Category: LATEST SUPREME COURT CASES


CASE  2011-0082: SPOUSES FERNANDO AND ANGELINA EDRALIN VS. PHILIPPINE VETERANS BANK (G.R. NO.  168523, 9 MARCH 2011. DEL CASTILLO, J.)  SUBJECTS: MANDAMUS; MORTGAGEE ENTITLED TO WRIT OF POSSESSION DURING REDEMPTION PERIOD; PACTUM COMISSORIUM; RIGHT TO WRIT OF POSSESSION DOES NOT PRESCRIBE. (BRIEF TITLE: SPOUSES EDRALIN VS. PHIL VETERANS BANK).

 

Republic of the Philippines

Supreme Court

Manila

FIRST DIVISION

SPOUSES FERNANDO and

ANGELINA EDRALIN,

  G.R. No.  168523
     Petitioners,   Present:
    CORONA, C.J., Chairperson,

VELASCO, JR.,

- versus -   LEONARDO-DE CASTRO,
 

 

  DEL CASTILLO, and

PEREZ, JJ.

 

PHILIPPINE VETERANS BANK,

 Respondent.

   

Promulgated:

March 9, 2011

x – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

D E C I S I O N

DEL CASTILLO, J.:

            The right to possess a property follows the right of ownership; consequently, it would be illogical to hold that a person having ownership of a parcel of land is barred from seeking possession thereof.  

                Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,[1] assailing the Decision[2] dated June 10, 2005 of the Court of Appeals (CA) in CA-G.R. SP No. 89248.  The dispositive portion of the assailed Decision reads:

                WHEREFORE, premises considered, the present petition is hereby GIVEN DUE COURSE and the writ prayed for accordingly GRANTED.  The assailed Orders dated November 8, 2004 and January 28, 2005 dismissing the ex-parte petition for issuance of writ of possession and denying petitioner’s motion for reconsideration, respectively, are hereby ANNULLED and SET ASIDE.  Respondent Judge is hereby DIRECTED to issue the writ of possession prayed for by the petitioner Philippine Veterans Bank over the subject property covered by TCT No. 78332 of the Registry of Deeds for Parañaque City, Metro Manila.

                No pronouncement as to costs.

                SO ORDERED.[3]

 

 

Factual Antecedents

 

 

            Respondent Philippine Veterans Bank (Veterans Bank) is a commercial banking institution created under Republic Act (RA) No. 3518,[4] as amended by RA No. 7169.[5] 

            On February 5, 1976, Veterans Bank granted petitioner spouses Fernando and Angelina Edralin (Edralins) a loan in the amount of Two Hundred Seventy Thousand Pesos (P270,000.00).  As security thereof, petitioners executed a Real Estate Mortgage(REM)[6] in favor of Veterans Bank over a real property situated in the Municipality of Parañaque and registered in the name of petitioner Fernando Edralin.  The mortgaged property is more particularly described in Transfer Certificate of Title (TCT) No. 204889.  The REM was registered with the Registry of Deeds of the Province of Rizal.[7]  The REM and its subsequent amendments[8] were all duly annotated at the back of TCT No. 204889.[9] 

            The Edralins failed to pay their obligation to Veterans Bank.  Thus,   on June 28, 1983, Veterans Bank filed a Petition for Extrajudicial Foreclosure[10] of the REM with the Office of the Clerk of Court and Ex-Officio Sheriff of Rizal. 

            In due course, the foreclosure sale was held on September 8, 1983, in which the Ex-Officio Sheriff of Rizal sold the mortgaged property at public auction.  Veterans Bank emerged as the highest bidder at the said foreclosure sale and was issued the corresponding Certificate of Sale.[11]  The said Certificate of Sale was registered with the Registry of Deeds of the Province ofRizal and annotated at the back of TCT No. 204889 under Entry No. 83-62953/T-No. 43153-A on October 25, 1983.[12] 

            Upon the Edralins’ failure to redeem the property during the one-year period provided under Act No. 3135, Veterans Bank acquired absolute ownership of the subject property.  Consequently, Veterans Bank caused the consolidation of ownership of the subject property in its name on January 19, 1994.[13]  The Register of Deeds of Parañaque, Metro Manila cancelled TCT No. 204889 under the name of Fernando Edralin and replaced it with a new transfer certificate of title, TCT No. 78332,[14] in the name of Veterans Bank on February 3, 1994.

            Despite the foregoing, the Edralins failed to vacate and surrender possession of the subject property to Veterans Bank. Thus, on May 24, 1996, Veterans Bank filed an Ex-Parte Petition for the Issuance of a Writ of Possession, docketed as Land Registration Case (LRC) No. 06-060 before Branch 274 of the Regional Trial Court (RTC) of Parañaque City.  The same, however, was dismissed for Veterans Bank’s failure to prosecute.[15]

            On July 29, 2003, Veterans Bank again filed an Ex-Parte Petition for Issuance of Writ of Possession,[16] this time docketed as Land Registration Case No. 03-0121, before the RTC of Parañaque City.  Veterans Bank divulged in its Certification against Forum-Shopping[17] that the earlier case, LRC No. 96-060, involving the same subject matter and parties, was dismissed. 

            The Edralins moved to dismiss[18] the petition on the ground that the dismissal of LRC No. 96-060 constituted res judicata.

Ruling of the Regional Trial Court

            The trial court denied the motion to dismiss explaining that the ground of failure to present evidence is not a determination of the merits of the case hence does not constitute res judicata on the petition for issuance of a writ of possession.[19]

            Nevertheless, the trial court found no merit in the Veterans Bank’s application and dismissed the same in its Order dated November 8, 2004.[20]  The trial court explained that, under paragraph (d) of the REM, the Veterans Bank agreed to take possession of the Edralins’ property without any judicial intervention.  The court held that granting the writ of possession to the Veterans Bank will violate the contractual agreement of the parties.  Paragraph (d) reads:

                (d)  Effective upon the breach of any condition of this mortgage and in addition to the remedies herein stipulated, the Mortgagee is hereby likewise appointed attorney-in-fact of the Mortgagor with full powers and authority, with the use of force, if necessary to take actual possession of the mortgaged property, without the necessity of any judicial order or any permission, or power, to collect rents, to eject tenants, to lease or sell the mortgaged property or any part thereof, at a private sale without previous notice or advertisement of any kind and execute the corresponding bills of sale, lease or other agreement that may be deemed convenient, to make repairs or improvements on the mortgaged property and pay for the same and perform any other act which the Mortgagee may deem convenient for the proper administration of the mortgaged property.  The payment of any expenses advanced by the Mortgagee in connection with the purposes indicated herein is also guaranteed by this Mortgage and such amount advanced shall bear interest at the rate of 12% per annum.  Any amount received from sale, disposal or administration above-mentioned may be applied to the payment of the repairs, improvements, taxes and any other incidental expenses and obligations and also the payment of the original indebtedness and interest thereof.  The power herein granted shall not be revoked during the life of this mortgage, and all acts that may be executed by the Mortgagee by virtue of said power are hereby ratified.  In addition to the foregoing, the Mortgagor also hereby agrees, that the Auditor General shall withhold any money due or which may become due the Mortgagor or debtor from the Government or from any of its instrumentalities, except those exempted by law from attachment or execution, and apply the same in settlement of any and all amount due to the Mortgagee;[21]

            The trial court held that, assuming the contract allowed for the issuance of a writ of possession, Veterans Bank’s right to seek possession had already prescribed.  Without citing authority and adequate explanation, the court held that Veterans Bank had only 10 years from February 24, 1983 to seek possession of the property. 

            Veterans Bank moved for the reconsideration[22] of the adverse decision.  It directed the court’s attention to paragraph (c) of the real estate mortgage, which expressly granted the mortgagee the right to avail itself of the remedy of extrajudicial foreclosure in case of the mortgagor’s default.  Paragraph (c) reads:

                (c)  If at any time the Mortgagor shall fail or refuse to pay the obligations herein secured, or any of the amortizations of such indebtedness when due, or to comply with any of the conditions and stipulations herein agreed, or shall, during the time this mortgage is in force, institute insolvency proceedings or be involuntarily declared insolvent, or shall use the proceeds of this loan for purposes other than those specified herein, or if this mortgage cannot be recorded in the corresponding Registry of Deeds, then all the obligations of the Mortgagor secured by this Mortgage and all the amortization thereof shall immediately become due, payable and defaulted, and the Mortgagee may immediately foreclose this mortgage judicially in accordance with the Rules of Court, or extra-judicially in accordance with Act No. 3135, as amended, and under Act 2612, as amended.  For the purpose of extra-judicial foreclosure the Mortgagor hereby appoints the Mortgagee his attorney-in-fact to sell the property mortgaged under Act No. 3135, as amended, to sign all documents and perform any act requisite and necessary to accomplish said purpose and to appoint its substitutes as such attorney-in-fact with the same powers as above specified. x x x[23]

            The motion for reconsideration was set for hearing on January 28, 2005.  Due to a conflict of schedule, Veterans Bank’s counsel moved[24] to reset the hearing on its motion.  In apparent denial of the motion to reset, the trial court proceeded to deny Veterans Bank’s motion for reconsideration in the Order dated January 28, 2005.[25]  The trial court reiterated that paragraph (d) of the REM allowed Veterans Bank to take immediate possession of the property without need of a judicial order.  It would be redundant for the court to issue a writ of possession in its favor. 

            This prompted Veterans Bank to file a Petition for Mandamus with Prayer for Issuance of a Preliminary Mandatory Injunction[26] before the CA.

            First among its arguments, Veterans Bank maintained that it was the trial court’s ministerial duty[27] to grant a writ of possession to the mortgagee who has consolidated and registered the property in its name. 

            Veterans Bank then assailed the trial court’s holding that its right to a writ of possession had already prescribed.  Respondent maintained that the writ can be issued at any time after the mortgagor failed to redeem the foreclosed property.[28]

            Lastly, Veterans Bank argued that, contrary to the trial court’s finding, it did not contract away its right to an extrajudicial foreclosure under Act No. 3135, as amended, by the inclusion of paragraph (d) in the REM.  Veterans Bank pointed out that, as evidenced by paragraph (c) of the REM, it expressly reserved the right to avail of the remedies under Act No. 3135.[29]

Ruling of the Court of Appeals[30]

 

            The appellate court ruled in favor of Veterans Bank. 

            It held that the contractual provision in paragraph (d) to immediately take possession of the mortgaged property without need of judicial intervention is distinct from the right to avail of extrajudicial foreclosure under Section 7 of Act No. 3135, which was expressly reserved by Veterans Bank in paragraph (c) of the REM.  The fact that the two paragraphs do not negate each other is evidenced by the qualifying phrase “in addition to the remedies herein stipulated” found in paragraph (c). 

            Having availed itself of the remedy of extrajudicial foreclosure, Veterans Bank, as the highest bidder, has the right to a writ of possession.  This right may be availed of any time after the buyer consolidates ownership.  In fact, the issuance of the writ of possession is a ministerial function, the right to which cannot be enjoined or stayed, even by an action for annulment of the mortgage or the foreclosure sale itself. 

            The trial court’s ruling that Veterans Bank’s right to possess has prescribed is likewise erroneous.  As already stated, Veterans Bank’s right to possess the property is not based on their contract but on Act No. 3135. 

            Since the issuance of a writ of possession is a ministerial act of the trial judge, mandamus lies to compel the performance of the said duty.            

 

            Petitioners immediately filed this petition for review. 

