Remedial Law Cases (3.21).docx

[G.R. No. 132655. August 11, 1998] BF CORPORATION, petitioner, vs. EDSA SHANGRI-LA HOTEL and RESORT, INC., RUFO B. COLAYCO, RUFINO T. SAMANIEGO, CYNTHIADEL CASTILLO, KUOK KHOON CHEN, and KUOK KHOON TSEN, respondents. DECISION MENDOZA, J.: On July 26, 1993, petitioner BF Corporation brought suit to collect from respondents EDSA Shangri-La Hotel and Resort, Inc. (ESHRI), Rufo B. Colayco, Rufino T. Samaniego, Cynthia del Castillo, Kuok Khoon Chen, and Kuok Khoon Tsen the sum of P31,791,284.72, plus damages. The amount represents the alleged liability of respondents to petitioner for the construction of the EDSA Shangri-La Hotel on St. Francis Street, Mandaluyong City. The case was assigned to Branch 162 of the Regional Trial Court, Pasig City. After trial, the said court rendered judgment ordering respondents to pay petitioner P24,780,490.00 for unpaid construction work accomplishments under petitioners Progress Billings Nos. 14 to 19; to return to petitioner the retention sum of P5,810,000.00, with legal interest on both amounts; and to pay petitioner the sums of P1,000,000.00 as moral damages, P1,000,000.00 as exemplary damages, P1,000,000.00 as attorneys fees, and the costs. Private respondents moved for a reconsideration of the decision. However, their motion was denied whereupon they appealed. Pending disposition of the appeal, petitioner filed a motion for the execution of the decision in its favor which the trial court granted in its order dated January 21, 1997. Private respondents assailed the order of execution pending appeal in a petition for certiorari which they filed in the Court of Appeals. In due time, petitioner filed a Comment with Opposition to Preliminary Injunction. On March 7, 1997, the Court of Appeals issued a writ of preliminary injunction enjoining the trial court from carrying out its order of execution, upon the filing by respondents of a bond in the amount of P1 million.[1] In a supplemental resolution issued on the same day, the appellate court issued a writ of preliminary mandatory injunction ordering that: A. Respondent Judge and his branch sheriff acting under him LIFT all garnishments and levy made under the enjoined order of execution pending appeal. B. Said Sheriff desist from delivering to private respondent [herein petitioner] all his garnishments on petitioners bank deposits and, instead, immediately return the same to PNB, Shangri-la Plaza Branch. C. If the garnished deposits have been delivered to private respondent [herein petitioner], the latter should forthwith return them to petitioners [herein respondents] deposit accounts.[2] Petitioner moved for a reconsideration of the two resolutions. On June 30, 1997, the Court of Appeals rendered a decision [3] setting aside the trial courts order of execution pending appeal and denying petitioners motion for reconsideration of its two resolutions dated March 7, 1997. The appellate court held that the trial courts reason for ordering execution pending appeal, that (petitioners) viability as a building contractor is being threatened by (respondents) continued refusal to pay their obligations, did not justify such an order. The appellate court noted that Contrary to the ordinary run of things it is the prevailing party in the trial court who admits to be in financial straits and cites his threatened

insolvency, not that of [the] defendant, as a good reason for execution pending appeal. Normally, we would expect a losing defendants impending insolvency or dangerous tendency to dispose or dissipate his properties to frustrate future execution, as the logical, good reason for plaintiff to ask for advanced execution. In addition, the appellate court found that the order of execution pending appeal was not in the form of a special order as required by Rule 39, 2 of the Rules of Civil Procedure. Petitioner moved for reconsideration, but this motion was denied by the Court of Appeals in its resolution dated February 11, 1998.[4] Hence, this petition for review on certiorari. Petitioner contends: I THE COURT OF APPEALS GRAVELY ERRED WHEN IT HELD THAT PETITIONERS SERIOUS FINANCIAL DISTRESS AND URGENT NEED OF FUNDS WERE NOT GOOD REASON TO JUSTIFY EXECUTION PENDING APPEAL IN UTTER DISREGARD OF WELL-FOUNDED AND ESTABLISHED JURISPRUDENTIAL PRECEPTS. II THE COURT OF APPEALS ERRED WHEN IT HELD THAT THE LOWER COURTS WRIT OF EXECUTION PENDING APPEAL WAS DEFECTIVE FOR NOT HAVING COMPLIED WITH THE PRESCRIBED FORM CONSIDERING THAT SECTION 2 OF RULE 39 DOES NOT PRESCRIBE FORMAL REQUIREMENTS. III THE COURT OF APPEALS GRAVELY ERRED WHEN IT FAILED TO CONSIDER THAT OTHER GOOD REASONS WARRANTING EXECUTION PENDING APPEAL EXISTED IN THE CASE AT BAR, TO WIT: (A) THE APPEAL FROM THE TRIAL COURTS DECISION DATED 23 SEPTEMBER 1996 IS OBVIOUSLY FRIVOLOUS AND UNCONSCIONABLY DILATORY. (B) THE POSTING OF A BOND BY PRIVATE RESPONDENT IS AN ADDED JUSTIFICATION FOR EXECUTION PENDING APPEAL. IV THE COURT OF APPEALS ERRED IN ISSUING THE ASSAILED INJUNCTIONS CONSIDERING THAT BY DOING SO IT RESOLVED THE MERITS OF THE MAIN CASE WITHOUT AFFORDING THE PETITIONER DUE PROCESS OF LAW. V THE COURT OF APPEALS ERRED IN GRANTING RESPONDENTS MOTIONS FOR PRELIMINARY INJUNCTIONS WHEN PRIVATE RESPONDENTS WERE CLEARLY NOT ENTITLED TO SAID RELIEF. VI THE COURT OF APPEALS ERRED IN IMPROVIDENTLY ISSUING A PRELIMINARY MANDATORY INJUNCTION BASED ON A FORMALLY AND SUBSTANTIALLY DEFECTIVE MOTION. VII

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THE COURT OF APPEALS GRAVELY ERRED IN GRANTING THE PRELIMINARY INJUNCTIONS WITHOUT AFFORDING PETITIONER THE OPPORTUNITY TO BE HEARD THEREBY DENYING IT DUE PROCESS OF LAW. VIII THE COURT OF APPEALS GRAVELY ERRED IN ISSUING A MANDATORY INJUNCTION ORDERING THE RETURN OF GARNISHED FUNDS WHICH IS CLEARLY OUTSIDE THE PROVINCE OF AN INJUNCTION. Petitioner filed a supplemental petition to enjoin the trial court from enforcing the writ of execution it had issued pursuant to the decision of the Court of Appeals. The issue in this case is whether the Court of Appeals erred in setting aside the trial courts order granting execution pending appeal. We hold that it did not. First. Execution pending appeal is not to be granted except for good reason to be stated in a special order. For the general rule is that only judgments which have become final and executory may be executed.[5] In this case, the issuance of an order granting execution pending appeal is sought to be justified on the plea that the [r]espondents dilatory appeal and refusal to pay petitioner the amount justly due it had placed petitioner in actual and imminent danger of insolvency. The contention is without merit. As we recently held in Philippine Bank of Communications v. Court of Appeals:[6] It is significant to stress that private respondent Falcon is a juridical entity and not a natural person. Even assuming that it was indeed in financial distress and on the verge of facing civil or even criminal suits, the immediate execution of a judgment in its favor pending appeal cannot be justified as Falcons situation may not be likened to a case of a natural person who may be ill or may be of advanced age. Even the danger of extinction of the corporation will not per se justify a discretionary execution unless there are showings of other good reasons, such as for instance, impending insolvency of the adverse party or the appeal being patently dilatory. But even as to the latter reason, it was noted in Aquino vs. Santiago (161 SCRA 570 [1988]), that it is not for the trial judge to determine the merit of a decision he rendered as this is the role of the appellate court.Hence, it is not within competence of the trial court, in resolving a motion for execution pending appeal, to rule that the appeal is patently dilatory and rely on the same as its basis for finding good reasons to grant the motion. Only an appellate court can appreciate the dilatory intent of an appeal as an additional good reason in upholding an order for execution pending appeal which may have been issued by the trial court for other good reasons, or in cases where the motion for execution pending appeal is filed with the appellate court in accordance with Section 2, paragraph (a), Rule 39 of the 1997 Rules of Court. Nor does the fact that petitioner filed a bond in the amount of P35 million justify the grant of execution pending appeal. We have held in a number of cases [7] that the posting of a bond to answer for damages is not alone a sufficient reason for ordering execution pending appeal. Otherwise, execution pending appeal could be obtained through the mere filing of such a bond. Second. The foregoing reason justifies the issuance by the Court of Appeals of writs of preliminary prohibitory and mandatory injunction against the trial court, the sheriff, and petitioner.

Petitioner assails the issuance of the writs, claiming that the same had been issued on the basis of motions which had no verification and without affording it due process. The motions referred to by petitioner merely sought the expeditious resolution of respondents application for a writ of preliminary injunction as contained in their verifiedpetition for certiorari. This petition contained the necessary factual averments justifying the grant of injunction. Nor was petitioner denied the right to be heard before the writs were issued. Petitioner filed a comment which controverted the allegations of the petition, including its prayer for a writ of preliminary injunction. There is, therefore, no basis for its claim that it was denied due process. Be that as it may, this question became moot in view of the appellate courts decision rendered on June 30, 1997, permanently enjoining the trial court from enforcing its order of execution pending appeal and ordering petitioner to return the amounts paid to it by virtue of the garnishment of respondents bank deposits. Petitioner argues that, instead of being required to make restitution, the bond for P35 million, which it had posted, should have been proceeded against. It cites the case of Engineering Construction Inc. v. National Power Corp.,[8] where this Court, instead of ordering the judgment creditor to return funds that had been improperly garnished pursuant to an order of execution pending appeal, directed the judgment debtor to proceed against the bond filed by the judgment creditor. We find this contention correct. Rule 39, 5 of the Rules of Civil Procedure provides that Where the executed judgment is reversed totally or partially, or annulled, on appeal or otherwise, the trial court may, on motion, issue such orders of restitution or reparation of damages as equity and justice may warrant under the circumstances. As garnishment is a specie of attachment, [9] the procedure provided in Rule 57, 20 of the Rules of Court for the recovery of damages against a bond in case of irregular attachment should be applied. This means that notice should be given to petitioners surety and that there should be a hearing before it is held liable on its bond.[10] Third. In its supplemental petition, petitioner contends that the propriety of the issuance of the writ of execution pending appeal is an ancillary issue which should have been raised by respondents in their appeal from the trial courts decision on the merits instead of in a separate petition for certiorari. The contention is also without merit. Certiorari lies against an order granting execution pending appeal where the same is not founded upon good reasons. Appeal is not a speedy and adequate remedy that can relieve the losing party from the immediate effects of an improvident execution pending appeal.[11] WHEREFORE, the decision of the Court of Appeals dated June 30, 1997 and its resolutions dated March 7, 1997 are AFFIRMED with the MODIFICATION that recovery of the garnished deposits delivered to petitioner shall be against the bond of petitioner BF Corporation. SO ORDERED

G.R. No. 100626 November 29, 1991 CITY OF MANILA, represented by Mayor Gemiliano C. Lopez, Jr., petitioner, vs. HON. COURT OF APPEALS and THE ARMY & NAVY CLUB, INC., respondents. The Chief Legal Officer for petitioner.

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Ramon A. Gonzales for private respondent.

the entire record of the proceedings had in the court of origin and such memoranda and/or briefs as may be submitted by the parties or required by the Regional Trial Courts. The decision of the RTC in such cases shall be appealable by petition for review to the Intermediate Appellate Court which may give it due course only when the petition shows prima facie that the lower court has committed an error of fact or law that will warrant a reversal or modifications of the decision or judgment sought to be reviewed. (Emphasis supplied.) It is useful at this point to review the distinction between a "final" judgment and one which has become "final and executory." In PLDT Employees Union v. PLDT Free Telephone Workers Union, 6 the Court observed: . . . (A)n order or judgment is deemed final when it finally disposes of the pending action so that nothing more can be done with it in the trial court. In other words, a final order is that which gives an end to the litigation . . . when the order or judgment does not dispose of the case completely but leaves something to be done upon the merits, it is merely interlocutory. The case of Antonio v. Samonte 7 elaborated on this matter thus: A final order of judgment finally disposes of, adjudicates, or determines the rights, or some right or rights of the parties, either on the entire controversy or on some definite and separate branch thereof, and concludes them until it is reversed or set aside . . .Where no issue is left for future consideration, except the fact of compliance or non-compliance with the terms of the judgment or order, such judgment or order is final and appealable. By contrast, in Investments, Inc. v. Court of Appeals, 8 we declared: Now, a "final judgment" in the sense just described becomes final "upon expiration of the period to appeal therefrom if no appeal has been duly perfected" or, an appeal therefrom having been taken, the judgment of the appellate tribunal in turn becomes final and the records of the case are returned to the Court of origin. The "final" judgment is then correctly categorized as a "final and executory judgment" in respect to which, as the law explicitly provides, "execution shall issue as a matter of right." It bears stressing that only a final judgment or order, i.e., "a judgment or order that finally dispose of the action of proceeding" can become final and executory. A judgment becomes "final and executory" by operation of law. Finality of judgment becomes a fact upon the lapse of the reglementary period to appeal if no appeal is perfected. In such a situation, the prevailing party is entitled to a writ of execution, and issuance thereof is a ministerial duty of the court. Both RA 6031 and BP 129 provide that decisions of the regional trial court in its appellate capacity may be elevated to the Court of Appeals in a petition for review. In effect, both laws recognize that such judgments are "final" in the sense that they finally dispose of, adjudicate, or determine the rights of the parties in the case. But such judgments are not yet "final and executory" pending the expiration of the reglementary period for appeal. During that period, execution of the judgment cannot yet be demanded by the winning party as a matter of right. In the present case, the private respondent had up to June 25, 1991, to appeal the decision of the regional trial court. The motion for execution was filed by the petitioner on June 10, 1991, before the expiration of the said reglementary period. As the decision had not yet become final and executory on that date, the motion was

CRUZ, J.: Respondent Court of Appeals is faulted in this action for certiorari for having set aside the order of execution dated June 10, 1991, and the writ of execution issued by Judge Wilfredo Reyes of the Regional Trial Court of Manila in Civil Case No. 9156335. This was a complaint for unlawful detainer filed by the City of Manila against private respondent Army and Navy Club for violation of the lease agreement between them over a parcel of land on Roxas Boulevard in the said city. A summary judgment in favor of the petitioner was rendered by the Metropolitan Trial Court of Manila 1 and seasonably elevated to the Regional Trial Court. To stay its execution, ANC filed a supersedes bond in the amount of P2,700,000.00, which was approved by Judge Reyes. 2 He subsequently affirmed the appealed judgment on June 7, 1991. 3 On June 10, 1991, the petitioner filed an ex parte motion for execution on the ground that the judgment had already become final and executory under RA 6031. Judge Reyes granted the motion the same day 4

and at 4:00 o'clock that afternoon the writ of execution was served on ANC. ANC moved to quash the writ on June 11, 1991, but hours later, sensing that the motion could not be acted upon, filed a petition for certiorari and prohibition with the Court of Appeals. On July 3, 1991, that court issued the questioned decision, 5 prompting the filing of the present petition for certiorari. The petitioner assails the action of the respondent court and contends that decisions of the regional trial court in cases exclusively cognizable by inferior courts and are final and executory under RA 6031. Thus: Sec. 1. . . . In cases falling under the exclusive original jurisdiction of municipal and city courts which are appealed to the courts of first instance, the decision of the latter shall be final: Provided, That the findings of facts contained in said decision are supported by substantial evidence as basis thereof, and the conclusions are not clearly against the law and jurisprudence; in cases falling under the concurrent jurisdictions of the municipal and city courts with the courts of first instance, the appeal shall be made directly to the Court of Appeals whose decision shall be final: Provided, however, that the Supreme Court in its direction may, in any case involving a question of law, upon petition of the party aggrieved by the decision and under rules and conditions that it may prescribe, require by certiorari that the case be certified to it for review and determination, as if the case had been brought before it on appeal. (Emphasis supplied.) The respondents argue on the other hand that under BP 129, decisions of the regional trial court in cases originating from and within the exclusive jurisdiction of the metropolitan or municipal trial courts are not final but subject to appeal in a petition for review to the Court of Appeals. Such decisions cannot be executed where the period of time for the defendant to perfect his appeal has not yet expired. Thus: Sec. 22. (BP 129) — Appellate jurisdiction. — Regional Trial Courts shall exercise appellate jurisdiction over all cases decided by Metropolitan Trial Courts, Municipal Trial Courts and Municipal Circuit Trial Courts in their respective territorial jurisdiction. Such cases shall be decided on the basis of

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the inadequacy — not the mere absence of all other legal remedies and the danger of failure of justice without merit that usually

premature and should therefore not have been granted. Contrary to the petitioner's contention, what the trial court authorized was an execution pending appeal. While it is true that execution pending appeal is allowed under Rule 39, Sec. 2, of the Rules of Court, this provision must be strictly construed, being an exception to the general rule. The reason allowing this kind of execution must be of such urgency as to outweigh the injury or damage of the losing party should it secure a reversal of the judgment on appeal. Absent any such justification, the order of execution must be struck down as flawed with grave abuse of discretion. 9

determines the propriety ofcertiorari. 13

While appeal is normally employed to question an order or writ which varies the terms of the decision being executed, it is nevertheless not the sole and exclusive remedy. The special civil action of certiorari and prohibition under Rule 65 was available to the private respondent on the allegation that the regional trial court, in issuing the writ of execution, committed grave abuse of discretion and acted beyond its jurisdiction and that the ordinary remedy of appeal was inadequate. The last question to be resolved is, assuming that the decision of the regional trial court had already become "final and executory," could the said court order its execution?

We see no such justification in the case before us. It is worth remarking that as the case was not tried under the Rule on Summary procedure, the writ of execution did not even fall under the following

The rule is that if the judgment of the metropolitan trial court is appealed to the regional trial court and the decision of the latter is itself elevated to

Section 18 thereof :

the Court of Appeals, whose decision thereafter became final, the case should be remanded through the regional trial court to the metropolitan trial

d) Sec. 18. Appeal. — The judgment or final order, including that rendered under Section 5 hereof, shall be appealable to the

court for execution. 14

The only exception is the execution pending appeal, which can be issued by the regional trial court under Sec. 8 of Rule 70 or the Court of Appeals or the Supreme Court under Sec. 10 of the same Rule. As previously observed, the petitioner has shown no weighty justification for the application of the exception. Hence, the respondent court committed no error in reversing the Regional Trial Court of Manila and annulling the writ of execution issued by it on June 10, 1991, pending appeal of its decision. ACCORDINGLY, the petition is DISMISSED, and the challenged decision of the Court of Appeals is AFFIRMED intoto. No costs. SO ORDERED.

appropriate regional trial court which shall decide the same on the basis of the records, in accordance with Section 22 of Batas Pambansa Blg. 129. The decision of the regional trial court in such civil cases shall be immediately executory.

To stay the execution, a supersedes bond is necessary except where one has already been filed in the lower court. This bond continues to be effective if the judgment of the regional trial court is appealed. But during the pendency of the appeal, the defendant-appellant must continue to depositing with the appellate court the payments required in the appealed judgment. The rentals accruing during the pendency of the appeal must be deposited on or before the date stipulated, if there is one, and in the absence thereof, on or before the dates provided for in Sec. 8 of Rule 70. Failure to make such deposits or payments is ground for execution of the judgment. 10 Since the private respondent in the case at bar has filed a supersedeas bond and the stipulated rental is yearly, 11

execution may issue only when it fails to make the yearly deposit of the rental, and after notice and hearing. Such default has not yet been established. The Court notes with disapproval the arbitrary manner in which Sheriff Dominador Cacpal and Deputy Sheriff Reynaldo Cordero acted in delivering possession of the leased premises to the petitioner. The evidence shows that they enforced the writ of execution on the same date they received it, forcibly taking out movables from the said premises, including chandeliers, furniture and furnishings, music organs, stereo components, lighting fixtures and computers. They turned off the water, cut off the electricity and disconnected the telephones. They also unreasonably prevented ANC members from entering the premises to get their personal belongings. Cacpal and Cordero are hereby sternly reprimanded and warned that a repetition of similar arbitrariness will be dealt with more severely. Their conduct was a clear violation of the requirement that: Under the Rules of Court the immediate enforcement of a writ of ejectment execution is carried out by giving the defendant notice of such writ, and making a demand that defendants comply therewith within a reasonable period, normally from three (3) to five (5) days, and it is only after such period that the sheriff enforces the writ by the bodily removal of the defendant and his personal belonging. 12

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. 89431 April 25, 1990 ERIBERTO G. VALENCIA, petitioner, vs. HON. COURT OF APPEALS, HON. CARLOS C. OFILADA, Presiding Judge, Regional Trial Court, Bulacan, Branch XL, Third Judicial Region, Deputy Sheriff PABLO R. GLORIOSO, MIGUEL BUNYE and RICARDO BAGTAS, respondents. Gamaliel P. Magsaysay for petitioner. Benjamin Abalos Law Office for private respondents.

REGALADO, J.: For review is the resolution of the Court of Appeals, 1 promulgated on June 20, 1989 in CA-G.R. SP No. 17374, which dismissed the petition for certiorari, prohibition and mandamus filed by petitioner assailing the order of respondent judge granting a writ of execution pending appeal, and the resolution of said respondent court, dated August 9, 1989, denying petitioner's motion for reconsideration of the dismissal. The record shows that on July 6, 1984, petitioner filed Civil Case No. 7554-M of the Regional Trial Court, Branch XL at Malolos, Bulacan, for the rescission of a lease contract over a 24 hectare fishpond in Paombong, Bulacan, with a prayer for a writ of preliminary mandatory injunction against private respondents. 2 Private respondents filed an answer with a counterclaim for damages.

On the issue of the propriety of a special civil action for certiorari to assail an order of execution pending appeal, this Court has held that —

. . . Although Sec. 1, Rule 66 of the Rules of Court provides that the special civil action of certiorari may only be invoked when "there is no appeal, nor any plain, speedy and adequate remedy in the (ordinary) course of law" this rule is not without exception. The availability of the ordinary course of appeal does not constitute sufficient ground to prevent a party from making use of the extraordinary remedy of certiorari where the appeal is not an adequate remedy or equally beneficial, speedy and sufficient. It is

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During the pendency of the case, as found by the trial court, the lease contract expired and the defendants therein peacefully surrendered the fishpond to therein plaintiff. Consequently, in its decision dated November 29, 1988, the court a quo declared that the plaintiff's prayer for rescission of contract had become moot and academic and the only remaining issue for adjudication was the matter of damages claimed by the defendants. On that score, the trial court awarded P100,000.00 as moral damages and P50,000.00 as exemplary damages to each defendant and further ordered plaintiff to pay P30,000.00 as attorney's fees, aside from the costs of suit. 3 Petitioner claims that defendant Bagtas acknowledged in writing his receipt of a copy of said decision on January 3, 1989. On the other hand, petitioner received a copy of the decision on January 10, 1989, and filed a notice of appeal on January 16, 1989. 4 On the same day, respondent judge issued an order that said notice of appeal be "given due course" and directing that the records of the case be forwarded to the Court of Appeals. 5 On January 17, 1989, private respondents filed a motion for execution pending appeal, alleging that: 2. Under Section 2 of Rule 39 of the Rules of Court a writ of execution may be issued to enforce a judgment before the expiration of the period to appeal upon showing good reasons. In the cases of Hacienda Navarro, Inc. vs. Labrador, et al., 65 Phil. 536; The People's Bank and Trust Company vs. San Juan, et al., L-7692, April 27, 1955; and Rodriguez vs. Court of Appeals, May 23, 1953, it has already been held that the filing of the bond by the successful party is a good reason for ordering execution. (Cited in Moran, Rules of Court, Volume 2, 1979 edition, Page 256) 3. Pursuant to said Section 2 of Rule 39 and the jurisprudence on the matter, defendant is now moving that a writ of execution be issued pending appeal to enforce judgment of this Honorable Court and for this purpose hereby offers to post a bond in such amount that this Honorable Court may deem adequate to answer for all damages that the plaintiff may suffer by reason of the execution prayed for. 6 On March 6, 1989, respondent judge, over the opposition filed by herein petitioner, issued an order 7 granting the motion for execution pending appeal, the defendants having filed a bond in the amount of P330,000.00 posted by the Domestic Insurance Company of the Philippines. It also granted a period up to April 27, 1989 8 within which the plaintiff may "file a counterbond to stay the implementation of the Writ of Execution to be issued." Petitioner's motion for reconsideration thereof was denied by the trial court in its order dated April 6, 1989, on the ground that "an offer of a bond for immediate execution of judgment is a good ground for execution pending appeal" and "execution pending appeal may be granted as long as movant files a good and sufficient surety." 9 On April 10, 1989, a writ of execution pending appeal was issued by the trial court. 10 Petitioner then filed a petition for certiorari, prohibition and mandamus with the Court of Appeals on the following grounds reproduced in the decision of said respondent court, to wit: THAT THE RESPONDENT JUDGE, UPON THE PERFECTION OF THE APPEAL FROM THE DECISION RENDERED ON NOVEMBER 29, 1988 IN CIVIL CASE NO. 7554-M, A COPY THEREOF HAVING BEEN RECEIVED BY BUNYE AND BAGTAS ON JANUARY 3, 1989, AS INDICATED ON THE

RECORDS OF SAID CASE, REGIONAL TRIAL COURT BULACAN BRANCH XV (15), THIRD JUDICIAL REGION, LOST JURISDICTION OVER THE CASE (AQUINO V. SANTIAGO, G.R. NO. 56362, 28 MAY 1988) AND ACCORDINGLY, NO LONGER HAD ANY JURISDICTION TO ENTERTAIN BUNYE'S AND BAGTAS' MOTION FOR EXECUTION PENDING APPEAL, LET ALONE TO ISSUE A WRIT OF EXECUTION. CONSIDERING THE EXPRESS PROVISIONS OF THE RULE GOVERNING EXECUTION PENDING APPEAL IN RELATION TO THE SETTLED DECISIONAL LAW DEFINING THE ESSENTIAL REQUISITES, STATING THAT MERE FILING OF A BOND DOES NOT SUFFICE ABSENT OF (sic) A SHOWING OF SUPERIOR CIRCUMSTANCES DEMANDING URGENCY WHICH WILL OUTWEIGH THE INJURY OR DAMAGES SHOULD THE LOSING PARTY SECURE A REVERSAL OF THE JUDGMENT, AND RULING THAT A TRIAL COURT EXCEEDS THE LIMITS OF ITS JURISDICTION WHERE IT ORDERS ADVANCE OF (sic) EXECUTION OF CONSEQUENTIAL DAMAGES, EXEMPLARY DAMAGES AND ATTORNEY'S FEES. INSTEAD, RESPONDENT JUDGMENT (sic) SHOULD HAVE IMPLEMENTED HIS ORDER GIVING DUE COURSE TO VALENCIA'S APPEAL AND DIRECTING THE RECORDS OF CIVIL CASE NO. 7554-M FORWARDED TO THIS COURT. 11 As stated at the outset, respondent Court of Appeals dismissed said petition and refused to reconsider such dismissal, eventuating in petitioner's appeal to us. In our resolution of August 28, 1989, we issued a temporary restraining order against respondents. We are not persuaded by the first and third grounds invoked by petitioner. Under the present procedure, an appeal is perfected upon the expiration of the last day to appeal by any party. 12 It is not perfected on the date the notice of appeal was filed. 13 In the present case, the defendants had up to January 18, 1989 within which to appeal and the plaintiff had up to January 25, 1989. The motion for execution was filed by defendants on January 17, 1989, before the expiration of the last day to appeal by any of the parties. The fact that plaintiff filed a notice of appeal on January 16, 1989 did not, as already stated, result in the perfection of the appeal. Despite plaintiff's having filed his notice of appeal, defendants, had they been so minded, could still have availed of the right, up to their last day to appeal which was January 18, 1989, to also file their notice of appeal or to file a motion for new trial or to move for execution as in fact they did, since plaintiff s appeal had not yet been perfected. That respondent judge gave "due course" to plaintiffs notice of appeal, on the same date when it was filed on January 16, 1989, is inconsequential. Both under the former and present procedural governance on appeals, a notice of appeal does not require the approval of the trial court, 14 and its act of giving "due course" thereto, or seeming approval thereof, does not affect the rule as to when an appeal is deemed perfected. Petitioner's second ground, however, commends itself as a meritorious submission. It is concordant with our present doctrinal pronouncements and must be sustained. Conformably with Section 2, Rule 39 of the Rules of Court, in order that there may be a discretionary issuance of a writ of execution pending appeal the following requisites must be satisfied: (a) There must be a motion by the prevailing party with notice to the

