J.A.B. Bulao & Associates

JOSE MARQUES AND MAXILITE TECHNOLOGIES, INC. VS. FAR EAST BANK AND TRUST COMPANY, FAR EAST BANK INSURANCE BROKERS, INC., AND MAKATI INSURANCE COMPANY (G.R. NO. 171379); FAR EAST BANK AND TRUST COMPANY VS. JOSE MARQUES AND MAXILITE TECHNOLOGIES, INC., (G.R. NO. 171379, 10 JANUARY 2011, CARPIO, J.) SUBJECTS: ESTOPPEL, CONCLUSIVE PRESUMPTIONS. (BRIEF TITLE: MARQUES ET AL. VS. FEBTC ET AL.)

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D E C I S I O N

CARPIO, J.:

The Case

These consolidated petitions for review¹ assail the 31 May 2005 Decision² and the 26 January 2006 Resolution³ of the Court of Appeals-Cebu City in CA-G.R. CV No. 62105. The Court of Appeals affirmed with modifications the 4 September 1998 Decision⁴ of the Regional Trial Court of Cebu City, Branch 58, in Civil Case No. CEB-18979.

The Facts

Maxilite Technologies, Inc. (Maxilite) is a domestic corporation engaged in the importation and trading of equipment for energy-efficiency systems. Jose N. Marques (Marques) is the President and controlling stockholder of Maxilite.

Far East Bank and Trust Co. (FEBTC)⁵ is a local bank which handled the financing and related requirements of Marques and Maxilite. Marques and Maxilite maintained accounts with FEBTC. Accordingly, FEBTC financed Maxilite’s capital and operational requirements through loans secured with properties of Marques under the latter’s name. Among Maxilite’s and Marques’ transactions with FEBTC were:

a. A straight loan in the name of Jose N. Marques for Maxilite at the original principal amount of P1 million. This is secured by real estate mortgage. From said original principal amount, the bank increased it by P300,000.00 about 26 October 1994 to enable the wiping out of Maxilite’s Trust Receipts Account and simplify the remaining accounts into straight loan accounts.

b. A straight loan in the name of Maxilite Technologies, Inc. for a principal amount of P2 million. This is secured with a Real Estate Mortgage of Marques’ residential property.

c. Master Card transactions covering two (2) Master Card Accounts of Marques, and

d. Local credit card transactions covering one credit card account of Marques.⁶

Far East Bank Insurance Brokers, Inc. (FEBIBI) is a local insurance brokerage corporation while Makati Insurance Company⁷ is a local insurance company. Both companies are subsidiaries of FEBTC.⁸

On 17 June 1993, Maxilite and Marques entered into a trust receipt transaction with FEBTC, in the sum of US$80,765.00, for the shipment of various high-technology equipment from the United States,⁹ with the merchandise serving as collateral. The foregoing importation was covered by a trust receipt document signed by Marques on behalf of Maxilite, which pertinently reads:

The undersigned (Marques) further agree(s) to keep said merchandise insured against fire to its full value, payable to the said bank, at the cost and expense of the undersigned, who hereby further agree(s) to pay all charges for storage on said merchandise or any or other expenses incurred thereon.

x x x x¹⁰

Sometime in August 1993, FEBIBI, upon the advice of FEBTC, facilitated the procurement and processing from Makati Insurance Company of four separate and independent fire insurance policies over the trust receipted merchandise: (1) Policy No. BR-F-1016333, issued on 15 September 1993, covering the period 12 August 1993 to 12 November 1993 in the amount of P1,000,000.00;¹¹ (2) Policy No. BR-F-1016888, issued on 15 September 1993 covering the period 8 September 1993 to 8 December 1993 in the amount of P605,494.28;¹² (3) Policy No. BR-F-1016930, issued on 18 October 1993, covering the period 14 October 1993 to 12 January 1994 in the amount of P527,723.66;¹³ and (4) Policy No. BR-F-1018392, issued on 14 December 1993, covering the period 1 December 1993 to 1 March 1994 in the amount of P725,000.00.¹⁴ Maxilite paid the premiums for these policies through debit arrangement. FEBTC would debit Maxilite’s account for the premium payments, as reflected in statements of accounts sent by FEBTC to Maxilite.

On 19 August 1994, Insurance Policy No. 1024439, covering the period 24 June 1994 to 24 June 1995, was released to cover the trust receipted merchandise. The policy relevantly provides:

2.      This policy including any renewal thereof and/or any endorsement thereon is not in force until the premium has been fully paid to and duly receipted by the Company in the manner provided herein.

Any supplementary agreement seeking to amend this condition prepared by agent, broker or Company official, shall be deemed invalid and of no effect.¹⁵

Finding that Maxilite failed to pay the insurance premium in the sum of P8,265.60 for Insurance Policy No. 1024439 covering the period 24 June 1994 to 24 June 1995, FEBIBI sent written reminders to FEBTC, dated 19 October 1994,¹⁶ 24 January 1995,¹⁷ and 6 March 1995, to debit Maxilite’s account.¹⁸

On 24 and 26 October 1994, Maxilite fully settled its trust receipt account.

On 9 March 1995, a fire gutted the Aboitiz Sea Transport Building along M.J. Cuenco Avenue, Cebu City, where Maxilite’s office and warehouse were located. As a result, Maxilite suffered losses amounting to at least P2.1 million, which Maxilite claimed against the fire insurance policy with Makati Insurance Company. Makati Insurance Company denied the fire loss claim on the ground of non-payment of premium. FEBTC and FEBIBI disclaimed any responsibility for the denial of the claim.

