THIRD DIVISION

Aquino vs. Aure

CHICO-NAZARIO, J.:

Before this Court is a Petition for Review on Certiorari[if !supportFootnotes][2][endif] under Rule 45 of the Revised Rules of Court filed by petitioner Librada M. Aquino (Aquino), seeking the reversal and the setting aside of the Decision[if !supportFootnotes][3][endif] dated 17 October 2001 and the Resolution[if !supportFootnotes][4][endif] dated 8 May 2002 of the Court of Appeals in CA-G.R. SP No. 63733. The appellate court, in its assailed Decision and Resolution, reversed the Decision[if !supportFootnotes][5][endif] of the Regional Trial Court (RTC) of Quezon City, Branch 88, affirming the Decision[if !supportFootnotes][6][endif] of the Metropolitan Trial Court (MeTC) of Quezon City, Branch 32, which dismissed respondent Ernesto Aures (Aure) complaint for ejectment on the ground, inter alia, of failure to comply with barangay conciliation proceedings.

The subject of the present controversy is a parcel of land situated in Roxas District, Quezon City, with an area of 449 square meters and covered by Transfer Certificate of Title (TCT) No. 205447 registered with the Registry of Deeds of Quezon City (subject property).[if !supportFootnotes][7][endif]

Aure and E.S. Aure Lending Investors, Inc. (Aure Lending) filed a Complaint for ejectment against Aquino before the MeTC docketed as Civil Case No. 17450. In their Complaint, Aure and Aure Lending alleged that they acquired the subject property from Aquino and her husband Manuel (spouses Aquino) by virtue of a Deed of Sale[if !supportFootnotes][8][endif] executed on 4 June 1996. Aure claimed that after the spouses Aquino received substantial consideration for the sale of the subject property, they refused to vacate the same.[if !supportFootnotes][9][endif]

In her Answer,[if !supportFootnotes][10][endif] Aquino countered that the Complaint in Civil Case No. 17450 lacks cause of action for Aure and Aure Lending do not have any legal right over the subject property. Aquino admitted that there was a sale but such was governed by the Memorandum of Agreement[if !supportFootnotes][11][endif] (MOA) signed by Aure. As stated in the MOA, Aure shall secure a loan from a bank or financial institution in his own name using the subject property as collateral and turn over the proceeds thereof to the spouses Aquino. However, even after Aure successfully secured a loan, the spouses Aquino did not receive the proceeds thereon or benefited therefrom.

On 20 April 1999, the MeTC rendered a Decision in Civil Case No. 17450 in favor of Aquino and dismissed the Complaint for ejectment of Aure and Aure Lending for non-compliance with the barangay conciliation process, among other grounds. The MeTC observed that Aure and Aquino are residents of the same barangay but there is no showing that any attempt has been made to settle the case amicably at the barangay level. The MeTC further observed that Aure Lending was improperly included as plaintiff in Civil Case No. 17450 for it did not stand to be injured or benefited by the suit. Finally, the MeTC ruled that since the question of ownership was put in issue, the action was converted from a mere detainer suit to one incapable of pecuniary estimation which properly rests within the original exclusive jurisdiction of the RTC. The dispositive portion of the MeTC Decision reads:

WHEREFORE, premises considered, let this case be, as it is, hereby ordered DISMISSED. [Aquinos] counterclaim is likewise dismissed.[if !supportFootnotes][12][endif]

On appeal, the RTC affirmed the dismissal of the Complaint on the same ground that the dispute was not brought before the Barangay Council for conciliation before it was filed in court. In a Decision dated 14 December 2000, the RTC stressed that the barangay conciliation process is a conditio sine qua non for the filing of an ejectment complaint involving residents of the same barangay, and failure to comply therewith constitutes sufficient cause for the dismissal of the action. The RTC likewise validated the ruling of the MeTC that the main issue involved in Civil Case No. 17450 is incapable of pecuniary estimation and cognizable by the RTC. Hence, the RTC ruled:

WHEREFORE, finding no reversible error in the appealed judgment, it is hereby affirmed in its entirety.[if !supportFootnotes][13][endif]

Aures Motion for Reconsideration was denied by the RTC in an Order[if !supportFootnotes][14][endif] dated 27 February 2001.

Undaunted, Aure appealed the adverse RTC Decision with the Court of Appeals arguing that the lower court erred in dismissing his Complaint for lack of cause of action. Aure asserted that misjoinder of parties was not a proper ground for dismissal of his Complaint and that the MeTC should have only ordered the exclusion of Aure Lending as plaintiff without prejudice to the continuation of the proceedings in Civil Case No. 17450 until the final determination thereof. Aure further asseverated that mere allegation of ownership should not divest the MeTC of jurisdiction over the ejectment suit since jurisdiction over the subject matter is conferred by law and should not depend on the defenses and objections raised by the parties. Finally, Aure contended that the MeTC erred in dismissing his Complaint with prejudice on the ground of non-compliance with barangay conciliation process. He was not given the opportunity to rectify the procedural defect by going through the barangay mediation proceedings and, thereafter, refile the Complaint.[if !supportFootnotes][15][endif]

On 17 October 2001, the Court of Appeals rendered a Decision, reversing the MeTC and RTC Decisions and remanding the case to the MeTC for further proceedings and final determination of the substantive rights of the parties. The appellate court declared that the failure of Aure to subject the matter to barangay conciliation is not a jurisdictional flaw and it will not affect the sufficiency of Aures Complaint since Aquino failed to seasonably raise such issue in her Answer. The Court of Appeals further ruled that mere allegation of ownership does not deprive the MeTC of jurisdiction over the ejectment case for jurisdiction over the subject matter is conferred by law and is determined by the allegations advanced by the plaintiff in his complaint. Hence, mere assertion of ownership by the defendant in an ejectment case will not oust the MeTC of its summary jurisdiction over the same. The decretal part of the Court of Appeals Decision reads:

WHEREFORE, premises considered, the petition is hereby GRANTED - and the decisions of the trial courts below REVERSED and SET ASIDE. Let the records be remanded back to the court a quo for further proceedings for an eventual decision of the substantive rights of the disputants.[if !supportFootnotes][16][endif]

In a Resolution dated 8 May 2002, the Court of Appeals denied the Motion for Reconsideration

interposed by Aquino for it was merely a rehash of the arguments set forth in her previous pleadings which were already considered and passed upon by the appellate court in its assailed Decision.

Aquino is now before this Court via the Petition at bar raising the following issues:

I.

WHETHER OR NOT NON-COMPLIANCE WITH THE BARANGAY CONCILIATION PROCEEDINGS IS A JURISDICTIONAL DEFECT THAT WARRANTS THE DISMISSAL OF THE COMPLAINT.

II.

WHETHER OR NOT ALLEGATION OF OWNERSHIP OUSTS THE MeTC OF ITS JURISDICTION OVER AN EJECTMENT CASE.

The barangay justice system was established primarily as a means of easing up the congestion of cases in the judicial courts. This could be accomplished through a proceeding before the barangay courts which, according to the conceptor of the system, the late Chief Justice Fred Ruiz Castro, is essentially arbitration in character, and to make it truly effective, it should also be compulsory. With this primary objective of the barangay justice system in mind, it would be wholly in keeping with the underlying philosophy of Presidential Decree No. 1508, otherwise known as the Katarungang Pambarangay Law, and the policy behind it would be better served if an out-of-court settlement of the case is reached voluntarily by the parties.[if !supportFootnotes][17][endif]

The primordial objective of Presidential Decree No. 1508 is to reduce the number of court litigations and prevent the deterioration of the quality of justice which has been brought by the indiscriminate filing of cases in the courts.[if !supportFootnotes][18][endif] To ensure this objective, Section 6 of Presidential Decree No. 1508[if !supportFootnotes][19][endif] requires the parties to undergo a conciliation process before the Lupon Chairman or the Pangkat ng Tagapagkasundo as a precondition to filing a complaint in court subject to certain exceptions[if !supportFootnotes][20][endif] which are inapplicable to this case. The said section has been declared compulsory in nature.[if !supportFootnotes][21][endif]

Presidential Decree No. 1508 is now incorporated in Republic Act No. 7160, otherwise known as The Local Government Code, which took effect on 1 January 1992.

The pertinent provisions of the Local Government Code making conciliation a precondition to filing of complaints in court, read:

SEC. 412. Conciliation.- (a) Pre-condition to filing of complaint in court. No complaint, petition, action, or proceeding involving any matter within the authority of the

lupon shall be filed or instituted directly in court or any other government office for adjudication, unless there has been a confrontation between the parties before the lupon chairman or the pangkat, and that no conciliation or settlement has been reached as certified by the lupon secretary or pangkat secretary as attested to by the lupon chairman or pangkat chairman or unless the settlement has been repudiated by the parties thereto.

(b) Where parties may go directly to court. The parties may go directly to court in the following instances:

(1) Where the accused is under detention;

(2) Where a person has otherwise been deprived of personal liberty calling for habeas corpus proceedings;

(3) Where actions are coupled with provisional remedies such as preliminary injunction, attachment, delivery of personal property, and support pendente lite; and

(4) Where the action may otherwise be barred by the statute of limitations.