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adverse party; (b) There must be a good reason for issuing the writ of execution; and (c) The good reason must be stated in a special order. 15 In the case at bar, the ground relied upon by the trial court in allowing the immediate execution, as stated in its order of March 20, 1989, is the filing of a bond by private respondents. The rule is now settled that the mere filing of a bond by the successful party is not a good reason for ordering execution pending appeal, as clarified in Roxas vs.Court of Appeals, et al., 16 which we are constrained to quote for the benefit of the parties: It is not intended obviously that execution pending appeal shall issue as a matter of course. Good reasons, special, important, pressing reasons must exist to justify it; otherwise, instead of an instrument of solicitude and justice, it may well become a tool of oppression and inequity. But to consider the mere posting of a bond a "good reason" would precisely make immediate execution of a judgment pending appeal routinary, the rule rather than the exception. Judgments would be executed immediately, as a matter of course, once rendered, if all that the prevailing party needed to do was to post a bond to answer for the damages that might result therefrom. This is a situation, to repeat, neither contemplated nor intended by law. The exercise of the power to grant or deny immediate or advance execution is addressed to the sound discretion of the court. 17 However, the existence of good reasons is principally what confers such discretionary power. Absent any such good reason, the special order of execution must be struck down for having been issued with grave abuse of discretion. The Court has had the occasion to explain the importance of such requirement for good reasons, thus: . . . If the judgment is executed and, on appeal, the same is reversed, although there are provisions for restitution, oftentimes damages may arise which cannot be fully compensated. Accordingly, execution should be granted only when these considerations are clearly outweighed by superior circumstances demanding urgency and the provision contained in Rule 39, Section 2, requires a statement of these circumstances as a security for their existence. 18 The courts look with disfavor upon any attempt to execute a judgment which has not acquired a final character. Section 2 of Rule 39 which authorizes the discretionary execution of judgments, being an exception to the general rule, must be restrictively construed. It would not be a sound rule to allow indiscriminately the execution of a money judgment, even if there is a sufficient bond. Moreover, we likewise further reproduce what we said in Radio Communications of the Philippines, Inc. (RCPI) vs.Lantin, et al. 19 that awards for moral and exemplary damages cannot be the subject of execution pending appeal, under the following rationale: . . . The execution of any award for moral and exemplary damages is dependent on the outcome of the main case. Unlike actual damages for which the petitioners may clearly be held liable if they breach a specific contract and the amounts of which are fixed and certain, liabilities with respect to moral and exemplary damages as well as the exact amounts remain uncertain and indefinite pending resolution by the Intermediate Appellate Court and eventually the Supreme Court. The existence of the factual bases of these types of damages and their causal relation to the petitioners' act will have to be determined in the light of the assignments of

errors on appeal. It is possible that the petitioners, after all, while liable for actual damages may not be liable for moral and exemplary damages. Or as in some cases elevated to the Supreme Court, the awards may be reduced. Anent the issue of the propriety of a special civil action for certiorari to assail an order for execution pending appeal, we have ruled in Jaca et al. vs. Davao Lumber Company, et al. 20 that: . . . Although Section 1, Rule 65 of the Rules of Court provides that the special civil action of certiorari may only be invoked when "there is no appeal, nor any plain, speedy and adequate remedy in the (ordinary) course of law," this rule is not without exception. The availability of the ordinary course of appeal does not constitute sufficient ground to prevent a party from making use of the extraordinary remedy of certiorari where appeal is not an adequate remedy or equally beneficial, speedy and sufficient. It is the inadequacy — not the mere absence — of all other legal remedies and the danger of failure of justice without the writ that usually determines the propriety of certiorari. Thus, we held therein, and we so reiterate for purposes of the case at bar, that certiorari lies against an order granting execution pending appeal where the same is not founded upon good reasons. Also, the fact that the losing party had appealed from the judgment does not bar the certiorari action filed in respondent court as the appeal could not be an adequate remedy from such premature execution. That petitioner could have resorted to a supersedeas bond to prevent execution pending appeal, as suggested by the two lower courts, is not to be held against him. The filing of such bond does not entitle him to the suspension of execution as a matter of right. 21 It cannot, therefore, be categorically considered as a plain, speedy and adequate remedy. Hence, no rule requires a losing party so circumstances to adopt such remedy in lieu or before availment of other remedial options at hand. Furthermore, a rational interpretation of Section 3, Rule 39 should be that the requirement for a supersedeas bond presupposes that the case presents a presumptively valid occasion for discretionary execution. Otherwise, even if no good reason exists to warrant advance execution, the prevailing party could unjustly compel the losing party to post a supersedeas bond through the simple expedient of filing a motion for, and the trial court improvidently granting, a writ of execution pending appeal although the situation is violative of Section 2, Rule 39. This could not have been the intendment of the rule, hence we give our imprimatur to the propriety of petitioner's action for certiorari in respondent court. WHEREFORE, the petition is granted and the assailed resolutions of respondent Court of Appeals are hereby REVERSED and SET ASIDE. The writ of execution issued by the trial court pursuant to its order of March 20, 1989 is hereby ANNULLED. The temporary restraining order heretofore issued against the said order and writ is hereby made permanent. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

6

G.R. No. 172149 February 8, 2010 SESSION DELIGHTS ICE CREAM AND FAST FOODS, Petitioner, vs. THE HON. COURT OF APPEALS (Sixth Division), HON. NATIONAL LABOR RELATIONS COMMISSION (Second Division) and ADONIS ARMENIO M. FLORA, Respondents. DECISION BRION, J.: We rule on the petition for review on certiorari assailing the decision1 and resolution2 of the Court of Appeals3 (CA) in CA-G.R. SP No. 89326. These CA rulings dismissed the petition for certiorari the petitioner – Session Delights Ice Cream and Fast Foods (petitioner) – filed to challenge the resolutions4 of the Second Division of the National Labor Relations Commission5 (NLRC) that in turn affirmed the order6 of the Labor Arbiter7 granting a re-computation of the monetary awards in favor of the private respondent Adonis Armenio M. Flora (private respondent). The Facts The private respondent filed against the petitioner a complaint for illegal dismissal, entitled "Adonis Armenio M. Flora, Complainant versus Session Delights Ice Cream & Fast Foods, et. al, Private respondents," docketed as NLRC Case No. RAB-CAR 090507-00. The labor arbiter decided the complaint on February 8, 2001, finding that the petitioner illegally dismissed the private respondent. The decision awarded the private respondent backwages, separation pay in lieu of reinstatement, indemnity, and attorney’s fees, under a computation that the decision itself outlined in its dispositive portion. The dispositive portion reads: WHEREFORE, judgment is hereby rendered declaring private respondent guilty of illegal dismissal. Accordingly, private respondent SESSION DELIGHTS is ordered to pay complainant the following: Backwages: a) ₱170.00 x 154 days ₱ 26,180.00

On July 4, 2003, the CA dismissed the petition and affirmed with modification the NLRC decision by deleting the awards for a proportionate 13th month pay and for indemnity.11 The CA decision became final per Entry of Judgment dated July 29, 2003.12 The dispositive portion of this CA decision states: WHEREFORE, premises considered, the instant petition is hereby DISMISSED. The decision of the National Labor Relations Commission is AFFIRMED with modification that the award of proportional 13th month pay as well as the award of indemnity of ₱ 5,000.00 for failure to observe due process are DELETED. In January 2004, and in the course of the execution of the above final judgment pursuant to Section 3, Rule VIII13 of the then NLRC Rules of Procedure, the Finance Analyst of the Labor Arbiter’s Office held a pre-execution conference with the contending parties in attendance. The Finance Analyst submitted an updated computation of the monetary awards due the private respondent in the total amount of ₱235,986.00.14 This updated computation included additional backwages and separation pay due the private respondent computed from March 1, 2001 to September 17, 2003. The computation also included the proportionate amount of the private respondent’s 13th month pay. On March 25, 2004, the labor arbiter approved the updated computation which ran, as follows: C O M P UTATI O N Total computation as per NLRC CAR decision dated February 8, 2001 (sic) 41,591.00 1. Additional backwages: (March 1, 2001-Sept. 17, 2003) March 1, 2001-April 30, 2002: ₱178.00 x 52 days ₱185.00 x 365 days

9,256.00

= 67,525.00

July 1, 2002- Sept. 17, 2003: ₱190.00 x 382 days

Proportional 13th month pay ₱ 26,180/12

=

May 1, 2001-June 30, 2002:

= 72,580.00 149,361.00

Proportional 13th month pay: 2,181.65

28,361.65

₱149,361.00/12

=

12,446.75

b) Separation Pay: ₱ 170.00 x 314/12 x 1

4,448.35

161,807.75

c) Indemnity of ₱5,000.00 for failure to observe due process

2. Additional separation pay:

Attorney’s fees which is 10% of the total award in the amount of d) ₱3,781.00. SO ORDERED.8 On the petitioner’s appeal, the NLRC affirmed the labor arbiter’s decision in its resolutions dated May 31, 2002 and September 30, 2002.9 The dispositive portion of the NLRC’s resolution of May 31, 2002 states: WHEREFORE, premises considered, the decision under review is hereby AFFIRMED, and the appeal, DISMISSED, for lack of merit.10 The petitioner continued to seek relief, this time by filing a petition for certiorari before the CA, which petition was docketed as CA-G.R. SP No. 74653.

₱190.00 x 314/12 x 3 years

=

14,915.00

=

17,672.25 194,395.00

3. Additional attorney’s fee: ₱176,722.75 x 10%

TOTAL

7

253,986.00

The petitioner objected to the re-computation and appealed the labor arbiter’s order to the NLRC. The petitioner claimed that the updated computation was inconsistent with the dispositive portion of the labor arbiter’s February 8, 2001 decision, as modified by the CA in CA-G.R. SP No. 74653. The NLRC disagreed with the petitioner and affirmed the labor arbiter’s decision in a resolution dated October 25, 2004. The NLRC also denied the petitioner’s motion for reconsideration in its resolution dated January 31, 2005. The petitioner sought recourse with the CA through a petition for certiorari on the ground that the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction. The CA Rulings The CA partially granted the petition in its decision of December 19, 2005 (now challenged before us) by deleting the awarded proportionate 13th month pay. The CA ruled: WHEREFORE, the petition is PARTIALLY GRANTED. The Labor Arbiter is DIRECTED to compute only the following (a) private respondent’s backwages from the time his salary was withheld up to July 29, 2003, the finality of the Decision in CAG.R. SP No. 74653; (b) private respondent’s separation pay from July 31, 2000 up to July 29, 2003; and (c) attorney’s fees equivalent to 10% of the total monetary claims from (a) and (b). The total monetary award shall earn legal interest from July 29, 2003 until fully paid. No pronouncement as to cost. SO ORDERED.15 The CA explained in this ruling that employees illegally dismissed are entitled to reinstatement, full backwages, inclusive of allowances and other benefits or their monetary equivalent, computed from the time actual compensation was withheld from them, up to the time of actual reinstatement. If reinstatement is no longer feasible, the backwages shall be computed from the time of their illegal dismissal up to the finality of the decision. The CA reasoned that a re-computation of the monetary awards was necessary to determine the correct amount due the private respondent from the time his salary was withheld from him until July 29, 2003 (the date of finality of the July 4, 2003 decision in CA-G.R. SP No. 74653) since the separation pay, which was awarded in lieu of reinstatement, had not been paid by the petitioner. The attorney’s fees likewise have to be re-computed in light of the deletion of the proportionate 13th month pay and indemnity awards. The petitioner timely filed a motion for reconsideration which the CA denied in its resolution of March 30, 2006, now similarly assailed before us. The Issue The lone issue the petitioner raised is whether a final and executory decision (the labor arbiter’s decision of February 8, 2001, as affirmed with modification by the CA decision in CA-G.R. SP No. 74653) may be enforced beyond the terms decreed in its dispositive portion. In the pleadings submitted to the Court, the petitioner insists on a literal reading and application of the labor arbiter’s February 8, 2001 decision, as modified by the CA in CA-G.R. SP No. 74653. The petitioner argues that since the modified labor arbiter’s February 8, 2001 decision did not provide in its dispositive portion for a computation of the monetary award up to the finality of the judgment in the case, the CA should have enforced the decision according to its express and literal terms. In other words, the CA cannot now allow the execution of the labor arbiter’s original decision (which the CA affirmed with finality but with modification) beyond the express terms of its

dispositive portion; thus, the amounts that accrued during the pendency of the petitioner’s recourses with the NLRC and the CA cannot be read into and implemented as part of the final and executory judgment. The petitioner, as an alternative argument, argues that even assuming that the body of the CA decision in CA-G.R. SP No. 74653 intended a computation of the monetary award up to the finality of the decision, the dispositive portion remains to be the directive that should be enforced, as it is the part of the decision that governs, settles, and declares the rights and obligations of the parties. The private respondent, for his part, counters that the computation of the monetary award until the finality of the CA decision in CA-G.R. SP No. 74653 is in accord with Article 279 of the Labor Code, as amended. The Court’s Ruling We resolve to dismiss the petition and, accordingly, affirm the CA decision. We state at the outset that, as a rule, we frown upon any delay in the execution of final and executory decisions, as the immediate enforcement of the parties’ rights, confirmed by a final decision, is a major component of the ideal administration of justice. We admit, however, that circumstances may transpire rendering delay unavoidable. One such occasion is when the execution of the final judgment is not in accord with what the final judgment decrees in its dispositive portion. Just as the execution of a final judgment is a matter of right for the winning litigant who should not be denied the fruits of his or her victory, the right of the losing party to give, perform, pay, and deliver only what has been decreed in the final judgment should also be respected. That a judgment should be implemented according to the terms of its dispositive portion is a long and well-established rule.16 Otherwise stated, it is the dispositive portion that categorically states the rights and obligations of the parties to the dispute as against each other.17 Thus, it is the dispositive portion which the entities charged with the execution of a final judgment that must be enforced to ensure the validity of the execution.18 A companion to the above rule on the execution of a final judgment is the principle of its immutability. Save for recognized exceptions,19 a final judgment may no longer be altered, amended or modified, even if the alteration, amendment or modification is meant to correct what is perceived to be an erroneous conclusion of fact or law and regardless of what court, be it the highest Court of the land, renders it.20 Any attempt on the part of the responsible entities charged with the execution of a final judgment to insert, change or add matters not clearly contemplated in the dispositive portion violates the rule on immutability of judgments. In the present case, with the CA’s deletion of the proportionate 13th month pay and indemnity awards in the labor arbiter’s February 8, 2001 decision, only the awards of backwages, separation pay, and attorney’s fees remain. These are the awards subject to execution. Award of backwages and separation pay A distinct feature of the judgment under execution is that the February 8, 2001 labor arbiter decision already provided for the computation of the payable separation pay and backwages due, and did not literally order the computation of the monetary awards up to the time of the finality of the judgment. The private respondent, too, did not contest the decision through an appeal. The petitioner’s argument to confine the awards to what the labor arbiter stated in the dispositive part of his decision is largely based on these established features of the judgment.

8

We reject the petitioner’s view as a narrow and misplaced interpretation of an illegal dismissal decision, particularly of the terms of the labor arbiter’s decision. While the private respondent failed to appeal the February 8, 2001 decision of the labor arbiter, the failure, at the most, had the effect of making the awards granted to him final so that he could no longer seek any other affirmative relief, or pray for any award additional to what the labor arbiter had given. Other than these, the illegal dismissal case remained open for adjudication based on the appeal made for the higher tribunals’ consideration. In other words, the higher tribunals, on appropriate recourses made, may reverse the judgment and declare that no illegal dismissal took place, or affirm the illegal dismissal already decreed with or without modifying the monetary consequences flowing from the dismissal. As the case developed and is presented to us, the issue before us is not the correctness of the awards, nor the finality of the CA’s judgment, nor the petitioner’s failure to appeal. The issue before us is the propriety of the computation of the awards made, and, whether this violated the principle of immutability of final judgments. In concrete terms, the question is whether a re-computation in the course of execution of the labor arbiter’s original computation of the awards made, pegged as of the time the decision was rendered and confirmed with modification by a final CA decision, is legally proper. The question is posed, given that the petitioner did not immediately pay the awards stated in the original labor arbiter’s decision; it delayed payment because it continued with the litigation until final judgment at the CA level. A source of misunderstanding in implementing the final decision in this case proceeds from the way the original labor arbiter framed his decision. The decision consists essentially of two parts. The first is that part of the decision that cannot now be disputed because it has been confirmed with finality. This is the finding of the illegality of the dismissal and the awards of separation pay in lieu of reinstatement, backwages, attorney’s fees, and legal interests. The second part is the computation of the awards made. On its face, the computation the labor arbiter made shows that it was time-bound as can be seen from the figures used in the computation. This part, being merely a computation of what the first part of the decision established and declared, can, by its nature, be re-computed. This is the part, too, that the petitioner now posits should no longer be re-computed because the computation is already in the labor arbiter’s decision that the CA had affirmed. The public and private respondents, on the other hand, posit that a re-computation is necessary because the relief in an illegal dismissal decision goes all the way up to reinstatement if reinstatement is to be made, or up to the finality of the decision, if separation pay is to be given in lieu reinstatement. That the labor arbiter’s decision, at the same time that it found that an illegal dismissal had taken place, also made a computation of the award, is understandable in light of Section 3, Rule VIII of the then NLRC Rules of Procedure which requires that a computation be made. This Section in part states: [T]he Labor Arbiter of origin, in cases involving monetary awards and at all events, as far as practicable, shall embody in any such decision or order the detailed and full amount awarded. Clearly implied from this original computation is its currency up to the finality of the labor arbiter’s decision. As we noted above, this implication is apparent from the

terms of the computation itself, and no question would have arisen had the parties terminated the case and implemented the decision at that point. However, the petitioner disagreed with the labor arbiter’s findings on all counts – i.e., on the finding of illegality as well as on all the consequent awards made. Hence, the petitioner appealed the case to the NLRC which, in turn, affirmed the labor arbiter’s decision. By law,21 the NLRC decision is final, reviewable only by the CA on jurisdictional grounds. The petitioner appropriately sought to nullify the NLRC decision on jurisdictional grounds through a timely filed Rule 65 petition for certiorari. The CA decision, finding that NLRC exceeded its authority in affirming the payment of 13th month pay and indemnity, lapsed to finality and was subsequently returned to the labor arbiter of origin for execution. It was at this point that the present case arose. Focusing on the core illegal dismissal portion of the original labor arbiter’s decision, the implementing labor arbiter ordered the award re-computed; he apparently read the figures originally ordered to be paid to be the computation due had the case been terminated and implemented at the labor arbiter’s level. Thus, the labor arbiter re-computed the award to include the separation pay and the backwages due up to the finality of the CA decision that fully terminated the case on the merits. Unfortunately, the labor arbiter’s approved computation went beyond the finality of the CA decision (July 29, 2003) and included as well the payment for awards the final CA decision had deleted – specifically, the proportionate 13th month pay and the indemnity awards. Hence, the CA issued the decision now questioned in the present petition. We see no error in the CA decision confirming that a re-computation is necessary as it essentially considered the labor arbiter’s original decision in accordance with its basic component parts as we discussed above. To reiterate, the first part contains the finding of illegality and its monetary consequences; the second part is the computation of the awards or monetary consequences of the illegal dismissal, computed as of the time of the labor arbiter’s original decision. To illustrate these points, had the case involved a pure money claim for a specific sum (e.g. salary for a specific period) or a specific benefit (e.g. 13th month pay for a specific year) made by a former employee, the labor arbiter’s computation would admittedly have continuing currency because the sum is specific and any variation may only be on the interests that may run from the finality of the decision ordering the payment of the specific sum. In contrast with a ruling on a specific pure money claim, is a claim that relates to status (as in this case, where the claim is the legality of the termination of the employment relationship). In this type of cases, the decision or ruling is essentially declaratory of the status and of the rights, obligations and monetary consequences that flow from the declared status (in this case, the payment of separation pay and backwages and attorney’s fees when illegal dismissal is found). When this type of decision is executed, what is primarily implemented is the declaratory finding on the status and the rights and obligations of the parties therein; the arising monetary consequences from the declaration only follow as component of the parties’ rights and obligations. In the present case, the CA confirmed that indeed an illegal dismissal had taken place, so that separation pay in lieu of reinstatement and backwages should be paid. How much that separation pay would be, would ideally be stated in the final CA decision; if not, the matter is for handling and computation by the labor arbiter of

9

origin as the labor official charged with the implementation of decisions before the NLRC.22 As the CA correctly pointed out, the basis for the computation of separation pay and backwages is Article 279 of the Labor Code, as amended, which reads: x x x An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. By jurisprudence derived from this provision, separation pay may be awarded to an illegally dismissed employee in lieu of reinstatement.23 Recourse to the payment of separation pay is made when continued employment is no longer possible, in cases where the dismissed employee’s position is no longer available, or the continued relationship between the employer and the employee is no longer viable due to the strained relations between them, or when the dismissed employee opted not to be reinstated, or payment of separation benefits will be for the best interest of the parties involved.24 This reading of Article 279, of course, does not appear to be disputed in the present case as the petitioner admits that separation pay in lieu of reinstatement shall be paid, computed up to the finality of the judgment finding that illegal dismissal had taken place. What the petitioner simply disputes is the re-computation of the award when the final CA decision did not order any re-computation while the NLRC decision that the CA affirmed and the labor arbiter decision the NLRC in turn affirmed, already made a computation that – on the basis of immutability of judgment and the rule on execution of the dispositive portion of the decision – should not now be disturbed. Consistent with what we discussed above, we hold that under the terms of the decision under execution, no essential change is made by a re-computation as this step is a necessary consequence that flows from the nature of the illegality of dismissal declared in that decision. A re-computation (or an original computation, if no previous computation has been made) is a part of the law – specifically, Article 279 of the Labor Code and the established jurisprudence on this provision – that is read into the decision. By the nature of an illegal dismissal case, the reliefs continue to add on until full satisfaction, as expressed under Article 279 of the Labor Code. The recomputation of the consequences of illegal dismissal upon execution of the decision does not constitute an alteration or amendment of the final decision being implemented. The illegal dismissal ruling stands; only the computation of monetary consequences of this dismissal is affected and this is not a violation of the principle of immutability of final judgments.1avvphi1 We fully appreciate the petitioner’s efforts in trying to clarify how the standing jurisprudence on the payment of separation pay in lieu of reinstatement and the accompanying payment of backwages ought to be read and reconciled. Its attempt, however, is out of place and, rather than clarify, may only confuse the implementation of Article 279; the core issue in this case is not the payment of separation pay and backwages but their re-computation in light of an original labor arbiter ruling that already contained a dated computation of the monetary consequences of illegal dismissal. That the amount the petitioner shall now pay has greatly increased is a consequence that it cannot avoid as it is the risk that it ran when it continued to seek recourses against the labor arbiter’s decision. Article 279 provides for the consequences of

illegal dismissal in no uncertain terms, qualified only by jurisprudence in its interpretation of when separation pay in lieu of reinstatement is allowed. When that happens, the finality of the illegal dismissal decision becomes the reckoning point instead of the reinstatement that the law decrees. In allowing separation pay, the final decision effectively declares that the employment relationship ended so that separation pay and backwages are to be computed up to that point. The decision also becomes a judgment for money from which another consequence flows – the payment of interest in case of delay. This was what the CA correctly decreed when it provided for the payment of the legal interest of 12% from the finality of the judgment, in accordance with our ruling in Eastern Shipping Lines, Inc. v. Court of Appeals.25 WHEREFORE, premises considered, we hereby AFFIRM the decision of the Court of Appeals dated December 19, 2005 and its resolution dated March 30, 2006 in CAG.R. SP No. 89326. For greater certainty, the petitioner is ORDERED to PAY the private respondent: (a) backwages computed from August 28, 2000 (the date the employer illegally dismissed the private respondent) up to July 29, 2003, the date of finality of the decision of the Court of Appeals in CA-G.R. SP No. 74653; (b) separation pay computed from July 31, 2000 (the private respondent’s first day of employment) up to July 29, 2003 at the rate of one month pay per year of service; (c) ten percent (10%) attorney’s fees based on the total amount of the awards under (a) and (b) above; and (d) legal interest of twelve percent (12%) per annum of the total monetary awards computed from July 29, 2003, until their full satisfaction. The labor arbiter is hereby ORDERED to make another re-computation according to the above directives. Costs against the petitioner. SO ORDERED.

G.R. No. 125607 March 18, 2004 RUFINA C. CAYANA, JOSEFINA C. RABINA, MERCEDES C. DE GUZMAN, and SUSANA C. SAMBALE,petitioners, vs. COURT OF APPEALS, SPS. PASTOR & ROSITA CAYABYAB, SPS. MARCELIANO & ROSALIA CAYABYAB, SPS. RAFAEL & ROSEMARIE CAYABYAB and INSURANCE CORP. OF THE PHILIPPINES, respondents. DECISION TINGA, J.: The instant case involves an unfortunate, albeit all too common, property dispute among siblings. The petitioners, Rufina Cayana, Josefina Rabina, Mercedes de Guzman and Susana Sambale, and respondents Pastor and Marceliano Cayabyab are children of the spouses Raymundo and Eulalia Cayabyab. The other respondents, Rosita and Rosalia Cayabyab are the wives of Pastor and Marceliano Cayabyab, respectively. Respondent Rosemarie Cayabyab-Ramos is the daughter of Marceliano Cayabyab, while respondent Rafael Ramos is the former’s husband. Their dispute involves two parcels of land1 specifically described thus:

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First Parcel ¾ A parcel of land Lot A, (LRC), Psd-231284, being a portion of Plan Psu136181, LRC Rec. No. N—8805, situated in Rosario, Lingayen, Pangasinan. Bounded on the E by Mactec River; SE by Agapito Cabrera; SW by Anselmo Cabrera; NW by Lot B of the subdivision plan, containing an area of 11,735 square meters, more or less. Covered by TCT No. 29332 and assessed at ₱1,730.00; and Second Parcel ¾ A parcel of land Lot 2-A of the subdivision plan Psd-36621, being a portion of Lot 2 described on Plan Psu-70452, GLRO Rec. No. 41762, situated in Rosario, Lingayen, Pangasinan. Bounded on the N by Ludovico Cayabyab & Agapito Cabrera; E by Eduvejas Cabrera and Lot 2-B of subdivision plan; S by Lot 2-B and W by Clemente Cruz, containing an area of 20,000 square meters more or less. Covered by TCT No. 117094, declared under Tax Decl. No. 29333 and assessed at ₱2,600.00. It appears that Raymundo Cayabyab, with the marital consent of Eulalia Cayabyab, sold the First and Second Parcels to Pastor Cayabyab by virtue of two Deeds of Absolute Sale2 respectively dated March 3, 1976 and May 13, 1965. Thereupon, Transfer Certificates of Title (TCTs) No. 117134 and 117094 covering the First and Second Parcels, respectively, were issued in the name of Pastor Cayabyab. After the death of Raymundo Cayabyab on March 20, 1976, his wife Eulalia Cayabyab executed an Affidavit of Adverse Claim,3 dated June 4, 1976, on the subject parcels of land, alleging that the Deeds of Absolute Sale in favor of Pastor Cayabyab were forgeries. However, on June 17, 1976, she executed another Affidavit4 recognizing Pastor Cayabyab’s title and requesting the cancellation of the adverse claims earlier annotated on the titles of the subject properties. On February 9, 1977, Eulalia Cayabyab, together with her children, Marceliano, Mercedes, Rufina, Josefina, Susana and Alfredo, filed a Complaint5 against Pastor and Rosita Cayabyab for the annulment of the Deeds of Absolute Sale dated March 3, 1976 and May 13, 1965 and the corresponding TCT Nos. 117134 and 117094, and reconveyance of the First and Second Parcels. They alleged that both parcels were fraudulently registered in the name of Pastor Cayabyab by means of the forged Deeds of Absolute Sale. The case was docketed as Civil Case No. 15298. On February 28, 1977, Pastor and Rosita Cayabyab entered into an agreement of counter guaranty with the Insurance Corporation of the Philippines (ICP) with respect to the Second Parcel. On June 12, 1977, Pastor Cayabyab mortgaged6 the First Parcel to the Rural Bank of Urbiztondo. On October 10, 1977, Pastor Cayabyab sold the First Parcel to Rosafina Reginaldo for ₱15,000.00 by virtue of a Deed of Absolute Sale.7 Subsequently, TCT No. 117134 was cancelled and TCT No. 1243048 was issued in the name of Rosafina Reginaldo on October 11, 1977. On the same day, the mortgage over the First Parcel was cancelled.9 On December 23, 1977, Rosafina Reginaldo mortgaged10 the First Parcel to the Rural Bank of Urbiztondo to secure a loan in the amount of ₱5,000.00. Meanwhile, the proceedings in Civil Case No. 15298 proceeded. Pastor and Rosita Cayabyab filed an Answer asserting the validity of the Deeds of Absolute Sale but were subsequently declared in default after failing to appear at the pre-trial conference. Thus, the plaintiffs were allowed to present evidence ex-parte. In a decision11 dated June 17, 1978, the then Court of First Instance of Pangasinan declared the Deeds of Absolute Sale dated May 13, 1965 and March 3, 1976, and the corresponding TCT Nos. 117094 and 117134 covering the Second and First Parcels,

respectively, null and void. The court, however, denied the prayer for reconveyance in view of the plaintiffs’ evidence attesting to the fact that Eulalia Cayabyab is still the owner and possessor of the subject properties. No appeal was taken and the decision consequently became final. On April 21, 1981, the mortgage over the First Parcel was foreclosed and the Rural Bank of Urbiztondo, as the highest bidder, bought the property.12 The bank consolidated its title on August 2, 198213 and TCT No. 14247914cancelling TCT No. 124304 was issued in its name on August 19, 1982. In a Deed of Absolute Sale15 dated September 3, 1982, the Rural Bank of Urbiztondo sold the First Parcel to Marceliano and Rosalia Cayabyab for the amount of ₱7,221.95. Two days later, the latter were issued TCT No. 14288716 cancelling TCT No. 142479. For the amount of ₱10,000.00, Marceliano and Rosalia Cayabyab sold the First Parcel to Rafael and Rosemarie Ramos by virtue of a Deed of Absolute Sale of Real Estate Property17 dated January 14, 1983. On January 25, 1983, TCT No. 14385918 cancelling TCT No. 142887 was issued in the name of the Ramos spouses. On June 8, 1983, the petitioners herein as plaintiffs, filed with the Regional Trial Court of Lingayen, Pangasinan, Branch 37, a Verified Complaint19 docketed as Civil Case No. 15937 against Pastor and Rosita Cayabyab, Marceliano and Rosalia Cayabyab, Rafael and Rosemarie Ramos and ICP. They prayed for the annulment of the deeds of sale in favor of Rosafina Reginaldo, Marceliano and Rosalia Cayabyab, and Rafael Ramos and Rosemarie Cayabyab; cancellation of TCT Nos. 124304, 142479, 142887, and 143859 issued in favor of Rosafina Reginaldo, the Rural Bank of Urbiztondo, Marceliano and Rosalia Cayabyab and Rafael and Rosemarie Ramos, respectively; and recovery of possession of the First and Second Parcels by virtue of an alleged deed of donation inter vivospurportedly executed by Eulalia Cayabyab in favor of the petitioners herein. As regards the Second Parcel, the plaintiffs prayed that ICP or Pastor Cayabyab, in whose name TCT No. 117094 remained, be ordered to surrender the title. It appears that ICP was not served with summons because it had already ceased to exist due to bankruptcy.20 The plaintiffs theorized that the documents sought to be annulled are fictitious, simulated and entered into in bad faith as the defendants had full knowledge of the pendency of, as well as the consequent decision in, Civil Case No. 15298. On the other hand, the defendants claimed that all the transactions over the First Parcel were entered into free from all liens and encumbrances not inscribed in the title. Recognizing the final decision in Civil Case No. 15298 on the nullity of the Deeds of Absolute Sale and the corresponding TCTs issued in favor of Pastor Cayabyab, the trial court rendered on August 22, 1989, a Decision in Civil Case No. 15937 in favor of the plaintiffs, the dispositive portion of which provides: WHEREFORE, judgment is hereby rendered ordering: 1. The plaintiffs to be the true and lawful owners over the landholdings in question; 2. The annulment of all documents pertaining thereto; namely, Exhs. C,D, & E; 3. The cancellation of TCT No. 124304, TCT No. 142479; TCT No. 142887 & TCT No. 143859;

