Civil Procedure Digest

A2010

Prof. Victoria A.

Avena
JUDICIAL POWER
CONSTITUTIONAL PROTECTION
PRESCRIBED JURISDICTION i.e. OVER
SUBJECT MATTER, BY LAW
SINDICO V DIAZ
440 SCRA 50
CARPIO-MORALES; October 1, 2004
NATURE
Petition for review on certiorari of a decision of the
RTC of Iloilo
FACTS
-Virgilio Sindico, is the registered owner of a parcel of
land, which he let the spouses Eulalio and Concordia
Sombrea cultivate, without him sharing in the
produce, as his "assistance in the education of his
cousins" including defendant Felipe Sombrea
-After the death of the Eulalio Sombrea, Felipe
continued to cultivate the lot
-On June 20, 1993, Sindico requested Felipes wife for
the return of the possession of the lot but the latter
requested time to advise her husband
-Repeated demands for the return of the possession
of the lot remained unheeded, forcing Sindico to file
a civil case before the RTC against the spouses
Sombrea for Accion Reivindicatoria with Preliminary
Mandatory Injunction
-The defendants filed a Motion to Dismiss, alleging
that the RTC has no jurisdiction over their person and
that as the subject matter of the case is an
agricultural land which is covered by the
Comprehensive Agrarian Reform Program (CARP) of
the government, the case is within the exclusive
original jurisdiction of the DARAB in accordance with
Section 50 of Republic Act 6657 (THE
COMPREHENSIVE AGRARIAN REFORM LAW OF 1988)
-The plaintiff filed an Opposition alleging that the
case does not involve an agrarian dispute, there
being no tenancy relationship or leasehold
agreement with the defendants.
-The RTC of Iloilo granted the Motion to Dismiss
-As their Motion for Reconsideration was denied by
the trial court, the plaintiffs, herein petitioners,
lodged the present Petition for Review on Certiorari

ISSUE
WON
the
Department
of
Agrarian
Reform
Adjudication Board (DARAB) has original and
exclusive jurisdiction over the case at bar
HELD
No.
Ratio. Jurisdiction over the subject matter is
determined by the allegations of the complaint. It is
not affected by the pleas set up by the defendant in
his answer or in a motion to dismiss, otherwise,
jurisdiction would be dependent on his whims.
Reasoning.The allegations in petitioners complaint
show that the action is one for recovery of
possession, not one which involves an agrarian
dispute.
-Section 3(d) of RA 6657 or the CARP Law defines
"agrarian dispute" over which the DARAB has
exclusive original jurisdiction as:
(d)
any
controversy
relating
to
tenurial
arrangements,
whether
leasehold,
tenancy,
stewardship or otherwise, over lands devoted to
agriculture,
including
disputes
concerning
farmworkers associations or representation of
persons in negotiating, fixing, maintaining, changing
or seeking to arrange terms or conditions of such
tenurial arrangements including any controversy
relating to compensation of lands acquired under this
Act and other terms and conditions of transfer of
ownership from landowners to farmworkers, tenants
and other agrarian reform beneficiaries, whether the
disputants stand in the proximate relation of farm
operator and beneficiary, landowner and tenant, or
lessor and lessee.
-Since petitioners action is one for recovery of
possession and does not involve an agrarian
dispute, the RTC has jurisdiction over it.
Disposition Petition is granted.

ground that the court had no jurisdiction of the

subject matter
FACTS
- On Dec 1907, Mla Railroad Co. began an action in
CFI Tarlac for the condemnation of 69,910 sq. m. real
estate located in Tarlac. This is for construction of a
railroad line "from Paniqui to Tayug in Tarlac," as
authorized by law.
- Before beginning the action, Mla Railroad had
caused to be made a thorough search in the Office of
the Registry of Property and of the Tax where the
lands sought to be condemned were located and to
whom they belonged. As a result of such
investigations, it alleged that the lands in question
were located in Tarlac.
- After filing and duly serving the complaint, the
plaintiff, pursuant to law and pending final
determination of the action, took possession of and
occupied the lands described in the complaint,
building its line and putting the same in operation.
- On Oct 4, Mla Railroad gave notice to the
defendants that on Oct. 9, a motion would be made
to the court to dismiss the action upon the ground
that the court had no jurisdiction of the subject
matter, it having just been ascertained by the
plaintiff that the land sought to be condemned was
situated in the Province of Nueva Ecija, instead of the
Province of Tarlac, as alleged in the complaint. This
motion was heard and, after due consideration, the
trial court dismissed the action upon the ground
presented by the plaintiff.
ISSUE/S
1. WON CFI Tarlac has power and authority to take
cognizance of condemnation of real estate located in
another province
2. WON Sec. 3771 of the Code of Civil Procedure and
1

JURISDICTION DISTINGUISHED FROM

VENUE
MANILA RAILROAD V ATTY. GENERAL
20 PHIL 523
MORELAND; December 11, 1911
NATURE
Appeal from CFI Tarlacs judgment dismissing the
action before it on motion of the plaintiff upon the

SEC. 377. Venue of actions. Actions to confirm title to real

estate, or to secure a partition of real estate, or to cancel clouds,
or remove doubts from the title to real estate, or to obtain
possession of real estate, or to recover damages for injuries to
real estate, or to establish any interest, right, or title in or to real
estate, or actions for the condemnation of real estate for public
use, shall be brought in the province were the lands, or some part
thereof, is situated; actions against executors, administrators,
and guardians touching the performance of their official duties,
and actions for account and settlement by them, and actions for
the distribution of the estates of deceased persons among the
heirs and distributes, and actions for the payment of legacies,
shall be brought in the province in which the will was admitted to
probate, or letters of administration were granted, or the
guardian was appointed. And all actions not herein otherwise
provided for may be brought in any province where the

Civil Procedure Digest

A2010

Act. No. 1258 are applicable and so the CFI has no

jurisdiction

- Procedure does not alter or change that power or

authority; it simply directs the manner in which it
shall be fully and justly exercised. To be sure, in
certain cases, if that power is not exercised in
conformity with the provisions of the procedural law,
purely, the court attempting to exercise it loses the
power to exercise it legally. This does not mean that
it loses jurisdiction of the subject matter. It means
simply that he may thereby lose jurisdiction of the
person or that the judgment may thereby be
rendered defective for lack of something essential to
sustain it. There is, of course, an important
distinction between person and subject matter are
both conferred by law. As to the subject matter,
nothing can change the jurisdiction of the court over
diminish it or dictate when it shall attach or when it
shall be removed. That is a matter of legislative
enactment which none but the legislature may
change. On the other hand, the jurisdiction of the
court over the person is, in some instances, made to
defend on the consent or objection, on the acts or
omissions of the parties or any of them. Jurisdiction
over the person, however, may be conferred by
consent, expressly or impliedly given, or it may, by
an objection, be prevented from attaching or
removed after it has attached.

Prof. Victoria A.

Avena
HELD
1.YES
Ratio Sections 55 and 562 of Act No. 136 of the
Philippine Commission confer perfect and complete
jurisdiction upon the CFI of these Islands with respect
to real estate in the Philippine Islands. Such
jurisdiction is not made to depend upon locality.
There is no suggestion of limitation. The jurisdiction
is universal. It is nowhere suggested, much less
provided, that a CFI of one province, regularly sitting
in said province, may not under certain conditions
take cognizance of an action arising in another
province or of an action relating to real estate
located outside of the boundaries of the province to
which it may at the time be assigned.
JURISDICTION OVER PERSON OF THE PLAINTIFF
defendant or any necessary party defendant may reside or be
found, or in any province where the plaintiff, except in cases
were other special provision is made in this Code. In case neither
the plaintiff nor the defendant resides within the Philippine
Islands and the action is brought to seize or obtain title to
property of the defendant within the Philippine Islands and the
action is brought to seize or obtain title to property of the
defendant within the Philippine Islands, the action shall be
brought in the province where the property which the plaintiff
seeks to seize or to obtain title to is situated or is found:
Provided, that in an action for the foreclosure of a mortgage upon
real estate, when the service upon the defendant is not personal,
but is by publication, in accordance with law, the action must be
brought in the province where the land lies. And in all cases
process may issue from the court in which an action or special
proceeding is pending, to be enforced in any province to bring in
defendants and to enforce all orders and decrees of the court.
The failure of a defendant to object to the venue of the action at
the time of entering his appearance in the action shall be
deemed a waiver on his part of all objection to the place or
tribunal in which the action is brought, except in the actions
referred to in the first sixteen lines of this section relating to real
estate, and actions against executors, administrators, and
guardians, and for the distribution of estates and payment of
legacies.

SEC. 55. Jurisdiction of Courts of First Instance. The

jurisdiction of Courts of First Instance shall be of two kinds:
1. Original; and 2. Appellate.
SEC. 56. Its original jurisdiction. Courts of First Instance
shall have original jurisdiction:
2. In all civil actions which involve the title to or possession
of real property, or any interest therein, or the legality of any
tax, impost, or assessment, except actions of forcible entry
into, and detainer of lands or buildings, original jurisdiction
of which is by this Act conferred upon courts of justice of the
peace.
2

2. NO
Ratio Sec. 377 contains no express inhibition against
the court. The prohibition provided therein is clearly
directed against the one who begins the action and
lays the venue. The court, before the action is
commenced, has nothing to do with it either. The
plaintiff does both. Only when that is done does the
section begin to operate effectively so far as the
court is concerned. The prohibition is not a limitation
on the power of the court but on the rights of the
plaintiff. It establishes a relation not between the
court and the subject, but between the plaintiff and
the defendant. It relates not to jurisdiction but to
trial. It simply gives to defendant the unqualified
right, if he desires it, to have the trial take place
where his land lies and where, probably, all of his
witnesses live. Its object is to secure to him a
convenient trial.
JURISDICTION OVER PERSON OF THE PLAINTIFF
- That it had jurisdiction of the persons of all the
parties is indisputable. That jurisdiction was obtained
not only by the usual course of practice - that is, by
the process of the court - but also by consent
expressly given, is apparent. The plaintiff submitted

itself to the jurisdiction by beginning the action. The

defendants are now in this court asking that the
action be not dismissed but continued. They are not
only nor objecting to the jurisdiction of the court but,
rather, are here on this appeal for the purpose of
maintaining that very jurisdiction over them. Nor is
the plaintiff in any position to asked for favors. It is
clearly guilty of gross negligence in the allegations of
its complaint, if the land does not lie in Tarlac as it
now asserts.
*DISTINGUISHED FROM VENUE
- The fact that such a provision appears in the
procedural law at once raises a strong presumption
that it has nothing to do with the jurisdiction of the
court over the subject matter. It becomes merely a
matter of method, of convenience to the parties
litigant. If their interests are best subserved by
bringing in the Court Instance of the city of Manila an
action affecting lands in the Province of Ilocos Norte,
there is no controlling reason why such a course
should not be followed. The matter is, under the law,
entirely within the control of either party. The
plaintiff's interests select the venue. If such selection
is not in accordance with section 377, the defendant
may make timely objection and, as a result, the
venue is changed to meet the requirements of the
law.
- Section 377 of the Code of Civil Procedure is not
applicable to actions by railroad corporations to
condemn lands; and that, while with the consent of
defendants express or implied the venue may be laid
and the action tried in any province selected by the
plaintiff nevertheless the defendants whose lands lie
in one province, or any one of such defendants, may,
by timely application to the court, require the venue
as to their, or, if one defendant, his, lands to be
changed to the province where their or his lands lie.
In such case the action as to all of the defendants not
objecting would continue in the province where
originally begun. It would be severed as to the
objecting defendants and ordered continued before
the court of the appropriate province or provinces.
While we are of that opinion and so hold it can not
affect the decision in the case before us for the
reason that the defendants are not objecting to
the venue and are not asking for a change
thereof. They have not only expressly submitted
themselves to the jurisdiction of the court but are
here asking that that jurisdiction be maintained
against the efforts of the plaintiff to remove it.

Civil Procedure Digest

A2010

Prof. Victoria A.

Avena
Disposition The judgment must be REVERSED and
the case REMANDED to the trial court with direction
to proceed with the action according to law.

JURISDITION VOID
ABBAIN V. CHUA
22 SCRA 748
Sanchez; February 26, 1968
NATURE
Direct appeal to the SC
FACTS
March 12, 1958: Tongham Chua commenced
suit for forcible entry and illegal detainer against
Hatib Abbain with the Justice of the Peace (JOP) Court
of Bongao, Sulu. Chua's averred that he is the owner
of a 4-hectare land together with the improvements
thereon mostly coconut trees located in Maraning,
Bongao, Sulu; that this land was donated to him by
his father, Subing Chua, in 1952 and from that date
he has assumed ownership thereof, taken possession
of the land and paid the corresponding taxes yearly;
that from 1952-1958, Abbain has been his tenant
and the two divided the fruits or copra harvested
therefrom on 50-50basis; that in 1957, Abbain by
means of force, strategy and stealth unlawfully
entered and still occupies the land in question after
Chua have repeatedly demanded of him to vacate
the premises due to his failure to give chuas share
of the several harvests.
LC:
JOP Managula rendered judgment directing
Abbain to vacate the premises and place Chua in
possession of the plantation, with costs. This
judgment was predicated upon the findings that
sometime before WWII, Abbain, because of financial
hardship, sold for P225 to Subing Chua the coconut
plantation; that after the sale, Abbain became the
tenant of Chua, the harvests of the land divided on a
50-50 basis; that subsequently, Subing Chua donated
the plantation to his son, Tongham Chua, and
Abbain, the same tenant of the father, continued to
be the tenant on the land.
- Abbain filed a petition in the CFI of Sulu against
Tongham Chua and Judge Managula, seeking relief
from the judgment of the JOTP Court anr/or
annulment of its decision with preliminary injunction.
He averred that the JOTP Court did not have

jurisdiction over the civil case and that said case

was within the exclusive original jurisdiction of
the Court of Agrarian Relations (CAR).
CFI of Sulu: petition dismissed without cause
-petitioner has not presented any proof or showing
of landlord and tenant relationship between the
parties" to bring the case within the jurisdiction of
the CAR, and that upon the allegations of the
complaint, the case is "clearly one of ejectment."
ISSUE
WON the JOTP Court has jurisdiction over the case
filed by Chua
HELD
NO
Ratio. Where a judgment or judicial order is void in
this sense it may be said to be a lawless thing, which
can be treated as an outlaw and slain at sight, or
ignored wherever and whenever it exhibits its head.
And in Gomez vs. Concepcion, this Court quoted
with approval the following from Freeman on
Judgments: "A void judgment is in legal effect no
judgment. By it no rights are divested. From it no
rights can be obtained. Being worthless in itself, all
proceedings founded upon it are equally worthless. It
neither binds nor bars any one. All acts performed
under it and all claims flowing out of it are void. The
parties attempting to enforce it may be responsible
as trespassers. The purchaser at a sale by virtue of
its authority finds himself without title and without
redress."
Since the judgment here on its face is void ab initio,
the limited periods for relief from judgment in Rule
38 are inapplicable. That judgment is vulnerable to
attack "in any way and at any time, even when no
appeal has been taken."
Reasoning. The provisions of Sec. 21 of RA 1199
(approved August 30, 1954), known as the
Agricultural Tenancy Act of the Philippines, read:
"SEC. 21. Ejectment; violation; jurisdiction. All
cases involving the dispossession of a tenant by the
landholder or by a third party and/or the settlement
and disposition of disputes arising from the
relationship of landholder and tenant, as well as the
violation of any of the provisions of this Act, shall be
under the original and exclusive jurisdiction of such
court as may now or hereafter be authorized by law
to
take
cognizance
of
tenancy
relations
anddisputes."

Sec. 7, RA 1267, creating the First Court of Agrarian

Relations, effective June 14, 1955, as amended by
Republic Act 1409 which took effect on September 9,
1955,provides:
"SEC. 7. Jurisdiction of the Court. The Court shall
have original and exclusive jurisdiction over the
entire Philippines, to consider, investigate, decide,
and settle all questions, matters, controversies or
disputes involving all those relationships established
by law which determine the varying rights of persons
in the cultivation and use of agricultural land where
one of the parties works the land."
- Chua's complaint was filed on March 12, 1958
long after RAs 1199, 1267 and 1409 were
incorporated in our statute books. Chua's complaint
positively averred that Hatib Abbain is his tenant on
a 50-50 sharing basis of the harvest; and that he
seeks ejectment of Hatib Abbain "due to his noncompliance of our agreement of his giving my share
of the several harvests he made." The JOTP Court
itself found that Abbain continued to be the tenant of
Chua after the latter became owner of the plantation
which he acquired from his father by virtue of a
donation; and that Abbain refused to give "the share
of his landlord of the harvest."
- If both the complaint and the inferior court's
judgment have any meaning at all, it is that the JOTP
Court had no jurisdiction over the case. Right at the
outset, the complaint should have been rejected.
Failing in this, the case should have been dismissed
during the course of the trial, when it became all the
more evident that a landlord-tenant relationship
existed. The judge had no power to determine the
case. Because
Chua's suit comes within the
coverage of Sec. 21, R.A. 1199 - that "cases involving
the dispossession of a tenant by the landholder,"
shall be under the "original and exclusive jurisdiction
of such court as may now or hereafter be authorized
by law to take cognizance of tenancy relations and
disputes", and the broad sweep of Section 7, RA
1267, which lodged with the CAR "original and
exclusive jurisdiction . . . to consider, investigate,
decide,
and
settle
all
questions,
matters,
controversies or disputes involving all those
relationships established by law which determine the
varying rights of persons in the cultivation and use of
agricultural land where one of the parties works the
land."
Jurisprudence has since stabilized the jurisdiction of
the CAR over cases of this nature. Such exclusive
authority is not divested by a mere averment on the
part of the tenant that he asserts ownership over the

Civil Procedure Digest

A2010

Prof. Victoria A.

Avena
land, "since the law does not exclude from the
jurisdiction" of the CAR, "cases in which a tenant
claims ownership over the land given to him for
cultivation by the landlord."
The judgment and proceedings of the Justice of the
Peace Court are null and void.
The judgment of the JOTP Court is not merely a
voidable judgment. It is void on its face. It may
be attacked directly or collaterally. Here, the
attack is direct. Abbain sought to annul the
judgment. Even after the time for appeal or review
had elapsed, appellant could bring, as he brought,
such an action. More, he also sought to enjoin
enforcement of that judgment. In varying language,
the Court has expressed its reprobation for
judgments rendered by a court without jurisdiction.
Such a judgment is held to be a dead limb on the
judicial tree, which should be lopped of' or
wholly disregarded as the circumstances
require.
Disposition The decision of the JOTP Court of Sulu is
annulled.

JURISDICTION BY ESTOPPEL
General rule:
SEAFDEC V NLRC (LAZAGA)
206 SCRA 283
NOCON, February 14, 1994
NATURE
Petition for certiorari to review the decision of the
NLRC
FACTS
-SEAFDEC-AQD is a department of an international
organization, the Southeast Asian Fisheries
Development Center. Private Respondent Lazaga was
hired as a Research Associate and eventually
became the Head of External Affairs Office of
SEAFDEC-AQD. However, he was terminated
allegedly due to financial constraints being
experienced by SEAFEC-AQD. He was supposed to
receive separation benefits but SEAFDEC-AQD failed
to pay private respondent his separation pay so
Lazaga filed a complaint for non-payment of

separation benefits, plus moral damages and

attorneys fees with the NLRC.
-In their ANSWER WITH COUNTERCLAIM, SEAFDEC
alleged that NLRC has no jurisdiction over the
case because: (1) It is an international organization;
(2) Lazaga must first secure clearances from the
proper departments for property or money
accountability before any claim for separation pay
will be paid (and clearances has not been paid)
COUNTERCLAIM: Lazaga had property accountability
and outstanding obligation to SEAFDEC-AQD
amounting to P27, 532.11 and that Lazaga was not
entitled to the accrued sick leave benefits due to his
failure to avail of the same during his employment
-LA: for Lazaga
-NLRC: affirmed LA, deleted attorneys fees and
actual damages
-SEAFDEC-AQD filed MFR, denied
ISSUES
1. WON SEAFEC-AQD is immune from suit owing to
its international character
2. WON SEAFDEC-AQD is estopped from claiming
that the court had no jurisdiction
HELD
1. YES
Ratio. Being an intergovernmental organization,
SEAFDEC including its departments enjoys functional
independence and freedom from control of the state
in whose territory its office is located.
Reasoning. One of the basic immunities of an
international organization is immunity from local
jurisdiction (immune from legal writs and processes
issued by the tribunals of the country where it is
found) that the subjection of such an organization to
the authority of the local courts would afford a
convenient medium thru which the host government
may interfere in their operations or even influence or
control its policies and decisions of the organization.
Such subjection to local jurisdiction would impair the
capacity of such body to discharge its responsibilities
impartially on behalf of its member-states.
2. NO
Ratio. Estoppel does not apply to confer jurisdiction
to a tribunal that has none over a cause of action.
Jurisdiction is conferred by law. Where there is none,
no agreement of the parties can provide one. Settled
is the rule that the decision of a tribunal not vested
with appropriate jurisdiction is null and void.

-The lack of jurisdiction of a court may be raised at

any stage of the proceedings, even on appeal.
-The issue of jurisdiction is not lost by waiver or by
estoppel

Exception:
SOLIVEN vs FASTFORMS PHILS.
440 SCRA 389
Sandoval-Gutierrez, October 18, 2004
NATURE
-petition for review on certiorari
FACTS
-Petitioner Marie Antoinette Soliven filed a complaint
for P195,155 as actual damages with P200k as moral
damages, P100k as exemplary damages and P100k
as attorneys fees against respondent Fastform
Phils., with the Makati RTC. It alleged that
respondent, through its president Dr. Escobar,
obtained a loan from petitioner (P170k) payable
within 21 days with 3% interest. On the same day,
respondent issued a postdated check for P170k +
P5k int. 3 weeks later, Escobar advised petitioner not
to deposit the check as the account from where it
was drawn had insufficient funds and instead
proposed that the P175k be rolled-over with 5%
monthly interest, to which the latter agreed.
Respondent issued several checks as payment for
interests for 5 months but thereafter refused to pay
its principal obligation despite petitioners repeated
demands.
-In its counterclaim, respondent denied obtaining the
loan and that it did not authorize Escobar to secure
said loan or issue checks as payment for interests.
After a trial on the merits, the court ordered
respondent to pay the amount of the loan plus
interest and attorneys fees, but moral and exemplary
damages as well as the counterclaim were
dismissed.
-Respondent filed a MFR questioning the courts
jurisdiction alleging that since the principal demand
(P195,155) did not exceed P200k, the complaint
should have been filed with the MTC, pursuant to RA
7691. The TC denied the MFR since the totality of the
claim exceeded 200k and since respondent was
estopped from questioning jurisdiction. On appeal,
the CA reversed the TC decision on the ground of
lack of jurisdiction and that respondent may assail

Civil Procedure Digest

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Prof. Victoria A.

Avena
jurisdiction of the TC anytime even for the first time
on appeal. Petitioner filed an MFR which was denied
by the CA, hence this petition.
ISSUE (Members of religious group)
WON the trial court has jurisdiction over the case
HELD
NO.
Ratio. While it is true that jurisdiction may be raised
at any time, this rule presupposes that estoppel has
not supervened. Since respondent actively
participated in all stages of the proceedings before
the TC and even sought affirmative relief, it is
estopped from challenging the TCs jurisdiction,
especially since an adverse judgment had been
rendered. A party cannot invoke the jurisdiction of a
court to secure affirmative relief against his
opponent and after obtaining or failing to obtain such
relief, repudiate that same jurisdiction.
Reasoning. Section 3 of RA 7691 provides that
where the amount of the demand in the complaint
instituted in Metro Manila does not exceed P200k,
exclusive of interest, damages of whatever kind,
attys fees, litigation expenses and costs, the
exclusive jurisdiction over the same is vested in the
Metropolitan Trial court, Municipal Trial Court and
Municipal Circuit Trial Court.
-Administrative Circular 09-94 specifies guidelines in
the implementation of RA 7691. Par 2 of the Circular
provides that the term damages of whatever kind
applies only to cases where damages are merely a
consequence of the main action. In the instant case,
the main cause of action is the collection of the debt
amounting to P195k. The damages being claimed are
merely incidental and are thus not included in
determining the jurisdictional amount.
Disposition. WHEREFORE, the instant petition is
GRANTED

ONCE ATTACHED, JURISDICTION NOT

OUSTED BY SUBSEQUENT STATUTE
UNLESS SO PROVIDED
SOUTHERN FOOD SALES
CORPORATION vs. SALAS
206 SCRA 333
MEDIALDEA; Feb 18, 1992

NATURE
Petition for certiorari
FACTS
- July 1979 Private respondent Laurente (former
sale supervisor of petitioner corporation) was notified
and advised of his immediate termination for gross
neglect of duty and/or dishonesty
- August 1979 - Laurente instituted a civil action for
damages against SFSC and Siao, its manager
- Laurente filed a complaint for illegal dismissal
(labor case).
- January 1980 - Petitioners filed a motion to dismiss
on Civil Case, claiming that the jurisdiction should be
vested with the NLRC.
February 5, 1980 it was found that the
termination of the complainant was for a just and
valid cause
February 28, 1980 The court in Civil Case
deferred the determination of the motion to dismiss
until after trial.
- Petitioners filed a motion for reconsideration but it
was denied. Thus, this petition for the issuance of a
writ of preliminary injunction.
ISSUE
WON the respondent judge committed grave abuse
of discretion when it deferred the determination or
resolution of the motion to dismiss questioning the
jurisdiction of the court over claims for damages.
HELD
NO.
Ratio "(t)he rule is that where a court has already
obtained and is exercising jurisdiction over a
controversy, its jurisdiction to proceed to the final
determination of the cause is not affected by new
legislation placing jurisdiction over such proceedings
in another tribunal. The exception to the rule is
where the statute expressly provides, or is construed
to the effect that it is intended to operate as to
actions pending before its enactment. Where a
statute changing the jurisdiction of a court has no
retroactive effect, it cannot be applied to a case that
was pending prior to the enactment of the statute."
(Bengzon v. Inciong)
Reasoning

a.

Article 217 (a) (4) of the Labor Code as amended

by Section 9 of Republic Act No. 6715 clearly
provides that the labor arbiter shall have original

and exclusive jurisdiction to hear and decide

claims for actual, moral, exemplary and other
forms of damages arising from an employeremployee relationship. However, when the civil
case for damages was instituted in 1979, the
applicable law then was Article 217 (a) (3) of the
Labor Code as amended by Presidential Decree
No. 1367 (May 1, 1978) which provides that
Labor Arbiters shall not entertain claims for
moral or other forms of damages.
b. To require the private respondent to file a single
suit combining his actions for illegal dismissal
and damages in the NLRC would be to sanction
the retroactivity of Republic Act No. 6715 which
took effect on March 21, 1989, where the same
law does not expressly so provide, or does not
intend to operate as to actions pending before
its enactment, hence prejudicial to the orderly
administration of justice.
Disposition. The petition is DISMISSED for lack of
merit.

ACQUIRED JURISDICTION OVER THE

PERSON
Of the plaintiff
MANILA RAILROAD V ATTY. GENERAL
(page 1)
FACTS
-Manila Railroad filed an action for condemnation
proceedings in CFI of Tarlac when they knew that the
lands concerned are found in Nueva Ecija. Now they
are assailing the jurisdiction of CFI Tarlac.
ACQUIRED JURISDICTION OVER THE PERSON Of
the plaintiff: Procedure does not alter or change
that power or authority; it simply directs the manner
in which it shall be fully and justly exercised. To be
sure, in certain cases, if that power is not exercised
in conformity with the provisions of the procedural
law, purely, the court attempting to exercise it loses
the power to exercise it legally. This does not mean
that it loses jurisdiction of the subject matter. It
means simply that he may thereby lose jurisdiction
of the person or that the judgment may thereby be
rendered defective for lack of something essential to
sustain it. There is, of course, an important
distinction between person and subject matter are
both conferred by law. As to the subject matter,

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nothing can change the jurisdiction of the court over
diminish it or dictate when it shall attach or when it
shall be removed. That is a matter of legislative
enactment which none but the legislature may
change. On the other hand, the jurisdiction of the
court over the person is, in some instances, made to
defend on the consent or objection, on the acts or
omissions of the parties or any of them. Jurisdiction
over the person, however, may be conferred by
consent, expressly or impliedly given, or it may, by
an objection, be prevented from attaching or
removed after it has attached.
- That it had jurisdiction of the persons of all the
parties is indisputable. That jurisdiction was obtained
not only by the usual course of practice - that is, by
the process of the court - but also by consent
expressly given, is apparent. The plaintiff submitted
itself to the jurisdiction by beginning the action. The
defendants are now in this court asking that the
action be not dismissed but continued. They are not
only nor objecting to the jurisdiction of the court but,
rather, are here on this appeal for the purpose of
maintaining that very jurisdiction over them. Nor is
the plaintiff in any position to asked for favors. It is
clearly guilty of gross negligence in the allegations of
its complaint, if the land does not lie in Tarlac as it
now asserts.

Of the defendant
1. by service of summons
2. by voluntary appearance
BOTICANO V CHU, JR
148 SCRA 541
PARAS; March 16, 1987
NATURE
Petition for review on certiorari seeking to reverse
and set aside CA ruling of denying MFR.
FACTS
- Eliseo Boticano is the registered owner of a Bedford
truck which is used in hauling logs for a fee. It was hit
at the rear by another Bedford truck owned by
Manuel Chu and driven by Jaime Sigua while loaded
with logs and parked properly by the driver Maximo
Dalangin at the shoulder of the national highway.
- Chu acknowledged ownership and agreed to
shoulder the expenses of the repair, but failed to
comply with the agreement. Boticano filed a

complaint at the CFI at Cabanatuan against Chu and

Sigua. Summons were issued but one was returned
unserved for Sigua wile the other served thru Chus
wife.
- Boticano moved to dismiss the case against Sigua
and to declare Chu in default. The Court granted the
motions and adduced from evidence that Chu is
responsible for the fault and negligence of the driver
under Art 2180 CC.
- Chu filed with the TC a notice of appeal and an
urgent motion for extension of time to file record on
appeal. Court granted the motions.
- Boticano filed a MTD the appeal and for execution,
but the appeal was still approved. The case was
brought to the CA. CA set aside the TC decision for
being null and void.
- Boticano filed an MFR with the CA to which CA
denied.
ISSUE/S
1. WON the question of jurisdiction of the court over
the person of the defendant cannot be raised for the
first time on appeal
2. WON CA erred in holding that Chu did not
voluntarily submit himself to the jurisdiction of the TC
despite his voluntary appearance
HELD
1. NO
Ratio The defects in jurisdiction arising from
irregularities in the commencement of the
proceedings, defective process or even absence of
process may be waived for failure to make seasonal
objections.
Reasoning The circumstances appear to show that
there was waiver by the defendant to allege such
defect when he failed to raise the question in the CFI
and at the first opportunity.
2. YES, he voluntarily submitted himself to the
courts jurisdiction.
Ratio Under Sec 23, Rule 14 ROC, the defendants
voluntary appearance in court shall be equivalent to
service. It has been held by the court that the defect
of summons is cured by the voluntary appearance by
the appearance of the defendant.
Disposition The assailed decision and resolution of
CA are reversed and set aside. The decision of the
CFI (now RTC) is reinstated.

3. by voluntary submission
RODRIGUEZ VS ALIKPALA
57 SCRA 455
CASTRO; June 25, 1974
NATURE
Petition for certiorari
FACTS
-Petitioner Rodriguez filed a case for recovery of the
sum of P5,320.00 plus interest, attorneys fees and
cost against Sps. Robellado.
-A writ of preliminary attachment was issued and
served to Fe Robellado at their store in Divisoria. Sps
Robellado pleaded to the Rodriguez for time before
the attachment to be effectively enforced. Rodriguez
agreed to the suspension of the judgment on the
condition that Fe Robellados parents, the now
respondents, Federico & Felisa Tolentino, to bind
themselves jointly and severally with the Robellados,
to pay the entire obligation subject of the suit. Felisa
Tolentino, being present, immediately agreed to this
proposal.
-A compromise agreement was then entered to by
the parties. The Rebellados subsequently failed to
comply with the terms of the compromise
agreement, thus prompting petitioner Rodriguez to
request the City Court for a writ of execution on the
properties of the Robellados and also of the
Tolentinos. The request was granted by the City
Court. The Tolentinos brought an action for certiorari
with the Court of First Instance of Manila. The CFI
rendered judgment excluding the Tolentinos from the
effects of the writ of execution. Thus this appeal.
ISSUE
WON the CFI erred in excluding the Tolentinos from
the effects of the writ of execution.
HELD
YES
-The contention of the CFI that the dispositive portion
of the judgment of the City Court does not explicitly
enjoin the Tolentinos to pay jointly and severally with
the Rebellados the amount due to the plaintiff, and
that the City Court never acquired jurisdiction over
Tolentinos and therefore cannot be bound by the
judgment rendered by said court, is erroneous.

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-The dispositive portion of the judgment of the City

Court approving the compromise and enjoining strict
compliance thereto by the parties is adequate for the
purpose of execution. Judgment on a compromise
need not specifically name a person to be subject of
execution thereof in obvious avoidance of repetition.
-On lack of jurisdiction of the court over the
Tolentinos: the Tolentinos freely and voluntarily
entered into the compromise agreement which
became the basis of judgment of the City Court.
Under the circumstances, the Tolentinos are
estopped the very authority they invoked. And even
assuming that estoppel lies, we cannot set aside the
principle of equity that jurisdiction over a person
not originally a party to a case may be
acquired, upon proper conditions, thru the
voluntary appearance of the person before the
court. By coming forward with the original litigants
in moving for a judgment on compromise and by
assuming such interest in the final adjudication of
the case together with the Robellados, the Tolentinos
effectively submitted themselves to the jurisdiction
of the City Court.
-Jurisdiction over the plaintiff can be acquired by
the court upon filing of the complaint. On the other
hand, jurisdiction over the defendants can be
acquired by the court upon service of valid summons
and upon voluntary appearance/submission of a
person in court.

- The order of the court was entered directing that

publication should be made in a newspaper, the
court directed that the clerk of the court should
deposit in the post office in a stamped envelope a
copy of the summons and complaint directed to
Palanca at his last place of residence.
- The cause proceeded in the CFI and Palanca not
having appeared, judgment was taken against him
by default. It was ordered that Palanca should deliver
said amount to the clerk of the court to be applied to
the satisfaction of the judgment, and it was declared
that in case of failure to satisfy the judgment, the
mortgage property located in the city of Manila
should be exposed to public sale.
- Payment was never made and the court ordered the
sale of the property. The property was brought in by
the bank.
- About seven years after the confirmation of this
sale, a motion was made by Vicente Palanca, as
administrator of the estate of the original defendant,
wherein the applicant requested the court to set
aside the order.

Prof. Victoria A.

Avena

ACQUIRED JURISDICTION OVER THE

RES
EL BANCO ESPAOL-FILINO v.
PALANCA
37 Phil. 921
STREET; March 26, 1918
FACTS
- A mortgage was executed by Palanca, as security
for a debt owing to him to the bank. After the
execution of this instrument, Palanca returned to
China where he died.
- As Palanca was a nonresident, it was necessary for
the bank to give notice to him by publication
pursuant to section 399 of the Code of Civil
Procedure. An order for publication was accordingly
obtained from the court, and publication was made in
due form in a newspaper of the city of Manila.

ISSUE
1. WON the order of default and the judgment
rendered thereon were void because the court had
never acquired jurisdiction over the defendant or
over the subject of the action.
2. WON the supposed irregularity in the proceedings
was of such gravity as to amount to a denial of due
process of law.

designated. The judgment entered in these

proceedings is conclusive only between the parties.
- Several principles: (1) That the jurisdiction of the
court is derived from the power which it possesses
over the property; (II) that jurisdiction over the
person is not acquired and is nonessential; (III) that
the relief granted by the court must be limited to
such as can be enforced against the property itself.
- In a foreclosure proceeding against a nonresident
owner it is necessary for the court, as in all cases of
foreclosure, to ascertain the amount due, as
prescribed in section 256 of the Code of Civil
Procedure, and to make an order requiring the
defendant to pay the money into court. This step is a
necessary precursor of the order of sale. It is clearly
intended merely as compliance with the requirement
that the amount due shall be ascertained and that
the defendant shall be required to pay it. As further
evidence of this it may be observed that according to
the Code of Civil Procedure a personal judgment
against the debtor for the deficiency is not to be
rendered until after the property has been sold and
the proceeds applied to the mortgage debt (sec. 260)
- Whatever may be the effect in other respects of the
failure of the clerk of the CFI to mail the proper
papers to the defendant in China, such irregularity
could in no wise impair or defeat the jurisdiction of
the court, for in our opinion that jurisdiction rests
upon a basis much more secure than would be
supplied by any form of notice that could be given to
a resident of a foreign country.

RULING
1. NO.
- The action to foreclose a mortgage is said to be a
proceeding quasi in rem, by which is expressed
the idea that while it is not strictly speaking an action
in rem yet it partakes of that nature and is
substantially such. The expression, "action in rem'
is, in its narrow application, used only with reference
to certain proceedings in courts of admiralty wherein
the property alone is treated as responsible for the
claim or obligation upon which the proceedings are
based. The action quasi in rem differs from the true
action in rem in the circumstance that in the former
an individual is named as defendant, and the
purpose of the proceeding is to subject his interest
therein to the obligation or lien burdening the
property. All proceedings having for their sole object
the sale or other disposition of the property of the
defendant, whether by attachment, foreclosure, or
other form of remedy, are in general way thus

2. NO.
- In a foreclosure case, some notification of the
proceedings to the nonresident owner, prescribing
the time within which appearance must be made, is
everywhere recognized as essential. To answer this
necessity the statutes generally provide for
publication, and usually in addition thereto, for the
mailing of notice to the defendant, if his residence is
known. It is merely a means provided by law
whereby the owner may be admonished by his
property is the subject of judicial proceedings and
that it is incumbent upon him to take such steps as
he sees fit to protect it.
- This mode of notification does not involve any
absolute assurance that the absent owner shall
thereby receive actual notice. The idea upon which
the law proceeds in recognizing the efficacy of a
means of notification which may fall short of actual
notice is apparently this: Property is always assumed
to be in the possession of its owner, in person or by

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agent; and he may be safely held, under certain

conditions, to be affected with knowledge that
proceedings have been instituted for its
condemnation and sale.
- Failure of the clerk to mail the notice, if in fact he
did so fail in his duty, is not such as irregularity as
amounts to a denial of due process of law; and hence
in our opinion that irregularity, if proved, would not
avoid the judgment in this case. Notice was given by
publication in a newspaper and this is the only form
of notice which the law unconditionally requires.

Midgely and Pastor, Jr. at their respective addresses

in Alicante and Barcelona.
- Both De Midgely and Pastor entered a special
appearance and filed a motion to dismiss on the
ground of lack of jurisdiction as they are nonresidents. They further alleged that earnest efforts
toward a compromise have not been made as
required in the Civil Code in suits between members
of the same family, The motion was denied by Judge
Ferandos and he ruled that the respondents were
properly summoned.
- The subsequent motion for reconsideration was
denied by Ferandos indicating in the order that the
action of Quemada was for the recovery of real
property and real rights. The respondents were
instructed to file their answer.
- De Midgely filed this action with the Supreme Court.

Prof. Victoria A.

Avena

Separate Opinion
MALCOLM; dissent
- The fundamental idea of due process of law is that
no man shall be condemned in his person or property
without notice and an opportunity of being heard in
his defense.
- "A judgment which is void upon its face, and which
requires only in inspection of the judgment roll to
demonstrate it want of vitality is a dead limb upon
the judicial tree, which should be lopped off, if the
power so to do exists. It can bear no fruit to the
plaintiff, but is a constant menace to the defendant."

DE MIDGELY VS FERANDOS
64 SCRA 23
AQUINO, May 13, 1975
NATURE
Original Actions. Certiorari and contempt.
FACTS
- Quemada, allegedly the illegitimate son of Alvaro
Pastor, Sr., was appointed as special administrator of
the latters estate by the CFI of Cebu. As such, he
filed a complaint against his half siblings, the
spouses Alvaro Pastor, Jr. and Maria Elena Achaval,
and Sofia Midgely, who were all at that time citizens
of Spain and residing in that country. The suit also
named Atlas Mining as co-respondent. The suit was
to settle the question of ownership over certain
properties and rights in some mining claims as
Quemada believed that those properties belong to
the estate of Alvaro Pastor, Sr.
- Quemada, on his own, caused extraterritorial
service of summons to be made through the
Department of Foreign Affairs and the Philippine
Embassy in Madrid, Spain, which effected the service
of the summons through registered mail upon De

ISSUE/S
WON Judge Ferandos gravely abused his discretion in
denying De Midgelys motion to dismissed based on
the lack of jurisdiction over her person.
HELD
NO. The fact that she alleged as a ground for
dismissal the lack of earnest effort to compromise is
deemed as abandonment of her special appearance
and as voluntary submission to the courts
jurisdiction.
Ratio. When the appearance is by motion for the
purpose of objecting to the jurisdiction of the court
over the person, it must be for the sole and separate
purpose of objecting to the jurisdiction of the court. If
the motion is for any other purpose than to object to
the jurisdiction of the court over his person, he
thereby submits himself to the jurisdiction of the
court,
Reasoning. Even if the lower court did not acquire
jurisdiction over De Midgely, her motion to dismiss
was properly denied because Quemadas action
against her maybe regarded as a quasi in rem
where jurisdiction over the person of a non-resident
defendant is not necessary and where the service of
summons is required only for the purpose of
complying with the requirement of due process.
Quasi in rem is an action between parties where
the direct object is to reach and dispose of property
owed by the parties or of some interest therein.
- The SC cited the Perkins case as a precedent. In
that case, it ruled that in a quasi in rem action
jurisdiction over a non resident defendant is not
essential. The service of summons by publication is

required merely to satisfy the constitutional

requirement of due process. The judgment of the
court would settle the title to the properties and to
that extent it partakes of the nature of judgment in
rem. The judgment is confined to the res (properties)
and no personal judgment could be rendered against
the non resident. It should be noted that the civil
case filed by Quemada is related to a testamentary
proceeding as it was filed for the purpose of
recovering the properties which in the understanding
of Quemada, belonged to the estate of the Late
Pastor, Sr. and which were held by De Midgely and
her brother.
Disposition. Petition is dismissed

ACQUIRED JURISDICTION OVER THE

ISSUES
SPS GONZAGA V CA (SPS ABAGAT)
SCRA
CALLEJO SR; October 18, 2004
NATURE
Petition for the Review of the Decision and resolution
of CA
FACTS
- October 22, 1991 > Sps Abagat filed complaint
against Sps Gonzaga for recovery of possession of
land in Baclaran, Paraaque issued in their names, as
owners. Sps Abagat alleged in their complaint that
they were the owners of a small hut (barong-barong)
constructed on the lot, which was then owned by the
government
- February 22, 1961 > Abagat filed an application for
sales patent over the land
- January 26, 1973 > hut was gutted by fire and after
that, Sps Gregorio built a two-storey house on the
property without their consent. Sps Abagat filed a
complaint for ejectment against Sps Gregorio but
complaint was dismissed for lack of jurisdiction
because in their answer to the complaint, the Sps
Gregorio claimed ownership over the house
- Sps Gregorio sold house to Sps Gonzaga for
P100,000 under a deed of conditional sale, in which
Sps Gregorio undertook to secure an award of the
land by the government in favor of Sps Gonzaga. In
an MOA, Sps Gregorio indicated that if they would

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not secure such, they would return P90,000 as
payment for the house
- January 2, 1986 > Bureau of Lands granted the
application of Abagat for a sales patent over the
property.
TCT No. 128186 was issued by the
Register of Deeds in his name. Sps Abagat
demanded that Sps Gonzaga vacate the property,
but latter refused
- September 29, 1992 > Sps Abagat filed a motion
for leave to file a third-party complaint against the
Sps Gregorio. TC no longer resolved the motion for
leave to file a third-party complaint
- Trial Court > October 10, 1994, in favor of Sps
Abagat
- CA > December 19, 1997, affirmed the decision of
the trial court on. On the plea of Sps Gonzaga that
the TC should have ordered the Sps Gregorio to
refund to them the P90,000.00 the latter had
received as payment for the house, CA ruled that a
separate complaint should have been filed against
the Sps Gregorio, instead of appealing the decision of
the TC.
ISSUE
WON RTC and CA erred in not ordering Sps Gregorio
to refund to them the P90,000 they had paid for the
house and which the latter promised to do so under
their Memorandum of Agreement
HELD
NO
Ratio The rule is that a party is entitled only to such
relief consistent with and limited to that sought by
the pleadings or incidental thereto. A trial court
would be acting beyond its jurisdiction if it grants
relief to a party beyond the scope of the pleadings.
Moreover, the right of a party to recover depends,
not on the prayer, but on the scope of the pleadings,
the issues made and the law.
Reasoning
- Sps Gonzaga failed to file any pleading against Sps
Gregorio for the enforcement of the deed of
conditional sale, the deed of final and absolute sale,
and the Memorandum of Agreement executed by
them. The petitioners filed their motion for leave to
file a third-party complaint against the intervenors,
Sps Gregorio, and appended thereto their third-party
complaint for indemnity for any judgment that may
be rendered by the court against them and in favor
of the respondents. However, Sps Gonzaga did not
include in their prayer that judgment be rendered
against the third-party defendants to refund the

P90,000.00 paid by them to the Sps Gregorio. Sps

Gonzaga failed to assail the trial courts order of
denial in the appellate court. Even after the trial
court had granted leave to the Sps Gregorio to
intervene as parties-defendants and the latter filed
their Answer-in-Intervention, Sps Gonzaga failed to
file a cross-claim against the intervenors for specific
performance for the refund of the P90,000.00 they
had received from the petitioners under their deed of
conditional sale, the deed of final and absolute sale
and the memorandum of agreement and pay filing
and docket fees therefor.
Disposition Petition is DENIED DUE COURSE. CA
decision and resolution are AFFIRMED.

SPECIFIC
JURISDICTION
COURTS
A. SUPREME COURT
Question of law

OF

URBANO V CHAVEZ
183 SCRA 347
GANCAYCO; March 19, 1990
NATURE
Petition to review decision of RTC Pasig
FACTS
- there are 2 cases involved here: a criminal action
for violation of the Anti-Graft and Corrupt Practices
Act (RA 3019) and an civil action for damages arising
from a felony (defamation through a published
interview whereby Chavez imputed that Nemesio Co
was a close associate (crony?) of Marcos), both
against Solicitor General Francisco Chavez (among
others)
- in the criminal case (filed in the Office of the
Ombudsman), the Office of the SolGen (OSG) entered
its appearance for Chavez and the other accused
(DILG Sec and 2 sectoral reps) as far as the Prelim
Investigation is concerned. Urbano et. al. filed a
special civil action for prohibition in the SC to enjoin
the SolGen and his associates from acting as counsel
for Chavez in the PI. The contention is in the event
that an information is filed against the accused, the
appearance of the OSG in the PI would be in conflict
with its role as the appellate counsel for the People

of the Phils (counsel at the first instance is the

provincial/ state prosecutor).
- in the action for damages, the OSG likewise acted
as counsel for Chavez, who was then the SolGen and
counsel for PCGG, the agency responsible for the
investigation of graft and corrupt practices of the
Marcoses. The OSG filed for extension of time to file
required pleading, and afterwards filed a motion to
dismiss on behalf of Chavez. Petitioner Co objected
to appearance of OSG as counsel, contending that he
is suing Chavez in his personal capacity.
- OSG manifested that it is authorized to represent
Chavez or any public official even if the said official is
sued in his personal capacity pursuant to the
unconditional provisions of PD478 which defines the
functions of OSG, as well as EO300 which made OSG
an independent agency under the Office of the
President
- RTC denied the petition, thus allowing the
appearance of OSG as counsel. It also denied the
MFR. Thus, this petition for review
ISSUE/S
1. WON the OSG has authority to appear for (a) a
certain govt official in the PI of their case before the
Ombudsman and (b) the SolGen in a suit for
damages arising from a crime
HELD
1. NO
Ratio The OSG is not authorized to represent a
public official at ANY stage of a criminal case or in a
civil suit for damages arising from a felony (applies
to all public officials and employees in the executive,
legislative and judicial branches).
Reasoning PD47811 defines the duties and
functions of OSG:
SEC1. The OSG shall represent the Govt of the Phils,
its agencies and instrumentalities and its officials and
agents in any litigation, proceeding, investigation or
matter requiring the services of a lawyer. x x x
- the OSG submits that since there is no qualification,
it can represent any public official without any
qualification or distinction in any litigation.
- Same argument seems to apply to a similar
provision in the Rev Admin Code (Sec. 1661: As
principal law officer of the Govt, the SolGen shall
have the authority to act for and represent the
Govt , its officers and agents in any official
investigation, proceeding or matter requiring the
services of a lawyer). In Anti-Graft League v Ortega,
SC interpreted Sec. 1661 to embrace PI. However,

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should an info be filed after, then OSG can no longer
act as counsel. The rationale given was that public
officials are subjected to numerous suits, and threats
of criminal prosecution could stay the hand of the
public official. OSG provides assurance against
timidity in that they will be duly represented by
counsel in the PI.
- However, the court declared this ruling abandoned
in this case. The anomaly in this ruling becomes
obvious when, in the event of a judgment of
conviction, the case is brought on appeal to the
appellate courts. The OSG, as the appellate counsel
of the People, is expected to take a stand against the
accused. More often than not, it does. Accordingly,
there is a clear conflict of interest here, and one
which smacks of ethical considerations, where the
OSG, as counsel for the public official, defends the
latter in the PI, and where the same office, as
appellate counsel of the People, represents the
prosecution when the case is brought on appeal. This
anomalous
situation
could
not
have
been
contemplated and allowed by the law. It is a situation
which cannot be countenanced by the Court.
- another reason why the OSG cant represent an
accused in a crim case: the State can speak and act
only by law, whatever it says or does is lawful, and
that which is unlawful is not the word or deed of the
state. As such, a public official who is sued criminally
is actually sued in his personal capacity inasmuch as
his principal (the State) can never the author of a
wrongful act. The same applies to a suit for damages
arising from a felony, where the public official is held
accountable for his act; the state is not liable.
** Re: Question of Law (copied verbatim. This is all
that is mentioned)
-both issues raise pure questions of law inasmuch as
there are no evidentiary matters to be evaluated by
this Court. Moreover, if the only issue is whether or
not the conclusions of the trial court are in
consonance with law and jurisprudence, then the
issue is a pure question of law (Torres v Yu). Thus,
the Court resolved to consolidate both Petitions and
to treat them as Petitions for certiorari on pure
questions of law in accordance with the provisions of
the Rules of Court.
Disposition Petition is granted.

ORTIGAS V. CA
106 SCRA 121
ABAD SANTOS, 1981

NATURE
Petition for review of the decision of the CA
FACTS
-In 1974, Ortigas and Co. filed a complaint for
unlawful detainer against Maximo Belmonte in the
Municipal Court of San Juan Rizal, praying that
judgment be rendered 1.) ordering the defendant his
successors-in-interest to vacate and surrender the lot
to plaintiff; 2.) declaring the residential building
constructed on the lot by defendant as forfeited in
favor of plaintiff; 3.0 condeming defendant to pay
monthly rent of 5,000 from July 18, 1971 up to the
time he vacates, together with attorney's fees and
exemplary damages. The Ruled in favor of plaintiff
and granted the relieves prayed for.
-Belmonte filed a motion to dismiss in the Cfi based
on lack of jurisdiction on the part of the MC. CFI
denied motion and affirmed in totot the MC
judgment. The said court also issued a writ of
execution. Belmonte filed a petition for certiorari and
prohibition with preliminsry injunction in the CA,
assiling the 1.) the jurisdiction of the CFI andf MC; 2.)
the propriety of the judgment on the pleadings
rendered by the MC; and 3.) the propriety of the
issuance of the writ of execution issued by the CFI.
The Ca ruled in favor of Belmonte, holding that the
MC has no jurisdiction. Hence the present petition.
ISSUES
1. WON the CA has appellate jurisdiction over this
case
2. WON the MC had jurisdiction to resolve the issues
in the original complaint
HELD
1. NO.
Reasoning. After analyzing the issues raised by
Belmonte before the CA, namely 1.) the jurisdiction
of the CFI andf MC; 2.) the propriety of the judgment
on the pleadings rendered by the MC; and 3.) the
propriety of the issuance of the writ of execution
issued by the CFI, the SC held that the same are
purely legal in nature. Since appellate jurisdiction
over cases involving purely legal questions is
exclusively vested in the SC by Sec. 17 of the
Judiciary Act (RA 296), it is apparent that the decision
under review rendered by the CA without jurisdiction
should be set aside.
2. NO.
Reasoning. Where a subdivision owner seeks not
just to eject the lot buyer who defaulted in his

payments but also prays that the residential building

constructed by the buyer be forfeited in plaintiff's
favor, jurisdiction over the case belongs to the CFI
not the MC in an ejectment case. The issues raised
before the inferior court did not only involved the
possession of the lot but also rights and obligations
of the parties to the residential building which under
Art. 45 of the CC is real property. Aslo, plaintiff's
claim to the bldg raises question of ownership.
-A CFI cannot assume jurisdiction in a case appealed
to it under SECII Rule 40 where one of the parties
objected to its jurisdiction. Since the original case
was decided by the MC without jurisdiction over the
subject matter thereof, the CFI should have
dismissed the cases when it was brought before it on
appeal.
Disposition. Without prejudice to the right of
Ortigas to file the proper action in the proper court,
the decisions of the CA, CFI and MC of San Juan Rizal
are set aside.

JOSEFA V ZHANDONG
GR 150903
SANDOVAL-GUTIERREZ; December 8,
2003
NATURE
Petition for review on certiorari
FACTS
Tan represented himself to be the owner of
hardboards and sold them to Josefa. Josefa paid all
his obligations to Tan. The hardboards apparently
belonged to Zhandong. When Tan failed to pay
Zhandong, it sent a demand letter for the payment of
the hardboards to both Tan and Josefa.
Trial Court ruled in favor of Zhandong
The Court of Appeals affirmed the trial courts
Decision.
Petitioner filed a motion for reconsideration but was
denied.
Petitioner ascribes to the CA the error in affirming
the ruling of the trial court that Josefa is liabe to
Zhandong despite THE MOUNTAIN OF EVIDENCE
showing that they had no business transaction with
each other and that it was Tan who was solely
responsible to Zhandong for the payment of the
goods.

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ISSUE
1. WON Josefa is liable to Zhandong for the payment
of the merchandise
HELD
1. NO
Reasoning. Evidence indicate that Tan bought the
hardboards from Zhandong and, in turn, sold them to
petitioner. However, both the trial court and the
Court of Appeals ignored this glaring reality and
instead held that petitioner purchased the boards
directly from respondent.
General Rule : Only questions of law may be
entertained by the Supreme Court in a petition for
review on certiorari
Exceptions:
(1) the conclusion is grounded on speculations,
surmises or conjectures;
(2) the inference is manifestly mistaken, absurd or
impossible;
(3) there is grave abuse of discretion;
(4) the judgment is based on a misapprehension of
facts;
(5) the findings of fact are conflicting;
(6) there is no citation of specific evidence on which
the factual findings are based;
(7) the finding of absence of facts is contradicted by
the presence of evidence on record;
(8) the findings of the Court of Appeals are contrary
to those of the trial court;
(9) the Court of Appeals manifestly overlooked
certain relevant and undisputed facts that, if properly
considered, would justify a different conclusion;
(10) the findings of the Court of Appeals are beyond
the issues of the case;
(11) such findings are contrary to the admissions of
both parties.
Disposition Petition is granted.

Petition for certiorari3

FACTS
-September 15, 1980: acting on the evidence
presented by the Philippine Constabulary
commander at Hinigaran, Negros Occidental, the CFI
of that province issued a search warrant for the
search and seizure of the deceased bodies of seven
persons believed in the possession of the accused
MAYOR Pablo Sola in his hacienda at Sta. Isabel,
Kabankalan, Negros Occidental.
-September 16, 1980: armed with warrant,
elements of the 332nd PC/INP Company proceeded
to the place of Sola. Diggings made in a canefield
yielded two common graves containing the bodies of
Fernando Fernandez, Mateo Olimpos, Alfredo Perez,
Custodio Juanica, Arsolo Juanica, Rollie Callet and
Bienvenido Emperado.
-September 23 and October 1, 1980: the PC
provincial commander of Negros Occidental filed
seven (7) separate complaints for murder against the
accused Pablo Sola, Francisco Garcia, Ricardo Garcia,
Jose Bethoven Cabral, Florendo Baliscao and fourteen
(14) other persons of unknown names. After due
preliminary examination of the complainant's
witnesses and his other evidence, the municipal
court found probable cause against the accused. It
thus issued an order for their arrest.
-However, without giving the prosecution the
opportunity to prove that the evidence of guilt of the
accused is strong, the court granted them the right
to post bail for their temporary release. The accused
Pablo Sola, Francisco Garcia, and Jose Bethoven

3 The one who filed this appeal which partakes of a nature of certiorari are private
prosecutors Francisco Cruz and Renecio Espiritu. The assertion of the petitioner private
prosecutors is that they are instituting the action `subject to the control and supervision of
the Fiscal. (CJ Fernandos prefatory statement states that the two have no legal standing to
raise this petition. Since Sol Gen Mendoza never bothered to question their legal standing,
the Court contented itself with the fact that the Solicitor General has authority to raise this

Change of venue
PEOPLE v. MAYOR PABLO SOLA
103 SCRA 393 (1981)
FERNANDO, C.J.
NATURE

petition in behalf of the People of the Philippines)

The Solicitor General adopted a two-pronged thrusts in this petition: 1. the setting aside, by
certiorari, of the order of the Municipal Court of Kabankalan, presided over by Judge Rafael
Gasataya, granting bail to the accused in the criminal cases mentioned above, and 2. the
petition for a change of venue or place of trial of the same criminal cases to avoid a
miscarriage of justice."

Cabral availed themselves of this right and have

since been released from detention.
-In a parallel development, the witnesses in the
murder cases informed the prosecution of their fears
that if the trial is held at the Court of First Instance
branch in Himamaylan which is but 10 kilometers
from Kabankalan, their safety could be jeopardized.
At least two of the accused are officials with power
and influence in Kabankalan and they have been
released on bail. In addition, most of the accused
remained at large. Indeed, there have been reports
made to police authorities of threats made on the
families of the witnesses." The facts alleged argue
strongly for the remedies sought, namely a change of
venue and the cancellation of the bail bonds.
-March 15, 1981: this Court issued the following
resolution: "The Court Resolved to: (A) [Note] the
comment of the Solicitor General on the urgent
petition for change of venue and cancellation of bail
bonds, adopting the plea of the petition, namely, (1)
the setting aside, by certiorari, of the order of the
Municipal Court of Kabankalan, presided over by
Judge Rafael Gasataya, granting bail to the accused
(2) the petition for a change of venue or place of trial
of the same criminal cases to avoid a miscarriage of
justice;
(B) [Transfer] the venue of the aforesaid criminal
cases to Branch V of the Court of First Instance of
Negros Occidental at Bacolod City, presided by
Executive Judge Alfonso Baguio, considering that
District Judge Ostervaldo Emilia of the Court of First
Instance, Negros Occidental, Branch VI at
Himamaylan has an approved leave of absence
covering the period from January 12 to March 12,
1981 due to a mild attack of cerebral thrombosis and
that the said Branch V is the nearest court station to
Himamaylan; and
(C) [Await] the comment of respondents on the
petition to cancel bail, without prejudice to the public
officials concerned taking the necessary measures to
assure the safety of the witnesses of the
prosecution." THUS, THE ISSUE OF A CHANGE OF
VENUE HAS BECOME MOOT AND ACADEMIC.
-The comments respectively submitted by
respondent Florendo Baliscao on March 5, 1981,
respondent Francisco Garcia on March 11, 1981 and
respondent Pablo Sola on March 16, 1981, dealt
solely with the question of the cancellation of the bail
bonds. Such comments were considered as answers,
with the case thereafter deemed submitted for
decision.

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ISSUE
Whether or not the bail bonds of respondents should
be cancelled

questions asked by the municipal judge before bail

was granted could be characterized as searching.
The fact did not cure an infirmity of a jurisdictional
character.
ON CHANGE OF VENUE: The constitution is quite
explicit. The Supreme Court could order "a change of
venue or place of trial to avoid a miscarriage of
justice."
-People v. Gutierrez, J.B.L. Reyes: "to compel the
prosecution to proceed to trial in a locality where its
witnesses will not be at liberty to reveal what they
know is to make a mockery of the judicial process,
and to betray the very purpose for which courts have
been established.
-The exercise by this Honorable Court of its above
constitutional power in this case will be appropriate.
The witnesses in the case are fearful for their lives.
They are afraid they would be killed on their way to
or from Himamaylan during any of the days of trial.
Because of this fear, they may either refuse to testify
or testify falsely to save their lives.
-there may be cases where the fear, objectively
viewed, may, to some individuals, be less than
terrifying, but the question must always be the effect
it has on the witnesses who will testify.
-The primordial aim and intent of the Constitution
must ever be kept in mind. In case of doubt, it should
be resolved in favor of a change of venue,

Prof. Victoria A.

12

Avena
HELD
YES.
Ratio. There being a failure to abide by the basic
requirement that the prosecution be heard in a case
where the accused is charged with a capital offense,
prior to bail being granted, must be decided in favor
of petitioner. The bail bonds must be cancelled and
the case remanded to the sala of Executive Judge
Alfonso Baguio for such hearing.
Reasoning. Bail was granted to the accused in the
Order of the Municipal Court without hearing the
prosecution. That is to disregard the authoritative
doctrine enunciated in People v. San Diego.
-Justice Capistrano: "The question presented before
us is, whether the prosecution was deprived of
procedural due process. The answer is in the
affirmative. We are of the considered opinion that
whether the motion for bail of a defendant who is in
custody for a capital offense be resolved in a
summary proceeding or in the course of a regular
trial, the prosecution must be given an opportunity to
present, within a reasonable time, all the evidence
that it may desire to introduce before the court
should resolve the motion for bail. If, as in the
criminal case involved in the instant special civil
action, the prosecution should be denied such an
opportunity, there would be a violation of procedural
due process, and the order of the court granting bail
should be considered void on that ground."
-J. Cardozo: "THE LAW, AS WE HAVE SEEN, IS
SEDULOUS IN MAINTAINING FOR A DEFENDANT
CHARGED WITH CRIME WHATEVER FORMS OF
PROCEDURE ARE OF THE ESSENCE OF AN
OPPORTUNITY TO DEFEND. PRIVILEGES SO
FUNDAMENTAL AS TO BE INHERENT IN EVERY
CONCEPT OF A FAIR TRIAL THAT COULD BE
ACCEPTABLE TO THE THOUGHT OF REASONABLE
MEN WILL BE KEPT INVIOLATE AND INVIOLABLE,
HOWEVER CRUSHING MAY BE THE PRESSURE OF
INCRIMINATING PROOF. BUT JUSTICE, THOUGH DUE
TO THE ACCUSED, IS DUE TO THE ACCUSER ALSO.
The concept of fairness must not be strained till it is
narrowed to a filament. We are to keep the balance
true."
-the very essence of due process as the embodiment
of justice requires that the prosecution be given the
opportunity to prove that there is strong evidence of
guilt. It does not suffice, as asserted herein, that the

Dispositive. WHEREFORE, the assailed order of

judge Rafael Gasataya granting bail to private
respondents is nullified, set aside, and declared to be
without force and effect. Executive Judge Alfonso
Baguio of the Court of First Instance of Negros
Occidental, to whose sala the cases had been
transferred by virtue of the resolution of this Court of
March 5, 1981, is directed forthwith to hear the
petitions for bail of private respondents, with the
prosecution being duly heard on the question of
whether or not the evidence of guilt against the
respondents is strong. This decision is immediately
executory. No costs.

B. COURT OF APPEALS
ST MARTIN FUNERAL HOME VS NLRC
G.R. No. 130866
REGALADO; Sept 16, 1998

NATURE
Petition for certiorari which stemmed from a
complaint for illegal dismissal filed by herein private
respondent before the NLRC
FACTS
- . Private respondent alleges that he started working
as Operations Manager of petitioner St. Martin
Funeral Home on February 6, 1995. However, there
was no contract of employment executed between
him and petitioner nor was his name included in the
semi-monthly payroll. On January 22, 1996, he was
dismissed from his employment for allegedly
misappropriating P38,000.00 which was intended for
payment by petitioner of its value added tax (VAT) to
the Bureau of Internal Revenue (BIR). Petitioner on
the other hand claims that private respondent was
not its employee but only the uncle of Amelita
Malabed, the owner of petitioner St. Martin's Funeral
Home. Sometime in 1995, private respondent, who
was formerly working as an overseas contract
worker, asked for financial assistance from the
mother of Amelita. Since then, as an indication of
gratitude, private respondent voluntarily helped the
mother of Amelita in overseeing the business.
- In January 1996, the mother of Amelita passed
away, so the latter then took over the management
of the business. She then discovered that there were
arrears in the payment of taxes and other
government fees, although the records purported to
show that the same were already paid. Amelita then
made some changes in the business operation and
private respondent and his wife were no longer
allowed to participate in the management thereof. As
a consequence, the latter filed a complaint charging
that petitioner had illegally terminated his
employment.
- Private respondent appealed to the NLRC. On June
13, 1997, the NLRC rendered a resolution setting
aside the questioned decision and remanding the
case to the labor arbiter for immediate appropriate
proceedings. Petitioner then filed a motion for
reconsideration which was denied by the NLRC in its
resolution dated August 18, 1997 for lack of merit,
hence the present petition alleging that the NLRC
committed grave abuse of discretion.
ISSUE
WON the SC should entertain the present petition

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HELD
NO (should be remanded to CA)
Ratio. All references in the amended Sec 9 of BP No.
129 to supposed appeals from the NLRC to the SC
are interpreted and hereby declared to mean and
refer to petitions for certiorari under Rule 65.
Consequently, all such petitions should henceforth be
initially filed in the CA in strict observance of the
doctrine on the hierarchy of courts as the appropriate
forum for the relief desired.
Reasoning. It will be noted that paragraph (3),
Section 9 of B.P. No. 129 now grants exclusive
appellate jurisdiction to the Court of Appeals over all
final adjudications of the Regional Trial Courts and
the quasi-judicial agencies generally or specifically
referred to therein except, among others, "those
falling within the appellate jurisdiction of the
Supreme Court in accordance with . . . the Labor
Code of the Philippines under Presidential Decree No.
442, as amended, . . . ." This would necessarily
contradict what has been ruled and said all along
that appeal does not lie from decisions of the NLRC.
Yet, under such excepting clause literally construed,
the appeal from the NLRC cannot be brought to the
Court of Appeals, but to this Court by necessary
implication.
The same exceptive clause further confuses the
situation by declaring that the Court of Appeals has
no appellate jurisdiction over decisions falling within
the appellate jurisdiction of the Supreme Court in
accordance with the Constitution, the provisions of
B.P. No. 129, and those specified cases in Section 17
of the Judiciary Act of 1948. These cases can, of
course, be properly excluded from the exclusive
appellate jurisdiction of the Court of Appeals.
However, because of the aforementioned
amendment by transposition, also supposedly
excluded are cases falling within the appellate
jurisdiction of the Supreme Court in accordance with
the Labor Code. This is illogical and impracticable,
and Congress could not have intended that
procedural gaffe, since there are no cases in the
Labor Code the decisions, resolutions, orders or
awards wherein are within the appellate jurisdiction
of the Supreme Court or of any other court for that
matter.
-Incidentally, it was noted by the sponsor therein that
some quarters were of the opinion that recourse from
the NLRC to the Court of Appeals as an initial step in
the process of judicial review would be circuitous and
would prolong the proceedings. On the contrary, as

he commendably and realistically emphasized, that

procedure would be advantageous to the aggrieved
party on this reasoning: i.e., , to allow these cases to
be appealed to the Court of Appeals would give
litigants the advantage to have all the evidence on
record be reexamined and reweighed after which the
findings of facts and conclusions of said bodies are
correspondingly affirmed, modified or reversed.
-Under such guarantee, the Supreme Court can then
apply strictly the axiom that factual findings of the
Court of Appeals are final and may not be reversed
on appeal to the Supreme Court. A perusal of the
records will reveal appeals which are factual in
nature and may, therefore, be dismissed outright by
minute resolutions.
-While the SC does not wish to intrude into the
Congressional sphere on the matter of the wisdom of
a law, on this score it adds the further observations
that there is a growing number of labor cases being
elevated to this Court which, not being a trier of fact,
has at times been constrained to remand the case to
the NLRC for resolution of unclear or ambiguous
factual findings; that the Court of Appeals is
procedurally equipped for that purpose, aside from
the increased number of its component divisions;
and that there is undeniably an imperative need for
expeditious action on labor cases as a major aspect
of constitutional protection to labor.
-This case therefore, reiterate the judicial policy that
the Supreme Court will not entertain direct resort to
it unless the redress desired cannot be obtained in
the appropriate courts or where exceptional and
compelling circumstances justify availment of a
remedy within and calling for the exercise of its
primary jurisdiction.
Disposition.The instant petition for certiorari is
hereby REMANDED, and all pertinent records thereof
ordered to be FORWARDED, to the Court of Appeals
for appropriate action and disposition consistent with
the views and ruling herein set forth, without
pronouncement as to costs.

C. RTC
CENTRAL BANK OF THE PHILIPPINES
and HON. JOSE B. FERNANDEZ, VS CA,
JUDGE TEOFILO GUADIZ, JR.,
PRODUCERS BANK OF THE
PHILIPPINES and PRODUCERS
PROPERTIES, INC.

208 SCRA 652

DAVIDE; May 8, 1992
NATURE
The common origin of these cases is Producers Bank
of the Philippines and Producers Properties, Inc. vs
CB, Jose B. Fernandez. Jr. and the Monetary Board
filed before the Makati RTC.
- the consolidation of the 2 cases was ordered:
FIRST CASE- a petition for review on certiorari of the
decision and the resolution of the CA. The impugned
decision upheld the Order of respondent Judge
Guadiz granting the motion for issuance of a writ of
preliminary injunction enjoining CB, Fernandez and
the Monetary Board from implementing Monetary
Board Resolutions No. 649 and No. 751, or from
taking the threatened appropriate alternative action
and the Order in the same case denying petitioners'
motion to dismiss and vacate said injunction. The
challenged resolution, on the other hand, denied
petitioners' MFR.
SECOND CASE- a petition for review directed
principally against the decision of the CA dismissing
the petition therein filed and sustained the various
Orders of the respondent Judge, but directed the
plaintiffs therein to amend the amended complaint
by stating in its prayer the specific amount of
damages which Producers Bank of the Philippines
(PBP) claims to have sustained as a result of losses of
operation and the conservator's bank frauds and
abuses; the Clerk of Court was also ordered to
determine the amount of filing fees which should be
paid by the plaintiffs within the applicable
prescriptive or reglementary period.
FACTS
- Petitioners claim that during the regular
examination of the PBP, CB examiners stumbled
upon some highly questionable loans which had been
extended by the PBP management to several
entities. Upon further examination, it was discovered
that these loans, totalling approximately P300
million, were "fictitious" as they were extended,
without collateral, to certain interests related to PBP
owners themselves. Said loans were deemed to be
anomalous particularly because the total paid-in
capital of PBP at that time was only P 140.544
million. This means that the entire paid-in capital of
the bank, together with some P160 million of
depositors' money, was utilized by PBP management
to fund these unsecured loans.

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- at the height of the controversy surrounding the
discovery of the anomalous loans, several blind items
about a family-owned bank in Binondo which granted
fictitious loans to its stockholders appeared in major
newspapers. These news items triggered a bank-run
in PBP which resulted in continuous over-drawings on
the bank's demand deposit account with the CB. On
the basis of the report submitted by the Supervision
and Examination Sector, Department I of the CB, the
Monetary
Board
(MB
placed
PBP
under
conservatorship.
- PBP nonetheless requested that the same be lifted
by the CB. Consequently, the MB directed the
principal stockholders of PBP to increase its capital
accounts by such an amount that would be
necessary for the elimination of PBP's negative net
worth.
- CB senior deputy Governor Gabriel Singson
informed PBP that the CB would be willing to lift the
conservatorship under the following conditions:
(a) PBP's unsecured overdraft with the Central Bank
will be converted into an emergency loan, to be
secured by sufficient collateral
(b) A comptroller for PBP and any number of bank
examiners deemed necessary to oversee PBP's
operations shall be designated by the CB, under
terms of reference to be determined by the
Governor;
(c) A letter from the Management of PBP authorizing
the CB to automatically return clearing items that
would result in an overdraft in its CB account shall be
submitted to the CB.
- the MB approved the consolidation of PBP's other
unsecured obligations to the CB with its overdraft
and authorizing the conversion thereof into an
emergency loan. The same resolution authorized the
CB Governor to lift the conservatorship and return
PBP's management to its principal stockholders upon
completion
of
the
documentation
and
full
collateralization of the emergency loan, but directed
PBP to pay the emergency loan in 5 equal annual
installments, with interest and penalty rates at MRR
180 days plus 48% per annum, and liquidated
damages of 5% for delayed payments.
- PBP submitted a rehabilitation plan to the CB.
Although said proposal was explored and discussed,
no program acceptable to both the CB and PPI was
arrived at because of disagreements on certain
matters such as interest rates, penalties and
liquidated damages. No other rehabilitation program
was submitted by PBP for almost 3 years; as a result
thereof, its overdrafts with the CB continued to

accumulate. Consequently, per Resolution No. 649,

the CB Monetary Board decided to approve in
principle what it considered a viable rehabilitation
program for PBP.
- There being no response from both PBP and PPI on
the proposed rehabilitation plan, the MB issued
Resolution No. 751 on 7 August 1987 instructing CB
management to advise the bank that:
a. The CB conservatorship over PBP may be lifted
only after PBP shall have identified the new group of
stockholders who will put in new capital in PBP and
after the Monetary Board shall have considered such
new stockholders as acceptable; and
b. The stockholders of PBP have to decide whether or
not to accept the terms of the rehabilitation plan as
provided
under
Resolution
No. 649 within one week from receipt of notice
hereof and if such terms are not acceptable to them,
the Central Bank will take appropriate alternative
action on the matter; . . .
- the PBP, without responding to the communications
of the CB, filed a complaint against the CB, the MB
and CB Governor Jose B. Fernandez, Jr. The
complaint, alleged that the conservatorship was
unwarranted,
ill-motivated,
illegal,
utterly
unnecessary and unjustified; that the appointment of
the conservator was arbitrary; that herein petitioners
acted in bad faith; that the CB-designated
conservators committed bank frauds and abuses;
that the CB is guilty of promissory estoppel; and that
by reason of the conservatorship, it suffered losses.
It prayed for a judicial review of the MB Resolutions
and the issuance of a TRO.
- The case was raffled to Branch 147 of Makati RTC
court which was then presided over by respondent
Judge.
- respondent Judge issued a TRO; Subsequently, he
issued an Order enjoining defendant-petitioners or
any of their agents from implementing Monetary
Board Resolutions Nos. 649 and 751 or from taking
the threatened "appropriate alternative action"
including exclusion of plaintiff bank from settlement
of clearing balances at the Central Bank clearing
house or any other action that will disturb the status
quo or the viability of plaintiff bank during the
pendency of this case conditioned upon the posting
of a bond in the amount of P2,000,000.00.
- PBP filed the Amended Complaint impleading PPI as
an additional plaintiff. No new allegations or causes
of action for said plaintiff were made. Petitioners filed
a Motion to Dismiss the Amended Complaint.

