Shipside Incorporated vs. Court of Appeals

An action for revival of judgment must be brought within ten years from the time the judgment becomes final and executory, and the Republic cannot invoke imprescriptibility when it is no longer the real party-in-interest because the subject property has been transferred to a government-owned or controlled corporation with a separate juridical personality.

Rafael Galvez was the original registered owner of four parcels of land in San Fernando, La Union, covered by OCT No. 0-381 issued on October 29, 1958. Portions of these lots were subsequently sold to private parties, ultimately reaching Shipside Incorporated as a third transferee in 1963. The Republic of the Philippines, through the Office of the Solicitor General, had earlier sought cancellation of OCT No. 0-381 in Land Registration Case No. N-361 on the ground that the land formed part of Camp Wallace (Wallace Air Station), a U.S. military reservation. The Court of First Instance declared the OCT null and void on February 1, 1963, a ruling affirmed by the Court of Appeals on August 14, 1973, which became final on October 23, 1973. Republic Act No. 7227, the Bases Conversion and Development Act of 1992, later created the Bases Conversion and Development Authority (BCDA) and transferred Wallace Air Station to it, vesting in the BCDA ownership, administration, and the capacity to sue and be sued in its corporate name.

On October 29, 1958, Original Certificate of Title No. 0-381 was issued in favor of Rafael Galvez, covering four parcels of land in Barrio Poro, San Fernando, La Union: Lot 1 (6,571 square meters), Lot 2 (16,777 square meters), Lot 3 (1,583 square meters), and Lot 4 (508 square meters). On April 11, 1960, Rafael Galvez conveyed Lots 1 and 4 to Filipina Mamaril, Cleopatra Llana, Regina Bustos, and Erlinda Balatbat by deed of sale, inscribed as Entry No. 9115 on OCT No. 0-381 on August 10, 1960, resulting in the issuance of Transfer Certificate of Title No. T-4304 in favor of the buyers. On August 16, 1960, Mamaril et al. sold Lots 1 and 4 to Lepanto Consolidated Mining Company, with the deed inscribed as Entry No. 9173 on TCT No. T-4304, and Transfer Certificate of Title No. T-4314 was issued in Lepanto's name.

On February 1, 1963, the Court of First Instance of La Union, Second Judicial District, in Land Registration Case No. N-361, issued an order declaring OCT No. 0-381 null and void and ordering its cancellation, as well as the cancellation of subsequent certificates of title derived from it. This order was issued unknown to Lepanto Consolidated Mining Company. Rafael Galvez filed a motion for reconsideration, which was denied on January 25, 1965. On appeal, the Court of Appeals ruled in favor of the Republic in a resolution promulgated on August 14, 1973 in CA-G.R. No. 36061-R. The judgment became final and executory on October 23, 1973, and an Entry of Judgment was issued accordingly. On April 22, 1974, the trial court issued a writ of execution, which was served on the Register of Deeds of San Fernando, La Union on April 29, 1974.

Meanwhile, on October 28, 1963, Lepanto Consolidated Mining Company sold Lots 1 and 4 to Shipside Incorporated, with the deed entered as Entry No. 12381 on TCT No. T-4314. Transfer Certificate of Title No. T-5710 was issued in favor of Shipside, which thereafter exercised proprietary rights over the lots. Twenty-four years after the writ of execution was served, on January 14, 1999, the Office of the Solicitor General received a letter from Mr. Victor G. Floresca, Vice-President of John Hay Poro Point Development Corporation, stating that the trial court's orders and decision in LRC Case No. N-361 had not been executed by the Register of Deeds despite receipt of the writ. On April 21, 1999, the OSG filed a complaint for revival of judgment and cancellation of titles before the RTC of San Fernando, La Union, docketed as Civil Case No. 6346, impleading the heirs of Rafael Galvez, Shipside Incorporated, and the Register of Deeds of La Union as defendants. The OSG argued that since OCT No. 0-381 had been declared null and void, the successors-in-interest of Rafael Galvez had no valid title and the subsequent Torrens titles issued in their names should be cancelled.

Shipside filed a motion to dismiss on July 22, 1999, on grounds including lack of cause of action, the Republic not being the real party-in-interest because the property was under BCDA ownership and administration under Republic Act No. 7227, prescription, and the ten-year prescriptive period under Article 1144(3) of the Civil Code having lapsed. The OSG opposed, contending that the Republic was the real party-in-interest and that prescription does not run against the State. The trial court denied the motion to dismiss on August 31, 1999 and the motion for reconsideration on October 14, 1999. Shipside elevated the matter to the Court of Appeals via petition for certiorari and prohibition, but the CA dismissed the petition on November 4, 1999 for lack of proof that resident manager Lorenzo Balbin, Jr. was authorized to sign the verification and certification on non-forum shopping, and denied reconsideration on May 23, 2000.

