7th Batch Of Cases Full Text.docx

PREMIERE DEVELOPMENT BANK, petitioner, vs. ALFREDO C. FLORES, in his Capacity as Presiding Judge of Regional Trial Court of Pasig City, Branch 167, ARIZONA TRANSPORT CORPORATION and PANACOR MARKETING CORPORATION, respondents.

existing loan obligations of Arizona in an amount not to exceed P6 million. On October 5, 1995, Iba-Finance sent a letter to Ms. Arlene R. Martillano, officer-in-charge of Premiere Bank’s San Juan Branch, informing her of the approved loan in favor of Panacor and Arizona, and requesting for the release of TCT No. T-3475. Martillano, after reading the letter, affixed her signature of conformity thereto and sent the original copy to Premiere Bank’s legal office. x x x

This is a Rule 45 petition for review1 of the Court of Appeals’ decision2 in CA-G.R. SP No. 92908 which affirmed the Regional Trial Court’s (RTC’s) orders3 granting respondent corporations’ motion for execution of the Court’s 14 April 2004 decision in G.R. No. 1593524 and denying5 petitioner Premiere Development Bank’s motion for reconsideration, as well as the appellate court’s resolution6 denying Premiere Development Bank’s motion for reconsideration.

On October 12, 1995, Premiere Bank sent a letter-reply to [IBA]-Finance, informing the latter of its refusal to turn over the requested documents on the ground that Arizona had existing unpaid loan obligations and that it was the bank’s policy to require full payment of all outstanding loan obligations prior to the release of mortgage documents. Thereafter, Premiere Bank issued to IBA-Finance a Final Statement of Account showing Arizona’s total loan indebtedness. On October 19, 1995, Panacor and Arizona executed in favor of IBA-Finance a promissory note in the amount of P7.5 million. Thereafter, IBA-Finance paid to Premiere Bank the amount of P6,235,754.79, representing the full outstanding loan account of Arizona. Despite such payment, Premiere Bank still refused to release the requested mortgage documents specifically, the owner’s duplicate copy of TCT No. T-3475.

The factual antecedents of the case, as found by the Court in G.R. No. 159352, are as follows: The undisputed facts show that on or about October 1994, Panacor Marketing Corporation (Panacor for brevity), a newlyformed corporation, acquired an exclusive distributorship of products manufactured by Colgate Palmolive Philippines, Inc. (Colgate for short). To meet the capital requirements of the exclusive distributorship, which required an initial inventory level of P7.5 million, Panacor applied for a loan of P4.1 million with Premiere Development Bank. After an extensive study of Panacor’s creditworthiness, Premiere Bank rejected the loan application and suggested that its affiliate company, Arizona Transport Corporation (Arizona for short), should instead apply for the loan on condition that the proceeds thereof shall be made available to Panacor. Eventually, Panacor was granted a P4.1 million credit line as evidenced by a Credit Line Agreement. As suggested, Arizona, which was an existing loan client, applied for and was granted a loan of P6.1 million, P3.4 million of which would be used to pay-off its existing loan accounts and the remaining P2.7 million as credit line of Panacor. As security for the P6.1 million loan, Arizona, represented by its Chief Executive Officer Pedro Panaligan and spouses Pedro and Marietta Panaligan in their personal capacities, executed a Real Estate Mortgage against a parcel of land covered by TCT No. T-3475 as per Entry No. 49507 dated October 2, 1995.

On November 2, 1995, Panacor requested IBA-Finance for the immediate approval and release of the remaining P2.5 million loan to meet the required monthly purchases from Colgate. IBA-Finance explained however, that the processing of the P2.5 million loan application was conditioned, among others, on the submission of the owner’s duplicate copy of TCT No. 3475 and the cancellation by Premiere Bank of Arizona’s mortgage. Occasioned by Premiere Bank’s adamant refusal to release the mortgage cancellation document, Panacor failed to generate the required capital to meet its distribution and sales targets. On December 7, 1995, Colgate informed Panacor of its decision to terminate their distribution agreement. On March 13, 1996, Panacor and Arizona filed a complaint for specific performance and damages against Premiere Bank before the Regional Trial Court of Pasig City, docketed as Civil Case No. 65577.

Since the P2.7 million released by Premiere Bank fell short of the P4.1 million credit line which was previously approved, Panacor negotiated for a take-out loan with IBA-Finance Corporation (hereinafter referred to as IBA-Finance) in the sum of P10 million, P7.5 million of which will be released outright in order to take-out the loan from Premiere Bank and the balance of P2.5 million (to complete the needed capital of P4.1 million with Colgate) to be released after the cancellation by Premiere of the collateral mortgage on the property covered by TCT No. T-3475. Pursuant to the said take-out agreement, IBA-Finance was authorized to pay Premiere Bank the prior

On June 11, 1996, IBA-Finance filed a complaint-inintervention praying that judgment be rendered ordering Premiere Bank to pay damages in its favor. On May 26, 1998, the trial court rendered a decision in favor of Panacor and IBA-Finance, the decretal portion of which reads: x x x

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Premiere Bank appealed to the Court of Appeals contending that the trial court erred in finding, inter alia, that it had maliciously downgraded the credit-line of Panacor from P4.1 million to P2.7 million.

of the mortgaged property. Premiere Development Bank allegedly had wanted to wait for the resolution of the civil case before it would file its deficiency claims against respondent corporations. Moreover, the execution of our decision in G.R. No. 159352 would allegedly be iniquitous and unfair since respondent corporations are already in the process of winding up.15

In the meantime, a compromise agreement was entered into between IBA-Finance and Premiere Bank whereby the latter agreed to return without interest the amount of P6,235,754.79 which IBA-Finance earlier remitted to Premiere Bank to pay off the unpaid loans of Arizona. On March 11, 1999, the compromise agreement was approved.

The Court finds the petition unmeritorious. A judgment becomes "final and executory" by operation of law. In such a situation, the prevailing party is entitled to a writ of execution, and issuance thereof is a ministerial duty of the court. 16 This policy is clearly and emphatically embodied in Rule 39, Section 1 of the Rules of Court, to wit:

On June 18, 2003, a decision was rendered by the Court of Appeals which affirmed with modification the decision of the trial court, the dispositive portion of which reads:7 x x x

SECTION 1. Execution upon judgments or final orders. ― Execution shall issue as a matter of right, on motion, upon a judgment or order that disposes of the action or proceeding upon the expiration of the period to appeal therefrom if no appeal has been duly perfected.

Incidentally, respondent corporations received a notice of sheriff’s sale during the pendency of G.R. No. 159352. Respondent corporations were able to secure an injunction from the RTC but it was set aside by the Court of Appeals in a decision dated 20 August 2004.8 The appellate court denied respondent corporations’ motion for reconsideration in a resolution dated 5 November 2004.9

If the appeal has been duly perfected and finally resolved, the execution may forthwith be applied for in the court of origin, on motion of the judgment obligee, submitting therewith certified true copies of the judgment or judgments or final order or orders sought to be enforced and of the entry thereof, with notice to the adverse party.

The Court, in a resolution dated 16 February 2005, did not give due course to the petition for review of respondent corporations as it did not find any reversible error in the decision of the appellate court.10 After the Court had denied with finality the motion for reconsideration, 11 the mortgaged property was purchased by Premiere Development Bank at the foreclosure sale held on 19 September 2005 for P6,600,000.00.12

The appellate court may, on motion in the same case, when the interest of justice so requires, direct the court of origin to issue the writ of execution. (Emphasis supplied.) Jurisprudentially, the Court has recognized certain exceptions to the rule as where in cases of special and exceptional nature it becomes imperative in the higher interest of justice to direct the suspension of its execution; whenever it is necessary to accomplish the aims of justice; or when certain facts and circumstances transpired after the judgment became final which could render the execution of the judgment unjust.17

Respondent corporations filed a motion for execution dated 25 August 200513 asking for the issuance of a writ of execution of our decision in G.R. No. 159352 where we awarded P800,000.00 as damages in their favor.14 The RTC granted the writ of execution sought. The Court of Appeals affirmed the order.Hence, the present petition for review. The only question before us is the propriety of the grant of the writ of execution by the RTC.

None of these exceptions avails to stay the execution of this Court’s decision in G.R. No. 159352. Premiere Development Bank has failed to show how injustice would exist in executing the judgment other than the allegation that respondent corporations are in the process of winding up. Indeed, no new circumstance transpired after our judgment had become final that would render the execution unjust.

Premiere Development Bank argues that the lower courts should have applied the principles of compensation or set-off as the foreclosure of the mortgaged property does not preclude it from filing an action to recover any deficiency from respondent corporations’ loan. It allegedly did not file an action to recover the loan deficiency from respondent corporations because of the pending Civil Case No. MC03-2202 filed by respondent corporations before the RTC of Mandaluyong City entitled Arizona Transport Corp. v. Premiere Development Bank. That case puts into issue the validity of Premiere Development Bank’s monetary claim against respondent corporations and the subsequent foreclosure sale

The Court cannot give due course to Premiere Development Bank’s claim of compensation or set-off on account of the pending Civil Case No. MC03-2202 before the RTC of Mandaluyong City. For compensation to apply, among other requisites, the two debts must be liquidated and demandable already.18

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A distinction must be made between a debt and a mere claim. A debt is an amount actually ascertained. It is a claim which has been formally passed upon by the courts or quasi-judicial bodies to which it can in law be submitted and has been declared to be a debt. A claim, on the other hand, is a debt in embryo. It is mere evidence of a debt and must pass thru the process prescribed by law before it develops into what is properly called a debt.19 Absent, however, any such categorical admission by an obligor or final adjudication, no legal compensation or off-set can take place. Unless admitted by a debtor himself, the conclusion that he is in truth indebted to another cannot be definitely and finally pronounced, no matter how convinced he may be from the examination of the pertinent records of the validity of that conclusion the indebtedness must be one that is admitted by the alleged debtor or pronounced by final judgment of a competent court.20 At best, what Premiere Development Bank has against respondent corporations is just a claim, not a debt. At worst, it is a speculative claim.

dissolution of the corporation would not serve as an effective bar to the enforcement of rights for or against it. As early as 1939,23 this Court held that, although the time during which the corporation, through its own officers, may conduct the liquidation of its assets and sue and be sued as a corporation is limited to three years from the time the period of dissolution commences, there is no time limit within which the trustees must complete a liquidation placed in their hands. What is provided in Section 12224 of the Corporation Code is that the conveyance to the trustees must be made within the three-year period. But it may be found impossible to complete the work of liquidation within the three-year period or to reduce disputed claims to judgment. The trustees to whom the corporate assets have been conveyed pursuant to the authority of Section 122 may sue and be sued as such in all matters connected with the liquidation. Furthermore, Section 145 of the Corporation Code clearly provides that "no right or remedy in favor of or against any corporation, its stockholders, members, directors, trustees, or officers, nor any liability incurred by any such corporation, stockholders, members, directors, trustees, or officers, shall be removed or impaired either by the subsequent dissolution of said corporation." Even if no trustee is appointed or designated during the three-year period of the liquidation of the corporation, the Court has held that the board of directors may be permitted to complete the corporate liquidation by continuing as "trustees" by legal implication.25 Therefore, no injustice would arise even if the Court does not stay the execution of G.R. 159352.

The alleged deficiency claims of Premiere Development Bank should have been raised as a compulsory counterclaim before the RTC of Mandaluyong City where Civil Case No. MC03-2202 is pending. Under Section 7, Rule 6 of the 1997 Rules of Civil Procedure, a counterclaim is compulsory when its object "arises out of or is necessarily connected with the transaction or occurrence constituting the subject matter of the opposing party’s claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction". In Quintanilla v. CA21 and reiterated in Alday v. FGU Insurance Corporation,22 the "compelling test of compulsoriness" characterizes a counterclaim as compulsory if there should exist a "logical relationship" between the main claim and the counterclaim. There exists such a relationship when conducting separate trials of the respective claims of the parties would entail substantial duplication of time and effort by the parties and the court; when the multiple claims involve the same factual and legal issues; or when the claims are offshoots of the same basic controversy between the parties. Clearly, the recovery of Premiere Development Bank’s alleged deficiency claims is contingent upon the case filed by respondent corporations; thus, conducting separate trials thereon will result in a substantial duplication of the time and effort of the court and the parties.

Although it is commendable for Premiere Development Bank in offering to deposit with the RTC the P800,000.00 as an alternative prayer, the Court cannot allow it to defeat or subvert the right of respondent corporations to have the final and executory decision in G.R. No. 159352 executed. The offer to deposit cannot suspend the execution of this Court’s decision for this cannot be deemed as consignation. Consignation is the act of depositing the thing due with the court or judicial authorities whenever the creditor cannot accept or refuses to accept payment, and it generally requires a prior tender of payment. In this case, it is Premiere Development Bank, the judgment debtor, who refused to pay respondent corporations P800,000.00 and not the other way around. Neither could such offer to make a deposit with the RTC provide a ground for this Court to issue an injunctive relief in this case.

The fear of Premiere Development Bank that they would have difficulty collecting its alleged loan deficiencies from respondent corporations since they were already involuntarily dissolved due to their failure to file reportorial requirements with the Securities and Exchange Commission is neither here nor there. In any event, the law specifically allows a trustee to manage the affairs of the corporation in liquidation, and the

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MERLINDA L. DAGOOC, complainant, vs. ROBERTO A. ERLINA, Sheriff IV, RTC, Branch 40, Tandag, Surigao del Sur, respondent.

Section 9, Rule 39 of the Revised Rules of Court which clearly states how the execution of money judgments should be made.

This is a complaint for misconduct and ignorance of the law filed by Merlinda L. Dagooc of Diatagon, Lianga, Surigao del Sur, against deputy sheriff Roberto A. Erlina of the Regional Trial Court, Branch 40, Tandag, Surigao del Sur.

Section 9. Execution of judgments for money, how enforced. (a) Immediate payment on demand. The officer shall enforce an execution of a judgment for money by demanding from the judgment obligor the immediate payment of the full amount stated in the writ of execution and all lawful fees. The judgment obligor shall pay in cash, certified bank check payable to the judgment obligee, or any other form of payment acceptable to the latter, the amount of the judgment debt under proper receipt directly to the judgment obligee or his authorized representative if present at the time of payment. The lawful fees shall be handed under proper receipt to the executing sheriff who shall turn over the said amount within the same day to the clerk of court of the court that issued the writ. (emphasis ours)

Complainant alleged that she was the plaintiff in Civil Case No. L-695 before the Regional Trial Court, Branch 28, Diatagon, Lianga, Surigao del Sur. The court rendered judgment by compromise agreement which immediately became final and executory. Complainant moved for the execution of the decision and, on February 28, 2002, a writ of execution was issued which was endorsed to respondent deputy sheriff Erlina for execution. The defendants, however, could not pay the money judgment. Instead of levying on the properties of the defendants to satisfy the judgment, however, sheriff Erlina asked them to execute promissory notes in favor of complainant which he asked the latter to collect from the defendants. Complainant further alleged that respondent sheriff indicated in his return of service that defendants were insolvent. But upon verification with the assessors office of Tandag, Surigao del Sur, complainant discovered that defendants owned real properties, as evidenced by the real property field appraisal and assessment sheet.

The law mandates that in the execution of a money judgment, the judgment debtor shall pay either in cash, certified bank check payable to the judgment obligee, or any other form of payment acceptable to the latter. Nowhere does the law mention promissory notes as a form of payment. The only exception is when such form of payment is acceptable to the judgment debtor. But it was obviously not acceptable to complainant, otherwise she would not have filed this case against respondent sheriff. In fact, she objected to it because the promissory notes of the defendants did not satisfy the money judgment in her favor.

In his comment, respondent sheriff averred that he served a copy of the writ of execution on the defendants but they could not pay the money judgment despite repeated demands. So he went to the residence of the defendants to levy on some of their personal properties but he found them to be exempt from execution pursuant to Section 13, Rule 39 of the Rules of Court. He then went to the office of the provincial assessor to verify if the defendants owned real properties which he could levy on. He alleged that he was given a certification that there was none. So he made a return of service stating that defendants were insolvent. He denied calling up complainant for her to collect defendants payment by means of promissory notes. But he advised her to secure an alias writ of execution so he could eventually go after defendants real properties in Tandag, Surigao del Sur.

If the judgment debtor cannot pay all or part of the obligation in cash, certified bank check or other mode of payment acceptable to the judgment obligee, the money judgment shall be satisfied by levying on the properties of the judgment debtor. Thus, Section 9(b) Satisfaction by levy. If the judgment obligor cannot pay all or part of the obligation in cash, certified bank check or other mode of payment acceptable to the judgment obligee, the officer shall levy upon the properties of the judgment obligor of every kind and nature whatsoever which may be disposed of for value and not otherwise exempt from execution giving the latter the option to immediately choose which property or part thereof may be levied upon, sufficient to satisfy the judgment. If the judgment obligor does not exercise the option, the officer shall first levy on the personal properties, if any, and then on the real properties if the personal properties are insufficient to answer for the judgment.

We referred the complaint to the Office of the Court Administrator (OCA) for review, evaluation and recommendation. The OCA found the complaint meritorious and respondent sheriff guilty of misconduct and gross ignorance of the law. It recommended that respondent be fined P5,000, with a warning that the commission of a similar act in the future shall be dealt with more severely.

Levy is defined as the act or acts by which an officer of the law and court sets apart or appropriates a part or the whole of the losers (judgment debtors) property for the purpose of

We find it strange and highly unusual, to say the least, that respondent sheriff did not know his duties and functions under

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eventually conducting an execution sale to the end that the writ of execution may be satisfied, and the judgment debt, paid.[2] However, not all of the judgment debtors properties may be levied upon because the law exempts some of them from execution.[3] But the right of exemption from execution is a personal privilege granted to the judgment debtor and, as such, it must be claimed not by the sheriff but by the judgment debtor himself at the time of the levy or within a reasonable period thereafter.[4]

during the period within which the judgment may be enforced by motion. The officer shall make a report to the court every thirty (30) days on the proceedings taken thereon until the judgment is satisfied in full, or its effectivity expires. x x x (emphasis ours) Sheriffs, as public officers, are repositories of public trust and are under obligation to perform the duties of their office honestly, faithfully and to the best of their ability. They are bound to use utmost skill and diligence in the performance of their official duties particularly where the rights of individuals may be jeopardized by their neglect.[5] Here, we find respondent sheriff utterly wanting in zeal and dedication. He was highly incompetent, downright inefficient and grossly ignorant of the law when he did not faithfully execute the writ of execution to the prejudice of complainant.

Respondent sheriff not only failed to levy on the properties of the judgment debtor when they could not pay the money judgment in cash but also claimed the exemption for them. His conduct blatantly manifested his incompetence and ineptitude in discharging his functions. Moreover, respondent sheriff was seriously remiss in his duties when he stated in his return of service that the defendants were insolvent without first diligently verifying such fact. As it turned out, the defendants had real properties he could have levied on to satisfy the money judgment.

Considering that respondent sheriffs primary duty was the execution of the writ strictly according to its terms, there was apparently more than mere harmless ignorance involved here, which makes us wonder about the very lame and docile penalty of P5,000 being recommended by the OCA. Applying Rule 4, Section 52 B(2) of the Revised Uniform Rules on Administrative Cases in the Civil Service, we find respondent guilty of inefficiency and incompetence in the performance of his official duties and suspend him from the service for one (1) year.

But even assuming that the defendants/judgment debtors were insolvent, respondent sheriff should have garnished their salaries (being paid employees) to enforce the judgment in the subject case as provided for in Section 9(c), Rule 39 of the Revised Rules of Court. (c) Garnishment of debts and credits. The officer may levy on debts due the judgment obligor and other credits, including bank deposits, financial interests, royalties, commissions and other personal property not capable of manual delivery in the possession or control of third parties. Levy shall be made by serving notice upon the person owing such debts or having in his possession or control such credits to which the judgment obligor is entitled. The garnishment shall cover only such amount as will satisfy the judgment and all lawful fees.

WHEREFORE, in view of the foregoing, we find respondent sheriff ROBERTO A. ERLINA of the Regional Trial Court, Branch 40, Tandag, Surigao del Sur, GUILTY of inefficiency and incompetence in the performance of his official duties. He is hereby SUSPENDED from the service for one (1) year and WARNED that the commission of a similar act in the future shall be dealt with more severely. DIONISIO FIESTAN and JUANITA ARCONADO, petitioners vs. COURT OF APPEALS; DEVELOPMENT BANK OF THE PHILIPPINES, LAOAG CITY BRANCH; PHILIPPINE NATIONAL BANK, VIGAN BRANCH, ILOCOS SUR, FRANCISCO PERIA and REGISTER OF DEEDS OF ILOCOS SUR, respondents.

Either to desperately cover his tracks after it was pointed out to him that the defendants were not insolvent at all or out of sheer ignorance of the law, respondent sheriff advised complainant to file a motion for the issuance of an alias writ of execution allegedly so that he could levy on the properties of the defendants. But there was no need for an alias writ of execution for him to levy on the real properties of the defendants. The life of the writ was for five years and the judgment of the court had not yet been fully satisfied. Section 14, Rule 39 of the Revised Rules of Court states that:

In this petition for review on certiorari, petitioners spouses Dionisio Fiestan and Juanita Arconada owners of a parcel of land (Lot No. 2B) situated in Ilocos Sur covered by TCT T-13218 which they mortgaged to the Development Bank of the Philippines (DBP) as security for their P22,400.00 loan, seek the reversal of the decision of the Court of Appeals 1 dated June 5, 1987 affirming the dismissal of their complaint filed against the Development Bank of the Philippines, Laoag City Branch, Philippine National Bank, Vigan Branch, Ilocos Sur, Francisco Peria and the Register of Deeds of Ilocos Sur, for annulment of sale, mortgage, and cancellation of transfer certificates of title.

Section 14. Return of writ of execution. The writ of execution shall be returnable to the court issuing it immediately after the judgment has been satisfied in part or in full. If the judgment cannot be satisfied in full within thirty (30) days after his receipt of the writ, the officer shall report to the court and state the reason therefor. Such writ shall continue in effect

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The motion for reconsideration having been denied 3 on January 19, 1988, petitioners filed the instant petition for review on certiorari with this Court. Petitioners seek to annul the extrajudicial foreclosure sale of the mortgaged property on August 6, 1979 in favor of the Development Bank of the Philippines (DBP) on the ground that it was conducted by the Provincial Sheriff of Ilocos Sur without first effecting a levy on said property before selling the same at the public auction sale. Petitioners thus maintained that the extrajudicial foreclosure sale being null and void by virtue of lack of a valid levy, the certificate of sale issued by the Provincial Sheriff cannot transfer ownership over the lot in question to the DBP and consequently the deed of sale executed by the DBP in favor of Francisco Peria and the real estate mortgage constituted thereon by the latter in favor of PNB Vigan Branch are likewise null and void.

Records show that Lot No. 2-B was acquired by the DBP as the highest bidder at a public auction sale on August 6, 1979 after it was extrajudicially foreclosed by the DBP in accordance with Act No. 3135, as amended by Act No. 4118, for failure of petitioners to pay their mortgage indebtedness. A certificate of sale was subsequently issued by the Provincial Sheriff of Ilocos Sur on the same day and the same was registered on September 28, 1979 in the Office of the Register of Deeds of Ilocos Sur. Earlier, or on September 26, 1979, petitioners executed a Deed of Sale in favor of DBP which was likewise registered on September 28, 1979. Upon failure of petitioners to redeem the property within the one (1) year period which expired on September 28, 1980, petitioners' TCT T-13218 over Lot No. 2-B was cancelled by the Register of Deeds and in lieu thereof TCT T-19077 was issued to the DBP upon presentation of a duly executed affidavit of consolidation of ownership.

The Court finds these contentions untenable. The formalities of a levy, as an essential requisite of a valid execution sale under Section 15 of Rule 39 and a valid attachment lien under Rule 57 of the Rules of Court, are not basic requirements before an extrajudicially foreclosed property can be sold at public auction. At the outset, distinction should be made of the three different kinds of sales under the law, namely: an ordinary execution sale, a judicial foreclosure sale, and an extrajudicial foreclosure sale, because a different set of law applies to each class of sale mentioned. An ordinary execution sale is governed by the pertinent provisions of Rule 39 of the Rules of Court. Rule 68 of the Rules of Court applies in cases of judicial foreclosure sale. On the other hand, Act No. 3135, as amended by Act No. 4118 otherwise known as "An Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real Estate Mortgages" applies in cases of extrajudicial foreclosure sale.

On April 13,1982, the DBP sold the lot to Francisco Peria in a Deed of Absolute Sale and the same was registered on April 15, 1982 in the Office of the Register of Deeds of Ilocos Sur. Subsequently, the DBP's title over the lot was cancelled and in lieu thereof TCT T-19229 was issued to Francisco Peria. After title over said lot was issued in his name, Francisco Peria secured a tax declaration for said lot and accordingly paid the taxes due thereon. He thereafter mortgaged said lot to the PNB Vigan Branch as security for his loan of P115,000.00 as required by the bank to increase his original loan from P49,000.00 to P66,000.00 until it finally reached the approved amount of P115,000.00. Since petitioners were still in possession of Lot No. 2-B, the Provincial Sheriff ordered them to vacate the premises. On the other hand, petitioners filed on August 23, 1982 a complaint for annulment of sale, mortgage and cancellation of transfer certificates of title against the DBP-Laoag City, PNB Vigan Branch, Ilocos Sur, Francisco Peria and the Register of Deeds of Ilocos Sur, docketed as Civil Case No. 3447-V before the Regional Trial Court of Vigan, Ilocos Sur.