Issues

 

            Petitioners submit the following issues for our consideration:

1.  Whether mandamus was resorted to as a substitute for a lost appeal

2.  Whether mandamus is the proper remedy to seek a review of the final orders of the trial court

3.  Whether the consolidation of ownership of the extrajudicially foreclosed property through a Deed of Sale is in accordance with law

4.  Whether the issuance of a writ of possession under Act [No.] 3135 is subject to the statute of limitations[31]

Our Ruling

 

Propriety of the Remedy of Mandamus

 

 

            Petitioners argue that Veterans Bank availed itself of the remedy of mandamus as a substitute for a lost appeal.[32] Petitioners narrate the relevant dates that allegedly show the belatedness and impropriety of the petition for mandamus.  Veterans Bank received the Order dated November 8, 2004 on November 18, 2004, thus it had until December 3, 2004 to file a motion for reconsideration.  Since December 3, 2004 was declared a non-working holiday, Veterans Bank filed its motion for reconsideration on the next working day, December 6, 2004.  With the said dates, it had only one day left from receipt of the January 28, 2005 Order, or until February 10, 2005, to file an appeal (citing Section 2, Rule 22) of the Rules of Court.  Since Veterans Bank did not file an appeal on the following day, it had lost its right to appeal and the assailed orders allegedly attained finality.   

            Respondent counters that the issuance of a writ of possession is not an ordinary action for which the rules on appeal apply. The writ being a mere motion or an order of execution, appeal is not the proper remedy to question the trial court’s ruling.  In fact, Section 1, Rule 41 of the Rules of Court provides that no appeal may be taken from an order of execution, but Rule 65 special civil actions are available.[33]  Given that the issuance of the writ of possession is a ministerial act of the judge, respondent maintains that a petition for mandamus is the proper remedy.

            Respondent adds that, even if appeal were available, the same is not the plain, speedy and adequate remedy to compel the performance of the ministerial act.[34]  Respondent maintains that Section 3 of Rule 65 recognizes that the remedy of mandamus is available in conjunction with an appeal.  The qualifying phrase “and there is no appeal [available],” which appears in certiorari and prohibition petitions, is conspicuously missing for petitions for mandamus. 

            We rule that mandamus is a proper remedy to compel the issuance of a writ of possession.  The purpose of mandamus is to compel the performance of a ministerial duty.  A ministerial act is “one which an officer or tribunal performs in a given state of facts, in a prescribed manner, in obedience to the mandate of legal authority, without regard to or the exercise of his own judgment upon the propriety or impropriety of the act done.”[35] 

            The issuance of a writ of possession is outlined in Section 7 of Act No. 3135, as amended by Act No. 4118, which provides:

SEC. 7. In any sale made under the provisions of this Act, the purchaser may petition the Court of First Instance of the province or place where the property or any part thereof is situated, to give him possession thereof during the redemption period, furnishing bond in an amount equivalent to the use of the property for a period of twelve months, to indemnify the debtor in case it be shown that the sale was made without violating the mortgage or without complying with the requirements of [this] Act. Such petition shall be made under oath and filed in form of an ex parte motion x x x and the court shall, upon approval of the bond, order that a writ of possession issue, addressed to the sheriff of the province in which the property is situated, who shall execute said order immediately.

During the period of redemption, the mortgagee is entitled to a writ of possession upon depositing the approved bond.  When the redemption period expires without the mortgagor exercising his right of redemption, the mortgagor is deemed to have lost all interest over the foreclosed property, and the purchaser acquires absolute ownership of the property.   The purchaser’s right is aptly described thus:

Consequently, the purchaser, who has a right to possession after the expiration of the redemption period, becomes the absolute owner of the property when no redemption is made.  In this regard, the bond is no longer needed.  The purchaser can demand possession at any time following the consolidation of ownership in his name and the issuance to him of a new TCT.  After consolidation of title in the purchaser’s name for failure of the mortgagor to redeem the property, the purchaser’s right to possession ripens into the absolute right of a confirmed owner.  At that point, the issuance of a writ of possession, upon proper application and proof of title becomes merely a ministerial function. Effectively, the court cannot exercise its discretion.

                Therefore, the issuance by the RTC of a writ of possession in favor of the respondent in this case is proper.  We have consistently held that the duty of the trial court to grant a writ of possession in such instances is ministerial, and the court may not exercise discretion or judgment x x x[36]

With the consolidated title, the purchaser becomes entitled to a writ of possession and the trial court has the ministerial duty to issue such writ of possession.[37]  Thus, “the remedy of mandamus lies to compel the performance of [this] ministerial duty.”[38] 

Does the charter of Veterans Bank prohibit extrajudicial foreclosures?

 

 

            Petitioners then assail Veterans Bank’s power to extrajudicially foreclose on mortgages.  They maintain that the legislature intended to limit Veterans Bank to judicial foreclosures only,[39] citing Section 18 of the Veterans Bank’s charter, RA No. 3518, which provides:

Section 18.  Right of redemption of property foreclosed.  – The mortgagor shall have the right, within one year after the sale of the real estate as a result of the foreclosure of a mortgage, to redeem the property by paying the amount fixed by the court in the order of execution, with interest thereon at the rate specified in the mortgage, and all the costs and other judicial expenses incurred by the Bank by reason of the execution and sale, and for the custody of said property.

            Respondent counters that the inclusion of the phrase “fixed by the Court” in Section 18 of RA No. 3518 does not necessarily mean that only judicial foreclosures are available to Veterans Bank.  Moreover, resort to an extrajudicial foreclosure was voluntarily entered into by the contracting parties in their REM.[40] 

            There is no merit in petitioners’ contention. 

            The aforequoted Section 18 grants to mortgagors of Veterans Bank the right to redeem their judicially foreclosed properties. This provision had to be included because in judicial foreclosures, mortgagors generally do not have the right of redemption unless there is an express grant by law.[41]    

            But, contrary to petitioners’ averments, there is nothing in Section 18 which can be interpreted to mean that Veterans Bank is limited to judicial foreclosures only, or that it cannot avail itself of the benefits provided under Act No. 3135,[42] as amended, allowing extrajudicial foreclosures.

            Moreover, the availability of extra-judicial foreclosure to a mortgagee depends upon the agreement of the contracting parties. Section 1 of Act No. 3135 provides:

Section 1.  When a sale is made under a special power inserted in or attached to any real-estate mortgage hereafter made as security for the payment of money or the fulfillment of any other obligation, the provisions of the following sections shall govern as to the manner in which the sale and redemption shall be effected, whether or not provision for the same is made in the power.  (Emphasis supplied.)

In the case at bar, paragraph (c) of the parties’ REM granted Veterans Bank the special power as attorney-in-fact of the petitioners to perform all acts necessary for the purpose of extrajudicial foreclosure under Act No. 3135.  Thus, there is no obstacle preventing Veterans Bank from availing itself of the remedy of extrajudicial foreclosure.

Was the consolidation of title done in accordance with law?

 

 

            Petitioners argue that Veterans Bank is not entitled to a writ of possession because it failed to properly consolidate its title over the subject property.[43]  They maintain that the Deed of Sale executed by the Veterans Bank in the bank’s own favor during the consolidation of title constitutes a pactum commissorium, which is prohibited under Article 2088 of the Civil Code.[44]

            Respondent contends that petitioners never questioned the validity of the foreclosure proceedings or the auction sale.  The failure to do so resulted in the ripening of the consolidation of ownership.[45]

There is no merit in petitioners’ argument. 

            Pactum commissorium is “a stipulation empowering the creditor to appropriate the thing given as guaranty for the fulfillment of the obligation in the event the obligor fails to live up to his undertakings, without further formality, such as foreclosure proceedings, and a public sale.”[46]  “The elements of pactum commissorium, which enable the mortgagee to acquire ownership of the mortgaged property without the need of any foreclosure proceedings, are: (1) there should be a property mortgaged by way of security for the payment of the principal obligation, and (2) there should be a stipulation for automatic appropriation by the creditor of the thing mortgaged in case of non-payment of the principal obligation within the stipulated period.”[47] 

            The second element is missing to characterize the Deed of Sale as a form of pactum commissorium. Veterans Bank did not, upon the petitioners’ default, automatically acquire or appropriate the mortgaged property for itself.  On the contrary, the Veterans Bank resorted to extrajudicial foreclosure and was issued a Certificate of Sale by the sheriff as proof of its purchase of the subject property during the foreclosure sale.  That Veterans Bank went through all the stages of extrajudicial foreclosure indicates that there was no pactum commissorium.

 

Does the right to a writ of possession prescribe?

 

 

            Petitioners assail the CA’s ruling that the issuance of a writ of possession does not prescribe.[48]  They maintain that Articles 1139,[49] 1149,[50] and 1150[51] of the Civil Code regarding prescriptive periods cover all kinds of action, which necessarily include the issuance of a writ of possession. Petitioners posit that, for purposes of the latter, it is the five-year prescriptive period provided in Article 1149 of the Civil Code which applies because Act No. 3135 itself did not provide for its prescriptive period. Thus, Veterans Bank had only five years from September 12, 1983, the date when the Certificate of Sale was issued in its favor, to move for the issuance of a writ of possession.[52]

            Respondent argues that jurisprudence has consistently held that a registered owner of the land, such as the buyer in an auction sale, is entitled to a writ of possession at any time after the consolidation of ownership.[53] 

            We cannot accept petitioners’ contention.  We have held before that the purchaser’s right “to request for the issuance of the writ of possession of the land never prescribes.”[54]  “The right to possess a property merely follows the right of ownership,”[55]and it would be illogical to hold that a person having ownership of a parcel of  land is barred from seeking possession thereof.  InCalacala v. Republic of the Philippines,[56] the Republic was the highest bidder in the public auction but failed for a long period of time to execute an Affidavit of Consolidation and to seek a writ of possession.  Calacala insisted that, by such inaction, the Republic’s right over the land had prescribed, been abandoned or waived. The Court’s language in rejecting Calacala’s theory is illuminating:

[T]he Republic’s failure to execute the acts referred to by the petitioners within ten (10) years from the registration of the Certificate of Sale cannot, in any way, operate to restore whatever rights petitioners’ predecessors-in-interest had over the same.  For sure, petitioners have yet to cite any provision of law or rule of jurisprudence, and we are not aware of any, to the effect that the failure of a buyer in a foreclosure sale to secure a Certificate of Final Sale, execute an Affidavit of Consolidation of Ownership and obtain a writ of possession over the property thus acquired, within ten (10) years from the registration of the Certificate of Sale will operate to bring ownership back to him whose property has been previously foreclosed and sold.  x x x

                x x x x

                Moreover, with the rule that the expiration of the 1-year redemption period forecloses the obligors’ right to redeem and that the sale thereby becomes absolute, the issuance thereafter of a final deed of sale is at best a mere formality and mere confirmation of the title that is already vested in the purchaser. x x x[57]

            Moreover, the provisions cited by petitioners refer to prescription of actions.  An action is “defined as an ordinary suit in a court of justice, by which one party prosecutes another for the enforcement or protection of a right, or the prevention or redress of a wrong.”[58]  On the other hand “[a] petition for the issuance of the writ, under Section 7 of Act No. 3135, as amended, is not an ordinary action filed in court, by which one party ‘sues another for the enforcement or protection of a right, or prevention or redress of a wrong.’  It is in the nature of an ex parte motion [in] which the court hears only one side.  It is taken or granted at the instance and for the benefit of one party, and without notice to or consent by any party adversely affected.  Accordingly, upon the filing of a proper motion by the purchaser in a foreclosure sale, and the approval of the corresponding bond, the writ of possession issues as a matter of course and the trial court has no discretion on this matter.”[59]

            WHEREFORE, premises considered, the Petition is DENIED for lack of merit.  The CA Decision dated June 10, 2005 in CA-G.R. SP No. 89248 is AFFIRMED.

