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362 Phil. 490


[ G.R. No. 76276, February 15, 1999 ]




Petition for Review on Certiorari seeking to reverse the Decision of the Court of Appeals[1] dated September 17, 1986, and the Order, dated October 14, 1986, denying the motion for reconsideration of said Decision, in CA-GR SP No. 06882.

The fact that matter are, as follows:

On November 25, 1983, Philippine Banking Corporation (Bank) filed a Complaint against the petitioners, which was later amended, for the collection of the sum of P2,700,000.00 plus interest and attorney's fees. Docketed as Civil Case No. 5775 before Branch 136 of the Regional Trial Court of Makati, the said complaint alleged inter alia, that:
"That basis of the action is a Promissory note executed by the petitioner on July 9, 1982, which contained the following terms and conditions:
"1. Date of promissory note; July 9, 1982

"2. Due Date: August 9, 1984

"3. Terms of Payment:

Principal payable semi-annually

Interest payable quarterly

"4. Acceleration Clause;

Upon default of payment of any installment when due or in case I/we fail to pay any other obligations which I/we or any of us may now or in the future owe to the Bank or to any other creditor whatsoever, whether as principal(s) or as guarantor(s) then the entire principal of this note including all other amounts agreed on at the option of the bank and without prior notice or demand shall immediately become due and demandable.
"5. Attorney's fees in the sum equivalent to 25% of the total amount due in case of suit."[2]
The bank theorized that since petitioners failed to pay the first and second installments of their obligation which fell due on January 9, 1983 and July 9, 1983, respectively, the entire amount of P2,700,000.00 became due and demandable under the acceleration clause of the promissory note sued upon.

In their answer, petitioners placed reliance on the affirmative defenses, that:

"6. Under the terms of the promissory Note No. 1141-82 the term of payment is as follows: "Principal payable semi-annually and interest payable quarterly". However, defendants and plaintiff agreed that the payments on said loan shall start from the time the said promissory note becomes due, i.e. August 9, 1984.

"7. Since the due date August 9, 1984 has not yet arrived, the complaint in the above-entitled case is clearly premature and without basis."[3]
After the Bank has adduced evidence and rested its case, petitioners interposed a demurrer to evidence on the ground that the obligation in question was not yet due and demandable, as it fell due only on August 9, 1984, after the case was instituted.

On July 25, 1985, the trial court denied the Demurrer to evidence and rendered judgement in favor of the Bank.

What petitioner did next was to bring a petition for certiorari and prohibition before the Court of Appeals, assailing the decision of the trial court for being tainted with grave abuse of discretion. According to petitioners, they were not afforded an opportunity to introduce evidence in accordance with Section 1, Rule 35, of the Revised Rules of Court, which provides:
"Effect of judgment on demurrer to evidence. After the plaintiff has completed the presentation of his evidence, the defendant without waiving his right to offer evidence in the event the motion is not granted, may move for a dismissal on the ground that upon the facts and the law the plaintiff has shown no right to relief. However, if the motion is granted and the order of dismissal is reversed on appeal, the movant loses his right to represent evidence in his behalf."
Relying on the ruling Dizon et al. v. Hon. Bayona, et al., 98 Phil 943, respondent court dismissed the Petition, ratiocinating, that:
"The genuineness and due execution of the Promissory Note which is attached to the Amended Complaint is admitted. The non-payment of the obligation despite demands therefor is likewise admitted. The only defense of petitioners is that the obligation is not yet due and demandable. The evidence to support their defense are the terms of the Promissory Note itself which is already before respondent Judge. xxx

There is no pretense by petitioners in their Answer or in the present Petition that they have evidence to support their only defense other than what appears on the face of the promissory note. It would, therefore, be a useless formality for the respondent Judge to still set the case for reception of Petitioners' evidence, when the evidence to be received is already before the Court and submitted for its consideration in order to arrive at a judgment on the issues set forth in the pleadings.
xxx the due date is August 9, 1984 while the present complaint was filed on November 22, 1983. The dependant is in error. The due date of August 9, 1984 appearing on the face of the Promissory Note encompasses the period within which to fully settle the obligation. xxx
To persist in presenting evidence already before the Court and considered by the latter in its decision is to insist on an empty formality and indulge in an exercise in futility."[4]
Undaunted, petitioners found their way to this Court via the present petition for review on certiorari, anchored on the assigned errors, that:



On February 4, 1988, the Bank, citing Section 9, Rule 130 of the Revised Rules of Court in its Brief, contended that the lower court merely exercised its adjudicatory power most judiciously and wisely, taking into account the facts and circumstances surrounding the case.[6]

On August 27, 1990, petitioners sent in a Manifestation that the parties had an initial conference for the amicable settlement of the case. Then, on September 10, 1990, the parties filed a joint Manifestation that within two (2) months, they would come up with an amicable settlement.

On August 3, 1992, Atty. Orlando C. Salvador, former counsel of the Bank, presented a motion to submit the compromise agreement for the consideration of the trial Court subject to the Manifestation that the attorney's fees due from their client equivalent to twenty five (25%) percent of the amount actually collected by the Bank shall be remitted, in the following manner: 75% shall be remitted to the Bank and 25%, directly to the lawyers who signed the said agreement, of every payment tendered. The pertinent portion of the compromise agreement states, thus:
"2. In consideration of the foregoing admission of liability by the private respondents and of their faithful compliance of their commitment (sic) as set forth in this Compromise Agreement, Philippine Banking Corporation hereby agrees to reduce the sum payable in the amount of P8,000,000.00 which shall be paid by the private respondents in the following manner:
a) P250,000.00 on or before July 1, 1992;

b) P500,000.00 on or before October 1, 1992;

c) P250,000.00 on or before December 1, 1992; and

d) The balance of P7,000,000.00 to be paid in five (5) annual installment, at P1.4 Million for each installment, the first to commence on or before December 31, 1993 and the rest of the installment to be paid on or before December 31, of each subsequent year of the last four (4) years;

3. Interest at the rate of 12% p.a. shall be paid based on diminishing principal balance payable together with the principal payments herein established; xxx"[7]
On September 18, 1992, the Bank, represented by a new counsel, filed a Manifestation and Motion to expunge the proposed compromise agreement for the reasons, that:
"3. In truth and in fact, the proposed agreement was sent to Atty. Salvador for his signature to be filed in Court only if his fees shall have been settled;

4. To set the records straight, private respondent accepted a settlement of P8.0 million and at that, payable on installment basis, on the ground that the said amount is the net amount that would be paid by the respondents;

5. The submission of the proposed compromise is therefore premature and unauthorized and should therefore be expunged from the records."[8]
But on September 23, 1992, Atty. Salvador, relying on the case of Aro v. Nanawa, 27 SCRA 1090, presented a Supplemental Manifestation, claiming, that:
"xxx it having been understood by the parties thereto that the P8,000,000 compromise settlement from an original amount of P18,000,000, was the net amount due to the Bank private respondent. It will be noted from this letter that there is no mention of an alleged "failure of agreement" which later will be seen as the ground being posited by the Bank private respondent to expunge the Compromise Agreement from the records. The letter only reiterates that it cannot accommodate a reduction of the P8,000,000 already agreed settlement amount.

xxx Yet, despite the defendants-petitioners not paying the undersigned counsels attorney's fees although it was clearly stipulated in the Compromise Agreement, the Bank private respondent signed the same and by no less than the President of the Bank, Mr. Edward Go. If the Bank private respondent were more conscious and if it had accorded respect for lawyers' professional services, it should have deferred the signing or execution of the Compromise Agreement until the defendants-petitioners had accordingly settled the attorneys (sic) fees of the undersigned counsels. xxx