The case at bar, as the facts disclose, involves an extrajudicial foreclosure sale. The public auction sale conducted on August 6, 1979 by the Provincial Sheriff of Ilocos Sur refers to the "sale" mentioned in Section 1 of Act No. 3135, as amended, which was made pursuant to a special power inserted in or attached to a real estate mortgage made as security for the payment of money or the fulfillment of any other obligation. It must be noted that in the mortgage contract, petitioners, as mortgagor, had appointed private respondent DBP, for the purpose of extrajudicial foreclosure, "as his attorney-in-fact to sell the property mortgaged under Act No. 3135, as amended, to sign all documents and perform any act requisite and necessary to accomplish said purpose .... In case of foreclosure, the Mortgagor hereby consents to the appointment of the mortgagee or any of its employees as receiver, without any bond, to take charge of the mortgaged property at once, and to hold possession of the same ... 4

After trial, the RTC of Vigan, Ilocos Sur, Branch 20, rendered its decision 2 on November 14, 1983 dismissing the complaint, declaring therein, as valid the extrajudicial foreclosure sale of the mortgaged property in favor of the DBP as highest bidder in the public auction sale held on August 6, 1979, and its subsequent sale by DBP to Francisco Peria as well as the real estate mortgage constituted thereon in favor of PNB Vigan as security for the P115,000.00 loan of Francisco Peria. The Court of Appeals affirmed the decision of the RTC of Vigan, Ilocos Sur on June 20, 1987.

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There is no justifiable basis, therefore, to apply by analogy the provisions of Rule 39 of the Rules of Court on ordinary execution sale, particularly Section 15 thereof as well as the jurisprudence under said provision, to an extrajudicial foreclosure sale conducted under the provisions of Act No. 3135, as amended. Act No. 3135, as amended, being a special law governing extrajudicial foreclosure proceedings, the same must govern as against the provisions on ordinary execution sale under Rule 39 of the Rules of Court.

of general circulation in the province of Ilocos Sur, setting the date of the auction sale on August 6, 1979 at 10:00 a.m. in the Office of the Sheriff, Vigan, Ilocos Sur. 6 The nullity of the extrajudicial foreclosure sale in the instant case is further sought by petitioners on the ground that the DBP cannot acquire by purchase the mortgaged property at the public auction sale by virtue of par. (2) of Article 1491 and par. (7) of Article 1409 of the Civil Code which prohibits agents from acquiring by purchase, even at a public or judicial auction either in person or through the mediation of another, the property whose administration or sale may have been entrusted to them unless the consent of the principal has been given.

In that sense, the case of Aparri vs. Court Of Appeals, 13 SCRA 611 (1965), cited by petitioners, must be distinguished from the instant case. On the question of what should be done in the event the highest bid made for the property at the extrajudicial foreclosure sale is in excess of the mortgage debt, this Court applied the rule and practice in a judicial foreclosure sale to an extrajudicial foreclosure sale in a similar case considering that the governing provisions of law as mandated by Section 6 of Act No. 3135, as amended, specifically Sections 29, 30 and 34 of Rule 39 of the Rules of Court (previously Sections 464, 465 and 466 of the Code of Civil Procedure) are silent on the matter. The said ruling cannot, however, be construed as the legal basis for applying the requirement of a levy under Section 15 of Rule 39 of the Rules of Court before an extrajudicially foreclosed property can be sold at public auction when none is expressly required under Act No. 3135, as amended.

The contention is erroneous. The prohibition mandated by par. (2) of Article 1491 in relation to Article 1409 of the Civil Code does not apply in the instant case where the sale of the property in dispute was made under a special power inserted in or attached to the real estate mortgage pursuant to Act No. 3135, as amended. It is a familiar rule of statutory construction that, as between a specific statute and general statute, the former must prevail since it evinces the legislative intent more clearly than a general statute does. 7 The Civil Code (R.A. 386) is of general character while Act No. 3135, as amended, is a special enactment and therefore the latter must prevail. 8 Under Act No. 3135, as amended, a mortgagee-creditor is allowed to participate in the bidding and purchase under the same conditions as any other bidder, as in the case at bar, thus:

Levy, as understood under Section 15, Rule 39 of the Rules of Court in relation to execution of money judgments, has been defined by this Court as the act whereby a sheriff sets apart or appropriates for the purpose of satisfying the command of the writ, a part or the whole of the judgment-debtor's property. 5

Section 5. At any sale, the creditor, trustee, or other person authorized to act for the creditor, may participate in the bidding and purchase under the same conditions as any other bidder, unless the contrary has been expressly provided in the mortgage or trust deed under which the sale is made.

In extrajudicial foreclosure of mortgage, the property sought to be foreclosed need not be identified or set apart by the sheriff from the whole mass of property of the mortgagor for the purpose of satisfying the mortgage indebtedness. For, the essence of a contract of mortgage indebtedness is that a property has been identified or set apart from the mass of the property of the debtor-mortgagor as security for the payment of money or the fulfillment of an obligation to answer the amount of indebtedness, in case of default of payment. By virtue of the special power inserted or attached to the mortgage contract, the mortgagor has authorized the mortgagee-creditor or any other person authorized to act for him to sell said property in accordance with the formalities required under Act No. 3135, as amended.

In other words, Section 5 of Act No. 3135, as amended, creates and is designed to create an exception to the general rule that a mortgagee or trustee in a mortgage or deed of trust which contains a power of sale on default may not become the purchaser, either directly or through the agency of a third person, at a sale which he himself makes under the power. Under such an exception, the title of the mortgagee-creditor over the property cannot be impeached or defeated on the ground that the mortgagee cannot be a purchaser at his own sale. Needless to state, the power to foreclose is not an ordinary agency that contemplates exclusively the representation of the principal by the agent but is primarily an authority conferred upon the mortgagee for the latter's own protection. It is an ancillary stipulation supported by the same cause or consideration for the mortgage and forms an essential and inseparable part of that bilateral agreement. 9 Even in the

The Court finds that the formalities prescribed under Sections 2, 3 and 4 of Act No. 3135, as amended, were substantially complied with in the instant case. Records show that the notices of sale were posted by the Provincial Sheriff of Ilocos Sur and the same were published in Ilocos Times, a newspaper

7

absence of statutory provision, there is authority to hold that a mortgagee may purchase at a sale under his mortgage to protect his own interest or to avoid a loss to himself by a sale to a third person at a price below the mortgage debt. 10 The express mandate of Section 5 of Act No. 3135, as amended, amply protects the interest of the mortgagee in this jurisdiction.

On November 17, 1980, the trial court rendered a decision declaring the contracts to sell in favor of the Ventanillas valid and subsisting, and annulling the contract to sell in favor of Crisostomo. It ordered the MRCI to execute an absolute deed of sale in favor of the Ventanillas, free from all liens and encumbrances. Damages and attorney's fees in the total amount of P210,000.00 were also awarded to the Ventanillas for which the MRCI, AUVCI, and Crisostomo were held solidarily liable.

THE MANILA REMNANT CO., INC., petitioner, vs. HON. COURT OF APPEALS, AND SPS. OSCAR C. VENTANILLA AND CARMEN GLORIA DIAZ, respondents.

The lower court ruled further that if for any reason the transfer of the lots could not be effected, the defendants would be solidarily liable to the Ventanillas for reimbursement of the sum of P73,122.35, representing the amount paid for the two lots, and legal interest thereon from March 1970, plus the decreed damages and attorney's fees. Valencia was also held liable to MRCI for moral and exemplary damages and attorney's fees.

The present petition is an offshoot of our decision in Manila Remnant Co., Inc., (MRCI) v. Court of Appeals, promulgated on November 22, 1990. That case involved parcels of land in Quezon City which were owned by petitioner MRCI and became the subject of its agreement with A.U. Valencia and Co., Inc., (AUVCI) by virtue of which the latter was to act as the petitioner's agent in the development and sale of the property. For a stipulated fee, AUVCI was to convert the lands into a subdivision, manage the sale of the lots, execute contracts and issue official receipts to the lot buyers. At the time of the agreement, the president of both MRCI and AUVCI was Artemio U. Valencia.

From this decision, separate appeals were filed by Valencia and MRCI. The appellate court, however, sustained the trial court in toto. MRCI then filed before this Court a petition for certiorari to review the portion of the decision of the Court of Appeals upholding the solidary liability of MRCI, AUVCI and Carlos Crisostomo for the payment of moral and exemplary damages and attorney's fees to the Ventanillas.

Pursuant to the above agreement, AUVCI executed two contracts to sell dated March 3, 1970, covering Lots 1 and 2, Block 17, in favor of spouses Oscar C. Ventanilla and Carmen Gloria Diaz for the combined contract price of P66,571.00, payable monthly in ten years. After ten days and without the knowledge of the Ventanilla couple, Valencia, as president of MRCI, resold the same parcels to Carlos Crisostomo, one of his sales agents, without any consideration. Upon orders of Valencia, the monthly payments of the Ventanillas were remitted to the MRCI as payments of Crisostomo, for which receipts were issued in his name. The receipts were kept by Valencia without the knowledge of the Ventanillas and Crisostomo. The Ventanillas continued paying their monthly installments.

On November 22, 1990, this Court affirmed the decision by the Court of Appeals and declared the judgment of the trial court immediately executory. The Present Case. On January 25, 1991, the spouses Ventanilla filed with the trial court a motion for the issuance of a writ of execution in Civil Case No. 26411. The writ was issued on May 3, 1991, and served upon MRCI on May 9, 1991. In a manifestation and motion filed by MRCI with the trial court on May 24, 1991, the petitioner alleged that the subject properties could not be delivered to the Ventanillas because they had already been sold to Samuel Marquez on February 7, 1990, while their petition was pending in this Court. Nevertheless, MRCI offered to reimburse the amount paid by the respondents, including legal interest plus the aforestated damages. MRCI also prayed that its tender of payment be accepted and all garnishments on their accounts lifted.

On May 30, 1973, MRCI informed AUVCI that it was terminating their agreement because of discrepancies discovered in the latter's collections and remittances. On June 6, 1973, Valencia was removed by the board of directors of MRCI as its president. On November 21, 1978, the Ventanilla spouses, having learned of the supposed sale of their lots to Crisostomo, commenced an action for specific performance, annulment of deeds, and damages against Manila Remnant Co., Inc., A.U. Valencia and Co., Inc., and Carlos Crisostomo. It was docketed as Civil Case No. 26411 in the Court of First Instance of Quezon City, Branch 7-B.

The Ventanillas accepted the amount of P210,000.00 as damages and attorney's fees but opposed the reimbursement offered by MRCI in lieu of the execution of the absolute deed of sale. They contended that the alleged sale to Samuel Marquez was void, fraudulent, and in contempt of court and that no claim of ownership over the properties in question had ever been made by Marquez.

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On July 19, 1991, Judge Elsie Ligot-Telan issued the following order:

sale to Marquez, the issue of the validity of the sale to the Ventanillas had not yet been resolved. Furthermore, there was no specific injunction against the petitioner re-selling the property.

To ensure that there is enough amount to cover the value of the lots involved if transfer thereof to plaintiff may no longer be effected, pending litigation of said issue, the garnishment made by the Sheriff upon the bank account of Manila Remnant may be lifted only upon the deposit to the Court of the amount of P500,000.00 in cash.

Lastly, the petitioner insists that Marquez was a buyer in good faith and had a right to rely on the recitals in the certificate of title. The subject matter of the controversy having passed to an innocent purchaser for value, the respondent court erred in ordering the execution of the absolute deed of sale in favor of the Ventanillas.

MRCI then filed a manifestation and motion for reconsideration praying that it be ordered to reimburse the Ventanillas in the amount of P263,074.10 and that the garnishment of its bank deposit be lifted. This motion was denied by the trial court in its order dated September 30, 1991. A second manifestation and motion filed by MRCI was denied on December 18, 1991. The trial court also required MRCI to show cause why it should not be cited for contempt for disobedience of its judgment.

For their part, the respondents argue that the validity of the sale to them had already been established even while the previous petition was still pending resolution. That petition only questioned the solidary liability of MRCI to the Ventanillas. The portion of the decision ordering the MRCI to execute an absolute deed of sale in favor of the Ventanillas became final and executory when the petitioner failed to appeal it to the Supreme Court. There was no need then for an order enjoining the petitioner from re-selling the property in litigation.

These orders were questioned by MRCI in a petition for certiorari before the respondent court on the ground that they were issued with grave abuse of discretion.

They also point to the unusual lack of interest of Marquez in protecting and asserting his right to the disputed property, a clear indication that the alleged sale to him was merely a ploy of the petitioner to evade the execution of the absolute deed of sale in their favor.

The Court of Appeals ruled that the contract to sell in favor of Marquez did not constitute a legal impediment to the immediate execution of the judgment. Furthermore, the cash bond fixed by the trial court for the lifting of the garnishment was fair and reasonable because the value of the lot in question had increased considerably. The appellate court also set aside the show-cause order and held that the trial court should have proceeded under Section 10, Rule 39 of the Rules of Court and not Section 9 thereof.1

The petition must fail. The validity of the contract to sell in favor of the Ventanilla spouses is not disputed by the parties. Even in the previous petition, the recognition of that contract was not assigned as error of either the trial court or appellate court. The fact that the MRCI did not question the legality of the award for damages to the Ventanillas also shows that it even then already acknowledged the validity of the contract to sell in favor of the private respondents.

In the petition now before us, it is submitted that the trial court and the Court of Appeals committed certain reversible errors to the prejudice of MRCI. The petitioner contends that the trial court may not enforce it garnishment order after the monetary judgment for damages had already been satisfied and the amount for reimbursement had already been deposited with the sheriff. Garnishment as a remedy is intended to secure the payment of a judgment debt when a well-founded belief exists that the erring party will abscond or deliberately render the execution of the judgment nugatory. As there is no such situation in this case, there is no need for a garnishment order.

On top of all this, there are other circumstances that cast suspicion on the validity, not to say the very existence, of the contract with Marquez. First, the contract to sell in favor of Marquez was entered into after the lapse of almost ten years from the rendition of the judgment of the trial court upholding the sale to the Ventanillas. Second, the petitioner did not invoke the contract with Marquez during the hearing on the motion for the issuance of the writ of execution filed by the private respondents. It disclosed the contract only after the writ of execution had been served upon it.

It is also averred that the trial court gravely abused its discretion when it arbitrarily fixed the amount of the cash bond for the lifting of the garnishment order at P500,000.00. MRCI further maintains that the sale to Samuel Marquez was valid and constitutes a legal impediment to the execution of the absolute deed of sale to the Ventanillas. At the time of the

Third, in its manifestation and motion dated December 21, 1990, the petitioner said it was ready to deliver the titles to the

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Ventanillas provided that their counterclaims against private respondents were paid or offset first. There was no mention of the contract to sell with Marquez on February 7, 1990.

defendant in the hands of a third person or money owed by such third person or garnishee to the defendant. 4The rules on attachment also apply to garnishment proceedings.

Fourth, Marquez has not intervened in any of these proceedings to assert and protect his rights to the subject property as an alleged purchaser in good faith.

A garnishment order shall be lifted if it established that: b(a) the party whose accounts have been garnished has posted a counterbond or has made the requisite cash deposit; 5

At any rate, even if it be assumed that the contract to sell in favor of Marquez is valid, it cannot prevail over the final and executory judgment ordering MRCI to execute an absolute deed of sale in favor of the Ventanillas. No less importantly, the records do not show that Marquez has already paid the supposed balance amounting to P616,000.00 of the original price of over P800,000.00.2

(b) the order was improperly or irregularly issued6 as where there is no ground for garnishment 7 or the affidavit and/or bond filed therefor are defective or insufficient;8 (c) the property attached is exempt from execution, hence exempt from preliminary attachment9 or (d) the judgment is rendered against the attaching or garnishing creditor.10

The Court notes that the petitioner stands to benefit more from the supposed contract with Marquez than from the contract with the Ventanillas with the agreed price of only P66,571.00. Even if it paid the P210,000.00 damages to the private respondents as decreed by the trial court, the petitioner would still earn more profit if the Marquez contract were to be sustained.

Partial execution of the judgment is not included in the above enumeration of the legal grounds for the discharge of a garnishment order. Neither does the petitioner's willingness to reimburse render the garnishment order unnecessary. As for the counterbond, the lower court did not err when it fixed the same at P500,000.00. As correctly pointed out by the respondent court, that amount corresponds to the current fair market value of the property in litigation and was a reasonable basis for determining the amount of the counterbond.

We come now to the order of the trial court requiring the posting of the sum of P500,000.00 for the lifting of its garnishment order.

Regarding the refusal of the petitioner to execute the absolute deed of sale, Section 10 of Rule 39 of the Rules of Court reads as follows: Sec. 10. Judgment for specific act; vesting title — If a judgment directs a party to execute a conveyance of land, or to deliver deeds or other documents, or to perform any other specific act, and the party fails to comply within the time specified, the court may direct the act to be done at the cost of the disobedient party by some other person appointed by the court and the act when so done shall have like effect as if done by the party. If real or personal property is within the Philippines, the court in lieu of directing a conveyance thereof may enter judgment divesting the title of any party and vesting it in others and such judgment shall have the force and effect of a conveyance executed in due form of law.

While the petitioners have readily complied with the order of the trial court for the payment of damages to the Ventanillas, they have, however, refused to execute the absolute deed of sale. It was for the purpose of ensuring their compliance with this portion of the judgment that the trial court issued the garnishment order which by its term could be lifted only upon the filling of a cash bond of P500,000.00. The petitioner questions the propriety of this order on the ground that it has already partially complied with the judgment and that it has always expressed its willingness to reimburse the amount paid by the respondents. It says that there is no need for a garnishment order because it is willing to reimburse the Ventanillas in lieu of execution of the absolute deed of sale.

Against the unjustified refusal of the petitioner to accept payment of the balance of the contract price, the remedy of the respondents is consignation, conformably to the following provisions of the Civil Code:

The alternative judgment of reimbursement is applicable only if the conveyance of the lots is not possible, but it has not been shown that there is an obstacle to such conveyance. As the main obligation of the petitioner is to execute the absolute deed of sale in favor of the Ventanillas, its unjustified refusal to do so warranted the issuance of the garnishment order.

Art. 1256. If the creditor to whom tender of payment has been made refuses without just cause to accept it, the debtor shall be released from responsibility by the consignation of the thing or sum due. . .

Garnishment is a species of attachment for reaching credits belonging to the judgment debtor and owing to him from a stranger to the litigation.3 It is an attachment by means of which the plaintiff seeks to subject to his claim property of the

Art. 1258. Consignation shall be made by depositing the things due at the disposal of the judicial authority, before whom the

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tender of payment shall be proved, in a proper case, and the announcement of the consignation in other cases.

Register of Deeds of Manila and on July 27, 1976 obtained a certificate of title in its name, numbered 122496, in lieu of that of the mortgagor, which was accordingly cancelled. 3

The consignation having been made, the interested parties shall also be notified thereof.

On the same day that title was issued to it, Banco Filipino filed a petition for a writ of possession with the Court of First Instance of Manila.4 The petition recited the foregoing facts and the additional circumstances that (1) the mortgagor, Universal Ventures, Inc., had failed to redeem the property within the one-year period allowed by law, and (2) the mortgagor was still in possession of the property, as well as certain other persons claiming rights under said mortgagor although said rights had not been recorded in the Register of Deeds, and prayed —

Art. 1260. Once the consignation has been duly made, the debtor may ask the judge to order the cancellation of the obligation. Accordingly, upon consignation by the Ventanillas of the sum due, the trial court may enter judgment canceling the title of the petitioner over the property and transferring the same to the respondents. This judgment shall have the same force and effect as conveyance duly executed in accordance with the requirements of the law.

. . . that after due notice and hearing, ... (the) Court forthwith issue in accordance with Section 7 of Act No. 3135, as amended by Act No. 4118, a writ of possession of the property in favor of the petitioner and against the respondent and all persons claiming under it, to vacate the premises ... covered by and embraced in (the mortgagor's title,) Transfer Certificate of Title No. 67992 of the Register of Deeds of Manila.

In sum, we find that: 1. No legal impediment exists to the execution, either by the petitioner or the trial court, of an absolute deed of sale of the subject property in favor of the respondent Ventanillas; and 2. The lower court did not abuse its discretion when it required the posting of a P500,000.00 cash bond for the lifting of the garnishment order.

Among the persons named in the petition as "claiming (rights) under" Universal Ventures, Inc., were petitioners Avelina Malonzo, Barbara Brown, and Bonifacia Monzon. 5 The petition contained a "Notification" addressed to the Clerk of Court to set the hearing thereon on July 30, 1976 at 9:00 o'clock in the morning; and copies were served on the Universal Ventures, Inc. and the persons alleged to be claiming rights under it. 6

SPOUSES ENRICO MALONZO and AVELINA MALONZO, BARBARA BROWN, and BONIFACIA MONZON, petitioners, vs. HON. HERMINIO MARIANO, Judge, CFI, Manila, Br. IV, BANCO FILIPINO SAVINGS AND MORTGAGE BANK and THE CITY SHERIFF OF MANILA, respondents. The principal issue raised in the special civil action of prohibition at bar is whether or not a writ of possession issued by a Court of First Instance (Regional Trial Court) in accordance with Act 3135, to give possession of property sold at an extrajudicial foreclosure sale to the purchaser thereof, may be enforced against persons other than the mortgagor

After hearings were had on the petition, Judge Herminio Mariano issued the order now assailed, under date of September 20, 1979, the dispositive portion whereof reads as follows:7 WHEREFORE, let the corresponding Writ of Possession be issued directing the Sheriff of Manila or his duly authorized representative to place the herein petitioner in actual possession of the foreclosed properties described in Transfer Certificate of Title No. 67992 and to eject therefrom the herein respondent, its officers, agents and other persons claiming under said respondent.

The property in question consists of two (2) parcels of land and the apartment and commercial building thereon standing, located at R. Magsaysay Boulevard, Sta. Mesa, Manila. A mortgage was constituted over this property by its owner then, Universal Ventures, Inc., in favor of Banco Filipino Mortgage & Savings Bank, as security for the payment of a loan of P350,000.00. 1 The mortgage deed authorized the extrajudicial foreclosure of the property in the event of default in the repayment of the loan. It was later amended to extend to and cover an additional and total consolidated loan of P400,000.00. 2 Universal Ventures, Inc. failed to repay the loan. Consequently, Banco Filipino caused the extra-judicial foreclosure of the property by the City Sheriff of Manila. The foreclosure sale took place in due course; the mortgaged property was struck off to the bank, as highest bidder, and the bank registered the sheriff's certificate of sale with the

The writ of possession issued on March 4, 1980 and on the strength thereof, the Sheriff of Manila attempted to evict the persons in occupancy of the property. 8 Three of the persons sought to be evicted, Enrico Malonzo, husband of Avelina Malonzo, Barbara Brown, and Bonifacia Monzon, filed suit against Banco Filipino and the City Sheriff in the same Court of First Instance of Manila seeking to perpetually restrain the enforcement of the writ of possession against them, and to recover damages resulting from the

11

defendants' attempts to enforce it. 9 The action was docketed as Civil Case No. 132075. In their complaint, they alleged that they were occupying their respective premises in the foreclosed property "by virtue of a verbal lease contract with Universal Ventures, lnc.," that "there being no ejectment case filed against them neither were they made a party to the Petition for Writ of Possession of defendant BANCO FILIPINO ..." they were entitled to remain in possession and could not be ousted under the writ of possession; moreover, "under Presidential Decree No. 20 and Batas Pambansa Blg. 25, transfer of ownership whether by virtue of sale or mortgage will not be a ground for ejectment."

encumbered with a mortgage duly registered in the office of any register of deeds in accordance with any existing law, and in each case the clerk of the court shall, upon the filing of such petition, collect the fees specified in paragraph eleven of section one hundred and fourteen of Act Numbered Four hundred and ninety-six, as amended by Act Numbered Twenty-eight hundred and sixty-six, and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately. There being no dispute about the fact that no redemption had been made within one (1) year from registration of the extrajudicial foreclosure sale, there can be no question about the absolute right of Banco Filipino, as purchaser, to a writ of possession, 11 or stated otherwise, the ministerial duty of the Court to issue the writ, 12 upon mere motion, without need of instituting a separate action for the purpose .13 The question is whether or not that writ of possession which — is the final process to carry out or consummate the extra-judicial foreclosure of the mortgage — may be enforced by the sheriff against persons other than the mortgagor who are in occupancy of the foreclosed property. To this question this Court has already had occasion to give an affirmative answer, grounded particularly on the provisions of Section 35, Rule 39 of the Rules of Court which are inter alia suppletory to act 3135. 14

Fourteen (14) days later, these same persons — Enrico Malonzo, Barbara Brown and Bonifacia Monzon — and Enrico's wife, Avelina Malonzo, instituted a second action, this time, a special civil action for prohibition, commenced in this Court by petition dated June 6, 1980. Named respondents were the same defendants in Civil Case No. 132075 — Banco Filipino and the City Sheriff of Manila — as well as Judge Mariano, who had issued the writ of possession. The petition recited substantially the same facts as those set out in the complaint in Civil Case No. 132075, and submitted the same thesis, that they could not be evicted from the premises "there being no ejectment case filed against them neither were they made a party to the petition for writ of possessioned filed by respondent Bank," and "under Presidential Decree No. 20 and further reiterated in Batas Pambansa Bilang 25, transfer of ownership whether by virtue of sale or mortgage will not be a ground for ejectment ... .