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4. The defendants restore possession of the landholdings in question to plaintiffs; 5. The defendants to pay the plaintiffs jointly and severally the amount of ₱20,000.00 as moral damages; 6. The defendants to pay the plaintiffs jointly and severally the amount of ₱5,000.00 as/for attorney’s fees; 7. The defendant Pastor Cayabyab and/or Insurance Corporation of the Philippines to surrender TCT No. 117094 free from all liens and encumbrances; 8. The defendants to pay the plaintiffs jointly and severally the amount of ₱5,000.00 as exemplary damages; 9. The dismissal of defendants’ counterclaim; and 10. The defendants to pay the costs of this suit.21 The respondents herein as appellants appealed to the Court of Appeals, contending that the trial court erred in applying the principle of res judicata to the judgment in Civil Case No. 15298. According to them, the institution of Civil Case No. 15937 resulted in the joinder of issues and allowed them to adduce evidence to prove ownership and possession of the subject parcels of land. Agreeing with the appellants, the appellate court in its Decision22 dated August 21, 1995, held that the principle of res judicata is inapplicable, there being no identity of the causes of action in Civil Case No. 15298 and Civil Case No. 15937. While both cases were for the annulment of public documents, the former covered only the Deeds of Absolute Sale dated March 3, 1976 and May 13, 1965 and the corresponding TCTs for the First and Second Parcels. On the other hand, the latter case covered not only the annulment of the subsequent transactions over the subject parcels of land but also the recovery of possession on the basis of the alleged deed of donation inter vivos executed by Eulalia Cayabyab. The Court of Appeals also upheld the validity of the deeds of sale and the corresponding TCTs in favor of the appellants, declaring that the affidavit cancelling the adverse claim annotated in TCT No. 117134 was duly admitted; that the subsequent sales transactions have not been proven to be simulated or fictitious; that no notice of lis pendens was recorded in the title; and that the appellees were not able to prove their claim of title having failed to present the original or certified true copy of the alleged deed of donation inter vivos or to prove the existence and due execution of the original deed. Hence, the appellate court reversed the Decision of the trial court, accordingly declaring that the deeds of sale as well as the TCTs which emanated from them valid and enforceable, and the appellants the true and lawful owners and possessors of the properties in question. The Court of Appeals denied the appellees’ Motion for Reconsideration in its Resolution23 dated July 11, 1996. In the instant Verified Petition24 dated July 30, 1996, the petitioners reiterate their argument that the Deeds of Absolute Sale dated March 3, 1976 and May 13, 1965, the corresponding TCTs covering the First and Second Parcels, and the subsequent transfers of the subject properties are all null and void by virtue of the final judgment in Civil Case No. 15298 declaring them to be so. They allege that a notice of lis pendens and an affidavit of adverse claim were duly annotated on the TCTs covering the two parcels of land. Hence, Rosafina Reginaldo, Marceliano and Rosalia Cayabyab, and Rafael and Rosemarie Ramos should be considered purchasers in bad faith. The petitioners further claim that the considerations for the subsequent

transfers were grossly inadequate leading to the conclusion that the respondents were motivated by a desire to execute fictitious deeds of conveyance. The petitioners also insist that the First and Second Parcels were donated to the petitioners by their mother, Eulalia Cayabyab, through an alleged Donation Inter Vivos attached to the petition as Annex "F". Finally, they reiterate that Pastor Cayabyab and ICP entered into a contract of guaranty over the Second Parcel despite the adverse claim and notice of lis pendens annotated on the title. In their Comment25 dated October 8, 1997, the respondents contend that whatever doubts may have been raised by Eulalia Cayabyab on the validity of Pastor Cayabyab’s title were removed when she executed the Affidavitrequesting the cancellation of the adverse claims inscribed in the titles. Hence, the Deeds of Absolute Sale dated March 3, 1976 and May 13, 1965 in favor of Pastor Cayabyab are legal and valid. The deed of donation inter vivos allegedly executed by Eulalia Cayabyab did not vest ownership and possession over the subject properties in favor of the petitioners because of the prior sale to Pastor Cayabyab. Besides, Eulalia Cayabyab did not have the right to donate the subject properties to the petitioners because there was no previous partition of the intestate estate of Raymundo Cayabyab. In a Resolution dated July 27, 1998, the Court denied the instant petition for noncompliance with the Resolution of February 25, 1998, requiring the petitioners to file a reply to the respondents’ Comment. The petitioners filed a Motion for Reconsideration with Reply26 dated September 21, 1998. In our Resolution of November 16, 1998, we granted the motion, reinstated and gave due course to the petition and required the parties to submit their respective Memoranda.27 The pivotal issue is whether the decision in Civil Case No. 15298 operates to bar the respondents’ defenses and counterclaims in Civil Case No. 15937. The petitioners insist that the decision of the trial court in Civil Case No. 15298 has settled with finality the nullity of Pastor Cayabyab’s title. Following the principle of res judicata, the respondents, as transferees of Pastor Cayabyab, should not have been allowed to adduce evidence to prove their ownership of the subject parcels of land. The appellate court, however, ruled that the principle of res judicata does not apply there being no identity of causes of action in the two cases. The trial court and the appellate court both erred in the manner by which they treated and applied the final decision in Civil Case No. 15298 to the instant case. This error apparently stems from a misreading of the provisions in the 1997 Rules of Civil Procedure on the effect of judgments. Section 47, Rule 39 thereof provides: SEC. 47. Effect of judgments or final orders.—The effect of a judgment or final order rendered by a court of the Philippines, having jurisdiction to pronounce the judgment or final order, may be as follows: (a) In case of a judgment or final order against a specific thing, or in respect to the probate of a will, or the administration of the estate of a deceased person, or in respect to the personal, political, or legal condition or status of a particular person or his relationship to another, the judgment or final order is conclusive upon the title to the thing, the will or administration, or the condition, status or relationship of the person; however, the probate of a will or granting of letters of administration shall only be prima facie evidence of the death of the testator or intestate; (b) In other cases, the judgment or final order is, with respect to the matter directly adjudged or as to any other matter that could have been raised in

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relation thereto, conclusive between the parties and their successors in interest by title subsequent to the commencement to the action or special proceeding, litigating for the same thing and under the same title and in the same capacity; (c) In any other litigation between the same parties or their successors in interest, that only is deemed to have been adjudged in a former judgment or final order which appears upon its face to have been so adjudged, or which was actually and necessarily included therein or necessarily thereto. The distinction between the doctrine of res judicata, or bar by prior judgment, under paragraph (b) above and conclusiveness of judgment under paragraph (c) is well-laid. In Gamboa v. Court of Appeals,28 we held: There is ‘bar by prior judgment’ when, between the first case where the judgment was rendered and the second case which is sought to be barred, there is identity of parties, subject matter and cause of action. The judgment in the first case constitutes an absolute bar to the subsequent action. It is final as to the claim or demand in controversy, including the parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose and of all matters that could have been adjudged in that case. But where between the first and second cases, there is identity of parties but no identity of cause of action, the first judgment is conclusive in the second case, only as to those matters actually and directly controverted and determined and not as to matters merely involved therein.29 For res judicata to apply, there must be (1) a former final judgment rendered on the merits; (2) the court must have had jurisdiction over the subject matter and the parties; and, (3) identity of parties, subject matter and cause of action between the first and second actions. According to the appellate court, the third requisite for the application of res judicata is not present in this case. In order to determine the identity of the causes of action in Civil Case Nos. 15298 and 15937, and consequently, the application of the doctrine of res judicata, it is essential to consider the identity of facts essential to their maintenance, or whether the same evidence would sustain both causes of action. If the same facts or evidence would sustain both, the two actions are considered the same and covered by the rule that the judgment in the former is a bar to the subsequent action. If, however, the two actions rest upon different states of fact, or if different proofs would be required to sustain the two actions, a judgment in one is no bar to the maintenance of the other.30 We find that the evidence required to prove the allegations in Civil Case No. 15937, which involves the annulment of the subsequent transactions and TCTs covering the subject parcels of land and the recovery of possession thereof on the basis of the alleged deed of donation inter vivos, is necessarily more than that required in Civil Case No. 15298, which involves only the annulment of the Deeds of Absolute Sale in favor of Pastor Cayabyab and the corresponding TCTs covering the First and Second Parcels. Furthermore, the decision in Civil Case No. 15298 necessarily turned only upon whether the Deeds of Absolute Sale were fictitious or simulated, while that in Civil Case No. 15937 will also have to include a determination of the good or bad faith of the subsequent purchasers. Res judicata, therefore, does not apply. Nonetheless, the trial court and the Court of Appeals should have applied the doctrine of conclusiveness of judgment. In Calalang v. Register of Deeds of Quezon City,31 the concept of conclusiveness of judgment was explained, thus:

xxx conclusiveness of judgment—states that a fact or question which was in issue in a former suit and there was judicially passed upon and determined by a court of competent jurisdiction, is conclusively settled by the judgment therein as far as the parties to that action and persons in privity with them are concerned and cannot be again litigated in any future action between such parties or their privies, in the same court or any other court of concurrent jurisdiction on either the same or different cause of action, while the judgment remains unreversed by proper authority. It has been held that in order that a judgment in one action can be conclusive as to a particular matter in another action between the same parties or their privies, it is essential that the issue be identical. If a particular point or question is in issue in the second action, and the judgment will depend on the determination of that particular point or question, a former judgment between the same parties or their privies will be final and conclusive in the second if that same point or question was in issue and adjudicated in the first suit. Identity of cause of action is not required but merely identity of issues.32 Under the doctrine of conclusiveness of judgment, the final decision in Civil Case No. 15298 declaring null and void the Deeds of Absolute Sale in favor of Pastor Cayabyab and the corresponding TCTs covering the subject parcels of land precluded the Court of Appeals from further adjudicating on the validity of the said deeds and titles. The appellate court’s pronouncement that "the decision in Civil Case No. 15298 which declares null and void the deeds of absolute sale dated May 13, 1965 and March 20, 1976 and the corresponding TCT is not conclusive upon the action in Civil Case No. 15937"33 is, therefore, flawed. It is likewise utterly erroneous for the appellate court to have disregarded the final judgment in Civil Case No. 15298 declaring null and void the Deeds of Absolute Sale in favor of Pastor Cayabyab and the corresponding TCTs covering the two parcels of land. It is axiomatic that decisions which have long become final and executory cannot be annulled by courts and the appellate court is deprived of jurisdiction to alter the trial court’s final judgment.34 The issue concerning the validity of the Deeds of Absolute Sale dated May 13, 1965 and March 3, 1976 and the corresponding TCTs covering the subject properties must be laid to rest. These documents cannot be relied upon by Pastor Cayabyab and his successors-in-interest as the basis of their claim of ownership over the First Parcel. Having said that, we find it necessary still to determine whether the respondents who take title over the First Parcel from Pastor Cayabyab were purchasers in good faith, i.e., whether they bought the property without notice that some other person has a right to or interest in such property, and paid a full and fair price for the same at the time of such purchase or before they had notice of the claim or interest of some other person in the property.35 If so, their rights will be protected and the nullity of the Deeds of Absolute Sale and the corresponding TCTs covering the subject properties cannot be successfully invoked to invalidate the titles subsequently issued, for it has been consistently ruled that a forged deed can legally be the root of a valid title when an innocent purchaser for value intervenes.36 As a general rule, every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go beyond the certificate to determine the condition of the property.37 However, this principle admits of an unchallenged exception: …a person dealing with registered land has a right to rely on the Torrens certificate of title and to dispense with the need of inquiring further except when the party has

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actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation. The presence of anything which excites or arouses suspicion should then prompt the vendee to look beyond the certificate and investigate the title of the vendor appearing on the face of said certificate. One who falls within the exception can neither be denominated an innocent purchaser for value nor a purchaser in good faith; and hence does not merit the protection of the law.38 [Emphasis supplied] A judicious evaluation of the records and the applicable legal principles leads us to the conclusion that the subsequent purchasers of the First Parcel were not purchasers in good faith. First. The Court notes—and it is not disputed—that Rosafina Reginaldo, the Rural Bank of Urbiztondo, Marceliano and Rosalia Cayabyab, and Rafael and Rosemarie Ramos are successors-in-interest of Pastor Cayabyab, having purchased the First Parcel after the filing of the Complaint in Civil Case No. 15298. In the case of the Rural Bank of Urbiztondo and Rafael and Rosemarie Ramos, they even purchased the property after the decision in Civil Case No. 15298 had been rendered. The records reveal that a Petition for Certiorari and Prohibition,39 dated November 18, 1985, was filed by Pastor and Rosita Cayabyab, Marceliano and Rosalia Cayabyab and Rafael and Rosemarie Cayabyab assailing the order and resolutions of the trial court in Civil Case No. 15937, delegating the reception of the plaintiffs’ evidence exparte to the Branch Clerk of Court and denying the defendants’ motions for reconsideration. The Court of Appeals40 set aside the questioned order and resolutions and directed the respondent Judge to allow the defendants to adduce their evidence. The decision was anchored, among others, on the defendants’ representation that the plaintiffs were neither parties nor intervenors in Civil Case No. 15298 but have only laid claim on the subject properties as donees.41 This allegation is patently false since, as previously mentioned, Eulalia Cayabyab and her children, Marceliano, Mercedes, Rufina, Josefina, Susana and Alfredo Cayabyab, were the plaintiffs in Civil Case No. 15298. Even so, the decision apparently became one of the bases for the respondents’ claim that the institution of Civil Case No. 15937 resulted in the joinder of issues thereby allowing them to adduce evidence in support of their claim of ownership and possession of the subject properties, a stand sanctioned by the appellate court in the instant case. Second. It is important to emphasize that Marceliano Cayabyab was among the plaintiffs in Civil Case No. 15298, contrary to the vehement denial in his Answer,42 dated July 21, 1983, in which he claimed that "answering defendants (Marceliano and Rosalia Cayabyab) are not parties to the said case and are totally strangers as regards the same."43 Third. During the pendency of Civil Case No. 15298, Eulalia Cayabyab and her children Alfredo, Ludovico, Marceliano, Mercedes, Susana, Rufina, Buenaventura and Josefina, filed a new case44 for the annulment of certain documents affecting several parcels of land, including the two parcels subject of the instant petition, against Pastor and Rosita Cayabyab and Rosafina Reginaldo. This was revealed by the respondents themselves in their Comment45 dated October 8, 1997 and Memorandum46 dated January 20, 1999. Parenthetically, in order to bolster their claim of valid title, the respondents constantly underscore the fact that Eulalia Cayabyab executed an Affidavit47 dated June 17,

1976, affirming the genuineness of the Deeds of Absolute Sale in favor of Pastor Cayabyab and requesting the cancellation of the adverse claims annotated on the TCTs covering the First and Second Parcels. It should be noted, however, that after executing the Affidavit on June 17, 1976, Eulalia Cayabyab herself filed a Complaint (Civil Case No. 15298) for the annulment of the Deeds of Absolute Sale and the reconveyance of the subject properties on February 9, 1977. It is beyond this Court’s power to hypothesize on the reasons for Eulalia Cayabyab’s change of mind. What is clear is that the trial court rendered a decision in Civil Case No. 15298 which subsequently became final. Eulalia Cayabyab’s Affidavit which was executed before the institution of Civil Case No. 15298 cannot, by any means, be construed as a bar to the final decision declaring Pastor Cayabyab’s titles null and void. Curiously, the respondents never questioned the petitioners’ assertion that a notice of lis pendens was annotated at the back of the TCT covering the First Parcel. The trial court did not rule on this point but the Court of Appeals declared that there was no such notice annotated on TCT No. 117134. Whether there was an annotation inscribed in TCT No. 117134 will not, however, affect the Court’s finding that the respondents are not purchasers in good faith. To summarize, the records disclose circumstances indicating that Rosafina Reginaldo, the Rural Bank of Urbiztondo and the respondents Marceliano and Rosalia Cayabyab and Rafael and Rosemarie Ramos were not purchasers in good faith. Rosafina Reginaldo purchased the First Parcel during the pendency of Civil Case No. 15298. Moreover, she was one of the defendants, together with Pastor and Rosita Cayabyab, in Civil Case No. SCC-552 filed by Eulalia Cayabyab and her children Alfredo, Ludovico, Marceliano, Mercedes, Susana, Rufina, Buenaventura and Josefina for the annulment of certain documents concerning several parcels of land, among which was the First Parcel. As for the Rural Bank of Urbiztondo, it became a mortgagee of the First Parcel initially on June 12, 1977 and later, on December 23, 1977, after the filing of the Complaint in Civil Case No. 15298 on February 9, 1977. After the decision in the case became final, the bank purchased the property during foreclosure proceedings. It later sold the property to Marceliano Cayabyab, one of the plaintiffs in Civil Case No. 15298. As regards Marceliano, his participation in Civil Case Nos. 15298 and SCC-552 seals his knowledge of the petitioners’ claim over the subject properties. Likewise, Rafael and Rosemarie Ramos cannot feign ignorance of the proceedings in Civil Case No. 15298 and the final decision therein declaring null and void the Deeds of Absolute Sale and the corresponding TCTs issued in the name of Pastor Cayabyab. The fact that the parties are family members also convinces the Court that the respondents’ assertion of lack of knowledge of Civil Case No. 15298 and the petitioners’ claim over the subject properties is a mere pretext. As regards the Second Parcel, it is not disputed that TCT No. 117094 is in Pastor Cayabyab’s name and possession. Emanating, as it did, from the final decision in Civil Case No. 15298, Pastor Cayabyab’s title is null and void. The final issue pertains to the deed of donation inter vivos allegedly executed by Eulalia Cayabyab in favor of the petitioners. The trial court sustained the existence and validity of the deed and declared the plaintiffs, the petitioners herein, to be the true and lawful owners of the subject properties.

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Interestingly, petitioner Rufina Cayana verified the existence of the deed of donation inter vivos on direct examination. She declared: Q: You said, you know the two parcels of land, subject of this litigation, why do you know them? A: I know them, sir, because I am one of the owners of said parcels of land. Q: Who are your co-owners? A: Mercedes C. de Guzman, Josefina C. Rabina and Susana C. Sambale, sir. Q: How did you and your co-owners acquire these two parcels of land? A: By way of donation intervivos executed by our mother, Eulalia Aquino Vda. De Cayabyab, sometime on January 5, 1980, sir. Q: Do you have a copy of that donation intervivos? A: Yes, sir. Q: Showing to you this document, entitled ‘Donation Inter-Vivos", will you go over this if this is the same document you are referring to? A: Yes, sir, that is the one. ATTY. PALMA: May we pray that this document be marked as Exh. A.48 [Emphasis supplied.] Petitioner Josefina Rabina also confirmed the existence of the deed. She testified: Q: Is there any document regarding the donation? A: Yes, sir. Q: Showing to you this deed of donation, is this the deed of donation you are referring to? A: Yes, sir. Q: There is a signature above the typewritten name ‘Eulalia Aquino Vda. De Cayabyab,’ do you know those (sic) signature is that? A: Yes, sir, this is the signature of my mother.49 [Emphasis supplied.] The appellate court, however, pronounced that the petitioners were not able to prove their claim of ownership of the subject properties as they failed to present the original or certified true copy of the deed of donation inter vivos. The Court of Appeals, in fact, held that the purported Exhibit "A" is actually the allegation on the existence of the alleged deed contained in the complaint itself.50 Due to the conflicting findings of the trial court and the appellate court, we requested51 the transmittal to this Court of, among others, the deed of donation inter vivos marked as Exhibit "A" for the plaintiffs during the direct examination of Rufina Cayana. In her reply dated September 2, 2002, the clerk of court informed the Court that the entire original records of Civil Case No. 15937, including Exhibit "A," were listed in the trial court’s records as among the exhibits forwarded to the Court of Appeals. However, except for the Index of Exhibits for the Plaintiffs-Appellees52 which lists Exhibit "A," the records of this case are bereft of any showing that the plaintiffs formally offered in evidence the original or certified true copy of the deed of donation inter vivos purportedly executed by Eulalia Cayabyab. The fact that it was only when they filed the instant petition that the petitioners actually attached as Annex "F"53 a copy of the said deed is further proof of the petitioners’ lapse. As a rule, the court shall not consider evidence which has not been formally offered.54 This being so, the donation in favor of the petitioners cannot be upheld.

This leaves us with the question of who the rightful owners of the subject properties are. The Court holds that the First and Second Parcels properly belong to the estate of Raymundo and Eulalia Cayabyab, the same to be partitioned in accordance with the law on succession. WHEREFORE, the Decision and Resolution of the Court of Appeals are hereby REVERSED and the Decision of the trial court is accordingly REINSTATED but with the modification that the First and Second Parcels should be included in the estate of Raymundo and Eulalia Cayabyab and partitioned in accordance with the law on succession. SO ORDERED.

G.R. No. 148090 November 28, 2006 STRONGHOLD INSURANCE COMPANY, INC., Petitioner, vs. HONORABLE NEMESIO S. FELIX, in his capacity as Presiding Judge of Branch 56, Regional Trial Court, Makati City, RICHARD C. JAMORA, Branch Clerk of Court, and EMERITA GARON, Respondents. DECISION CARPIO, J.: The Case Before the Court is a petition for review1 assailing the 4 May 2001 Decision2 of the Court of Appeals in CA-G.R. SP No. 63334. The Antecedent Facts Emerita Garon ("Garon") filed an action for sum of money docketed as Civil Case No. 99-1051 against Project Movers Realty and Development Corporation ("Project Movers") and Stronghold Insurance Company, Inc. ("Stronghold Insurance"). In an Order3 dated 19 September 2000, the Regional Trial Court of Makati City, Branch 564 ("trial court") granted Garon’s motion for summary judgment. The trial court rendered judgment in favor of Garon, as follows: 1. Defendant Project Movers Realty and Development Corporation is hereby directed to pay plaintiff as follows: On Promissory Note No. PMRDC 97-12-332: (A) The sum of PESOS: Six Million Eighty Eight Thousand Seven Hundred Eighty Three and 68/100 (₱6,088,783.68) under PMRDC97-12-332; (B) Interest thereon at 36% per annum computed from 19 December 1997 until fully paid; (C) A penalty of 3% per month computed from 03 November 1998 until full payment on all unpaid amounts consisting of the principal and interest. On Promissory Note No. PMRDC No. 97-12-333: (A) The peso equivalent of the sum of DOLLARS: One Hundred Eighty Nine Thousand Four Hundred Eighteen and 75/100 (US$189,418.75) under PMRDC-97-12-333; (B) Interest thereon at the stipulated rate of 17% per annum computed from 31 December 1997; (C) A penalty of 3% per month computed from 03 November 1998 until full payment on all unpaid amounts consisting of the principal and interest.

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2. Defendant Stronghold Insurance Company, Inc. is hereby held jointly and solidarily liable to plaintiff Mrs. Garon in the amount of PESOS: TWELVE MILLION SEVEN HUNDRED FIFTY FIVE THOUSAND ONE HUNDRED THIRTY NINE AND EIGHTY FIVE CENTAVOS (₱12,755,139.85). 3. Defendants Project Movers Realty and Development Corporation and Stronghold Insurance Company, Inc. are also ordered to pay plaintiff Mrs. Garon jointly and severally the sum of PESOS: TWO HUNDRED THOUSAND as attorney’s fees plus costs of suit. All other claims and counter-claims of the parties are hereby ordered dismissed. SO ORDERED.5 On 6 October 2000, Garon filed a motion for execution pending appeal. On 10 October 2000, Stronghold Insurance moved for the reconsideration of the 19 September 2000 Order of the trial court. In an Order6 dated 23 January 2001, the trial court denied Stronghold Insurance’s motion for reconsideration for lack of merit. In an Order7 dated 8 February 2001, the trial court granted Garon’s motion for execution pending appeal. The trial court ordered Garon to post a bond of ₱20 million to answer for any damage that Project Movers and Stronghold Insurance may sustain by reason of the execution pending appeal. On 14 February 2001, Branch Clerk of Court Richard C. Jamora ("Jamora") issued a writ of execution pending appeal. On 16 February 2001, Stronghold Insurance filed a notice of appeal. Stronghold Insurance also filed a petition for certiorari before the Court of Appeals to assail the trial court’s 8 February 2001 Order and the writ of execution pending appeal. In its Resolution8 of 23 February 2001, the Court of Appeals enjoined the trial court, Jamora and Garon from enforcing the 8 February 2001 Order. However, it turned out that notices of garnishment had been served before the Court of Appeals issued the temporary restraining order (TRO). In its Order9 dated 7 March 2001, the trial court denied Stronghold Insurance’s Urgent Motion for the recall of the notices of garnishment. The Ruling of the Court of Appeals In its 4 May 2001 Decision, the Court of Appeals dismissed the petition of Stronghold Insurance and lifted the TRO it issued. The Court of Appeals sustained the trial court in issuing the writ of execution pending appeal on the ground of illness of Garon’s husband. Citing Articles 6810 and 19511 of the Family Code, the Court of Appeals held that while it was not Garon who was ill, Garon needed the money to support her husband’s medical expenses and to support her family. Stronghold Insurance alleged that its liability is limited only to ₱12,755,139.85 in accordance with its surety bond with Project Movers, plus attorney’s fees of ₱200,000 as awarded by the trial court. However, the amount in the writ of execution pending appeal and notices of garnishment is ₱56 million. Nevertheless, the Court of Appeals ruled that Stronghold Insurance failed to show that more than ₱12,755,139.85 had been garnished. Hence, the petition before this Court. In its Resolution12 dated 8 August 2001, this Court issued a TRO to restrain and enjoin the enforcement of the 8 February 2001 Order and the writ of execution pending appeal until further orders from this Court. The Issue The sole issue is whether there are good reasons to justify execution pending appeal.