SO ORDERED.

                                     MARIANO C. DEL CASTILLO

             Associate Justice

WE CONCUR:

 

 

RENATO C. CORONA

Chief Justice

Chairperson

 

 

 

 

 

 

 

 

PRESBITERO J. VELASCO, JR.

Associate Justice

TERESITA LEONARDO-DE CASTRO  

Associate Justice       

 

 

 

JOSE PORTUGAL PEREZ

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


[1]       Rollo, pp. 8-28.

[2]       CA rollo, pp. 195-207.

[3]       CA Decision, p. 12; id. at 206.

[4]       An Act Creating the Philippine Veterans Bank, and For Other Purposes.

[5]       An Act to Rehabilitate the Philippine Veterans Bank Created Under Republic Act No. 3518, Providing the Mechanisms Therefor, and For Other Purposes.

[6]       CA rollo, pp. 70-71.

[7]       Id. at 68-69.

[8]       Id. at 72-73.

[9]       Entry Nos. 24991/S-19595, 39423/S-19595, 52016/S-19595 (id. at 69).

[10]     Id. at 76.  Notice of Extrajudicial Sale appears on page 77 of the CA rollo. 

[11]     Id. at 79.

[12]     Entry No. 83-62953 (id. at 69). 

[13]     Entry No. 3139 Affidavit of Consolidation (id., back of p. 69); id. at 80-81.

[14]     Id. at 82.

[15]     Respondent’s Memorandum, p. 7; rollo, p. 300.

[16]     CA rollo, pp. 83-91.

[17]     Id. at 88.

[18]     Id. at 41-42.

[19]     Order dated July 13, 2004 (id. at 123).

[20]     Id. at 43-46; penned by Judge Brigido Artemon M. Luna.

[21]     Id., dorsal portion, p. 70.

[22]     Id. at 49-58.

[23]     Id., dorsal portion of p. 70.

[24]     Rollo, pp. 155-160.

[25]     CA rollo, pp. 47-48.

[26]     Id. at 2-38.

[27]     Petition in CA-G.R. SP No. 89248, pp. 14-17; id. at 15-18.

[28]     Id. at 27-31; id. at 28-32.  

[29]     Id. at 20-25; id. at 21-26.

[30]     Id. at 195-207; penned by Associate Justice Martin S. Villarama, Jr. and concurred in by Associate Justices Lucas P. Bersamin and Lucenito N. Tagle.

[31]     Petitioners’ Memorandum, p. 10; rollo, p. 334.

[32]     Id. at 11-12; id. at 335-336.

[33]     Respondent’s Memorandum, pp. 18-21; id. at 311-314.

[34]     Id. at 22-23; id. at 315-316.

[35]     FERIA AND NOCHE, CIVIL PROCEDURE ANNOTATED, Vol. II (2001 ed.), p. 487.

[36]     Saguan v. Philippine Bank of Communications, G.R. No. 159882, November 23, 2007, 538 SCRA 390, 396-397. Emphasis supplied.

[37]     Bank of the Philippine Islands v. Tarampi, G.R. No. 174988, December 10, 2008, 573 SCRA 537, 543; Fernandez v. Espinoza, G.R. No. 156421, April 14, 2008, 551 SCRA 136, 150-151;Spouses Carpo v. Chua, 508 Phil. 462, 477-478 (2005); Philippine National Bank v. Sanao Marketing Corporation, 503 Phil. 260, 274-275 (2005).

[38]     Spouses Carpo v. Chua, 508 Phil. 462, 477 (2005).

[39]     Petitioners’ Memorandum, pp. 13-14; rollo, pp. 337-338.

[40]     Respondent’s Memorandum, p. 28; id. at 321.

[41]     Rule 68 (Foreclosure of Real Estate Mortgage), “Sec. 3.  Sale of mortgaged property; effect. —  x x x Such sale shall not affect the rights of persons holding prior encumbrances upon the property or a part thereof, and when confirmed by an order of the court, also upon motion, it shall operate to divest the rights in the property of all the parties to the action and to vest their rights in the purchaser, subject to such rights of redemption as may be allowed by law.” See Limpin v. Intermediate Appellate Court, 248 Phil. 318, 325-326 (1988).

[42]     An Act to Regulate the Sale of Property under Special Powers Inserted in or Annexed to Real-Estate Mortgages.

[43]     Petitioners’ Memorandum, p. 14; rollo, p. 338.

[44]     Id.

[45]     Respondent’s Memorandum, pp. 26-27; rollo, pp. 319-320.

[46]     PENA, REGISTRATION OF LAND TITLES AND DEEDS (2008 ed.), p. 351.

[47]     Ong v. Roban Lending Corporation, G.R. No. 172592, July 9, 2008, 557 SCRA 516, 524. Emphasis supplied.

[48]     Petitioners’ Memorandum, pp. 24-25; rollo, pp. 339-340.

[49]     CIVIL CODE, Article 1139.  Actions prescribe by the mere lapse of time fixed by law.

[50]     CIVIL CODE, Article 1149.  All other actions whose periods are not fixed in this Code or in other laws must be brought within five years from the time the right of action accrues.

[51]     CIVIL CODE, Article 1150.  The time for prescription for all kinds of actions, when there is no special provision which ordains otherwise, shall be counted from the day they may be brought.

[52]     Petitioners’ Memorandum, pp. 25-26; rollo, pp. 349-350.

[53]     Respondent’s Memorandum, pp. 24-25; id. at 317-318.

[54]     Spouses Paderes v. Court of Appeals, 502 Phil. 76, 97 (2005), citing Rodil v. Judge Benedicto, 184 Phil. 108 (1980).

[55]     Metropolitan Bank and Trust Co. v. Santos, G.R. No. 157867, December 15, 2009, 608 SCRA 222, 234.

[56]     502 Phil. 680 (2005).

[57]     Id. at 689-691.

[58]     Metropolitan Bank and Trust Co. v. Santos, supra note 55 at 236, citing Ancheta v. Metropolitan Bank and Trust Company, Inc., 507 Phil. 161 (2005).

[59]     Metropolitan Bank and Trust Co. v. BanceG.R. No. 167280, April 30, 2008, 553 SCRA 507, 515-516. Emphasis supplied.

 

CASE NO. 2011-0081: HEIRS OF JOSE MARCIAL K. OCHOA NAMELY: RUBY B. OCHOA, MICAELA B. OCHOA AND JOMAR B. OCHOA VS. G & S TRANSPORT CORPORATION (G.R. NO. 170071); G & S TRANSPORT CORPORATION VS.  HEIRS OF JOSE MARCIAL K. OCHOA NAMELY: RUBY B. OCHOA, MICAELA B. OCHOA AND JOMAR B. OCHOA (G.R. NO.  170125, 9 MARCH 2011, DEL CASTILLO, J.) (SUBECTS: WRECKLESS IMPRUDENCE; CONTRACT OF CARRIAGE; LOSS OF INCOME, HOW COMPUTED; MORAL DAMAGES; FACTUAL FINDINGS DEEMED FINAL. (BRIEF TITLE: HEIRS OF OCHOA VS. G& S TRANSPORT. 

 

   

Republic of the Philippines

Supreme Court

Manila

FIRST DIVISION

HEIRS OF JOSE MARCIAL K. OCHOA namely: RUBY B. OCHOA, MICAELA B. OCHOA and JOMAR B. OCHOA,

                               Petitioners,

 

versus-

 

G & S TRANSPORT CORPORATION,

                            Respondent.

x – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

 

G & S TRANSPORT CORPORATION,

                            Petitioner,

  G.R. No. 170071

 

 

 

 

 

 

 

 

 

 

 

G.R. No.  170125

    Present:
- versus -   CORONA, C. J., Chairperson,
    VELASCO, JR.,
 

HEIRS OF JOSE MARCIAL K. OCHOA namely: RUBY B. OCHOA, MICAELA B. OCHOA and JOMAR B. OCHOA,

                               Respondents.

  LEONARDO-DE CASTRO,

DEL CASTILLO, and,

PEREZ, JJ.

 

Promulgated:

March 9, 2011

x – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – –  – – – – – – – – – – – – – – – – – x

D E C I S I O N

 

DEL CASTILLO, J.:

 

            An accident which claimed the life of a passenger is the root of these two petitions – one brought before us by the common carrier and the other by the heirs of the deceased.

            These consolidated Petitions for Review on Certiorari assail the Court of Appeals’ (CA) Decision[1] dated June 29, 2005 in CA-G.R. CV No. 75602 which affirmed with modification the December 21, 2001 Decision and March 5, 2002 Order of the trial court.  Likewise assailed is the Resolution[2] dated October 12, 2005 denying the parties’ respective Motions for Reconsideration thereto.

Factual Antecedents

 

            Jose Marcial K. Ochoa (Jose Marcial) died on the night of March 10, 1995 while on board an Avis taxicab owned and operated by G & S Transport Corporation (G & S), a common carrier.  As narrated by the trial court, the circumstances attending Jose Marcial’s death are as follows:

It appears that sometime in the evening of March 10, 1995, at the Manila Domestic Airport, the late Jose Marcial K. Ochoa boarded and rode a taxicab with Plate No. PKR-534, a passenger vehicle for hire owned and operated by defendant corporation under the business name “Avis Coupon Taxi” (Avis) and driven by its employee and authorized driver Bibiano Padilla, Jr. on his way home to Teacher’s Village, Diliman, Quezon City.

At about 11:00 p.m., the taxicab was cruising along Epifanio delos Santos Avenue [EDSA], in front of Camp Aguinaldo in Quezon City at high speed.  While going up the Boni Serrano (Santolan) fly-over, it overtook another cab driven by Pablo Clave and tried to pass another vehicle, a ten-wheeler cargo truck.  Because of the narrow space between the left side railing of the fly-over and the ten-wheeler truck, the Avis cab was unable to pass and because of its speed, its driver (Padilla) was unable to control it.  To avoid colliding with the truck, Padilla turned the wheel to the left causing his taxicab to ram the railing throwing itself off the fly-over and fell on the middle surface of EDSA below.  The forceful drop of the vehicle on the floor of the road broke and split it into two parts.  Both driver Padilla and passenger Jose Marcial K. Ochoa were injured and rushed to the hospital.  At the East Avenue Medical Center, Ochoa was not as lucky as Padilla who was alive.  He was declared dead on arrival from the accident.  The death certificate issued by the Office of the Civil Registrar of Quezon City cited the cause of his death as vehicular accident.[3]

On May 13, 1999, Jose Marcial’s wife, Ruby Bueno Ochoa, and his two minor children, Micaela B. Ochoa and Jomar B. Ochoa (the heirs), through counsel, sent G & S a letter[4] demanding that the latter indemnify them for Jose Marcial’s death, his loss of earning capacity, and funeral expenses in the total amount of P15,000,000.00.  As G & S failed to heed the same, the heirs filed aComplaint[5] for Damages before the Regional Trial Court (RTC) of Pasig City which was raffled to Branch 164 of said court.

The heirs alleged that G & S, as a common carrier, is under legal obligation to observe and exercise extraordinary diligence in transporting its passengers to their destination safely and securely. However, G & S failed to observe and exercise this extraordinary diligence because its employee failed to transport Jose Marcial to his destination safely.  They averred that G & S is liable to them for having breached the contract of common carriage.  As an alternative cause of action, they asserted that G & S is likewise liable for damages based on quasi-delict pursuant to Article 2180[6] in relation to Article 2176[7] of the Civil Code.  The heirs thus prayed for G & S to pay them actual damages, moral damages, exemplary damages, and attorney’s fees and expenses of litigation.

