G.R. No.

176033
FELILIBETH AGUINALDO and BENJAMIN PEREZ, Petitioners, vs. REYNALDO P. VENTUS and JOJO
B. JOSON, Respondents.
DECISION
PERALTA, J.:

Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court,
seeking to nullify and set aside the Decision1 dated August 11, 2006 of the Court of Appeals (CA)
and its December 4, 2006 Resolution2 in CA-G.R. SP No. 92094. The CA dismissed for lack of
merit the Petition for Certiorari under Rule 65 filed by petitioners Felilibeth Aguinaldo and
Benjamin Perez, praying for the following reliefs: (1) the issuance of a Writ of Preliminary
Injunction and/or Temporary Restraining Order to enjoin the public respondent Judge Felixberto
T. Olalia from implementing the Orders dated May 16, 2005 and August 23, 2005; (2) the
issuance of a Writ of Certiorari to annul the said Orders, and (3) the dismissal of the estafa case
against them for having been prematurely filed and for lack of cause of action.

The procedural antecedents are as follows:

On December 2, 2002, private respondents Reynaldo P. Ventus and Jojo B. Joson filed a
Complaint-Affidavit3 for estafa against petitioners Aguinaldo and Perez before the Office of the
City Prosecutor (OCP) of Manila. Claiming to be business partners in financing casino players,
private respondents alleged that sometime in March and April 2002, petitioners connived in
convincing them to part with their Two Hundred Sixty Thousand (P260,000.00) Pesos in
consideration of a pledge of two motor vehicles which the latter had misrepresented to be
owned by Aguinaldo, but turned out to be owned by one Levita De Castro, manager/operator of
LEDC Rent-A-Car.

On January 15, 2003, Perez filed his Counter-Affidavit,4 denying the accusation against him, and
claiming that his only participation in the transaction between private respondents and
Aguinaldo was limited to having initially introduced them to each other.

On January 22, 2003, private respondents filed their Reply-Affidavit, 5 asserting that Perez was
the one who showed them photocopies of the registration paper of the motor vehicles in the
name of Aguinaldo, as well as the one who personally took them out from the rent-a-car
company.

On January 29, 2003, Perez filed his Rejoinder-Affidavit,6 stating that neither original nor
photocopies of the registration was required by private respondents to be submitted to them
because from the very start, they were informed by Aguinaldo that she merely leased the
vehicles from LEDC Rent-a-Car.

On February 25, 2003, Assistant City Prosecutor (ACP) Renato F. Gonzaga issued a
Resolution7 recommending both petitioners to be indicted in court for estafa under Article 315,
paragraph (2) of the Revised Penal Code (RPC). He also noted that Aguinaldo failed to appear
and to submit any controverting evidence despite the subpoena.

On July 16, 2003, an Information8 (I.S. No. 02L-51569) charging petitioners with the crime of
estafa under Article 315, paragraph 2 (a) of the RPC was filed with the Regional Trial Court of
Manila. Docketed as Criminal Case No. 03-216182, entitled "People of the Philippines v.
Felilibeth Aguinaldo and Benjamin Perez," the case was raffled to the public respondent.

On July 31, 2003, Perez was arrested, so he filed an Urgent Motion for Reduction of Bail to be
Posted in Cash, which the public respondent granted in an Order of even date.9

On the same day, petitioners filed through counsel a Very Urgent Motion to Recall or Quash
Warrants of Arrest,10alleging that the Resolution dated February 25, 2003 has not yet attained
finality, and that they intended to file a motion for reconsideration.

On August 4, 2003, petitioners jointly filed with the OCP of Manila their "Motion for
Reconsideration and Motion for the Withdrawal of the Information Prematurely Filed With the
Regional Trial Court, Branch 8, City of Manila." 11 Citing the Counter-Affidavit and Rejoinder-
Affidavit of Perez, Aguinaldo asserted, among others, that no deceit or false pretenses was
committed because private respondents were fully aware that she does not own the pledged
motor vehicles.

On August 6, 2003, the public respondent issued an Order12 granting the motion for withdrawal
of information, and directing the recall of the arrest warrant only insofar as Aguinaldo was
concerned, pending resolution of her motion for reconsideration with the OCP.

On August 9, 2003, petitioners filed an Urgent Motion for Cancellation of Arraignment, pending
resolution of their motion for reconsideration filed with the OCP of Manila. Upon the
prosecution's motion,13 the public respondent ordered the proceedings to be deferred until the
resolution of petitioners' motion for reconsideration.14

On December 23, 2003, the public respondent ordered the case archived pending resolution of
petitioners' motion for reconsideration with the OCP of Manila. 15

On January 16, 2004, the OCP of Manila, through ACP Antonio M. Israel, filed a Motion to Set
Case for Trial,16considering that petitioners' motions for reconsideration and for withdrawal of
the information have already been denied for lack of merit.

On February 27, 2004, petitioners filed with the Department of Justice (DOJ) a petition for
review17 in I.S. No. 02L-51569 for estafa, entitled "Benjamin Perez and Felilibeth Aguinaldo v.
Reynaldo P. Ventus and Jojo B. Joson."

Acting on the prosecution's recommendation for the denial of petitioners' motions for
reconsideration and withdrawal of the information, and its motion to set the case for trial, the
public respondent issued an Order18 dated March 15, 2004 directing the issuance of a warrant
of arrest against Aguinaldo and the setting of the case for arraignment.

