J.A.B. Bulao & Associates

CASE 2011-0186: DEVELOPMENT BANK OF THE PHILIPPINES VS. HON. SILVERIO Q. CASTILLO and CRISTINA TRINIDAD ZARATE ROMERO (G.R. NO. 163827, 17 AUGUST 2011, VILLARAMA, JR., J.) SUBJECT: CAUSE OF ACTION. (BRIEF TITLE: DBP VS. CASTILLO).

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DISPOSITIVE:

WHEREFORE, the petition is DENIED for lack of merit.  The Decision dated July 21, 2003 of the Court of Appeals in CA-G.R. SP No. 53825 is AFFIRMED.

No costs.

SO ORDERED.

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SUBJECT/DOCTRINE/DIGEST:

THE CASE STORY:

 SIBLINGS CORAZON AND GONZALO CO-OWNED A REAL PROPERTY. THEY MORTGAGED THE PROPERTY TO DBP. FOR FAILURE TO PAY THE LOAN, DBP FORCLOSED THE MORTGAGE. CORAZON DIED. HER DAUGHTER CRISTINA FOUND OUT THAT THE PROPERTY IS ALREADY IN THE NAME OF DBP. SHE FILED A CASE FOR RECONVEYANCE ON THE GROUND THAT DBP AND GONZALO CONNIVED SO THE PROPERTY WILL BE OWNED SOLELY BY GONZALO. HER PROOFS: HER MOTHER WAS NOT INFORMED OF THE FORECLOSURE AND THUS WAS DEPRIVED OF HER RIGHT TO REDEEM; GONZALO EXECUTED BUY-BACK AGREEMENT WITH DBP OVER THE PROPERTY. SHE ASKED FOR TRO AND INJUNCTION TO PREVENT THE SALE OF THE PROPERTY AT PUBLIC AUCTION. DBP FILED MOTION TO DISMISS AND OPPOSED TRO AND INJUNCTION ON THE GROUND THAT THERE IS NO CAUSE OF ACTION BECAUSE WHEN CRISTINA BECAME HEIR THE PROPERTY WAS ALREADY IN THE NAME OF DBP. RTC GRANTED TRO AND LATER INJUNCTION AND DENIED MOTION TO DISMISS. DPB MOVED FOR RECON. RTC DENIED. DBP FILED AN ANSWER AD CAUTELAM AND ALSO FILED PETITIONS AT CA RE THE TRO, INJUNCTION AND DENIAL OF MOTION TO DISMISS.  CA DENIED PETITIONS FOR BEING FILED OUT OF TIME. CA ALSO DENIED THE MOTION TO DISMISS FOR BEING MOOT BECAUSE DBP SUBSEQUENTLY FILED AN ANSWER.

WAS CA CORRECT IN DENYING THE PETITIONS FOR CERTIORARI RE TRO AND INJUNCTION?

 YES, BECAUSE THE PETITIONS WERE FILED OUT OF TIME.

As correctly ruled by the CA, the petition for certiorari assailing the orders pertaining to the grant of the TRO and the writ of injunction were filed out of time.  Notice of the issuance of the TRO was received by DBP on the same day it was granted, November 24, 1998; thus, the petition for certiorari should have been filed not later than January 23, 1999.  The denial of the motion for reconsideration of the order granting the writ of injunction, on the other hand, was received by DBP on March 18, 1999 and thus, it had only until May 17, 1999 to file the petition for certiorari.  DBP, however, filed its petition only on June 23, 1999.

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 WAS THE DENIAL OF THE MOTION TO DISMISS CORRECT?

YES BUT NOT BECAUSE IT WAS MOOT BUT BECAUSE ITS WAS WITHOUT MERIT SINCE THE COMPLAINT OF CRISTINA STATES A CAUSE OF ACTION.

Evidently, all the above elements of a cause of action are alleged in the complaint: (1) the legal right of the respondent over the subject property foreclosed premised on the fact that she is the sole heir of one of the owners who is entitled to the right of redemption; (2) the correlative obligation of defendant DBP, as the foreclosing entity, to respect such right of redemption; and (3) the act or omission of the defendant in violation of the legal right, i.e., the act of DBP and its co-defendant Zarate to cause the ostensible foreclosure of the subject property and the subsequent execution of a deed of conditional sale between the defendants even prior to the lapse of redemption period to deprive respondent’s mother of her right over the property.

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 WHAT IS CAUSE OF ACTION?

A CAUSE OF ACTION IS THE ACT OR OMISSION BY WHICH A PARTY VIOLATES A RIGHT OF ANOTHER.^[1][24]

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WHEN DOES A COMPLAINT STATES A CAUSE OF ACTION?

WHEN IT CONTAINS THREE ESSENTIAL ELEMENTS:

(1) A RIGHT IN FAVOR OF THE PLAINTIFF BY WHATEVER MEANS AND WHATEVER LAW IT ARISES;

(2) THE CORRELATIVE OBLIGATION OF THE DEFENDANT TO RESPECT SUCH RIGHT; AND

(3) THE ACT OR OMISSION OF THE DEFENDANT VIOLATES THE RIGHT OF THE PLAINTIFF. 

IF ANY OF THESE ELEMENTS IS ABSENT, THE COMPLAINT BECOMES VULNERABLE TO A MOTION TO DISMISS ON THE GROUND OF FAILURE TO STATE A CAUSE OF ACTION.^[2][25]

A cause of action is the act or omission by which a party violates a right of another.^[3][24]  A complaint states a cause of action when it contains three essential elements: (1) a right in favor of the plaintiff by whatever means and whatever law it arises; (2) the correlative obligation of the defendant to respect such right; and (3) the act or omission of the defendant violates the right of the plaintiff.  If any of these elements is absent, the complaint becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of action.^[4][25]

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FIRST DIVISION

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RESOLUTION

VILLARAMA, JR., J.:

Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, seeking to set aside the July 21, 2003 Decision^[5][1] of the Court of Appeals (CA) in CA-G.R. SP No. 53825 dismissing petitioner’s petition for certiorari.

The antecedents follow:

Corazon Zarate Romero and his brother Gonzalo Zarate co-owned a property covered by Transfer Certificate of Title (TCT) No. 10070^[6][2] of the Register of Deeds of Dagupan City.  The subject property, located inDagupanCity,Province ofPangasinan, is a 1,705-square-meter lot with a four-storey hotel erected thereon.

It appears that sometime in 1975, Corazon and Gonzalo obtained a loan from petitioner Development Bank of the Philippines (DBP).  As collateral, they executed a real estate mortgage^[7][3] over the subject property in favor of DBP.  On the alleged failure of the two borrowers to pay their amortizations, DBP foreclosed the real estate mortgage onSeptember 15, 1983.  Purportedly, no redemption was made within one year, and thus, DBP consolidated ownership over the subject property.

In March 1993, when Corazon passed away, her sole heir, her daughter respondent Cristina Trinidad Zarate Romero, asserted ownership over the subject property to the extent of one-half thereof.  However, respondent discovered that the property was already registered as early as June 13, 1989in the name of DBP under TCT No. 54142,^[8][4] with TCT No10070 in the names of her mother and uncle already cancelled.

Respondent filed before the Regional Trial Court (RTC) of DagupanCitya complaint^[9][5] for reconveyance, quieting of title and damages with prayer for a temporary restraining order (TRO) and writ of preliminary injunction to prevent DBP from conducting any auction sale on the subject property during the pendency of the case.  Respondent claimed that her uncle and DBP conspired in committing fraudulent acts relative to their true transaction and concealed the same from her mother, thereby depriving her of her right of redemption.

The RTC, after hearing, issued on November 24, 1998, a TRO^[10][6] restraining DBP from proceeding with its scheduled auction of the disputed property onNovember 25, 1998.  The dispositive portion of the trial court’s order reads:

It appearing that plaintiff Cristina Trinidad Romero y Zarate is the sole heir of the late Maria Corazon Zarate Romero[,] co-owner of the ½ pro[-]indiviso of the property covered by TCT No. 10070 which at present is carried in TCT No.54142 inthe name of DBP[,] and to avoid irreparable damage that may arise [from] the auction sale (public bidding) scheduled on November 25, 1998[,] this Court hereby issues a Temporary Restraining Order (TRO) AGAINST DEFENDANT Development Bank of the Philippines, Makati, Metro Manila from proceeding [with] the scheduled auction sale (public bidding) on November 25, 1998 at defendant’s head office at SAM BCG for a period of twenty (20) days from receipt of this order.