Maxilite and Marques sued FEBTC, FEBIBI, and Makati Insurance Company. Maxilite prayed for (1) actual damages totaling P2.3 million representing full insurance coverage and “business opportunity losses,” (2) moral damages, and (3) exemplary damages.¹⁹ On the other hand, Marques sought payment of actual, moral and exemplary damages, attorney’s fees, and litigation expenses. Maxilite and Marques also sought the issuance of a preliminary injunction or a temporary restraining to enjoin FEBTC from (1) imposing penalties on their obligations; (2) foreclosing the real estate mortage securing their straight loan accounts; and (3) initiating actions to collect their obligations.

FEBTC, FEBIBI, and Makati Insurance Company countered that Maxilite and Marques have no cause of action against them and essentially denied the allegations in the complaint.

The Ruling of the Trial Court

In ruling in favor of Maxilite and Marques, the Regional Trial Court of Cebu City, Branch 58, explained:

Considering the interest of the defendant FEBTC in the property insured, hence, its concern that the insurance policy therefor has to be effected and enforceable, and considering that the payment of the premium thereof was the procedure adopted by debiting the plaintiffs’ account, the Court is of the view that the non-payment of the premium of the insurance policy in question was due to the fault or negligence of the defendant FEBTC. What could have happened to the interest of the defendant FEBTC in the insurance policy in question had the fire occurred prior to the full settlement and payment of plaintiff’s Maxilite trust receipt account? Would defendant FEBTC have tossed the blame on the non-payment of premium to the plaintiffs?

Although there were reminders by defendant FEBIBI of the non-payment of the premium, the same were made by said defendant through the defendant FEBTC and not to the plaintiffs directly. Despite said reminders, the first of which was made on October 19, 1994 when plaintiff Maxilite has sufficient fund in its trust receipt account, defendant FEBTC did not heed the same and more so did it not care to pay the premium after the plaintiff Maxilite fully and finally settled its trust receipt account with defendant FEBTC as the latter has already lost its interest in the insurance policy in question by virtue of said full payment. But despite the non-payment of the insurance premium, the defendant Makati Insurance did not cancel the policy in question nor informed plaintiffs of its cancellation if the insurance premium should not be paid. Just as defendant FEBIBI failed to notify directly the plaintiffs of the said non-payment. Considering the relationship of the three (3) defendants herein, as undeniably sister companies, the non-payment of the premium of the insurance policy in question should be imputable to their fault or negligence. Under the factual milieu in the case at bar, the Court finds it just and equitable to hold said defendants liable to pay all the consequent damages suffered by the plaintiffs and their liability is solidary (Art. 2194, Civil Code).²⁰

The trial court disposed of the case as follows:

WHEREFORE, premises considered, judgment is hereby rendered ordering the defendants to pay jointly and severally to the plaintiff Maxilite the sum of Two Million One Hundred Thousand Pesos (P2,100,000.00), Philippine Currency, representing the full coverage of Insurance Policy No. 1024439 (Exh. ‘A’), as actual damages, plus interest of 12% per annum from filing of Complaint on July 11, 1996 until fully paid, to the plaintiff Marque[s] the sum of P400,000.00 as moral damages, to both plaintiffs the sum of P500,000.00 as exemplary damages, the sum of P50,000.00 as attorney’s fees, the sum of P23,082.50, representing the filing fees, as litigation expenses, and to pay the costs.

The counter-claims are hereby dismissed.

The writ of preliminary injunction is hereby made permanent.

SO ORDERED.²¹

The Ruling of the Court of Appeals

The Court of Appeals affirmed the trial court’s decision, with modifications, on the following grounds:

First, the relations among defendants with each other are closely related and so intertwined. The said three defendants, FEBTC, FEBIBI and MICI, are sister companies. This was never denied by the defendants themselves.

Second, the insurance coverage was the business of sister companies FEBIBI and Makati Insurance, not with FEBTC, which has been the bank of plaintiffs which handled the latter’s financing and related transactions. Stated a bit differently, defendant FEBTC handled the financing and related requirements of plaintiffs; defendant FEBIBI on the other hand is an insurance brokerage company of defendant FEBTC, while Makati Insurance is the insurance (arm) company of both defendants FEBIBI and FEBTC.

Third, defendant FEBTC caused FEBIBI to facilitate the insurance coverage of plaintiffs. FEBIBI then asked Makati Insurance to issue the subject policy. Makati Insurance delivered the policy to FEBIBI which it tasked with the collection of premium. FEBIBI in turn delivered the policy to FEBTC from where it sought the payment of the premiums.

Fourth, it must be noted that the cover note and policy was supposedly issued and made effective on June 24, 1994, when the trust receipt account was still outstanding and the insured merchandise was still theoretically owned by the bank. Thus, for all intents and purposes, it was to the best interest and protection of the bank to see to it that the goods were properly covered by insurance.

Fifth, the payment of premium has never been made an issue when the subject policy was still separated into three. Or even after the said consolidation into one policy (No. 1024439), still, payment of the premium has never become an issue.

x x x x

For another, if We were to believe defendants’ claim that the premium for the subject policy was not paid, then defendants should have cancelled the policy long before. But even up to the time the fire gutted plaintiffs’ warehouse in March 1995, defendants acknowledged that the subject policy remained effective. x x x

Furthermore, there was no notice of cancellation or any communication from defendants sent to plaintiffs that the policy shall be cancelled because of non-payment of premiums. Thus, the more reasonable and logical conclusion is that the subject policy was still fully in force because plaintiffs are still paying its premiums and defendants are collecting the same through debit account.²²

The Court of Appeals disposed of the case as follows:

UPON THE VIEW WE TAKE OF THIS CASE, judgment appealed from is hereby MODIFIED in such that:

a. the interest shall be at the rate of six percent (6%) per annum to run from the time of demand on April 11, 1995, in accordance with Article 1589 of the Civil Code, until the finality of this decision;

b. the moral damages of P400,000.00 is reduced to P50,000.00;

c. the exemplary damages of P500,000.00 is reduced to P50,000.00; and

d. the writ of preliminary injunction previously issued lifted and set aside.

