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[G.R. No. 136228.July 30, 2001]

GALLARDO-CORRO, et. al. vs. GALLARDO, et al.

SECOND DIVISION

Gentleman:

Quoted hereunder, for your information, is a resolution of this Court dated JUL 30 2001.

G.R. No. 136228(Emma Gallardo-Corro, et al. vs. Efren Don L. Gallardo, et al.)

The poet-philosopher John Milton, for the bountiful harvest of tenacity shown by petitioners, would have referred to them as possessed of the "courage never to submit or yield." In their Motion for Reconsideration of our Decision of 30 January 2001 are practically a rehash of arguments already raised by them in their earlier pleadings although in between the lines is the stringent call for this Court to decide on the equities of the case. In a word, petitioners convince us that they would lose their share worth some P90,000,000.00 in the subject inheritance to what they perceive to be a "swindling activity" that has remained perpetuated to this day by sheer temerity and the succor lent by procedural technicality. For, this Court is loathe to deny justice and cultivate inequity; we therefore resolve to look into the equities of this case for the last time and decide accordingly.

Briefly, for better perception and understanding of the facts, we rewind: Petitioners and respondents are heirs of the patriarch of the Gallardo clan, Dr. Marcelino Gallardo, Sr., who died in 1943 leaving behind several properties in Dumaguete City, particularly referring to Lots Nos. 2, 1014, 1015, 1026, 1028, 6136 and 4347, subject matter of the instant case. On 29 March 1977, upon allegations of fraud 1 The plaintiffs alleged in their complaint that Marcelino Gallardo, Jr. misrepresented to them that he was applying for a housing loan with DBP and he needed the properties left by Dr. Marcelino Gallardo, Sr. as collateral; that by fraud and trickery Marcelino Jr. induced them into signing several simulated documents denominated "Assignment of Shares of Inheritance," "Deed of Quit Claims of Undivided Share," and "Ext rajudicial Settlement of Estate and Deed of Absolute Sale," all of which purported to convey to Marcelino, Jr., their rights and interests over the properties therein described; that Marcelino, Jr. eventually transferred the title of the properties to DBP pursuant to the requirements of the bank that all collaterals for housing loans should be in the name of the bank, to be reconveyed to the owners as soon as the loans were fully paid; that DBP later reconveyed the title to the properties to Marcelino, Jr. after the latter paid in full the amount of his indebtedness to the bank; and, that Marcelino, Jr. and his wife Ildefonsa were now claiming sole ownership of the disputed properties to the exclusion of the other heirs of Dr. Marcelino Gallardo, Sr.committed by one of the children of the patriarch, his namesake Marcelino Gallardo, Jr., the other heirs, namely, the (patriarch's wife Patroci�a Vda. de Gallardo together with her children Jose Ed Gallardo, Marcelina Gallardo-Arcenas, Emma Gallardo-Corro, Felicisimo Gallardo, Teresita Gallardo, and grandchildren Joaquin Gallardo Bocanegra III and Sagrario Gallardo Bocanegra, filed in the then Court of First Instance of Negros Oriental a complaint for Declaration of Inexistence of Certain Documents, Receivership, Partition of Real Estate and Damages against Marcelino Gallardo, Jr. and his wife Ildefonsa L. Gallardo and impleading with them the Development Bank of the Philippines(DBP). 2 Docketed as Civil Case No. 6704 of the Court of First Instance of Negros Oriental.