            In its Answer With Compulsory Counterclaims,[8] G & S claimed that Jose Marcial boarded an Avis taxicab driven by its employee, Bibiano Padilla (Padilla), at the Domestic Airport to bring him to Teacher’s Village in Quezon City.  While passing the Santolan fly-over, however, the Avis taxicab was bumped by an on-rushing delivery van at the right portion causing the taxicab to veer to the left, ram through the left side of the railings of the fly-over and fall to the center of the island below.  The taxicab was split into two and Jose Marcial was thrown 10 meters away.  G & S posited that the proximate cause of  Jose Marcial’s  death is a

fortuitous event and/or the fault or negligence of the driver of the delivery van that hit the taxicab.  It likewise claimed that it exercised the diligence required of a good father of a family in the selection and supervision of its employees including Padilla.  By way of compulsory counterclaim, G & S sought to recover from the heirs the amount of P300,000.00 as attorney’s fees and costs of suit.

Ruling of the Regional Trial Court

On December 27, 2001, the trial court rendered a Decision[9] finding the vehicular mishap not caused by a fortuitous event but by the negligence of Padilla.  It likewise found the evidence adduced by G & S to show that it exercised the diligence of a good father of a family in the selection and supervision of its employees as insufficient.  Hence, the trial court declared G & S civilly liable to the heirs.  However, for lack of receipts or any proof of funeral expenses and other actual damages, the trial court denied the heirs’ claim for actual damages.  It also denied them moral and exemplary damages for lack of legal basis. The dispositive portion of said Decision reads:

            WHEREFORE, defendant is hereby adjudged guilty of breach of contract of carriage and is ordered to pay plaintiffs the following amounts:

1.              P50,000.00 as civil indemnity for the death of deceased Jose Marcial K. Ochoa;

2.              P6,537,244.96 for the loss of earning capacity of the deceased;

3.              P100,00.00 for attorney’s fees;

4.              And the cost of litigation.

SO ORDERED.[10]

            G & S filed a Notice of Appeal[11] while the heirs filed a Motion for Partial Reconsideration.[12]  The heirs averred that they are entitled to moral damages pursuant to Article 1764[13] in relation to Article 2206(3)[14] of the Civil Code.  They also cited applicable jurisprudence providing that moral damages are recoverable in a damage suit predicated upon a breach of contract of carriage where the mishap results in the death of the passenger. With respect to their claim for exemplary damages, the heirs relied upon Article 2232 of the Civil Code which provides that in contracts and quasi-contracts, the court may award exemplary damages if the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent manner.  And, since Padilla was declared by the trial court to have been grossly negligent in driving the taxicab, the heirs claimed that they are likewise entitled to exemplary damages. 

            After G & S filed its Opposition (To Plaintiffs’ Motion for Partial Reconsideration),[15] the trial court issued an Order[16]on March 5, 2002.  It found merit in the heirs’ Motion for Partial Reconsideration and thus declared them entitled to moral and exemplary damages, viz:

WHEREFORE, the decision dated December 27, 2001 is hereby modified so as to order defendant Corporation to pay plaintiffs the amount of P300,000.00 as moral damages and P50,000.00 as exemplary damages.  The dispositive portion of said decision is hereby amended to read as follows:

‘WHEREFORE, defendant is hereby adjudged guilty of breach of contract of carriage and is ordered to pay plaintiffs the following amounts:

1.     P50,000.00 as civil indemnity for the death of the deceased Jose Marcial K. Ochoa;

2.     P6,537,244.96 for the loss of earning capacity of the deceased.

3.              P300,000.00 as moral damages;

4.              P50,000.00 as exemplary damages;

5.              P100,000.00 for attorney’s fees;

6.              And the costs of litigation.’

                                SO ORDERED.[17]

Because of this, G & S filed another Notice of Appeal[18] and same was given due course by the trial court in an Order[19]dated April 23, 2002.

Ruling of the Court of Appeals

 

            Before the CA, G & S continued to insist that it exercised the diligence of a good father of the family in the selection and supervision of its employees.   It averred that it has been carrying out not only seminars for its drivers even before they were made to work, but also periodic evaluations for their performance.  Aside from these, it has also been conducting monthly check-up of its automobiles and has regularly issued rules regarding the conduct of its drivers.  G & S claimed that it was able to establish a good name in the industry and maintain a clientele. 

            In an effort to build up Padilla’s character as an experienced and careful driver, G & S averred that: (1) before G & S employed Padilla, he was a delivery truck driver of Inter Island Gas Service for 11 years; (2) Padilla has been an employee of G & S from 1989 to 1996 and during said period, there was no recorded incident of his being a negligent driver; (3) despite his qualifications, G & S still required Padilla to submit an NBI clearance, driver’s license and police clearance; (4) Padilla’s being a good driver-employee was manifest in his years of service with G & S, as in fact, he has received congratulatory messages from the latter as shown by the inter-office memos dated August 23, 1990 and February 1, 1993; and that (5) Padilla attended a seminar at the Pope Pius Center sometime in December 1999 as part of the NAIA Taxi Operation Program.

            G & S also argued that the proximate cause of Jose Marcial’s death is a fortuitous event and/or the fault or negligence of another and not of its employee.  According to G & S, the collision was totally unforeseen since Padilla had every right to expect that the delivery van would just overtake him and not hit the right side of the taxicab.  Therefore, what transpired was beyond Padilla’s control.  There was no negligence on his part but on the part of the driver of the delivery van.  For this reason, G & S opined that it was not liable to the heirs.

            On the other hand, the heirs maintained that Padilla was grossly negligent in driving the Avis taxicab on the night of March 10, 1995.  They claimed that Padilla, while running at a very high speed, acted negligently when he tried to overtake a ten-wheeler truck at the foot of the fly-over.  This forced him to swerve to the left and as a consequence, the Avis taxicab hit the center of the railing and was split into two upon hitting the ground.  The manner by which Padilla drove the taxicab clearly showed that he acted without regard to the safety of his passenger.

            The heirs also averred that in order for a fortuitous event to exempt one from liability, it is necessary that he has committed no negligence or conduct that may have occasioned the loss.  Thus, to be exempt from liability for the death of Jose Marcial on this ground, G & S must clearly show that the proximate cause of the casualty was entirely independent of human will and that it was impossible to avoid.  And since in the case at bar it was Padilla’s inexcusable poor judgment, utter lack of foresight and extreme negligence which were the immediate and proximate causes of the accident, same cannot be considered to be due to a fortuitous event.  This is bolstered by the fact that the court trying the case for criminal negligence arising from the same incident convicted Padilla for said charge.[20]

            At any rate, the heirs contended that regardless of whether G & S observed due diligence in the selection of its employees, it should nonetheless be held liable for the death of Jose Marcial pursuant to Article 1759 of the Civil Code which provides:

ART. 1759 – Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former’s employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers.

This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees.

            In sum, the heirs prayed that the appeal be dismissed for lack of merit and the assailed Decision and Order of the trial court be affirmed in toto.

 

            In a Decision[21] dated June 29, 2005, the CA ruled in favor of the heirs.  The appellate court gave weight to their argument that in order for a fortuitous event to exempt one from liability, it is necessary that he committed no negligence or misconduct that may have occasioned the loss.  In this case, the CA noted that Padilla failed to employ reasonable foresight, diligence and care needed to exempt G & S from liability for Jose Marcial’s death.  Said court also quoted pertinent portions of the MTC decision convicting Padilla of reckless imprudence resulting in homicide to negate G & S’ claim that the proximate cause of the accident was the fault of the driver of the delivery van who allegedly hit the right side of the taxicab.  And just like the trial court, the CA found insufficient the evidence adduced by G & S to support its claim that it exercised due diligence in the selection and supervision of its employees.

             With respect to the award of P6,537,244.96 for Jose Marcial’s loss of earning capacity, the CA declared the same unwarranted.  It found the Certification[22] issued by Jose Marcial’s employer, the United States Agency for International Development (USAID) through its Chief of Human Resources Division Jonas Cruz (Cruz), as self-serving, unreliable, and biased.  While said certification states that Jose Marcial was earning an annual salary of P450,844.49 at the time of his untimely demise, the CA noted that same is unsupported by competent evidence such as income tax returns or receipts.  This is in view of the ruling inPeople v. Ereño[23] where it was held that “there must be unbiased proof of the deceased’s average income.”  Anent moral damages, the CA found the award of P300,000.00 excessive and thus reduced the same to P200,000.00 as to make it proportionate to the award of exemplary damages which is P50,000.00. The dispositive portion of said Decision reads:

WHEREFORE, the assailed Decision dated December 27, 2001 and Order dated March 5, 2002 are AFFIRMED with the following MODIFICATION:  appellant is ordered to pay appellees the sum of P50,000.00 as civil indemnity for the death of the deceased Jose Marcial K. Ochoa, P200,000.00 as moral damages, P50,000.00 as exemplary damages, P100,000.00 for attorney’s fees and the costs of litigation.  The trial court’s award of P6,537,244.96 for the loss of earning capacity of the deceased is DELETED for lack of basis.

SO ORDERED.

 

 

            Both parties moved for reconsideration[24] but the CA denied their respective motions for reconsideration in a Resolution[25] dated October 12, 2005.

            Hence, G & S and the heirs filed their respective Petitions for Review on Certiorari before this Court. The heirs’ petition was docketed as G.R. No. 170071 and that of G & S as G.R. No. 170125.  These petitions were later consolidated pursuant to this Court’s Resolution of November 21, 2005.[26] 

G.R. No. 170125

 

G & S anchors its petition on the following grounds:

I.     THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT RULING THAT THE PROXIMATE CAUSE OF DEATH OF MR. JOSE MARCIAL K. OCHOA WAS A FORTUITOUS EVENT AND/OR WAS DUE TO THE FAULT OR NEGLIGENCE OF ANOTHER AND SHOULD THUS EXEMPT THE PETITIONER FROM LIABILITY.

II.    THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT TAKING NOTE OF THE FACT THAT THE PETITIONER’S EMPLOYEE HAD BEEN ACQUITTED OF THE CRIME OF RECKLESS IMPRUDENCE RESULTING (IN) HOMICIDE.

III.  THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING THE TESTIMONY OF A WITNESS WHO SURFACED MONTHS AFTER THE INCIDENT WHILE DISREGARDING THAT OF AN EYEWITNESS WHO WAS PRESENT AT THE TIME AND PLACE OF THE ACCIDENT.

IV.  THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT RULING THAT THE PETITIONER EXERCISED THE DILIGENCE OF A GOOD FATHER OF A FAMILY IN THE SELECTION AND SUPERVISION OF ITS EMPLOYEES PARTICULARLY MR. BIBIANO PADILLA.[27]

            G & S reiterates its arguments that the proximate cause of the accident is a fortuitous event and/or the negligence of the driver of the delivery van which bumped the right portion of its taxicab and, that it exercised the diligence of a good father of a family in the selection and supervision of its employees.  It faults the CA when it overlooked the fact that the MTC Decision convicting Padilla of reckless imprudence has already been reversed on appeal by the RTC with Padilla having been accordingly acquitted of the crime charged.  Moreover, it claims that the appellate court erred in according respect to the testimony of the lone prosecution witness, Pablo Clave (Clave), when it concluded that Padilla was driving negligently at the time of the accident.  It asserts that Clave is not a credible witness and so is his testimony. Thus, G & S prays that the assailed CA Decision and Resolution be reversed and set aside.

            On the other hand, the heirs posit that the determination of the issues raised by G & S necessarily entails a re-examination of the factual findings which this Court cannot do in this petition for review on certiorari.  At any rate, they maintain that the trial court itself is convinced of Clave’s credibility.  They stress the settled rule that the evaluation of the credibility of witnesses is a matter that particularly falls within the authority of the trial court because it had the opportunity to observe the demeanor of the witnesses on the stand. 