The Ruling of This Court The petition has merit. Requisites of Execution Pending Appeal Execution pending appeal is governed by paragraph (a), Section 2, Rule 39 of the 1997 Rules of Civil Procedure ("Rules") which provides: SEC. 2. Discretionary execution. (a) Execution of a judgment or final order pending appeal. - On motion of the prevailing party with notice to the adverse party filed in the trial court while it has jurisdiction over the case and is in possession of either the original record or the record on appeal, as the case may be, at the time of the filing of such motion, said court may, in its discretion, order execution of a judgment or final order even before the expiration of the period to appeal. After the trial court has lost jurisdiction, the motion for execution pending appeal may be filed in the appellate court. Discretionary execution may only issue upon good reasons to be stated in a special order after due hearing. xxxx Execution pending appeal is an exception to the general rule. The Court explained the nature of execution pending appeal as follows: Execution pending appeal is an extraordinary remedy, being more of the exception rather than the rule. This rule is strictly construed against the movant because courts look with disfavor upon any attempt to execute a judgment which has not acquired finality. Such execution affects the rights of the parties which are yet to be ascertained on appeal.13 The requisites for the grant of an execution of a judgment pending appeal are the following: (a) there must be a motion by the prevailing party with notice to the adverse party; (b) there must be good reasons for execution pending appeal; (c) the good reasons must be stated in the special order.14 As a discretionary execution, execution pending appeal is permissible only when good reasons exist for immediately executing the judgment before finality or pending appeal or even before the expiration of the period to appeal.15Good reasons, special, important, pressing reasons must exist to justify execution pending appeal; otherwise, instead of an instrument of solicitude and justice, it may well become a tool of oppression and inequality.16 Good reasons consist of exceptional circumstances of such urgency as to outweigh the injury or damage that the losing party may suffer should the appealed judgment be reversed later.17 Existence of Good Grounds to Justify Execution Pending Appeal In this case, Garon anchors the motion for execution pending appeal on the following grounds: (a) any appeal which Project Movers and Stronghold Insurance may take from the summary judgment would be patently dilatory; (b) the ill health of Garon’s spouse and the spouses’ urgent need for the funds owed to them by Project Movers and Stronghold Insurance constitute good reasons for execution pending appeal; and (c) Garon is ready and willing to post a bond to answer for any damage Project Movers and Stronghold Insurance may suffer should the trial court’s decision be reversed on appeal.18

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In granting the motion for execution pending appeal, the trial court ruled: A perusal of [t]he records of the instant case will sustain plaintiff’s claim that defendants raised no valid or meritorious defenses against the claims of plaintiff. The Court notes with interest the fact that defendants admitted the genuineness and due execution of the Promissory Notes and Surety Agreement sued upon in this case. The instant case simply turns on the issues of (i) whether or not there was a valid, due and demandable obligation and (ii) whether or not the obligation had been extinguished in the manner provided for under our laws. The Answers of defendants contained admissions that the obligation was valid and subsisting and that the same was due and unpaid. Founded as it is on Promissory Notes and Surety Agreements, the authenticity and due execution of which had been admitted, the Court is convinced that plaintiff is entitled to a judgment in her favor and that any appeal therefrom will obviously be a ploy to delay the proceedings (See Home Insurance Company vs. Court of Appeals, 184 SCRA 318). The second ground relied upon by plaintiff is also impressed with merit. In Ma-ao Sugar Central vs. Canete, 19 SCRA 646, the Supreme Court held that the movant was entitled to execution pending appeal of an award of compensation, ruling that his ill health and urgent need for the funds so awarded were considered "good reasons" to justify execution pending appeal (See also De Leon vs. Soriano, 95 Phil. 806). It is established that plaintiff’s spouse, Mr. Robert Garon, suffers from coronary artery disease, benign Prostatic Hyperplasia and hyperlipidemia. He is undergoing continuous treatment for the foregoing ailments and has been constrained to make serious lifestyle changes, that he can no longer actively earn a living. As shown in plaintiff’s verified motion, she has urgent need of the funds owed to her by defendants in order to answer for her husband’s medical expenses and for the day-to-day support of the family considering her husband’s ill health. The Court therefore finds and holds that there exists good reasons warranting an execution pending appeal.19 The trial court ruled that an appeal from its 19 September 2000 Order is only a ploy to delay the proceedings of the case. However, the authority to determine whether an appeal is dilatory lies with the appellate court.20 The trial court’s assumption that the appeal is dilatory prematurely judges the merits of the main case on appeal.21 Thus: Well-settled is the rule that it is not for the trial court to determine the merit of a decision it rendered as this is the role of the appellate Court. Hence, it is not within the competence of the trial court, in resolving the motion for execution pending appeal, to rule that the appeal is patently dilatory and to rely on the same as the basis for finding good reason to grant the motion.22 In a Decision23 promulgated on 7 May 2004 in CA-G.R. CV No. 69962 entitled "Emerita Garon v. Project Movers Realty and Development Corporation, et al.," the Court of Appeals sustained the trial court in rendering the summary judgment in Civil Case No. 99-1051. However, the Court of Appeals ruled that Stronghold Insurance could not be held solidarily liable with Project Movers. The Court of Appeals ruled that the surety bond between Project Movers and Stronghold Insurance expired on 7 November 1998 before the maturity of Project Movers’ loans on 17 December 1998 and 31 December 1998, respectively. Hence, when the loans matured, the liability of Stronghold Insurance had long ceased. The Court of Appeals affirmed the trial court’s 19 September 2000 Order with modification by ruling that Stronghold Insurance is not liable to Garon. The 7 May 2004 Decision of the Court of Appeals is not yet final. It is the subject of a petition for review filed by Garon before this Court. The case, docketed as G.R. No.

166058, is still pending with this Court. While this Court may either affirm or reverse the 7 May 2004 Decision of the Court of Appeals, the fact that the Court of Appeals absolved Stronghold Insurance from liability to Garon shows that the appeal from the 19 September 2000 Order is not dilatory on the part of Stronghold Insurance. We agree with Stronghold Insurance that Garon failed to present good reasons to justify execution pending appeal. The situations in the cases cited by the trial court are not similar to this case. In Ma-Ao Sugar Central Co., Inc. v. Cañete,24 Cañete filed an action for compensation for his illness. The Workmen’s Compensation Commission found the illness compensable. Considering Cañete’s physical condition and the Court’s finding that he was in constant danger of death, the Court allowed execution pending appeal. In De Leon, et al. v. Soriano, et al.,25 De Leon, et al. defaulted on an agreement that was peculiarly personal to Asuncion. The agreement was valid only during Asuncion’s lifetime. The Court considered that Soriano’s health was delicate and she was 75 years old at that time. Hence, execution pending appeal was justified. In this case, it was not Garon, but her husband, who was ill. The posting of a bond, standing alone and absent the good reasons required under Section 2, Rule 39 of the Rules, is not enough to allow execution pending appeal. The mere filing of a bond by a successful party is not a good reason to justify execution pending appeal as a combination of circumstances is the dominant consideration which impels the grant of immediate execution.26 The bond is only an additional factor for the protection of the defendant’s creditor.27 The exercise of the power to grant or deny a motion for execution pending appeal is addressed to the sound discretion of the trial court.28 However, the existence of good reasons is indispensable to the grant of execution pending appeal.29 Here, Garon failed to advance good reasons that would justify the execution pending appeal. Execution Pending Appeal against Stronghold Insurance Exceeds its Liability under the Trial Court’s Order The dispositive portion of the trial court’s 19 September 2000 Order states: WHEREFORE, premises considered[,] this Court hereby renders judgment in favor of the plaintiff Mrs. Emerita I. Garon as follows: xxxx 2. Defendant Stronghold Insurance Company, Inc. is hereby held jointly and solidarily liable to plaintiff Mrs. Garon in the amount of PESOS: TWELVE MILLION SEVEN HUNDRED FIFTY FIVE THOUSAND ONE HUNDRED THIRTY NINE AND EIGHTY FIVE CENTAVOS (₱12,755,139.85). 3. Defendants Project Movers Realty and Development Corporation and Stronghold Insurance Company, Inc. are also ordered to pay plaintiff Mrs. Garon jointly and severally the sum of PESOS: TWO HUNDRED THOUSAND as attorney’s fees plus costs of suit. x x x x30 The writ of execution pending appeal issued against Project Movers and Stronghold Insurance is for ₱56 million.31However, the Court of Appeals ruled that Stronghold Insurance failed to show that more than ₱12,755,139.85 had been garnished. The ruling of the Court of Appeals unduly burdens Stronghold Insurance because the amount garnished could exceed its liability. It gives the sheriff the discretion to garnish more than ₱12,755,139.85 from the accounts of Stronghold Insurance. The amount for garnishment is no longer ministerial on the part of the sheriff. This is not allowed. Thus:

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Leaving to the Sheriff, as held by the Court of Appeals, the determination of the exact amount due under the Writ would be tantamount to vesting such officer with judicial powers. He would have to receive evidence to determine the exact amount owing. In his hands would be placed a broad discretion that can only lead to delay and open the door to possible abuse. The orderly administration of justice requires that the amount on execution be determined judicially and the duties of the Sheriff confined to purely ministerial ones.32 WHEREFORE, we SET ASIDE the 4 May 2001 Decision of the Court of Appeals in CA-G.R. SP No. 63334. We also SET ASIDE the 8 February 2001 Order of the Regional Trial Court of Makati City, Branch 56 and the writ of execution pending appeal issued on 14 February 2001. We make permanent the temporary restraining order we issued on 8 August 2001. SO ORDERED.

Hence, the complaint for illegal dismissal and non-payment of monetary benefits filed by petitioners and other LMCEC employees who were similarly situated, namely: Guillermo S. Lucas (Lucas), Alvin Bontugay, Rector Palajos, and Hermes B. Pacatang (Pacatang), against respondents before the National Labor Relations Commission (NLRC). The employees alleged that they were illegally dismissed from employment and that their employer failed to pay them their holiday pay, premium pay for holiday, rest day, service incentive leave pay, and 13th month pay during the existence and duration of their employment. They also averred that they were not provided with sick and vacation leaves.10 Respondents denied that petitioners were illegally dismissed from employment. They claimed that petitioners were project employees and, upon the completion of each project, they were served notices of project completion.11 They clarified that the termination of petitioners’ employment was due to the completion of the projects for which they were hired.12 Petitioners, however, countered that they were regular employees as they had been engaged to perform activities which are usually necessary or desirable in the usual business or trade of LMCEC. They denied that they were project or contractual employees because their employment was continuous and uninterrupted for more than one (1) year. Finally, they maintained that they were part of a work pool from which LMCEC drew its workers for its various projects.13 On July 24, 2002, Labor Arbiter (LA) Lilia S. Savari rendered a decision,14 the dispositive portion of which reads: WHEREFORE, a Decision is hereby rendered declaring the dismissal of the complainants illegal. Corollarily, except for complainant Helyto N. Reyes, who has voluntarily withdrawn his case against the respondents, all the other complainants are hereby ordered to report to respondents for reinstatement but without backwages. All other claims are dismissed for lack of merit. SO ORDERED.15 The LA did not give credence to respondents’ claim that petitioners were project employees because of the former’s failure to present evidence showing that petitioners’ contracts of employment reflected the duration of each project for which they were employed and that respondents duly reported to the Department of Labor and Employment every termination of employment and project. As petitioners’ dismissal was without just and valid cause, the LA ruled that their termination from employment was illegal. However, the LA refused to award backwages and other monetary claims on the ground that petitioners’ employment was not continuous as they belonged to the regular work pool of LMCEC.16 The employees jointly filed a partial appeal to the NLRC, except Pacatang and Lucas who filed their separate appeal. On the other hand, the Administrative Officer of LMCEC issued individual communications to petitioners directing their reinstatement pursuant to the LA decision.17 On June 9, 2004, the NLRC modified18 the LA decision, the dispositive portion of which reads: WHEREFORE, the employees enumerated above are hereby ordered reinstated with limited backwages, without loss of seniority rights and other privileges. The computation division of the RAB-NCR is hereby ordered to compute the award as herein established. SO ORDERED.19

G.R. No. 176748 September 1, 2010 JUDY O. DACUITAL,1 EUGENIO L. MONDANO, JR., JOSEPH GALER,2 MARIANO MORALES, ROBERTO RUANCE, JOSEPH PORCADILLA, RAULITO PALAD, RICARDO DIGAMON, NONITO PRISCO , EULOGIO M. TUTOR, MELVIN PEPITO, HELYTO N. REYES,3 RANDOLF C. BALUDO, ALBERTO EPONDOL, RODELO A. SUSPER,4 EVARISTO VIGORI, 5 JONATHAN P. AYAAY, FELIPE ERILLA, ARIS A. GARCIA, ROY A. GARCIA, and RESTITUTO TAPANAN, Petitioners, vs. L.M. CAMUS ENGINEERING CORPORATION and/or LUIS M. CAMUS, Respondents. DECISION NACHURA, J.: This is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Court of Appeals (CA) Decision6 dated September 25, 2006 and Resolution7 dated February 14, 2007 in CA-G.R. SP No. 90377. The case stemmed from the following factual and procedural antecedents: Respondent L.M. Camus Engineering Corporation (LMCEC) is a domestic corporation duly organized and existing under and by virtue of Philippine laws, engaged in construction, engineering, and air-conditioning business; while respondent Luis M. Camus (Camus) is the company president. Petitioners Judy O. Dacuital (Dacuital), Eugenio L. Mondano, Jr., Joseph Galer (Galer), Mariano Morales, Roberto Ruance (Ruance), Joseph Porcadilla, Raulito Palad (Palad), Ricardo Digamon (Digamon), Nonito Prisco, Eulogio M. Tutor, Melvin Pepito, Helyto N. Reyes (Reyes), Randolf C. Baludo (Baludo), Alberto Epondol, Rodelo A. Susper, Evaristo Vigori, Jonathan P. Ayaay, Felipe Erilla, Aris A. Garcia (Aris), Roy A. Garcia (Roy), and Restituto Tapanan (Tapanan) were hired by LMCEC as welder, tinsmith, pipefitter, and mechanical employees.8 During the months of January, February and March 2001, petitioners were required by LMCEC to surrender their identification cards and ATM cards and were ordered to execute contracts of employment. Most of the petitioners did not comply with the directive as they believed that it was only respondents’ strategy to get rid of petitioners’ regular status since they would become new employees disregarding their length of service. Petitioners were later dismissed from employment.9

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The NLRC agreed with the LA that petitioners were illegally dismissed from employment. As a consequence of this pronouncement, the tribunal deemed it proper not only to reinstate them to their original position but also to give them their backwages. However, in view of the delayed resolution of the case that could not be attributed to respondents, the NLRC limited the award of backwages from the date of dismissal up to six (6) months after the case was elevated on appeal on September 23, 2002.20 The appeal filed by Pacatang and Lucas was dismissed for having been filed out of time. Respondents and complainants Pacatang and Lucas moved for the reconsideration of the NLRC decision. In a Resolution21 dated April 11, 2005, the NLRC denied the motion for reconsideration filed by respondents, but granted that of Pacatang and Lucas, thereby entitling the latter to receive backwages. Petitioners subsequently moved for the execution of the NLRC decision. Respondents, however, filed a Clarificatory Motion and Opposition to the Motion for Issuance of Entry of Judgment and Writ of Execution and for Recomputation of the Monetary Award22 in view of respondents’ petition before the CA and the reinstatement of some of the employees. In an Order23 dated August 23, 2005, the NLRC granted the motion. The NLRC took into consideration the fact that some of the employees who were earlier dismissed from employment had actually been reinstated. Hence, it limited the award of backwages from illegal dismissal up to the date of actual reinstatement. These employees who were actually reinstated were Galer, Ruance, Palad, Digamon, Aris, Roy, and Baludo.24 In the meantime, in their petition before the CA, respondents obtained a favorable decision when the appellate court declared petitioners’ termination from employment valid and legal and consequently set aside the award of backwages.25 The pertinent portion of the decision reads: IN VIEW WHEREOF, the Petition is GRANTED. The assailed Decision (dated June 9, 2004) of the National Labor Relations Commission is hereby MODIFIED. The termination from employment of the public respondents herein are declared valid and legal. Their award of backwages computed from the date of their termination are (sic) SET ASIDE. SO ORDERED.26 Contrary to the conclusions of the LA and the NLRC, the CA held that petitioners were project employees as their employment contracts provided that their respective tenures of employment were dependent on the duration of the construction projects. As such employees, their employment could lawfully be terminated upon the completion of the project for which they were hired. Consequently, there was no illegal dismissal.27 Petitioners’ motion for reconsideration was denied on February 14, 2007.28 Aggrieved, petitioners come to us seeking a review of the CA Decision, anchored on the following issues: I. Whether or not the Findings of the Honorable Labor Arbiter as affirmed by the Honorable National Labor Relations Commission should be accorded high respect and finality. II. Whether or not Petitioners were regular employees of respondent Corporation. III. Whether or not Complainants were illegally dismissed from their employment.29

Petitioners aver that the CA erred in completely disregarding the findings of the LA, as affirmed by the NLRC, in view of the settled rule that findings of fact and conclusions of law of quasi-judicial agencies like the NLRC are generally entitled to great respect and even finality. They also insist that they were regular employees, considering that the services they rendered were not only necessary but also indispensable to LMCEC’s business. They likewise claim that they had been in the service for a continuous period and a considerable length of time, and are in fact members of a work pool from which LMCEC draws its workers for its projects. Hence, even if they were initially hired as project employees, they eventually attained the status of regular employees. Petitioners also insist that they were illegally dismissed as their employment was terminated without just and valid cause, and without affording them due process of law. Lastly, petitioners claim that the NLRC had previously rendered decisions in favor of LMCEC employees who were similarly situated, hence, their case should also be decided in favor of labor.30 The petition is meritorious. We discuss first the procedural issues. Respondents point out that the decision of the LA had attained finality, except as to Palad, because of their failure to appeal. They explain that the Memorandum on Appeal filed with the NLRC was verified only by Palad without stating therein that he did it in representation of the other petitioners. In view of the finality of the NLRC decision, the instant petition should not prosper. We do not agree. Our pronouncement in Pacquing v. Coca-Cola Philippines, Inc.31 is instructive. As to the defective verification in the appeal memorandum before the NLRC, the same liberality applies. After all, the requirement regarding verification of a pleading is formal, not jurisdictional. Such requirement is simply a condition affecting the form of pleading, the non-compliance of which does not necessarily render the pleading fatally defective. Verification is simply intended to secure an assurance that the allegations in the pleading are true and correct and not the product of the imagination or a matter of speculation, and that the pleading is filed in good faith. The court or tribunal may order the correction of the pleading if verification is lacking or act on the pleading although it is not verified, if the attending circumstances are such that strict compliance with the rules may be dispensed with in order that the ends of justice may thereby be served. Moreover, no less than the Labor Code directs labor officials to use reasonable means to ascertain the facts speedily and objectively, with little regard to technicalities or formalities; while Section 10, Rule VII of the New Rules of Procedure of the NLRC provides that technical rules are not binding. Indeed, the application of technical rules of procedure may be relaxed in labor cases to serve the demand of substantial justice. Thus, the execution of the verification in the appeal memorandum by only two complainants in behalf of the other complainants also constitute substantial compliance.32 Clearly, the NLRC properly took cognizance of the appeal of all the named complainants even though it was signed by only one of them. While the right to appeal is a statutory and not a natural right, it is nonetheless an essential part of our judicial system. Courts are, therefore, advised to proceed with caution, so as not to deprive a party of the right to appeal. Litigants should have the amplest opportunity for the proper and just disposition of their cause – free, as much as possible, from the constraints of procedural technicalities.33 Thus, contrary to respondents’ claim, the

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decision had not attained finality even as to those who did not sign the appeal memorandum. Now on the substantive aspect. The issues boil down to whether the CA was correct in concluding that petitioners were project employees and that their dismissal from employment was legal. We answer in the negative. Even if the questions that need to be settled are factual in nature, this Court nevertheless feels obliged to resolve them due to the incongruent findings of the NLRC and the LA and those of the CA.34 Article 280 of the Labor Code distinguishes a "project employee" from a "regular employee" in this wise: Article 280. Regular and casual employment.—The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That, any employee who has rendered at least one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.35 A project employee is assigned to a project which begins and ends at determined or determinable times.36Employees who work under different project employment contracts for several years do not automatically become regular employees; they can remain as project employees regardless of the number of years they work. Length of service is not a controlling factor in determining the nature of one’s employment.37 Their rehiring is only a natural consequence of the fact that experienced construction workers are preferred.38 In fact, employees who are members of a "work pool" from which a company draws workers for deployment to its different projects do not become regular employees by reason of that fact alone. The Court has consistently held that members of a "work pool" can either be project employees or regular employees.39 The principal test used to determine whether employees are project employees is whether or not the employees were assigned to carry out a specific project or undertaking, the duration or scope of which was specified at the time the employees were engaged for that project.40 Admittedly, respondents did not present the employment contracts of petitioners except that of Dacuital. They explained that it was no longer necessary to present the other contracts since petitioners were similarly situated. Having presented one contract, respondents believed that they sufficiently established petitioners’ status as project employees. Even though the absence of a written contract does not by itself grant regular status to petitioners, such a contract is evidence that petitioners were informed of the duration and scope of their work and their status as project employees.41 In this case, where no other evidence was offered, the absence of the employment contracts

raises a serious question of whether the employees were properly informed at the onset of their employment of their status as project employees.42 While it is true that respondents presented the employment contract of Dacuital, the contract does not show that he was informed of the nature, as well as the duration of his employment. In fact, the duration of the project for which he was allegedly hired was not specified in the contract. The pertinent provision thereof is quoted hereunder for easy reference: 3. In accordance with Policy No. 20 of the Labor Code of the Philippines, parties agree that the effective date of this employment is 4-5-00 up to the duration of the DUCTWORK/ELECTRICAL/MECHANICAL phase of the project estimated to be finished in the month of _______, 19______ or earlier.43 Even if we assume that under the above provision of the contract, Dacuital was informed of the nature of his employment and the duration of the project, that same contract is not sufficient evidence to show that the other employees were so informed. It is undisputed that petitioners had individual employment contracts, yet respondents opted not to present them on the lame excuse that they were similarly situated as Dacuital. The non-presentation of these contracts gives rise to the presumption that the employees were not informed of the nature and duration of their employment. It is doctrinally entrenched that in illegal dismissal cases, the employer has the burden of proving with clear, accurate, consistent, and convincing evidence that the dismissal was valid. Absent any other proof that the project employees were informed of their status as such, it will be presumed that they are regular employees.44 Moreover, Department Order No. 19 (as well as the old Policy Instructions No. 20) requires employers to submit a report of an employee’s termination to the nearest public employment office everytime the employment is terminated due to the completion of a project.45 In this case, there was no evidence that there was indeed such a report. LMCEC’s failure to file termination reports upon the cessation of petitioners’ employment was an indication that petitioners were not project but regular employees. Well-established is the rule that regular employees enjoy security of tenure and they can only be dismissed for just or valid cause and upon compliance with due process, i.e., after notice and hearing. In cases involving an employee’s dismissal, the burden is on the employer to prove that the dismissal was legal.46 This burden was not amply discharged by LMCEC in this case. Being regular employees, petitioners were entitled to security of tenure, and their services may not be terminated except for causes provided by law.47 Finally, records failed to show that LMCEC afforded petitioners, as regular employees, due process prior to their dismissal, through the twin requirements of notice and hearing. Petitioners were not served notices informing them of the particular acts for which their dismissal was sought. Nor were they required to give their side regarding the charges made against them, if any. Certainly, petitioners’ dismissal was not carried out in accordance with law and was, therefore, illegal.48 Article 279 of the Labor Code, as amended, provides that an illegally dismissed employee shall be entitled to reinstatement, full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent from the time his compensation was withheld from him up to the time of his actual reinstatement.49 Contrary to the conclusion of the NLRC, the backwages due petitioners must be computed from the time they were unjustly dismissed until actual reinstatement to their former positions. Thus, until LMCEC implements the reinstatement aspect, its

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obligation to petitioners, insofar as accrued backwages and other benefits are concerned, continues to accumulate.50 The fact that petitioners did not appeal the NLRC decision on this matter does not bar this Court from ordering its modification. As held in Cocomangas Hotel Beach Resort v. Visca51¾ While as a general rule, a party who has not appealed is not entitled to affirmative relief other than the ones granted in the decision of the court below, this Court is imbued with sufficient authority and discretion to review matters, not otherwise assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a complete and just resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice. Besides, substantive rights like the award of backwages resulting from illegal dismissal must not be prejudiced by a rigid and technical application of the rules. The computation of the award for backwages from the time compensation was withheld up to the time of actual reinstatement is a mere legal consequence of the finding that respondents [petitioners] were illegally dismissed by petitioners [respondents].52 As to respondent Camus’ liability as LMCEC president, it is settled that in the absence of malice, bad faith, or specific provision of law, a director or officer of a corporation cannot be made personally liable for corporate liabilities.53 As held in Lowe, Inc. v. Court of Appeals,54 citing McLeod v. NLRC:55 Personal liability of corporate directors, trustees or officers attaches only when (1) they assent to a patently unlawful act of the corporation, or when they are guilty of bad faith or gross negligence in directing its affairs, or when there is a conflict of interest resulting in damages to the corporation, its stockholders or other persons; (2) they consent to the issuance of watered down stocks or when, having knowledge of such issuance, do not forthwith file with the corporate secretary their written objection; (3) they agree to hold themselves personally and solidarily liable with the corporation; or (4) they are made by specific provision of law personally answerable for their corporate action.56 To be sure, Camus has a personality which is distinct and separate from that of LMCEC. There was no proof that Camus acted in bad faith in dismissing petitioners from employment. The mere fact that he is the president of the company does not make him personally liable for the payment of backwages. Finally, the Court notes that although Tapanan was named as petitioner, he was never included as a complainant before the NLRC. As such, he is not a party to this case. Moreover, as clearly stated in the LA decision, Reyes has voluntarily withdrawn his case against respondents. Thus, although he is one of the petitioners here, he is not covered by this Decision. Lastly, some of the petitioners had already been actually reinstated by LMCEC. We emphasize that the computation of their backwages should be up to the date of actual reinstatement. WHEREFORE, premises considered, the petition is GRANTED. The Court of Appeals Decision dated September 25, 2006 and Resolution dated February 14, 2007 in CAG.R. SP No. 90377 are REVERSED and SET ASIDE. Petitioners’ dismissal from employment is declared illegal and, except Helyto N. Reyes and Restituto Tapanan, they are entitled to full backwages from the time of illegal dismissal until actual reinstatement. SO ORDERED.

G.R. No. 189496 February 1, 2012 D.M. FERRER & ASSOCIATES CORPORATION, Petitioner, vs. UNIVERSITY OF SANTO TOMAS, Respondent. DECISION SERENO, J.: Before us is a Petition for Review on Certiorari under Rule 45 of the Revised Rules of Court. Petitioner assails the Court of Appeals (CA) Resolution1 promulgated on 26 June 2009 dismissing the former’s Petition for Certiorari, and the Resolution2 dated 3 September 2009 denying the subsequent Motion for Reconsideration. The facts are undisputed: On 25 November 2005, petitioner and University of Santo Tomas Hospital, Inc. (USTHI) entered into a Project Management Contract for the renovation of the 4th and 5th floors of the Clinical Division Building, Nurse Call Room and Medical Records, Medical Arts Tower, Diagnostic Treatment Building and Pay Division Building. On various dates, petitioner demanded from USTHI the payment of the construction costs amounting to ₱17,558,479.39. However, on 16 April 2008, the University of Santo Tomas (UST), through its rector, Fr. Rolando V. Dela Rosa, wrote a letter informing petitioner that its claim for payment had been denied, because the Project Management Contract was without the required prior approval of the board of trustees. Thus, on 23 May 2008, petitioner filed a Complaint3 for sum of money, breach of contract and damages against herein respondent UST and USTHI when the latter failed to pay petitioner despite repeated demands. In impleading respondent UST, petitioner alleged that the former took complete control over the business and operation of USTHI, as well as the completion of the construction project. It also pointed out that the Articles of Incorporation of USTHI provided that, upon dissolution, all of the latter’s assets shall be transferred without any consideration and shall inure to the benefit of UST. It appears that USTHI passed a Resolution on 10 January 2008 dissolving the corporation by shortening its corporate term of existence from 16 March 2057 to 31 May 2008. Finally, petitioner alleged that respondent, through its rector, Fr. Dela Rosa, O.P., verbally assured the former of the payment of USTHI’s outstanding obligations. Thus, petitioner posited in part that UST may be impleaded in the case under the doctrine of "piercing the corporate veil," wherein respondent UST and USTHI would be considered to be acting as one corporate entity, and UST may be held liable for the alleged obligations due to petitioner. Subsequently, respondent filed its Motion to Dismiss dated 12 June 2008.4 It alleged that the Complaint failed to state a cause of action, and that the claim was unenforceable under the provisions of the Statute of Frauds. On 4 August 2008, Judge Bernelito R. Fernandez of Branch 97 of the Regional Trial Court (RTC) of Quezon City granted the motion and dismissed the Complaint insofar as respondent UST was concerned.5 First, basing its findings on the documents submitted in support of the Complaint, the RTC held that respondent was not a real party-in-interest, and that it was not privy to the contract executed between USTHI and petitioner. Second, the court pointed out that the alleged verbal assurances of Fr. Dela Rosa should have been in writing to make these assurances binding and demandable.

