REMEDIAL LAW 1 – SPECIAL CIVIL ACTIONS – SEPT 4 2018 –

CASES - BALABAT

FLORO MERCENE, Petitioner vs.

GOVERNMENT SERVICE INSURANCE SYSTEM, Respondent
G.R. No. 192971 | MARTIRES, J. | FORECLOSURE OF REM

THE FACTS

In1965, petitioner Floro Mercene (Mercene) obtained a loan from respondent Government Service Insurance System (GSIS) in the amount of
₱29,500.00. As security, a real estate mortgage was executed over Mercene's property in Quezon City, registered under Transfer Certificate of
Title No. 90535. The mortgage was registered and annotated on the title.

In1968, Mercene contracted another loan with GSIS for the amount of ₱14,500.00. The loan was likewise secured by a real estate mortgage
on the same parcel of land. The following day, the loan was registered and duly annotated on the title. 5

In 2004, Mercene opted to file a complaint for Quieting of Title6 against GSIS. He alleged that: since 1968 until the time the complaint was
filed, GSIS never exercised its rights as a mortgagee; the real estate mortgage over his property constituted a cloud on the title; GSIS' right to
foreclose had prescribed.

In its answer,7 GSIS assailed that the complaint failed to state a cause of action and that prescription does not run against it because it is a
government entity.

An action to quiet title is a lawsuit brought in a court having jurisdiction over property disputes, in order to establish a party's title to real
property, or personal property having a title, of against anyone and everyone, and thus "quiet" any challenges or claims to the title.

The RTC Decision: RTC granted Mercene's complaint and ordered the cancellation of the mortgages annotated on the title. It ruled that the
real estate mortgages annotated on the title constituted a cloud thereto, because the annotations appeared to be valid but was ineffective and
prejudicial to the title. The trial court opined that GSIS' right as a mortgagee had prescribed because more than ten (10) years had lapsed from
the time the cause of action had accrued. Aggrieved, GSIS appealed before the CA.

The CA Ruling: CA reversed the RTC decision. The appellate court posited that the trial court erred in declaring that GSIS' right to foreclose
the mortgaged properties had prescribed. It highlighted that Mercene's complaint neither alleged the maturity date of the loans, nor the fact that
a demand for payment was made. The CA explained that prescription commences only upon the accrual of the cause of action, and that a cause
of action in a written contract accrues only when there is an actual breach or violation. Thus, the appellate court surmised that no prescription
had set in against GSIS because it has not made a demand to Mercene.

ISSUES

WHETHER THE COURT OF APPEALS ERRED IN DISREGARDING THE JUDICIAL ADMISSION ALLEGEDLY MADE BY GSIS;
AND

WHETHER THE COURT OF APPEALS ERRED IN RULING THAT THE REAL ESTATE MORTGAGES HAD YET TO
PRESCRIBE.

THE COURTS RULING

The petition has no merit. Only ultimate facts need be specifically denied

Further, Mercene insists that GSIS had judicially admitted that its right to foreclose the mortgage had prescribed. He assails that GSIS failed
to specifically deny the allegations in his complaint, particularly paragraphs 11.1 and 11.2
he Court agrees with Mercene that material averments not specifically denied are deemed admitted. 12Nonetheless, his conclusion that GSIS
judicially admitted that its right to foreclose had prescribed is erroneous. It must be remembered that conclusions of fact and law stated in the
complaint are not deemed admitted by the failure to make a specific denial. 13 This is true considering that only ultimate facts must be alleged
in any pleading and only material allegation of facts need to be specifically denied. 14

A conclusion of law is a legal inference on a question of law made as a result of a factual showing where no further evidence is required. 15 The
allegation of prescription in Mercene's complaint is a mere conclusion of law. In Abad v. Court of First Instance of Pangasinan, 16 the Court
ruled that the characterization of a contract as void or voidable is a conclusion of law, to wit:

A pleading should state the ultimate facts essential to the rights of action or defense asserted, as distinguished from mere conclusions of fact,
or conclusions of law. General allegations that a contract is valid or legal, or is just, fair and reasonable, are mere conclusions of law. Likewise,
allegations that a contract is void, voidable, invalid, illegal, ultra vires, or against public policy, without stating facts showing its invalidity,
are mere conclusions of law.

In the same vein, labelling-an obligation to have prescribed without specifying the circumstances behind it is a mere conclusion of law. As
would be discussed further, the fact that GSIS had not instituted any action within ten (10) years after the loan had been contracted is insufficient
to hold that prescription had set in. Thus, even if GSIS' denial would not be considered as a specific denial, only the fact that GSIS had not
commenced any action, would be deemed admitted at the most. This is true considering that the circumstances to establish prescription against
GSIS have not been alleged with particularity.

Commencement of the prescriptive period for real estate mortgages material in determining cause of action

In its answer, GSIS raised the affirmative defense, among others, that the complaint failed to state a cause of action.1âwphi1 In turn, the CA
ruled that Mercene's complaint did not state a cause of action because the maturity date of the loans, or the demand for the satisfaction of the
obligation, was never alleged.

In order for cause of action to arise, the following elements must be present: (1) a right in favor of the plaintiff by whatever means and under
whatever law it arises or is created; (2) an obligation on the part of the named defendant to respect or not to violate such right; and (3) an act
or omission on the part of such defendant violative of the right of the plaintiff or constituting a breach of obligation of the defendant to the
plaintiff.17

In University of Mindanao, Inc. v. Bangko Sentral ng Pilipinas, et al., 18 the Court clarified that prescription runs in mortgage contract from
the time the cause of action arose and not from the time of its execution, to wit:

The prescriptive period neither runs from the date of the execution of a contract nor does the prescriptive period necessarily run on
the date when the loan becomes due and demandable. Prescriptive period runs from the date of demand, subject to certain exceptions.

In other words, ten (10) years may lapse from the date of the execution of contract, without barring a cause of action on the mortgage when
there is a gap between the period of execution of the contract and the due date or between the due date and the demand date in cases when
demand is necessary.

The prescriptive period for filing an action may run either (1) from 1990 when the loan became due, if the obligation was covered by
the exceptions under Article 1169 of the Civil Code; (2) or from 1999 when respondent demanded payment, if the obligation was not
covered by the exceptions under Article 116919 of the Civil Code. [emphasis supplied]

In Maybank Philippines, Inc. v. Spouses Tarrosa, 20 the Court explained that the right to foreclose prescribes after ten (10) years from the time
a demand for payment is made, or when then loan becomes due and demandable in cases where demand is unnecessary, viz:

An action to enforce a right arising from a mortgage should be enforced within ten (10) years from the time the right of action accrues, i.e., when
the mortgagor defaults in the payment of his obligation to the mortgagee; otherwise, it will be barred by prescription and the mortgagee will
lose his rights under the mortgage. However, mere delinquency in payment does not necessarily mean delay in the legal concept. To be in
default is different from mere delay in the grammatical sense, because it involves the beginning of a special condition or status which has its
own peculiar effects or results.

In order that the debtor may be in default, it is necessary that: (a) the obligation be demandable and already liquidated; (b) the debtor delays
performance; and (c) the creditor requires the performance judicially or extrajudicially, unless demand is not necessary - i.e., when there is an
express stipulation to that effect; where the law so provides; when the period is the controlling motive or the principal inducement for the
creation of the obligation; and where demand would be useless. Moreover, it is not sufficient that the law or obligation fixes a date for
performance; it must further state expressly that after the period lapses, default will commence. Thus, it is only when demand to pay is
unnecessary in case of the aforementioned circumstances, or when required, such demand is made and subsequently refused that the mortgagor
can be considered in default and the mortgagee obtains the right to file an action to collect the debt or foreclose the mortgage.

Thus, applying the pronouncements of the Court regarding prescription on the right to foreclose mortgages, the Court finds that the CA did
not err in concluding that Mercene's complaint failed to state a cause of action. It is undisputed that his complaint merely stated the
dates when the loan was contracted and when the mortgages were annotated on the title of the lot used as a security. Conspicuously
lacking were allegations concerning: the maturity date of the loan contracted and whether demand was necessary under the terms and
conditions of the loan.

As such, the RTC erred in ruling that GSIS' right to foreclose had prescribed because the allegations in Mercene's complaint were
insufficient to establish prescription against GSIS. The only information the trial court had were the dates of the execution of the loan, and
the annotation of the mortgages on the title. As elucidated in the above-mentioned decisions, prescription of the right to foreclose mortgages
is not reckoned from the date of execution of the contract. Rather, prescription commences from the time the cause of action accrues; in
other words, from the time the obligation becomes due and demandable, or upon demand by the creditor/mortgagor, as the case may
be.

In addition, there was no judicial admission on the part of GSIS with regard to prescription because treating the obligation as prescribed, was
merely a conclusion of law. It would have been different if Mercene's complaint alleged details necessary to determine when GSIS' right to
foreclose arose, i.e., date of maturity and whether demand was necessary.

WHEREFORE, the petition is DENIED. The 29 April 2010 Decision and 20 July 2010 Resolution of the Court of Appeals (CA) are
AFFIRMED in toto.

SO ORDERED.

TERESA R. IGNACIO, Petitioner vs.

RAMON REYES, FLORENCIO REYES, JR., ROSARIO R. DU and CARMELITA R. PASTOR, Respondents
G.R. No. 213192 | PERALTA J. | PARTITION

In 1967, Angel Reyes (Angel) and Oliva3 R. Arevalo (Oliva) filed before the then Court of First Instance of Rizal (now RTC of Pasig City,
Branch 151) (intestate court) a Petition4 for Letters of Administration of the Estate of their father Florencio Reyes, Sr. (Florencio Sr.) who
died on June 23, 1967, and enumerated therein the surviving heirs, namely: Oliva, Francisca Vda. de Justiniani (Francisca), Angel, Amparo
R. Avecilla (Amparo), Ramon Reyes (Ramon), Teresa, Rosario R. Du (Rosario), Jose Reyes (Reyes), Soledad Reyes (Soledad), Carmelita5 R.
Pastor (Carmelita), and Florencio Reyes, Jr. (Florencio Jr.).

Same year, the intestate court appointed Oliva as the special administratrix of the estate of Florencio Sr. (Florencio Sr. estate), and then as the
regular administratrix. Florencio, Jr. replaced Oliva in 1982. Thereafter, Teresa became the administratrix of the Florencio Sr. estate in 1994.7

In 1994, Teresa executed a lease contract over a 398 square meters (sq. m.) parcel of land located at Magsaysay Avenue, Baguio City covered
by Transfer Certificate of Title (TCT) No. T-59201 (Magsaysay property) in favor of Gonzalo Ong et al which was approved by the intestate
court.

Likewise, in 1996, the intestate court allowed Teresa to enter into a lease contract over the parcel of land (Session Road property) to Famous
Realty Corporation (FRC).10Thus, on October 29, 1996, Teresa leased the Session Road property to FRC for the period of July 1, 1996 to June
30, 2003, with a monthly rental of ₱135,000.00.

Sometime in January 1997, Teresa also leased the (Loakan and Military Cut-off properties), in favor of ATC Wonderland, Inc. and,
subsequently, to Gloria de Guzman and Sonshine Pre-School for a period often years, effective September 1, 1996 to August 31, 2006. 12

In 2001, herein respondents Ramon, Florencio Jr., Rosario and Carmelita, and the Heirs of Amparo, Intestate Estate of Soledad, Jose and
Intestate Estate of Angel (plaintiffs) filed before the RTC of Baguio City, Branch 3 (Baguio RTC), three complaints for partition, annulment
of lease contract, accounting and damages with prayer for the issuance of a writ of preliminary injunction against Teresa and the lessees of the
subject Baguio properties.13

The plaintiffs alleged in their Complaints14 that, with the exception of the lessees, the parties and the Florencio Sr. estate own one-tenth (1/10)
of each of the Session Road, Loakan and Military Cut-off, and Magsaysay properties. They claimed that Teresa misrepresented that the
Florencio Sr. estate is the sole owner of the properties and leased the same to the other parties without their conformity. They also asserted in
one of their complaints that the Florencio Sr. estate is different from the Heirs of Florencio Sr. and Heirs of Salud.

They averred that, as co-owners, they have not received their share in the monthly rentals of the properties aforementioned due
to Teresa's failure to duly account for the same. Thus, they are asking for the partition of the properties, for the accounting
of all the rentals, income or profits derived, and deliver the same to the plaintiffs, for the annulment of the lease contracts and
order the lessees to vacate the premises, and for the payment of damages.15

Thereafter, the Baguio RTC directed and commissioned a team of auditors with Leticia Clemente as the head accountant to conduct an
accounting of the properties. Baguio RTC manifested that it shall await a Request Order from the intestate court regarding the possible
distribution of the subject properties.18
Subsequently, respondents and the others filed a motion19 before the intestate court praying for the issuance of an order allowing the distribution
of the heirs' aliquot shares in the co-owned properties' net income, and the partition of the said properties by the Baguio RTC. However, the
intestate court denied the motion saying x x x This Court cannot allow the Baguio Court to partition the property of the estate because
this Court already has jurisdiction over the matter. In fact, this Court is wondering why actions for partition are being entertained in
other jurisdictions when such can be readily addressed by this Court as an estate court.

Thereafter, the respondents filed before the CA a petition for certiorari assailing the Orders of the intestate court disallowing the partition of
the Baguio properties.

