Archive for October, 2011


CASE NO. 2011-0197: PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT VS. SANDIGANBAYAN (SECOND DIVISION), TOURIST DUTY FREE SHOPS, INC., BANK OF AMERICA AND RIZAL COMMERCIAL BANKING CORPORATION (G.R. NO. 152500, 14 SEPTEMBER 2011, PERALTA, J.) SUBJECTS: SEQUESTRATION ORDERS AND FREEZE ORDERS; PRELIMINARY INJUNCTION; RES JUDICATA. (BRIEF TITLE: PCGG VS. TOURIST DUTY FREE SHOPS).

Filed under: LATEST SUPREME COURT CASES — 1 Comment
October 3, 2011

CASE NO. 2011-0197: PRESIDENTIAL COMMISSION ON GOOD GOVERNMENT VS. SANDIGANBAYAN (SECOND DIVISION), TOURIST DUTY FREE SHOPS, INC., BANK OF AMERICA AND RIZAL COMMERCIAL BANKING CORPORATION (G.R. NO. 152500, 14 SEPTEMBER 2011, PERALTA, J.) SUBJECTS: SEQUESTRATION ORDERS AND FREEZE ORDERS; PRELIMINARY INJUNCTION; RES JUDICATA. (BRIEF TITLE: PCGG VS. TOURIST DUTY FREE SHOPS).

 

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DISPOSITIVE:

 

“WHEREFORE, premises considered, the petition is hereby GRANTED. The Resolution dated July 26, 2001, October 5, 2001, January 23, 2002 and the Writ of Preliminary Mandatory Injunction and Preliminary Injunction dated August 3, 2001 are hereby SET ASIDE. Consequently, the Sequestration Order dated March 11, 1986 directed against Tourist Duty Free Shops, Inc. and the Freeze Order issued subsequent thereto, STAND subject to the final outcome of Civil Case No. 0142.

 

The Sandiganbayan is DIRECTED to resolve Civil Case No. 0142 with dispatch.

SO ORDERED.”

 

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Republic of thePhilippines

Supreme Court

Manila

 

                                                           THIRD DIVISION

                       

PRESIDENTIAL

COMMISSION ON GOOD GOVERNMENT,                                                                                               

                          Petitioner,

 

 

 

– versus-

 

 

 

SANDIGANBAYAN (Second Division), TOURIST DUTY FREE SHOPS, INC., BANK OF AMERICA and RIZAL COMMERCIAL BANKING CORPORATION,                  

                            Respondents.                                                                

 G.R. No. 152500

 

 

 

Present:

 

VELASCO, JR., J., Chairperson,

 PERALTA,

 ABAD,

 MENDOZA, and

 SERENO,*  JJ.

 

 

 

 

 Promulgated:

 

       September 14, 2011

x—————————————————————————————-x

                        DECISION

 

 

PERALTA, J.:

         

Assailed in this Petition for Certiorari and Prohibition with Urgent Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction[1][1] under Rule 65 of the Rules of Court filed by the Presidential Commission on Good Government (PCGG) are the following Orders of the Sandiganbayan: (1) Resolution[2][2] dated July 26, 2001 granting Tourist Duty Free Shops, Inc.’s (TDFSI’s) motion for the issuance of a writ of preliminary mandatory and prohibitory injunction against the implementation of the Sequestration Order dated March 11, 1986 upon the posting of a bond in the amount of P100,000.00; (2) The Writ of Preliminary Mandatory Injunction and Preliminary Injunction[3][3] dated August 3, 2001;[4][4] (3) Resolution[5][5] dated October 5, 2001 holding in abeyance the resolution of PCGG’s motion for reconsideration and suspending the implementation of the writ of preliminary mandatory and prohibitory injunction; (4) Resolution[6][6] dated January 23, 2002 denying PCGG’s motion for reconsideration and omnibus motion and increasing the amount of the injunction bond to P1million; (5) Order[7][7] dated January 23, 2002 setting the pre-trial and trial of the case; and (6) Order dated January 24, 2002 resetting the trial.[8][8]

 

          The facts of the case are as follows:

 

          By virtue of Presidential Decree (P.D.) No. 1193,[9][9] as amended by P.D. No. 1394,[10][10] then President Ferdinand E. Marcos authorized TDFSI to establish, operate and maintain duty and tax free stores at all international airports and seaports, as well as at selected hotels, tourist resorts, and commercial or trading centers throughout the country.

 

On March 11, 1986, the PCGG issued to TDFSI a Sequestration Order[11][11] signed by then Commissioner Mary Concepcion Bautista which reads as follows:

 

                                                                   March 11, 1986

 

The Manager

Tourist Duty Free Shops, Inc.

Food Terminal, Inc. Compound

Taguig, MetroManila

 

Sir:

 

            The Presidential Commission on Good Government, by authority of the President of thePhilippines, has decided to sequester the facilities, assets and funds of Tourist Duty Free Shops, Inc. in order to prevent any dispositions thereof to the prejudice of the people. You are hereby ordered to refrain from:

 

1.      entering into new contracts or transactions;

2.      making any disbursements of funds of the corporation, except in the ordinary course of business and for the payment of salaries of legitimate employees which are due; and

3.      withdrawing funds from the accounts of the corporation, or its branches or subsidiaries.

 

Please preserve all the records of the corporation, and do not remove or allow the removal of any documents or other records.

 

 

 

                                                Very truly yours,

 

                                             (SGD.) MARY CONCEPCION BAUTISTA

                                                                     Commissioner

 

          On March 11, 1986, the PCGG issued a Freeze Order[12][12] directing the Manager of Rizal Commercial Banking Corporation (RCBC) to freeze any withdrawals, transfers or remittances from the funds of TDFSI in the said bank.

 

On May 2, 1986, TDFSI filed before the Court a Petition for Certiorari, Prohibition and Injunction with Preliminary Injunction and/or Restraining Order[13][13] to annul and stop the enforcement of the Sequestration Order. The case was docketed as G.R. No. 74302.

 

On May 27, 1986, the Court issued a Resolution[14][14] in favor of PCGG and against TDFSI, the dispositive portion of which reads:

 

Accordingly, the Court Resolved as follows:

 

(1)               The sequestration order of all the assets of petitioner stands and, therefore, no temporary restraining order will issue against the same;

 

(2)               The respondent Commission’s order authorizing the Philippine Tourism Authority to conduct an audit and inventory of petitioner’s goods likewise stands and no temporary restraining order will issue against the same, provided that petitioner Company will be entitled to a sufficient number of representatives as it may designate to be present to protect its interest in the taking of such audit and inventory;

 

(3)               After the completion of such audit and inventory by the Philippine Tourism Authority within the period of five (5) days from notice hereof, petitioner TDFSI shall be permitted to undertake the following activities under the supervision of respondent Commission’s authorized representatives: (a) to dispose and sell all its existing stocks in the ordinary course of business at such reasonable number of outlets as may be determined by respondent Commission. All proceeds of such sales shall at the end of the day be turned over to the respondent Commission’s duly- authorized representatives. The respondent Commission in turn shall hold the same in trust and deposit such proceeds in special trust account so designated; and (b) to pay by means of checks issued by and countersigned by the respondent Commission’s fiscal agent, or comptroller or duly-authorized representatives so designated, ordinary operational expenses such as payrolls, rentals, utilities, etc.

 

It is understood that no new contracts or transactions may be entered into by petitioner, nor shall any payment for accounts of, suppliers be made, except with the approval of the Commission.

 

Finally, the Court directs the Clerk of Court to deliver the three (3) keys deposited with the Court to respondent Commission’s duly-authorized representative x x x[15][15]

Upon the issuance of Executive Order No. 14[16][16] and on petition[17][17] of TDFSI, the Court issued a Resolution[18][18] dated October 8, 1991 dismissing the petition in G.R. No. 74302 without prejudice to the filing of a case before the Sandiganbayan. The resolution had become final and executory on October 16, 1991 and was recorded in the Book of Entries of Judgments.[19][19] 

 

Meanwhile, on July 21, 1987, the Republic of the Philippines, represented by the PCGG, filed a Complaint for Reconveyance, Reversion, Accounting, Restitution and Damages[20][20] against Bienvenido Tantoco, Bienvenido R. Tantoco, Jr., Gliceria R. Tantoco, Maria Lourdes Tantoco-Pineda, Dominador Santiago, Ferdinand E. Marcos and Imelda R. Marcos. The case was docketed as Civil Case No. 0008.

 

On December 18, 1991, following the dismissal of G.R. No. 74302, TDFSI filed a Complaint for Injunction and Specific Performance with Prayer for Issuance of Restraining Order and/or Preliminary Mandatory and Prohibitory Injunction[21][21] against the PCGG, Bank of America (BA) and RCBC before the Sandiganbayan. The case was docketed as Civil Case No. 0142.[22][22]

 

In its Complaint, TDFSI assailed the Sequestration Order, having been signed by only one of the five PCGG Commissioners and having been issued without the requisite investigation. Considering that no action had been filed for the recovery of TDFSI’s assets, funds and properties, and no list of the sequestered assets had been made, TDFSI claimed that the Sequestration Order was deemed automatically lifted.[23][23] It also questioned PCGG’s act of preventing RCBC and BA from allowing TDFSI to withdraw from its accounts without the approval of the PCGG. In support of the prayer for the issuance of a restraining order and/or a writ of preliminary mandatory and prohibitory injunction, TDFSI claimed that the continued refusal of RCBC and BA to allow withdrawal of its funds without PCGG’s approval has prevented TDFSI from investing its own funds in money-making ventures and, unless remedied upon, stands to suffer irreparable damage in the form of lost opportunities.[24][24]

 

On June 15, 1992, the Sandiganbayan issued a Resolution[25][25] dismissing Civil Case No. 0142 without prejudice to the re-filing of the proper motions in Civil Case No. 0008. Civil Case No. 0142 was dismissed allegedly because the issues are intimately related with those raised in Civil Case No. 0008 such that the resolution of the issues raised in the former might render inutile or nugatory any future determination and resolution of the merits of the causes of action in the latter case. TDFSI’s motion for reconsideration was likewise denied on September 23, 1992.[26][26]

 

When elevated to the Court in G.R. No. 107395, we reversed and set aside the above resolutions on January 26, 2000.[27][27] The Court held that the elements of litis pendentia were absent. It explained that there is no identity of parties and causes of action. It also concluded that any decision that may be rendered in any of the two cases cannot constitute res judicata on the other.

 

Consequently, Civil Case No. 0142 was remanded for further proceedings. On July 26, 2001, the Sandiganbayan issued the first assailed Resolution[28][28] granting TDFSI’s motion for the issuance of a writ of preliminary mandatory and prohibitory injunction. The dispositive portion of the resolution is quoted below for easy reference:

 

ACCORDINGLY, and finding merit, the Motion of plaintiff for the issuance of a writ of preliminary mandatory injunction and preliminary injunction is hereby granted upon posting of a bond in the amount of One Hundred Thousand (P100,000.00), Pesos. Defendant-PCGG is enjoined from further implementing the writ of sequestration or the letter dated March 11, 1986 until further orders from this Court.

 

As regard to the defendant-banks, considering that it has no reason to prevent plaintiff from withdrawing funds with them or transacting business with them and there exist a contract separate and distinct from the issue/s under consideration, they are likewise enjoined, until further orders from this Court, from requiring prior approval from defendant-PCGG before it allows plaintiff to withdraw funds or monies and/or transact business with them, and said defendant-banks are likewise ordered to accept whatever checks plaintiff has issued.

 

SO ORDERED.[29][29]  

          While recognizing the PCGG’s authority to issue the Sequestration Order to carry out its vital task of recovering justly and expeditiously ill-gotten wealth, the Sandiganbayan found that the continued implementation of said Order would greatly cause irreparable damage to TDFSI. The court held that in issuing the Sequestration Order against TDFSI, PCGG did not observe the Rules and Regulations implementing Executive Order Nos. 1[30][30] and 2.[31][31] It explained that no investigation was conducted, no notice nor opportunity to adduce evidence was given to TDFSI, and no public hearing was conducted. More importantly, the court observed that the Sequestration Order was signed by only one of the PCGG Commissioners, which is violative of its own Rules and Regulations dated April 11, 1986.

 

          On August 3, 2001, the assailed Writ of Preliminary Mandatory Injunction and Preliminary Injunction[32][32] was issued, the pertinent portion of which reads:

 

            NOW THEREFORE, you (defendant Presidential Commission on Good Government), your officers, agents, representatives and/or persons acting upon your orders or, in your place or stead, are hereby ENJOINED from further implementing the writ of sequestration or the letter dated March 11, 1986 until further orders from this Court and as regards the defendant-banks (Bank of America and Rizal Commercial Banking Corp.) your officers, agents, representatives, and/or persons acting upon your orders or, in your place or stead, are likewise ENJOINED until further orders from this Court from requiring prior approval from defendant-PCGG before it allows plaintiff to withdraw funds or monies and/or transact business with them, and defendant-banks are likewise ordered to accept whatever checks plaintiff has issued.[33][33] (Emphasis supplied.)  