- the respondent Judge handed down an Order

denying the motion to dismiss on the following
grounds: (a) the amended complaint alleges ultimate
facts showing that plaintiff has a right and that such
a right has been violated by defendant; the
questioned MB Resolutions were issued arbitrarily
and with bad faith, "being a part of a scheme to
divest plaintiff's present stockholders of their control
of PBP and to award the same to the PDIC or its
unknown transferees"; and the averments of legality
or illegality of the conservatorship are relevant to the
cause of action since the complaint seeks the lifting
of the conservatorship; (b) While it is true that under
Section 28-A of the Central Bank Act the conservator
takes over the management of a bank, the Board of
Directors of such bank is not prohibited from filing a
suit to lift the conservatorship and from questioning
the validity of both the conservator's fraudulent acts
and abuses and its principal's (MB) arbitrary action;
besides, PPI is now a party-plaintiff in the action; and
(c) plaintiffs have paid the correct filing fees since
"the value of the case cannot be estimated."
FIRST CASE
- Unable to accept the above Order, CB and
Fernandez filed with respondent CA a petition for
certiorari with preliminary injunction to annul the
Orders of the respondent Judge, restrain the
implementation of the same and nullify the writ of
preliminary injunction. They contend therein that: 1.
The trial court's injunctive order and writ are
anomalous and illegal because they are directed
against CB acts and measures which constitute no
invasion of plaintiff's rights; and 2. The complaint
filed was, on its face, dismissible: (a) for failure to
state a cause of action, (b) for being unauthorized by
the party in whose name it purports to have been
filed, and (c) for failure of the purported plaintiff to
pay the required filing fees.
- CA dismissed the petition for lack of merit, ruling
that the CB's sudden and untimely announcement of
the conservatorship over PBP eroded the confidence
which the banking public had hitherto reposed on the
bank and resulted in the bank-run; it then concluded
that when the CB "peremptorily and illtimely
announced" the conservatorship, PBP was not given
an opportunity to be heard since the CB arbitrarily
brushed
aside
administrative
due
process
notwithstanding PBP's having sufficiently established
its inherent corporate right to autonomously perform
its banking activities without undue governmental
interference that would in effect divest its
stockholders of their control over the operations of

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Avena
the bank." It further held that the challenged
resolutions of the MB are not just advisory in
character "because the same sought to impose upon
the respondent bank petitioners' governmental acts
that were specifically designed and executed to
devise a scheme that would irreparably divest from
the stockholders of the respondent bank control of
the same."
On the issue of the non-payment of the correct
docket fees, the said court, in ruling that the correct
amount was paid, said that "the instant case is
incapable of pecuniary estimation because the value
of the losses incurred by the respondent bank cannot
be calibrated nor pinned down to a specific amount
in view of the damage that may be caused by the
appointment of a conservator to its goodwill and
standing in the community."
- petitioners filed with this Court the instant petition
for review. It is alleged therein that the respondent
Court committed grave abuse of discretion in:
(1) Ignoring petitioners' contention that since PBP did
not pay the correct filing fees, the trial court did not
acquire jurisdiction over the case; hence, pursuant to
Manchester Development Corp., et al. vs. Court of
Appeals, et al., the complaint should have been
dismissed for lack of jurisdiction on the part of the
court;
(2) . . . ruling on the propriety or impropriety of the
conservatorship as a basis for determining the
existence of a cause of action since the amended
complaint does not seek the annulment or lifting of
the conservatorship;
(3) . . . not holding that the amended complaint
should have been dismissed because it was filed in
the name of PBP without the authority of its
conservator; and
(4) . . . not setting aside the Order of the trial court
granting the issuance of a writ of preliminary
injunction which unlawfully restrained the CB from
exercising
its
mandated
responsibilities
and
effectively compelled it to allow the PBP to continue
incurring overdrafts with it.
- private respondents argue that the Manchester rule
is not applicable in the case at bar because what is
primarily sought for herein is a writ of injunction and
not an award for damages; it is further alleged that
an order denying a motion to dismiss is neither
appealable nor be made the proper subject of a
petition for certiorari absent a clear showing of lack
of jurisdiction or grave abuse of discretion.
SECOND CASE

- Pursuant to the powers and authority conferred

upon her by the Central Bank, Atty. Leonida
Tansinsin-Encarnacion,
in
her
capacity
as
conservator, instituted reforms aimed at making PBP
more viable. With this purpose in mind, she started
reorganizing the bank's personnel and committees.
- In order to prevent her from continuing with the
reorganization, PBP filed an Omnibus Motion asking
the
trial
court
for
an
order:
(a) reinstating PBP officers to their original positions
and restoring the bank's standing committees to
their
respective
compositions prior to
said
reorganization; (b) enjoining the lease of any portion
of the bank's space in Producers Bank Centre
building to third parties and the relocation of
departments/offices of PBP as was contemplated;
and (c) to hold, after an opportunity to be heard is
given her, said conservator in contempt of court for
disobedience of and resistance to the writ of
injunction. An opposition to the contempt charge was
later filed by said petitioner.
- respondent Judge issued an Order (a) requiring
conservator Tansinsin-Encarnacion to reinstate PBP
officers to their original positions prior to the
reorganization of the bank's personnel and restore
PBP's standing committees to their original
compositions, and (b) restraining her from leasing
out to third parties any portion of PBP's space in the
Producers Bank Centre building.
- A second Order directed Tansinsin-Encarnacion to
publish the financial statement of PBP
- On several occasions thereafter, conservator
Tansinsin-Encarnacion caused the publication of
PBP's financial statement as required by regulations,
without, however, carrying the items enumerated by
the trial court as "suspense accounts." Consequently,
contempt charges were filed against her, of which
she was found guilty. Tansinsin-Encarnacion filed a
petition for certiorari against respondent Judge,
Henry L. Co and the law firm of Quisumbing, Torres
and Evangelista. She prays therein for judgment
declaring respondent judge to be without jurisdiction
to entertain both the complaint and amended
complaint; declaring null and void all his orders,
specially the contempt orders; and finding
respondent Judge and respondent lawyers guilty of
violating their respective oaths of office.
- In her Memorandum submitted to the CA, TansinsinEncarnacion alleged that: (1) respondent Judge has
no jurisdiction because the filing of the case was not
authorized by the petitioner or the conservator in
violation of Section 28-A of R.A. No. 265, as

amended, it was filed after the ten (10) day period

prescribed by Section 29 of R.A. No. 265, as
amended, and the correct docket fees were not paid;
(2) respondent Judge illegally ordered her to return
to PPI the administration of the bank's three (3)
properties, contrary to his own writ of preliminary
injunction and earlier order to make the bank viable,
and to publish the alleged "suspense accounts"
contrary to Section 28-A of R.A. No. 265, as
amended, the writ of preliminary injunction and her
constitutional right to silence; (3) respondent Judge
erred in declaring her in contempt of court
notwithstanding his lack of jurisdiction over the case
and failure to set any date for the hearing and
reception of evidence, in violation of her right to due
process of law; and (4) respondents Judge and
lawyers are administratively liable for their grossly
illegal actuations and for depriving the Government
of at least P13.2 million in filing fees.
- In disposing of the issues raised, respondent Court
merely adopted with approval the ruling of the
respondent Judge on the question of jurisdiction,
sustaining the respondent Judge's ruling. As to the
filing of the complaint after the lapse of the 10-day
period provided for in Section 29 of R.A. No. 265, it
ruled that the Section does not apply because the
complaint
essentially
seeks
to
compel
the
conservator to perform his duties and refers to
circumstances and incidents which transpired after
said 10-day period.
- On the issue of lack of jurisdiction for non-payment
of correct filing fees, to which an exception was
made in the dispositive portion, the respondent Court
found the same to be "partly" meritorious. It agreed
with petitioner that while the other losses and
damages sought to be recovered are incapable of
pecuniary estimation, the damages inflicted on PBP
due to losses of operation and the conservator's bank
frauds and abuses were in fact pegged at
P108,479,771.00 in paragraph 26 of the amended
complaint. This specific amount, however, should
have been stated in the prayer of the complaint. It
also held that the Manchester case "has been legally
construed in the subsequent case of Sun Insurance
Office Ltd. and the case of Filipinas Shell Petroleum
Corp.
to the effect that applying the doctrine
initiated in the case of Manchester, together with
said subsequent thereto (sic), plaintiffs in the original
case should be given a reasonable time to amend
their complaint, more particularly, to state in their
prayer in the amended complaint the specific
amount of damages . . ."

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- On the orders of contempt and the reasons
therefor, respondent Court merely stated:
. . . Generally, when the court has jurisdiction over
the subject matter and of the person, decisions upon
or questions pertinent to the cause are decisions
within its jurisdiction, and however, irregular or
erroneous they may be, they cannot be corrected by
certiorari.
- Finally, on the administrative liability of the
respondent Judge and the lawyers, the respondent
Court declared the claim to be without merit.
ISSUE
WON the respondent Judge committed grave abuse
of discretion amounting to lack of jurisdiction in not
dismissing the Civil Case on the ground of nonpayment of the correct amount of docket fee in
violation of the rule enunciated in Manchester
Development Corp. vs. Court of Appeals, et al.
HELD
Ratio The action must be dismissed for failure of the
plaintiffs therein to pay the correct docket fees,
pursuant to Manchester. The said case was decided
by this Court on 7 May 1987, exactly 3 months and
20 days before the filing of the original complaint
and 5 months and 18 days before the filing of the
Amended Complaint. It was ruled therein that:
The Court acquires jurisdiction over any case
only upon the payment of the prescribed
docket fee. An amendment of the complaint or
similar
pleading
will
not thereby
vest
jurisdiction in the Court, much less the
payment of the docket fee based on the
amounts sought in the amended pleading.
Reasoning The respondent Judge, in ruling that PBP
and PPI had paid the correct docket fee of P102.00,
said that "the value of the case cannot be estimated"
since what is sought is an injunction against the
enforcement of the challenged resolutions of the MB;
in short, the claim for damages is merely incidental.
Upon the other hand, respondent Court, in its
Resolution, ruled that the case is "incapable of
pecuniary estimation" because the value of the
losses incurred by the PBP "cannot be calibrated nor
pinned down to a specific amount in view of the
damage that may be caused by the appointment of a
conservator to its goodwill and standing in the
community."
Both conclusions are unfounded and are the result of
a misapprehension of the allegations and causes of
action in both the complaint and amended complaint.

- While PBP cleverly worded its complaint to make it

appear as one principally for injunction, deliberately
omitting the claim for damages as a specific cause of
action, a careful examination thereof bears that the
same is in reality an action for damages arising out
of the alleged "unwarranted, ill-motivated and illegal
conservatorship," or a conservatorship which "was
utterly unnecessary and unjustified," and the
"arbitrary" appointment of a conservator. Thus, as
stated earlier, it devoted the bulk of its petition to
detailed events, occurrences and transactions in
support thereof and patiently enumerated the losses
it sustained and suffered.
- These are the very damages referred to in the
prayer:
to fully repair the damages inflicted on PBP
consisting of losses of operation and the
conservators' bank frauds and abuses
but not specified therein. To this Court's mind, this
was done to evade the payment of the corresponding
filing fees which, as computed by petitioner on the
basis
alone
of
the
specified
losses
of
P108,479,771.00, would amount to about P
437,000.00. The PBP then clearly acted with manifest
bad faith in resorting to the foregoing clever strategy
to avoid paying the correct filing fees. The
pronouncements in the Manchester case should thus
be reiterated:
The Court cannot close this case without making the
observation that it frowns at the practice of counsel
who filed the original complaint in this case of
omitting any specification of the amount of damages
in the prayer although the amount of over P78
million is alleged in the body of the complaint. This is
clearly intended for no other purpose than to evade
the payment of the correct filing fees if not to
mislead the docket clerk in the assessment of the
filing fee. . . .
- The respondent Court itself, confronted by the same
issue, but perhaps unaware of its earlier Resolution,
ruled that PBP and PPI are liable for the filing fees on
the claim for damages.
- respondent Court applied the rule laid down in Sun
Insurance Office and Filipinas Shell Petroleum Corp.
which were, by then, already overturned by
Manchester. Even granting for the sake of argument
that Sun Insurance and Pilipinas Shell may apply in
this case, the Court categorically stated:
It is not simply the filing of the complaint or
appropriate initiatory pleading, but the payment of
the prescribed docket fee, that vests a trial court
with jurisdiction over the subject-matter or nature of

the action. Where the filling of the initiatory pleading

is not accompanied by payment of the docket fee,
the court may allow the payment of the fee within a
reasonable time but in no case beyond the
applicable prescriptive or reglementary period.
- The prescriptive period therein mentioned refers to
the period within which a specific action must be
filed. It means that in every case, the docket fee
must be paid before the lapse of the prescriptive
period.
- There can be no question that in the instant case,
PBP's claims for damages arise out of an injury to its
rights. Pursuant to Article 1146 of the Civil Code, the
action therefor must be initiated within 4 years from
the time the cause of action accrued. Since the
damages arose out of the alleged unwarranted, illmotivated, illegal, unnecessary and unjustified
conservatorship, the cause of action, if any, first
accrued in 1984 and continued until 1987, when the
original complaint was filed. There is no showing that
PBP paid the correct filing fee for the claim within the
prescribed period. Hence, nothing can save the case
from being dismissed.
DISPOSITION
PREMISES CONSIDERED, the petitions are GRANTED.
The decision and resolution of the CA are REVERSED
and SET ASIDE. Respondent Judge is ordered to
dismiss Civil Case. All proceedings undertaken and
all orders issued by respondent Judge are hereby SET
ASIDE for being null and void.

ASCUE v CA (ANTONIO)
GR No. 84330
Padilla; May 8, 1991
NATURE
Petition for review on certiorari
FACTS
- Private respondents Ramon Antonio, Salvador
Salenga and Ulipia Fernandez (lessees) filed a
complaint with the MetroTC alleging that petitioner
Ascue (lessor) refused to collect their rentals. Hence,
they sought consignation of the payments with the
MetroTC.
- Ascue filed a motion to dismiss complaint on the
ground that it is the RTC not MTC which has
jurisdiction over consignation cases, the subject
matter of litigation being incapable of pecuniary

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estimation. The MetroTC denied Ascues motion to
dismiss and held that the inferior court had
jurisdiction since the consigned amount was P5,625
(well below 20K).
- Ascue later appealed to the RTC but the same
dismissed the appeal for being premature. Ascue
brought the case to the SC on direct appeal but the
case was referred back to the CA. The CA then
dismissed the petition and ruled that the jurisdiction
of a court in consignation cases depends on the
amount consigned, consignation being merely a form
of payment and the opposite of a demand by a
creditor for payment.
ISSUE
WON the CA erred in holding that consignation cases
fall within the jurisdiction of the MetroTC and that the
amount consigned determines said jurisdiction
HELD
No.
Ratio In valid consignation cases, where the thing
sought to be deposited is a sum of money, the
amount of debt due is determinable, hence, the
subject matter is capable of pecuniary estimation.
This amount sought to be consigned then determines
the jurisdiction of the court.
Reasoning petitioner is of the belief that it is the
RTC, not the MTC, which has jurisdiction over the
case, inasmuch as the subject matter of litigation
(the amount to be consigned) is incapable of
pecuniary estimation. This is wrong. Consignation is
the act of depositing the thing due with the court or
judicial authorities whenever the creditor cannot
accept or refuses to accept payment and it generally
requires a prior tender of payment. Two of the
requisites of it valid consignation are (1) that there is
a debt due. and (2) the amount is placed it the
disposal of the court. Thus, where no debt is due and
owing, consignation is not proper. In a valid
consignation where the thing sought to be deposited
is a sum of money, the amount of the debt due is
determinable. Clearly, the subject matter (i.e., the
amount due) in consignation cases is capable of
pecuniary estimation. This amount sought to be
consigned determines the jurisdiction of the court.
- In the case at bar. the amount consigned being
P5,625.00, the respondent metropolitan trial court
correctly assumed jurisdiction over the same in
accordance with Section 33(1) of BP Blg. 129.
Disposition Petition DENIED. CA decision AFFIRMED.

NEGRE v CABAHUG SHIPPING

16 SCRA 655
DIZON; April 29, 1966
NATURE
Appeal
FACTS
On August 14, 1961, Negre (appellant) filed
his complaint against Cabahug Shipping &
Co (appellee), a common carrier engaged in
the business of transporting persons and
goods for a price within Philippine waters, to
recover the sum of P3,774.90, representing
the value of a cargo of dried fish belonging
to him which was loaded on the latter's
vessel, and which was totally destroyed on
board thereof, before it could be transported
to its place of destination, due to the gross
negligence of the officers and members of
the crew of said vessel
As Cabahugs answer admitted liability for
the loss of said cargo, but only up to the
amount of P3,733,78, appellant moved for a
judgment on the pleadings. In replying
thereto, however, appellee moved to
dismiss the case on the ground that the
amount of the claim did not fall within the
jurisdiction of the court. Resolving this
motion, the court dismissed the complaint
for lack of jurisdiction, without prejudice to
the right of appellant to file the same with
the corresponding municipal court.
Appellant maintains in this appeal that his
action is one in admiralty and maritime
jurisdiction,
which,
pursuant
to
the
provisions of Section 44 of the Judiciary Act,
as amended, falls within the exclusive
original jurisdiction of the courts of first
instance, irrespective of the amount or the
value of the goods involved.
ISSUE/S
WON the case falls within the jurisdiction of CFI (RTC)
HELD
YES
Ratio. It has been held that, to give admiralty
jurisdiction over a contract, the same must relate to
the trade and business of the sea Admiralty

jurisdiction, it has also been held, extends to all

maritime torts.
Reasoning. The action was based upon an oral
contract for the transportation of goods by water.
-Moreover, the allegations of the complaint clearly
show: first, that the contract entered into between
the parties had already been partially performed with
the loading of the goods subject-matter thereof on
board appellee's vessel and the acceptance thereof
by said appellee, and second, that the maritime
contract binding the parties was breached by the
carrier because through his fault and that of his
agents and representatives the cargo became a total
loss.
Disposition Reversed.

BAITO V SARMIENTO
109 Phil. 148
PADILLA; APR 25, 1960
NATURE
Appeal from CFI Samar
FACTS
-Lucina Baito filed action for support against
her husband Anatalio Sarmiento.
-CFI Samar dismissed her complaint on the
ground that it has no jurisdiction, the amount
demanded as support being only P720
ISSUE
WON the CFI has jurisdiction over an action for
support if the amount claimed or demanded as
support is only P720, or not more than P2,000 (now
P5,000)
HELD
Ratio. An action for support does not only involve
the determination of the amount to be given as
support, but also the relation of the parties, the right
to support created by the relation, the needs of the
claimant, the financial resources of the person from
whom support is sought, all of which are not capable
of pecuniary estimation.
Reasoning. An action for support falls within the
original jurisdiction of Courts of First Instance under
section 44(a) of Republic Act No. 296, as amended
by Republic Act No. 2613.
Disposition The order appealed from is set aside

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and the case is remanded

D.
METROPOLITAN,
MUNICIPAL,
MUNICIPAL CIRCUIT TRIAL COURTS
Exclusive original jurisdiction in civil
and
estate
settlement
proceedings/over
provisional
remedies
Exclusive
original
jurisdiction
in
forcible entry and unlawful detainer
cases
LIM V CA (PIZARRO)
00 SCRA 00
GANCAYCO; March 18, 1991
NATURE
Petition to review the decision and resolution of the
Court of Appeals
FACTS
- Lim Kieh Tong, Inc. owns a building in Manila. One
of the rooms in the building (Room 301) is occupied
by Reginaldo Lim, an MTC judge.
- The original occupant of Room 103 was Lim Eng
Piao, the father of Reginaldo. When Lim Eng Piao
died, the occupancy was continued by Reginaldo.
Eventually, Reginaldo was able to acquire a house
and lot in Quezon City but he still used the room
where he kept his books, documents, appliances and
other important belongings.
- September 1987 LKT, Inc. changed the lock of the
main door of the building which was commonly used
by all the occupants of the building.
- September 30, 1987 Reginaldo was unable to
enter the building because he did not have a key to
the new lock. He was unable to get his law books for
a case he was working on so he had to purchase new
ones which cost him P1,235.00.
- October 1, 1987 - He requested for a new key from
the OIC of the buiding but his request was not
complied with.
- October 2, 1987 Reginaldo instituted a civil case
against Rafael Lim and Lim Kieh Tong, Inc. before the
Metropolitan Trial Court.
The complaint was
denominated as an action for damages with
injunction but was subsequently dismissed for lack of

jurisdiction.
- October 23, 1987 Another complaint was
instituted in the MTC which had the same allegations.
Reginaldo alleges that he has a clear and
unmistakable right to the use of said room, entitling
him to the writ of preliminary mandatory injunction
to command petitioner to provide him the
appropriate key to the lock of the main building; and
to pay damages in the amount of P1,253.00,
P5,000.00 attorney's fees and costs of the suit.
- November 2, 1987 - A temporary restraining order
was issued by respondent judge pending trial on the
merits, commanding LKT, Inc. to deliver the
appropriate keys to Reginaldo and to allow him to
enter the premises and Room 301 of the building. November 3, 1987 LKT, Inc. instituted the instant
petition.
- The Executive Judge issued a temporary restraining
order, enjoining the enforcement of the temporary
restraining order earlier issued by respondent judge
and from further taking cognizance of said civil case.
With regard to the issue of possession: Force
was used by LKT, Inc. in depriving Reginaldo of
physical possession of the room when the main
doors lock was changed without the knowledge and
consent of Reginaldo.
- The issue involved is mere physical possession
(possession de facto) and not juridical possession
(possession de jure) nor ownership.
- The purpose of forcible entry is that regardless of
the actual condition of the title to property, the party
in peaceable and quiet possession shall not be
turned out by strong hand, violence or terror.
- Considering that respondent judge found the
applicability of the Rule in Summary Procedure, the
motion to dismiss was correctly denied, a motion to
dismiss being one of the prohibited pleadings and
motions under Section 15 of the 1983 Rules on
Summary Procedure.
With regard to the issue of jurisdiction:
- LKT, Inc. argued that when the amount of damages
claimed is not specifically alleged in the complaint,
jurisdiction over the case would fall under the RTC as
the failure to so allege would characterize the subject
matter as one which is incapable of pecuniary
estimation.
- In Singson vs. Aragon, the SC held that exemplary
damages must be specified and if not, the municipal
trial court could still grant it, if together with the
other money claims, the amount of the total claim
does not exceed P10,000.00 (now P20,000).

ISSUE
WON the action for specific performance in this case
falls under the jurisdiction of the RTC
HELD
NO
Ratio In Vichanco vs. Laurilla, it was held that what
confers jurisdiction on the inferior court in forcible
entry and illegal detainer cases is not the amount of
unpaid rentals or damages involved, but rather the
nature of the action because the rents or damages
are only incidental to the main action.
Reasoning
- The suit is one for forcible entry and detainer under
Rule 70 of the Rules of Court. It was through stealth
that LKT, Inc. prevented Reginaldo from using the
room.
- Any person deprived of possession of any land or
building or part thereof, may file an action for
forcible entry and detainer in the proper inferior
court against the person unlawfully depriving or
withholding possession from him.
- This relief is available to a landlord, vendor and
vendee and also to a tenant or lessee or any other
person against whom the possession of any land or
building, or a part of it, is unlawfully withheld, or is
otherwise unlawfully deprived possession within 1
year after such unlawful deprivation or withholding
possession.
Disposition Petition is denied. No costs.

Exclusive original jurisdiction

in civil actions involving title to
or possession of real property
RUSSELL V VESTIL
304 SCRA 738
KAPUNAN; March 17, 1999
NATURE
Petition for Certiorari
FACTS
- Petitioners filed a complaint against respondents,
denominated "DECLARATION OF NULLITY AND
PARTITION," with the RTC of Mandaue City
- The complaint alleged that petitioners are coowners of that parcel of land in Liloan, Cebu. The

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land was previously owned by the spouses Casimero
Tautho and Cesaria Tautho.
- Upon the death of said spouses, the property was
inherited by their legal heirs, herein petitioners and
private respondents.
Since then, the lot had
remained undivided until petitioners discovered a
public document denominated "DECLARATION OF
HEIRS AND DEED OF CONFIRMATION OF A PREVIOUS
ORAL AGREEMENT OF PARTITION"
- By virtue of this deed, respondents divided the
property among themselves to the exclusion of
petitioners.
- The complaint prayed that the document be
declared null and void and an order be issued to
partition the land among all the heirs.
- Respondents filed a Motion to Dismiss the
complaint on the ground of lack of jurisdiction over
the nature of the case as the action is one for repartition and since the assessed value of the
property as stated in the complaint is P5,000.00,
then, the case falls within the jurisdiction of the
MCTC of Liloan, Compostela, Cebu
- Petitioners filed an Opposition to the Motion to
Dismiss saying that the complaint is for the
annulment of a document denominated as
"DECLARATION
OF
HEIRS
AND
DEED
OF
CONFIRMATION OF PREVIOUS ORAL PARTITION,"
which is clearly one incapable of pecuniary
estimation, thus, cognizable by the RTC
- The respondent judge issued an Order granting the
Motion to Dismiss.
- A Motion for Reconsideration of said order was filed
by petitioners
- Respondents did not oppose the motion for
reconsideration.
- Respondent judge issued another Order denying
the motion for reconsideration.
- Hence, this petition
ISSUE
WON the RTC has jurisdiction to entertain the civil
case.
HELD
YES.
Ratio Singsong vs. Isabela Sawmill: In determining
whether an action is one the subject matter of which
is not capable of pecuniary estimation this Court has
adopted the criterion of first ascertaining the nature
of the principal action or remedy sought. If it is
primarily for the recovery of a sum of money, the
claim is considered capable of pecuniary estimation,

and whether jurisdiction is in the municipal courts or

in the courts of first instance would depend on the
amount of the claim. However, where the basic issue
is something other than the right to recover a sum of
money, where the money claim is purely incidental
to, or a consequence of, the principal relief sought,
this Court has considered such actions as cases
where the subject of the litigation may not be
estimated in terms of money, and are cognizable
exclusively by courts of first instance Examples of
actions incapable of pecuniary estimation are those
for specific performance, support, or foreclosure of
mortgage or annulment of judgment; also actions
questioning the validity of a mortgage, annulling a
deed of sale or conveyance and to recover the price
paid and for rescission, which is a counterpart of
specific performance.
While actions under Sec. 33(3) of B.P. 129 are also
incapable of pecuniary estimation, the law
specifically mandates that they are cognizable by the
MTC, METC, or MCTC where the assessed value of the
real property involved does exceed P20,000.00 in
Metro Manila, or P50,000.00, if located elsewhere. If
the value exceeds P20,000.00 or P50,000.00 as the
case may be, it is the Regional Trial Courts which
have jurisdiction under Sec. 19(2).
Reasoning The subject matter of the complaint in
this case is annulment of a document denominated
as "DECLARATION OF HEIRS AND DEED OF
CONFIRMATION OF PREVIOUS ORAL PARTITION." The
main purpose of petitioners in filing the complaint is
to declare null and void the document in which
private respondents declared themselves as the only
heirs of the late spouses Casimero Tautho and
Cesaria Tautho and divided his property among
themselves to the exclusion of petitioners who also
claim to be legal heirs and entitled to the property.
While the complaint also prays for the partition of the
property, this is just incidental to the main action,
which is the declaration of nullity of the document
above-described. It is axiomatic that jurisdiction
over the subject matter of a case is conferred by law
and is determined by the allegations in the complaint
and the character of the relief sought, irrespective of
whether the plaintiff is entitled to all or some of the
claims asserted therein.
Disposition The petition was GRANTED.

E. SPECIAL RULES

MANUFACTURER'S DISTRIBUTORS,
INC., V
YU SIU LIONG
11 SCRA 680
REYES, JBL; April 29 1966
NATURE
Appeal on points of law from an order of the CFI
Manila sustaining and affirming an order of the MTC
Manila dismissing the original complaint for want of
jurisdiction.
FACTS
-Manufacturer's Distributors, Inc. had filed action in
MTC Manila, Branch III, seeking to compel Yu Siu
Liong to accept delivery of 74,500 pieces of plastifilm
bags, balance of 100,000 pieces ordered by said Yu
Sio Liong and supplied by the Manufacturers
Distributors; to pay P3,376.00, the value of the
100,000 pieces of plastifilm bags ordered by him,
plus 12% interest per annum thereon until fully paid;
and to pay the amount of P844.00, for and as
stipulated
attorney's
fees.
Manuufacturers
Distributors also prayed for such other reliefs as may
be deemed just and equitable in the premises.
-Yu Sio Liong filed MTD on the ground that, the
subject of the litigation being specific performance,
the same lay within the exclusive jurisdiction of the
CFI. MTC upheld Yu Sio Liong and dismissed the
complaint.
-CFI affirmed the order of dismissal with costs,
saying: Manufacturers Distributors's action before
the MTC was one for specific performance Whether
refusal to accept delivery of said plastifilms was
justified or not is not capable of pecuniary estimation
and was, therefore, not cognizable by the Municipal
Court."
-Manufacturers Distributors contend that the
subject of the litigation were the 100,000 plastifilm
bags, contracted for by Yu Sio Liong at a total price
of P3,376.00, and, therefore, it was susceptible of
pecuniary estimation.
ISSUE
WON the issue is incapable of pecuniary estimation,
and is therefore not within the jurisdiction of MTC
HELD
YES.

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-There is no controversy, as to the contractual price
for the plastifilm bags; the dispute is whether or not
Yu Sio Liong was justified in its refusal to accept the
delivery of the bags. This matter plainly is not
capable of pecuniary estimation, and, therefore, is
not within the jurisdiction of the MTC.
-Speaking of the original jurisdiction of the Justice of
the Peace and Municipal Courts, the Judiciary Act, as
amended, in its sec88, after conferring original
jurisdiction in Justice of the Peace and Municipal
Courts over cases where the value of the subject
matter or amount of the demand does not exceed
P5,000.00, provides nevertheless in its par2 that
"The jurisdiction of a justice of the peace and judge
of a municipal court shall not extend to civil actions
in which the subject of litigation is not capable of
pecuniary estimation, except in forcible entry and
detainer cases; nor to those which involve the
legality of any tax, impost or assessment; nor to
actions involving admiralty or maritime jurisdiction;
nor to matters of probate, the appointments of
trustees or receiver; nor to actions for annulment of
marriages; . . ." Jurisdiction over the classes of cases
thus excluded is conferred on the CFI (Judiciary Act,
sec44).
-That Manufacturers Distributors's complaint also
sought the payment by Yu Sio Liong of P3,376.00
plus interest and attorney's fees, does not give a
pecuniary estimation to the litigation, for the
payment of such amounts can only be ordered as a
consequence of the specific performance primarily
sought. In other words, such payment would be but
an incident or consequence of Yu Sio Liong's liability
for specific performance. If no such liability is
judicially declared, the payment cannot be awarded.
Hence, the amounts sought do not represent the
value of the subject of litigation.
-Subject matter over which jurisdiction cannot be
conferred by consent, has reference, not to the res or
property involved in the litigation nor to a particular
case, but to the class of cases, the purported subject
of litigation, the nature of the action and of the relief
sought.
-The [Municipal Trial] Court has no jurisdiction of a
suit for specific performance of a contract, although
the damages alleged for its breach, if permitted, are
within the amount of which that court has
jurisdiction.
-Cruz vs. Tan (87 Phil. 627) is inapplicable. In said
case, the plaintiff had made an alternative prayer:
specific performance or payment of the sum of
P644.31. The alternative prayer meant that the

payment of the latter sum was a pecuniary

estimation of the specific performance sought, since
it would equally satisfy the claims of the plaintiffs. In
the present case, the payment in money is not an
alternative equivalent, but a consequence or result of
the specific performance, and hence can not
constitute a pecuniary estimation thereof.
Disposition CFI order affirmed.

CRUZ V TAN
87 SCRA 627
JUGO; November 27, 1950
NATURE
Original action in the Supreme Court. Certiorari and
prohibition with injunction.
FACTS
- August 3, 1949: respondent Telesfora Yambao filed
a complaint against the petitioner Manuel Cruz,
praying that the latter be ordered to finish the
construction of a house mentioned in the complaint,
or to pay her the sum of P644.31.
- Within ten days from the receipt of the summons,
the petitioner filed a motion for a bill of particulars,
which was denied by the court.
- September 19, 1949: petitioner filed a motion to
dismiss the case on the ground that the CFI has no
jurisdiction over the subject-matter of the suitthe
demand contained in the prayer is only for P644.31,
which falls under the Justice of the Peace or the
Judge of the Municipal Court. The motion to dismiss
was denied by the court, and trial for the merits was
also set.
- Order setting the case for trial on October 10, 1949
was received by petitioners counsel on October 12
(two days after). Since the parties did not appear at
the trial, the court dismissed the case for lack of
interest of the parties on October 10, 1949.
- October 12, 1949: respondent Yambao filed a
motion praying that the trial of the case be set for
November 14, 1949. The motion was heard on
October 15, 1949, but as the petitioners counsel
received notice of the said motion on Oct. 15, he
could not appear in the said hearing.
ISSUE
1. WON CFI has jurisdiction over the case.
HELD
NO

Ratio The jurisdiction of the respective courts is

determined by the value of the demand and not the
value of the transaction out of which the demand
arose.
Reasoning
- The case comes within the exclusive original
jurisdiction of the municipal court or justice of the
peace court.
Judiciary Act of 1948
SEC. 44. Original jurisdiction.CFI shall have original
jurisdiction:
(c) In all cases in which the demand, exclusive of
interest, or the value of the property in
controversy, amounts to more than two thousand
pesos.
SEC. 86. Jurisdiction of justices of the peace and
judges of municipal courts of chartered cities.
(b) Original jurisdiction in civil actions arising in
their respective municipalities, and not exclusively
cognizable by the CFI.
SEC. 88. Original Jurisdiction in civil cases.
Xxx exclusive original jurisdiction where the value
of the subject-matter or amount of the demand
does not exceed two thousand pesos, exclusive of
interest and costs.
- The alternative prayer for specific performance is
also of the same value, for the alternative prayers
would not have been made in the complaint if one
was more valuable than the other; the specific
performance alternatively prayed for is capable of
pecuniary estimation at P644.31.
DISPOSITION
Judge of CFI is declared without jurisdiction to try the
case, and is ordered to stop further proceedings by
dismissing the case.

LAPITAN V SCANDIA
24 SCRA 477
REYES, J.B.L., July 31, 1968
FACTS
- Andres Lapitan has appealed directly to this Court
against an order of the CFI of Cebu, dismissing, for
lack of jurisdiction, his complaint for rescission and
damages against appellees Scandia, Inc., of Manila
and General Engineering Co. of Cebu. Plaintiff avers
that on April 17, 1963 he purchased from Scandia,
Inc., one ABC Diesel Engine; that he bought the
engine for running a rice and corn mill; that
defendants had warranted and assured him that all

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spare parts for said engine are kept in stock in their
stores, enabling him to avoid loss due to long periods
of waiting, and that defendants would replace any
part of the engine that might break within 12 months
after delivery.
- The cam rocker arm of the engine broke due to
faulty material and workmanship and it stopped
functioning; the sellers were unable to send a
replacement until August 29, 1963; barely six days
after replacement the new part broke again due to
faulty casting and poor material, so Lapitan notified
the sellers and demanded rescission of the contract
of sale; he sought return of the price and damages
but defendants did not pay.
- Scandia, Inc., moved to dismiss the complaint on
the ground that the total amount claimed was only
P8,735.00, and was within the exclusive jurisdiction
of the municipal court, under RA 3828, amending the
Judiciary Act by increasing the jurisdiction of
municipal courts to civil cases involving P10,000.00
or less. The CFI dismissed the action for lack of
jurisdiction. Lapitan appealed directly to this Court,
arguing (1) that rescission was incapable of
pecuniary estimation, and (2) that as he claimed
moral and exemplary damages, besides the price of
P3,735.00, P4,000.00 actual damages, and P1,000.00
attorneys' fees, the value of his demand exceeded
the jurisdiction of the municipal court.
ISSUE
WON CFI had jurisdiction
HELD
YES.
Ratio. In determining whether an action is one the
subject matter of which is not capable of pecuniary
estimation, this Court has adopted the criterion of
first ascertaining the nature of the principal action or
remedy sought. If it is primarily for the recovery of a
sum of money, the claim is considered capable of
pecuniary estimation, and whether jurisdiction is in
the municipal courts or in the CFI would depend on
the amount of the claim. However, where the basic
issue is something other than the right to recover a
sum of money, or where the money claim is purely
incidental to, or a consequence of, the principal relief
sought, like in suits to have the defendant perform
his part of the contract and in actions for support, or
for annulment of a judgment or to foreclose a
mortgage, this Court has considered such actions as
cases where the subject of the litigation may not be
estimated in terms of money, and are cognizable

exclusively by theCFI. Actions for specific

performance of contracts have been expressly
pronounced to be exclusively cognizable by the CFI.
And no cogent reason appears why an action for
rescission should be differently treated. We,
therefore, rule that the subject matter of actions for
rescission of contracts are not capable of pecuniary
estimation.

THE GOOD DEVELOPMENT

CORPORATION V TUTAAN
73 SCRA 189
CONCEPCION; September 30, 1976
NATURE
Petition for certiorari
FACTS
- A complaint was filed before the CFI of Rizal against
private respondents Guillermo delos Reyes and
Marcelina Marcelo for the recovery of the sum of
P1520 plus interest and the sum equivalent to 25%
of the total amount due as attorneys fees, and in
default of payment thereof, to order the foreclosure
of the chattel mortgage (worth P15,340) executed by
the said respondents. Gregorio Emperado and
Leonarda de la Cruz were made party defendants
since they were co-makers of the promissory note.
- Private respondents, in their answer claims that the
loaned sued upon is only one of five loans secured by
them from the petitioner wherein they were charged
usurious interest. They claim that the balance due is
only P1260.
- For failure to plead, Emperado was declared in
default while the case against de la Cruz was
dismissed w/o prejudice.
- Respondents file a motion to dismiss for lack of
jurisdiction since the petitioner only prays for P1520.
It therefore comes under the jurisdiction of the
original jurisdiction of the municipal court. Also, since
the petitioner prays for foreclosure of chattel in
Bulacan, it should have been filed there where the
deed of chattel mortgage is located. The CFI
dismissed the case. Motion for reconsideration was
likewise denied.
ISSUE/S
1. WON the city court has jurisdiction
HELD
1. YES.

Ratio Although the purpose of the action is to

recover an amount plus interest which comes within
the original jurisdiction of the Justice of the Peace
Court, yet when said action involves foreclosure of
chattel mortgage covering properties valued at more
than P10,000, the action should be instituted before
the CFI.
Reasoning In the case at bar, the amount sought to
be recovered is P1520 plus interest and costs, and
chattel mortgage of properties valued at P15340. It is
therefore within the jurisdiction of the CFI.
Disposition Petition granted

1997 RULES OF CIVIL PROCEDURE

SCOPE AND CONSTRUCTION
UNIFORM PROCEDURE
ACTIONS
NATURE
Real/personal/mixed
HERNANDEZ V. RURAL BANK OF
LUCENA
81 SCRA 75
AQUINO, 10 Jan. 1978
FACTS
-This case is about the propriety of a separate action
to compel a distressed rural bank, which is under
judicial liquidation, to accept a check in payment of a
mortgage debt.
-Spouses Francisco S. Hernandez and Josefa U.
Atienza obtained from the Rural Bank of Lucena, Inc.
a loan of P6,000 secured by a mortgage on their two
lots situated in Cubao, Quezon City. Three months
after that loan was obtained, the Lucena bank
became a distressed bank.
-Before the expiration of the one year term of the
loan, or on August 22, 1961, Hernandez went to the
Lucena bank and offered to pay the loan by means of
a check for P6,000 which was drawn against the bank
by a depositor, the San Pablo Colleges, and which
was payable to Hernandez. As the bank's executive
vice-president was not available, the payment was
not consummated. At the time that the check was
issued, the San Pablo Colleges had a deposit in the

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Lucena bank amounting to P11,890.16. Instead of
withdrawing P6,000 from that deposit, the San Pablo
Colleges chose to issue a check for that amount to
Hernandez. He sent to the bank by registered mail a
photostat of the check and a letter inquiring whether
the bank would honor the check and when he could
go personally to the bank for that purpose. That
letter was received by the bank. The executive vicepresident wrote to Hernandez and informed him that
the check could not be honored for the time being
because of adverse events that had disrupted the
bank's operations. What the vice-president meant
was that by reason of the letter of the Central Bank
Governor dated June 16, 1961 the operations of the
Lucena bank were suspended. The vice-president
explained that because there was a run on the bank
its assets were exhausted, and so the check sent by
Hernandez, which check was drawn against the
Lucena bank, could not be accepted. The vicepresident said that when Hernandez presented the
check, the Lucena bank was no longer in a position to
honor withdrawals and that had Hernandez paid
cash, his payment would have been accepted. To
honor the check would have been tantamount to
allowing a depositor (San Pablo Colleges) to make a
withdrawal but the Lucena bank could not entertain
withdrawals without the consent of the Central Bank
examiners. Payment by check was a disbursement.
Apparently, the vice-president did not take the
trouble of asking the Central Bank examiners
whether the payment by check made by Hernandez
could be accepted. Hernandez himself who should
have known that the bank was a distressed bank
which had suspended operations and which was
under the supervision of Central Bank examiners, did
not bother to take up his problem with the said
examiners.
-Hernandez again asked the bank when he could
deliver the check. The executive vice-president told
Hernandez that the bank could not yet honor the
check because it had not resumed its banking
operations; that it was awaiting the outcome of a
case filed by the bank against the Central Bank; that
it might reopen in January, 1962, and that, anyway,
the loan would not be due until March 21, 1962.
Hernandez sent another letter and enclosed the
original check (duly endorsed) with his letter to the
bank sent by registered mail and special delivery.
Letter was returned to Hernandez because the
bank's manager was allegedly in Manila. Undeterred,
Hernandez again mailed the check to the bank with
the request that his mortgage be cancelled.

-Monetary Board had decided to liquidate the Lucena

bank. To implement the resolution of the Monetary
Board for the Liquidation of the Lucena bank, the
Central Bank, pursuant to section 29 of its charter
and on the assumption that the Lucena bank was
insolvent, filed with the Court of First Instance of
Manila a petition dated March 27, 1962 for assistance
and supervision in the liquidation of the Lucena bank.
Court of First Instance of Manila issued an order
directing the Lucena bank to turn over its assets to
the Central Bank's authorized representative.
-Among the accounts receivable of the Lucena bank
inventoried by the Central Bank's representative was
the account of Hernandez. In a letter dated October
29, 1963 Hernandez informed the Central Bank that
he had sent to the Lucena bank on April 25, 1962 the
check for P6,000. He again requested that his
mortgage
be
cancelled.
The
Associate
Superintendent of Banks in his answer returned the
check to Hernandez and informed him that,
according to the Lucena bank's executive vicepresident, the check could not be applied to the
payment of Hernandez' loan because the bank was
already closed when he received the check.
Moreover, the check was drawn against the current
deposits of the San Pablo Colleges in the Lucena
bank which was in the process of liquidation.
Hernandez was advised to settle his account by
paying cash or by means of a check drawn against a
bank other than the Lucena bank.
-Disregarding that suggestion, Hernandez announced
to the Associate Superintendent of Banks in his letter
that he was going to deposit the said check in the
Court of First Instance of Lipa City on or before
December 26, 1963.
-Instead of filing a consignation complaint.
Hernandez enclosed the check with his letter to the
clerk of court of the Court of First Instance at Lipa
City. Hernandez wrote a letter dated January 11,
1964 informing the Associate Superintendent of
Banks of the judicial deposit of the check. Copies of
that letter were furnished the Lucena bank and the
San Pablo Colleges.
- Hernandez and his wife filed an action in the Court
of First Instance at Lipa City to compel the Rural
Bank of Lucena, Inc., the Central Bank as liquidator,
and Jose S. Martinez as receiver, to accept the check
and to execute the cancellation of the real estate
mortgage. The Hernandez spouses also asked for
moral damages in the amount of P10,000 and
attorney's fees of P3,000.

- Central Bank filed a motion to dismiss. It contended

that there was improper venue because, as the
action allegedly involved title to real property, it
should have been instituted in Quezon City where the
encumbered lots are situated. It further contended
that since the Lucena bank is under liquidation and is
in the hands of a receiver, its properties and assets
are in custodia legis and may, therefore, be reached
only by motion or petition in Civil Case No. 50019 of
the Court of First Instance of Manila. The motion was
denied.
-Counsel for the Lucena bank on January 30, 1967
offered to compromise the case by stipulating that
the Central Bank would apply the check in question
to the mortgage debt of Hernandez if the balance of
the deposit of the San Pablo Colleges would be
enough to cover the amount of the check of P6,000
and that, by virtue of that compromise, the
complaint and counterclaim would be dismissed.That
conditional and equivocal compromise offer fizzled
out because the lawyers of Hernandez and the
Central Bank did not assent to it.
-Lower court ordered the Lucena bank or the Central
Bank, as liquidator, to accept and honor the check, to
cancel the mortgage, and to pay the Hernandez
spouse P25,000 as moral damages (not P10,000 as
prayed for in the complaint) plus P1,000 as
attorney's fees.
-The Lucena bank, the Central Bank and its
employee, the receiver, appealed to the SC.
ISSUE/S
1. WON the action of the Hernandez spouses to
compel them to honor the check in question and to
cancel the mortgage on their two lots is a real action
affecting title to real property which should have
been filed in the Court of First Instance of Rizal at
Quezon City where the mortgaged lots are situated.
2. WON Lucena bank had not lost its juridical
personality after it was placed under liquidation thus
making it not fall under the jurisdiction of the
liquidation court
HELD
1. No it is a personal action.
Section 2(a), Rule 4 of the Rules of Court provides
that "actions affecting title to, or for recovery of
possession, or for partition or condemnation of, or
foreclosure of mortgage on, real property, shall be
commenced and tried in the province where the
property or any part thereof lies"

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Note that the rule mentions an action for foreclosure
of a real estate mortgage but does not mention an
action for the cancellation of a real mortgage. In the
instant case, the action is primarily to compel the
mortgagee to accept payment of the mortgage debt
and to release the mortgage.
That action, which is not expressly included in
the enumeration found in section 2(a) of Rule
4, does not involve the title to the mortgage
lots. It is a personal action and not a real
action. The mortgagee has not foreclosed the
mortgage. Plaintiffs' title is not in question.
They are in possession of the mortgaged lots.
Hence, the venue of plaintiffs' personal action is the
place where the defendant or any of the defendants
resides or may be found, or where the plaintiff or any
of the plaintiffs resides, at the election of the plaintiff
(Sec. 2[b], Rule 4).
The plaintiffs in their brief confound a real action with
an action in rem and a personal action with an action
in personam. They argue that their action is not an
action in rem and, therefore, it could be brought in a
place other than the place where the mortgaged lots
are located.
A real action is not the same as an action in
rem and a personal action is not the same as
an action in personam.
In a personal action, the plaintiff seeks the
recovery
of
personal
property,
the
enforcement of a contract or the recovery of
damages. In a real action, the plaintiff seeks
the recovery of real property, or, as indicated
in section 2(a) of Rule 4, a real action is an
action affecting title to real property or for the
recovery of possession, or for partition or
condemnation of, or foreclosure of a mortgage
on, real property.
An action in personam is an action against a
person on the basis of his personal liability,
while an action in rem is an action against the
thing itself, instead of against the person (1 C.
J. S. 943-4), Hence, a real action may at the
same time be an action, in personam and not
necessarily an action in rem. In this case, the
plaintiffs alleged in their complaint that they
were residents of San Juan, Batangas, which in
their brief they characterize as their legal
residence and which appears to be their
domicile of origin.
On the other hand, it is indicated in the promissory
note and mortgage signed by them and in the
Torrens title covering the mortgaged lots that their

residence is at 11 Chicago Street, Cubao, Quezon

City, which apparently is the place where the said
lots are located. The plaintiffs did not testify during
the trial, So, they have no testimony in the records
as to their actual residence.
We hold that the trial court should have
dismissed the action because the venue
thereof was improperly laid in Batangas. The
term "resides" in section 2[b] of Rule 4 refers
to the place of actual residence or the place of
abode and not necessarily to the legal
residence or domicile (Dangwa Transportation
Co., Inc. vs. Sarmiento, L-22795, January 31,
1977, 75 SCRA 124, 128). (Of course, the actual
residence may also in some cases be the legal
residence or domicile.).
San Juan, Batangas might be the place where the
plaintiffs have their domicile or legal residence but
there is no question that 11 Chicago Street, Cubao,
Quezon City is their place of abode or the place
where they actually reside. So, the action in this
case, which is a personal action to compel the
defendants to honor the check in question and to
cancel the mortgage, should have been filed in
Quezon City if the plaintiffs intended to use their
residence as the basis for their choice of venue.
The Central Bank points out that the redemption
action of the Hernandez spouses would ultimately
affect the funds and property of the Lucena Bank.
Hence, the liquidation court is the competent tribunal
to pass upon the issue as to whether the Hernandez
spouses could validly pay their mortgage debt by
means of the check of the San Pablo Colleges.
2. No. The liquidation court or the Manila court has
exclusive jurisdiction to entertain the claim of the
Hernandez spouses.
At the time the Hernandez spouses filed in 1964 their
consignation complaint the Lucena bank was already
under liquidation. The Manila court in its order of
March 28, 1963 had ordered the officers of the
Lucena bank to turn over to the Central Bank or to
the receiver, the Superintendent of Banks, all of its
assets, properties and papers. Among the assets
turned over to the receiver was the outstanding or
unpaid account of the Hernandez spouses which
appears in the inventory as: "393. Hernandez,
Francisco S., 11 Chicago St., Cubao, Q. C.
And among the papers or obligations turned over to
the receiver was Ledger No. 056 evidencing the
deposit of the San Pablo Colleges in the Lucena bank
in the sum of P11,890.16, against which the check

for P6,000 was drawn. It was that check which the

Hernandez spouses had issued to pay their mortgage
debt to the Lucena bank.
Under section 29 of the Central Bank Act, Republic
Act No. 265, when the Monetary Board, upon
information submitted by the Superintendent of
Banks, finds a bank to be insolvent, it shall forbid the
bank to do business and it shall take care of its
assets according to law.
In that case, if the Monetary Board finds out that the
insolvent bank cannot resume business with safety
to its creditors, it shall through the Solicitor General,
file a petition in the Court of First Instance, praying
for the assistance and super vision of the court in the
liquidation of the bank's affairs. Thereafter, the
Superintendent of Banks, upon order of the Monetary
Board and under the supervision of the court, shall
convert to money the bank's assets. "Sabido es que
uno de los deberes primordiales de un depositario es
hacerse cargo inmediatamente de todo el activo y
pasivo de un banco" (Luy Lam & Co. vs. Mercantile
Bank of China, 71 Phil. 573, 576).
The fact that the insolvent bank is forbidden to
do business, that its assets are turned over to
the Superintendent of Banks, as a receiver, for
conversion into cash, and that its liquidation is
undertaken with judicial intervention means
that, as far as lawful and practicable, all claims
against the insolvent bank should be filed in
the liquidation proceeding.
The judicial liquidation is intended to prevent
multiplicity of actions against the insolvent bank. The
lawmaking body contemplated that for convenience
only one court, if possible should pass upon the
claims against the insolvent bank and that the
liquidation court should assist the Superintendent of
Banks and control his operations.
In the course of the liquidation, contentious cases
might arise wherein a full-dress hearing would be
required and legal issues would have to be resolved.
Hence, it would be necessary in justice to all
concerned that a Court of First Instance should assist
and supervise the liquidation and should act as
umpire and arbitrator in the allowance and
disallowance of claims.
The judicial
liquidation
is a pragmatic
arrangement
designed
to
establish
due
process and orderliness in the liquidation of
the bank, to obviate the proliferation of
litigations
and
to
avoid
injustice
and
arbitrariness.

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DispositioN. WHEREFORE, the trial court judgment
is reversed and set aside. The case is dismissed
without prejudice to the right of the Hernandez
spouses to take up with the liquidation court the
settlement of their mortgage obligation. Costs
against the plaintiffs appellees. SO ORDERED.

In personam/ in rem/ quasi in rem

DE MIDGELY VS FERANDOS
(SUPRA)
FACTS
Half-brother appointed as administrator, caused the
extraterritorial service of summons to half siblings
living in Spain to settle the question of ownership
over certain properties and rights in some mining
claims as Quemada believed that those properties
belong to the estate of Alvaro Pastor, Sr. De Midgely
and Pastor both filed a motion to dismiss on the
ground of lack of jurisdiction BUT further alleged that
earnest efforts towards a compromise have not been
made
ON ACTIONS IN REM
Even if the lower court did not acquire jurisdiction
over De Midgely, her motion to dismiss was properly
denied because Quemadas action against her
maybe regarded as a quasi in rem where
jurisdiction over the person of a non-resident
defendant is not necessary and where the service of
summons is required only for the purpose of
complying with the requirement of due process.
Quasi in rem is an action between parties where
the direct object is to reach and dispose of property
owed by the parties or of some interest therein.
-in a quasi in rem action jurisdiction over a non
resident defendant is not essential. The service of
summons by publication is required merely to satisfy
the constitutional requirement of due process. The
judgment of the court would settle the title to the
properties and to that extent it partakes of the
nature of judgment in rem. The judgment is confined
to the res (properties) and no personal judgment
could be rendered against the non resident.

COMMENCEMENT OF ACTION

CB V. CA
(supra)
FACTS
Consolidated cases. Issue was
payment of the correct docket fee.

regarding

the

RULING ON COMMENCEMENT OF ACTION

-It is not simply the filing of the complaint or
appropriate initiatory pleading, but the payment of
the prescribed docket fee, that vests a trial court
with jurisdiction over the subject-matter or nature of
the action. Where the filling of the initiatory pleading
is not accompanied by payment of the docket fee,
the court may allow the payment of the fee within a
reasonable time but in no case beyond the applicable
prescriptive or reglementary period.
- The prescriptive period therein mentioned refers to
the period within which a specific action must be
filed. It means that in every case, the docket fee
must be paid before the lapse of the prescriptive
period.

GO V TONG
G.R. No. 151942.
PANGANIBAN; November 27, 2003
NATURE
Petition for review on Certiorari
FACTS
- Petitioner Juana Go purchased a cashiers check of
P500K from the Far East Bank and Trust Company
(FEBTC), private respondent Tong. On Gos
instruction, the cashiers check bore the words Final
Payment/Quitclaim after the name of payee Tong
allegedly to insure that Tong would honor his
commitment that he would no longer ask for further
payments for his interest in the informal business
partnership which he and she had earlier dissolved.
Tong
deposited
it
with
the
words
Final
Payment/Quitclaim already erased, hence, it was not
honored.
- Tongs lawyer requested that the check be replaced
with another payable to Johnson Tong-Final
Settlement/Quitclaim with same amount, the bank
charges to be paid by his client-Tong, which was
denied by FEBTC. So, Tong filed complaint against
FEBTC and Go at RTC Manila. FEBTC and Go
answered that erasure was intentional, which
justified the dishonor and refusal to replace check.

- Case pending, Gos son, George, filed a criminal

complaint against Tong falsification of the check. The
criminal complaint was dismissed.
- Tong filed Motion for Leave to File a Supplemental
Complaint and to Admit the Attached Supplemental
Complaint which Supplemental Complaint alleged
that Sps. Gos used their son to file the criminal
complaint against him which caused damages,
hence, the prayer for an increase in the amount of
MD and ED sought to be recovered from P2.5M to
P55M and praying for the award of AD of P58K. RTC
granted the motion and admitted the Supplemental
Complaint.
- Go filed a Manifestation of Deposit and deposited to
the RTC Clerk of Court P500K representing the
amount of the check, subject to the condition that it
shall remain deposited until the disposition of the
case. MFRs of FEBTC and Go were denied.
- One of the defenses of FEBTC and Go: Tong cannot
prosecute his Supplemental Complaint, and the same
should be dismissed, unless the corresponding
docket fee and legal fees for the monetary claims of
P55M are paid for.
- On Feb. 5, 1999, RTC, acting on the verbal motion
of Tongs counsel, allowed the release of petitioners
P500K deposit to Tong. Later, RTC, in the interest of
justice and because of the huge amount of outlay
involved (the Court considers the business climate
and the peso crunch prevailing), allowed Tong to first
deposit P25K on or before Dec.15, 1999 and P20K
every month thereafter until the full amount of
docket fees is paid, and only then shall the deposits
be considered as payment of docket fees. FEBTC
and Go filed MFR but was denied. Hence, this case.
ISSUE
WON respondent judge and the CA erred in allowing
private respondent to pay the docket fee on a
staggered basis.
HELD
NO
Ratio Docket fees should be paid upon the filing of
the initiatory pleadings. However, for cogent reasons
to be determined by the trial judge, staggered
payment thereof within a reasonable period may be
allowed. Unless grave abuse of discretion is
demonstrated, the discretion of the trial judge in
granting staggered payment shall not be disturbed.
Reasoning An action commences from the filing of
the original complaint and the payment of the
prescribed docket fees. However, where the filing of

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the initiatory pleading is not accompanied by
payment of the docket fee, the court may allow
payment of the fee within a reasonable time but in
no case beyond the applicable prescriptive or
reglementary period. (Sun Insurance Office Ltd. V
Asuncion) In other words, while the payment of the
prescribed docket fee is a jurisdictional requirement,
even its nonpayment at the time of filing does not
automatically cause the dismissal of the case, as
long as the fee is paid within the applicable
prescriptive or reglementary period; more so when
the party involved demonstrates a willingness to
abide by the rules prescribing such payment.
Disposition Petition is DENIED.

HEIRS OF HINOG V MELICOR

G.R. No. 140954
AUSTRIA-MARTINEZ; April 12, 2005
NATURE
Petition for certiorari and prohibition
FACTS
- Private respondents Custodio, Rufo, Tomas and
Honorio, all surnamed Balane own a 1,399- square
meter parcel of land situated in Malayo Norte, Cortes,
Bohol, designated as Lot No. 1714. Sometime in
March 1980, they allowed Bertuldo Hinog to use a
portion of the said property for a period of ten years
and construct thereon a small house of light
materials at a nominal annual rental of P100.00 only,
considering the close relations of the parties. After
the expiration of the ten-year period, they demanded
the return of the occupied portion and removal of the
house constructed thereon but Bertuldo refused and
instead claimed ownership of the entire property by
virtue of a Deed of Absolute Sale dated July 2, 1980,
executed by one Tomas Pahac with the knowledge
and conformity of private respondents.
- Accordingly, private respondents filed a complaint
for Recovery of Ownership and Possession, Removal
of Construction and Damages against Bertuldo.
- Trial ensued but on June 24, 1998, Bertuldo died
without completing his evidence. Atty. Sulpicio A.
Tinampay withdrew as counsel for Bertuldo as his
services were terminated by petitioner Bertuldo
Hinog III. Atty. Veronico G. Petalcorin then entered
his appearance as new counsel for Bertuldo.
- On September 22, 1998, Atty. Petalcorin filed a
motion to expunge the complaint from the record
and nullify all court proceedings on the ground

that private respondents failed to specify in the

complaint the amount of damages claimed so as to
pay the correct docket fees; and that under
Manchester Development Corporation vs. Court of
Appeals, non-payment of the correct docket fee is
jurisdictional. It was further alleged that the private
respondents failed to pay the correct docket fee
since the main subject matter of the case cannot be
estimated as it is for recovery of ownership,
possession and removal of construction.
- Private respondents opposed the motion to
expunge on the following grounds: (a) said motion
was filed more than seven years from the institution
of the case; (b) Atty. Petalcorin has not complied
with Section 16, Rule 3 of the Rules of Court which
provides that the death of the original defendant
requires a substitution of parties before a lawyer can
have legal personality to represent a litigant and the
motion to expunge does not mention of any specific
party whom he is representing [this was later on
complied with by Atty. Petalcorin]; (c) collectible fees
due the court can be charged as lien on the
judgment; and (d) considering the lapse of time, the
motion is merely a dilatory scheme employed by
petitioners.
- In their Rejoinder, petitioners manifested that the
lapse of time does not vest the court with jurisdiction
over the case due to failure to pay the correct docket
fees. As to the contention that deficiency in payment
of docket fees can be made as a lien on the
judgment, petitioners argued that the payment of
filing fees cannot be made dependent on the result
of the action taken.
- On January 21, 1999, the trial court ordered the
complaint to be expunged from the records and the
nullification of all court proceedings taken for failure
to pay the correct docket fees.
- On January 28, 1999, upon payment of deficiency
docket fee, private respondents filed a manifestation
with prayer to reinstate the case. Petitioners opposed
the reinstatement but on March 22, 1999, the trial
court issued the first assailed Order reinstating the
case.
- On July 14, 1999, petitioners manifested that the
trial court having expunged the complaint and
nullified all court proceedings, there is no valid case
and the complaint should not be admitted for failure
to pay the correct docket fees; that there should be
no case to be reinstated and no case to proceed as
there is no complaint filed.
- After the submission of private respondents
opposition and petitioners rejoinder, the trial court

issued the second assailed Order on August 13,

1999, essentially denying petitioners
manifestation/rejoinder. The trial court held that the
issues raised in such manifestation/rejoinder are
practically the same as those raised in the amended
motion to expunge which had already been passed
upon in the Order dated January 21, 1999. Moreover,
the trial court observed that the Order dated March
22, 1999 which reinstated the case was not objected
to by petitioners within the reglementary period or
even thereafter via a motion for reconsideration
despite receipt thereof on March 26, 1999.
- On August 25, 1999, petitioners filed a motion for
reconsideration but the same was denied by the trial
court in its third assailed Order dated October 15,
1999. Hence, this petition.
ISSUE
WON grave abuse of discretion was committed by
the trial court in reinstating the complaint upon the
payment of deficiency docket fees
HELD
NO
- The unavailability of the writ of certiorari and
prohibition in this case is borne out of the fact that
petitioners principally assail the Order dated March
22, 1999 which they never sought reconsideration of,
in due time, despite receipt thereof on March 26,
1999. Instead, petitioners went through the motion
of filing a supplemental pleading and only when the
latter was denied, or after more than three months
have passed, did they raise the issue that the
complaint should not have been reinstated in the
first place because the trial court had no jurisdiction
to do so, having already ruled that the complaint
shall be expunged.
- After recognizing the jurisdiction of the trial court
by seeking affirmative relief in their motion to serve
supplemental pleading upon private respondents,
petitioners are effectively barred by estoppel from
challenging the trial courts jurisdiction. If a party
invokes the jurisdiction of a court, he cannot
thereafter challenge the courts jurisdiction in the
same case. To rule otherwise would amount to
speculating on the fortune of litigation, which is
against the policy of the Court.
- It must be clarified that the said order is but a
resolution on an incidental matter which does not
touch on the merits of the case or put an end to the
proceedings. It is an interlocutory order since there
leaves something else to be done by the trial court

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with respect to the merits of the case. The remedy
against an interlocutory order is generally not to
resort forthwith to certiorari, but to continue with the
case in due course and, when an unfavorable verdict
is handed down, to take an appeal in the manner
authorized by law. Only when the court issued such
order without or in excess of jurisdiction or with
grave abuse of discretion and when the assailed
interlocutory order is patently erroneous and the
remedy of appeal would not afford adequate and
expeditious relief will certiorari be considered an
appropriate remedy to assail an interlocutory order.
Such special circumstances are absolutely wanting in
the present case.
- Plainly, while the payment of the prescribed docket
fee is a jurisdictional requirement, even its nonpayment at the time of filing does not automatically
cause the dismissal of the case, as long as the fee is
paid within the applicable prescriptive or
reglementary period, more so when the party
involved demonstrates a willingness to abide by the
rules prescribing such payment. Thus, when
insufficient filing fees were initially paid by the
plaintiffs and there was no intention to defraud the
government, the Manchester rule does not apply.
Under the peculiar circumstances of this case, the
reinstatement of the complaint was just and proper
considering that the cause of action of private
respondents, being a real action, prescribes in thirty
years, and private respondents did not really intend
to evade the payment of the prescribed docket fee
but simply contend that they could not be faulted for
inadequate assessment because the clerk of court
made no notice of demand or reassessment. They
were in good faith and simply relied on the
assessment of the clerk of court.
- While the docket fees were based only on the real
property valuation, the trial court acquired
jurisdiction over the action, and judgment awards
which were left for determination by the court or as
may be proven during trial would still be subject to
additional filing fees which shall constitute a lien on
the judgment. It would then be the responsibility of
the Clerk of Court of the trial court or his duly
authorized deputy to enforce said lien and assess
and collect the additional fees.

CAUSE OF ACTION, DEFINED

FELIPE V LEUTERIO
91 Phil 482

Bengzon; May 30, 1952

NATURE
Original Action in the Supreme Court. Certiorari
FACTS:
In an oratorical contest held in Naga, Camarines' Sur,
first honor was given by the board of five judges to
Nestor Nosce, and second honor to Emma Imperial.
Six days later, Emma asked the court of first instance
of that province to reverse the award, alleging that
one of the judges had fallen into error in grading her
performance. After a hearing, and over the objection.
of the other four judges of the contest, the court
declared Emma Imperial winner of the first place
ISSUE
WON the courts have the authority to reverse the
award of the board of judges of an oratorical
competition
HELD
No.
Reasoning.. The Court held: We observe that in
assuming jurisdiction over the matter, the
respondent judge reasoned out that where there is a
wrong there is a remedy and that courts of first
instance are courts of general jurisdiction.
The flaw in his reasoning lies in the assumption that
Imperial suffered some wrong at the hands of the
board of judges. If at all, there was error on the part
of one judge, at most. Error and wrong do not mean
the same thing. "Wrong" as used in the aforesaid
legal principle is the deprivation or violation of a
right. As stated before, a contestant has no right to
the prize unless and until he or she is declared
winner by the board of referees or judges
Granting that Imperial suffered some loss or injury,
yet in law there are instances of "damnum absque
injuria". This is one of them. If fraud or malice had
been proven, it would be a different proposition. But
then her action should be directed against the
individual judge or judges who fraudulently or
maliciously injured her. Not against the other judges
Disposition. The judiciary has no power to reverse
the award of the board of judges of an oratorical
contest. For that matter it would not interfere in
literary contests, beauty contests and similar
competitions

SANTIAGO V BAUTISTA
32 SCRA 188
BARREDO : MARCH 30, 1970
NATURE
Appeal from the order of the Court of First Instance
of Cotabato dismissing, on a motion to dismiss, its
Civil Case No. 2012 for certiorari, injunction and
damages on the ground that the complaint therein
states no cause of action, and from the subsequent
order of the court a quo denying the motion for the
reconsideration of the said order of dismissal.
FACTS
-Appellant Teodoro Santiago, Jr. was a pupil in Grade
Six at the Sero Elementary School in Cotabato City.
-When the school year was about to end the
"Committee On The Rating Of Students For Honor"
was constituted by the teachers concerned at said
school for the purpose of selecting the "honor
students" of its graduating class. The above-named
committee deliberated and finally adjudged Teodoro
C. Santiago, Jr. as third honor. The school's
graduation exercises were thereafter set for May 21,
1965; but three days before that date, the "third
placer" Teodoro Santiago, Jr., represented by his
mother, and with his father as counsel, sought the
invalidation of the "ranking of honor students" thus
made, by instituting the civil case in the Court of First
Instance of Cotabato, against the committee
members along with the District Supervisor and the
Academic Supervisor of the place.
SANTIAGOs alleged that: (1) Plaintiff-petitioner
Teodoro C. Santiago, Jr. is a sixth grader at the Sero
Elementary School in Cotabato City scheduled to be
graduated on May 21st, 1965 with the honor rank of
third place, which is disputed; (2) That the teachers
of the school had been made respondents as they
compose the "Committee on the Rating of Student
for Honor", whoserave abuse of official discretion is
the subject of suit, while the other defendants were
included as Principal, District Supervisor and
Academic Supervisor of the school; (3) That Teodoro
Santiago, Jr. had been a consistent honor pupil from
Grade I to Grade V of the Sero Elementary School,
while Patricia Ligat (second placer in the disputed
ranking in Grade VI) had never been a close rival of
petitioner before, except in Grade V wherein she
ranked third; (4) That Santiago, Jr. had been
prejudiced, while his closest rival had been so much
benefited, by the circumstance that the latter,

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Socorro Medina, was coached and tutored during the

summer vacation of 1964 by Mrs. Alpas who became
the teacher of both pupils in English in Grade VI,
resulting in the far lead Medina obtained over the
other pupil; (5) That the committee referred to in this
case had been illegally constituted as the same was
composed of all the Grade VI teachers only, in
violation of the Service Manual for Teachers of the
Bureau of Public Schools which provides that the
committee to select the honor students should be
composed of all teachers in Grades V and VI; (6) That
there are direct and circumstantial matters, which
shall be proven during the trial, wherein respondents
have exercised grave abuse of discretion and
irregularities, such as the changing of the final
ratings on the grading sheets of Socorro Medina and
Patricia Ligat; (7) That there was a unanimous
agreement and understanding among the
respondent teachers to insult and prejudice the
second and third honors by rating Socorro Medina
with a perfect score, which is very unnatural; (8) That
the words "first place" in petitioner's certificate in
Grade I was erased and replaced with the words
"second place", which is an instance of the unjust
and discriminating abuses committed by the
respondent teachers in the disputed selection of
honor pupils they made; (9) That petitioner
personally appealed the matter to the School
Principal, to the District Supervisor, and to the
Academic Supervisor, but said officials "passed the
buck to each other" to delay his grievances, and as
to appeal to higher authorities will be too late, there
is no other speedy and adequate remedy under the
circumstances; and, that petitioner and his parents
suffered mental and moral damages in the amount of
P10,000.00; and (10) The petitioners prayed to the
Court to set aside the final list of honor students in
Grade VI of the Sero Elementary School for that
school year 1964-1965, and, during the pendency of
the suit, to enjoin the respondent teachers from
officially and formally publishing and proclaiming the
said honor pupils in Grade VI in the graduation
exercises the school was scheduled to hold on the
21st of May of that year 1965.
LC: denied injunction
-As scheduled, the graduation exercises of the Sero
Elementary School for the school year 1964-1965
was held on May 21, with the same protested list of
honor students.
The Court then required the respondents to answer
the petition within 10 days but respondents moved
for the dismissal of the case instead on the grounds

(1) that the action for certiorari was improper, and

(2) that even assuming the propriety of the action,
the question brought before the court had already
become academic. This was opposed by petitioner.
The motion to dismiss was granted.
Upon receipt of a copy of the above-quoted order,
the petitioner moved for the reconsideration thereof,
but the same was dismissed.
Petitioners appealed

that law is and thereupon adjudicate the respective

rights of the contending parties.
- There is nothing on record about any rule of law
that provides that when teachers sit down to assess
the individual merits of their pupils for purposes of
rating them for honors, such function involves the
determination of what the law is and that they are
therefore automatically vested with judicial or quasi
judicial functions.

ISSUE/S
WON the said committee of teachers does falls within
the category of the tribunal, board, or officer
exercising judicial functions contemplated by Rule 65

Dispositive. The judgment appealed from is

affirmed, with costs against appellant.

27

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HELD:
1. NO (therefore, no cause of action exists)
Reasoning. In this jurisdiction certiorari is a special
civil action instituted against 'any tribunal, board, or
officer exercising judicial functions.' A judicial
function is an act performed by virtue of judicial
powers; the exercise of a judicial function is the
doing of something in the nature of the action of the
court. In order that a special civil action of certiorari
may be invoked in this jurisdiction the following
circumstances must exist: (1) that there must be a
specific controversy involving rights of persons or
property and said controversy is brought before a
tribunal, board or officer for hearing and
determination of their respective rights and
obligations; (2) the tribunal, board or officer before
whom the controversy is brought must have the
power and authority to pronounce judgment and
render a decision on the controversy construing and
applying the laws to that end; (3) the tribunal, board
or officer must pertain to that branch of the
sovereign power which belongs to the judiciary, or at
least, which does not belong to the legislative or
executive department.
- It is evident, upon the foregoing authorities, that
the so called committee on the rating of students for
honor whose actions are questioned in this case
exercised neither judicial nor quasi judicial functions
in the performance of its assigned task. Before a
tribunal board, or officer may exercise judicial or
quasi judicial acts, it is necessary that there be a law
that give rise to some specific rights of persons or
property under which adverse claims to such rights
are made, and the controversy ensuing therefrom is
brought, in turn, before the tribunal, board or officer
clothed with power and authority to determine what

SAGRADA V NATIONAL COCONUT

CORP.
G.R. L-3756
LABRADOR; June 30, 1952
NATURE
Action to recover piece of property
FACTS
- The land belongs to the plaintiff, in whose name the
title was registered before the war. During the
Japanese occupation, the land was acquired by a
Japanese corporation, Taiwan Tekkosho, for the sum
of P140,000, and thereupon title thereto issued in its
name. After liberation, the Alien Property Custodian
of the United States of America took possession,
control, and custody thereof under section 12 of the
Trading with the Enemy Act, for the reason that it
belonged to an enemy national. During the year
1946 the property was occupied by the Copra Export
Management Company under a custodianship
agreement with United States Alien Property
Custodian, and when it vacated the property it was
occupied by the defendant herein. The defendant
was authorized to repair the warehouse on the land,
and actually spent thereon the repairs the sum of
P26,898.27.
- Plaintiff brought an action in court to annul the sale
of property of Taiwan Tekkosho, and recover its
possession. The case did not come for trial because
the parties presented a joint petition in which it is
claimed by plaintiff that the sale in favor of the
Taiwan Tekkosho was null and void because it was
executed under threats, duress, and intimidation,
and it was agreed that the title issued in the name of
the Taiwan Tekkosho be cancelled and the original
title of plaintiff re-issued.
- The present action is to recover the reasonable

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rentals from August, 1946, the date when the
defendant began to occupy the premises, to the date
it vacated it.

1949, is hereby reversed. In all other respects the

judgment is affirmed. Costs of this appeal shall be
against the plaintiff-appellee.

ISSUE/S
1. WON defendant is liable for rent of the said period

MA-AO SUGAR CENTRAL CO V

BARRIOS
79 PHIL 666
FERIA; December 3, 1947

HELD
1. No
Ratio If defendant-appellant is liable at all, its
obligations, must arise from any of the four
sources of obligations, namley, law, contract or
quasi-contract, crime, or negligence. (Article
1089, Spanish Civil Code.)
Reasoning Defendant-appellant is not guilty of any
offense at all, because it entered the premises
and occupied it with the permission of the
entity which had the legal control and
administration thereof, the Alien Property
Administration.
Neither
was
there
any
negligence on its part. There was also no privity
(of contract or obligation) between the Alien
Property Custodian and the Taiwan Tekkosho,
such that the Alien Property Custodian or its
permittee (defendant-appellant) may be held
responsible for the supposed illegality of the
occupation of the property by the said Taiwan
Tekkosho. The Alien Property Administration
had the control and administration of the
property not as successor to the interests of the
enemy holder of the title, the Taiwan Tekkosho,
but by express provision of law. Neither is it a
trustee of the former owner, the plaintiffappellee herein, but a trustee of then
Government of the United States, in its own
right, to the exclusion of, and against the claim
or title of, the enemy owner. From August,
1946,
when
defendant-appellant
took
possession, to the late of judgment on February
28, 1948, Alien Property Administration had the
absolute control of the property as trustee of
the Government of the United States, with
power to dispose of it by sale or otherwise, as
though it were the absolute owner. Therefore,
even if defendant-appellant were liable to the
Alien Property Administration for rentals, these
would not accrue to the benefit of the plaintiffappellee, the owner, but to the United States
Government.
Disposition Wherefore, the part of the judgment
appealed from, which sentences defendant-appellant
to pay rentals from August, 1946, to February 28,

NATURE
Petition for certiorari to set aside the order of the
respondent judge denying the motion to dismiss the
complaint of respondents
FACTS
- respondents filed a complaint seeking to recover
amounts of money due to them from the petitioner
before the outbreak of the war.
- the ground of the motion to dismiss filed by the
petitioners is that the complaint of the respondents
does not state facts sufficient to constitute a cause of
action, because the plaintiffs have no right to
demand the payment of the defendants debts until
after the termination or legal cessation of the
moratorium provided in EO No. 32: Enforcement of
payment of payments of all debts and other
monetary obligations payable within the Philippines,
except debts and other monetary obligations,
entered into in any area after declaration by
Presidential Proclamation, that such area has been
freed from enemy occupation and control, is
temporarily suspended pending action by the
Commonwealth Government.
ISSUE/S
1. WON complain of the respondents states facts
sufficient to constitute a cause of action
HELD
1. NO
Ratio. A cause of action is an act or omission of one
party in violation of the legal rights of another, and
its essential elements are: 1. legal right of plaintiff, 2.
correlative obligation of the defendant, and 3. act or
omission of defendant in violation of said legal right.
Reasoning. In this case, there was no omission on
the part of the defendant in vilation of the legal
rights of the plaintiffs to be paid, because EO No. 32
said debts are not yet payable or their payment
cannot be enforced until the legal cessation of the
moratorium, which is still in force.

***BUT (not related to topic Cause of Action):

even if the complaint of the plaintiffs respondents
states no cause of action, the SC holds that the facts
stated in the petition for certiorari and prohibition
filed in the present case do NOT entitle the petitioner
to said reliefs. Because judge HAD jurisdiction and
did not exceed it or act with grave abuse of
discretion in denying the petitioners motion to
dismiss. This Court, in actions of certiorari, can only
determine WON the court acted without or in excess
of its jurisdiction or with grave abuse of discretion.
So disposition:
Disposition Petition is denied.

DANFOSS V. CONTINENTAL CEMENT

CORPORATION
G.R. NO. 143788
CORONA; SEPT. 9 2005
NATURE
This is a petition for review on certiorari under Rule
45 of the 1997 Rules on Civil Procedure of the
decision of the Court of Appeals and its resolution
denying petitioners motion for reconsideration.
FACTS
- On November 5, 1998, respondent Continental
Cement Corporation (CCC) filed a complaint for
damages
against
petitioner
DANFOSS
and
Mechatronics Instruments and Controls, Inc. (MINCI)
before the RTC of QC, Branch 80, alleging that:
(1) CCC purchased from MINCI two Danfoss Brand
Frequency Converter/Inverter for use in the Finish
Mill of its Cement Plant. The said purchase is covered
by a Purchase Order which indicated the delivery
date to be within eight (8) to ten (10) weeks from the
opening of the letter of credit. CCC executed and
opened a letter of credit under in favor of DANFOSS
INDUSTRIES PTE. LTD; (2) CCC through a letter dated
7 November 1997, reiterated its demand that every
delay in the shipment of the two (2) unit Frequency
Converter/Inverter will cause substantial losses in its
operations and requested for the early work out and
the immediate shipment of the frequency converter
to avoid further loss to the company; However, on 9
November 1997, DANFOSS, informed the other MINCI
through fax transmission, copy furnished plaintiff
CCC, that the reason why DANFOSS has delivery
problems was that some of the supplied components
for the new VLT 5000 series did not meet the agreed
quality standard. That means that their factory was

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canvassing for another supplier.
And at that
moment, there was no clear message when normal
production will resume.
-Due to this information received, CCC surmised that
defendants MINCI and DANFOSS could not be able to
deliver the two (2) unit Frequency Converter within
the maximum period of ten (10) weeks period from
the opening of the Letter of Credit, as one of the
conditions in the Purchase Order. Thereafter, no
definite commitment was received by plaintiff CCC
from defendants MINCI and DANFOSS for the delivery
of the two unit Frequency Converter.
-By reason of the delay to deliver, CCC informed
MINCI in a letter dated 13 November 1997, of the
plaintiffs intention to cancel the said order. As a
consequence thereof, CCC has suffered an actual
substantial production losses in the amount
P8,064,000.00 due to the time lost and delay in the
delivery of the said two (2) unit Frequency
Converter/Inverter.
Likewise, plaintiff CCC was
compelled to look for another supplier.
- On February 17, 1999, DANFOSS filed a motion to
dismiss the complaint on the ground that it did not
state a cause of action.
- The court a quo denied the motion to dismiss in its
order[4] dated May 28, 1999.
- Danfoss filed a motion for reconsideration of the
order but it was denied. On appeal to the CA, the
latter also denied Danfoss petition for lack of merit.
The CA likewise denied petitioners motion for
reconsideration, hence, this appeal.
ISSUE
WON the CA erred in affirming the denial by the
court a quo of petitioners motion to dismiss the
complaint for damages on the ground that it failed to
state a cause of action.
HELD
YES.
Ratio. In order to sustain a dismissal on the ground
of lack of cause of action, the insufficiency must
appear on the face of the complaint. And the test of
the sufficiency of the facts alleged in the complaint
to constitute a cause of action is whether or not,
admitting the facts alleged, the court can render a
valid judgment thereon in accordance with the
prayer of the complaint. For this purpose, the motion
to dismiss must hypothetically admit the truth of the
facts alleged in the complaint.
Reasoning. After a careful perusal of the allegations
in respondents complaint for damages against

petitioner, we rule that the same failed to state a

cause of action. When respondent sued petitioner
for damages, petitioner had not violated any right of
respondent from which a cause of action had arisen.
Respondent only surmised that petitioner would not
be able to deliver the two units frequency
converter/inverter on the date agreed upon by them.
Based on this apprehension, it cancelled its order six
days prior to the agreed date of delivery. How could
respondent hold petitioner liable for damages (1)
when petitioner had not yet breached its obligation
to deliver the goods and (2) after respondent made it
impossible for petitioner to deliver them by
cancelling its order even before the agreed delivery
date?
-Section 1 (g), Rule 16 of the 1997 Revised
Rules on Civil Procedure provides that:
Section 1. Grounds Within the time for but before
filing the answer to the complaint or pleading
asserting a claim, a motion to dismiss may be made
on any of the following grounds:
xxx
xxx
xxx
(g) That the pleading asserting the claim states no
cause of action;
-ON CAUSE OF ACTION: A cause of action is defined
under Section 2, Rule 2 of the same Rules
Sec. 2. Cause of action, defined. A cause of action
is the act or omission by which a party violates a
right of another.***
-It is the delict or wrongful act or omission
committed by the defendant in violation of the
primary right of the plaintiff.
-Disposition. WHEREFORE, we hereby GRANT the
petition. The assailed decision of the CA dated
February 11, 2000 and its resolution dated June 7,
2000 are REVERSED and SET ASIDE. Civil Case
pending before the RTC of Quezon City, Branch 80, is
hereby DISMISSED.