While Civil Case No. 6704 was pending before the trial court, plaintiff Patroci�a Vda. de Gallardo died, and the trial court on 21 November 1979 gave her counsel, Atty. Franklin Esme�a, sixty (60) days to file his amended complaint "in view of the death of the mother of the parties." On 6 October 1980 the case was dismissed without prejudice, obviously by reason of the parties' efforts to settle amicably they being members of the same family. Defendants moved for reconsideration as they would have the case dismissed with prejudice, with the additional prayer that plaintiffs be required "to update their complaint as a consequence of the death of the plaintiffs' mother x x x x" Plaintiffs opposed the motion claiming that the dismissal without prejudice was obtained precisely upon the representation of the defendants that a settlement was in the offing. The trial court deferred its resolution of defendants' motion "there being a bright prospect to settle this case amicably," but prodded plaintiffs' counsel in the meantime to amend the complaint. But counsel failed to amend the complaint thus prompting the trial court on 27 October 1982 to dismiss the case motu proprio, this time with prejudice. On 19 April 1983 the trial court denied plaintiffs' motion for reconsideration. No appeal therefrom or petition for review was filed by any of the parties.

On 3 March 1997 a Complaint for Partition of Inherited Properties with Damages was filed before the Regional Trial Court of Dumaguete City. 3 Docketed as Civil Case No. 11861 of the Regional Trial Court of Dumaguete City.The same members of the Gallardo family litigated the case, except that Jose Ed Gallardo, the original plaintiff in Civil Case No. 6704, already died and was replaced as party-plaintiff by his spouse Theresa Gallardo, and children Marwill, Melvin, Alice, Millan, Michael and Johnny. On the other hand, Marcelino Gallardo, Jr., the original defendant in Civil Case No. 6704, also died and was subsequently replaced as party-defendant by his surviving children Efren Don, Dinahbelle Emilia, Evangeline Fidela, Agnes Avita, Edgar David and Josie Marie. The same contested parcels of land in Civil Case No. 6704 with the addition of Lot No. 4347 were involved in Civil Case No. 11861.

The defendants moved to dismiss the complaint on the ground of res judicata, arguing that the issues raised by the plaintiffs in their complaint have already been resolved with finality in Civil Case No. 6704. On 12 May 1997 plaintiffs filed their opposition thereto. On 11 July 1997 the trial court denied defendants' motion to dismiss, considered the order of dismissal in Civil Case No. 6704 to be void 4 This order of the trial court stated in part: "It was not necessary for the lawyer of the plaintiffs [in Civil Case No. 6704] to amend the complaint, evidently to implead the deceased plaintiff Patrocina Vda. de Gallardo . . . . Neither an amendment of the complaint, nor an appointment of a legal representative, was necessary in said case because the heirs of the deceased plaintiff who are, in fact, her children and grandchildren were already made original parties-plaintiffs in the complaint. As original parties-plaintiffs, there was no doubt that said heirs voluntarily submitted themselves to the jurisdiction of the court....Without digressing from the frame of the foregoing disquisition, the orders of November 21, 1979 and November 18, 1980 directing the amendment of the complaint in Civil Case No. 6704 were all void. When, on October 27, 1982, the case was dismissed with prejudice and its reconsideration denied in the order of April 18, 1983, the same orders were, likewise, void for they were results of previous void orders . . . . This Court is aware of jurisprudence prohibiting interference with orders or judgments of courts with coordinate or concurrent jurisdiction. However, as viewed above, the orders of dismissal issued in Civil Case No. 6704 violated due process and were, therefore, void, in view of which it is the inherent power of every court to 'amend and control its processes and orders so as to make them conformable to law and justice' [Rule 135 (g) Rules of Court]. For being void, the orders of November 21, 1979, November 18, 1980, October 27, 1982 and April 19, 1983, did not attain finality and, therefore, produced no effect of res judicata, in like manner that said orders could not be justified, for being void, under Sec. 3, Rule 17, Rules of Court."and gave them a fresh period of fifteen (15) days within which to file their answer. Defendants elevated the case to the Court of Appeals on a petition for certiorari and prohibition. On 4 September 1998 the appellate court rendered the assailed Decision annulling the order of the trial court and declaring void the proceedings in Civil Case No. 11861. 5 The Decision of the Court of Appeals states in part: "It is regarded as an elementary principle of high importance in the administration of justice that the judgment of a court of competent jurisdiction may not be opened, modified or vacated by any court of concurrent jurisdiction . . . at any rate, the counsel for the plaintiffs-respondents should be faulted for all these legal entanglements. In the first place, he initiated the move to amend the complaint in lieu (sic) of the death of one of the plaintiffs. Time passed and he never filed any amended complaint. Thus, the court was forced to issue an order to effect the amendment. But still, he did not comply despite the order . . . rightly so, the court ordered Civil Case No. 6704 dismissed with prejudice. Surprisingly, he did not file a motion for reconsideration or appeal against this order. Instead, he allowed almost fourteen (14) years to pass and filed an altogether different case, with practically the same parties and the same subject matter and same cause of action. As evidenced by the records of this case, this second case is effectively barred by the former judgment (res judicata) rendered in Civil Case No. 6704. In addition, the filing of the second case with a false certification coupled with the inclusion of Lot 4347 which was admitted to have been erroneously included constitutes deliberate forum-shopping, another ground which warrants the dismissal of Civil Case No. 11861." In this proceeding, the core issue of the applicability of res judicata to authorize the dismissal of Civil Case No. 11861 hinges on the legality of the order of dismissal of Civil Case No. 6704 since res judicata presupposes in the first place a valid judgment. The focal point of petitioners in this motion for reconsideration, as in the petition in chief, is that the order of the trial court in Civil Case No. 6704 to amend the complaint is void and imposes upon the plaintiffs therein no obligation to comply therewith; that since the dismissal of the case was grounded upon a void order, the dismissal itself was also void; and that, consequently, the dismissal of Civil Case No. 6704 may not be asserted to bar the subsequent prosecution of the same or identical claim in Civil Case No. 11861, citing Case�as v. Rosales. 6 No. L-18707, 28 February 1967, 19 SCRA 462.