On March 26, 2004, petitioners filed an Urgent Motion to Cancel Arraignment and Suspend
Further Proceedings,19until their petition for review before the DOJ is resolved with finality.
Petitioners reiterated the same prayer in their Urgent Motion for Reconsideration 20 of the Order
dated March 15, 2004.

On April 16, 2004, the public respondent granted petitioners' urgent motion to cancel
arraignment and suspend proceedings, and motion for reconsideration.21

On June 23, 2004, Levita De Castro, through the Law Firm of Lapeña and Associates, filed a
Motion to Reinstate Case and to Issue Warrant of Arrest.22 De Castro alleged that she was the
private complainant in the estafa case that had been ordered archived. Petitioners filed an
Opposition with Motion to Expunge,23 alleging that De Castro is not a party to the said case,
which is in active file, awaiting the resolution of their petition for review before the DOJ.

On October 15, 2004, De Castro filed a Manifestation24 informing the public respondent that the
DOJ had already promulgated a Resolution dated September 6, 2004 denying petitioners'
petition for review in I.S. No. 02G- 29349 & 02G-28820 for estafa, entitled "Levita De Castro v.
Felilibeth Aguinaldo."25

On May 16, 2005, the public respondent issued an Order granting the Motion to Reinstate Case
and to Issue Warrant of Arrest, thus:

Pending with this Court are (1) Motion to Reinstate Case and to Issue Warrant of Arrest against
accused Aguinaldo filed by private prosecutor with conformity of the public prosecutor. x x x

It appears from the records that:

(1)the warrant of arrest issued against accused Aguinaldo was recalled pending
resolution of the Petition for Review filed with the DOJ; x x x

(2)the Petition for Review was subsequently dismissed

xxx

(3)accused Aguinaldo has not yet posted bail bond.

In view of the foregoing, (the) Motion to Reinstate Case and to Issue Warrant of Arrest is
GRANTED. Let this case be REINSTATED and let warrant of arrest be issued against accused
Aguinaldo.

xxxx
SO ORDERED.26

On May 30, 2005, petitioners filed a Motion for Reconsideration with Motion to Quash Warrant
of Arrest.27

On August 23, 2005, the public respondent issued an Order denying petitioners' Motion for
Reconsideration with Motion to Quash Warrant of Arrest, and setting petitioners' arraignment,
as the Revised Rules on Criminal Procedure (or Rules of Court) allows only a 60-day period of
suspension of arraignment. Citing Crespo v. Mogul,28he also ruled that the issuance of the
warrant of arrest is best left to the discretion of the trial court. He also noted that records do
not show that the DOJ has resolved the petition for review, although photocopies were
presented by De Castro.

Aggrieved, petitioners filed with the CA a Petition for Certiorari under Rule 65 of the Rules of
Court, attributing grave abuse of discretion amounting to lack or excess of jurisdiction on the
part of the public respondent in issuing the Orders dated May 16, 2005 and August 23, 2005. On
August 11, 2006, the CA dismissed the petition for lack of merit. Petitioners filed a motion for
reconsideration, but the CA denied it in a Resolution29 dated December 4, 2006. Hence, this
instant petition for review on certiorari.

Petitioners raise the following issues:

I.

THE HONORABLE COURT OF APPEALS FAILED TO APPRECIATE THAT THE MOTION TO REINSTATE
THE CASE AND ISSUE A WARRANT OF ARREST WAS FILED BY ONE LEVITA DE CASTRO WHO IS
NOT A PARTY TO CRIMINAL CASE NO. 03-21[6]182.

II.

A PROCEDURAL TECHINICALITY THAT THE SUSPENSION ALLOWED FOR ARRAIGNMENT IS

ALREADY BEYOND THE 60- DAY PERIOD MAY BE RELAXED IN THE INTEREST OF AN ORDERLY AND
SPEEDY ADMINISTRATION OF JUSTICE.

III.

THE PRELIMINARY INVESTIGATION ON THE I.S. NO. 02L-51569 (CRIMINAL CASE NO. 03-
21[6]182) BY THE OFFICE OF THE CITY PROSECUTOR OF MANILA HAS NOT YET BEEN
COMPLETED.30

On the first issue, petitioners argue that the public respondent erred in issuing the Order dated
May 16, 2005 reinstating the case and issuing an arrest warrant against Aguinaldo. They point
out that the Motion to Reinstate the Case and to Issue a Warrant of Arrest against Aguinaldo
was filed by De Castro who is not a party in Criminal Case No. 03-216182, entitled "People of
the Philippines v. Felilibeth Aguinaldo and Benjamin Perez," instead of private complainants
Reynaldo P. Ventus and Jojo B. Joson. They also assert that said motion was erroneously granted
based on the purported denial of their petition for review by the DOJ, despite a Certification
showing that their actual petition in I.S. Number 02L-51569, entitled "Reynaldo Ventus, et al. v.
Felilibeth Aguinaldo," has not yet been resolved and is still pending with the DOJ.

On the second issue, petitioners argue that the provision of Section 11, Rule 116 of the Rules of
Court limiting the suspension for arraignment to only sixty (60) days is merely directory; thus, it
cannot deprive petitioners of their procedural right to due process, as their petition for review
has not yet been resolved by the DOJ.

On the third issue, petitioners take exception that even before they could receive a copy of the
DOJ resolution denying their petition for review, and thus move for its reconsideration, the
Information in Criminal Case No. 03-216182 had already been filed with the RTC on July 16,
2003. They contend that such precipitate filing of the Information and issuance of a warrant of
arrest put petitioners at the risk of incarceration without the preliminary investigation having
been completed because they were not afforded their right to file a motion for reconsideration
of the DOJ resolution. In support of their contention, they raise the following arguments: that
the right to preliminary investigation is a substantive, not merely a procedural right; that an
Information filed without affording the respondent his right to file a motion for reconsideration
of an adverse resolution, is fatally premature; and, that a denial of a complete preliminary
investigation deprives the accused of the full measure of his right to due process and infringes
on his constitutional right to liberty.

