RULE 5

G.R. No. 191336               January 25, 2012

CRISANTA ALCARAZ MIGUEL, Petitioner, vs.JERRY D. MONTANEZ, Respondent.

D E C I S I O N

REYES, J.:

Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. Petitioner Crisanta Alcaraz Miguel (Miguel) seeks the reversal and setting aside of the September 17, 2009 Decision1 and February 11, 2010 Resolution2 of the Court of Appeals (CA) in CA-G.R. SP No. 100544, entitled "Jerry D. Montanez v. Crisanta Alcaraz Miguel."

Antecedent Facts

On February 1, 2001, respondent Jerry Montanez (Montanez) secured a loan of One Hundred Forty-Three Thousand Eight Hundred Sixty-Four Pesos (P143,864.00), payable in one (1) year, or until February 1, 2002, from the petitioner. The respondent gave as collateral therefor his house and lot located at Block 39 Lot 39 Phase 3, Palmera Spring, Bagumbong, Caloocan City.

Due to the respondent’s failure to pay the loan, the petitioner filed a complaint against the respondent before the Lupong Tagapamayapa of Barangay San Jose, Rodriguez, Rizal. The parties entered into a Kasunduang Pag-aayos wherein the respondent agreed to pay his loan in installments in the amount of Two Thousand Pesos (P2,000.00) per month, and in the event the house and lot given as collateral is sold, the respondent would settle the balance of the loan in full. However, the respondent still failed to pay, and on December 13, 2004, the Lupong Tagapamayapa issued a certification to file action in court in favor of the petitioner.

On April 7, 2005, the petitioner filed before the Metropolitan Trial Court (MeTC) of Makati City, Branch 66, a complaint for Collection of Sum of Money. In his Answer with Counterclaim,3 the respondent raised the defense of improper venue considering that the petitioner was a resident of Bagumbong, Caloocan City while he lived in San Mateo, Rizal.

After trial, on August 16, 2006, the MeTC rendered a Decision,4 which disposes as follows:

WHEREFORE, premises considered[,] judgment is hereby rendered ordering defendant Jerry D. Montanez to pay plaintiff the following:

1. The amount of [Php147,893.00] representing the obligation with legal rate of interest from February 1, 2002 which was the date of the loan maturity until the account is fully paid;

2. The amount of Php10,000.00 as and by way of attorney’s fees; and the costs.

SO ORDERED. 5

On appeal to the Regional Trial Court (RTC) of Makati City, Branch 146, the respondent raised the same issues cited in his Answer. In its March 14, 2007 Decision,6 the RTC affirmed the MeTC Decision, disposing as follows:

WHEREFORE, finding no cogent reason to disturb the findings of the court a quo, the appeal is hereby DISMISSED, and the DECISION appealed from is hereby AFFIRMED in its entirety for being in accordance with law and evidence.

SO ORDERED.7

Dissatisfied, the respondent appealed to the CA raising two issues, namely, (1) whether or not venue was improperly laid, and (2) whether or not the Kasunduang Pag-aayos effectively novated the loan agreement. On September 17, 2009, the CA rendered the assailed Decision, disposing as follows:

WHEREFORE, premises considered, the petition is hereby GRANTED. The appealed Decision dated March 14, 2007 of the Regional Trial Court (RTC) of Makati City, Branch 146, is REVERSED and SET ASIDE. A new judgment is entered dismissing respondent’s complaint for collection of sum of money, without prejudice to her right to file the necessary action to enforce the Kasunduang Pag-aayos.

SO ORDERED.8

Anent the issue of whether or not there is novation of the loan contract, the CA ruled in the negative. It ratiocinated as follows:

Judging from the terms of the Kasunduang Pag-aayos, it is clear that no novation of the old obligation has taken place.1âwphi1 Contrary to petitioner’s assertion, there was no reduction of the term or period originally stipulated. The original period in the first agreement is one (1) year to be counted from February 1, 2001, or until January 31, 2002. When the complaint was filed before the barangay on February 2003, the period of the original agreement had long expired without compliance on the part of petitioner. Hence, there was nothing to reduce or extend. There was only a change in the terms of payment which is not incompatible with the old agreement. In other words, the Kasunduang Pag-aayos merely supplemented the old agreement.9

The CA went on saying that since the parties entered into a Kasunduang Pag-aayos before the Lupon ng Barangay, such settlement has the force and effect of a court judgment, which may be enforced by execution within six (6) months from the date of settlement by the Lupon ng Barangay, or by court action after the lapse of such time.10 Considering that more than six (6) months had elapsed from the date of settlement, the CA ruled that the remedy of the petitioner was to file an action for the execution of the Kasunduang Pag-aayos in court and not for collection of sum of money.11 Consequently, the CA deemed it unnecessary to resolve the issue on venue.12

The petitioner now comes to this Court.

Issues

(1) Whether or not a complaint for sum of money is the proper remedy for the petitioner, notwithstanding the Kasunduang Pag-aayos;13 and

(2) Whether or not the CA should have decided the case on the merits rather than remand the case for the enforcement of the Kasunduang Pag-aayos.14

Our Ruling

Because the respondent failed to comply with the terms of the Kasunduang Pag-aayos, said agreement is deemed rescinded pursuant to Article 2041 of the New Civil Code and the petitioner can insist on his original demand. Perforce, the complaint for collection of sum of money is the proper remedy.

The petitioner contends that the CA erred in ruling that she should have followed the procedure for enforcement of the amicable settlement as provided in the Revised Katarungang Pambarangay Law, instead of filing a collection case. The petitioner points out that the cause of action did not arise from the Kasunduang Pag-aayos but on the respondent’s breach of the original loan agreement.15

This Court agrees with the petitioner.

It is true that an amicable settlement reached at the barangay conciliation proceedings, like the Kasunduang Pag-aayos in this case, is binding between the contracting parties and, upon its perfection, is immediately executory insofar as it is not contrary to law, good morals, good customs, public order and public policy.16 This is in accord with the broad precept of Article 2037 of the Civil Code, viz:

A compromise has upon the parties the effect and authority of res judicata; but there shall be no execution except in compliance with a judicial compromise.

