HIANG KAI SHEK SCHOOL

vs.
COURT OF APPEALS and FAUSTINA FRANCO OH

Facts:
Fausta Oh had been employed as a teacher in Hiang Kai Shek School for almost 33 years before her dismissal for no
apparent reason. As a result of the illegal dismissal, Oh sued the school and demanded separation pay, SSS benefits,
salary differentials, maternity benefits, and moral and exemplary damages. The original action was filed against
Hiang Kai Shek, but it filed a motion to dismiss on the ground that it cannot be sued, thus the complaint was
amended. Certain officials of the school were also impleaded to make them solidarily liable with the school.
RTC dismissed the complaint on the ground that the school cannot be sued. CA overturned the decision of RTC and
ruled that the school is suable and liable while absolving other defendants. Motion for recon was denied, hence this
petition for review on certiorari.

Relevant Issue:
1. Whether or not a school that has not been incorporated may be sued by reason alone of its long continued existence
and recognition by the government,
Held:
Petition denied. The court ruled that It is true that Rule 3, Section 1, of the Rules of Court clearly provides that "only
natural or juridical persons may be parties in a civil action." It is also not denied that the school has not been
incorporated. However, this omission should not prejudice the private respondent in the assertion of her claims against
the school. As a school, the petitioner was governed by Act No. 2706 as amended by C.A. No. 180, which provided as
follows:
Unless exempted for special reasons by the Secretary of Public Instruction, any private school or
college recognized by the government shall be incorporated under the provisions of Act No. 1459
known as the Corporation Law, within 90 days after the date of recognition, and shall file with the
Secretary of Public Instruction a copy of its incorporation papers and by-laws.
Having been recognized by the government, it was under obligation to incorporate under the Corporation Law within
90 days from such recognition. It appears that it had not done so at the time the complaint was filed notwithstanding
that it had been in existence even earlier than 1932. The petitioner cannot now invoke its own non-compliance with the
law to immunize it from the private respondent's complaint.
There should also be no question that having contracted with the private respondent every year for thirty two years and
thus represented itself as possessed of juridical personality to do so, the petitioner is now estopped from denying such
personality to defeat her claim against it.
As the school itself may be sued in its own name, there is no need to apply Rule 3, Section 15, under which the persons
joined in an association without any juridical personality may be sued with such association. Besides, it has been
shown that the individual members of the board of trustees are not liable, having been appointed only after the private
respondent's dismissal.

JUASING HARDWARE,
vs.
THE HONORABLE RAFAEL T. MENDOZA, Judge of the Court of First Instance of Cebu, and PILAR DOLLA,
Facts:
This is a special action for certiorari praying to annul the decision of the respondent judge. Juasing Hardware alleges
that it is a single proprietorship represented by its manager Ong Bon Yong. The defendant in this case Pilar Dolla owed
the plaintiff due to her purchase of some merchandise. After repeated demands, she failed to pay thus plaintiff filed an
complaint for the collection of a sum of money. The case proceeded to pre-trial and trial. After plaintiff had completed
the presentation of its evidence and rested its case, defendant filed a Motion for Dismissal of Action (Demurrer to
Evidence) 4praying that the action be dismissed for plaintiff's lack of legal capacity to sue. Defendant in said Motion
contended that plaintiff Juasing Hardware is a single proprietorship, not a corporation or a partnership duly registered
in accordance with law, and therefore is not a juridical person with legal capacity to bring an action in court. Plaintiff
filed an Opposition and moved for the admission of an Amended Complaint. The respondent judge denied the
opposition and dismissed the case because the plaintiff insisted on proceeding with the trial even with the allegations
of the defendant without amending its complaint. It cannot now ask for that remedy. Thus, this present petition.
Issue:
The sole issue in this case is whether or not the lower court committed a grave abuse of discretion when it dismissed
the case below and refused to admit the Amended Complaint filed by therein plaintiff, now herein petitioner, Juasing
Hardware
Held:
Rule 3 of the Revised Rules of Court provides as follows:
Sec. 1. Who may be parties.-Only natural or juridical persons or entities authorized by law may be
parties in a civil action.
Petitioner is definitely not a natural person; nor is it a juridical person as defined in the New Civil Code of the Philippines
thus:
Art. 44. The following are juridical persons:
(1) The State and its political subdivisions;
(2) Other corporations, institutions and entities for public interest or purpose, created by law; their
personality begins as soon as they have been constituted according to law;
(3) Corporations, partnerships and associations for private interest or purpose to which the law grants
a juridical personality, separate and distinct from that of each shareholder, partner or member.
Finally, there is no law authorizing sole proprietorships like petitioner to bring suit in court. The law merely recognizes
the existence of a sole proprietorship as a form of business organization conducted for profit by a single individual, and
requires the proprietor or owner thereof to secure licenses and permits, register the business name, and pay taxes to
the national government. It does not vest juridical or legal personality upon the sole proprietorship nor empower it to
file or defend an action in court.

Thus, the complaint in the court below should have been filed in the name of the owner of Juasing Hardware. The
allegations in the body of the complaint would show that the suit is brought by such person AS proprietor or owner of
the business conducted under the name and style Juasing Hardware". The descriptive words "doing business as
Juasing Hardware' " may be added in the title of the case, as is customarily done.
But, the SC held that the RTC judge nevertheless committed error in not granting the motion of the plaintiff, because
such amendment is allowed by Sec. 4, Rule 10 which provides that a defect in the designation of the parties may be
summarily corrected at any stage of the action provided no prejudice is caused thereby to the adverse party.
Contrary to the ruling of respondent Judge, the defect of the complaint in the instant case is merely formal, not
substantial. Substitution of the party plaintiff would not constitute a change in the Identity of the parties. No unfairness
or surprise to private respondent Dolla, defendant in the court a quo, would result by allowing the amendment, the
purpose of which is merely to conform to procedural rules or to correct a technical error.

In various cases, the court has ruled that: ... Defect in form cannot possibly prejudice so long as the substantial is
clearly evident. ...
No one has been misled by the error in the name of the party plaintiff. If we should by reason of this error send this
case back for amendment and new trial, there would be on the retrial the same complaint, the same answer, the same
defense, the same interests, the same witnesses, and the same evidence. The name of the plaintiff would constitute
the only difference between the old trial and the new. In our judgment there is not enough in a name to justify such
action.

HANG LUNG BANK, LTD., petitioner,

vs.
HON. FELINTRIYE G. SAULOG, Presiding Judge, Regional Trial Court, National Capital Judicial Region,
Branch CXLII, Makati, Metro Manila, and CORDOVA CHIN SAN, respondents.

Facts:
This is a petition for certiorari seeking to nullify the two orders of the RTC which dismissed the complaint of Hang Lung
Bank for collection of sum of money on the ground that Hang Lung Bank is a Hong Kong based bank and is barred by
the General Banking Act from maintaining a suit in this jurisdiction. The issue stemmed from the foregoing:
Hang Lung Bank which is not doing any business in the Philippine entered into a loan with Worlder Enterprises with
Cordova Chin San as the guarantor under a continuing guaranty to the extent of 250,000 HK dollars. Worlder Ent failed
to pay, and so Hang Lung Bank filed in Hongkongs SC a collection suit against both Chin San and Worlder Ent.
Summons were served in their address at HK but failed to respond thereto. As a result, SC of Hongkong rendered
judgment in favor of Hang Lung Bank. Thereafter, petitioner through counsel sent a demand letter to Chin San at his
Philippine address but again, no response was made thereto. Hence, on October 18, 1984, petitioner instituted in the
court below an action seeking "the enforcement of its just and valid claims against private respondent, who is a local
resident, for a sum of money based on a transaction which was perfected, executed and consummated abroad.

In his answer to the complaint, Chin San raised as affirmative defenses: lack of cause of action, incapacity to sue
and improper venue. Before the trial Chin San filed a motion to dismiss based on the grounds above which
was granted by RTC. Its dismissal was anchored on the following:
Section 14, General Banking Act provides:
"No foreign bank or banking corporation formed, organized or existing under any laws other than those of the
Republic of the Philippines, shall be permitted to transact business in the Philippines, or maintain by itself any
suit for the recovery of any debt, claims or demands whatsoever until after it shall have obtained, upon order
of the Monetary Board, a license for that purpose." Any officer, director or agent of any such corporation who
transacts business in the Philippines without the said license shall be punished by imprisonment for not less
than one year nor more than ten years and by a fine of not less than one thousand pesos nor more than ten
thousand pesos.
Petitioner filed a motion for the reconsideration of said order but it was denied for lack of merit. 6 Hence, the instant
petition for certiorari seeking the reversal of said orders "so as to allow petitioner to enforce through the court below its
claims against private respondent as recognized by the Supreme Court of Hongkong.