CA granted the petition and annulled and set aside the assailed Orders of the intestate court. On the other hand, the Regional Trial Court of
Baguio City, Branch 3, before which court Special Civil Actions Nos. 5055-R, 5056-R, and 5057-R are pending, is DIRECTED to partition
the Baguio Properties among the registered co-owners thereof.

ISSUE: Whether or not RTC Baguio may proceed with the complaint for partition without waiting for order of the intestate court. –
yes

WON RTC Baguio erred when it deferred the trial to await a request order from the intestate court regarding the possible distribution. - YES

RULING:

The Court finds the instant petition without merit.

The assailed April 13, 2004 and June 14, 2012 Orders denying respondents' motion to allow the distribution of the estate's and co-owners'
shares in the subject properties were interlocutory. This is because such denial was not a final determination of their alleged co-ownership. In
fact, the intestate court merely asserted its jurisdiction over the properties which were allegedly co-owned with the Florencio Sr. estate.

Jurisprudence teaches that jurisdiction of the trial court as an intestate court is special and limited as it relates only to matters having
to do with the probate of the will and/or settlement of the estate of deceased persons, but does not extend to the determination of
questions of ownership that arise during the proceedings. This is true whether or not the property is alleged to belong to the estate.31

Furthermore, the doctrine that "in a special proceeding for the probate of a will, the question of ownership is an extraneous matter which the
probate court cannot resolve with finality" applies with equal force to an intestate proceeding as in the case at bar. 32 Thus:

"[A] probate court or one in charge of proceedings whether testate or intestate cannot adjudicate or determine title to properties claimed to be
a part of the estate and which are claimed to belong to outside parties. All that the said court could do as regards said properties is to determine
whether they should or should not be included in the inventory or list of properties to be administered by the administrator. If there is not
dispute, well and good, but if there is, then the parties, the administrator, and the opposing parties have to resort to an ordinary action for a
final determination of the conflicting claims of title because the probate court cannot do so."33

Corollarily, in the case of Agtarap v. Agtarap, et al. 34 the Court enumerated the instances when the intestate court may pass upon the issue of
ownership, to wit:

However, this general rule is subject to exceptions as justified by expediency and convenience.

First, the probate court may provisionally pass upon in an intestate or a testate proceeding the question of inclusion in, or exclusion
from, the inventory of a piece of property without prejudice to the final determination of ownership in a separate action.

Second, if the interested parties are all heirs to the estate, or the question is one of collation or advancement, or the parties consent to
the assumption of jurisdiction by the probate court and the rights of third parties are not impaired, then the probate court is competent
to resolve issues on ownership. Verily, its jurisdiction extends to matters incidental or collateral to the settlement and distribution of the estate,
such as the determination of the status of each heir and whether the property in the inventory is conjugal or exclusive property of the deceased
spouse.35

From the foregoing, this Court holds that the general rule on the limited jurisdiction of the RTC as intestate court is applicable in Special Civil
Action Nos. 5.055-R and 5056-R.
As to the Magsaysay property in Special Civil Action No. 5057-R, it is evident from the certificate of title that the rights of parties other than
the heirs of Florencio Sr. will be impaired should the intestate court decide on the ownership of the property.

Presentation of Title: In regard to such incident of inclusion or exclusion, We hold that if a property covered by Torrens Title is involved, the
presumptive conclusiveness of such title should be given due weight, and in the absence of strong compelling evidence to the contrary, the
holder thereof should be considered as the owner of the property in controversy until his title is nullified or modified in an appropriate ordinary
action, particularly, when as in the case at bar, possession of the property itself is in the persons named in the title.38
As such, they are considered the owners of the properties until their title is nullified or modified in an appropriate ordinary action. The co-
ownership of the said properties by virtue of the certificates of title is a common issue in the complaints for partition filed before the Baguio
RTC.

Thus, the intestate court committed grave abuse of discretion when it asserted jurisdiction over the subject properties since its
jurisdiction relates only to matters having to do with the settlement of the estate of deceased persons. Any decision that the intestate
court would render on the title of the properties would at best be merely provisional in character, and would yield to a final
determination in a separate action.

An action for partition under Rule 69 of the Rules of Court is typically brought by a person claiming to be the owner of a specified
property against a defendant or defendants whom the plaintiff recognizes to be his co-owners,39 and is premised on the existence or
non-existence of co-ownership between the parties.40

As discussed in Lim De Mesa v. Court of Appeals,41the determination of the existence of co-ownership is the first stage to accord with the
remedy of judicial partition, thus:

The first stage of an action for judicial partition and/or accounting is concerned with the determination of whether or not a co-ownership in
fact exists and a partition is proper, that is, it is not otherwise legally proscribed and may be made by voluntary agreement of all the parties
interested in the property. This phase may end in a declaration that plaintiff is not entitled to the desired partition either because a co-ownership
does nut exist or a partition is legally prohibited. It may also end, on the other hand, with an adjudgment that a co-ownership does in truth exist,
that partition is proper in the premises, and that an accounting of rents and profits received by the defendant from the real estate in question is
in order. In the latter case, "the parties may, if they are able to agree, make partition among themselves by proper instruments of conveyance,
and the court shall confirm the partition so agreed upon by all the parties." In either case, whether the action is dismissed or partition and/or
accounting is decreed, the order is a final one and may be appealed by any party aggrieved thereby.

In this regard, the Baguio RTC shirked from its duty when it deferred the trial to await a request order from the intestate court
regarding the possible distribution. In fact, it has not yet made a definite ruling on the existence of co-ownership. There was no
declaration of entitlement to the desired partition either because a co-ownership exists or a partition is not legally prohibited. As this
Court is not a trier of facts, it is for the trial court to proceed and determine once and for all if there is co-ownership and to partition
the subject properties if there is no legal prohibition. It is also best for the Baguio RTC to settle whether the respondents are claiming
ownership over the properties by virtue of their title adverse to that of their late father and his estate and not by any right of
inheritance.

WHEREFORE, the petition for review on certiorari filed by petitioner Teresa R. Ignacio is hereby DENIED. The Decision and Resolution;
dated March 27, 2014 and June 27, 2014, respectively, of the Court of Appeals in CA-G.R. SP No. 127151 are hereby AFFIRMED with
MODIFICATION, such that the Regional Trial Court of Baguio City, Branch 3 is DIRECTED to RESUME trial on the merits in Special
Civil Action Nos. 5055-R, 5056-R, and 5057-R to determine the ownership of the subject properties and to partition as co-owners, if proper.
G.R. No. 202088

MANUEL L. BAUTISTA, SPOUSES ANGEL SAHAGUN and CARMELITA BAUTISTA, and ANIANO L. BAUTISTA
, Petitioners vs
MARGARITO L. BAUTISTA, Respondent
G.R. No. 202088 | PERALTA, J. |PARTITION

A Complaint for Partition and Accounting with Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction filed by the
petitioners against Margarito and the other defendants over several properties allegedly co-owned by them, which included the subject
property.

The Bautista siblings - Margarito, Manuel L. Bautista, Carmelita Bautista Sahagun (Carmelita), Aniano L. Bautista (Aniano), Florencia
Bautista de Villa (Florencia), and Ester Bautista Cabrera (Ester) - established a lending business through a common fund from the
proceeds of the sale of a parcel of coconut land they inherited from their mother Consorcia Lantin Bautista.4 Margarito, Florencia, and
Ester managed the business with Reginald Sahagun, Carmelita's son, as credit investigator.5 Senen Cabrera, Ester's husband, prepared the
documents for mortgage and reported the status of the lending business to the Bautista siblings.6 Through the said lending business, the
siblings acquired several real properties in San Pablo City. 7

In1998, Amelia V. Mendoza (Amelia) obtained a loan in the amount of P690,000.00 from Florencia, and secured the same with a real estate
mortgage over a 25,518-square-meter parcel of land she owned situated at Barangay Sta. Monica, San Pablo City, and covered by Transfer
Certificate of Title (TCT) No. T-2371 (Sta. Monica property).8 They later extended the mmigage through a Kasulatan ng Pagdaragdag ng
Sanla, for an additional loan.

Amelia and Florencia renewed the mortgage for ₱l,085,000.00 10 and cancelled the previous loan of ₱690,000.00 through a "Cancellation and
Discharge of Mortgage."11

Subsequently, Amelia and Florencia executed another Kasulatan ng Pagdaragdag ng Sanla in the amount of ₱57,500.00.12
Florencia, thereafter, received the owner's duplicate copy of TCT No. T-2371, which she, in turn, entrusted to Carmelita when she went
overseas.

In 2002, Amelia allegedly sold the subject property to Margarito through a Kasulatan ng Bilihang Tuluyan13 for ₱500,000.00 and, likewise,
cancelled the ₱l,085,000.00 loan through another "Cancellation and Discharge of Mortgage." 14

On the same date, Florencia filed a Petition for the Issuance of a Second Owner's Duplicate of TCT No. T-2371 before the RTC of San Pablo
City. She alleged that she was the mortgagee of the subject property, and that she could not locate, despite diligent search, the owner's
duplicate title in her possession, which she misplaced sometime in September 2002. 16

Petitioners tried to oppose the issuance,18 but he RTC granted the petition and TCT No. T-59882 was later issued.

Petitioners registered an Adverse Claim over the Sta. Monica property, which was annotated on TCT No. T-59882.20

Failing to settle their differences, petitioners subsequently instituted a Complaint for Partition and Accounting with Prayer for Temporary
Restraining Order and/or Writ of Preliminary Injunction docketed before the RTC of San Pablo City over several properties against herein
respondent Margarito // Florencia, the Spouses Marconi de Villa and Florencia Bautista, and the Spouses Senen Cabrera and Ester Bautista.21

Petitioners averred that Margarito // Florencia and the others refused to heed their oral and written demands for the partition of the properties
they co-owned, which included the Sta. Monica property.22

The parties filed a "Partial Settlement" manifesting that they have entered into an amicable settlement over the other properties involved in
the complaint. The RTC approved the compromise agreement.

Since no settlement was reached as regards the Sta. Monica property, petitioners presented copies of their bank transactions with Far East
Bank to support their claim of co-ownership over the same.25 They also presented an undated, unnotarized, and without the name of the
vendee Kasulatan ng Bilihang Tuluyan (blank Kasulatan ), which Amelia purportedly executed and signed disposing the subject property in
favor of the Bautista siblings.26 Petitioner Carmelita also alleged that the duplicate copy of TCT No. T-2371 in the name of Amelia was in
her possession and was never lost.

For his part, Margarito asseverated that he exclusively owns the property in controversy since he used his personal funds in purchasing the
land.27 Margarito presented TCT No. T-59882 covering the Sta. Monica property, and the Tax Declaration and Receipts thereof. 28

In 2009, the RTC ruled in favor of the petitioners and declared, among other things, that the Sta. Monica property was commonly owned by
the siblings.29 The RTC also ordered that the property be partitioned among all of them and that an accounting of its income be held.

Aggrieved, Margarito elevated the case before the CA.

CA reversed and set aside the decision of the RTC. The subject property covered by Transfer Certificate of Title (TCT) No. T-59882 under
the name of defendant-appellant Margarito L. Bautista is declared exclusively owned by defendant-appellant Margarito L. Bautista.

The CA concluded that petitioners failed to establish that they are coowners of the Sta. Monica property. It held that the TCT under
Margarito's name was an indefeasible and incontrovertible title to the property and has more probative weight than the
blank Kasulatan adduced by the petitioners. Consequently, petitioners' action for partition and accounting cannot be acted upon because they
failed to prove that they are co-owners of the Sta. Monica property.

ISSUE: WON CA erred when it set aside the RTC’s order of partition of the Sta. Monica property. -YES

A. The Court of Appeals seriously erred when it relied on the case of Manuel Catindig vs. Aurora Irene Vda. de Meneses which led to a
conclusion that the TCT held by the defendant-appellant serves as an indefeasible and incontrovertible title to said property.

C. The Court of Appeals erred when it failed to appreciate the fact that there was a compromise decision based on an agreement by all the
parties which included property where some of the titles are already in the names of the siblings concerned.

D. The Court of Appeals thus erred when it did not give weight to the evidence presented by the petitioners-appellees and this is
notwithstanding the findings of the court a quo in their favor.

RULING:

The petition is impressed with merit.

It is to be noted that the present action stemmed from an action for partition and accounting. A special civil action of judicial partition
under Rule 69 of the Rules of Court is a judicial controversy between persons who, being co-owners or coparceners of common
property, seek to secure a division or partition thereof among themselves, giving to each one of them the part corresponding to
him.42

The object of partition is to enable those who own property as joint tenants, or coparceners, or tenants in common to put an end to the joint
tenancy so as to vest in each a sole estate in specific property or an allotment in the lands or tenements.43 It is typically brought by a person
claiming to be the owner of a specified property against a defendant or defendants whom the plaintiff recognizes to be his co-owners44and is
premised on the existence or non-existence of co-ownership between the parties.45 Hence, unless and until the issue of co-ownership is
definitively resolved, it would be premature to effect a partition of an estate. 46

Consequently, the first stage of an action for judicial partition and/or accounting is concerned with the determination of whether or
not a coownership in fact exists and a partition is proper.47 In the case at bar, petitioners aver that although the Sta. Monica property was
registered solely in Margarito's name, they are co-owners of the property because it was acquired through the siblings' lending business, as
such, they are entitled to partition and the conveyance to them of their respective shares.