Being a by-product of mutual concessions and good faith of the parties, an amicable settlement has the force and effect of res judicata even if not judicially approved.17 It transcends being a mere contract binding only upon the parties thereto, and is akin to a judgment that is subject to execution in accordance with the Rules.18 Thus, under Section 417 of the Local Government Code,19 such amicable settlement or arbitration award may be enforced by execution by the Barangay Lupon within six (6) months from the date of settlement, or by filing an action to enforce such settlement in the appropriate city or municipal court, if beyond the six-month period.

Under the first remedy, the proceedings are covered by the Local Government Code and the Katarungang Pambarangay Implementing Rules and Regulations. The Punong Barangay is called upon during the hearing to determine solely the fact of non-compliance of the terms of the settlement and to give the defaulting party another chance at voluntarily complying with his obligation under the settlement. Under the second remedy, the proceedings are governed by the Rules of Court, as amended. The cause of action is the amicable settlement itself, which, by operation of law, has the force and effect of a final judgment.20

It must be emphasized, however, that enforcement by execution of the amicable settlement, either under the first or the second remedy, is only applicable if the contracting parties have not repudiated such settlement within ten (10) days from the date thereof in accordance with Section 416 of the Local Government Code. If the amicable settlement is repudiated by one party, either expressly or impliedly, the other party has two options, namely, to enforce the compromise in accordance with the Local Government Code or Rules of Court as the case may be, or to consider it rescinded and insist upon his original demand. This is in accord with Article 2041 of the Civil Code, which qualifies the broad application of Article 2037, viz:

If one of the parties fails or refuses to abide by the compromise, the other party may either enforce the compromise or regard it as rescinded and insist upon his original demand.

In the case of Leonor v. Sycip,21 the Supreme Court (SC) had the occasion to explain this provision of law. It ruled that Article 2041 does not require an action for rescission, and the aggrieved party, by the breach of compromise agreement, may just consider it already rescinded, to wit:

It is worthy of notice, in this connection, that, unlike Article 2039 of the same Code, which speaks of "a cause of annulment or rescission of the compromise" and provides that "the compromise may be annulled or rescinded" for the cause therein specified, thus suggesting an action for annulment or rescission, said

Article 2041 confers upon the party concerned, not a "cause" for rescission, or the right to "demand" the rescission of a compromise, but the authority, not only to "regard it as rescinded", but, also, to "insist upon his original demand". The language of this Article 2041, particularly when contrasted with that of Article 2039, denotes that no action for rescission is required in said Article 2041, and that the party aggrieved by the breach of a compromise agreement may, if he chooses, bring the suit contemplated or involved in his original demand, as if there had never been any compromise agreement, without bringing an action for rescission thereof. He need not seek a judicial declaration of rescission, for he may "regard" the compromise agreement already "rescinded".22 (emphasis supplied)

As so well stated in the case of Chavez v. Court of Appeals,23 a party's non-compliance with the amicable settlement paved the way for the application of Article 2041 under which the other party may either enforce the compromise, following the procedure laid out in the Revised Katarungang Pambarangay Law, or consider it as rescinded and insist upon his original demand. To quote:

In the case at bar, the Revised Katarungang Pambarangay Law provides for a two-tiered mode of enforcement of an amicable settlement, to wit: (a) by execution by the Punong Barangay which is quasi-judicial and summary in nature on mere motion of the party entitled thereto; and (b) an action in regular form, which remedy is judicial. However, the mode of enforcement does not rule out the right of rescission under Art. 2041 of the Civil Code. The availability of the right of rescission is apparent from the wording of Sec. 417 itself which provides that the amicable settlement "may" be enforced by execution by the lupon within six (6) months from its date or by action in the appropriate city or municipal court, if beyond that period. The use of the word "may" clearly makes the procedure provided in the Revised Katarungang Pambarangay Law directory or merely optional in nature.

Thus, although the "Kasunduan" executed by petitioner and respondent before the Office of the Barangay Captain had the force and effect of a final judgment of a court, petitioner's non-compliance paved the way for the application of Art. 2041 under which respondent may either enforce the compromise, following the procedure laid out in the Revised Katarungang Pambarangay Law, or regard it as rescinded and insist upon his original demand. Respondent chose the latter option when he instituted Civil Case No. 5139-V-97 for recovery of unrealized profits and reimbursement of advance rentals, moral and exemplary damages, and attorney's fees. Respondent was not limited to claiming P150,000.00 because although he agreed to the amount in the "Kasunduan," it is axiomatic that a compromise settlement is not an admission of liability but merely a recognition that there is a dispute and an impending litigation which the parties hope to prevent by making reciprocal concessions, adjusting their respective positions in the hope of gaining balanced by the danger of losing. Under the "Kasunduan," respondent was only required to execute a waiver of all possible claims arising from the lease contract if petitioner fully complies with his obligations thereunder. It is undisputed that herein petitioner did not.24 (emphasis supplied and citations omitted)

In the instant case, the respondent did not comply with the terms and conditions of the Kasunduang Pag-aayos. Such non-compliance may be construed as repudiation because it denotes that the respondent did not intend to be bound by the terms thereof, thereby negating the very purpose for which it was executed. Perforce, the petitioner has the option either to enforce the Kasunduang Pag-aayos, or to regard it as rescinded and insist upon his original demand, in accordance with the provision of Article 2041 of the Civil Code. Having instituted an action for collection of sum of money, the petitioner obviously chose to rescind the Kasunduang Pag-aayos. As such, it is error on the part of the CA to rule that enforcement by execution of said agreement is the appropriate remedy under the circumstances.

Considering that the Kasunduang Pag-aayos is deemed rescinded by the non-compliance of the respondent of the terms thereof, remanding the case to the trial court for the enforcement of said agreement is clearly unwarranted.

The petitioner avers that the CA erred in remanding the case to the trial court for the enforcement of the Kasunduang Pag-aayos as it prolonged the process, "thereby putting off the case in an indefinite pendency."25Thus, the petitioner insists that she should be allowed to ventilate her rights before this Court

and not to repeat the same proceedings just to comply with the enforcement of the Kasunduang Pag-aayos, in order to finally enforce her right to payment.26

The CA took off on the wrong premise that enforcement of the Kasunduang Pag-aayos is the proper remedy, and therefore erred in its conclusion that the case should be remanded to the trial court. The fact that the petitioner opted to rescind the Kasunduang Pag-aayos means that she is insisting upon the undertaking of the respondent under the original loan contract. Thus, the CA should have decided the case on the merits, as an appeal before it, and not prolong the determination of the issues by remanding it to the trial court. Pertinently, evidence abounds that the respondent has failed to comply with his loan obligation. In fact, the Kasunduang Pag-aayos is the well nigh incontrovertible proof of the respondent’s indebtedness with the petitioner as it was executed precisely to give the respondent a second chance to make good on his undertaking. And since the respondent still reneged in paying his indebtedness, justice demands that he must be held answerable therefor.