Issue:

Whether petitioner foreign banking corporation has the capacity to file the action below.
Held:
First, the SC said that the issue of the improper venue need not be tackled because the same was waived by
Chin San when he filed his answer to the complaint thereby necessarily implying submission to the jurisdiction
of the court.
With regards to the main issue, Chin San was correct in contending that that since petitioner is a bank, its capacity
to file an action in this jurisdiction is governed by the General Banking Act (Republic Act No. 337), particularly Section
14 as found above. The court adhered to its previous construction of the said provision which is almost identical to the
Old Corporation Law (Sec. 69, Act No. 1459). In a long line of cases, it has ruled that a foreign corporation is not
prohibited from suing or maintaining a cause of action in the Philippine courts. What it seeks to prevent is a foreign
corporation doing business in the Philippines without a license from gaining access to Philippine courts. The object of
the statute was to subject the foreign corporation doing business in the Philippines to the jurisdiction of its courts. The
object of the statute was not to prevent it from performing single acts but to prevent it from acquiring a domicile for the
purpose of business without taking the steps necessary to render it amenable to suit in the local courts. ( ako lang I
bisayah ha kay di ko ka English..) Niana ang Courts na based sa ilaha interpretation ang gi prohibit sa suit kay ang
pag do og business here sa Phils kung walay license, kailangan nay license para ma subject ang corps a jurisdiction
sa court; but wala na nagpasabot na for a foreign corporation to maintain a suit in the Philippines, it has to have a
license because if that would be the case persons would be able to avoid their obligations by merely contracting it
abroad.
The fairly recent case of Universal Shipping Lines vs. Intermediate Appellate Court, 10 although dealing with the
amended version of Section 69 of the old Corporation Law, Section 133 of the Corporation Code (Batas Pambansa
Blg. 68), but which is nonetheless apropos, states the rule succinctly: "it is not the lack of the prescribed license (to do
business in the Philippines) but doing business without license, which bars a foreign corporation from access to our

courts." In this case, the court ruled that a foreign corporation not licensed to do business in the Philippines may file a
suit in this country.
Since petitioner foreign banking corporation was not doing business in the Philippines, it may not be denied the privilege
of pursuing its claims against private respondent for a contract which was entered into and consummated outside the
Philippines. Otherwise we will be hampering the growth and development of business relations between Filipino citizens
and foreign nationals. Worse, we will be allowing the law to serve as a protective shield for unscrupulous Filipino
citizens who have business relationships abroad.
The complaint therefore appears to be one of the enforcement of the Hongkong judgment because it prays for the grant
of the affirmative relief given by said foreign judgment. 17 Although petitioner asserts that it is merely seeking the
recognition of its claims based on the contract sued upon and not the enforcement of the Hongkong judgment18 it
should be noted that in the prayer of the complaint, petitioner simply copied the Hongkong judgment with respect to
private respondent's liability.
However, a foreign judgment may not be enforced if it is not recognized in the jurisdiction where affirmative relief is
being sought. Hence, in the interest of justice, the complaint should be considered as a petition for the recognition of
the Hongkong judgment under Section 50 (b), Rule 39 of the Rules of Court in order that the defendant, private
respondent herein, may present evidence of lack of jurisdiction, notice, collusion, fraud or clear mistake of fact and law,
if applicable.
THE COMMISSIONER OF CUSTOMS, petitioner,
vs.
K.M.K. GANI, INDRAPAL & CO., and the HONORABLE COURT OF TAX APPEALS, respondents.

Facts:
Containers loaded with 103 cartons of merchandise covered by 11 airway bills of several supposedly Singapore based
consignees arrived at Manila from Hongkong. The cargoes were consigned to different entities, the respondents herein
who are all based in Singapore. Acting on a tip, the Bureau of Customs seized the cargoes which contained various
items. These goods were then transferred to the International Cargo Terminal under Warrant of Seizure and Detention
and thereafter subjected to the Seizure and Forfeiture proceedings for technical smuggling.

At the hearing, the respondents as represented by their counsel moved for the transshipment of the said
goods, it averred that the goods were not meant for the Philippines but for Singapore . On the other hand, the
Solicitor General avers that K.M.K. and INDRAPAL did not present any testimonial or documentary evidence. The,
collector of Customs at the then Manila International Airport (MIA), now Ninoy Aquino International Airport (NAIA), ruled
for the forfeiture of all the cargoes in the said containers. Consequently, Atty. Padilla, ostensibly on behalf of his two
clients, K.M.K. and INDRAPAL, appealed the order to the Commissioner. of Customs. The Commissioner of Customs
affirmed the finding of the Collector of Customs of the presence of the intention to import the said goods in violation of
the Dangerous Drugs Act 3and Central Bank Circular No. 808 in relation to the Tariff and Customs Code. The
Commissioner of Customs also added that: 1. There is a direct flight from Hongkong to Singapore, thus making the
transit through Manila more expensive, tedious, and circuitous.2. The articles were grossly misdeclared, considering
that Singapore is a free port. 3. The television sets and betamax units seized were of the American standard which is
popularly used in Manila, and not of the European standard which is used in Singapore.4. One of the shippers is a
Filipino national with no business connection with her alleged consignee in Singapore. 5. The alleged consignee of the
prohibited drugs confiscated has no authority to import Mogadon or Mandrax. Upon these findings, the Commissioner
concluded that there was an "intent to unlade" in Manila, thus, an attempt to smuggle goods into the country. The

respondents further appealed to the Court of Tax Appeals contending that the goods were covered by the Airway bills
as in transit which supports their contention that the goods were never meant for Manila. The court of Tax Appeals
favored the respondents, hence this present petition.
Relevant Issue:
Whether or not the private respondents failed to establish their personality to sue in a representative capacity, hence
making their action dismissable.
Held:
The Court said Yes. The law is clear: "No foreign corporation transacting business in the Philippines without a license,
or its successors or assigns, shall be permitted to maintain or intervene in any action, suit or proceeding in any court
or administrative agency of the Philippines; but such corporation may be sued or proceeded against before Philippine
courts or administrative tribunals on any valid cause of action recognized under Philippine laws." However, the Court
in a long line of cases has held that a foreign corporation not engaged in business in the Philippines may not be denied
the right to file an action in the Philippine courts for an isolated transaction. 8
Therefore, the issue on whether or not a foreign corporation which does not have a license to engage in business in
this country can seek redress in Philippine courts boils down as to whether it is doing business or merely entered into
an isolated transaction in the Philippines. The fact that a foreign corporation is not doing business in the Philippines
must be disclosed if it desires to sue in Philippine courts under the "isolated transaction rule." Without this disclosure,
the court may choose to deny it the right to sue.
The isolated transaction rule as discussed by the court only applies to foreign corporations who are not doing any
business in the Philippines. It does not extend to other entities like single proprietorship, or any other organization but
exclusively to foreign corporations only. Hence, if one wants to avail of such rule, it must prove its legal existence or
juridical personality as a foreign corporation. It is to be noted that foreign corporations who engage in the
Philippines needs a license in order to sue, while a foreign corporation who has no business in the Philippines,
do not require such license.
In this case, the respondents failed to satisfy the said requirement in their pleadings as it failed to prove their legal
existence or juridical personality as foreign corporations. The first paragraph of their petition before the Court,
containing the allegation of their identities, does not even aver their corporate character. On the contrary, K.M.K. alleges
that it is a "single proprietorship" while INDRAPAL hides under the vague identification as a "firm," although both
describe themselves with the phrase "doing business in accordance with the laws of Singapore."
Absent such proof that the private respondents are corporations (foreign or not), the respondent Court of Tax Appeals
should have barred their invocation of the right to sue within Philippine jurisdiction under the "isolated transaction rule"
since they do not qualify for the availment of such right.
Moreover, the court also noted that the pleadings of the respondent do not state as to who its duly authorized
representative is, all it has is the record that Atty. Padilla represents himself as counsel for the respondents. The court
said that it is incumbent on plaintiff to allege sufficient facts to show that he is concerned with the cause of action
averred, and is the party who has suffered injury by reason of the acts of defendant; in other words, it is not enough
that he alleges a cause of action existing in favor of someone, but he must show that it exists in favor of himself. In
other words, he must show that he is the real party in interest in order to have a legal standing, otherwise the case
should be dismissed for insufficiency. The appearance of Atty, Armando S. Padilla as counsel for the two claimants
would not suffice. Generally, a "lawyer is presumed to be properly authorized to represent any cause in which he
appears, and no written power of attorney is required to authorize him to appear in court for his client." 13 Nevertheless,

although the authority of an attorney to appear for and on behalf of a party may be assumed, it can still be questioned
or challenged by the adverse party concerned. The presumption established under the provision of Section 21, Rule
138 of the Revised Rules of Court is disputable. 15 The requirement for the production of authority is essential because
the client will be bound by his acquiescence resulting from his knowledge that he was being represented by said
attorney.
Apart from the foregoing, Section 4, Rule 8, Revised Rules of Court mandates that facts showing the capacity of a
party to sue or be sued; or the authority of a party to sue or be sued in a representative capacity; or the legal existence
of an organized association of person (sic) that is made a party, must be averred. In like manner, the rule is settled that
in case where the law denies a foreign corporation to maintain a suit unless it has previously complied with certain
requirements, then such compliance or exemption therefrom, becomes a necessary averment in the complaint (Atlantic
Mutual Inc. Co. v. Cebu Stevedoring Co., Inc. 17 SCRA 1037; vide; Sec. 4, Rule 8, Revised Rules of Court). In the
case at bar, apart from merely alleging that private respondents are foreign corporation (sic) and that summons may
be served to their counsel, their petition in the Court of Tax Appeals is bereft of any other factual allegation to show
their capacity to sue or be sued in a representative capacity in his jurisdiction. 17

MERRILL LYNCH FUTURES, INC., petitioner,

vs.
HON. COURT OF APPEALS, and the SPOUSES PEDRO M. LARA and ELISA G. LARA, respondents.
Facts:
Merryl Lynch Futures, Inc (ML Futures) is a foreign corporation under USA which is principally a future commission
merchant, or in a sense a broker company and averred that it is not doing any business in the Phils. Sometime 1983,
it entered into an agreement with the Sps. Lara that pursuant to the contract, orders to buy and sell futures contracts
were transmitted to ML FUTURES by the Lara Spouses "through the facilities of Merrill Lynch Philippines, Inc., a
Philippine corporation and a company servicing plaintiffs customers. That from the outset, the Lara Spouses "knew
and were duly advised that Merrill Lynch Philippines, Inc. was not a broker in futures contracts," and that it "did not
have a license from the Securities and Exchange Commission to operate as a commodity trading advisor. But while
the transactions were ongoing for 4 years, the Lara spouses as a result became indebted to ML Futures for $84,
836.27 which the latter asked them to pay. But the Lara Spouses however refused to pay this balance, "alleging that
the transactions were null and void because Merrill Lynch Philippines, Inc., the Philippine company servicing accounts
of plaintiff, had no license to operate as a 'commodity and/or financial futures broker.'" Based on this, ML Futures sued
the Lara spouse for a preliminary attachment and order to pay. RTC issued the preliminary attachment.
The Spouses Lara filed a motion to dismiss on the grounds that ML Futures had (1) no legal capacity to sue, and (2)
its complaint states no cause of action since it is not the real party in interest. The spouses averred that ML Futures
without a license have been doing business in the Philippines at least for the last 4 years, and is therefore prohibited
by law to maintain or intervene in any action, suit or proceeding in any court or administrative agency in the Philippines.
they also aver that they never knew that ML Futures was not licensed and contrary to the allegations of the complaint,
all their transactions had actually been with MERRILL LYNCH PIERCE FENNER & SMITH, INC., and not with ML
FUTURES.
ML Futures on the other hand opposed the motion to dismiss on the following grounds:
1. Spouses Lara asked ML if they were trading in the US, and as such, how could they be trading in the
Philippines,

