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[ G.R. No. 252467, June 21, 2021 ]

FRANK COLMENAR, IN HIS CAPACITY AS AN HEIR OF THE LATE FRANCISCO

COLMENAR,* PETITIONER, VS. APOLLO A. COLMENAR, JEANNIE COLMENAR
MENDOZA, VICTORIA JET COLMENAR, PHILIPPINE ESTATES CORPORATION,
AMAIA LAND CORPORATION, CRISANTA REALTY DEVELOPMENT
CORPORATION, PROPERTY COMPANY OF FRIENDS, AND THE REGISTER OF
DEEDS OF THE PROVINCE OF CAVITE, RESPONDENTS.

The Case

This petition for review on certiorari1 seeks to reverse and set aside the Order2 dated May 22,
2020 of the Regional Trial Court (RTC), Branch 23, Trece Martires City, Cavite in Civil Case
No. TMCV-062-18 dismissing the complaint of petitioner Frank Colmenar for declaration of
nullity of deeds of extrajudicial settlement of estate, deeds of sale, cancellation of titles, and
damages against respondents Philippine Estates Corporation (PEC), Amaia Land Corporation
(Amaia), Crisanta Realty Development Corporation (Crisanta Realty), and Property Company of
Friends (ProFriends), on the ground that the complaint failed to state a cause of action as against
them. In dismissing the case, the trial court applied the 2019 Amendments to the 1997 Revised
Rules on Civil Procedure even though it was allegedly not feasible and it caused injustice to
petitioner.

Antecedents

In his complaint3 filed on September 11, 2018, petitioner essentially averred:

(a) He is the second child of Filipino-born Francisco Jesus Colmenar and American
Dorothy Marie Crimmin. Their family lived in Cleveland, Ohio, United States of
America.4

(b) Following his parents' divorce, his father Francisco Jesus Colmenar returned to the
Philippines. Despite the distance between him and his father, he remained close to the
latter. In fact, when his own child was born, Francisco Jesus Colmenar visited them in
Las Vegas, Nevada, where he and his family lived. Francisco Jesus Colmenar confided in
him that he (Francisco Jesus Colmenar) had met a woman named Loida.5

(c) Years later, he learned that his father had died. The latter left real properties located at
General Trias, Cavite, all registered in his father's name, viz.: (i) an interest in a property
covered by Transfer Certificate of Title (TCT) No. 579 with an area of 130,743 sq. m.;
(ii) an interest in the property under TCT No. 588 with an area of 806 sq. m.; (iii) half an
interest in the property under TCT No. 572 measuring 27,175 sq. m.; and (iv) 1/6 interest
in the property under TCT No. 25848 with an area of 117,476 sq. m..6

(d) He also learned that respondents Apollo Colmenar (Apollo), Jeannie Colmenar
Mendoza (Jeannie), and Victoria Jet Colmenar (Victoria) executed an Extrajudicial
Settlement of Estate of Francisco Jesus Colmenar dated May 16, 2008 and another
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Extrajudicial Settlement of Estate of Deceased Francisco Jesus Colmenar and Loida

Colmenar dated July 8, 2011 where they made it appear that they were the surviving heirs
of Francisco Jesus Colmenar, and by virtue thereof, allocated unto themselves the
interests of his late father in the aforesaid properties.7

(e) Apollo, Jeannie, and Victoria thereafter sold to ProFriends the property under TCT
No. 25848 on January 3, 2012; to Crisanta Realty the property under TCT No. 572
through a Deed of Absolute Sale dated September 21, 2012; and to PEC the property
under TCT No. 579 through a Deed of Sale dated May 22, 2013. Much later, PEC sold
this property to Amaia in whose name TCT No. 057-2013024578 was issued.8

(f) These sales were made without his knowledge and consent. The individual
respondents effectively deprived him of his successional rights under Philippine laws as a
legitimate son of his late father. Thus, he secured the services of counsel and sent demand
letters to individual respondents to invoke his successional rights. Apollo's counsel,
however, refused to meet with him. His subsequent demand letters were also ignored.9

(g) The Deeds of Sale in PEC's favor are void because the individual respondents, not
being heirs of Francisco Jesus Colmenar, had no rightful claim and interest over the
property under TCT No. 579. Consequently, PEC also did not confer any right on Amaia
when the former sold this property to the latter.10 For the same reason, the sale in favor
of Crisanta Realty and ProFriends are also void.11

The case was docketed as Civil Case No. TMCV-062-18 and raffled to RTC-Trece Martires
City, Cavite, Branch 23.

ProFriends,12 PEC,13 and Crisanta Realty14 filed their respective answers. ProFriends invoked

as affirmative defense lack of cause of action, while PEC and Crisanta Realty, averred that the
complaint failed to state a cause of action against them. They also invoked the following
common defenses: (1) they are innocent purchasers for value; and (2) petitioner's claim is barred
by laches and/or prescription.

Apollo15 and Amaia, on the other hand, filed their respective motions to dismiss. Amaia, like
PEC and Crisanta Realty, averred that the complaint stated no cause of action against it and that
it was a buyer in good faith.16

Crisanta Realty and PEC then filed a Motion for Leave of Court to Set the Case for Preliminary
Hearing on Affirmative Defenses (Motion for Leave of Court).17

On April 1, 2019, the trial court, through then Assisting Judge Bonifacio S. Pascua, issued an
Order18 granting the aforesaid motion and setting their affinnative defenses for hearing on May
27, 2019. In the same order, the trial court deferred the resolution of the motions to dismiss of
Apollo and Amaia.

Through Order19 dated December 26, 2019, however, Assisting Judge Jean Desuasido-Gill
(Judge Gill) set aside the April 1, 2019 Order and deemed PEC and Crisanta Realty's Motion for
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Leave of Court, as well as Apollo and Amaia's respective motions to dismiss, submitted for
resolution.

On February 12, 2020, Judge Gill issued an Omnibus Order20 denying these motions, viz.:

MOTIONS TO DISMISS

Anent the Motion to Dismiss filed by Defendants Apollo Colmenar (Apollo) and Amaia Land
Corporation (Amaia), the Court hereby DENIES said Motions. The issues raised by the
Defendants are complex and the matters raised are evidentiary, which can be best threshed out
during trial. Defendants Apollo and Amaia are directed to file their Answer within ten (10) days
from receipt hereof.

MOTIONS TO HEAR AFFIRMATIVE DEFENSES

The Court exercises its discretion under Section 1, Rule 16 of the Rules of Court to DENY the
Motion to Hear Affirmative Defenses. The issues raised in this case by each party are complex.
The affirmative defenses raised by defendants Crisanta Realty Development Corporation
(Crisanta) and Philippine Estates Corporation (PEC) are matters better threshed out in trial.21

xxxx

PEC,22 Crisanta Realty,23 and Amaia24 filed their respective motions for reconsideration. At

the same time, Amaia filed its Answer25 pleading anew its affirmative defenses that the
complaint failed to state a cause of action against it, it was an innocent purchaser for value, and
petitioner's claim had prescribed.

Meantime, the 2019 amendment to the Rules of Court took effect on May 1, 2020.

Thereafter, the trial court, still through Judge Gill, issued the assailed Order dated May 22,
2020,26 dismissing the complaint as against PEC, Crisanta Realty, Amaia, and ProFriends on
ground that the complaint failed to state a cause of action against them.27 Judge Gill stated that
she applied Section 12, Rule 8 of the 2019 Amendments to the Revised Rules on Civil
Procedure, thus:

For comment and resolution of the Court are the Affirmative Defenses filed by: Philippine
Estates Corporation (PEC), Amaia Land Corporation (Amaia), Crisanta Realty Development
Corporation (Crisanta), and Property Company of Friends, Inc. (Profriends).

They are being resolved in consonance with Rule 8 Section 12, particularly par. (a) and (c) of the
2020 Amendments to the 1997 Rules of Civil Procedure, which took effect on May 1, 2020. As
per this new provision, the Court shall motu proprio resolve the affirmative defense if claim [sic]
allegedly states no cause of action, among others. The Court marries the case status with the new
provision.28

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The Court rules to DISMISS the Complaint vs. PEC and AMAIA.

Nowhere in the Complaint did Plaintiff allege that Defendant PEC is a purchaser in bad faith or
that it has notice of the defect in the title of Defendants Siblings Colmenar.

In a complaint for recovery of ownership of real property, the Supreme Court held that:

Where the complaint for recovery of ownership and possession of a parcel of land alleges that
some of the defendants bought said land from their co-defendants who had a defective title
thereto but does not allege that the purchasers were purchasers in bad faith or with notice of the
defect in the title of their vendors, there is a failure to state a cause of action.

A complaint states a cause of action if it avers the existence of the three essential elements of a
cause of action, namely:

i) the legal right of the plaintiff;

ii) the correlative obligation of the defendant;

iii) the act or omission of the defendant in violation of said legal right.

If the allegations in the complaint do not aver the concurrence of these elements, the complaint
becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of action.

Amaia has similar arguments for dismissal as PEC. Defendant AMAIA purchased the subject
property from PEC. The Complaint's omission to allege that PEC and Amaia are not purchasers
in good faith or that they had notice of defect in the title of their predecessors in interest makes
the Complaint fail to state a cause of action.

An innocent purchaser for value is protected by the Torrens system of registration under Section
53 of PD 1529. Under this section, while a legal remedy is available for fraud perpetrators in
obtaining Title to property, the remedy is not available against an innocent purchaser for value.

Both PEC and Amaia, the latter a company in the business of realty or land sales, enumerated the
due diligence they observed in procuring or purchasing the subject property which are, among
others: keen inspection of titles; physical inspection of land; inspection of neighboring or
adjacent lands; inquiries in the Register of Deeds; circumspect inspection of any defect of Title.

As PEC and Amaia are innocent purchasers for value of the subject land, the Plaintiff loses the
legal remedy that could have been afforded by Section 53. There is no cause of action against
PEC and Amaia.

Premises considered: 1/ the Complaint against Philippine Estates Corporation

is DISMISSED for lack of cause of action, sans pronouncement as to Damages, [Attorney's]
fees and Compulsory Counterclaim; 2/ PEC's Motion for Reconsideration to Hear Affirmative
Defenses is rendered MOOT.
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Likewise, the Complaint as against Amaia Land Corporation is hereby Dismissed for lack of
cause of action, bereft of pronouncement as to the Counterclaim and Cross-claim.

Crisanta Realty Development Corporation

Crisanta's Affirmative Defenses strongly echo PEC's.

Crisanta's Affirmative Defenses of No Cause of Action against it AND innocent purchaser for
value displayed the same narrative in PEC's affirmative defense.

The Court reached the same conclusions: 1/ the Complaint against Crisanta Realty Development
Corporation is DISMISSED for lack of cause of action, sans pronouncement as to Damages,
[Attorney's] fees and Compulsory Counterclaim; 2/ Crisanta's Motion for Reconsideration to
Hear Affirmative Defenses is rendered MOOT.

Property Company of Friends, Inc.

Profriends Affirmative Defense relied on No cause of action.

Profriends alleged that although it is being impleaded in the Complaint as a purchaser of the
parcel of land previously covered by TCT No. 25848, it allegedly has no obligation insofar as
plaintiff is concerned. Plaintiff failed to provide in its Complaint factual and legal basis for the
prayer of cancellation of the Deed of Sale in Profriend's favor, as well as the new TCT issued
under it, as a result of the sale.

Again, the Court finds no cause of action against Profriends to support the Complaint.

Profriends is a purchaser in good faith, the property it bought is covered by the Torrens Title.

The Court reiterates the discussion in PEC's and Amaia's cases above, as conclusive ground for
dismissal of the Complaint against Profriends.

Wherefore, the Complaint against Property Company of Friends, Inc. is DISMISSED for lack of
cause of action, bereft of pronouncement as to the Compulsory Counterclaim.

FINAL ORDERS:

Preceding any progression of this case, in order to be consistent with the 2020 Amendments to
the Rules of Civil Procedure, particularly Rule 7 Section 6 (b) and (c) the Court orders the
Plaintiff to file within a non-extendible period of thirty (30) days from receipt hereof: 1/ a
summary of its witnesses and their intended testimonies; 2/ the judicial affidavits of the said
witnesses; 3/ true copy of the documentary evidence and object evidence of all the allegations to
support the claim, if none filed, as suppletory to its initial pleading.

Let this case be set for a possible marking of Exhibits and true copy of documents, including
Judicial Affidavits of Plaintiffs witnesses on Tuesday, June 30, 2020 @ 1:15 o'clock in the
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afternoon in the Courtroom of RTC Branch 23, Trece Martires City. This case will be heard face
to face.

The Court stands pat on the Default Order against Defendants Jeannie Colmenar Mendoza and
Victoria Jet Colmenar, and strongly NOTES the non-Answer of Defendant Apollo A. Colmenar,
despite Court Order of February 12, 2020. The period for Apollo A. Colmenar to file Answer has
lapsed.

So Ordered.29

Noticeably, the inclusion of the name of ProFriends was erroneous since ProFriends actually
pleaded a different affirmative defense - lack of cause of action.

In light of the proscription against filing a motion for reconsideration under Section 12, Rule
1530 of the 2019 Rules on Civil Procedure and in view of the singular question of law
purportedly involved, petitioner directly sought relief from the Court.

The Present Petition

Petitioner now seeks affirmative relief from the Court against the assailed Order dated May 22,
2020. He faults Judge Gill for applying the 2019 Rules on Civil Procedure to the case, and based
thereon, motu proprio acted on the affirmative defenses of respondent companies despite the
clear injustice it caused to him.31 He asserts that although admittedly procedural rules may be
applied to actions already pending prior to their effectivity, the 2019 Amendments expressly
proscribe their application to pending actions when "in the opinion of the court, their application
would not be feasible or would work injustice, in which case the procedure under which the
cases were filed shall govern."32 Here, Judge Gill motu proprio acted on and granted the
affirmative defenses of respondent companies despite previously denying them through her
Omnibus Order dated February 12, 2020. This hasty turn-about caused him great prejudice as he
was peremptorily deprived of the opportunity to assert his claim against respondent companies.
More so considering the trial court's earlier pronouncement that the issues presented could be
better threshed out through a full dressed trial. Worse, he could not even seek a reconsideration
from the assailed disposition because Section 12, Rule 15 of the 2019 Amendments prohibits the
filing of a motion for reconsideration of court actions on affirmative defenses.33

Petitioner further posits that Judge Gill had earlier ruled on the affirmative defenses through her
Omnibus Order dated February 12, 2020. The pending matters at the time the 2019 Amendments
took effect were respondent companies' motions for reconsideration of the February 12, 2020
Omnibus Order. If Judge Gill was truly insistent on applying the new rules in the case, she
should have denied the motions for reconsideration pursuant to Section 12(e), Rule 8 of the 2019
Amendments which prohibits the filing of a motion for reconsideration where an affirmative
defense is denied.34

Further, by motu proprio resolving the affirmative defenses, Judge Gill totally disregarded the
requirement set forth under Section 12(c), Rule 8 of the 2019 Amendments that the court
"shall motu proprio resolve the above affirmative defenses within thirty (30) calendar days from
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the filing of the answer." ProFriends filed its answer with affirmative defense as early as
December 2018; PEC and Crisanta Realty, on January 3, 2019; and Amaia on February 27, 2020.
Thus, when she resolved their respective affirmative defenses on May 22, 2020, she did so way
beyond the 30-day period provided under the 2019 Amendments.35

Lastly, Judge Gill gravely erred when she decreed that the complaint failed to state a cause of
action as against respondent companies in view of the absence of a material allegation that they
were purchasers in bad faith or had notice of a defect in the sellers' titles. In truth, the complaint
bears the material allegations that petitioner is the heir of Francisco Jesus Colmenar, the
registered owner of the properties which were sold to respondent companies by Apollo, Jeannie,
and Victoria, who were not heirs of Francisco Jesus Colmenar. A purchaser may be impleaded in
an action if said purchaser acquired the property from a seller who had no right over the said
property. The Roman Catholic Bishop of Tuguegarao v. Prudencio,36 decreed that a
transferee's claim of good faith does not preclude a cause of action against it. Thus, the lack of
specific allegation in the complaint that respondent companies acquired the properties in bad
faith does not equate to failure to state a cause of action against them.37

In their Comment dated January 22, 2021,38 PEC and Crisanta Realty aver that the petition must
be dismissed since it actually raises a question of fact. For petitioner is asking the Court to
evaluate the allegations in the complaint and determine whether the same make out a case
against respondent companies, which is basically a question of fact, thus, outside the purview of
Rule 45 of the Revised Rules of Court.39 Contrary to petitioner's claim, Judge Gill did not err in
applying the 2019 Rules on Civil Procedure to the case for Rule 144 of the Rules itself clearly
ordains that the same may be applied to all pending proceedings. In fact, Judge Gill had
consistently applied the 2019 Rules in all proceedings before her court.40 In any event, Judge
Gill was correct in holding that the complaint failed to state a cause of action against them.
Petitioner, indeed, did not allege in his complaint that they are purchasers in bad faith or that
they had notice of any defect in the titles of the properties they bought from individual
respondents who are also children of Francisco Jesus Colmenar, albeit, from a different wife. In
effect, the complaint failed to state the particular right, if any, which they supposedly violated.
They were innocent purchasers for value. They exercised the required diligence when they
investigated the property before buying it. Their diligent investigation did not yield anything
suspicious about the properties and their corresponding titles.41

For its part, Amaia reiterates the arguments in its Comment42 dated January 25, 2021 that the
complaint indeed failed to state a cause of action against it. The complaint did not bear any
allegation that respondent companies were purchasers in bad faith. As innocent purchasers for
value, they are protected by law.43 Also, the trial court was correct when it applied the 2019
Amendments and acted on respondent companies' affirmative defenses. The 2019 Amendments
clearly uses the word "shall" to qualify its effectivity provision, hence, it applies as well to
pending cases.44

On the other hand, ProFriends, in its Comment45 dated January 29, 2021, also faults petitioner
for improperly raising here a mixed question of fact and law, which is not allowed under Rule
45. Petitioner should have gone first t() the Court of Appeals in consonance with the rule on the
hierarchy of courts.46
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Issues

1. Does the petition raise pure questions of law?

2. Did the trial court commit reversible error when it applied the 2019 Amendments to
the 1997 Revised Rules on Civil Procedure (now known as the 2019 Rules of Procedure)
to resolve the affirmative defenses pleaded by respondent companies?

3. Did the trial court commit reversible error when it dismissed the complaint against
respondent companies on ground that it failed to state a cause of action against them?

Ruling

The petition raises pure questions of law.

The issues for resolution are:

First. Did the trial court commit reversible error when it applied the 2019 Amendments to
resolve the affirmative defenses pleaded by respondent companies, albeit the case was already
pending when the 2019 Amendments took effect?; and

Second. Assuming the allegations in the complaint to be true, does the complaint state a cause of
action against respondent companies?

A "question of law" exists when the doubt hinges on what the law is on a certain set of facts or
circumstances; on the other hand, there is a "question of fact" when the issue raised on appeal
pertains to the truth or falsity of the alleged facts. The test for determining whether the supposed
error was one of "law" or "fact" is not the appellation given by the parties raising the same;
rather, it is whether the reviewing court can resolve the issues raised without evaluating the
evidence, in which case, it is a question of law; otherwise, it is one of fact. In other words, where
there is no dispute as to the facts, the question of whether the conclusions drawn from these facts
are correct is a question of law. If the question posed, however, requires a re-evaluation of the
credibility of witnesses, or the existence or relevance of surrounding circumstances and their
relationship to each other, the issue is factual.47

Here, the first question of whether the trial court committed reversible error when it applied the
2019 Amendments to resolve the affirmative defenses pleaded by the respondent companies,
albeit the same was already pending when these Amendments took effect is one of law.
In Central Realty and Development Corp. v. Solar Resources, Inc.,48 the Court held that the
issue of whether the trial court correctly applied a specific law or rules to a particular case is a
question of law, viz.:

Was the denial of petitioner's motion for judgment on the pleadings correct? Is Solar's action for
specific performance barred by res judicata? Is summary judgment in the case proper? These are
precisely the questions being raised here. The resolution of these questions rests solely on what
the law or the rules provides on the given set of circumstances. In other words, the Court ought
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to look only into whether the trial court correctly applied the law or rules in the case. These
are pure questions of law which do not require the examination of evidence. (Emphasis
supplied)

As for the second issue, whether the allegations in the complaint, assuming them to be true, state
a cause of action against respondent companies is also one of law. The Court stressed in Bases
Conversion Development Authority v. Reyes,49 that where there is no dispute as to the facts, the
question of whether the conclusions drawn from these facts are correct is a question of law.
Indeed, in resolving whether the complaint here, based on its allegations, states a cause of action
against respondent companies, the Court need not re-evaluate the credibility of any witnesses or
the veracity of any evidence. The Court only needs to examine the complaint itself, the
allegations of which are assumed to be true, in order to determine whether the complaint states a
cause of action against respondent companies for declaration of nullity of deeds of extrajudicial
settlement of estate, deeds of sale, cancellation of titles, and damages against respondent
companies. To repeat, this is a pure question of law.

In fine, petitioner's direct resort to the Court is in accordance with Rule 45, which ordains:

Section 1. Filing of petition with Supreme Court - A party desiring to appeal by certiorari from a
judgment, final order or resolution of the Court of Appeals, the Sandiganbayan, the Court of Tax
Appeals, the Regional Trial Court or other courts, whenever authorized by law, may file with the
Supreme Court a verified petition for review on certiorari. The petition may include an
application for a writ of preliminary injunction or other provisional remedies and shall raise only
questions of law, which must be distinctly set forth. The petitioner may seek the same
provisional remedies by verified motion filed in the same action or proceeding at any time during
its pendency.

As held in Daswani v. Banco de Oro,50 when only questions of law remain to be addressed, a

direct recourse to the Court under this remedy is the proper mode of appeal.

We now resolve the case on the merits.

The trial court gravely erred when it applied the 2019 Amendments to resolve the
affirmative defenses pleaded by respondent companies

The 2019 Amendments have been incorporated into the 1997 Revised Rules on Civil Procedure,
now known as the 2019 Rules on Civil Procedure. And as with all things new, precedence is
generally scarce, hence, its application must be done with utmost caution and in strict adherence
to its provisions.

Rule 144 of the 2019 Rules, provides:

The 2019 Proposed Amendments to the 1997 Rules of Civil Procedure shall govern all cases
filed after their effectivity on May 1, 2020, and also all pending proceedings, except to the
extent that in the opinion of the court, their application would not be feasible or would
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work injustice, in which case the procedure under which the cases were filed shall govern.
(Emphasis supplied)

As worded, the 2019 Amendments shall also govern all pending cases commenced before they
took effect on May 1, 2020, except to the extent that in the opinion of the court, their application
would not be feasible or would work injustice, in which case, the procedure under which the
cases were filed shall govern. Here, the case commenced with the filing of the complaint in
September 2018 and remained pending when the 2019 Amendments took effect.

As it was, Judge Gill applied Section 12, Rule 8 of the 2019 Amendments when she supposedly
resolved motu proprio the affirmative defense of respondent companies, that is, the complaint
failed to state a cause of action, thus:

Section 12. Affirmative defenses. - (a) A defendant shall raise his or her affirmative defenses in
his or her answer, which shall be limited to the reasons set forth under Section 5(b), Rule 6, and
the following grounds:

1. That the court has no jurisdiction over the person of the defending party;

2. That venue is improperly laid;

3. That the plaintiff has no legal capacity to sue;

4. That the pleading asserting the claim states no cause of action; and

5. That a condition precedent for filing the claim has not been complied with.

(b) Failure to raise the affirmative defenses at the earliest opportunity shall constitute a
waiver thereof.

(c) The court shall motu proprio resolve the above affirmative defenses within thirty
(30) calendar days from the filing of the answer. (Emphasis supplied)

The records though readily show that when Judge Gill motu proprio resolved the affirmative
defenses on May 22, 2020, the prescribed thirty (30) day period had long expired. ProFriends
filed 1ts answer with affirmative defense51 in December 2018; PEC52 and Crisanta Realty53 on
January 3, 2019; and Amaia54 on February 27, 2020. Judge Gill should have, therefore, desisted
from applying the 2019 Amendments to the case below, specifically Section 12, Rule 8 thereof,
because when she did, the same was no longer feasible.

Another. It was inaccurate for Judge Gill to say that she was motu proprio acting on the
affirmative defenses. In truth, she had already resolved this common affirmative defense of
failure to state a cause of action, together with the other affirmative defenses in her Omnibus
Order dated February 12, 2020. There, she denied the motions to dismiss and motions to set the
affirmative defenses for hearing because in her words, "the issues x x x are complex x x x and
are x x x better threshed out in trial."55 Too, PEC, Crisanta Realty, and Amaia all had pending
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motions for reconsideration of the Omnibus Order dated February 12, 2020 when Judge Gill
"motu proprio" resolved their common affirmative defense, and dismissed the case based on, and
consequently considered the pending motions for reconsiderations as moot. Thus, instead of
applying the 2019 Amendments, Judge Gill could have simply resolved the pending motions for
reconsiderations of PEC, Crisanta Realty, and Amaia.

But this is not all. The worst part is when Judge Gill ignored the injustice caused by the
application of the 2019 Amendments to the case. For as a consequence, petitioner lost his
substantial right to be heard on the common affirmative defense of PEC, Crisanta Realty, and
Amaia, and his right to seek a reconsideration of the order of dismissal which were both granted
him under the 1997 Revised Rules on Civil Procedure.

This brings us to the third and last issue: did the complaint fail to state a cause of action against
respondent companies?

The complaint stated a cause of action against respondent companies

To recall, there are two (2) sets of affirmative defenses raised below, viz.: (1) the complaint
failed to state a cause of action, raised by PEC, Amaia, and Crisanta Realty; and (2) lack of cause
of action, raised by ProFriends.

In the Omnibus Order dated February 12, 2020, Judge Gill did not resolve the affirmative
defense of lack of cause of action raised by ProFriends. She only resolved the common
affirmative defense of PEC, Amaia, and Crisanta Realty that the complaint failed to state a cause
of action. And yet, in the assailed Order dated May 22, 2020, the case against ProFriends was
also dismissed on the ground that the complaint failed to state a cause of action, the common
affirmative defense raised only by PEC, Amaia, and Crisanta Realty.56

It has been repeatedly held, however, that failure to state a cause of action and lack of cause of
action are distinct and separate grounds to dismiss a particular action. Zuniga-Santos v.
Santos-Gran57 explained that failure to state a cause of action refers to the insufficiency of the
allegations in the pleading, while lack of cause of action refers to the insufficiency of the factual
basis for the action. Dismissal for failure to state a cause of action may be raised at the earliest
stages of the proceedings through a motion to dismiss under Rule 16 of the 1997 Rules of Court
or raised as an affirmative defense in an answer, while dismissal for lack of cause of action may
be raised any time after the questions of fact have been resolved on the basis of stipulations,
admissions or evidence presented by the plaintiff. Asia Brewery, Inc. v. Equitable PCI
Bank58 further explained:

Failure to state a cause of action is not the same as lack of cause of action; the terms are not
interchangeable. It may be observed that lack of cause of action is not among the grounds that
may be raised in a motion to dismiss under Rule 16 of the Rules of Court. The dismissal of a
Complaint for lack of cause of action is based on Section 1 of Rule 33, which provides:

Section 1. Demurrer to evidence. - After the plaintiff has completed the presentation of his
evidence, the defendant may move for dismissal on the ground that upon the facts and the law
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the plaintiff has shown no right to relief. If his motion is denied he shall have the right to present
evidence. If the motion is granted but on appeal the order of dismissal is reversed he shall be
deemed to have waived the right to present evidence.

If the Complaint fails to state a cause of action, a motion to dismiss must be made before a
responsive pleading is filed; and the issue can be resolved only on the basis of the
allegations in the initiatory pleading. On the other hand, if the Complaint lacks a cause of
action, the motion to dismiss must be filed after the plaintiff has rested its case.

In the first situation, the veracity of the allegations is immaterial; however, in the second
situation, the judge must determine the veracity of the allegations based on the evidence
presented.

xxxx

Hence, in order to resolve whether the Complaint lacked a cause of action, respondent must have
presented evidence to dispute the presumption that the signatories validly and intentionally
delivered the instrument.

xxxx

The test to determine whether a complaint states a cause of action against the defendants is this:
admitting hypothetically the truth of the allegations of fact made in the complaint, may a judge
validly grant the relief demanded in the complaint?59 (Emphasis supplied)

Consequently, the trial court erred in dismissing the complaint against ProFriends on ground that
the complaint failed to state a cause of action, an affirmative defense it did not raise, and which
is completely different from what it actually raised, i.e., lack of cause action. And strictly
speaking, lack of cause of action may only be raised after the questions of fact have been
resolved on the basis of stipulations or admissions or evidence presented by the plaintiff. Before
then, it cannot be raised as a ground for dismissal; much less can the court dismiss the case on
that ground.

We now go to the dismissal of the complaint against PEC, Amaia, and Crisanta Realty on the
ground that the complaint failed to state a cause of action against them.