The petition is denied for lack of merit.

On the first issue, petitioners are correct in pointing out that the Motion to Reinstate the Case
and Issue a Warrant of Arrest31 was filed by one Levita De Castro who is not a party to Criminal
Case No. 03-216182. Records show that De Castro is not even a private complainant, but a mere
witness for being the owner of the vehicles allegedly used by petitioners in defrauding and
convincing private respondents to part with their P260,000.00. Thus, the public respondent
should have granted petitioners' motion to expunge, and treated De Castro's motion as a mere
scrap of paper with no legal effect, as it was filed by one who is not a party to that case.

Petitioners are also correct in noting that De Castro's motion was granted based on the
purported dismissal of their petition for review with the DOJ. In reinstating the case and issuing
the arrest warrant against Aguinaldo, the public respondent erroneously relied on the DOJ
Resolution dated September 6, 2004 dismissing the petition for review in a different case, i.e.,
I.S. No. 02G-29349 & 02G-28820, entitled "Levita De Castro v. Felilibeth Aguinaldo, for two (2)
counts of estafa." As correctly noted by petitioners, however, their petition for review with the
DOJ is still pending resolution. In particular, Assistant Chief State Prosecutor Miguel F. Guido, Jr.
certified that based on available records of the Office of the Chief State Prosecutor, their
petition for review filed in I.S. Number 02L-51569, entitled "Reynaldo Ventus, et al. v. Felilibeth
Aguinaldo" for estafa, is still pending resolution as of May 27, 2005. 32 It bears stressing that their
petition stemmed from Criminal Case No. 03-216812, entitled "People of the Philippines v.
Felilibeth Aguinaldo and Benjamin Perez" wherein the public respondent issued the
interlocutory orders assailed before the CA, and now before the Court.

On the second issue, the Court disagrees with petitioners' contention that the provision of
Section 11 (c),33 Rule 116 of the Rules of Court limiting the suspension for arraignment to only
sixty (60) days is merely directory; thus, the estafa case against them cannot proceed until the
DOJ resolves their petition for review with finality.

In Samson v. Judge Daway,34 the Court explained that while the pendency of a petition for
review is a ground for suspension of the arraignment, the aforecited provision limits the
deferment of the arraignment to a period of 60 days reckoned from the filing of the petition
with the reviewing office. It follows, therefore, that after the expiration of said period, the trial
court is bound to arraign the accused or to deny the motion to defer arraignment. 35

In Diño v. Olivarez,36 the Court held that it did not sanction an indefinite suspension of the
proceedings in the trial court. Its reliance on the reviewing authority, the Justice Secretary, to
decide the appeal at the soonest possible time was anchored on the rule provided under
Department Memorandum Order No. 12, dated 3 July 2000, which mandates that the period for
the disposition of appeals or petitions for review shall be seventy- five (75) days. 37

In Heirs of Feraren v. Court of Appeals,38 the Court ruled that in a long line of decisions, it has
repeatedly held that while rules of procedure are liberally construed, the provisions on
reglementary periods are strictly applied, indispensable as they are to the prevention of
needless delays, and are necessary to the orderly and speedy discharge of judicial business.
After all, rules of procedure do not exist for the convenience of the litigants, and they are not to
be trifled with lightly or overlooked by the mere expedience of invoking "substantial justice."
Relaxation or suspension of procedural rules, or the exemption of a case from their operation, is
warranted only by compelling reasons or when the purpose of justice requires it. 39

Consistent with the foregoing jurisprudence, and there being no such reasons shown to warrant
relaxation of procedural rules in this case, the CA correctly ruled, thus:

In the case at bar, the petitioners' petition for review was filed with the Secretary of Justice on
February 27, 2004. As early as April 16, 2004, upon the petitioners' motion, the arraignment of
the petitioners herein was ordered deferred by the public respondent. We believe that the
period of one year and one month from April 16, 2004 to May 16, 2005 when the public
respondent ordered the issuance of a warrant for the arrest of petitioner Aguinaldo, was more
than ample time to give the petitioners the opportunity to obtain a resolution of their petition
for review from the DOJ. The petitioners though submitted a Certification from the DOJ dated
May 30, 2005 stating that their petition for review is pending resolution by the Department as
of May 27, 2005. However, such delay in the resolution does not extend the period of 60 days
prescribed under the afore-quoted Section 11(c), Rule 116 of the Revised Rules on Criminal
Procedure. Besides, the petitioners may be faulted for the delay in the resolution of their
petition. According to their counsel, she received the letter dated April 15, 2004 from the DOJ
requiring her to submit the pertinent pleadings relative to petitioners' petition for review;
admittedly, however, the same was complied with only on October 15, 2004. We therefore find
that the trial court did not commit grave abuse of discretion in issuing the assailed orders. 40

On the third issue, the Court is likewise unconvinced by petitioners' argument that the
precipitate filing of the Information and the issuance of a warrant of arrest put petitioners at the
risk of incarceration without the preliminary investigation having been completed because they
were not afforded their right to file a motion for reconsideration of the DOJ resolution.