WHEREFORE, the petition is GRANTED. The assailed decision of the Court of Appeals is SET ASIDE and the Decision of the Regional Trial Court, Branch 146, Makati City, dated March 14, 2007 is REINSTATED.

SO ORDERED.

RULE 7

G.R. No. 164205               September 3, 2009

OLDARICO S. TRAVEÑO, ROVEL A. GENELSA, RUEL U. VILLARMENTE, ALFREDO A. PANILAGAO, CARMEN P. DANILA, ELIZABETH B. MACALINO, RAMIL P. ALBITO, REYNALDO A. LADRILLO, LUCAS G. TAMAYO, DIOSDADO A. AMORIN, RODINO C. VASQUEZ, GLORIA A. FELICANO, NOLE E. FERMILAN, JOSELITO B. RENDON, CRISTETA D. CAÑA, EVELYN D. ARCENAL and JEORGE M. NONO, Petitioners, vs.BOBONGON BANANA GROWERS MULTI-PURPOSE COOPERATIVE, TIMOG AGRICULTURAL CORPORATION, DIAMOND FARMS, INC., and DOLE ASIA PHILIPPINES, Respondents.

D E C I S I O N

CARPIO MORALES, J.:

By the account of petitioner Oldarico Traveño and his 16 co-petitioners, in 1992, respondent Timog Agricultural Corporation (TACOR) and respondent Diamond Farms, Inc. (DFI) hired them to work at a banana plantation at Bobongon, Santo Tomas, Davao Del Norte which covered lands previously planted with rice and corn but whose owners had agreed to convert into a banana plantation upon being convinced that TACOR and DFI could provide the needed capital, expertise, and equipment. Petitioners helped prepare the lands for the planting of banana suckers and eventually carried out the planting as well.1

Petitioners asseverated that while they worked under the direct control of supervisors assigned by TACOR and DFI, these companies used different schemes to make it appear that petitioners were hired

through independent contractors, including individuals, unregistered associations, and cooperatives; that the successive changes in the names of their employers notwithstanding, they continued to perform the same work under the direct control of TACOR and DFI supervisors; and that under the last scheme adopted by these companies, the nominal individual contractors were required to, as they did, join a cooperative and thus became members of respondent Bobongon Banana Growers Multi-purpose Cooperative (the Cooperative).2

Continued petitioners: Sometime in 2000, above-named respondents began utilizing harassment tactics to ease them out of their jobs. Without first seeking the approval of the Department of Labor and Employment (DOLE), they changed their compensation package from being based on a daily rate to a pakyawan rate that depended on the combined productivity of the "gangs" they had been grouped into. Soon thereafter, they stopped paying their salaries, prompting them to stop working.3

One after another, three separate complaints for illegal dismissal were filed by petitioners, individually and collectively, with the National Labor Relations Commission (NLRC) against said respondents including respondent Dole Asia Philippines as it then supposedly owned TACOR,4 for unpaid salaries, overtime pay, 13th month pay, service incentive leave pay, damages, and attorney’s fees.5

DFI answered for itself and TACOR, which it claimed had been merged with it and ceased to exist as a corporation. Denying that it had engaged the services of petitioners,6 DFI alleged that during the corporate lifetime of TACOR, it had an arrangement with several landowners in Santo Tomas, Davao Del Norte whereby TACOR was to extend financial and technical assistance to them for the development of their lands into a banana plantation on the condition that the bananas produced therein would be sold exclusively to TACOR; that the landowners worked on their own farms and hired laborers to assist them; that the landowners themselves decided to form a cooperative in order to better attain their business objectives; and that it was not in a position to state whether petitioners were working on the banana plantation of the landowners who had contracted with TACOR.7a1f

The Cooperative failed to file a position paper despite due notice, prompting the Labor Arbiter to consider it to have waived its right to adduce evidence in its defense.

Nothing was heard from respondent Dole Asia Philippines.

By consolidated Decision dated October 30, 2002,8 the Labor Arbiter, found respondent Cooperative guilty of illegal dismissal. It dropped the complaints against DFI, TACOR and Dole Asia Philippines. Thus it disposed:

WHEREFORE, judgment is hereby rendered:

1. Declaring respondent Bobongon Banana Growers Multi-purpose Cooperative guilty of illegal dismissal;

2. Ordering respondent Bobongon Banana Growers Multi-purpose Cooperative to pay complainants full backwages from the time of their illegal dismissal up to this promulgation, to be determined during the execution stage;

3. Ordering respondent Bobongon Banana Growers Multi-purpose Cooperative to reinstate complainants to their former positions without loss of seniority rights and if not possible, to pay them separation pay equivalent to 1/2 month pay for every year of service;

4. Ordering respondent Bobongon Banana Grower Cooperative [sic] to pay 10% of the total award as Attorney’s fees;

5. All other respondents are hereby dropped as party-respondents for lack of merit. (Underscoring supplied)

In finding for petitioners, the Labor Arbiter relied heavily on the following Orders submitted by DFI which were issued in an earlier case filed with the DOLE, viz: (1) Order dated July 11, 1995 of the Director of DOLE Regional Office No. XI declaring the Cooperative as the employer of the 341 workers in the farms of its several members; (2) Order dated December 17, 1997 of the DOLE Secretary affirming the Order dated July 11, 1995 of the Director of DOLE Regional Office No. XI; and (3) Order dated June 23, 1998 of the DOLE Secretary denying the Cooperative’s Motion for Reconsideration.

On partial appeal to the NLRC, petitioners questioned the Labor Arbiter’s denial of their money claims and the dropping of their complaints against TACOR, DFI, and Dole Asia Philippines.