(c) Conciliation among members of indigenous cultural communities. The customs and traditions of indigenous cultural communities shall be applied in settling disputes between members of the cultural communities.

SEC. 408. Subject Matter for Amicable Settlement; Exception Therein. The lupon of each barangay shall have authority to bring together the parties actually residing in the same city or municipality for amicable settlement of all disputes except:

(a) Where one party is the government or any subdivision or instrumentality thereof;

(b) Where one party is a public officer or employee, and the dispute relates to the performance of his official functions;

(c) Offenses punishable by imprisonment exceeding one (1) year or a fine exceeding Five thousand pesos (P5,000.00);

(d) Offenses where there is no private offended party;

(e) Where the dispute involves real properties located in different cities or municipalities unless the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon;

(f) Disputes involving parties who actually reside in barangays of different cities or municipalities, except where such barangay units adjoin each other and the parties thereto agree to submit their differences to amicable settlement by an appropriate lupon;

(g) Such other classes of disputes which the President may determine in the interest of justice or upon the recommendation of the Secretary of Justice.

There is no dispute herein that the present case was never referred to the Barangay Lupon for conciliation before Aure and Aure Lending instituted Civil Case No. 17450. In fact, no allegation of such barangay conciliation proceedings was made in Aure and Aure Lendings Complaint before the MeTC. The only issue to be resolved is whether non-recourse to the barangay conciliation process is a jurisdictional flaw that warrants the dismissal of the ejectment suit filed with the MeTC.

Aquino posits that failure to resort to barangay conciliation makes the action for ejectment premature and, hence, dismissible. She likewise avers that this objection was timely raised during the pre-trial and even subsequently in her Position Paper submitted to the MeTC.

We do not agree.

It is true that the precise technical effect of failure to comply with the requirement of Section 412 of the Local Government Code on barangay conciliation (previously contained in Section 5 of Presidential Decree No. 1508) is much the same effect produced by non-exhaustion of administrative remedies -- the complaint becomes afflicted with the vice of pre-maturity; and the controversy there alleged is not ripe for judicial determination. The complaint becomes vulnerable to a motion to dismiss.[if !supportFootnotes][22][endif] Nevertheless, the conciliation process is not a jurisdictional requirement, so that non-compliance therewith cannot affect the jurisdiction which the court has otherwise acquired over the subject matter or over the person of the defendant.[if !supportFootnotes][23][endif]

As enunciated in the landmark case of Royales v. Intermediate Appellate Court[if !supportFootnotes][24][endif]:

Ordinarily, non-compliance with the condition precedent prescribed by P.D. 1508 could affect the sufficiency of the plaintiff's cause of action and make his complaint vulnerable to dismissal on ground of lack of cause of action or prematurity; but the same would not prevent a court of competent jurisdiction from exercising its power of adjudication over the case before it, where the defendants, as in this

case, failed to object to such exercise of jurisdiction in their answer and even during the entire proceedings a quo.

While petitioners could have prevented the trial court from exercising jurisdiction over the case by seasonably taking exception thereto, they instead invoked the very same jurisdiction by filing an answer and seeking affirmative relief from it. What is more, they participated in the trial of the case by cross-examining respondent Planas. Upon this premise, petitioners cannot now be allowed belatedly to adopt an inconsistent posture by attacking the jurisdiction of the court to which they had submitted themselves voluntarily. x x x (Emphasis supplied.)

In the case at bar, we similarly find that Aquino cannot be allowed to attack the jurisdiction of the MeTC over Civil Case No. 17450 after having submitted herself voluntarily thereto. We have scrupulously examined Aquinos Answer before the MeTC in Civil Case No. 17450 and there is utter lack of any objection on her part to any deficiency in the complaint which could oust the MeTC of its jurisdcition.

We thus quote with approval the disquisition of the Court of Appeals:

Moreover, the Court takes note that the defendant [Aquino] herself did not raise in defense the aforesaid lack of conciliation proceedings in her answer, which raises the exclusive affirmative defense of simulation. By this acquiescence, defendant [Aquino] is deemed to have waived such objection. As held in a case of similar circumstances, the failure of a defendant [Aquino] in an ejectment suit to specifically allege the fact that there was no compliance with the barangay conciliation procedure constitutes a waiver of that defense. x x x.[if !supportFootnotes][25][endif]

By Aquinos failure to seasonably object to the deficiency in the Complaint, she is deemed to have already acquiesced or waived any defect attendant thereto. Consequently, Aquino cannot thereafter move for the dismissal of the ejectment suit for Aure and Aure Lendings failure to resort to the barangay conciliation process, since she is already precluded from doing so. The fact that Aquino raised such objection during the pre-trial and in her Position Paper is of no moment, for the issue of non-recourse to barangay mediation proceedings should be impleaded in her Answer.

As provided under Section 1, Rule 9 of the 1997 Rules of Civil Procedure:

Sec. 1. Defenses and objections not pleaded. Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived. However, when it appears from the pleadings or the evidence on record that the court has no jurisdiction over the subject matter, that there is another action pending between the same parties for the same cause, or that the action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim. (Emphasis supplied.)

While the aforequoted provision applies to a pleading (specifically, an Answer) or a motion to dismiss, a similar or identical rule is provided for all other motions in Section 8 of Rule 15 of the same Rule which states:

Sec. 8. Omnibus Motion. - Subject to the provisions of Section 1 of Rule 9, a motion attacking a pleading, order, judgment, or proceeding shall include all objections then available, and all objections not so included shall be deemed waived.

The spirit that surrounds the foregoing statutory norm is to require the party filing a pleading or motion to raise all available exceptions for relief during the single opportunity so that single or multiple objections may be avoided.[if !supportFootnotes][26][endif] It is clear and categorical in Section 1, Rule 9 of the Revised Rules of Court that failure to raise defenses and objections in a motion to dismiss or in an answer is deemed a waiver thereof; and basic is the rule in statutory construction that when the law is clear and free from any doubt or ambiguity, there is no room for construction or interpretation.[if !supportFootnotes][27][endif] As has been our consistent ruling, where the law speaks in clear and categorical language, there is no occasion for interpretation; there is only room for application.[if !supportFootnotes][28][endif] Thus, although Aquinos defense of non-compliance with Presidential Decree No. 1508 is meritorious, procedurally, such defense is no longer available for failure to plead the same in the Answer as required by the omnibus motion rule.

Neither could the MeTC dismiss Civil Case No. 17450 motu proprio. The 1997 Rules of Civil Procedure provide only three instances when the court may motu proprio dismiss the claim, and that is when the pleadings or evidence on the record show that (1) the court has no jurisdiction over the subject matter; (2) there is another cause of action pending between the same parties for the same cause; or (3) where the action is barred by a prior judgment or by a statute of limitations. Thus, it is clear that a court may not motu proprio dismiss a case on the ground of failure to comply with the requirement for barangay conciliation, this ground not being among those mentioned for the dismissal by the trial court of a case on its own initiative.

Aquino further argues that the issue of possession in the instant case cannot be resolved by the MeTC without first adjudicating the question of ownership, since the Deed of Sale vesting Aure with the legal right over the subject property is simulated.

Again, we do not agree. Jurisdiction in ejectment cases is determined by the allegations pleaded in the complaint. As long as these allegations demonstrate a cause of action either for forcible entry or for unlawful detainer, the court acquires jurisdiction over the subject matter. This principle holds, even if the facts proved during the trial do not support the cause of action thus alleged, in which instance the court -- after acquiring jurisdiction -- may resolve to dismiss the action for insufficiency of evidence.

The necessary allegations in a Complaint for ejectment are set forth in Section 1, Rule 70 of the Rules of Court, which reads:

SECTION 1. Who may institute proceedings, and when. Subject to the provisions of the next succeeding section, a person deprived of the possession of any land or building by force, intimidation,

threat, strategy, or stealth, or a lessor, vendor, vendee, or other person against whom the possession of any land or building is unlawfully withheld after the expiration or termination of the right to hold possession, by virtue of any contract, express or implied, or the legal representatives or assigns of any such lessor, vendor, vendee, or other person may at any time within one (1) year after such unlawful deprivation or withholding of possession, bring an action in the proper Municipal Trial Court against the person or persons unlawfully withholding or depriving of possession, or any person or persons claiming under them, for the restitution of such possession, together with damages and costs.