While they are correct in stating that the right to preliminary investigation is a substantive, not
merely a procedural right, petitioners are wrong in arguing that the Information filed, without
affording the respondent his right to file a motion for reconsideration of an adverse DOJ
resolution, is fatally premature. In support of their argument, petitioners cite Sales v.
Sandiganbayan41 wherein it was held that since filing of a motion for reconsideration is an
integral part of the preliminary investigation proper, an Information filed without first affording
the accused his right to a motion for reconsideration, is tantamount to a denial of the right itself
to a preliminary investigation.

The Court finds petitioners' reliance on Sales42 as misplaced. A closer look into said case would
reveal that the accused therein was denied his right to move for a reconsideration or a
reinvestigation of an adverse resolution in a preliminary investigation under the Rules of
Procedure of the Ombudsman before the filing of an Information. In contrast, petitioners in this
case were afforded their right to move for reconsideration of the adverse resolution in a
preliminary investigation when they filed their "Motion for Reconsideration and Motion for the
Withdrawal of Information Prematurely Filed with the Regional Trial Court, Branch 8, City of
Manila,"43 pursuant to Section 3 of the 2000 National Prosecution Service (NPS Rule on
Appeal)44 and Section 56 of the Manual for Prosecutors45 .

With the Information for estafa against petitioners having been filed on July 16, 2003, the public
respondent cannot be faulted with grave abuse of discretion in issuing the August 23, 2005
Order denying their motion to quash warrant of arrest, and setting their arraignment, pending
the final resolution of their petition for review by the DOJ. The Court believes that the period of
almost one (1) year and seven (7) months from the time petitioners filed their petition for
review with the DOJ on February 27, 2004 to September 14, 2005 46 when the trial court finally
set their arraignment, was more than ample time to give petitioners the opportunity to obtain a
resolution of their petition. In fact, the public respondent had been very liberal with petitioners
in applying Section 11 (c), Rule 116 of the Rules of Court which limits the suspension of
arraignment to a 60-day period from the filing of such petition. Indeed, with more than eleven
(11) years having elapsed from the filing of the petition for review and petitioners have yet to be
arraigned, it is now high time for the continuation of the trial on the merits in the criminal case
below, as the 60-day period counted from the filing of the petition for review with the DOJ had
long lapsed.
On whether petitioners were accorded their right to a complete preliminary investigation as
part of their right to due process, the Court rules in the affirmative. Having submitted his
Counter-Affidavit and Rejoinder- Affidavit to the OCP of Manila before the filing of Information
for estafa, Perez cannot be heard to decry that his right to preliminary investigation was not
completed. For her part, while Aguinaldo was not personally informed of any notice of
preliminary investigation prior to the filing of the Information, she was nonetheless given
opportunity to be heard during such investigation. In petitioners' motion for reconsideration 47 of
the February 25, 2003 Resolution of ACP Gonzaga, Aguinaldo relied mostly on the Counter-
Affidavit and Rejoinder-Affidavit of Perez to assail the recommendation of the prosecutor to
indict her for estafa. Since the filing of such motion for reconsideration was held to be
consistent with the principle of due process and allowed under Section 56 of the Manual for
Prosecutors,48 she cannot complain denial of her right to preliminary investigation.

Both petitioners cannot, therefore, claim denial of their right to a complete preliminary
investigation as part of their right to due process. After all, "[d]ue process simply demands an
opportunity to be heard. Due process is satisfied when the parties are afforded a fair and
reasonable opportunity to explain their respective sides of the controversy. Where an
opportunity to be heard either through oral arguments or through pleadings is accorded, there
is no denial of procedural due process."49

In fine, the Court holds that public respondent erred in issuing the May 16, 2005 Order granting
the Motion to Reinstate Case and to Issue Warrant of Arrest, as it was filed by one who is not a
party to the case, and it was based on the DOJ's dismissal of a petition for review in a different
case. Nevertheless, the Court upholds the CA ruling that the public respondent committed no
grave abuse of discretion when he issued the August 23, 2005 Order denying petitioners'
motion to quash warrant of arrest, and setting their arraignment, despite the pendency of their
petition for review with the DOJ. For one, the public respondent had been very liberal in
applying Section 11 (c), Rule 116 of the Rules of Court which allows suspension of arraignment
for a period of 60 days only. For another, records show that petitioners were given opportunity
to be heard during the preliminary investigation of their estafa case.

Considering that this case had been held in abeyance long enough without petitioners having
been arraigned, the Court directs the remand of this case to the trial court for trial on the
merits with strict observance of Circular No. 38-98 dated August 11, 1998, or the "Implementing
the Provisions of Republic Act No. 8493, entitled 'An Act to Ensure a Speedy Trial of All Criminal
Cases Before the Sandiganbayan, Regional Trial Court, Metropolitan Trial Court, Municipal Trial
Court in Cities, Municipal Trial Court and Municipal Circuit Trial Court, Appropriating Funds
Therefor, and for Other Purposes.'" In this regard, suffice it to state that petitioners cannot
invoke violation of their right to speedy trial because Section 9 (3) of Circular No. 38-98 excludes
in computing the time within which trial must commence the delay resulting from extraordinary
remedies against interlocutory orders, such as their petitions before the CA and the Court.

Finally, in order to avoid delay in the proceedings, judges are reminded that the pendency of a
motion for reconsideration, motion for reinvestigation, or petition for review is not a cause for
the quashal of a warrant of arrest previously issued because the quashal of a warrant of arrest
may only take place upon the finding that no probable cause exists. Moreover, judges should
take note of the following:

1.If there is a pending motion for reconsideration or motion for reinvestigation of the resolution
of the public prosecutor, the court may suspend the proceedings upon motion by the parties.
However, the court should set the arraignment of the accused and direct the public prosecutor
to submit the resolution disposing of the motion on or before the period fixed by the court,
which in no instance could be more than the period fixed by the court counted from the
granting of the motion to suspend arraignment, otherwise the court will proceed with the
arraignment as scheduled and without further delay.