By Resolution dated July 30, 2003,9 the NLRC sustained the Labor Arbiter’s ruling that the employer of petitioners is the Cooperative, there being no showing that the earlier mentioned Orders of the DOLE Secretary had been set aside by a court of competent jurisdiction. It partially granted petitioners’ appeal, however, by ordering the Cooperative to pay them their unpaid wages, wage differentials, service incentive leave pay, and 13th month pay. It thus remanded the case to the Labor Arbiter for computation of those awards.

Their Motion for Reconsideration having been denied by Resolution of September 30, 2003,10 petitioners appealed to the Court of Appeals via certiorari.11

By Resolution dated February 20, 2004,12 the appellate court dismissed petitioners’ petition for certiorari on the ground that the accompanying verification and certification against forum shopping was defective, it having been signed by only 19 of the 22 therein named petitioners. Their Motion for Reconsideration having been denied by Resolution of May 13, 2004,13 petitioners lodged the present Petition for Review on Certiorari.

Petitioners posit that the appellate court erred in dismissing their petition on a mere technicality as it should have, at most, dismissed the petition only with respect to the non-signing petitioners.

Dwelling on the merits of the case, petitioners posit that the Labor Arbiter and the NLRC disregarded evidence on record showing that while the Cooperative was their employer on paper, the other respondents exercised control and supervision over them; that the Cooperative was a labor-only contractor; and that the Orders of the DOLE Secretary relied upon by the Labor Arbiter and the NLRC are not applicable to them as the same pertained to a certification election case involving different parties and issues.14

DFI, commenting for itself and TACOR, maintains that, among other things, it was not the employer of petitioners; and that it cannot comment on their money claims because no evidence was submitted in support thereof.15

It appears that respondent Cooperative had been dissolved.16

As respondent Dole Asia Philippines failed to file a comment, the Court, by Resolution of November 29, 2006,17required it to (1) show cause why it should not be held in contempt for its failure to heed the Court’s directive, and (2) file the required comment, within 10 days from notice.

Dole Philippines, Inc. (DPI) promptly filed an Urgent Manifestation18 stating that, among other things, while its division located in Davao City received the Court’s Resolution directing Dole Asia Philippines to file a comment on the present petition, DPI did not file a comment as the directive was addressed to "Dole Asia Philippines", an entity which is not registered at the Securities and Exchange Commission.

Commenting on DPI’s Urgent Manifestation, petitioners contend that DPI cannot be allowed to take advantage of their lack of knowledge as to its exact corporate name, DPI having raised the matter for the first time before this Court notwithstanding its receipt of all pleadings and court processes from the inception of this case.19

Upon review of the records, the Court finds that DPI never ever participated in the proceedings despite due notice. Its posturing, therefore, that the court processes it received were addressed to "Dole Asia Philippines," a non-existent entity, does not lie. That DPI is the intended respondent, there is no doubt.

Respecting the appellate court’s dismissal of petitioners’ appeal due to the failure of some of them to sign the therein accompanying verification and certification against forum-shopping, the Court’s guidelines for the bench and bar in Altres v. Empleo,20 which were culled "from jurisprudential pronouncements," are instructive:

For the guidance of the bench and bar, the Court restates in capsule form the jurisprudential pronouncements already reflected above respecting non-compliance with the requirements on, or submission of defective, verification and certification against forum shopping:

1) A distinction must be made between non-compliance with the requirement on or submission of defective verification, and non-compliance with the requirement on or submission of defective certification against forum shopping.

2) As to verification, non-compliance therewith or a defect therein does not necessarily render the pleading fatally defective. The court may order its submission or correction or act on the pleading if the attending circumstances are such that strict compliance with the Rule may be dispensed with in order that the ends of justice may be served thereby.

3) Verification is deemed substantially complied with when one who has ample knowledge to swear to the truth of the allegations in the complaint or petition signs the verification, and when matters alleged in the petition have been made in good faith or are true and correct.

4) As to certification against forum shopping, non-compliance therewith or a defect therein, unlike in verification, is generally not curable by its subsequent submission or correction thereof, unless there is a need to relax the Rule on the ground of "substantial compliance" or presence of "special circumstances or compelling reasons."

5) The certification against forum shopping must be signed by all the plaintiffs or petitioners in a case; otherwise, those who did not sign will be dropped as parties to the case. Under reasonable or justifiable circumstances, however, as when all the plaintiffs or petitioners share a common interest and invoke a common cause of action or defense, the signature of only one of them in the certification against forum shopping substantially complies with the Rule.

6) Finally, the certification against forum shopping must be executed by the party-pleader, not by his counsel. If, however, for reasonable or justifiable reasons, the party-pleader is unable to sign, he must execute a Special Power of Attorney designating his counsel of record to sign on his behalf. (Emphasis and underscoring supplied)

The foregoing restated pronouncements were lost in the challenged Resolutions of the appellate court. Petitioners’ contention that the appellate court should have dismissed the petition only as to the non-signing petitioners or merely dropped them as parties to the case is thus in order.

Instead of remanding the case to the appellate court, however, the Court deems it more practical to decide the substantive issue raised in this petition so as not to further delay the disposition of this

case.21 And it thus resolves to deviate as well from the general rule that factual questions are not entertained in petitions for review on certiorari of the appellate court’s decisions in order to write finis to this protracted litigation.

The sole issue is whether DFI (with which TACOR had been merged) and DPI should be held solidarily liable with the Cooperative for petitioners’ illegal dismissal and money claims.

The Labor Code and its Implementing Rules empower the Labor Arbiter to be the trier of facts in labor cases.22Much reliance is thus placed on the Arbiter’s findings of fact, having had the opportunity to discuss with the parties and their witnesses the factual matters of the case during the conciliation phase.23 Just the same, a review of the records of the present case does not warrant a conclusion different from the Arbiter’s, as affirmed by the NLRC, that the Cooperative is the employer of petitioners.

To be sure, the matter of whether the Cooperative is an independent contractor or a labor-only contractor may not be used to predicate a ruling in this case. Job contracting or subcontracting refers to an arrangement whereby a principal agrees to farm out with a contractor or subcontractor the performance of a specific job, work or service within a definite or predetermined period, regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal.24 The present case does not involve such an arrangement.