To support their allegations, petitioners presented several mortgage contracts evidencing the transactions between Amelia and Florencia,
computer printouts of their bank transactions, and the blank Kasulatan. In Carmelita's direct testimony, she illustrated how they acquired
properties through their lending business and how ownership of the properties was transferred under their names. She also testified that the
money used in the purchase of the Sta. Monica property came from their common fund.

From the foregoing, petitioners established the manner in which they acquired several properties through their business and have them
registered under their names. Even the compromise agreement they entered into, which was approved by the RTC, reflected their claim and
admission that they co-owned the properties although titled to only one of their siblings. It was, thus, logical for the RTC to conclude that it
was through this practice that they also acquired the Sta. Monica property.

Moreover, several other circumstances buttressed petitioners' claim, among which is that they have proven that their lending business has the
financial capacity to acquire the Sta. Monica property; that Florencia, who was co-manager of the business, entered into several mortgage
transactions with Amelia; and that the blank Kasulatan was in their possession. They even opposed the issuance of a second owner's
duplicate copy of TCT No. T-2371 since the original TCT was in their safekeeping and was not actually lost.

The CA held that Margarito presented pieces of evidence, including a deed of sale between Amelia and Margarito. However, as found by the
RTC and based on the List of Exhibits, aside from his bare allegations and testimony, Margarito neither identified nor presented the deed of
sale during trial nor formally offered the same as his evidence. 50 It is elementary that he who alleges a fact has the burden of proving it and a
mere allegation is not evidence.51 It appears that Margarito's evidence of exclusive ownership are the certificate of title, the tax declarations
pertaining thereto, his bank deposits, and other mortgage contracts involving different mortgagors. Despite all these, Margarito failed to
prove that Amelia conveyed the Sta. Monica property exclusively in his name. It is also quite intriguing why he did not even bother to
present the testimony of Amelia or of Florencia, who could have enlightened the court about their transactions. In addition, We find it
incredible that a property, which secured a loan roughly over a million pesos, would be sold for considerably less than that amount or for
only ₱550,000.00.

As for the TCT No. T-59882 in the name of Margarito, like in the case at bar, although a certificate of title is the best proof of ownership
of a piece of land, the mere issuance of the same in the name of any person does not foreclose the possibility that the real property
may be under co-ownership with persons not named in the certificate or that the registrant may only be a trustee or that other
parties may have acquired interest subsequent to the issuance of the certificate of title.52 The principle that a trustee who puts a
certificate of registration in his name cannot repudiate the trust by relying on the registration is one of the well-known limitations upon a
title.53

There is an implied trust when a property is sold and the legal estate is granted to one party but the price is paid by another for the purpose of
having the beneficial interest of the property.54 This is sometimes referred to as a purchase money resulting trust, the elements of which are:
(a) an actual payment of money, property or services, or an equivalent, constituting valuable consideration; and (b) such consideration must
be furnished by the alleged beneficiary of a resulting trust.55

A trust, which derives its strength from the confidence one reposes on another especially between families, does not lose that character
simply because of what appears in a legal document.56 From the foregoing, this Court finds that an implied resulting trust existed among the
parties. The pieces of evidence presented demonstrate their intention to acquire the Sta. Monica property in the course of their business, just
like the other properties that were also the subjects of the partition case and the compromise agreement they entered into. Although the Sta.
Monica property was titled under the name of Margarito, the surrounding circumstances as to its acquisition speak of the intent that the
equitable or beneficial ownership of the property should belong to the Bautista siblings.

Inevitably, the RTC's Order of partition of the Sta. Monica property was erroneously set aside by the CA and this Court is convinced
that petitioners satisfactorily established that they are co-owners of the property and are entitled to the reliefs prayed for.

WHEREFORE, the petition is hereby GRANTED. The Decision dated March 6, 2012 and the Resolution dated May 25, 2012 of the Court
of Appeals in CA-G.R. CV No. 93562 are REVERSED and SET ASIDE. Consequently, the Decision dated February 16, 2009 of the
Regional Trial Court of San Pablo City, Branch 32, in Civil Case No. SP-6064(04) is REINSTATED.
SO ORDERED.

ROMULO et al v.
SAMAHAN MAGKAKAPITBAHAY NG BAYANIHAN COMPOUND
GR No 180687 | UNLAWFUL DETAINER

In its Complaint, respondent [Samahang Magkakapitbahay ng Bayanihan Compound Homeowners Association, Inc., represented by
its President, Paquito Quitalig] alleged that since it was qualified to avail of the benefits under the Community Mortgage Program of
the government, it secured a loan from the National Home Mortgage Finance Corporation Development Fund (NHMFCDF) for the
purchase of a land known as Bayanihan Compound located in Santan Street, Parang, Marikina. Said land would thereafter be
distributed to members/beneficiaries of the respondent under its housing program. After the sale was consummated, two Transfer
Certificates of Title were issued in the name of the respondent and the land was distributed in portions to respondents
members/beneficiaries. However, despite demand, petitioners [Esmeraldo C. Romullo, Pedro Mangundayao, Maximo Anes, Elvira
Bonza, Roberto Belarmino, Telesporo Garcia, Beth Zaida Gimenez, Celso Librando, Michael dela Cruz, and Roberto Arawag] refused
to pay their monthly dues and legal fees as well as the deposits and amortizations for their respective lot allocations.

Resultantly, respondent approved a Resolution expelling the petitioners as its members and disqualifying them as beneficiaries of the
housing project and in another Resolution, also approved the substitution of petitioners by qualified members/beneficiaries in
accordance with the Rules and Regulations Implementing the Community Mortgage Program.

Despite notice of disqualification, petitioners continued to occupy the lots alloted to them and refused to execute a waiver of their lot
allotments. The matter was referred to the barangay for conciliation but still no settlement was reached. Thus, final and formal
demands were made by respondent on each of the petitioners to vacate and surrender peacefully [the] possession and control of their
lots. Still, petitioners refused and failed to comply.

Ultimately, respondent sought the eviction of the petitioners based on the provisions of the Implementing Corporate Circular of the
NHMFCDF on Community Mortgage Program under RA [No.] 7279, specifically Sections 8.5.4 and 12.3.5 by filing an ejectment
case against the petitioners praying that they vacate the premises and pay the sum of PhP3,000.00 as reasonable compensation until
such time that they vacate the lots in question.

In their Answer with Compulsory Counterclaim, petitioners alleged that respondent neither informed them of the status of the housing
project and its scheduled meetings, nor were they notified of respondents registration with the Home Insurance Guaranty Corporation
(HIGC), wherein some of them were excluded in the master list of members/beneficiaries.

Petitioners further argued that the board resolutions expelling them as members and disqualifying them as beneficiaries of the
respondents housing project were null and void as the terms of office of the members of the Board of Directors who passed the said
resolutions had already expired at the time the meeting was held. Moreover, they maintained that the case should have been suspended
due to a prejudicial question brought about by the filing of another suit by some of them with the Housing and Land Use Regulatory
Board (HLURB) entitled Esmeraldo C. Romul[l]o, et al. v. Paquito Quitalig, et al. As counterclaims, petitioners sought awards of
moral and exemplary damages as well as litigation expenses.

M[e]TC gave more weight to the arguments raised by the petitioners and the Complaint was dismissed without prejudice for alleged
lack of jurisdiction in view of the pending case before the HLURB involving the same parties and issues. Petitioners counterclaims
were likewise dismissed for lack of merit. However, this judgment was reversed by the RTC on appeal.

Aggrieved, petitioners went to the CA with a prayer for the issuance of a temporary restraining order and/or writ of preliminary
injunction, claiming that the Regional Trial Court (RTC) erred in not affirming the dismissal of the complaint by the Metropolitan Trial Court
(MeTC) for lack of jurisdiction.

CA ruled in favor of respondent. The CA held that the complaint filed by respondent against petitioners contained assertions that
clearly established a cause of action for unlawful detainer which was well within the jurisdiction of the MeTC.

Hence, this petition.

ISSUE:

WHETHER OR NOT THE HON. COURT OF APPEALS ERRED IN NOT SUSTAINING PETITIONERS' ARGUMENT
THAT THE RULING OF THE RTC MUST BE SET ASIDE DUE TO THE PENDENCY OF A CASE BEFORE THE
HLURB INVOLVING THE SAME PARTIES AND ISSUES. --- NO.
 WON a case of ejectment would prosper against the petitioners --- YES!

Petitioners opine that the CA is devoid of competence to decide on the following issues, namely: i) whether or not the corporate
officers who passed the board resolution expelling/disqualifying petitioners from their membership with respondent acted within their
authority; and (ii) whether or not the disqualification was valid and legal. It is petitioners position that these issues could have been best resolved
by the HLURB and/or the Home Insurance Guaranty Corporation, considering the administrative agencies' expertise on the matter and
considering the pendency of petitioners case against respondent before these bodies. Invoking the same ruling in Quiambao v. Hon.
Osorio,[7] petitioners claim that the more prudent course in this case is to hold the ejectment proceedings in abeyance until after the
determination of the administrative case because of the intimate correlation between the two proceedings, stemming from the fact that
petitioners' ejectment from the property depends primarily on the resolution of the administrative case. [8]

On the other hand, respondent asserts that the complaint filed before the MeTC contains ample allegations for the latter to exercise
jurisdiction over the case in accordance with the rules and prevailing jurisprudence. Respondent also claims that the issue involves questions
of fact which were adequately passed upon by both the RTC and the CA when they made the finding that petitioners failed to perform their
obligation under the Community Mortgage Program by refusing to pay their monthly dues, deposits, and amortizations for their allotted portions
over the community property. Respondent insists that the factual findings of both the RTC and the CA must not only be accorded respect but
also finality. Moreover, respondent stands by the ruling of the RTC and the CA that there exist no issues of litis pendentia and prejudicial
question in this case since the HLURB case and the ejectment proceedings do not involve the same issues nor pray for the same
reliefs.[9] Finally, respondent manifests that the HLURB case filed by petitioners was already dismissed, which the OP affirmed on
appeal.[10] Thus, any matter related thereto has become moot and academic. Respondent submits that this case is a simple ejectment case which
is well within the MeTC's jurisdiction.

RULING:

The petition is bereft of merit.

A party desiring to appeal by certiorari from a judgment, final order, or resolution of the CA, as in this case, may file before this
Court a verified petition for review on certiorari under Rule 45 of the Rules of Civil Procedure within 15 days from notice of the judgment,
final order, or resolution appealed from. Petitioners, instead of a petition for review on certiorari under Rule 45, filed with this Court the instant
petition for certiorari under Rule 65, an improper remedy. By availing of a wrong or inappropriate mode of appeal, the petition merits outright
dismissal.[11]

Even on the merits, the petition must fail.

Settled is the rule that jurisdiction in ejectment cases is determined by the allegations pleaded in the complaint. It cannot be made to
depend on the defenses set up in the answer or pleadings filed by the defendant. Neither can it be made to depend on the exclusive
characterization of the case by one of the parties. The test for determining the sufficiency of those allegations is whether, admitting the facts
alleged, the court can render a valid judgment in accordance with the prayer of the plaintiff. [12]

An action for forcible entry or unlawful detainer is governed by Rule 70 of the Rules of Court, Section 1 of which provides:

SECTION 1. Who may institute proceedings, and when. Subject to the provisions of the next succeeding section, 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, may, at any time within one (1) year after such
unlawful deprivation or withholding of possession, bring 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.

Unlawful detainer is an action to recover possession of real property from one who illegally withholds possession after the
expiration or termination of his right to hold possession under any contract, express or implied. The possession of the defendant in
unlawful detainer is originally legal but became illegal due to the expiration or termination of the right to possess.
 An unlawful detainer proceeding is summary in nature, jurisdiction of which lies with the proper municipal trial court or metropolitan
trial court. The action must be brought within one year from the date of last demand; and the issue in said case is the right to physical
possession.[13]

Based on the foregoing, we have held that a complaint sufficiently alleges a cause of action for unlawful detainer if it recites the
following:

(1) initially, possession of property by the defendant was by contract with or by tolerance of the plaintiff;

(2) eventually, such possession became illegal upon notice by plaintiff to defendant of the termination of the
latter's right of possession;

(3) thereafter, the defendant remained in possession of the property and deprived the plaintiff of the
enjoyment thereof; and

(4) within one year from the last demand on defendant to vacate the property, the plaintiff instituted the
complaint for ejectment.[14]

In this case, respondent's allegations in the complaint clearly make a case for unlawful detainer, essential to confer jurisdiction on the MeTC
over the subject matter. Thus, we accord respect to the CA's findings, to wit:

A review of the Complaint readily reveals that land titles were issued in the name of the respondent after it purchased
the land referred to as the Bayanihan Compound through the Community Mortgage Program (CMP) of the National Home
Mortgage Finance Corporation. The lots allocated to the petitioners formed part of the Bayanihan Compound which they
received as members/beneficiaries of the respondent. However, their refusal to pay the monthly amortizations despite
demands resulted in their expulsion as members and loss of recognition as beneficiaries of the lots in question. Even when
the case was referred to the barangay, no settlement was reached. Petitioners likewise did not conform to respondents
demand to vacate the premises and return its possession. As such, respondent sought to recover possession of the said lots
by filing a case for ejectment within a year after final demand. [15]

Moreover, this Court rejects the contention of petitioners that the RTC and the CA erred in not dismissing the complaint of respondent
on the ground of litis pendentia, in view of the pendency of the HLURB case.