Aggrieved, PCGG filed an Urgent Motion to Recall Writ of Preliminary Mandatory Injunction and Preliminary Injunction,[34][34] Motion for Reconsideration,[35][35] and Supplemental Motion for Reconsideration.[36][36]

 

On October 5, 2001, the Sandiganbayan issued the third assailed Resolution[37][37] holding in abeyance the resolution of the three motions named in the preceding paragraph and other related incidents. In the same resolution, the court suspended the implementation of the writ of preliminary mandatory and prohibitory injunction in order to avoid “judicial apostacy.”

 

On January 23, 2002, the Sandiganbayan issued the fourth assailed Resolution[38][38] denying PCGG’s motion for reconsideration. The court held that the Sequestration Order is void for failure to comply with Executive Order No. 1 which requires the PCGG as a body to issue the order. It also explained that in G.R. No. 74302, the Court did not decide with finality the issue of whether or not the assets and funds in question are ill-gotten wealth of the Marcoses.

 

On even date, the Sandiganbayan issued the fifth assailed Order[39][39] setting the case for pre-trial. The sixth assailed Order[40][40] was issued on January 24, 2002, resetting the trial of the case.

 

For failure to obtain a favorable decision, PCGG comes before the Court in this Petition for Certiorari and Prohibition with Temporary Restraining Order and/or Writ of Preliminary Injunction based on the following grounds:

 

WHETHERRESPONDENT COURTACTED ARBITRARILY AND COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN ISSUING THE ASSAILED ORDERS AND PROCEEDED TO CONDUCT THE PRE-TRIAL/TRIAL OF CIVIL CASE NO. 0142, CONSIDERING THAT:

 

I.

THE HONORABLE COURT EN BANC HAD ALREADY SUSTAINED IN ITS RESOLUTION DATED JANUARY 26, 1986 IN G.R. NO. 74302 THE VALIDITY OF THE ISSUANCE OF THE SEQUESTRATION ORDER: AND, RELEVANTLY, IN G.R. NO. 107395, THE HONORABLE COURT DENIED A SIMILAR APPLICATION FOR AN INJUNCTIVE WRIT FILED BY TDFSI TO ENJOIN THE ENFORCEMENT OF THE SUBJECT SEQUESTRATION ORDER.

 

 

 

 

II.

IN VIEW OF THE PRONOUNCEMENT OF THE HONORABLE COURT IN G.R. NO. 74302 AS WELL AS THE JUDICIAL ADMISSIONS IN CIVIL CASE NO. 0008, IT COULD NO LONGER BE DISPUTED THAT THE FUNDS OF TDFSI SUBJECT OF THE ASSAILED WRIT OF SEQUESTRATION CONSTITUTE ILL-GOTTEN WEALTH OF THE MARCOSES.

 

III.

ASSUMING ARGUENDO THAT THE ISSUE OF THE VALIDITY OF THE SEQUESTRATION ORDER COULD STILL BE RE-LITIGATED, IT IS ALREADY SETTLED IN LIGHT OF G.R. NO. 74302, THAT SEQUESTRATION ORDERS SIGNED BY ONE COMMISSIONER BUT ISSUED PRIOR TO THE ADOPTION OF THE PCGG RULES ARE VALID, AND THAT CORPORATE ENTITIES MERELY CONSTITUTING THE RES IN RECOVERY OF ILL-GOTTEN WEALTH CASES NEED NOT BE IMPLEADED AS PARTY DEFENDANTS THEREIN.

 

IV.

THE ASSAILED ORDERS OFRESPONDENT COURT, PARTICULARLY THE GRANT OF THE INJUNCTIVE WRIT, AMOUNT TO A PREJUDGMENT OF CIVIL CASE NO. 0142 AND RENDERS NUGATORY ANY JUDGMENT THAT MAY EVENTUALLY BE PROMULGATED BYRESPONDENT COURTIN THAT CASE.

 

V.

THE INJUNCTIVE WRIT WAS ISSUED IN UTTER DISREGARD OF THE BASIC REQUIREMENTS THAT: (A) THE APPLICANT MUST HAVE A CLEAR AND UNMISTAKEABLE LEGAL RIGHT; AND (B) THE APPLICANT WILL SUSTAIN IRREPARABLE DAMAGE OR INJURY UNLESS THE INJUNCTIVE WRIT IS ISSUED.

 

VI.

THE AMOUNT OF THE BOND FIXED BY RESPONDENT COURT IS DEVOID OF ANY BASIS AND IS NOT SUFFICIENT TO COVER WHATEVER DAMAGES THE PCGG AND THE FILIPINO PEOPLE MAY SUFFER AS A RESULT OF THE ISSUANCE OF THE INJUNCTIVE WRIT.

 

VII.

THE POSTING OF A COUNTERBOND BY PCGG CANNOT OPERATE TO ESTOP THE LATTER FROM QUESTIONING THE ASSAILED ORDERS CONSIDERING THAT PCGG POSTED IT OUT OF SHEER NECESSITY AND URGENCY UPON RESPONDENT COURT’S ORDER IN ORDER TO IMMEDIATELY EFFECT THE LIFTING OF THE INJUNCTIVE WRIT AND THEREBY PREVENT THE DISSIPATION OF THE SEQUESTERED ASSETS, WITHOUT, HOWEVER, WAIVING THE GROUNDS RAISED IN ITS MOTION FOR RECONSIDERATION AND SUPPLEMENTAL MOTION FOR RECONSIDERATION.

 

VIII.

THE ISSUANCE OF THE INJUNCTIVE WRITS CAUSED AND WILL CONTINUE TO CAUSE GRAVE AND IRREPARABLE DAMAGE AND PREJUDICE TO THE REPUBLIC AND THE FILIPINO PEOPLE AT LARGE, CONTRARY TO AND IN EVIDENT DISAVOWAL OF THE PCGG’S CONSTITUTIONALLY AND STATUTORILY ENSHRINED MANDATE OF RECOVERING THE ILL-GOTTEN WEALTH OF THE MARCOSES AND THEIR CRONIES.

 

IX.

THE ASSAILED ORDERS OF RESPONDENT COURT, PARTICULARLY THE DENIAL OF PCGG’S MOTION FOR ACCOUNTING OF THE FUNDS AND DEPOSITS SUBJECT OF THE SEQUESTRATION ORDER, AMOUNT TO A CAPRICIOUS, WHIMSICAL AND UTTER ABDICATION OF RESPONDENT COURT’S DUTY AS LEGAL CUSTODIAN OF THOSE FUNDS AND DEPOSITS, TO PRESERVE THEM AS THE WRIT THE DETERMINATION OF RESPONDENT COURT IN CIVIL CASE NO. 0008 AS TO WHETHER THEY ARE ILL-GOTTEN WEALTH OR LAWFULLY ACQUIRED PROPERTIES.[41][41]

 

The petition is meritorious.

 

A perusal of the records of the case and the pleadings submitted before the Court would shows that the PCGG and TDFSI have thoroughly argued for and against the validity of the Sequestration Order in support of their respective positions. However, we would like to stress that we are confronted only with the preliminary issue of the propriety of the issuance by the Sandiganbayan of the writ of preliminary mandatory and prohibitory injunction against the  implementation of the March 11, 1986 Sequestration Order of the PCGG directed against TDFSI. The validity of the Sequestration Order is yet to be decided by the Sandiganbayan in Civil Case No. 0142.

 

PCGG insists that in issuing the injunctive writ, the Sandiganbayan contravened and overturned the Court’s resolution in G.R. No. 74302 which denied TDFSI’s similar application for an injunctive writ and affirmed the validity of the Sequestration Order.[42][42] PCGG points out that the reasons cited for the issuance of the injunctive writ were the very same grounds that were already invoked, considered and passed upon in the earlier case. The issuance of the injunctive writ is, therefore, violative of the principles of res judicata, litis pendentia and law of the case.[43][43] In other words, TDFSI could not assail anew the validity of the Sequestration Order.

 

We do not agree.

 

This Court’s May 27, 1986 Resolution in G.R. No. 74302 clearly states that it merely disposed of the preliminary issue of whether or not the Court should grant TDFSI’s prayer for the issuance of a temporary restraining order against the PCGG’s Sequestration and Freeze Orders. It appears that after the issuance of the above resolution and upon the issuance of Executive Order No. 14 vesting the Sandiganbayan with the exclusive and original jurisdiction over ill-gotten wealth cases to be prosecuted by the PCGG with the assistance of the Office of the Solicitor General, TDFSI filed a petition to dismiss the case which the Court granted. Apparently, the case was dismissed by the Court without prejudice to its re-filing with the Sandiganbayan. Clearly, there is no final determination yet of the validity of the assailed Sequestration and Freeze Orders. The May 27, 1986 Resolution relied on by PCGG is only an interlocutory order and an incident of the dismissed case. PCGG cannot therefore rely on the principles of res judicata, litis pendentia or law of the case.      

 

Res judicata exists when the following elements are present: (a) the former judgment must be final; (b) the court which rendered judgment had jurisdiction over the parties and the subject matter; (c) it must be a judgment on the merits; and (d) there must be, between the first and second actions, identity of parties, subject matter, and cause of action.[44][44] Obviously, the third requisite is wanting. Res judicata or bar by prior judgment is a doctrine which holds that a matter that has been adjudicated by a court of competent jurisdiction must be deemed to have been finally and conclusively settled if it arises in any subsequent litigation between the same parties and for the same cause.[45][45]

 

As the dismissal of G.R. No. 74302 was without prejudice, it was not a judgment on the merits. A judgment on the merits is one rendered after a determination of which party is right, as distinguished from a judgment rendered upon some preliminary or formal or merely technical point. The dismissal of the case without prejudice indicates the absence of a decision on the merits and leaves the parties free to litigate the matter in a subsequent action as though the dismissed action had not been commenced.[46][46] In other words, the discontinuance of a case not on the merits does not bar another action on the same subject matter.[47][47] TDFSI thus re-filed the case to the Sandiganbayan in a petition for injunction docketed as Civil Case No. 0142 assailing anew the validity of the Sequestration and Freeze Orders.

 

To be sure, the provisional remedy, like any other interlocutory order, cannot survive the main case of which it is but an incident.[48][48] The findings of fact and opinion of a court when issuing (or denying) the writ of preliminary injunction are interlocutory in nature and made even before the trial on the merits is commenced or terminated.[49][49]  Thus, the May 27, 1986 interlocutory order of the Court died with the dismissal of the main case in G.R. No. 74302. The right of TDFSI to re-file the main case carries with it its right to apply for the provisional remedies available under the Rules of Court.

 

Although the principles of res judicata, litis pendentia and law of the case are inapplicable to set aside the assailed resolutions and writ of preliminary mandatory and prohibitory injunction, we hold that the issuance of writ of certiorari and prohibition is proper.

 

In support of its prayer for the issuance of a writ of preliminary mandatory and prohibitory injunction, TDFSI presented before the court a quo  the following  documentary evidence: (1) the Complaint filed by TDFSI with the court below in Civil Case No. 0142;[50][50] (2) The General Information Sheet of TDFSI;[51][51] (3) Presidential Decree No. 1193;[52][52] (4) Presidential Decree No. 1394;[53][53] (5) The Sequestration Order;[54][54] (6) Correspondence between TDFSI and Bank of America;[55][55] (7) Letter  of TDFSI addressed to the Sandiganbayan inquiring from the latter whether or not an action for recovery of ill-gotten wealth against TDFSI has been filed by the PCGG;[56][56] and (8) a Certification from the Sandiganbayan that as of a particular date, no such action has been filed.[57][57]  PCGG, on the other hand, did not present any evidence. 

 

Based on the foregoing evidence, the Sandiganbayan declared the Sequestration and Freeze Orders null and void and used such nullity as a justification for the issuance of the questioned writ of preliminary mandatory and prohibitory injunction. Specifically, it concluded that said Orders are invalid on the following grounds: (1) no investigation was conducted by the PCGG before the issuance of the Sequestration and Freeze Orders; (2) even if there was an investigation, no notice or opportunity to adduce evidence was given to TDFSI; (3) no public hearing was conducted; (4) the Sequestration and Freeze Orders were signed by only one Commissioner; (5) the Sequestration and Freeze Orders contained no explanation as to why they were issued; and (6) the Sequestration and Freeze Orders were automatically lifted, since there was actually no case for recovery of ill-gotten wealth filed because TDFSI was not impleaded as a defendant.

 

We hold that the Sandiganbayan gravely abused its discretion amounting to lack or excess of jurisdiction in issuing the questioned preliminary injunctive writ. The grounds relied upon by the Sandiganbayan are not sufficient to warrant the issuance of said writ. The documentary evidence listed above merely show that TDFSI is a corporation, that a sequestration order signed by a PCGG Commissioner was issued against it, and that no action for recovery of ill-gotten wealth was filed by PCGG against TDFSI at the time the inquiry was made.