SO ORDERED.^[11][7]

DBP moved to lift the TRO arguing that it violates Section 2^[12][8] of Presidential Decree (P.D.) No. 385^[13][9] which prohibits the issuance of a restraining order, temporary or permanent, against government financing institutions like DBP to enjoin any action taken pursuant to the mandatory foreclosure clause of the decree.^[14][10]

On December 14, 1998, the RTC denied DBP’s motion to lift the TRO and granted respondent’s plea for an injunctive writ.^[15][11] The pertinent portions of the trial court’s order reads:

To the honest evaluation of this Court what is unrestrainable is the right of government financial institutions to foreclose mandatorily all loans with arrearages including interest and charges amounting to at least twenty (20%) percent of the total outstanding obligation.

x x x x

 To allay the fears of the plaintiff and to avoid any irreparable damage that may arise while the issues involved in the above case are still being resolved and determined by the Court in the light of the evidence so f[a]r presented, [considering that] there is a tendency on the part of the Development Bank of the Philippines of continuing the acts complained of (auction sale/Public bidding) and considering further [that] there [should] be no advantage … given to one [party] to the prejudice of the other while this case is still pending in Court, it is hereby ordered that a WRIT of Preliminary Injunction be issued against defendant Development Bank of the Philippines from conducting any auction sale of the property involved in the above case (formerly covered by TCT No. 10070 and at [present] covered by TCT No. 54142), upon posting  of a BOND by the plaintiff in the amount of P3 Million within five (5) days from receipt of this Order.^[16][12]

On even date, DBP moved to reconsider^[17][13] the December 14, 1998 Order and at the same time sought the dismissal of respondent’s complaint on the sole ground that the same states no cause of action.^[18][14]

On December 23, 1998, the writ of preliminary injunction^[19][15] was issued in favor of respondent.

On March 8, 1999, the RTC denied DBP’s motion for reconsideration of the denial of its motion for the lifting of the TRO.  The RTC likewise denied in the same order DBP’s motion to dismiss the complaint,^[20][16] and ordered DBP to file an answer.

On March 23, 1999, DBP moved to reconsider the March 8, 1999denial of its motion to dismiss.^[21][17]  But even before the RTC could resolve said motion, DBP filed its Answer^[22][18] on April 5, 1999.  A manifestation^[23][19] was later filed by DBP indicating that the answer it filed was a mere cautionary measure or what is known as an answer ad cautelam and thus without prejudice to any right of action it may take and without any waiver of any of the grounds for the dismissal of the complaint and any favorable resolution or order that a superior court may issue hereinafter.

On April 20, 1999, the RTC issued an order^[24][20] denying DBP’s motion for reconsideration of itsMarch 8, 1999 Order.  The RTC in the same order emphasized that DBP already filed an answer thereby rendering the motion to dismiss moot and academic.

On June 23, 1999, DBP filed a petition for certiorari^[25][21] before the CA assailing the following issuances of the RTC:

(1)              TRO datedNovember 24, 1998(received by DBP onNovember 24, 1998) issued against DBP enjoining it from proceeding with the scheduled auction sale of the disputed property;

(2)              Order datedDecember 14, 1998(received by DBP onDecember 16, 1998) denying its motion to lift the TRO and granting the respondents’ prayer for a writ of preliminary injunction;

(3)              Order datedMarch 8, 1999(received by DBP onMarch 18, 1999) denying DBP’s motion to dismiss and motion for reconsideration of theDecember 14, 1998Order; and

(4)              Order datedApril 20, 1999(received by DBP onApril 23, 1999) denying DBP’s motion for reconsideration of theMarch 8, 1999order.

In its assailed decision, the CA dismissed the petition on procedural grounds.  It held that the petition questioning the first three orders was filed late as the petition should have been filed within 60 days from receipt of the assailed orders.  The CA noted that as regards the third order, DBP was notified of the denial of its motion for reconsideration of the December 14, 1998 Order on March 18, 1999 and thus only had until May 17, 1999 to question the same.  The CA further stated that DBP’s subsequent filing of its Answer to the complaint rendered its motion to dismiss moot and academic.

Hence, the present appeal.

DBP raises the following issues for this Court’s consideration:

I.          WHETHER … THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE ORDER OF THE COURT A QUO … DENYING DBP’S MOTION TO DISMISS….

II.         WHETHER … THE COURT OF APPEALS GRAVELY ERRED IN AFFIRMING THE ORDER OF THE COURT A QUO … ISSUING THE TEMPORARY RESTRAINING ORDER AND THE PRELIMINARY INJUNCTION AGAINST PETITIONER DBP.

III.       WHETHER … THE RULES OF PROCEDURE [SHOULD NOT] BE APPLIED IN A VERY RIGID AND TECHNICAL SENSE SO AS NOT TO FRUSTRATE THE PROMOTION OF SUBSTANTIAL JUSTICE.^[26][22]

DBP insists that it is evident from the face of the complaint that respondent failed to state a cause of action.  DBP contends that respondent’s allegation of conspiracy between DBP and Gonzalo is bare and has no factual basis to stand on.  Further, DBP claims that respondent has no legal right over the subject property as she did not inherit the same in the first place.  At the time of death of respondent’s mother, the property was not anymore owned by the latter and therefore not part of her estate.  Thus, respondent has no legal right over the property and has no cause of action against DBP.  And because she had no right to the property, the issuance of the TRO and injunctive writ were likewise improper.  DBP also points to the following provisions of P.D. No. 385 that were allegedly violated with the issuance of the TRO and injunctive writ:

Section 1.  It shall be mandatory for government financial institutions, after the lapse of sixty (60) days from the issuance of this Decree, to foreclose the collaterals and/or securities for any loan, credit, accommodation, and/or guarantees granted by them whenever the arrearages on such account, including accrued interest and other charges, amount to at least twenty percent (20%) of the total outstanding obligations, including interest and other charges, as appearing in the books of account and/or related records of the financial institution concerned.  This shall be without prejudice to the exercise by the government financial institutions of such rights and/or remedies available to them under their respective contracts with their debtors, including the right to foreclose on loans, credits, accommodations and/or guarantees on which the arrearages are less than twenty percent (20%).

Sec. 2. No restraining order, temporary or permanent injunction shall be issued by the court against any government financial institution in any action taken by such institution in compliance with the mandatory foreclosure provided in Section 1 hereof, whether such restraining order, temporary or permanent injunction is sought by the borrower(s) or any third party or parties, except after due hearing in which it is established by the borrower and admitted by the government financial institution concerned that twenty percent (20%) of the outstanding arrearages has been paid after the filing of foreclosure proceedings.

x x x x

Respondent, for her part, counters that the CA was correct in dismissing the petition for certiorari for having been filed beyond the sixty (60)-day reglementary period.  Also, respondent contends that the provisions of P.D. No. 385 relating to the proscription against the issuance of injunctive writs enjoining foreclosure sales are not applicable in the instant case.  She points out that what the RTC enjoined is not an auction sale arising from the foreclosure of mortgage as the subject property had long been foreclosed and title thereto consolidated in the name of DBP.  Rather, what the RTC enjoined was DBP’s sale of the subject property through ordinary public bidding which is not within the ambit of P.D. No. 385.

The petition should be denied.

As correctly ruled by the CA, the petition for certiorari assailing the orders pertaining to the grant of the TRO and the writ of injunction were filed out of time.  Notice of the issuance of the TRO was received by DBP on the same day it was granted,November 24, 1998; thus, the petition for certiorari should have been filed not later thanJanuary 23, 1999.  The denial of the motion for reconsideration of the order granting the writ of injunction, on the other hand, was received by DBP on March 18, 1999 and thus, it had only until May 17, 1999 to file the petition for certiorari.  DBP, however, filed its petition only onJune 23, 1999.