• CA Abuse of Discretion on Authorization: Petitioner asseverated that the Court of Appeals gravely abused its discretion in dismissing the petition when it conclusively presumed that Mr. Balbin had no authority to sign the petition despite the clarity of laws, jurisprudence, and a secretary's certificate to the contrary.
• CA Abuse of Discretion on Prescription: Petitioner argued that the Court of Appeals abused its discretion in effectively affirming the trial court's grave abuse of discretion in refusing to dismiss the 1999 complaint for revival of a 1973 judgment, in violation of clear laws and jurisprudence.
• Adoption of CA-Level Arguments: Petitioner likewise adopted the arguments it raised in the petition and comment/reply it filed with the Court of Appeals, attached to its Supreme Court petition as Exhibits "L" and "N."

• Lack of Corporate Authorization: Respondent, through the Solicitor General, moved for dismissal of the instant petition on the ground that Lorenzo Balbin, who signed for and on behalf of petitioner in the verification and certification on non-forum shopping, failed to show proof of his authorization to institute the petition for certiorari and prohibition with the Court of Appeals, thus the latter court acted correctly in dismissing it.
• Imprescriptibility of State Claims: Respondent argued that the real party-in-interest being the Republic of the Philippines, its claims are imprescriptible.

• Corporate Authority to Sue: Whether an authorization from petitioner's Board of Directors is still required in order for its resident manager to institute or commence a legal action for and on behalf of the corporation.
• Revival of Judgment and Real Party-in-Interest: Whether the Republic of the Philippines can maintain the action for revival of judgment herein.

• Corporate Authority to Sue: No, in the exceptional circumstances of this case. While board authorization is generally required, the Court tempered the rule because petitioner did submit a certification on non-forum shopping and subsequently submitted a secretary's certificate attesting that Balbin was authorized by the board ten days prior to filing.
• Revival of Judgment and Real Party-in-Interest: No. The action for revival of judgment was barred by extinctive prescription, having been instituted more than twenty-five years after the judgment became final, well beyond the ten-year prescriptive period. The Republic was not the real party-in-interest, the subject property having been transferred to the BCDA, a body corporate with a separate personality from the government.

• Corporate Authority to Sue: A corporation exercises its powers through its board of directors and duly authorized officers and agents. Physical acts such as signing documents can be performed only by natural persons duly authorized by corporate by-laws or a specific act of the board. At the time Balbin filed the petition on October 21, 1999, no proof of his authority was attached, prompting the CA's dismissal. However, petitioner subsequently filed a motion for reconsideration attaching a secretary's certificate stating that on October 11, 1999, ten days prior to filing, Balbin had been authorized by the board. While the lack of certification against forum shopping is generally not curable by subsequent submission, the Court has allowed belated filing in exceptional circumstances, as in Loyola vs. Court of Appeals, Roadway Express, Inc. vs. Court of Appeals, and Uy vs. LandBank. In this case, the merits of petitioner's case constituted special circumstances justifying relaxation of the rule. Petitioner did submit a certification on non-forum shopping, failing only to show proof that the signatory was authorized; the subsequent secretary's certificate mitigated this oversight. Technical rules of procedure should promote, not frustrate, justice, and the granting of substantial justice is an even more urgent ideal than the swift unclogging of court dockets.

• Revival of Judgment and Real Party-in-Interest: An action for revival of judgment is governed by Article 1144(3) of the Civil Code and Section 6, Rule 39 of the 1997 Rules on Civil Procedure. Article 1144(3) provides that an action upon a judgment must be brought within ten years from the time the right of action accrues. Section 6, Rule 39 provides that a final and executory judgment may be executed on motion within five years from the date of its entry, and after such time, by action before it is barred by the statute of limitations. The judgment sought to be revived became final on October 23, 1973, but the action for revival was instituted only in 1999, more than twenty-five years later, rendering the action barred by extinctive prescription. The OSG's argument that the State's cause of action is imprescriptible because the property is part of Camp Wallace was rejected. While prescription does not run against the State, the same may not be invoked here because the government is no longer interested in the subject matter. Republic Act No. 7227 transferred Wallace Air Station to the BCDA, a body corporate with perpetual succession and the power to sue and be sued. The BCDA's functions are basically proprietary, not governmental, making it a corporate body performing proprietary functions rather than a mere agency of the government. Being the owner of the areas covered by Camp Wallace, it is the BCDA, not the Republic, which stands to be benefited if Shipside's title is cancelled. The Republic, having divested its title, cannot invoke imprescriptibility, which applies only where the government is a party in interest. The case of E.B. Marcha Transport Co., Inc. vs. IAC was distinguished: there, the Republic's and PPA's claims were the same, and dismissal would have caused needless delay; here, allowing the government to sue enables it to raise imprescriptibility, a claim unavailable to the BCDA, thereby supplanting rather than assisting the BCDA. Recognizing the government as a proper party would set a bad precedent allowing the Republic to prosecute prescribed causes of action on behalf of government-owned or controlled corporations. Petitioner was also a buyer in good faith and for value, having acquired the property in 1963 as a third transferee, and deserves some measure of protection under the Torrens System.