2. it also drew attention to a printed form of "Merrill Lynch Futures, Inc." filled out and signed by defendant
spouses when they opened an account with ML Futures, in order to supply information about themselves,
including their bank's name.
It further averred that it is not permitted for the spouses to present evidence in connection with a motion to dismiss
based on the failure of the complaint to state a cause of action.
As a reply,the spouses affirmed their claim that they were not aware of ML Futures lack of license which was
denied by the latter alleging it had given the spouses a disclosure statement by which the latter were made aware
that the transactions they were agreeing on would take place outside of the Philippines, and that "all funds in the
trading program must be placed with Merrill Lynch Futures, Inc."
The RTC dismissed the case, and denied motion for reconsideration. ML futures appealed to CA. CA affirmed
RTCs decision and cited Sec. 133 of the Corporation Code which states that:
Doing business without a license. No foreign corporation transacting business in the Philippines
without a license, or its successors or assigns, shall be permitted to maintain or intervene in any
action, suit or proceeding in any court or administrative agency in the Philippines; but such
corporation may be sued or proceeded against before Philippine courts or administrative tribunals
on any valid cause of action recognized under Philippine laws.
It also declared that the evidence established that plaintiff had in fact been "doing business" in this country in legal
contemplation, adverting to Mentholatum v. Mangaliman, 72 Phil. 524, 528-530, and Section 1 of Republic Act No.
5455.
.. AND ANY OTHER ACT OR ACTS THAT IMPLY A
CONTINUITY OF COMMERCIAL DEALINGS OR ARRANGEMENTS AND CONTEMPLATE TO
THAT EXTENT THE PERFORMANCE OF ACTS OR WORKS, OR THE EXERCISE OF SOME
FUNCTIONS NORMALLY INCIDENT TO, AND IN PROGRESSIVE PROSECUTION OF
COMMERCIAL GAIN OR OF THE PURPOSE AND OBJECT OF THE BUSINESS ORGANIZATION.
Relevant Issue:
Whether or not the annexes, assuming them to be admissible, established that ML FUTURES was doing business
in the Philippines without a license.
Held:
On the second ground that ML Futures had no legal capacity to sue, the Court ruled that the settled doctrine of course
is that said ground must appear on the face of the complaint, and its existence may be determined only by the
allegations of the complaint, consideration of other facts being proscribed, and any attempt to prove extraneous
circumstances not being allowed. 11 The test of the sufficiency of the facts alleged in a complaint as constituting a
cause of action is whether or not, admitting the facts alleged, the court might render a valid judgment upon the same
in accordance with the prayer of the complaint. 12 Indeed, it is error for a judge to conduct a preliminary hearing and
receive evidence on the affirmative defense of failure of the complaint to state a cause of action.
The other ground for dismissal relied upon, i.e., that the plaintiff has no legal capacity to sue may be understood in
two senses: one, that the plaintiff is prohibited or otherwise incapacitated by law to institute suit in Philippine Courts, 14 or
two, although not otherwise incapacitated in the sense just stated, that it is not a real party in interest. Now, the Lara
Spouses contend that ML Futures has no capacity to sue them because the transactions subject of the complaint were

had by them, not with the plaintiff ML FUTURES, but with Merrill Lynch Pierce Fenner & Smith, Inc. Evidence is quite
obviously needed in this situation, for it is not to be expected that said ground, or any facts from which its existence
may be inferred, will be found in the averments of the complaint. . When such a ground is asserted in a motion to
dismiss, the general rule governing evidence on motions applies. The rule is embodied in Section 7, Rule 133 of the
Rules of Court.
Sec. 7. Evidence on motion. When a motion is based on facts not appearing of record the court
may hear the matter on affidavits or depositions presented by the respective parties, but the court
may direct that the matter be heard wholly or partly on oral testimony or depositions.
There was, to be sure, no affidavit or deposition attached to the Lara Spouses' motion to dismiss or thereafter
proffered in proof of the averments of their motion. The motion itself was not verified. What the spouses did do
was to refer in their motion to documents which purported to establish that it was not with ML FUTURES that they
had theretofore been dealing, but another, distinct entity, Merrill Lynch, Pierce, Fenner & Smith, Inc., copies of
which documents were attached to the motion. But even such, ML Futures made no objection to such documents,
and even averred their contentions on it, the same must be admitted.
There being otherwise no question respecting the genuineness of the documents, nor of their relevance to at least one
of the grounds for dismissal i.e., the prohibition on suits in Philippine Courts by foreign corporations doing business
in the country without license it would have been a superfluity for the Court to require prior proof of their authenticity,
and no error may be ascribed to the Trial Court in taking account of them in the determination of the motion on the
ground, not that the complaint fails to state a cause of action as regards which evidence is improper and
impermissible but that the plaintiff has no legal capacity to sue respecting which proof may and should be
presented.
The first question then, is, as ML FUTURES formulates it, whether or not the annexes, assuming them to be admissible,
establish that (a) ML FUTURES is prohibited from suing in Philippine Courts because doing business in the country
without a license, and that (b) it is not a real party in interest since the Lara Spouses had not been doing business with
it, but with another corporation, Merrill Lynch, Pierce, Fenner & Smith, Inc.
The Court is satisfied that the facts on record adequately establish that ML FUTURES, operating in the United States,
had indeed done business with the Lara Spouses in the Philippines over several years, had done so at all times through
Merrill Lynch Philippines, Inc. (MLPI), a corporation organized in this country, and had executed all these transactions
without ML FUTURES being licensed to so transact business here, and without MLPI being authorized to operate as
a commodity futures trading advisor. These are the factual findings of both the Trial Court and the Court of Appeals.
These, too, are the conclusions of the Securities & Exchange Commission which denied MLPI's application to operate
as a commodity futures trading advisor, a denial subsequently affirmed by the Court of Appeals. Prescinding from the
proposition that factual findings of the Court of Appeals are generally conclusive this Court has been cited to no
circumstance of substance to warrant reversal of said Appellate Court's findings or conclusions in this case.
The crucial question is whether or not ML FUTURES may sue in Philippine Courts to establish and enforce its rights
against said spouses, in light of the undeniable fact that it had transacted business in this country without being licensed
to do so. In other words, if it be true that during all the time that they were transacting with ML FUTURES, the Laras
were fully aware of its lack of license to do business in the Philippines, and in relation to those transactions had made
payments to, and received money from it for several years, the question is whether or not the Lara Spouses are now
estopped to impugn ML FUTURES' capacity to sue them in the courts of the forum.
The rule is that a party is estopped to challenge the personality of a corporation after having acknowledged the same
by entering into a contract with it. 16 And the "doctrine of estoppel to deny corporate existence applies to foreign as well
as to domestic corporations;" 17 "one who has dealt with a corporation of foreign origin as a corporate entity is estopped

to deny its corporate existence and capacity." 18 The principle "will be applied to prevent a person contracting with a
foreign corporation from later taking advantage of its noncompliance with the statutes, chiefly in cases where such
person has received the benefits of the contract.
Considerations of equity dictate that, at the very least, the issue of whether the Laras are in truth liable to ML FUTURES
and if so in what amount, and whether they were so far aware of the absence of the requisite licenses on the part of
ML FUTURES and its Philippine correspondent, MLPI, as to be estopped from alleging that fact as defense to such
liability, should be ventilated and adjudicated on the merits by the proper trial court.
Hence, there should be trial on the merits.

UNITED STATES OF AMERICA and MAXINE BRADFORD, petitioners,

vs.
HON. LUIS R. REYES, as Presiding Judge of Branch 22, Regional Trial Court of Cavite, and NELIA T.
MONTOYA, respondents.

Facts:
This is a petition for certiorari and prohibition under Rule 65 of the Rules of Court. Petitioners herein are praying for the
annulment of the RTC decision denying their motion to dismiss. The doctrine of State Immunity is at the core of
this controversy. Respondent herein is an American Citizen employed as an ID checker at the US Navy Exchange
headquartes in Quezon City. On the other hand, petitioner is an American Citizen who was the activity exchange
manager at the said JUSMAG headquarters.
The issue arose when the respondent was shopping for some commodities in the store of NEX JUSMAG where she
had shopping priviliges was searched after she left the store. As a result of the search, the respondent filed damages
due to the oppressive and discriminatory acts committed by the petitioner in excess of her authority as store manager.
Respondent prayed that the petitioner pay her her P500,000.00 as moral damages, P100,000.00 as exemplary
damages and reasonable attorney's fees plus the costs of the suit. As answer, the petitioner together with the US filed
a motion to dismiss based on the following grounds: 1) (This) action is in effect a suit against the United States of
America, a foreign sovereign immune from suit without its consent for the cause of action pleaded in the complaint;
and 2) Defendant, Maxine Bradford, as manager of the US Navy Exchange Branch at JUSMAG, Quezon City, is
immune from suit for act(s) done by her in the performance of her official functions under the Philippines-United States
Military Assistance Agreement of 1947 and Military Bases Agreement of 1947, as amended.
In support of the motion, the petitioners claimed that JUSMAG, composed of an Army, Navy and Air Group, had been
established under the Philippine-United States Military Assistance Agreement entered into on 21 March 1947 to
implement the United States' program of rendering military assistance to the Philippines. Its headquarters in Quezon
City is considered a temporary installation under the provisions of Article XXI of the Military Bases Agreement of 1947.
Thereunder, "it is mutually agreed that the United States shall have the rights, power and authority within the bases
which are necessary for the establishment, use and operation and defense thereof or appropriate for the control thereof.
They further claimed that the Navy Exchange (NAVEX), an instrumentality of the U.S. Government, is considered
essential for the performance of governmental functions. Its mission is to provide a convenient and reliable source, at
the lowest practicable cost, of articles and services required for the well-being of Navy personnel, and of funds to be
used for the latter's welfare and recreation. Montoya's complaint, relating as it does to the mission, functions and
responsibilities of a unit of the United States Navy, cannot then be allowed.