As to DBP’s motion to dismiss the complaint, we agree with the RTC and CA that the same should be denied, but not for the reason cited by said courts that it has been rendered moot and academic by DBP’s filing of its answer but because the same lacks merit.  Contrary to DBP’s submission, a perusal of the allegations of the complaint clearly reveals respondent’s cause of action against DBP.  The complaint states,

x x x x

1.1  Plaintiff is the sole heir and successor-in-interest of the late Ma. Corazon Zarate-Romero, who died intestate on6 March 1993.

x x x x

3.  During her lifetime, plaintiff’s predecessor-in-interest was the erstwhile owner pro-indiviso of that parcel of land, together with improvements, located in Dagupan City, which property used to be covered by Transfer Certificate of Title (TCT) No. 10070 of the Registry of Deeds of Dagupan City….

4.  In or about the year 1975, defendant Zarate, who was co-owner of the subject property, secured various personal loan obligations from the defendant DBP in the aggregate amount of P2,000,000.00.

4.1  To secure such putative loan obligations of the defendant Zarate, the latter, who wielded moral ascendancy over his younger sister and herein plaintiff’s predecessor-in-interest — Ma. Corazon Zarate-Romero, cajoled and prevailed upon the latter to mortgage the entirety of the subject property in favor of defendant DBP, including her one-half (1/2) pro-indiviso share in the same.

4.2  Accordingly, defendant Zarate assured the plaintiff’s predecessor-in-interest that the mortgage would be for a brief period only and that he (defendant Zarate) would forthwith pay and settle in full all his personal loan obligations with the defendant DBP to ensure that said mortgage is cancelled in the soonest time possible.

5.  At some point in time during the effectivity of the mortgage, however, defendant Zarate apparently saw an opportunity to claim the entirety of the subject property for himself, to the exclusion of plaintiff’s predecessor-in-interest.

5.1  Emboldened by, and taking advantage of, the complete trust and confidence reposed upon him by the plaintiff’s predecessor-in-interest anent the subject property, defendant Zarate conspired with the defendant DBP for the ostensible foreclosure of the subject property, with the end in view, however, of subsequently reacquiring the same for himself as sole owner.

6.  Pursuant to such sinister plot hatched by defendants, defendant DBP foreclosed the subject property in September of 1983 and, thereafter, bought the same for itself in the sum of P2,253,101.00 during the auction sale conducted by the Deputy Sheriff of Pangasinan….

7.  Significantly enough, and even before the lapse of the mortgagors’ right of redemption over the subject property, the herein defendants entered into a Deed of Conditional Sale over the same, with the defendant DBP as seller, and the defendant Zarate as buyer….

7.1  Needless to state, all the aforedescribed dealings, transactions and proceedings concerning the subject property — from its fraudulent foreclosure up to the highly anomalous execution of the Deed of Conditional Sale over the same — were concealed from plaintiff’s predecessor-in-interest and even from the plaintiff herself after the death of her mother.

x x x x^[27][23]

A cause of action is the act or omission by which a party violates a right of another.^[28][24]  A complaint states a cause of action when it contains three essential elements: (1) a right in favor of the plaintiff by whatever means and whatever law it arises; (2) the correlative obligation of the defendant to respect such right; and (3) the act or omission of the defendant violates the right of the plaintiff.  If any of these elements is absent, the complaint becomes vulnerable to a motion to dismiss on the ground of failure to state a cause of action.^[29][25]

Evidently, all the above elements of a cause of action are alleged in the complaint: (1) the legal right of the respondent over the subject property foreclosed premised on the fact that she is the sole heir of one of the owners who is entitled to the right of redemption; (2) the correlative obligation of defendant DBP, as the foreclosing entity, to respect such right of redemption; and (3) the act or omission of the defendant in violation of the legal right, i.e., the act of DBP and its co-defendant Zarate to cause the ostensible foreclosure of the subject property and the subsequent execution of a deed of conditional sale between the defendants even prior to the lapse of redemption period to deprive respondent’s mother of her right over the property.

WHEREFORE, the petition is DENIED for lack of merit.  The Decision dated July 21, 2003 of the Court of Appeals in CA-G.R. SP No. 53825 is AFFIRMED.

No costs.

SO ORDERED.

C E R T I F I C A T I O N

          Pursuant to Section 13, Article VIII of the 1987 Constitution, I certify that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Court’s Division.

CASE 2011-0185: ROMAN CATHOLIC ARCHBISHOP OF SAN FERNANDO, PAMPANGA represented herein by the incumbent Archbishop VS. EDUARDO SORIANO, JR., EDNA YALUN, EVANGELINA ABLAZA, FELICIDAD Y. URBINA, FELIX SALENGA, REYNALDO I. MALLARI, MARCIANA B. BARCOMA, BIENVENIDO PANGANIBAN, BRIGIDA NAVARRO, EUFRANCIA T. FLORES, VICTORIA B. SUDSOD, EUFRONIO CAPARAS, CRISANTO MANANSALA, LILY MASANGCAY, BENJAMIN GUINTO, JR., MARTHA G. CASTRO and LINO TOLENTINO (G.R. NO. 153829); BENJAMIN GUINTO, JR. VS. ROMAN CATHOLIC ARCHBISHOP OF SAN FERNANDO, PAMPANGA represented herein by the incumbent Archbishop (G.R. NO. 160909) (17 AUGUST 2011, VILLARAMA, JR., J.) SUBJECTS: MOTION TO DISMISS; COLATERAL AND DIRECT ATTACKS; MISJOINDER OF CAUSES OF ACTION; INJUNCTION. (BRIEF TITLE: ROMAN CATHOLIC ARCH. VS. SORIANO)

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DISPOSITIVE:

WHEREFORE, the petition in G.R. No. 153829 is DENIED.  The Decision dated March 18, 2002 and the Resolution dated May 30, 2002 of the Court of Appeals in CA-G.R. SP No. 66974 are AFFIRMED.  The motion for the issuance of a TRO and/or writ of preliminary injunction to enjoin the sheriff from enforcing the writ of execution in Civil Case No. 2000(23) is likewise DENIED for lack of merit.   

        No costs.

SO ORDERED.

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SUBJECT/DOCTRINE/DIGEST:

RESPONDENTS FILED CASE AGAINST ROMAN CATHOLIC ARCHBISHOP (RCA) OF SAN FERNANDO FOR QUIETING OF TITLE. RCA FILED MOTION TO DISMISS. RTC DENIED. CA UPHELD RTC. RCA FILED PETITION FOR CERTIORARI. IS CERTIORARI THE PROPER REMEDY?

NO. THE DISMISSAL OF A MOTION TO DISMISS CANNOT BE QUESTIONED IN A CERTIORARI PROCEEDING.

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WHY?

BECAUSE CERTIORARI WRIT IS A REMEDY TO CORRECT ERROR OF JURISDICTION AND NOT ERROR OF JUDGMENT.

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WHAT IS THE APPROPRIATE COURSE OF ACTION?

TO FILE AN ANSWER AND INTERPOSE AS AFFIRMATIVE DEFENSE THE OBJECTIONS RAISED IN THE MOTION TO DISMISS.

Well-entrenched in our jurisdiction is the rule that the trial court’s denial of a motion to dismiss cannot be questioned in a certiorari proceeding under Rule 65 of the 1997 Rules of Civil Procedure, as amended.  This is because a certiorari writ is a remedy designed to correct errors of jurisdiction and not errors of judgment. The appropriate course of action of the movant in such event is to file an answer and interpose as affirmative defenses the objections raised in the motion to dismiss.  If, later, the decision of the trial judge is adverse, the movant may then elevate on appeal the same issues raised in the motion.^[1][27]  

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IS THERE AN EXCEPTION TO THE RULE THAT MOTION TO DISMISS CANNOT BE QUESTIONED ON CERTIORARI?

YES. WHEN THE TRIAL COURT GRAVELY ABUSED ITS DISCRETION IN DENYING THE MOTION.^[2][28] THIS EXCEPTION IS, NEVERTHELESS, APPLIED SPARINGLY, AND ONLY IN INSTANCES WHEN THERE IS A CLEAR SHOWING THAT THE TRIAL COURT EXERCISED ITS JUDICIAL POWER IN AN ARBITRARY OR DESPOTIC MANNER BY REASON OF PASSION OR PERSONAL HOSTILITY.