The requisites of litis pendentia are the following: (a) identity of parties, or at least such as representing the same interests in both
actions; (b) identity of rights asserted and relief prayed for, the relief being founded on the same facts; and (c) identity of the two cases such
that judgment in one, regardless of which party is successful, would amount to res judicata in the other.[16]

The causes of action and, logically, the issues in the two cases, are clearly different, each requiring divergent adjudication. In short,
while there is identity of parties, there are different issues, causes of action, and reliefs prayed for between them. Contrary to petitioners
posture, not all the elements of litis pendentia are present.

Appropos is the CA's ruling:

The suit filed with the HLURB involves: (1) the reinstatement of the petitioners as members of the respondent,
which was their community association; (2) a call for regular annual meetings; (3) elections for board of directors; ([4]) an
accounting of funds; and ([5]) the annulment of the board resolutions which expelled them as members and disqualified them
to be beneficiaries of the housing program. On the other hand, the ejectment case has in issue the better right of the petitioners
or of the respondent to the physical possession of the lots occupied by petitioners. Clearly, therefore, no identity of the rights
asserted and the reliefs prayed for exist in both cases.[17]
 In sum, we find no grave abuse of discretion, amounting to lack or excess of jurisdiction, on the part of the CA, which would warrant
the reversal and/or modification of the assailed Decision.

WHEREFORE, the instant petition is DISMISSED, and the Court of Appeals Decision dated August 22, 2007 is AFFIRMED. No
costs. SO ORDERED.

SPS. VICENTE DIONISIO AND ANITA DIONISIO, Petitioner, vs.

WILFREDO LINSANGAN, Respondent.
G.R. No. 178159 | March 2, 2011 | UNLAWFUL DETAINER

The case is about a) amendments in the complaint that do not alter the cause of action and b) the effect in an unlawful detainer action of the
tolerated possessor’s assignment of his possession to the defendant.

The Facts and the Case

Gorgonio M. Cruz (Cruz) owned agricultural lands in San Rafael, Bulacan, that his tenant, Romualdo San Mateo (Romualdo) cultivated.
Upon Romualdo’s death, his widow, Emiliana, got Cruz’s permission to stay on the property provided she would vacate it upon demand.

In September 1989 spouses Vicente and Anita Dionisio (the Dionisios) bought the property from Cruz. 1 In April 2002, the Dionisios found
out that Emiliana had left the property and that it was already Wilfredo Linsangan (Wilfredo) who occupied it under the strength of a
"Kasunduan ng Bilihan ng Karapatan"2 dated April 7, 1977.

The Dionisios wrote Wilfredo on April 22, 2002, demanding that he vacate the land but the latter declined, prompting the Dionisios to file an
eviction suit3 against him before the Municipal Trial Court (MTC) of San Rafael, Bulacan. Wilfredo filed an answer with counterclaims in
which he declared that he had been a tenant of the land as early as 1977.

At the pre-trial, the Dionisios orally asked leave to amend their complaint. Despite initial misgivings over the amended complaint, Wilfredo
asked for time to respond to it. The Dionisios filed their amended complaint on August 5, 2003; Wilfredo maintained his original answer.

The MTC issued a pre-trial order4 specifying the issues. For the plaintiffs: (1) whether or not the defendant can be ejected from the property
and (2) whether or not the plaintiffs are entitled to reasonable rent for the use of the property, damages, and attorney’s fees. For the
defendant: (1) whether or not the MTC has jurisdiction to try this case; (2) whether or not the defendant can be ejected from the questioned
property; and (3) whether or not the defendant is entitled to damages and attorney’s fees.

The MTC rendered judgment, ordering Wilfredo to vacate the land and remove his house from it.

On appeal,5 the Regional Trial Court (RTC) of Malolos, Bulacan, affirmed the MTC decision, holding that the case was one for forcible
entry.

On review,6 however, the Court of Appeals (CA) reversed the decisions of the courts below, and ordering the dismissal of the Dionisios’
action. The CA held that, by amending their complaint, the Dionisios effectively changed their cause of action from unlawful detainer to
recovery of possession which fell outside the jurisdiction of the MTC. Further, since the amendment introduced a new cause of action, its
filing on August 5, 2003 marked the passage of the one year limit from demand required in ejectment suits. More, since jurisdiction over
actions for possession depended on the assessed value of the property and since such assessed value was not alleged, the CA cannot
determine what court has jurisdiction over the action.

The Issues Presented

1. Whether or not the Dionisios’ amendment of their complaint effectively changed their cause of action from one of ejectment to
one of recovery of possession; -- NO

2. Whether or not the MTC had jurisdiction over the action before it.-- YES

The Rulings of the Court

One. An amended complaint that changes the plaintiff’s cause of action is technically a new complaint. Consequently, the action is deemed
filed on the date of the filing of such amended pleading, not on the date of the filing of its original version. Thus, the statute of limitation
resumes its run until it is arrested by the filing of the amended pleading. The Court acknowledges, however, that an amendment which does
not alter the cause of action but merely supplements or amplifies the facts previously alleged, does not affect the reckoning date of filing
based on the original complaint. The cause of action, unchanged, is not barred by the statute of limitations that expired after the filing of the
original complaint.7
Here, the original complaint alleges that the Dionisios bought the land from Cruz on September 30, 1989; that Romualdo used to be the
land’s tenant; that when he died, the Dionisios allowed his widow, Emiliana, to stay under a promise that she would leave the land upon
demand; that in April 2002 the Dionisios discovered on visit to the land that Emiliana had left it and that Wilfredo now occupied it under a
claim that he bought the right to stay from Emiliana under a "Kasunduan ng Bilihan ng Karapatan;" that the Dionisios did not know of and
gave no consent to this sale which had not been annotated on their title; that the Dionisios verbally told Wilfredo to leave the property by
April 31, 2002; that their lawyer reiterated such demand in writing on April 22, 2002; that Wilfredo did not heed the demand; that the
Dionisios wanted to get possession so they could till the land and demolish Wilfredo’s house on it; that Wilfredo did not give the Dionisios’
just share in the harvest; and that the Dionisios were compelled to get the services of counsel for ₱100,000.00.

The amended complaint has essentially identical allegations. The only new ones are that the Dionisios allowed Emiliana, Romualdo’s widow
to stay "out of their kindness, tolerance, and generosity;" that they went to the land in April 2002, after deciding to occupy it, to tell Emiliana
of their plan; that Wilfredo cannot deny that Cruz was the previous registered owner and that he sold the land to the Dionisios; and that a
person occupying another’s land by the latter’s tolerance or permission, without contract, is bound by an implied promise to leave upon
demand, failing which a summary action for ejectment is the proper remedy.

To determine if an amendment introduces a different cause of action, the test is whether such amendment now requires the defendant to
answer for a liability or obligation which is completely different from that stated in the original complaint. 8 Here, both the original and the
amended complaint required Wilfredo to defend his possession based on the allegation that he had stayed on the land after Emiliana
left out of the owner’s mere tolerance and that the latter had demanded that he leave. Indeed, Wilfredo did not find the need to file a
new answer.

Two. Wilfredo points out that the MTC has no jurisdiction to hear and decide the case since it involved tenancy relation which comes under
the jurisdiction of the DARAB.9 But the jurisdiction of the court over the subject matter of the action is determined by the allegations of the
complaint.10 Besides, the records show that Wilfredo failed to substantiate his claim that he was a tenant of the land. The MTC records show
that aside from the assertion that he is a tenant, he did not present any evidence to prove the same. To consider evidence presented only
during appeal is offensive to the idea of fair play.

The remaining question is the nature of the action based on the allegations of the complaint. The RTC characterized it as an action for
forcible entry, Wilfredo having entered the property and taken over from widow Emiliana on the sly. The problem with this characterization
is that the complaint contained no allegation that the Dionisios were in possession of the property before Wilfredo occupied it either by force,
intimidation, threat, strategy, or stealth, an element of that kind of eviction suit.11 Nowhere in the recitation of the amended complaint did the
Dionisios assert that they were in prior possession of the land and were ousted from such possession by Wilfredo’s unlawful occupation of
the property.

Is the action one for unlawful detainer? An action is for unlawful detainer if the complaint sufficiently alleges the following:

(1) initially, the defendant has possession of property by contract with or by tolerance of the plaintiff;
(2) eventually, however, such possession became illegal upon plaintiff’s notice to defendant, terminating the latter’s right of
possession;
(3) still, the defendant remains in possession, depriving the plaintiff of the enjoyment of his property; and
(4) within a year from plaintiff’s last demand that defendant vacate the property, the plaintiff files a complaint for
defendant’s ejectment.12 If the defendant had possession of the land upon mere tolerance of the owner, such tolerance must
be present at the beginning of defendant’s possession.13

Here, based on the allegations of the amended complaint, the Dionisios allowed Emiliana, tenant Romualdo’s widow, to stay on the land for
the meantime and leave when asked to do so. But, without the knowledge or consent of the Dionisios, she sold her "right of tenancy" to
Wilfredo. When the Dionisios visited the land in April 2002 and found Wilfredo there, they demanded that he leave the land. They did so in
writing on April 22, 2002 but he refused to leave. The Dionisios filed their eviction suit within the year.

It is pointed out that the original complaint did not allege that the Dionisios "tolerated" Emiliana’s possession of the land after her husband
died, much less did it allege that they "tolerated" Wilfredo’s possession after he took over from Emiliana. But the rules do not require the
plaintiff in an eviction suit to use the exact language of such rules. The Dionisios alleged that Romualdo used to be the land’s tenant and that
when he died, the Dionisios allowed his widow, Emiliana, to stay under a promise that she would leave upon demand. These allegations
clearly imply the Dionisios’ "tolerance" of her stay meantime that they did not yet need the land.

As for Wilfredo, it is clear from the allegations of the complaint that Emiliana assigned to him her right to occupy the property. In fact that
assignment was in writing. Consequently, his claim to the land was based on the Dionisios’ "tolerance" of the possession of Emiliana and,
impliedly, of all persons claiming right under her.

True, the "Kasunduan ng Bilihan ng Karapatan" under which Emiliana transferred her tenancy right to Wilfredo appears to have been
executed in 1977, years before Cruz sold the land to the Dionisios, implying that Wilfredo had already been in possession of the property
before the sale. But what is controlling in ascertaining the jurisdiction of the court are the allegations of the complaint. The Dionisios alleged
in their complaint that they were the ones who allowed Emiliana (and all persons claiming right under her) to stay on the land meantime that
they did not need it. The MTC and the RTC gave credence to the Dionisios’ version. The Court will respect their judgment on a question of
fact.

WHEREFORE, the Court GRANTS the petition, REVERSES and SETS ASIDE the Decision of the Court of Appeals in CA-G.R. SP
92643 dated July 6, 2006, and REINSTATES the Decision of the Municipal Trial Court of San Rafael, Bulacan, in Civil Case 1160-SRB-
2003 dated May 3, 2004.

SO ORDERED.

ROSA DELOS REYES, Petitioner, vs.

SPOUSES FRANCISCO ODONES and ARWENIA ODONES, NOEMI OTALES, and GREGORIO RAMIREZ,Respondents
G.R. No. 178096 | March 23, 2011 | UNLAWFUL DETAINER

The Facts

This case emanated from a complaint for Unlawful Detainer with Preliminary Injunction6 filed by petitioner Rosa delos Reyes (petitioner)
against respondents spouses Arwenia and Francisco Odones, Noemi Otales, and Gregorio Ramirez (respondents) before the MTC of
Camiling, Tarlac, on July 12, 2005. The complaint alleged these material facts:

3. That [petitioner] is the owner of a parcel of land covered x x x by Transfer Certificate of Title No. 392430, located at Pao,
Camiling, Tarlac, x x x.

4. That even before the document upon which the title was based, [petitioner] has long been the owner thereof;

5. That [respondents] are staying on the said property with a house/improvements therein, with the mere tolerance of [petitioner]
only without any contract whatsoever and for which there is an implied understanding to vacate upon the demand;

6. That [petitioner] previously demanded verbally upon [respondents] to vacate which they refused and for which a written notice
was sent advising them to vacate the said property within fifteen (15) days from receipt of the letter to vacate x x x.

7. That the said letter was sent by registered mail on June 17, 2005, which was duly received x x x.7

In their Answer with Counterclaim,8 respondents claimed that they are the owners of the lot, having purchased the same by virtue of an
Extrajudicial Succession of Estate and Sale9 dated January 29, 2004, executed by the heirs of Donata Lardizabal, the land’s original owner.
Respondents denied that their occupancy of the property was by virtue of petitioner’s tolerance. 10

Respondents further argued that the basis of petitioner’s Transfer Certificate of Title (TCT), which is a Deed of Absolute Sale dated April 18,
1972,11 was a forgery because the purported vendors therein, Donata Lardizabal and Francisco Razalan, died on June 30, 1926 12 and June 5,
1971,13 respectively. Incidentally, the said TCT and Deed of Absolute Sale are the subject of a pending case for annulment of title before the
RTC, Branch 68, Camiling, Tarlac.14

The MTC ruled in favor of petitioner, and ordered respondents to vacate the property and to pay rent for the use and occupation of the same,
plus attorney's fees.

Respondents appealed15 to the RTC, arguing that since the complaint failed to allege how respondents entered the property or when they
erected their houses thereon, it is an improper action for unlawful detainer, and the MTC had no jurisdiction over the same. 16

The RTC set aside the MTC’s judgment and dismissed the complaint. The RTC held that the complaint failed to aver acts constitutive of
forcible entry or unlawful detainer since it did not state how entry was effected or how and when the dispossession started. Hence, the
remedy should either be accion publiciana or accion reivindicatoria in the proper RTC.