In all other respects, judgment appealed from is AFFIRMED. Without pronouncement as to costs.

SO ORDERED.²³

Hence, these petitions.

The Issues

In G.R. No. 171379, petitioners assail the Court of Appeals’ reduction of (1) the interest rate from 12% to 6% per annum to be imposed on respondents’ liabilities; and (2) the award of moral and exemplary damages. Petitioners also question the portion of the Court of Appeals’ judgment allowing FEBTC to foreclose the real estate mortgage securing petitioners’ loans and disallowing legal compensation for the parties’ mutual obligations.

In G.R. No. 171419, petitioners challenge the Court of Appeals’ findings that (1) the premium for the subject insurance policy has in fact been paid; (2) FEBTC, FEBIBI and Makati Insurance Company are jointly and severally liable to pay respondents the full coverage of the subject insurance policy despite (a) their separate juridical personalities; (b) the absence of any fault or negligence on their part; and (c) respondents’ failure to prove the extent of the alleged loss. Petitioners further impugn the award of damages and attorney’s fees.

The Court’s Ruling

The petition in G.R. No. 171319 lacks merit, whereas the petition in G.R. No. 171419 is partially meritorious.

Essentially, Maxilite and Marques invoke estoppel in claiming against FEBTC, FEBIBI, and Makati Insurance Company the face value of the insurance policy. In their complaint, Maxilite and Marques alleged they were led to believe and they in fact believed that the settlement of Maxilite’s trust receipt account included the payment of the insurance premium.²⁴ Maxilite and Marques faulted FEBTC “if it failed to transmit the premium payments on subject insurance coverage contrary to its represented standard operating procedure of solely handling the insurance coverage and past practice of debiting [Maxilite’s] account.”²⁵

Article 1431 of the Civil Code defines estoppel as follows:
Art. 1431. Through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon.

Meanwhile, Section 2(a), Rule 131 of the Rules of Court provides:

SEC. 2. Conclusive presumptions. – The following are instances of conclusive presumptions:

(a) Whenever a party has, by his own declaration, act, or omission, intentionally and deliberately led another to believe a particular thing is true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act or omission, be permitted to falsify it.

In estoppel, a party creating an appearance of fact, which is false, is bound by that appearance as against another person who acted in good faith on it.²⁶ Estoppel is based on public policy, fair dealing, good faith and justice.²⁷ Its purpose is to forbid one to speak against his own act, representations, or commitments to the injury of one who reasonably relied thereon.²⁸ It springs from equity, and is designed to aid the law in the administration of justice where without its aid injustice might result.²⁹

In Santiago Syjuco, Inc. v. Castro,³⁰ the Court stated that “estoppel may arise from silence as well as from words.” ‘Estoppel by silence’ arises where a person, who by force of circumstances is obliged to another to speak, refrains from doing so and thereby induces the other to believe in the existence of a state of facts in reliance on which he acts to his prejudice.³¹ Silence may support an estoppel whether the failure to speak is intentional or negligent.³²

Both trial and appellate courts basically agree that FEBTC is estopped from claiming that the insurance premium has been unpaid. That FEBTC induced Maxilite and Marques to believe that the insurance premium has in fact been debited from Maxilite’s account is grounded on the the following facts: (1) FEBTC represented and committed to handle Maxilite’s financing and capital requirements, including the related transactions such as the insurance of the trust receipted merchandise; (2) prior to the subject Insurance Policy No. 1024439, the premiums for the three separate fire insurance policies had been paid through automatic debit arrangement; (3) FEBIBI sent FEBTC, not Maxilite nor Marques, written reminders dated 19 October 1994, 24 January 1995, and 6 March 1995 to debit Maxilite’s account, establishing FEBTC’s obligation to automatically debit Maxilite’s account for the premium amount; (4) there was no written demand from FEBTC or Makati Insurance Company for Maxilite or Marques to pay the insurance premium; (5) the subject insurance policy was released to Maxilite on 19 August 1994; and (6) the subject insurance policy remained uncancelled despite the alleged non-payment of the premium, making it appear that the insurance policy remained in force and binding.

Moreover, prior to the full settlement of the trust receipt account on 24 and 26 October 1994, FEBTC had insurable interest over the merchandise, and thus had greater reason to debit Maxilite’s account. Further, as found by the trial court, and apparently undisputed by FEBTC, FEBIBI and Makati Insurance Company, Maxilite had sufficient funds at the time the first reminder, dated 19 October 1994, was sent by FEBIBI to FEBTC to debit Maxilite’s account for the payment of the insurance premium. Since (1) FEBTC committed to debit Maxilite’s account corresponding to the insurance premium; (2) FEBTC had insurable interest over the property prior to the settlement of the trust receipt account; and (3) Maxilite’s bank account had sufficient funds to pay the insurance premium prior to the settlement of the trust receipt account, FEBTC should have debited Maxilite’s account as what it had repeatedly done, as an established practice, with respect to the previous insurance policies. However, FEBTC failed to debit and instead disregarded the written reminder from FEBIBI to debit Maxilite’s account. FEBTC’s conduct clearly constitutes negligence in handling Maxilite’s and Marques’ accounts. Negligence is defined as “the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent man and reasonable man could not do.”³³

As a consequence of its negligence, FEBTC must be held liable for damages pursuant to Article 2176 of the Civil Code which states “whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done.” Indisputably, had the insurance premium been paid, through the automatic debit arrangement with FEBTC, Maxilite’s fire loss claim would have been approved. Hence, Maxilite suffered damage to the extent of the face value of the insurance policy or the sum of P2.1 million.