2.If there is a pending petition for review before the DOJ, the court may suspend the
proceedings upon motion by the parties. However, the court should set the arraignment of the
accused and direct the DOJ to submit the resolution disposing of the petition on or before the
period fixed by the Rules which, in no instance, could be more than sixty (60) days from the
filing of the Petition for Review before the DOJ, otherwise, the court will proceed with the
arraignment as scheduled and without further delay.

WHEREFORE, premises considered, the petition is DENIED. The Decision dated August 11, 2006
of the Court of Appeals and its Resolution dated December 4, 2006 in CA-G.R. SP No. 92094, are
AFFIRMED. Considering that the proceedings in this criminal case had been held in abeyance
long enough, let the records of this case be remanded to the trial court which is hereby
DIRECTED to try the case on the merits with dispatch in accordance with the Court's Circular No.
38-98 dated August 11, 1998.

SO ORDERED.

DIOSDADO M. PERALTA
Associate Justice

SPOUSES SILVESTRE and CELIA PASCUAL, petitioners, vs. RODRIGO V. RAMOS, respondent.,
G.R. No. 144712, 2002 July 4, 1st Division

DECISION
DAVIDE, JR., C.J.:
Before us is a petition for review on certiorari assailing the 5 November 1999 Decision[1] and
the 18 August 2000 Resolution[2] of the Court of Appeals in CA G.R. CV No. 52848. The former
affirmed the 5 June 1995 and 7 September 1995 Orders of the Regional Trial Court, Malolos,
Bulacan, Branch 21, in Civil Case No. 526-M-93, and the latter denied petitioner’s motion for
reconsideration.
 The case at bar stemmed from the petition[3] for consolidation of title or ownership filed on 5
July 1993 with the trial court by herein respondent Rodrigo V. Ramos (hereafter RAMOS)
against herein petitioners, Spouses Silvestre and Celia Pascual (hereafter the PASCUALs). In his
petition, RAMOS alleged that on 3 June 1987, for and in consideration of P150,000, the
PASCUALs executed in his favor a Deed of Absolute Sale with Right to Repurchase over two
parcels of land and the improvements thereon located in Bambang, Bulacan, Bulacan, covered
by Transfer Certificate of Title (TCT) No. 305626 of the Registry of Deeds of Bulacan. This
document was annotated at the back of the title. The PASCUALs did not exercise their right to
repurchase the property within the stipulated one-year period; hence, RAMOS prayed that the
title or ownership over the subject parcels of land and improvements thereon be consolidated
in his favor.

In their Answer,[4] the PASCUALs admitted having signed the Deed of Absolute Sale with Right
to Repurchase for a consideration of P150,000 but averred that what the parties had actually
agreed upon and entered into was a real estate mortgage. They further alleged that there was
no agreement limiting the period within which to exercise the right to repurchase and that they
had even overpaid RAMOS. Furthermore, they interposed the following defenses: (a) the trial
court had no jurisdiction over the subject or nature of the petition; (b) RAMOS had no legal
capacity to sue; (c) the cause of action, if any, was barred by the statute of limitations; (d) the
petition stated no cause of action; (e) the claim or demand set forth in RAMOS’s pleading had
been paid, waived, abandoned, or otherwise extinguished; and (f) RAMOS has not complied
with the required confrontation and conciliation before the barangay.

By way of counterclaim, the PASCUALs prayed that RAMOS be ordered to execute a Deed of
Cancellation, Release or Discharge of the Deed of Absolute Sale with Right to Repurchase or a
Deed of Real Estate Mortgage; deliver to them the owner’s duplicate of TCT No. T-305626;
return the amount they had overpaid; and pay each of them moral damages and exemplary
damages in the amounts of P200,000 and P50,000, respectively, plus attorney’s fees of
P100,000; appearance fee of P1,500 per hearing; litigation expenses; and costs of suit.

After the pre-trial, the trial court issued an order[5] wherein it identified the following issues:
(1) whether the Deed of Absolute Sale with Right to Repurchase is an absolute sale or a mere
mortgage; (2) whether the PASCUALs have paid or overpaid the principal obligation; (3) whether
the ownership over the parcel of land may be consolidated in favor of RAMOS; and (4) whether
damages may be awarded.

Among the documents offered in evidence by RAMOS during the trial on the merits was a
document denominated as Sinumpaang Salaysay[6] signed by RAMOS and Silvestre Pascual, but
not notarized. The contents of the document read:
Ako, si SILVESTRE PASCUAL, Filipino, nasa hustong gulang, may asawa at kasalukuyang
naninirahan sa Bambang, Bulacan, Bulacan, ay nagsasabing buong katotohanan at sumusumpa
sa aking mga salaysay sa kasulatang ito:

1. Na ngayong June 3, 1987 dahil sa aking matinding pangangailangan ng puhunan ay lumapit

ako at nakiusap kay Rodrigo Ramos ng Taal, Pulilan, Bulacan na pautangin ako ng halagang
P150,000.00.

2. Na aming napagkasunduan na ang nasabing utang ay babayaran ko ng tubo ng seven

percent (7%) o P10,500.00 isang buwan (7% per month).