In the case at bar, the Complaint filed by Aure and Aure Lending on 2 April 1997, alleged as follows:

2. [Aure and Aure Lending] became the owners of a house and lot located at No. 37 Salazar Street corner Encarnacion Street, B.F. Homes, Quezon City by virtue of a deed of absolute sale executed by [the spouses Aquino] in favor of [Aure and Aure Lending] although registered in the name of x x x Ernesto S. Aure; title to the said property had already been issued in the name of [Aure] as shown by a transfer Certificate of Title , a copy of which is hereto attached and made an integral part hereof as Annex A;

3. However, despite the sale thus transferring ownership of the subject premises to [Aure and Aure Lending] as above-stated and consequently terminating [Aquinos] right of possession over the subject property, [Aquino] together with her family, is continuously occupying the subject premises notwithstanding several demands made by [Aure and Aure Lending] against [Aquino] and all persons claiming right under her to vacate the subject premises and surrender possession thereof to [Aure and Aure Lending] causing damage and prejudice to [Aure and Aure Lending] and making [Aquinos] occupancy together with those actually occupying the subject premises claiming right under her, illegal.[if !supportFootnotes][29][endif]

It can be inferred from the foregoing that Aure, together with Aure Lending, sought the possession of the subject property which was never surrendered by Aquino after the perfection of the Deed of Sale, which gives rise to a cause of action for an ejectment suit cognizable by the MeTC. Aures assertion of possession over the subject property is based on his ownership thereof as evidenced by TCT No. 156802 bearing his name. That Aquino impugned the validity of Aures title over the subject property and claimed that the Deed of Sale was simulated should not divest the MeTC of jurisdiction over the ejectment case.[if !supportFootnotes][30][endif]

As extensively discussed by the eminent jurist Florenz D. Regalado in Refugia v. Court of Appeals[if !supportFootnotes][31][endif]:

As the law on forcible entry and unlawful detainer cases now stands, even where the defendant raises the question of ownership in his pleadings and the question of possession cannot be resolved without deciding the issue of ownership, the Metropolitan Trial Courts, Municipal Trial Courts, and Municipal Circuit Trial Courts nevertheless have the undoubted competence to resolve the issue of ownership albeit only to determine the issue of possession.

x x x. The law, as revised, now provides instead that when the question of possession cannot be resolved without deciding the issue of ownership, the issue of ownership shall be resolved only

to determine the issue of possession. On its face, the new Rule on Summary Procedure was extended to include within the jurisdiction of the inferior courts ejectment cases which likewise involve the issue of ownership. This does not mean, however, that blanket authority to adjudicate the issue of ownership in ejectment suits has been thus conferred on the inferior courts.

At the outset, it must here be stressed that the resolution of this particular issue concerns and applies only to forcible entry and unlawful detainer cases where the issue of possession is intimately intertwined with the issue of ownership. It finds no proper application where it is otherwise, that is, where ownership is not in issue, or where the principal and main issue raised in the allegations of the complaint as well as the relief prayed for make out not a case for ejectment but one for recovery of ownership.

Apropos thereto, this Court ruled in Hilario v. Court of Appeals[if !supportFootnotes][32][endif]:

Thus, an adjudication made therein regarding the issue of ownership should be regarded as merely provisional and, therefore, would not bar or prejudice an action between the same parties involving title to the land. The foregoing doctrine is a necessary consequence of the nature of forcible entry and unlawful detainer cases where the only issue to be settled is the physical or material possession over the real property, that is, possession de facto and not possession de jure.

In other words, inferior courts are now conditionally vested with adjudicatory power over the issue of title or ownership raised by the parties in an ejectment suit. These courts shall resolve the question of ownership raised as an incident in an ejectment case where a determination thereof is necessary for a proper and complete adjudication of the issue of possession.[if !supportFootnotes][33][endif]

WHEREFORE, premises considered, the instant Petition is DENIED. The Court of Appeals Decision dated 17 October 2001 and its Resolution dated 8 May 2002 in CA-G.R. SP No. 63733 are hereby AFFIRMED. Costs against the petitioner.

SO ORDERED.

FIRST DIVISION

G.R. No. 161657 October 4, 2007

REPUBLIC OF THE PHILIPPINES, Petitioner,

vs.

HON. VICENTE A. HIDALGO, in his capacity as Presiding Judge of the Regional Trial Court of Manila, Branch 37, CARMELO V. CACHERO, in his capacity as Sheriff IV, Regional Trial Court of Manila, and TARCILA LAPERAL MENDOZA, Respondents.

D E C I S I O N

GARCIA, J.:

Via this verified petition for certiorari and prohibition under Rule 65 of the Rules of Court, the Republic of the Philippines ("Republic," for short), thru the Office of the Solicitor General (OSG), comes to this Court to nullify and set aside the decision dated August 27, 2003 and other related issuances of the Regional Trial Court (RTC) of Manila, Branch 37, in its Civil Case No. 99-94075. In directly invoking the Courts original jurisdiction to issue the extraordinary writs of certiorari and prohibition, without challenge from any of the respondents, the Republic gave as justification therefor the fact that the case involves an over TWO BILLION PESO judgment against the State, allegedly rendered in blatant violation of the Constitution, law and jurisprudence.

By any standard, the case indeed involves a colossal sum of money which, on the face of the assailed decision, shall be the liability of the national government or, in fine, the taxpayers. This consideration, juxtaposed with the constitutional and legal questions surrounding the controversy, presents special and compelling reasons of public interests why direct recourse to the Court should be allowed, as an exception to the policy on hierarchy of courts.

At the core of the litigation is a 4,924.60-square meter lot once covered by Transfer Certificate of Title (TCT) No. 118527 of the Registry of Deeds of Manila in the name of the herein private respondent Tarcila Laperal Mendoza (Mendoza), married to Perfecto Mendoza. The lot is situated at No. 1440 Arlegui St., San Miguel, Manila, near the Malacaang Palace complex. On this lot, hereinafter referred to as the Arlegui property, now stands the Presidential Guest House which was home to two (2) former Presidents of the Republic and now appears to be used as office building of the Office of the President.1

The facts:

Sometime in June 1999, Mendoza filed a suit with the RTC of Manila for reconveyance and the corresponding declaration of nullity of a deed of sale and title against the Republic, the Register of Deeds of Manila and one Atty. Fidel Vivar. In her complaint, as later amended, docketed as Civil Case No. 99-94075 and eventually raffled to Branch 35 of the court, Mendoza essentially alleged being the owner of the disputed Arlegui property which the Republic forcibly dispossessed her of and over which the Register of Deeds of Manila issued TCT No. 118911 in the name of the Republic.

Answering, the Republic set up, among other affirmative defenses, the States immunity from suit.

The intervening legal tussles are not essential to this narration. What is material is that in an Order of March 17, 2000, the RTC of Manila, Branch 35, dismissed Mendozas complaint. The court would also deny, in another order dated May 12, 2000, Mendozas omnibus motion for reconsideration. On a petition for certiorari, however, the Court of Appeals (CA), in CA-G.R. SP No. 60749, reversed the trial courts assailed orders and remanded the case to the court a quo for further proceedings.2 On appeal, this Court, in G.R. No. 155231, sustained the CAs reversal action.3

From Branch 35 of the trial court whose then presiding judge inhibited himself from hearing the remanded Civil Case No. 99-94075, the case was re-raffled to Branch 37 thereof, presided by the respondent judge.

On May 5, 2003, Mendoza filed a Motion for Leave of Court to file a Third Amended Complaint with a copy of the intended third amended complaint thereto attached. In the May 16, 2003 setting to hear the motion, the RTC, in open court and in the presence of the Republics counsel, admitted the third amended complaint, ordered the Republic to file its answer thereto within five (5) days from May 16, 2003 and set a date for pre-trial.

In her adverted third amended complaint for recovery and reconveyance of the Arlegui property, Mendoza sought the declaration of nullity of a supposed deed of sale dated July 15, 1975 which provided the instrumentation toward the issuance of TCT No. 118911 in the name of the Republic. And aside from the cancellation of TCT No. 118911, Mendoza also asked for the reinstatement of her TCT No. 118527.4 In the

same third amended complaint, Mendoza averred that, since time immemorial, she and her predecessors-in-interest had been in peaceful and adverse possession of the property as well as of the owners duplicate copy of TCT No. 118527. Such possession, she added, continued "until the first week of July 1975 when a group of armed men representing themselves to be members of the Presidential Security Group [PSG] of the then President Ferdinand E. Marcos, had forcibly entered [her] residence and ordered [her] to turn over to them her Copy of TCT No. 118525 and compelled her and the members of her household to vacate the same ; thus, out of fear for their lives, [she] handed her Owners Duplicate Certificate Copy of TCT No. 118527 and had left and/or vacated the subject property." Mendoza further alleged the following:

1. Per verification, TCT No. 118527 had already been cancelled by virtue of a deed of sale in favor of the Republic allegedly executed by her and her deceased husband on July 15, 1975 and acknowledged before Fidel Vivar which deed was annotated at the back of TCT No. 118527 under PE: 2035/T-118911 dated July 28, 1975; and

2. That the aforementioned deed of sale is fictitious as she (Mendoza) and her husband have not executed any deed of conveyance covering the disputed property in favor of the Republic, let alone appearing before Fidel Vivar.

Inter alia, she prayed for the following:

4. Ordering the Republic to pay plaintiff [Mendoza] a reasonable compensation or rental for the use or occupancy of the subject property in the sum of FIVE HUNDRED THOUSAND (P500,000.00) PESOS a month with a five (5%) per cent yearly increase, plus interest thereon at the legal rate, beginning July 1975 until it finally vacates the same;

5. Ordering the Republic to pay plaintiffs counsel a sum equivalent to TWENTY FIVE (25%) PER CENT of the current value of the subject property and/or whatever amount is recovered under the premises; Further, plaintiff prays for such other relief, just and equitable under the premises.