DFI did not farm out to the Cooperative the performance of a specific job, work, or service. Instead, it entered into a Banana Production and Purchase Agreement25 (Contract) with the Cooperative, under which the Cooperative would handle and fund the production of bananas and operation of the plantation covering lands owned by its members in consideration of DFI’s commitment to provide financial and technical assistance as needed, including the supply of information and equipment in growing, packing, and shipping bananas. The Cooperative would hire its own workers and pay their wages and benefits, and sell exclusively to DFI all export quality bananas produced that meet the specifications agreed upon.

To the Court, the Contract between the Cooperative and DFI, far from being a job contracting arrangement, is in essence a business partnership that partakes of the nature of a joint venture.26 The rules on job contracting are, therefore, inapposite. The Court may not alter the intention of the contracting parties as gleaned from their stipulations without violating the autonomy of contracts principle under Article 1306 of the Civil Code which gives the contracting parties the utmost liberality and freedom to establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good custom, public order or public policy.

Petitioners’ claim of employment relationship with the Cooperative’s herein co-respondents must be assessed on the basis of four standards, viz: (a) the manner of their selection and engagement; (b) the mode of payment of their wages; (c) the presence or absence of the power of dismissal; and (d) the presence or absence of control over their conduct. Most determinative among these factors is the so-called "control test."27

There is nothing in the records which indicates the presence of any of the foregoing elements of an employer-employee relationship.

The absence of the first requisite, which refers to selection and engagement, is shown by DFI’s total lack of knowledge on who actually were engaged by the Cooperative to work in the banana plantation. This is borne out by the Contract between the Cooperative and DFI, under which the Cooperative was to hire its own workers. As TACOR had been merged with DFI, and DPI is merely alleged to have previously owned TACOR, this applies to them as well. Petitioners failed to prove the contrary. No employment contract whatsoever was submitted to substantiate how petitioners were hired and by whom.

On the second requisite, which refers to the payment of wages, it was likewise the Cooperative that paid the same. As reflected earlier, under the Contract, the Cooperative was to handle and fund the production

of bananas and operation of the plantation.28 The Cooperative was also to be responsible for the proper conduct, safety, benefits, and general welfare of its members and workers in the plantation.29

As to the third requisite, which refers to the power of dismissal, and the fourth requisite, which refers to the power of control, both were retained by the Cooperative. Again, the Contract stipulated that the Cooperative was to be responsible for the proper conduct and general welfare of its members and workers in the plantation.

The crucial element of control refers to the authority of the employer to control the employee not only with regard to the result of the work to be done, but also to the means and methods by which the work is to be accomplished.30 While it suffices that the power of control exists, albeit not actually exercised, there must be someevidence of such power. In the present case, petitioners did not present any.

There being no employer-employee relationship between petitioners and the Cooperative’s co-respondents, the latter are not solidarily liable with the Cooperative for petitioners’ illegal dismissal and money claims.

While the Court commiserates with petitioners on their loss of employment, especially now that the Cooperative is no longer a going concern, it cannot simply, by default, hold the Cooperative’s co-respondents liable for their claims without any factual and legal justification therefor. The social justice policy of labor laws and the Constitution is not meant to be oppressive of capital.

En passant, petitioners are not precluded from pursuing any available remedies against the former members of the defunct Cooperative as their individual circumstances may warrant.

WHEREFORE, the petition is DISMISSED.

SO ORDERED.

RULE 9

G.R. No. 165273               March 10, 2010

LEAH PALMA, Petitioner, vs.HON. DANILO P. GALVEZ, in his capacity as PRESIDING JUDGE of the REGIONAL TRIAL COURT OF ILOILO CITY, BRANCH 24; and PSYCHE ELENA AGUDO, Respondents.

D E C I S I O N

PERALTA, J.:

Assailed in this petition for certiorari under Rule 65 of the Rules of Court are the Orders dated May 7, 20041 and July 21, 20042 of the Regional Trial Court (RTC) of Iloilo City, Branch 24, granting the motion to dismiss filed by private respondent Psyche Elena Agudo and denying reconsideration thereof, respectively.

On July 28, 2003, petitioner Leah Palma filed with the RTC an action for damages against the Philippine Heart Center (PHC), Dr. Danilo Giron and Dr. Bernadette O. Cruz, alleging that the defendants committed professional fault, negligence and omission for having removed her right ovary against her will, and losing the same and the tissues extracted from her during the surgery; and that although the specimens were subsequently found, petitioner was doubtful and uncertain that the same was hers as the label therein pertained that of somebody else. Defendants filed their respective Answers. Petitioner subsequently filed a Motion for Leave to Admit Amended Complaint, praying for the inclusion of additional defendants who were all nurses at the PHC, namely, Karla Reyes, Myra Mangaser and herein private respondent Agudo. Thus, summons were subsequently issued to them.

On February 17, 2004, the RTC's process server submitted his return of summons stating that the alias summons, together with a copy of the amended complaint and its annexes, were served upon private respondent thru her husband Alfredo Agudo, who received and signed the same as private respondent was out of the country.3

On March 1, 2004, counsel of private respondent filed a Notice of Appearance and a Motion for Extension of Time to File Answer4 stating that he was just engaged by private respondent's husband as she was out of the country and the Answer was already due.

On March 15, 2004, private respondent's counsel filed a Motion for Another Extension of Time to File Answer,5and stating that while the draft answer was already finished, the same would be sent to private respondent for her clarification/verification before the Philippine Consulate in Ireland; thus, the counsel prayed for another 20 days to file the Answer.

On March 30, 2004, private respondent filed a Motion to Dismiss6 on the ground that the RTC had not acquired jurisdiction over her as she was not properly served with summons, since she was temporarily out of the country; that service of summons on her should conform to Section 16, Rule 14 of the Rules of Court. Petitioner filed her Opposition7 to the motion to dismiss, arguing that a substituted service of summons on private respondent's husband was valid and binding on her; that service of summons under Section 16, Rule 14 was not exclusive and may be effected by other modes of service, i.e., by personal or substituted service. Private respondent filed a Comment8 on petitioner's Opposition, and petitioner filed a Reply9 thereto.