Aggrieved, petitioner sought recourse with the CA, asseverating that the RTC misappreciated the allegations in the complaint and that
respondents were estopped from assailing the MTC’s jurisdiction because they did not raise such issue in the proceedings before that court.
Petitioner insisted that, as the registered owner of the lot, she has a preferential right of possession over it. 18

The CA affirmed the judgment of the RTC, adding that, as pronounced in Go, Jr. v. Court of Appeals, 19 in order to justify an action for
unlawful detainer, the owner’s permission or tolerance must be present at the beginning of the possession. Hence, the instant petition.

ISSUES:

THE HON. COURT OF APPEALS ERRED IN APPLYING THE CASE OF GO, JR. v. COURT OF APPEALS.
THE HON. COURT OF APPEALS ERRED IN HOLDING THAT THE HON. MUNICIPAL TRIAL COURT OF CAMILING, TARLAC
NEVER ACQUIRED JURISDICTION OVER THE CASE.

RULING:

The petition is meritorious.

Well-settled is the rule that what determines the nature of the action, as well as the court which has jurisdiction over the case, are the
allegations in the complaint. In ejectment cases, the complaint should embody such statement of facts as to bring the party clearly
within the class of cases for which the statutes provide a remedy, as these proceedings are summary in nature. The complaint must
show enough on its face to give the court jurisdiction without resort to parol evidence. 25

Unlawful detainer is an action to recover possession of real property from one who illegally withholds possession after the expiration
or termination of his right to hold possession under any contract, express or implied. The possession by the defendant in unlawful
detainer is originally legal but became illegal due to the expiration or termination of the right to possess. 26 The proceeding is summary
in nature, jurisdiction over which lies with the proper MTC or metropolitan trial court. The action must be brought up within one year from
the date of last demand, and the issue in the case must be the right to physical possession. 27

A complaint sufficiently alleges a cause of action for unlawful detainer if it recites the following:

1. initially, possession of property by the defendant was by contract with or by tolerance of the plaintiff;

2. eventually, such possession became illegal upon notice by plaintiff to defendant of the termination of the latter's right of
possession;

3. thereafter, the defendant remained in possession of the property and deprived the plaintiff of the enjoyment thereof; and

4. within one year from the last demand on defendant to vacate the property, the plaintiff instituted the complaint for
ejectment.28

Contrary to the findings of the RTC and the CA, petitioner’s allegations in the complaint clearly makes out a case for unlawful detainer,
essential to confer jurisdiction over the subject matter on the MTC. Petitioner alleges that she is the owner of the lot, as shown by TCT No.
392430, issued by the Registry of Deeds of Tarlac; that respondents are occupying the lot by virtue of petitioner’s tolerance; and that
petitioner sent a letter to respondents on June 17, 2005, demanding that they vacate the property, but they failed and refused to do so. The
complaint was filed on July 12, 2005, or within one year from the time the last demand to vacate was made.

Firm is the rule that as long as these allegations demonstrate a cause of action for unlawful detainer, the court acquires jurisdiction over the
subject matter.

The CA misapplied the ruling in Go29 that tolerance must be present right from the start of possession, which possession is sought to be
recovered. The CA, in affirming the RTC, likewise erroneously applied the rule that jurisdictional facts must appear on the face of the
complaint for ejectment, such that when the complaint fails to faithfully aver facts constitutive of unlawful detainer, as where it does not state
when and how entry was effected, or how and when dispossession started, the remedy should either be accion publiciana or accion
reivindicatoria in the proper RTC.

The requirement that the complaint should aver, as jurisdictional facts, when and how entry into the property was made by the defendants
applies only when the issue is the timeliness of the filing of the complaint before the MTC, and not when the jurisdiction of the MTC is
assailed because the case is one for accion publiciana cognizable by the RTC.30

This is because, in forcible entry cases, the prescriptive period is counted from the date of defendants’ actual entry into the property;
whereas, in unlawful detainer cases, it is counted from the date of the last demand to vacate. Hence, to determine whether the case was filed
on time, there is a necessity to ascertain whether the complaint is one for forcible entry or for unlawful detainer; and since the main
distinction between the two actions is when and how defendant entered the property, the determinative facts should be alleged in the
complaint.311avvphi1

In Go, there was evidence that the possession by the defendant was illegal at the inception and not merely tolerated as alleged in the
complaint. No such similar finding is extant in this case. Further, one of the factual issues raised in Go was whether the action was filed
within one (1) year from the date the last demand was made. Here, it is beyond dispute that the complaint for unlawful detainer was filed
within one (1) year from the date the demand letter was sent on June 17, 2005.

Based on the foregoing, the MTC validly acquired jurisdiction over the complaint and we agree with its conclusion that petitioner is
entitled to the physical possession of the lot, she having been able to prove by preponderance of evidence, through the TCT
registered in her name, that she is entitled to possession of the property as owner. The countervailing evidence presented by
respondents that sought to dispute the authenticity of petitioner’s TCT cannot be given weight in this case. Settled is the rule that the
validity of a certificate of title cannot be attacked in an action for ejectment. 32

This notwithstanding, the determination made herein as regards petitioner’s ownership of the lot by virtue of TCT No. 392430 is only prima
facie and only for purposes of resolving the issue of physical possession. These pronouncements are without prejudice to the case of
annulment of the deed of sale and TCT filed by respondents against petitioner.33 Lastly, these pronouncements are not binding on
respondents Noemi Otales and Gregorio Ramirez over whose persons no jurisdiction was acquired by the MTC.34

WHEREFORE, the petition is GRANTED. The February 19, 2007 Decision and the May 22, 2007 Resolution of the Court of Appeals are
hereby REVERSED and SET ASIDE. The March 28, 2006 decision of the Municipal Trial Court of Camiling, Tarlac, is REINSTATED and
AFFIRMED. SO ORDERED.

CAPITOL HILLS GOLF & COUNTRY CLUB, INC. and PABLO B. ROMAN, JR., Petitioners, vs.
MANUEL O. SANCHEZ, Respondent.
G.R. No. 182738 | February 24, 2014 | CONTEMPT

In 2002, respondent Manuel O. Sanchez (respondent), a stockholder of petitioner Capitol Hills Golf & Country Club, Inc. (Corporation) filed
a petition for the nullification of the annual meeting of stockholders of May 21, 2002 and the special meeting of stockholders of April 23,
2002.4

Petitioners, along with their co-defendants, filed an Answer with Counterclaims5 and, thereafter, a Motion for Preliminary Hearing of
Defendants’ Affirmative Defenses,6which was denied by Hon. Apolinario D. Bruselas, Jr., then Presiding Judge of the RTC of Quezon City,
now a member of the Court of Appeals.

Respondent filed a Motion for Production and Inspection of Documents, which the court granted directing, thus: On motion of the plaintiff,
without objection from the defendants, and pursuant to Rule 3 of the Interim Rules of Procedure Governing Intra-Corporate Controversies, in
relation to Rule 27 of the 1997 Rules of Civil Procedure, the defendants are ordered to produce and make available for inspection and
photocopying by the plaintiff.

Subsequently, petitioners filed a Supplement to Defendants’ Motion for Reconsideration, 10 attaching therewith an alleged certification issued
by the National Printing Office to support their contention of lack of cause of action on the grounds, among others, that the Securities and
Exchange Commission (SEC) Memorandum Circular No. 5, Series of 1996, as amended, has not been duly published in accordance with law
and jurisprudence. Pending resolution of the MR, petitioners filed on January 21, 2003 a Motion for Deferment of Implementation of the
September 10, 2002 Order.11

For his part, respondent, on October 7, 2002, filed an Omnibus Motion to immediately allow him to inspect and photocopy the documents
and to compel petitioners to deposit with the court the documents subject of the September 10, 2002 Order.

On December 9, 2002, then Presiding Judge Bruselas issued an Order 12 denying petitioners’ MR of the Order dated August 9, 2002 and
considered respondent’s omnibus motion as a reiteration of his earlier motion for inspection and production of documents; thus, the
immediate implementation of the September 10, 2002 Order was simultaneously ordered.

Petitioners elevated the case to the CA via a petition for certiorari assailing the Orders dated August 9, 2002 and December 9, 2002.
However, the CA denied the same in its Decision dated June 29, 2004. A petition for review was filed before this Court, but We denied it per
Resolution dated January 10, 2005.

In the meantime, respondent sought to enforce the September 10, 2002 Order. The supposed inspection on September 30, 2002 was not held
per the trial court’s Order dated September 27, 2002.13 The January 22, 2003 inspection also did not push through after petitioners and their
co-defendants again moved for its deferment.14 When the court eventually denied their motion on June 16, 2003, respondent set the
inspection to August 1, 2003.15 On said date, however, Atty. Matias V. Defensor, then Corporate Secretary of the Corporation, was alleged to
be out of town and petitioner Pablo B. Roman, Jr. (Roman) purported to have shown no willingness to comply with the directive.16 The
matter was reported to the trial court, which merely noted respondent’s Report and Manifestation. 17On November 3, 2003, respondent moved
for the issuance of an order for immediate implementation of the September 10, 2002 Order, as reiterated in the Order dated June 16, 2003,
but the court denied the same in its May 24, 2004 Order. 18 Respondent’s motion for issuance of writ of execution suffered the same fate
when the trial court denied it on February 10, 2005.19

When this Court settled petitioners’ challenge to the Orders dated August 9, 2002 and December 9, 2002, respondent filed a Manifestation
with Omnibus Motion for Clarification and to Resolve Plaintiff’s Pending Motion for the Issuance of a Writ of Execution and to Set the Case
for Pre-Trial Conference.20 Acting thereon, Judge Ramon Paul L. Hernando, likewise now a member of the Court of Appeals, who took over
Branch 93 after the appointment of Judge Bruselas to the CA, issued the July 10, 2006 Order, 21 which directed the immediate execution of
the September 10, 2002 Order, and set the case for pre-trial.

On February 9, 2007, Judge Hernando issued an Order 22 inhibiting himself from handling the case in view of his "close friendship relation"
with petitioners’ counsel and ordering the transmittal of the records of the case to the Office of the Clerk of Court for re-raffle to another
sala. The case was subsequently re-raffled to RTC Branch 90 presided by Judge Reynaldo B. Daway, who likewise voluntarily recused
himself from the case per Order23 dated July 13, 2007. Finally, on July 30, 2007, the case was re-raffled to RTC Branch 226 presided by
Judge Leah S. Domingo Regala.24

On November 28, 2006, the parties agreed to defer the pre-trial conference until the actual conduct of the inspection of records/documents on
December 12, 2006.25 Before said date, however, petitioners and their co-defendants moved to hold the inspection to January 11, 2007,
which the court granted.26

During the January 11, 2007 inspection, the only document produced by the Acting Corporate Secretary, Atty. Antonio V. Meriz, and one of
the staff, Malou Santos, was the Stock and Transfer Book of the Corporation. They alleged that they could not find from the corporate
records the copies of the proxies submitted by the stockholders, including the tape recordings taken during the stockholders’ meetings, and
that they needed more time to locate and find the list of stockholders as of March 2002, which was in the bodega of the Corporation. 27 This
prompted respondent to file a Manifestation with Omnibus Motion praying that an order be issued in accordance with Section 3, Paragraphs
(a) to (d) of Rule 29 of the Rules of Court (Rules), in relation to Section 4, Rule 3 of the Interim Rules of Procedure Governing Intra-
Corporate Controversies under Republic Act No. 8799 (Interim Rules).

On September 3, 2007, the trial court issued a Resolution, the concluding portion of which ordered:

In order to give both the plaintiff and defendants one last chance to comply with the order dated September 10, 2002, this Court
reiterates the said order. This Court orders the defendants to strictly comply with this order. Failure of the defendants to comply
with all the requirements of the order dated September 10, 2002 will result in this court citing all the defendants in contempt of
court. This Court shall order defendants solidarily to pay a fine of ₱10,000.00 for every day of delay to comply with the order of
September 10, 2002 until the defendants shall have fully and completely complied with the said order. Further sanctions shall be
meted upon defendants should the Court find that defendants have been in bad faith in complying with the order of September 10,
2002 despite the order of this Court.

Petitioners questioned the aforesaid Resolution via Petition for Certiorari (With Application for Temporary Restraining Order and/or Writ of
Preliminary Injunction).29

In resolving the petition, the CA ruled that there is no indication that the RTC committed grave abuse of discretion amounting to lack or
excess of jurisdiction. According to the appellate court, the September 3, 2007 Resolution was issued pursuant to Section 3, 30 Rule 3 of the
Interim Rules, with the suppletory application of Section 1, 31 Rule 27 of the Rules. It noted that, except for the sanctions contained therein,
the assailed Resolution merely reiterated the September 10, 2002 Order of Judge Bruselas, which petitioners did not dispute in accordance
with Section 2,32 Rule 3 of the Interim Rules or via petition for certiorari. The CA further held that petitioners were not denied due process as
they were able to move for a reconsideration of the September 10, 2002 Order, but not opted to file the same with respect to the September 3,
2007 Resolution.

Anent the argument against the threatened imposition of sanction for contempt of court and the possible payment of a hefty fine, the CA
opined that the case of Dee v. Securities and Exchange Commission33 cited by petitioners is inapplicable, since the September 3, 2007
Resolution merely warned petitioners that they would be cited for contempt and be fined if they fail to comply with the court’s directive.
Moreover, it said that the penalty contained in the September 3, 2007 Resolution is in accord with Section 4, 34 Rule 3 of the Interim Rules, in
relation to Section 3,35 Rule 29 of the Rules.

