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Avila 4B Memorandum of Agreement, constituted pactum commisorium and as such,

were null and void; and that the acknowledgment in the Deeds of Absolute
Remedial Law Review – Civil Procedure Sale were falsified, petitioner averred “that by reason of the fraudulent
actions by the [herein respondents], [herein petitioner] is prejudiced and is
I. Filing Fees now in danger of being deprived, physically and legally, of the mortgaged
properties without benefit of legal processes such as the remedy of
1. Ruby Shelter v. Formaran (2009) foreclosure and its attendant procedures, solemnities and remedies available
to a mortgagor, while [petitioner] is desirous and willing to pay its obligation
Facts: and have the mortgaged properties released.”

Petitioner obtained a loan3 in the total amount of P95,700,620.00 from In support of its second cause of action, petitioner narrated in its Complaint
respondents Romeo Y. Tan (Tan) and Roberto L. Obiedo (Obiedo), secured that on 18 January 2006, respondents Tan and Obiedo forcibly took over, with
by real estate mortgages over five parcels of land issued in the name of the use of armed men, possession of the five parcels of land subject of the
petitioner. When petitioner was unable to pay the loan when it became due falsified Deeds of Absolute Sale and fenced the said properties with barbed
and demandable, respondents Tan and Obiedo agreed to an extension of the wire. The actions of respondents Tan and Obiedo were to the damage and
same. prejudice of petitioner and its tenants/lessees.

The parties entered into a Memorandum of Agreement providing the Ultimately, petitioner’s prayer in its Complaint reads:
petitioner several options for the payment of its debt. In the MOA, the “WHEREFORE, premises considered, it is most respectfully prayed of this
respondents Tan and Obiedo granted petitioner until 31 December 2005 to Honorable Court that upon the filing of this complaint, a 72-hour temporary
settle its indebtedness, and condoned waived the interests, penalties, etc. restraining order be forthwith issued ex parte:
amounting P74M provided that the petitioner execute deeds of sale by way
of “dacion en pago” covering the same parcel of lands subject of the (d) After trial, judgment be rendered: 1. Making the injunction
mortgages. permanent; 2. Declaring the provision in the Memorandum of Agreement
requiring the [petitioner] to execute deed of sales (sic) in favor of the
Without payment having been made by petitioner on 31 December 2005, [respondents Tan and Obiedo] as dacion en pago in the event of non-payment
respondents Tan and Obiedo presented the Deeds of Absolute Sale dated 3 of the debt as pactum commissorium;
January 2006 before the Register of Deeds of Naga City on 8 March 2006, as
a result of which, they were able to secure TCTs over the five parcels of land 3. Annulling the Deed[s] of Sale for TCT Nos. 29918, 38374, 38376, 39225
in their names. and 39232, all dated January 3, 2006, the same being in contravention of law;

On 16 March 2006, petitioner filed before the RTC a Complaint12 against 4. Ordering the [respondents] jointly and solidarily to pay the [petitioner]
respondents Tan, Obiedo, and Atty. Reyes, for declaration of nullity of deeds actual damages of at least P300,000.00; attorney’s fees in the amount of
of sales and damages. P100,000.00 plus P1,000.00 per court attendance of counsel as appearance
fee; litigation expenses in the amount of at least P10,000.00 and exemplary
Petitioner raised two causes of action in its Complaint. damages in the amount of P300,000.00, plus the costs.

Asserting that the Deeds of Absolute Sale over the five parcels of land were [Petitioner] further prays for such other reliefs as may be proper, just and
executed merely as security for the payment of its loan to respondents Tan equitable under the premises.”14
and Obiedo; that the Deeds of Absolute Sale, executed in accordance with the

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Upon filing its Complaint with the RTC on 16 March 2006, petitioner paid In Manchester Development Corporation v. Court of Appeals, 149 SCRA 562
the sum of P13,644.25 for docket and other legal fees, as assessed by the (1987), the Court explicitly pronounced that “[t]he court acquires jurisdiction
Office of the Clerk of Court. The Clerk of Court initially considered Civil over any case only upon the payment of the prescribed docket fee.” Hence,
Case No. 2006-0030 as an action incapable of pecuniary estimation and the payment of docket fees is not only mandatory, but also jurisdictional.
computed the docket and other legal fees due thereon according to Section
7(b)(1), Rule 141 of the Rules of Court. In Sun Insurance Office, Ltd. (SIOL) v. Asuncion,29 the Court laid down
guidelines for the implementation of its previous pronouncement in
Thereafter, respondent Tan filed before the RTC an Omnibus Motion in Manchester under particular circumstances, to wit:
which he contended that Civil Case No. 2006-0030 involved real properties, “1. It is not simply the filing of the complaint or appropriate initiatory
the docket fees for which should be computed in accordance with Section pleading, but the payment of the prescribed docket fee, that vests a trial court
7(a), not Section 7(b)(1), of Rule 141 of the Rules of Court, as amended by with jurisdiction over the subject matter or nature of the action. Where the
A.M. No. 04-2-04-SC which took effect on 16 August 2004. Since petitioner filing of the initiatory pleading is not accompanied by payment of the docket
did not pay the appropriate docket fees for Civil Case No. 2006- 0030, the fee, the court may allow payment of the fee within a reasonable time but in
RTC did not acquire jurisdiction over the said case. Hence, respondent Tan no case beyond the applicable prescriptive or reglementary period.
asked the RTC to issue an order requiring petitioner to pay the correct and
accurate docket fees pursuant to Section 7(a), Rule 141 of the Rules of Court, 2. The same rule applies to permissive counterclaims, third-party claims and
as amended; and should petitioner fail to do so, to deny and dismiss the prayer similar pleadings, which shall not be considered filed until and unless the
of petitioner for the annulment of the Deeds of Absolute Sale for having been filing fee prescribed therefor is paid. The court may also allow payment of
executed in contravention of the law or of the Memorandum of Agreement as said fee within a reasonable time but also in no case beyond its applicable
pactum commisorium. prescriptive or reglementary period.

RTC ruled for respondent and ordered it to pay the fees within 15 days. 3. Where the trial court acquires jurisdiction over a claim by the filing of the
appropriate pleading and payment of the prescribed filing fee but,
In a letter dated 19 April 2006, the RTC Clerk of Court computed, upon the subsequently, the judgment awards a claim not specified in the pleading, or
request of counsel for the petitioner, the additional docket fees petitioner must if specified the same has been left for determination by the court, the
pay for in Civil Case No. 2006-0030 as directed in the afore- mentioned RTC additional filing fee therefor shall constitute a lien on the judgment. It shall
Orders. Per the computation of the RTC Clerk of Court, after excluding the be the responsibility of the Clerk of Court or his duly authorized deputy to
amount petitioner previously paid on 16 March 2006, petitioner must still pay enforce said lien and assess and collect the additional fee.”
the amount of P720,392.60 as docket fees.23
The docket fees under Section 7(a), Rule 141, in cases involving real property
CA affirmed. depend on the fair market value of the same: the higher the value of the real
property, the higher the docket fees due. In contrast, Section 7(b) (1), Rule
Issue: 141 imposes a fixed or flat rate of docket fees on actions incapable of
W/N the action by petitioner is one incapable of pecuniary estimation pecuniary estimation.
therefore he paid the proper filing fees corresponding to such action – No.
In order to resolve the issue of whether petitioner paid the correct amount of
Held: docket fees, it is necessary to determine the true nature of its Complaint. The
No. dictum adhered to in this jurisdiction is that the nature of an action is
determined by the allegations in the body of the pleading or Complaint itself,
rather than by its title or heading.32

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No matter how fastidiously petitioner attempts to conceal them, the A real action indisputably involves real property. The docket fees for a real
allegations and reliefs it sought in its Complaint in Civil Case No. 2006-0030 action would still be determined in accordance with the value of the real
appears to be ultimately a real action, involving as they do the recovery by property involved therein; the only difference is in what constitutes the
petitioner of its title to and possession of the five parcels of land from acceptable value. In computing the docket fees for cases involving real
respondents Tan and Obiedo. properties, the courts, instead of relying on the assessed or estimated value,
would now be using the fair market value of the real properties (as stated in
A real action is one in which the plaintiff seeks the recovery of real property; the Tax Declaration or the Zonal Valuation of the Bureau of Internal
or, as indicated in what is now Section 1, Rule 4 of the Rules of Court, a real Revenue, whichever is higher) or, in the absence thereof, the stated value of
action is an action affecting title to or recovery of possession of real property. the same.

Siapno v. Manalo: In sum, the Court finds that the true nature of the action instituted by
“A prayer for annulment or rescission of contract does not operate to petitioner against respondents is the recovery of title to and possession of real
efface the true objectives and nature of the action which is to recover real property. It is a real action necessarily involving real property, the docket fees
property. for which must be computed in accordance with Section 7(1), Rule 141 of the
Rules of Court, as amended. The Court of Appeals, therefore, did not commit
An action for the annulment or rescission of a sale of real property is a any error in affirming the RTC Orders requiring petitioner to pay additional
real action. Its prime objective is to recover said real property. docket fees for its Complaint in Civil Case No. 2006-0030.

While it is true that petitioner does not directly seek the recovery of title The Court does not give much credence to the allegation of petitioner that if
or possession of the property in question, his action for annulment of sale the judgment of the Court of Appeals is allowed to stand and not rectified, it
and his claim for damages are closely intertwined with the issue of would result in grave injustice and irreparable injury to petitioner in view of
ownership of the building which, under the law, is considered immovable the prohibitive amount assessed against it. It is a sweeping assertion which
property, the recovery of which is petitioner’s primary objective. The lacks evidentiary support. Undeniably, before the Court can conclude that the
prevalent doctrine is that an action for the annulment or rescission of a amount of docket fees is indeed prohibitive for a party, it would have to look
sale of real property does not operate to efface the fundamental and into the financial capacity of said party. It baffles this Court that herein
prime objective and nature of the case, which is to recover said real petitioner, having the capacity to enter into multi-million transactions, now
property. It is a real action.” stalls at paying P720,392.60 additional docket fees so it could champion
before the courts its rights over the disputed real properties. Moreover, even
The Court calls attention to the following statement in Spouses De Leon: “A though the Court exempts individuals, as indigent or pauper litigants, from
review of the jurisprudence of this Court indicates that in determining paying docket fees, it has never extended such an exemption to a corporate
whether an action is one the subject matter of which is not capable of entity.
pecuniary estimation, this Court has adopted the criterion of first ascertaining
the nature of the principal action or remedy sought.” Necessarily, the
determination must be done on a case-to-case basis, depending on the facts
and circumstances of each. What petitioner conveniently ignores is that in
Spouses De Leon, the action therein that private respondents instituted before
the RTC was “solely for annulment or rescission” of the contract of sale over
a real property.40 There appeared to be no transfer of title or possession to
the adverse party.

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2. Do-All Metals v. Security Bank (2011) restraining order (TRO) or preliminary injunction against the Bank and its
co-defendants Payongayong, Sison, PISA, and Gil Silos.2
Facts:
From 1996 to 1997, Dragon Lady Industries, Inc., owned by petitioner The Bank denied, on the other hand, that its guards harassed DMI and the
spouses Domingo Lim and Lely Kung Lim (the Lims) took out loans from Lims. To protect its property, the Bank began posting guards at the building
respondent Security Bank Corporation (the Bank) that totaled even before it leased the same to DMI. Indeed, this arrangement benefited
P92,454,776.45. Unable to pay the loans on time, the Lims assigned some of both parties. The Bank alleged that in October of 2000, when the parties could
their real properties to the Bank to secure the same, including a building and not come to an agreement regarding the purchase of the property, DMI
the lot on which it stands (the property), located at M. de Leon St., Santolan, vacated the same and peacefully turned over possession to the Bank.
Pasig City.1
The Bank offered no objection to the issuance of a TRO since it claimed that
In 1998 the Bank offered to lease the property to the Lims through petitioner it never prevented DMI or its employees from entering or leaving the
Do-All Metals Industries, Inc. (DMI) primarily for business although the building. For this reason, the RTC directed the Bank to allow DMI and the
Lims were to use part of the property as their residence. DMI and the Bank Lims to enter the building and get the things they left there. The latter
executed a two-year lease contract from October 1, 1998 to September 30, claimed, however, that on entering the building, they were unable to find the
2000 but the Bank retained the right to pre-terminate the lease. The contract movable properties they left there. In a supplemental complaint, DMI and
also provided that, should the Bank decide to sell the property, DMI shall the Lims alleged that the Bank surreptitiously took such properties,
have the right of first refusal. resulting in additional actual damages to them of over P27 million.

On December 3, 1999, before the lease was up, the Bank gave notice to DMI RTC rendered a decision in favor of DMI and the Lims. It ordered the Bank
that it was pre-terminating the lease on December 31, 1999. Wanting to to pay the plaintiffsP27,974,564.00 as actual damages, P500,000.00 as moral
exercise its right of first refusal, DMI tried to negotiate with the Bank the damages, P500,000 as exemplary damages, and P100,000.00 as attorney’s
terms of its purchase. DMI offered to pay the Bank P8 million for the property fees. But the court absolved defendants Payongayong, Sison, Silos and PISA
but the latter rejected the offer, suggesting P15 million instead. DMI made a of any liability.
second offer of P10 million but the Bank declined the same.
The Bank moved for reconsideration of the decision, questioning among
While the negotiations were on going, the Lims claimed that they continued other things the RTC’s authority to grant damages considering plaintiffs’
to use the property in their business. But the Bank posted at the place private failure to pay the filing fees on their supplemental complaint. The RTC
security guards from Philippine Industrial Security Agency (PISA). The Lims denied the motion. On appeal to the CA, the latter found for the Bank,
also claimed that on several occasions in 2000, the guards, on instructions of reversed the RTC decision, and dismissed the complaint as well as the
the Bank representatives Titolaido Payon gayong and Evylene Sison, counterclaims.5 DMI and the Lims filed a motion for reconsideration but the
padlocked the entrances to the place and barred the Lims as well as DMI’s CA denied the same, hence this petition.
employees from entering the property. One of the guards even pointed his
gun at one employee and shots were fired. Because of this, DMI was unable Issue:
to close several projects and contracts with prospective clients. Further, the W/N the RTC had no jurisdiction over the case due to the petitioner’s failure
Lims alleged that they were unable to retrieve assorted furniture, equipment, to pay filing fees on its supplemental complaint – No. But the RTC should
and personal items left at the property. have treated the supplemental complaint as not filed.

The Lims eventually filed a complaint with the Regional Trial Court (RTC) Held:
of Pasig City for damages with prayer for the issuance of a temporary No. But the RTC should have treated the supplemental complaint as not filed.

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On the issue of jurisdiction, respondent Bank argues that plaintiffs’ failure to supplemental complaint. Only the Supreme Court can grant exemptions
pay the filing fees on their supplemental complaint is fatal to their action. But to the payment of the fees due the courts and these exemptions are
what the plaintiffs failed to pay was merely the filing fees for their embodied in its rules.
Supplemental Complaint. The RTC acquired jurisdiction over plaintiffs’
action from the moment they filed their original complaint accompanied by WHEREFORE, the Court PARTIALLY GRANTS the petition and
the payment of the filing fees due on the same. The plaintiffs’ non-payment REINSTATES with modification the decision of the Regional Trial Court of
of the additional filing fees due on their additional claims did not divest the Pasig City in Civil Case 68184. The Court DIRECTS respondent Security
RTC of the jurisdiction it already had over the case. Bank Corporation to pay petitioners DMI and spouses Domingo and Lely
Kung Lim damages in the following amounts: P500,000.00 as moral
As to the damages that plaintiffs claim under their supplemental complaint, damages, P500,000.00 as exemplary damages, and P100,000.00 for
their stand is that the RTC committed no error in admitting the complaint attorney’s fees. The Court DELETES the award of actual damages of
even if they had not paid the filing fees due on it since such fees constituted P27,974,564.00.
a lien anyway on the judgment award. But this after-judgment lien, which SO ORDERED.
implies that payment depends on a successful execution of the judgment,
applies to cases where the filing fees were incorrectly assessed or paid or
where the court has discretion to fix the amount of the award. None of these
circumstances obtain in this case.

Here, the supplemental complaint specified from the beginning the actual
damages that the plaintiffs sought against the Bank. Still plaintiffs paid no
filing fees on the same. And, while petitioners claim that they were willing to
pay the additional fees, they gave no reason for their omission nor offered to
pay the same. They merely said that they did not yet pay the fees because the
RTC had not assessed them for it. But a supplemental complaint is like any
complaint and the rule is that the filing fees due on a complaint need to be
paid upon its filing. The rules do not require the court to make special
assessments in cases of supplemental complaints. To aggravate plaintiffs’
omission, although the Bank brought up the question of their failure to pay
additional filing fees in its motion for reconsideration, plaintiffs made no
effort to make at least a late payment before the case could be submitted for
decision, assuming of course that the prescription of their action had not then
set it in. Clearly, plaintiffs have no excuse for their continuous failure to pay
the fees they owed the court. Consequently, the trial court should have treated
their Supplemental Complaint as not filed.

Plaintiffs of course point out that the Bank itself raised the issue of non-
payment of additional filing fees only after the RTC had rendered its decision
in the case. The implication is that the Bank should be deemed to have waived
its objection to such omission. But it is not for a party to the case or even for
the trial court to waive the payment of the additional filing fees due on the

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3. Phil. First Insurance v. Pyramid (2008) THAT, [herein petitioners] be adjudged jointly and severally to pay to [it], in
addition to the foregoing, the following:
Facts: 1. The sum of PHP 50,000.00 plus PHP 1,500.00 for each Court session
The issue, in the main, in the present case is whether respondent, Pyramid attended by counsel until the instant [case] is finally terminated, as and for
Logistics and Trucking Corporation (Pyramid), which filed on November 7, attorney’ s fees;
2001 a complaint,1 denominated as one for specific performance and 2. The costs of suit[;]
damages, against petitioners Philippine First Insurance Company, Inc. and for other reliefs just and equitable in the premises.”
(Philippine First) and Paramount General Insurance Corporation (Paramount)
before the Regional Trial Court (RTC) of Makati, docketed as Civil Case No. Pyramid was assessed P610 docket fee, apparently on the basis of the amount
01-1609, paid the correct docket fee; if in the negative, whether the complaint of P50,000 specified in the prayer representing attorney’s fees, which it duly
should be dismissed or Pyramid can still be ordered to pay the fee. paid.5

Pyramid sought to recover the proceeds of two insurance policies issued to it, Pyramid later filed a 1st Amended Complaint6 containing minor changes in
Policy No. IN-002904 issued by petitioner Paramount, and Policy No. MN- its body7 but bearing the same prayer.8 Branch 148 of the Makati RTC to
MCL-HO-00-0000007-00 issued by petitioner Philippine First. Despite which the complaint was raffled admitted the Amended Complaint.9
demands, petitioners allegedly failed to settle them, hence, it filed the
complaint subject of the present petition. Petitioners filed a Motion to Dismiss on the ground of, inter alia, lack of
jurisdiction, Pyramid not having paid the docket fees in full. Petitioners claim
In its complaint, Pyramid alleged that on November 8, 2000, its delivery van that in the body of the amended complaint, respondent Pyramid sought to
bearing license plate number PHL-545 which was loaded with goods collect from the petitioners the amount of P907,159.07. However, the
belonging to California Manufacturing Corporation (CMC) valued at respondent deliberately failed to specify in the prayer what these damages
P907,149.07 left the CMC Bicutan Warehouse but the van, together with the are. According to petitioners, this deliberate omission by the plaintiff is
goods, failed to reach its destination and its driver and helper were nowhere clearly intended for no other purposes than to evade the payment of the
to be found, to its damage and prejudice; that it filed a criminal complaint correct filing fee if not to mislead the docket clerk, in the assessment of the
against the driver and the helper for qualified theft, and a claim with herein filing fee. In fact, the docket clerk in the instant case charged the plaintiff a
petitioners as co-insurers of the lost goods but, in violation of petitioners’ total of Php610.00 only as a filing fee, which she must have based on the
undertaking under the insurance policies, they refused without just and valid amount of Php50,000.00 [attorney’s fees] only.
reasons to compensate it for the loss; and that as a direct consequence of
petitioners’ failure, despite repeated demands, to comply with their respective Petitioners cited11 Manchester Development Corporation v. Court of
undertakings under the Insurance Policies by compensating for the value of Appeals12 which held:
the lost goods, it suffered damages and was constrained to engage the services “x x x [A]ll complaints, petitions, answers and other similar pleadings should
of counsel to enforce and protect its right to recover compensation under said specify the amount of damages being prayed for not only in the body of the
policies, for which services it obligated itself to pay the sum equivalent to pleading but also in the prayer, and said damages shall be considered in the
twenty-five (25%) of any amount recovered as and for attorney’s fees and assessment of the filing fees in any case. Any pleading that fails to comply
legal expenses.2 with this requirement shall not be accepted or admitted, or shall otherwise be
expunged from the record.”13 (Emphasis and italics supplied)
Pyramid thus prayed that after due proceedings, judgment be rendered,
ordering [herein petitioners] to comply with their obligation under their They cited too Sun Insurance Office, Ltd. v. Asuncion14 which held that “[i]t
respective Insurance Policies by paying to [it] jointly and severally, the is not simply the filing of the complaint or appropriate pleading, but the
claims arising from the subject losses.

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payment of the prescribed docket fee, that vests a trial court with jurisdiction In Tacay v. Regional Trial Court of Tagum, Davao del Norte, 180 SCRA 433
over the subject-matter or nature of the action.”15 (1989), the Court clarified the effect of the Sun Insurance ruling on the
Manchester ruling as follows:
To the Motion to Dismiss Pyramid filed its Opposition,17 alleging that if
there was a mistake in the assessment of the docket fees, the trial court was “As will be noted, the requirement in Circular No. 7 [of this Court which was
not precluded from acquiring jurisdiction over the complaint as “it has the issued based on the Manchester ruling] that complaints, petitions, answers,
authority to direct the mistaken party to complete the docket fees in the course and similar pleadings should specify the amount of damages being prayed for
of the proceedings . . .”18 The Opposition merited a Reply19 from not only in the body of the pleading but also in the prayer, has not been
petitioners. altered. What has been revised is the rule that subsequent “amendment of the
complaint or similar pleading will not thereby vest jurisdiction in the Court,
RTC denied the MTD. much less the payment of the docket fee based on the amount sought in the
amended pleading,” the trial court now being authorized to allow payment
The Court of Appeals partially granted petitioners’ petition for certiorari by of the fee within a reasonable time but in no case beyond the applicable
setting aside the trial judge’s assailed orders and ordering Pyramid to file the prescriptive period or reglementary period. Moreover, a new rule has been
correct docket fees within a reasonable time, it holding that while the added, governing the awards of claims not specified in the pleading—i.e.,
complaint was denominated as one for specific performance, it sought to damages arising after the filing of the complaint or similar pleading—as to
recover from petitioners Pyramid’s “claims arising from the subject losses.” which the additional filing fee therefore shall constitute a lien on the
judgment.
Hence this petition by the petitioners.
Two situations may arise. One is where the complaint or similar pleading sets
Arguments: out a claim purely for money and damages and there is no statement of the
Petitioners invoke the doctrine in Manchester Development Corporation v. amounts being claimed. In this event the rule is that the pleading will “not be
Court of Appeals38 that a pleading which does not specify in the prayer the accepted nor admitted, or shall otherwise be expunged from the record.” In
amount sought shall not be admitted or shall otherwise be expunged, and other words, the complaint or pleading may be dismissed, or the claims as to
that the court acquires jurisdiction only upon the payment of the prescribed which amounts are unspecified may be expunged, although as aforestated the
docket fee.39 Court may, on motion, permit amendment of the complaint and payment of
the fees provided the claim has not in the meantime become time-barred.
Pyramid, on the other hand, insists, in its Comment on the Petition,40 on the
application of Sun Insurance Office, Ltd. (SIOL) v. Asuncion41 and The other is where the pleading does specify the amount of every claim, but
subsequent rulings relaxing the Manchester ruling by allowing payment of the fees paid are insufficient; and here again, the rule now is that the court
the docket fee within a reasonable time, in no case beyond the applicable may allow a reasonable time for the payment of the prescribed fees, or the
prescriptive or reglementary period, where the filing of the initiatory pleading balance thereof, and upon such payment, the defect is cured and the court
is not accompanied by the payment of the prescribed docket fee. may properly take cognizance of the action, unless in the meantime
prescription has set in and consequently barred the right of action.”
Issue:
W/N respondent paid the correct filing fees, and, if no, whether its complaint Indeed, Pyramid captioned its complaint as one for “specific performance and
should be expunged – No and no. damages” even if it was, as the allegations in its body showed, seeking in the
main the collection of its claims-sums of money representing losses the
Held: amount of which it, by its own admission, “knew.”46 And, indeed, it failed
No and no. to specify in its prayer in the complaint the amount of its claims/damages.

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When Pyramid amended its complaint, it still did not specify, in its prayer,
the amount of claims/damages it was seeking.

Petitioner’s following justification for omitting to specify in the prayer of its


complaint the amount of its claims fails to impress:
“While respondent knew its losses and alleged them in the body of the
Complaint, it was not aware of the extent of petitioners’ respective liability
under the two insurance policies. The allegation of respondent’s losses,
albeit, without repeating them in its prayer for relief was not motivated by an
intention to mislead, cheat or defraud the Court. It just left the matter of
liability arising from two separate and distinct Insurance Policies covering
the same insurable risk for the trial court’s determination, hence, respondent
came up with an action for “specific performance.”

As the salient allegations of Pyramid’s complaint show and as priorly stated,


they constitute, in the main, an action for collection of its claims it admittedly
“knew.”

Assuming arguendo that Pyramid has other claims the amounts of which are
yet to be determined by the trial court, the rule established in Manchester
which was embodied in this Court’s Circular No. 7-88 issued on March 24,
1988, as modified by the Sun Insurance ruling, still applies.

Consider this Court’s pronouncement bearing on the matter in Ayala


Corporation v. Madayag:
“While it is true that the determination of certain damages x x x is left to the
sound discretion of the court, it is the duty of the parties claiming such
damages to specify the amount sought on the basis of which the court may
make a proper determination, and for the proper assessment of the
appropriate docket fees. The exception contemplated as to claims not
specified or to claims although specified are left for determination of the court
is limited only to any damages that may arise after the filing of the complaint
or similar pleading for then it will not be possible for the claimant to specify
nor speculate as to the amount thereof.” (Emphasis and italics supplied)

WHEREFORE, in light of the foregoing discussions, the petition is DENIED.


SO ORDERED.

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4. Bautista v. Unangst (2008) without need of a judicial order; and (3) respondent’s refusal to do so will
entitle petitioner to take immediate possession of the property.12
Facts:
On November 15, 1996, Hamilton Salak rented a car from GAB Rent-A-Car, Respondent failed to repurchase the property within the stipulated period. As
a car rental shop owned by petitioner Benjamin Bautista. The lease was for a result, petitioner filed, on June 5, 1998, a complaint for specific
three (3) consecutive days at a rental fee of P1,000.00 per day.5 However, performance or recovery of possession, for sum of money, for consolidation
Salak failed to return the car after three (3) days prompting petitioner to file of ownership and damages against respondent and other unnamed persons
a complaint against him for estafa, violation of Batas Pambansa Blg. 22 and before the RTC of Olongapo City.
carnapping.6
Petitioner prayed before the RTC that an order be issued in his favor directing
On February 2, 1997, Salak and his common-law wife, respondent Shirley G. respondents to: (1) surrender the possession of the property; (2) pay
Unangst, were arrested by officers of the Criminal Investigation Service P150,000.00 for the reasonable compensation for its use from March 7, 1997
Group (CISG) of the Philippine National Police while riding the rented car to June 7, 1998, plus P10,000.00 per month afterward; (3) pay the amount
along Quezon City. The next day, petitioner demanded from Salak at the advanced by petitioner, to wit: P71,129.05 and P11,993.72 for the payment
CISG Office the sum of P232,372.00 as payment for car rental fees, fees of capital gains tax and real estate taxes, respectively; and P70,000.00 for
incurred in locating the car, attorney’s fees, capital gains tax, transfer tax, and attorney’s fees.15
other incidental expenses.7
On June 16, 1998, petitioner filed an amended complaint,16 reiterating his
Salak and respondent expressed willingness to pay but since they were then previous allegations but with the added prayer for consolidation of ownership
short on cash, Salak proposed to sell to petitioner a house and lot titled in the pursuant to Article 1607 of the Civil Code.17
name of respondent. Petitioner welcomed the proposal after consulting his
wife, Cynthia. Cynthia, on the other hand, further agreed to pay the mortgage RTC ruled for petitioner.
loan of respondent over the subject property to a certain Jojo Lee in the
amount of P295,000.00 as the property was then set to be publicly auctioned Respondents failed to interpose a timely appeal. However, on September 10,
on February 17, 1997.8 2004, respondent Unangst filed a petition for relief pursuant to Section 38 of
the 1997 Rules on Civil Procedure. She argued that she learned of the decision
To formalize their amicable settlement, Cynthia, Salak and respondent of the RTC only on September 6, 2004 when she received a copy of the
executed a written agreement.9 They stipulated that respondent would sell, motion for execution filed by petitioner.21
subject to repurchase, her residential property in favor of Cynthia for the total
amount of P527,372.00 broken down, as follows: (1) P295,000.00 for the Petitioner, on the other hand, moved for the dismissal of respondent’s petition
amount paid by Cynthia to Lee to release the mortgage on the property; and on the ground that the latter paid an insufficient sum of P200.00 as docket
(2) P232,372.00, which is the amount due to GAB Rent-A-Car. Cynthia also fees.22
agreed to desist from pursuing the complaint against Salak and respondent.10
It appears that respondent Unangst initially paid P200.00 as docket fees as
Respondent and petitioner also executed a separate deed of sale with right to this was the amount assessed by the Clerk of Court of the RTC.23 Said
repurchase,11 specifying, among others, that: amount was insufficient as the proper filing fees amount to P1,715.00.
(1) respondent, as vendor, shall pay capital gains tax, current real estate taxes Nevertheless, the correct amount was subsequently paid by said respondent
and utility bills pertaining to the property; (2) if respondent fails to repurchase on February 22, 2005.24
the property within 30 days from the date of the deed, she and her assigns
shall immediately vacate the premises and deliver its possession to petitioner

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In their comment,25 respondents countered that they should not be faulted reconsideration or a petition for certiorari to the higher court to question said
for paying deficient docket fees as it was due to an erroneous assessment of order.
the Clerk of Court.26
We agree with respondents. Their failure to pay the correct amount of docket
The RTC granted the petition for relief. Subsequently, it directed respondents fees was due to a justifiable reason.
to file a notice of appeal within twenty-four (24) hours from receipt of the
order.27 Accordingly, on February 23, 2005, respondents filed their notice of The right to appeal is a purely statutory right. Not being a natural right or a
appeal.28 part of due process, the right to appeal may be exercised only in the manner
and in accordance with the rules provided therefor. For this reason, payment
Before the CA, petitioner insisted, among others, that although the petition of the full amount of the appellate court docket and other lawful fees within
for relief of respondents was filed on time, the proper filing fees for said the reglementary period is mandatory and jurisdictional.
petition were paid beyond the 60-day reglementary period. He posited that
jurisdiction is acquired by the court over the action only upon full payment Nevertheless, as this Court ruled in Aranas v. Endona, the strict application
of prescribed docket fees. of the jurisdictional nature of the above rule on payment of appellate docket
fees may be mitigated under exceptional circumstances to better serve the
CA ruled for respondents. interest of justice. It is always within the power of this Court to suspend its
own rules, or to except a particular case from their operation, whenever the
Issue: purposes of justice require it.
W/N the respondents’ failure to pay the docket fees on time warranted the
dismissal of its petition for relief – No. In not a few instances, the Court relaxed the rigid application of the rules of
procedure to afford the parties the opportunity to fully ventilate their cases on
Held: the merits. This is in line with the time-honored principle that cases should
No. be decided only after giving all parties the chance to argue their causes and
defenses.
Arguments:
On the first issue, petitioner contends that respondents’ “Petition for Relief to Technicality and procedural imperfections should thus not serve as bases of
Be Able to Appeal Judgment,” which paved the way for the allowance of decisions. In that way, the ends of justice would be better served. For, indeed,
respondents’ appeal of the RTC decision, was filed within the prescriptive the general objective of procedure is to facilitate the application of justice to
period but the proper docket fees for it were belatedly paid.40 He thus posits the rival claims of contending parties, bearing always in mind that procedure
that the RTC did not acquire jurisdiction over said petition. Having no is not to hinder but to promote the administration of justice.
jurisdiction, the RTC could not have allowed respondents to appeal.
WHEREFORE, the petition is DENIED for lack of merit. SO ORDERED.
On this issue, respondent counters that the belated payment of proper docket
fees was not due to their fault but to the improper assessment by the Clerk of
Court. Respondent asserts the ruling of the CA that the court may extend the
time for the payment of the docket fees if there is a justifiable reason for the
failure to pay the correct amount. Moreover, respondent argues that petitioner
failed to contest the RTC Order dated February 21, 2004 that allowed the
payment of supplementary docket fees. Petitioner failed to file a motion for

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5. Chua v. Executive Judge (2013) of the MeTC ratiocinated that granting petitioner’s plea would constitute a
deferment in the payment of filing fees that, in turn, contravenes Section 1(b)
Facts: of the Rule 111 of the Rules of Court.1
On 13 January 2012, herein petitioner Richard Chua filed before the Office
of the City Prosecutor (OCP) of Manila, a complaint charging one Letty Sy Issue:
Gan of forty (40) counts of violation of Batas Pambansa Bilang (BP Blg.) 22 W/N petitioner should be allowed to pay the filing fees on a per case basis –
or the Bouncing Checks Law.3 After conducting preliminary investigation, Yes.
the OCP found probable cause and, on 22 March 2012, filed forty (40) counts
of violation of BP Blg. 22 before the MeTC.4 Held:
Yes.
Consequently, the MeTC informed petitioner that he has to pay a total of
P540,668.00 as filing fees for all the forty (40) counts of violation of BP Blg. Thus, We come to the focal issue of whether the Executive Judge of the
22.5 Finding the said amount to be beyond his means, petitioner consulted MeTC committed grave abuse of discretion, in light of the facts and
with the MeTC clerk of court to ask whether he could pay filing fees on a per circumstances herein obtaining, in refusing petitioner’s request of paying
case basis instead of being required to pay the total filing fees for all the BP filing fees on a per case basis.
Blg. 22 cases all at once.6 The MeTC clerk of court opined that petitioner
could not.7 Petitioner was thus unable to pay any filing fees. We answer in the affirmative. We grant the petition.

Due to non-payment of the required filing fees, the MeTC designated the In proposing to pay filing fees on a per case basis, petitioner was not trying
forty (40) counts of violation of BP Blg. 22 as undocketed cases under UDK to evade or deny his obligation to pay for the filing fees for all forty (40)
Nos. 12001457 to 96. Subsequently, the OCP moved for consolidation of the counts of violation of BP Blg. 22 filed before the MeTC. He, in fact,
said cases.8 acknowledges such obligation. He, in fact, admits that he is incapable of
fulfilling such obligation in its entirety.
On 18 April 2012, petitioner filed before the Executive Judge of the MeTC a
motion entitled “Urgent Motion to Allow Private Complainant to Pay Filing Rather, what petitioner is asking is that he at least be allowed to pursue some
Fee on a Per Case Basis.” of the cases, the filing fees of which he is capable of financing. Petitioner
manifests that, given his current financial status, he simply cannot afford the
In it, petitioner reiterated his request that he be allowed to pay filing fees on filing fees for all the forty (40) BP Blg. 22 cases.
a per case basis instead of being required to pay the total amount of filing fees
in its entirety. We see nothing wrong or illegal in granting petitioner’s request.

On 26 June 2012, the Executive Judge issued an Order denying petitioner’s First. The Executive Judge erred when she treated the entire P540,668.00 as
Urgent Motion. In rebuffing petitioner’s Urgent Motion, the Executive Judge one indivisible obligation, when that figure was nothing but the sum of

1. (b) The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to seeks to recover liquidated, moral, nominal, temperate or exemplary damages, the
include the corresponding civil action. No reservation to file such civil action offended party shall pay additional filing fees based on the amounts alleged therein.
separately shall be allowed. If the amounts are not so alleged but any of these damages are subsequently awarded
by the court, the filing fees based on the amount awarded shall constitute a first lien
Upon filing of the aforesaid joint criminal and civil actions, the offended party shall on the judgment. (Emphasis supplied)
pay in full the filing fees based on the amount of the check involved, which shall be
considered as the actual damages claimed. Where the complaint or information also

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individual filing fees due for each count of violation of BP Blg. 22 filed
before the MeTC. Granting petitioner’s request would not constitute a
deferment in the payment of filing fees, for the latter clearly intends to pay in
full the filing fees of some, albeit not all, of the cases filed.

Filing fees, when required, are assessed and become due for each initiatory
pleading filed. In criminal actions, these pleadings refer to the information
filed in court.

In the instant case, there are a total of forty (40) counts of violation of BP
Blg. 22 that was filed before the MeTC. And each of the forty (40) was, in
fact, assessed its filing fees, individually, based on the amount of check one
covers. Under the rules of criminal procedure, the filing of the forty (40)
counts is equivalent to the filing of forty (40) different informations, as each
count represents an independent violation of BP Blg. 22. Filing fees are,
therefore, due for each count and may be paid for each count separately.

Second. In an effort to justify her refusal of petitioner’s request, the Executive


Judge further argues that since all forty (40) counts of violation of BP Blg.
22 were brought about by a single complaint filed before the OCP and are
now consolidated before the court, the payment of their filing fees should be
made for all or none at all.18

That all forty (40) counts of violation of BP Blg. 22 all emanated from a single
complaint filed in the OCP is irrelevant. The fact remains that there are still
forty (40) counts of violation of BP Blg. 22 that were filed before the MeTC
and, as a consequence, forty (40) individual filing fees to be paid.

Neither would the consolidation of all forty (40) counts make any difference.
Consolidation unifies criminal cases involving related offenses only for
purposes of trial.19 Consolidation does not transform the filing fees due for
each case consolidated into one indivisible fee.

Third. Allowing petitioner to pay for the filing fees of some of the forty (40)
counts of violation of BP Blg. 22 filed before the MeTC, will concededly
result into the absolute nonpayment of the filing fees of the rest. The fate of
the cases which filing fees were not paid, however, is already the concern of
the MeTC.

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6. In re: exemption of the NPC from payment of docket fees
Section 70 of Republic Act No. 9136 (Electric Power Industry Reform Act
Facts: of 2001), on privatization of NPC assets, expressly states that the NPC “shall
The National Power Corporation (NPC) seeks clarification from the Court on remain as a national government-owned and -controlled corporation.”
whether or not it is exempt from the payment of filing fees, appeal bonds and
supersedeas bonds. Thus, NPC is not exempt from payment of filing fees.

On December 6, 2005, the Court issued A.M. No. 05-10- 20-SC, In re: The non-exemption of NPC is further fortified by the promulgation on
Exemption of the National Power Corporation from the Payment of February 11, 2010 of A.M. No. 08-2-01-0, In re: Petition for Recognition of
Filing/Docket Fees, on the basis of Section 13, Republic Act No. 6395 (An the Exemption of the Government Service Insurance System (GSIS) from
Act Revising the Charter of the National Power Corporation). The Court Payment of Legal Fees. In said case, the Court, citing Echegaray v. Secretary
therein declared that the NPC is still exempt from the payment of filing fees, of Justice, 301 SCRA 96 (1999) stressed that the 1987 Constitution took away
appeal bonds, and supersedeas bonds. the power of Congress to repeal, alter or supplement rules concerning
pleading, practice, and procedure; and that the power to promulgate these
On October 27, 2009, however, the Court issued A.M. No. 05-10-20-SC rules is no longer shared by the Court with Congress and the Executive.
stating that:
“The Court Resolved, upon recommendation of the Committee on the “Since the payment of legal fees is a vital component of the rules promulgated
Revision of the Rules of Court, to DENY the request of the National Power by this Court concerning pleading, practice and procedure, it cannot be
Corporation (NPC) for exemption from the payment of filing fees pursuant validly annulled, changed or modified by Congress. As one of the safeguards
to Section 10 of Republic Act No. 6395, as amended by Section 13 of of this Court’s institutional independence, the power to promulgate rules of
Presidential Decree No. 938. The request appears to run counter to Section pleading, practice and procedure is now the Court’s exclusive domain. That
5(5), Article VIII of the Constitution, in the rule-making power of the power is no longer shared by this Court with Congress, much less the
Supreme Court over the rules on pleading, practice and procedure in all Executive.”
courts, which includes the sole power to fix the filing fees of cases in courts.”
With the foregoing categorical pronouncement of the Court, it is clear that
Hence, the subject letter of NPC for clarification as to its exemption from the NPC can no longer invoke Republic Act No. 6395 (NPC Charter), as
payment of filing fees and court fees. amended by Presidential Decree No. 938, as its basis for exemption from the
payment of legal fees.
Issue:
W/N NPC is exempted from the payment of docket fees – No.

Held:
No.

Section 22 of Rule 141 reads:


“Sec. 22. Government exempt.—The Republic of the Philippines, its agencies
and instrumentalities are exempt from paying the legal fees provided in this
rule. Local government units and government-owned or controlled
corporations with or without independent charters are not exempt from
paying such fees.” (emphasis supplied)

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7. Unicapital v. Consing (2013) Injunctive Relief24 (Consing, Jr.’s complaint) before the RTC-Pasig City
against Unicapital, URI, PBI, Martirez, PBI General Manager Mariano
Facts: Martinez (Martinez), Dela Cruz and Does 1-20, docketed as SCA No. 1759.
In 1997, Consing, Jr., an investment banker, and his mother, Cecilia Dela
Cruz (Dela Cruz), obtained an P18,000,000.00 loan from Unicapital. The said In his complaint, Consing, Jr. claimed that the incessant demands/recovery
loan was secured by Promissory Notes10 and a Real Estate Mortgage11 over efforts made upon him by Unicapital and PBI to return to them the purchase
a 42,443 square meter-parcel of land located at Imus, Cavite, registered in the price they had paid for the subject property constituted harassment and
name of Dela Cruz as per Transfer Certificate of Title (TCT) No. T- 687599 oppression which severely affected his personal and professional life.
(subject property).12
Accordingly, Consing, Jr. prayed that: (a) he be declared as a mere agent of
Prior to these transactions, Plus Builders, Inc. (PBI), a real estate company, Dela Cruz, and as such, devoid of any obligation to Unicapital, URI, and PBI
was already interested to develop the subject property into a residential for the transactions entered into concerning the subject property; (b)
subdivision.13 In this regard, PBI entered into a joint venture agreement with Unicapital, URI, and PBI be enjoined from harassing or coercing him, and
Unicapital, through its real estate development arm, URI. In view of the from speaking about him in a derogatory fashion; and (c) Unicapital, URI,
foregoing, the loan and mortgage over the subject property was later on and PBI pay him actual and consequential damages in the amount of
modified into an Option to Buy Real Property14 and, after further P2,000,000.00, moral damages of at least P1,000,000.00, exemplary
negotiations, Dela Cruz decided to sell the same to Unicapital and PBI. For damages of P1,000,000.00, all per month, reckoned from May 1, 1999
this purpose, Dela Cruz appointed Consing, Jr. as her attorney-in-fact.15 and until the controversy is resolved, and attorney’s fees and costs of
suit.32
Eventually, Unicapital, through URI, purchased one- half of the subject
property for a consideration of P21,221,500.00 (against which Dela Cruz’s For their part, Unicapital, URI, and Martirez (Unicapital, et al.) filed separate
outstanding loan obligations were first offset), while PBI bought the Motions to Dismiss33 Consing, Jr.’s complaint (Unicapital, et al.’s motion to
remaining half for the price of P21,047,000.00.16 In this relation, Dela Cruz dismiss) on the ground of failure to state a cause of action.
caused TCT No. T-687599 to be divided into three separate titles as follows:
(a) TCT No. T-851861 for URI;17 (b) TCT No. T-851862 for PBI;18 and (c) Moreover, Unicapital, et al. posited that the RTC-Pasig City did not acquire
TCT No. T-851863 which was designated as a road lot.19 jurisdiction over the case given that Consing, Jr. failed to pay the proper
amount of docket fees.
However, even before URI and PBI were able to have the titles transferred to
their names, Juanito Tan Teng (Teng) and Po Willie Yu (Yu) informed On September 14, 1999, the RTC-Pasig City issued a Resolution36 denying
Unicapital that they are the lawful owners of the subject property as the abovementioned motions to dismiss, holding that Consing, Jr.’s complaint
evidenced by TCT No. T-114708;20 that they did not sell the subject sufficiently stated a cause of action for tort and damages pursuant to Article
property; and that Dela Cruz’s title, i.e., TCT No. T-687599, thereto was a 19 of the Civil Code. It ruled that where there is abusive behavior, a
mere forgery.21 Prompted by Teng and Yu’s assertions, PBI conducted complainant, like Consing, Jr., has the right to seek refuge from the courts.
further investigations on the subject property which later revealed that Dela
Cruz’s title was actually of dubious origin. Based on this finding, PBI and It equally refused to dismiss the action on the ground of non-payment of
Unicapital sent separate demand letters22 to Dela Cruz and Consing, Jr., docket fees, despite Consing, Jr.’s escalated claims for damages therein, as
seeking the return of the purchase price they had paid for the subject property. jurisdiction was already vested in it upon the filing of the original complaint.