MISJOINDER
UNION GLASS V SEC (Hofilea)
126 SCRA 32
ESCOLIN; November 28, 1983
NATURE
Petition for certiorari and prohibition seeking to annul
and set aside the order of the Securities and
Exchange Commission (SEC)

FACTS
- Carolina Hofilea is a stockholder of Pioneer Glass
Manufacturing Corporation, a domestic corporation
engaged in the operation of silica mines and the
manufacture of glass and glassware. Since 1967,
Pioneer
Glass
had
obtained
various
loan
accommodations from the Development Bank of the
Philippines [DBP], and also from other local and
foreign sources which DBP guaranteed. The proceeds
were used in the construction of a glass plant in
Rosario, Cavite, and the operation of seven silica
mining claims owned by the corporation.
- As security, Pioneer Glass mortgaged and/or
assigned its assets to the DBP in addition to the
mortgages executed by some of its corporate officers
over their personal assets. Through the conversion
into equity of the accumulated unpaid interests on
the various loans DBP was able to gain control of the
outstanding shares of common stocks of Pioneer
Glass, and to get three regular seats in the
corporation's board of directors.
- When Pioneer Glass suffered serious liquidity
problems such that it could no longer meet its
financial obligations with DBP, it entered into a
dacion en pago agreement with the latter, whereby
all its assets mortgaged to DBP were ceded to the
latter in full satisfaction of the corporation's
obligations in the total amount of P59 million. Part of
the assets transferred to the DBP was the glass plant
in Rosario, Cavite, which DBP leased and
subsequently sold to Union Glass and Container
Corporation.
- Hofilea filed a complaint before the SEC against
the DBP, Union Glass and Pioneer Glass. Hofilea
prayed that the dacion en pago be declared null and
void and the assets of the Pioneer Glass taken over
by DBP particularly the glass plant be returned.
- Of the five causes of action pleaded, only the first
cause of action concerned Union Glass as transferee
and possessor of the glass plant. Union Glass moved
for dismissal of the case on the ground that the SEC
had no jurisdiction over the subject matter or nature
of the suit. Respondent Hofilea filed her opposition
to said motion, to which Union Glass filed a rejoinder.
- SEC Hearing Officer Eugenio Reyes granted the
MTD for lack of jurisdiction. However, upon a MFR, he
reversed his original order. Unable to secure a
reconsideration of the Order as well as to have the
same reviewed by the Commission En Banc, Union
Glass filed this petition in the SC.

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ISSUE
1. WON the SEC has jurisdiction over the case and
not the regular courts
HELD
1. NO.
Ratio In order that the SEC can take cognizance of a
case, the controversy must pertain to any of the
following relationships: [a] between the corporation,
partnership or association and the public; [b]
between the corporation, partnership or association
and its stockholders, partners, members, or officers;
[c] between the corporation, partnership or
association and the state in so far as its franchise,
permit or license to operate is concerned; and [d]
among the stockholders, partners or associates
themselves.
Reasoning While the Rules of Court, which applies
suppletorily to proceedings before the SEC, allows
the joinder of causes of action in one complaint, such
procedure however is subject to the rules regarding
jurisdiction, venue and joinder of parties. Since Union
Glass has no intra-corporate relationship with
Hofilea, it cannot be joined as party-defendant in
said case as to do so would violate the rule on
jurisdiction. Hofilea's complaint against Union Glass
for cancellation of the sale of the glass plant should
therefore be brought separately before the regular
court.
- Such action, if instituted, shall be suspended to
await the final outcome of the SEC case, for the issue
of the validity of the dacion en pago posed in the SEC
case is a prejudicial question, the resolution of which
is a logical antecedent of the issue involved in the
action against Union Glass. Thus, Hofilea's
complaint against the latter can only prosper if final
judgment is rendered in SEC Case No. 2035,
annulling the dacion en Pago executed in favor of the
DBP.
NOTE: The jurisdiction of the SEC is delineated, by
Sec 5 of PD 902-A:
SEC. 5. In addition to the regulatory and adjudicative
function of the Securities and Exchange Commission
over corporations, partnerships and other forms of
associations registered with it as expressly granted
under existing laws and devices, it shall have original
and exclusive jurisdiction to hear and decide cases
involving:
a) Devices and schemes employed by or any acts, of
the board of directors, business associates, its
officers or partners, amounting to fraud and
misrepresentation which may be detrimental to the

interest of the public and/or the stockholders

partners, members of associations or organizations
registered with the Commission;
b) Controversies arising out of intra-corporate or
partnership
relations,
between
and
among
stockholders, members or associates; between any
or all of them and the corporation, partnership or
association of which they are stockholders, members
or associates, respectively; and between such
corporation, partnership or association and the state
insofar as it concerns their individual franchise or
right to exist as such entity;
c) Controversies in the election or appointments of
directors, trustees, officers or managers of such
corporations, partnerships or associations.
Disposition Petition GRANTED. Questioned orders of
SEC, set aside.

PARTIES
Who may be parties
JUASING HARDWARE V MENDOZA
115 SCRA 783
GUERRERO; July 30, 1982
NATURE
Special Civil Action for certiorari
FACTS
- Juasing Hardware, alleging to be a single
proprietorship duly organized and existing under and
by virtue of the laws of the Philippines and
represented by its manager Ong Bon Yong, filed a
complaint for the collection of a sum of money
against Pilar Dolla.
- In her Answer, defendant stated that she "has no
knowledge about plaintiff's legal personality and
capacity to sue as alleged in the complaint."
- After plaintiff had completed the presentation of its
evidence and rested its case, defendant filed a
Motion for Dismissal of Action (Demurrer to
Evidence) based on plaintiff's lack of legal capacity to
sue. Defendant contended that 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.

- Judge Mendoza dismissed the case and denied

admission of the Amended Complaint. MFR was
likewise denied
ISSUES
WON the lower court committed grave abuse of
discretion when it dismissed the case and refused to
admit the Amended Complaint
HELD
YES
Ratio 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. (Sec. 4, Rule 10, Revised Rules of
Court)
Reasoning
- 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 com. plaint 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.
- Rule 3 of the Revised Rules of Court , 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. 4 The law does not vest juridical or
legal personality upon the sole proprietorship nor
empower it to file or defend an action in court.
- However, the defect of the complaint is merely
formal, not substantial. Substitution of the party
plaintiff would not constitute a change in the Identity
of the parties.
- The courts should be liberal in allowing
amendments to pleadings to avoid multiplicity of
suits and in order that t he real controversies
4 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.

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between the parties are presented and the case
decided on the merits without unnecessary delay.
This rule applies with more reason and with greater
force when the amendment sought to be made refers
to a mere matter of form and no substantial rights
are prejudiced.
Dispositive Petition is GRANTED.

SEPARATE OPINION
AQUINO [concurring]
- It should appear in the amended complaint (a copy
which was not attached to the petition) that the
plaintiff is Ong Hua or Huat, doing business under the
tradename, Juasing Hardware, and in the body of the
complaint the personal circumstances of Ong Hua
should be stated.

Parties in interest
CARILLO, GUYOT, SENOY, RISONAR,
GONZALES V. CA (DABON AND
DABON)
GR No. 121165
QUISUMBING; September 26, 2006
NATURE
Review on certiorari of decision of Court of Appeals
FACTS
- Gonzales filed complaint (action for specific
performance) against Manio sps, seeking execution
of deed of sale of property she bought fr Priscilla
Manio.
Gonzales said she pd downpayment to
Priscilla because she had an SPA from her son
Aristotle, the owner of the land.
- TC ruled in favor of Gonzales. Gonzales deposited
balance w/ the court and filed motion for execution,
w/c was w/drawn bec decision wasnt served on
defendants.
Sheriff finally served a copy at an
ungodly hour of 12 mn.
- TCs decision became final and executory.
- The Dabons, claiming to have bought the land fr
Aristotle, filed before the CA a petition for annulment
of judgment and orders of the TC. They alleged that
the decision was void for lack of jurisdiction over
their persons as the real parties in interest. CA
issued resolution restraining TC from implementing
its decision. Hence, this petition by Gonzales.

ISSUE/S
1. WON there was basis to annul the decision of the
TC.
2. WON the Dabons can seek annulment of the TC
judgment
HELD
1. YES.
Ratio
An action should be brought against the real party in
interest. The real party in interest is the one who
would be benefited or injured by the judgment or is
the one entitled to the avails of the suit.
Reasoning
- Named petitioners herein are Carillo (Presiding
Judge), Guyot (Clerk of Court), Senoy (Deputy
Sheriff), Risonar (Registrar of Deeds), and Gonzales.
Carillo, Guyot, Senoy and Risonar are not interested
parties because they would not benefit from the
affirmative reliefs sought. Only Gonzales remains as
genuine party-petitioner in this case.
- Gonzales insists that the Dabons have no right to
seek annulment of the TCs judgment bec theyre not
parties to the specific performance case. But the
Dabons insist that they are parties in interest bec
they are buyers, owners and possessors of the
contested land.
The specific performance case brought by
Gonzales to the TC named Priscilla Manio and
husband as defendants. However, the lot is owned
by Aristotle, their son. Priscilla had no interest on the
lot and can have no interest in the judgment of the
TC. Failure to implead Aristotle Manio renders the
proceedings in the specific performance case null
and void.
2. YES.
Ratio
A person need not be a party to the judgment sought
to be annulled. What is essential is that he can
prove that the judgment was obtained by fraud and
he would be adversely affected thereby.
Reasoning
Although the Dabons are not parties to the specific
performance case, any finding of extrinsic fraud
would adversely affect their ownership and could be
basis of annulment of judgment.
In this case,
Gonzales knew of the sale of lot by Aristotle Manio to
the Dabons yet Gonzales did not include the Dabons
in her petition. This is extrinsic fraud.
Disposition Petition is denied.

DEAN JOSE JOYA, CARMEN GUERRERO

NAKPIL, ARMIDA SIGUION REYNA, et
al. v. PCGG, EXEC. SEC. CATALINO
MACARAIG, JR. & PCGG CHAIRMAN
MATEO A.T. CAPARAS
225 SCRA 568

BELLOSILLO/ August 24, 1993

NATURE: Special Civil Action for Prohibition and
Mandamus with Prayer for Preliminary Injunction
and/or Restraining Order seek to enjoin the
Presidential Commission on Good Government
(PCGG) from proceeding with the scheduled auction
sale by Christies (of NY) of the Old Masters Paintings
and 18th and 19th century silverware seized from
Malacaang and the Metropolitan Museum of Manila
and placed in the custody of the Central Bank.
FACTS:
- Pres. Aquino, through Exec. Sec. Macaraig, Jr.,
authorized
Chairman
Caparas
to
sign
the
Consignment Agreement allowing the auction sale of
82 Old Masters Paintings and antique silverware
seized from Malacaang and the Metropolitan
Museum of Manila alleged to be part of the ill-gotten
wealth of the late President Marcos, his relatives and
cronies.
- According to the agreement, PCGG shall consign to
CHRISTIE'S for sale at public auction the 82 Old
Masters Paintings then found at the Metropolitan
Museum of Manila as well as the silverware
contained in 71 cartons in the custody of the Central
Bank of the Philippines, and such other property as
may subsequently be identified by PCGG and
accepted by CHRISTIE'S to be subject to the
provisions of the agreement.
- PCGG through its new Chairman David M. Castro,
wrote Pres. Aquino defending the Consignment
Agreement and refuting the allegations of COAudit
Chairman Domingo (that the authority of former
PCGG Chairman Caparas to enter into the
Consignment Agreement was of doubtful legality;
the contract was highly disadvantageous to the
government; PCGG had a poor track record in asset
disposal by auction in the U.S.; and, the assets
subject of auction were historical relics and had
cultural significance, hence, their disposal was
prohibited by law.
- Director of National Museum Gabriel S. Casal issued

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a certification that the items subject of the
Consignment Agreement did not fall within the
classification of protected cultural properties and did
not specifically qualify as part of the Filipino cultural
heritage. Hence, this petition.
- After the oral arguments of the parties, the
application for preliminary injunction to restrain the
scheduled sale of the artworks was DENIED on the
ground that petitioners had not presented a clear
legal right to a restraining order and that proper
parties had not been impleaded.
- The sale at public auction proceeded as scheduled
and the proceeds of $13,302,604.86 were turned
over to the Bureau of Treasury.
- On motion of petitioners, 12 more were joined as
additional petitioners and Catalino Macaraig, Jr., in
his capacity as former Executive Secretary, the
incumbent Executive Secretary, and Chairman Mateo
A.T. Caparas were impleaded as additional
respondents.
ISSUE:
WON the instant petition complies with the legal
requisites for this Court to exercise its power of
judicial review over this case.
HELD: NO. The paintings and silverware, which were
taken from Malacaang and the Metropolitan
Museum of Manila and transferred to the Central
Bank Museum (the ownership of these paintings
legally belongs to the foundation or corporation or
the members thereof.)
- The confiscation of these properties by the Aquino
administration however should not be understood to
mean that the ownership of these paintings has
automatically passed on the government without
complying
with
constitutional
and
statutory
requirements of due process and just compensation.
If these properties were already acquired by the
government, any constitutional or statutory defect in
their acquisition and their subsequent disposition
must be raised only by the proper parties - the true
owners thereof -whose authority to recover
emanates from their proprietary rights which are
protected by statutes and the Constitution. Having
failed to show that they are the legal owners of the
artworks or that the valued pieces have become
publicly owned, petitioners do not possess any clear
legal right whatsoever to question their alleged
unauthorized disposition.
REASONING:

- Dumlao v. Comelec: The rule is settled that no

question involving the constitutionality or validity of
a law or governmental act may be heard and decided
by the court unless there is compliance with the legal
requisites for judicial inquiry, namely: that the
question must be raised by the proper party; that
there must be an actual case or controversy; that the
question must be raised at the earliest possible
opportunity; and, that the decision on the
constitutional or legal question must be necessary to
the determination of the case itself. But the most
important are the first two (2) requisites.
- SC: we have held that one having no right or
interest to protect cannot invoke the jurisdiction of
the
court
as
party-plaintiff
in
an
action. (Sustiguer v. Tamayo, G.R. No. L-29341)
- This is premised on Sec. 2, Rule 3, of the Rules of
Court, which provides that every action must be
prosecuted and defended in the name of the real
party-in-interest, and that all persons having
interest in the subject of the action and in
obtaining the relief demanded shall be joined as
plaintiffs.

- The Court will exercise its power of judicial review

only if the case is brought before it by a party who

has the legal standing to raise the constitutional
or legal question. "Legal standing" means a
personal and substantial interest in the case such
that the party has sustained or will sustain direct
injury as a result of the governmental act that is
being challenged. The term "interest" is 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 (House International Building Tenants
Association, Inc. v. Intermediate Appellate Court,
G.R. No. L-75287)
- Moreover, the interest of the party plaintiff must
be personal and not one based on a desire to
vindicate the constitutional right of some third
and related party.
- Taada v. Tuvera : There are certain instances
however when this Court has allowed exceptions to
the rule on legal standing, as when a citizen brings a
case for mandamus to procure the enforcement of a
public duty for the fulfillment of a public right
recognized by the Constitution, and (Pascual v.
Secretary of Public Works) when a taxpayer
questions the validity of a governmental act
authorizing the disbursement of public funds.

-AS regards Mandamus: it does not fulfill the criteria

for a mandamus suit.
Legaspi v. Civil Service
Commission: a writ of mandamus may be issued to a
citizen only when the public right to be enforced and
the concomitant duty of the state are unequivocably
set forth in the Constitution.
-In the case at bar, petitioners are not after the
fulfillment of a positive duty required of respondent
officials under the 1987 Constitution. What they seek
is the enjoining of an official act because it is
constitutionally infirmed. Moreover, petitioners' claim
for the continued enjoyment and appreciation by the
public of the artworks is at most a privilege and is
unenforceable as a constitutional right in this action
for mandamus.
-As regards Taxpayers Suit: Neither can this petition
be allowed as a taxpayer's suit. Not every action filed
by a taxpayer can qualify to challenge the legality of
official acts done by the government.
- A taxpayer's suit can prosper only if the
governmental acts being questioned involve
disbursement of public funds upon the theory
that the expenditure of public funds by an officer
of the state for the purpose of administering an
unconstitutional act constitutes a misapplication
of such funds, which may be enjoined at the
request of a taxpayer.
- -Obviously, petitioners are not challenging any
expenditure involving public funds but the
disposition of what they allege to be public
properties. It is worthy to note that petitioners
admit that the paintings and antique silverware
were acquired from private sources and not with
public money.

DISPOSITIVE: The petition for prohibition

and mandamus is DISMISSED.
OPOSA V FACTORAN
224 SCRA 792
DAVIDE JR; JULY 30, 1993
NATURE
Special civil action for certiorari of the dismissal
order
FACTS
The controversy has its genesis in Civil Case No. 90777 which was filed before Branch 66 (Makati, Metro
Manila) of the Regional Trial Court (RTC), National

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Capital Judicial Region. The principal plaintiffs
therein, now the principal petitioners, are all minors
duly represented and joined by their respective
parents. Impleaded as an additional plaintiff is the
Philippine Ecological Network, Inc. (PENI), a domestic,
non-stock and non-profit corporation organized for
the purpose of, inter alia, engaging in concerted
action geared for the protection of our environment
and natural resources. The original defendant was
the Honorable Fulgencio S. Factoran, Jr., then
Secretary of the Department of Environment and
Natural Resources (DENR). His substitution in this
petition by the new Secretary, the Honorable Angel
C. Alcala, was subsequently ordered upon proper
motion by the petitioners.
The complaint
was
instituted as a taxpayers' class suit and alleges that
the plaintiffs "are all citizens of the Republic of the
Philippines, taxpayers, and entitled to the full benefit,
use and enjoyment of the natural resource treasure
that is the country's virgin tropical rainforests." The
same was filed for themselves and others who are
equally concerned about the preservation of said
resource but are "so numerous that it is
impracticable to bring them all before the Court."
The minors further asseverate that they "represent
their generation as well as generations yet unborn."
Consequently, it is prayed for that judgment be
rendered:
". . . ordering defendant, his agents, representatives
and other persons acting in his behalf to
(1)
Cancel
all
existing
timber
license
agreements in the country;
(2)
Cease and desist from receiving, accepting,
processing, renewing or approving new timber
license agreements."
and granting the plaintiffs ". . . such other reliefs just
and equitable under the premises."
-The original defendant, Secretary Factoran, Jr., filed
a Motion to Dismiss the complaint based on two (2)
grounds, namely: (1) the plaintiffs have no cause of
action against him and (2) the issue raised by the
plaintiffs is a political question which properly
pertains to the legislative or executive branches of
Government. In their Opposition to the Motion, the
petitioners maintain that (1) the complaint shows a
clear and unmistakable cause of action, (2) the
motion is dilatory and (3) the action presents a
justiciable question as it involves the defendant's
abuse of discretion.
-Subsequently, respondent Judge issued an order
granting the aforementioned motion to dismiss. In
the said order, not only was the defendant's claim

that the complaint states no cause of action against

him and that it raises a political question
sustained, the respondent Judge further ruled that
the granting of the reliefs prayed for would result in
the impairment of contracts which is prohibited by
the fundamental law of the land.
-Plaintiffs thus filed the instant special civil action for
certiorari under Rule 65 of the Revised Rules of Court
and ask this Court to rescind and set aside the
dismissal order on the ground that the respondent
Judge gravely abused his discretion in dismissing the
action. Again, the parents of the plaintiffs-minors not
only represent their children, but have also joined
the latter in this case.
ISSUE
WON Civil Case No. 90-777 is a class suit
HELD
YES. The subject matter of the complaint is of
common and general interest not just to several, but
to all citizens of the Philippines. Consequently, since
the parties are so numerous, it becomes
impracticable, if not totally impossible, to bring all of
them before the court. We likewise declare that the
plaintiffs therein are numerous and representative
enough to ensure the full protection of all concerned
interests. Hence, all the requisites for the filing of a
valid class suit under Section 12, Rule 3 of the
Revised Rules of Court are present both in the said
civil case and in the instant petition, the latter being
but an incident to the former.
-This case, however, has a special and novel
element. Petitioners minors assert that they
represent their generation as well as generations yet
unborn. We find no difficulty in ruling that they can,
for themselves, for others of their generation and for
the succeeding generations, file a class suit. Their
personality to sue in behalf of the succeeding
generations can only be based on the concept of
intergenerational responsibility insofar as the right to
a balanced and healthful ecology is concerned. Such
a right, as hereinafter expounded, considers the
"rhythm and harmony of nature." Nature means the
created world in its entirety. Such rhythm and
harmony indispensably include, inter alia, the
judicious
disposition,
utilization,
management,
renewal and conservation of the country's forest,
mineral, land, waters, fisheries, wildlife, off-shore
areas and other natural resources to the end that
their exploration, development and utilization be
equitably accessible to the present as well as future

generations. Needless to say, every generation has a

responsibility to the next to preserve that rhythm
and harmony for the full enjoyment of a balanced
and healthful ecology. Put a little differently, the
minors' assertion of their right to a sound
environment constitutes, at the same time, the
performance of their obligation to ensure the
protection of that right for the generations to come.
Dispositive Petition granted. Challenged order set
aside.

KINDS OF PARTIES
Compulsory joinder of indispensable
parties
ARCELONA V. CA (FARNACIO)
G.R. No. 102900
PANGANIBAN; Oct. 2, 1997
NATURE
Petition for review
FACTS
-Olanday, et al. (petitioners) are co-owners proindiviso of a fishpond which they inherited from their
deceased parents.
-A contract of lease over the fishpond was executed
between Cipriano Tandoc and Olanday, et al.
-Private Respondent Moises Farnacio was appointed
in turn by Tandoc as caretaker-tenant of the same
fishpond.
-After the termination of the lease contract, the
lessee (Tandoc) surrendered possession of the leased
premises to the lessors, Olanday, et al.
-Three days thereafter, Farnacio instituted Civil Case
for "peaceful possession, maintenance of security of
tenure plus damages, with motion for the issuance of
an interlocutory order" against Olanday, et al., before
Respondent Regional Trial Court. The case was
intended to maintain private respondent as tenant of
the fishpond.
-RTC ruled in favor of Farnacio
-IAC affirmed with slight modification
-SC sustained IAC
-Petitioners filed with CA a petition for annulment of
the aforesaid judgment. CA said to implead RTC
-Dissatisfied, petitioners lodged this petition for
review

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ISSUES
1. WON a final judgment may be annulled on the
ground of lack of jurisdiction (over the subject matter
and/or over the person of indispensable parties) and
denial of due process, aside from extrinsic fraud?
2. WON all the co-owners pro-indiviso of a real
property indispensable parties?
HELD
1. YES.
Ratio. Under the present procedure, aside from the
reliefs provided in these two sections (Secs. 1 & 2,
Rule 38), there is no other means whereby the
defeated party may procure final and executory
judgment to be set aside with a view to the renewal
of the litigation, unless (a) the judgment is void for
want of jurisdiction or for lack of due process of law,
or (b) it has been obtained by fraud.' (I Moran's Rules
of Court 1950 Ed., p. 697, citing Anuran v. Aquino, 38
Phil. 29; Banco Espaol-Filipino v. Palanca, 37 Phil.
921). Reason of public policy which favors the
stability of judicial decisions are (sic) mute in the
presence of fraud which the law abhors
(Garchitorena vs. Sotelo, 74 Phil. 25).
Reasoning Jurisdiction is conferred by law. Its
exercise must strictly comply with the legal
requisites; otherwise, a challenge on the ground of
lack of jurisdiction may be brought up anytime. Such
jurisdiction normally refers to jurisdiction over the
subject.
2. YES.
Ratio Co-owners in an action for the security of
tenure of a tenant are encompassed within the
definition of indispensable parties; thus, all of them
must be impleaded.
Reasoning As held by the Supreme Court, were the
courts to permit an action in ejectment to be
maintained by a person having merely an undivided
interest in any given tract of land, a judgment in
favor of the defendants would not be conclusive as
against the other co-owners not parties to the suit,
and thus the defendant in possession of the property
might be harassed by as many succeeding actions of
ejectment, as there might be co-owners of the title
asserted against him. The purpose of this provision
was to prevent multiplicity of suits by requiring the
person asserting a right against the defendant to
include with him, either as co-plaintiffs or as codefendants, all persons standing in the same

position, so that the whole matter in dispute may be

determined once and for all in one litigation.

even necessary as Tuazon may collect damages from

Mrs. Cerezo alone.

Disposition PETITION GRANTED.

Disposition PETITION DENIED.

CEREZO V. TUAZON
G.R. No. 141538
CARPIO; March 23, 2004
NATURE
Petition for review on certiorari
FACTS
-Country Bus Lines passenger bus with plate number
NYA 241 collided with a tricycle.
-tricycle driver Tuazon filed a complaint for damages
against Mrs. Cerezo, as owner of the bus line, her
husband Attorney Juan Cerezo ("Atty. Cerezo"), and
bus driver Danilo A. Foronda ("Foronda").
-Mrs. Cerezo asserts that the trial court could not
validly render judgment since it failed to acquire
jurisdiction over Foronda, an indispensable party.
Mrs. Cerezo points out that there was no service of
summons on Foronda.
ISSUE
1. WON Fronda is an indispensable party
HELD
1.NO.
Ratio
COMPULSORY
JOINDER
OF
INDISPENSABLE PARTIES. An indispensable party
is one whose interest is affected by the courts action
in the litigation, and without whom no final resolution
of the case is possible
Reasoning Mrs. Cerezos liability as an employer in
an action for a quasi-delict is not only solidary, it is
also primary and direct. Foronda is not an
indispensable party to the final resolution of Tuazons
action for damages against Mrs. Cerezo. The
responsibility of two or more persons who are liable
for a quasi-delict is solidary. Where there is a solidary
obligation on the part of debtors, as in this case,
each debtor is liable for the entire obligation. Hence,
each debtor is liable to pay for the entire obligation
in full. There is no merger or renunciation of rights,
but only mutual representation. Where the obligation
of the parties is solidary, either of the parties is
indispensable, and the other is not even a necessary
party because complete relief is available from
either. Therefore, jurisdiction over Foronda is not

Permissive Joinder
FLORES V MALLARE-PHILLIPS
144 SCRA 377
FERIA; September 24,1986
NATURE
Appeal by certiorari from the order of the RTC of
Baguio
FACTS
-Petitioner Remedio Flores filed a complaint with the
RTC of Baguio: his first cause of action was against
respondent Ignacio Binongcal for refusing to pay the
amount of P11,643.00 representing cost of truck tires
which he purchased on credit from petitioner on
various occasions from August to October, 1981; and
the second cause of action was against respondent
Fernando Calion for allegedly refusing to pay the
amount of P10,212.00 representing cost of truck tires
which he purchased on credit from petitioner on
several occasions from March, 1981 to January,
1982.
-On December 15, 1983, counsel for respondent
Binongcal filed a Motion to Dismiss on the ground of
lack of jurisdiction since the amount of the demand
against said respondent was only P11,643.00, and
under Section 19(8) of BP129 the regional trial court
shall exercise exclusive original jurisdiction if the
amount of the demand is more than twenty thousand
pesos (P20,000.00).
-It was further averred in said motion that although
another person, Fernando Calion, was allegedly
indebted to petitioner in the amount of P10,212.00,
his obligation was separate and distinct from that of
the other respondent.
-At the hearing of said Motion to Dismiss, counsel for
respondent Calion joined in moving for the dismissal
of the complaint on the ground of lack of jurisdiction.
-RTC dismissed the complaint for lack of jurisdiction.
-Petitioner appealed by certiorari to the SC
ISSUE

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WON the application of the totality rule in Sec 33(1) 5
of BP 129 and Section 116 of the interim rules is
subject to permissive joinder of parties under Sec 67
of Rule 3
HELD
Petitioner maintains that the RTC has jurisdiction
over the case following the "novel" totality rule
introduced in Section 33(l) of BP129 and Section 11
of the Interim Rules.
-Petitioner compares the above-quoted provisions
with 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
5

Provided,That where there are several claims or causes of action

between the same or different parties, embodied in the same
complaint, 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. ...

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.

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 aconnection with any proceedings in
which he may have no interest.

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.
-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
joined 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. As worded,
the former rule applied only to cases of permissive
joinder of parties plaintiff. However, it was also
applicable to cases of permissive joinder of parties
defendant.
-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.
-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.
-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.
Disposition
The order appealed from is affirmed.

Class suit
NEWSWEEK V IAC (NFSPI et. al.)
142 SCRA 171
FERIA; May 30, 1986
NATURE
Special action for certiorari, prohibition with
preliminary injunction
FACTS
- Petitioner, NEWSWEEK, Inc. seeks to annul the
decision of the IAC sustaining the Order of the CFI
Bacolod City. CFI denied Newsweeks Motion to
Dismiss complaint for libel. (Question as to whether
the printed article sued upon its actionable or not is a
matter of evidence.)
- Initial complaint: Private respondents, incorporated
associations of sugarcane planters in Negros
Occidental claiming to have 8,500 members and
several individual sugar planters, filed in their own
behalf and/or as a class suit in behalf of all
sugarcane planters in the province of Negros
Occidental, against
petitioner
and
two
of
petitioners' non-resident correspondents/reporters
Fred Bruning and Barry Came.
- It was alleged that they committed libel by the
publication of the article "An Island of Fear" in the
Feb 23, 1981 issue of petitioner's weekly news
magazine Newsweek. It supposedly portrayed their
island as a place dominated by big landowners who
not only exploited the impoverished and underpaid
sugarcane workers, but also brutalized and killed
them.
- Complainants therein alleged that said article,
taken as a whole, showed a deliberate and
malicious
use
of
falsehood,
slanted
presentation and/or misrepresentation of facts.
- They prayed that defendants be ordered to pay
them PlM as actual and compensatory damages, and
such amounts for moral, exemplary and corrective
damages as the court may determine.
- NEWSWEEK filed a motion to dismiss on the
grounds that --(1) the printed article sued upon is not actionable in
fact and in law; and (2) the complaint is bereft of
allegations that state, much less support a cause of
action. It pointed out the non-libelous nature of the
article and, consequently, the failure of the complaint
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- NO CAUSE OF ACTION because no allegation that
anything contained in the article regarding
sugarcane planters referred specifically to any one of
the private respondents; that libel can be committed
only against individual reputation; and that in cases
where libel is claimed to have been directed at a
group, there is actionable defamation only if the libel
can be said to reach beyond the mere collectivity to
do damage to a specific, individual group member's
reputation.
ISSUE
1. WON respondents failed to state a cause of action
2. WON this case is a class suit
HELD
1. YES
Ratio Defamatory matter which does not reveal the
Identity of the person upon whom the imputation is
cast, affords no ground of action unless it be shown
that the readers of the libel could have identified the
personality of the individual defamed. It is evident
that the larger the collectivity, the more difficult it is
for the individual member to prove that the
defamatory remarks apply to him.
2. NO
Ratio It is not a case where one or more may sue for
the benefit of all (Mathay vs. Consolidated Bank and
Trust Co.) or where the representation of class
interest affected by the judgment or decree is
indispensable to make each member of the class an
actual party (Borlaza vs. Polistico). We have here a
case where each of the plaintiffs has a separate and
distinct reputation in the community. They do not
have a common or general interest in the subject
matter of the controversy.
CLASS SUIT
- Where the defamation is alleged to have been
directed at a group or class, it is essential that the
statement must be so sweeping or all-embracing
as to apply to every individual in that group or
class, or sufficiently specific so that each
individual in the class or group can prove that the
defamatory statement specifically pointed to him, so
that he can bring the action separately, if need be.
Disposition The decision of the Intermediate
Appellate Court is reversed and the complaint in Civil
Case No. 15812 of the CFI Negros Occidental is
dismissed, without pronouncement as to costs.

MANILA INTERNATIONAL AIRPORT

AUTHORITY v RIVERA VILLAGE
LESSEE HOMEOWNERS
ASSOCIATION,INC.
00 SCRA 00
Tinga, September 30, 2005
NATURE
Petition for Review on Certiorari filed by the MIAA
assailing the Decision of the CA which directed the
issuance of a writ of preliminary injunction
restraining petitioner from evicting the homeowners
of Rivera Village from their dwellings.
FACTS
-The then Civil Aeronautics Administration (CAA) was
entrusted with the administration, operation,
management,
control,
maintenance
and
development of the Manila International Airport
(MIA), now the NAIA. The CAA entered into individual
lease contracts with its employees for the lease of
portions of a 4-hectare lot situated in Rivera Village,
Barangay 199 and 200 in Pasay City. The leases were
for a 25-year period to commence on May 25, 1965
up to May 24, 1990 at P20 per annum as rental.
- Thereafter, EO 778 was issued (later amended by
EO 903), creating MIAA, transferring existing assets
of the MIA to MIAA, and vesting the latter with the
power to administer and operate the MIA.
- MIAA stopped issuing accrued rental bills and
refused to accept rental payments from the lessees.
As a result, respondent homeowners association,
purportedly representing the lessees, requested
MIAA to sell the subject property to its members,
invoking the provisions of PD 1517 or the Urban Land
Reform Act and PD 2016. The MIAA denied the
request, claiming that the subject property is
included in its Conceptual Development Plan
intended for airport-related activities.
- Respondent filed a petition for mandamus and
prohibition with prayer for the issuance of a
preliminary injunction against MIAA and the National
Housing Authority (NHA) with the RTC of Pasay. The
petition sought to restrain the MIAA from
implementing its Conceptual Development Plan
insofar as Rivera Village is concerned and to compel
MIAA to segregate Rivera Village from the scope of
the Conceptual Development Plan and the NHA to
take the necessary steps for the disposition of the

property in favor of the members of the homeowners

association.
- After the preliminary, the RTC denied the prayer for
the issuance of a temporary restraining order and/or
writ of preliminary injunction and dismissed the
petition for lack of merit. The trial court held, among
others, that the petition failed to state a cause of
action inasmuch as respondent homeowners
association is not the real party-in-interest, the
individual members of the association being the ones
who have possessory rights over their respective
premises. Moreover, the lease contracts have
already expired.
- Upon appeal, the CA annulled and set aside the
order of the trial court and remanded the case for
further proceedings. A writ of preliminary injunction
was issued restraining and preventing respondent
MIAA from evicting the members of Rivera Village
Association from their respective lots in the Rivera
Village. The CA ruled that the case can be construed
as a class suit instituted by the Rivera Village
lessees. The homeowners association, considered as
the representative of the lessees, merely instituted
the suit for the benefit of its members. It does not
claim to have any right or interest in the lots
occupied by the lessees, nor seek the registration of
the titles to the land in its name.
- MIAA argues that the petition filed by the
homeowners association with the trial court fails to
state a cause of action because the homeowners
association is not the real party-in-interest in the suit.
Allegedly, the Board Resolution presented by
respondent shows that it was only the board of
directors of the association, as distinguished from
the members thereof, which authorized respondent
to act as its representative in the suit.
ISSUE
WON the petition filed by respondent with the trial
court states a cause of action against petitioner/
WON respondent has personality to sue
HELD
YES
The 1997 Rules of Civil Procedure requires that every
action must be prosecuted or defended in the name
of the real party-in-interest, i.e., the party who
stands to be benefited or injured by the judgment in
the suit, or the party entitled to the avails of the suit.
A case is dismissible for lack of personality to sue
upon proof that the plaintiff is not the real party-in-

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interest, hence grounded on failure to state a cause
of action.
The petition before the trial court was filed by the
homeowners
association,
represented
by
its
President, Panfilo R. Chiutena, Sr., upon authority of
a Board Resolution empowering the latter to file "All
necessary action to the Court of Justice and other
related acts necessary to have our Housing Project
number 4 land be titled to the members of the
Association."
Obviously, the petition cannot be considered a class
suit under Sec. 12, Rule 3 of the Rules of Court, the
requisites therefor not being present in the case,
notably because the petition does not allege the
existence and prove the requisites of a class suit,
i.e., that the subject matter of the controversy is one
of common or general interest to many persons and
the parties are so numerous that it is impracticable
to bring them all before the court, and because it
was brought only by one party.
In Board of Optometry v. Colet, it was held that
courts must exercise utmost caution before allowing
a class suit, which is the exception to the
requirement of joinder of all indispensable parties.
For while no difficulty may arise if the decision
secured is favorable to the plaintiffs, a quandary
would result if the decision were otherwise as those
who were deemed impleaded by their self-appointed
representatives would certainly claim denial of due
process.
There is, however, merit in the appellate courts
pronouncement that the petition should be construed
as a suit brought by the homeowners association as
the representative of the members thereof under
Sec. 3, Rule 3 of the Rules of Court, which provides:
Sec. 3. Representatives as parties. Where the action
is allowed to be prosecuted or defended by a
representative or someone acting in a fiduciary
capacity, the beneficiary shall be included in the title
of the case and shall be deemed to be the real party
in interest. A representative may be a trustee of an
express trust, a guardian, an executor or
administrator, or a party authorized by law or these
Rules. An agent acting in his own name and for the
benefit of an undisclosed principal may sue or be
sued without joining the principal except when the
contract involves things belonging to the principal.
It is a settled rule that every action must be
prosecuted or defended in the name of the real
party-in-interest. Where the action is allowed to be
prosecuted or defended by a representative acting in
a fiduciary capacity, the beneficiary must be

included in the title of the case and shall be deemed

to be the real party-in-interest. The name of such
beneficiaries shall, likewise, be included in the
complaint.
Moreover, Sec. 4, Rule 8 of the Rules of Court
provides 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 must be
averred in the complaint. In order to maintain an
action in a court of justice, the plaintiff must have an
actual legal existence, that is, he or she or it must be
a person in law and possessed of a legal entity as
either a natural or an artificial person. The party
bringing suit has the burden of proving the
sufficiency of the representative character that he
claims. If a complaint is filed by one who claims to
represent a party as plaintiff but who, in fact, is not
authorized to do so, such complaint is not deemed
filed and the court does not acquire jurisdiction over
the complaint. It must be stressed that an
unauthorized complaint does not produce any legal
effect.
In this case, the petition filed with the trial court
sufficiently avers that the homeowners association,
through its President, is suing in a representative
capacity as authorized under the Board Resolution
attached to the petition. Although the names of the
individual members of the homeowners association
who are the beneficiaries and real parties-in-interest
in the suit were not indicated in the title of the
petition, this defect can be cured by the simple
expedient of requiring the association to disclose the
names of the principals and to amend the title and
averments of the petition accordingly.
Essentially, the purpose of the rule that actions
should be brought or defended in the name of the
real party-in-interest is to protect against undue and
unnecessary litigation and to ensure that the court
will have the benefit of having before it the real
adverse parties in the consideration of a case. This
rule, however, is not to be narrowly and restrictively
construed, and its application should be neither
dogmatic nor rigid at all times but viewed in
consonance with extant realities and practicalities.
As correctly noted by the CA, the dismissal of this
case based on the lack of personality to sue of
petitioner-association will only result in the filing of
multiple suits by the individual members of the
association.
Disposition

The instant petition is GRANTED. The decision of the

CA is REVERSED and SET ASIDE. The civil case in the
RTC of Pasay City is ordered DISMISSED.

DEL CASTILLO VS. JAYMALIN, ET AL.

112 SCRA 629
MELENCIO-HERRERA, March 17, 1982
NATURE
Direct appeal from the decision of the CFI which
dismiss the case for Damages due to the death of
plaintiff
FACTS
1960: Deaf-mute Mario del Castillo fell upon alighting
the bus of the respondents and died.
1962: Action for recovery of damages was filed by
Severo del Castillo, the father of the victim, against
the driver, conductor, and the owner companies.
1966: Severo died. Counsel for Motion for Annulment
Proceedings after having learned that plaintiff Severo
already died without resting his case. Court ordered
plaintiffs counsel to verify existence of heirs willing
to be substituted as parties-plaintiffs. Allegedly, a
Deed of Assignment was executed by Severo in
favor of his son-in-law Wenceslao Haloc of all his
rights in the proceedings in 1960 so plaintiff filed a
Motion to Admit Amended Complaint, substituting
Wenceslao as party-plaintiff. Amended Complaint
was admitted by the court.
CFI: dismissed original and amended complaints due
to the death of Severo. Wenceslao had no personality
to continue the case, not being a heir of Severo.
ISSUE
1. WON the complaint should be dismissed due to
the death of the plaintiff, even if he had already
assigned his rights before he died
2. WON damages should have been awarded
HELD
1. NO
Ratio. Where an assignable right has been
transferred before action brought, the proceeding
ought to be instituted in the name of the assignee;
and where an assignment is effected pendente lite, it
is proper to have the assignee substituted for the
original plaintiff. If such substitution should not be
effected and the transfer of the right of action should
not be brought to the attention of the court, the
original plaintiff, if successful in the litigation, would

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hold the fruits of the action as a sort of trustee for

the use and benefit of his assignee.
Reasoning. This is not a case where the provisions
of Section 17, Rule 3 of the Rules of Court on "death
of a party" are applicable. Rather, it is a situation
where plaintiff, while alive, had assigned his rights to
another, in which case, the proper procedure would
have been for the transferee to have been
substituted for the transferor as plaintiff. The rights
of Severo to claim damages for his son were
transferable. Severo had transferred his rights as
plaintiff to Wenceslao Haloc but after the assignment
the case continued in Severo's name and there was
no immediate and formal substitution of party
plaintiff. This is but a formality, however, and the fact
remains that, after the assignment, the substantial
plaintiff and real party in interest became Haloc, with
Severo as a sort of trustee of whatever fruits the
litigation would bring.

purchase price. 10 years after the execution of said

document, Gojo filed a case with the CFI against
Goyala by way of a petition for consolidation of
ownership of said land. Gojo alleged that the period
for repurchasing had expired and ownership had
become consolidated in him and that for purposes of
recording the consolidation in the Registry of
Property, it was necessary that a judicial order be
issued to that effect.
-Goyala filed an answer to the petition, alleging that
they had obtained a cash loan of P810 from Gojo
payable w/in one year w/o interest and that to
guarantee payment, Goyala executed a mortgage in
favor of the petitioner on the parcel of land in
question. Hence, although the deed was executed in
the form of a pacto de retro sale, the true intention
of the parties was for it to be a mere mortgage to
secure payment. Goyala further claimed that he and
his wife attempted to pay the debt but petitioner
refused to receive the sum and cancel the mortgage.
By way of counterclaim, Goyala prayed that
petitioner receive the P810 and that the document of
mortgage be declared so, and not a pacto de retro
sale. He further prayed for P1800 per annum until
the final termination of the case for the fruits of said
property and in the case that the instrument be
deemed a true pacto de retro sale, that petitioner be
ordered to execute a deed of resale in favor of
respondents in accordance with A1606CC.
-Counsel for Goyala filed a manifestation informing
the TC that the named defendant, Antonina, had
died, prompting the TC to issue an order requiring
counsel for the plaintiff to submit an amended
Complaint substituting Antonina with one of her
successors in interest as party defendants. Goyala
filed a motion to dismiss the petition on the ground
that notwithstanding the lapse of 43 days after
appellants receipt of a copy of the said TC order,
said appellant failed and neglected to submit the
amended complaint required of him. Appellant
opposed the motion but the TC dismissed the
complaint.
-Appellee filed a motion to declare appellant in
default in respect of said appellees counterclaim,
which was granted by the TC, which further required
Goyala to submit his evidence before the Clerk of
Court. TC rendered favorable judgment on appellees
counterclaim, declaring the Deed of Pacto de Retro
Sale an equitable mortgage and ordering Gojo to
receive the P810 and to restore possession to the
defendants and allowing them to redeem the same.

Prof. Victoria A.

38

Avena

2. YES
Reasoning. Articles 1764 and 2206 of the Civil
Code. Failure to exercise extraordinary care for the
safety of its passengers even after being apprised of
the fact that the victim was a deaf-mute. Should
have been remanded to CA for determination of
amount of damages but due to pendency of case for
13 years + put an end to controversy, Court imposed
P12,000 for death of victim, plus P2,000 attys fees
Disposition. WHEREFORE, the judgment appealed
from is hereby reversed, and defendants hereby
ordered jointly and severally, to pay Wenceslao
Haloc, the amount of P12,000.00 as damages for
death, without interest, and P2,000.00 as attorney's
fees. No costs. SO ORDERED.

GOJO V GOYALA
35 SCRA 557
Barredo, J.: Oct. 30, 1970
NATURE
Appeal from a decision of the CFI of Sorsogon
FACTS
-Appellee Segundo Goyala, with his now deceased
wife Antonina sold to Gojo a 2.5 hectare parcel of
agricultural land for P750 by a Deed of Pacto de
Retro Sale, the repurchase to be made within one
year, as stated in the deed. The deed also indicates
that the vendee paid another P100 in addition to the

-Appellant appealed to the CA, which upon finding

that the said appeal involves purely questions of law,
certified the same to the SC.
ISSUES
Parties: Re contractual money claims /
Dismissal by claimant / Compulsory
counterclaim/ Answer: Defenses
WON TC erred in declaring plaintiff in default with
respect to defendants counterclaim
HELD
YES. The appellant contends that there is no occasion
for the TC to declare him in default in respect of
appellees counterclaim as said counterclaim falls
within the category of compulsory counterclaim
which does not call for an independent answer as the
complaint already denies its material allegations. It is
now settled that a plaintiff who fails or chooses not to
answer a compulsory counterclaim may not be
declared in default, principally because the issues
raised in the counterclaim are deemed automatically
joined by the allegations of the complaint.
-While it is true that under Sec. 3 of Rule 17, a
complaint may be dismissed for failure to prosecute
if the plaintiff fails to comply with an order of the
court, said provision cannot apply when the order
ignored is a void one, as in this case. (As in Sec 20 of
Rule 3, the death of the defendant in a contractual
money claim does dismiss such action for recovery,
but will be allowed to continue until final judgment is
entered. Favorable judgment obtained by the plaintiff
shall be enforced in the manner provided in these
Rules for prosecuting claims against the estate of a
deceased person. In Barrameda vs Barbara, the SC
held that an order to amend the complaint, before
the proper substitution of parties as directed by Sec.
17, Rule 3 (Sec. 16, new law), is void and imposes
upon the plaintiff no duty to comply therewith to the
end that an order dismissing the said complaint, for
such non-compliance, would similarly be void. It was
further held in Ferriera vs Gonzales that the
continuance of a proceeding during the pendency of
which a party thereto dies, without such party having
been validly substituted in accordance with the rules,
amounts to lack of jurisdiction.
WHEREFORE, the decision appealed from is set
aside

VENUE

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PEOPLE v. MAYOR PABLO SOLA
(page 8)
FACTS
-Bodies found in Mayor Solas hacienda. Information
filed against Mayor, Chief of Police and other
accused. Accused were granted bail. Witnesses fear
for their lives because the trial was to be held near
the town where the accused were powerful. Also, the
witnesses had been receiving threats on their lives.
Relevance: Change in venue
ON CHANGE OF VENUE: The constitution is quite
explicit. The Supreme Court could order "a change of
venue or place of trial to avoid a miscarriage of
justice."
-People v. Gutierrez, J.B.L. Reyes: "TO COMPEL THE
PROSECUTION TO PROCEED TO TRIAL IN A LOCALITY
WHERE ITS WITNESSES WILL NOT BE AT LIBERTY TO
REVEAL WHAT THEY KNOW IS TO MAKE A MOCKERY
OF THE JUDICIAL PROCESS, AND TO BETRAY THE
VERY PURPOSE FOR WHICH COURTS HAVE BEEN
ESTABLISHED."
-The exercise by this Honorable Court of its above
constitutional power in this case will be appropriate.
The witnesses in the case are fearful for their lives.
They are afraid they would be killed on their way to
or from Himamaylan during any of the days of trial.
Because of this fear, they may either refuse to testify
or testify falsely to save their lives.
-there may be cases where the fear, objectively
viewed, may, to some individuals, be less than
terrifying, but the question must always be the effect
it has on the witnesses who will testify.
-The primordial aim and intent of the Constitution
must ever be kept in mind. In case of doubt, it should
be resolved in favor of a change of venue

TIME, INC. vs. REYES

39 SCRA 303
REYES, J.B.L.; May 31, 1971
NATURE
Petition
for
certiorari
and
prohibition,
with
preliminary injunction, to annul certain orders of the
respondent Court of First Instance of Rizal, issued
and to prohibit the said court from further proceeding
with the said civil case.
FACTS

- Antonio J. Villegas and Juan Ponce Enrile (Mayor of

Manila and Undersecretary of Finance and
concurrently Acting Commissioner of Customs,
respectively, with offices in the City of Manila) filed a
civil action in the Court of First Instance of Rizal
seeking to recover from the herein petitioner
damages upon an alleged libel arising from a
publication of Time (Asia Edition) magazine, in its
issue of 18 August 1967, of an essay, entitled
"Corruption in Asia", wherein the defendants
allegedly impute to plaintiffs the commission of the
crimes of graft and corruption and nepotism.
- Petitioner Time, Inc., is an American corporation
with principal offices at Rockefeller Center, New York
City, N. Y., and is the publisher of "Time", a weekly
news magazine.
PROCEDURE
- Villegas and Enrile filed a Motion for leave to take
the depositions "of Mr. Anthony Gonzales, Time-life
International", and "Mr. Cesar B. Enriquez, Muller &
Phipps (Manila) Ltd.", in connection with the activities
and operations in the Philippines of the petitioner. It
was granted by Judge Reyes and he also issued a
writ of attachment on the real and personal estate of
Time, Inc.
- Time Inc. filed a motion to dismiss the complaint
for lack of jurisdiction and improper venue, relying
upon the provisions of Republic Act 4363 (According to
this law, 'The criminal and civil action for damages in cases
of written defamations. . .where one of the offended parties
is a public officer whose office is in the City of Manila at the
time of the commission of the offense, the action shall be
filed in the Court of First Instance of the City of Manila or of
the city or province where the libelous article is printed and
first published, and in case such public officer does not hold
office in the City of Manila, the action shall be filed in the
Court of First Instance of the province or city where he held
office at the time of the commission of the offense or where
the libelous article is printed and first published).

- Respondent court deferred the determination of

the motion to dismiss until after trial of the case on
the merits, the court having considered that the
grounds relied upon in the motion do not appear to
be indubitable.
- Petitioner moved for reconsideration of the
deferment; The respondent judge issued an order re
affirming the previous order of deferment for the
reason that "the rule laid down under Republic Act
No. 4363, amending Article 360 of the Revised Penal
Code, is not applicable to actions against nonresident
defendants,
and
because
questions
involving harrasments and inconvenience, as well as

disruption of public service do not appear indubitable

. . ."
- Petitioner filed the instant petition for certiorari and
prohibition. (Subject of the petition: The orders for
the taking of the said depositions, for deferring
determination of the motion to dismiss, and for re
affirming the deferment, and the writ of attachment
are sought to be annulled in the petition.)
ISSUES
1. Whether or not, under the provisions of Republic
Act No. 4363 the respondent Court of First Instance
of Rizal has jurisdiction to take cognizance of the civil
suit for damages arising from an allegedly libelous
publication, considering that the action was
instituted by public officers whose offices were in the
City of Manila at the time of the publication;
2.
If it has no jurisdiction, whether or not its
erroneous assumption of jurisdiction may be
challenged by a foreign corporation by writ of
certiorari or prohibition; and
HELD
1. No. The proper venue is the CFI of Manila.
Ratio: Under Article 360 of the Revised Penal Code,
as amended by Republic Act No. 4363, actions for
damages by public officials for libelous publications
against them can only be filed in the courts of first
instance of the city or province where the offended
functionary held office at the time of the commission
of the offense, in case the libelous article was first
printed or published outside the Philippines.
Reasoning:
a. (Intent of the law) The assertion that a foreign
corporation or a non-resident defendant is not
inconvenienced by an out-of-town suit is irrelevant
and untenable, for venue and jurisdiction are not
dependent upon convenience or inconvenience to a
party; and moreover, venue was fixed under
Republic Act No. 4363, pursuant to the basic policy of
the law that is, as previously stated, to protect the
interest of the public service when the offended
party is a public officer, by minimizing as much as
possible any interference with the discharge of his
duties.
b. (Textual and strict interpretation of the law) The
rule is that where a statute creates a right and
provides a remedy for its enforcement, the remedy is
exclusive; and where it confers jurisdiction upon a
particular court, that jurisdiction is likewise exclusive,
unless otherwise provided. Hence, the venue
provisions of Republic Act No 4363 should be

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deemed mandatory for the party bringing the action,
unless the question of venue should be waived by
the defendant, which was not the case here.
2. Yes.
Ratio: The action of a court in refusing to rule, or
deferring its ruling, on a motion to dismiss for lack of
jurisdiction over the subject matter, or for improper
venue, is in excess of jurisdiction and correctible by
writ of prohibition or certiorari sued out in the
appellate Court, even before trial on the merits is
had.
Reasoning
It would be useless and futile to go ahead with the
proceedings if the court had no jurisdiction.
DISPOSITION
The writs applied for are granted: the respondent
Court of First Instance of Rizal is declared without
jurisdiction to take cognizance of its Civil Case No.
10403; and its orders issued in connection therewith
are hereby annulled and set aside. Respondent court
is further commanded to desist from further
proceedings in Civil Case No. 10403 aforesaid.
The writ of preliminary injunction heretofore issued
by this Supreme Court is made permanent.

PILIPINO TELEPHONE V TECSON

00 SCRA 00
VITUGJ; May 7, 2004
NATURE
Special civil action of certiorari
FACTS
- On various dates in 1996, Delfino C. Tecson applied
for six (6) cellular phone subscriptions with petitioner
Pilipino Telephone Corporation (PILTEL), which
applications were each approved and covered, by six
mobiline service agreements.
- On 05 April 2001, respondent filed with the RTC of
Iligan City, Lanao Del Norte, a complaint against
petitioner for a "Sum of Money and Damages."
Petitioner moved for the dismissal of the complaint
on the ground of improper venue, citing a common
provision in the mobiline service agreements to the
effect that "Venue of all suits arising from this Agreement or any
other suit directly or indirectly arising from the
relationship between PILTEL and subscriber shall be
in the proper courts of Makati, Metro Manila.

Subscriber hereby expressly waives any other

venues."
- In an order, the RTC denied petitioner's MTD and
required it to file an answer within 15 days from
receipt thereof.
- PILTEL filed a MFR, through registered mail, of the
order of the trial court. In its subsequent order, TC
denied the MFR.
- Petitioner filed a petition for certiorari under Rule
65 of the Revised Rules of Civil Procedure before the
CA.
- CA saw no merit in the petition and affirmed the
assailed orders of the TC. Petitioner moved for a
reconsideration, but the appellate court denied the
motion.
ISSUE/S
WON parties may stipulate on the venue of any
litigation between them
HELD
YES
Ratio Section 4, Rule 4, of the Revised Rules of Civil
Procedure allows the parties to agree and stipulate in
writing, before the filing of an action, on the
exclusive venue of any litigation between them. Such
an agreement would be valid and binding provided
that the stipulation on the chosen venue is exclusive
in nature or in intent, that it is expressed in writing
by the parties thereto, and that it is entered into
before the filing of the suit.
Reasoning. The provision contained in paragraph 22
of the "Mobile Service Agreement," a standard
contract made out by petitioner PILTEL to its
subscribers, apparently accepted and signed by
respondent. The added stipulation that the
subscriber "expressly waives any other venue"
should indicate, clearly enough, the intent of the
parties to consider the venue stipulation as being
preclusive in character.
The appellate court, however, would appear to
anchor its decision on the thesis that the subscription
agreement, being a mere contract of adhesion, does
not bind respondent on the venue stipulation. But
such an agreement is not per se inefficacious. The
rule instead is that, should there be ambiguities in a
contract of adhesion, such ambiguities are to be
construed against the party that prepared it. If,
however, the stipulations are not obscure, but are
clear and leave no doubt on the intention of the
parties, the literal meaning of its stipulations must be
held controlling.

A contract duly executed is the law between the

parties, and they are obliged to comply fully and not
selectively with its terms. A contract of adhesion is
no exception.
Disposition WHEREFORE, the instant petition is
GRANTED.

PLEADINGS
In General: Manner of making
allegations in pleadings
Actionable document
SANTIAGO VS DE LOS SANTOS
61 SCRA 146
FERNANDO; November 22, 1974
FACTS
Santiago applied for registration of a parcel of land
located in San Mateo, Rizal. The application is
opposed by the Director of Lands, Director of
Forestry and by Mrs. Pacita V. de los Santos on the
ground that the property applied for is part of the
public domain. Subsequently, motions to dismiss
the application were filed by the oppositor Pacita V.
de los Santos and the Director of Forestry which
motions are principally based on the allegation that
the property applied for is a portion of the public
domain which was leased to Mrs. Pacita de los Santos
under Pasture Lease Agreement No. 1305.
The motion to dismiss was granted based on the
documents attached to their motion by Judge Cecilia
Muoz Palma, now an Associate Justice of this Court,
dismissed the suit. In this appeal, Santiago seeks for
the decision to be reversed. His new counsel, the
firm of Luna and Manalo, is thorough and
comprehensive.
ISSUE
WON the order of the lower court should be reversed.
HELD
NO.
Even the most cursory reading of the order of
dismissal can lead to no other conclusion except that
it should be affirmed. Notwithstanding the vigor with
which the appeal is being prosecuted by new
counsel, it cannot suffice for a reversal. The infirmity
of the case is incurable.

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The pleading left no choice to the then Judge Muoz

Palma except to dismiss the case, which wrote: ...
the portion of the said parcel of land subject of this
registration which was claimed as part of the public
forest has already been released by the Honorable
Secretary of Agriculture and Natural Resources for
agricultural purposes as evidenced by its order dated
August 10, 1961. Attached to such pleading were
the documents, which, in the language of the then
Judge Palma, "show that the land object of this
registration proceeding is part of the public domain.
Former counsel ought to have realized the fatal
effect on his client's case of such an admission. If it
were his intention to demolish entirely the pretension
of plaintiff to the claim that he had been in open,
public, uninterrupted, peaceful and adverse
possession in the concept of owner from July 26,
1894 up to the present, he could not have succeeded
any better.
What was so categorically therein set forth
as to such parcel of land being a part of a public
forest, although thereafter released by the Secretary
of Agriculture and Natural Resources for agricultural
purposes, is conclusive and binding. It would clearly
appear that Santiago could not in truth show that
there was such an open, uninterrupted, peaceful and
adverse possession in the concept of owner
It is a familiar doctrine," according to Justice J.B.L.
Reyes in Joe's Radio & Electrical Supply v. Alto
Electronics Corp., 5 "that an admission made in the
pleadings cannot be controverted by the party
making such admission and are conclusive as to him,
and that all proofs submitted by him contrary thereto
or inconsistent therewith, should be ignored, whether
objection is interposed by the party or not ... ." 6
Even if there had been a full hearing on the case,
therefore, the result would not have been any
different. There was no choice then for the lower
court except to dismiss the complaint.
The present counsel of Santiago tries to
extricate himself from a predicament of his own
making by arguing that the motion to dismiss of
Pacita de los Santos is not entitled to recognition as
there was a general order of default except as to the
Bureau of Lands and the Bureau of Forestry, not
lifted as to her and that she has no interest to
oppose the application although admittedly there
was a claim on her part under a pasture lease
agreement in her favor. But in the motion to dismiss
of de los Santos, it was alleged that the son of
Santiago, Juanito was one time the lessee of the
timber area sought to be registered by Santiago.

There was no denial of such allegation. It is quite

obvious then that the facts, no less than the law, call
for precisely the conclusion reached by the then
Judge Muoz Palma.
"Rules of pleading are intended to secure a method
by which the issues may be properly laid before the
court. When those issues are already clear before the
court, the deficiency in the observance of the rules
should not be given undue importance. What is
important is that the case be decided upon the
merits and that it should not be allowed to go off on
procedural points. Technicalities, in the appropriate
language of Justice Makalintal, "should give way to
the realities of the situation." 13 Well could Justice
Cardozo observe: "A system of procedure is
perverted from its proper function when it multiplies
impediments to justice without the warrant of clear
necessity."

41

Avena

Dispositive. WHEREFORE, the appealed order of

November 17, 1961 of the then Judge Muoz Palma
is affirmed. Costs against appellant Luis R. Santiago

The Claim
Counterclaim/cross-claim
answer

after

NAMARCO v. FEDERACION
49 SCRA 238
ANTONIO; January 31, 1972
NATURE
Appeal by defendantfrom a decision of the Court of
First Instance ordering said defendant to pay the
plaintiff
FACTS
- NAMARCO is a GOCC organized and existing under
and by virtue of RA 1345. FEDERATION is a non-stock
corporation duly organized and existing under and by
virtue of the laws of the Philippines.
- They entered into a Contract of Sale which says
that the Management of NAMARCO was authorized to
import items worth $2,001,031. FEDERATION
deposited P200,000 as partial payment and the
balance shall be paid on cash basis upon delivery of

the duly indorsed negotiable shipping document

covering the same and
- To insure payment, the NAMARCO accepted three
domestic letters of credit for the account of the
FEDERATION.
- The FEDERATION and some of its members filed a
complaint against the NAMARCO for specific
performance and damages, alleging that after the
NAMARCO had delivered a great portion of the goods
listed in the Contract of Sale, it refused to deliver the
other goods mentioned in the said contract.
- CFI ordered the NAMARCO to specifically perform its
obligation in the Contract of Sale, by delivering to the
FEDERATION the undelivered goods.
- SC: The Contract of Sale was valid."
- NAMARCO: FEDERATION'S act or omission in
refusing to satisfy the former's valid, just and
demandable claim has compelled it to file the instant
action; and praying that the FEDERATION be ordered
to pay the NAMARCO the costs of merchandise plus
damages.
- FEDERATION moved to dismiss the complaint on the
ground that the cause of action alleged therein is
barred forever, pursuant to section 6 of Rule 10 of
the Rules of Court. In support thereof, the
FEDERATION alleged it filed a case for specific
performance to enforce compliance with the contract
of sale; that said contract is also the basis
NAMARCO's present complaint; that when NAMARCO
filed its answer to the complaint, it did not set up any
counterclaim therein; that the CFI promulgated the
decision in said case ordering, among others, the
NAMARCO to specifically perform its obligation under
the contract of sale by delivering to the FEDERATION
the goods subject-matter of the contract as are
involved in the complaint.
- NAMARCO opposed the motion to dismiss
contending that its claim for the recovery of the cost
of merchandise delivered to the FEDERATION is not
necessarily connected for specific performance and,
therefore, does not fall under the category of
compulsory counterclaim; that NAMARCO's failure to
set it up as a counterclaim in its answer does not
constitute res judicata; that the deliveries of the
merchandise were effected through the fault or
negligence of one of its personnel, Juan T. Arive, who
was administratively charged therefor, found guilty
and accordingly dismissed.; that the present claim is
not necessarily connected with the transaction or
occurrence that is the subject matter of Civil Case
No. 42684, as the same evidence would not support
or refute both.

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- The FEDERATION filed a rejoinder reiterating that
the requirements on the rule of compulsory
counterclaim are present; that the first requirement
that the counterclaim arises out of or is necessarily
connected with the contract of sale subject-matter of
NAMARCO's cause of action is evident from the face
of the complaint itself.
- LC issued an order holding "in abeyance" action on
the motion to dismiss till after the trial on the merits.
- FEDERATION filed its answer to the NAMARCO's
complaint admitting some material averments of the
complaint, specifically denying other allegations and
consistently with its position averred as affirmative
defense that NAMARCO's failure to assert its claim
against the FEDERATION before judgment in Civil
Case No. 42684 on October 15, 1960 constituted a
bar to the institution of the present action. By way of
counterclaim, the FEDERATION sought P50,000.00 as
attorney's fees and other expenses of litigation, as
well as P17,000.00 as damages for improper
issuance of a writ of attachment which writ, evidently
had been issued earlier by the court.
- NAMARCO filed an answer to the FEDERATION'S
counterclaim specifically denying the material
averments thereof and maintaining that the present
action is not barred by Civil Case No. 42684.
ISSUE
WON this action of NAMARCO for the collection of the
payment of the merchandise delivered to, but not yet
paid by, the FEDERATION, is already barred as a
consequence of the failure of NAMARCO to set it up
as a counterclaim in the previous case, (Civil Case
No. 42684).
HELD
- A counterclaim has been held to be compulsory if
there is a logical relationship between it and the
main claim.
- But even assuming for the nonce that NAMARCO's
present claim is logically related to the claim of the
FEDERATION in the previous case, NAMARCO's claim
having accrued or matured after the service of its
answer in the earlier case is in the nature of an afteracquired counterclaim which under the rules is not
barred even if it is not set up in the previous case as
a counterclaim. An after-acquired counterclaim, is
one of the recognized exceptions to the general rule
that a counterclaim is compulsory and must be
asserted if it arises out of the same transaction as
the opposing party's claim.

- The party need not assert a counterclaim that has

not matured at the time he serves his pleading. This
is derived from the language in the rule limiting its
application to claims the pleader has 'at the time of
serving the pleading.' A counterclaim acquired by
defendant after he has answered will not be
considered compulsory, even if it arises out of the
same transaction as does plaintiff's claim. Similarly, a
counterclaim acquired by plaintiff after he has
replied to a counterclaim by defendant is not
compulsory under Rule 13(a). However, if a party
should acquire a matured counterclaim after he has
pleaded, Rule 13(e) provides that he may obtain the
court's permission to include it in a supplemental
pleading under Rule 15(d)."
- A counterclaim may be asserted under Rule 13(e)
only by leave of court, which usually will be granted
in order to enable the parties to litigate all the claims
that they have against each other at one time
thereby avoiding multiple actions. However, Rule 13,
(e) is permissive in character. An after-acquired
counterclaim, even if it arises out of the transaction
or occurrence that is the subject matter of the
opposing party's claim, need not be pleaded
supplementally; the after-acquired claim is not
considered a compulsory counterclaim under Rule
13(a) and a failure to interpose it will not bar its
assertion a later suit.
- The counterclaim must be existing at the time of
filling the answer, though not at the commencement
of the action for under Section 3 of the former Rule
10, the counterclaim or cross-claim which a party
may aver in his answer must be one which he may
have "at the time" against the posing party. That
phrase can only have reference to the time of the
answer. Certainly a premature counterclaim cannot
be set up in the answer. This construction is not only
explicit from the language of the aforecited
provisions but also serves to harmonize the
aforecited sections of Rule 10, with section 4 of the
same rule which provides that "a counterclaim . . .
which either matured or was acquired by a party
after serving his pleading may, with the permission
of the court, be presented as a counterclaim . . . by
supplemental pleading before judgment."
- Thus a party who fails to interpose a counterclaim
although arising out of or is necessarily connected
with transaction or occurrence of the plaintiff's suit
but which did not exist or mature at the time said
party files his answer is not thereby barred from
interposing such claim in a future litigation. However
such claim may with the court's permission be

included in the same case by way of supplemental

pleading before judgment under Section 4 of former
Rule 10 of the Rules (now Sec. 9 Rule 6). And the
same may be allowed unless the case has
progressed so far that it may be inconvenient or
confusing to allow the additional claim to be pleaded.
- We therefore rule that NAMARCO's present action,
is not barred by its failure to assert it as a
counterclaim the previous case.
BARREDO, dissenting:
- Namarco's present claim arise out of or was
necessarily connected with the transaction or
occurrence that was the subject matter of the
Federation's action in Civil Case No 42684 within the
contemplation
of
the
rule
on
compulsory
counterclaims.
- It was the element of time herein involved that
somehow induced me at the beginning to be inclined,
albeit reluctantly, to sustain Namarco's position in
this appeal. At the precise time that Namarco filed its
answer in Civil Case No. 42684, it was not yet certain
that the Federation would not pay or that payment of
its sight drafts would not be effected by the bank. In
other words, from that point of view, Namarco's
cause of action had not yet matured then. It is also
clear, however, that said cause of action accrued
before judgment was rendered by the trial court.
- Under Section 4 of Rule 10 of the old rules, now
Section 9 of Rule 6, a counterclaim which either
matured or was acquired by a defendant after
serving his answer may be set up in a supplemental
pleading later before judgment. Since this may be
done or not in the case of counterclaims not arising
out of the same transaction or occurrence, the
question that arises is, must it have to be done in the
case of counterclaims that do arise from the same
transaction or occurrence, such that if not
interposed, they must be deemed barred?
- I agree that the Court rule for the present that for a
counterclaim to be considered as barred, under the
above provisions, the cause of action thereof must
have already accrued at the time the answer is filed
by the defendant, although I, for one, would prefer
supplemental counterclaims, the defendant should
just the same be compelled to allege it in such a
supplemental pleading in those cases where his
claim accrues before trial has began or at the latest,
before the defendant has started presenting his
evidence. Otherwise stated, my position is that the
claim of Namarco in this case did arise out of the
same transaction or occurrence that was the subject

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matter of the Federation's anterior action, but
inasmuch as, on the hypothesis that the contract
were binding, the formers' cause of action could not
have been considered as already matured when it
filed its answer, there would have been no need for it
to file this counterclaim.
- The whole trouble with Namarco's pose in this a
appeal lies, however, in the fact that in its answer to
the Federation's complaint, it pleaded the defense of
illegality or nullity of the contract. From that point of
view, it was immaterial to Namarco's recovery of the
purchase price of goods it had already delivered
under the contract that there was in said contract
any term for the payment thereof. As far as Namarco
was concerned, those goods had been delivered
illegally and should have been immediately returned
unless their value had been paid for, (Article 1412
(2), Civil Code) or Namarco was in pari delicto (Article
1411, id). Such being the case, it is quite evident that
when Namarco filed its answer to the Federation's
action, its cause of action for the recovery of the
price of the delivered goods was already existing and
could have been the subject of a counterclaim. This
means that as of the time Namarco filed its answer
contesting the legality or validity of the contract, it
was incumbent upon it to then and there seek
recovery of whatever it had delivered thereunder.

Amended
pleadings

and

Supplemental

YOUNG VS SPOUSES SY
GR No. 157745
AUSTRIA- MARTINEZ, September 26,
2006
NATURE
Consolidated petitions for review on Certiorari
FACTS
- Petitioner filed a complaint for nullification of
Second Supplemental Extra-judicial settlement,
mortgage, foreclosure sale, and tax declaration
against respondents on May 20, 2000. The
complained alleged that the questioned partition
which
was
executed
by her
mother
was
unenforceable since at the time of the execution the
petitioner was only 15 years old and that no court
approval was secured. Her mother obtained a loan
from the spouses respondents and used the property

as security (mortgage). Due to non-payment the

property was foreclosed and sold to respondents as
highest bidders. The deed of sale has been filed with
the Register of Deed and the respondents obtained n
their name a tax declaration over the property.
- Petitioner subsequently filed with the same RTC a
Motion to Admit Supplemental Complaint to invoke
her right to exercise legal redemption over the
property. This supplemental motion was denied by
the RTC on December 28, 2000. Petitioner filed a
Petition for Certiorari and Mandamus under Rule 65
of the Rules of Court with the CA. The CA dismissed
the petition on the ground that the cause of action in
the Supplemental complaint is entirely different from
the original complaint, that the said complaint did
not merely supply its deficiencies, and that, at any
rate, in the event the trial court issues an adverse
ruling, the petitioner can still the same. Petitioner
filed this Petition for review on certiorari under Rule
45 with the SC.
- With regard the original action, the RTC dismissed
the case upon motion of the respondents on the
ground of failure to prosecute. Apparently, the
petitioner had asked for postponements opening the
door for a claim by the respondents of non-suit. (This
is where it becomes more interesting) Petitioner filed
two appeals with the CA. Both appeals raised
essentially the same issues. One of the appeals an
ordinary appeal and the other is a Petition for
Certiorari under Rule 65 filed four months after the
first. The CA ruled in favor of the petitioner under the
ordinary appeal but a motion for reconsideration was
filed by the respondents and the CA has yet to rule
on this reconsideration motion. The other appeal was
dismissed on the ground that judgment of the RTC
can only be appealed via an ordinary appeal and not
by certiorari. Hence this petition for review under
Rule 45 with the SC.
ISSUE/S
1. WON the denial of the Motion to admit
supplemental Complaint is valid
2. WON the dismissal of the petition for certiorari
with regard the original action is proper
HELD
1. No. As its very name denotes, a supplemental
pleading only serves to bolster or add something to
the primary pleading. A supplement exists side by
side with the original. It does not replace that which
it supplement. Moreover, a supplemental pleading
assumes that the original pleading is to stand and

that the issues jpined with the original pleading

remained an issue to be tried in the action. It is but a
continuation of the complaint. Its usual office is to set
up new facts which justify, enlarge or change the
kind of relief with respect to the same subject matter
as the controversy referred to in the original
complaint. In this case, the consolidation of the title
over the property in the name of the respondent,
Manuel Sy, and the issue as to whether it precluded
petitioner as alleged co-owner from exercising the
right of legal redemption, are new matters that
occurred after the filing of the original complaint. The
relief prayd for in the Supplemental complaint, which
is the exercise of the right of legal redemption
accorded to co-owners of property, is germane to
and intertwined with the cause of action in the
Complaint for the nullification. The right of legal
redemption as co-owner is conferred by law and is
merely a natural consequence of co-ownership.
Hence petitioners cause of action for legal
redemption as embodied in the supplemental
complaint stems directly from and is an extension of
her rights as co-owner of the property subject of the
complaint. Also as petitioner correctly pointed out,
even if the trial court decides in her favor, the
redemption period would have lapsed already and
would not form part of the decision since it is not
prayed for, much less alleged in the original
complaint. In such a case, the respondents could
oppose the exercise since it would not have been
included in the decision over the original complaint.
2. Yes. The petitioner is guilty of forum shopping.
Forum shopping consists of filling multiple suits
involving the same parties for the same cause of
action, either simultaneously or successively, the the
purpose of obtaining a favorably judgment. There is
forum shopping where there exist: (a) identity of
parties, or at least such parties as represent the
same interests in both actions; (b) identity of rights
asserted and relief prayed for, the relief being
founded on the same facts; (c) the identity of the two
preceding particulars is such that any judgment
rendered in the pending case, regardless of which
party is successful would amount to res judicata. The
decision of the RTC is dismissing the case is a final
order and the proper remedy against such final order
is appeal and not certiorari. As a general rule, a writ
of certiorari sill not issue where the remedy of appeal
is available to the aggrieved party. The remedies of
appeal in the ordinary course of law and that of
certiorari under Rule 65 are mutually exclusive and
not alternative or cumulative. hence the special civil

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action of certiorari under Rule 65 cannot be a
substitute for an appeal where the latter remedy is
available. This is a firm judicial policy.
Disposition
Petition for the non-suit is denied. Petition for the
admission of the supplemental order is granted. The
trial court is directed to admit said complaint.

Third Party Complaint, etc.

REPUBLIC V CENTRAL SURETY &
INSURANCE COMPANY
26 SCRA 741
CASTRO; October 26, 1968
NATURE
FACTS
- October 23, 1959 > Republic of the Philippines filed
suit against the Central Surety & Insurance Company
and Mangoba, manager of the bond department
stating that Po Kee Kam who was the subject of
deportation proceedings in whom the bond was
made in favor of, did not appear in such proceedings
despite notice to the Surety. This constituted a
violation of the conditions of the bond causing the
forfeiture of the bond made by the Surety in favor of
the government. Republic claims P5,000 (amount of
bond) and P1,000 (attys fees)
- July 5, 1963 > Surety filed its answer: (1) that its
bond cannot be made liable beyond the amount of
P5,000; (2) that it is not liable for attorney's fees in
the absence of any stipulation to that effect; (3) that
the court has no jurisdiction over the case as the
amount involved is only P5,000; and (4) that the
Republic has no cause of action.
- July 30, 1963 > Surety filed a third-party complaint,
with leave of court, against Po Kee Kam and Tony Go
alleging that for consideration of the bond, the thirdparty defendants, executed an indemnity agreement
in favor of the Surety to indemnify it for damage,
loss, expenses etc and that in the event judgment is
rendered against it, the third party defendants be
ordered to reimburse
- September 7, 1963 > the third-party defendants
answer: defense that the case is premature as the
main case has not yet been terminated.
- December 2, 1963 > upon verbal motion of the
third party defendants, the trial court dismissed the

third-party complaint for lack of jurisdiction that the

third-party complaint was filed after the passage of
RA 3828 conferring original jurisdiction on the
Municipal Court in civil cases involving not more than
P10,000.00, and that the third-party complaint refers
to a claim of only P6,000.00
- December 3, 1963 > TC ordered surety to pay the
Republic P5,000, with interest
- CA: Surety interposed its appeal from the order
dismissing its third-party complaint and from the
decision ordering it to pay the Republic the amount
of P5,000, contending that the trial court erred in (1)
not declaring itself without jurisdiction over the
subject-matter of the action, and (2) dismissing the
third-party complaint. But it certified the case to SC
pursuant to Sec 2 Article VIII of the Constitution and
Sec 17(3) of RA 296 where jurisdiction of TC is in
issue
ISSUES
1. WON the trial court had jurisdiction over the
subject-matter of the main action
2. WON the trial court had jurisdiction over the thirdparty complaint
HELD
1. YES
- Even though the total amount involved is only
P6,000 (P5,000 under the bond and P1,000 as
attorney's fees) and a court of first instance is vested
with jurisdiction only over cases in which the
demand, exclusive of interest, or the value of the
property in controversy, exceeds P10,000, pursuant
to section 44 of Republic Act 296, as amended by
Republic Act 3828 which took effect on June 22,
1963, the present action having been filed on June
20, 1963 (two days before the effectivity of Republic
Act 3828 which broadened the jurisdiction of
municipal and city courts to include cases in which
the demand, exclusive of interest, or the value of the
property in controversy, does not exceed P10,000) it
is cannot be argued that the court's jurisdiction over
the case was lost on June 22, 1963, when Republic
Act 3828 took effect, and therefore the case should
have been remanded to the municipal court.
- It is not disputed that the trial court acquired
jurisdiction over the subject-matter on June 20, 1963
when the complaint was filed with it. It is of no
moment that summons was served and that the case
was heard and decided after the effectivity of
Republic Act 3828, because the rule is firmly

entrenched in our law that jurisdiction once acquired

continues until the case is finally terminated
2. YES
- It is true that the third-party complaint was filed
after the effectivity date of RA3828. It is likewise true
that the demand therein made does not exceed
P10,000, and, therefore, is not within the jurisdiction
of the Court of First Instance if it were an
independent action. But the third-party complaint is
an ancillary suit which depends on the jurisdiction of
the court over the main action. Since the trial court
had acquired jurisdiction over the complaint, it
necessarily follows that it likewise had jurisdiction
over the third-party complaint which is but an
incident thereof. This must be so because jurisdiction
over the main case embraces all incidental matters
arising therefrom and connected therewith. A
contrary rule would result in "split jurisdiction" which
is not favored, and in multiplicity of suits, a situation
obnoxious to the orderly administration of justice.
Talisay-Silay Milling Co., et al. vs. CIR, et al:
The third-party complaint is but a continuation of the
main action, its purpose being merely to seek
"contribution, indemnity, subrogation or any other
relief, in respect of his opponent's claim." (Rule 6,
See. 12.) The aim is to avoid the actions which
should be tried together to save the time and cost of
a reduplication of evidence, to obtain consistent
results from identical or similar evidence, and to do
away with the serious handicap to a defendant of a
time difference between a judgment against him and
a judgment in his favor against the third party
defendant. Petitioners urge that a rule similar to the
rule on counterclaim be adopted. But a third-party
complaint cannot be likened to a counterclaim which
must be within the jurisdiction of the court trying the
main case, because unlike a third-party complaint, a
counterclaim "need not diminish or defeat the
recovery sought by the opposing party, but may
claim itself exceeding in amount or different in kind
from that sought in the opposing party's claim" (Rule
6, Sec. 6). A third-party complaint may likewise be
likened to a cross claim under Rule 9, section 5. ...
The principle is at once apparent, namely, that where
an action is ancillary to a main action over which a
court has jurisdiction, no independent jurisdiction is
needed to enable the court to take cognizance of the
ancillary action.
Disposition the order dated December 2, 1963
dismissing the third-party complaint is set aside; the
decision dated December 3, 1963 is modified in the
sense that the third-party defendants are hereby

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ordered to pay to the Surety whatever sums the
latter will pay to the Republic by virtue of the
judgment appealed from.