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Petitioner sought a reconsideration of the RTC Order and asserted that only allegations of the Complaint, and not the attached documents, should have been the basis of the trial court’s ruling, consistent with the rule that the cause of action can be determined only from the facts alleged in the Complaint. It also insisted that the Statute of Frauds was inapplicable, since USTHI’s obligation had already been partially executed.6 On 5 October 2008, petitioner filed an Urgent Motion for Voluntary Inhibition7 on the ground that Judge Fernandez was an alumnus of respondent UST. Thereafter, Judge Fernandez issued an Order8 inhibiting himself from the case, which was consequently re-raffled to Branch 76 presided by Judge Alexander S. Balut. On 16 April 2009, Judge Balut dismissed the Motion for Reconsideration filed by petitioner,9 upholding the initial findings of Judge Fernandez declaring that respondent UST was not a real party-in-interest, and that Fr. Dela Rosa’s alleged assurances of payment were unenforceable. Subsequently, petitioner filed a Petition for Certiorari under Rule 65 with the CA.10 Petitioner alleged that the trial court committed grave abuse of discretion when it granted respondent’s Motion to Dismiss on the basis of the documents submitted in support of the Complaint, and not solely on the allegations stated therein. Petitioner pointed out that the allegations raised questions of fact and law, which should have been threshed out during trial, when both parties would have been given the chance to present evidence supporting their respective allegations. However, on 26 June 2009, the CA issued the assailed Resolution and dismissed the Petition on the ground that a petition under Rule 65 is the wrong remedy to question the RTC’s Order that completely disposes of the case. Instead, petitioner should have availed itself of an appeal under Rule 41 of the Rules of Court. Petitioner moved for a reconsideration of the Resolution.11 It pointed out that the present case falls under the enumerated exceptions of Rule 41, in particular, while the main case is still pending, no appeal may be made from a judgment or final order for or against one or more of several parties or in separate claims, counterclaims, crossclaims and third-party complaints. On 3 September 2009, the CA denied the Motion for Reconsideration through its second assailed Resolution, holding that the motion raised no new issues or substantial grounds that would merit the reconsideration of the court. Hence this Petition. Petitioner raises two grounds in the present Petition: first, whether the CA erred in dismissing the Petition for Certiorari by failing to consider the exception in Sec. 1(g) of Rule 41 of the Rules of Court; second, whether the trial court committed grave abuse of discretion when it held that the Complaint stated no cause of action. We rule for petitioner. Respondent insists that petitioner should have first filed a notice of appeal before the RTC, and the appeal should have been subsequently denied before recourse to the CA was made. This contention holds no water. In Jan-Dec Construction Corp. v. Court of Appeals,12 we held that a petition for certiorari under Rule 65 is the proper remedy to question the dismissal of an action against one of the parties while the main case is still pending. This is the general rule in accordance with Rule 41, Sec. 1(g). In that case, ruled thus: Evidently, the CA erred in dismissing petitioner's petition for certiorari from the Order of the RTC dismissing the complaint against respondent. While Section 1, Rule 41 of the 1997 Rules of Civil Procedure states that an appeal may be taken only from a

final order that completely disposes of the case, it also provides several exceptions to the rule, to wit: (a) an order denying a motion for new trial or reconsideration; (b) an order denying a petition for relief or any similar motion seeking relief from judgment; (c) an interlocutory order; (d) an order disallowing or dismissing an appeal; (e) an order denying a motion to set aside a judgment by consent, confession or compromise on the ground of fraud, mistake or duress, or any other ground vitiating consent; (f) an order of execution; (g) a judgment or final order for or against one or more of several parties or in separate claims, counterclaims, cross-claims and thirdparty complaints, while the main case is pending, unless the court allows an appeal therefrom; and (h) an order dismissing an action without prejudice. In the foregoing instances, the aggrieved party may file an appropriate special civil action for certiorari under Rule 65. In the present case, the Order of the RTC dismissing the complaint against respondent is a final order because it terminates the proceedings against respondent but it falls within exception (g) of the Rule since the case involves two defendants, Intermodal and herein respondent and the complaint against Intermodal is still pending. Thus, the remedy of a special civil action for certiorari availed of by petitioner before the CA was proper and the CA erred in dismissing the petition. (Emphasis supplied) Clearly, in the case at bar, the CA also erred when it dismissed the Petition filed before it. Anent the second issue, we also agree with petitioner that the Complaint states a cause of action against respondent UST. In Abacan v. Northwestern University, Inc.,13 we said: It is settled that the existence of a cause of action is determined by the allegations in the complaint.1âwphi1 In resolving a motion to dismiss based on the failure to state a cause of action, only the facts alleged in the complaint must be considered. The test is whether the court can render a valid judgment on the complaint based on the facts alleged and the prayer asked for. Indeed, the elementary test for failure to state a cause of action is whether the complaint alleges facts which if true would justify the relief demanded. Only ultimate facts and not legal conclusions or evidentiary facts, which should not be alleged in the complaint in the first place, are considered for purposes of applying the test. (Emphasis supplied) While it is admitted that respondent UST was not a party to the contract, petitioner posits that the former is nevertheless liable for the construction costs. In support of its position, petitioner alleged that (1) UST and USTHI are one and the same corporation; (2) UST stands to benefit from the assets of USTHI by virtue of the latter’s Articles of Incorporation; (3) respondent controls the business of USTHI; and (4) UST’s officials have performed acts that may be construed as an acknowledgement of respondent’s liability to petitioner. Obviously, these issues would have been best resolved during trial. The RTC therefore committed grave abuse of discretion when it dismissed the case against respondent for lack of cause of action. The trial court relied on the contract executed between petitioner and USTHI, when the court should have instead considered merely the allegations stated in the Complaint. WHEREFORE, in view of the foregoing, the Petition is GRANTED. Branch 76 of the Regional Trial Court of Quezon City is hereby ordered to REINSTATE respondent University of Santo Tomas as a defendant in C.C. No. 0862635. SO ORDERED.

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Via a petition for certiorari and mandamus under Rule 65 of the 1997 Rules of Civil Procedure, petitioners assailed the dismissal of the notice of appeal before the Court of Appeals. In the appellate court, petitioners claimed that they had seasonably filed their notice of appeal. They argued that the 15-day reglementary period to appeal started to run only on July 22, 1998 since this was the day they received the final order of the trial court denying their motion for reconsideration. When they filed their notice of appeal on July 27, 1998, only five days had elapsed and they were well within the reglementary period for appeal.7 On September 16, 1999, the Court of Appeals (CA) dismissed the petition. It ruled that the 15-day period to appeal should have been reckoned from March 3, 1998 or the day they received the February 12, 1998 order dismissing their complaint. According to the appellate court, the order was the "final order" appealable under the Rules. It held further: Perforce the petitioners’ tardy appeal was correctly dismissed for the (P)erfection of an appeal within the reglementary period and in the manner prescribed by law is jurisdictional and non-compliance with such legal requirement is fatal and effectively renders the judgment final and executory.8 Petitioners filed a motion for reconsideration of the aforementioned decision. This was denied by the Court of Appeals on January 6, 2000. In this present petition for review under Rule 45 of the Rules, petitioners ascribe the following errors allegedly committed by the appellate court: I THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE PETITIONERS’ PETITION FOR CERTIORARI AND MANDAMUS AND IN AFFIRMING THE ORDER OF THE HON. JUDGE ANTONIO N. ROSALES WHICH DISMISSED THE PETITIONERS’ APPEAL IN CIVIL CASE NO. C-36 OF THE REGIONAL TRIAL COURT, BRANCH 43, ROXAS, ORIENTAL MINDORO, EVEN AFTER THE PETITIONERS HAD PAID THE APPEAL DOCKET FEES. II THE HONORABLE COURT OF APPEALS LIKEWISE ERRED IN RULING AND AFFIRMING THE DECISION OR ORDER OF THE RESPONDENT HON. ANTONIO M. ROSALES THAT PETITIONERS’ APPEAL WAS FILED OUT OF TIME WHEN PETITIONERS RECEIVED THE LAST OR FINAL ORDER OF THE COURT ON JULY 22, 1998 AND FILED THEIR NOTICE OF APPEAL ON JULY 27, 1998 AND PAID THE APPEAL DOCKET FEE ON AUGUST 3, 1998. III THE HONORABLE COURT OF APPEALS FURTHER ERRED IN RULING THAT THE WORDS "FINAL ORDER" IN SECTION 3, RULE 41, OF THE 1997 RULES OF CIVIL PROCEDURE WILL REFER TO THE [FIRST] ORDER OF RESPONDENT JUDGE HON. ANTONIO M. MORALES DATED FEBRUARY 12, 1998 INSTEAD OF THE LAST AND FINAL ORDER DATED JULY 1, 1998 COPY OF WHICH WAS RECEIVED BY PETITIONERS THROUGH COUNSEL ON JULY 22, 1998. IV. THE HONORABLE COURT OF APPEALS FINALLY ERRED IN FINDING THAT THE DECISION IN THE CASE OF DENSO, INC. V. IAC, 148 SCRA 280, IS APPLICABLE IN THE INSTANT CASE THEREBY IGNORING THE PECULIAR FACTS AND CIRCUMSTANCES OF THIS CASE AND THE FACT THAT THE SAID DECISION

G.R. No. 141524 September 14, 2005 DOMINGO NEYPES, LUZ FAUSTINO, ROGELIO FAUSTINO, LOLITO VICTORIANO, JACOB OBANIA AND DOMINGO CABACUNGAN, Petitioners, vs. HON. COURT OF APPEALS, HEIRS OF BERNARDO DEL MUNDO, namely: FE, CORAZON, JOSEFA, SALVADOR and CARMEN, all surnamed DEL MUNDO, LAND BANK OF THE PHILIPPINES AND HON. ANTONIO N. ROSALES, Presiding Judge, Branch 43, Regional Trial Court, Roxas, Oriental Mindoro,Respondent. DECISION CORONA, J.: Petitioners Domingo Neypes, Luz Faustino, Rogelio Faustino, Lolito Victoriano, Jacob Obania and Domingo Cabacungan filed an action for annulment of judgment and titles of land and/or reconveyance and/or reversion with preliminary injunction before the Regional Trial Court, Branch 43, of Roxas, Oriental Mindoro, against the Bureau of Forest Development, Bureau of Lands, Land Bank of the Philippines and the heirs of Bernardo del Mundo, namely, Fe, Corazon, Josefa, Salvador and Carmen. In the course of the proceedings, the parties (both petitioners and respondents) filed various motions with the trial court. Among these were: (1) the motion filed by petitioners to declare the respondent heirs, the Bureau of Lands and the Bureau of Forest Development in default and (2) the motions to dismiss filed by the respondent heirs and the Land Bank of the Philippines, respectively. In an order dated May 16, 1997, the trial court, presided by public respondent Judge Antonio N. Rosales, resolved the foregoing motions as follows: (1) the petitioners’ motion to declare respondents Bureau of Lands and Bureau of Forest Development in default was granted for their failure to file an answer, but denied as against the respondent heirs of del Mundo because the substituted service of summons on them was improper; (2) the Land Bank’s motion to dismiss for lack of cause of action was denied because there were hypothetical admissions and matters that could be determined only after trial, and (3) the motion to dismiss filed by respondent heirs of del Mundo, based on prescription, was also denied because there were factual matters that could be determined only after trial.1 The respondent heirs filed a motion for reconsideration of the order denying their motion to dismiss on the ground that the trial court could very well resolve the issue of prescription from the bare allegations of the complaint itself without waiting for the trial proper. In an order2 dated February 12, 1998, the trial court dismissed petitioners’ complaint on the ground that the action had already prescribed. Petitioners allegedly received a copy of the order of dismissal on March 3, 1998 and, on the 15th day thereafter or on March 18, 1998, filed a motion for reconsideration. On July 1, 1998, the trial court issued another order dismissing the motion for reconsideration3 which petitioners received on July 22, 1998. Five days later, on July 27, 1998, petitioners filed a notice of appeal4 and paid the appeal fees on August 3, 1998. On August 4, 1998, the court a quo denied the notice of appeal, holding that it was filed eight days late.5 This was received by petitioners on July 31, 1998. Petitioners filed a motion for reconsideration but this too was denied in an order dated September 3, 1998.6

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WAS RENDERED PRIOR TO THE ENACTMENT OF THE 1997 RULES OF CIVIL PROCEDURE.9 The foregoing issues essentially revolve around the period within which petitioners should have filed their notice of appeal. First and foremost, the right to appeal is neither a natural right nor a part of due process. It is merely a statutory privilege and may be exercised only in the manner and in accordance with the provisions of law. Thus, one who seeks to avail of the right to appeal must comply with the requirements of the Rules. Failure to do so often leads to the loss of the right to appeal.10 The period to appeal is fixed by both statute and procedural rules. BP 129,11 as amended, provides: Sec. 39. Appeals. – The period for appeal from final orders, resolutions, awards, judgments, or decisions of any court in all these cases shall be fifteen (15) days counted from the notice of the final order, resolution, award, judgment, or decision appealed from. Provided, however, that in habeas corpus cases, the period for appeal shall be (48) forty-eight hours from the notice of judgment appealed from. x x x Rule 41, Section 3 of the 1997 Rules of Civil Procedure states: SEC. 3. Period of ordinary appeal. ― The appeal shall be taken within fifteen (15) days from the notice of the judgment or final order appealed from. Where a record on appeal is required, the appellant shall file a notice of appeal and a record on appeal within thirty (30) days from the notice of judgment or final order. The period to appeal shall be interrupted by a timely motion for new trial or reconsideration. No motion for extension of time to file a motion for new trial or reconsideration shall be allowed. (emphasis supplied) Based on the foregoing, an appeal should be taken within 15 days from the notice of judgment or final order appealed from. A final judgment or order is one that finally disposes of a case, leaving nothing more for the court to do with respect to it. It is an adjudication on the merits which, considering the evidence presented at the trial, declares categorically what the rights and obligations of the parties are; or it may be an order or judgment that dismisses an action.12 As already mentioned, petitioners argue that the order of July 1, 1998 denying their motion for reconsideration should be construed as the "final order," not the February 12, 1998 order which dismissed their complaint. Since they received their copy of the denial of their motion for reconsideration only on July 22, 1998, the 15-day reglementary period to appeal had not yet lapsed when they filed their notice of appeal on July 27, 1998. What therefore should be deemed as the "final order," receipt of which triggers the start of the 15-day reglementary period to appeal ¾ the February 12, 1998 order dismissing the complaint or the July 1, 1998 order dismissing the MR? In the recent case of Quelnan v. VHF Philippines, Inc.,13 the trial court declared petitioner Quelnan non-suited and accordingly dismissed his complaint. Upon receipt of the order of dismissal, he filed an omnibus motion to set it aside. When the omnibus motion was filed, 12 days of the 15-day period to appeal the order had lapsed. He later on received another order, this time dismissing his omnibus motion. He then filed his notice of appeal. But this was likewise dismissed ― for having been filed out of time. The court a quo ruled that petitioner should have appealed within 15 days after the dismissal of his complaint since this was the final order that was appealable under the Rules. We reversed the trial court and declared that it was the denial of the motion for

reconsideration of an order of dismissal of a complaint which constituted the final order as it was what ended the issues raised there. This pronouncement was reiterated in the more recent case of Apuyan v. Haldeman et al.14 where we again considered the order denying petitioner Apuyan’s motion for reconsideration as the final order which finally disposed of the issues involved in the case. Based on the aforementioned cases, we sustain petitioners’ view that the order dated July 1, 1998 denying their motion for reconsideration was the final order contemplated in the Rules. We now come to the next question: if July 1, 1998 was the start of the 15-day reglementary period to appeal, did petitioners in fact file their notice of appeal on time? Under Rule 41, Section 3, petitioners had 15 days from notice of judgment or final order to appeal the decision of the trial court. On the 15th day of the original appeal period (March 18, 1998), petitioners did not file a notice of appeal but instead opted to file a motion for reconsideration. According to the trial court, the MR only interrupted the running of the 15-day appeal period.15 It ruled that petitioners, having filed their MR on the last day of the 15-day reglementary period to appeal, had only one (1) day left to file the notice of appeal upon receipt of the notice of denial of their MR. Petitioners, however, argue that they were entitled under the Rules to a fresh period of 15 days from receipt of the "final order" or the order dismissing their motion for reconsideration. In Quelnan and Apuyan, both petitioners filed a motion for reconsideration of the decision of the trial court. We ruled there that they only had the remaining time of the 15-day appeal period to file the notice of appeal. We consistently applied this rule in similar cases,16 premised on the long-settled doctrine that the perfection of an appeal in the manner and within the period permitted by law is not only mandatory but also jurisdictional.17 The rule is also founded on deep-seated considerations of public policy and sound practice that, at risk of occasional error, the judgments and awards of courts must become final at some definite time fixed by law.18 Prior to the passage of BP 129, Rule 41, Section 3 of the 1964 Revised Rules of Court read: Sec. 3. How appeal is taken. — Appeal maybe taken by serving upon the adverse party and filing with the trial court within thirty (30) days from notice of order or judgment, a notice of appeal, an appeal bond, and a record on appeal. The time during which a motion to set aside the judgment or order or for new trial has been pending shall be deducted, unless such motion fails to satisfy the requirements of Rule 37. But where such motion has been filed during office hours of the last day of the period herein provided, the appeal must be perfected within the day following that in which the party appealing received notice of the denial of said motion.19 (emphasis supplied) According to the foregoing provision, the appeal period previously consisted of 30 days. BP 129, however, reduced this appeal period to 15 days. In the deliberations of the Committee on Judicial Reorganization20 that drafted BP 129, the raison d’ etre behind the amendment was to shorten the period of appeal21 and enhance the efficiency and dispensation of justice. We have since required strict observance of this reglementary period of appeal. Seldom have we condoned late filing of notices of appeal,22 and only in very exceptional instances to better serve the ends of justice.

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In National Waterworks and Sewerage Authority and Authority v. Municipality of Libmanan,23 however, we declared that appeal is an essential part of our judicial system and the rules of procedure should not be applied rigidly. This Court has on occasion advised the lower courts to be cautious about not depriving a party of the right to appeal and that every party litigant should be afforded the amplest opportunity for the proper and just disposition of his cause, free from the constraint of technicalities. In de la Rosa v. Court of Appeals,24 we stated that, as a rule, periods which require litigants to do certain acts must be followed unless, under exceptional circumstances, a delay in the filing of an appeal may be excused on grounds of substantial justice. There, we condoned the delay incurred by the appealing party due to strong considerations of fairness and justice. In setting aside technical infirmities and thereby giving due course to tardy appeals, we have not been oblivious to or unmindful of the extraordinary situations that merit liberal application of the Rules. In those situations where technicalities were dispensed with, our decisions were not meant to undermine the force and effectivity of the periods set by law. But we hasten to add that in those rare cases where procedural rules were not stringently applied, there always existed a clear need to prevent the commission of a grave injustice. Our judicial system and the courts have always tried to maintain a healthy balance between the strict enforcement of procedural laws and the guarantee that every litigant be given the full opportunity for the just and proper disposition of his cause.25 The Supreme Court may promulgate procedural rules in all courts.26 It has the sole prerogative to amend, repeal or even establish new rules for a more simplified and inexpensive process, and the speedy disposition of cases. In the rules governing appeals to it and to the Court of Appeals, particularly Rules 42,27 4328 and 45,29 the Court allows extensions of time, based on justifiable and compelling reasons, for parties to file their appeals. These extensions may consist of 15 days or more. To standardize the appeal periods provided in the Rules and to afford litigants fair opportunity to appeal their cases, the Court deems it practical to allow a fresh period of 15 days within which to file the notice of appeal in the Regional Trial Court, counted from receipt of the order dismissing a motion for a new trial or motion for reconsideration. 30 Henceforth, this "fresh period rule" shall also apply to Rule 40 governing appeals from the Municipal Trial Courts to the Regional Trial Courts; Rule 42 on petitions for review from the Regional Trial Courts to the Court of Appeals; Rule 43 on appeals from quasi-judicial agencies31 to the Court of Appeals and Rule 45 governing appeals by certiorari to the Supreme Court.32 The new rule aims to regiment or make the appeal period uniform, to be counted from receipt of the order denying the motion for new trial, motion for reconsideration (whether full or partial) or any final order or resolution. We thus hold that petitioners seasonably filed their notice of appeal within the fresh period of 15 days, counted from July 22, 1998 (the date of receipt of notice denying their motion for reconsideration). This pronouncement is not inconsistent with Rule 41, Section 3 of the Rules which states that the appeal shall be taken within 15 days from notice of judgment or final order appealed from. The use of the disjunctive word "or" signifies disassociation and independence of one thing from another. It should, as a rule, be construed in the sense in which it ordinarily implies.33 Hence, the use of "or" in the above provision supposes that the notice of appeal may be filed within 15 days

from the notice of judgment or within 15 days from notice of the "final order," which we already determined to refer to the July 1, 1998 order denying the motion for a new trial or reconsideration. Neither does this new rule run counter to the spirit of Section 39 of BP 129 which shortened the appeal period from 30 days to 15 days to hasten the disposition of cases. The original period of appeal (in this case March 3-18, 1998) remains and the requirement for strict compliance still applies. The fresh period of 15 days becomes significant only when a party opts to file a motion for new trial or motion for reconsideration. In this manner, the trial court which rendered the assailed decision is given another opportunity to review the case and, in the process, minimize and/or rectify any error of judgment. While we aim to resolve cases with dispatch and to have judgments of courts become final at some definite time, we likewise aspire to deliver justice fairly. In this case, the new period of 15 days eradicates the confusion as to when the 15day appeal period should be counted – from receipt of notice of judgment (March 3, 1998) or from receipt of notice of "final order" appealed from (July 22, 1998). To recapitulate, a party litigant may either file his notice of appeal within 15 days from receipt of the Regional Trial Court’s decision or file it within 15 days from receipt of the order (the "final order") denying his motion for new trial or motion for reconsideration. Obviously, the new 15-day period may be availed of only if either motion is filed; otherwise, the decision becomes final and executory after the lapse of the original appeal period provided in Rule 41, Section 3. Petitioners here filed their notice of appeal on July 27, 1998 or five days from receipt of the order denying their motion for reconsideration on July 22, 1998. Hence, the notice of appeal was well within the fresh appeal period of 15 days, as already discussed.34 We deem it unnecessary to discuss the applicability of Denso (Philippines), Inc. v. IAC35 since the Court of Appeals never even referred to it in its assailed decision. WHEREFORE, the petition is hereby GRANTED and the assailed decision of the Court of Appeals REVERSED and SET ASIDE. Accordingly, let the records of this case be remanded to the Court of Appeals for further proceedings. No costs. SO ORDERED.

G.R. No. L-61042 April 15, 1987 HECTOR L. ONG, petitioner, vs. MARILYN TATING AND ROBERT TATING, ET AL., respondents. NARVASA, J.: The issue in this case concerns the jurisdiction of an inferior Court to take cognizance of a motion impugning the sheriff's authority to execute a final judgment in an ejectment case — which commands payment of rentals in arrears — against personalty claimed as theirs by persons formerly residing in the leased premises together with the evicted defendant-lessee. An action of desahucio was instituted in the City Court of Quezon City by petitioner Ong against his lessee, Evangeline Roces. 1 This in time culminated in a judgment by the Court of First Instance (Branch XVIII) 2 disposing of the case as follows:

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WHEREFORE, premises considered, the judgment of the City Court is set aside and in lieu thereof judgment is rendered ordering defendant Evangeline Roces and all persons claiming under her to vacate plaintiff's premises located at 169-D, Tolentino St., San Francisco del Monte, Quezon City; to pay rentals in arrears in the sum of P10,920.00 as of September 1978 and P260.00 a month from October 1978 until the premises are vacated with interest at 12% per annum; P1,000.00 as attomey's fees and the costs. 3 The decision became final and executory, no appeal having been taken therefrom; and in due course, the records of the case were remanded to the City Court. On Ong's application, the City Court directed execution of the judgment. Accordingly, the sheriff cleared the premises of its occupants, which included Anacleto Tating (Evangeline's stepfather and lawyer), Marilyn Tating (Anacleto's wife), and Robert Tating. 4 The sheriff also levied on certain chattels found in the place: a "Citizen" stereo set; a "Sanyo" television set; a "Frigidaire" refrigerator; and a "Hitachi" electric desk fan. Marilyn and Robert Tating sought to retrieve these appliances from the sheriff, alleging that the articles belonged to them and not to the lessee, Evangeline Roces. 5 To this end, Robert filed with the sheriff a "Third Party Claim" dated September 13, 1979 as regards the "Citizen" stereo set; and Marilyn, a similar claim with respect to the other chattels. 6 When these proved unavailing, they filed with the City Court Identical applications dated September 17, 1979, entitled "Urgent Motion for Suspension of Sheriff Sale and for Release of Properties Wrongfully Levied Upon on Execution," in which they set out their respective titles to the goods and prayed that the execution sale thereof scheduled on September 19, 1979 be abated and that, after hearing, said goods be released to them as the true and lawful owners thereof. 7 To neutralize the Tatings' moves, and so that the execution sale might proceed as scheduled, Ong posted two (2) surety bonds 8 to indemnify the sheriff for any liability for damages. 9 But by Order dated September 19, 1979 the City Court restrained the sale and set the Tatings' motions for hearing. 10 What Ong did was to present an "Omnibus Opposition, etc. " dated October 2, 1979, 11 contending that the Tatings' motions should have been filed with the Court of First Instance since it was the latter's decision which was being executed; and that, in any event, the Tatings' remedy was "to file an action for damages against the indemnity bonds after the auction sale. " He also theorized that — * * Atty. Tating, and the third party claimants having stayed in the premises and having enjoyed the same should be required to pay the back rentals, attorney's fees and sheriff's and legal expenses (and should not) escape by avoiding paying any amount as stated in the judgment. * * 12 Ong later filed a "Motion to Inhibit" dated January 9, 1980, which the City Court denied by Order dated January 23, 1980. The Court also directed Ong's counsel to explain certain apparently contumacious statements in the motion. The Order reads as follows: ORDER Considering the Motion to Inhibit filed by the plaintiff, dated January 9, 1980, and the Manifestation filed by the third party claimants, Marilyn Tating and Robert Tating, dated January 16, 1980, this Court finds the motion without merit and hereby resolves to deny it.

Furthermore, Atty. Manuel E. Yuzon, counsel for the plaintiff, is hereby ordered to explain in writing within ten (10) days from notice hereof why he should not be cited for indirect contempt of court for stating in his Motion to Inhibit that if this Court 'proceeds to hear and resolve the third-party claims, it is foregone conclusion that the third-party claimants will surely win and the plaintiff will lose,' thereby casting aspersions on the integrity of this Court and degrading the administration of justice. In the meantime, let the continuation of the hearing of the motion for suspension of sheriff's sale etc. be set for February 11, 1980, at 9:00 o'clock in the morning. SO ORDERED. 13 Ong promptly initiated proceedings to negate this Order. He filed with the Court of First Instance on February 7, 1980 a petition for certiorari and prohibition, with application for preliminary injunction. 14 Acting thereon, the Court (Branch IX) promulgated an Order dated April 2, 1980 directing the maintenance of the status quo and commanding that the City Court refrain "from hearing and deciding the third party claims and the urgent motion for suspension of Sheriff's Sale, etc. until the resolution of the injunction * *. 15 It afterwards rendered a decision, dated December 15, 1981, 16 pertinently reading as follows: The issue in this petition boils down to this should the third-party claims be heard and decided by the lower court. While it is true that the respondents Marilyn and Robert Tating were not parties in the ejectment case because the lease was between the petitioner and Evangeline Roces, they stayed with her and the decision of the appellate court covered them as it ordered "Evangeline Roces and all persons claiming under her to vacate plaintiff's premises" ... Besides, the procedure followed by said private respondents in vindicating their rights over the four (4) levied appliances is not the one sanctioned by law for they should have filed a separate and independent action making parties the deputy sheriff and the petitioner and making them responsible for the execution (Santos et al., vs. Hon. Mojica, L-19618, Feb. 28, 1964). WHEREUPON, premises considered, the petitioner Hector L. Ong is entitled to relief. The decision of Branch XVIII of the CFI Quezon City which is final and executory, stands. The preliminary injunction issued on April 2, 1980 is hereby ordered permanent. 17 The Tatings appealed to the Court of Appeals by "a petition for review filed * * on March 1, 1982. 18 In its decision, promulgated on June 23, 1982, after due proceedings, 19 the Court of Appeals expressed puzzlement why the matter of the execution and related incidents were passed upon by the lower court, when the only issue was the correctness of the City Judge's refusal to inhibit, himself. 20 It dismissed the petition, and sent the case back to the City Court for further proceedings." Said the Court: It is a puzzle to Us why the hearing went out of bounds. Instead of determining merely the propriety of the order of denial of the motion to inhibit, the parties and the Court of First Instance * * went into the

