NAGKAKAISANG LAKAS NG MANGGAGAWA SA KEIHIN (NLMK-OLALIA-KMU) and HELEN VALENZUELA, Petitioners, G.R. No. 171115
- versus -
KEIHIN PHILIPPINES CORPORATION, Respondent.
Promulgated: August 9, 2010
DEL CASTILLO, J.: This Petition for Review on Certiorari assails the November 2, 2005 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 91718 dismissing outright the petition for certiorari filed by the petitioners, as well as its January 6, 2006 Resolution denying petitioners‘ Motion for Reconsideration. Factual Antecedents Petitioner Helen Valenzuela (Helen) was a production associate in
respondent Keihin Philippines Corporation (Keihin), a company engaged in the production of intake manifold and throttle body used in motor vehicles manufactured by Honda. It is a standard operating procedure of Keihin to subject all its employees to reasonable search before they leave the company premises. On September 5, 2003, while Helen was about to leave the company premises, she saw a packing tape near her work area and placed it inside her bag because it would be useful in her transfer of residence. When the lady guard on duty inspected Helen‘s bag, she found the packing tape inside her bag. The guard confiscated it and submitted an incident report dated September 5, 2003 to the Guard-in-Charge, who, in turn, submitted a memorandum regarding the incident to the Human Resources and Administration Department on the same date. The following day, or on September 6, 2003, respondent company issued a show cause notice to Helen accusing her of violating F.2 of the company‘s Code of Conduct, which says, ―Any act constituting theft or robbery, or any attempt to commit theft or robbery, of any company property or other associate‘s property. Penalty: D (dismissal).‖ Paul Cupon, Helen‘s supervisor, called her to his office and directed her to explain in writing why no disciplinary action should be taken against her. Helen, in her explanation, admitted the offense and even manifested that she would accept whatever penalty would be imposed upon her. She, however, did not reckon that respondent company would terminate her services for her admitted offense. On September 26, 2003, Helen received a notice of disciplinary action informing her that Keihin has decided to terminate her services.
On October 15, 2003, petitioners filed a complaint against respondent for illegal dismissal, non-payment of 13th month pay, with a prayer for reinstatement and payment of full backwages, as well as moral and exemplary damages. Petitioners alleged that Helen‘s act of taking the packing tape did not constitute serious misconduct, because the same was done with no malicious intent. They believed that the tape was not of great value and of no further use to respondent company since it was already half used. Although Helen admitted that she took the packing tape, petitioners claimed that her punishment was disproportionate to her infraction. Keihin, on the other hand, maintained that Helen was guilty of serious misconduct because there was a deliberate act of stealing from the company. Respondent company also claimed that motive and value of the thing stolen are irrelevant in this case. Ruling of the Labor Arbiter On July 30, 2004, the Labor Arbiter rendered his Decision dismissing the complaint of illegal dismissal. He brushed aside petitioners‘ argument that the penalty imposed on Helen was disproportionate to the offense committed, and held that she indeed committed a serious violation of the company‘s policies amounting to serious misconduct, a just cause for terminating an employee under Article 282 of the Labor Code. The Labor Arbiter likewise upheld the right of the company to terminate Helen on the ground of loss of confidence or breach of trust. The Labor Arbiter further held that Keihin observed the requirements of procedural due process in implementing the dismissal of Helen. He ruled that the following circumstances showed that the company observed the requirements of procedural due process: a) there
was a show cause letter informing Helen of the charge of theft and requiring her to submit an explanation; b) there was an administrative hearing giving her an opportunity to be heard; and c) the respondent company furnished her with notice of termination stating the facts of her dismissal, the offense for which she was found guilty, and the grounds for her dismissal. Ruling of the National Labor Relations Commission (NLRC) On appeal, the NLRC dismissed the appeal of the petitioners and affirmed in toto the Decision of the Labor Arbiter. It held that petitioners admitted in their Position Paper that Helen took the packing tape strewn on the floor near her production line within the company premises. By the strength of petitioners‘ admission, the NLRC held that theft is a valid reason for Helen‘s dismissal. As to the issue of due process, the pertinent portion of the Decision of the NLRC reads:
Complainant‘s dismissal too, was with due process. Procedural due process only requires employers to furnish their errant employees written notices stating the particular acts or omissions constituting the grounds for their dismissal and to hear their side of the story (Mendoza vs. NLRC, 310 SCRA 846 ). Complainant‘s claim that the showcause letter did not pass the stringent requirement of the law is belied by her admission in her position paper that Mr. Cupon furnished her a ―form,‖ simultaneously asking her why she did such an act and x x x that Mr. Cupon directed her to submit a written explanation on the matter, which she complied with. By Complainant‘s own admission then, it is clear that she was furnished a written notice informing her of the particular act constituting the ground for her dismissal and that x x x her side of the story [was heard]. Evidently then, Complainant was afforded due process prior to her dismissal.
The dispositive portion of the Decision of the NLRC reads:
WHEREFORE. in a Resolution dated November 2. Hence. the Nagkakaisang Lakas ng Manggagawa sa Keihin. every action must be prosecuted or defended in the name of the real party in interest. 2005. Complainant‘s appeal is DISMISSED for lack of merit. or the party entitled to the avails of the suit.
SEC 2. – A real party in interest is the party who stands to be benefited or injured by the judgment in the suit. premises considered. the CA dismissed the petition outright for not having been filed by an indispensable party in interest under Section 2. filed a Petition for Certiorari with the CA praying that the Decision of the NLRC be set aside. the petitioner union. However. Rule 3 of the Rules of Court. Parties in interest.
Petitioners filed a Motion for Reconsideration but it was denied by the CA in its Resolution of January 6. SO ORDERED.
Ruling of the Court of Appeals
After having their Motion for Reconsideration denied by the NLRC. Unless otherwise authorized by law or these Rules. The Labor Arbiter‘s assailed Decision in the above-entitled case is hereby AFFIRMED in toto. petitioners filed the present petition for review on certiorari under Rule 45. 2006. asking the Court to reverse the Resolutions of the CA and
HELEN VALENZUELA WAS NOT FILED BY AN INDISPENSABLE PARTY. THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN HOLDING THAT THE PETITION FOR CERTIORARI FILED BY THE UNION AND MS. THE COURT OF APPEALS COMMITTED SERIOUS ERROR IN FAILING TO DECIDE THE CASE ON THE MERITS DESPITE SHOWING THAT THE PETITION FOR CERTIORARI WAS VERIFIED BY THE UNION PRESIDENT AND MS. III. Instead. It is clear that petitioners failed to include the name of the dismissed employee Helen Valenzuela in the caption of their petition for certiorari filed with the CA as well as in the body of the said petition. they only indicated the name of the labor union Nagkakaisang Lakas ng Manggagawa sa Keihin (NLMK-OLALIA) as the party acting
We affirm the ruling of the CA. They anchor their petition on the following grounds:
I. II.enter a new one declaring Helen‘s dismissal unjustified. HELEN VALENZUELA. THE COURT OF APPEALS ERRED IN FAILING TO APPRECIATE THAT SERIOUS MISCONDUCT UNDER EXISTING LAW AND JURISPRUDENCE CANNOT BE ATTRIBUTED TO HEREIN PETITIONER HELEN VALENZUELA BECAUSE THE DECISION OF THE NLRC IS NOT SUPPORTED BY SUBSTANTIAL EVIDENCE.
we shall still discuss the substantive aspect of the case and go into the merits. According to petitioners. she cannot be held guilty of serious misconduct. thus. Rule 3 of the Rules of Court. willful or wrongful intent and.on behalf of Helen. ―parties in interest without whom no final determination can be had of an action shall be joined as plaintiffs or defendants. As a result. is frowned upon. It is ―precisely ‗when an indispensable party is not before the court (that) an action should be dismissed. Dismissal of appeals purely on technical grounds. during the routine inspection and even before the guard opened Helen‘s bag. Rather. while we affirm the CA‘s dismissal of the petition for certiorari. Under Section 7. she readily admitted that the bag contained a packing tape. we are aware that it is the policy of courts to encourage full adjudication of the merits of an appeal. especially an appeal by a worker who was terminated and whose livelihood depends on the speedy disposition of her case.‖ The purpose of the rules on joinder of indispensable parties is a complete determination of all issues not only between the parties themselves. the CA rightly dismissed the petition based on a formal defect. A decision valid on its face cannot attain real finality where there is want of indispensable parties. Thus. any judgment rendered would have no effectiveness.‘ The absence of an indispensable party renders all subsequent actions of the court null and void for want of authority to act. At any rate. The petitioners argue that serious misconduct under existing law and jurisprudence could not be attributed to Helen because she was not motivated by malicious intent. Petitioners claim that the mental attitude of Helen negates depravity. but also as regards other persons who may be affected by the judgment.‖ If there is a failure to implead an indispensable party.
. not only as to the absent parties but even to those present.
(d) Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representative. willful in character. a forbidden act. Thus.
. – An employer may terminate an employment for any of the following causes: (a) Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work.it was a mere error of judgment on the part of Helen. it was Helen‘s honest belief that the tape she took was of no use or value and that she did not hide the same. (c) Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative. and (e) Other causes analogous to the foregoing. Furthermore. the issue boils down to whether. Termination by employer. Article 282 of the Labor Code enumerates the just causes for termination.‖ For serious misconduct to justify dismissal under the law. (b) Gross and habitual neglect by the employee of his duties. in taking the packing tape for her own personal use. which is a just cause for her dismissal from service. Helen committed serious misconduct. It provides:
ARTICLE 282. and implies wrongful intent and not mere error in judgment. a dereliction of duty.
Misconduct is defined as ―the transgression of some established and definite rule of action.
she stated. Helen took the packing tape and was caught during the routine inspection. Lariosa involving an employee who was caught by the security guards of the company during a routine inspection with possession of company property.―(a) it must be serious. there was intent on her part to benefit herself when she attempted to bring home the packing tape in question. but a deliberate act of theft of company property. there had been several cases of theft and vandalism involving both respondent company‘s property and personal belongings of other employees. respondent company issued two memoranda implementing an intensive inspection procedure and reminding all employees that those who will be caught stealing and performing acts of vandalism will be dealt with in accordance with the company‘s Code of Conduct. by her own admission. In order to address this issue of losses. we held that:
There is no gainsaying that theft committed by an employee constitutes a valid reason for his dismissal by the employer. acts of dishonesty in the handling of company property are a
. Helen took the packing tape with the thought that she could use it for her own personal purposes. (b) must relate to the performance of the employee‘s duties. In the case of Firestone Tire and Rubber Company of the Philippines v. Despite these reminders. It is noteworthy that prior to this incident. Although as a rule this Court leans over backwards to help workers and employees continue with their employment or to mitigate the penalties imposed on them.‖ In the case at bar. When Helen was asked to explain in writing why she took the tape. ―Kumuha po ako ng isang packing tape na gagamitin ko sa paglilipat ng gamit ko sa bago kong lilipatang bahay. All these circumstances point to the conclusion that it was not just an error of judgment on the part of Helen.‖ In other words. and (c) must show that the employee has become unfit to continue working for the employer.
Although both Clarete and Helen had no prior violations. the notice was vague and lacked sufficient definitiveness. and loss of company and employees‘ property when the incident involving Helen transpired. The petitioners also argue that the penalty of dismissal is too harsh and disproportionate to the offense committed since the value of the thing taken is very minimal. And what further distinguishes the instant case from Caltex is that respondent company was dealing with several cases of theft. On the other hand. we are convinced that the case of Caltex is different from the case at hand. Regarding the requirement of procedural due process in dismissal of employees. In said case.
We hold that Helen is guilty of serious misconduct in her act of taking the packing tape.‖
After a closer study of both cases.different matter. Clarete (Clarete) was found to have willfully breached the trust and confidence reposed in him by taking a bottle of lighter fluid. vandalism. National Labor Relations Commission where Arnelio M. the former had a clean record of eight years with his employer. we refrained from imposing the supreme penalty of dismissal since the employee had no violations ―in his eight years of service and the value of the lighter fluid x x x is very minimal compared to his salary x x x. Helen was not even on her second year of service with Keihin when the incident of theft occurred. petitioners argue that the first notice failed to explain the charge being leveled against Helen.
. Petitioners cite the case of Caltex Refinery Employees Association v. According to the petitioners.
respondent company furnished Helen a show-cause notice dated September 6. or any attempt to commit theft or robbery. of any company property or other associate‘s property. Such opportunity was afforded the petitioner when she was asked to explain her side of the story.‖
We reject petitioners‘ claim that respondent company failed to observe the requirements of procedural due process. it has been consistently held that the twin requirements of notice and hearing are essential elements of due process.‖ In this case. why you have committed an offense against company property specifically F.2 of the company‘s Code of Conduct: ―Any act constituting theft or robbery. The employer must furnish the employee with two written notices before termination of employment can be legally effected: (a) a notice apprising the employee of the particular acts or omissions for which his dismissal is sought. ―Any act constituting theft or robbery. the essence of due process lies in an opportunity to be heard. In
.2 of the company‘s Code of Conduct which says.The show-cause notice states:
Please explain in writing within 48 hours upon receipt hereof. or any attempt to commit theft or robbery. With regard to the requirement of a hearing.‖ We find that such notice sufficiently informed Helen of the charge of theft of company property against her. 2003 accusing her of violating F. of any company property or other associate‘s property. ―In the dismissal of employees. and (b) a subsequent notice informing the employee of the employer‘s decision to dismiss him. We are convinced that such notice satisfies the due process requirement to apprise the employee of the particular acts or omissions for which dismissal is sought.
 we held that.R. 91718 are AFFIRMED.Metropolitan Bank and Trust Company v. we held that.‖ WHEREFORE. The Resolutions dated November 2. the requirement of due process had been met since he was accorded a chance to explain his side of the controversy. Edpan. ―the essence of due process lies simply in an opportunity to be heard. ―[e]ven if no hearing or conference was conducted. Barrientos. 2006 of the Court of Appeals in CAG.‖ Similarly in Philippine Pasay Chung Hua Academy v. 2005 and January 6. SP No. SO ORDERED. the Petition is DENIED. and not that an actual hearing should always and indispensably be held.
Chairperson VELASCO. 2004 of the Court of Appeals in CA-G. 548-ML. PERALTA.. No. 161838 Present:
CORONA. 2002 of the Regional Trial Court (RTC) of Balanga.versus -
Assailed in this petition for review on certiorari filed by petitioner is the Decision dated January 21. INC.R. represented by DANTE QUINDOZA.THIRD DIVISION
REPUBLIC OF THE PHILIPPINES.. denying petitioner's Motion to Dismiss. Petitioner. and SHEILA F. J. in his capacity as Zone Administrator of the Bataan Economic Zone. NACHURA. and MENDOZA. Bataan. April 7.
COALBRINE INTERNATIONAL PHILIPPINES. JJ. in Civil Case No. SP No 74667. 2010 x----------------------------------------------------------------------------------------x
PERALTA. J. which affirmed the Order dated September 24. Promulgated: NERI.
. JR.R. .
. predecessor of the Philippine Economic Zone Authority (PEZA). 1998. Inc. is the owner of the Bataan Hilltop Hotel and Country Club. Respondent Sheila F. 96231 rescinding the contract to rehabilitate and lease. now PEZA. 1994. on the ground of respondent Coalbrine's repeated violations and non-performance of its obligations as provided in the contract. the PEZA Board passed Resolution No. Subsequently. Mariveles. 1994. and renewable for another twentyfive (25) years at the option of respondent Coalbrine. Golf Course and Clubhouse for twenty-five (25) years. On July 11. and respondent Coalbrine International Philippines. respondent Coalbrine filed with the RTC of Manila a Complaint for specific performance with prayer for the issuance of a temporary restraining order (TRO) and/or writ of preliminary injunction with damages against PEZA and/or Bataan Economic Zone wherein respondent Coalbrine sought to declare that PEZA had no valid cause to rescind the contract to rehabilitate and lease. and to enjoin PEZA from taking over the hotel and country club and from disconnecting the water and electric services to the hotel. Quindoza is the Zone Administrator of the Bataan Economic Zone. Dante M.The Export Processing Zone Authority (EPZA). PEZA sent respondent Coalbrine a notice to vacate the premises and to pay its outstanding obligations to it. On August 4. located at the Bataan Export Processing Zone. Neri was the Managing Director of the hotel. The complaint is pending with Branch 17 of the RTC of Manila. EPZA. entered into a contract in which the latter would rehabilitate and lease the Bataan Hilltop Hotel. which commenced on January 1. Bataan. On April 3.
Respondents prayed for the payment of damages. The Honorable Court is an improper venue for the instant
. 2. Quindoza had also placed a big ―ROAD CLOSED‖ sign near the hotel. and to cause the construction of a reasonable access road at Quindoza's expense. respondent Neri undertook the construction of a temporary narrow access ramp in order that the hotel guests and their vehicles could pass through the wide excavations. paralyzed the hotel's operations. through the Solicitor General.On April 24. 548-ML. the pipelines were reconnected. filed a Motion to Dismiss on the following grounds:
1. 2002. Quindoza cut the pipelines that supplied water to the hotel to the great inconvenience of respondents and the hotel guests. subsequently. Respondent alleged that: in October 2001. Bataan. respondents Coalbrine and Neri filed with the RTC of Balanga. a Complaint for damages with prayer for the issuance of a TRO and/or writ of preliminary prohibitory/mandatory injunction against Zone Administrator Quindoza. Administrator Quindoza. for the issuance of a TRO and a writ of preliminary injunction to enjoin Quindoza from cutting or disconnecting the reconnected water pipelines to the hotel and from committing further acts of harassment. The Honorable Court has no jurisdiction over the instant case. which. docketed as Civil Case No. which effectively blocked all access to and from the hotel and created an impression that the hotel had been closed. and. consequently. Quindoza started to harass the hotel's operations by causing the excavation of the entire width of a crosssection of the only road leading to the hotel for the supposed project of putting up a one length steel pipe. that such project had been stopped. in the last week of March 2002.
which was docketed as Civil Case No.
Administrator Quindoza filed a Motion for Reconsideration. the complaint states no cause of action against defendant. the RTC issued an Order denying petitioner's motion to dismiss. 5. On January 21. petitioner is now before us in a petition for review on certiorari raising the lone issue of respondent Neri's lack of proof of authority to file the complaint in the RTC of Balanga. that
. 2002. In their Comment. the CA issued its assailed Decision denying petitioner's petition for certiorari for lack of merit. Hence. 2004. in his capacity as Zone Administrator of the Bataan Economic Zone. Plaintiff (respondent Coalbrine) is guilty of forum shopping. hence. petitioner Republic of the Philippines. 2002. it has no personality to file the instant petition for review. reiterating the grounds raised by Administrator Quindoza in the RTC. filed with the CA a petition for certiorari under Rule 65 seeking to annul the RTC Orders. respondents argue that the Republic of the Philippines was not a party to the civil case subject of this petition. 3. The complaint is fatally defective for being unauthorized. 2003.
On September 24. represented by Dante Quindoza. Bataan. 548-ML. which the RTC denied in its Order dated December 9. On January 2. With respect to plaintiff (respondent) Neri. 4.case.
PETITIONER REPUBLIC OF THE PHILIPPINES IS THE REAL PARTY-IN-INTEREST IN THE CASE AT BAR. In its Reply. petitioner raises the following arguments. which justified the filing of a petition for certiorari with the CA. NECESSITATING THE FILING OF A PETITION FOR CERTIORARI UNDER RULE 65 BEFORE THE HONORABLE COURT OF APPEALS.the RTC Order denying the motion to dismiss the complaint was a mere interlocutory order. The parties filed their respective memoranda as required under the Resolution dated January 26. to wit:
THE COMPLAINT IS FATALLY DEFECTIVE FOR BEING UNAUTHORIZED. thus. and that respondents had already presented their evidence by way of an opposition to the motion to dismiss and in support of their application for the issuance of a writ of preliminary mandatory injunction. RESPONDENT JUDGE ACTED WITH GRAVE ABUSE OF DISCRETION IN DENYING PETITIONER'S MOTION TO DISMISS. that petitioner had already filed an answer to the complaint incorporating the grounds stated in their motion to dismiss. petitioner argues that it has the personality to file this petition.
. the same is not appealable and not a proper subject of a petition for certiorari unless it was shown that there was a grave abuse of discretion in its issuance. since Administrator Quindoza is being sued for damages for certain acts he performed in an official capacity. 2005. that the denial of petitioner's motion to dismiss was tainted with grave abuse of discretion. In its Memorandum.
since there was no proof of her authority to institute the complaint on behalf of the corporation. respondent Neri signed the verification/certification as one of the plaintiffs. Parties-in interest. Cases construing the real party-in-interest provision can be more easily understood if it is borne in mind that
. Section 2." within the meaning of the rule. We agree. means material interest.
Notably. Rule 3 of the Rules of Civil Procedure provides:
SEC. and that respondent Neri is not a real party-in-interest. Unless otherwise authorized by law or these Rules. 2. – A real party-in-interest is the party who stands to be benefited or injured by the judgment in the suit. as distinguished from mere interest in the question involved. The verification and certification against non-forum shopping reads:
xxxx That I am the Managing Director of Bataan Hilltop Hotel and one of the plaintiffs in this case. or a mere incidental interest. we find that respondent Neri is not a real party-in.Petitioner claims that respondent Neri's signature in the verification and certification against non-forum shopping attached to the complaint filed by respondents in the RTC was defective.
And ―interest. every action must be prosecuted or defended in the name of the real party-in-interest. However. or the party entitled to the avails of the suit.interest. an interest in issue and to be affected by the decree.
has the right sought to be enforced. it has been observed that the power of a corporation to sue and be sued in any court is lodged with the board of directors that exercises its corporate powers. Thus. by the substantive law. In turn. did not rule on the matter despite the fact that it was raised in petitioner's petition for certiorari filed before it and merely said that there was no necessity to discuss such issue after deciding the other grounds raised in the petition. can be performed only by natural persons duly authorized for the purpose by corporate by-laws or by a specific act of the board of directors. In turn. The CA. a corporation exercises said powers through its board of directors and/or its duly authorized officers and agents. except those expressly conferred on it by the Corporation Code and those that are implied or incidental to its existence. A corporation has no power. like the signing of documents. the plaintiff in this case would only be respondent Coalbrine. Consequently. physical acts of the corporation. The RTC based its conclusion that respondent Neri had a cause of action against petitioner on the allegations in the complaint.
. we find that respondent Neri has no cause of action against petitioner. however. Thus.the true meaning of real party-in-interest may be summarized as follows: An action shall be prosecuted in the name of the party who. We find the RTC in error. A reading of the allegations in the complaint shows that the acts complained of and said to have been committed by petitioner against respondents have solely affected the hotel's operations where respondent Neri was the hotel's Managing Director and whose interest in the suit was incidental.
 Verification is simply intended to secure an assurance that the allegations in the pleading are true and correct. respondent Coalbrine is a corporation. and not the product of the imagination or a matter of speculation. Such requirement is simply a condition affecting the form of the pleading. when respondent Neri filed the complaint in the RTC. We also required that proof of such authority must be
. v. Inc.
On the other hand. and that the pleading is filed in good faith. we ruled that only individuals vested with authority by a valid board resolution may sign the certificate of non-forum shopping on behalf of a corporation. not jurisdictional. In Philippine Airlines.In this case. The same rule applies to certifications against nonforum shopping signed by a person on behalf of a corporation which are unaccompanied by proof that said signatory is authorized to file the complaint on behalf of the corporation. non-compliance with which does not necessarily render the pleading fatally defective. there was no proof that she was authorized to sign the verification and the certification against non-forum shopping. the lack of certification against non-forum shopping is generally not curable by mere amendment of the complaint. Flight Attendants and Stewards Association of the Philippines (FASAP). but shall be a cause for the dismissal of the case without prejudice. if the attending circumstances are such that strict compliance with the rules may be dispensed with in order that the ends of justice may thereby be served. The Court has consistently held that the requirement regarding verification of a pleading is formal. The court may order the correction of the pleading if verification is lacking or act on the pleading although it is not verified. However.
we also relaxed the rule. While there were instances where we have allowed the filing of a certificate against non-forum shopping by someone on behalf of a corporation without the accompanying proof of authority at the time of its filing. there was a subsequent compliance by the submission of the proof of authority attesting to the fact that the person who signed the certification was duly authorized. the petition is subject to dismissal if a certification was submitted unaccompanied by proof of signatory's authority. since the latter failed to show that its bank manager who signed the certification against non-forum shopping was authorized to do so. Abaya's authority to
. We reversed the CA and said that the case be decided on the merits despite the failure to attach the required proof of authority. since the case had already been decided by the lower courts on the merits. Failure to provide a certificate of non-forum shopping is sufficient ground to dismiss the petition.. Likewise. In China Banking Corporation v. In Abaya Investments Corporation v.attached. Moreover. the CA dismissed the petition filed by China Bank. we did so on the basis of a special circumstance or compelling reason. where the complaint before the Metropolitan Trial Court of Manila was instituted by petitioner's Chairman and President. Mondragon International Philippines. We did so taking into consideration the merits of the case and to avoid a re-litigation of the issues and further delay the administration of justice. since the board resolution which was subsequently attached recognized the pre-existing status of the bank manager as an authorized signatory. Inc. Ofelia Abaya. Moreover. Merit Philippines. who signed the verification and certification against non-forum shopping without proof of authority to sign for the corporation.
More importantly. the RTC. it chose not to tackle the issue after disposing of the other issues raised therein. in denying petitioner's motion to dismiss the complaint when the latter raised respondent Neri's lack of authority to sign the certification. First. such proof of authority had not been submitted even belatedly to show subsequent compliance. there was no showing that there was a valid board resolution authorizing the corporate secretary to file the action. We cannot agree with the RTC's reasoning and find the certification signed by respondent Neri to be defective. there was no reason for the relaxation of the rule.sign the certification was ratified by the Board. while she testified that she was authorized by the corporate secretary. The authority of respondent Neri to file the complaint in the RTC had not been proven. found that respondent Neri testified that she was the Managing Director of the Bataan Hilltop Hotel which was being leased by respondent Coalbrine. As to respondents' claim that petitioner Republic of the Philippines was not a party to the civil case subject of this petition since Administrator Quindoza was the sole defendant therein and.
. In fact. and to authorize respondent Neri to file the action. Thus. and that she was authorized by the Corporate Secretary to file the case. the certification against non-forum shopping did not even contain a statement that she was authorized by the corporate secretary to file the case on behalf of Coalbrine as she claimed. thus. has no personality to file this petition. Notably. their claim is not persuasive. In the present case. while the matter of lack of authority was raised by petitioner in its petition for certiorari filed with the CA.
the court rejects rebuttal evidence for the prosecution as. and that the appropriate recourse is to file an answer and to interpose as defenses the objections raised in the motion. Anent respondents' claim that the RTC Order denying a motion to dismiss is a mere interlocutory order. which is not intended to correct every controversial interlocutory ruling. and (6) where the decision in the certiorari case will avoid future litigations. the Supreme Court has allowed a writ of certiorari (1) where the appeal does not constitute a speedy and adequate remedy. in case of acquittal. Therefore. and the Republic has the personality to file the petition. and. there could be no remedy. this rule is not absolute. Even when appeal is available and is the proper remedy. as public welfare or public policy. not appealable and may not be a subject of a petition for certiorari filed by the petitioner before the CA. the same is also not meritorious. the complaint is in the nature of suit against the State. to elevate the entire case by appeal in due course. Administrator Quindoza was sued for damages for certain acts that he allegedly committed while he was the Zone Administrator of the Bataan Export Processing Zone. (5) where the order is a patent nullity. in case of an adverse
decision. (2) where the orders were also issued either in excess of or without jurisdiction or with grave abuse of discretion. (4) where in criminal actions. to proceed to trial. thus. While indeed. (3) for certain special considerations. 
.Notably. the general rule is that the denial of a motion to dismiss cannot be questioned in a special civil action for certiorari.
is ordered DISMISSED. WHEREFORE. we find that the RTC committed grave abuse of discretion amounting to lack of jurisdiction when it failed to consider the lack of proof of authority of respondent Neri to file the action on behalf of the corporation as we have discussed above. Bataan.In this case. Branch 4. 548-ML pending in the Regional Trial Court. SP No 74667 is REVERSED and SET ASIDE.R. 2004 of the Court of Appeals in CA-G. the petition for review is GRANTED. The Decision dated January 21. Balanga. SO ORDERED. The Complaint in Civil Case No.
CHICO-NAZARIO. INC...THIRD DIVISION
SANTIAGO CUA.. Chairperson. x -------------------------------------. JEMIE U.
G.x SANTIAGO CUA. in his capacity as Director of PHILIPPINE RACING CLUB.versus -
MIGUEL OCAMPO TAN...
. J. SOLOMON S. No. No. OCAMPO TAN. DULAY. INC. in their capacity as Directors of PHILIPPINE RACING CLUB. BRIGIDO J.
Present: CORONA. and PERALTA.versus -
OF APPEALS. Respondents. TAN and ATTY. ROBLES. Petitioners. SR. VELASCO. NACHURA.
. JR. JR. CUA and EXEQUIEL D.. JJ.R. Petitioner.R.
.. (PRCI).. 181455-56. Sr.....-x
CHICO-NAZARIO... in their capacity as directors of the Philippine Racing Club.
December 4.). docketed as G.. No.. and Dulay as respondents.. BRIGIDO J. with Miguel Ocampo Tan (Miguel).. and Exequiel D.. No.:
Before this Court are two Petitions: (1) a Petition for Review on Certiorari  under Rule 45 of the Rules of Court filed by petitioners Santiago Cua.JEMIE U.. 2009 x. DULAY... Robles (Robles). (Santiago Jr. 182008.. Branch 149 of Makati City... Brigido J... Br... Tan (Jemie) and Atty.R. Makati Regional Trial Court... and (2) a Petition for Certiorari and Prohibition under Rule 65 of the Rules of Court filed by petitioner Santiago Cua... Respondents. docketed as G. Dulay (Dulay) as respondents. Jemie U. likewise naming Miguel. Inc.).. Solomon S... CESAR UNTALAN.... ATTY. Presiding Judge. together with the Court of Appeals and Presiding Judge Cesar Untalan (Judge Untalan) of the Regional Trial Court (RTC)... J.. 149.. Jr..R.. also in his capacity as PRCI director... Cua (Solomon)... Jemie. and HON. (Santiago Sr. TAN.....
stablings. and Dulay (Miguel. the Court of Appeals dismissed for lack of merit. et al. booths. et al.). I FACTUAL AND PROCEDURAL ANTECEDENTS PRCI is a corporation organized and established under Philippine laws to: (1) carry on the business of a race course in all its branches and. the Petition for Certiorari of petitioners Santiago Jr. and to construct grand or other stands. and Robles (Santiago Jr. 07-610 granting the issuance of a ―permanent injunction‖ against petitioners and the other PRCI directors until the said case was resolved. hold and promote race meetings and other shows and
. the appellate court denied the Motions for Reconsideration of petitioners and the Motion to Admit Supplemental Petition for Certiorari of petitioner Santiago Jr..R.. Jemie. The same Resolution did not consider the Supplemental Petition for Certiorari and Prohibition filed by petitioner Santiago Sr.. paddocks. Solomon. clubhouses. and prematurity. 07-610 granting the Temporary Restraining Order (TRO) prayed for by respondents Miguel. 99780. In its 22 January 2008 Resolution. and the Petition for Certiorari and Prohibition of petitioner Santiago Sr.). et al. mootness. to conduct horse races or races of any kind. SP No. refreshment rooms and other erections. to accept bets on the results of the races. and conveniences. Petitioners would have wanted to challenge in their Supplemental Petitions the Resolution dated 8 October 2007 of the RTC in Civil Case No. In its 6 September 2007 Decision. buildings. for the latter‘s failure to seek leave of court for its filing and admittance. in particular. and to conduct. 99769 and No.Both Petitions assail the Decision dated 6 September 2007 and Resolution dated 22 January 2008 of the Court of Appeals in the consolidated cases CA-G. which sought the nullification of the Resolution dated 16 July 2007 of the RTC in Civil Case No.
Reyes Avenue.00 divided into 1. with a par value of P1. lend all possible aid in the development of sports. as amended by Republic Act No. and (2) promote the breeding of better horses in the Philippines. viz:
To acquire real properties and/or develop real properties into mix-use realty projects including but not limited to leisure. had been subscribed and paid up. Following the trend in the development of properties in the same area. measuring around 21.857.000. In 1999.00. of which a total of P569. each covered by several transfer certificates of title. In 2006. operate.749 shares. To pursue its avowed purposes.2 hectares.exhibitions. 6632.857. the Articles of Incorporation of PRCI was amended to include a secondary purpose. PRCI may operate only one racetrack. PRCI owns only two real properties.000. recreational and memorial parks and to own.000.000. Under its franchise. representing 569.749. and the other is located in the towns of Naic and Tanza in the province of Cavite (Cavite property).000. P. Ana Racetrack. located along A. to operate a horse racetrack and manage betting stations. PRCI holds a franchise granted under Republic Act No. One is known as the Sta. and uphold the principles of good sportsmanship and fair play. PRCI wished to convert its Makati property from a racetrack to urban residential and commercial use.00 each. Given the
. manage and/or sell these real estate projects.000 shares.
PRCI is publicly listed with the Philippine Stock Exchange (PSE). PRCI had an authorized capital stock of P1. Makati City (Makati property). 7953.
000. PRCI began developing its Cavite property as a racetrack. scheduled to be completed by April 2008. Hence.55% of the outstanding capital stock of JTH.00 .000.418. or for a total of P449. PRCI engaged the services of the accounting firm Sycip Gorres Velayo & Co. It had an authorized capital stock of P25. in this case. (JTH).000.426.848.450.928. To determine the value of JTH.00.000 common shares with a par value of P0. PRCI management opted to acquire another domestic corporation.50 each. Inc.410. (SGV) to conduct a due diligence study.00
.000.71/share) Less: Unaudited net worth of JTH (purely cash) P 470.location and size of its Makati property. or 95. PRCI believed that said property was severely under-utilized. Instead of organizing and establishing a new corporation for the said purpose. for the price of P10. PRCI management decided that it was best to spin off the management and development of the same to a wholly owned subsidiary. (JME).000.V.00. JTH Davies Holdings.71 per share. so that PRCI could continue to focus its efforts on pursuing its core business competence of horse racing. Now as to its Makati property. JTH was then owned by Jardine Matheson Europe B.250. Using the results of the SGV study.290 shares.00 for the said JTH shares. Its tangible assets substantially consisted of cash. divided into 50. PRCI management determined that PRCI could initially acquire 41. PRCI management decided to transfer its racetrack from Makati to Cavite. JTH was publicly listed with the PSE. computed as follows:
Total price for all of the issued and subscribed JTH shares (at P10.010. PRCI would be paying a premium of P42.
450. After discussing and deliberating on the matter of the acquisition of JTH by PRCI. That the Corporation authorizes its President. its implementing rules.410. and such other deeds.955 P 42.408. Among the directors present were petitioners Santiago Sr. as it is hereby resolved.5% interest in JTH to be acquired by PRCI
44. Santiago Jr. RESOLVED FURTHER. as well as to source the funds to implement the same.00 x 0. 2. that the Corporation intends to acquire up to one hundred percent (100%) of the common shares of stock of JTH Davies Holdings. by way of negotiated sale. RESOLVED FURTHERMORE.5%) Premium for the 95. to sign and execute any purchase agreements.. Cua. That Management and the Corporate Secretary shall prepare and submit the Tender Offer. Special Stockholders’ Meeting -
. all the directors present.848. and other prevailing regulations. Inc. and to deliver any documents and papers. except respondent Dulay. as well as. memoranda.Total premium for 100% of JTH Multiply: Interest in JTH to be initially acquired by PRCI (95. necessary and incidental to implement the foregoing. as well as respondent Dulay. voted affirmatively to pass and approve the following resolutions:
1. perform any acts. Solomon S. Mr. Declaration of Intention to Acquire and Purchase Shares of Stock of Another Company -
RESOLVED.. to file all the necessary disclosures and notices in compliance with the Securities Regulation Code.00
The PRCI Board of Directors held a meeting on 26 September 2006. and Solomon.