Contrary to Maxilite’s and Marques’ view, FEBTC is solely liable for the payment of the face value of the insurance policy and the monetary awards stated in the Court of Appeals’ decision. Suffice it to state that FEBTC, FEBIBI, and Makati Insurance Company are independent and separate juridical entities, even if FEBIBI and Makati Insurance Company are subsidiaries of FEBTC. Absent any showing of its illegitimate or illegal functions, a subsidiary’s separate existence shall be respected, and the liability of the parent corporation as well as the subsidiary shall be confined to those arising in their respective business.³⁴ Besides, the records are bereft of any evidence warranting the piercing of corporate veil in order to treat FEBTC, FEBIBI, and Makati Insurance Company as a single entity. Likewise, there is no evidence showing FEBIBI’s and Makati Insurance Company’s negligence as regards the non-payment of the insurance premium.

The Court agrees with the Court of Appeals in reducing the interest rate from 12% to 6% as the obligation to pay does not arise from a loan or forbearance of money. In Eastern Shipping Lines, Inc. v. Court of Appeals,³⁵ the Court laid down the following guidelines for the application of the proper interest rates:

I. When an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held liable for damages. The provisions under Title XVIII on “Damages” of the Civil Code govern in determining the measure of recoverable damages.

II. With regard particularly to an award of interest in the concept of actual and compensatory damages, the rate of interest, as well as the accrual thereof, is imposed, as follows:

1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for the computation of legal interest shall, in any case, be . . . the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to forbearance of credit. (Emphasis supplied)

With respect to Maxilite’s and Marques’ invocation of legal compensation, we find the same devoid of merit. Aside from their bare allegations, there is no clear and convincing evidence that legal compensation exists in this case. In other words, Maxilite and Marques failed to establish the essential elements of legal compensation. Therefore, Maxilite’s and Marques’ claim of legal compensation must fail.

WHEREFORE, we AFFIRM with MODIFICATION the 31 May 2005 Decision and the 26 January 2006 Resolution of the Court of Appeals-Cebu City in CA-G.R. CV No. 62105. Only Far East Bank and Trust Company, and not Far East Bank Insurance Brokers, Inc. or Makati Insurance Company, is ORDERED to PAY the face value of the subject insurance policy and the monetary awards stated in the Court of Appeals’ decision.

SO ORDERED.

ANTONIO T. CARPIO

Associate Justice

WE CONCUR:

ARTURO D. BRION

Associate Justice

DIOSDADO M. PERALTA ROBERTO A. ABAD

Associate Justice Associate Justice

JOSE C. MENDOZA

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.

ANTONIO T. CARPIO

Associate Justice

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 additional member per Raffle dated 9 June 2010.

1 Under Rule 45 of the Rules of Court.

2 Rollo (G.R. No. 171419), pp. 94-113. Penned by Associate Justice Vicente L. Yap, with Associate Justices Isaias P. Dicdican and Enrico A. Lanzanas concurring.

3 Id. at 114-118.

4 Id. at 631-664. Penned by Judge Jose P. Soberano, Jr.

5 FEBTC has been merged with Bank of the Philippine Islands (BPI), which is the surviving corporation.

6 Rollo (G.R. No. 171379), p. 157.

7 Now known as BPI/MS Insurance Corporation (BPI/MS-IC), id. at 198.

8 Rollo (G.R. No. 171419), p. 330; TSN, 9 February 1998, p. 20.

9 Id. at 251.

10 Id. at 225; TSN, 31 July 1997, p. 8 (Benjamin Torno).

11 Id. at 306.

12 Id. at 309.

13 Id. at 310.

14 Id. at 308.

15 Id. at 414.

16 Id. at 403.

17 Id. at 404.

18 Id. at 405.

19 Id. at 616-617.

20 Id. at 661-662.

21 Id. at 663-664.

22 Id. at 107-109.

23 Id. at 112-113.

24 Id. at 605.

25 Id. at 608.

26 Aquino, Ramon C., The Civil Code of the Philippines, Vol. 2, 1990 Edition, p. 508, citing Strong v. Gutierrez Repide, 6 Phil. 680, 685.

27 Id. at 509.

28 Id.

29 Id., citing 28 Am Jur 2^nd 28; PNB v. Perez, 183 Phil. 54 (1979); Lazo v. Republic Surety & Ins. Co., Inc., 142 Phil. 158 (1970).

30 G.R. No. 70403, 7 July 1989, 175 SCRA 171, 192, citing 31 C.J.S., pp. 490-494.

31 Id.

32 Id.

33 Bank of the Philippine Islands v. Suaez, G.R. No. 167750, 15 March 2010, 615 SCRA 291, 298.

34 Nisce v. Equitable PCI Bank, Inc., G.R. No. 167434, 19 February 2007, 516 SCRA 231, 258.

35 G.R. No. 97412, 12 July 1994, 234 SCRA 78, 95-97.

MILAGROS SALTING VS. JOHN VELEZ AND CLARISSA R. VELEZ (G.R. NO. 181930, 10 JANUARY 2011, NACHURA, J.)

SUBJECTS: NOTICE TO COUNSEL WHO DIED; EJECTMENT) BRIEF TITLE: SALTING VS. VELEZ ET AL.