        The only exception to this rule is when the trial court gravely abused its discretion in denying the motion.^[3][28] This exception is, nevertheless, applied sparingly, and only in instances when there is a clear showing that the trial court exercised its judicial power in an arbitrary or despotic manner by reason of passion or personal hostility.^[4][29] Further, the abuse of the court’s discretion must be so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform the duty enjoined by, or to act at all in contemplation of, law.^[5][30]

        Here, in dismissing the petition for certiorari, the CA did not find grave abuse of discretion on the part of the RTC.  The appellate court was not convinced with the RCA’s argument that plaintiffs failed to comply with the condition precedent provided in Article 477^[6][31] of the Civil Code because they allegedly did not have legal or equitable title to, or interest in the real property.  The CA explained that the requirement stated in Article 477 is not a condition precedent before one can file an action for quieting of title.  Rather, it is a requisite for an action to quiet title to prosper and the existence or nonexistence of the requisite should be determined only after trial on the merits.   The CA also agreed with the trial court in ruling that the RCA cannot raise in a motion to dismiss the ground that the complaint is already barred by laches for it still remains to be established during trial how long the plaintiffs have slept on their rights, if such be the case.  Evidently, the CA is correct in finding that the denial by the RTC of the RCA’s motion to dismiss is not tainted with grave abuse of discretion. 

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RCA ARGUES THAT THERE IS MISJOINDER OF CAUSES OF ACTION BECAUSE QUIETING OF TITLE IS SPECIAL CIVIL ACTION        WHILE DECLARATION OF NULLITY IS GOVERNED BY ORDINARY RULES. BOTH RELIEFS ARE BEING SOUGHT BY RESPONDENTS. THEREFORE THE CASE SHOULD HAVE BEEN DISMISSED. IS RCA CORRECT?

NO. SECTION 6 OF RULE 2 EXPLICITLY PROVIDES THAT MISJOINDER OF CAUSES OF ACTION IS NOT A GROUND FOR DISMISSAL OF AN ACTION.

Next, the RCA submits that an action for quieting of title is a special civil action covered by Rule 63, while an action for declaration of nullity of title is governed by ordinary rules.  Thus, it contends that these cases should have been dismissed for violation of the rule on joinder of actions under Section 5, Rule 2 of the 1997 Rules of Civil Procedure, as amended, which requires that the joinder shall not include special civil actions governed by special rules.  Such contention, however, is utterly bereft of merit and insufficient to show that the CA erred in upholding the trial court’s decision. Section 6 of Rule 2 explicitly provides that misjoinder of causes of action is not a ground for dismissal of an action.

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RCA ASSERTS THAT QUIETING OF TITLE IS COLLATERAL ATTACK ON ITS TITLE PROHIBITED BY LAW. IS RCA CORRECT?

NO. THE ACTION  FOR THE DECLARATION OF NULLITY OF OCT NO. 17629 IS A CLEAR AND DIRECT ATTACK ON THE  TITLE.

        The RCA likewise asserts that the case for quieting of title is a collateral attack on its title which is prohibited by law.  However, we agree with the CA in holding that the complaint against the RCA does not amount to a collateral attack because the action for the declaration of nullity of OCT No. 17629 is a clear and direct attack on its title.

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WHEN IS THERE DIRECT ATTACK?

WHEN THE OBJECTIVE IS TO ANNUL OR SET ASIDE SUCH JUDGMENT, OR ENJOIN ITS ENFORCEMENT.

X XXXXXXXXXXXXXXXXXXXX

WHEN IS AN ATTACK ON TITLE COLLATERAL?

WHEN THE ATTACK IS ONLY AN INCIDENT IN A CASE PRAYING FOR A DIFFERENT RELIEF.

An action is deemed an attack on a title when its objective is to nullify the title, thereby challenging the judgment pursuant to which the title was decreed.  The attack is direct when the objective is to annul or set aside such judgment, or enjoin its enforcement.  On the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof.^[7][32]

        The complaint filed with the RTC pertinently alleged that the claim of ownership by the RCA is spurious as its title, denominated as OCT No. 17629, is fake for the following reasons: (1) that the erasures are very apparent and the title itself is fake; (2) it was made to appear under Memorandum of Encumbrance Entry No. 1007 that the title is a reconstituted title when in truth, it is not; and (3) the verification reveals that there was no petition filed before any court where an order was issued for the reconstitution and re-issuance of an owner’s duplicate copy.^[8][33]  It is thus clear from the foregoing that the case filed questioning the genuineness of OCT No. 17629 is a direct attack on the title of the RCA.

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RCA WON EJECTMENT CASE. PETITIONER GUINTO PRAYS FOR PRELIMINARY INJUNCTION TO PREVENT THE  SHERIFF FROM ENFORCING EJECTMENT WRIT. IS THERE BASIS FOR PRELIM INJUNCTION?

NO. THEIR RIGHT TO POSSESSION HAS BEEN DECLARED INFERIOR TO THAT OF RCA BY THE MTC DECISION AND SUCH DECISION HAS BECOME FINAL.

As regards the petition docketed as G.R. No. 160909 which this Court treated as motion for the issuance of a TRO and/or writ of preliminary injunction, Guinto insists that there is a need to enjoin the sheriff from enforcing the writ of execution as it would cause grave and irreparable damage to Guinto, while the RCA would not suffer any damage if it would later be proved that indeed its title is genuine.  

        We disagree.

        Section 3, Rule 58 of the 1997 Rules of Civil Procedure, as amended, 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 nonperformance 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:^[9][34]

          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.

        In this case, the defendants in the ejectment case possess no such legal rights that merit the protection of the courts through the writ of preliminary injunction.  The MCTC has already rendered a decision in favor of the RCA and ordered the defendants therein to vacate the premises.  Their appeal to the RTC was dismissed and the decision has become final.  Evidently, their right to possess the property in question has already been declared inferior or inexistent in relation to the right of the RCA in the MCTC decision which has already become final and executory.^[10][35]

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FIRST DIVISION

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DECISION

VILLARAMA, JR., J.:

Before this Court are two petitions for resolution: the first, a Petition for Review on Certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended, filed by the Roman Catholic Archbishop (RCA) of San Fernando, Pampanga, assailing the March 18, 2002 Decision^[12][2] and the May 30, 2002 Resolution^[13][3] of the Court of Appeals (CA) in CA-G.R. SP No. 66974; and the second, a Petition for Injunction under Rule 58, filed by Benjamin Guinto, Jr. (Guinto), seeking to enjoin the implementation of the Writ of Execution^[14][4] dated October 14, 2003, issued by the Municipal Circuit Trial Court (MCTC) of Macabebe-Masantol, Pampanga in Civil Case No. 2000(23).

          The facts follow:

          The RCA of San Fernando, Pampanga, represented by Most Rev. Paciano B. Aniceto, D.D., claimed that it is the owner of a vast tract of land located near the Catholic Church at Poblacion, Macabebe, Pampanga and covered by Original Certificate of Title (OCT) No. 17629 issued by the Registry of Deeds of San Fernando on February 21, 1929.^[15][5]   The RCA alleged that several individuals unlawfully occupied the subject land and refused to vacate despite repeated demands.  Having no other recourse, the RCA filed an ejectment case, docketed as Civil Case No. 2000(23), before the MCTC of Macabebe-Masantol, Pampanga against the alleged intruders, namely, Leocadio and Rufina Reyes, Jose Balagtas, Marcial and Victoria Balagtas, Levita Naluz, Dionisio Barcoma, Felicidad Urbina, Justiniano Reyes, Lawrence Muniz, Eduardo Soriano, Cosmer Vergara, Perlita Bustos, Brigida Navarro, Leonoda Cruz, Leonida Manansala, Angelito Juliano, Eduardo Ibay, Edna Yalung, Reynaldo Mallari, Lily Masangcay, Evangelina Ablaza, Crisanto Manansala, Feliza Esguerra, Gloria Manansala, Bienvenido and Felicisima Panganiban, Ofroneo Caparas, Tino Enriquez, Elizabeth and Benjamin Guinto, Felix Salenga, Eleno and Rosala Salenga, Luisa and Domingo Sison, Francia Flores, Eduardo and Rosita Gutierrez, Zosima and Ener Basilio, Andy and Loreto Bonifacio, Peter and Felicisima Villajuan.^[16][6] 

          On the other hand, defendants countered that the RCA has no cause of action against them because its title is spurious. They contended that the subject land belonged to the State, but they have already acquired the same by acquisitive prescription as they and their predecessors-in-interest have been in continuous possession of the land for more than thirty (30) years.  