            The heirs assert that fortuitous event was not the proximate cause of the mishap.  They point out that as correctly found by the trial court, Padilla was running at an extremely high speed. This was why the impact was so strong when the taxicab rammed the fly-over railings and was split into two when it hit the ground. Also, while it is true that the MTC Decision in the criminal case for reckless imprudence has been reversed by the RTC, this does not excuse G & S from its liability to the heirs because its liability arises from its breach of contract of carriage and from its negligence in the selection and supervision of its employees.  Also, since the acquittal of Padilla is based on reasonable doubt, same does not in any way rule out his negligence as this may merely mean that the prosecution failed to meet the requisite quantum of evidence to sustain his conviction.  Therefore, G & S cannot bank on said acquittal to disprove its liability.   

G.R. No. 170071    

 

            The heirs, on the other hand, advance the following grounds in support of their petition:

THE COURT OF APPEALS MANIFESTLY AND GRAVELY ERRED IN COMPLETELY DELETING THE TRIAL COURT’S AWARD FOR THE LOSS OF EARNING CAPACITY OF THE DECEASED.

THE COURT OF APPEALS MANIFESTLY AND GRAVELY ERRED IN REDUCING THE TRIAL COURT’S AWARD FOR MORAL DAMAGES.[28]

            The focal point of the heirs’ petition is the CA’s deletion of the award of P6,537,244.96 for Jose Marcial’s loss of earning capacity as well as the reduction of the award of moral damages from P300,000.00 to P200,000.00.

            The heirs aver that the appellate court gravely erred in relying upon Ereño as said case is not on all fours with the present case.  They contend that in Ereño, this Court disallowed the award for loss of income because the only proof presented was a handwritten statement of the victim’s spouse stating the daily income of the deceased as a self-employed fish vendor.  The heirs argue that the reason why this Court declared said handwritten statement as self-serving is because the one who prepared it, the deceased’s wife, was also the one who would directly and personally benefit from such an award.[29]  This cannot be said in the case at bar since the same bias and personal interest cannot be attributed to Jose Marcial’s employer, the USAID.  Unlike in Ereño, USAID here does not stand to be benefited by an award for Jose Marcial’s loss of earning capacity.  Clearly, the Certification issued by it is far from being self-serving.  At any rate, the heirs contend that Ereño has already been superseded by Pleyto v. Lomboy[30]where this Court held that in awarding damages for loss of earning capacity, “mere testimonial evidence suffices to establish a basis for which the court can make a fair and reasonable estimate of the loss of earning capacity”.  In addition, the heirs point out that the authenticity and accuracy of said Certification was neither questioned by G & S nor discredited by any controverting evidence.  In fact, its admission by the trial court was not even assigned by G & S as an error in their appeal before the CA.

            As to the reduction of moral damages, the heirs claim that since the CA agreed with the factual circumstances of the case as found by the trial court, there is therefore no reason for it to alter the award of damages arising from such factual circumstances. They aver that the CA may only modify the damages awarded by the trial court when it is excessive and scandalous as held inMeneses v. Court of Appeals.[31]  Here, they claim that the award of moral damages in the amount of P300,000.00 cannot be considered as excessive and unreasonable but only commensurate to the sufferings caused by the incident to a wife who became a young widow at the age of 33 and to two minor children who lost a father.  Moreover, the heirs aver that the CA should not have reduced the award of moral damages just to make said amount proportionate to the exemplary damages awarded.  This is because there is no such rule which dictates that the amount of moral damages should be proportionate to that of the exemplary damages. The heirs pray that the assailed CA Decision and Resolution be reversed and set aside insofar as they deleted the award for loss of earning capacity and reduced the award for moral damages.

 

            For its part, G & S avers that the Certification issued by USAID is self-serving because the USAID officer who issued it has not been put on the witness stand to validate the contents thereof.  Moreover, said Certification was not supported by competent evidence such as income tax returns and receipts.  G & S likewise finds the reduction of the award of moral damages appropriate in view of the settled rule that moral damages are not meant to enrich the complainant at the expense of the defendant.  Hence, it prays that the petition be dismissed for lack of merit.

Our Ruling

We shall first tackle the issues raised by G & S in its petition.

The first, third and fourth issues raised by G & S involve questions of fact

We have reviewed said issues and we find that the determination of the first, third and fourth issues raised entails re-examination of the evidence presented because they all involve questions of fact.  In Microsoft Corporation v. Maxicorp, Inc.,[32]we held that:

Once it is clear that the issue invites a review of the evidence presented, the question posed is one of fact.  If the query requires a re-evaluation of the credibility of witnesses, or the existence or relevance of surrounding circumstances and their relation to each other, the issue in that query is factual. Our ruling in Paterno v. Paterno is illustrative on this point:

Such questions as whether certain items of evidence should be accorded probative value or weight, or rejected as feeble or spurious, or whether or not the proof on one side or the other are clear and convincing and adequate to establish a proposition in issue, are without doubt questions of fact.  Whether or not the body of proofs presented by a party, weighed and analyzed in relation to contrary evidence submitted by adverse party, may be said to be strong, clear and convincing; whether or not certain documents presented by one side should be accorded full faith and credit in the face of protests as to their spurious character by the other side; whether or not inconsistencies in the body of proofs of a party are of such a gravity as to justify refusing to give said proofs weight – all these are issues of fact. (Citations omitted)

            In this case, the said three issues boil down to the determination of the following questions: What is the proximate cause of the death of Jose Marcial?  Is the testimony of prosecution witness Clave credible?  Did G & S exercise the diligence of a good father of a family in the selection and supervision of its employees?  Suffice it to say that these are all questions of fact which require this Court to inquire into the probative value of the evidence presented before the trial court.  As we have consistently held, “[t]his Court is not a trier of facts.  It is not a function of this court to analyze or weigh evidence.  When we give due course to such situations, it is solely by way of exception.  Such exceptions apply only in the presence of extremely meritorious circumstances.”[33]  Here, we note that although G & S enumerated in its Consolidated Memorandum[34] the exceptions[35] to the rule that a petition for review on certiorari should only raise questions of law, it nevertheless did not point out under what exception its case falls. And, upon review of the records of the case, we are convinced that it does not fall under any.  Hence, we cannot proceed to resolve said issues and disturb the findings and conclusions of the CA with respect thereto.  As we declared in Diokno v. Cacdac:[36]

                It is aphoristic that a re-examination of factual findings cannot be done through a petition for review on certiorari under Rule 45 of the Rules of Court because as earlier stated, this Court is not a trier of facts; it reviews only questions of law.  The Supreme Court is not duty-bound to analyze and weigh again the evidence considered in the proceedings below.  This is already outside the province of the instant Petition for Certiorari.[Citations omitted.]

There is a contract of carriage between G & S and Jose Marcial

What is clear from the records is that there existed a contract of carriage between G & S, as the owner and operator of the Avis taxicab, and Jose Marcial, as the passenger of said vehicle.   As a common carrier, G & S “is bound to carry [Jose Marcial] safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard for all the circumstances.”[37]  However, Jose Marcial was not able to reach his destination safely as he died during the course of the travel. “In a contract of carriage, it is presumed that the common carrier is at fault or is negligent when a passenger dies or is injured.  In fact, there is even no need for the court to make an express finding of fault or negligence on the part of the common carrier. This statutory presumption may only be overcome by evidence that the carrier exercised extraordinary diligence.”[38]  Unfortunately, G & S miserably failed to overcome this presumption.  Both the trial court and the CA found that the accident which led to Jose Marcial’s death was due to the reckless driving and gross negligence of G & S’ driver, Padilla, thereby holding G & S liable to the heirs of Jose Marcial for breach of contract of carriage.

The acquittal of Padilla in the criminal case is immaterial to the instant case for breach of contract

This thus now leaves us with the remaining issue raised by G & S, that is, whether the CA gravely erred in not taking note of the fact that Padilla has already been acquitted of the crime of reckless imprudence resulting in homicide, a charge which arose from the same incident subject of this case.

Article 31 of the Civil Code provides, viz:

 

When the civil action is based on an obligation not arising from the act or omission complained of as a felony, such civil action may proceed independently of the criminal proceedings and regardless of the result of the latter.

Thus, in Cancio, Jr. v. Isip,[39] we declared:

In the instant case, it must be stressed that the action filed by petitioner is an independent civil action, which remains separate and distinct from any criminal prosecution based on the same act.  Not being deemed instituted in the criminal action based on culpa criminal, a ruling on the culpability of the offender will have no bearing on said independent civil action based on an entirely different cause of action, i.e., culpa contractual.” (Emphasis supplied; Citations omitted.)

            In this case, the action filed by the heirs is primarily for the recovery of damages arising from breach of contract of carriage allegedly committed by G & S.  Clearly, it is an independent civil action arising from contract which is separate and distinct from the criminal action for reckless imprudence resulting in homicide filed by the heirs against Padilla by reason of the same incident.  Hence, regardless of Padilla’s acquittal or conviction in said criminal case, same has no bearing in the resolution of the present case.  There was therefore no error on the part of the CA when it resolved this case without regard to the fact that Padilla has already been acquitted by the RTC in the criminal case.  Moreover, while the CA quoted some portions of the MTC Decision in said criminal case, we however find that those quoted portions were only meant to belie G & S’ claim that the proximate cause of the accident was the negligence of the driver of the delivery van which allegedly hit the Avis taxicab.  Even without those quoted portions, the appellate court’s ultimate finding that it was Padilla’s negligence which was the proximate cause of the mishap would still be the same.  This is because the CA has, in fact, already made this declaration in the earlier part of its assailed Decision.  The fact that the MTC Decision from which the subject quoted portions were lifted has already been reversed by the RTC is therefore immaterial.

            In view of the foregoing, we deny G & S’ petition for lack of merit.

The denial by the CA of the heirs’ claim for lost earnings is unwarranted

 

            Going now to the petition filed by the heirs, we note at the outset that the issues of whether the CA erred in deleting the award for loss of earning capacity and in reducing the award for moral damages made by the trial court likewise raise questions of fact as they “involve an examination of the probative value of the evidence presented by the parties”.[40]  However, we find that the heirs’ case falls under one of the exceptions because the findings of the CA conflict with the findings of the RTC.[41]  Since the heirs properly raised the conflicting findings of the lower courts, it is proper for this Court to resolve such contradiction.[42] 

            In Ereño, we denied the claim for loss of income because the handwritten estimate of the deceased’s daily income as a self-employed vendor was not supported by competent evidence like income tax returns or receipts.  This was in view of the rule that compensation for lost income is in the nature of damages and as such requires due proof of damages suffered.  We reiterated this rule in People v. Yrat[43] where we likewise denied the same claim because the only evidence presented to show that the deceased was earning P50,000.00 a month was the testimony of the wife.  There we stated that for lost income due to death, there must be unbiased proof of the deceased’s average income.  Self-serving, hence, unreliable statement is not enough.  In People v. Caraig,[44]we declared that “documentary evidence should be presented to substantiate the claim for damages for loss of earning capacity.  By way of exception, damages therefor may be awarded despite the absence of documentary evidence, provided that there is testimony that the victim was either (1) self-employed earning less than the minimum wage under current labor laws, and judicial notice may be taken of the fact that in the victim’s line of work no documentary evidence is available; or (2) employed as a daily-wage worker earning less than the minimum wage under current labor laws”.  However, we subsequently ruled in Pleyto v. Lomboy[45] that “failure to present documentary evidence to support a claim for loss of earning capacity of the deceased need not be fatal to its cause.  Testimonial evidence suffices to establish a basis for which the court can make a fair and reasonable estimate of the loss of earning capacity”.  Hence, we held as sufficient to establish a basis for an estimate of damages for loss of earning capacity the testimony of the victim’s widow that her husband was earning a monthly income of P8,000.00.  Later, in Victory Liner, Inc. v. Gammad,[46] after finding that the deceased’s earnings does not fall within the exceptions laid down in Caraig, we deleted the award for compensatory damages for loss of earning capacity as same was awarded by the lower courts only on the basis of the husband’s testimony that the deceased was 39 years of age and a Section Chief of the Bureau of Internal Revenue with a salary ofP83,088.00 per annum at the time of her death.  This same rule was also applied in the 2008 case of Licyayo v. People.[47] 

            In all of the cases mentioned except for Ereño, the sole basis for the claim for loss of earning capacity were the testimonies of the claimants.  This is not the case here.  Just like in Ereño where the testimony of the mother of the deceased was accompanied by a handwritten estimate of her daughter’s alleged income as a fish vendor, the testimony of Jose Marcial’s wife that he was earning around P450,000.00 a year was corroborated by a Certification issued by the USAID.  However in Ereño, we declared as self-serving the handwritten estimate submitted by the mother hence we denied the claim for such award.  Based on said ruling, the CA in this case deleted the award for lost income after it found the USAID Certification to be self-serving and unreliable.  