Inc. to effect the foregoing. SOLOMON S.RESOLVED. That only those stockholders of record as of end of business day of October 11. 2006 shall be entitled to notice.M. as well as. or in his absence. or in his absence. JR. set the time for the submission of. to order publication of notices and undertake such appropriate and necessary steps.. the Board passed and approved the following resolutions: RESOLVED. in accordance with the laws. regulations and by-laws of PRCI. INC. and to exercise all rights appurtenant thereto during the Annual Stockholders‘ Meeting/s and all regular/special meeting/s of JTH DAVIES HOLDINGS. RESOLVED FURTHER. SANTIAGO CUA. including the filing of the required disclosures to the regulating agencies. to act as its attorney-infact/proxy and to vote all shares as may be registered in the name of the Corporation/lodged with the PCD System. shall have full power and authority and discretion
.P. or in his absence. DATUK SURIN UPATKOON. and to receive and validate proxies. or in his absence. or at such later date as may be practicable under the circumstances. 3. That the Corporate Secretary shall be authorized to issue the required notices.). That a Special Stockholders‘ Meeting of PRCI shall be held on October 26. LIM TEONG LEONG. Reyes Avenue. INC. or in his absence. in the said order of priority. to vote and/or to be voted upon. that the Corporation shall hereby authorize SANTIAGO CUA. (formerly JARDINE DAVIES. Laurence Lim Swee Lim. CUA. or in his absence. RESOLVED FURTHERMORE. 2006 at 10:00 A. Authorized Attorney-In-Fact and Proxy -
In the event of a successful acquisition of the shares of JTH Davies Holdings.. That these Directors. A. in the principal place of business of PRCI at Santa Ana Park. RESOLVED FURTHER.. EXEQUIEL ROBLES. Makati City.
In the Special Stockholders‘ Meeting held on 7 November 2006.883 issued and outstanding common shares of JTH at P10.250.000.71 per share or P449. 2006 or the 50th day from the start of the JTH Offer or such date which shall in no case be later than December 11.71 each. appoint. 27 September 2006.954. INC.).887 shares or 84.290 common shares or 95. PRCI entered into a Sale and Purchase Agreement for the acquisition from JME of 41. attended by stockholders with 481. as they are hereby granted full power and authority whatsoever requisite or necessary or proper to be done in these matters. (formerly JARDINE DAVIES.42%
.00.55% of the outstanding capital stock of JTH.
The next day.928. (b) Upon the signing of the [A]greement.45% or 1. INC. 2006. That these Directors be.
PRCI also made a tender offer for the remaining 4. Among the principal terms of the Sale and Purchase Agreement were:
(a) The consideration for the acquisition was P10. RESOLVED FINALLY.045. and (c) The sale and purchase transaction contemplated in the Agreement shall be consummated at a closing not later than November 30. the [PRCI] shall pay P20 Million to an Escrow Agent as deposit. and/or vote into office such directors and/or officers during the said Annual Stockholders‘ Meeting/s and regular/special meeting/s of JTH HOLDINGS.to nominate.
The President explained that JTH is one of the oldest holdings company and the name JTH Davies is an internationally acclaimed name with a reputation for solid and sound financial standing. Inc. the President informed that the latest Annual Report of JTH has been appended to the Information Statement for guidance. Thereafter. APPROVAL OF THE ACQUISITION OF THE SHARES OF STOCK OF JTH DAVIES HOLDINGS. the Corporate Secretary informed that the President will present to the stockholders the rationale for the acquisition of the shares of JTH Davies Holdings. For reference. The Vice-Chairman then informed that the resolution
. According to the President PRCI is intending to acquire up to 100% of the shares of JTH Davies Holdings. The events during said meeting were duly recorded in the Minutes.of the outstanding capital stock of PRCI. It is for this reason that we call this special meeting so you may know soonest the present opportunity faced by PRCI without need for you to wait until next year‘s annual meeting. to wit:
V. PRCI believes that this JTH will complement the direction of PRCI in fast tracking the development of PRCI‘s plans and provide it investment opportunities. the acquisition by PRCI of JTH was presented for approval. another listed company in the PSE. it gives PRCI the necessary vehicle within which to enlarge and broaden the business and operational alternatives or options of our company. INC. Also copies of the Board‘s resolution presented for approval and ratification by the stockholders has been posted in the room for convenient reading of the stockholders. Inc. With PRCI‘s acquisition of JTH.
asked the President what are the plans of PRCI on the assets of JTH. A stockholder thereafter moved that the the (sic) resolution be approved which was duly seconded by another stockholder. (74%) the Corporate Secretary declared the resolution as duly approved and ratified.19% of the outstanding
. Pagunsan. Atty. Mr.137 common shares of JTH from the minority stockholders of the latter.160. Notwithstanding the objection of Atty.approving the purchase of JTH Davies Holdings. He proceeded to thank the President and shook hands with him. Ngo.
By 22 November 2006. another stockholder. Ngo asked again what will be the direction of PRCI on the substantial retained earnings of JTH to which the President replied that there are several options being considered once the purchase is complete one of which is the declaration of cash dividend. Thereafter. as presented in the Information Statement which were furnished to the stockholders is presented for approval to the body. Another stockholder took the floor and informed the Management that he is happy with the transaction of PRCI and the purchase by PRCI of the JTH shares is a good deal since the value of the goodwill of JTH is substantial by his estimate. Thereafter. Pagunsan took the floor and informed that he is the proxy of various stockholders (10%) and would like to manifest his vote as ―NO‖ which the Vice-Chairman duly noted. Mr. The President informed that as of now. The Vice-Chairman declared the resolution approved. giving PRCI ownership of 98. JTH has no material hard assets other than its retained earnings. considering the more than 2/3 of the outstanding capital stock of PRCI has approved and ratified the resolution. Inc. PRCI was able to additionally acquire 1.
would be reflected as additional paid-in capital of PRCI in JTH. and the Philippine Stock Exchange (PSE). The matter of the proposed exchange was taken up and approved by the PRCI Board of Directors in its meeting held on 11
. could be transferred to JTH in exchange for the unissued portion of the latter‘s recently increase authorized capital stock.908.capital stock of JTH.419.000. It was then determined that the Makati property. the consolidated financial position of the Philippine Racing Club. divided into 795. the Bureau of Internal Revenue (BIR). 2006.817. The financial statements were audited by the accounting firm Punongbayan & Araullo which gave the following unqualified opinion of the same: ―In our opinion.789 shares with a par value of P0. the consolidated financial statements present fairly. amounting to P397.00. and Subsidiary as of December 31. The difference of P3. Inc. with a total zonal value of P3. and their consolidated financial performance and their cash flows for the year then ended in accordance with Philippine Financial Reporting Standards. PRCI again engaged the assistance of SGV in executing its intended spin-off to JTH of the management and development of PRCI‘s Makati property.817.105. in all material respects.‖ The audited financial statements of PRCI and JTH for 2006 were presented to the stockholders of PRCI and submitted to the Securities and Exchange Commission (SEC).50 between the total zonal value of the Makati property and the aggregate par value of the JTH shares to be issued in exchange for the same.333. Thereafter.50 per share.50.242.894. PRCI prepared consolidated financial statements for itself and for JTH for the fiscal year ending 31 December 2006. based on our audit and the report of other auditors.
That. all the Directors present approved and passed the following resolution. After due discussion and deliberation. That the Corporation hereby approves and authorizes the exchange of its Makati property with shares of JTH Davies Holdings. be. RESOLVED FURTHER. That the Executive Committee. President & CEO. RESOLVED FURTHER. Inc. except Director Brigido Dulay who registered a negative vote: RESOLVED. the Corporation hereby authorizes its Executive Committee to determine and approve the terms and conditions governing the exchange as it shall consider for the best interest of the Corporation subject to approval by the stockholders in compliance with the Corporation Code. as he is hereby authorized to negotiate with JTH Davies
President Cua reported on certain essential matters regarding the Corporation‘s Makati Property..May 2007. That SOLOMON CUA. as it is hereby granted full power and authority whatsoever requisite or necessary or proper to accomplish these. He then presented to the Board financial facts and figures heavily favoring the transaction. for this purpose. again with the lone dissent of respondent Dulay. Inc. Exchange of the Corporation’s Makati Property with Shares of JTH Davies Holdings. According to the Minutes of the said meeting. Inc. RESOLVED FINALLY. President Cua proposed the exchange of this Property with shares of JTH Davies Holdings. be. After doing so. the following occurred:
Holdings. Report of the President.
Approval of the Amendments of the By-Laws to conform with the Manual of Corporate Governance. Approval of the Minutes of the Annual Stockholders‘ Meeting held last June 19. X. Election of the members of the Board of Directors. and/or deliver any and all documents covering the exchange in accordance with the terms and conditions of the Executive Committee.
II. VII. sign.
. IV. Approval of the Planned Exchange of PRCI‘s Makati
property for shares of stock.
IX. and to execute. III. 2006 and of the Special Stockholders‘ Meeting held last November 7. Approval and Ratification of the acts of the Board of Directors. the Annual Stockholders‘ Meeting of PRCI was scheduled on 17 July 2007. the Executive Committee and the Management of the Corporation for the Fiscal Year 2006. Certification of Quorum. Call to Order. the Agenda for which is reproduced below:
I. Proof of Notice. VI. 2006. Approval of the Audited Financial Statement for the year ended December 31. 2006.
Dulay Total No.720 1 32. but also extremely prejudicial and inimical to interest of PRCI. Tan Atty.972. The Complaint was based on three causes of action: (1) the approval by the majority directors of PRCI of the Board Resolutions dated 26 September 2006 and 11 May 2007 -. despite the absence of any disclosure and information -. Adjournment.000 15.with undue haste and deliberate speed.
XIII. of Shares 16.was not only anomalous and fraudulent. et al.721 Percentage 2. against the rest of the directors of PRCI and/or JTH.00 5. respondents Miguel. on 10 July 2007.XI.352. The Complaint was docketed as Civil Case No.380. Other Matters. XII. 07-610. committed in
. VII and No.67
filed before the RTC a Complaint. However. The 11 May 2007 Resolution of the PRCI Board of Directors on the property-for-shares exchange between PRCI and JTH was supposed to be presented for approval by the stockholders under the afore-quoted Items No.87 2. denominated as a Derivative Suit with prayer for Issuance of TRO/Preliminary Injunction. as minority stockholders of PRCI. VIII of the Agenda.. Brigido J.
Appointment of Independent External Auditors. with the following shareholdings:
Stockholder Miguel Ocampo-Tan Jemie U.80 0.
for complete and adequate information relative to the disputed Board Resolutions. To compel the defendant Majority Directors to render a complete and adequate disclosure of all documents and information relating to the subject matter of the Disputed Resolutions as well as the business and affairs of the Corporation and its wholly-owned subsidiary from the time of the latter‘s acquisition until final judgment. 3. brazenly and unlawfully violating the rights of the minority stockholders to information and to inspect corporate books and records..
.violation of their fiduciary duty as directors of the said corporation. (2) respondent Solomon. ―railroading‖. 2. A temporary restraining order and/or writ of preliminary injunction be issued restraining and enjoining the holding of the Annual Stockholders‘ Meeting scheduled on 17 July 2007 and restraining and enjoining the defendants [PRCI directors] from enforcing. maliciously refused and resisted the request of respondents Miguel. In the end. wastage and dissipation. respondents Miguel. et al. or taking any further action in reliance upon or in substitution or in furtherance of the Disputed Resolutions. A receiver and/or management committee be constituted and appointed to undertake the management and operations of the Corporation and to take over its assets to prevent its further loss. the majority directors of PRCI illegally and unlawfully constituted themselves as members of the Board of Directors and/or Executive Officers of JTH. rendering all the actions they have taken as such null and void ab initio. which would inflict grave and irreparable injury in fraud of the Corporation. after notice and hearing. implementing. and (3) without being officially and formally nominated. prayed to the RTC. as PRCI President. et al. that:
1. with the acquiescence of the majority directors of PRCI..
00 per court appearance. After trial on the merits. the dispositive portion of which reads:
WHEREFORE.00. as follows: (a) Permanently enjoining and prohibiting defendants from enforcing.00 bond on condition that such bond shall answer to any damage that the Defendants may sustain by reason
After conducting hearings on the prayer for the issuance of a TRO. and by way of attorney‘s fees. as null and void ab initio.000.4. that judgment be rendered in favor of the plaintiffs and against the defendants. as well as any and all actions taken in reliance upon or pursuant to or in furtherance of the Disputed Resolutions and/or approval of the Executive Committee. or taking any action in reliance upon the Disputed Resolutions. plus costs of suit. including all acts done by defendant Majority Directors as such Directors and/or officers of JTH. RTC Judge Untalan issued a Resolution on 16 July 2007. (b) Declaring the Disputed Resolutions dated 26 September 2006 and 11 May 2007 and the approval by the Executive Committee of the exchange of the Corporation‘s Makati Property for JTH shares.000. as null and void ab initio. plus P10. implementing. Other reliefs just and equitable under the premises are likewise prayed for. this court hereby partially grants the prayer of PRCI for the issuance of Temporary Restraining Order upon the herein defendants subject to the posting of Php100. premises considered. (d) Ordering defendants to pay plaintiffs the sum of P500.000. (c) Declaring the assumption by defendant Majority Directors as Directors and/or officers of JTH.
their agents.M. the Executive Committee and the Management of the Corporation for the Fiscal Year 2006. much more to approve the same. prohibited and forbidden to present to. in case herein Defendants. proxies and representatives defy and disobey this mandate. This TRO shall be effective for TWENTY (20) DAYS only from service of the same upon the Defendants after posting of the bond. at the VIP Room.
3. jointly and severally. their agents. VIII – Approval of the Planned
Exchange of PRCI‘s Makati property for shares of stock. are hereby ordered to delete and remove from the Agenda said three (3) above stated items of the Agenda before the start and conduct of the said stockholders‘ meeting. Santa Ana Park. the herein Defendants. Agenda Roman No. 2006 and the Special Stockholders‘ meeting held last November 7. Thus. Agenda Roman No. Makati City. 2007 at 8:00 A. discuss and approve. they have committed already four (4) distinct contemptuous acts: delete.of this TRO if the court should finally decide that the applicants are not entitled thereto. discuss.
2. proxies and representatives are hereby enjoined. the Defendants. their agents.
. VII – Approval and Ratification
of the acts of the Board of Directors. at the 2007 Annual Stockholders‘ Meeting of PRCI to be held on July 17. the following Agenda included in the Notice of said stockholders‘ meeting: 1. A. Reyes Ave.. Agenda Roman No. proxies and representatives. in order that these subject matters and items of the Agenda of the aforesaid Stockholders‘ Meeting shall not be taken up. Therefore. IV – Approval of the Minutes of the Annual Stockholders‘ Meeting held last June 19. present. Therefore.P. 2006.
2007 and August 2. Let the hearing of the main injunction be set on July 23 and 24. filed his own Petition for Certiorari and Prohibition. SP No. for being rendered with grave abuse of discretion amounting to lack or excess of jurisdiction. 99769 and No. failed to push through for lack of quorum. SP No. SP No. and approval of only three of the 13 items on the Agenda of the 2007 Annual Stockholders‘ Meeting. 99769 and No. 99780.. 99780 were subsequently consolidated. 17 July 2007.R. According to the Court of Appeals. to please make sure that this mandate is obeyed and observed by the Defendants. also as PRCI director. docketed as CA-G. 99769. There is no evidence that the TRO issued by the RTC legally impaired the holding of the scheduled stockholders‘
.R.This Court appealed to the Corporate Secretary as Officer of the Court. Both Petitions assailed the RTC Resolution dated 16 July 2007. On 19 July 2007. mootness. proxies and representatives. 99780 for lack of merit. petitioners Santiago Jr. discussion. docketed as CA-G. before and during the conduct of said stockholders‘ meeting.R. 2007. Santiago Sr.R. all at two o‘clock in the afternoon.. granting the issuance of a TRO. The Court of Appeals promulgated its Decision on 6 September 2007 dismissing the Petitions in CA-G. SP No.
The Annual Stockholders‘ Meeting of PRCI scheduled the next day. as PRCI directors filed a Petition for Certiorari with the Court of Appeals. the TRO issued by the RTC enjoined the presentation. CA-G. On 20 July 2007.. and prematurity. their agents. et al.
Consequently. even before the Petitions were submitted for resolution. Therefore. the Court of Appeals held that the issues raised by petitioners were factual and evidentiary in nature which must be threshed out before the RTC as the designated commercial court in Makati. 99769 and No. Indeed. 99780 as regards the issuance of the TRO already became moot when the 20-day period of effectivity of said restraining order expired on 5 August 2007. Section 1 of the Interim Rules of Procedure for Intra-Corporate Controversies (Interim Rules) provides: ―SECTION 1. Derivative action. Although the Complaint contained mere allegations. the appellate court found no grave abuse of discretion in the issuance by the RTC of the TRO. Lastly. – A stockholder or member may bring an action in the
. and the RTC properly took cognizance of the same. 07-610 had not yet gone to trial and had not yet been resolved or terminated by the RTC.R. 07-610. The Court of Appeals ruled that there was no reason to dismiss the Complaint in Civil Case No. The Court of Appeals reasoned that:
Rule 8. it was sufficient in form and substance. The appellate court would not interfere with the proceedings a quo considering that Civil Case No. 07-610. the Court of Appeals could not prohibit the continuance of the RTC proceedings in Civil Case No. which had yet to be supported by evidence.meeting. for being premature. SP No. the lack of quorum during the said meeting was due to the absence of petitioners themselves who comprised the majority interest in PRCI. The Court of Appeals also noted that the Petitions in CA-G.
The suit is not a nuisance or harassment
In case of nuisance or harassment suit. (3) No appraisal rights are available for the act or acts complained of.name of a corporation or association. by-laws. that nevertheless. provided. as the case may be. that: (1) He was a stockholder or member at the time the acts or transactions subject of the action occurred and at the time the action was filed.
. Complainants essentially allege that they are PRCI stockholders. that prior resort to intra-corporate remedies are futile. the court shall forthwith dismiss the case. they have asked for copies of the pertinent documents pertaining to the questioned transactions which the board has declined to furnish. laws or rules governing the corporation or partnership to obtain the relief he desires. and alleges the same with particularity in the complaint. that they have opposed the issuance and approval of the questioned resolutions during the board stockholders‘ (sic) meetings. to exhaust all remedies available under the articles of incorporation. (2) He exerted all reasonable efforts. that they are questioning the acts of the majority of the board of directors believing that the herein petitioners have committed a wrong against the corporation and seeking a nullification of the questioned board resolutions on the ground of wastage of the corporate assets. and (4) suit. that they have instituted the derivative suit in the name of the corporation.‖ A reading of the Complaint reveals that the same sufficiently alleges the foregoing requirements.
premises considered. 2. 2006 of PRCI. Judge Untalan issued on 8 October 2007 a Resolution with the following decree:
WHEREFORE. Approval and Ratification of the acts of the Board of
. the Annual Stockholders‘ Meeting of PRCI was again scheduled on 10 October 2007.000. However. In the meantime. SP No. 2006 and the Special Stockholders‘ meeting held last November 7. this court hereby GRANTS the issuance of PERMANENT INJUNCTION against the defendants until the instant case is finally resolved. upon the expiration of the TRO issued by RTC Judge Untalan in Civil Case No. the Defendants. Approval of the Minutes of the Annual Stockholders‘ Meeting held last June 19.R. discuss. 99769 and No. at any stockholders‘ meeting. of PRCI of the following Agenda: 1. proxies and representatives are hereby enjoined. contrary to petitioners‘ averment. their agents. the Complaint does state a cause of action. subject to the posting by plaintiffs of a Php 100. on condition that such bond shall answer to any damage that the Defendants may sustain by reason of this injunction if the court should finally decide that the applicants are not entitled thereto. 07-610.Thus.00 bond. Therefore. 99780 filed their respective Motions for Reconsideration of the foregoing Decision of the Court of Appeals.
Petitioners in CA-G. whatsoever kind and nature. This injunction shall be effective from service of the same upon the Defendants after posting of the bond. much more to approve the same. prohibited and forbidden to present to.
The Court of Appeals found that petitioners‘ Motions for Reconsideration merely reiterated the issues and arguments which were raised in the Petitions and/or which the appellate court already discussed and passed upon. Petitioners intended to additionally assail in their Supplemental Petitions the 8 October 2007 Resolution of the RTC granting the issuance of the permanent injunction. SP No. the Executive Committee and the Management of PRCI for the Fiscal Year 2006. 99769 their Motion to Admit Supplemental Petition for Certiorari with the attached Supplemental Petition for Certiorari. 99780 a Supplemental Petition for Certiorari and Prohibition. filed in CA-G. filed in CA-G..R. In its Resolution dated 22 January 2008.Directors.R. SP No. The Court of Appeals reiterated its
. et al.
As a result. the Annual Stockholders‘ Meeting of PRCI proceeded as scheduled on 10 October 2007 without taking up the matters covered by the permanent injunction issued by the RTC. as far as the acquisition of JTH and the planned exchange of PRCI‘s Makati property for shares of stock of JTH are concerned. and petitioner Santiago Sr. Petitioners Santiago Jr. Approval of the Planned Exchange of PRCI‘s Makati property for shares of stock of JTH. 3. to be followed shortly thereafter by a Motion to Admit (Supplemental Petition).. et al. the Court of Appeals denied the Motions for Reconsideration of petitioners and the Motion to Admit Supplemental Petition for Certiorari of petitioners Santiago Jr.
petitioners turned to this Court. No. and only the TRO was the subject of the original Petitions. Failing to obtain any relief from the Court of Appeals. 181455-56. SP No.R. In addition. filed a Petition for Certiorari under Rule 65 of the Rules of Court. The Court of Appeals likewise refused to admit petitioners‘ Supplemental Petitions for Certiorari.
. Petitioners Santiago Jr.R. 07-610 before the RTC. 99769 and No. docketed as G. Hence.. 182008. the Supplemental Petitions assailing the permanent injunction granted by the RTC could not be considered as merely augmenting the matters. Although the TRO and the permanent injunction were both issued by the RTC in Civil Case No. issues.R. et al. It noted that Santiago Sr.ruling that it was premature to prohibit the continuance of the proceedings in Civil Case No. the two issuances were independent of each other. 07-610. 99780. No.. filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court. the appellate court committed reversible errors of law and grave abuse of discretion in its Decision dated 6 September 2007 and Resolution dated 22 January 2008 in CA-G. and causes of action of the original Petitions. while petitioner Santiago Sr. According to petitioners. the appellate court disregarded the Motion to Admit (Supplemental Petition) which petitioner Santiago filed separately from and at a later date than his Supplemental Petition. and should be challenged in a separate petition for certiorari. Apparently. and that the Complaint therein sufficiently stated a cause of action. docketed as G. the Court of Appeals adjudged that the Supplemental Petitions which petitioners hoped to be admitted involved a subject matter not covered in their original Petitions. filed his Supplemental Petition without asking for leave to file the same.
. Respondents Miguel. arbitrarily and capriciously disregarding the business judgment made by the said Board and approved by PRCI stockholders. 99780. 99780 moot. by finding no grave abuse of discretion on the part of the RTC in issuing the TRO against petitioners and the other PRCI directors. 99769 and No. 07-610 in view of the fatally defective Complaint. In fact. the expiration of the 20-day TRO did not make their Petitions for Certiorari in CA-GR SP No. 07-610 pending before the RTC did not constitute a valid derivative suit. Petitioners also challenged the refusal by the Court of Appeals to admit their Supplemental Petitions in CA-GR SP No. Petitioners averred that. The prayer of petitioners Santiago Jr. 07-610 was nothing more than a nuisance or harassment suit against petitioners and the other PRCI directors. the Court of Appeals substituted its own judgment for that of the PRCI Board of Directors. 99769 and No.. the very allegations made by respondents Miguel. They asserted that the issues in their Supplemental Petitions were closely intertwined with those in their original Petitions. The Complaint in Civil Case No. in their Complaint supported the availability of appraisal rights to them. failed to allege in their Complaint that they had no appraisal rights for the acts they were complaining of. Furthermore. in their Petition
.Petitioners insisted that Civil Case No. the grant or denial of which the appellate court should have still determined despite the expiration of the TRO.. et al. The TRO issued by the RTC was not for the benefit of the PRCI stockholders. et al. Said Petitions included the prayer that the RTC be restrained from proceeding with Civil Case No. et al.
Petitioners Santiago Jr.R. The Decision of the Court of Appeals dated 06 September 2007 (Annex “I”) and the Resolution of the Court of Appeals dated 22 January 2008 (Annex “M”) be NULLIFIED. Such further reliefs just and equitable under the circumstances be GRANTED. The Resolutions of Judge Cesar Untalan of Makati Regional Trial Court. REVERSED and SET ASIDE for having been issued with grave abuse of discretion amounting to lack of jurisdiction.in G. The complaint of Respondents be DISMISSED outright for lack of jurisdiction and cause of action.. in which they additionally asked the Court that ―a Temporary Restraining Order (Status Quo Ante) and/or Writ of Preliminary Injunction be immediately issued restraining the implementation (sic) Judge Cesar Untalan‘s Resolutions dated 16 July 2007 and 08 October 2007 so as not to render inutile this Most
. 181455-56 reads:
PRAYER WHEREFORE. C. 181455-56 an Urgent Motion for Issuance of a Temporary Restraining Order (Status Quo Ante) and/or Writ of Preliminary Injunction. D. No. et al. REVERSED and SET ASIDE for having been issued on the basis of reversible error of law and with grave abuse of discretion amounting to lack of jurisdiction. No. subsequently filed in G.. Branch 149 dated 16 July 2007 (Annex “F”) and 08 October 2007 (Annex “G”) be accordingly NULLIFIED. it is most respectfully prayed of the Honorable Supreme Court that: A. in view of the foregoing and in the interest of justice. B.
sought the following reliefs from this Court in his Petition in G. 182008:
PRAYER WHEREFORE. Thereafter. 2. No. which prevents the stockholders of the corporation from acting on matters that have to be submitted to them for approval and/ratification at the regular annual stockholders‘ meetings.‖ Meanwhile. and that: 1. and the assailed trial court‘s resolutions. as well as the Trial Court‘s 16 July 2007 and 8 October 2007 Resolutions in Civil Case No.R. 07-610 of the Makati Regional Trial Court. SP No. it is respectfully prayed that the petition be given due course. 3. After due hearing. particularly that which mandates the continued enforcement of the Writ of PERMANENT Injunction issued by the trial. and
. a writ of prohibition be issued and/or the preliminary injunction be made permanent and continuing. premises considered. during the pendency of the instant case before the Honorable court. a temporary restraining order and/or writ of preliminary injunction be immediately issued restraining and enjoining the enforcement or execution of the assailed Court of Appeals‘ Decision and Resolution. Upon the filing of this petition. that the Honorable Court:
(a) Declare null and void the Honorable Court of Appeals‘ 06 September 2007 Decision and 22 January 2008 Resolution.Honorable Court‘s exercise of jurisdiction over this action and to prevent the decision on this case from being rendered ineffectual and academic. in CA-G. petitioner Santiago Sr. 99780.R.
the Court granted petitioner Santiago Sr. et al.
Accordingly. Other reliefs just and equitable in the premises are likewise prayed for. 07-610 of the RTC of Makati City.
. to wit:
Acting on the prayer for the issuance of a temporary restraining order and/or a writ of preliminary injunction dated 24 March 2008.. otherwise. directed against the respondents of G.
In a Resolution dated 9 April 2008 in G.‘s prayer for the issuance of a TRO..R. the bond shall be effective from its approval by the Court until this case is finally decided.R. docketed as Civil Case No.(b) Order the dismissal of the Complaint filed by the private respondents against petitioner. and to require petitioner to POST a CASH BOND or a SURETY BOND from a reputable bonding company of indubitable solvency with terms and conditions acceptable to the Court. 182008. and Judge Untalan. namely. until further orders from this Court. the Court issued the TRO on even date. 182008. respondents Miguel. in the amount of TWO HUNDRED THOUSAND PESOS (P200. et al. the temporary restraining order herein issued shall automatically be lifted.000. the Court likewise resolves to ISSUE a TEMPORARY RESTRAINING ORDER enjoining respondents from enforcing or executing the assailed Court of Appeals‘ decision and resolution and the assailed trial court‘s resolutions particularly that which mandates the continued enforcement of the writ of permanent injunction issued by the trial court. No. within five (5) days from notice. No. Unless and until the Court directs otherwise. resolved or terminated.00).
R. subject matter.R. No. Moreover. No.‖ In fact. petitioners Santiago Jr. errors of judgment could not be remedied by a Petition for Certiorari. Both Petitions involved the same transactions. No.. respondents Miguel. filed a Petition for Review in G. 182008 was dismissible due to several procedural errors. and circumstances.On 21 April 2008. et al. Petitioner Santiago Sr. No. 182008 was also not personally verified by petitioner Santiago Sr... It was not merely a derivative suit. 181455-56. as well as identical causes of action. and issues.R. who signed the Petition in G. except that he was ―avoiding the tortuous manner offered by other remedies.R. The Petition for Certiorari in G.R. of which he was one of the petitioners. Additionally. explained that their Complaint in Civil Case No. as required by rules and jurisprudence... On substantial grounds. 182008 raised issues that were factual and evidentiary in nature. Respondents Miguel. but was also an intra-corporate action arising from devices or schemes employed by the PRCI Board of Directors amounting to fraud or misrepresentation and were detrimental to the interest of the PRCI stockholders. speedy. et al.R. essential facts. filed with the Court their Comment with Prayer for the Immediate Lifting or Dissolution of the Temporary Restraining Order in G. on which the RTC has yet to make finding.‘s Petition in G. 181455-56. respondents Miguel. No. and adequate remedy in the ordinary course of law. was guilty of forum shopping for failing to inform the Court of the Petition for Review in G. Petitioner Solomon. argued that the Petition for Certiorari in G. 182008 on behalf of Santiago Sr. et al.R. No. Lastly. since it was only proper when there was no other plain. 07-610 was comprised of several causes of action. et al. Petitioner Cua himself admitted the availability of other remedies. No. the Petition for Certiorari was not a proper remedy. the fraudulent acts and breach of
respondents Miguel. In support of their prayer for the immediate lifting or dissolution of the TRO issued by this Court. since (1) the PRCI directors were being charged with mismanagement. Furthermore. which were not subject to appraisal rights. and breach of fiduciary duties. et al. in contrast. 99769 and No. 07-610. the Court of Appeals correctly denied admission of the Supplemental Petitions in CA-GR SP No.fiduciary duties by the PRCI directors had already been established by prima facie factual evidence. who still had not voted on the intended property-for-shares exchange between PRCI and JTH. which warranted the continuation of the proceedings in Civil Case No. It was also established that there were no appraisal rights available for the acts complained of. The issues raised in the original Petitions pertain to the grave abuse of discretion committed by the RTC in issuing the TRO and in taking cognizance of Civil Case No. (2) appraisal rights would only obtain for acts of the Board of Directors in good faith. 99780. contended that:
I THE TEMPORARY RESTRAINING ORDER ISSUED BY THIS HONORABLE COURT HAS IMPELLED HEREIN PETITIONER AND HIS CO-MAJORITY DIRECTORS TO SCHEDULE A STOCKHOLDERS‘ MEETING WITH THE
. the issues in the Supplemental Petitions referred to the issuance of the Writ of Preliminary Injunction. by setting the same for hearing on the main injunction. A new and independent cause of action could not be set by supplemental complaint. misrepresentation. 07-610 before the RTC for adjudication on the merits.. and no corporate action had yet been taken herein by PRCI stockholders. and (3) appraisal rights may be exercised by a stockholder who had voted against the proposed corporate action. fraud.
BRANCH 149. DOES NOT STAND TO SUFFER ANY IRREPARABLE INJURY. it is respectfully prayed of this Honorable Supreme Court that the Temporary Restraining Order be LIFTED or DISSOLVED IMMEDIATELY. II THE PETITIONER HEREIN.
. V THE TRO WAS IMPROPERLY ISSUED AS PETITIONER HAS FAILED TO SHOW ANY EXTREME URGENCY TO NECESSITATE THE ISSUANCE THEREOF. respondents Miguel. premises considered. III TO THE CONTRARY. et al. HAVING BEEN IMPLEADED AS DIRECTOR AND FIDUCIARY OF PRCI. IV THE PETITIONER HEREIN HAS FAILED TO ESTABLISH ANY CLEAR LEGAL RIGHT THAT ENTITLES HIM TO THE ISSUANCE OF A TRO AND/OR WRIT OF PRELIMINARY INJUNCTION. prayed:
PRAYER WHEREFORE. and that the instant Petition be DISMISSED. IT IS PRCI WHO STAND TO SUFFER GRAVE AND IRREPARABLE INJURY IF THE TRO IS NOT LIFTED AND/OR DISSOLVED.VIEW TO RENDER MOOT AND ACADEMIC THE ACTION AND PROCEEDINGS BEFORE THE REGIONAL TRIAL COURT OF MAKATI.
In the end..
They informed the Court that the PRCI Board of Directors passed and approved on 22 April 2008 a Resolution setting the Annual Stockholders‘ Meeting of PRCI on 18 June 2008.000.00 shares or 0. and the Minutes of the Annual Stockholders‘ Meeting held on 10 October 2007. 23 April 2008. on 16 June 2008. a minority stockholder of PRCI – with 5.Other just and equitable reliefs are likewise prayed for.. on 23 April 2008. 181455-56 and No. Aris Prime Resources. including in the proposed Agenda therefor the following items:
(d) Approval of the Minutes of the Special Stockholders‘ Meeting held on 7 November 2006. the Court issued a Resolution consolidating G. et al. respondents Miguel.
On the same day. Inc. (APRI). the Executive Committee. and Management of the Corporation for Fiscal Years 2006 and 2007. Approval of the Planned Exchange of PRCI‘s Makati Property for shares of stock of JTH Davies Holdings. Inc. 182008. again urgently moved for the lifting and/or dissolution of the TRO issued by this Court.R. No. xxxx (g) Approval and ratification of the acts of the Board of Directors.000.
Only two days later. Thereafter.88% of the outstanding capital stock of PRCI – filed a Very Respectful Motion for Leave to Intervene as Co-Respondent in the Petition with the attached Very Respectful Urgent Motion to Lift
the submission of the exchange to the PRCI stockholders for their approval will render the aforementioned proceedings before this Court and the RTC moot and academic.. et al. and for the sanction of the blatant disregard by the majority directors of their duties of fidelity and transparency.. Unless the TRO is lifted forthwith. filed before the Court a Manifestation and Motion to Set Case for Oral Arguments. APRI. Considering that the validity of the acts of the PRCI Board of Directors concerning the property-for-shares exchange are the very issues raised in the Petitions presently before the Court. 07-610. respondents Miguel. et al. and all other minority stockholders stand to suffer prejudice. It will amount to a denial of the right of APRI and of respondents Miguel.Restraining Order.. It relayed to the Court that it received Notice of the Annual Stockholders‘ Meeting of PRCI set on 18 June 2008. while the factual issues relating to the same are still being litigated before the RTC in Civil Case No. petitioners Santiago Jr. It will likewise unduly pave the way for the validation of the abuse committed by the majority directors of PRCI in denying the right of the minority directors and stockholders of the corporation to information.. Pending action on the foregoing incidents. et al.. while respondents Miguel. et al.. In their Manifestation. petitioners Santiago Jr. admitted that the PRCI Board of Directors had already called and set the Annual Stockholders‘ Meeting on 18 June 2008. and among the
. where the items on the property-for-shares exchange between PRCI and JTH were included in the Agenda.. et al. petitioners seek the dismissal. pray for the grant of the motion to intervene of APRI. to be heard before the RTC where they are still to present their evidence on the factual issues. Expectedly.