On May 21, 2003, the Republic, represented by the OSG, filed a Motion for Extension (With Motion for Cancellation of scheduled pre-trial). In it, the Republic manifested its inability to simply adopt its previous answer and, accordingly, asked that it be given a period of thirty (30) days from May 21, 2003 or until June 20, 2003 within which to submit an Answer.5 June 20, 2003 came and went, but no answer was filed. On July 18, 2003 and again on August 19, 2003, the OSG moved for a 30-day extension at each instance. The filing of the last two motions for extension proved to be an idle gesture, however, since the trial court had meanwhile issued an order6 dated July 7, 2003 declaring the petitioner Republic as in default and allowing the private respondent to present her evidence ex-parte.

The evidence for the private respondent, as plaintiff a quo, consisted of her testimony denying having executed the alleged deed of sale dated July 15, 1975 which paved the way for the issuance of TCT No. 118911. According to her, said deed is fictitious or inexistent, as evidenced by separate certifications, the first (Exh. "E"), issued by the Register of Deeds for Manila and the second (Exh. "F"), by the Office of Clerk of Court, RTC Manila. Exhibit "E"7 states that a copy of the supposed conveying deed cannot, despite diligent efforts of records personnel, be located, while Exhibit "F"8 states that Fidel Vivar was not a commissioned notary public for and in the City of Manila for the year 1975. Three other witnesses9 testified, albeit their testimonies revolved around the appraisal and rental values of the Arlegui property.

Eventually, the trial court rendered a judgment by default10 for Mendoza and against the Republic. To the trial court, the Republic had veritably confiscated Mendozas property, and deprived her not only of the use thereof but also denied her of the income she could have had otherwise realized during all the years she was illegally dispossessed of the same.

Dated August 27, 2003, the trial courts decision dispositively reads as follows:

WHEREFORE, judgment is hereby rendered:

1. Declaring the deed of sale dated July 15, 1975, annotated at the back of [TCT] No. 118527 as PE:2035/T-118911, as non-existent and/or fictitious, and, therefore, null and void from the beginning;

2. Declaring that [TCT] No. 118911 of the defendant Republic of the Philippines has no basis, thereby making it null and void from the beginning;

3. Ordering the defendant Register of Deeds for the City of Manila to reinstate plaintiff [Mendozas TCT] No. 118527;

4. Ordering the defendant Republic to pay just compensation in the sum of ONE HUNDRED FORTY THREE MILLION SIX HUNDRED THOUSAND (P143,600,000.00) PESOS, plus interest at the legal rate, until the whole amount is paid in full for the acquisition of the subject property;

5. Ordering the plaintiff, upon payment of the just compensation for the acquisition of her property, to execute the necessary deed of conveyance in favor of the defendant Republic ; and, on the other hand, directing the defendant Register of Deeds, upon presentation of the said deed of conveyance, to cancel plaintiffs TCT No. 118527 and to issue, in lieu thereof, a new Transfer Certificate of Title in favor of the defendant Republic;

6. Ordering the defendant Republic to pay the plaintiff the sum of ONE BILLION FOUR HUNDRED EIGHTY MILLION SIX HUNDRED TWENTY SEVEN THOUSAND SIX HUNDRED EIGHTY EIGHT (P1,480,627,688.00) PESOS, representing the reasonable rental for the use of the subject property, the interest thereon at the legal rate, and the opportunity cost at the rate of three (3%) per cent per annum, commencing July 1975 continuously up to July 30, 2003, plus an additional interest at the legal rate, commencing from this date until the whole amount is paid in full;

7. Ordering the defendant Republic to pay the plaintiff attorneys fee, in an amount equivalent to FIFTEEN (15%) PER CENT of the amount due to the plaintiff.

With pronouncement as to the costs of suit.

SO ORDERED. (Words in bracket and emphasis added.)

Subsequently, the Republic moved for, but was denied, a new trial per order of the trial court of October 7, 2003.11 Denied also was its subsequent plea for reconsideration.12 These twin denial orders were followed by several orders and processes issued by the trial court on separate dates as hereunder indicated:

1. November 27, 2003 - - Certificate of Finality declaring the August 27, 2003 decision final and executory.13

2. December 17, 2003 - - Order denying the Notice of Appeal filed on November 27, 2003, the same having been filed beyond the reglementary period.14

3. December 19, 2003 - - Order15 granting the private respondents motion for execution.

4. December 22, 2003 - - Writ of Execution.16

Hence, this petition for certiorari.

By Resolution17 of November 20, 2006, the case was set for oral arguments. On January 22, 2007, when this case was called for the purpose, both parties manifested their willingness to settle the case amicably, for which reason the Court gave them up to February 28, 2007 to submit the compromise agreement for approval. Following several approved extensions of the February 28, 2007 deadline, the OSG, on August 6, 2007, manifested that it is submitting the case for resolution on the merits owing to the inability of the parties to agree on an acceptable compromise.

In this recourse, the petitioner urges the Court to strike down as a nullity the trial courts order declaring it in default and the judgment by default that followed. Sought to be nullified, too, also on the ground that they were issued in grave abuse of discretion amounting to lack or in excess of jurisdiction, are the orders and processes enumerated immediately above issued after the rendition of the default judgment.

Petitioner lists five (5) overlapping grounds for allowing its petition. It starts off by impugning the order of default and the judgment by default. To the petitioner, the respondent judge committed serious jurisdictional error when he proceeded to hear the case and eventually awarded the private respondent a staggering amount without so much as giving the petitioner the opportunity to present its defense.

Petitioners posture is simply without merit.

Deprivation of procedural due process is obviously the petitioners threshold theme. Due process, in its procedural aspect, guarantees in the minimum the opportunity to be heard.18 Grave abuse of discretion, however, cannot plausibly be laid at the doorstep of the respondent judge on account of his having issued the default order against the petitioner, then proceeding with the hearing and eventually rendering a default judgment. For, what the respondent judge did hew with what Section 3, Rule 9 of the Rules of Court prescribes and allows in the event the defending party fails to seasonably file a responsive pleading. The provision reads:

SEC. 3. Default; declaration of.- If the defending party fails to answer within the time allowed therefor, the court shall, upon motion of the claiming party with notice to the defending party, and proof of such failure, declare the defending party in default. Thereupon, the court shall proceed to render judgment granting the claimant such relief as his pleading may warrant, unless the court in its discretion requires the claimant to submit evidence .19

While the ideal lies in avoiding orders of default,20 the policy of the law being to have every litigated case tried on its full merits,21 the act of the respondent judge in rendering the default judgment after an order of default was properly issued cannot be struck down as a case of grave abuse of discretion.

The term "grave abuse of discretion," in its juridical sense, connotes capricious, despotic, oppressive or whimsical exercise of judgment as is equivalent to lack of jurisdiction.22 The abuse must be of such degree as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law, as where the power is exercised in a capricious manner. The word "capricious," usually used in tandem with "arbitrary," conveys the notion of willful and unreasoning action.23

Under the premises, the mere issuance by the trial court of the order of default followed by a judgment by default can easily be sustained as correct and doubtless within its jurisdiction. Surely, a disposition directing the Republic to pay an enormous sum without the trial court hearing its side does not, without more, vitiate, on due procedural ground, the validity of the default judgment. The petitioner may have indeed been deprived of such hearing, but this does not mean that its right to due process had been violated. For, consequent to being declared in default, the defaulting defendant is deemed to have waived his right to be heard or to take part in the trial. The handling solicitors simply squandered the Republics opportunity to be heard. But more importantly, the law itself imposes such deprivation of the right to participate as a form of penalty against one unwilling without justification to join issue upon the allegations tendered by the plaintiff.

And going to another point, the petitioner would ascribe jurisdictional error on the respondent judge for denying its motion for new trial based on any or a mix of the following factors, viz., (1) the failure to file an answer is attributable to the negligence of the former handling solicitor; (2) the meritorious nature of the petitioners defense; and (3) the value of the property involved.

The Court is not convinced. Even as the Court particularly notes what the trial court had said on the matter of negligence: that all of the petitioners pleadings below bear at least three signatures, that of the handling solicitor, the assistant solicitor and the Solicitor General himself, and hence accountability should go up all the way to the top of the totem pole of authority, the cited reasons advanced by the petitioner for a new trial are not recognized under Section 1, Rule 37 of the Rules of Court for such recourse.24 Withal, there is no cogent reason to disturb the denial by the trial court of the motion for new trial and the denial of the reiterative motion for reconsideration.