A cause of action is defined as an act or omission by which a party violates a right of

another.60 A complaint states a cause of action if it sufficiently avers the existence of the three
(3) essential elements of a cause of action, namely: (a) a right in favor of the plaintiff by
whatever means and under whatever law it arises or is created; (b) an obligation on the part of
the named defendant to respect or not to violate such right; and (c) an act or omission on the part
of the named defendant violative of the right of the plaintiff or constituting a breach of the
obligation of defendant to the plaintiff for which the latter may maintain an action for recovery
of damages. If the allegations of the complaint do not state the concurrence of these elements, the
complaint becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of
action.61
 13

Here, the complaint for declaration of nullity of Deeds of Extrajudicial Settlement of Estate,
Deeds of Sale, Cancellation of Titles, and Damages alleges:

1. Plaintiff Frank Colmenar x x x is the legitimate son of the late Francisco Jesus
Colmenar (Deceased) and Dorothy Marie Crimmin (Dorothy).62

xxxx

28. Years later, Plaintiff learned of the unfortunate demise of his father.63 x x x

xxxx

29. Upon his death, Deceased left real properties registered under his name, to wit:

(1) An interest in a real property located in General Trias, Cavite, with an area of
130,743 square meters then covered by Transfer Certificate of Title No. 579;

(2) One-half (1/2) interest in a real property located in General Trias, Cavite, with
total area of 27,175 square meters then covered by Transfer Certificate of Title
No. 572;

(3) One-sixth (1/6) interest in a real property located in General Trias, Cavite with
a total land area of 117,476 square meters then covered by Transfer Certificate of
Title No. 25848; and

(4) An interest in a real property located in General Trias, Cavite with a total land
area of 806 square meters then covered by Transfer Certificate of Title No. 588.

30. Several years later, Plaintiff learned that Defendants Apollo, Jeannie, and Victoria
made it appear that they were the heirs of the Deceased in the Extrajudicial Settlement of
Estate dated 16 May 2008 involving a real property then covered by Transfer Certificate
of Title No. T-579 registered in the name of the Deceased, and a portion of a real
property covered by Transfer Certificate of Title No. T-572 registered in the name of the
Deceased and Angel Colmenar, both properties being located at General Trias, Province
of Cavite.

31. Defendants Apollo, Jeannie, and Victoria committed the same misrepresentations
when they executed the Extrajudicial Settlement of the Estates of Deceased Francisco
Colmenar and Loida Colmenar dated 8 July 2011 involving a real property then covered
by Transfer Certificate of Title No. 579 issued in the name of the Deceased and another
real property covered by Transfer Certificate of Title No. 25848 in the name of the
Deceased, among others, both properties being located at General Trias, Province of
Cavite.

32. Using the foregoing deeds of extrajudicial settlement of estate as authority,

Defendants Apollo and Jeannie executed a Deed of Absolute Sale dated 22 May 2013 in
 14

favor of Defendant PEC covering a real property then covered by Transfer Certificate of
Title No. 579 issued in the name of the Deceased. For her part, Defendant Victoria,
executed a Deed of Absolute Sale dated 22 May 2013 in favor of Defendant PEC
covering a real property with Transfer Certificate of Title No. 579 issued in the name of
the Deceased.

32.1. Subsequently, Defendant PEC sold the property covered by Transfer Certificate of
Title No. 579 to Defendant Amaia, which by then was already covered by Transfer
Certificate of Title No. 057-2013024578 in the name of Defendant PEC.

33. In the same manner, Defendants Apollo. Jeannie, and Victoria executed a Deed of
Sale dated 12 September 2012 in favor of Defendant Crisanta, covering a real property
then covered by Transfer Certificate of Title No. 943212 issued in the name of the
Deceased and a Deed of Absolute Sale dated 3 January 2012 in favor of Defendant
Profriends covering a portion of a real property then covered [by] Transfer Certificate of
Title No. 25848 in the name of the Deceased, among others.

34. All the actions of Defendants Apollo, Jeannie and Victoria were made without the
knowledge and consent of Plaintiff.ℒαwρhi ৷ Worse, said Defendants did the same
depriving Plaintiff of his successional rights under Philippine laws as the legitimate son
of the Deceased.64

xxxx

47. However, Defendant PEC did not earlier acquire any right or interest over the
property since the Deeds of Absolute Sale executed by Defendants Apollo, Jeannie and
Victoria are void.

47.1. The said deeds are void since Defendants Apollo, Jeannie, and Victoria had no
interest over the property covered by Transfer Certificate of Title No. 579. Hence, they
had no right to sell the same to Defendant PEC.

48. Despite not having acquired any right or interest over the property covered
by Transfer Certificate of Title No. 579, Defendant PEC still subsequently sold the said
property to Defendant Amaia x x x65

xxxx

54. Subsequently, or on 21 September 2012, Defendants Apollo, Jeannie and Victoria

executed a deed of sale involving the property covered by Transfer Certificate of Title
No. 943212 in favor of Defendant Crisanta.

55. It bears stressing, however, that Defendants Apollo, Jeannie, and Victoria are not
[the] heirs of the Deceased. Therefore, they had no right to dispose of the property
covered by Transfer Certificate of Title No. 943212 in favor of Defendant Crisanta.66
 15

xxxx

60. Defendants Apollo, Jeannie and Victoria subsequently sold Francisco Colmenar's
share in Transfer Certificate of Title No. 25848 to Defendant Profriends.

61. It bears stressing, however, that Defendants Apollo, Jeannie, and Victoria are not
[the] heirs of the Deceased. Therefore, they had no right to dispose of the property
covered by Transfer Certificate of Title No. 25848 in favor of Defendant Profriends.67

xxxx

64. On account of the Deeds of Extrajudicial Settlement of Estate and void Deeds of

Absolute Sale executed by Defendants Apollo, Jeannie, and Victoria, Transfer Certificate
of Title Nos. 579, 943212, 25848 were cancelled.

65. To reiterate, however, Defendants Apollo, Jeannie, and Victoria had no right to
transfer the properties to Defendant corporations.

66. Consequently, the titles issued by Defendant Registry of Deeds under the name of
Defendant Amaia, which originated from the title issued to Defendant PEC, should be
cancelled. In the same manner, the titles issued by the Defendant Registry of Deeds to
Defendants Crisanta and Profriends are earnestly requested to be cancelled.68

In essence, petitioner essentially avers that: (a) he is the legitimate son and lawful heir of
Francisco Jesus Colmenar; (b) his father left real properties in the Philippines, the rights and
interests of which would legally pass on to his heirs upon his death; (c) the individual
respondents are not the lawful heirs of Francisco Jesus Colmenar, thus, have no claim to the
properties left by the latter; (d) the individual respondents, nonetheless, despite being devoid of
any right in or authority over the estate of his father, were able to effect a void extrajudicial
settlement of his father's estate, and thereafter, a void sale of his father's properties in favor of
respondent companies, which, as a consequence, also did not acquire a valid title hereto.

In Asia Brewery, Inc. v. Equitable PCI Bank69 the Court ordained that the test to determine
whether a complaint states a cause of action against the defendants is - admitting hypothetically
the truth of the allegations of fact made in the complaint, may a judge validly grant the relief
demanded in the complaint?

Here, assuming the foregoing allegations to be true, petitioner as legitimate child and lawful heir
of Francisco Jesus Colmenar has the right to the relief prayed for. i.e., to declare as void the
extrajudicial settlement of estate effected by the individual respondents who, not being lawful
heirs of his father, had no legal right to settle the estate; and to declare as void the subsequent
deeds of sale executed by these individual respondents in favor of respondent companies which
consequently also did not derive any valid title from the individual respondents.

In Unciano v. Gorospe70 the Court underscored the fundamental principle that no one can give
what he does not have. In other words, a seller may sell only what he or she owns, or that which
 16

he or she does not own but has authority to transfer, and a buyer can acquire only what the seller
can legally transfer. As the Court emphasized in Daclag v. Macahilig,71 in a contract of sale, it
is essential that the seller is the owner of the property he is selling. Under Article 1458 of the
New Civil Code, the principal obligation of a seller is to transfer the ownership of the property
sold. Article 1459 of the same provides that the thing must be licit and the vendor must have a
right to trar.sfcr the ownership thereof at the time it is delivered. Nool v. Court of
Appeals,72 further enunciated Article 1505 of the New Civil Code which provides that "where
goods are sold by a person who is not the owner thereof, and who does not sell them under
authority or with consent of the owner, the buyer acquires no better title to the goods than the
seller had, unless the owner of the goods is by his conduct precluded from denying the seller's
authority to sell."

Hence, whether respondent companies were buyers in bad faith or had knowledge of the defect
in the title of the seller is not the issue nor the trigger that gave rise to the complaint. Petitioner's
causes of action hinged on his averment that the individual respondents are not the owners of the
properties, hence, they cannot validly sell the same to respondent companies, nor convey any
title to the latter by reason of the invalid sale. The spring cannot rise above its source. Needless
to state, the trial court cannot inject its own theory to take the place of the actual allegations in
the complaint. Besides, where petitioner in this case has no actual or personal knowledge of the
good faith or bad faith of the buyers in the purchase of the properties, how could he possibly
allege it in the complaint? In any event, good faith or lack of bad faith is a matter of defense for
the buyers in this case. It can be pleaded in the answer and proved during the trial.

As enunciated in Sindophil, Inc. v. Republic,73 the presumption that a holder of a Torrens title

is an innocent purchaser for value is disputable and may be overcome by contrary evidence, thus:

Sindophil insists that it bought the Trame property from Ty in good faith and that it was an
innocent purchaser for value. However, the presumption of good faith and that a holder of a title
is an innocent purchaser for value may be overcome by contrary evidence.

Here, the Republic presented evidence that TCT No. 10354, from which Sindophil's TCT No.
132440 was derived, was void. As found by the Regional Trial Court:

Record shows that Certificate of Title No. 6735, wherein the lot claimed by defendant, Marcelo
R. Teodoro, lot 3270-B, is derived therefrom, is under the name of the Republic of the
Philippines, dated October 17, 1913. Nothing in the subsequent annotations was under the name
of any of the defendants and neither the subject TCT No. 10354.

With the Republic having put forward evidence that the Tramo property claimed by Sindophil
belongs to the Republic, the burden of evidence shifted to Sindophil to prove that its title to it
was valid. Concomitantly, it had the burden of proving that it was indeed a buyer in good faith
and for value. As this Court said in Baltazar v. Court of Appeals, "the burden of proving the
status of a purchaser in good faith and for value lies upon him who asserts that status " and
"[i]n discharging that burden, it is not enough to invoke the ordinary presumption of good
faith,  i.e., that everyone is presumed to act in good faith. The good faith that is [essential here] is
integral with the very status which must be proved." (Emphasis supplied)
 17

In any event, the trial court's reliance on Spouses Castillo v. Heirs of Madrigal74 is utterly
misplaced. It is not on all fours with the present case. Spouses Castillo involved a conveyance of
property registered in the names of the Castillo Siblings. The conveyance appeared to have been
executed by all the registered co-owners, albeit the plaintiffs later disclaimed their participation
in the conveyance and sued for recovery of possession and ownership. Meantime the property
had already been conveyed from the original buyer to a company who invoked the right of an
innocent buyer for value. The Court ruled:

Where the complaint for recovery of ownership and possession of a parcel of land alleges that
some of the defendants bought said land from their co-defendants who had a defective title
thereto but does not allege that the purchasers were purchasers in bad faith or with notice of the
defect in the title of their vendors, there is a failure to state a cause of action. By reason of this
failure, private respondent Susana Realty, Inc. is presumed to be an innocent purchaser for value
and in good faith, entitled to protection under the law.75

Here, the allegations in the complaint do not speak of co-ownership between petitioner and the
individual respondents insofar as the subject properties are concerned. There is no allegation
either that the corresponding certificates of title which the respondent individuals transacted with
respondent companies bore all the names of the respondent individuals, as well as the name of
petitioner himself as their co-owner. Nor is there any allegation that the deeds of sale executed in
favor of respondent companies were signed not only by individual respondents but also by
petitioner himself, all of them being supposedly co-owners of the properties. On the contrary, the
allegations in the complaint, assuming them to be true, are all about the unlawful conveyances of
the properties by the respondent individuals who had no right to do so since the true and lawful
owner of these properties is petitioner, no other.

All told, the trial court gravely erred when it held that the complaint failed to state a cause of
action against respondent companies, and based thereon, dismissed the complaint against them.

WHEREFORE, the petition is GRANTED and the Order dated May 22, 2020 of the Regional
Trial Court, Branch 23, Trece Martires, Cavite in Civil Case No. TMCV-062-
18 REVERSED and SET ASIDE. The Complaint is REINSTATED as against Philippine
Estates Corporation, Crisanta Realty Development Corporation, Amaia Land Corporation, and
Property Company of Friends. The trial court is DIRECTED to PROCEED with the resolution of
the case with UTMOST DISPATCH.

SO ORDERED.
 18

G.R. No. 201022, March 17, 2021

TECHNICAL EDUCATION AND SKILLS DEVELOPMENT AUTHORITY (TESDA),

Petitioner, v. ERNESTO ABRAGAR, Respondent.

HERNANDO, J.:

This Petition for Review on Certiorari1 challenges the March 13, 2012 Decision2 of the Court of
Appeals (CA) in CA-G.R. SP No. 106253 which annulled the June 30, 20 083 and August 29,
20084 Resolutions of the National Labor Relations Commission (NLRC) in NLRC NCR CANo.
043526-05 that granted petitioner Technical Education and Skills Development Authority's
(TESDA) Appeal Memorandum in Intervention5 in the said case.

The Factual Antecedents:

On April 29, 2003, respondent Ernesto Abragar (Abragar) filed a complaint6 before the Regional
Arbitration Branch of the NLRC in San Fernando City, Pampanga for underpayment and non-
payment of salaries/wages, service incentive leave, and 13th month pay against a certain Marble
Center (used interchangeably with the "Marble Training Center" or "Marble Production Training
Center"; hereinafter referred to as the Center) with address at TESDA, Guiguinto, Bulacan, and
his supervisor, Philip Bronio (Bronio). Summons was served on the said parties via registered
mail at the abovementioned address.7 An amended complaint8 was later filed to include
constructive dismissal, non-payment of separation pay and retirement pay, and payment of
damages and attorney's fees.

During the mandatory conference, Bronio appeared as the apparent representative of the Center
and both parties were encouraged to settle the case amicably.9 When no amicable settlement was
reached, the mandatory conference was terminated and the parties were ordered to file their
respective position papers.10

In his Position Paper,11 Abragar described the Center as a corporation organized and existing in
accordance with Philippine laws. He alleged that the Center's address is the TESDA Compound
in Tabang, Guiguinto, Bulacan. He further claimed that he was hired in September 1997 as a
marble operator for the Center and was tasked to cut and trim marbles in accordance with the
 19

prescribed orders, until sometime in December 2002 when the Center suddenly cut down his
working days from six to twice or thrice a week, without giving him the usual salary he received
for the week. Also, his 13th month pay was reduced despite his pleas that he be allowed to
maintain his former work schedule. Respondent claimed that the reduction of his work schedule
and pay amounted to constructive dismissal.

On the other hand, the Center and Bronio failed to submit their position paper and thus were
deemed to have waived their right to present evidence. 12

In a July 30, 2004 Decision,13 the Labor Arbiter (LA) found that Abragar was constructively
dismissed and granted his claim for unpaid salaries, service incentive leave, and 13th month pay.
The dispositive portion of the Decision reads:

WHEREFORE, premises considered, judgment is hereby rendered declaring illegal

complainant's dismissal. Consequently, respondents are hereby held liable and ordered to pay
complainant's separation pay as prayed for by him in lieu of reinstatement in the amount of
P28,630.00 and backwages in the sum of P109,174.00. Respondents are likewise ordered to pay
complainant's salary differential in the sum of P17,492.67, service incentive leave pay of
P3,007.50 and 13th month pay of P5,746.00.

 All other claims are hereby dismissed for lack of merit.

 SO ORDERED.14
There being no appeal filed within the reglementary period, Abragar moved for the issuance of a
writ of execution to carry out the aforementioned decision.15

On December 29, 2004, Bronio filed a Motion for Reconsideration16 before the LA insisting that
there was no employer-employee relationship between Abragar and the Center. He asserted that
the Center is a mere cooperative and training center of TESDA under the cooperation of the
Department of Trade and Industry (DTI), Provincial Government of Bulacan. The Center merely
serves as a training ground for workers who intend to work in the private sector upon completion
of the training courses under TESDA. However, no action was taken on the said motion.

Thus, on January 25, 2005, Bronio filed a Petition for Relief from Judgment,17 where he
reiterated that the Center is a non-juridical entity but a mere training facility run by TESDA and
created pursuant to a Memorandum of Agreement (MOA)18 executed by and among the DTI, the
Provincial Government of Bulacan, the Marble Association of the Philippines (MAP), the
National Manpower and Youth Council (now renamed TESDA; hereinafter referred to
collectively as the MOA Parties). Under the MOA, the said parties undertook to pool and share
their resources, facilities, and expertise for the establishment of a functional marble production
and training center. Moreover, Bronio alleged that he is merely an employee and trainor-
supervisor of MAP and thus cannot be held liable for any of the acts of the Center, and that
respondent is not an employee but a trainee of the Center.

Abragar filed an Opposition19 thereto, and the petition was referred to the NLRC.
 20

In a June 30, 2006 Resolution,20 the NLRC dismissed the petition for relief from judgment. It
held that since no appeal was filed against the LA Decision by Bronio and the Center, it already
became final and executory. No appeal was filed in connection with the said resolution; thus, an
Entry of Judgment21 of the LA's July 30, 2004 Decision was issued by the NLRC.

Execution of the LA Decision:

The LA thereafter issued a Writ of Execution22 directing the sheriff to enforce the July 30, 2004
Decision by proceeding to the premises of Marble Center and Bronio located at TESDA,
Guiguinto, Bulacan and collect the total judgment amount. Upon failure to collect the same, the
sheriff was directed to cause the full satisfaction of the same from the properties of Marble
Center and Bronio that are not exempt from execution.23 However, the sheriff reported that he
and Abragar were denied entry by security into the premises of the Center in the TESDA
Compound when they tried to levy on the movable properties of the Center.24 Thus, Abragar filed
a Motion (For Issuance Of A Break Open Order.25

On June 14, 2007, Bronio filed a Motion to Quash the Writ of Execution26 which Abragar
opposed on the ground that the Decision of the NLRC is already fmal and executory and must be
carried out without further delay.27

TESDA's Appeal Memorandum in Intervention:

On September 25, 2007, petitioner TESDA filed an Appeal Memorandum in Intervention28 with

the NLRC praying for the quashal of the writ of execution and break-open order issued by the
LA and for the remand of the case to the LA for further proceedings. Petitioner, in substance,
alleged that (a) the Center is a marble processing facility run by TESDA and a non-juridical
entity without capacity to sue or be sued; (b) the Center is a joint undertaking formed pursuant to
the aforementioned MOA agreed upon among the MOA Parties that pooled their resources for
the conduct of training and job induction programs for TESDA applicant-trainees; (c) the writ of
execution and break-open order, while directed at "respondents Marble Center & Philip Bronio
at TESDA, Guiguinto, Bulacan," was actually directed at TESDA as the former's address is
clearly the address of TESDA and occupied exclusively by the said agency; (d) Bronio was the
caretaker and supervisor assigned by MAP to oversee the resources and facilities in the Center;
and (e) despite the aforementioned facts; it was never notified nor impleaded in the case. Thus,
TESDA alleged that the LA committed grave abuse of discretion when he grossly
misappreciated the facts of the case and issued the appealed decision, the writ of execution and
break-open order, which if not corrected, would cause grave injury to TESDA.29

Abragar filed an Opposition30 thereto and alleged that the same must be denied outright for
failure to comply with procedural requirements. He likewise insists that TESDA slept on its right
to appeal and that the said Order had long become final and executory. Abragar averred that, in
any case, TESDA will not be affected by the execution of the LA's July 30, 2004 Decision and
thus has no right to intervene. The NLRC in a June 30, 2008 Resolution31 gave due course to
TESDA's appeal in intervention. The fallo of the Resolution reads:
WHEREFORE, the appeal of TESDA is GRANTED. The assailed decision is VACATED and
SET ASIDE. The corresponding writ of execution is QUASHED and the order to break open
 21

issues pursuant thereto is also VACATED and SET ASIDE. Complainant is directed to amend
his complaint to implead the real parties in interest. The case is hereby REMANDED for further
appropriate proceedings. SO ORDERED.32
In so ruling, the NLRC cited Article 221 of the Labor Code which provides that technical rules
are not binding and that the LA shall use every and all reasonable means to ascertain the facts in
each case speedily and objectively and without regard to technicalities of law or procedure, in the
interest of due process, and Section 218(c) of the Labor Code which empowers the NLRC to
direct parties to be joined in or excluded from the proceedings, correct, amend, or waive any
error, defect or irregularity, whether in substance or in form, give all such direction as it may
deem necessary and expedient in the determination of the dispute. The NLRC noted that
TESDA's Appeal Memorandum in Intervention, while peculiar, is impressed with substantial
allegations that if proven true would result to a clear denial of due process and miscarriage of
justice.33

Moreover, the NLRC stressed that nothing on record shows that the Center is a juridical person
authorized to be made a party to any case as it is not clothed with legal personality to be sued,
and the question remained on how it can be held liable for illegal dismissal and payment of
money claims. Thus, the NLRC held that the real parties-in-interest appear to be TESDA, DTI,
the Provincial Government of Bulacan and the MAP, which should be joined as parties even if
only alternatively, conformably with Rule 3, Sections 1 and 2 of the Rules of Court. The NLRC
thereafter noted that the assailed order was void which can never attain finality.34

Respondent moved for reconsideration,35 which was denied by the NLRC.36 Entry of judgment of

the August 29, 2008 Resolution was issued on December 10, 2008.

Proceedings in the Court of Appeals:

Aggrieved, respondent filed a Petition for Certiorari37 before the CA assailing the June 30, 2008
and August 29, 2008 Resolutions of the NLRC. The Office of the Solicitor General on behalf of
TESDA filed a Comment thereto.

In a March 13, 2012 Decision,38 the CA reversed and set aside the NLRC's Resolutions dated
June 30, 2008 and August 29, 2008. The dispositive portion of the CA Decision reads:
WHEREFORE, the petition is GRANTED. Accordingly, the resolutions dated June 30, 2008
and August 29, 2008, of the public respondent NLRC are NULLIFIED and SET ASIDE.
Accordingly, the decision of the Labor Arbiter dated July 30, 2004 is REINSTATED. SO
ORDERED.39
The appellate court opined that the failure of the Center and Bronio to perfect their appeal in the
manner and within the period fixed by law rendered the July 30, 2004 Decision of the LA and
the June 30, 2006 Resolution which dismissed the petition for relief from judgment final and
executory. Moreover, the appellate court stressed that the Revised Rules of Court which apply
suppletorily to labor cases provide that a motion to intervene may be filed any time before
rendition of judgment by the trial court. Thus, TESDA should have filed its pleading in
intervention with the Regional Arbitration Branch and before the rendition of the LA's July 30,
2004 Decision instead of filing the same three years and one month from the said decision, when
 22

the LA's July 30, 2004 Decision and the resolution dismissing the petition for relief had long
become final and executory. Hence, this Petition.

Issue

The fundamental issue for resolution is whether the CA erred in annulling the NLRC's grant of
petitioner's Appeal Memorandum in Intervention.

Our Ruling

The petition has merit.

The Center has no juridical

personality and thus has no legal capacity to be sued. Hence, the indispensable parties
should be impleaded in the proceedings.

Petitioner argues that the Center against whom the labor complaint was filed below is not a
juridical entity nor authorized by law to sue or be sued but merely a training and skill
development facility operated by petitioner in TESDA's premises pursuant to the MO A.
Accordingly, since only natural or juridical persons, or entities authorized by law may be parties
in a civil action and the joinder of indispensable parties is mandatory, the Center should not have
been impleaded as a party to the complaint below. Instead, the parties who created it should have
been impleaded as party-respondents in the labor complaint below as indispensable parties.40

On the other hand, respondent contends that petitioner's claim that the Center is a non-juridical
entity with no legal personality to sue or be sued is a belated claim raised for the first time on
appeal. Thus, it should not be entertained because it would be unjust for a third person to be
allowed to circumvent labor laws by claiming that a person or company who acted as an
employer is a non-juridical entity which cannot sue or be sued. Further, respondent maintains
that petitioner's claim that it is an indispensable party is misleading. Respondent points out that
his claims are borne by the existing employer-employee relationship between the Center and
respondent, and that the terms and conditions of the MOA surrounding the creation of Marble
Center are not binding as to him since he was not privy to the same.41

We rule for petitioner.

Sections 1 and 2, Rule 3 of the Rules of Court mandate that only natural or juridical persons, or
entities authorized by law may be parties in a civil action and every action must be prosecuted
and defended in the name of the real parties-in-interest.42 In connection thereto, in Litonjua
Group of Companies v. Vigan,43 this Court found that the Litonjua Group of Companies, which
therein respondent sought to hold solidarity liable for illegal dismissal, was not a legal entity
with juridical personality and hence could not be held a party to the suit.44 Similarly, the Center
which respondent seeks to hold liable has no juridical personality nor is it an entity authorized by
law to be a party to any action; it has no legal capacity to sue or be sued and should not have
been impleaded as defendant in the instant case.

Respondent, to bolster his claim, alleged that it would be unjust for a third person to be allowed
 23

to circumvent labor laws by claiming that a person or company who acted as an employer is a
non-juridical entity which cannot sue or be sued. To be sure, the Court, in the interest of
preventing injustice and unfairness, has previously prevented non-existent corporations from
raising its lack of juridical personality as a means to avoid fulfillment of its contracts or
obligations by applying the doctrine of corporation by estoppel. This doctrine has been codified
in Section 20 of the Corporation Code, which provides that all persons who assume to act as a
corporation knowing it to be without the authority to do so shall be liable as general partners for
all debts, liabilities, and damages incurred or arising as a result thereof.

However, the attendant circumstances do not call for the application of the said doctrine. While
the Center appears to be managed by TESDA in collaboration with MAP and involves a pooling
of resources by the DTI, TESDA, Provincial Government of Bulacan, and MAP, a careful review
of the records fails to show that the MOA Parties represented that the Center had its own
juridical personality in its dealings with respondent or third persons. In fact, as pertinently
alleged by petitioner, the employment contract submitted by respondent in evidence was with
MAP Multi-Purpose Cooperative Incorporated. 45

Moreover, this Court is not inclined to rule that TESDA and the other parties to the MOA shall
be held liable as general partners to respondent's claims against the Center for non-payment of
wages, benefits, and illegal dismissal without giving them their day in court. It is a basic tenet of
due process of law that a person cannot be prejudiced by a ruling rendered in an action or
proceeding in which he was not made a party.46 In the context of administrative proceedings, due
process refers to an opportunity to explain one's side or an opportunity to seek reconsideration of
the action or ruling complained of 47 It would also be wholly unjust to consider Bronio's
appearance in the proceedings below as sufficient compliance with this due process requirement
insofar as the MOA parties are concerned. Relevantly, the pleadings filed by Bronio in the
proceedings below which purported to represent himself and the Center was signed only by
himself. The records are likewise devoid of any indication that Bronio was authorized to attend
the hearings on behalf of any of the MOA Parties or if such authority was ascertained by the
labor tribunals during the proceedings below. As previously alleged by Bronio himself, he was a
mere employee and tr ainor-supervisor of MAP tasked to supervise the operations of the Center.

Given the foregoing, the proper remedy in this case is the joinder of the proper parties.48 In
connection thereto, the mandatory rule on joinder of indispensable parties is set forth in Section
7, Rule 3 of the Rules of Court, to wit:
SEC. 7. Compulsory joinder of indispensable parties. - Parties in interest without whom no final
determination can be had of an action shall be joined either as plaintiffs or defendants.
"Indispensable parties are parties whose legal presence in the proceeding is so necessary that 'the
action cannot be finally determined' without them because their interests in the matter and in the
relief are so bound up with that of the other parties."49 This Court has previously laid down the
test to determine if a party is an indispensable party, thus:
An indispensable party is a party who has an interest in the controversy or subject matter that a
final adjudication cannot be made, in his absence, without injuring or affecting that interest, a
party who has not only an interest in the subject matter of the controversy, but also has an
interest of such nature that a final decree cannot be made without affecting his interest or leaving
 24

the controversy in such a condition that its final determination may be wholly inconsistent with
equity and good conscience. It has also been considered that an indispensable party is a person in
whose absence there cannot be a determination between the parties already before the court
which is effective, complete, or equitable. Further, an indispensable party is one who must be
included in an action before it may properly go forward. A person is not an indispensable party,
however, if his interest in the controversy or subject matter is separable from the interest of the
other parties, so that it will not necessarily be directly or injuriously affected by a decree which
does complete justice between them. Also, a person is not an indispensable party if his presence
would merely permit complete relief between him and those already parties to the action, or if he
has no interest in the subject matter of the action. It is not a sufficient reason to declare a person
to be an indispensable party that his presence will avoid multiple litigation.50
Applying the foregoing test, the Court finds that the MOA Parties are indispensable parties as
their interest in the controversy is such that a final adjudication cannot be made in their absence,
without injuring or affecting their interest. As alleged by respondent himself, his claims are
anchored in his employer-employee relationship with the Center. In view of the lack of juridical
personality of the Center, any judgment in favor of respondent against the Center would have to
be enforced against the properties contributed by the MOA Parties. A perusal of the MOA shows
that DTI contributed pre-operating expenses, machinery, and consumables required for training
and marble processing; the Provincial Government of Bulacan allowed the use of its provincial
lot where the Center operates to TESDA for training purposes, and which TESDA in turn
earmarked for the Center's operations; and MAP provides supplies and materials for training and
skills testing.