ASIAN CONSTRUCTION V CA (MONARK

EQUIPMENT)
00 SCRA 00
CALLEJO; May 17, 2005
NATURE
Petition for review on certiorari decision of CA
FACTS
- Asian contruction leased from Monark Equipment
several pieces of equipment which it failed to pay for,
despite demands. Monark then filed in the RTC an
action to recover a sum of money amounting to P5
million plus 12% interest. Asian filed a motion to file
and admit answer with 3rd party complaint against
Becthel Overseas Corp. Asian, although admitting the
its indebtedness to Monark, claimed that it used the
leased equipment to perform services in favor of
Becthel, which in turn failed to pay Asian for the
same. Asian claims that it needs to implead Becthel
for contribution, indemnity, subrogation, or other
reliefs to off-set or to pay the amount of money
claimed by Monark. Monark in turn filed a motion for
summary judgment, contending that there were no
genuine issues raised.
- RTC: Motion of Asian for leave to file a 3 rd part
complaint was denied, but motion of Monark for
summary judgment granted (RTC considered this as
motion for judgment on the pleadings). Judgment
ordered Asian to pay Monark P5 million plus interest
- Asian appealed to CA. CA affirmed, sustaining the
disallowance of the 3rd party complaint on the ground
that the transaction between the said parties did not
arise out of the same transaction on which Monarks
claim was based. MFR was also denied.
ISSUE/S
1. WON a 3rd-party complaint is proper
2. WON judgment on the pleadings is proper
HELD
1. NO
Ratio Section 11, Rule 6 provides: 3rd (fourth, etc.)party complaint. A 3rd (fourth, etc.) party
complaint is a claim that a defending party may, with
leave of court, file against a person not a party to the

action, called the 3rd (fourth, etc.) party defendant,

for contribution, indemnity, subrogation or any other
relief, in respect of his opponents claim.
Reasoning Purpose of the rule: permit a defendant
to assert an independent claim against a 3rd-party
which he, otherwise, would assert in another action,
thus preventing multiplicity of suits. This is a rule of
procedure and does not create a substantial right.
Neither does it abridge, enlarge, or nullify the
substantial rights of any litigant. This right to file a
3rd-party complaint against a 3rd-party rests in the
discretion of the trial court. The 3rd-party complaint
is actually independent of, separate and distinct from
the plaintiffs complaint, such that were it not for the
rule, it would have to be filed separately from the
original complaint.
- Prerequisite to the exercise of right: some
substantive basis for a 3rd-party claim is found to
exist, whether the basis be one of indemnity,
subrogation, contribution or other substantive right.
Bringing of a 3rd-party defendant is proper if he would
be liable to plaintiff, defendant or both for all or part
of the plaintiffs claim against the original defendant,
although the 3rd-party defendants liability arises out
of another transaction.
- The defendant may implead another as 3rd-party
defendant (a) on an allegation of liability of the latter
to the defendant for contribution, indemnity,
subrogation or any other relief; (b) on the ground of
direct liability of the 3rd-party defendant to the
plaintiff; or (c) the liability of the 3rd-party defendant
to both the plaintiff and the defendant.
- There must be a causal connection between the
claim of the plaintiff in his complaint and a claim for
contribution, indemnity or other relief of the
defendant against the 3rd-party defendant.
- Capayas v. CFI: Court made out the ff tests: (1)
whether it arises out of the same transaction on
which the plaintiffs claim is based; or whether the
3rd-party claim, although arising out of another or
different contract or transaction, is connected with
the plaintiffs claim; (2) whether the 3rd-party
defendant would be liable to the plaintiff or to the
defendant for all or part of the plaintiffs claim
against the original defendant, although the 3rd-party
defendants liability arises out of another transaction;
and (3) whether the 3rd-party defendant may assert
any defenses which the 3rd-party plaintiff has or may
have to the plaintiffs claim.
- 3rd-party complaint does not have to show with
certainty that there will be recovery against the 3rdparty defendant; sufficient that pleadings show

possibility of recovery. In determining the sufficiency

of the 3rd-party complaint, the allegations in the
original complaint and the 3rd-party complaint must
be examined. A 3rd-party complaint must allege facts
which prima facie show that the defendant is entitled
to contribution, indemnity, subrogation or other relief
from the 3rd-party defendant.
- In this case, the claims of Monark against Asian
arose out of the contracts of lease and sale; such
transactions are different and separate from those
between Becthel and Asian where the equipment
leased from Monark was used by the
petitioner. There is no showing in the proposed 3rdparty complaint that Becthel knew or approved the
use of the leased equipment by Asian for the said
project
- fact that Asian used the equipment it leased from
Monark in connection with its project with Becthel
does not provide a substantive basis for the filing of
a 3rd-party complaint against the latter. There is no
causal connection between the claim of Monark, and
the failure of Becthel to pay the balance of its
account to Asian after the completion of the project.
2. YES
Ratio Section 1, Rule 34: Judgment on the
pleadings. Where an answer fails to tender an
issue, or, otherwise, admits the material allegations
of the adverse partys pleading, the court may, on
motion of that party, direct judgment on such
pleading. However, in actions for declaration of
nullity or annulment of marriage or for legal
separation, the material facts alleged in the
complaint shall always be proved.
Reasoning The denial of the petitioners motion with
leave to file a third-party complaint against Becthel is
without prejudice to its right to file a separate
complaint against the latter.
- Considering that the petitioner admitted its liability
for the principal claim of the respondent in its Answer
with Third-Party Complaint, the trial court did not err
in rendering judgment on the pleadings against it.
Disposition Petition is denied.

COMPULSORY
COUNTERCLAIM/CROSS-CLAIM
CALO appellant, vs.AJAX
INTERNATIONAL, INC, defendantappellee

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22 SCRA 996
BENGZON, March 13, 1968
NATURE
Petition for certiorari, prohibition and mandamus on
decision of CFI of Agusan dismissing the complaint of
Calo
FACTS
-Sometime on May 7, 1959, plaintiff-appellant Calo
ordered from defendant-appellee Ajax International,
Inc., 1,200 ft. of John Shaw wire rope at P2.85 per
foot. The transaction was evidenced by Charge Order
No. 37071, for P3,420.00. According to plaintiff Calo,
when the wire rope was delivered to Butuan City, the
same was found short of 300 ft. Plaintiff then wrote
two letters to defendant asking for either completion
of delivery or account adjustment of the alleged
undelivered 300 ft. of wire rope.
-On November 20, 1961, a complaint docketed as
Civil Case No. IV-93062 was filed in the Municipal
Court of Manila by one Adolfo Benavides who claimed
to have acquired the outstanding credit account of
Calo from defendant Ajax International, Inc. Charge
Order No. 37071 was among those included in the
assigned account. Subsequently, a judgment by
default was entered, and a writ of execution issued,
against plaintiff Calo.
-On January 23, 1962, plaintiff Calo, assisted by her
husband, Marcos Calo, filed in the Court of First
Instance of Agusan a complaint against defendant
asking (1) that the latter either effect complete
delivery of Charge Order No. 37071 or that she be
relieved from paying P855.00 and (2) that the latter
indemnify her for P12,000 as attorney's fees,
damages and expenses of litigation.2 The case was
docketed as Civil Case No. 860.
-Instead of filing an answer, defendant moved for the
dismissal of Civil Case 860 on the ground, inter alia,
that the subject thereof was involved and intimately
related to that in Civil Case No. IV-93062 of the
Municipal Court of Manila. The court a quo sustained
the motion and dismissed the case. Plaintiff-appellant
moved for reconsideration and new trial. When this
failed, she instituted the present appeal.
-The dismissal of Civil Case No. 860 by the court a
quo because of the pendency of Civil Case No. IV93062 in the municipal court of Manila is predicated
on the supposition that plaintiff's claim is a
compulsory counter-claim that should be filed in the
latter case. There is no question that it arises out of

the same transaction which is the basis of the

complaint in Civil Case No. IV-93062 and does not
require the presence of third parties over whom the
municipal court of Manila could not acquire
jurisdiction.
ISSUE
WON plaintiff's claim is a compulsory counter-claim
that should be filed in the earlier case
HELD
No. Plaintiff's claim is not a compulsory counterclaim
in Civil Case No. IV-93062 for the simple reason that
the amount thereof exceeds the jurisdiction of the
municipal court.
Reasoning The rule that a compulsory counterclaim
not set up is barred, when applied to the municipal
court, presupposes that the amount involved is
within the said court's jurisdiction. Otherwise, as this
Court had already noted in Yu Lay v. Galmes we
would come to the absurd situation where a claim
must be filed with the municipal court which it is
prohibited from taking cognizance of, being beyond
its jurisdiction. Besides, the reason underlying the
rule, which is to settle all related controversies in one
sitting only, does not obtain. For, even if the
counterclaim in excess of the amount cognizable by
the inferior court is set up, the defendant cannot
obtain positive relief. The Rules allow this only for the
defendant to prevent plaintiff from recovering from
him. This means that should the court find both
plaintiff's complaint and defendant's counterclaim
(for an amount exceeding said court's jurisdiction)
meritorious, it will simply dismiss the complaint on
the ground that defendant has a bigger credit. Since
defendant still has to institute a separate action for
the remaining balance of his counterclaim, the
previous litigation did not really settle all related
controversies.
Disposition Plaintiff Calo's claim of P12,000.00 not
being a compulsory counterclaim in Civil Case No. VI93062, it need not be filed there. The pendency then
of said civil case could not be pleaded in abatement
of Civil Case No. 860. Consequently, the lower court
erred in dismissing plaintiff's complaint.

GOJO V GOYALA
Page 26
NATURE
Appeal from a decision of the CFI of Sorsogon

FACTS
-allegedly a pacto de retro sale (the other party
alleged it was a mortgage), Gojo the buyer alleged
that the period for redemption has already lapsed so
he filed a petition for consolidation of ownership.
-Goyalas, the buyers who were alleging that they
had obtained a cash loan from Gojo and the land
allegedly sold to Gojo was only a security to the loan,
and that they tried to pay their debt to Gojo but Gojo
refused. Goyalas filed a counterclaim for Gojo to
receive the amount due, for the document to be
declared a mortgage and not a pacto de retro sale,
for P1800 per annum for the fruits of said property
and that, if ever the document be deemed a pacto de
retro sale, for Gojo to be ordered to execute a deed
of resale in favor of the Goyalas.
-Goyalas spouse died, TC ordered Gojo to amend the
Complaint to substitute the spouse with one of her
successors in interest as party. Notwithstanding the
lapse of 43 days after receipt of copy of TC order,
Gojo allegedly failed to submit the amended
complaint so Goyala filed a motion to dismiss the
petition. TC dismissed complaint, Gojo was also
declared in default in re Goyalas counterclaim. TC
ruled in favor of Goyala.
-Appellant appealed to the CA, which upon finding
that the said appeal involves purely questions of law,
certified the same to the SC.
ON COMPULSORY COUNTERCLAIM
The appellant contends that there is no occasion for
the TC to declare him in default in respect of
appellees counterclaim as said counterclaim falls
within the category of compulsory counterclaim
which does not call for an independent answer as the
complaint already denies its material allegations. It is
now settled that a plaintiff who fails or chooses not to
answer a compulsory counterclaim may not be
declared in default, principally because the issues
raised in the counterclaim are deemed automatically
joined by the allegations of the complaint.
-While it is true that under Sec. 3 of Rule 17, a
complaint may be dismissed for failure to prosecute
if the plaintiff fails to comply with an order of the
court, said provision cannot apply when the order
ignored is a void one, as in this case. (As in Sec 20 of
Rule 3, the death of the defendant in a contractual
money claim does dismiss such action for recovery,
but will be allowed to continue until final judgment is
entered. Favorable judgment obtained by the plaintiff
shall be enforced in the manner provided in these

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Rules for prosecuting claims against the estate of a

deceased person. In Barrameda vs Barbara, the SC
held that an order to amend the complaint, before
the proper substitution of parties as directed by Sec.
17, Rule 3 (Sec. 16, new law), is void and imposes
upon the plaintiff no duty to comply therewith to the
end that an order dismissing the said complaint, for
such non-compliance, would similarly be void. It was
further held in Ferriera vs Gonzales that the
continuance of a proceeding during the pendency of
which a party thereto dies, without such party having
been validly substituted in accordance with the rules,
amounts to lack of jurisdiction.
Disposition WHEREFORE, the decision appealed
from is set aside

reconsider the June 8, 1989 resolution.

Thereafter, all the PCGG officials filed their answer to
the counterclaims invoking their immunity from suits
as provided in Section 4 of Executive Order No. 1.
Instead of filing an answer, the petitioner comes to
this Court assailing the resolutions as rendered with
grave abuse of discretion amounting to lack of
jurisdiction.
Petitioners claim
-no counter-claim can be filed against him in his
capacity as Solicitor General since he is only acting
as counsel for the Republic. He cites the case of
Borja v. Borja,8
- since he is simply the lawyer in the case, exercising
his duty under the law to assist the Government in
the filing and prosecution of all cases pursuant to
Section 1, Executive Order No. 14, he cannot be sued
in a counterclaim in the same case.

Prof. Victoria A.

47

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Barred if not set up

CHAVEZ V SANDIGANBAYAN
G.R. No. 91391
GUTIERREZ, JR; January 24, 1991
FACTS
- July 31, 1987, the Republic of the Philippines,
through the Presidential Commission on Good
Government (PCGG) with the assistance of Solicitor
General Francisco Chavez filed with the respondent
Sandiganbayan a complaint docketed as Civil Case
No. 0033 against Eduardo Cojuangco, Jr. and Juan
Ponce Enrile, among others, for reconveyance,
reversion and accounting, restitution and damages.
-After the denial of his motion to dismiss, respondent
Enrile filed his answer with compulsory counterclaim
and cross-claim with damages.
On January 30, 1989, respondent Sandiganbayan
issued a resolution which deferred The resolution of
the Motion to Dismiss the Counterclaim against the
Plaintiff government until after trialRespondent Enrile
then requested leave from the Sandiganbayan to
implead the petitioner and the PCGG officials as
party defendants for lodging this alleged
"harassment suit" against him.
The motion praying for leave to implead additional
parties(Chavez et al) to his counterclaim was granted
in a resolution dated June 8, 1989, without prejudice
to the defenses which said defendants may put forth
individually or in common, in their personal
capacities or otherwise.
In a later resolution dated November 2, 1989,
respondent Sandiganbayan denied a motion to

ISSUES
1.WON Chavez (SolGEn)is immune from suit
2.WON it is proper to implead Chavez (as SolGen)
petitioner as additional party defendant in the
counterclaim filed by respondent Enrile
HELD
1.No.
The general rule is that public officials can be held
personally accountable for acts claimed to have been
performed in connection with official duties where
they have acted ultra vires or where there is a
showing of bad faith.
Moreover, the petitioner's argument that the
immunity proviso under Section 4(a) of Executive
Order No. 1 also extends to him is not well-taken. A
mere invocation of the immunity clause does not
ipso facto result in the charges being automatically
dropped.
8

The appearance of a lawyer as counsel for a party and his participation in a case as
such counsel does not make him a party to the action. The fact that he represents
the interests of his client or that he acts in their behalf will not hold him liable for or
make him entitled to any award that the Court may adjudicate to the parties, other
than his professional fees. The principle that a counterclaim cannot be filed against
persons who are acting in representation of another ? such as trustees ? in their
individual capacities (Chambers v. Cameron, 2 Fed. Rules Service, p. 155; 29 F. Supp.
742) could be applied with more force and effect in the case of a counsel whose
participation in the action is merely confined to the preparation of the defense of his
client. Appellant, however, asserted that he filed the counterclaim against said
lawyer not in his individual capacity but as counsel for the heirs of Quintin de Borja.
But as we have already stated that the existence of a lawyer-client relationship does
not make the former a party to the action, even this allegation of appellant will not
alter the result We have arrived at (at pp. 924-925)

Immunity from suit cannot institutionalize

irresponsibility and non-accountability nor grant a
privileged status not claimed by any other official of
the Republic. (id., at page 586)
Where the petitioner exceeds his authority as
Solicitor General acts in bad faith, or, as contended
by the private respondent, "maliciously conspir(es)
with the PCGG commissioners in persecuting
respondent Enrile by filing against him an evidently
baseless suit in derogation of the latter's
constitutional rights and liberties" (Rollo, p. 417),
there can be no question that a complaint for
damages may be filed against him. High position in
government does not confer a license to persecute or
recklessly injure another. The actions governed by
Articles 19, 20, 21, and 32 of the Civil Code on
Human Relations may be taken against public
officers or private citizens alike.
2. No. Senator Enrile has to file a separate and
distinct civil action for damages against the Solicitor
General.
-The charges pressed by respondent Enrile for
damages under Article 32 of the Civil Code arising
from the filing of an alleged harassment suit with
malice and evident bad faith do not constitute a
compulsory counterclaim.
In the case of Tiu Po v. Bautista, (103 SCRA 388
[1981]), we ruled that damages claimed to have
been suffered as a consequence of an action filed
against the petitioner must be pleaded in the same
action as a compulsory counterclaim. We were
referring, however, to a case filed by the private
respondent against the petitioners or parties in the
litigation. In the present case, the counterclaim was
filed against the lawyer, not against the party
plaintiff itself.
-To allow a counterclaim against a lawyer who files a
complaint for his clients, who is merely their
representative in court and not a plaintiff or
complainant in the case would lead to mischievous
consequences.
-The problem is particularly perplexing for the
Solicitor General. As counsel of the Republic, the
Solicitor General has to appear in controversial and
politically charged cases. It is not unusual for high
officials of the Government to unwittingly use
shortcuts in the zealous desire to expedite executive
programs or reforms. The Solicitor General cannot
look at these cases with indifferent neutrality. His
perception of national interest and obedience to
instructions from above may compel him to take a

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stance which to a respondent may appear too

personal and biased. It is likewise unreasonable to
require Government Prosecutors to defend
themselves against counterclaims in the very same
cases they are prosecuting.

Court (MTC) of Malolos, Bulacan, Branch I on August

23, 1978.

Prof. Victoria A.

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LUALHATI A. COJUANGCO vs.

PURIFICACION VILLEGAS
184 SCRA 374
FERNAN,
NATURE
The instant petition for certiorari and prohibition
raises the ultimate issue of whether or not the
execution of a final judgment in an ejectment case
may be stayed by a co-equal court in order that the
right of indemnification and retention of an alleged
builder in good faith may not be rendered
meaningless or illusory in an independent civil action
for specific performance.
FACTS
Petitioner Lualhati Aldaba Cojuangco is the widow of
Don Juan Cojuangco, the registered owner of the
disputed parcel of residential land containing an area
of 585 square meters and situated at San Agustin,
Malolos, Bulacan. Many years back (about sixty
years, according to the municipal trial court) the
parents of private respondent Purificacion Villegas,
with the acquiescence of Don Juan Cojuangco,
constructed a residential house and later a structure
housing a bakery on the aforesaid lot. It was
understood that they could remain on the land with
his blessings and without paying rentals on condition
that they would vacate the premises when needed
by the owner.
After her parent's death, Villegas remained in the
property, renovating the same and spending
P300,000.00 in the process. She also leased out a
portion of the land to Siapno Appliances at P600.00 a
month without the knowledge and consent of Don
Juan Cojuangco. This latter act apparently destroyed
her congenial relations with the landowner because
soon thereafter, Don Juan Cojuangco, through his
attorney in fact, demanded that she leave the
property. Despite his repeated written demands for
her to surrender possession of the property, Villegas
refused, prompting Cojuangco to institute ejectment
proceedings against her before the Municipal Trial

On February 5, 1979, Don Juan Cojuangco died

intestate. In the trial court's order of October 22,
1979, his wife Lualhati, herein petitioner, together
with nephews and nieces, were substituted as
parties-plaintiffs.
In its decision dated June 30, 1983, the inferior court
dismissed the action for ejectment for lack of
jurisdiction. It cited the unassailable fact that Villegas
and her predecessors-in-interest had been in actual
possession of the subject land for no less than sixty
years and that in addition, Villegas asserted an
adverse claim of ownership, thus transforming the
suit into an "accion publiciana" which is properly
cognizable by courts of first instance (now regional
trial courts).
On appeal to the then Court of First Instance (CFI) of
Malolos, Branch XV, the inferior court was reversed
insofar as it had erroneously denied jurisdiction over
the ejectment case. The trial court then ordered
Villegas to vacate the premises and to surrender
possession thereof to herein petitioner Cojuangco.
The case was elevated to the appellate court and to
the Supreme Court and in both instances, herein
petitioner Cojuangco's right of possession over the
land was upheld. After entry of judgment was made
on November 20, 1985, herein petitioner went to the
Regional Trial Court of Malolos, Branch XV, where she
filed a motion for execution of the judgment, which
the court granted on June 30, 1986. On July 29, 1986,
a writ of demolition was issued against Villegas, who
did not oppose the ordered demolition but instead
asked the lower court to give her more time (forty
days from August 7, 1986) to effect the transfer of
her personal properties and to remove the
improvements on the subject lot to which motion the
court acceded.
On September 16, 1986, before the lapse of the
grace period, Villegas filed a separate civil action
docketed as Civil Case No. 9094-M against petitioner
Cojuangco and the provincial sheriff "for specific
performance with urgent prayer for issuance of a
temporary restraining order and preliminary
injunction." This case, instead of being referred to
Branch XV which had earlier issued the writ of
demolition, was raffled to another Malolos branch of

the Bulacan Trial Court, specifically Branch XVII

which issued on the same day, September 16, 1986,
a temporary restraining order enjoining Cojuangco
and particularly the sheriff "from enforcing or
implementing the Order of Demolition issued in Civil
Case No. 7042-M . . ." This was followed by another
order dated October 6, 1986 granting a writ of
preliminary injunction. The twin orders are now the
subject of the instant petition for certiorari on the
ground that they have been issued with grave abuse
of discretion amounting to lack of jurisdiction.
ISSUES
1. Whether or not the respondent court validly issued
an injunction
2. Whether or not Villegas can successfully raise an
independent action to assert that she and her
predecessors are builders in good faith and that they
are entitled to recover the value of improvements on
the lot.
HELD
1. NO.
Ratio. As early as 1922 in the case of Cabigao v. Del
Rosario, this Court laid down the doctrine that "no
court has power to interfere by injunction with the
judgments or decrees of a court of concurrent or
coordinate jurisdiction having power to grant the
relief sought by injunction."
Reasoning. The various branches of the court of
first instance of a province or city, having as they
have the same or equal authority and exercising as
they do concurrent and coordinate jurisdiction,
should not, cannot and are not permitted to interfere
with their respective cases, much less with their
orders or judgments. A contrary rule would obviously
lead to confusion and seriously hamper the
administration of justice.
2. NO
Ratio. Rule 9, Section 4 of the Revised Rules of
Court on compulsory counterclaim provides the
answer. It states:
"A counterclaim or cross-claim not set up shall be
barred if it arises out of or is necessarily connected
with, the transaction or occurrence that is the
subject-matter of the opposing party's or co-party's
claim and does not require for its adjudication the
presence of third parties of whom the court cannot
acquire jurisdiction.
Reasoning. Villegas' claim to recover compensation
for improvements made on the land is essentially in

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the nature of a counterclaim since it is interwoven

with the fact of possession. Said claim for
compensation should have been presented as a
counterclaim in the ejectment suit. It is deemed
barred if not raised on time and the party in error is
precluded from setting it up in a subsequent
litigation.
-The rule on compulsory counter-claim is designed to
enable the disposition of the entire conflict at one
time and in one action. The philosophy of the rule is
to DISCOURAGE MULTIPLICITY OF SUITS.
-According to Villegas, the reason why the
counterclaim for indemnification was not made in the
original action was because it became a "ripe issue"
only after the ejectment proceedings. Villegas
contended that the estoppel of judgment could only
extend to those facts and conditions existing at the
time the judgment was rendered and not to those
which supervened before the second suit.
-The argument is untenable. In her pleadings,
Villegas repeatedly stressed that the residential
house which her parents had constructed was
already there on the questioned lot for as long as she
could remember, that she herself has lived there all
her life and that in the honest belief that the land
had been "donated" to her parents by her "Aunt
Tecla", she made various improvements and
renovation thereon. Obviously, such declarations on
the part of Villegas completely negate her absurd
claim that the factual basis for her subsequent action
arose after the ejectment suit became final.
-Thus, Villegas should have set forth, simultaneously
with the assertion that she was entitled to the parcel
of land by right of inheritance, the alternative claim
that assuming she was not legally entitled to the
disputed lot, at least as a builder in good faith, she
has the right to the value of the buildings and
improvements which she and her parents had
introduced on the land.
-And while it may be argued that the defense of
being a builder in good faith would have been
inconsistent with her claim of ownership, in the case
of Castle Bros., Wolf and Sons v. Go-Juno, the Court
held that a party may set forth as many defenses
and counterclaims as he may have, whatever be
their nature. These may even be inconsistent with
each other because what is sufficient is that each is
consistent with itself.
-Since Villegas failed to set up such alternative
defense (i.e. a builder in good faith is entitled to
recover the value of improvements) and instead
relied on the sole defense that she inherited the land

from her parents, the rejection thereof was a

complete resolution of the controversy between the
parties which bars a later case based upon the
unpleaded defense. The adjudication of the issue
joined by the parties in the earlier case constitutes
res judicata, the theory being that what is barred by
prior judgment are not only the matters actually
raised and litigated upon, but also such other
matters as could have been raised but were not. 13
-It bears emphasizing that in ejectment cases, the
rule is explicit that the judgment must be executed
immediately when it is in favor of the plaintiff to
prevent further damages to him arising from the loss
of possession. The sense of urgency is more
pronounced in the case at bar where the ejectment
case in favor of Cojuangco was decided in 1978 and
subsequently appealed all the way to the Supreme
Court. But the final victory continues to elude
Cojuangco to this day due to a large extent to the
legal maneuvers utilized by Villegas to forestall the
inevitable.
-For its part, respondent trial court has attempted to
justify its writ of injunction by stating that the
impending demolition of Villegas' house and other
buildings on the disputed property would render
inutile her right as a builder in good faith. We cannot
agree. The loss to Villegas is not sufficient to warrant
a blatant disregard of established precedents
especially when it is borne in mind that for more than
half a century, Villegas and her family have enjoyed
the fruits of the land without paying a single centavo
in return. Surely, the equities are more in favor of
Cojuangco, the landowner.

Prof. Victoria A.

49

Avena

Dispositive WHEREFORE, the petition is granted.

The respondent court is hereby ordered to DISMISS
Civil Case No. 9094-M and all proceedings held
therein are declared null and void. The Regional Trial
Court of Malolos, Bulacan, Branch XV is ordered to
immediately execute the decision in the ejectment
case. Civil Case No. 7042-M. Costs against private
respondent Villegas. This decision is immediately
executory.

CARPENA VS MANALO
GR No. 74262
PARAS; October 29, 1987
NATURE
Action to recover possession

FACTS
Lot 74 of the Calamba Cadastre was co-owned
Beatriz Manalo and her common-law husband,
Luciano Manalo. On November 5, 1947 Beatriz sold
her one-half interest therein to the spouses Demetrio
Carpena and Salud Catindig for the sum of
P5,000.00. To keep the transaction from Luciano, the
sale was made in the neighboring town of Sta. Rosa,
Laguna, and the parties agreed that Beatriz would
remain in possession of the property but with the
obligation of paying the land taxes due thereon. On
May 22, 1948 Beatriz and Luciano were married, but
she died three months thereafter.
On August 30, 1948 the deed of the sale was
registered and, as a result, TCT No. 16833 was
cancelled and TCT No. 2004 was issued in the name
of the Carpena spouses for the portion purchased by
them, which was identified as Lot No. 74-B of
subdivision plan Psd-23230. Upon the death of their
vendor, the Carpenas notified Luciano of the sale and
besides demanded of him the possession of lot 74-B,
but the latter, instead of acquiescing thereto, filed an
action against them to annul the sale made in their
favor by Beatriz and to have himself declared owner
of the property subject matter thereof (Civil Case No.
9194). Defendant's answer in said case alleged, as
defense, that the sale in their favor was valid and
that by virtue of the same they became owners of
the property subject matter thereof. Consequently,
they prayed for the dismissal of the case and for
damages. The case was dismissed by the lower court
after a trial on the merits and on appeal, the Court of
Appeals affirmed the dismissal.
It appears that in 1945 a barong-barong was erected
on Lot 74-B by a tenant occupying the same. Two
years thereafter the building was sold to Beatriz
Manalo for P200.00, and thereafter said
improvement, with an assessed value of P150.00,
was declared in her name for taxation purposes.
After her death, Luciano Manalo and their children
continued to occupy said house, making considerable
improvements thereon in the years 1952 and 1953,
but in December 1954 Luciano Manalo sold it to
Pelagia Cailles Vda. de Unson and Beronica Capareda
who began occupying the same on April 2, 1955.
The present action was commenced on April 11,
1955 in the Court of First Instance of Laguna by the
Carpena spouses against Luciano Manalo, Pelagia
Cailles Vda. de Unson and Beronica Capareda to
recover the possession of Lot 74-B and the house
erected thereon as well as reasonable rental for its
use and occupancy from August 1, 1948. Appellees

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herein alleged in their answer that the sale executed

by Beatriz Manalo in favor of appellants covered only
Lot 74-B and not the house erected thereon.
While the case was pending in the lower court, or
more specifically on April 17, 1955, appellees,
without the consent of appellants, moved the house
in question to the adjoining lot, which compelled the
latter to file a supplemental complaint to recover
from the former the sum of P2,500.00 representing
the value of the house, plus attorney's fees.
As appellees had already vacated Lot 74-B, the lower
court, after trial on the merits, rendered judgment
declaring appellant the owners of the house in
question and sentencing appellees to pay appellants
the sum of P1,000.00 representing the fair market
value thereof. Appellants' claim for damages for the
use and occupancy of the premises was, however,
dismissed for not having been set up in Civil Case
No. 9194, the same being compulsory counterclaim.
The present is their appeal from this portion of the
decision of the lower court

property, otherwise his claim would be barred. That

this ruling applies to the present case can not be
disputed because the only difference between both
cases is that in the one before us the counterclaim is
for rents for the occupancy of the land sought to be
recovered and of the house constructed thereon,
instead of being ? as in the Berses case ? for the
recovery of the value of improvements made on the
property
Appellants, however, argue that even assuming that
their claim constituted a mandatory counterclaim in
relation to Civil Case No. 9194, still they could not
have pleaded it as such in said case because it was
not within the jurisdiction of the Court of First
Instance of Laguna where the case was pending. In
this connection they contend that their counterclaim
against Luciano Manalo and his co-plaintiffs would
have been for unlawful detainer and the collection of
one month rent only, because when the action was
commenced Manalo had been in possession of the lot
and house involved therein only for one month. This
is not entirely correct. The record on appeal filed by
Manalo in the aforesaid ease shows that the
defendants (appellants herein) filed an answer in
which they alleged that they were "the true and
lawful owners of the parcel of land" subject matter of
the action by virtue of the deed of sale executed in
their favor by Beatriz Manalo, upon the registration
of which a transfer certificate of title was issued in
their name. Their answer also interposed a
counterclaim which they incorporated all the
allegations made in their answer and further alleged
that the plaintiffs had filed the action against them
maliciously, thus causing them damages in the sum
of P2,000.00. Said answer prayed not only for the
dismissal of the complaint but also for judgment
declaring said defendants as true and lawful owners
of the property in question" (Exhibit C, pp. 18-23). It
is obvious therefore that, for all legal purposes,
appellants had, by way of counterclaim, filed an
accion reivindicatoria which, of course, necessarily
included the question of possession. This
notwithstanding, they failed to claim rents or
compensation for the use and occupancy of the lot
and house subject matter of the complaint filed
against them. The right to collect these rents or
reasonable compensation being merely incidental to
the counterclaim, it seems clear that the fact that the
amount thereof was less than the jurisdictional
amount for the Court of First Instance of Laguna did
not deprive said court of authority to take cognizance
of the same.

Prof. Victoria A.

50

Avena

ISSUE
WON the action filed by Luciano Manalo is a
compulsory counterclaim
HELD
Yes. As stated above, the purpose of the action filed
by Luciano Manalo (Civil Case No. 9194 of the Court
of First Instance of Laguna) was to annul the sale
made by his wife, Beatriz Manalo, in favor of the
Carpena spouses and to recover ownership of the
property subject matter thereof. The rents which
appellants now seek to collect from appellees were
for the occupancy of said property and of the house
constructed thereon. Had the sale been annulled, it
would have meant that the Carpenas, appellants
herein, had no right to collect rents from the
occupants of the lot and of the house aforesaid, while
if the court sustained the validity of the sale, they
would have had such right. It is thus obvious that the
claim which they seek to enforce now as, to say the
least, a matter necessarily connected with the
transaction or occurrence subject matter of the
complaint filed against them in Civil Case No. 9194. It
follows that the same constituted a compulsory
counterclaim which they should have pleaded in their
answer filed in the aforesaid case.
In Berses vs. Villanueva, 25 Phil. 473, it was held that
in an action for the recovery of a parcel of land, the
defendant must set up a counterclaim for the value
of improvements made or introduced by him on the

Lastly, appellants contend that there was absolutely

no mutuality of claims because the plaintiffs in Civil
Case No. 9194 were Luciano Manalo and the heirs of
his deceased wife, whereas the claim for rents in the
present case is directed, jointly and severally,
against Luciano Manalo, Pelagia Cailles Vda. de
Unson and Beronica Capareda. This is likewise
untenable because a party may not evade the effect
of the doctrine of res judicata by simply including
additional parties, in the subsequent litigation or by
not including as parties in the latter persons who
were parties in the previous suit
Disposition. Decision affirmed

CABAERO VS CANTOS
G.R. No. 102942
PANGANIBAN; April 18, 1997
NATURE
Petition filed under Rule 65 assailing the Orders of
respondent Judge for being contrary to law and for
having been issued in excess of his jurisdiction and
with grave abuse of discretion tantamount to lack of
jurisdiction.
The Order of July 1, 1991, reads:
"THE Answer with Counterclaim filed by the accused
through counsel, dated February 12, 1991, as well as
the Opposition thereto; the Memorandum filed by the
Private Prosecutor, in Support of Motion to Expunge
from the Records And/Or to Dismiss Answer with
Counterclaim; the Supplement; and Comment on
Supplement, are all ordered expunged from the
Records, considering that this is a criminal case
wherein the civil liability of the acused (sic) is
impliedly instituted therein."
Petitioners pleaded for reconsideration of said Order
but respondent judge, in the Order of August 21,
1991, denied their motion, thus:
"ACTING on the Motion for Reconsideration dated July
17, 1991, of the accused through counsel, this Court
finds no merit therein, such that said motion is
hereby denied."
FACTS
- This petition emanated from a criminal case in the
RTC of Manila. Said case commenced on October 18,
1990, with the filing of an Information against
petitioners charging them with estafa for allegedly
defrauding private respondent Epifanio Ceralde of
the sum of P1,550,000.00. The accusatory portion of
the Information reads as follows:

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51

Avena
"... the said accused induced and succeeded in
inducing the said EPIFANIO CERALDE to advance the
total amount of P1,550,000.00 to be paid to M.C.
Castro Construction, Co. representing the purchase
price of 6 parcels of land located in Pangasinan which
the Aqualand Ventures & Management Corporation, a
joint business venture organized by accused AMADO
F. CABAERO and the said EPIFANIO CERALDE,
purchased from the said company, with the
understanding that the said amount would be
returned to the said EPIFANIO CERALDE as soon as
the loan for P1,500,000.00 applied for by the said
Aqualand Ventures & Management Corporation with
Solid Bank, of which said accused AMADO F.
CABAERO is the Senior Vice-President, is released,
but both accused, once the said loan had been
approved by the bank, in furtherance of their
conspiracy and falsely pretending that accused
CARMEN C. PEREZ had been authorized by the said
Aqualand Ventures & Management Corporation to
receive the check for P1,500,000.00 for and in its
own behalf, succeeded in inducing the cashier of said
Solid Bank to release the same to accused CARMEN
C. PEREZ, thereby enabling her to encash the
aforesaid check, and instead of turning over the said
amount to the said EPIFANIO CERALDE; accused
failed and refused, and still fail and refuse, to do so
despite repeated demands made to that effect, and
with intent to defraud, misappropriated, misapplied
and converted the said amount to their own personal
use and benefit...
- petitioners entered a plea of not guilty.
- Atty. Ambrosio Blanco entered his appearance as
private prosecutor.
- The Presiding Judge of the RTC of Manila, Hon. Elisa
R. Israel, inhibited herself "out of delicadeza" from
further hearing the case "considering that the
complainant is a relative by affinity of a nephew of
her husband." Thereafter, the case was re-raffled to
Branch VII presided over by respondent Judge Alfredo
Cantos.
- On April 2, 1991, petitioners filed an Answer with
Counterclaim alleging that the money loaned from
Solidbank mentioned in the Information was duly
applied to the purchase of the 6 parcels of land in
Pangasinan, and that the filing of said Information
was unjustified and malicious. Petitioners included
the following prayer:
"WHEREFORE, it is respectfully prayed that after trial
judgment be rendered:

1.
Dismissing, or quashing the information, and
the civil action impliedly instituted in the criminal
action;
2.
Ordering the complaining witness Ceralde to
pay to the accused the following amounts:
(a) P1,500,000.00 as moral damages;
(b) P500,000.00 as exemplary damages;
(c) P100,000.00 as attorney's fees; and
(d) P20,000.00, as litigation expenses.
Accused pray for such other reliefs, legal and
equitable in the premises."
- During the initial hearing on April 15, 1991, the
prosecution verbally moved that the answer with
counterclaim be expunged from the records and/or
be dismissed. The respondent judge gave the
contending parties time to submit a Memorandum
and Comment or Opposition, respectively.
- The Memorandum of the private prosecutor justified
his Motion to Expunge the answer with counterclaim
for two reasons: (1) the trial court had no jurisdiction
over the answer with counterclaim for non-payment
of the prescribed docket fees and (2) the
"compulsory counterclaim against complainant
is barred for failure to file it before
arraignment."
- In their Opposition, petitioners argued that this
Court in Javier vs. IAC laid down, for "procedural
soundness," the rule that a counterclaim should be
permitted in a criminal action where the civil aspect
is not reserved. Further, inasmuch as petitioners'
counterclaim was compulsory in nature, they were
not required to pay docket fees therefor.
Additionally, the Rules do not specifically provide for
the period for filing of counterclaims in criminal
cases, whereas Section 3 of Rule 9 and Section 9 of
Rule 6 allow the filing, with leave of court, of a
counterclaim at any time before judgment. Thus,
petitioners contended that their filing was within the
proper period.
- respondent Judge Cantos granted the prosecution's
motion to expunge and denied the petitioners'
motion for reconsideration.
- - Petitioners invoke Section 1, Rule 111 of the Rules
on Criminal Procedure. They contend that it is not
only a right but an "outright duty" of the accused to
file an answer with counterclaim since failure to do
so shall result in the counterclaim being forever
barred.
- Petitioners argue that under Rule 136 of the Rules
of Court, particularly Section 8 thereof, clerks of
court are instructed to "keep a general docket, each
page of which shall be numbered and prepared for

receiving all the entries in a single case, and shall

enter therein all cases x x x." Thus, respondent Judge
Cantos allegedly erred in expunging all records with
respect to the Answer with Counterclaim for, on
appeal, "if the records elevated x x x are incomplete
and inaccurate, there arises a grave danger that the
ends of justice and due process shall not be served
and instead frustrated."
- Petitioners further allege that the Order failed to
resolve the legal issues raised by the parties as it
neglected to state the legal basis therefor
ISSUE
WON the respondent judge committed grave abuse
of discretion, amounting to lack or excess of
jurisdiction in ordering that the answer with
counterclaim of the petitioners in the criminal case,
together with all pleadings filed in relation thereto,
be expunged from the records. (WON the accusedpetitioners who were charged with estafa may file an
answer with counterclaim for moral and exemplary
damages plus attorney's fees and litigation expenses
against the private complainant in the same criminal
action.)
Preliminary Matters
Litis Pendentia as a Defense
- Private respondent belatedly interposes litis
pendentia to defeat the petition alleges that the
present petition is barred by the cross-claim of the
petitioners
against
Aqualand
Ventures
and
Management Corporation, of which petitioners are
stockholders and officers, in Civil Case No. 90-53035
(filed against both petitioners and the private
respondent by Solidbank).
- SC said: Considerations of due process
prevent us from taking up the merits of this
argument in favor of private respondent. This
cross-claim was never raised in the trial court
-- certainly not in the Memorandum dated April
19, 1991, submitted to the court a quo in
support of respondent Ceralde's motion to
expunge the answer with counterclaim. The
Rules require that "(a) motion attacking a
pleading or a proceeding shall include all
objections then available, and all objections
not so included shall be deemed waived."
Consequently and ineluctably, the ground of
litis pendentia which was not argued in the
court a quo is deemed waived.
The Payment of Filing Fees

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Prof. Victoria A.

52

Avena
- The Court agrees with petitioners that inasmuch as
the counterclaim is compulsory, there is no necessity
to pay such fees, as the Rules do not require them
(as clarified in Sun Insurance Office, Ltd. vs.
Asuncion).
Main Issue
HELD NO. (NO)
As held in Javier, counterclaim is compulsory and is
considered barred if not set up where the following
circumstances are present: (1) that it arises out of, or
is necessarily connected with the transaction or
occurrence that is the subject matter of the opposing
party's claim; (2) that it does not require for its
adjudication the presence of third parties of whom
the court cannot acquire jurisdiction, and (3) that the
court has jurisdiction to entertain the claim.
As categorically recognized in the case of Javier, a
claim for malicious prosecution or "grossly
unfounded suit" as a compulsory counterclaim has
no appropriate venue other than the same criminal
case which is alleged to be a malicious suit. The
counterclaim stands on the same footing and is to be
tested by the same rules as if it were an independent
action. A counterclaim is defined as any claim for
money or other relief which a defending party may
have against an opposing party. Compulsory
counterclaim is one which at the time of suit arises
out of, or is necessarily connected with, the same
transaction or occurrence that is the subject matter
of plaintiff's complaint. It is compulsory in the sense
that if it is within the jurisdiction of the court, and
does not require for its adjudication the presence of
third parties over whom the court cannot acquire
jurisdiction, it must be set up therein, and will be
barred in the future if not set up.
- In justifying his Order, Judge Cantos ruled that "this
is a criminal case wherein the civil liability of the
accused is impliedly instituted therein." This
justification begs the question. Basically, that is the
reason why petitioners herein filed their answer with
counterclaim for, apparently, in hiring a private
prosecutor, Ceralde intended to prosecute his civil
claim together with the criminal action. Hence, as a
protective
measure,
petitioners
filed
their
counterclaim in the same case. Since under Section 1
Rule 111, the civil action which is deemed impliedly
instituted with the criminal action, if not waived or
reserved, includes recovery of indemnity under the
RPC, and damages under Art.32, 33, 34 and 2176 of
the Civil Code arising from the same act or omission

of the accused, should not the accused have the

right to file a counterclaim in the criminal case?
Obviously, the answer is in the affirmative, as was
held in Javier.
Some Reservations in the Application of Javier
- The logic and cogency of Javier notwithstanding,
some reservations and concerns were voiced out by
members of the Court during the deliberations on the
present case. These were engendered by the obvious
lacuna in the Rules of Court, which contains no
express provision for the adjudication of a
counterclaim in a civil action impliedly instituted in a
criminal case. The following problems were noted:
1) While the rules on civil procedure expressly
recognize a defendant's entitlement to plead his
counterclaim and offer evidence in support thereof,
the rules on criminal procedure which authorize the
implied institution of a civil action in a criminal case
are, in contrast, silent on this point and do not
provide specific guidelines on how such counterclaim
shall be pursued.
2) A judgment in a criminal action is not required to
provide for the award of a counterclaim.
3) Allowing and hearing counterclaims (and possibly
cross-claims and third-party complaints) in a criminal
action will surely delay the said action. The primary
issue in a criminal prosecution that is under the
control of state prosecutors is the guilt of the
accused and his civil liability arising from the same
act or omission. Extending the civil action arising
from the same act or omission to counterclaims,
cross-claims and third-party complaints, and allowing
the accused and other parties to submit evidence of
their respective claims will complicate the disposition
of the criminal case.
4) Adjudication of compulsory counterclaims and/or
related claims or pleadings logically includes the
application of other rules which, by their very nature,
apply only to civil actions. The following matters may
be invoked in connection with the filing of an answer
with a counterclaim: the genuineness and due
execution of an actionable document which are
deemed admitted unless specifically denied under
oath; affirmative defenses like res judicata,
prescription and statute of frauds which are deemed
waived by failure to interpose them as affirmative
defenses in an answer; and the failure of a defendant
to file an answer seasonably may result in his default
in the civil aspect but not in the criminal. As a
consequence of these matters, the entry of plea
during arraignment will no longer signal joinder of
issues in a criminal action.

5) In an impliedly instituted civil action, an accused is

not sufficiently apprised of the specific basis of the
claims against him. An accused learns of the implied
institution of a civil action from the contents of an
information. An information, however, is filed in
behalf of the People of the Philippines. Hence, it does
not contain the ultimate facts relating to the civil
liability of the accused.
6) Because an accused is not sufficiently apprised of
the specific basis of the civil action against him, he
may file a motion for bill of particulars or take
advantage of discovery procedures. The end result,
in any case, will be delay and complication in the
criminal action and even confusion among the
parties.
7) The Rules of Court does not specify the reckoning
date for the filing of an answer in an impliedly
instituted civil action.
8) An accused can file his answer with counterclaim
only after the initial hearing, because the private
complainant may still reserve his civil action at any
time before the prosecution commences to present
evidence. On the other hand, an answer in an
ordinary civil action should be filed before the start of
hearing, because hearing commences only after the
issues have been joined, i.e., after the responsive
pleadings have been filed.
9) Confusion in the application of the rules on civil
procedure will certainly encourage litigants to
challenge before appellate courts interlocutory
incidents of the impliedly instituted civil action.
10) Some members of the Court believe that a cause
of action for malicious prosecution may be premature
because there is as yet no finding of such wrongful
prosecution. This fact is precisely what the trial court
still has to determine.
--By the foregoing discussion, we do not imply
any fault in Javier. The real problem lies in the
absence of clear-cut rules governing the
prosecution of impliedly instituted civil actions
and
the
necessary
consequences
and
implications thereof. For this reason, the
counter-claim of the accused cannot be tried
together with the criminal case because, as
already
discussed,
it
will
unnecessarily
complicate
and
confuse
the
criminal
proceedings. Thus, the trial court should
confine itself to the criminal aspect and the
possible civil liability of the accused arising out
of the crime. The counter-claim (and crossclaim or third party complaint, if any) should
be set aside or refused cognizance without

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prejudice
to
their
filing
in
separate
proceedings at the proper time. At balance,
until there are definitive rules of procedure to
govern
the
institution,
prosecution
and
resolution of the civil aspect (and the
consequences
and
implications
thereof)
impliedly instituted in a criminal case, trial
courts should limit their jurisdiction to the civil
liability of the accused arising from the
criminal case.
Disposition WHEREFORE, premises considered, the
questioned Orders are hereby MODIFIED. The
counterclaim of the accused is hereby set aside
without prejudice. The Respondent RTC of Manila is
DIRECTED to proceed with the trial of the criminal
action and the civil action arising from the criminal
offense that is impliedly instituted therein, with all
judicious dispatch.

CHAN V CA (CU)
G.R. 109020
DAVIDE; MARCH 3, 1994
NATURE
Review on certiorari
FACTS
- On Feb.1, 1983, petitioner Felisa Chan and private
respondent Grace Cu, entered into a contract of
lease, the terms of which were:
>>Cu will occupy Room 401 and rooftop of Room
442 of a bldg in Urbiztondo owned by Chan.
>>Term of lease is 1 year at a monthly rental of
P2,400.
>>The premises shall be used as a learning
center.
- The contract was renewed for the succeeding 2
years or up to Feb.1, 1986, after which date, no
written contract of lease was executed although Cu
continued to occupy the premises. Increasing every
year, the monthly eventually came to P3, 484.80 in
Jan. 1989.
- Nov. 1989: Chan locked the way to the rooftop. In
the ensuing exchange of communication, Cu insisted
that she be allowed to use the rooftop of Rm.442,
while Chan maintained that only Rm.401 was leased
and that the use of the rooftop was merely tolerated,
adding that the use of the rooftop posed danger to
the students. Chan eventually terminated the lease,
refused to collect the rental for Dec.1989 (turned

down a check tendered by Cu) and gave Cu only until

Jan.1990 to vacate the premises.
- Cus lawyer tendered the payment in cash with
notice to Chan that in case of non-acceptance, the
same will be deposited in court by way of
consignation. At this point, Chan gave Cu up to
March, 1990
- Jan.15, 1990: Cu filed a civil case for consignation
with the MTC. Chan answered with a counterclaim for
ejectment. The MTCs decision:
>>declared that the rooftop is included in the
lease
>>fixed the term of the lease until June 30, 1992
>>held valid and legal the consignation by Cu
- Both parties appealed to the RTC. Cu maintained
that the MTC should have fixed a longer period while
Chan contended that the MTC erred in extending the
term of the lease and in upholding the validity of the
consignation. RTC later affirmed the MTC. Cu then
went to the CA on petition for review, with the same
allegation that that the RTC erred in not fixing a
longer period of extension of the lease. The CA
reversed and set aside the decisions of the MTC and
RTC and dismissed, for lack of merit, the complaint
for consignation. The CA held that Chan had
justifiable cause (Cus overstay) to refuse to accept
the payment. It ruled that the MTC and RTC erred in
passing upon the issue of ejectment raised in Chans
counterclaim since an action for ejectment can only
be initiated through a verified complaint, not a
counterclaim. Chans MFR was denied by the CA and
so she filed this instant petition.
ISSUE
WON Chans action for ejectment set up in a
counterclaim was proper
HELD
YES.
Reasoning Sec.7, Rule 6 of the Rules of Court
provides that the answer may contain any
counterclaim which a party may have against the
opposing party provided that the court has
jurisdiction to entertain the claim and can, if the
presence of third parties is essential for its
adjudication, acquire jurisdiction of such parties.
Under Sec. 2 of Rule 9, a counterclaim not set up
shall be barred if it arises out of or is necessarily
connected with the transaction or occurrence that is
the subject matter of the opposing party's claim and
does not require for its adjudication the presence of
third parties of whom the court cannot acquire

jurisdiction. A counterclaim may be compulsory or

permissive.
- Chan's counterclaim for ejectment is a compulsory
counterclaim because it is necessarily connected
with the transaction or occurrence which is the
subject matter of Cu's complaint, viz., the lease
contract between them. Consequently, the CA erred
when it held that Chan's cause of action for
ejectment could not be set up in a counterclaim.
- The case of Ching Pue vs. Gonzales is inapplicable
because in Ching Pue the consignation cases were
filed with the CFI which did not have jurisdiction over
ejectment cases; necessarily, no counterclaim for
ejectment could have been interposed therein. The
ratio of the said case is that consignation is not
proper where the refusal of the creditor to accept
tender of payment is with just cause. In the instant
case, the ejectment was set up as a counterclaim in
the MTC which has jurisdiction over it and Cu joined
that issue and the incidents thereto by her answer to
the counterclaim, and the counterclaim to the
counterclaim.
- The CA therefore should have confined itself to the
principal error raised in Cu's petition in (the duration
of the extended term of the lease fixed in the
decision of the MTC and affirmed by the RTC). As
fixed, the term of the lease was extended to June 30,
1992. That period had expired six months before the
CA promulgated its challenged decision. Considering
that Chan did not file any petition for the review of
the RTC decision and was, therefore, deemed to have
agreed to the extension; and considering further that
Cu did not come to us on a petition for review to seek
reversal of the decision therein and should thus be
considered to have agreed to the dismissal of her
consignation case, the parties must be deemed
bound by the extended term, which has,
nevertheless, already lapsed.
**On Counterclaims
- A counterclaim is any claim for money or other
relief which a defending party may have against an
opposing party. It need not diminish or defeat the
recovery sought by the opposing party, but may
claim relief exceeding in amount or different in kind
from that sought by the opposing party's claim.
Counterclaims are designed to enable the disposition
of a whole controversy of interested parties
conflicling claims, at one time and in one action,
provided all the parties can be brought before the
court and the matter decided without prejudicing the
rights of any party. A counterclaim "is in itself a
distinct and independent cause of action, so that

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when properly stated as such, the defendant
becomes, in respect to the matter stated by him, an
actor, and there are two simultaneous actions
pending between the same parties, wherein each is
at the same time both a plaintiff and a defendant . . .
. A counterclaim stands on the same footing and is to
be tested by the same rules, as if it were an
independent action. In short, the defendant is a
plaintiff with respect to his counterclaim.
Disposition petition GRANTED. CA decision SET
ASIDE.

The Answer
Defenses
GOJO V GOYALA
Page 26
FACTS
-allegedly a pacto de retro sale (the other party
alleged it was a mortgage), Gojo the buyer alleged
that the period for redemption has already lapsed so
he filed a petition for consolidation of ownership.
-Goyalas, the buyers who were alleging that they
had obtained a cash loan from Gojo and the land
allegedly sold to Gojo was only a security to the loan,
and that they tried to pay their debt to Gojo but Gojo
refused. Goyalas filed a counterclaim for Gojo to
receive the amount due, for the document to be
declared a mortgage and not a pacto de retro sale,
for P1800 per annum for the fruits of said property
and that, if ever the document be deemed a pacto de
retro sale, for Gojo to be ordered to execute a deed
of resale in favor of the Goyalas.
-Goyalas spouse died, TC ordered Gojo to amend the
Complaint to substitute the spouse with one of her
successors in interest as party. Notwithstanding the
lapse of 43 days after receipt of copy of TC order,
Gojo allegedly failed to submit the amended
complaint so Goyala filed a motion to dismiss the
petition. TC dismissed complaint, Gojo was also
declared in default in re Goyalas counterclaim. TC
ruled in favor of Goyala.
-Appellant appealed to the CA, which upon finding
that the said appeal involves purely questions of law,
certified the same to the SC.

ON DEFENSES

Rule 8, allegations deemed admitted

TEC BI & CO v CHARTERED BANK OF
INDIA, AUSTRALIA AND CHINA
41 Phil 596
CARSON; Feb 5, 1916
FACTS:
- on the 7th of November 1912, the plaintiff sold to
the "La Urania Cigar Factory (Ltd.)," a quantity of leaf
tobacco.
- on 16th January, 1913, the "La Urania Cigar Factory
(Ltd.)," pledged to the defendant corporation as
security for the payment of an indebtedness of
P25,000 the bales of tobacco. The bales of tobacco
thus pledged were stored in the bodega of a third
person, Messrs. Sprungli & Co., situated at No. 42
(now No. 214) of Calle David, Manila.
- on or about the 1st day of February, 1913, the
defendant corporation demanded and obtained from
Messrs. Sprungli & Co. the keys to the said bodega,
and discovered that of the 436 bales of tobacco
there remained only those set forth in paragraph 4 of
the answer. (I have no idea how many. Sorry.)
- the defendant bank did not know and had been
unable to ascertain whether "La Urania Cigar Factory
(Ltd.)," misrepresented the quantity of the tobacco in
the said warehouse at the time of the execution of
said document of pledge, or whether the difference
between the amount described in the document of
pledge and that found on hand on the 1st of
February, 1913, and in the meantime been disposed
of by "La Urania Cigar Factory (Ltd.)," in collusion
with Messrs. Sprungli & Co., but that if such
disposition was made it was without the knowledge
or consent of the defendant bank.
- from said 1st day of February, 1913, the defendant
corporation had been in the absolute and exclusive
possession of the tobacco, until the 15th of May,
1913, when same was sold under and by virtue of
the document of pledge by the defendant bank for
the sum of P12,722.36 which was applied on account
of said loan, the entire amount of which was then
past due and unpaid, leaving a large balance thereof
still due and unpaid.
- on the 22nd day of April, 1913, the plaintiff Tec Bi &
Co., filed a complaint in the Court of First Instance of
Manila against "La Urania Cigar Factory (Ltd.),"
claiming the payment of the sum of P11,572.96 as

the balance of the unpaid purchase price of the

tobacco
- on the 5th day of May, 1913, Tec Bi & Co. asked for
and obtained from the Court of First Instance an
attachment against the said bales of tobacco, but
inasmuch as the bodega was locked and the sheriff
was informed that the keys were in the possession of
the bank, he demanded the delivery thereof from the
latter, which demand was refused by the bank,
alleging that it held possession of the tobacco under
a pledge.
- the sheriff notified it that the bales of tobacco were
attached subject to the results of the complaint filed
by Tec Bi & Co. against "La Urania Cigar Factory
(Ltd.),
- on 8th day of May, 1913, the bank answered the
notification of the sheriff, confirming the fact that it
had in its possession the bales of tobacco specified in
the notification, as security for the payment of a loan
and that it intended to sell the same; that the sheriff
communicated the answer of the bank to the
attorneys to Tec Bi & Co., who replied insisting upon
the levy of the attachment.
- on the 19th day of May, 1913, the Court of First
Instance rendered judgment in said case against "La
Urania Cigar Factory (Ltd.)," in favor of Tec Bi & Co.,
for the sum of P11,572.96, with legal interest from
April 22, 1913, and costs.
- on the 22d day of May, 1913, the sheriff attempted
to execute the judgment upon the bales of tobacco
attached and in the possession of the defendant
corporation, but was unable to do so due to the
statement of the agent of said corporation, that the
tobacco had been sold and that the proceeds of the
sale had been applied upon the payment of the
amount due to from "La Urania Cigar Factory (Ltd.),"
- Court of First Instance found that the plaintiff's
claim was a preferred credit under the provisions of
paragraph 1 of article 1922 of the Civil Code; that the
pledge executed by "La Urania Cigar Factory (Ltd.),"
in favor of the defendant corporation
was not
binding upon the plaintiff for the reason that it was
not set forth in a public instrument as required by
article 1865 of the Civil Code in order to be effective
against, third person, and rendered judgment in
favor of the plaintiff and against the defendant for
the amount of the former's judgment against "La
Urania Cigar Factory (Ltd.)," with interest and costs.
ISSUE:
WON the court erred in holding that the plaintiff did
not waive any defect in the private instrument of

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pledge by expressly admitting its genuineness and
the correctness of its date by stipulation, and by
failure to object to its introduction in evidence.
NOTE: the case dealt with a pledgor-pledgee [credit]
relationship. The discussion here is limited to that
pertaining to civil provision. Please see case re
issues on credit.
HELD:
A general admission of the truth of the allegations
set forth in a pleading is not an admission of the
truth of an impossible conclusion of fact drawn from
other facts set out in the pleading, nor of a wrong
conclusion of law based on the allegations of fact
well pleaded, nor of the truth of a general averment
of facts contradicted by more specific averments.
Thus, if a pleader alleges that two pesos were
borrowed on one day and two more borrowed on
another making five Pin all, a stipulation of the truth
of the allegations in the pleading does not amount to
an admission by the opposing party that twice two
make five. Again if a pleader alleges that one
hundred pesos were loaned without interest for one
year and had not been paid, and that the borrower is
indebted to the lender in the sum of one hundred
and ten pesos, that being the amount of the capital
together with interest for the year for which the
money was loaned, a stipulation as to the truth of the
allegation set forth in the pleadings is not an
admission of the truth of the conclusion of law as to
the interest due by the borrower. These elementary
principles have been quite fully developed in a great
variety of cases arising on demurrers, and
sufficiently dispose of the attempt of counsel to fix
the attention of the court upon this single averment
of the answer, apart from the context and to the
exclusion of the specific allegations of fact, the truth
of which, as stipulated by the parties, cannot be
questioned.
DISPOSITION: Judgment affirmed

PHIL ADVERTISING COUNSELORS V.

CA, HON. PEDRO REVILLA, SOUTHERN
INDUSTRIAL PROJECTS
GRN L 31869
ANTONIO; AUG 8 1973
NATURE
Appeal from the decision of the CA

FACTS
-Southern Industrial Projects (SIP) hired Philippine
Advertising Counselors (PAC) to promote SIPs
products. SIP accumulated unpaid accounts.
-PAC filed complaint. Attached w/ the complaint were
two letters (Annexed A&B) from SIPs lawyer, saying
that it would not be possible for SIP to settle in full its
account of P97,952 08 in one payment and
suggested that it (SIP) be allowed to settle its
account by "periodic amortization"; and that SIP had
included PAC in its list of creditors "to whom
payments are regularly scheduled."
- SIP filed answer stating:
1.
That it admits the allegations in
paragraph 1 insofar as its personality is
concerned but is w/o sufficient information to
form a belief as to the truth of the rest of the
allegations.
2.
That defendant is w/o sufficient
knowledge or information to form a belief as to
the truth, correctness or accuracy of the
allegations set forth in paragraphs 2 to 6 of
plaintiffs complaint."
- PAC filed a motion for judgment on the pleadings
as the answer failed to tender an issue or
"otherwise admits the material allegations of the
complaint. SIP did not oppose to this motion.
Judge Revilla denied the motion and set the case
for pre-trial. Then the case was set for trial on the
merits.
- PAC presented its case and filed memoranda
saying that SIPs answer failed to tender an issue
as said party "could not have denied knowledge of
the account in the face of its written admissions,"
hence, judgment on the pleadings was proper.
- SIP presented its case and filed memoranda
saying that under Section 10, Rule 8 of the Rules
of Court, its answer had sufficiently denied the
allegations of the complaint and placed them in
issue, so that it became incumbent upon petitioner
to prove its allegations ; and that a denial for
"lack of sufficient knowledge or information to form
a belief as to the truth" of the averments of the
complaint is a specific denial and as such places in
issue the allegations of the complaint so denied.

- TC declared that said answer really failed to

tender any issue and that the claims alleged in the
complaint are, therefore, deemed admitted. TC
ordered SIP to pay PAC the sum of P89,100.03 with
legal interest, attorney's fees, and the costs of suit.
- SIP filed motion for reconsideration. PAC filed an
opposition to the MFR on the grounds that the
decision was in accordance with law and the
evidence. Judge Revilla granted MFR "in the
interest of justice and set the case for hearing on
the merits.
- PAC filed an omnibus motion for reconsideration
and for execution, contending that the MFR being
pro forma, did not interrupt the running of the
period for appeal, and since SIP received notice of
the decision, the judgment became final and
executory, and consequently it could no longer be
modified, or set aside. Judge Revilla denied the
omnibus motion.
-PAC filed petition for certiorari, prohibition and
mandamus, w/ prayer for preliminary injunction w/
the CA, which gave due course to the petition and
issued a writ of preliminary injunction. CA later
dismissed the petition and dissolved the writ of
preliminary injunction. CA said that private
respondent could do no more than claim in its
motion for reconsideration that the judgment of
the trial court was contrary to Rule 8, Section 10,
of the Rules of Court
ISSUE (for this topic)
1. WON respondents answer constitute
(allegation not deemed admitted)

denial

HELD
1 NO
-The rule authorizing an answer to the effect that the
defendant has no knowledge or information sufficient
to form a belief as to the truth of an averment and
giving such answer the effect of a denial, does not
apply where the fact as to which want of
knowledge is asserted is so plainly and
necessarily within the defendant's knowledge
that his averment of ignorance must be
palpably untrue (as held in
Capitol Motors
Corporation v. Yabut)
- "an unexplained denial of information and belief of
a matter of records, the means of information
concerning which are within the control of the

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pleader, or are readily accessible to him, is evasive
and is insufficient to constitute an effective denial."
Reasoning: The rule that a mere allegation of
ignorance of the facts alleged in the complaint is
insufficient to raise an issue, for the defendant must
aver positively or state how it is that he is ignorant of
the facts so alleged, must be applied in this case, for
petitioner's complaint explicitly averred that the
letters (AnnexA&B) were written by private
respondent, albeit thru its lawyer. Whether or not the
said averments in the complaint were true, could not
conceivably be unknown to private respondent. As a
matter of fact it has never been denied by private
respondent that it was indebted to petitione. It has
not been asserted that the letters attached as
Annexes "A" and "B" to the complaint which were
sent to petitioner by the counsel of private
respondent were not authorized by the latter. There
was thus a failure on private respondent's part to
deny the material averments of the complaint.
Consequently, the same, including the contents of
Annexes "A" and "B", which formed part of the
complaint, and in which the existence and validity of
petitioner's claim were unequivocally conceded,
must be deemed to have been admitted. Although
sanctioned by the rules, the form of denial adopted
by private respondent must be availed of in good
faith and with sincerity and not resorted to merely for
the purpose of delay or to confuse the adverse party
as to what averments in the complaint are actually
put in issue.
Disposition Appealed judgment reversed and set
aside, and Southern Industrial Projects, Inc. to pay
Philippine Advertising Counselors, Inc. the amount of
P89,100.03, with legal interest until fully paid, plus
10% of the principal amount due by way of
attorney's fees, and costs.

LIAM LAW V OLYMPIC SAWMILL

129 SCRA 439
MELENCIO-HERRERA; May 28, 1984
NATURE
Appeal from a Decision rendered by the Court of First
Instance of Bulacan
FACTS
- Law loaned P10,000 to Olympic Sawmill without

interest. The loan became due on January 31, 1960

but was not paid on that date. The debtors asked for
an extension of 3 months (April 30, 1960).
- March 17, 1960 Another loan document was
drawn up wherein the obligation was increased by
P6,000 (to answer or attorneys fees, legal interest
and other costs). Defendants failed to pay their dues
by April and when a action was instituted against
them by Law in September, they claimed that the
additional interest as usurious.
- A writ of attachment was then executed on real and
personal properties of the defendant.
- TC: ordered Olympic Sawmill to pay Liam Law
P10,000 plus the P6,000 interest.
ISSUE
WON the decision of the trial court was correct
HELD
YES
Ratio Sec. 9 of the Usury Law envisages a
complaint filed against an entity which has
committed usury, for the recovery of the
usurious interest paid. In that case, if the entity
sued shall not file its answer under oath
denying the allegation of usury, the defendant
shall be deemed to have admitted the usury.
The provision does not apply to a case, as in
the present, where it is the defendant, not the
plaintiff, who is alleging usury.
Reasoning
- Sec. 9 of the Usury Law states: The person or
corporation sued shall file its answer in writing under
oath to any complaint brought or filed against said
person or corporation before a competent court to
recover the money or other personal or real property,
seeds or agricultural products, charged or received in
violation of the provisions of this Act. The lack of
taking an oath to an answer to a complaint will mean
the admission of the facts contained in the latter.
- For sometime, usury has been legally nonexistent.
Interest can now be charged as tender and borrower
may agree upon.4 The Rules of Court in regards to
allegations of usury, procedural in nature, should be
considered repealed with retroactive effect.
Disposition Judgment affirmed

How to contest document

PHILIPPINE BANKING CORPORATION V

CA (AMALIO L. SARMIENTO)
SCRA
CORONA; January 13, 2004
NATURE
Petition for review
FACTS
- Amalio L. Sarmiento, registered owner of A.L.
Sarmiento Construction, applied for a loan from
Philippine Banking Corporation in the sum of
P4,126,000, evidenced by promissory note no. 62684.
- Pursuant thereto, Sarmiento obligated himself to
pay the amount with interest at the rate of 29% per
annum.
Additionally, it was stipulated that if
payment was not made upon maturity of the loan,
penalty charges of 1% per month and 25% of the
total amount due would be charged against him.
- Sarmiento signed the aforesaid promissory note
together with the disclosure statement on loan/credit
transaction provided by the bank.
- Sarmiento failed to pay the obligation on maturity,
prompting PBC to send him a letter of demand.
Despite the demand, however, Sarmiento still failed
to settle his indebtedness.
- PBC filed a complaint for a sum of money against
him.
In his answer, Sarmiento denied that he
received the proceeds of the loan transaction and
prayed that the case against him be dismissed.
- The trial court rendered its decision finding that
plaintiff miserably failed to prove its case by
preponderance of evidence.
The case was
dismissed.
- PBC filed a motion for new trial which the trial court
subsequently granted despite the opposition of
Sarmiento.
- The trial court rendered a decision finding the
evidence adduced by the bank to be insufficient to
substantiate its claim. The trial court reinstated its
earlier dismissal of the case against Sarmiento and
denied Philippine Banking Corporations subsequent
motion for reconsideration.
- PBC appealed to the CA
- CA affirmed with modification the trial courts by
deleting the trial courts award of attorneys fees.
- Hence, the instant petition
ISSUE

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WON no proof was required of petitioner to establish
the contents of the said documents because such
judicial admissions of respondent created a prima
facie case in petitioners favor
HELD
NO.
- It is undisputed that respondent Sarmiento signed
the promissory note and the accompanying
disclosure statement on loan/credit transaction. But
said pieces of evidence proved only the existence of
such documents. There was even no question as to
that because respondent Sarmiento himself admitted
the due execution thereof.
- The important issue was whether or not respondent
Sarmiento actually received the proceeds of the
subject loan so as to make him liable therefor, a
matter which should have been ventilated before the
trial court.
- The trial court did in fact make a finding that the
documentary evidence of petitioner failed to prove
anything showing that respondent indeed received
the proceeds of the loan. The Court of Appeals
affirmed the conclusions of the trial court and
declared:
A pre-existing obligation, it may be conceded, constitutes value
and may, of and by itself, serve as valuable and sufficient
consideration for a contract such as the loan sued upon. As an
essential element of a contract, however, the same should have
been satisfactorily proved by the appellant particularly when,
as in the instant case, the absence of consideration was precisely
put in issue by the pleadings and was buttressed by both oral
and documentary evidence.
Having failed in this material
respect, the appellants withdrawal of the amount supposedly
credited to the appellees account was understandably
interpreted by the court a quo as a termination/cancellation of
the loan the latter applied for. Considering further that contracts
without consideration do not exist in contemplation of law and
produce no effect whatsoever (Article 1352, Civil Code of the
Philippines), the trial, likewise, correctly dismissed the
appellants case.

- A statement in a written instrument regarding the

payment of consideration is merely in the nature of a
receipt and may be contradicted. Respondent
Sarmiento denied having received the proceeds of
the loan and in fact presented evidence showing that
on the day petitioner claimed to have credited the
subject amount, it was again debited or withdrawn
by petitioner, admittedly upon the instruction of the
officials from petitioners head office.
- Petitioner attempted to controvert this fact by
claiming that the proceeds of the loan were applied
to respondents previous obligations to the bank. But
there is nothing in the records showing that
respondent had other obligations to which the
proceeds of the loan could or should have been

applied. Moreover, petitioner failed to explain just

exactly what said obligations were or to what extent
the purported proceeds were applied in satisfaction
thereof.
What appeared clearly was that the
proceeds of the loan were deposited then withdrawn
the same day by petitioner itself, thus negating its
claim that respondent actually received it. Petitioner
therefore failed to establish its case against
respondent Sarmiento.
- Be that as it may, the general rule is that only
questions of law may be raised in a petition for
review on certiorari. Barring a showing that the
findings of fact complained of are totally devoid of
support in the records, such determination must
stand for the Court is neither expected nor required
to examine or refute the oral and documentary
evidence submitted by the parties.
Disposition Petition DENIED.

Defense/objection waived
9

KATON V PALANCA
G.R. No. 151149
PANGANIBAN; September 7, 2004
NATURE
Petition for Review under Rule 45 of the Rules of
Court, assailing CA decision, and resolution denying
MFR.
FACTS
-August 2, 1963: George Katon filed a request with
the District Office of the Bureau of Forestry in Puerto
Princesa,
Palawan,
for
the
re-classification
(forestagricultural land) of a piece of real property
known as Sombrero Island (~18has).
-BFDO Puerto Princesa ordered the inspection,
investigation and survey of the land, and thereafter
for George Katon to apply for a homestead patent.
9 For other footnotes in this case:
[14]

The said section provides that [t]hese rules shall apply in all courts, except as

otherwise provided by the Supreme Court.

[35]

1(g) of Rule 16 of the Rules of Court.

[37]

2 of Rule 3 of the Rules of Court reads:

SEC. 2. Parties in interest.- A real party in interest is the party who stands to be benefited
or injured by the judgment in the suit, or the party entitled to the avails of the suit. Unless
otherwise authorized by law or these Rules, every action must be prosecuted or defended in
the name of the real party in interest.

-Gabriel Mandocdoc (now retired Land Classification

Investigator) undertook the investigation, inspection
and survey of the area in the presence of George, his
brother Rodolfo (deceased) and his cousin, Manuel
Palanca, Jr., (respondent). During said survey, there
were no actual occupants on the island but there
were some coconut trees claimed to have been
planted by George and Palanca (alleged overseer of
George) who went to the island from time to time to
undertake development work, like planting of
additional coconut trees.
-The application for conversion of the whole
Sombrero Island was favorably endorsed by BFDO
Puerto Princesa to its main office in Manila for
appropriate action. The names of Felicisimo Corpuz,
Clemente Magdayao and Jesus Gapilango and Juan
Fresnillo were included in the endorsement as coapplicants of George. Authorities noted that since the
subject land was no longer needed for forest
purposes, the same is therefore certified and
released as agricultural land for disposition under the
Public Land Act.
-George Katon says: the whole Sombrero Island had
been classified from forest land to agricultural land
and certified available for disposition upon his
request and at his instance.
-However land investigators of the Puerto Princesa
District Land Office, later favorably endorsed the
request of respondents Manuel Palanca Jr. and
Lorenzo Agustin, for authority to survey vacant
portions of Sombrero Island consisting of 5hectares
each.
-Subsequently,
respondents
filed
their
own
homestead patent applications: Lorenzo Agustin
(4.3has), Juan Fresnillo (8.5has), and
Jesus
Gapilango (??has). Manuel Palanca, Jr. was issued a
Homestead Patent No. and OCT for 6.84 hectares of
Sombrero Island.
-Katon
filed
Complaint
for
Nullification
of
Applications for Homestead and Original Certificate
of Title No. G-7089 and for Reconveyance of Title
and prayed for reconveyance of the whole island in
his favor, arguing that the homestead patents and
original certificates of title covering certain portions
of Sombrero Island issued in favor of respondents
were invalid for having been obtained through fraud.
Respondents arguments:
-Manuel Palanca asserts that he himself requested
for the reclassification of the island in dispute; that
about the time of such request, Fresnillo, Gapilango
and himself already occupied their respective areas
and introduced numerous improvements; that Katon

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never filed any homestead application for the island;
that Gabriel Mandocdoc never undertook the
inspection and survey of the island; that he is not a
mere overseer of Katon because he was acting for
himself in developing his own area and not as
anybodys caretaker.
-Respondents aver that they are all bona fide and
lawful possessors of their respective portions, have
declared such for taxation purposes and have been
faithfully paying taxes thereon for twenty years. They
contend that Katon has no legal capacity to sue
insofar as the island is concerned (an action for
reconveyance can only be brought by the owner and
not a mere homestead applicant) and that petitioner
is guilty of estoppel by laches for his failure to assert
his right over the land for an unreasonable and
unexplained period of time.
-After filing their Answer with Special and/or
Affirmative Defenses and Counterclaim, respondents
also filed a Motion to Dismiss on the ground of the
alleged defiance by Katon of the RTCs order to
amend his Complaint (substitution by the legal heirs
of the deceased Gapilango). MTD was granted.
Katons MFR was denied.
-Katon filed petition for certiorari before CA. Instead
of limiting itself to the allegation of grave abuse of
discretion, CA ruled on the merits & held that while
Katon had caused the reclassification of Sombrero
Island from forest to agricultural land, he never
applied for a homestead patent under the Public
Land Act. Hence, he never acquired title to that land.
Also, granting arguendo that Katon had the exclusive
right to apply for a patent to the land in question, he
was already barred by laches for having slept on his
right for almost 23 years from the time Palancas title
had been issued
-On MR, CA acknowledged that it had erred when it
ruled on the merits of the case. It agreed with Katon
that the TC had acted without jurisdiction in
perfunctorily dismissing his Sept10, 1999 MFR, on
the erroneous ground that it was a third and
prohibited motion when it was actually only his first
motion. Nonetheless, the complaint was dismissed
motu proprio by the CA with two justices dissenting
pursuant to its residual prerogative under Sec. 1
of Rule 9 of the Rules of Court. CA said that from the
allegations of the complaint, Katon clearly had no
standing to seek reconveyance of the disputed land,
because he neither held title to it nor even applied
for a homestead patent. It reiterated that only the
State could sue for cancellation of the title issued
upon a homestead patent, and for reversion of the

land to the public domain. It also ruled that

prescription had already barred the action for
reconveyance.
ISSUES
1. WON CA was correct in resolving the petition for
certiorari based on an issue not raised in the petition
(WON CA was correct in ruling on the merits)
2. WON CA was correct in invoking its alleged
residual prerogative under Section 1, Rule 9 of the
1997 Rules of Civil Procedure in resolving the Petition
on an issue not raised in the Petition (and eventually
dismissing the case for prescription and lack of
jurisdiction)
HELD
Where prescription, lack of jurisdiction or failure to
state a cause of action clearly appear from the
complaint filed with the TC, the action may be
dismissed motu proprio by the CA, even if the case
has been elevated for review on different grounds.
Verily, the dismissal of such cases appropriately ends
useless litigations.
1. This is not the first time that petitioner has taken
issue with the propriety of the CAs ruling on the
merits. He raised it with the CA when he moved for
reconsideration of CAs Dec8, 2000 Decision. The CA
even corrected itself in its Nov20, 2001 Resolution.
-That should have been enough to settle the issue.
The CAs Resolution on this point has rendered
petitioners issue moot. There is no need to discuss it
further. Suffice it to say that the appellate court
indeed acted ultra jurisdictio in ruling on the merits
of the case when the only issue that could have
been, and was in fact, raised was the alleged grave
abuse of discretion committed by the trial court in
denying Katons MFR.
-Settled is the doctrine that the sole office of a writ of
certiorari is the correction of errors of jurisdiction.
Such writ does not include a review of the evidence,
[10] more so when no determination of the merits
has yet been made by the trial court, as in this case.

defenses and objections not pleaded either in a

motion to dismiss or in the answer are deemed
waived, except when
(1) lack of jurisdiction over the subject matter,
(2) litis pendentia,
(3) res judicata and
(4) prescription
are evident from the pleadings or the evidence on
record. In the four excepted instances, the court
shall motu proprio dismiss the claim or action.
-RESIDUAL JURISDICTION: Sec 9 of Rule 41 of the
Rules of Court10:
The residual jurisdiction of trial courts is available
at a stage in which the court is normally deemed to
have lost jurisdiction over the case or the subject
matter involved in the appeal. This stage is reached
upon the perfection of the appeals by the parties or
upon the approval of the records on appeal, but prior
to the transmittal of the original records or the
records on appeal. In either instance, the TC still
retains its so-called residual jurisdiction to issue
protective orders, approve compromises, permit
appeals of indigent litigants, order execution pending
appeal, and allow the withdrawal of the appeal.
-CAs motu proprio dismissal of petitioners
Complaint could not have been based on residual
jurisdiction under Rule 41. Such order of dismissal
was not one for the protection and preservation of
the rights of the parties, pending the disposition of
the case on appeal. What the CA referred to as
residual prerogatives were the general residual
powers of the courts to dismiss an action motu
proprio upon the grounds mentioned in Section 1 of
Rule 9 of the Rules of Court and under authority of
Section 2 of Rule 1 of the same rules.
-Jurisdiction over the subject matter is conferred by
law and is determined by the allegations in the
10Rule41.SEC. 9. Perfection of appeal; effect thereof. A partys appeal by notice of appeal
is deemed perfected as to him upon the filing of the notice of appeal in due time.
A partys appeal by record on appeal is deemed perfected as to him with respect to the
subject matter thereof upon the approval of the record on appeal filed in due time.
In appeals by notice of appeal, the court loses jurisdiction over the case upon the perfection
of the appeals filed in due time and the expiration of the time to appeal of the other parties.