. Tan. and Ricardo S.94
Jalane.476 Percentage 2. namely.92% of JTH shares by PRCI. Jalane Christie U.00 3. et al. 08458 that ―[a]part from being a derivative suit. Tan Marilou U.451. (3) exchange of the Makati property of PRCI for JTH shares. (2) sale of 29. Pua Artisteo G. Parreno (Jalane.‖ The Complaint was based on four causes of action: (1) the acquisition of JTH by PRCI. The Complaint of Jalane. No.M. another set of minority stockholders of PRCI. 01-2-04-SC).. and (4) interlocking of Directors of PRCI and JTH.68 0.400 1. Petitioners Santiago Jr. contained the following prayer:
. Puyat.. Marilou U. claimed in their Complaint in Civil Case No..items on the Agenda for confirmation and approval by the stockholders was the property-for-shares exchange between PRCI and JTH. of Shares 16. Jalane.850 22. 08458.560 3.29 0. Aristeo G. have the following shareholdings in PRCI:
Stockholder Jalane Christie U.97 0. the public and/or stockholders as provided for under Section 1(a)(1) of the Interim Rules of Procedure for Intra-Corporate Controversies (A. et al.666 5.) filed with the RTC of Makati a Complaint against petitioners and the other directors of PRCI and/or JTH.633.884. this suit is also filed based on devices or schemes employed by the Board of Directors amounting to fraud or misrepresentation which is detrimental to the interest of the corporation. et al. Pua. et al. Pareño Total No. et al. docketed as Civil Case No. Puyat Ricardo S..927. brought to the attention of the Court the fact that on 5 June 2008.
No. However. it is respectfully prayed of this Honorable Court. An order be issued nullifying the Sale and Purchase Agreement dated September 27. in relation to Civil Case
Acting on the Complaint of Jalane. An order be issued directing defendants to pay plaintiffs the sum of P500.PRAYER WHEREFORE. [Paragraph crossed-out. 08458. Other reliefs. after due notice and hearing. discussion and ratification of portions of the Agenda of the Annual Stockholders Meeting of PRCI scheduled on June 18. A Temporary Restraining Order and/or Writ of Preliminary Mandatory Injunction be issued enjoining the presentation. discussing.00 as and by way of attorney‘s fees. plus cost of suit. enjoining PRCI directors from presenting. 3. et al. 182008. Executive Judge Winlove Dumayas (Executive Judge Dumayas) of the Makati City RTC issued a 72-hour TRO. 2006 for the acquisition of JTH Davies Holdings. An order be issued nullifying the sale of PRCI shares in JTH in April 2007 and May 7.R. that: 1. just and equitable under the premises are likewise prayed for. VII and VIII. 2008. in Civil Case No. particularly items IV. upon being apprised of the TRO issued by this Court on 9 April 2008 in G. 2007. and ratifying the items in the Agenda for the Annual Stockholders‘ Meeting set on 18 June 2008 related to the property-for-shares exchange between PRCI and JTH. Inc. 2.] 5.
et al. The Corporation (sic) Secretary answered in the negative. Marilou U. Atty. et al. The actions taken by the stockholders on the controversial items were duly recorded in the Minutes of the meeting. Executive Judge Dumayas gave verbal advice that the Annual Stockholders‘ Meeting of PRCI should proceed on 18 June 2008 as if the 72-hour TRO had not been issued. Santos permission to speak. 08-458. Atty. 08458. and a 72-hour TRO was issued on 17
. as follows:
IV. Benjamin Santos asked to be recognized on the floor.52% of the outstanding capital stock of PRCI. was attended by stockholders with a total of 493. For the information of the stockholders present. whose presentation to the stockholders was sought to be enjoined by respondents Miguel. Parreno. Santos mentioned that a case has been filed by certain minority shareholders. held on 18 June 2008.. Branch 149. more than the necessary 2/3 to constitute a quorum. against the Board of Directors of PRCI (Civil Case No.509 shares or 86. Atty. namely. Santos inquired from the Corporate Secretary if there has already been official notice of service on him regarding a 72-hour temporary restraining order which was issued by the Executive Judge of the Makati Regional Trial Court (RTC). Makati RTC). 07-610 pending before the Makati City RTC. Jalane Christie U. in Civil Case No. Tan.017. the Annual Stockholders‘ Meeting of PRCI proceeded on 18 June 2008. The Annual Stockholders‘ Meeting of PRCI.No.. Aristeo G. 07-610 and by Jalane. The Chairman gave Atty. APPROVAL OF THE MINUTES OF THE PREVIOUS STOCKHOLDERS’ MEETINGS Before the next agenda was tackled in the meeting. Discussed in the meeting were the same items. a stockholder. Pua. Consequently. Puyat and Ricardo S. in Civil Case No.
VII and VIII. The Chairman is present merely to preside over the meeting. Atty. Santos clarified that the pending case is currently the subject of a Petition to the Supreme Court wherein the
. until further orders from this Court.‖ Thereafter. their representatives. Santos moved that Agenda Item IV as well as the rest of the items to be taken up since the TRO of the Makati RTC is defective and should not prevail over the TRO of the Supreme Court. employees and/or all those acting for and in their behalf to refrain from the presentation. is in their capacity as stockholders of PRCI and not as directors of PRCI. Atty. 182008) which ―enjoin(ed) respondents from enforcing or executing the assailed Court of Appeals’ decision and resolution.June 2008 ―enjoining defendants (directors of PRCI). and the Corporate Secretary is not a member of the Board of Directors. It was pointed out that the shareholders in the recent case are guilty of forum shopping since they primarily have the same interests as those who had earlier filed a suit against PRCI. He further stated that the attendance of all the directors present in the stockholders‘ meeting. Atty. Atty.R. No. Santos added that the case recently filed by the abovementioned minority shareholders is a duplicate of another pending case filed by other minority shareholders also in the Makati RTC. and the assailed trial court’s resolutions particularly that which mandates the continued enforcement of the writ of permanent injunction issued by the trial court. Santos. discussion and ratification of portions of the Agenda of the Annual Stockholders‘ Meeting of PRCI scheduled on June 18. the TRO enjoins them in their capacity as Directors of PRCI. 2008 particularly items IV. Santos likewise informed the stockholders present of the existence of a temporary restraining order issued by the Supreme Court dated 09 April 2008 (in SC G. xxxx According to Atty.‖ x x x.
He also mentioned that the case which Puyat earlier filed is different because it is a case for inspection and photocopying of PRCI documents. he answered his name and said he was stockholder of record and a proxy of Aristeo Puyat and Jose L. Inc. Brigido Dulay. Tan. contrary to Atty. After Atty. etc. He thereafter warned against the tackling of Agenda Item No. 2006. the Minutes of the Special Stockholders‘ Meeting held on November 7. With this Comment. Santos‘ earlier actuations. 4. The Chairman asked Atty. Carandang was recognized. JUT Holdings. Atty. to which. Tan. which are the following: the Minutes of the Annual Stockholders‘ Meeting held on June 19. Santos moved that the stockholders proceed with the meeting and that the item under Agenda IV be approved.) likewise took the floor to manifest his continuing objection to the proceedings.aforementioned TRO was issued. Jemie U. Atty. Thereafter. 2007. Jalane Christie U. the Corporate Secretary took note of the Petition filed with the Supreme Court and the TRO issued by the Supreme Court. Atty. 2006 and the Minutes of the Annual Stockholders‘ Meeting held on October 10. Santos. the recent complaint filed is different from the complaint earlier filed by the Dulay group. Alexander Carandang asked to be given permission to speak. he stated that. as a stockholder and proxy to the Tan group (Miguel Ocampo Tan.. xxxx x x x With all the foregoing comments. Amado Paolo Dimayuga also took the floor as a proxy to Marilou Pua and manifested that the complainants in the recent case filed are not guilty of forum shopping and also manifested his objection to the taking up of Item IV in the agenda and the continuance of the proceedings in
. Atty. Carandang his name and authority to speak.
The Executive Judge said that today‘s meeting should proceed because the plaintiffs therein suppressed the existing TRO in the Supreme Court. Jr.the stockholders‘ meeting. THE EXECUTIVE COMMITTEE AND THE MANAGEMENT OF THE CORPORATION FOR FISCAL YEARS 2006 AND 2007
. Dimayuga and Atty. xxxx VI. Cua. Atty. There is therefore no legal obstacle to holding the Annual Stockholders‘ Meeting. Inc. De Villa and Robles informed the stockholders of the wrong information being given by Atty. Santos. the Corporate Secretary asked that the counsel for the PRCI directors be allowed to explain such allegations. The motion having been duly seconded. which should proceed so as not to prejudice the stockholders. the counsel for PRCI Directors Cua. Atty. Dimayuga also mentioned that he received word that a Motion to Lift was just filed by the PRCI Directors regarding the recent TRO issued by the Makati RTC.. There being an earlier motion for the approval of the Minutes. Enriquez. Dimayuga. Garbriel Q. the Chairman declared all the minutes for approval as duly approved. They had filed a manifestation before the Executive Judge of the RTC which issued the TRO and informed him of the facts mentioned by Atty. Ricalde manifested continuing objections. and also manifested objection to the proceedings. As a reply. Atty. and the TRO of the RTC cannot rise above the Supreme Court TRO. a stockholder seconded said motion. The Corporate Secretary stated that all the objections are duly noted. Pelagio Ricalde also took the floor as proxy for Aries Prime Resources. Both Atty. RATIFICATION OF THE ACTS OF THE BOARD OF DIRECTORS.
Ricalde all took the floor successively and objected to this item in the agenda and the Corporate Secretary duly noted these objections. Once more.The Chairman then proceeded by stating that the next item on the agenda is the ratification by the Stockholders of the acts of the Board of Directors. APPROVAL OF THE EXCHANGE OF PRCI’S MAKATI PROPERTY FOR SHARES OF STOCK OF JTH DAVIES HOLDINGS. Carandang likewise inquired about the same information about a lady stockholder who earlier seconded the motion. The said motion was duly seconded. With this. Atty. The other stockholders stated that they were proxies of Mr. Atty. the stockholders thereafter approved and ratified all the said acts. Atty. Dulay. Carandang. the Executive Committee. At this juncture. Jose Miguel Manalo stated his name and said he was a stockholder of record. Dimayuga and Atty. A stockholder later moved that all the acts of the Board of Directors. and the corporate management be confirmed. Santiago Cualoping III. thus. INC. The Chairman then explained that as to all other matters and action affecting the operations. Atty. the Executive Committee. and the Management during the last fiscal years 2006 and 2007.
. financial performance and strategic posture of the Corporation. VII. Atty. Atty. all have been subsumed and discussed in the Annual Report of the President and likewise reflected in the Information Statement sent to all stockholders of record and to the SEC. ratified and approved by the stockholders. Dulay requested that the stockholders who moved and seconded the aforementioned acts be named and their authority to speak be made known.
Mr. The Chairman then called the President of PRCI. Atty.19% of the shares. Mr.15% of the shareholdings. Atty. as proxy of Sta. Atty.39% of the shareholdings voted in favor of the exchange. a stockholder and a proxy of approximately 31.
. Yet again. Carandang. who own 39. Santos also wanted his vote of approval be counted whi his shares of stock of 117 shares. Ricalde all took the floor successively and objected to this item in the agenda which were duly noted by the Corporate Secretary.23% of the outstanding capital stock of PRCI voting in favor of the exchange of its Makati property for shares of stock of JTH Davies.When asked by the Chairman as to the next item in the agenda. With 75. owning 4. Robles also voted in favor of the exchange. Atty. Dimayuga and Atty. Lucia Realty & Development. Exequiel D. Mr. also voted in favor of the exchange. Lawrence Lim Swee Lin. Then. Lastly. one stockholder moved that the exchange of PRCI‘s Makati property for JTH shares be approved by the stockholders. At this point. Santiago Cua. the Chairman then declared said motion as carried and approved. which was duly seconded by another stockholder. Mr. and Leisure Management Ltd.. Solomon Cua to officiate on this matter. representing Magnum Investment Ltd. Inc. Jr. the Corporate Secretary informed all present that the next item is the approval of the exchange of PRCI’s Makati property for shares of stock of JTH Davies Holdings which was duly approved by the Board of Directors during its 11 May 2007 meeting. The exchange was duly reported and disclosed to the SEC and the information thereof was included in the Information Statements mailed to all stockholders of PRCI. President Cua then asked that the total percentage of those who are in favor of the exchange be taken. Dulay.
08-458. The ruling confirmed that the transfer of the Subscriber‘s parcels of land to the Company in exchange for the shares of stock of the latter is not subject to income tax. the PRCI stockholders had already confirmed and approved the actions and resolutions of the PRCI Board of Directors. PRCI and JTH executed on 22 August 2008 a Disengagement Agreement. covering the exchange of the Makati property of PRCI for shares of stock of JTH. pursuant to this Deed. upon subscription of shares hereunder. As a result. effective immediately. in accordance with Sections 40(C)(2) of the NIRC. capital gains tax. as amended.)
However. at their annual meeting on 18 June 2008.Hence. by virtue of which. the Subscriber shall gain further control of the Company. except for documentary stamp tax on the original issuance of the Company‘s shares of stock to the Subscriber. where. and subjected the exchange to value-added tax. Paragraph 4 of said Deed expressly provides:
4.  (Emphases ours. Resultantly. the BIR reversed/revoked its earlier ruling that the property-for-shares exchange between PRCI and JTH was a tax-free transaction under Section 40(C)(2) of the National Internal Revenue Code of 1997. on 7 July 2008. acknowledge and agree that this Deed is executed with the intention of availing of the benefits of Sections 40(C)(2) of the National Internal Revenue Code of 1997 (NIRC). as amended. The parties understand. 07-610 and No. in a letter dated 15 July 2008. The parties obtained a ruling from the Bureau of Internal Revenue to the effect that no gain or loss will be recognized on the part of each of the parties. PRCI and JTH duly signed and executed a Deed of Transfer with Subscription Agreement. donor’s tax. PRCI and
. which were to subject matters of Civil Cases No. value-added tax and documentary stamp tax.
RTC. 08-458. asked that this Court grant them the following reliefs:
PRAYER WHEREFORE. the said Deed of Transfer with Subscription Agreement was rescinded. et al. On 25 September 2008 and 30 September 2008. 08-458.. the initial counsel of Jalane. 08-458 was eventually also assigned to the only commercial court of Makati City. since he had revealed in several instances his utter bias and prejudice against the PRCI directors and admitted his being a relative by affinity of Atty. the PRCI directors filed before the RTC a Motion to Inhibit and a Supplemental Motion to Inhibit. openly making hasty conclusions as to certain marked exhibits and demonstrating his prejudgment of the case.. averred that Judge Untalan refused to dismiss Civil Case No. et al. i. 07-610. 07610] as well as the Second Suit [Civil Case No.. Amado Paulo Dimayuga. respectively. and that the First Suit [Civil Case No. Branch 149.. presided over by Judge Untalan. et al. urging Judge Untalan to inhibit himself from Civil Case No. et al. At the end of their Manifestation. 08-458 on the ground of forum shopping. PRCI disclosed the Disengagement Agreement to the SEC on 26 August 2008. 08-458] should now be dismissed for being moot and academic. Petitioners Santiago Jr. without need of
. Judge Untalan has yet to act on such motions. Civil Case No. it is respectfully prayed that the foregoing Manifestation be noted. during the hearings in Civil Case No. For all intents and purposes. even when it was no different from Civil Case No.JTH would disengaged and would no longer implement the Deed of Transfer with Subscription Agreement dated 7 July 2008. They further asserted that Judge Untalan showed evident partiality in favor of Jalane.. petitioners Santiago Jr.e.
it is respectfully prayed that the Honorable Court: 1. also filed his own Manifestation (To Update the Honorable Court on Relevant Supervening Proceedings and Incidents) with Motion to Resolve Merits of Petition and of the Case in the Lower Court (In View of Supervening Proceedings and Incidents). Branch 149.remand to the trial (sic) Court for further proceedings. essentially recounting the same events in the Manifestation of petitioners Santiago Jr. et al. The prayer of Santiago Sr. especially and specifically. after the issuance by the Honorable Court on 09 April 2008 of a temporary restraining order. and the private respondents. in his Manifestation and Motion reads:
PRAYER WHEREFORE.. and the assailed trial court‘s resolutions particularly
Petitioner Santiago Sr. the instant cases be set for oral arguments on such date and time as it may deem convenient to its calendar. representatives and/or any person or persons acting upon their orders or in their place of stead. TAKE COGNIZANCE of the instant Manifestation on relevant supervening proceedings and incidents in this case. It is further respectfully prayed that should the Honorable Court find it proper and necessary. Makati City. and their agents. Herein petitioners furthermore pray for such other reliefs as may be just and equitable in the premises. the presiding judge of the Regional Trial Court. who are: ―ENJOINED from enforcing or executing the assailed Court of Appeals‘ decision and resolution. addressed to the Court of Appeals.
II ISSUES The Court identifies the following fundamental issues for its resolution in the Petitions at bar: (1) Whether the Petition of Santiago Sr. 4. 6. 180028 should be dismissed for its procedural infirmities?
.that which mandates the continued enforcement of the writ of permanent injunction issued by the trial court.R. No. ORDER that the temporary restraining order issued by the Court on 09 April 2008 be made PERMANENT. until further orders from this Court.‖ 2. Other reliefs just and equitable in the premises are likewise prayed for. in any case. on the ground that the issues raised in the complaint. ORDER the dismissal of the complaint below. ORDER the dismissal of the complaint below on the ground that the same is not a legitimate and valid derivative suit. 5. ORDER the private respondents to explain why they should not be cited for contempt of court for violation of the temporary restraining order issued by the Court on 09 April 2008. have been mooted and/or no longer subsist. ORDER the private respondents to explain why they should not be cited for contempt of court for engaging in forum-shopping. in G. specifically with respect to the so-called ―disputed‖ resolutions.
(2) Whether Civil Case No. 07-610 instituted by respondents Miguel, et al. before the RTC should be ordered dismissed? (3) Whether Civil Case No. 08-458 instituted by Jalane, et al., before the RTC should be ordered dismissed? (4) Whether APRI should be allowed to intervene in the instant Petitions? III RULING OF THE COURT Procedural infirmities of Petition in G.R. No. 180028 Respondents Miguel, et al., call attention to two procedural infirmities of the Petition for Certiorari of petitioner Santiago Sr. in G.R. No. 180028: (1) the failure to inform the Court of the pendency of the Petition in G.R. No. 181455-56, thus, violating the rule against forum-shopping; and (2) its being the wrong mode of appeal. The Verification and Certification of Non-Forum Shopping attached to the Petition for Certiorari of petitioner Santiago Sr. in G.R. No. 180028 was actually signed by his attorney-in-fact, Solomon, who is also a petitioner in G.R. No. 181455-56. It contains the following paragraph:
4. In compliance with the 1997 Rules of Civil Procedure, I hereby certify that the petitioner, by himself personally and/or acting through his attorneys-in fact, has not heretofore commenced any other action or proceeding involving the same issues in the Supreme Court, the Court of Appeals, or different Divisions thereof, or any other tribunal or agency, and that to the best of my knowledge, no such action or proceeding is pending in the Supreme Court, the Court of Appeals, or different
Divisions thereof, or any other tribunal or agency. If I should learn that a similar action or proceeding has been filed or is pending before the Supreme Court, Court of Appeals, or different Divisions thereof, or any other tribunal or agency, I undertake to promptly inform this Honorable Court, the aforesaid courts and other tribunal or agency within five (5) days therefrom.
Respondents Miguel, et al., maintain that the failure of Solomon, as petitioner Santiago Sr.‘s attorney-in-fact, to inform the Court as regards the pendency of the Petition for Review in G.R. No. 181455-56, of which Solomon is one of the petitioners, is in violation of the rule against forum-shopping and warrants the summary dismissal of the Petition in G.R. No. 182008. Forum shopping is the institution of two or more actions or proceedings grounded on the same cause on the supposition that one or the other court would make a favorable disposition. It is an act of malpractice and is prohibited and condemned as trifling with courts and abusing their processes. In determining whether or not there is forum shopping, what is important is the vexation caused the courts and parties-litigants by a party who asks different courts and/or administrative bodies to rule on the same or related causes and/or grant the same or substantially the same reliefs and in the process creates the possibility of conflicting decisions being rendered by the different bodies upon the same issues. Forum shopping is present when, in two or more cases pending, there is identity of (1) parties (2) rights or causes of action and reliefs prayed for, and (3) the two preceding particulars, such that any judgment rendered in the other action will, regardless of which party is successful, amount to res judicata in the action under consideration.
It is evident that Santiago Sr., the petitioner in G.R. No. 182008, is not a party to G.R. No. 181455-56. Even though Solomon is admittedly a petitioner in G.R. No. 181455-56, he is only acting in G.R. No. 182008 as the attorney-in-fact of Santiago Sr., the actual petitioner in the latter case. Thus, the very first element for forum shopping, identity of parties, is lacking. Respondents Miguel, et al., cannot insist on identity of interests between petitioner Santiago Sr. in G.R. No. 182008 and petitioners Santiago Jr., et al., in G.R. No. 181455-56, when the Complaint itself of respondents Miguel, et al., before the RTC, docketed as Civil Case No. 07-610, impleads the petitioners Santiago Sr. and Santiago Jr., et al., as defendants a quo in their individual capacities as PRCI directors, and not collectively as the PRCI Board of Directors. Each individual PRCI director, therefore, is not precluded from hiring his own counsel, presenting his own arguments and defenses, and resorting to his own procedural remedies, apart and independent from the other PRCI directors. In addition, the consolidation of G.R. No. 181455-56 and G.R. No. 182008 has already eliminated the danger of conflicting decisions being issued in said cases. Assuming arguendo that Solomon did have the legal obligation to inform the Court in G.R. No. 182008 of the pendency of G.R. No. 181455-56, his failure to do so does not necessarily result in the dismissal of the former. Although the submission of a certificate against forum shopping is deemed obligatory, it is not jurisdictional. Hence, in this case in which such a certification was in fact submitted – only, it was defective -- the Court may still refuse to dismiss and may, instead, give due course to the Petition in light of attendant exceptional circumstances.
Santiago Sr. committed another procedural faux pas by filing before this Court a Petition for Certiorari under Rule 65 of the Rules of Court to assail the Decision dated 6 September 2007 and Resolution dated 22 January 2008 of the Court of Appeals in CAG.R. SP No. 99769 and No. 99780. The proper remedy of a party aggrieved by a decision of the Court of Appeals is a petition for review under Rule 45, which is not similar to a petition for certiorari under Rule 65 of the Rules of Court. As provided in Rule 45 of the Rules of Court, decisions, final orders or resolutions of the Court of Appeals in any case, i.e., regardless of the nature of the action or proceedings involved, may be appealed to this Court by filing a petition for review, which would be but a continuation of the appellate process over the original case. On the other hand, a special civil action under Rule 65 is an independent action based on the specific grounds therein provided and, as a general rule, cannot be availed of as a substitute for the lost remedy of an ordinary appeal, including that under Rule 45. Accordingly, when a party adopts an improper remedy, as in this case, his Petition may be dismissed outright. However, in the interest of substantial justice, the strict application of procedural technicalities should not hinder the speedy disposition of this case on the merits. Thus, while the instant Petition is one for certiorari under Rule 65 of the Rules of Court, the assigned errors are more properly addressed in a petition for review under Rule 45. The merits of the Petitions in both G.R. No. 181455-56 and No. 182008 compel this Court to give more weight to substantive justice, instead of technical rules. Indeed, where, as here, there is a strong showing that a grave miscarriage of justice would result from
and the courts are without authority to substitute their judgment for the judgment of the board of directors. and not the other way around. The governing body of a corporation is its board of directors. is but an association of individuals. and with a distinct legal personality. As to its corporate and management decisions. Questions of policy and of management are left to the honest decision of the officers and directors of a corporation. as they ought to be.the strict application of the Rules. in general A corporation. its orders are not reviewable by the courts. it is always within the power of the Court to suspend the Rules. It bears stressing that the rules of procedure are merely tools designed to facilitate the attainment of justice. therefore. conscientiously guided by the norm that. Courts are not slaves to or robots of technical rules. They were conceived and promulgated to effectively aid the court in the dispensation of justice. and so long as it acts in good faith. the corporate powers of all corporations
. such as PRCI. it waives no constitutional immunities and perquisites appropriate to such body. on the balance. if the application of the Rules would tend to frustrate rather than promote justice. Derivative suits. courts have always been. or except a particular case from its operation. the Court will not hesitate to relax the same in the interest of substantial justice. In rendering justice. Thus. Section 23 of the Corporation Code provides that ―[u]nless otherwise provided in this Code. shorn of judicial discretion. the State will generally not interfere with the same. In organizing itself as a collective body. The board is the business manager of the corporation. allowed to transact under an assumed corporate name. technicalities take a backseat against substantive rights.
enter into any contract. scattered and unfamiliar with the business of a corporation to conduct its business directly. and may be treated by it as merely advisory. or the majority thereof. The following discourse on the corporate powers of the board of directors under Section 23 of the Corporation Code establishes the extent thereof:
Under the above provision.‖ The concentration in the board of the powers of control of corporate business and of appointment of corporate officers and managers is necessary for efficiency in any large organization.formed under this Code shall be exercised.
The board of directors of a corporation is a creation of the stockholders. Stockholders are too numerous. The theory of the law is that although stockholders are to have all the profit. Since the law has vested the responsibility of managing the corporate affairs on the board. purchase and sell property. the complete management of the enterprise shall be with the board. the stockholders must abide by its decisions. Stockholders‘ or members‘ resolutions dealing with matters other than the exceptions are not legally effective nor binding on the board. If they do not agree with the policies of the board. or perform any act. And so the plan of corporate organization is for the stockholders to choose the directors who shall control and supervise the conduct of corporate business. it is quite clear that. their remedy is to wait for the next election of the directors and choose new ones to take their place. the board has the sole power and responsibility to decide whether a corporation should sue. all business conducted and all property of such corporations controlled and held by the board of directors or trustees x x x. except in the instances where the Code expressly grants a specific power to the stockholders or member. The board of directors. or may even be completely disregarded.
but in drawing to itself the power of the corporation. or performs ultra vires acts. It is well settled in this jurisdiction that where corporate directors are guilty of a breach of trust — not of mere error of judgment or abuse of discretion — and intracorporate remedy is futile or useless. it occupies a position of trusteeship in relation to the minority of the stock. the court. a stockholder may institute a suit in behalf of himself and other stockholders and for the benefit of the corporation. to bring about a redress of the wrong inflicted directly upon the corporation and indirectly upon the stockholders.
. The board shall exercise good faith. care.controls and directs the affairs of the corporation. and upon showing that intracorporate remedy is unavailing. for and in behalf of the corporation. and protect not only the interest of the majority but also that of the minority of the stock. Where the majority of the board of directors wastes or dissipates the funds of the corporation or fraudulently disposes of its properties. will entertain a suit filed by the minority members of the board of directors. The action in such a case is said to be brought derivatively in behalf of the corporation to protect the rights of the minority stockholders thereof. and derivative suits. in the exercise of its equity jurisdiction. thus:
Suits by stockholders or members of a corporation based on wrongful or fraudulent acts of directors or other persons may be classified into individual suits. to prevent waste and dissipation and the commission of illegal acts and otherwise redress the injuries of the minority stockholders against the wrongdoing of the majority. class suits. and diligence in the administration of the affairs of the corporation. A derivative suit must be differentiated from individual and representative or class suits.
and can and should itself sue the wrongdoer. whenever officials of the corporation refuse to sue or are the ones to be sued or hold the control of the corporation.Where a stockholder or member is denied the right of inspection. Where the wrong is done to a group of stockholders. each stockholder is necessarily affected because the value of his interest therein would be impaired. an individual stockholder is permitted to institute a derivative suit on behalf of the corporation wherein he holds stock in order to protect or vindicate corporate rights. the suing stockholder is regarded as the nominal party. Because of the frequent occurrence of such a situation. the common law gradually recognized the right of a stockholder to sue on behalf of a corporation in what eventually became known as a “derivative suit. Otherwise. but there would be multiplicity of suits as well as a violation of the priority rights of creditors. The corporation would thus be helpless to seek remedy. In such actions. with the corporation as the party
. However. this fact of itself is not sufficient to give him an individual cause of action since the corporation is a person distinct and separate from him. in cases of mismanagement where the wrongful acts are committed by the directors or trustees themselves. Although in most every case of wrong to the corporation. not only would the theory of separate entity be violated. Furthermore. as where preferred stockholders‘ rights are violated. a stockholder or member may find that he has no redress because the former are vested by law with the right to decide whether or not the corporation should sue. the cause of action belongs to the corporation and not to the individual stockholder or member. a class or representative suit will be proper for the protection of all stockholders belonging to the same group. Thus.” It has been proven to be an effective remedy of the minority against the abuses of management. there is the difficulty of determining the amount of damages that should be paid to each individual stockholder. But where the acts complained of constitute a wrong to the corporation itself. and they will never be willing to sue themselves. his suit would be individual because the wrong is done to him personally and not to the other stockholders or the corporation.
in order to redress the wrongs committed against the Corporation and to protect or vindicate corporate rights. 07-610 is not just a derivative suit.in interest. A thorough study of the said Complaint. viz:
As the Supreme Court has explained: ―A shareholder's derivative suit seeks to recover for the benefit of the corporation and its whole body of shareholders when injury is caused to the
. also aver that they are seeking ―redress for the injuries of the minority stockholders against the wrongdoings of the majority. respondents have alleged that they are filing the same ―as shareholders. et al. and to prevent wastage and dissipation of corporate funds and assets and the further commission of illegal acts by the Board of Directors. but also an intracorporate action arising from devices or schemes employed by the PRCI Board of Directors amounting to fraud or misrepresentation. Indeed. From the very beginning of their Complaint.
The afore-quoted exposition is relevant considering the claim of respondents Miguel. and is utterly lacking any allegation of injury personal to them or a certain class of stockholders to which they belong. They are the very same acts of the PRCI Board of Directors that have supposedly caused injury to the corporation.‖ the rest of the Complaint does not bear this out. are mutually exclusive. for and in behalf of the Corporation. on one hand. that its Complaint in Civil Case No. reveals that the distinction is deceptive. however. the Court notes American jurisprudence to the effect that a derivative suit.‖ Although respondents Miguel... on the other. et al. The supposed devices and schemes employed by the PRCI Board of Directors amounting to fraud or misrepresentation are the very same bases for the derivative suit. and individual and class suits.
‖ (Friedman. 125. (Id. resulting in its total failure..2d 753.) In contrast. 592. 84 Cal. or to the whole body of its stock and property without any severance or distribution among individual holders.Rptr. the right of action and recovery belongs to either the shareholders (direct action) *651 or the corporation (derivative action)... if the gravamen of the complaint is injury to the corporation. 07-610.e. [¶] .]‖ (Jones. 84 Cal. et al.e. 84 Cal. in the corporate right. at p. based on the devices and schemes employed by the
. 1 Cal. or it seeks to recover assets for the corporation or to prevent the dissipation of its assets.‖ (Id.Rptr.App. .] A derivative action would have been appropriate if its responsible officials had refused or failed to act. [Citation.3d 93. the **289 minority shareholder alleged that the other shareholder of the corporation negligently managed the business. supra.‖ any damages that the plaintiff alleged that resulted from such loss of corporate profits ―were incidental to the injury to the corporation. it was for the corporation to institute and maintain a remedial action. at p. 6-127.‖
Based on allegations in the Complaint of Miguel..corporation that may not otherwise be redressed because of failure of the corporation to act. (Id. supra. ¶ 6:598.2d 464..2d 753) Since ―[s]hareholders own neither the property nor the earnings of the corporation. 84 Cal. p. Thus. ―a direct action [is one] filed by the shareholder individually (or on behalf of a class of shareholders to which he or she belongs) for injury to his or her interest as a shareholder. Anderson (1999) 72 Cal. in Civil Case No. [T]he two actions are mutually exclusive: i..‘ [Citations. the Court determines that there is only a derivative suit. 81 Cal.2d 753) The appellate court concluded that the plaintiff could not maintain the suit as a direct action: ―Because the gravamen of the complaint is injury to the whole body of its stockholders. at pp. i. 460 P. in Nelson v.) Thus.Rptr. Cal. 106.. ‗the action is derivative. 126.Rptr. Practice Guide: Corporations.4th 111. 125126.Rptr.2d 753) The court went on to note that the damages shown at trial were the loss of corporate profits.
the Court rules that it is dismissible for being moot and academic. in Civil Case No. and (2) the Resolution dated 11 May 2007. the protest of respondents Miguel. and vote into office directors and/or officers during regular and special stockholders‘ meetings of JTH. authorizing the acquisition by PRCI of up to 100% of the common shares of JTH. After a careful study of the allegations concerning this derivative suit. approving the property-for-shares exchange between PRCI and JTH.. That a court will not sit for the purpose of trying moot cases and spend its time in deciding questions. and bad faith. misrepresentation. It was by this authority that PRCI directors were able to constitute the JTH Board of Directors. appoint. 07-610 is their dissent from the passage by the majority of the PRCI Board of Directors of the ―disputed resolutions.PRCI Board of Directors that amounts to mismanagement. but it also specifically appointed petitioner Santiago Sr. as well as nominate. Derivative suit (re: acquisition of JTH) It is important for the Court to mention that the 26 September 2006 Resolution of the PRCI Board of Directors not only authorized the acquisition by PRCI of up to 100% of the common stock of JTH. to act as attorney-in-fact and proxy who could vote all the shares of PRCI in JTH. et al. the resolution of which
.‖ particularly: (1) the Resolution dated 26 September 2006. Thus.. At the crux of the Complaint of respondents Miguel. fraud. et al. against the interlocking directors of PRCI and JTH is also rooted in the 26 September 2006 Resolution of the PRCI Board of Directors.