Before Us, petitioners contend that the "threatened imminent action" by the RTC to penalize them sua sponte or without regard to the
guideline laid down by the Court in Engr. Torcende v. Judge Sardido 37 is not proper and calls for the exercise of Our power of supervision
over the lower courts. Likewise, citing Panaligan v. Judge Ibay, 38 among others, they claim that the threatened citation for contempt is not in
line with the policy that there should be wilfullness or that the contumacious act be done deliberately in disregard of the authority of the
court.

ISSUE:

RULING:

We deny.

A person guilty of disobedience of or resistance to a lawful order of a court 39 or commits any improper conduct tending, directly or
indirectly, to impede, obstruct, or degrade the administration of justice40 may be punished for indirect contempt.

In particular, Section 4, Rule 3 of the Interim Rules states that, in addition to a possible treatment of a party as non-suited or as in default, the
sanctions prescribed in the Rules for failure to avail of, or refusal to comply with, the modes of discovery shall apply.
Under Section 3, Rule 29 of the Rules, if a party or an officer or managing agent of a party refuses to obey an order to produce any document
or other things for inspection, copying, or photographing or to permit it to be done, the court may make such orders as are just. The
enumeration of options given to the court under Section 3, Rule 29 of the Rules is not exclusive, as shown by the phrase "among others."
Thus, in Republic v. Sandiganbayan,41 We said:

To ensure that availment of the modes of discovery is otherwise untrammeled and efficacious, the law imposes serious sanctions on the party
who refuses to make discovery, such as dismissing the action or proceeding or part thereof, or rendering judgment by default against the
disobedient party; contempt of court, or arrest of the party or agent of the party; payment of the amount of reasonable expenses incurred in
obtaining a court order to compel discovery; taking the matters inquired into as established in accordance with the claim of the party seeking
discovery; refusal to allow the disobedient party support or oppose designated claims or defenses; striking out pleadings or parts thereof;
staying further proceedings.42

If adjudged guilty of indirect contempt, the respondent who committed it against a Regional Trial Court or a court of equivalent or higher
rank may be punished with a fine not exceeding thirty thousand pesos, or imprisonment not exceeding six (6) months, or both. 43 In this case,
the threatened sanction of possibly ordering petitioners to solidarily pay a fine of ₱10,000.00 for every day of delay in complying with the
September 10, 2002 Order is well within the allowable range of penalty.

As far as the proceedings for indirect contempt is concerned, the case of Baculi v. Judge Belen 44 is instructive:

x x x Under the Rules of Court, there are two ways of initiating indirect contempt proceedings:
(1) motu proprio by the court; or (2) by a verified petition.

In contempt proceedings, the prescribed procedure must be followed. Sections 3 and 4, Rule 71 of the Rules of Court provide the
procedure to be followed in case of indirect contempt. First, there must be an order requiring the respondent to show cause why he
should not be cited for contempt. Second, the respondent must be given the opportunity to comment on the charge against him.
Third, there must be a hearing and the court must investigate the charge and consider respondent’s answer. Finally, only if found
guilty will respondent be punished accordingly. (Citations omitted.)

As to the second mode of initiating indirect contempt proceedings, that is, through a verified petition, the rule is already settled in Regalado
v. Go: In cases where the court did not initiate the contempt charge, the Rules prescribe that a verified petition which has complied with the
requirements of initiatory pleadings as outlined in the heretofore quoted provision of second paragraph, Section 4, Rule 71 of the Rules of
Court, must be filed.

The Rules itself is explicit on this point:

In all other cases, charges for indirect contempt shall be commenced by a verified petition with supporting particulars and certified
true copies of documents or papers involved therein, and upon full compliance with the requirements for filing initiatory pleadings
for civil actions in the court concerned. If the contempt charges arose out of or are related to a principal action pending in the court,
the petition for contempt shall allege that fact but said petition shall be docketed, heard and decided separately, unless the court in
its discretion orders the consolidation of the contempt charge and the principal action for joint hearing and decision. (Emphasis
added.)

Thus, where there is a verified petition to cite someone in contempt of court, courts have the duty to ensure that all the requirements
for filing initiatory pleadings have been complied with. It behooves them too to docket the petition, and to hear and decide it
separately from the main case, unless the presiding judge orders the consolidation of the contempt proceedings and the main action.

But in indirect contempt proceedings initiated motu proprio by the court, the above rules, as clarified in Regalado, do not necessarily apply.
First, since the court itself motu proprio initiates the proceedings, there can be no verified petition to speak of. Instead, the court has the duty
to inform the respondent in writing, in accordance with his or her right to due process. This formal charge is done by the court in the form of
an Order requiring the respondent to explain why he or she should not be cited in contempt of court.

The formal charge has to be specific enough to inform the person, against whom contempt proceedings are being conducted, that he or she
must explain to the court; otherwise, he or she will be cited in contempt. The Order must express this in clear and unambiguous language.

Second, when the court issues motu proprio a show-cause order, the duty of the court (1) to docket and (2) to hear and decide the case
separately from the main case does not arise, much less to exercise the discretion to order the consolidation of the cases. There is no petition
from any party to be docketed, heard and decided separately from the main case precisely because it is the show-cause order that initiated the
proceedings.

What remains in any case, whether the proceedings are initiated by a verified petition or by the court motu proprio, is the duty of the court to
ensure that the proceedings are conducted respecting the right to due process of the party being cited in contempt. In both modes of initiating
indirect contempt proceedings, if the court deems that the answer to the contempt charge is satisfactory, the proceedings end. The court must
conduct a hearing, and the court must consider the respondent’s answer. Only if found guilty will the respondent be punished accordingly.
 xxxx

In contempt proceedings, the respondent must be given the right to defend himself or herself and have a day in court – a basic requirement of
due process. This is especially so in indirect contempt proceedings, as the court cannot decide them summarily pursuant to the Rules of
Court. As We have stated in Calimlim, in indirect contempt proceedings, the respondent must be given the opportunity to comment on the
charge against him or her, and there must be a hearing, and the court must investigate the charge and consider the respondent’s answer.45

In this case, the proceedings for indirect contempt have not been initiated.1âwphi1 To the Court’s mind, the September 3, 2007
Resolution could be treated as a mere reiteration of the September 10, 2002 Order. It is not yet a "judgment or final order of a court
in a case of indirect contempt" as contemplated under the Rules. The penalty mentioned therein only serves as a reminder to caution
petitioners of the consequence of possible non-observance of the long-overdue order to produce and make available for inspection
and photocopying of the requested records/documents. In case of another failure or refusal to comply with the directive, the court or
respondent could formally initiate the indirect contempt proceedings pursuant to the mandatory requirements of the Rules and
existing jurisprudence.

Even if We are to treat the September 3, 2007 Resolution as a "judgment or final order of a court in a case of indirect contempt," this would
still not work to petitioners’ advantage. Section 11, Rule 71 of the Rules of Court lays down the proper remedy from a judgment in indirect
contempt proceedings. It states:

Sec. 11. Review of judgment or final order; bond for stay.––The judgment or final order of a court in a case of indirect contempt may be
appealed to the proper court as in criminal cases. But execution of the judgment or final order shall not be suspended until a bond is filed by
the person adjudged in contempt, in an amount fixed by the court from which the appeal is taken, conditioned that if the appeal be decided
against him he will abide by and perform the judgment or final order.

The recourse provided for in the above-mentioned provision is clear enough: the person adjudged in indirect contempt must file an appeal
under Rule 41 (Appeal from the Regional Trial Courts) and post a bond for its suspension pendente lite.46 Obviously, these were not done in
this case. Instead, petitioners filed a petition for certiorari under Rule 65 of the Rules and did not post the required bond, effectively making
the September 3, 2007 Resolution final and executory.

WHEREFORE, premises considered, the instant Petition is DENIED. The March 13, 2008 Decision and April 28, 2008 Resolution of the
Court of Appeals in CA-G.R. SP No. 100911, which affirmed the September 3, 2007 Resolution of the Quezon City Regional Trial Court,
Branch 226, are AFFIRMED. SO ORDERED.

CASTILLEJOS CONSUMERS ASSOCIATION, INC. (CASCONA), Petitioners, vs.

JOSE S. DOMINGUEZ,et al Respondents.
G.R. No. 189949 | CONTEMPT

The Facts

Petitioner CASCONA is an organization of electric consumers from Castillejos, Zambales, under the coverage area of Zambales II Electric
Cooperative, Inc. (ZAMECO II).

Acting on a letter-complaint filed by CASCONA, the National Electrification Administration (NEA) issued its Resolution, dated November
24, 2004, removing respondents Jose Dominguez, et al., and all incumbent members of the Board of Directors of ZAMECO II for
mismanagement of funds and expiration of their term of office.3

Dominguez, et al. appealed the November 24, 2004 resolution of the NEA to the Court of Appeals (CA) on the ground that Republic Act
(R.A.) No. 9136 or the Electric Power Industry Reform Act (EPIRA) abrogated the regulatory and disciplinary power of the NEA over
electric cooperatives. In its Decision, dated March 13, 2007, the CA upheld the authority of the NEA over ZAMECO II.

Aggrieved, Dominguez, et al. appealed to this Court and argued that the power of the NEA to supervise and control electric cooperatives had
been abrogated by the EPIRA. They further stated that they had registered ZAMECO II as a cooperative under respondent Cooperative
Development Authority (CDA), and, thus, it was the CDA which had regulatory powers over ZAMECO II. 4

On March 13, 2009, the Court promulgated its decision in G.R. Nos. 176935-36 which held that "[t]he passage of the EPIRA xxx did not
affect the power of the NEA particularly over administrative cases involving the board of directors, officers and employees of electric
cooperatives."5 The Court further ruled that there was substantial evidence to justify the penalty of removal from office imposed by NEA
against the board members, Dominguez, et al.6

With respect to the issue of ZAMECO II being under the regulatory powers of the CDA in view of its registration, the Court declared then
that the matter could not be adjudicated yet. It stated that the EPIRA provided that an electric cooperative must first convert into either a
stock cooperative or stock corporation before it could register under the CDA. "[W]hether ZAMECO II complied with the foregoing
provisions, particularly on the conduct of a referendum and obtainment of a simple majority vote prior to its conversion into a stock
cooperative, is a question of fact which this Court shall not review. At any rate, the evidence on record does not afford us sufficient basis to
make a ruling on the matter. The remand of the case to the Court of Appeals solely on this question is, therefore, proper." 7

An Entry of Judgment was issued on September 2, 2009. Dominguez, et al. promptly filed a motion to set aside the entry of judgment on the
sole ground that the March 13, 2009 Decision of the Court was an interlocutory order. 10

On February 3, 2010, the Court granted the motion of Dominguez, et al. and recalled the Entry of Judgment. The March 13, 2009 Decision
was indeed interlocutory in character as there was still something to be done by the CA because it would still determine whether the
proceedings outlined in the EPIRA and its Implementing Rules and Regulations (IRR), for the conversion of an electric cooperative into a
stock cooperative under the CDA, had been complied with. In this sense, the March 13, 2009 Decision could not have attained a final and
executory character.11

Meanwhile, by virtue of the November 24, 2004 Resolution of the NEA, ZAMECO II was managed and operated by an interim board of
directors under the authority and supervision of NEA. 12

On September 1, 2009, respondent Atty. Fulgencio Vigare (Atty. Vigare), as CDA Administrator for Luzon, issued the
Memorandum,13 declaring that the CDA should assume jurisdiction over ZAMECO II. It stated, among others, that in the August 26, 2009
hearing of the House of Representatives Committee on Cooperative Development (August 26, 2009 House Committee Hearing), the NEA
readily acceded that the CDA should assume jurisdiction over ZAMECO II. 14 Also, a task force was created primarily to reinstate the duly-
recognized incumbent members of the board of directors who should perform their functions until such time as elections were conducted, and
their successors should have been elected and qualified.15

Pursuant to the said memorandum, on October 19, 2009, the CDA issued Resolution No. 262, S-200916 which created a team composed of
the respondent-officers of the CDA. The team was mandated to meet with the ZAMECO II management about its issues and concerns; to
pave the way for the conduct of the election of officers; and to seek the opinion of the Department of Justice (DOJ) about the jurisdiction of
the CDA over electric cooperatives. The said resolution was implemented by Special Order 2009- 304 issued on October 20, 2009.17

According to CASCONA, on October 22, 2009, respondents Fidel Correa, Alicia Mercado and Angelito Sacro (Sacro) entered the ZAMECO
II premises and refused to leave. Come night fall, respondent-members of the PNP and security guards assembled outside the gates of
ZAMECO II but were not allowed inside the premises.

The next day, on October 23, 2009, respondents P/Insp. Gerry Haduca and P/Insp. Robin Fugiran asked the interim President of ZAMECO II
for a discussion. When the latter opened the gates, the respondent PNP members and security guards forcefully entered the grounds of
ZAMECO II. The interim board of directors did not surrender the management of ZAMECO II to the respondents.

On October 24, 2009, respondents Jose Dominguez and two other former board members (Jose Naseriv Dolojan and Juan Fernandez) arrived
at the electric cooperative premises. Tensions only de-escalated when the respondent-PNP members left the scene through the intervention of
Governor Amor Deloso.

Hence, this present petition for indirect contempt.