The respondent opposed the motion to dismiss on the grounds that: the petitioner exceeded the scope of her authority,
and having done such she cannot rely on the sovereign immunity of the public petitioner because her liability is
personal. Also, Philippine courts are vested with jurisdiction over the case because Bradford is a civilian employee who
had committed the challenged act outside the U.S. Military Bases; such act is not one of those exempted from the
jurisdiction of Philippine courts; and (d) Philippine courts can inquire into the factual circumstances of the case to
determine whether or not Bradford had acted within or outside the scope of her authority.
RTC denied motion to dismiss. Instead of reconsiderations, the petitioner herein filed this instant petition based on this
ground:
Issue:
WON the petitioner can invoke immunity from suit.
Held:
This was the argument of petitioner: The respondent judge committed a grave abuse of discretion amounting to lack
of jurisdiction in denying the motion to dismiss the complaint in Civil Case No. 224-87 "for lack of merit." For the action
was in effect a suit against the United States of America, a foreign sovereign immune from suit without its consent for
the cause of action pleaded in the complaint, while its co-petitioner was immune from suit for act(s) done by her in the
performance of her official functions as manager of the US Navy Exchange Branch at the Headquarters of JUSMAG,
under the Philippines-United States Military Assistance Agreement of 1947 and Military Bases Agreement of 1947, as
amended.
On the other hand, Montoya submits that Bradford is not covered by the protective mantle of the doctrine of sovereign
immunity from suit as the latter is a mere civilian employee of JUSMAG performing non-governmental and proprietary
functions. And even assuming arguendo that Bradford is performing governmental functions, she would still remain
outside the coverage of the doctrine of state immunity since the act complained of is ultra viresor outside the scope of
her authority.
The Court first dealt with procedural matters (promise relevant ni)
Despite the fact that public petitioner was not impleaded as a defendant in Civil Case No. 224-87, it nevertheless joined
Bradford in the motion to dismiss on the theory that the suit was in effect against it without, however, first having
obtained leave of court to intervene therein. This was a procedural lapse, if not a downright improper legal tack. Since
it was not impleaded as an original party, the public petitioner could, on its own volition, join in the case only by
intervening therein; such intervention, the grant of which is discretionary upon the court, 37 may be allowed only upon
a prior motion for leave with notice to all the parties in the action. Of course, Montoya could have also impleaded the
public petitioner as an additional defendant by amending the complaint if she so believed that the latter is an
indispensible or necessary party.
Since the trial court entertained the motion to dismiss and the subsequent pleadings filed by the public petitioner and
Bradford, it may be deemed to have allowed the public petitioner to intervene. Corollarily, because of its voluntary
appearance, the public petitioner must be deemed to have submitted itself to the jurisdiction of the trial court.
The court said that although the dismissal was anchored on the ground o state immunity from suit, the court said that
the real ground is the lack of cause of action a specific ground for dismissal under the aforesaid Rule (Sec1, Rule
16) because assuming arguendo that Montoya's rights had been violated by the public petitioner and Bradford,
resulting in damage or injury to the former, both would not be liable therefor, and no action may be maintained thereon,
because of the principle of state immunity.

A motion to dismiss on the ground of failure to state a cause of action hypothetically admits the truth of the
allegations in the complaint.
In deciding a motion to dismiss, a court may grant, deny, allow amendments to the pleadings or defer the hearing and
determination of the same if the ground alleged does not appear to be indubitable. 39 In the instant case, while the trial
court concluded that "the grounds and arguments interposed for the dismissal" are not "indubitable," it denied the
motion for lack of merit. What the trial court should have done was to defer there solution on the motion instead of
denying it for lack of merit.
In this case, the court reiterated the doctrine of immunity from suit but cited this exception: Inasmuch as the State
authorizes only legal acts by its officers, unauthorized acts of government officials or officers are not acts of the State,
and an action against the officials or officers by one whose rights have been invaded or violated by such acts, for the
protection of his rights, is not a suit against the State within the rule of immunity of the State from suit. In the same
tenor, it has been said that an action at law or suit in equity against a State officer or the director of a State department
on the ground that, while claiming to act or the State, he violates or invades the personal and property rights of the
plaintiff, under an unconstitutional act or under an assumption of authority which he does not have, is not a suit against
the State within the constitutional provision that the State may not be sued without its consent." 44 The rationale for this
ruling is that the doctrinaire of state immunity cannot be used as an instrument for perpetrating an injustice. The
aforecited authorities are clear on the matter. They state that the doctrine of immunity from suit will not apply and may
not be invoked where the public official is being sued in his private and personal capacity as an ordinary citizen. The
cloak of protection afforded the officers and agents of the government is removed the moment they are sued in their
individual capacity. This situation usually arises where the public official acts without authority or in excess of the
powers vested in him. It is a well-settled principle of law that a public official may be liable in his personal private
capacity
for
whatever
damage
he
may
have
caused
by
his
act
done
with malice and in bad faith, or beyond the scope of his authority or jurisdiction.
Since it is apparent from the complaint that Bradford was sued in her private or personal capacity for acts allegedly
done beyond the scope and even beyond her place of official functions, said complaint is not then vulnerable to a
motion to dismiss based on the grounds relied upon by the petitioners because as a consequence of the hypothetical
admission of the truth of the allegations therein, the case falls within the exception to the doctrine of state immunity.
There can be no doubt that on the basis of the allegations in the complaint, Montoya has a sufficient and viable cause
of action. Bradford's purported non-suability on the ground of state immunity is then a defense which may be pleaded
in the answer and proven at the trial.
Since Bradford did not file her Answer within the reglementary period, the trial court correctly declared her in default
upon motion of the private respondent. The judgment then rendered against her on 10 September 1987 after the ex
parte reception of the evidence for the private respondent and before this Court issued the Temporary Restraining
Order.

Flores vs Mallare
Facts:
Plaintiff Flores files one compliant with the RTC against two defendants, Ignacio Binongcal and Fernando Calion for

refusing to pay the amount of P11,643.00 for Ignacio and P10,212.00 for Fernando.
Respondents filed a Motion to Dismiss on the ground of lack of jurisdiction since the amount of the each demand is
below 20k and MTC has jurisdiction over such case. The Regional trial court dismissed the complaint for lack of
jurisdiction
Petitioner maintains that the lower court has jurisdiction over the case following the "novel" totality rule introduced in
Section 33(l) of BP129 and Section 11 of the Interim Rules.
Section 11 of the Interim Rules provides thus:
Application of the totality rule.-In actions where the jurisdiction of the court is dependent on the
amount involved, the test of jurisdiction shall be the aggregate sum of all the money demands,
exclusive only of interest and costs, irrespective of whether or not the separate claims are owned by
or due to different parties. If any demand is for damages in a civil action, the amount thereof must
be specifically alleged.
Held:
Petitioner compares the above-quoted provisions with the pertinent portion of the former rule under Section 88 of the
Judiciary Act of 1948 as amended which reads as follows:
... Where there are several claims or causes of action between the same parties embodied in the
same complaint, the amount of the demand shall be the totality of the demand in all the causes of
action, irrespective of whether the causes of action arose out of the same or different transactions;
but where the claims or causes of action joined in a single complaint are separately owned by or due
to different parties, each separate claim shall furnish the jurisdictional test. ...
and argues that with the deletion of the proviso in the former rule, the totality rule was reduced to clarity and brevity
and the jurisdictional test is the totality of the claims in all, not in each, of the causes of action, irrespective of whether
the causes of action arose out of the same or different transactions.
This argument is partly correct. There is no difference between the former and present rules in cases where a plaintiff
sues a defendant on two or more separate causes of action. In such cases, the amount of the demand shall be the
totality of the claims in all the causes of action irrespective of whether the causes of action arose out of the same or
different transactions. If the total demand exceeds twenty thousand pesos, then the regional trial court has jurisdiction.
Needless to state, if the causes of action are separate and independent, their joinder in one complaint is permissive
and not mandatory, and any cause of action where the amount of the demand is twenty thousand pesos or less may
be the subject of a separate complaint filed with a metropolitan or municipal trial court.
On the other hand, there is a difference between the former and present rules in cases where two or more plaintiffs
having separate causes of action against a defendant join in a single complaint. Under the former rule, "where the
claims or causes of action joined in a single complaint are separately owned by or due to different parties, each separate
claim shall furnish the jurisdictional test" (Section 88 of the Judiciary Act of 1948 as amended, supra).

In cases of joinder of causes of action, the amount of the demand shall be the totality of the claims in all the causes of

action irrespective of whether the causes of action arose out of the same or different transactions. If the total demand
exceeds twenty thousand pesos, then the regional trial court has jurisdiction. Needless to state, if the causes of action
are separate and independent, their joinder in one complaint is permissive and not mandatory, and any cause of action
where the amount of the demand is twenty thousand pesos or less may be the subject of a separate complaint filed
with a metropolitan or municipal trial court.
The Court rules that the application of the totality rule under Section 33(l) of Batas Pambansa Blg. 129 and Section 11
of the Interim Rules is subject to the requirements for the permissive joinder of parties under Section 6 of Rule 3 which
provides as follows:
Permissive joinder of parties.-All persons in whom or against whom any right to relief in respect to or
arising out of the same transaction or series of transactions is alleged to exist, whether jointly,
severally, or in the alternative, may, except as otherwise provided in these rules, join as plaintiffs or
be joined as defendants in one complaint, where any question of law or fact common to all such
plaintiffs or to all such defendants may arise in the action; but the court may make such orders as
may be just to prevent any plaintiff or defendant from being embarrassed or put to expense in
connection with any proceedings in which he may have no interest.
Under the present law, the totality rule is applied also to cases where two or more plaintiffs having separate causes of
action against a defendant join in a single complaint, as well as to cases where a plaintiff has separate causes of action
against two or more defendants joined in a single complaint. However, the causes of action in favor of the two or more
plaintiffs or against the two or more defendants should arise out of the same transaction or series of transactions and
there should be a common question of law or fact, as provided in Section 6 of Rule 3.
(pasabot ani, ang makita nimu nga totality rule sa BP 129 kay subject ghapon xa sa Rule 2, sec 5 og Rule 3
sec.6 sa rules of court, nga nag provide that if mogamit ka sa totality rule to determine jurisdiction, dapat ang
causes of action kay nag arise sa same transactions and there should be a common question of law or fact,
cause if not, then ang amount sa each claim ang mo determine sa jurisdiction for each.)
In other words, in cases of permissive joinder of parties, whether as plaintiffs or as defendants, under Section 6 of Rule
3, the total of all the claims shall now furnish the jurisdictional test. Needless to state also, if instead of joining or being
joined in one complaint separate actions are filed by or against the parties, the amount demanded in each complaint
shall furnish the jurisdictional test. (permissive joinder ra, meaning dili jud kailangan na imuha cla I join).
In the case at bar, the lower court correctly held that the jurisdictional test is subject to the rules on joinder of parties
pursuant to Section 5 of Rule 2 and Section 6 of Rule 3 of the Rules of Court and that, after a careful scrutiny of the
complaint, it appears that there is a misjoinder of parties for the reason that the claims against respondents Binongcal
and Calion are separate and distinct and neither of which falls within its jurisdiction.

