Fortune Motors, Inc.

v CA (Civil procedure)
Fortune Motors, Inc. v. CA, Metropolitan Bank and Trust Company
Facts:
Private respondent extended various loans to petitioner for a total sum of P32,500,000.00;
Due to financial difficulties, and economic recession, the petitioner was not able to pay the loan which became due;
The respondent bank initiated extrajudicial foreclosure proceedings, the mortgaged property was sold at public
auction where respondent was the highest bidder;
3 days before the expiration of the redemption period, petitioner filed a complaint for the annulment of the
extrajudicial foreclosure sale at the RTC of Manila, alleging that:
(a) the foreclosure was premature because its obligation to the Bank was not yet due,
(b) the publication of the notice of sale was incomplete, there was no public auction,
(c) thhe price for which was shockingly low;
Respondent filed a motion to dismiss the complaint on the ground that the venue of the action was improperly laid in
Manila for the realty covered by the real estate mortgages is situated in Makati, therefore the action to annul the
foreclosure sale should be filed in the RTC of Makati;
Petitioner argued that its action is a personal action and that the issue is the validity of the extrajudicial foreclosure
proceedings so that it may have a new one year period to redeem the same.
Lower court rulings:
RTC: reserved the resolution of the Banks motion to dismiss until after the trial on the merits

CA: on petition for certiorari and prohibition, granted the petitions and dismissed the case without prejudice to the
filing of the case before the proper courts
*Reconsideration was denied, hence the petition before the SC
Issue: WON petitioners action for annulment of the real estate mortgage extrajudicial foreclosure sale of Fortune
Building is personal action or a real action for venue purposes
Ruling: Yes, the action is a real action which should have been filed before the RTC of Makati.
Real actions or actions affecting title to, or for the recovery of possession, or for the partition or condemnation of or
foreclosure of mortgage on real property, must be instituted in the CFI of the province where the property or any part
thereof lies.
Personal actions upon the other hand, may be instituted in the CFI where the defendant resides or may be found, or
where the plaintiff or any of the plaintiffs resides, at the election of the plaintiff.
An action for the annulment or rescission of contract does not operate to efface the true objectives and nature of
action which is to recover real property.
An action for annulment or rescission of sale of real property is a real action; its prime objective is to recover said
real property.
An action to annul a real estate mortgage foreclosure is no different from an action to annul a private sale of real
property.

Jonathan Landoil vs. Mangudadatu

GRN 155010 August 16, 2001

Panganiban, J.;
FACTS:
Respondents filed a complaint for damages against petitioner in the lower court. Trial
proceeded without the participation of petitioner and declared it in default. Petitioner filed a
motion for new trial but was denied. When the writ of execution was served, petitioner alleged
that it is yet to receive the order of denial for the motion for new trial. A petition for prohibition
was filed with CA and respondents submitted its opposition and attached to their pleading is a
certification that the order denying the motion for new trial was no longer available for a
deposition since trial, had already been terminated. It also opined that the alleged error
committed by the trial court of disregarding the oral depositions, was certiorari or prohibition.
ISSUE:
Whether or not the taking of oral deposition was proper under the circumstances.
RULING:
(A motion for new trial may be filed on the grounds of 1) fraud, accident, mistake or
excusable negligence that could not have been guarded against ordinary prudence, and by reason
of which the aggrieved partys rights have probably been impaired; 2) newly discovered
evidence, that, with reasonable diligence,. The aggrieved party could not have discovered and
produced at the trial; 3) and that if presented, would probably alter the result.)
A deposition may be taken with leave of court after jurisdiction has been obtained over
any defendant or over property that is the subject of the action; or without such leave after an
answer has been served. In keeping with the principle of promoting the just, speedy and
inexpensive disposition of every action and proceeding, depositions are allowed as a departure
from the accepted and usual judicial proceedings of examining witness in open court where
demeanor could be observed by the trial judge.
As a rule, depositions should be allowed absent any showing that taking them would
prejudice any party.
HYATT INDUSTRIAL MANUFACTURING CORP.
vs.
LEY CONSTRUCTION AND DEVELOPMENT CORP.
(G.R. No. 147143; March 10, 2006)
Facts:
Ley Construction and Development Corporation (LCDC) filed a complaint for specific performance
and
damages with the RTC of Makati against Hyatt Industrial Manufacturing Corporation (Hyatt) claiming
that Hyatt reneged in its obligation to transfer 40% of the pro indiviso share of a real property in
Makati