3. Na bilang sangla (collateral security) sa aking utang, kami ay nagkasundo na mag-execute

ng Deed of Sale with Right to Repurchase para sa aking bahay at lupa (TCT No. 305626) sa Bo.
Taliptip, Bambang, Bulacan, Bulacan ngayong June 3, 1987 at binigyan ako ni Mr. Ramos ng
isang taon hanggang June 3, 1988 upang mabiling muli ang aking isinanla sa kaniya sa
kasunduang babayaran kong lahat ang capital na P150,000.00 pati na ang P10,500.00 na tubo
buwan buwan.

4. Na bilang karagdagang condition, si RODRIGO RAMOS ay pumayag sa aking kahilingan na

kung sakali na hindi ko mabayaran ng buo ang aking pagkakautang (Principal plus interest) sa
loob ng isang taon mula ngayon, ang nakasanglang bahay at lupa ay hindi muna niya iilitin
(foreclose) o ipalilipat sa pangalan niya at hindi muna kami paaalisin sa tinitirhan naming bahay
hanggat ang tubo (interest) na P10,500.00 ay nababayaran ko buwan buwan.

5. Na ako ay sumasang-ayon sa kundisyon ni Rodrigo Ramos na pagkatapos ng isang taon

mula ngayon hanggang June 3, 1988 at puro interest lamang ang aking naibabayad buwan-
buwan, kung sakaling hindi ako makabayad ng tubo for six (6) consecutive months (1/2 year
after June 3, 1988 (6 na buwang hindi bayad ang interest ang utang ko) si Rodrigo Ramos ay
binibigyan ko ng karapatan at kapangyarihan na mag-mayari ng aming bahay at lupa at kami
ng aking pamilya ay kusang loob na aalis sa nasabing bahay at lupa na lumalabas na ibinenta
ko sa kaniya dahil hindi ako nakasunod sa aming mga pinagkasunduang usapan.

6. At bilang finale ng aming kasunduan, ako ay nangangako na hindi maghahabol ng ano mang
sukli sa pagkakailit ng aming bahay at lupa kung sakali mang dumating sa ganuong
pagkakataon o sitwasyon o di kaya’y magsasampa ng reklamo kanino man.
Bilang pagsang-ayon sa mga nasabing kasunduan, kami ay lumagda sa ibaba nito kalakip ng
aming mga pangalan ngayong ika-3 ng Hunyo, 1987.

(Sgd.)Rodrigo Ramos Sgd.) Silvestre Pascual

Nagpautang Umutang

For their part, the PASCUALs presented documentary evidence consisting of acknowledgment
receipts[7] to prove the payments they had made.

The trial court found that the transaction between the parties was actually a loan in the amount
of P150,000, the payment of which was secured by a mortgage of the property covered by TCT
No. 305626. It also found that the PASCUALs had made payments in the total sum of P344,000,
and that with interest at 7% per annum, the PASCUALs had overpaid the loan by P141,500.
Accordingly, in its Decision[8] of 15 March 1995 the trial court decreed as follows:

WHEREFORE, judgment is hereby rendered in favor of the defendants and against the plaintiff in
the following manner:

1. Dismissing the plaintiff’s petition;

2. Directing the Register of Deeds to cancel the annotation of the Deed of Sale with Right to
Repurchase on the dorsal side of TCT No. 305626;

3. Awarding the defendants the sum of P141,500.00 as overpayment on the loan and interests;

4. Granting the defendants attorney’s fee in the sum of P15,000.00 and P3,000.00 for
litigation expenses.

With costs against the plaintiff.

RAMOS moved for the reconsideration of the decision, alleging that the trial court erred in
using an interest rate of 7% per annum in the computation of the total amount of obligation
because what was expressly stipulated in the Sinumpaang Salaysay was 7% per month. The
total interest due from 3 June 1987 to 3 April 1995 was P987,000. Deducting therefrom the
interest payments made in the sum of P344,000, the amount of P643,000 was still due as
interest. Adding the latter to the principal sum of P150,000, the total amount due from the
PASCUALs as of 3 April 1995 was P793,000.

Finding merit in the motion for reconsideration, which was not opposed by the PASCUALs, the
trial court issued on 5 June 1995 an Order[9] modifying its decision by deleting the award of
P141,500 to the PASCUALs as overpayment of the loan and interest and ordering them to pay
RAMOS P511,000 representing the principal loan plus interest. The trial court acknowledged
that it had inadvertently declared the interest rate to be 7% per annum when, in fact, the
Sinumpaang Salaysay stipulated 7% per month. It noted that during trial, the PASCUALs never
disputed the stipulated interest rate. However, the court declared that the 7% per month
interest is too burdensome and onerous. Invoking the protective mantle of Article 24 of the
Civil Code, which mandates the courts to be vigilant for the protection of a party at a
disadvantage due to his moral dependence, ignorance, indigence, mental weakness, tender age
or other handicap, the trial court unilaterally reduced the interest rate from 7% per month to
5% per month. Thus, the interest due from 3 June 1987 to 3 April 1995 was P705,000.
Deducting therefrom the payments made by the PASCUALs in the amount of P344,000, the net
interest due was P361,000. Adding thereto the loan principal of P150,000, the total amount
due from the PASCUALs was P511,000.

Aggrieved by the modification of the decision, the PASCUALs filed a motion to reconsider the
Order of 5 June 1995. They alleged that the motion for reconsideration filed by RAMOS was a
mere scrap of paper because they received a copy of said motion only a day before the hearing,
in violation of the 3-day-notice rule. Moreover, they had already paid the interests and had in
fact overpaid the principal sum of P150,000. Besides, RAMOS, being an individual, could not
charge more than 1% interest per month or 12% per annum; and, the interest of either 5% or
7% a month is exorbitant, unconscionable, unreasonable, usurious and inequitable.