Ralla vs Ralla
Facts:
Rosendo Ralla had two sons, Pablo and Pedro. Rosendo executed a will disinheriting Pedro and leaving everything
he owned to Pablo and to whom he said he had earlier sold a part of his property for P10,000.00.Now, Pedro sues for

annulment

of

sale

of

property.

On November 3, 1966, the probate judge converted SP 564 into an intestate proceeding. On February 28, 1978, a
creditor of the deceased filed a petition for the probate of Rosendo's will in SP 1106, which was heard jointly with SP
564. On August 3, 1979, the order of November 3, 1966, was set aside.
The last will and testament of Rosendo Ralla was allowed on June 7, 1982 2 but on October 20, 1982, the disinheritance
of Pedro was disapproved. 3 This order was elevated to the Court of Appeals in AC-G.R. Nos. 00472, 00489.
In a decision dated July 25, 1986, the Court of Appeals 4 reversed the trial court and reinstated the disinheritance
clause after finding that the requisites of a valid disinheritance had been complied with in the will. The appellate court
noted that Pedro had threatened to kill his father, who was afraid of him and had earlier sued him for slander and grave
oral defamation.
Pedro assailed the decision, but having failed to appeal on time, the same was dismissed.
What is involved in the present petition is the correctness of the decision of the respondent court annulling the deed
of sale executed by Rosendo Ralla in favor of Pablo over 149 parcels of land. Pedro had filed on May 19, 1972, a
complaint to annul the transaction on the ground that it was simulated. 5 The original decision of the trial court
declared the sale null and void. 6 In the resolution of the motion for reconsideration, however, Judge Jose F. Madara
completely reversed himself and held the deed of sale to be valid. 7 This order was in turn set aside by the
respondent court, which reinstated the original decision invalidating the deed of sale.
But we find that, regardless of these curious resolutions, the petition must nevertheless be sustained albeit not on the
ground that the deed of sale was indeed valid. The Court is inclined to support the findings of the respondent court.
However, we do not and cannot make any decision on this matter because of one insuperable obstacle. That obstacle
is the proper party personality of Pedro Ralla to question the transaction.
Held:
The 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. "Interest" within the meaning of the rule means material interest, an interest in issue and to be
affected by the decree, as distinguished from mere interest in the question involved, or a mere incidental interest. As
a general rule, one having no right or interest to protect cannot invoke the jurisdiction of the court as a party-plaintiff
in an action.
a validly disinherited heir, and not claiming to be a creditor of his deceased father, Pedro Ralla had no legal
personality to question the deed of sale dated November 29, 1957, between Rosendo Ralla and his son Pablo.
Legally speaking, Pedro Ralla was a stranger to the transaction as he did not stand to benefit from its annulment. His
disinheritance had rendered him hors de combat.

Mansion Biscuit vs CA
Facts:
Sometime in 1981, Ty Teck Suan, as president of Edward Ty Brothers Corporation, ordered numerous canons of
nutria-wafer biscuits from Mansion Biscuit Corporation, before the delivery of the goods on November 12, 1981, Ty

Teck Suan issued to Ang Cho Hong, president of Mansion Biscuit Corp., four postdated checks totaling P404,980.00
as payment for the nutria-wafer biscuits. Four other postdated checks in the amount of P100,000.00 each were issued
by Ty Teck Suan with Siy Gui as Co-signor in December of the same year. Accordingly, Mansion Biscuit Corp. delivered
the goods. When the first four checks were deposited, they were all dishonored due to insufficiency of funds. Ang Cho
Hong informed Ty Teck Suan of the dishonor and requested him to replace the checks with good cash or good checks.
Ty Teck Suan failed to heed said request. Subsequently, Ty Teck Suan delivered a total of 1,150 sacks of Australian
flour to Mansion Biscuits plus cash advance by Suan and the amount paid was applied as payment for the first
postdated check. Hong sent Suan a formal demand letter requesting the latter to make good the value of the remaining
dishonored checks within five days from the receipt thereof. Thereafter, the second batch of checks were issued by
Suan and Gui but were all dishonored again. Mansion Biscuit Corporation filed a case against Suan and Gui for violation
of
Batasang
Pambansa
Blg.
22
(Bouncing
Checks
Law)
Both accused are found not guilty. Order of Attachment set aside. Prosecution then filed MfR and for clarification as to
the civil aspect of the crim actions. MfR was denied. Mansion filed certiorari and injunction with the CA questioning
RTCs setting aside of the order of attachment. CA annulled and set aside the portion of the order which set aside the
Order of Attachment. Mansion filed another appeal with the CA assailing RTCs ruling absolving defendants from civil
liability. While appeal was pending, Ty died. MtD the appeal was filed. CA denied MtD and granted the substitution of
Tys
children.
CA dismissed the appeal filed by Mansion for lack of merit. CA held that civil liab sought to be enforced by Mansion
was not the personal liab of Ty but a contractual liab of ETB Corp. The civil liab of ETB Corp to Mansion was not
litigated and resolved in the crim cases because ETB Corp was not a party thereto. CA held that a separate civil action
should
be
instituted
by
Mansion
against
ETB
Corp.
After the prosecution rested its case, Ty Teck Suan filed a motion to dismiss by way of demurrer to evidence, which
Siy Gui likewise adopted as his own. The motion to dismiss was based on the following grounds: (a) the subject checks
were issued merely to guarantee or secure fulfillment of the agreement with the complainant; (b) the four Equitable
Banking Corporation checks were issued by the accused only as replacement for the four Rizal Banking Corporation
checks issued by Ty Teck Suan alone, and (c) the trial court had no jurisdiction over the offense.
Their motion for reconsideration having been denied, petitioner came to this Court by way of the instant petition for
review alleging that respondent Court of Appeals erred in: (a) limiting its appeal to civil liability arising from contract;
(b) refusing to acknowledge the quasi-delict or tort committed by Ty Teck Suan; (c) insisting that the contractual liability
could not be enforced against Ty Teck Suan; (d) not ruling that Ty Teck Suan, by his actuations, had personally
assumed liability, and (e) disregarding the conclusive findings of the Court of Appeals in CA-G.R. No. SP No. 13264.
Petitioner contends that "when Ty Teck Suan committed the illegal act of insuring and delivering worthless checks as
advance payment, thus successfully inducing Ang Cho Hong, president of Mansion, to deliver several hundred cartons
of nutri-van biscuits, two (2) civil liabilities arose, namely: (1) the civil liability arising from crime under Article 100 of the
Revised Penal Code, and (2) the civil liability arising from tort or quasi-delict." 32 Petitioner further alleges that when Ty
Teck Suan and Siy Gui were acquitted in the criminal cases, "only the civil liability arising from crime was extinguished"
pursuant to Article 100 of the Revised Penal Code, but their civil liability based on quasi-delict remained.
Private respondents, on the other hand, asseverate that Ty Teck Suan and Siy Gui could not be held liable for a
contractual liability of the corporation which they represented. They maintain the view that petitioner must file a separate
civil action against Edward Ty Brothers Corporation inasmuch as the latter is the real party in interest and was not a
party to the criminal cases filed against them which are subject of the present petition for review.
Issue:

whether or not the petitioner can enforce the civil liability for non-payment of the nutri-wafer biscuits in question against
private respondents notwithstanding the fact that the latter contracted the agreement in behalf of Edward Ty Brothers
Corporation.
Held:
Negative.
The civil liability for non-payment of the nutri-wafer biscuits delivered by petitioner to the Edward Ty Brothers
Corporation cannot be enforced against the private respondents because the said civil liability was not the personal
liability of Ty Teck Suan to Mansion Biscuit Corporation, rather, it was the contractual liability of Edward Ty Brothers
Corporation, of which Ty Teck Suan was president, to Mansion Biscuit Corporation.
It is quite clear from the foregoing that plaintiff-appellant is enforcing a contractual, not a tortious, liability.
Assuming that plaintiff-appellant has basis for his quasi-delict claim, the same must be addressed still against Edward
Ty Brothers Corporation for the established facts show that the post-dated checks were issued by accused-appellee
not in payment of his personal obligations but of the corporation's. Moreover the fraud allegedly committed by accusedappellee was merely incidental to the contractual obligation, not an independent act which could serve as a source of
obligation. The cases cited by plaintiff-appellant, to illustrate that the existence of a contract does not preclude an action
on quasi-delict where the act that breaks the contract constitutes a quasi-delict, have no application because the acts
complained of therein were performed to break an existing contract, whereas the alleged fraud herein was committed
at the time of the creation of the contractual relationship and as an incident thereof.
As a sidelight, we would like to reiterate our ruling in People v.
Bayotas, 37 where we summarized the rules with respect to recovery of civil liability arising from crime and other
sources, to wit:
1. Death of the accused pending appeal of his conviction extinguishes his criminal liability as well as the civil liability
based solely thereon.
2. , the claim for civil liability survives notwithstanding the death of accused, if the same may also be predicated on a
source of obligation other than delict. Article 1157 of the Civil Code enumerates these other sources of obligation
from which the civil liability may arise as a result of the same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) . . .
e) Quasi-delicts.
3. Where the civil liability survives, as explained in Number 2 above, an action for recovery may be pursued but only
by way of filing a separate civil action and subject to Section 1, Rule III of the 1984 Rules on Criminal Procedures as
amended. This separate civil action may be enforced either against the executor/administrator or the estate of the
accused, depending on the source of obligation upon which the same is based as explained above.