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merits of the propriety of the execution of the decision of the City Court, the auction sale of the appliances claimed by the Tatings, the levy,the third party claim,the indemnity bond, and the motion to suspend the sale and the filling of the sheriffs bond matters which are properly only to be treated in a separate proceeding. From the records,We see that if at all the matter of execution of the decision ** (etc.) were mentioned,it was merely to give a background to the motion to inhibit Judge Laquio, Jr. from proceeding to take further participation in the incident of the execution ** and the incident stemming therefrom. The propriety of the denial of the motion to inhibit was lost in the maze of the irrelevant facts and incidents taken during the hearing of this case in the court below. A thorough review of the decision of the Court of First Instance * * Branch IX, in this certiorari case shows that the Presiding Judge * * erroneously treated the pleadings before it in Civil Case No. 29245. Thus, We are constrained to set the same aside and remand the case to the City Court presided over by Judge Laquio, Jr. for further proceedings. Principally, We rule the denial of the motion for Judge Laquio, Jr. to inhibit himself from the ejectment case No. 28309, Quezon City Court, was well taken. The petition assailing the order of denial which is the main issue in Civil Case No. 29245 is without merit. * * 21 Ong is now before this Court, praying for the reversal of the decision of the Court of Appeals, and the perpetual inhibition of the City Judge "from further hearing and deciding the (Tatings') third-party claims." 22 It will not do to dismiss the petition as the IAC did by declaring that the only issue involved is the propriety of the City Judge's denial of the motion for his inhibition, and pronouncing the denial to be correct. Not only is such a limitation of the issues disputed by Ong, but the resolution of the single point would leave unanswered several other nagging questions. The opportunity to resolve those questions having been presented, the Court will do precisely that, to the end that the controversy may be expeditiously laid to rest, Three theories are advocated by Ong, namely: 1. From the decision of the Court of First Instance (Branch IX) on his petition for certiorari and prohibition, the Tatings' remedy was appeal (by writ of error), not a petition for review, to the Court of Appeals. 2. The City Court lost jurisdiction to hear and determine the Tatings' third-party claims upon the filing by him (Ong) of the bonds prescribed by Section 17, Rule 39, the purpose of which is precisely to hold the sheriff free from liability for damages for proceeding with the execution sale despite said third- party claims. 3. Corollarily, the Tatings' remedy was to file a separate suit to recover against said bonds posted by Ong, whatever damages might be suffered by them by reason of the effectuation of the execution sale. 23 Ong is correct in arguing that the mode of appeal to the Court of Appeals available to the Tatings from the adverse judgment of the CFI in the action of certiorari and prohibition instituted by him, was not by "petition for review" under Section 22 of B.P. Blg., 129 24 but an ordinary appeal (by writ of error) under Rule 41, Rules of Court and Section 39, of B.P. Blg. 129 (also, Section 20 of the Interim Rules) A "petition for

review" is the correct mode of appeal from a judgment rendered by a CFI (RTC) in the exercise of appellate jurisdiction i.e., when it decides a case appealed to it from the inferior court. In such a case, the appeal is not a matter of right, its acceptance being discretionary on the Court of Appeals, which "may give it due course only when the petition shows prima facie that the lower court has committed an error of fact or law that will warrant a reversal or modification of the decision or judgment sought to be reviewed." On the other hand, when a CFI (RTC) adjudicates a case in the exercise of its original jurisdiction, the correct mode of elevating the judgment to the Court of Appeals is by ordinary appeal, or appeal by writ of error, involving merely the filing of a notice of appeal except only if the appeal is taken in special proceedings and other cases wherein multiple appeals are allowed under the law, in which event the filing of a record on appeal is additionally required. 25 Of course, when the appeal would involve purely questions of law or any of the other cases (except criminal cases as stated hereunder) specified in Section 5(2), Article X of the Constitution, 26 it should be taken to the Supreme Court by petition for review on certiorari in accordance with Rules 42 and 45 of the Rules of Court. 27 However, in criminal cases in which the penalty imposed is death or life imprisonment, the appeal to the Supreme Court is by ordinary appeal on both questions of fact and law. In cases where the death penalty is imposed, there is an automatic review by the Supreme Court. (Sec. 3 of the 1985 Rules on Criminal Procedure) The mode by which the Tatings thus brought up to the Court of Appeals the adverse judgment of the CFI — i.e., by petition for review — was erroneous. This aspect of the case apparently escaped the Appellate Court's attention; it did not treat of it at all. This is however of no moment. The need of finally resolve this case makes this defect inconsequential. In any event, the defect has been waived, no issue concerning it having been raised in the proceedings before the Court of Appeals. 28 Ong's second contention — that the posting by him of a bond to indemnify the sheriff for damages for proceeding with an execution sale despite the existence of third-party claims on the property levied on (pursuant to Section 17, Rule 39) caused the Trial Court to lose jurisdiction to deal with the third-party claimants' plea for relief against what they deemed to be an act of trespass by the sheriff is incorrect. Certain it is that the Trial Court has plenary jurisdiction over the proceedings for the enforcement of its judgments. It has undeniable competence to act on motions for execution (whether execution be a matter of right or discretionary upon the Court), issue and quash writs, determine if property is exempt from execution, or fix the value of property claimed by third persons so that a bond equal to such value may be posted by a judgment creditor to indemnify the sheriff against liability for damages, resolve questions involving redemption, examine the judgment debtor and his debtors, and otherwise perform such other acts as may be necessary or incidental to the carrying out of its decisions. It may and should exercise control and supervision over the sheriff and other court officers and employees taking part in the execution proceedings, and correct them in the event that they should err in the discharge of their functions. Now, it is axiomatic that money judgments are enforceable only against property unquestionably belonging to the judgment debtor. One man's goods shall not be sold for another man's debts, as the saying goes. 29 Therefore, the sheriff acts properly only when he subjects to execution property undeniably belonging to the judgment debtor. But to the extent that he levies on assets of a third person, in which the

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judgment debtor has no interest, to that extent he acts as a trespasser, and to that extent he is amenable to control and correction by the Court. 30 When the sheriff thus seizes property of a third person in which the judgment debtor holds no right or interest, and so incurs in error, the supervisory power of the Court which has authorized execution may be invoked by the third person. Upon due application by the third person, and after summary hearing, the Court may command that the property be released from the mistaken levy and restored to the rightful owner or possessor. What the Court can do in these instances however is limited to a determination of whether the sheriff has acted rightly or wrongly in the performance of his duties in the execution of the judgment, more specifically, if he has indeed taken hold of property not belonging to the judgment debtor. The Court does not and cannot pass upon the question of title to the property, with any character of finality. It can treat of that matter only in so far as may be necessary to decide if the Sheriff has acted correctly or not. 31 The Court can require the sheriff to restore the property to the claimant's possession if warranted by the evidence. If the claimant's proofs do not however persuade the Court of his title or right of possession thereof, the claim will of course be denied. This remedy is not that of intervention, which is dealt with in Rule 12 of the Rules of Court, and may be availed of only before or during trial, not thereafter, and certainly not when judgment is executory. It is rather simply an invocation of the Court's power of supervision and control over the actuations of its officers and employees to the end that it be assured that these conform to the law. 32 Independently of the recourse just indicated, and even before or without availment thereof, the person who claims that his property has been wrongfully seized by resort to the remedy known as terceria set out in Section 17, Rule 39 of the Rules of Court, viz: SEC. 17. Proceedings where property claimed by third person. — If property levied on be claimed by any other person than the judgment debtor or his agent, and such person make an affidavit of his title thereto or right to the possession thereof, stating the grounds of such right or title, and serve the same upon the officer making the levy, and a copy thereof upon the judgment creditor, the officer shag not be bound to keep the property, unless such judgment creditor or his agent, on demand of the officer, indemnify the officer against such claim by a bond in a sum not greater than the value of the property levied on. In case of disagreement as to such value, the same shall be determined by the court issuing the writ of execution. The officer is not liable for damages, for the taking or keeping of the property, to any third-party claimant unless a claim is made by the latter and unless an action for damages is brought by him against the officer within one hundred twenty (120) days from the date of the filing of the bond. But nothing herein contained shall prevent such claimant or any third person from vindicating his claim to the property by any proper action. xxx xxx xxx The remedies just mentioned are without prejudice to "any proper action" that a thirdparty claimant may deem suitable, to vindicate "his claim to the property." Such a

"proper action," in the context of Section 17 of Rule 39, has been held to refer to an action distinct and separate from that in which the judgment is being enforced. Such a "proper action" is, quite obviously, entirely distinct from the explicitly described in Section 17 of Rule 39, i.e., "an action for damages ** brought (by a third-party claimant) against the officer within one hundred twenty (120) days from the date of the filing of the bond ** for the taking or keeping of the property" subject of the terceria. Quite obviously, too, this "proper action" would have for its object the recovery of the possession of the property seized by the sheriff, as well as damages resulting from the allegedly wrongful seizure and detention thereof despite the thirdparty claim; and it may be brought against the sheriff, of course, and such other parties as may be alleged to have wrongful with the sheriff in the supposedly wrongful execution proceedings, such as the judgment creditor himself. And such a "proper action," as above pointed out, is and should be an entirety separate and distinct action from that in which execution has issued, if instituted by a stranger to the latter suit. 33 ** (C)onstruing Section 17 of Rule 39 of the Revised Rules of Court, the rights of third-party claimant over certain properties levied upon by the sheriff to satisfy the judgment should not be decided in the action where the third- party claims have been presented, but in the separate action instituted by the claimants. This is evident from the very nature of the proceedings. In Herald Publishing, supra. We intimated that the levy by the sheriff of a property by virtue of a writ of attachment may be considered as made under authority of the court only when the property levied upon unquestionably belongs to the defendant. If he attaches properties other than those of the defendant, he acts beyond the acts of his authority. Otherwise stated, the court issuing a writ of execution is supposed to enforce its authority only over properties of the judgment debtor, and should a third party appear to claim the property levied upon by the sheriff, the procedure laid down by the Rules is that such claim should be the subject of a separate and independent action. As we explained in the Quebral case (Quebral v. Garduno, 67 Phil., 316), since the third-party claimant is not one of the parties to the action, she could not strictly speaking, appeal from the order denying her claim, but should file a separate reivindicatory action against the execution creditor or the purchaser of her property after the sale at public auction, or a complaint for damages against the bond filed by the judgment creditor in favor of the sheriff. We reiterated this in Potenciano v. Dineros, et al. (97 Phil. 196; Agricultural Credit Administration v. Lasam 28 SCRA 1098) when We ruled that "such reivindicatory action is reserved to the thirdparty claimant by Section 15 of Rule 39 despite disapproval of his claim by the court itself (Planas v. Madriga 94 Phil. 754, Lara v. Bayona, G.R. No. L-7920, decided May 10, 1955)." This rule is dictated by reasons -of convenience, as "intervention is more likely to inject confusion into the issues between the parties in the case *** with which the third-party claimant has nothing to do and thereby retard instead of facilitate the prompt dispatch of the

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controversy which is the underlying objective of the rules of pleading and practice" ( Herald Publishing, supra, p. 101). Besides, intervention may not be permitted after trial has been concluded and a final judgment rendered in the case. 34 In such separate action, the court may issue a writ of preliminary injunction against the sheriff enjoining him from proceeding with the execution sale. 34-A Upon the other hand, if the claim of impropriety on the part of the sheriff in the execution proceedings is made by a party to the action, not a stranger thereto, any relief therefrom may be applied for with, and obtained from, only the executing court; and this is true even if a new party has been impleaded in the Suit. 35 In any case, Ong's claim that the filing of the judgment creditor's bond operated to divest the Court of jurisdiction to control and supervise the conduct of the execution sale must be rejected. That bond had absolutely no effect on the Court's jurisdiction. It was merely "equivalent to the personal interference of the indemnitor and his bondsmen in the course of the proceeding by directing or requesting the sheriff to hold and sell the goods as if they were the property of the defendants in attachment. In doing this they (the indemnitor and his bondsmen) assume the direction and control of the sheriff's future action so far as it constitutes a trespass; and they become to that extent the principals and he their agent in the transaction. This makes them responsible for the continuance of the wrongful possession and for the sale and conversion of the goods; in other words, for all the real damages which plaintiff sustains (Love Joy vs. Murray, 70 U.S. 129). 36 Ong's third theory — that the Tatings' remedy in the event of the denial of their application for relief by the Trial Court is a separate action for recovery of possession of the goods by them claimed plus damages for wrongful detention — is correct and should be sustained, in line with the doctrine in Bayer, supra, 37 and the other cases which followed it. 38 As regards the matter of the inhibition of the City Court Judge, the incident has been correctly determined by the Court of Appeals. No proper ground exists to disqualify His Honor from continuing to act in Civil Case No. 28309. One last issue remains, and that is, whether the Tatings, who were living with Evangeline Roces in the premises lease by the latter from Ong, are hable for the payment of rentals in arrears jointly or solidarily with said Evangeline Roces. They are not. They were never impleaded as parties and never served with summons in the suit for ejectment initiated by Ong against Evangeline Roces. The Court therefore never acquired jurisdiction over them. And while the judgment against Evangeline Roces, in so far as it decrees her ouster from the leased premises, may be enforced not only against her but also against "any person or persons claiming under" her 39 that judgment, in so far as it directs payment of money by way of arrearages in rents, is not binding on the Tatings and definitely not enforceable against them. WHEREFORE, the petition is dismissed for lack of merit. The case shall be remanded to the Metropolitan Trial Court at Quezon City which shall forthwith resolve the Tatings' pending motions in Civil Case No. 28309, consistently with the principles herein set forth. Costs against petitioner. SO ORDERED.

UNIVERSAL MOTORS CORPORATION, plaintiff-appellant, vs. MARIANO D. VELASCO, ET AL., defendants-appellees. ABAD SANTOS, J.: This is an appeal on a question of law from a decision of the Court of First Instance of Manila. Since the appeal was perfected in 1965 before the enactment of R.A. No. 5440 which took effect on September 7, 1968, a record on appeal was submitted. The plaintiff-appellant filed a brief but defendants-appellees having failed to file their brief within the reglementary period the case was submitted for decision without their brief. The uncontroverted facts are: Mariano T. Velasco bought from Universal Motors C tion a Mercedes-Benz truck on installment basis. To the balance of the purchase price of P35,243.68 he executed a promissory note and executed a chattel mortgage over the truck. He defaulted in his payments and as a consequence the Vendor asked him to surrender the truck in accordance will the term and conditions of the chattel mortgage contract. lie failed and refused to surrender the truck whereupon the vendor instituted an action in the court a quo to recover the truck preparatory to foreclosure of the chattel mortgage. As an alternative, in case the truck could not be recovered, the plaintiff asked for the payment, among other things, of its vs in the sum of P23,763.09 plus legal interest. By virtue of a writ of replevin issued by said court, the seller was able to re-possess the truck. Going back to the action which was commenced on December 29, 1964, the defendants failed to answer the complaint within the reglementary period and were declare in default. On April 26, 1965, defendant Velasco filed a motion to lift the default order which was granted. He did not, however, file an answer. In lieu thereof the parties, on June 15, 1965, submitted the following: STIPULATION OF FACTS COME NOW the parties in the above-entitled case, through their respective counsel and before this Honorable Court respectfully stipulate: 1. That defendant was, at the time of the filing of the complaint indebted to plaintiff in the principal sum of P23,763.09, which amount is covered by a promissory note secured by a Chattel Mo (Annex 'A' of the complaint) on a motor vehicle described in paragraph 2 of the complaint 2. That notwithstanding defendant being in default of this aforesaid mentioned sum and notwithstanding demands made by plain tiff on December 11, 1964, defendant failed to surrender the chattel described in paragraph 2 of the complaint thereby preventing plaintiff from f on the same; 3. That plaintiff is entitled to the possession of the chattel bed in paragraph 2 of the complaint and was constrained to institute the t action for recovery of possession as a preliminary stop to forced. 4. That in the se and execution of the writ of seizure issued in this cage and in g the possession of the vehicle subjected of the complaint plaintiff the occured the following expenses: a) Premium on replevin bond P971.47 b) Sheriff's expenses 300.00

G.R. No. L-25140 July 15, 1980

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c) Costs of suit 132.00 d) Mechanic's lien paid by plaintiff in defendant defendant's behalf to G. Cruz Truck Body Builder & Welding Shop 3,000.00 P 4,403.47 5. That on May 21, 1965, plaintiff received from the Workmen's Insurance Company, Inc., the sum of P1,870.99 in full settlement of the damages sustained by the truck subject matter hereof when it figured in an accident on December 5, 1964, totally immobile the motor vehicle 6. That subsequent to said event, defect failed to deliver the truck m question despite demands made by plaintiff, 7. That the following stipulation is found in paragraph 14 of the Chattel Mortgage (Annex 'A') of the complaint the genuineness and due execution of which is hereby admitted by the defendant: 14. That in case of non-compliance or violation; or default by the mortgagor, and forced or any other legal remedy is undertaken by the mortgagee to compel pa of compensation in the concept of attorney's fees and cost payment of his obligation the mortgagee shall be entitled to a reasonable election in a sum equal to twenty five percent (25%) of the total amount of the indebtedness then outstanding and unpaid by the mortgagor, but in no case less than Fifty Pesos (P50.00) as well as payment of the premium on the rep bond and was of suit in case of court action, which amounts said agree to pay and for such payment a first Em is hereby in favor of the mortgagee upon the property mortgaged. 8. That the following stipulation is also found in paragraph 10 of the Chattel Mortgage (Annex 'A' of the complaint): 10. The mortgagor further agrees that in cm non-compliance with, or violation of, any of the of the mortgage, and/or in case of default in the payment of the principle municipal sum or any part thereof or interest as and when the mm shad become due and payable, the mo property shall be delivered on demand to the mortgagee in Manila of all charges, and should be mortgage fail or refuse to deliver peacefully the said Property as above stated, the mortgagee and/or its representative or the S is hereby given full and irevocable power and authority to take possession of the said property, wherever it may be found and have the same brought in the City of Manila the HEREBY RATIFYING AND CONFIRMING all that said mortgagee and/or its representative and/or the Sheriff shall lawfully do or cause to be done under and by virtue of these presents and the expenses of locating and bringing property to the City of Manila shall the account of the mortgegee and shall form part of the sum by this mortgage ... 9. That plaintiff waives the attorney's fees herein stipulated, but not the reasonable amount that may be adjudged by this Honorable Court, the premium of the replevin bond, sheriff's expenses, costs of suit and the mechanic's lien mentioned in paragraph 4 herein. 10. That plaintiff admits that it is not entitled to deficiency judgment on the principal sum of P23,763.09 once it has foreclosed on the mortgage, but only to a reasonable amount of attorney's fees and

those amounts mentioned in paragraph 4 herein, less the amount of P1,870.99 paid by the insurance company. Acting on the stipulation, the court a quo rendered a decision part of which reads as follows: The only issue is whether the plaintiff is entitled to recover the expenses mentioned in paragraph 4 and attorney's fees. It undoubtedly has a right to repayment for the premium on the replevin bond it filed, the sheriff's fees, costs of this suit, and a reasonable sum as attorney's fees. These are expenses rendered necessary by the defendant's refusal to surrender voluntarily possession of the vehicle, in violation of his agreement with the plaintiff. But the mechanic's lien the plaintiff satisfied is not recoverable in this action. Nothing is said about it in the complaint and it is not one of the reliefs sought therein. It must be understood, however, that all sums adjudged in the plaintiff's favor may be enforced only against the proceeds of the vehicle mortgaged in accordance with the settled rule that in an proceedings for foreclosure of mortgages executed on chattels which have been sold on the installment plan, the mortgagee is limited to the property included in the mortgage. Macondray & Co. vs. Tan, 38, O.G. 2606; Macondray & Co. vs. Ruiz, 38, O.G. 2168; and Bachrach Motor Co. vs. Milan, 61 Phil. 409. WHEREFORE, judgment is hereby rendered declaring that the plaintiff is entitled to the possession of the vehicle described in the complaint and ordering the defendant Mariano Velasco to pay the plaintiff P1,403.47 as well as the additional sum of P1,500.00 as attorney's fees to be satisfied out of the proceeds of the sale vehicle. The plaintiff filed a motion requesting that the Court "reconsider its decision dated June 28, 1965, by requiring the defendant to pay plaintiff directly the sums of P1,403.47 and P500.00 instead of o the satisfaction of the same from the p of the auction sale." When the motion was domed the plaintiff appealed as aforementioned assuming only one , namely "The lower court erred in that the sums adjudged in favor of the plaintiff are to be satisfied only vehicle. In stipulating that the sums adjudged P971.41, premium on replevin bond, P300.00, sheriff's P132.00, costs of the suit total P1,403.47; and P500.00, attorney's fees — the lower court relied on the provisions of Article 1484 of the Civil Code which insofar as relevant reads as follows: Art 1484. In a contract of sale of property the price of which is payable in to, the vs may any of the following xxx xxx xxx (3) Foreclose the chattel mortgage on the thing sold if one has been constituted, should the vendee's failure to pay cover two or more installment In this case, he shag have no further action against the purchase to recover any unpaid of the balance of the price Any agreement to the contrary shall be void. The third paragraph of Art. 1484 is inapplicable to the cam at bar. First, as the plaintiff has correctly pointed out the action instituted in the court a quo was not foreclosure at the chattel/mortgage but for the replevin; and second, the amounts adjudged in favor

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of the plaintiff were not part of the unpaid balance of the price" or in the concept of a deficiency judgment but were for expenses of the suit. WHEREFORE, the judgment appealed from is modified by ordering the defendantappellee Mariano D. Velasco to pay the amount adjudged m favor of the plaintiffappellant of having the same satisfied out of the proceeds of the auction sale on the motor vehicle the defendant-appellee. SO ORDERED.

1. Both parties recognize the existence of the Deed of Sale over the residential house located at No. 7 Granada St., Gordon Heights, Olongapo City, which was acquired from Armando Altares on June 4, 1974 and sold by defendant Criselda Cheesman to Estelita Padilla on July 12, 1981; and 2. That the transaction regarding the transfer of their property took place during the existence of their marriage as the couple were married on December 4, 1970 and the questioned property was acquired sometime on June 4,1974. The action resulted in a judgment dated June 24, 1982,10 declaring void ab initio the sale executed by Criselda Cheesman in favor of Estelita M. Padilla, and ordering the delivery of the property to Thomas Cheesman as administrator of the conjugal partnership property, and the payment to him of P5,000.00 as attorney's fees and expenses of litigation.11 The judgment was however set aside as regards Estelita Padilla on a petition for relief filed by the latter, grounded on "fraud, mistake and/or excusable negligence" which had seriously impaired her right to present her case adequately.12 "After the petition for relief from judgment was given due course," according to petitioner, "a new judge presided over the case."13 Estelita Padilla filed a supplemental pleading on December 20, 1982 as her own answer to the complaint, and a motion for summary judgment on May 17, 1983. Although there was initial opposition by Thomas Cheesman to the motion, the parties ultimately agreed on the rendition by the court of a summary judgment after entering into a stipulation of facts, at the hearing of the motion on June 21, 1983, the stipulation being of the following tenor:14 (1) that the property in question was bought during the existence of the marriage between the plaintiff and the defendant Criselda P. Cheesman; (2) that the property bought during the marriage was registered in the name of Criselda Cheesman and that the Deed of Sale and Transfer of Possessory Rights executed by the former owner-vendor Armando Altares in favor of Criselda Cheesman made no mention of the plaintiff; (3) that the property, subject of the proceedings, was sold by defendant Criselda Cheesman in favor of the other defendant Estelita M. Padilla, without the written consent of the plaintiff. Obviously upon the theory that no genuine issue existed any longer and there was hence no need of a trial, the parties having in fact submitted, as also stipulated, their respective memoranda each praying for a favorable verdict, the Trial Court15 rendered a "Summary Judgment" dated August 3, 1982 declaring "the sale executed by . . . Criselda Cheesman in favor of . . . Estelita Padilla to be valid," dismissing Thomas Cheesman's complaint and ordering him "to immediately turn over the possession of the house and lot subject of . . . (the) case to . . . Estelita Padilla . . ."16 The Trial Court found that — 1) the evidence on record satisfactorily overcame the disputable presumption in Article 160 of the Civil Code—that all property of the marriage belongs to the conjugal partnership "unless it be proved that it pertains exclusively to the husband or to the wife"—and that the immovable in question was in truth Criselda's paraphernal property; 2) that moreover, said legal presumption in Article 160 could not apply "inasmuch as the husband-plaintiff is an American citizen and therefore disqualified under the Constitution to acquire and own real properties; and

G.R. No. 74833 January 21, 1991 THOMAS C. CHEESMAN, petitioner, vs. INTERMEDIATE APPELLATE COURT and ESTELITA PADILLA, respondents. Estanislao L. Cesa, Jr. for petitioner. Benjamin I. Fernandez for private respondent.

NARVASA, J.: This appeal concerns the attempt by an American citizen (petitioner Thomas Cheesman) to annul — for lack of consent on his part — the sale by his Filipino wife (Criselda) of a residential lot and building to Estelita Padilla, also a Filipino. Thomas Cheesman and Criselda P. Cheesman were married on December 4, 1970 but have been separated since February 15,1981.1 On June 4, 1974, a "Deed of Sale and Transfer of Possessory Rights" was executed by Armando Altares conveying a parcel of unregistered land and the house thereon (at No. 7 Neptune Street, Gordon Heights, Olongapo City) in favor of "Criselda P. Cheesman, of legal age, Filipino citizen, married to Thomas Cheesman, and residing at Lot No. 1, Blk. 8, Filtration Road, Sta. Rita, Olongapo City . . ."2 Thomas Cheesman, although aware of the deed, did not object to the transfer being made only to his wife.3 Thereafter—and again with the knowledge of Thomas Cheesman and also without any protest by him—tax declarations for the property purchased were issued in the name only of Criselda Cheesman and Criselda assumed exclusive management and administration of said property, leasing it to tenants.4 On July 1, 1981, Criselda Cheesman sold the property to Estelita M. Padilla, without the knowledge or consent of Thomas Cheesman.5 The deed described Criselda as being" . . . of legal age, married to an American citizen,. . ."6 Thirty days later, or on July 31, 1981, Thomas Cheesman brought suit in the Court of First Instance at Olongapo City against his wife, Criselda, and Estelita Padilla, praying for the annulment of the sale on the ground that the transaction had been executed without his knowledge and consent.7 An answer was filed in the names of both defendants, alleging that (1) the property sold was paraphernal, having been purchased by Criselda with funds exclusively belonging to her ("her own separate money"); (2) Thomas Cheesman, being an American, was disqualified to have any interest or right of ownership in the land; and (3) Estelita Padilla was a buyer in good faith.8 During the pre-trial conference, the parties agreed upon certain facts which were subsequently set out in a pre-trial Order dated October 22, 1981,9 as follows:

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3) that the exercise by Criselda of exclusive acts of dominion with the knowledge of her husband "had led . . . Estelita Padilla to believe that the properties were the exclusive properties of Criselda Cheesman and on the faith of such a belief she bought the properties from her and for value," and therefore, Thomas Cheesman was, under Article 1473 of the Civil Code, estopped to impugn the transfer to Estelita Padilla. Thomas Cheesman appealed to the Intermediate Appellate Court. There he assailed the Trial Court acts (1) of granting Estelita Padilla's petition for relief, and its resolution of matters not subject of said petition; (2) of declaring valid the sale to Estelita Padilla despite the lack of consent thereto by him, and the presumption of the conjugal character of the property in question pursuant to Article 160 of the Civil Code; (3) of disregarding the judgment of June 24, 1982 which, not having been set aside as against Criselda Cheesman, continued to be binding on her; and (4) of making findings of fact not supported by evidence. All of these contentions were found to be without merit by the Appellate Tribunal which, on January 7, 1986, promulgated a decision (erroneously denominated, "Report")17affirming the "Summary Judgment complained of," "having found no reversible error" therein. Once more, Thomas Cheesman availed of the remedy of appeal, this time to this Court. Here, he argues that it was reversible error for the Intermediate Appellate Court — 1) to find that the presumption that the property in question is conjugal in accordance with Article 160 had been satisfactorily overcome by Estelita Padilla;18 2) to rule that Estelita Padilla was a purchaser of said property in good faith, it appearing: a) that the deed by which the property was conveyed to Criselda Cheesman described her as "married to Thomas C. Cheesman," as well as the deed by which the property was later conveyed to Estelita Padilla by Criselda Cheesman also described her as "married to an American citizen," and both said descriptions had thus "placed Estelita on knowledge of the conjugal nature of the property;" and b) that furthermore, Estelita had admitted to stating in the deed by which she acquired the property a price much lower than that actually paid "in order to avoid payment of more obligation to the government;"19 3) to decline to declare that the evidence did not warrant the grant of Estelita Padilla's petition for relief on the ground of "fraud, mistake and/or excusable negligence;"20 4) to hold that Thomas Cheesman had waived his objection to Estelita's petition for relief by failing to appeal from the order granting the same; 5) to accord to Estelita Padilla a relief other than that she had specifically prayed for in her petition for relief, ie., "the restoration of the purchase price which Estelita allegedly paid to Criselda;"21 and 6) to fail to declare that Thomas Cheesman's citizenship is not a bar to his action to recover the lot and house for the conjugal partnership.22 Such conclusions as that (1) fraud, mistake or excusable negligence existed in the premises justifying relief to Estelita Padilla under Rule 38 of the Rules of Court, or (2) that Criselda Cheesman had used money she had brought into her marriage to Thomas Cheesman to purchase the lot and house in question, or (3) that Estelita Padilla believed in good faith that Criselda Cheesman was the exclusive owner of the

property that she (Estelita) intended to and did in fact buy—derived from the evidence adduced by the parties, the facts set out in the pleadings or otherwise appearing on record—are conclusions or findings of fact. As distinguished from a question of law— which exists "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;"23 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 the probabilities of the situation."24 Now, it is axiomatic that only questions of law, distinctly set forth, may be raised in a petition for the review oncertiorari of a decision of the Court of Appeals presented to this Court.25 As everyone knows or ought to know, the appellate jurisdiction of this Court is limited to reviewing errors of law, accepting as conclusive the factual findings of the lower court upon its own assessment of the evidence.26 The creation of the Court of Appeals was precisely intended to take away from the Supreme Court the work of examining the evidence, and confine its task to the determination of questions which do not call for the reading and study of transcripts containing the testimony of witnesses.27 The rule of conclusiveness of the factual findings or conclusions of the Court of Appeals is, to be sure, subject to certain exceptions,28 none of which however obtains in the case at bar. It is noteworthy that both the Trial Court and the Intermediate Appellate Court reached the same conclusions on the three (3) factual matters above set forth, after assessment of the evidence and determination of the probative value thereof. Both Courts found that the facts on record adequately proved fraud, mistake or excusable negligence by which Estelita Padilla's rights had been substantially impaired; that the funds used by Criselda Cheesman was money she had earned and saved prior to her marriage to Thomas Cheesman, and that Estelita Padilla did believe in good faith that Criselda Cheesman was the sole owner of the property in question. Consequently, these determinations of fact will not be here disturbed, this Court having been cited to no reason for doing so. These considerations dispose of the first three (3) points that petitioner Cheesman seeks to make in his appeal.1âwphi1They also make unnecessary an extended discussion of the other issues raised by him. As to them, it should suffice to restate certain fundamental propositions. An order of a Court of First Instance (now Regional Trial Court) granting a petition for relief under Rule 38 is interlocutory and is not appealable. Hence, the failure of the party who opposed the petition to appeal from said order, or his participation in the proceedings subsequently had, cannot be construed as a waiver of his objection to the petition for relief so as to preclude his raising the same question on appeal from the judgment on the merits of the main case. Such a party need not repeat his objections to the petition for relief, or perform any act thereafter (e.g., take formal exception) in order to preserve his right to question the same eventually, on appeal, it being sufficient for this purpose that he has made of record "the action which he desires the court to take or his objection to the action of the court and his grounds therefor."29 Again, the prayer in a petition for relief from judgment under Rule 38 is not necessarily the same prayer in the petitioner's complaint, answer or other basic pleading. This should be obvious. Equally obvious is that once a petition for relief is granted and the judgment subject thereof set aside, and further proceedings are

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thereafter had, the Court in its judgment on the merits may properly grant the relief sought in the petitioner's basic pleadings, although different from that stated in his petition for relief. Finally, the fundamental law prohibits the sale to aliens of residential land. Section 14, Article XIV of the 1973 Constitution ordains that, "Save in cases of hereditary succession, no private land shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain."30Petitioner Thomas Cheesman was, of course, charged with knowledge of this prohibition. Thus, assuming that it was his intention that the lot in question be purchased by him and his wife, he acquired no right whatever over the property by virtue of that purchase; and in attempting to acquire a right or interest in land, vicariously and clandestinely, he knowingly violated the Constitution; the sale as to him was null and void.31 In any event, he had and has no capacity or personality to question the subsequent sale of the same property by his wife on the theory that in so doing he is merely exercising the prerogative of a husband in respect of conjugal property. To sustain such a theory would permit indirect controversion of the constitutional prohibition. If the property were to be declared conjugal, this would accord to the alien husband a not insubstantial interest and right over land, as he would then have a decisive vote as to its transfer or disposition. This is a right that the Constitution does not permit him to have. As already observed, the finding that his wife had used her own money to purchase the property cannot, and will not, at this stage of the proceedings be reviewed and overturned. But even if it were a fact that said wife had used conjugal funds to make the acquisition, the considerations just set out militate, on high constitutional grounds, against his recovering and holding the property so acquired or any part thereof. And whether in such an event, he may recover from his wife any share of the money used for the purchase or charge her with unauthorized disposition or expenditure of conjugal funds is not now inquired into; that would be, in the premises, a purely academic exercise. An equally decisive consideration is that Estelita Padilla is a purchaser in good faith, both the Trial Court and the Appellate Court having found that Cheesman's own conduct had led her to believe the property to be exclusive property of the latter's wife, freely disposable by her without his consent or intervention. An innocent buyer for value, she is entitled to the protection of the law in her purchase, particularly as against Cheesman, who would assert rights to the property denied him by both letter and spirit of the Constitution itself. WHEREFORE, the appealed decision is AFFIRMED, with costs against petitioner. SO ORDERED.