On May 3, 1999, Consing, Jr. filed a complaint, denominated as a Complex CA affirmed. At the outset, it ruled that while the payment of the prescribed
Action for Declaratory Relief23 and later amended to Complex Action for docket fee is a jurisdictional requirement, its non-payment will not

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automatically cause the dismissal of the case. In this regard, it considered that constitute as a lien against the judgment as explicitly provided under Section
should there be any deficiency in the payment of such fees, the same shall 2,89 Rule 141 of the Rules.
constitute a lien on the judgment award.41

Issue:
W/N Consing’s complaint should be dismissed for failure to pay the proper
docket fees – No.

Held:
No.

Neither should Consing, Jr.’s failure to pay the required docket fees lead to
the dismissal of his complaint. It has long been settled that while the court
acquires jurisdiction over any case only upon the payment of the prescribed
docket fees, its non-payment at the time of the filing of the complaint does
not automatically cause the dismissal of the complaint provided that the fees
are paid within a reasonable period.

Consequently, Unicapital, et al.’s insistence that the stringent rule on


non-payment of docket fees enunciated in the case of Manchester
Development Corporation v. CA, 149 SCRA 562 (1987), should be applied
in this case cannot be sustained in the absence of proof that Consing, Jr.
intended to defraud the government by his failure to pay the correct amount
of filing fees.

As pronounced in the case of Heirs of Bertuldo Hinog v. Hon. Melicor:86


“Plainly, while the payment of the prescribed docket fee is a jurisdictional
requirement, even its non-payment at the time of filing does not automatically
cause the dismissal of the case, as long as the fee is paid within the applicable
prescriptive or reglementary period, more so when the party involved
demonstrates a willingness to abide by the rules prescribing such payment.
Thus, when insufficient filing fees were initially paid by the plaintiffs and
there was no intention to defraud the government, the Manchester rule does
not apply.”

Indeed, while the Court acknowledges Unicapital, et al.’s apprehension that


Consing, Jr.’s “metered” claim for damages to the tune of around
P2,000,000.00 per month88 may balloon to a rather huge amount by the time
that this case is finally disposed of, still, any amount that may by then fall due
shall be subject to assessment and any additional fees determined shall

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8. Proton Pilipinas v. Banque de Paris (2005) As additional ground, petitioners raised prematurity of the complaint, BNP
not having priorly sent any demand letter.11
Facts:
It appears that sometime in 1995, petitioner Proton Pilipinas Corporation RTC denied the MTD:
(Proton) availed of the credit facilities of herein respondent, Banque “Resolving the first ground relied upon by the defendant, this court believes
Nationale de Paris (BNP). To guarantee the payment of its obligation, its co- and so hold that the docket fees were properly paid. It is the Office of the
petitioners Automotive Corporation Philippines (Automotive), Asea One Clerk of Court of this station that computes the correct docket fees, and it is
Corporation (Asea) and Autocorp Group (Autocorp) executed a corporate their duty to assess the docket fees correctly, which they did.
guarantee2 to the extent of US$2,000,000.00. BNP and Proton subsequently
entered into three trust receipt agreements dated June 4, 1996,3 January 14, Even granting arguendo that the docket fees were not properly paid, the court
1997,4 and April 24, 1997.5 cannot just dismiss the case. The Court has not yet ordered (and it will not in
this case) to pay the correct docket fees, thus the Motion to dismiss is
Under the terms of the trust receipt agreements, Proton would receive premature, aside from being without any legal basis.”
imported passenger motor vehicles and hold them in trust for BNP. Proton
would be free to sell the vehicles subject to the condition that it would deliver CA affirmed:
the proceeds of the sale to BNP, to be applied to its obligations to it. In case “Section 7(a) of Rule 141 of the Rules of Court excludes interest accruing
the vehicles are not sold, Proton would return them to BNP, together with all from the principal amount being claimed in the pleading in the computation
the accompanying documents of title. of the prescribed filing fees.”

Allegedly, Proton failed to deliver the proceeds of the sale and return the Citing Administrative Circular No. 11-94,23 petitioners argue that BNP
unsold motor vehicles. failed to pay the correct docket fees as the said circular provides that in the
assessment thereof, interest claimed should be included. There being an
Pursuant to the corporate guarantee, BNP demanded from Automotive, Asea underpayment of the docket fees, petitioners conclude, the trial court did not
and Autocorp the payment of the amount of US$1,544,984.406 representing acquire jurisdiction over the case.
Proton’s total outstanding obligations.
Furthermore, petitioners submit that pursuant to Supreme Court Circular No.
These guarantors refused to pay, however. Hence, BNP filed on September 7,25 the complaint should have been dismissed for failure to specify the
7, 1998 before the Makati Regional Trial Court (RTC) a complaint against amount of interest in the prayer.
petitioners praying that they be ordered to pay (1) US$1,544,984.40 plus
accrued interest and other related charges thereon subsequent to August 15, Additionally, petitioners point out that the clerk of court, in converting BNP’s
1998 until fully paid and (2) an amount equivalent to 5% of all sums due from claims from US dollars to Philippine pesos, applied the wrong exchange rate
petitioners as attorney’s fees. of US $1 = P43.00, the exchange rate on September 7, 1998 when the
complaint was filed having been pegged at US $1 = P43.21. Thus, by
The Makati RTC Clerk of Court assessed the docket fees which BNP paid at petitioners’ computation, BNP’s claim as of August 15, 1998 was actually
P352,116.30. In its computation of the fees, the RTC did not consider the P70,096,714.72,24 not P69,756,045.66.
interest but only the principal amount owed.
Respondents, on the other hand, invoke the Tacay ruling which declared that,
To the complaint, the defendants-herein petitioners filed on October 12, 1998 where the action is purely for the recovery of money or damages, the docket
a Motion to Dismiss9 on the ground that BNP failed to pay the correct docket fees are assessed on the basis of the aggregate amount claimed, exclusive
fees to thus prevent the trial court from acquiring jurisdiction over the case.10 only of interests and costs.2

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application of the exchange rate is not conclusive.33 It is disputable.34 As
Issue: such, the presumption may be overturned by the requisite rebutting
W/N the interest of the amount due should be considered in the computation evidence.35 In the case at bar, petitioners have adequately proven with
of the docket fees – Yes. documentary evidence36 that the exchange rate when the complaint was filed
on September 7, 1998 was US $1 = P43.21.
Held:
Yes. In fine, the docket fees paid by respondent were insufficient.

When Tacay was decided in 1989, the pertinent rule applicable was Section With respect to petitioner’s argument that the trial court did not acquire
5 (a) of Rule 141 which provided for the following: jurisdiction over the case in light of the insufficient docket fees, the same
does not lie considering that the Sun Insurance case has already modified the
“SEC. 5. Clerks of Regional Trial Courts.—(a) For filing an action or Manchester case.
proceeding, or a permissive counter-claim or cross-claim not arising out of
the same transaction subject of the complaint, a third-party complaint and a Thus, the Court rules as follows:
complaint in intervention and for all services in the same, if the sum claimed,
exclusive of interest, of the value of the property in litigation, or the value of 1. It is not simply the filing of the complaint or appropriate initiatory
the estate…” pleading, but the payment of the prescribed docket fee, that vests a trial court
with jurisdiction over the subject-matter or nature of the action. Where the
When the complaint in this case was filed in 1998, however, as correctly filing of the initiatory pleading is not accompanied by payment of the docket
pointed out by petitioners, Rule 141 had been amended by Administrative fee, the court may allow payment of the fee within a reasonable time but in
Circular No. 11-9429 which provides: no case beyond the applicable prescriptive or reglementary period;

“(a) For filing an action or a permissive counterclaim or money claim against 2. The same rule applies to permissive counterclaims, third-party claims and
an estate not based on judgment, or for filing with leave of court a third-party, similar pleadings, which shall not be considered filed until and unless the
fourth-party, etc. complaint, or a complaint in intervention, and for all clerical filing fee prescribed therefor is paid. The court may also allow payment of
services in the same, if the total sum claimed, inclusive of interest, damages said fee within a reasonable time but also in no case beyond its applicable
of whatever kind, attorney’s fees, litigation expenses, and costs, or the stated prescriptive or reglementary period;
value of the property in litigation…”
3. Where the trial court acquires jurisdiction over a claim by the filing of the
The clerk of court should thus have assessed the filing fee by taking into appropriate pleading and payment of the prescribed filing fee but,
consideration “the total sum claimed, inclusive of interest, damages of subsequently, the judgment awards a claim not specified in the pleading, or
whatever kind, attorney’s fees, litigation expenses, and costs, or the stated if specified the same has been left for determination by the court, the
value of the property in litigation.” Respondent’s and the Court of Appeals’ additional filing fee therefor shall constitute a lien on the judgment. It shall
reliance then on Tacay was not in order. be the responsibility of the Clerk of Court or his duly authorized deputy to
enforce said lien and assess and collect the additional fee.
Respecting the Court of Appeals’ conclusion that the clerk of court did not
err when he applied the exchange rate of US $1 = P43.00 “[i]n the absence of The ruling in Sun Insurance Office was echoed in the 2005 case of Heirs of
any office guide of the rate of exchange which said court functionary was Bertuldo Hinog v. Hon. Achilles Melicor:41
duty bound to follow,[hence,] the rate he applied is presumptively correct,” Plainly, while the payment of the prescribed docket fee is a jurisdictional
the same does not lie. The presumption of regularity of the clerk of court’s requirement, even its non-payment at the time of filing does not automatically

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cause the dismissal of the case, as long as the fee is paid within the applicable this Court held that the same refers only to damages arising after the filing
prescriptive or reglementary period, more so when the party involved of the complaint or similar pleading as to which the additional filing fee
demonstrates a willingness to abide by the rules prescribing such payment. therefor shall constitute a lien on the judgment.
Thus, when insufficient filing fees were initially paid by the plaintiffs and
there was no intention to defraud the government, the Manchester rule WHEREFORE, the petition is GRANTED in part. The July 25, 2001
does not apply. (Emphasis and italics supplied; citations omitted) Decision and the December 18, 2001 Resolution of the Court Appeals are
hereby MODIFIED. The Clerk of Court of the Regional Trial Court of Makati
In the case at bar, respondent merely relied on the assessment made by the City is ordered to reassess and determine the docket fees that should be paid
clerk of court which turned out to be incorrect. Under the circumstances, the by respondent, BNP, in accordance with the Decision of this Court, and direct
clerk of court has the responsibility of reassessing what respondent must pay respondent to pay the same within fifteen (15) days, provided the applicable
within the prescriptive period, failing which the complaint merits dismissal. prescriptive or reglementary period has not yet expired. Thereafter, the trial
court is ordered to proceed with the case with utmost dispatch.
II.
SO ORDERED.
Parenthetically, in the complaint, respondent prayed for “accrued interest . . .
subsequent to August 15, 1998 until fully paid.” The complaint having been
filed on September 7, 1998, respondent’s claim includes the interest from
August 16, 1998 until such date of filing.

Respondent did not, however, pay the filing fee corresponding to its claim for
interest from August 16, 1998 until the filing of the complaint on September
7, 1998. As priorly discussed, this is required under Rule 141, as amended by
Administrative Circular No. 11-94, which was the rule applicable at the time.
Thus, as the complaint currently stands, respondent cannot claim the interest
from August 16, 1998 until September 7, 1998, unless respondent is allowed
by motion to amend its complaint within a reasonable time and specify the
precise amount of interest petitioners owe from August 16, 1998 to
September 7, 199842 and pay the corresponding docket fee therefor.

III.

With respect to the interest accruing after the filing of the complaint, the same
can only be determined after a final judgment has been handed down.
Respondent cannot thus be made to pay the corresponding docket fee
therefor. Pursuant, however, to Section 2, Rule 141, as amended by
Administrative Circular No. 11-94, respondent should be made to pay
additional fees which shall constitute a lien in the event the trial court
adjudges that it is entitled to interest accruing after the filing of the complaint.
In Ayala Corporation v. Madayag,43 in interpreting the third rule laid down
in Sun Insurance regarding awards of claims not specified in the pleading,

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9. In re Request of NCLA to exempt legal aid clients from docket fees Section 16-D of RA 9406. In this connection, the Supreme Court previously
issued a circular exempting IBP clients from the payment of transcript of
Facts: stenographic notes.”
On September 23, 2008 the Misamis Oriental Chapter of the Integrated Bar
of the Philippines (IBP) promulgated Resolution No. 24, series of 2008.2 The Issue:
resolution requested the IBP’s National Committee on Legal Aid3 (NCLA) W/N the legal aid clients of the IBP should be exempted from docket fees –
to ask for the exemption from the payment of filing, docket and other fees of Yes.
clients of the legal aid offices in the various IBP chapters.
Held:
The Court noted Resolution No. 24, series of 2008 and required the IBP, Yes.
through the NCLA, to comment thereon.5 In a comment dated December 18,
2008,6 the IBP, through the NCLA, made the following comments: Access to justice by all, especially by the poor, is not simply an ideal in our
society. Its existence is essential in a democracy and in the rule of law. As
“(a) Under Section 16-D of RA7 9406, clients of the Public Attorneys’ Office such, it is guaranteed by no less than the fundamental law: Sec. 11. Free
(PAO) are exempt from the payment of docket and other fees incidental to access to the courts and quasi-judicial bodies and adequate legal assistance
the institution of action in court and other quasi- judicial bodies. On the other shall not be denied to any person by reason of poverty. (emphasis supplied)
hand, clients of legal aid offices in the various IBP chapters do not enjoy the The Court recognizes the right of access to justice as the most important pillar
same exemption. IBP’s indigent clients are advised to litigate as pauper of legal empowerment of the marginalized sectors of our society. Among
litigants under Section 21, Rule 3 of the Rules of Court; others, it has exercised its power to “promulgate rules concerning the
protection and enforcement of constitutional rights” to open the doors of
(b) They are further advised to submit documentary evidence to prove justice to the underprivileged and to allow them to step inside the courts to
compliance with the requirements under Section 21, Rule 3 of the Rules of be heard of their plaints. In particular, indigent litigants are permitted under
Court, i.e., certifications from the barangay and the Department of Social
Welfare and Development. However, not only does the process involve some
expense which indigent clients could ill- afford, clients also lack knowledge
on how to go about the tedious process of obtaining these documents;

(c) Although the IBP is given an annual legal aid subsidy, the amount it
receives from the government is barely enough to cover various operating
expenses;8

(d) While each IBP local chapter is given a quarterly allocation (from the
legal aid subsidy),9 said allocation covers neither the incidental expenses
defrayed by legal aid lawyers in handling legal aid cases nor the payment of
docket and other fees collected by the courts, quasi-judicial bodies and the
prosecutor’s office, as well as mediation fees and

(e) Considering the aforementioned factors, a directive may be issued by the


Supreme Court granting IBP’s indigent clients an exemption from the
payment of docket and other fees similar to that given to PAO clients under

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Section 21, Rule 32 and Section 19, Rule 1413 of the Rules of Court to bring Rule. Section 2. Persons not covered by the Rule.—The following shall be
suits in forma pauperis. disqualified from the coverage of this Rule. Nor may they be accepted as
clients by the NCLA and the chapter legal aid offices.
The “means and merit tests” of the IBP appear to be reasonable determinants
of eligibility for coverage under the legal aid program of the IBP. (a) Juridical persons; except in cases covered by developmental legal aid or
Nonetheless, they may be improved to ensure that any exemption from the public interest causes involving juridical entities which are non-stock,
payment of legal fees that may be granted to clients of the NCLA and the non-profit organizations, non-governmental organizations and people’s
legal aid offices of the various IBP chapters will really further the right of organizations whose individual members will pass the means test provided in
access to justice by the poor. This will guarantee that the exemption will this Rule;
neither be abused nor trivialized. Towards this end, the following shall be (b) Persons who do not pass the means and merit tests;
observed by the NCLA and the legal aid offices in IBP chapters nationwide (c) Parties already represented by a counsel de parte;
in accepting clients and handling cases for the said clients: [SC laid down (d) Owners or lessors of residential lands or buildings with respect to the
new rules for determining those NCLA clients entitled to exemption from
filing of collection or unlawful detainer suits against their tenants and
docket fees]
(e) Persons who have been clients of the NCLA or chapter legal aid office
previously in a case where the NCLA or chapter legal aid office withdrew its
Section 1. Persons qualified for exemption from payment of legal fees.—
representation because of a falsity in the application or in any of the affidavits
Persons who shall enjoy the benefit of exemption from the payment of legal
supporting the said application.
fees incidental to instituting an action in court, as an original proceeding or
on appeal, granted under this Rule shall be limited only to clients of the
Section 3. Cases not covered by the Rule.—The NCLA and the chapter legal
NCLA and the chapter legal aid offices.
aid offices shall not handle the following:
(a) Cases where conflicting interests will be represented by the NCLA and
The said clients shall refer to those indigents qualified to receive free legal
the chapter legal aid offices and
aid service from the NCLA and the chapter legal aid offices. Their
(b) Prosecution of criminal cases in court.
qualifications shall be determined based on the tests provided in this

. Section 21. Indigent party.—A party may be authorized to litigate his action, claim 3. Section 19. Indigent-litigants exempt from payment of legal fees.— Indigent litigant
or defense as an indigent if the court, upon an ex parte application and hearing, is (a) whose gross income and that of their immediate family do not exceed an amount
satisfied that the party is one who has no money or property sufficient and double the monthly minimum wage of an employee and (b) who do not own real
available for food, shelter and basic necessities for himself and his family. property with a fair market value as stated in the current tax declaration of more than
Three Hundred Thousand (P300,000.00) Pesos shall be exempt from the payment of
Such authority shall include an exemption from payment of docket and other lawful legal fees.
fees, and of transcripts of stenographic notes which the court may order to be
furnished him. The amount of the docket and other lawful fees which the indigent The legal fees shall be a lien on any judgment rendered in the case favorable to the
was exempted from paying shall be a lien on any judgment rendered in the case indigent unless the court otherwise provides.
favorable to the indigent, unless the court otherwise provides.
To be entitled to the exemption herein provided, the litigant shall execute an affidavit
Any adverse party may contest the grant of such authority at any time before that he and his immediate family do not earn a gross income abovementioned, nor
judgment is rendered by the trial court. If the court should determine after hearing own any real property with the fair value aforementioned, supported by a an affidavit
that the party declared as an indigent is in fact a person with sufficient income or of a disinterested person attesting to the truth of the litigant’s affidavit. The current
property, the proper docket and other lawful fees shall be assessed and collected by tax declaration, if any, shall be attached to the litigant’s affidavit.
the clerk of court. If payment is not made within the time fixed by the court, execution
shall issue for the payment thereof, without prejudice to such other sanctions as the Any falsity in the affidavit of litigant or disinterested person shall be sufficient cause
court may impose. to dismiss the complaint or action or to strike out the pleading of that party, without
prejudice to whatever criminal liability may have been incurred.

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ARTICLE IV The above rule, in conjunction with Section 21, Rule 3 and Section 19, Rule
Tests of Indigency Section 1. Tests for determining who may be clients of 141 of the Rules of Court, the Rule on Mandatory Legal Aid Service and the
the NCLA and the legal aid offices in local IBP chapters.—The NCLA or the Rule of Procedure for Small Claims Cases, shall form a solid base of rules
chapter legal aid committee, as the case may be, shall pass upon requests for upon which the right of access to courts by the poor shall be implemented.
legal aid by the combined application of the means and merit tests and the With these rules, we equip the poor with the tools to effectively, efficiently
consideration of other relevant factors provided for in the following sections. and easily enforce their rights in the judicial system.
Section 2. Means test; exception.—(a) This test shall be based on the
following criteria: (i) the applicant and that of his immediate family must Equity will not suffer a wrong to be without a remedy. Ubi jus ibi remedium.
have a gross monthly income that does not exceed an amount double the Where there is a right, there must be a remedy. The remedy must not only be
monthly minimum wage of an employee in the place where the applicant effective and efficient, but also readily accessible. For a remedy that is
resides and (ii) he does not own real property with a fair market value as inaccessible is no remedy at all. The Constitution guarantees the rights of the
stated in the current tax declaration of more than Three Hundred Thousand poor to free access to the courts and to adequate legal assistance. The legal
(P300,000.00) Pesos. aid service rendered by the NCLA and legal aid offices of IBP chapters
nationwide addresses only the right to adequate legal assistance. Recipients
In this connection, the applicant shall execute an affidavit of indigency of the service of the NCLA and legal aid offices of IBP chapters may enjoy
(printed at the back of the application form) stating that he and his immediate free access to courts by exempting them from the payment of fees assessed
family do not earn a gross income abovementioned, nor own any real property in connection with the filing of a complaint or action in court. With these twin
with the fair value aforementioned, supported by an affidavit of a initiatives, the guarantee of Section 11, Article III of Constitution is advanced
disinterested person attesting to the truth of the applicant’s affidavit. The and access to justice is increased by bridging a significant gap and removing
latest income tax return and/or current tax declaration, if any, shall be a major roadblock.
attached to the applicant’s affidavit.

(b) The means test shall not be applicable to applicants who fall under the
developmental legal aid program such as overseas workers, fisherfolk,
farmers, laborers, indigenous cultural communities, women, children and
other disadvantaged groups.

Section 3. Merit test.—A case shall be considered meritorious if an


assessment of the law and evidence at hand discloses that the legal service
will be in aid of justice or in the furtherance thereof, taking into consideration
the interests of the party and those of society. A case fails this test if, after
consideration of the law and evidence presented by the applicant, it appears
that it is intended merely to harass or injure the opposite party or to work
oppression or wrong.

Section 4. Other relevant factors that may be considered.—The effect of legal


aid or of the failure to render the same upon the rule of law, the proper
administration of justice, the public interest involved in a given case and the
practice of law in the locality shall likewise be considered.

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10. Query of Mr. Prioreschi (2009) of legal fees granted to indigent litigants even if the foundations are working
for indigent and underprivileged people.
Facts:
In his letter dated May 22, 2009 addressed to the Chief Justice, Mr. Roger C. The basis for the exemption from legal and filing fees is the free access
Prioreschi, administrator of the Good Shepherd Foundation, Inc., wrote: clause, embodied in Sec. 11, Art. III of the 1987 Constitution, thus:
“Sec. 11. Free access to the courts and quasi judicial bodies and adequate
“The Good Shepherd Foundation, Inc. is very grateful for your 1rst. legal assistance shall not be denied to any person by reason of poverty.”
Indorsement to pay a nominal fee of Php 5,000.00 and the balance upon the The importance of the right to free access to the courts and quasi judicial
collection action of 10 million pesos, thus giving us access to the Justice bodies and to adequate legal assistance cannot be denied.
System previously denied by an up-front excessive court fee.
In implementation of the right of free access under the Constitution, the
The Hon. Court Administrator Jose Perez pointed out to the need of Supreme Court promulgated rules, specifically, Sec. 21, Rule 3, Rules of
complying with OCA Circular No. 42-2005 and Rule 141 that reserves this Court,2 and Sec. 19, Rule 141, Rules of Court,3 which respectively state thus:
“privilege” to indigent persons. While judges are appointed to interpret the “Sec. 21. Indigent party.—A party may be authorized to litigate his action,
law, this type of law seems to be extremely detailed with requirements that claim or defense as an indigent if the court, upon an ex parte application and
do not leave much room for interpretations. hearing, is satisfied that the party is one who has no money or property
sufficient and available for food, shelter and basic necessities for himself
In addition, this law deals mainly with “individual indigent” and it does not and his family.
include Foundations or Associations that work with and for the most Indigent
persons. As seen in our Article of Incorporation, since 1985 the Good Such authority shall include an exemption from payment of docket and other
Shepherd Foundation, Inc. reached-out to the poorest among the poor, to the lawful fees, and of transcripts of stenographic notes which the court may
newly born and abandoned babies, to children who never saw the smile of order to be furnished him. The amount of the docket and other lawful fees
their mother, to old people who cannot afford a few pesos to pay for “common which the indigent was exempted from paying shall be a lien on any judgment
prescriptions,” to broken families who returned to a normal life. In other rendered in the case favorable to the indigent, unless the court otherwise
words, we have been working hard for the very Filipino people, that the provides.
Government and the society cannot reach to, or have rejected or abandoned
them. Any adverse party may contest the grant of such authority at any time before
judgment is rendered by the trial court. If the court should determine after
Can the Courts grant to our Foundation who works for indigent and hearing that the party declared as an indigent is in fact a person with sufficient
underprivileged people, the same option granted to indigent people?” income or property, the proper docket and other lawful fees shall be assessed
and collected by the clerk of court. If payment is not made within the time
Issue: fixed by the court, execution shall issue for the payment thereof, without
W/N juridical persons that work with indigent litigants can be granted prejudice to such other sanctions as the court may impose. (22a)
exemption from docket fees – No.
Sec. 19. Indigent litigants exempt from payment of legal fees. —Indigent
Held: litigants (a) whose gross income and that of their immediate family do not
No. 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
To answer the query of Mr. Prioreschi, the Courts cannot grant to foundations current tax declaration of more than three hundred thousand (P300,000.00)
like the Good Shepherd Foundation, Inc. the same exemption from payment pesos shall be exempt from payment of legal fees.

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The legal fees shall be a lien on any judgment rendered in the case favorable
to the indigent litigant unless the court otherwise provides.

To be entitled to the exemption herein provided, the litigant shall execute an


affidavit that he and his immediate family do not earn a gross income
abovementioned, and they do not own any real property with the fair value
aforementioned, supported by an affidavit of a disinterested person attesting
to the truth of the litigant’s affidavit. The current tax declaration, if any, shall
be attached to the litigant’s affidavit.

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, without prejudice to whatever criminal liability may have been
incurred.”

The clear intent and precise language of the aforequoted provisions of the
Rules of Court indicate that only a natural party litigant may be regarded as
an indigent litigant. The Good Shepherd Foundation, Inc., being a corporation
invested by the State with a juridical personality separate and distinct from
that of its members, is a juridical person. Among others, it has the power to
acquire and possess property of all kinds as well as incur obligations and
bring civil or criminal actions, in conformity with the laws and regulations of
their organization. As a juridical person, therefore, it cannot be accorded the
exemption from legal and filing fees granted to indigent litigants.

That the Good Shepherd Foundation, Inc. is working for indigent and
underprivileged people is of no moment.

Clearly, the Constitution has explicitly premised the free access clause on a
person’s poverty, a condition that only a natural person can suffer.

There are other reasons that warrant the rejection of the request for exemption
in favor of a juridical person. For one, extending the exemption to a juridical
person on the ground that it works for indigent and underprivileged people
may be prone to abuse (even with the imposition of rigid documentation
requirements), particularly by corporations and entities bent on
circumventing the rule on payment of the fees. Also, the scrutiny of
compliance with the documentation requirements may prove too
time-consuming and wasteful for the courts.

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II. Jurisdiction Expanding the Jurisdiction of the Court of Appeals) and Batas Pambansa 129
(The Judiciary Reorganization Act of 1980)
1. Thorton v. Thorton (2004)
Issue:
Facts: W/N the CA has jurisdiction to issue writs of habeas corpus involving
Petitioner, an American, and respondent, a Filipino, were married on August custody of minors in the light of the provision in RA 8369 giving family
28, 1998 in the Catholic Evangelical Church at United Nations Avenue, courts exclusive original jurisdiction over such petitions – Yes.
Manila. A year later, respondent gave birth to a baby girl whom they named
Sequeira Jennifer Delle Francisco Thornton. Held:
Yes.
However, after three years, respondent grew restless and bored as a plain
housewife. She wanted to return to her old job as a “guest relations officer” The Court of Appeals should take cognizance of the case since there is
in a nightclub, with the freedom to go out with her friends. In fact, whenever nothing in RA 8369 that revoked its jurisdiction to issue writs of habeas
petitioner was out of the country, respondent was also often out with her corpus involving the custody of minors.
friends, leaving her daughter in the care of the househelp.
The Court of Appeals opines that RA 8369 impliedly repealed RA 7902 and
Petitioner admonished respondent about her irresponsibility but she BP 129 since, by giving family courts exclusive jurisdiction over habeas
continued her carefree ways. On December 7, 2001, respondent left the corpus cases, the lawmakers intended it to be the sole court which can issue
family home with her daughter Sequiera without notifying her husband. She writs of habeas corpus. To the court a quo, the word “exclusive” apparently
told the servants that she was bringing Sequiera to Purok Marikit, Sta. Clara, cannot be construed any other way.
Lamitan, Basilan Province.
We disagree with the CA’s reasoning because it will result in an iniquitous
Petitioner filed a petition for habeas corpus in the designated Family Court in situation, leaving individuals like petitioner without legal recourse in
Makati City but this was dismissed, presumably because of the allegation that obtaining custody of their children. Individuals who do not know the
the child was in Basilan. Petitioner then went to Basilan to ascertain the whereabouts of minors they are looking for would be helpless since they
whereabouts of respondent and their daughter. However, he did not find them cannot seek redress from family courts whose writs are enforceable only in
there and the barangay office of Sta. Clara, Lamitan, Basilan, issued a their respective territorial jurisdictions. Thus, if a minor is being transferred
certification that respondent was no longer residing there. from one place to another, which seems to be the case here, the petitioner in
a habeas corpus case will be left without legal remedy. This lack of recourse
Petitioner gave up his search when he got hold of respondent’s cellular phone could not have been the intention of the lawmakers when they passed the
bills showing calls from different places such as Cavite, Nueva Ecija, Metro Family Courts Act of 1997.
Manila and other provinces. Petitioner then filed another petition for habeas
corpus, this time in the Court of Appeals which could issue a writ of habeas The primordial consideration is the welfare and best interests of the child. We
corpus enforceable in the entire country. rule therefore that RA 8369 did not divest the Court of Appeals and the
Supreme Court of their jurisdiction over habeas corpus cases involving the
However, the petition was denied by the Court of Appeals on the ground that custody of minors.
it did not have jurisdiction over the case. It ruled that since RA 8369 (The
Family Courts Act of 1997) gave family courts exclusive original jurisdiction The jurisdiction of the Court of Appeals and Family Court in the case at bar
over petitions for habeas corpus, it impliedly repealed RA 7902 (An Act is concurrent. The Family Court can issue writs of habeas corpus enforceable
only within its territorial jurisdiction. On the other hand, in cases where the

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territorial jurisdiction for the enforcement of the writ cannot be determined From the foregoing, there is no doubt that the Court of Appeals and Supreme
with certainty, the Court of Appeals can issue the same writ enforceable Court have concurrent jurisdiction with family courts in habeas corpus cases
throughout the Philippines, as provided in Sec. 2, Rule 102 of the Revised where the custody of minors is involved.
Rules of Court, thus:

The Writ of Habeas Corpus may be granted by the Supreme Court, or any
member thereof, on any day and at any time, or by the Court of Appeals or
any member thereof in the instances authorized by law, and if so granted it
shall be enforceable anywhere in the Philippines, and may be made returnable
before the court or any member thereof, or before a Court of First Instance,
or any judge thereof for hearing and decision on the merits. It may also be
granted by a Court of First Instance, or a judge thereof, on any day and at any
time, and returnable before himself, enforceable only within his judicial
district.

The provisions of RA 8369 reveal no manifest intent to revoke the


jurisdiction of the Court of Appeals and Supreme Court to issue writs of
habeas corpus relating to the custody of minors. Further, it cannot be said that
the provisions of RA 8369, RA 7092 and BP 129 are absolutely incompatible
since RA 8369 does not prohibit the Court of Appeals and the Supreme Court
from issuing writs of habeas corpus in cases involving the custody of minors.
Thus, the provisions of RA 8369 must be read in harmony with RA 7029 and
BP 129—that family courts have concurrent jurisdiction with the Court of
Appeals and the Supreme Court in petitions for habeas corpus where the
custody of minors is at issue.

In any case, whatever uncertainty there was has been settled with the adoption
of A.M. No. 03-03-04-SC Re: Rule on Custody of Minors and Writ of Habeas
Corpus in Relation to Custody of Minors. Section 20 of the rule provides that:

“Section 20. Petition for writ of habeas corpus.—A verified petition for a writ
of habeas corpus involving custody of minors shall be filed with the Family
Court. The writ shall be enforceable within its judicial region to which the
Family Court belongs.
xxx xxx xxx
The petition may likewise be filed with the Supreme Court, Court of Appeals,
or with any of its members and, if so granted, the writ shall be enforceable
anywhere in the Philippines.”

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2. Navida v. Dizon (2011) Instead of answering the complaint, most of the defendant companies
respectively filed their Motions for Bill of Particulars.15 During the pendency
Facts: of the motions, on March 13, 1996, NAVIDA, et al., filed an Amended Joint
Beginning 1993, a number of personal injury suits were filed in different Complaint,16 excluding Dead Sea Bromine Co., Ltd., Ameribrom, Inc.,
Texas state courts by citizens of twelve foreign countries, including the Bromine Compounds, Ltd. and Amvac Chemical Corp. as party defendants.
Philippines. The thousands of plaintiffs sought damages for injuries they Again, the remaining defendant companies filed their various Motions for
allegedly sustained from their exposure to dibromochloropropane (DBCP), a Bill of Particulars.17 On May 15, 1996, DOW filed an Answer with
chemical used to kill nematodes (worms), while working on farms in 23 Counterclaim.18
foreign countries. The cases were eventually transferred to, and consolidated
in, the Federal District Court for the Southern District of Texas, Houston On May 20, 1996, without resolving the motions filed by the parties, the RTC
Division. The cases therein that involved plaintiffs from the Philippines were of General Santos City issued an Order dismissing the complaint.
“Jorge Colindres Carcamo, et al. v. Shell Oil Co., et al.,” which was docketed
as Civil Action No. H- 94-1359, and “Juan Ramon Valdez, et al. v. Shell Oil First, the trial court determined that it did not have jurisdiction to hear the
Co., et al.,” which was docketed as Civil Action No. H-95-1356. The case, to wit:
defendants in the consolidated cases prayed for the dismissal of all the actions
under the doctrine of forum non conveniens. “The substance of the cause of action as stated in the complaint against the
defendant foreign companies cites activity on their part which took place
In a Memorandum and Order dated July 11, 1995, the Federal District Court abroad and had occurred outside and beyond the territorial domain of the
conditionally granted the defendants’ motion to dismiss. Philippines. These acts of defendants cited in the complaint included the
manufacture of pesticides, their packaging in containers, their distribution
In accordance with the above Memorandum and Order, a total of 336 through sale or other disposition, resulting in their becoming part of the
plaintiffs from General Santos City (the petitioners in G.R. No. 125078, stream of commerce.
hereinafter referred to as NAVIDA, et al.) filed a Joint Complaint14 in the
RTC of General Santos City on August 10, 1995. The case was docketed as Accordingly, the subject matter stated in the complaint and which is uniquely
Civil Case No. 5617. Named as defendants therein were: Shell Oil Co. particular to the present case, consisted of activity or course of conduct
(SHELL) et al. engaged in by foreign defendants outside Philippine territory, hence, outside
and beyond the jurisdiction of Philippine Courts, including the present
Navida, et al., prayed for the payment of damages in view of the illnesses and Regional Trial Court.”
injuries to the reproductive systems which they allegedly suffered because of
their exposure to DBCP. They claimed, among others, that they were exposed Second, the RTC of General Santos City declared that the tort alleged by
to this chemical during the early 1970’s up to the early 1980’s when they used Navida, et al., in their complaint is a tort category that is not recognized in
the same in the banana plantations where they worked at; and/or when they Philippine laws. Said the trial court:
resided within the agricultural area where such chemical was used. Navida,
et al., claimed that their illnesses and injuries were due to the fault or “The specific tort asserted against defendant foreign companies in the present
negligence of each of the defendant companies in that they produced, sold complaint is product liability tort. When the averments in the present
and/or otherwise put into the stream of commerce DBCP- containing complaint are examined in terms of the particular categories of tort
products. According to NAVIDA, et al., they were allowed to be exposed to recognized in the Philippine Civil Code, it becomes stark clear that such
the said products, which the defendant companies knew, or ought to have averments describe and identify the category of specific tort known as
known, were highly injurious to the former’s health and well-being. product liability tort. This is necessarily so, because it is the product
manufactured by defendant foreign companies, which is asserted to be the

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proximate cause of the damages sustained by the plaintiff workers, and the the causes of action, the amount of such claim shall be considered in
liability of the defendant foreign companies, is premised on being the determining the jurisdiction of the court.”
manufacturer of the pesticides.”
Here, NAVIDA, et al., and ABELLA, et al., sought in their similarly-worded
Third, the RTC of General Santos City adjudged that Navida, et al., were Amended Joint-Complaints filed before the courts a quo, the following
coerced into submitting their case to the Philippine courts. prayer:
“WHEREFORE, premises considered, it is most respectfully
Issue: prayed that after hearing, judgment be rendered in favor of the plaintiffs
W/N the RTC has jurisdiction over the subject matter of the case - Yes ordering the defendants:
a) TO PAY EACH PLAINTIFF moral damages in the amount of One Million
Held: Five Hundred Thousand Pesos (P1,500,00.00);
Yes. b) TO PAY EACH PLAINTIFF nominal damages in the amount of Four
Hundred Thousand Pesos (P400,000.00) each;
The rule is settled that jurisdiction over the subject matter of a case is c) TO PAY EACH PLAINTIFF exemplary damages in the amount of Six
conferred by law and is determined by the allegations in the complaint and Hundred Thousand Pesos (P600,000.00);
the character of the relief sought, irrespective of whether the plaintiffs are d) TO PAY EACH PLAINTIFF attorneys fees of Two Hundred Thousand
entitled to all or some of the claims asserted therein. Once vested by law, on Pesos (P200,000.00); and
a particular court or body, the jurisdiction over the subject matter or nature of e) TO PAY THE COSTS of the suit.”61
the action cannot be dislodged by anybody other than by the legislature
through the enactment of a law. From the foregoing, it is clear that the claim for damages is the main cause of
action and that the total amount sought in the complaints is approximately
At the time of the filing of the complaints, the jurisdiction of the RTC in civil P2.7 million for each of the plaintiff claimants. The RTCs unmistakably have
cases under Batas Pambansa Blg. 129, as amended by Republic Act No. 7691, jurisdiction over the cases filed in General Santos City and Davao City, as
was: both claims by NAVIDA, et al., and ABELLA, et al., fall within the purview
“SEC. 19. Jurisdiction in civil cases.—Regional Trial Courts shall exercise of the definition of the jurisdiction of the RTC under Batas Pambansa Blg.
exclusive original jurisdiction: 129.
xxxx
(8) In all other cases in which the demand, exclusive of interest, damages of Quite evidently, the allegations in the Amended Joint-Complaints of
whatever kind, attorney’s fees, litigation expenses, and costs or the value of NAVIDA, et al., and ABELLA, et al., attribute to defendant companies
the property in controversy exceeds One hundred thousand pesos certain acts and/or omissions which led to their exposure to nematocides
(P100,000.00) or, in such other cases in Metro Manila, where the demand, containing the chemical DBCP. According to NAVIDA, et al., and ABELLA,
exclusive of the abovementioned items exceeds Two hundred thousand pesos et al., such exposure to the said chemical caused ill effects, injuries and
(P200,000.00).”60 illnesses, specifically to their reproductive system.
Corollary thereto, Supreme Court Administrative Circular No. 09-94, states:
“2. The exclusion of the term “damages of whatever kind” in determining the Thus, these allegations in the complaints constitute the cause of action of
jurisdictional amount under Section 19 (8) and Section 33 (1) of B.P. Blg. plaintiff claimants—a quasi-delict, which under the Civil Code is defined as
129, as amended by R.A. No. 7691, applies to cases where the damages are an act, or omission which causes damage to another, there being fault or
merely incidental to or a consequence of the main cause of action. However, negligence. To be precise, Article 2176 of the Civil Code provides: Article
in cases where the claim for damages is the main cause of action, or one of 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or

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negligence, if there is no pre-existing contractual relation between the parties, place abroad and had occurred outside and beyond the territorial boundaries
is called a quasi-delict and is governed by the provisions of this Chapter. of the Philippines, i.e., “the manufacture of the pesticides, their packaging in
containers, their distribution through sale or other disposition, resulting in
As specifically enumerated in the amended complaints, NAVIDA, et al., and their becoming part of the stream of commerce,”65 and, hence, outside the
ABELLA, et al., point to the acts and/or omissions of the defendant jurisdiction of the RTCs.
companies in manufacturing, producing, selling, using, and/or otherwise
putting into the stream of commerce, nematocides which contain DBCP, Certainly, the cases below are not criminal cases where territoriality, or the
“without informing the users of its hazardous effects on health and/or without situs of the act complained of, would be determinative of jurisdiction and
instructions on its proper use and application.”63 venue for trial of cases. In personal civil actions, such as claims for payment
of damages, the Rules of Court allow the action to be commenced and tried
In Citibank, N.A. v. Court of Appeals, 299 SCRA 390 (1998), this Court has in the appropriate court, where any of the plaintiffs or defendants resides, or
always reminded that jurisdiction of the court over the subject matter of the in the case of a non-resident defendant, where he may be found, at the election
action is determined by the allegations of the complaint, irrespective of of the plaintiff.66
whether or not the plaintiffs are entitled to recover upon all or some of the
claims asserted therein. The jurisdiction of the court cannot be made to In a very real sense, most of the evidence required to prove the claims of
depend upon the defenses set up in the answer or upon the motion to dismiss, NAVIDA, et al., and ABELLA, et al., are available only in the Philippines.
for otherwise, the question of jurisdiction would almost entirely depend upon First, plaintiff claimants are all residents of the Philippines, either in General
the defendants. What determines the jurisdiction of the court is the nature of Santos City or in Davao City. Second, the specific areas where they were
the action pleaded as appearing from the allegations in the complaint. The allegedly exposed to the chemical DBCP are within the territorial jurisdiction
averments therein and the character of the relief sought are the ones to be of the courts a quo wherein NAVIDA, et al., and ABELLA, et al., initially
consulted. filed their claims for damages. Third, the testimonial and documentary
evidence from important witnesses, such as doctors, co-workers, family
Clearly then, the acts and/or omissions attributed to the defendant companies members and other members of the community, would be easier to gather in
constitute a quasi-delict which is the basis for the claim for damages filed by the Philippines. Considering the great number of plaintiff claimants involved
NAVIDA, et al., and ABELLA, et al., with individual claims of in this case, it is not far-fetched to assume that voluminous records are
approximately P2.7 million for each plaintiff claimant, which obviously falls involved in the presentation of evidence to support the claim of plaintiff
within the purview of the civil action jurisdiction of the RTCs. claimants. Thus, these additional factors, coupled with the fact that the
alleged cause of action of NAVIDA, et al., and ABELLA, et al., against the
Moreover, the injuries and illnesses, which NAVIDA, et al., and ABELLA, defendant companies for damages occurred in the Philippines, demonstrate
et al., allegedly suffered resulted from their exposure to DBCP while they that, apart from the RTC of General Santos City and the RTC of Davao City
were employed in the banana plantations located in the Philippines or while having jurisdiction over the subject matter in the instant civil cases, they are,
they were residing within the agricultural areas also located in the indeed, the convenient fora for trying these cases.67
Philippines. The factual allegations in the Amended Joint-Complaints all
point to their cause of action, which undeniably occurred in the Philippines.
The RTC of General Santos City and the RTC of Davao City obviously have
reasonable basis to assume jurisdiction over the cases.