4. Finally, the private offended party need not fear a forfeiture of his right to file this separate civil action by
prescription, in cases where during the prosecution of the criminal action and prior to its extinction, the privateoffended party instituted together therewith the civil action. In such case, the statute of limitations on the civil liability
is deemed interrupted during the pendency of the criminal case, conformably with provisions of Article 1155 of the
Civil Code, that should thereby avoid any apprehension on a possible privation of right by prescription. 38
In the case at bench, the acquittal of Ty Teck Suan and Siy Gui extinguished both their criminal and civil liability as it
is clear from the order acquitting them that the issuance of the checks in question did not constitute a violation of B.P.
Blg. 22. Consequently, no civil liability arising from the alleged delict may be awarded.

Nunal vs CA
Facts:
Frank and Mary had children, one of whom was Mary Lyon Martin. They also owned a parcel of land. They died. Luisa
Lyon Nual was in possession of the land. Emma Lyon de Leon in her behalf and as guardian ad litem of the minor
heirs of Frank and Mary (but not including Mary Lyon Martin) sued Luisa Lyon, now deceased and herein represented
by
her
heirs,
for
partition
and
accounting.
CFI ordered the partition but dismissed the complaint for accounting. Affirmed by the CA, with a finding that Mary Lyon
Martin was a child of Frank and Mary, but the order of partitioning did not include Mary Lyon Martin. Decision became
final
and
writ
of
execution
was
issued.
Thereafter, Mary Lyon Martin filed a motion to quash the order of execution with preliminary injunction. She contends
that not being a party to the above-entitled case her rights, interests, ownership and participation over the land should
not be affected by a judgment in the said case; that the order of execution is unenforceable insofar as her share, right,
ownership and participation is concerned, said share not having been brought within the Jurisdiction of the court a quo.
The petition filed by Mary Lyon Martin was eventually dismissed and directed the partition of the property among the
original party plaintiffs and defendants. On October 1, 1986, the petitioners filed a manifestation praying that the court
issue an order directing the partition of the property in consonance the decision dated December 17, 1974 of the trial
court the order of said court dated May 28, 1986. 10
Without ruling on the manifestation, the lower court issued an order directing the Board of Commissioners to
immediately partition the said property. On January 3, 1987, the private respondents filed motion for clarification as to
whether the partition of property is to be confined merely among the party plaintiffs and defendants, to the exclusion of
Mary Lyon Martin. Eventually, the lower court ordered the inclusion of Mary Lyon Martin in the partitioning as a coowner, invoking the fact that the earlier decision had a finding that Mary Lyon Martin is one of the children of Frank and
Mary. CA affirms.
Motion
for
reconsideration
of
the
aforesaid
order
was
denied
Issue:
whether of not the trial court may order the inclusion of Mary L. Martin as co-heir entitled to participate in the partition
of the property considering that she was neither a party plaintiff nor a party defendant in Civil Case No. 872 for partition

and accounting of the aforesaid property and that the decision rendered in said case has long become final and
executory.
Held:
Petitioners contend that the trial court's decision dated December 14, 1974 in Civil Case No. 872 ordering the partition
of the parcel of land covered by Transfer Certificate of Title No. 3141 among plaintiffs and defendants has long become
final and executory. Hence the trial court has no jurisdiction to issue the questioned Order dated January 9, 1987
ordering the Board of Commissioners to include Mary Lyon Martin to share in the partition of said property despite the
fact that she was not a party to the said case. Said Order, therefore, resulted in an amendment or modification of its
decision rendered in Civil Case No. 872.
The

Court

finds

merit.

In the ease of Manning International Corporation v. NLRC, 19 We held that ". . ., nothing is more settled in the law than
that when a final judgment becomes executory, it thereby becomes immutable and unalterable. The judgment may no
longer be modified in any respect, even if the modification is meant to correct what is perceived to be an erroneous
conclusion of fact or law, and regardless of whether the modification is attempted to be made by the Court rendering it
or by the highest Court of land. The only recognized exceptions are the correction of clerical errors or the making of
so-called nunc pro tunc entries which cause no prejudice to any party, and, of course, where the judgment is void."
Furthermore, "(a)ny amendment. or alteration which substantially affects a final and executory judgment is null and
void for lack of jurisdiction, including the entire proceedings held for that purpose." 20
In the case at bar, the decision of the trial court in Civil Case No. 872 has become final and executory. Thus, upon its
finality, the trial judge lost his jurisdiction over the case. Consequently, any modification that he would make, as in this
case, the inclusion of Mary Lyon Martin would be in excess of his authority.
The remedy of Mary Lyon Martin is to file an independent suit against the parties in Civil Case No. 872 and all other
heirs for her share in the subject property, in order that all the parties in interest can prove their respective claims.

Robles vs CA
Facts:
petitioner Aida Robles is the granddaughter of the deceased Eligio A. Robles and Melania Cuaycong. Melania as
surviving spouse executed a general power of attorney in favor of Francisco (a son) to alienate and encumber the
disputed properties, reciting therein that the signatories are the owners of the properties, although they were not
joined by petitioner Aida who is also an heir of the deceaseds estate to the extent of 1/44.
Francisco by virtue of the power of attorney executed a private deed of sale of the properties in favor of respondent
Aniceto B. Parreo
Aida Robles as plaintiff filed a complaint against respondents Parreo and Register of Deeds praying for cancellation
of the titles issued in respondent Parreos name and that she be allowed, as a 1/44 coheir and co-owner of the
properties to redeem the same from said respondent vendee.

The lower court dismissed the complaint. On appeal, respondent appellate court held that the vendors (the other coheirs) were indispensable parties and remanded the case to the lower court so that the petitioner can be required to
implead the indispensable and necessary parties in the case and for subsequent hearing for the issuance of a new
judgment.
Held:
PARTIES; INDISPENSABLE PARTIES; VENDORS-COHEIRS NOT INDISPENSABLE PARTIES IN ACTION FOR
CANCELLATION OF VENDEES TITLE AND FOR LEGAL REDEMPTION FILED BY EXCLUDED HEIR
The Supreme Court ruled that petitioners co-heirs who sold the properties to respondent-vendee are not indispensable
parties and the action filed by the petitioner could be completely adjudicated even without them, much more so with
regard to her action as co-heir for legal redemption of the properties from said respondent-vendee under Article 1088
of the Civil Code.
Petitioner's action for cancellation of titles was in reality not one "for cancellation of (respondent's) ownership of account
disputed property sold to him by account sellers" as perceived by respondent court but rather one questioning account
validity of respondent Register of Deeds' issuing account titles to account whole of account properties in disregard of
petitioner's 1/44 share therein and against existing laws and regulations. As stated in account petition, 1 respondent
Register of Deeds was impleaded "because, by his obvious negligence or act of indiscretion, he unduly accommodated
respondent Parreno to cure a legal defect or legal deficiency of account documents covering account sale, via a shortcut method, by allowing account General Power of Attorney to be registered as a 'Declaration of Heirship' (which, in
effect. left out account petitioner and transferred ownership of account disputed property in 'totality' to respondent
Parreno instead of requiring account presentation of a separate and true 'Declaration of Heirship' executed by all
account heirs.
Petitioner's principal action is really therefore one for legal redemption under Article 1088 of account Civil Code. 4
Insofar as account exercise of such right of redemption is concerned, petitioner as a co-heir and respondent Parreno
as account buyer are account only indispensable parties to account exclusion of account seners-coheirs This was
expressly so ruled by account Court in Castillo vs. Samonte, 5 where we held that "the trial court had no obligation to
order account inclusion of account vendor either as a party plaintiff or party defendant in account case, because while
he may be a necessary party, still he is not indispensable in account sense that account matter before it could not be
completely adjudicated without him. The deed of sale in favor of appellant clearly states that what is being sold is an
undivided 1/5 portion of account land jointly owned by account vendor and his brothers and nephew, The vendeeappellant is, therefore, conclusively presumed to know account law that under such circumstances, account co- heirs
are entitled to redeem account portion being sold within 30 days from notice in writing of account sale, under Article
1088 of account New civil Code. In effect, he is a vendee with notice of account right of redemption by account vendor's
co-heirs," and that "moreover, if vendee-appellant believed he had a claim against account vendor by reason of account
warranty, it was his duty to have filed a third-party complaint against account latter ...

(Remedy of Parreo)
REMEDIES OF VENDEE. That the vendors-coheirs have a right to justify the legality of their sale to respondent to
avoid being held liable for damages or possible criminal responsibility if the sale should be adjudged invalid does not
make them indispensable parties without whom the excluded heirs action questioning the validity of the issuance of

the titles for the whole of the properties cannot be completely adjudicated. The vendee can call the vendors-coheirs
as witnesses on his behalf or implead them as third-parties defendants in a third-party complaint to justify the sale of
the properties or else answer to his by way of damages or he can file a separate action against said vendors-coheirs
by way of enforcing the warranty made by them as vendors of the properties should the contract of sale be adjudged
invalid.