x x x x x x x x x

15. Quantified, the undersigned counsels are entitled under the Compromise Agreement to 25% of P8,000,000, which should be P2,000,000. However, if the Compromise Agreement were expunged and the case were decided on the merits, readily the value of the litigation by the time of final rendition of judgement will be around P20,000,000. Twenty five (25%) percent thereof will be P5,000,000 for the undersigned counsels attorney's fees. At this point, however it will be safe to assume that only twenty (20%) percent of the legal process remains to be done, and that eighty (80%) percent of the legal efforts leading to the final conclusion of the case has been accomplished by the undersigned counsels. x x x

x x x x x x x x x
`The attorney should be allowed to recover his attorney's fee in the same action on consideration of equity, to avoid multiplicity of suits and for the better protection of lawyers, who, trusting in the good faith of their clients, render professional services on contingent basis. This should also do away with the questionable practices of clients of compromising their cases at the back of their counsel with the consequence that the stipulated contingent fees of the lawyer are either unreasonably reduced or even completely rendered without basis as in a case wherein the clients waived after the latter had acknowledged, in effect, the correctness of said clients connection.'
In either of the foregoing, to put a notice of attorney's lien in favor of the undersigned counsels' claim for attorneys (sic) fees upon any judgment which may be rendered herein, pursuant to Sec. 37, Rule 138, Rules of Court, in relation to Section 26, Rule 138 thereof.[9]

x x x x x x x x x"
On February 24, 1993, this Court resolve to REINSTATE the Petition, observing that:
"x x x x x x x x x

xxx despite several manifestations of petitioners to defer resolution of the instant petition due to on-going negotiations to settle the dispute by compromise agreement, the parties have seemingly failed to agree on terms acceptable to all concerned. The three-cornered fight among Asian Trading Corporation, Philippine Banking Corporation and Attys. Salvador and Garingo (former lawyers of Philbanking) over their claim for attorney's fees is better left for adjudication in the main petition."[10]
The petition is devoid of merit.

In dismissing petitioners's petition for certiorari, the respondent court relied on Section 1, Rule 65 of the Revised Rules of Court prescribing the requirements for a petition for certiorari, to wit:
"xxx (1) the writ is directed against a tribunal board or officer exercising judicial or quasi-judicial functions; (2) such tribunal, board or officer has acted without or in excess of jurisdiction, or with grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no appeal or any plain, speedy and adequate remedy in the ordinary course of law."[11]
Well entrenched to the point of being elementary is the doctrine that certiorari will only lie if there is no plain, speedy and adequate remedy in the ordinary course of law.
"xxx a special civil action for certiorari under Rule 65 of the Rules of Court lies only when `there is no appeal nor plain, speedy and adequate remedy in the ordinary course of law.' Certiorari cannot be allowed when a party fails to appeal a judgment despite the availability of that remedy, xxx." (Bernardo v. The Hon. Special Sixth Division of the Court of Appeals, 275 SCRA 413, 426)

"xxx Certiorari will only lie if there is no appeal or any other plain, speedy and adequate remedy in the ordinary course of law xxx." (Building Care Corporation v. National Labor Relations Commission, et al. 268 SCRA 666)

"xxx the special civil action of certiorari will not lie unless a motion for reconsideration must first filed before the respondent court to allow it an opportunity to correct its errors. xxx" (Tan v. Court of Appeals, 275 SCRA 568)

"xxx before certiorari under Rule 65 can be availed of, a motion for reconsideration must first be filed. xxx" (Centro Escolar University v. National Labor Relations Commission, et al., 276 SCRA 699)

"Likewise, a motion for reconsideration is an adequate remedy; hence certiorari proceedings, as in this case, will not prosper. xxx

"xxx Certiorari will lie only if there is no appeal or any other plain, speedy and adequate remedy in the ordinary course of law against the act of respondent." (Jamer v. National Labor Relations Commission, 278 SCRA 632)
In a long line of decisions, the Court ruled that a petition for certiorari will only lie in case of grave abuse of discretion.
"xxx where the ground invoked in a special civil action for certiorari under Rule 65 of the Rules of Court is abuse of discretion xxx the abuse must be grave as where the power is exercised in an arbitrary or despotic manner by reason of passion or personal hostility; or, it must be so patent and gross as to amount to an evasion of positive duty or to a virtual refusal to perform the duty enjoined to act at all in contemplation of law. xxx" (Republic of the Philippines v. Villarama, Jr., 278 SCRA 736)

