents. Therefore, what would inevitably arise from such
a review are pure questions of law, and not questions of fact.

It is apparent that JADEBANK, as well as respondent appellate

court, confused situations where the complaint does not allege
a sufficient cause of action and where the evidence does not
sustain the cause of action alleged. The first is raised in a
motion to dismiss under Rule 16 before a responsive pleading
is filed and can be determined only from the allegations in the
initiatory pleading and not from evidentiary or other
matters aliunde. The second is raised in a demurrer to
evidence under Rule 33 after the plaintiff has rested his case
and can be resolved only on the basis of the evidence he has
presented in support of his claim.[18] The first does not concern
itself with the truth and falsity of the allegations while the
second arises precisely because the judge has determined the
truth and falsity of the allegations and has found the evidence
wanting.

This is not to say that we automatically agree with the trial

court that private respondent failed to allege a sufficient cause
of action. However, the question of whether JADEBANK failed
to state a sufficient cause of action is not before us for review;
it may only be resolved when the appropriate mode of review
is availed of JADEBANK's appeal having been improperly
brought before the Court of Appeals, it should be dismissed
outright pursuant to Sec. 2 of Rule 50 of the Rules of Court,
which provides: Sec. 2. Dismissal of improper appeal to the
Court of Appeals. -- An appeal under Rule 41 taken from the
Regional Trial Court to the Court of Appeals raising only
questions of law shall be dismissed, issues purely of law not
being reviewable by the said court x x x x

WHEREFORE, the petition for certiorari is GRANTED. The

assailed Resolutions of the Court of Appeals dated 29 October
1998 and 5 February 1999 are REVERSED and SET ASIDE for
having been issued with grave abuse of discretion amounting
to lack or excess of jurisdiction.

49