2. NO
-CAs residual prerogatives under Sec1 of Rule9 of
the Rules of Court is different from the residual
jurisdiction of TC over cases appealed to CA.
-RESIDUAL PREROGATIVES: Sec 1 of Rule 9 of the
Rules of Court:

In appeals by record on appeal, the court loses jurisdiction only over the subject matter
thereof upon the approval of the records on appeal filed in due time and the expiration of the
time to appeal of the other parties.
In either case, prior to the transmittal of the original record or the record on appeal, the
court may issue orders for the protection and preservation of the rights of the parties which
do not involve any matter litigated by the appeal, approve compromises, permit appeals of
indigent litigants, order execution pending appeal in accordance with Section 2 of Rule 39,
and allow withdrawal of the appeal.

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complaint and the character of the relief sought.
Katon prayed, among others, for a judgment (1)
nullifying the homestead patent applications of
Respondents Agustin, Fresnillo and Gapilango as well
as Homestead Patent No. 145927 and OCT No. G7089 in the name of Respondent Palanca; and (2)
ordering the director of the Land Management
Bureau to reconvey the Sombrero Island to
petitioner.
-Q: did the Complaint sufficiently allege an action for
declaration of nullity of the free patent and
certificate of title or, alternatively, for reconveyance?
Or did it plead merely for reversion?
-Ans: The complaint did not sufficiently make a case
for any of such actions, over which the TC could have
exercised jurisdiction.
-In an action for nullification of title or declaration of
its nullity, the complaint must contain the following
allegations:
1) that the contested land was privately owned by
the plaintiff prior to the issuance of the assailed
certificate of title to the defendant; and
2) that the defendant perpetuated a fraud or
committed a mistake in obtaining a document of title
over the parcel of land claimed by the plaintiff.
-In these cases, the nullity arises not from fraud or
deceit, but from the fact that the director of the Land
Management Bureau had no jurisdiction to bestow
title; hence, the issued patent or certificate of title
was void ab initio.
-In an alternative action for reconveyance, the
certificate
of
title
is
also
respected
as
incontrovertible, but the transfer of the property or
title thereto is sought to be nullified on the ground
that it was wrongfully or erroneously registered in
the defendants name. The complaint must allege
two facts that, if admitted, would entitle the plaintiff
to recover title to the disputed land:
(1) that the plaintiff was the owner of the land, and
(2) that the defendant illegally dispossessed the
plaintiff of the property.
-In the present case, nowhere in the Complaint did
petitioner allege that he had previously held title to
the land in question.
On the contrary, he
acknowledged that the disputed island was public
land, that it had never been privately titled in his
name, and that he had not applied for a homestead
under the provisions of the Public Land Act.
-Reversion? No. Section 101 of the Public Land Act
categorically declares that only the solicitor general
or the officer in his stead may institute such an
action. A private person may not bring an action for

reversion or any other action that would have the

effect of canceling a free patent and its derivative
title, with the result that the land thereby covered
would again form part of the public domain.
-The dismissal of the Complaint is proper not
only because of lack of jurisdiction, but also
because of the utter absence of a cause of
action, a defense raised by respondents in
their Answer.
-Assuming that petitioner is the proper party to bring
the action for annulment of title or its reconveyance,
the case should still be dismissed for being timebarred.
A. 1977, Feb21: a homestead patent and an OCT was
issued to Palanca
1988, Oct6: filing of the complaint, way past ten
years from the date of the issuance of the Certificate,
the prescriptive period for reconveyance of
fraudulently registered real property.
B. Palancas title attained the status of indefeasibility
one year from the issuance of the patent and the
Certificate of Title in February 1977. It is no longer
open to review on the ground of actual fraud.
Trial courts have authority and discretion to
dismiss an action on the ground of prescription when
the parties' pleadings or other facts on record show it
to be indeed time-barred; and it may do so
-on the basis of a motion to dismiss (Sec. 1,f, Rule
16, Rules of Court), or
-an answer which sets up such ground as an
affirmative defense (Sec. 5, Rule 16), or
-even if the ground is alleged after judgment on the
merits, as in a motion for reconsideration; or
-even if the defense has not been asserted at all, as
where no statement thereof is found in the
pleadings; or
-where a defendant has been declared in default.
What is essential only is that the facts demonstrating
the lapse of the prescriptive period be otherwise
sufficiently and satisfactorily apparent on the record;
either in the averments of the plaintiff's complaint, or
otherwise established by the evidence.
Disposition Petition denied. CA resolution affirmed.
Complaint dismissed on the grounds of lack of
jurisdiction, failure to state a cause of action and
prescription. Costs against petitioner.

COMMON PROVISIONS
Re parts of pleading

FIL-ESTATE GOLF AND DEVELOPMENT,

INC. V CA (CABUCO-ANDRES)
265 SCRA 614
KAPUNAN; December 16, 1996
NATURE
Petition for review on certiorari of a decision of the
CA.
FACTS
- Petitioner Fil-Estate Golf and Development, Inc.
(FEGDI) is the developer of the Manila Southwoods
golf course and residential subdivision project which
partly covers lands located in Bian, Laguna.
- December 29, 1992: Felipe Layos filed a Complaint
for Injunction and Damages with Application for
Preliminary Injunction against Fil-Estate Realty
Corporation (FERC) with the RTC of Bian. It alleged
that Felipe Layos is the legal owner and possessor of
thwo parcels of land having a total area of 837,695
sq. m. located in Bian, Laguna known as Lots 1 & 2
of Plan Psu-201. Layos claimed that the Southwoods
project encroached upon the aforecited lands and
thus his rights of ownership and possession were
violated when FERC brought in men and equipment
to begin development of the said properties.
- February 2, 1993: FERC filed an Opposition to
Application for Writ of Preliminary Injunction and
explicitly stated therein that the developer is its
sister company, FEGDI.
- March 29, 1993: Judge Sultan of RTC Bian issued
an order denying the prayer for preliminary
injunction in view of Layos inability to substantiate
his right.
- June 25, 1993: Layos along with his wife and other
individuals filed another case for Injunction and
Damage with Prayer for Preliminary Injunction with
the RTC of San Pedro, this time against FEGDI. The
complaint is basically identical to that filed in the
Bian case, except for changes in the number of
party-plaintiffs and party-defendants and in the area
size of the claimed landholdings.
- FEGDI moved to dismiss the San Pedro case on
grounds of litis pendentia, forum-shopping, lack of
cause of action and lack of jurisdiction. FEGDI argues
that a similar complaint was previously filed with the
RTC Bian court. FEGDI also averred that the
documents relied upon by the private respondents
are of doubtful veracity and that they failed to pay
the correct filing fees.

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- Judge Cabuco-Andres of San Pedro RTC denied
FEGDIs motion to dismiss, as well as the Motion for
Reconsideration. FEGDI filed a Petition for Certiorari
and Prohibition with Application for Preliminary
Injunction with the CA. CA ordered an RTO enjoining
Cabuco-Andres.
- January 25, 1994: RTC Bian case was dismissed
without prejudice on grounds of forum-shopping.
ISSUES
1. WON Layos is guilty of forum-shopping.
2. WON the San Pedro case has cause of action.
HELD
1. YES
Ratio
Reasoning Private respondents have indeed
resorted to forum-shopping in order to obtain a
favorable decision. The pattern is undisputably
revealed by the fact that after Felipe Layos instituted
in 1992 a case for injunction and damages with
application for preliminary injunction in the RTC of
Bian, and after his prayer was denied in March
1993, he (and other individuals) filed an identical
complaint for injunction and damages with
preliminary injunction in June 1993, this time with
RTC San Pedro. An examination would show that the
San Pedro complains is simply an improved version
of the Bian complaint.
- Respondents content that there is no identity of
part-defendants since it was FERC in the Bian case
and FEGDI in the San Pedro case. This is
unmeritorious, because FEGDI voluntarily submitted
to the courts jurisdiction by filing its answer and
expressly stating that it is the developer of
Southwoods, and not FERC. The Bian court
expressly recognized FEGDI as the defendant in the
said case.
- The willful attempt by private respondent to obtain
a preliminary injunction in another court after it
failed to acquire the same from the original court
constitutes grave abuse of the judicial process.
SC-Administrative Circular 04-94:
Revised Circular 29-91 applies to and governs
the filing of petitions in the Supreme Court and
the Court of Appeals and is intended to prevent
the multiple filing of the petitions or complaints
involving the same issues in other tribunals.
The following requirements xxx shall be
strictly complied with in the filing of the
complaints, petitions, applications or other

initiatory pleadings in all courts and agencies

other than the SC xxx.
The complaint and other initiatory pleadings
referred to and subject of this Circular are the
original civil complaint, counter-claim, crossclaim, third (fourth, etc) party complaint, or
complaint-in-intervention, petition, or application
wherein a party asserts his claim for relief.
2. NO
Ratio In the determination of WON the complaint
states a cause of action, the annexes attached to the
complaint may be considered, they being parts of the
complaint.
Reasoning The San Pedro case also did not state a
cause of action. In determining WON a complaint
states a cause of action, only the allegations in the
complaint must be considered. The test if sufficiency
of the facts is WON admitting the facts alleged the
court can render a valid judgment upon the same in
accordance with the prayer thereof.
- There is no cause of action because Layos claim on
the land in question is based on a fabricated
document. The affidavit of self-adjudication is a vital
part of the complaint that should be considered in
the determination of whether or not a cause of action
exists.
- The land Psu-201 is an original survey for J. Reed
located in Malate, Manila, and Si-14769 is a survey
number for the plan of a land parcel situated in Bo.
Bessang, Cagayan in the name of Gregorio Blanco
- However the CA and RTC limited itself to the
allegations in the complaint proper of the San Pedro
case in concluding that said complaint stated a cause
of action. This is erroneous.
- In the case of Marcopper Mining v Garcia, the RTC
had the opportunity to examine the merits of the
complaint, the answer with counterclaim, the
petitioners answer to the counterclaim and its
answer to the request for admission. It was but
logical for said court to consider all of these
pleadings in determining WON there was a sufficient
cause of action in the petitioners complaint.
- Regalado: The exception is provided in Sec. 2 Rule
9. It as also been held that under this ground the trial
court can consider all the pleadings filed, including
annexes, motions and the evidence on record.
DISPOSITION
The petition for review on certiorari is granted.
Respondents complaint is dismissed.

DBP v CA
G.R. No. 147217
October 7, 2004
NATURE
petition for review on certiorari assailing the
Resolution of the CA dismissing the petition for
certiorari filed by the DBP and Atty. Nilo Galorport
FACTS
- Bibiana Guerra de Azarcon, herein private
respondent, and her late husband Inocentes Azarcon,
obtained a loan from PNB. As collateral, they
mortgaged 2 lots with the bank. But they could not
pay their loan. Asuncion Calceta told Bibiana that she
is willing to pay their loan if Bibiana would mortgage
the lots to her. Private respondents agreed. Asuncion
Calceta then made an initial payment of P273,000.00
to the PNB. The bank extended the redemption
period to allow Asuncion to apply with the DBP a loan
of P3.5M to be paid to the PNB. Private respondents
executed a simulated deed of sale of their lots in her
favor to enable her to mortgage the same with the
DBP.
- When the proceeds of the loan were released,
Asuncion paid the PNB P900,000.00 representing the
unpaid balance of respondents loan. However, she
failed to pay her loan with the DBP, prompting the
bank to foreclose the mortgage covering the 2 lots.
After hearing private respondents application for
preliminary injunction, the RTC issued an Order
enjoining the DBP and Atty. Nilo Galorport, the
banks deputized special sheriff, from proceeding
with the auction sale of the lots pending the final
determination of the civil case wherein private
respondents prayed for annulment of the contract
and the TCTs transferring title over the lots to
Asuncion Calceta.
- DBP and Atty. Galorport filed an MFR but were
denied by the RTC. Hence, they filed with the CA a
petition for certiorari alleging that in granting the
injunctive relief in favor of private respondents, the
RTC acted with grave abuse of discretion. The CA
dismissed the petition for certiorari for failure of one
of the petitioners, Atty. Nilo Galorport to sign the
certification against forum shopping. The CA denied
petitioners MFR, holding that Atty. Demosthenes
Demecillo, Branch Manager of the DBP at Tagbilaran
City, failed to show that he is the banks authorized
representative to file the petition for certiorari.

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ISSUE
WON the CA acted with grave abuse of discretion in
dismissing the petition for certiorari
HELD
NO
Ratio
The certification against forum shopping is fatally
defective, not having been duly signed by both
petitioners. This procedural flaw warrants the
dismissal of the petition for certiorari. The
certification against forum shopping must be signed
by the principal parties.
Reasoning
The petitioners before the CA were the DBP,
represented by Atty. Demosthenes Demecillo, the
banks Branch Manager at Tagbilaran City, and Atty.
Nilo Galorport, DBPs deputized special sheriff. The
certification against forum shopping was signed by
Atty. Demecillo only. Petitioners explained in their
MFR that in the verification of the petition for
certiorari, Atty. Demecillo stated under oath that he
is the DBPs incumbent Branch Head and its duly
authorized officer. They submitted a copy of a
resolution passed by the DBP Board of Governors,
authorizing Branch Heads of the DBP to sign the
verification and certification against forum shopping
of all initiatory pleadings of the bank. What
petitioners failed to explain, however, is their failure
to attach a certified true copy of the resolution to
their petition. Their omission is fatal to their case.
Courts are not expected to take judicial notice of
corporate board resolutions or a corporate officers
authority to represent a corporation. Petitioners
failure to submit proof that Atty. Demecillo has been
authorized by the DBP to file the petition is a
"sufficient ground for the dismissal thereof." Atty.
Galorport contends that the signature of Atty.
Demecillo, representing the DBP, is sufficient since
he and DBP are being sued jointly, they having a
common interest in the lots under litigation. His
contention lacks merit. DBP is being sued as a
mortgagee, while he is impleaded as the banks
deputized special sheriff who conducted the extrajudicial foreclosure of the mortgage. Their interests
are not the same. The certification against forum
shopping should be signed by all the petitioners in a
case, and the signing by only one of them is
insufficient.
Disposition

Petition is DENIED

WEE V GALVEZ
436 SCRA 96
QUISUMBING; August 11, 2004
NATURE
Petition for review on certiorari
FACTS
- Petitioner Rosemarie Wee and respondent Rosario
D. Galvez are sisters. Rosemarie lives with husband
Manuel in Bataan. Rosario lives in New York, USA
- They entered into an agreement whereby Rosario
would send Rosemarie US$20,000, half of said
amount to be deposited in a savings account while
the balance could be invested in the money market.
The interest to be earned therefrom would be given
to Rosario's son, Manolito Galvez, as his allowance
- In accordance with her agreement with Rosario,
Rosemarie gave Manolito his monthly allowance
ranging from P2,000 to P4,000 a month from 1993 to
January 1999. However, sometime in 1995, Rosario
asked for the return of the US$20,000 and for an
accounting. Rosemarie promised to comply with the
demand but failed to do so. A written demand was
sent to her. When Rosemarie did not comply, Rosario
filed a suit against her.
- The Wees moved to dismiss the case based on the
following grounds: (1) the lack of allegation in the
complaint that earnest efforts toward a compromise
had been made in accordance with Article 1515 of
the Family Code; (2) failure to state a valid cause of
action, the action being premature in the absence of
previous earnest efforts toward a compromise; and
(3) the certification against forum shopping was
defective, having been executed by an attorney-infact and not the plaintiff.
- Rosario amended her complaint to add that
Earnest efforts towards have been made but the
same have failed (mali talaga yung sinulat nila).
The trial court accepted the amended complaint and
dismissed the Wees motion to dismiss. Wee moved
for an MFR. It was also denied.
- The Wee couple brought the matter to the Court of
Appeals via a special civil action for certiorari,
prohibition, and mandamus. It was also denied. The
Court of Appeals held that the complaint, as
amended, sufficiently stated a cause of action. It
likewise held that the questioned certification against
forum shopping appended thereto was not so
defective as to warrant the dismissal of the

complaint. An MFR was filed but was likewise denied.

ISSUE/S
1. WON the certification of non-forum shopping
executed by the plaintiffs atty-in-fact is
defective
2. WON the amended complaint before the RTC
states a cause of action
HELD
1. No
Reasoning The Special Power of Attorney executed
by her in favor of Grace Galvez, if subjected to
careful scrutiny would clearly show that the authority
given to the latter is not only broad but also all
encompassing that it includes the power and
authority to institute both civil and criminal actions.
Corollary with this power is the authority to sign all
papers, documents, and pleadings necessary for the
accomplishment of the said purpose.
The SPA includes:
1. To ask, demand and claim any sum of money that
is duly [due] from any person natural, juridical and/or
corporation in the Philippines;
2. To file criminal and/or civil complaints before the
courts of justice in the Philippines to enforce my
rights and interest[s];
3. To attend hearings and/or Preliminary
Conference[s], to make stipulations, adjust claims, to
settle and/or enter into Compromise Agreement[s],
to litigate and to terminate such proceedings; [and]
4. To sign all papers, documents and pleadings
necessary for the accomplishment of the above
purposes.
2. YES
Ratio It is true that the lead sentence of paragraph
9-A, may be incomplete or even grammatically
incorrect as there might be a missing word or phrase,
but to our mind, a lacking word like "compromise"
could be supplied by the rest of the paragraph.
Reasoning Petitioners submit that the amended
complaint violates Rule 8, Section 133 of the 1997
Rules of Civil Procedure, as there is no plain and
direct statement of the ultimate facts on which the
plaintiff relies for her claim. Specifically, petitioners
contend that the allegation in paragraph 9-A of the
amended complaint that "Earnest efforts towards
have been made but the same have failed" is clearly
insufficient. The sentence is incomplete, thus
requires the reader of the pleading to engage in

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deductions or inferences in order to get a complete
sense of the cause of action, according to petitioners.
-Respondent rebuts by stating that the amended
complaint as well as the annexes attached to the
pleadings should be taken in their entirety. Thus
taken together, in their entirety, the amended
complaint and the attachments to the original
complaint, clearly show that a sufficient cause of
action as it is shown and stated that earnest efforts
towards a compromise have been made, according
to respondent.
-A paragraph is "a distinct section or subdivision of a
written or printed composition that consists of from
one to many sentences, forms a rhetorical unit. As a
"short composition consisting of a group of sentences
dealing with a single topic," a paragraph must
necessarily be construed in its entirety in order to
properly derive the message sought to be conveyed.
In the instant case, paragraph 9-A of the Amended
Complaint deals with the topic of efforts made by the
respondent to reach a compromise between the
parties. Hence, it is in this light that the defective
lead sentence must be understood or construed.
-Having examined the Amended Complaint in its
entirety as well as the documents attached thereto,
following the rule that documents attached to a
pleading are considered both as evidence and as
part of the pleading, we find that the respondent has
properly set out her cause of action.
Disposition Petition is denied.

BAGUIARO V. BARRIOS
00SCRA 00
FERIA, 30 Aug. 1946
FACTS
-Complaint filed on January 7, 1945, in the Court of
First Instance of Iloilo by Emiliana Tupas Vda. de Atas
against Baguiaro.
-De Atas is the exclusive and absolute and registered
owner of the following described property, situated in
the City of Iloilo. The above lot, without the
improvements which were burned during the war, is
assessed at P4,680.
-That sometime in the month of July, 1946, Baguiaro
verbally solicited the permission of herein de Atas to
construct a house of light materials on the lot of
some three brazas wide and three brazas long just
enough for them to sleep, at a monthly rental of
twenty pesos (P20), payable in advance, and de Atas

told Baguiaro that she would think the matter; she

found out that defendant had already begun the
construction of a nipa and bamboo house with no
approval from her;
-Instead of constructing a house of three brazas by
three brazas as above Baguiaro has built additions
after additions to the house such that the present
house constructed is twenty-eight and one-half feet
on the front and forty-two and one-half feet on the
side, and has rented a part thereof to other persons,
and that when plaintiff discovered this anomaly and
violations of their verbal and initial agreement,
defendant was told sometime on October, 1945, to
pay a monthly rental of fifty pesos (P50) a month, or
vacate the lot in question. For the month of October,
Baguiaro paid only the sum of P25, leaving a balance
of P25, and for subsequent months Baguiaro has
refused and still refuses to pay the said rentals of
fifty pesos (P50), or vacate the premises, in spite of
repeated demands.
-Prayer: defendant to pay to plaintiff the sum of fifty
pesos (P50) as monthly rentals for the lot occupied
by him of the property of herein plaintiff, beginning
with the month of October, 1945, or to vacate the lot
in question, with costs against the defendant, and for
such other and for such other and further relief as
this Honorable Court shall deem just and equitable.
-Baguiaro filed motion to dismiss on the ground that
the Court has no jurisdiction over the subject matter
of the complaint or suit, the action being either for
the collection of rentals of a real estate which do not
reach to two hundred pesos (P200) or for ejectment
from the premises in jurisdiction over the subject of
the litigation.
-CFI motion to dismiss denied and sentencing
Baguiaro either to pay two hundred fifty pesos (P250)
or to vacate the lot in question.
-Petition for Certiorari on the ground the respondent
judge acted without jurisdiction over the subject
matter in trying and deciding the case, and at the
same time asked this Court to enjoin the respondent
judge from taking further action in the case during
the pendency of this petition.
ISSUE
WON the court acted without jurisdiction
HELD
Yes, court acted without jurisdiction. It is an axiom, in
civil procedure that if the relief demanded is not the
proper one which may be granted under the law, it
does not characterize or determine the nature of the

plaintiff's action, and that the relief to which the

plaintiff is entitled based on the facts alleged by him
in his complaint, although it is not the relief
demanded, is what determines the nature of the
action. And that is the reason why it is generally
added to prayers for relief, though not necessary, the
words "and for such other relief as the law warrants,"
or others to the same effect. So if a plaintiff alleges,
for instance, that the defendant owes the former a
certain amount of money and did not pay it at the
time stipulated, and prays that the defendant be
sentenced to return a certain personal property to
the plaintiff, such prayer will not make or convert the
action of recovery, of debt into one of recovery of
personal property, and the court shall grant the
proper relief, or sentence the defendant to pay his
debt to the plaintiff.
The attorney of the plaintiff, in his opposition to the
defendant's motion to dismiss filed in the court
below, and in his answer to the petition for certiorari
in this Court, contends that the plaintiff's principal
action is for breach of contract, and therefore within
the jurisdiction of the Court of First Instance, because
it is not capable of pecuniary estimation. There is no
such kind of action. Breach of contract may be the
cause of action, but not the action or relief itself.
According to our Civil Code, a breach of contract is
accuse of action, either for specific performance, or
performance, or rescission of the contract. As the
plaintiff is entitled is entitled only to one of the two
reliefs, if he prays that the defendants be sentenced
to perform the obligations imposed upon him by the
contract the action is specific performance, and if he
prays that the contract be rescind the plaintiff's
action is rescission. In contracts of lease of a real
estate, if the lessee violates the terms of the contract
by his failure to pay the rent due or to comply with
the conditions of the lease, and refuses to vacate or
return the possession of the property leased to the
lessor notwithstanding demand to do so, the action is
illegal detainer if filed within one year, and recovery
or restoration of possession if filed after one year,
from the demand.
That the prayer of relief in the complaint seems to
convey the idea that the plaintiff would agree to let
the defendant continue in possession if he pays the
rents or damages demanded by the plaintiff, does
not change the nature of the action, since the court
may only grant the proper relief according to law,
that is, the ejectment of the defendant and the
payment by the latter of the damages due for the
occupation of the land, though the plaintiff is free to

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condone said payment. It is evident that the court
can not authorize the defendant petitioner to
continue in possession the land as lessee if he pays
the rents or damages demanded by the plaintiff
since such continuation depends not only upon the
plaintiff's will but also upon that of the defendant. A
judgment authorizing the defendant to continue as
lessee for a certain and definite period of time after
the judgment, will not bind the plaintiff to grant such
lease nor the defendant to continue as lessee paying
the monthly rental fixed by the court. A court cannot
make and impose a contract upon the parties.
Even assuming, arguendo, that the complaint may
contain two alternatives or independent actions, one
of forcible entry and another for recovery of rents or
damages, the Court of First Instance of Iloilo has no
jurisdiction to entertain either one or both. It has no
jurisdiction over the action of forcible entry, for it is
within the exclusive jurisdiction of the justice of the
peace; nor over that of recovery of rents or damages,
because the amount claimed by the plaintiff in his
complaint, which determines the court jurisdiction, is
less than two hundred pesos (P200). According to the
complaint, the petitioner had occupied the lot in
question during the months of October, November,
December and January when the complaint was filed,
and the total amount of rents or damages claimed as
due for that occupation at the rate of fifty pesos
(P50) a month, minus the sum of twenty-five pesos
(P25) which was paid on account of the rent for
October, aggregate only one hundred and seventyfive pesos (P175).
The fact that, in its judgment, the lower court has
awarded the plaintiff the sum of P250, including the
rent for February, and not the P25 paid on account
by the petitioner for the month of October as alleged
in the same complaint, did not confer upon the court
jurisdiction over the case. If the court has no
jurisdiction over the subject matter according to the
allegations in the complaint, it can not acquire it just
because the rents claimed and those that may
accrue during the pendency of the suit may amount
to a sum within its jurisdiction. To hold otherwise
would lead to the absurdity that the jurisdiction of
the court depends not upon the allegations in the
complaint, but upon a contingency which may or
may not arise or occur. As the damages claimed in
the complaint amounted to one hundred and
seventy-five pesos (P175), could the lower court
have sentenced the defendant to pay the amount
claimed had the latter made a confession of
judgment?

Disposition
The respondent judge's decision in this case is set
aside; with costs against the respondent Emiliana
Tupas Vda. de Atas. So ordered.
PARAS, J., dissenting:
- The willingness of the plaintiff to let the defendant,
herein petitioner Manuel Baguioro, retain possession
of the land upon payment of the rent (which, plaintiff
alleges, should be P50) is plainly repugnant to the
theory that the principal purpose of the action is
ejectment of the defendant or, in the language of
section 1 of Rule 72, "the restitution of possession."
Upon the other hand, giving such reasonable
intendments to the allegations of the complaint as
are consistent with and implied by the relief sought,
the action may be one for the enforcement of a lease
contract implied or otherwise in which the court
is asked to fix the amount of the rent for want of
corresponding stipulation. The claim that the rent
ought to be P50, when considered with the prayer
"for such other and further relief as this Honorable
Court shall deem just and equitable," merely invokes
the discretion and judgment of the court regarding
the righteousness of said claim.
-While the complaint may be treated ;as one for
simple ejectment, in the light of some of its
averments, the circumstance nevertheless does not
prevent it from being an action its denomination
immaterial that may be filed originally in the Court
of First Instance, in view of the other allegations and
the prayer. In the latter situation, matters contained
in the pleading which are not necessary to, or are
incompatible with, the jurisdiction of the Court of
First Instance may be considered surplusage. The
complaint might have been awkwardly drafted, but
unless the defendant was actually misled to his
surprise or injury, it should be held sufficient.
(Lizarraga Hermanos vs. Yap Tico, 24 Phil., 504.) It is
needless to state that the nature of an action is
determined by its allegations and prayer. As long as
the complaint makes out a case cognizable by the
Court of First Instance, the latter's jurisdiction will not
be altered or taken away simply because the action
cannot prosper. The judgment in this case was
rendered after the defendant had been declared in
default.
HILADO, J., dissenting:
-Liberally construed, as it should be (Rule 15, section
17), the plaintiff's complaint is susceptible of two
constructions: as a complaint in ejectment, and as

one aimed at invoking the general jurisdiction of the

Court of First Instance in actions for possession of
real property, as regards the plaintiff's land under
section 56, paragraph 2, of Act No. 136. In choosing
between these two constructions in justice to the
learning and intelligence of counsel for the plaintiff, it
seems to me that the court should have had no
difficulty in concluding that he meant and intended
to resort to the latter procedure, as he should be
presumed to know such an elemental rule as that
which confers upon the municipal or justice of the
peace court exclusive original jurisdiction of forcible
entry and unlawful detainer cases within the first
year following the accrual of the cause of action.
-Even where the defendant employs, e. g., violence
in taking possession of the plaintiff's land, the law
does not compel the latter to resort to the summary
remedy y furnished by Rule 72, section 1, just as it
does not compel the plaintiff to file a criminal
complaint for any criminal offense which the
defendant may have committed with the use of such
violence. The law grants the plaintiff of remedies, as
well as a choice of courts, so long as he lays before
the court of his choice the facts calling for a proper
exercise of its jurisdiction. So that an undisputed
owner of land who, as such, is by law entitled to its
possession, and who is deprived thereof, e.. g., by
force, while entitled to the summary remedy afforded
by Rule 72, section 1, which according to said section
he may resort to, is neither compelled to bring his
case
thereunder,
alleging
the
characteristic
circumstance of violence, lodging his action in the
proper inferior court, nor forbidden to seek redress
from the proper Court of First Instance by bringing
his case under its general jurisdiction "in all civil
actions which involve . . . the possession of real
property . . .", waiving the effects of the violence
committed by the defendant as well as the summary
remedy to which such characteristic circumstance
may entitled, had simply alleging, as his cause of
action, his ownership of the land, his right to its
possession and the fact that he has been deprived of
such possession by the defendant, regardless of the
manner employed in such deprivation. The same law
which does not compel the owner to bring a criminal
action by reason of such violence does not compel
him to bring a forcible entry suit by reason thereof.
And it would be to my mind scandalous to affirm in a
government of laws that in such circumstances the
owner will be prevented from bringing his case under
the general jurisdiction of the Court of First Instance
of the province without invoking the characteristic

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circumstance of violence. Of course, in an ordinary
action commenced in the Court of First Instance, he
will not be entitled to the summary proceedings,
such as the immediate execution of the judgment,
etc., provided for in Rule 72. So long as the plaintiff
does not rely on any of the specific circumstances
characterizing the action as one of forcible entry or
unlawful detainer, it cannot be said to be within the
exclusive original jurisdiction of the municipal or
justice of the peace court, even within the first year
following the accrual of the cause of action.

CHINA BANKING CORP V MONDRAGON

INTERNATIONAL
G.R. No. 164798
PUNO; November 17, 2005
NATURE
Petition for certiorari
FACTS
- In 1994, respondent Mondragon International
Philippines, Incorporated (MIPI), entered into a Lease
Agreement with Clark Development Corporation
(Clark)to develop the 232-hectare Mimosa Leisure
Estate. They also entered into supplemental lease
agreements to develop other additional areas. Part of
the funds used for these projects was generated from
loans obtained from petitioner China Banking
Corporation (CBC). To secure these loans, MIPI
executed promissory notes in favor of CBC. In
addition, respondent Antonio U. Gonzales executed a
Surety Agreement in favor of CBC in the amount of
P100M. In 1997, the Asian financial crisis transpired.
The ensuing shock to the Philippine economy
affected MIPIs ability to pay its obligations to CBC.
- In 2000, CBC filed a complaint for a sum of money
with RTC Makati City against MIPI and Mr. Gonzales.
The certification of forum shopping was attached to
the complaint. It was to the effect that: MERCEDES E.
GERMAN, the Manager of Loans & Discounts Dept of
the China Banking Corp certified that the defendant
China Bank has not commenced any other action or
proceeding involving the same issues in the SC, CA
or before any other tribunal or agency, and that to
the best of her knowledge, no such action or
proceeding is pending, and that if a similar action or
proceeding has been filed or is pending before SC,
CA or any other tribunal or agency, she undertakes
to report that fact within five (5) days.

- In 2001, MIPI and Gonzales filed MTD on the ff.

grounds: [1] the complaint failed to comply with the
requirements set forth under SC Administrative
Circular No. 04-94 and Section 5, Rule 7 of the 1997
Rules of Civil Procedure as regards certifications
against forum shopping; and [2] there was
noncompliance with a condition precedent for the
filing of the case and/or the same failed to state a
cause of action or was premature
- RTC denied MTD and MFR of MIPI and Gonzales. CA
granted the petition for certiorari and reversed RTC.
CA ruled that CBC failed to comply with the
requirements of Section 5, Rule 7 of the 1997 Rules
of Civil Procedure as there was nothing in the records
showing that the signatory of the certification against
forum shopping was authorized by CBC. It referred to
the Corporation Code and jurisprudence which state
that corporations exercise their corporate powers
through their board of directors and no person can
bind the corporation without authority from the
latter. CA denied CBCs MFR. Hence, the present
petition.
ISSUE
WON CBCs failure to attach the requisite board
resolution making Ms. German an authorized
signatory of certifications against forum shopping
was a fatal error and cannot be rectified by
subsequent submission thereof.
HELD
NO
Ratio The Court has relaxed, under justifiable
circumstances, the rule requiring the submission of
these certifications and has applied the rule of
substantial
compliance
under
justifiable
circumstances with respect to the contents of the
certification. If the belated filing of the certification
against forum shopping for compelling reasons in
previous rulings is allowed, with more reason should
the Court sanction the timely submission of such
certification though the proof of the signatorys
authority was submitted thereafter.
Reasoning The court has used the doctrine of stare
decisis to enunciate this principle. The ff. cases were
cited as authority: Shipside Incorporated v. CA,
Ateneo De Naga University v. Manalo, and, Pascual &
Santos
Inc
v.
Tramo
Wakas
Neighborhood
Association. At the meeting of CBCs Board of
Directors, the Board, in a resolution, approved,
confirmed and ratified Ms. Germans authority.

Though the wording of the board resolution leaves

much to be desired, it remains equally susceptible of
interpretation in favor of Ms. Germans preexisting
status as an authorized signatory.
Disposition Petition is GRANTED.

CRUZ-AGANA V LAGMAN
G.R. No. 139018
CARPIO; April 11, 2005
NATURE
Petition for certiorari
FACTS
- On 18 March 1996, petitioner filed a Complaint for
annulment of title with prayer for preliminary
mandatory injunction against respondent. Petitioner
claims that as the sole heir of one Teodorico Cruz,
she is the sole owner of a lot covered by Transfer
Certificate of Title No. T-3907. Petitioner further
claims that the lot was fraudulently sold to Eugenio
Lopez, Jr. who later on transferred the lot to
respondent.
- Respondent seasonably filed its Answer with
compulsory counterclaim. Petitioner moved to
dismiss respondents counterclaim for lack of a
certificate of non-forum shopping.
- In an Order dated 11 March 1999, the trial court
denied petitioners motion to dismiss respondents
counterclaim.
The trial court reasoned that
respondents counterclaim is compulsory and
therefore excluded from the coverage of Section 5,
Rule 7 of the Rules of Court. Petitioner moved that
the trial court reconsider its Order invoking the
mandatory nature of a certificate of non-forum
shopping under Supreme Court Administrative
Circular No. 04-94. On 25 May 1999, the trial court
reversed its 11 March 1999 Order and dismissed
respondents counterclaim for lack of a certificate of
non-forum shopping.
- Respondent seasonably filed a motion for
reconsideration arguing that Administrative Circular
No. 04-94 does not apply to compulsory
counterclaims following the ruling in Santo Tomas
University Hospital v. Surla. On 4 June 1999, the
trial court again reversed itself and recalled its Order
dismissing respondents counterclaim. The trial court
ruled that the filing of a compulsory counterclaim
does not require a certificate of non-forum shopping.
ISSUE

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WON a compulsory counterclaim pleaded in an
Answer can be dismissed on the ground of a failure
to accompany it with a certificate of non-forum
shopping
HELD
NO
- Santo Tomas clarified the scope of Administrative
Circular No. 04-94 with respect to counterclaims.
The Court pointed out that this circular is intended
primarily to cover an initiatory pleading or an
incipient application of a party asserting a claim for
relief. The distinction between a compulsory and a
permissive counterclaim is vital in the application of
the circular. The Court explained:
It should not be too difficult, the foregoing
rationale of the circular aptly taken, to sustain
the view that the circular in question has not, in
fact, been contemplated to include a kind of
claim which, by its very nature as being auxiliary
to the proceedings in the suit and as deriving its
substantive and jurisdictional support therefrom,
can only be appropriately pleaded in the answer
and not remain outstanding for independent
resolution except by the court where the main
case pends. Prescinding from the foregoing, the
proviso in the second paragraph of Section 5,
Rule 8 of the 1997 Rules of Civil Procedure, i.e.,
that the violation of the anti-forum shopping rule
shall not be curable by mere amendment xxx
but shall be cause for the dismissal of the case
without prejudice, being predicated on the
applicability of the need for a certification
against forum-shopping, obviously does not
include a claim which cannot be independently
set up.
- The Court reiterated this ruling in Ponciano v. Judge
Parentela, Jr.
- Administrative Circular No. 04-94 does not apply to
compulsory counterclaims.
The circular applies to
initiatory and similar pleadings.
A compulsory
counterclaim set up in the answer is not an
initiatory or similar pleading.
The initiatory
pleading is the plaintiffs complaint. A respondent
has no choice but to raise a compulsory counterclaim
the moment the plaintiff files the complaint.
Otherwise, respondent waives the compulsory
counterclaim. In short, the compulsory counterclaim
is a reaction or response, mandatory upon pain of
waiver, to an initiatory pleading which is the
complaint.

- Petitioners counsel fails or simply refuses to accept

the distinction between a permissive counterclaim
and a compulsory counterclaim. This distinction was
the basis for the ruling in Santo Tomas and Ponciano.
The sole issue for resolution in the present case is
whether respondents counterclaim is compulsory or
permissive. If it is a permissive counterclaim, the
lack of a certificate of non-forum shopping is fatal. If
it is a compulsory counterclaim, the lack of a
certificate of non-forum shopping is immaterial.
- A compulsory counterclaim is any claim for money
or other relief, which a defending party may have
against an opposing party, which at the time of suit
arises out of, or is necessarily connected with, the
same transaction or occurrence that is the subject
matter of plaintiffs complaint.[9] It is compulsory in
the sense that it is within the jurisdiction of the court,
does not require for its adjudication the presence of
third parties over whom the court cannot acquire
jurisdiction, and will be barred in the future if not set
up in the answer to the complaint in the same case.
Any other counterclaim is permissive.
- Respondents counterclaim as set up in its answer
states:
3. That because of the unwarranted, baseless,
and unjustified acts of the plaintiff, herein
defendant has suffered and continue to suffer
actual damages in the sum of at least
P400,000,000.00 which the law, equity, and
justice require that to be paid by the plaintiff and
further to reimburse the attorneys fees of
P2,000,000.00;
- It is clear that the counterclaim set up by
respondent arises from the filing of plaintiffs
complaint. The counterclaim is so intertwined with
the main case that it is incapable of proceeding
independently. The counterclaim will require a relitigation of the same evidence if the counterclaim is
allowed to proceed in a separate action.
Even
petitioner recognizes that respondents counterclaim
is compulsory. A compulsory counterclaim does not
require a certificate of non-forum shopping because
a compulsory counterclaim is not an initiatory
pleading.
Disposition The decision petition is denied.

Re manner of making allegations

PERPETUAL SAVINGS V FAJARDO
223 SCRA 720

FELICIANO; June28,1993
FACTS:
-J.J. Mining and Exploration Corporation ("J.J. Mining")
executed and delivered to petitioner Perpetual
Savings ("Bank") a promisory note in the amount of
P750.000.00 payable in one lump sum upon maturity
with interest at 23% per annum. The note also
contained, inter alia, a clause providing for penalty
interest at the rate of 3% , nor month on the amount
due, compounded monthly. The promisory note was
executed for J.J. Mining by respondents Jose Oro B.
Fajardo and Emmanuel F. Del Mande. Messrs. Fajardo
and Del Mundo are said to be officers of J.J. Mining.
Upon maturity of the promissory note, neither J.J.
Mining nor anyone else paid the amount of the
indebtedness, notwithstanding petitioner's repeated
written demands for payment.
-petitioner Bank filed a complaint with the Regional
Trial Court, Makati, against J.J; Mining, Jose
Emmanuel Jalandoni and herein respondents Fajardo
and Del Mundo, for collection of the amounts due
under the promissory note
-Defendant's Fajardo and Del Mundo were impleaded
as agents/or representatives of Defendant
Corporation who were signatories in the Promissory
Note or alternatively, in their personal capacities if it
be shown that they contracted the loan fully knowing
that the Defendant Corporation would be unable to
pay the same upon maturity, and/or that they used
the proceeds of the loan foe their own personal
benefit
-Respondent Fajardo and Del Mundo filed a Motion to
Dismiss on the ground that the complaint had failed
to stated cause of action against them. RTC denied
motion to dismiss. Fajardo and Del Mundo raised the
case to the SC but SC referred case to CA.
Respondents Fajardo and Del Mundo, basically
alleged that petitioner Bank's complaint did not set
forth any cause of action as against them personally,
and that Section 13, Rule 3 of the Rules of Court on
alternative defendants was not applicable to the case
at bar. CA granted motion of Fajardo and Del Mundo
ISSUE
WON complaint of Perpetual Savings stated a cause
of action against respondents Fajardo and Del
Mundo, as distinguished from J.J. Mining, on whose
behalf they had purported to act.
HELD

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YES.
Reasoning. In Rava Development Corporation v.
Court of Appeals, the Court elaborated on this
established standard in the following manner:
'The rule is that a defendant moving to dismiss a
complaint on the ground of lack of cause of action is
regarded as having hypothetically admitted all the
averments thereof. The test of the sufficiency of the
facts found in a petition as constituting a cause of
action is whether or not, admitting the facts alleged,
the court can render a valid Judgment upon the same
in accordance with the prayer thereof.
- In its Decision, CA said, among other the that
petitioner Bank's complaint did not state a cause of
action against respondents Fajardo and Del Mundo in
their personal and individual capacities for the
reason that. no evidence had been presented to
support such alleged liability on the "so called
alternative cause of action."
-The SC held that the CA was in reversible error. It
was quite premature for the Court of Appeals to
consider evidence (or lack of evidence) outside the
complaint since the trial had not yet started. The
allegations made by the bank could be proven on
trial.

complaint and the attachments to the original

complaint, clearly show that a sufficient cause of
action as it is shown and stated that earnest efforts
towards a compromise have been made, according
to respondent.
-A paragraph is "a distinct section or subdivision of a
written or printed composition that consists of from
one to many sentences, forms a rhetorical unit. As a
"short composition consisting of a group of sentences
dealing with a single topic," a paragraph must
necessarily be construed in its entirety in order to
properly derive the message sought to be conveyed.
In the instant case, paragraph 9-A of the Amended
Complaint deals with the topic of efforts made by the
respondent to reach a compromise between the
parties. Hence, it is in this light that the defective
lead sentence must be understood or construed.
-Having examined the Amended Complaint in its
entirety as well as the documents attached thereto,
following the rule that documents attached to a
pleading are considered both as evidence and as
part of the pleading, we find that the respondent has
properly set out her cause of action.

Prof. Victoria A.

66

Avena

WEE V GALVEZ
(supra)
FACTS
-this is regards the sisters, one in US and one in RP
who is taking care of the son of the sister in US.
Allowance issues
ON MANNER OF MAKING ALLEGATIONS
etitioners submit that the amended complaint
violates Rule 8, Section 133 of the 1997 Rules of Civil
Procedure, as there is no plain and direct statement
of the ultimate facts on which the plaintiff relies for
her claim. Specifically, petitioners contend that the
allegation in paragraph 9-A of the amended
complaint that "Earnest efforts towards have been
made but the same have failed" is clearly
insufficient. The sentence is incomplete, thus
requires the reader of the pleading to engage in
deductions or inferences in order to get a complete
sense of the cause of action, according to petitioners.
-Respondent rebuts by stating that the amended
complaint as well as the annexes attached to the
pleadings should be taken in their entirety. Thus
taken together, in their entirety, the amended

Re Effect of Failure to Plead

CEREZO V. TUAZON
(supra)
NATURE
Petition for review on certiorari
FACTS
-Bus collided with tricycle
EFFECT OF FAILURE TO PLEAD
When a party has another remedy available to him,
which may either be a motion for new trial or appeal
from an adverse decision of the trial court, and he
was not prevented by fraud, accident, mistake or
excusable negligence from filing such motion or
taking such appeal, he cannot avail himself of this
petition. Indeed, relief will not be granted to a party
who seeks avoidance from the effects of the
judgment when the loss of the remedy at law was
due to his own negligence; otherwise the petition for
relief can be used to revive the right to appeal which
has been lost thru inexcusable negligence.
Reasoning there was no fraud, accident, mistake, or
excusable negligence that prevented Mrs. Cerezo
from filing an appeal, a motion for new trial or a

petition for certiorari. It was error for her to avail of a

petition for relief from judgment.After the SCs
resolution denying Mrs. Cerezos petition for relief
became final and executory, Mrs. Cerezo, in her last
ditch attempt to evade liability, filed before the Court
of Appeals a petition for annulment of the judgment
of the trial court. Annulment is available only on the
grounds of extrinsic fraud and lack of jurisdiction. If
based on extrinsic fraud, a party must file the
petition within four years from its discovery, and if
based on lack of jurisdiction, before laches or
estoppel bars the petition. Extrinsic fraud is not a
valid ground if such fraud was used as a ground, or
could have been used as a ground, in a motion for
new trial or petition for relief from judgment. Mrs.
Cerezo insists that lack of jurisdiction, not extrinsic
fraud, was her ground for filing the petition for
annulment of judgment. However, a party may avail
of the remedy of annulment of judgment under Rule
only if the ordinary remedies of new trial, appeal,
petition for relief from judgment, or other appropriate
remedies are no longer available through no fault of
the party. Mrs. Cerezo could have availed of a new
trial or appeal but through her own fault she
erroneously availed of the remedy of a petition for
relief, which was denied with finality. Thus, Mrs.
Cerezo may no longer avail of the remedy of
annulment.
Disposition PETITION DENIED.

SPOUSES DELOS SANTOS VS RTC

(HON. EMMANUEL C. CARPIO)
G.R. NO. 153696
AUSTRIA-MARTINEZ: September 11,
2006
NATURE:
Petition for review on certiorari under Rule 45 of the
Rules of Court
FACTS:
On January 3, 2001, Metropolitan Bank and
Trust Company (or "Metrobank") filed a
complaint for sum of money against
spouses Humberto and Carmencita delos
Santos (or "petitioners") before the Regional
Trial Court of Davao City.
On January 22, 2001, petitioners were
served with the summons, together with a

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copy of the complaint. As petitioners failed

to file an answer within the reglementary
period, Metrobank, on February 8, 2001,
filed a motion to declare them in default.
The motion was set for hearing on February
16, 2001.
Acting on the motion, the lower court,
presided over by Hon. Emmanuel C. Carpio
(or "respondent judge"), issued an order
dated
February
12,
2001
declaring
petitioners in default and setting the exparte presentation of Metrobank?s evidence
on March 7, 2001.
On February 15, 2001, petitioners filed an
opposition to Metrobanks motion to declare
them in default, claiming that upon receipt
of the summons, they immediately sought
the services of Atty. Philip Pantojan but it
was only on February 12, 2001 that they
were able to meet with Atty. Pantojan.
Petitioners alleged that not being "learned
in law", they were unaware "of the
consequences of delay in the filing of their
answer."
On the same date, February 15, 2001,
petitioners filed a motion to admit answer,
as well as the answer. In an order dated
February 16, 2001, respondent judge
disregarded
petitioners
opposition
to
Metrobanks motion for default
On February 19, 2001, Metrobank filed an
opposition to petitioners motion to admit
answer, arguing that said motion was
rendered moot and academic by the
February 12, 2001 order. Metrobank also
chided petitioners for violating the threeday notice rule under Sec. 4, Rule 15 of the
1997 Rules of Civil Procedure. In an order
dated February 20, 2001, the motion to
admit answer was denied.
On February 27, 2001, petitioners filed a
motion to lift the order of default;
Metrobank opposed the motion.
On March 2, 2001, respondent judge issued
an order holding in abeyance the ex-parte
reception of evidence pending resolution of
petitioners motion to lift the order of
default.
On March 5, 2001, respondent judge issued
an order denying petitioners motion to lift
the order of default and setting the
reception of Metrobanks evidence on March

7, 2001, as previously scheduled. On that

date (March 7, 2001), Metrobank presented
its evidence and the case was submitted for
decision.
Petitioners
moved
for
reconsideration of the March 5, 2001 order
but their motion was denied.
Petitioners filed a Petition for Certiorari with
the CA ascribing grave abuse of discretion
committed by the trial court amounting to
lack of jurisdiction in issuing the Orders,
declaring them in default and denying their
Opposition to Metropolitan Bank and Trust
Companys (Metrobank) Motion to Declare
them in Default; and the Orders denying
their Motion to Lift the Order of Default and
their Motion for Reconsideration.
CA denied the petition for lack of merit and
accordingly dismissed the same. The CA did
not find the excuse proffered by petitioners.
It also ruled that for an order of default to
be set aside, petitioners must have a
meritorious defense or that something could
be gained by having the order of default set
aside
The CA further found unmeritorious the
contention of petitioners that they were
declared in default without giving them
ample time to file an opposition to
Metrobanks Motion to Declare them in
Default; that under Section 3, Rule 9 of the
Rules of Court, it is provided that the court
shall, upon motion of the claiming party with
notice to the defending party in default, and
proof of such failure, declare the defending
party in default; and that since it is clear
from the records that the reglementary
period for filing an answer had expired with
no responsive pleading filed by petitioners,
the trial court had properly declared them in
default. The CA further declared that even
assuming that the trial court committed a
procedural lapse in declaring petitioners in
default before the scheduled hearing of
Metrobanks motion, such error is not so
serious as to constitute grave abuse of
discretion.

ISSUE:
1. WON LITIS PENDENTIA raised by petitioners as an
affirmative defense is a meritorious defense.
HELD:

1. YES
ReasoningSection 3, Rule 9 of the Rules of Court
provides:
Sec. 3. Default; declaration of If the defending party
fails to answer within the time allowed therefor, the
court shall, upon motion of the claiming party with
notice to the defending party, and proof of such
failure, declare the defending party in default.
Thereupon, the court shall proceed to render
judgment granting the claimant such relief as his
pleading may warrant, unless the court in its
discretion requires the claimant to submit evidence.
Such reception of evidence may be delegated to the
clerk of court.
Clearly, there are three requirements which
must be complied with by the claiming party
before the court may declare the defending
party in default, to wit: (1) the claiming
party must file a motion asking the court to
declare the defending party in default; (2)
the defending party must be notified of the
motion to declare him in default; (3) the
claiming party must prove that the
defending party has failed to answer within
the period provided by the Rule.
In filing motions, Section 4, Rule 15 of the
Rules of Court, specifically provides:
Sec. 4. Hearing of motion. Except for motions which
the court may act upon without prejudicing the rights
of the adverse party, every written motion shall be
set for hearing by the applicant.
Prior to the present rule on default
introduced by the 1997 Rules of Civil
Procedure, as amended, Section 1 of the
former Rule 18 on default is silent on
whether or not there is need for a notice of
a motion to declare defendant in default.
The Court then ruled that there is no need.
However, the present rule expressly
requires that the motion of the claiming
party should be with notice to the defending
party. The purpose of a notice of a motion is
to avoid surprises on the opposite party and
to give him time to study and meet the
arguments. The notice of a motion is
required when the party has the right to
resist the relief sought by the motion and
principles of natural justice demand that his
right be not affected without an opportunity
to be heard.
Therefore, as the present rule on default
requires the filing of a motion and notice of

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such motion to the defending party, it is not
enough that the defendant failed to answer
the complaint within the reglementary
period to be a sufficient ground for
declaration in default.
Disposition. Petition for review is GRANTED. The
Decision of the Court of Appealsis REVERSED and
SET ASIDE. The Order of Default of the Regional
Trial Court is SET ASIDE and the Answer filed by
petitioners is deemed ADMITTED. The trial court is
DIRECTED to continue with deliberate speed with
the proceedings in the case below.

SPOUSES DELOS SANTOS VS RTC (HON.

EMMANUEL C. CARPIO)
G.R. NO. 153696
AUSTRIA-MARTINEZ: September 11, 2006
NATURE:
Petition for review on certiorari under Rule 45 of the
Rules of Court
FACTS:
On January 3, 2001, Metropolitan Bank and
Trust Company (or "Metrobank") filed a
complaint for sum of money against
spouses Humberto and Carmencita delos
Santos (or "petitioners") before the Regional
Trial Court of Davao City.
On January 22, 2001, petitioners were
served with the summons, together with a
copy of the complaint. As petitioners failed
to file an answer within the reglementary
period, Metrobank, on February 8, 2001,
filed a motion to declare them in default.
The motion was set for hearing on February
16, 2001.
Acting on the motion, the lower court,
presided over by Hon. Emmanuel C. Carpio
(or "respondent judge"), issued an order
dated
February
12,
2001
declaring
petitioners in default and setting the exparte presentation of Metrobank?s evidence
on March 7, 2001.
On February 15, 2001, petitioners filed an
opposition to Metrobanks motion to declare
them in default, claiming that upon receipt
of the summons, they immediately sought
the services of Atty. Philip Pantojan but it
was only on February 12, 2001 that they

were able to meet with Atty. Pantojan.

Petitioners alleged that not being "learned
in law", they were unaware "of the
consequences of delay in the filing of their
answer."
On the same date, February 15, 2001,
petitioners filed a motion to admit answer,
as well as the answer. In an order dated
February 16, 2001, respondent judge
disregarded
petitioners
opposition
to
Metrobanks motion for default
On February 19, 2001, Metrobank filed an
opposition to petitioners motion to admit
answer, arguing that said motion was
rendered moot and academic by the
February 12, 2001 order. Metrobank also
chided petitioners for violating the threeday notice rule under Sec. 4, Rule 15 of the
1997 Rules of Civil Procedure. In an order
dated February 20, 2001, the motion to
admit answer was denied.
On February 27, 2001, petitioners filed a
motion to lift the order of default;
Metrobank opposed the motion.
On March 2, 2001, respondent judge issued
an order holding in abeyance the ex-parte
reception of evidence pending resolution of
petitioners motion to lift the order of
default.
On March 5, 2001, respondent judge issued
an order denying petitioners motion to lift
the order of default and setting the
reception of Metrobanks evidence on March
7, 2001, as previously scheduled. On that
date (March 7, 2001), Metrobank presented
its evidence and the case was submitted for
decision.
Petitioners
moved
for
reconsideration of the March 5, 2001 order
but their motion was denied.
Petitioners filed a Petition for Certiorari with
the CA ascribing grave abuse of discretion
committed by the trial court amounting to
lack of jurisdiction in issuing the Orders,
declaring them in default and denying their
Opposition to Metropolitan Bank and Trust
Companys (Metrobank) Motion to Declare
them in Default; and the Orders denying
their Motion to Lift the Order of Default and
their Motion for Reconsideration.
CA denied the petition for lack of merit and
accordingly dismissed the same. The CA did
not find the excuse proffered by petitioners.

It also ruled that for an order of default to

be set aside, petitioners must have a
meritorious defense or that something could
be gained by having the order of default set
aside
The CA further found unmeritorious the
contention of petitioners that they were
declared in default without giving them
ample time to file an opposition to
Metrobanks Motion to Declare them in
Default; that under Section 3, Rule 9 of the
Rules of Court, it is provided that the court
shall, upon motion of the claiming party with
notice to the defending party in default, and
proof of such failure, declare the defending
party in default; and that since it is clear
from the records that the reglementary
period for filing an answer had expired with
no responsive pleading filed by petitioners,
the trial court had properly declared them in
default. The CA further declared that even
assuming that the trial court committed a
procedural lapse in declaring petitioners in
default before the scheduled hearing of
Metrobanks motion, such error is not so
serious as to constitute grave abuse of
discretion.

ISSUE:
1. WON LITIS PENDENTIA raised by petitioners as an
affirmative defense is a meritorious defense.
HELD:
1. YES
ReasoningSection 3, Rule 9 of the Rules of Court
provides:
Sec. 3. Default; declaration of If the defending party
fails to answer within the time allowed therefor, the
court shall, upon motion of the claiming party with
notice to the defending party, and proof of such
failure, declare the defending party in default.
Thereupon, the court shall proceed to render
judgment granting the claimant such relief as his
pleading may warrant, unless the court in its
discretion requires the claimant to submit evidence.
Such reception of evidence may be delegated to the
clerk of court.
Clearly, there are three requirements which
must be complied with by the claiming party
before the court may declare the defending
party in default, to wit: (1) the claiming
party must file a motion asking the court to

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declare the defending party in default; (2)
the defending party must be notified of the
motion to declare him in default; (3) the
claiming party must prove that the
defending party has failed to answer within
the period provided by the Rule.
In filing motions, Section 4, Rule 15 of the
Rules of Court, specifically provides:
Sec. 4. Hearing of motion. Except for motions which
the court may act upon without prejudicing the rights
of the adverse party, every written motion shall be
set for hearing by the applicant.
Prior to the present rule on default
introduced by the 1997 Rules of Civil
Procedure, as amended, Section 1 of the
former Rule 18 on default is silent on
whether or not there is need for a notice of
a motion to declare defendant in default.
The Court then ruled that there is no need.
However, the present rule expressly
requires that the motion of the claiming
party should be with notice to the defending
party. The purpose of a notice of a motion is
to avoid surprises on the opposite party and
to give him time to study and meet the
arguments. The notice of a motion is
required when the party has the right to
resist the relief sought by the motion and
principles of natural justice demand that his
right be not affected without an opportunity
to be heard.
Therefore, as the present rule on default
requires the filing of a motion and notice of
such motion to the defending party, it is not
enough that the defendant failed to answer
the complaint within the reglementary
period to be a sufficient ground for
declaration in default.
Disposition. Petition for review is GRANTED. The
Decision of the Court of Appealsis REVERSED and
SET ASIDE. The Order of Default of the Regional
Trial Court is SET ASIDE and the Answer filed by
petitioners is deemed ADMITTED. The trial court is
DIRECTED to continue with deliberate speed with
the proceedings in the case below.

HOLLYWOOD FAR EAST

PRODUCTIONS, INC., and
VALENZUELA
27 SCRA 1276
REYES, J.B.L.; April 30, 1969
NATURE
Petition for a writ of certiorari to set aside certain
orders of the CFI dismissing a complaint for breach of
contract and damages, denying reconsideration,
refusing to admit an amended complaint, and
declaring the dismissal final and unappealable.
FACTS
- Petitioner, actress Dauden-Hernaez, files a
complaint to recover P14,700 (the balance allegedly
due to her for her services as leading actress), plus
damages, against private respondents Hollywood Far
East Productions (HFEP) and its President Valenzuela
- Upon motion of defendants, respondent court
dismissed the complaint because claim of plaintiff
was not evidenced by any written document, either
public or private, and the complaint was Defective
on its face for violating CC A 1356 and 135811, as
well as for containing defective allege, petitions.
- Plaintiff sought reconsideration of the dismissal,
and for admission of an amended complaint,
attached to the motion
11 Article 1356. Contracts shall be obligatory, in whatever form they may have been entered

into, provided all the essential requisites for their validity are present. However, when the
law requires that a contract be in some form in order that it may be valid or enforceable, or
that a contract be proved in a certain way, that requirement is absolute and indispensable.
In such cases, the right of the parties stated in the following article cannot be exercised.

Article 1358. The following must appear in a public document: (1) Acts and contracts which
have for their object the creation, transmission, modification or extinguishment of real rights
over immovable property; sales of real property or of an interest therein are governed by
articles 1403, No. 2, and 1405; (2) The cession, repudiation or renunciation of hereditary
rights or of those of the conjugal partnership of gains; (3) The power to administer property,
or any other power which has for its object an act appearing or which should appear in a
public document, or should prejudice a third person; (4) The cession of actions or rights
proceeding from an act appearing in a public document.

All other contracts where the amount involved exceeds five hundred pesos must appear in
writing, even a private one. But sales of goods, chattels or things in action are governed by

STRIKING OUT PLEADINGS

DAUDEN-HERNAEZ V ANGELES,

articles, 1403, No. 2 and 1405. (1280a)

- court denied the reconsideration and the leave to

amend.
- a second reconsideration was filed
- court denied it as its allegations were more or less
the same as the first motion, and not accompanied
by an affidavit of merits. The court further declared
the dismissal final and unappealable.
- hence this petition
- the respondent courts defense: The proposed
amendment suffers from the same vital defect of the
original complaint, which is violation of A 1356
because the contract sued upon was not alleged to
be in writing, and A 1358 in because the writing was
absolute and indispensable because the amount
exceeds P500; and that the second motion for
reconsideration did not interrupt the period for
appeal because it was not served on 3 days notice.
ISSUES
1. WON the plaintiff-petitioner was entitled as of right
to amend the original dismissed complaint
2. WON xxx
HELD
1.YES
Reasoning Twhen a court sustains a demurrer or
motion to dismiss, the court must give the party
plaintiff an opportunity to amend his complaint if he
so chooses. The first order of dismissal did not
provide that the same was without prejudice to
amendment of the complaint, or reserve to the
plaintiff the right to amend his complaint, so the
order was erroneous.
Hence, petitioner was within her rights in filing her
so-called second motion for reconsideration, which
was actually a first motion against the refusal to
admit the amended complaint.
Also, since a motion to dismiss is not a responsive
pleading, the plaintiff-petitioner was entitled as of
right to amend the original dismissed complaint.
Paeste v Jaurigue:
Amendments to pleadings are favored and
should be liberally allowed in the furtherance of
justice. (Torres vs. Tomacruz, 49 Phil. 913).
Moreover, under section 1 of Rule 17, Rules of Court,
a party may amend his pleading once as a matter of
course, that is, without leave of court, at any time
before a responsive pleading is served. A motion to
dismiss is not a "responsive pleading". (Moran on the
Rules of Court, vol. 1, 1952, ed., p. 376). As plaintiffs

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amended their complaint before it was answered, the
motion to admit the amendment should not have
been denied.
Disposition The order dismissing the complaint is
set aside, and the case is ordered remanded to the
court of origin for further proceedings not at variance
with this decision.

PHILIPPINE EXPORT vs. PHILIPPINE

INFRASTRUCTURES, INC.
G.R. No. 120384
AUSTRIA-MARTINEZ; January 13, 2004
NATURE: Petition for review on certiorari (Rule 45)
FACTS: Petitioner filed a complaint for collection of
sum of money against respondents Philippine
Infrastructures, Inc. (PII), Philippine British Assurance
Co., Inc. (PBAC), The Solid Guaranty, Inc. (Solid), B.F.
Homes, Inc. (BF Homes), Pilar Development
Corporation (PDC) and Tomas B. Aguirre (Aguirre).
The complaint alleged, among others, that: (i)
petitioner issued 5 Letters of Guarantee in favor of
the Philippine National Bank (PNB) as security for
credit accommodations extended by PNB to PII; (ii)
PII, BF Homes, PDC and Aguirre executed a Deed of
Undertaking
binding
themselves,
jointly
and
severally, to pay or reimburse petitioner upon
demand such amount of money or to repair the
damages, losses or penalties which petitioner may
pay or suffer on account of its guarantees; (iii) on
April 24, 1985, PNB called on the guarantees of
petitioner; (iv) thereafter, petitioner demanded from
PII the immediate settlement of P20,959,529.36,
representing the aggregate amount of the
guarantees of petitioner called by PNB and the
further sum of P351,517.57 representing various fees
and charges; (v) PII refused to settle said obligations;
(vi) respondents Solid and PBAC also refused to pay
petitioner despite demand.
Respondent BF Homes filed a Motion to
Dismiss on the ground that it is undergoing
rehabilitation receivership in the SEC and pursuant to
P.D. 902-A, the trial court has no jurisdiction to try
the case. Respondent PII also filed a Motion to
Dismiss on the ground that the complaint states no
cause of action. The other respondents filed their
respective responsive pleadings.
The trial court, through Judge Roberto M.
Lagman, issued an Order suspending the case only

as against respondent BF Homes and denying

respondent PII's motion to dismiss. Thereafter,
hearing on the merits ensued.
During trial, petitioner presented Rosauro
Termulo, its treasury department manager, who
testified that the amount of P19,035,256.57 was paid
by petitioner to the PNB through the account of the
National Treasury to cover the principal loan and
interests incurred by PII. Consequently, petitioner
filed a Motion to Amend Complaint to Conform to
Evidence pursuant to Section 5, Rule 10 of the
Revised Rules of Court, seeking to amend the
pertinent portions of the complaint insofar as it refers
to the fact of payment and the amount paid by
petitioner to PNB.
Acting on the motion to amend, the trial
court, at that time presided by Judge Joselito J. Dela
Rosa, issued the assailed Order, dismissing the case
without prejudice on the ground of failure of the
complaint to state a cause of action, thus in effect,
reversing the Order issued by Judge Lagman five
years earlier. Petitioner's motion for reconsideration
of the order of dismissal was denied by Judge de la
Rosa. Subsequently, petitioner filed with the
Supreme Court a petition for certiorari against the
trial court. The SC issued referred the case to the
Court of Appeals for disposition. The Court of Appeals
dismissed the petition and denied petitioners motion
for reconsideration. Hence, this petition.
ISSUES: (1) WON an order dismissing a petition
without prejudice should be appealed by way of
ordinary appeal; (2) WON the Court of Appeals erred
in affirming the dismissal of the complaint on the
ground that petitioner failed to state a cause of
action for not alleging loss or actual payment made
by it to PNB under its guarantees; (3) WON the
complaint stated a cause of action.
HELD:
(1) NO (under the 1997 Rules of Civil Procedure).
Prior to the 1997 Rules of Civil Procedure, an order
dismissing an action may be appealed by ordinary
appeal. However, under Section 1(h), Rule 41 of the
1997 Rules of Civil Procedure, no appeal may be
taken from an order dismissing an action without
prejudice. It may be subject of a special civil action
for certiorari under Rule 65 of the 1997 Rules of Civil
Procedure. Considering that the assailed decision of
the Court of Appeals was promulgated in 1994,
respondent appellate court could not have

committed any grave abuse of discretion in

dismissing CA-G.R. SP No. 31483. Nevertheless, in
the higher interest of substantial justice and
pursuant to the hornbook doctrine that
procedural laws may be applied retroactively,
16 the Court gives due course to the present
petition.
(2) YES. It should be stressed that the amendment of
the complaint was sought after petitioner had
already presented evidence, more specifically, the
testimony of petitioner's Treasury Department
Manager and a debit memo from the PNB proving
that petitioner had paid the PNB in the amount of
P19,035,256.57 pursuant to the guarantees it
accorded to respondent PII.
The record shows that respondents did not raise any
objection when it presented evidence to prove
payment to PNB. Hence, as provided for in Section 5,
Rule 10 of the Revised Rules of Court, when issues
not raised by the pleadings are tried by express or
implied consent of the parties, they shall be treated
in all respects, as if they had been raised in the
pleadings. A scrutiny of the pleadings filed by
respondents reveal that none of them denied
petitioner's claim that said evidence was presented
before the trial court without objections having been
raised by respondents. None of them claimed that
they raised any objections at the time when
petitioner presented its evidence to prove its
payment to PNB. Respondents Pilar and Aguirre
admitted the presentation of the said evidence.
Respondents contend that since they had already
alleged the failure of the complaint to state a cause
of action as an affirmative defense in their answer,
there was no further need for them to raise an
objection at the time the evidence was introduced.
This is not plausible. It is settled that even if the
complaint be defective, but the parties go to
trial thereon, and the plaintiff, without
objection, introduces sufficient evidence to
constitute the particular cause of action which
it intended to allege in the original complaint,
and the defendant voluntarily produces
witnesses to meet the cause of action thus
established, an issue is joined as fully and as
effectively as if it had been previously joined
by the most perfect pleadings. Likewise, when issues
not raised by the pleadings are tried by express or
implied consent of the parties, they shall be treated

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in all respects as if they had been raised in the

pleadings.

had been validly and duly staked and located by the

plaintiff or its grantors and predecessors in interest.
- On November 23, 1935, the defendants demurred
to the complaint on the ground that the complaint
was ambiguous and unintelligible. On January 9,
1936 the CFI entered an order requiring Surigao
Mining to amend its complaint so as to contain a
detailed description of its placer claims.
- On January 13, 1936 an amended complaint was
filed to which another demurrer was interposed but
was overruled. On June 11, 1936, a third amended
complaint in which thirty-two other individuals were
included as parties-defendant. In this third amended
complaint the placer claims were reduced, to eleven,
and the relief prayed for was about the same as that
asked in the original complaint, although the amount
sought as damages was increased to P49,000.
- Exhibits O and O-1 to 0-9 were presented. With the
exception of Exhibit O-7, all are deeds of sale in favor
of Surigao Mining covering the placer claims and
bear dates posterior to (AFTER) October 24, 1935,
the date of the filing of the original complaint. Exhibit
O-7 is a deed of sale executed by Pablo Atillo in favor
of Maximo Borromeo on January 23, 1935. The
mining claims conveyed by Maximo Borromeo, to
Surigao Mining under Exhibit O-9 were the same
claims acquired by Maximo Borromeo, under Exhibit
O-7.
- Before Surigao Mining could close its evidence, the
defendants moved for the dismissal of the complaint
on the ground that, when the action was
commenced, plaintiff's right of action had not yet
accrued, since the plaintiff did not become the owner
of the claims until after the original complaint was
filed on October 24, 1935. The CFI granted the MTD.

Prof. Victoria A.

71

Avena
Respondents' failure to object to the evidence at the
time it is presented in court is fatal to their cause
inasmuch as whatever perceived defect the
complaint had was cured by the introduction of
petitioner's evidence proving actual loss sustained by
petitioner due to payment made by it to PNB.
(3) YES. Petitioner's cause of action against
respondents stemmed from the obligation of
respondents under their Deed of Undertaking, a copy
of which was attached to the complaint. In the
present petition, petitioner had become liable to pay
the amounts covered by said guarantees when, as
the original complaint alleges, the PNB called upon
said guarantees. Respondents' obligation under the
Deed of Undertaking to keep petitioner free and
harmless from any damage or liability then became
operative as soon as the liability of petitioner arose
and there was no need for petitioner to first sustain
actual loss before it could have a cause of action
against respondents. The mere inclusion in
petitioner's original complaint of the allegation that
the PNB had already called on the guarantees of
petitioner is sufficient to constitute a cause of action
against respondents. Clearly therefore, the original
complaint, by itself, stated a valid cause of action.
DISPOSITIVE: The petition is GRANTED. Let the
original records of Civil Case No. 86-38169 be
REMANDED to the Regional Trial Court (Branch 29),
Manila, for continuation of the trial on the merits.

SURIGAO MINING V HARRIS

68 PHIL 113
LAUREL; May 17, 1939
NATURE
Appeal from the order of the CFI of Surigao
dismissing the complaint filed by Surigao Mining
against Harris, et al.
FACTS
- On October 24, 1935, Surigao Mining filed a
complaint claiming that it is the owner by purchase
of 14 placer claims and that lode claims were staked
by the defendants Harris, Surigao-Mainit Mining
Syndicate. Surigao Consolidated Mining Co., Inc., and
Otto Weber on plaintiff's placer claims after the latter

ISSUE
1. WON the lower court erred in dismissing the
complaint
HELD
1. NO.
Ratio Unless the plaintiff has a valid and subsisting
cause of action at the time his action is commenced,
the defect cannot be cured or remedied by the
acquisition or accrual of one while the action is
pending, and a supplemental complaint or an
amendment setting up such later accrued cause of
action is not permissible.
Reasoning Subject to certain qualifications and
except as otherwise provided by law, an action
commenced before the cause of action has accrued

is prematurely brought and should be dismissed,

provided, an objection on this ground is properly and
seasonably interposed. The fact that the cause of
action accrues after the action is commenced and
while it is pending is of no moment.
- In this case, timely objection was made by counsel
for the appellees upon discovery of the immaturity of
the action. The date when a civil action is deemed
commenced is determined by section 389 of the
Code of Civil Procedure. Under section 389, which
was taken from section 405 of the Code of Civil
Procedure of California, the action is deemed
commenced upon the "filing of a complaint in the
office of the clerk of the court in which the action is
to be instituted." The original complaint was filed on
October 24, 1935.
- The right to amend a pleading is not an absolute
and unconditional right. It is to be allowed in
furtherance of justice under a sound judicial
discretion. This judicial discretion, upon the other
hand, is of course not without any restriction. The
cause of action must exist at the time the action was
begun, and the plaintiff will not be allowed by an
amendment to introduce a cause of action which had
no existence when the action was commenced. As
soon as an action is brought and the complaint is
filed, the proceedings thus initiated are not subject to
the arbitrary control of the parties or of the court, but
must be dealt with in accordance with recognized
rules of pleading and practice. Amendments must be
such, and only such, as are necessary to promote the
completion of the action begun.
- It is true, that an amended complaint and the
answer thereto take the place of the originals which
are thereby regarded as abandoned. That, however,
which is no cause of action whatsoever cannot by
amendment or supplemental pleading be converted
into a cause of action: Nihil do re accrescit ei qui nihil
in re quando jua accresceret habet.
Disposition Order appealed from is AFFIRMED.

Filing/
Service
of
pleadings,
judgments and other papers
BAUTISTA V MAYA-MAYA COTTAGES
INC
G.R. No. 148361
SANDOVAL-GUTIERREZ; Nov. 29, 2005
NATURE

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Petition for review on certiorari assailing decision and
resolution of the CA
FACTS
- Spouses Bautista are the registered owners of a lot
in Batangas.
- MMCI. filed with the RTC a complaint for
cancellation of petitioners title and damages, with
application for a preliminary injunction, alleging that
without any color of right and through dubious
means, petitioners were able to obtain original title
in their names.
- Spouses filed a motion to dismiss on the ground
that it does not state a cause of action. They averred
that respondent is a private corporation, hence,
disqualified under the Constitution from acquiring
public alienable lands except by lease, and cannot
be
considered
a
real
party
in
interest.
- RTC granted motion to dismiss.
- MMCI filed a motion for reconsideration with motion
for leave to file an amended complaint for quieting of
title.
Respondent alleged that the technical
description in petitioners title does not cover the
disputed
lot.
- Spouses filed their opposition, contending that the
amended complaint does not also state a cause of
action and if admitted, respondents theory of the
case is substantially modified.
- RTC issued an Order denying petitioners motion to
dismiss.
- Petitioners filed with the CA a special civil action for
certiorari and prohibition, alleging that the amended
complaint does not cure the defect in the original
complaint which does not state a cause of action.
- CA dismissed the petition for certiorari and
prohibition.
Petitioners
filed
a
motion
for
reconsideration but it was denied.
ISSUE
WON the CA erred in holding that the trial court did
not commit grave abuse of discretion amounting to
lack or excess of jurisdiction in admitting
respondents amended complaint
HELD
NO
- Section 2, Rule 10 of the 1997 Rules of Civil
Procedure12 shows that before the filing of any
12 SEC. 2. Amendments as a matter of right. A party may amend his pleading once as a
matter of right at any time before a responsive pleading is served or, in the case of a reply,

responsive pleading, a party has the absolute

right to amend his pleading, regardless of whether a
new cause of action or change in theory is
introduced.
- Petitioners had not yet filed a responsive pleading
to the original complaint. What they filed was a
motion to dismiss, which is not a responsive pleading
as contemplated by the Rule. Thus respondent, as a
plaintiff, may file an amended complaint even after
the original complaint was ordered dismissed,
provided that the order of dismissal is not yet final,
as in this case.
- As to petitioners contention that MMCI is barred
from acquiring the subject lot, suffice it to say that
this is a matter of defense which can only be
properly determined during the full-blown trial of the
instant case.
Dispositive Petition DENIED. CA decision affirmed in
toto.

GCP-MANNY TRANSPORT SERVICES

INC. V. PRINCIPE
GR No. 141484
AUSTRIA-MARTINEZ; Nov 11, 2005
NATURE
Petition for review on certiorari
FACTS
- This petition is filed by GCP, seeking reversal of CA
decision.
- The case started when Recolizado filed complaint
for damages for physical injuries sustained by him as
passenger of GCPs bus. RTC rendered decision in
favor of Recolizado.
- Copy of decision sent to petitioner was returned
because it had moved (residence), while copy sent
to Atty. Aquino, then petitioners counsel, was
returned unserved being unclaimed. Petitioner
states that copy of decision was personally delivered
by Civil Docket Clerk of TC on Atty. Aquino who
refused to receive the same saying he was no longer
counsel for petitioner, although no notice of
withdrawal as counsel was filed by him.
- Private respondent filed a motion for execution of
the judgment, copy furnished to Atty. Arnold M.
Aquino and petitioner which the court granted. Writ
at any time within ten (10) days after it is served.

of execution was issued, which petitioner received.

- Atty. Jose de Luna entered his appearance as new
counsel for the petitioner with motion for
reconsideration of the order granting the motion for
execution or the quashal of the writ of execution on
the ground that petitioner had not been duly notified.
Petitioner received a Notice of Demand for
Payment from the deputies of the Ex-officio Sheriff of
the RTC attaching thereto copies of the writ of
execution and the decision. petitioner filed a Notice
of Appeal. 2 mos later, respondent court issued
assailed resolution denying petitioners motion for
reconsideration or to quash writ of execution.
- Petitioner went to CA on petition for certiorari. CA
found no abuse of discretion and dismissed the
petition. Reconsideration was also denied. Hence,
the present petition for review on certiorari.
- Petitioner argues that: when a copy of the decision
which the court sent to Atty. Aquino was returned to
sender, respondent Judge resorted in causing the
service of the decision to said counsel in open court,
as petitioners counsel on record, when said lawyer
appeared in the sala of respondent Judge for another
case; petitioner should be deemed as having no
notice of the trial court decision since its counsel,
who had not withdrawn as such, refused to receive a
copy of the same. What the civil docket clerk of the
trial court should have done was to resort to
substituted service.
- Respondent in his Comment contends that since
Atty. Aquino is counsel of petitioner and there is
nothing to show that he withdrew as counsel of
petitioner, the copy of the decision mailed to him by
registered mail although returned unserved is
sufficient to serve as notice to him and to his client
following Sec. 5 of Rule 13 of RoC; it was the duty of
petitioner to notify the court that Atty. Aquino was no
longer its lawyer; if a lawyer is going to withdraw as
counsel for his client, he should file a motion to
withdraw as such with the conformity of the client.
ISSUE/S
WON CA decision should be reversed
HELD
NO
- Clients are bound by the actions of their counsel in
the conduct of their case. If it were otherwise, and a
lawyers mistake or negligence was admitted as a
reason for the opening of a case, there would be no
end to litigation so long as counsel had not been
sufficiently diligent or experienced.
The only

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exception to the general rule is when the counsels
actuations are gross or palpable, resulting in serious
injustice to client. In this case, while Atty. Aquino,
counsel of petitioner, was far from being vigilant in
protecting the interest of his client, his infractions
cannot be said to have deprived petitioner of due
process.
- Petitioner was able to actively participate in the
proceedings a quo. While it may have lost its right to
appeal, it was not denied its day in court. Right to
appeal is not a natural right or a part of due process
but only a statutory privilege and may be exercised
only in the manner and in accordance with the
provisions of law.
When petitioner is at fault or not entirely
blameless, there is no reason to overturn well-settled
jurisprudence.
- Petitioner was wanting in all these areas. Not only
did it fail to regularly check on the status of the case,
it also failed to ensure that it could be notified of the
decision as soon as it was promulgated. Petitioner
did not inform the court that it has severed its
relationship with Atty. Aquino. Neither did it hire a
new lawyer soon after Atty. Aquino allegedly ceased
to be its counsel.
- That Atty. Aquino refused to receive a copy of the
decision and no substituted service was effected
does not erase the fact that a copy of the trial court
decision had earlier been sent by registered mail to
Atty. Aquino This is sufficient service of the decision
on petitioner since service upon counsel of record at
his given address is service to petitioner.
- In cases where service was made on the counsel of
record at his given address, notice sent to petitioner
itself is not even necessary. Even then, in the
present case, the trial court had sent a copy of the
decision to petitioners known address.
Obiter
Court reiterates the distinction between petition for
review on certiorari under Rule 45 and petition for
certiorari under Rule 65. It should be recalled that a
petition under Rule 45 brings up for review errors of
judgment while a petition under Rule 65 concerns
errors of jurisdiction or grave abuse of discretion
amounting to lack or excess of jurisdiction. Grave
abuse of discretion is not an allowable ground under
Rule 45. However, a petition for review on certiorari
under Rule 45 may be considered as a petition for
certiorari under Rule 65 where it is alleged that the
respondents abused their discretion.