Further, under the MOA, TESDA is in charge of organizing the conduct of training and job
induction programs, entrepreneurship development training, as well as supervising and
coordinating all training-related activities, while MAP is mandated to oversee the efficient
implementation of the activities under the Project Work Plan of TESDA, ensure the efficient
implementation of activities contained therein, manage the Center operations, and provide
supplies and materials for training and skills testing.

Verily, the interest of the MOA Parties in the subject matter of the suit and in the relief sought
are so inextricably intertwined such that their legal presence as a party to the proceedings is an
absolute necessity. While we wish to abide by the mandate on speedy disposition of cases, more
so considering that what is involved here is the welfare of a worker, we cannot allow a judgment
that would ultimately be enforced against one or more of the MOA Parties without giving them
their day in court. To do so will result in a possible violation of due process. Their inclusion is
necessary for the effective and complete resolution of the case and in order to accord all parties
the benefit of due process and fair play.

There are two consequences of a finding on appeal that indispensable parties have not been
joined. First, all subsequent actions of the lower courts are null and void for lack of jurisdiction;
second, the case should be remanded to the trial court for the inclusion of indispensable
parties.51 Considering the foregoing, the CA erred in setting aside the NLRC's grant of
petitioner's Appeal Memorandum in Intervention.

The failure to implead TESDA and

 25

the other parties to the MOA renders

the proceedings void, which may be

questioned at any time.

Abragar asserts that petitioner's Appeal Memorandum in Intervention was filed way beyond the
period allowed by law and the LA Decision had already become final and executory. On the
other hand, TESDA asserts that the failure to implead petitioner, among others, renders the
Decision dated July 30, 2004 of the LA, writ of execution, and break-open order null and void
for want of authority, which may be attacked in any way at any time, even when no appeal is
taken.

We agree with petitioner.

The joinder of all indispensable parties is a condition sine qua non for the exercise of judicial
power. While the failure to implead an indispensable party is not per se a ground for the
dismissal of an action, considering that said party may still be added by order of the court, on
motion of the party or on its own initiative at any stage of the action and/or such times as are
just, it remains essential — as it is jurisdictional — that any indispensable party be impleaded in
the proceedings before the court renders judgment.52 The absence of an indispensable party
renders all subsequent actions of the court null and void for want of authority to act, not only as
to the absent parties but even as to those present.53

A void judgment is in effect no judgment at all, and all acts performed under it and all claims
flowing out of it are void. The judgment is vulnerable to attack even when no appeal has been
taken, and does not become final in the sense of depriving a party of his right to question its
validity.54

Thus, the failure to implead petitioner and the other parties to the MOA renders the July 30, 2004
Decision of the LA, writ of execution, and break- open order null and void for want of authority,
which may be attacked in any way at any time, even when no appeal is taken. It is immaterial
that petitioner filed the Appeal Memorandum in Intervention after the LA judgment became
allegedly final and executory, since a judgment void ab initio is non-existent and thus cannot
acquire finality.

WHEREFORE, the Petition is GRANTED. The assailed March 13, 2012 Decision of the Court
of Appeals in CA-G.R. SP No. 106253 is hereby REVERSED and SET ASIDE. Let the case
be REMANDED to the Regional Arbitration Branch of the National Labor Relations
Commission in San Fernando City, Pampanga for the inclusion of Technical Education and
Skills Development Authority, Department of Trade and Industry, Marble Association of the
Philippines, and the Provincial Government of Bulacan, as parties-respondents and for further
proceedings.chanroblesvirtualawlibrary

SO ORDERED.
 26

G.R. No. 201302, January 23, 2019

HYGIENIC PACKAGING CORPORATION, Petitioner, v. NUTRI-ASIA, INC., DOING

BUSINESS UNDER THE NAME AND STYLE OF UFC PHILIPPINES (FORMERLY
NUTRI-ASIA, INC.), Respondent.

LEONEN, J.:

The venue for the collection of sum of money case is governed by Rule 4, Section 2 of the Rules
of Court. Unless the parties enter into a written agreement on their preferred venue before an
action is instituted, the plaintiff may commence his or her action before the trial court of the
province or city either where he or she resides, or where the defendant resides. If the party is a
corporation, its residence is the province or city where its principal place of business is situated
as recorded in its Articles of Incorporation.1

This is a Petition for Review on Certiorari2 assailing the January 13, 2012 Decision3 and March
28, 2012 Resolution4 of the Court of Appeals in CA-G.R. SP No. 119511. The Court of Appeals
granted Nutri-Asia, Inc.'s (Nutri-Asia) Petition for Certiorari, 5 and reversed and set aside the
May 24, 2010 Order6 of the Regional Trial Court Branch 46, Manila and the March 14, 2011
Joint Order7 of the Regional Trial Court Branch 24, Manila in Civil Case No. 09-121849. The
trial courts denied Nutri-Asia's Omnibus Motion to Set for Hearing the Affirmative Defenses
Pleaded in the Answer and to Refer the Parties to Arbitration in a collection of sum of money
case.8

Hygienic Packaging Corporation (Hygienic) is a domestic corporation that manufactures,

markets, and sells packaging materials such as plastic bottles and ratchet caps.9 Meanwhile,
Nutri-Asia is a domestic corporation that manufactures, sells, and distributes food products such
as banana-based and tomato-based condiments, fish sauce, vinegar, soy sauce, and other sauces.10

From 1998 to 2009, Hygienic supplied Nutri-Asia with KG Orange Bottles and Ratchet Caps
with Liners (plastic containers) for its banana catsup products.11 Every transaction was covered
by a Purchase Order issued by Nutri-Asia.12 The Terms and Conditions on the Purchase Order
provided:
 27

TERMS AND CONDITIONS

The following terms and conditions and any of the specifications, drawings, samples and
additional terms and conditions which may be incorporated herein by reference or appended
hereto are part of this Purchase Order. By accepting this Purchase Order or any part thereof the
Seller agrees to and accepts all terms and conditions.

1. The number of this Purchase Order must appear on the corresponding Sales
Invoice, Shipping papers and other pertinent documents and the Seller's VAT No.,
when applicable, must be on all Invoices/Delivery receipts.

2. NO Payment will be made unless original sales invoice received by Buyer's

accounting Department.

....

8. The Seller warrants that the Goods delivered to the Buyer will be merchantable,
of commercial standard and that the Goods will conform with (sic) the written
specifications and requirements of the Buyer. The Buyer shall have the right to
reject or return any or all items found not in conformity with such standards[,]
[s]pecifications or requirements. The Seller shall likewise indemnify and hold the
Buyer free and harmless from any and all damages incurred by the Buyer as a
result of the violation of these warranties.

The above warranties by the Seller shall also apply in case o[f] Goods consisting
of packaging materials or foodstuffs to be used as raw materials or ingredients in
the manufacture or processing of foodstuff in ensuring that they shall be fit for
human consumption and free from adulteration or foreign materials and shall
comply with all the relevant food and hygiene statutes and regulations both in the
Buyer's Country and in any other such relevant country as to composition,
processing (if any), packaging and description.

....

13. Arbitration [of] all disputes arising in connection with this Contract shall be
referred to an Arbitration Committee, in accordance with the Philippine
Arbitration Law, composed of three members: one (1) member to be chosen by
the Buyer; another member to be chosen by . the Seller[;] and the third member to
be chosen by the other two members. The decision of the Arbitration Committee
shall be binding upon the parties.13

From December 29, 2007 to January 22, 2009, Nutri-Asia purchased from Hygienic 457,128
plastic containers, for a total consideration of P9,737,674.62.14 Hygienic issued Sales
Invoices15 and Delivery Receipts16 to cover these transactions.17

On July 29, 2009, Hygienic filed a Complaint18 for sum of money against Nutri-Asia. It instituted
the case before the Regional Trial Court of Manila "pursuant to the stipulation of the parties as
 28

stated in the Sales Invoices submitting themselves to the jurisdiction of the Courts of the City of
Manila in any legal action arising out of their transaction[.]"19

In its Complaint, Hygienic alleged that based on the Purchase Orders and Sales Invoices, Nutri-
Asia agreed to pay Hygienic 30 days after every delivery of plastic containers. However, Nutri-
Asia refused to pay for the goods delivered from December 29, 2007 to January 22, 2009 after
their payment became due, despite oral and written demands from Hygienic.20

Hygienic prayed that Nutri-Asia be ordered to pay it the sum of: (1) P9,737,674.62 plus 12%
interest per annum as the total unpaid cost of the plastic containers; (2) 25% of P9,737,674.62 or
the amount to be collected from Nutri-Asia as attorney's fees; (3) P300,000.00 as their counsel's
acceptance fee; (4) P4,000.00 as their counsel's appearance fee for each and every appearance of
its counsel in court; and (5) costs of suit.21

In its Answer with Compulsory Counter-Claim,22 Nutri-Asia argued that the case should be
dismissed as Hygienic failed to comply with a condition precedent prior to its filing of the
Complaint.23 It claimed that under the Terms and Conditions of the Purchase Orders, Hygienic
should have first referred the matter to the Arbitration Committee.24

Nutri-Asia alleged that the venue was also improperly laid since the Regional Trial Court of
Manila was not the proper venue for the institution of Hygienic's personal action. The Complaint
should have been filed either before the trial courts of San Pedro, Laguna or Pasig City, where
the principal places of business of Hygienic and Nutri-Asia are located, respectively. The venue
of actions as stated in the Sales Invoices could not bind Nutri-Asia since it did not give its
express conformity to that stipulation.25

Nutri-Asia admitted purchasing the plastic containers, and receiving Hygienic's Demand Letter
and Final Demand Letter.26 However, it countered that Hygienic's claim "has been extinguished
on the ground of compensation."27

Nutri-Asia claimed that of the 457,128 plastic containers, it only used 327,046 for its products,
while the 130,082 pieces were unused.28 It narrated that since January 21, 2009, it received
numerous customer complaints on its UFC Banana Catsup products. Consumers complained that
the catsup smelled like detergent and soap and tasted like chemical, soap, plastic, and
rubber.29 After investigation, Nutri-Asia discovered that "the contaminated products were all
manufactured on December 15, 2008 and they [were] limited to UFC Banana Catsup in 2 kg.
plastic containers supplied by [Hygienic]."30 It was compelled to recall the contaminated
products.31

Nutri-Asia stated that in the meetings held on January 22 and 23, 2009, the officers of Hygienic
admitted and confirmed that it "used a different colorant which has a poor Low Density
Polyethylene (LDPE) carrier grade or poor bonding of the die/powder (sic) with the
carrier."32 The colorant bleeding in the containers contaminated Nutri-Asia's banana catsup.
Hygienic's officers allegedly assured Nutri-Asia representatives that Hygienic will shoulder the
expenses that would be incurred in the recall of the contaminated products. Its Sales and
Marketing Manager, Judith B. Lim, allegedly reassured the same in an electronic mail.33
 29

Nutri-Asia further stated that it sent a Letter dated May 6, 2009 to Hygienic, requesting for the
reimbursement of P36,304,451.27, representing the recall expenses, product and container costs,
freight and rental charges, and brand damage. This amount excludes Nutri-Asia's unrealized
income.34

Nutri-Asia disclosed that Hygienic, in its June 9, 2009 letter, stated that it could not assess Nutri-
Asia's claims as they were not accompanied by any supporting document. It also said that it
would consider the case closed if Nutri-Asia failed to provide supporting documents by the end
of June 11, 2009 office hours. Nutri-Asia replied that Hygienic had no basis to consider the
matter closed since the former did not abandon or waive its reimbursement claim. Nutri-Asia
requested for a meeting to further discuss the matter.35

Nutri-Asia alleged that it sent Hygienic the supporting documents on June 15, 2009. However,
Hygienic stated that the documents it received were insufficient to support Nutri-Asia's
reimbursement claim. Nutri-Asia insisted that the documents were sufficient, and again
suggested a meeting between the parties.36

After a re-computation of its claims, Nutri-Asia informed Hygienic that its request for
reimbursement decreased to P25,850,759.31. The new amount was due to the reduction of the
number of rejects and the reduction in freight charges, rental charges, and additional manpower
charges. The parties exchanged several correspondences, until Nutri-Asia received a copy of the
Complaint. As of September 4, 2009, Nutri-Asia's expenses increased to P26,405,553.95.37

In arguing that its obligation was extinguished by compensation, Nutri-Asia contended:

10.47 In the instant case, both plaintiff and defendant are bound principally and at the same
time a principal creditor of the other; both debts consist in a sum of money; both debts
are due, liquidated and demandable; and neither plaintiff [n]or defendant there be any
retention or controversy, commenced by third persons and communicated in due time to
the debtor.
10.48 By virtue of compensation, the plaintiff's obligation to defendant for the said losses and
damages in the sum of P26,405,553.95 is set off to the extent of P9,737,674.12 with the
defendant's alleged obligation to plaintiff in the sum of P9,737,674.12 resulting to the
extinguishment of defendant's alleged obligation to plaintiff.38
Due to compensation, Hygienic's unpaid obligation was reduced to Pl6,667,879.83.39 Nutri-Asia
added that Hygienic's cause of action against it had yet to accrue, and that Nutri-Asia was merely
holding the payment of P9,737,674.12 as a lien to ensure that Hygienic would pay the losses and
damages it incurred.40

Lastly, Nutri-Asia alleged that Hygienic did not come to comi with clean hands, and that it acted
in bad faith when it filed the Complaint.41 It claimed that the amount charged by Hygienic was
"excessive, iniquitious[,] and unconscionable."42

After Hygienic filed its Reply,43 Nutri-Asia filed an Omnibus Motion.44 Nutri-Asia reiterated its
arguments in its Answer, adding that its affirmative defenses could "be resolved on the basis of
the pleadings and the documents attached to the complaint without the need of further hearing."45
 30

Hygienic opposed Nutri-Asia's Omnibus Motion in its Consolidated or Joint Comment.46 It

countered that the allegation of noncompliance with a condition precedent was
incorrect.47 Moreover, its cause of action was anchored on "the sales invoices and delivery
receipts duly acknowledged by [Nutri-Asia] through its authorized representative and that these
deliveries made by [Hygienic] were not properly paid by [Nutri-Asia]."48

Hygienic claimed that even if the cause of action was based on all attached documents in the
Complaint, which included the Purchase Orders, the arbitration clause was "inoperative or
incapable of being performed."49 This is because of the conflict between the arbitration clause in
the Purchase Orders and the submission of parties to the Manila courts' jurisdiction in the Sales
Invoices. The arbitration clause was merely an offer from Nutri-Asia, which Hygienic rejected in
its Sales Invoices. To submit the dispute to arbitration, there should have been an unequivocal
agreement between the parties. This agreement was lacking in their case.50

In its May 24, 2010 Order,51 the Regional Trial Court Branch 46, Manila denied the Omnibus
Motion.52 It held that the venue was properly laid. It considered the signatures ofNutri-Asia's
representatives in the Sales Invoices as the company's concurrence that any dispute would be
raised before the courts of Manila.53

The trial court also found that the elements of compensation under the Civil Code were absent. It
held that Hygienic and Nutri-Asia were not creditors and debtors of each other. Only Hygienic
was the creditor, and only Nutri-Asia was the debtor. Nutri-Asia's Counter-Claim for damages
still had to be proven.54

The trial court likewise did not give credence to Nutri-Asia's allegation that Hygienic had no
cause of action against it.55 As to the allegation that Nutri-Asia's affirmative defenses could
already be resolved without going through trial, the trial court held that the issues Nutri-Asia
raised "must be heard in a full blown trial."56 It held:
It is the view of the court that the arguments presented are factual in nature. Trial therefore is
essential for the court to best appreciate the facts presented. It cannot be done by mere reading,
study and evaluation of the documents attached to the complaint and the arguments presented in
their respective motions and comments to prevent miscarriage of justice.

....

[Rule 16, Section 6 of the Rules of Civil Procedure] provides that it is discretionary upon the
court to conduct a preliminary hearing on the affirmative defenses as a ground for dismissal.

Considering therefore that it is discretionary upon the court to allow the hearing on special and
affirmative defenses[,] this court would rather conduct a full blown trial so it could evaluate the
respective issues raised by the parties.57
The trial court ruled that Nutri-Asia's Counter-Claim was permissive in nature; thus, it could not
acquire jurisdiction over the Counter-Claim unless the filing fees were paid.58

The dispositive portion of the trial court's May 24, 2010 Order read:
 31

Considering the above premises, the Omnibus Motion is hereby denied.

Defendant is directed to pay the appropriate docket fees on its permissive counterclaim within
thirty (30) days from receipt of this order.

Let the pre-trial of the above case be set on July 28, 2010 at 8:30 A.M.

Notify Attys. Malinao and Po of this order.

SO ORDERED.59
Nutri-Asia filed a Motion for Reconsideration.60 However, in its March 14, 2011 Joint
Order,61 the Regional Trial Court Branch 24, Manila denied the Motion. It also endorsed the case
for mediation to the Philippine Mediation Center and set a pre-trial conference on May 11, 2011,
in case mediation was unsuccessful.62

Thus, Nutri-Asia filed a Petition for Certiorari63 before the Court of Appeals.

In its January 13, 2012 Decision,64 the Court of Appeals granted the Petition.65 It held:
Here, the trial courts rendered the assailed Orders deferring a ruling on the issues of venue· and
compliance with a condition precedent, which is the arbitration clause. No trial was necessary to
resolve them. All the trial courts ought to know could be determined from the documents on
record, namely, the sales invoices, the purchase orders, the respective places of business of
petitioner and private respondent, and the jurisprudence on these issues. We cannot envision any
factual question, and the trial courts did not mention any, to be threshed out before they can rule
on these affirmative defenses. The error in refusing to resolve them violates so basic and
elemental precepts on what and how discretion is to be exercised. We have to set aside and
reverse these Orders.66 (Emphasis in the original)
The Court of Appeals also found that "the trial courts committed grave abuse of discretion in
allowing the complaint to stand and stay in Manila."67 It held that since the signature of Nutri-
Asia's employee in the Sales Invoices was only for the receipt of goods, Nutri-Asia did not agree
to be bound by the venue stipulation in the Sales Invoices. Meanwhile, Hygienic did not deny
that an arbitration clause was written on the Purchase Orders.68 Its representative even
"acknowledged its conformity to the purchase orders." 69 Since Hygienic "availed of the
advantages and benefits of the purchase orders when it acted on them[,]"70 it is thus estopped
from rebuffing the arbitration clause.71

The Court of Appeals held that Nutri-Asia should have submitted its Counter-Claim to
arbitration for resolution. Thus, whether the Counter Claim was permissive or compulsory was
irrelevant.72

The dispositive portion of the Court of Appeals January 13, 2012 Decision read:
ACCORDINGLY, the petition is GRANTED. The Orders dated May 24, 2010 and March 14,
2011 of the Regional Trial Court, Branches 46 and 24, in Civil Case No. 09-121849,
are REVERSED AND SET ASIDE. The complaint and the counterclaim in Civil Case No. 09-
121849 are DISMISSED WITHOUT PREJUDICE to referral of the disputes between
petitioner Nutri-Asia, Inc. and private respondent Hygienic Packaging Corporation to arbitration,
 32

as stipulated in the purchase orders. No costs.

SO ORDERED.73 (Emphasis in the original)

Hygienic filed a Motion for Reconsideration,74 but it was denied by the Court of Appeals in its
March 28, 2012 Resolution.75

On May 14, 2012, Hygienic filed a Petition for Review on Certiorari76 against Nutri-Asia before
this Court. It prayed that the Court of Appeals January 13, 2012 Decision and March 28, 2012
Resolution be reversed and set aside, and the trial court's May 24, 2010 Order and March 14,
2011 Joint Order be reinstated.77 Respondent filed its Comment78 on August 22, 2012, while
petitioner filed its Reply79 on September 4, 2013.

In its October 7, 2013 Resolution,80 this Court gave due course to the Petition and required the
parties to submit their respective memoranda.81 Petitioner filed its Memorandum of
Arguments82 on December 12, 2013, while respondent filed its Memorandum83 on December 19,
2013.

Petitioner argues that the decision of the Court of Appeals to dismiss the Complaint and deny its
Motion for Reconsideration is improper. It claims that the Court of Appeals did not discuss the
issues it raised in its pleadings.84 Moreover, if the arbitration clause was found to be valid, the
Court of Appeals should have "referred the matter to arbitration and suspended the proceedings
of the case."85

Petitioner maintains that the arbitration clause lacks the elements of a valid arbitration
agreement. Although present in writing, it was not properly subscribed, and the person who
signed the Purchase Orders was only a messenger, not petitioner's authorized agent. Thus, the
arbitration clause cannot bind petitioner.86

Petitioner reiterates that the Purchase Orders constitute respondent's offer to petitioner to enter
into a contract with it. Meanwhile, the Sales Invoices constitute petitioner's counter-offer
rejecting the stipulation clause.87 Since the parties did not agree on the arbitration agreement, the
arbitration clause is "inoperative and incapable of being performed, if not totally null and void."88

Petitioner also insists that the venue was properly laid when it filed the Complaint before the trial
court in Manila. It claims that when respondent accepted the Sales Invoices without protest, it
adhered to the contract, which included the venue stipulation. Petitioner points out that the
person who signed the Sales Invoices was a high-ranking officer of respondent, not a mere
messenger. By signing the Sales Invoices, respondent's representative bound the company to the
venue stipulation.89

Petitioner asserts that its Motion for Reconsideration and Petition are not prohibited pleadings. It
filed the Motion to question both its Complaint's dismissal and the case's supposed referral to
arbitration. Thus, the Motion does not fall under Rule 4.6 of the Special Rules of Court on
Alternative Dispute Resolution. There is no basis for this Court to deny outright the Petition,
which assails the Court of Appeals Resolution denying the Motion.90
 33

Petitioner also argues it raised purely questions of law:91

The main contention of the petitioner is that the alleged arbitration agreement between the parties
of this case did not comply with the requisites provided in the Rules. This is certainly not a
question of fact but rather, a question of law, as it necessitates the interpretation and application
of Section 4 of [Republic Act No.] 876 to the attendant facts of the case.

....

Contrary to the position of the respondent, the specific issue on whether or not the messenger-
signatory had the authority to bind petitioner Nutri-Asia with respect to the Arbitration Clause is
not at all a question of fact. [Neither the] identity nor the rank of the signatory was not disputed
or put in question so as to require further reception of evidence and conduction of trial. The truth
or falsehood of the incidents related to the act of signing of the mere messenger is not disputed
by the respondent. The issue is only with respect to his very authority to bind petitioner Hygienic
as to the alleged agreement on arbitration. In short, the issue is limited to whether or not the
messenger acted as a lawful agent of the petitioner - and this is undeniably a pure question of
law.

The same rationale applies on the issue raised by the petitioner as to whether or not the document
pe1iaining to the arbitration clause was properly subscribed.

... This specific issue merely concerns the correct application of law or jurisprudence as to the
construction of the term "subscribed" and does not require the examination of the probative value
of evidence pertaining to the document containing the arbitration clause.92 (Emphasis in the
original)
Lastly, assuming that petitioner raised factual issues, it argues that these issues fall under the
exceptions provided by law and jurisprudence; 93 specifically, when the Court of Appeals
rendered its Decision: (1) "based on a misapprehension of facts"; 94 and (2) its findings were
"contrary to those of the trial court[.]"95

Respondent counters that petitioner's Motion for Reconsideration and Petition for Review should
have been dismissed outright under Rule 4.6 of the Special Rules of Court on Alternative
Dispute Resolution.96 Since the Court of Appeals referred the dispute to arbitration, it is
"immediately executory - not subject to a motion for reconsideration, appeal[,] or petition for
certiorari[.]"97

Respondent argues that the Court of Appeals correctly dismissed the case since the parties failed
to submit the case to arbitration. In any case, since it already found that the venue was
improperly laid, the Court of Appeals did not err in dismissing the case. 98

Respondent further claims that the Petition raises questions of fact. 99 It states that petitioner, in
filing the Petition, wants this Court "to review the evidence on record and ascertain the authority
of the persons who signed the Purchase Orders, as well as the Sales Invoices." 100 This Court will
then have to examine these facts:
(a) The identities of the persons who signed the Purchase Orders and the Sales Invoices;
 34

(b) The positions of the persons in HYGIENIC [NUTRI-ASIA never stipulated on the
positions of the said persons] who signed the Purchase Orders;
(c) The positions of the persons who ostensibly signed the Sales Invoices;
(d) The duties and functions of the persons who signed the Purchase Orders and the Sales
Invoices;
(e) Whether the persons who signed the Purchase Orders had the authority to act on behalf of
HYGIENIC [To be clear, NUTRI-ASIA never admitted that the persons were not
authorized to act on behalf of HYGIENIC];
(f) Whether the persons who signed the Sales Invoices had the authority to act on behalf of
NUTRI-ASIA [Again, NUTRI-ASIA never admitted the alleged authority of the persons
who signed the Sales Invoices]; and
[g] The circumstances surrounding the signing of the Purchase Orders and the Sales
Invoices.101
Respondent adds that the conflicting findings of the trial court and the Court of Appeals on the
issue of arbitration do not suffice to allow the Petition.102 It highlights that in resolving the case,
the question is "whether the Court of Appeals correctly determined the presence of grave abuse
of discretion in the ruling of RTC-Manila[.]"103

Contrary to petitioner's assertion, respondent contends that the arbitration clause is operative and
capable of being performed. Aside from being in writing, both parties subscribed to the Terms
and Conditions of the Purchase Orders.104 Petitioner's acceptance of the Terms and Conditions,
which included the arbitration clause, is "manifested by its issuance of the corresponding Sales
Invoices, which made reference to the relevant Purchase Orders."105 By reflecting in its Sales
Invoices the serial numbers of respondent's Purchase Orders, petitioner "effectively incorporated
the Purchase Order and its contents into the Sales Invoice, including the arbitration
clause."106 For failing to refer the case to arbitration - a condition precedent before taking judicial
action-the Court of Appeals correctly dismissed the case.107

Finally, respondent maintains that "the Sales Invoices and the venue stipulation therein did not
constitute a rejection of the arbitration clause in the Purchase Orders."108 It claims that the
persons who signed the Sales Invoices were not respondent's employees, but of a third party
contractor for their logistics operations.109 It notes that above the signature line of the Sales
Invoices, the phrase "[r]eceived the above goods in good order and condition"110 is written. The
contractor's employees only signed the Sales Invoices to signify that they received the deliveries.
Their signatures cannot bind respondent to the venue stipulation. Assuming that they were
authorized by respondent, the venue stipulation cannot supersede the arbitration clause in the
Purchase Orders.111 The Sales Invoices' venue stipulation "does not authorize either party to do
away with arbitration before proceeding to the courts to seek relief."112

The sole issue for this Court's resolution is whether or not the action for collection of sum of
money was properly filed.

Petitioner and respondent differ as to where their dispute should be brought for resolution. On
the one hand, petitioner contends that the venue stipulation in the Sales Invoices should be
 35

enforced. On the other hand, respondent asserts that the arbitration clause in the Purchase Orders
should be carried out.

This Court cannot subscribe to either contention.

Parties are allowed to constitute any stipulation on the venue or mode of dispute resolution as
part of their freedom to contract under Article 1306 of the Civil Code of the Philippines, which
provides:
ARTICLE 1306. The contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.
Here, however, the records lack any written contract of sale containing the specific terms and
conditions agreed upon by the parties. The parties failed to provide evidence of any contract,
which could have contained stipulations on the venue of dispute resolution. Nonetheless,
petitioner and respondent both claim that the Sales Invoices and the Purchase Orders,
respectively, contained a stipulation on where to raise issues on any conflict regarding the sale of
plastic containers. Each party also insists that the other party accepted the venue stipulation in
the Sales Invoices or the Purchase Orders when its representative signed them.

Upon examination of the Sales Invoices and the Purchase Orders, this Court cannot consider the
documents as contracts that would bind the parties as to the venue of dispute resolution.

A closer look at the Sales Invoices issued by petitioner reveals that above the signature of
respondent's representative is the phrase, "Received the above goods in good order and
condition."113 Clearly, the purpose of respondent's representative in signing the Sales Invoices is
merely to acknowledge that he or she has received the plastic containers in good condition. He or
she did not affix his or her signature in any other capacity except as the recipient of the goods.
To extend the effect of the signature by including the venue stipulation would be to stretch the
intention of the signatory beyond his or her objective. This Court, then, cannot bind respondent
to the other stipulations in the Sales Invoices.

A scrutiny of the Purchase Orders issued by respondent also reveals that above the signature of
petitioner's representative is the phrase "Acknowledged By (Supplier)."114 Since the Purchase
Orders indicated how many pieces of plastic containers respondent wanted to order from
petitioner, the signatory merely affixed his or her signature to acknowledge respondent's order.
Moreover, the Purchase Orders included a note stating that the "[Purchase Order] must be DULY
acknowledged to facilitate payment."115

Thus, it was necessary for petitioner's representative to sign the document for the processing of
payment. The act of signing the Purchase Orders, then, was limited to acknowledging
respondent's order and facilitating the payment of the goods to be delivered. It did not bind
petitioner to the terms and conditions in the Purchase Orders, which included the arbitration
clause.