It is, therefore, error on the part of the courts a quo when they dismissed the
cases on the ground of lack of jurisdiction on the mistaken assumption that
the cause of action narrated by NAVIDA, et al., and ABELLA, et al., took

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3. Pua v. Citibank (2013) securities. In this regard, respondent contended that the SRC conferred upon
the SEC jurisdiction to investigate compliance with its provisions and thus,
Facts: petitioners’ complaint should be first filed with the SEC and not directly
On December 2, 2002, petitioners Jose and Benjamin Pua filed before the before the RTC.16
RTC a Complaint6 for declaration of nullity of contract and sums of money
with damages against respondent,7 docketed as Civil Case No. 19- 1159. Petitioners opposed17 respondent’s motion to dismiss, maintaining that the
RTC has jurisdiction over their complaint. They asserted that Section 63of
In their complaint, petitioners alleged that they had been depositors of the SRC expressly provides that the RTC has exclusive jurisdiction to hear
Citibank Binondo Branch (Citibank Binondo) since 1996. Sometime in 1999, and decide all suits to recover damages pursuant to Sections 56 to 61 of the
Guada Ang, Citibank Binondo’s Branch Manager, invited Jose to a dinner same law.18
party at the Manila Hotel where he was introduced to several officers and
employees of Citibank Hongkong Branch (Citibank Hongkong).9 RTC denied the MTD. It noted that petitioners’ complaint is for declaration
of nullity of contract and sums of money with damages and, as such, it has
A few months after, Chingyee Yau (Yau), Vice-President of Citibank jurisdiction to hear and decide upon the case even if it involves the alleged
Hongkong, came to the Philippines to sell securities to Jose. They averred sale of securities. It ratiocinated that the legal questions or issues arising from
that Yau required Jose to open an account with Citibank Hongkong as it is petitioners’ causes of action against respondent are more appropriate for the
one of the conditions for the sale of the aforementioned securities.10 After judiciary than for an administrative agency to resolve.20
opening such account, Yau offered and sold to petitioners numerous
securities11 issued by various public limited companies established in Jersey, CA reversed RTC holding that the RTC violated the doctrine of primary
Channel I sands. jurisdiction.

The offer, sale, and signing of the subscription agreements of said securities Issue:
were all made and perfected at Citibank Binondo in the presence of its W/N petitioners’ action falls within the primary jurisdiction of the SEC – No.
officers and employees.12
Held:
Later on, petitioners discovered that the securities sold to them were not No.
registered with the Securities and Exchange Commission (SEC) and that the
terms and conditions covering the subscription were not likewise submitted At the outset, the Court observes that respondent erroneously relied on the
to the SEC for evaluation, approval, and registration.13 Baviera ruling to support its position that all complaints involving purported
violations of the SRC should be first referred to the SEC. A careful reading
Asserting that respondent’s actions are in violation of Republic Act No.8799, of the Baviera case would reveal that the same involves a criminal
entitled the "Securities Regulation Code" (SRC), they assailed the validity of prosecution of a purported violator of the SRC, and not a civil suit such as
the subscription agreements and the terms and conditions thereof for being the case at bar. The pertinent portions of the Baviera ruling thus read:
contrary to law and/or public policy.14
“A criminal charge for violation of the Securities Regulation Code is a
For its part, respondent filed a motion to dismiss15 alleging, inter alia, that specialized dispute. Hence, it must first be referred to an administrative
petitioners’ complaint should be dismissed outright for violation of the agency of special competence, i.e., the SEC. Under the doctrine of primary
doctrine of primary jurisdiction. It pointed out that the merits of the case jurisdiction, courts will not determine a controversy involving a question
would largely depend on the issue of whether or not there was a violation of within the jurisdiction of the administrative tribunal, where the question
the SRC, in particular, whether or not there was a sale of unregistered demands the exercise of sound administrative discretion requiring the

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specialized knowledge and expertise of said administrative tribunal to in an amount not exceeding triple the amount of the transaction plus actual
determine technical and intricate matters of fact. The Securities Regulation damages.
Code is a special law. Its enforcement is particularly vested in the SEC.
Based on the foregoing, it is clear that cases falling under Section 57 of the
Hence, all complaints for any violation of the Code and its implementing SRC, which pertain to civil liabilities arising from violations of the
rules and regulations should be filed with the SEC. Where the complaint is requirements for offers to sell or the sale of securities, as well as other civil
criminal in nature, the SEC shall indorse the complaint to the DOJ for suits under Sections 56, 58, 59, 60, and 61 of the SRC shall be exclusively
preliminary investigation and prosecution as provided in Section 53.1 earlier brought before the regional trial courts. It is a well-settled rule in statutory
quoted.” construction that the term "shall" is a word of command, and one which has
always or which must be given a compulsory meaning, and it is generally
Records show that petitioners’ complaint constitutes a civil suit for imperative or mandatory.35 Likewise, it is equally revelatory that no SRC
declaration of nullity of contract and sums of money with damages, which provision of similar import is found in its sections governing criminal suits;
stemmed from respondent’s alleged sale of unregistered securities, in quite the contrary, the SRC states that criminal cases arising from violations
violation of the various provisions of the SRC and not a criminal case such of its provisions should be first referred to the SEC.
as that involved in Baviera.
Therefore, based on these considerations, it stands to reason that civil suits
In this light, when the Court ruled in Baviera that "all complaints for any falling under the SRC are under the exclusive original jurisdiction of the
violation of the [SRC] x x x should be filed with the SEC,"33 it should be regional trial courts and hence, need not be first filed before the SEC, unlike
construed as to apply only to criminal and not to civil suits such as petitioners’ criminal cases wherein the latter body exercises primary jurisdiction.
complaint.
All told, petitioners' filing of a civil suit against respondent for purported
Moreover, it is a fundamental rule in procedural law that jurisdiction is violations of the SRC was properly filed directly before the RTC.
conferred by law;34 it cannot be inferred but must be explicitly stated therein.
Thus, when Congress confers exclusive jurisdiction to a judicial or quasi-
judicial entity over certain matters by law, this, absent any other indication to
the contrary, evinces its intent to exclude other bodies from exercising the
same.

It is apparent that the SRC provisions governing criminal suits are separate
and distinct from those which pertain to civil suits. On the one hand, Section
53 of the SRC governs criminal suits involving violations of the said law. On
the other hand, Sections 56, 57, 58, 59, 60, 61, 62, and 63 of the SRC pertain
to civil suits involving violations of the same law. Among these, the
applicable provisions to this case are Sections 57.1 and 63.1 of the SRC.

SEC. 63. Amount of Damages to be Awarded. – 63.1. All suits to recover


damages pursuant to Sections 56, 57, 58, 59, 60 and 61 shall be brought
before the Regional Trial Court which shall have exclusive jurisdiction to
hear and decide such suits. The Court is hereby authorized to award damages

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4. Herrera v. Bernardo (2011) Hence this petition.

Facts: Arguments:
Respondents heirs of Crisanto S. Bernardo, represented by Emelita Bernardo, Petitioner averred that the COSLAP has no adjudicatory powers to settle and
filed a complaint before the Commission on the Settlement of Land Problems decide the question of ownership over the subject land. Further, the present
(COSLAP) against Alfredo Herrera (Alfredo) for interference, disturbance, case cannot be classified as explosive in nature as the parties never resorted
unlawful claim, harassment and trespassing over a portion of a parcel of land to violence in resolving the controversy. Petitioner submits that it is the
situated at Barangay Dalig, Cardona, Rizal, with an area of 7,993 square Regional Trial Court which has jurisdiction over controversies relative to
meters. The complaint was docketed as COSLAP Case No. 99-221. ownership of the subject property.

Respondents claimed that said parcel of land was originally owned by their Respondents, on the other hand, alleged that the COSLAP has jurisdiction
predecessor-in-interest, Crisanto Bernardo, and was later on acquired by over the present case. Further, respondents argued that petitioner is estopped
Crisanto S. Bernardo. The parcel of land was later on covered by Tax from questioning the jurisdiction of the COSLAP by reason of laches due to
Declaration No. CD-006-0828 under the name of the respondents. Alfredo’s active participation in the actual proceedings before the COSLAP.
Respondents said that Alfredo’s filing of the Motion for Reconsideration
Petitioner, on the other hand, alleged that the portion of the subject property and/or Reopening of the proceedings before the COSLAP is indicative of his
consisting of about 700 square meters was bought by Diosdado Herrera, conformity with the questioned resolution of the COSLAP.
Alfredo’s father, from a certain Domingo Villaran. Upon the death of
Diosdado Herrera, Alfredo inherited the 700-square-meter lot. Issue:
W/N COSLAP had jurisdiction to decide the question of ownership of the
The COSLAP, in a Resolution3 dated December 6, 1999, ruled that property in dispute – No.
respondents have a rightful claim over the subject property. Consequently, a
motion for reconsideration and/or reopening of the proceedings was filed by Held:
Alfredo. No.

The COSLAP, in an Order4 dated August 21, 2002, denied the motion and The COSLAP was created by virtue of Executive Order (E.O.) No. 561,
reiterated its Order dated December 6, 1999. issued on September 21, 1979 by then President Ferdinand E. Marcos. It is
an administrative body established as a means of providing a mechanism for
Aggrieved, petitioner Celia S. Vda. de Herrera, as the surviving spouse of the expeditious settlement of land problems among small settlers, landowners
Alfredo, filed a petition for certiorari with the CA.5 The CA, Twelfth and members of the cultural minorities to avoid social unrest.
Division, in its Decision dated April 28, 2005, dismissed the petition and
affirmed the resolution of the COSLAP. The CA ruled that the COSLAP has Section 3 of E.O. No. 561 specifically enumerates the instances when the
exclusive jurisdiction over the present case and, even assuming that the COSLAP can exercise its adjudicatory functions:
COSLAP has no jurisdiction over the land dispute of the parties herein,
petitioner is already estopped from raising the issue of jurisdiction because “Section 3. Powers and Functions.—The Commission shall have the
Alfredo failed to raise the issue of lack of jurisdiction before the COSLAP following powers and functions:
and he actively participated in the proceedings before the said body. xxxx
Petitioner filed a motion for reconsideration, which was denied by the CA in 2. Refer and follow up for immediate action by the agency having appropriate
a Resolution dated October 17, 2005. jurisdiction any land problem or dispute referred to the Commission:
Provided, That the Commission may, in the following cases, assume

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jurisdiction and resolve land problems or disputes which are critical and social tension or unrest. It can also hardly be characterized as involving a
explosive in nature considering, for instance, the large number of the critical situation that requires immediate action.
parties involved, the presence or emergence of social tension or unrest,
or other similar critical situations requiring immediate action: It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial
(a) Between occupants/squatters and pasture lease agreement holders or officer or government agency, over the nature and subject matter of a petition
timber concessionaires; or complaint is determined by the material allegations therein and the
(b) Between occupants/squatters and government reservation grantees; character of the relief prayed for, irrespective of whether the petitioner or
(c) Between occupants/squatters and public land claimants or applicants; complainant is entitled to any or all such reliefs.10
(d) Petitions for classification, release and/or subdivision of lands of the
public domain; and Respondents’ cause of action before the COSLAP pertains to their claim of
(e) Other similar land problems of grave urgency and magnitude.” ownership over the subject property, which is an action involving title to or
possession of real property, or any interest therein,11 the jurisdiction of which
Administrative agencies, like the COSLAP, are tribunals of limited is vested with the Regional Trial Courts or the Municipal Trial Courts
jurisdiction that can only wield powers which are specifically granted to it by depending on the assessed value of the subject property.
its enabling statute.
Since the COSLAP has no jurisdiction over the action, all the proceedings
Under Section 3 of E.O. No. 561, the COSLAP has two options in acting on therein, including the decision rendered, are null and void. A judgment issued
a land dispute or problem lodged before it, to wit: by a quasi-judicial body without jurisdiction is void. It cannot be the source
(a) refer the matter to the agency having appropriate jurisdiction for of any right or create any obligation. All acts performed pursuant to it and all
settlement/resolution; or claims emanating from it have no legal effect. Having no legal effect, the
(b) assume jurisdiction if the matter is one of those enumerated in paragraph situation is the same as it would be as if there was no judgment at all. It leaves
2 (a) to (e) of the law, if such case is critical and explosive in nature, taking the parties in the position they were before the proceedings.
into account the large number of parties involved, the presence or emergence
of social unrest, or other similar critical situations requiring immediate action. Respondents’ allegation that petitioner is estopped from questioning the
jurisdiction of the COSLAP by reason of laches does not hold water.
In resolving whether to assume jurisdiction over a case or to refer the same Petitioner is not estopped from raising the jurisdictional issue, because it may
to the particular agency concerned, the COSLAP has to consider the nature be raised at any stage of the proceedings, even on appeal, and is not lost by
or classification of the land involved, the parties to the case, the nature of the waiver or by estoppel. The fact that a person attempts to invoke unauthorized
questions raised, and the need for immediate and urgent action thereon to jurisdiction of a court does not estop him from thereafter challenging its
prevent injuries to persons and damage or destruction to property. The law jurisdiction over the subject matter, since such jurisdiction must arise by law
does not vest jurisdiction on the COSLAP over any land dispute or problem. and not by mere consent of the parties.

In the instant case, the COSLAP has no jurisdiction over the subject matter In Regalado v. Go, 514 SCRA 616 (2007), the Court held that laches should
of respondents’ complaint. The present case does not fall under any of the be clearly present for the Sibonghanoy doctrine4 to apply, thus: Laches is
cases enumerated under Section 3, paragraph 2 (a) to (e) of E.O. No. 561. The defined as the “failure or neglect for an unreasonable and unexplained length
dispute between the parties is not critical and explosive in nature, nor does it of time, to do that which, by exercising due diligence, could or should have
involve a large number of parties, nor is there a presence or emergence of been done earlier, it is negligence or omission to assert a right within a

4. In Tijam v. Sibonghanoy, 131 Phil. 556; 23 SCRA 29 (1968), the Court held that a purpose of annulling everything done in the case with the active participation of said
party may be barred by laches from invoking lack of jurisdiction at a late hour for the party invoking the plea of lack of jurisdiction.

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reasonable length of time, warranting a presumption that the party entitled to
assert it either has abandoned it or declined to assert it.”

The ruling in People v. Regalario that was based on the landmark doctrine
enunciated in Tijam v. Sibonghanoy, 23 SCRA 29 (1968), on the matter of
jurisdiction by estoppel is the exception rather than the rule. Estoppel by
laches may be invoked to bar the issue of lack of jurisdiction only in cases in
which the factual milieu is analogous to that in the cited case. In such
controversies, laches should have been clearly present; that is, lack of
jurisdiction must have been raised so belatedly as to warrant the presumption
that the party entitled to assert it had abandoned or declined to assert it.

In Sibonghanoy, the defense of lack of jurisdiction was raised for the first
time in a motion to dismiss filed by the Surety almost 15 years after the
questioned ruling had been rendered. At several stages of the proceedings, in
the court a quo as well as in the Court of Appeals, the Surety invoked the
jurisdiction of the said courts to obtain affirmative relief and submitted its
case for final adjudication on the merits. It was only when the adverse
decision was rendered by the Court of Appeals that it finally woke up to raise
the question of jurisdiction.”

The factual settings attendant in Sibonghanoy are not present in the case at
bar that would justify the application of estoppel by laches against the
petitioner. Here, petitioner assailed the jurisdiction of the COSLAP when she
appealed the case to the CA and at that time, no considerable period had yet
elapsed for laches to attach. Therefore, petitioner is not estopped from
assailing the jurisdiction of the COSLAP. Additionally, no laches will even
attach because the judgment is null and void for want of jurisdiction.23

WHEREFORE, the petition is GRANTED. The Decision and the Resolution


of the Court of Appeals, dated April 28, 2005 and October 17, 2005,
respectively, in CA-G.R. SP No. 73674 are REVERSED and SET ASIDE.
The Decision and Order of the Commission on the Settlement of Land
Problems, dated December 6, 1999 and August 21, 2002, respectively, in
COSLAP Case No. 99-221, are declared NULL and VOID for having been
issued without jurisdiction.
SO ORDERED.

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5. Dacasin v. Dacasin (2010) In its Order dated 23 June 2005, the trial court denied reconsideration,
holding that unlike in the case of respondent, the divorce decree is binding on
Facts: petitioner under the laws of his nationality.
Petitioner Herald Dacasin (petitioner), American, and respondent Sharon Del
Mundo Dacasin (respondent), Filipino, were married in Manila in April 1994. Hence, this petition.
They have one daughter, Stephanie, born on 21 September 1995. In June
1999, respondent sought and obtained from the Circuit Court, 19th Judicial Petitioner submits the following alternative theories for the validity of the
Circuit, Lake County, Illinois (Illinois court) a divorce decree against Agreement to justify its enforcement by the trial court: (1) the Agreement
petitioner.3 In its ruling, the Illinois court dissolved the marriage of petitioner novated the valid divorce decree, modifying the terms of child custody from
and respondent, awarded to respondent sole custody of Stephanie and sole (maternal) to joint;8 or (2) the Agreement is independent of the divorce
retained jurisdiction over the case for enforcement purposes. decree obtained by respondent.

On 28 January 2002, petitioner and respondent executed in Manila a contract Issue:


(Agreement4) for the joint custody of Stephanie. The parties chose Philippine W/N the RTC has jurisdiction to take cognizance of petitioner’s suit and
courts as exclusive forum to adjudicate disputes arising from the Agreement. enforce the Agreement on the joint custody of the parties’ child – The trial
Respondent undertook to obtain from the Illinois court an order court has jurisdiction to entertain petitioner’s suit but not to enforce the
“relinquishing” jurisdiction to Philippine courts. Agreement which is void. However, factual and equity considerations
militate against the dismissal of petitioner’s suit and call for the remand of
In 2004, petitioner sued respondent in the Regional Trial Court of Makati the case to settle the question of Stephanie’s custody.
City, Branch 60 (trial court) to enforce the Agreement. Petitioner alleged that
in violation of the Agreement, respondent exercised sole custody over Held:
Stephanie. The trial court has jurisdiction to entertain petitioner’s suit but not to enforce
the Agreement which is void. However, factual and equity considerations
Respondent sought the dismissal of the complaint for, among others, lack of militate against the dismissal of petitioner’s suit and call for the remand of
jurisdiction because of the Illinois court’s retention of jurisdiction to enforce the case to settle the question of Stephanie’s custody.
the divorce decree.
I.
RTC granted the MTD based on lack of jurisdiction holding that Subject matter jurisdiction is conferred by law. At the time petitioner filed
(1) it is precluded from taking cognizance over the suit considering the his suit in the trial court, statutory law vests on Regional Trial Courts
Illinois court’s retention of jurisdiction to enforce its divorce decree, exclusive original jurisdiction over civil actions incapable of pecuniary
including its order awarding sole custody of Stephanie to respondent; estimation.9 An action for specific performance, such as petitioner’s suit to
(2) the divorce decree is binding on petitioner following the “nationality rule” enforce the Agreement on joint child custody, belongs to this species of
prevailing in this jurisdiction;5 and actions.10 Thus, jurisdiction-wise, petitioner went to the right court.
(3) the Agreement is void for contravening Article 2035, paragraph 5 of the
Civil Code6 prohibiting compromise agreements on jurisdiction.7 Indeed, the trial court’s refusal to entertain petitioner’s suit was grounded not
on its lack of power to do so but on its thinking that the Illinois court’s divorce
Petitioner sought reconsideration, raising the new argument that the divorce decree stripped it of jurisdiction. This conclusion is unfounded. What the
decree obtained by respondent is void. Thus, the divorce decree is no bar to Illinois court retained was “jurisdiction x x x for the purpose of enforcing all
the trial court’s exercise of jurisdiction over the case. and sundry the various provisions of [its] Judgment for Dissolution.”11

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Petitioner’s suit seeks the enforcement not of the “various provisions” of the separated because the law provides for joint parental authority when spouses
divorce decree but of the post-divorce Agreement on joint child custody. live together.21 However, upon separation of the spouses, the mother takes
sole custody under the law if the child is below seven years old and any
Thus, the action lies beyond the zone of the Illinois court’s so-called “retained agreement to the contrary is void. Thus, the law suspends the joint custody
jurisdiction.” regime for (1) children under seven of (2) separated or divorced spouses.

II. III.
The foregoing notwithstanding, the trial court cannot enforce the Agreement Instead of ordering the dismissal of petitioner’s suit, the logical end to its lack
which is contrary to law. of cause of action, we remand the case for the trial court to settle the question
of Stephanie’s custody.
In this jurisdiction, parties to a contract are free to stipulate the terms of
agreement subject to the minimum ban on stipulations contrary to law, Stephanie is now nearly 15 years old, thus removing the case outside of the
morals, good customs, public order, or public policy.12 Otherwise, the ambit of the mandatory maternal custody regime under Article 213 and
contract is denied legal existence, deemed “inexistent and void from the bringing it within coverage of the default standard on child custody
beginning.”13 For lack of relevant stipulation in the Agreement, these and proceedings – the best interest of the child.30 As the question of custody is
other ancillary Philippine substantive law serve as default parameters to test already before the trial court and the child’s parents, by executing the
the validity of the Agreement’s joint child custody stipulations.14 Agreement, initially showed inclination to share custody, it is in the interest
of swift and efficient rendition of justice to allow the parties to take advantage
At the time the parties executed the Agreement on 28 January 2002, two facts of the court’s jurisdiction, submit evidence on the custodial arrangement best
are undisputed: serving Stephanie’s interest, and let the trial court render judgment. This
(1) Stephanie was under seven years old (having been born on 21 September disposition is consistent with the settled doctrine that in child custody
1995); and proceedings, equity may be invoked to serve the child’s best interest.31
(2) petitioner and respondent were no longer married under the laws of the
United States because of the divorce decree.

The relevant Philippine law on child custody for spouses separated in fact or
in law15 (under the second paragraph of Article 213 of the Family Code) is
also undisputed: “no child under seven years of age shall be separated from
the mother x x x.”16

This statutory awarding of sole parental custody17 to the mother is


mandatory,18 grounded on sound policy consideration,19 subject only to a
narrow exception not alleged to obtain here.20 Clearly then, the Agreement’s
object to establish a post-divorce joint custody regime between respondent
and petitioner over their child under seven years old contravenes Philippine
law.

The Agreement is not only void ab initio for being contrary to law, it has also
been repudiated by the mother when she refused to allow joint custody by the
father. The Agreement would be valid if the spouses have not divorced or

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6. Far East Bank v. Shemberg (2006) representatives to sign “standard pre-printed bank forms in fine print, such as
Credit Line Agreements (CLA), Promissory Notes (PN), Real Estate
Facts: Mortgages (REM), Chattel Mortgages (CM), Trust Receipts (TR), Surety
Far East Bank & Trust Company (FEBTC), petitioner, is a domestic banking Agreements (JSS) and other bank forms and documents.” Respondents
corporation organized and existing under Philippine laws. It is now managed complied since they trusted petitioner. However, it tuned out that petitioner’s
and operated by the Bank of the Philippine Islands with main office in Makati employees filled the blanks with “false and inaccurate entries.”
City.
Respondents deny and dispute the genuineness and due execution of the
Shemberg Marketing Corporation, Mackie Industries Corporation, Benson documents and pray for the following reliefs:
Industries Incorporated, Kamaro Enterprises Corporation, Polysaccharide
Corporation, Prime Crafts Incorporated, Cebu United Polymer Corporation, “xxx
Shemberg Natures Craft Inc., respondents herein, are all duly registered a) Declaring null and void the CLA, REMs, CMs, PNs, JSS, TRs, and other
domestic corporations based in Pakna-an, Mandaue City. The individual related documents, the notices of sale, the entire foreclosure proceedings,
respondents, all surnamed Dacay, are directors and corporate officers of the including the auction sale, the amount claimed by the bank to be the
said corporations. outstanding account, the amount claimed by the bank to be the principal, the
interest unilaterally imposed by the bank, the penalties imposed by the bank
Respondents are the registered owners of several realties located in Mandaue and the PNs made basis for default and foreclosure;
City. Prior to 1998, respondents entered into several credit transactions with b) Declaring the CLA, REMs, CMs, PNs, JSS, TRs, and other related
petitioner secured by several real estate mortgages. documents as without consideration, invalid, inoperative, ineffective,
unenforceable, null and void and to cancel the same;
In their respective mortgage contracts, duly annotated on respondents’ titles, c) To make the injunction permanent;
the parties stipulated that upon failure or refusal of the mortgagor to pay the d) To order the bank to comply with its commitments, assurances and
obligations when due, the entire principal, interest, penalties and other representations to help in the rehabilitation of the Dacay Group and the
charges shall be immediately demandable and payable without need of notice restructuring of its obligations, if any;
or demand; and the mortgagee shall have the absolute discretion to foreclose e) To award to plaintiffs moral damages of P300,000.00, exemplary damages
the mortgage extrajudicially pursuant to Act No. 3135, as amended. of P200,000.00, attorney’s fees of P200,000.00 plus P1,000.00 per billable
hour, and litigation expenses of P300,000.00;
Pursuant to the parties’ agreements, petitioner released to respondents the f) Declaring that the defendant cannot validly do, perform or suffer to be done
principal amounts of the loans as evidenced by various promissory notes. the acts complained of.”

However, respondents failed to pay the loans which matured on February 14, RTC granted the TRO.
2001. Thus, petitioner sought to foreclose the mortgages extrajudicially.
Petitioner filed its Answer with Affirmative Defenses, Counterclaim, and
On February 28, 2001, respondents filed with the Regional Trial Court, Vigorous Opposition to the Order directing the issuance of a TRO and/or
Branch 56, Mandaue City, a Complaint for Declaratory Relief, Injunction, preliminary mandatory injunction. Likewise, petitioner filed a Motion to
Damages, Annulment of Promissory Notes, Documents, and Contracts Dismiss Based On Affirmative Defenses alleging that:
against petitioner, docketed as Civil Case No. MAN-4045. (1) the venue is improperly laid;
(2) the trial court did not acquire jurisdiction over the case for non-payment
The complaint alleges that prior to 1998, respondents obtained credit of proper docket fees;
accommodations from petitioner. The latter required respondents’ (3) there is non-joinder of indispensable parties; and

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(4) the trial court has no jurisdiction to enjoin the foreclosure proceedings. would depend upon the amount of the claim. However, where the basic issue
is something other than the right to recover a sum of money, where the money
RTC denied the MTD holding, among others, that it has jurisdiction because claim is only incidental or a consequence of the principal relief sought, the
the annulment of a mortagage is incapable of pecuniary estimation. action is incapable of pecuniary estimation.

CA denied the R65 holding that since the RTC has jurisdiction over the case, Here, the primary reliefs prayed for by respondents in Civil Case No.
the extraordinary writ of certiorari cannot be utilized. MAN-4045 is the cancellation of the real estate and chattel mortgages for
want of consideration. In Bumayog v. Tumas,12 this Court ruled that where
Hence this petition. the issue involves the validity of a mortgage, the action is one incapable of
pecuniary estimation. In the more recent case of Russell v. Vestil,13 this
Issue: Court, citing Bumayog,14 held that an action questioning the validity of a
W/N the RTC has jurisdiction - Yes mortgage is one incapable of pecuniary estimation. Petitioner has not shown
adequate reasons for this Court to revisit Bumayog and Russell. Hence,
Held: petitioner’s contention can not be sustained. Since respondents paid the
Yes. docket fees, as computed by the clerk of court, consequently, the trial court
acquired jurisdiction over Civil Case No. MAN4045.
On the first issue, petitioner contends that in real actions, the assessed value
of the property or if there is none, the estimated value thereof, must be alleged
in the complaint, and shall serve as the basis for computing the fees.

Nowhere in the complaint in Civil Case No. MAN- 4045 did respondents
allege the assessed values of their realties. Hence, there is no adequate basis
for computing the proper filing fees. It necessarily follows that the fees paid
are deficient. The trial court, therefore, did not acquire jurisdiction over the
case.

Respondents counter that a perusal of the complaint in Civil Case No.


MAN-4045 shows that the suit primarily involves cancellation of mortgages,
an action incapable of pecuniary estimation. Consequently, petitioner’s
contention that there is a deficiency in the payment of docket fees is without
merit.

A court acquires jurisdiction over a case only upon the payment of the
prescribed fees.9

In Singsong v. Isabela Sawmill,11 this Court laid the test for determining
whether the subject matter of an action is incapable of pecuniary estimation,
thus: Ascertain the nature of the principal action or remedy sought. If the
action is primarily for recovery of a sum of money, the claim is considered
capable of pecuniary estimation. Whether the trial court has jurisdiction

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7. Sabitsana v. Muertegi (2013) The Complaint13 prayed, among others, that the Sabitsana Deed of Sale, the
August 24, 1998 letter, and TD No. 5327 be declared null and void and of no
Facts: effect; that petitioners be ordered to respect and recognize Juanito’s title over
On September 2, 1981, Alberto Garcia (Garcia) executed an unnotarized the lot; and that moral and exemplary damages, attorney’s fees, and litigation
Deed of Sale5 in favor of respondent Juanito Muertegui6 (Juanito) over a expenses be awarded to him.
7,500-square meter parcel of unregistered land (the lot) located in Dalutan
Island, Talahid, Almeira, Biliran, Leyte del Norte covered by Tax Declaration In their Answer with Counterclaim,14 petitioners asserted mainly that the sale
(TD) No. 1996 issued in 1985 in Garcia’s name.7 to Juanito is null and void absent the marital consent of Garcia’s wife,
Soledad Corto (Soledad); that they acquired the property in good faith and
Juanito’s father Domingo Muertegui, Sr. (Domingo Sr.) and brother for value; and that the Complaint is barred by prescription and laches.
Domingo Jr. took actual possession of the lot and planted thereon coconut
and ipil-ipil trees. They also paid the real property taxes on the lot for the They likewise insisted that the Regional Trial Court (RTC) of Naval, Biliran
years 1980 up to 1998. did not have jurisdiction over the case, which involved title to or interest in a
parcel of land the assessed value of which is merely P1,230.00.
On October 17, 1991, Garcia sold the lot to the Muertegui family lawyer,
petitioner Atty. Clemencio C. Sabitsana, Jr. (Atty. Sabitsana), through a RTC ruled for respondent Juanito. The trial court held that petitioners are not
notarized deed of absolute sale.8 The sale was registered with the Register of buyers in good faith. Petitioner Atty. Sabitsana was the Muertegui family’s
Deeds on February 6, 1992.9 TD No. 1996 was cancelled and a new one, TD lawyer, and was informed beforehand by Carmen that her family had
No. 5327,10 was issued in Atty. Sabitsana’s name. purchased the lot; thus, he knew of the sale to Juanito. After conducting an
investigation, he found out that the sale was not registered. With this
Although Domingo Jr. and Sr. paid the real estate taxes, Atty. Sabitsana also information in mind, Atty. Sabitsana went on to purchase the same lot and
paid real property taxes in 1992, 1993, and 1999. In 1996, he introduced raced to register the sale ahead of the Muerteguis, expecting that his purchase
concrete improvements on the property, which shortly thereafter were and prior registration would prevail over that of his clients, the Muerteguis.
destroyed by a typhoon. Applying Article 1544 of the Civil Code,17 the trial court declared that even
though petitioners were first to register their sale, the same was not done in
When Domingo Sr. passed away, his heirs applied for registration and good faith.
coverage of the lot under the Public Land Act or Commonwealth Act No.
141. Atty. Sabitsana, in a letter11 dated August 24, 1998 addressed to the CA affirmed.
Department of Environment and Natural Resources’ CENRO/PENRO office
in Naval, Biliran, opposed the application, claiming that he was the true Hence this petition claiming, among others, that the RTC had no jurisdiction
owner of the lot. He asked that the application for registration be held in over the case because the assessed value of the lot was only P1,230 and its
abeyance until the issue of conflicting ownership has been resolved. stated market value was only P3,450.

On April 11, 2000, Juanito, through his attorney-in-fact Domingo Jr., filed Arguments:
Civil Case No. B-109712 for quieting of title and preliminary injunction, Petitioners assert that the RTC of Naval, Biliran did not have jurisdiction over
against herein petitioners Atty. Sabitsana and his wife, Rosario, claiming that the case. They argue that since the assessed value of the lot was a mere
they bought the lot in bad faith and are exercising acts of possession and P1,230.00, jurisdiction over the case lies with the first level courts, pursuant
ownership over the same, which acts thus constitute a cloud over his title. to Republic Act No. 7691, which expanded their exclusive original
jurisdiction to include "all civil actions which involve title to, or possession
of, real property, or any interest therein where the assessed value of the

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property or interest therein does not exceed Twenty thousand pesos
(P20,000.00) or, in civil actions in Metro Manila, where such assessed value
does not exceed Fifty thousand pesos (P50,000.00) exclusive of interest,
damages of whatever kind, attorney’s fees, litigation expenses and costs."26
Petitioners thus conclude that the Decision in Civil Case No. B-1097 is null
and void for lack of jurisdiction.

Respondent, on the other hand, counters that a suit for quieting of title is one
whose subject matter is incapable of pecuniary estimation, and thus falls
within the jurisdiction of the RTC.

Issue:
W/N the RTC had jurisdiction over subject matter – Yes.

Held:
Yes.

On the question of jurisdiction, it is clear under the Rules that an action for
quieting of title may be instituted in the RTCs, regardless of the assessed
value of the real property in dispute. Under Rule 63 of the Rules of Court,29
an action to quiet title to real property or remove clouds therefrom may be
brought in the appropriate RTC.

It must be remembered that the suit for quieting of title was prompted by
petitioners’ August 24, 1998 letter-opposition to respondent’s application for
registration. Thus, in order to prevent30 a cloud from being cast upon his
application for a title, respondent filed Civil Case No. B-1097 to obtain a
declaration of his rights. In this sense, the action is one for declaratory relief,
which properly falls within the jurisdiction of the RTC pursuant to Rule 63
of the Rules.

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8. Spouses Manila v. Spouses Manzo (2011) petitioners arguing that said court’s appellate jurisdiction in ejectment cases
is limited to the determination of who is entitled to the physical possession of
Facts: real property and the only judgment it can render in favor of the defendant is
On June 30, 1982, Ederlinda Gallardo leased two (2) parcels of land situated to recover his costs, which judgment is conclusive only on the issue of
along Real St., Manuyo, Las Piñas, Metro Manila, to Eulogia Manila for a possession and does not affect the ownership of the land.
period of ten (10) years at a monthly rental(s) of P2,000.00 for the first two
years, and thereafter an increase of ten (10) percent every after two years. They contended that the sale of real property by one party to another may be
ordered by the RTC only in a case for specific performance falling under its
They also agreed that the lessee shall have the option to buy the property original exclusive jurisdiction, not in the exercise of its appellate jurisdiction
within two (2) years from the date of execution of the contract of lease at a in an ejectment case.
fair market value of One Hundred and Fifty Thousand Pesos (P150,000.00).
Respondents also alleged that the petition for annulment is the only remedy
The contract of lease expired on July 1, 1992 but the lessee continued in available to them because the ordinary remedies of new trial, appeal, petition
possession of the property despite a formal demand letter dated August 8, for relief or other appropriate remedies are no longer available through no
1992, to vacate the same and pay the rental arrearages. In a letter reply dated fault on their part.
August 12, 1992, herein defendant claimed that no rental fee is due because
she allegedly became the owner of the property at the time she communicated CA granted the petition and ruled that the RTC exceeded its jurisdiction
to the plaintiff her desire to exercise the option to buy the said property. holding that

Respondents thus filed an action for ejectment against the petitioners with the “what the respondent court should have done in the exercise of its appellate
MTC of Las Pinas City. jurisdiction, was to confine itself to the issue of whether or not petitioners
have a valid cause of action for ejectment against the private respondents.
MTC ruled for respondents. Unfortunately, in the decision herein sought to be annulled, the respondent
court went further than what is required of it as an appellate court when it
RTC reversed holding that petitioners have in fact exercised their option to ordered the petitioners to sell their properties to the private respondents. In a
buy the leased property but the respondents refused to honor the same. It very real sense, the respondent court materially changed the nature of
noted that respondents even informed the petitioners about foreclosure petitioners’ cause of action by deciding the question of ownership even as the
proceedings on their property, whereupon the petitioners tried to intervene by appealed case involves only the issue of prior physical possession which, in
tendering rental payments but the respondents advised them to withhold such every ejectment suit, is the only question to be resolved.
payments until the appeal of respondents in the case they filed against the
Rural Bank of Bombon (Camarines Sur), Inc. (Civil Case No. 6062) is As it were, the respondent court converted the issue to one for specific
resolved. It further noted that respondents’ intention to sell the lot to performance which falls under its original, not appellate jurisdiction. Sad to
petitioners is confirmed by the fact that the former allowed the latter to say, this cannot be done by the respondent court in an appealed ejectment
construct a building of strong materials on the premises. RTC ordered the case because the essential criterion of appellate jurisdiction is that it revises
petitioners to execute the corresponding deed of sale. and corrects the proceedings in a cause already instituted and does not create
that cause.”
Respondents filed an MR which was denied.

Respondents then filed a petition for annulment of the RTC decision in the
CA. Respondents assailed the RTC for ordering them to sell their property to

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Issue: purpose of resolving the issue of possession de facto, it has no jurisdiction to
W/N the RTC exceeded its jurisdiction when it, in its appellate jurisdiction settle with finality the issue of ownership19 and any pronouncement made by
over an ejectment case, declared the petitioners as owners of the property – it on the question of ownership is provisional in nature.20 A judgment in a
Yes, but the petition for annulment is an erroneous remedy. forcible entry or detainer case disposes of no other issue than possession and
establishes only who has the right of possession, but by no means constitutes
Held: a bar to an action for determination of who has the right or title of
Yes, but the petition for annulment is an erroneous remedy. ownership.21 We have held that although it was proper for the RTC, on
appeal in the ejectment suit, to delve on the issue of ownership and receive
Petitioners assail the CA in holding that the RTC decision is void because it evidence on possession de jure, it cannot adjudicate with semblance of
granted a relief inconsistent with the nature of an ejectment suit and not even finality the ownership of the property to either party by ordering the
prayed for by the respondents in their answer. They contend that whatever cancellation of the TCT.
maybe questionable in the decision is a ground for assignment of errors on
appeal—or in certain cases, as ground for a special civil action for certiorari In this case, the RTC acted in excess of its jurisdiction in deciding the appeal
under Rule 65—and not as ground for its annulment. of respondents when, instead of simply dismissing the complaint and
awarding any counterclaim for costs due to the defendants (petitioners), it
On the other hand, respondents assert that the CA, being a higher court, has ordered the respondents-lessors to execute a deed of absolute sale in favor of
the power to adopt, reverse or modify the findings of the RTC in this case. the petitioners-lessees, on the basis of its own interpretation of the Contract
They point out that the CA in the exercise of its sound discretion found the of Lease which granted petitioners the option to buy the leased premises
RTC’s findings unsupported by the evidence on record which also indicated within a certain period (two years from date of execution) and for a fixed
that the loss of ordinary remedies of appeal, new trial and petition for review price (P150,000.00).23 This cannot be done in an ejectment case where the
was not due to the fault of the respondents. only issue for resolution is who between the parties is entitled to the physical
possession of the property.
We agree with the petitioners.
Such erroneous grant of relief to the defendants on appeal, however, is but an
Lack of jurisdiction as a ground for annulment of judgment refers to either exercise of jurisdiction by the RTC. Jurisdiction is not the same as the
lack of jurisdiction over the person of the defending party or over the subject exercise of jurisdiction. As distinguished from the exercise of jurisdiction,
matter of the claim. In a petition for annulment of judgment based on lack of jurisdiction is the authority to decide a cause, and not the decision rendered
jurisdiction, petitioner must show not merely an abuse of jurisdictional therein.24 The ground for annulment of the decision is absence of, or no,
discretion but an absolute lack of jurisdiction. Lack of jurisdiction means jurisdiction; that is, the court should not have taken cognizance of the petition
absence of or no jurisdiction, that is, the court should not have taken because the law does not vest it with jurisdiction over the subject matter.25
cognizance of the petition because the law does not vest it with jurisdiction
over the subject matter. Jurisdiction over the nature of the action or subject Thus, while respondents assailed the content of the RTC decision, they failed
matter is conferred by law. to show that the RTC did not have the authority to decide the case on appeal.

There is no dispute that the RTC is vested with appellate jurisdiction over “Chiefly, Section 22 of B.P. Blg. 129, otherwise known as the Judiciary
ejectment cases decided by the MeTC, MTC or MCTC. We note that Reorganization Act of 1980, vests upon the RTC the exercise of an ‘appellate
petitioners’ attack on the validity of the RTC decision pertains to a relief jurisdiction over all cases decided by the Metropolitan Trial Courts,
erroneously granted on appeal, and beyond the scope of judgment provided Municipal Trial Courts, and Municipal Circuit Trial Courts in their respective
in Section 6 (now Section 17) of Rule 70. While the court in an ejectment territorial jurisdictions.’
case may delve on the issue of ownership or possession de jure solely for the

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Clearly then, when the RTC took cognizance of petitioners’ appeal from the
adverse decision of the MTC in the ejectment suit, it (RTC) was
unquestionably exercising its appellate jurisdiction as mandated by law.
Perforce, its decision may not be annulled on the basis of lack of jurisdiction
as it has, beyond cavil, jurisdiction to decide the appeal.”

The CA therefore erred in annulling the November 18, 1994 RTC decision
on the ground of lack of jurisdiction as said court had jurisdiction to take
cognizance of petitioners’ appeal.