"xxx Certiorari may be issued only where it is clearly shown that there is patent and gross abuse of discretion as to amount to an evasion of positive duty or to virtual refusal to perform a duty enjoined by law, or to act at all in contemplation of law, as where the power is execised in an arbitrary or despotic manner by reason of passion or personal hostility. xxx" (Lalican v. Vergara, 276 SCRA 518)

"xxx a special civil action for certiorari is limited to questions of jurisdiction or grave abuse of discretion. xxx" (Philippine Airlines, Inc. v. National Labor Relations Commission, 276 SCRA 391)

"For the petition for certiorari to be granted, it must be shown that the respondent court committed grave abuse of discretion equivalent to lack of jurisdiction and not mere errors of judgement, for certiorari is not a remedy for errors of judgement, which are correctible by appeal. xxx" (Medina v. City Sheriff, Manila, 276 SCRA 133)

"xxx a special civil action for certiorari is limited to correcting errors of jurisdiction or grave abuse of discretion. xxx" (Pure Blue Industries, Inc. v. National Labor Relation Commission, 271 SCRA 259)

"xxx a petition for certiorari under Rule 65 of the Rules of Court will prosper only if there is a showing of grave abuse of discretion or an act without or in excess of jurisdiction on the part of the National Labor Relations Commission. It does not include an inquiry as to the correctness of the evaluation of evidence which was the basis of the labor official or officer in determining his conclusion. xxx" (National Federation of Labor v. National Labor Relations Commission, 283 SCRA 275)
Apt and proper is the observation by the respondent court that instead of filing a motion for reconsideration of or appealing from, subject judgement, the petitioners resorted to the extraordinary remedy of certiorari, which is unavailable under the antecedent facts and circumstances.

Anent petitioners's protestation of deprivation of due process, the respondent court erred not when it considered the yearning of petitioners to present evidence before the trial court, as an empty formality and exercise in futility. "xxx The sole office of the writ of certiorari is the correction of errors of jurisdiction including the commission of grave abuse of discretion amounting to lack or excess of jurisdiction xxx" (Caltex Refinery Employees Association (CREA) v. Brillantes, 279 SCRA 218) and "will issue only to correct errors of jurisdiction xxx and not to correct errors of procedure or mistake in the findings or conclusions of the judge." (Chua v. Court of Appeals, 271 SCRA 546).

WHEREFORE, the Petition under consideration is DENIED for want of merit. No pronouncement as to costs.


Romero (Chairman), Vitug, Panganiban, and Gonzaga-Reyes JJ., concur.

[1] As per the Decision of Court of Appeals, Eight Division with J. Oscar M. Herrera as ponente and JJ. Manuel T. Reyes and Mariano A. Zosa, as members.

[2] Rollo, pp. 18-19.

[3] Rollo, p. 19.

[4] Decision, pp. 4-5, Rollo, pp. 21-22.

[5] Petition , Rollo, pp. 9-10.

[6] "Evidence of written agreement.- When the terms of an agreement have been reduced to writing, it is considered as containing all the terms agreed upon and there can be, between the parties and their successors in interest, no evidence of such terms other than the contents of the written agreement .

However, a party may present evidence to modify, explain or add to the terms of the written agreement if he puts in issue in his pleading:
a) An intrinsic ambiguity, mistake or imperfection in the written agreement;

b) The failure of the written agreement to express the true intent of the parties thereto;

c) The validity of the written agreement; or

d) The existence of other terms agreed to by the parties or their successors in interest after the execution of the written agreement.

[7] Compromise Agreement, Annex A, pp. 1-2, Rollo, pp. 85-86.

[8] Rollo, p.94.

[9] Rollo, pp. 101, 103, 105, 107-108.

[10] Rollo, p. 129.

[11] Sanchez v. Court of Appeals, 279 SCRA 647, 672.

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