 

Section 3, Rule 58 of the Rules of Court lays down the requirements for the issuance of a writ of preliminary injunction, viz:

 

(a)                That the applicant is entitled to the relief demanded, and the whole or part of such relief consists in restraining the commission or continuance of the acts complained of, or in requiring the performance of an act or acts, either for a limited period or perpetually;

(b)               That the commission, continuance or non-performance of the act or acts complained of during the litigation would probably work injustice to the applicant; or

(c)                That a party, court or agency or a person is doing, threatening, or attempting to do, or is procuring or suffering to be done, some act or acts probably in violation of the rights of the applicant respecting the subject of the action or proceeding, and tending to render the judgment ineffectual.[58][58]

 

 

From the foregoing, it can be inferred that two (2) requisites must exist to warrant the issuance of an injunctive relief, namely: (1) the existence of a clear and unmistakable right that must be protected; and (2) an urgent and paramount necessity for the writ to prevent serious damage.[59][59]  Otherwise stated, before a writ of preliminary injunction may be issued, there must be a clear showing that there exists a right to be protected and that the acts against which the writ is to be directed are violative of established right.[60][60]

 

Without making a definitive conclusion as to the validity of the Sequestration and Freeze Orders being the main issue in Civil Case No. 0142 which is yet to be decided by the Sandiganbayan, we conclude that the pieces of evidence enumerated above do not, in any way, show that TDFSI has a right to be protected and that the implementation of the Sequestration and Freeze Orders is violative of its rights.

 

In Bataan Shipyard & Engineering Co., Inc. (BASECO) v. PCGG,[61][61] the Court has already described the nature and purpose of Sequestration and Freeze Orders and the extent of the PCGG’s power to implement the same, and we quote:

By the clear terms of the law, the power of the PCGG to sequester property claimed to be “ill-gotten” means to place or cause to be placed under its possession or control said property, or any building or office wherein any such property and any records pertaining thereto may be found, including “business enterprises and entities” – for the purpose of preventing the destruction, concealment or dissipation of, and otherwise conserving and preserving, the same – until  it can be determined, through appropriate judicial proceedings, whether the property was in truth “ill-gotten,” i.e., acquired through or as a result of improper or illegal use of or the conversion of funds belonging to the Government or any of its branches, instrumentalities, enterprises, banks or financial institutions, or by taking undue advantage of official position, authority, relationship, connection or influence, resulting in unjust enrichment of the ostensible owner and grave damage and prejudice to the State. x x x

 

A “freeze order” [on the other hand] prohibits the person having possession or control of property alleged to constitute “ill-gotten wealth” from transferring, conveying, encumbering or otherwise depleting or concealing such property, or from assisting or taking part in its transfer, encumbrance, concealment, or dissipation. In other words, it commands the possessor to hold the property and conserve it subject to the orders and disposition of the authority decreeing such freezing. In this sense, it is akin to a garnishment by which the possessor or ostensible owner of property is enjoined not to deliver, transfer, or otherwise dispose of any effects or credits in his possession or control, and thus becomes in a sense an involuntary depositary thereof.[62][62]  

 

 

Pending the determination of whether or not the subject properties are “ill-gotten,” there is an obvious and imperative need for preliminary, provisional measures to prevent concealment, disappearance, destruction, dissipation, or loss of the assets and properties subject of the suits, or to restrain or foil acts that may render moot and academic, or effectively hamper, delay or negate efforts to recover the same.[63][63] The implementation of these orders should, therefore, not be restrained unless there is a clear ground to do so. More so in this case, considering that the Sandiganbayan’s conclusions are contrary to established jurisprudence. 

 

It has been settled in a number of cases that Sequestration and Freeze Orders signed by only one Commissioner and issued prior to the adoption of the PCGG Rules and Regulations cannot be invalidated. The PCGG Rules and Regulations were promulgated on April 11, 1986. Section 3[64][64] thereof requires that the sequestration order be issued upon the authority of at least two Commissioners. The questioned Sequestration Order was, however, issued on March 11, 1986 prior to the promulgation of the PCGG Rules and Regulations. Consequently, we cannot reasonably expect the PCGG to abide by said rules which were nonexistent at the time the subject orders were issued by then Commissioner Mary Concepcion Bautista.[65][65]

 

 The Court notes that on July 21, 1987, the Republic of the Philippines, represented by the PCGG, filed a Complaint for Reconveyance, Reversion, Accounting, Restitution and Damages against the Marcoses and the alleged stockholders and owners of TDFSI docketed as Civil Case No. 0008. While no case had been commenced against TDFSI itself, it has been a well-established doctrine that as to corporations allegedly organized with ill-gotten wealth but are not themselves guilty of misappropriation, fraud or other illicit conduct, there is no need to implead them. Their impleading is not proper on the strength alone of their being formed with ill-gotten funds, absent any other particular wrongdoing on their part.[66][66] And even in cases where there is a need to implead the sequestered corporation as indispensable or necessary party, its sequestration is not rendered functus officio, since it is a mere technical defect which can be cured at any stage of the proceedings.[67][67] The Sandiganbayan cannot, therefore, nullify the Sequestration and Freeze Orders on this basis alone.

 

 Among the rights explicitly acknowledged in Bataan Shipyard & Engineering Co., Inc. v. PCGG[68][68] is that the owners of properties have the “opportunity to contest” actions or orders of sequestration issued by the PCGG.[69][69] That “opportunity to contest” includes resort to the courts as in Civil Case No. 0142.[70][70] In that case, which is the main case where the questioned preliminary injunctive writ is an incident, the parties’ respective evidence are presented for the final determination of the validity of the questioned Sequestration and Freeze Orders. The Court is yet to determine whether the requisites for the valid issuance of said Orders are present.      

 

In view of the foregoing disquisition and considering that the pre-trial and trial of the case had been completed before the Sandiganbayan, we need not discuss the other issues raised by the PCGG.

 

WHEREFORE, premises considered, the petition is hereby GRANTED. The Resolution dated July 26, 2001, October 5, 2001, January 23, 2002 and the Writ of Preliminary Mandatory Injunction and Preliminary Injunction dated August 3, 2001 are hereby SET ASIDE. Consequently, the Sequestration Order dated March 11, 1986 directed against Tourist Duty Free Shops, Inc. and the Freeze Order issued subsequent thereto, STAND subject to the final outcome of Civil Case No. 0142.

 

The Sandiganbayan is DIRECTED to resolve Civil Case No. 0142 with dispatch.

SO ORDERED.

 

 

 

                                      DIOSDADO M. PERALTA

                                      Associate Justice

 

WE CONCUR:

 

 

 

PRESBITERO J. VELASCO, JR.

Associate Justice

Chairperson

 

 

 

ROBERTO A. ABAD                                JOSE CATRAL MENDOZA

      Associate Justice                                                Associate Justice

                  

            

 

MARIA LOURDES P. A. SERENO

Associate Justice

 

 

ATTESTATION

 

          I attest that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

 

 

 

 

                                                      PRESBITERO J. VELASCO, JR.

   Associate Justice

    Third Division, Chairperson

 

 

          CERTIFICATION

 

          Pursuant to Section 13, Article VIII of the Constitution and the Division Chairperson’s Attestation, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

 

 

 

 

                                                                   RENATO C. CORONA

                                                                             Chief Justice

 

 

*               Designated as an additional member, per Special Order No. 1028 dated June 21, 2011.

[1][1]           Rollo, pp. 2-140.

[2][2]           Penned by Associate Justice Godofredo L. Legaspi, with Associate Justices Edilberto G. Sandoval and Raoul V. Victorino, concurring; rollo, pp. 142-147.

[3][3]           Also referred to as preliminary mandatory and prohibitory injunction.

[4][4]           Rollo,  pp. 148-149.

[5][5]           Id. at 150-151.

[6][6]           Id. at 152-165

[7][7]           Id. at 166.

[8][8]           Id. at 167.

[9][9]           Authorizing the Tourist Duty Free Shops, Inc. to Establish and Operate Duty and Tax Free Stores and Requiring it to Pay Franchise Tax in Lieu of All Other Taxes; records, vol. I, pp. 10-12.

[10][10]         Amending Presidential Decree No. 1193 by Authorizing the Tourist Duty Free Shops, Inc. to Establish Only the Customs Bonded Warehouse, Exempting it From the Duties and Taxes Imposed by Presidential Decrees Nos. 1352 and 1352-A, and for Other Purposes; id. at 13-14.

[11][11]         Records, Vol. I, p. 83.

[12][12]         Rollo, Vol. I, (G.R. No. 74302), p. 37.

[13][13]         Records, Vol. I, pp. 421-453.

[14][14]         Id. at 416-420.

[15][15]         Id. at 516-517.

[16][16]         Defining the Jurisdiction Over Cases Involving the Ill-Gotten Wealth of Former President Ferdinand E. Marcos, Mrs. Imelda R. Marcos, Members of their Immediate Family, Close Relatives, Subordinates, Close and/or Business associates, Dummies, Agents and Nominees.

[17][17]         Rollo, Vol. II, (G.R. No. 74302), pp. 794-796.

[18][18]         Id. at 797.

[19][19]         Id. at 803.

[20][20]         Records, Vol. II, pp. 985-1112.

[21][21]         Records, Vol. I, pp. 1-7.

[22][22]         Also referred to in the record of the case as SB No. 0142.

[23][23]         Records, Vol. I, pp. 1-4.

[24][24]         Id. at 5.

[25][25]         Penned by Associate Justice Romeo M. Escareal, with Associate Justices Jose S. Balajadia and Nathaniel M. Gorospe, concurring; id. at 223-231.

[26][26]         Records, Vol. I, pp. 297-311.

[27][27]         380 Phil. 328 (2000).

[28][28]         Supra note 2.

[29][29]         Rollo, pp. 146-147.

[30][30]         Creating the Presidential Commission on Good Government.

[31][31]         Regarding the Funds, Monies, Assets, and Properties Illegally Acquired or Misappropriated by Former President Ferdinand Marcos, Mrs. Imelda Romualdez Marcos, Their Close Relatives, Subordinates, Business Associates, Dummies, Agents, or Nominees.

[32][32]         Supra note 4.

[33][33]         Rollo, p. 149.

[34][34]         Records, Vol. I, pp. 402-414.

[35][35]         Id. at 454-480.

[36][36]         Id. at 541-548.

[37][37]         Supra note 5.

[38][38]         Supra note 6.

[39][39]         Supra note 7.

[40][40]         Supra note 8.

[41][41]         Rollo, pp. 876-879.

[42][42]         Id. at 881-882.

[43][43]         Id. at 883.

[44][44]         Cruz v. Caraos, G.R. No. 138208, April 23, 2007, 521 SCRA 510, 524-525.

[45][45]         Id. at 524.

[46][46]         Id. at 525.

[47][47]         Heirs of Enrique Diaz, represented by Aurora T. Diaz v. Elinor A. Virata, in her capacity as the Administratrix of the Estate of Antenor Virata, G.R. No. 162037, August 7, 2006, 498 SCRA 141, 166.

[48][48]         G & S Transport Corp. v. CA, 432 Phil. 7, 27 (2002).

[49][49]         Urbanes, Jr. v. Court of Appeals, 407 Phil. 856, 867 (2001).

[50][50]         Records, Vol. I, pp. 1-7.

[51][51]         Id. at 8-9.

[52][52]         Id. at 10-12.

[53][53]         Id. at 13-14.

[54][54]         Id. at 15.

[55][55]         Id. at 16-17.

[56][56]         Id. at 81.

[57][57]         Id. at 82.

[58][58]         Phil Pharmawealth, Inc. v. Pfizer, Inc., G.R. No. 167715, November 17, 2010, 635 SCRA 140, 149-150.

[59][59]         Id. at 150.

[60][60]         G & S Transport Corp. v. CA, supra note 48.

[61][61]         234 Phil. 180 (1987).

[62][62]         Bataan Shipyard & Engineering Co., Inc. (BASECO) v. PCGG, 234 Phil. 180, 207-208 (1987).

[63][63]         Id.

[64][64]         SECTION 3. Who may issue. – A writ of sequestration or a freeze or hold order may be issued by the Commission upon the authority of at least two Commissioners, based on the affirmation or complaint of an interested party or motu proprio when the Commission has reasonable grounds to believe that the issuance thereof is warranted.

[65][65]         Republic of the Philippines v. Sandiganbayan, 336 Phil. 304, 318 (1997).

[66][66]         Id. at 314.

[67][67]         Id. at 315.

[68][68]         Supra note 61.

[69][69]         Presidential Commission on Good Government v. Tan, G.R. No. 173553-56, December 7, 2007, 539 SCRA 464, 480.

[70][70]         Id. at 483-484.

Comment

LEGAL NOTE 0101: NOTES ON ANNULMENT OF JUDGMENT. WHEN RESORTED TO. WHAT ARE THE GROUNDS.

Filed under: LEGAL NOTES — Leave a comment
October 2, 2011

LEGAL NOTE 0101: NOTES ON ANNULMENT OF JUDGMENT. WHEN RESORTED TO. WHAT ARE THE GROUNDS.