Petitioners' present insistence is the inherent unjustness of allowing an allegedly fraudulent act to perpetuate itself by the expedience of a technicality.

n Case�as the plaintiffs filed a complaint for specific performance and enforcement of their right under a certain deed of sale. During the pendency of the case, however, one of the plaintiffs died. The trial court motu proprio directed the surviving plaintiff to amend the complaint to effect the necessary substitution of parties. When the plaintiff failed to comply with the order, the lower court dismissed the case. No appeal was taken by the plaintiff hence in due time the order became final. Three (3) years later, the same plaintiff filed a similar complaint with the same trial court, but this complaint was dismissed on the ground of res judicata. In reversing the trial court's order of dismissal of the second case and holding that there was no res judicata, this Court held -

An order to amend the complaint, before the proper substitution of parties . . . is void and imposes upon the plaintiff no duty to comply therewith to the end that an order dismissing the said complaint, for such non-compliance, would similarly be void ...grounded as it was upon a void order, the dismissal was itself void. Consequently, as the dismissal of Civil Case No. 261 was void, it clearly may not be asserted to bar the consequent prosecution of the same or identical claim.

Unlike in Case�as, the judge in Civil Case No. 6704 did not motu proprio direct the plaintiffs therein to amend their complaint. It was plaintiffs' counsel who sought to amend the complaint. In other words, it was the plaintiffs' counsel who sought to amend the complaint and the trial court merely dignified his request when it found its way into the order of 21 November 1979. More significantly, what was involved in Case�as was the nullity of the order of dismissal predicated upon the failure of the plaintiff to effect the substitution of parties. In the instant case, there is no showing that the dismissal of Civil Case No. 6704 was for failure of the plaintiffs' counsel to effect the substitution of parties. The order of 27 October 1982 merely stated, in part, that the court directed plaintiffs' counsel to comply with its order of 21 November 1979 within sixty (60) days but which counsel failed to comply with. So did the order of 21 November 1979 simply state -

As prayed for by Atty. Franklin Esmena, he is given a period of sixty (60) days within which to file his amended complaint in view of the death of the mother of the parties.