Disposition Petition is dismissed.

COMPUTATION OF TIME
SPS. CONRADO and MA. CORONA
ROMERO vs. CA, SATURNINO S.
ORDEN
G.R. No. 142406
AUSTRIA-MARTINEZ; May 16, 2005
NATURE
Petition for certiorari filed [R65]
FACTS
- Ma. Corona Romero and her siblings executed a
letter-contract to sell with private respondent
Saturnino Orden.
- In said contract, Orden proposed to purchase from
Romero and her siblings a property located at
Denver cor. New York Sts., Cubao, QC for the total
amount of P17M.
- The contract stipulated that private respondent
shall pay petitioner the amount of P7M upon the
execution of the deed of absolute sale, the balance
of P10M not later than December 19, 1996 and that
Orden shall shoulder the expenses to evict the
squatters on the property.
- When Orden failed to pay the down payment,
petitioner Corona told him that she was rescinding
the contract to sell.
- Orden then filed a complaint for specific
performance and damages against petitioners before
the QC RTC alleging that he has complied with his
obligation to evict the squatters on the property and
is entitled to demand from petitioners the
performance of their obligation under the contract.
- Simultaneous with the filing of the complaint, Orden
caused the annotation of a notice of lis pendens on
the TCT.
- August 11, 1997, Manuel Y. Limsico, Jr. and Aloysius
R. Santos, subsequent buyers of the subject property
sold by Corona and her siblings, filed a motion for
leave to intervene with the RTC and were admitted
as defendants-intervenors. - They filed a motion for
the cancellation of lis pendens which the RTC
granted in its Resolution saying that the evidence
presented by Orden does not bear out the main
allegations in the complaint and that he does not
have any actionable right over the subject property
there being no deed of sale executed between him

and the defendants over the subject real properties

as offered in the alleged agreement.
- RTC: denied Ordens MR.
- Nov. 16, 1998, Orden filed a petition for certiorari
before the CA seeking the nullification of the
resolutions of the RTC and asked for the reannotation of the notice of lis pendens on the TCT.
- The CA granted the petition on 4 grounds: First,
they said that the general rule is a notice of lis
pendens cannot be cancelled while the action is
pending and undetermined except in cases expressly
provided by statute. Second, CA cited Sec.77 of PD
1529-Property Registration Decree which provided
for two grounds for the court to order the
cancellation of a notice of lis pendens during the
pendency of an action which are: (1) if the
annotation was for the purpose of molesting the title
of the adverse party, or (2) when the annotation is
not necessary to protect the title of the party who
caused it to be recorded (NOW SEC 14, R13 ROC).
Third, the Doctrine of Lis Pendens would be rendered
meaningless if the private respondents are allowed
to file a bond regardless of the amount, in
substitution of said notice and that the law does not
authorize a judge to cancel a notice of lis pendens
pending litigation, upon the mere filing of a sufficient
bond by the party on whose title said notice is
annotated. Fourth, if there was indeed an agreement
to sell between the petitioner and the private
respondents-owners (which question of fact is not for
this court to determine in this petition), then the said
parties are bound by the provisions of A1475 of the
Civil Code (The contract of sale is perfected at the
moment there is a meeting of minds upon the thing
which is the object of the contract and upon the
price.From that moment, the parties may reciprocally
demand performance, subject to the provisions of
the law governing the form of contract.)
-CA denied Romeros MR on January 26, 2000.
Petitioners contention. by ordering the reannotation of the notice of lis pendens, when private
respondent did not even assert a claim of possession
or title over the subject property, the CA went
against the doctrine in Villanueva vs. Court of
Appeals where this Court held that the applicant
must, in the complaint or answer filed in the subject
litigation, assert a claim of possession or title over
the subject property in order to give due course to
his application; the CA, in concluding that there was
no hearing before the annotation was cancelled,
overlooked the fact that the motion for cancellation
was set for hearing on November 12, 1997, that

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private respondent was duly notified but failed to

appear, and that he was able to file his opposition to
the motion to cancel lis pendens which the RTC
considered before promulgating its Resolution dated
November 26, 1997.
Ordens contention. the court a quo cancelled the
notice of lis pendens even before it has been
apprised of all the relevant facts of the case; the CA
was correct in ruling that while the parties are locked
in legal battle and until it becomes manifest that the
grounds set forth in Sec. 77, P.D. No. 1529 exist, the
trial court should not allow the cancellation of the lis
pendens;
In their Reply, petitioners reiterate their arguments
and cited AFP Mutual Benefit Association, Inc. vs.
Court of Appeals where it was held that a notice of lis
pendens may be annotated only where there is an
action or proceeding in court which affects title to or
possession of real property. They further maintain
that the requirement of prior hearing was sufficiently
complied with in this case and petitioners did not act
in bad faith when she sold the subject property
pending the outcome of this case since there was no
outstanding injunction or restraining order which
would have prevented her from doing so.

within the power of the court until the entry of the

final judgment to prevent the defeat of the final
judgment by successive alienations; and (2) to bind a
purchaser, bona fide or not, of the land subject of the
litigation to the judgment or decree that the court
will promulgate subsequently.
- Magdalena Homeowners Association, Inc. vs. CA: a
notice of lis pendens is appropriate in the following:
(a)
an action to recover possession of real estate;
(b)
an action to quiet title thereto;
(c)
an action to remove clouds thereon;
(d)
an action for partition; and
(e) any other proceedings of any kind in Court
directly affecting the title to the land or the use or
occupation thereof or the buildings thereon.
-Atlantic Erectors, Inc. vs. Herbal Cove Realty Corp.:
Resorting to lis pendens is not necessarily confined
to cases that involve title to or possession of real
property but also applies to suits seeking to establish
a right to, or an equitable estate or interest in, a
specific real property; or to enforce a lien, a charge
or an encumbrance against it.
- The doctrine of lis pendens has no application to a
proceeding in which the only object sought is the
recovery of a money judgment, though the title or
right of possession to property be incidentally
affected. It is essential that the property be directly
affected such as when the relief sought in the action
or suit includes the recovery of possession, or the
enforcement of a lien, or an adjudication between
conflicting claims of title, possession, or the right of
possession to specific property, or requiring its
transfer or sale. Even if a party initially avails of a
notice of lis pendens upon the filing of a case in
court, such notice is rendered nugatory if the case
turns out to be a purely personal action. In such
event, the notice of lis pendens becomes functus
officio.
-To put the property under the coverage of the rule
on lis pendens, all a party has to do is to assert a
claim of possession or title over the subject property.
It is not necessary that ownership or interest over the
property is proved.
-By praying for the Romeros to be bound by the
terms of their contract (ie. Specific performance and
damages), Orden in effect asks the court to order
petitioners to fulfill their promise to sell the property
for the amount of P17M.
-While Orden did not explicitly state that he was
running after the ownership of the property, a simple
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ISSUE
WON the CA committed grave abuse of discretion in
ordering the re-annotation of the lis pendens.
HELD
NO. Petitioners have failed to show that the CA
committed GAD.
Reasoning. Heirs of Eugenio Lopez, Sr. vs. Enriquez:
Lis pendens, which literally means pending suit,
refers to the jurisdiction, power or control which a
court acquires over property involved in a suit,
pending the continuance of the action, and until final
judgment.
-Lim v. Vera Cruz: Founded upon public policy and
necessity, lis pendens is intended to keep the
properties in litigation within the power of the court
until the litigation is terminated, and to prevent the
defeat of the judgment or decree by subsequent
alienation.
- Yared vs. Ilarde: Its notice is an announcement to
the whole world that a particular property is in
litigation and serves as a warning that one who
acquires an interest over said property does so at his
own risk or that he gambles on the result of the
litigation over said property.
- The filing of a notice of lis pendens has a two-fold
effect: (1) to keep the subject matter of the litigation

his intent. This is sufficient for purposes of

annotating lis pendens.
- There is no requirement that the party applying for
the annotation must prove his right or interest over
the property sought to be annotated. Thus, even on
the basis of an unregistered deed of sale, a notice of
lis pendens may be annotated on the title.
-Said annotation cannot be considered as a collateral
attack against the certificate of title based on the
principle that the registration of a notice of lis
pendens does not produce a legal effect similar to a
lien.
- The rules merely require that an affirmative relief
be claimed since a notation of lis pendens neither
affects the merits of a case nor creates a right or a
lien. It only protects the applicants rights which will
be determined during trial.
Dispositive the petition for certiorari is DISMISSED
for lack of merit.

LUZ V NATIONAL AMNESTY

COMMISSION
00 SCRA 00
CALLEJO, SR; SEP 24, 2004
NATURE
Petition for review of the Resolution of the CA
FACTS
-On July 18, 1988, the petitioner was charged with
violation of Presidential Decree No. 1866 (illegal
possession of firearms) in the Regional Trial Court of
Makati City, docketed as Criminal Case No. 427. On
March 22, 2000, the petitioner filed an application for
amnesty with the Local Amnesty Board for Metro
Manila. In due course, the board denied the said
application. On August 26, 2002, the National
Amnesty Commission (NAC) issued a Resolution
affirming that of the Local Amnesty Board. The
motion for reconsideration thereof was denied by the
NAC, per its Resolution dated November 13, 2002, a
copy of which was received by the petitioner on
November 22, 2002.
-Under Rule III, Section 4 of NAC Administrative Order
No. 2, Series of 1999, the petitioner had until
December 7, 2002, a Saturday, within which to file a
petition for review of the said resolution with the
Court of Appeals. On December 9, 2002, the
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extension of fifteen (15) days from December 9,
2002, or until December 24, 2002 within which to file
his petition. The petitioner alleged therein that he
had just engaged the services of counsel who needed
additional time to study the case and draft the
petition. However, the petitioner failed to file his
petition for review.
-December 24, 2002 was declared a national holiday;
December 25, 2002 was also a holiday. On
December 26, 2002, the petitioner filed a second
motion for extension of fifteen (15) days from
December 26, 2002 or until January 10, 2002, within
which to file his petition. The petitioner filed his
petition for review with the Court of Appeals on
January 10, 2003.
-On January 13, 2003, the CA issued a Resolution
granting the petitioners first motion for a fifteen-day
extension counted from December 7, 2002 or until
December 22, 2002, within which to file said petition.
On February 20, 2003, the CA issued a Resolution
denying petitioners second motion for having been
filed out of time. The petitioner filed a motion for
reconsideration of the February 20, 2003 Resolution
claiming that, since the last day to file his petition
was a Saturday, December 7, 2002, and the next
day, December 8, 2002 was a Sunday, the last day
for filing the petition was December 9, 2002. He
reasoned that since he filed his motion for extension
of time to file his petition for review on the said date,
the said motion was timely filed.
-On August 19, 2003, the CA issued a Resolution
denying the petitioners motion, relying on A.M. No.
00-2-14-SC issued on February 29, 2000, which
provides that any extension of time to file the
required pleading should be counted from the
expiration of the period regardless of the fact that
the said due date is a Saturday, Sunday, or legal
holiday.
ISSUE
WON the petitioner timely filed his second motion for
extension of time to file his petition for review.
HELD
NO. Petitioners motion for a second extension of
time to file his petition for review was filed out of
time.
Reasoning. Section 1, Rule 22, of the 1997 Rules of
Civil Procedure provides:
Section 1. How to compute time. In computing any
period of time prescribed or allowed by these Rules,
or by order of the court, or by any applicable statute,

the day of the act or event from which the

designated period of time begins to run is to be
excluded and the date of performance included. If
the last day of the period, as thus computed, falls on
a Saturday, a Sunday, or a legal holiday in the place
where the court sits, the time shall not run until the
next working day.3
-The Court clarified the provision when it issued A.M.
No. 00-2-14-SC, which reads:
Whereas, the aforecited provision applies in the
matter of filing of pleadings in courts when the due
date falls on a Saturday, Sunday, or legal holiday, in
which case, the filing of the said pleading on the next
working day is deemed on time;
Whereas, the question has been raised if the period
is extended ipso jure to the next working day
immediately following where the last day of the
period is a Saturday, Sunday or legal holiday so that
when a motion for extension of time is filed, the
period of extension is to be reckoned from the next
working day and not from the original expiration of
the period;
NOW THEREFORE, the Court Resolves, for the
guidance of the Bench and the Bar, to declare that
Section 1, Rule 22 speaks only of "the last day of the
period" so that when a party seeks an extension and
the same is granted, the due date ceases to be the
last day and hence, the provision no longer applies.
Any extension of time to file the required pleading
should therefore be counted from the expiration of
the period regardless of the fact that said due date is
a Saturday, Sunday or legal holiday.
-The extension granted by the Court of Appeals
should be tacked to the original period and
commences immediately after the expiration of such
period. Under the Resolution of this Court in A.M. No.
00-2-14-SC, the CA has no discretion to reckon the
commencement of the extension it granted from a
date later than the expiration of such period,
regardless of the fact that said due date is a
Saturday, Sunday, or a legal holiday.
-The Court of Appeals cannot be faulted for granting
the petitioners first motion for extension of fifteen
(15) days within which to file his petition for review,
reckoned from December 7, 2002, and not from
December 9, 2002 as prayed for by the petitioner. In
so doing, it merely applied, with fealty, Section 1,
Rule 22 of the Revised Rules of Court, as amended,
as clarified by the Court via its Resolution in A.M. No.
00-2-14-SC. Had the CA granted the petitioners
first motion for extension and reckoned the fifteenday period from December 9, 2002, instead of from

December 7, 2002, the appellate court would have

acted with grave abuse of its discretion.
Dispositive Petition granted

SUMMONS
modes of service
1. voluntary appearance
2. Voluntary submission
RODRIGUEZ VS ALIKPALA
(supra)
FACTS
-Spouses Tolentino were co-movants in the motion
for a judgment on a compromise with Spouses
Rebollado
VOLUNTARY SUBMISSION
the Tolentinos freely and voluntarily entered into the
compromise agreement which became the basis of
judgment of the City Court. Under the circumstances,
the Tolentinos are estopped the very authority they
invoked. And even assuming that estoppel lies, we
cannot set aside the principle of equity that
jurisdiction over a person not originally a party
to a case may be acquired, upon proper
conditions, thru the voluntary appearance of
the person before the court. By coming forward
with the original litigants in moving for a judgment
on compromise and by assuming such interest in the
final adjudication of the case together with the
Robellados, the Tolentinos effectively submitted
themselves to the jurisdiction of the City Court.
-Jurisdiction over the plaintiff can be acquired by
the court upon filing of the complaint. On the other
hand, jurisdiction over the defendants can be
acquired by the court upon service of valid summons
and upon voluntary appearance/submission of a
person in court.

3. service in person
TOYOTA CUBAO V. CA (GUEVARRA)
G.R. No. 126321
VITUG; October 23, 1997
NATURE

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Petition for review
FACTS
-Petitioner Toyota Cubao, Inc., undertook repairs on
the car owned by private respondent Guevarra. The
repair costwas paid by means of BPI Check drawn by
Guevarra in favor of Toyota.
-The check was dishonored.
-Guevarra failed to make good the check
-Toyota a civil case for collection of the unpaid
account.
-trial court issued the summons to Guevarra at his
address in 29 Burgos Street, Calamba, Laguna.
-Process Server Antonio Rimas of the Regional Trial
Court of Calamba, Laguna, submitted to the trial
court a return on the service; it read in full:
"Respectfully returned to the Branch Clerk of Court,
Regional Trial Court, National Capital Judicial Region,
Branch 92, Quezon City, the herein attached original
summon in the above entitled case with the
information that it was duly served to the defendant
DANILO A. GUEVARRA, thru her sister-in-law,
GLORIA CABALLES, by leaving a copy of the
summons and complaint but refused to sign.
-Toyota claims that Guevarra had failed to file an
ANSWER within the reglementary period, moved to
declare Guevarra in default. A copy of the motion
was furnished Guevarra, through registered mail with
return card, at 29 Burgos Street, Calamba, Laguna.
-petitioner filed the registry return card indicating
receipt of the motion
-trial court granted petitioner's Motion To Declare
Defendant In Default and allowed an ex-parte
presentation of petitioner's evidence.
-TC in favor of Toyota
- a writ of execution was issued to implement the
decision. The Deputy Sheriff, implementing the writ,
levied on Guevarra's Toyota Corolla. The notice of
levy was served on Guevarra personally but he
refused to sign the receipt thereof, expressed
surprise over it, and stated that he was not aware of
any case instituted against him. Guevarra turned
over the vehicle but filed a certiorari petition before
the CA claiming that the trial court did not acquire
jurisdiction over his person because of a defective
service of summons on him.
-CA in favor of Guevarra-annulled and set aside the
default judgment, the writ of execution, the levy
upon execution and the sale at public auction of the
vehicle-saying that substituted service of summons
was not valid
-Toyota went to SC

ISSUE
2. WON service of summons is defective
HELD
2.YES.
Reasoning
It is not here disputed that substituted service of
summons has been resorted to by the process server
but that, unfortunately, the server's return did not
state the facts or the needed particulars that could
justify the substituted service. The constitutional
requirement of due process, this Court has held in
Boticano vs. Chu, Jr., exacts that the service (of
summons) be such as may reasonably be expected
to give the notice desired. Once the service provided
by the rules accomplishes that end, "the requirement
of justice is answered; the traditional notions of fair
play are satisfied; due process is served." Although
Moran, on the Rules of Court, has said that
"Irregularities of this kind (substituted service)
(might) be cured by proof that the copies (have)
actually been delivered to the defendant," in the
case at bar, however, private respondent appears to
have been notified of the case for the first time only
at the time the levy on execution of judgment was
effected by the sheriff.
The fact of the matter was that Guevarra evidently
had been unaware of the proceedings before the
RTC. Upon learning of the adverse decision, but
already too late in the day for him to get relief from
that court, he filed, instead, a certiorari petition
before the Court of Appeals. The appellate court
neither abused its discretion nor was in error when it
refused to consider the affidavit of the process server
(declaring the concomitant facts required to be
incorporated in the return) which was presented to it
for the first time only as an annex to its Reply filed
with the tribunal. For the appellate court to have
accepted the affidavit favorably on its face value,
without hearing, would have again been a denial to
the defendant (herein private respondent) of his right
to due process.
Disposition PETITION DENIED.

4. Substituted service
QUELNAN V. VHF PHIL.
G.R. No. 138500

GARCIA; September 16, 2005

NATURE
Petition for review on certiorari
FACTS
-VHF Phils filed an ejectment suit in the MeTC against
Quelnan involving a condominium unit
-MeTC in favor of VHF Phils.
-on its finding that "summons together with a copy of
the complaint was served [on petitioner] thru his wife
on August 25, 1992 by substituted service" and that
petitioner "failed to file his answer within the
reglementary period", came out with a decision
dated November 23, 1992
-Copy of the aforementioned decision was served on
petitioner by registered mail but the same was
returned unclaimed on account of petitioner's failure
to claim the same despite the postmaster's three
(3) successive notices on November 25, 1992,
December 7, 1992 and December 11, 1992.
-No appeal having been taken by the petitioner, the
MeTC decision became final and executory.
-a writ of execution, a notice of levy and a notice to
vacate were served on petitioner's wife who
acknowledged receipt thereof.
-petitioner filed with the RTC a Petition for Relief from
Judgment With Prayer for Preliminary Injunction
and/or temporary restraining order, thereunder
alleging, that he was never served with summons
and was completely unaware of the proceedings in
the ejectment suit, adding that he learned of the
judgment rendered thereon only on May 18, 1993
when a notice of levy on execution came to his
knowledge. He thus prayed the RTC to annul and
set aside the MeTC decision and the writs issued in
connection therewith.
-In a decision dated June 3, 1996, the RTC granted
petitioner's petition for relief and set aside the MeTC
decision. The RTC explained that petitioner had been
unduly deprived of a hearing and had been
prevented from taking an appeal for the reason that
petitioner's wife, in a fit of anger, tore the summons
and complaint in the ejectment suit in the heat of a
marital squabble.
-VHF went to SC but SC remanded to CA
-CA-in a decision dated September 17, 1997, upon a
finding that petitioner's petition for relief was filed
with the RTC beyond the 60-day mandatory period
therefor under Section 3, Rule 38 of the Rules of

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Court, reversed and set aside the RTC decision

and reinstated that of the MeTC,

With the reality that petitioner was first notified by

the postmaster on November 25, 1992, it follows that
service of a copy of the MeTC decision was deemed
complete and effective five (5) days therefrom or on
November 30, 1992. Necessarily, the 60-day
period for filing a petition for relief must be reckoned
from such date (November 30, 1992) as this was the
day when actual receipt by petitioner is presumed. In
short, petitioner
was
deemed
to have
knowledge of the MeTC decision on November
30, 1992. The 60-day period for filing a petition
for relief thus expired on January 29, 1993.
Unfortunately, it was only on May 24, 1993, or
175 days after petitioner was deemed to have
learned of the judgment that he filed his
petition for relief with the RTC. Indubitably, the
petition was filed way beyond the 60-day period
provided by law.

Prof. Victoria A.

77

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ISSUE
3. WON THE METROPOLITAN TRIAL COURT OF MANILA
NEVER ACQUIRED JURISDICTION OVER THE
PETITIONER, HENCE ITS DECISION CANNOT
BECOME FINAL AND EXECUTORY.
HELD
3.NO.
Reasoning The records clearly reveal that a copy of
the MeTC decision was sent to petitioner through
registered mail at his given address on November 25,
1992. It should be noted that petitioner was not
represented by counsel during the proceedings
before the MeTC. The first notice to him by the
postmaster to check his mail was on November 25,
1992. Thereafter, subsequent notices were sent by
the postmaster on December 7, 1992 and December
11, 1992. For sure, a certification that the registered
mail was unclaimed by the petitioner and thus
returned to the sender after three successive notices
was issued by the postmaster. Hence, service of said
MeTC decision became effective five (5) days after
November 25, 1992, or on November 30, 1992,
conformably with Rule 13, Section 10 of the 1997
Rules of Civil Procedure, which reads:
SEC. 10. Completeness of Service. Personal
service is complete upon actual delivery. Service by
ordinary mail is complete upon the expiration of ten
(10) days after mailing, unless the court otherwise
provides. Service by registered mail is complete
upon actual receipt by the addressee, or after five (5)
days from the date he received the first notice of the
postmaster, whichever date is earlier. (Emphasis
supplied)
There is no doubt that under the Rules, service by
registered mail is complete upon actual receipt by
the addressee. However, if the addressee fails to
claim his mail from the post office within five (5) days
from the date of the first notice, service becomes
effective upon the expiration of five (5) days
therefrom. In such a case, there arises a presumption
that the service was complete at the end of the said
five-day period. This means that the period to appeal
or to file the necessary pleading begins to run after
five days from the first notice given by the
postmaster. This is because a party is deemed to
have received and to have been notified of the
judgment at that point.

Disposition PETITION DENIED. CA AFFIRMED

SUMMONS RULE 14
Contents, when issued, by whom
issued
Modes of Service
1. Voluntary Appearance
2. Voluntary Submission
3. Service in Person
4. Substituted Service
5. Extra-territorial Service
GUIGUINTO CREDIT COOPERATIVE,
INC V TORRES
G. R. No. 170926
YNARES-SANTIAGO; September 15, 2006
NATURE
Petition for review on certiorari under Rule 45 of the
Rules of Court of the decision and resolution of the
Court of Appeals
FACTS
-Respondents Aida Torres, Nonilo Torres, and Sheryl
Ann Torres-Holgado, are members of Guiguinto
Credit Cooperative, Inc. (GUCCI). They availed of
loans from the cooperative but were unable to pay
on the due dates despite demands.
-On March 24, 2003, petitioner filed a complaint

before the RTC of Bulacan for collection of sum of

money and damages
-Summons against respondents were served
through their Secretary, a certain Benita S.
Pagtalunan, who received the same on April
22, 2003. The Return of Summons was filed on April
24, 2003 by Process Server Valeriano P. Badato
-On November 18, 2003, petitioner filed a motion to
declare respondents in default
-TC granted said petition, thereby allowing petitioner
to present its evidence ex-parte
-After presenting petitioners evidence ex-parte, the
trial court rendered judgment on September 15,
2004, ordering respondents to pay petitioner the ff:
1. For Aida Torres, the amount of P163,516.80 from
April, 2004 plus legal interest until the said amount is
fully paid; 2. For Nonilo Torres the amount of
P278,151.58 from April, 2004 plus legal interest until
the said amount is fully paid; 3. For Sheryl Ann Torres
the amount of P15,903.93 from April, 2004 plus legal
interest until the said amount is fully paid; 4. To pay
P10,000.00, jointly and severally, as attorneys fees
5. Costs of suit.
-Petitioner thereafter moved for the issuance of a
writ of execution, which was granted and
accordingly, the writ of execution was issued on even
date.
-On May 4, 2005, Sheriff Felixberto L. Samonte levied
respondents house and lot and the same was
scheduled to be sold at public auction on June 7,
2005 when the Court of Appeals issued a temporary
restraining order.
-On August 24, 2005, the Court of Appeals annulled
the judgment of the trial court on the ground that it
did not acquire jurisdiction over the persons of
respondents since they were not validly served with
summons and neither did they voluntarily appear in
court.
-According to the appellate court, the service of
summons to Pagtalunan was in violation of Section 6,
Rule 14 of the Rules of Court because there was no
explanation why resort to substituted service of
summons was made. Thus, the appellate court held
that respondents were deprived of their right to due
process.
-The Court of Appeals denied petitioners motion for
reconsideration, hence, this petition
ISSUE
WON summons was not validly served on the
respondents, and therefore the CA correctly annulled
the judgment of the RTC

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HELD
Yes.
-Summons is a writ by which the defendant is
notified of the action brought against him. Service of
such writ is the means by which the court acquires
jurisdiction over his person. Jurisdiction over the
person of the defendant is acquired through coercive
process, generally by the service of summons issued
by the court, or through the defendants voluntary
appearance or submission to the court.
-Where the defendant is a natural person, service
may be personal, substituted, by publication and
such other mode of service as the court may deem
sufficient.
-In an action in personam, jurisdiction over the
person of the defendant is necessary for the court to
validly try and decide the case. Jurisdiction over the
person of a resident defendant who does not
voluntarily appear in court can be acquired by
personal service of summons as provided under
Section 7, Rule 14 of the Rules of Court.
-If he cannot be personally served with
summons within a reasonable time, substituted
service may be made in accordance with
Section 8 of the said Rule. If he is temporarily
out of the country, any of the following modes
of service may be resorted to: (1) substituted
service set forth in Section 8; (2) personal
service outside the country, with leave of
court; (3) service by publication, also with
leave of court; or (4) any other manner the
court may deem sufficient.
-In these types of civil actions (in personam),
summons on the defendant must be served by
handing a copy thereof to the defendant in person, or
in case of refusal, by tendering it to him. If efforts to
find defendant personally makes prompt service
impossible, service may be effected by leaving
copies of the summons at the defendants dwelling
house or residence with some person of suitable age
and discretion residing therein, or by leaving the
copies at the defendants office or regular place of
business with some competent person in charge
thereof.
-The proper service of summons is a critical step in
litigation because upon such service rests the courts
acquisition of jurisdiction over the person of the
defendant.
-In the absence of a valid waiver, trial and judgment
without such service are null and void.
-In the instant case, the Court of Appeals correctly

ruled that since substituted service was availed of in

lieu of personal service, there should be a report
stating that Pagtalunan was one with whom
respondents had a relationship of trust and
confidence that would ensure that the latter will
receive or be notified of the summons issued in their
names.
-This is because substituted service may only be
availed of when the respondents could not be served
personally within a reasonable period of time, and
such impossibility of prompt service must be shown
by stating that earnest efforts have been made to
find the respondents personally and that such efforts
have failed.
-Such requirements under Sections 6 and 7 of Rule
14 must be followed strictly, faithfully and fully in
order not to deprive any person of his property by
violating his constitutional right to due process. The
statutory requirements of substituted service must
be strictly construed since it is an extraordinary
method of service in derogation of personal service
of summons, availed of only under certain conditions
imposed by the Rules of Court. Any substituted
service other than that authorized under Section 7 is
deemed ineffective and contrary to law.
-Granting that Pagtalunan is the personal secretary
of Aida Torres, as appearing in the Affidavit of Merit
of Sheryl Ann Torres and attached to the Petition of
Annulment filed before the Court of Appeals, there is
no showing that the former had indeed a relationship
of trust and confidence with the three respondents.
It appears that the process server hastily and
capriciously resorted to substituted service of
summons without ascertaining the
whereabouts of the respondents. Such service
of summons is not binding upon respondents
Nonilo and Sheryl Ann Torres whose
relationship with Pagtalunan was neither
readily ascertained nor adequately explained
in the Return of Summons. Also, no earnest
efforts were made to locate respondent Aida
Torres who was allegedly working abroad at
the time summons was served on her person.
No explanation was stated in the Return why
substituted service was resorted to through
Pagtalunan.
-Without specifying the details of the attendant
circumstances or of the efforts exerted to serve the
summons, a general statement that such efforts
were made will not suffice for purposes of complying
with the rules of substituted service of summons.
-In the instant case, there was an undue, if not

indecent, haste to serve the summons at the first

attempt without making sure that personal service
was an impossibility because either the respondents
had left for a foreign country or an unknown
destination with no definite date of returning within a
reasonable period, or had gone into hiding to avoid
service of any process from the courts. Since the
substituted service was not validly effected, the trial
court did not acquire jurisdiction over the persons of
the respondents. The order of default, the judgment
by default, the writ of execution issued by it, as well
as the auction sale of the respondents properties
levied on execution are, therefore, null and void.
Disposition. Petition is denied.

BONNEVIE V CA (Phil Bank of

Commerce)
G.R. NO. L-49101
GUERRERO; October 24, 1983
NATURE
Petition for review on certiorari seeking the reversal
of the CA decision
FACTS
- Honesto Bonnevie filed with the CFI Rizal a
complaint against Philippine Bank of Commerce
seeking the annulment of the Deed of Mortgage
dated Dec 6, 1966 executed in favor of the PBC by
spouses Lozano, as well as the extrajudicial
foreclosure made on Sept 4, 1968.
They assail validity and legality of the extrajudicial
foreclosure on the following grounds: a) petitioners
were never notified of the foreclosure sale. b) The
notice of auction sale was not posted for the period
required by law. c) publication of the notice of
auction sale in the Luzon Weekly Courier was not in
accordance with law.
- History: Lozano spouses were the owners of the
property which they mortgaged to secure the
payment of the loan in the principal amount of P75T
they were about to obtain from PBC.
- They then executed in favor of Bonnevie the Deed
of Sale with Mortgage for P100T, P25T of which
amount being payable to the Lozano spouses upon
the execution of the document, and the P75T to PBC.

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- When the mortgage was executed by the Lozano
spouses in favor of PBC, the loan of P75T was not yet
received them.
- From April 28, 1967 to July 12, 1968, Bonnevie
made payments to PBC on the mortgage in the total
amount of P18,944.22. Bonnevie then assigned all
his rights under the Deed of Sale with Assumption of
Mortgage to his brother, intervenor Raoul.
- PBC then applied for the foreclosure of the
mortgage, and notice of sale was published in the
Luzon Weekly Courier on June 30, July 7, and July 14,
1968; auction sale was conducted a month after, and
the property was sold to PBC for P84,387.00.
- PBC specifically denied most of the allegations: (a)
that the defendant has not given its consent to the
sale of the mortgaged property; (b) that the demand
letters and notice of foreclosure were sent to Jose
Lozano at his address; (c) that it was notified for the
first time about the alleged sale after it had
foreclosed the Lozano mortgage; that the property in
question remained registered in the name of Lozano
in the land records of Rizal and there was no entry,
notation or indication of the alleged sale.
- After petitioner Honesto Bonnevie had rested his
case, petitioner Raoul SV Bonnevie filed a motion for
intervention, which was granted.
- CFI dismissed the complaint. MFR was also denied.
CA affirmed.
ISSUE/S
1. WON the mortgage executed by the Lozanos in
favor of PBC is valid
2. WON extrajudicial foreclosure is valid
HELD
1. YES
Reasoning A mortgage follows the property
whoever the possessor may be and subjects the
fulfillment of the obligation for whose security it was
constituted. Petitioners voluntarily assumed it and
are, therefore, estopped from impugning its validity.
They did not secure the consent of respondent Bank
to the sale with assumption of mortgage.
2. YES
Reasoning Act No. 3135 does not require
personal notice on the mortgagor.13 Honesto
13

Section 3. Notice shall be given by posting notices of the

sale for not less than twenty days in at least three public
places of the municipality or city where the property is
situated, and if such property is worth more than four
hundred pesos, such notice shall also be published once a

Bonnevie was not entitled to any notice because as

of May 14, 1968, he had transferred and assigned all
his rights and interests in favor of intervenor Raoul
without informing the Bank.
- Also, petitioners were placed on constructive notice.
The notice of sale was published in the Luzon Courier
on June 30, July 7 and July 14, 1968 and notices of
the sale were posted for not less than twenty days in
at least three (3) public places in the Municipality
where the property is located. Act No. 3135 merely
requires that such notice shall be published once a
week for at least three consecutive weeks. Such
phrase, as interpreted by this Court in Basa vs.
Mercado does not mean that notice should be
published for three full weeks.
- To be a newspaper of general circulation, it is
enough that "it is published for the dissemination of
local news and general information; that it has a
bona fide subscription list of paying subscribers; that
it is published at regular intervals." The newspaper
need not have the largest circulation so long as it is
of general circulation.
- Whether or not the notice of auction sale was
posted for the period required by law is a
question of fact. It can no longer be entertained by
this Court. Nevertheless, the records show that
copies of said notice were posted in three
conspicuous places in the municipality of Pasig, Rizal
namely: the Hall of Justice, the Pasig Municipal
Market and Pasig Municipal Hall.
- A single act of posting (which may even extend
beyond the period required by law) satisfies the
requirement of law. The burden of proving that the
posting requirement was not complied with is now
shifted to the one who alleges non-compliance.
Disposition The appeal being devoid of merit, the
decision of the Court of Appeals is hereby AFFIRMED.
Costs against petitioners.

DIAL CORPORATION v SORIANO (RTC

Judge)
00 SCRA 00
GRINO-AQUINO; May 31, 1988
NATURE
Petition for certiorari with a prayer for the issuance of
a temporary restraining order
week for at least three consecutive weeks in a newspaper of
general circulation in the municipality or city.

FACTS
- The petitioners ( Dial Corp., C & T Refinery Inc.,
Nalin sdn. bhb. Berisford Commodities, Ltd., and
Pacific Molasses Co.) are foreign corporations (US, UK
and Malaysia). They are not domiciled in the
Philippines, nor do they have officers or agents, place
of business, or property in the Philippines; they are
not licensed to engage, and are not engaged, in
business here. The respondent Imperial Vegetable Oil
Co., Inc. (IVO) is a Philippine corporation which
through its president, Dominador Monteverde, had
entered into several contracts for the delivery of
coconut oil to the petitioners. Those contracts
stipulate that any dispute between the parties will be
settled through arbitration under the rules of either
the Federation of Oils Seeds and Fats Association
(FOSFA) or the National Institute of Oil Seed Products
(NIOP). Because IVO defaulted under the contracts,
the petitioners and 15 others, initiated arbitration
proceedings abroad, and some have already
obtained arbitration awards against IVO.
- On April 8, 1987, IVO filed a complaint for injunction
and damages (RTC Manila) against 19 foreign
coconut oil buyers including the petitioners, with
whom Dominador had entered into contracts for the
delivery of coconut oil. IVO repudiated Dominador's
contracts on the grounds that they were mere "paper
trading in futures" as no actual delivery of the
coconut oil was allegedly intended by the parties;
that the Board of Directors of IVO removed
Monteverde from his position as president of the
corporation, named in his place, Rodrigo Monteverde,
and disowned Dominador's allegedly illegal and
unauthorized acts; that the defendants have
allegedly "harassed" IVO to comply with Dominador's
contracts and to come to a settlement with them.
IVO prayed for the issuance of a temporary
restraining order or writ of preliminary injunction to
stop the defendants from harassing IVO with their
insistent demands to recognize the contracts entered
into by Dominador and from portraying the IVO as
one that defaults on its contracts and obligations and
has fallen into bad times and from interfering with
IVO's normal conduct of business. IVO also prayed
that the defendants pay it damages worth more than
P21M.
- Respondent Judge Soriano authorized IVO to effect
extraterritorial service of summons to all the
defendants through DHL Philippines Corp. Pursuant
to that order, the petitioners were served with

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summons and copy of the complaint by DHL courier
service.
- On April 25, 1987, without submitting to the court's
jurisdiction and only for the purpose of objecting to
said jurisdiction over their persons, the petitioners
filed motions to dismiss the complaint against them
on the ground that the extraterritorial service of
summons to them was improper and that hence the
court did not acquire jurisdiction over them. The
court denied their motions to dismiss and upheld the
validity of the extraterritorial service of summons to
them on the ground that "the present action relates
to property rights which lie in contracts within the
Philippines, or which defendants claim liens or
interests, actual or inchoate, legal or equitable. And
one of the reliefs demanded consists, wholly or in
part, in excluding the defendants from any interest in
such property for the reason that their transactions
with plaintiff's former president are ultra vires."
Furthermore, "as foreign corporations doing business
in the Philippines without a license, they opened
themselves to suit before Philippine courts, pursuant
to Sec. 133 of the Corporation Code of the
Philippines."
The
petitioners'
motions
for
reconsideration of that order were also denied by the
court. Hence this petition for certiorari with a prayer
for the issuance of a temporary restraining order.
ISSUE
WON the extra territorial service of summons was
proper
HELD
NO.
Section 17, Rule 14 of the Rules of Court provides
only 4 instances in which extraterritorial service of
summons is proper, namely: "(1) when the action
affects the personal status of the plaintiffs; (2)
when the action relates to, or the subject of
which is, property within the Philippines, in
which the defendant has or claims a lien or
interest, actual or contingent; (3) when the
relief demanded in such action consists, wholly
or in part, in excluding the defendant from any
interest in property located in the Philippines;
and (4) when the defendant non-resident's
property has been attached within the
Philippines"
The complaint in this case does not involve the
personal status of the plaintiff, nor any property in
the Philippines in which the defendants have or claim
an interest, or which the plaintiff has attached. The

action is purely an action for injunction to restrain

the defendants from enforcing against IVO ("abusing
and harassing") its contracts for the delivery of
coconut oil to the defendants, and to recover from
the defendants P21 million in damages for such
"harassment." It is clearly a personal action as
well as an action in personam, not an action in
rem or quasi in rem. "An action in personam is an
action against a person on the basis of his personal
liability, while an action in remedies is an action
against the thing itself, instead of against the
person." A personal action is one brought for the
recovery of personal property, for the enforcement
of some contract or recovery of damages for its
breach, or for the recovery of damages for the
commission of an injury to the person or property.
As the civil case filed is a personal action,
personal or substituted service of summons on
the defendants, not extraterritorial service, is
necessary to confer jurisdiction on the court.
Moran's Comments on the Rules of Court:
As a general rule, when the defendant is not residing
and is not found in the Philippines, the Philippine
courts cannot try any case against him because of
the impossibility of acquiring jurisdiction over his
person unless he voluntarily appears in court. But,
when the action affects the personal status of the
plaintiff residing in the Philippines, or is intended to
seize or dispose of any property, real or personal, of
the defendant located in the Philippines, it may be
validly tried by the Philippine courts, for then, they
have jurisdiction over the res, i.e., the personal
status of the plaintiff or the property of the
defendant and their jurisdiction over the person of
the non-resident defendant is not essential. Venue in
such cases may be laid in the province where the
property of the defendant or a part thereof involved
in the litigation is located.
In an action for injunction, extraterritorial service of
summons and complaint upon the non-resident
defendants cannot subject them to the processes of
the regional trial courts which are powerless to reach
them outside the region over which they exercise
their authority (Sec. 3-a, Interim Rules of Court; Sec.
21, subpar. 1, B.P. Blg. 129). Extraterritorial service
of summons will not confer on the court jurisdiction
or power to compel them to obey its orders.
Neither may the court by extraterritorial service of
summons acquire jurisdiction to render and enforce
a money judgment against a non-resident defendant
who has no property in the Philippines for "the
fundamental rule is that jurisdiction in personam

over non-residents, so as to sustain a money

judgment, must be based upon personal service
within the state which renders the judgment ."
Respondents' contention that "the action below is
related to property within the Philippines, specifically
contractual rights that petitioners are enforcing
against IVO" is specious for the "contractual rights"
of the petitioners are not property found in the
Philippines for the petitioners have not filed an action
in the local courts to enforce said rights. They have
not submitted to the jurisdiction of our courts.
The lower court invoked Section 33 of the
Corporation Code which provides that a "foreign
corporation transacting business in the Philippines
without a license may be sued or proceeded against
before Philippine courts or administrative tribunal on
any valid cause of action recognized under Philippine
laws." It assumed that the petitioners are doing
business in the Philippines, which allegation the
latter denied. Even if they can be considered as such,
the Corporation Code did not repeal the rules
requiring proper service of summons to such
corporations as provided in Rule 14 of the ROC and
Section 128 of the Corporation Code.
The respondent court's finding that, by filing motions
to dismiss, the petitioners hypothetically admitted
the allegations of the complaint that they are doing
business in the Philippines without any license, and
that they may be served with summons and other
court
processes
through
their
agents
or
representatives enumerated in paragraph 2 of the
complaint, is contradicted by its order authorizing
IVO to summon them by extraterritorial service, a
mode of service which is resorted to when the
defendant is not found in the Philippines, does not
transact business here, and has no resident agent on
whom the summons may be served.
Disposition. The extraterritorial service of summons
on the petitioners is held to be improper, hence null
and void. The petition for certiorari is granted. The
orders of Judge Soriano are set aside. The complaint
is dismissed as against the petitioners for failure of
the court to acquire jurisdiction over them.

MONTALBAN V. MAXIMO
22 SCRA 1070
SANCHEZ, March 15, 1968
NATURE
Appeal from the orders of CFI Manila

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FACTS
-Fr. Gerardo Maximo was involved in a motor vehicle
accident where the son of the petitioners suffered
injuries. Petitioners filed suit against Fr. Maximo for
damages. Summons were served at the Malabon
Parish where Fr. Maximo was allegedly residing.
However, Fr. Maximo was in Europe when the
summons were served, Fr. Bautista was the one who
received the summons. Fr. Bautista wrote to the
Clerk of Court of CFI Manila informing him that Fr.
Maximo was in Europe.
-On Plaintiffs motion, lower court declared Fr.
Maximo in default, sentenced Fr. Maximo to pay for
damages. The Montalbans even wrote to Fr. Maximo
at the Malabon Catholic Church informing him of the
lower courts decision and requesting hi to comply
with the decision. Fr. Maximo replied that he was not
aware of the civil case against him and that he was
acquitted in the criminal case.
-Deputy Sheriff of Rizal notified Fr. Maximo of the
issuance of writ of execution and demanded
payment. Return to writ expressed that Fr. Maximo is
financially hard up and had no property. Alias writ
of execution issued. Copy received by Fr. Maximo.
Deputy Sheriff attached and levied on a residential
house in Caloocan allegedly belonging to Fr. Maximo.
-After 2 years, 2 months, Fr. Maximo admittedly
learned of lower courts decision and filed for
ANNULMENT OF ENTIRE PROCEEDINGS on verified
motion on the grounds that the summons were not
duly served (based on then Sec.7, Rule 7 and Sec18,
Rule 14 of ROC) therefore, the court did not acquire
jurisdiction over his person so the trial and the
decision were null and void. His verified motion was
denied, MFR was rejected.
ISSUE
WON the summons in a suit in personam against a
resident of the Philippines temporarily absent may be
validly effected by substituted service under Sec. 8
Rule 14 (on residents temporarily out of the
Philippines)
HELD
*ON argument that Sec18 (in relation to sec17)
is the sole provision that governs summons
upon a defendant temporarily absent in an
action in personam: substituted service out of
the Philippines - is but one of the modes of effective
service to bring a defendant in court. The normal
method of service of summons on one temporarily
absent is by substituted service. Personal service

outside the country and service by publication are

not ordinary means of summoning defendants.
-in suits in personam, the more circuitous procedure
delineated in Sections 17 and 18 is resorted to by a
plaintiff if defendants dwelling house or residence or
place of business in this country is not known; or, if
known, service upon him cannot be had thereat upon
the terms of Sec8. Since personal service is
impossible, resort to substituted service becomes a
necessity.
*ON fact that judgment has been long final: the
judgment enjoys the presumption of regularity. It is,
unless striken down, entitled to respect. Non quieta
movere. Because public policy and sound practice
demand that, at the risk of occasional errors,
judgments of courts should become final at some
definite date fixed by law.
Disposition. Orders affirmed.

DE MIDGELY VS FERANDOS
64 SCRA 23
AQUINO, May 13, 1975
NATURE
Original Actions. Certiorari and contempt.
FACTS
- Quemada, allegedly the illegitimate son of Alvaro
Pastor, Sr., was appointed as special administrator of
the latters estate by the CFI of Cebu. As such, he
filed a complaint against his half siblings, the
spouses Alvaro Pastor, Jr. and Maria Elena Achaval,
and Sofia Midgely, who were all at that time citizens
of Spain and residing in that country. The suit also
named Atlas Mining as co-respondent. The suit was
to settle the question of ownership over certain
properties and rights in some mining claims as
Quemada believed that those properties belong to
the estate of Alvaro Pastor, Sr.
- Quemada, on his own, caused extraterritorial
service of summons to be made through the
Department of Foreign Affairs and the Philippine
Embassy in Madrid, Spain, which effected the service
of the summons through registered mail upon De
Midgely and Pastor, Jr. at their respective addresses
in Alicante and Barcelona.
- Both De Midgely and Pastor entered a special
appearance and filed a motion to dismiss on the
ground of lack of jurisdiction as they are nonresidents. They further alleged that earnest efforts

toward a compromise have not been made as

required in the Civil Code in suits between members
of the same family, The motion was denied by Judge
Ferandos and he ruled that the respondents were
properly summoned.
- The subsequent motion for reconsideration was
denied by Ferandos indicating in the order that the
action of Quemada was for the recovery of real
property and real rights. The respondents were
instructed to file their answer.
- De Midgely filed this action with the Supreme Court.
ISSUE/S
WON Judge Ferandos gravely abused his discretion in
denying De Midgelys motion to dismissed based on
the lack of jurisdiction over her person.
HELD
No. The fact that she alleged as a ground for
dismissal the lack of earnest effort to compromise is
deemed as abandonment of her special appearance
and as voluntary submission to the courts
jurisdiction. When the appearance is by motion for
the purpose of objecting to the jurisdiction of the
court over the person, it must be for the sole and
separate purpose of objecting to the jurisdiction of
the court. If the motion is for any other purpose than
to object to the jurisdiction of the court over his
person, he thereby submits himself to the jurisdiction
of the court,
- Even if the lower court did not acquire jurisdiction
over De Midgely, her motion to dismiss was properly
denied because Quemadas action against her
maybe regarded as a quasi in rem where jurisdiction
over the person of a non-resident defendant is not
necessary and where the service of summons is
required only for the purpose of complying with the
requirement of due process. Quasi in rem is an action
between parties where the direct object is to reach
and dispose of property owed by the parties or of
some interest therein.
- The SC cited the Perkins case as a precedent. In
that case, it ruled that in a quasi in rem action
jurisdiction over a non resident defendant is not
essential. The service of summons by publication is
required merely to satisfy the constitutional
requirement of due process. The judgment of the
court would settle the title to the properties and to
that extent it partakes of the nature of judgment in
rem. The judgment is confined to the res (properties)
and no personal judgment could be rendered against
the non resident. It should be noted that the civil

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case filed by Quemada is related to a testamentary
proceeding as it was filed for the purpose of
recovering the properties which in the understanding
of Quemada, belonged to the estate of the Late
Pastor, Sr. and which were held by De Midgely and
her brother.
Disposition
Petition is dismissed

SAHAGUN V CA (MADAYAG/FILINVEST
CREDIT CORP.)
G.R. NO. 78328
REGALADO; June 3 1991
NATURE
Petition for certiorari
FACTS
- It was alleged that petitioner's spouse, Abel
Sahagun (Alias Abelardo), manager of Rallye
Motor Co., Inc. (Rallye), made it appear that his
company had sold a motor vehicle to Salazar
who issued a promissory note for the price and
executed as security a chattel mortgage on
said vehicle in favor of Rallye. Rallye, through
Abel, assigned the note and chattel to Filinvest
for valuable consideration. When the note
matured, Salazar failed to pay, compelling
Filinvest to sue. However, Filinvest found that
the mortgaged car had not been delivered to
Salazar by Abel. A writ of attachment was
issued and levied on a house and lot in Las
Pinas, registered in Abel's name. Petitioner had
been continuously residing in said house and
claims ownership, having allegedly paid for it
with her own earnings.
-The TC denied the respondent's motion to
declare Abel in default but directed it to "take
steps to effect service of summons and
complaint upon defendant, whose whereabouts
in the US was unknown. The TC later dismissed
the complaint of Filinvest for failure to serve
summons extra-territorially upon Abel despite
said order. Filinvest filed an MFR praying that
said order be reconsidered and set aside and
that Abel be declared in default and to deny
petitioner's motion for leave. TC granted
petitioner time to file intervention and denied
the motion to declare Abel in default. Petitioner
intervened, questioning the jurisdiction of the

TC. Petitioner was declared in default for failure

to appear, as was Abel for failing to answer the
complaint. The court rendered judgment
against Abel, ordering him to pay P97,066.59
(equivalent to 25% of the principal obligation
due as liquidated damages + 25% as attorney's
fees).
-petitioner elevated the case to the IAC (Feb.
27, 1985) which granted her petition for
certiorari with prohibition and set aside the TC's
aforesaid decision, ruling that petitioner was
deprived of opportunity to present evidence
(including evidence she and Abel had been
living separately since 1970). Filinvest filed a
petition for review with the SC which was
denied. Filinvest filed a motion for leave to
serve summons by publicatio on Abel, which
the court granted, stating that pursuant to Sec.
17, Rule 14, "the summons be effected out of
the Phils. by publication in a newspaper of
general circulation in the Phils., to which this
matter may be assigned after due raffle, for 3
successive days. Said defendant was ordered to
file his answer in Court within a reasonable time
(not less than 60 days after notice); that the
CoC send copies of the summons and tills Order
by registered mail to last known address of said
defendant in Las Pinas. Plaintiff is ordered to
implead Rallye as co-defendant within 1 month
from notice."
-Filinvest filed an amended complaint, this time
impleading petitioner and Rallye as additional
defendants. Respondent court admitted the
amended complaint and directed service of
summons and the complaint upon Abel at a
different last known address in Antipolo.
Summons was supposedly served on Abel
through publication in the Manila Evening Post
according to the affidavit of publication of its
president, with a confusing entry in the notice
of order which stated the Las Pinas address,
contradicting the Antipolo address stated by
the TC. Petitioner filed her answer to the
amended complaint. Abel and Rallye filed no
answer, so Filinvest filed a motion to declare
them in default which respondent Judge
Madayag of the RTC of Makati granted, but not
as to Rallye since summons had not been
served upon it. Petitoner went on certiorari to
the CA (Feb. 6, 1987), assailing as grave abuse
of discretion the declaration of default of Abel;
CA dismissed the petition and a subsequent

MFR, hence this petiton.

ISSUE
1. WON respondent court acquired jurisdiction over
Abel by the publication of summons in the Manila
Evening Post
HELD
1. YES
Ratio As a nonresident defendant, and since the suit
involves real property wherein the defendant
ostensibly has an interest and which the property has
in fact been attached at the instance of private
respondent, the court correctly ordered the service
of summons by publication in a newspaper of general
circulation in such places and for such time as the
court may order. Although it would appear that
publication should have been made in a newspaper
in the US as it would most likely give notice to Abel,
such a sweeping doctrine would virtually unsettle a
long standing interpretation of the aforesaid rule on
extraterritorial service of summons by publication, as
well as its implementation sanctioned by the practice
followed in this jurisdiction.
Reasoning The instant case is based on the
attachment of defendant's property, and as such is
an action quasi in rem, wherein summons by
publication is allowed. Such is called constructive or
substituted service, which does not constitute a
service of process in any true sense but serves as a
means whereby the owner may be admonished that
his property is subject to judicial proceedings and
that he should take steps as he sees fit to protect it.
Such is required to physically acquire jurisdiction
over the person of the defendant and for purposes of
fair play by informing him of the pendency of the
action against him. Even then, there is no guarantee
that the absent owner shall receive the actual notice;
as such, under law, actual notice is not considered to
be absolutely necessary (as held in Banco Espanol).
Considering this, publication in the US would be all
the more difficult as Abel's exact location is
unknown; to have at hand the available newspapers,
research the laws governing judicial processes in
each state would be too taxing for the TC. Still, it was
held in De Midgely that in actions quasi in rem,
jurisdiction over the person of the nonresident alien
is not essential and service of summons is only
required to satisfy due process. Relief in an action
against a nonresident defendant who chooses not to
submit himself to Phil. courts is limited to the res.
-There is no specific proscription against resorting to

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foreign publication in the place where the defendant
resides, but publication in a local newspaper should
not altogether be interdicted since the rule
specifically authorizes service of summons "in such
places and for such time as the court concerned may
order". The matter should be left to the sound
discretion of the TC in each particular case since it
has the facts before it. Still, the publication in the
Manila Evening Post was defective as there was no
showing that copies of the summons and the
amended complaint were duly served at the
defendant's last know correct address.
-The Court is not inclined to dismiss the case for noncompliance of private respondent to serve the
amended complaint to Abel at his Antipolo address
as there is prima facie justification for extraterritorial
service of summons, and transmission of copies of
the summons to the wrong address is a matter which
the TC can more readily remedy. Even if Abel is
declared in default, his interest can be duly
represented by the non-defaulting defendant since a
common cause of action is involved.
Disposition Petition is granted
SEPARATE OPINIONS
Sarmiento, J. [concurring and dissenting]
-service of summons to the wrong last known
address is a defect which cannot justify an order of
default. Assuming default were proper, it will not
preclude petitioner from presenting her own
evidence.
-However, as to extrajudicial service of summons to a
nonresident alien, it is only valid when effected in the
territory in which the absent defendant may be
found. Sec. 17 was in part, taken from Sections 398
and 399 of Act. 190, which in turn were an adoption
of the Code of Civil Procedure of California which
states that personal service outside the state must
be named and designated in the publication as most
likely to give notice to the person to be served.
Publication in the Phils. is not likely to provide notice
to a US resident.
-As to Banco Espanol and De Midgely: although the
court acquired jurisdiction over the res, the res
belongs to the defendant, and as such he reserves
the right to be heard when his possessions are in
peril. Although the court cannot award money by
way of relief, judgment condemning the res would
yield the same result, that is, liability against the
defendant. This would lead to the fundamental
injustice of trial in absentia, especially considering

the increase in immigrant Filipinos.

6. By Publication
-MODE OF SERVICE UPON CERTAIN
DEFENDANTS
1. Upon domestic private juridical
entity
PALUWAGAN NG BAYAN SAVINGS
BANK vs. KING
172 SCRA 131
GANCAYCO; April 12, 1989
NATURE
Petition for certiorari
FACTS
- Petitioner sued Mercantile Financing Corporation
(MFC) and private respondents, as directors and
officers of MFC, for the recovery of money market
placements through certain promissory notes. They
were charged jointly and solidarily in accordance
with Section 31 of the Corporation Code 5.
- Summons and copies of the complaints were served
upon MFC and private respondents at the 4th Floor,
LTA Building, No. 118 Perea Street, Makati, Metro
Manila, which is the stated office address of MFC in
the complaint, through its Assistant Manager Mr.
Nasario S. Najomot, Jr. who acknowledged receipt
thereof for and in behalf of MFC and the private
respondents. This is so recited in the certification of
deputy sheriff Bernardo San Juan dated May 11,
1983.
- The parties, assisted by their counsel, submitted a
Compromise Agreement for the approval of the court
which was approved.
- Counsel for defendants filed a "Motion To Correct
Compromise Agreement" on the ground that he
erroneously filed the Compromise Agreement in
behalf of all the defendants when in fact he was the
counsel for MFC only. (denied)
- Syquia Law Offices, in behalf of private respondents
Angelo King, Keng Suy Wat, Quintin Calderon and
Jose J. Ferrer, Jr., filed a motion to set aside decision
on the following grounds:
a. there was no service of summons upon each of
them as the corporate address of the corporation

was not their address they were no longer connected

therewith;
b. that Atty. Aragones had no authority to represent
them in the action and compromise agreement;
c. that they were not served copies of the decision
of the court;
d. that they learned about the same only when it
was being executed; and
e. that they did not participate as directors or
officers of MFC in the subject transaction. (denied)
- CA reversed
- Motion for reconsideration (denied)
ISSUE
WON private respondents were properly served with
summons
HELD
NO.
Ratio Although private respondents were sued in
their capacity as directors and officers of MFC, they
are, nevertheless, being held personally liable for the
obligation subject of the litigation under the
complaint filed by petitioner. Hence, the rule on
personal service of summons must be observed in
that summons must be served personally on private
respondents or, if they refuse to receive the same,
by tendering it to them.
It is only when the defendant cannot be served
personally within a reasonable time that substituted
service may be resorted to. The impossibility of
prompt service should be shown by stating the
efforts made to find the defendant personally and
the fact that such efforts failed. This statement
should be made in the proof of service. This is
necessary because substituted service is in
derogation of the usual method of service. It has
been held that this method of service is in derogation
of the common law; it is a method extraordinary in
character, and hence may be used only as prescribed
and in the circumstances authorized by statute."
Thus, under the controlling decisions, the statutory
requirements of substituted service must be followed
strictly, faithfully and fully, and any substituted
service other than that authorized by the statute is
considered ineffective.
Reasoning The proof of service prepared by the
sheriff does not show that such personal service of
summons was effected. The office address of the
corporation as indicated in the complaint does not

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appear to be the office address of private
respondents as they were no longer connected with
the corporation then. Personal service of summons
should have been made on them at their residences
as shown in the records of the Securities and
Exchange Commission and the Central Bank. Instead,
the sheriff effected substituted service by leaving
copies of the summons with the Assistant Manager of
MFC at the place of business of said corporation with
which as above stated private respondents were no
longer connected. Such substituted service is not
valid. There was no compliance with the
requirements of the rule that there must be a
previous personal service and a failure to effect the
same before substituted service could be resorted to.
As the private respondents have not been duly
served with summons, the trial court never acquired
jurisdiction over their persons.
Disposition. Petition is DENIED

2. Upon
Entity

Foreign

Private

Juridical

FACILITIES MANAGEMENT V DELA OSA

89 SCRA 131
MAKASIAR; March 26, 1979
NATURE
Petition for review on certiorari of the decision of the
CIR
FACTS
-On July 1, 1967, Leonardo dela Osa sought his
reinstatement. with full backwages, as well as the
recovery of his overtime compensation, swing shift
and graveyard shift differentials. Petitioner alleged
that he was employed by respondents as (1) painter
with an hourly rate of $1.25 from March, 1964 to
November, 1964, inclusive; (2) houseboy with an
hourly rate of $1.26 from December, 1964 to
November, 1965, inclusive; (3) houseboy with an
hourly rate of $1.33 from December, 1965 to August,
1966, inclusive; and (4) cashier with an hourly rate of
$1.40 from August, 1966 to March 27, 1967,
inclusive.
- Respondents filed on August 7, 1967 their letteranswer without substantially denying the material
allegations of the basic petition but interposed the
following special defenses that respondents Facilities

Management Corporation and J. S. Dreyer are

domiciled in Wake Island which is beyond the
territorial jurisdiction of the Philippine Government;
that respondent J. V. Catuira, though an employee of
respondent corporation presently stationed in Manila,
is
without
power
and
authority
of
legal
representation; and that the employment contract
between petitioner and respondent corporation
carries -the approval of the DOL.
- On May 3, 1968. respondents filed MTD the subject
petition on the ground that this Court has no
Jurisdiction over the instant case, and on May 24,
1968, petitioner interposed an opposition thereto.
Said motion was denied.
ISSUE/S
1. WON Court can acquire jurisdiction over the
persons of the accused provided that they are
domiciled beyond the territorial jurisdiction of the
Philippine Government
2. WON petitioner has been 'doing business in the
Philippines' so that the service of summons upon its
agent in the Philippines vested the CFI of Manila with
jurisdiction.
HELD
1. Yes. While it is true the site of work is Identified as
Wake Island, it is equally true the place of hire is
established in Manila. Moreover, what is important is
the fact that the contract of employment between
the parties litigant was shown to have been originally
executed and subsequently renewed in Manila, as
asserted by petitioner and not denied by
respondents. Hence, any dispute arising therefrom
should necessarily be determined in the place or
venue where it was contracted.
2.
the petitioner may be considered as doing busuness
un the Philippines within the the scope of Section 14,
Rule 14 of the ROC
in compliance with law, the petitioner had to appoint
Jaime V. Catuira, as agent for FMC with authority to
execute Employment Contracts and receive, in behalf
of that corporation, legal services from and be bound
by processes of the Philippine Courts of Justice, for as
long as he remains an employee of FMC. It is a fact
that when the summons for the petitioner was served
on Jaime V. Catuira he was still in the employ of the
FMC. Mr. Catuira was a on officer representing
petitioner in the Philippines.
Aetna Casualty & Curety Company v Pacific Star Line

WON the plaintiff appellant has been doing

business in the Philippines, considering the fact that
it has no license to transact business in the
Philippines as a foreign corporation. The object of
Sections 68 and 69 of the Corporation Law was not to
prevent the foreign corporation 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. It was never the purpose of the
Legislature to exclude a foreign corporation which
happens to obtain an isolated order for business from
the Philippines, from securing redress in the
Philippine courts (Marshall Co. vs. Elser & Co., 46 Phil
70,75).
if a foreign corporation, not engaged in business in
the Philippines, is not banned from seeking redress
from courts in the Philippines, a fortiori, that same
corporation cannot claim exemption from being sued
in Philippine courts for acts done against a person or
persons in the Philippines.
Disposition WHEREFORE, THE PETITION IS HEREBY
DENIED WITH COSTS AGAINST THE PETITIONER

3. Upon Resident Temporarily Abroad

MONTALBAN V. MAXIMO
(SUPRA)
FACTS
-Fr. Maximo was sued by the parents of the child he
injured during a motor vehicle accident. He was in
Europe when the summons were served upon Fr.
Bautista in the Malabon Church where Fr. Maximo
was known to reside. Since was away when trial was
being held, he was declared in default and a decision
was made in favor of the Sps. After 2y, 2m Fr.
Maximo questioned the validity of the judgment
against him, questioning the service of summons
made
ISSUE
WON the summons in a suit in personam against a
resident of the Philippines temporarily absent may be
validly effected by substituted service under Sec. 8
Rule 14 (on residents temporarily out of the
Philippines)
HELD

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YES. In suits in personam, courts have
jurisdiction over residents temporarily out of
the country.
Reasoning. HISTORY. Common Law (Power
Concept of Jurisdiction): Jurisdiction of Courts to
render judgments in personam was granted on their
de facto power over defendants person. Jurisdiction
was based on the power to seize and imprison
defendant.
-Continental Law: Principles of Roman Origin:
(1) Suits in personam and those relating to
MOVABLES courts of the domicile of the defendant
have general jurisdiction [Actor Rei Forum Sequitur];
(2) actions concerning IMMOVABLES: Courts of the
situs have exclusive jurisdiction
-FORGED DOCTRINE: Domiciliaries of a state,
though temporarily out of its territorial jurisdiction,
are ALWAYS amenable to suits in personam so
substituted service is binding on absent residents.
-MILLIKEN V MEYER: The attendant duties, like the
rights and privileges incident to domicile, are not
dependent on continuous presence in the state. One
such incident of domicile is amenability to suit within
the state even during sojourns without the state,
where the state was provided and employed a
REASONABLE METHOD for apprising such an absent
party of the proceeding against him.
*ON SERVICE OF SUMMONS & DUE PROCESS:
the constitutional requirement of due process exacts
that the service be such as may be reasonably
expected to give reasonably calculated to give the
notice desired
-MILLIKEN V MEYER, supra: its adequacy so far as
due process is concerned is dependent on WON the
form of substituted service provided for such cases
and employed is REASONABLY CALCULATED TO GIVE
HIM ACTUAL NOTICE of the proceedings and an
opportunity to be heard.
*interpretation of then Sec8 on substituted
service: Same meaning shaped out by the
jurisprudence of the jurisdiction where it was
patterned (American Legal System); the defendant
means any resident of the country without distinction
as to whether he is physically present or not.
-on Sec18, Rule 14, according to CJ MORAN: Since
resident of RP, jurisdiction may be acquired over his
person under Sec8; Extraterritorial Service also
allowed. Plaintiff is not duty bound to see to it that
the person upon when service was actually made
delivers the summons to defendant or informs him
about it. The law presumes that for him. It is
immaterial that defendant does not in fact receive

actual notice. This will not affect the validity of the

service.
-A man temporarily absent from this country leaves a
definite place of residence, a dwelling where he lives,
a local base to which any inquiry about him may be
directed and where he is bound to return.
Disposition. Orders affirmed.

4.
Upon
Defendant
whose
identity/whereabouts unknown
BALTAZAR VS CA (GOOD EARTH
ENTERPRISES)
G.R. No. 78728
FELICIANO; December 8, 1988

Nature
Petition for review on certiorari to annul CA decision
FACTS
- Two parcels of land located in Barrio San Isidro,
Paranaque were adjudicated to Lorenzo Molera
pursuant to the decree in a land registration case
by the CFI of Rizal acting as a cadastral court. They
were titled in the name of Lorenzo Molera, under
Original Certificate of Title (OCT) No. 1866. On 15
August 1965, the parcels of land were acquired by
Good Earth from successors-in-interest of Lorenzo
Molera. A transfer of Certificate title was issued in
the name of Good Earth.
- On 22 March 1977, Artemio Baltazar instituted Civil
Case No. 5552-P against Good Earth for
declaration of ownership and reconveyance
of the parcels of land before the CFI, Rizal.
Baltazar traced his claimed rights from an alleged
vast Spanish land grant to one Don Hermogenes
Rodriguez, Governor General of Intramuros, down
to a deed of sale over the subject lots allegedly
executed by one Pedro Asedillo (for whose mother,
Baltazar had been a tenant sharing in the rice
harvest from the lots)
- The Deputy Sheriff of the trial court, Mr. Ernesto
Pre, received a copy of the summons and
complaint for service on Good Earth at its address
set forth in the complaint 666 Muelle de Binondo,
Manila.
- On 1 April 1977, the Deputy Sheriff pre-certified in
his Sheriffs Return that: notwithstanding three
attempts made by the undersigned Deputy Sheriff,
particularly on March 25, 27 and 30, 1977, to serve

the summons and copy of the complaint upon the

defendant Good Earth Enterprises, Inc. at the given
address, the same has failed as according to
information defendant Corporation has never held
office thereat and its present office address is
unknown.
On the same date, Baltazar filed a motion for leave
to serve the summons and a copy of the complaint
upon therein defendant Good Earth by publication.
The trial court granted Baltazar's motion.
Publication of the summons and the complaint in
the "Times Journal," a newspaper of general
circulation, for 3 consecutive weeks was effected
on 6, 13 and 20 August 1977.
Subsequently the trial court, on motion of Baltazar
and upon finding that Good Earth had failed to file
its answer within the sixty (60) day period counted
from the day following the last day of the
publication, declared Good Earth "as if in default"
and allowed Baltazar to present his evidence ex
parte 10 days later
the trial court then issued the questioned
judgment by default against Good Earth which: 1)
declared Baltazar true and owner of the property
covered by TCT No. 191048, 2) ordered Good Earth
to reconvey that property to Baltazar and, should
Good Earth fail so to reconvey, 3) decreed the
cancellation of TCT No. 191048; and 4) required
the Register of Deeds of Rizal to issue a new TCT in
the name of Baltazar.
These were done
accordingly all without the knowledge of Good
Earth.
Baltazar lost no time at all in selling the land so
titled in his name to Aurora Galvez, Rizaliana
Garments, Inc. and to BGB Development
CorporationOn 9 August 1979, Good Earth
instituted a complaint for annulment of the
judgment in Civil Case No. 5552-P and for
reconveyance, against Artemio Baltazar and his
vendees Aurora Galvez and BGB Development
Corporation, which complaint was docketed as Civil
Case No. PQ-7410-P, in the Court of First Instance
of Rizal, Branch 28, the same court which had
issued the judgment by default against Good
Earth. Good Earth later impleaded Baltazar's third
vendee, Rizaliana Garments, Inc. as an additional
defendant.
Good Earth assailed the judgment as null and void,
upon the ground that the trial court had not
acquired jurisdiction over the person of Good
Earth. It was urged by Good Earth that the suit
commenced by Baltazar was an action in

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personam which required personal service of
summons; hence, service of summons by
publication was improper and unwarranted in this
case. It was also urged by Good Earth that Land
Registration Decree No. N-70457, by virtue of
which OCT No. 1866 was issued to Lorenzo Molera,
predecessor-in-interest of Good Earth, became
incontrovertible one year after its registration on 5
February 1959.
- The trial court rendered judgment against Good
Earth. It held that the trial court which issued the
judgment by default had acquired jurisdiction over
the person of defendant Good Earth through
service of summons by publication; that the suit
brought by Baltazar against Good Earth was an
action quasi in rem such that service of summons
by publication was appropriate; that Lorenzo
Molera, the original registered owner of the subject
lands, was not an indispensable party to the suit
brought against Good Earth; that the action
instituted by Good Earth was barred by res
judicata; and that defendants Galvez, BGB
Development Corporation and Rizaliana Garments,
Inc. were purchasers in good faith and for value.
- CA reversed TCs decision and directed the
defendants to reconvey the parcels of land in
question to Good Earth free from all liens and
encumbrances. Hence this Petition for Review
instituted by Baltazar and Galvez.
ISSUE
WON the service of summons by publication upon
respondent Good Earth was proper.
HELD
The regular mode of serving summons upon a
private domestic corporation (i.e., a private
corporation organized under Philippine law and
hence registered with the Securities and Exchange
Commission) is governed by Section 13 of Rule 14
of the Revised Rules of Court. The regular mode, in
other words, of serving summons upon a private
Philippine corporation is by personal service upon
one of the officers of such corporation identified in
Section 13.
For the purpose of receiving service of summons
and being bound by it, a corporation is Identified
with its agent or officer who under the rule is
designated to accept service of process. "The
corporate power to receive and act on such
service, so far as to make it known to the
corporation, is thus vested in such officer or

agent." A strict compliance with the mode of

service is necessary to confer jurisdiction of the
court over a corporation. The purpose is to render
it reasonably certain that the corporation will
receive prompt and proper notice in an action
against it or to insure that the summons be served
on a representative so integrated with the
corporation that such person will know what to do
with the legal papers served on him.
It is not disputed that Deputy Sheriff Pre did not
comply and did not attempt to comply with the
requirement of Section 13 of Rule 14. Since
personal service of summons was clearly not
effected upon Good Earth, we come to the
question of whether the substituted service by
publication purported to have been effected by the
trial court in Civil Case No. 5552-P was proper and
effective to vest jurisdiction upon such court over
the person of Good Earth. The first point that
must be made in this connection is that the
propriety
of
service
of
summons
by
publication is not dependent upon the
technical characterization of the action being
initiated as an action in rem or quasi in rem.
The propriety of service by publication is
dependent, rather, upon compliance with the
requirements of the applicable provisions of
the Rules of Court. We note secondly, that
service of summons of publication may be allowed
under Rule 14 of the Revised Rules of Court in
three 3 different situations. The first is the
situation of an "unknown defendant" addressed by
Section 16 of Rule 14. The second refers to
situations where "extra-territorial service" is
proper, governed by Section 17 of Rule 14. The
third situation is that of a resident of the
Philippines who is temporarily out of the
Philippines and who may be served with summons
by publication under Section 18.
Even a cursory examination of Sections 16,17 and
18 of Rule 14 above will at once reveal that, if at
all, service of summons by publication upon Good
Earth could only be done under Section 16. Section
17 can find application only where the defendant is
both a non-resident and not actually found in the
Philippines. Since Good Earth is a corporation
organized under the Philippine law, it cannot be
regarded as a non-resident corporation. Section
18, upon the other hand, appears to contemplate a
defendant who is a natural person. In any case,
petitioner did not pretend that Good Earth was at
any time temporarily out of the Philippines,

assuming such a condition were possible. Section

16 itself covers two (2) distinguishable situations:
where the identity of the defendant is unknown;
and where the address of the defendant is
unknown. Under Section 16, therefore, petitioner
must show that the address of Good Earth was
"unknown" and that such address "could not be
ascertained by diligent inquiry."
In the case at bar, petitioner acted as if the
address of Good Earth was "unknown." Petitioner
claimed that Good Earth could not be found at the
address appearing in the TCT issued in the name
of Good Earth. The sum total of what the Sheriff
actually did, was to ask a security guard he found
at 666 Muelle de Binondo and this security guard
apparently pointed to the building directory where
the name of Good Earth did not appear. It is
argued by Good Earth that had the Sheriff inquired
at any of the offices actually found in the building
at 666 Muelle de Binondo, he would have found
Good Earth which is a corporation owned or
controlled by the Ching family, considering that all
the corporations quartered at 666 Muelle de
Binondo are Ching family corporations. Good Earth,
in other words, did not dispute that 666 Muelle de
Binondo, Manila was its correct corporate address.
The court does not believe, therefore, that the
address of Good Earth could be regarded as
"unknown" within the meaning of Section 16 of
Rule 14. More importantly, it does not believe that
the acts of Deputy Sheriff Pre satisfied the
standard of diligent inquiry' established by Section
16 of Rule 14. Deputy Sheriff Pre should have
known what every law school student knows, that
Good Earth being a domestic corporation must
have been registered with the Securities and
Exchange Commission and that the SEC records
would, therefore, reveal not just the correct
address of the corporate headquarters of Good
Earth but also the addresses of its directors and
other officers. We believe and so hold that a
litigant or process server who has not gone
through the records of the SEC cannot claim to
have carried out the "diligent inquiry" required
under Section 16 of Rule 14 of the Revised Rules of
Court for valid service of summons by publication
upon a domestic corporation.
It may be noted, finally, that the record does not
show that Baltazar sent a copy of the summons
and the order for publication to Good Earth by
registered mail to its last known address which

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was 666 Muelle de Binondo, Manila, as required by
Section 21 of Rule 14, Revised Rules of Court. We
hold that the purported service of summons by
publication upon Good Earth in Civil Case No.
5552-P was legally and constitutionally vitiated
and hence invalid and ineffective to vest
jurisdiction over the person of Good Earth upon the
trial court, and that the judgment there rendered
by that court was null and void. It vested no rights
upon Baltazar and imposed no liabilities or burdens
upon Good Earth. We agree with the respondent
Court of Appeals that the trial court in Civil Case
No. PQ-7410-P fell into profound error in not
setting aside and annulling the judgment of the
trial court in Civil Case No. 5552-P.
Disposition. WHEREFORE, the Petition for Review is
DENIED and the Decision dated 14 January 1987 of
the Court of Appeals in C.A. G.R. CV No. 00104 is
AFFIRMED. Costs against petitioners.

5. Upon others
MOTIONS IN GENERAL
MOTION TO DISMISS UNDER RULE 16
US v. RUIZ
136 SCRA 487
ABAD SANTOS; May 22, 1985
NATURE
Petition to review to set aside certain orders and
restrain the respondent judge from trying Civil Case
No. 779-M of the defunct CFI of Rizal.
FACTS
- US had a naval base in Subic, Zambales. The base
was one of those provided in the Military Bases
Agreement between the Philippines and the US.
- US invited the submission of bids for the following
projects:
1. Repair fender system, Alava Wharf at the U.S.
Naval Station Subic Bay, Philippines.
2. Repair typhoon damage to NAS Cubi shoreline;
repair typhoon damage to shoreline revetment,
NAVBASE Subic; and repair to Leyte Wharf approach,
NAVBASE Subic Bay, Philippines.