          After considering the pleadings submitted by the parties, the MCTC rendered decision on September 28, 2001 in favor of the RCA. The trial court held that OCT No. 17629 in the name of the RCA remains valid and binding against the whole world until it is declared void by a court of competent jurisdiction. Thus, defendants were ordered to vacate the premises and to pay reasonable monthly rentals from August 15, 2000 until they shall have finally vacated the premises.^[17][7] 

          Defendants appealed to the Regional Trial Court (RTC).  However, the appeal was dismissed because of their failure to file the appeal memorandum.  When defendants elevated the case to the CA, their petition for certiorari was not given due course for failure to file the same within the extended period.  Hence, the decision ejecting the defendants from the premises became final.

          Pursuant to Section 21,^[18][8] Rule 70 of the 1997 Rules of Civil Procedure, as amended, the RCA filed an Urgent Motion for Immediate Issuance of a Writ of Execution, which the MCTC granted in an Order^[19][9] dated February 10, 2003, as follows:

          WHEREFORE, on the basis of the rules and jurisprudence aforecited, the Motion for Execution filed by plaintiff is hereby granted.  Let a writ of execution be issued in connection with this case which is a ministerial duty of the Court. 

            Defendants’ Motion for Inhibition is denied for lack of merit.

            SO ORDERED.^[20][10]   

          Thereafter, the MCTC issued another Order dated October 6, 2003, the pertinent portion of which states:

          Let a writ of execution be issued to implement the Decision dated September 28, 2001.

            No further defendants’ motion to stay execution shall be entertained.

            SO ORDERED.^[21][11]

          Accordingly, a writ of execution^[22][12] was issued commanding the sheriff or his deputies to implement the MCTC Decision.  Thus, Sheriff Edgar Joseph C. David sent the defendants a Notice to Vacate^[23][13] dated December 8, 2003. 

          Seeking to enjoin the implementation of the writ of execution and the notice to vacate, Guinto filed the instant Petition for Injunction with Prayer for Issuance of a Temporary Restraining Order (TRO),^[24][14] docketed as G.R. No. 160909.

Meanwhile, during the pendency of the ejectment case at the MCTC, some of the defendants therein, namely, Eduardo Soriano, Jr., Edna Yalun, Evangelina Ablaza, Felicidad Y. Urbina, Felix Salenga, Reynaldo I. Mallari, Marciana B. Barcoma, Bienvenido Panganiban, Brigida Navarro, Eufrancia T. Flores, Victoria B. Sodsod, Eufronio Caparas, Crisanto Manansala, Lily Masangcay, Benjamin Guinto, Jr., Martha G. Castro and Lino Tolentino filed Civil Case No. 01-1046(M) against the RCA for Quieting of Title and Declaration of Nullity of Title before the RTC of Macabebe, Pampanga.^[25][15] They claimed that they are in actual possession of the land in the concept of owners and alleged that OCT No. 17629 in the name of RCA is spurious and fake. 

Before filing its Answer, the RCA moved to dismiss the case on grounds of noncompliance with a condition precedent, laches, and for being a collateral attack on its title.  The RCA likewise later filed a supplement to its motion to dismiss. 

In an Order^[26][16] dated June 4, 2001, the RTC denied the motion to dismiss reasoning that when the rules speak of noncompliance with a condition precedent, it could refer only to the failure of a party to secure the appropriate certificate to file action under the Local Government Code, or the failure to exert earnest efforts towards an amicable settlement when the suit involves members of the same family.  The RTC also found that plaintiffs have a cause of action.  Furthermore, the trial court held that RCA’s argument – that the property cannot be acquired by prescription because it has title over it – is a matter of evidence which may be established during the trial on the merits.

Aggrieved, the RCA filed a motion for reconsideration, which the trial court denied in an Order^[27][17] dated July 24, 2001.  Thereafter, the RCA filed with the CA a petition for certiorari with prayer for preliminary injunction.^[28][18]

          On March 18, 2002, the CA promulgated the assailed Decision,^[29][19] the dispositive portion of which reads:

            WHEREFORE, for lack of merit, the petition is hereby DISMISSED.

            SO ORDERED.^[30][20]

          A motion for reconsideration^[31][21] of the Decision was filed by the RCA. However, in the Resolution^[32][22] dated May 30, 2002, the CA denied the motion for lack of merit.  Hence, the RCA filed the present petition for review on certiorari,^[33][23] docketed as G.R. No. 153829, assailing the Decision of the CA, as well as its Resolution denying the motion for reconsideration. 

          On January 14, 2004, we resolved to consolidate G.R. Nos. 160909 and 153829.^[34][24]  Subsequently, the Court resolved to treat the petition for injunction with prayer for the issuance of a TRO in G.R. No. 160909 as a motion for the issuance of a TRO and/or writ of preliminary injunction in G.R. No. 153829.^[35][25]

The RCA raises the following issues:

(A)             WHETHER OR NOT CIVIL CASE NO. 01-1046(M) FOR QUIETING OF TITLE AND DECLARATION OF NULLITY OF TITLE IS LEGALLY DISMISSIBLE FOR VIOLATION OF THE VARIOUS PROVISIONS OF THE RULES OF COURT;

and

(B)  WHETHER OR NOT THE CIVIL ACTION (THE ABOVE MENTIONED CIVIL CASE NO. 01-1046[M]) FILED BY PRIVATE RESPONDENTS CONSTITUTES A COLLATERAL ATTACK ON PETITIONER’S TITLE.^[36][26]               

          Essentially, the issue before us is whether the CA erred in not holding that the RTC committed grave abuse of discretion in denying the motion to dismiss filed by the RCA.

          We affirm the ruling of the CA.

          Well-entrenched in our jurisdiction is the rule that the trial court’s denial of a motion to dismiss cannot be questioned in a certiorari proceeding under Rule 65 of the 1997 Rules of Civil Procedure, as amended.  This is because a certiorari writ is a remedy designed to correct errors of jurisdiction and not errors of judgment. The appropriate course of action of the movant in such event is to file an answer and interpose as affirmative defenses the objections raised in the motion to dismiss.  If, later, the decision of the trial judge is adverse, the movant may then elevate on appeal the same issues raised in the motion.^[37][27]

          The only exception to this rule is when the trial court gravely abused its discretion in denying the motion.^[38][28] This exception is, nevertheless, applied sparingly, and only in instances when there is a clear showing that the trial court exercised its judicial power in an arbitrary or despotic manner by reason of passion or personal hostility.^[39][29] Further, the abuse of the court’s discretion must be so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform the duty enjoined by, or to act at all in contemplation of, law.^[40][30]

          Here, in dismissing the petition for certiorari, the CA did not find grave abuse of discretion on the part of the RTC.  The appellate court was not convinced with the RCA’s argument that plaintiffs failed to comply with the condition precedent provided in Article 477^[41][31] of the Civil Code because they allegedly did not have legal or equitable title to, or interest in the real property.  The CA explained that the requirement stated in Article 477 is not a condition precedent before one can file an action for quieting of title.  Rather, it is a requisite for an action to quiet title to prosper and the existence or nonexistence of the requisite should be determined only after trial on the merits.   The CA also agreed with the trial court in ruling that the RCA cannot raise in a motion to dismiss the ground that the complaint is already barred by laches for it still remains to be established during trial how long the plaintiffs have slept on their rights, if such be the case.  Evidently, the CA is correct in finding that the denial by the RTC of the RCA’s motion to dismiss is not tainted with grave abuse of discretion. 