Petitioner and respondent may have entered into a contract of sale with respect to petitioner's
merchandise. However, the case records do not show that they have a contract in relation to the
 36

venue of any civil action arising from their business transaction.

Cathay Metal Corporation v. Laguna West Multi-Purpose Cooperative, Inc.116 provides, "[f]or

there to be a contract, there must be a meeting of the minds between the parties."117 Here, no
evidence shows that petitioner and respondent had a meeting of minds and agreed to submit any
future issue either to the trial court or to arbitration.

Since there is no contractual stipulation that can be enforced on the venue of dispute resolution,
the venue of petitioner's personal action will be governed by the 1997 Revised Rules of Civil
Procedure. Rule 4 provides:
RULE 4
Venue of Actions

SECTION 1. Venue of Real Actions. - Actions affecting title to or possession of real property, or
interest therein, shall be commenced and tried in the proper court which has jurisdiction over the
area wherein the real property involved, or a portion thereof, is situated.

Forcible entry and detainer actions shall be commenced and tried in the Municipal Trial Court of
the municipality or city wherein the real property involved, or a portion thereof, is situated.

SECTION 2. Venue of Personal Actions. - All other actions may be commenced and tried where
the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the
principal defendants resides, or in the case of a non-resident defendant where he may be found,
at the election of the plaintiff.

SECTION 3. Venue of Actions Against Nonresidents. - If any of the defendants does not reside
and is not found in the Philippines, and the action affects the personal status of the plaintiff, or
any property of said defendant located in the Philippines, the action may be commenced and
tried in the court of the place where the plaintiff resides, or where the property or any portion
thereof is situated or found.

SECTION 4. When Rule not Applicable. - This Rule shall not apply -

(a) In those cases where a specific rule or law provides otherwise; or

(b) Where the parties have validly agreed in writing before the filing of the action on the
exclusive venue thereof.
In City of Lapu-Lapu v. Philippine Economic Zone Authority:118
[V]enue is "the place of trial or geographical location in which an action or proceeding should be
brought." In civil cases, venue is a matter of procedural law. A party's objections to venue must
be brought at the earliest opportunity either in a motion to dismiss or in the answer; otherwise the
objection shall be deemed waived. When the venue of a civil action is improperly laid, the court
cannot motu proprio dismiss the case.

The venue of an action depends on whether the action is a real or personal action. Should the
action affect title to or possession of real property, or interest therein, it is a real action. The
 37

action should be filed in the proper court which has jurisdiction over the area wherein the real
property involved, or a portion thereof, is situated. If the action is a personal action, the action
shall be filed with the proper court where the plaintiff or any of the principal plaintiffs resides,
or where the defendant or any of the principal defendants resides, or in the case of a non-resident
defendant where he may be found, at the election of the plaintiff.119 (Emphasis supplied, citations
omitted)
It has been consistently held that an action for collection of sum of money is a personal
action.120 Taking into account that no exception can be applied in this case, the venue, then, is
"where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the
principal defendants resides, ... at the election of the plaintiff."121 For a corporation, its residence
is considered "the place where its principal office is located as stated in its Articles of
Incorporation."122

In its Complaint, petitioner stated that its principal place of business is on San Vicente Road
beside South Superhighway, San Pedro, Laguna.123 Meanwhile, respondent admitted in its
Answer that its principal office is at 12/F Centerpoint Building, Garnet Road corner Julia Vargas
Avenue, Ortigas Center, Pasig City.124 Considering that the amount petitioner claims falls within
the jurisdiction of the Regional Trial Court,125 petitioner may file its Complaint for sum of money
either in the Regional Trial Court of San Pedro, Laguna or in the Regional Trial Court of Pasig
City.

Petitioner's erroneous belief on the applicability of the venue stipulation in the Sales Invoices led
it to file an action before the Regional Trial Court of Manila. This error is fatal to petitioner's
case.

One (1) of the grounds for dismissal of an action under Rule 16, Section 1126 of the 1997 Revised
Rules of Civil Procedure is when the venue is improperly laid. Although respondent did not file a
Motion to Dismiss on this ground, it cited the improper venue as one (1) of the affirmative
defenses in its Answer:127
9. The venue of the instant complaint is improperly laid.
9.1 The instant complaint for collection of a sum of money, a personal action was filed before
the Regional Trial Court of the City of Manila which is not the proper venue for the instant
complaint.
....  
9.3 In paragraphs 1 and 2 of the instant complaint, the plaintiff had made an admission on the
pleading that its principal place of business is located at San Vicente Road beside South
Superhighway, San Pedro, [Laguna,] while the principal place of business of defendant is
located at 12/F The Centerpoint Building, Garnet Road corner Julia Vargas Avenue,
Ortigas Center, Pasig City. With this admission on the pleading, it is clear that the instant
complaint should have been filed before the Regional Trial Court of San Pedro, Laguna,
where the plaintiff has its principal place of business or before the Regional Trial Court of
Pasig City, Laguna where the defendant has its principal place of business.
9.4 The parties did not validly agree in writing before the filing of the action that the Courts of
the City of Manila shall be the exclusive venue thereof.
 38

9.5 The alleged stipulation in the Sales Invoice that the parties submit themselves to
jurisdiction of the Courts of the City of Manila in any legal action out of the transaction
between the parties cannot and should not bind defendant in the absence of the express
conformity by the defendant. The defendant has never signed the said Sales Invoice to
signify its conformity to the said stipulation regarding venue of actions. 128 (Emphasis in the
original)
This Court finds that the Court of Appeals is partly correct in ruling that the trial court
committed grave abuse of discretion in denying respondent's Omnibus Motion. The assailed
Court of Appeals January 13, 2012 Decision held:
On the issue of venue, the trial courts committed grave abuse of discretion in allowing the
complaint to stand and stay in Manila. The sales invoices, if viewed to be a contract on venue
stipulation, were not signed by petitioner's agent to be bound by such stipulation. The signature
has to do with the receipt of the purchased goods "in good order and condition." Petitioner did
not, therefore, agree to be restricted to a venue in Manila and was never obliged to observe this
unilateral statement in the sales invoices.129 (Citation omitted)
However, contrary to the Court of Appeals' finding on the validity of the arbitration clause, this
Court cannot give the stipulation any effect as discussed earlier.

This Court reminds litigants that while the rules on venue are for the convenience of plaintiffs,
these rules do not give them unbounded freedom to file their cases wherever they may please:130
[T]he rules on venue, like the other procedural rules, are designed to insure a just and orderly
administration of justice or the impartial and even-handed determination of every action and
proceeding. Obviously, this objective will not be attained if the plaintiff is given unrestricted
freedom to choose the court where he may file his complaint or petition. The choice of venue
should not be left to the plaintiff's whim or caprice. He [or she] may be impelled by some ulterior
motivation in choosing to file a case in a particular court even if not allowed by the rules on
venue.131 (Citation omitted)
WHEREFORE, premises considered, the Court of Appeals January 13, 2012 Decision and
March 28, 2012 Resolution in CA-G.R. SP No. 119511 are AFFIRMED insofar as they reversed
and set aside the May 24, 2010 Order and March 14, 2011 Joint Order of the Regional Trial
Court, Branches 46 and 24, in Civil Case No. 09-121849.

However, the rulings of the Court of Appeals dismissing the Complaint and the Counter-Claim
in Civil Case No. 09-121849 without prejudice to referral of the disputes to arbitration
are REVERSED and SET ASIDE.

The Complaint and the Counter-Claim in Civil Case No. 09-121849 are DISMISSED
WITHOUT PREJUDICE to the refiling of the same claims before the proper court.

SO ORDERED.
 39

G.R. No. 194262, February 28, 2018

BOBIE ROSE D. V. FRIAS, AS REPRESENTED BY MARIE REGINE F.

FUJITA, Petitioner, v. ROLANDO F. ALCAYDE, Respondent.

"Due process dictates that jurisdiction over the person of a defendant can only be acquired by
the courts after a strict compliance with the rules on the proper service of summons."1

Challenged in this appeal2 is the Decision3 dated May 27, 2010 and Resolution4 dated October
22, 2010 of the Court of Appeals (CA) in CA-G.R. SP No. 109824.

The facts are as follows:

On December 5, 2003, petitioner Bobie Rose D.V. Frias, as lessor and respondent Rolando
Alcayde, as lessee, entered into a Contract of Lease involving a residential house and lot (subject
property) located at No. 589 Batangas East, Ayala Alabang Village, Muntinlupa City, for a
period of one year, starting on December 5, 2003 up until December 4, 2004, with a monthly
rental of Thirty Thousand Pesos (P30,000). Respondent refused to perform any of his contractual
obligations, which had accumulated for 24 months in rental arrearages as of December 2005.5

This prompted petitioner to file a Complaint for Unlawful Detainer,6 docketed as CV Case No.
6040, with the Metropolitan Trial Court (MeTC), Muntinlupa City, Branch 80, against the
respondent.7 As per the Process Server's Return8 dated February 14, 2006, the process server,
Tobias N. Abellano (Mr. Abellano) tried to personally serve the summons to respondent on
January 14 and 22, 2006, but to no avail. Through substituted service, summons was served upon
respondent's caretaker, May Ann Fortiles (Ms. Fortiles).

On July 26, 2006, the MeTC rendered a Decision,9 in favor of the petitioner and ordered
respondent to vacate the subject premises and to pay the petitioner the accrued rentals at 12%
legal interest, plus P10,000 in attorney's fees. The dispositive portion reads, thus:

WHEREFORE, judgment is hereby rendered in favor of the [petitioner] and against [respondent]
ordering:

1. The [respondent] and all persons claiming right over him to immediately vacate the subject
premises located at No. 589 Batangas East, Ayala Alabang Village, Muntinlupa City and
peacefully surrender possession thereof to the [petitioner];

2. The [respondent] to pay the accrued rental arrearages from December 2003 up to the time he
vacates the property in the amount of THIRTY THOUSAND PESOS (Php30,000.00) per month
with twelve (12%) percent legal interest; and
 40

3. The [respondent] to pay the [petitioner] the amount of TEN THOUSAND PESOS
(Php10,000.00) as reasonable attorney's fees and to pay the cost of the suit.

SO ORDERED.10
On July 4, 2007, the MeTC issued an Order,11 granting petitioner's Motion to execute the
Decision dated July 26, 2006, and denying respondent's Omnibus Motion thereto.

On July 25, 2007, respondent filed a Petition for Annulment of Judgment with Prayer for
Issuance of TRO and/or Injunction,12 with the Regional Trial Court (RTC), Muntinlupa City,
Branch 203. Respondent averred that the MeTC's July 26, 2006 Decision does not bind him since
the court did not acquire jurisdiction over his person. Respondent likewise averred that the
MeTC lacked jurisdiction over the case for two reasons: (1) petitioners' complaint has no cause
of action for failure to make a prior demand to pay and to vacate; and (2) petitioner's non-referral
of the case before the barangay.13

A copy of the petition for annulment of judgment was allegedly served to the petitioner. Based
on the Officer's Return14 dated July 27, 2007, Sheriff IV Jocelyn S. Tolentino (Sheriff Tolentino)
caused the "service of a Notice of Raffle and Summons together with a copy of the complaints
and its annexes" to the petitioner, through Sally Gonzales (Ms. Gonzales), the secretary of
petitioner's counsel, Atty. Daniel S. Frias (Atty. Frias).

On September 7, 2007, the RTC, through Judge Pedro M. Sabundayo, Jr. issued an
Order,15 containing therein the manifestation of respondent that he is withdrawing his application
for a TRO and is now pursuing the main case for annulment of judgment.

On September 25, 2007, respondent filed an Ex-Parte Motion,16 to declare petitioner in default,
on the ground that despite her receipt of the summons, she has yet to file any pleading.17

On October 3, 2007, the petitioner filed a Special Appearance/Submission (Jurisdictional

Infirmity Raised),18 alleging among others, that respondent's Motion to Revive Relief re:
Issuance of a TRO merits neither judicial cognizance nor consideration.19

On October 30, 2007 the MeTC issued a Writ of Execution,20 for the purpose of implementing its
July 26, 2006 Decision.

On November 5, 2007, Sheriff III Armando S. Camacho, sent a Notice to Pay and to Vacate21 to
respondent. Attached to the notice was the October 30, 2007 Writ of Execution.

In the RTC's Order22 dated November 15, 2007, the RTC issued a TRO enjoining the MeTC
from implementing its July 26, 2006 Decision, and setting the hearing for respondent's prayer for
writ of preliminary injunction.23

On November 29, 2007, petitioner, through her representative, Marie Regine F. Fujita (Ms.
Fujita), filed a Preliminary Submission to Dismiss Petition - Special Appearance Raising
Jurisdictional Issues (Preliminary. Submission), on the ground of lack of jurisdiction over her
 41

person.24 She pointed out that the defect in the service of summons is immediately apparent on
the Officer's Return, since it did not indicate the impossibility of a personal service within a
reasonable time; it did not specify the efforts exerted by Sheriff Tolentino to locate the
petitioner; and it did not certify that the person in the office who received the summons in
petitioner's behalf was one with whom the petitioner had a relation of confidence ensuring that
the latter would receive or would be notified of the summons issued in her name.25

On December 3, 2007, the RTC issued an Order,26 granting respondent's prayer for the issuance
of a writ of preliminary injunction, to enjoin the MeTC's July 26, 2006 Decision. The RTC ruled
that although Atty. Frias maintained his. special appearance, he actively participated in the
proceedings by attending the summary hearing in the prayer for the issuance of the TRO on
November 9, 2007 and November 20, 2007. The dispositive portion reads, thus:
WHEREFORE, premises considered, the Court grants [respondent's prayer for the issuance of a
preliminary injunction. Accordingly, the Court enjoins respondent and the Court Sheriff of
Metropolitan Trial Court, Branch 80, Muntinlupa City and or his deputy or duly authorized
representative(s) from implementing or enforcing the decision dated July 26, 2006 in Civil Case
No. 6040 during the pendency of this action.

SO ORDERED.27
On July 25, 2008, the law office of Real Brotarlo & Real entered its appearance as collaborating
counsel for the petitioner.28

On August 11, 2008, petitioner filed a Manifestation and Omnibus Motion to Dismiss Petition
for Annulment of Judgment and to Set Aside and/or Reconsider29 the RTC's December 3, 2007
Order, reiterating in substance the November 29, 2007 Preliminary Submission. Petitioner
alleged, among others, that the RTC's December 3, 2007 Order violated the well-settled rule that
a writ of injunction is not proper where its purpose is to take property out of the possession or
control of one person and place the same in the hands of another where title has not been clearly
established by law.30

On August 22, 2008, the RTC issued an Order,31 granting petitioner's November 29, 2007
Preliminary Submission. The RTC ruled that the summons and copies of the petition and its
attachments were not duly served upon petitioner, either personally or through substituted
service of summons strictly in accordance with the Rules. The RTC continued that there is no
proof that Ms. Gonzales or Atty. Frias was authorized by the petitioner to receive summons on
her behalf. Since the face of the Officer's Return is patently defective, the RTC ruled that the
presumption of regularity of performance of duty under the Rules does not apply. The RTC, thus,
ordered the dismissal of the petition for annulment of judgment.32 The dispositive portion of
which reads, thus:
WHEREFORE, premises considered, the preliminary submission to dismiss petition and
Omnibus Motion filed by [petitioner] Bobbie Rose DV Frias are granted and the petition for
annulment of judgment filed by Rolando Alcayde is DISMISSED. The Order of the court dated
December 3, 2007 granting the issuance of a preliminary injunction is recalled and set aside
considering that since the court has not acquired jurisdiction over the person of the [petitioner],
all the proceedings in this case are without any force and effect.
SO ORDERED.33
 42

On September 4, 2008, respondent filed a Manifestation and Motion, 34 praying for the recall of
the August 22, 2008 Order and/or to maintain the status quo.

On September 15, 2008, respondent filed a Motion for Reconsideration35 of the August 22, 2008
Order.

On October 6, 2008, petitioner filed a Consolidated Opposition,36 alleging that the RTC held in
abeyance the resolution of her November 29, 2007 Preliminary Submission, for eight (8) months
until it issued its August 22, 2008 Order. She likewise alleged that there was nothing in the
RTC's December 3, 2007 Order that categorically denied the November 29, 2007 Preliminary
Submission.37

On November 3, 2008, the RTC, through Judge Juanita T. Guerrero, issued an Order,38 granting
respondent's Motion for Reconsideration, on the ground that he was not given an opportunity to
file his Comment or Opposition to petitioner's August 11, 2008 Manifestation and Omnibus
Motion. The dispositive portion of the order reads, thus:

IN VIEW THEREOF, the Motion for Reconsideration is hereby GRANTED. The Order of the
Court dated August 22, 2008 is recalled and set aside. The [respondent] is given fifteen (15) days
from receipt of this order to file his Comment or Opposition or reiterates the one he filed, on the
Manifestation and Omnibus Motion (i.) to Dismiss Petition for Annulment of Judgment (ii.) to
Set Aside and/or Reconsider the Order dated December 3, 2007 and [petitioner] Bobbie Rose
D.V. Frias through his counsel is given fifteen (15) days therefrom to file his Reply if necessary.
Thereafter, said Manifestation and Omnibus Motion is considered submitted for resolution.

SO ORDERED.39
On November 17, 2008, respondent filed a Manifestation (in compliance with the Order dated
November 3, 2008) and Supplement,40 substantially reiterating his September 15, 2008 Motion
for Reconsideration.

On November 28, 2008, petitioner filed a Manifestation and Reply (to Alcayde's Comment dated
August 19, 2008 and Supplement dated November 12, 2008).41

On February 2, 2009, the RTC issued an Order42 denying petitioner's. August 11, 2008
Manifestation and Omnibus Motion, the dispositive portion of which reads, thus:
WHEREFORE, finding no reason to deviate from the Order of the Court dated December 3,
2007, the same is hereby maintained with modification that the Writ of Preliminary Injunction
shall be issued upon filing of a bond in the amount of Php500,000.00 by the [respondent]. For
emphasis, the Motion to Dismiss this petition for lack of jurisdiction is hereby DENIED.

The petitioner BOBIE ROSE D. FRIAS is directed to file his ANSWER within a non-extendible
period of ten (10) days from receipt of this Order.

SO ORDERED.43
On February 20, 2009, petitioner moved for the reconsideration44 of the RTC's February 2, 2009
Order, but the same was denied in the RTC's Order45 dated June 5, 2009.
 43

On July 15, 2009, respondent filed an Ex-Parte Motion for Default,46 to declare petitioner in
default for the latter's failure to comply with the RTC's February 2, 2009 order requiring her to
file an answer to the Petition for Annulment of Judgment.

Aggrieved, petitioner filed a Petition for Certiorari47 with the CA, to which respondent answered
by way of a Comment.48 After the filing of petitioner's Reply,49 the CA on May 27, 2010
rendered a Decision,50 denying the petitioner's Petition for Certiorari for lack of merit.

The Motion for Reconsideration,51 having been denied by the CA in its Resolution dated October
22, 2010,52 petitioner filed this Petition for Review on Certiorari, raising the following issues:
I. WHETHER OR NOT THE PUBLIC RESPONDENT COURT OF AP[P]EALS ERRED IN
NOT HOLDING THAT THE PAIRING JUDGE OF RTC 203 COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN NOT
DISMISSING [RESPONDENT'S PETITION FOR ANNULMENT OF JUDGMENT ON A
GROUND THAT THE RTC 203 DID NOT ACQUIRE JURISDICTION OVER THE
PETITIONER.

II. WHETHER OR NOT THE PUBLIC RESPONDENT COURT OF APPEALS GRAVELY

ERRED IN HOLDING THAT THE RTC 203 NEED NOT ACQUIRE JURISDICTION OVER
THE PETITIONER AS LONG AS SAID RTC 203 HAS ACQUIRED JURISDICTION OVER
THE RES.

III. WHETHER OR NOT THE PUBLIC RESPONDENT COURT OF APPEALS ERRED IN

NOT HOLDING THAT THE PAIRING JUDGE OF RTC 203 COMMITTED GRAVE ABUSE
OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN NOT
SETTING ASIDE THE ORDER DATED DECEMBER 3, 2007 OF THE RTC ENJOINING
PETITIONER AND SHERIFF OF THE METROPOLITAN TRIAL COURT, BRANCH 80 OF
MUNTINLUPA CITY FROM IMPLEMENTING ITS FINAL AND EXECUTORY DECISION
DATED JULY 26, 2006.53
On the one hand, petitioner contends that the CA erred in not dismissing respondent's petition for
annulment of judgment on the ground of lack of jurisdiction over her person. She maintains that
since an annulment of judgment is a personal action, it is necessary for the RTC to acquire
jurisdiction over her person. She likewise insists that the CA erred in not setting aside the RTC's
Decision dated December 3, 2007.

On the other hand, the CA ruled that a petition for annulment of judgment is not an action
in personam, thus, the court need not acquire jurisdiction over the person of the petitioner, as
long as it has acquired jurisdiction over the res, which in this case was through the filing of the
petition for annulment of judgment with the RTC. This pronouncement was adopted by the
respondent in his comment to the instant petition.

The petition is meritorious.

It is elementary that courts acquire jurisdiction over the plaintiff or petitioner once the complaint
 44

or petition is filed. On the other hand, there are two ways through which jurisdiction over the
defendant or respondent is acquired through coercive process - either through the service of
summons upon them or through their voluntary appearance in court.

The function of summons in court actions

In the case of Guiguinto Credit Cooperative, Inc. (GUCCI) v. Torres,54 We discussed the
function of summons in court actions, in this wise —
Fundamentally, the service of summons is intended to give official notice to the defendant or
respondent that an action has been commenced against it. The defendant or respondent is thus
put on guard as to the demands of the plaintiff as stated in the complaint. The service of
summons upon the defendant becomes an important element in the operation of a court's
jurisdiction upon a party to a suit, as service of summons upon the defendant is the means by
which the court acquires jurisdiction over his person. Without service of summons, or when
summons are improperly made, both the trial and the judgment, being in violation of due
process, are null and void, unless the defendant waives the service of summons by voluntarily
appearing and answering the suit.

When a defendant voluntarily appears, he is deemed to have submitted himself to the jurisdiction
of the court. This is not, however, always the case. Admittedly, and without subjecting himself to
the court's jurisdiction, the defendant in an action can, by special appearance object to the
court's assumption on the ground of lack of jurisdiction. If he so wishes to assert this defense, he
must do so seasonably by motion for the purpose of objecting to the jurisdiction of the court,
otherwise, he shall be deemed to have submitted himself to that jurisdiction.55
Elsewhere, We declared that jurisdiction of the court over the person of the defendant or
respondent cannot be acquired notwithstanding his knowledge of the pendency of a case against
him unless he was validly served with summons. Such is the important role a valid service of
summons plays in court actions.56

Nature of a petition for annulment of judgment for purposes of service of summons

For a proper perspective, it is crucial to underscore the necessity of determining first whether the
action subject of this appeal is in personam, in rem, or quasi in rem because the rules on service
of summons under Rule 14 apply according to the nature of the action.57

An action in personam is a proceeding to enforce personal rights and obligations brought against
the person and is based on the jurisdiction of the person, although it may involve his right to, or
the exercise of ownership of, specific property, or seek to compel him to control or dispose of it
in accordance with the mandate of the court. Its purpose is to impose, through the judgment of a
court, some responsibility or liability directly upon the person of the defendant. Of this character
are suits to compel a defendant to specifically perform some act or actions to fasten a pecuniary
liability on him.58 The following are some of the examples of actions in personam: action for
collection of sum of money and damages; action for unlawful detainer or forcible entry; action
for specific performance; action to enforce a foreign judgment in a complaint for a breach of
contract.
 45

Actions in rem are actions against the thing itself. They are binding upon the whole world.59 The
phrase, "against the thing," to describe in rem. actions is a metaphor. It is not the "thing" that is
the party to an in rem action; only legal or natural persons may be parties even in in
rem actions.60 The following are some of the examples of actions in rem: petitions directed
against the "thing" itself or the res which concerns the status of a person, like a petition for
adoption, correction of entries in the birth certificate; or annulment of marriage; nullity of
marriage; petition to establish illegitimate filiation; registration of land under the Torrens system;
and forfeiture proceedings.

A proceeding quasi in rem is one brought against persons seeking to subject the property of such
persons to the discharge of the claims assailed.61 In an action quasi in rem, an individual is
named as defendant and the purpose of the proceeding is to subject his interests therein to the
obligation or loan burdening the property.62 In an action quasi in rem, an individual is named as
defendant. But, unlike suits in rem, a quasi in rem judgment is conclusive only between the
parties.63 The following are some of the examples of actions quasi in rem: suits to quiet title;
actions for foreclosure; and attachment proceedings.

In actions in personam, the judgment is for or against a person directly. Jurisdiction over the
parties is required in actions in personam because they seek to impose personal responsibility or
liability upon a person.64 "In a proceeding in rem or quasi in rem, jurisdiction over the person of
the defendant is not a prerequisite to confer jurisdiction on the court, provided that the latter has
jurisdiction over the res. Jurisdiction over the res is acquired either (a) by the seizure of the
property under legal process, whereby it is brought into actual custody of the law; or (b) as a
result of the institution of legal proceedings, in which the power of the court is recognized and
made effective. "65

Here, respondent filed a petition to annul the MeTC's July 26, 2006 Decision, which ordered him
to vacate the premises of the subject property and to pay the petitioner the accrued rentals
thereon, in violation of the parties' lease contract.

Annulment of judgment, as provided for in Rule 47, is based only on the grounds of extrinsic
fraud and lack of jurisdiction. Jurisprudence, however, recognizes lack ,of due process as an
additional ground to annul a judgment.66 It is a recourse that presupposes the filing of a separate
and original action for the purpose of annulling or avoiding a decision in another case.
Annulment is a remedy in law independent of the case where the judgment sought to be annulled
is rendered.67 It is unlike a motion for reconsideration, appeal or even a petition for relief from
judgment, because annulment is not a continuation or progression of the same case, as in fact the
case it seeks to annul is already final and executory. Rather, it is an extraordinary remedy that is
equitable in character and is permitted only in exceptional cases.68

Annulment of judgment involves the exercise of original jurisdiction, as expressly conferred on

the CA by Batas Pambansa Bilang (BP Blg.) 129, Section 9(2). It also implies power by a
superior court over a subordinate one, as provided for in Rule 47, wherein the appellate court
may annul a decision of the regional trial court, or the latter court may annul a decision of the
municipal or metropolitan trial court.69
 46

For purposes of summons, this Court holds that the nature of a petition for annulment of
judgment is in personam, on the basis of the following reasons:

First, a petition for annulment of judgment is an original action, which is separate, distinct and
independent of the case where the judgment sought to be annulled is rendered. It is not a
continuation or progression of the same case. Thus, regardless of the nature of the original action
in the decision sought to be annulled, be it in personam, in rem or quasi in rein, the respondent
should be duly notified of the petition seeking to annul the court's decision over which the
respondent has a direct or indirect interest.

To consider a petition for annulment of judgment as either in rem or quasi-in-rem, would create

an absurdity wherein the petitioner would simply file the petition in court, without informing the
respondent of the same, through a valid service of summons. This is exactly what the CA
reasoned out in its decision. The CA held that the court need only acquire jurisdiction over
the res, which was "through the institution of the petition for annulment of judgment" with the
RTC, conveniently invoking that "jurisdiction over the res x x x is x x x acquired x x x as a result
of the institution of legal proceedings with the court"70 If left unchecked, this disposition would
set a dangerous precedent that will sanction a violation of due process. It will foil a respondent
from taking steps to protect his interest, merely because he was not previously informed of the
pendency of the petition for annulment of judgment filed in court.

Second, a petition for annulment of judgment and the court's subsequent decision thereon will
affect the parties alone. It will not be enforceable against the whole world. Any judgment therein
will eventually bind only the parties properly impleaded.

Pursuant to Section 7, Rule 47,71 a judgment of annulment shall set aside the questioned
judgment or final order or resolution and render the same null and void.

In this case, had the RTC granted the respondent's petition, the MeTC's July 26 2006 judgment
would have been declared a nullity. This would have resulted to the following consequences: as
to the respondent, he would no longer be required to pay the rentals and vacate the subject
property; and, as to the petitioner, she would be deprived of her right to demand the rentals and
to legally eject the respondent. Clearly, through the RTC's judgment on the petition, only the
parties' interests, i.e., rights and obligation, would have been affected. Thus, a petition for
annulment of judgment is one in personam. It is neither an action in rem nor an action quasi in
rem.

We disagree with the CA's disquisition that since jurisdiction over the res is sufficient to confer
jurisdiction on the RTC, the jurisdiction over the person of herein petitioner may be dispensed
with. Citing the case of Villanueva v. Nite,72 the CA concluded that the petition is not an
action in personam since it can be filed by one who was not a party to the case. Suffice it to say
that in Villanueva, this Court did not give a categorical statement to the effect that a petition for
annulment of judgment is not an action in personam. Neither did We make a remark that said
petition is either an action in rem or a quasi in rem. The issue in Villanueva was simply whether
or not the CA erred in annulling and setting aside the RTC's decision on the ground of extrinsic
 47

fraud. Unlike in this case, there were no issues pertaining to the proper service of summons, to
the nature of a. petition for annulment of judgment or to the denial of due process by reason of a
defect in the service of summons.