Under section 6 of Act No. 3135 and Sections 29 to 31 and Section 35 Rule 39 of the Revised Rules of Court, in case of an extra-judicial foreclosure of a real estate mortgage, the possession of the property sold may be given to the purchaser by the sheriff after the period of redemption had expired, unless a third person is actually holding the property adversely to the mortgagor. An ordinary action for the recovery of possession is not necessary. There is no law in this jurisdiction whereby the purchaser at a sheriffs sale of real property is obliged to bring a separate and independent suit for possession after the one year period for redemption has expired and after he has obtained the sheriffs final certificate of sale. (Tan Soo Huat vs. Ongwico 63 Phil. 746, 749). The same rule was followed in a judicial foreclosure of mortgage and in an execution sale (Rivera vs. Court of First Instance of Nueva Ecija, 61 Phil. 201 and Republic vs. Nable, L-4979, April 30, 1952). If the court can issue a writ of possession during the period of redemption there is no reason why it should not also have the same power after the expiration of that period.15

Section 7 of Act 3135, as amended by Act 4118, grants to the purchaser at an extra-judicial foreclosure sale, an absolute right to possession of the property sold during the one-year period of redemption and a fortiori after the lapse of said period without any redemption being made. 10 Possession may be obtained under a writ which may be applied for ex parte. Section 7 reads as follows: SEC. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of this Act. Such petition shall be made under oath and filed in form of an ex parte motion in the registration or cadastral proceedings if the property is registered, or in special proceedings in the case of property registered under the Mortgage Law or under section one hundred and ninetyfour of the Administrative Code or of any other real property

The petitioners cannot be deemed third parties "actually holding the property adversely" to the mortgagor. They derive their rights to the possession of the property exclusively from the mortgagor, in virtue of verbal agreements of lease. They derive their rights to the possession of the property exclusively

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from the mortgagor, in virtue of verbal agreements of lease. They were lessees at the time that the property occupied by them was mortgaged by their lessor to respondent Banco Filipino. And of that mortgage they were charged with constructive knowledge upon its registration in the Registry of Property, if they did not indeed, actually know of it. The right pertaining to them in this situation was that of being notified of the application for a writ of possession and of being accorded an opportunity at a hearing to oppose the same, as by showing that they were "actually holding the property adversely" to the mortgagor. That right was duly accorded to them. They were served with copies of the motion or petition for issuance of the writ of possession and had ample opportunity to oppose the same, to persuade the Court that the writ should not issue or be executed against them. The proceedings showed that, by their own assertions, they were not holding the property adversely to the mortgagor, but were exercising rights under, derived from, said mortgagor, who was their lessor. Upon the cessation of their lessor's rights over the property, their own also ceased. The writ of possession was therefore properly enforceable against them.

CA-G.R. SP No. 90547 which denied the Application for a Writ of Preliminary Prohibitory Injunction[2] filed by petitioner. Challenged as well is the Order[3] dated August 17, 2006 of the Regional Trial Court (RTC) of Naga City, Branch 26 in Civil Case No. RTC 2005-0030 for unlawful detainer which granted respondents Motion to Issue Writ of Execution[4] filed on August 16, 2005 and denied petitioners Motion for Inhibition[5] filed on June 27, 2005. Concomitantly, the processes issued to enforce said Order are equally assailed, namely: the Writ of Execution Pending Appeal[6] dated August 22, 2006; the Notice to Vacate[7] dated August 23, 2006; and the Notice of Garnishment[8] dated August 23, 2006. The facts as culled from the rollo of this petition and from the averments of the parties to this petition are as follows: Macario A. Mariano and Jose A. Gimenez were the registered owners of a 229,301-square meter land covered by Transfer Certificate of Title (TCT) No. 671[9] located in NagaCity. The land was subdivided into several lots and sold as part of City Heights Subdivision (CHS). In a Letter[10] dated July 3, 1954, the officers of CHS offered to construct the Naga City Hall on a two (2)-hectare lot within the premises of the subdivision. Said lot was to be designated as an open space for public purpose and donated to petitioner in accordance with the rules and regulations of the National Urban Planning Commission. By Resolution No. 75[11] dated July 12, 1954, the Municipal Board of Naga City (Municipal Board) asked CHS to increase the area of the land to four (4) hectares. Accordingly, CHS amended its offer to five (5) hectares.

The situation is not significantly different from that contemplated by Section 49 (b) of Rule 39, declaring a final and executory judgment or order conclusive and hence enforceable not only against the parties but also "their successors in interest by title subsequent to the commencement of the action or special proceeding." Pursuant to this provision, a judgment in personam directing a party to deliver possession of property to another is binding not only against the former but also against his successors in interest by title subsequent to the commencement of the action, i.e., those whose possessory rights are derived from him, 16 e.g., lessees, possessors by tolerance, assignees. As regards the latter, it is not required that a separate action be instituted against them to litigate the issue of possession; due process is satisfied by holding a hearing, with notice to them, on the nature of their possession, and thereafter denying or acceding to the enforcement of a writ of possession against them as the findings at said hearing shall warrant. 17

On August 11, 1954, the Municipal Board adopted Resolution No. 89[12] accepting CHS amended offer. Mariano and Gimenez thereafter delivered possession of the lots described as Blocks 25 and 26 to the City Government of Naga (city government). Eventually, the contract for the construction of the city hall was awarded by the Bureau of Public Works through public bidding to Francisco O. Sabaria, a local contractor. This prompted Mariano and Gimenez to demand the return of the parcels of land from petitioner. On assurance, however, of then Naga City Mayor Monico Imperial that petitioner will buy the lots instead, Mariano and Gimenez allowed the city government to continue in possession of the land.

WHEREFORE, the petition is DISMISSED for lack of merit, and the case is remanded to the Court a quo with instructions to forthwith issue in favor of respondent bank an alias writ of possession enforceable against the petitioners or their successors in interest, and all other persons claiming under, or not otherwise actually holding the property adversely to, the mortgagor, Universal Ventures, Inc. Costs against petitioners.

On September 17, 1959, Mariano wrote a letter[13] to Mayor Imperial inquiring on the status of the latters proposal for the city government to buy the lots instead. Then, through a note[14] dated May 14, 1968, Mariano directed Atty. Eusebio Lopez, Jr., CHS General Manager, to disregard the proposed donation of lots and insist on Mayor Imperials offer for the city government to purchase them.

CITY OF NAGA VS. ASUNCION This petition for certiorari and prohibition under Rule 65 of the Rules of Court seeks the reversal of the Resolution[1] dated August 16, 2006 of the Court of Appeals in

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On December 2, 1971, Macario A. Mariano died. Meanwhile, the city government continued in possession of the lots, and constructed the Naga City Hall on Block 25 and the public market on Block 26. It also conveyed to other government offices[15] portions of the land which at present, house the National Bureau of Investigation (NBI), Land Transportation Office, and Hall of Justice, among others.

On August 17, 2006, the RTC issued the assailed Order, thus: WHEREFORE, let the corresponding Writ of Execution Pending Appeal be issued in this case immediately pursuant to Sec. 21, Rule 70. However, in view of the MANIFESTATION of plaintiffs dated October 13, 2005 that they will not take possession of the land and building where the City Hall, Hall of Justice and National Bureau of Investigation are located while this case is still pending before the Court of Appeals, this writ of execution shall be subject to the above-cited exception.

In a Letter[16] dated September 3, 2003, Danilo D. Mariano, as administrator and representative of the heirs of Macario A. Mariano, demanded from petitioner the return of Blocks 25 and 26 to CHS. Alas, to no avail.

The Sangguniang [Panlungsod] of Naga City is hereby directed to immediately appropriate the necessary amount of [P]2,500,000.00 per month representing the unpaid rentals reckoned from November 30, 2003 up to the present from its UNAPPROPRIATED FUNDS to satisfy the claim of the plaintiffs, subject to the existing accounting and auditing rules and regulations. SO ORDERED.[22]

Thus, on February 12, 2004, respondent filed a Complaint[17] for unlawful detainer against petitioner before the Municipal Trial Court (MTC) of Naga City, Branch 1. In a Decision[18] dated February 14, 2005 of the MTC in Civil Case No. 12334, the MTC dismissed the case for lack of jurisdiction. It ruled that the citys claim of ownership over the lots posed an issue not cognizable in an unlawful detainer case.

Consequently, Clerk of Court Atty. Jesus Mampo issued a writ of execution pending appeal. Sheriff Jorge B. Lopez on the other hand, served a notice to vacate on respondents, and a notice of garnishment on Land Bank, Naga City Branch.

On appeal, the RTC reversed the court a quo by Decision[19] dated June 20, 2005 in Civil Case No. RTC 20050030. It directed petitioner to surrender physical possession of the lots to respondents with forfeiture of all the improvements, and to pay P2,500,000.00 monthly as reasonable compensation for the use and occupation of the land; P587,159.60 as attorneys fees; and the costs of suit.

Hence, this petition for certiorari and prohibition. On August 28, 2006, we issued a Temporary Restraining Order[23] to maintain the status quo pending resolution of the petition. Petitioner raises the following issues for our consideration: I.WHETHER OR NOT PETITIONER CAN VALIDLY AVAIL OF THE EXTRAORDINARY WRITS OF CERTIORARI AND PROHIBITION IN ASSAILING THE CHALLENGED RESOLUTION, ORDERS AND NOTICES.

On June 27, 2005, petitioner filed a Motion for Inhibition against Presiding RTC Judge Filemon B. Montenegro for alleged bias and partiality. Then, petitioner moved for reconsideration/new trial of the June 20, 2005 Decision. On July 15, 2005, the RTC denied both motions.

II.WHETHER OR NOT PETITIONER IS GUILTY OF FORUMSHOPPING.

On July 22, 2005, petitioner filed a Petition for Review with Very Urgent Motion/Application for Temporary Restraining Order and Writ of Preliminary Prohibitory Injunction[20] with the Court of Appeals. Respondents thereafter filed a Motion to Issue Writ of Execution.

III.WHETHER OR NOT PUBLIC RESPONDENT JUDGE COMMITTED GRAVE ABUSE OF DISCRETION IN ALLOWING THE IMMEDIATE EXECUTION OF ITS JUDGMENT NOTWITHSTANDING THE CATASTROPHIC CONSEQUENCES IT WILL BEAR ON THE DELIVERY OF BASIC GOVERNMENTAL SERVICES TO THE GOOD CITIZENS OF NAGA CITY; THE INCONCLUSIVENESS OF PRIVATE RESPONDENTS TITLE AND CLAIM OF POSSESSION OVER THE SUBJECT PROPERTY; AND THE IMPUTATION OF BIAS AND PARTIALITY AGAINST PUBLIC RESPONDENT JUDGE.

On October 13, 2005, respondents manifested that they will not seek execution against the NBI, City Hall and Hall of Justice in case the writ of preliminary injunction is denied. On August 16, 2006, the appellate court issued the challenged Resolution, the decretal portion of which reads: WHEREFORE, based on the foregoing premises, and in the absence of any immediate threat of grave and irreparable injury, petitioners prayer for issuance of a writ of preliminary injunction is hereby DENIED. Petitioner had already filed its Memorandum. Hence, the private respondents are given fifteen (15) days from notice within which to submit their Memorandum. SO ORDERED.[21]

IV.WHETHER OR NOT PUBLIC RESPONDENTS JUDGE FILEMON B. MONTENEGRO, ATTY. JESUS MAMPO AND SHERIFF JORGE B. LOPEZ EXCEEDED THEIR AUTHORITY AND/OR COMMITTED GRAVE ABUSE OF DISCRETION IN TRYING TO EVICT PETITIONER AND VARIOUS DEPARTMENTS AND OFFICES THEREOF FROM THE SUBJECT PROPERTY.

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V.WHETHER OR NOT PUBLIC RESPONDENT JUDGE FILEMON B. MONTENEGRO EXCEEDED HIS JURISDICTION AND/OR COMMITTED GRAVE ABUSE OF DISCRETION IN DIRECTING PETITIONER TO PAY PRIVATE RESPONDENTS MONTHLY RENTALS OF ABOUT [P]81,500,000.00.

abuse when they issued the writ of execution pending appeal, and served notice to vacate and notice of garnishment, respectively. Finally, petitioner imputes grave abuse of discretion on the Court of Appeals for denying its application for a writ of preliminary injunction. The appellate tribunal struck down petitioners application pending resolution by the RTC of respondents motion to execute its June 20, 2005 Decision. Also, it found no merit in petitioners claim that grave and irreparable injury will result to the City of Naga by the implementation of said decision. Nevertheless, it excused the NBI, Naga City Hall and Hall of Justice from execution.

VI.WHETHER OR NOT THE ORDER DIRECTING PETITIONER TO PAY PRIVATE RESPONDENT MONTHLY RENTALS [DISREGARDED] THE HONORABLE COURTS ADMINISTRATIVE CIRCULAR NO. 10-2000 AND THE LAW AND THE JURISPRUDENCE CITED THEREIN. VII.WHETHER OR NOT PUBLIC RESPONDENTS JUDGE FILEMON B. MONTENEGRO, ATTY. JESUS MAMPO AND SHERIFF JORGE B. LOPEZ EXCEEDED THEIR AUTHORITY AND/OR COMMITTED GRAVE ABUSE OF DISCRETION IN CAUSING THE GARNISHMENT OF PETITIONERS ACCOUNT WITH LAND BANK OF THE PHILIPPINES.

For their part, respondents (Marianos) call for the dismissal of the instant petition on the ground of forum-shopping. They aver that the petition for review in the Court of Appeals and the present petition are but similar attempts to stop the immediate enforcement of the June 20, 2005 RTC Decision. They add that the court a quo merely acted in obedience to the provisions of Section 21[26] of Rule 70 of the Rules of Court when it ordered execution. Thus, the writ of execution, notice to vacate and notice of garnishment are also valid as incidents of the August 17, 2006 RTC Order. Respondents agree with the appellate court that there is no immediate threat of grave and irreparable injury to petitioner. In any case, the Marianos suggest that petitioner just seek reparation for damages should the appellate court reverse the RTC. Lastly, respondents allege that the court a quo correctly ruled on the merits despite its finding that the MTC erroneously dismissed the unlawful detainer case for lack of jurisdiction. The MTC based its decision on the affidavits and position papers submitted by the parties.

VIII.WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DENYING THE PETITIONERS APPLICATION FOR WRIT OF PRELIMINARY PROHIBITORY INJUNCTION.[24] The pertinent issues, in our view, are as follows: (1) whether petitioner availed of the proper remedy to contest the disputed order, resolution, and notices; (2) whether petitioner was guilty of forum-shopping in filing the instant petition pending the petition for review before the Court of Appeals; (3) whether RTC Judge Montenegro committed grave abuse of discretion in granting execution pending appeal; and (4) whether the Court of Appeals committed grave abuse of discretion in denying petitioners application for a writ of preliminary injunction.

The petition is partly meritorious. In the interest of justice, we decided to give due course to the petition for certiorari and prohibition concerning the August 17, 2006 Order of the RTC. As a rule, petitions for the issuance of such extraordinary writs against an RTC should be filed with the Court of Appeals. A direct invocation of this Courts original jurisdiction to issue these writs should be allowed only when there are special and important reasons therefor, clearly and specifically set out in the petition.[27] Under the present circumstance however, we agree to take cognizance of this case as an exception to the principle of hierarchy of courts.[28] For while it has been held by this Court that a motion for reconsideration is a condition sine qua non for the grant of a writ of certiorari, nevertheless such requirement may be dispensed with where there is an urgent necessity for the resolution of the question and any further delay would prejudice the interests of the Government.[29] Such is the situation in the case at bar.

Petitioner City of Naga ascribes grave abuse of discretion on Judge Montenegro for allowing execution pending appeal and for refusing to inhibit himself from the proceedings. It contends that its claim of ownership over the lots behooved the RTC of jurisdiction to try the illegal detainer case. Granting arguendo that the RTC had jurisdiction and its judgment was immediately executory, petitioner insists that the circumstances in the case at bar warranted against it. For one, the people of Naga would be deprived of access to basic social services even before respondents right to possess the land has been conclusively established. The City of Naga assails the validity of the order of execution issued by the court inasmuch as it excluded the NBI, City Hall and Hall of Justice from its coverage; ordered garnishment of government funds; and directed the Sangguniang Panlungsodto appropriate money in violation of the Supreme Court Administrative Circular No. 10-2000.[25] Petitioner likewise claims that Atty. Jesus Mampo and Sheriff Jorge B. Lopez acted with manifest

Thus, we find no merit in respondents contention that petitioner erred in its choice of remedy before this Court.

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Under Section 1(c) and (f),[30] Rule 41 of the Rules of Court, no appeal may be taken from an interlocutory order and an order of execution, respectively. An interlocutory order is one which does not dispose of the case completely but leaves something to be decided upon.[31] Such is the nature of an order granting or denying an application for preliminary injunction; hence, not appealable.[32] The proper remedy, as petitioner did in this case, is to file a petition for certiorari and/or prohibition under Rule 65.

prevailing circumstances, the court may stay immediate execution of the judgment. Noteworthy, the foregoing exceptions were made in reference to Section 8,[42] Rule 70 of the old Rules of Court which has been substantially reproduced as Section 19, Rule 70 of the 1997 Rules of Civil Procedure. Therefore, even if the appealing defendant was not able to file a supersedeas bond, and make periodic deposits to the appellate court, immediate execution of the MTC decision is not proper where the circumstances of the case fall under any of the above-mentioned exceptions. Yet, Section 21, Rule 70 of the Rules does not provide for a procedure to avert immediate execution of an RTC decision.

Nor can we agree that petitioner was guilty of forum-shopping. Under the Same Objective Standard enunciated in the case of First Philippine International Bank v. Court of Appeals,[33] the filing by a party of two apparently different actions, but with the same objective, constitutes forum- shopping.[34] Here, the special civil action of certiorari before us is an independent action. The ultimate purpose of such action is to keep the inferior tribunal within the bounds of its jurisdiction or relieve parties from arbitrary acts of the court.[35] In contrast, the petition for review before the Court of Appeals under Rule 42 involves an evaluation of the case on the merits. Clearly, petitioner did not commit forum-shopping.

This is not to say that the losing defendant in an ejectment case is without recourse to avoid immediate execution of the RTC decision. The defendant may, as in this case, appeal said judgment to the Court of Appeals and therein apply for a writ of preliminary injunction. Thus, as held in Benedicto v. Court of Appeals,[43] even if RTC judgments in unlawful detainer cases are immediately executory, preliminary injunction may still be granted.[44] In the present case, the Court of Appeals denied petitioners application for a writ of preliminary injunction because the RTC has yet to rule on respondents Motion to Issue Writ of Execution. Significantly, however, it also made a finding that said application was without merit. On this score, we are unable to agree with the appellate court.

Now, we shall proceed to resolve the contentious issues in this case. Section 21, Rule 70 of the Rules of Court is pertinent: SEC. 21. Immediate execution on appeal to Court of Appeals or Supreme Court. The judgment of the Regional Trial Court against the defendant shall be immediately executory, without prejudice to a further appeal that may be taken therefrom.

A writ of preliminary injunction is available to prevent threatened or continuous irremediable injury to parties before their claims can be thoroughly studied and adjudicated. Its sole objective is to preserve the status quo until the merits of the case can be heard fully.[45] Status quo is the last actual, peaceable and uncontested situation which precedes a controversy.[46]

Thus, the judgment of the RTC against the defendant in an ejectment case is immediately executory. Unlike Section 19,[36] Rule 70 of the Rules, Section 21 does not provide a means to prevent execution; hence, the courts duty to order such execution is practically ministerial.[37] Section 21 of Rule 70 presupposes that the defendant in a forcible entry or unlawful detainer case is unsatisfied with the judgment of the RTC and decides to appeal to a superior court. It authorizes the RTC to immediately issue a writ of execution without prejudice to the appeal taking its due course. Nevertheless, it should be stressed that the appellate court may stay the said writ should circumstances so require.[38]

As a rule, the issuance of a preliminary injunction rests entirely within the discretion of the court taking cognizance of the case and will not be interfered with, except in cases of manifest abuse.[47] Grave abuse of discretion implies a capricious and whimsical exercise of judgment tantamount to lack or excess of jurisdiction. The exercise of power must have been done in an arbitrary or a despotic manner by reason of passion or personal hostility. It must have been so patent and gross as to amount to an evasion of positive duty or a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.[48]

Petitioner herein invokes seasonably the exceptions to immediate execution of judgments in ejectment cases cited in Hualam Construction and Devt. Corp. v. Court of Appeals[39] and Laurel v. Abalos,[40] thus: Where supervening events (occurring subsequent to the judgment) bring about a material change in the situation of the parties which makes the execution inequitable, or where there is no compelling urgency for the execution because it is not justified by the

Considering the circumstances in this case, we find that the Court of Appeals abused its discretion when it denied petitioners application for a writ of preliminary injunction because of the pendency of respondents Motion to Issue Writ of Execution with the RTC, but ruled on the merits of the

16

application at the same time. At most, the appellate court should have deferred resolution on the application until the RTC has decided on the motion for execution pending appeal. Moreover, nothing in the rules allow a qualified execution pending appeal that would have justified the exclusion of the NBI, City Hall and Hall of Justice from the effects of the writ.

depositary of the Philippine Government by any of its agencies or instrumentalities, whether by general or special deposit, remain government funds. Hence, they may not be subject to garnishment or levy, in the absence of corresponding appropriation as required by law.[51] For this reason, we hold that the Notice of Garnishment dated August 23, 2006 is void.

In any case, we have ploughed through the records of this case and we are convinced of the pressing need for a writ of preliminary injunction. Be it noted that for a writ of preliminary injunction to be issued, the Rules of Court do not require that the act complained of be in clear violation of the rights of the applicant. Indeed, what the Rules require is that the act complained of be probably in violation of the rights of the applicant. Under the Rules, probability is enough basis for injunction to issue as a provisional remedy.This situation is different from injunction as a main action where one needs to establish absolute certainty as basis for a final and permanent injunction.[49]

Anent Judge Montenegros refusal to recuse himself from the proceedings, we find no grave abuse of discretion. We have held time and again that inhibition must be for just and valid causes. The mere imputation of bias and partiality is not enough ground for judges to inhibit, especially when the charge is without sufficient basis. This Court has to be shown acts or conduct clearly indicative of arbitrariness or prejudice before it can brand concerned judges with the stigma of bias and partiality. Bare allegations of partiality will not suffice in the absence of clear and convincing evidence to overcome the presumption that the judge will undertake his noble role to dispense justice according to law and evidence without fear and favor.[52] The Resolution[53] of the Court En Banc dated June 27, 2006 which dismissed the complaint filed by Mayor Jesse Robredo against Judge Montenegro served to negate petitioners allegations. Nevertheless, when the ground sought for the judges inhibition is not among those enumerated in Section 1,[54] Rule 137 of the Rules of Court, a judge may, in the exercise of his sound discretion, disqualify himself from sitting in a case, for just or valid reasons.

Thus, we have stressed the foregoing distinction to justify the issuance of a writ of preliminary injunction in actions for unlawful detainer: ...Where the action, therefore, is one of illegal detainer, as distinguished from one of forcible entry, and the right of the plaintiff to recover the premises is seriously placed in issue in a proper judicial proceeding, it is more equitable and just and less productive of confusion and disturbance of physical possession, with all its concomitant inconvenience and expenses. For the Court in which the issue of legal possession, whether involving ownership or not, is brought to restrain, should a petition for preliminary injunction be filed with it, the effects of any order or decision in the unlawful detainer case in order to await the final judgment in the more substantive case involving legal possession or ownership. It is only where there has been forcible entry that as a matter of public policy the right to physical possession should be immediately set at rest in favor of the prior possession regardless of the fact that the other party might ultimately be found to have superior claim to the premises involved, thereby to discourage any attempt to recover possession thru force, strategy or stealth and without resorting to the courts.[50]

Similarly, in our view, the charge of grave abuse of discretion against Clerk of Court Atty. Jesus Mampo and Sheriff Jorge B. Lopez cannot prosper. When Judge Montenegroissued the order directing the issuance of a writ of execution, Atty. Jesus Mampo was left with no choice but to issue the writ. Such was his ministerial duty in accordance with Section 4,[55] Rule 136 of the Rules of Court.[56] In the same vein, when the writ was placed in the hands of Sheriff Lopez, it was his duty, in the absence of instructions to the contrary, to proceed with reasonable celerity and promptness to implement it in accordance with its mandate. It is elementary that a sheriffs duty in the execution of the writ is purely ministerial; he is to execute the order of the court strictly to the letter. He has no discretion whether to execute the judgment or not. The rule may appear harsh, but such is the rule we have to observe. [57]

Needless to reiterate, grave and irreparable injury will be inflicted on the City of Naga by the immediate execution of the June 20, 2005 RTC Decision. Foremost, as pointed out by petitioner, the people of Naga would be deprived of access to basic social services. It should not be forgotten that the land subject of the ejectment case houses government offices which perform important functions vital to the orderly operation of the local government. As regards the garnishment of Naga Citys account with the Land Bank, the rule is and has always been that all government funds deposited in official

WHEREFORE, the instant petition is PARTLY GRANTED, and it is hereby ORDERED that: (A) The Resolution dated August 16, 2006 of the Court of Appeals in CA-G.R. SP No. 90547 is REVERSED and SET ASIDE. The Court of Appeals is ORDERED to issue a writ of preliminary injunction to restrain the execution of the Decision dated June 20, 2005 of the Regional Trial Court, Branch 26, Naga City pending resolution of the petition for review before it;

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(B) The Writ of Execution Pending Appeal dated August 22, 2006, Notice to Vacate dated August 23, 2006, and the Notice of Garnishment dated August 23, 2006 are SET ASIDE.

void because the RTC Balayan did not acquire jurisdiction over them. FBCI allegedly forged the service of summons on them. On 28 December 1998, the RTC Balayan nullified and set aside the judgment by default and the writ of possession. The RTC Balayan found that the summons and the complaint were not served on Silverio, Jr., Esses and Tri-Star. The RTC Balayan directed the service of summons anew on Silverio, Jr., Esses and Tri-Star.

Lastly, the Court of Appeals is hereby ENJOINED to resolve the pending petition for review before it, CA-G.R. SP No. 90547, without further delay, in a manner not inconsistent with this Decision. RICARDO S. SILVERIO, JR., ESSES DEVELOPMENT CORPORATION, and TRI-STAR FARMS, INC., petitioners, vs. FILIPINO BUSINESS CONSULTANTS, INC., respondent.

The RTC Balayan denied FBCIs motion for reconsideration of the order. FBCI then filed a petition for certiorari with the Court of Appeals questioning the RTC Balayans 28 December 1998 Order.[3] On 28 April 2000, the Court of Appeals denied FBCIs petition. The Court of Appeals also denied FBCIs motion for reconsideration. On 13 August 2001, the Supreme Court denied FBCIs petition.