Then, too, the issuance by the trial court of the Order dated December 17, 200325 denying the petitioners notice of appeal after the court caused the issuance on November 27, 2003 of a certificate of finality of its August 27, 2003 decision can hardly be described as arbitrary, as the petitioner would have this Court believe. In this regard, the Court takes stock of the following key events and material dates set forth in the assailed December 17, 2003 order, supra: (a) The petitioner, thru the OSG, received on August 29, 2003 a copy of the RTC decision in this case, hence had up to September 13, 2003, a Saturday, within which to perfect an appeal; (b) On September 15, 2003, a Monday, the OSG filed its motion for new trial, which the RTC denied, the OSG receiving a copy of the order of denial on October 9, 2003; and (c) On October 24, 2003, the OSG sought reconsideration of the order denying the motion for new trial. The motion for reconsideration was denied per Order dated November 25, 2003, a copy of which the OSG received on the same date.

Given the foregoing time perspective, what the trial court wrote in its aforementioned impugned order of December 17, 2003 merits approval:

In the case at bar, it is clear that the motion for new trial filed on the fifteenth (15th) day after the decision was received on August 29, 2003 was denied and the moving party has only the remaining period from notice of notice of denial within which to file a notice of appeal. xxx

Accordingly, when defendants [Republic et al.] filed their motion for new trial on the last day of the fifteen day (15) prescribed for taking an appeal, which motion was subsequently denied, they had one (1) day from receipt of a copy of the order denying new trial within which to perfect [an] appeal . Since defendants had received a copy of the order denying their motion for new trial on 09 October 2003, reckoned from that date, they only have one (1) day left within which to file the notice of appeal. But instead of doing so, the defendants filed a motion for reconsideration which was later declared by the Court as pro forma motion in the Order dated 25 November 2003. The running of the prescriptive period, therefore, can not be interrupted by a pro forma motion. Hence the filing of the notice of appeal on 27 November 2007 came much too late for by then the judgment had already become final and executory.26 (Words in bracket added; Emphasis in the original.)

It cannot be over-emphasized at this stage that the special civil action of certiorari is limited to resolving only errors of jurisdiction; it is not a remedy to correct errors of judgment. Hence, the petitioners lament, partly covered by and discussed under the first ground for allowing its petition, about the trial court taking cognizance of the case notwithstanding private respondents claim or action being barred by prescription and/or laches cannot be considered favorably. For, let alone the fact that an action for the declaration of the inexistence of a contract, as here, does not prescribe;27 that a void transfer of property can be recovered by accion reivindicatoria;28 and that the legal fiction of indefeasibility of a Torrens title cannot be used as a shield to perpetuate fraud,29 the trial courts disinclination not to appreciate in favor of the Republic the general principles of prescription or laches constitutes, at best, errors of judgment not correctable by certiorari.

The evidence adduced below indeed adequately supports a conclusion that the Office of the President, during the administration of then President Marcos, wrested possession of the property in question and somehow secured a certificate of title over it without a conveying deed having been executed to legally justify the cancellation of the old title (TCT No. 118527) in the name of the private respondent and the issuance of a new one (TCT No. 118911) in the name of petitioner Republic. Accordingly, granting private respondents basic plea for recovery of the Arlegui property, which was legally hers all along, and the reinstatement of her cancelled certificate of title are legally correct as they are morally right. While not exactly convenient because the Office of the President presently uses it for mix residence and office purposes, restoring private respondent to her possession of the Arlegui property is still legally and physically feasible. For what is before us, after all, is a registered owner of a piece of land who, during the early days of the martial law regime, lost possession thereof to the Government which appropriated the same for some public use, but without going through the legal process of expropriation, let alone paying such owner just compensation.

The Court cannot, however, stop with just restoring the private respondent to her possession and ownership of her property. The restoration ought to be complemented by some form of monetary compensation for having been unjustly deprived of the beneficial use thereof, but not, however, in the varying amounts and level fixed in the assailed decision of the trial court and set to be executed by the equally assailed writ of execution. The Court finds the monetary award set forth therein to be erroneous. And the error relates to basic fundamentals of law as to constitute grave abuse of discretion.

As may be noted, private respondent fixed the assessed value of her Arlegui property at P2,388,990.00. And in the prayer portion of her third amended complaint for recovery, she asked to be restored to the possession of her property and that the petitioner be ordered to pay her, as reasonable compensation or rental use or occupancy thereof, the sum of P500,000.00 a month, or P6 Million a year, with a five percent (5%) yearly increase plus interest at the legal rate beginning July 1975. From July 1975 when the PSG allegedly took over the subject property to July 2003, a month before the trial court rendered judgment, or a period of 28 years, private respondents total rental claim would, per the OSGs computation, only amount to P371,440,426.00. In its assailed decision, however, the trial court ordered the petitioner to pay private respondent the total amount of over P1.48 Billion or the mind-boggling amount of P1,480,627,688.00, to be exact, representing the reasonable rental for the property, the interest rate thereon at the legal rate and the opportunity cost. This figure is on top of the P143,600,000.00 which represents the acquisition cost of the disputed property. All told, the trial court would have the Republic pay the total amount of about P1.624 Billion, exclusive of interest, for the taking of a property with a declared assessed value of P2,388,900.00. This is not to mention the award of attorneys fees in an amount equivalent to 15% of the amount due the

private respondent.

In doing so, the respondent judge brazenly went around the explicit command of Rule 9, Section 3(d) of the Rules of Court30 which defines the extent of the relief that may be awarded in a judgment by default, i.e., only so much as has been alleged and proved. The court acts in excess of jurisdiction if it awards an amount beyond the claim made in the complaint or beyond that proved by the evidence.31 While a defaulted defendant may be said to be at the mercy of the trial court, the Rules of Court and certainly the imperatives of fair play see to it that any decision against him must be in accordance with law.32 In the abstract, this means that the judgment must not be characterized by outrageous one-sidedness, but by what is fair, just and equitable that always underlie the enactment of a law.

Given the above perspective, the obvious question that comes to mind is the level of compensation which for the use and occupancy of the Arlegui property - would be fair to both the petitioner and the private respondent and, at the same time, be within acceptable legal bounds. The process of balancing the interests of both parties is not an easy one. But surely, the Arlegui property cannot possibly be assigned, even perhaps at the present real estate business standards, a monthly rental value of at least P500,000.00 or P6,000,000.00 a year, the amount private respondent particularly sought and attempted to prove. This asking figure is clearly unconscionable, if not downright ridiculous, attendant circumstances considered. To the Court, an award of P20,000.00 a month for the use and occupancy of the Arlegui property, while perhaps a little bit arbitrary, is reasonable and may be granted pro hac vice considering the following hard realities which the Court takes stock of:

1. The property is relatively small in terms of actual area and had an assessed value of only P2,388,900.00;

2. What the martial law regime took over was not exactly an area with a new and imposing structure, if there was any; and

3. The Arlegui property had minimal rental value during the relatively long martial law years, given the very restrictive entry and egress conditions prevailing at the vicinity at that time and even after.

To be sure, the grant of monetary award is not without parallel. In Alfonso v. Pasay City,33 a case where a registered owner also lost possession of a piece of lot to a municipality which took it for a public purposes without instituting expropriation proceedings or paying any compensation for the lot, the Court, citing Herrera v. Auditor General,34 ordered payment of just compensation but in the form of interest when a return of the property was no longer feasible.

The award of attorneys fees equivalent to 15% of the amount due the private respondent, as reduced herein, is affirmed.

The assessment of costs of suit against the petitioner is, however, nullified, costs not being allowed against the Republic, unless otherwise provided by law.35

The assailed trial courts issuance of the writ of execution36 against government funds to satisfy its money judgment is also nullified. It is basic that government funds and properties may not be seized under writs of execution or garnishment to satisfy such judgments.37 Republic v. Palacio38 teaches that a judgment against the State generally operates merely to liquidate and establish the plaintiffs claim in the absence of express provision; otherwise, they can not be enforced by processes of law.

Albeit title to the Arlegui property remains in the name of the petitioner Republic, it is actually the Office of the President which has beneficial possession of and use over it since the 1975 takeover. Accordingly, and in accord with the elementary sense of justice, it behooves that office to make the appropriate budgetary arrangements towards paying private respondent what is due her under the premises. This, to us, is the right thing to do. The imperatives of fair dealing demand no less. And the Court would be remiss in the discharge of its duties as dispenser of justice if it does not exhort the Office of the President to comply with what, in law and equity, is its obligation. If the same office will undertake to pay its obligation with reasonable dispatch or in a manner acceptable to the private respondent, then simple justice, while perhaps delayed, will have its day. Private respondent is in the twilight of her life, being now over 90 years of age.39 Any delay in the implementation of this disposition would be a bitter cut.1wphi1

WHEREFORE, the decision of the Regional Trial Court of Manila dated August 27, 2003 insofar as it nullified TCT No. 118911 of petitioner Republic of the Philippines and ordered the Register of Deeds of

Manila to reinstate private respondent Tarcila L. Mendozas TCT No. 118527, or to issue her a new certificate of title is AFFIRMED. Should it be necessary, the Register of Deeds of Manila shall execute the necessary conveying deed to effect the reinstatement of title or the issuance of a new title to her.

It is MODIFIED in the sense that for the use and occupancy of the Arlegui property, petitioner Republic is ordered to pay private respondent the reasonable amount of P20,000.00 a month beginning July 1975 until it vacates the same and the possession thereof restored to the private respondent, plus an additional interest of 6% per annum on the total amount due upon the finality of this Decision until the same is fully paid. Petitioner is further ordered to pay private respondent attorney's fees equivalent to 15% of the amount due her under the premises.