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DECISION

NACHURA, J.:

          This is a petition for review on certiorari under Rule 45 of the Rules of Court, seeking to annul and set aside the Court of Appeals (CA) Decision^[1][1] dated November 29, 2007 and Resolution^[2][2] dated February 27, 2008 in CA-G.R. SP No. 97618.

The factual and procedural antecedents leading to the instant petition are as follows:

          On October 7, 2003, respondents John Velez and Clarissa Velez filed a complaint^[3][3] for ejectment against petitioner Milagros Salting involving a property covered by Transfer Certificate of Title (TCT) No. 38079. The case was docketed as Civil Case No. 2524. On March 28, 2006, respondents obtained a favorable decision^[4][4] when the Metropolitan Trial Court (MeTC), Branch LXXIV, of Taguig City, Metro Manila, ordered petitioner to vacate the subject parcel of land and to pay attorney’s fees and costs of suit. The decision became final and executory, after which respondents filed a motion for execution which was opposed by petitioner.

 Thereafter, petitioner instituted an action before the Regional Trial Court (RTC), Branch 153, for Annulment of Sale of the Property covered by  TCT No. 38079, with prayer for the issuance of a Temporary Restraining Order (TRO) and/or Writ of Preliminary Injunction against respondents, Hon. Ma. Paz Yson, Deputy Sheriff Ernesto G. Raymundo, Jr., Teresita Diokno-Villamena, and Heirs of Daniel B. Villamena (Heirs of Villamena).^[5][5] The case was docketed as Civil Case No. 70859-TG. Petitioner claimed that she purchased the subject parcel of land from Villamena as evidenced by a notarized document known as Sale of Real Estate. She further explained that respondents were able to obtain title to the subject property through the fraudulent acts of the heirs of Villamena. Finally, she averred that the decision in Civil Case No. 2524 had not attained finality as she was not properly informed of the MeTC decision. Petitioner thus prayed that a TRO be issued, restraining respondents and all persons acting for and in their behalf from executing the MeTC decision dated March 28, 2006. She further sought the declaration of nullity of the sale by the heirs of Villamena to respondents involving the subject parcel of land, and, consequently, the cancellation of the title to the property in the name of respondents.

          Finding that petitioner would suffer grave and irreparable damage if respondents would not be enjoined from executing the March 28, 2006 MeTC decision while respondents would not suffer any prejudice, the RTC, in an Order dated October 26, 2006, granted the writ of preliminary injunction applied for.^[6][6] Aggrieved, respondents filed a special civil action for certiorari under Rule 65 of the Rules of Court before the CA, raising the sole issue of whether or not the RTC committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the writ of preliminary injunction against the execution of a judgment for ejectment.

          In a Decision^[7][7] dated November 29, 2007, the CA resolved the issue in the affirmative. The CA noted that the principal action in Civil Case No. 70859-TG is the annulment of the deed of sale executed between respondents and the heirs of Villamena, while the subject of the ancillary remedy of preliminary injunction is the execution of the final judgment in a separate proceeding for ejectment in Civil Case No. 2524. The appellate court concluded that petitioner had no clear and unmistakable right to possession over the subject parcel of land in view of the March 28, 2006 MeTC decision. Hence, contrary to the conclusion of the RTC, the CA opined that petitioner was not entitled to the writ of preliminary injunction. The CA thus set aside the October 26, 2006 Order of the RTC.

          Petitioner now comes before this Court in this petition for review on certiorari under Rule 45 of the Rules of Court, claiming that:         

          In rendering the assailed Decision and Resolution, the Court of Appeals has decided in a way probably not in accord with law or with the applicable decisions of the Supreme Court. (Section 6 (a), Rule 45, 1997 Rule[s] of Civil Procedure). The Court of Appeals disregarded the rule that service of decision to a deceased lawyer is invalid and that the party must be duly served by the final judgment in order that the final judgment will become final and executory. The Court of Appeals, likewise, disregarded the existence of a clear and existing right of the petitioner which should be protected by an injunctive relief and the rule that the pendency of an action assailing the right of a party to eject will justify the suspension of the proceedings of the ejectment case.^[8][8]  

Petitioner claims that she was denied her right to appeal when the March 28, 2006 MeTC decision was declared final and executory despite the fact that the copy of the decision was served on her deceased counsel. She further claims that the MeTC decision had not attained finality due to improper service of the decision. Moreover, petitioner avers that she has a clear and existing right and interest over the subject property which should be protected by injunction. Finally, petitioner argues that jurisprudence allows the suspension of proceedings in an ejectment case at whatever stage when warranted by the circumstances of the case.

In their Comment,^[9][9] respondents allege that the petition is already moot and academic in view of the execution of the MeTC decision. They claim that it is not proper to restrain the execution of the MeTC decision as the case instituted before the RTC was for the annulment of the sale executed between respondents and the heirs of Villamena, and not an action for annulment of judgment or mandamus to compel the MeTC to entertain her belated appeal. Respondents add that the finality of the ejectment case is not a bar to the case instituted for the annulment of the sale and the eventual recovery of ownership of the subject property. The actions for ejectment and for annulment of sale are two different cases that may proceed independently, especially when the judgment in the ejectment case had attained finality, as in the instant case. Finally, respondents fault the petitioner herself for not informing the MeTC of the death of her former counsel the moment she learned of such death.

We find no merit in the petition.

.