. and Robles. insofar as it concerns the Resolution dated 26 September 2006 of the PRCI Board of Directors..approving and ratifying said acquisition and the manner in which PRCI shall constitute the JTH Board of Directors -. against herein petitioners Santiago Sr. together with Renato de Villa. if the derivative suit. By ratification. Solomon. Tham Ka Hon. during the Special Stockholders‘ Meeting held on 7 November 2006. Where the issues have academic. Clearly. instituted Civil Case No. the acquisition by PRCI of JTH and the constitution of the JTH Board of Directors are no longer just the acts of the majority of the PRCI Board of Directors.. is well settled.cannot in presenting moot and rendering value. is not dismissible for mootness.
any way affect the rights of the person or them. Santiago Jr. because the Resolution dated 7 November 2006 of the PRCI stockholders -. the
. there is no justiciable controversy. and Dato Surin Upatkoon. To declare the Resolution dated 26 September 2006 of the PRCI Board of Directors null and void will serve no practical use or value. or affect any of the rights of the parties. 07-610 only on 10 July 2007. Lim Teong Leong.will still remain valid and binding. but also of the majority of the PRCI stockholders. In fact. even an unauthorized act of an agent becomes the authorized act of the principal. Lawrence Lim Swee Lin. it is still vulnerable to dismissal for failure to implead indispensable parties. Respondents Miguel. et al. in their capacity as directors of PRCI and/or JTH. the resolution of the same of no practical
persons become thereby use or
The Resolution dated 26 September 2006 of the PRCI Board of Directors was approved and ratified by the stockholders. holding 74% of the outstanding capital stock in PRCI. namely.
no final determination of the validity of the acquisition by PRCI of JTH or of the constitution of the JTH Board of Directors can be had without consideration of the effect of the approval and ratification thereof by the majority stockholders. the Resolution dated 26 September 2006 of the PRCI Board of Directors. not as stockholders. 07-610 are also the PRCI majority stockholders. Respondents Miguel. with respect to the Resolution dated 11 May 2007 of the PRCI Board of Directors. et al. Section 7 of the Rules of Court. cannot simply assert that the majority of the PRCI Board of Directors named as defendants in Civil Case No. 07-610.majority of the PRCI stockholders. The interests of such indispensable party in the subject matter of the suit and the relief are so bound with those of the other parties that his legal presence as a party to the proceeding is an absolute necessity. without whom there can be no final determination of an action. Under Rule 3. for they have approved and ratified. during the Special Stockholders‘ Meeting on 7 November 2006. Derivative suit (re: property-for-shares exchange) The derivative suit. an indispensable party‘s interest in the subject matter is such that a complete and efficient determination of the equities and rights of the parties is not possible if he is not joined. explicitly impleaded said defendants in their capacity as directors of PRCI and/or JTH.. As a rule. because respondents Miguel. et al. is similarly dismissible
. Obviously. The majority of the stockholders of PRCI are indispensable parties to Civil Case No.. an indispensable party is a party-in-interest.
The Court has recognized that a stockholder‘s right to institute a derivative suit is not based on any express provision of the Corporation Code. it cannot prosper without first complying with the legal requisites for its institution. Rule 8. 1. by-laws. or even the Securities Regulation Code. owed by the corporation to the stockholders. However. (3) No appraisal rights are available for the act or acts
. (2) He exerted all reasonable efforts. In effect. provided. The basis of a stockholder‘s suit is always one of equity. to exhaust all remedies available under the articles of incorporation. but is impliedly recognized when the said laws make corporate directors or officers liable for damages suffered by the corporation and its stockholders for violation of their fiduciary duties.for lack of cause of action. the suit is an action for specific performance of an obligation. to assist its rights of action when the corporation has been put in default by the wrongful refusal of the directors or management to adopt suitable measures for its protection. laws or rules governing the corporation or partnership to obtain the relief he desires. Section 1 of the Interim Rules of Procedure for IntraCorporate Controversies (IRPICC) lays down the following requirements which a stockholder must comply with in filing a derivative suit:
Sec. that: (1) He was a stockholder or member at the time the acts or transactions subject of the action occurred and at the time the action was filed. as the case may be. and alleges the same with particularity in the complaint. Derivative action. – A stockholder or member may bring an action in the name of a corporation or association.
It bears to point out that every derivative suit is necessarily grounded on an alleged violation by the board of directors of its fiduciary duties. who still have not voted on the intended property-for-shares exchange between PRCI and JTH. respondents Miguel. Section 1(3) of the IPRICC superfluous and effectively
. (Emphasis ours. which could or could not have been available to them. appraisal rights would be unavailable in any derivative suit. – that the existence of mismanagement. misrepresentation. et al. Inevitably. This renders the requirement in Rule 8. and no corporate action has yet been taken herein by PRCI stockholders. and/or bad faith renders the right of appraisal unavailable – it would give rise to an absurd situation. with the latter two situations already implying bad faith. In their Comment on the Petitions at bar. and breach of fiduciary duties..)
In their Complaint before the RTC in Civil Case No.. misrepresentation. or fraud. (2) appraisal rights will only obtain for acts of the Board of Directors in good faith. since (1) the PRCI directors are being charged with mismanagement. fraud. committed by mismanagement. fraud.complained of. The Court disagrees. 07-610. respondents Miguel. and (4) The suit is not a nuisance or harassment suit. misrepresentation. which are not subject to appraisal rights. If the Court upholds the position of respondents Miguel. et al. contend that there are no appraisal rights available for the acts complained of. and (3) appraisal rights may be exercised by a stockholder who shall have voted against the proposed corporate action. et al. made no mention at all of appraisal rights.
(3) Legal and factual basis of the complaint. (2) Subject matter of the suit. forthwith dismiss the case. the following: (1) The extent of the shareholding or interest of the initiating stockholder or member.] In case of nuisance or harassment suits. and sentence of the statute. and that a statute should be so interpreted that no part thereof becomes inoperative or superfluous. Section 1(b). partnership.
The availability or unavailability of appraisal rights should be objectively based on the subject matter of the complaint. motu proprio or upon motion. (4) Availability of appraisal rights for the act or acts complained of. The import of establishing the availability or unavailability of appraisal rights to the minority stockholder is further highlighted by the fact that it is one of the factors in determining whether or not a complaint involving an intra-corporate controversy is a nuisance and harassment suit. Rule 1 of IRPICC provides:
(b) Prohibition against nuisance and harassment suits.. i. or association in relation to the relief sought. the
. and (5) Prejudice or damage to the corporation.e. [Emphasis ours. Nuisance and harassment suits are prohibited. the court may. clause. In determining whether a suit is a nuisance or harassment suit. and in contravention of an elementary rule of legal hermeneutics that effect must be given to every word. the court shall consider. among others.inoperative.
If there is no buyer. the Code grants the stockholder the right to get out of the corporation even before its dissolution because there has been a major change in his contract of investment with which he does not agree and which the law presumes he did not foresee when he bought his shares. and even then. He will have to wait until the corporation is finally dissolved before he can get back his investment. The raison d’etre for the grant of appraisal rights to minority stockholders has been explained thus:
x x x [Appraisal right] means that a stockholder who dissented and voted against the proposed corporate action. or bad faith. 42. without regard to the subjective conclusion of the minority stockholder instituting the derivative suit that such act constituted mismanagement. (Emphasis ours. His only way out before dissolution is to sell his shares should he find a willing buyer. only if sufficient assets are left after paying all corporate creditors. – Subject to the
. then he has no recourse but to stay with the corporation. When a person invests in the stocks of a corporation. Power to invest corporate funds in another corporation or business or for any other purpose. x x x. he subjects his investment to all the risks of the business and cannot just pull out such investment should the business not come out as he expected. misrepresentation. fraud.specific act or acts performed by the board of directors. the law considers it only fair to allow him to get back his investment and withdraw from the corporation. in certain specified instances. Since the will of two-thirds of the stocks will have to prevail over his objections. may choose to get out of the corporation by demanding payment of the fair market value of his shares.)
The Corporation Code expressly made appraisal rights available to the dissenting stockholder in the following instances:
provisions of this Code. 81. Sec. That any dissenting stockholder shall have appraisal right as provided in this Code: Provided. Instances of appraisal right. (Emphasis ours. or of extending or shortening the term of corporate existence. themselves admitted that the
. Provided. the approval of the stockholders or members shall not be necessary. lease. Written notice of the proposed investment and the time and place of the meeting shall be addressed to each stockholder or member at his place of residence as shown on the books of the corporation and deposited to the addressee in the post office with postage prepaid. 2. et al. or served personally. however. at a stockholders‘ or members‘ meeting duly called for the purpose.)
Respondents Miguel. or by at least two-thirds (2/3) of the members in case of non-stock corporations. That where the investment by the corporation is reasonably necessary to accomplish its primary purpose as stated in the articles of incorporation. pledge or other disposition of all or substantially all of the corporate property and assets as provided in this Code. or of authorizing preferences in any respect superior to those of outstanding shares of any class. and 3. – Any stockholder of a corporation shall have the right to dissent and demand payment of the fair value of his shares in the following instances: 1. In case of merger or consolidation. In case any amendment to the articles of incorporation has the effect of changing or restricting the rights of any stockholders or class of shares. mortgage.. transfer. exchange. a private corporation may invest its funds in any other corporation or business or for any purpose other than the primary purpose for which it was organized when approved by a majority of the board of directors or trustees and ratified by the stockholders representing at least two-thirds (2/3) of the outstanding capital stock. In case of sale.
07-610. in which they prayed that the 11 May 2007 Resolution of the Board of Directors approving the property-for-shares exchange between PRCI and JTH be declared
. approved by majority of the PRCI Board of Directors in the Resolution dated 11 May 2007. et al. The Corporation‘s Makati Property. could have exercised their appraisal rights. consisting of prime property in the heart of Makati City worth billions of pesos in its current value constitutes substantially all of the assets of the Corporation and is the sole and exclusive location on which it conducts its business of a race course. 07-610. et al. The Court finds specious the averment of respondents Miguel. Respondents Miguel. The exchange of the Corporation‘s property for JTH shares would therefore constitute a sale of substantially all of the assets of the corporation. 07-610 that:
49. that appraisal rights were not available to them. because appraisal rights may only be exercised by stockholders who had voted against the proposed corporate action. 50. involved all or substantially all of the properties and assets of PRCI.. (Emphasis ours. qualified as one of the instances when dissenting stockholders. the property-for-shares exchange between PRCI and JTH. and that at the time respondents Miguel..)
Irrefragably. et al. They alleged in their Complaint in Civil Case No. PRCI stockholders had yet to vote on the intended property-for-shares exchange between PRCI and JTH.. instituted Civil Case No. such as respondents Miguel. themselves caused the unavailability of appraisal rights by filing the Complaint in Civil Case No.. involving as it did substantially all of the properties and assets of PRCI.property-for-shares exchange between PRCI and JTH. et al.
In addition to the requirements in section 4. Personal action for inspection of corporate books and records Respondents Miguel. More than anything.. the Resolutions dated 16 September 2006 and 11 May 2007 of the PRCI Board of Directors. Rule 7 of the IRPICC shall apply to disputes exclusively involving the rights of stockholders or members to inspect the books and records and/or to be furnished with the financial statements of a corporation. as required by Rule 8. by-laws. under Sections 74 and 75 of the Corporation Code. allege another cause of action. et al. other than the derivative suit -.null and void. Rule 7. Section 1(2) of the IRPICC. 2.. The obvious intent behind the rule is to make the derivative suit the final recourse of the stockholder. et al. the argument of respondents Miguel.the violation of their right to information relative to the disputed Resolutions. . Section 2 of IRPICC enumerates the requirements particular to a complaint for inspection of corporate books and records:
Sec. Rule 2 of these Rules.e.. after all other remedies to obtain the relief sought have failed. or rules governing the corporation or partnership. the complaint must state the
. laws. Complaint. i. raises questions of whether their derivative suit was prematurely filed for they had failed to exert all reasonable efforts to exhaust all other remedies available under the articles of incorporation. even before the said Resolution could be presented to the PRCI stockholders for approval or rejection.
‖ There is no allegation that his co-respondents (who are his coplaintiffs in Civil Case No.)
As has already been previously established herein. the Court observes that only respondent Dulay actually made a demand for a copy of ―all the records. stating the law and jurisprudence in support thereof. if any. relative to the acquisition of JTH x x x. and agreements. contracts. emails. (2) A demand for inspection and copying of books and records and/or to be furnished with financial statements made by the plaintiff upon defendant. documents. and (4) The reasons why the refusal of defendant to grant the demands of the plaintiff is unjustified and illegal. is a right personal to each stockholder. for his demand for copies of pertinent documents relative to the acquisition of JTH shares was not denied by any of the defendants named in the Complaint in Civil Case No.
. Section 2(2) of IRPICC. 07-610) made similar demands for the inspection or copying of corporate books and records. Even so. which includes the right to inspect corporate books and records. 07-610. correspondences. (Emphasis ours. Only respondent Dulay complied then with the requirement under Rule 7. After a closer reading of the Complaint in Civil Case No. the right to information. letters. (3) The refusal of defendant to grant the demands of the plaintiff and the reasons given for such refusals. respondent Dulay‘s Complaint should be dismissed for lack of cause of action.following: (1) The case is for the enforcement of plaintiff's right of inspection of corporate orders or records and/or to be furnished with financial statements under Sections 74 and 75 of the Corporation Code of the Philippines.
Corporate Secretary Manalo is not among the defendants named in the Complaint in Civil Case No. 07-610. stockholder or member of the corporation to examine and copy excerpts from its records or minutes. but by Atty.)
Based on the foregoing. There is also utter lack of any allegation in the Complaint that Corporate Secretary Manalo denied respondent Dulay‘s demand pursuant to a resolution or order of the PRCI Directors. so that the latter (who are actually named defendants in the Complaint) could also be held liable for the denial. shall be liable to such director. in a letter dated 17 January 2006. shall be guilty of an offense which shall be punishable under Section 144 of this Code: Provided. the liability under this section for such action shall be imposed upon the directors or trustees who voted for such refusal: x x x (Emphasis ours.07-610. stockholder or member for damages. Section 74 of the Corporation Code. Books to be kept. in accordance with the provisions of this Code. but. That if such refusal is pursuant to a resolution or order of the Board of Directors or Trustees. it is Corporate Secretary Manalo who should be held liable for the supposedly wrongful and unreasonable denial of respondent Dulay‘s demand for inspection and copying of corporate books and records. states that:
Sec. 74. stock transfer agent. as previously mentioned. – xxxx Any officer or agent of the corporation who shall refuse to allow any director. and in addition. trustees. Manalo (Manalo). Jesulito A. the Corporate Secretary of PRCI. Supervening events
. the substantive law on which respondent Dulay‘s Complaint for inspection and copying of corporate books and records is based. trustee.
during which the majority of the stockholders approved and ratified the acquisition of JTH by PRCI. Even respondents Miguel. the approval and/or ratification of the transfer of PRCI‘s Sta. and (3) the planned property-for-shares exchange between PRCI and JTH. In the same vein. the Executive Committee. moot and academic the action and proceedings before the Regional Trial Court of Makati. et al. themselves admitted in their Comment with Prayer for the Immediate Lifting or Dissolution of the Temporary Restraining Order in G. Ana racetrack property to JTH during the upcoming stockholders‘ meeting would render nugatory. the following agenda items were finally presented to the stockholders. during the 2008 Annual Stockholders‘ Meeting of PRCI. supervening events took place that further justified the dismissal of Civil Case No. Branch 149. which included the acquisition of JTH by PRCI. held on 18 June 2008.. No. 13.R. (2) the acts of the Board of Directors. 07610 for already being moot and academic.During the pendency of the cases at bar. 182008 that:
. First. Indeed. inasmuch as the acts assailed by private respondents would have already been consummated by such approval and/or ratification. who approved and ratified the same by a majority vote: (1) the Minutes of the Special Stockholders‘ Meeting dated 7 November 2006. such approval and/or ratification during the forthcoming PRCI stockholder‘s (sic) meeting would likewise render moot and academic the proceedings before this Honorable Court in that it would have effectively granted the reliefs sought by herein petitioner even before this Honorable Court could finally rule on the propriety of the Court of Appeals‘ Decision/Resolution by herein petitioners. and the Management of PRCI for 2006.
by virtue of which. although already approved and ratified by majority vote of the PRCI stockholders. and the suing stockholder is only a nominal party:
An individual stockholder is permitted to institute a derivative suit on behalf of the corporation wherein he holds stocks in order to protect or vindicate corporate rights. xxxx x x x For a derivative suit to prosper. with the corporation as the real party in interest. whenever the officials of the corporation refuse to sue. 07-610 as a derivative suit bars Civil Case No. but the BIR ruled that such transaction shall be subject to VAT. and PRCI and JTH executed a Deed of Transfer with Subscription Agreement on 7 July 2008 to effect the property-for-shares exchange between the two corporations. both corporations rescinded the Deed of Transfer with Subscription Agreement dated 7 July 2008 and immediately disengaged from implementing the said Deed. the Court stresses that the corporation is the real party in interest in a derivative suit. it is required that the
. Civil Case No. the suing stockholder is regarded as a nominal party. In such actions. A major consideration for the exchange is that it will be tax-free. In Chua v. Court of Appeals. 08-458 and warrants the latter‘s dismissal. Resultantly.Second. or are the ones to be sued. 08-458 The very nature of Civil Case No. the controversial transaction will no longer push through. or hold the control of the corporation. PRCI and JTH executed on 22 August 2008 a Disengagement Agreement.
the corporation is the real party in interest while the stockholder filing suit for the corporation‘s behalf is only a nominal party. the corporation must be joined as party because it is its cause of action that is being litigated and because judgment must be a res adjudicata against it. It is a condition sine qua non that the corporation be impleaded as a party because not only is the corporation an indispensable party. or are the ones to be sued or hold the control of the corporation. x x x. whenever the officials of the corporation refuse to sue. In such actions. It is a condition sine qua non that the corporation be impleaded as a party because-
. with the corporation as the real party in interest. Court of Appeals is presented below:
Settled is the doctrine that in a derivative suit. the suing stockholder is regarded as a nominal party. (Emphases ours.)
The more extensive discussion by the Court of the nature of a derivative suit in Asset Privatization Trust v. In other words.minority stockholder suing for and on behalf of the corporation must allege in his complaint that he is suing on a derivative cause of action on behalf of the corporation and all other stockholders similarly situated who may wish to join him in the suit. The corporation should be included as a party in the suit. The judgment must be made binding upon the corporation in order that the corporation may get the benefit of the suit and may not bring subsequent suit against the same defendants for the same cause of action. but it is also the present rule that it must be served with process. An individual stockholder is permitted to institute a derivative suit on behalf of the corporation wherein he holds stock in order to protect or vindicate corporate rights.
to allow shareholders to sue separately would conflict with the separate corporate entity principle. In other words the corporations must be joined as party because it is its cause of action that is being litigated and because judgment must be a res ajudicata against it. but it is also the present rule that it must be served with process. that ―the stockholders may not directly claim those damages for themselves for that would result in the appropriation by.‖
.‖ In other words. that both of these are in the corporation itself for the benefit of the stockholders. The reason given is that the judgment must be made binding upon the corporation and in order that the corporation may get the benefit of the suit and may not bring a subsequent suit against the same defendants for the same cause of action. and the distribution among them of part of the corporate assets before the dissolution of the corporation and the liquidation of its debts and liabilities. something which cannot be legally done in view of Section 16 of the Corporation Law xxx. our Supreme Court held in the case of Evangelista v. Not only is the corporation an indispensable party. The reasons given for not allowing direct individual suit are: (1) x x x ―the universally recognized doctrine that a stockholder in a corporation has no title legal or equitable to the corporate property.x x x. Santos. (2) x x x that the prior rights of the creditors may be prejudiced. Thus.
while the suing stockholder is just a nominal party. any ruling in one of the derivative suits should already bind the corporation as res judicata in the other. so that the court cannot proceed without their presence. without whom no final determination can be had of an action without that party being impleaded. in a derivative suit.
As established in the foregoing jurisprudence. With the corporation as the real party-in-interest and the indispensable party.‖ within the meaning of this rule. Allowing two different minority stockholders to institute separate derivative
.(3) the filing of such suits would conflict with the duty of the management to sue for the protection of all concerned. as distinguished from a mere incidental interest in the question involved. Indispensable parties are those with such an interest in the controversy that a final decree would necessarily affect their rights. On the other hand. but merely because the technical rules of pleadings require the presence of such party on the record. Under Rule 7. ―Interest. directly in issue. it is the corporation that is the indispensable party. a nominal or pro forma party is one who is joined as a plaintiff or defendant. should be material. an indispensable party is a party-in-interest. Section 3 of the Rules of Court. not because such party has any real interest in the subject matter or because any relief is demanded. and to be affected by the decree. (4) it would produce wasteful multiplicity of suits. and (5) it would involve confusion in ascertaining the effect of partial recovery by an individual on the damages recoverable by the corporation for the same act.
in turn. Furthermore. on 9 April 2008. 07-610. which prevented the PRCI Board of Directors from presenting to the PRCI stockholders at the Annual Stockholders‘ Meeting. 08458 enjoined the very same acts covered by the writ of permanent injunction issued by the RTC in Civil Case No. is tantamount to allowing the corporation. To recall. because it is to look beyond the corporation and to give recognition to the different identities of the stockholders instituting the derivative suits. the agenda items on the acquisition by PRCI of JTH shares and the property-for-shares exchange between PRCI and JTH. 08-458 are not lost upon the Court. and praying for the same reliefs. 08-458 was filed with the RTC on 16 June 2008. just two days before the scheduled Annual Stockholders‘ Meeting on 18 June 2008.R. although filed by a different set of minority stockholders from those in Civil Case No. should still not be allowed to proceed. for approval and ratification. It is also in disregard of the separate-corporate-entity principle. The Complaint in Civil Case No. was already enjoined by the TRO dated 9 April 2008 of this Court. No. the Court already issued in G. 07610. 08-458. the execution and enforcement of which. 182008 a TRO enjoining the execution and enforcement of the writ of permanent injunction issued by the RTC in Civil Case No. Considering that it is
.suits arising from the same factual background. to file the same suit twice. The 72-hour TRO issued by the RTC in Civil Case No. resulting in the violation of the rules against a multiplicity of suits and even forum-shopping. alleging the same causes of action. the highly suspicious circumstances surrounding the institution of Civil Case No. the real party-in-interest. 07-610. Civil Case No. It is for these reasons that the derivative suit. where the items subject of the permanent injunction were again included in the agenda.
and. whose participation therein is deemed nominal. made repeated allegations that foreigners were taking over PRCI. moreover. hence. et al. the intervention of APRI is already moot.PRCI which is the real party-in-interest in both Civil Cases No. et al. merely echoes the position of respondents Miguel. for approval and ratification by the stockholders – of the agenda items on the acquisition by PRCI of JTH shares and the property-forshares exchange between PRCI and JTH. 07-610 redundant. Given that the Annual Stockholders‘ Meeting already took place on 18 June 2008. Intervention of APRI It is also the nature of a derivative suit that prompts the Court to deny the intervention by APRI in Civil Case No. renders the participation of APRI in Civil Case No. 07-610. the main concern of APRI was the lifting of the TRO issued by this Court on 9 April 2008 and the execution and enforcement of the permanent injunction issued by the RTC.. 07610 and No.at the Annual Stockholders‘ Meeting scheduled on 18 June 2008. enjoining the presentation by the PRCI Board of Directors -. then its acquisition in the latter of a TRO exactly similar to the writ of permanent injunction in the former is but an obvious attempt to circumvent the TRO of this Court enjoining the execution and enforcement of the permanent injunction. APRI. 08-458. and that this must
. Also. during which the subject agenda items were presented to and approved and ratified by the stockholders. Once more. not respondents Miguel. 07-610. et al. respondent Miguel. As a final note. the Court emphasizes that PRCI is the real party-in-interest in Civil Case No..
a living testimonial to Philippine heritage.‖ like Manila Hotel. This was in accord with the Filipino-first policy in the 1987 Constitution. however. the Court renders the following judgment: (1) The Court GRANTS the Petitions of petitioners
. Government Service Insurance System (GSIS). In contrast. owned the historic Manila Hotel. The Government. in turn. They even invoked the ruling of this Court in Manila Prince Hotel v. can hardly claim to be ―a living testimonial of Philippine heritage. Respondents Miguel. Without any legal basis therefor. What is more. WHEREFORE. PRCI is a publicly listed corporation.be stopped to protect the Filipino stockholders. that would justify judicial intervention to protect the interests of Filipino stockholders as against foreign stockholders. cannot rely on Manila Prince Hotel as judicial precedent. which. owned Manila Hotel Corporation (MHC). subject to regulation by the PSE and the SEC. PRCI. then preference should be given to the former.. considering that Manila Hotel had become a landmark. which operates and maintains a horse racetrack and conducts horse racing and betting. through GSIS. the Court cannot be expected to allocate or impose limitations on ownership of PRCI shares by foreigners. for the facts therein are far different from those in the cases at bar. The Court ruled that since the Filipino corporation was able to match the higher bid made by a foreign corporation. Its shares can be freely sold and traded to the public. and part of Philippine economy and patrimony. The case arose from the efforts of GSIS at privatizing MHC by holding a public bidding for 30-51% of the issued and outstanding shares of MHC. et al.
since the agenda items subject of said permanent injunction were already presented to. (4) The Court ORDERS the DISMISSAL of the Complaint of Jalane. SP No.R. It REVERSES and SETS ASIDE the Decision dated 6 September 2007 and Resolution dated 22 January 2008 of the Court of Appeals in CA-G. 08-458.R. 180028 and CANCELS and RETURNS the cash bond posted by petitioner Santiago Sr. 99780.Santiago. in G. No costs. 182008.R. No. in Civil Case No. 181455-56 and G. has been rendered moot. failure to implead indispensable parties. 99769 and No. for redundancy and mootness. in Civil Case No.
. and mootness. (3) The Court ORDERS the DISMISSAL of the Complaint of respondents Miguel.R. and approved and ratified by a majority of the PRCI stockholders at the Annual Stockholders‘ Meeting held on 18 June 2008. et al. The permanent injunction issued by the RTC on 8 October 2007. 07-610 before the RTC for lack of cause of action. respectively. and petitioner Santiago Sr. et al. for being in violation of the rules on the multiplicity of suits and forum shopping. No... and (5) The Court DENIES the Very Respectful Motion for Leave to Intervene as Co-Respondent in the Petition with the attached Very Respectful Urgent Motion to Lift Restraining Order of APRI.. (2) The Court LIFTS the TRO issued on 9 April 2008 in G. the execution and enforcement of which the TRO dated 9 April 2008 of this Court enjoins. et al. No.
. JEAN R. REYES. PENSON. LAROCO. JULIANA SUPLEO. NEPHTALIE IMPERIO. MARCELA C. CORDOBA. CLARO G. ELISEO M. ANDAL. G. ARTURO ADSUARA. SENEN B. MONSALVE. RADITO V. ROSANNA T. SAYAO. PADRIGANO. BALAGOT.C. TAYLAN.. SANTIAGO. CESAR ANDRA. NELSON PADUA. DE MESA. ANGELITO MALAKAS. CECILIA ESTERNON. CONSORICIA O. CALMA. 166620
. FILOMENA A. CARVAJAL. GALANG. FRANCISCO P. DELA CRUZ. ALBERT BRILLANTES. EDUARDO FRIAS. JEAN PAUL MELEGRITO. MANUEL MENDRIQUE. JOVITA V. No. CONCEPCION. VICTOR R. FELICISIMO GALACIO. E. RICHARD ODERON. JR. LEAH P.EN BANC ATTY. MACASAQUIT. JR. JR. ORTIZ. VICTORIA E. MALIWANAG. REYNALDO O. JR. JOSE C.. ELSA R.R. GLORIA BISDA.. ANDY V. RUEL BALAGTAS. MA. JR. TERESITA G. F. SYLVIA BANDA.. GLORIA RAMENTO. LADRERO. BENEDICTO CABRAL.
BASCO.. JJ.* VILLARAMA. THE DIRECTOR GENERAL OF THE PHILIPPINE INFORMATION AGENCY and THE NATIONAL
.. LEONARDO-DE CASTRO BRION. SANCHEZ. AVIADO. CORONA. ESTRELLA.. CARAAN. VELASCO. FEDERICO RAMOS. NARNE. in his capacity as Executive Secretary. ALFREDO S. GUILLERMO G. NACHURA. RODELIO L. FLORIZA M. PETERSON CAAMPUED. SOJO. MICHAEL P. ABAD. JR.versus -
EDUARDO R.J.. SOL E.A. LAPLANA. COCJIN. CATIIS. CARPIO. A. JR.
PUNO. C. TAMAYO. E. JR. ALICE E. and JESUS MEL SAYO. ALLAN VILLANUEVA. ANTONIO D. MALANUM.. PEREZ. JR. CARPIO MORALES. ARTHUR G. DEL CASTILLO. PERALTA. LETICIA SORIANO.. ROY-LEO C. JR. and MENDOZA. DOLORES M. SORIANO. GOMEZ. DAMIAN QUINTO. JALIJALI. IMELDA ERENO. BERSAMIN. ANTONIO GALO. VICENTE R. ERMITA. JR. PABLO. DANILO VARGAS. M. EDLYN MARIANO. MARIO C.M. VELASCO.
.CARMELA BOBIS. RANIEL R.. GARCIA. JOSEPHINE A. Petitioners.
issued by President Gloria Macapagal Arroyo (President Arroyo). among others. by virtue of Executive Order No. 2010 x-------------------------------------------------x
LEONARDO-DE CASTRO. – There is hereby created a National Printing Office out of the merger of the Government Printing Office and the relevant printing units of the Philippine Information Agency. the creation of the NPO from the merger of the Government Printing Office and the relevant printing units of the Philippine Information Agency (PIA). Aquino (President Aquino). Petitioners characterize their action as a class suit filed on their own behalf and on behalf of all their co-employees at the National Printing Office (NPO). 285 reads:
SECTION 6. during the term of former President Corazon C. Creation of the National Printing Office. The Office shall have exclusive printing jurisdiction over the following:
. Respondents.: The present controversy arose from a Petition for Certiorari and prohibition challenging the constitutionality of Executive Order No. 1987. 378 dated October 25. J. April 20.TREASURER. 285 which provided. The NPO was formed on July 25. 2004. Section 6 of Executive Order No.
inter alia. Printing of officials ballots. 2004. city and municipal governments. General Appropriations Act. including government publications. including government corporations. in turn.
c. aside from those enumerated above. 378. President Arroyo issued the herein assailed Executive Order No. 285 by. b. amending Section 6 of Executive Order No. and development information materials of the Philippine Information Agency. functions. authorities. Philippine Reports. The Office may also accept other government printing jobs. 378. it shall no longer enjoy exclusive jurisdiction over the printing services requirements of the government over standard and accountable forms. However. provide:
SECTION 1. provincial. Printing of public documents such as the Official Gazette.
On October 25. powers. The Office shall be attached to the Philippine Information Agency. The details of the organization. Printing. removing the exclusive jurisdiction of the NPO over the printing services requirements of government agencies and instrumentalities. The pertinent portions of Executive Order No. binding and distribution of all standard and accountable forms of national. The NPO shall continue to provide printing services to government agencies and instrumentalities as mandated by law. It
. but not in an exclusive basis. and related management aspects of the Office shall be provided in the implementing details which shall be prepared and promulgated in accordance with Section II of this Executive Order.a.
contending that: (1) it is beyond the executive powers of President Arroyo to amend or repeal Executive
. (Emphases and underscoring supplied. Executive Order No. petitioners now challenge its constitutionality.)
Pursuant to Executive Order No. Government agencies/instrumentalities may source printing services outside NPO provided that: 2. 378 as a threat to their security of tenure as employees of the NPO. SECTION 2.shall have to compete with the private sector. government agencies and instrumentalities are allowed to source their printing services from the private sector through competitive bidding. except in the printing of election paraphernalia which could be shared with the Bangko Sentral ng Pilipinas. In the exercise of its functions. 378 also limited NPO‘s appropriation in the General Appropriations Act to its income. subject to the condition that the services offered by the private supplier be of superior quality and lower in cost compared to what was offered by the NPO.1 The printing services to be provided by the private sector is superior in quality and at a lower cost than what is offered by the NPO. the amount to be appropriated for the programs. SECTION 3.2 The private printing provider is flexible in terms of meeting the target completion time of the government agency. 378. projects and activities of the NPO in the General Appropriations Act (GAA) shall be limited to its income without additional financial support from the government. Perceiving Executive Order No. upon the discretion of the Commission on Elections consistent with the provisions of the Election Code of 1987. and 2.
– When the subject matter of the controversy is one of common or general interest to many persons so numerous that it is impracticable to join all as parties. 2) the parties affected are so
From the foregoing definition. Since petitioners instituted this case as a class suit. 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. We dismiss the petition. because it paves the way for the gradual abolition of the NPO. we held that ―[c]ourts must exercise utmost caution before allowing a class suit. and (2) Executive Order No. Before proceeding to resolve the substantive issues. the Court must first delve into a procedural matter. Colet. as follows:
Sec. For while no difficulty may arise if the decision secured is favorable to the plaintiffs. which is the exception to the requirement of joinder of all indispensable parties. Class suit. 285 issued by former President Aquino when the latter still exercised legislative powers. thus. must first determine if the petition indeed qualifies as one. In Board of Optometry v. the Court.Order No.‖ Section 12. 378 violates petitioners‘ security of tenure. the requisites of a class suit are: 1) the subject matter of controversy is one of common or general interest to many persons. 12. a number of them which the court finds to be sufficiently numerous and representative as to fully protect the interests of all concerned may sue or defend for the benefit of all. Any party in interest shall have the right to intervene to protect his individual interest. Rule 3 of the Rules of Court defines a class suit.
and the existence of a class and the number of persons in the alleged class. Whether the suit is or is not a class suit depends upon the attending facts. to contrast the number appearing on the record with the number in the class and to determine whether claimants on record adequately represent the class and the subject matter of general or common interest. 32 of the original petitioners executed an Affidavit of Desistance. We note that counsel for the petitioners
. who pointed out that there were about 549 employees in the NPO. and the complaint. (Emphases ours. the petition failed to state the number of NPO employees who would be affected by the assailed Executive Order and who were allegedly represented by petitioners. as counsel for respondents. while one signed a letter denying ever signing the petition. to wit. In Mathay v. and 3) the parties bringing the class suit are sufficiently numerous or representative of the class and can fully protect the interests of all concerned.numerous that it is impracticable to bring them all to court. or other pleading initiating the class action should allege the existence of the necessary facts. ostensibly reducing the number of petitioners to 34.)
Here. The Consolidated Bank and Trust Company. The 67 petitioners undeniably comprised a small fraction of the NPO employees whom they claimed to represent. in order that the court might be enabled to determine whether the members of the class are so numerous as to make it impracticable to bring them all before the court. the existence of a subject matter of common interest. It was the Solicitor General. the Court held that:
An action does not become a class suit merely because it is designated as such in the pleadings. Subsequently.
 to which the previously mentioned Affidavit of Desistance was attached. Previously. even if we were to disregard the affidavit of desistance filed by some of the petitioners. Islamic Da’wah Council of the Philippines. In determining the question of fair and adequate representation of members of a class. v. Roman Catholic Church that where the interests of the plaintiffs and the other members of the class they seek to represent are diametrically opposed. In other words. was filed by the President of the National Printing Office Workers Association (NAPOWA). It is worth mentioning that a Manifestation of Desistance. we held in Ibañes v. Inc. the class suit will not prosper. the court must consider (a) whether the interest of the named party is coextensive with the interest of the other members of the class. The said manifestation
. only 20 petitioners were in fact mentioned in the jurat as having duly subscribed the petition before the notary public. (b) the proportion of those made a party. A perusal of the petition itself would show that of the 67 petitioners who signed the Verification/Certification of Non-Forum Shopping. as it so bears. representative number of NPO employees have instituted this purported class suit. Indeed. only 20 petitioners effectively instituted the present case. we observed that an element of a class suit or representative suit is the adequacy of representation.challenged the validity of the desistance or withdrawal of some of the petitioners and insinuated that such desistance was due to pressure from people ―close to the seat of power.. it is highly doubtful that a sufficient. in MVRS Publications. and (c) any other factor bearing on the ability of the named party to speak for the rest of the class.‖ Still. to the total membership of the class. Inc.
it is contended that President Arroyo cannot amend or repeal Executive Order No. only Congress through legislation can validly amend Executive Order No. 378: First. the said pleading is a clear indication that there is a divergence of opinions and views among the members of the class sought to be represented. Since it cannot be said that petitioners sufficiently represent the interests of the entire class. the petition raises two main grounds to assail the constitutionality of Executive Order No. As to the merits of the case. 285 by the mere issuance of another executive order (Executive Order No.expressed NAPOWA‘s opposition to the filing of the instant petition in any court. 285 is a legislative enactment. as the same was issued while President Aquino still had legislative powers under the Freedom Constitution. 378 would lead to the eventual abolition of the NPO and would violate the security of tenure of NPO employees. Second. thus. Even if we take into account the contention of petitioners‘ counsel that the NAPOWA President had no legal standing to file such manifestation. Anent the first ground raised in the petition. It is a well-settled principle in jurisprudence that the President
. 285. the instant case cannot be properly treated as a class suit. petitioners maintain that the issuance of Executive Order No. we find the same patently without merit. and not all are in favor of filing the present suit. Petitioners maintain that former President Aquino‘s Executive Order No. 378). There is here an apparent conflict between petitioners‘ interests and those of the persons whom they claim to represent.