On May 7, 2004, the RTC issued its assailed Order granting private respondent's motion to dismiss. It found that while the summons was served at private respondent's house and received by respondent's husband, such service did not qualify as a valid service of summons on her as she was out of the country at the time the summons was served, thus, she was not personally served a summons; and even granting that she knew that a complaint was filed against her, nevertheless, the court did not acquire jurisdiction over her person as she was not validly served with summons; that substituted service could not be resorted to since it was established that private respondent was out of the country, thus, Section 16, Rule 14 provides for the service of summons on her by publication.

Petitioner filed a motion for reconsideration, which the RTC denied in its Order dated July 21, 2004.

Petitioner is now before us alleging that the public respondent committed a grave abuse of discretion amounting to lack or excess of jurisdiction when he ruled that:

I. Substituted service of summons upon private respondent, a defendant residing in the Philippines but temporarily outside the country is invalid;

II. Section 16, Rule 14, of the 1997 Rules of Civil Procedure limits the mode of service of summons upon a defendant residing in the Philippines, but temporarily outside the country, exclusively to extraterritorial service of summons under section 15 of the same rule;

III. In not ruling that by filing two (2) motions for extension of time to file Answer, private respondent had voluntarily submitted herself to the jurisdiction of respondent court, pursuant to Section 20, Rule 14 of the 1997 Rules of Civil Procedure, hence, equivalent to having been served with summons;

IV. The cases cited in his challenged Order of May 7, 2004 constitute stare decisis despite his own admission that the factual landscape in those decided cases are entirely different from those in this case.10

Petitioner claims that the RTC committed a grave abuse of discretion in ruling that Section 16, Rule 14, limits the service of summons upon the defendant-resident who is temporarily out of the country exclusively by means of extraterritorial service, i.e., by personal service or by publication, pursuant to Section 15 of the same Rule. Petitioner further argues that in filing two motions for extension of time to file answer, private respondent voluntarily submitted to the jurisdiction of the court.

In her Comment, private respondent claims that petitioner's certiorari under Rule 65 is not the proper remedy but a petition for review under Rule 45, since the RTC ruling cannot be considered as having been issued with grave abuse of discretion; that the petition was not properly verified because while the verification was dated September 15, 2004, the petition was dated September 30, 2004. She insists that since she was out of the country at the time the service of summons was made, such service should be governed by Section 16, in relation to Section 15, Rule 14 of the Rules of Court; that there was no voluntary appearance on her part when her counsel filed two motions for extension of time to file answer, since she filed her motion to dismiss on the ground of lack of jurisdiction within the period provided under Section 1, Rule 16 of the Rules of Court.

In her Reply, petitioner claims that the draft of the petition and the verification and certification against forum shopping were sent to her for her signature earlier than the date of the finalized petition, since the petition could not be filed without her signed verification. Petitioner avers that when private respondent filed her two motions for extension of time to file answer, no special appearance was made to challenge the validity of the service of summons on her.

The parties subsequently filed their respective memoranda as required.

We shall first resolve the procedural issues raised by private respondent.

Private respondent's claim that the petition for certiorari under Rule 65 is a wrong remedy thus the petition should be dismissed, is not persuasive. A petition for certiorari is proper when any tribunal, board or officer exercising judicial or quasi-judicial functions has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction and there is no appeal, or any plain, speedy, and adequate remedy at law.11 There is "grave abuse of discretion" when public respondent acts in a capricious or whimsical manner in the exercise of its judgment as to be equivalent to lack of jurisdiction.

Section 1, Rule 41 of the 1997 Rules of Civil Procedure states that an appeal may be taken only from a final order that completely disposes of the case; that no appeal may be taken from (a) an order denying a motion for new trial or reconsideration; (b) an order denying a petition for relief or any similar motion seeking relief from judgment; (c) an interlocutory order; (d) an order disallowing or dismissing an appeal; (e) an order denying a motion to set aside a judgment by consent, confession or compromise on the ground of fraud, mistake or duress, or any other ground vitiating consent; (f) an order of execution; (g) a judgment or final order for or against one or more of several parties or in separate claims, counterclaims, cross-claims and third-party complaints, while the main case is pending, unless the court allows an appeal therefrom; or (h) an order dismissing an action without prejudice. In all the above instances where the judgment or final order is not appealable, the aggrieved party may file an appropriate special civil action for certiorari under Rule 65.

In this case, the RTC Order granting the motion to dismiss filed by private respondent is a final order because it terminates the proceedings against her, but it falls within exception (g) of the Rule since the case involves several defendants, and the complaint for damages against these defendants is still pending.12 Since there is no appeal, or any plain, speedy, and adequate remedy in law, the remedy of a special civil action for certiorari is proper as there is a need to promptly relieve the aggrieved party from the injurious effects of the acts of an inferior court or tribunal.13

Anent private respondent's allegation that the petition was not properly verified, we find the same to be devoid of merit. The purpose of requiring a verification is to secure an assurance that the allegations of the petition have been made in good faith, or are true and correct, not merely speculative.14 In this instance, petitioner attached a verification to her petition although dated earlier than the filing of her petition. Petitioner explains that since a draft of the petition and the verification were earlier sent to her in New York for her signature, the verification was earlier dated than the petition for certiorari filed with us. We accept such explanation. While Section 1, Rule 65 requires that the petition for certiorari be verified, this is not an absolute necessity where the material facts alleged are a matter of record and the questions raised are mainly of law.15 In this case, the issue raised is purely of law.

Now on the merits, the issue for resolution is whether there was a valid service of summons on private respondent.

In civil cases, the trial court acquires jurisdiction over the person of the defendant either by the service of summons or by the latter’s voluntary appearance and submission to the authority of the former.16 Private respondent was a Filipino resident who was temporarily out of the Philippines at the time of the service of summons; thus, service of summons on her is governed by Section 16, Rule 14 of the Rules of Court, which provides:

Sec. 16. Residents temporarily out of the Philippines. – When an action is commenced against a defendant who ordinarily resides within the Philippines, but who is temporarily out of it, service may, by leave of court, be alsoeffected out of the Philippines, as under the preceding section. (Emphasis supplied)

The preceding section referred to in the above provision is Section 15, which speaks of extraterritorial service, thus:

SEC. 15. Extraterritorial service. ─ When the defendant does not reside and is not found in the Philippines, and the action affects the personal status of the plaintiff or relates to, or the subject of which is, property within the Philippines, in which the defendant has or claims a lien or interest, actual or contingent, or in which the relief demanded consists, wholly or in part, in excluding the defendant from any interest therein, or the property of the defendant has been attached within the Philippines, service may, by leave of court, be effected out of the Philippines by personal service as under section 6; or by publication in a newspaper of general circulation in such places and for such time as the court may order, in which case a copy of the summons and order of the court shall be sent by registered mail to the last known address of the defendant, or in any other manner the court may deem sufficient. Any order granting such leave shall specify a reasonable time, which shall not be less than sixty (60) days after notice, within which the defendant must answer.