WHEREFORE, the petition for review on certiorari is GRANTED. The


Decision dated February 27, 2004 and Resolution dated May 14, 2004 of the
Court of Appeals in CA-G.R. SP No. 49998 are SET ASIDE. The petition for
annulment of judgment filed by herein respondents is DISMISSED.
No costs. SO ORDERED.

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9. Lhuillier v. British Airways (2010) Respondent alleged that only the courts of London, United Kingdom or
Rome, Italy, have jurisdiction over the complaint for damages pursuant to the
Facts: Warsaw Convention,5 Article 28(1) of which provides:
On April 28, 2005, petitioner Edna Diago Lhuillier filed a Complaint2 for
damages against respondent British Airways before the Regional Trial Court “An action for damages must be brought at the option of the plaintiff, either
(RTC) of Makati City. before the court of domicile of the carrier or his principal place of business,
or where he has a place of business through which the contract has been made,
She alleged that on February 28, 2005, she took respondent’s flight 548 from or before the court of the place of destination.”
London, United Kingdom to Rome, Italy. Once on board, she allegedly
requested Julian Halliday (Halliday), one of the respondent’s flight Thus, since a) respondent is domiciled in London; b) respondent’s principal
attendants, to assist her in placing her hand-carried luggage in the overhead place of business is in London; c) petitioner bought her ticket in Italy (through
bin. However, Halliday allegedly refused to help and assist her, and even Jeepney Travel S.A.S, in Rome);6 and d) Rome, Italy is petitioner’s place of
sarcastically remarked that “If I were to help all 300 passengers in this flight, destination, then it follows that the complaint should only be filed in the
I would have a broken back!” proper courts of London, United Kingdom or Rome, Italy.

Petitioner further alleged that when the plane was about to land in Rome, Likewise, it was alleged that the case must be dismissed for lack of
Italy, another flight attendant, Nickolas Kerrigan (Kerrigan), singled her out jurisdiction over the person of the respondent because the summons was
from among all the passengers in the business class section to lecture on plane erroneously served on Euro- Philippine Airline Services, Inc. which is
safety. Allegedly, Kerrigan made her appear to the other passengers to be not its resident agent in the Philippines.
ignorant, uneducated, stupid, and in need of lecturing on the safety rules and
regulations of the plane. Affronted, petitioner assured Kerrigan that she knew On June 3, 2005, the trial court issued an Order requiring herein petitioner to
the plane’s safety regulations being a frequent traveler. Thereupon, Kerrigan file her Comment/Opposition on the Motion to Dismiss within 10 days from
allegedly thrust his face a mere few centimeters away from that of the notice thereof, and for respondent to file a Reply thereon.7
petitioner and menacingly told her that “We don’t like your attitude.”
Instead of filing a Comment/Opposition, petitioner filed on June 27, 2005, an
Upon arrival in Rome, petitioner complained to respondent’s ground manager Urgent Ex-Parte Motion to Admit Formal Amendment to the Complaint and
and demanded an apology. However, he latter declared that the flight Issuance of Alias Summons.8 Petitioner alleged that upon verification with
stewards were “only doing their job.” the Securities and Exchange Commission, she found out that the resident
agent of respondent in the Philippines is Alonzo Q. Ancheta. Subsequently,
Thus, petitioner filed the complaint for damages, praying that respondent be on September 9, 2005, petitioner filed a Motion to Resolve Pending Incident
ordered to pay P5 million as moral damages, P2 million as nominal damages, and Opposition to Motion to Dismiss.9
P1 million as exemplary damages, P300,000.00 as attorney’s fees,
P200,000.00 as litigation expenses, and cost of the suit. RTC granted the MTD holding that it had no jurisdiction over the case based
on the Warsaw Convention. This being so, the issue of jurisdiction over the
On May 16, 2005, summons, together with a copy of the complaint, was person of the respondent airline has become moot.
served on the respondent through Violeta Echevarria, General Manager of
Euro-Philippine Airline Services, Inc.3On May 30, 2005, respondent, by way Hence this petition.
of special appearance through counsel, filed a Motion to Dismiss4 on
grounds of lack of jurisdiction over the case and over the person of the Issue:
respondent. 1. W/N the RTC has jurisdiction over the subject matter – No.

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2. W/N the RTC acquired jurisdiction over the respondent – No. “Special Appearance to Question a Court’s Jurisdiction Is Not Voluntary
Appearance
Held: The second sentence of Sec. 20, Rule 14 of the Revised Rules of Civil
Procedure clearly provides:
I. No. Sec. 20. Voluntary appearance.—The defendant’s voluntary appearance in
the action shall be equivalent to service of summons. The inclusion in a
The Warsaw Convention applies in this case and governs the jurisdiction over motion to dismiss of other grounds aside from lack of jurisdiction over the
the subject matter over the action. The WC is jurisdictional in character. person of the defendant shall not be deemed a voluntary appearance.
Further, it is settled that allegations of tortious conduct committed against an
airline passenger during the course of the international carriage do not bring Thus, a defendant who files a motion to dismiss, assailing the jurisdiction of
the case outside the ambit of the Warsaw Convention. RTC decision affirmed. the court over his person, together with other grounds raised therein, is not
deemed to have appeared voluntarily before the court. What the rule on
II. No. voluntary appearance—the first sentence of the above-quoted rule—means is
that the voluntary appearance of the defendant in court is without
Respondent, in seeking remedies from the trial court through special qualification, in which case he is deemed to have waived his defense of lack
appearance of counsel, is not deemed to have voluntarily submitted itself to of jurisdiction over his person due to improper service of summons.
the jurisdiction of the trial court.
A special appearance before the court— challenging its jurisdiction over the
Petitioner argues that respondent has effectively submitted itself to the person through a motion to dismiss even if the movant invokes other
jurisdiction of the trial court when the latter stated in its Comment/Opposition grounds—is not tantamount to estoppel or a waiver by the movant of his
to the Motion for Reconsideration that “Defendant [is at a loss] x x x how the objection to jurisdiction over his person; and such is not constitutive of a
plaintiff arrived at her erroneous impression that it is/was Euro-Philippines voluntary submission to the jurisdiction of the court.”
Airlines Services, Inc. that has been making a special appearance since x x x
British Airways x x x has been clearly specifying in all the pleadings that it In this case, the special appearance of the counsel of respondent in filing the
has filed with this Honorable Court that it is the one making a special Motion to Dismiss and other pleadings before the trial court cannot be
appearance.”44 deemed to be voluntary submission to the jurisdiction of the said trial court.
We hence disagree with the contention of the petitioner and rule that there
In refuting the contention of petitioner, respondent cited La Naval Drug was no voluntary appearance before the trial court that could constitute
Corporation v. Court of Appeals45 where we held that even if a party estoppel or a waiver of respondent’s objection to jurisdiction over its person.
“challenges the jurisdiction of the court over his person, as by reason of
absence or defective service of summons, and he also invokes other grounds WHEREFORE, the petition is DENIED. The October 14, 2005 Order of the
for the dismissal of the action under Rule 16, he is not deemed to be in Regional Trial Court of Makati City, Branch 132, dismissing the complaint
estoppel or to have waived his objection to the jurisdiction over his for lack of jurisdiction, is AFFIRMED.
person.”46 SO ORDERED.

This issue has been squarely passed upon in the recent case of Garcia v.
Sandiganbayan,47 where we reiterated our ruling in La Naval Drug
Corporation v. Court of Appeals48 and elucidated thus:

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10. Heirs of Nispero v. Ducusin (2013) and respondent was reached prompting the MARO to issue a Certificate to
File Action.12
Facts:
The instant case stemmed from a complaint4 filed by petitioners with the On January 23, 2002, petitioners filed with the DARAB a complaint for
DARAB alleging the following antecedents: annulment of documents and damages against respondent. Petitioners
contended that the transfer of ownership over the subject land was made
The 15,837-square-meter parcel of land subject of the instant case is part of without the consent of the heirs of Santiago and that respondent took
the 58,350-square- meter agricultural land in Pao Sur, San Fernando City, La advantage of Maria’s senility and made it appear that Maria and Cipriana sold
Union acquired by Santiago Nisperos, the predecessor of petitioners, during said property by virtue of the VLT.
his lifetime.
They further alleged that said document was falsified by respondent because
When Santiago and his wife Estefania died, they were survived by their nine Maria could not anymore sign but could only affix her thumbmark as she did
children, the petitioners herein, among whom was Maria and Cipriana in a 1988 Deed of Donation. To support their complaint, they attached a Joint
Nispero. Affidavit of Denial13 by Anita and Lucia Gascon the supposed instrumental
witnesses to the VLT. In said affidavit, Anita and Lucia claimed that the
Later, the petitioner-heirs took respondent Marissa Ducusin, a daughter of signatures appearing therein are not theirs as they never affixed their
their cousin, as their ward and raised her like their own child. signatures on said document. They further stated that they were never aware
of said document.
On February 12, 1988, Maria and Cipriana, acting as representatives of their
other siblings, executed a Deed of Donation Mortis Causa8 in favor of Petitioners likewise asseverated in their complaint that respondent committed
petitioners over the 58,350-square-meter property and another fraud because she was not a bona fide beneficiary as she was not engaged in
46,000-square- meter property. farming since she was still a minor at that time and that she could not validly
enter into a contract with Maria and Cipriana.
On April 28, 1992, a Deed of Voluntary Land Transfer (VLT) over the subject
property was executed between Maria and Cipriana as landowners, and The DARAB Regional Adjudicator (PARAD) ruled for petitioners and
respondent, who was then only 17 years old, as farmer-beneficiary. The annulled the VLT and the OCT/CLOA. It was also ruled that the issuance of
instrument was signed by the three in the presence of witnesses Anita, Lucia the title in respondent’s name was not in accordance with agrarian laws
and Marcelina Gascon and Municipal Agrarian Reform Officer Susimo because she cannot be considered as a tenant but more of an heir of the
Asuncion. The same was notarized by Notary Public Atty. Roberto E. transferors.
Caoayan.
Respondent contested the PARAD’s decision before the DARAB alleging
On June 24, 1992, Certificate of Land Ownership Award (CLOA) No. that the Regional Adjudicator went beyond the scope of his authority by
000212245390210 was issued to respondent by the Department of Agrarian directing the parties to litigate the issue of ownership before the court.
Reform (DAR) over the subject property. By virtue of said CLOA, OCT No.
CLOA-62311 was issued to respondent a month later, or on July 24, 1992. The DARAB reversed the PARAD.

Alleging fraud on the part of respondent which petitioners claim to have CA affirmed the DARAB and held that retention rights, exclusion of a
discovered only in August 2001, petitioners filed a complaint on September property from CARP coverage and the qualification and disqualification of
6, 2001 with the Municipal Agrarian Reform Office (MARO) of San agrarian reform beneficiaries are issues not cognizable by the Regional
Fernando City, La Union. Unfortunately, no settlement between petitioners Adjudicator and the DARAB but by the DAR Secretary. The appellate court

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nevertheless held that petitioners failed to discharge their burden of proving maintaining, changing, or seeking to arrange terms or conditions of such
that fraud attended the execution of the VLT. It also agreed with the DARAB tenurial arrangements” and includes “any controversy relating to
that considering a certificate of title was already issued in favor of respondent, compensation of lands acquired under this Act and other terms and conditions
the same became indefeasible and incontrovertible by the time petitioners of transfer of ownership from landowners to farmworkers, tenants and other
instituted the case in January 2002, and thus may no longer be judicially agrarian reform beneficiaries, whether the disputants stand in the proximate
reviewed. relation of farm operator and beneficiary, landowner and tenant, or lessor and
lessee.”
Hence this petition claiming that the CA erred in ruling that PARAB has no
jurisdiction over the case. Thus, in Morta, Sr. v. Occidental,24 this Court held that there must be a
tenancy relationship between the parties for the DARAB to have jurisdiction
Issue: over a case. It is essential to establish all of the following indispensable
W/N the Regional Adjudicator and the DARAB have jurisdiction over the elements, to wit:
case – No. (1) that the parties are the landowner and the tenant or agricultural lessee;
(2) that the subject matter of the relationship is an agricultural land;
Held: (3) that there is consent between the parties to the relationship;
No. (4) that the purpose of the relationship is to bring about agricultural
production;
We set aside the assailed Decision and Resolution. (5) that there is personal cultivation on the part of the tenant or agricultural
lessee; and
The complaint should have been lodged with the Office of the DAR Secretary (6) that the harvest is shared between the landowner and the tenant or
and not with the DARAB. agricultural lessee.

Under the DARAB Rules of Procedure, the DARAB has primary and In the instant case, petitioners, as supposed owners of the subject property,
exclusive original and appellate jurisdiction to determine and adjudicate all did not allege in their complaint that a tenancy relationship exists between
agrarian disputes involving the implementation of the Comprehensive them and respondent. In fact, in their complaint, they described respondent
Agrarian Reform Program (CARP) and other agrarian laws. Specifically, as a “ward” of one of the co-owners, Maria, who is “not a bona fide
such jurisdiction shall include cases involving the issuance, correction and beneficiary, she being not engaged in farming because she was still a minor”
cancellation of Certificates of Land Ownership Award (CLOAs) and at the time the VLT was executed.
Emancipation Patents (EPs) which are registered with the Land Registration
Authority. It is axiomatic that the jurisdiction of a tribunal, including a quasi-judicial
officer or government agency, over the nature and subject matter of a petition
However, it is not enough that the controversy involves the cancellation of a or complaint is determined by the material allegations therein and the
CLOA registered with the Land Registration Authority for the DARAB to character of the relief prayed for, irrespective of whether the petitioner or
have jurisdiction. What is of primordial consideration is the existence of an complainant is entitled to any or all such reliefs.
agrarian dispute between the parties.
Jurisdiction over the nature and subject matter of an action is conferred by
Section 3(d) of R.A. No. 6657 defines an agrarian dispute as “any controversy the Constitution and the law, and not by the consent or waiver of the parties
relating to tenurial arrangements, whether leasehold, tenancy, stewardship or where the court otherwise would have no jurisdiction over the nature or
otherwise, over lands devoted to agriculture, including disputes concerning subject matter of the action. Nor can it be acquired through, or waived by,
farmworkers’ associations or representation of persons in negotiating, fixing, any act or omission of the parties.

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Moreover, estoppel does not apply to confer jurisdiction to a tribunal that has
none over the cause of action. The failure of the parties to challenge the
jurisdiction of the DARAB does not prevent the court from addressing the
issue, especially where the DARAB’s lack of jurisdiction is apparent on the
face of the complaint or petition.

Considering that the allegations in the complaint negate the existence of an


agrarian dispute among the parties, the DARAB is bereft of jurisdiction to
take cognizance of the same as it is the DAR Secretary who has authority to
resolve the dispute raised by petitioners.

While it is true that PARAD and the DARAB (which was upheld by the CA)
thoroughly discussed in their respective decisions the issues pertaining to the
validity of the VLT and the OCT/CLOA issued to respondent, the fact that
they are bereft of jurisdiction to resolve the same prevents this Court from
resolving the instant petition on its merits.

The doctrine of primary jurisdiction does not allow a court to arrogate unto
itself authority to resolve a controversy, the jurisdiction over which is initially
lodged with an administrative body of special competence.29 To assume the
power is to short- circuit the administrative process, which has yet to run its
regular course. The DAR must be given a chance to correct its administrative
and procedural lapses in the issuance of the CLOA.30 Moreover, it is in a
better position to resolve the particular issue at hand, being the agency
possessing the required expertise on the matter and authority to hear the same.

WHEREFORE, the July 13, 2009 Decision and September 14, 2009
Resolution of the Court of Appeals in CA-G.R. SP No. 105898 are SET
ASIDE. The complaint is REFERRED to the Office of the Department of
Agrarian Reform Secretary for appropriate action.
No pronouncement as to costs. SO ORDERED.

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11. Dy v. Palamos (2013) mortgage on M/V Pilar-I was premature. The RTC ordered that the vessel be
returned to Spouses Dy.6
Facts:
The present controversy finds its roots in the Court’s decision in Orix Metro This was affirmed by the Court of Appeals (CA), with the modification that
Leasing and Finance Corporation v. M/V “Pilar-I” and Spouses Ernesto Dy Spouses Dy be ordered to reimburse the respondent for repair and drydocking
and Lourdes Dy2 involving the same parties. The facts, as culled from the expenses while the vessel was in the latter’s possession.
Court’s decision in the said case and the records, are not disputed by the
parties. On appeal, the SC affirmed the CA but deleted the order requiring the
Spouses Dy to reimburse the respondent.
Petitioner Ernesto Dy (petitioner) and his wife, Lourdes Dy (Lourdes), were
the proprietors of Limchia Enterprises which was engaged in the shipping Consequently, on August 17, 2010, petitioner filed a motion for execution of
business. In 1990, Limchia Enterprises, with Lourdes as co-maker, obtained judgment with the RTC. In the intervening period, Colorado filed its
a loan from Orix Metro Leasing and Finance Corporation (respondent) to Manifestation/Motion, dated July 29, 2010, informing the RTC that M/V
fund its acquisition of M/V Pilar-I, a cargo vessel. As additional security for Pilar-I, which was in its possession, had sustained severe damage and
the loan, Limchia Enterprises executed the Deed of Chattel Mortgage over deterioration and had sunk in its shipyard because of its exposure to the
M/V Pilar-I.3 elements. For this reason, it sought permission from the court to cut the
sunken vessel into pieces, sell its parts and deposit the proceeds in escrow.9
Due to financial losses suffered when M/V Pilar-I was attacked by pirates,
Spouses Dy failed to make the scheduled payments as required in their In his Comment/Objection, petitioner insisted that he had the right to require
promissory note. that the vessel be returned to him in the same condition that it had been at the
time it was wrongfully seized by respondent or, should it no longer be
After receiving several demand letters from respondent, Spouses Dy applied possible, that another vessel of the same tonnage, length and beam similar to
for the restructuring of their loan. Meanwhile, Lourdes issued several checks that of M/V Pilar-I be delivered.10
to cover the remainder of their loan but the same were dishonored by the
bank, prompting respondent to institute a criminal complaint for violation of Colorado, however, responded that the vessel had suffered severe damage
the Bouncing Checks Law. Lourdes appealed to respondent with a new and deterioration that refloating or restoring it to its former condition would
proposal to update their outstanding loan obligations.4 be futile, impossible and very costly; and should petitioner persist in his
demand that the ship be refloated, it should be done at the expense of the
On August 18, 1992, respondent filed the Complaint and Petition for party adjudged by the court to pay the same.
Extrajudicial Foreclosure of Preferred Ship Mortgage under Presidential
Decree No. 1521 with Urgent Prayer for Attachment with the RTC. The RTC issued its questioned December 13, 2010 Order granting the motion
Following the filing of an affidavit of merit and the posting of bond by for execution but denying petitioner’s prayer for the return of M/V Pilar-I in
respondent, the RTC ordered the seizure of M/V Pilar-I and turned over its the same state in which it was taken by respondent.
possession to respondent. On September 28, 1994, respondent transferred all
of its rights, title to and interests, as mortgagee, in M/V Pilar-I to Colorado Hence this rule 65 petition for certiorari filed directly with the SC.
Shipyard Corporation (Colorado).5
Issue:
The RTC rendered a decision in favor of Spouses Dy, ruling that they had not W/N the petitioners violated the rule on hierarchy of courts in going directly
yet defaulted on their loan because respondent agreed to a restructured to the SC – No.
schedule of payment. There being no default, the foreclosure of the chattel

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Held: involved is a final judgment promulgated by this Court, it is but proper for
No. petitioner to call upon its original jurisdiction and seek final clarification.

I. II. Wrong Mode of Appeal; Exception (Certiorari not proper, but exception
present in this case)
Petitioner argues that his situation calls for the direct invocation of this
Court’s jurisdiction in the interest of justice. Moreover, as pointed out by the Petitioner asserts that the RTC committed grave abuse of discretion when it
RTC, what is involved is a judgment of the Court which the lower courts failed to rule in his favor despite the fact that he had been deprived by
cannot modify. Hence, petitioner deemed it proper to bring this case respondent of his property rights over M/V Pilar-I for the past eighteen (18)
immediately to the attention of this Court. Lastly, petitioner claims that the years. Moreover, the change in the situation of the parties calls for a
present case involves a novel issue of law — that is, whether in an action to relaxation of the rules which would make the execution of the earlier decision
recover, a defendant in wrongful possession of the subject matter in litigation of this Court inequitable or unjust. According to petitioner, for the RTC to
may be allowed to return the same in a deteriorated condition without any allow respondent to return the ship to him in its severely damaged and
liability.14 deteriorated condition without any liability would be to reward bad faith.18

Respondent, on the other hand, contends that the petition should have been Conversely, respondent submits that there was no grave abuse of discretion
filed with the CA, following the doctrine of hierarchy of courts. It pointed out on the part of the RTC as the latter merely observed due process and followed
that petitioner failed to state any special or important reason or any the principle that an execution order may not vary or go beyond the terms of
exceptional and compelling circumstance which would warrant a direct the judgment it seeks to enforce.19 Respondent adds that the proper remedy
recourse to this Court.15 should have been an ordinary appeal, where a factual review of the records
can be made to determine the condition of the ship at the time it was taken
Under the principle of hierarchy of courts, direct recourse to this Court is from petitioner, and not a special civil action for certiorari.
improper because the Supreme Court is a court of last resort and must remain
to be so in order for it to satisfactorily perform its constitutional functions, There are considerable differences between an ordinary appeal and a petition
thereby allowing it to devote its time and attention to matters within its for certiorari which have been exhaustively discussed by this Court in
exclusive jurisdiction and preventing the overcrowding of its docket.16 countless cases. The remedy for errors of judgment, whether based on the law
or the facts of the case or on the wisdom or legal soundness of a decision, is
Nonetheless, the invocation of this Court’s original jurisdiction to issue writs an ordinary appeal.21 In contrast, a petition for certiorari under Rule 65 is an
of certiorari has been allowed in certain instances on the ground of special original action designed to correct errors of jurisdiction, defined to be those
and important reasons clearly stated in the petition, such as, “in which the act complained of was issued by the court, officer, or
(1) when dictated by the public welfare and the advancement of public policy; quasi-judicial body without or in excess of jurisdiction, or with grave abuse
(2) when demanded by the broader interest of justice; of discretion which is tantamount to lack of in excess of jurisdiction.”22 A
(3) when the challenged orders were patent nullities; or court or tribunal can only be considered to have acted with grave abuse of
(4) when analogous exceptional and compelling circumstances called for and discretion if its exercise of judgment was so whimsical and capricious as to
justified the immediate and direct handling of the case.17 be equivalent to a lack of jurisdiction. The abuse must be extremely patent
and gross that it would amount to an “evasion of a positive duty or to virtual
This case falls under one of the exceptions to the principle of hierarchy of refusal to perform a duty enjoined by law, or to act at all in contemplation of
courts. Justice demands that this Court take cognizance of this case to put an law, as where the power is exercised in an arbitrary and despotic manner by
end to the controversy and resolve the matter which has been dragging on for reason of passion and hostility.”
more than twenty (20) years. Moreover, in light of the fact that what is

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Therefore, a misappreciation of evidence on the part of the lower court, as
asserted by petitioner, may only be reviewed by appeal and not by certiorari
because the issue raised by the petitioner does not involve any jurisdictional
ground.24 It is a general rule of procedural law that when a party adopts an
inappropriate mode of appeal, his petition may be dismissed outright to
prevent the erring party from benefiting from his neglect and mistakes.25
There are exceptions to this otherwise ironclad rule, however. One is when
the strict application of procedural technicalities would hinder the expeditious
disposition of this case on the merits,26 such as in this case.

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12. Smart v. Aldecoa (2013) of Environment and Natural Resources (DENR)], construction permit, and
other requirements of the National Telecommunications Commission (NTC),
Facts: xxx.”
Petitioner is a domestic corporation engaged in the telecommunications
business. On March 9, 2000, petitioner entered into a contract of lease4 with After filing their Answer, petitioner filed a Motion for Summary Judgment.
Florentino Sebastian in which the latter agreed to lease to the former a piece
of vacant lot, measuring around 300 square meters, located in Barangay Vira, RTC granted the Motion for Summary Judgment and dismissed respondents’
Roxas, Isabela (leased property). Petitioner, through its contractor, Allarilla Complaint.
Construction, immediately constructed and installed a cellular base station on
the leased property. Inside the cellular base station is a communications CA reversed and declared the cellular base station of petitioner a nuisance
tower, rising as high as 150 feet, with antennas and transmitters; as well as a that endangered the health and safety of the residents of Barangay Vira,
power house open on three sides containing a 25KVA diesel power generator. Roxas, Isabela because:
Around and close to the cellular base station are houses, hospitals, clinics, (1) the locational clearance granted to petitioner was a nullity due to the
and establishments, including the properties of respondents Arsenio Aldecoa, lack of approval by majority of the actual residents of the barangay and
Jose B. Torre, Conrado U. Pua, Gregorio V. Mansano, Jerry Corpuz, and a barangay resolution endorsing the construction of the cellular base
Estelita Acosta. station; and
(2) the sound emission of the generator at the cellular base station exceeded
Respondents filed before the RTC on May 23, 2000 a Complaint against the Department of Environment and Natural Resources (DENR) standards.
petitioner for abatement of nuisance and injunction with prayer for temporary
restraining order and writ of preliminary injunction, docketed as Civil Case Hence this petition claiming, among others, that the CA erred when it
No. Br. 23-632-2000. Respondents alleged in their Complaint that: encroached upon an executive function of determining the validity of a
locational clearance when it declared, contrary to the administrative findings
“7. With its structural design, SMART’s tower being constructed at Vira, of the Housing Land Use and Regulatory Board (“HLURB”), that the
Roxas, Isabela, is weak, unstable, and infirm, susceptible to collapse like the locational clearance of Petitioner was void.
Mobiline tower which fell during a typhoon as earlier alleged, and its
structural integrity being doubtful, and not earthquake proof, this tower poses Issue:
great danger to life and limb of persons as well as their property, particularly, W/N the CA erred in taking cognizance of the issue of whether the locational
the [respondents] whose houses abut, or are near or within the periphery of clearance for petitioner’s cell site is valid – Yes, it erred.
the communications tower;
8. This tower is powered by a standby generator that emits noxious and Held:
deleterious fumes, not to mention the constant noise it produces, hence, a Yes, it erred.
hazard to the health, not only of the [respondents], but the residents in the
area as well; The Petition is partly meritorious. While the Court agrees that the Court of
9. When in operation, the tower would also pose danger to the life and health Appeals should not have taken cognizance of the issue of whether the
of [respondents] and residents of the barangay, especially children, because locational clearance for petitioner’s cellular base station is valid, the Court
of the ultra high frequency (UHF) radio wave emissions it radiates. will still not reinstate the RTC Order dated January 16, 2001 granting
10. Worse, and in violation of law, [petitioner] constructed the tower without petitioner’s Motion for Summary Judgment and entirely dismissing Civil
the necessary public hearing, permit of the barangay, as well as that of the Case No. Br. 23-632-2000. The issues of (1) whether petitioner’s cellular
municipality, the Environmental Compliance Certificate of the [Department base station is a nuisance, and (2) whether the generator at petitioner’s
cellular base station is, by itself, also a nuisance, ultimately involve disputed

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or contested factual matters that call for the presentation of evidence at a discretion of government agencies entrusted with the regulation of activities
full-blown trial. coming under the special technical knowledge and training of such agencies.

I. In fact, a party with an administrative remedy must not merely initiate the
prescribed administrative procedure to obtain relief, but also pursue it to its
Based on the principle of exhaustion of administrative remedies and its appropriate conclusion before seeking judicial intervention. The underlying
corollary doctrine of primary jurisdiction, it was premature for the Court of principle of the rule on exhaustion of administrative remedies rests on the
Appeals to take cognizance of and rule upon the issue of the validity or nullity presumption that when the administrative body, or grievance machinery, is
of petitioner’s locational clearance for its cellular base station. afforded a chance to pass upon the matter, it will decide the same correctly.”

The principle of exhaustion of administrative remedies and the doctrine of “Corollary to the doctrine of exhaustion of administrative remedies is the
primary jurisdiction were explained at length by the Court in Province of doctrine of primary jurisdiction; that is, courts cannot or will not determine a
Zamboanga del Norte v. Court of Appeals, 342 SCRA 549 (2000) as follows: controversy involving a question which is within the jurisdiction of the
administrative tribunal prior to the resolution of that question by the
“The Court in a long line of cases has held that before a party is allowed to administrative tribunal, where the question demands the exercise of sound
seek the intervention of the courts, it is a pre-condition that he avail himself administrative discretion requiring the special knowledge, experience and
of all administrative processes afforded him. Hence, if a remedy within the services of the administrative tribunal to determine technical and intricate
administrative machinery can be resorted to by giving the administrative matters of fact.”
officer every opportunity to decide on a matter that comes within his
jurisdiction, then such remedy must be exhausted first before the court’s The Housing and Land Use Regulatory Board (HLURB) is the planning,
power of judicial review can be sought. The premature resort to the court is regulatory, and quasi-judicial instrumentality of government for land use
fatal to one’s cause of action. Accordingly, absent any finding of waiver or development. In the exercise of its mandate to ensure rational land use by
estoppel, the case may be dismissed for lack of cause of action. regulating land development, it issued HLURB Resolution No. R-626, series
of 1998, Approving the Locational Guidelines for Base Stations of Cellular
The doctrine of exhaustion of administrative remedies is not without its Mobile Telephone Service, Paging Service, Trunking Service, Wireless Loop
practical and legal reasons. Indeed, resort to administrative remedies entails Service and Other Wireless Communication Services (HLURB Guidelines).
lesser expenses and provides for speedier disposition of controversies. Our Said HLURB Guidelines aim to protect “providers and users, as well as the
courts of justice for reason of comity and convenience will shy away from a public in general while ensuring efficient and responsive communication
dispute until the system of administrative redress has been completed and services.”
complied with so as to give the administrative agency every opportunity to
correct its error and to dispose of the case. Under the 1996 HLURB Rules of Procedure, as amended, an opposition to
an application for a locational clearance for a cellular base station or a
The doctrine of primary jurisdiction does not warrant a court to arrogate unto complaint for the revocation of a locational clearance for a cellular base
itself the authority to resolve a controversy the jurisdiction over which is station already issued, is within the original jurisdiction of the HLURB
initially lodged with an administrative body of special competence. Executive Committee. To wit:

We have held that while the administration grapples with the complex and “SECTION 2. Opposition to Application for Permit/License/Clearance.—
multifarious problems caused by unbridled exploitation of our resources, the When an opposition is filed to an application for a license, permit or clearance
judiciary will stand clear. A long line of cases establishes the basic rule that with the Board or any of its Regional Field Office, the Regional Officer shall
the court will not interfere in matters which are addressed to the sound make a preliminary evaluation and determination whether the case is

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impressed with significant economic, social, environmental or national policy Ordinarily, failure to comply with the principle of exhaustion of
implications. If he/she determines that the case is so impressed with administrative remedies and the doctrine of primary jurisdiction will result in
significant economic, social, environmental or national policy implications… the dismissal of the case for lack of cause of action. However, the Court
the Regional Officer shall cause the records of the case to be transmitted to herein will not go to the extent of entirely dismissing Civil Case No. Br.
the Executive Committee which shall assume original jurisdiction over the 23-632-2000.
case, otherwise, the Regional Officer shall act on and resolve the
Opposition.” The Court does not lose sight of the fact that respondents’ Complaint in Civil
Case No. Br. 23-632-2000 is primarily for abatement of nuisance; and
After the HLURB Executive Committee had rendered its Decision, the respondents alleged the lack of HLURB requirements for the cellular base
aggrieved party could still avail itself of a system of administrative appeal, station, not to seek nullification of petitioner’s locational clearance, but to
also provided in the 1996 HLURB Rules of Procedure. support their chief argument that said cellular base station is a nuisance which
needs to be abated. The issue of whether or not the locational clearance for
There is no showing that respondents availed themselves of the said cellular base station is valid is actually separate and distinct from the
aforementioned administrative remedies prior to instituting Civil Case No. issue of whether or not the cellular base station is a nuisance; one is not
Br. 23-632-2000 before the RTC. While there are accepted exceptions to the necessarily determinative of the other. While the first is within the primary
principle of exhaustion of administrative remedies and the doctrine of jurisdiction of the HLURB and, therefore, premature for the courts to rule
primary jurisdiction,30 respondents never asserted nor argued any of them. upon in the present case, the latter is within the jurisdiction of the courts to
Thus, there is no cogent reason for the Court to apply the exceptions instead determine but only after trial proper.
of the general rule to this case.
The Court, in AC Enterprises, Inc. v. Frabelle Properties Corporation, 506
In Republic v. Lacap (supra note 27 at pp. 97-98), the Court enumerated the SCRA 625 (2006), settled that a simple suit for abatement of nuisance, being
exceptions: incapable of pecuniary estimation, is within the exclusive jurisdiction of the
(a) where there is estoppel on the part of the party invoking the doctrine; RTC. Although respondents also prayed for judgment for moral and
(b) where the challenged administrative act is patently illegal, amounting to exemplary damages, attorney’s fees, and litigation expenses, such claims are
lack of jurisdiction; merely incidental to or as a consequence of, their principal relief.
(c) where there is unreasonable delay or official inaction that will
irretrievably prejudice the complainant; Nonetheless, while jurisdiction over respondents’ Complaint for abatement
(d) where the amount involved is relatively small so as to make the rule of nuisance lies with the courts, the respective judgments of the RTC and the
impractical and oppressive; Court of Appeals cannot be upheld.
(e) where the question involved is purely legal and will ultimately have to be
decided by the courts of justice; Judging by the aforequoted standards, summary judgment cannot be rendered
(f) where judicial intervention is urgent; in this case as there are clearly factual issues disputed or contested by the
(g) when its application may cause great and irreparable damage; parties.
(h) where the controverted acts violate due process;
(i) when the issue of non-exhaustion of administrative remedies has been At the outset, the RTC erred in granting petitioner’s Motion for Summary
rendered moot; Judgment and ordering the dismissal of respondents’ Complaint in Civil Case
(j) when there is no other plain, speedy and adequate remedy; (k) when strong No. Br. 23-632- 2000.
public interest is involved; and,
(l) in quo warranto proceedings.

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WHEREFORE, premises considered, the instant Petition is PARTIALLY
GRANTED. The Decision dated July 16, 2004 and Resolution dated
December 9, 2004 of the Court of Appeals in CA-G.R. CV No. 71337 are
REVERSED and SET ASIDE. Let the records of the case be REMANDED
to the Regional Trial Court, Branch 23, of Roxas, Isabela, which is
DIRECTED to reinstate Civil Case No. Br. 23-632-2000 to its docket and
proceed with the trial and adjudication thereof with appropriate dispatch in
accordance with this Decision.
SO ORDERED.

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III. Cause of Action (Rule 2) RTC ruled for petitioner and held that the only participation of Mindanao
Terminal was to load the cargoes on board the M/V Mistrau under the
1. Mindanao Terminal v. Phoenix Assurance, G.R. No. 162467, May 8, direction and supervision of the ship’s officers, who would not have accepted
2009 the cargoes on board the vessel and signed the foreman’s report unless they
were properly arranged and tightly secured to withstand voyage across the
Facts: open seas.
Del Monte Philippines, Inc. (Del Monte) contracted petitioner Mindanao
Terminal and Brokerage Service, Inc. (Mindanao Terminal), a stevedoring Accordingly, Mindanao Terminal cannot be held liable for whatever
company, to load and stow a shipment of 146,288 cartons of fresh green happened to the cargoes after it had loaded and stowed them. Moreover, citing
Philippine bananas and 15,202 cartons of fresh pineapples belonging to Del the survey report, it was found by the RTC that the cargoes were damaged on
Monte Fresh Produce International, Inc. (Del Monte Produce) into the cargo account of a typhoon which M/V Mistrau had encountered during the voyage.
hold of the vessel M/V Mistrau.
It was further held that Phoenix and McGee had no cause of action
The vessel was docked at the port of Davao City and the goods were to be against Mindanao Terminal because the latter, whose services were
transported by it to the port of Inchon, Korea in favor of consignee Taegu contracted by Del Monte, a distinct corporation from Del Monte
Industries, Inc. Del Monte Produce insured the shipment under an “open Produce, had no contract with the assured Del Monte Produce.
cargo policy” with private respondent Phoenix Assurance Company of New
York (Phoenix), a non-life insurance company, and private respondent The RTC dismissed the complaint and awarded the counterclaim of
McGee & Co. Inc. (McGee), the underwriting manager/agent of Phoenix.4 Mindanao Terminal in the amount of P83,945.80 as actual damages and
P100,000.00 as attorney’s fees.9 The actual damages were awarded as
Mindanao Terminal loaded and stowed the cargoes aboard the M/V Mistrau. reimbursement for the expenses incurred by Mindanao Terminal’s lawyer in
The vessel set sail from the port of Davao City and arrived at the port of attending the hearings in the case wherein he had to travel all the way from
Inchon, Korea. It was then discovered upon discharge that some of the cargo Metro Manila to Davao City.
was in bad condition. The Marine Cargo Damage Surveyor of Incok Loss and
Average Adjuster of Korea, through its representative Byeong Yong Ahn CA reversed. It sustained Phoenix’s and McGee’s argument that the damage
(Byeong), surveyed the extent of the damage of the shipment. In a survey in the cargoes was the result of improper stowage by Mindanao Terminal. It
report, it was stated that 16,069 cartons of the banana shipment and 2,185 imposed on Mindanao Terminal, as the stevedore of the cargo, the duty to
cartons of the pineapple shipment were so damaged that they no longer had exercise extraordinary diligence in loading and stowing the cargoes. It further
commercial value.5 held that even with the absence of a contractual relationship between
Mindanao Terminal and Del Monte Produce, the cause of action of Phoenix
Del Monte Produce filed a claim under the open cargo policy for the damages and McGee could be based on quasi-delict under Article 2176 of the Civil
to its shipment. McGee’s Marine Claims Insurance Adjuster evaluated the Code.
claim and recommended that payment in the amount of $210,266.43 be made.
A check for the recommended amount was sent to Del Monte Produce; Hence this petition claiming that Phoenix and McGee had no cause of action
the latter then issued a subrogation receipt6 to Phoenix and McGee. against it.

Rem Part Issue:


W/N Phoenix and McGee have a cause of action against Mindanao Terminal
Phoenix and McGee instituted an action for damages7 against Mindanao – Yes, quasi-delict.
Terminal in the Regional Trial Court (RTC) of Davao City, Branch 12.

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Held:
Yes, quasi-delict.

We agree with the Court of Appeals that the complaint filed by Phoenix and
McGee against Mindanao Terminal, from which the present case has arisen,
states a cause of action.

The present action is based on quasi-delict, arising from the negligent and
careless loading and stowing of the cargoes belonging to Del Monte Produce.
Even assuming that both Phoenix and McGee have only been subrogated in
the rights of Del Monte Produce, who is not a party to the contract of service
between Mindanao Terminal and Del Monte, still the insurance carriers may
have a cause of action in light of the Court’s consistent ruling that the act that
breaks the contract may be also a tort.17

In fine, a liability for tort may arise even under a contract, where tort is that
which breaches the contract18. In the present case, Phoenix and McGee are
not suing for damages for injuries arising from the breach of the contract of
service but from the alleged negligent manner by which Mindanao Terminal
handled the cargoes belonging to Del Monte Produce. Despite the absence of
contractual relationship between Del Monte Produce and Mindanao
Terminal, the allegation of negligence on the part of the defendant should be
sufficient to establish a cause of action arising from quasi-delict.

We adopt the findings27 of the RTC,28 which are not disputed by Phoenix
and McGee. The Court of Appeals did not make any new findings of fact
when it reversed the decision of the trial court. The only participation of
Mindanao Terminal was to load the cargoes on board M/V Mistrau.29 It was
not disputed by Phoenix and McGee that the materials, such as ropes, pallets,
and cardboards, used in lashing and rigging the cargoes were all provided by
M/V Mistrau and these materials meets industry standard.30

WHEREFORE, the petition is GRANTED. The decision of the Court of


Appeals in CA-G.R. CV No. 66121 is SET ASIDE and the decision of the
Regional Trial Court of Davao City, Branch 12 in Civil Case No. 25,311.97
is hereby REINSTATED MINUS the awards of P100,000.00 as attorney’s
fees and P83,945.80 as actual damages.
SO ORDERED.

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2. Dolores Macaslang v. Renato Zamora, G.R. No. 156375, May 30, 2011 cause of action against Defendant-appellee. It is undisputed that as alleged in
the complaint and testified to by Plaintiffs-appellants, a demand to vacate was
Facts: made before the action for unlawful detainer was instituted.
On March 10, 1999, the respondents filed a complaint for unlawful
detainer in the MTCC, alleging that “the [petitioner] sold to [respondents] a A complaint for unlawful detainer is sufficient if it alleges that the
residential land located in Sabang, Danao City” and that “the [petitioner] withholding of possession or the refusal is unlawful without necessarily
requested to be allowed to live in the house” with a “promise to vacate as employing the terminology of the law.
soon as she would be able to find a new residence.” They further alleged that
despite their demand after a year, the petitioner failed or refused to vacate the In the case at bench, par. 4 of the Complaint alleges, thus:
premises. ‘4. After a period of one (1) year living in the aforementioned house, Plaintiff
demanded upon defendant to vacate but she failed and refused;’
Despite the due service of the summons and copy of the complaint, the
petitioner did not file her answer. The MTCC declared her in default upon From the foregoing allegation, it cannot be disputed that a demand to vacate
the respondents’ motion to declare her in default, and proceeded to receive has not only been made but that the same was alleged in the complaint. How
the respondents’ oral testimony and documentary evidence. the Regional Trial Court came to the questionable conclusion that
Plaintiffs-appellants had no cause of action is beyond Us.”
MTC rendered judgment against the petitioner.
We concur with the CA.
RTC reversed and dismissed the complaint for failure to state a cause of
action, but may be refiled in the same court alleging their cause of action if A complaint sufficiently alleges a cause of action for unlawful detainer if it
any. states the following:
(a) Initially, the possession of the property by the defendant was by contract
CA reversed the RTC holding that the complaint stated a cause of action. with or by tolerance of the plaintiff;
(b) Eventually, such possession became illegal upon notice by the plaintiff to
Hence this petition. the defendant about the termination of the latter’s right of possession;
(c) Thereafter, the defendant remained in possession of the property and
Issue: deprived the plaintiff of its enjoyment; and
W/N the complaint stated a cause of action – Yes, but the respondents have (d) Within one year from the making of the last demand to vacate the property
no cause of action. on the defendant, the plaintiff instituted the complaint for ejectment.15

Held: In resolving whether the complaint states a cause of action or not, only the
Yes, but the respondents have no cause of action. facts alleged in the complaint are considered. The test is whether the court
can render a valid judgment on the complaint based on the facts alleged
The RTC opined that the complaint failed to state a cause of action because and the prayer asked for. Only ultimate facts, not legal conclusions or
the evidence showed that there was no demand to vacate made upon the evidentiary facts, are considered for purposes of applying the test.
petitioner.
Based on its allegations, the complaint sufficiently stated a cause of action
The CA disagreed, observing in its appealed decision: for unlawful detainer. Firstly, it averred that the petitioner possessed the
“But what is worse is that a careful reading of Plaintiffs- appellants’ property by the mere tolerance of the respondents. Secondly, the respondents
Complaint would readily reveal that they have sufficiently established (sic) a demanded that the petitioner vacate the property, thereby rendering her

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possession illegal. Thirdly, she remained in possession of the property despite constitute a demand to pay rent and to vacate the premises necessary in an
the demand to vacate. And, fourthly, the respondents instituted the complaint action for unlawful detainer. It was this conclusion that caused the RTC to
on March 10, 1999, which was well within a year after the demand to vacate confuse the defect as failure of the complaint to state a cause of action for
was made around September of 1998 or later. unlawful detainer.