(2) Transfer any function under the Office of the President to any other Department or Agency as well as transfer functions to the Office of the President from other Departments and Agencies. is explicit:
Sec. Continuing Authority of the President to Reorganize his Office.has the power to reorganize the offices and agencies in the executive department in line with the President‘s constitutionally granted power of control over executive offices and by virtue of previous delegation of the legislative power to reorganize executive offices under existing statutes. the Court pointed out that Executive Order No. he may take any of the following actions: (1) Restructure the internal organization of the Office of the President Proper. and (3) Transfer any agency under the Office of the President to any other department or
. by abolishing. economy and efficiency. including the immediate Offices. subject to the policy in the Executive Office and in order to achieve simplicity. Zamora. For this purpose. In Buklod ng Kawaning EIIB v. Title III. 292 or the Administrative Code of 1987 gives the President continuing authority to reorganize and redefine the functions of the Office of the President. the President Special Assistants/Advisers System and the Common Staff Support System. Book III of the said Code. 31. shall have continuing authority to reorganize the administrative structure of the Office of the President. – The President. consolidating or merging units thereof or transferring functions from one unit to another. Section 31. Chapter 10.
he may transfer the functions of other Departments or Agencies to the Office of the President. subject to the policy in the Executive Office and in order to achieve simplicity. economy and efficiency. ―the President. Aguirre [323 SCRA 312 (2000)]. authority and responsibility between them. (Emphases ours. the list of legal basis authorizing the President to reorganize any department or agency in the executive branch does not have to end here. (Emphasis ours. as an agency that is part of the Office of the Press Secretary (which in various times has been an agency directly attached to the Office of the Press Secretary or as an agency under the Philippine Information Agency). Book III of Executive Order No. or abolition thereof by reason of economy or redundancy of functions. we held in Buklod ng Kawaning EIIB. thus:
But of course. consolidation of offices.)
Interpreting the foregoing provision. 292 (otherwise known as the Administrative Code of 1987). In Canonizado v.” It takes place when there is an alteration of the existing structure of government offices or units therein. including the lines of control. shall have the continuing authority to reorganize the administrative structure of the Office of the President. is part of the Office of the President.agency as well as transfer agencies to the Office of the President from other Departments or agencies. Hence. We must not lose sight of the very source of the power – that which constitutes an express grant of power. The EIIB is a bureau attached to the Department of Finance. we ruled that reorganization “involves the reduction of personnel. Under Section 31.
. It falls under the Office of the President.‖ For this purpose. it is subject to the President‘s continuing authority to reorganize.)
It is undisputed that the NPO.
with the exception of election paraphernalia which remains the exclusive responsibility of the NPO. and vice versa. and (b) to transfer functions or offices from the Office of the President to any other Department or Agency in the Executive Branch. there was neither an abolition of the NPO nor a removal of any of its functions to be transferred to another agency. together with the Bangko Sentral ng Pilipinas. Under the assailed Executive Order No. the President implicitly has the power to effect less radical or less substantive changes to the functional and internal structure of the Office of the President. Concomitant to such power to abolish. it must now compete with the private sector for certain government printing jobs. merge or consolidate offices in the Office of the President Proper and to transfer functions/offices not only among the offices in the Office of President Proper but also the rest of the Office of the President and the Executive Branch. including the immediate Offices. 378. the President Special Assistants/Advisers System and the Common Staff Support System. by abolishing.Pertinent to the case at bar. In the case at bar. there was a mere alteration of the main function
. consolidating or merging units thereof or transferring functions from one unit to another. including the modification of functions of such executive agencies as the exigencies of the service may require. At most. the NPO remains the main printing arm of the government for all kinds of government forms and publications but in the interest of greater economy and encouraging efficiency and profitability. as the Commission on Elections may determine. Section 31 of the Administrative Code of 1987 quoted above authorizes the President (a) to restructure the internal organization of the Office of the President Proper.
of the NPO by limiting the exclusivity of its printing responsibility to election forms. the general appropriations law for 1993. (Emphasis ours. Book III of the same Code significantly provides:
Sec. an inclusive and broad interpretation of the President‘s power to reorganize executive offices has been consistently supported by specific provisions in general appropriations laws.)
Pursuant to Section 20. 20. Residual Powers. Executive Secretary. However. In the oft-cited Larin v. the President shall exercise such other powers and functions vested in the President which are provided for under the laws and which are not specifically enumerated above. the power of the President to reorganize the Executive Branch under Section 31 includes such powers and functions that may be provided for under other laws. to wit:
. or which are not delegated by the President in accordance with law. – Unless Congress provides otherwise. the Court likewise adverted to certain provisions of Republic Act No. Title I. Chapter 7. as among the statutory bases for the President‘s power to reorganize executive agencies. 7645. There is a view that the reorganization actions that the President may take with respect to agencies in the Office of the President are strictly limited to transfer of functions and offices as seemingly provided in Section 31 of the Administrative Code of 1987. Section 20. To be sure.
 (Emphases ours)
Buklod ng Kawaning EIIB v. phasing out or abolition of the activities shall be effected pursuant to Circulars or Orders issued for the purpose by the Office of the President. 62. Unless and until a specific provision of the law is declared invalid and unconstitutional. Scaling Down and Phase Out of Activities of Agencies Within the Executive Branch. Zamora.‖ The foregoing provision evidently shows that the President is authorized to effect organizational changes including the creation of offices in the department or agency concerned. — The heads of departments. Well settled is the rule that every law has in its favor the presumption of constitutionality. which provides that: ―Sec. no organizational unit or changes in key positions in any department or agency shall be authorized in their respective organization structures and be funded from appropriations by this Act. Unauthorized organizational changes. — Unless otherwise created by law or directed by the President of the Philippines. phasing out and abolition" of offices only and does not cover the creation of offices or transfer of functions. bureaus and offices and agencies are hereby directed to identify their respective activities which are no longer essential in the delivery of public services and which may be scaled down.Section 48 of R. Actual scaling down. subject to civil [service] rules and regulations. x x x. the same is valid and binding for all intents and purposes.‖ Said provision clearly mentions the acts of "scaling down. Nevertheless. 7645 provides that: ―Sec. where the Court
. The contention of petitioner that the two provisions are riders deserves scant consideration. the act of creating and decentralizing is included in the subsequent provision of Section 62.A. phased out or abolished. 48.
offices and agencies and other entities in the Executive Branch are directed (a) to conduct a comprehensive review of their respective mandates. which was reenacted in 2004 (the year of the issuance of Executive Order No. also traced from the General Appropriations Act the President‘s authority to effect organizational changes in the department or agency under the executive structure. objectives. missions. 378). Section 78 ends up with the mandate that the actual streamlining and productivity improvement in agency organization and operation shall be effected pursuant to Circulars or Orders issued for the purpose by the Office of the President. Such a ruling further finds support in Section 78 of Republic Act No. phased-out or abolished. projects. among others. the 2003 General Appropriations Act. hewed closely to the reasoning in Larin. and (c) adopt measures that will result in the streamlined organization and improved overall performance of their respective agencies. the heads of departments. thus:
We adhere to the precedent or ruling in Larin that this provision recognizes the authority of the President to effect organizational changes in the department or agency under the executive structure. Sections 77 and 78 of said Act provides:
. programs. Under this law. likewise gave the President the authority to effect a wide variety of organizational changes in any department or agency in the Executive Branch. in the present case. (b) identify activities which are no longer essential in the delivery of public services and which may be scaled down. The Court. functions. 191 ―deactivating‖ the Economic Intelligence and Investigation Bureau (EIIB) of the Department of Finance. bureaus.upheld as valid then President Joseph Estrada‘s Executive Order No. 8760. (Emphasis ours)
Notably. x x x. activities and systems and procedures.
as authorized by the President of the Philippines for the purpose. no changes in key positions or organizational units in any department or agency shall be authorized in their respective organizational structures and funded from appropriations provided by this Act. missions. as directed by the President of the Philippines. agencies. Section 78. That in the implementation of organizations/reorganizations. That actual streamlining and productivity improvements in agency organization and operations. projects. programs. FURTHER. and other entities of the Executive Branch shall accordingly conduct a comprehensive review of their respective mandates. objectives. That any unexpended balances or savings in appropriations may be made available for payment of retirement gratuities and separation benefits to affected personnel. bureaus. Organized Changes. as authorized under existing laws. or specific changes in agency structure. activities and systems and procedures. the appropriation. (Emphases
. including the utilization of savings generated from such activities. including the functions. offices. purposes and activities of agencies concerned may be realigned as may be necessary: PROVIDED. upon consultation with the Presidential Committee on Effective Governance: PROVIDED. FINALLY. The heads of departments. and implement corresponding structural. functions. identify areas where improvements are necessary.Section 77. Institutional Strengthening and Productivity Improvement in Agency Organization and Operations and Implementation of Organization/Reorganization Mandated by Law. projects. functions and operations as a result of institutional strengthening or as mandated by law. – Unless otherwise provided by law or directed by the President of the Philippines. functional and operational adjustments that will result in streamlined organization and operations and improved performance and productivity: PROVIDED. The Government shall adopt institutional strengthening and productivity improvement measures to improve service delivery and enhance productivity in the government. shall be in accordance with the rules and regulations to be issued by the DBM.
and underscoring ours. we upheld the ―streamlining‖ of the National Tobacco Administration through a reduction of its personnel and deemed the same as included in the power of the President to reorganize executive offices granted under the laws. in his capacity as the Executive Secretary. and operational adjustments in the executive bureaucracy and. x x x xxxx The first sentence of the law is an express grant to the President of a continuing authority to reorganize the administrative structure of the Office of the President. the same is statutorily authorized by the above provisions. Thus. et al. modify or realign appropriations of funds as may be necessary under such reorganization. To quote the relevant portion of that decision:
In the recent case of Rosa Ligaya C. Zamora. In the 2003 case of Bagaoisan v. Domingo. The succeeding numbered paragraphs are not in the nature of provisos that unduly limit the aim and scope of the grant to the President of the power to reorganize but are to be viewed in consonance therewith.)
Implicitly. National Tobacco Administration. functional. insofar as petitioners protest the limitation of the NPO‘s appropriations to its own income under Executive Order No. in so doing. notwithstanding that such streamlining neither involved an abolition nor a transfer of functions of an office.. vs.
. Hon. the aforequoted provisions in the appropriations law recognize the power of the President to reorganize even executive offices already funded by the said appropriations act. this Court has had occasion to also delve on the President‘s power to reorganize the Office of the President under Section 31(2) and (3) of Executive Order No. including the power to implement structural. 292 and the power to reorganize the Office of the President Proper. Ronaldo D. et al. 378.
 which involved a structural and functional reorganization of the Department of Health under an executive order. In the present instance. by abolishing. and the transfer of any agency under the Office of the President to any other department or agency and vice-versa. direct the reorganization of government entities under the Executive Department. the assailed action is a mere reorganization under the general provisions of the law consisting mainly of streamlining the NTA in the interest of simplicity.)
In the more recent case of Tondo Medical Center Employees Association v. a factual assessment that this Court could only but accept. consolidating or merging units hereof or transferring functions from one unit to another. economy and efficiency. clearly
. It is an act well within the authority of the President motivated and carried out. as well as other statutes. we reiterated the principle that the power of the President to reorganize agencies under the executive department by executive or administrative order is constitutionally and statutorily recognized. in good faith. Article VII of the 1987 Constitution. according to the findings of the appellate court. Section 17. (Emphases and underscoring supplied. involving neither an abolition nor transfer of offices. We held in that case:
This Court has already ruled in a number of cases that the President may. 292 specifically refers to the President‘s power to restructure the internal organization of the Office of the President Proper. This is also sanctioned under the Constitution. by executive or administrative order.Section 31(1) of Executive Order No. while Section 31(2) and (3) concern executive offices outside the Office of the President Proper allowing the President to transfer any function under the Office of the President to any other Department or Agency and vice-versa. Court of Appeals.
it must be capable of being shaped and reshaped by the President in the manner the Chief Executive deems fit to carry out presidential directives and policies. bureaus and offices. subject to the policy in the Executive Office and in order to achieve simplicity. The Agencies under the Office of the President. The Administrative Code provides that the Office of the President consists of the Office of the President Proper and the agencies under it. shall have continuing authority to reorganize the administrative structure of the Office of the President. also known as the Administrative Code of 1987 reads: SEC.” To remain effective and efficient. Zamora [445 Phil.states: ―[T]he president shall have control of all executive departments. 23. those under the
. Chapter 10 of Executive Order No. Book III. economy and efficiency. The agencies under the Office of the President are identified in Section 23. this Court explained the rationale behind the President‘s continuing authority under the Administrative Code to reorganize the administrative structure of the Office of the President. economy and efficiency. For this purpose. Continuing Authority of the President to Reorganize his Office . he may take any of the following actions: xxxx In Domingo v.” Section 31. 292. The law grants the President the power to reorganize the Office of the President in recognition of the recurring need of every President to reorganize his or her office “to achieve simplicity. Title II of the Administrative Code: Sec.The President.—The agencies under the Office of the President refer to those offices placed under the chairmanship of the President. 7 (2003)]. Chapter 8. 31.
recognized by other statutes. (Emphases supplied. In enacting a statute. we ruled in Anak Mindanao Party-List Group v. those attached to it for policy and program coordination. supported by the provisions of the Administrative Code. x x x. Executive Order No. 102 is well within the constitutional power of the President to issue. It is thus reasonable to conclude that in passing a statute which places an agency under the Office of the President. and consistently affirmed by this Court.supervision and control of the President. those under the administrative supervision of the Office of the President. the legislature is presumed to have deliberated with full knowledge of all existing laws and jurisprudence on the subject. it was in accordance with existing laws and
. xxxx The power of the President to reorganize the executive department is likewise recognized in general appropriations laws. It is an exercise of the President’s constitutional power of control over the executive department. 102. and those that are not placed by law or order creating them under any specific department. Executive Secretary that:
The Constitution‘s express grant of the power of control in the President justifies an executive action to carry out reorganization measures under a broad authority of law. The President did not usurp any legislative prerogative in issuing Executive Order No. xxxx Clearly.)
2. ―in order to achieve simplicity. Such determination is primary. In establishing an executive department.)
The issuance of Executive Order No. the legislature necessarily ordains an executive agency‘s position in the scheme of administrative structure. Administrative Orders. The reorganization of such an office through executive or administrative order is also recognized in the Administrative Code of 1987. agencies or offices in the executive department are concerned. but subject to the President‘s continuing authority to reorganize the administrative structure. Or a law may expressly grant the President the broad authority to carry out reorganization measures. the power of control may justify the President to deactivate the functions of a particular office. Executive Orders. which provides for the continuing authority of the President to reorganize the Office of the President.‖ This is a matter already well-entrenched in jurisprudence. Book III of the Administrative Code of 1987. As far as bureaus. economy and efficiency. Sec. (Emphases supplied. Title III. Chapter 10. Chapter 2. Title I. Book III of the said Code provide:
Sec. . The Administrative Code of 1987 is one such law.Acts of the President providing for rules of a general or permanent character in implementation or execution of constitutional or statutory powers shall be promulgated in executive orders. bureau or office.jurisprudence on the President‘s power to reorganize. . Sections 2 and 3. 378 by President Arroyo is an exercise of a delegated legislative power granted by the aforementioned Section 31.Acts of the President which relate to particular aspects of governmental operations in pursuance of his duties as administrative head shall be promulgated in administrative orders.
this delegated legislative power to reorganize pertains only to the Office of the President and the departments. which purports to institute necessary reforms in government in order to improve and upgrade efficiency in the delivery of public services by redefining the functions of the NPO and limiting its funding to its own income and to transform it into a self-reliant agency able to compete with the private sector. 378 is an invalid exercise of legislative power on the part of the President has no legal leg to stand on. To be very clear. Beginning with Larin and in subsequent cases. Carpio. In all. offices and agencies of the executive branch and does not include the Judiciary. we find nothing objectionable in the provision in Executive Order No. Executive Order No. is well within the prerogative of President Arroyo under her continuing delegated legislative power to reorganize her own office.To reiterate. 378 limiting the appropriation of the NPO to its own income. it must be stressed that the
. Associate Justice Antonio T. the Legislature or the constitutionallycreated or mandated bodies. Petitioners‘ contention that the issuance of Executive Order No. Moreover. 378 is wholly consistent with the state policy contained in Republic Act No. 9184 or the Government Procurement Reform Act to encourage competitiveness by extending equal opportunity to private contracting parties who are eligible and qualified. the objective behind Executive Order No. the Court has noted certain provisions in the general appropriations laws as likewise reflecting the power of the President to reorganize executive offices or agencies even to the extent of modifying and realigning appropriations for that purpose. As pointed out in the separate concurring opinion of our learned colleague. 378.
exercise by the President of the power to reorganize the executive department must be in accordance with the Constitution. In this regard. if the ―abolition. is void ab initio. which results in loss of security of tenure of affected government employees. relevant laws and prevailing jurisprudence. we even observed that there was no such thing as an absolute right to hold office. a reorganization is carried out in ―good faith‖ if it is for the purpose of economy or to make bureaucracy more efficient. the abolition of positions. or where claims of economy are belied by the existence of ample funds. Be that as it may. would be valid.‖ which is nothing else but a separation or removal. we are mindful of the previous pronouncement of this Court in Dario v. or otherwise not in good faith. is done for political reasons or purposely to defeat security of tenure. Except those who hold constitutional offices. no dismissal (in case of a dismissal) or separation actually occurs because the position itself ceases to exist. no valid ―abolition‖ takes place and whatever ―abolition‖ is done. security of tenure would not be a Chinese wall. (Emphasis ours. If the reorganization is done in good faith. Zamora. There is an invalid ―abolition‖ as where there is merely a change of nomenclature of positions. In Buklod ng Kawaning EIIB v. Mison that:
Reorganizations in this jurisdiction have been regarded as valid provided they are pursued in good faith. the presidential power to reorganize agencies and offices in the executive branch of government is subject to the condition that such reorganization is carried out in good faith. In that event. As a general rule. which provide for special immunity as regards
Stated alternatively. And in that case.
in allowing government agencies to secure their printing requirements from the private sector and in limiting the budget of the NPO to its income. no one can be said to have any vested right to an office or salary. No costs.salary and tenure. sufficient facts to show that the limitation of the NPO‘s budget to its own income would indeed lead to the abolition of the position. 378. the petition is hereby DISMISSED and the prayer for a Temporary Restraining Order and/or a Writ of Preliminary Injunction is hereby DENIED. Neither did petitioners present any shred of proof of their assertion that the changes in the functions of the NPO were for political considerations that had nothing to do with improving the efficiency of. 378. This brings us to the second ground raised in the petition – that Executive Order No.
. the Court finds that the petition failed to show any constitutional infirmity or grave abuse of discretion amounting to lack or excess of jurisdiction in President Arroyo‘s issuance of Executive Order No. A careful review of the records will show that petitioners utterly failed to substantiate their claim. of any employee. In other words. WHEREFORE. will purportedly lead to the gradual abolition of the NPO and the loss of security of tenure of its present employees. or encouraging operational economy in. much less prove. petitioners avow that the reorganization of the NPO under Executive Order No. 378 is tainted with bad faith. In sum. or removal from office. They failed to allege. the said agency. The basic evidentiary rule is that he who asserts a fact or the affirmative of an issue has the burden of proving it.
2000 filed by the Manila International Airport Authority (MIAA). J.R.:
We resolve the Petition for Review on Certiorari dated August 23. JJ. and NAZARIO.
DECISION TINGA. CALLEJO.SECOND DIVISION
MANILA INTERNATIONAL 143870 AIRPORT AUTHORITY. AUSTRIANo.. SR. x------------------------------------------------------------x Promulgated: September 30. INCORPORATED. RIVERA VILLAGE LESSEE HOMEOWNERS ASSOCIATION. Chairman. TINGA. 2005 Respondent. assailing the Decision of the Court of Appeals dated June 30. 2000 which directed
.versus MARTINEZ. Petitioner. . G. Present: PUNO.
transferring existing assets of the MIA to MIAA. management. 1983). Vicente C.00 per annum as rental. maintenance and development of the Manila International Airport (MIA). culled from the petition and the assailed Decision. operation. control. now the Ninoy Aquino International Airport. and vesting the latter with the power
. creating petitioner MIAA. 1982. the CAA. The antecedents. entered into individual lease contracts with its employees (lessees) for the lease of portions of a four (4)-hectare lot situated in what is now known as Rivera Village located in Barangay 199 and 200 in Pasay City. 1990 at P20. The leases were for a twenty-five (25)-year period to commence on May 25. through its Director. 1965.
On May 4. Capt. On May 25. Executive Order No. Rivera. 1965 up to May 24.the issuance of a writ of preliminary injunction restraining petitioner from evicting the homeowners of Rivera Village from their dwellings. are as follows: The then Civil Aeronautics Administration (CAA) was entrusted with the administration. (EO) 778 was issued (later amended by EO 903 on July 21. make and execute concessions and concession rights for purposes essential to the operation of the airport. Among its powers was the power to enter into.
MIAA stopped issuing accrued rental bills and refused to accept rental payments from the lessees. respondent Rivera Village Lessee Homeowners Association. purportedly representing the lessees. 1996. Inc. The MIAA. denied the request. Sometime in January 1995.to administer and operate the MIA. MIAA filed an answer alleging that the petition
. sought to restrain the MIAA from implementing its Conceptual Development Plan insofar as Rivera Village is concerned. (PD) 1517 or the Urban Land Reform Act and PD 2016. claiming that the subject property is included in its Conceptual Development Plan intended for airport-related activities. As a result. invoking the provisions of Presidential Decree No. (homeowners association). docketed as Civil Case No. The petition. 97-1598 in the Regional Trial Court of Pasay City. Branch 109. It also sought 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. on February 14. Respondent then filed a petition for mandamus and prohibition with prayer for the issuance of a preliminary injunction against MIAA and the National Housing Authority (NHA). requested MIAA to sell the subject property to its members.
1998. The dispositive portion of the Order reads:
In view of all the foregoing.
The trial court held that PD 1818 bars the issuance of a restraining order. preliminary injunction or preliminary mandatory injunction in any case.fails to state a cause of action in view of the expiration of the lease contracts and the lack of personality to sue of the homeowners association. dispute or controversy involving infrastructure projects of the government or any public utility operated by the
. A preliminary hearing on MIAA’s affirmative defenses was conducted. after which the trial court issued an Order dated October 12. denying the prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction and dismissing the petition for lack of merit. the prayer for the issuance of a temporary restraining order and/or writ of preliminary injunction is hereby denied for lack of merit and the above-entitled petition is hereby ordered dismissed for lack of merit. MIAA also claimed that the homeowners association is not entitled to a writ of mandamus because it does not have a clear legal right to possess the subject property and MIAA does not have a corresponding duty to segregate Rivera Village from its Conceptual Development Plan. SO ORDERED.
It also ruled that the petition failed to state a cause of action inasmuch as petitioner therein (respondent homeowners association) is not the real party-in-interest. set aside and reversed. Moreover. The dispositive portion of the assailed Decision states:
WHEREFORE. which respectively identify parcels of urban land as part of the Urban Land Reform Zone.government. interposing essentially the same arguments raised before the trial court. the trial court declared that the subject property has been reserved by MIAA for airport-related activities and. The case is remanded to the court a quo for further proceedings. and prohibit the eviction of occupant families from such lands. as areas for priority development or urban land reform zones. the assailed October 12. Proclamation No. The appellate court annulled and set aside the order of the trial court and remanded the case for further proceedings. 1967 and PD 2016. the individual members of the association being the ones who have possessory rights over their respective premises. is exempt from the coverage of the Comprehensive and Continuing Urban Development and Housing Program under Republic Act No.
. As regards the contention that the lessees are entitled to possess the subject property by virtue of PD 1517. specify certain areas in Metro Manila. 1998 Order is annulled. including Rivera Village. (RA) 7279. the lease contracts have already expired. as such. Respondent filed an appeal with the Court of Appeals.
merely instituted the suit for the benefit of its members.A writ of preliminary injunction is issued restraining and preventing respondent MIAA from evicting the members of petitioner Rivera Village Association from their respective lots in the Rivera Village. Besides.
The appellate court foremost ruled that the case can be construed as a class suit instituted by the Rivera Village lessees. The homeowners association. Proclamation No.000. SO ORDERED. 1990 up to December
. the Court of Appeals held that the expiration of the lease contracts cannot adversely affect the rights acquired by the lessees under the foregoing laws. It does not claim to have any right or interest in the lots occupied by the lessees.00 with the condition that petitioner will pay to respondent MIAA all damages it may sustain by reason of the injunction if the court should finally decided that petitioner is not entitled thereto. nor seek the registration of the titles to the land in its name. On the issue of the expiration of the lease contracts and the application of PD 1517. Upon approval of the bond. considered as the representative of the lessees. 1967 and PD 2016. Petitioner is ordered to post a bond in the amount of P500. the writ of preliminary injunction shall forthwith issue. the lease contracts were impliedly renewed by virtue of MIAA’s acceptance of rental payments from May 25.
the trial court can issue an injunctive writ if the act sought to be restrained will enforce the eviction of tenants from urban land reform zones. the appellate court construed Sec. considering the need for a full-blown trial to ferret out whether the claimed rights under the pertinent laws have ripened to actual legal and vested rights in their favor. the appellate court ruled that PD 1818 is a general law on the issuance of restraining orders and writs of preliminary injunction.1994. Moreover. however. As to whether PD 1818 bars the issuance of an injunctive writ in this case. then said lot is encompassed by the law and is subject to distribution to the legitimate and qualified residents of the area after appropriate proceedings have been undertaken. declared that it cannot make a definitive ruling on the rights of the members of the homeowners association vis-à-vis the MIAA Conceptual Development Plan.
. On the other hand. PD 2016 is a special law specifically prohibiting the eviction of tenants from lands identified as areas for priority development. 5(c) of RA 7279 to mean that if the government lot has not been utilized during the ten (10)-year period for the purpose for which it has been reserved prior to 1983. The court. Thus. This resulted in an implied new lease under Article 1670 of the Civil Code.
MIAA now seeks a review of the Decision of the Court of Appeals. Moreover.
. Allegedly. Sec. has modified PD 1818. which bars the issuance of injunctive writ in cases involving infrastructure projects of the government. MIAA also stresses that the subject property has recently been reserved by MIAA for airport-related activities and. the Board Resolution presented by respondent shows that it was only the board of directors of the association. It 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. 5(c) of RA 7279 applies. In the instant petition. as such. which prohibits the eviction of occupant families from real property identified as areas for priority development or urban land reform zones. which authorized respondent to act as its representative in the suit. Under the said law. facilities and other installations are exempt from the coverage of the law. reserved or otherwise set aside for government offices. MIAA contends that the appellate court erred in ruling that PD 2016. lands which are used. including public utilities for the transport of goods and commodities. as distinguished from the members thereof. MIAA avers that the Court of Appeals should not have granted injunctive relief to respondent.
arguing that MIAA is mandated by law to dispose of Rivera Village to the homeowners thereof. Respondent filed a Comment dated November 20. 2001.considering that the grant of an injunction would inflict greater damage to petitioner and to the public. In the Resolution dated January 24. the petition was given due course and the parties were required to submit their respective memoranda. Accordingly. PD 2016 which protects from eviction tenants of lands identified for priority development. Respondent further argues that PD 1818 is inapplicable to this case because it has established a clear and unmistakable right to an injunction. 2001. MIAA submitted its Memorandum dated March 20. To accept MIAA’s pretense that the property has been recently reserved for airportrelated activities and therefor exempt from the coverage of RA 7279 will allegedly violate the right of the homeowners as bona fide tenants to socialized housing. the homeowners have the right to possess and enjoy the property. while respondent filed its Memorandum dated April 20. 2000. 2001.
. For its part. Under existing laws. NHA manifested that it is adopting the memorandum of MIAA as its own insofar as the same is germane and material to NHA’s stand. Besides. is a later enactment which should be deemed to prevail over PD 1818.
Has PD 2016 modified PD 1818? Did the petition filed by respondent with the trial court state a cause of action against petitioner? Is petitioner obliged to dispose of the subject properties in favor of the members of respondent association after appropriate proceedings? Is respondent entitled to the issuance of a writ of preliminary injunction?
4.e. MIAA contends that the real parties-in-interest in the petition filed with the trial court are the individual members of the homeowners association. 2.. i. The 1997 Rules of Civil Procedure (Rules of Court) requires that every action must be prosecuted or defended in the name of the real party-in-interest.As presented and discussed by the parties. A case is dismissible for lack of personality to sue upon proof that the plaintiff is not the
We first resolve the threshold question of whether respondent has personality to sue. Not having been brought in the name of the real parties-in-interest. the suit was correctly dismissed by the trial court for failure to state a cause of action. or the party entitled to the avails of the suit. the party who stands to be benefited or injured by the judgment in the suit. the issues are the following:
Rule 3 of the Rules of Court. hence grounded on failure to state a cause of action. 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. represented by its President. Panfilo R.
. Sr.real party-in-interest.. notably because the petition does not allege the existence and prove the requisites of a class suit. we held that courts must exercise utmost caution before allowing a class suit. Colet. 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. Chiutena. 12. In Board of Optometry v. the petition cannot be considered a class suit under Sec. i.e. For while no difficulty may arise if the decision secured is favorable to the plaintiffs.” Obviously. the requisites therefor not being present in the case. and because it was brought only by one party. upon authority of a Board Resolution empowering the latter to file “[A]ll 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. The petition before the trial court was filed by the homeowners association.. which is the exception to the requirement of joinder of all indispensable parties.
be included in the complaint. 3.]
It is a settled rule that every action must be prosecuted or defended in the name of the real party-ininterest. Rule 3 of the Rules of Court.—Where the action is allowed to be prosecuted or defended by a representative or someone acting in a fiduciary capacity. Representatives as parties.There is. The name of such beneficiaries shall. or the authority of a party to sue or be
. likewise. the beneficiary must be included in the title of the case and shall be deemed to be the real party-ininterest. [Emphasis supplied. however. Rule 8 of the Rules of Court provides that facts showing the capacity of a party to sue or be sued. Moreover. Sec. the beneficiary shall be included in the title of the case and shall be deemed to be the real party in interest. 3. which provides:
Sec. A representative may be a trustee of an express trust. a guardian. 4. 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. or a party authorized by law or these Rules. an executor or administrator. Where the action is allowed to be prosecuted or defended by a representative acting in a fiduciary capacity. merit in the appellate court’s pronouncement that the petition should be construed as a suit brought by the homeowners association as the representative of the members thereof under Sec.
such complaint is not deemed filed and the court does not acquire jurisdiction over the complaint. 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. Essentially. It must be stressed that an unauthorized complaint does not produce any legal effect. In this case. the plaintiff must have an actual legal existence. 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
. is suing in a representative capacity as authorized under the Board Resolution attached to 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. in fact. If a complaint is filed by one who claims to represent a party as plaintiff but who. 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. The party bringing suit has the burden of proving the sufficiency of the representative character that he claims.sued in a representative capacity must be averred in the complaint. is not authorized to do so. In order to maintain an action in a court of justice. the petition filed with the trial court sufficiently avers that the homeowners association. that is. through its President.
 As correctly noted by the Court of Appeals.have the benefit of having before it the real adverse parties in the consideration of a case. the dismissal of this case based on the lack of personality to sue of petitionerassociation will only result in the filing of multiple suits by the individual members of the association. Parenthetically. if these are indispensable or necessary to the just resolution of the pleaded issues. and its application should be neither dogmatic nor rigid at all times but viewed in consonance with extant realities and practicalities. however. that is. is not to be narrowly and restrictively construed. is a matter not addressed by the parties in the case before this Court. it is equally settled that appellate courts have ample authority to rule on matters not assigned as errors in an appeal. the Court has allowed the
. This rule. while the procedural rule is that a party is required to indicate in his brief an assignment of errors and only those assigned shall be considered by the appellate court in deciding the case. What is more decisive to the resolution of the present controversy. however. the fact that the petition filed before the trial court is for mandamus to compel MIAA to segregate Rivera Village from the scope of its Conceptual Development Plan and the NHA to take the necessary steps for the disposition of the subject property in favor of the members of the homeowners association. For instance.
(3) matters not assigned as errors on appeal but consideration of which is necessary in arriving at a just decision and complete resolution of the case or to serve the interest of justice or to avoid dispensing piecemeal justice. MIAA asserted in its answer to the original petition that the homeowners association is not entitled to a writ of mandamus because it has not shown any legal right to possess the subject property and a correlative obligation on the part of MIAA to segregate the property from its Conceptual Development Plan. although the propriety of the filing of a petition for mandamus was no longer raised as an issue before this Court. In this case. MIAA averred:
28. and (6) matters not assigned as errors on appeal but upon which the determination of a question properly assigned is dependent. For a writ of mandamus to issue. it is essential that petitioner has a legal right to the thing
. (4) matters not specifically assigned as errors on appeal but raised in the trial court and are matters of record having some bearing on the issue submitted which the parties failed to raise or which the lower court ignored.consideration of other grounds not raised or assigned as errors specifically in the following instances: (1) grounds not assigned as errors but affecting jurisdiction over the subject matter. Petitioner is not entitled to the issuance of a writ of mandamus. (5) matters not assigned as errors on appeal but closely related to an error assigned. (2) matters not assigned as errors on appeal but are evidently plain or clerical errors within the contemplation of the law.
Lemi v. 30. The legal right of petitioner to the thing demanded must be welldefined.
The question of whether the homeowners association is entitled to the issuance of a writ of mandamus was again raised in the memorandum filed by MIAA with the Court of Appeals. 210 ). Valencia.
. Petitioner. clear and certain. The corresponding duty of respondent to perform the required act must also be clear and specific (Cf. For a writ of mandamus to issue. clear and certain. 26 SCRA 203. 210 ). Lemi v.demanded and that it is the imperative duty of respondent to perform the act required. There is therefore no corresponding duty on the part of respondent MIAA to segregate the property from the scope of its Conceptual Development Plan. The legal right of appellant to the thing demanded must be welldefined. 29. The corresponding duty of respondent to perform the required act must also be clear and specific (cf. in view of the expiration of the lease contracts of its individual members. 26 SCRA 203. Valencia. it is essential that the appellant has a legal right to the thing demanded and that it is the imperative duty of respondent to perform the act required. MIAA alleged:
Appellant is not entitled to the issuance of a writ of mandamus. has failed to show that it has the legal right to possess the subject property.
There is therefore no corresponding duty on the part of the MIAA to segregate the property from the scope of its conceptual development plan. A writ of mandamus can be issued only when petitioner’s legal right to the performance of a particular act which is sought to be compelled is clear and complete. on the one hand. appellant has failed to show that it has the legal right to possess the subject property. it is essential that.