The RTC found that since private respondent was abroad at the time of the service of summons, she was a resident who was temporarily out of the country; thus, service of summons may be made only by publication.

We do not agree.

In Montefalcon v. Vasquez,17 we said that because Section 16 of Rule 14 uses the words "may" and "also," it is not mandatory. Other methods of service of summons allowed under the Rules may also be availed of by the serving officer on a defendant-resident who is temporarily out of the Philippines. Thus, if a resident defendant is temporarily out of the country, any of the following modes of service may be resorted to: (1) substituted service set forth in section 7 ( formerly Section 8), Rule 14; (2) personal service outside the country, with leave of court; (3) service by publication, also with leave of court; or (4) in any other manner the court may deem sufficient.18

In Montalban v. Maximo,19 we held that substituted service of summons under the present Section 7, Rule 14 of the Rules of Court in a suit in personam against residents of the Philippines temporarily absent therefrom is the normal method of service of summons that will confer jurisdiction on the court over such defendant. In the same case, we expounded on the rationale in providing for substituted service as the normal mode of service for residents temporarily out of the Philippines.

x x x A man temporarily absent from this country leaves a definite place of residence, a dwelling where he lives, a local base, so to speak, to which any inquiry about him may be directed and where he is bound to return. Where one temporarily absents himself, he leaves his affairs in the hands of one who may be reasonably expected to act in his place and stead; to do all that is necessary to protect his interests; and to communicate with him from time to time any incident of importance that may affect him or his business or his affairs. It is usual for such a man to leave at his home or with his business associates information as to where he may be contacted in the event a question that affects him crops up. If he does not do what is expected of him, and a case comes up in court against him, he cannot just raise his voice and say that he is not subject to the processes of our courts. He cannot stop a suit from being filed against him upon a claim that he cannot be summoned at his dwelling house or residence or his office or regular place of business.

Not that he cannot be reached within a reasonable time to enable him to contest a suit against him. There are now advanced facilities of communication. Long distance telephone calls and cablegrams make it easy for one he left behind to communicate with him.20

Considering that private respondent was temporarily out of the country, the summons and complaint may be validly served on her through substituted service under Section 7, Rule 14 of the Rules of Court which reads:

SEC. 7. Substituted service. — If, for justifiable causes, the defendant cannot be served within a reasonable time as provided in the preceding section, service may be effected (a) by leaving copies of the summons at the defendant’s residence with some person of suitable age and discretion then residing therein, or (b) by leaving the copies at defendant’s office or regular place of business with some competent person in charge thereof.

We have held that a dwelling, house or residence refers to the place where the person named in the summons is living at the time when the service is made, even though he may be temporarily out of the country at the time.21 It is, thus, the service of the summons intended for the defendant that must be left with the person of suitable age and discretion residing in the house of the defendant. Compliance with the rules regarding the service of summons is as important as the issue of due process as that of jurisdiction.221avvphi1

Section 7 also designates the persons with whom copies of the process may be left. The rule presupposes that such a relation of confidence exists between the person with whom the copy is left and the defendant and, therefore, assumes that such person will deliver the process to defendant or in some way give him notice thereof.23

In this case, the Sheriff's Return stated that private respondent was out of the country; thus, the service of summons was made at her residence with her husband, Alfredo P. Agudo, acknowledging receipt thereof. Alfredo was presumably of suitable age and discretion, who was residing in that place and, therefore, was competent to receive the summons on private respondent's behalf.

Notably, private respondent makes no issue as to the fact that the place where the summons was served was her residence, though she was temporarily out of the country at that time, and that Alfredo is her husband. In fact, in the notice of appearance and motion for extension of time to file answer submitted by private respondent's counsel, he confirmed the Sheriff's Return by stating that private respondent was out of the country and that his service was engaged by respondent's husband. In his motion for another extension of time to file answer, private respondent's counsel stated that a draft of the answer had already been prepared, which would be submitted to private respondent, who was in Ireland for her clarification and/or verification before the Philippine Consulate there. These statements establish the fact that private respondent had knowledge of the case filed against her, and that her husband had told her about the case as Alfredo even engaged the services of her counsel.

In addition, we agree with petitioner that the RTC had indeed acquired jurisdiction over the person of private respondent when the latter's counsel entered his appearance on private respondent's behalf, without qualification and without questioning the propriety of the service of summons, and even filed two Motions for Extension of Time to File Answer. In effect, private respondent, through counsel, had already invoked the RTC’s jurisdiction over her person by praying that the motions for extension of time to file answer be granted. We have held that the filing of motions seeking affirmative relief, such as, to admit answer, for additional time to file answer, for reconsideration of a default judgment, and to lift order of default with motion for reconsideration, are considered voluntary submission to the jurisdiction of the court.24 When private respondent earlier invoked the jurisdiction of the RTC to secure affirmative relief in her motions for additional time to file answer, she voluntarily submitted to the jurisdiction of the RTC and is thereby estopped from asserting otherwise.25

Considering the foregoing, we find that the RTC committed a grave abuse of discretion amounting to excess of jurisdiction in issuing its assailed Orders.

WHEREFORE, the petition is GRANTED. The Orders dated May 7, 2004 and July 21, 2004 of the Regional Trial Court of Iloilo City, Branch 24, are hereby SET ASIDE. Private respondent is DIRECTED to file her Answer within the reglementary period from receipt of this decision.

RULE 10

G.R. No. 158401             January 28, 2008

PHILIPPINE PORTS AUTHORITY, petitioner, vs.WILLIAM GOTHONG & ABOITIZ (WG&A), INC., respondent.