The Case. Before us is a petition for review of the Order of the Regional Trial Court, Fourth Judicial Region, Branch XI, Balayan, Batangas (RTC Balayan) dated 26 May 2000.[1] The order suspended the enforcement of the writ of possession that the RTC Balayan had previously issued in favor of petitioners Ricardo S. Silverio, Jr. (Silverio, Jr.), Esses Development Corporation (Esses) and Tri-Star Farms, Inc. (Tri-Star). Filipino Business Consultants, Inc. (FBCI), now Filipino Vastland Company, Inc. sought to suspend the writ of possession on the ground of a supervening event. FBCI claimed that it had just acquired all the stocks of Esses and Tri-Star. As the new owner of Esses and Tri-Star, FBCI asserted its right of possession to the disputed property. Petitioners Silverio, Jr., Esses and TriStar question the RTC Balayans suspension of the writ of possession and its jurisdiction to hold hearings on the supervening event.

On 14 April 1999, the RTC Balayan modified its 28 December 1998 Order by upholding FBCIs possession of the Calatagan Property. The RTC Balayan ruled that FBCI could not be deprived of possession of the Calatagan Property because FBCI made substantial improvements on it. Possession could revert to Silverio, Jr., Esses and Tri-Star only if they reimburse FBCI. The RTC Balayan gave Silverio, Jr., Esses and Tri-Star 15 days to file their responsive pleadings. Silverio, Jr., Esses and Tri-Star moved for the partial reconsideration of the 14 April 1999 Order. Silverio, Jr., Esses and Tri-Star argued that since the judgment by default was nullified, they should be restored to their possession of the Calatagan Property. FBCI did not file any opposition to the motion.

The Antecedent Facts. The parties are wrangling over possession of a 62 hectare-land in Calatagan, Batangas (Calatagan Property). Silverio, Jr. is the President of Esses and Tri-Star. Esses and Tri-Star were in possession of the Calatagan Property, covered by TCT No. T-55200 and registered in the names of Esses and Tri-Star.

On 9 November 1999, the RTC Balayan reversed its 14 April 1999 Order by holding that Silverio, Jr., Esses and Tri-Star had no duty to reimburse FBCI. The RTC Balayan pointed out that FBCI offered no evidence to substantiate its claim for expenses. The 9 November 1999 Order also restored possession of the Calatagan Property to Silverio, Jr., Esses and Tri-Star pursuant to Rule 39, Section 5 of the 1997 Rules of Civil Procedure. This provision provides for restitution in case of reversal of an executed judgment. On 7 January 2000, the RTC Balayan denied FBCIs motion for reconsideration.

On 22 September 1995, Esses and Tri-Star executed a Deed of Sale with Assumption of Mortgage in favor of FBCI. Esses and Tri-Star failed to redeem the Calatagan Property. On 27 May 1997, FBCI filed a Petition for Consolidation of Title of the Calatagan Property with the RTC Balayan.[2] FBCI obtained a judgment by default. Subsequently, TCT No. T55200 in the names of Esses and Tri-Star was cancelled and TCT No. T-77656 was issued in FBCIs name. On 20 April 1998, the RTC Balayan issued a writ of possession in FBCIs favor. FBCI then entered the Calatagan Property.

On 8 May 2000, the RTC Balayan issued the writ of possession to Silverio, Jr., Esses and Tri-Star. On 12 May 2000, FBCI filed with the RTC Balayan a Manifestation and Motion to Recall Writ of Possession on the ground that the decision of the Court of Appeals in CA-G.R. SP No. 56924 was not yet final and FBCIs motion for reconsideration was still pending. The RTC Balayan set the hearing on 26 May 2000.

When Silverio, Jr., Esses and Tri-Star learned of the judgment by default and writ of possession, they filed a petition for relief from judgment and the recall of the writ of possession. Silverio, Jr., Esses and Tri-Star alleged that the judgment by default is

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On 23 May 2000, FBCI filed with the RTC Balayan an Urgent ExParte Motion to Suspend Enforcement of Writ of Possession. FBCI pointed out that it is now the new owner of Esses and TriStar having purchased the substantial and controlling shares of stocks[4] of the two corporations.

validate certain new allegations. Neither can said ex parte motion be the basis for the suspension of a writ of possession being implemented. II.When the RTC Balayan suspended the writ of possession, it was barred from hearing intra-corporate disputes. And though Congress has now amended our law on the matter, the RTC still cannot proceed because of due process and res judicata reasons.

On the 26 May 2000 hearing, FBCI reiterated its claim of a supervening event, its ownership of Esses and Tri-Star. FBCI informed the RTC Balayan that a new board of directors for Esses and Tri-Star had been convened following the resignation of the members of the board of directors. The previous actions of the former board of directors have been abandoned and the services of Atty. Vicente B. Chuidian, the counsel of petitioners Silverio, Jr., Esses and Tri-Star, have been terminated.

III.A final and executory judgment cannot be enjoined except by an appropriate petition for relief, a direct attack in another action or a collateral act in another action. IV. Respondent FBCI is asking for a suspension of the writ of possession while at the same time threatening violence if the writ of possession were to be implemented. The RTC Balayan had no lawful basis to suspend the writ under these admitted circumstances.

On the same day, the RTC Balayan issued the order suspending the writ of possession it had earlier issued to Silverio, Jr., Esses and Tri-Star. The RTC Balayan reasoned that it would violate the law on forum shopping if it executed the writ while FBCIs motion for reconsideration of the Court of Appeals decision and urgent motion to suspend the issuance of the writ of possession remained pending with the Court of Appeals. The RTC Balayan noted that because of FBCIs strong resistance, Silverio, Jr., Esses and Tri-Star have still to take possession of the Calatagan Property. More than ten days had already passed from the time that the RTC Balayan had issued the writ of possession. FBCI had barricaded the Calatagan Property, threatening bloodshed if possession will be taken away from it. The RTC Balayan believed that if it would not restrain Silverio, Jr., Esses and Tri-Star from taking possession of the Calatagan Property, a violent confrontation between the parties might erupt as reported in the Tempo newspaper in its 26 May 2000 issue. Without issuing a restraining order, the RTC Balayan suspended the writ by requesting the counsel of Silverio, Jr., Esses and Tri-Star to allow the court to study the voluminous records of the case, which are to be presented at the hearing on 16 June 2000. The hearing would determine the existence of a supervening event.

V. Respondent has not directly answered petitioners legal theory. The petition is founded on admitted facts upon which relief is sought under Rule 45. Respondent has altered these facts presenting its so called counterstatements of facts and issues which involve questions of fact that are still litis pendentia at the RTC Balayan. And which even involve an attempt to vary res judicata. VI. Contrary to respondents claims, that the RTC order of 15 June 2000 has rendered this case moot and academic quite on the contrary said order calls upon the Supreme Court to decide whether or not, the RTC Balayan may continue to conduct its hearings on suspending the writ of possession. VII. Respondents theory that an order suspending a writ of possession is interlocutory in nature, and therefore inappealable, is not supported by jurisprudence. VIII. Respondents views on when suspending a writ of execution is appropriate would make the exception as rule. And respondents reliance on Flores vs. CA, et al. is totally misplaced. In the Flores case, the party being dispossessed was a judgment creditor, who was admitted by the adverse party to be the owner.

On 15 June 2000, the RTC Balayan issued an Order cancelling the 16 June 2000 hearing so that the Court of Appeals could resolve the issue regarding the existence of a supervening event. However, the RTC Balayan declared that the suspension of the writ of possession would be lifted on 17 June 2000.

IX. The question of jus possessionis on the Calatagan Property is already res judicata while the question of jus possidendi is still under litis pendentia. For that reason, respondent has lost all his legal options in retaining the property procured under a faked service of summons.

On 8 August 2000, Silverio, Jr., Esses and Tri-Star filed a complaint for annulment of contracts with damages with the Regional Trial Court of Las Pias City, Branch 275 (RTC Las Pias).[5]

X. Respondents arguments in his 11-06-01 Memo on (a) forum shopping, (b) petitioners lack of capacity to sue, (c) service of summons already served (d) no intra-corporate dispute and (e) the relief herein preempted by events are ratiocinations of miniscule weight, meriting only the slightest comment.[6]

Issues Silverio, Jr., Esses and Tri-Star argue that: I.An ex parte motion cannot legally constitute an initiatory basis for the RTC Balayan to conduct additional hearings in order to

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FBCI raises the following issues: 1. Whether the present case has been rendered moot and academic by the Order of the RTC Balayan dated 15 June 2000 and the filing of an action with the Regional Trial Court of Las Pias City; 2. Whether the present appeal should be dismissed on the ground of forum shopping; 3. Whether the RTC Balayan had the authority to suspend enforcement of the writ of possession and to conduct hearings on a new set of facts; 4. Whether the present case involves an intra-corporate controversy; 5. Whether appeal by certiorari under Rule 45 is the proper remedy under the given facts of the case.[7]

accompli. However, while the 15 June 2000 Order is supposed to have mooted the suspension of the execution of the writ of possession by lifting the suspension on 17 June 2000, Silverio, Jr., Esses and Tri-Star claim that the writ has not been executed in their favor. Thus, the issues in this petition are far from being moot. Also, the existence of a supervening event is another issue that must be resolved since the RTC Balayan had instead submitted to the higher courts the resolution of this issue. Third, Silverio, Jr., Esses and Tri-Star are not guilty of forum shopping for filing another action against FBCI with the RTC Las Pias during the pendency of this case with the RTC Balayan. Forum shopping consists of filing multiple suits involving the same parties for the same cause of action, either simultaneously or successively, to obtain a favorable judgment.[13]

The Ruling of the Court The petition has merit. Procedural Issues. Before resolving the threshold issue, which is the existence of a supervening event, we first address the following procedural issues: (1) whether appeal is the proper remedy against an order suspending the execution of a writ of possession; (2) whether the issue of possession was mooted by the 15 June 2000 Order of the RTC Balayan; and (3) whether the filing of a civil case with the RTC Las Pias constitutes forum shopping.

The parties and cause of action in the present case before the RTC Balayan and in the case before the RTC Las Pias are different. The present case was filed by FBCI against Silverio, Jr., Esses and Tri-Star for the consolidation of title over the Calatagan Property. On the other hand, the case before the RTC Las Pias was filed by Silverio, Jr., Esses and Tri-Star against FBCI and other defendants for the annulment of contract with damages, tort and culpa aquiliana (civil fraud).

First, interlocutory orders are those that determine incidental matters that do not touch on the merits of the case or put an end to the proceedings.[8] The proper remedy to question an improvident interlocutory order is a petition for certiorari under Rule 65, not Rule 45.[9] A petition for review under Rule 45 is the proper mode of redress to question final judgments.[10]

In its complaint before the RTC Las Pias, Silverio, Jr., Esses and Tri-Star informed the court that there is a pending case with the RTC Balayan over the Calatagan Property.[14] Silverio, Jr., Esses and Tri-Star made it clear in the complaint that the case before the RTC Las Pias will focus on the Makati Tuscany property and any reference to the Calatagan Property is meant to serve only as proof or evidence of the plan, system, scheme, habit, etc., lurking behind defendants interlocking acts constituting interlocking tort and interlocking fraud.[15] Clearly, FBCIs claim of forum shopping against Silverio, Jr., Esses and Tri-Star has no basis.

An order staying the execution of the writ of possession is an interlocutory order.[11] Clearly, this order cannot be appealed. A petition for certiorari was therefore the correct remedy. Moreover, Silverio, Jr., Esses and Tri-Star pointed out that the RTC Balayan acted on an ex-parte motion to suspend the writ of possession, which is a litigious matter, without complying with the rules on notice and hearing. Silverio, Jr., Esses and TriStar also assail the RTC Balayans impending move to accept FBCIs evidence on its subsequent ownership of Esses and TriStar. In effect, Silverio, Jr., Esses and Tri-Star accuse the RTC Balayan of acting without or in excess of jurisdiction or with grave abuse of discretion, which is within the ambit of certiorari.

No Supervening Event in this Case. FBCI took possession of the Calatagan Property after the RTC Balayan rendered a judgment by default in FBCIs favor. The judgment by default was nullified after the RTC Balayan found out that the service of summons on Silverio, Jr., Esses and Tri-Star was procured fraudulently. The RTC Balayan thus recalled the writ of possession it had issued to FBCI. Silverio, Jr., Esses and Tri-Star were served anew with summons. The RTC Balayan restored possession of the Calatagan Property to Silverio, Jr., Esses and Tri-Star as restitution resulting from the annulment of the judgment by default. The order restoring possession of the Calatagan Property to Silverio, Jr., Esses and Tri-Star has attained finality. This case then proceeded to pre-trial.

However, in the exercise of our judicial discretion, we will treat the appeal as a petition under Rule 65.[12] Technical rules must be suspended whenever the purposes of justice warrant it, such as in this case where substantial and important issues await resolution. Second, the RTC Balayans 15 June 2000 Order lifting the suspension of the writ of possession was issued to correct its action on FBCIs ex-parte motion, which did not have the required notice and hearing. This issue has thus become a fait

FBCI has resisted the enforcement of the writ of possession by barricading the Calatagan Property and threatening violence if

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its possession of the property is taken away from it. To avoid bloodshed, as FBCI also claimed that Silverio, Jr. had armed civilians threatening to shoot FBCIs representatives,[16] the RTC Balayan momentarily suspended the execution of the writ. The RTC Balayan also had to rule on FBCIs claim of a supervening event that would allegedly make the execution of the writ absurd,[17] as FBCI alleges it now owns the controlling interest in Esses and Tri-Star. The RTC Balayan lifted the suspension of the writ but it cancelled the hearings on the supervening event to give way to the Court of Appeals action on this issue. The RTC Balayan decided to await the appellate courts resolution because it did not want to violate the rule against forum shopping.

The order of restitution placed the parties in the situation prior to the RTC Balayans rendition of the void judgment by default. Title to the Calatagan Property is still in the names of Esses and Tri-Star. Possession of the Calatagan Property must revert to Esses and Tri-Star as legal owners of the property. However, with the reinstitution of the case for consolidation of title with the RTC Balayan, possession of the Calatagan Property is now subject to the outcome of the case. Nonetheless, while this case is still under litigation it is only in the pre-trial stage Esses and Tri-Star in whose names the Calatagan Property is titled and in whose favor the order of restitution was issued, are the ones entitled to possession of the property.

Silverio, Jr., Esses and Tri-Star argue that the RTC Balayan has no power to conduct hearings on the supervening event because res judicata has set in on the issue. They also contend that the supervening event is an intra-corporate controversy that is within the jurisdiction of the Securities and Exchange Commission, not the trial court. Silverio, Jr., Esses and Tri-Star point out that despite the lifting of the suspension RTC Balayan has still to execute the writ of possession in their favor. On the other hand, FBCI maintains that its acquisition of Esses and TriStar is a supervening event, which the RTC Balayan could hear and is sufficient ground to stay the execution of the writ of possession.

We do not agree with Silverio, Jr., Esses and Tri-Stars assertion that the RTC Balayan has no power to conduct a hearing on the existence of a supervening event because of res judicata. Res judicata does not set in where the court is without jurisdiction over the subject or person, and therefore, the judgment is a nullity[23] such as the judgment by default in this case. The order that voided the judgment by default and the order of restitution merely recognized the nullity of the judgment by default. The orders did not adjudicate on the merits of the case. Since res judicata had not set in, the case was tried anew upon the proper service of summons on Silverio, Jr., Esses and Tri-Star.

We rule in favor of Silverio, Jr., Esses and Tri-Star. The court may stay immediate execution of a judgment when supervening events, occurring subsequent to the judgment, bring about a material change in the situation of the parties.[18] To justify the stay of immediate execution, the supervening events must have a direct effect on the matter already litigated and settled.[19] Or, the supervening events must create a substantial change in the rights or relations of the parties which would render execution of a final judgment unjust, impossible or inequitable making it imperative to stay immediate execution in the interest of justice.[20]

Moreover, it is the court issuing the writ of possession that has control and supervision over its processes.[24] The RTC Balayan can therefore hear the evidence on the existence of a supervening event, provided the subject matter is within the jurisdiction of the court, as this could affect the execution of the writ of possession. We are, therefore, dismayed with the RTC Balayans referral of the existence of the supervening event to the higher courts. Courts must not shirk from their duty to rule on an issue. The duty of the appellate or higher courts is to review the findings and rulings of the lower courts, not to issue advisories. Courts must execute its processes and should not succumb to threats by any of the parties to resort to violence in case of such enforcement. Had the RTC Balayan immediately passed upon FBCIs allegation of a supervening event, it would have been apparent that this claim is without merit. The RTC Balayan should have then enforced posthaste the writ of possession in Silverio, Jr., Esses and Tri-Stars favor.

In this case, there is no judgment on the merits, only a judgment on a technicality. Even then, the judgment of default rendered in FBCIs favor was voided because the RTC Balayan did not acquire jurisdiction over Silverio, Jr., Esses and Tri-Star due to a fraudulent service of summons. The case for consolidation of title, from which this petition stemmed, is in fact still being litigated before the RTC Balayan. The issuance of the writ of possession in favor of Silverio, Jr., Esses and Tri-Star is also not a judgment on the merits.[21] A writ of possession is an order whereby the sheriff is commanded to place a person in possession of real or personal property. [22] The issuance of the writ of possession to Silverio, Jr., Esses and Tri-Star is but an order of restitution a consequence of the nullification of the judgment by default.

FBCIs acquisition of the substantial and controlling shares of stocks[25] of Esses and Tri-Star does not create a substantial change in the rights or relations of the parties that would entitle FBCI to possession of the Calatagan Property, a corporate property of Esses and Tri-Star. Esses and Tri-Star, just like FBCI, are corporations. A corporation has a personality

21

distinct from that of its stockholders. As early as the case of Stockholders of F. Guanzon and Sons, Inc. v. Register of Deeds of Manila,[26] the Court explained the principle of separate juridical personality in this wise:

VICTORIANO M. ENCARNACION, petitioner, AMIGO, respondent.

vs. NIEVES

This petition for review assails the June 30, 2005 Decision 1 of the Court of Appeals in CA-G.R. SP No. 73857, ordering the remand of Civil Case No. Br. 20-1194 to the Regional Trial Court of Cauayan, Isabela, Branch 20, for further proceedings.

A corporation is a juridical person distinct from the members composing it. Properties registered in the name of the corporation are owned by it as an entity separate and distinct from its members. While shares of stock constitute personal property, they do not represent property of the corporation. The corporation has property of its own which consists chiefly of real estate (Nelson v. Owen, 113 Ala., 372, 21 So. 75; Morrow v. Gould, 145 Iowa 1, 123 N.W. 743). A share of stock only typifies an aliquot part of the corporation's property, or the right to share in its proceeds to that extent when distributed according to law and equity (Hall & Faley v. Alabama Terminal, 173 Ala 398, 56 So., 235), but its holder is not the owner of any part of the capital of the corporation (Bradley v. Bauder, 36 Ohio St., 28). Nor is he entitled to the possession of any definite portion of its property or assets (Gottfried v. Miller, 104 U.S., 521; Jones v. Davis, 35 Ohio St., 474). The stockholder is not a co-owner or tenant in common of the corporate property (Harton v. Hohnston, 166 Ala., 317, 51 So., 992).

The antecedent facts are as follows: Petitioner Victoriano M. Encarnacion is the registered owner of Lot No. 2121-B-1, consisting of 100 square meters and covered by TCT No. T-256650; and Lot No. 2121-B-2 consisting of 607 square meters with TCT No. T-256651, located at District 1, National Hi-way, Cauayan, Isabela. Said two lots originally form part of Lot No. 2121, a single 707 square meter track of land owned by Rogelio Valiente who sold the same to Nicasio Mallapitan on January 18, 1982. On March 21, 1985, Mallapitan sold the land to Victoriano Magpantay. After the death of the latter in 1992, his widow, Anita N. Magpantay executed an Affidavit of Waiver2 on April 11, 1995 waving her right over the property in favor of her son-in-law, herein petitioner, Victoriano Encarnacion. Thereafter, the latter caused the subdivision of the land into two lots3 and the issuance of titles in his name on July 18, 1996.4

Thus, FBCIs alleged controlling shareholdings in Esses and TriStar merely represent a proportionate or aliquot interest in the properties of the two corporations. Such controlling shareholdings do not vest FBCI with any legal right or title to any of Esses and Tri-Stars corporate properties. As a stockholder, FBCI has an interest in Esses and Tri-Stars corporate properties that is only equitable or beneficial in nature. Even assuming that FBCI is the controlling shareholder of Esses and Tri-Star, it does not legally make it the owner of the Calatagan Property, which is legally owned by Esses and Tri-Star as distinct juridical persons. As such, FBCI is not entitled to the possession of any definite portion of the Calatagan Property or any of Esses and Tri-Stars properties or assets. FBCI is not a co-owner or tenant in common of the Calatagan Property or any of Esses and Tri-Stars corporate properties.

Respondent Nieves Amigo allegedly entered the premises and took possession of a portion of the property sometime in 1985 without the permission of the then owner, Victoriano Magpantay. Said occupation by respondent continued even after TCT Nos. T-256650 and T-256651 were issue to petitioner. Consequently, petitioner, through his lawyer sent a letter5 dated Febuary 1, 2001 demanding that the respondent vacate the subject property. As evidenced by the registry return receipt, the demand letter was delivered by registered mail to the respondent on February 12, 2001. Notwithstanding receipt of the demand letter, respondent still refused to vacate the subject property. Thereafter, on March 2, 2001, petitioner filed a complaint6 for ejectment, damages with injunction and prayer for restraining order with the Municipal Trial Court in Cities of Isabela which was docketed as CV-01-030. In his Answer, respondent alleged that he has been in actual possession and occupation of a portion of the subject land since 1968 and that the issuance of Free Patent and titles in the name of petitioner was tainted with irregularities.7

We see no reason why the execution of the writ of possession has been long delayed. Possession of the Calatagan Property must be restored to Esses and Tri-Star through their representative, Silverio, Jr. There is no proof on record that Silverio, Jr. has ceased to be the representative of Esses and Tri-Star in this case.

On October 24, 2001, the Municipal Trial Court in Cities rendered judgment, which reads:

WHEREFORE, we GRANT the petition. The Regional Trial Court, Branch XI, Balayan, Batangas is ordered to immediately execute the writ of possession in Civil Case No. 3356 in favor of Esses Development Corporation and Tri-Star Farms, Inc. through their representative, Ricardo S. Silverio, Jr. No costs.

WHERE[FO]RE, there being a preponderance of evidence, a JUDGMENT is hereby rendered in favor of the plaintiff VICTORIANO M. ENCARNACION and against the defendant NIEVES AMIGOE (sic) as follows:

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a) ORDERING the defendant to vacate the portion of the parcels of land described in Transfer Certificates of Title Nos. T-256650 and T-256651 he is now occupying and surrender it to the plaintiff;

dispossession. Under the Rules of Court, the remedies of forcible entry and unlawful detainer are granted to a person deprived of the possession of any land or building by force, intimidation, threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession by virtue of any contract, express or implied, or the legal representatives or assigns of any such lessor, vendor, vendee, or other person. These remedies afford the person deprived of the possession to file at any time within one year after such unlawful deprivation or withholding of possession, an action in the proper Municipal Trial Court against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with damages and costs.14 Thus, if the dispossession has not lasted for more than one year, an ejectment proceeding is proper and the inferior court acquires jurisdiction. On the other hand, if the dispossession lasted for more than one year, the proper action to be filed is an accion publiciana which should be brought to the proper Regional Trial Court.

b) ORDERING the defendant to pay the plaintiff the sum of FIVE THOUSAND PESOS (P5,000) as attorney's fees, and c) ORDERING the defendant to pay rentals equivalent [to] P500.00 per month from February, 2001 until the portion of the land occupied by him is surrendered to the plaintiff. COSTS against the defendant. SO ORDERED.8 On appeal, the Regional Trial Court of Cauayan, Isabela, Branch 20, ruled as follows: WHEREFORE, judgment is hereby rendered dismissing the case on the ground that as the Municipal Court had no jurisdiction over the case, this Court acquired no appellate jurisdiction thereof. Costs against plaintiff-appellee. Aggrieved, petitioner filed a petition for review 10 under Rule 42 of the Rules of Court before the Court of Appeals which promulgated the assailed Decision remanding the case to the Regional Trial Court. The dispositive portion thereof reads: WHEREFORE, premises considered, this case is hereby REMANDED to Branch 20, Regional Trial Court of Cauayan, Isabela for further proceedings.

After a careful evaluation of the evidence on record of this case, we find that the Court of Appeals committed no reversible error in holding that the proper action in this case is accion publiciana; and in ordering the remand of the case to the Regional Trial Court of Cauayan, Isabela, Branch 20, for further proceedings.