We cannot likewise lend credence to the respondent's claim that a petition for annulment of
judgment is either an action in rem or quasi in rem. Suffice it to say that the petition cannot be
converted either to an action in rem or quasi in rem since there was no showing that the
respondent attached any of the properties of the petitioner located within the Philippines.73

Assuming arguendo, that a petition for annulment of judgment is either an action in rem or quasi

in rem, still the observance of due process for purposes of service of summons cannot be
deliberately ignored. For courts, as guardians of constitutional rights cannot be expected to deny
persons their due process rights while at the same time be considered as acting within their
jurisdiction.74

There was neither a valid service of summons in person nor a valid substituted service of
summons over the person of the petitioner

At any rate, regardless of the type of action - whether it is in personam, in rem or quasi in rem —
the proper service of summons is imperative.75

Where the action is in personam and the defendant is in the Philippines, as in this case, the
service of summons may be done by personal or substituted service as laid out in Sections
676 and 777 of Rule 14. Indeed, the preferred mode of service of summons is personal
service.78 To warrant the substituted service of the summons and copy of the complaint, (or, as in
this case, the petition for annulment of judgment), the serving officer must first attempt to effect
the same upon the defendant in person. Only after the attempt at personal service has become
impossible within a reasonable time may the officer resort to substituted service.79

This Court explained the nature and enumerated the requisites of substituted service in Manotoc
v. Court of Appeals, et al.,80 which We summarize and paraphrase below:
(1) Impossibility of Prompt Personal Service -

The party relying on substituted service or the sheriff must show that defendant cannot be served
promptly or there is impossibility of prompt service.

"Reasonable time" under Section 8, Rule 14, is defined as "so much time as is necessary under
the circumstances for a reasonably prudent and diligent man to do, conveniently, what the
contract or duty requires that should be done, having a regard for the rights and possibility of
loss, if any, to the other party."

To the plaintiff, "reasonable time" means no more than seven (7) days since an expeditious
processing of a complaint is what a plaintiff wants. To the sheriff, "reasonable time" means 15 to
30 days because at the end of the month, it is a practice for the branch clerk of court to require
the sheriff to submit a return of the summons assigned  to the sheriff for service. Thus, one (1)
month from the issuance of summons can be considered "reasonable time" with regard to
 48

personal service on the defendant.

Sheriffs are asked to discharge their duties on the service of summons with due care, utmost
diligence, and reasonable promptness and speed so as not to prejudice the expeditious
dispensation of justice. Thus, they are enjoined to try their best efforts to accomplish personal
service on defendant. On the other hand, since the defendant is expected to try to avoid and
evade service of summons, the sheriff must be  resourceful, persevering, canny, and diligent in
serving the process on the defendant.

For substituted service of summons to be available, there must be several attempts by the sheriff
to personally serve the summons within a reasonable period of one (1) month which eventually
resulted in failure to prove impossibility of prompt service. "Several attempts" means at
least three (3) tries, preferably on at least two (2) different dates. In addition, the sheriff must
cite why such efforts were unsuccessful. It is only then that impossibility of service can be
confirmed or accepted.

(2) Specific Details in the Return -

The sheriff must describe in the Return of Summons the facts and circumstances surrounding the
attempted personal service. The efforts made to find the defendant and the reasons behind the
failure must be clearly narrated in detail in the Return. The date and time of the attempts on
personal service, the inquiries made to locate the defendant, the name/s of the occupants of the
alleged residence or house of defendant and all other acts done, though futile, to serve the
summons on defendant must be specified in the Return to justify substituted service.

(3) A Person of Suitable Age and Discretion -

If the substituted service will be effected at defendant's house or residence, it should be left with
a person of "suitable age and discretion then residing therein." A person of suitable age and
discretion is one who has attained the age of full legal capacity (18 years old) and is considered
to have enough discernment to understand the importance of a summons. "Discretion" is defined
as "the ability to make decisions which represent a responsible choice and for which an
understanding of what is lawful, right or wise may be presupposed." Thus, to be of sufficient
discretion, such person must know how to read and understand English to comprehend the
import of the summons, and fully realize the need to deliver the summons and complaint to the
defendant at the earliest possible time for the person to take appropriate action. Thus, the person
must have the "relation of confidence" to the defendant, ensuring that the latter would receive or
at least be notified of the receipt of the summons. The sheriff must therefore determine if the
person found in the alleged dwelling or residence of defendant is of legal age, what the
recipient's relationship with the defendant is, and whether said person comprehends the
significance of the receipt of the summons and his duty to immediately deliver it to the defendant
or at least notify the defendant of said receipt of summons. These matters must be clearly and
specifically described in the Return of Summons.

(4) A Competent Person in Charge -

 49

If the substituted service will be done at defendant's office or regular place of business, then it
should be served on a competent person in charge of the place. Thus, the person on whom the
substituted service will be made must be the one managing the office or business of defendant,
such as the president or manager; and such individual must have sufficient knowledge to
understand the obligation of the defendant in the summons, its importance, and the prejudicial
effects arising from inaction on the summons. Again, these details must be contained in the
Return. [Emphasis and italics supplied].81
A copy of Sheriff Tolentino's Return dated July 27, 2007 reads, thus:
OFFICER'S RETURN

This is to certify the on the 27th day of July 2007, the undersigned caused the service of
the Notice of Raffle and Summons together with a copy of the complaints and its annexes, to the
following defendants, to wit:

BOBBIE ROSE DV FRIAS — served thru Ms. Sally Gonzales, a secretary of her counsel Atty.
Daniel S. Frias, a person employed thereat of suitable age and discretion to receive such court
processes. Inspite of diligent efforts exerted by the undersigned to effect personal service to the
defendant, but still no one's around at her given address.

HON. PAULINO GALLEGOS, Presiding Judge -

MTC Branch LXXX, Muntinlupa City and
Sheriff Armando Camacho of MTC - Br. 80,
Muntinlupa City -

served thru their authorized receiving clerk, Mr. Jay-R Honorica, a person employed thereat of
suitable age and discretion to receive such court processes.

As evidenced by their signature's and stamp received appearing on the original copy of the
Notice of Raffle and Summons.

WHEREFORE, in view of the foregoing, I am now returning herewith the original copy of the
Notice of Raffle and Summons to the Honorable Court of origin, DULY SERVED, for its
record's [sic] and information.

Muntinlupa City, July 27, 2007.82

A perusal, however, of the Officer's Return discloses that the following circumstances, as
required in Manotoc, were not clearly-established: (a) personal service of summons within a
reasonable time was impossible; (b) efforts were exerted to locate the party; and (c) the summons
was served upon a person of sufficient age and discretion residing at the party's residence or
upon a competent person in charge of the party's office or place of business.83

The Officer's Return likewise revealed that no diligent effort was exerted and no positive step
was taken to locate and serve the summons personally on the petitioner. Upon having been
satisfied that the petitioner was not present at her given address, Sheriff Tolentino immediately
resorted to substituted service of summons by proceeding to the office of Atty. Frias, petitioner's
counsel. Evidently, Sheriff Tolentino failed to show that she made several attempts to effect
 50

personal service for at least three times on at least two different dates. It is likewise evident that
Sheriff Tolentino simply left the "Notice of Raffle and Summons" with Ms. Gonzales, the
alleged secretary of Atty. Frias. She did not even bother to ask her where the petitioner might be.
There were no details in the Officer's Return that would suggest that Sheriff Tolentino inquired
as to the identity of Ms. Gonzales. There was no showing that Ms. Gonzales was the one
managing the office or business of the petitioner, such as the president or manager; and that she
has sufficient knowledge to understand the obligation of the petitioner in the summons, its
importance, and the prejudicial effects arising from inaction on the summons.

Indeed, without specifying the details of the attendant circumstances or of the efforts exerted to
serve the summons, a general statement that such efforts were made will not suffice for purposes
of complying with the rules of substituted service of summons.84 This is necessary because
substituted service is in derogation of the usual method of service. It is a method extraordinary in
character and hence may be used only as prescribed and in the circumstances authorized by
statute.85 Sheriff Tolentino, however, fell short of these standards. For her failure to faithfully,
strictly, and fully comply with the requirements of substituted service, the same is rendered
ineffective. As such, the presumption of regularity in the performance of official functions,
which is generally accorded to a sheriffs return,86 does not obtain in this case.

Special appearance to question a court's jurisdiction is not voluntary appearance

In Prudential Bank v. Magdam.it, Jr.87 We had the occasion to elucidate the concept of voluntary
or conditional appearance, such that a party who makes a special appearance to challenge, among
others, the court's jurisdiction over his person cannot be considered to have submitted to its
authority, thus:
Preliminarily, jurisdiction over the defendant in a civil case is acquired either by the coercive
power of legal processes exerted over his person, or his voluntary appearance in court. As a
general proposition, one who seeks an affirmative relief is deemed to have submitted to the
jurisdiction of the court. It is by reason of this rule that we have had occasion to declare that the
filing of motions to admit answer, for additional time to file answer: for reconsideration of a
default judgment, and to lift order of default with motion for reconsideration, is considered
voluntary submission to the court's jurisdiction. This, however, is tempered by the concept of
conditional appearance, such that a party who makes a special appearance to challenge, among
others, the court's jurisdiction over his person cannot be considered to have submitted to its
authority.

Prescinding from the foregoing, it is thus clear that:

(1) Special appearance operates as an exception to the general rule on voluntary appearance;

(2) Accordingly, objections to the jurisdiction of the court over the person of the defendant must
be explicitly made, i.e., set forth in an unequivocal manner; and

(3) Failure to do so constitutes voluntary submission to the jurisdiction of the court, especially' in
instances where a pleading or motion seeking affirmative relief is filed and submitted to the court
for resolution.88
 51

Measured against these standards, it is readily apparent that the petitioner did not acquiesce to
the jurisdiction of the trial court.

The records show that the petitioner never received any copy of the the respondent's petition to
annul the final and executory judgment of the MeTC in the unlawful detainer case. As explained
earlier, the copy of the said petition which was served to Ms. Gonzales was defective under the
Rules of Court. Consequently, in order to question the trial court's jurisdiction, the petitioner
filed the following pleadings and motions: Special Appearance/Submission (Jurisdictional
Infirmity Raised); Preliminary Submission to Dismiss Petition (Special Appearance Raising
Jurisdictional Issues); Manifestation and Omnibus Motion to Dismiss Petition for Annulment of
Judgment and to Set Aside and/or Reconsider89 the RTC's December 3, 2007 Order,
Consolidated Opposition, Manifestation and Reply (to Alcayde's Comment dated August 19,
2008 and Supplement dated November 12, 2008); and Motion for Reconsideration against the
RTC's February 2, 2009 Order.

In all these pleadings and motions, the petitioner never faltered in declaring that the trial court
did not acquire jurisdiction over her person, due to invalid and improper service of summons. It
is noteworthy that when the petitioner filed those pleadings and motions, it was only in a
"special" character, conveying the fact that her appearance before the trial court was with a
qualification, i.e., to defy the RTC's lack of jurisdiction over her person.

This Court is of the view that the petitioner never abandoned her objections to the trial court's
jurisdiction even when she elevated the matter to the CA through her petition for certiorari. The
filing of her pleadings and motions, including that of her subsequent posturings, were all in
protest of the respondent's insistence on holding her to answer the petition for annulment of
judgment in the RTC, which she believed she was not subject to. Indeed, to continue the
proceeding in such case would not only be useless and a waste of time, but would violate her
right to due process.

In its Order dated December 3, 2007, the RTC harped on the fact that petitioner's counsel, Atty.
Frias, attended the summary hearing on November 9, 2007 of the respondent's prayer for the
issuance of a TRO. This, however, can hardly be construed as voluntary appearance. There was
no clear intention on the part of Atty. Frias to be bound by the proceedings. Precisely, his
"special" appearance in the hearing was to challenge the RTC's lack of jurisdiction over her
client. This Court held in Ejercito, et al. v. M.R. Vargas Construction, et al.90 that the presence or
attendance at the hearing on the application of a TRO should not be equated with voluntary
appearance, thus:
Despite Agarao's not being a party-respondent, petitioners nevertheless confuse his presence or
attendance at the hearing on the application for TRO with the notion of voluntary appearance,
which interpretation has a legal nuance as far as jurisdiction is concerned. While it is true that
an appearance in whatever form, without explicitly objecting to the jurisdiction of the court
over the person, is a submission to the jurisdiction of the court over the person, the
appearance must constitute a positive act on the part of the litigant manifesting an intention to
submit to the court's jurisdiction. Thus, in the instances where the Court upheld the jurisdiction
of the trial court over the person of the defendant, the parties showed the intention to participate
or be bound by the proceedings through the filing of a motion, a plea or an answer.
 52

Neither is the service of the notice of hearing on the application for a TRO on a certain Rona
Adol binding on respondent enterprise. The records show that Rona Adol received the notice of
hearing on behalf of an entity named JCB. More importantly, for purposes of acquiring
jurisdiction over the person of the defendant, the Rules require the service of summons and
not of any other court processes. [Emphasis and italics supplied].91
As we have consistently pronounced, if the appearance of a party in a suit is precisely to question
the jurisdiction of the said tribunal over the person of the defendant, then this appearance is not
equivalent to service of summons, nor does it constitute an acquiescence to the court's
jurisdiction.92

To recapitulate, the jurisdiction over the person of the petitioner was never vested with the RTC
despite the mere filing of the petition for annulment of judgment. The manner of substituted
service by the process server was apparently invalid and ineffective. As such, there was a
violation of due process. In its classic formulation, due process means that any person with
interest to the thing in litigation, or the outcome of the judgment, as in this case, must be notified
and given an opportunity to defend that interest.93 Thus, as the essence of due process lies in the
reasonable opportunity to be heard and to submit any evidence the defendant may have in
support of her defense, the petitioner must be properly served the summons of the court. In other
words, the service of summons is a vital and indispensable ingredient of due process94 and
compliance with the rules regarding the service of the summons is as much an issue of due
process as it is of jurisdiction.95 Regrettably, as had been discussed, the Constitutional right of
the petitioner to be properly served the summons and be notified has been utterly overlooked by
the officers of the trial court.

Petition for annulment of judgment is an improper remedy

In any event, respondent's petition to annul the MeTC's July 26, 2006 judgment cannot prosper
for being the wrong remedy.

A principle almost repeated to satiety is that an action for annulment of judgment cannot and is
not a substitute for the lost remedy of appeal.96 Its obvious rationale is to prevent the party from
benefiting from his inaction or negligence.97

In this case, it is evident that respondent failed to interpose an appeal, let alone a motion for new
trial or a petition for relief from the MeTC July 26, 2006 Decision rendering the same final and
executory. Hence, the October 30, 2007 Order granting its execution was properly issued.

It is doctrinal that when a decision has acquired finality, the same becomes immutable and
unalterable. By this principle of immutability of judgments, the RTC is now precluded from
further examining the MeTC Decision and to further dwell on petitioner's perceived errors
therein, i.e., that petitioners' complaint has no cause of action for failure to make a prior
demand to pay and to vacate; and, that petitioner failed to refer the case before the barangay.

Resultantly, the implementation and execution of judgments that had attained finality are already
ministerial on the courts. Public policy also dictates that once a judgment becomes final,
 53

executory, and unappealable, the prevailing party should not be denied the fruits of his victory by
some subterfuge devised by the losing party.98 Unjustified delay in the enforcement of a
judgment sets at naught the role of courts in disposing justiciable controversies with finality.99

Verily, once a judgment becomes final, the prevailing party is entitled as a matter of right to a
writ of execution, the issuance of which is the trial court's ministerial duty. So is it in this case.

WHEREFORE, the Petition is GRANTED. The Decision dated May 27, 2010 and Resolution
dated October 22, 2010 of the Court of Appeals in CA-G.R. SP No. 109824, are
hereby REVERSED and SET ASIDE, and a new judgment is rendered ordering
the DISMISSAL of the respondent Rolando F. Alcayde's petition for annulment of judgment.

SO ORDERED.
 54

[ G.R. No. 244129, December 09, 2020 ]

ELEONOR SAROL, PETITIONER, VS. SPOUSES GEORGE GORDON DIAO AND

MARILYN A. DIAO, ET. AL. RESPONDENT.

This Petition for Review on Certiorari1 under Rule 45 of the Rules of Court assails the
Resolution2 dated December 13, 2018 of the Court of Appeals (CA) in CA-G.R. SP No. 12099
which dismissed the Petition for Annulment of Judgment3 filed by petitioner Eleonor Sarol
(Sarol) against respondents Spouses George Gordon Diao and Marilyn Diao (Spouses Diao), and
Sheriff IV Norman Stephen Tale (Sheriff Tale) of the Regional Trial Court (RTC) of Dumaguete
City, Branch 44.

Facts of the Case

Sometime in 2007, petitioner Sarol purchased from a certain Claire Chiu a parcel of land located
in Guinsuan, Poblacion, Zamboanguita, Negros Oriental. The parcel of land has an area of 1,217
square meters and is designated as Lot No. 7150. Sarol claims to have purchased the property for
P2,000,000.00, where she initially paid P1,800,000.00 and settled the remaining balance
amounting to P200,000.00 in 2011. On July 20, 2011, the Deed of Sale over the property was
executed in view of payment of the remaining balance worth P200,000.00. Accordingly, the
Original Certificate of Title (OCT) No. FV-44750 registered in the name of Claire Chiu was
cancelled and Transfer Certificate of Title (TCT) No. 103-2012000605 was issued in the name of
Sarol on February 16, 2012.4

Sarol had been in possession of the property since 2007 and began developing a beach resort.
She eventually left the Philippines to reside in Germany. Her father, Emproso Sarol, was made to
manage all her assets in the Philippines, including the beach resort and Lot No. 7150. Sarol also
left Marie Jeane Alanta-ol to manage the beach resort.5

Spouses Diao claim that their property is adjacent to Lot No. 7150. Prior the sale of said property
to Sarol, Claire Chiu caused to survey the property yielding an area of 1,217 square meters.
However, the area, as surveyed, is erroneous because it included 464 square meters of Spouses
Diao's property. In 2009, Spouses Diao learned of this overlap. They immediately demanded
Claire Chiu and Sarol to return their portion of the property, but to no avail.6 In 2015, Spouses
Diao filed a complaint7 with the RTC Branch 44, Dumaguete City docketed as Civil Case No.
2015-15007 entitled Spouses George Gordon Diao and Marilyn Diao v. Claire Chiu, joined by
her husband Ginghis Gamaliel D. Chiu, the Register of Deeds of Negros Oriental and Eleanor
Sarol. Spouses Diao sought to partially cancel the contracts from which Claire Chiu derived
ownership over Lot No. 7150, to reconvey an area of 464 square meters from said property in
their favor and to hold Claire Chiu and Sarol liable for damages.8

Ruling of the Regional Trial Court

 55

In the course of the proceedings for the abovementioned case, summons9 was issued for service
to Claire Chiu, her husband Ginghis Chiu, the Register of Deeds of Negros Oriental, and Sarol.
The address of Sarol indicated in the summons states "Guinsuan, Poblacion, Zamboanguita,
Negros Oriental,"10 or the location of the property she purchased from Claire Chiu. OnApril16,
2015, respondent Sheriff Tale issued a Sheriffs Return of Summons,11 which states that
summons was served on Claire Chiu but could not be served to Sarol "on the ground that she is
out of the country."12 Spouses Diao then moved for the issuance of alias summons.13 In the
Sheriffs Return dated July 25, 2015,14 Sheriff Tale stated his three failed attempts to personally
serve the alias summons to Sarol at Guinsuan, Poblacion, Zamboanguita, Negros Oriental.
Sheriff Tale narrates that on July 10, 2015, the alias summons was not served because nobody
was around the location. In the evening of the same date, he, again, failed to serve the alias
summons after receiving information from the caretaker that Sarol left a few days ago. Early
morning of July 11, 2015, Sheriff Tale spoke with the caretaker and learned that Sarol arrived the
Philippines on July 3, 2015 and left for Germany on July 7, 2015; that the caretaker had no idea
of Sarol's return.15 For this reason, Spouses Diao moved that summons be served by publication
in a newspaper of general circulation in the City of Dumaguete and in the Province of Negros
Oriental pursuant to Section 15, Rule 14 of the Rules of Court on extraterritorial service of
summons.16 In an Order dated February 5, 2016, the RTC directed service of summons on Sarol
by publication in a newspaper of general circulation in the City of Dumaguete and in the
Province of Negros Oriental, for two consecutive weeks and to send copies of the summons and
of the order by registered mail to the last known address of Sarol in Guinsuan, Poblacion,
Zamboanguita Negros Oriental.17

Claire Chiu filed her answer to the complaint, but failed to appear at the pre-trial proceedings.
Sarol, on the other hand, failed to file any pleadings with the RTC. Upon motion of Spouses
Diao, Claire Chiu and Sarol were declared in default in an Order18 dated January 25, 2017. The
Order became final and executory allowing Spouses Diao to present their evidence ex-parte. On
December 13, 2017, the RTC rendered a Decision19 in favor of Spouses Diao. The dispositive
portion of the Decision of the RTC reads,

WHEREFORE, judgment is hereby rendered:

1. Declaring the Deed of Confirmation and Ratification of Sale and the Deed of Absolute
Sale partially null and void and of no legal effect insofar as they affect the plaintiffs lot;

2. Ordering the defendants to reconvey to the plaintiff the 464-square-meter portion of

Lot No. 7150, Pls-847, identical to Lot No. 2788_B, CSD-07-010295, by executing a
deed of conveyance;

3. Ordering the defendants Chiu to pay plaintiff Thirty Thousand Pesos (PHP30,000) as
moral damages, and PhP15,000 as exemplary damages;

4. Ordering defendants Chiu to pay plaintiffs attorney's fees of fifteen thousand Pesos
(PHP15,000) based on quantum meruit; and

5. Dismissing the counterclaim for lack of merit;

 56

Costs against the defendants.

SO ORDERED.20 (Emphasis in the original)

The Decision of the RTC attained finality. Thereafter and on motion of Spouses Diao, the RTC
issued a Writ of Execution21 dated May 2, 2018.

In view of the finality of the Decision of the RTC, Sarol filed a Petition for Annulment of
Judgement22 under Rule 47 of the Rules Court with the CA. She sought to invalidate the
Decision of the RTC because the court a quo did not acquire jurisdiction over her person. Sarol
argued that she was not served with any summons relating to the case instituted by Spouses
Diao.23

Ruling of the Court of Appeals

In the assailed Resolution24 dated December 13, 2018, the CA dismissed the petition for
annulment of judgment. The CA held that Sarol is a Filipino resident, who was temporarily out
of the country. Thus, the rules on service of summons under Section 16, Rule 14 of the Rules of
Court is applicable. Under Section 16, service of summons, to a resident defendant, who is
temporarily out of the country, may be effected by modes provided for in Section 15, Rule 14 of
the Rules of Court. Following Section 15 on extraterritorial service of summons, one of the
modes of service may be "effected x x x by publication in a newspaper of general circulation, in
which case a copy of the summons and order of the court shall be sent by registered mail to the
last known address of the defendant x x x". The CA found that personal service of the summons
and the alias summons could not be effected at Sarol's address in Guinsuan, Poblacion,
Zamboanguita, Negros Oriental because Sarol was out of the country. Thus, Spouses Diao
moved for the service of summons by publication which the RTC granted in an Order dated
February 5, 2016. The CA held that summons was clearly served on the person of Sarol by
publication. Having failed to timely file an answer to the complaint, Sarol was declared in
default. Further, the CA held that Sarol failed to show clear facts and laws for the petition for
annulment of judgment to prosper.25

Petitioner's Arguments

Unsatisfied with the Decision of the CA, Sarol filed the instant petition before this Court
reiterating that the RTC did not acquire jurisdiction over her person. Sarolargued that there was a
defective service of summons by Sheriff Tale. While she is named a recipient of the summons,
the address, Guinsuan, Poblacion, Zamboanguita, Negros Oriental, was incorrect. Sarol argued
that she never became a resident at said address. Her last known address in the Philippines was
in Barangay Tamisu, Bais City, Negros Oriental. She claimed that after her purchase of the
subject property from Claire Chiu, she migrated to Germany. Hence, personal service of the
summons could not have validly been effected.26

Other modes of service of summons were also not proven to have been successfully executed.
The substituted service of summons under Section 7, Rule 14 of the Rules of Court provides that
such mode of service may be effected by leaving copies of the summons: (a) at the defendant's
 57

residence with some person of suitable age and discretion then residing therein; or (b) at
defendant's office or regular place of business with some competent person in charge thereof.
Sarol asserted failure on the part of Sheriff Tale to effect service of summons under this rule. If
Sarol's residential address was indeed at Guinsuan, Poblacion Zamboanguita, Sheriff Tale could
have easily served the alias summons to Sarol's caretaker at the beach resort built on the subject
property. In this case, Sarol argued that there was no proof of the successful substituted service
of the alias summons.27

Sarol also argued that the RTC erred in allowing the service of summons by publication because
none of the rules for such mode of service are applicable. First, Section 14, Rule 14 of the Rules
of Court provides that service by publication shall be resorted to when: (1) the defendant is
unknown or the like; and (2) whenever his whereabouts are unknown and cannot be ascertained
by diligent inquiry. None of the foregoing conditions are present in Sarol's case because Spouses
Diao knew that she was one of the defendants to the case and that she resided in
Germany. Second, Section 15, Rule 14 of the Rules of Court on extraterritorial service of
summons by publication requires that a copy of the summons and order of the court be sent by
registered mail to the last known address of the defendant. Sarol claims that there was no mail to
her last address in the Philippines in Barangay Tamisu, Bais City, Negros Oriental or to her
residence in Germany. Third, Section 16, Rule 14 of the Rules of Court provides that
extraterritorial service of summons shall be made when a resident defendant is temporarily out of
the Philippines. Sarol argues that this rule is inapplicable because she is a permanent resident in
Germany.28 Finally, Sarol claims that no affidavit of the publisher, editor or advertising manager
was presented as proof of service by publication required under the Rules of Court.29

Respondent's Arguments

In their Comment,30 Spouses Diao claim that there is no truth to Sarol's lack of knowledge of
the pendency of the case. They argue that Sarol returns to the beach reson every year, and that
the resort caretaker had a pre-arranged agreement with Sheriff Tale to inform the latter when
Sarol is in the Philippines. However, when Sheriff Tale made inquiries of Sarol's return to the
country, the caretaker had a ready reply that Sarol already left. Sarol clearly evaded the service
of summons, leaving Spouses Diao with no other choice but to resort to serve summons by
publication. Moreover, a Petition for Annulment of Judgment may be resorted when there is no
available or adequate remedy. Here, Spouses Diao argue that Sarol lost her opportunity to defend
her case for deliberately evading the service of summons.31

Ruling of the Court

The proper service of summons is important because it serves to acquire jurisdiction over the
person of the defendant or respondent, or to notify said person of the action filed against them
and to afford an opportunity to be heard on the claims made against them.32 Logically, in order
to effect the proper service of summons it is crucial to furnish the correct address of the
defendant or respondent in a complaint. The foregoing is in consonance with the doctrine of due
process. A violation of this due process would be a jurisdictional defect.33 Thus, absent the
proper service of summons, the trial court does not acquire jurisdiction and renders null and void
all subsequent proceedings and issuances in relation to the case.34
 58

Here, the summons and alias summons issued by the court a quo to Sarol indicated her
residential address at "Guinsuan, Poblacion, Zamboanguita, Negros Oriental."35 The address is
undisputedly the location of the property, which is the subject matter of this case. We find that in
the complaint for reconveyance36 filed by Spouses Diao with the RTC of Dumaguete City,
Branch 44, Sarol was included as a party-defendant for being the purchaser of the disputed
property from co-defendant Claire Chiu.37 To Our mind, as Sarol purchased the disputed
property located in Guinsuan, Poblacion, Zamboanguita, Negros Oriental, Spouses Diao
considered the location of the property to be Sarol's place of residence. However, the records
pertaining to Sarol's claim over the subject property reveal that her place of residence is in
Tamisu, Bais City, Negros Oriental. The Deed of Sale38 dated July 20, 2011 between Sarol and
Claire Chiu indicates that Sarol's residence is in "Tamisu, Bais City."39 TCT No. 103-
201200060540 or the transfer certificate of title registered under Sarol's name for the subject
property also indicates that Sarol's place of residence is in "Tamisu, Bais City, Negros Oriental
Central Visayas."41 Absent any allegation and evidence to prove otherwise, We give credence to
Sarol's position that her place of residence is not in Guinsuan, Poblacion, Zamboanguita, Negros
Oriental. For this reason, the service of summons should have been made in Tamisu, Bais City,
Negros Oriental.