 

SOURCE: REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, THROUGH THE HON. SECRETARY, HERMOGENES EBDANE  VS. ALBERTO A. DOMINGO (G.R. NO. 175299, 14 SEPTEMBER 2011, LEONARDO-DE CASTRO, J.) SUBJECTS: SUMMONS TO THE REPUBLIC; APPEARANCE OF OSG; ANNULMENT OF JUDGMENT. (BRIEF TITLE: REPUBLIC VS. DOMINGO)

 

============================

 

 

DISPOSITIVE:

 

 

“WHEREFORE, the petition is GRANTED.  The Decision dated May 19, 2006 and the Resolution dated October 25, 2006 of the Court of Appeals in CA-G.R. SP No. 78813 are REVERSED.  The Decision dated February 18, 2003 of the Regional Trial Court of Malolos, Bulacan, Branch 18, in Civil Case No. 333-M-2002 is hereby ANNULLED and SET ASIDE, without prejudice to the filing of the original action in the proper Regional Trial Court.

 

SO ORDERED.”

 

============================

 

 

SUBJECT/DOCTRINE/DIGEST:

 

 

WHEN IS REMEDY OF ANNULMENT RESORTED TO?

 

 

WHEN  THE ORDINARY REMEDIES OF NEW TRIAL, APPEAL, PETITION FOR RELIEF OR OTHER APPROPRIATE REMEDIES ARE NO LONGER AVAILABLE THROUGH NO FAULT OF THE PETITIONER.

 

 

          Section 1, Rule 47[1][26] of the Rules of Court provides for the remedy of annulment by the Court of Appeals of judgments or final orders and resolutions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner.

 

XXXXXXXXXXXXXXXXXXXX

 

 

WHAT ARE THE GROUNDS FOR ANNULMENT OF JUDGMENT?

 

EXTRINSIC FRAUD AND LACK OF JURISDICTION.

 

          Under the first paragraph of Section 2, Rule 47[2][27] of the Rules of Court, the annulment may be based only on the grounds of extrinsic fraud and lack of jurisdiction.  As a ground for annulment of judgment, lack of jurisdiction refers to either lack of jurisdiction over the person of the defending party or over the subject matter of the claim.[3][28]  

 

XXXXXXXXXXXXXXXXXXXX

 

 

WAS THE PROCEEDINGS THEN NULL AND VOID?

 

 

YES BECAUSE THE REPUBLIC WAS NOT VALIDLY SERVED WITH SUMMONS. THERE WAS THEREFORE LACK OF JURISDICTION. BUT WITHOUT PREJUDICE TO THE REFILING OF THE CASE.

 

In sum, the Court holds that the Republic was not validly served with summons in Civil Case No. 333-M-2002.  Hence, the RTC failed to acquire jurisdiction over the person of the Republic.  Consequently, the proceedings had before the trial court and its Decision dated February 18, 2003 are hereby declared void.

In accordance with Section 7, Rule 47[4][35] of the Rules of Court, a judgment of annulment shall set aside the questioned judgment or final order or resolution and render the same null and void, without prejudice to the original action being refiled in the proper court.

 

============================

 

Republic of the Philippines

Supreme Court

Manila

 

 

FIRST DIVISION

 

 

REPUBLIC OF THE PHILIPPINES, represented by the Department of Public Works and Highways, through the Hon. Secretary, HERMOGENES EBDANE,

                    Petitioner,

 

 

–  versus  –

 

 

ALBERTO A. DOMINGO,

                   Respondent.

   G.R. No. 175299

 

Present:

 

CORONA, C.J.,

     Chairperson,     

LEONARDO-DE CASTRO,

BERSAMIN,

DELCASTILLO, and

VILLARAMA, JR., JJ.

 

Promulgated:

 

September 14, 2011

x- – – – – – – – – – – – – – – – – – – – – – – – – – – – –  – – – – – – – – – – – – – – – – – – – – – -x

 

 

D E C I S I O N

 

 

LEONARDO – DE CASTRO, J.:

 

          In this Petition for Review on Certiorari[5][1] under Rule 45 of the Rules of Court, the Court is called upon to reverse and set aside the Decision[6][2] dated May 19, 2006 and the Resolution[7][3] dated October 25, 2006 of the Court of Appeals in CA-G.R. SP No. 78813, as well as to declare null and void the Decision[8][4] dated February 18, 2003 of the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 18, in Civil Case No. 333-M-2002.   

 

          As culled from the records, the factual antecedents of the case are as follows:

          On April 26, 2002, herein respondent Alberto A. Domingo filed a Complaint for Specific Performance with Damages[9][5] against the Department of Public Works and Highways (DPWH), Region III, which was docketed as Civil Case No. 333-M-2002 in the RTC of Malolos, Bulacan, Branch 18.  Domingo averred that from April to September 1992, he entered into seven contracts with the DPWH Region III for the lease of his construction equipment to said government agency.[10][6]  The lease contracts were allegedly executed in order to implement the emergency projects of the DPWH Region III, which aimed to control the flow of lahar from Mt. Pinatubo in the adjacent towns in the provinces of Tarlac and Pampanga.  After the completion of the projects, Domingo claimed that the unpaid rentals of the DPWH Region III amounted to P6,320,163.05.  Despite repeated demands, Domingo asserted that the DPWH Region III failed to pay its obligations.  Domingo was, thus, compelled to file the above case for the payment of the P6,320,163.05 balance, plus P200,000.00 as moral and compensatory damages, P100,000.00 as exemplary damages, and P200,000.00 as attorney’s fees.[11][7]

 

          Thereafter, summons was issued by the RTC. The Proof of Service[12][8] of the Sheriff dated May 9, 2002 stated, thus:

 

PROOF OF SERVICE

 

            The undersigned personally served the copy of the Summons together with the complaint issued in the above-entitled case upon defendant The Department of Public Works and Highways, Region III, San Fernando Pampanga on May 6, 2002 through Nora Cortez, Clerk III of said office as shown by her signature and stamped mark received by said office appearing on the original Summons.

 

            WHEREFORE, the original Summons respectfully returned to the Court “DULY SERVED”, for its record and information.

 

            Malolos, Bulacan, May 9, 2002.

 

 

            Subsequently, on July 30, 2002, Domingo filed a Motion to Declare Defendant in Default[13][9] in view of the failure of the DPWH Region III to file a responsive pleading within the reglementary period as required under the Rules of Court.  During the hearing of the motion on August 8, 2002, the RTC directed the counsel of Domingo to submit proof of service of said motion on the DPWH Region III.  Thereafter, the motion was deemed submitted for resolution.[14][10]  Counsel for Domingo timely filed a Manifestation,[15][11] showing compliance with the order of the trial court.

 

          In an Order[16][12] dated September 2, 2002, the RTC declared the DPWH Region III in default and thereafter set the date for the reception of Domingo’s evidence ex parte. 

 

After the ex parte presentation of Domingo’s evidence, the RTC rendered judgment on February 18, 2003, finding that:

 

          From the evidence presented by [Domingo], testimonial and documentary, it was convincingly proven that [Domingo] is entitled to the relief prayed for.

 

            In his seven causes of actions, [Domingo] has religiously undertaken what is incumbent upon him in the contracts of lease signed by both [Domingo] and [the DPWH Region III].  As a matter of course, the [DPWH Region III] has the duty to pay [Domingo] the amount equivalent to the services performed by [Domingo] which [in] this case now amount to P6,320,163.05 excluding interest.

 

            Considering that there was a long delay in the payment of the obligation on the part of the [DPWH Region III], Article 2209 of the New Civil Code finds application as to imputation of legal interest at six (6%) percent per annum, in the absence of stipulation of interest on the amount due.

 

            With respect to the claim for attorney’s fees, although as a general rule, attorney’s fees cannot be rewarded because of the policy that no premium should be placed on the right to litigate, this rule does not apply in the case at bar in the face of the stubborn refusal of [the DPWH Region III] to respect the valid claim of [Domingo] x x x.  Award of attorney’s fees in the amount of P30,000.00 appears proper.  Moreover, as to [the] demand for moral and exemplary damages, the same are hereby denied for lack of persuasive and sufficient evidence.[17][13]

 

 

          Thus, the RTC disposed:

Wherefore, premises considered, judgment is hereby rendered in favor of plaintiff Alberto Domingo and against defendant DPWH Region III, ordering defendant to pay plaintiff:

 

1.  the sum of Six Million Three Hundred Twenty Thousand One Hundred Sixty[-]Three and 05/100 Pesos (P6,320,163.05) representing the principal obligation of the defendant plus interest at six percent (6%) per annum from 1993 until the obligation is fully paid;

 

2.  to pay attorney’s fees in the total amount of Thirty Thousand Pesos (P30,000.00) and

 

3.  to pay the costs of suit.[18][14]

 

 

          On March 12, 2003, Domingo filed a Motion for Issuance of Writ of Execution,[19][15] asserting that the DPWH Region III failed to file an appeal or a motion for new trial and/or reconsideration despite its receipt of a copy of the RTC decision on February 19, 2003.  On March 20, 2003, the RTC granted the aforesaid motion of Domingo.[20][16]  A Writ of Execution[21][17] was then issued on March 24, 2003, commanding the sheriff to enforce the RTC Decision dated February 18, 2003. 

 

          On August 27, 2003, the Republic of the Philippines, represented by the Office of the Solicitor General (OSG), filed with the Court of Appeals a Petition for Annulment of Judgment with Prayer for the Issuance of a Temporary Restraining Order and/or a Writ of Preliminary Injunction.[22][18]  The petition was docketed as CA-G.R. SP No. 78813.  The Republic argued that it was not impleaded as an indispensable party in Civil Case No. 333-M-2002.  The seven contracts sued upon in the trial court stated that they were entered into by the Regional Director, Assistant Regional Director and/or Project Manager of the DPWH Region III for and in behalf of the Republic of thePhilippines, which purportedly was the real party to the contract.  Moreover, the Republic averred that, under the law, the statutory representatives of the government for purposes of litigation are either the Solicitor General or the Legal Service Branch of the Executive Department concerned.  Since no summons was issued to either of said representatives, the trial court never acquired jurisdiction over the Republic.  The absence of indispensable parties allegedly rendered null and void the subsequent acts of the trial court because of its lack of authority to act, not only as to the absent parties, but even as to those present.  The Republic prayed for the annulment of the RTC Decision dated February 18, 2003 and the dismissal of the said case, without prejudice to the original action being refiled in the proper court.

 

          On May 19, 2006, the Court of Appeals promulgated its decision, dismissing the Petition for Annulment of Judgment filed by the Republic.  The appellate court elaborated that:

 

          The hair-splitting distinction being made by [the Republic] between the DPWH as a department under the Republic, and the Regional Office of the DPWH fails to persuade Us.  Instead, We uphold [Domingo’s] position that the regional office is an extension of the department itself and service of summons upon the former is service upon the latter. x x x.

 

            x x x x

 

x x x [A] regional office of the DPWH is part of the composition of the department itself and is therefore, not an entity that is altogether separate from the department.  This conclusion lends credence to [Domingo’s] position that service of summons upon the regional office is service upon the department itself because the former is essentially part of the latter.  Indeed, what militates heavily against [the Republic’s] theory is the simple fact that the regional office is not a different entity at all, but, as can be gleaned from the manner of its creation, a part of the department itself, so much so that it does not even have a juridical personality of its own. x x x.

 

            Anent the claim that the procedure for service of summons upon the Republic was not followed because service should have been made on the OSG or the Legal Service Department of the DPWH, We are likewise not persuaded.  A perusal of the Revised Administrative Code of thePhilippinessuggests nothing of this import. x x x.

 

            x x x x

 

            Clearly, nothing [in the functions of the OSG] remotely suggests that service of summons upon the Republic should be made exclusively on the OSG.  What the [provisions] merely state is that the OSG will represent the government in all proceedings involving it.  It cannot be deduced nor implied from this, however, that summons should be served upon it alone.

 

            The same conclusion applies to the legal service branch of the DPWH, as there is also nothing in the law that suggests that service of summons on the DPWH should be made upon it alone. x x x.

 

            x x x x

 

            Obviously, petitioner’s conclusion that the proper procedure for service of summons was not observed is a mere conjecture because We find nothing in the provisions invoked by it that such indeed is the procedure sanctioned by law.  We are thus inclined to give more credence to [the Republic’s] argument that it was the regional office’s fault if it failed to bring the subject case to the attention of the OSG for proper representation.  To allow it to benefit from its own omission in order to evade its just and valid obligation would be the height of injustice.

 

            Finally, anent the argument that the Republic is estopped from questioning the jurisdiction of the trial court, We rule in the negative.  The existence of another case against the regional office of the DPWH where the OSG appeared is of no moment as it concerns a totally different transaction.  Thus, it would be erroneous for Us to rule on that basis alone, that the OSG is already acknowledging the service of summons upon the regional office, especially considering the categorical stand taken by the OSG on the matter in the case now before Us.  Be that as it may, however, We still rule, as We have discussed above, that [Domingo’s] position is more impressed with merit.