Hence the present petition raising the sole issue: [WHETHER] THE COURT OF APPEALS ERRED IN HOLDING THAT THE PROPER ACTION IN THIS CASE IS ACCION PUBLICIANA AND NOT UNLAWFUL DETAINER AS DETERMINED BY THE ALLEGATIONS IN THE COMPLAINT FILED BY PETITIONER.12

Well settled is the rule that jurisdiction of the court over the subject matter of the action is determined by the allegations of the complaint at the time of its filing, irrespective of whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein. What determines the jurisdiction of the court is the nature of the action pleaded as appearing from the allegations in the complaint. The averments therein and the character of the relief sought are the ones to be consulted.15 On its face, the complaint must show enough ground for the court to assume jurisdiction without resort to parol testimony.16

The petition lacks merit. In this jurisdiction, the three kinds of actions for the recovery of possession of real property are: 1. Accion interdictal, or an ejectment proceeding which may be either that for forcible entry (detentacion) or unlawful detainer (desahucio), which is a summary action for recovery of physical possession where the dispossession has not lasted for more than one year, and should be brought in the proper inferior court;

From the allegations in the complaint, it appears that the petitioner became the owner of the property on April 11, 1995 by virtue of the waiver of rights executed by his mother-in-law. He filed the complaint for ejectment on March 2, 2001 after his February 1, 2001 letter to the respondent demanding that the latter vacate the premises remained unheeded. While it is true that the demand letter was received by the respondent on February 12, 2001, thereby making the filing of the complaint for ejectment fall within the requisite one year from last demand for complaints for unlawful detainer, it is also equally true that petitioner became the owner of the subject

2. Accion publiciana or the plenary action for the recovery of the real right of possession, which should be brought in the proper Regional Trial Court when the dispossession has lasted for more than one year; and 3. Accion reinvindicatoria or accion de reivindicacion, which is an action for the recovery of ownership which must be brought in the proper Regional Trial Court.13 Based on the foregoing distinctions, the material element that determines the proper action to be filed for the recovery of the possession of the property in this case is the length of time of

23

lot in 1995 and has been since that time deprived possession of a portion thereof. From the date of the petitioner's dispossession in 1995 up to his filing of his complaint for ejectment in 2001, almost 6 years have elapsed. The length of time that the petitioner was dispossessed of his property made his cause of action beyond the ambit of an accion interdictal and effectively made it one for accion publiciana. After the lapse of the one-year period, the suit must be commenced in the Regional Trial Court via an accion publiciana which is a suit for recovery of the right to possess. It is an ordinary civil proceeding to determine the better right of possession of realty independently of title. It also refers to an ejectment suit filed after the expiration of one year from the accrual of the cause of action or from the unlawful withholding of possession of the realty.17

If the case was tried on the merits by the lower court without jurisdiction over the subject matter, the Regional Trial Court on appeal shall not dismiss the case if it has original jurisdiction thereof, but shall decide the case in accordance with the preceding section, without prejudice to the admission of amended pleadings and additional evidence in the interest of justice. The RTC should have taken cognizance of the case. If the case is tried on the merits by the Municipal Court without jurisdiction over the subject matter, the RTC on appeal may no longer dismiss the case if it has original jurisdiction thereof. Moreover, the RTC shall no longer try the case on the merits, but shall decide the case on the basis of the evidence presented in the lower court, without prejudice to the admission of the amended pleadings and additional evidence in the interest of justice.19

Previously, we have held that if the owner of the land knew that another person was occupying his property way back in 1977 but the said owner only filed the complaint for ejectment in 1995, the proper action would be one for accion publiciana and not one under the summary procedure on ejectment. As explained by the Court:

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals dated June 30, 2005 in CA-G.R. SP No. 73857 ordering the remand of Civil Case No. Br. 20-1194 to the Regional Trial Court of Cauayan, Isabela, Branch 20, for further proceedings, is AFFIRMED.

We agree with the Court of Appeals that if petitioners are indeed the owners of the subject lot and were unlawfully deprived of their right of possession, they should present their claim before the regional trial court in an accion publiciana or an accion reivindicatoria, and not before the metropolitan trial court in a summary proceeding for unlawful detainer or forcible entry. For even if one is the owner of the property, the possession thereof cannot be wrested from another who had been in physical or material possession of the same for more than one year by resorting to a summary action for ejectment.18

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

Hence, we agree with the Court of Appeals when it declared that: The respondent's actual entry on the land of the petitioner was in 1985 but it was only on March 2, 2001 or sixteen years after, when petitioner filed his ejectment case. The respondent should have filed an accion publiciana case which is under the jurisdiction of the RTC.

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.

However, the RTC should have not dismissed the case.

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

Section 8, Rule 40 of the Rules of Court provides: SECTION 8. Appeal from orders dismissing case without trial; lack of jurisdiction. — If an appeal is taken from an order of the lower court dismissing the case without a trial on the merits, the Regional Trial Court may affirm or reverse it, as the case may be. In case of affirmance and the ground of dismissal is lack of jurisdiction over the subject matter, the Regional Trial Court, if it has jurisdiction thereover, shall try the case on the merits as if the case was originally filed with it. In case of reversal, the case shall be remanded for further proceedings.

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del Mundo, based on prescription, was also denied because there were factual matters that could be determined only after trial.[1]

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

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 this present petition for review under Rule 45 of the Rules, petitioners ascribe the following errors allegedly committed by the appellate court: I THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE PETITIONERS PETITION FOR CERTIORARI AND MANDAMUS AND IN AFFIRMING THE ORDER OF THE HON. JUDGE ANTONIO N. ROSALES WHICH DISMISSED THE PETITIONERS APPEAL IN CIVIL CASE NO. C-36 OF THE REGIONAL TRIAL COURT, BRANCH 43, ROXAS, ORIENTAL MINDORO, EVEN AFTER THE PETITIONERS HAD PAID THE APPEAL DOCKET FEES.

In an order[2] dated February 12, 1998, the trial court dismissed petitioners complaint on the ground that the action had already prescribed. Petitioners allegedly received a copy of the order of dismissal on March 3, 1998 and, on the 15th day thereafter or on March 18, 1998, filed a motion for reconsideration. On July 1, 1998, the trial court issued another order dismissing the motion for reconsideration [3] which petitioners received on July 22, 1998. Five days later, on July 27, 1998, petitioners filed a notice of appeal[4] and paid the appeal fees on August 3, 1998.

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.

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]

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.

Via a petition for certiorari and mandamus under Rule 65 of the 1997 Rules of Civil Procedure, petitioners assailed the dismissal of the notice of appeal before the Court of Appeals. In the appellate court, petitioners claimed that they had seasonably filed their notice of appeal. They argued that the 15-day reglementary period to appeal started to run only on July 22, 1998 since this was the day they received the final order of the trial court denying their motion for reconsideration. When they filed their notice of appeal on July 27, 1998, only five days had elapsed and they were well within the reglementary period for appeal.[7]

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]

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:

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:

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]

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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

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.

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.

This pronouncement was reiterated in the more recent case of Apuyan v. Haldeman et al.[14] where we again considered the order denying petitioner Apuyans motion for reconsideration as the final order which finally disposed of the issues involved in the case. Based on the aforementioned cases, we sustain petitioners view that the order dated July 1, 1998 denying their motion for reconsideration was the final order contemplated in the Rules.

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)

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?

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]

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

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.

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 longsettled 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 deepseated 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]

What therefore should be deemed as the final order, receipt of which triggers the start of the 15-day reglementary period to appeal the February 12, 1998 order dismissing the complaint or the July 1, 1998 order dismissing the MR? In the recent case of Quelnan v. VHF Philippines, Inc.,[13] the trial court declared petitioner Quelnan non-suited and accordingly dismissed his complaint. Upon receipt of the order of dismissal, he filed an omnibus motion to set it aside. When the omnibus motion was filed, 12 days of the 15-day period to appeal the order had lapsed. He later on received another order, this time dismissing his omnibus motion. He then filed his notice of appeal. But this was likewise dismissed ― for having been filed out of time.

Prior to the passage of BP 129, Rule 41, Section 3 of the 1964 Revised Rules of Court read: Sec. 3. How appeal is taken. Appeal maybe taken by serving upon the adverse party and filing with the trial court within thirty (30) days from notice of order or judgment, a notice of appeal, an appeal bond, and a record on appeal. The time during which a motion to set aside the judgment or order or for new trial has

26

been pending shall be deducted, unless such motion fails to satisfy the requirements of Rule 37.

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] 43[28] 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.

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 Reorganization[20] that drafted BP 129, the raison d etre behind the amendment was to shorten the period of appeal[21] 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.

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. 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 agencies[31] 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.

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.

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.

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]

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.

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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.

the following amounts: $1,325,703.65 representing the amount of profit which it could have enjoyed had the contract been observed; $10,000.00 for expenses incurred by petitioners local agent in the preparation and execution of the contract; P932,102.53 representing the combined premium paid by petitioner for the bidders bond, performance bond and surety bond; and P200,000.00 as attorneys fees.

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).

A copy of the aforesaid decision was received by respondents on June 6, l996. On June 19, l996, respondents filed their motion for reconsideration alleging in the main that certain facts were overlooked, ignored or wrongly appreciated by the trial court.[4] An opposition to said motion was filed by petitioner on July 11, l996.[5] On August 2, l996, the trial court issued an order denying the motion for reconsideration. [6] A copy of the aforesaid order was personally delivered to respondent NAPOCORS office on August 23, l996 (Friday) and was received by Ronald T. Lapuz, a clerk assigned at the office of the VP-General Counsel.

To recapitulate, a party litigant may either file his notice of appeal within 15 days from receipt of the Regional Trial Courts decision or file it within 15 days from receipt of the order (the final order) denying his motion for new trial or motion for reconsideration. Obviously, the new 15-day period may be availed of only if either motion is filed; otherwise, the decision becomes final and executory after the lapse of the original appeal period provided in Rule 41, Section 3. Petitioners here filed their notice of appeal on July 27, 1998 or five days from receipt of the order denying their motion for reconsideration on July 22, 1998. Hence, the notice of appeal was well within the fresh appeal period of 15 days, as already discussed.[34]

Considering that it was almost 5:00 p.m., Lapuz placed the said order inside the drawer of his table. However, on August 26 and 27, l996 (Monday and Tuesday, respectively) said clerk was unable to report for work due to an illness he suffered as a result of the extraction of his three front teeth. Said order was retrieved from his drawer only in the afternoon of the 27th and was immediately forwarded to the secretary of Atty. Wilfredo J. Collado, counsel for the respondents. At 3:10 p.m. that same day, respondents thru counsel filed their notice of appeal. [7]

We deem it unnecessary to discuss the applicability of Denso (Philippines), Inc. v. IAC[35] since the Court of Appeals never even referred to it in its assailed decision. WHEREFORE, the petition is hereby GRANTED and the assailed decision of the Court of Appeals REVERSED and SET ASIDE. Accordingly, let the records of this case be remanded to the Court of Appeals for further proceedings

On August 29, l996, petitioner filed a motion for execution before the trial court contending that its decision dated May 22, l996 had become final and executory since respondents failed to make a timely appeal and praying for the issuance of an order granting the writ of execution.[8] On the other hand, respondents filed an opposition thereto alleging therein that the cause of their failure to make a timely appeal was due to unforeseeable oversight and accident on the part of their employee who was unable to report for work because of illness.[9] On September 9, l996 petitioner filed a reply to said opposition.[10] On September 11, l996 respondents counsel filed a supplemental opposition to the motion for execution attaching thereto the affidavit of Lapuz.[11] Finally, on September 18, l996, respondents filed their rejoinder to said reply.[12]

TRANS INTERNATIONAL, petitioner, vs. THE COURT OF APPEALS; NATIONAL POWER CORPORATION; PERLA A. SEGOVIA and GILBERTO PASTORAL, respondents. Challenged in this petition for review by way of certiorari is the decision[1] of the Court of Appeals which set aside the order of the trial court and directed the latter to give due course to the notice of appeal of respondents. The motion for reconsideration filed by petitioner was likewise denied on January 31, l997.[2] The facts which gave rise to the instant petition are as follows; Petitioner Trans International filed a complaint for damages against respondent National Power Corporation (NAPOCOR for brevity) and two of its principal officers arising from the rescission of a contract for the supply and delivery of woodpoles before the Regional Trial Court of Quezon City which was docketed as Civil Case No. Q-94-20960.

On September 13, l996, the trial court issued an order denying respondents notice of appeal and granting the motion for execution filed by petitioner, the dispositive portion of which reads, to wit: WHEREFORE, the foregoing circumstances having been considered, this Court is constrained to DENY defendants NOTICE OF APPEAL for having been filed out of time.

On May 22, l996, the trial court rendered a decision sustaining the claim of petitioner corporation.[3] It awarded to petitioner

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Consequently, plaintiffs motion for execution of the Courts decision dated May 22, l996 is hereby GRANTED, let a Writ of Execution be issued the same to be enforced by deputy sheriff Efren V. Cachero. SO ORDERED.[13]

subject matter and parties by the perfection of the appeal.[17] The party who seeks to avail of the same must comply with the requirements of the rules. Failing to do so, the right to appeal is lost.[18] In fact, it has been long recognized that strict compliance with the Rules of Court is indispensable for the prevention of needless delays and for the orderly and expeditious dispatch of judicial business.[19]

On September 20, l996, respondents filed a petition for certiorari before the Court of Appeals questioning the validity of the issuance of the aforesaid order on the ground that the denial of their notice of appeal was on the basis of a mere technicality and that the writ of execution should not have been issued since there are strong considerations which militate the strict application of the rules on procedure.[14] Petitioner corporation filed its comment to the petition dated September 25, l996 claiming that the event which happened in respondents office does not amount to an honest mistake nor an unavoidable accident that would legally excuse their neglect.[15]

Nonetheless, this court has on several occasions relaxed this strict requirement. In the case of Toledo, et al. vs. Intermediate Appellate Court, et al.,[20] we allowed the filing of an appeal where a stringent application of the rules would have denied it, but only when to do so would serve the demands of substantial justice and in the exercise of our equity jurisdiction. Thus, for a party to seek exception for its failure to comply strictly with the statutory requirements for perfecting its appeal, strong compelling reasons such as serving the ends of justice and preventing a grave miscarriage thereof must be shown, in order to warrant the Courts suspension of the rules.[21] Indeed, the court is confronted with the need to balance stringent application of technical rules vis-a-vis strong policy considerations of substantial significance to relax said rules based on equity and justice.

On October 21, l996, the respondent Court rendered its decision, the dispositive portion of which reads, to wit: WHEREFORE, the petition is GRANTED DUE COURSE. The assailed order dated September 13, l996 is ANNULLED and SET ASIDE. Respondent court is ordered to give due course to petitioners appeal.

The case at bench squarely meets the requisites postulated by the aforequoted rule. If respondents right to appeal would be curtailed by the mere expediency of holding that they had belatedly filed their notice of appeal, then this Court as the final arbiter of justice would be deserting its avowed objective, that is to dispense justice based on the merits of the case and not on a mere technicality. Needless to say, the peculiar circumstances attendant in this case strongly demands a review of the decision of the trial court. As aptly observed by the respondent court, to wit:

The motion for reconsideration filed by petitioner corporation was denied for lack of merit, hence, a recourse to this court on a petition for review by way of a petition for certiorari.[16] Petitioner avers that the respondent court committed grave abuse of discretion amounting to lack or excess in jurisdiction when it gave due course to the petition of respondents considering their admission that the notice of appeal was belatedly filed before the trial court. Since the ground submitted by respondents for their late filing does not constitute excusable neglect then the respondent court allegedly grievously erred in admitting the same. Furthermore, petitioner argues that appeal is not a natural right and is merely a statutory privilege which must be exercised within and in the manner provided by law. Failure to do so is fatal and the right of appeal would be lost. Respondents, while admitting that the appeal was filed out of time, maintain that the rules on appeal should not be construed in such a manner as to give way to its rigid application without even considering the circumstances which led to the belated filing of the notice of appeal. In fact, it is argued, this Court has on several occasions, recognized the need to relax the stringent rules on appeal on reasons of equity and substantial justice.We find for the respondent.

In this case, the one-day delay in filing the notice of appeal was due to an unforeseen illness of the receiving clerk Ronald Lapuz in the office of the General Counsel of petitioner NAPOCOR. As stated in the affidavit of said clerk, which was presented to the trial court, he received a copy of the Order of respondent judge dated August 2, 1996 at 4:54 p.m., Friday, August 23, 1996; since it was already almost 5:00 p.m., he placed the said order inside the drawer of his table together with some other documents, intending to deliver it to the handling lawyer, Atty. Collado, who had given him instructions to deliver immediately to his secretary any order on the case; he was unable to report for work the following Monday because of severe pain in the front jaw as a result of the extraction of three front teeth, and was absent for two days, August 26 and 27. when the Order was retrieved on August 27th, the notice of appeal was promptly filed in the afternoon, at 3:10 p.m., of the same day.

The general rule holds that the appellate jurisdiction of the courts is conferred by law, and must be exercised in the manner and in accordance with the provisions thereof and such jurisdiction is acquired by the appellate court over the

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The delay was properly explained and sufficiently justified; considerations of substantial justice and equity strongly argue against a rigid enforcement of the technical rules of procedure, considering not only that the delay was only for one day, and the petitioners have pleaded an unforeseeable oversight and illness on the part of the receiving clerk, as an excuse. More important, the decision sought to be appealed from awarded an enormous sum in the amount of P37,554,414.99, by way of damages arising from the rescission of the contract with private respondents, and legal and factual bases for the awards, and the 12% interest thereon, are being questioned, on the ground among others, that the amount awarded for unrealized profits ($1,325,703.68) was bigger than the amount prayed for in the complaint ($788,700.00) [See Motion for Reconsideration, Annex C of Petition]. to insist that the oneday delay in filing the appeal despite the plausible reason adduced therefor is a fatal mistake due alone to the negligence of counsel is to insist on a rigid application of the rules, which as repeatedly enunciated by the Supreme court, should help secure, not override substantial justice.[22]

just determination of his cause, free from the constraints of technicalities.[25] Time and again, we have consistently held that rules must not be applied rigidly so as not to override substantial justice.[26] In Segunda Santiago and Valerio Flores vs. Pablo Valenzuela and Moises Pardo[27], the court ruled that: The court may extend the time or allow the perfection of the appeal beyond the prescribed period if it be satisfactorily shown that there is justifiable reason, such as fraud, accident, mistake or excusable negligence, or similar supervening casualty, without fault of the appellant, which the court may deem sufficient reason for relieving him from the consequences of his failure to comply strictly with the law. In such case the appeal is deemed taken and perfected on time, and the appellate court acquires appellate jurisdiction. In essence, the court is convinced that the test for substantial justice and equity considerations have been adequately met by respondents to overcome the one day delay in the perfection of their appeal. Considering the factual and legal milieu obtaining in the case at bench, the petition must be denied.

Verily, the respondent courts pronouncement cannot be more emphatic in view of the instances wherein we allowed the filing of an appeal in certain cases where a narrow and stringent application of the rules would have denied it. Indeed, the allowance thereof would fully serve the demands of substantial justice in the exercise of the Courts equity jurisdiction. Thus, in Castro vs. Court of Appeals,[23] and reiterated in the case of Velasco vs. Gayapa, Jr.[24], the Court stressed the importance and objective of appeal, to wit:

WHEREFORE, IN VIEW OF THE FOREGOING, finding no reversible error in the decision of the Court of Appeals, the petition is hereby DENIED for lack of merit. ROSS RICA SALES CENTER VS. ONG In a Decision[1] dated 6 January 1998, the Former First Division of the Court of Appeals overturned the decisions of the Municipal Trial Court (MTC) and the Regional Trial Court (RTC) of Mandaue City, ruling instead that the MTC had no jurisdiction over the subject complaint for unlawful detainer. This petition for review prays for the reversal of the aforesaid Court of Appeals Decision.

An appeal is an essential part of our judicial system. We have advised the courts to proceed with caution so as not to deprive a party of the right to appeal (National Waterworks and Sewerage Authority vs. Municipality of Libmanan, 97 SCRA 138) and instructed that every party litigant should be afforded the amplest opportunity for the proper and just disposition of his cause, freed from the constraints of technicalities (A-One Feeds, Inc. vs. Court of Appeals, 100 SCRA 590).

The case originated from a complaint for ejectment filed by petitioners against respondents, docketed as Civil Case No. 2376, before the MTC of Mandaue City, Branch I. In the complaint, petitioners alleged the fact of their ownership of three (3) parcels of land covered by Transfer Certificates of Title (TCT) Nos. 36466, 36467 and 36468. Petitioners likewise acknowledged respondent Elizabeth Ongs ownership of the lots previous to theirs. On 26 January 1995, Atty. Joseph M. Baduel, representing Mandaue Prime Estate Realty, wrote respondents informing them of its intent to use the lots and asking them to vacate within thirty (30) days from receipt of the letter. But respondents refused to vacate, thereby unlawfully withholding possession of said lots, so petitioners alleged.

The rules of procedure are not to be applied in a very rigid and technical sense. The rules of procedure are used only to help secure, not override substantial justice.(Gregorio vs. Court of Appeals, 72 SCRA 120) Therefore, we ruled in Republic vs. Court of Appeals (83 SCRA 453) that a six-day delay in the perfection of appeal does not warrant a dismissal. And again in Ramos vs. Bagasao, (96 SCRA 395), this Court held that the delay of four (4) days in filing the notice of appeal and a motion for extension of time to file a record on appeal can be excused on the basis of equity.

Ross Rica Sales Center, Inc. and Juanito King and Sons, Inc. (petitioners) had acquired the lands from Mandaue Prime Estate Realty through a sale made on 23 March 1995. In turn, it appears that Mandaue Prime Estate Realty had acquired the properties from the respondents through a Deed of Absolute Sale dated 14 July 1994. However, this latter deed of sale and the transfers of title consequential thereto were subsequently sought to be annulled by respondents in a complaint filed on 13 February 1995 before the

The emerging trend in the rulings of this Court is to afford every party-litigant the amplest opportunity for the proper and

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Mandaue RTC against Mandaue Prime Estate Realty.[2] Per record, this case is still pending resolution.

May 1997, albeit the wrong mode of appeal, expressly manifested their intention to file a petition for review to either the Court of Appeals or the Supreme Court.[4]

Meanwhile, the MYC resolved the ejectment case on 24 April 1996, with the decision ordering respondents to vacate the premises in question and to peacefully turn over possession thereof to petitioners.

Petitioners further argue that respondents, after having filed the Notice of Appeal which was given due course by the RTC, cannot take an inconsistent stand such as filing a Motion for Reconsideration. Such filing, therefore, did not toll the fifteen (15)-day period which started running from the date of receipt of the RTC decision on 28 April 1997 and ended on 13 May 1997.

On appeal, the RTC rendered on 1 March 1997 a judgment affirming the MTCs decision in its entirety. On 8 May 1997, respondents filed a notice of appeal. However, on the following day, they filed a motion for reconsideration.

Respondents, in their Comment,[5] submit that the filing of the Notice of Appeal dated 8 May 1997 was improper, and as such did not produce any legal effect. Therefore, the filing of the Motion for Reconsideration immediately on the following day cured this defect. The RTC refused to subscribe respondents position. It justified the denial of the Motion for Reconsideration on the ground that the respondents had already filed a Notice of Appeal. The Order dated 23 June 1997 stated:

On 23 June 1997, the RTC issued an Order which concurrently gave due course to respondents notice of appeal filed on 8 May 1997; denied their motion for reconsideration dated 9 May 1997,[3] and granted petitioners motion for immediate execution pending appeal. In a Petition for Certiorari with Injunction filed with the Court of Appeals and treated as a Petition for Review, the appellate court ruled that the MTC had no jurisdiction over said case as there was no contract between the parties, express or implied, as would qualify the same as one for unlawful detainer. Thus, the assailed Orders of the MTC and RTC were set aside.

On record is a Notice of Appeal by Certiorari filed by Defendants on May 8, 1997. Likewise filed by Defendants on May 9, 1997 is a Motion for Reconsideration. Considering the Notice of Appeal filed earlier which the court hereby approves, the Motion for Reconsideration is DENIED.

Petitioners then took this recourse via Petition for Review under Rule 45 of the Rules of Court. The principal issues raised before this Court are: (i) whether the RTC decision has already become final and executory at the time the petition for review was filed; (ii) whether the allegations in the complaint constitute a case for unlawful detainer properly cognizable by the MTC; and, (iii) whether petitioners, as registered owners, are entitled to the possession of the subject premises. We resolve the first argument to be without merit.

The Motion for Immediate Execution Pending Appeal being meritorious, is GRANTED.[6] (Emphasis in the original.) Strangely enough, the Court of Appeals passed no comment on this point when it took cognizance of respondents position and reversed the RTC. But does this necessarily mean that the RTC was correct when it declared that the Motion for Reconsideration was barred by the filing of the Notice of Appeal, no matter how erroneous the latter mode was?

The following sequence of events is undisputed: (1) On 1 March 1997, the RTC rendered the questioned decision affirming the judgment of the MTC. (2) On 28 April 1997, respondents received a copy of the aforementioned decision. (3) On 8 May 1997, respondents filed a Notice of Appeal with the RTC. (4) On 9 May 1997, respondents filed likewise with the RTC a Motion for Reconsideration of the aforementioned 1 March 1997 decision. (5) On 23 June 1997, the RTC of Mandaue issued an Order denying respondents Motion for Reconsideration.(6) On 9 July 1997, respondents received a copy of the aforementioned 23 June 1997 Order. (7) On 24 July 1997, respondents filed with the Court of Appeals their motion for an additional period of ten (10) days within which to file their Petition for Review.(8) On 30 July 1997, respondents filed with the Court of Appeals their Petition for Review.

Rule 42 governs the mode of appeal applicable in this case. Sec. 1 provides: Section 1. How appeal taken; time for filing. -- A party desiring to appeal from a decision of the RTC rendered in the exercise of its appellate jurisdiction may file a verified petition for review with the Court of Appeals, paying at the same time to the clerk of said court the corresponding docket and other lawful fees, depositing the amount of P500.00 for costs, and furnishing the Regional Trial Court and the adverse party with a copy of the petition. The petition shall be filed and served within fifteen (15) days from notice of the decision sought to be reviewed or of the denial of petitioners motion for new trial or reconsideration filed in due time after judgment. Upon proper motion and the payment of the full amount of the docket and other lawful fees and the deposit for costs before the expiration of the reglementary period, the Court of Appeals may grant an additional period of fifteen (15) days only within which to file the petition for review. No further extension shall be granted except for the most compelling reason and in no case to exceed fifteen (15) days.

Petitioners assert that the Petition for Review was filed beyond the fifteen (15)-day period for appeal. They theorize that the period started running on 28 April 1995, the date of receipt of the RTC decision, and ended on 13 May 1997. According to them, this reglementary period could not have been interrupted by the filing on 9 May 1997 of the Motion for Reconsideration because of the filing one day earlier of the Notice of Appeal. This Notice of Appeal dated 8

Since the unlawful detainer case was filed with the MTC and affirmed by the RTC, petitioners should have filed a Petition for Review with the Court of Appeals and not a Notice of Appeal with the RTC. However, we consider this to have been remedied by the timely filing of the Motion for Reconsideration on the following day. Section 3, Rule 50 of the Rules of Court allows the withdrawal of appeal at any

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time, as a matter of right, before the filing of the appellees brief. Applying this rule contextually, the filing of the Motion for Reconsideration may be deemed as an effective withdrawal of the defective Notice of Appeal.