The preferred mode of service of summons shall be done personally upon the defendant or
respondent.42 However, our rules set out other modes of service. ℒαwρhi ৷ Section 7, Rule
1443 of the Rules of Court allows the substituted service of summons if, for justifiable causes,
the defendant cannot be served within a reasonable time. It shall be effected by leaving copies of
the summons: (a) at the defendant's residence with some person of suitable age and discretion
residing therein; or (b) at the defendant's place of business with some competent person in charge
thereof. "Dwelling house" or "residence" refers to the place where the person named in the
summons is living at the time when the service is made, even though he may be temporarily out
of the country at the time. Similarly, the terms "office" or "regular place of business" refer to the
office or place of business of defendant at the time of service44 As discussed, We found that the
address in Guinsuan, Poblacion, Zarnboanguita, Negros Oriental is not Sarol's place of residence.
Therefore, service of summons to Sarol, even by substituted service, should have been effected
in Tamisu, Bais City, Negros Oriental. Assuming that Guinsuan, Poblacion, Zamboanguita,
Negros Oriental is Sarol's regular place of business, We find that there was no substituted service
effected. The Sheriff's Return of Summons45 dated April 16, 2015 and Sheriff's Return of Alias
Summons46 dated July 25, 2015 report the unsuccessful service to Sarol because she is out of
the country. Sheriff Tale accounted in the Return of Alias Summons that he merely inquired
from the caretaker the whereabouts of Sarol.47 From the foregoing, the returns of the sheriff do
not state that substituted service of summons was made to the designated persons provided under
Section 7, Rule 14.

Spouses Diao are not totally without recourse as the rules allow summons by publication and
extraterritorial service. These are extraordinary modes which require leave of court.48 In fact, in
view of Sheriff Tale's reports of failure to serve summons on Sarol, Spouses Diao moved for the
extraterritorial service of summons by publication under Section 15,49 Rule 14 of the Rules of
Court.50 Under this rule, one of the modes to effect the extraterritorial service of summons is by
publication in a newspaper of general circulation in such places and for such time as the court
may order, in which case a copy of the summons and order of the court shall be sent by
 59

registered mail to the last known correct address of the defendant. Furthermore, to avail this
mode, the action or complaint filed against a nonresident defendant: (1) affects the personal
status of the plaintiff or relates to; or (2) the subject of which, is property within the Philippines,
in which the defendant has or claims a lien or interest, actual or contingent; or (3) in which the
relief demanded consists, wholly or in part, in excluding the defendant from any interest therein;
or (4) the property of the defendant has been attached within the Philippines. We emphasize that
it is the duty of the court to require the fullest compliance with all the requirements of the statute
permitting service by publication. Where service is obtained by publication, the entire
proceeding should be closely scrutinized by the courts and a strict compliance with every
condition of law should be exacted.51

Here, as Sarol is out of the country and the action pertains to her interest over a parcel of land
located in the Philippines, the RTC granted the extraterritorial service on Sarol by publication in
a newspaper of general circulation in the. City of Dumaguete and in the Province of Negros
Oriental, for two consecutive weeks and to send copies of the summons and of the order of the
court a quo by registered mail to the last known address of Sarol in Guinsuan, Poblacion,
Zamboanguita Negros Oriental.52 Following the provisions of Section 15, Rule 14 of the Rules
of Court and the aforementioned order of the court, publication must be duly observed and
copies of the summons and order of the court be served at Sarol's last known correct address by
registered mail, as a complement to the publication. The failure to strictly comply with the
requirements of the rules regarding the mailing of copies of the summons and the order for its
publication is a fatal defect in the service of summons. Considering that Sarol's last known
address is in Tamisu, Bais City, Negros Oriental, copies of the summons and order of the court
must be sent to this address. As Spouses Diao furnished an address in Guinsuan, Poblacion,
Zamboanguita, Negros Oriental, service of summons by publication is defective in view of the
failure to mail the requirements of Section 15, Rule 14 to the correct address of Sarol. Relatedly,
the findings of the CA on service of summons by publication under Section 16,53 Rule 14 of the
Rules of Court cannot be considered proper because this rule also follows the same procedures
set out in Section 15, Rule 14 of the Rules of Court on publication and mailing to the last known
correct address of the defendant or respondent. Spouses Diao only assert compliance with
publication of summons in Dumaguete City and Negros Oriental. There were no records
presented showing proof of service by registered mail of the summons and the order of the court
to the last known address of Sarol as required under the rules by the court a quo in this case.

We reiterate that the service of summons is vital and indispensable to defendant's right to due
process.54 A violation of this due process is a jurisdictional defect55 which renders null and void
all subsequent proceedings and issuances in relation to the case.56 Thus, the judgment57 and the
Writ of Execution58 issued by the RTC of Dumaguete City, Branch 44 in Civil Case No. 2015-
15007 is null and void. In which case, We find that Sarol's availment of the petition for
annulment of judgement under Rule 47 of the Rules of Court59 is proper. Our rules explicitly
provide that lack of jurisdiction is one of the grounds in a petition for annulment of
judgment.60 Lack of jurisdiction on the part of the trial court in rendering the judgment or final
order is either lack of jurisdiction over the subject matter or nature of the action, or lack of
jurisdiction over the person of the petitioner.61 In cases involving jurisdiction over the subject
matter, We have recognized denial of due process as a valid ground to file a petition for
annulment of judgment.62 Section 163 of Rule 47 of the Rules of Court provides that this
 60

remedy shall be available where the ordinary remedies of new trial, appeal, petition for relief or
other appropriate remedies are no longer available through no fault of the petitioner. Further, a
petition for annulment of judgment because of lack of jurisdiction over the person or subject
matter may be proved at most by the evidence on record but never by extraneous
evidence.64 Had there been the proper service of summons, Sarol would have had such remedies
as, a motion for new trial, appeal, certiorari, petition for relief from judgment, among others, to
assail the Decision of the RTC of Dumaguete City, Branch 44. In view of the failure to properly
serve summons, Sarol could not have learned of the instant case and had no other recourse but to
file a petition under the extraordinary remedy of annulment of judgment provided in Rule 47 of
the Rules of Court.

WHEREFORE, the petition is GRANTED. The Resolution dated December 13, 2018 of the
Court of Appeals in CA-G.R. SP No. 12099 is REVERSED and SET ASIDE. The Decision
dated December 13, 2017 and the Writ of Execution dated May 2, 2018 of the Regional Trial
Court of Dumaguete City, Branch 44 in Civil Case No. 2015-15007 are
declared NULL and VOID.

SO ORDERED.
 61

[ G.R. No. 246088, April 28, 2021 ]

TITAN DRAGON PROPERTIES CORPORATION, PETITIONER, VS. MARLINA

VELOSO-GALENZOGA, RESPONDENT.

DECISION

ZALAMEDA, J.:

A void judgment is in legal effect no judgment. By it no rights are divested. From it no rights can
be obtained. Being worthless in itself, all proceedings founded upon it are equally worthless. It
neither binds nor bars any one. All acts performed under it and claims flowing out of it are void.
The parties attempting to enforce it may be responsible as trespassers.1

This resolves the Petition for Review on Certiorari2 under Rule 45 of the Rules of Court (Rules)
filed by petitioner Titan Dragon Properties Corporation (petitioner corporation) assailing the
Decision3 dated 01 June 2018 rendered by the Court of Appeals (CA), Division of Five,4 and
Resolution5 dated 26 February 2019 rendered by the CA, Special Division of Five, Special
Former Third Division6 in CA-G.R. SP No. 150941 entitled, "Titan Dragon Properties
Corporation v. Hon. Edgardo B. Bellosillo, in his official capacity as the Presiding Judge,
Regional Trial Court, Branch 95, Quezon City, and Marlina Veloso-Galenzoga," which affirmed
the Decision7 dated 21 October 2016 rendered by the Honorable Edgardo B. Bellosillo,
Presiding Judge of Branch 95, Regional Trial Court of Quezon City (Br. 95-RTC), in Civil Case
No. R-QZN-15-03231-CV for Specific Performance.

Antecedents

The very subject of litigation is a 70,364-square meter (sq.m.) parcel of land (subject property)
situated in Barangay Damayan Lagi, New Manila, Quezon City and registered in the name of
Titan Dragon Properties Corporation under Transfer Certificate (TCT) No. 185260.8 However,
petitioner corporation, through its then President Antonio L. Yao (Yao), allegedly sold the
subject property in favor of respondent Marlina Veloso Galenzoga (respondent). Purportedly, the
transaction was evidenced by a Deed of Absolute Sale9 (Deed) executed between the parties on
08 December 1997 for a contract price of Sixty Million Pesos (Php60,000,000.00). The Deed
also obligated petitioner corporation to shoulder the payment of capital gains tax (CGT) and
documentary stamp tax (DST) while respondent agreed to pay the transfer tax and registration
fee.10
 62

Respondent claimed that since 1997, she had been religiously paying real property taxes over the
property. On the contrary, petitioner corporation failed to comply with its obligations to 1)
deliver possession of the property and 2) pay the necessary CGT and DST.11 Respondent
averred she made several verbal demands to his good friend Yao, but to no avail, until the latter's
demise. Thus, respondent filed a Complaint12 for specific performance (specific performance
case) dated 07 April 2015, to compel petitioner corporation to comply with its obligations.13 The
case was raffled to Br. 95-RTC.

Respondent filed a Petition for Mandamus14 (mandamus case) on 21 April 2015, docketed

as Civil Case No. R-QZM-15-03669-CV, just two (2) weeks apart from the filing of the specific
performance case. The petition was raffled to Branch 76, Regional Trial Court of Quezon City
(Br. 76-RTC). In her petition, respondent alleged facts similar to the specific performance case,
except for the allegation that on 13 January 2015, TCT No. 185260 was cancelled, resulting to
two (2) derivative titles in the name of petitioner corporation under TCT Nos. 004-
201500169815 and 004-2015001699.16 Respondent claimed fraud as the owner's duplicate
certificate of TCT No. 185260 was in her possession. She thus, sought to compel the Register of
Deeds (RD) of Quezon City to 1) annul and cancel said derivative titles; and 2) reinstate TCT
No. 185260.

Corresponding summonses were issued for both proceedings. However, the Sheriffs
Return17 dated 27 April 2015 in the specific performance case showed that Br. 95-RTC's deputy
sheriff made attempts to serve the summons at the 6th Floor, PBCom Building, Ayala Avenue,
Makati. The first was on 16 April 2015, when the deputy sheriff was informed by the
administrative assistant of the building that petitioner company does not hold office at the
6th Floor. He verified the same and found that the entire floor is being occupied by PBCom
bank. The second time, the deputy sheriff went back to the same address but the building
manager of PBCom informed him that petitioner corporation was not holding office at the
6th Floor thereof. This prompted respondent to file a motion to serve summons to petitioner
corporation by substituted service (publication),18 which Br. 95-RTC granted in an
Order19 dated 09 June 2015.

Anent the mandamus case, the Sheriffs Return20 dated 11 May 2015, yielded service of

summons to petitioner corporation at the 6th Floor of PBCom Building, Ayala Avenue, through a
certain Jona Agustin, front desk representative, who refused to sign the acknowledgment.
Nonetheless, Br. 76-RTC declared that summons was properly served. The mandamus case was
submitted for decision on 16 June 2015 upon failure of petitioner corporation to file its
answer.21

On the same day Br. 76-RTC also issued a Decision22 in favor of respondent. According to the
trial court, respondent had been in possession of the owner's duplicate copy of TCT No. 185260.
It assumed that the RD irregularly cancelled said title and issued two (2) new titles without
requiring the presentation of TCT No. 185260. Thus, in its decision, Br. 76-RTC disposed:

WHEREFORE, premises considered, judgment is rendered ordering the Register of Deeds of

Quezon City to:
 63

1. Cancel Transfer Certificate of Title Nos. 004-2015001698 and 004-2015001699 in the

name of Titan Dragon Properties Corporation;

2. Reinstate Transfer Certificate of Title No. 185260;

3. Annotate the Deed of Absolute Sale executed between Marlina Veloso-Galenzoga and
Titan Dragon Properties Corporation, throught its president Antonio L. Yao, over the real
property covered by Transfer Certificate of Title No. 185260; and

4. Issue a new certificate of title over the subject property in favor of Marlina Veloso-
Valenzoga, upon payment of the necessary fees and taxes.

SO ORDERED.23

On 01 July 2015, petitioner corporation filed a Motion for Reconsideration24 in

the mandamus case. Allegedly, petitioner corporation discovered that a decision was issued
against it and was only able to secure copies of the same with the clerk of court of Br. 76-RTC.

In said motion, petitioner corporation maintained that the summons was improperly served to a
receptionist, who is not an employee of petitioner corporation, nor among those who could be
validly served with summons under Section 11, Rule 1425 of the Rules of Court.26 Hence, the
service of summons was invalid, and the consequent decision rendered therein void.

Petitioner corporation also asserted that the decision in the mandamus case expanded the reliefs
sought by respondent when it ordered the annotation of the Deed between respondent and Yao in
TCT No. 185260 and the issuance of a new title in respondent's name. This, considering that
respondent did not even pray for these reliefs.

Br. 76-RTC, now presided by a new judge,27 issued a Resolution28 on 21 April 2016 granting
petitioner corporation's motion for reconsideration. It ruled that the court did not acquire
jurisdiction as the summons was invalidly served. Moreover, the mandamus case was decided
without respondent moving to declare petitioner corporation in default, and without the
subsequent presentation of respondent's evidence ex parte. The court also noted the precipitate
haste in resolving the mandamus case having been decided the same day it was submitted for
decision. Hence, the trial court set aside the Decision dated 16 June 2015 and ordered for
summons to be issued to petitioner corporation.

Meanwhile, petitioner corporation was declared in default in the specific performance case upon
motion by the respondent on 12 July 2016.29 Thus, Br. 95-RTC rendered a Decision30 dated 21
October 2016 granting respondent's complaint for specific performance, the dispositive portion
of which states:

WHEREFORE, Judgment by deafult is hereby rendered in favor of plaintiff and against

defendant.

Accordingly, the Court Orders as follows:

 64

1. The defendant to pay the Capital Gains Tax and Documentary Stamp Tax to effect the
transfer of title of the subject property; and

2. To deliver the possession of the subject real property to plaintiff Marlina Veloso-
Galenzoga.

SO ORDERED.31

On 27 October 2016, an Omnibus Motion32 was filed by respondent. She alleged that petitioner
corporation caused the subdivision of the subject property fraudulently, resulting to the
cancellation of TCT No. 185260 and the subsequent issuance of the derivative titles in its name.
Respondent prayed for the trial court to cancel the said derivative titles for being void and to
direct the RD of Quezon City to reinstate TCT No. 185260, annotate thereon the absolute deed of
sale between respondent and Yao, and to issue a new title in her name.

In the interim, the said Decision dated 21 October 2016 in the specific performance case became
final and executory on 12 December 2016 based on the Certificate of Finality33 issued by the
trial court on 04 January 2017. A day after said decision became final, the omnibus motion
earlier filed by respondent was partly granted in an Order34 dated 13 December 2016, the
dispositive portion of which states:

Accordingly, the Register of Deeds of Quezon City is ordered to annotate on TCT No. 185260
the Deed of Absolute Sale dated December 8, 1997 executed by and between Titan Dragon
Properties Corporation and Marlina G. Veloso-Galenzoga; and to issue a new title in the name of
plaintiff Marlina G. Veloso-Galenzoga upon payment of all taxes and fees due to the
Government or upon the presentation of the pertinent Certificate Authorizing Registration from
the Bureau of Internal Revenue, consistent with the Decision of the Honorable Court dated
October 21[,] 2016.

SO ORDERED.

On 24 April 2017, a Writ of Execution35 was issued pursuant to an order of even date rendered
by Br. 95-RTC granting the motion filed by respondent for the issuance of the said writ.
However, the writ directed not only the execution of the Decision dated 21 October 2016, but
likewise, the subsequent Order dated 13 December 2016. A Notice to Comply36 was issued
compelling both the petitioner corporation and the RD of Quezon City to comply with the writ of
execution.

The Deputy RD of Quezon City37 was prompted to write a Letter38 to the Land Registration
Authority (LRA) on 19 May 2017, seeking guidance on the implementation of the writ of
execution in the specific performance case. According to the Deputy RD, TCT No. 185260,
registered in the name of petitioner corporation, was already cancelled and two (2) derivative
titles were issued, still under the name of petitioner corporation, due to the subdivision of the
subject property. However, on 16 April 2015, a certain Atty. Levito D. Baligod presented an
alleged owner's duplicate copy of TCT No. 185260 which the RD found dubious. Without
confiscating the same, the then Acting RD requested for an investigation on the authenticity of
 65

said copy. Thus, the LRA, through its Task Force Titulong Malinis in TFTM No. 15-009, and
supported by the findings of the Banknotes and Securities Printing Department of the Bangko
Sentral ng Pilipinas in its Report dated 17 March 2017, stated that the cancelled owner's
duplicate and the original/registry copies of TCT No. 185260 of petitioner corporation were
authentic and genuine.39

It was also relayed by the Deputy RD of Quezon City to the LRA, in her letter dated 19 May
2017, that respondent filed a speci fie performance case to compel petitioner corporation to pay
the proper taxes with the Bureau of Internal Revenue and to deliver possession over the property,
which case had already been decided in respondent's favor. Br. 95-RTC, however, issued an
Order granting an omnibus order praying for the issuance of a new title in the name of
respondent. The Deputy RD of Quezon City claimed that to comply with the trial court's
directive would be tantamount to a collateral attack on TCT No. 185260 and its derivatives, in
violation of the provisions of Section 4840 of Presidential Decree No. (PD) 1529.41

Renato D. Bermejo (Bermejo), the LRA Administrator, issued an undated Legal

Opinion42 pertaining to the query of the Deputy RD of Quezon City. According to Bermejo, the
LRA is inclined on the execution and compliance of the RD of Quezon City considering that the
questioned decision of the trial court is already final and executory.

The RD of Quezon City filed a Manifestation43 before Br. 95-RTC stating that the title sought to
be cancelled, TCT No. 185260, had already been previously cancelled. Moreover, the RD is
incapable of processing the issuance of a new title from a cancelled title considering its effect on
the stability and indefeasibility of titles covered under the Torrens system.

Br. 95-RTC, however, was unimpressed and thus, commanded the RD to show cause why it
should not be cited in contempt for failure to abide by the notice to comply in an Order44 dated
09 October 2017.

On the other hand, respondent filed in the mandamus case, a Motion to Withdraw Petition on 08

September 2017. Respondent alleged that the RD of Quezon City sought legal opinion
concerning "issues that are closely intertwined with the case" and that the LRA issued a legal
opinion directing said RD to perform certain acts which, if performed, would amount to the same
reliefs sought by her.45 Respondent, however, failed to expound on the basis of her claim.

Petitioner corporation submitted a comment/opposition on the motion to withdraw, claiming that

another case for specific performance had been filed by respondent in another branch. According
to petitioner corporation, the mandamus and specific performance cases claim for reliefs which
are not only related, but similar, hence, the motion to withdraw must be denied on the ground of
forum shopping.46

On 18 October 2017, Br. 76-RTC issued an Order47 dismissing the mandamus case with

prejudice on the ground of forum shopping. The trial court found that respondent ultimately
seeks, in both the mandamus and specific performance cases, for title to the subject property to
be established in her favor. Further, respondent failed to state in her certification against forum
shopping the existence and pendency of the specific performance case.
 66

Respondent then filed a petition for certiorari under Rule 65 of the Rules, docketed as C.A.-G.R.
No. 156169 entitled, "Marlina Veloso-Galenzoga v. The Registry of Deeds of Quezon City, et
al.," assailing the dismissal of the mandamus case with prejudice. This was later denied by the
CA48 in its Decision49 dated 16 November 2018, affirming the finding of Br. 76-RTC that
respondent committed forum shopping. The motion for reconsideration filed by respondent
herein was likewise denied by the majority of the CA Division of Five of the Former Special
Sixteenth Division by Resolution50 dated 30 July 2019, penned by Associate Justice Maria
Filomena D. Singh, with the former ponente of the Decision dated 16 November 2018, Associate
Justice Stephen C. Cruz, now dissenting.

Eventually, the mandamus case reached the Court, with respondent filing a petition for review
on certiorari assailing the dismissal of her petition for certiorari before the CA, docketed as
G.R. No. 248747. The Court takes judicial notice that on 15 June 2020, the Third Division of the
Court, finding no reversible error on the part of the CA, denied the same.

Petition for Certiorari (Under Rule 65) filed before the CA assailing the Specific Performance
case

During the pendency of C.A.-G.R. No. 156169, petitioner corporation filed its own petition
for certiorari before the CA, docketed as C.A.-G.R. SP No. 150941, seeking to annul and set
aside in the specific performance case, the Decision dated 21 October 2016, and Writ of
Execution dated 24 April 201 7, as well as the proceedings held and conducted, and issuances
rendered, by the Hon. Edgardo Bellosillo (Judge Bellosillo), Presiding Judge of Br. 95-RTC,
pursuant to the same.

Petitioner corporation, through then counsel, Atty. Reynaldo P. Melendres, maintained that
Judge Bellosillo committed grave abuse of discretion when he rendered the assailed decision
despite improper service of summons in violation of petitioner corporation's right to due process
and when he ordered the issuance of the writ of execution despite the Decision being void.

According to petitioner corporation, it only learned of the specific performance case against it on
12 May 2017. Allegedly, petitioner corporation was informed by its security guards stationed at
the subject property that a broker went to said property wielding a copy of the decision and writ
of execution. However, petitioner corporation never received any summons from Br. 95-RTC.

Petitioner corporation asserted that while summons by publication was effected, no diligent
inquiry was made by the sheriff in serving the summons personally. Due to invalid service of
summons, petitioner corporation was deprived of due process to present its meritorious defense.

In its Comment/Opposition,51 respondent insisted that the sheriff made diligent efforts in

serving the summons. Furthermore, based on the Articles of Incorporation (AOI) and the General
Information Sheets (GIS) filed by petitioner corporation for the years 2006 to 2015, it has
consistently declared PBCom Bulding, Ayala Avenue, Makati City as its principal place of
business.
 67

Respondent likewise claimed that petitioner corporation availed of the wrong remedy, the proper
one being a petition for annulment of judgment under Rule 47 of the Rules.

On 04 October 2017, petitioner corporation, now represented by new counsel, filed a Motion for
Leave to File and Admit Attached Supplemental Reply (with Motion to Set Case for Oral
Arguments).52 In its Supplemental Reply,53 petitioner raised the issue of forum shopping and
alleged that the mandamus case and the specific performance case ultimately sought for the
issuance of a new title in the name of respondent, with essentially the same facts and
circumstances and the same parties with common interest.

Moreover, respondent's right of action in the specific performance case has already prescribed
and is now barred by laches. It took seventeen (17) years from the execution of the deed of
absolute sale before respondent filed a complaint for specific performance, beyond the 10-year
period provided under Article 1144 of the Civil Code.54

Contrary to respondent's claim, petitioner corporation maintained the first page of its 2014 GIS
clearly showed its complete and current address at "c/o Mindanao Textile Corp, -Km 16, ACSIE
Compound, Severina Ind'l. Estate, Paranaque" (KM 16). However, respondent only attached, and
the sheriff merely relied on, the cover page of petitioner corporation's GIS when in fact, the first
page revealed its current address.

The sheriff was also required to make at least three (3) attempts on at least two (2) different dates
to serve the summons pursuant to Manotoc v. Tinga.55 However, he only made a second attempt
to serve the summons at the same address as in his first attempt.

Petitioner corporation also claimed that it made the correct resort via a Rule 65 petition based on
several decisions of the Court; a petition for annulment of judgment not being a plain, speedy
and adequate remedy against judgments rendered or proceedings had without valid service of
summons.

Finally, the authenticity of the Deed and the alleged duplicate copy of TCT No. 185260 in
respondent's possession was put into question.

Ruling of the Court of Appeals

In its Decision56 dated 01 June 2018, the Court of Appeals (CA) Division of Five57 ruled to
dismiss petitioner corporation's petition for being the wrong mode of appeal. The speedy and
adequate remedy is a petition for annulment of judgment under Rule 47 of the Rules considering
that the basis of the petition is the lack of jurisdiction over the person of petitioner corporation.

The CA Division of Five also ruled that service of summons by publication was properly done.
The sheriff cannot be faulted for not attempting to serve summons at petitioner corporation's
alleged business address at KM 16 considering it was not even stated in respondent's complaint
for specific performance and pertained to the address of an unrelated company,58 i.e., Mindanao
Textile, Corp.
 68

The dispositive portion of the CA's Decision reads:

FOR THESE REASONS, the instant Petition for Certiorari is DISMISSED. The assailed

Decision dated dated (sic) 21 October 2016 and the subsequent Writ of Execution dated 24 April
2017, both issued by the public respondent Regional Trial Court, Branch 95, Quezon City in
Civil Case No. R-QZN-15-03231-CV are AFFIRMED.

SO ORDERED.59

Associate Justice Pedro A. Corales (Justice Corales), a member of the CA Division of Five,
however, registered his dissent with the majority.60 Justice Corales observed that there was a
patent lack of valid service of summons. The sheriff did not even bother to serve the summons
personally upon those authorized to receive the same, such as petitioner corporation's president,
managing partner, general manager, corporate secretary, treasurer or in-house counsel. The lack
of diligence to serve the summons personally rendered invalid the summons by publication.
After all, it may only be resorted to after unsuccessful attempts to serve the summons personally
and after diligent inquiry as to petitioner corporation's whereabouts.

Justice Corales also noted that the writ of execution issued in the specific performance case
altered the terms of the judgment sought to be executed. The writ of execution, aside from
ordering the payment of DST and CGT and the turn over of possession of the subject property,
added a directive to the RD of Quezon City to annotate on TCT No. 185260 the absolute deed of
sale and to issue a new title in the name of respondent.

In disregarding the rules on service of summons, and in altering the decision sought to be
executed, Judge Bellosillo committed grave abuse of discretion. His manifest and obstinate
disregard of the basic rules of procedure warrants the resort to Rule 65 of the Rules.

Petitioner corporation filed its Motion for Reconsideration61 which the majority of the CA
Special Division of Five62 denied in its Resolution63 dated 26 February 2019, the dispositive
portion of which states:

WHEREFORE, WE stand by OUR Decision dated June 1, 2018. The Motion for
Reconsideration is DENIED.

SO ORDERED.

Feeling aggrieved, petitioner corporation filed the instant petition for review on certiorari.

Issues

Both parties presented a slew of issues which may be condensed and simplified to the following:
1) propriety of resort to Rule 65 of the Rules; 2) the validity of the service of summons by
publication; and 3) the propriety of the expansion of the writ of execution issued in the specific
performance case.
 69

Ruling of the Court

A judgment may be voided through either a collateral attack, or by direct attack via a petition
for certiorari under Rule 65 or a petition for annulment of judgment under Rule 47

A void judgment is defined as one that, from its inception, is a complete nullity and without legal
effect. A void judgment is not entitled to the respect accorded to, and is attended by none of the
consequences of, a valid adjudication. Indeed, a void judgment need not be recognized by
anyone, but may be entirely disregarded or declared inoperative by any tribunal in which effect is
sought to be given to it. It has no legal or binding force or efficacy for any purpose or at any
place. It cannot affect, impair, or create rights, nor can any rights be based on it. All proceedings
founded on the void judgment are themselves regarded as invalid and ineffective for any
purpose.64

As void judgments produce no legal and binding effect, they are deemed inexistent. They may
result from lack of jurisdiction over the subject matter or a lack of jurisdiction over the person of
either of the parties. And they may also arise if they were rendered with grave abuse of discretion
amounting to lack or excess of jurisdiction. Such void judgments may be attacked directly via a
petition for annulment of judgment under Rule 47, and via a petition for certiorari under Rule 65
of the Rules, respectively.65

The majority of the CA Division of Five ruled that petitioner corporation should have availed of
the remedy of annulment of judgment instead of petition for certiorari in attacking the decision
of Br. 95-RTC in the specific performance case. This, considering that petition essentially assails
the lack of jurisdiction over its person, not having been validly served with summons.

We do not agree.

While it is true that defective service of summons negates the Court's jurisdiction and is thus
recognized as a ground for an action for annulment of judgment,66 this does not preclude the
remedy of certiorari.

In cases where a tribunal's action is tainted with grave abuse of discretion, Rule 65 of the Rules
provides the remedy of a special civil action for certiorari to nullify the act.67 After all, the
concept of lack of jurisdiction as a ground to annul a judgment does not embrace abuse of
discretion.68

Here, petitioner corporation does not only assail the lack of jurisdiction over its person on
account of an invalid service of summons but likewise the grave abuse of discretion allegedly
committed by Judge Bellosillo in patently disregarding the Rules of Court and applicable
jurisprudence in issuing the decision and writ of execution in the specific performance case. To
recall, petitioner corporation asserts that the expansion of the scope of the decision smacks of
grave abuse of discretion considering that the writ of execution issued included reliefs not even
prayed for in the complaint. After all, a petition for certiorari is a remedy directed not only to
correct errors of jurisdiction, but also to set right, undo, and restrain any act of grave abuse of
 70

discretion amounting to lack or excess of jurisdiction by any branch or instrumentality of the

Government.69

We are aware that while a void judgment is no judgment at all, any action to challenge it must be
done through the correct remedy.70 However, to haphazardly conclude that the remedy of
annulment is the only proper remedy and precludes resort to certiorari, by singularly taking the
allegation of lack of jurisdiction over the person of petitioner corporation as basis, is a myopic
appreciation of the facts, issues and pieces of evidence, as well as interpretation of procedural
rules and established jurisprudence. A holistic approach is favored to better serve the interest of
justice.