 

            WHEREFORE, in view of the foregoing, the instant Petition for Annulment of Judgment is hereby DISMISSED.[23][19]

 

 

          The Republic filed a Motion for Reconsideration[24][20] of the above decision, but the Court of Appeals denied the same in the assailed Resolution dated October 25, 2006.

 

Consequently, the Republic filed the instant petition before this Court.  In a Resolution[25][21] dated February 19, 2007, we denied the Republic’s petition for failure to properly verify the petition and that the jurat in the verification and certification against forum shopping did not contain any competent evidence of the affiant’s identity.  In addition, the Integrated Bar of the Philippines (IBP) dues payment (under IBP O.R. No. 663485) of one of the counsels who signed the petition was not updated.  The Republic filed a Motion for Reconsideration[26][22] of the above resolution.[27][23]  On July 2, 2007, the Court resolved[28][24] to grant the Republic’s motion, thereby reinstating its petition.

 

In assailing the judgment of the Court of Appeals, the Republic brings to fore the following arguments:

I.

 

If in the act by which the Republic consents to be sued, no designation is made as to the officer to be served with summons, then the process can only be served upon the Solicitor General.

 

[II.]

 

The State is not bound by the errors or mistakes of its agents.

 

III.

 

Respondent can recover on the government contracts sued upon in Civil Case No. [3]33-M-2002 only on a quantum meruit basis.[29][25]

 

 

          In essence, the primary issue that must be resolved in the instant petition is whether the Court of Appeals correctly dismissed the Petition for Annulment of Judgment filed by the Republic.

 

          Section 1, Rule 47[30][26] of the Rules of Court provides for the remedy of annulment by the Court of Appeals of judgments or final orders and resolutions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner.

 

          Under the first paragraph of Section 2, Rule 47[31][27] of the Rules of Court, the annulment may be based only on the grounds of extrinsic fraud and lack of jurisdiction.  As a ground for annulment of judgment, lack of jurisdiction refers to either lack of jurisdiction over the person of the defending party or over the subject matter of the claim.[32][28]   

 

In the petition at bar, the Republic argues that the RTC failed to acquire jurisdiction over the former.  The Republic reiterates that the service of summons upon the DPWH Region III alone was insufficient.   According to the Republic, the applicable rule of procedure in this case is Section 13, Rule 14 of the Rules of Court, which mandates that when the defendant is the Republic of thePhilippines, the service of summons may be effected on the Office of the Solicitor General (OSG).  The DPWH and its regional office are simply agents of the Republic, which is the real party in interest in Civil Case No. 333-M-2002.  The Republic posits that, since it was not impleaded in the case below and the RTC did not acquire jurisdiction over it, the proceedings in Civil Case No. 333-M-2002 are null and void. 

 

On the other hand, Domingo argues that the DPWH Region III is part of the DPWH itself; hence, a suit against the regional office is a suit against the said department and the Republic as well.  Domingo stresses that the case he filed was against the Republic, that is, against the DPWH Region III, and it was clear that the summons and a copy of the complaint was duly served on the said regional office.  Likewise, Domingo submits that the Republic is estopped from raising the issue of jurisdiction in the instant case given that he has filed two other civil actions for specific performance and damages against the DPWH Region III and, in the said cases, the OSG formally entered its appearance for and in behalf of the Republic.  Domingo alleges that the foregoing action of the OSG proved that it recognized the validity of the service of summons upon the DPWH Region III and the jurisdiction of the trial court over the said regional office.

 

          The Court finds merit in the Republic’s petition.

 

Summons is a writ by which the defendant is notified of the action brought against him.  Service of such writ is the means by which the court acquires jurisdiction over his person.  Jurisdiction over the person of the defendant is acquired through coercive process, generally by the service of summons issued by the court, or through the defendant’s voluntary appearance or submission to the court.[33][29]

 

Section 13, Rule 14 of the Rules of Court states that:

 

SEC. 13. Service upon public corporations. – When the defendant is the Republic of the Philippines, service may be effected on the Solicitor General; in case of a province, city or municipality, or like public corporations, service may be effected on its executive head, or on such other officer or officers as the law or the court may direct.  (Emphasis ours.)

 

 

          Jurisprudence further instructs that when a suit is directed against an unincorporated government agency, which, because it is unincorporated, possesses no juridical personality of its own, the suit is against the agency’s principal, i.e., the State.[34][30]  In the similar case of Heirs of Mamerto Manguiat v. Court of Appeals,[35][31] where summons was served on the Bureau of Telecommunications which was an agency attached to the Department of Transportation and Communications, we held that:

 

Rule 14, Section 13 of the 1997 Rules of Procedure provides:

 

SEC. 13.          Service upon public corporations. — When the defendant is the Republic of thePhilippines, service may be effected on the Solicitor General; in case of a province, city or municipality, or like public corporations, service may be effected on its executive head, or on such other officer or officers as the law or the court may direct.

 

It is clear under the Rules that where the defendant is the Republic of the Philippines, service of summons must be made on the Solicitor General. The BUTEL is an agency attached to the Department of Transportation and Communications created under E.O. No. 546 on July 23, 1979, and is in charge of providing telecommunication facilities, including telephone systems to government offices. It also provides its services to augment limited or inadequate existing similar private communication facilities. It extends its services to areas where no communication facilities exist yet; and assists the private sector engaged in telecommunication services by providing and maintaining backbone telecommunication network. It is indisputably part of the Republic, and summons should have been served on the Solicitor General.   

 

We now turn to the question of whether summons was properly served according to the Rules of Court. Petitioners rely solely on the sheriff’s return to prove that summons was properly served. We quote its contents, viz:

 

“THIS IS TO CERTIFY that on the 19th day of May 1999, the undersigned caused the service of Summons and Complaint upon defendant J.A. Development Corporation at the address indicated in the summons, the same having been received by a certain Jacqueline delos Santos, a person employed thereat, of sufficient age and discretion to receive such process, who signed on the lower portion of the Summons to acknowledge receipt thereof.

 

Likewise, copy of the Summons and Complaint was served upon defendant Bureau of Telecommunications at the address indicated in the Summons, a copy of the same was received by a certain Cholito Anitola, a person employed thereat, who signed on the lower portion of the Summons to acknowledge receipt thereof.”

 

It is incumbent upon the party alleging that summons was validly served to prove that all requirements were met in the service thereof. We find that this burden was not discharged by the petitioners. The records show that the sheriff served summons on an ordinary employee and not on the Solicitor General. Consequently, the trial court acquired no jurisdiction over BUTEL, and all proceedings therein are null and void.[36][32]    (Emphases supplied.)

 

 

In the instant case, the Complaint for Specific Performance with Damages filed by Domingo specifically named as defendant the DPWH Region III.  As correctly argued by the Republic, the DPWH and its regional office are merely the agents of the former (the Republic), which is the real party in interest in Civil Case No. 333-M-2002.  Thus, as mandated by Section 13, Rule 14 of the Rules of Court, the summons in this case should have been served on the OSG.

 

          Quite inexplicably, the Court of Appeals failed to apply, nay, to even consider, the provisions of Section 13, Rule 14 of the Rules of Court in rendering its assailed Decision.  A perusal of the Decision dated May 19, 2006 shows that the appellate court mainly dissertated regarding the functions and organizational structures of the DPWH and the OSG, as provided for in the Revised Administrative Code of 1987, in an attempt to demonstrate the relationship between the DPWH and its regional offices, as well as to refute the claim that the service of summons upon the Republic should be made exclusively upon the OSG.  Such an oversight on the part of the Court of Appeals is most unfortunate given the relevance and materiality of Section 13, Rule 14 of the Rules of Court to the instant case, in addition to the fact that the Republic itself quoted the aforesaid provision in its petition before the appellate court.[37][33]

 

The Court, nonetheless, subscribes to the ruling of the Court of Appeals that the Republic is not estopped from raising the issue of jurisdiction in the case at bar in view of the alleged entry of appearance of the OSG, in behalf of the Republic, in the other civil cases supposedly filed by Domingo against the DPWH Region III.  As held by the appellate court, the other civil cases presumably pertained to transactions involving Domingo and the DPWH Region III, which were totally different from the contracts involved in the instant case.  The fact that the OSG entered its appearance in the other civil cases, notwithstanding that the summons therein were only served upon the DPWH Region III, has no bearing in the case now before us.  All this indicates is that, despite the improper service of summons in these other civil cases, there appeared to be notice to the OSG and voluntary appearance on the latter’s part.

 

Here, there was no indication, and Domingo did not insist otherwise, that the OSG had any notice of the filing of Civil Case No. 333-M-2002.  Domingo speculates that, in the subsequent civil actions against the DPWH Region III, the latter most likely brought the said cases to the attention of the OSG.  On the other hand, Domingo opines that the DPWH Region III apparently neglected to inform the OSG of the pendency of Civil Case No. 333-M-2002.  Accordingly, Domingo asserted that he should not be faulted therefor.  The Court disagrees.  Domingo ought to bear in mind that it is the duty of the plaintiff to implead all the necessary or indispensable parties for the complete determination of the action.[38][34]  It was, thus, incumbent upon him to name and implead the proper defendant in this case, i.e., the Republic, and cause the service of summons to be made upon the officer mandated by law, that is, the OSG.  As Domingo failed to discharge this burden, he cannot now be allowed to shift the blame on the DPWH Region III or hold in estoppel the OSG.   

In sum, the Court holds that the Republic was not validly served with summons in Civil Case No. 333-M-2002.  Hence, the RTC failed to acquire jurisdiction over the person of the Republic.  Consequently, the proceedings had before the trial court and its Decision dated February 18, 2003 are hereby declared void.

In accordance with Section 7, Rule 47[39][35] of the Rules of Court, a judgment of annulment shall set aside the questioned judgment or final order or resolution and render the same null and void, without prejudice to the original action being refiled in the proper court.

 

In view of the above ruling of the Court declaring the nullity of the proceedings in the RTC, the Court shall no longer pass upon the other issues raised by the parties in the instant petition.

 

WHEREFORE, the petition is GRANTED.  The Decision dated May 19, 2006 and the Resolution dated October 25, 2006 of the Court of Appeals in CA-G.R. SP No. 78813 are REVERSED.  The Decision dated February 18, 2003 of the Regional Trial Court of Malolos, Bulacan, Branch 18, in Civil Case No. 333-M-2002 is hereby ANNULLED and SET ASIDE, without prejudice to the filing of the original action in the proper Regional Trial Court.

 

SO ORDERED.

 

 

 

 

TERESITA J. LEONARDO-DE CASTRO

  Associate Justice

 

 

WE CONCUR:

 

 

 

 

 

RENATO C. CORONA

Chief Justice

Chairperson

 

 

 

 

 

 

LUCAS P. BERSAMIN

Associate Justice

MARIANO C. DEL CASTILLO

Associate Justice

 

 

 

 

 

 

 

 

 

 

 

 

MARTIN S. VILLARAMA, JR.

Associate Justice

 

 

 

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

 

 

 

RENATO C. CORONA

Chief Justice

 

 

 

 

 

 

[1][26]      Section 1 of Rule 47 reads:

SEC. 1. Coverage.  – This Rule shall govern the annulment by the Court of Appeals of judgments or final orders and resolutions in civil actions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner.

[2][27]          Section 2 of Rule 47 provides:

SEC. 2. Grounds for annulment.  – The annulment may be based only on the grounds of extrinsic fraud and lack of jurisdiction.

Extrinsic fraud shall not be a valid ground if it was availed of, or could have been availed of, in a motion for new trial or petition for relief.

[3][28]          Republic of the Philippines v. “G” Holdings, Inc., G.R. No. 141241, November 22, 2005, 475 SCRA 608, 617-618.

[4][35]          Section 7, Rule 47 provides:

            SEC. 7. Effect of judgment. – A judgment of annulment shall set aside the questioned judgment or final order or resolution and render the same null and void, without prejudice to the original action being refiled in the proper court.  However, where the judgment or final order or resolution is set aside on the ground of extrinsic fraud, the court may on motion order the trial court to try the case as if a timely motion for new trial had been granted therein.

[5][1]           Rollo, pp. 9-31.

[6][2]          Id. at 32-45; penned by Associate Justice Mariflor P. Punzalan Castillo with Associate Justices Elvi John S. Asuncion and Noel G. Tijam, concurring.

[7][3]          Id. at 46-48.

[8][4]          Id. at 73-80; penned by Presiding Judge Victoria C. Fernandez-Bernardo.

[9][5]           Records, Vol. I, pp. 3-24. 

[10][6]          Id., Vol. III, pp. 2-3, 40-41, 75-76, 112-114, 171-173, 230-231, and 261-262. 

[11][7]         Id., Vol. I, pp. 22-23. 

[12][8]         Id. at 41.

[13][9]         Id. at 42-43.

[14][10]        Id. at 46.

[15][11]        Id. at 47-49.

[16][12]        Id. at 50.

[17][13]         Rollo, p. 79.

[18][14]        Id. at 80.

[19][15]         Records, Vol. I, pp. 76-78.

[20][16]        Id. at 79.