Yet, even as we rule that the respondents’ complaint stated a cause of action, The RTC erred even in that regard.
we must find and hold that both the RTC and the CA erroneously appreciated
the real issue to be about the complaint’s failure to state a cause of action. It To begin with, it was undeniable that Exhibit “D” (the respondents’ letter
certainly was not so, but the respondents’ lack of cause of action. Their dated April 28, 1998) constituted the demand to vacate that validly supported
erroneous appreciation expectedly prevented the correct resolution of the their action for unlawful detainer, because of its unmistakable tenor as a
action. demand to vacate, which the following portion indicates:22
“This is to give notice that since the mortgage to your property has long
Failure to state a cause of action and lack of cause of action are really expired and that since the property is already in my name, I will be taking
different from each other. On the one hand, failure to state a cause of action over the occupancy of said property two (2) months from date of this letter.”
refers to the insufficiency of the pleading, and is a ground for dismissal under
Rule 16 of the Rules of Court. On the other hand, lack of cause of action Also, the demand not being to pay rent and to vacate did not render the cause
refers to a situation where the evidence does not prove the cause of action of action deficient. Based on the complaint, the petitioner’s possession was
alleged in the pleading. allegedly based on the respondents’ tolerance, not on any contract between
them. Hence, the demand to vacate sufficed.
A complaint states a cause of action if it avers the existence of the three
essential elements of a cause of action, namely: Despite holding herein that the respondents’ demand to vacate sufficed, we
(a) The legal right of the plaintiff; uphold the result of the RTC decision in favor of the petitioner. This we do,
(b) The correlative obligation of the defendant; and because the respondents’ Exhibit “C” and Exhibit “E”, by demanding
(c) The act or omission of the defendant in violation of said legal right. payment from the petitioner, respectively, of P1,101,089.90 and
P1,600,000.00, revealed the true nature of the transaction involving the
If the allegations of the complaint do not aver the concurrence of these property in question as one of equitable mortgage, not a sale.
elements, the complaint becomes vulnerable to a motion to dismiss on the
ground of failure to state a cause of action. Evidently, it is not the lack or Verily, where the cause of action in an ejectment suit is based on ownership
absence of a cause of action that is a ground for the dismissal of the complaint of the property, the defense that the defendant retained title or ownership is a
but the fact that the complaint states no cause of action. Failure to state a proper subject for determination by the MTC but only for the purpose of
cause of action may be raised at the earliest stages of an action through a adjudicating the rightful possessor of the property.
motion to dismiss, but lack of cause of action may be raised at any time after
the questions of fact have been resolved on the basis of the stipulations, WHEREFORE, we grant the petition for review on certiorari; set aside the
admissions, or evidence presented.20 decision promulgated on July 3, 2002 by the Court of Appeals; and dismiss
the complaint for unlawful detainer for lack of a cause of action.
Having found that neither Exhibit “C” nor Exhibit “E” was a proper demand
to vacate,21 considering that Exhibit “C” (the respondents’ letter dated
February 11, 1998) demanded the payment of P1,101,089.90, and Exhibit “E”
(their letter dated January 21, 1999) demanded the payment of P1,600,000.00,
the RTC concluded that the demand alleged in the complaint did not

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3. Turner v. Lorenzo Shipping (2010)
Rem part
Facts:
The petitioners held 1,010,000 shares of stock of the respondent, a domestic Upon the respondent’s refusal to pay, the petitioners sued the respondent
corporation engaged primarily in cargo shipping activities. In June 1999, the for collection and damages in the RTC in Makati City on January 22,
respondent decided to amend its articles of incorporation to remove the 2001. The case, docketed as Civil Case No. 01-086, was initially assigned to
stockholders’ pre-emptive rights to newly issued shares of stock. Feeling that Branch 132.
the corporate move would be prejudicial to their interest as stockholders, the
petitioners voted against the amendment and demanded payment of their On June 26, 2002, the petitioners filed their motion for partial summary
shares at the rate of P2.276/share based on the book value of the shares, or a judgment, claiming that:
total of P2,298,760.00. “7) xxx the defendant has an accumulated unrestricted retained earnings of
ELEVEN MILLION NINE HUNDRED SEVENTY FIVE THOUSAND
The respondent found the fair value of the shares demanded by the petitioners FOUR HUNDRED NINETY (P11,975,490.00) PESOS, Philippine
unacceptable. It insisted that the market value on the date before the action to Currency, evidenced by its Financial Statement as of the Quarter Ending
remove the pre-emptive right was taken should be the value, or P0.41/share March 31, 2002; xxx
(or a total of P414,100.00), considering that its shares were listed in the 8) xxx the fair value of the shares of the petitioners as fixed by the Appraisal
Philippine Stock Exchange, and that the payment could be made only if the Committee is final, that the same cannot be disputed xxx
respondent had unrestricted retained earnings in its books to cover the value 9) xxx there is no genuine issue to material fact and therefore, the plaintiffs
of the shares, which was not the case. are entitled, as a matter of right, to a summary judgment. xxx”

The disagreement on the valuation of the shares led the parties to constitute The respondent opposed the motion for partial summary judgment, stating
an appraisal committee pursuant to Section 82 of the Corporation Code. that the determination of the unrestricted retained earnings should be made at
the end of the fiscal year of the respondent, and that the petitioners did not
On October 27, 2000, the appraisal committee reported its valuation of have a cause of action against the respondent.
P2.54/share, for an aggregate value of P2,565,400.00 for the petitioners.2
RTC granted the Motion for Partial Summary Judgment holding that since
Subsequently, the petitioners demanded payment based on the valuation of the appraisal/recommendation made by the Committee is not disputed by the
the appraisal committee, plus 2%/month penalty from the date of their parties, that since the Corporation Code provides that the appraisal is final
original demand for payment, as well as the reimbursement of the amounts subject only to the further limitation that no payment shall be made unless the
advanced as professional fees to the appraisers.3 corporation has unrestricted retained earnings, and since the plaintiffs have
shown in the quarterly financial statements that the corporation has retained
In its letter to the petitioners dated January 2, 2001,4 the respondent refused earnings of P11M as of March 21, 2002, therefore, the Motion for Partial
the petitioners’ demand, explaining that pursuant to the Corporation Summary Judgment should be granted.
Code, the dissenting stockholders exercising their appraisal rights could
be paid only when the corporation had unrestricted retained earnings to CA reversed holding that, based on the records and the evidence, the
cover the fair value of the shares, but that it had no retained earnings at the respondent corporation only had unrestricted retained earnings on March 21,
time of the petitioners’ demand, as borne out by its Financial Statements for 2002. But the complaint by petitioners were filed on January 22, 2001, at
Fiscal Year 1999 showing a deficit of P72,973,114.00 as of December 31, which time there was yet no unrestricted retained earnings. Therefore, the
1999. petitioners’ right of action arose only on March 21, 2002 when the respondent
already retained earnings worth P11M.

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Issue: of the court’s intervention renders the complaint without a cause of action
W/N the CA was correct in ruling that petitioners’ cause of action was and dismissible on such ground. In short, Civil Case No. 01-086, being a
premature – Yes, CA was correct. groundless suit, should be dismissed.

Held: Even the fact that the respondent already had unrestricted retained earnings
Yes. more than sufficient to cover the petitioners’ claims on June 26, 2002 (when
they filed their motion for partial summary judgment) did not rectify the
Petitioners’ cause of action was premature That the respondent had absence of the cause of action at the time of the commencement of Civil Case
indisputably no unrestricted retained earnings in its books at the time the No. 01-086. The motion for partial summary judgment, being a mere
petitioners commenced Civil Case No. 01-086 on January 22, 2001 proved application for relief other than by a pleading,33 was not the same as the
that the respondent’s legal obligation to pay the value of the petitioners’ complaint in Civil Case No. 01-086. Thereby, the petitioners did not meet
shares did not yet arise. Thus, the CA did not err in holding that the petitioners the requirement of the Rules of Court that a cause of action must exist at the
had no cause of action, and in ruling that the RTC did not validly render the commencement of an action, which is “commenced by the filing of the
partial summary judgment. original complaint in court.”34

A cause of action is the act or omission by which a party violates a right of WHEREFORE, the petition for review on certiorari is denied for lack of
another. The essential elements of a cause of action are: merit.
(a) the existence of a legal right in favor of the plaintiff;
(b) a correlative legal duty of the defendant to respect such right; and We affirm the decision promulgated on March 4, 2003 in C.A.-G.R. SP No.
(c) an act or omission by such defendant in violation of the right of the 74156 entitled Lorenzo Shipping Corporation v. Hon. Artemio S. Tipon, in
plaintiff with a resulting injury or damage to the plaintiff for which the latter his capacity as Presiding Judge of Branch 46 of the Regional Trial Court of
may maintain an action for the recovery of relief from the defendant. Manila, et al.

Although the first two elements may exist, a cause of action arises only upon Costs of suit to be paid by the petitioners. SO ORDERED.
the occurrence of the last element, giving the plaintiff the right to maintain an
action in court for recovery of damages or other appropriate relief.

Section 1, Rule 2, of the Rules of Court requires that every ordinary civil
action must be based on a cause of action. Accordingly, Civil Case No.
01-086 was dismissible from the beginning for being without any cause of
action.

Neither did the subsequent existence of unrestricted retained earnings after


the filing of the complaint cure the lack of cause of action in Civil Case No.
01-086. The petitioners’ right of action could only spring from an existing
cause of action. Thus, a complaint whose cause of action has not yet accrued
cannot be cured by an amended or supplemental pleading alleging the
existence or accrual of a cause of action during the pendency of the action.
For, only when there is an invasion of primary rights, not before, does the
adjective or remedial law become operative. Verily, a premature invocation

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4. Chua v. Metrobank, et al., G. R. No.182311, August 19, 2009 P88,101,093.98, excluding unpaid interest and penalties (to be computed
from 14 September 1999), attorney’s fees, legal fees, and other expenses for
Facts: the foreclosure and sale. The auction sale was scheduled on 31 May 2001.10
Petitioner Chua is president of co-petitioner Filiden, a domestic corporation, On 4 May 2001, petitioners received a copy of the Notice of Sale.11
engaged in the realty business.4 Respondent Metropolitan Bank and Trust
Co. (respondent Metrobank) is a domestic corporation and a duly licensed Case #1
banking institution.5 On 28 May 2001, petitioner Chua, in his personal capacity and acting on
behalf of petitioner Filiden, filed before Branch 257 of the Regional Trial
Sometime in 1988, petitioners obtained from respondent Metrobank a loan of Court of Parañaque (RTC-Branch `257), a Complaint for Injunction with
P4,000,000.00, which was secured by a real estate mortgage (REM) on Prayer for Issuance of Temporary Restraining Order (TRO), Preliminary
parcels of land covered by Transfer Certificates of Title (TCTs) No. Injunction and Damages,12 against respondents Atty. Celestra, docketed as
(108020)1148, No. 93919, and No. 125185, registered in petitioner Chua’s Civil Case No. CV-01-0207.
name (subject properties).6
RTC issued a TRO enjoining respondents from conducting the auction sale.
Since the value of the collateral was more than the loan, petitioners were
given an open credit line for future loans. On 18 September 1995, 17 January After the expiration of the TRO on 18 June 2001, and no injunction having
1996, 31 July 1996, 21 January 1997, and 12 October 1998, petitioners been issued by RTC-Branch 257, respondent Atty. Celestra reset the auction
obtained other loans from respondent Metrobank, and the real estate sale on 8 November 2001. On 8 November 2001, the rescheduled date of the
mortgages were repeatedly amended in accordance with the increase in auction sale, RTC-Branch 257 issued an Order directing that the said sale be
petitioners’ liabilities.7 reset anew after 8 November 2001. The Order was served on 8 November
2001, on respondent Atty. Celestra’s daughter, Arlene Celestra, at a coffee
Having failed to fully pay their obligations, petitioners entered into a Debt shop owned by the former’s other daughter, Grace Celestra Aguirre. The
Settlement Agreement8 with respondent Metrobank on 13 January 2000, auction sale, however, proceeded on 8 November 2001, and a Certificate of
whereby the loan obligations of the former were restructured. The debt Sale was accordingly issued to respondent Metrobank as the highest bidder
consisted of a total principal amount of P79,650,000.00, plus unpaid interest of the foreclosed properties.14
of P7,898,309.02, and penalty charges of P552,784.96. Amortization
payments were to be made in accordance with the schedule attached to the On 13 February 2002, petitioners filed with RTC-Branch 257 a Motion to
agreement. Admit Amended Complaint15 in Civil Case No. CV-01-0207. The Amended
Verified Complaint,16 attached to the said Motion, impleaded as additional
In a letter9 dated 28 February 2001, the lawyers of respondent Metrobank defendant the incumbent Register of Deeds of Parañaque City. Petitioners
demanded that petitioners fully pay and settle their liabilities, including alleged that the Certificate of Sale was a falsified document since there
interest and penalties, in the total amount of P103,450,391 as of 16 January was no actual sale that took place on 8 November 2001. And, even if an
2001, as well as the stipulated attorney’s fees, within three days from receipt auction sale was conducted, the Certificate of Sale would still be void
of said letter. because the auction sale was done in disobedience to a lawful order of
RTC-Branch 257.
When petitioners still failed to pay their loans, respondent Metrobank sought
to extrajudicially foreclose the REM constituted on the subject properties. Petitioners additionally prayed in their Amended Complaint for the award of
Upon a verified Petition for Foreclosure filed by respondent Metrobank on damages given the abuse of power of respondent Metrobank in the
25 April 2001, respondent Atty. Romualdo Celestra (Atty. Celestra) issued a preparation, execution, and implementation of the Debt Settlement
Notice of Sale dated 26 April 2001, wherein the mortgage debt was set at Agreement with petitioners; the bad faith of respondent Metrobank in

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offering the subject properties at a price much lower than its assessed fair of the Complaint for Damages in Civil Case No. CV-05-0402, on the ground
market value; and the gross violation by respondents Metrobank and Atty. of forum shopping.23
Celestra of the injunction.
RTC-Branch 258 dismissed Civil Case No. CV-05-0402 on the ground of
Petitioners also sought, in their Amended Complaint, the issuance of a TRO forum shopping. RTC-Branch 258 declared that the facts or claims submitted
or a writ of preliminary injunction to enjoin respondent Atty. Celestra and all by petitioners, the rights asserted, and the principal parties in the two cases
other persons from proceeding with the foreclosure sale, on the premise that were the same.
no auction sale was actually held on 8 November 2001.
CA affirmed.
In an Order dated 6 March 2002, RTC-Branch 257 denied petitioners’
application for injunction on the ground that the sale of the foreclosed Issue:
properties rendered the same moot and academic. The auction sale, which W/N petitioners are guilty of forum shopping – Yes.
was conducted by respondents Metrobank and Atty. Celestra, after the
expiration of the TRO, and without knowledge of the Order dated 8 Held:
November 2001 of RTC-Branch 257, was considered as proper and valid.18 Yes.

Petitioners went to the CA on a R65 certiorari. CA reversed the RTC and I.


remanded the case back to RTC. SC dismissed the appeal of respondents with Forum shopping exists when a party repeatedly avails himself of several
finality. judicial remedies in different courts, simultaneously or successively, all
substantially founded on the same transactions and the same essential facts
Case #2 and circumstances, and all raising substantially the same issues either pending
On 28 October 2005, petitioners filed with Branch 195 of the Regional Trial in or already resolved adversely by some other court.
Court of Parañaque (RTC-Branch 195) a Verified Complaint for Damages
against respondents Metrobank, Atty. Celestra, and three Metrobank lawyers, Ultimately, what is truly important in determining whether forum shopping
namely, Atty. Antonio Viray, Atty. Ramon Miranda and Atty. Pompeyo exists or not is the vexation caused the courts and party-litigant by a party
Maynigo. The Complaint was docketed as Civil Case No. CV-05-0402. who asks different courts to rule on the same or related causes and/or to grant
Petitioners sought in their Complaint the award of actual, moral, and the same or substantially the same reliefs, in the process creating the
exemplary damages against the respondents for making it appear that an possibility of conflicting decisions being rendered by the different fora upon
auction sale of the subject properties took place, as a result of which, the the same issue.
prospective buyers of the said properties lost their interest and petitioner
Chua was prevented from realizing a profit of P70,000,000.00 from the Forum shopping can be committed in three ways:
intended sale.21 (1) filing multiple cases based on the same cause of action and with the same
prayer, the previous case not having been resolved yet (where the ground for
Petitioners filed with RTC-Branch 195 a Motion to Consolidate22 dated 27 dismissal is litis pendentia);
December 2005, seeking the consolidation of Civil Case No. CV-05-0402, (2) filing multiple cases based on the same cause of action and the same
the action for damages pending before said court, with Civil Case No. CV- prayer, the previous case having been finally resolved (where the ground for
01-0207, the injunction case that was being heard before RTC-Branch 258. dismissal is res judicata); and
(3) filing multiple cases based on the same cause of action, but with different
On 3 January 2006, respondents filed with RTC-Branch 195 an Opposition prayers (splitting of causes of action, where the ground for dismissal is also
to Motion to Consolidate with Prayer for Sanctions, praying for the dismissal either litis pendentia or res judicata).

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In the present case, there is no dispute that petitioners failed to state in the Petitioners would like to make it appear that Civil Case No. CV-01-0207 was
Certificate of Non-Forum Shopping, attached to their Verified Complaint in solely concerned with the nullification of the auction sale and certification of
Civil Case No. CV- 05-0402 before RTC-Branch 195, the existence of Civil sale, while Civil Case No. CV-05-0402 was a totally separate claim for
Case No. CV-01-0207 pending before RTC-Branch 258. Nevertheless, damages. Yet, a review of the records reveals that petitioners also included
petitioners insist that they are not guilty of forum shopping, since: an explicit claim for damages in their Amended Complaint37 in Civil Case
(1) the two cases do not have the same ultimate objective—Civil Case No. No. CV-01-0207.
CV-01-0207 seeks the annulment of the 8 November 2001 public auction and
certificate of sale issued therein, while Civil Case No. CV- 05-0402 prays for There is no question that the claims of petitioners for damages in Civil Case
the award of actual and compensatory damages for respondents’ tortuous act No. CV-01-0207 and Civil Case No. CV-05-0402 are premised on the same
of making it appear that an auction sale actually took place on 8 November cause of action, i.e., the purportedly wrongful conduct of respondents in
2001; and connection with the foreclosure sale of the subject properties.
(2) the judgment in Civil Case No. CV-01-0207, on the annulment of the
foreclosure sale, would not affect the outcome of Civil Case No. At first glance, said claims for damages may appear different. In Civil Case
CV-05-0402, on the entitlement of petitioners to damages. The Court, No. CV-01-0207, the damages purportedly arose from the bad faith of
however, finds these arguments refuted by the allegations made by petitioners respondents in offering the subject properties at the auction sale at a price
themselves in their Complaints in both cases. much lower than the assessed fair market value of the said properties, said to
be P176,117,000.00. On the other hand, the damages in Civil Case No.
Petitioners committed forum shopping by filing multiple cases based on the CV-05-0402, allegedly resulted from the backing out of prospective buyers,
same cause of action, although with different prayers. who had initially offered to buy the subject properties for “not less than
P175,000,000.00,” because respondents made it appear that the said
Sections 3 and 4, Rule 2 of the Rules of Court proscribe the splitting of a properties were already sold at the auction sale. Yet, it is worthy to note that
single cause of action: petitioners quoted closely similar values for the subject properties in both
“Section 3. A party may not institute more than one suit for a single cause of cases, against which they measured the damages they supposedly suffered.
action. Evidently, this is due to the fact that petitioners actually based the said values
Section 4. Splitting a single cause of action; effect of.—If two or more suits on the single appraisal report of the Philippine Appraisal Company on the
are instituted on the basis of the same cause of action, the filing of one or a subject properties.
judgment upon the merits in any one is available as a ground for the dismissal
of the others.” II.
Petitioners’ contention that the outcome of Civil Case No. CV-01-0207 will
Forum shopping occurs although the actions seem to be different, when it can not determine that of Civil Case No. CV-05-0402 does not justify the filing
be seen that there is a splitting of a cause of action. A cause of action is of separate cases. Even if it were assumed that the two cases contain two
understood to be the delict or wrongful act or omission committed by the separate remedies that are both available to petitioners, these two remedies
defendant in violation of the primary rights of the plaintiff. It is true that a that arose from one wrongful act cannot be pursued in two different cases.
single act or omission can violate various rights at the same time, as when the The rule against splitting a cause of action is intended to prevent repeated
act constitutes juridically a violation of several separate and distinct legal litigation between the same parties in regard to the same subject of
obligations. However, where there is only one delict or wrong, there is but a controversy, to protect the defendant from unnecessary vexation; and to avoid
single cause of action regardless of the number of rights that may have been the costs and expenses incident to numerous suits. It comes from the old
violated belonging to one person. maxim nemo debet bis vexari, pro una et eadem causa (no man shall be twice
vexed for one and the same cause).

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Moreover, petitioners admitted in their Motion to Consolidate42 dated 27
December 2005 before RTC-Branch 195 that both cases shared the same
parties, the same central issue, and the same subject property.

If the forum shopping is not considered willful and deliberate, the subsequent
case shall be dismissed without prejudice, on the ground of either litis
pendentia or res judicata. However, if the forum shopping is willful and
deliberate, both (or all, if there are more than two) actions shall be dismissed
with prejudice. In this case, petitioners did not deliberately file Civil Case
No. CV- 05-0402 for the purpose of seeking a favorable decision in another
forum. Otherwise, they would not have moved for the consolidation of both
cases. Thus, only Civil Case No. CV-05-0402 is dismissed and the hearing of
Civil Case No. CV-01-0207 before RTC-Branch 258 will be continued.

IN VIEW OF THE FOREGOING, the instant Petition is DENIED. The


Decision dated 31 January 2008 and Resolution dated 28 March 2008 of the
Court of Appeals in CA-G.R. CV No. 88087, affirming the Order dated 3 July
2006 of Branch 258 of the Regional Trial Court of Parañaque City, dismissing
Civil Case No. CV-05-0402, is AFFIRMED, without prejudice to the
proceedings in Civil Case No. CV-01-0207. Costs against petitioners.
SO ORDERED.

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5. Catalina Chu, et al. v. Spouses Fernando and Trinidad Cunanan, G.R. Cunanan (Cunanans). Five years later, on April 19, 1993, the Chus amended
No. 156185, September 12, 2011 the complaint to seek the annulment of the deed of sale with assumption
of mortgage and of the TCTs issued pursuant to the deed, and to recover
Facts: damages. They impleaded Cool Town Realty and Development Corporation
On September 30, 1986, Spouses Manuel and Catalina Chu (Chus) executed (Cool Town Realty), and the Office of the Registry of Deeds of Pampanga as
a deed of sale with assumption of mortgage3 involving their five parcels of defendants in addition to the Cunanans.7
land in favor of Trinidad N. Cunanan (Cunanan) for the consideration of
P5,161,090.00. Considering that the Carloses had meanwhile sold the two lots to Benelda
Estate Development Corporation (Benelda Estate) in 1995, the Chus further
They also executed a so- called side agreement, whereby they clarified that amended the complaint in Civil Case No. G-1936 to implead Benelda Estate
Cunanan had paid only P1,000,000.00 to the Chus despite the Chus, as as additional defendant. In due course, Benelda Estate filed its answer with a
vendors, having acknowledged receiving P5,161,090.00; that the amount of motion to dismiss, claiming, among others, that the amended complaint stated
P1,600,000.00 was to be paid directly to Benito Co and to Security Bank and no cause of action because it had acted in good faith in buying the affected
Trust Company (SBTC) in whose favor the five lots had been mortgaged; and lots, exerting all efforts to verify the authenticity of the titles, and had found
that Cunanan would pay the balance of P2,561.090.00 within three months, no defect in them.
with a grace period of one month subject to 3%/month interest on any
remaining unpaid amount. After the RTC denied its motion to dismiss, Benelda Estate assailed the denial
on certiorari in the CA, which annulled the RTC’s denial for being tainted
The parties further stipulated that the ownership of the lots would remain with with grave abuse of discretion and dismissed Civil Case No. G-1936 as
the Chus as the vendors and would be transferred to Cunanan only upon against Benelda Estate. On March 1, 2001, the Supreme Court upheld the
complete payment of the total consideration and compliance with the terms dismissal of Civil Case No. G-1936 in G.R. No. 142313 entitled Chu, Sr. v.
of the deed of sale with assumption of mortgage.4 Benelda Estate Development Corporation.8

Thereafter, the Chus executed a special power of attorney authorizing Compromise


Cunanan to borrow P5,161,090.00 from any banking institution and to On December 2, 1999, the Chus, the Cunanans, and Cool Town Realty
mortgage the five lots as security, and then to deliver the proceeds to the Chus entered into a compromise agreement,9 whereby the Cunanans transferred to
net of the balance of the mortgage obligation and the downpayment.5 the Chus their 50% share in “all the parcels of land situated in Saguin, San
Fernando, Pampanga” registered in the name of Cool Town Realty “for and
Cunanan was able to transfer the title of the five lots to her name without the in consideration of the full settlement of their case.” The RTC approved the
knowledge of the Chus, and to borrow money with the lots as security without compromise agreement in a partial decision dated January 25, 2000.10
paying the balance of the purchase price to the Chus. She later transferred
two of the lots to Spouses Amado and Gloria Carlos (Carloses) on July 29, Case#2
1987. As a result, on March 18, 1988, the Chus caused the annotation of an Thereafter, on April 30, 2001, the petitioners herein (i.e., Catalina Chu and
unpaid vendor’s lien on three of the lots. Nonetheless, Cunanan still assigned her children) brought another suit, Civil Case No. 12251, against the Carloses
the remaining three lots to Cool Town Realty on May 25, 1989 despite the and Benelda Estate,11 seeking the cancellation of the TCTs of the two lots
annotation.6 in the name of Benelda Estate, and the issuance of new TCTs in their
favor, plus damages.
Case#1
In February 1988, the Chus commenced Civil Case No. G-1936 in the RTC The petitioners amended their complaint in Civil Case No. 12251 on February
to recover the unpaid balance from Spouses Fernando and Trinidad 4, 2002 to implead the Cunanans as additional defendants.12

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A compromise agreement is a contract whereby the parties, by making
The Cunanans moved to dismiss the amended complaint based on two reciprocal concessions, avoid a litigation or put an end to one already
grounds, namely: (a) bar by prior judgment, and (b) the claim or demand had commenced.19 It encompasses the objects specifically stated therein,
been paid, waived, and abandoned. Benelda Estate likewise moved to dismiss although it may include other objects by necessary implication,20 and is
the amended complaint, citing as grounds: (a) forum shopping; (b) bar by binding on the contracting parties, being expressly acknowledged as a
prior judgment, and (c) failure to state a cause of action. On their part, the juridical agreement between them.21 It has the effect and authority of res
Carloses raised affirmative defenses in their answer, namely: (a) the failure judicata upon the parties.22
to state a cause of action; (b) res judicata or bar by prior judgment; and (c)
bar by statute of limitations. Apparently, the petitioners were guilty of splitting their single cause of action
to enforce or rescind the deed of sale with assumption of mortgage. Splitting
RTC denied both motions to dismiss,13 holding that the amended complaint a single cause of action is the act of dividing a single or indivisible cause of
stated a cause of action against all the defendants; that the action was not action into several parts or claims and instituting two or more actions upon
barred by res judicata because there was no identity of parties and them. A single cause of action or entire claim or demand cannot be split up
subject matter between Civil Case No. 12251 and Civil Case No. G-1936 or divided in order to be made the subject of two or more different actions.

CA reversed holding the compromise agreement had ended the legal The petitioners were not at liberty to split their demand to enforce or rescind
controversy between the parties with respect to the cause of action the deed of sale with assumption of mortgage and to prosecute piecemeal or
arising from the deed of sale with assumption of mortgage covering all present only a portion of the grounds upon which a special relief was sought
the five parcels of land; that Civil Case No. G-1936 and Civil Case under the deed of sale with assumption of mortgage, and then to leave the rest
No.12251 involved the violation by the Cunanans of the same legal right to be presented in another suit; otherwise, there would be no end to
under the deed of sale with assumption of mortgage; and that the filing of litigation.28 Their splitting violated the policy against multiplicity of suits,
Civil Case No.12251 contravened the rule against splitting of a cause of whose primary objective was to avoid unduly burdening the dockets of the
action, and rendered Civil Case No.12251 subject of a motion to dismiss courts. Their contravention of the policy merited the dismissal of Civil Case
based on bar by res judicata. No. 12251 on the ground of bar by res judicata.

Issue: Res judicata means a matter adjudged, a thing judicially acted upon or
W/N the second case was barred by res judicata although the compromise decided; a thing or matter settled by judgment. The doctrine of res judicata is
agreement did not expressly include Benelda Estate as a party and although an old axiom of law, dictated by wisdom and sanctified by age, and founded
the compromise agreement made no reference to the lots now registered in on the broad principle that it is to the interest of the public that there should
Benelda Estate’s name – Yes. be an end to litigation by the same parties over a subject once fully and fairly
adjudicated.
Held:
Yes. Under the doctrine of res judicata, a final judgment or decree on the merits
rendered by a court of competent jurisdiction is conclusive of the rights of the
The petitioners contend that the compromise agreement did not apply or parties or their privies in all later suits and on all points and matters
extend to the Carloses and Benelda Estate; hence, their Civil Case No. 12251 determined in the previous suit. The foundation principle upon which the
was not barred by res judicata. doctrine rests is that the parties ought not to be permitted to litigate the same
issue more than once; that when a right or fact has been judicially tried and
We disagree. determined by a court of competent jurisdiction, so long as it remains

Avila 4B | 2016
unreversed, should be conclusive upon the parties and those in privity with substantial identity of parties, or even community of interests between parties
them in law or estate. in the prior and subsequent cases, even if the latter were not impleaded in the
first case, was sufficient.
Yet, in order that res judicata may bar the institution of a subsequent action,
the following requisites must concur: As to identity of the subject matter, both actions dealt with the properties
(a) the former judgment must be final; involved in the deed of sale with assumption of mortgage. Identity of the
(b) it must have been rendered by a court having jurisdiction of the subject causes of action was also met, because Case No. G-1936 and Civil Case No.
matter and the parties; 12251 were rooted in one and the same cause of action—the failure of
(c) it must be a judgment on the merits; and Cunanan to pay in full the purchase price of the five lots subject of the deed
(d) there must be between the first and second actions of sale with assumption of mortgage. In other words, Civil Case No. 12251
(i) identity of parties, reprised Civil Case No. G-1936, the only difference between them being that
(ii) identity of the subject matter, and the petitioners alleged in the former that Benelda Estate was “not also a
(iii) identity of cause of action. purchaser for value and in good faith.”38

In fine, the rights and obligations of the parties vis-à-vis the five lots were all
The first requisite was attendant. Civil Case No. G-1936 was already defined and governed by the deed of sale with assumption of mortgage, the
terminated under the compromise agreement, for the judgment, being upon a only contract between them. That contract was single and indivisible, as far
compromise, was immediately final and unappealable. as they were concerned. Consequently, the Chus could not properly proceed
against the respondents in Civil Case No. 12251, despite the silence of the
As to the second requisite, the RTC had jurisdiction over the cause of action compromise agreement as to the Carloses and Benelda Estate, because there
in Civil Case No. G-1936 for the enforcement or rescission of the deed of sale can only be one action where the contract is entire, and the breach total, and
with assumption of mortgage, which was an action whose subject matter was the petitioners must therein recover all their claims and damages.39 The Chus
not capable of pecuniary estimation. could not be permitted to split up a single cause of action and make that single
cause of action the basis of several suits.
But was there an identity of parties, of subject matter, and of causes of action
between Civil Case No.G-1936 and Civil Case No. 12251?

There is identity of parties when the parties in both actions are the same, or
there is privity between them, or they are successors-in-interest by title
subsequent to the commencement of the action litigating for the same thing
and under the same title and in the same capacity.

The requirement of the identity of parties was fully met, because the Chus,
on the one hand, and the Cunanans, on the other hand, were the parties in both
cases along with their respective privies. The fact that the Carloses and
Benelda Estate, defendants in Civil Case No. 12251, were not parties in the
compromise agreement was inconsequential, for they were also the privies of
the Cunanans as transferees and successors-in-interest. It is settled that the
absolute identity of parties was not a condition sine qua non for res
judicata to apply, because a shared identity of interest sufficed. Mere

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6. NM Rothschild & Sons (AUSTRALIA) Limited, v. Lepanto As regards the allegation of failure to state a cause of action, while the same
Consolidated Mining Company, G.R. No. 175799, November 28, 2011 is usually available as a ground in a Motion to Dismiss, said ground cannot
be ruled upon in the present Petition without going into the very merits of the
Facts: main case.
On August 30, 2005, respondent Lepanto Consolidated Mining Company
filed with the Regional Trial Court (RTC) of Makati City a Complaint3 It is basic that “[a] cause of action is the act or omission by which a party
against petitioner NM Rothschild & Sons (Australia) Limited praying for a violates a right of another.” Its elements are the following: (1) a right existing
judgment declaring the loan and hedging contracts between the parties in favor of the plaintiff, (2) a duty on the part of the defendant to respect the
void for being contrary to Article 2018 of the Civil Code of the plaintiff’s right, and (3) an act or omission of the defendant in violation of
Philippines and for damages. such right.

The Complaint was docketed as Civil Case No. 05-782, and was raffled to We have held that to sustain a Motion to Dismiss for lack of cause of action,
Branch 150. Upon respondent’s (plaintiff’s) motion, the trial court authorized the complaint must show that the claim for relief does not exist and not only
respondent’s counsel to personally bring the summons and Complaint to the that the claim was defectively stated or is ambiguous, indefinite or uncertain.
Philippine Consulate General in Sydney, Australia for the latter office to
effect service of summons on petitioner (defendant). The trial court held that the Complaint in the case at bar contains all the three
elements of a cause of action, i.e., it alleges that:
On October 20, 2005, petitioner filed a Special Appearance With Motion to (1) plaintiff has the right to ask for the declaration of nullity of the Hedging
Dismiss5 praying for the dismissal of the Complaint on the following Contracts for being null and void and contrary to Article 2018 of the Civil
grounds: (b) the Complaint failed to state a cause of action and respondent Code of the Philippines;
does not have any against petitioner. (2) defendant has the corresponding obligation not to enforce the Hedging
Contracts because they are in the nature of wagering or gambling agreements
RTC denied the MTD holding, among others, that the Complaint sufficiently and therefore the transactions implementing those contracts are null and void
stated a cause of action. under Philippine laws; and
(3) defendant ignored the advice and intends to enforce the Hedging
CA affirmed. Contracts by demanding financial payments due therefrom.21

Hence this petition. The determination of whether or not the Complaint stated a cause of action
would therefore involve an inquiry into whether or not the assailed contracts
Issue: are void under Philippine laws.
W/N the RTC erred in denying the petitioner’s MTD alleging that
respondent’s complaint failed to state a cause of action and has no cause of This is, precisely, the very issue to be determined in Civil Case No. 05-782.
action – it stated a cause of action; as to the existence of a cause of action, it Indeed, petitioner’s defense against the charge of nullity of the Hedging
can only be determined after presentation of evidence and its absence should Contracts is the purported intent of the parties that actual deliveries of gold
not be raised in a mere MTD. be made pursuant thereto. Such a defense requires the presentation of
evidence on the merits of the case. An issue that “requires the contravention
Held: of the allegations of the complaint, as well as the full ventilation, in effect, of
It stated a cause of action; as to the existence of a cause of action, it can only the main merits of the case, should not be within the province of a mere
be determined after presentation of evidence and its absence should not be Motion to Dismiss.”26 The trial court, therefore, correctly denied the Motion
raised in a mere MTD. to Dismiss on this ground.

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7. Pua v. Citibank, N.A., 2013 (SEC jurisdiction) the SRC, in particular, whether or not there was a sale of unregistered
securities. In this regard, respondent contended that the SRC conferred upon
Facts: the SEC jurisdiction to investigate compliance with its provisions and thus,
On December 2, 2002, petitioners Jose and Benjamin Pua filed before the petitioners’ complaint should be first filed with the SEC and not directly
RTC a Complaint6 for declaration of nullity of contract and sums of before the RTC.16
money with damages against respondent,7 docketed as Civil Case No. 19-
1159. Petitioners opposed17 respondent’s motion to dismiss, maintaining that the
RTC has jurisdiction over their complaint. They asserted that Section 63of
In their complaint, petitioners alleged that they had been depositors of the SRC expressly provides that the RTC has exclusive jurisdiction to hear
Citibank Binondo Branch (Citibank Binondo) since 1996. Sometime in 1999, and decide all suits to recover damages pursuant to Sections 56 to 61 of the
Guada Ang, Citibank Binondo’s Branch Manager, invited Jose to a dinner same law.18
party at the Manila Hotel where he was introduced to several officers and
employees of Citibank Hongkong Branch (Citibank Hongkong).9 RTC denied the MTD. It noted that petitioners’ complaint is for declaration
of nullity of contract and sums of money with damages and, as such, it has
A few months after, Chingyee Yau (Yau), Vice-President of Citibank jurisdiction to hear and decide upon the case even if it involves the alleged
Hongkong, came to the Philippines to sell securities to Jose. They averred sale of securities. It ratiocinated that the legal questions or issues arising from
that Yau required Jose to open an account with Citibank Hongkong as it is petitioners’ causes of action against respondent are more appropriate for the
one of the conditions for the sale of the aforementioned securities.10 After judiciary than for an administrative agency to resolve.20
opening such account, Yau offered and sold to petitioners numerous
securities11 issued by various public limited companies established in Jersey, CA reversed RTC holding that the RTC violated the doctrine of primary
Channel I sands. jurisdiction.

The offer, sale, and signing of the subscription agreements of said securities Issue:
were all made and perfected at Citibank Binondo in the presence of its W/N petitioners’ action falls within the primary jurisdiction of the SEC – No.
officers and employees.12
Held:
Later on, petitioners discovered that the securities sold to them were not No.
registered with the Securities and Exchange Commission (SEC)and that the
terms and conditions covering the subscription were not likewise submitted At the outset, the Court observes that respondent erroneously relied on the
to the SEC for evaluation, approval, and registration.13 Baviera ruling to support its position that all complaints involving purported
violations of the SRC should be first referred to the SEC. A careful reading
Asserting that respondent’s actions are in violation of Republic Act No.8799, of the Baviera case would reveal that the same involves a criminal
entitled the "Securities Regulation Code" (SRC), they assailed the validity of prosecution of a purported violator of the SRC, and not a civil suit such as
the subscription agreements and the terms and conditions thereof for being the case at bar. The pertinent portions of the Baviera ruling thus read:
contrary to law and/or public policy.14
“A criminal charge for violation of the Securities Regulation Code is a
For its part, respondent filed a motion to dismiss15 alleging, inter alia, that specialized dispute. Hence, it must first be referred to an administrative
petitioners’ complaint should be dismissed outright for violation of the agency of special competence, i.e., the SEC. Under the doctrine of primary
doctrine of primary jurisdiction. It pointed out that the merits of the case jurisdiction, courts will not determine a controversy involving a question
would largely depend on the issue of whether or not there was a violation of within the jurisdiction of the administrative tribunal, where the question

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demands the exercise of sound administrative discretion requiring the in an amount not exceeding triple the amount of the transaction plus actual
specialized knowledge and expertise of said administrative tribunal to damages.
determine technical and intricate matters of fact. The Securities Regulation
Code is a special law. Its enforcement is particularly vested in the SEC. Based on the foregoing, it is clear that cases falling under Section 57 of the
SRC, which pertain to civil liabilities arising from violations of the
Hence, all complaints for any violation of the Code and its implementing requirements for offers to sell or the sale of securities, as well as other civil
rules and regulations should be filed with the SEC. Where the complaint is suits under Sections 56, 58, 59, 60, and 61 of the SRC shall be exclusively
criminal in nature, the SEC shall indorse the complaint to the DOJ for brought before the regional trial courts. It is a well-settled rule in statutory
preliminary investigation and prosecution as provided in Section 53.1 earlier construction that the term "shall" is a word of command, and one which has
quoted.” always or which must be given a compulsory meaning, and it is generally
imperative or mandatory.35 Likewise, it is equally revelatory that no SRC
Records show that petitioners’ complaint constitutes a civil suit for provision of similar import is found in its sections governing criminal suits;
declaration of nullity of contract and sums of money with damages, which quite the contrary, the SRC states that criminal cases arising from violations
stemmed from respondent’s alleged sale of unregistered securities, in of its provisions should be first referred to the SEC.
violation of the various provisions of the SRC and not a criminal case such
as that involved in Baviera. Therefore, based on these considerations, it stands to reason that civil suits
falling under the SRC are under the exclusive original jurisdiction of the
In this light, when the Court ruled in Baviera that "all complaints for any regional trial courts and hence, need not be first filed before the SEC, unlike
violation of the [SRC] x x x should be filed with the SEC,"33 it should be criminal cases wherein the latter body exercises primary jurisdiction.
construed as to apply only to criminal and not to civil suits such as petitioners’
complaint. All told, petitioners' filing of a civil suit against respondent for purported
violations of the SRC was properly filed directly before the RTC.
Moreover, it is a fundamental rule in procedural law that jurisdiction is
conferred by law;34 it cannot be inferred but must be explicitly stated therein.
Thus, when Congress confers exclusive jurisdiction to a judicial or quasi-
judicial entity over certain matters by law, this, absent any other indication to
the contrary, evinces its intent to exclude other bodies from exercising the
same.

It is apparent that the SRC provisions governing criminal suits are separate
and distinct from those which pertain to civil suits. On the one hand, Section
53 of the SRC governs criminal suits involving violations of the said law. On
the other hand, Sections 56, 57, 58, 59, 60, 61, 62, and 63 of the SRC pertain
to civil suits involving violations of the same law. Among these, the
applicable provisions to this case are Sections 57.1 and 63.1 of the SRC.