Accordingly, a writ of certiorari is hereby ISSUED in the sense that:

1. The respondent courts assailed decision of August 27, 2003 insofar as it ordered the petitioner Republic of the Philippines to pay private respondent Tarcila L. Mendoza the sum of One Billion Four Hundred Eighty Million Six Hundred Twenty Seven Thousand Six Hundred Eighty Eight Pesos (P1,480,627,688.00) representing the purported rental use of the property in question, the interest thereon and the opportunity cost at the rate of 3% per annum plus the interest at the legal rate added thereon is nullified. The portion assessing the petitioner Republic for costs of suit is also declared null and void.

2. The Order of the respondent court dated December 19, 2003 for the issuance of a writ of execution and the Writ of Execution dated December 22, 2003 against government funds are hereby declared null and void. Accordingly, the presiding judge of the respondent court, the private respondent, their agents and persons acting for and in their behalves are permanently enjoined from enforcing said writ of execution.

However, consistent with the basic tenets of justice, fairness and equity, petitioner Republic, thru the Office of the President, is hereby strongly enjoined to take the necessary steps, and, with reasonable dispatch, make the appropriate budgetary arrangements to pay private respondent Tarcila L. Mendoza or her assigns the amount adjudged due her under this disposition.

SO ORDERED.

SECOND DIVISION

ADM. MATTER NO. RTJ-04-1848 October 25, 2005

(Formerly OCA I.P.I. No. 03-1804-RTJ)

Philippine Amusement and Gaming Corporation (PAGCOR), represented by Atty. Carlos R. Bautista, Jr., Complainant,

vs.

HON. ROMULO A. LOPEZ, CHICO-NAZARIO,* Presiding Judge, Branch 34, Regional Trial Court, Manila, Respondent.

R E S O L U T I O N

AUSTRIA-MARTINEZ, J.:

PAGCOR filed the instant administrative complaint against Judge Romulo A. Lopez of the Regional Trial Court (RTC) of Manila, Branch 34, seeking his dismissal from the service for alleged gross ignorance of the law and for his disbarment for such ignorance, violation of the lawyers oath and the Code of Professional Responsibility.

The administrative complaint stemmed from the proceedings in Civil Case No. 00-99133,1 entitled, Filipinas Gaming Entertainment Totalizator Corporation (FILGAME) vs. PAGCOR, Department of Interior and Local

Government (DILG), and Secretary Alfredo S. Lim, filed with the RTC of Manila and assigned by raffle to Branch 34 presided by respondent Judge. The antecedents and the pertinent proceedings that transpired therein are as follows:

On June 17, 1999, PAGCOR entered into an Agreement with FILGAME and BELLE Jai-Alai Corporation (BELLE) for the resumption of the Jai-Alai operations in the country.2 FILGAME and BELLE jointly agreed to provide funds, at no cost to complainant, for pre-operating expenses and working capital. PAGCOR shall manage, operate and control all aspects of the Jai-Alai operations.

On October 19, 2000, the Office of the President of the Philippines issued a Memorandum addressed to Alicia Ll. Reyes, then PAGCOR Chairperson and Chief Executive Officer, directing her to take immediate steps to close down all PAGCOR facilities and outlets in Jai-Alai, on-line bingo and internet casino gaming.

On October 20, 2000, DILG, through then Secretary Alfredo S. Lim, caused the closure of the Jai-Alai main fronton.

Thus, on November 6, 2000, FILGAME and BELLE filed the case for Specific Performance and Injunction with prayer for Damages and Temporary Restraining Order (TRO), and Writ of Preliminary Injunction3 against PAGCOR, DILG and Secretary Alfredo Lim, docketed as Civil Case No. 00-99133 and raffled to herein respondent Judge.

On November 10, 2000, respondent issued a writ of temporary restraining order effective for 20 days.

On November 29, 2000, this Court rendered a decision in the cases, entitled, Raoul B. Del Mar vs. PAGCOR, BELLE and FILGAME and Federico S. Sandoval II and Michael T. Defensor vs. PAGCOR,4 the decretal portion of which reads:

WHEREFORE, the petitions are GRANTED. Respondents PAGCOR, Belle Jai-Alai Corporation and Filipinas Gaming Entertainment Totalizator Corporation are enjoined from managing, maintaining and operating jai-alai games, and from enforcing the agreement entered into by them for that purpose.

Motions for Reconsideration filed by PAGCOR, BELLE and FILGAME were subsequently denied.

Consequently, FILGAME and BELLE filed a Motion to Admit Amended Complaint5 with the trial court where the cause of action was changed, i.e., from Specific Performance to Recovery of Sum of Money, inasmuch as plaintiffs could no longer ask for specific performance of their agreement with complainant since the Court had declared the agreement without force and effect. Thus, FILGAME and BELLE sought to recover their pre-operating expenses and/or investments totaling P1,562,145,661.87 including the goodwill money of P200,000,000.00 which they allegedly invested with the complainant. Complainant filed an opposition on the ground that there is a substantial change in the complaint and cause of action.

On November 27, 2001, respondent issued an Order6 admitting the amended complaint and directing complainant and DILG to file their answer.

Complainant filed a motion to dismiss the amended complaint7 on the ground that the trial court had not acquired jurisdiction over the case for failure of the plaintiffs to pay the prescribed docket fees considering that the docket fee originally paid was only P1,212.00. It claimed that per the affidavit of Atty. Ma. Concepcion Gloria,8 complainants representative, she attested to the fact that as computed by the Docket Fee Assessor, the amended complaint, which sought recovery of the P1,562,145,661.87 including the P200,000,000 goodwill money, should have docket fees of P15,775,903.68.

On June 19, 2002, respondent issued an Order9 denying complainants motion to dismiss and directed it to file its answer. Respondent judge made the following ratiocination:

Considering the parties arguments, this Court is of the opinion and so holds that there is no basis for dismissing the amended complaint since the original complaint was filed and the corresponding docket fee was paid by the plaintiff, the Court had acquired jurisdiction over the said complaint. Having done so, and considering the rule for the payment of the docket fees set forth in the Sun Insurance Office, Ltd. with respect to initiatory pleadings, there is no firm ground to dismiss the Amended Complaint.

Under the said ruling "where the filing of the initiatory pleading is not accompanied by payment of the

docket fee, the Court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period." If a late payment of the docket fee is allowed in filing initiatory pleading to vest jurisdiction to the Court, with more reason the same leniency should be afforded in an amended pleading/complaint which sets out additional/new cause of action necessitating the increase of the docket fee. The plaintiff is correct in not immediately paying the additional filing fee before the amended complaint is admitted for why will it pay when there is no assurance that the amended complaint will be admitted.

Once jurisdiction is acquired and vested in a Court, said Court maintains its jurisdiction until judgment is had. (Aruego, Jr., et al. vs. CA, 254 SCRA 711-719). Such acquired jurisdiction is not lost by the amendment of a pleading that raises additional/new cause(s) of action. The jurisdiction of a Court is not lost even if additional docket fees are required by reason of the amendment.

In the same ruling in Sun Insurance case, "any additional filing (docket) fee shall constitute a lien on the judgment and that it shall be the responsibility of the Clerk of Court or his duly authorized deputy to enforce said lien and assess and collect the additional fee provided that the cause of action has not prescribed."

Moreover in Yuchengco vs. Republic, 333 SCRA 368, 381, the Supreme Court even allowed the payment of the filing fees beyond the prescriptive period.

Complainant then filed its Answer with compulsory counterclaim.10 A pre-trial conference was conducted. On October 10, 2002, respondent issued a Pre-trial Order and at the same time directed the parties to submit their respective comments and/or manifestations on the said order. The pre-trial order listed 13 issues to be resolved.

During the October 25, 2002 hearing, FILGAME and BELLE manifested their intention to file a Motion for Summary Judgment which they subsequently filed. Complainant filed its opposition thereto. Respondent did not conduct any hearing on the motion for summary judgment.

On May 19, 2003, respondent rendered his decision by way of Summary Judgment11 in favor of FILGAME and BELLE where complainant was ordered to return and pay the sum of P1,562,145,661.87, representing the amount of pre-operating expenses and/or investment including the goodwill money given by plaintiffs and the release of P500,000.00 cash bond posted in support of the TRO.

On June 10, 2003, complainant filed its notice of appeal12 which was subsequently withdrawn.

On June 12, 2003, complainant filed with the Court of Appeals (CA) a petition for certiorari seeking the annulment of the respondents decision by way of summary judgment for having been rendered without or in excess of jurisdiction and with grave abuse of discretion.13

On July 8, 2003, complainant filed the present administrative case charging respondent with gross ignorance of the law and for violations of the Lawyers Oath and Code of Professional Responsibility in connection with his actions in Civil Case No. 00-99133.

In a Resolution dated January 26, 2004,14 we deferred action on this complaint until the final resolution of the petition for certiorari filed before the CA.