• Prescription of Actions for Revival of Judgment — An action for revival of judgment must be brought within ten (10) years from the time the judgment becomes final and executory, pursuant to Article 1144(3) of the Civil Code and Section 6, Rule 39 of the Rules of Civil Procedure. A judgment may be executed on motion within five years from entry; after five years and before the statute of limitations bars it, it may be enforced by action. The Court applied this by finding that the 1973 judgment sought to be revived in 1999 was already barred by prescription, more than twenty-five years having elapsed.

• Real Party-in-Interest — Under Section 2, Rule 3 of the 1997 Rules of Civil Procedure, every action must be prosecuted or defended in the name of the real party in interest. A real party in interest is the party who stands to be benefited or injured by the judgment, or the party entitled to the avails of the suit, having a present substantial interest as distinguished from a mere expectancy or contingent interest. The Court held that the Republic was not the real party in interest because title had been transferred to the BCDA, which, as owner, stood to be benefited by cancellation of Shipside's title.

• Separate Juridical Personality of Government-Owned or Controlled Corporations — A government-created corporation vested with powers of a corporation, including the power to sue and be sued, has a personality separate and distinct from the government. When the Republic's title has been divested, its grantees, although artificial bodies of its own creation, are in the same category as ordinary persons. The BCDA, performing proprietary functions, is not a mere agency of the government but a corporate body, and prescription runs against it as against ordinary persons.

• Imprescriptibility of State Actions — The rule that prescription does not run against the State applies only where the government is a party in interest. It does not apply to corporations or artificial bodies created by the State for special purposes when the title of the Republic has been divested. The Court held the Republic could not invoke imprescriptibility because it was no longer interested in the subject matter after transferring Camp Wallace to the BCDA.

• Verification and Certification Against Forum Shopping — Verification is a formal, not jurisdictional, requirement, intended to secure an assurance that the allegations are true and correct and the pleading is filed in good faith. Lack of certification against forum shopping is generally not curable by subsequent submission. However, in exceptional circumstances with special or compelling reasons, the Court may relax the rule. Technical rules of procedure should be used to promote, not frustrate, justice.

• "An action for revival of judgment must be brought within ten years from the time the right of action accrues." — This passage states the controlling prescriptive period for revival of judgment actions, derived from Article 1144(3) of the Civil Code, and forms the ratio decidendi for barring the Republic's 1999 complaint.

• "With the transfer of Camp Wallace to the BCDA, the government no longer has a right or interest to protect." — This sentence crystallizes the Court's finding that the Republic ceased to be the real party-in-interest upon transfer of the property to the BCDA, defeating the State's claim of imprescriptibility.

• "Technical rules of procedure should be used to promote, not frustrate justice. While the swift unclogging of court dockets is a laudable objective, the granting of substantial justice is an even more urgent ideal." — Frequently cited in subsequent jurisprudence for the principle that procedural rules are liberally construed in exceptional circumstances to serve substantial justice.

• "The rule that prescription does not run against the State does not apply to corporations or artificial bodies created by the State for special purposes, it being said that when the title of the Republic has been divested, its grantees, although artificial bodies of its own creation, are in the same category as ordinary persons." — This passage defines the boundary of the imprescriptibility doctrine as applied to government-owned or controlled corporations, distinguishing them from the State itself.