ISSUE

WHETHER THE ACTS OF RESPONDENTS IN ATTEMPTING TO TAKE CONTROL OF ZAMECO II AND ULTIMATELY
REINSTATE THE RESPONDENTS-FORMER BOARD MEMBERS TO THEIR FORMER POSITIONS DESPITE THE RULING
OF THE SUPREME COURT UPHOLDING THE VALIDITY OF THE REMOVAL OF THE RESPONDENTS-FORMER BOARD
MEMBERS FROM THEIR POSITIONS AND THE PENDENCY OF THE PROCEEDINGS BEFORE THE COURT OF
APPEALS ARE PUNISHABLE AS INDIRECT CONTEMPT UNDER RULE 71, SECTION 3 (B), (C) AND (D). 18

CASCONA asserts that the respondents committed several acts of indirect contempt as follows: first, the CDA officials issued the September
1, 2009 Memorandum for the takeover of jurisdiction over ZAMECO II; second, CDA also issued Resolution No. 262, S-2009 and Special
Order 2009-304 which scrutinized the management and operation of ZAMECO II; and lastly, the respondents attempted to forcefully occupy
ZAMECO II on October 22, 2009. According to CASCONA, these acts clearly pre-empted the Court’s decision in G.R. Nos. 176935-36.

CASCONA contends that, with the intent of reinstating Dominguez, et al. and under the guise of the purported authority of the CDA over
ZAMECO II, the respondents acted in conspiracy, took the law into their own hands, and attempted to take control of ZAMECO II.

On February 10, 2011, Dominguez, et al., filed their Comment to Petition.19 They argue, first, that the March 13, 2009 Decision of the Court
in G.R. Nos. 176935-36 was not yet final and executory, thus, they had not been ordered to do or refrain from doing any act. Second, R.A.
No. 9520 or the Philippine Cooperative Code of 2008, which took effect on March 22, 2009, divested the NEA of its authority over electric
cooperatives in favor of the CDA. Lastly, the respondents cited the CA decision, Abdon v. NEA,20 which held that it was the CDA, and not
the NEA, that had regulatory powers over ZAMECO II.

Preliminary Matters
Before proceeding with the Court’s ruling on the indirect contempt charge, several developments in the main case of ZAMECO II v.
CASCONA, docketed as G.R. Nos. 176935-36, must be noted.

On March 25, 2010, the CA submitted its Report pursuant to the March 13, 2009 decision of the Court. The CA found that the registration of
ZAMECO II with the CDA did not comply with the referendum requirement under the IRR of EPIRA. In the absence of a referendum,
ZAMECO II failed to obtain the required simple majority vote in order to validly convert it into either a stock cooperative or a stock
corporation.25

On October 20, 2014, the Court promulgated the decision in G.R. Nos. 176935-36. It finally ruled that ZAMECO II was an electric
cooperative and remained under the jurisdiction of the NEA, and not the CDA, based on (1) R.A. No. 6939 or Cooperative Code of 1990, (2)
R.A. No. 9136 or EPIRA, (3) R.A. No. 9520 or Philippine Cooperative Code of 2008, and (4) R.A. No. 10531, or the National Electrification
Administration Reform Act of 2013.

The Court also declared that the CDA’s issuance of a certificate of registration in favor of ZAMECO II in December 2007 did not operate to
divest the NEA of its jurisdiction because Dominguez, et al. failed to comply with the statutory requirement of conversion outlined under the
EPIRA.

The Court’s Ruling

The petition is meritorious.

Contempt of court has been defined as a willful disregard or disobedience of a public authority. In its broad sense, contempt is a disregard of,
or disobedience to, the rules or orders of a legislative or judicial body or an interruption of its proceedings by disorderly behavior or insolent
language in its presence or so near thereto as to disturb its proceedings or to impair the respect due to such a body. In its restricted and more
usual sense, contempt comprehends a despising of the authority, justice, or dignity of a court. 26

There are two (2) kinds of contempt of court, namely: direct and indirect. Indirect contempt or constructive contempt is that which is
committed out of the presence of the court.27 A person who is guilty of disobedience or of resistance to a lawful order of a court or who
commits any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the administration of justice may be punished
for indirect contempt.28

Also, a contempt charge can either be criminal or civil in nature. A criminal contempt involves a conduct that is directed against the dignity
and authority of the court or a judge acting judicially; it is an act obstructing the administration of justice which tends to bring the court into
disrepute or disrespect. Civil contempt on the other hand, consists in failing to do something ordered to be done by a court in a civil action
for the benefit of the opposing party therein and is, therefore, an offense against the party in whose behalf the violated order is made.29

In the case at bench, the respondents committed several acts which constituted indirect contempt. The CDA issued the September 1,
2009 Memorandum stating that it had jurisdiction over ZAMECO II and could reinstate the former members of the Board of
Directors. The CDA officials also issued Resolution No. 262, S-2009 and Special Order 2009-304 to interfere with the management
and control of ZAMECO II. Armed with these issuances, the other respondents even tried to physically takeover ZAMECO II on
October 22, 2013. These acts were evidently against the March 13, 2009 decision of this Court and, thus, constituted indirect
contempt against the Court. These contemptuous acts are criminal in nature because these obstruct the administration of justice and
tend to bring the court into disrepute or disrespect. Section 3, Rule 71 of the Rules of Court enumerates the acts which amount to indirect
contempt, to wit:

Section 3. Indirect contempt to be punished after charge and hearing.

xxxx

(c)Any abuse of or any unlawful interference with the processes or proceedings of a court not constituting direct contempt under section 1 of
this Rule;

(d)Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the administration of justice;

xxxx

The respondents argue that the March 13, 2009 decision in G.R. Nos. 176935-36 did not order them to do any act or refrain from doing an
act. Hence, they did not, in any manner, disobey or resist a lawful writ, process, order or judgment.

The defense of the respondents does not persuade. The March 13, 2009 decision should not be taken in isolation. A perusal of the said
decision shows that there were several pronouncements which must be respected and obeyed, to wit: first, the CA shall make a factual
determination as to the propriety of ZAMECO II’s registration with the CDA; second, the continuing jurisdiction of the Court, as the case is
not yet final and executory; and lastly, that there is substantial evidence to justify the removal from office of respondents Dominguez, et al.
Precisely, the Court remanded the case to the CA to determine whether ZAMECO II was properly registered as a stock cooperative under the
CDA. Until the CA properly had ascertained such fact, the Court could not determine conclusively that the CDA had supervisory powers
over ZAMECO II. The parties were then expected to maintain status quo and refrain from doing any act that would pre-empt the final
decision of the Court. Hence, the Court continued to exercise its jurisdiction in G.R. Nos. 176935-36 until a final decision was promulgated.
The respondents, however, unreasonably interfered with the proper procedure mandated by the Court when they decided for themselves that
the CDA had jurisdiction over ZAMECO II. This constituted a contemptuous act because it unlawfully interfered with the processes or
proceedings of a court.

Worse, the respondent-officials of the CDA, fully aware of the Court’s pronouncement,30 attempted to reinstate respondents Dominguez, et
al. despite the existence of substantial evidence that warrant the latter’s removal from office. Glaringly, this grave allegation was never
refuted by the respondents. Dominguez, et al. were found unfit to hold office yet the respondents relentlessly endeavoured to return them to
the seat of power in ZAMECO II. This blatant disregard of the March 13, 2009 decision of the Court is an improper conduct that impedes,
obstructs, or degrades the administration of justice.

The respondents justify their acts by stating that in the August 26, 2009 House Committee Hearing, the NEA acceded to the jurisdiction of
the CDA over ZAMECO II. This contention, however, is completely unsubstantiated. Notably, respondents Esguerra and Apalisok admitted
that the creation of a task force to take over ZAMECO II would place dire consequences against the CDA. Even CDA Regional Director
Manuel A. Mar doubted that the NEA consented to the authority of the CDA over ZAMECO II. 31

Indeed, the October 20, 2014 decision of the Court in G.R. Nos. 176935-36 conclusively settled that it is NEA, and not the CDA, that has
jurisdiction and disciplinary authority over ZAMECO II. The substantial issues of the case have now been laid to rest. The Court, however,
cannot turn a blind eye to the contemptuous acts of the respondents during the pendency of the case. If the Court condones these acts of
interference and improper conduct, it would set a dangerous precedent to future litigants in disregarding the interlocutory orders and
processes of the Court.

Liability of the Respondents

The Court cannot agree with CASCONA that all of the respondents were in conspiracy to commit the contemptuous acts. CASCONA failed
to substantiate its claim that all the respondents acted in unison to disobey the March 13, 2009 decision of the Court. It was established that
only the CDA officials and the former board members who pursued to reinstate Dominguez, et al. to ZAMECO II. Thus, the other
respondents, the PNP members and security guards merely acted as a conduit of their contumelious intent.

Respondents Esguerra and Apalisok cannot be adjudged liable because they did not participate in the acts complained of as evidenced by the
November 5, 2009 Memorandum.32 Also, respondents Lecira Juarez, Alicia Mercado and Juan Fernandez cannot be affected by this decision
because they were not properly notified by the processes of the Court as CASCONA failed to provide their proper addresses.33 With respect
to respondent Jose Santiago, records show that he has passed away as shown by his death certificate. 34

Section 7, Rule 71 of the Rules of Court provides for the penalties for indirect contempt, as follows:

If the respondent is adjudged guilty of indirect contempt committed against a Regional Trial Court or a court of equivalent or higher rank,
hebymay be punished a fine not exceeding thirty thousand pesos or imprisonment not exceeding six (6) months, or both. If he guilty is
adjudged of contempt committed against a lower court, he may be punished by a fine not exceeding five thousand pesos or imprisonment not
exceeding one (1) month, or both. If the contempt consists in the violation of a writ of injunction, temporary restraining order or status quo
order, he may also be ordered to make complete restitution to the party injured by such violation of the property involved or such amount as
may be alleged and proved.

xxxx

Based on the circumstances of the case, a fine amounting to Ten Thousand Pesos (I!l0,000.00) is a sufficient penalty to be imposed against
each liable contemnor.

WHEREFORE, finding Jose S. Dominguez, Isias Q. Vidua, Vicente M. Barreto, Jose Naseriv C. Dolojan, and Honorario Dilag, Jr., as
former board members of ZAMECO II, and Atty. Fulgencio Vigare, Jr. and Angelito U. Sacro, as CDA officials, GUILTY of indirect
contempt for attempting to pre-empt the final decision of the Court in G.R. Nos. 176935- 36, the Court orders each of them to pay a FINE of
Ten Thousand Pesos (I! 10,000.00), within ten (10) days from the finality of this decision. SO ORDERED.

L.C. BIG MAK BURGER, INC., PETITIONER, V. MCDONALD'S CORPORATION, RESPONDENT.

[ G.R. No. 233073, February 14, 2018 ] CONTEMPT

The Factual Antecedents

The instant petition stemmed from Civil Case No. 90-1507, which McDonald's Corporation (respondent) filed against L.C. Big Mak Burger,
Inc. (petitioner) for trademark infringement and unfair competition raffled to the Regional Trial Court (RTC) of Makati City, Branch 137
(Infringement Court).[4]

In the said case, the Infringement Court, acting on the prayer for the issuance of a writ preliminary injunction, issued an Order[5] dated
August 16, 1990, directing petitioner to refrain from:

a) using for its fast food restaurant business the name "Big Mak" or any other mark, word, name, or device, which by colorable
imitation is likely to confuse, mislead or deceive the public into believing that the [petitioner's] goods and services originate from,
or are sponsored by or affiliated with those of [respondent's], and from otherwise unfairly trading on the reputation and goodwill of
the Mcdonald's Marks, in particular the mark "BIG MAC";

b) selling, distributing, advertising, offering for sale or procuring to be sold, or otherwise disposing of any article described as or
purporting to be manufactured by [respondent];

c) directly or indirectly using any mark, or doing any set or thing, likely to induce the belief on the part of the public that [petitioner]
and their products and services are in any way connected with [respondent's] and their products and services

in such places within the jurisdiction of the National Capital Judicial Region.

xxxx

After trial, the said court rendered a Decision[7] dated September 5, 1994, disposing of the case as follows: WHEREFORE, judgment is
rendered in favor of [respondent] McDonald's Corporation and McGeorge Food Industries Inc. and against [petitioner] L.C. Big Mak
Burgers, Inc.

The CA overturned the September 5, 1994 Decision in a decision[9] dated November 26, 1999 in CA-G.R. CV No. 53722.

However, We reversed the CA in Our Decision[10] dated August 18, 2004 in G.R. No. 143993 and thus reinstated the Infringement Court's
Decision.Thusly, on November 14, 2005, Infringement Court, issued a Writ of Execution[12] to implement its September 5, 1994 Decision.