in favor of LCDC despite LCDCs full payment of the purchase price of P2,634,000.00; and that
Hyatt
failed to develop the said property in a joint venture, despite LCDCs payment of 40% of the preconstruction cost. LCDC filed amended complaints impleading Princeton Development Corporation
(Princeton) and Yu He Ching (Yu) President of Hyatt as additional defendants claiming that Hyatt
sold
the subject property to Princeton in fraud of LCDC and alleging that LCDC paid the purchase price of
P2,
634,000.00 to Hyatt through Yu.
LCDC filed notices to take the depositions of Yu; Pacita Tan Go, Account Officer of Rizal Commercial
Banking Corporation (RCBC); and Elena Sy, Finance Officer of Hyatt. Hyatt also filed notice to take
deposition of Manuel Ley, President of LCDC, while Princeton filed notice to take the depositions of
Manuel and Janet Ley. The RTC ordered the deposition-taking to proceed.
However, at the scheduled deposition of Elena Sy, Hyatt and Yu prayed that all settings for
depositions be
disregarded and pre-trial be set instead, contending that the taking of depositions only delay the
resolution
of the case. The RTC agreed and on the same day ordered all depositions cancelled and pre-trial to
take
place.
LCDC moved for reconsideration which the RTC denied due to the following reasons 1) said
depositions
will only delay the early termination of the case; 2) had the Court set the case for pre-trial conference
and
trial thereafter, the case would have been terminated earlier; 3) what the parties would like to elicit
from
their deponents would probably be elicited at the pre-trial conference; 4) no substantial rights of the
parties would be prejudiced, if pre-trial conference is held, instead of deposition.
On the scheduled date of the pre-trial, LCDC filed an Urgent Motion to Suspend Proceedings Due to
Pendency of Petition for Certiorari in the Court of Appeals (12
th
Division), which sought to annul the
order regarding the cancellation of the deposition-taking. RTC denied plaintiffs motion to suspend
proceedings and gave LCDC two (2) options: enter into a pre-trial conference, advising plaintiff that
what
it would like to obtain at the deposition may be obtained at the pre-trial conference; and, terminate
the
pre-trial conference and apply for deposition later on.
The pre-trial proceeded as scheduled and with the refusal of LCDC to enter into pre-trial, Hyatt, Yu
and
Princeton moved to declare LCDC non-suited which the RTC granted.
For LCDCs failure to enter into pre-trial conference without any valid reason the complaint and the
counterclaims were dismissed by the RTC.
LCDC filed a motion for reconsideration which was also denied compelling it file an appeal with CA
(7
th
Division).
CAs 12
th
Division denied LCDCs petition for certiorari declaring that the granting of the petition and
setting aside of the RTC Orders are manifestly pointless considering that the complaint itself had
already
been dismissed.