It is therefore unclear from the records why counsel for plaintiffs proposed to amend the complaint in the first place, except to state that it was "in view of the death of the mother of the parties." For sure, if the intention of the proposed amendment was to implead the heirs of Patroci�a Vda. de Gallardo, then the trial court under authority of Case�as committed grave abuse of discretion in requiring the amendment of the complaint for the reason that such order to amend is void when issued prior to the service of the order of substitution upon the substitute parties. But what if the amendment was for some other purpose, e.g., to include in the partition case the properties left by the deceased Patroci�a Vda. de Gallardo; or to implead some other heirs who were left out; or to notify creditors known or unknown who were not informed of the death of Patroci�a Vda. de Gallardo either by personal service or through publication? Clearly, we can only surmise the reason or reasons of counsel in requesting for the amendment of the complaint. For this reason, we cannot conclude with finality, as the lower court did, that the order to amend was precisely to implead the heirs of Patroci�a Vda. de Gallardo. This conclusion would be purely speculative and unsupported by the evidence.

Nonetheless, even without Case�as, we find merit in the cause of petitioners. Precisely because of the uncertainty in the true character of the order to amend embodied in the orders above quoted, it was incumbent upon the trial court in Civil Case No. 6704 to hear the parties before, opting to dismiss motu proprio the complaint upon the ground so cited. Otherwise stated, it is the positive duty of the trial court under the facts of this case to conduct a hearing to determine the merits of the intended dismissal of the complaint. While we do not rule out a motu proprio action by the court for a litigant's inaction, there must however be sufficient and legitimate basis for such action. Unfortunately, none exists in this case, except perhaps merely to declog its docket which, although deserving of some merit, is not a solid ground to justify the outright dismissal of a case. Consequently, we are constrained to declare as void the order of 27 October 1982 in view of the absence of a hearing which violated plaintiff's right to due process.

For one thing, the hearing is required by the manifestation of the parties regarding the possibility of settlement, which the trial court itself recognized by suspending the proceedings. During this hearing, the trial court is afforded the opportunity to inquire into the status of the proposed settlement as well as the necessity for the amendment, which could have already been superseded by what happened in the discussion regarding a compromise agreement. This certainly should have been the fair and just action of the trial court, rather than precipitately throwing the complaint to the waste bin. True it is that the plaintiffs have their "own duty to prosecute the case diligently and to call the attention of the court, if necessary, to the necessity of putting the case back to its calendar if that has been neglected by the court because of the numerous cases it has to attend to." 7 Smith, Bell & Co., Ltd., et al v. American President Lines, Ltd., et al., G.R. Nos. L-5304-24, 30 April 1954.

Yet this omission on the part of plaintiffs need not immediately or conveniently result in the outright dismissal of the case motu proprio. Care must be taken to protect at all times the right of plaintiffs, and any party for that matter, to due process. As we said in Goldloop Properties, Inc. v. Court of Appeals, 8 G.R. No. 99431, 11 August 1992, 212 SCRA 498.dismissing the action without even allowing the parties to present evidence in their behalf and after ordering them to compromise would, therefore, be tantamount to deprivation of due process.

For another reason, the hearing was necessary to determine whether the amendment was at all mandated by the rules of procedure and whether there was sufficient factual and legal bases for decreeing the dismissal of the complaint motu proprio. The hearing is thus geared precisely towards defining the parameters of the amendment ordered by the trial court. For, not all orders of the trial court are valid grounds for invoking non-prosequitur, as explained in Bank of Philippine Islands v. Court of Appeals 9 G.R. No. 117385, 11 February 1999, 303 SCRA 19.-

In Marahay v. Melicor we said: While a court can dismiss a case on the ground of non-prosequitur, the real test of such power is whether, under the circumstances, plaintiff is chargeable with one of due diligence in failing to proceed with reasonable promptitude. In the absence of a pattern or a scheme to delay the disposition of a case or a wanton failure to observe the mandatory requirement of the rules on the part of the plaintiff as in the case at bar, courts should decide to dispense rather than wield their authority to dismiss (emphasis supplied).