The question of whether mandamus is the proper remedy was clearly raised in the trial court and the Court of Appeals although it was largely ignored by both courts. we shall rule on the matter. Mandamus will not issue to enforce a right. This issue being indispensable to the resolution of this case.In view of the expiration of the lease contracts of its individual members. petitioner has a clear legal right to the claim that is sought and that. or to compel compliance with
. respondent has an imperative duty to perform that which is demanded of him. In order that a writ of mandamus may aptly issue. on the other hand. A clear legal right is a right which is indubitably granted by law or is inferable as a matter of law.
a duty, which is questionable or over which a substantial doubt exists. The principal function of the writ of mandamus is to command and to expedite, not to inquire and to adjudicate. Thus, it is neither the office nor the aim of the writ to secure a legal right but to implement that which is already established. Unless the right to relief sought is unclouded, mandamus will not issue. In this case, the Court of Appeals itself conceded that no definitive ruling as regards the rights of the individual members of the homeowners association could yet be made considering the need for a full determination of whether their claimed rights under the pertinent laws have ripened into actual legal and vested rights. The appellate court even outlined the requisites under PD 1517 which have yet to be complied with, namely: (1) the submission to the NHA of a proposal to acquire the subject property as required under Sec. 9 of PD 1517; and (2) proof that the members of the homeowners association are qualified to avail of the benefits under PD 1517 as mandated by Sec. 6 of the same law. Resort to mandamus is evidently premature because there is no showing that the members of the homeowners association have already filed an application or proposal with the NHA to acquire their respective lots. There is still an administrative remedy
open to the members of the homeowners association which they should have first pursued, failing which they cannot invoke judicial action. We note that while respondent alleges that its members enlisted themselves with the NHA in order to avail of the benefits of the law, the NHA, in its answer to the petition, denied this allegation for being self-serving. Whatever rights the members of the homeowners association may have under the relevant laws are still in substantial doubt or dispute. Hence, the petition for mandamus was appropriately dismissed for failure to state a cause of action. So, too, should the prayer for the issuance of a writ of prohibition contained in the same petition be denied. Writs of certiorari, prohibition and mandamus are prerogative writs of equity and their granting is ordinarily within the sound discretion of the courts to be exercised on equitable principles. Said writs should only be issued when the right to the relief is clear. As our findings in this case confirm, the homeowners association failed to establish a clear legal right to the issuance of the writs of mandamus and prohibition prayed for. There is, moreover, another ground for the dismissal of the petition filed before the trial court which appears to have been overlooked by the parties in this case.
In the original petition filed before the trial court, the homeowners association averred that although EO 903 transferred to MIAA the properties and assets of MIA, such transfer was made subject to what the homeowners association claims to be the existing rights of its members. MIAA dismissed this allegation as an erroneous conclusion of law. We cite the complete text of the relevant provision of EO 903 to fully understand the import thereof and its effect on the present controversy. Section 3 thereof states:
Sec. 3. Creation of the Manila International Airport Authority.—There is hereby established a body corporate to be known as the Manila International Airport Authority which shall be attached to the Ministry of Transportation and Communications. The principal office of the Authority shall be located at the New Manila International Airport. The Authority may establish such offices, branches, agencies or subsidiaries as it may deem proper and necessary; Provided, That any subsidiary that may be organized shall have the prior approval of the President. The land where the Airport is presently located as well as the surrounding land area of approximately six hundred hectares, are hereby transferred, conveyed and assigned to the ownership and administration of the Authority, subject to existing rights, if any. The Bureau of Lands and other appropriate government agencies shall undertake an actual survey of the area transferred within one year from the promulgation of this Executive Order and the corresponding title to be
issued in the name of the authority. Any portion thereof shall not be disposed through sale or through any other mode unless specifically approved by the President of the Philippines. [Emphasis supplied.]
As can clearly be seen from the foregoing provision, while it is true that the ownership and administration of the airport and its surrounding land was assigned to MIAA subject to existing rights, which we may here understand to be the rights granted under PD 1517, EO 903 specifically requires the approval of the President of the Philippines before any disposition by sale or any other mode may be made concerning the property transferred to MIAA. The Executive Secretary as representative of the President of the Philippines is, therefore, an indispensable party in actions seeking to compel the sale or disposition of properties of the MIAA. Section 7, Rule 3 of the Rules of Court provides that parties-ininterest without whom no final determination can be had of an action shall be joined either as plaintiffs or defendants. Thus, the presence of all indispensable parties is a condition sine qua non for the exercise of judicial power. It is precisely when an indispensable party is not before the court that the action should be dismissed. The plaintiff is mandated to implead all indispensable parties, and the absence of one renders all subsequent actions of the court null and void for
. the determination of the homeowners association’s entitlement to a writ of preliminary injunction is already moot and academic. Besides. he will be deprived of his right to due process. Preliminary injunction is a mere ancillary remedy which cannot stand separately or proceed independently of the main case. For the foregoing reasons. Having declared that the petition filed before the trial court was correctly dismissed. One who is a party to a case is not bound by any decision of the court.want of authority to act. the right of the members of the homeowners association to possess and purchase the subject property is still uncertain considering that they have not completed the process for the acquisition of their lots as outlined in PD 1517. as earlier noted. the prayer for the issuance of the writ of preliminary injunction must perforce be denied. not only as to the absent parties. The writ of preliminary injunction is issued by the court to prevent threatened or continuous irreparable injury to parties before their claims can be thoroughly studied and adjudicated. Injunction is a preservative remedy aimed at protecting substantive rights and interests. Its sole objective is to preserve the status quo until the merits of the case can be heard fully. but even as to those present. The writ is issued upon the satisfaction of two requisites.
injunction is not proper. Where the complainant’s right is doubtful or disputed. Civil Case No. In the absence of a clear legal right. The Decision of the Court of Appeals dated June 30. 2000 is REVERSED and SET ASIDE. WHEREFORE. the issuance of the injunctive relief constitutes grave abuse of discretion. 971598 of the Regional Trial Court of Pasay City is ordered DISMISSED.
. SO ORDERED. Injunction is not designed to protect contingent or future rights.namely: (1) the existence of a right to be protected. With this conclusion. and (2) acts which are violative of said right. we deem it unnecessary to discuss the other issues raised in this petition. the instant petition is GRANTED. The possibility of irreparable damage without proof of actual existing right is not a ground for an injunction.
AMANDO BARBARONA and GERVACIA MONJAS BARBARONA. J.. CORONA.:
Petitioner Capitolina Vivero Napere interposes this petition for review to assail the Court of Appeals‘ Decision dated October 9.
x-----------------------------------------------------------------------------------x RESOLUTION NACHURA. and REYES. Promulgated: January 31. which upheld the validity of the Regional Trial Court‘s decision despite failure to formally order the substitution of the heirs of the deceased defendant. JJ.THIRD DIVISION CAPITOLINA VIVERO NAPERE. 160426 Present: YNARES-SANTIAGO. G. No. 2008
. Respondents. AUSTRIA-MARTINEZ. Petitioner. petitioner‘s husband. J. Chairperson.R.* NACHURA.
while the case was pending. adjoins said lot on the northeastern side. the respondents took possession of this encroached portion of the lot and harvested the fruits thereon from April 1993 to December 1993. refused to turn over possession of the area. 1110 in the name of Anacleto Napere. that the Naperes harvested the coconut fruits thereon. Lot No.The case stems from the following antecedents: Respondent Amando Barbarona is the registered owner of Lot No. and refusing to vacate the property on demand. their relatives and hired laborers. 3176. and. situated in Barangay San Sotero (formerly Tambis). the spouses Napere. 3177. appropriated the proceeds thereof. a relocation survey was conducted which confirmed that the respondents‘ property was encroached upon by the Naperes. covered by OCT No. respondents alleged that in April 1980. Javier. Their counsel informed the court of Juan Napere‘s death. herein petitioner. After Anacleto died. 3177. Juan Napere. planted coconut trees on certain portions of the property with the consent of his co-heirs. but that in January 1994. encroached upon and occupied the northeastern portion of Lot No. the Naperes repeated their acts by encroaching again on the respondents‘ property. 1995. In their complaint. the RTC noted that the Naperes were not
. P-7350. At the pre-trial. and the latter‘s wife. Leyte and covered by Original Certificate of Title (OCT) No. despite demands. by means of stealth and strategy. that on the basis of the relocation survey. and submitted the names and addresses of Napere‘s heirs. On November 10. his son. harvesting the coconuts and appropriating the proceeds thereof. that in April 1992. Juan Napere died.
the RTC rendered a Decision against the estate of Juan Napere. 1996. arguing. this Court finds in favor of the plaintiff and against the defendant.00) PESOS in litigation expenses. SO ORDERED. 2003. Thus. the CA rendered a Decision affirming the RTC Decision. that the judgment of the trial court was void for lack of jurisdiction over the heirs who were not ordered substituted as party-defendants for the deceased.200. The appellate court held that failure to substitute the heirs for the deceased defendant will not invalidate the proceedings and the judgment in a case which survives the death of such party.000. and the c) Cost[s] of suit. thus:
Petitioner appealed the case to the Court of Appeals (CA). inter alia. b) The estate of Juan Napere shall be liable to pay FIVE THOUSAND (P5. this petition for review where the only issue is whether
.00) PESOS in actual damages. On October 17. On October 9. hereby declaring the following: a) The estate of Juan Napere is liable to pay the amount of ONE HUNDRED SEVENTY-NINE THOUSAND TWO HUNDRED (P179.contesting the respondents‘ right of possession over the disputed portion of the property but were demanding the rights of a planter in good faith under Articles 445 and 455 of the Civil Code.
despite this oversight. the counsel of Juan Napere complied with his duty to inform the court of his client‘s death and the names and addresses of the heirs. The petition must fail. Rule 3 of the Rule of Court. Notably. will not invalidate the proceedings and the judgment rendered thereon if the action survives the death of such party. the proceedings conducted and the decision rendered by the trial court are null and void. counsel is obliged to inform the court of the death of his client and give the name and address of the latter‘s legal representative. Mere failure to substitute a deceased party is not sufficient
. however. In such case. the Rules require the substitution of the deceased party by his legal representative or heirs. The complaint for recovery of possession. The trial court. failed to order the substitution of the heirs. The Court has repeatedly declared that failure of the counsel to comply with his duty to inform the court of the death of his client. such that no substitution is effected.or not the RTC decision is void for lack of jurisdiction over the heirs of Juan Napere. The trial court‘s jurisdiction over the case subsists despite the death of the party. quieting of title and damages is an action that survives the death of the defendant. hence. Petitioner alleges that the trial court did not acquire jurisdiction over the persons of the heirs because of its failure to order their substitution pursuant to Section 17. When a party to a pending case dies and the claim is not extinguished by such death. Nonetheless. we hold that the proceedings conducted and the judgment rendered by the trial court are valid.
 In such case. as when the right of the representative or heir is recognized and protected. The records show that the counsel of Juan Napere and petitioner continued to represent them
.ground to nullify a trial court‘s decision. a co-defendant of the deceased. there is really no violation of the right to due process. would be substantially affected by the decision rendered therein. as when the deceased is not represented by any legal representative or heir. that the court nullifies the trial proceedings and the resulting judgment therein. The essence of due process is the reasonable opportunity to be heard and to submit any evidence available in support of one‘s defense. Strictly speaking. noncompliance or belated formal compliance with the Rules cannot affect the validity of a promulgated decision. actively participated in the case. The rule on substitution was crafted to protect every party‘s right to due process. we cannot nullify the proceedings before the trial court and the judgment rendered therein because the petitioner. and present evidence in defense of the deceased. It was designed to ensure that the deceased party would continue to be properly represented in the suit through his heirs or the duly appointed legal representative of his estate. non-compliance with the Rules results in the denial of the right to due process for the heirs who. participate in the case. Thus. The party alleging nullity must prove that there was an undeniable violation of due process. in fact. Formal substitution by heirs is not necessary when they themselves voluntarily appear. the rule on substitution by heirs is not a matter of jurisdiction. In light of these pronouncements. When due process is not violated. though not duly notified of the proceedings. who was. Moreover. but a requirement of due process. it is only when there is a denial of due process.
the petition is DENIED DUE COURSE. dated October 9. through counsel. is AFFIRMED. WHEREFORE. cannot claim denial of due process.even after Juan‘s death. The Decision of the Court of Appeals. CV No. the alleged denial of due process as would nullify the proceedings and the judgment thereon can be invoked only by the heirs whose rights have been violated. Violation of due process is a personal defense that can only be asserted by the persons whose rights have been allegedly violated. Finally. Due process simply demands an opportunity to be heard and this opportunity was not denied petitioner.
. Hence. to participate in the trial court proceedings. in CA-G. 2003. petitioner was able to adequately defend herself and the deceased in the proceedings below.
SO ORDERED. 56457. Petitioner. premises considered. through counsel.R. who had every opportunity and who took advantage of such opportunity.
* REYES. Petitioner. SP No. 2008
x --------------------------------------------------------------------------------x DECISION BRION.
G. No. LITERATO. 59712.R. J. Respondents. 2001 and its related Resolution dated September 4. The assailed Decision dismissed the petition for certiorari filed by
.R.: Before this Court is the Petition for Review on Certiorari under Rule 45 of the Rules of Court assailing the Decision of the Court of Appeals (―CA‖) dated June 26. J. and ** LEONARDO-DE CASTR JJ.. 2001 in CA-G. Chairp TINGA.SECOND DIVISION
JUDGE ANTONIO C. SUMALJAG. BRION.
June 18. 149787 Present:
SPOUSES DIOSDIDIT and MENENDEZ M. and MICHAELES MAGLASANG RODRIGO.
1986 the contract of lease over the whole of Lot 1220 between all the Maglasang heirs (but excluding Josefa) and Vicente Tolo. 1993. Josefa was the sister of Menendez Maglasang Literato (―Menendez‖). while Lot 1220-E was given to Menendez. Lot 1220-D was partitioned to Josefa. Lot 1220-E is theirs by inheritance while 1220-D had been sold to them by Josefa. Baybay. Sumaljag (the ―petitioner‖) in the interlocutory matter outlined below in Civil Cases B-1239 and B1281 before the trial court. Josefa D. Maglasang (―Josefa‖) filed with the Regional Trial Court (―RTC‖). The challenged Resolution denied the petitioner‘s motion for reconsideration. Leyte a complaint (docketed as Civil Case No. They also alleged that the petitioner acted in bad faith in acquiring the two (2) lots because he prepared and notarized on September 26.3906-hectare property (Lot 1220) passed on to them by their parents Cristito and Inecita Diano Maglasang. occupied Lot 1220-D and Lot 1220-E without their (the respondent spouses‘) authority. B-1239) for the nullity of the deed of sale of real property purportedly executed between her as vendor and the spouses Diosdidit and Menendez Literato (the ―respondent spouses‖) as vendees. The complaint alleged that this deed of sale dated October 15. ANTECEDENT FACTS On November 16. The respondent spouses‘ response to the complaint was an amended answer with counterclaim denying that the deed of sale was falsified. 1971 of Lot 1220-D is spurious.petitioner Judge Antonio C. at the instance of Josefa. with the
. Branch 14. They impleaded the petitioner with Josefa as counterclaim defendant on the allegation that the petitioner. They were two (2) of the six (6) heirs who inherited equal parts of a 6.
that this lease contract between Josefa and the petitioner be declared null and void. thus. Josefa died on May 3. Puray‖) the petitioner‘s and Josefa‘s common counsel . The submission alleged that prior to Josefa‘s death. Puray (―Atty. she executed a Quitclaim Deed over Lot 1220-D in favor of Remismundo D. Zenen A. leased it. Atty. On August 13. who had previously sold Lot 1220-D to Menendez. Atty. and damages against the petitioner and Josefa after the RTC dismissed the respondent spouses‘ counterclaim in Civil Case No. together with Lot 1220-E. 1239. 1281 is a complaint that Menendez filed on April 4. the petitioner then knew that Josefa no longer owned Lot 1220-D. The RTC granted the motion in an order dated August 13. 1999.asked the RTC in Civil Case No. 1996 with the RTC for the declaration of the inexistence of lease contract. B-1239 and B-1281.lease running from 1986 to 1991. Menendez further averred that the petitioner and Josefa were in bad faith in entering their contract of lease as they both knew that Josefa did not own the leased lots. 1999 within which to file a formal notice of death and substitution of party. 1999 during the pendency of Civil Case Nos. among others. Civil Case No. 1239 that he be given an extended period or up to September 10. 1999. praying that Josefa – in his capacity as plaintiff and third party counterclaim defendant – be substituted by the petitioner. Menendez prayed. recovery of possession of land. On August 26. Puray filed with the RTC a notice of death and substitution of party. The complaint alleged that Josefa. Maglasang who in turn sold this
. 1999. to the petitioner.
The petitioner went to the CA on a petition for certiorari (docketed as CA-G. Puray filed the notice of death and substitution of party beyond the thirty-day period provided under Section 16. 59712) to question the above interlocutory orders. 2000.
The RTC subsequently denied the petitioner‘s motion for reconsideration in an order dated May 25. the CA dismissed the petition for lack of merit. Rule 3 of the 1997 Rules of Civil Procedure. SP 59712 since: (a) the property under
. Puray‘s motion for substitution and instead ordered the appearance of Michaeles as representative of the deceased Josefa. Binulho.property to the petitioner.R. 2001. 2001. Michaeles Maglasang Rodrigo (―Michaeles‖). Albuera. The appellate court similarly denied the petitioner‘s motion for reconsideration in its Resolution dated September 4. as amended. In a Decision dated June 26. through counsel. objected to the proposed substitution. SP No. Menendez. Leyte. SO ORDERED. as representative of the deceased Josefa Maglasang. the motion is hereby DENIED for lack of merit and instead order the appearance of Mrs. The RTC denied Atty.R. The present petition essentially claims that the CA erred in dismissing CA-G. No. This Order provides:
WHEREFORE. alleging that Atty. She recommended instead that Josefa be substituted by the latter‘s full-blood sister. Mechailes Maglasang-Rodrigo of Brgy. in view of the foregoing.
and the claim is not thereby extinguished. and (e) the petitioner is a transferee pendente lite who the courts should recognize pursuant to Rule 3. without requiring the appointment of an executor or administrator and the court may appoint a guardian ad litem for the minor heirs. it shall be the duty of his counsel to inform the court within thirty (30) days after such death of the fact thereof. (c) without an estate. which provides:
Section 16. duty of counsel. –Whenever a party to a pending action dies. (b) the petitioner had effectively been subrogated to the rights of Josefa over the property under litigation at the time she died. Death of a party. The Governing Rule. as amended. The heirs of the deceased may be allowed to be substituted for the deceased. Section 20 of the Rules of Court. and to give the name and address of his legal representative or representatives. Rule 3 of the 1997 Rules of Civil Procedure. The rule on substitution in case of death of a party is governed by Section 16. the heir who was appointed by the lower court no longer had any interest to represent.litigation was no longer part of Josefa‘s estate since she was no longer its owner at the time of her death. The court shall forthwith order said legal representative or
. THE COURT’S RULING We resolve to deny the petition for lack of merit. Failure of counsel to comply with this duty shall be a ground for disciplinary action. (d) the notice of death was seasonably submitted by the counsel of Josefa to the RTC within the extended period granted.
Barcena (71 SCRA 491 (1976). as follows: . . In the causes of action which survive. B-1239 and B-1281 are actions that survive the death of Josefa. If no legal representative is named by the counsel for the deceased party. to procure the appointment of an executor or administrator for the estate of the deceased. The deceased litigant is herself or himself protected as he/she continues to be properly represented in the suit through the duly appointed legal representative of his estate. within a specified time. and the latter shall immediately appear for and on behalf of the deceased. The question as to whether an action survives or not depends on the nature of the action and the damage sued for. The court charges in procuring such appointment.representatives to appear and be substituted within a period of thirty (30) days from notice. may be recovered as costs. the court may order the opposing party. Pagcor:
―The criteria for determining whether an action survives the death of a plaintiff or petitioner was elucidated upon in Bonilla v. Application of the Governing Rule. We said in Gonzalez v. (Emphasis ours)
The purpose behind this rule is the protection of the right to due process of every party to the litigation who may be affected by the intervening death. if defrayed by the opposing party. Survival of the pending action A question preliminary to the application of the above provision is whether Civil Case Nos. a. or if the one so named shall fail to appear within the specified period. . the wrong complained [of] affects primarily and principally property
and property rights. Albuera. the injury complained of is to the person.‖
. while in the causes of action which do not survive. he did as well inform the lower court that – ―2. Leyte). this is the only representation that counsel can undertake after the death of a client as the fact of death terminated any further lawyer-client relationship. . copy of which is hereto attached as Annex ―B‖ who in turn sold it in favor of JUDGE ANTONIO SUMALJAG. copy of which is hereto attached as Annex ―C‖. the property and rights of property affected being incidental. The duty of counsel under the aforecited provision is to inform the court within thirty (30) days after the death of his client of the fact of death. . and to give the name and address of the deceased‘s legal representative or representatives. Duty of Counsel under the Rule. b. of the fact of her death. In the present case. then we are dealing with actions that survive so that Section 16. 1220-D of Benolho. the injuries to the person being merely incidental. although belatedly. Incidentally. evidenced by a DEED OF ABSOLUTE SALE. However. it is undisputed that the counsel for Josefa did in fact notify the lower court. evidenced by a QUITCLAIM DEED. That before she died she executed a QUITCLAIM DEED in favor of REMISMUNDO D. MAGLASANG over the land in question (Lot No. . Rule 3 must necessarily apply.
Since the question involved in these cases relate to property and property rights.
effectively informed the lower court of the death of litigant Josefa Maglasang so as to free her counsel of any liability for failure to make a report of death under Section 16. counsel satisfactorily explained to the lower court the circumstances of the late reporting. although filed late. We rule that he did not. In our view. is constituted to take over the estate of the deceased. under the rule on settlement of estate of deceased persons. Rule 3. Rule 3 of the Rules of Court. counsel asked that ―the deceased Josefa Maglasang in her capacity as plaintiff and as Third Party Counterclaim Defendant be substituted in the case at bar by JUDGE ANTONIO SUMALJAG whose address is 38 Osmena Street. The ―legal representatives‖ that the provision speaks of. without requiring the appointment of an executor or administrator . . executor or guardian who. Significantly.‖. The reporting issue that goes into the core of this case is whether counsel properly gave the court the name and address of the legal representative of the deceased that Section 16. Under the circumstances. Rather. the person – now the present petitioner . Rule 3 likewise expressly provides that ―the heirs of the deceased may be allowed to be substituted for the deceased. Rule 3 specifies.Further. This notification. . he is a counterclaim co-defendant of the deceased whose proferred justification for the requested substitution is the transfer to him of the interests of the deceased in the litigation prior to her death. refer to those authorized by law – the administrator. The timeliness of the report is therefore a non-issue. Section 16. Ormoc City‖ pursuant to ―Section 16. and the latter in fact granted counsel an extended period.that counsel gave as substitute was not one of those mentioned under Section 16. both the lower court and the CA
. Rule 3 of the 1997 Rules of Civil Procedure‖.
the transfer is in favor of the very same person who is suggested to the court as the substitute. particularly the deceased and her estate. Rule 3 speaks for itself in this respect. Second. the petitioner is not one of those allowed by the Rules to be a substitute. to make such manifestation because he then has lost the authority to speak for and bind his client. after the death of his client. To state the obvious. if only for the reason that it is not for counsel. the petitioner can be said to be a
. We note in this respect that the Notice that counsel filed in fact reflects a claim against the interest of the deceased through the transfer of her remaining interest in the litigation to another party. counsel has every authority to manifest to the court changes in interest that transpire in the course of litigation. Thus. counsel could have validly manifested to the court the transfer of Josefa‘s interests in the subject matter of litigation pursuant to Section 19. cannot at the same time represent and fully protect the interest of the deceased transferor. Interestingly. not after the death of the client when the lawyer-client relationship has terminated. the suggested substitution effectively brings to naught the protection that the Rules intend.were legally correct in not giving effect to counsel‘s suggested substitute. First. the reason for the Rule is to protect all concerned who may be affected by the intervening death. Rule 3. Thus. Section 16. as already mentioned above. The fact that the alleged transfer may have actually taken place is immaterial to this conclusion. at most. Third. plain common sense tells us that the transferee who has his own interest to protect. But this can happen only while the clienttransferor was alive and while the manifesting counsel was still the effective and authorized counsel for the client-transferor.
v. c. Lastly.the heirs of the deceased may be allowed to be substituted for the deceased. a close examination of the documents attached to the records disclose that the subject matter of the Quitclaim allegedly executed by Josefa in favor of Remismundo is Lot 1220-E. as amended. The Heirs as Legal Representatives. Court of Appeals x x x that priority is given to the legal representative of the deceased (the executor or administrator) and that it is only in case of unreasonable delay in the appointment of an executor or administrator. Jr. Cruz. This circumstance alone raises the possibility that there is more than meets the eye in the transactions related to this case. Rule 3 in determining who the appropriate legal representative/s should be in the absence of an executor or administrator. The CA correctly harked back to the plain terms of Section 16. Rule 3 of the 1997 Rules of Court. this Court held:
The pronouncement of this Court in Lawas v. Our decisions on this matter have been clear and unequivocal.transferee pendente lite whose status is pending with the lower court. without requiring the appointment of an executor or administrator. is no longer true. is clear . while the subject matter of the deed of sale executed by Remismundo in the petitioner‘s favor is Lot 1220-D. (Emphasis ours)
. or in cases where the heirs resort to an extra-judicial settlement of the estate that the court may adopt the alternative of allowing the heirs of the deceased to be substituted for the deceased. In San Juan. The second paragraph of the Section 16.
Maglasang. Costs against the petitioner.
Josefa‘s death certificate shows that she was single at the time of her death. in applying Section 16. namely Manuel Lumapas. as correctly held by the CA. Cesar. WHEREFORE.We likewise said in Gochan v. Huros and Regulo) who should be her legal representatives. and Consolacion) and the children of her deceased sister. Lumapas. Maria M. this Court has in previous instances recognized the heirs as proper representatives of the decedent. although also a sister. even when there is already an administrator appointed by the court. as in this case. should be excluded for being one of the adverse parties in the cases before the RTC. her heirs are her surviving sisters (Michaelis. premises considered. Huros Lumapas and Regulo Maquilan – should be her substitutes and are hereby so ordered to be substituted for her in Civil Case Nos. SO ORDERED.
. We AFFIRM the Court of Appeals decision that the surviving heirs of the deceased Josefa – namely Michaelis M. Maria. Bag-aw. Rule 3. and the children of Lourdes M. Young: 
For the protection of the interests of the decedent. Zosima D. B-1239 and B-1281. we DENY the petition for lack of merit. Therefore. Menendez. there is all the more reason to recognize the heirs as the proper representatives of the deceased. Lourdes (Manuel. Zosima. The records do not show that she left a will. When no administrator has been appointed. Cesar Lumapas. Rodrigo. Consolacion M. Cecilio.
and VELASCO. MANUEL TEOXON.
THE LOCAL GOVERNMENT UNIT OF THE CITY OF NAGA.. SR. LEON PALMIANO.
Promulgated: October 30. JJ. No.THIRD DIVISION SPOUSES ANTONIO F. Petitioners. JR. ATTY.:
Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor. NATHAN SERGIO and BENJAMIN NAVARRO. TINGA. CARPIO MORALES. 150135
Present: .R. G. –– James Baldwin
.. Respondents. JR.. ALGURA and LORENCITA S. ALGURA..versus Chairperson. ENGR.J. QUISUMBING. J. 2006
DECISION VELASCO. CARPIO. J.
The Constitution affords litigants—moneyed or poor—equal access to the courts. the Court gives due course to the instant petition sanctioned under Section 2(c) of Rule 41 on Appeal from the RTCs.00 monthly. 1999 for damages against the Naga City Government and its officers.
. Since the instant petition involves only a question of law based on facts established from the pleadings and documents submitted by the parties. and implemented pursuant to the intent and spirit of this constitutional provision. laws and rules must be formulated. et al.J. Branch 27. though one of the essential elements in court procedures. it specifically provides that poverty shall not bar any person from having access to the courts. 2001 Order of the Regional Trial Court (RTC) of Naga City. As such. moreover. The Case This Petition for Review on Certiorari seeks the annulment of the September 11.000. The Local Government Unit of the City of Naga. Algura v. Accordingly. interpreted. Algura and Lorencita S. filing fees. should not be an obstacle to poor litigants‘ opportunity to seek redress for their grievances before the courts. spouses Antonio F. and governed by Rule 45 of the 1997 Rules of Civil Procedure. arising from the alleged illegal demolition of their residence and boarding house and for payment of lost income derived from fees paid by their boarders amounting to PhP 7. The Facts On September 1. 1999.J.. dismissing the case for failure of petitioners Algura spouses to pay the required filing fees. Algura and Lorencita S. 99-4403 entitled Spouses Antonio F. in Civil Case No. Algura filed a Verified Complaint dated August 30.
 granted petitioners‘ plea for exemption from filing fees. Atienza of the Naga City RTC. arguing that the defenses of the petitioners in the complaint had no cause of action. 1999. among others. the meager income from Lorencita Algura‘s sari-sari store and Antonio Algura‘s small take home pay became insufficient for the expenses of the Algura spouses and their six (6) children for their basic needs including food. and schooling.
.Simultaneously. respondents filed an Answer with Counterclaim dated October 10. in the September 1.474.00 from their boarders‘ rentals.616.99) for [the month of] July 1999. Executive Judge Jose T. showing a gross monthly income of Ten Thousand Four Hundred Seventy Four Pesos (PhP 10. to which petitioner Antonio Algura‘s Pay Slip No. the Alguras allegedly lost a monthly income of PhP 7. bills. With the loss of the rentals. 2457360 (Annex ―A‖ of motion) was appended. 1999.00) and a net pay of Three Thousand Six Hundred Sixteen Pesos and Ninety Nine Centavos (PhP 3. Finding that petitioners‘ motion to litigate as indigent litigants was meritorious. Also attached as Annex ―B‖ to the motion was a July 14. which stated that petitioners had no property declared in their name for taxation purposes. On October 13. petitioners filed an Ex-Parte Motion to Litigate as Indigent Litigants. clothes. Meanwhile. and said structure was a nuisance per se.000. 1999 Order. the spouses‘ boarding house blocked the road right of way. 1999 Certification issued by the Office of the City Assessor of Naga City. as a result of respondent Naga City Government‘s demolition of a portion of petitioners‘ house.
On April 14. respondents filed a Motion to Disqualify the Plaintiffs for Non-Payment of Filing Fees dated March 10. from which they earned more than PhP 3. Sta.. 1999. respondents claimed that petitioners‘ second floor was used as their residence and as a boarding house. They asserted that in addition to the more than PhP 3.000. 2000. petitioners subsequently interposed their Opposition to the Motion to respondents‘ motion to disqualify them for non-payment of filing fees.Praying that the counterclaim of defendants (respondents) be dismissed. petitioners then filed their Reply with Ex-Parte Request for a Pre-Trial Setting before the Naga City RTC on October 19. 2000. spouse Lorencita Algura also had a mini-store and a computer shop on the ground floor of their residence along Bayawas St. On March 13.00 net income of petitioner Antonio Algura.
.00 a month. it was claimed that petitioners derived additional income from their computer shop patronized by students and from several boarders who paid rentals to them. 2000. Also. Naga City. In addition. the Naga City RTC issued an Order disqualifying petitioners as indigent litigants on the ground that they failed to substantiate their claim for exemption from payment of legal fees and to comply with the third paragraph of Rule 141. Cruz. Section 18 of the Revised Rules of Court—directing them to pay the requisite filing fees. On February 3. Hence. 2000. 2000.000. a pre-trial was held wherein respondents asked for five (5) days within which to file a Motion to Disqualify Petitioners as Indigent Litigants. respondents concluded that petitioners were not indigent litigants. On March 28. who is a member of the Philippine National Police.
Section 18 of the Rules of Court and in support of their claim to be declared as indigent litigants. petitioners filed a Motion for Reconsideration of the April 14. Also. Rule 141. More so. to comply with the requirements of then Rule 141. 2000. that she personally knew spouses Antonio Algura and Lorencita Algura.500. petitioners also submitted the affidavit of Erlinda Bangate. 2000 Order. who were her neighbors. To buttress their position as qualified indigent litigants. and their six (6) minor children had to rely mainly on her husband‘s salary as a policeman which provided them a monthly amount of PhP 3. who attested under oath. On May 13. that they derived substantial income from their boarders. She. the trial court issued an Order giving petitioners the opportunity to comply with the requisites laid down in Section 18. were not enough to pay the family‘s basic necessities. petitioner Lorencita Algura claimed that the demolition of their small dwelling deprived her of a monthly income amounting to PhP 7. 2000. 2000. On May 8.000. her husband. plus the salary of her husband. In her May 13. On May 5. the meager net income from her small sari-sari store and the rentals of some boarders. 2000 Affidavit. according to her.On April 28. respondents then filed their Comment/Objections to petitioner‘s Motion for Reconsideration. for them to qualify as indigent litigants. they did not own any real property as certified by the assessor‘s office of Naga City. 2000. more or less. petitioners submitted their Compliance attaching the affidavits of petitioner Lorencita Algura and Erlinda Bangate. that they lost said income from their boarders‘ rentals when the Local Government
through its officers. Judge Barsaga ratiocinated that the pay slip of Antonio F. and the meager salary of Antonio Algura were insufficient for their basic necessities like food and clothing.J.00 which amount [was] over and above the amount mentioned in the first paragraph of Rule 141. demolished part of their house because from that time. 2000 Affidavit.00 a month and shall not own real estate with an assessed value of PhP 50.‖ Said rule provides that the gross income of the litigant should not exceed PhP 3. 2000 Order denying the petitioners‘ Motion for Reconsideration. the Alguras instituted the instant petition raising a solitary issue for the consideration of the Court: whether petitioners should be considered as indigent litigants who qualify for exemption from paying filing fees. Naga City RTC Acting Presiding Judge Andres B. nowhere was it stated that she and her immediate family did not earn a gross income of PhP 3.000. the boarders.00. Jr. The Ruling of the Court
. and that she knew that petitioners did not own any real property. Barsaga.Unit of the City of Naga. The trial court found that. The Issue Unconvinced of the said ruling.000. Algura‘s May 13. in Lorencita S. Thereafter.000.474. only a few boarders could be accommodated. considering that the Algura spouses had six (6) children. that the income from the small store. issued his July 17. Algura showed that the ―GROSS INCOME or TOTAL EARNINGS of plaintiff Algura [was] ₧10.00. Section 18 for pauper litigants residing outside Metro Manila.
Rule 141 on Legal Fees. certificate of the corresponding provincial. 64274).—Any court may authorize a litigant to prosecute his action or defense as a pauper upon a proper showing that he has no means to that effect by affidavits. Pauper litigant.] once given[. When the Rules of Court took effect on January 1. did not contain any provision on pauper litigants. Makasiar. on the other hand. through its Chairman. in Administrative Matter No. the rule on pauper litigants was found in Rule 3. A review of the history of the Rules of Court on suits in forma pauperis (pauper litigant) is necessary before the Court rules on the issue of the Algura spouses‘ claim to exemption from paying filing fees. then Justice Felix V. printed record and printed brief. The legal fees shall be a lien to any judgment rendered in the case [favorable] to the pauper. 1984. Section 22 which provided that:
SECTION 22. city or municipal treasurer. or otherwise. 1964. unless the court otherwise provides. Such authority[. to revise the fees in Rule 141 of the Rules of Court to generate funds to effectively cover administrative costs for services rendered by the courts. On July 19.R. 836-389-0 (formerly G. the Court. approved the recommendation of the Committee on the Revision of Rates and Charges of Court Fees. A provision on pauper litigants was inserted which
From the same Rules of Court.] shall include an exemption from payment of legal fees and from filing appeal bond.The petition is meritorious.
printed record and printed brief. To be entitled to the exemption herein provided.000. Rule 3. Pauper-litigants exempt from payment of court fees.—Pauper-litigants include wage earners whose gross income do not exceed P2.000. Section 22 of the Revised Rules of Court was superseded by Rule 3. which became effective on July 1. and P1.