[21][17]        Id. at 80-81.

[22][18]         CA rollo, pp. 1-30.

[23][19]         Rollo, pp. 37-45.

[24][20]         CA rollo, pp. 158-165.

[25][21]         Rollo, p. 129. 

[26][22]        Id. at 130-149.

[27][23]         In brief, the Republic proffered the following reasons: (a) the OSG’s authority to administer oaths in matters of official business is derived from Presidential Decree No. 1347, hence, the Notarial Law or the 2004 Rules on Notarial Practice, including the approved forms of the 2004 Rules on Notarial Practice, is not particularly applicable to the said office; (b) the petition was properly verified and the identity and signature of affiant Hermogenes Ebdane was confirmed by the Solicitor/Officer of the OSG administering the oath; (c) IBP O.R. No. 663485 of Solicitor Edgar R. Tupas was paid for the Calendar Year 2006; and (d) substantial compliance with the Rules merits a liberal construction of the Rules with the instant case being determined on its merits rather than on technicality or procedural imperfections. (Rollo, pp. 130-131.)

[28][24]         Rollo, pp. 158-159.

[29][25]        Id. at 263.

[30][26]     Section 1 of Rule 47 reads:

SEC. 1. Coverage.  – This Rule shall govern the annulment by the Court of Appeals of judgments or final orders and resolutions in civil actions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner.

[31][27]         Section 2 of Rule 47 provides:

SEC. 2. Grounds for annulment.  – The annulment may be based only on the grounds of extrinsic fraud and lack of jurisdiction.

Extrinsic fraud shall not be a valid ground if it was availed of, or could have been availed of, in a motion for new trial or petition for relief.

[32][28]         Republic of the Philippines v. “G” Holdings, Inc., G.R. No. 141241, November 22, 2005, 475 SCRA 608, 617-618.

[33][29]         Guiguinto Credit Cooperative, Inc. v. Torres, G.R. No. 170926, September 15, 2006, 502 SCRA 182, 189-190.

[34][30]         Philippine Rock Industries, Inc. v. Board of Liquidators, 259 Phil. 650, 655-656 (1989). See also Farolan, Jr. v. Court of Tax Appeals, G.R. No. 42204, January 21, 1993, 217 SCRA 298, 306.

[35][31]         G.R. Nos. 150768 and 160176, August 20, 2008, 562 SCRA 422.

[36][32]        Id. at 431-432.

[37][33]         CA rollo, p. 12.

[38][34]         Nery v. Leyson, 393 Phil. 644, 655 (2000).

[39][35]         Section 7, Rule 47 provides:

            SEC. 7. Effect of judgment. – A judgment of annulment shall set aside the questioned judgment or final order or resolution and render the same null and void, without prejudice to the original action being refiled in the proper court.  However, where the judgment or final order or resolution is set aside on the ground of extrinsic fraud, the court may on motion order the trial court to try the case as if a timely motion for new trial had been granted therein.

Comment

TRIAL NOTE 0014: WHEN YOU FILE A CASE AGAINST DPWH OR ANY UNINCORPORATED GOVERNMENT AGENCY, ALWAYS CAUSE THE SERVICE OF SUMMONS TO THE SOLICITOR GENERAL BECAUSE THE DEFENDNANT IS NOT DPWH BUT THE REPUBLIC.

Filed under: TIPS FOR TRIAL LAWYERS — 6 Comments

TRIAL NOTE 0014: WHEN YOU FILE A CASE AGAINST DPWH OR ANY UNINCORPORATED GOVERNMENT AGENCY, ALWAYS CAUSE THE SERVICE OF SUMMONS TO THE SOLICITOR GENERAL BECAUSE THE DEFENDNANT IS NOT DPWH BUT THE REPUBLIC.

 

 

SOURCE: REPUBLIC OF THE PHILIPPINES, REPRESENTED BY THE DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS, THROUGH THE HON. SECRETARY, HERMOGENES EBDANE  VS. ALBERTO A. DOMINGO (G.R. NO. 175299, 14 SEPTEMBER 2011, LEONARDO-DE CASTRO, J.) SUBJECTS: SUMMONS TO THE REPUBLIC; APPEARANCE OF OSG; ANNULMENT OF JUDGMENT. (BRIEF TITLE: REPUBLIC VS. DOMINGO)

 

============================

 

 

DISPOSITIVE:

 

 

“WHEREFORE, the petition is GRANTED.  The Decision dated May 19, 2006 and the Resolution dated October 25, 2006 of the Court of Appeals in CA-G.R. SP No. 78813 are REVERSED.  The Decision dated February 18, 2003 of the Regional Trial Court of Malolos, Bulacan, Branch 18, in Civil Case No. 333-M-2002 is hereby ANNULLED and SET ASIDE, without prejudice to the filing of the original action in the proper Regional Trial Court.

 

SO ORDERED.”

 

============================

 

 

SUBJECT/DOCTRINE/DIGEST:

 

 

RESPONDENT DOMINGO FILED A SUIT AGAINST DPWH REGION 3. THE REPUBLIC ARGUES THAT THE REAL PARTY IN INTEREST IS THE REPUBLIC AND DPWH IS ONLY ITS AGENT. THEREFORE SINCE SUMMONS WAS NOT SERVED TO THE REPUBLIC THROUGH OSG THEN THE PROCEEDINGS OF THE CASE ARE NULL AND VOID FOR LACK OF JURISDICTION. IS THE REPUBLIC CORRECT?

 

 

YES. WHEN A SUIT IS DIRECTED AGAINST AN UNINCORPORATED GOVERNMENT AGENCY, WHICH, BECAUSE IT IS UNINCORPORATED, POSSESSES NO JURIDICAL PERSONALITY OF ITS OWN, THE SUIT IS AGAINST THE AGENCY’S PRINCIPAL, I.E., THE STATE.[1][30] 

 

 

Section 13, Rule 14 of the Rules of Court states that:

 

SEC. 13. Service upon public corporations. – When the defendant is the Republic of the Philippines, service may be effected on the Solicitor General; in case of a province, city or municipality, or like public corporations, service may be effected on its executive head, or on such other officer or officers as the law or the court may direct.  (Emphasis ours.)

 

 

          Jurisprudence further instructs that when a suit is directed against an unincorporated government agency, which, because it is unincorporated, possesses no juridical personality of its own, the suit is against the agency’s principal, i.e., the State.[2][30]  In the similar case of Heirs of Mamerto Manguiat v. Court of Appeals,[3][31] where summons was served on the Bureau of Telecommunications which was an agency attached to the Department of Transportation and Communications, we held that:

 

Rule 14, Section 13 of the 1997 Rules of Procedure provides:

 

SEC. 13.          Service upon public corporations. — When the defendant is the Republic of thePhilippines, service may be effected on the Solicitor General; in case of a province, city or municipality, or like public corporations, service may be effected on its executive head, or on such other officer or officers as the law or the court may direct.

 

It is clear under the Rules that where the defendant is the Republic of the Philippines, service of summons must be made on the Solicitor General. The BUTEL is an agency attached to the Department of Transportation and Communications created under E.O. No. 546 on July 23, 1979, and is in charge of providing telecommunication facilities, including telephone systems to government offices. It also provides its services to augment limited or inadequate existing similar private communication facilities. It extends its services to areas where no communication facilities exist yet; and assists the private sector engaged in telecommunication services by providing and maintaining backbone telecommunication network. It is indisputably part of the Republic, and summons should have been served on the Solicitor General.   

 

We now turn to the question of whether summons was properly served according to the Rules of Court. Petitioners rely solely on the sheriff’s return to prove that summons was properly served. We quote its contents, viz:

 

“THIS IS TO CERTIFY that on the 19th day of May 1999, the undersigned caused the service of Summons and Complaint upon defendant J.A. Development Corporation at the address indicated in the summons, the same having been received by a certain Jacqueline delos Santos, a person employed thereat, of sufficient age and discretion to receive such process, who signed on the lower portion of the Summons to acknowledge receipt thereof.

 

Likewise, copy of the Summons and Complaint was served upon defendant Bureau of Telecommunications at the address indicated in the Summons, a copy of the same was received by a certain Cholito Anitola, a person employed thereat, who signed on the lower portion of the Summons to acknowledge receipt thereof.”

 

It is incumbent upon the party alleging that summons was validly served to prove that all requirements were met in the service thereof. We find that this burden was not discharged by the petitioners. The records show that the sheriff served summons on an ordinary employee and not on the Solicitor General. Consequently, the trial court acquired no jurisdiction over BUTEL, and all proceedings therein are null and void.[4][32]    (Emphases supplied.)

 

In the instant case, the Complaint for Specific Performance with Damages filed by Domingo specifically named as defendant the DPWH Region III.  As correctly argued by the Republic, the DPWH and its regional office are merely the agents of the former (the Republic), which is the real party in interest in Civil Case No. 333-M-2002.  Thus, as mandated by Section 13, Rule 14 of the Rules of Court, the summons in this case should have been served on the OSG.

 

 

XXXXXXXXXXXXXXXXXXXXXXXX

 

 

DOMINGO FURTHER ARGUES THAT THE REPUBLIC IS ESTOPPED BECAUSE IN TWO SIMILAR CASES FILED AGAINST THE DPWH, THE OSG ENTERED THEIR APPEARANCE. IS THIS ARGUMENT CORRECT?

 

 

NO. JURISDICTION IS ACQUIRED BY COERCIVE PROCESS OF SERVICE OF SUMMONS OR BY VOLUNTARY APPEARANCE OR SUBMISSION TO COURT. IN THE OTHER CASES, THERE WAS VOLUNTARY APPEARANCE. IN THE CASE AT HAND THERE WAS NO VOLUNTARY APPEARANCE, HENCE JURISDICTION MUST BE THROUGH SUMMONS. BUT SUMMONS WAS NOT SERVED TO THE REPUBLIC. THUS THE COURT AQUIRED NO JURISDICTION OVER THE CASE.

 

 

Summons is a writ by which the defendant is notified of the action brought against him.  Service of such writ is the means by which the court acquires jurisdiction over his person.  Jurisdiction over the person of the defendant is acquired through coercive process, generally by the service of summons issued by the court, or through the defendant’s voluntary appearance or submission to the court.[5][29]

 

……………………….

 

 

The Court, nonetheless, subscribes to the ruling of the Court of Appeals that the Republic is not estopped from raising the issue of jurisdiction in the case at bar in view of the alleged entry of appearance of the OSG, in behalf of the Republic, in the other civil cases supposedly filed by Domingo against the DPWH Region III.  As held by the appellate court, the other civil cases presumably pertained to transactions involving Domingo and the DPWH Region III, which were totally different from the contracts involved in the instant case.  The fact that the OSG entered its appearance in the other civil cases, notwithstanding that the summons therein were only served upon the DPWH Region III, has no bearing in the case now before us.  All this indicates is that, despite the improper service of summons in these other civil cases, there appeared to be notice to the OSG and voluntary appearance on the latter’s part.

 

Here, there was no indication, and Domingo did not insist otherwise, that the OSG had any notice of the filing of Civil Case No. 333-M-2002.  Domingo speculates that, in the subsequent civil actions against the DPWH Region III, the latter most likely brought the said cases to the attention of the OSG.  On the other hand, Domingo opines that the DPWH Region III apparently neglected to inform the OSG of the pendency of Civil Case No. 333-M-2002.  Accordingly, Domingo asserted that he should not be faulted therefor.  The Court disagrees.  Domingo ought to bear in mind that it is the duty of the plaintiff to implead all the necessary or indispensable parties for the complete determination of the action.[6][34]  It was, thus, incumbent upon him to name and implead the proper defendant in this case, i.e., the Republic, and cause the service of summons to be made upon the officer mandated by law, that is, the OSG.  As Domingo failed to discharge this burden, he cannot now be allowed to shift the blame on the DPWH Region III or hold in estoppel the OSG.   

 

 

XXXXXXXXXXXXXXXXXXX

 

 

WERE THE PROCEEDINGS THEN NULL AND VOID?

 

 

YES BECAUSE THE REPUBLIC WAS NOT VALIDLY SERVED WITH SUMMONS. BUT WITHOUT PREJUDICE TO THE REFILING OF THE CASE.

 

In sum, the Court holds that the Republic was not validly served with summons in Civil Case No. 333-M-2002.  Hence, the RTC failed to acquire jurisdiction over the person of the Republic.  Consequently, the proceedings had before the trial court and its Decision dated February 18, 2003 are hereby declared void.

In accordance with Section 7, Rule 47[7][35] of the Rules of Court, a judgment of annulment shall set aside the questioned judgment or final order or resolution and render the same null and void, without prejudice to the original action being refiled in the proper court.

 

============================

 

Republic of the Philippines

Supreme Court

Manila

 

 

FIRST DIVISION

 

 

REPUBLIC OF THE PHILIPPINES, represented by the Department of Public Works and Highways, through the Hon. Secretary, HERMOGENES EBDANE,

                    Petitioner,

 

 

–  versus  –

 

 

ALBERTO A. DOMINGO,

                   Respondent.