In this connection, the hearing could have also provided the clear and distinct reasons that due process requires to be embodied in the order of dismissal. As it is, the cavalier disposition in the order of 27 October 1982 now poses difficulty, misunderstanding, and even confusion on the part of both - the petitioners in taking recourse therefrom, and this Court that is called upon to resolve the same. As shown by the barren order of dismissal, the trial court also ought to have stated the grounds therefor clearly and distinctly in the same manner that decisions on the merits are required to state their factual and legal bases. Thus in Barrera v. Militante, 10 G.R. No. 54681, 31 May 1982, 114 SCRA 323. citing Continental Bank v. Tiangco, 11 G.R. No. 50480, 14 December 1979, 94 SCRA 715.we required that a trial court should specify in its order the reasons for the dismissal of the complaint so that when the order is appealed, this Court can readily determine from a casual perusal thereof whether there is a prima facie justification for the dismissal.

Upon this omission of the reasons for dismissing a complaint outright, the order of 27 October 1982 cannot be considered a valid adjudication on the merits and, as ruled in Suarez v. Court of Appeals, 12 G.R. No. 83251, 23 January 1991, 193 SCRA 183.cannot constitute res judicata -

Nevertheless, it is error for the trial court to dismiss the first case with prejudice to the filing of the final action without stating the reasons or basis thereof . This should not prevent the second action for custody of minor, since no opportunity was granted by the trial court to the plaintiff to raise this issue for the determination of the court in the habeas corpus case. Hence, we believe that the order of dismissal of the petition for the writ of habeas corpus cannot be considered as a valid adjudication on the merits which would serve as a bar to the second action for custody of minor (emphasis supplied).

In sum, the case before us boils down to an opportunity to ventilate the merits of the case. As has often been said, merits win the soul and the judgment discerning what is true. It would indeed be more in keeping with substantial justice (the value and worth of the controversy is claimed to be in the vicinity of P90,000,000.00) if the disagreement between or among the parties be resolved on the merits rather than on a procedural technicality in light of the express mandate of the Rules that they be liberally construed in order to promote their object and to assist the parties in obtaining just, speedy, and inexpensive determination of every action and proceeding. This guiding principle squarely fits the cause presently invoked given petitioners' strongly worded imputations of deprivation of one set of heirs of their substantial inheritance by means of fraud.

The dismissal of actions is based on sound judicial discretion, which must be exercised wisely and prudently, never capriciously, with a view to substantial justice. For having failed to meet this standard, particularly in perforce shutting off to petitioners their only available avenue for redress, it will have to be declared that the order of dismissal of Civil Case No. 6704 is tainted with grave abuse of discretion.

A final point. We do not see the supposed absence of authority of the RTC - Br. 38 (in Civil Case No. 11861) to declare void the order of dismissal of Br. 40 of the same court (in Civil Case No. 6704) as a bar to the favorable resolution of petitioners' motion. While the rule is that no court has the authority to nullify the judgments or processes of another court they having co-equal power to grant the same reliefs, this rule indeed becomes immaterial in the instant case in view of the broad authority of this Court to review the legality and justness of the order of dismissal, and to declare its nullity whenever warranted. Such power at any rate devolves exclusively upon the proper appellate court. In fine, the confluence of the foregoing considerations impels us to give our imprimatur to the continuation of Civil Case No. 11861 for speedy and substantial justice, in absolute fidelity to our trust. This is one true occasion for vindicating justice in the place where it ought to be due.

WHEREFORE, the Motion for Reconsideration is GRANTED. The Decision of the Court of Appeals dated 4 September 1998 declaring void all the proceedings in Civil Case No. 11861 and dismissing the case instead, is REVERSED and SET ASIDE. Civil Case No. 11861 is REINSTATED and the trial court is DIRECTED to require defendants therein to file their answer within the reglementary period and thereafter to proceed with this case on the merits until terminated.

SO ORDERED.

Very truly yours,

(Sgd.) TOMASITA B. MAGAY-DRIS
Clerk of Court


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