RAMOS opposed the motion of the PASCUALs. He contended that the non-compliance with the
3-day-notice rule was cured when the trial court gave them an opportunity to file their
opposition, but despite the lapse of the period given them, no opposition was filed. It is not
correct to say that he was not allowed to collect more than 1% per month interest considering
that with the moratorium on the Usury Law, the allowable interest is that agreed upon by the
parties. In the absence of any evidence that there was fraud, force or undue influence exerted
upon the PASCUALs when they entered into the transaction in question, their agreement
embodied in the Sinumpaang Salaysay should be respected. Furthermore, the trial court had
already reduced the interest rate to 5% per month, a rate which is not exorbitant,
unconscionable, unreasonable and inequitable.
Their motion for reconsideration having been denied in the Order[10] of 7 September 1995, the
PASCUALs seasonably appealed to the Court of Appeals. They pointed out that since the only
prayer of RAMOS in his petition was to have the title or ownership over the subject land and the
improvements thereon consolidated in his favor and he did not have any prayer for general
relief, the trial court had no basis in ordering them to pay him the sum of P511,000.

In its Decision[11] of 5 November 1999, the Court of Appeals affirmed in toto the trial court’s
Orders of 5 June 1995 and 7 September 1995. It ruled that while RAMOS’s petition for
consolidation of title or ownership did not include a prayer for the payment of the balance of
the petitioners’ obligation and a prayer for general relief, the issue of whether there was still a
balance from the amount loaned was deemed to have been raised in the pleadings by virtue of
Section 5, Rule 10 of the Rules of Court, which provides that “[w]hen issues not raised by the
pleadings are tried with the express or implied consent of the parties, they shall be treated in all
respects as if they had been raised in the pleadings.” In the course of the trial, receipts were
presented by the PASCUALs evidencing the payments they had made. Taken in conjunction with
the Sinumpaang Salaysay which specified the interest rate at 7% per month, a mathematical
computation readily leads to the conclusion that there is still a balance due from the PASCUALs,
even at a reduced interest rate of 5% interest per month.

With the denial of their motion for reconsideration of the decision by the Court of Appeals, the
PASCUALs filed before us the instant petition raising the sole issue of whether they are liable for
5% interest per month from 3 June 1987 to 3 April 1995. Invoking this Court’s ruling in Medel v.
Court of Appeals,[12] they argue that the 5% per month interest is excessive, iniquitous,
unconscionable and exorbitant. Moreover, respondent should not be allowed to collect interest
of more than 1% per month because he tried to hide the real transaction between the parties
by imposing upon them to sign a Deed of Absolute Sale with Right to Repurchase.

For his part, RAMOS contends that the issue raised by petitioners cannot be entertained
anymore because it was neither raised in the complaint nor ventilated during the trial. In any
case, there was nothing illegal on the rate of interest agreed upon by the parties, since the
ceilings on interest rates prescribed under the Usury Law had expressly been removed, and
hence parties are left freely at their discretion to agree on any rate of interest. Moreover, there
was no scheme to hide a usurious transaction. RAMOS then prays that the challenged decision
and resolution be affirmed and that petitioners be further ordered to pay legal interest on the
interest due from the time it was demanded.

We see at once the proclivity of the PASCUALs to change theory almost every step of the case.
By invoking the decision in Medel v. Court of Appeals, the PASCUALs are actually raising as issue
the validity of the stipulated interest rate. It must be stressed that they never raised as a
defense or as basis for their counterclaim the nullity of the stipulated interest. While
overpayment was alleged in the Answer, no ultimate facts which constituted the basis of the
overpayment was alleged. In their pre-trial brief, the PASCUALs made a long list of issues, but
not one of them touched on the validity of the stipulated interest rate. Their own evidence
clearly shows that they have agreed on, and have in fact paid interest at, the rate of 7% per
month. Exhibits “1” to “8” specifically mentioned that the payments made were for the interest
due on the P150,000 loan of the PASCUALs. In the course of the trial, the PASCUALs never put
in issue the validity of the stipulated interest rate.

After the trial court sustained petitioners’ claim that their agreement with RAMOS was actually
a loan with real estate mortgage, the PASCUALs should not be allowed to turn their back on the
stipulation in that agreement to pay interest at the rate of 7% per month. The PASCUALs should
accept not only the favorable aspect of the court’s declaration that the document is actually an
equitable mortgage but also the necessary consequence of such declaration, that is, that
interest on the loan as stipulated by the parties in that same document should be paid. Besides,
when RAMOS moved for a reconsideration of the 15 March 1995 Decision of the trial court
pointing out that the interest rate to be used should be 7% per month, the PASCUALs never
lifted a finger to oppose the claim. Admittedly, in their Motion for Reconsideration of the Order
of 5 June 1995, the PASCUALs argued that the interest rate, whether it be 5% or 7%, is
exorbitant, unconscionable, unreasonable, usurious and inequitable. However, in their
Appellants’ Brief, the only argument raised by the PASCUALs was that RAMOS’s petition did not
contain a prayer for general relief and, hence, the trial court had no basis for ordering them to
pay RAMOS P511,000 representing the principal and unpaid interest. It was only in their motion
for the reconsideration of the decision of the Court of Appeals that the PASCUALs made an issue
of the interest rate and prayed for its reduction to 12% per annum.