Meanwhile CAs 7
th
Division finds the appeal meritorious and remanded the case to the RTC for further
hearing and to proceed with the deposition taking.
Hyatt and Princeton filed their respective motions for reconsideration which the CA denied.
Hence, this
petition for review on certiorari.
Issues:
Whether or not the CA erred in remanding the case to the trial court and order the depositiontaking to
proceed.
Ruling:
No. A deposition should be allowed; absent any showing that taking it would prejudice any
party. It is
accorded a broad and liberal treatment and the liberty of a party to make discovery is well-nigh
unrestricted if the matters inquired into are otherwise relevant and not privileged, and the
inquiry is made
in good faith and within the bounds of law. It is allowed as a departure from the accepted and
usual
judicial proceedings of examining witnesses in open court where their demeanor could be
observed by the
trial judge, consistent with the principle of promoting just, speedy and inexpensive disposition
of every
action and proceeding; and provided it is taken in accordance with the provisions of the Rules
of Court,
i.e., with leave of court if summons have been served, and without such leave if an answer has
been
submitted; and provided further that a circumstance for its admissibility exists (Section 4, Rule
23, Rules
of Court). The rules on discovery should not be unduly restricted; otherwise, the advantage of a
liberal
discovery procedure in ascertaining the truth and expediting the disposal of litigation would be
defeated.
Sec. 1, Rule 23 of the 1997 Rules of Court which provides as follows:
SECTION 1. Depositions pending action, when may be taken.--- By leave of court after
jurisdiction has been obtained over any defendant or over property which is the subject of the
action, or without such leave after an answer has been served, the testimony of any person,
whether a party or not, may be taken, at the instance of any party, by deposition upon oral
examination or written interrogatories. The attendance of witnesses may be compelled by the
use of a subpoena as provided in Rule 21. Depositions shall be taken only in accordance with
these Rules. The deposition of a person confined in prison may be taken only by leave of
court on such terms as the court prescribes. (Emphasis supplied).
LCDC complied with the above quoted provision as it made its notice to take depositions after
the
answers of the defendants have been served, thus, erred in canceling the previously scheduled

depositions.
While it is true that depositions may be disallowed by trial courts if the examination is
conducted in bad
faith; or in such a manner as to annoy, embarrass, or oppress the person who is the subject of
the inquiry,
or when the inquiry touches upon the irrelevant or encroaches upon the recognized domains of
privilege,
such circumstances, however are absent in the case at bar.
The taking of depositions would not cause unnecessary duplicity even though the intended
deponents
shall also be called as witnesses during trial, as explained in Fortune Corp. v. Court of Appeals:
The availability of the proposed deponent to testify in court does not constitute good cause to
justify the courts order that his deposition shall not be taken. That the witness is unable to
attend
or testify is one of the grounds when the deposition of a witness may be used in court during
the
trial. But the same reason cannot be successfully invoked to prohibit the taking of his
deposition.
x x x Under the concept adopted by the new Rules, the deposition serves the double function of
a method
of discovery - with use on trial not necessarily contemplated - and a method of presenting
testimony.
Accordingly, no limitations other than relevancy and privilege have been placed on the taking of
depositions, while the use at the trial is subject to circumscriptions looking toward the use of
oral
testimony wherever practicable.
In Republic v. Sandiganbayan the Court held:
What is chiefly contemplated is the discovery of every bit of information which may be useful in
the preparation for trial, such as the identity and location of persons having knowledge of
relevant
facts; those relevant facts themselves; and the existence, description, nature, custody,
condition,
and location of any books, documents, or other tangible things. Hence, the depositiondiscovery
rules are to be accorded a broad and liberal treatment. No longer can the time-honored cry of
fishing expedition serve to preclude a party from inquiring into the facts underlying his
opponents case. Mutual knowledge of all the relevant facts gathered by both parties is
essential
to proper litigation. To that end, either party may compel the other to disgorge whatever facts
he
has in his possession. The deposition-discovery procedure simply advances the stage at which
the disclosure can be compelled from the time of trial to the period preceding it, thus reducing
the
possibility, of surprise.