We first determine the validity of the service of the March 28, 2006 MeTC decision on petitioner’s counsel who, as of that date, was already deceased. If a party to a case has appeared by counsel, service of pleadings and judgments shall be made upon his counsel or one of them, unless service upon the party himself is ordered by the court.^[10][10]  Thus, when the MeTC decision was sent to petitioner’s counsel, such service of judgment was valid and binding upon petitioner, notwithstanding the death of her counsel.  It is not the duty of the courts to inquire, during the progress of a case, whether the law firm or partnership continues to exist lawfully, the partners are still alive, or its associates are still connected with the firm.^[11][11] Litigants, represented by counsel, cannot simply sit back, relax, and await the outcome of their case.^[12][12] It is the duty of the party-litigant to be in contact with her counsel from time to time in order to be informed of the progress of her case.^[13][13] It is likewise the duty of the party to inform the court of the fact of her counsel’s death. Her failure to do so means that she is negligent in the protection of her cause, and she cannot pass the blame to the court which is not tasked to monitor the changes in the circumstances of the parties and their counsels.

          It is noteworthy that when petitioner came to know of the death of her counsel and upon obtaining the services of a new counsel, petitioner instituted another action for the annulment of the deed of sale between her and the heirs of Villamena, instead of questioning the MeTC decision  through an action for annulment of judgment. Obviously, the annulment case instituted by petitioner is separate and distinct from the ejectment case filed by respondents. She cannot, therefore, obtain relief through the second case for alleged errors and injustices committed in the first case.

With the foregoing disquisition, we find that the March 28, 2006 MeTC decision had, indeed, become final and executory. A final and executory decision can only be annulled by a petition to annul the same on the ground of extrinsic fraud and lack of jurisdiction, or by a petition for relief from a final order or judgment under Rule 38 of the Rules of Court. However, no petition to that effect was filed.^[14][14] Well-settled is the rule that once a judgment becomes final and executory, it can no longer be disturbed, altered, or modified in any respect except to correct clerical errors or to make nunc pro tunc entries. Nothing further can be done to a final judgment except to execute it.^[15][15]

          In the present case, the finality of the March 28, 2006 decision with respect to possession de facto cannot be affected by the pendency of the annulment case where the ownership of the property is being contested.^[16][16] We are inclined to adhere to settled jurisprudence that suits involving ownership may not be successfully pleaded in abatement of the enforcement of the final decision in an ejectment suit. The rationale of the rule has been explained in this wise:

This rule is not without good reason. If the rule were otherwise, ejectment cases could easily be frustrated through the simple expedient of filing an action contesting the ownership over the property subject of the controversy. This would render nugatory the underlying philosophy of the summary remedy of ejectment which is to prevent criminal disorder and breaches of the peace and to discourage those who, believing themselves entitled to the possession of the property, resort to force rather than to some appropriate action in court to assert their claims.^[17][17]

Unlawful detainer and forcible entry suits under Rule 70 of the Rules of Court are designed to summarily restore physical possession of a piece of land or building to one who has been illegally or forcibly deprived thereof, without prejudice to the settlement of the parties’ opposing claims of juridical possession in appropriate proceedings.^[18][18] 

Finally, as aptly held by the CA, petitioner is not entitled to a writ of preliminary injunction to restrain the execution of the MeTC decision. Section 3, Rule 58 of the Rules of Court enumerates the grounds for the issuance of preliminary injunction, viz.:

SEC. 3. Grounds for issuance of preliminary injunction. – A preliminary injunction may be granted when it is established:

(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 act or 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, agency or a person is doing, threatening, or is 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.

And as clearly explained in Ocampo v. Sison Vda. de Fernandez^[19][19] ¾

To be entitled to the injunctive writ, the applicant must show that there exists a right to be protected which is directly threatened by an act sought to be enjoined. Furthermore, there must be a showing that the invasion of the right is material and substantial and that there is an urgent and paramount necessity for the writ to prevent serious damage. The applicant’s right must be clear and unmistakable. In the absence of a clear legal right, the issuance of the writ constitutes grave abuse of discretion. Where the applicant’s right or title is doubtful or disputed, injunction is not proper. The possibility of irreparable damage without proof of an actual existing right is not a ground for injunction.

A clear and positive right especially calling for judicial protection must be shown. Injunction is not a remedy to protect or enforce contingent, abstract, or future rights; it will not issue to protect a right not in esse and which may never arise, or to restrain an act which does not give rise to a cause of action. There must exist an actual right. There must be a patent showing by the applicant that there exists a right to be protected and that the acts against which the writ is to be directed are violative of said right.^[20][20] 

In this case, the enforcement of the writ of execution which would evict petitioner from her residence is manifestly prejudicial to her interest. However, she possesses no legal right that merits the protection of the courts through the writ of preliminary injunction. Her right to possess the property in question has been declared inferior or inexistent in relation to respondents in the ejectment case in the MeTC decision which has become final and executory.^[21][21]

In any event, as manifested by respondents, the March 28, 2006 MeTC decision has already been executed. Hence, there is nothing more to restrain.

WHEREFORE, premises considered, the petition is DENIED for lack of merit. The Court of Appeals Decision dated November 29, 2007 and Resolution dated February 27, 2008 in CA-G.R. SP No. 97618 are AFFIRMED.

SO ORDERED.

                                      ANTONIO EDUARDO B. NACHURA

                                      Associate Justice

 WE CONCUR:

ANTONIO T. CARPIO

Associate Justice

Chairperson

JOSE CATRAL MENDOZA

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.