SEC. 63. Amount of Damages to be Awarded. – 63.1. All suits to recover


damages pursuant to Sections 56, 57, 58, 59, 60 and 61 shall be brought
before the Regional Trial Court which shall have exclusive jurisdiction to
hear and decide such suits. The Court is hereby authorized to award damages

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IV. Parties (Rule 3) assignment of title over CCT Nos. 21030 and PT- 27396/C-136-II and their
conversion into common areas. Thus, CCT Nos. PT-43400 and PT-43399
1. Go v. Distinction Properties (2012) were issued by the Registrar of Deeds of Pasig City in favor of PHCC in lieu
of the old titles. The said settlement between the two corporations likewise
Facts: included the reversion of the 22 storage spaces into common areas. With the
Philip L. Go, Pacifico Q. Lim and Andrew Q. Lim (petitioners) are registered conformity of PHCC, DPDCI’s application for alteration (conversion of
individual owners of condominium units in Phoenix Heights Condominium. unconstructed 22 storage units and units GF4-A and BAS from saleable to
common areas) was granted by the Housing and Land Use Regulatory Board
Respondent Distinction Properties Development and Construction, Inc. (HLURB).
(DPDCI) was incorporated as a real estate developer, engaged in the
development of condominium projects, among which was the Phoenix Rem Part
Heights Condominium.
In August 2008, petitioners Go, Lim and Lim, as condominium unit-
In February 1996, petitioner Pacifico Lim, one of the incorporators and the owners, filed a complaint7 before the HLURB against DPDCI for
then president of DPDCI, executed a Master Deed and Declaration of unsound business practices and violation of the Master Deed and
Restrictions (MDDR)3 of Phoenix Heights Condominium, which was filed Declaration of Restrictions (MDDR). The case was docketed as REM-
with the Registry of Deeds. As the developer, DPDCI undertook, among 080508-13906. They alleged that DPDCI committed misrepresentation in
others, the marketing aspect of the project, the sale of the units and the release their circulated flyers and brochures as to the facilities or amenities that would
of flyers and brochures. be available in the condominium and failed to perform its obligation to
comply with the MDDR.
Thereafter, Phoenix Heights Condominium Corporation (PHCC) was
formally organized and incorporated. Sometime in 2000, DPDCI turned over In one of its defenses, DPDCI questioned the petitioners’ personality to
to PHCC the ownership and possession of the condominium units, except for sue as the action was a derivative suit.
the two saleable commercial units/spaces:
1. G/F Level BAS covered by Condominium Certificate of Title (CCT) No. HLURB ruled for petitioners holding, among others, that the case was not a
21030 utilized as the PHCC’s administration office, and derivative suit but one which involved contracts of sale of the respective units
2. G/F Level 4-A covered by CCT No. PT-27396/C-136-II used as living between the complainants and DPDCI, hence, within its jurisdiction pursuant
quarters by the building administrator. to Section 1, Presidential Decree (P.D.) No. 957 (The Subdivision and
Condominium Buyers’ Protective Decree), as amended.
Although used by PHCC, DPDCI was assessed association dues for these two
units. On a R65, CA reversed holding that the HLURB had no jurisdiction over the
complaint filed by petitioners as the controversy did not fall within the scope
Meanwhile, in March 1999, petitioner Pacifico Lim, as president of DPDCI, of the administrative agency’s authority under P.D. No. 957. The CA held
filed an Application for Alteration of Plan4 pertaining to the construction of that jurisdiction over PHCC, an indispensable party, was neither acquired nor
22 storage units in the spaces adjunct to the parking area of the building. The waived by estoppel. Citing Carandang v. Heirs of De Guzman,12 it held that,
application, however, was disapproved as the proposed alteration would in any event, the action should be dismissed because the absence of PHCC,
obstruct light and ventilation. an indispensable party, rendered all subsequent actuations of the court
void, for want of authority to act, not only as to the absent parties but
In August 2004, through its Board,5 PHCC approved a settlement offer from even as to those present.
DPDCI for the set-off of the latter’s association dues arrears with the

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MR denied. themselves, but also as regards other persons who may be affected by the
judgment. A decision valid on its face cannot attain real finality where there
Hence this petition. is want of indispensable parties.

Issue: Similarly, in the case of Plasabas v. Court of Appeals,33 the Court held that
W/N PHCC is an indispensable party, the non-inclusion of which rendered a final decree would necessarily affect the rights of indispensable parties so
the proceedings void – Yes. that the Court could not proceed without their presence. In support thereof,
the Court in Plasabas cited the following authorities, thus:
Held: “Parties in interest without whom no final determination can be had of an
Yes. action shall be joined either as plaintiffs or defendants. (Sec. 7, Rule 3, Rules
of Court). The burden of procuring the presence of all indispensable
In this case, the complaint filed by petitioners alleged causes of action that parties is on the plaintiff. (39 Amjur [sic] 885). The evident purpose of the
apparently are not cognizable by the HLURB considering the nature of the rule is to prevent the multiplicity of suits by requiring the person arresting a
action and the reliefs sought. A perusal of the complaint discloses that right against the defendant to include with him, either as co-plaintiffs or as
petitioners are actually seeking to nullify and invalidate the duly constituted co-defendants, all persons standing in the same position, so that the whole
acts of PHCC—the April 29, 2005 Agreement27 entered into by PHCC with matter in dispute may be determined once and for all in one litigation.”
DPDCI and its Board Resolution28 which authorized the acceptance of the
proposed offsetting/settlement of DPDCI’s indebtedness and approval of the From all indications, PHCC is an indispensable party and should have been
conversion of certain units from saleable to common areas. All these were impleaded, either as a plaintiff or as a defendant,34 in the complaint filed
approved by the HLURB. before the HLURB as it would be directly and adversely affected by any
determination therein. To belabor the point, the causes of action, or the acts
As it is clear that the acts being assailed are those of PHHC, this case cannot complained of, were the acts of PHCC as a corporate body. Note that in the
prosper for failure to implead the proper party, PHCC. judgment rendered by the HLURB, the dispositive portion in particular,
DPDCI was ordered (1) to pay P998,190.70, plus interests and surcharges, as
An indispensable party is defined as one who has such an interest in the condominium dues in arrears and turnover the administration office to
controversy or subject matter that a final adjudication cannot be made, in his PHCC; and (2) to refund to PHCC P1,277,500.00, representing the cost of
absence, without injuring or affecting that interest. the deep well, with interests and surcharges. Also, the HLURB declared as
illegal the agreement regarding the conversion of the 22 storage units and
In the recent case of Nagkakaisang Lakas ng Manggagawa sa Keihin Units GF4-A and BAS, to which agreement PHCC was a party.
(NLMK-OLALIA-KMU) v. Keihin Philippines Corporation, 627 SCRA 179
(2010), the Court had the occasion to state that: Under Section 7, Rule 3 of Evidently, the cause of action rightfully pertains to PHCC. Petitioners
the Rules of Court, “parties in interest without whom no final determination cannot exercise the same except through a derivative suit. In the
can be had of an action shall be joined as plaintiffs or defendants.” If there is complaint, however, there was no allegation that the action was a
a failure to implead an indispensable party, any judgment rendered would derivative suit. In fact, in the petition, petitioners claim that their complaint
have no effectiveness. It is “precisely ‘when an indispensable party is not is not a derivative suit.
before the court (that) an action should be dismissed.’ The absence of an
indispensable party renders all subsequent actions of the court null and In the cited case of Chua v. Court of Appeals, 443 SCRA 259 (2004), the
void for want of authority to act, not only as to the absent parties but Court ruled: For a derivative suit to prosper, it is required that the minority
even to those present.” The purpose of the rules on joinder of indispensable stockholder suing for and on behalf of the corporation must allege in his
parties is a complete determination of all issues not only between the parties complaint that he is suing on a derivative cause of action on behalf of the

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corporation and all other stockholders similarly situated who may wish
to join him in the suit. It is a condition sine qua non that the corporation
be impleaded as a party because not only is the corporation an
indispensable party, but it is also the present rule that it must be served with
process. 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. In
other words, 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.

Without PHCC as a party, there can be no final adjudication of the HLURB’s


judgment. The CA was, thus, correct in ordering the dismissal of the case for
failure to implead an indispensable party.

Moreover, considering that petitioners, who are members of PHCC, are


ultimately challenging the agreement entered into by PHCC with DPDCI,
they are assailing, in effect, PHCC’s acts as a body corporate. This action,
therefore, partakes the nature of an “intra-corporate controversy,” the
jurisdiction over which used to belong to the Securities and Exchange
Commission (SEC), but transferred to the courts of general jurisdiction or the
appropriate Regional Trial Court (RTC), pursuant to Section 5b of P.D. No.
902- A,38 as amended by Section 5.2 of Republic Act (R.A.) No. 8799.39

In sum, inasmuch as the HLURB has no jurisdiction over petitioners’


complaint, the Court sustains the subject decision of the CA that the HLURB
decision is null and void ab initio. This disposition, however, is without
prejudice to any action that the parties may rightfully file in the proper forum.
WHEREFORE, the petition is DENIED. SO ORDERED.

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2. Macawadib v. PNP Directorate (2013)
Hence this petition.
Facts:
Petitioner was a police officer with the rank of Police Senior Superintendent. Issue:
On July 30, 2001, pursuant to the provisions of Section 39 of Republic Act W/N the RTC decision should be nullified due to lack of an indispensable
6975, otherwise known as the “Department of the Interior and Local party – Yes.
Government Act of 1990,” the Chief of Directorial Staff of the Philippine
National Police (PNP) issued General Order No. 1168, enumerating the Held:
names of commissioned officers who were subject to compulsory retirement Yes.
on various dates in the month of January 2002 by virtue of their attainment
of the compulsory retirement age of 56. In his first assigned error, petitioner contends that respondent is not an
indispensable party. The Court is not persuaded.
Among the names included in the said Order was that of petitioner, who was
supposed to retire on January 11, 2002, as the files of the PNP Records On the contrary, the Court agrees with the ruling of the CA that it is the
Management Division indicate that he was born on January 11, 1946. integrity and correctness of the public records in the custody of the PNP,
National Police Commission (NAPOLCOM) and Civil Service Commission
On September 3, 2001, petitioner filed an application for late registration of (CSC) which are involved and which would be affected by any decision
his birth with the Municipal Civil Registrar’s Office of Mulondo, Lanao del rendered in the petition for correction filed by herein petitioner. The
Sur. In the said application, petitioner swore under oath that he was born on aforementioned government agencies are, thus, required to be made parties
January 11, 1956. The application was, subsequently, approved. to the proceeding. They are indispensable parties, without whom no final
determination of the case can be had. An indispensable party is defined as
Rem Part one who has such an interest in the controversy or subject matter that a final
On October 15, 2001, petitioner filed with the RTC of Marawi City, Branch adjudication cannot be made, in his absence, without injuring or affecting that
8, a Petition for Correction of Entry in the Public Service Records interest.
Regarding the Birth Date. (Special Proceeding)
In the fairly recent case of Go v. Distinction Properties Development and
RTC ruled for petitioner. Subsequently, the RTC issued an Entry of Final Construction, Inc.,13 the Court had the occasion to reiterate the principle that:
Judgment6 indicating therein that its December 4, 2001 Decision in Spl. Proc. Under Section 7, Rule 3 of the Rules of Court, “parties in interest without
No. 782-01 has become final and executory on March 13, 2002. whom no final determination can be had of an action shall be joined as
plaintiffs or defendants.” If there is a failure to implead an indispensable
On January 8, 2008, herein respondent filed a Petition for Annulment of party, any judgment rendered would have no effectiveness. It is “precisely
Judgment with Prayer for the Issuance of a Temporary Restraining Order ‘when an indispensable party is not before the court (that) an action
and/or Writ of Preliminary Injunction with the CA, seeking to nullify the should be dismissed.’ The absence of an indispensable party renders all
above-mentioned Decision of the RTC on the ground that the trial court subsequent actions of the court null and void for want of authority to act,
failed to acquire jurisdiction over the PNP, “an unimpleaded not only as to the absent parties but even to those present.” The purpose
indispensable party.”7 of the rules on joinder of indispensable parties is a complete determination of
all issues not only between the parties themselves, but also as regards other
CA granted and nullified the RTC decision. persons who may be affected by the judgment. A decision valid on its face
cannot attain real finality where there is want of indispensable parties.14
MR denied.

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The burden of procuring the presence of all indispensable parties is on the attained finality. Settled is the rule that a void judgment cannot attain finality
plaintiff.16 and its execution has no basis in law.20

In the instant case, there is a necessity to implead the PNP, NAPOLCOM and WHEREFORE, the petition for review on certiorari is DENIED. The
CSC because they stand to be adversely affected by petitioner’s petition Decision dated December 17, 2008 and the Resolution dated February 25,
which involves substantial and controversial alterations in petitioner’s service 2009 of the Court of Appeals, in CA- G.R. SP No. 02120-MIN, are hereby
records. Moreover, as correctly pointed out by the Office of the Solicitor AFFIRMED.
General (OSG), if petitioner’s service is extended by ten years, the SO ORDERED.
government, through the PNP, shall be burdened by the additional salary and
benefits that would have to be given to petitioner during such extension.
Thus, aside from the OSG, all other agencies which may be affected by the
change should be notified or represented as the truth is best ascertained under
an adversary system of justice.

As the above-mentioned agencies were not impleaded in this case much less
given notice of the proceedings, the decision of the trial court granting
petitioner’s prayer for the correction of entries in his service records, is void.
As mentioned above, the absence of an indispensable party renders all
subsequent actions of the court null and void for want of authority to act, not
only as to the absent parties but even as to those present.

On the question of whether or not respondent is estopped from assailing the


decision of the RTC for failure of the OSG, as government representative, to
participate in the proceedings before the trial court or to file an opposition to
petitioner’s petition for correction of entries in his service records, this Court
rules that such an apparent oversight has no bearing on the validity of the
appeal which the petitioner filed before the CA. Neither can the State, as
represented by the government, be considered in estoppel due to the
petitioner’s seeming acquiescence to the judgment of the RTC when it
initially made corrections to some of petitioner’s records with the PNP. This
Court has reiterated time and again that the absence of opposition from
government agencies is of no controlling significance, because the State
cannot be estopped by the omission, mistake or error of its officials or
agents.18 Nor is the Republic barred from assailing the decision granting the
petition for correction of entries if, on the basis of the law and the evidence
on record, such petition has no merit.19

As to the second and last assigned errors, suffice it to say that considering
that the assailed decision of the RTC is null and void, the same could not have

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3. Hacienda Luisita v. Presidential Agrarian Reform Council (2011) the case against Tadeco as a political message to the family of the late
Benigno Aquino, Jr.[23] Eventually, the Manila RTC rendered judgment
Facts: ordering Tadeco to surrender Hacienda Luisita to the MAR.
At the core of the case is Hacienda Luisita de Tarlac (Hacienda Luisita), once
a 6,443- hectare mixed agricultural-industrial-residential expanse straddling Therefrom, Tadeco appealed to the Court of Appeals (CA).
several municipalities of Tarlac and owned by Compaia General de Tabacos
de Filipinas (Tabacalera). On March 17, 1988, the Office of the Solicitor General (OSG) moved to
withdraw the governments case against Tadeco, et al. By Resolution of May
In 1957, the Spanish owners of Tabacalera offered to sell Hacienda Luisita 18, 1988, the CA dismissed the case the Marcos government initially
as well as their controlling interest in the sugar mill within the hacienda, the instituted and won against Tadeco, et al. The dismissal action was, however,
Central Azucarera de Tarlac (CAT), as an indivisible transaction. The Tarlac made subject to the obtention by Tadeco of the PARCs approval of a stock
Development Corporation (Tadeco), then owned and/or controlled by the distribution plan (SDP) that must initially be implemented after such approval
Jose Cojuangco, Sr. Group, was willing to buy. As agreed upon, Tadeco shall have been secured.
undertook to pay the purchase price for Hacienda Luisita in pesos, while that
for the controlling interest in CAT, in US dollars.[19] On May 9, 1989, some 93% of the then farmworker-beneficiaries (FWBs)
complement of Hacienda Luisita signified in a referendum their acceptance
To facilitate the adverted sale-and-purchase package, the Philippine of the proposed HLIs Stock Distribution Option Plan.
government, through the then Central Bank of the Philippines, assisted the
buyer to obtain a dollar loan from a US bank.[20] Also, the Government On May 11, 1989, the Stock Distribution Option Agreement (SDOA), styled
Service Insurance System (GSIS) Board of Trustees extended on November as a Memorandum of Agreement (MOA),[33] was entered into by Tadeco,
27, 1957 a PhP 5.911 million loan in favor of Tadeco to pay the peso price HLI, and the 5,848 qualified FWBs[34] and attested to by then DAR
component of the sale. One of the conditions contained in the approving GSIS Secretary Philip Juico. The SDOA embodied the basis and mechanics of the
Resolution No. 3203, as later amended by Resolution No. 356, Series of 1958, SDP, which would eventually be submitted to the PARC for approval.
reads as follows:
“That the lots comprising the Hacienda Luisita shall be subdivided by the Subsequently, HLI submitted to DAR its SDP, designated as Proposal for
applicant- corporation and sold at cost to the tenants, should there be any, and Stock Distribution under C.A.R.P.,[35] which was substantially based on the
whenever conditions should exist warranting such action under the provisions SDOA.
of the Land Tenure Act;[21]”
Notably, in a follow-up referendum the DAR conducted on October 14, 1989,
As of March 31, 1958, Tadeco had fully paid the purchase price for the 5,117 FWBs, out of 5,315 who participated, opted to receive shares in
acquisition of Hacienda Luisita and Tabacaleras interest in CAT.[22] HLI.[36] One hundred thirty-two (132) chose actual land distribution.[37]

Suffice it to state that on May 7, 1980, the martial law administration filed a The PARC, under then Sec. Defensor-Santiago, by Resolution No. 89-
suit before the Manila Regional Trial Court (RTC) against Tadeco, et al., for 12-2[40] dated November 21, 1989, approved the SDP of
them to surrender Hacienda Luisita to the then Ministry of Agrarian Tadeco/HLI.[41]
Reform (MAR, now the Department of Agrarian Reform [DAR]) so that
the land can be distributed to farmers at cost. Responding, Tadeco or its Rem Part
owners alleged that Hacienda Luisita does not have tenants, besides which
sugar lands of which the hacienda consisted are not covered by existing Such, in short, was the state of things when two separate petitions, both
agrarian reform legislations. As perceived then, the government commenced undated, reached the DAR in the latter part of 2003. In the first,

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denominated as Petition/Protest,[57] respondents Jose Julio Suniga and HLI would deny real party-in-interest status to the purported leaders of the
Windsor Andaya, identifying themselves as head of the Supervisory Group Supervisory Group and AMBALA, i.e., Julio Suniga, Windsor Andaya, and
of HLI (Supervisory Group), and 60 other supervisors sought to revoke the Rene Galang, who filed the revocatory petitions before the DAR.
SDOA, alleging that HLI had failed to give them their dividends and the one
percent (1%) share in gross sales, as well as the thirty-three percent (33%) As HLI would have it, Galang, the self-styled head of AMBALA, gained HLI
share in the proceeds of the sale of the converted 500 hectares of land. They employment in June 1990 and, thus, could not have been a party to the SDOA
further claimed that their lives have not improved contrary to the promise and executed a year earlier.[85]
rationale for the adoption of the SDOA. They also cited violations by HLI of
the SDOAs terms. As regards the Supervisory Group, HLI alleges that supervisors are not
regular farmworkers, but the company nonetheless considered them
[58] They prayed for a renegotiation of the SDOA, or, in the alternative, its Farmworker-beneficiaries (FWBs) under the SDOA as a mere concession to
revocation. enable them to enjoy the same benefits given qualified regular farmworkers.
However, if the SDOA would be canceled and land distribution effected, so
Revocation and nullification of the SDOA and the distribution of the lands in HLI claims, citing Fortich v. Corona,[86] the supervisors would be excluded
the hacienda were the call in the second petition, styled as Petisyon from receiving lands as farmworkers other than the regular farmworkers who
(Petition).[59] The Petisyon was ostensibly filed on December 4, 2003 by are merely entitled to the fruits of the land.[87]
Alyansa ng mga Manggagawang Bukid ng Hacienda Luisita (AMBALA),
where the handwritten name of respondents Rene Galang as Pangulo The SDOA no less identifies the SDP qualified beneficiaries as the
AMBALA and Noel Mallari as Sec-Gen. AMBALA[60] appeared. As farmworkers who appear in the annual payroll, inclusive of the
alleged, the petition was filed on behalf of AMBALAs members purportedly permanent and seasonal employees, who are regularly or periodically
composing about 80% of the 5,339 FWBs of Hacienda Luisita. employed by [HLI].[88] Galang, per HLIs own admission, is employed
by HLI, and is, thus, a qualified beneficiary of the SDP; he comes within
PARC granted the petitions and revoked the SDO plan of Tadeco and HLI. the definition of a real party-in-interest under Sec. 2, Rule 3 of the Rules
of Court, meaning, one who stands to be benefited or injured by the
Hence this instant recourse to the SC. judgment in the suit or is the party entitled to the avails of the suit.

One of petitioner’s arguments is that the Supervisory Group, AMBALA and The same holds true with respect to the Supervisory Group whose members
their respective leaders are not real parties in interest in the case. were admittedly employed by HLI and whose names and signatures even
appeared in the annex of the SDOA. Being qualified beneficiaries of the SDP,
Issue: Suniga and the other 61 supervisors are certainly parties who would benefit
W/N the the Supervisory Group, AMBALA and their respective leaders are or be prejudiced by the judgment recalling the SDP or replacing it with some
real parties-in-interest - Yes other modality to comply with RA 6657.

Held: Even assuming that members of the Supervisory Group are not regular
Yes. farmworkers, but are in the category of other farmworkers mentioned in Sec.
4, Article XIII of the Constitution, [89] thus only entitled to a share of the
Supervisory Group, AMBALA and their respective leaders are real fruits of the land, as indeed Fortich teaches, this does not detract from the
parties-in-interest fact that they are still identified as being among the SDP qualified
beneficiaries.

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As such, they are, thus, entitled to bring an action upon the SDP.[90] At any
rate, the following admission made by Atty. Gener Asuncion, counsel of HLI,
during the oral arguments should put to rest any lingering doubt as to the
status of protesters Galang, Suniga, and Andaya:
Justice Bersamin: x x x I heard you a while ago that you were conceding the
qualified farmer beneficiaries of Hacienda Luisita were real parties in
interest?
Atty. Asuncion: Yes, Your Honor please, real party in interest which that
question refers to the complaints of protest initiated before the DAR and the
real party in interest there be considered as possessed by the farmer
beneficiaries who initiated the protest.[91]

Further, under Sec. 50, paragraph 4 of RA 6657, farmer-leaders are expressly


allowed to represent themselves, their fellow farmers or their organizations
in any proceedings before the DAR. Specifically:
SEC. 50. Quasi-Judicial Powers of the DAR.x x x
xxxx
Responsible farmer leaders shall be allowed to represent themselves,
their fellow farmers or their organizations in any proceedings before the
DAR: Provided, however, that when there are two or more representatives
for any individual or group, the representatives should choose only one
among themselves to represent such party or group before any DAR
proceedings. (Emphasis supplied.)
Clearly, the respective leaders of the Supervisory Group and AMBALA are
contextually real parties-in-interest allowed by law to file a petition before
the DAR or PARC.

This is not necessarily to say, however, that Galang represents AMBALA,


for as records show and as HLI aptly noted,[92] his petisyon filed with DAR
did not carry the usual authorization of the individuals in whose behalf it was
supposed to have been instituted. To date, such authorization document,
which would logically include a list of the names of the authorizing FWBs,
has yet to be submitted to be part of the records.

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4. Metrobank v. Rural Bank of Gerona (RBG) (2010) debit advices, reversing all the approved IBRD loans.[6] The Central Bank
implemented the reversal by debiting from Metrobanks demand deposit
Facts: account the amount corresponding to all three IBRD loans.
RBG is a rural banking corporation organized under Philippine laws and
located in Gerona, Tarlac. In the 1970s, the Central Bank and the RBG Upon receipt of the November 3, 1978 debit advices, Metrobank, in turn,
entered into an agreement providing that RBG shall facilitate the loan debited the following amounts from RBGs special savings account:
applications of farmers-borrowers under the Central Bank-International Bank P189,052.00, P115,000.00, and P8,000.41. Metrobank, however, claimed
for Reconstruction and Developments (IBRDs) 4th Rural Credit Project. that these amounts were insufficient to cover all the credit advices that were
reversed by the Central Bank. It demanded payment from RBG which could
The agreement required RBG to open a separate bank account where the make partial payments.
IBRD loan proceeds shall be deposited. The RBG accordingly opened a
special savings account with Metrobank’s Tarlac Branch. Rem Part

As the depository bank of RBG, Metrobank was designated to receive the As of October 17, 1979, Metrobank claimed that RBG had an outstanding
credit advice released by the Central Bank representing the proceeds of the balance of P334,220.00. To collect this amount, it filed a complaint for
IBRD loan of the farmers-borrowers; Metrobank, in turn, credited the collection of sum of money against RBG before the RTC, docketed as Civil
proceeds to RBGs special savings account for the latters release to the Case No. 6028.[7]
farmers-borrowers.
RTC ruled for Metrobank holding that legal subrogation ensued.
On September 27, 1978, the Central Bank released a credit advice in
Metrobanks favor and accordingly credited Metrobanks demand deposit CA reversed. CA noted that this was not a case of legal subrogation under
account in the amount of P178,652.00, for the account of RBG. The amount, Article 1302 of the Civil Code. Nevertheless, the CA recognized that
which was credited to RBGs special savings account represented the Metrobank had a right to be reimbursed of the amount it had paid and failed
approved loan application of farmer-borrower Dominador de Jesus. RBG to recover, as it suffered loss in an agreement that involved only the Central
withdrew the P178,652.00 from its account. Bank and the RBG. It clarified, however, that a determination still had to be
made on who should reimburse Metrobank. Noting that no evidence exists
On the same date, the Central Bank approved the loan application of another why the Central Bank reversed the credit advices it had previously confirmed,
farmer- borrower, Basilio Panopio, for P189,052.00, and credited the the CA declared that the Central Bank should be impleaded as a
amount to Metrobanks demand deposit account. Metrobank, in turn, credited necessary party so it could shed light on the IBRD loan reversals. Thus, the
RBGs special savings account. Metrobank claims that the RBG also withdrew CA set aside the RTC decision, and remanded the case to the trial court for
the entire credited amount from its account. further proceedings after the Central Bank is impleaded as a necessary party.

On October 3, 1978, the Central Bank approved Ponciano Lagmans loan Hence this petition.
application for P220,000.00. As with the two other IBRD loans, the amount
was credited to Metrobanks demand deposit account, which amount Issue:
Metrobank later credited in favor of RBGs special savings account. Of the W/N the Central Bank should be impleaded as a necessary party – No.
P220,000.00, RBG only withdrew P75,375.00.
Held:
On November 3, 1978, more than a month after RBG had made the above No.
withdrawals from its account with Metrobank, the Central Bank issued

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The petition is impressed with merit. conclusion that the agreement governed only the parties involved the Central
A basic first step in resolving this case is to determine who the liable parties Bank and the RBG. Metrobank was simply an outsider to the agreement.
are on the IBRD loans that the Central Bank extended. The Terms and
Conditions of the IBRD 4th Rural Credit Project[12] (Project Terms and Article 1303 of the Civil Code states that subrogation transfers to the person
Conditions) executed by the Central Bank and the RBG shows that the subrogated the credit with all the rights thereto appertaining, either against
farmers-borrowers to whom credits have been extended, are primarily liable the debtor or against third persons. As the entity against which the collection
for the payment of the borrowed amounts. was enforced, Metrobank was subrogated to the rights of Central Bank and
has a cause of action to recover from RBG the amounts it paid to the Central
The loans were extended through the RBG which also took care of the Bank, plus 14% per annum interest.
collection and of the remittance of the collection to the Central Bank. RBG,
however, was not a mere conduit and collector. While the farmers-borrowers Under this situation, impleading the Central Bank as a party is completely
were the principal debtors, RBG assumed liability under the Project Terms unnecessary.
and Conditions by solidarily binding itself with the principal debtors to fulfill
the obligation. We note that the CA erroneously believed that the Central Banks presence is
necessary in order x x x to shed light on the matter of reversals made by it
How RBG profited from the transaction is not clear from the records and is concerning the loan applications of the end users and to have a complete
not part of the issues before us, but if it delays in remitting the amounts due, determination or settlement of the claim.[16]
the Central Bank imposed a 14% per annum penalty rate on RBG until the
amount is actually remitted. The Central Bank was further authorized to In so far as Metrobank is concerned, however, the Central Banks presence
deduct the amount due from RBGs demand deposit reserve should the latter and the reasons for its reversals of the IBRD loans are immaterial after
become delinquent in payment. subrogation has taken place; Metrobanks interest is simply to collect the
amounts it paid the Central Bank. Whatever cause of action RBG may have
On these points, paragraphs 5 and 6 of the Project Terms and Conditions read: against the Central Bank for the unexplained reversals and any undue
5. Collection received representing repayments of borrowers shall be deductions is for RBG to ventilate as a third-party claim; if it has not done so
immediately remitted to the Central Bank, otherwise[,] the Rural Bank/SLA at this point, then the matter should be dealt with in a separate case that should
shall be charged a penalty of fourteen [percent] (14%) p.a. until date of not in any way further delay the disposition of the present case that had been
remittance. pending before the courts since 1980.
6. In case the rural bank becomes delinquent in the payment of
amortizations due[,] the Central Bank is authorized to deduct the
corresponding amount from the rural banks demand deposit reserve[13]
at any time to cover any delinquency. [Emphasis supplied.]

Based on these arrangements, the Central Banks immediate recourse,


therefore should have been against the farmers-borrowers and the RBG; thus,
it erred when it deducted the amounts covered by the debit advices from
Metrobanks demand deposit account. Under the Project Terms and
Conditions, Metrobank had no responsibility over the proceeds of the IBRD
loans other than serving as a conduit for their transfer from the Central Bank
to the RBG once credit advice has been issued. Thus, we agree with the CAs

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5. Constantino v. Heirs of Pedro Constantino (2013) said deed, respondents adjudicated unto themselves to the exclusion of other
heirs, the parcel of land with an area of 192 sq m by misrepresenting that they
Facts: were “the only legitimate heirs of Pedro Sr. Thus, petitioners claimed that in
This involves a controversy over a parcel of land claimed to be part of an the manner similar to the assailed “Pagmamana sa Labas ng Hukuman,” they
estate which needed to be proportionally subdivided among heirs. asserted their rights and ownership over the subject 240 sq m lot without
damage to the respondents.
Pedro Constantino, Sr., (Pedro Sr.) ancestors of the petitioners and
respondents, owned several parcels of land, one of which is an unregistered In essence, petitioners position was that the Deed of Extrajudicial Settlement
parcel of land declared for taxation purposes under Tax Declaration 208143 with Waiver which led to the issuance of Tax Declaration No. 9534 was
consisting of 240 square meters situated at Sta. Monica, Hagonoy, Bulacan. acquiesced in by the other heirs of Pedro Sr., including the petitioners, on the
Pedro, Sr., upon his death, was survived by his six (6) children. understanding that the respondent heirs of Pedro Jr. would no longer share
and participate in the settlement and partition of the remaining lot covered by
Rem Part the “Pagmamana sa Labas ng Hukuman.” Maria Laquindanum,
respondent’s predecessor-in-interest, was one of the signatories in the
On 17 June 1999, respondents Asuncion Laquindanum (Asuncion) and Extrajudicial Settlement with Waiver who was also allegedly in
Josefina Cailipan (Josefina), great grandchildren of Pedro Sr., in agreement with the petitioners.
representation of Pedro, Jr. filed a complaint5 against petitioners Oscar
Constantino, Maxima Constantino and Casimira Maturingan, grandchildren RTC ruled for petitioners and dismissed the complaint holding that the
of Pedro Sr., for the nullification of a document denominated as parties are in pari delito and should be left where they stand. Thus the
“Pagmamana sa Labas ng Hukuman” dated 10 August 1992, and other tax documents sought to be nullified remain valid.
declaration documents.
CA reversed holding that the Extrajudicial Settlement with Waiver dated 5
In the said complaint, respondents alleged that sometime in October 1998, December 1968 pertains to a different property and is valid absent any
petitioners asserted their claim of ownership over the whole parcel of land evidence to the contrary. Hence, it is erroneous for the trial court to declare
(240 sq m) owned by the late Pedro Sr., to the exclusion of respondents who the parties in pari delicto.
are occupying a portion thereof. Upon verification, respondents learned that
a Tax Declaration No. 02010- 2170-33235 in the name of petitioner Oscar Hence this petition.
Constantino and his cousin Maxima Constantino was unlawfully issued,
which in effect canceled Tax Declaration No. 20814 in the name of their Respondents argue among others that no fault can be attributed to them or
ancestor Pedro Sr. The issuance of the new tax declaration was allegedly due that they are free from the effects of violation of any laws arising from the
to the execution of a simulated, fabricated and fictitious document supposed unlawful agreement entered into between Maria Laquindanum,
denominated as “Pagmamana sa Labas ng Hukuman,” wherein the their predecessor-in-interest, and the other heirs, including petitioners herein,
petitioners misrepresented themselves as the sole and only heirs of Pedro Sr. based on the fact that they are not signatories to said agreement, thus, the lack
of any binding effect to them.
Further, petitioners alleged that the respondents have no cause of action
against them considering that the respondents’ lawful share over the estate of Issue:
Pedro Sr., had already been transferred to them as evidenced by the Deed of W/N the parties are in pari delicto and whether the respondent’s claim that
Extrajudicial Settlement with Waiver14 dated 5 December 1968, executed by they are not bound by the acts of their predecessor in interest has merit – No
Angelo Constantino, Maria Constantino (mother of respondent Asuncion), and no, but contracts are annulled.
Arcadio Constantino and Mercedes Constantino, all heirs of Pedro Jr. In the

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Held:
No and no, but contracts are annulled. That said, we cannot give credence to the contention of respondents that no
fault can be attributed to them or that they are free from the effects of
We do not dispute that herein parties, through the Deeds they separately violation of any laws arising from the supposed unlawful agreement entered
executed deprived each other of rightful shares in the two lots subject of the into between Maria Laquindanum, their predecessor-in-interest, and the other
separate contracts — that is, if the two (2) parcels of land subject matter heirs, including petitioners herein, based on the fact that they are not
thereof, form part of the estate of the late Pedro Sr. signatories to said agreement, thus, the lack of any binding effect to them.

We find that the trial court erroneously applied the doctrine of in pari delicto. Respondents argued and set forth as an issue during the trial that they were
not signatories to any of the contract or privies to such an arrangement. It is
This is not to say, however, that the CA was correct in upholding the validity not disputed, however, that respondents are successors-in-interest of Maria
of the contract denominated as “Pagmamana sa Labas ng Hukuman.” The Laquindanum, one of the signatories in the Extrajudicial Settlement with
CA decision being, likewise, based on pari delicto, is also incorrect. Waiver who was also allegedly in agreement with the petitioners.

Finding the inapplicability of the in pari delicto doctrine, We find occasion On this note, We agree with the trial court that respondents are “privies” to
to stress that Article 1412 of the Civil Code that breathes life to the doctrine Maria Laquindanum. By the term “privies” is meant those between whom an
speaks of the rights and obligations of the parties to the contract with an action is deemed binding although they are not literally parties to the said
illegal cause or object which does not constitute a criminal offense. It applies action.30
to contracts which are void for illegality of subject matter and not to contracts
rendered void for being simulated,28 or those in which the parties do not This Court, in Correa v. Pascual,31 had occasion to explain that “privity in
really intend to be bound thereby. Specifically, in pari delicto situations estate denotes the privity between assignor and assignee, donor and donee,
involve the parties in one contract who are both at fault, such that neither can grantor and grantee, joint tenant for life and remainderman or reversioner
recover nor have any action against each other. and their respective assignees, vendor by deed of warranty and a remote
vendee or assignee. A privy in estate is one, it has been said, who derives his
In this case, there are two Deeds of extrajudicial assignments unto the title to the property in question by purchase; one who takes by conveyance.”
signatories of the portions of the estate of an ancestor common to them and In fine, respondents, as successors-in- interest, derive their right from and are
another set of signatories likewise assigning unto themselves portions of the in the same position as their predecessor in whose shoes they now stand.
same estate. The separate Deeds came into being out of an identical intention
of the signatories in both to exclude their co-heirs of their rightful share in As such successors, respondents’ situation is analogous to that of a transferee
the entire estate of Pedro Sr. It was, in reality, an assignment of specific pendente lite illustrated in Santiago Land Development Corporation v. Court
portions of the estate of Pedro Sr., without resorting to a lawful partition of of Appeals,32 reiterating Fetalino v. Sanz33 where this Court held:
estate as both sets of heirs intended to exclude the other heirs. “As such, he stands exactly in the shoes of his predecessor in interest, the
original defendant, and is bound by the proceedings had in the case before
Clearly, the principle of in pari delicto cannot be applied. The inapplicability the property was transferred to him. He is a proper, but not an indispensable,
is dictated not only by the fact that two deeds, not one contract, are involved, party as he would, in any event, have been bound by the judgment against his
but because of the more important reason that such an application would predecessor.34”
result in the validation of both deeds instead of their nullification as
necessitated by their illegality. It must be emphasized that the underlying Thus, any condition attached to the property or any agreement precipitating
agreement resulting in the execution of the deeds is nothing but a void the execution of the Deed of Extrajudicial Settlement with Waiver which was
agreement.

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binding upon Maria Laquindanum is applicable to respondents who merely
succeeded Maria.

In light of the foregoing, while both parties acted in violation of the law on
legitimes, the pari delicto rule, expressed in the maxims “Ex dolo malo non
oritur action” and “in pari delicto potior est condition defendentis,” which
refuses remedy to either party to an illegal agreement and leaves them where
they are, does not apply in this case.

Accordingly, in order not to put a premium to the circumvention of the laws


as contemplated by the parties in the instant case, we must declare both
contracts as void. Indeed, any circumvention of the law cannot be
countenanced.48

WHEREFORE, the 31 May 2007 Decision of the Court of Appeals in CA-


G.R. CV No. 81329 is hereby REVERSED. The Pagmamana sa Labas ng
Hukuman and Extrajudicial Settlement with Waiver are hereby declared void
without prejudice to the partition of the estate of Pedro Constantino Sr. with
the full participation of all the latter’s heirs.
SO ORDERED.

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6. Cagatao v. Almonte (2013)
CA on appeal partly granted his petition and modified the decision of the
Facts: RTC. CA ruled that the deed of sale between Carlos and Spouses Fernandez
This case stemmed from an action for annulment of deeds of sale, could not be declared null and void, especially because Carlos was not
cancellation of title and damages filed on April 18, 1996 by petitioner impleaded as a party in the case. It, however, stressed that Cagatao’s
Virgilio G. Cagatao (Cagatao) against respondents Guillermo Almonte possession of the subject property should be respected. Any party, including
(Almonte), Arthur Aguilar (Aguilar), Spouses Ernesto and Avelina Fernandez the respondents, who would like to assert their claim of ownership or a better
(Spouses Fernandez), and Marvin John Fernandez, Marson Fernandez and right over the lot should assert their right in an appropriate action in court
Marjun Fernandez (collectively the Fernandez Siblings).4 against him.

On February 16, 1949, a homestead patent over the property subject of this Hence this petition.
controversy (Lot No. 5598, Pls-67) was issued in favor of Juan Gatchalian.5
Cagatao claimed that sometime in 1940, Gatchalian sold the lot to Delfin Issue:
Manzulin (Manzulin) in exchange for one carabao, as embodied in a barter W/N the failure to implead Carlos is fatal to petitioner’s case – Yes.
agreement which was unfortunately destroyed or lost during the Second
World War.6 In 1990, Manzulin allegedly executed a private written Held:
document in the Ilocano dialect, transferring ownership over the property to Yes.
his son-in-law, Cagatao.7 The latter then occupied and cultivated the land
until the Fernandez Siblings attempted to take possession of the lot, thereby Cagatao’s entire petition revolves around the assertion that the reconstituted
prompting him to file the subject complaint before the RTC. TCT No. 12159-A in the name of Carlos was a fake and should have been
declared void. This claim is based on the existence of an allegedly falsified
The respondents, on the other hand, contended that on April 3, 1993, the annotation (Entry No. 7259), the speculative nature of the RTC’s declaration
Spouses Fernandez purchased the property from Almonte and Aguilar who that the said title appeared valid, and the fact that the respondents were not
had in their possession a tax declaration covering the said land.9 To protect able to present an affidavit of loss or any proof of judicial reconstitution.22
their interest, on January 17, 1996, Spouses Fernandez once again
bought the same property for P220,000.00 from Emmaculada Carlos The Court cannot accommodate the petitioner.
(Carlos), believed to be the owner of the lot by virtue of Transfer
Certificate of Title (TCT) No. T-12159-A, a reconstituted title in her The validity of TCT No. 12159-A cannot be attacked collaterally; Carlos is
name.10 The former, in turn, executed a deed of sale, dated January 22, 1996, an indispensable party
in favor of their children, the Fernandez Siblings, resulting in the issuance of
TCT No. T-249437 in their names.11 From the arguments of Cagatao, it is clear that he is assailing the validity of
the title of Carlos over the land in question. Section 48 of P.D. No. 1529
RTC ruled that Cagatao’s evidence was insufficient to prove his ownership clearly states that “a certificate of title shall not be subject to collateral attack.
over the land in question because Manzulin never acquired a lawful title to It cannot be altered, modified, or cancelled except in a direct proceeding in
the property from his predecessor, Gatchalian. The RTC, after noting that accordance with law.” An attack on the validity of the title is considered to
Cagatao had no valid title, ruled that his claim of possession could not prevail be a collateral attack when, in an action to obtain a different relief and as an
over the claim of ownership by Spouses Fernandez as evidenced by a incident of the said action, an attack is made against the judgment granting
certificate of title. Finally, the RTC sustained the validity of TCT No. T- the title.23
12159-A in the name of Carlos, theorizing that someone must have applied
for an original certificate of title from which the said title was derived.

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Cagatao’s original complaint before the RTC was for the cancellation of TCT
No. T-249437 in the name of the Fernandez Siblings and the nullification of
the deeds of sale between the Fernandez Siblings and Spouses Fernandez, and
the earlier one between the latter and Almonte and Aguilar. Nowhere in his
complaint did Cagatao mention that he sought to invalidate TCT No. 12159-
A. It was only during the course of the proceedings, when Spouses Fernandez
disclosed that they had purchased the property from Carlos, that Cagatao
thought of questioning the validity of TCT No. 12159-A.

Moreover, Carlos, as the registered owner of the lot whose title Cagatao seeks
to nullify, should have been impleaded as an indispensable party.

Section 7, Rule 3 of the 1997 Rules of Civil Procedure defines indispensable


parties to be “parties in interest without whom no final determination can be
had of an action.”

It is clear in this case that Cagatao failed to include Carlos in his action for
the annulment of TCT No. 12159-A. Basic is the rule in procedural law that
no man can be affected by any proceeding to which he is a stranger and
strangers to a case cannot be bound by a judgment rendered by the court. It
would be the height of injustice to entertain an action for the annulment of
Carlos’ title without giving her the opportunity to present evidence to support
her claim of ownership through title. In addition, it is without question a
violation of the constitutional guarantee that no person shall be deprived of
property without due process of law.

Thus, should Cagatao wish to question the ownership of the subject lot of
Carlos and Spouses Fernandez, he should institute a direct action before the
proper courts for the cancellation or modification of the titles in the name of
the latter two. He cannot do so now because it is tantamount to a collateral
attack on Carlos’ title, which is expressly prohibited by law and
jurisprudence.

While the Court finds that the validity of TCT No. 12159-A cannot be
attacked collaterally and that Cagatao had not sufficiently established his
claim of ownership over the subject property, it agrees with the CA that he,
the current possessor, shall remain to be so until such time that his possession
is successfully contested by a person with a better right.

WHEREFORE, the petition is DENIED. SO ORDERED.