The trial court erred in forcing LCDC to choose only from the options given by the trial court
and in
dismissing the complaint upon LCDCs refusal to choose either of the two.
The information LCDC seeks to obtain through the depositions, may not be obtained at the pretrial
conference, as the said deponents are not parties to the pre-trial conference.
As also pointed out by the CA:
x x x To unduly restrict the modes of discovery during trial, would defeat the very purpose for
which it is
intended, as a pre-trial device. By then, the issues would have been confined only on matters
defined
during pre-trial. The importance of the modes of discovery cannot be gainsaid in this case in
view of the
nature of the controversy involved and the conflicting interest claimed by the parties.
Deposition is chiefly a mode of discovery, the primary function of which is to supplement the
pleadings
for the purpose of disclosing the real matters of dispute between the parties and affording an
adequate
factual basis during the preparation for trial.
Further, in Republic v. Sandiganbayan the Court explained that:
The truth is that evidentiary matters may be inquired into and learned by the parties before
the
trial. Indeed, it is the purpose and policy of the law that the parties - before the trial if not
indeed
even before the pre-trial - should discover or inform themselves of all the facts relevant to the
action, not only those known to them individually, but also those known to their adversaries; in
other words, the desideratum is that civil trials should not be carried on in the dark; and the
Rules
of Court make this ideal possible through the deposition- discovery mechanism set forth in
Rules
24 to 29. The experience in other jurisdictions has been the ample discovery before trial, under
proper regulation, accomplished one of the most necessary ends of modern procedure; it not
only
eliminates unessential issues from trials thereby shortening them considerably, but also
requires
parties to play the game with the cards on the table so that the possibility of fair settlement
before
trial is measurably increased.
The various modes or instruments of discovery are meant to serve (1) as a device, along with
the pretrial hearing under Rule 20, to narrow and clarify the basic issues between the parties, and (2)
as a
device for ascertaining the facts relative to those issues. The evident purpose is, to repeat, to
enable

the parties, consistent with recognized privileges, to obtain the fullest possible knowledge of
the
issues and facts before civil trials and thus prevent that said trials are carried on in the dark.
In this case, the information sought to be obtained through the depositions of Elena and Pacita
are
necessary to fully equip LCDC in determining what issues will be defined at the pre-trial.
Without such
information before pre-trial, LCDC will be forced to prosecute its case in the dark --- the very
situation
which the rules of discovery seek to prevent. Indeed, the rules on discovery seek to make trial
less a
game of blind mans bluff and more a fair contest with the basic issues and facts disclosed to
the fullest
practicable extent.
Petition is denied for lack of merit.
December 14, 1992
SALVADOR D. BRIBONERIA vs CA
FACTS:
Petitioner Salvador D. Briboneria, filed a complaint for Annulment of Document and
Damages, with prayer for preliminary injunction and/or temporary restraining order
against private respondent Gertrudes B. Mag-isa, with the Regional Trial Court of Pasig.
In due time, private respondent Gertrudes B. Mag-isa, as defendant, filed her answer,
after issues in the case had been joined, petitioner served on the private respondent
Magisa a request for admission.
Petitioner filed a Motion for summary Judgment, claiming that the Answer to Request for
Admission was filed by private respondents beyond the ten (10) day period fixed in the
request and that the answer was not under oath; that, consequently the private
respondents are deemed to have admitted the material facts and documents subject of
the
request for admission. The private respondents filed an opposition to the motion for
summary judgment, while the petitioner filed a reply to said opposition. The petitioner
thereupon filed with the Court of Appeals a petition for certiorari ,prohibition and
mandamus to annul and set aside the order of the court a quo, alleging that the said
order
was issued with grave abuse of discretion amounting to lack of jurisdiction. The Court
of Appeals dismisses the petition. Petitioner's motion for reconsideration having been
likewise denied.
ISSUE:
Whether or not the appellate court erred in holding that the matters of fact and the
documents requested to be admitted are mere reiterations and/or reproductions of
those
alleged in the complaint.

HELD:
He claims that the material facts and documents described in the request for admission
are relevant evidentiary matters supportive of his cause of action. He further argues
that
the private respondents have impliedly admitted the material facts and documents
subject
of the request for admission on account of their failure to answer the request for
admission within the period fixed therein, and for said answer not being under oath. The
petition cannot be upheld; the petitioner's contentions are devoid of merit. "The
material
matters and documents set forth in the request for admission are the same as those set
forth in the complaint which private respondents either admitted or denied in their
answer." it will be noted that the request for admission was not served upon the private
respondent Mag-isa but upon her counsel, Atty. Alfredo A. Alto. Private respondent
Mag-isa,therefore, cannot be deemed to have admitted the facts and documents subject
of