Jepte Demerin Rogelio Argel, Demetrio Jongco and Alfonso Demerin filed with the Court of Agrarian Relations a complaint against Apolonio Sumbingco, seeking their reinstatement as tenants on the latter two (2) haciendas and the payment to them of damages for their ouster therefrom. According to them, prior to the purchase by Sumbingco of the haciendas in question from Ricardo Nolan, they were already tenants of the latter, planting the areas occupied by them 'with rice: that even after Sumbingco acquired the land they continued as tenants thereon by permission of Sumbingco's administrator; that Sumibingco caused the planting of their landholdings to citrus little by little, thus progressively depriving them of possession thereof until the time came when their landholdings were completely planted to citrus and they were effectively, divested of any area to cultivate: that in view thereof, they asked Sumbingco to compensate them for the loss of their tenacy rights but although the former promised to do so, he never did; that instead, in 1964, Sumbingco told them to vacate their landholdings. The court of Agrarian Relations dismissed their complaint. It declined to give credence to the evidence proferred by them to substantiate their claim of being Sumbingco's tenants, declaring that evidence to be both implausible and tainted by material trial inconsistencies. On appeal, however, the court of Appeals reversed the judgment of the Court of Agrarian Relation. It ruled that in the light of the admission that Jepte Demerio and his co-plaintiffs were tenants in at least one of the haciendas prior to the sale to Sumbingco, it was difficult to believe the latter's protestation that he had never seen them; at the very least, Sumbingco's overseer should have apprised him of their presence on the land; hence, it was safe to assume that Demerin and his companions continued as tenants on the land under the new owner. The Appellate Court accordingly ordered the payment to Demerin, et al. of damages by Sumbingco but not their reinstatement on the ground that the landholdings had already been completely planted to citrus. Both Sumbingco and the Demerin group have taken an appeal by certiorari to this Court, the former's being docketed as G.R. No. 45114 and the latter's, G.R. No. 45192. It is axiomatic that appeals from the Court of Appeals are not a matter of right but of sound judicial discretion on the part of this Court, and will be granted only when there are special and important reasons therefor. 1 In other words, appeals from the Court of Appeals are not entertained as a matter of routine; they may be rejected out of hand in the exercise of this Court's sound judicial discretion. The prescribed mode of appeal is by certiorari, 2 limited only to issues or questions of law which must be distinctly set forth in the petition for review on certiorari. 3 The findings of fact of the Appellate Court are conclusive even on this Court, subject only to a few well defined exceptions (none of which is present in the instant case). 4 It is incumbent on the appellant to make out a sufficiently strong demonstration of serious error on the part of the Court of Appeals, and adduced special and important reasons to justlfy the exercise by this Court of its discretionary appellate jurisdiction, 5 failing in which this Court will decline to wield its invoked power of review and will dismiss the appeal on the ground that it is without merit, or is prosecuted manifestly for delay or the questions raised are too unsubstantial to require consideration. 6 A thoroughgoing review of the record discloses that contrary to this Court's first impression, which initially led it to give due course to both petitions in its case, there is no special and important reason to justify this Court's exercise of its appellate

G.R. No. L-45114 October 26, 1987 APOLONIO SUMBINCO, petitioner, vs. COURT OF APPEALS, et al., respondents. No. L-45192 October 26, 1987 JEPTE DEMERIN et al., petitioners, vs. COURT OF APPEALS, et al., respondents. NARVASA, J.:

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jurisdiction. The issues raised are principally factual, and such of those issues as may be characterized as legal are not sufficiently weighty or substantial to warrant consideration and review. WHERFFORE, the petitions in G.R. No. 45114 and G.R. No. 45192 are DENIED, and the decision of the Court of Appeals sought to be thereby reviewed is affirmed. This decision is immediately, executory, and no motion for extension of time to file a motion for reconsideration will be entertained.

Administrative Region (DENR-CAR), in pursuance of the Supreme Court decision is poised to order the removal or demolition of plaintiffs improvements and to hand possession of the area to defendants Macawiwili and Omico. Plaintiff, while admitting the possessory rights of defendant mining companies, stresses that the improvements already existing thereon are vital to the conduct of its mining operations particularly, its Nevada claims. Thus, it came to court seeking the expropriation of this area pursuant to Section 59 of Presidential Decree No. 463. The conflict between the plaintiff and defendant mining companies spans a period of almost 23 years until finally, it reached the Supreme Court, the final arbiter of all disputes. The Supreme Court has spoken and it has awarded to defendants Macawiwili and Omico the portion sought to be expropriated by the plaintiff. Can this Court now grant to plaintiff the right to expropriate the very land which has been denied it by the decision of the highest court of the land? This Court believes not. To do so would not only be presumptious of this Court but a patent defiance of the decision of the highest tribunal. The plaintiff states that the expropriation is necessary in order for it to continue with the operation of its Nevada claims. The improvements now existing on the land sought to be expropriated consists of a network of roads constructed sometime in 1958, a motorpool facility built in 1963, a tailings dam and three (3) two-storey concrete bunkhouses. It is thus clear that these improvements have been existing for quite sometime now. Aware that these improvements are essential to their mining operations, plaintiff should have initiated expropriation proceedings long before it even started putting up said improvements. Why exercise the right of eminent domain only now that the land has been adjudged in favor of defendant mining companies by no less than the Supreme Court? It seems the plaintiff, mindful of the Supreme Court decision, would now look for avenues of escape to evade the repercussions of such a decision. What it has not achieved through the decision, it tries to gain through the power of eminent domain. Clearly, this is forum-shopping, plain and simple. Stripped of all its legal niceties, this expropriation proceeding is patently a last ditch effort on the part of the plaintiff to overcome the adverse effects of the Supreme Court decision. Can this Court countenance such a procedure under the guise of the legal process of expropriation? No. To agree to it would be to encourage forum-shopping which is abhorred as there will no longer be any end to any litigation. Nevertheless, plaintiff asserts that its right to expropriate is distinct and separate from the rights of Macawiwili and Omico under the Supreme Court decision, anchoring said right on Section 59 of Presidential Decree No. 463 which states: SEC. 59. Eminent Domain. - When the claim owner or an occupant or owner of private lands refuses to grant to another claim owner or lessee the right to build, construct or install any of the facilities mentioned in the next preceding section, the claim owner or lessee may prosecute an action for eminent domain

[G.R. No. 115104. October 12, 1998] MACAWIWILI GOLD MINING AND DEVELOPMENT CO., INC. and OMICO MINING AND INDUSTRIAL CORPORATION, petitioners, vs. COURT OF APPEALS and PHILEX MINING CORPORATION, respondents. DECISION MENDOZA, J.: This is a petition for certiorari to set aside the resolution, dated April 12, 1994, of the Tenth Division of the Court of Appeals in CA-G.R. CV No. 42120, denying petitioners motion to dismiss the appeal of private respondent from a ruling of the trial court.[1] The antecedent facts are as follows: On October 16, 1992, respondent Philex Mining Corporation filed a complaint for expropriation against petitioners Macawiwili Gold Mining and Development Co., Inc. and Omico Mining & Industrial Corporation. The complaint, entitled Philex Mining Corporation v. Macawiwili Gold Mining and Development Co., Inc., et al., was filed before the Regional Trial Court of La Trinidad, Benguet, where it was docketed as Civil Case No. 92-CV-0727. Based on 53 of P.D. No. 463, Philex Mining sought to expropriate 21.9 hectares of petitioners mining areas where the latters Macawiwili claims are located. Philex Mining likewise moved for the issuance of a writ of preliminary injunction to enjoin petitioners from ejecting it (Philex Mining) from the mining areas sought to be expropriated. Although a temporary restraining order was initially issued by the Regional Trial Court of La Trinidad, Branch X, on November 11, 1992, it denied respondents application for a preliminary injunction. On February 18, 1993, the trial court, acting on the motion of petitioners, dismissed the complaint of Philex Mining. In its resolution, the trial court stated:[2] To better appreciate the incident submitted for resolution, a review of the antecedent facts which gave rise to this case is in order. The decision of the Supreme Court dated October 2, 1991 in Poe Mining Association vs. Garcia, 202 SCRA 222 upheld the decision of the then Minister of Natural Resources which was affirmed by the Office of the President. This decision recognized the possessory rights of defendants Macawiwili and Omico over their mining claims located at Tuba and Itogon, Benguet as against Poe Mining Association and plaintiff herein Philex Mining Corporation as operator. However, on the surface of 21.9 hectares of these mining claims awarded to defendants Macawiwili and Omico, we find improvements of the plaintiff consisting of a network of roads, a motorpool facility, a tailings dam and three bunkhouses. The Department of Environment and Natural Resources - Cordillera

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under the Rules of Court in the Court of First Instance of the province where the mining claims involved are situated. In the determination of the just compensation due the claim owner or owner or occupant of the land, the court shall appoint at least one duly qualified mining engineer or geologist to be recommended by the Director as one of the commissioners. There are two (2) stages in every action of expropriation. The first is concerned with the determination of the authority of the plaintiff to exercise the power of eminent domain and the propriety of its exercise in the context of the facts involved in the suit. It ends either with an order of dismissal or an order of condemnation. The second phase of the eminent domain action is concerned with the determination by the court of the just compensation for the property sought to be taken (Municipality of Bian vs. Hon. Jose Mar Garcia, et al., 180 SCRA 576 as quoted in National Power Corporation vs. Jocson, G.R. Nos. 94193-99, February 25, 1992, 206 SCRA 520). Going to the first stage of the expropriation proceeding in the case at bar, the question is: Is the right to expropriate granted to mining companies under Section 59 of P.D. No. 463 an absolute right? An examination of Presidential Decree No. 463 would readily show that Section 59 upon which plaintiff asserts its right to expropriate is found under Chapter XI with the heading Auxiliary Mining Rights. From the title alone, it would seem that the right to expropriate is not an absolute one but a mere auxiliary right. The right of eminent domain granted to mining companies is given in aid of its mining operations and not as a matter of right. Thus, it should be construed strictly against the mining company seeking the right. Thus, taking into context the antecedent facts arising from this case, is it proper for plaintiff to exercise the power of eminent domain? Absolutely not. But, granting arguendo that the right of expropriation can be awarded to plaintiff, a bigger question arises on whether a mining company can expropriate land belonging to another mining company. It would be absurd if not ridiculous. In the first place, the land would no longer be subject to expropriation. Expropriation demands that the land be private land. When the Supreme Court awarded the possessory rights over the land subject of this case to defendants Macawiwili and Omico, it has stripped said land of its private character and gave it its public character, that is, to be utilized for mining operations. Although property already devoted to public use is still subject to expropriation, this must be done directly by the national legislature or under a specific grant of authority to the delegate (Constitutional Law by Isagani Cruz, 1989 edition, page 64). Section 59 of Presidential Decree No. 463 is not a specific grant of authority given to plaintiff but a mere general authority which will not suffice to allow plaintiff to exercise the power of eminent domain. The plaintiff also states that it does not question the mining rights of defendant mining companies over the area as it is only interested in the surface rights as this is where its improvements are located. But this is an illusory dream which cannot be given reality by this Court. It is a well-

known principle that the owner of a piece of land has rights not only to its surface but also to everything underneath and the airspace above it to a reasonable height (Art. 437, Civil Code of the Philippines). The surface area cannot be segregated from the subjacent minerals. There is no dividing line between the surface and what is underneath that one can categorically state that one belongs to the plaintiff while the other forms part of the property of the defendant mining companies. For that is in effect what the plaintiff wants, just the surface area where its improvements are. It would be like dismembering a human body of a lady and awarding the upper part including her bosom to someone while giving the lower part to another, making it a useless proposition to either one. For how can defendant mining companies operate their mining claims when the surface belongs to somebody else and for that matter, how will the plaintiff improve the surface area without affecting what is underneath? As the Supreme Court stated in the case of Republic vs. Court of Appeals, No. L-43938, April 15, 1988, 160 SCRA 228: Under the (no- conflict) theory of the respondent court, the surface owner will be planting on the land while the mining locator will be boring tunnels underneath. The farmer cannot dig a well because he may interfere with the mining operations below and the miner cannot blast a tunnel lest he destroys the crops above. How deep can the farmer, and how high can the miner, go without encroaching on each others right? Where is the dividing line between the surface and sub-surface rights? The Court feels that the rights over the land are indivisible and that the land itself cannot be half agricultural and half mineral. The classification must be categorical; the land must be either completely mineral or completely agricultural. All told, it is clear that plaintiff has not shown that it has the right to expropriate the land subject of this case. Moreover, that land has been placed out of its reach by the Supreme Court decision when it awarded it to defendants Macawiwili and Omico. Both plaintiff and defendants are engaged in mining, and the Supreme Court has adjudged defendant mining companies to be the owner of the land. This Court now, on the ground of the exercise of the power of eminent domain, cannot and will not overwhelm said decision by awarding it to plaintiff. As the other motions have become moot and academic, this Court will no longer delve into them. However, as to the motion for reduction of deposit, the Court will make its last point. In the case of National Power Corporation vs. Jocson, supra, the Supreme Court made this pronouncement: Presidential Decree No. 42 requires the petitioner, to deposit with the Philippine National Bank in its main office or any of its branches or agencies, an amount equivalent to the assessed valued of the property for purposes of taxation. This assessed value is that indicated in the tax declaration. P.D. No. 42 repealed the provisions of Rule 67 of the Rules of Court and any other existing law contrary to or inconsistent with it. Accordingly, it repealed Section 2 of Rule 67 insofar as the determination of the provisional value, the form of payment and the agency with which the deposit shall be made, are concerned. P.D. No. 42, however effectively removes the discretion of the court in determining the

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provisional value. What is to be deposited is an amount equivalent to the assessed value for taxation purposes. No hearing is required for that purpose. All that is needed is notice to the owner of the property sought to be condemned. Thus, the plaintiff is right in depositing the assessed value of the property as appearing on the tax declaration of defendant Macawiwili as the provisional value of the land sought to be expropriated. While this case remains pending, the plaintiff may then withdraw the balance of the Two Million Pesos (P2,000,000.00) from the Philippine National Bank after deducting the provisional value of the land amounting to Forty Eight Thousand Six Hundred Pesos (P48,600.00). WHEREFORE, premises considered, the Motion to Dismiss filed by defendants Macawiwili Gold Mining and Development Mining Co., Inc. and Omico Mining and Industrial Corporation is granted. This case is hereby DISMISSED without pronouncement as to costs. SO ORDERED. Philex Mining moved for a reconsideration, but its motion was denied. It then appealed to the Court of Appeals. On February 16, 1994, petitioners filed a Motion to Dismiss Appeal on the ground that only questions of law were involved and, therefore, the appeal should be to the Supreme Court. However, the appellate court denied petitioners motion in a resolution, dated April 12, 1994. Without filing a motion for reconsideration, petitioners filed the instant petition for certiorari. Respondent Philex Mining seeks the dismissal of the petition on the ground that petitioner should have filed a motion for reconsideration giving the appellate court an opportunity to correct itself. Rule 65, 1 of the 1964 Rules of Court in part provides: Section 1. Petition for certiorari. - When any tribunal, board or officer exercising judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings, as the law requires, of such tribunal, board or officer. With some modifications, Rule 65, 1 of the 1997 Rules of Civil Procedure similarly provides: Section 1. Petition for certiorari. - When any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a person aggrieved thereby may file a verified petition in the proper court, alleging the facts with certainty and praying that judgment be rendered annulling or modifying the proceedings of such tribunal, board or officer, and granting such incidental reliefs as law and justice may require.

reconsideration, as a general rule, must be filed before the tribunal, board, or officer against whom the writ of certiorari is sought. Ordinarily, certiorari as a special civil action will not lie unless a motion for reconsideration is first filed before the respondent tribunal, to allow it an opportunity to correct its assigned errors.[4] This rule, however, is not without exceptions. In Pajo v. Ago and Ortiz[5] we held: Respondent contends that petitioners should have filed a motion for reconsideration of the order in question, or asked for the dissolution of the preliminary injunction issued by the trial court, before coming to us. This is not always so. It is only when the questions are raised for the first time before this Court in a certiorari proceeding that the writ shall not issue unless the lower court had first been given the opportunity to pass upon the same. In fine, when the questions raised before this Court are the same as those which have been squarely raised in and passed upon by, the court below, the filing of a motion for reconsideration in said court before certiorari can be instituted in this Court, is no longer prerequisite. In Locsin v. Climaco[6] it was stated: When a definite question has been properly raised, argued, and submitted to a lower court, and the latter has decided the question, a motion for reconsideration is no longer necessary as a condition precedent to the filing of a petition for certiorari in this Court. And in Central Bank v. Cloribel,[7] it was explained: It is true that Petitioner herein did not seek a reconsideration of the order complained of, and that, as a general rule, a petition for certiorari will not be entertained unless the respondent has had, through a motion for reconsideration, a chance to correct the error imputed to him. This rule is subject, however, to exceptions, among which are the following, namely: 1) where the issue raised is one purely of law; 2) where public interest is involved; and 3) in case of urgency. These circumstances are present in the case at bar. Moreover, Petitioner herein had raised - in its answer in the main case and in the rejoinder to the memorandum of the Banco Filipino in support of the latters application for a writ of preliminary injunction - the very same questions raised in the Petition herein. In other words, Judge Cloribel has already had an opportunity to consider and pass upon those questions, so that a motion for reconsideration of his contested order would have served no practical purpose. The rule requiring exhaustion of remedies does not call for an exercise in futility. The issues raised by petitioners in this petition are substantially the same as those asserted by them in their Motion to Dismiss Appeal, dated February 14, 1994, before the Court of Appeals. The argument that respondent has no right to expropriate petitioners mineral areas under Presidential Decree No. 463 has already been raised, argued, and submitted by petitioners for resolution by the appellate court in their Motion to Dismiss Appeal. To further file a motion for reconsideration before the Court of Appeals would simply be to repeat their arguments. For this reason, we hold that petitioners failure to file a motion for reconsideration is not fatal to the allowance of their action. We therefore come to the main question: Did the Court of Appeals commit grave abuse of discretion in denying petitioners Motion to Dismiss Appeal? We find that it did.

[3]

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

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To begin with, the writ of certiorari lies when a court, in denying a motion to dismiss, acts without or in excess of jurisdiction or with grave abuse of discretion. [8] By grave abuse of discretion is meant, such capricious and whimsical exercise of judgment as is equivalent to lack of jurisdiction. The abuse of discretion must be grave as where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility and must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined by or to act all in contemplation of law.[9] Petitioners contend that the Court of Appeals gravely abused its discretion in denying their motion to dismiss the appeal. According to petitioners, respondents appeal raises only questions of law and, therefore, it should be brought to the Supreme Court by means of a petition for review on certiorari and not, as Philex Mining did, by bringing an ordinary appeal to the Court of Appeals. Petitioners argue that the question whether respondent has a right to expropriate petitioners mining areas under 59 of Presidential Decree No. 463 is a question of law. On the other hand, Philex Mining maintains that the issues raised in its appeal are factual and, therefore, the appellate court is the proper forum for the ventilation of such issues. Supreme Court Circular No. 2-90, which is based on the Resolution of the Court En Banc in UDK-9748 (Anacleto Murillo v. Rodolfo Consul), March 1, 1990, provides in 4(c) thereof: c) Raising issues purely of law in the Court of Appeals, or appeal by wrong mode. - If an appeal under Rule 41 is taken from the regional trial court to the Court of Appeals and therein the appellant raises only questions of law, the appeal shall be dismissed, issues purely of law not being reviewable by said Court. So, too, if an appeal is attempted from the judgment rendered by a Regional Trial Court in the exercise of its appellate jurisdiction by notice of appeal, instead of by petition for review, the appeal is inefficacious and should be dismissed. Thus, judgments of the regional trial courts in the exercise of their original jurisdiction are to be elevated to the Court of Appeals in cases where the appellant raises questions of fact or mixed questions of fact and law. On the other hand, appeals from judgments of the regional trial courts in the exercise of their original jurisdiction must be brought directly to the Supreme Court in cases where the appellant raises only questions of law. This procedure is now embodied in Rule 41, 2 of the 1997 Rules of Civil Procedure which distinguishes the different modes of appeal from judgments of regional trial courts as follows: Modes of appeal.(a) Ordinary appeal. - The appeal to the Court to Appeals in cases decided by the Regional Trial Court in the exercise of its original jurisdiction shall be taken by filing a notice of appeal with the court which rendered the judgment or final order appealed from and serving a copy thereof upon the adverse party. No record on appeal shall be required except in special proceedings and other cases of multiple or separate appeals where the law or these Rules so require. In such cases, the record on appeal shall be filed and served in like manner.

(b) Petition for review. - The appeal to the Court of Appeals in cases decided by the Regional Trial Court in the exercise of its appellate jurisdiction shall be by petition for review in accordance with Rule 42. (c) Appeal by certiorari. - In all cases where only questions of law are raised or involved, the appeal shall be to the Supreme Court by petition for review on certiorari in accordance with Rule 45. On the other hand, Rule 42 provides that appeals from judgments of the regional trial courts in the exercise of their appellate jurisdiction must be brought to the Court of Appeals, whether the appellant raises questions of fact, of law, or mixed questions of fact and law. The rules on appeals from the judgments of the regional trial courts in civil cases may thus be summarized as follows: (1) Original Jurisdiction - In all cases decided by the regional trial courts in the exercise of their original jurisdiction, appeal may be made to: (a) Court of Appeals - where the appellant raises questions of fact or mixed questions of fact and law, by filing a mere notice of appeal. (b) Supreme Court - where the appellant solely raises questions of law, by filing a petition for review on certiorari under Rule 45. (2) Appellate Jurisdiction All appeals from judgments rendered by the regional trial courts in the exercise of their appellate jurisdiction, whether the appellant raises questions of fact, of law, or mixed questions of fact and law, shall be by filing a petition for review under Rule 42. The question is whether the issues raised in the appeal of respondent Philex Mining are questions of law or of fact. [F]or a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. And the distinction is well-known: There is a question of law in a given case when the doubt or difference arises as to what the law is on a certain state of facts; there is a question of fact when the doubt or difference arises as to the truth or the falsehood of alleged facts.[10] Respondents assignment of errors[11] before the appellate court should therefore be considered in order to determine the nature of the questions therein raised. Respondent Philex Mining argued before the Court of Appeals: A. The trial court erred in finding that Philex has no right to expropriate; P.D. 463 expressly grants to Philex, as operator of the Nevada claims, the right of eminent domain. B. The trial court erred in finding that Philex cannot expropriate land belonging to a mining company; Section 59 in relation to Section 58 of P.D. 463 allows an operator of a mining claim to expropriate mining claims or lands owned, occupied, or leased by other persons or claim owners. C. The trial court erred in finding that Philex is attempting to subvert the Supreme Court decision and is engaged in 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.

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E. The trial court erred in dismissing the complaint. Philexs alternative cause of action was disregarded. The respondents arguments may thus be summarized as follows: (1) Section 59, in relation to Section 53 of Presidential Decree No. 463, expressly grants respondent the right to expropriate mining claims or lands owned, occupied, or leased by other persons once the conditions justifying expropriation are present. The power of eminent domain expressly granted under Sections 58 and 59 of P.D. No. 463 is not inferior to the possessory right of other claimowners.[12] (2) There is nothing absurd in allowing a mining company to expropriate land belonging to another mining company. Pursuant to the ruling laid down in Benguet Consolidated, Inc. v. Republic,[13] land covered by mining claims may be the subject of expropriation. Moreover, a general grant of the power of eminent domain only means that the court may inquire into the necessity of the expropriation.[14] (3) Respondent could not be held guilty of forum-shopping or subverting the Supreme Courts decision in Poe Mining v. Garcia.[15] Forum-shopping, which refers to filing the same or repetitious suits, is not resorted to in the present case since respondent seeks to expropriate petitioners mining areas, not as operator of the Poe mining claims, but as operator of the Nevada mining claims.[16] (4) Respondents expropriation of the land will not divide the surface from the subsurface for the reason that respondent seeks to expropriate all rights that petitioners, as well as the Pigoro heirs, have over the 21.9 hectare area.[17] (5) The trial court erred in disregarding respondents alternative cause of action, even on the assumption that respondent does not have the right to expropriate, for the reason that an alternative statement in a pleading, if sufficient, is not vitiated by the insufficiency of the other alternative statements.[18] The first four arguments advanced by respondent Philex Mining raise the sole issue of whether it has, under Presidential Decree No. 463, the right to expropriate the 21.9 hectare mining areas where petitioners mining claims are located. On the other hand, its final argument raises the issue of whether the rules on the allegation of alternative causes of action in one pleading under Rule 8, 1 of the Rules of Court are applicable to special civil actions. These are legal questions whose resolution does not require an examination of the probative weight of the evidence presented by the parties but a determination of what the law is on the given state of facts. These issues raise questions of law which should be the subject of a petition for review on certiorari under Rule 45 filed directly with this Court. The Court of Appeals committed a grave error in ruling otherwise. WHEREFORE, the petition is GRANTED, the challenged resolution of the Court of Appeals is SET ASIDE, and the appeal of respondent Philex Mining is DISMISSED. SO ORDERED.