Annex D and made an integral part thereof; 7. That despite demand to vacate, the defendants have refused and still refuse to vacate said lots, thus, unlawfully withholding possession of said lots from plaintiffs and depriving plaintiffs of the use of their lots; 8. That in unlawfully withholding the possession of said lots from the plaintiffs, plaintiffs have suffered damages in the form of unearned rentals in the amount of P10,000.00 a month

Perforce, the period of appeal was tolled by the Motion for Reconsideration and started to run again from the receipt of the order denying the Motion for Reconsideration. A Motion for Additional Time to File the Petition was likewise filed with the Court of Appeals. Counting fifteen (15) days from receipt of the denial of the Motion for Reconsideration and the ten (10)-day request for additional period, it is clear that respondents filed their Petition for Review on time.

[8]Well-settled is the rule that what determines the nature of an action as well as which court has jurisdiction over it are the allegations of the complaint and the character of the relief sought.[9]

Respondents contend that the complaint did not allege that petitioners possession was originally lawful but had ceased to be so due to the expiration of the right to possess by virtue of any express or implied contract.

Petitioners invoke to the ruling in People v. De la Cruz[7] that once a notice of appeal is filed, it cannot be validly withdrawn to give way to a motion for reconsideration. The factual circumstances in the two cases are different.

The emphasis placed by the Court of Appeals on the presence of a contract as a requisite to qualify the case as one of unlawful detainer contradicts the various jurisprudence dealing on the matter.

De la Cruz is a criminal case, governed by criminal procedure. Section 3, Rule 122 of the Rules of Court provides that the proper mode of appeal from a decision of the RTC is a notice of appeal and an appeal is deemed perfected upon filing of the notice of appeal.

In Javelosa v. Court of the Appeals,[10] it was held that the allegation in the complaint that there was unlawful withholding of possession is sufficient to make out a case for unlawful detainer. It is equally settled that in an action for unlawful detainer, an allegation that the defendant is unlawfully withholding possession from the plaintiff is deemed sufficient, without necessarily employing the terminology of the law.[11]

In the case at bar, a petition for review before the Court of Appeals is the proper mode of appeal from a decision of the RTC. Since the filing of the notice of appeal is erroneous, it is considered as if no appeal was interposed. Now on the second and more important issue raised by petitioners: whether the Complaint satisfies the jurisdictional requirements for a case of unlawful detainer properly cognizable by the MTC.

Hence, the phrase "unlawful withholding" has been held to imply possession on the part of defendant, which was legal in the beginning, having no other source than a contract, express or implied, and which later expired as a right and is being withheld by defendant.[12] In Rosanna B. Barba v. Court of Appeals,[13] we held that a simple allegation that the defendant is unlawfully withholding possession from plaintiff is sufficient.

The MTC considered itself as having jurisdiction over the ejectment complaint and disposed of the same in favor of petitioners. Said ruling was affirmed by the RTC. The Court of Appeals reversed the lower courts and found the complaint to be one not for unlawful detainer based on two (2) grounds, namely: that the allegations fail to show that petitioners were deprived of possession by force, intimidation, threat, strategy or stealth; and that there is no contract, express or implied, between the parties as would qualify the case as one of unlawful detainer.

Based on this premise, the allegation in the Complaint that: . . . . despite demand to vacate, the defendants have refused and still refuse to vacate said lots, thus, unlawfully withholding possession of said lots from plaintiffs and depriving plaintiffs of the use of their lots;[14] is already sufficient to constitute an unlawful detainer case.

We disagree with the Court of Appeals. The complaint for unlawful detainer contained the following material allegations: 3. That plaintiffs are the owners of Lot No. 2, which is covered by T.C.T. No. 36466 of the Register of Deeds of Mandaue City, Lot No. 1-A which is covered by T.C.T. No. 36467 of the Register of Deeds of Mandaue City and Lot No. 86-A which is covered by T.C.T. No. 36468 of the Register of Deeds of Mandaue City, all situated in the City of Mandaue. Copies of said Transfer Certificate of Titles are hereto attached as Annexes A, B, and C respectively and made an integral part hereof;

In the subject complaint, petitioners alleged that they are the registered owners of the lots covered by TCT Nos. 36466, 36467 and 36468. By their implied tolerance, they have allowed respondents, the former owners of the properties, to remain therein. Nonetheless, they eventually sent a letter to respondents asking that the latter vacate the said lots. Respondents refused, thereby depriving petitioners of possession of the lots. Clearly, the complaint establishes the basic elements of an unlawful detainer case, certainly sufficient for the purpose of vesting jurisdiction over it in the MTC.

4. That defendant Elizabeth Ong is the previous registered owner of said lots; 5. That as the previous registered owner of said lots, defendant Elizabeth Ong and her husband and co-defendant Jerry Ong have been living in the house constructed on said lots;

Respondents would like to capitalize on the requisites as cited in the case of Raymundo dela Paz v. Panis.[15] But the citation is a mere reiteration of Sec. 1, Rule 70[16] of the Rules of Court. The case doesid not provide for rigid standards in the drafting of the ejectment complaint. The case of Co Tiamco v. Diaz[17] justifies a more liberal approach, thus: . . . The principle underlying the brevity and simplicity of pleadings in forcible entry and unlawful detainer cases rests upon considerations of public policy. Cases of forcible entry and detainer

6. That on May 6, 1995, plaintiffs, through the undersigned counsel, wrote defendants a letter informing them or their intent to use said lots and demanded of them to vacate said lots within 30 days from receipt of said letter. Copy of said letter is hereto attached as

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are summary in nature, for they involve perturbation of social order which must be restored as promptly as possible and, accordingly, technicalities or details of procedure should be carefully avoided. [18]

annulment of title and/or reconveyance, the rights asserted and the relief prayed for are not the same.[24] In Oronce v. Court of Appeals,[25] this Court held that the fact that respondents had previously filed a separate action for the reformation of a deed of absolute sale into one of pacto de retro sale or equitable mortgage in the same

Moreover, petitioners fail to mention any of the incidents of the pending case involving the annulment of deed of sale and title over said property. Petitioners know better than to question this in an ejectment proceeding, which brings us to the nature of the action in this case.

Court of First Instance is not a valid reason to frustrate the summary remedy of ejectment afforded by law to the plaintiff. Consequently, an adjudication made in an ejectment proceeding regarding the issue of ownership should be regarded as merely provisional and, therefore, would not bar or prejudice an action between the same parties involving title to the land. The foregoing doctrine is a necessary consequence of the nature of forcible entry and unlawful detainer cases where the only issue to be settled is the physical or material possession over the real property, that is, possession de facto and not possession de jure.

Respondents insist that the RTC, and not the MTC, had jurisdiction over the action, it being an accion reivindicatoria according to them, on the ground that petitioners were constantly claiming ownership over the lands in the guise of filing an action for ejectment. In their Comment,[19]respondents maintain that they occupy the subject lots as the legal owners. Petitioners, on the other hand, are seeking recovery of possession under a claim of ownership which is tantamount to recovery of possession based on alleged title to the lands, and therefore is within the original jurisdiction of the RTC, so respondents conclude.

The Court reiterated this in the case of Tecson v. Gutierrez[26] when it ruled: We must stress, however, that before us is only the initial determination of ownership over the lot in dispute, for the purpose of settling the issue of possession, although the issue of ownership is inseparably linked thereto. As such, the lower court's adjudication of ownership in the ejectment case is merely provisional, and our affirmance of the trial courts' decisions as well, would not bar or prejudice an action between the same parties involving title to the property, if and when such action is brought seasonably before the proper forum.

This contention is not tenable. The issue involved in accion reivindicatoria is the recovery of ownership of real property. This differs from accion publiciana where the issue is the better right of possession or possession de jure, and accion interdictal where the issue is material possession or possession de facto. In an action for unlawful detainer, the question of possession is primordial while the issue of ownership is generally unessential.[20] Neither the allegation in petitioners complaint for ejectment nor the defenses thereto raised by respondents sufficiently convert this case into an accion reivindicatoria which is beyond the province of the MTC to decide. Petitioners did not institute the complaint for ejectment as a means of claiming or obtaining ownership of the properties. The acknowledgment in their pleadings of the fact of prior ownership by respondents does not constitute a recognition of respondents present ownership. This is meant only to establish one of the necessary elements for a case of unlawful detainer, specifically the unlawful withholding of possession. Petitioners, in all their pleadings, only sought to recover physical possession of the subject property. The mere fact that they claim ownership over the parcels of land as well did not deprive the MTC of jurisdiction to try the ejectment case.

MACAWIWILI GOLD MINING AND DEVELOPMENT CO., INC. and OMICO MINING AND INDUSTRIAL CORPORATION, petitioners, vs. COURT OF APPEALS and PHILEX MINING CORPORATION, respondents. This is a petition for certiorari to set aside the resolution, dated April 12, 1994, of the Tenth Division of the Court of Appeals in CA-G.R. CV No. 42120, denying petitioners motion to dismiss the appeal of private respondent from a ruling of the trial court.[1] The antecedent facts are as follows: On October 16, 1992, respondent Philex Mining Corporation filed a complaint for expropriation against petitioners Macawiwili Gold Mining and Development Co., Inc. and Omico Mining & Industrial Corporation. The complaint, entitled Philex Mining Corporation v. Macawiwili Gold Mining and Development Co., Inc., et al., was filed before the Regional Trial Court of La Trinidad, Benguet, where it was docketed as Civil Case No. 92CV-0727.

Even if respondents claim ownership as a defense to the complaint for ejectment, the conclusion would be the same for mere assertion of ownership by the defendant in an ejectment case will not therefore oust the municipal court of its summary jurisdiction. [21] This Court in Ganadin v. Ramos[22] stated that if what is prayed for is ejectment or recovery of possession, it does not matter if ownership is claimed by either party. Therefore, the pending actions for declaration of nullity of deed of sale and Transfer Certificates of Title and quieting of title in Civil Case No. MAN-2356 will not abate the ejectment case.In Drilon v. Gaurana,[23] this Court ruled that the filing of an action for reconveyance of title over the same property or for annulment of the deed of sale over the land does not divest the MTC of its jurisdiction to try the forcible entry or unlawful detainer case before it, the rationale being that, while there may be identity of parties and subject matter in the forcible entry case and the suit for

Based on 53 of P.D. No. 463, Philex Mining sought to expropriate 21.9 hectares of petitioners mining areas where the latters Macawiwili claims are located. Philex Mining likewise moved for the issuance of a writ of preliminary injunction to enjoin petitioners from ejecting it (Philex Mining) from the mining areas sought to be expropriated.

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Although a temporary restraining order was initially issued by the Regional Trial Court of La Trinidad, Branch X, on November 11, 1992, it denied respondents application for a preliminary injunction.

expropriated consists of a network of roads constructed sometime in 1958, a motorpool facility built in 1963, a tailings dam and three (3) two-storey concrete bunkhouses. It is thus clear that these improvements have been existing for quite sometime now. Aware that these improvements are essential to their mining operations, plaintiff should have initiated expropriation proceedings long before it even started putting up said improvements. Why exercise the right of eminent domain only now that the land has been adjudged in favor of defendant mining companies by no less than the Supreme Court? It seems the plaintiff, mindful of the Supreme Court decision, would now look for avenues of escape to evade the repercussions of such a decision. What it has not achieved through the decision, it tries to gain through the power of eminent domain. Clearly, this is forum-shopping, plain and simple. Stripped of all its legal niceties, this expropriation proceeding is patently a last ditch effort on the part of the plaintiff to overcome the adverse effects of the Supreme Court decision.

On February 18, 1993, the trial court, acting on the motion of petitioners, dismissed the complaint of Philex Mining. In its resolution, the trial court stated:[2] To better appreciate the incident submitted for resolution, a review of the antecedent facts which gave rise to this case is in order. The decision of the Supreme Court dated October 2, 1991 in Poe Mining Association vs. Garcia, 202 SCRA 222 upheld the decision of the then Minister of Natural Resources which was affirmed by the Office of the President. This decision recognized the possessory rights of defendants Macawiwili and Omico over their mining claims located at Tuba and Itogon, Benguet as against Poe Mining Association and plaintiff herein Philex Mining Corporation as operator. However, on the surface of 21.9 hectares of these mining claims awarded to defendants Macawiwili and Omico, we find improvements of the plaintiff consisting of a network of roads, a motorpool facility, a tailings dam and three bunkhouses. The Department of Environment and Natural Resources - Cordillera Administrative Region (DENR-CAR), in pursuance of the Supreme Court decision is poised to order the removal or demolition of plaintiffs improvements and to hand possession of the area to defendants Macawiwili and Omico. Plaintiff, while admitting the possessory rights of defendant mining companies, stresses that the improvements already existing thereon are vital to the conduct of its mining operations particularly, its Nevada claims. Thus, it came to court seeking the expropriation of this area pursuant to Section 59 of Presidential Decree No. 463.

Can this Court countenance such a procedure under the guise of the legal process of expropriation? No. To agree to it would be to encourage forum-shopping which is abhorred as there will no longer be any end to any litigation. Nevertheless, plaintiff asserts that its right to expropriate is distinct and separate from the rights of Macawiwili and Omico under the Supreme Court decision, anchoring said right on Section 59 of Presidential Decree No. 463 which states: SEC. 59. Eminent Domain. - When the claim owner or an occupant or owner of private lands refuses to grant to another claim owner or lessee the right to build, construct or install any of the facilities mentioned in the next preceding section, the claim owner or lessee may prosecute an action for eminent domain under the Rules of Court in the Court of First Instance of the province where the mining claims involved are situated. In the determination of the just compensation due the claim owner or owner or occupant of the land, the court shall appoint at least one duly qualified mining engineer or geologist to be recommended by the Director as one of the commissioners.

The conflict between the plaintiff and defendant mining companies spans a period of almost 23 years until finally, it reached the Supreme Court, the final arbiter of all disputes. The Supreme Court has spoken and it has awarded to defendants Macawiwili and Omico the portion sought to be expropriated by the plaintiff.

There are two (2) stages in every action of expropriation. The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends either with an order of dismissal or an order of condemnation. The second phase of the eminent domain action is concerned with the determination by the court of the just compensation for the property sought to be taken (Municipality of Bian vs. Hon. Jose Mar Garcia, et al., 180 SCRA 576 as quoted in National Power Corporation vs. Jocson, G.R. Nos. 94193-99, February 25, 1992, 206 SCRA 520).

Can this Court now grant to plaintiff the right to expropriate the very land which has been denied it by the decision of the highest court of the land? This Court believes not. To do so would not only be presumptious of this Court but a patent defiance of the decision of the highest tribunal. The plaintiff states that the expropriation is necessary in order for it to continue with the operation of its Nevada claims. The improvements now existing on the land sought to be

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Going to the first stage of the expropriation proceeding in the case at bar, the question is: Is the right to expropriate granted to mining companies under Section 59 of P.D. No. 463 an absolute right?

making it a useless proposition to either one. For how can defendant mining companies operate their mining claims when the surface belongs to somebody else and for that matter, how will the plaintiff improve the surface area without affecting what is underneath?

An examination of Presidential Decree No. 463 would readily show that Section 59 upon which plaintiff asserts its right to expropriate is found under Chapter XI with the heading Auxiliary Mining Rights. From the title alone, it would seem that the right to expropriate is not an absolute one but a mere auxiliary right. The right of eminent domain granted to mining companies is given in aid of its mining operations and not as a matter of right. Thus, it should be construed strictly against the mining company seeking the right. Thus, taking into context the antecedent facts arising from this case, is it proper for plaintiff to exercise the power of eminent domain?

As the Supreme Court stated in the case of Republic vs. Court of Appeals, No. L-43938, April 15, 1988, 160 SCRA 228: Under the (no- conflict) theory of the respondent court, the surface owner will be planting on the land while the mining locator will be boring tunnels underneath. The farmer cannot dig a well because he may interfere with the mining operations below and the miner cannot blast a tunnel lest he destroys the crops above. How deep can the farmer, and how high can the miner, go without encroaching on each others right? Where is the dividing line between the surface and sub-surface rights? The Court feels that the rights over the land are indivisible and that the land itself cannot be half agricultural and half mineral. The classification must be categorical; the land must be either completely mineral or completely agricultural.

Absolutely not. But, granting arguendo that the right of expropriation can be awarded to plaintiff, a bigger question arises on whether a mining company can expropriate land belonging to another mining company. It would be absurd if not ridiculous. In the first place, the land would no longer be subject to expropriation. Expropriation demands that the land be private land. When the Supreme Court awarded the possessory rights over the land subject of this case to defendants Macawiwili and Omico, it has stripped said land of its private character and gave it its public character, that is, to be utilized for mining operations. Although property already devoted to public use is still subject to expropriation, this must be done directly by the national legislature or under a specific grant of authority to the delegate (Constitutional Law by Isagani Cruz, 1989 edition, page 64). Section 59 of Presidential Decree No. 463 is not a specific grant of authority given to plaintiff but a mere general authority which will not suffice to allow plaintiff to exercise the power of eminent domain.

All told, it is clear that plaintiff has not shown that it has the right to expropriate the land subject of this case. Moreover, that land has been placed out of its reach by the Supreme Court decision when it awarded it to defendants Macawiwili and Omico. Both plaintiff and defendants are engaged in mining, and the Supreme Court has adjudged defendant mining companies to be the owner of the land. This Court now, on the ground of the exercise of the power of eminent domain, cannot and will not overwhelm said decision by awarding it to plaintiff. As the other motions have become moot and academic, this Court will no longer delve into them. However, as to the motion for reduction of deposit, the Court will make its last point. In the case of National Power Corporation vs. Jocson, supra, the Supreme Court made this pronouncement: Presidential Decree No. 42 requires the petitioner, to deposit with the Philippine National Bank in its main office or any of its branches or agencies, an amount equivalent to the assessed valued of the property for purposes of taxation. This assessed value is that indicated in the tax declaration. P.D. No. 42 repealed the provisions of Rule 67 of the Rules of Court and any other existing law contrary to or inconsistent with it. Accordingly, it repealed Section 2 of Rule 67 insofar as the determination of the provisional value, the form of payment and the agency with which the deposit shall be made, are concerned. P.D. No. 42, however effectively removes the discretion of the court in determining the provisional value. What is to be deposited is an amount equivalent to the assessed value for taxation purposes. No hearing is required for that purpose. All that is needed is notice to the owner of the property sought to be condemned.

The plaintiff also states that it does not question the mining rights of defendant mining companies over the area as it is only interested in the surface rights as this is where its improvements are located. But this is an illusory dream which cannot be given reality by this Court. It is a well-known principle that the owner of a piece of land has rights not only to its surface but also to everything underneath and the airspace above it to a reasonable height (Art. 437, Civil Code of the Philippines). The surface area cannot be segregated from the subjacent minerals. There is no dividing line between the surface and what is underneath that one can categorically state that one belongs to the plaintiff while the other forms part of the property of the defendant mining companies. For that is in effect what the plaintiff wants, just the surface area where its improvements are. It would be like dismembering a human body of a lady and awarding the upper part including her bosom to someone while giving the lower part to another,

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Thus, the plaintiff is right in depositing the assessed value of the property as appearing on the tax declaration of defendant Macawiwili as the provisional value of the land sought to be expropriated. While this case remains pending, the plaintiff may then withdraw the balance of the Two Million Pesos (P2,000,000.00) from the Philippine National Bank after deducting the provisional value of the land amounting to Forty Eight Thousand Six Hundred Pesos (P48,600.00).

It is settled that the writ of certiorari lies only when petitioner has no other plain, speedy, and adequate remedy in the ordinary course of law. Thus, a motion for reconsideration, as a general rule, must be filed before the tribunal, board, or officer against whom the writ of certiorari is sought. Ordinarily, certiorari as a special civil action will not lie unless a motion for reconsideration is first filed before the respondent tribunal, to allow it an opportunity to correct its assigned errors.[4]

WHEREFORE, premises considered, the Motion to Dismiss filed by defendants Macawiwili Gold Mining and Development Mining Co., Inc. and Omico Mining and Industrial Corporation is granted. This case is hereby DISMISSED without pronouncement as to costs.

This rule, however, is not without exceptions. In Pajo v. Ago and Ortiz[5] we held: Respondent contends that petitioners should have filed a motion for reconsideration of the order in question, or asked for the dissolution of the preliminary injunction issued by the trial court, before coming to us.

Philex Mining moved for a reconsideration, but its motion was denied. It then appealed to the Court of Appeals.

This is not always so. It is only when the questions are raised for the first time before this Court in a certiorari proceeding that the writ shall not issue unless the lower court had first been given the opportunity to pass upon the same. In fine, when the questions raised before this Court are the same as those which have been squarely raised in and passed upon by, the court below, the filing of a motion for reconsideration in said court before certiorari can be instituted in this Court, is no longer prerequisite.

On February 16, 1994, petitioners filed a Motion to Dismiss Appeal on the ground that only questions of law were involved and, therefore, the appeal should be to the Supreme Court.However, the appellate court denied petitioners motion in a resolution, dated April 12, 1994. Without filing a motion for reconsideration, petitioners filed the instant petition for certiorari. Respondent Philex Mining seeks the dismissal of the petition on the ground that petitioner should have filed a motion for reconsideration giving the appellate court an opportunity to correct itself.

In Locsin v. Climaco[6] it was stated: When a definite question has been properly raised, argued, and submitted to a lower court, and the latter has decided the question, a motion for reconsideration is no longer necessary as a condition precedent to the filing of a petition for certiorari in this Court.

Rule 65, 1 of the 1964 Rules of Court in part provides: Section 1. Petition for certiorari. - When any tribunal, board or officer exercising judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings, as the law requires, of such tribunal, board or officer.

And in Central Bank v. Cloribel,[7] it was explained: It is true that Petitioner herein did not seek a reconsideration of the order complained of, and that, as a general rule, a petition for certiorari will not be entertained unless the respondent has had, through a motion for reconsideration, a chance to correct the error imputed to him. This rule is subject, however, to exceptions, among which are the following, namely: 1) where the issue raised is one purely of law; 2) where public interest is involved; and 3) in case of urgency. These circumstances are present in the case at bar.Moreover, Petitioner herein had raised - in its answer in the main case and in the rejoinder to the memorandum of the Banco Filipino in support of the latters application for a writ of preliminary injunction - the very same questions raised in the Petition herein. In other words, Judge Cloribel has already had an opportunity to consider and pass upon those questions, so that a motion for reconsideration of his contested order would have served no practical purpose. The rule requiring exhaustion of remedies does not call for an exercise in futility.

With some modifications, Rule 65, 1 of the 1997 Rules of Civil Procedure similarly provides: Section 1. Petition for certiorari. - When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.[3]

The issues raised by petitioners in this petition are substantially the same as those asserted by them in their

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Motion to Dismiss Appeal, dated February 14, 1994, before the Court of Appeals. The argument that respondent has no right to expropriate petitioners mineral areas under Presidential Decree No. 463 has already been raised, argued, and submitted by petitioners for resolution by the appellate court in their Motion to Dismiss Appeal. To further file a motion for reconsideration before the Court of Appeals would simply be to repeat their arguments. For this reason, we hold that petitioners failure to file a motion for reconsideration is not fatal to the allowance of their action.

Thus, judgments of the regional trial courts in the exercise of their original jurisdiction are to be elevated to the Court of Appeals in cases where the appellant raises questions of fact or mixed questions of fact and law. On the other hand, appeals from judgments of the regional trial courts in the exercise of their original jurisdiction must be brought directly to the Supreme Court in cases where the appellant raises only questions of law. This procedure is now embodied in Rule 41, 2 of the 1997 Rules of Civil Procedure which distinguishes the different modes of appeal from judgments of regional trial courts as follows:

We therefore come to the main question: Did the Court of Appeals commit grave abuse of discretion in denying petitioners Motion to Dismiss Appeal? We find that it did.

Modes of appeal.- (a) Ordinary appeal. - The appeal to the Court to Appeals in cases decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party. No record on appeal shall be required except in special proceedings and other cases of multiple or separate appeals where the law or these Rules so require. In such cases, the record on appeal shall be filed and served in like manner.

To begin with, the writ of certiorari lies when a court, in denying a motion to dismiss, acts without or in excess of jurisdiction or with grave abuse of discretion.[8] By grave abuse of discretion is meant, such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be grave as where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act all in contemplation of law.[9]

(b) Petition for review. - The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition for review in accordance with Rule 42.

Petitioners contend that the Court of Appeals gravely abused its discretion in denying their motion to dismiss the appeal. According to petitioners, respondents appeal raises only questions of law and, therefore, it should be brought to the Supreme Court by means of a petition for review on certiorari and not, as Philex Mining did, by bringing an ordinary appeal to the Court of Appeals. Petitioners argue that the question whether respondent has a right to expropriate petitioners mining areas under 59 of Presidential Decree No. 463 is a question of law.

(c) Appeal by certiorari. - In all cases where only questions of law are raised or involved, the appeal shall be to the Supreme Court by petition for review on certiorari in accordance with Rule 45. On the other hand, Rule 42 provides that appeals from judgments of the regional trial courts in the exercise of their appellate jurisdiction must be brought to the Court of Appeals, whether the appellant raises questions of fact, of law, or mixed questions of fact and law.

On the other hand, Philex Mining maintains that the issues raised in its appeal are factual and, therefore, the appellate court is the proper forum for the ventilation of such issues.

The rules on appeals from the judgments of the regional trial courts in civil cases may thus be summarized as follows:

Supreme Court Circular No. 2-90, which is based on the Resolution of the Court En Banc in UDK-9748 (Anacleto Murillo v. Rodolfo Consul), March 1, 1990, provides in 4(c) thereof:

(1) Original Jurisdiction - In all cases decided by the regional trial courts in the exercise of their original jurisdiction, appeal may be made to:

c) Raising issues purely of law in the Court of Appeals, or appeal by wrong mode. - If an appeal under Rule 41 is taken from the regional trial court to the Court of Appeals and therein the appellant raises only questions of law, the appeal shall be dismissed, issues purely of law not being reviewable by said Court. So, too, if an appeal is attempted from the judgment rendered by a Regional Trial Court in the exercise of its appellate jurisdiction by notice of appeal, instead of by petition for review, the appeal is inefficacious and should be dismissed.