   G.R. No. 175299

 

Present:

 

CORONA, C.J.,

     Chairperson,     

LEONARDO-DE CASTRO,

BERSAMIN,

DELCASTILLO, and

VILLARAMA, JR., JJ.

 

Promulgated:

 

September 14, 2011

x- – – – – – – – – – – – – – – – – – – – – – – – – – – – –  – – – – – – – – – – – – – – – – – – – – – -x

 

 

D E C I S I O N

 

 

LEONARDO – DE CASTRO, J.:

 

          In this Petition for Review on Certiorari[8][1] under Rule 45 of the Rules of Court, the Court is called upon to reverse and set aside the Decision[9][2] dated May 19, 2006 and the Resolution[10][3] dated October 25, 2006 of the Court of Appeals in CA-G.R. SP No. 78813, as well as to declare null and void the Decision[11][4] dated February 18, 2003 of the Regional Trial Court (RTC) of Malolos, Bulacan, Branch 18, in Civil Case No. 333-M-2002.   

 

          As culled from the records, the factual antecedents of the case are as follows:

          On April 26, 2002, herein respondent Alberto A. Domingo filed a Complaint for Specific Performance with Damages[12][5] against the Department of Public Works and Highways (DPWH), Region III, which was docketed as Civil Case No. 333-M-2002 in the RTC of Malolos, Bulacan, Branch 18.  Domingo averred that from April to September 1992, he entered into seven contracts with the DPWH Region III for the lease of his construction equipment to said government agency.[13][6]  The lease contracts were allegedly executed in order to implement the emergency projects of the DPWH Region III, which aimed to control the flow of lahar from Mt. Pinatubo in the adjacent towns in the provinces of Tarlac and Pampanga.  After the completion of the projects, Domingo claimed that the unpaid rentals of the DPWH Region III amounted to P6,320,163.05.  Despite repeated demands, Domingo asserted that the DPWH Region III failed to pay its obligations.  Domingo was, thus, compelled to file the above case for the payment of the P6,320,163.05 balance, plus P200,000.00 as moral and compensatory damages, P100,000.00 as exemplary damages, and P200,000.00 as attorney’s fees.[14][7]

 

          Thereafter, summons was issued by the RTC. The Proof of Service[15][8] of the Sheriff dated May 9, 2002 stated, thus:

 

PROOF OF SERVICE

 

            The undersigned personally served the copy of the Summons together with the complaint issued in the above-entitled case upon defendant The Department of Public Works and Highways, Region III, San Fernando Pampanga on May 6, 2002 through Nora Cortez, Clerk III of said office as shown by her signature and stamped mark received by said office appearing on the original Summons.

 

            WHEREFORE, the original Summons respectfully returned to the Court “DULY SERVED”, for its record and information.

 

            Malolos, Bulacan, May 9, 2002.

 

 

            Subsequently, on July 30, 2002, Domingo filed a Motion to Declare Defendant in Default[16][9] in view of the failure of the DPWH Region III to file a responsive pleading within the reglementary period as required under the Rules of Court.  During the hearing of the motion on August 8, 2002, the RTC directed the counsel of Domingo to submit proof of service of said motion on the DPWH Region III.  Thereafter, the motion was deemed submitted for resolution.[17][10]  Counsel for Domingo timely filed a Manifestation,[18][11] showing compliance with the order of the trial court.

 

          In an Order[19][12] dated September 2, 2002, the RTC declared the DPWH Region III in default and thereafter set the date for the reception of Domingo’s evidence ex parte. 

 

After the ex parte presentation of Domingo’s evidence, the RTC rendered judgment on February 18, 2003, finding that:

 

          From the evidence presented by [Domingo], testimonial and documentary, it was convincingly proven that [Domingo] is entitled to the relief prayed for.

 

            In his seven causes of actions, [Domingo] has religiously undertaken what is incumbent upon him in the contracts of lease signed by both [Domingo] and [the DPWH Region III].  As a matter of course, the [DPWH Region III] has the duty to pay [Domingo] the amount equivalent to the services performed by [Domingo] which [in] this case now amount to P6,320,163.05 excluding interest.

 

            Considering that there was a long delay in the payment of the obligation on the part of the [DPWH Region III], Article 2209 of the New Civil Code finds application as to imputation of legal interest at six (6%) percent per annum, in the absence of stipulation of interest on the amount due.

 

            With respect to the claim for attorney’s fees, although as a general rule, attorney’s fees cannot be rewarded because of the policy that no premium should be placed on the right to litigate, this rule does not apply in the case at bar in the face of the stubborn refusal of [the DPWH Region III] to respect the valid claim of [Domingo] x x x.  Award of attorney’s fees in the amount of P30,000.00 appears proper.  Moreover, as to [the] demand for moral and exemplary damages, the same are hereby denied for lack of persuasive and sufficient evidence.[20][13]

 

 

          Thus, the RTC disposed:

Wherefore, premises considered, judgment is hereby rendered in favor of plaintiff Alberto Domingo and against defendant DPWH Region III, ordering defendant to pay plaintiff:

 

1.  the sum of Six Million Three Hundred Twenty Thousand One Hundred Sixty[-]Three and 05/100 Pesos (P6,320,163.05) representing the principal obligation of the defendant plus interest at six percent (6%) per annum from 1993 until the obligation is fully paid;

 

2.  to pay attorney’s fees in the total amount of Thirty Thousand Pesos (P30,000.00) and

 

3.  to pay the costs of suit.[21][14]

 

 

          On March 12, 2003, Domingo filed a Motion for Issuance of Writ of Execution,[22][15] asserting that the DPWH Region III failed to file an appeal or a motion for new trial and/or reconsideration despite its receipt of a copy of the RTC decision on February 19, 2003.  On March 20, 2003, the RTC granted the aforesaid motion of Domingo.[23][16]  A Writ of Execution[24][17] was then issued on March 24, 2003, commanding the sheriff to enforce the RTC Decision dated February 18, 2003. 

 

          On August 27, 2003, the Republic of the Philippines, represented by the Office of the Solicitor General (OSG), filed with the Court of Appeals a Petition for Annulment of Judgment with Prayer for the Issuance of a Temporary Restraining Order and/or a Writ of Preliminary Injunction.[25][18]  The petition was docketed as CA-G.R. SP No. 78813.  The Republic argued that it was not impleaded as an indispensable party in Civil Case No. 333-M-2002.  The seven contracts sued upon in the trial court stated that they were entered into by the Regional Director, Assistant Regional Director and/or Project Manager of the DPWH Region III for and in behalf of the Republic of thePhilippines, which purportedly was the real party to the contract.  Moreover, the Republic averred that, under the law, the statutory representatives of the government for purposes of litigation are either the Solicitor General or the Legal Service Branch of the Executive Department concerned.  Since no summons was issued to either of said representatives, the trial court never acquired jurisdiction over the Republic.  The absence of indispensable parties allegedly rendered null and void the subsequent acts of the trial court because of its lack of authority to act, not only as to the absent parties, but even as to those present.  The Republic prayed for the annulment of the RTC Decision dated February 18, 2003 and the dismissal of the said case, without prejudice to the original action being refiled in the proper court.

 

          On May 19, 2006, the Court of Appeals promulgated its decision, dismissing the Petition for Annulment of Judgment filed by the Republic.  The appellate court elaborated that:

 

          The hair-splitting distinction being made by [the Republic] between the DPWH as a department under the Republic, and the Regional Office of the DPWH fails to persuade Us.  Instead, We uphold [Domingo’s] position that the regional office is an extension of the department itself and service of summons upon the former is service upon the latter. x x x.

 

            x x x x

 

x x x [A] regional office of the DPWH is part of the composition of the department itself and is therefore, not an entity that is altogether separate from the department.  This conclusion lends credence to [Domingo’s] position that service of summons upon the regional office is service upon the department itself because the former is essentially part of the latter.  Indeed, what militates heavily against [the Republic’s] theory is the simple fact that the regional office is not a different entity at all, but, as can be gleaned from the manner of its creation, a part of the department itself, so much so that it does not even have a juridical personality of its own. x x x.

 

            Anent the claim that the procedure for service of summons upon the Republic was not followed because service should have been made on the OSG or the Legal Service Department of the DPWH, We are likewise not persuaded.  A perusal of the Revised Administrative Code of thePhilippinessuggests nothing of this import. x x x.

 

            x x x x

 

            Clearly, nothing [in the functions of the OSG] remotely suggests that service of summons upon the Republic should be made exclusively on the OSG.  What the [provisions] merely state is that the OSG will represent the government in all proceedings involving it.  It cannot be deduced nor implied from this, however, that summons should be served upon it alone.

 

            The same conclusion applies to the legal service branch of the DPWH, as there is also nothing in the law that suggests that service of summons on the DPWH should be made upon it alone. x x x.

 

            x x x x

 

            Obviously, petitioner’s conclusion that the proper procedure for service of summons was not observed is a mere conjecture because We find nothing in the provisions invoked by it that such indeed is the procedure sanctioned by law.  We are thus inclined to give more credence to [the Republic’s] argument that it was the regional office’s fault if it failed to bring the subject case to the attention of the OSG for proper representation.  To allow it to benefit from its own omission in order to evade its just and valid obligation would be the height of injustice.

 

            Finally, anent the argument that the Republic is estopped from questioning the jurisdiction of the trial court, We rule in the negative.  The existence of another case against the regional office of the DPWH where the OSG appeared is of no moment as it concerns a totally different transaction.  Thus, it would be erroneous for Us to rule on that basis alone, that the OSG is already acknowledging the service of summons upon the regional office, especially considering the categorical stand taken by the OSG on the matter in the case now before Us.  Be that as it may, however, We still rule, as We have discussed above, that [Domingo’s] position is more impressed with merit.

 

            WHEREFORE, in view of the foregoing, the instant Petition for Annulment of Judgment is hereby DISMISSED.[26][19]

 

 

          The Republic filed a Motion for Reconsideration[27][20] of the above decision, but the Court of Appeals denied the same in the assailed Resolution dated October 25, 2006.

 

Consequently, the Republic filed the instant petition before this Court.  In a Resolution[28][21] dated February 19, 2007, we denied the Republic’s petition for failure to properly verify the petition and that the jurat in the verification and certification against forum shopping did not contain any competent evidence of the affiant’s identity.  In addition, the Integrated Bar of the Philippines (IBP) dues payment (under IBP O.R. No. 663485) of one of the counsels who signed the petition was not updated.  The Republic filed a Motion for Reconsideration[29][22] of the above resolution.[30][23]  On July 2, 2007, the Court resolved[31][24] to grant the Republic’s motion, thereby reinstating its petition.

 

In assailing the judgment of the Court of Appeals, the Republic brings to fore the following arguments:

I.

 

If in the act by which the Republic consents to be sued, no designation is made as to the officer to be served with summons, then the process can only be served upon the Solicitor General.

 

[II.]

 

The State is not bound by the errors or mistakes of its agents.

 

III.

 

Respondent can recover on the government contracts sued upon in Civil Case No. [3]33-M-2002 only on a quantum meruit basis.[32][25]

 

 

          In essence, the primary issue that must be resolved in the instant petition is whether the Court of Appeals correctly dismissed the Petition for Annulment of Judgment filed by the Republic.

 

          Section 1, Rule 47[33][26] of the Rules of Court provides for the remedy of annulment by the Court of Appeals of judgments or final orders and resolutions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner.

 

          Under the first paragraph of Section 2, Rule 47[34][27] of the Rules of Court, the annulment may be based only on the grounds of extrinsic fraud and lack of jurisdiction.  As a ground for annulment of judgment, lack of jurisdiction refers to either lack of jurisdiction over the person of the defending party or over the subject matter of the claim.[35][28]  

 

In the petition at bar, the Republic argues that the RTC failed to acquire jurisdiction over the former.  The Republic reiterates that the service of summons upon the DPWH Region III alone was insufficient.   According to the Republic, the applicable rule of procedure in this case is Section 13, Rule 14 of the Rules of Court, which mandates that when the defendant is the Republic of thePhilippines, the service of summons may be effected on the Office of the Solicitor General (OSG).  The DPWH and its regional office are simply agents of the Republic, which is the real party in interest in Civil Case No. 333-M-2002.  The Republic posits that, since it was not impleaded in the case below and the RTC did not acquire jurisdiction over it, the proceedings in Civil Case No. 333-M-2002 are null and void. 

 

On the other hand, Domingo argues that the DPWH Region III is part of the DPWH itself; hence, a suit against the regional office is a suit against the said department and the Republic as well.  Domingo stresses that the case he filed was against the Republic, that is, against the DPWH Region III, and it was clear that the summons and a copy of the complaint was duly served on the said regional office.  Likewise, Domingo submits that the Republic is estopped from raising the issue of jurisdiction in the instant case given that he has filed two other civil actions for specific performance and damages against the DPWH Region III and, in the said cases, the OSG formally entered its appearance for and in behalf of the Republic.  Domingo alleges that the foregoing action of the OSG proved that it recognized the validity of the service of summons upon the DPWH Region III and the jurisdiction of the trial court over the said regional office.