- Eligio de Guzman & Co., Inc. responded to the

invitation and submitted bids. US requested it to
confirm its price proposals and for the name of its
bonding company. The company complied with the
requests.
- The company received a letter which was signed by
Dir. Collins, Contracts Division, Naval Facilities
Engineering Command, Southwest Pacific,
Department of the Navy of the United States, who is
one of the petitioners herein. The letter said that the
company did not qualify to receive an award for the
projects because of its previous unsatisfactory
performance rating on a repair contract for the sea
wall at the boat landings of the U.S. Naval Station in
Subic Bay. The letter further said that the projects
had been awarded to third parties.
- The company sued the US and Messrs. James E.
Galloway, William I. Collins and Robert Gohier all
members of the Engineering Command of the U.S.
Navy. The complaint is to order the defendants to
allow the plaintiff to perform the work on the projects
and, in the event that specific performance was no
longer possible, to order the defendants to pay
damages. The company also asked for the issuance
of a writ of preliminary injunction to restrain the
defendants from entering into contracts with third
parties for work on the projects.
- The defendants entered their special appearance
"for the purpose only of questioning the jurisdiction
of this court over the subject matter of the complaint
and the persons of defendants, the subject matter of
the complaint being acts and omissions of the
individual defendants as agents of defendant United
States of America, a foreign sovereign which has not
given her consent to this suit or any other suit for the
causes of action asserted in the complaint."
- Defendants filed a motion to dismiss the complaint
which included an opposition to the issuance of the
writ of preliminary injunction. The company opposed
the motion. The trial court denied the motion and
issued the writ. The defendants moved twice to
reconsider but to no avail. Hence the instant petition
which seeks to restrain perpetually the proceedings
in Civil Case No. 779-M for lack of jurisdiction on the
part of the trial court.
ISSUE
WON trial court has jurisdiction
HELD
NO. The traditional rule of State immunity exempts a
State from being sued in the courts of another State

without its consent or waiver. This rule is a necessary

consequence of the principles of independence and
equality of States. But State immunity now extends
only to acts jure imperii.
- The respondent judge recognized the restrictive
doctrine of State immunity when he said in his Order
denying the defendants' (now petitioners) motion: "A
distinction should be made between a strictly
governmental function of the sovereign state from its
private, proprietary or non-governmental acts."
However, the respondent judge also said: "It is the
Court's considered opinion that entering into a
contract for the repair of wharves or shoreline is
certainly not a governmental function altho it may
partake of a public nature or character.
- The restrictive application of State immunity is
proper only when the proceedings arise out of
commercial transactions of the foreign sovereign, its
commercial activities or economic affairs. Stated
differently, a State may be said to have descended to
the level of an individual and can thus be deemed to
have tacitly given its consent to be sued only when it
enters into business contracts. It does not apply
where the contract relates to the exercise of its
sovereign functions. In this case the projects are an
integral part of the naval base which is devoted to
the defense of both the United States and the
Philippines, indisputably a function of the
government of the highest order; they are not
utilized for nor dedicated to commercial or business
purposes.
- That the correct test for the application of State
immunity is not the conclusion of a contract by a
State but the legal nature of the act is shown in
Syquia vs. Lopez, 84 Phil. 312 (1949). In that case
the plaintiffs leased three apartment buildings to the
United States of America for the use of its military
officials. The plaintiffs sued to recover possession of
the premises on the ground that the term of the
leases had expired, They also asked for increased
rentals until the apartments shall have been vacated.
It held:
"On the basis of the foregoing considerations we are
of the belief and we hold that the real party
defendant in interest is the Government of the
United States of America; that any judgment for back
or increased rentals or damages will have to be paid
not by defendants Moore and Tillman and their 64
co-defendants but by the said U.S. Government. On
the basis of the ruling in the case of Land vs. Dollar
already cited, and on what we have already stated,
the present action must be considered as one

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against the U.S. Government. It is clear that the
courts of the Philippines including the Municipal
Court of Manila have no jurisdiction over the present
case for unlawful detainer. The question of lack of
jurisdiction was raised and interposed at the very
beginning of the action. The U.S. Government has
not given its consent to the filing of this suit which is
essentially against her, though not in name.
Moreover, this is not only a case of a citizen filing a
suit against his own Government without the latter's
consent but it is of a citizen filing an action against a
foreign government without said government's
consent, which renders more obvious the lack of
jurisdiction of the courts of his country. The principles
of law behind this rule are so elementary and of such
general acceptance that we deem it unnecessary to
cite authorities in support thereof." (At p. 323.)
- In Syquia, the United States concluded contracts
with private individuals but the contracts
notwithstanding the United States was not deemed
to have given or waived its consent to be sued for
the reason that the contracts were for jure imperii
and not for jure gestionis.
Disposition WHEREFORE, the petition is granted;
the questioned orders of the respondent judge are
set aside and Civil Case No. 779-M is dismissed.
Costs against the private respondent.
SEPARATE OPINION
MAKASIAR, dissents:
- The petition should be dismissed and the
proceedings in Civil Case No. 779-M in the defunct
CFI (now RTC) of Rizal be allowed to continue therein.
- When the U.S. Government, through its agency at
Subic Bay, confirmed the acceptance of a bid of a
private company for the repair of wharves or
shoreline in the Subic Bay area, it is deemed to have
entered into a contract and thus waived the mantle
of sovereign immunity from suit and descended to
the level of the ordinary citizen. Its consent to be
sued, therefore, is implied from its act of entering
into a contract.
- Justice and fairness dictate that a foreign
government that commits a breach of its contractual
obligation - in the case at bar by the unilateral
cancellation of the award for the project by the
United States government, through its agency at
Subic Bay - should not be allowed to take undue
advantage of a party who may have legitimate
claims against it by seeking refuge behind the shield
of non-suability. A contrary view would render a
Filipino citizen, as in the instant case, helpless and

without redress in his own country for violation of his

rights committed by the agents of the foreign
government professing to act in its name.
- Constant resort by a foreign state or its agents to
the doctrine of State immunity in this jurisdiction
impinges unduly upon our sovereignty and dignity as
a nation. Its application will particularly discourage
Filipino or domestic contractors from transacting
business and entering into contracts with United
States authorities or facilities in the Philippines whether naval, air or ground forces - because the
difficulty, if not impossibility, of enforcing a validly
executed contract and of seeking judicial remedy in
our own courts for breaches of contractual obligation
committed by agents of the United States
government, always looms large, thereby hampering
the growth of Filipino enterprises and creating a
virtual monopoly in our own country by United States
contractors of contracts for services or supplies with
the various U.S. offices and agencies operating in the
Philippines.
- In the case at bar, the efficacy of the contract
between the U.S. Naval authorities at Subic Bay on
one hand, and herein private respondent on the
other, was honored more in the breach than in the
compliance. The opinion of the majority will certainly
open the floodgates of more violations of contractual
obligations. American authorities or any foreign
government in the Philippines for that matter,
dealing with the citizens of this country, can
conveniently seek protective cover under the
majority opinion. The result is disastrous to the
Philippines.

SEAFDEC V NLRC (LAZAGA)

(supra)
NATURE
Petition for certiorari to review the decision of the
NLRC
FACTS
-SEAFDEC-AQD is a department of an international
organization, the Southeast Asian Fisheries
Development Center. Private Respondent Lazaga was
hired as a Research Associate and eventually
became the Head of External Affairs Office of
SEAFDEC-AQD. However, he was terminated
allegedly due to financial constraints being
experienced by SEAFEC-AQD. He was supposed to

receive separation benefits but SEAFDEC-AQD failed

to pay private respondent his separation pay so
Lazaga filed a complaint for non-payment of
separation benefits, plus moral damages and
attorneys fees with the NLRC.
-In their ANSWER WITH COUNTERCLAIM (NOT
MOTION TO DISMISS), SEAFDEC alleged that NLRC
has no jurisdiction over the case because: (1) It
is an international organization; (2) Lazaga must first
secure clearances from the proper departments for
property or money accountability before any claim
for separation pay will be paid (and clearances has
not been paid)
COUNTERCLAIM: Lazaga had property accountability
and outstanding obligation to SEAFDEC-AQD
amounting to P27, 532.11 and that Lazaga was not
entitled to the accrued sick leave benefits due to his
failure to avail of the same during his employment
-LA: for Lazaga
-NLRC: affirmed LA, deleted attorneys fees and
actual damages
-SEAFDEC-AQD filed MFR, denied
ISSUES
WON SEAFDEC-AQD is estopped from claiming that
the court had no jurisdiction
HELD
NO
Ratio. Estoppel does not apply to confer jurisdiction
to a tribunal that has none over a cause of action.
Jurisdiction is conferred by law. Where there is none,
no agreement of the parties can provide one. Settled
is the rule that the decision of a tribunal not vested
with appropriate jurisdiction is null and void.
-The lack of jurisdiction of a court may be raised at
any stage of the proceedings, even on appeal.
-The issue of jurisdiction is not lost by waiver or by
estoppel

NATIONAL UNION VS STOLT-NIELSEN

184 SCRA 682
MELENCIO-HERRERA, J.; April 26,
1990
NATURE
Petition to review. Certiorari
FACTS

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- United Coconut Chemicals shipped on board MT
Stolt Sceptre, a tanker owned by Stolt-Nielsen
Philippines 404 tons of distilled C6-C18 fatty acid
from Batangas to Rotterdam Netherlands.The cargo
was insured with National Union Fire Insurance, an
American insurance company, thru its Philippine
Agent, American International Underwriters.
- Upon arrival and after inspection, the shipment was
found to be totally contaminated and discolored. The
Carrier denied the claim but the Insurer indemnified
said shipper. As subrogee, the insurer filed suit
against Carrier before the RTC to recovery the sum
of P1,619,469.21, the amount paid to the Shipper.
- Carrier filed a motion to dismiss on the ground that
the RTC had no jurisdiction over the claim the same
being arbitrable as provided by the terms of the
Charter Party dated 21 December 1984 between
Shipper and Parcel Tankers.
- Insurer opposed the motion on the ground
that it was not legally bound to submit the
claim for arbitration as the arbitration clause in
the Charter Party was not incorporated into the
Bill of Lading. RTC denied the motion to dismiss
but issued a resolution on the Motion to Dismiss
until trial on the merits since the ground
alleged in said motion does not appear
indubitable.
- Carrier filed motion for Certiorari and
Prohibition with the CA seeking to nullify the
RTC order which it set aside.
- Hence the appeal to the SC
ISSUE/S
1. WON the CA order setting aside the RTC order,
which was interlocutory, is valid
2. WON the terms of the Charter Party, particularly
the provision on arbitration, binding on the Insurer.
HELD
1. Yes. Generally, an interlocutory order cannot be
the subject of a special civil action on certiorari and
prohibition. . However, the case before us falls under
the exception. While a Court Order deferring action
on a motion to dismiss until the trial is interlocutory
and cannot be challenged until final judgment, still,
where it clearly appears that the trial Judge or Court
is proceeding in excess or outside of its jurisdiction,
the remedy of prohibition would lie since it would be
useless and a waste of time to go ahead with the
proceedings.
2. Yes. A reading of the charter Party and the Bill of
Lading shows that the Insurer is in fact bound to
arbitration. Clearly, the Bill of Lading incorporates by

reference the terms of the Charter Party. It is settled

law that the charter may be made part of the
contract under which the goods are carried by an
appropriate reference in the Bill of Lading (Wharton
Poor, Charter Parties and Ocean Bills of Lading (5th
ed., p. 71). This should include the provision on
arbitration even without a specific stipulation to that
effect. The entire contract must be read together and
its clauses interpreted in relation to one another and
not by parts. Moreover, in cases where a Bill of
Lading has been issued by a carrier covering goods
shipped aboard a vessel under a charter party, and
the charterer is also the holder of the bill of lading,
"the bill of lading operates as the receipt for the
goods, and as document of title passing-the property
of the goods, but not as varying the contract
between the charterer and the shipowner" (In re
Marine Sulphur Queen, 460 F 2d 89, 103 [2d Cir.
1972]; Ministry of Commerce vs. Marine Tankers
Corp. 194 F, Supp 161, 163 [S.D.N.Y. 1960];
Greenstone Shipping Co., S.A. vs. Transworld Oil,
Ltd., 588 F Supp [D.El. 1984]). The Bill of Lading
becomes, therefore, only a receipt and not the
contract of carriage in a charter of the entire vessel,
for the contract is the Charter Party (Shell Oil Co. vs.
MIT Gilds, 790 F 2d 1209, 1212 [5th Cir. 1986]; Home
Insurance Co. vs. American Steamship Agencies, Inc.,
G.R. No. L-25599, 4 April 1968, 23 SCRA 24), and is
the law between the parties who are bound by its
terms and condition provided that these are not
contrary to law, morals, good customs, public order
and public policy (Article 1306, Civil Code).
Disposition
Petition for certiorari is denied and the judgment of
the CA is affirmed.

BALO V CA (JUDGE ASIS, GARRIDO)

GR No. 129704
CHICO-NAZARIO; September 30, 2005
NATURE
Petition for review of CA Resolution under Rule 45 of
the Rules of Court
FACTS
- complaint for Judicial Partition of Real Properties
and Accounting with Damages was filed by Josefina
Garrido against Ulpiano Balo, Lydia Balo-Lumpas,
Eugenio Balo, Ulpiano Balo, Jr., Nida Balo-Moraleta,

Nora Balo-Catano, Zaida Balo, Judith Balo-Mandreza,

Danilo Balo and Ronilo Balo, before RTC Abuyog,
Leyte alleging that Garrido and Balos are the coowners of undivided parcels of land located at
Mayorga, Leyte. According to her, these lands were
originally owned by the spouses Eugenio Balo, Sr.
and Ma. Pasagui-Balo, who, at the time of the filing of
the complaint, were already deceased. The Balo
spouses were survived by their two (2) children,
Ulpiano, Sr. and Maximino, the latter likewise
deceased. Garrido is the daughter of Maximino Balo
and Salvacion Sabulao. Ulpiano Balo is the son of
Eugenio Balo, Sr. and the other petitioners, the
children of Ulpiano, are Eugenios grandchildren.
- Garrido alleged in her complaint that immediately
upon the death of her grandfather, Eugenio Sr., the
Balos took possession of the said real properties
without her knowledge and consent. Her uncle and
cousins were earnestly requested by Garrido that
they come up with a fair and equal partition of the
properties left by her grandparents.
The Balos
outrightly refused her proposal.
- Garrido filed a complaint. In lieu of an Answer,
Balos filed a Motion to Dismiss on the following
grounds:
(1) Failure to state a cause of action - plaintiff,
though daughter of Maximino, failed to allege WON
she is a legitimate child thus fatal considering A992
CC and to allow Garrido to inherit from the estate of
the
spouses
Eugenio
and
Maria
Balo
in
representation of her father Maximino Balo would be
to permit intestate succession by an illegitimate child
from the legitimate parent of his father, assuming
that she is the child of Maximino Balo
(2) complaint does not show that estate have been
settled and its obligations have been paid.
(3) properties enumerated in the complaint were
proceeded against by way of execution to satisfy a
judgment against Eugenio and Maria Balo.
Subsequently, Ulpiano repurchased the properties
and has been openly, exclusively and adversely in
possession of the properties
- RTC denied the motion to dismiss for lack of merit
and said that the complaint clearly states that the
late Eugenio Balo, Sr., and Maria Pasagui Balo had
two (2) children, namely: Ulpiano, Sr. and Maximino.
The plaintiff is the daughter of the late Maximino
Balo and Salvacion Sabulao; while the defendants are
children of the late Ulpiano Balo, Sr. and Felicidad
Superio. The complaint enumerates/annexes 13 tax
declarations in the name of Eugenio Balo, Sr. The
plaintiff as an heir prays that these parcels of land be

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partitioned in accordance with Article 982 of the Civil
Code which states: The grandchildren and other
descendants shall inherit by right of representation,
and if any one of them should have died, leaving
several heirs, the portion pertaining to him shall be
divided among the latter in equal portions. No
evidence may be alleged or considered to test the
sufficiency of the complaint except the very facts
pleaded therein. It would be improper to inject into
the allegation, facts not alleged and use them as
basis for the decision on the motion. The Court is not
permitted to go beyond and outside of the
allegations in the complaint for data or facts.
Therefore, the allegation of illegitimacy and claim of
absolute
ownership
are
modifications
and
unreasonable inferences. If there is doubt to the
truth of the facts averred in the complaint, the Court
does not dismiss the complaint but requires an
answer and proceeds to hear the case on the merit.
- Balos filed an MFR which the RTC denied
- Balos filed a Petition for Certiorari before the CA.
After the filing of Comment and other pleadings, the
case was deemed submitted for decision.
In a
resolution, the CA denied due course to the petition
and accordingly dismissed the same and justified the
dismissal in the following manner:
It is an
established rule that an order denying a motion to
dismiss is basically interlocutory in character and
cannot be the proper subject of a petition for
certiorari. When a motion to dismiss is denied, the
proper procedure is to proceed with the trial and if
the decision be adverse to the movant, the remedy is
to take an appeal from said decision, assigning as
one of the errors therefore the denial of the motion
to dismiss.
- Balos filed an MFR which the CA denied
ISSUES
1. WON CAs dismissal of the petition for certiorari
filed by the Balos is valid
2. WON the failure to allege the nature and extent of
plaintiffs title in a petition for partition is fatal to its
cause of action
3.
WON the action for judicial partition and
accounting has prescribed, was waived, or was
otherwise abandoned
HELD
1. NO, CA should not have dismissed the petition
outright as the same alleges grave abuse of
discretion. Instead, it should have proceeded to
determine WON the trial court did commit grave

abuse of discretion as alleged by the Balos. CA

having failed in this regard, it behooves upon this
Court to discuss the merits of the petition to put to
rest the issues raised by the petitioners.
Reasoning
- The general rule regarding denial of a motion to
dismiss as a basis of a resort to the extraordinary
writ of certiorari is that an order denying a motion to
dismiss is an interlocutory order which neither
terminates nor finally disposes of a case as it leaves
something to be done by the court before the case is
finally decided on the merits. As such, the general
rule is that the denial of a motion to dismiss cannot
be questioned in a special civil action for certiorari
which is a remedy designed to correct errors of
jurisdiction and not errors of judgment. To justify the
grant of the extraordinary remedy of certiorari,
therefore, the denial of the motion to dismiss must
have been tainted with grave abuse of discretion. By
grave abuse of discretion is meant, such capricious
and whimsical exercise of judgment as is equivalent
to lack of jurisdiction. The abuse of discretion must
be grave as where the power is exercised in an
arbitrary or despotic manner by reason of passion or
personal hostility and must be so patent and gross as
to amount to an evasion of positive duty or to a
virtual refusal to perform the duty enjoined by or to
act all in contemplation of law.
- Specific instances whereby the rule admits certain
exceptions are provided as follows: Under certain
situations, recourse to certiorari or mandamus is
considered appropriate, i.e., (a) when the trial court
issued the order without or in excess of jurisdiction;
(b) where there is patent grave abuse of discretion
by the trial court; or (c) appeal would not prove to
be a speedy and adequate remedy as when an
appeal would not promptly relieve a defendant from
the injurious effects of the patently mistaken order
maintaining the plaintiffs baseless action and
compelling the defendant needlessly to go through a
protracted trial and clogging the court dockets by
another futile case
- Contrary to petitioners contention, allegations
sufficient to support a cause of action for partition
may be found in private respondents complaint.
Nothing is more settled than the rule that in a motion
to dismiss for failure to state a cause of action, the
inquiry is into the sufficiency, not the veracity, of the
material allegations.
Moreover, the inquiry is
confined to the four corners of the complaint, and no
other.

- Section 1, Rule 8 of the 1997 Rules of Civil

Procedure provides that the complaint needs only to
allege the ultimate facts upon which private
respondent bases her claim. The rules of procedure
require that the complaint must make a concise
statement of the ultimate facts or the essential facts
constituting the plaintiffs cause of action. A fact is
essential if it cannot be stricken out without leaving
the statement of the cause of action inadequate.
- In her Complaint, the private respondent made the
following assertions: That the afore-described parcels
of lands were originally owned by Eugenio Balo, Sr.
and Ma. Pasagui-Balo, who are now both deceased
and after their death, were inherited into two (2)
equal shares by their two (2) children, namely:
Ulpiano, Sr. and Maximino, both surnamed Balo, the
later (sic) being already dead; That plaintiff is the
daughter of the late Maximino Balo and Salvacion
Sabulao, who after her fathers death, had inherited
her fathers share of the inheritance; That defendant
Ulpiano Balo, Sr. aside from being the son of Eugenio
Balo, Sr., is married to Felicidad Superio, and is the
father of all the other defendants in this case; The
defendants took possession of the above-described
real properties immediately after the death of
plaintiffs grandfather Eugenio Balo, Sr. without her
knowledge and consent; That plaintiff is desirous that
the above-described real properties be partitioned
between her and defendants; That plaintiff has
proposed to the defendants that the above-described
real properties be amicably partitioned between
them by mutual agreement in a very fair and
practical division of the same, but said defendants
refused and continue to do so without any justifiable
cause or reason to accede to the partition of the said
properties.
The foregoing allegations show
substantial compliance with the formal and
substantial requirements of a Complaint for Partition
as required under Section 1, Rule 69 of the 1997
Rules of Civil Procedure.
2. NO
- Briz v. Briz: proof of legal acknowledgment is not a
prerequisite before an action for partition may be
filed. There is no absolute necessity requiring that
the action to compel acknowledgment should have
been instituted and prosecuted to a successful
conclusion prior to the action in which that same
plaintiff seeks additional relief in the character of
heir.
- In a complaint for partition, the plaintiff seeks, first,
a declaration that he is a co-owner of the subject
properties; and second, the conveyance of his lawful

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shares. As the Court of Appeals correctly held, an
action for partition is at once an action for
declaration of co-ownership and for segregation and
conveyance of a determine portion of the properties
involved. If the defendant asserts exclusive title over
the property, the action for partition should not be
dismissed. Rather, the court should resolve the case
and if the plaintiff is unable to sustain his claimed
status as a co-owner, the court should dismiss the
action, not because the wrong remedy was availed
of, but because no basis exists for requiring the
defendant to submit to partition. If, on the other
hand, the court after trial should find the existence of
co-ownership among the parties, the court may and
should order the partition of the properties in the
same action.
3. NO
- On the matter of prescription cited by the
petitioners as a ground for the dismissal of the
complaint, it is noteworthy that the motion to dismiss
filed by the Balos did not ipso facto establish
prescription.
An allegation of prescription can
effectively be used in a motion to dismiss only when
the complaint on its face shows that indeed the
action has already prescribed; otherwise, the issue of
prescription is one involving evidentiary matters
requiring a full-blown trial on the merits and cannot
be determined in a mere motion to dismiss.
Disposition
instant Petition is DENIED and the
decision of CA affirming the Order of the RTC is
affirmed

SEA-LAND SERVICE INC V CA (A.P.

MOLLER/ MAERSK LINE)
00 SCRA 00
YNARES-SANTIAGO; March 2, 2000
NATURE
Petition for review on certiorari decision of CA
FACTS
- Sea-land Service Inc and AP Moller/Maersk Line
(AMML) are both carriers of cargo and common
carriers. They entered into a contract entitled
Cooperation in the Pacific, which is essentially a
vessel sharing agreement whereby they mutually
agreed to purchase, share, and exchange needed
space for cargo in their respective containerships.
Under the Agreement, they could be, depending on
the occasion, either a principal carrier (with a

negotiable bill of lading or other contract of carriage

with respect to cargo) or a containership operator
(owner, operator or charterer of containership on
which the cargo is carried).
- During the lifetime of the contract, Florex delivered
to AMML cargo of various foodstuffs. A corresponding
Bill of Lading was issued by AMML to Florex. Pursuant
to the agreement, AMML loaded the cargo to a vessel
of Sea-land. Thus, under this arrangement, AMML
was the principal carrier while Sea-land was the
containership operator.
- However, the consignee (not named in the case)
refused pay for the cargo, alleging that delivery was
delayed. Florex then filed a complaint against AMML
for reimbursement of the value of the cargo
- AMMLs answer: even on the assumption that Florex
was entitled to reimbursement, it was Sea-land who
should be liable. Thus, AMML filed a 3rd Party
Complaint against Sea-Land, averring that whatever
damages sustained by Florex were caused by SeaLand, which actually received and transported
Florex's cargo on its vessels and unloaded them.
- Sea-land filed a motion to dismiss the 3rd party
complaint on the ground of failure to state a cause of
action and lack of jurisdiction, the amount of
damages not having been specified therein. Also,
Sea-Land prayed for either dismissal or suspension of
the 3rd party complaint on the ground that there
exists an arbitration agreement between it and
AMML
- RTC denied motion to dismiss. Sea-Land filed
petition for certiorari with CA: dismissed. Hence, this
appeal.
WON the 3rd party complaint should have been
dismissed
HELD
YES
Ratio AMML is barred from taking judicial action
against Sea-Land by the clear terms of their
Agreement.
Reasoning To allow AMML's 3rd Party Claim against
Sea-Land to proceed would be in violation of Clause
16.2 of the Agreement. As summarized, the clause
provides that whatever dispute there may be
between the Principal Carrier and the Containership
Operator arising from contracts of carriage shall be
governed by the provisions of the bills of lading
deemed issued to the Principal Carrier by the
Containership Operator. On the other hand, to
sustain the 3rd Party Complaint would be to allow

AMML to hold Sea-Land liable under the provisions of

the bill of lading issued by the Principal Carrier to
Florex, under which the latter is suing in its
Complaint, not under the bill of lading petitioner, as
containership operator, issued to AMML, as Principal
Carrier, contrary to what is contemplated in Clause
16.2.
- As the Principal Carrier with which Florex directly
dealt with, AMML can and should be held
accountable by Florex in the event that it has a valid
claim against the former. Pursuant to Clause 16.3 of
the Agreement, AMML, when faced with such a suit
shall use all reasonable endeavours to defend itself
or settle such suits for as low a figure as reasonably
possible. In turn, AMML can seek damages and/or
indemnity from Sea-Land as Containership Operator
for whatever final judgment may be adjudged
against it under the Complaint of Florex. The crucial
point is that collection of said damages and/or
indemnity from Sea-Land should be by arbitration. In
the light of the Agreement, it is clear that arbitration
is the mode provided by which AMML as Principal
Carrier can seek damages and/or indemnity from
Sea-Land, as Containership Operator.
- Arbitration being the mode of settlement between
the parties expressly provided for by the Agreement,
the 3rd Party Complaint should have been dismissed.
This Court has previously held that arbitration is one
of the alternative methods of dispute resolution that
is now rightfully vaunted as the wave of the future
in international relations, and is recognized
worldwide. To brush aside a contractual agreement
calling for arbitration in case of disagreement
between the parties would therefore be a step
backward.
(bottomline, the court considered the existence of
the arbitration clause as
binding between the
parties, thus a ground for dismissal of the 3rd party
complaint)
Obiter: CA did not err in reading the Complaint of
Florex and AMML's Answer together with the 3rd Party
Complaint to determine whether a cause of action is
properly alleged. In Fil-Estate Golf and Development,
Inc. vs. CA, this Court ruled that in the determination
of whether or not the complaint states a cause of
action, the annexes attached to the complaint may
be considered, they being parts of the complaint.
Disposition Petition is granted.

SWAGMAN HOTELS V. CA

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G.R. 161135
Davide, Jr., C.J.: April 8, 2005
FACTS:
- Sometime in 1996 and 1997, petitioner Swagman
Hotels and Travel, Inc., through Atty. Leonor L.
Infante and Rodney David Hegerty, its president and
vice-president, respectively, obtained from private
respondent Neal B. Christian loans evidenced by
three promissory notes dated 7 August 1996, 14
March 1997, and 14 July 1997. Each of the
promissory notes is in the amount of US$50,000
payable after three years from its date with an
interest of 15% per annum payable every three
months. In a letter dated 16 December 1998,
Christian informed the petitioner corporation that he
was terminating the loans and demanded from the
latter payment in the total amount of US$150,000
plus unpaid interests in the total amount of
US$13,500.
- On 2 February 1999, private respondent Christian
filed with the Regional Trial Court of Baguio City,
Branch 59, a complaint for a sum of money and
damages against the petitioner corporation, Hegerty,
and Atty. Infante.
- The petitioner corporation, together with its
president and vice-president, filed an Answer raising
as defenses lack of cause of action and novation of
the principal obligations. According to them,
Christian had no cause of action because the three
promissory notes were not yet due and demandable.
- In due course and after hearing, the trial court
rendered a decision on 5 May 2000 declaring the first
two promissory notes dated 7 August 1996 and 14
March 1997 as already due and demandable and that
the interest on the loans had been reduced by the
parties from 15% to 6% per annum. The TC
reasoned: When the instant case was filed on
February 2, 1999, none of the promissory notes was
due and demandable. As of this date however, the
first and the second promissory notes have already
matured. Hence, payment is already due. Under
Section 5 of Rule 10 of the 1997 Rules of Civil
Procedure, a complaint which states no cause of
action may be cured by evidence presented without

objection. Thus, even if the plaintiff had no cause of

action at the time he filed the instant complaint, as
defendants obligation are not yet due and
demandable then, he may nevertheless recover on
the first two promissory notes in view of the
introduction of evidence showing that the obligations
covered by the two promissory notes are now due
and demandable.
- In its decision of 5 September 2003, the Court of
Appeals denied petitioners appeal and affirmed in
toto the decision of the trial court.

yet; although, two of the promissory notes with the

due dates of 7 August 1999 and 14 March 2000
matured during the pendency of the case with the
trial court. Both courts also found that the petitioner
had been religiously paying the private respondent
US$750 per month from January 1998 and even
during the pendency of the case before the trial court
and that the private respondent had accepted all
these monthly payments.

ISSUE: May a complaint that lacks a cause of action

at the time it was filed be cured by the accrual of a
cause of action during the pendency of the case?

- With these findings of facts, it has become glaringly

obvious that when the complaint for a sum of money
and damages was filed with the trial court on 2
February 1999, no cause of action has as yet existed
because the petitioner had not committed any act in
violation of the terms of the three promissory notes
as modified by the renegotiation in December 1997.
Without a cause of action, the private respondent
had no right to maintain an action in court, and the
trial court should have therefore dismissed his
complaint.

HELD: No, it cannot be cured. The curing effect

under Section 5 is applicable only if a cause of
action in fact exists at the time the complaint
is filed, but the complaint is defective for
failure to allege the essential facts. The
interpretation of Section 5, Rule 10 of the 1997 Rules
of Civil Procedure by the TC and CA is erroneous.

- Despite its finding that the petitioner corporation

did not violate the modified terms of the three
promissory notes and that the payment of the
principal loans were not yet due when the complaint
was filed, the trial court did not dismiss the
complaint, citing Section 5, Rule 10 of the 1997 Rules
of Civil Procedure, which reads:

RATIO:

Section 5. Amendment to conform to or authorize

presentation of evidence. When issues not raised
by the pleadings are tried with the express or implied
consent of the parties, they shall be treated in all
respects as if they had been raised in the pleadings.
Such amendment of the pleadings as may be
necessary to cause them to conform to the evidence
and to raise these issues may be made upon motion
of any party at any time, even after judgment; but
failure to amend does not affect the result of the trial
of these issues. If evidence is objected to at the trial
on the ground that it is not within the issues made by
the pleadings, the court may allow the pleadings to
be amended and shall do so with liberality if the
presentation of the merits of the action and the ends
of substantial justice will be subserved thereby. The
court may grant a continuance to enable the
amendment to be made.

- The petitioner came to this Court harping on the

absence of a cause of action at the time the private
respondents complaint was filed with the trial court.

- It is undisputed that the three promissory notes

were for the amount of P50,000 each and uniformly
provided for (1) a term of three years; (2) an interest
of 15 % per annum, payable quarterly; and (3) the
repayment of the principal loans after three years
from their respective dates. However, both the Court
of Appeals and the trial court found that a
renegotiation of the three promissory notes indeed
happened in December 1997 between the private
respondent and the petitioner resulting in the
reduction not waiver of the interest from 15% to
6% per annum, which from then on was payable
monthly, instead of quarterly. The term of the
principal loans remained unchanged in that they
were still due three years from the respective dates
of the promissory notes. Thus, at the time the
complaint was filed with the trial court on 2 February
1999, none of the three promissory notes was due

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According to the trial court, and sustained by the
Court of Appeals, this Section allows a complaint that
does not state a cause of action to be cured by
evidence presented without objection during the
trial. Thus, it ruled that even if the private
respondent had no cause of action when he filed the
complaint for a sum of money and damages because
none of the three promissory notes was due yet, he
could nevertheless recover on the first two
promissory notes dated 7 August 1996 and 14 March
1997, which became due during the pendency of the
case in view of the introduction of evidence of their
maturity during the trial.
- Such interpretation of Section 5, Rule 10 of the
1997 Rules of Civil Procedure is erroneous.
- Amendments of pleadings are allowed under Rule
10 of the 1997 Rules of Civil Procedure in order that
the actual merits of a case may be determined in the
most expeditious and inexpensive manner without
regard to technicalities, and that all other matters
included in the case may be determined in a single
proceeding, thereby avoiding multiplicity of suits.
Section 5 thereof applies to situations wherein
evidence not within the issues raised in the pleadings
is presented by the parties during the trial, and to
conform to such evidence the pleadings are
subsequently amended on motion of a party. Thus, a
complaint which fails to state a cause of action may
be cured by evidence presented during the trial.
- However, the curing effect under Section 5 is
applicable only if a cause of action in fact exists at
the time the complaint is filed, but the complaint is
defective for failure to allege the essential facts.
- A complaint whose cause of action has not yet
accrued cannot be cured or remedied by an
amended or supplemental pleading alleging the
existence or accrual of a cause of action while the
case is pending. Such an action is prematurely
brought and is, therefore, a groundless suit, which
should be dismissed by the court upon proper motion
seasonably filed by the defendant. The underlying
reason for this rule is that a person should not be
summoned before the public tribunals to answer for
complaints which are immature.

DISPOSITION: The petition is hereby GRANTED

GOODYEAR V. SY
G.R. 154554
PANGANIBAN;Nov 9, 2005

Nature
Petition for Review under Rule 45
Facts
In 1983 Goodyear Philippines purchased from
Industrial and Transport Equipment, Inc. an Isuzo JCR
6-Wheeler. the truck was hijacked on April 30, 1986.
This hijacking was reported to the Philippine National
Police (PNP) which issued out an alert alarm on the
said vehicle as a stolen one.It was later on recovered
also in 1986. Goodyear sold it to Anthony Sy on
September 12, 1996.Sy, in turn, sold it to Jose L. Lee
on January 29, 1997.
Lee filed an action for rescission of contract with
damages against Sy on December 4, 1997 because
he could not register the vehicle in his name due to
the certification from the PNP Regional Traffic
Management Office in Legazpi City that it was a
stolen vehicle and the alarm covering the same was
not lifted. Instead, the PNP in Legazpi City
impounded the vehicle and charged Lee criminally.Sy
informed Goodyear.Goodyear requested on July 10,
1997 the PNP to lift the stolen vehicle alarm status.
This notwithstanding, Goodyear was impleaded as
third-party defendant in the third-party complaint
filed by Sy on January 9, 1998.Goodyear filed a
motion to dismiss on March 24, 1998 on the twin
grounds that the third-party complaint failed to state
a cause of action and even if it did, such cause of
action was already extinguished. The Regional Trial
Court [(RTC)] resolved to dismiss the third-party
complaint because it does not expressly show any
act or omission committed by the third party
defendant which violates a right of the third party
complainant. CA granted the appeal, holding that
that the Third-Party Complaint had stated a cause of
action. First, petitioner did not make good its
warranty in the Deed of Sale: to convey the vehicle
to Respondent Anthony Sy free from all liens,
encumbrances and legal impediments. The reported
hijacking of the vehicle was a legal impediment that
prevented its subsequent sale. Second, Respondent
Sy had a right to protect and a warranty to enforce,
while petitioner had the corresponding obligation to
honor that warranty. Goodyear moved for
reconsideration, which CA denied.

Issues
WON the third-party complaint states a cause of
action against Goodyear
Held
No. The Third-Party Complaint filed by Sy is
inadequate, because it did not allege any act or
omission that petitioner had committed in violation of
his right to the subject vehicle.
Reasoning:
A cause of action is a formal statement of the
operative facts that give rise to a remedial right. The
question of whether the complaint states a cause of
action is determined by its averments regarding the
acts committed by the defendant. Thus, it must
contain a concise statement of the ultimate or
essential facts constituting the plaintiffs cause of
action. Failure to make a sufficient allegation of a
cause of action in the complaint warrants its
dismissal.
Elements of a Cause of Action
A cause of action, which is an act or omission by
which a party violates the right of another, has these
elements:
1) the legal right of the plaintiff;
2) the correlative obligation of the defendant to
respect that legal right; and
3) an act or omission of the defendant that violates
such right.
TEST In determining whether an initiatory pleading
states a cause of action admitting the truth of the
facts alleged, can the court render a valid judgment
in accordance with the prayer? To be taken into
account are only the material allegations in the
complaint; extraneous facts and circumstances or
other matters aliunde are not considered. The court
may consider -- in addition to the complaint -- the
appended annexes or documents, other pleadings of
the plaintiff, or admissions in the records.
In the present case, the third element is missing. The
Third-Party Complaint filed by Sy is inadequate,
because it did not allege any act or omission that
petitioner had committed in violation of his right to the
subject vehicle. The Complaint capitalized merely on
the fact that the vehicle -- according to the records of
the PNP, which was a stranger to the case -- was a
stolen vehicle. The pleading did not contain

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sufficient notice of the cause of action against

petitioner.
without even going into the veracity of its material
allegations, the Complaint is insufficient on its face.
No connection was laid out between the owners sale
of the vehicle and its impounding by the PNP. That
the police did not lift the alert status did not make
petitioner less of an owner.
The Deed of Sale between petitioner and Respondent
Sy was attached as Annex A to the Third-Party
Complaint filed by the latter against the former. The
Deed stated that petitioner was the absolute owner
of the subject vehicle. No contrary assertion was
made in the Complaint. Hence, the trial court
correctly observed that the Complaint had failed to
show that, at the time of its sale to Respondent Sy,
the vehicle belonged to a person other than
petitioner.

respondents Antonio Lavia (now deceased) and

Teresita Lavia protested the free patent application.
-On August 10, 1993, Regional Office No. IV of the
DENR decreed the reduction of the area covered by
the FPA. The Spouses Antonio and Teresita Lavia
were directed to file the appropriate public land
application covering the other half of the lot in
question particularly the northern portion thereof.
Morcals motion for reconsideration was denied.
Petitioner then filed with the Regional Trial Court a
civil action to nullify the two Orders of the DENR
Regional Office. The trial court, however, dismissed
petitioners civil action and sustained DENR.
Petitioner appealed to the Court of Appeals but the
latter eventually affirmed the TC.
-Petitioner contends the trial court is vested with the
power to rule on the substantial rights of the parties
in this case. She insists the issue of jurisdiction has
been settled when the trial court issued an Order
denying the Motion to Dismiss filed by respondents.
Petitioner alleges the principle of exhaustion of
administrative remedies does not apply because
there is urgent need for judicial intervention and
because what is involved is a small piece of
agricultural land, all of 2,420 square meters. She
adds she has lost trust in the DENR as a body, which
she believes would not reverse itself.
-However, private respondent Teresita Lavia
counters that petitioners failure to pursue and
exhaust the proper administrative remedies was fatal
to her cause. She maintains that the Regional
Executive Director of the DENR did not commit any
palpable error or grave abuse of discretion. Likewise,
private respondent contests petitioners claim that
the disputed land is very small; she alleges that the
same is valued at a considerable amount, over a
million pesos.

Prof. Victoria A.

94

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ANGELITA MORCAL VS. ANTONIO

LAVIA ET. AL.
476 SCRA 508 (2005)
QUISUMBING, J.
NATURE
For review on certiorari are the Decision and
Resolution of the Court of Appeals in CA-G.R. CV No.
75402, which affirmed the Decision of the Regional
Trial Court of Mauban, Quezon, Branch 64. The trial
court Decision sustained the Orders issued by
Regional Office No. IV of the Department of
Environment and Natural Resources in DENR IV Case
No. 5441 CENRO Case No. 91-02.
FACTS
-The case involves a parcel of unregistered land with
an area of 4,840 square meters, situated at
Barangay Cagsiay, Mauban Quezon, identified only
as Lot No. 2056-Cad-245.
-Petitioner Angelita Morcal, with her sister Ildefonsa
Morcal and other members of their family occupied,
cleared and planted seasonal crops on the land up to
the time it was declared as public land on May 14,
1941. Thereafter, their family declared the land for
taxation purposes and began planting coconut and
other fruit bearing trees. Having been in possession
of the said land for almost forty (40) years, petitioner
filed Free Patent Application No. (IV-3) 14661 in
1976. However, on September 11, 1990, private

ISSUE
WON the petition should be given due course
HELD
NO, for failure to comply with the doctrine of
exhaustion of administrative remedies
Ratio. The doctrine of exhaustion of administrative
remedies requires that resort be first made to the
administrative authorities in cases falling under their
jurisdiction to allow them to carry out their functions
and discharge their responsibilities within the
specialized areas of their competence. This is
because the administrative agency concerned is in

the best position to correct any previous error

committed in its forum.[9]
-There are exceptions, however, to the applicability
of the doctrine. Among the established exceptions
are:
1) when the question raised is purely legal;
2) when the administrative body is in estoppel;
3) when the act complained of is patently illegal;
4)
when there is urgent need for judicial
intervention;
5) when the claim involved is small;
6) when irreparable damage will be suffered;
7)
when there is no other plain, speedy and
adequate remedy;
8) when strong public interest is involved;
9)
when the subject of the controversy is private
land; and
10) in quo warranto proceedings.
-In this case, however, none of the foregoing
exceptions may be availed of. Contrary to
petitioners assertion, we see no urgent need for
judicial intervention. Note that the case arose from
the protest filed by respondents against petitioners
free patent application for the subject unregistered
agricultural land. Clearly, the matter comes within
the exclusive primary jurisdiction of the DENR in the
exercise of its quasi-judicial powers. The impugned
Orders of the DENR Regional Office are subject to
review by the DENR Head Office. Petitioner cannot
circumvent this procedure by simply invoking a
supposed loss of faith in the said agency.
-Neither are we prepared to sustain petitioners claim
that exhaustion of administrative remedies need not
be complied with on the ground that the value of the
disputed parcel of land is allegedly insignificant.
Records show that the land in question consists of
2,420 square meters, no doubt a sizable parcel of
land, regardless of its agricultural nature and the fact
that it is located in a remote area; and its value of
over a million pesos is certainly substantial and not
insignificant.
Dispositive. In sum, we are convinced that no
reversible error was committed by the Court of
Appeals when it sustained the trial courts dismissal
of petitioners complaint seeking to nullify the
questioned DENR Orders for petitioners failure to
exhaust the proper administrative remedies.

PASCUAL VS PASCUAL
G.R. No 157830

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CARPIO-MORALES; November 17, 2005
NATURE
Petition for Review on Certiorari challenging the
February 10, 2003 Order of the Regional Trial Court
(RTC) of Isabela on motion of herein respondent
Marilou M. Pascual, the complaint filed against her by
her brother-herein petitioner Dante M. Pascual for
non-compliance with the conciliation provision-pre
condition to filing of complaint in court under R.A.
7160 (the Local Government Code)
FACTS
- Petitioner, a permanent resident of the United
States of America, appointed Sagario as his attorneyin-fact by a Special Power of Attorney (SPA) dated
April 10, 2002: (1.) To file a case for the cancellation
of Transfer Certificate of Title No. T-271656 issued in
the name of Marilou M. Pascual as well as the Deed
of Sale of Registered Land and/or Reconveyance at
the appropriate court; ( 2.) To collect the monthly
rentals from the tenant; (3). To enter into amicable
settlement with Marilou M. Pascual or any other
mode of payment/and/or dispute resolution; (4). To
execute
and
sign
any
and
all
papers,
contracts/documents which may be necessary
relative to the above acts.
- Sagario filed on October 14, 2002 (pursuant to the
SPA) before the Isabela RTC at Roxas a complaint for
Annulment of Transfer Certificate of Title No. T271657 of Isabela and Deed of Absolute Sale of
Registered Land and/or Reconveyance with Damages
- Defendant-herein respondent Marilou M. Pascual
filed a Motion to Dismiss on two grounds one of
which was non-compliance with the requirement
under Section 412 of the Local Government Code.
She contends that there is no showing that the
dispute was referred to the barangay court before
the case was filed in court. By the assailed Order of
February 10, 2003, Branch 23 of the Isabela RTC at
Roxas granted respondents Motion to Dismiss. It
stated that :
-RA 7160 repealing P.D. 1508 otherwise known as
the Revised Katarungang Pambarangay provides
under Section 409 All disputes involving real
property or any interest therein shall be brought in
the barangay where the real property or the larger
portion thereof is situated. Hence, the reliance of
the plaintiff on Section 408 of R.A. 7160 is incorrect.
When real property or any interest therein is
involved, the dispute shall be filed before the

barangay where the property is located, regardless

of the residence of the parties. Besides, it is
incorrect to say that the parties are not residents of
the same place, Vira, Roxas, Isabela. The Attorneyin-fact of the plaintiff in the person of Reymel
R. Sagario is a resident of Vira, Roxas, Isabela,
and he substitute (sic) Dante Pascual by virtue
of said Special Power of Attorney. Hence, said
Attorney-in-fact should have brought the dispute
before barangay Vira, Roxas, Isabela, where the
property is located. In the case of Royales vs.
Intermediate Appellate Court, Ordinarily, noncompliance with the condition precedent prescribed
by P.D. 1508 could affect the sufficiency of the
plaintiffs cause of action and make his complaint
vulnerable to dismissal on ground of lack of cause of
action or prematurity.
-Petitioners Motion for Reconsideration of the abovesaid order was denied. This order stated that
Consequently, the Court is [of] the opinion that the
said Attorney-in-fact shall be deemed to be the
real party in interest, reading from the tenor of
the provisions of the Special Power of Attorney.
Being a real party in interest, the Attorney-in-fact is
therefore obliged to bring this case first before the
Barangay Court. Sec. 3, Rule 3 of the Rules of Court
provides that Where the action is allowed to be
prosecuted or defended by a representative or
someone acting in a fiduciary capacity, the
beneficiary shall be included in the title of the case
and shall be deemed to be the real party in interest.
ISSUE/S
WON the dismissal of the case by the RTC is valid
HELD
NO
Ratio. Petitioner argues that since he, not his
attorney-in-fact Sagario, is the real party in interest,
and since he actually resides abroad, the lupon
would have no jurisdiction to pass upon the dispute
involving real property, he citing Agbayani v. Belen
The pertinent provisions of the Local Government
Code read: SEC. 408. Subject Matter for Amicable
Settlement; Exception Thereto. The lupon of each
barangay shall have authority to bring together the
parties actually residing in the same city or
municipality for amicable settlement of all disputes
except: xxxxx
-In the 1982 case of Tavora v. Veloso the Court held
that where the parties are not actual residents in
the same city or municipality or adjoining barangays,

there is no requirement for them to submit their

dispute to the lupon as provided for in Section 6 vis a
vis Sections 2 and 3 of P.D. 1508 (Katarungang
Pambarangay Law).
-[B]y express statutory inclusion and exclusion, the
Lupon shall have no jurisdiction over disputes where
the parties are not actual residents of the same city
or municipality, except where the barangays in which
they actually reside adjoin each other.
Reasoning. To construe the express statutory
requirement of actual residency as applicable to the
attorney-in-fact of the party-plaintiff, as contended
by respondent, would abrogate the meaning of a
real party in interest as defined in Section 2 of Rule
3 of the 1997 Rules of Court vis a vis Section 3 of the
same Rule which was earlier quoted but misread and
misunderstood by respondent.
-In fine, since the plaintiff-herein petitioner, the real
party in interest, is not an actual resident of the
barangay where the defendant-herein respondent
resides, the local lupon has no jurisdiction over their
dispute, hence, prior referral to it for conciliation is
not a pre-condition to its filing in court.
Dispositive. The petition is granted.

PHILVILLE VS JAVIER
00 SCRA 00
SANDOVAL-GUTIERREZ; Dec. 13, 2007
NATURE
Instant petition for review on certiorari
FACTS
- This case traces its antecedents to a verified
complaint filed
by Mercedes
Javier,
herein
respondent with the RTC for damages and injunction.
Impleaded as defendant was PHILVILLE Development
and Housing Corporation (PHILVILLE).
- The complaint alleges that spouses Crisanto (now
deceased) and Javier have been tenant-cultivators of
a 5.5 hectare parcel of rice land owned by Felimon
Emperado, a holder of a free patent.
- Sometime in 1977, PHILVILLE proposed to buy the
land for conversion into a housing subdivision.
Spouses Javier, PHILVILLE and Emperado then
entered into a Kasulatan ng Pagsasalin at Kusang
Loob na Pagsusuko. Among the terms agreed upon
by the parties was that the Javiers would be given a

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2,000 square meter lot as a disturbance
compensation. However, instead of giving them a
single lot measuring 2,000 square meters, what they
received were 2 separate lots of 1,000 square meters
each located far apart. This prompted Mercedes to
sue PHILVILLE for damages.
- In its answer, PHILVILLE specifically denied the
allegations in the complaint and raised the following
affirmative and special defenses: (1) the complaint
fails to state a cause of action; (2) it does not allege
that the parties resorted to conciliation proceedings
before the barangay; and (3) plaintiff is estopped
from filing the complaint.
- Mercedes filed a motion for leave of court to amend
her complaint. In her attached amended complaint,
she alleged that the Kasulatan did not express the
true agreement of the parties and that the sale is
void as it was executed within the 5-year prohibitive
period from the issuance of the free patent.
- The trial court denied the motion, holding that the
proposed amendment is inconsistent with the cause
of action in the original complaint; and that the
proposed amendment is the subject of another civil
case between the same parties pending before
another branch of the trial court.
- PHILVILLE moved to dismiss the original complaint
alleging that the plaintiff had filed a protest with the
Land Management Bureau seeking the revocation of
the free patent issued to Emperado and the reversion
of the land to the public domain.
- the trial court granted PHILVILLEs motion to
dismiss
- Mercedes filed a motion for reconsideration of the
said Order but it was denied. This prompted her to
interpose an appeal to the CA which reversed the
order and remanded the cast to the trial court.
- PHILVILLE filed a motion for reconsideration but it
was denied by the Appellate Court. Hence, the
instant petition for review on certiorari.

(a) That the court has no jurisdiction over the person

of the defendant or over the subject of the action or
suit; (b) That the court has no jurisdiction over the
nature of the action or suit; (c) That venue is
improperly laid; (d) That the plaintiff has no legal
capacity to sue; (e) That there is another action
pending between the same parties for the same
cause; (f) That the cause of action is barred by a
prior judgment or by statute of limitations; (g) That
the complaint states no cause of action; (h) That the
claim or demand set forth in the plaintiffs pleading
has been paid, waived, abandoned, or otherwise
extinguished; (i) That the claim on which the action
or suit is founded is unenforceable under the
provisions of the statute of frauds; (j) The suit is
between members of the same family and no earnest
efforts towards a compromise have been made.
In J.M. Tuason & Co., Inc. v. Rafor, this Court
interpreted within the time for pleading to
mean within the time to answer.
Reasoning Under Section 1, Rule 11, the time to
answer is 15 days after service of summons upon the
defendant. In the instant case, we note that
PHILVILLEs motion to dismiss the complaint was filed
after it had filed its answer.
- The only exceptions to the rule, as correctly pointed
out by the CA, are: (1) where the ground raised is
lack of jurisdiction of the court over the subject
matter; (2) where the complaint does not state a
cause of action; (3) prescription; and (4) where the
evidence that would constitute a ground for the
dismissal of the complaint was discovered only
during the trial. None of the foregoing grounds is
present in PHILVILLEs motion to dismiss.
Dispostition WHEREFORE, the petition is DENIED.

DIU V CA (BUSHNELL AND PAGBA)

G.R. NO. 115213
REGALADO; DEC.19, 1995

ISSUE
WON the CA erred in reversing the challenged Orders
of the trial court dismissing the complaint of
Mercedes.

NATURE
Appeal by certiorari from judgment of CA which set
aside the RTCs

HELD
NO.
Ratio Section 1, Rule 16 of the Revised Rules of
Court then applicable provides:
SEC. 1. Grounds. Within the time for
pleading a motion to dismiss the action may be
made on any of the following grounds:

FACTS
- Private respondent Pagba purchased on credit
various merchandise from petitioners (Wilson and
Dorcita Diu) store in Naval, Biliran all valued at P7,
862.55.
- Respondents failed to pay despite repeated
demands. Petitioners then brought the matter to the

Barangay Chairman of Naval and so the case was set

for hearing but private respondents failed to appear.
When the case was again set for hearing, the parties
appeared but they failed to reach an amicable
settlement. Accordingly, the barangay chairman
issued a Certification to File Action.
- Petitioners then filed their complaint for a sum of
money before the MTC of Naval to which private
respondents interposed the counterclaim that
petitioners also had existing obligations to them: one
for alleged maintenance and repair of petitioners
boat and another for the cost of 2 tires that
petitioners
allegedly
misappropriated.
Private
respondents likewise alleged that despite the
confrontations before the barangay chairman,
petitioners refused to pay their just and valid
obligations to private respondent and her husband
- The MTC dismissed the complaint for noncompliance with the provisions of P.D. 1508 on
conciliation. Petitioners appealed to the RTC, which
did not pass upon the issue of the alleged noncompliance with P.D. 1508 but instead, decided the
appeal on the merits and rendered judgment in favor
of petitioners.
- Private respondents then went to the CA and said
appellate court set aside the judgment of the RTC on
the ground that there had been no compliance with
P.D. 1508. The CA said thus:
It is, therefore, clear that if efforts of the
barangay captain to settle the dispute fails, the
Pangkat ng Tagapagkasundo shall be constituted
with the end in view of exploring all possibilities of
amicable settlement. If no conciliation or
settlement has been reached pursuant to the
aforesaid rules, the matter may then be brought to
the regular courts.
In the case at bar, it has been established that
there was no valid conciliation proceeding between
the parties. The efforts of the barangay captain of
Naval, Biliran to mediate the dispute between the
parties
having
failed,
the
Pangkat
ng
Tagapamayapa should have been constituted for
purposes of settling the matter. However, the
Pangkat was not constituted, and instead, a
Certification to File Action was issued by the
barangay captain in favor of respondent spouses
Diu. In Bejer vs. Court of Appeals, 169 SCRA 5 66,
it was held that failure to avail of conciliation
process under P.D. 1508, x x x renders the
complaint vulnerable to a timely motion to
dismiss.

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ISSUE
WON the confrontations before the Barangay
Chairman of Naval satisfied the requirement in P.D.
1508, there was substantial compliance with the precondition (for filing the claim)
HELD
YES.
Ratio Under Sec.412 of the Local Government Code,
confrontation before the Lupon Chairman OR the
Pangkat is sufficient compliance with the precondition for filing the case in court.
Reasoning P.D. 1508 has been repealed by
codification in the Local Government Code, which
took effect on Jan.1, 1992.
Sec.410 (B)14 of the Local Govt. Code which
mandates that the barangay chairman shall
constitute a pangkat if he fails in his mediation
efforts, should be construed together with Sec.41215,
as well as the circumstances obtaining and peculiar
to the case. On this score, the barangay chairman or
punong barangays is himself the chairman of the
lupon under the Local Govt. Code.
- While no pangkat was constituted, it is not denied
that the parties met at the office of the barangay
chairman for possible settlement. Although no
pangkat was formed, there was substantial
compliance with the law.
- From the facts, it is undeniable that there was
substantial compliance with P.D.1508 which does not
require strict technical compliance with its
procedural
requirements.
Under
the
factual
antecedents, it cannot be said that the failure of the
parties to appear before the pangkat caused any
14

SEC. 410. PROCEDURE FOR AMICABLE

SETTLEMENT. (b) x x x. If he (lupon chairman) fails in
his mediation effort within fifteen (15) days from the
first meeting of the parties before him, he shall
forthwith set a date for the constitution of the
pangkat in accordance with the provisions of this
chapter.
15
SEC. 412. CONCILIATION. - (a) Precondition to filing
of Complaint in Court. - No complaint x x x shall be
filed or instituted in court x x x unless there has been
a confrontation of the parties before the lupon
chairman OR the pangkat, and that no conciliation or
settlement has been reached as certified by the
lupon secretary or pangkat secretary as attested to
by the lupon or pangkat chairman x x x.

prejudice to the case for private respondents

considering that they already refused conciliation
before the barangay chairman and, their sham
insistence for a meeting before the pangkat is merely
a ploy for further delay. Technicalities should not be
made to desert their true role in our justice system,
and should not be used as obstructions therein.
- The Court noted that although the basic complaint
was filed by petitioners on July 10, 1991, before the
effectivity of the Local Govt. Code, or when P.D. 1508
was still in force, the procedural provisions of the
Local Govt. Code are also applicable to this case.
Statutes regulating procedure in courts are
applicable to actions pending and undetermined at
the time of their passage. Procedural laws are
retrospective in that sense.
- The Court further reasoned that the failure of Pagba
to specifically allege in their Answer that there was
no compliance with the barangay conciliation
procedure constituted a waiver of that defense. Since
private respondents failed to duly raise that issue,
their defense founded thereon is deemed waived,
especially since they did not pursue the issue before
the case was set for hearing. Also, the conciliation
procedure under P.D. 1508 is not a jurisdictional
requirement and noncompliance therewith cannot
affect the jurisdiction which the lower courts had
already acquired over the subject matter and private
respondents as defendants therein.
Disposition petition GRANTED. The CA judgment is
SET ASIDE. RTC judgment is REINSTATED.

BERBA V. PABLO
474 SCRA 686
CALLEJO, November 11, 2005

Nature
Petition for review on certiorari
Facts
-

Estela Berba was the owner of a parcel of

land located at M. Roxas St, Sta. Ana,
Manila. A house was constructed on the lot,
which she leased to Josephine Pablo and the
Heirs of Carlos Palanca sometime in 1976,
covered by a lease contract. Upon its
expiration, the lessees continued leasing the
house on a month-to-month basis.
The lessees failed to pay the rentals due,
and by May 1999, their arrears amounted to
P81,818. Berba filed a complaint for eviction

and collection of unpaid rentals only against

Pablo in the Office of the Punong Barangay.
On June 5, 1999, Berba and Pablo executed
an Agreement approved by the pangkat,
wherein: 1) Pablo undertook to pay Berba
P3000 every tenth of the month until fully
paid; 2) Pablo will voluntarily leave the
leased premises upon failure to pay; and 3)
Pablo will pay P3450 as monthly rental, on
top of the P3000.
By May 2000, the lessees still had a balance
of P71,716. As of May 2001, the total
arrearages of the lessees amounted to
P135,115.63.
On May 2, 2001, Berba through counsel
wrote to lessees, demanding payment of the
arrearages and to vacate the house within
30 days from notice, otherwise she will sue
them. The lessees ignored the demand.
On June 21, 2001, Berba filed a complaint
against Pablo and the Heirs of Carlos
Palanca in the MTC of Manila for unlawful
detainer. Berba, however, failed to append
to her complaint a certification from the
Lupon
ng
Tagapamayapa
that
no
conciliation or settlement has been reached.
In their answer, defendants admitted they
stopped paying rentals because of financial
distress. By way of special and affirmative
defenses, they averred that the plaintiff had
no cause of action against them as she
failed to secure a Certificate to File Action
from the Lupon.
During the pre-trial conference, the parties
manifested that despite earnest efforts, no
amicable settlement was reached. They
defined the main issue as WON the plaintiff
had a valid cause of action for unlawful
detainer against defendants.
In her position paper, Berba appended an
Agreement dated June 5, 1999 between her
and Pablo, which appeared to have been
approved by the Punong Barangay and the
members of the Lupon. She also appended a
Statement of Account.
In their position paper, defendants insisted
that the dispute did not go through the
Lupon ng Tagapamayapa prior to the filing

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-

of the complaint; hence Berbas complaint

was premature.
In her reply, the plaintiff alleged that there
was no more need for her to secure a
Certificate to File Action because she was a
resident of Maligaya St., Malate, Manila,
while the defendants were residing in
Barangay 873, Zone 6 in Sta. Ana Manila.
MTC ruled in favor of Berba. Defendants
appealed to the RTC. On motion of Berba,
RTC issued an order for the execution of the
decision pending appeal. The defendants
filed a motion for the recall of the Order, but
before the court could resolve the motion,
the Sheriff turned over the physical
possession of the property to Berba on May
20, 2002.
In their Appeal Memorandum, defendants
insisted that Berbas action in the MTC was
premature because of the absence of
Certificate to File Action issued by the
Lupon. Berba averred there was no need of
a prior referral to the Lupon, and cited Sec
408(f) of the Local Government Code,
pointing out that she resided in a barangay
in Malate, 8 kilometers away from the
barangay in Sta. Ana where the defendants
lived.
RTC granted the appeal, reversing the
decision of the MTC and ordering the
dismissal of the complaint for unlawful
detainer without prejudice. The RTC ruled
that under Sec 408 of the Local Government
Code, parties who reside in the same city or
municipality although in different barangays
are mandated to go through conciliation
proceedings in the Lupon.
RTC denied Berbas MFR. She then filed
petition for review with CA, claiming that
Sec 408 of Local Government Code should
be construed liberally together with Sec
412. She further averred that she had
complied substantially with the requisites of
the law, and recalls that conciliation
proceedings before the Lupon resulted in
the execution of an Agreement on June 5,
1999. Upon failure to comply with the
agreement, all chances of amicable
settlement were effectively foreclosed.

Issue
WON the CA erred in dismissing the petition and
declaring that there was no substantial compliance
with the mandate of the law with respect to prior
referral to the Barangay Court.
Held
NO

G.R. No. 29341

FERNAN; AUG 21 1989

CA dismissed the petition and affirmed the

RTC decision.

Berba and Pablo executed the Agreement

which was approved by the Lupon. This
agreement had the force and effect of a
final judgment. When Pablo failed to comply
with her obligation of repaying the back
rentals, Berba had the right to enforce the
Agreement against her and move for her
eviction from the premises. However,
instead of filing a motion before the Lupon
for the enforcement of the agreement, or an
action in the MTC for the enforcement of the
settlement, the petitioner filed an action
against Pablo for unlawful detainer and the
collection of unpaid rentals. The action of
Berba against Pablo was barred by the
Agreement of June 5, 1999.
Berbas complaint against the Heirs of
Carlos Palanca was premature. They were
not impleaded by Berba as partiesrespondents before the Lupon. Moreover,
they were not privy to the agreement, and
as such, were not bound by it.
Under Sec 408 of the Local Government
Code, parties actually residing in the same
city or municipality are bound to submit
their
disputes
to
the
Lupon
for
conciliation/amicable settlement, unless
otherwise provided therein.
If the complainant/plaintiff fails to comply
with the requirements of the Local
Government Code, such complaint filed with
the court may be dismissed for failure to
exhaust all administrative remedies.

Disposition Petition denied.

SUSTIGUER V TAMAYO

NATURE
Appeal to order by CFI
FACTS
-Sustiguer and Aposaga both claimed that they were
qualified and entitled to purchase a subdivision lot in
Bacolod for the reason that they possess the
preferential right to buy it from the Govt of Bacolod,
being the actual occupants of the lot.
- they agreed that the award of the lot be given to
Aposaga and that a down payment of 20% of the
total cost of the lot shall be made (or else the lot will
be awarded to other applicants)
-Aposaga failed to pay the price. The same lot was
sold to Jose Tamayo.
-Sustiguer and Aposaga filed for annulment of the
sale on installment and award of said lot against the
Govt of Bacolod and Tamayo, claiming that Tamayo
was not qualified to apply for the award nor to
purchase the lot under Ordinance No. 149. It was
also claimed that Tamayo maliciously filed for
unlawful detainer against Aposaga and Sustiguer
- 5 years and 5 months after the complaint was filed,
Aposaga filed a "Motion to Withdraw in Case 6528
(annulment of sale) and Confess Judgment in Civil
Case No. 7512 (unlawful detainer case)" declaring
she is no longer interested in its prosecution. The
court allowed her withdrawal as plaintiff.
- Sustiguer filed a manifestation that the withdrawal
of Aposaga as party-plaintiff in Civil Case 6528 and
as party defendant in Civil Case 7512 does not
change the status and character of the said cases
considering that she was merely accommodated by
her codefendant in occupying the lot in question.
- Tamayo moved for a preliminary hearing on his
affirmative and special defenses and to dismiss both
the complaint and complaint in intervention (of
Villamarzo) invoking Sec 5 of Rule 16. He prayed that
he be allowed to submit a written memorandum in
support of his affirmative and special defenses.
-Tamayo filed his memorandum on the issue WON
Sustiguer has any cause of action against the
defendants. Sustiguer filed an opposition to the
motion to dismiss and moved for judgment on the
pleadings pursuant to Sec 1 of Rule 19.
-lower court dismissed the complaint of Sustiguer for
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-Sustiguer filed MFR and new trial claiming that the
dismissal of the complaint is contrary to law as there
was no preliminary hearing and that she still has a
valid cause of action even after the withdrawal of
Aposaga from the case as she was suing in her own
right as an awardee entitled to the award in
question. CFI denied.
ISSUE
WON dismissal of complaint was proper
HELD
YES
- Rule 3.2 Every action must be prosecuted and
defended in the name of the real party-in-interest. All
persons having an interest in the subject of the
action and in obtaining the relief demanded shall be
joined as plaintiffs. . . ."
-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.
- Sustiguer is not entitled to the relief prayed for, she
not being the real party-in-interest. The dismissal of
the complaint for lack of cause of action is proper
under the circumstances. It is well-settled that where
the plaintiff is not the real party-in-interest, the
ground for the motion to dismiss is lack of cause of
action.
-Sustiguers interest cannot be categorized as
material interest within the meaning of Rule 3.2
considering that it is contingent upon the final
execution of the contract of sale on installment in
favor of Aposaga.
-Although the ground of lack of cause of action was
pleaded by Tamayo as one of his special and
affirmative defenses in his answer, the said ground
for dismissal of the complaint may be heard
preliminarily as if a motion to dismiss had been filed
pursuant to Section 5 of Rule 16 of the Rules of
Court. Tamayo took this procedural step by filing a
motion for preliminary hearing and thereafter to

dismiss the complaint and the complaint in

intervention. Records show that instead of a
preliminary hearing, the parties filed their respective
memoranda on the issue WON Sustiguer has a cause
of action.
-When the ground for dismissal is that the complaint
states no cause of action, the rule provides that its
sufficiency can only be determined by considering
the facts alleged in the complaint and no other, the
test being whether the court can render a valid
judgment from the facts set forth.The rule is that
when the motion to dismiss is based on the ground
that the complaint states no cause of action, no
evidence may be allowed and the issue should only
be determined in the light of the allegations of the
complaint. Thus it was erroneous for Sustiguer to
claim that the lower court should have conducted a
trial on the merits instead of dismissing the
complaint upon a mere motion.
Disposition dismissal of complaint for lack of cause
of action as well as the order denying MFR affirmed

HEIRS OF LICAROS V
SANDIGANBAYAN
440 SCRA 483
PANGANIBAN; October 18, 2004
FACTS
- Gregorio S. Licaros, petitioners predecessor-ininterest, served as governor of the Central Bank of
the Philippines from 1970 to 1980 during the
presidency of Marcos. He died on August 3, 1983.
- July 17, 1987 PCGG, assisted by Office of SolGen,
filed a complaint for reversion, reconveyance,
restitution, accounting and damages against Marcos
and alleged crony Lucio Tan. The complaint was to
recover ill-gotten wealth which was allegedly
acquired and accumulated in flagrant breach of trust
and of their fiduciary obligations as public officers.
- Aside from the main defendants (Marcos, wife
Imelda and Tan), 23 other persons who had
purportedly acted as their dummies, nominees or
agents.
- It alleged, among others, that Tan (with the
connivance of some government officials, including
CB Governor Licaros) had fraudulently acquired the
assets of the General Bank and Trust Company, now
known as the Allied Bank.

- Despite the allegation, Licaros was not impleaded in

this Complaint or in the subsequent Expanded
Complaint.
- September 13, 1991 - 4 years after the original
action was filed, RP filed a Motion for Leave to
Amend Complaint and for Admission of a Second
Amended Complaint, which impleaded the
Estate/Heirs of Licaros for the first time.
- The Amended Complaint, reiterating earlier
allegations in the Expanded Complaint, detailed
Licaros participation in the alleged unholy
conspiracy.
- Licaros had allegedly facilitated the fraudulent
acquisition of the assets of GBTC worth over P688
million at that time, to favor the Marcoses and the
Lucio Tan Group who acquired said GBTC assets
for only P500,000.00. Hence, his estate
represented by his heirs was impleaded as a party
defendant for the purpose of obtaining complete
relief.
- In 1976, GBTC got into financial difficulties and a
loan was extended to it by CB amounting to P310
million.
- In extending this loan, the CB took control of
GBTC when the latter executed an irrevocable
proxy of 2/3 of the banks outstanding shares in
favor of the CB. 7 of the 11-member Board of
Directors were CB nominees.
- March 25, 1977 GBTC was declared insolvent
and placed under receivership.
- A public bidding was held for the shares of GBTC.
Among the conditions was the attachment by the
bidder of a letter of credit. This was not fulfilled by
Tan, et. al. who only paid P500,000 and attached a
letter from PNB president Domingo. Marcos,
Domingo and Licaros allegedly conspired with each
other and gave Tan, et. al. favors.
- September 3, 2001 - The heirs of Licaros filed a
Motion to Dismiss the Complaint, raising as grounds
(1) lack of cause of action and (2) prescription.
- The Sandiganbayan held that the averments in the
Second Amended Complaint had sufficiently
established a cause of action against Licaros.
- The Sandiganbayan ruled that the argument of
petitioners that Licaros could not be held
personally liable was untenable because the GBTC
assets had been acquired by Tan through a public
bidding duly approved by the Monetary Board.
According to the anti-graft court, this argument
was a matter of defense that could not be resorted
to in a motion to dismiss, and that did not
constitute a valid ground for dismissal.

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- It was immaterial that Licaros was not a business
associate of the main defendants and not an
officer, a director, or a stockholder of any of the
defendant corporations. The paramount issue
hinged on his acts as Central Bank governor,
particularly his participation in an allegedly illegal
conspiracy with Marcos and Domingo to give
undue advantage to Tans bid for the GBTC assets.
ISSUE
WON the motion to dismiss should have been
granted on the grounds of:
Lack of cause of action
Prescription
HELD
1. NO
Ratio It is a well-settled rule that in a motion to
dismiss based on the ground that the complaint fails
to state a cause of action, the question submitted to
the court for determination is the sufficiency of the
allegations in the complaint itself. Whether these
allegations are true or not is beside the point, for
their truth is hypothetically admitted. The issue
rather is: admitting them to be true, may the court
render a valid judgment in accordance with the
prayer in the complaint? So rigid is the norm
prescribed that if the court should doubt the truth of
the facts averred, it must not dismiss the complaint
but require an answer and proceed to hear the case
on the merits.
Reasoning
- Petitioners are seeking the dismissal of the present
case, because (1) the actions imputed to Licaros as
Central Bank governor were allegedly official acts of
the members of the Monetary Board acting as a
collegial body; and (2) the acquisition was done
through a public bidding and in good faith. These
contentions are evidently matters of defense, the
veracity of which must be determined in a full-blown
trial (or in a pretrial stipulation), and not in a mere
motion to dismiss.
- A cause of action exists if the following elements
are present: (1) a right in favor of the plaintiff by
whatever means and under whatever law it arises or
is created; (2) an obligation on the part of the named
defendant to respect and not to violate that right;
and (3) an act or omission constituting a breach of
obligation of the defendant to the plaintiff or
violating the right of the plaintiff, for which the latter
may maintain an action for recovery of damages.
- The allegations in the Second Amended Complaint

clearly and unequivocally outlines its cause of action

against Licaros.
- The Second Amended Complaint was unambiguous
when it charged that Licaros, during his lifetime, had
conspired with the main defendants in facilitating the
allegedly questionable transfer of the GBTC assets to
Tan.
- This charge of "conspiracy" casts a wide net,
sufficiently extensive to include all acts and all
incidents incidental, related to or arising from the
charge of systematic plunder and pillage against the
main defendants
Ratio An action to recover ill-gotten wealth is
outside the purview of the ordinary rules on
prescription, as contained in Article 1146 of the Civil
Code.
Reasoning
- The instant action for reconveyance, restitution,
and accounting impleads the Estate/Heirs of Gregorio
Licaros for previous acts committed by the decedent
during his lifetime, more particularly for conspiring
with the main defendants to prejudice the Republic.
- Section 15 of Article XI of the 1987 Constitution
states that the right of the State to recover
properties unlawfully acquired by public officials or
employees, from them or from their nominees or
transferees, shall not be barred by prescription,
laches or estoppel.
- The intent of the constitutional provision
presumably
lies
in
the
special
attendant
circumstances and the primordial state interests
involved in cases of such nature.
Disposition Petition dismissed

TANCUNTIAN V GEMPESAW
00 SCRA 00
CORONA; October 18, 2004
NATURE
Petition for review under Rule 45 for the reversal of
the decision and resolution of the Court of Appeals
which affirmed the order of the Regional Trial Court
dismissing an action for cancellation of title and
damages for alleged lack of legal personality of
petitioners.
FACTS

- Plaintiffs, Fausto Tancuntian, Macario Tancuntian

and Cristina Cayang are beneficial owners of that
parcel of land
- Sometime in May 1994, the plaintiffs discovered
that defendants applied for a free patent and
fraudulently and anomalously secured titles on the
portions of the same parcels of land from the Bureau
of Lands
- Petitioners prayed for the issuance of a temporary
restraining order and/or writ of preliminary injunction
enjoining respondents from selling, alienating and
disposing the subject properties or any portion
thereof during the pendency of the case. They also
sought the cancellation and nullification of all the
titles of the subject properties in the names of
respondents as well as the reconveyance thereof to
petitioners, plus damages and attorneys fees.
- Private respondents filed an opposition to the
motion for the issuance of a writ of preliminary
injunction on the ground that petitioners had neither
the legal personality nor the authority to institute the
proceedings for cancellation of title.
- Petitioners clarified that they were not asking for
the reversion of subject private land to the public
domain, which would have required the participation
of the Director of Lands or the Secretary of the
Department of Environment and Natural Resources
(DENR) through the Solicitor General. In essence,
petitioners were seeking the quieting of their original
titles that would ultimately lead to the cancellation of
private respondents unlawfully issued and void free
patent titles on the same private land.
- RTC motu propio dismissed the complaint because
only the Republic of the Philippines through the
Solicitor General can file a case for cancellation of
title on the ground of fraud in the processing and
issuance of the said title
- Petitioners filed motions for reconsideration of the
said order and inhibition of the presiding judge.
- Judge Salvador Ibarreta, Jr. of Branch 8 of the Davao
City RTC, to whom the case was re-raffled after Judge
Quitains inhibition, granted the motion for
reconsideration and set aside the order of dismissal.
In reinstating the complaint Judge Ibarreta reasoned
that it was error for the court to have dismissed the
case without a prior motion to dismiss having been
filed by private respondents.
- Respondents Vicente Gempesaw, et al. filed their
answer to the complaint, while Jofre Saniel, another
respondent, filed a motion to dismiss. They
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personality and authority to institute the action for
cancellation of their titles.
- Respondent Saniel asserted that since the action
was for the cancellation of the original certificates of
title issued to them through free patent, it was only
the Government through the Solicitor General or his
duly authorized representative who could institute
the reversion proceeding.
- Eventually, Judge Ibarreta issued an order
dismissing the complaint.
- Petitioners appealed to the Court of Appeals which
affirmed the trial court and held: There is no dispute
that the titles registered in the names of the
defendants-appellees are free patent titles issued by
the State through the Bureau of Lands. Thus, not
being owners, much less grantors, plaintiffsappellants
cannot
as
for
cancellation
or
reconveyance.
- Petitioners filed this petition.
- Petitioners contend that the suit they initially filed
in the RTC of Davao City was not an action for
reversion (wherein the real party in interest would
have indeed been the Republic of the Philippines) but
rather an action for cancellation of titles with
damages, since the problem was double titling.
- Petitioners thus pray for the cancellation of titles
and
free
patents
fraudulently
secured
by
respondents over the same parcels of land which
were already registered to them through OCTs which
were still intact and in their names at the time of the
issuance of respondents allegedly void titles.
- Petitioners insist that since the land in question was
already private land at the time it was issued a free
patent by the Bureau of Lands, the inclusion of the
Republic of the Philippines as the real party in
interest was unnecessary.
ISSUE
WON the petitioners have
institute the proceedings.

legal personality

to

HELD
YES
- This legal dispute does not involve an action for the
reversion of land to the public domain but one for the
cancellation of null and void free patents over private
land.
- Heirs of Ambrocio Kionisala vs. Heirs of Honorio
Dacut: An ordinary civil action for declaration of
nullity of free patents and certificates of title is not
the same as an action for reversion. The difference
between them lies in the allegations as to the

character of ownership of the realty whose title is

sought to be nullified.
- In an action for reversion, the pertinent allegations
in the complaint would admit State ownership of the
disputed land. On the other hand, a cause of action
for declaration of nullity of free patent and certificate
of title would require allegations of the plaintiffs
ownership of the contested lot prior to the issuance
of such free patent and certificate of title as well as
the defendants fraud or mistake; as the case may
be, in successfully obtaining these documents of title
over the parcel of land claimed by plaintiff. In such a
case, the nullity arises strictly not from the fraud or
deceit but from the fact that the land is beyond the
jurisdiction of the Bureau of Lands to bestow and
whatever patent or certificate of title obtained
therefor is consequently void ab initio. The real party
in interest is not the State but the plaintiff who
alleges a pre-existing right of ownership over the
parcel of land in question even before the grant of
title to the defendant.
- Petitioners claim continuing ownership over the
subject parcels of land since 1976, as evidenced by
OCT No. 0-328 and 0-329 in their names. This can
only mean, according to petitioners, that the free
patents and OCTs issued to respondents in 1990 and
1991 were null and void because the land was their
private property, and as such, could not have been
validly disposed of by the Government. Conformably
with our ruling in Heirs of Ambrocio Kionisala,
petitioners are therefore the real party in interest in
this case.
- Furthermore, Rule 3, Section 2 of the 1997 Rules of
Civil Procedure states:
Section 2. Parties in interest - A real party in
interest is the party who stands to be benefited
or injured by the judgment in the suit, or the
party entitled to the avails of the suit. Unless
otherwise authorized by law or these Rules,
every action must be presented or defended in
the name of the real party in interest.
- Since, petitioners are the real parties in interest
under the rules, then they have the legal personality
to sue respondents. The land subject of the
controversy is titled either in their names or that of
their predecessors-in-interest. They stand to be
benefited or injured by whatever decision the court
may decree. Hence, they are entitled to the
opportunity to defend their titles and present their
side of the controversy since their titles date even
earlier than those of the patent holders-respondents.

Disposition Petition GRANTED.

MALLION V ALCANTARA
G.R. No. 141528
AZCUNA; October 31, 2006
NATURE
Petition for review on certiorari under Rule 45, ROC
FACTS
-Oct24,1995: Oscar P. Mallion filed a petition with
RTC San Pablo City seeking a declaration of nullity of
his marriage to Editha Alcantara under Article 36 of
the Family Code, citing Alcantaras alleged
psychological incapacity. After trial on the merits,
RTC denied the petition upon the finding that Mallion
failed to adduce preponderant evidence to warrant
the grant of the relief he is seeking. CA dismissed the
appeal for failure of Mallion to pay the docket and
other lawful fees within the reglementary period.
-After said decision attained finality, Mallion filed on
July 12, 1999 another petition for declaration of
nullity of marriage with RTC San Pablo City, this time
alleging that his marriage with Alcantara was null
and void due to the fact that it was celebrated
without a valid marriage license. For her part,
Alcantara filed an answer with a MTD praying for the
dismissal of the petition on the ground of res judicata
and forum shopping.
-RTC granted MTD and dismissed the case forforum
shopping and multiplicity of suits. Mallions MFR was
also denied. Hence, this petition.
-Mallion argues that while the relief prayed for in the
two cases was the same, that is, the declaration of
nullity of his marriage to respondent, the cause of
action in the earlier case was distinct and separate
from the cause of action in the present case because
the operative facts upon which they were based as
well as the evidence required to sustain either were
different. Because there is no identity as to the cause
of action, petitioner claims that res judicata does not
lie to bar the second petition. In this connection,
petitioner maintains that there was no violation of
the rule on forum shopping or of the rule which
proscribes the splitting of a cause of action.
-Alcantara, in her comment, counters that while the
present suit is anchored on a different ground, it still
involves the same issue raised in the earlier civil
case (validity of their marriage) and prays for the
same remedy (declaration of nullity). Respondent

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thus contends that petitioner violated the rule on
forum shopping. Moreover, respondent asserts that
petitioner violated the rule on multiplicity of suits as
the ground he cites in this petition could have been
raised during the trial in the first case.
ISSUE
WON a previous final judgment denying a petition for
declaration of nullity on the ground of psychological
incapacity is bar to a subsequent petition for
declaration of nullity on the ground of lack of
marriage license
HELD: YES
-Res judicata, defined: a matter adjudged; a thing
judicially acted upon or decided; a thing or matter
settled by judgment. It also refers to the rule that a
final judgment or decree on the merits by a court of
competent jurisdiction is conclusive of the rights of
the parties or their privies in all later suits on points
and matters determined in the former suit.
-This doctrine is a rule which pervades every wellregulated system of jurisprudence and is founded
upon the following precepts of common law, namely:
(1) public policy and necessity, which makes it to the
interest of the State that there should be an end to
litigation, &(2) the hardship on the individual that he
should be vexed twice for the same cause. A
contrary doctrine would subject the public peace and
quiet to the will and neglect of individuals and prefer
the gratification of the litigious disposition on the
part of suitors to the preservation of the public
tranquility and happiness.
-In this jurisdiction, the concept of res judicata is
embodied in Sec47(b) and (c) of Rule 39 of ROC. Res
judicata in this sense requires the concurrence of
the following requisites:
(1) the former judgment is final;
(2) it is rendered by a court having jurisdiction over
the subject matter and the parties;
(3) it is a judgment or an order on the merits; and
(4) there is -- between the first and the second
actions -- identity of parties, of subject matter, and of
causes of action.
-test to determine whether the causes of
action are identical: ascertain whether the same
evidence will sustain both actions, or whether there
is an identity in the facts essential to the
maintenance of the two actions. If the same facts or
evidence would sustain both, the two actions are
considered the same, and a judgment in the first
case is a bar to the subsequent action.