          Next, the RCA submits that an action for quieting of title is a special civil action covered by Rule 63, while an action for declaration of nullity of title is governed by ordinary rules.  Thus, it contends that these cases should have been dismissed for violation of the rule on joinder of actions under Section 5, Rule 2 of the 1997 Rules of Civil Procedure, as amended, which requires that the joinder shall not include special civil actions governed by special rules.  Such contention, however, is utterly bereft of merit and insufficient to show that the CA erred in upholding the trial court’s decision. Section 6 of Rule 2 explicitly provides that misjoinder of causes of action is not a ground for dismissal of an action.

          The RCA likewise asserts that the case for quieting of title is a collateral attack on its title which is prohibited by law.  However, we agree with the CA in holding that the complaint against the RCA does not amount to a collateral attack because the action for the declaration of nullity of OCT No. 17629 is a clear and direct attack on its title.

          An action is deemed an attack on a title when its objective is to nullify the title, thereby challenging the judgment pursuant to which the title was decreed.  The attack is direct when the objective is to annul or set aside such judgment, or enjoin its enforcement.  On the other hand, the attack is indirect or collateral when, in an action to obtain a different relief, an attack on the judgment is nevertheless made as an incident thereof.^[42][32]

          The complaint filed with the RTC pertinently alleged that the claim of ownership by the RCA is spurious as its title, denominated as OCT No. 17629, is fake for the following reasons: (1) that the erasures are very apparent and the title itself is fake; (2) it was made to appear under Memorandum of Encumbrance Entry No. 1007 that the title is a reconstituted title when in truth, it is not; and (3) the verification reveals that there was no petition filed before any court where an order was issued for the reconstitution and re-issuance of an owner’s duplicate copy.^[43][33]  It is thus clear from the foregoing that the case filed questioning the genuineness of OCT No. 17629 is a direct attack on the title of the RCA.

          As regards the petition docketed as G.R. No. 160909 which this Court treated as motion for the issuance of a TRO and/or writ of preliminary injunction, Guinto insists that there is a need to enjoin the sheriff from enforcing the writ of execution as it would cause grave and irreparable damage to Guinto, while the RCA would not suffer any damage if it would later be proved that indeed its title is genuine.  

          We disagree.

          Section 3, Rule 58 of the 1997 Rules of Civil Procedure, as amended, 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 nonperformance 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:^[44][34]

            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.

          In this case, the defendants in the ejectment case possess no such legal rights that merit the protection of the courts through the writ of preliminary injunction.  The MCTC has already rendered a decision in favor of the RCA and ordered the defendants therein to vacate the premises.  Their appeal to the RTC was dismissed and the decision has become final.  Evidently, their right to possess the property in question has already been declared inferior or inexistent in relation to the right of the RCA in the MCTC decision which has already become final and executory.^[45][35]

          WHEREFORE, the petition in G.R. No. 153829 is DENIED.  The Decision dated March 18, 2002 and the Resolution dated May 30, 2002 of the Court of Appeals in CA-G.R. SP No. 66974 are AFFIRMED.  The motion for the issuance of a TRO and/or writ of preliminary injunction to enjoin the sheriff from enforcing the writ of execution in Civil Case No. 2000(23) is likewise DENIED for lack of merit.   

          No costs.

SO ORDERED.

C E R T I F I C A T I O N

          Pursuant to Section 13, Article VIII of the 1987 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.

CASE 2011-0184: ATIKO TRANS INC. AND CHENGLIE NAVIGATION CO., LTD. VS. PRUDENTIAL GUARANTEE AND ASSURANCE INC. (G.R. NO. 167545, 17 AUGUST 2011, DEL CASTILLO, J.) SUBJECT: COURT JURISDICTION (BRIEF TITLE: ATIKO VS. PRUDENTIAL GUARANTEE)

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DISPOSITIVE:

          WHEREFORE, the instant petition is PARTIALLY GRANTED.  The assailed December 10, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 82547 is AFFIRMED with the MODIFICATION that the judgment insofar as Cheng Lie Navigation Co., Ltd. is concerned is declared VOID for failure to acquire jurisdiction over its person as there was improper service of summons.

          SO ORDERED.

XXXXXXXXXXXXXXXXXXXX

SUBJECT/DOCTRINE/DIGEST

A cursory reading of the issues raised readily reveals that they involve factual matters which are not within the province of this Court to look into. Well-settled is the rule that in petitions for review on certiorari under Rule 45, only questions of law can be raised.  While there are recognized exceptions to this rule,^[1][18]  none is present in this case.  “[A]s a matter of x x x procedure, [this] Court defers and accords finality to the factual findings of trial courts, [especially] when such findings were [affirmed by the RTC and the CA. These] factual determination[s], as a matter of long and sound appellate practice, deserve great weight and shall not be disturbed on appeal x x x.  [I]t is not the function of the Court to analyze and weigh all over again the evidence or premises supportive of the factual holding of the lower courts.”^[2][19]

XXXXXXXXXXXXXXXXXXXXXXX

We are not persuaded.  True, when the defendant is a domestic corporation, service of summons may be made only upon the persons enumerated in Section 11, Rule 14 of the Rules of Court.^[3][20]  However, jurisdiction over the person of the defendant can be acquired not only by proper service of summons but also by defendant’s voluntary appearance without expressly objecting to the court’s jurisdiction, as embodied in Section 20, Rule 14 of the Rules of Court, viz:

SEC. 20. Voluntary appearance. – The defendant’s voluntary appearance in the action shall be equivalent to service of summons.  The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance.

XXXXXXXXXXXXXXXXXXXXXXX

On this score, we find for the petitioners.  Before it was amended by A.M. No. 11-3-6-SC,^[4][30] Section 12 of Rule 14 of the Rules of Court reads:

SEC. 12. Service upon foreign private juridical entity.  – When the defendant is a foreign private juridical entity which has transacted business in the Philippines, service may be made on its resident agent designated in accordance with law for that purpose, or, if there be no such agent, on the government official designated by law to that effect, or on any of its officers or agents within the Philippines.

Elucidating on the above provision of the Rules of Court, this Court declared in Pioneer International, Ltd. v. Guadiz, Jr.^[5][31] that when the defendant is a foreign juridical entity, service of summons may be made upon:

1. Its resident agent designated in accordance with law for that purpose;

1. The government official designated by law to receive summons if the corporation does not have a resident agent; or,

1. Any of the corporation’s officers or agents within thePhilippines.

In the case at bench, no summons was served upon Cheng Lie in any manner prescribed above.  It should be recalled that Atiko was not properly served with summons as the person who received it on behalf of Atiko, cashier Cristina Figueroa, is not one of the corporate officers enumerated in Section 11 of Rule 14 of the Rules of Court.  The MeTC acquired jurisdiction over the person of Atiko not thru valid service of summons but by the latter’s voluntary appearance.  Thus, there being no proper service of summons upon Atiko to speak of, it follows that the MeTC never acquired jurisdiction over the person of Cheng Lie.  To rule otherwise would create an absurd situation where service of summons is valid upon the purported principal but not on the latter’s co-defendant cum putative agent despite the fact that service was coursed thru said agent.  Indeed, in order for the court to acquire jurisdiction over the person of a defendant foreign private juridical entity under Section 12, Rule 14 of the Rules of Court, there must be prior valid service of summons upon the agent of such defendant.

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Republic of thePhilippines

Supreme Court

Manila

FIRST DIVISION

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D E C I S I O N

DEL CASTILLO, J.:

            Where service of summons upon the defendant principal is coursed thru its co-defendant agent, and the latter happens to be a domestic corporation, the rules on service of summons upon a domestic private juridical entity^[6][1] must be strictly complied with.  Otherwise, the court cannot be said to have acquired jurisdiction over the person of both defendants.  And insofar as the principal is concerned, such jurisdictional flaw cannot be cured by the agent’s subsequent voluntary appearance.