Imson vs CA
Facts:
The case at bench arose from a vehicular collision involving petitioner's Toyota Corolla and a Hino diesel truck
registered under the names of private respondents FNCB Finance Corporation and Holiday Hills Stock and Breeding
Farm Corporation. The collision seriously injured petitioner and totally wrecked his car.
petitioner filed with the RTC Baguio City a Complaint for Damages, Sued were private respondents as registered
owners of the truck; truck driver Felix B. Calip, Jr.; the beneficial owners of the truck, Gorgonio Co Adarme, Felisa T.
Co (also known as Felisa Tan), and Cirilia Chua Siok Bieng, and the truck insurer, Western Guaranty Corporation.
The Complaint prayed that defendants be ordered to pay, jointly and severally, two hundred seventy thousand pesos
(P270,000.00) as compensatory damages, fifty thousand pesos (P50,000.00) each as moral and exemplary
damages, and attorney's fees, litigation expenses, and cost of suit. 8
Defendants driver and beneficial owners failed to answer and were declared in default. however, petitioner and
defendant insurer, entered into a compromise agreement and the claim against him was withdrawn.
The settlement between the insurer and the petitioner contained that this compromise agreement shall in no way
waive nor prejudice plaintiffs (herein petitioner's) rights to proceed against the other defendants with respect the
remainder of his claims;
Registered owners now seek dismissal of the claims against them as well. It argued that since they are all
indispensable parties under a common cause of action, the dismissal of the case against defendant insurer must
result in the dismissal of the suit against all of them which was denied by the trial court. They filed with the CA which
reversed the RTCs decision citing that:
The petitioner (herein private respondent Holiday Hills Stock and Breeding Farm Corporation) cites the doctrine laid
down in Lim Tanhu v. Hon. Ramolete, 66 SCRA 425, as applied later in Co v. Acosta, 134 SCRA 185, to support its
averment that the court a quo gravely abused its discretion in refusing to dismiss the case.
Essentially, the doctrine adverted to essays that in a common cause of action where all the defendants are
indispensable parties, the court's power to act is integral and cannot be split, such that it cannot relieve any of them
and at the same time render judgment against the rest.
Hence, this petition:

Issue:
WON the respondent are indispensable parties
WON there is a common cause of action against defendants herein
Held:
There is merit to the petition.
In sum, Lim Tanhu states that where a complaint alleges a common cause of action against defendants who are all
indispensable parties to the case, its dismissal against any of them by virtue of a compromise agreement with the
plaintiff necessarily results in the dismissal of the case against the other defendants, including those in default. The
ruling is rooted on the rationale that the court's power to act in a case involving a common cause of action against
indispensable parties "is integral and cannot be split such that it cannot relieve any of them and at the same time
render judgment against the rest. 10
For Lim Tanhu to apply to the case at bench, it must be established that: (1) petitioner has common cause of action
against private respondents and the other defendants in Civil Case No. 248-R; and (2) all the defendants are
indispensable parties to the case.
Cause of action is the delict or wrong by which the right of the plaintiff is violated by the defendant. The question as
to whether a plaintiff has a cause of action is determined by the averments in the pleadings pertaining to the acts of
the defendant. Whether such acts give him a right of action is determined by substantive law.
In the case at bench, it is clear that petitioner has different and separate causes of action against the defendants in
the case. The allegations in the Complaint show that petitioner seeks to recover from the truck driver for his wrong
which caused injury to petitioner and his car. The cause of action against him is based on quasi-delict under Article
2176 of the New Civil Code. Quasi-delict, too, is the basis of the cause of action against defendants beneficial and
registered owners. But in their case, it is Article 2180 of the same Code which governs the rights of the parties.
However, with respect to defendant Western Guaranty Corporation, petitioner's cause of action is based on contract.
He seeks to recover from the insurer on the basis of the third party liability clause of its insurance contract with the
owners of the truck.
But this is not all. Defendants in Civil Case No. 248-R are not all indispensable parties. An indispensable
party is one whose interest will be affected by the court's action in the litigation, and without whom no final
determination of the case can be had.
Conversely, a party is not indispensable to the suit if his interest in the controversy or subject matter is distinct and
divisible from the interest of the other parties and will not necessarily be prejudiced by a judgment which does
complete justice to the parties in court.
It is true that all of petitioner's claims in Civil Case No. 248-R is premised on the wrong committed by defendant truck
driver. Concededly, the truck driver is an indispensable party to the suit. The other defendants, however,
cannot be categorized as indispensable parties. They are merely proper parties to the case. Proper parties
have been described as parties whose presence is necessary in order to adjudicate the whole controversy,
but whose interests are so far separable that a final decree can be made in their absence without affecting
them. It is easy to see that if any of them had not been impleaded as defendant, the case would still proceed without
prejudicing the party not impleaded. Thus, if petitioner did not sue Western Guaranty Corporation, the omission

would not cause the dismissal of the suit against the other defendants. Even without the insurer, the trial court would
not lose its competency to act completely and validly on the damage suit. The insurer, clearly, is not an indispensable
party in Civil Case No. 248-R.

De la rama vs National development co

Facts:
De la Rama entered into an agreement with NDC for the management of four "Donya" vessels
with an option to buy to be exercised by the former on the fifth year. Failure to exercise the option
will
give
rise
to
the
right
of
De
la
Rama
to
reimbursement.
In GR L-8784, following the action of De la Rama to compel NDc to sell to it three of the four
vessels, the SC ruled that NDC had the right to cancel the agreement as provided in the contract
hence the option was declared ineffective. Later, De la Rama filed a supplemental pleading which
initiated this second case, demanding that NDC cease in using the names of the three vessels,
reimbursement, earned commission, and damages. The supplemental pleasing was opposed on the
ground that De la Rama had no right of action and as such cannot file a supplemental pleading.
However, said pleading was admitted by the court. The court ordered the appointment of a Board
of Accountants since the case involved questions of accounting. A report by the chairman was
submitted stating that comments and suggestions were submitted by both the NDC and the De la
Rama representatives. But the NDC representative never really submitted a comment. The report
further states that a copy of the report was furnished to both representatives and that NDC should
be given the opportunity to submit further comments directly to the court. Without the required
notice to the parties and hearing of the chairman's report under Rule 34, the court rendered the
assailed decision in favor of De la Rama. NDC appealed without first submitting a motion for
reconsideration for failure of the court to give it an opportunity to submit its objections to the
report.
Issues:
(1)
WON
the
supplemental
pleading
was
improperly
admitted?
(2) WON the court decided on the report without giving NDC the opportunity to submit its
objections?
Held: (1) Yes. Sec. 479 of the Phillips Code Pleading states that a supplemental complaint may be
allowed if new facts relevant and material to the original action arise after the action has begun,
subject to terms of notice and costs as the court may prescribe. The causes of action in the
supplemental pleading are not relevant and material to the original action in the first case. The
causes actions in the supplemental pleading arose out of De la Rama's failure to action its option.
They were alternatives which could have been stated in the first case. The right to reimbursement
could not be joined together in the first case because the right to enforce the option to buy excludes
the
former.
However, the supplemental pleading must not be dismissed in the interests of speedy
administration of justice. Hence, the supplemental pleading was ordered enrolled as a new action
subject to De la Rama's payment of the required registration fees (docket fees).
(2) Yes. The chairman clearly recommended to the court an opportunity in favor of NDC to submit

its objections directly to the court. In contravention of said recommendation, it violated Sec 10 and
11 of Rule 34 and the rgith to be heard and due process. The failure of NDC to file for
reconsideration does not amount to waiver because it was denied the right to be heard and the same
was assigned as an error in the timely perfected appeal. Thus, the case must be remanded to the
lower court with instructions to allow an ooportunity to be heard in favor of NDC.

Caseas vs Rosales
Facts:
Araas was the vendee in a deed of sale with vendor spouses jose Rosales and Concepcion
Sanchez which provided that the actual transfer of the subject parcel Of land was to be made
only on Feb 18, 1941. Aranas assigned his rights in the contract to Casenas. Upon the arrival of
the stipulated period, the spouses failed to transfer the land. hence a complaint for specific
performance and the enforcement of a right under a deed of sale plus damages was filed. After
defendants therein filed an answer but before trial, counsel for plaintiffs notified the court that
plaintiff Aranas and defendant Rosales had both died. The court then ordered Agustin Casenas to
filed an amended complaint, subsituting the parties. this he failed to do. Hence, the court
dismissed the case. No appeal was taken, thereby making the order to dismiss final. Agustin filed
for quieting and reconveyance of title plus damages against the heirs of Rosales, over the same
subject parcel of land. The compaint presented the same allegations and causes of actions. A
motion to dismiss was filed on the grounds of res judicata, prescription, lack of cause of action,
failure to include indispensable parties and that the subject contract was void ab initio. The lower
court granted the motion on the first three grounds aforestated. The court found that no cause of
action exists because plaintiff has yet to acquire title to the land. Hence, appeal.
Issue: WON amendment of complaint is the proper course of action should parties to a case die?
Held: No. Sec 17, Rule 3 provides that the court, upon death of a party and the claim is not
extinguished, shall order, upon proper notice, the legal representative to appear and represent the
deceased. In Barrameda vs Barbara, the Court held that an order to amend the complaint prior to
the proper substitution of parties is void and likewise, the order dismissing the complaint is void.
should the case continue without substitution, it is defective for lack jurisdiction, as held in
Ferriera et al. vs Gonzales. In the case, proper notice was rendered. however, instead of ordering
the substitution, the lower court order an amendment of the complaint. Hence, since the order to
amend was void, the dismissal of the complaint is likewise void. Being void, it cannot bar the
present complaint.
A cause of action was sufficiently alleged in the complaint.
The Court deffered from ruling on the issue of prescription as the case involves an alleged trust
relationship.

Order of dismissal set aside and Case remanded to the lower court.
(In this case, what the court should have ordered is substitution of parties and not to amend
the complaint. )

Vda. de Dela Cruz vs CA

Facts:
Petitioners filed for ejectment and collection of unpaid rentals due to failure to pay in full and
refusal to vacate the landholding against Jose and 114 other tenants with the Court of Agrarian
Relations. Before the termination of the case, Jose died and no substitution was effected. The
trial court then ruled in favor of petitioners. It was elevated to the SC on certiorari but was
dismissed for failure of petitioners to file their brief. Upon an order of execution, the conjugal
properties of the deceased Jose were sold at public auction for the award of damages. Petitioners
were the highest bidders. Heirs of Jose filed a motion to substitute the deceased and to set the
decision aside. Substitution was granted for "whatever proceedings may still be allowed" but the
decision was not set aside. MOR denied. They appealed to the CA. The CA ruled in favor of
respondents. MOR of petitioners denied. Hence, this petition.
Issue: WON substitution should have been ordered?
Held: Yes. Sec 17, Rule 3, as enunciated in different cases, imposes a duty upon the court to
order the substitution of a legal representative in place of a deceased party upon due notice to the
court of the death. Failure to do so amounts to lack of jurisdiction due to the right to due
process. In the case at bar, the failure of the trial court to order the substitution renders the
subsequent orders void.
Even after judgment, substitution should still be ordered since proceedings may still be taken like
execution in order to allow the legal representatives to appear. In the case, CA found that the
representatives were not notified of the decision and of the auction sale. This finding of a fact is
conclusive upon the SC, except when, the conclusion is based entirely on speculation, the
inference manifestly mistaken, absurd, or impossible, there is grave abuse of discretion, the
judgment is based on a misapprehension of the facts, or that the CA went beyond the issues of
the case. None of the exceptions applies to the case.
No res judicata exists since jurisdiction was lacking in the lower court.
Affirmed.