            We disagree.  The CA sweepingly concluded that the USAID Certification is self-serving and unreliable without elaborating on how it was able to arrive at such a conclusion.  A research on USAID reveals that it is the “principal [United States] agency to extend assistance to countries recovering from disaster, trying to escape poverty, and engaging in democratic reforms.”[48]  It is an “independent federal government agency that receives over-all foreign policy guidance from the Secretary of the State [of the United States].”[49] Given this background, it is highly improbable that such an agency will issue a certification containing unreliable information regarding an employee’s income.  Besides, there exists a presumption that official duty has been regularly performed.[50]Absent any showing to the contrary, it is presumed that Cruz, as Chief of Human Resources Division of USAID, has regularly performed his duty relative to the issuance of said certification and therefore, the correctness of its contents can be relied upon.  This presumption remains especially so where the authenticity, due execution and correctness of said certification have not been put in issue either before the trial court or the CA.  As to its being self-serving, our discussion on “self-serving evidence” in Heirs of Pedro Clemeña y Zurbano v. Heirs of Irene B. Bien[51] is enlightening, viz:

‘Self-serving evidence,’ perhaps owing to its descriptive formulation, is a concept much misunderstood. Not infrequently, the term is employed as a weapon to devalue and discredit a party’s testimony favorable to his cause. That, it seems, is the sense in which petitioners are using it now. This is a grave error. “Self-serving evidence” is not to be taken literally to mean any evidence that serves its proponent’s interest. The term, if used with any legal sense, refers only to acts or declarations made by a party in his own interest at some place and time out of court x x x.   (Citations omitted; emphasis supplied.)

Verily, the USAID certification cannot be said to be self-serving because it does not refer to an act or declaration made out of court by the heirs themselves as parties to this case. 

Clearly, the CA erred in deleting the award for lost income on the ground that the USAID Certification supporting such claim is self-serving and unreliable.  On the contrary, we find said certification sufficient basis for the court to make a fair and reasonable estimate of Jose Marcial’s loss of earning capacity just like in Tamayo v. Señora[52] where we based the victim’s gross annual income on his pay slip from the Philippine National Police.  Hence, we uphold the trial court’s award for Jose Marcial’s loss of earning capacity.

            While the trial court applied the formula generally used by the courts to determine net earning capacity which is, to wit:

Net Earning Capacity =  life expectancy* x (gross annual income  –  reasonable living expenses),[53]

*Life expectancy = 2/3 (80 – age of the deceased)

we, however, find incorrect the amount of P6,537, 244.96 arrived at.  The award should be P6,611,634.59 as borne out by the following computation:

3

 

Net earning capacity           =             2 (80-36[54]) x 450, 844.49[55]-50%[56]

3

 

=             88 x 225,422.25

                                                =             29.33 x 225,422.25

                                                =             P6, 611,634.59

The award of moral damages should be modified

 

 

            While we deemed it proper to modify the amount of moral damages awarded by the trial court as discussed below, we nevertheless agree with the heirs that the CA should not have pegged said award in proportion to the award of exemplary damages. Moral and exemplary damages are based on different jural foundations.[57]  They are different in nature and require separate determination.[58]  The amount of one cannot be made to depend on the other.

            In Victory Liner Inc. v. Gammad[59] we awarded P100,000.00 by way of moral damages to the husband and three children of the deceased, a 39-year old Section Chief of the Bureau of Internal Revenue, to compensate said heirs for the grief caused by her death.  This is pursuant to the provisions of Articles 1764 and 2206(3) which provide:

                Art. 1764.  Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages.  Articles 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier.

                Art. 2206.  x x x

                (3) The spouse, legitimate and illegitimate descendants and the ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased.

Here, there is no question that the heirs are likewise entitled to moral damages pursuant to the above provisions, considering the mental anguish suffered by them by reason of Jose Marcial’s untimely death, as can be deduced from the following testimony of his wife Ruby:

 

Atty. Suarez:

                        Q:           How would you describe Jose Marcial Ochoa?

(Ruby)   A:           My husband was a very loving husband, faithful husband, a very [good] provider[.]  I depended on him so much financially [and] emotionally[.]  He was practically my life then.

Q:           How is he as a father?

A:           A very good father, he is very committed to Micaela[. H]e has always time for her[. H]e is a family man, so it’s really a great [loss] to me and to Micaela.

Q:           What was your reaction upon learning of your husband’s death?

A:           Immediately after I learned of his death, I tried very hard to keep a clear mind for my little girl, she was 3 ½ and she could not grasp what death is, so I found [it] so hard to explain to her [at] that time what happened [e]specially [because] she just talked to her father from the airport telling her that he is coming home, tapos hindi na pala.

Q:           How did it affect you?

A:           It was a painful struggle everyday just to get up and move on when someone who [you] really really love and [who] is important to you … it is very hard to move on and [it is even] harder to move on [when] I found out that I was pregnant with my second child, parang tinabunan ka [ng] lahat eh[.  I]t’s [too] hard to find happiness, you’re pregnant, when you know wala naman talagang father yung bata later on x x x

                x x x x

Q:           How did this affect your family?

A:           Yung effect kay Micaela, she [used] to be a gregarious child, yung happy ganyan, but nung wala na yong father niya that time, [during] graduation ng nursery that time naging very very [quiet] siya, so a lot of emotional support from my own family was given to her at the time para makacope-up siya sa loss kasi she is very close to the father.

Q:           Financially, how did it affect you?

A:           I had to make do of what was left by my husband, I couldn’t also work so much at the time because I was….and hirap eh, I cannot find enthusiasm in what I do, tapos pregnant pa ako, and hirap talaga.

Q:           How else did it affect you?

A:           We had to move houses like we used to live in Quezon City at (the) time of his death, tapos kinuha kami ni Gorjie my brother-in-law sa compound nila para hindi… [to] support us emotionally (at that time) kasi nga I was pregnant and then I also decided to move (to make it easy for me) to adjust yung lifestyle ng mga bata, because I cannot cope [here] financially on my own[. N]ahihirapan na ako dito because the living expenses here are quite high compared sa probinsiya so I decided to move.

Q:           If you would assign that pain and suffering that you suffered as a result of the death of your husband, what will be the monetary consideration?

A:           I struggled with that kasi….I can honestly say no amount of money can ever repay the [loss] that my children suffered, future nila yan eh, and my son was not given a chance to get to know his father, so I cannot imagine kung ano yung sinasabi n’yong amount that will compensate the suffering that I have to go through and my children will go through, ‘yon and mahirap bayaran.[60]

Under this circumstance, we thus find as sufficient and “somehow proportional to and in approximation of the suffering inflicted”[61] an award of moral damages in an amount similar to that awarded in Victory which is P100,000.00.

From the above discussion, we, thus, partly grant the heirs’ petition.

WHEREFORE, the petition for review on certiorari in G.R. No. 170071 is PARTLY GRANTED while the petition in G.R. No. 170125 is DENIED.  The assailed Decision and Resolution dated June 29, 2005 and October 12, 2005 of the Court of Appeals in CA-G.R. CV No. 75602 are AFFIRMED with the MODIFICATIONS that G & S is ordered to pay the heirs of Jose Marcial K. Ochoa the sum of  P6,611,634.59 for loss of earning capacity of the deceased and P100,000.00 as moral damages.

            SO ORDERED.

MARIANO C. DEL CASTILLO

Associate Justice

 

 

WE CONCUR:

 

 

RENATO C. CORONA

Chief Justice

Chairperson

PRESBITERO J. VELASCO, JR.

Associate Justice

TERESITA J. LEONARDO-DE CASTRO

Associate Justice

 

                                               

JOSE PORTUGAL PEREZ

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


[1]       CA rollo, pp. 216-233; penned by Associate Justice Vicente S.E. Veloso and concurred in by Associate Justices Roberto A. Barrios and Amelita G. Tolentino.

[2]       Id. at 309.

[3]       RTC Decision dated December 7, 2001; penned by Judge Librado S. Correa, records, pp. 298-303.

[4]       Id. at 18-19.

[5]       Id. at 1-8.

[6]       Art. 2180 – The obligation imposed by Article 2176 is demandable not only for one’s own acts or omissions, but also for those of persons for whom one is responsible.

                x x x x

Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry.

x x x x

The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage.

[7]       Art. 2176 – Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done.  Such fault or negligence, if there is no preexisting contractual relation between the parties, is called quasi-delict x x x.

[8]       Recordspp. 48-54.

[9]       Id. at 298-303.

[10]     Id. at 303.

[11]     Id. at 307-308

[12]     Id. at 316-323.

[13]     Art. 1764 – Damages in cases comprised in this Section shall be awarded in accordance with Title XVIII of this Book, concerning Damages.  Article 2206 shall also apply to the death of a passenger caused by the breach of contract by a common carrier.

[14]     Art. 2206 – The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. In addition:

                x x x x

                (3)  The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral  damages for mental anguish by reason of the death of the deceased.

[15]     Records,. 331-341.

[16]     Id. at 342-343.

[17]     Id. at 343.

[18]     Id. at 344-346.                         

[19]     Id. at 353.

[20]     Decision of the Metropolitan Trial Court (MTC)-Quezon City, Branch 39 in Criminal Case No. 0011769 for Reckless Imprudence Resulting in Homicide, CA rollo, pp. 112-120. However, this MTC Decision was later reversed and set aside by the RTC, Quezon City, Branch 222 in Criminal Case No. Q03-118524 on December 11, 2003 where Padilla was accordingly acquitted; id. at 194-200.

[21]     Id. at 216-233.

[22]     Records, p. 150.

[23]     383 Phil. 30, 46 (2000).

[24]     G & S’ Motion for Reconsideration, CA rollo, pp. 240-249 and the heirs’ Motion for Partial Reconsideration, id. at 250-263.

[25]     Id. at 309.

[26]     Rollo of G.R. No. 170071, pp. 114-115 and rollo of G.R. No. 170125, pp. 6-7.

[27]     Rollo of G.R. No. 170125, p. 16.

[28]     Rollo of G.R. No. 170071, pp. 11-12.

[29]     A reading of Ereño, however, reveals that it was the victim’s mother, not the spouse, who submitted a handwritten statement of her daughter’s daily income and claimed for the award for lost income.

[30]     476 Phil373, 389 (2004).