January 31, 2008 of the Court of Appeals (CA) in CA-G. R. CV No. 82916 dismissing the appeal for lack of jurisdiction. In January 2000, the Department of Public Works and Highways (DPWH) and respondent Crispin D. Ramos (respondent) entered into a contract of sale over a portion of land affected by a bridge construction project. As per the recitals of the Deed of Absolute Sale,2ςrνll the property sold is co-owned but respondent was the sole vendee, thus:chanroblesvirtuallawlibrary WHEREAS, the PARTY OF THE FIRST PART is to construct the New Gayaman Bridge, Binmaley, Pangasinan and such construction affects and passes through a portion of the hereunto described property under Tax Declaration No. 573 still in the name of the late Maximo Diaz who is the predecessor-in-interest of the PARTY OF THE SECOND PART Crispin D. Ramos; WHEREAS, the PARTY OF THE SECOND PART and FLORA D. RAMOS-REYES, GOMERCINDO D. RAMOS and JOSE ADVITO D. RAMOS are the compulsory heirs of the late Matea D. Ramos, the latter, together with the Late Maximo Diaz, being the only compulsory heirs of the late Mariano Diaz; WHEREAS, the heirs of the Late Matea Diaz-Ramos and the heirs of the Late Maximo Diaz are the co-owners of the parcel of land hereunto described property, but the latters share was alienated, conveyed and ceded to Eduardo Concepcion by the heirs of the late Maximo Diaz; WHEREAS, only the PARTY OF THE SECOND PART voluntarily and spontaneously agrees and assents to alienate, convey and cede such a portion from their share of inheritance in the estate of the Late Mariano Diaz as transferred to the Late Matea D. Ramos which such said portion to be affected by the construction of the New Concrete Gayaman Bridge shall be deducted from his inheritance share on the said one-half portion of the estate of the Late Mariano Diaz as hereunto described; WHEREAS, the PARTY OF THE SECOND PART, being a co-owner of that property hereunto described covered and embodied under Tax declaration No. 573 as declared for taxation purposes consents to cede and convey for consideration a portion from his share in inheritance in the estate of the Late Matea Diaz Ramos affected thereby by way of this Deed of Absolute Sale to the herein PARTY OF THE FIRST PART, such portion being more particularly described and bounded on the North, by the National Road and the property of Marcelo Senting, on the East, by the river; on the South, by the river; and on the West, by the property of Isidro Menera and Inocencio Cerezo, containing an area of One Thousand One Hundred Forty Square Meters (1,140 sq.m.).3ςrνll (Emphasis supplied) Accordingly, the agreed consideration of P570,000.00 was paid by DPWH to respondent by debiting the said amount from the latters account with petitioner Land Bank of the Philippines (LBP) which credited such fund to the deposit/account of respondent.4ςrνll Respondent was able to withdraw from the aforesaid account P100,000.00 on March 26, 2001. In a letter5ςrνll dated April 10, 2001, DPWH requested petitioner to hold in abeyance the release of payment to respondent while it sought a legal opinion from the DPWH Central Office in Manila. It appears that earlier, Jose Advito D. Ramos, a brother of respondent, wrote the DPWH saying that as co-owner of the property bought by DPWH, he is also entitled to his share in the proceeds of the sale. Under 1st Indorsement dated June 22, 2001, DPWH Legal Services Director Oscar D. Abundo opined that:

FIRST DIVISION G.R. No. 181664 : November 14, 2012 LAND BANK OF THE PHILIPPINES, Petitioner, v. CRISPIN D. RAMOS and DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, Respondent. DECISION VILLARAMA, JR., J.: This petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, seeks to reverse and set aside the Resolution1ςrνll dated

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xxx It is worthy to mention that until now the property is still owned in common by the heirs, therefore, all should participate or share in the proceeds of the payment. For equity and justice, a Deed of Partition should be submitted/demanded in order to determine the Degree of Participation for every heir. In view of the foregoing, no release/payment should be made until such time that the issue is settled.6ςrνll On March 4, 2002, respondent filed a Complaint7ςrνll for "Recovery of Bank Deposit With Damages" in the Regional Trial Court (RTC) of Lingayen, Pangasinan against petitioner, its Branch Manager Ms. Kathleen Fernandez, and Field Attorney Atty. Jose L. Lopez, Jr. Petitioner filed its Answer8ςrνll asserting that it was forced to litigate in a baseless suit which did not implead DPWH as the real party defendant. With leave of court, it filed a Third-Party Complaint9ςrνll against DPWH. In its Answer,10ςrνll DPWH contended that it was well within its right to request that payment to respondent be held in abeyance. Absent any actual partition, respondent cannot appropriate as his own, that portion of Lot 7382 sought to be acquired by DPWH, which is owned pro-indiviso by all the co-owners who are also entitled to receive their equal share of the payment. Hence, DPWH asserted that it does not incur any liability for its action, the same being legal and justifiable under the circumstances. The parties agreed to submit the case for a judgment on the pleadings. On November 27, 2003, the trial court rendered its decision11ςrνll , the dispositive portion of which reads:chanroblesvirtuallawlibrary WHEREFORE, premises well-considered, judgment is hereby rendered as follows: 1. ordering the Land Bank of the Philippines, Dagupan City Extension Office in Caranglaan District, through its authorized officer(s) to allow the plaintiff to withdraw his deposit with interest from Savings Account No. 2641-0235-50 with aforesaid bank; 2. ordering the Land Bank of the Philippines to pay the plaintiff litigation expenses in the amount of Ten Thousand (P10,000.00) pesos and attorneys fees in the amount of Thirty Thousand (P30,000.00) pesos; 3. dismissing the third party complaint of Land Bank of the Philippines against the third party defendant Department of Public Works and Highways. SO ORDERED.12ςrνll Petitioner filed a motion for reconsideration but it was denied by the trial court in its Order dated February 16, 2004.13ςrνll DPWH had separately filed a notice of appeal but subsequently filed a motion to withdraw appeal which was granted by the CA. Before the CA, petitioner presented the following assignment of errors: First Assignment of Error THE LOWER COURT ERRED WHEN IT ORDERED DEFENDANT/THIRD-PARTY PLAINTIFF-APPELLANT TO ALLOW PLAINTIFF-APPELLEE TO WITHDRAW HIS DEPOSIT WITH INTEREST FROM SAVINGS ACCOUNT NO. 2641-0235-50. Second Assignment of Error THE LOWER COURT ERRED IN ORDERING DEFENDANTS/THIRD PARTY PLAINTIFFS-APPELLANTS TO PAY THE PLAINTIFF-APPELLEE LITIGATION EXPENSES IN THE AMOUNT OF P10,000.00 AND ATTORNEYS FEES IN THE AMOUNT OF P3,000.00. Third Assignment of Error

THE LOWER COURT ERRED IN ORDERING THE DISMISSAL OF DEFENDANTS/THIRD-PARTY PLAINTIFFS-APPELLANTS THIRD-PARTY COMPLAINT AGAINST THIRD-PARTY DEFENDANT-APPELLEE (DPWH).14ςrνll However, in its assailed Resolution dated January 31, 2008, the CA dismissed the appeal after finding that it raised only pure questions of law, thus:chanroblesvirtuallawlibrary It is clear from the arguments of the Bank that it is assailing the correctness of the conclusion of the court a quo that it is not an agent of DPWH with respect to the amount deposited in the savings account of Crispin and that its act of withholding the release of said amount to Crispin was not valid. It has been held that when there is no dispute as to the facts, the question of whether or not the conclusion drawn therefrom is correct is a question of law. x x x. Worthy of note that during the pre-trial conference, the parties agreed to have the case resolved by judgment on the pleadings, there being only legal issues involved. Thus, the court a quo did not make any findings of fact nor did it evaluate the parties respective evidence, as none was presented, nor pass upon the truth or falsity of the parties allegations. What the court a quo did was simply to apply the law as to the facts borne out by the allegations in the pleadings, and whatever conclusions it arrived at evidently involved questions of law. Consequently, a review of the propriety of the judgment on the pleadings rendered by the court a quo would not involve an evaluation of the probative value of any evidence, as none was presented, but would be limited to the inquiry of whether the law was properly applied given the facts of the case. Therefore, what would inevitably arise from such a review are pure questions of law, and not questions of fact, which are not proper in an ordinary appeal under Rule 41, but should be raised by way of a petition for review on certiorari before the Supreme Court under Rule 45, of the Rules of Court.15ςrνll Hence, this petitionassailing mainly the dismissal of petitioners appeal. In Macawiwili Gold Mining and Development Co., Inc. v. Court of Appeals,16ςrνll we summarized the rule on appeals as follows17ςrνll : (1) In all cases decided by the RTC in the exercise of its original jurisdiction, appeal may be made to the Court of Appeals by mere notice of appeal where the appellant raises questions of fact or mixed questions of fact and law; (2) In all cases decided by the RTC in the exercise of its original jurisdiction where the appellant raises only questions of law, the appeal must be taken to the Supreme Court on a petition for review on certiorari under Rule 45. (3) All appeals from judgments rendered by the RTC in the exercise of its appellate jurisdiction, regardless of whether the appellant raises questions of fact, questions of law, or mixed questions of fact and law, shall be brought to the Court of Appeals by filing a petition for review under Rule 42. A question of law arises when there is doubt as to what the law is on a certain state of facts, while there is a question of fact when the doubt arises as to the truth or falsity of the alleged facts. For a question to be one of law, the same must not involve an examination of the probative value of the evidence presented by the litigants or any of them. The resolution of the issue must rest solely on what the law provides on the given set of circumstances. Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact. Thus, 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

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issue raised without reviewing or evaluating the evidence, in which case, it is a question of law; otherwise it is a question of fact.18Ï‚rνll In this case, petitioners appeal did not raise only questions of law but also questions of fact. Petitioner assailed not just the trial courts alleged error in applying the law on the nature of relation of the parties, particularly on the rights of DPWH to request withholding of release of payment and of petitioner as depositary bank to comply with such request, but also on the factual basis for the grant of damages (litigation and attorneys fees) in favor of respondent. The discretion of the court to award attorney's fees under Article 2208 of the Civil Code demands factual, legal, and equitable justification, without which the award is a conclusion without a premise, its basis being improperly left to speculation and conjecture.19Ï‚rνll Since the appeal raised mixed questions of law and fact, the CA clearly erred in dismissing the case on the ground of lack of jurisdiction.ςηαοblενιrυαllÎ±Ï ‰lιbrαr WHEREFORE, the petition for review on certiorari is GRANTED. The Resolution dated January 31, 2008 of the Court of Appeals in CA-G.R. CV No. 82916 is SET ASIDE. The case is hereby REMANDED to the Court of Appeals which shall decide CA-G.R. CV No. 82916 on the merits with deliberate dispatch. No pronouncement as to costs.Ï‚rαlαωlιbrαr SO ORDERED.

corporation organized under Philippine law with offices at Zobel Street, Isla de Provisor, Paco, Metro Manila where it may be served with summons and other court processes . . . . 2 On 24 January 1992 private respondent filed a motion to dismiss the complaint alleging that: (a) The complaint was filed by counsel who had no authority to sue for plaintiff; (b) The complaint stated no cause of action or without a cause of action as (a) there was no privity of contract between plaintiff and defendant; (b) the risks which allegedly caused damages on the goods were not covered by the insurance issued by plaintiff, and (c) the charter agreement between the consignee, ALCHEMCO PHILIPPINES, INC., and private respondent absolved the latter from all kinds of claim whatsoever; (3) The claim of plaintiff was already extinguished, waived, abandoned and/or had prescribed; and, (4) Plaintiff had no legal capacity to sue. On 5 February 1992 petitioner opposed the motion to dismiss. On 10 April 1992 the trial court denied the motion. On 18 August 1992 the motion to reconsider the denial was also denied. The trial court ruled that since petitioner alleged in its complaint that it was suing on an isolated transaction the qualifying circumstance of plaintiff's capacity to sue as an essential element has been properly pleaded. The trial court also held that the grounds relied upon by private respondent in its motion to dismiss were matters of defense. On 28 September 1992 private respondent filed a petition for certiorari and prohibition with the Court of Appeals alleging that the trial court gravely abused its discretion in issuing the orders of 10 April 1992 and 18 August 1992 which amounted to lack or excess of jurisdiction. On 29 July 1993 the appellate court granted the petition after finding the assailed orders to be patently erroneous.3While it found the allegation in the complaint that plaintiff was a non-life foreign insurance corporation engaged in an isolated transaction to be a sufficient averment, it nevertheless held the complaint to be fatally defective for failure to allege the duly authorized representative or resident agent of petitioner in the Philippines. Thus it enjoined the trial court from further proceeding except to dismiss the case with prejudice. This petition alleges that the Court of Appeals acted whimsically, capriciously and arbitrarily amounting to lack or excess of jurisdiction in deciding that petitioner's complaint was fatally defective for failing to allege its duly authorized representative or resident agent in the Philippines. Petitioner argues that there is no law, substantive or procedural, that requires a foreign corporation engaged only in an isolated transaction to appoint a duly authorized representative or a resident agent in the Philippines before it can sue locally. The proper remedy available to petitioner from a decision of the Court of Appeals is a petition for review on certiorari under Rule 45 of the Rules of Court, not a petition for certiorari under Rule 65 of the Rules of Court. Mere errors of judgment cannot be the proper subject of a special civil action for certiorari. Where the issue or question involved affects the wisdom or legal soundness of the decision — not the jurisdiction of the court to render said decision — the same is beyond the province of a special civil action for certiorari. Erroneous findings and conclusions do not render the appellate court vulnerable to the corrective writ of certiorari. For where the court has jurisdiction over the case, even if its findings are not correct, they would, at most, constitute errors of law and not abuse of discretion correctible by certiorari.4 But even if we treat the instant petition as one for review on certiorari the same must still fail. The issue on whether a foreign corporation can seek the aid of Philippine

G.R. No. 111837 October 24, 1995 NEW YORK MARINE MANAGERS, INC., petitioner, vs. COURT OF APPEALS and VLASONS SHIPPPING INC., respondents. BELLOSILLO, J.: NEW YORK MARINE MANAGERS, INC., a foreign corporation organized under the laws of the United States, seeks in this special civil action for certiorari under Rule 65 of the Rules of Court1 the annulment of the decision of the Court of Appeals which reversed the ruling of the trial court denying the motion to dismiss of private respondent Vlasons Shipping Company, Inc. On 25 July 1990 American Natural Soda Ash Corporation (ANSAC) loaded in Portland, U.S.A., a shipment of soda ash on board the vessel "MS Abu Hanna" for delivery to Manila. The supplier/shipper insured the shipment with petitioner. Upon arrival in Manila the shipment was unloaded and transferred to the vessel "MV Biyayang Ginto" owned by private respondent. Since the shipment allegedly sustained wettage, hardening and contamination, it was rejected as total loss by the consignees. When the supplier sought to recover the value of the cargo loss from petitioner the latter paid the claim in the amount of US$58,323.96. On 20 November 1991 petitioner as subrogee filed with the Regional Trial Court of Manila a complaint for damages against private respondent alleging among others that — . . . 1.01. Plaintiff is a non-life foreign insurance corporation organized under the laws of the State of New York with offices at 123 William Street, New York, N.Y. 10038 and engaged in an isolated transaction in this case; defendant is a local domestic

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courts for relief recoils to the basic question of whether it is doing business in the Philippines or has merely entered into an isolated transaction. This Court has held in a long line of cases that a foreign corporation not engaged in business in the Philippines may exercise the right to file an action in Philippine courts for an isolated transaction.5 However, in Commissioner of Customs v. K.M.K. Gani et a1.,6 citing Atlantic Mutual Insurance Company v. Cebu Stevedoring, Inc., 7 we ruled that to say merely that a foreign corporation not doing business in the Philippines does not need a license in order to sue in our courts does not completely resolve the issue. When the allegations in the complaint have a bearing on the plaintiff's capacity to sue and merely state that the plaintiff is a foreign corporation existing under the laws of the United States, such averment conjures two alternative possibilities: either the corporation is engaged in business in the Philippines, or it is not so engaged. In the first, the corporation must have been duly licensed in order to maintain the suit; in the second, and the transaction sued upon is singular and isolated, no such license is required. In either case, compliance with the requirement of license, or the fact that the suing corporation is exempt therefrom, as the case may be, cannot be inferred from the mere fact that the party suing is a foreign corporation. The qualifying circumstance being an essential part of the plaintiff's capacity to sue must be affirmatively pleaded. Hence, the ultimate fact that a foreign corporation is not doing business in the Philippines must first be disclosed for it to be allowed to sue in Philippine courts under the isolated transaction rule.8 Failing in this requirement, the complaint filed by petitioner with the trial court, it must be said, fails to show its legal capacity to sue. Moreover, petitioner's complaint is fatally defective for failing to allege its duly authorized representative or resident agent in this jurisdiction. The pleadings filed by counsel for petitioner do not suffice. True, a lawyer is generally presumed to be properly authorized to represent any cause in which he appears, and no written power of attorney is required to authorize him to appear in court for his client. But this presumption is disputable. Where said authority has been challenged or attacked by the adverse party the lawyer is required to show proof of such authority or representation in order to bind his client. The requirement of the production of authority is essential because the client will be bound by his acquiescence resulting from his knowledge that he was being represented by said attorney.9 In the instant case, the extent of authority of counsel for petitioner has been expressly and continuously assailed but he has failed to show competent proof that he was indeed duly authorized to represent petitioner. WHEREFORE, the petition is DENIED. The assailed decision of the Court of Appeals dated 29 July 1993 is AFFIRMED. Costs against petitioner. SO ORDERED.

FERNAN, C.J.: This petition for certiorari, prohibition and mandamus which this court treated as a petition for review on certiorari in its resolution of August 22, 1984 seeks to nullify the decision of the Intermediate Appellate Court (now Court of Appeals) dated June 29, 1984, modifying the decision of the Court of First Instance (now Regional Trial Court) of Davao Oriental, dated June 8, 1981, ordering the herein petitioners to vacate the property in controversy; to return its possession to private respondent and to pay P10,000.00 representing proceeds of the land from January 4, 1975, and attorney's fees. Records show that private respondent Valentin Ouano, a claimant-occupant of Lot No. 986, Pls-599-D situated at sitio Bagsac, barrio of Manikling, Governor Generoso (now San Isidro), Davao del Norte, containing an area of three (3) hectares, 48 ares and 78 centares which was surveyed on March 13, 1958, as evidenced by the "Survey Notification Card" issued in his name, filed on February 27, 1959, a homestead application1 with the Bureau of Lands. The said application, recorded as Homestead Application No. 20-107001, was approved in an order dated March 3, 1959 issued by the District Land Officer, Land District No. 20, for and by authority of the Director of Lands. Three (3) years thereafter, or on September 5, 1962, a "Notice of Intention to Make Final Proof was made by Valentin Ouano to establish his claim to the lot applied for and to prove his residence and cultivation before Land Inspector Lorenzo Sazon at the Bureau of Lands, Davao City at 10:00 o'clock A.M. appending thereto an affidavit attesting that a copy of his intention to make final proof relative to his Homestead Application No. 20-10701 was posted at the Municipal building of the Municipality of Gov. Generoso (now San Isidro), Davao, on the bulletin board of the barrio where the land applied for is located, and in a conspicuous place on the land itself on the 5th day of August, 1962 and remained so posted for a period of thirty days, until September 5, 1962.2 On the said date, or on September 5, 1962, Valentin Ouano made his "Final Proof" before Land Inspector Lorenzo Sazon pursuant to Section 14, Commonwealth Act No. 141, as amended. The following year, or on March 4, 1963, an order for the issuance of patent was issued by the Bureau of Lands. On April 15, 1963, an "Original Certificate of Title No. P-15353" was issued to private respondent Valentin Ouano over Homestead Patent No. 181261 which was transcribed in the "Registration Book" for the province of Davao on October 28, 1963.3 On January 4, 1975, after 19 years of possession, cultivation and income derived from coconuts planted on Lot No. 986, private respondent Valentin Ouano was interrupted in his peaceful occupation thereof when a certain Arcadio Ybanez and his sons, Melquiades, Abdula, Eugenia Numeriano, Apolonio and Victoriano, forcibly and unlawfully entered the land armed with spears, canes and bolos. Because of the unwarranted refusal of Arcadio Ybanez, et al. to vacate the premises since the time he was dispossessed in 1975, private respondent Valentin Ouano filed on September 24, 1978 a complaint for recovery of possession, damages and attorney's fees before the then Court of First Instance (now RTC) of Davao Oriental against Arcadio Melquiades, Abdula, Eugenia Numeriano, Apolonio, Victoriano and Servando, all surnamed Ybanez,4 docketed as Civil Case No. 671, seeking to enjoin the Ybanezes from further the coconuts therefrom and restore to him the peaceful

G.R. No. L-68291 March 6, 1991 ARCADIO, MELQUIADES, ABDULA, EUGENIO, APOLONIO, all surnamed YBAÑEZ, petitioners, vs. THE HONORABLE INTERMEDIATE APPELLATE COURT and VALENTIN O. OUANO, respondents, Dominador F. Carillo for petitioners. Pableo B. Baldoza for private respondent.

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possession and occupation of the premises. In his complaint, Valentin Ouano, then plaintiff therein, alleged that he has been in lawful and peaceful possession since 1956 of a parcel of land designated as Lot No. 986, Pls-599-D situated in Bagsac, Manikling, Governor Generoso (now San Isidro), Davao Oriental, to which an Original Certificate of Title No. P-(l5353)-P-3932 was issued in his name; that petitioners, then defendants therein, unlawfully entered his land on January 4, 1975 and started cultivating and gathering the coconuts, bananas and other fruits therein, thereby illegally depriving him of the possession and enjoyment of the fruits of the premises. Petitioners, on the other hand, alleged that plaintiff Valentin Ouano, now private respondent, has never been in possession of any portion of Lot No. 986 as the same has been continously occupied and possessed by petitioners since 1930 in the concept of owner and have introduced valuable improvements thereon such as coconuts and houses; that Lot No. 986 was the subject matter of administrative proceedings before the Bureau of Lands in Mati, Davao Oriental which was consequently decided in their favor by the Director of Lands on the finding that Valentin Ouano has never resided in the land; that it was declared by the Director of Lands that the homestead patent issued to private respondent Valentin Ouano was improperly and erroneously issued, since on the basis of their investigation and relocation survey, the actual occupation and cultivation was made by petitioner Arcadio Ybañez and his children, consisting of 9.6 hectares which cover the whole of Lot No. 986 and portions of Lot Nos. 987, 988 and 989; that based on the ocular inspection conducted, it was established that Valentin Ouano did not have a house on the land and cannot locate the boundaries of his titled land for he never resided therein.5 The trial court, after hearing, rendered on June 8, 1991 its decision6 in favor of private respondent, the dispositive portion of which reads as follows: WHEREFORE, in view of all the foregoing, judgment is hereby rendered as follows: 1 — The defendants are ordered to vacate the premises of Lot 986, PLS599-D, situated at Sitio Bagsac, Manikling, San Isidro, Governor Generoso and to return the possession thereof to the plaintiff Valentin Ouano together with all the improvements therein; 2 — To pay unto the plaintiff the sum of P12,000.00, the proceeds of the sale of copra from January 4, 1975 to the present; 3 — To pay attorney's fees of P7,500.00; 4 — To desist from entering the property again after they have turned it over to plaintiff; and 5 — To pay the costs of this suit.7 Petitioners appealed to the Intermediate Appellate Court. On June 29, 1984, the Intermediate Appellate Court, First Civil Cases Division promulgated a decision,8 affirming the decision of the trial court, with the modification that the award of Pl2,000.00 representing the proceeds of the land from January 24, 1975 was reduced to P10,000.00 and the amount of P7,500.00 as attorney's fees was fixed at P5,000.00.9 Hence the instant recourse by petitioners. At the outset, it must be noted that in assailing the appellate court's decision which affirmed that of the trial court, petitioners relied on the Order dated July 19, 1978 issued by the Director of the Bureau of Lands resolving the protest filed by them on January 3, 1975, later amended on February 6, 1975, against the Homestead

Application No. 20-107001 of Valentin Ouano over Lot No. 986, Pls-599-D, docketed as B.L. Claim No. 2809, D.L.O. Confect No. (XI-7)102. Petitioners claimed that the complaint for recovery of possession, damages and attorneys fees against them should have been dismissed by the trial court for failure of private respondents, as patentee-respondent in the protest case before the Bureau of Lands, to exhaust administrative remedies which is tantamount to a lack of cause of action under Section 1, Rule 16 of the Rules of Court; that the decision or order on a question of fact by the Bureau of Lands that Patent No. 101201 issued to private respondent was improperly and erroneously issued should have been respected by the trial court and the appellate court; that the indefeasibility of a certificate of title must not be a sword for an offense nor should it be allowed to perpetrate fraud. We find the contentions unmeritorious. It was erroneous for petitioners to question the Torrens Original Certificate of Title issued to private respondent over Lot No. 986 in Civil Case No. 671, an ordinary civil action for recovery of possession filed by the registered owner of the said lot, by invoking as affirmative defense in their answer the Order of the Bureau of Lands, dated July 19, 1978,10 issued pursuant to the investigatory power of the Director of Lands under Section 91 of Public Land Law (C.A. 141 as amended). Such a defense partakes of the nature of a collateral attack against a certificate of title brought under the operation of the Torrens system of registration pursuant to Section 122 of the Land Registration Act, now Section 103 of P.D. 1259. The case law on the matter does not allow a collateral attack on the Torrens certificate of title on the ground of actual fraud.11 The rule now finds expression in Section 48 of P.D. 1529 otherwise known as the Property Registration Decree. The certificate of title serves as evidence of an indefeasible title to the property in favor of the person whose name appears therein. After the expiration of the one (1) year period from the issuance of the decree of registration upon which it is based, it becomes incontrovertible.12 The settled rule is that a decree of registration and the certificate of title issued pursuant thereto may be attacked on the ground of actual fraud within one (1) year from the date of its entry and such an attack must be direct and not by a collateral proceeding.13 The validity of the certificate of title in this regard can be threshed out only in an action expressly filed for the purpose.14 It must be emphasized that a certificate of title issued under an administrative proceeding pursuant to a homestead patent, as in the instant case, is as indefeasible as a certificate of title issued under a judicial registration proceeding, provided the land covered by said certificate is a disposable public land within the contemplation of the Public Land Law.15 There is no specific provision in the Public Land Law (C.A. No. 141, as amended) or the Land Registration Act (Act 496), now P.D. 1529, fixing the one (1) year period within which the public land patent is open to review on the ground of actual fraud as in Section 38 of the Land Registration Act, now Section 32 of P.D. 1529, and clothing a public land patent certificate of title with indefeasibility. Nevertheless, the pertinent pronouncements in the aforecited cases clearly reveal that Section 38 of the Land Registration Act, now Section 32 of P.D. 1529 was applied by implication by this Court to the patent issued by the Director of Lands duly approved by the Secretary of Natural Resources, under the signature of the President of the Philippines in accordance with law. The date of issuance of the patent, therefore, corresponds to the date of the issuance of the decree in ordinary registration cases because the decree finally awards the land applied for registration to the party entitled to it, and the

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patent issued by the Director of Lands equally and finally grants, awards, and conveys the land applied for to the applicant.16 This, to our mind, is in consonance with the intent and spirit of the homestead laws, i.e. conservation of a family home, and to encourage the settlement, residence and cultivation and improvement of the lands of the public domain. If the title to the land grant in favor of the homesteader would be subjected to inquiry, contest and decision after it has been given by the Government thru the process of proceedings in accordance with the Public Land Law, there would arise uncertainty, confusion and suspicion on the government's system of distributing public agricultural lands pursuant to the "Land for the Landless" policy of the State. In the instant case, the public land certificate of title issued to private respondent attained the status of indefeasibility one (1) year after the issuance of patent on April 15, 1963, hence, it is no longer open to review on the ground of actual fraud. Consequently, the filing of the protest before the Bureau of Lands against the Homestead Application of private respondent on January 3, 1975, or 12 years after, can no longer re-open or revise the public land certificate of title on the ground of actual fraud. No reasonable and plausible excuse has been shown for such an unusual delay. The law serves those who are vigilant and diligent and not those who sleep when the law requires them to act.17 In rendering judgment restoring possession of Lot No. 986 to private respondent Ouano, the duly registered owner thereof, the trial court merely applied the rule and jurisprudence that a person whose property has been wrongly or erroneously registered in another's name is not to set aside the decree, but, respecting the decree as incontrovertible and no longer open to review, to bring an ordinary action in the ordinary court of justice for reconveyance or, if the property has passed into the hands of an innocent purchaser for value, for damages.18 Although petitioners may still have the remedy of reconveyance, assuming that they are the "owners" and actual occupants of Lot No. 986, as claimed by them before the trial court, this remedy, however, can no longer be availed of by petitioners due to prescription. The prescriptive period for the reconveyance of fraudulently registered real property is ten (10) years reckoned from the date of the issuance of the certificate of title.19 While there is no dispute that the Director of Lands has the authority to conduct an investigation of any alleged fraud in securing a homestead patent and the corresponding title to a public land notwithstanding the status of indefeasibility attached to the certificate of title of private respondent, and such investigation cannot be enjoined by a writ of prohibition, it must be observed however, that whatever may be the result of the factual finding in this administrative proceedings under Section 91 of the Public Land Law is not decisive of the issue as to who has a better right of possession (possession de jure) over Lot No. 986 in Civil Case No. 671. The action instituted by private respondent before the trial court partakes of the nature of an accion publiciana which is basically intended for the recovery of possession, and is a plenary action in an ordinary civil proceeding before a Court of First Instance (now RTC).20 On the other hand, in the case of the administrative investigation under Section 91 of the Public Land Law, the sole and only purpose of the Director of Lands is to determine whether or not fraud had been committed in securing such title in order that the appropriate action for reversion may be filed by the Government.21 It is not intended to invalidate the Torrens certificate of title of the registered owner of the land.

Unless and until the land is reverted to the State by virtue of a judgment of a court of law in a direct proceedings for reversion, the Torrens certificate of title thereto remains valid and binding against the whole world. In resolving the basic issue of an accion publiciana, the trial court acted within its sphere of competence and has correctly found that private respondent Ouano has a better right of possession over Lot No. 986 than petitioners who claimed to own and possess a total of 12 hectares of land including that of Lot No. 986. Records indicate that petitioners have not taken any positive step to legitimize before the Bureau of Lands their self-serving claim of possession and cultivation of a total of 12 hectares of public agricultural land by either applying for homestead settlement, sale patent, lease, or confirmation of imperfect or incomplete title by judicial legalization under Section 48(b) of the Public Land Law, as amended by R.A. No. 1942 and P.D. 1073, or by administrative legalization (free patent) under Section 11 of Public Land Law, as amended.1âwphi1 What was clearly shown during the trial of the case was that petitioners wrested control and possession of Lot No. 986 on January 4, 1975, or one (1) day after they filed their belated protest on January 3, 1975 before the Bureau of Lands against the homestead application of private respondent, thus casting serious doubt on their claim of prior possession and productive cultivation. What is more, it was only in 1975 that petitioners came to know and realize that they do not have actual possession of the so-called 12 hectares because, as testified by Ernesto Domanais, son-in-law of Arcadio Ybanez, three (3) hectares of their land were found to be in possession of a certain Rodolfo Beneguian; and that petitioners did not object when said portion of land was removed from their occupation thereby reducing their purported claim of 12 hectares to only nine (9) hectares.22 It is relatively easy to declare and claim that one owns and possesses a 12-hectare public agricultural land, but it is entirely a different matter to affirmatively declare and to prove before a court of law that one actually possessed and cultivated the entire area to the exclusion of other claimants who stand on equal footing under the Public Land Law (CA 141, as amended) as any other pioneering claimants. WHEREFORE, the petition is DENIED for lack of merit. The decision of the Intermediate Appellate Court, now Court of Appeals, dated June 29, 1984, is hereby affirmed. No costs. SO ORDERED.

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