(a) Court of Appeals - where the appellant raises questions of fact or mixed questions of fact and law, by filing a mere notice of appeal. (b) Supreme Court - where the appellant solely raises questions of law, by filing a petition for review on certiorari under Rule 45.

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(2) Appellate Jurisdiction All appeals from judgments rendered by the regional trial courts in the exercise of their appellate jurisdiction, whether the appellant raises questions of fact, of law, or mixed questions of fact and law, shall be by filing a petition for review under Rule 42.

may be the subject of expropriation. Moreover, a general grant of the power of eminent domain only means that the court may inquire into the necessity of the expropriation.[14] (3) Respondent could not be held guilty of forum-shopping or subverting the Supreme Courts decision in Poe Mining v. Garcia.[15] Forum-shopping, which refers to filing the same or repetitious suits, is not resorted to in the present case since respondent seeks to expropriate petitioners mining areas, not as operator of the Poe mining claims, but as operator of the Nevada mining claims.[16]

The question is whether the issues raised in the appeal of respondent Philex Mining are questions of law or of fact. [F]or a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. And the distinction is well-known: There is a question of law in a given case when the doubt or difference arises as to what the law is on a certain state of facts; there is a question of fact when the doubt or difference arises as to the truth or the falsehood of alleged facts.[10]

(4) Respondents expropriation of the land will not divide the surface from the subsurface for the reason that respondent seeks to expropriate all rights that petitioners, as well as the Pigoro heirs, have over the 21.9 hectare area.[17] (5) The trial court erred in disregarding respondents alternative cause of action, even on the assumption that respondent does not have the right to expropriate, for the reason that an alternative statement in a pleading, if sufficient, is not vitiated by the insufficiency of the other alternative statements.[18]

Respondents assignment of errors[11] before the appellate court should therefore be considered in order to determine the nature of the questions therein raised. Respondent Philex Mining argued before the Court of Appeals: A. The trial court erred in finding that Philex has no right to expropriate; P.D. 463 expressly grants to Philex, as operator of the Nevada claims, the right of eminent domain.

The first four arguments advanced by respondent Philex Mining raise the sole issue of whether it has, under Presidential Decree No. 463, the right to expropriate the 21.9 hectare mining areas where petitioners mining claims are located. On the other hand, its final argument raises the issue of whether the rules on the allegation of alternative causes of action in one pleading under Rule 8, 1 of the Rules of Court are applicable to special civil actions. These are legal questions whose resolution does not require an examination of the probative weight of the evidence presented by the parties but a determination of what the law is on the given state of facts. These issues raise questions of law which should be the subject of a petition for review on certiorari under Rule 45 filed directly with this Court. The Court of Appeals committed a grave error in ruling otherwise.

B. The trial court erred in finding that Philex cannot expropriate land belonging to a mining company; Section 59 in relation to Section 58 of P.D. 463 allows an operator of a mining claim to expropriate mining claims or lands owned, occupied, or leased by other persons or claim owners. C. The trial court erred in finding that Philex is attempting to subvert the Supreme Court decision and is engaged in forumshopping. Philex is merely exercising its rights under the law. D. The trial court erred in finding that the expropriation of the land will divide the surface from the subsurface. E. The trial court erred in dismissing the complaint. Philexs alternative cause of action was disregarded.

SANTOS VS. GO

The respondents arguments may thus be summarized as follows: (1) Section 59, in relation to Section 53 of Presidential Decree No. 463, expressly grants respondent the right to expropriate mining claims or lands owned, occupied, or leased by other persons once the conditions justifying expropriation are present. The power of eminent domain expressly granted under Sections 58 and 59 of P.D. No. 463 is not inferior to the possessory right of other claimowners.[12]

For our review on certiorari is the Decision[1] dated September 2, 2002 of the Court of Appeals in CA-G.R. SP No. 67388, as well as its Resolution[2] dated November 12, 2002, denying petitioners motion for reconsideration. The appellate court dismissed the petition for review under Rule 43[3] of the 1997 Rules of Civil Procedure for being an erroneous mode of appeal from the Resolution[4] of the Secretary of Justice. The Secretary had modified the Resolution[5] of the Office of the City Prosecutor of Pasig City in I.S. No. PSG 00-04-10205 and directed the latter to file an information for estafa against petitioners.

(2) There is nothing absurd in allowing a mining company to expropriate land belonging to another mining company. Pursuant to the ruling laid down in Benguet Consolidated, Inc. v. Republic,[13] land covered by mining claims

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The petitioners are corporate directors and officers of FilEstate Properties, Inc. (FEPI).

well that the development of the property and issuance of its corresponding title were impossible to accomplish, as the ownership and title thereto had not yet been acquired and registered under the name of FEPI at the time of sale. Thus, FEPI had grossly misrepresented itself as owner at the time of the sale of the subject property to him and when it received from him the full payment, despite being aware that it was not yet the owner.

On October 17, 1995, FEPI allegedly entered into a Project Agreement with Manila Southcoast Development Corporation (MSDC), whereby FEPI undertook to develop several parcels of land in Nasugbu, Batangas allegedly owned by MSDC. Under the terms of the Agreement, FEPI was to convert an approximate area of 1,269 hectares into a first-class residential, commercial, resort, leisure, and recreational complex. The said Project Agreement clothed FEPI with authority to market and sell the subdivision lots to the public.

Petitioners challenged the jurisdiction of the City Prosecutor of Pasig City to conduct the preliminary investigation on the ground that the complainant was not from Pasig City, the contract was not executed nor were the payments made in Pasig City. Besides, countered petitioners, none of the elements of estafa under Articles 316 and 318 were present. They averred that FEPI was not the owner of the project but the developer with authority to sell under a joint venture with MSDC, who is the real owner. They further denied that FEPI ever made any written nor oral representation to Go that it is the owner, pointing out that Go failed to positively identify who made such misrepresentation to him nor did Go say where the misrepresentation was made. According to petitioner, there being neither deceit nor misrepresentation, there could be no damage nor prejudice to respondent, and no probable cause exists to indict the petitioners. Petitioners likewise insisted that they could not be held criminally liable for abiding with a cease-and-desist order of the DAR.

Respondent Wilson Go offered to buy Lot 17, Block 38 from FEPI. Lot 17 measured approximately 1,079 square meters and the purchase price agreed upon was P4,304,000. The Contract to Sell signed by the parties was the standard, printed form prepared by FEPI. Under the terms of said contract of adhesion, Go agreed to pay a downpayment of P1,291,200 and a last installment of P840,000 on the balance due on April 7, 1997. In turn, FEPI would execute a final Deed of Sale in favor of Go and deliver to Go the owners duplicate copy of Transfer Certificate of Title (TCT) upon complete payment of the purchase price. Go fully complied with the terms of the Contract. FEPI, however, failed to develop the property. Neither did it release the TCT to Go. The latter demanded fulfillment of the terms and conditions of their agreement. FEPI balked. In several letters to its clients, including respondent Go, FEPI explained that the project was temporarily halted due to some claimants who opposed FEPIs application for exclusion of the subject properties from the coverage of the Comprehensive Agrarian Reform Law (CARL). Further, FEPIs hands were tied by a cease and desist order issued by the Department of Agrarian Reform (DAR). Said order was the subject of several appeals now pending before this Court. FEPI assured its clients that it had no intention to abandon the project and would resume developing the properties once the disputes had been settled in its favor.

In his reply, Go stressed that the City Prosecutor of Pasig City had jurisdiction over the case. He argued that the Contract to Sell specifically provided that payment be made at FEPIs office at Pasig City and the demand letters bore the Pasig City address. He averred that FEPI could not disclaim ownership of the project since the contract described FEPI as owner without mentioning MSDC. Additionally, the acts executed by FEPI appearing in the contract were the acts of an owner and not a mere developer. After the preliminary investigation, the City Prosecutor resolved to dismiss the complaint for estafa, thus: Wherefore, the case for estafa, under Articles 316 and 318 of the Revised Penal Code, filed against the respondents Ferdinand Santos, Robert [John] Sobrepea, Federico Campos, Polo Pantaleon and Rafael Perez de Tagle, Jr. is dismissed for insufficiency of evidence.[8]

Go was neither satisfied nor assured by FEPIs statements and he made several demands upon FEPI to return his payment of the purchase price in full. FEPI failed to heed his demands. Go then filed a complaint before the Housing and Land Use Regulatory Board (HLURB). He likewise filed a separate Complaint-Affidavit for estafa under Articles 316 [6] and 318[7] of the Revised Penal Code before the Office of the City Prosecutor of Pasig City against petitioners as officers of FEPI. The complaint for estafa averred that the Contract to Sell categorically stated that FEPI was the owner of the property. However, before the HLURB, FEPI denied ownership of the realty. Go alleged that the petitioners committed estafa when they offered the subject property for sale since they knew fully

The City Prosecutor found no misrepresentation stating that, (1) the Contract to Sell did not mention FEPI as the owner of the property; (2) since no Deed of Sale had been executed by the parties, then petitioners are not yet bound to deliver the certificate of title since under both the Contract to Sell and Section 25[9] of Presidential Decree No. 957,[10] FEPI was bound to deliver the certificate of title only upon the execution of a contract of sale; and (3) the City Prosecutor disavowed any

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jurisdiction since it is the HLURB, which has exclusive jurisdiction over disputes and controversies involving the sale of lots in commercial subdivision including claims involving refunds under P.D. No. 1344.[11]

The appellate court opined that a petition for review pursuant to Rule 43 cannot be availed of as a mode of appeal from the ruling of the Secretary of Justice because the Rule applies only to agencies or officers exercising quasi-judicial functions. The decision to file an information or not is an executive and not a quasi-judicial function.

Go appealed the City Prosecutors Resolution to the Department of Justice (DOJ), which, in turn reversed the City Prosecutors findings, and held, to wit:

Herein petitioners seasonably moved for reconsideration, but the motion was likewise denied by the Court of Appeals.

WHEREFORE, the questioned resolution is hereby MODIFIED. The City Prosecutor of Pasig City is directed to file an information for estafa defined and penalized under Art. 316, par. 1 of the Revised Penal Code against respondents Ferdinand Santos, Robert [John] Sobrepea, Federico Campos, Polo Pantaleon and Rafael Perez De Tagle, Jr. and report the action taken within ten (10) days from receipt hereof.

Hence, this petition based on the following grounds: (1) THE COURT OF APPEALS ERRED IN RULING THAT RULE 43 OF THE 1997 RULES OF CIVIL PROCEDURE CANNOT BE AVAILED OF TO APPEAL THE RESOLUTIONS OF THE SECRETARY OF JUSTICE.[14] (2) THE DOJ SECRETARY ERRED WHEN IT FOUND PROBABLE CAUSE AND RESOLVED TO FILE AN INFORMATION FOR ESTAFA UNDER ART. 316, SEC. 1 OF THE REVISED PENAL CODE AGAINST PETITIONERS, CONSIDERING THAT: (A) Petitioners did not pretend that they, or FEPI, were the owners of the subject property; (B) FEPI need not have been the owner at the time the Contract to Sell was furnished to respondent Go; (C) There was no prejudice caused to respondent Go; (D) There is no personal act or omission constituting a crime ascribed to any of the Petitioners, therefore, there can be no probable cause against them; and (E) There was no deceit or even intent to deceive.[15]

The DOJ found that there was a prima facie basis to hold petitioners liable for estafa under Article 316 (1) of the Revised Penal Code, pointing out that the elements of the offense were present as evidenced by the terms of the Contract to Sell. It ruled that under the Contract, the petitioners sold the property to Go despite full knowledge that FEPI was not its owner. The DOJ noted that petitioners did not deny the due execution of the contract and had accepted payments of the purchase price as evidenced by the receipts. Thus, FEPI was exercising acts of ownership when it conveyed the property to respondent Go. Acts to convey, sell, encumber or mortgage real property are acts of strict ownership. Furthermore, nowhere did FEPI mention that it had a joint venture with MSDC, the alleged true owner of the property. Clearly, petitioners committed acts of misrepresentation when FEPI denied ownership after the perfection of the contract and the payment of the purchase price. Since a corporation can only act through its agents or officers, then all the participants in a fraudulent transaction are deemed liable.

To our mind, the sole issue for resolution is whether a petition for review under Rule 43 is a proper mode of appeal from a resolution of the Secretary of Justice directing the prosecutor to file an information in a criminal case. In the course of this determination, we must also consider whether the conduct of preliminary investigation by the prosecutor is a quasi-judicial function. Petitioners submit that there is jurisprudence to the effect that Rule 43 covers rulings of the Secretary of Justice since during preliminary investigations, the DOJs decisions are deemed as awards, judgments, final orders or resolutions of or authorized by any quasi-judicial agency in the exercise of its quasi-judicial functions, and its prosecutorial offices are considered quasijudicial bodies/officers performing quasi-judicial functions.

Accordingly, an Information for estafa was filed against petitioners and Federico Campos and Polo Pantaleon before the MTC of Pasig City. However, the arraignment was deferred since Campos and Pantaleon filed a Motion for Judicial Determination of Probable Cause, which was granted by the trial court. Meanwhile petitioners herein filed with the Court of Appeals, a petition for review docketed as CA-G.R. SP No. 67388. Accordingly, the trial court deferred the arraignment of petitioners until the petition for review was resolved.

Respondent counters that the herein petition is a dilatory tactic and emphasizes that injunction will not lie to restrain criminal prosecution.

On September 2, 2002, the appellate court disposed of CA-G.R. SP No. 67388 in this wise:

Rule 43 of the 1997 Rules of Civil Procedure clearly shows that it governs appeals to the Court of Appeals from decisions and final orders or resolutions of the Court of Tax Appeals or quasijudicial agencies in the exercise of their quasi-judicial functions. The Department of Justice is not among the agencies[16] enumerated in Section 1 of Rule 43. Inclusio unius est exclusio alterius.

WHEREFORE, foregoing premises considered, the Petition, HAVING NO MERIT, is hereby DENIED DUE COURSE AND ORDERED DISMISSED, with cost to Petitioners. SO ORDERED.[13]

40

We cannot agree with petitioners submission that a preliminary investigation is a quasi-judicial proceeding, and that the DOJ is a quasi-judicial agency exercising a quasijudicial function when it reviews the findings of a public prosecutor regarding the presence of probable cause.

inclined to do, for we have no basis to review the DOJs factual findings and its determination of probable cause. First, Rule 45 is explicit. This mode of appeal to the Supreme Court covers the judgments, orders or resolutions of the Court of Appeals, the Sandiganbayan, the Regional Trial Court or any authorized court and should raise only pure question of law. The Department of Justice is not a court.

In Bautista v. Court of Appeals,[17] we held that a preliminary investigation is not a quasi-judicial proceeding, thus: [t]he prosecutor in a preliminary investigation does not determine the guilt or innocence of the accused. He does not exercise adjudication nor rule-making functions. Preliminary investigation is merely inquisitorial, and is often the only means of discovering the persons who may be reasonably charged with a crime and to enable the fiscal to prepare his complaint or information. It is not a trial of the case on the merits and has no purpose except that of determining whether a crime has been committed and whether there is probable cause to believe that the accused is guilty thereof. While the fiscal makes that determination, he cannot be said to be acting as a quasi-court, for it is the courts, ultimately, that pass judgment on the accused, not the fiscal.[18]

Also, in this petition are raised factual matters for our resolution, e.g. the ownership of the subject property, the existence of deceit committed by petitioners on respondent, and petitioners knowledge or direct participation in the Contract to Sell. These are factual issues and are outside the scope of a petition for review on certiorari. The cited questions require evaluation and examination of evidence, which is the province of a full-blown trial on the merits. Second, courts cannot interfere with the discretion of the public prosecutor in evaluating the offense charged. He may dismiss the complaint forthwith, if he finds the charge insufficient in form or substance, or without any ground. Or, he may proceed with the investigation if the complaint in his view is sufficient and in proper form.[22] The decision whether to dismiss a complaint or not, is dependent upon the sound discretion of the prosecuting fiscal and, ultimately, that of the Secretary of Justice.[23] Findings of the Secretary of Justice are not subject to review unless made with grave abuse of discretion.[24] In this case, petitioners have not shown sufficient nor convincing reason for us to deviate from prevailing jurisprudence.

Though some cases[19] describe the public prosecutors power to conduct a preliminary investigation as quasi-judicial in nature, this is true only to the extent that, like quasi-judicial bodies, the prosecutor is an officer of the executive department exercising powers akin to those of a court, and the similarity ends at this point.[20] A quasi-judicial body is as an organ of government other than a court and other than a legislature which affects the rights of private parties through either adjudication or rule-making.[21] A quasi-judicial agency performs adjudicatory functions such that its awards, determine the rights of parties, and their decisions have the same effect as judgments of a court. Such is not the case when a public prosecutor conducts a preliminary investigation to determine probable cause to file an information against a person charged with a criminal offense, or when the Secretary of Justice is reviewing the formers order or resolutions.

WHEREFORE, the instant petition is DENIED for lack of merit. The Decision and the Resolution of the Court of Appeals in CAG.R. SP No. 67388, dated September 2, 2002 and November 12, 2002, respectively, are AFFIRMED. GOVERNOR MANUEL M. LAPID, petitioner, vs. HONORABLE COURT OF APPEALS, OFFICE OF THE OMBUDSMAN, NATIONAL BUREAU OF INVESTIGATION, FACT-FINDING INTELLIGENCE BUREAU (FFIB) of the Office of the Ombudsman, DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT, respondents.

Since the DOJ is not a quasi-judicial body and it is not one of those agencies whose decisions, orders or resolutions are appealable to the Court of Appeals under Rule 43, the resolution of the Secretary of Justice finding probable cause to indict petitioners for estafa is, therefore, not appealable to the Court of Appeals via a petition for review under Rule 43. Accordingly, the Court of Appeals correctly dismissed petitioners petition for review.

Before us are the Motions for Reconsideration filed by the National Bureau of Investigation and the Department of the Interior and Local Government, represented by the Office of the Solicitor-General, and the Office of the Ombudsman of our 5 April 2000 Resolution.[1] In this resolution, we ordered the immediate reinstatement of petitioner Manuel Lapid to the position of Governor of Pampanga as the respondents failed to establish the existence of a law mandating the immediate execution of a decision of the Office of the Ombudsman in an administrative case where the penalty imposed is suspension for one year.

Notwithstanding that theirs is a petition for review properly under Rule 45, petitioners want us to reverse the findings of probable cause by the DOJ after their petition for review under Rule 43 from the court a quo failed. This much we are not

41

The factual antecedents are as follows: On the basis of an unsigned letter dated July 20, 1998, allegedly originating from the Mga Mamamayan ng Lalawigan ng Pampanga, addressed to the National Bureau of Investigation, the latter initiated an open probe on the alleged illegal quarrying in Pampanga & exaction of exorbitant fees purportedly perpetrated by unscrupulous individuals with the connivance of high-ranking government officials. The NBI Report was endorsed to the respondent Ombudsman and was docketed as OMB-1-982067.

Quiambao, who resigned effective June 30, 1998 was dismissed on March 12, 1999, without prejudice to the outcome of the criminal case.[5] The copy of the said decision was received by counsel for the petitioner on November 25, 1999 and a motion for reconsideration was filed on November 29, 1999. The Office of the Ombudsman, in an Order[6] dated 12 January 2000, denied the motion for reconsideration. Petitioner then filed a petition for review with the Court of Appeals on January 18, 2000 praying for the issuance of a temporary restraining order to enjoin the Ombudsman from enforcing the questioned decision. The temporary restraining order was issued by the appellate court on January 19, 2000.[7]

On Oct. 26, 1998, a complaint was filed charging petitioner Gov. Manuel M. Lapid, Vice-Governor Clayton Olalia, Provincial Administrator Enrico Quiambao, Provincial Treasurer Jovito Sabado, Mabalacat Municipal Mayor Marino Morales and Senior Police Officer 4 Nestor Tadeo with alleged Dishonesty, Grave Misconduct and Conduct Prejudicial to the Best Interest of the Service for allegedly having conspired between and among themselves in demanding and collecting from various quarrying operators in Pampanga a control fee, control slip, or monitoring fee of P120.00 per truckload of sand, gravel, or other quarry material, without a duly enacted provincial ordinance authorizing the collection thereof and without issuing receipts for its collection. They were also accused of giving unwarranted benefits to Nestor Tadeo, Rodrigo Rudy Fernandez & Conrado Pangilinan who are neither officials/employees of the Provincial Government. of Pampanga nor quarry operators by allowing them to collect the said amount which was over and above the P40.00 prescribed under the present provincial ordinance and in allowing Tadeo, Fernandez and Pangilinan to sell and deliver to various quarry operators booklets of official receipts which were pre-stamped with SAND FEE P40.00.[2]

When the 60-day lifetime of the temporary restraining order lapsed on March 19, 2000 without the Court of Appeals resolving the prayer for the issuance of a writ of preliminary injunction, a petition[8] for certiorari, prohibition and mandamus was filed with this Court on March 20, 2000. The petition asked for the issuance of a temporary restraining order to enjoin the respondents from enforcing the assailed decision of the Ombudsman and prayed that after due proceedings, judgment be rendered reversing and setting aside the questioned decision (of the Ombudsman) dated November 22, 1999 and the order dated January 12, 2000.[9] On March 22, 2000 the Third Division of this Court issued a Resolution requiring the respondents to comment on the petition. That same day, the Court of Appeals issued a resolution[10] denying the petitioners prayer for injunctive relief. The following day, or on March 23, 2000, the DILG implemented the assailed decision of the Ombudsman and the highest ranking Provincial Board Member of Pampanga, Edna David, took her oath of office as O.I.C.- Governor of the Province of Pampanga.

The Ombudsman issued an Order dated January 13, 1999 preventively suspending petitioner Lapid, Olalia, Quiambao, Sabado, Morales and Tadeo for a period of six (6) months without pay pursuant to Sec. 24 of RA 6770. On Jan. 19, 1999, the Department of the Interior and Local Government (hereinafter the DILG) implemented the suspension of petitioner Lapid[3].

On March 24, 2000 a Motion for Leave to File Supplement to the Petition for Certiorari, Prohibition and Mandamus[11] and the Supplement to the Petition[12] itself were filed in view of the resolution of the Court of Appeals denying the petitioners prayer for preliminary injunction. In addition to the arguments raised in the main petition, the petitioner likewise raised in issue the apparent pre-judgment of the case on the merits by the Court of Appeals in its resolution denying the prayer for preliminary injunction. In so doing, petitioner argued that the respondent court exceeded the bounds of its jurisdiction. Proceeding from the premise that the decision of the Ombudsman had not yet become final, the petitioner argued that the writs of prohibition and mandamus may be issued against the respondent DILG for prematurely implementing the assailed decision. Finally, the petitioner prayed for the setting aside of the resolution issued by the Court of Appeals

On November 22, 1999 the Ombudsman rendered a decision[4] in the administrative case finding the petitioner administratively liable for misconduct thus: Wherefore, premises considered, respondent Manuel M. Lapid, Clayton A. Olalia, Jovito S. Sabado and Nestor C. Tadeo are hereby found guilty of misconduct for which they are meted out the penalty of one (1) year suspension without pay pursuant to section 25 (2) of R.A. 6770 (Ombudsman Act of 1989). Respondent Marino P. Morales is hereby exonerated from the same administrative charge for insufficiency of evidence. The complaint against respondent Enrico P.

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dated March 22, 2000 and for the issuance of a new one enjoining the respondents from enforcing the said decision or, if it has already been implemented, to withdraw any action already taken until the issue of whether or not the said decision of the Ombudsman is immediately executory has been settled.

Governor of the Province of Pampanga. This case is hereby remanded to the Court of Appeals for resolution of the appeal in CA-GR. SP No. 564744 on the merits. Said court is hereby directed to resolve the same with utmost deliberate dispatch. This is without prejudice to the promulgation of an extended decision. From this 5 April 2000 Resolution, the Offices of the Solicitor-General and the Ombudsman filed the instant motions for reconsideration.

The Solicitor-General and the Office of the Ombudsman filed their respective comments[13]to the petition praying for the dismissal thereof. Regarding the issue of the immediate enforcement of the decision of the Ombudsman, the SolicitorGeneral maintains that the said decision is governed by Section 12, Rule 43 of the Rules of Court and is therefore, immediately executory. For its part, the Office of the Ombudsman maintains that the Ombudsman Law and its implementing rules are silent as to the execution of decisions rendered by the Ombudsman considering that the portion of the said law cited by petitioner pertains to the finality of the decision but not to its enforcement pending appeal. The Office of the Ombudsman also stated that it has uniformly adopted the provisions in the Local Government Code and Administrative Code that decisions in administrative disciplinary cases are immediately executory.

The sole issue addressed by our 5 April 2000 Resolution is whether or not the decision of the Office of the Ombudsman finding herein petitioner administratively liable for misconduct and imposing upon him a penalty of one (1) year suspension without pay is immediately executory pending appeal. Petitioner was administratively charged for misconduct under the provisions of R.A. 6770, the Ombudsman Act of 1989. Section 27 of the said Act provides as follows: Section 27. Effectivity and Finality of Decisions. All provisionary orders of the Office of the Ombudsman are immediately effective and executory. A motion for reconsideration of any order, directive or decision of the Office of the Ombudsman must be filed within five (5) days after receipt of written notice and shall be entertained only on the following grounds: Findings of fact of the Office of the Ombudsman when supported by substantial evidence are conclusive. Any order, directive or decision imposing the penalty of public censure or reprimand, suspension of not more than one months salary shall be final and unappealable.