[31]     316 Phil. 210, 225 (1995).

[32]     481 Phil. 550, 561-562 (2004).

[33]     Id. at 563.

[34]     Rollo of G.R. No. 170125, pp. 273-298; rollo of G.R. No. 170071, pp. 168-195.

[35]     The rule that a petition for review on certiorari should raise only questions of law admits of exceptions, among which are: (1) when the findings are grounded entirely on speculations, surmises or conjectures; (2) when the inference made is manifestly mistaken, absurd, or impossible; (3) when there is grave abuse of discretion; (4) when the judgment is based on misapprehension of facts; (5) when the findings of fact are conflicting; (6) when in making its findings the Court of Appeals went beyond the issues of the case, or its findings are contrary to the admissions of both appellant and appellee; (7) when the findings are contrary to those of the trial court; (8) when the findings are conclusions without citation of specific evidence on which they are based; (9) when the facts set forth in the petition as well as in the petitioner’s main and reply briefs are not disputed by the respondents; and (10) when the findings of fact are premised on the supposed absence of evidence and contradicted by the evidence on record, Marquez v. Espejo. G.R. No. 168387,August 25, 2010.

[36]     G.R. No. 168475, July 4, 2007, 526 SCRA 440, 460-461.

[37]     CIVIL CODE, Article 1755.

[38]     Diaz v. Court of Appeals, G.R. No. 149749, July 25, 2006, 496 SCRA 468, 472.

[39]     440 Phil29, 40 (2002).

[40]     Spouses Caoili v. Court of Appeals, 373 Phil. 122, 131 (1999).

[41]     Meneses v. Court of Appeals, supra note 31.

[42]     Id.

[43]     419 Phil. 435, 443 (2001).

[44]     448 Phil. 78, 97 (2003).

[45]     Supra note 30.

[46]     486 Phil. 574, 591 (2004).

[47]     G.R. No. 169425, March 4, 2008, 547 SCRA 598, 615-616.

[48]     USAID: About USAID, Last updated on December 8, 2010,http://www.usaid.gov/(visited February 4, 2011).

[49]     Id.

[50]     RULES OF COURT, Rule 131, Sec. 3(m).

[51]     G.R. No. 155508, September 11, 2006, 501 SCRA 405, 416.           

[52]     G.R. No. 176946, November 15, 2010.

[53]     Id.

[54]     Jose Marcial’s age at the time of his death.

[55]     Jose Marcial’s annual income per Certification from USAID.

[56]     If there is no proof of living expenses, as in this case, the net income is estimated to be 50% of the gross annual income, People v. Templo, 400 Phil. 471, 494 (2000).

[57]     Victory Liner Inc. v. Gammad, supra note 46 at 592-593.

[58]     Id.

[59]     Id.

[60]     TSN, May 12, 2000, pp. 18-21.

[61]     Go v. Cordero, G.R. Nos. 164703 &164747, May 4, 2010.

CASE NO. 2011-0080: ASIA UNITED BANK, CHRISTINE T. CHAN, AND FLORANTE C. DEL MUNDO VS. GOODLAND COMPANY, INC. (G.R. NO.  191388, 9 MARCH 2011, DEL CASTILLO, J.) SUBJECT: FORUM SHOPPING. 2 CASES DISMISSED ON GROUND OF FORUM SHOPPING. (BRIEF TITLE: ASIA UNITED BANK ET AL VS. GOODLAND). 

   

Republic of the Philippines

Supreme Court

Manila

FIRST DIVISION

ASIA UNITED BANK, CHRISTINE T. CHAN, and FLORANTE C. DEL MUNDO,   G.R. No.  191388

 

Present:

     Petitioners,    
    CORONA, C. J., Chairperson,

VELASCO, JR.,

    LEONARDO-DE CASTRO,
                           - versus -   DEL CASTILLO, and
 

 

  PEREZ, JJ.
     
GOODLAND COMPANY, INC.,   Promulgated:
 Respondent.    March 9, 2011

x – – – – – – – – – – – – – – – –  – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – x

 

D E C I S I O N

DEL CASTILLO, J.:

            The costly consequence of forum shopping should remind the parties to ever be mindful against abusing court processes.

            Before the Court is a Petition for Review[1] under Rule 45 of the Rules of Court assailing the Decision[2] dated June 5, 2009 of the Court of Appeals (CA) in CA-G.R. CV No. 90114, as well as its Resolution[3] dated February 17, 2010, which denied a reconsideration of  the  assailed  Decision.   The dispositive portion

of the appellate court’s Decision reads:

                WHEREFORE, the appeal is GRANTED and the appealed Order dated March 15, 2007 is REVERSED and SET ASIDE.  In lieu thereof, another is entered ordering the DENIAL of appellee bank’s motion to dismiss and directing the REINSTATEMENT of appellant’s complaint as well as the REMAND of the case to the trial court for further proceedings.

 

SO ORDERED.[4]

Factual Antecedents

 

            Respondent Goodland Company, Inc. (Goodland) executed a Third Party Real Estate Mortgage (REM) over two parcels of land located in the Municipality of Sta. Rosa, Laguna and covered by Transfer Certificates of Title (TCT) Nos. 321672[5] and 321673[6] in favor of petitioner Asia United Bank (AUB).  The mortgage secured the obligation amounting to P250 million of Radiomarine Network, Inc. (RMNI), doing business as Smartnet Philippines, to AUB.  The REM was duly registered on March 8, 2001 in the Registry of Deeds of Calamba, Laguna.[7] 

            Goodland then filed a Complaint[8] docketed as Civil Case No. B-6242 before Branch 25 of the Regional Trial Court (RTC) of Biñan, Laguna for the annulment of the REM on the ground that the same was falsified and done in contravention of the parties’ verbal agreement (Annulment Case).   

            While the Annulment Case was pending, RMNI defaulted in the payment of its obligation to AUB, prompting the latter to exercise its right under the REM to extrajudicially foreclose the mortgage.  It filed its Application for Extrajudicial Foreclosure of Real Estate Mortgage under Act No. 3135, as amended with the Office of the Executive Judge of the RTC of Biñan, Laguna on October 19, 2006.[9]  The mortgaged properties were sold in public auction to AUB as the highest bidder.  It was issued aCertificate of Sale, which was registered with the Registry of Deeds of Calamba on November 23, 2006.

            Before AUB could consolidate its title, Goodland filed on November 28, 2006 another Complaint[10] docketed as Civil Case No. B-7110 before Branch 25 of the RTC of Biñan, Laguna, against AUB and its officers, petitioners Christine Chan and Florante del Mundo.  This Complaint sought to annul the foreclosure sale and to enjoin the consolidation of title in favor of AUB (Injunction Case).  Goodland asserted the alleged falsified nature of the REM as basis for its prayer for injunction. 

            A few days later,  AUB consolidated its ownership over the foreclosed properties and obtained new titles, TCT Nos. T-657031[11] and 657032,[12]in its name from the Registry of Deeds of Calamba.  

            Petitioners then filed on December 11, 2006 a Motion to Dismiss with Opposition to a Temporary Restraining Order in the Injunction Case.[13]  They brought to the trial court’s attention Goodland’s forum shopping given the pendency of the Annulment Case.  They argued that the two cases both rely on the alleged falsification of the real estate mortgage as basis for the reliefs sought. 

Ruling of the Regional Trial Court (Injunction Case)

            On March 15, 2007, the trial court acted favorably on petitioners’ motion and dismissed the Injunction Case with prejudice on the grounds of forum shopping and litis pendentia.[14]  The trial court explained that the Injunction Case and the Annulment Case are both founded on the same transactions, same essential facts and circumstances, and raise substantially the same issues. The addition of the application for a writ of preliminary injunction does not vary the similarity between the two cases.  The trial court further noted that Goodland could have prayed for injunctive relief as ancillary remedy in the Annulment Case.  Finally, the trial court stated that any judgment in the Annulment Case regarding the validity of the REM would constitute res judicata on the Injunction Case.

Ruling of the Court of Appeals[15] (Injunction Case)

 

            Goodland appealed[16] the same to the CA. 

            Meanwhile, AUB filed an Ex-Parte Application for Writ of Possession on December 18, 2006, which was granted on March 15, 2007.  The writ was issued on March 26, 2007 and AUB obtained possession of the foreclosed properties on April 2, 2007.

 

On June 5, 2009, the CA promulgated its assailed Decision, which ruled in favor of Goodland and ordered the reinstatement of the Injunction Case in the trial court.[17] 

            The CA rejected petitioners’ contention that Goodland’s appeal raised pure questions of law,[18] which are within the jurisdiction of the Supreme Court under Rule 45.[19]  Instead, it found Goodland’s Rule 41 appeal to be proper because it involvedboth questions of fact and of law.  The CA held that a question of fact existed because petitioners themselves questioned in their Brief the veracity of Goodland’s Certification of Non-Forum Shopping.[20]

The CA conceded that Goodland’s Brief failed to comply with the formal requirements, which are all grounds for the dismissal of the appeal,[21] e.g., failure of the appellant to serve and file the required number of copies of its brief on all appellees and absence of page references to the record.  However, it relaxed the rules so as to completely resolve the rights and obligations of the parties. The CA, however, warned Goodland that its future lapses will be dealt with more severely.[22]

            The CA further ruled against petitioners’ argument that the delivery of the foreclosed properties to AUB’s possession has rendered Goodland’s appeal moot. It explained that the Injunction Appeal involving the annulment of extrajudicial foreclosure sale can proceed independently of petitioners’ application for a writ of possession.[23] 

            The CA then concluded that Goodland was not guilty of forum shopping when it initiated the Annulment and Injunction Cases.  The CA held that the reliefs sought in the two cases were different.  The Annulment Case sought the nullification of the real estate mortgage, while the Injunction Case sought the nullification of the foreclosure proceedings as well as to enjoin the consolidation of title in favor of petitioners.[24]  The CA further held that aside from the difference in reliefs sought, the two cases were independent of each other because the facts or evidence that supported their respective causes of action were different.  The acts which gave rise to the Injunction Case (i.e., the extrajudicial foreclosure proceedings) occurred long after the filing of the Annulment Case.[25] 

            The appellate court also held that any decision in either case will not constitute res judicata on the other.  It explained that the validity of the real estate mortgage has no “automatic bearing” on the validity of the extrajudicial foreclosure proceedings.[26] 

            Moreover, according to the CA, the fact that Goodland stated in its Certification of Non-Forum Shopping in the Injunction Case that the Annulment Case was pending belied the existence of forum shopping.[27]

 

            Petitioners filed a Motion for Reconsideration[28] on July 2, 2009, which was denied in the assailed Resolution of February 17, 2010.[29]

            Hence, the instant petition.