                                                                   ANTONIO T. CARPIO

                                                                      Associate Justice

                                                             Chairperson, Second Division

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

PROSECUTOR HILARIO RONSON H. TILAN VS. JUDGE ESTER PISCOSO-FLOR, RTC, BRANCH 34, BANAUE, IFUGAO (A.M. NO. RTJ-09-2188, 10 JANUARY 2011, BRION, J.) SUBJECT: ISSUANCE OF DECISION BEYOND THE 90-DAY PERIOD, GROUND FOR DISCIPLINARY ACTION. (BRIEF TITLE: TILAN VS. JUDGE FLOR).

x————————————————————————————–x

D E C I S I O N

We resolve in this Decision the Administrative Matter against Judge Ester Piscoso-Flor of the Regional Trial Court, Branch 34, Banaue, Ifugao.

The Antecedents

The case arose from the verified complaint, dated September 1, 2008,^[1][1] filed by Public Prosecutor Hilario Ronson H. Tilan, charging Judge Piscoso-Flor with gross inefficiency, gross negligence and dishonesty.

The records show that the prosecutor was then handling Criminal Case No. 127, People of the Philippines v. Juanito Baguilat, for Falsification of Public Document, and Criminal Case No. 140, People of the Philippines v. Wihlis Talanay, for Violation of RA 7610, pending promulgation before Judge Piscoso-Flor.  He was also handling Criminal Case No. 221, People of the Philippines v. Macario Tenefrancia, for Libel, pending arraignment in the same court.

In People v. Baguilat, Judge Piscoso-Flor issued an order dated October 20, 2007^[2][2] directing the parties to submit their respective memoranda within thirty (30) days from receipt of the order. The complainant alleged that the judge failed to render a decision within the ninety (90)-day reglementary period; instead, she issued an order, dated April 8, 2008,^[3][3] reiterating her earlier directive for the parties to submit their respective memoranda.

 In People v. Talanay, Judge Piscoso-Flor issued an order dated September 25, 2007^[4][4] giving the accused fifteen (15) days to file his formal offer of evidence, and five (5) days for the prosecution to file its comment/objections.  Allegedly, Judge Piscoso-Flor again failed to resolve the case within the 90-day reglementary period; instead, she issued another order dated May 21, 2008^[5][5] giving the parties fifteen (15) days within which to file their memoranda.

 Prosecutor Tilan claimed that in both cases, Judge Piscoso-Flor resorted to the issuance of an order requiring the submission of the parties’ memoranda to circumvent the statutory period for the resolution of cases.  Prosecutor Tilan pointed out that  the father of  the victim  (a minor)  in People v. Talanay sought the assistance of the Commission on Human Rights (CHR) “regarding the slow process of resolving the case,”^[6][6] and the CHR even called his attention on the matter.^[7][7]

In People v. Tenefrancia, Prosecutor Tilan alleged that the accused filed a Petition for Suspension of Trial, prompting Judge Piscoso-Flor to call a hearing on the petition.  Despite the parties’ submission of the matter for resolution, Judge Piscoso-Flor failed to resolve the petition within the required period.

The Office of the Court Administrator (OCA)^[8][8] required Judge Piscoso-Flor to submit her comment, and she complied on November 7, 2008.^[9][9]  She  offered   the following explanation: in the court’s monthly report  for  January 2008,^[10][10] Criminal Case No. 127, People v. Baguilat, was submitted for decision on January 31, 2008, and was due for decision on May 1, 2008;  the  reason  for this was the parties’ failure to submit their memoranda as required in her order dated October 20, 2007; on April 8, 2008, she issued another order reiterating her directive for the parties to file their memoranda because the case had been heard previously by her two predecessors.

Judge Piscoso-Flor further explained that on April 28, 2008, accused Baguilat moved for extension of time to submit his memorandum.^[11][11]  She herself requested for an extension of time to decide the case up to July 2, 2008.^[12][12] She promulgated the decision on September 29, 2008,^[13][13] after several postponements due to the absence of Prosecutor Tilan, the counsel for the accused, and of the accused himself.

In conclusion, she stated that Prosecutor Tilan filed the present complaint after she personally went to Justice Secretary Raul M. Gonzales to complain about the former’s actuations towards her,^[14][14]and after she cited him for direct contempt.^[15][15]

On November 19, 2008, Prosecutor Tilan filed a reply,^[16][16]reiterating the allegations in his complaint, and adding that he filed a Motion for Inhibition of Judge Piscoso-Flor in Criminal Case No. 228, People of the Philippines v. Eddie Immongor and Senando Bannog,” which was deemed submitted for resolution on July 18, 2008.

In a rejoinder dated November 25, 2008,^[17][17] Judge Piscoso-Flor explained  that in Criminal Case No. 142, People of the Philippines v. Myleen Dimpatan, for Estafa, which Prosecutor Tilan mentioned in his reply, she received the accused’s memorandum on April 20, 2007, and that of the prosecution on April 17, 2007.  She added that on July 24, 2007, the court   received  a joint manifestation by Prosecutor Tilan, Private Prosecutor Rufino  Lamase,  and  the accused’s counsel (Atty. Gerald Tabayan) asking that the promulgation of the decision be deferred pending a possible settlement of the case. It was only on October 8, 2008 that Prosecutor Lamase  moved  to  have  the case resolved for failure of the accused  to  settle  the civil  aspect  of the case. She immediately finalized the decision and  scheduled  its promulgation on November 14, 2008, but this was reset to November 24, 2008 upon motion of the counsel for the accused.

Judge Piscoso-Flor further explained that the motion for inhibition in Criminal Case No. 228 had been the subject of a contempt case which reached the Court of Appeals and gave rise to numerous complaints filed by Prosecutor Tilan against her. One of the cases had been considered closed and terminated by Deputy Court Administrator Reuben P. de la Cruz in a letter dated November 4, 2008.^[18][18] 

Upon recommendation of the OCA, the Court issued a Resolution on July 6, 2009:^[19][19] (1) re-docketing the case as a regular administrative matter; (2) directing Judge Piscoso-Flor to conduct an inventory of cases pending in her court and find out whether there were cases submitted for decision that had not been decided within the required period, and to decide these cases within thirty (30) days; and (3) requiring the parties to manifest whether they were willing to submit the case for resolution on the basis of the pleadings and the records.