D E C I S I O N

AUSTRIA-MARTINEZ, J.:

This resolves the Petition for Review on Certiorari filed by the Philippine Ports Authority (petitioner) seeking the reversal of the Decision1 of the Court of Appeals (CA) promulgated on October 24, 2002 and its Resolution dated May 15, 2003.

The antecedent facts are accurately narrated by the CA as follows:

Petitioner William Gothong & Aboitiz, Inc. (WG&A for brevity), is a duly organized domestic corporation engaged in the shipping industry. Respondent Philippine Ports Authority (PPA for brevity), upon the other hand, is a government-owned and controlled company created and existing by virtue of the provisions of P.D. No. 87 and mandated under its charter to operate and administer the country's sea port and port facilities.

After the expiration of the lease contract of Veterans Shipping Corporation over the Marine Slip Way in the North Harbor on December 31, 2000, petitioner WG&A requested respondent PPA for it to be allowed to lease and operate the said facility. Thereafter, then President Estrada issued a memorandum dated December 18, 2000 addressed to the Secretary of the Department of Transportation and Communication (DOTC) and the General Manager of PPA, stating to the effect that in its meeting held on December 13, 2000, the Economic Coordinating Council (ECC) has approved the request of petitioner WG&A to lease the Marine Slip Way from January 1 to June 30, 2001 or until such time that respondent PPA turns over its operations to the winning bidder for the North Harbor Modernization Project.

Pursuant to the said Memorandum, a Contract of Lease was prepared by respondent PPA containing the following terms:

1. The lease of the area shall take effect on January 1 to June 30, 2001 or until such time that PPA turns over its operation to the winning bidder for the North Harbor modernization;

2. You shall pay a monthly rental rate of P12.15 per square meter or an aggregate monthly rental amount of P886,950.00;

3. All structures/improvements introduced in the leased premises shall be turned over to PPA;

4. Water, electricity, telephone and other utility expenses shall be for the account of William, Gothong & Aboitiz, Inc.;

5. Real Estate tax/insurance and other government dues and charges shall be borne by WG&A.

The said contract was eventually conformed to and signed by the petitioner company, through its President/Chief Executive Officer Endika Aboitiz, Jr. Thereafter, in accordance with the stipulations made in the lease agreement, PPA surrendered possession of the Marine Slip Way in favor of the petitioner.

However, believing that the said lease already expired on June 30, 2001, respondent PPA subsequently sent a letter to petitioner WG&A dated November 12, 2001 directing the latter to vacate the contested premises not later than November 30, 2001 and to turnover the improvements made therein pursuant to the terms and conditions agreed upon in the contract.

In response, petitioner WG&A wrote PPA on November 27, 2001 urging the latter to reconsider its decision to eject the former. Said request was denied by the PPA via a letter dated November 29, 2001.

On November 28, 2001, petitioner WG&A commenced an Injunction suit before the Regional Trial Court of Manila. Petitioner claims that the PPA unjustly, illegally and prematurely terminated the lease contract. It likewise prayed for the issuance of a temporary restraining order to arrest the evacuation. In its complaint, petitioner also sought recovery of damages for breach of contract and attorney's fees.

On December 11, 2001, petitioner WG&A amended its complaint for the first time. The complaint was still denominated as one for Injunction with prayer for TRO. In the said amended pleading, the petitioner incorporated statements to the effect that PPA is already estopped from denying that the correct period of lease is "until such time that the North Harbor Modernization Project has been bidded out to and operations turned over to the winning bidder. It likewise included, as its third cause of action, the additional relief in its prayer, that should the petitioner be forced to vacate the said facility, it should be deemed as entitled to be refunded of the value of the improvements it introduced in the leased property.

Following the first amendment in the petitioner's complaint, respondent PPA submitted its answer on January 23, 2002. Meanwhile, the TRO sought by the former was denied by the trial court by way of an order dated January 16, 2002.

Petitioner later moved for the reconsideration of the said Order on February 11, 2002. Shortly thereafter, petitioner filed a Motion to Admit Attached Second Amended Complaint. This time, however, the complaint was already captioned as one for Injunction with Prayer for Temporary Restraining Order and/or Writ of Preliminary Injunction and damages and/or for Reformation of Contract. Also, it included as its fourth cause of action and additional relief in its prayer, the reformation of the contract as it failed to express or embody the true intent of the contracting parties.

The admission of the second amended complaint met strong opposition from the respondent PPA. It postulated that the reformation sought for by the petitioner constituted substantial amendment, which if granted, will substantially alter the latter's cause of action and theory of the case.

On March 22, 2002, the respondent judge issued an Order denying the Admission of the Second Amended Complaint. Petitioner filed a motion for reconsideration of the aforesaid order but the same was again denied in an order dated April 26, 2002.2

Herein respondent WG&A then filed a petition for certiorari with the CA seeking the nullification of the aforementioned RTC orders.

In its Decision dated October 24, 2002, the CA granted respondent's petition, thereby setting aside the RTC orders and directing the RTC to admit respondent's second amended complaint pursuant to Section 3, Rule 10 of the 1997 Rules of Civil Procedure. Petitioner moved for reconsideration but the same was denied per Resolution dated May 15, 2003.

Hence, the present petition where the only issue raised is whether the CA erred in ruling that the RTC committed grave abuse of discretion when it denied the admission of the second amended complaint.

The Court finds the petition without merit.

The CA did not err in finding that the RTC committed grave abuse of discretion in issuing the Order dated March 22, 2002 denying the admission of respondent's second amended complaint.

The RTC applied the old Section 3, Rule 10 of the Rules of Court:

Section 3. Amendments by leave of court. – after the case is set for hearing, 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 the action or that the cause of action or defense is substantially altered. 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.

instead of the provisions of the 1997 Rules of Civil Procedure, amending Section 3, Rule 10, to wit:

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.

The Court has emphasized the import of Section 3, Rule 10 of the 1997 Rules of Civil Procedure in Valenzuela v. Court of Appeals,3 thus:

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."4

The application of the old Rules by the RTC almost five years after its amendment by the 1997 Rules of Civil Procedure patently constitutes grave abuse of discretion.

WHEREFORE, the petition is DENIED for lack of merit. The Decision of the Court of Appeals promulgated on October 24, 2002 and its Resolution dated May 15, 2003 are hereby AFFIRMED in toto.

SO ORDERED.