Ruling in G.R. No. 190231 (Annulment Case)

 

            Contemporaneously with the proceedings of the Injunction Case, the earlier Annulment Case (Civil Case No. B-6242) was also dismissed by the trial court on the ground of forum shopping on August 16, 2007.[30] 

 

            Goodland filed an appeal[31] of the dismissal to the CA, which appeal was granted.  The CA ordered on August 11, 2009 the reinstatement of the Annulment Case in the trial court.[32]

            AUB then filed with this Court a Petition for Review,[33] docketed as G.R. No. 190231 and entitled Asia United Bank and Abraham Co v. Goodland Company, Inc

            On December 8, 2010, the Court’s First Division reversed the CA ruling and resolved the appeal in AUB’s favor.[34]  The sole issue resolved by the Court was whether Goodland committed willful and deliberate forum shopping by filing Civil Case Nos. B-6242 (Annulment Case) and B-7110 (Injunction Case).  The Court ruled that Goodland committed forum shopping because both cases asserted non-consent to the mortgage as the only basis for seeking the nullification of the REM, as well as the injunction of the foreclosure.  When Goodland did not notify the trial court of the subsequent filing of the injunction complaint, Goodland revealed its “furtive intent to conceal the filing of Civil Case No. B-7110 for the purpose of securing a favorable judgment.”  Thus, the Court concluded that the trial court was correct in dismissing the annulment case with prejudice. The dispositive portion of the said Resolution reads as follows:

                WHEREFORE, the petition is hereby GRANTED.  The August 11, 2009 decision and November 10, 2009 resolution of the Court of Appeals in CA-GR CV No. 9126[9] are REVERSED and SET ASIDE.  The August 16, 2007 and December 5, 2007 orders of the Regional Trial Court of Biñan, Laguna, Branch 25 in Civil Case No. B-6242 are REINSTATED.[35]

            Goodland filed a Motion for Reconsideration[36] but the same was denied with finality in the Court’s Resolution dated January 19, 2011.

Issue[37]

            The parties present several issues for the Court’s resolution.  Most of these address the procedural infirmities that attended Goodland’s appeal to the CA, making such appeal improper and dismissible.  The crux of the case, however, lies in the issue of whether the successive filing of the Annulment and Injunction Cases constitute forum shopping. 

Petitioners’ Arguments

 

            Petitioners maintain that Goodland is guilty of forum shopping because it sought in the Annulment Case to annul the REM on the ground that it was falsified and unlawfully filled-out; while in the Injunction Case, Goodland wanted to nullify the foreclosure sale arising from the same REM on the ground that the REM was falsified and unlawfully filled-out.  Clearly, Goodland’s complaints rise and fall on the issue of whether the REM is valid.  This requires the presentation of the same evidence in the Annulment and Injunction Cases.[38] 

Goodland’s Arguments

            Goodland counters that it did not commit forum shopping because the causes of action for the Injunction and Annulment Cases are different.  The Annulment Case is for the annulment of REM; while the Injunction Case is for the annulment of the extrajudicial foreclosure sale.  Goodland argues that any judgment in the Annulment Case, regardless of which party is successful, would not amount to res judicata in the Injunction Case.[39]

Our Ruling

 

            We grant the petition.

            There is forum shopping “when a party repetitively avails of several judicial remedies in different courts, simultaneously or successively, all substantially founded on the same transactions and the same essential facts and circumstances, and all raising substantially the same issues either pending in or already resolved adversely by some other court.”[40]  The different ways by which forum shopping may be committed were explained in Chua v. Metropolitan Bank & Trust Company:[41]

                Forum shopping can be committed in three ways:  (1) filing multiple cases based on the same cause of action and with the same prayer, the previous case not having been resolved yet (where the ground for dismissal is litis pendentia); (2) filing multiple cases based on the same cause of action and the same prayer, the previous case having been finally resolved (where the ground for dismissal is res judicata); and (3) filing multiple cases based on the same cause of action, but with different prayers (splitting causes of action, where the ground for dismissal is also either litis pendentia or res judicata).

Common in these types of forum shopping is the identity of the cause of action in the different cases filed.  Cause of action is defined as “the act or omission by which a party violates the right of another.”[42]          

            The cause of action in the earlier Annulment Case is the alleged nullity of the REM (due to its allegedly falsified or spurious nature) which is allegedly violative of Goodland’s right to the mortgaged property.  It serves as the basis for the prayer for the nullification of the REM.  The Injunction Case involves the same cause of action, inasmuch as it also invokes the nullity of the REM as the basis for the prayer for the nullification of the extrajudicial foreclosure and for injunction against consolidation of title.  While the main relief sought in the Annulment Case (nullification of the REM) is ostensibly different from the main relief sought in the Injunction Case (nullification of the extrajudicial foreclosure and injunction against consolidation of title), the cause of action which serves as the basis for the said reliefs remains the same — the alleged nullity of the REM.  Thus, what is involved here is the third way of committing forum shopping, i.e., filing multiple cases based on the same cause of action, but with different prayers.  As previously held by the Court, there is still forum shopping even if the reliefs prayed for in the two cases are different, so long as both cases raise substantially the same issues.[43]

            There can be no determination of the validity of the extrajudicial foreclosure and the propriety of injunction in the Injunction Case without necessarily ruling on the validity of the REM, which is already the subject of the Annulment Case.  The identity of the causes of action in the two cases entails that the validity of the mortgage will be ruled upon in both, and creates a possibility that the two rulings will conflict with each other.  This is precisely what is sought to be avoided by the rule against forum shopping. 

The substantial identity of the two cases remains even if the parties should add different grounds or legal theories for the nullity of the REM or should alter the designation or form of the action.  The well-entrenched rule is that “a party cannot, by varying the form of action, or adopting a different method of presenting his case, escape the operation of the principle that one and the same cause of action shall not be twice litigated.”[44]

            The CA ruled that the two cases are different because the events that gave rise to them are different.  The CA rationalized that the Annulment Case was brought about by the execution of a falsified document, while the Injunction Case arose from AUB’s foreclosure based on a falsified document.  The distinction is illusory.  The cause of action for both cases is the alleged nullity of the REM due to its falsified or spurious nature.  It is this nullity of the REM which Goodland sought to establish in the Annulment Case. It is also this nullity of the REM which Goodland asserted in the Injunction Case as basis for seeking to nullify the foreclosure and enjoin the consolidation of title.  Clearly, the trial court cannot decide the Injunction Case without ruling on the validity of the mortgage, which issue is already within the jurisdiction of the trial court in the Annulment Case. 

            The recent development in Asia United Bank v. Goodland Company, Inc.,[45] which involved substantially the same parties and the same issue is another reason for Goodland’s loss in the instant case.  The issue that Goodland committed deliberate forum shopping when it successively filed the Annulment and Injunction Cases against AUB and its officers was decided with finality therein.  This ruling is conclusive on the petitioners and Goodland considering that they are substantially the same parties in that earlier case.

            Given our ruling above that the Injunction Case ought to be dismissed for forum shopping, there is no need to rule further on the procedural infirmities raised by petitioners against Goodland’s appeal. 

            WHEREFORE, premises considered, the Petition is GRANTED.  The June 5, 2009 Decision of the Court of Appeals and its February 17, 2010 Resolution in CA-G.R. CV No. 90114 are hereby REVERSED and SET ASIDE.  The March 15, 2007 Order of Branch 25 of the Regional Trial Court of Biñan, Laguna DISMISSING Civil Case No. B-7110 is hereby REINSTATED and AFFIRMED

SO ORDERED.

                                     MARIANO C. DEL CASTILLO

             Associate Justice

WE CONCUR:

 

RENATO C. CORONA

Chief Justice

Chairperson

 

 

 

 

PRESBITERO J. VELASCO, JR.

Associate Justice

TERESITA J. LEONARDO-DE CASTRO  

Associate Justice       

 

 

 

JOSE PORTUGAL PEREZ

Associate Justice

 

 

 

 

 

 

 

 

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

 

            Pursuant to Section 13, Article VIII of the Constitution, and the Division Chairperson’s attestation, 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


[1]       Rollo of G.R. No. 191388, pp. 44-95.  The prayer of the petition reads:

                WHEREFORE, petitioners respectfully pray that this Honorable Court REVERSE and SET ASIDE the assailed Decision dated 5 June 2009 and Resolution dated 17 February 2010 issued by the Court of Appeals in CA-G.R. CV No. 90114, and in lieu thereof, REINSTATE the Order dated 15 March 2007 of the Regional Trial Court of Biñan, Laguna, Branch 25, in Civil Case No. B-7110.

                Petitioners pray for such further or other reliefs as may be deemed just or equitable.  (Petition, p. 50; id. at 93).

[2]       Id. at 9-25; penned by Associate Justice Rebecca De Guia-Salvador and concurred in by Associate Justices Japar B. Dimaampao and Sixto C. Marella, Jr.

[3]       Id. at 27-32; penned by Associate Justice Rebecca De Guia-Salvador and concurred in by Associate Justices Japar B. Dimaampao and Normandie B. Pizzaro.

[4]       Id. at 24.

[5]       Id. at 516-520.

[6]       Id. at 521-525.

[7]       Id. at 518, 523.

[8]       Id. at 256-271.

[9]       Id. at 502-505. 

[10]     Id. at 282-306.

[11]     Id. at 599-602.

[12]     Id. at 603-606.

[13]     Id. at 370-431.

[14]     Id. at 916-917. The dispositive portion of the trial court’s Order states:

                WHEREFORE, finding the Motion to Dismiss filed by the defendants to be meritorious and well-taken, the same is hereby GRANTED.  Consequently, the above-entitled case is hereby ordered DISMISSED, with prejudice. 

                No costs.

                SO ORDERED.  (Id. at 917; penned by Acting  Presiding Judge Romeo C. De Leon.)

[15]     Id. at 9-25.

[16]     Id. at 958- 993.

[17]     Id. at 9-25.

[18]     RULES OF COURT, Rule 50, Section 2.  Dismissal of improper appeal to the Court of Appeals.  – An appeal under Rule 41 taken from the Regional Trial Court to the Court of Appeals raising only questions of law shall be dismissed, issues purely of law not being reviewable by said court.  x x x

                An appeal erroneously taken to the Court of Appeals shall not be transferred to the appropriate court but shall be dismissed outright.

[19]     RULES OF COURT, Rule 41, Section 2.  Modes of Appeal. –

                (a)  Ordinary appeal. –  x x x

                (b)  Petition for review.  – x x x

                (c)  Appeal by certiorari.  – In all cases where only questions of law are raised or involved, the appeal shall be to the Supreme Court by petition for review on certiorari in accordance with Rule 45.

[20]     Rollo of G.R. No. 191388, pp. 15-16.

[21]     RULES OF COURT, Rule 50, Section 1.  Grounds for dismissal of appeal.  – An appeal may be dismissed by the Court of Appeals, on its own motion or on that of the appellee, on the following grounds:

                x x x x

                (e)  Failure of the appellant to serve and file the required number of copies of his brief or memorandum within the time provided by these Rules;

                (f)  Absence x x x of page references to the record as required in section 13, paragraphs (a), (c), (d) and (f) of Rule 44.

[22]     Rollo of G.R. No. 191388, p. 16.

[23]     Id. at 17.

[24]     Id. at 18-22.

[25]     Id. at 22.

[26]     Id. at 22-23.

[27]     Id. at 24.

[28]     Id. at 123-158.

[29]     Id. at 27-32.

[30]     Id. at 1069-1074; penned by Presiding Judge Teodoro N. Solis. 

[31]     Id. at 1078-1105.

[32]     Rollo of G.R. No. 190231, pp. 40-51; penned by Associate Justice Juan Q. Enriquez, Jr. and concurred in by Associate Justices Celia C. Librea-Leagogo and Antonio L. Villamor.

[33]     Id. at 3-38.

[34]     Id. at 584-592.

[35]     Id. at 591.

[36]     Id. at 593-611.

[37]     Rollo of G.R. No. 191388, p. 60.

[38]     Id. at 67-81.

[39]     Id. at 1486.

[40]     Chua v. Metropolitan Bank & Trust Company, G.R. No. 182311, August 19, 2009, 596 SCRA 524, 535.   

[41]     Id. at 535-536.

[42]     RULES OF COURT, Rule 2, Section 2.

[43]     See Prubankers Association v. Prudential Bank and Trust Company, 361 Phil. 744, 756 (1999).

[44]     Ramos v. Pangasinan Transportation Company, Inc., 169 Phil. 172, 179 (1977).

[45]     G.R. No. 190231, supra note 34.

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