Judge Piscoso-Flor and Prosecutor Tilan submitted the case for resolution on August 27, 2009 and October 8, 2009, respectively.

The Court’s Ruling

In his Memorandum dated March 19, 2009,^[20][20] Court Administrator Jose P. Perez (now a member of the Court) found Judge Piscoso-Flor to have been  remiss  in  her  duty  to  decide cases within the period required by law.  He recommended that the judge be merely admonished considering that  this  is her first infraction and that she inherited most of the cases that gave  rise  to  the  complaint.  At the same time, he recommended that a stern warning be given against the commission of a similar offense in the future.

The OCA evaluation tells us that Judge Piscoso-Flor is guilty of failing to decide cases within the required periods, citing Criminal Case No. 127  (People v. Juanito Baguilat)  as  the principal basis of its conclusion.  In  this case, the OCA faulted Judge Piscoso-Flor for using as justification for  her inaction the parties’ failure to submit their respective memoranda.  The  OCA  opined  that  this  is not a valid reason for not deciding the case; if  she  believed  she  would  not be able to decide the case on time, she could have asked the Court for an extension of the required period. The OCA acknowledged though that Judge Piscoso-Flor requested for an extension to decide the case in her monthly report of cases and certificate of service.^[21][21]

We find the OCA evaluation in order.  Although Judge Piscoso-Flor claimed that she had requested for an extension of time to decide Criminal Case No. 127, there was no showing that the request was ever granted. Over and above this consideration, she allowed the parties to control the period of disposition of the case through their lukewarm response to her call for the submission of memoranda, which she had to do twice.  She could have acted more firmly, considering, as she said, that she only inherited the case, which implies that it had been on the docket for quite some time.  In any event, Judge Piscoso-Flor should have known that “[t]he Court may grant extension of time to file memoranda, but the ninety (90) day period for deciding the case shall not be interrupted thereby.”^[22][22] 

The same is true with Criminal Case No. 140 (People v. Talanay).  As early as March 6, 2006,^[23][23] the CHR Office in the Cordillera Administrative Region relayed to Judge Piscoso-Flor the concern of the parent of the victim of the child abuse regarding the delay in the resolution of the case.  It was only on May 21, 2008 when Judge Piscoso-Flor called for the submission of memoranda.

 Judge Piscoso-Flor  had no comment on Criminal Case No. 221 (People v. Tenefrancia).  On the other hand, the Motion for Inhibition in Criminal Case No. 228, filed by Prosecutor Tilan, was deemed submitted for resolution on July 18, 2008,^[24][24] but Judge Piscoso-Flor herself admitted that she resolved the motion on November 10, 2008 or beyond the required 90-day period.

   Judge Piscoso-Flor, however, cannot be held liable for delay in the disposition of Criminal Case No. 142 (People v. Dimpatan), which Prosecutor Tilan cited in his reply.^[25][25] While he claimed that the case  was  deemed submitted for decision on March 12, 2007, it appears from the records  that he, Private Prosecutor Rufino Lamase, and the accused’s counsel  (Atty. Gerald Tabayan)  executed  a joint manifestation^[26][26] praying that the promulgation of the decision be deferred pending negotiations among  them  on  the  civil aspect of the case.  When the negotiations bogged down and upon motion of Prosecutor Lamase (dated October 8, 2008),^[27][27] Judge Piscoso-Flor promulgated the decision on November 24, 2008.

On the whole, we find Judge Piscoso-Flor guilty of undue delay in the disposition of cases. Except for People v. Dimpatan, Judge Piscoso-Flor failed to resolve the other cases within the required period, in violation of the law and the rules.  No less than the Constitution sets the limits on this all-important aspect in the administration of justice.  It mandates that lower courts have three (3) months or ninety (90) days within which to decide cases or matters submitted to them for resolution.^[28][28] Also, the Code of Judicial Conduct requires judges to dispose of the Court’s business promptly and decide cases within the prescribed period.^[29][29]

It cannot be over emphasized that judges need to decide cases promptly and expeditiously.  Delay in the disposition of cases, it must again be stated, is a major cause in the erosion of public faith and confidence in the justice system.^[30][30] For this fundamental and compelling reason, judges are required to decide cases and resolve motions with dispatch within the reglementary period.  Failure to comply constitutes gross inefficiency, a lapse that warrants the imposition of administrative sanctions against the erring magistrate.^[31][31]

Section 9, Rule 140 of the Rules of Court defines undue delay in rendering a decision or order as a less serious charge, punishable under Section 11(b) of the same Rule and imposes a penalty of suspension from office, without salary and other benefits, for not less than one (1) nor more than three (3) months, or a fine of more than P10,000.00 but not exceeding P20,000.00.  In light, however, of the fact that this is Judge Piscoso-Flor’s first infraction and considering that most of the cases involved were inherited cases, we deem a fine in its minimum range an appropriate penalty for Judge Piscoso-Flor.

WHEREFORE, premises considered, Judge Ester Piscoso-Flor is declared liable for delay in the disposition of cases.  Accordingly, she is FINED P10,000.00, with a stern warning against the commission of a similar offense in the future.

SO ORDERED.

ARTURO D. BRION

Associate Justice

WE CONCUR:

MARIA LOURDES P.A. SERENO

Associate Justice