Further, the lack of a valid service of summons may be properly assailed in a Rule 65 petition.
Jurisprudence has allowed a certiorari petition to render judgments and writs of executions
issued without valid service of summons as void. In Matanguihan v. Tengco,71 the Court
ruled certiorari is proper where the proceeding in the trial court has gone so far out of hand as to
require prompt action. An action for an annulment of judgment is not a plain, speedy and
adequate remedy. Similar resort to Rule 65 was allowed in Filmerco Commercial Co., Inc. v.
Intermediate Appellate Court,72 and in Santiago Syjuco, Inc. v. Castro.73 More recently, the
Court affirmed the findings of grave abuse of discretion by the appellate court committed by the
trial courts in issuing decisions sans proper service of summons in Pascual v. Pascual,74 Express
Padala (ltalia) v. Ocampo,75 and Interlink Movie Houses, Inc. v. Court of Appeals.76

Even assuming, arguendo, that a petition for annulment of judgment is the proper remedy, the
CA is not barred from taking cognizance of the petition. In Heirs of So v. Obliosca,77 where the
inverse happened, i.e., annulment of judgment was deemed as improper remedy, the Court ruled
that the higher interests of justice and equity demand that procedural norms be brushed aside:

After all, rules of procedure are intended to promote rather than defeat substantial justice, and
should not be applied in a very rigid and technical sense. Rules of procedure are merely tools
designed to facilitate the attainment of justice; they are promulgated to aid the court in the
effective dispensation of justice. The Court has the inherent power and discretion to amend,
modify or reconsider a final judgment when it is necessary to accomplish the ends of justice.

If the rigid application of the Rules would frustrate rather than promote justice, it is always
within the Court's power to suspend the Rules or except a particular case from its operation. The
power to suspend or even disregard rules can be so pervasive and compelling as to alter even that
which this Court itself has already declared to be final.78

Given the realities obtaining in this case, the liberal construction of the Rules will promote and
secure a just determination of the parties' causes of action against each other. As the court of the
last resort, justice should be the paramount consideration when the Court is confronted with an
issue on the interpretation of the Rules, subject to petitioner's burden to convince the Court that
enough reasons obtain to warrant the suspension of a strict adherence to procedural
rules.79 Petitioner corporation has shown more than enough valid and justifiable reasons why a
relaxation of the Rules should be accounted in its favor.
 71

The service of summons was invalid; Br. 95-RTC never acquired jurisdiction

Respondent moved for the service of summons by publication after the branch deputy sheriff
failed to serve summons twice at the provided address, "6th Floor of PBCom Building, Ayala
Avenue, Makati City," which the trial court granted. Petitioner corporation, however, asserts that
the requisites for service of summons for publication were not even met; thus, the service
through such means is invalid.

Personal service of summons is the preferred mode of service of summons. Thus, as a rule,
summons must be served personally upon the defendant or respondent wherever he or she may
be found.80 The Rules, however, allow service of summons through other modes, such by by
substituted service, and by publication. Under Section 14, Rule 14 of the Rules81 then in force,
summons by publication may be effected, by leave of court, when the whereabouts of the
defendant is unknown and cannot be ascertained with diligent inquiry.

Thus, before summons by publication may be allowed, the following requirements must be
satisfied: 1) there must be a written motion for leave of court to effect service of summons by
publication, supported by affidavit of the plaintiff or some person on his behalf, setting forth the
grounds for the application;82 and 2) there must be diligent efforts exerted by the sheriff in
ascertaining the whereabouts of the defendant.83

A perusal of the records reveals that the foregoing requirements were not met. While respondent
filed, through counsel, a Motion to Serve Summons by Substituted Service,84 praying for
summons by publication, it was not accompanied by the required affidavit executed either by
respondent or by some other person on her behalf. Moreover, the Sheriffs Return85 does not
show that diligent or earnest efforts were exerted by the sheriff in ascertaining the whereabouts
of petitioner corporation.

The diligence requirement under Section 14, Rule 14 of the Rules means that there must be prior
resort to personal service under Section 7 and substituted service under Section 8 of the same
Rule, and proof that these modes were ineffective before summons by publication may be
allowed.86 In Manotoc v. Court of Appeals,87 the Court ruled that the sheriff must be
resourceful, persevering, canny, and diligent in serving the process on the defendant. Moreover,
there must be several attempts by the sheriff to personally serve the summons within a
reasonable period, which means at least three (3) tries, preferably on at least two (2) different
dates. There must likewise be reasons cited why such efforts were unsuccessful. It is only then
that impossibility of service can be confirmed or accepted.88

The Sheriff's Return in this case states:

THIS IS TO CERTIFY that on April 16, 2015, the undersigned tried to Serve a copy of the
Summons together with the Complaint and Annexes to the defendant Titan Dragon Properties
Corporation located at 6th Floor, PBCom Buidling, Ayala Avenue, Makati City. On same date,
the undersigned was informed by a certain Administrative Assistant, Ms. Gina Busque[,] that no
such company exist[s] at the given address. The Undersigned went up to the 6th Floor of the
 72

PBCom Building to verify the said address and I found out that the Entire 6th Floor is occupied
by PBCom Bank.

Dissatisfied, the undersigned went again on April 23, 2015, the undersigned again tried to Serve
a copy of the Summons together with the Complaint and Annexes to the defendant. On the same
date, the undersigned was informed by the Building Manager of PBCom, a certain Mr. Jonathan
P. Roda that the defendant Titan Dragon Properties Corporation was not holding office at the
above described address.

Respectfully returned for your information and guidance.89 [Emphasis supplied.]

It is apparent from the said return that the sheriff only tried to serve the summons personally
twice on two (2) separate dates, contrary to respondent's allegation that the sheriff made three (3)
of the mandated attempts. The sheriff's act of going up to the 6th Floor to check whether or not
petitioner corporation was holding office thereat90 cannot, by any stretch of imagination be
considered as a separate attempt to serve summons. For one, the sheriff did not even state that he
made an attempt to serve the summons anew to petitioner corporation when he went to the
6th Floor of PBCom. For another, the sheriff himself categorically alleged in his return that he
"tried to Serve a copy of the Summons together with the Complaint and Annexes to the
defendant Titan Dragon Properties Corporation located at 6th Floor, PBCom Buidling, Ayala
Avenue, Makati City" only on 16 April 2015 and again on 23 April 2015.

Further, the sheriff did not even bother to state if he made inquiries with Administrative
Assistant Ms. Gina Busque and Building Manager Mr. Jonathan P. Roda, both of PBCom Tower,
if petitioner corporation previously held office in the said building and whether they have
information where it may now be found. Also, nothing in the said return shows that the sheriff
tried to effect a substituted service of summons. Neither did the sheriff bother to explain, at the
very least, that substituted service of summons was not feasible.

Both parties in this case belabored the issue of whether or not the sheriff exerted efforts to locate
the whereabouts of petitioner corporation. Respondent insists that the cover pages of the GIS and
AOI of petitioner corporation for several years show its address as 6th Floor, PBCom Building,
Ayala Avenue, Makati City. Petitioner corporation, on the other hand, maintains that it provided,
in the same GIS alluded to by respondent, its current address at Km 16, ACSIE Compound,
Severina Ind'l. Estate, Parañaque. However, respondent merely attached its cover page, without
including the rest of the GIS, or at least, the first page thereof where its current address is stated.

Indeed, the cover page of petitioner corporation's GIS shows its address at the 6th Floor of
PBCom Building. It is equally true, however, that on the very next page of the GIS, its current
address at KM 16 is likewise provided. Thus, the sheriff, upon failure to serve the summons at
the address provided by respondent, should have endeavored to ask the latter for an alternative
address; or, at the very least, asked for the complete pages of petitioner corporation's GIS.

The sheriff could have also visited the subject property and attempted to serve the summons at
said place.ℒαwρhi ৷ This, considering respondent's prayer in her complaint in the specific
performance case that petitioner corporation remains in possession thereof. Moreover, the sheriff
 73

could have tried searching for petitioner corporation's address using the internet. However, the
sheriff did the bare minimum by limiting service at the 6th Floor of PBCom Building. To Our
mind, the sheriff fell short of his duty to be resourceful, persevering, canny, and diligent in
serving the summons on petitioner corporation.

Contrary to the findings of the majority of the CA Division of Five,91 the presumption of

regularity in the performance of the sheriffs duty cannot justify the glaring disregard of
procedural rules.92 After all, the presumption of regularity in the issuance of the sheriffs return
does not apply to patently defective returns,93 as in this case.

Likewise, We stress that respondent had the responsibility to provide alternative addresses after
the service of summons at the original given address turned futile. After all, respondent claimed
herself in her complaint for mandamus, which she filed two (2) weeks after the specific
performance case, that she demanded from Yao, while still alive, and after the latter's death, from
the representatives/owners of petitioner corporation, to abide by the terms of the Deed.94 This
only shows that respondent was aware all along of the whereabouts of petitioner corporation
and/or its representatives.

In Yu v. Yu,95 citing Dulap v. Court of Appeals,96 the Court explained the importance of

requiring the fullest compliance with all the requirements of the statute permitting service by
publication in this wise:

x x x Where service is obtained by publication, the entire proceeding should be closely

scrutinized by the courts and a strict compliance with every condition of law should be exacted.
Otherwise great abuses may occur, and the rights of persons and property may be made to
depend upon the elastic conscience of interested parties rather than the enlightened judgment of
the court or judge.

In court proceedings, there is no right more cherished than the right of every litigant to be given
an opportunity to be heard. This right begins at the very moment that summons is served on the
defendant. The Rules place utmost importance in ensuring that the defendant personally grasp
the weight of responsibility that will befall him.97 Statutes prescribing modes other than
personal service of summons must be strictly complied with to give the court jurisdiction, and
such compliance must appear affirmatively on the return.98 As such, the rules must be followed
strictly, faithfully and fully as they are extraordinary in character and considered in derogation of
the usual method of service.99

Absent compliance with the rigid requirements on the service of summons, service by
publication is invalid. Hence, Br. 95-RTC never acquired jurisdiction over the person of
petitioner corporation. Necessarily, the proceedings and any judgment, including all issuances
rendered in the specific performance case are null and void.100

The Writ of Execution issued in the specific performance case expanded the scope of the
Decision dated 16 October 2016 of Br. 95-RTC it sought to execute
 74

A void judgment creates no rights and produces no effect, thus all acts performed pursuant to it
and all claims emanating from it have no legal effect,101 including writs of execution issued
pursuant thereto. Considering that the proceedings and the decision in the specific performance
case are void, necessarily, the writ of execution ordered by Br. 95-RTC to be issued is likewise
void.

The Court notes, however, that the patent nullity of the proceedings in the specific performance
case is further exacerbated by the issuance of a writ of execution which included matters not
even prayed for by respondent in her complaint. As earlier stated, respondent merely prayed for
two (2) things: first, that petitioner corporation be made to pay the CGT and DST pursuant to the
absolute deed of sale; and second, for petitioner corporation to turn over possession of the
subject property.

Notwithstanding, the writ directed not only the execution of the Decision dated 21 October 2016,
which already became final on 12 December 2016, but likewise, the subsequent Order dated 13
December 2016. The latter order mandated the RD of Quezon City to reinstate TCT No. 185260,
which had been earlier cancelled and subdivided by petitioner corporation, to annotate thereon
the absolute deed of sale between respondent and Yao, and to issue a new title in the name of
respondent. Thus, Judge Bellosillo whimsically expanded the scope of an already final and
executory decision at the time by including reliefs not even stated in the said decision or prayed
for by respondent in her complaint for specific performance. Such act is a blatant disregard of the
most basic rules of procedure. It is so contumacious and scandalous that it behooves the Court
why the appellate court turned a blind eye on this issue.

Elementary is the rule that a writ of execution must substantially conform to the judgment sought
to be enforced, more particularly, to that ordained or decreed in the dispositive portion of the
decision.102 The courts may not go beyond the terms of the judgment sought to be executed.
Where the executions is not in harmony with the judgment which gives it life and exceeds it, it
has pro tanto no validity. To maintain otherwise would be to ignore the constitutional provision
against depriving a person of his property without due process of law.103

Judge Bellosillo, as Presiding Judge of Br. 95-RTC, committed grave abuse of discretion in
allowing summons by publication which eventually led to the declaration of default on the part
of petitioner corporation and the issuance of the assailed judgment by default and the writ of
execution

In petitions for review on certiorari emanating from Rule 65 petitions, the question of law
presented before the Court is whether or not the CA was correct in its finding of the presence or
absence of grave abuse of discretion amounting to lack or excess of jurisdiction.104 And in this,
We find that contrary to the ruling of the majority of the CA Division of Five, Judge Bellosillo
committed grave abuse of discretion.

Grave abuse of discretion means such capricious or whimsical exercise of judgment which is
equivalent to lack of jurisdiction. The abuse of discretion must be grave, as when the power is
exercised in an arbitrary or despotic manner by reason of passion or personal hostility, and the
abuse must be so patent and gross as to amount to an evasion of a positive duty or to a virtual
 75

refusal to perform the duty enjoined, or to act at all, in contemplation of law, as to be equivalent
to having acted without jurisdiction.105

The manifest abuse of discretion exhibited by Judge Bellosillo in allowing the service of
summons through publication, which led to the issuance of judgment of default against petitioner
corporation and in expanding the dispositive portion of the Decision dated 16 October 2016 by
issuing a writ of execution containing terms neither appearing in said decision nor in the
complaint for specific performance, must not be countenanced. Moreso, the wanton disregard of
basic procedural requirements led to the deprivation of due process of law on the part of
petitioner corporation.

If only to emphasize the gravity of the abuse of discretion committed, petitioner corporation was
stripped of, not only the possession of the subject property, but likewise, title thereto. To
reiterate, the writ of execution included the cancellation of its derivative titles emanating from
TCT No. 185260 and the issuance of a new title in the name of respondent. This, despite the fact
that the case is simply one for specific performance for the payment of CGT and DST and the
turn over of possession of the subject property.

Based on the records, petitioner corporation, in fact, was ousted of possession over the subject
property on 03 February 2020.106 Worse, its derivative titles were cancelled107 and new
ones108 were issued in the name of respondent.109 Thus, the trial court judge should have
exercised prudence and caution considering especially that the property involved in this case is a
7-hectare plot of land in the prime location of New Manila, Quezon City.

An order of default is frowned upon and not looked upon with favor

The Court takes notice that as a result of the allowance of service of summons by publication,
petitioner corporation was declared in default and a judgment by default was entered against it.
This deprived petitioner corporation of its day in court to present its meritorious defense which
eventually led to the deprivation of its title to and possession over the subject 70,364 sq.m
property in New Manila, Quezon City without due process of law.

The policy of the law is to have every litigant's case tried on the merits as much as possible.
Hence, judgments by default are frowned upon. A case is best decided when all contending
parties are able to ventilate their respective claims, present their arguments and adduce evidence
in support thereof. The parties are thus given the chance to be heard fully and the demands of
due process are subserved. Moreover, it is only amidst such an atmosphere that accurate factual
findings and correct legal conclusions can be reached by the courts.110

A void decision is a nullity, thus, it never acquires finality

The Decision dated 21 October 2016 in the specific performance case, including all orders,
resolutions and the writ of execution issued pursuant thereto, are void. When a judgment is void
for lack of jurisdiction and its nullity is shown by virtue of its own recitals, it may be said to be a
lawless thing, which can be treated as an outlaw and slain at sight, or ignored wherever and
 76

whenever it exhibits its head.111 A void judgment is no judgment at all, hence, it can never
attain finality.112

Finally, considering the nullity of the issuance of the summons by publication, all proceedings
emanating therefrom are likewise void. Thus, in order to afford petitioner corporation of its day
in court, as originally prayed for by petitioner corporation in its pleadings113 before the CA, and
to afford the parties ample opportunity to thresh out their respective claims and defenses, the
remand of the case to the trial court is proper. Forthwith, Br. 95-RTC is mandated to issue
summons anew to petitioner corporation at its current address.

WHEREFORE, premises considered, the petition is hereby GRANTED. The Decision dated 01

June 2018 rendered by the Court of Appeals, Division of Five, and Resolution dated 26 February
2019 rendered by the Court of Appeals, Special Division of Five, Special Former Third Division,
in CA-G.R. SP No. 150941 are REVERSED and SET ASIDE. Accordingly, the Decision dated
21 October 2016 of Branch 95, Regional Trial Court of Quezon City, as well as all issuances
rendered pursuant thereto, are declared NULL and VOID.

The case is hereby REMANDED to Branch 95, Regional Trial Court of Quezon City for further
proceedings. The presiding judge of the said court is mandated to issue anew the required
summons to petitioner corporation and proceed with the trial of the case with dispatch.

SO ORDERED.

Gesmundo, C. J., Caguioa, Gaerlan, and J. Lopez,* JJ., concur.

[ G.R. No. 238201. November 22, 2021 ]

FEDERAL LAND, INC., METROPOLITAN BANK & TRUST COMPANY,[1] BELLA

ANG, SERGRE MARIO IYOG, ALFRED TY, ROSA P. CHUA, AND MICHAEL
LUCIANO P. ARANAS, PETITIONERS, VS. NORTHLANDER REAL ESTATE AND
DEVELOPMENT, INC., RESPONDENT.

DECISION

LEONEN, J.:

There is litis pendentia when there is, between the two cases, identity of parties, identity of rights
asserted and reliefs prayed for, and identity of cases in such that judgment rendered in the
pending case would amount to res judicata in the other. Concurrence of these elements is a
ground for dismissal of an action.

This Court resolves the Petition for Review2 which seeks to annul, reverse, and set aside the
Court of Appeals' Decision3 and Resolution4 dismissing the consolidated petitions
for certiorari filed by Federal Land Inc. (Federal Land), Metropolitan Bank and Trust Company
 77

(Metrobank), and officers of Central Realty & Development Corporation (Central Realty),
namely Bella Ang, Sergre Mario Iyog, Rosa P. Chua, and Michael Luciano P. Aranas
(collectively, petitioners) against the Order5 which also denied petitioners' Motion to Dismiss the
complaint filed by North Lander Real Estate and Development, Inc. (North Lander).6

Central Realty is the registered true owner of a parcel of land in Binondo, Manila with an area of
about 7,350 square meters and covered by Transfer Certificate of Title (TCT) No. 198996.7 It
bought the land from Philippine National Bank in 1989 and paid the real estate taxes from 1991
to 2010.8

On September 23, 2011, Federal Land entered into a Joint Venture Agreement with Central
Realty for the development of the property into a residential and commercial condominium
project to be known as "Four Seasons Riviera."9 Construction began after the signing of the joint
venture agreement.10

On December 6, 2012, North Lander filed a Complaint11 (North Lander's Complaint) for

recovery of ownership and possession against petitioners12 and the Register of Deeds
Manila.13 North Lander sought for the cancellation of encumbrance, annotation, and entries,
annulment and declaration of nullity of documents, recovery of possession, judicial declaration
and confirmation of ownership of land, injunction and temporary restraining order and damages
in relation to the property.14

North Lander alleged that, on September 7, 1993, Central Realty sold the property to Dolores
Molina (Molina), who in turn sold the property to North Lander on October 30,
2012.15 Additionally, it alleged that Central Realty and Federal Land executed the joint venture
agreement using a forged owner's duplicate of TCT No. 198996, and together with the Register
of Deeds of Manila, annotated fictitious loans and mortgages on the title.16 Lastly, North Lander
claimed that it would suffer irreparable injury unless Federal Land and Central Realty are
enjoined from continuing with the project.17

Petitioners moved to dismiss18 on the grounds of improper service of summons, res judicata,

and litis pendentia, forum shopping, failure to implead Central Realty which is an indispensable
party, violation of Statute of Frauds, prohibition on collateral attack against a certificate of title,
and coming to court with unclean hands.19

On the ground of res judicata and litis pendentia, petitioners referred to a February 4, 2011

Petition for Cancellation of Adverse Claim20 (Adverse Claim case), filed by Central Realty
before the Regional Trial Court of Manila, Branch 4. Central Realty sought to cancel Molina's
adverse claim as buyer of the property annotated on TCT No. 198996 on May 7, 2010.
According to petitioners, the Adverse Claim case and North Lander's Complaint involved
substantially the same property, parties, and interests, and a judgment in the former case may
result in res judicata in the latter case. Petitioners further contended that North Lander bought
the property from Molina knowing that she was neither the registered owner nor possessor
thereof.21
 78

The Regional Trial Court denied the Motion to Dismiss in its January 9, 2013 Order.22 It held, in
part:

Verily, the case for cancellation of adverse claim pending before Branch 4 of
this Court is a land registration proceeding where a speedy hearing on the
question of the validity of the adverse claim is in issue and thus has to be
adjudged .... In other words, the land registration court has a limited jurisdiction
such that its decision cannot encompass all the other reliefs sought in the present
action such as the issuance of a permanent injunction and the determination of
the validity of the documents in question, among others.

Further, this court subscribes to the view of the plaintiff that the Statute of
Frauds is not applicable to the case at bar. As it is, the Deeds of Sale subject of
this case could no longer be considered as executory contracts, thus, outside of
the ambit of the Statute of Frauds.

Moreover, though a collateral attack on the title is indeed not permitted, this
Court is of the considered view that the present action is not geared towards an
inquiry into the validity of the defendants' title but of the subject documents,
among others. Both the allegations in the Complaint and its prayers confirm such
an observation.

As to the last ground, the defendants claim that the plaintiff's claim is based
on fraud. Such assertion cannot, however, be determined based on the summary
hearing held on the application for temporary restraining order nor based on the
allegations of the Complaint. ... The veracity of the assertions could be asserted at
the trial on the merits.23

On March 25, 2013, petitioners filed a Petition for Certiorari before the Court of Appeals,
docketed as CA-G.R. SP No. 129133.24

Meanwhile, on April 10, 2013, the Regional Trial Court issued an Order denying North Lander's
application for the issuance of a writ of preliminary injunction.25 North Lander then filed a
Petition for Certiorari with the Court of Appeals docketed as CA-G.R. SP No. 129625. This was
consolidated with CA-G.R. SP No. 129133 on October 14, 2016.26

Pending the resolution of the petitions, the Regional Trial Court of Manila, Branch 4 rendered its
April 11, 2014 Decision27 in the Adverse Claim case. It cancelled Molina's adverse claim,
saying that Central Realty's title is "that which is genuine"28 and that Molina's title was
"questionable and suspect."29 The Decision attained finality on October 26, 2015.30

On April 21, 2017, the Court of Appeals rendered its Decision in CA-G.R. SP Nos. 129133 and
129625, dismissing the petitions for certiorari. The Court of Appeals upheld the trial court's
denial of North Lander's application for injunctive writ. It agreed with the trial court's finding
that North Lander failed to show a clear and unmistakable right to be protected and the
irreparable injury it would suffer.31
 79

With regard to CA-G.R. SP No. 129133, the Court of Appeals did not find grave abuse of
discretion on the part of the trial court in denying petitioners' motion to dismiss.32 It agreed with
the Regional Trial Court that litis pendentia is not present as there was no identity of parties,
rights, and interests between North Lander's Complaint and the Adverse Claim
case.33 Moreover, it held that the Adverse Claim case, "being a land registration proceeding, is
limited in character and summary in nature... Jurisdiction of the [Regional Trial Court] ... did not
extend to other issues" such as North Lander's "right to the injunctive writ prayed for, claims for
damages, recovery of possession and confirmation of ownership over the property."34

The Court of Appeals further held that the issues on Molina's authority to sell the property,
statute of frauds, and prescription could be best ventilated during trial as they require
presentation of evidence.35 The Court of Appeals also found a trial on the merits to be proper
considering the ownership of the property was in dispute.36

Petitioners moved for partial reconsideration of the Decision. They argued that the Decision in
the Adverse Claim case declaring Molina's supposed title as not genuine constitutes res
judicata to North Lander's Complaint.37

In a February 19, 2018 Resolution,38 the Court of Appeals denied the motion for partial
reconsideration.

Hence, this Petition.

Petitioners contend that there is identity of parties, subject matter and causes of action between
respondent's Complaint and the Adverse Claim case,39 hence, respondent's Complaint should
have been dismissed on the ground of res judicata.40 Petitioners assert that there is community
of interest between respondent and Molina, the defendant in the Adverse Claim case,41 and both
cases involve the exact same property.42 Both respondent and Molina assert their purported right
as owner of the property and present the same evidence.43 While respondent claims, among
others, a right to an injunctive writ, damages, recovery of possession, petitioners contend that the
issue in respondent's Complaint essentially involves the claim of ownership.44

Assailing the Court of Appeals' ruling, petitioners argue that "the [Regional Trial Court of]
Manila, Branch 4's designation as a land registration court in the Adverse Claim Case does not
limit its jurisdiction."45 They add that the doctrine of limited jurisdiction was abandoned as early
as 199546 in Ligon v. Court of Appeals,47 where the Court held that Section 2 of Presidential
Decree No. 1529 or the Property Registration Decree has "simplified registration proceedings"
and "eliminated the distinction between the general jurisdiction vested in the regional trial court
and the limited jurisdiction conferred upon it by the former law when acting merely as a
cadastral court."48 Petitioners add that the Regional Trial Court of Manila, Branch 4 did not only
rule on whether Molina's adverse claim should be cancelled, but also determined whose title was
genuine.49 The Decision in the Adverse Claim case, which had attained finality, operates as a
bar to respondent's Complaint on the ground of res judicata.50

Petitioners further aver that respondent's claim is unenforceable under the Statute of
Frauds.51 They argue that no Deed of Sale was ever executed by Central Realty in favor of
 80

Molina and the purported Deed of Sale and related documents executed by Molina were fake and
falsified.52 Moreover, respondent, as a mere successor-in-interest of Molina, is already barred
from filing any action on the basis of the so-called September 7, 1993 Deed of Absolute Sale
because of prescription.53 These are all apparent from the face of the documents and the
pleadings. Hence, petitioners claim that the Court of Appeals erred in ruling that a full-blown
trial is necessary to resolve these issues.54

Petitioners further contend that respondent's exclusion of Central Realty from the Complaint,
despite knowing and admitting that Central Realty is the registered owner of the property,
reveals its attempt to escape the consequences of its deliberate forum shopping.55 Moreover,
petitioners assert that respondent's Complaint and the reliefs prayed for constitute a collateral
attack on Central Realty's title, which is prohibited under Section 48 of the Property Registration
Decree.56

Finally, petitioners contend that the Regional Trial Court of Manila, Branch 4, already held that
Central Realty is the true owner of the property and that "it has not conveyed ownership to any
third part[y]."57 This clear pronouncement in the Adverse Claim case must be fully respected
pursuant to the doctrine of judicial stability or non-interference.58

In its Comment,59 respondent counters that petitioners raised the same grounds and arguments,
which have already been extensively considered first by the trial court, then the Court of
Appeals.60 First, the trial court and the Court of Appeals correctly ruled that there is no litis
pendentia or res judicata because there is no identity of parties, rights, and reliefs.61 Respondent
was not a party to the Adverse Claim case, and Central Realty and Molina were not impleaded as
parties in the present case.62 Moreover, respondent's complaint is essentially for recovery of title
and ownership of the property, while the Adverse Claim case is a summary proceeding for the
cancellation of the annotation of adverse claim on the title.63 The determination of ownership in
the Adverse Claim case was not conclusive.64

Second, respondent claims that the Statute of Frauds is inapplicable because the deeds of sale,
upon which respondent relies on its claim of ownership, were in writing and notarized.65 With
regard to prescription, petitioners did not raise this ground in their motion to dismiss before the
trial court. Moreover, this issue involves the ascertainment of factual matters that is best
ventilated during trial.66

Finally, respondent's complaint is not a collateral attack on Central Realty's title. There is no
allegation that Central Realty's title is on its face null and void. Rather, respondent's claim of
ownership is based on the sale of the property by Central Realty to Molina.67

The main issue for this Court's resolution is whether or not litis pendentia and res
judicata applies to the Adverse Claim case filed by Central Realty & Development Corporation
and respondent North Lander Real Estate and Development Inc.'s complaint for recovery of
ownership and possession.

The Petition is granted.

 81

The Court of Appeals agreed with the Regional Trial Court that litis pendentia is not present as
there was no identity of parties, rights, and interests between respondent's Complaint and the
Adverse Claim case.68 Moreover, it held that the Adverse Claim case, "being a land registration
proceeding, is limited in character" and the jurisdiction of the Regional Trial Court did not
extend to resolving respondent's "right to the injunctive writ prayed for, claims for damages,
recovery of possession and confirmation of ownership over the property."69

The Court of Appeals erred.

Litis pendentia is a ground for dismissal of an action where another action for the same cause of
action is pending between the same parties.70 The elements of litis pendentia are:

(1) identity of parties, or at least such as representing the same interests in

both actions; (2) identity of rights asserted and reliefs prayed for, the reliefs being
founded on the same facts; and (3) identity in both cases is such that the
judgment that may be rendered in the pending case would, regardless of which
party is successful, amount to res judicata in the other.71 (Citation omitted)

In turn, res judicata precludes parties from re-litigating issues actually litigated and determined
by a prior and final judgment.72 It applies when the following elements concur:

(1) the judgment sought to bar the new action must be final; (2) the decision
must have been rendered by a court having jurisdiction over the subject matter
and the parties; (3) the disposition of the case must be a judgment on the merits;
and (4) there must be as between the first and second action, identity of parties,
subject matter, and causes of action.73 (Citation omitted)

The Court finds concurrence of the elements of litis pendentia and res judicata.

Respondent filed its Complaint for recovery of ownership and possession on December 6, 2012,
after it purportedly bought the property from Molina on October 30, 2012, and during the
pendency of the Adverse Claim case filed by Central Realty.