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7. Legaspi Towers 300 Inc v. Muer (2012) 21, 2004. The RTC held that the said motion could not be admitted for being
improper.
Facts:
Pursuant to the by-laws of Legaspi Towers 300, Inc., petitioners Lilia MR of the two Orders were denied.
Marquinez Palanca, Rosanna D. Imai, Gloria Domingo and Ray Vincent, the
incumbent Board of Directors, set the annual meeting of the members of the CA on R65 affirmed. The Court of Appeals stated that petitioners’ complaint
condominium corporation and the election of the new Board of Directors for sought to nullify the election of the Board of Directors held on April 2, 2004,
the years 2004-2005 on April 2, 2004 at 5:00 p.m. at the lobby of Legaspi and to protect and enforce their individual right to vote. The appellate court
Towers 300, Inc. held that as the right to vote is a personal right of a stockholder of a
corporation, such right can only be enforced through a direct action; hence,
Out of a total number of 5,723 members who were entitled to vote, 1,358 Legaspi Towers 300, Inc. cannot be impleaded as plaintiff in this case.
were supposed to vote through their respective proxies and their votes were
critical in determining the existence of a quorum, which was at least 2,863 MR denied. Hence this R45.
(50% plus 1).
Arguments:
The Committee on Elections of Legaspi Towers 300, Inc., however, found Petitioners clarified that the inclusion of Legaspi Towers 300, Inc. as a party-
most of the proxy votes, at its face value, irregular, thus, questionable; and plaintiff in the Second Amended Complaint was, first and foremost, intended
for lack of time to authenticate the same, petitioners adjourned the meeting as a direct action by the corporation acting through them (petitioners) as the
for lack of quorum. reconstituted Board of Directors of Legaspi Towers 300, Inc. Petitioners
allege that their act of including the corporation as party-plaintiff is consistent
However, the group of respondents challenged the adjournment of the with their position that the election conducted by respondents was invalid;
meeting. Despite petitioners’ insistence that no quorum was obtained during hence, petitioners, under their by-laws, could reconstitute themselves as the
the annual meeting held on April 2, 2004, respondents pushed through with Board of Directors of Legaspi Towers 300, Inc. in a hold-over capacity for
the scheduled election and were elected as the new Board of Directors and the succeeding term. By so doing, petitioners had the right as the rightful
officers of Legaspi Towers 300, Inc. Subsequently, they submitted a General Board of Directors to bring the action in representation of Legaspi Towers
Information Sheet to the Securities and Exchange Commission (SEC) with a 300, Inc. Thus, the Second Amended Complaint was intended by the
new set of officers. petitioners as a direct suit by the corporation joined in by the petitioners to
protect and enforce their common rights.
Rem Part
Petitioners contend that Legaspi Towers 300, Inc. is a real party- in- interest
On April 13, 2004, petitioners filed a Complaint for the Declaration of as it stands to be affected the most by the controversy, because it involves the
Nullity of Elections with Prayers for the Issuance of Temporary Restraining determination of whether or not the corporation’s by-laws was properly
Orders and Writ of Preliminary Injunction and Damages against respondents carried out in the meeting held on April 2, 2004, when despite the
with the RTC of Manila. Later they amended their Complaint. adjournment of the meeting for lack of quorum, the elections were still
conducted. Although petitioners admit that the action involves their right to
During the pre-trial conference held on July 21, 2004, the trial court resolved vote, they argue that it also involves the right of the condominium corporation
various incidents in the case and other issues raised by the contending parties. to be managed and run by the duly-elected Board of Directors, and to seek
One of the incidents acted upon by the trial court was petitioners’ motion redress against those who wrongfully occupy positions of the corporation and
to amend complaint to implead Legaspi Towers 300, Inc. as plaintiff, who may mismanage the corporation.
which motion was denied with the issuance of two Orders both dated July

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Issue: Where a stockholder or member is denied the right of inspection, his suit
W/N RTC erred in denying the motion to implead the corporation Legaspi would be individual because the wrong is done to him personally and not
Towers as party-plaintiff – No, RTC did not err. to the other stockholders or the corporation.

Held: Where the wrong is done to a group of stockholders, as where preferred


No, RTC did not err. stockholders’ rights are violated, a class or representative suit will be
proper for the protection of all stockholders belonging to the same group.
Petitioners’ argument is unmeritorious.
But where the acts complained of constitute a wrong to the corporation
The Court notes that in the Amended Complaint, petitioners as plaintiffs itself, the cause of action belongs to the corporation and not to the
stated that they are the incumbent reconstituted Board of Directors of Legaspi individual stockholder or member.
Towers 300, Inc., and that defendants, herein respondents, are the newly-
elected members of the Board of Directors; while in the Second Amended Thus, an individual stockholder is permitted to institute a derivative suit on
Complaint, the plaintiff is Legaspi Towers 300, Inc., represented by behalf of the corporation wherein he holds stock in order to protect or
petitioners as the allegedly incumbent reconstituted Board of Directors of vindicate corporate rights, whenever officials of the corporation refuse to
Legaspi Towers 300, Inc. sue or are the ones to be sued or hold the control of the corporation. In such
actions, the suing stockholder is regarded as the nominal party, with the
The Second Amended Complaint states who the plaintiffs are, thus: corporation as the party-in- interest.”
That the plaintiffs are: LEGASPI TOWERS 300, INC., non-stock
corporation xxx duly represented by the incumbent reconstituted Board Since it is the corporation that is the real party-in-interest in a derivative suit,
of Directors of Legaspi Towers 300, Inc., then the reliefs prayed for must be for the benefit or interest of the
corporation. When the reliefs prayed for do not pertain to the corporation,
The Court agrees with the Court of Appeals that the Second Amended then it is an improper derivative suit.
Complaint is meant to be a derivative suit filed by petitioners in behalf of the
corporation. The Court of Appeals stated in its Decision that petitioners The requisites for a derivative suit are as follows:
justified the inclusion of Legaspi Towers 300, Inc. as plaintiff in Civil Case a) the party bringing suit should be a shareholder as of the time of the act or
No. 0410655 by invoking the doctrine of derivative suit. transaction complained of, the number of his shares not being material;
b) he has tried to exhaust intra-corporate remedies, i.e., has made a demand
Is a derivative suit proper in this case? No. on the board of directors for the appropriate relief but the latter has failed or
refused to heed his plea; and
Cua v. Tan: c) the cause of action actually devolves on the corporation, the wrongdoing
“A derivative suit must be differentiated from individual and representative or harm having been, or being caused to the corporation and not to the
or class suits, thus: particular stockholder bringing the suit.

Suits by stockholders or members of a corporation based on wrongful or In this case, petitioners, as members of the Board of Directors of the
fraudulent acts of directors or other persons may be classified into: condominium corporation before the election in question, filed a complaint
(1) individual suits, against the newly-elected members of the Board of Directors for the years
(2) class suits, and 2004-2005, questioning the validity of the election held on April 2, 2004, as
(3) derivative suits.

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it was allegedly marred by lack of quorum, and praying for the nullification
of the said election.

As stated by the Court of Appeals, petitioners’ complaint seek to nullify the


said election, and to protect and enforce their individual right to vote.
Petitioners seek the nullification of the election of the Board of Directors for
the years 2004-2005, composed of herein respondents, who pushed through
with the election even if petitioners had adjourned the meeting allegedly due
to lack of quorum. Petitioners are the injured party, whose rights to vote and
to be voted upon were directly affected by the election of the new set of board
of directors. The party-in-interest are the petitioners as stockholders, who
wield such right to vote. The cause of action devolves on petitioners, not the
condominium corporation, which did not have the right to vote. Hence, the
complaint for nullification of the election is a direct action by petitioners,
who were the members of the Board of Directors of the corporation before
the election, against respondents, who are the newly-elected Board of
Directors.

Under the circumstances, the derivative suit filed by petitioners in behalf of


the condominium corporation in the Second Amended Complaint is
improper.

The stockholder’s right to file a derivative suit is not based on any express
provision of The Corporation Code, but is impliedly recognized when the law
makes corporate directors or officers liable for damages suffered by the
corporation and its stockholders for violation of their fiduciary duties, which
is not the issue in this case.

WHEREFORE, the petition is DENIED. The Decision of the Court of


Appeals in CA-G.R. CV No. 87684, dated July 22, 2005, and its Resolution
dated November 24, 2005 are AFFIRMED.
Costs against petitioners. SO ORDERED.

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8. Republic v. Agunoy (2005) On May 12, 1980, the adverse claim of Francisca Perez, et al. annotated at
the back of the OCT was cancelled by the Register of Deeds of Nueva Ecija
Facts: (Exhibit “G”).
Respondent Gregorio Anuoy, Sr. filed his application for Free Patent No.5-
1414 covering two parcels of land. On January 18, 1967, he was issued Free On January 16, 1981, Joaquin Sangabol subdivided the property described as
Patent No. 314450 by the Director of Lands. Lot 1341 in TCT No. NT-166271 into three lots. Thereafter, the lands were
transferred to different persons at different points in time…
On February 6, 1967, the Register of Deeds of Nueva Ecija registered Free
Patent No. 314450 and issued the corresponding Original Certificate of Title On May 10, 1988, the Chief of the Legal Division recommended to the
(OCT) No. P-4522 in the name of Gregorio Agunoy, Sr. Director of Lands that court action be instituted for the cancellation of
Free Patent No. 314450 and its corresponding Original Certificate of Title
On March 10, 1967, the heirs of Eusebio Perez, represented by Francisca No. P- 4522 in the name Gregorio Agunoy, Sr., as well as other subsequent
Perez, caused the annotation on the said OCT of an adverse claim in their transfer certificates of title issued therefrom based on the foregoing findings
favor over a portion of 15.1593 hectares of the property.
Rem Part
The said heirs filed a formal protest with the Bureau of Lands that Lot 1341
of the Sta. Rosa Cadastre, Nueva Ecija, covered by Original Certificate of It was against the foregoing backdrop of events when, on May 24, 1990, in
Title No-P4522 is identical to Lots 1 and 2 of Plan Psu-47200 which had been the Regional Trial Court at Gapan, Nueva Ecija petitioner Republic of the
adjudicated as private property of said protestant pursuant to a decision Philippines, thru the Office of the Solicitor General, filed the complaint in
promulgated on October 24, 1960 by the Court of First Instance of Nueva this case against several defendants, among whom are the herein respondents
Ecija in Land Registration Case No. 430, LRC Records No. 14876. Gregorio Agunoy, Sr., his children, the spouses Eduardo Dee and Arcelita
Marquez-Dee and the Rural Bank of Gapan, Nueva Ecija.
On May 3, 1976, the chief of the Legal Division, Bureau of Lands, conducted
a formal investigation and ocular inspection of the premises and it was In its complaint, docketed as Civil Case No. 831-AF, petitioner Republic
ascertained that Free Patent No. 314450 and its corresponding OCT No. P- alleged, inter alia:
4522 were improperly and fraudulently issued (Records, p.78) 1. Free Patent No. 314450 and its corresponding Original Certificate of Title
No. P-4522 were procured by defendant Gregorio Agunoy, Sr., through fraud,
On July 31, 1979, upon the death of the wife of Gregorio Agunoy, Sr., the deceit and misrepresentation since the property in question (Lots 1341 and
heirs, namely Gregorio Sr., Tomas, Lilian, Angelito and Gregorio, Jr., 1342) at the time the patent and the title were issued was already
executed a Deed of Extrajudicial Partition with Sale in favor of Joaquin adjudicated as private property of the heirs of Eusebio Perez and Valeriano
Sangabol for and in consideration of the sum of Twenty Thousand Pesos Espiritu, respectively. Consequently, the then Bureau of Lands, now Lands
(P20,000.00). Management Bureau, no longer had any jurisdiction and control over the
same.
The Original Certificate of Title No. P-4522 was cancelled by the Register of 2. The fraudulent acts and misrepresentation of defendant Gregorio Agunoy,
Deeds of Nueva Ecija and Transfer Certificate of Title (TCT) No. 166270 Sr. had misled the then Bureau of Lands in issuing said patent. Since the
was issued in favor of the aforenamed heirs. Said TCT No. 166270 was again property in question was no longer a disposable public land, Free Patent No.
cancelled by reason of the concurrent sale to Joaquin Sangabol in whose favor 314450 and its corresponding Original Certificate of Title No. P-4522 issued
TCT No. NT-166271 was issued. to defendant Gregorio Agunoy, Sr. are null and void and should be cancelled.

The OSG prayed for a judgment:

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1. Declaring Free Patent No. 314450 and the corresponding Original government is a party in interest. Under Section 2 of Rule 3 of the 1997 Rules
Certificate of Title No. P-4522 in the name of Gregorio Agunoy, as well as of Civil Procedure, “every action must be prosecuted or defended in the name
all other subsequent transfer certificates of title emanating therefrom, of the real party in interest.” To qualify a person to be a real party in interest
including all liens and encumbrances annotated thereon, null and void; in whose name an action must be prosecuted, he must appear to be the present
real owner of the right sought to enforced (Pioneer Insurance v. CA, 175
RTC ruled for petitioner and declared as null and void Free Patent No. 314450 SCRA 668 [1989]). A real party in interest is the party who stands to be
and the corresponding Original Certificate of Title No. P-4522 in the name benefited or injured by the judgment in the suit, or the party entitled to the
of Gregorio Agunoy, as well as all other subsequent transfer certificates of avails of the suit. And by real interest is meant a present substantial interest,
titles emanating therefrom. as distinguished from a mere expectancy, or a future, contingent, subordinate
or consequential interest.”
CA reversed holding that respondent Agunoy validly acquired the patent and
the OCT, and that the respondent Spouses Dee’s TCT (which sprung from The very complaint in this case, supra, filed by petitioner Republic before the
Agunoy’s title) is valid because the spouses acquired it in good faith and for trial court unmistakably alleges that at the time Free Patent No. 31445 and its
value. corresponding Original Certificate of Title No. P-45222 were issued to
Gregorio Agunoy, Sr., “the property in question (Lots 1341 and 1342) was
The CA declared, among others, that petitioner Republic is not the real party already adjudicated as private property of the heirs of Eusebio Perez and
in interest in this case. Valeriano Espiritu,” and that at that time, “the property in question was no
longer a disposable public land.”
Hence this petition.
With the very admissions by the petitioner itself in its basic pleading that Lots
Issue: No. 1341 and 1342 are already private properties of the heirs of Eusebio
W/N the Republic is a real party in interest – No. Perez and Valeriano Espiritu, and are, therefore, “no longer disposable
public land” over which the then Bureau of Lands, now Lands Management
Held: Bureau, “no longer had any jurisdiction and control,” we are simply at a
No. loss to understand how petitioner Republic can still profess to be the real
party-in- interest in this case, and insists that the disputed properties are still
We DENY. To begin with, we agree with the Court of Appeals that part of the public domain. If ever, the real party-in-interest could be none
petitioner Republic is not the real party-in-interest in this case. other than the heirs of Eusebio Perez and Valeriano Espiritu, but certainly not
the petitioner.
Basic it is in the law of procedure that every action must be prosecuted or
defended in the name of the real party-in-interest, meaning “the party who Then, too, it is striking to note that even as the complaint is basically one for
stands to be benefited or injured by the judgment in the suit, or the party reversion of private property to the mass of public domain, petitioner did not
entitled to the avails of the suit,” a procedural rule reechoed in a long line of implead either the heirs of Eusebio Perez or that of Valeriano Espiritu.
cases decided by this Court. Without doubt, if our decision hereon were to be in favor of petitioner, the
real beneficiary thereof is not the State. And because, as no less admitted by
For sure, not too long ago, in Shipside, Inc. vs. Court of Appeals, citing earlier the petitioner, the lands subject of this case are no longer part of the public
cases, we wrote: domain, the nullification of Agunoy’s Free Patent P-314450 and OCT No. P-
“x x x. Consequently, the Republic is not a real party in interest and it may 4522 would not result in the reversion of the lands subject thereof to the mass
not institute the instant action. Nor may it raise the defense of of public land. And the government, not being the real party-in-interest, is
imprescriptibility, the same being applicable only in cases where the without personality to institute reversion proceedings.

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9. Juana Complex v. Fil-Estate (2012) On a R65, CA partially affirmed, sustaining the RTC ruling that the complaint
was properly filed as a class suit as it was shown that the case was of common
Facts: interest and that the individuals sought to be represented were so numerous
On January 20, 1999, Juana Complex I Homeowners Association, Inc. that it was impractical to include all of them as parties.
(JCHA), together with individual residents of Juana Complex I and other
neighboring subdivisions (collectively referred as JCHA, et al.), instituted a Hence this petition.
complaint5 for damages, in its own behalf and as a class suit representing
the regular commuters and motorists of Juana Complex I and Issue:
neighboring subdivisions who were deprived of the use of La Paz Road, W/N the complaint was properly filed as a class suit – Yes.
against Fil-Estate Land, Inc. (Fil-Estate), Fil-estate Ecocentrum Corporation
(FEEC), La Paz Housing & Development Corporation (La Paz), and Warbird Held:
Security Agency and their respective officers (collectively referred as Fil- Yes.
Estate, et al.).
With respect to the issue that the case was improperly instituted as a class
The complaint alleged that JCHA, et al. were regular commuters and suit, the Court finds the opposition without merit. Section 12, Rule 3 of the
motorists who constantly travelled towards the direction of Manila and Rules of Court defines a class suit, as follows:
Calamba; that they used the entry and exit toll gates of South Luzon “Sec. 12. Class suit.— When the subject matter of the controversy is one of
Expressway (SLEX) by passing through right-of-way public road known as common or general interest to many persons so numerous that it is
La Paz Road; that they had been using La Paz Road for more than ten (10) impracticable to join all as parties, a number of them which the court finds to
years; that in August 1998, Fil-estate excavated, broke and deliberately be sufficiently numerous and representative as to fully protect the interests of
ruined La Paz Road that led to SLEX so JCHA, et al. would not be able to all concerned may sue or defend for the benefit of all. Any party in interest
pass through the said road; that La Paz Road was restored by the residents to shall have the right to intervene to protect his individual interest.”
make it passable but Fil-estate excavated the road again; that JCHA reported
the matter to the Municipal Government and the Office of the Municipal The necessary elements for the maintenance of a class suit are:
Engineer but the latter failed to repair the road to make it passable and safe 1) the subject matter of controversy is one of common or general interest to
to motorists and pedestrians; that the act of Fil- estate in excavating La Paz many persons;
Road caused damage, prejudice, inconvenience, annoyance, and loss of 2) the parties affected are so numerous that it is impracticable to bring them
precious hours to them, to the commuters and motorists because traffic was all to court; and
re-routed to narrow streets that caused terrible traffic congestion and hazard; 3) the parties bringing the class suit are sufficiently numerous or
and that its permanent closure would not only prejudice their right to free and representative of the class and can fully protect the interests of all concerned.
unhampered use of the property but would also cause great damage and
irreparable injury. In this case, the suit is clearly one that benefits all commuters and motorists
who use La Paz Road. As succinctly stated by the CA:
On February 26, 1999, Fil-Estate, et al. filed a motion to dismiss7 arguing “The subject matter of the instant case, i.e., the closure and excavation of the
that the complaint failed to state a cause of action and that it was improperly La Paz Road, is initially shown to be of common or general interest to many
filed as a class suit. On March 5, 1999, JCHA, et al. filed their comment8 on persons. The records reveal that numerous individuals have filed
the motion to dismiss to which respondents filed a reply.9 manifestations with the lower court, conveying their intention to join private
respondents in the suit and claiming that they are similarly situated with
RTC denied the MTD. private respondents for they were also prejudiced by the acts of petitioners in
closing and excavating the La Paz Road. Moreover, the individuals sought to

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be represented by private respondents in the suit are so numerous that it is
impracticable to join them all as parties and be named individually as
plaintiffs in the complaint. These individuals claim to be residents of various
barangays in Biñan, Laguna and other barangays in San Pedro, Laguna.”

WHEREFORE, the petitions are DENIED. Accordingly, the July 31, 2001
Decision and February 21, 2002 Resolution of the Court of Appeals in CA-
G.R. SP No. 60543 are AFFIRMED.
SO ORDERED.

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10. Banda v. Ermita (2010) 378 violates petitioners’ security of tenure, because it paves the way for the
gradual abolition of the NPO.
Facts:
The National Printing Office (NPO) was formed on July 25, 1987, during the Petitioners characterize their action as a class suit filed on their own
term of former President Corazon C. Aquino (President Aquino), by virtue of behalf and on behalf of all their co-employees at the National Printing
Executive Order No. 2851 which provided, among others, the creation of the Office (NPO).
NPO from the merger of the Government Printing Office and the relevant
printing units of the Philippine Information Agency (PIA). Issue:
W/N the petition qualifies as a class suit – No.
Under Section 6, the NPO shall have exclusive printing jurisdiction over
Printing, binding and distribution of all standard and accountable forms of Held:
national, provincial, city and municipal governments, including government No.
corporations, among others.
Before proceeding to resolve the substantive issues, the Court must first delve
On October 25, 2004, President Arroyo issued the herein assailed Executive into a procedural matter.
Order No. 378, amending Section 6 of Executive Order No. 285 by, inter alia,
removing the exclusive jurisdiction of the NPO over the printing services Since petitioners instituted this case as a class suit, the Court, thus, must first
requirements of government agencies and instrumentalities. determine if the petition indeed qualifies as one. In Board of Optometry v.
Colet, 260 SCRA 88 (1996), we held that “[c]ourts must exercise utmost
The pertinent portions of Executive Order No. 378, in turn, provide: caution before allowing a class suit, which is the exception to the requirement
“SECTION 1. The NPO shall continue to provide printing services to of joinder of all indispensable parties. For while no difficulty may arise if the
government agencies and instrumentalities as mandated by law. decision secured is favorable to the plaintiffs, a quandary would result if the
However, it shall no longer enjoy exclusive jurisdiction over the printing decision were otherwise as those who were deemed impleaded by their self-
services requirements of the government over standard and accountable appointed representatives would certainly claim denial of due process.”
forms. It shall have to compete with the private sector, except in the
printing of election paraphernalia…” Section 12, Rule 3 of the Rules of Court defines a class suit, as follows: “Sec.
12. Class suit.—When the subject matter of the controversy is one of
Pursuant to Executive Order No. 378, government agencies and common or general interest to many persons so numerous that it is
instrumentalities are allowed to source their printing services from the private impracticable to join all as parties, a number of them which the court finds to
sector through competitive bidding, subject to the condition that the services be sufficiently numerous and representative as to fully protect the interests of
offered by the private supplier be of superior quality and lower in cost all concerned may sue or defend for the benefit of all. Any party in interest
compared to what was offered by the NPO. Executive Order No. 378 also shall have the right to intervene to protect his individual interest.”
limited NPO’s appropriation in the General Appropriations Act to its income.
From the foregoing definition, the requisites of a class suit are:
Perceiving Executive Order No. 378 as a threat to their security of tenure as 1) the subject matter of controversy is one of common or general interest to
employees of the NPO, petitioners now challenge its constitutionality, many persons;
contending that: (1) it is beyond the executive powers of President Arroyo to 2) the parties affected are so numerous that it is impracticable to bring them
amend or repeal Executive Order No. 285 issued by former President Aquino all to court; and
when the latter still exercised legislative powers; and (2) Executive Order No. 3) the parties bringing the class suit are sufficiently numerous or
representative of the class and can fully protect the interests of all concerned.

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In Mathay v. The Consolidated Bank and Trust Company, 58 SCRA 559 Indeed, in MVRS Publications, Inc. v. Islamic Da’wah Council of the
(1974), the Court held that: An action does not become a class suit merely Philippines, Inc., 396 SCRA 210 (2003), we observed that an element of a
because it is designated as such in the pleadings. Whether the suit is or is not class suit or representative suit is the adequacy of representation. In
a class suit depends upon the attending facts, and the complaint, or other determining the question of fair and adequate representation of members of a
pleading initiating the class action should allege the existence of the class, the court must consider
necessary facts, to wit: (a) whether the interest of the named party is coextensive with the interest of
1. the existence of a subject matter of common interest, and the other members of the class;
2. the existence of a class and (b) the proportion of those made a party, as it so bears, to the total
3. the number of persons in the alleged class, in order that the court membership of the class; and
might be enabled to determine whether the members of the class are so (c) any other factor bearing on the ability of the named party to speak for the
numerous as to make it impracticable to bring them all before the court, rest of the class.
to contrast the number appearing on the record with the number in the
class and to determine whether claimants on record adequately Previously, we held in Ibañes v. Roman Catholic Church, that where the
represent the class and the subject matter of general or common interests of the plaintiffs and the other members of the class they seek to
interest.” represent are diametrically opposed, the class suit will not prosper.

Here, the petition failed to state the number of NPO employees who would It is worth mentioning that a Manifestation of Desistance,9 to which the
be affected by the assailed Executive Order and who were allegedly previously mentioned Affidavit of Desistance10 was attached, was filed by
represented by petitioners. It was the Solicitor General, as counsel for the President of the National Printing Office Workers Association
respondents, who pointed out that there were about 549 employees in the (NAPOWA). The said manifestation expressed NAPOWA’s opposition to
NPO.4 the filing of the instant petition in any court.

The 67 petitioners undeniably comprised a small fraction of the NPO Even if we take into account the contention of petitioners’ counsel that the
employees whom they claimed to represent. Subsequently, 32 of the original NAPOWA President had no legal standing to file such manifestation, the said
petitioners executed an Affidavit of Desistance, while one signed a letter pleading is a clear indication that there is a divergence of opinions and views
denying ever signing the petition,5 ostensibly reducing the number of among the members of the class sought to be represented, and not all are in
petitioners to 34. favor of filing the present suit. There is here an apparent conflict between
petitioners’ interests and those of the persons whom they claim to represent.
We note that counsel for the petitioners challenged the validity of the Since it cannot be said that petitioners sufficiently represent the interests of
desistance or withdrawal of some of the petitioners and insinuated that such the entire class, the instant case cannot be properly treated as a class suit.
desistance was due to pressure from people “close to the seat of power.” Still,
even if we were to disregard the affidavit of desistance filed by some of the WHEREFORE, the petition is hereby DISMISSED and the prayer for a
petitioners, it is highly doubtful that a sufficient, representative number of Temporary Restraining Order and/or a Writ of Preliminary Injunction is
NPO employees have instituted this purported class suit. A perusal of the hereby DENIED. No costs.
petition itself would show that of the 67 petitioners who signed the SO ORDERED.
Verification/Certification of Non-Forum Shopping, only 20 petitioners were
in fact mentioned in the jurat as having duly subscribed the petition before
the notary public. In other words, only 20 petitioners effectively instituted the
present case.

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11. Napere v. Barbarona (2008) Petitioner appealed the case to the Court of Appeals (CA), arguing, inter alia,
that the judgment of the trial court was void for lack of jurisdiction over the
Facts: heirs who were not ordered substituted as party- defendants for the deceased.
Respondent Amando Barbarona is the registered owner of Lot No. 3177,
situated in Barangay San Sotero (formerly Tambis), Javier, Leyte and CA affirmed RTC. The appellate court held that failure to substitute the heirs
covered by Original Certificate of Title (OCT) No. P-7350. for the deceased defendant will not invalidate the proceedings and the
judgment in a case which survives the death of such party.
Lot No. 3176, covered by OCT No. 1110 in the name of Anacleto Napere,
adjoins said lot on the northeastern side. After Anacleto died, his son, Juan Hence this petition.
Napere, and the latter’s wife, herein petitioner, planted coconut trees on
certain portions of the property with the consent of his coheirs. 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
In their complaint for recovery of possession, quieting of title and to Section 17, Rule 3 of the Rule of Court; hence, the proceedings conducted
damages, respondents alleged that in April 1980, the spouses Napere, their and the decision rendered by the trial court are null and void.
relatives and hired laborers, by means of stealth and strategy, encroached
upon and occupied the northeastern portion of Lot No. 3177; that the Naperes Issue:
harvested the coconut fruits thereon, appropriated the proceeds thereof, and, W/N the proceedings before the RTC are void for lack of jurisdiction over
despite demands, refused to turn over possession of the area; that in April the heirs of Napere for failure to order the substitution of the petitioner heirs
1992, a relocation survey was conducted which confirmed that the – No.
respondents’ property was encroached upon by the Naperes; that on the basis
of the relocation survey, the respondents took possession of this encroached Held:
portion of the lot and harvested the fruits thereon from April 1993 to No.
December 1993; but that in January 1994, the Naperes repeated their acts by
encroaching again on the respondents’ property, harvesting the coconuts and The petition must fail.
appropriating the proceeds thereof, and refusing to vacate the property on
demand. When a party to a pending case dies and the claim is not extinguished by such
death, the Rules require the substitution of the deceased party by his legal
On November 10, 1995, while the case was pending, Juan Napere died. representative or heirs. In such case, counsel is obliged to inform the court of
Their counsel informed the court of Juan Napere’s death, and submitted the death of his client and give the name and address of the latter’s legal
the names and addresses of Napere’s heirs. representative.

At the pre-trial, the RTC noted that the Naperes were not contesting the The complaint for recovery of possession, quieting of title and damages is an
respondents’ right of possession over the disputed portion of the property but action that survives the death of the defendant. Notably, the counsel of Juan
were demanding the rights of a planter in good faith under Articles 445 and Napere complied with his duty to inform the court of his client’s death and
455 of the Civil Code. the names and addresses of the heirs. The trial court, however, failed to order
the substitution of the heirs. Nonetheless, despite this oversight, we hold that
RTC ruled against the estate of Juan Napere. the proceedings conducted and the judgment rendered by the trial court are
valid.

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The Court has repeatedly declared that failure of the counsel to comply with The alleged denial of due process as would nullify the proceedings and the
his duty to inform the court of the death of his client, such that no substitution judgment thereon can be invoked only by the heirs whose rights have been
is effected, will not invalidate the proceedings and the judgment rendered violated. Violation of due process is a personal defense that can only be
thereon if the action survives the death of such party. asserted by the persons whose rights have been allegedly violated. Petitioner,
who had every opportunity and who took advantage of such opportunity,
The trial court’s jurisdiction over the case subsists despite the death of the through counsel, to participate in the trial court proceedings, cannot claim
party. Mere failure to substitute a deceased party is not sufficient ground to denial of due process.
nullify a trial court’s decision. The party alleging nullity must prove that
there was an undeniable violation of due process. WHEREFORE, premises considered, the petition is DENIED DUE
COURSE. The Decision of the Court of Appeals, dated October 9, 2003, in
Strictly speaking, the rule on substitution by heirs is not a matter of CA-G.R. CV No. 56457, is AFFIRMED.
jurisdiction, but a requirement of due process. The rule on substitution was SO ORDERED.
crafted to protect every party’s right to due process. 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.
Moreover, non-compliance with the Rules results in the denial of the right to
due process for the heirs who, though not duly notified of the proceedings,
would be substantially affected by the decision rendered therein. Thus, it is
only when there is a denial of due process, 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.

Formal substitution by heirs is not necessary when they themselves


voluntarily appear, participate in the case, and present evidence in defense of
the deceased. In such case, there is really no violation of the right to due
process. The essence of due process is the reasonable opportunity to be heard
and to submit any evidence available in support of one’s defense. When due
process is not violated, as when the right of the representative or heir is
recognized and protected, noncompliance or belated formal compliance with
the Rules cannot affect the validity of a promulgated decision.

In light of these pronouncements, we cannot nullify the proceedings before


the trial court and the judgment rendered therein because the petitioner, who
was, in fact, a codefendant of the deceased, actively participated in the case.

The records show that the counsel of Juan Napere and petitioner continued to
represent them even after Juan’s death. Hence, through counsel, petitioner
was able to adequately defend herself and the deceased in the proceedings
below. Due process simply demands an opportunity to be heard and this
opportunity was not denied petitioner.

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12. Sumaljag v. Spouses Literato (2008) Menendez prayed, among others, that this lease contract between Josefa and
the petitioner be declared null and void.
Facts:
On November 16, 1993, Josefa D. Maglasang (“Josefa”) filed with the Josefa died on May 3, 1999 during the pendency of Civil Case Nos. B-
Regional Trial Court (“RTC”), Branch 14, Baybay, Leyte a complaint3 1239 and B-1281.
(docketed as Civil Case No. B-1239) for the nullity of the deed of sale of
real property purportedly executed between her as vendor and the spouses On August 13, 1999, Atty. Zenen A. Puray (“Atty. Puray”)—the petitioner’s
Diosdidit and Menendez Literato (the “respondent spouses”) as vendees. and Josefa’s common counsel—asked the RTC in Civil Case No. 1239 that
he be given an extended period or up to September 10, 1999 within which to
The complaint alleged that this deed of sale dated October 15, 1971 of Lot file a formal notice of death and substitution of party.
1220-D is spurious. Josefa was the sister of Menendez Maglasang Literato
(“Menendez”). They were two (2) of the six (6) heirs who inherited equal The RTC granted the motion in an order dated August 13, 1999.7 On August
parts of a 6.3906-hectare property (Lot 1220) passed on to them by their 26, 1999, Atty. Puray filed with the RTC a notice of death and
parents Cristito and Inecita Diano Maglasang.4 Lot 1220-D was partitioned substitution of party,8 praying that Josefa—in his capacity as plaintiff
to Josefa, while Lot 1220-E was given to Menendez. and third party counterclaim defendant—be substituted by the
petitioner Judge Sumaljag. The submission alleged that prior to Josefa’s
The respondent spouses’ response to the complaint was an amended answer death, she executed a Quitclaim Deed9 over Lot 1220-D in favor of
with counterclaim5 denying that the deed of sale was falsified. They Remismundo D. Maglasang10 who in turn sold this property to the petitioner.
impleaded the petitioner with Josefa as counterclaim defendant on the
allegation that the petitioner, at the instance of Josefa, occupied Lot 1220-D Menendez, through counsel, objected to the proposed substitution, alleging
and Lot 1220-E without their (the respondent spouses’) authority; Lot 1220- that Atty. Puray filed the notice of death and substitution of party beyond the
E is theirs by inheritance while 1220-D had been sold to them by Josefa. They thirty-day period provided under Section 16, Rule 3 of the 1997 Rules of Civil
also alleged that the petitioner acted in bad faith in acquiring the two (2) lots Procedure, as amended. She recommended instead that Josefa be substituted
because he prepared and notarized on September 26, 1986 the contract of by the latter’ s full-blood sister, Michaeles Rodrigo (“Michaeles”).
lease over the whole of Lot 1220 between all the Maglasang heirs (but
excluding Josefa) and Vicente Tolo, with the lease running from 1986 to RTC denied the motion for substitution. MR denied.
1991; thus, the petitioner then knew that Josefa no longer owned Lot 1220-
D. CA on R65 affirmed. MR denied.

Civil Case No. 12816 is a complaint that Menendez filed on April 4, 1996 Hence this petition claiming, among others, that petitioner should be
with the RTC for the declaration of the inexistence of lease contract, substituted because he is a transferee pendente lite under R3, §20.
recovery of possession of land, and damages against the petitioner and
Josefa after the RTC dismissed the respondent spouses’ counterclaim in Civil Issue:
Case No. 1239. W/N the lower courts erred in denying the substitution of petitioner – No,
they did not err.
The complaint alleged that Josefa, who had previously sold Lot 1220-D to
Menendez, leased it, together with Lot 1220-E, to the petitioner. Menendez Held:
further averred that the petitioner and Josefa were in bad faith in entering their No, they did not err.
contract of lease as they both knew that Josefa did not own the leased lots.

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The rule on substitution in case of death of a party is governed by Section 16, b. Duty of Counsel under the Rule.
Rule 3 of the 1997 Rules of Civil Procedure, as amended, which provides: The duty of counsel under the aforecited provision is to inform the court
“Section 16. Death of a party; duty of counsel.—Whenever a party to a within thirty (30) days after the death of his client of the fact of death, and to
pending action dies, and the claim is not thereby extinguished, it shall be the give the name and address of the deceased’s legal representative or
duty of his counsel to inform the court within thirty (30) days after such death representatives. Incidentally, this is the only representation that counsel can
of the fact thereof, and to give the name and address of his legal representative undertake after the death of a client as the fact of death terminated any further
or representatives. Failure of counsel to comply with this duty shall be a lawyer-client relationship.17
ground for disciplinary action. The heirs of the deceased may be allowed
to be substituted for the deceased, without requiring the appointment of In the present case, it is undisputed that the counsel for Josefa did in fact
an executor or administrator and the court may appoint a guardian ad litem notify the lower court, although belatedly, of the fact of her death.18
for the minor heirs.” However, he did as well inform the lower court that before she died she
executed a QUITCLAIM DEED in favor of REMISMUNDO D.
The purpose behind this rule is the protection of the right to due process of MAGLASANG over the land in question who in turn sold it in favor of
every party to the litigation who may be affected by the intervening death. JUDGE ANTONIO SUMALJAG, evidenced by a DEED OF ABSOLUTE
The deceased litigant is herself or himself protected as he/she continues to be SALE. Further, counsel asked that “the deceased Josefa Maglasang in her
properly represented in the suit through the duly appointed legal capacity as plaintiff and as Third Party Counterclaim Defendant be
representative of his estate. substituted in the case at bar by JUDGE ANTONIO SUMALJAG whose
address is 38 Osmeña Street, Ormoc City pursuant to Section 16, Rule 3 of
Application of the Governing Rule. the Rules of Court.”
a. Survival of the pending action
This notification, although filed late, effectively informed the lower court of
A question preliminary to the application of the above provision is whether the death of litigant Josefa Maglasang so as to free her counsel of any liability
Civil Case Nos. B-1239 and B-1281 are actions that survive the death of for failure to make a report of death under Section 16, Rule 3 of the Rules of
Josefa. Court. In our view, counsel satisfactorily explained to the lower court the
circumstances of the late reporting, and the latter in fact granted counsel an
We said in Gonzalez v. Pagcor, 429 SCRA 533 (2004): “The criteria for extended period. The timeliness of the report is therefore a non-issue.
determining whether an action survives the death of a plaintiff or petitioner
was elucidated upon in Bonilla v. Barcena, 71 SCRA 491 (1976), as follows: The reporting issue that goes into the core of this case is whether counsel
. . . The question as to whether an action survives or not depends on the nature properly gave the court the name and address of the legal representative of
of the action and the damage sued for. In the causes of action which survive, the deceased that Section 16, Rule 3 specifies.
the wrong complained [of] affects primarily and principally property
and property rights, the injuries to the person being merely incidental, We rule that he did not.
while in the causes of action which do not survive, the injury complained
of is to the person, the property and rights of property affected being The “legal representatives” that the provision speaks of, refer to those
incidental. . . .” authorized by law—the administrator, executor or guardian who, under the
rule on settlement of estate of deceased persons, is constituted to take over
Since the questions involved in these cases relate to property and property the estate of the deceased.
rights, then we are dealing with actions that survive so that Section 16, Rule
3 must necessarily apply.

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Section 16, Rule 3 likewise expressly provides that “the heirs of the deceased c. The Heirs as Legal Representatives.
may be allowed to be substituted for the deceased, without requiring the The CA correctly harked back to the plain terms of Section 16, Rule 3 in
appointment of an executor or administrator . . . .” determining who the appropriate legal representative/s should be in the
absence of an executor or administrator. The second paragraph of the Section
Significantly, the person—now the present petitioner—that counsel gave as 16, Rule 3 of the 1997 Rules of Court, as amended, is clear—the heirs of the
substitute was not one of those mentioned under Section 16, Rule 3. Rather, deceased may be allowed to be substituted for the deceased, without requiring
he is a counterclaim co-defendant of the deceased whose proferred the appointment of an executor or administrator.
justification for the requested substitution is the transfer to him of the interests
of the deceased in the litigation prior to her death. We likewise said in Gochan v. Young, 354 SCRA 207 (2001): For the
protection of the interests of the decedent, this Court has in previous instances
Under the circumstances, both the lower court and the CA were legally recognized the heirs as proper representatives of the decedent, even when
correct in not giving effect to counsel’s suggested substitute. there is already an administrator appointed by the court. When no
administrator has been appointed, as in this case, there is all the more reason
First, the petitioner is not one of those allowed by the Rules to be a substitute. to recognize the heirs as the proper representatives of the deceased.
Section 16, Rule 3 speaks for itself in this respect.
Josefa’s death certificate shows that she was single at the time of her death.
Second, as already mentioned above, the reason for the Rule is to protect all The records do not show that she left a will. Therefore, as correctly held by
concerned who may be affected by the intervening death, particularly the the CA, in applying Section 16, Rule 3, her heirs are her surviving sisters
deceased and her estate. We note in this respect that the Notice that counsel (Michaelis, Maria, Zosima, and Consolacion) and the children of her
filed in fact reflects a claim against the interest of the deceased though the deceased sister, Lourdes (Manuel, Cesar, Huros and Regulo) who should be
transfer of her remaining interest in the litigation to another party. her legal representatives. Menendez, although also a sister, should be
excluded for being one of the adverse parties in the cases before the RTC.
Third, counsel has every authority to manifest to the court changes in interest
that transpire in the course of litigation. Thus, counsel could have validly WHEREFORE, premises considered, we DENY the petition for lack of merit.
manifested to the court the transfer of Josefa’s interests in the subject matter We AFFIRM the Court of Appeals decision that the surviving heirs of the
of litigation pursuant to Section 19, Rule 3.5 But this can happen only while deceased Josefa—namely Michaelis M. Rodrigo; Maria M. Cecilio; Zosima
the client- transferor was alive and while the manifesting counsel was still D. Maglasang; Consolacion M. Bag-aw; and the children of Lourdes M.
the effective and authorized counsel for the client-transferor, not after the Lumapas, namely Manuel Lumapas, Cesar Lumapas, Huros Lumapas and
death of the client when the lawyer-client relationship has terminated. Regulo Maquilan— should be her substitutes and are hereby so ordered to be
substituted for her in Civil Case Nos. B-1239 and B-1281.
The fact that the alleged transfer may have actually taken place is immaterial Costs against the petitioner. SO ORDERED.
to this conclusion, if only for the reason that it is not for counsel, after the
death of his client, to make such manifestation because he then has lost the
authority to speak for and bind his client. Thus, at most, the petitioner can be
said to be a transferee pendente lite whose status is pending with the lower
court.

5. Section 19. Transfer of interest.—In case of any transfer of interest, the action may
be continued by or against the original party, unless the court upon motion directs the
person to whom the interest is transferred to be substituted in the action or joined with
the original party.