On January 21, 2004, a judgment by compromise agreement15 was rendered by the CA in the certiorari case filed with it and an entry of judgment was subsequently made.16 Thereafter, complainant sought the continuation of the pending administrative case because there was no longer any legal impediment with the resolution of the certiorari case.

Complainant charges respondent for gross ignorance of the law and procedure in (1) admitting the amended complaint of plaintiffs FILGAME and BELLE in Civil Case No. 00-99133 despite the fact that (a) the amended complaint is a total change of theory of the case; and (b) that the required filing fees for the amended complaint were not paid; and (2) in rendering summary judgment (a) despite the fact that respondent found the existence of 13 factual issues to be resolved; (b) without conducting a hearing on the motion for summary judgment; (c) based on the alleged implied admission rather than on the personal knowledge of witnesses and other affiants; and (d) despite the fact that plaintiffs were estopped from denying the existence of these 13 issues raised in the pre-trial order.

Complainant contends that respondent denied its motion to dismiss the amended complaint without requiring plaintiffs FILGAME and BELLE to pay the correct docket fees within a reasonable time from the admission of the amended complaint, thus the court is deprived of its lawful docket fees in the amount of P15,774,691.68; that respondents reliance on the third rule enunciated in the Sun Insurance, i.e., allowing docket fee to constitute as lien on the judgment, finds no application in the civil case since the P1.5 Billion claim is not in the nature of an award not specified in the pleading.

Complainant claims that respondent Judge was grossly ignorant of the law when he disregarded the 13 factual issues enumerated in his Pre-trial Order dated October 10, 2002 and rendered a summary judgment on the case; that in rendering a summary judgment, he disposed of the case with undue haste thus depriving it of its day in court; that no hearing was conducted by respondent for purposes of resolving FILGAME and BELLEs motion for summary judgment as provided under Section 3, Rule 35 of the Rules on Civil Procedure; that although opposition, reply and rejoinder were submitted by the parties, the same appeared to be inadequate considering the mandatory nature of the summary hearing.

Complainant avers that respondent granted summary judgment based on its alleged implied admissions when it failed to specifically deny certain material allegations in the amended complaint and other pleadings of FILGAME and BELLE; that such is contrary to Section 5, Rule 35 and jurisprudence.

In his Comment, respondent denied having committed gross ignorance of the law in admitting the amended complaint since dismissal is not the consequence provided for in not paying the right docket fee at the time the complaint or initiatory pleading is filed; that the trial court acquires jurisdiction over a claim by the filing of appropriate pleading and payment of the prescribed filing fee but when subsequently the judgment awards a claim not specified in the pleading, the additional filing fee therefor shall constitute a lien on the judgment.

He argues that the grant of summary judgment despite the existence of a list of issues in his Pre-trial Order dated October 10, 2002 was not even final and only listed issues or matters which complainant refused to admit when counsel for BELLE and FILGAME asked for stipulations; that the holding of a trial type hearing is not absolutely indispensable for the court to rule on a motion for summary judgment; that he granted the motion for summary judgment not solely on the implied admissions made by complainant but based on the evidence on record and that complainants contention that plaintiffs are estopped from challenging the list of issues in the Pre-trial Order is without basis since plaintiffs had vigorously insisted for a summary judgment.

Complainant filed a Reply where it claimed that because of respondents undue haste in rendering summary judgment, some of its evidence were suppressed.

Respondent filed his Rejoinder where he stated that in his Order dated February 19, 2004, he required the payment of additional docket fees on the amended complaint which was complied with; that since it was the clerk of court who computed the same, any deficiency can still be collected by issuing another order. He denied the suppression of evidence since the alleged evidence were not attached to its answer to the amended complaint.

Complainant filed a Sur-rejoinder claiming that the additional docket fees were based on the compromise agreement entered by the parties in the CA in the amount of P120 million and not in the amended complaint for recovery of money in the amount of P1.56 billion.

In a Resolution dated September 15, 2004,17 the Court referred the case to Justice Noel G. Tijam of the CA for investigation, report and recommendation.

The Investigating Justice submitted his Report recommending the dismissal of the administrative and the disbarment complaint against respondent for patent lack of merit, based on the following findings:

Anent the issue on non-payment of docket fees on the amended complaint -

Based on the evidence, the undersigned Investigator finds that Respondent Judge did not commit gross ignorance of the law in admitting the amended complaint. There is no evidence that the respondent Judge acted in bad faith or was motivated by fraud, dishonesty or corruption in issuing the assailed order.

It is a well-settled rule that once the jurisdiction of the court attaches, it continues until the case is finally

terminated. The trial court cannot be ousted therefrom by subsequent happenings of events, although of a character would have prevented jurisdiction from attaching in the first instance.

The trial court validly acquired jurisdiction over the amended complaint. In the case of PNOC Shipping and Transport Corp. vs. CA, the Supreme Court ruled that the plaintiffs failure to pay the docket fee corresponding to its increased claim for damages to P600,000.00 under the amended complaint should not be considered as having curtailed the lower courts jurisdiction. Pursuant to the ruling in Sun Insurance Office, Ltd. vs. Asuncion, the unpaid docket fee should be considered as a lien on the judgment even though private respondent therein specified the amount of P600,000.00 as its claim for damages in its amended complaint. Besides, it is too late in the day to invoke lack of jurisdiction because the case decided by the respondent Judge elevated on appeal to the Court of Appeals has become final and executory when PAGCOR voluntarily entered into a compromise agreement in the Court of Appeals.

Respondent Judge did not deviate from the rules when he did not dismiss the amended complaint for failure to pay the additional docket fee because the court may still require the same to be paid within a reasonable time and in no case beyond the prescriptive period. The timely payment of docket fees is jurisdictional, but considerations of law and equity come into the picture. Despite the jurisdictional nature on the rule on the payment of the docket fee, the court still has discretion to relax the rule in meritorious cases.

Furthermore, the undersigned Investigator agrees with Respondent Judges argument that the assailed Order was consistent with Sec. 3, Rule 10 of the Rules on Civil Procedure, as amended and the ruling in the case of Pagubo vs. CA. Indeed, although an amendment may substantially change or alter the cause of action or defense, the same must serve the higher interests of substantial justice, and prevent delay and equally promote the laudable objective of the rules which is to secure a "just, speedy and inexpensive disposition of every action and proceedings."

Contrary to PAGCORs claim that Respondent Judge failed to issue an order to collect the additional docket fees, the evidence shows that Respondent Judge in fact issued an Order dated February 19, 2004, directing the Clerk of Court of the RTC of Manila to collect and require payment of docket fees within 15 days. The order was issued after the entry of judgment on a compromise which automatically lifted the TRO which earlier prevented the Respondent Judge from directing Belle and Filgame to pay the additional fees. Moreover, at PAGCORs instance, Respondent Judge issued another Order dated October 26, 2004 directing the Clerk of Court to recompute the docket fee.

As to the claim that respondent judge rendered summary judgment despite the 13 factual issues embodied in the Pre-trial Order and that he did not find that plaintiffs are estopped from denying these factual issues

Section 10 of Rule 8 of the Rules provides that if the defendant is without knowledge or information sufficient to form a belief as to the truth of the material averment in the complaint, he is bound to so state and this shall have the effect of denial. In such a case it is indispensable that the matter denied for lack of knowledge is alleged be clearly set forth so that the adverse party is informed of what is denied.

A scrutiny of the amended answer of PAGCOR in Civil Case No. 00-99133, shows that PAGCOR actually knows the gross and net income from the Jai-Alai operations, the tax paid by PAGCOR and the pre-operating expenses of Belle and Filgame. Considering that the Agreement between PAGCOR and Filgame and Belle provided that PAGCOR shall manage, operate and control all aspects of Jai-Alai operation pursuant to its franchise, it would have been unbelievable for them not to know the gross and net income from the Jai-Alai operations from June 1999 to December 2000; the tax paid by PAGCOR to BIR; and the effect of Jai- Alai operations on the government revenues and where the income of PAGCOR was used. Furthermore, Belle and Filgame had furnished PAGCOR a copy of the amount of pre-operating per request of PAGCOR as evidenced by a letter dated September 15, 1999 of Edgardo M. del Fonso, President of Belle Jai-Alai Corporation addressed to Renaldo Tenorio, President and Chief Operating Officer of PAGCOR and the receipt of which was not denied by PAGCOR.

PAGCORs blanket denial of the said allegations in the amended complaint is ineffective because such facts are within PAGCORs knowledge. Thus, said denial was properly treated as an admission.

Indeed, in a similar case, PNB vs. Court of Appeals, the private respondent therein denied the averments in the complaint regarding the fact of withdrawal of $14,056.25 in PCIB-Cagayan de Oro City Account No. 16087 and the surrounding circumstances of said withdrawal. The private respondent, however, admitted the averment in the complaint that he is the sole signatory of the subject account. The Supreme Court

considered said denial as ineffective because such fact was within the knowledge of the private respondent, being the sole signatory to the said account. Private respondents denial was consequently declared by the Supreme Court as equivalent to an admission.