In Manila Bay Club Corp. v. Court of Appeals,[13] this Court ruled that if an issue is raised only in
the motion for reconsideration of the decision of the Court of Appeals, the effect is that it is as if
it was never duly raised in that court at all.

Our ruling in Medel v. Court of Appeals[14] is not applicable to the present case. In that case,
the excessiveness of the stipulated interest at the rate of 5.5 % per month was put in issue by
the defendants in the Answer. Moreover, in addition to the interest, the debtors were also
required, as per stipulation in the promissory note, to pay service charge of 2% per annum and
a penalty charge of 1% per month plus attorney’s fee of equivalent to 25% of the amount due.
In the case at bar, there is no other stipulation for the payment of an extra amount except
interest on the principal loan. Thus, taken in conjunction with the stipulated service charge and
penalty, the interest rate of 5.5% in the Medel case was found to be excessive, iniquitous,
unconscionable, exorbitant and hence, contrary to morals, thereby making such stipulation null
and void.

Considering the variance in the factual circumstances of the Medel case and the instant case,
we are not prepared to apply the former lest it be construed that we can strike down anytime
interest rates agreed upon by parties in a loan transaction.

It is a basic principle in civil law that parties are bound by the stipulations in the contracts
voluntarily entered into by them. Parties are free to stipulate terms and conditions which they
deem convenient provided they are not contrary to law, morals, good customs, public order, or
public policy.[15]

The interest rate of 7% per month was voluntarily agreed upon by RAMOS and the PASCUALs.
There is nothing from the records and, in fact, there is no allegation showing that petitioners
were victims of fraud when they entered into the agreement with RAMOS. Neither is there a
showing that in their contractual relations with RAMOS, the PASCUALs were at a disadvantage
on account of their moral dependence, ignorance, mental weakness, tender age or other
handicap, which would entitle them to the vigilant protection of the courts as mandated by
Article 24 of the Civil Code. Apropos in our ruling in Vales vs. Villa:

All men are presumed to be sane and normal and subject to be moved by substantially the
same motives. When of age and sane, they must take care of themselves. In their relations
with others in the business of life, wits, sense, intelligence, training, ability and judgment meet
and clash and contest, sometimes with gain and advantage to all, sometimes to a few only, with
loss and injury to others. In these contests men must depend upon themselves – upon their
own abilities, talents, training, sense, acumen, judgment. The fact that one may be worsted by
another, of itself, furnishes no cause of complaint. One man cannot complain because another
is more able, or better trained, or has better sense or judgment than he has; and when the two
meet on a fair field the inferior cannot murmur if the battle goes against him. The law furnishes
no protection to the inferior simply because he is inferior, any more than it protects the strong
because he is strong. The law furnishes protection to both alike – to one no more or less than
to the other. It makes no distinction between the wise and the foolish, the great and the small,
the strong and the weak. The foolish may lose all they have to the wise; but that does not mean
that the law will give it back to them again. Courts cannot follow one every step of his life and
extricate him from bad bargains, protect him from unwise investments, relieve him from one-
sided contracts, or annul the effects of foolish acts. Courts cannot constitute themselves
guardians of persons who are not legally incompetent. Courts operate not because one person
has been defeated or overcome by another, but because he has been defeated or overcome
illegally. Men may do foolish things, make ridiculous contracts, use miserable judgment, and
lose money by then – indeed, all they have in the world; but not for that alone can the law
intervene and restore. There must be, in addition, a violation of law, the commission of what
the law knows as an actionable wrong, before the courts are authorized to lay hold of the
situation and remedy it.[16]

With the suspension of the Usury Law and the removal of interest ceiling, the parties are free to
stipulate the interest to be imposed on loans. Absent any evidence of fraud, undue influence, or
any vice of consent exercised by RAMOS on the PASCUALs, the interest agreed upon is binding
upon them. This Court is not in a position to impose upon parties contractual stipulations
different from what they have agreed upon. As declared in the decision of Cuizon v. Court of
Appeals,[17]

It is not the province of the court to alter a contract by construction or to make a new contract
for the parties; its duty is confined to the interpretation of the one which they have made for
themselves without regard to its wisdom or folly as the court cannot supply material
stipulations or read into the contract words which it does not contain.

Thus, we cannot supplant the interest rate, which was reduced to 5% per month without
opposition on the part of RAMOS.

We are not persuaded by the argument of the PASCUALs that since RAMOS tried to hide the real
transaction by imposing upon them the execution of a Deed of Absolute Sale with Right to
Repurchase, he should not be allowed to collect more than 1% per month interest. It is
undisputed that simultaneous with the execution of the said deed was the execution of the
Sinumpaang Salaysay, which set forth the true agreement of the parties. The PASCUALs cannot
then claim that they did not know the real transaction.

RAMOS’s claim that the interest due should earn legal interest cannot be acted upon favorably
because he did not appeal from the Order of the trial court of 5 June 1995, which simply
ordered the payment by the PASCUALs of the amount of P511,000 without interest thereon. No
relief can be granted a party who does not appeal.[18] Therefore, the order of the trial court
should stand.

Incidentally, we noticed that in the Memorandum filed by RAMOS, the ruling in Vales v. Valle
was reproduced by his counsel without the proper citation. Such act constitutes plagiarism.
Atty. Felimon B. Mangahas is hereby warned that a repetition of such act shall be dealt with
accordingly.
WHEREFORE, in view of all the foregoing, the petition is DENIED. The assailed decision of the
Court of Appeals in CA-G.R. CV No. 52848 is AFFIRMED in toto.