 

          The Court finds merit in the Republic’s petition.

 

Summons is a writ by which the defendant is notified of the action brought against him.  Service of such writ is the means by which the court acquires jurisdiction over his person.  Jurisdiction over the person of the defendant is acquired through coercive process, generally by the service of summons issued by the court, or through the defendant’s voluntary appearance or submission to the court.[36][29]

 

Section 13, Rule 14 of the Rules of Court states that:

 

SEC. 13. Service upon public corporations. – When the defendant is the Republic of the Philippines, service may be effected on the Solicitor General; in case of a province, city or municipality, or like public corporations, service may be effected on its executive head, or on such other officer or officers as the law or the court may direct.  (Emphasis ours.)

 

 

          Jurisprudence further instructs that when a suit is directed against an unincorporated government agency, which, because it is unincorporated, possesses no juridical personality of its own, the suit is against the agency’s principal, i.e., the State.[37][30]  In the similar case of Heirs of Mamerto Manguiat v. Court of Appeals,[38][31] where summons was served on the Bureau of Telecommunications which was an agency attached to the Department of Transportation and Communications, we held that:

 

Rule 14, Section 13 of the 1997 Rules of Procedure provides:

 

SEC. 13.          Service upon public corporations. — When the defendant is the Republic of thePhilippines, service may be effected on the Solicitor General; in case of a province, city or municipality, or like public corporations, service may be effected on its executive head, or on such other officer or officers as the law or the court may direct.

 

It is clear under the Rules that where the defendant is the Republic of the Philippines, service of summons must be made on the Solicitor General. The BUTEL is an agency attached to the Department of Transportation and Communications created under E.O. No. 546 on July 23, 1979, and is in charge of providing telecommunication facilities, including telephone systems to government offices. It also provides its services to augment limited or inadequate existing similar private communication facilities. It extends its services to areas where no communication facilities exist yet; and assists the private sector engaged in telecommunication services by providing and maintaining backbone telecommunication network. It is indisputably part of the Republic, and summons should have been served on the Solicitor General.   

 

We now turn to the question of whether summons was properly served according to the Rules of Court. Petitioners rely solely on the sheriff’s return to prove that summons was properly served. We quote its contents, viz:

 

“THIS IS TO CERTIFY that on the 19th day of May 1999, the undersigned caused the service of Summons and Complaint upon defendant J.A. Development Corporation at the address indicated in the summons, the same having been received by a certain Jacqueline delos Santos, a person employed thereat, of sufficient age and discretion to receive such process, who signed on the lower portion of the Summons to acknowledge receipt thereof.

 

Likewise, copy of the Summons and Complaint was served upon defendant Bureau of Telecommunications at the address indicated in the Summons, a copy of the same was received by a certain Cholito Anitola, a person employed thereat, who signed on the lower portion of the Summons to acknowledge receipt thereof.”

 

It is incumbent upon the party alleging that summons was validly served to prove that all requirements were met in the service thereof. We find that this burden was not discharged by the petitioners. The records show that the sheriff served summons on an ordinary employee and not on the Solicitor General. Consequently, the trial court acquired no jurisdiction over BUTEL, and all proceedings therein are null and void.[39][32]    (Emphases supplied.)

 

 

In the instant case, the Complaint for Specific Performance with Damages filed by Domingo specifically named as defendant the DPWH Region III.  As correctly argued by the Republic, the DPWH and its regional office are merely the agents of the former (the Republic), which is the real party in interest in Civil Case No. 333-M-2002.  Thus, as mandated by Section 13, Rule 14 of the Rules of Court, the summons in this case should have been served on the OSG.

 

          Quite inexplicably, the Court of Appeals failed to apply, nay, to even consider, the provisions of Section 13, Rule 14 of the Rules of Court in rendering its assailed Decision.  A perusal of the Decision dated May 19, 2006 shows that the appellate court mainly dissertated regarding the functions and organizational structures of the DPWH and the OSG, as provided for in the Revised Administrative Code of 1987, in an attempt to demonstrate the relationship between the DPWH and its regional offices, as well as to refute the claim that the service of summons upon the Republic should be made exclusively upon the OSG.  Such an oversight on the part of the Court of Appeals is most unfortunate given the relevance and materiality of Section 13, Rule 14 of the Rules of Court to the instant case, in addition to the fact that the Republic itself quoted the aforesaid provision in its petition before the appellate court.[40][33]

 

The Court, nonetheless, subscribes to the ruling of the Court of Appeals that the Republic is not estopped from raising the issue of jurisdiction in the case at bar in view of the alleged entry of appearance of the OSG, in behalf of the Republic, in the other civil cases supposedly filed by Domingo against the DPWH Region III.  As held by the appellate court, the other civil cases presumably pertained to transactions involving Domingo and the DPWH Region III, which were totally different from the contracts involved in the instant case.  The fact that the OSG entered its appearance in the other civil cases, notwithstanding that the summons therein were only served upon the DPWH Region III, has no bearing in the case now before us.  All this indicates is that, despite the improper service of summons in these other civil cases, there appeared to be notice to the OSG and voluntary appearance on the latter’s part.

 

Here, there was no indication, and Domingo did not insist otherwise, that the OSG had any notice of the filing of Civil Case No. 333-M-2002.  Domingo speculates that, in the subsequent civil actions against the DPWH Region III, the latter most likely brought the said cases to the attention of the OSG.  On the other hand, Domingo opines that the DPWH Region III apparently neglected to inform the OSG of the pendency of Civil Case No. 333-M-2002.  Accordingly, Domingo asserted that he should not be faulted therefor.  The Court disagrees.  Domingo ought to bear in mind that it is the duty of the plaintiff to implead all the necessary or indispensable parties for the complete determination of the action.[41][34]  It was, thus, incumbent upon him to name and implead the proper defendant in this case, i.e., the Republic, and cause the service of summons to be made upon the officer mandated by law, that is, the OSG.  As Domingo failed to discharge this burden, he cannot now be allowed to shift the blame on the DPWH Region III or hold in estoppel the OSG.   

In sum, the Court holds that the Republic was not validly served with summons in Civil Case No. 333-M-2002.  Hence, the RTC failed to acquire jurisdiction over the person of the Republic.  Consequently, the proceedings had before the trial court and its Decision dated February 18, 2003 are hereby declared void.

In accordance with Section 7, Rule 47[42][35] of the Rules of Court, a judgment of annulment shall set aside the questioned judgment or final order or resolution and render the same null and void, without prejudice to the original action being refiled in the proper court.

 

In view of the above ruling of the Court declaring the nullity of the proceedings in the RTC, the Court shall no longer pass upon the other issues raised by the parties in the instant petition.

 

WHEREFORE, the petition is GRANTED.  The Decision dated May 19, 2006 and the Resolution dated October 25, 2006 of the Court of Appeals in CA-G.R. SP No. 78813 are REVERSED.  The Decision dated February 18, 2003 of the Regional Trial Court of Malolos, Bulacan, Branch 18, in Civil Case No. 333-M-2002 is hereby ANNULLED and SET ASIDE, without prejudice to the filing of the original action in the proper Regional Trial Court.

 

SO ORDERED.

 

 

 

 

TERESITA J. LEONARDO-DE CASTRO

  Associate Justice

 

 

WE CONCUR:

 

 

 

 

 

RENATO C. CORONA

Chief Justice

Chairperson

 

 

 

 

 

 

LUCAS P. BERSAMIN

Associate Justice

MARIANO C. DEL CASTILLO

Associate Justice

 

 

 

 

 

 

 

 

 

 

 

 

MARTIN S. VILLARAMA, JR.

Associate Justice

 

 

 

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in the above Decision had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

 

 

 

RENATO C. CORONA

Chief Justice

 

 

 

 

 

 

[1][30]          Philippine Rock Industries, Inc. v. Board of Liquidators, 259 Phil. 650, 655-656 (1989). See also Farolan, Jr. v. Court of Tax Appeals, G.R. No. 42204, January 21, 1993, 217 SCRA 298, 306.

[2][30]          Philippine Rock Industries, Inc. v. Board of Liquidators, 259 Phil. 650, 655-656 (1989). See also Farolan, Jr. v. Court of Tax Appeals, G.R. No. 42204, January 21, 1993, 217 SCRA 298, 306.

[3][31]          G.R. Nos. 150768 and 160176, August 20, 2008, 562 SCRA 422.

[4][32]         Id. at 431-432.

[5][29]          Guiguinto Credit Cooperative, Inc. v. Torres, G.R. No. 170926, September 15, 2006, 502 SCRA 182, 189-190.

[6][34]          Nery v. Leyson, 393 Phil. 644, 655 (2000).

[7][35]          Section 7, Rule 47 provides:

            SEC. 7. Effect of judgment. – A judgment of annulment shall set aside the questioned judgment or final order or resolution and render the same null and void, without prejudice to the original action being refiled in the proper court.  However, where the judgment or final order or resolution is set aside on the ground of extrinsic fraud, the court may on motion order the trial court to try the case as if a timely motion for new trial had been granted therein.

[8][1]           Rollo, pp. 9-31.

[9][2]          Id. at 32-45; penned by Associate Justice Mariflor P. Punzalan Castillo with Associate Justices Elvi John S. Asuncion and Noel G. Tijam, concurring.

[10][3]         Id. at 46-48.

[11][4]         Id. at 73-80; penned by Presiding Judge Victoria C. Fernandez-Bernardo.

[12][5]          Records, Vol. I, pp. 3-24. 

[13][6]          Id., Vol. III, pp. 2-3, 40-41, 75-76, 112-114, 171-173, 230-231, and 261-262. 

[14][7]         Id., Vol. I, pp. 22-23. 

[15][8]         Id. at 41.

[16][9]         Id. at 42-43.

[17][10]        Id. at 46.

[18][11]        Id. at 47-49.

[19][12]        Id. at 50.

[20][13]         Rollo, p. 79.

[21][14]        Id. at 80.

[22][15]         Records, Vol. I, pp. 76-78.

[23][16]        Id. at 79.

[24][17]        Id. at 80-81.

[25][18]         CA rollo, pp. 1-30.

[26][19]         Rollo, pp. 37-45.

[27][20]         CA rollo, pp. 158-165.

[28][21]         Rollo, p. 129. 

[29][22]        Id. at 130-149.

[30][23]         In brief, the Republic proffered the following reasons: (a) the OSG’s authority to administer oaths in matters of official business is derived from Presidential Decree No. 1347, hence, the Notarial Law or the 2004 Rules on Notarial Practice, including the approved forms of the 2004 Rules on Notarial Practice, is not particularly applicable to the said office; (b) the petition was properly verified and the identity and signature of affiant Hermogenes Ebdane was confirmed by the Solicitor/Officer of the OSG administering the oath; (c) IBP O.R. No. 663485 of Solicitor Edgar R. Tupas was paid for the Calendar Year 2006; and (d) substantial compliance with the Rules merits a liberal construction of the Rules with the instant case being determined on its merits rather than on technicality or procedural imperfections. (Rollo, pp. 130-131.)

[31][24]         Rollo, pp. 158-159.

[32][25]        Id. at 263.

[33][26]     Section 1 of Rule 47 reads:

SEC. 1. Coverage.  – This Rule shall govern the annulment by the Court of Appeals of judgments or final orders and resolutions in civil actions of Regional Trial Courts for which the ordinary remedies of new trial, appeal, petition for relief or other appropriate remedies are no longer available through no fault of the petitioner.

[34][27]         Section 2 of Rule 47 provides:

SEC. 2. Grounds for annulment.  – The annulment may be based only on the grounds of extrinsic fraud and lack of jurisdiction.

Extrinsic fraud shall not be a valid ground if it was availed of, or could have been availed of, in a motion for new trial or petition for relief.

[35][28]         Republic of the Philippines v. “G” Holdings, Inc., G.R. No. 141241, November 22, 2005, 475 SCRA 608, 617-618.

[36][29]         Guiguinto Credit Cooperative, Inc. v. Torres, G.R. No. 170926, September 15, 2006, 502 SCRA 182, 189-190.

[37][30]         Philippine Rock Industries, Inc. v. Board of Liquidators, 259 Phil. 650, 655-656 (1989). See also Farolan, Jr. v. Court of Tax Appeals, G.R. No. 42204, January 21, 1993, 217 SCRA 298, 306.

[38][31]         G.R. Nos. 150768 and 160176, August 20, 2008, 562 SCRA 422.

[39][32]        Id. at 431-432.

[40][33]         CA rollo, p. 12.

[41][34]         Nery v. Leyson, 393 Phil. 644, 655 (2000).

[42][35]         Section 7, Rule 47 provides:

            SEC. 7. Effect of judgment. – A judgment of annulment shall set aside the questioned judgment or final order or resolution and render the same null and void, without prejudice to the original action being refiled in the proper court.  However, where the judgment or final order or resolution is set aside on the ground of extrinsic fraud, the court may on motion order the trial court to try the case as if a timely motion for new trial had been granted therein.

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