            This Petition for Review on Certiorari assails the December 10, 2004 Decision^[7][2] of the Court of Appeals (CA) in CA-G.R. SP No. 82547 which affirmed the April 8, 2003 Decision^[8][3] of the Regional Trial Court (RTC), Branch 150, Makati City.  Said Decision of the RTC affirmed the August 6, 2002 Decision^[9][4] of the Metropolitan Trial Court (MeTC), Branch 63, Makati City, which disposed as follows:

                WHEREFORE, judgment is rendered declaring defendants Cheng Lie Navigation Co., Ltd. and Atiko Trans, Inc. solidarily liable to pay plaintiff Prudential Guarantee & Assurance, Inc. the following amounts:

1. P205,220.97 as actual damages with interest of 1% per month from 14 December 1999 until full payment;

1. P10,000.00 as Attorney’s fees; and

1. Costs of suit.

SO ORDERED.^[10][5]

            Likewise assailed is the CA’s Resolution^[11][6] dated March 16, 2005 which denied the Motion for Reconsideration of the said December 10, 2004 Decision.

Factual Antecedents

            On December 11, 1998, 40 coils of electrolytic tinplates were loaded on board M/S Katjana in Kaohsiung, Taiwanfor shipment to Manila.  The shipment was covered by Bill of Lading No. KNMNI-15126^[12][7] issued by petitioner Cheng Lie Navigation Co., Ltd. (Cheng Lie) with Oriental Tin Can & Metal Sheet Manufacturing Co., Inc. (Oriental) as the notify party.  The cargoes were insured against all risks per Marine Insurance Policy No. 20RN-18749/99 issued by respondent Prudential Guarantee and Assurance, Inc. (Prudential).

On December 14, 1998, M/S Katjana arrived in theportofManila.  Upon discharge of the cargoes, it was found that one of the tinplates was damaged, crumpled and dented on the edges.  The sea van in which it was kept during the voyage was also damaged, presumably while still on board the vessel and during the course of the voyage.

Oriental then filed its claim against the policy.  Satisfied that Oriental’s claim was compensable, Prudential paid Oriental P205,220.97 representing the amount of losses it suffered due to the damaged cargo.

Proceedings before the Metropolitan Trial Court

On December 14, 1999, Prudential filed with the MeTC of Makati City a Complaint^[13][8] for sum of money against Cheng Lie and Atiko Trans, Inc. (Atiko).  In addition to the above undisputed facts, Prudential alleged that:

1. Plaintiff (Prudential) is a domestic insurance corporation duly organized and existing under the laws of thePhilippineswith office address at Coyiuto House, 119 Carlos Palanca[,]Jr. St.,LegaspiVillage,MakatiCity;

1. Defendant Cheng Lie Navigation Co. Ltd., is [a] foreign shipping company doing business in the Philippines [thru] its duly authorized shipagent   defendant Atiko Trans Inc. which is a domestic corporation duly established and created under the laws of the Philippines with office address at 7^th Floor, Victoria Bldg., United Nation[s] Ave., Ermita, Manila, where both defendants may be served with summons and other court processes;

1. At all times material to the cause of action of this complaint, plaintiff was and still is engaged in, among others, marine insurance business; Whereas Defendant Cheng Lie Navigation Co. Ltd. was and still is engaged in, among others, shipping, transportation and freight/cargo forwarding business, and as such, owned, operated and/or chartered the ocean going vessel M/S “Katjana” as common carrier to and from any Philippine [port] in international trade [thru] its duly authorized shipagent defendant Atiko Trans Inc. (Both defendants are hereinafter referred to as the “CARRIER”);     

x x x x

9.     Plaintiff, as cargo-insurer and upon finding that the consignee’s insurance claim was in order and compensable, paid the latter’s claim in the amount of P205,220.97 under and by virtue of the aforesaid insurance policy, thereby subrogating herein plaintiff to all the rights and causes of action appertaining to the consignee against the defendants;^[14][9]

On March 20, 2000, Prudential filed a Motion to Declare Defendant in Default,^[15][10] alleging among others that on March 1, 2000 a copy of the summons was served upon petitioners thru cashier Cristina Figueroa and that despite receipt thereof petitioners failed to file any responsive pleading.  Acting on the motion, the MeTC issued an Order^[16][11] declaring Cheng Lie and Atiko in default and allowing Prudential to present its evidence ex-parte.

On August 6, 2002, the MeTC rendered its judgment by default.  Atiko then filed a Notice of Appeal^[17][12] dated November 4, 2002.

Proceedings before the Regional Trial Court and the Court of Appeals

In its Memorandum of Appeal,^[18][13] Atiko argued that Prudential failed to prove the material allegations of the complaint.  Atiko asserted that Prudential failed to prove by preponderance of evidence that it is a domestic corporation with legal personality to file an action; that Cheng Lie is a private foreign juridical entity operating its shipping business in the Philippines thru Atiko as its shipagent; that Cheng Lie is a common carrier, which owns and operates M/S Katjana; that Prudential was subrogated to the rights of Oriental; and, that Atiko can be held solidarily liable with Cheng Lie. 

Although assisted by the same counsel, Cheng Lie filed its own Memorandum of Appeal^[19][14] maintaining that the MeTC never acquired jurisdiction over its person. 

On April 8, 2003, the RTC rendered its Decision dismissing the appeal and affirming the Decision of the MeTC.  Atiko and Cheng Lie challenged the RTC Decision before the CA via a Petition for Review^[20][15] under Rule 42 of the Rules of Court but the appellate court affirmed the RTC’s Decision.

Hence, this petition.

Issues

In their Memorandum,^[21][16] petitioners raised the following issues:

1. WHETHER X X X THE DECISION OF MAKATI [MeTC] WHICH WAS AFFIRMED BY MAKATI RTC AND THE COURT OF APPEALS IS NULL AND VOID FOR FAILURE TO ACQUIRE JURISDICTION OVER THE PERSONS OF THE PETITIONERS-DEFENDANTS CONSIDERING THAT THE SUMMONS WERE NOT PROPERLY SERVED ON THEM AS REQUIRED BY RULE 14 OF THE RULES OF COURT.

1. WHETHER X X X THE RESPONDENT-PLAINTIFF IS REQUIRED TO PROVE THE MATERIAL ALLEGATIONS IN THE COMPLAINT EVEN IN DEFAULT JUDGMENT OR WHETHER OR NOT IN DEFAULT JUDGMENT, ALL ALLEGATIONS IN THE COMPLAINT ARE DEEMED CONTROVERTED, HENCE, MUST BE PROVED BY COMPETENT EVIDENCE.

2.1.  WHETHER X X X RESPONDENT-PLAINTIFF IS OBLIGED TO PROVE ITS LEGAL PERSONALITY TO SUE EVEN IN DEFAULT JUDGMENT.

2.2.  WHETHER X X X RESPONDENT-PLAINTIFF IS OBLIGED TO PROVE THAT PETITIONER-DEFENDANT ATIKO IS THE SHIPAGENT OF PETITIONER-DEFENDANT CHENG LIE EVEN IN DEFAULT JUDGMENT.

2.3.  WHETHER X X X THE TESTIMONIES OF THE WITNESSES AND THE DOCUMENTARY EXHIBITS CAN BE CONSIDERED FOR PURPOSES OTHER THAN THE PURPOSE FOR WHICH THEY WERE OFFERED.

2.4.  WHETHER X X X A MOTION TO DECLARE DEFENDANT IN DEFAULT ADDRESSED AND SENT TO ONLY ONE OF THE DEFENDANTS WOULD BIND THE OTHER DEFENDANT TO WHOM THE MOTION WAS NOT ADDRESSED AND NOT SENT.^[22][17]

Our Ruling

The petition is partly meritorious.  We shall first tackle the factual matters involved in this case, then proceed with the jurisdictional issues raised.

Petitioners raised factual matters which are not the proper subject of this appeal.

Petitioners contend that the lower courts grievously erred in granting the complaint because, even if they were declared in default, the respondent still has the burden of proving the material allegations in the complaint by preponderance of evidence.  Petitioners further argue that respondent miserably failed to discharge this burden because it failed to present sufficient proof that it is a domestic corporation.  Hence, respondent could not possibly maintain the present action because only natural or juridical persons or entities authorized by law can be parties to a civil action.  Petitioners also claim that respondent failed to present competent proof that Cheng Lie is a foreign shipping company doing business in thePhilippinesthru its duly authorized shipagent Atiko.  Lastly, petitioners assert that respondent failed to prove that Cheng Lie is a common carrier which owned, operated and/or chartered M/S Katjana thru its duly authorized shipagent Atiko.  Petitioners emphasize that there is no proof, testimonial or otherwise, which would support the material allegations of the complaint.  They also insist that respondent’s witnesses do not have personal knowledge of the facts on which they were examined.