Such exemption shall include exemption from payment of fees for filing appeal bond. Section 21 of said 1997 Rules of Civil Procedure. nor own any real property with the assessed value afore-mentioned [sic]. The legal fees shall be a lien on the monetary or property judgment rendered in favor of the pauper-litigant.
When the Rules of Court on Civil Procedure were amended by the 1997 Rules of Civil Procedure (inclusive of Rules 1 to 71) in Supreme Court Resolution in Bar Matter No. claim or defense as an
. the pauper-litigant shall execute an affidavit that he does not earn the gross income abovementioned.000. 803 dated April 8.00. city or town assessor or treasurer. as follows:
SECTION 21. supported by a certification to that effect by the provincial.00 a month or P18. or not more than P18. 1997.00 a month or P24.000.—A party may be authorized to litigate his action.500.00 a year for those residing outside Metro Manila.00 as the case may be.reads:
SECTION 16.00 a year for those residing in Metro Manila.000. Indigent party. or those who do not own real property with an assessed value of not more than P24. 1997.
No.000. there was no amendment made on Rule 141. Section 16 on pauper litigants. Any adverse party may contest the grant of such authority at any time before judgment is rendered by the trial court. however. 2000. is satisfied that the party is one who has no money or property sufficient and available for food. and
. If the court should determine after hearing that the party declared as an indigent is in fact a person with sufficient income or property.00) pesos a month if residing in Metro Manila. Such authority shall include an exemption from payment of docket and other lawful fees. The amount of the docket and other lawful fees which the indigent was exempted from paying shall be a lien on any judgment rendered in the case favorable to the indigent. On March 1. making it Section 18. shelter and basic necessities for himself and his family. Rule 141 on Legal Fees was amended by the Court in A. which now reads:
SECTION 18. Pauper-litigants exempt from payment of legal fees. whereby certain fees were increased or adjusted. execution shall issue for the payment thereof. without prejudice to such other sanctions as the court may impose. 00-2-01-SC.—Pauper litigants (a) whose gross income and that of their immediate family do not exceed four thousand (P4. the proper docket and other lawful fees shall be assessed and collected by the clerk of court. In this Resolution. the Court amended Section 16 of Rule 141. upon an ex parte application and hearing.M.
At the time the Rules on Civil Procedure were amended by the Court in Bar Matter No. and of transcripts of stenographic notes which the court may order to be furnished him.indigent if the court. unless the court otherwise provides. If payment is not made within the time fixed by the court. 803.
It then became Section 19 of Rule 141. Section 18. 2004. without prejudice to whatever criminal liability may have been incurred. To be entitled to the exemption herein provided. nor do they own any real property with the assessed value aforementioned. there were two existing rules on pauper litigants. 2000. on March 1.00) pesos a month if residing outside Metro Manila. Rule 3. and (b) who do not own real property with an assessed value of more than fifty thousand (P50.
It can be readily seen that the rule on pauper litigants was inserted in Rule 141 without revoking or amending Section 21 of Rule 3.00) pesos shall be exempt from the payment of legal fees. the litigant shall execute an affidavit that he and his immediate family do not earn the gross income abovementioned. supported by an affidavit of a disinterested person attesting to the truth of the litigant‘s affidavit. On August 16. Thus.three thousand (P3.000. 04-2-04-SC. unless the court otherwise provides. The legal fees shall be a lien on any judgment rendered in the case favorably to the pauper litigant. namely. Any falsity in the affidavit of a litigant or disinterested person shall be sufficient cause to strike out the pleading of that party. which provides for the exemption of pauper litigants from payment of filing fees.000. Section 21 and Rule 141. to wit:
. Section 18 of Rule 141 was further amended in Administrative Matter No. which became effective on the same date.
Any falsity in the affidavit of litigant or disinterested person shall be sufficient cause to dismiss the complaint or action or to strike out the pleading of that party. and they do not own any real property with the fair value aforementioned. 2004 amendment. shall be attached to the litigant‘s affidavit.SEC.000. the ceiling for the gross income of litigants
. To be entitled to the exemption herein provided. without prejudice to whatever criminal liability may have been incurred. if any. (Emphasis supplied. the litigant shall execute an affidavit that he and his immediate family do not earn a gross income abovementioned.00) PESOS SHALL BE EXEMPT FROM PAYMENT OF LEGAL FEES.)
Amendments to Rule 141 (including the amendment to Rule 141. 19. The current tax declaration. supported by an affidavit of a disinterested person attesting to the truth of the litigant’s affidavit. Specifically. Indigent litigants exempt from payment of legal fees. Section 18) were made to implement RA 9227 which brought about new increases in filing fees.–INDIGENT LITIGANTS (A) WHOSE GROSS INCOME AND THAT OF THEIR IMMEDIATE FAMILY DO NOT EXCEED AN AMOUNT DOUBLE THE MONTHLY MINIMUM WAGE OF AN EMPLOYEE AND (B) WHO DO NOT OWN REAL PROPERTY WITH A FAIR MARKET VALUE AS STATED IN THE CURRENT TAX DECLARATION OF MORE THAN THREE HUNDRED THOUSAND (P300. The legal fees shall be a lien on any judgment rendered in the case favorable to the indigent litigant unless the court otherwise provides. in the August 16.
Even if there was an amendment to Rule 141 on August 16. to be able to accommodate more indigent litigants and promote easier access to justice by the poor and the marginalized in the wake of these new increases in filing fees. 99-4403) was filed on September 1.00 a month in Metro Manila and PhP 3. It is undisputed that the Complaint (Civil Case No. 1984 up to February 28. 2000 and July 17. 1997 and Rule 141. Section 21 on Indigent Party which took effect on July 1.000. there was still no amendment or recall of Rule 3. Section 16 on Pauper Litigants which became effective on July 19. With this historical backdrop. the Naga City RTC.000.000. and the maximum value of the property owned by the applicant was increased from an assessed value of PhP 50. Section 18 on Legal Fees when the applicable rules at that time were Rule 3. 2000 Orders.000. 2004.000.00 a month outside Metro Manila.000.00 a month or PhP 24.applying for exemption and that of their immediate family was increased from PhP 4.00. The old Section 16. Rule 141 requires applicants to file an exparte motion to litigate as a pauper litigant by submitting an affidavit that they do not have a gross income of PhP 2. 2000.000. let us now move on to the sole issue—whether petitioners are exempt from the payment of filing fees. However.00 a month or PhP 18. 1999.00 a year for those residing outside
. to double the monthly minimum wage of an employee.500. incorrectly applied Rule 141. in its April 14. Section 21 on indigent litigants.00 a year for those residing in Metro Manila and PhP 1.00 to a maximum market value of PhP 300.
it is clear that the gross monthly income of PhP 10.00 monthly income threshold. However with respect to the income requirement. the pay slip of petitioner Antonio F.00 income of Lorencita Algura when combined.00. Section 16 which was in effect at the time of the filing of the application on September 1. Algura and the PhP 3. Thus.500. The trial court was therefore correct in disqualifying petitioners Alguras as indigent litigants although the court should have applied Rule 141. and a Certification of the Naga City assessor stating that petitioners do not have property declared in their names for taxation.000. the income requirement was not satisfied.00 monthly income threshold prescribed by then Rule 141. Undoubtedly.000. Section 16 and therefore.00 or not more than PhP 18.00. and b) property requirement––they should not own property with an assessed value of not more than PhP 18.00. 1999. Section 16 on March 1. Even if Rule 141. petitioners do not own real property as shown by the Certification of the Naga City assessor and so the property requirement is met.474.000. In the case at bar. there are two requirements: a) income requirement—the applicants should not have a gross monthly income of more than PhP 1. petitioners however argue in their Motion for Reconsideration of the April 14.500.00 as the case may be. Unrelenting.00 income of petitioners was beyond the PhP 3.000.000.474. still the application could not have been granted as the combined PhP 13.Metro Manila or those who do not own real property with an assessed value of not more than PhP 24. 2000) were applied. Algura showing a gross monthly income of PhP 10. Section 18 (which superseded Rule 141. were above the PhP 1.00 of petitioner Antonio F.474. petitioners Alguras submitted the Affidavits of petitioner Lorencita Algura and neighbor Erlinda Bangate. 2000 Order disqualifying them as
which took effect on January 1.indigent litigants that the rules have been relaxed by relying on Rule 3. Section 19 on August 16. Section 21 as having been superseded by Rule 141. 1984 through A. 1994 to have been amended and superseded by Rule 141. For one. Section 21 of the 1997 Rules of Civil procedure which authorizes parties to litigate their action as indigents if the court is satisfied that the party is ―one who has no money or property sufficient and available for food. The fact that Section 22 which became Rule 3. 83-6-389-0. No. Section 16 on Legal Fees. Section 16 and discard Rule 3. the history of the two seemingly conflicting rules readily reveals that it was not the intent of the Court to consider the old Section 22 of Rule 3. The position of petitioners on the need to use Rule 3. could have already deleted Section 22 from Rule 3 when it amended Rules 1 to 71 and approved the 1997 Rules of Civil Procedure. Section 18 on March 1. 2000 and subsequently amended by Rule 141. Section 21 on such applications or should the court apply only Rule 141. The Court rules that Rule 3. shelter and basic necessities for himself and his family. which is now the present rule) are still valid and enforceable rules on indigent litigants. 2003. Section 21 on
. Section 21 on their application to litigate as indigent litigants brings to the fore the issue on whether a trial court has to apply both Rule 141. which took effect on July 19. which took effect on July 1. 1997.M. Section 21 and Rule 141. Section 16 and Rule 3. Section 16 (later amended as Rule 141. Section 21 on Indigent Party. Section 16.‖ The trial court did not give credence to this view of petitioners and simply applied Rule 141 but ignored Rule 3. If that is the case. then the Supreme Court. upon the recommendation of the Committee on the Revision on Rules.
Rule 141 on indigent litigants was amended twice: first on March 1. This clearly evinces the desire of the Court to maintain the two (2) rules on indigent litigants to cover applications to litigate as an indigent litigant. and will not be decreed. As laws are presumed to be passed with deliberation and with full knowledge of all existing ones on the subject. unless the repugnancy between the two is not only irreconcilable. or unless the reason for the earlier act is beyond peradventure removed.indigent litigant was retained in the rules of procedure. Implied repeals are frowned upon unless the intent of the framers of the rules is unequivocal. and flowing necessarily from the language used. unless the later act fully embraces the subject matter of the earlier. Hence. it is but reasonable to conclude that in passing a statute[. It may be argued that Rule 3. despite these two amendments. there was no attempt to delete Section 21 from said Rule 3. every effort must be used to make all acts stand and if. by any reasonable construction they can be reconciled. This position is bereft of merit. Section 21 has been impliedly repealed by the recent 2000 and 2004 amendments to Rule 141 on legal fees. unless it is manifest that the legislature so intended. but also clear and convincing. the later act will not operate as a repeal of the
. Furthermore. 2000 and the second on August 16. even elaborating on the meaning of an indigent party.] it was not intended to interfere with or abrogate any former law relating to same matter. and yet. and was also strengthened by the addition of a third paragraph on the right to contest the grant of authority to litigate only goes to show that there was no intent at all to consider said rule as expunged from the 1997 Rules of Civil Procedure. 2004. It has been consistently ruled that:
(r)epeals by implication are not favored.
every statute should be construed in such a way that will harmonize it with existing laws. the Court finds that the two rules can and should be harmonized. This principle is expressed in the legal maxim ‗interpretare et concordare leges legibus est optimus interpretandi. Section 21 has been superseded and impliedly amended by Section 18 and later Section 19 of Rule 141. Section 19 because it is a settled principle that when conflicts are seen between two provisions.‘ that is. therefore. ―every statute [or rule] must be so construed and harmonized with other statutes [or rules] as to form a uniform system of jurisprudence. the two (2) rules can stand together and are compatible with each other. this Court enunciated that in the interpretation of seemingly conflicting laws. efforts must be made to first harmonize them. the court shall scrutinize the affidavits and supporting documents submitted by the applicant to determine if the applicant complies with the income and property standards prescribed in the present
. When an application to litigate as an indigent litigant is filed. This Court thus ruled:
Consequently. all efforts must be made to harmonize them.earlier. Inc. to interpret and to do it in such a way as to harmonize laws with laws is the best method of interpretation.‖ In Manila Jockey Club.
Instead of declaring that Rule 3. Hence. The Court opts to reconcile Rule 3. Section 21 and Rule 141. v.
In the light of the foregoing considerations. Court of Appeals. (Emphasis supplied).
possibly based on newly discovered evidence not obtained at the time the application was heard. However. shelter and basic necessities for himself and his family.00). Section 21 does not clearly draw the limits of the entitlement to the exemption.000. if the trial court finds that one or both requirements have not been met. execution shall issue or the payment of prescribed fees shall be made. the adverse party may adduce countervailing evidence to disprove the evidence presented by the applicant. If the trial court finds that the applicant meets the income and property requirements. then it would set a hearing to enable the applicant to prove that the applicant has ―no money or property sufficient and available for food. the applicant‘s gross income and that of the applicant‘s immediate family do not exceed an amount double the monthly minimum wage of an employee. Section 21 of Rule 3 also provides that the adverse party may later still contest the grant of such authority at any time before judgment is rendered by the trial court.‖ In that hearing. and the applicant does not own real property with a fair market value of more than Three Hundred Thousand Pesos (PhP 300. the authority to litigate as indigent litigant is automatically granted and the grant is a matter of right. without prejudice to such other sanctions as the court may impose. the proper docket and other lawful fees shall be assessed and collected by the clerk of court.Section 19 of Rule 141—that is. In addition. the trial court must use sound
. The Court concedes that Rule 141. If payment is not made within the time fixed by the court. that the party declared as an indigent is in fact a person with sufficient income or property. Section 19 provides specific standards while Rule 3. If the court determines after hearing. after which the trial court will rule on the application depending on the evidence adduced. Knowing that the litigants may abuse the grant of authority.
Recapitulating the rules on indigent litigants. the trial court should have applied Rule 3. Since this Court is not a trier of facts. On the other hand. then the application should not be denied outright. Section 21 to enable the petitioners to adduce evidence to show that they didn‘t have property and money sufficient and available for food. instead. The trial court must also guard against abuse and misuse of the privilege to litigate as an indigent litigant to prevent the filing of exorbitant claims which would otherwise be regulated by a legal fee requirement.discretion and scrutinize evidence strictly in granting exemptions. and basic necessities for them and their family. when the application does not satisfy one or both requirements. therefore. In that hearing. the trial court should have called a hearing as required by Rule 3. Section 21 to the application of the Alguras after their affidavits and supporting documents showed that petitioners did not satisfy the twin requirements on gross monthly income and ownership of real property under Rule 141. shelter. Instead of disqualifying the Alguras as indigent litigants. it will have to remand the case to the trial court to determine whether petitioners can be considered as indigent litigants using the standards set in Rule 3. the court should apply the ―indigency test‖ under Section 21 of Rule 3 and use its sound discretion in determining the merits of the prayer for exemption. aware that the applicant has not hurdled the precise standards under Rule 141. Thus. the respondents would have had the right to also present evidence to refute the allegations and evidence in support of the application of the petitioners to litigate as indigent litigants. then the grant of the application is mandatory.
. if the applicant for exemption meets the salary and property requirements under Section 19 of Rule 141. Section 21.
Section 11 of the 1987 Constitution. and the September 11. Panganiban makes it imperative that the courts shall not only safeguard but also enhance the rights of individuals—which are considered sacred under the 1987 Constitution. Furthermore.. the judicial philosophy of Liberty and Prosperity of Chief Justice Artemio V. Without doubt. Likewise. SO ORDERED. the July 17. the Naga City RTC is ordered to set the ―Ex-Parte Motion to Litigate as Indigent Litigants‖ for hearing and apply Rule 3. the petition is GRANTED and the April 14. placed prime importance on ‗easy access to justice by the poor‘ as one of its six major components. WHEREFORE. the underprivileged. 2000 Order granting the disqualification of petitioners. initiated by former Chief Justice Hilario G. RTC-99-4403 before the Naga City RTC. Davide. Branch 27 are ANNULLED and SET ASIDE. 2001 Order dismissing the case in Civil Case No.
. 2000 Order denying petitioners‘ Motion for Reconsideration. Jr.Access to justice by the impoverished is held sacrosanct under Article III. The Action Program for Judicial Reforms (APJR) itself. No costs. and the marginalized. Section 21 of the 1997 Rules of Civil Procedure to determine whether petitioners can qualify as indigent litigants. one of the most precious rights which must be shielded and secured is the unhampered access to the justice system by the poor.
INC. J.-x DECISION SERENO.
Promulgated: June 18. G. Intervenor.. 2012
x---------------------------------------------. SERENO. Petitioners.
J. 179018 Present: CARPIO. NOTARY PUBLIC JOHN DOE. JJ. and REYES. and HEALTH MARKETING TECHNOLOGIES... No. BRION. KING & SONS CO. PEREZ..versus -
UNION BANK OF THE PHILIPPINES. J.
.SECOND DIVISION PAGLAUM MANAGEMENT & DEVELOPMENT CORP..R. and REGISTER OF DEEDS of Cebu City and Cebu Province Respondents. Chairperson..:
and his mother and siblings. – The venue of all suits and actions arising out of or in connection with this Mortgage shall be in Cebu City Metro Manila or in the place where any of the Mortgaged Properties is located. Dy. the parties hereto waiving any other venue. It must be noted that the Real Estate Mortgage. – The venue of all suits and actions arising out of or in connection with this Mortgage shall be in Makati. PAGLAUM executed three Real Estate Mortgages on behalf of HealthTech and in favor of Union Bank. respondent Union Bank of the Philippines (Union Bank) extended HealthTech a credit line in the amount of ₱10. (Emphasis supplied.)
Meanwhile. the xxxxxxxxxxxxx any other venue. the same provision in the Real Estate Mortgage
. Inc. originally stipulates:
Section 9. at the absolute option of the Mortgagee. and T68516. the following version appears:
Section 9. on the provision regarding the venue of all suits and actions arising out of or in connection therewith. Venue.000. (Emphasis supplied. assailing the Decision dated 31 May 2007 and Resolution dated 24 July 2007 issued by the Court of Appeals (CA).000. 112488. On 3 February 1994. the president of petitioner Health Marketing Technologies.)
However. under the two Real Estate Mortgages dated 11 February 1994. at the absolute option of the Mortgagee. 112489. These lots are co-owned by Benjamin B.Before this Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court. Petitioner Paglaum Management and Development Corporation (PAGLAUM) is the registered owner of three parcels of land located in the Province of Cebu and covered by Transfer Certificate of Title (TCT) Nos. Venue. Metro Manila or in the place where any of the Mortgaged Properties is located. (HealthTech). To secure this obligation.
directing Union Bank to refrain from exercising acts of ownership over the foreclosed
. Since HealthTech defaulted on its payment. Union Bank extrajudicially foreclosed the mortgaged properties. was then issued a Certificate of Sale dated 24 May 2001. prompting Union Bank to send a demand letter dated 9 October 2000.
HealthTech and Union Bank agreed to subsequent renewals and increases in the credit line. Despite the Restructuring Agreement. HealthTech filed a Complaint for Annulment of Sale and Titles with Damages and Application for Temporary Restraining Order and Writ of Injunction dated 23 October 2001. on 11 December 1998. it filed a Petition for Consolidation of Title. according to HealthTech. with the total amount of debt reaching ₱36. Thereafter. which states that any action or proceeding arising out of or in connection therewith shall be commenced in Makati City. Unfortunately. praying for: (a) the issuance of a temporary restraining order.dated 22 April 1998 contains the following:
Section 9. with both parties waiving any other venue.500. The bank. HealthTech failed to pay its obligation. and later a writ of preliminary injunction. as the sole bidder in the auction sale. Venue. unless HealthTech settled its account in full. both parties entered into a Restructuring Agreement. at the absolute option of the Mortgagee. the parties hereto waiving any other venue. Consequently. – The venue of all suits and actions arising out of or in connection with this Mortgage shall be in _________ or in the place where any of the Mortgaged Properties is located. stating that the latter would be constrained to institute foreclosure proceedings.000. Thus. the 1997 Asian financial crisis adversely affected its business and caused it difficulty in meeting its obligations with Union Bank.
properties. 134). Union Bank contends that: (a) the Restructuring Agreement is applicable only to the contract of loan. On 23 November 2001. Meanwhile. and (b) the agreement on the choice of venue must be interpreted with the convenience of the parties in mind and the view that any obscurity therein was caused by Union Bank. RTC Br. intervenor J. Makati City. (b) the annulment of the extra-judicial foreclosure of real properties. 134 granted this Motion in its Order dated 11 March 2003. resulting in the dismissal of the case. Branch 134 (RTC Br. and (e) the payment of damages. (c) the cancellation of the registration of the Certificates of Sale and the resulting titles issued. 01-1567 and raffled to the Regional Trial Court. PAGLAUM and HealthTech elevated the case to the CA. King & Sons Company. as well as the dissolution of the Writ of Preliminary Injunction. (b) improper venue. Inc. Union Bank filed a Motion to Dismiss on the following grounds: (a) lack of jurisdiction over the issuance of the injunctive relief. and (b) the mortgage contracts explicitly state that the choice of venue exclusively belongs to it. On the other hand. which issued in favor of PAGLAUM and HealthTech a Writ of Preliminary Injunction restraining Union Bank from proceeding with the auction sale of the three mortgaged properties. National Capital Judicial Region. adopts the position of Union Bank and reiterates the position that Cebu City
. PAGLAUM and HealthTech argue that: (a) the Restructuring Agreement governs the choice of venue between the parties. (d) the reinstatement of PAGLAUM‘s ownership over the subject properties. In the instant Petition. The case was docketed as Civil Case No. and (c) lack of authority of the person who signed the Complaint. It likewise denied the subsequent Motion for Reconsideration filed by PAGLAUM and HealthTech. and not to the Real Estate Mortgage. which affirmed the Order dated 11 March 2003 and denied the Motion for Reconsideration.
– Actions affecting title to or possession of real property. or interest therein. shall be commenced and tried in the proper court which has jurisdiction over the area wherein the real property involved. It is a real action. being an action for Annulment of Sale and Titles resulting from the extrajudicial foreclosure by Union Bank of the mortgaged real properties. (Muñoz v. Forcible entry and detainer actions shall be commenced and tried in the municipal trial court of the municipality or city wherein
. Court of Appeals. The sole issue to be resolved is whether Makati City is the proper venue to assail the foreclosure of the subject real estate mortgage. viz:
An action to annul a real estate mortgage foreclosure sale is no different from an action to annul a private sale of real property. under the law. or a portion thereof. While it is true that petitioner does not directly seek the recovery of title or possession of the property in question. The prevalent doctrine is that an action for the annulment or rescission of a sale of real property does not operate to efface the fundamental and prime objective and nature of the case. 737. 01-1567 should be governed by the following relevant provisions of the Rules of Court (the Rules):
Rule 4 VENUE OF ACTIONS Section 1. his action for annulment of sale and his claim for damages are closely intertwined with the issue of ownership of the building which. In Fortune Motors v. This Court rules in the affirmative.is the proper venue. 87 Phil.
Being a real action. 1950). which is to recover said real property. the recovery of which is petitioner‘s primary objective. the filing and trial of the Civil Case No. is considered immovable property. is classified as a real action. is situated. Llamas. Venue of real actions. Civil Case No. 01-1567. this Court held that a case seeking to annul a foreclosure of a real estate mortgage is a real action.
not as limiting venue to the specified place. or a portion thereof. the Rules provide an exception. is situated. (Emphasis supplied. When Rule not applicable. Lantion. xxx xxx xxx
Clearly. In the absence of qualifying or restrictive words. all the mortgaged properties are located in the Province of Cebu.the real property involved. real actions shall be commenced and tried in the court that has jurisdiction over the area where the property is situated. following the general rule. and not in Makati. the general rules on venue of actions shall not apply where the parties. before the filing of the action. as follows:
At the outset. Sec. in that real actions can be commenced and tried in a court other than where the property
. have validly agreed in writing on an exclusive venue. the stipulation should be deemed as merely an agreement on an additional forum. (Emphasis supplied. However. this Court explained that a venue stipulation must contain words that show exclusivity or restrictiveness. is not enough to preclude parties from bringing a case in other venues. The parties must be able to show that such stipulation is exclusive. 3.)
According to the Rules. however. or (b) Where the parties have validly agreed in writing before the filing of the action on the exclusive venue thereof. Thus. The mere stipulation on the venue of an action. In this case. we must make clear that under Section 4 (b) of Rule 4 of the 1997 Rules of Civil Procedure. – This Rule shall not apply – (a) In those cases where a specific rule or law provides otherwise. PAGLAUM and HealthTech should have filed their case in Cebu.)
In Sps. Lantin v. the words “exclusively” and “waiving for this purpose any other venue” are restrictive and used advisedly to meet the requirements.
or that in the Restructuring Agreement. the Agreement and this Mortgage. the Agreement. and c) Any and all expenses which may be incurred in collecting any and all of the above and in enforcing any and all
. amended or novated are in the nature of new. extension. This Court rules that the venue stipulation in the Restructuring Agreement should be controlling. extensions. Secured Obligations. the Agreement and this Mortgage. amendment or novation of the Notes. The only dispute is whether the venue that should be followed is that contained in the Real Estate Mortgages. The Real Estate Mortgages were executed by PAGLAUM in favor of Union Bank to secure the credit line extended by the latter to HealthTech. as contended by Union Bank. which secures succeeding obligations. All three mortgage contracts contain a dragnet clause. separate or additional obligations. and this Mortgage. amendments or novations thereof. the parties claim that such an agreement exists. whether presently owing or hereinafter incurred and whether or not arising from or connected with the Agreement. extended. (ii) any and all instruments or documents issued upon the renewal. to wit:
Section 1. as posited by PAGLAUM and HealthTech. b) All other obligations of the Borrower and/or the Mortgagor in favor of the Mortgagee. irrespective of whether such obligations as renewed.is situated in instances where the parties have previously and validly agreed in writing on the exclusive venue thereof. and (iii) any and all instruments or documents issued pursuant to the Notes. the Notes and/or this Mortgage. – The obligations secured by this Mortgage (the ―Secured Obligations‖) are the following: a) All the obligations of the Borrower and/or the Mortgagor under: (i) the Notes. incurred by HealthTech from Union Bank. In the case at bar. including renewals.
Real Estate Mortgage dated February 11. shall continue to be secured by the following security arrangements (the “Collaterals”): a. amended or novated.
On the other hand. – The principal. are in the nature of new. 1994 executed by Paglaum Management and Development Corporation over a 474 square meter property covered by TCT No. extension. d. interests. 112489. and all other instruments or documents covering the Indebtedness or otherwise made pursuant to this Restructuring Agreement (the ―Secured Obligations‖). including the renewal. as renewed.)
. the Restructuring Agreement was entered into by HealthTech and Union Bank to modify the entire loan obligation. separate or additional obligations. b.796 square meter property covered by TCT No. the existing Collaterals. T-68516. 1994 executed by Paglaum Management and Development Corporation over a 2. Real Estate Mortgage dated February 11. Section 7 thereof provides:
Security. (Emphasis supplied. powers and remedies of the Mortgagee under this Mortgage. Continuing Surety Agreement of Benjamin B.711 square meter property covered by TCT No.
Without need of any further act and deed. 1998 executed by Paglaum Management and Development Corporation over a 3. Dy.rights. penalties and other charges for which the BORROWER may be bound to the BANK under the terms of this Restructuring Agreement. shall remain in full force and effect and continue to secure the payment and performance of the obligations of the BORROWER arising from the Notes and this Restructuring Agreement. Real Estate Mortgage dated April 22. irrespective of whether the obligations arising out of or in connection with this Restructuring Agreement. extended. c. 112488. amendment or novation of this Restructuring Agreement.
in the absence of qualifying or restrictive words. Following the ruling in Sps. The
. the Petition for Review is GRANTED. 01-1567 by RTC Br. Lantin as earlier quoted. with the Real Estate Mortgages being explicitly defined as such. WHEREFORE. but also to the mortgages. as well as the Real Estate Mortgages executed by PAGLAUM. the Note. In fact.)
These quoted provisions of the Real Estate Mortgages and the later Restructuring Agreement clearly reveal the intention of the parties to implement a restrictive venue stipulation. in the Real Estate Mortgages dated 11 February 1994. which applies not only to the principal obligation. Section 20 of the Restructuring Agreement as regards the venue of actions state:
20. is exclusive. and not as a restriction on a specified place. the CA committed reversible error in affirming the dismissal of Civil Case No. Even if this Court were to consider the venue stipulations under the Real Estate Mortgages. it must be underscored that those provisions did not contain words showing exclusivity or restrictiveness. (Emphasis supplied. Considering that Makati City was agreed upon by the parties to be the venue for all actions arising out of or in connection with the loan obligation incurred by HealthTech.Meanwhile. The phrase ―waiving any other venue‖ plainly shows that the choice of Makati City as the venue for actions arising out of or in connection with the Restructuring Agreement and the Collateral. Venue – Venue of any action or proceeding arising out of or connected with this Restructuring Agreement. the Collateral and any and all related documents shall be in Makati City. [HealthTech] and [Union Bank] hereby waiving any other venue. the phrase ―parties hereto waiving‖ – from the entire phrase ―the parties hereto waiving any other venue‖ – was stricken from the final executed contract. 134 on the ground of improper venue. the venue stipulation should only be deemed as an agreement on an additional forum.
Decision dated 31 May 2007 and Resolution dated 24 July 2007 in CA-G. The Complaint in Civil Case No. 01-1567 is hereby REINSTATED. Branch 134. 82053 of the Court of Appeals. CV No.
. as well as the Orders dated 11 March 2003 and 19 September 2003 issued by the Regional Trial Court. SO ORDERED. are REVERSED and SET ASIDE. Makati City.R.
. August 28.... and VELASCO...... Chairperson. J. BRANCH 13.. ELIZABETH C..THIRD DIVISION
SPS.. 2003 in Civil Case No. LANTION.. JANE AURORA C... 160053
HON. No... JR.. ALICE PERCE...
QUISUMBING.... JJ... 2003 and September 15. J.-x
QUISUMBING....versus G.. TINGA.. RENATO & ANGELINA LANTIN.. BATANGAS. 2002-0555
.. 2006 JELEN MOSCA. REGISTER OF DEEDS FOR LIPA CITY.. Respondents.. CARPIO MORALES.. Petitioners.. FOURTH JUDICIAL REGION..R.. x.... CARPIO. ..: This is a petition for certiorari assailing the orders dated May 15... THE CLERK OF COURT and EX-OFFICIO SHERIFF OF THE REGIONAL TRIAL COURT OF BATANGAS. UMALI... PLANTERS DEVELOPMENT Promulgated: BANK. PRESIDING JUDGE OF THE REGIONAL TRIAL COURT OF LIPA CITY.....
Petitioners sought reconsideration. Permanent Injunction. They argued that the trial court in effect prejudged the validity of the loan documents because
. Lantion. a Complaint for Declaration of Nullity and/or Annulment of Sale and/or Mortgage. hence. were sold at a public auction where the respondent bank was the winning bidder. 2003. The facts of the case are as follows: Petitioners Renato and Angelina Lantin took several peso and dollar loans from respondent Planters Development Bank and executed several real estate mortgages and promissory notes to cover the loans. On May 15.issued by public respondent. of the Regional Trial Court (RTC) of Lipa City. Presiding Judge Jane Aurora C. Alice Perce and Jelen Mosca (private respondents). Batangas. On November 8. Discharge of Mortgage. the mortgages should have been discharged. They challenged the validity of the foreclosure on the alleged nonpayment of their dollar loans as the mortgages did not cover those loans. They defaulted on the payments so respondent bank foreclosed the mortgaged lots. Private respondents moved to dismiss the complaint on the ground of improper venue since the loan agreements restricted the venue of any suit in Metro Manila. in partial satisfaction of petitioners‘ debt. Batangas. Reconveyance. The foreclosed properties. Accounting. and Damages with the RTC of Lipa City. the respondent judge dismissed the case for improper venue. petitioners filed against Planters Development Bank and its officers Elizabeth Umali. 2003. Petitioners alleged that only their peso loans were covered by the mortgages and that these had already been fully paid.
the trial court based its dismissal on a venue stipulation provided in the agreement. II THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN NOT FINDING THAT THE MERE USE OF THE WORD ―EXCLUSIVELY‖ DOES NOT. MEAN THAT SUCH STIPULATIONS AUTOMATICALLY PROVIDE FOR AN ―EXCLUSIVE VENUE‖. BY ITSELF. The motion for reconsideration was denied and the lower court held that the previous order did not touch upon the validity of the loan documents but merely ruled on the procedural issue of venue. SPECIALLY WHEN THE TENOR OR LANGUAGE OF THE ENTIRE VENUE STIPULATION CLEARLY PROVIDES OTHERWISE. III THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DISREGARDING THE FACT THAT HEREIN PETITIONERS‘ COMPLAINT INVOLVES SEVERAL CAUSES OF ACTION WHICH DO NOT ARISE SOLELY FROM THE ―REAL ESTATE MORTGAGE‖ AND ―PROMISSORY NOTES‖ AND WHICH OTHER CAUSES OF ACTION MAY BE FILED IN OTHER VENUES UNDER SECTIONS 1 AND 2 OF RULE 4 OF THE 1997 RULES OF
. Petitioners now come before us alleging that:
I THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN HOLDING THAT THE VENUE STIPULATIONS IN THE ―REAL ESTATE MORTGAGE‖ AND ―PROMISSORY NOTES‖ FALL WITHIN THE PURVIEW OF SECTION 4(B) OF RULE 4 OF THE 1997 RULES OF CIVIL PROCEDURE IN THAT IT LIMITED THE VENUE OF ACTIONS TO A DEFINITE PLACE. AS CONTEMPLATED BY SECTION 4(B) OF RULE 4 OF THE 1997 RULES OF CIVIL PROCEDURE.
the cited venue stipulation should not be made to apply.
. the rule on venue of action was established for the convenience of the plaintiff. and the issue of validity was merely petitioners‘ afterthought to avoid being bound by the venue stipulation. Private respondents counter that. Further. They also aver that the venue stipulation was not contrary to the doctrine in Unimasters. Moreover. which requires that a venue stipulation employ categorical and suitably limiting language to the effect that the parties agree that the venue of actions between them should be laid only and exclusively at a definite place. herein petitioners. according to the petitioners. since the validity of the loan documents were squarely put in issue. petitioners did not assail the loan documents. petitioners posit.CIVIL PROCEDURE. Petitioners contend that. the venue stipulation in the loan documents is not an exclusive venue stipulation under Section 4(b) of Rule 4 of the 1997 Rules of Civil Procedure. necessarily this meant also that the validity of the venue stipulation also was at issue. Besides. in their complaint. petitioners also contend that since the complaint involves several causes of action which did not arise solely from or connected with the loan documents.