On April 11, 2014, the Regional Trial Court, Branch 4, Manila rendered a Decision ordering the
cancellation of Molina's adverse claim for the reason that Central Realty's title is "that which is
genuine"74 and that Molina's title was "questionable and suspect."75 The Decision in the
Adverse Claim case attained finality on October 26, 2015.76 It was rendered based on the merits,
after a consideration of the evidence submitted by the parties.

The Regional Trial Court, Branch 4, Manila had jurisdiction to cancel Molina's adverse claim
pursuant to Section 7077 of the Property Registration Decree. Under Section 278 of the same
Decree, Regional Trial Courts have exclusive jurisdiction over applications for original
registration and petitions filed after, with power to resolve all questions arising upon such
applications or petitions.79
 82

It was clarified in Santos v. Ganayo80 that the Regional Trial Court, whether sitting as a land
registration court or as a court of general jurisdiction, may determine the validity of the adverse
claim and resolve issues on ownership raised by the parties. Thus:

Section 110 [of Act No. 49681 does not distinguish between a Court sitting
as a land registration Court and a Court of general jurisdiction. We are of the
considered opinion, therefore, that either Court may determine the validity of an
adverse claim and if found to be invalid, order its cancellation. This conclusion
found expression in  Paz Ty Sin Tei vs. Jose Lee Dy Piao... which held:

"The action taken by the lower Court in ordering the cancellation of the
adverse claim before its validity could be passed upon, is not sanctioned by
law ... it may be cancelled only in one instance i.e. after the claim is adjudged
invalid or unmeritorious by the Court, acting either as a land registration court
or one of general jurisdiction while passing upon a case before it where the
subject of the litigation is the same interest or right which is being secured by the
adverse claim."

The conclusion arrived at is not altered by the fact that ownership is

involved, and corollarily, the issues of prescription and laches. For in any event,
there was, in effect, acquiescence by the parties to the jurisdiction assumed by the
Court a quo, notwithstanding initial objections thereto, inasmuch as they had
presented their respective evidence and were given full opportunity to air their
side of the controversy.

"Generally, an issue properly litigable in an ordinary civil action under the

general jurisdiction of the Court of First Instance should not be resolved in a land
registration proceeding. But since in this jurisdiction the Court of First Instance
also functions as a land registration court, if the parties acquiesced in submitting
that issue for determination in the land registration proceeding and they were
given full opportunity to present their respective sides and their evidence, the
land registration court would have jurisdiction to pass upon that issue."

Again,

"The otherwise rigid rule that the jurisdiction of the Land Registration Court,
being special and limited in character and proceedings thereon summary in
nature, does not extend to cases involving issues properly litigable in other
independent suits or ordinary civil actions, has time and again been relaxed in
special and exceptional circumstances .... It may be gleaned and gathered that the
peculiarity of the exceptions is based not alone on the fact that Land Registration
Courts are likewise the same Court of First Instance, but also the following
premises: 1) Mutual consent of the parties or their acquiescence in submitting the
aforesaid issues for determination by the court in the registration proceedings; 2)
full opportunity given to the parties in the presentation of their respective side of
the issues and of the evidence in support thereto; 3) consideration by the court
 83

that the evidence already of record is sufficient and adequate for rendering a
decision upon these issues."

Besides, whether a particular matter should be resolved by the Court of

First Instance in the exercise of its general jurisdiction or of its limited
jurisdiction as a special court (probate, land registration, etc.) is in reality not a
jurisdictional question. It is in essence a procedural question involving a mode of
practice 'which may be waived.'82 (Emphasis supplied, citation omitted)

Finally, there is identity of parties and causes of action between respondent's Complaint for
recovery of ownership and possession and Central Realty's Adverse Claim case.

Respondent claims that it is the successor-in-interest of Molina based on a purported October 30,
2012 Deed of Sale. Molina is the party against whom the Adverse Claim case was filed. There is,
at the very least, a community of interest between respondent and Molina. This Court explained
in Degayo v. Magbanua-Dinglasan:83

There is identity of parties where the parties in both actions are the same, or
there is privity between them, or they are successors-in-interest by
title subsequent to the commencement of the action, litigating for the same thing
and under the same title and in the same capacity. Absolute identity of parties is
not required, shared identity of interest is sufficient to invoke the coverage of this
principle. Thus, it is enough that there is a community of interest between a party
in the first case and a party in the second case even if the latter was not
impleaded in the first case.84 (Emphasis supplied, citations omitted)

In Sempio v. Court of Appeals,85 a parcel of land owned by the Sempio spouses was
extrajudicially foreclosed by the Development Bank of the Philippines after it emerged as the
highest bidder at the auction sale. Later, the Development Bank of the Philippines filed a Petition
for Issuance of Writ of Possession Ex-Parte docketed as Civil Case No. P-1787-89. The Sempio
spouses then filed a Complaint for Annulment of Foreclosure, Reconveyance of Title and
Damages docketed as Civil Case No. 181-M-90, while Tuazon, the new owner who bought the
land from DBP, filed a complaint for Injunction and Damages docketed as Civil Case No. 681-
M-90. The trial court nullified the extrajudicial foreclosure proceedings in Civil Case No. 181-
M-90, which was later affirmed by this Court, while the writ of possession in Civil Case No. P-
1787-89 was denied.

Meanwhile, Civil Case No. 681-M-90 was dismissed on the ground of litis pendentia, but the
Court of Appeals set aside the order of dismissal and remanded the case to the trial court for
further proceedings. The Court of Appeals held that neither identity of parties nor identity of
causes of action attends Civil Case No. 681-M-90 vis-a-vis Civil Cases Nos. P-1787-89 and 181-
M-90, and the issue of whether Tuazon was a purchaser in good faith and for value was never
passed upon in both Civil Cases Nos. P-1787-89 and 181-M-90.

This Court, in reversing the Court of Appeals, held:

 84

Well-settled is the rule that only substantial, and not absolute, identity of
parties is required for lis pendens, or in any case, res judicata, to lie. There is
substantial identity of parties when there is a community of interest between a
party in the first case and a party in the second case albeit the latter was not
impleaded in the first case.

Respondent Tuazon, concededly, was not impleaded as party-defendant in

Civil Case No. 181-M-90. This court, however, is not oblivious to the fact that
she purchased the land from the DBP at a time when the latter, despite non-
redemption by the Sempios of the land within the applicable period, had not as
yet effectuated the cancellation of TCT No. T-6263 and the issuance of a
certificate of title in the name of the DBP. Respondent Tuazon apparently bought
the land with the actual knowledge, or at least, she ought to have known, that the
DBP was not the registered owner thereof. As such, respondent Tuazon cannot
invoke the protection accorded by the law to purchasers of real property in good
faith and/or value. Moreover, respondent Tuazon should also be taken to task for
failing to make inquiry concerning the rights of the Sempios who were then and
are until now, in possession of the land. Such failure to take the ordinary
precautions which a prudent person would have taken under the circumstances,
specially in buying a piece of land in the actual, visible and public possession of
persons other than the vendor, constitutes gross negligence amounting to bad
faith.

Considering the foregoing, it cannot be denied that the interests of

respondent Tuazon are inextricably intertwined with those of the DBP such that
the former's exercise of her rights as purchaser-transferee of the land foreclosed
by the DBP, is conditioned on the latter's successful defense of the validity of its
foreclosure procedures in Civil Case No. 181-M-90. Thus, a community of
interest, and corollarily, substantial identity of parties, exist between respondent
Tuazon and the DBP insofar as Civil Cases Nos. 181-M-90 and 681-M-90 are
concerned.86 (Emphasis supplied, citations omitted)

As in the case above, respondent bought the property from Molina knowing that the latter is not
the registered owner87 and despite knowledge of the pendency of cases - including the Adverse
Claim case - between Central Realty and Molina.88 There is community of interests between
respondent and Molina because the former's rights are closely intertwined with those of the latter
and with the adjudication of Molina's claim of ownership in the Adverse Claim case.

In its Complaint, respondent acknowledged that Central Realty is the former real and original
owner of the property.89 It claimed, however, that the property was sold to Molina pursuant to a
September 7, 1993 Deed of Sale executed by Central Realty, and thereafter sold to it through an
October 30, 2012 Deed of Sale executed by Molina.90 It further claimed that the sale of the
property to Molina was genuine, but the owner's duplicate of title was not immediately
surrendered to Molina, so the property could not be registered in her name.91 Respondent also
claimed that the owner's duplicate of TCT No. 198996 in the possession of, and used by, Central
 85

Realty's new directors and officers in the joint venture agreement with petitioner Federal Land,
and which bears annotations of loan and mortgages, was fictitious and spurious.92

Respondent's cause of action consists of the violation of what it believes to be its right to the
exclusive possession and enjoyment of the land. At the core of the reliefs sought by respondent -
injunctive writ, damages, recovery of possession, and confirmation of ownership over the
property - is the issue of ownership. Therefore, evidence of its exclusive ownership of the land is
indispensable. Respondent's rights are inherently contingent on those of Molina's, its
predecessor-in-interest. In fact, petitioners contend that the same documents relied upon by
Molina in the Adverse Claim case were also alleged and attached in respondent's Complaint.
This shows the identity of rights asserted and reliefs prayed for by respondent and Molina.

In Estate of Sotto v. Palicte,93 this Court held:

There is identity of causes of action since the issues raised in all the cases
essentially involve the claim of ownership over the subject properties. Even if the
forms or natures of the actions are different, there is still identity of causes of
action when the same facts or evidence support and establish the causes of action
in the case at bar and in the previous cases.94 (Citation omitted)

The Regional Trial Court Manila, Branch 4 ordered the cancellation of Molina's adverse claim
after determining that Molina's claim of ownership is unmeritorious because Central Realty is the
true owner of the property. The Decision in the Adverse Claim case states:

Section 70 of Presidential Decree No. 1529 and the leading case of Spouses
Sajonas vs. Court of Appeals, et al. G.R. No. 102377 (July 5, 1996) dictate that
this court make a finding as to the veracity and sufficiency of a given adverse
claim. In this case, petitioner Central Realty has aptly proven that the adverse
claim made as Entry No. 1515 on the subject title has no leg to stand on. Through
documentary evidence presented and the testimony of Atty. Serge Mario C.
Iyog, Central Realty has proven that no Deed of Sale or no conveyance of
ownership was made in favor of any third party. Petitioner has consistently, up
to the present, exercised acts of ownership and administration over the subject
property as readily shown by the payment of real property taxes on the property
and entering into a Joint Venture Agreement with Federal Land Inc. (Exhibit
"RR").

While intended intervenor Pedro Yulo and oppositor Dolores V. Molina

posses[s] owner's duplicate copies of the title, the examination conducted by the
National Bureau of Investigation Questioned Document Division and the
testimony of Agent Antonio R. Magbujos, acting as a court-appointed
Commissioner, will show that the owner's duplicate copy of the title in
possession of Central Realty is that which is genuine and that those titles held by
Dolores V Molina and Pedro Yulo are questionable and suspect. The Report of
the Land Registration Authority dated 20 February 2014 further supports the
 86

determination of the National Bureau of Investigation in that the title held by the
petitioner is that which is genuine.

Summarily, petitioner has sufficiently shown that the adverse claim

annotated on the title by Dolores V. Molina under Entry No. 1515 has no basis
and should be cancelled. The subject entry should not burden the property any
further as it is undisputed that petitioner Central Realty remains to be the owner
of the subject property.95 (Emphasis supplied)

Respondent is bound by the Regional Trial Court's Decision declaring that Central Realty
remained to be the true owner of the property and that it had not conveyed ownership to any third
party; and that Central Realty's title is genuine, while the title held by Molina was questionable
and suspect. Respondent's Complaint for recovery of ownership and possession must, therefore,
be dismissed on the grounds of litis pendentia and res judicata. Thus, the Court of Appeals erred
in upholding the Regional Trial Court of Manila, Branch 41's denial of petitioners' motion to
dismiss.

With the above disquisition, this Court finds it unnecessary to discuss and resolve the other
issues raised in the Petition.

WHEREFORE, the Petition is GRANTED. The April 21, 2017 Decision

and February 19, 2018 Resolution of the Court of Appeals in CA-G.R. SP Nos.
129133 & 129625 are hereby REVERSED and SET ASIDE. Civil Case No. 12-
129163 is DISMISSED.

Carandang, Zalameda, Rosario, and Marquez, JJ., concur.

G.R. No. 141524 September 14, 2005

DOMINGO NEYPES, LUZ FAUSTINO, ROGELIO FAUSTINO, LOLITO

VICTORIANO, JACOB OBANIA AND DOMINGO CABACUNGAN, Petitioners,
vs.
HON. COURT OF APPEALS, HEIRS OF BERNARDO DEL MUNDO, namely: FE,
CORAZON, JOSEFA, SALVADOR and CARMEN, all surnamed DEL MUNDO, LAND
BANK OF THE PHILIPPINES AND HON. ANTONIO N. ROSALES, Presiding Judge,
Branch 43, Regional Trial Court, Roxas, Oriental Mindoro, Respondent.

DECISION
 87

CORONA, J.:

Petitioners Domingo Neypes, Luz Faustino, Rogelio Faustino, Lolito Victoriano, Jacob Obania
and Domingo Cabacungan filed an action for annulment of judgment and titles of land and/or
reconveyance and/or reversion with preliminary injunction before the Regional Trial Court,
Branch 43, of Roxas, Oriental Mindoro, against the Bureau of Forest Development, Bureau of
Lands, Land Bank of the Philippines and the heirs of Bernardo del Mundo, namely, Fe, Corazon,
Josefa, Salvador and Carmen.

In the course of the proceedings, the parties (both petitioners and respondents) filed various
motions with the trial court. Among these were: (1) the motion filed by petitioners to declare the
respondent heirs, the Bureau of Lands and the Bureau of Forest Development in default and (2)
the motions to dismiss filed by the respondent heirs and the Land Bank of the Philippines,
respectively.

In an order dated May 16, 1997, the trial court, presided by public respondent Judge Antonio N.
Rosales, resolved the foregoing motions as follows: (1) the petitioners’ motion to declare
respondents Bureau of Lands and Bureau of Forest Development in default was granted for their
failure to file an answer, but denied as against the respondent heirs of del Mundo because the
substituted service of summons on them was improper; (2) the Land Bank’s motion to dismiss
for lack of cause of action was denied because there were hypothetical admissions and matters
that could be determined only after trial, and (3) the motion to dismiss filed by respondent heirs
of del Mundo, based on prescription, was also denied because there were factual matters that
could be determined only after trial.1

The respondent heirs filed a motion for reconsideration of the order denying their motion to
dismiss on the ground that the trial court could very well resolve the issue of prescription from
the bare allegations of the complaint itself without waiting for the trial proper.

In an order2 dated February 12, 1998, the trial court dismissed petitioners’ complaint on the
ground that the action had already prescribed. Petitioners allegedly received a copy of the order
of dismissal on March 3, 1998 and, on the 15th day thereafter or on March 18, 1998, filed a
motion for reconsideration. On July 1, 1998, the trial court issued another order dismissing the
motion for reconsideration3 which petitioners received on July 22, 1998. Five days later, on July
27, 1998, petitioners filed a notice of appeal4 and paid the appeal fees on August 3, 1998.

On August 4, 1998, the court a quo denied the notice of appeal, holding that it was filed eight
days late.5 This was received by petitioners on July 31, 1998. Petitioners filed a motion for
reconsideration but this too was denied in an order dated September 3, 1998.6

Via a petition for certiorari and mandamus under Rule 65 of the 1997 Rules of Civil Procedure,
petitioners assailed the dismissal of the notice of appeal before the Court of Appeals.

In the appellate court, petitioners claimed that they had seasonably filed their notice of appeal.
They argued that the 15-day reglementary period to appeal started to run only on July 22, 1998
since this was the day they received the final order of the trial court denying their motion for
 88

reconsideration. When they filed their notice of appeal on July 27, 1998, only five days had
elapsed and they were well within the reglementary period for appeal.7

On September 16, 1999, the Court of Appeals (CA) dismissed the petition. It ruled that the 15-
day period to appeal should have been reckoned from March 3, 1998 or the day they received the
February 12, 1998 order dismissing their complaint. According to the appellate court, the order
was the "final order" appealable under the Rules. It held further:

Perforce the petitioners’ tardy appeal was correctly dismissed for the (P)erfection of an appeal
within the reglementary period and in the manner prescribed by law is jurisdictional and non-
compliance with such legal requirement is fatal and effectively renders the judgment final and
executory.8

Petitioners filed a motion for reconsideration of the aforementioned decision. This was denied by
the Court of Appeals on January 6, 2000.

In this present petition for review under Rule 45 of the Rules, petitioners ascribe the following
errors allegedly committed by the appellate court:

THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE PETITIONERS’

PETITION FOR CERTIORARI AND MANDAMUS AND IN AFFIRMING THE ORDER OF
THE HON. JUDGE ANTONIO N. ROSALES WHICH DISMISSED THE PETITIONERS’
APPEAL IN CIVIL CASE NO. C-36 OF THE REGIONAL TRIAL COURT, BRANCH 43,
ROXAS, ORIENTAL MINDORO, EVEN AFTER THE PETITIONERS HAD PAID THE
APPEAL DOCKET FEES.

II

THE HONORABLE COURT OF APPEALS LIKEWISE ERRED IN RULING AND

AFFIRMING THE DECISION OR ORDER OF THE RESPONDENT HON. ANTONIO M.
ROSALES THAT PETITIONERS’ APPEAL WAS FILED OUT OF TIME WHEN
PETITIONERS RECEIVED THE LAST OR FINAL ORDER OF THE COURT ON JULY 22,
1998 AND FILED THEIR NOTICE OF APPEAL ON JULY 27, 1998 AND PAID THE
APPEAL DOCKET FEE ON AUGUST 3, 1998.

III

THE HONORABLE COURT OF APPEALS FURTHER ERRED IN RULING THAT THE

WORDS "FINAL ORDER" IN SECTION 3, RULE 41, OF THE 1997 RULES OF CIVIL
PROCEDURE WILL REFER TO THE [FIRST] ORDER OF RESPONDENT JUDGE HON.
ANTONIO M. MORALES DATED FEBRUARY 12, 1998 INSTEAD OF THE LAST AND
FINAL ORDER DATED JULY 1, 1998 COPY OF WHICH WAS RECEIVED BY
PETITIONERS THROUGH COUNSEL ON JULY 22, 1998.
 89

IV.

THE HONORABLE COURT OF APPEALS FINALLY ERRED IN FINDING THAT THE

DECISION IN THE CASE OF DENSO, INC. V. IAC, 148 SCRA 280, IS APPLICABLE IN
THE INSTANT CASE THEREBY IGNORING THE PECULIAR FACTS AND
CIRCUMSTANCES OF THIS CASE AND THE FACT THAT THE SAID DECISION WAS
RENDERED PRIOR TO THE ENACTMENT OF THE 1997 RULES OF CIVIL
PROCEDURE.9

The foregoing issues essentially revolve around the period within which petitioners should have
filed their notice of appeal.

First and foremost, the right to appeal is neither a natural right nor a part of due process. It is
merely a statutory privilege and may be exercised only in the manner and in accordance with the
provisions of law. Thus, one who seeks to avail of the right to appeal must comply with the
requirements of the Rules. Failure to do so often leads to the loss of the right to appeal. 10 The
period to appeal is fixed by both statute and procedural rules. BP 129,11 as amended, provides:

Sec. 39. Appeals. – The period for appeal from final orders, resolutions, awards, judgments, or
decisions of any court in all these cases shall be fifteen (15) days counted from the notice of the
final order, resolution, award, judgment, or decision appealed from. Provided, however, that in
habeas corpus cases, the period for appeal shall be (48) forty-eight hours from the notice of
judgment appealed from. x x x

Rule 41, Section 3 of the 1997 Rules of Civil Procedure states:

SEC. 3. Period of ordinary appeal. ― The appeal shall be taken within fifteen (15) days from
the notice of the judgment or final order appealed from. Where a record on appeal is
required, the appellant shall file a notice of appeal and a record on appeal within thirty (30) days
from the notice of judgment or final order.

The period to appeal shall be interrupted by a timely motion for new trial or reconsideration. No
motion for extension of time to file a motion for new trial or reconsideration shall be allowed.
(emphasis supplied)

Based on the foregoing, an appeal should be taken within 15 days from the notice of judgment or
final order appealed from. A final judgment or order is one that finally disposes of a case,
leaving nothing more for the court to do with respect to it. It is an adjudication on the merits
which, considering the evidence presented at the trial, declares categorically what the rights and
obligations of the parties are; or it may be an order or judgment that dismisses an action.12

As already mentioned, petitioners argue that the order of July 1, 1998 denying their motion for
reconsideration should be construed as the "final order," not the February 12, 1998 order which
dismissed their complaint. Since they received their copy of the denial of their motion for
reconsideration only on July 22, 1998, the 15-day reglementary period to appeal had not yet
lapsed when they filed their notice of appeal on July 27, 1998.
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What therefore should be deemed as the "final order," receipt of which triggers the start of the
15-day reglementary period to appeal ¾ the February 12, 1998 order dismissing the complaint or
the July 1, 1998 order dismissing the MR?

In the recent case of Quelnan v. VHF Philippines, Inc.,13 the trial court declared
petitioner Quelnan non-suited and accordingly dismissed his complaint. Upon receipt of the
order of dismissal, he filed an omnibus motion to set it aside. When the omnibus motion was
filed, 12 days of the 15-day period to appeal the order had lapsed. He later on received another
order, this time dismissing his omnibus motion. He then filed his notice of appeal. But this was
likewise dismissed ― for having been filed out of time.

The court a quo ruled that petitioner should have appealed within 15 days after the dismissal of
his complaint since this was the final order that was appealable under the Rules. We reversed the
trial court and declared that it was the denial of the motion for reconsideration of an order of
dismissal of a complaint which constituted the final order as it was what ended the issues raised
there.

This pronouncement was reiterated in the more recent case of Apuyan v. Haldeman et al.14 where
we again considered the order denying petitioner Apuyan’s motion for reconsideration as the
final order which finally disposed of the issues involved in the case.

Based on the aforementioned cases, we sustain petitioners’ view that the order dated July 1,
1998 denying their motion for reconsideration was the final order contemplated in the Rules.

We now come to the next question: if July 1, 1998 was the start of the 15-day reglementary
period to appeal, did petitioners in fact file their notice of appeal on time?

Under Rule 41, Section 3, petitioners had 15 days from notice of judgment or final order to
appeal the decision of the trial court. On the 15th day of the original appeal period (March 18,
1998), petitioners did not file a notice of appeal but instead opted to file a motion for
reconsideration. According to the trial court, the MR only interrupted the running of the 15-day
appeal period.15 It ruled that petitioners, having filed their MR on the last day of the 15-day
reglementary period to appeal, had only one (1) day left to file the notice of appeal upon receipt
of the notice of denial of their MR. Petitioners, however, argue that they were entitled under the
Rules to a fresh period of 15 days from receipt of the "final order" or the order dismissing their
motion for reconsideration.

In Quelnan and Apuyan, both petitioners filed a motion for reconsideration of the decision of the
trial court. We ruled there that they only had the remaining time of the 15-day appeal period to
file the notice of appeal. We consistently applied this rule in similar cases, 16 premised on the
long-settled doctrine that the perfection of an appeal in the manner and within the period
permitted by law is not only mandatory but also jurisdictional. 17 The rule is also founded on
deep-seated considerations of public policy and sound practice that, at risk of occasional error,
the judgments and awards of courts must become final at some definite time fixed by law.18

Prior to the passage of BP 129, Rule 41, Section 3 of the 1964 Revised Rules of Court read:
 91

Sec. 3. How appeal is taken. — Appeal maybe taken by serving upon the adverse party and
filing with the trial court within thirty (30) days from notice of order or judgment, a notice
of appeal, an appeal bond, and a record on appeal. The time during which a motion to set
aside the judgment or order or for new trial has been pending shall be deducted, unless such
motion fails to satisfy the requirements of Rule 37.

But where such motion has been filed during office hours of the last day of the period herein
provided, the appeal must be perfected within the day following that in which the party appealing
received notice of the denial of said motion.19 (emphasis supplied)

According to the foregoing provision, the appeal period previously consisted of 30 days. BP 129,
however, reduced this appeal period to 15 days. In the deliberations of the Committee on Judicial
Reorganization20 that drafted BP 129, the raison d’ etre behind the amendment was to shorten
the period of appeal21 and enhance the efficiency and dispensation of justice. We have since
required strict observance of this reglementary period of appeal. Seldom have we condoned late
filing of notices of appeal, 22 and only in very exceptional instances to better serve the ends of
justice.

In National Waterworks and Sewerage Authority and Authority v. Municipality of

Libmanan,23 however, we declared that appeal is an essential part of our judicial system and the
rules of procedure should not be applied rigidly. This Court has on occasion advised the lower
courts to be cautious about not depriving a party of the right to appeal and that every party
litigant should be afforded the amplest opportunity for the proper and just disposition of his
cause, free from the constraint of technicalities.

In de la Rosa v. Court of Appeals,24 we stated that, as a rule, periods which require litigants to do
certain acts must be followed unless, under exceptional circumstances, a delay in the filing of an
appeal may be excused on grounds of substantial justice. There, we condoned the delay incurred
by the appealing party due to strong considerations of fairness and justice.

In setting aside technical infirmities and thereby giving due course to tardy appeals, we have not
been oblivious to or unmindful of the extraordinary situations that merit liberal application of the
Rules. In those situations where technicalities were dispensed with, our decisions were not meant
to undermine the force and effectivity of the periods set by law. But we hasten to add that in
those rare cases where procedural rules were not stringently applied, there always existed a clear
need to prevent the commission of a grave injustice. Our judicial system and the courts have
always tried to maintain a healthy balance between the strict enforcement of procedural laws and
the guarantee that every litigant be given the full opportunity for the just and proper disposition
of his cause.25

The Supreme Court may promulgate procedural rules in all courts. 26 It has the sole prerogative to
amend, repeal or even establish new rules for a more simplified and inexpensive process, and the
speedy disposition of cases. In the rules governing appeals to it and to the Court of Appeals,
particularly Rules 42,27 4328 and 45,29 the Court allows extensions of time, based on justifiable
and compelling reasons, for parties to file their appeals. These extensions may consist of 15 days
or more.
 92

To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to
appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to
file the notice of appeal in the Regional Trial Court, counted from receipt of the order dismissing
a motion for a new trial or motion for reconsideration. 30

Henceforth, this "fresh period rule" shall also apply to Rule 40 governing appeals from the
Municipal Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review from the
Regional Trial Courts to the Court of Appeals; Rule 43 on appeals from quasi-judicial
agencies31 to the Court of Appeals and Rule 45 governing appeals by certiorari to the Supreme
Court.32 The new rule aims to regiment or make the appeal period uniform, to be counted from
receipt of the order denying the motion for new trial, motion for reconsideration (whether full or
partial) or any final order or resolution.

We thus hold that petitioners seasonably filed their notice of appeal within the fresh period of 15
days, counted from July 22, 1998 (the date of receipt of notice denying their motion for
reconsideration). This pronouncement is not inconsistent with Rule 41, Section 3 of the Rules
which states that the appeal shall be taken within 15 days from notice of judgment or final order
appealed from. The use of the disjunctive word "or" signifies disassociation and independence of
one thing from another. It should, as a rule, be construed in the sense in which it ordinarily
implies.33 Hence, the use of "or" in the above provision supposes that the notice of appeal may be
filed within 15 days from the notice of judgment or within 15 days from notice of the "final
order," which we already determined to refer to the July 1, 1998 order denying the motion for a
new trial or reconsideration.

Neither does this new rule run counter to the spirit of Section 39 of BP 129 which shortened the
appeal period from 30 days to 15 days to hasten the disposition of cases. The original period of
appeal (in this case March 3-18, 1998) remains and the requirement for strict compliance still
applies. The fresh period of 15 days becomes significant only when a party opts to file a motion
for new trial or motion for reconsideration. In this manner, the trial court which rendered the
assailed decision is given another opportunity to review the case and, in the process, minimize
and/or rectify any error of judgment. While we aim to resolve cases with dispatch and to have
judgments of courts become final at some definite time, we likewise aspire to deliver justice
fairly.

In this case, the new period of 15 days eradicates the confusion as to when the 15-day appeal
period should be counted – from receipt of notice of judgment (March 3, 1998) or from receipt of
notice of "final order" appealed from (July 22, 1998).

To recapitulate, a party litigant may either file his notice of appeal within 15 days from receipt of
the Regional Trial Court’s decision or file it within 15 days from receipt of the order (the "final
order") denying his motion for new trial or motion for reconsideration. Obviously, the new 15-
day period may be availed of only if either motion is filed; otherwise, the decision becomes final
and executory after the lapse of the original appeal period provided in Rule 41, Section 3.
 93

Petitioners here filed their notice of appeal on July 27, 1998 or five days from receipt of the
order denying their motion for reconsideration on July 22, 1998. Hence, the notice of appeal was
well within the fresh appeal period of 15 days, as already discussed.34

We deem it unnecessary to discuss the applicability of Denso (Philippines), Inc. v. IAC35 since

the Court of Appeals never even referred to it in its assailed decision.

WHEREFORE, the petition is hereby GRANTED and the assailed decision of the Court of

Appeals REVERSED and SET ASIDE. Accordingly, let the records of this case be remanded to
the Court of Appeals for further proceedings.

No costs.

SO ORDERED.