Respondent Judge, therefore, correctly granted the motion for summary judgment based on the Agreement dated June 17, 1999 and the stipulation made by PAGCORs counsel, Atty. Bautista, regarding the records of summary operations covering the period of June 1999 to October 2000 being true and correct, having been prepared by a responsible officer of PAGCOR and based on the existing records of PAGCOR.

All told, based on the evidence, PAGCOR was privy to all the material allegations in the amended complaint relating to the Jai-Alai operations. It would have been incredulous for PAGCOR to claim ignorance or lack of knowledge of said material allegations.

Convincingly, Respondent Judge had sufficient basis to render summary judgment.

As to the claim that the summary judgment was rendered without hearing -

Based on the evidence,we find that Respondent Judge did not commit gross ignorance of the law in not conducting a trial type hearing in resolving the motion for summary judgment. Well-settled is the rule that, in proceedings for summary judgment, the court is merely expected to act chiefly on the basis of what is on the records of the case and that the hearing contemplated in the Rules is not de riguer as its purpose is only to determine whether the issues are genuine or not and not to receive evidence on issues set up in the pleadings.

Based on the records and the evidence presented, the trial type hearing on the motion was dispensable in view of the fact that PAGCORs blanket/ineffective denial in its answer to the amended complaint had the effect of an admission, thus, did not raise any genuine issues. Furthermore, a hearing on the motion for summary judgment was not necessary considering that the evidence necessary for the resolution of the same was already part of the records. It is evident from the records, particularly in the minutes of the hearings held on November 22, 2002 and February 10, 2003, as well as Respondent Judges Order issued on even dates, that PAGCOR was given ample opportunity to be heard and present its evidence in opposition to the motion for summary judgment, but PAGCOR chose not to adduce any such evidence. The scheduled hearing on the motion for summary judgment was cancelled and the motion was considered submitted for resolution without PAGCOR objecting on the absence of a hearing. PAGCOR, therefore, cannot now insist that Respondent Judge should have conducted a hearing on the motion.

As to the claim that respondent Judge granted the summary judgment based on complainants implied admissions -

It is a recognized rule in summary judgment that the trial court can determine whether there is genuine issue on the basis of the pleadings, admissions, documents, affidavits, and/or counter-affidavits submitted by the parties. On the basis of this rule PAGCOR cannot claim that Respondent Judge was grossly ignorant of the law and procedure when he rendered summary judgment based on implied admissions of the material facts in the amended complaint and not on personal knowledge of witnesses and other affiants. PAGCOR cannot rely solely on Section 5, Rule 35 of the Rules of Court because the provision pertains only to cases when affidavits and supporting papers are submitted to establish whether there is genuine issue. Such supporting affidavits must be made on personal knowledge. Section 1, Rule 35 is explicit that the movant of the motion for summary judgment can support his motion with affidavits, depositions and admissions. It is illogical to claim that a motion for summary judgment must be resolved based on affidavits alone, considering that the Rules are clear that the motion can likewise be supported by depositions and admissions.

As to complainants claim that respondent Judge should be disbarred because he violated the laws, rules and legal principles -

The complaint for violation of lawyers oath and Code of Professional Responsibility is not meritorious.

The complaint for disbarment is unfounded. There was no gross ignorance of the law and procedure committed by the Respondent Judge. Considering the evidence presented, Respondent Judge conducted the proceedings in accordance with the applicable laws and procedure. To constitute gross ignorance of the law, the judges actuation must not only be contrary to law and jurisprudence, the judge must have also

been moved by bad faith, fraud, dishonesty or corruption. The records are also bereft of any showing of bad faith, fraud, dishonesty and corruption on the part of the Respondent Judge.

It is settled that in administrative proceedings, the complainant has the burden of substantiating the charges asseverated in the complaint. The complainant has the burden of proving the allegations in the complaint with substantial evidence. In the absence of evidence to the contrary, the presumption that respondent has regularly performed his duties will prevail. Applying the same in the case, PAGCOR failed to support its allegations with substantial and competent evidence to warrant the dismissal and disbarment of the Respondent Judge.

As a matter of policy, in the absence of fraud, dishonesty, and corruption, the acts of the judge in his judicial capacity are not subject of disciplinary action even though such acts are erroneous. He cannot be subjected to liability civil, criminal, or administrative for any of his official acts, no matter how erroneous, as long as he acts in good faith. Only judicial errors tainted with fraud, dishonesty, gross ignorance, bad faith or deliberate intent to do an injustice will be administratively sanctioned. To hold otherwise, would be to render the judicial office untenable, for no one is called upon to try the facts or interpret the law in the process of administering justice can be infallible in his judgment.

Well-settled is the rule that, if a party is prejudiced by the orders of a judge, his remedy lies with the proper court for proper judicial action and not with the office of the Court Administrator by means of an administrative complaint. It is an established doctrine and policy that disciplinary proceedings and criminal actions against judges are not complementary or suppletory of, nor a substitute for, these judicial remedies, whether ordinary or extraordinary. Resort to and exhaustion of these judicial remedies, as well as entry of judgment in the corresponding action or proceeding, is pre-requisite for the taking of other measure against the person of the judges concerned. It is only after the available judicial remedies have been exhausted and the appellate court have spoken with finality, the door to an inquiry into his criminal, civil and administrative liability may be said to have opened or closed.

Here, the administrative complaint was filed by the Complainant pending the resolution of PAGCORs Petition for Certiorari filed before the Court of Appeals. As such, the filing of this administrative case was in disregard of the rules, if not malicious. Indeed, Civil Case No. 0099133 has not been resolved with finality at the time the administrative complaint was filed with the Supreme Court. Also, a review of the records of the case discloses the fact that counsels of PAGCOR were negligent in handling their case. Clearly, this baseless administrative case was filed merely to harass Respondent Judge in the hope that the negligence of PAGCORs counsel would be conveniently overlooked or unjustifiably mitigated.

The Court agrees with the findings and recommendation of the Investigating Justice that the administrative complaint against respondent be dismissed.

The Court finds no gross ignorance of law committed by respondent when he admitted the amended complaint notwithstanding that such amended complaint substantially altered the cause of action of plaintiffs FILGAME and BELLE.

Section 3, Rule 10 of the Rules of Court, provides:

SECTION 3. Amendments by leave of court. Except as provided in the next preceding section, substantial amendments may be made only upon leave of court. But such leave may be refused if it appears to the court that the motion was made with intent to delay. Orders of the court upon the matters provided in this section shall be made upon motion filed in court, and after notice to the adverse party, and an opportunity to be heard.

As held in Valenzuela vs. CA,18

Interestingly, Section 3, Rule 10 of the 1997 Rules of Civil Procedure amended the former rule in such manner that the phrase "or that the cause of action or defense is substantially altered" was stricken-off and not retained in the new rules. The clear import of such amendment in Section 3, Rule 10 is that under the new rules, "the amendment may (now) substantially alter the cause of action or defense." This should only be true, however, when despite a substantial change or alteration in the cause of action or defense, the amendments sought to be made shall serve the higher interests of substantial justice, and prevent delay and equally promote the laudable objective of the rules which is to secure a "just, speedy and inexpensive disposition of every action and proceeding.(emphasis supplied).

The original complaint filed by the plaintiffs was for specific performance and injunction with prayer for damages and for TRO and writ of preliminary injunction against complainant while the amended complaint was for recovery of sum of money. Such amendment to the original complaint was filed by plaintiffs FILGAME and BELLE after the Supreme Court decision declared that complainant could not enter into a joint agreement with other corporations to operate the Jai-Alai, and that the Agreement dated June 17, 1999 entered into between complainant and the plaintiffs is null and void. However, since plaintiffs had provided funds for complainants pre-operating expenses and working capital, plaintiffs had to file an amended complaint which seeks the recovery of their expenses. Although the amended complaint substantially changed the cause of action of plaintiffs FILGAME and BELLE, the admission thereof by respondent is allowed under Section 3, Rule 10 and jurisprudence.

The Court also finds that respondent was not guilty of gross ignorance of the law when he admitted the amended complaint despite the non-payment by plaintiffs FILGAME and BELLE of additional docket fees on the amended complaint. In Sun Insurance Office, Ltd. vs. Asuncion,19 the Court laid down the rules on the payment of docket fees as follows:

1. It is not simply the filing of the complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee, that vests a trial court with jurisdiction over the subject-matter or nature of the action. Where the filing of the initiatory pleading is not accompanied by payment of the docket fee, the court may allow payment of the fee within a reasonable time but in no case beyond the applicable prescriptive or reglementary period.

2. The same rule applies to permissive counterclaims, third-party claims and similar pleadings, which shall not be considered filed until and unless the filing fee prescribed therefor is paid. The court may also allow payment of said fee within a reasonable time but also in no case beyond its applicable prescriptive or reglementary period.

3. Where the trial court acquires jurisdiction over a claim by the filing of the appropriate pleading and payment of the prescribed filing fee but, subsequently, the judgment awards a claim not specified in the pleading, or if specified the same has been left for determination by the court, the additional filing fee therefor shall constitute a lien on the judgme