The main issue in the present petition is whether respondent judge committed grave abuse of discretion when she dismissed the case for improper venue. The venue in the loan agreement was not specified with particularity. IV THE HONORABLE JUDGE COMMITTED GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN DISREGARDING THE PRINCIPLE THAT THE RULE ON VENUE OF ACTIONS IS ESTABLISHED FOR THE CONVENIENCE OF THE PLAINTIFFS.
the Mortgagor waiving for this purpose any other venue. (Emphasis supplied. is not enough to preclude parties from bringing a case in other venues. The pertinent provisions of the several real estate mortgages and promissory notes executed by the petitioner respectively read as follows:
18. the stipulation should be deemed as merely an agreement on an additional forum. Petitioners claim that effecting the exclusive venue stipulation would be tantamount to a prejudgment on the validity of the loan
Clearly. the words ―exclusively‖ and ―waiving for this purpose any other venue‖ are restrictive and used advisedly to meet the requirements. the general rules on venue of actions shall not apply where the parties. Philippines or any other venue chosen by the BANK. In the event of suit arising out of or in connection with this mortgage and/or the promissory note/s secured by this mortgage. (Emphasis supplied. have validly agreed in writing on an exclusive venue. At the outset. The parties must be able to show that such stipulation is exclusive. not as limiting venue to the specified place.According to private respondents. the language of the stipulation is clearly exclusive. In the absence of qualifying or restrictive words. waiving for this purpose any other venue provided by the Rules of Court. before the filing of the action. The mere stipulation on the venue of an action. the parties hereto agree to bring their causes of auction (sic) exclusively in the proper court of Makati. however. Metro Manila or at such other venue chosen by the Mortgagee. we must make clear that under Section 4 (b) of Rule 4 of the 1997 Rules of Civil Procedure.) I/We further submit that the venue of any legal action arising out of this note shall exclusively be at the proper court of Metropolitan Manila.
We note however that in their complaint. They only assailed the terms and coverage of the mortgage contracts. 2002-0555 are AFFIRMED. the stipulation on venue is also applicable thereto. Costs against petitioners.documents. Batangas. 2003 and September 15. in Civil Case No. Considering all the circumstances in this controversy. petitioners never assailed the validity of the mortgage contracts securing their peso loans. SO ORDERED. arose out of the said loan documents. as the questioned orders were evidently in accord with law and jurisprudence. 2003 of the Regional Trial Court of Lipa City. the petition is DISMISSED. since the issues of whether the mortgages should be properly discharged and whether these also cover the dollar loans. What petitioners claimed is that their peso loans had already been paid thus the mortgages should be discharged. The assailed orders dated May 15. and that the mortgage contracts did not include their dollar loans. WHEREFORE. In our view.
. we find that the respondent judge did not commit grave abuse of discretion.
which denied its Motion to Dismiss on the ground of improper venue and the subsequent Motion for Reconsideration in Civil Case No. 2001. stock handling.. June 23. 2005]
SAN MIGUEL CORPORATION. 2001. 151037. RTC’98-4150. The Court of Appeals dismissed the special civil action for certiorari filed by San Miguel Corporation (SMC) assailing the Orders of the Regional Trial Court of Naga City. TROY FRANCIS L.:
This appeal by certiorari seeks to reverse and set aside the Decision dated July 16. J. Monasterio. 1993. b. SP No. respondent. Sorsogon and Daet. represented by its manager.R. Branch 20. and receiving SMC products for its route operations at Sorsogon. warehousing and related services such as. SMB undertook to provide land. The agreement likewise contained a stipulation on venue of actions. respondent Troy Francis L. vs. petitioner SMC entered into an Exclusive Warehouse Agreement (hereafter EWA for brevity) with SMB Warehousing Services (SMB).R. The facts are as follows: On August 1. No.. to wit: 26 GENERAL PROVISIONS . physical structures. of the Court of Appeals in CA-G. and the Resolution dated November 27. segregation of empty bottles. petitioner. 52622. MONASTERIO. but not limited to.FIRST DIVISION
QUISUMBING. Camarines Norte. Should it be necessary that an action be brought in
. equipment and personnel for storage.
 Monasterio claimed P900. SMC filed a Motion to Dismiss on the ground of improper venue. SMC cites in its favor Section 4(b) in relation to Section 2 of Rule 4 of the Rules of Court allowing agreement of parties on exclusive venue of actions. theft. In his Complaint. Metro Manila is the proper venue as provided under paragraph 26(b) of the Exclusive Warehouse Agreement. and attorney’s fees in the amount of P500. to the exclusion of the other courts at the option of the COMPANY. that petitioner SMC started paying him P11. [Underscoring supplied. filed a complaint docketed as Civil Case No. He alleged that from September 1993 to September 1997 and May 1995 to November 1997. Branch 20.600 for unpaid cashiering fees. he had assumed what amounted to approximately 35 million pesos per annum for Sorsogon. On November 3. robbery and hold-up..32 for warehousing fees. as well as exemplary damages. 1997. SMC contended that respondent’s money claim for alleged unpaid cashiering services arose from respondent’s function as warehouse contractor thus the EWA should be followed and thus.400 per month for his cashiering services.. Respondent added that it was only on December 1. He also said that he hired personnel for the job.400 for cashiering fees for the month of September. Camarines Norte. respectively. respondent Monasterio. a resident of Naga City. the exclusive venue of courts of Makati or Pasig. Sorsogon. 1998.
. 1998. he was given the additional task of cashiering in SMC’s Sorsogon and Camarines Norte sales offices for which he was promised a separate fee. it is agreed that the proper court should be in the courts of Makati or Pasig. He claims that of approximately 290 million pesos in cash and checks of the sales office and the risks of pilferage.000. Monasterio demanded P82.959. Metro Manila. On November 19. and 60 million pesos for Daet.000 and P300. aside from rendering service as warehouseman. P11.] .court to enforce the terms of this Agreement or the duties or rights of the parties herein. 1998. RTC’98-4150 for collection of sum of money against petitioner before the Regional Trial Court of Naga City.
the respondent filed an Amended Complaint deleting his claim for unpaid warehousing and cashiering fees but increasing the exemplary damages from P500. of Naga City. respondent Monasterio filed an amended complaint to which SMC filed an answer. Branch 20 issued an Order denying petitioner’s motion to dismiss. the Regional Trial Court. the provision on venue in the EWA was not applicable to said services. 2001. 1999. the Court of Appeals dismissed San Miguel’s petition for certiorari. In its decision dated July 16. On February 22. 1999. SMC’s subsequent Motion for Reconsideration was likewise denied. his place of residence.500. during the pendency of the certiorari petition SMC filed before the trial court an answer ex abundanti cautela with a compulsory counterclaim for moral and exemplary damages and attorney’s fees. The court held that the services agreed upon in said contract is limited to warehousing services and the claim of plaintiff in his suit pertains to the cashiering services rendered to the defendant. respondent insists that in accordance with Section 2 of Rule 4 of the Rules of Court the venue should be in Naga City.000. waiver. Thus. payment. Hence. On June 11. a relationship which was not documented. imputing grave abuse of discretion on the RTC Naga City for denying its motion to dismiss and subsequent motion for reconsideration. the Court of Appeals noted that prior to the filing of SMC’s petition. the venue stipulated in the EWA is the proper venue. SMC averred lack of cause of action.Respondent filed an Opposition contending that the cashiering service he rendered for the petitioner was separate and distinct from the services under the EWA. thus. While the motion was pending. and is certainly a contract separate and independent from the exclusive warehousing agreements. Hence. Petitioner elevated the controversy to the Court of Appeals by way of a special civil action for certiorari with a prayer for the issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction.000 to P1. abandonment and extinguishment. However. the Court of Appeals found respondent’s claim for cashiering services inseparable from his claim for warehousing services. stating that the case was already moot and
 The EWA stipulation on venue is clear and unequivocal. Records show also that previously. Petitioner filed a motion for reconsideration which was denied by the Court of Appeals. the respondent’s cause of action was specifically limited to the collection of the sum owing to him for his cashiering service in favor of SMC. He already omitted petitioner’s non-payment of warehousing fees. this petition wherein petitioner raises the following as issues:
1. 2. Whether or not this Honorable Court may review the finding of the Court of Appeals that the Complaint and Amended Complaint were filed in the wrong venue. allegations in the complaint determines the cause of action or the nature of the case.academic. in the amended complaint. However. Assuming arguendo that this Honorable Court may review the finding of the Court of Appeals that the Complaint and Amended Complaint were filed in the wrong venue. given the circumstances of this
. we note that the cause of action in the complaint filed by the respondent before the RTC of Naga was not based on the EWA. whether or not such finding should be reversed. Moreover. Whether or not the Court of Appeals gravely erred in ruling that SMC’s Petition For Certiorari has become moot and academic in view of the filing of Monasterio’s Amended Complaint and SMC’s Answer (Ex Abundanti Cautela). Nothing therein being contrary to law. but concern services not enumerated in the EWA. the venue stipulation in the EWA should be construed as mandatory. respondent received a separate consideration of P11. this provision is binding upon the parties.400 for the cashiering service he rendered to SMC. Hence. good custom or public policy.
In our view. 3. morals. As previously ruled. two issues only require resolution: (1) Did the RTC of Naga City err in denying the motion to dismiss filed by SMC alleging improper venue? (2) Did the CA gravely err in ruling that SMC’s petition for certiorari has become moot? On disputes relating to the enforcement of the rights and duties of the contracting parties. thus it ought to be respected. Thus.
Otherwise. Expanding the scope of such limitation on a contracting party will create unwarranted restrictions which the parties might find unintended or worse. WHEREFORE. in connection with his cashiering services. Thus. Having settled the issue on venue. since the present case for the collection of sum of money filed by herein respondent is a personal action. the place where plaintiff resides. we need not belabor the issue of whether SMC’s petition has become moot. arbitrary and oppressive. and that interpretation should be adopted which most serves the parties’ convenience. we are constrained to hold that it would be erroneous to rule. Branch 20. Exclusive venue stipulation embodied in a contract restricts or confines parties thereto when the suit relates to breach of the said contract. as the CA did. the basic principles of freedom to contract might work to the great disadvantage of a weak party-suitor who ought to be allowed free access to courts of justice. the rules mandated by the Rules of Court should govern.case now before us. the restriction should be strictly construed as relating solely to the agreement for which the exclusive venue stipulation is embodied. that the collection suit of the respondent did not pertain solely to the unpaid cashiering services but pertain likewise to the warehousing services. Restrictive stipulations are in derogation of the general policy of making it more convenient for the parties to institute actions arising from or in relation to their agreements. in denying petitioner’s motion to dismiss. Said RTC is the proper venue of the amended complaint for a sum of money filed by respondent against petitioner San Miguel Corporation.  we find no compelling reason why it could not be instituted in the RTC of Naga City. since convenience is the raison d’etre of the rules on venue. venue stipulation should be deemed merely permissive. Accordingly. the stipulation designating exclusive venues should be strictly confined to the specific undertaking or agreement. such that even those not related to the enforcement of the contract should be subject to the exclusive venue. The case is hereby
. But where the exclusivity clause does not make it necessarily all encompassing. Contrawise. it is hereby ruled that no reversible error was committed by the Regional Trial Court of Naga City. Moreover.
Branch 20.REMANDED to the RTC of Naga City. Costs against petitioner. for further proceedings on respondent’s amended complaint. SO ORDERED.
. without further delay.
JULITA C. BENEDICTO. CARPIO MORALES.: The Case This Petition for Review on Certiorari under Rule 45 assails and seeks to nullify the Decision dated October 17.R. The assailed CA decision annulled and set aside the
. No. JR. JR. 154096 Present: QUISUMBING. . J. VELASCO. 2008 Respondents. 2002 denying petitioners‘ motion for reconsideration. J. August 22. ORLANDO G. 64246 and its Resolution of June 20.R. SP No.
COURT OF APPEALS. DANIEL RUBIO.. RESLIN. and FRANCISCA Promulgated: BENEDICTOPAULINO. RESLIN. JJ...versus -
G. TINGA. and BRION. x----------------------------------------------------------------------------------------x DECISION VELASCO. Petitioners. 2001 of the Court of Appeals (CA) in CA-G.SECOND DIVISION
IRENE MARCOS-ARANETA. and JOSE G. Chairperson.
3341-17. Araneta III. respectively. 3341-17 and 3342-17. (FEMII) and Universal Equity Corporation (UEC). and March 15. In March 2000. docketed as Civil Case No. Ilocos Norte which admitted petitioners‘ amended complaint in Civil Case Nos.Orders dated October 9. through her trustee-husband. sought the recovery to the extent of 65% of FEMII shares held by Benedicto and the other defendants named therein. Gregorio Ma. Branch 17 in Batac. docketed as Civil Case No. The second. both corporations were organized pursuant to a contract or arrangement whereby Benedicto. December 18.
The Facts Sometime in 1968 and 1972. Benedicto. and at least 20 other individuals as defendants. Irene. Ambassador Roberto S. his daughter. as trustees. the shares of stocks of FEMII and UEC with the obligation to hold those shares and their fruits in trust and for the benefit of Irene to the extent of 65% of such shares. 2000. Inc. demanded the reconveyance of said 65% stockholdings. As petitioner Irene Marcos-Araneta would later allege. Several years after. but the Benedicto Group refused to oblige. 2000. 2001 of the Regional Trial Court (RTC). and his business associates (Benedicto Group) organized Far East Managers and Investors. covered the UEC shares and named Benedicto. as trustor.
. 3342-17. now deceased. The first. Irene thereupon instituted before the RTC two similar complaints for conveyance of shares of stock. accounting and receivership against the Benedicto Group with prayer for the issuance of a temporary restraining order (TRO). placed in his name and in the name of his associates.
During the preliminary proceedings on their motions to dismiss. Ilocos Norte and that Irene did not maintain residence in said place as she in fact only visited the mansion twice in 1999. adopting in toto the five (5) grounds raised by Francisca in her amended motion to dismiss. 3342-17. Among these were: (1) the cases involved an intracorporate dispute over which the Securities and Exchange Commission. on the other hand. and Conchita R. Benedicto‘s daughter. To the motions to dismiss. not the RTC. Benedicto and Francisca. Benedicto. followed later by an Amended Motion to Dismiss. has jurisdiction. Irene filed a Consolidated Opposition. Upon Benedicto‘s motion. Batac. filed a Motion to Dismiss Civil Case No. has accepted the trust created in her favor. Irene presented her PhP 5 community tax certificate (CTC) issued on
. Valdez. which Benedicto and Francisca countered with a Joint Reply to Opposition. Against the aforesaid unrebutted joint affidavit. Lacub. and that she was staying at her husband‘s house in Makati City. Rasco who all attested being employed as household staff at the Marcos‘ Mansion in Brgy. both cases were consolidated. that she did not vote in Batac in the 1998 national elections. by way of bolstering their contentions on improper venue. and (3) the complaint failed to state a cause of action. moved to dismiss Civil Case No. Bactat. as there was no allegation therein that plaintiff. 3341-17.Respondent Francisca Benedicto-Paulino. as beneficiary of the purported trust. Catalino A. presented the Joint Affidavit of Gilmia B. (2) venue was improperly laid.
Ilocos Norte to support her claimed residency in Batac. attaching therewith a copy of the Amended Complaint dated July 14. Reslin. the RTC dictated in open court an order denying Irene‘s motion for reconsideration aforementioned. the RTC dismissed both complaints. In the meantime. Benedicto died and was substituted by his wife. venue was improperly laid. and Francisca. and Jose G. therefore. as couched.―11/07/99‖ in Curimao. Orlando G. Irene interposed a Motion for Reconsideration which Julita and Francisca duly opposed. the RTC issued an Order entertaining the amended complaint. sought the reconveyance of the FEMII shares only. 2000 hearing. the amended complaint stated practically the same cause of action but. 2000 a Motion (to Admit Amended Complaint). 2000.‖ and that Irene did not actually reside in Ilocos Norte. and. Julita C. In its dismissal order. On October 9. On June 29. Parenthetically. 2000. stating that these partly constituted ―real action. all from Ilocos Norte. Ilocos Norte. on May 15. Reslin appeared as additional plaintiffs. the court also declared ―all the other issues raised in the different Motions to Dismiss x x x moot and academic. As stated in the amended complaint. Irene filed on July 17. Pending resolution of her motion for reconsideration.‖ From the above order. During the August 25. 2000 in which the names of Daniel Rubio. were Irene‘s new trustees. Benedicto. but deferred action on her motion to admit amended complaint and the opposition thereto. dispositively stating:
. the added plaintiffs. 2000.
In time. 2000. (2) The inclusion of additional plaintiffs. 2 of Rule 4 allow the filing of the amended complaint in question in the place of residence of any of Irene‘s co-plaintiffs. 2000 order dismissing the original complaints. And scoffing at the argument about there being no complaint to amend in the first place as of October 9.e. the admission of the Amended Complaint being tenable and legal.WHEREFORE. denied the motion and reiterated its directive for the two to answer the amended complaint. In said order. but the RTC. on August 25. an amended complaint. 2 and 3 of Rule 3 in relation to Sec. Julita and Francisca moved to dismiss the amended complaint. by Order dated December 18. the court
.. an Ilocos Norte resident. 2000 (when the RTC granted the motion to amend) as the original complaints were dismissed with finality earlier. Rule 10 of the Rules of Court. as a matter of right. Irene may opt to file. the RTC stood pat on its holding on the rule on amendments of pleadings. (3) Secs. Let copies of the Amended Complaint be served to the defendants who are ordered to answer within the reglementary period provided by the rules.
The RTC predicated its order on the following premises: (1) Pursuant to Section 2. the same is GRANTED. in the amended complaint setting out the same cause of action cured the defect of improper venue. 2000 when the court denied Irene‘s motion for reconsideration of the June 29. one of whom was a Batac. i.
the second. the RTC added the observation that the filing of the amended complaint on July 17. Benedicto to Francisca B.
. 2000 ipso facto superseded the original complaints. Paulino authorizing the latter to represent her in these proceedings. 64246. seeking to nullify the following RTC orders: the first. SP No. the CA required the joint petitioners ―to submit x x x either the written authority of Julita C. or a supplemental verification and certification duly signed by x x x Julita C. admitting the amended complaint. 2000 order aforestated. Following the denial on March 15. per the June 29. had not yet become final at the time of the filing of the amended complaint. denying their motion to dismiss the amended complaint. Inasmuch as the verification portion of the joint petition and the certification on non-forum shopping bore only Francisca‘s signature. filed on April 10. it being her right as plaintiff to amend her complaints absent any responsive pleading thereto. and the third. Later developments saw the CA issuing a TRO and then a writ of preliminary injunction enjoining the RTC from conducting further proceedings on the subject civil cases. Pushing its point. they went to the CA via a petition for certiorari.R. docketed as CA-G.stated thusly: there was actually no need to act on Irene‘s motion to admit. 2001 of their motion for the RTC to reconsider its December 18. Julita and Francisca. 2001 their Answer to the amended complaint. in a bid to evade being declared in default. denying their motion for reconsideration of the second issuance. Benedicto. 2000 Order. But on the same day.‖ Records show the submission of the corresponding authorizing Affidavit executed by Julita in favor of Francisca. the dismissal of which.
and the amended complaints a quo are. (3) ruling that the amended complaints in the lower court should be dismissed because. this petition for review is before us. the petition is hereby GRANTED. 3341-17 and 3342-17. Hence. 2001. processes not proper in a petition for certiorari under Rule 65 of the Rules of Court.
Irene and her new trustees‘ motion for reconsideration of the assailed decision was denied through the equally assailed June 20. based on the foregoing premises. (2) ruling on the merits of the trust issue which involves factual and evidentiary determination. setting aside the assailed RTC orders and dismissing the amended complaints in Civil Case Nos. (4) ruling that the respondents did not waive improper venue. accordingly. The fallo of the CA decision reads:
WHEREFORE. DISMISSED. at the time it was filed. and (5) ruling that petitioner Irene was not a resident of Batac. The assailed Orders admitting the amended complaints are SET ASIDE for being null and void. The Court’s Ruling
. 2002 CA Resolution.On October 17. the CA rendered a Decision. there was no more original complaint to amend. Ilocos Norte and that none of the principal parties are residents of Ilocos Norte. The Issues Petitioners urge the setting aside and annulment of the assailed CA decision and resolution on the following submissions that the appellate court erred in: (1) allowing the submission of an affidavit by Julita as sufficient compliance with the requirement on verification and certification of non-forum shopping.
SP No.We affirm. May be Corrected Verification is. not a jurisdictional requisite.R. 64246 as defective for non-compliance with the requirements of Secs. Verification not Jurisdictional. The Court may order the correction of the pleading. As the Court articulated in Kimberly Independent Labor Union for Solidarity. who failed to sign the verification and certification of non-forum shopping. the CA‘s decision. Court of Appeals:
[V]erification is a formal. We are not persuaded. Petitioners thus fault the appellate court for directing Julita‘s counsel to submit a written authority for Francisca to represent Julita in the certiorari proceedings. as it is mainly intended to secure an assurance that the allegations therein made are done in good faith or are true and correct and not mere speculation. not a jurisdictional but merely a formal requirement which the court may motu proprio direct a party to comply with or correct. as the case may be. First Issue: Substantial Compliance with the Rule on Verification and Certification of Non-Forum Shopping Petitioners tag private respondents‘ petition in CA-G. 4 and 5 of Rule 7 of the Rules of Court at least with regard to Julita. but not for all the reasons set out in. if not verified. Activism and Nationalism (KILUSAN)-Organized Labor Associations in Line Industries and Agriculture (OLALIA) v. or act on the unverified pleading if the attending circumstances are such that a strict compliance with the
. under the Rules.
It cannot be overemphasized that Francisca herself was a principal party in Civil Case No. which were designed to promote the orderly administration of justice. Signature by Any of the Principal Petitioners is Substantial Compliance Regarding the certificate of non-forum shopping.rule may be dispensed with in order that the ends of justice may be served. However. do not interdict substantial compliance with its provisions under justifiable circumstances.
.‖ raising only one common cause of action or presenting a common defense. Julita. 3341-17 before the RTC and in the certiorari proceedings before the CA. is sufficient compliance. the signature of any of the principal petitioners or principal parties. then the signature of one of the petitioners or complainants. acting as representative. the Court has time and again stressed that the rules on forum shopping.
Given this consideration. as Francisca is in this case. And should there exist a commonality of interest among the parties. Francisca. would constitute a substantial compliance with the rule on verification and certification of non-forum shopping. with her mother. Besides being an heir of Benedicto. the CA acted within its sound discretion in ordering the submission of proof of Francisca‘s authority to sign on Julita‘s behalf and represent her in the proceedings before the appellate court. As has been ruled by the Court. or where the parties filed the case as a ―collective. the general rule is that all the petitioners or plaintiffs in a case should sign it. We said so in Cavile v. was substituted for Benedicto in the instant case after his demise.
the CA overstepped its boundaries when. it did not confine itself to determining whether or not lack of jurisdiction or
. As they aptly pointed out. as well as their relation to each other and to the whole. Clearly then. as petitioners before the CA. sharing a common interest and having a common single defense to protect their rights over the shares of stocks in question. Like Thomas Cavile. A question of fact obtains when the doubt or difference arises as to the truth or falsehood of facts or when the query invites the calibration of the whole evidence considering mainly the credibility of the witnesses. and the probability of the situation. and the other petitioners in Cavile. in the exercise of its certiorari jurisdiction under Rule 65. the truth or falsehood of facts being admitted. cannot be judiciously resolved without first establishing certain facts based on evidence. It cannot validly delve into the issue of trust which. Second Issue: Merits of the Case cannot be Resolved on Certiorari under Rule 65 Petitioners‘ posture on the second issue is correct. or when the issue does not call for an examination of the probative value of the evidence presented. the existence and relevancy of specific surrounding circumstances.Heirs of Clarita Cavile. had filed their petition as a collective. Sr. in disposing of private respondents‘ petition for certiorari. Whether a determinative question is one of law or of fact depends on the nature of the dispute. under the premises. is limited to reviewing and correcting errors of jurisdiction only. A question of law exists when the doubt or controversy concerns the correct application of law or jurisprudence to a certain given set of facts. Francisca and Julita. the CA.
the nature of the trust allegedly constituted in Irene‘s favor and its enforceability. To be sure. scoring the CA for its
. 2000 came after the RTC had ordered with finality the dismissal of the original complaints. According to petitioners. The original complaints and the amended complaint certainly do not even clearly indicate whether the asserted trust is implied or express. The flaw in the RTC‘s act of admitting the amended complaint lies. Civil Case Nos. must be struck down. as here. was implied or express properly pertains. the CA veritably declared as reversibly erroneous the admission of the amended complaint. the onus of factually determining whether the trust allegedly established in favor of Irene. but proceeded to pass on the factual issue of the existence and enforceability of the asserted trust. if properly challenged. Surely. the appellate court cannot intelligently pass upon the issue of trust. In the process. to the trial court and not to the appellate court in a special civil action for certiorari.grave abuse of discretion tainted the issuance of the assailed RTC orders. on the other. in the fact that the filing of the amended complaint on July 17. So it must be here. on one hand. A pronouncement on said issue of trust rooted on speculation and conjecture. 3341-17 and 3342-17 in fact have not even reached the pre-trial stage. are best determined by the trial court. if one was indeed established. In the absence of evidence to prove or disprove the constitution and necessarily the existence of the trust agreement between Irene. at the first instance. the CA virtually resolved petitioner Irene‘s case for reconveyance on its substantive merits even before evidence on the matter could be adduced. being evidentiary in nature. Third Issue: Admission of Amended Complaint Proper As may be recalled. and the Benedicto Group. an express trust differs from the implied variety in terms of the manner of proving its existence. so the CA held. To stress.
declaration adverted to and debunking its posture on the finality of the said RTC order, the CA failed to take stock of their motion for reconsideration of the said dismissal order. We agree with petitioners and turn to the governing Sec. 2 of Rule 10 of the Rules of Court which provides:
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, at any time within ten (10) days after it is served.
As the aforequoted provision makes it abundantly clear that the plaintiff may amend his complaint once as a matter of right, i.e., without leave of court, before any responsive pleading is filed or served. Responsive pleadings are those which seek affirmative relief and/or set up defenses, like an answer. A motion to dismiss is not a responsive pleading for purposes of Sec. 2 of Rule 10. Assayed against the foregoing perspective, the RTC did not err in admitting petitioners‘ amended complaint, Julita and Francisca not having yet answered the original complaints when the amended complaint was filed. At that precise moment, Irene, by force of said Sec. 2 of Rule 10, had, as a matter of right, the option of amending her underlying reconveyance complaints. As aptly observed by the RTC, Irene‘s motion to admit amended complaint was not even necessary. The Court notes though that the RTC has not offered an explanation why it saw fit to grant the motion to admit in the first place. In Alpine Lending Investors v. Corpuz, the Court, expounding on the propriety of admitting an amended complaint before a
responsive pleading is filed, wrote:
[W]hat petitioner Alpine filed in Civil Case No. C-20124 was a motion to dismiss, not an answer. Settled is the rule that a motion to dismiss is not a responsive pleading for purposes of Section 2, Rule 10. As no responsive pleading had been filed, respondent could amend her complaint in Civil Case No. C-20124 as a matter of right. Following this Court‘s ruling in Breslin v. Luzon Stevedoring Co. considering that respondent has the right to amend her complaint, it is the correlative duty of the trial court to accept the amended complaint; otherwise, mandamus would lie against it. In other words, the trial court‘s duty to admit the amended complaint was purely ministerial. In fact, respondent should not have filed a motion to admit her amended complaint.
It may be argued that the original complaints had been dismissed through the June 29, 2000 RTC order. It should be pointed out, however, that the finality of such dismissal order had not set in when Irene filed the amended complaint on July 17, 2000, she having meanwhile seasonably sought reconsideration thereof. Irene‘s motion for reconsideration was only resolved on August 25, 2000. Thus, when Irene filed the amended complaint on July 17, 2000, the order of dismissal was not yet final, implying that there was strictly no legal impediment to her amending her original complaints. Fourth Issue: Private Respondents did not Waive Improper Venue Petitioners maintain that Julita and Francisca were effectively precluded from raising the matter of improper venue by their subsequent acts of filing numerous pleadings. To petitioners, these pleadings, taken together, signify a waiver of private respondents‘
initial objection to improper venue. This contention is without basis and, at best, tenuous. Venue essentially concerns a rule of procedure which, in personal actions, is fixed for the greatest convenience possible of the plaintiff and his witnesses. The ground of improperly laid venue must be raised seasonably, else it is deemed waived. Where the defendant failed to either file a motion to dismiss on the ground of improper venue or include the same as an affirmative defense, he is deemed to have waived his right to object to improper venue. In the case at bench, Benedicto and Francisca raised at the earliest time possible, meaning ―within the time for but before filing the answer to the complaint,‖ the matter of improper venue. They would thereafter reiterate and pursue their objection on venue, first, in their answer to the amended complaints and then in their petition for certiorari before the CA. Any suggestion, therefore, that Francisca and Benedicto or his substitutes abandoned along the way improper venue as ground to defeat Irene‘s claim before the RTC has to be rejected. Fifth Issue: The RTC Has No Jurisdiction on the Ground of Improper Venue Subject Civil Cases are Personal Actions It is the posture of Julita and Francisca that the venue was in this case improperly laid since the suit in question partakes of a real action involving real properties located outside the territorial jurisdiction of the RTC in Batac. This contention is not well-taken. In a personal action, the plaintiff seeks the recovery of personal property, the enforcement of
a contract, or the recovery of damages. Real actions, on the other hand, are those affecting title to or possession of real property, or interest therein. In accordance with the wordings of Sec. 1 of Rule 4, the venue of real actions shall be the proper court which has territorial jurisdiction over the area wherein the real property involved, or a portion thereof, is situated. The venue of personal actions is the court where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff. In the instant case, petitioners are basically asking Benedicto and his Group, as defendants a quo, to acknowledge holding in trust Irene‘s purported 65% stockownership of UEC and FEMII, inclusive of the fruits of the trust, and to execute in Irene‘s favor the necessary conveying deed over the said 65% shareholdings. In other words, Irene seeks to compel recognition of the trust arrangement she has with the Benedicto Group. The fact that FEMII‘s assets include real properties does not materially change the nature of the action, for the ownership interest of a stockholder over corporate assets is only inchoate as the corporation, as a juridical person, solely owns such assets. It is only upon the liquidation of the corporation that the stockholders, depending on the type and nature of their stockownership, may have a real inchoate right over the corporate assets, but then only to the extent of their stockownership.
The amended complaint is an action in personam, it being a suit against Francisca and the late Benedicto (now represented by Julita and Francisca), on the basis of their alleged personal liability to Irene upon an alleged trust constituted in 1968 and/or 1972. They are not actions in rem where the actions are against the real
properties instead of against persons. We particularly note that possession or title to the real properties of FEMII and UEC is not being disputed, albeit part of the assets of the corporation happens to be real properties. Given the foregoing perspective, we now tackle the determinative question of venue in the light of the inclusion of additional plaintiffs in the amended complaint. Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of Rule 4 We point out at the outset that Irene, as categorically and peremptorily found by the RTC after a hearing, is not a resident of Batac, Ilocos Norte, as she claimed. The Court perceives no compelling reason to disturb, in the confines of this case, the factual determination of the trial court and the premises holding it together. Accordingly, Irene cannot, in a personal action, contextually opt for Batac as venue of her reconveyance complaint. As to her, Batac, Ilocos Norte is not what Sec. 2, Rule 4 of the Rules of Court adverts to as the place ―where the plaintiff or any of the principal plaintiffs resides‖ at the time she filed her amended complaint. That Irene holds CTC No. 17019451 issued sometime in June 2000 in Batac, Ilocos Norte and in which she indicated her address as Brgy. Lacub, Batac, Ilocos is really of no moment. Let alone the fact that one can easily secure a basic residence certificate practically anytime in any Bureau of Internal Revenue or treasurer‘s office and dictate whatever relevant data one desires entered, Irene procured CTC No. 17019451 and appended the same to her motion for reconsideration following the RTC‘s pronouncement against her being a resident of Batac. Petitioners, in an attempt to establish that the RTC in Batac,
Ilocos Norte is the proper court venue, asseverate that Batac, Ilocos Norte is where the principal parties reside. Pivotal to the resolution of the venue issue is a determination of the status of Irene‘s co-plaintiffs in the context of Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4, which pertinently provide as follows:
Rule 3 PARTIES TO CIVIL ACTIONS 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. 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. Rule 4 VENUE OF ACTIONS SEC. 2. Venue of personal actions. –– All other actions may be commenced and tried where the plaintiff or any of the principal plaintiffs resides, or where the defendant or any of the principal defendants resides, or in the case of a non-resident defendant where he may be found, at the election of the plaintiff.
Venue is Improperly Laid There can be no serious dispute that the real party-in-interest plaintiff is Irene. As self-styled beneficiary of the disputed trust, she stands to be benefited or entitled to the avails of the present suit. It is undisputed too that petitioners Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin, all from Ilocos Norte, were included as coplaintiffs in the amended complaint as Irene‘s new designated trustees. As trustees, they can only serve as mere representatives of Irene. Upon the foregoing consideration, the resolution of the crucial issue of whether or not venue had properly been laid should not be difficult. Sec. 2 of Rule 4 indicates quite clearly that when there is more than one plaintiff in a personal action case, the residences of the principal parties should be the basis for determining proper venue. According to the late Justice Jose Y. Feria, ―the word ‗principal‘ has been added [in the uniform procedure rule] in order to prevent the plaintiff from choosing the residence of a minor plaintiff or defendant as the venue.‖ Eliminate the qualifying term ―principal‖ and the purpose of the Rule would, to borrow from Justice Regalado, ―be defeated where a nominal or formal party is impleaded in the action since the latter would not have the degree of interest in the subject of the action which would warrant and entail the desirably active participation expected of litigants in a case.‖ Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342-17, Irene stands undisputedly as the principal plaintiff, the real party-in-interest. Following Sec. 2 of Rule 4, the subject civil cases
Makati City. Withal. no less than the RTC in Batac declared Irene as not a resident of Batac.ought to be commenced and prosecuted at the place where Irene resides. And this brings us to the final point. Ilocos Norte. although jurisprudence has it that one can have several residences. assigns. But it ought to be stressed in this regard that not one of the three can be considered as principal partyplaintiffs in Civil Case Nos. This conclusion becomes all the more forceful considering that Irene herself initiated and was actively prosecuting her claim against Benedicto. his heirs. Ilocos Norte. Lacub. The Court can concede that Irene‘s three co-plaintiffs are all residents of Batac. Principal Plaintiff not a Resident in Venue of Action As earlier stated. the right to prosecute a suit. Batac. that court was an improper venue for her conveyance action. they may be accorded. if such were the established fact. included as they were in the amended complaint as trustees of the principal plaintiff. the residences of Irene‘s co-plaintiffs cannot be made the basis in determining the venue of the subject suit. by virtue of Sec. She was not a resident of Brgy. preferred that
. for all the inconvenience and expenses she and her adversaries would have to endure by a Batac trial. 3341-17 and 3342-17. but only on behalf of the beneficiary who must be included in the title of the case and shall be deemed to be the real party-in-interest. In the final analysis. virtually rendering the impleading of the trustees unnecessary. Irene was a resident during the period material of Forbes Park. or associates. 3 of Rule 3. As trustees. Ilocos Norte. The Court will not speculate on the reason why petitioner Irene.
2001 and June 20. the instant petition is hereby DISMISSED. judges. 3341-17 and 3342-17 are accordingly ANNULLED and SET ASIDE and said civil cases are DISMISSED. that the case stays with the RTC in Batac.
WHEREFORE. three new personalities were added to the complaint doubtless to insure. of the CA in CA-G. It is high time that courts. Branch 17 in Batac. 2001 of the RTC in Civil Case Nos. 2002. are hereby AFFIRMED.R. the superiority of their cases.her case be heard and decided by the RTC in Batac. and March 15. 64246. SP No. 3341-17 and 3342-17 on the ground of lack of jurisdiction due to improper venue. but in vain as it turned out. SO ORDERED. Litigants ought to bank on the righteousness of their causes. insofar as they nullified the assailed orders of the RTC. Costs against petitioners. 2000. and the persuasiveness of arguments to secure a favorable verdict. The Orders dated October 9. On the heels of the dismissal of the original complaints on the ground of improper venue. respectively. December 18. Ilocos Norte in Civil Case Nos. The Decision and Resolution dated October 17.
. 2000. and those who come to court for redress keep this ideal in mind.