Mina vs Pacson
Facts:
Plaintiffs are the illegitimate children of Joaquin Mina with Pilar Lazo while the Mina was married
to Pacson. Joaquin, in two deeds of sale, sold parcels of land to defendant spouses Medina and
Mina with the conformity of Pacson. Joaquin died, leaving Pacson as his only heir. In the complaint
filed with the lower court, plaintiffs assert their illegitimate paternity to Joaquin Mina and that the
two deeds of sale were executed fraudulently because at the time, Joaquin was ill and didn't know
what he was doing. A motion to dismiss was filed by defendants alleging res judicata since a
similar action was previously presented, with the same causes of action and the same prayer, except
for the declaration of filiation. The first case produced an order, ordering the consolidation of the
different cases to avoid multiplicity of suits and the amendment of the complaint since Pacson and
the other intestate heirs or necessary parties were not made parties thereto and failure to amend
will lead to the dismissal of the case. The plaintiffs did fail to amend and hence the case was
dismissed. The motion to dismiss in the second case was granted. MOR denied. hence, appeal.
Issues: (1) WON dismissal of the first case was at the indirect instance of the plaintiffs through
inaction
or
omission?
(2) WON the negligence of the plaintiff's lawyer should excuse the plaintiffs from suffering from
the
dismissal
of
the
case?
(3)
WON
the
parties
in
both
cases
are
identical?
held: (1) No. The express warning given by the court in its order leads to the conclusion that
plaintiffs flatly refused to comply with the express mandate, rather than mere inaction. Under Sec
3, Rule 130, the case may be dismissed upon defendant's or the court's own motion where plaintiff
fails to appear at the time of trial or to prosecute his action for an unreasonable length of time or
to comply with the Rules of any order of the court. Such dismissal shall be deemed an
adjudication on the merits, unless otherwise provided. As held in Garchitorena et al vs De Los
Santos, when the court orders that an indispensable party be impleaded, and the party ordered fails
to
comply,
such
a
refusal
or
failure
is
a
ground
for
dismissal.
(2) No. It was found that some degree of negligence is imputable to the plaintiffs since they lacked
ordinary interest in the case filed as to prompt them to secure information from their lawyer. Upon
receipt of the information, they could have complied with the order. Even assuming that it was the
lawyer's fault alone, still it was held that a client is bound by the action of his lawyer.
(3) No. In the first case, Pacson was not included as a defendant and the issue of filiation was not
raised. Hence, insofar as these two instances is concerned, the present complaint is not barred. It
is
however
barred
as
to
the
other
issues.
Modified.

NUGUID VDA. DE HABERER v CA, MARTINEZ, ET.AL

Facts:

This is a petition for review by way of appeal to the SC from the decision of the CA which
dismissed the appeal of the petitioner herein (deceased) and order all pleadings filed in said cases after
the death of said appellant stricken off the records, for having been issued with grave error of law if not with grave
abuse of discretion and remands the case for proper proceedings and determination of the appeal on the merits.
The deceased petitioner herein filed with the RTC complaints for recovery of possession of her land, alleging that
private respondents had entered the land and built houses therein. The RTC dismissed the case. On motion of the
petitioner, the cases were reopened and retried on the ground of newly discovered evidence. The RTC upheld its
previous decision, so petitioner appealed to the CA which was also dismissed on the ground that it was filed out of
time. The case reached the SC which ruled that the same should be remanded to the CA for having been filed on time.
Pending the submission of brief in CA, the petitioner herein died, and the court was subsequently notified therefor and
asked for the suspension of the running of the period within which to file the brief pending the appointment of an
executor of the estate left by their client in the Court of First Instance of Quezon City where a petition for the probate
of the alleged will of the deceased had been filed.
The respondents contended that the lawyers had no longer any legal standing since the attorney-client relationship
was automatically severed upon the death of the petitioner, and prayed for the dismissal of the case for failure to
prosecute. The CA did not act on the request of the petitioner, and so the lawyers of the petitioner again filed another
motion to either grant extension or to suspend the running of the period. This remain unacted.
The CA however, denied the request and dismissed the appeal on the ground that the heirs of the deceased plaintiff
might not hire the lawyers representing herein, but the CA preserved the rights of the heirs who are to be determined
in another proceeding to continue with the appeal.

Held:
The CA committed error when it ruled that the case should be dismissed pending the determination of the heirs of the
deceased plaintiff. In the case at bar, the counsel properly informed respondent court of the death of the appellant and
sought suspension of the proceedings and of the period for filing appeliant's brief pending the appointment of the
executor of the deceased's estate in the proper probate proceedings filed with the Court of First Instance of Quezon
City. Section 17, Rule 3 of the Rules of Court 4 sets the rule on substitution of parties in case of death of any of the
parties. Under the Rule, it is the court that is called upon, after notice of a party's death and the claim is not thereby
extinguished, to order upon proper notice the legal representative of the deceased to appear within a period of 30 days
or such tlnie as it may grant. Since no administrator of the estate of the deceased appellant had yet been appointed as
the same was still pending determination in the Court of First Instance of Quezon City, the motion of the deceased's
counsel for the suspension of the running of the period within which to file appellant's brief was well-taken. More, under
the Rule, it should have set a period for the substitution of the deceased party with her legal representative or heirs,
failing which, the court is called upon to order the opposing party to procure the appointment of a legal representative
of the deceased at the cost of the deceased's estate, and such representative shall then "immediately appear for and
on behalf of the interest of the deceased."

Respondent court gravely erred in not following the Rule and requiring the appearance of the legal representative of
the deceased and instead dismissing the appeal of the deceased who yet had to be substituted in the pending appeal.
Thus, it has been held that when a party dies in an action that survives, and no order is issued by the court for
the appearance of the legal representative or of the heirs of the deceased in substitution of the deceased, and
as a matter of fact no such substitution has ever been effected, the trial held by the court without such legal
representatives or heirs and the judgment rendered after such trial are null and void because the court
acquired no jurisdiction over the persons of the legal representatives or of the heirs upon whom the trial and
the judgment would be binding.
Respondent court therefore erred in ruling that since upon the demise of the party-appellant, the attorney-client
relationship between her and her counsels "was automatically severed and terminated," whatever pleadings filed by
said counsel with it after the death of said appellant "are mere scraps of paper." 6 If at all, due to said death on May 25,
1975 and severance of the attorney-client relationship, further proceedings and specifically the running of the original
45-day period for filing the appellnt's brief should be legally deemed as having been automatically suspended, until the
proper substitution of the deceased appellant by her executor or administrator or her heirs shall have been effected
within the time set by respondent court pursuant to the cited Rule.
What should guide judicial action is the principle that a party litigant is to be given the fullest opportunity to establish
the merits of his complaint or defense rather than for him to lose life, liberty, honor or property on technicalities. 8 A
liberal, rather than a strict and inflexible adherence to the Rules, is justified not only because appellant (in this case,
her estate and/or heirs) should be given every opportunity to be heard but also because no substantial injury or
prejudice can well be caused to the adverse parties principally, since they are in actual possession of the disputed
land.
The failure of an appellant to file his brief within the time prescribed does not have the effect of dismissing the appeal
automatically. 14 Rather, the Court of Appeals has the discretion to dismiss or not to dismiss appellant's appeal, which
discretion must be a sound one to be exercised in accordance with the tenets of justice and fair play having in mind
the circumstances obtaining in each case. l5
Paraphrasing what the Court stressed in the leading case of Berkenkotter vs. Court of Appeals, 16 a reading of the
appellant's brief discloses that petitioners-appellants have a prima facie meritorious case which should be properly
determined on the merits and "the element of rigidity should not be affixed to procedural concepts and made to cover
the matter," 17 for to dismiss the appeal would not serve the ends of justice.

G.R. No. 121510 November 23, 1995

FABIANA C. VDA. DE SALAZAR, petitioner,
vs.
COURT OF APPEALS, PRIMITIVO NEPOMUCENO and EMERENCIANA
NEPOMUCENO, respondents.
HERMOSISIMA, JR., J.:

Facts:

Private respondents Primitive Nepomuceno and Emerenciana Nepomuceno filed separate

complaints with the then Court of Agrarian Relations for ejectment on the ground of personal
cultivation and conversion of land for useful non-agricultural purposes against petitioner's
deceased husband, Benjamin Salazar. The trial court rendered its joint decision in favor of
private respondents. An appeal was interposed in the name of petitioner's deceased husband. The
Court of Appeals rejected the appeal.
Almost a year after, a petition for annulment of judgment was filed with the CA. Herein
petitioner assailed the same trial court decision as having been rendered by a court that did not
have jurisdiction over her and the other heirs of her deceased husband because notwithstanding
the fact that her husband had already died on October 3, 1991, the trial court still proceeded to
render its decision on August 23, 1993 without effecting the substitution of heirs in accordance
with Section 17, Rule 3, of the Rules of Court thereby depriving her of her day in court.
The petition was dismissed. MOR denied. Hence, petition.
Issue:
WON failure to substitute a deceased party's legal representative renders a judgment
jurisdictionally infirm?
held:
Yes. The general rule is that a substitution of parties must be order upon the death of a party
prior to termination of the case. However, in the case at bar, the CA correctly ruled when it said
that formal substitution is not required in the case since the heirs themselves voluntarily
appeared. The SC agreed with the CA when the latter disected the procedural requisite into its
formal, i.e. the change of the caption of the case, and substantive aspect, i.e. the notice to the
heirs or legal representatives that they will be affected by the outcome of the case and hence
must participate therein to protect their interests. The CA held that compliance with the
substantive aspect, even without the formal aspect, satisfies substantial compliance with the
requirements of the rule since the purpose of the rule is to afford a party his/her day in court.
Participation by the heirs in the case is inferred from the continued representation of the lawyer,
the appearance of the wife as a witness in court, the petition for annulment of judgment was filed
only after a year the decision in the appeal was rendered, and there is jurisdiction by estoppel
over the person of the heirs due to their appearance.
A case for ejectment is not extinguished by death of a party because it is a real action principally
concerned with property rights, where injury to a person is merely incidental. As such, it affects
not only the defendants but also persons who derive their right of possession from the defendant.
Dismissed.