[14]

The Solicitor-General filed an additional comment alleging that the petitioner did not question the executory character of the decision of the Ombudsman and that he is presenting this argument for the first time before the Supreme Court. The appellate court should be given an opportunity to review the case from this standpoint before asking the Supreme Court to review the resolutions of the Court of Appeals. The petitioner filed a consolidated Reply[15] to the Comments of the respondents.

In all administrative disciplinary cases, orders, directives or decisions of the Office of the Ombudsman may be appealed to the Supreme Court by filing a petition for certiorari within ten (10) days from receipt of the written notice of the order, directive or decision or denial of the motion for reconsideration in accordance with Rule 45 of the Rules of Court.

After oral arguments before the Third Division of this Court on 5 April 2000, the Resolution[16] subject of the instant Motions for Reconsideration was issued. The Resolution provides as follows: From the pleadings filed by the parties and after oral arguments held on April 5, 2000, the petitioner represented by Atty. Augusto G. Panlilio, the respondent Ombudsman represented by its Chief Legal Counsel, and the National Bureau of Investigation and the Department of the Interior and Local Government represented by the Solicitor General, and after due deliberation, the Court finds that the respondents failed to establish the existence of a law mandating the immediate execution of a decision of the Ombudsman in an administrative case where the penalty imposed is suspension for one year. The immediate implementation of the decision of the Ombudsman against petitioner is thus premature.

The Rules of Procedure of the Office of the Ombudsman[17] likewise contain a similar provision. Section 7, Rule III of the said Rules provides as follows: Sec. 7. Finality of Decision where the respondent is absolved of the charge and in case of conviction where the penalty imposed is public censure or reprimand, suspension of not more than one month, or a fine not equivalent to one month salary, the decision shall be final and unappealable. In all other cases, the decision shall become final after the expiration of ten (10) days from receipt thereof by the respondent, unless a motion for reconsideration or petition for certiorari, shall have been filed by him as prescribed in Section 27 of R.A. 6770.

WHEREFORE, the respondents are ordered to reinstate effective immediately the petitioner to the position of

43

It is clear from the above provisions that the punishment imposed upon petitioner, i.e. suspension without pay for one year, is not among those listed as final and unappealable, hence, immediately executory. Section 27 states that all provisionary orders of the Office of the Ombudsman are immediately effective and executory; and that any order, directive or decision of the said Office imposing the penalty of censure or reprimand or suspension of not more than one months salary is final and unappealable. As such the legal maxim inclusion unius est exclusio alterus finds application. The express mention of the things included excludes those that are not included. The clear import of these statements taken together is that all other decisions of the Office of the Ombudsman which impose penalties that are not enumerated in the said section 27 are not final, unappealable and immediately executory. An appeal timely filed, such as the one filed in the instant case, will stay the immediate implementation of the decision. This finds support in the Rules of Procedure issued by the Ombudsman itself which states that (I)n all other cases, the decision shall become final after the expiration of ten (10) days from receipt thereof by the respondent, unless a motion for reconsideration or petition for certiorari(should now be petition for review under Rule 43) shall have been filed by him as prescribed in Section 27 of R.A. 6770.

On this point, respondents contend that considering the silence of the Ombudsman Act on the matter of execution pending appeal, the above-quoted provision of the Rules of Court, which allegedly mandates the immediate execution of all decisions rendered by administrative and quasi-judicial agencies, should apply suppletorily to the provisions of the Ombudsman Act. We do not agree. A judgment becomes final and executory by operation of law.[20] Section 27 of the Ombudsman Act provides that any order, directive or decision of the Office of the Ombudsman imposing a penalty of public censure or reprimand, or suspension of not more than one months salary shall be final and unappealable. In all other cases, the respondent therein has the right to appeal to the Court of Appeals within ten (10) days from receipt of the written notice of the order, directive or decision. In all these other cases therefore, the judgment imposed therein will become final after the lapse of the reglementary period of appeal if no appeal is perfected [21] or, an appeal therefrom having been taken, the judgment in the appellate tribunal becomes final. It is this final judgment which is then correctly categorized as a final and executory judgment in respect to which execution shall issue as a matter of right.[22] In other words, the fact that the Ombudsman Act gives parties the right to appeal from its decisions should generally carry with it the stay of these decisions pending appeal. Otherwise, the essential nature of these judgments as being appealable would be rendered nugatory.

The Office of the Solicitor General insists however that the case of Fabian vs. Desierto[18] has voided Section 27 of R.A. 6770 and Section 7, Rule III of Administrative Order No. 07. As such, the review of decisions of the Ombudsman in administrative cases is now governed by Rule 43 of the 1997 Rules of Civil Procedure which mandates, under Section 12[19] thereof, the immediately executory character of the decision or order appealed from.

The general rule is that judgments by lower courts or tribunals become executory only after it has become final and executory,[23] execution pending appeal being an exception to this general rule. It is the contention of respondents however that with respect to decisions of quasi-judicial agencies and administrative bodies, the opposite is true. It is argued that the general rule with respect to quasi-judicial and administrative agencies is that the decisions of such bodies are immediately executory even pending appeal.

The contention of the Solicitor General is not well-taken. Our ruling in the case of Fabian vs. Desierto invalidated Section 27 of Republic Act No. 6770 and Section 7, Rule III of Administrative Order No.07 and any other provision of law implementing the aforesaid Act only insofar as they provide for appeals in administrative disciplinary cases from the Office of the Ombudsman to the Supreme Court. The only provision affected by the Fabian ruling is the designation of the Court of Appeals as the proper forum and of Rule 43 of the Rules of Court as the proper mode of appeal. All other matters included in said section 27, including the finality or non-finality of decisions, are not affected and still stand.

The contention of respondents is misplaced. There is no general legal principle that mandates that all decisions of quasi-judicial agencies are immediately executory. Decisions rendered by the Securities and Exchange Commission [24] and the Civil Aeronautics Board,[25] for example, are not immediately executory and are stayed when an appeal is filed before the Court of Appeals. On the other hand, the decisions of the Civil Service Commission, under the Administrative Code[26], and the Office of the President under the Local Government Code[27], which respondents cite, are immediately executory even pending appeal because the pertinent laws under which the decisions were rendered mandate them to be so. The provisions of the last two cited laws expressly provide for the execution pending appeal of their final orders or

Neither can respondents find support in Section 12, Rule 43 of the 1997 Rules of Civil Procedure which provides as follows: Section 12. Effect of Appeal. The appeal shall not stay the award, judgment, final order or resolution sought to be reviewed unless the Court of Appeals shall direct otherwise upon such terms as it may deem just.

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decisions. The Local Government Code, under Section 68 thereof provides as follows:

statutory construction that where there are two statutes that apply to a particular case, that which was specially designed for the said case must prevail over the other.[29] In the instant case, the acts attributed to petitioner could have been the subject of administrative disciplinary proceedings before the Office of the President under the Local Government Code or before the Office of the Ombudsman under the Ombudsman Act. Considering however, that petitioner was charged under the Ombudsman Act, it is this law alone which should govern his case.

Section 68. Execution Pending Appeal. An appeal shall not prevent a decision from becoming final and executory. The respondent shall be considered as having been placed under preventive suspension during the pendency of an appeal in the event he wins such appeal. In the event the appeal results in an exoneration, he shall be paid his salary and such other emoluments during the pendency of the appeal. Similarly, Book V, Title I, Subtitle A, Chapter 6, Section 47, par. (4) of the Administrative Code of 1987 provides:

Respondents, through the Office of the Solicitor General, argue that the ruling against execution pending review of the Ombudsmans decision grants a one-sided protection to the offender found guilty of misconduct in office and nothing at all to the government as the aggrieved party. The offender, according to respondents, can just let the case drag on until the expiration of his office or his reelection as by then, the case against him shall become academic and his offense, obliterated. As such, respondents conclude, the government is left without further remedy and is left helpless in its own fight against graft and corruption.

(4) An appeal shall not stop the decision from being executory, and in case the penalty is suspension or removal, the respondent shall be considered as having been under preventive suspension during the pendency of the appeal in the event he wins an appeal. Where the legislature has seen fit to declare that the decision of the quasi-judicial agency is immediately final and executory pending appeal, the law expressly so provides. Section 12 of Rule 43 should therefore be interpreted as mandating that the appeal will not stay the award, judgment, final order or resolution unless the law directs otherwise.

We find this argument much too speculative to warrant serious consideration. If it perceived that the fight against graft and corruption is hampered by the inadequacy of the provisions of the Ombudsman Act, the remedy lies not with this Court but by legislative amendment.

Petitioner was charged administratively before the Ombudsman and accordingly the provisions of the Ombudsman Act should apply in his case. Section 68 of the Local Government Code only applies to administrative decisions rendered by the Office of the President or the appropriate Sanggunian against elective local government officials. Similarly, the provision in the Administrative Code of 1987 mandating execution pending review applies specifically to administrative decisions of the Civil Service Commission involving members of the Civil Service.

As regards the contention of the Office of the Ombudsman that under Sec. 13(8), Article XI of the 1987 Constitution, the Office of the Ombudsman is empowered to (p)romulgate its rules of procedure and exercise such other powers or perform such functions or duties as may be provided by law, suffice it to note that the Ombudsman rules of procedure, Administrative Order No. 07, mandate that decisions of the Office of the Ombudsman where the penalty imposed is other than public censure or reprimand, suspension of not more than one month salary or fine equivalent to one month salary are still appealable and hence, not final and executory. Under these rules, which were admittedly promulgated by virtue of the rule-making power of the Office of the Ombudsman, the decision imposing a penalty of one year suspension without pay on petitioner Lapid is not immediately executory.

There is no basis in law for the proposition that the provisions of the Administrative Code of 1987 and the Local Government Code on execution pending review should be applied suppletorily to the provisions of the Ombudsman Act as there is nothing in the Ombudsman Act which provides for such suppletory application. Courts may not, in the guise of interpretation, enlarge the scope of a statute and include therein situations not provided or intended by the lawmakers. An omission at the time of enactment, whether careless or calculated, cannot be judicially supplied however later wisdom may recommend the inclusion.[28]

CHINA ROAD AND BRIDGE CORPORATION, petitioner, vs. COURT OF APPEALS (Special Seventh Division) and JADE PROGRESSIVE SAVINGS AND MORTGAGE BANK, respondents. BELLOSILLO, J.:

And while in one respect, the Ombudsman Law, the Administrative Code of 1987 and the Local Government Code are in pari materia insofar as the three laws relate or deal with public officers, the similarity ends there. It is a principle in

This is a petition for certiorari under Rule 65 of the 1997 Rules of Civil Procedure praying for the nullification of the Resolution of the Court of Appeals (Special Seventh Division)dated 29 October 1998 denying petitioner's Motion to

45

Dismiss Appeal, and its Resolution dated 5 February 1999, denying reconsideration thereof and for the dismissal of CAG.R. CV No. 57375.

ALLIEDBANK Check No. 0000126131 issued by Ambrosio dated 30 April 1997 for the same amount. On 25 March 1997 JADEBANK released P400,000.00 for which HI-QUALITY executed Promissory Note No. JB BDO 162/97 payable on 5 May 1997 and indorsed to JADEBANK Check No. 214179 issued by Ambrosio dated 30 April 1997 for the same amount, drawn on Security Bank Corporation, Pateros Branch (SECURITYBANK).

CHINA ROAD AND BRIDGE CORPORATION (CRBC), petitioner, is a corporation organized under the laws of the People's Republic of China duly licensed by the Securities and Exchange Commission to do business in the Philippines. It was awarded by the Philippine Government the contract to construct the EDSA Shaw

On 7 February 1997 JADEBANK released another P400,000.00 for which HI-QUALITY executed Promissory Note No. JB BDO 33/97 payable on 5 May 1997 and indorsed to JADEBANK UCPB Check No. 270144 issued by CRBC.

Boulevard Overpass in Mandaluyong, which it subcontracted to Hi-Quality Builders and Traders, Inc. (HI-QUALITY), a domestic corporation organized under the laws of the Philippines.

On 17 February 1997 JADEBANK released P350,000.00 for which HI-QUALITY executed Promissory Note No. JB BDO 45/97 payable on 5 May 1997 and indorsed to JADEBANK UCPB Check No. 270147 issued by CRBC.

On 17 October 1996 Helen Ambrosio, President of HI-QUALITY, executed a Continuing Suretyship in favor of Jade Progressive Savings and Mortgage Bank (JADEBANK) binding herself to pay the "obligations of the Debtor (Hi-Quality) arising from all credit accommodations extended by the Bank to the Debtor x x x x presently or hereafter owing to the Bank, as appears in theaccounts, books and records of the Bank whether direct or indirect x x x x"

Finally, on 21 February 1997 JADEBANK released P250,000.00 for which HI-QUALITY executed Promissory Note No. JB BDO 75/97 payable on 5 May 1997 and indorsed to JADEBANK UCPB Check No. 270551 issued by CRBC. All the promissory notes executed by HI-QUALITY provided for twenty-five percent (25%) interest per annum and a five percent (5%) penalty per month in case of default. The amount of each check corresponded to the amount released to HIQUALITY on the day the check was indorsed to JADEBANK.

On 10 January 1997, in consideration of a loan of P5,000,000.00, HI-QUALITY executed a Deed of Assignment in favor of JADEBANK with the approval of CRBC where it assigned to JADEBANK "(a)ll monthly accomplishment billings, the sums of money, credit, or receivables assigned, be in the position (sic) of or due or to be due from China Road and Bridge Corporation, arising from the subcontract agreement in the construction of the EDSA/Shaw Blvd. Overpass Project x x x x"[1]

When JADEBANK deposited the aforementioned checks for payment, they were returned unpaid. The checks drawn on UCPB were dishonored due to "Stop Payment" orders from the drawer. The ALLIEDBANK checks were dishonored because the account was closed on 19 February 1997. The SECURITYBANK check was dishonored because the account had been closed since the second quarter of 1996.

On 17 January 1997 JADEBANK released to HIQUALITY P500,000.00 as part of the loan both parties earlier contracted. As security for the loan, HI-QUALITY executed Promissory Note No. JB BDO 15/97 promising to pay the loan on 3 April 1997. It also indorsed to JADEBANK Check No. 0000270127 issued by CRBC on 31 March 1997 covering the amount released, drawn on United Coconut Planters Bank (UCPB), Mandaluyong Branch.

On 9 June 1997, after repeated demands for payment which were unheeded, JADEBANK filed a case for collection against HI-QUALITY, Helen Ambrosio and CRBC, with an application for a writ of attachment against their properties. The Complaint included as cause of action the first four (4) checks indorsed by HI-QUALITY to JADEBANK and alleging among others that the defendants conspired to commit fraudulent acts in order to induce JADEBANK to grant the loans to HI-QUALITY. Firstly, CRBC issued to HI-QUALITY the UCPB check for P500,000.00 dated 31 March 1997 without any intention of honoring the check. JADEBANK alleged that CRBC knew fully well that the check was to be used by HI-QUALITY as security for the loan from JADEBANK. However, in violation of the Deed of Assignment, CRBC gave to HI-QUALITY sums of money without notice to or the consent of JADEBANK, thereby releasing funds

On 7 April 1997 JADEBANK released P250,000.00 for which HIQUALITY executed Promissory Note No. JB BDO 181/97 payable on 18 April 1997 and indorsed to JADEBANK Check No. 0000126132 issued by Helen Ambrosio on 18 April 1997 covering the amount released, drawn on Allied Banking Corporation, Shaw Boulevard Branch (ALLIEDBANK). On 21 March 1997 JADEBANK released P250,000.00 for which HI-QUALITY executed Promissory Note No. JB BDO 150/97 payable on 5 May 1997 and indorsed to JADEBANK

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supposedly already assigned to JADEBANK for the payment of HI-QUALITY's loans. Secondly, Helen Ambrosio, as President of HI-QUALITY, issued the checks drawn on SECURITYBANK and ALLIEDBANK after her accounts with these banks were closed, thus revealing a fraudulent intention not to honor her obligations even from their inception. She also executed the Suretyship Agreement in favor of JADEBANK without any intention of fulfilling her obligations.

Court of Appeals a Motion to Dismiss Appeal asserting that"the determination of whether the ultimate facts in a Complaint state a cause of action against the defendant is a pure question of law and does not involve any question of fact."[4]According to CRBC, the proper mode of appeal was not by way of ordinary appeal under Rule 41 but rather by way of a petition for review on certiorari under Rule 45. On 29 October 1998 the Court of Appeals (Special Seventh Division) issued the assailed Resolution denying CRBC's Motion to Dismiss, finding the appeal involved both questions of fact and of law. On 5 February 1999 the appellate court denied reconsideration; hence, this petition.

On 17 June 1997 the trial court[2] issued a Writ of Preliminary Attachment. On the same day, a Notice of Garnishment was served on UCPB garnishing all the moneys of CRBC in the bank. On 23 June 1997 CRBC filed a Motion for Discharge of Attachment. On the same day a Notice of Levy on Attachment was also served on CRBC. On 27 June 1997 the preliminary attachment was discharged after CRBC posted a counter-bond in the amount of P1,962,458.00. On 30 June 1997 JADEBANK filed an Amended Complaint to include the loans contracted on 7, 17 and 21 February 1997 increasing the total amount collectible to P3,437,424.42.

The only issue that needs to be resolved is whether the Court of Appeals committed grave abuse of discretion amounting to lack or excess of jurisdiction in denying petitioner's Motion to Dismiss. In resolving the issue it is necessary to determine only if private respondent's appeal to the Court of Appeals involved purely questions of law, in which case the proper mode of appeal would be a petition for review on certiorari to the Supreme Court under Rule 45;[5] or questions of fact or mixed questions of fact and law, in which case the proper mode would be by ordinary appeal under Rule 41.

On 28 July 1997 CRBC filed a Motion to Dismiss the 30 May 1997 Complaint on the ground of lack of cause of action. According to CRBC, the Deed of Assignment upon which JADEBANK based its cause of action against CRBC, was subject to the Sub-Contracting Agreement between CRBC and HI-QUALITY -

A question of law exists when there is doubt or controversy as to what the law is on a certain state of facts, and there is a question of fact when the doubt or difference arises as to the truth or falsehood of facts,[6] or when the query necessarily invites calibration of the whole evidence considering mainly the credibility of witnesses, existence and relevancy of specific surrounding circumstances, their relation to each other and to the whole and probabilities of the situation.[7] Ordinarily, the determination of whether an appeal involves only questions of law or both questions of law and fact is best left to the appellate court,[8] and all doubts as to the correctness of such conclusions will be resolved in favor of the Court of Appeals.[9]However, in the instant case, we find that there was grave abuse of discretion on the part of respondent Court of Appeals, hence, we grant the petition.

Under these circumstances, until such time as Hi-Quality is able to perform its obligations pursuant to the Sub-Contract Agreement thereby entitling it to payment for services rendered, China Road has no liability whatsoever in HiQuality's favor. Corollarily, until this happens, Hi-Quality has nothing to assign in favor of the plaintiff in the form of collectibles/receivables from China Road pursuant to the Deed of Assignment.[3] CRBC also denied that the issuance of the checks to HIQUALITY was for the purpose of facilitating the loans in favor of the latter, claiming that the checks were for the use of HIQUALITY alone, and not for any other purpose. In support of this claim, CRBC asserted that "(n)owhere on the face of the said check does the name of the plaintiff appear. Neither is it accompanied by any document whatsoever specifically evincing that the same was intended for delivery to plaintiff." CRBC also denied that it had been releasing money to HI-QUALITY, claiming that the latter had failed to comply with its obligations to CRBC.

The ground for dismissal invoked by petitioner is that the complaint of JADEBANK before the trial court stated no cause of action, under Sec. 1, par. (g), Rule 16, the 1997 Revised Rules of Civil Procedure. It is well settled that in a motion to dismiss based on lack of cause of action, the issue is passed upon on the basis of the allegations assuming them to be true.[10] The court does not inquire into the truth of the allegations and declare them to be false, otherwise it would be a procedural error and a denial of due process to the plaintiff. Only the statements in the complaint may be properly considered, and the court cannot take cognizance of external facts or hold preliminary hearings to ascertain their existence.[11] To put it simply, the test for determining whether a complaint states or

On 27 August 1997 the lower court granted the Motion to Dismiss the complaint with respect to CRBC. Its Motion for Reconsideration having been denied on 31 June 1997 JADEBANK appealed to the Court of Appeals under Rule 41 of the Rules of Court. On 12 August 1997 CRBC filed with the

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does not state a cause of action against the defendants is whether or not, admitting hypothetically the truth of the allegations of fact made in the complaint, the judge may validly grant the relief demanded in the complaint.[12]

complaint. And it found that even assuming that all the allegations of JADEBANK were true, it would still not be able to collect from CRBC because based on the same allegations, CRBC did not have any duty whatsoever to remit money to JADEBANK. Whether this conclusion is correct or not is a totally separate issue and is not before us for review at this time. What is evident, however, is that such a conclusion could only raise pure questions of law. It is perplexing to this Court then why respondent appellate court found that there were questions of fact to be answered in the appeal. It taxes the imagination how a question of fact can arise from a controversy that does not involve findings of fact.

In a motion to dismiss based on failure to state a cause of action, there cannot be any question of fact or "doubt or difference as to the truth or falsehood of facts," simply because there are no findings of fact in the first place. What the trial court merely does is to apply the law to the facts as alleged in the complaint, assuming such allegations to be true. It follows then that any appeal therefrom could only raise questions of law or "doubt or controversy as to what the law is on a certain state of facts." Therefore, a decision dismissing a complaint based on failure to state a cause of action necessarily precludes a review of the same decision on questions of fact. One is the legal and logical opposite of the other.

JADEBANK in its Appellant's Brief raised the following questions, which it erroneously designated as questions of fact, in an attempt to place its appeal within the jurisdiction of the Court of Appeals: 4.1.1. Whether or not the amended complaint together with the Annexes attached and forming an integral part thereof, states a sufficient cause of action against the defendantappellee;

In resolving the Motion to Dismiss, the lower court ruled - As alleged in the complaint, the plaintiff granted a loan to HiQuality Builders and Traders, Inc. (HQ); that as security of the payment of the loan, HQ assigned all its receivables from China; that China gave HQ a check for P5,000,000.00 payable to HQ; that in turn HQ gave the check to plaintiff; and that plaintiff deposited said check which was returned for the reason: "stop payment".

4.1.2. Whether or not there was an unwarranted reversal of the Honorable Regional Trial Court's Orders stating that the complaint states a sufficient cause of action; 4.2.1. Whether or not the Motion to Dismiss the complaint can be considered also as a Motion to Dismiss the Amended Complaint.

It is clear from the foregoing that there is no cause of action of plaintiff against China. While there is a "delict" or "wrong" committed, it was not committed against the rights of plaintiff because it alleged none but against HQ. Therefore, the one that has a cause of action against China is HQ.[13]

We fail to see how these issues raised by JADEBANK could be properly denominated questions of fact. The test of whether a question is one of law or of fact is not the appellation given to such question by the party raising the same; rather, it is whether the appellate court can determine the issue raised without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise, it is a question of fact.[16] Applying the test to the instant case, it is clear that private respondent raises pure questions of law which are not proper in an ordinary appeal under Rule 41, but should be raised by way of a petition for review on certiorari under Rule 45.

The Motion for Reconsideration filed by JADEBANK was resolved by the trial court thuswise - (T)he plaintiff has a right in the collection of the loan it granted to Hi-Quality Builders but there is no corresponding allegation the (sic) China Road has an obligation to pay such loan. All that is alleged is that China Road agreed that Hi-Quality Builders will assign its receivables from China Road and for that purpose appointed plaintiff as Attorney-in-fact. Had there been allegation to the effect that plaintiff, as Attorney-in-fact, of Hi-Quality Builders collected from China Road and that China Road refused to deliver the money due Hi-Quality Builders then a cause of action would have arisen.[14]

We agree with private respondent that in a motion to dismiss due to failure to state a cause of action, the trial court can consider all the pleadings filed, including annexes, motions and the evidence on record.[17] However in so doing, the trial court does not rule on the truth or falsity of such documents. It merely includes such documents in the hypothetical admission. Any review of a finding of lack of cause of action based on these documents would not involve a calibration of the probative value of such pieces of evidence but would only limit itself to the inquiry of whether the law was properly applied given the facts and these supporting

It is clear from the foregoing that the lower court did not make any finding of fact; rather, as was proper in a motion to dismiss for this particular ground, it merely assumed the plaintiff's allegations to be true. It did not evaluate the evidence of the plaintiff nor did it pass upon the truth or falsity of the plaintiff's allegations. What the lower court did was simply to apply the law as to the facts borne out by the allegations in the

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documents. Therefore, what would inevitably arise from such a review are pure questions of law, and not questions of fact. It is apparent that JADEBANK, as well as respondent appellate court, confused situations where the complaint does not allege a sufficient cause of action and where the evidence does not sustain the cause of action alleged. The first is raised in a motion to dismiss under Rule 16 before a responsive pleading is filed and can be determined only from the allegations in the initiatory pleading and not from evidentiary or other matters aliunde. The second is raised in a demurrer to evidence under Rule 33 after the plaintiff has rested his case and can be resolved only on the basis of the evidence he has presented in support of his claim.[18] The first does not concern itself with the truth and falsity of the allegations while the second arises precisely because the judge has determined the truth and falsity of the allegations and has found the evidence wanting. This is not to say that we automatically agree with the trial court that private respondent failed to allege a sufficient cause of action. However, the question of whether JADEBANK failed to state a sufficient cause of action is not before us for review; it may only be resolved when the appropriate mode of review is availed of JADEBANK's appeal having been improperly brought before the Court of Appeals, it should be dismissed outright pursuant to Sec. 2 of Rule 50 of the Rules of Court, which provides: Sec. 2. Dismissal of improper appeal to the Court of Appeals. -- An appeal under Rule 41 taken from the Regional Trial Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely of law not being reviewable by the said court x x x x WHEREFORE, the petition for certiorari is GRANTED. The assailed Resolutions of the Court of Appeals dated 29 October 1998 and 5 February 1999 are REVERSED and SET ASIDE for having been issued with grave abuse of discretion amounting to lack or excess of jurisdiction.

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