-Based on this test, it is apparent that petitioner is

simply invoking different grounds for the same cause
of action. By definition, a cause of action is the act or
omission by which a party violates the right of
another. In both petitions, petitioner has the same
cause - the declaration of nullity of his marriage to
respondent. What differs is the ground upon which
the cause of action is predicated. These grounds
cited by petitioner essentially split the various
aspects of the pivotal issue that holds the key to the
resolution of this controversy, that is, the actual
status of petitioner and respondents marriage.
-Furthermore, the instant case is premised on the
claim that the marriage is null and void because no
valid celebration of the same took place due to the
alleged lack of a marriage license. But in the earlier
case, petitioner impliedly conceded that the
marriage had been solemnized and celebrated in
accordance with law. Petitioner is now bound by this
admission. The alleged absence of a marriage license
which petitioner raises now could have been
presented and heard in the earlier case.
-Parties are bound not only as regards every matter
offered and received to sustain or defeat their claims
or demand but as to any other admissible matter
which might have been offered for that purpose and
of all other matters that could have been adjudged in
that case.
-A party cannot evade or avoid the application of res
judicata by simply varying the form of his action or
adopting a different method of presenting his case.
Perez v. CA: the statement of a different form of
liability is not a different cause of action, provided it
grows out of the same transaction or act and seeks
redress for the wrong. Two actions are not
necessarily for different causes of action simply
because the theory of the second would not have
been open under the pleadings in the first. A party
cannot preserve the right to bring a second action
after the loss of the first merely by having
circumscribed and limited theories of recovery
opened by the pleadings in the first.
-Litigants are provided with the options on the course
of action to take in order to obtain judicial relief.
Once an option has been taken and a case is filed in
court, the parties must ventilate all matters and
relevant issues therein. The losing party who files
another action regarding the same controversy will
be needlessly squandering time, effort and financial
resources because he is barred by law from litigating
the same controversy all over again.

-Having expressly and impliedly conceded the

validity of their marriage celebration, petitioner is
now deemed to have waived any defects therein. For
this reason, the Court finds that the present action
for declaration of nullity of marriage on the ground of
lack of marriage license is barred by the earlier
decision dismissing the petition for declaration of
nullity on the ground of psychological incapacity.
Disposition Petition denied for lack of merit. Costs
against petitioner.
SO ORDERED.

LEE BUN TING V ALIGAEN

76 SCRA 416
ANTONIO; April 22, 1977
NATURE
Original petition in the SC. Certiorari with preliminary
injunction.
FACTS
- The case involves a question of res judicata. The
first case was Dinglasan v Lee Bun Ting. The present
case seeks for the reversal of the decision in
aforementioned case.
DINGLASAN V LEE BUN TING
- Petitioners sold to Lee Liong, a Chinese citizen
(predecessor of Lee Bun Ting), a parcel of land
situated in Capiz, for P6,000. After the sale Lee Liong
constructed a concrete building which he used for his
lumber business and his residence.
- Petitioners sought for the declaration of nullity of
the sale. Petitioners contend that the sale was a
conditional sale with the right to repurchase, but the
RTC and CA found that the sale was absolute.
Another contention was that the sale is null and void
as it violated the 1973 Constitution, Art XIII, Sec. 5
(that foreigners cannot own land in the Philippines).
On June 27, 1956, the Court upheld the sale.
- The Supreme Court held that even if Lee Liong
violated the Constitution, the sale cannot be deemed
null and void because at the time of the sale, one of
the plaintiffs, Judge Rafael Dinglasan (an assistant
attorney at the DOJ) knew of the said Constitutional
provision. The vendor was equally guilty, and the
doctrine of pari delicto applied. The doctrine of in
pari delicto barred petitioner-appellants from
recovering the title to the property in question and
renders unnecessary the consideration of the other
arguments presented.

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- The Court pointed out the absence of policy
governing lands sold to aliens in violation of the
Constitutional prohibition.
PRESENT CASE
- Twelve (12) years later, private respondents
Dinglasan et al. filed a complaint on JULY 1, 1968
for the recovery of the same parcel of land (subjectmatter of the previous case), on the basis of the
decision of the SC in Philippine Banking Corporation
v Lui She. The respondents again asserted that the
sale violated the Constitution. They prayed that they
be declared the legal owners, the land be
surrendered, that Lee Bun Ting receive P6K as
restitution for the land, and that they be paid P2K
monthly until the return of the property.
- A motion to dismiss was filed by Lee Bun Ting on
the ground of res judicata, alleging that the issues
have definitely been settled in the Dinglasan case.
- On Oct. 10, 1968 Aligaen of Capiz CFI denied the
motion to dismiss. A motion for reconsideration was
filed by defendants. The claimed that in the case of
Philippine Banking Corporation, there is no statement
which would have the effect of reopening and
changing previously adjudicated rights of parties and
finally settled cases (meaning there is no express
prohibition against changing previous cases).
- Lee Bun Ting reiterated their defense of res
judicata on the basis of the decision of the SC on
June 27, 1956. They prayed that the complaint
be dismissed.
ISSUE
WON the case Rafael Dinglasan, et al. v Lee Bun
Ting, et al. could be relitigated in view of the
subsequent decision of the SC in Philippine Banking
Corp. v Lui She
HELD
NO.
Ratio It is clear that posterior changes in the
doctrine of the SC cannot retroactively be applied to
nullify a prior final ruling in the same proceeding
where the prior adjudication was had, whether civil
or criminal.
Reasoning
- Reasons of public policy, judicial orderliness,
economy and judicial time and the interests of
litigants, as well as the peace and order of society,
all require that stability be accorded the solemn and
final judgments of the courts or tribunals of
competent jurisdiction.
RES JUDICATA

- The doctrine of res judicata applies where,

between a pending action and one which has been
finally and definitely settled, there is identity of
parties, subject matter and cause of action. Parties
should not be allowed to litigate the same issue more
than once.
Rule 39, Sec. 49(b)
(b) In other cases the judgment or order is, with
respect to the matter directly adjudged or as to any
other matter that could have been raised in relation
thereto, conclusive between the parties and their
successors in interest by the title subsequent to the
commencement of the action or special proceeding,
litigating for the same title and in the same capacity.
(c) In any other litigation between the same parties
or their successors-in-interest, that only is deemed to
have been adjudged in a former judgment which
appears upon it face to have been so adjudged, or
was actually and necessarily included therein or
necessary thereto.
- 49(b) refers to bar by prior judgment, while 49(c)
refers to conclusiveness of judgment. The judgment
in the first case constitutes an absolute bar to the
subsequent action. (However, even if there is identity
of parties but no identity or cause of action, the first
judgment is conclusive in the second case.
- In the present case, the names of the parties
involved were the same, and the action and relief
prayed for are identicalannulment of sale and
recovery of the parcel of land.
- a subsequent reinterpretation of the law may be
applied to new cases but not to an old one finally and
conclusively determined by the people. Once the
judgment of the SC becomes final, it is binding on all
inferior courts, and hence beyond their power and
authority to alter or modify.
DISPOSITION
Certiorari is granted, with costs against private
respondents.

VILLARINO v AVILA
G.R. No. 131191
TINGA, J.; September 26, 2006
NATURE
Petition for review on certiorari assailing the decision
of the CA affirming the order of dismissal of the RTC
FACTS

- Petitioners spouses Villarino filed an action for

Annulment of Title, Reconveyance, Damages and
Injunction against respondents the Avilas and the
Provincial Sheriff. Petitioners opposed the application
of the Avilas for the registration of Lot No. 967 on the
ground that a portion of Lot No. 967 encroached
upon Lot No. 968 to the extent of 2,146 square
meters. Lot No. 968 is the adjacent property
belonging to petitioners. In their complaint,
petitioners averred that the registration of Lot No.
967 was based on an erroneous survey and technical
description. They sought the reconveyance of the
disputed area and the cancellation of the OCT to
reflect the consequent reduction in area. The Avilas
moved for the dismissal of the case on the ground of
res judicata. After a preliminary hearing, the RTC
issued the order dismissing the case.
- Petitioners elevated the matter to the CA,
contending that the RTC erred in dismissing the case
based on res judicata. The CA upheld the
incontrovertibility of the decree of registration one
year after its issuance. It also debunked the
erroneous survey and technical description foisted by
petitioners as not the fraud contemplated under Sec.
53 of PD 1529, which allows the reconveyance of
fraudulently registered land.
- Petitioners filed the instant petition. They argued
that the judgment in the land registration case is not
yet final because the aggrieved party can still avail of
the remedy of reconveyance and recovery of
damages, and that the trial court therein had no
jurisdiction over the disputed area since it had
already been covered by an OCT issued in the name
of petitioners.
ISSUES
WON petitioners complaint is barred by res judicata
HELD
YES
Ratio For res judicata to serve as an absolute bar to
a subsequent action, the following requisites must
concur:
(1) the former judgment or order must be final; (2)
the judgment or order must be on the merits; (3) it
must have been rendered by a court having
jurisdiction over the subject matter and parties; and
(4) there must be between the first and second
actions, identity of parties, of subject matter, and of
causes of action. When there is no identity of causes
of action, but only an identity of issues, there exists
res judicata in the concept of conclusiveness of

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judgment. The rule on conclusiveness of judgment
bars the relitigation of particular facts or issues in
another litigation between the same parties on a
different claim or cause of action.
Reasoning All the elements of res judicata in the
mode of bar by prior judgment are present. There is
no question that said decision was an adjudication on
the merits. Petitioners and respondents were the
same party litigants. The subject matter of the civil
case was the same property that was the subject
matter in the LRC case. Petitioners cause of action in
the civil case would call for the determination and
adjudication of ownership over the disputed portion,
an issue already passed by the land registration
court when it confirmed the Avilas title over Lot No.
967. Petitioners point out that the land registration
court had no jurisdiction over the disputed portion as
this had already been decreed in an earlier land
registration case and a second decree for the same
land is null and void. Petitioners claim that the
disputed portion is covered by their title, but that it
was erroneously included in the survey and technical
description subject of the Avilas land registration
application. That was precisely the content and
thrust of petitioners opposition to the Avilas land
registration application. But the land registration
court debunked the opposition and upheld the
application. Petitioners could have appealed the
decision of the land registration court. Their failure to
do so rendered said decision final and executory.
Disposition Petition DENIED.

CARILLO V. CA (DABON AND DABON)

(supra)
NATURE
Review on certiorari of decision of Court of Appeals
FACTS
- Gonzales filed complaint (action for specific
performance) against Manio sps, seeking execution
of deed of sale of property she bought fr Priscilla
Manio.
Gonzales said she pd downpayment to
Priscilla because she had an SPA from her son
Aristotle, the owner of the land.
- TC ruled in favor of Gonzales. Gonzales deposited
balance w/ the court and filed motion for execution,
w/c was w/drawn bec decision wasnt served on
defendants.
Sheriff finally served a copy at an
ungodly hour of 12 mn.

- TCs decision became final and executory.

- The Dabons, claiming to have bought the land fr
Aristotle, filed before the CA a petition for annulment
of judgment and orders of the TC. They alleged that
the decision was void for lack of jurisdiction over
their persons as the real parties in interest. CA
issued resolution restraining TC from implementing
its decision. Hence, this petition by Gonzales.
ISSUE/S
1. WON there was basis to annul the decision of the
TC.
2. WON the Dabons can seek annulment of the TC
judgment
HELD
1. YES.
Ratio
An action should be brought against the real party in
interest. The real party in interest is the one who
would be benefited or injured by the judgment or is
the one entitled to the avails of the suit.
Reasoning
- Named petitioners herein are Carillo (Presiding
Judge), Guyot (Clerk of Court), Senoy (Deputy
Sheriff), Risonar (Registrar of Deeds), and Gonzales.
Carillo, Guyot, Senoy and Risonar are not interested
parties because they would not benefit from the
affirmative reliefs sought. Only Gonzales remains as
genuine party-petitioner in this case.
- Gonzales insists that the Dabons have no right to
seek annulment of the TCs judgment bec theyre not
parties to the specific performance case. But the
Dabons insist that they are parties in interest bec
they are buyers, owners and possessors of the
contested land.
The specific performance case brought by
Gonzales to the TC named Priscilla Manio and
husband as defendants. However, the lot is owned
by Aristotle, their son. Priscilla had no interest on the
lot and can have no interest in the judgment of the
TC. Failure to implead Aristotle Manio renders the
proceedings in the specific performance case null
and void.
2. YES.
Ratio
A person need not be a party to the judgment sought
to be annulled. What is essential is that he can
prove that the judgment was obtained by fraud and
he would be adversely affected thereby.
Reasoning
Although the Dabons are not parties to the specific

performance case, any finding of extrinsic fraud

would adversely affect their ownership and could be
basis of annulment of judgment.
In this case,
Gonzales knew of the sale of lot by Aristotle Manio to
the Dabons yet Gonzales did not include the Dabons
in her petition. This is extrinsic fraud.
Disposition Petition is denied.

REGALA V SANDIGANBAYAN
G.R. No. 10538
KAPUNAN; September 20, 1996
NATURE
Special civil action for certiorari
FACTS
- This is an offshoot of the complaint before the
Sandiganbayan through the PCGG against Eduardo
Cojuangco Jr. for recovery of alleged ill-gotten wealth
including shares of stocks in certain corporations.
ACCRA Law Firm performs legal svcs incl.
organization
and
acquisition
of
business
associations/orgs. Sometimes, members of the firm
act as incorporators or stockholders. They acquire
info relative to assets of clients and their personal/biz
circumstances. In this case, ACCRA lawyers acted as
nominees-stockholders of said corps involved in
sequestration proceedings.
- PCGG filed Third Amended Complaint w/c excluded
respondent Raul Roco because he promised to reveal
identity of principal/s for whom he acted as nomineestockholder
- ACCRA lawyers said it was in furtherance of legit
lawyering and they became holders of shares of
stock only as incorporating or acquiring stockholders,
and as such, they do not claim any proprietary
interest in said shares.
Petitioner Paraja Hayudini, who separated fr
ACCRA, filed a separate answer.
- ACCRA lawyers filed a counter-motion that PCGG
also exclude them as parties-defendant as it did to
Roco. PCGG set conditions for exclusion of the
petitioners:
- disclosure of identity of clients
submission of docs substantiating lawyerclient relationship
submission of deeds of assignments
petitioners executed in favor of its clients
covering their respective shareholdings.

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- PCGG presented supposed proof to substantiate

compliance by Roco of the said conditions.
- Sandiganbayan denied exclusion of petitioners fr
the PCGG case. That denial is now being questioned.

2. Yes
Ratio
- The right to counsel of an accused is also involved
in this issue. If client were made to choose bet legal
representation w/o effective communication and
disclosure and legal representation w/ all his secrets
revealed then he might be compelled to stay away
from the judicial system or lose right to counsel.

and blood.
Privilege exists only after atty-client
relationship has been established. It does not
attach until there is a client.
- Privilege generally pertains to subject matter
of the relationship.
- Due process requires that the opposing party
should, as a general rule, know his adversary.
- EXCEPTIONS
- Client identity is privileged where a strong
probability exists that revealing clients name
would implicate that client in the very activity for
w/c he sought the lawyers advice.
- It is also privileged where disclosure would
open the client to civil liability.
- It is also privileged when govts lawyers have
no case against an attys client unless, by
revealing the clients name, the said name
would furnish the only link that would be
necessary to convict an individual of a crime.
- Apart fr the exceptions above, other situations
could qualify as exceptions. Info relating to the
identity of client may fall w/in privilege when clients
name itself has independent significance such that
disclosure would reveal client confidence.
The instant case FALLS UNDER AT LEAST 2
EXCEPTIONS.
First, disclosure would lead to
establish the clients connection w/ the very fact in
issue. Also, the link bet the offense and the legal
advice/svc was duly established by no less than the
PCGG itself. Petitioners have a legitimate fear that
identifying their clients would implicate them.
Revelation of the name would provide the link for
prosecution to build its case, where none otherwise
exists.
- It is diff when the client consults atty for illicit
purposes, seeking advice on how to around the law.
In this case, a client thinks he might have previously
committed something illegal and consults atty abt it.
- Court is trying to avoid fishing expedition by the
prosecution. After all, there are alternative sources
of info available to prosecutor w/c does not depend
on utilizing a defendants counsel as convenient and
readily available source of info.
- Lawyer-client confidentiality and loyalty exists not
only during relationship but even after termination of
the relationship.

Reasoning
- GENERAL RULE:
- Court has right to know that client whose
privileged info is sought to be protected is flesh

3. Yes
- Respondents failed to show that Roco actually
revealed the identity of his clients. PCGG shld show
that Roco was treated as a species apart fr the

Prof. Victoria A.

105

Avena

ISSUE/S
1. WON there is a cause of action against the
defendants
2. WON lawyer-client confidentiality applies in this
case
3. WON Roco and the ACCRA lawyers are similarly
situated, thus, making the denial of the ACCRA
lawyers exclusion from the PCGG case a violation of
equal protection clause.
HELD
1. NO.
Reasoning
- It is quite apparent that petitioners were impleaded
by the PCGG as co-defendants to force them to
disclose the identity of their clients. Clearly,
respondent PCGG is not after petitioners but the
bigger fish as they say in street parlance. This ploy
is quite clear from the PCGGs willingness to cut a
deal with petitioners -- the names of their clients in
exchange for exclusion from the complaint
- It would seem that petitioners are merely standing
in for their clients as defendants in the complaint.
Petitioners are being prosecuted solely on the basis
of activities and services performed in the course of
their duties as lawyers. Quite obviously, petitioners
inclusion as co-defendants in the complaint is merely
being used as leverage to compel them to name
their clients and consequently to enable the PCGG to
nail these clients. Such being the case, respondent
PCGG has no valid cause of action as against
petitioners and should exclude them from the Third
Amended Complaint

ACCRA lawyers on basis of classification w/c made

substantial distinctions based on real differences. No
such substantial distinctions exist.
Disposition Decision of the Sandiganbayan annulled
and set aside

DISMISSAL BY CLAIMANT
GOJO V GOYALA
(supra)
NATURE
Appeal from a decision of the CFI of Sorsogon
FACTS
-Appellee Segundo Goyala, with his now deceased
wife Antonina sold to Gojo a 2.5 hectare parcel of
agricultural land for P750 by a Deed of Pacto de
Retro Sale, the repurchase to be made within one
year, as stated in the deed. The deed also indicates
that the vendee paid another P100 in addition to the
purchase price. 10 years after the execution of said
document, Gojo filed a case with the CFI against
Goyala by way of a petition for consolidation of
ownership of said land. Gojo alleged that the period
for repurchasing had expired and ownership had
become consolidated in him and that for purposes of
recording the consolidation in the Registry of
Property, it was necessary that a judicial order be
issued to that effect.
-Goyala filed an answer to the petition, alleging that
they had obtained a cash loan of P810 from Gojo
payable w/in one year w/o interest and that to
guarantee payment, Goyala executed a mortgage in
favor of the petitioner on the parcel of land in
question. Hence, although the deed was executed in
the form of a pacto de retro sale, the true intention
of the parties was for it to be a mere mortgage to
secure payment. Goyala further claimed that he and
his wife attempted to pay the debt but petitioner
refused to receive the sum and cancel the mortgage.
By way of counterclaim, Goyala prayed that
petitioner receive the P810 and that the document of
mortgage be declared so, and not a pacto de retro
sale. He further prayed for P1800 per annum until
the final termination of the case for the fruits of said
property and in the case that the instrument be
deemed a true pacto de retro sale, that petitioner be

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ordered to execute a deed of resale in favor of

respondents in accordance with A1606CC.
-Counsel for Goyala filed a manifestation informing
the TC that the named defendant, Antonina, had
died, prompting the TC to issue an order requiring
counsel for the plaintiff to submit an amended
Complaint substituting Antonina with one of her
successors in interest as party defendants. Goyala
filed a motion to dismiss the petition on the ground
that notwithstanding the lapse of 43 days after
appellants receipt of a copy of the said TC order,
said appellant failed and neglected to submit the
amended complaint required of him. Appellant
opposed the motion but the TC dismissed the
complaint.
-Appellee filed a motion to declare appellant in
default in respect of said appellees counterclaim,
which was granted by the TC, which further required
Goyala to submit his evidence before the Clerk of
Court. TC rendered favorable judgment on appellees
counterclaim, declaring the Deed of Pacto de Retro
Sale an equitable mortgage and ordering Gojo to
receive the P810 and to restore possession to the
defendants and allowing them to redeem the same.
-Appellant appealed to the CA, which upon finding
that the said appeal involves purely questions of law,
certified the same to the SC.

entered. Favorable judgment obtained by the plaintiff

shall be enforced in the manner provided in these
Rules for prosecuting claims against the estate of a
deceased person. In Barrameda vs Barbara, the SC
held that an order to amend the complaint, before
the proper substitution of parties as directed by Sec.
17, Rule 3 (Sec. 16, new law), is void and imposes
upon the plaintiff no duty to comply therewith to the
end that an order dismissing the said complaint, for
such non-compliance, would similarly be void. It was
further held in Ferriera vs Gonzales that the
continuance of a proceeding during the pendency of
which a party thereto dies, without such party having
been validly substituted in accordance with the rules,
amounts to lack of jurisdiction.
WHEREFORE, the decision appealed from is set
aside

Prof. Victoria A.

106

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JUDGMENT ON THE PLEADINGS

PRE-TRIAL
JONATHAN LANDOIL INTERNATIONAL
CO. V. MANGUDADATU
00 SCRA 00
PANGANIBAN, August 16, 2004

ISSUES
WON TC erred in declaring plaintiff in default with
respect to defendants counterclaim

NATURE
Petition for Review under Rule 45

HELD
YES. The appellant contends that there is no occasion
for the TC to declare him in default in respect of
appellees counterclaim as said counterclaim falls
within the category of compulsory counterclaim
which does not call for an independent answer as the
complaint already denies its material allegations. It is
now settled that a plaintiff who fails or chooses not to
answer a compulsory counterclaim may not be
declared in default, principally because the issues
raised in the counterclaim are deemed automatically
joined by the allegations of the complaint.
-While it is true that under Sec. 3 of Rule 17, a
complaint may be dismissed for failure to prosecute
if the plaintiff fails to comply with an order of the
court, said provision cannot apply when the order
ignored is a void one, as in this case. (As in Sec 20 of
Rule 3, the death of the defendant in a contractual
money claim does dismiss such action for recovery,
but will be allowed to continue until final judgment is

FACTS
-Spouses Suharto and Miriam Sangki Mangudadatu
(Respondent) filed with the RTC of Tacurong City,
Sultan Kudarat, a Complaint for damages against
Jonathan Landoil International Co., Inc. ("JLI"
-Petitioner). Parties submitted their respective
Pretrial Briefs.
-Trial proceeded without the participation of
petitioner, whose absence during the pretrial had led
the trial court to declare it in default. Petitioner
received a copy of the RTCs Decision. It filed an
Omnibus Motion for New Trial and Change of Venue.
This Motion was deemed submitted for resolution but
was eventually denied by the trial court in an Order.
Petitioner received a copy of a Writ of Execution.
Alleging that it had yet to receive a copy of an Order
resolving the Omnibus Motion for New Trial,
petitioner filed a Motion to Quash/Recall Writ of
Execution. Its counsels -- Attys. Jaime L. Mario Jr. and
Dioscoro
G.
Peligro
-submitted
separate

withdrawals of appearance. On the same date, the

law firm Ong Abad Santos & Meneses filed an Entry
of Appearance with Supplement to Motion to
Quash/Recall Writ of Execution. To its Supplement,
petitioner attached the Affidavits of Attys. Mario and
Peligro attesting that they had not yet received a
copy of the Order resolving the Omnibus Motion for
New Trial. On the same day, January 7, 2002,
petitioner received a Sheriffs Notice regarding the
public auction sale of its properties. By reason of the
immediate threat to implement the Writ of Execution,
it filed with the CA a Petition for Prohibition seeking
to enjoin the enforcement of the Writ until the
resolution of the Motion to Quash. RTC issued an
Order directing respondents to file their written
comment on the Motion to Quash and scheduled the
hearing thereon for February 1, 2002. Petitioner
received a copy of respondents Vigorous Opposition
(Re: Motion to Quash/Recall Writ of Execution, and its
Supplement) dated January 16, 2001. Attached to
this pleading were two separate Certifications
supposedly issued by the postmaster of Tacurong
City, affirming that the Order denying the Motion for
New Trial had been received by petitioners two
previous counsels of record. The Certification
pertaining to Atty. Peligro alleged that a certain
Michelle Viquira had received a copy of the Order
intended for him. The Certification as regards Atty.
Mario stated that he had personally received his copy
on December 21, 2001.
-Petitioner personally served counsel for respondents
a Notice to Take Deposition Upon Oral Examination
of Attys. Mario and Peligro. The Deposition was
intended to prove that petitioner had not received a
copy of the Order denying the Omnibus Motion for
New Trial. At 9:30 a.m. on January 28, 2002, the
deposition-taking proceeded as scheduled -- at the
Business Center Conference Room of the Mandarin
Oriental Hotel in Makati City -- before Atty. Ana
Peralta-Nazareno, a notary public acting as
deposition officer. At 12:00 noon of the same day,
respondents sent petitioner a fax message via JRS
Express, advising it that they had filed a Motion to
Strike Off from the records the Notice to Take
Deposition; and asking it not to proceed until the RTC
would have resolved the Motion, a copy of which it
eventually received later in the day, at 3:10 p.m. On
January 29, 2002, separate Notices were sent by
Atty. Nazareno to Attys. Mario and Peligro, as
witnesses, for them to examine the transcript of their
testimonies. On the same date, Atty. Nazareno filed
via registered mail a Submission to the RTC

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attaching (1) a Certification that the witnesses had
been present and duly sworn to by her; (2) a
transcript bearing their signatures, attesting that it
was a true record of their testimonies; (3) a copy of
the Notice to Take Deposition delivered to her; and
(4) a copy of the Notice signed by respondents
counsel. Hearing on the Motion to Quash, petitioner
submitted its (1) Formal Offer of Exhibits, together
with the documentary exhibits marked during the
deposition-taking; (2)
Reply to respondents
Vigorous Opposition to the Motion to Quash; and (3)
Opposition ad Cautelam to respondents Motion to
Strike Off the Notice to Take Deposition. Meanwhile
CA issued a Resolution denying the Petition for
Prohibition. Petitioner received a copy of the RTCs
Resolution dated February 21, 2002, denying the
Motion to Quash, it received a copy of respondents
Motion to Set Auction Sale of Defendants Levied
Properties. Petitioner filed with the CA a Petition for
Certiorari and Prohibition, seeking to hold in
abeyance the February 21, 2002 RTC Resolution and
the December 4, 2001 Writ of Execution. Petitioner
alleged that since it had not received the Order
denying its Motion for New Trial, the period to appeal
had not yet lapsed.[33] It thus concluded that the
judgment, not being final, could not be the subject of
a writ of execution.
Ruling of the Court of Appeals = It ruled that
petitioner could no longer avail itself of a deposition
under Rule 23 of Rules of Court, since trial had
already been terminated. The appellate court also
opined that the alleged error committed by the trial
court -- when the latter disregarded two witnesses
oral depositions -- was an error of judgment not
reviewable by certiorari or prohibition. Finally, it
ruled that between the denial of a lawyer and the
certification of a postmaster, the latter would prevail.
ISSUES
(1) whether petitioner received the Order denying its
timely filed Motion for New Trial;
(2) whether the taking of oral depositions was proper
under the circumstances.
HELD
1. No. It is readily apparent that petitioner is raising
factual issues that this Court does not review. A
motion for new trial may be filed on the grounds of
(1) fraud, accident, mistake or excusable negligence
that could not have been guarded against by
ordinary prudence, and by reason of which the
aggrieved partys rights have probably been

impaired; or (2) newly discovered evidence that, with

reasonable diligence, the aggrieved party could not
have discovered and produced at the trial; and that,
if presented, would probably alter the result. In its
Omnibus Motion for New Trial, petitioner argued that
its counsel Atty. Mario was sick, a fact that allegedly
constituted excusable negligence for his failure to
appear at the August 8, 2000 pretrial. With regard to
Atty. Rogelio Fernandez, the collaborating counsel, it
alleged that the Board of Directors had terminated
his legal services on August 4, 2000.
-These grounds relied upon by petitioner cannot
properly secure a new trial. Counsels are not the
only ones required to attend the pretrial.
The
appearance of the plaintiff and the defendant is also
mandatory. The pertinent rule states:
Section 4. Appearance of parties. -- It shall be the
duty of the parties and their counsel to appear at the
pre-trial. The non-appearance of a party may be
excused only if a valid cause is shown therefore or if
a representative shall appear in his behalf fully
authorized in writing to enter into an amicable
settlement, to submit to alternative modes of dispute
resolution, and to enter into stipulations or
admissions of facts and of documents.
-The rationale for this requirement of compelling the
parties to appear personally before the court is to
exhaust the possibility of reaching a compromise.
While notice of the pretrial is served on counsels, it is
their duty to notify the party they represent.
The explanation offered by petitioner as regards the
absence of its counsel from the pretrial is therefore
unacceptable. It should have also justified its own
absence therefrom. Having failed to do so, it had no
valid ground to request a new trial.
Petitioner also failed to justify the absence of
both its counsels. Until their formal withdrawal is
granted,
lawyers
are
deemed
to
be
the
representatives of their clients.
Atty. Fernandez may have been notified of the
termination of his services on August 7, 2004. But as
far as the trial court was concerned, he continued to
be petitioners counsel of record, since no withdrawal
of appearance had yet been granted. Hence, his
absence from the pretrial was still not excusable.
While he could no longer represent petitioner, his
presence would have afforded him an opportunity to
make a formal withdrawal of appearance.
An
improvident termination of legal services is not an
excuse to justify non-appearance at a pretrial.
Otherwise, the rules of procedure would be rendered

meaningless, as they would be subject to the

counsels will.
-The Proper Remedy under the new Rules, the
consequence of non-appearance without cause at the
pretrial is not for the petitioner to be considered "as
in default," but "to allow the plaintiff to present
evidence ex parte and [for] the court to render
judgment on the basis thereof." This procedure was
followed in the instant case.
To the trial courts order allowing the ex parte
presentation of evidence by the plaintiff, the
defendants remedy is a motion for reconsideration.
An affidavit of merit is not required to be attached to
such motion, because the defense has already been
laid down in the answer.
Liberality is the rule in considering a motion for
reconsideration. It is best for the trial court to give
both the plaintiff and the defendant a chance to
litigate their causes fairly and openly, without resort
to technicality. Unless the reopening of the case is
clearly intended for delay, courts should be liberal in
setting aside orders barring defendants from
presenting evidence. Judgments based on an ex
parte presentation of evidence are generally frowned
upon.
In the present case, petitioner did not file a
motion for reconsideration after the trial court had
allowed respondents ex parte presentation of
evidence. The Rules of Court does not prohibit the
filing of a motion for a new trial despite the
availability of a motion for reconsideration. But the
failure to file the latter motion -- without due cause -is a factor in determining whether to apply the
liberality rule in lifting an order that allowed the ex
parte presentation of evidence. In its motions and
petitions filed with this Court and the lower courts,
petitioner did not explain why it had failed to file a
motion for reconsideration.
The lapse of time -- from the August 8, 2000 pretrial
to the September 5, 2000 ex parte presentation of
evidence, and until the June 19, 2001 promulgation
of the Decision-- shows the negligence of petitioner
and its counsels. Prior to the trial courts resolution
of the case, it had ample opportunity to challenge
the Order allowing the ex parte presentation of
evidence. Too late was the challenge that it made
after the Decision had already been rendered.
-In addition to the foregoing facts, petitioner fails to
convince us that it has not received the trial courts
Order denying its Motion for New Trial. There is a
disputable presumption that official duties have been
regularly performed. On this basis, we have ruled

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that the postmasters certification prevails over the
mere denial of a lawyer. This rule is applicable here.
Petitioner has failed to establish its non-receipt of the
trial courts Order denying its Motion for New Trial.
This Court notes the trial courts finding that
petitioner received a copy of respondents
September 24, 2001 Motion for Execution and
November 21, 2001 Motion for Early Resolution, as
well as the trial courts September 28, 2001 Order
submitting the Motion for Execution for resolution.
Given these unrebutted facts, it is unbelievable that
petitioner did not know that a ruling on the Motion
for New Trial had already been issued. At the very
least, the Motions filed by respondents should have
alerted it of such issuance. Otherwise, it could have
opposed their Motion for Execution by requesting the
RTC to resolve the Motion for New Trial; or the trial
court could have been informed by petitioner of the
latters
non-receipt
of
the
Order
resolving
respondents Motion.
2. No. A deposition may be taken with leave of
court after jurisdiction has been obtained over any
defendant or over property that is the subject of the
action; or, without such leave, after an answer has
been served. Deposition is chiefly a mode of
discovery, the primary function of which is to
supplement the pleadings for the purpose of
disclosing the real points of dispute between the
parties and affording an adequate factual basis
during the preparation for trial. The liberty of a party
to avail itself of this procedure, as an attribute of
discovery, is "well-nigh unrestricted if the matters
inquired into are otherwise relevant and not
privileged, and the inquiry is made in good faith and
within the bounds of the law."
Limitations would arise, though, if the examination is
conducted in bad faith; or in such a manner as to
annoy, embarrass, or oppress the person who is the
subject of the inquiry; or when the inquiry touches
upon the irrelevant or encroaches upon the
recognized domains of privilege.
As a mode of discovery resorted to before trial,
deposition has advantages, as follows:
-1. It is of great assistance in ascertaining the truth
and in checking and preventing perjury. x x x 2. It is
an effective means of detecting and exposing false,
fraudulent, and sham claims and defenses. 3. It
makes available in a simple, convenient, and often
inexpensive way facts which otherwise could not
have been proved, except with great difficulty and
sometimes not at all.

4. It educates the parties in advance of trial as to the

real value of their claims and defenses, thereby
encouraging settlements out of court. 5. It expedites
the disposal of litigation, saves the time of the
courts, and clears the docket of many cases by
settlements and dismissals which otherwise would
have to be tried. 6. It safeguards against surprise at
the trial, prevents delays, and narrows and simplifies
the issues to be tried, thereby expediting the trial. 7.
It facilitates both the preparation and the trial of
cases.
-The Rules of Court and jurisprudence, however, do
not restrict a deposition to the sole function of being
a mode of discovery before trial. Under certain
conditions and for certain limited purposes, it may be
taken even after trial has commenced and may be
used without the deponent being actually called to
the witness stand.
In Dasmarias Garments v.
Reyes, we allowed the taking of the witnesses
testimonies through deposition, in lieu of their actual
presence at the trial. Thus, "[d]epositions may be
taken at any time after the institution of any action,
whenever necessary or convenient. There is no rule
that limits deposition-taking only to the period of pretrial or before it; no prohibition against the taking of
depositions after pre-trial." There can be no valid
objection to allowing them during the process of
executing final and executory judgments, when the
material issues of fact have become numerous or
complicated.
In keeping with the principle of promoting the just,
speedy and inexpensive disposition of every action
and proceeding, depositions are allowed as a
"departure from the accepted and usual judicial
proceedings of examining witnesses in open court
where their demeanor could be observed by the trial
judge." Depositions are allowed, provided they are
taken in accordance with the provisions of the Rules
of Court (that is, with leave of court if the summons
have been served, without leave of court if an
answer has been submitted); and provided, further,
that a circumstance for their admissibility exists
(Section 4, Rule 23, Rules of Court).
The Rules of Court vests in the trial court the
discretion to order whether a deposition may be
taken or not under specified circumstances that may
even differ from those the proponents have intended.
However, it is well-settled that this discretion is not
unlimited. It must be exercised -- not arbitrarily,
capriciously or oppressively -- but in a reasonable
manner and in consonance with the spirit of the law,
to the end that its purpose may be attained.

When a deposition does not conform to the essential

requirements of law and may reasonably cause
material injury to the adverse party, its taking should
not be allowed.
-The Rules of Court provides adequate safeguards to
ensure the reliability of depositions. The right to
object to their admissibility is retained by the parties,
for the same reasons as those for excluding evidence
if the witness were present and had testified in court;
and for errors and irregularities in the deposition. As
a rule, depositions should be allowed, absent any
showing that taking them would prejudice any party.
-Depositions may be used for the trial or for the
hearing of a motion or an interlocutory proceeding,
under the circumstances specified hereunder:
Section 4. Use of Depositions. -- At the trial or upon
the hearing of a motion or an interlocutory
proceeding, any part or all of a deposition, so far as
admissible under the rules of evidence, may be used
against any party who was present or represented at
the taking of the deposition or who had due notice
thereof, in accordance with any one of the following
provisions:
(a)Any deposition may be used by any party
for the purpose of contradicting or impeaching the
testimony of deponent as a witness; (b)The
deposition of a party or of anyone who at the time of
taking the deposition was an officer, director, or
managing agent of a public or private corporation,
partnership, or association which is a party may be
used by an adverse party for any purpose; (c) The
deposition of a witness, whether or not a party, may
be used by any party for any purpose if the court
finds: (1) that the witness is dead; or (2) that the
witness resides at a distance more than one hundred
(100) kilometers from the place of trial or hearing, or
is out of the Philippines, unless it appears that his
absence was procured by the party offering the
deposition; or (3) that the witness is unable to attend
or testify because of age, sickness, infirmity, or
imprisonment; or (4) that the party offering the
deposition has been unable to procure the
attendance of the witness by subpoena; or (5) upon
application and notice, that such exceptional
circumstances exist as to make it desirable, in the
interest of justice and with due regard to the
importance of presenting the testimony of witnesses
orally in open court, to allow the deposition to be
used; and (d) If only part of a deposition is offered in
evidence by a party, the adverse party may require
him to introduce all of it which is relevant to the part

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introduced, and any party may introduce any other
parts.
The present case involved a circumstance that fell
under the above-cited Section 4(c)(2) of Rule 23 -the witnesses of petitioner in Metro Manila resided
beyond 100 kilometers from Sultan Kudarat, the
place of hearing. Petitioner offered the depositions
in support of its Motion to Quash (the Writ of
Execution) and for the purpose of proving that the
trial courts Decision was not yet final. As previously
explained, despite the fact that trial has already
been terminated, a deposition can still be properly
taken.
We note, however, that the RTC did not totally
disregard petitioners depositions. In its February 21,
2001 Resolution, the trial court considered and
weighed -- against all other evidence -- that its Order
denying the Motion for New Trial filed by petitioner
had not been received by the latters counsels.
Despite their depositions, petitioner failed to prove
convincingly its denial of receipt.
Disposition. WHEREFORE, the Petition is DENIED,
and the assailed Decision and Resolution AFFIRMED.
Costs against petitioner. SO ORDERED.

PAREDES V VERANO
G.R. No.164375
TINGA; October 12, 2006
NATURE
Petition for review
FACTS
- A complaint for the establishment of a right of way
was filed at RTC Maasin by Paredes, Alago and
Baybay (plaintiffs-petitioners) against Verano and
Hinunangan (defendants-respondents). It culminated
in a judgment by compromise. In the Compromise
Agreement, Hinunangan granted a 2- meter-wide
right of way in favor of Paredes for a consideration of
P6K.
- Alleging that petitioners had blocked the passage
way in violation of the Compromise Agreement,
respondents
filed
a
complaint
for
specific
performance with damages against petitioners.
Petitioners answered, denied having violated the
Compromise Agreement. They alleged that like them,
respondents were not actual residents of Brgy
Tagnipa where the "road right of way" was

established and that respondent Hinunangan had

already sold his only remaining lot in the vicinity to
petitioner Paredes
- Petitioners next filed MTD for lack of cause of
action, which was denied by RTC. Petitioners
elevated case to CA and SC but to no avail.
Petitioners asked Judge Kapili to inhibit himself from
the case. The judge denied the motion
- Pre-trial was initially set and reset and reset again.
In the pre-trial, Baybay's counsel moved to reset it to
another date on account of a conflicting hearing.
However, petitioner Baybay, who is the father of the
counsel for petitioners, was present in court along
with the other defendants. RTC was informed of a
proposed settlement between the parties, although
respondent Baybay qualified his reaction by telling
the court that he would first have to inform his
lawyer and the co-defendants of the said proposal.
The RTC then commented unfavorably on the
absence
of
petitioners'
counsel,
expressing
disappointment towards his attitude, even making
note of the fact that not once had the counsel
appeared before the RTC, even though the case had
already reached SC over the denial of MTD. RTC
again reset the pre-trial date.
- Before the new pre-trial date, counsel for
petitioners filed a Manifestation of Willingness to
Settle With Request for Cancellation. Apart from
manifesting his willingness to settle the complaint,
petitioners' counsel suggested to the opposing
counsel that he be informed of the terms of the
proposed settlement. So, petitioners' counsel
requested the cancellation of the 23 Jan 2004
hearing.
- But the hearing pushed through on 23 Jan 2004.
Private respondents and their counsel were present.
So were Baybay and Paredes, and co-defendant
Alago, but not their counsel. The RTC allowed
respondents to present their evidence ex parte, "for
failure of the defendants counsel to appear before
RTC. Petitioners filed MFR, but was denied
- So, petitioners filed a petition for certiorari with CA.
CA dismissed it for failure to attach duplicate original
copies of the annexes to the petition other than the
RTC Orders and for failure to submit such other
pleadings relevant and pertinent to the petition.
Petitioners filed MFR with Motion to Admit Additional
Exhibits, adverting to the documents previously
missing from the petition but attached to the motion.
- MFR dismissed. CA resolved on the merits, ruling
that under Sec 5, Rule 18 ROC, it is the failure of the
defendant, and not defendant's counsel, to appear at

the pre-trial that would serve cause to allow plaintiff

to present evidence ex parte. CA noted that Baybay
had made it clear that he would never enter into any
amicable settlement without the advice of his
counsel.
- CA cited Sps. Ampeloquio, Sr. v. CA where the Court
held that if every error committed by RTC were to be
a proper object of review by certiorari, then trial
would never come to an end and the appellate court
dockets would be clogged with petitions challenging
every interlocutory order of the TC. It concluded that
the acts of Judge Kapili did not constitute grave
abuse of discretion equivalent to lack of jurisdiction.
ISSUE
WON the absence of the counsel for defendants at
the pre-trial, with all defendants themselves present,
is a ground to declare defendants in default and to
authorize plaintiffs to present evidence ex parte.
HELD
NO
Ratio The absence of counsel for defendants at pretrial does not ipso facto authorize the judge to
declare the defendant as in default and order the
presentation of evidence ex parte. It bears stressing
that nothing in the Rules of Court sanctions the
presentation of evidence ex parte upon instances
when counsel for defendant is absent during pretrial. The Rules do not countenance stringent
construction at the expense of justice and equity
Reasoning
- The order of RTC allowing respondents to present
evidence ex parte was undoubtedly to the detriment
of petitioners. Since the RTC would only consider the
evidence presented by respondents, and not that of
petitioners, the order strikes at the heart of the case,
disallowing as it does any meaningful defense
petitioners could have posed. A judgment of default
against a defendant who failed to attend pre-trial, or
even any defendant who failed to file an answer,
implies a waiver only of their right to be heard and to
present evidence to support their allegations but not
all their other rights.
- Nothing in the ROC authorizes a trial judge to allow
the plaintiff to present evidence ex parte on account
of the absence during pre-trial of the counsel for
defendant. In Rule 18, Sect. 4 imposes the duty on
litigating parties and their respective counsel during
pre-trial. The provision also provides for the
instances where the non-appearance of a party may
be excused. Nothing, however, in Sec. 4 provides for

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a sanction should the parties or their respective
counsel be absent during pre-trial. Instead, the
penalty is provided for in Sec. 5. Notably, what
Section 5 penalizes is the failure to appear of either
the plaintiff or the defendant, and not their
respective counsel.
-The Court also cited cases and discussed why
although they have similar facts are inapplicable or
do not constitute a precedent to the instant case.
These cases are: UCPB v. Magpay, Jonathan Landoil
International Co. v. Mangudadat, SSS v. Chaves,
Africa v. IAC. (See original)
- Due process dictates that petitioners be deprived
of their right to be heard and to present evidence to
support their allegations if, and only if, there exists
sufficient basis in fact and in law to do so. There
being a manifest lack of such basis in this case,
petitioners would be unjustly denied of the
opportunity to fully defend themselves should the
Court affirm the questioned orders which were
evidently issued by the RTC with grave abuse of
discretion. The better and certainly more prudent
course of action in every judicial proceeding is to
hear both sides and decide on the merits rather than
dispose of a case on technicalities
- While counsel is somewhat to blame for his nonattendance at pre-trial, incidentally the operative act
which gave birth to the controversy at bar, it would
be most unfair to penalize petitioners for what may
be the deficiency of their lawyer when the
consequent penalty has no basis in law.
Disposition Petition is granted. RTC and CA rulings
reversed.

COURSE OF TRIAL
1. trial proper
2. kinds of trial
a. consolidated/ separate trial
SPS. YU V MAGNO CONSTRUCTION
G.R. No. 138701-02
GARCIA; October 17, 2006
NATURE
Petition for review on certiorari
FACTS
- The spouses Roque Yu, Sr. and Asuncion Yu are the
controlling stockholders of Leyte Lumber. During his
lifetime, Engr. Basilio G. Magno entered into a verbal

agreement with Leyte Lumber through Roque Yu, Sr.,

whereby the latter agreed to supply Magno with
building materials he may need in his construction
business. The success of Magno's business gave birth
to the Basilio G. Magno Construction and
Development Enterprises, Inc.
- Owing to this fruitful relationship, the two (Roque
Yu, Sr. and Magno) entered into a joint venture, the
Great Pacific Construction Company (GREPAC), with
Yu as President and Magno as Vice President. The
relationship between Yu and Magno began in 1975
and continued until Magno's death on August 21,
1978.
- On January 30, 1979, in the RTC of Tacloban City,
the petitioners instituted two separate complaints
for sums of money with damages and preliminary
attachment against the respondents. One was Civil
Case No. 5822, raffled to Branch 8 of the court,
instituted by Leyte Lumber against BG Magno and
the Estate of Basilio Magno, to collect on the
principal amount of P1,270,134.87 for construction
materials claimed to have been obtained on credit by
BG Magno, and the other was Civil Case No. 5823,
raffled to Branch 6, filed by the Yu spouses against
BG Magno and the Estate of Basilio Magno, to collect
upon loans and advances (P3,575,000.00) allegedly
made by the spouses to BG Magno.
- On June 17, 1993 the court rendered its decision i
favor of the defendant on both cases. The two
separate decisions of even date were penned by
Judge Getulio M. Francisco, the presiding judge of
Branch 6 to which only Civil Case No. 5823 was
raffled. The parties did not move for a
reconsideration of the two decisions nor did they call
the attention of Judge Francisco on the absence of an
order for consolidation of the two cases. Instead,
they directly interposed their respective appeals to
the CA.
- In the CA, the two cases on appeal were
consolidated. In Civil Case No. 5822, the appealed
decision is MODIFIED by declaring that defendant
B.G.
Magno
Construction
and
Development
Enterprises, Inc., made an overpayment in the
amount of P631,235.61, instead of P620,239.61 and
ordering plaintiff to return said amount to defendant,
with interest of 12% per annum from promulgation
hereof until fully paid, and by DELETING the award of
exemplary damages in the sum of P200,000.00 in
favor of defendan. In Civil Case No. 5823, the
appealed decision is REVERSED and SET ASIDE.
Accordingly, defendant B.G. Magno Construction and
Development Enterprises, Inc. is ordered to pay

plaintiffs the sum of P625,000.00, with 12% interest

per annum from promulgation hereof until fully paid,
and the further sum of P50,000.00 by way of
attorney's fees, plus costs of suit.
ISSUE
WON Branch 6 had jurisdiction to decide Civil
Case No. 5822 pending in Branch 8 in the
absence of a motion or order of consolidation of
the two cases
HELD
YES
- There was nothing irregular in the procedure taken.
The records show that there appears to have been a
previous agreement to either transfer or consolidate
the two cases for decision by the presiding judge of
Branch 6.
- Indeed, when the respondents filed a Motion to Lift,
Dissolve and Quash the Writs of Attachment with
Branch 6 on January 20, 1993, the caption thereof
indicated the docket numbers of both cases.
Likewise, on October 29, 1993, when the petitioners'
new counsel entered his Formal Appearance, in the
caption thereof was also written the docket numbers
of both cases. Petitioners' previous counsel of
longstanding (whose representation dates back to
the filing of the two complaints in 1979) filed his
Motion to Withdraw as Counsel on October 30, 1993,
and the caption thereof similarly indicated the docket
numbers of both cases. Subsequent orders of the
court which emanated from Branch 6 also bear, in
the caption thereof, the titles and docket numbers of
both cases. In other words, as early as six months
prior to the promulgation of Judge Franciscos
decisions in the two cases, there appears to have
been a transfer or consolidation of said cases in
Branch 6 and the parties knew of it, albeit the actual
date when the two cases were consolidated or
transferred does not appear on record. Nonetheless,
the fact remains that no opposition or objection in
any manner was registered by either of the parties to
the same, thereby evincing their consent thereto. It
is, therefore, already too late in the day for the
petitioners to question the competence of Judge
Francisco to render the separate decisions in the two
cases. Petitioners may not now question the transfer
or consolidation of the two cases on appeal, for they
knew of it and did not question the same in the court
below. They may not now make a total turn-around
and adopt a contrary stance; more so when the
judgment issued is adverse to their cause.

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- The next logical questions are: Is the consolidation
of the two cases (Civil Case Nos. 5822 and 5823) a
procedural step which the court a quo could have
properly taken? Is it a remedy available within the
context of the surrounding circumstances? We
answer both questions in the affirmative. The two
cases were filed just a few months apart; they
involve simple cases of collection of sums of money
between identical parties and no other; the
respondents (as defendants therein) claim, in both
cases, essentially the same defense, which is
overpayment; they cover the same period of
transacting continuous business that spans four
years; they relate to simple issues of fact that are
intimately related to each other; they entailed the
presentation of practically identical evidence and
witnesses; in fact, a broad part of the evidence and
testimonies in one case was totally adopted or
reproduced in the other by either or both parties.
And the trial court, being multi-sala courts, its
Branches 6 and 8 possessed jurisdiction to try either
or both cases on their own.
- A court may order several actions pending before it
to be tried together where they arise from the same
act, event or transaction, involve the same or like
issues, and depend largely or substantially on the
same evidence, provided that the court has
jurisdiction over the case to be consolidated and that
a joint trial will not give one party an undue
advantage or prejudice the substantial rights of any
of the parties (citing 1 CJS, 1347). Consolidation of
actions is expressly authorized under Section 1, Rule
31 of the Rules of Court:
Section 1.
Consolidation. When actions
involving a common question of law or fact are
pending before the court, it may order a joint hearing
or trial of any or all the matters in issue in the
actions; it may order all the actions consolidated;
and it may make such orders concerning proceedings
therein as may tend to avoid unnecessary costs or
delay.
- The obvious purpose of the above rule is to avoid
multiplicity of suits, to guard against oppression and
abuse, to prevent delays, to clear congested dockets,
to simplify the work of the trial court; in short the
attainment of justice with the least expense and
vexation to the parties litigants (citing 1 CJS 13421343).
- Consolidation of actions is addressed to the sound
discretion of the court, and its action in consolidating

will not be disturbed in the absence of manifest

abuse of discretion. In the instant case, respondent
judge did not abuse his discretion in ordering the
joint trial of the two cases. There is no showing that
such joint trial would prejudice any substantial right
of petitioner. Neither does the latter question the
court's jurisdiction to try and decide the two cases.
- The ordered consolidation of cases, to our mind,
crystallizes into reality the thinking of our
predecessors that:
". . . The whole purpose and object of procedure is to
make the powers of the court fully and completely
available for justice. The most perfect procedure that
can be devised is that which gives opportunity for
the most complete and perfect exercise of the
powers of the court within the limitations set by
natural justice. It is that one which, in other words,
gives the most perfect opportunity for the powers of
the court to transmute themselves into concrete acts
of justice between the parties before it. The purpose
of such a procedure is not to restrict the jurisdiction
of the court over the subject matter, but to give it
effective facility in righteous action. It may be said in
passing that the most salient objection which can be
urged against procedure today is that it so restricts
the exercise of the court's powers by technicalities
that part of its authority effective for justice between
the parties is many times an inconsiderable portion
of the whole. The purpose of procedure is not to
thwart justice. Its proper aim is to facilitate the
application of justice to the rival claims of contending
parties. It was created not to hinder and delay but to
facilitate and promote the administration of justice. It
does not constitute the thing itself which courts are
always striving to secure to litigants. It is designed as
the means best adapted to obtain that thing. In other
words, it is a means to an end. It is the means by
which the powers of the court are made effective in
just judgments. When it loses the character of the
one and takes on that of the other the administration
of justice becomes incomplete and unsatisfactory
and lays itself open to grave criticism."
Disposition
Judgment
is
hereby
rendered
MODIFYING the assailed CA decision by setting aside
and deleting the award of the respondents
counterclaim in the amount of P142,817.27 in Civil
Case No. 5822; reiterating the P50,000.00 award of
attorneys fees and litigation expenses in favor of the
respondents in Civil Case No. 5822; and deleting the
award of attorneys fees to the petitioners in Civil

Case No. 5823. In all other respects, the assailed

decision is AFFIRMED.

b. trial by commissioners
ANGARA v FEDMAN
G.R. NO. 156822
AUSTRIA-MARTINEZ; October 18,
2004
NATURE: Motion for Reconsideration
FACTS:
- On February 8, 1996, respondent filed a complaint
for Accion Reinvindicatoria and/or Quieting of Title
against petitioner before the Regional Trial Court,
Nasugbu, Batangas , claiming to be the rightful
owners of the land currently occupied by petitioner.
They even conducted a relocation survey.
-petitoner on the other hand claimed that he is the
lawful owner; the said parcels of land do not
encroach on respondent's property; and assuming
that there is such an encroachment, he nevertheless
had acquired title thereto by virtue of acquisitive
prescription
-RTC ordered the constitution of committee of three
surveyors composed of geodetic engineers
representing the petitioner, respondent and the
DENR
-On June 22, 2000, the RTC issued subpoena ad
testificandum to the three Geodetic Engineers who
composed the Board of Commissioners to testify in
connection with their individual reports. The RTC also
reminded respondent that the case was filed as early
as February 8, 1996, the pre-trial was conducted on
January 20, 1999 and since then respondent has not
even commenced presenting its evidence on the
merits.
-On September 27, 2000, the RTC ordered the
dismissal of the case due to the failure of the
respondent to prosecute its case for an unreasonable
length of time. However, upon respondent's motion
for reconsideration, the RTC reconsidered the order
of dismissal.
-petitioner filed an Omnibus Motion praying that
judgment be rendered on the basis of the
commissioners' report and, alternatively, all other

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persons who will be adversely affected by the

relocation survey be impleaded as parties
-RTC denied the said Omnibus Motion. The RTC held
that according to respondent there was no joint
survey conducted by the commissioners as ordered
by it and as agreed upon by the parties, hence the
report of the commissioners cannot be the basis of
the judgment, petitioner filed a motion for
reconsideration which was rejected by the RTC.
Petitioner then filed a petition for certiorari with the
CA. this too was rejected. Petitoner filed a petition for
certiorari with the SC. Court denied the petition for
review on certiorari for failure to sufficiently show
that the CA committed any reversible error. Hence,
the present Motion for Reconsideration

survey, which literally means one that is conducted

physically together or in the presence of one
another." The order constituting the panel of
commissioners, however, does not define what a
joint relocation survey entails nor does it lay out the
steps or procedures in conducting the same.
Petitioner submits that the term "joint survey" does
not rule out a survey that is coordinated and linked
together resulting in a joint finding and
recommendation. On the other hand, respondent
subscribes to the pronouncement of the RTC that the
record is replete with explicit motion and orders of
the court calling for joint survey.
*issue of certiorari (important to note)
- It must be emphasized that the petition before the
CA is a special civil action for certiorari under Rule 65
of the Rules of Court. Certiorari under Rule 65 is a
remedy narrow in scope and inflexible in character. It
can be invoked only for an error of jurisdiction, that
is, one where the act complained of was issued by
the court, without or in excess of jurisdiction, or with
grave abuse of discretion which is tantamount to lack
or in excess of jurisdiction.
-In this case, the assailed orders of the RTC are but
resolutions on incidental matters which do not touch
on the merits of the case or put an end to the
proceedings. They are interlocutory orders since
there leaves something else to be done by the RTC
with respect to the merits of the case. Consequently,
the Court is perplexed that, in resolving the petition
before it, the Court of Appeals chose to delve into the
wisdom and soundness of the orders of the RTC,
overlooking the nature of the petition before it. The
supervisory jurisdiction of the court to issue a
certiorari writ cannot be exercised in order to review
the judgment of the lower court as to its intrinsic
correctness, either upon the law or the facts of the
case
-Petitioner failed to demonstrate his claim that the
RTC acted with grave abuse of discretion amounting
to lack or in excess of its jurisdiction in denying
petitioner's prayer for rendition of judgment based
on the commissioners' report. The Rules of Court
clearly provides that the trial court is not bound by
the findings of the commissioners or precluded from
disregarding the same. It may adopt, modify, reject
the report or recommit it with instructions, or require
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Prof. Victoria A.

112

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ISSUE: WON CA erred in rejecting the appeal

HELD: no.
-According to petitioner, this is a "simple case of an
alleged 'encroachment' or 'overlapping' of property
boundaries." Considering that the issue involves
principally a factual and technical matter for which
the RTC, at the instance of the parties, created a
Panel of Commissioners has done its job and the
chairman submitted his report on the basis of his
evaluation of the separate surveys conducted by the
members. The RTC, however, simply ignored the
report on the technical and lame excuse that the
Panel of Commissioners did not conduct a "joint
survey."
-petitioner submits that the RTC cannot simply ignore
the commissioners' report without considering its
merits simply because the parties agreed that the
same is not final and binding. Petitioner argues that
the RTC should have considered the merits of the
report and acted on its recommendation instead of
rejecting it outright without any cause or reason. As
to the insistence of respondent that the RTC ordered
a "joint survey", petitioner submits that there is
nothing in the order of the RTC defining or specifying
what a "joint" survey is.
-Petitioner reiterates his arguments in the petition
that a joint survey, as understood by respondent,
wherein the commissioners literally go out together,
conduct a survey in the presence of one another, and
prepare one report, could not have been
contemplated by the RTC since the commissioners
nominated by the parties insisted on two different
methods or approaches for the survey.
-A battle of semantics is principally being waged
before this Court. Petitioner argues that undue
emphasis was placed on the words "joint relocation

3. incidents/ processes
a. calendar of cases

b. intervention
HOLIDAY INN V SANDIGANBAYAN
186 SCRA 447
MEDIALDEA: June 8, 1990
NATURE:
Petition for review on certiorari (treated as a special
civil action for certiorari)
FACTS:
On January 1, 1976, Holiday Inn, Inc. (HII)
entered into a management contract with
New Riviera Hotel and Development Co.,
Inc. (NRHDC) for a period of ten (10) years.
Article 18 of said agreement stipulates:
ARTICLE 18 RIGHT OF FIRST REFUSAL
If Owner, at any time or times during the term
hereof, shall receive a bona fide offer from a third
party acceptable to Owner, or which Owner does
not promptly reject, to purchase the Premises or
any part thereof, or the business conducted in
connection therewith, or in the buildings,
equipment, or furnishings used in connection
therewith, or any interest in Owner (whether a
partnership, or corporation or otherwise), Owner
shall deliver to Manager an executed original copy
of such offer and agrees concurrently therewith to
deliver to Manager an financial information
(including but not limited to, certified balance
sheets and operating statements) involved and
such, other information as may be reasonably
requested by Manager. Manager may, within
twenty one (21) days of its receipt of such offer
and said financial data, at its portion, purchase
said interest of said Owner on the terms of said
offer.

On January 1, 1976, NRHDC and HII

assigned all their rights under the above
mentioned agreement to petitioner Holiday
Inn (Phils.), Inc. (HIP)
On April 22, 1986, NRHDC was sequestered
by the PCGG which subsequently appointed
fiscal agents and/or placed an operating
team to monitor the activities of said
corporation.
Because of numerous controversies and
conflicts resulting in operational problems
regarding NRHDC, PCGG and Roberto S.
Benedicto, who is perceived to be the
controlling stockholder of the company,
entered into an agreement whereby 2/3 of

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-

the members of the Board of Directors of

NRHDC shall be nominees of the PCGG and
1/3 thereof shall be nominees of Mr.
Benedicto.
On July 14, 1986, HIP and NRHDC, as
sequestered by PCGG entered into an
agreement (addendum) extending the
terms of their January 1, 1976 agreement
thereof to an indefinite period "on its
existing terms and conditions" with either
party having the right to terminate the
agreement upon six (6) months prior written
notice to the other party
On May 10, 1988, NRHDC served upon HIP a
letter advising that the management
agreement shall be terminated six (6)
months from said date. It was latter learned
that the letter of termination was brought
about by NRHDCs decision to have New
World Hotel Philippines (NWHP) manage the
property in lieu of HIP.
Contending that there was breach of Article
18 of its original management agreement
with NRHDC, HIP initiated on November 2,
1988 an action for intervention in
Sandiganbayan, a sequestration case, and
wherein NRHDC was included as among the
firms sequestered, alleged to be part of the
ill-gotten wealth amassed by Roberto S.
Benedicto in conspiracy with former
President Ferdinand Marcos.
The
proposed
complaint-in-intervention
attached to the motion-in-intervention
questions
the
termination
of
the
management
agreement
without
the
corresponding prior notice and/or right of
first refusal under Article 18 of the
Agreement. Petitioner likewise prayed for
recovery of unpaid management fees under
the agreement.
On November 11, 1988, the Sandiganbayan
issued the questioned Resolution denying
HIPs motion for intervention for lack of
jurisdiction since
HIP has flied the present petition contending
that, the Sandiganbayan has exclusive and
original jurisdiction over all cases civil or
criminal, and all incidents arising from
incidental to, or related to, such cases
necessarily
fall
likewise
under
the
Sandiganbayan's exclusive, and original

jurisdiction subject to review on certiorari

exclusively by the Supreme Court
The court a quo issued a temporary
restraining order on November 16, 1988.

ISSUES
1. WON petitioner has a legal interest
sufficient to justify its intervention
2. WON the Sandiganbayan has jurisdiction
over the subject matter of petitioners
proposed complaint-in-intervention
HELD
1. NO
Reasoning
Sec. 2 of Rule 12 tells us that a person may intervene
in proceedings in progress if that person has a legal
interest in the success of either of the parties, or
against both or when a disposition of the property
involved would affect the prospective intervenor.
Holiday Inn, Inc., has not shown how the termination
or continuation of its management contract would be
legally affected by a finding of whether or not
Roberto S. Benedicto lawfully acquired RIVIERA.
The
subject-matter
of
petitioner's
proposed
complaint-in-intervention involves basically, an
interpretation of contract, i.e., whether or not the
right of first refusal could and/or should have been
observed, based on the Addendum/Agreement of July
14, 1988, which extended the terms and conditions
of the original agreement of January 1, 1976. The
question of whether or not the sequestered property
was lawfully acquired by Roberto S. Benedicto has no
bearing on the legality of the termination of the
management contract by NRHDC's Board of
Directors. The two are independent and unrelated
issues and resolution of either may proceed
independently of each other. Upholding the legality
of Benedicto's acquisition of the sequestered
property is not a guarantee that HIP's management
contract would be upheld, for only the Board of
Directors of NRHDC is qualified to make such a
determination.
2. NO
Reasoning
The original and exclusive jurisdiction given to the
Sandiganbayan over PCGG cases pertains to (a)
cases filed by the PCGG, pursuant to the exercise of
its powers under Executive Order Nos. 1, 2 and 14.
as amended by the Office of the President, and

Article XVIII, Section 26 of the Constitution, i.e.,

where the principal cause of action is the recovery of
ill-gotten wealth, as well as all incidents arising from,
incidental to, or related to such cases and (b) cases
filed by those who wish to question or challenge the
commission's acts or orders in such cases.
Evidently,
petitioner's
proposed
complaint-inintervention is an ordinary civil case that does not
pertain to the Sandiganbayan. As the Solicitor
General stated, the complaint is not directed against
PCGG as an entity, but against a private corporation,
in which case it is not per se, a PCGG case.
Dispositive. Dismissed.

ORDONEZ V GUSTILO
192 SCRA 469
PARAS; December 20, 1990
NATURE
Petition for certiorari to review decision and order of
RTC Cavite, Br. 16, Cavite City, Gustilo, J.
FACTS
- Respondent Espiritu filed complaint for specific
performance and damages against respondents
Municipality of Rosario, Cavite and Mayor Enriquez to
enforce their agreement contained in a Reclamation
Contract. Plaintiff prays that a portion of the
foreshore land of the town be conveyed to him as
assignee of Salinas Devt. Corp. (SADECO), the entity
which reclaimed the land in question. Defendants
resisted the claim stating it was barred by the
statute of limitations.
- Herein petitioner, the barangay captain of Tejeros
Convention, Rosario, Cavite, together with 7 others
intervened and alleged in their Answer-inIntervention that the area being claimed by Espiritu
came about by natural accretion and that the
Reclamation Contract is null and void.
- At the pre-trial conference, where the original
parties and intervenors were present, Espiritu and
defendant municipality manifested that they would
submit to a compromise agreement at a latter date.
- On the other hand, intervenors asked that they be
allowed to present evidence to prove their defense.
- The principal litigants submitted to the court their
compromise agreement. TC approved and rendered
a decision in accordance therewith. Yet, intervenors
continued to present evidence, regarding their
allegations.

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- 2 years later, intervenors filed a motion to set aside
the compromise agreement. Respondent judge
denied. Judge Gustilo also terminated the
proceedings and ordered the case to be closed.

AGULTO v TECSON
G.R. No.145276
CORONA;November 29, 2005

that their absence during the scheduled pre-trial was

for a valid cause
-Hence, this petition for review on certiorari under
Rule 45 of the Rules of Court

ISSUE/S
WON trial court erred in stopping/preventing the
intervenors from further presenting evidence in
support of their Answer-in-Interevention.

FACTS:
-On August 25, 1997, the respondent William Z.
Tecson filed an action for damages against
petitioners Rolando Agulto, Maxima Agulto, Cecille
Tenoria and a certain Maribel Mallari in the RTC of
Quezon City. Agulto filedan answer claiming that
Tecson had no cause of action and alleged malicious
prosecution. RTC dismissed Tecsons complaint
(failure to prosecute for an unreasonable length of
time). Tecson filed a motion for reconsideration,
which was gracted. Court required the parties to
appear during the pre-trial conference scheduled on
January 21, 1999. The pre-trial was, however, reset
to April 29, 1999.
-During the scheduled pre-trial on April 29, 1999,
petitioner Rolando Agulto and his counsel were
informed by an employee of the RTC that the
presiding judge was on leave. Counsel for Agulto
suggested that it be re-scheduled on June 17.
Employee advised petitioners counsel that the
suggested setting was not yet official as it would
depend on the calendar of the court and the counsel
of respondent.
-The pre-trial proceeded on June 17, 1999. For failure
of petitioners to appear at the pre-trial and to submit
their pre-trial brief, the RTC issued an order allowing
the respondent to present his evidence ex parte
-Petitioners filed a motion for reconsideration of the
June 17, 1999 order of the RTC. They claimed that
they were not notified of the pre-trial held on June
17, 1999. Before the motion could be heard,
however, the court rendered its July 12, 1999
decision in favor of respondent. Petitioners were
ordered to pay respondent moral damages,
exemplary damages and attorneys fees in the
aggregate amount of P170,000.
-Petitioners filed a petition for certiorari under Rule
65 of the 1997 Rules of Civil Procedure with the CA
on November 24, 1999. They claimed that the RTC
gravely abused its discretion when it issued the
September 24, 1999 order
-CA dismissed the petition. It ruled that the proper
remedy was appeal by writ of error, i.e., ordinary
appeal, under Rule 41 of the 1997 Rules of Civil
Procedure, not a petition for certiorari under Rule 65.
The CA also held that the petitioners failed to show

ISSUE: WON RTC acted with grave abuse of

discretion in not considering Agultos motions for
reconsideration regarding the pre-trial.
HELD: YES
-Under the present Section 3, Rule 18 of the 1997
Rules of Civil Procedure, the notice of pre-trial should
be served on counsel. The counsel served with notice
is charged with the duty of notifying the party he
represents. It is only when a party has no counsel
that the notice of pre-trial is required to be served
personally on him.
-Thus, the present rule simplifies the procedure in
the sense that notice of pre-trial is served on
counsel, and service is made on a party only if he
has no counsel. It does not, however, dispense with
notice of pre-trial.
-Thus, sending a notice of pre-trial stating the date,
time and place of pre-trial is mandatory. Its absence
will render the pre-trial and subsequent proceedings
void. Thus, the trial courts order allowing the
plaintiff to present his evidence ex parte without due
notice of pre-trial to the defendant constitutes grave
abuse of discretion
-Although the failure of the defendant to file a pretrial brief has the same effect as his failure to appear
at the pre-trial (this is, the plaintiff may be allowed to
present his evidence ex parte and the court shall
render judgment on the basis thereof), a condition
precedent is the service of notice of pre-trial.
Otherwise, the defendant will be groping in the dark
as to when exactly he is supposed to file his pre-trial
brief.
-More specifically, under Section 6, Rule 18 of the
1997 Rules of Civil Procedure, the parties are
required to file with the court and serve on the
adverse party, in such manner as shall ensure their
receipt thereof at least three days before the date of
the pre-trial, their respective pre-trial briefs. Clearly,
the date of the pre-trial is the reckoning point for the
filing of the pre-trial brief. But without prior notice of
pre-trial, the parties cannot reasonably be expected
to know the date of the pre-trial.

HELD
1. NO. Intervention is defined as a proceeding in a
suit or action by which a third party is permitted by
the court to make himself a party, either joining
plaintiff in claiming what is sought by the complaint,
or uniting with defendant in resisting the claims of
plaintiff, or demanding something adversely to both
of them; the act or proceeding by which a third
person becomes a party in a suit pending between
the others; the admission, by leave of court, of a
person not an original party to pending legal
proceedings, by which such person becomes a party
thereto for the protection of some right or interest
alleged by him to be affected by such proceedings.
Ratio Intervention is only collateral or ancillary
to the main action. Hence, it was previously
ruled that the final dismissal of the principal
action results in the dismissal of said
ancillary action.
Reasoning A judgment approving a compromise
agreement is final and immediately executory.
All pending issues will become moot and
academic once a compromise submitted by the
parties is approved by the trial court.
The continuation of reception of intervenors
evidence would serve no purpose at all. Should
intervenors fail to prove that the Reclamation
Contract is null and void and that no actual
reclamation was made, the correctness and propriety
of the decision based upon the compromise
agreement would be strengthened. On the other
hand, should they succeed in proving that the
contract is null and void, and that the area in
question came into being through the natural action
of the sea, still the decision of the lower court could
no longer be set aside, inasmuch as it has already
become final and executed.
Disposition WHEREFORE, for lack of merit, the
petition is DISMISSED. Costs against petitioner.

c. subpoena
d. Rule 22

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Prof. Victoria A.

115

Avena
UY vs. FIRST METRO INTEGRATED
STEEL CORP.
G.R. No. 167245
YNARES-SANTIAGO; September 27, 2006

ISSUES: (1) WON petitioners motion for new trial

was filed out of time; (2) WON a petition for certiorari
is the proper remedy to overturn the denial of a
motion for new trial; (3) WON the motion for new trial
should be granted.

NATURE: Petition for Review

HELD:

FACTS: Private respondent First Metro Integrated

Steel Corporation (FMISC) filed a complaint for sum
of money with prayer for writ of preliminary
attachment against Robert Juan Uy (Robert), Midland
Integrated Construction Company (MICC) and
petitioner Elpidio Uy. The complaint arose from
petitioners issuance of a check in the amount of
P695,811.00 in favor of FMISC to cover payment for
deformed steel bars delivered by the latter to
petitioner and private respondents MICC and Robert.
However,
the
check
was
dishonored
upon
presentment and despite demands, MICC, Robert and
petitioner refused to pay.
After the filing of the respective Answers of
FMISC, Robert and MICC, hearings were thereafter
conducted for the reception of their respective
evidence. The initial reception of petitioner's
evidence was set on February 28, 2001 but it was
cancelled because petitioner had influenza. The
hearing was reset six more times, but in each
instance, petitioner, through his lawyers, moved for
the cancellation and resetting of the presentation of
his evidence. During the sixth scheduled hearing on
February 28, 2002, Atty. Baares, counsel for
petitioner arrived late. Upon motion of FMISC, the
trial court ordered that petitioner's right to present
evidence is deemed waived and the parties were
directed to file their respective memorandum. Atty.
Baares withdrew his appearance on January 8, 2003
with petitioner's conformity.
On March 7, 2003, the trial court rendered
judgment against petitioner and in favor of FMISC.
On April 4, 2003, petitioner received a copy of the
Decision. On April 21, 2003, petitioner through Atty.
Lucas C. Carpio, Jr. filed a Motion for New Trial on the
ground of gross negligence of petitioner's counsel in
failing to attend the hearing for the reception of
evidence, thus impairing his rights to due process.
The trial court denied the motion for new trial.
Dissatisfied, petitioner filed with the Court of Appeals
a petition for certiorari. The CA dismissed the petition
and denied petitioner's motion for reconsideration.
Hence, this Petition.

(1) NO. A scrutiny of the records discloses that while

the Motion for New Trial was received by the trial
court on April 28, 2003, the date on the Registry
Receipt attached to the Affidavit of Service as well as
that stamped on the envelope which contained the
copy of the motion, reveals that it was filed and
served by registered mail on April 21, 2003, a
Monday, because April 19, 2003, the last day for
filing the same was a Saturday. Section 1, Rule 22 of
the Rules of Court states that if the last day of the
period thus computed falls on a Saturday, a Sunday,
or a legal holiday in the place where the court sits,
the time shall not run until the next working day.
Thus, the motion was actually filed on time it having
been filed on April 21, 2003, the next working day,
following the last day for filing which fell on a
Saturday.
(2) YES. Section 9, Rule 37 of the Rules of Court
which provides that the remedy to an order denying
a motion for new trial is to appeal the judgment or
final order, must be read in conjunction with Section
1, Rule 41 which provides that no appeal may be
taken from an order denying a new trial or
reconsideration. Rule 41, Section 1 further provides
that: where the judgment or final order is not
appealable, the aggrieved party may file an
appropriate special civil action under Rule 65. Thus,
the filing by the petitioner of a petition for certiorari
with the Court of Appeals from the denial of the
motion for new trial by the trial court is proper.
(3) NO. Section 1, Rule 37 provides that a motion for
new trial may be filed within the period for taking an
appeal based, among others, on excusable
negligence. Negligence to be excusable must be one
which ordinary diligence and prudence could not
have guarded against. In the instant case, the
negligence of petitioner's counsel in failing to attend
the hearings for the reception of evidence is
inexcusable. The trial court scheduled the hearing for
the reception of petitioner's evidence seven times.
The initial hearing set on February 28, 2001 was
cancelled because petitioner allegedly had influenza.

The hearings scheduled on April 26, 2001 and May

10, 2001 were cancelled and moved to October 25,
2001 and December 13, 2001. Petitioner was
represented by Atty. Carpio, Jr. as collaborating
counsel during the hearing on October 25, 2001 but
no evidence was presented. Instead, the hearing was
cancelled. On December 13, 2001, Atty. Baares,
petitioner's new counsel, appeared but he requested
for a resetting. On February 14, 2002, Atty. Baares
moved to postpone the hearing to February 28, 2002
as previously scheduled. On February 28, 2002, Atty.
Baares arrived late. The records disclose that the
hearings were postponed or cancelled without any
justification. However, the trial court accommodated
the requests for postponement or resetting in order
to accord petitioner due process. Under the
circumstances, petitioner's counsel's failure to attend
the seven scheduled hearings is without justifiable
reason tantamount to inexcusable neglect. As such,
it cannot be a ground for new trial.
In addition, the Rule requires that motions for new
trial founded on fraud, accident, mistake or
excusable negligence must be accompanied by
affidavits of merits, i.e., affidavits showing the facts
(not mere conclusions or opinions) constituting the
valid cause of action or defense which the movant
may prove in case a new trial is granted, because a
new trial would serve no purpose and would just
waste the time of the court as well as the parties if
the complaint is after all groundless or the defense is
nil or ineffective.
Under the Rules, the moving party must show that he
has a meritorious defense. The facts constituting the
movant's good and substantial defense, which he
may prove if the petition were granted, must be
shown in the affidavit which should accompany the
motion for a new trial. Petitioner's Affidavit of Merit
did not contain clear statements of the facts
constituting a good and valid defense which he might
prove if given the chance to introduce evidence. The
allegations that he has a "meritorious defense" and a
"good cause" are mere conclusions which did not
provide the court with any basis for determining the
nature and merit of the case. An affidavit of merit
should state facts, and not mere opinion or
conclusions of law. Petitioner's motion for new trial
and affidavit of merit did not mention the evidence
which he was prevented from introducing, nor did it
allege that such evidence would change the outcome
of the case.

Civil Procedure Digest

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Avena

Petitioner's argument that his counsel's negligence

was so gross that he was deprived of due process
fails to impress. Gross negligence is not one of the
grounds for a motion for a new trial. We cannot
declare his counsel's negligence as gross as to
liberate him from the effects of his failure to present
countervailing evidence. Besides, we find that
petitioner's and his counsel's negligence are
concurrent. During the initial hearing for the
reception of his evidence, petitioner was absent
allegedly due to influenza. During the succeeding
scheduled hearings, petitioner was absent but his
lawyer, Atty. Molina, was present but did not present
any evidence. Instead, motions for postponement or
resetting were made. In one occasion, Atty. Molina
was absent but Atty. Carpio, Jr. appeared as
collaborating counsel. Still, no evidence was
presented but a resetting was again requested.
Finally, petitioner's counsel's inexcusable neglect did
not amount to petitioner's deprivation of due process
of law. The right to due process safeguards the
opportunity to be heard and to submit any evidence
one may have in support of his claim or defense. In
the instant case, petitioner was given several
opportunities to be heard and to submit evidence but
he squandered them. Blunders and mistakes in the
conduct of the proceedings in the trial court as a
result
of
the
ignorance,
inexperience
or
incompetence of counsel do not qualify as a ground
for new trial.
DISPOSITIVE: The Petition is DENIED for lack of
merit.

Prof. Victoria A.

116