Respondent, for its part, assails the propriety of the remedy taken by the petitioners.  It posits that petitioners advanced factual matters which are not the proper subject of a petition for review on certiorari.  Besides, the lower courts consistently held that the allegations in respondent’s complaint are supported by sufficient evidence.

We agree with respondent. 

A cursory reading of the issues raised readily reveals that they involve factual matters which are not within the province of this Court to look into. Well-settled is the rule that in petitions for review on certiorari under Rule 45, only questions of law can be raised.  While there are recognized exceptions to this rule,^[23][18]  none is present in this case.  “[A]s a matter of x x x procedure, [this] Court defers and accords finality to the factual findings of trial courts, [especially] when such findings were [affirmed by the RTC and the CA. These] factual determination[s], as a matter of long and sound appellate practice, deserve great weight and shall not be disturbed on appeal x x x.  [I]t is not the function of the Court to analyze and weigh all over again the evidence or premises supportive of the factual holding of the lower courts.”^[24][19]

MeTC properly acquired jurisdiction over the person of Atiko.

Petitioners also argue that the MeTC did not acquire jurisdiction over the person of Atiko as the summons was received by its cashier, Cristina Figueroa.  They maintain that under Section 11, Rule 14 of the Rules of Court, when the defendant is a domestic corporation like Atiko, summons may be served only upon its president, general manager, corporate secretary, treasurer or in-house counsel. 

We are not persuaded.  True, when the defendant is a domestic corporation, service of summons may be made only upon the persons enumerated in Section 11, Rule 14 of the Rules of Court.^[25][20]  However, jurisdiction over the person of the defendant can be acquired not only by proper service of summons but also by defendant’s voluntary appearance without expressly objecting to the court’s jurisdiction, as embodied in Section 20, Rule 14 of the Rules of Court, viz:

SEC. 20. Voluntary appearance. – The defendant’s voluntary appearance in the action shall be equivalent to service of summons.  The inclusion in a motion to dismiss of other grounds aside from lack of jurisdiction over the person of the defendant shall not be deemed a voluntary appearance.

In the case at bench, when Atiko filed its Notice of Appeal,^[26][21] Memorandum of Appeal,^[27][22] Motion for Reconsideration^[28][23] of the April 8, 2003 Decision of the RTC, and Petition for Review,^[29][24] it never questioned the jurisdiction of the MeTC over its person.  The filing of these pleadings seeking affirmative relief amounted to voluntary appearance and, hence, rendered the alleged lack of jurisdiction moot.  In Palma v. Galvez,^[30][25] this Court reiterated the oft-repeated rule that “the filing of motions seeking affirmative relief, such as, to admit answer, for additional time to file answer, for reconsideration of a default judgment, and to lift order of default with motion for reconsideration, are considered voluntary submission to the jurisdiction of the court.”

Moreover, petitioners’ contention is a mere afterthought.    It was only in their Memorandum^[31][26] filed with this Court where they claimed, for the first time, that Atiko was not properly served with summons.  In La Naval Drug Corporation v. Court of Appeals,^[32][27] it was held that the issue of jurisdiction over the person of the defendant must be seasonably raised.  Failing to do so, a party who invoked the jurisdiction of a court to secure an affirmative relief cannot be allowed to disavow such jurisdiction after unsuccessfully trying to obtain such relief.^[33][28]

It may not be amiss to state too that in our February 13, 2006 Resolution,^[34][29] we reminded the parties that they are not allowed to interject new issues in their memorandum. 

MeTC did not acquire jurisdiction over the person of Cheng Lie.

Petitioners likewise challenge the validity of the service of summons upon Cheng Lie, thru Atiko.  They claim that when the defendant is a foreign private juridical entity which has transacted business in thePhilippines, service of summons may be made, among others, upon its resident agent.  In this case, however, there is no proof that Atiko is the local agent of Cheng Lie.  

On this score, we find for the petitioners.  Before it was amended by A.M. No. 11-3-6-SC,^[35][30] Section 12 of Rule 14 of the Rules of Court reads:

SEC. 12. Service upon foreign private juridical entity.  – When the defendant is a foreign private juridical entity which has transacted business in the Philippines, service may be made on its resident agent designated in accordance with law for that purpose, or, if there be no such agent, on the government official designated by law to that effect, or on any of its officers or agents within the Philippines.

Elucidating on the above provision of the Rules of Court, this Court declared in Pioneer International, Ltd. v. Guadiz, Jr.^[36][31] that when the defendant is a foreign juridical entity, service of summons may be made upon:

1. Its resident agent designated in accordance with law for that purpose;

1. The government official designated by law to receive summons if the corporation does not have a resident agent; or,

1. Any of the corporation’s officers or agents within thePhilippines.

In the case at bench, no summons was served upon Cheng Lie in any manner prescribed above.  It should be recalled that Atiko was not properly served with summons as the person who received it on behalf of Atiko, cashier Cristina Figueroa, is not one of the corporate officers enumerated in Section 11 of Rule 14 of the Rules of Court.  The MeTC acquired jurisdiction over the person of Atiko not thru valid service of summons but by the latter’s voluntary appearance.  Thus, there being no proper service of summons upon Atiko to speak of, it follows that the MeTC never acquired jurisdiction over the person of Cheng Lie.  To rule otherwise would create an absurd situation where service of summons is valid upon the purported principal but not on the latter’s co-defendant cum putative agent despite the fact that service was coursed thru said agent.  Indeed, in order for the court to acquire jurisdiction over the person of a defendant foreign private juridical entity under Section 12, Rule 14 of the Rules of Court, there must be prior valid service of summons upon the agent of such defendant.

Also, the records of this case is bereft of any showing that cashier Cristina Figueroa is a government official designated by law to receive summons on behalf of Cheng Lie or that she is an officer or agent of Cheng Lie within the Philippines.  Hence, her receipt of summons bears no significance insofar as Cheng Lie is concerned.  At this point, we emphasize that the requirements of the rule on summons must be strictly followed,^[37][32] lest we ride roughshod on defendant’s right to due process.^[38][33]

With regard to Cheng Lie’s filing of numerous pleadings, the same cannot be considered as voluntary appearance.  Unlike Atiko, Cheng Lie never sought affirmative relief other than the dismissal of the complaint on the ground of lack of jurisdiction over its person.  From the very beginning, it has consistently questioned the validity of the service of summons and the jurisdiction of the MeTC over its person. 

It does not escape our attention though that Cheng Lie’s pleadings do not indicate that the same were filed by way of special appearance.  But these, to our mind, are mere inaccuracies in the title of the pleadings.  What is important are the allegations contained therein which consistently resisted the jurisdiction of the trial court.  Thus, Cheng Lie cannot be considered to have submitted itself to the jurisdiction of the courts.^[39][34]

In fine, since the MeTC never acquired jurisdiction over the person of Cheng Lie, its decision insofar as Cheng Lie is concerned is void.^[40][35]

Cheng Lie was improperly declared in default.

Applying the above disquisition, the MeTC likewise erred in declaring Cheng Lie in default. Settled is the rule that a defendant cannot be declared in default unless such declaration is preceded by a valid service of summons.^[41][36] 

WHEREFORE, the instant petition is PARTIALLY GRANTED.  The assailed December 10, 2004 Decision of the Court of Appeals in CA-G.R. SP No. 82547 is AFFIRMED with the MODIFICATION that the judgment insofar as Cheng Lie Navigation Co., Ltd. is concerned is declared VOID for failure to acquire jurisdiction over its person as there was improper service of summons.

            SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

WE CONCUR:

RENATO C. CORONA

Chief Justice

Chairperson

MARTIN S. VILLARAMA, JR.

Associate Justice

C E R T I F I C A T I O N

            Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified 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