On May 5, 2008, however, respondent filed a Petition for Contempt [13] against petitioner and Francis Dy, in his capacity as President of L.C.
Big Mak Burger, Inc., docketed as Spec. Pro. No. 08-370 and raffled to the RTC of Makati, Branch 59 (Contempt Court). Basically,
respondent averred therein that despite service upon the petitioner and its president of the Writ of Execution in the trademark infringement
and unfair competition case, the latter continues to disobey and ignore their judgment obligation by continuously using, as part of their food
and restaurant business, the words "Big Mak." It was also alleged that petitioner refused to fully pay the damages awarded to the respondent
in the said case.[14]

In its Answer with Compulsory Counterclaims,[15] petitioner denied refusing to settle its judgment debt, averring that as a matter of fact, it
offered and tendered payment to the respondent through the sheriff but respondent refused to accept the same and demanded that payment be
made directly to it. Petitioner further argued that it is evident from the August 18, 2004 Decision of the Supreme Court, that the prohibition
covers only the use of the mark "Big Mak" and not the name "L.C. Big Mak Burger, Inc." Petitioner then averred that at that time, its stalls
were using its company name "L.C. Big Mak Burger, Inc." and not the mark "Big Mak" and that it had already stopped selling "Big Mak"
burgers for several years already. Moreover, petitioner averred that it has already changed the name of some of its stalls and products to
"Supermak" as evidenced by pictures of its stalls in Metro Manila. Also, petitioner pointed out that the preliminary injunction issued in Civil
Case No. 90-1507 was enforceable only within the National Capital Judicial Region as can be gleaned from its express provision. [16]

On April 7, 2014, RTC-Makati Branch 59, rendered a Decision[17] as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of [petitioner] L.C. BIG MAK BURGER, INC. and FRANCIS
DY, and against [respondent] DISMISSING this instant petition for lack of merit. [Respondent] is also ordered to pay the [petitioner and
Francis Dy].

On appeal, the CA, in its assailed Decision,[19] reversed the Contempt Court's ruling and instead found petitioner guilty of indirect contempt.
Hence, this petition.

The Issue

Is petitioner guilty of indirect contempt? NO. Good faith.

The Ruling of this Court

At the outset, once again, it is important to emphasize that the only issue for Our resolution is whether or not petitioner is guilty of indirect
contempt.

Section 3, Rule 71 of the Rules of Court provides:

SEC. 3. Indirect Contempt to be punished after charge and hearing - After a charge in writing has been filed, and an opportunity given to the
respondent to comment thereon within such period as may be fixed by the court and to be heard by himself or counsel, a person guilty of any
of the following acts may be punished for indirect contempt:

xxxx

b) Disobedience of or resistance to a lawful writ, process, order, or judgment of a court, including the act of a person who, after being
dispossessed or ejected from any real property by the judgment or process of any court of competent jurisdiction, enters or attempts or
induces another to enter into or upon such real property, for the purpose of executing acts of ownership or possession, or in any manner
disturbs the possession given to the person adjudged to be entitled thereto;

c) Any abuse of or any unlawful interference with the processes or proceedings of a court not constituting direct contempt under section 1 of
this Rule:

d) Any improper conduct tending, directly or indirectly, to impede, obstruct, or degrade the administration of justice;

xxxx

But nothing in this section shall be construed as to prevent the court from issuing process to bring the respondent into court, or from holding
him in custody pending such proceedings.

Respondent maintains that even after the service of the writ of execution of the said Decision on November 17, 2005 upon the petitioner, the
latter continues to use the words "Big Mak" in its stalls and products in and out of Metro Manila. Also, respondent averred that petitioner
continuously refused to fully pay the damages awarded to it.

We resolve.

Let Us examine once again the court's lawful order that was allegedly defied by the petitioner. In the August 16, 1990 injunction order made
permanent by this Court in Our final and executory Decision in G.R. No. 143993 dated August 18, 2004, petitioner was ordered to refrain
from:

a) using for its fast food restaurant business the name "Big Mak" or any other mark, word, name, or device, which by colorable imitation is
likely to confuse, mislead or deceive the public into believing that the [petitioner's] goods and services originate from, or are sponsored by or
affiliated with those of [respondent's], and from otherwise unfairly trading on the reputation and goodwill of the Mcdonald's Marks, in
particular the mark "BIG MAC";

b) selling, distributing, advertising, offering for sale or procuring to be sold, or otherwise disposing of any article described as or purporting
to be manufactured by [respondent];

c) directly or indirectly using any mark, or doing any set or thing, likely to induce the belief on the part of the public that [petitioner] and
their products and services are in any way connected with [respondent's] and their products and services

in such places within the jurisdiction of the National Capital Judicial Region.

In ruling that there was disobedience tantamount to an indirect contempt on the part of the petitioner, the CA found that: (1) there is an
express admission on Francis Dy's judicial affidavit[24] that the company complied with the court's order only in 2009 or after the petition for
indirect contempt was filed against them;[25] (2) that petitioner's use of its corporate name is likewise an infringement of respondent's mark, a
defiance therefore to the subject injunction order.[26]

We do not agree.

First, contrary to what respondent attempted to impress to the courts, it is not wholly true that petitioner continues to use the mark "Big Mak"
in its business, in complete defiance to this Court's Decision.

Testimonial and documentary evidence were in fact presented to show that petitioner had been using "Super Mak" and/or its corporate name
"L.C. Big Mak Burger Inc." in its business operations instead of the proscribed mark "Big Mak" pursuant to the ruling of the Infringement
Court.
There is also nothing on record that will show that Francis Dy made an admission that petitioner began to comply with the writ of execution
only in 2009. If at all, the CA misinterpreted Francis Dy's allegation in the said. judicial affidavit that "by early 2009" petitioner's stalls and
vans only reflected "Super Mak" and the corporate name "L.C. Big Mak Burger, Inc." Also, the fact that the photographs presented during
trial were taken in 2009 was taken by the CA as the time when the petitioner started to implement changes in their business operations
pursuant to the writ of execution. A careful reading of the pertinent portions of the said judicial affidavit, however, would show no such
admission, thus:
29. Q: What did you do when you received the Writ of Execution?
We issued 6 checks each for P100,000.00 to pay the P600,000.00 that our company was ordered to pay. I believe we gave the checks
A:
to the Sheriff.

30. Q: What else did you do?

Since the decision of the trial court also ordered us to stop using the name "Big Mak" in our restaurants in Metro Manila, we
A:
complied. We desisted from using the words "Big Mak", standing alone, within Metro Manila, and even outside of it.

xxxx

36. Q: Aside from complying with the order to stop the use of Big Mak, what else did you do?
A: We changed the name of our stalls within Metro Manila from "Big Mak" to "Super Mak".

37. Q: Do you have any proof that would show the change of the name?
A: There are some photographs of the stalls within Metro Manila that now reflect the name "Super Mak".

xxxx

I am now showing you six (6) photographs of stalls bearing the name "Super Mak". What relation do these documents have with the
39. Q:
photographs you mentioned?
A: These photographs are accurate depictions of our stalls in Metro Manila that have the name "Super Mak".

xxxx

40. Q: So you have already stopped using "Big Mak" in Metro Manila?
Yes. In fact, by early 2009, our stalls and vans in Metro Manila only reflect "Super Mak" and our corporate name "L.C. Big Mak
A:
Burger, Inc."

41. Q: Do you have any proof to show the use of "Super Mak" and "L.C. Big Mak Burger, Inc.” in early 2009?
There are photographs of our stalls and vans in Pasig, Trinoma, V. Luna, Lagro, and Fatima were taken on 12 January 2009 as
A:
depicted by the newspaper being held in front of our vans and stalls.

If I show you the photographs of the stalls and vans in Pasig, Trinoma, V. Luna, Lagro, and Fatima, would you be able to identify
42. Q:
those?
A: Yes, Sir.

I am now showing you fourteen (14) phtographs of stalls bearing the name "Super Mak" and or "L.C. Big Mak Burger, Inc." What
43. Q:
relation do these documents have with the photographs you mentioned.
These photographs are accurate depictions of our stalls in Pasig, Trinoma, V. Luna, Lagro, and Fatima in that have [sic] the name
A:
"Super Mak” or "LC Big Mak Burger, Inc."

xxxx

44. Q: What about the newspaper you mentioned that was in the photographs?
The newspaper, The Philippine Star, being held in the photographs shows the date when the photographs were taken. The date of the
A: newspaper is 12 January 2009, to show that the photographs were taken on 12 January 2009. Photographs were also taken on
February 28, 2009 and the front page of the said issue of the Philippine Star was also shown in some of them. [27]

xxxx

Evidently, there is nothing on the aforequoted judicial affidavit which may be taken as an admission of a belated compliance with the subject
injunction order. At most, what was established is the fact that the subject photographs were taken in 2009, which does not in any way mean
that the changes depicted in those photographs were implemented only at the time they were taken.

What could readily be seen in the aforecited circumstances is the fact that petitioner indeed implemented changes in its business to address
the matter of infringement and unfair competition. In fact, in as early as during the trial of the said case, certain changes had already been
made by the petitioner to rule out the charge of infringement and unfair competition. During the trial of the infringement and unfair
competition case, the wrappers and bags for petitioner's burger sandwiches already reflected its corporate name instead of the words "Big
Mak."

These circumstances belie the imputation of disobedience, much less contemptuous acts, against the petitioner.

Second, petitioner's use of its corporate name in its stalls and products cannot, by itself, be considered to be tantamount to indirect contempt,
contrary to the CA's conclusion.

What is actually being argued in this case is petitioner's use of its corporate name. According to the respondent, as the proscribed "Big Mak"
words appears in petitioner's corporate name, the use of the same in petitioner's stalls and products is still an infringement of respondent's
mark. Ultimately, thus, respondent argues that petitioner's use of its corporate name is a defiance to the injunction order. This argument was
sustained by the CA in its assailed Decision.

Again, We do not agree.

It bears stressing that the proscription in the injunction order is against petitioner's use of the mark "Big Mak." However, as established,
petitioner had already been using its corporate name instead of the proscribed mark. The use of petitioner's corporate name instead of the
words "Big Mak" solely was evidently pursuant to the directive of the court in the injunction order. Clearly, as correctly found by the RTC,
petitioner had indeed desisted from the use of "Big Mak" to comply with the injunction order.

Third, at any rate, whether or not petitioner's action in complying with the court's order was proper is not an issue in this contempt case.
Settled is the rule that in contempt proceedings, what should be considered is the intent of the alleged contemnor to disobey or defy the court.

Contempt of court has been defined as a willful disregard or disobedience of a public authority. In its broad sense, contempt is a disregard of,
or disobedience to, the rules or orders of a legislative or judicial body or an interruption of its proceedings by disorderly behavior or insolent
language in its presence or so near thereto as to disturb its proceedings or to impair the respect due to such a body. In its restricted and more
usual sense, contempt comprehends a despising of the authority, justice, or dignity of a court.[28](emphasis supplied)

Indeed, as can be gleaned from the above-cited jurisprudential definition of contempt, the intent goes to the gravamen of the offense. Thus,
the good faith, or lack of it, of the alleged contemnor should be considered. [29] A person should not be condemned for contempt where he
contends for what he believes to be right and in good faith however erroneous may be his conclusion as to his rights. To constitute contempt,
the act must be done willfully and for an illegitimate or improper purpose.[30]

Petitioner's good faith in complying with the court's order is manifest in this case.

Petitioner's questioned action, i.e., the use of its corporate name, is anchored upon the January 3, 1994 Decision [31] of the Securities and
Exchange Commission (SEC) in SEC-AC No. 426 entitled McDonald's Corporation and McGeorge Food Industries, Inc. v. L.C. Big Mak
Burger, Inc., et al., wherein respondent sought the change of petitioner's corporate name to some other name which is not confusingly or
deceptively similar to respondent's "Big Mac" mark. In the said case, the SEC dismissed respondent's case, ruling that petitioner's use of the
name "Big Mak Burger" has priority in right; and that petitioner's corporate name is not identical or confusingly similar to respondent's "Big
Mac" mark, hence, there is no basis to cancel petitioner's corporate name, among others.

Notably, it was a patent error on the part of the CA to rule that the said SEC Decision was binding upon the parties until this Court issued its
final and executory Decision in G.R. No. 143993, giving the impression that the latter Decision overturned or modified SEC's final and
executory Decision.[32] To be sure, the complaint for change of corporate name before the SEC is a separate and distinct case from that of the
infringement and unfair competition case before the trial court. Hence, inasmuch as the SEC Decision had long attained finality, the
judgment in the separate case of infringement and unfair competition cannot reverse nor modify the said SEC Decision.

In any event, what is relevant and essential in this contempt case is the fact that by virtue of petitioner's reliance upon the said lawful and
binding SEC Decision in the use of its corporate name in lieu of the proscribed "Big Mak" mark to comply with the subject injunction order,
petitioner's good faith is clearly manifest. Petitioner's justification of its questioned action is not at all implausible. This Court finds no reason
to reject petitioner's explanation or doubt its good faith as certainly, the use of its corporate name was warranted by the SEC Decision. It was
also not unreasonable for the petitioner, through its officers, to think that the stalls and products bearing its corporate name would send the
message to the public that the products were the petitioner's and not those of respondent's, the very evil sought to be prevented and/or
eradicated by the decision in the infringement/unfair competition case.

Considering that condemnation for contempt should not be made lightly, and that the power to punish contempt should be exercised on the
preservative and not on the vindictive principle, the Court finds no difficulty in reaching the conclusion that there was no willful disregard or
defiance of its order/decision.[33]

We are, therefore, one with the Contempt Court in dismissing the contempt case. There being no issue raised as to the damages awarded and
more importantly, finding that the Contempt Court had correctly discussed the rationale for such award, We find it unnecessary to disturb the
same.
WHEREFORE, premises considered, the instant petition is GRANTED. The assailed Decision dated February 2, 2017 and Resolution
dated July 26, 2017 of the Court of Appeals (CA) in CA-G.R. CR No. 36768 are hereby REVERSED and SET ASIDE. Accordingly, the
Decision dated April 7, 2014 of the Regional Trial Court of Makati City, Branch 59 is REINSTATED.

SO ORDERED.