• Premium Marble Resources, Inc. vs. CA, 264 SCRA 11 (1996) — Cited for the proposition that the power of a corporation to sue and be sued is lodged with the board of directors, which exercises corporate powers.
• Uy vs. LandBank, G.R. No. 136100, July 24, 2000 — Cited for the principle that verification is a formal, not jurisdictional, requirement; also as an example of a case where the Court initially dismissed a petition for lack of verification and certification but later reinstated it after submission of the required documents.
• Loyola vs. Court of Appeals, et al., 245 SCRA 477 (1995) — Cited as authority for allowing belated filing of the certification against forum shopping, where the filing one day after an election protest was deemed substantial compliance.
• Roadway Express, Inc. vs. Court of Appeals, et al., 264 SCRA 696 (1996) — Cited as authority for allowing belated filing of the certification against forum shopping fourteen days before dismissal of the petition.
• Pioneer Insurance vs. CA, 175 SCRA 668 (1989) — Cited for the definition of a real party in interest as the present real owner of the right sought to be enforced.
• Ibonilla vs. Province of Cebu, 210 SCRA 526 (1992) — Cited for the definition of real interest as a present substantial interest, distinguished from a mere expectancy or contingent interest.
• E.B. Marcha Transport Co., Inc. vs. IAC, 147 SCRA 276 (1987) — Distinguished. In that case, the Republic was held a proper party to sue because its claim and the PPA's claim were the same, and dismissal would have caused needless delay. In the present case, allowing the Republic to sue would enable it to raise imprescriptibility, a claim unavailable to the BCDA, thereby supplanting rather than assisting the latter.
• Ralla vs. Ralla, 199 SCRA 495 (1991) — Cited for the principle that one having no right or interest to protect cannot invoke the jurisdiction of the court as a party plaintiff.
• Tanpingco vs. IAC, 207 SCRA 652 (1992) — Cited for the proposition that a suit not brought in the name of the real party in interest may be dismissed on the ground that the complaint states no cause of action.
• Bernardo vs. NLRC, 255 SCRA 108 (1996) — Cited for the principle that the requirements of the certification on non-forum shopping must not be interpreted too literally so as to defeat the objective of preventing forum shopping.

• Article 1144(3), Civil Code — Provides that an action upon a judgment must be brought within ten years from the time the right of action accrues. Applied to bar the Republic's action for revival of judgment, which was filed more than twenty-five years after the judgment became final.
• Section 6, Rule 39, 1997 Rules of Civil Procedure — Provides that a final and executory judgment may be executed on motion within five years from the date of its entry, and after such time, by action before it is barred by the statute of limitations. Read together with Article 1144(3) to establish the ten-year prescriptive period for revival of judgment.
• Section 2, Rule 3, 1997 Rules of Civil Procedure — Provides that every action must be prosecuted or defended in the name of the real party in interest. Applied to hold that the Republic, having transferred the property to the BCDA, was no longer the real party in interest.
• Section 5, Rule 45, 1997 Rules of Civil Procedure — Provides that failure to submit the required documents, including the certification against forum shopping, is sufficient ground for dismissal. Discussed in the context of the general rule that lack of certification is not curable, subject to exceptions.
• Section 4, Republic Act No. 7227 (Bases Conversion and Development Act of 1992) — Vests in the BCDA the purpose to own, hold, and/or administer military reservations including Wallace Air Station. Relied upon to establish that the BCDA, not the Republic, owns and administers the subject property.
• Section 3, Republic Act No. 7227 — Creates the BCDA as a body corporate with perpetual succession and the powers of a corporation. Relied upon to establish the BCDA's separate juridical personality.
• Section 5, Republic Act No. 7227 — Vests the BCDA with the power to sue and be sued in its corporate name. Relied upon to conclude that the BCDA, not the Republic, is the proper party to file an action for cancellation of Shipside's title.
• Proclamation No. 216, July 27, 1993, Section 2 — Transfers all areas covered by Wallace Air Station to the BCDA. Relied upon to confirm the transfer of Camp Wallace to the BCDA.

Panganiban, Gonzaga-Reyes, and Sandoval-Gutierrez, JJ., concurred.

• Vitug, J. — Justice Vitug concurred with the ponencia's ruling that the action for revival of judgment was barred by extinctive prescription under Article 1144(3) of the Civil Code, the judgment having become final on October 23, 1973, more than two decades before the revival action was instituted in 1999. He respectfully disagreed, however, with the conclusion that the Republic was not the real party-in-interest. He maintained that the transfer of Camp Wallace to the BCDA under Republic Act No. 7227 was not an abdication of the Republic's interests but merely the creation of a body corporate to act as its agent for the realization of its program. Citing E.B. Marcha Transport Co., Inc. vs. Intermediate Appellate Court, he argued that the Republic remained the real party-in-interest with the BCDA as its mere agent, and that dismissing the complaint on the ground that the Republic was not the proper party would result in needless delay and a multiplicity of suits. He noted that the original suit for cancellation of title was commenced by the Republic itself, and the transfer of the military camp to the BCDA occurred only in 1992, well after the original litigation.