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13. Memoracion Cruz v. Oswaldo Z. Cruz, G.R. No. 173292, September Issue:
01, 2010 W/N the lower courts erred in holding that the action was personal action that
did not survive a party’s death – Yes, they erred.
Facts:
Memoracion Z. Cruz filed with the Regional Trial Court in Manila a Held:
Complaint against her son, defendant-appellee Oswaldo Z. Cruz, for Yes, they erred.
“Annulment of Sale, Reconveyance and Damages.”
The criterion for determining whether an action survives the death of a
Memoracion claimed that during her union with her common-law husband petitioner was elucidated in Bonilla v. Barcena, 71 SCRA 491 (1976), to wit:
(deceased) Architect Guido M. Cruz, she acquired a parcel of land located at “The question as to whether an action survives or not depends on the nature
Tabora corner Limay Streets, Bo. Obrero, Tondo Manila; that the said lot was of the action and the damage sued for. In the causes of action which survive,
registered in her name under TCT No. 63467 at the Register of Deeds of the wrong complained [of] affects primarily and principally property and
Manila; that sometime in July 1992, she discovered that the title to the said property rights, the injuries to the person being merely incidental, while in
property was transferred by appellee and the latter’s wife in their names in the causes of action which do not survive, the injury complained of is to the
August 1991 under TCT No. 0-199377 by virtue of a Deed of Sale dated person, the property and rights of property affected being incidental.”
February 12, 1973; that the said deed was executed through fraud, forgery,
misrepresentation and simulation, hence, null and void… If the case affects primarily and principally property and property rights, then
it survives the death of the plaintiff or petitioner. In Sumaljag v. Literato, 555
After Memoracion x x x finished presenting her evidence in chief, she died SCRA 53 (2008), we held that a Petition for Declaration of Nullity of Deed
on October 30, 1996. Through a Manifestation, Memoracion’s counsel, Atty. of Sale of Real Property is one relating to property and property rights, and
Roberto T. Neri, notified the trial court on January 13, 1997 of the fact of therefore, survives the death of the petitioner. Accordingly, the instant case
such death, evidenced by a certificate thereof. for annulment of sale of real property merits survival despite the death of
petitioner Memoracion Z. Cruz.
For his part, appellee filed a Motion to Dismiss on the grounds that (1) the
plaintiff’s reconveyance action is a personal action which does not The CA erred in affirming RTC’s dismissal of the Petition for Annulment
survive a party’s death, pursuant to Section 21, Rule 3 of the Revised Rules of Deed of Sale, Reconveyance and Damages
of Court, and (2) to allow the case to continue would result in legal absurdity
whereby one heir is representing the defendant [and is a] co- plaintiff in this When a party dies during the pendency of a case, Section 16, Rule 3 of the
case. 1997 Revised Rules of Civil Procedure necessarily applies, viz.:
“Sec. 16. Death of party; duty of counsel.—Whenever a party to a pending
RTC granted the MTD and dismissed the case without prejudice. action dies, and the claim is not thereby extinguished, it shall be the duty of
his counsel to inform the court within thirty (30) days after such death of the
On October 17, 1997, Memoracion’s son-heir, Edgardo Z. Cruz, manifested fact thereof, and to give the name and address of his legal representative or
to the trial court that he is retaining the services of Atty. Neri for the plaintiff. representatives. Failure of counsel to comply with this duty shall be a ground
MR with RTC denied. for disciplinary action.

On appeal, CA affirmed. MR denied. The heirs of the deceased may be allowed to be substituted for the deceased,
without requiring the appointment of an executor or administrator and the
Hence this appeal. court may appoint a guardian ad litem for the minor heirs.

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The court shall forthwith order said legal representative or representatives to What the RTC could have done was to require Edgardo Cruz to appear in
appear and be substituted within a period of thirty (30) days from notice. court and substitute Memoracion as party to the pending case, pursuant to
Section 16, Rule 3 of the 1997 Revised Rules of Civil Procedure, and
If no legal representative is named by the counsel for the deceased party, or established jurisprudence.
if the one so named shall fail to appear within the specified period, the court
may order the opposing party, within a specified time, to procure the We note that on 17 October 1997, Edgardo Cruz filed with the RTC a
appointment of an executor or administrator for the estate of the deceased and Manifestation, stating that he is retaining the services of Atty. Roberto T.
the latter shall immediately appear for and on behalf of the deceased. The Neri.
court charges in procuring such appointment, if defrayed by the opposing
party, may be recovered as costs.” Consistent with our ruling in Heirs of Haberer v. Court of Appeals,15 we
consider such Manifestation, signed by Memoracion’s heir, Edgardo Cruz,
If the action survives despite death of a party, it is the duty of the deceased’s and retaining Atty. Neri’s services as counsel, a formal substitution of
counsel to inform the court of such death, and to give the names and addresses deceased Memoracion by her heir, Edgardo Cruz. It also needs mention that
of the deceased’s legal representatives. The deceased may be substituted by Oswaldo Cruz, although also an heir of Memoracion, should be excluded as
his heirs in the pending action. a legal representative in the case for being an adverse party therein.16

If no legal representative is named by the counsel of the deceased, or the legal WHEREFORE, we GRANT the petition.
representative fails to appear within a specified period, it is the duty of the
court where the case is pending to order the opposing party to procure the
appointment of an executor or administrator for the estate of the deceased.
The reason for this rule is to protect all concerned who may be affected by
the intervening death, particularly the deceased and his estate.11

In the instant case, petitioner (plaintiff) Memoracion Z. Cruz died on 30


October 1996. Her counsel, Atty. Roberto T. Neri, notified the trial court of
such death on 13 January 1997, through a Manifestation, and stated that “The
legal representative of the deceased plaintiff is her son EDGARDO CRUZ
whose address is at No. 3231-E Tabora St., Bo. Obrero, Tondo, Manila.”

On 24 January 1997, respondent (defendant) Oswaldo Z. Cruz moved to


dismiss the case alleging that it did not survive Memoracion’s death. The
RTC granted the motion to dismiss in the assailed Order dated 2 June 1997.

We rule that it was error for the RTC to dismiss the case. As mentioned
earlier, the petition for annulment of deed of sale involves property and
property rights, and hence, survives the death of petitioner Memoracion.
The RTC was informed, albeit belatedly,13 of the death of Memoracion, and
was supplied with the name and address of her legal representative, Edgardo
Cruz.

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14. Heritage Park Management v. CIAC, G.R. No. 148133, October 8, Thereafter, on April 5, 2000, Heritage filed a petition dated April 4, 20004
2008 with the CA (CA case) for prohibition/injunction with prayer for
preliminary injunction and temporary restraining order (TRO) against
Facts: the CIAC and EDC.
The antecedent facts of the case are set forth in the Court’s decision in Public
Estates Authority v. Uy.3 In that case, the petitioner, Public Estates Authority Heritage alleged in the petition that the CIAC has no jurisdiction over the
(PEA), was designated by the Bases Conversion Development Authority to subject funds against which any award against PEA, a party-defendant in the
develop the first class memorial park known as the Heritage Park, located in CIAC case, would be enforced. Allegedly, Heritage has complete control,
Fort Bonifacio, Taguig, Metro Manila. custody, and authority over the Heritage Park Project funds and has never
submitted itself and the funds to the CIAC’s arbitral jurisdiction.
Relative thereto, PEA engaged the services of herein private respondent
Elpidio S. Uy, doing business under the name and style of EDC, under a CA granted the TRO to enjoin the CIAC from further proceedings.
Landscaping and Construction Agreement dated November 20, 1996
(Agreement). In the Agreement, EDC undertook to perform all landscaping Previously, however, the CIAC already finished the hearing of the case and
works on the 105-hectare Heritage Park, to be completed within 450 days, the same was already submitted for decision as of April 4, 2000 or one day
commencing within 14 days from EDC’s receipt from PEA of a written notice before the filing of the petition in CA-G.R. SP No. 58124 with the CA.
to proceed. Due to delays, the contract period was extended to 693 days. Thereafter, CIAC ruled on the main case for EDC.
Among the causes of delay was PEA’s inability to deliver to EDC 45 hectares
of the property landscaping due to the existence of squatters and a public CA affirmed CIAC on appeal. On appeal of the main case docketed as PEA
cemetery. v. Uy, the SC affirmed CA.

Thus, EDC instituted a Complaint dated January 12, 2000 with the CIAC Meanwhile, private respondent filed a comment before the CA in the CA
(CIAC case), docketed as CIAC Case No. 02-2000, seeking to collect from case.
PEA damages arising from its delay in the delivery of the entire property
for landscaping. CA issued a Certification, upon the request of private respondent, stating that
no Writ of Preliminary Injunction had been issued by the Court as of June 7,
EDC alleged that it incurred additional rental costs for equipment which were 2000 and that the TRO issued in a Resolution dated April 7, 2000 had already
kept on standby and labor costs for idle manpower. Likewise, the delay lapsed.
incurred by PEA caused the topsoil of the original supplier to be depleted,
thereby incurring added costs. EDC also claimed incurring additional costs Private respondent filed with the CIAC a Motion Ex Parte to Promulgate
to mobilize water trucks for the plants and trees which had already been Decision, arguing that the 60-day period of effectivity of the TRO had already
delivered at the site. Finally, EDC claimed that it was necessary to construct lapsed.
a nursery shade to protect and preserve the young plants and trees prior to
actual transplanting at the landscaped area. CIAC issued a Notice of Award.

Sometime in March 2000, PEA executed a Deed of Assignment in favor of It is against the foregoing factual backdrop that the CA issued the assailed
herein petitioner Heritage Park Management Corporation (Heritage), decision dated November 29, 2000, denying and accordingly dismissing the
whereby PEA assigned all its interests in the contracts with EDC to Heritage. petition. The CA reasoned that considering the petition prayed that the CIAC
be prohibited from further acting on the case and that the CIAC had rendered

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a Decision thereon, the petition had become moot and academic, there being In Jocson v. Court of Appeals, this Court held the Bank of the Philippine
nothing more to prohibit or enjoin. Islands is bound by the decision of the trial court being the transferee
pendente lite of the original defendant therein, despite the fact that it had not
Hence this petition claiming, among others, that petitioner Heritage is an been substituted for the original defendant and had not been notified of the
indispensable party to the proceedings before the CIAC as the assignee of proceedings against it. We ruled that:
PEA. Thus, its non-inclusion in the proceedings before the CIAC deprived
the latter of jurisdiction over the case. “We hold that the respondent court erred when it declared that the
decision of the trial court was not binding on BPI because it had not been
Issue: substituted for the original defendant and had not been notified of the
W/N Heritage is an indispensable party to the CIAC case – No. (issue of proceedings against them.
violation of TRO omitted)
This Court has declared in a number of decisions that a transferee pendente
Held: lite stands in exactly the same position as its predecessor-in-interest, the
No. original defendant, and is bound by the proceedings had in the case before
the property was transferred to it.
Such contention is bereft of merit.
It is a proper but not an indispensable party as it would in any event be
It must be remembered that when the case was originally filed by EDC before bound by the judgment against his predecessor. This would follow even
the CIAC on January 12, 2000, PEA had not yet transferred its rights and if it is not formally included as a defendant through an amendment of
obligations over the Project to Heritage, as evidenced by the Deed of the complaint.”
Assignment dated March 2000. Thus, by impleading PEA as respondent, the
CIAC had jurisdiction over the case at that time. Verily, the non-inclusion of Heritage in the proceedings before the CIAC is
of no moment as the Rules of Court specifically allows the proceedings to
Heritage, however, claims that when PEA transferred its rights and proceed with the original parties while binding the transferee.
obligations over the Project to Heritage, the CIAC lost its jurisdiction. In
other words, Heritage alleges that a court may lose jurisdiction over a case WHEREFORE, the instant petition is hereby DENIED on the ground that it
based on the subsequent actions of the parties. has become moot.
Costs against petitioner. SO ORDERED.
This is unacceptable. The settled rule is that jurisdiction once acquired is not
lost upon the instance of the parties but continues until the case is terminated.
Certainly, it would be the height of injustice to allow parties that disagree
with the decision of a judicial tribunal to annul the same through the
expedient of transferring their interests or rights involved in the case.

Moreover, Heritage is mistaken when it claims that it is an indispensable


party to the case and that it was not included in the case before the CIAC.
Being a transferee of the interests of PEA over the Project during the
pendency of the case before the CIAC, it is bound by the proceedings in like
manner as PEA.

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15. William Genato v. Benjamin Bayhon, G.R. No. 171035, August 24, While the appeal was pending with the CA, respondent Benjamin
2009 Bayhon died.

Facts: CA reversed the RTC. The Court of Appeals held among others that while
the principal obligation is valid, the death of respondent Benjamin Bayhon
Civil Case No. Q-90-7012 extinguished it. 21 The heirs could not be ordered to pay the debts left by the
deceased.22 Based on the foregoing, the Court of Appeals dismissed
On October 18, 1990, respondents Benjamin M. Bayhon, Melanie Bayhon, petitioner’ s appeal.
Benjamin Bayhon Jr., Brenda Bayhon, Alina Bayhon-Campos, Irene
Bayhon-Tolosa and the minor Gino Bayhon, as represented by his mother Issue:
Jesusita M. Bayhon, filed an action before the RTC, Quezon City, Branch W/N the death of respondent extinguished his obligation – No.
76, docketed as Civil Case No. Q-90-7012. In their Complaint, respondents
sought the declaration of nullity of a dacion en pago allegedly executed by Held:
respondent Benjamin Bayhon in favor of petitioner William Ong Genato.2 No.

Respondent Benjamin Bayhon alleged that on July 3, 1989, he obtained from We now go to the ruling of the appellate court extinguishing the obligation
the petitioner a loan amounting to PhP 1,000,000.00;3 that to cover the loan, of respondent. As a general rule, obligations derived from a contract are
he executed a Deed of Real Estate Mortgage over the property covered by transmissible. Article 1311, par.1 of the Civil Code provides:
Transfer Certificate of Title (TCT) No. 38052; that, however, the execution “Contracts take effect only between the parties, their assigns and heirs, except
of the Deed of Real Estate Mortgage was conditioned upon the personal in case where the rights and obligations arising from the contract are not
assurance of the petitioner that the said instrument is only a private transmissible by their nature, or by stipulation or by provision of law. The
memorandum of indebtedness and that it would neither be notarized nor heir is not liable beyond the value of the property he received from the
enforced according to its tenor.4 decedent.”

Civil Case No. Q-90-7551 The Court proceeded further to state the general rule:
“Under our law, therefore, the general rule is that a party’s contractual
On December 20, 1990, petitioner William Ong Genato filed Civil Case No. rights and obligations are transmissible to the successors. The rule is a
Q-90-7551, an action for specific performance, before the RTC, Quezon consequence of the progressive “depersonalization” of patrimonial rights and
City, Branch 79. In his Complaint, petitioner alleged that respondent obtained duties that, as observed by Victorio Polacco, has characterized the history of
a loan from him in the amount of PhP 1,000,000.00. Petitioner alleged further these institutions. From the Roman concept of a relation from person to
that respondent failed to pay the loan and executed on October 21, 1989 a person, the obligation has evolved into a relation from patrimony to
dacion en pago in favor of the petitioner. The dacion en pago was inscribed patrimony, with the persons occupying only a representative position, barring
and recorded with the Registry of Deeds of Quezon City.11 those rare cases where the obligation is strictly personal, i.e., is contracted
intuitu personae, in consideration of its performance by a specific person and
Decision by no other. The transition is marked by the disappearance of the
imprisonment for debt.”
RTC consolidated the two cases and ruled for petitioner and ordered
respondent Benjamin Bayhon to pay petitioner. The loan in this case was contracted by respondent. He died while the case
was pending before the Court of Appeals. While he may no longer be
compelled to pay the loan, the debt subsists against his estate. No property or

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portion of the inheritance may be transmitted to his heirs unless the debt has
first been satisfied. Notably, throughout the appellate stage of this case, the
estate has been amply represented by the heirs of the deceased, who are also
his co-parties in Civil Case No. Q-90-7012.

The procedure in vindicating monetary claims involving a defendant who


dies before final judgment is governed by Rule 3, Section 20 of the Rules of
Civil Procedure, to wit:
“When the action is for recovery of money arising from contract, express or
implied, and the defendant dies before entry of final judgment in the court in
which the action was pending at the time of such death, it shall not be
dismissed but shall instead be allowed to continue until entry of final
judgment. A favorable judgment obtained by the plaintiff therein shall be
enforced in the manner especially provided in these Rules for prosecuting
claims against the estate of a deceased person.”

Pursuant to this provision, petitioner’s remedy lies in filing a claim against


the estate of the deceased respondent.

IN VIEW WHEREOF, the decision of the Court of Appeals dated September


16, 2005 is AFFIRMED with the MODIFICATION that the obligation to pay
the principal loan and interest contracted by the deceased Benjamin Bayhon
subsists against his estate and is computed at PhP 3,050,682.00.
No costs. SO ORDERED.

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16. Algura v. LGU of the City of Naga, G.R. No. 15013;5, October 30, claimed that petitioners’ second floor was used as their residence and as a
2006 boarding house, from which they earned more than PhP 3,000.00 a month. In
addition, it was claimed that petitioners derived additional income from their
Facts: computer shop patronized by students and from several boarders who paid
On September 1, 1999, spouses Antonio F. Algura and Lorencita S.J. Algura rentals to them. Hence, respondents concluded that petitioners were not
filed a Verified Complaint dated August 30, 1999 for damages against the indigent litigants.
Naga City Government and its officers, arising from the alleged illegal
demolition of their residence and boarding house and for payment of lost RTC issued an Order disqualifying petitioners as indigent litigants on the
income derived from fees paid by their boarders amounting to PhP 7,000.00 ground that they failed to substantiate their claim for exemption from
monthly. payment of legal fees and to comply with the third paragraph of Rule 141,
Section 18 of the Revised Rules of Court—directing them to pay the requisite
Simultaneously, petitioners filed an Ex Parte Motion to Litigate as filing fees.
Indigent Litigants, to which petitioner Antonio Algura’s Pay Slip No.
2457360 (Annex “A” of motion) was appended, showing a gross monthly Petitioners filed an MR.
income of Ten Thousand Four Hundred Seventy Four Pesos (PhP 10,474.00)
and a net pay of Three Thousand Six Hundred Sixteen Pesos and Ninety Nine On May 5, 2000, the trial court issued an Order giving petitioners the
Centavos (PhP 3,616.99) for [the month of] July 1999. Also attached as opportunity to comply with the requisites laid down in Section 18, Rule 141,
Annex “B” to the motion was a July 14, 1999 Certification issued by the for them to qualify as indigent litigants.
Office of the City Assessor of Naga City, which stated that petitioners had no
property declared in their name for taxation purposes. On May 13, 2000, petitioners submitted their Compliance attaching the
affidavits of petitioner Lorencita Algura and Erlinda Bangate, to comply with
Finding that petitioners’ motion to litigate as indigent litigants was the requirements of then Rule 141, Section 18 of the Rules of Court and in
meritorious, Executive Judge Jose T. Atienza of the Naga City RTC, in the support of their claim to be declared as indigent litigants.
September 1, 1999 Order, granted petitioners’ plea for exemption from
filing fees. RTC denied the MR. Judge Barsaga ratiocinated that the pay slip of Antonio
F. Algura showed that the “GROSS INCOME or TOTAL EARNINGS of
Meanwhile, as a result of respondent Naga City Government’s demolition of plaintiff Algura [was] P10,474.00 which amount [was] over and above the
a portion of petitioners’ house, the Alguras allegedly lost a monthly income amount mentioned in the first paragraph of Rule 141, Section 18 for pauper
of PhP 7,000.00 from their boarders’ rentals. With the loss of the rentals, the litigants residing outside Metro Manila.” Said rule provides that the gross
meager income from Lorencita Algura’s sari-sari store and Antonio Algura’s income of the litigant should not exceed PhP 3,000.00 a month and shall not
small take home pay became insufficient for the expenses of the Algura own real estate with an assessed value of PhP 50,000.00. The trial court found
spouses and their six (6) children for their basic needs including food, bills, that, in Lorencita S.J. Algura’s May 13, 2000 Affidavit, nowhere was it stated
clothes, and schooling, among others. that she and her immediate family did not earn a gross income of PhP
3,000.00.
On March 13, 2000, respondents filed a Motion to Disqualify the Plaintiffs
for Non-Payment of Filing Fees dated March 10, 2000. They asserted that Hence this R41 in rel. to R45 petition directly with the SC raising a pure
in addition to the more than PhP 3,000.00 net income of petitioner Antonio question of law.
Algura, who is a member of the Philippine National Police, spouse Lorencita
Algura also had a mini- store and a computer shop on the ground floor of their
residence along Bayawas St., Sta. Cruz, Naga City. Also, respondents

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Issue: Certification of the Naga City assessor stating that petitioners do not have
W/N petitioners should be considered as pauper litigants – Remanded to property declared in their names for taxation.
determine whether they qualify as indigents under Rule 3, §21.
Undoubtedly, petitioners do not own real property as shown by the
Held: Certification of the Naga City assessor and so the property requirement is
Remanded to determine whether they qualify as indigents under Rule 3, §21. met. However with respect to the income requirement, it is clear that the gross
monthly income of PhP 10,474.00 of petitioner Antonio F. Algura and the
The petition is meritorious. PhP 3,000.00 income of Lorencita Algura when combined, were above the
PhP 1,500.00 monthly income threshold prescribed by then Rule 141, Section
I. 16 and therefore, the income requirement was not satisfied.
[History of provision on indigent litigants in R141 omitted]
The trial court was therefore correct in disqualifying petitioners Alguras as
It can be readily seen that the rule on pauper litigants was inserted in Rule indigent litigants although the court should have applied Rule 141, Section
141 without revoking or amending Section 21 of Rule 3, which provides for 16 which was in effect at the time of the filing of the application on September
the exemption of pauper litigants from payment of filing fees. Thus, on March 1, 1999. Even if Rule 141, Section 18 (which superseded Rule 141, Section
1, 2000, there were two existing rules on pauper litigants; namely, Rule 3, 16 on March 1, 2000) were applied, still the application could not have been
Section 21 and Rule 141, Section 18. granted as the combined PhP 13,474.00 income of petitioners was beyond the
PhP 3,000.00 monthly income threshold.
It is undisputed that the Complaint (Civil Case No. 99-4403) was filed on
September 1, 1999. However, the Naga City RTC, in its April 14, 2000 and Unrelenting, petitioners however argue in their Motion for Reconsideration
July 17, 2000 Orders, incorrectly applied Rule 141, Section 18 on Legal Fees of the April 14, 2000 Order disqualifying them as indigent litigants that the
when the applicable rules at that time were Rule 3, Section 21 on Indigent rules have been relaxed by relying on Rule 3, Section 21 of the 1997 Rules
Party which took effect on July 1, 1997 and Rule 141, Section 16 on Pauper of Civil procedure which authorizes parties to litigate their action as indigents
Litigants which became effective on July 19, 1984 up to February 28, 2000. if the court is satisfied that the party is “one who has no money or property
sufficient and available for food, shelter and basic necessities for himself and
The old Section 16, Rule 141 requires applicants to file an ex parte motion to his family.” The trial court did not give credence to this view of petitioners
litigate as a pauper litigant by submitting an affidavit that they do not have a and simply applied Rule 141 but ignored Rule 3, Section 21 on Indigent Party.
gross income of PhP 2,000.00 a month or PhP 24,000.00 a year for those
residing in Metro Manila and PhP 1,500.00 a month or PhP 18,000.00 a year II.
for those residing outside Metro Manila or those who do not own real The position of petitioners on the need to use Rule 3, Section 21 on their
property with an assessed value of not more than PhP 24,000.00 or not more application to litigate as indigent litigants brings to the fore the issue on
than PhP 18,000.00 as the case may be. Thus, there are two requirements: whether a trial court has to apply both Rule 141, Section 16 and Rule 3,
a) income requirement—the applicants should not have a gross monthly Section 21 on such applications or should the court apply only Rule 141,
income of more than PhP 1,500.00, and Section 16 and discard Rule 3, Section 21 as having been superseded by Rule
b) property requirement——they should not own property with an assessed 141, Section 16 on Legal Fees.
value of not more than PhP 18,000.00.
The Court rules that Rule 3, Section 21 and Rule 141, Section 16 (later
In the case at bar, petitioners Alguras submitted the Affidavits of petitioner amended as Rule 141, Section 18 on March 1, 2000 and subsequently
Lorencita Algura and neighbor Erlinda Bangate, the pay slip of petitioner amended by Rule 141, Section 19 on August 16, 2003, which is now the
Antonio F. Algura showing a gross monthly income of PhP 10,474.00, and a present rule) are still valid and enforceable rules on indigent litigants.

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to determine if the applicant complies with the income and property standards
The history of the two seemingly conflicting rules readily reveals that it was prescribed in the present Section 19 of Rule 141—that is, the applicant’s
not the intent of the Court to consider the old Section 22 of Rule 3, which gross income and that of the applicant’s immediate family do not exceed an
took effect on January 1, 1994 to have been amended and superseded by Rule amount double the monthly minimum wage of an employee; and the applicant
141, Section 16, which took effect on July 19, 1984 through A.M. No. 83-6- does not own real property with a fair market value of more than Three
389-0. Hundred Thousand Pesos (PhP 300,000.00).

The fact that Section 22 which became Rule 3, Section 21 on indigent litigant If the trial court finds that the applicant meets the income and property
was retained in the rules of procedure, even elaborating on the meaning of an requirements, the authority to litigate as indigent litigant is automatically
indigent party, and was also strengthened by the addition of a third paragraph granted and the grant is a matter of right.
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 However, if the trial court finds that one or both requirements have not been
Rules of Civil Procedure. met, 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, shelter
Furthermore, Rule 141 on indigent litigants was amended twice: first on and basic necessities for himself and his family.”
March 1, 2000 and the second on August 16, 2004; and yet, despite these two
amendments, there was no attempt to delete Section 21 from said Rule 3. This In that hearing, the adverse party may adduce countervailing evidence to
clearly evinces the desire of the Court to maintain the two (2) rules on disprove the evidence presented by the applicant; after which the trial court
indigent litigants to cover applications to litigate as an indigent litigant. will rule on the application depending on the evidence adduced.

It may be argued that Rule 3, Section 21 has been impliedly repealed by the In addition, Section 21 of Rule 3 also provides that the adverse party may
recent 2000 and 2004 amendments to Rule 141 on legal fees. This position is later still contest the grant of such authority at any time before judgment is
bereft of merit. Implied repeals are frowned upon unless the intent of the rendered by the trial court, possibly based on newly discovered evidence not
framers of the rules is unequivocal. obtained at the time the application was heard.

Instead of declaring that Rule 3, Section 21 has been superseded and If the court determines after hearing, that the party declared as an indigent is
impliedly amended by Section 18 and later Section 19 of Rule 141, the Court in fact a person with sufficient income or property, the proper docket and
finds that the two rules can and should be harmonized. The Court opts to other lawful fees shall be assessed and collected by the clerk of court.
reconcile Rule 3, Section 21 and Rule 141, Section 19 because it is a settled
principle that when conflicts are seen between two provisions, all efforts must If payment is not made within the time fixed by the court, execution shall
be made to harmonize them. Hence, “every statute [or rule] must be so issue or the payment of prescribed fees shall be made, without prejudice to
construed and harmonized with other statutes [or rules] as to form a uniform such other sanctions as the court may impose.
system of jurisprudence.”
The Court concedes that Rule 141, Section 19 provides specific standards
Procedure to be followed while Rule 3, Section 21 does not clearly draw the limits of the entitlement
In light of the foregoing considerations, therefore, the two (2) rules can stand to the exemption. Knowing that the litigants may abuse the grant of authority,
together and are compatible with each other. the trial court must use sound discretion and scrutinize evidence strictly in
granting exemptions, aware that the applicant has not hurdled the precise
When an application to litigate as an indigent litigant is filed, the court shall standards under Rule 141. The trial court must also guard against abuse and
scrutinize the affidavits and supporting documents submitted by the applicant misuse of the privilege to litigate as an indigent litigant to prevent the filing

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of exorbitant claims which would otherwise be regulated by a legal fee
requirement.

Instead of disqualifying the Alguras as indigent litigants, the trial court should
have called a hearing as required by Rule 3, Section 21 to enable the
petitioners to adduce evidence to show that they didn’t have property and
money sufficient and available for food, shelter, and basic necessities for
them and their family. In that hearing, 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. Since this
Court is not a trier of facts, 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, Section 21.

Recapitulating the rules on indigent litigants, therefore, if the applicant for


exemption meets the salary and property requirements under Section 19 of
Rule 141, then the grant of the application is mandatory. On the other hand,
when the application does not satisfy one or both requirements, then the
application should not be denied outright; instead, 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.

WHEREFORE, the petition is GRANTED and the April 14, 2000 Order
granting the disqualification of petitioners, the July 17, 2000 Order denying
petitioners’ Motion for Reconsideration, and the September 11, 2001 Order
dismissing the case in Civil Case No. RTC-99-4403 before the Naga City
RTC, Branch 27 are ANNULLED and SET ASIDE. Furthermore, the Naga
City RTC is ordered to set the “Ex Parte Motion to Litigate as Indigent
Litigants” for hearing and apply Rule 3, Section 21 of the 1997 Rules of Civil
Procedure to determine whether petitioners can qualify as indigent litigants.
No costs. SO ORDERED.

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V. Venue (Rule 4) In response, Briones filed an opposition,19 asserting, inter alia, that he should
1. Briones v. CA, G.R. 204444, January 14, 2015 not be covered by the venue stipulation in the subject contracts as he was
never a party therein. He also reiterated that his signatures on the said
Facts: contracts were forgeries.
Petitioner Virgilio Briones filed a complaint before the RTC of Manila for
Nullity of Mortgage Contract, Promissory Note, Loan Agreement, RTC denied MTD holding that the parties must be afforded the right to be
Foreclosure of Mortgage, Cancellation of Transfer Certificate of Title (TCT) heard in view of the substance of Briones’ cause of action against Cash Asia
No. 290846, and Damages against Cash Asia. as stated in the complaint.22

He alleged, that he is the owner of a property covered by TCT No. 160689 CA reversed holding that the subject contracts clearly provide that actions
(subject property), and that, on July 15, 2010, his sister informed him that his arising therefrom should be exclusively filed before the courts of Makati City
property had been foreclosed and a writ of possession had already been issued only.28 As such, the CA concluded that Briones’ complaint should have been
in favor of Cash Asia.8 dismissed outright on the ground of improper venue,29 this, notwithstanding
Briones’ claim of forgery.
Upon investigation, Briones discovered that:
(a) on December 6, 2007, he purportedly executed a promissory note,9 loan Hence this R65.
agreement,10 and deed of real estate mortgage11 covering the subject
property (subject contracts) in favor of Cash Asia in order to obtain a loan in Issue:
the amount of P3,500,000.00 from the latter;12 and Where is the proper venue of the action? General rules on venue, therefore,
(b) since the said loan was left unpaid, Cash Asia proceeded to foreclose his the case should not have been dismissed.
property.13
Held:
In this relation, Briones claimed that he never contracted any loans from Cash General rules on venue, therefore, the case should not have been dismissed.
Asia as he has been living and working in Vietnam since October 31, 2007.
He further claimed that he only went back to the Philippines on December The petition is meritorious.
28, 2007 until January 3, 2008 to spend the holidays with his family, and that
during his brief stay in the Philippines, nobody informed him of any loan Based on the Rules of Court, the general rule is that the venue of real actions
agreement entered into with Cash Asia. Essentially, Briones assailed the is the court which has jurisdiction over the area wherein the real property
validity of the foregoing contracts claiming his signature to be forged.14 involved, or a portion thereof, is situated; while the venue of personal actions
is the court which has jurisdiction where the plaintiff or the defendant resides,
Respondent Cash Asia filed a MTD on the ground of improper venue. at the election of the plaintiff. As an exception, jurisprudence in Legaspi v.
Respondent pointed out the venue stipulation in the subject contracts stating Rep. of the Phils., 559 SCRA 410 (2008), instructs that the parties, thru a
that “all legal actions arising out of this notice in connection with the Real written instrument, may either introduce another venue where actions arising
Estate Mortgage subject hereof shall only be brought in or submitted to from such instrument may be filed, or restrict the filing of said actions in a
the jurisdiction of the proper court of Makati City.”17 certain exclusive venue, viz.:

In view thereof, it contended that all actions arising out of the subject “The parties, however, are not precluded from agreeing in writing on an
contracts may only be exclusively brought in the courts of Makati City, and exclusive venue, as qualified by Section 4 of the same rule. Written
as such, Briones’ complaint should be dismissed for having been filed in the stipulations as to venue may be restrictive in the sense that the suit may
City of Manila.18 be filed only in the place agreed upon, or merely permissive in that the

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parties may file their suit not only in the place agreed upon but also in
the places fixed by law. As in any other agreement, what is essential is the
ascertainment of the intention of the parties respecting the matter.

As regards restrictive stipulations on venue, jurisprudence instructs that


it must be shown that such stipulation is exclusive. In the absence of
qualifying or restrictive words, such as “exclusively,” “waiving for this
purpose any other venue,” “shall only” preceding the designation of venue,
“to the exclusion of the other courts,” or words of similar import, the
stipulation should be deemed as merely an agreement on an additional
forum, not as limiting venue to the specified place.”

In this relation, case law likewise provides that in cases where the complaint
assails only the terms, conditions, and/or coverage of a written instrument
and not its validity, the exclusive venue stipulation contained therein shall
still be binding on the parties, and thus, the complaint may be properly
dismissed on the ground of improper venue.35

Conversely, therefore, a complaint directly assailing the validity of the


written instrument itself should not be bound by the exclusive venue
stipulation contained therein and should be filed in accordance with the
general rules on venue. To be sure, it would be inherently consistent for a
complaint of this nature to recognize the exclusive venue stipulation when it,
in fact, precisely assails the validity of the instrument in which such
stipulation is contained.

In this case, the venue stipulation found in the subject contracts is indeed
restrictive in nature, considering that it effectively limits the venue of the
actions arising therefrom to the courts of Makati City. However, it must be
emphasized that Briones’ complaint directly assails the validity of the subject
contracts, claiming forgery in their execution. Given this circumstance,
Briones cannot be expected to comply with the aforesaid venue stipulation,
as his compliance therewith would mean an implicit recognition of their
validity. Hence, pursuant to the general rules on venue, Briones properly filed
his complaint before a court in the City of Manila where the subject property
is located.

In conclusion, the CA patently erred and hence committed grave abuse of


discretion in dismissing Briones’ complaint on the ground of improper venue.

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2. San Miguel Corporation v. Monasterio, G.R. No. 151037, June 23, On November 19, 1998, SMC filed a Motion to Dismiss on the ground of
2005 improper venue.

Facts: SMC contended that respondent’s money claim for alleged unpaid cashiering
On August 1, 1993, petitioner SMC entered into an Exclusive Warehouse services arose from respondent’s function as warehouse contractor thus the
Agreement (hereafter EWA for brevity) with SMB Warehousing Services EWA should be followed and thus, the exclusive venue of courts of Makati
(SMB), represented by its manager, respondent Troy Francis L. Monasterio. or Pasig, Metro Manila is the proper venue as provided under paragraph 26(b)
SMB undertook to provide land, physical structures, equipment and of the Exclusive Warehouse Agreement. SMC cites in its favor Section 4(b)
personnel for storage, warehousing and related services such as, but not in relation to Section 2 of Rule 4 of the Rules of Court allowing agreement
limited to, segregation of empty bottles, stock handling, and receiving SMC of parties on exclusive venue of actions.
products for its route operations at Sorsogon, Sorsogon and Daet, Camarines
Norte. Respondent filed an Opposition contending that the cashiering service he
rendered for the petitioner was separate and distinct from the services under
The agreement likewise contained a stipulation on venue of actions, to wit: the EWA. Hence, the provision on venue in the EWA was not applicable to
“b. Should it be necessary that an action be brought in court to enforce the said services. Hence, respondent insists that in accordance with Section 2 of
terms of this Agreement or the duties or rights of the parties herein, it is Rule 4 of the Rules of Court the venue should be in Naga City, his place of
agreed that the proper court should be in the courts of Makati or Pasig, Metro residence.
Manila, to the exclusion of the other courts at the option of the COMPANY.”
RTC Naga denied the MTD holding that the services agreed upon in said
On November 3, 1998, respondent Monasterio, a resident of Naga City, filed contract is limited to warehousing services and the claim of plaintiff in his
a complaint for collection of sum of money before the RTC of Naga City. suit pertains to the cashiering services rendered to the defendant, a
relationship which was not documented, and is certainly a contract separate
In his Complaint, Monasterio claimed P900,600 for unpaid cashiering fees. and independent from the exclusive warehousing agreements.
He alleged that from September 1993 to September 1997 and May 1995 to
November 1997, aside from rendering service as warehouseman, he was While SMC’s MR was pending before the RTC, respondent filed an
given the additional task of cashiering in SMC’s Sorsogon and Camarines Amended Complaint deleting his claim for unpaid warehousing but
Norte sales offices for which he was promised a separate fee. He claims that increasing the exemplary damages from P500,000 to P1,500,000. MR denied.
of approximately 290 million pesos in cash and checks of the sales office and
the risks of pilferage, theft, robbery and hold-up, he had assumed what On a R65, the CA found respondent’s claim for cashiering services
amounted to approximately 35 million pesos per annum for Sorsogon, inseparable from his claim for warehousing services, thus, the venue
Sorsogon, and 60 million pesos for Daet, Camarines Norte. He also said that stipulated in the EWA is the proper venue. However, the Court of Appeals
he hired personnel for the job. Respondent added that it was only on noted that prior to the filing of SMC’s petition, respondent Monasterio filed
December 1, 1997, that petitioner SMC started paying him P11,400 per an amended complaint to which SMC filed an answer. Thus, the Court of
month for his cashiering services. Appeals dismissed San Miguel’s petition for certiorari, stating that the case
was already moot and academic.
Monasterio demanded P82,959.32 for warehousing fees, P11,400 for
cashiering fees for the month of September, 1998, as well as exemplary Hence this petition.
damages, and attorney’s fees in the amount of P500,000 and P300,000,
respectively. Issue:
W/N the venue stipulation applies to respondent’s action – No.

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contracting party will create unwarranted restrictions which the parties might
Held: find unintended or worse, arbitrary and oppressive.
No.
Moreover, since convenience is the raison d’’tre of the rules on venue, venue
On disputes relating to the enforcement of the rights and duties of the stipulation should be deemed merely permissive, and that interpretation
contracting parties, the venue stipulation in the EWA should be construed as should be adopted which most serves the parties’ convenience. Contrawise,
mandatory. Nothing therein being contrary to law, morals, good custom or the rules mandated by the Rules of Court should govern. Accordingly, since
public policy, this provision is binding upon the parties. The EWA stipulation the present case for the collection of sum of money filed by herein respondent
on venue is clear and unequivocal, thus it ought to be respected. is a personal action, we find no compelling reason why it could not be
instituted in the RTC of Naga City, the place where plaintiff resides.
However, 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, but concern Having settled the issue on venue, we need not belabor the issue of whether
services not enumerated in the EWA. Records show also that previously, SMC’s petition has become moot.
respondent received a separate consideration of P11,400 for the cashiering
service he rendered to SMC. Moreover, in the amended complaint, the WHEREFORE, it is hereby ruled that no reversible error was committed by
respondent’s cause of action was specifically limited to the collection of the the Regional Trial Court of Naga City, Branch 20, in denying petitioner’s
sum owing to him for his cashiering service in favor of SMC. He already motion to dismiss. Said RTC is the proper venue of the amended complaint
omitted petitioner’s non-payment of warehousing fees. for a sum of money filed by respondent against petitioner San Miguel
Corporation, in connection with his cashiering services. The case is hereby
As previously ruled, allegations in the complaint determines the cause of REMANDED to the RTC of Naga City, Branch 20, for further proceedings
action or the nature of the case. Thus, given the circumstances of this case on respondent’s amended complaint, without further delay.
now before us, we are constrained to hold that it would be erroneous to rule, Costs against petitioner. SO ORDERED.
as the CA did, that the collection suit of the respondent did not pertain solely
to the unpaid cashiering services but pertain likewise to the warehousing
services.

Exclusive venue stipulation embodied in a contract restricts or confines


parties thereto when the suit relates to breach of the said contract. But where
the exclusivity clause does not make it necessarily all encompassing, such
that even those not related to the enforcement of the contract should be
subject to the exclusive venue, the stipulation designating exclusive venues
should be strictly confined to the specific undertaking or agreement.

Otherwise, 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. 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. Thus, the restriction should be strictly
construed as relating solely to the agreement for which the exclusive venue
stipulation is embodied. Expanding the scope of such limitation on a

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3. URC v. Albert Lim, G.R. NO. 154338, October 05, 2007 mail, in violation of Section 11, Rule 14 of the 1997 Rules of Civil Procedure,
as amended.
Facts:
The present controversy stemmed from a contract of sale between Universal Hence this petition.
Robina Corporation, petitioner, and Albert Lim, respondent. Pursuant to the
contract, petitioner sold to respondent grocery products in the total amount of Issue:
P808,059.88. After tendering partial payments, respondent refused to settle W/N the RTC may dismiss motu proprio petitioner’s complaint on the ground
his obligation despite petitioner’s repeated demands. of improper venue – No.

Petitioner filed with the RTC of QC a complaint for sum of money. Held:
No.
RTC motu proprio dismissed the complaint without prejudice on the ground
of improper venue and lack of jurisdiction. The RTC held: Sec. 4. When Rule not applicable.—This Rule shall not apply— (a) In those
“The case is misplaced with respect to jurisdiction and venue. There is not cases where a specific rule or law provides otherwise; or
even a remote connection by the parties to Quezon City, where this Regional (b) Where the parties have validly agreed in writing before the filing of
Trial Court sits, the plaintiff corporation has principal office at Pasig City the action on the exclusive venue thereof.
and the defendant is, as provided in the complaint, from Laoag City.
Wherefore, premises considered, this case is hereby DISMISSED without In personal actions, the plaintiff may commence an action either in the place
prejudice for improper venue and for lack of jurisdiction.” of his or her residence or the place where the defendant resides. However, the
parties may agree to a specific venue which could be in a place where neither
Petitioner filed an MR and an amended complaint with the RTC alleging of them resides.
that the parties agreed that the proper venue for any dispute relative to the
transaction is Quezon City. Corollarily, Section 1, Rule 9 of the same Rules provides instances when the
trial court may motu proprio dismiss a claim, thus:
In an Order dated October 11, 1999, the trial court granted the motion and “Section 1. Defenses and objections not pleaded.—Defenses and objections
admitted petitioner’s amended complaint. not pleaded either in a motion to dismiss or in the answer are deemed waived.
However, when it appears from the pleadings or the evidence on record that
On December 6, 1999, summons was served upon respondent. For his failure the court has no jurisdiction over the subject matter, that there is another
to file an answer seasonably and upon motion of petitioner, the trial court action pending between the same parties for the same cause, or that the action
issued an Order dated September 12, 2000 declaring him in3 default and is barred by a prior judgment or by statute of limitations, the court shall
allowing petitioner to present its evidence ex parte. dismiss the claim.”

However, on April 17, 2001, the trial court, still unsure whether venue was Implicit from the above provision is that improper venue not impleaded in
properly laid, issued an Order directing petitioner to file a memorandum of the motion to dismiss or in the answer is deemed waived. Thus, a court may
authorities on whether it can file a complaint in Quezon City. Subsequently, not dismiss an action motu proprio on the ground of improper venue as it is
on May 11, 2001, the trial court again issued an Order dismissing the not one of the grounds wherein the court may dismiss an action motu proprio
complaint on the ground of improper venue. on the basis of the pleadings.

CA dismissed due to petitioner’s failure to attach thereto an explanation why


copies of the petition were not served by personal service but by registered

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In Rudolf Lietz Holdings, Inc. v. Registry of Deeds of Parañaque, the Court
likewise held that a trial court may not motu proprio dismiss a complaint on
the ground of improper venue, thus:
“Rule 9, Section 1 of the 1997 Rules of Civil Procedure states that defenses
and objections not pleaded either in a motion to dismiss or in the answer are
deemed waived. The court may only dismiss an action motu proprio in
case of lack of jurisdiction over the subject matter, litis pendentia, res
judicata and prescription. Therefore, the trial court in this case erred
when it dismissed the petition motu proprio. It should have waited for a
motion to dismiss or a responsive pleading from respondent, raising the
objection or affirmative defense of improper venue, before dismissing
the petition.”

In the instant case, respondent, despite proper service of summons, failed to


file an answer and was thus declared in default by the trial court. Verily,
having been declared in default, he lost his standing in court and his right to
adduce evidence and present his defense, including his right to question the
propriety of the venue of the action.

WHEREFORE, the Petition for Review is GRANTED. The assailed


Resolutions of the Court of Appeals in CA-G.R. SP No. 67368 are
REVERSED. The Regional Trial Court, Branch 227, Quezon City is ordered
to REINSTATE Civil Case No. Q-99-37791 and conduct an ex parte hearing
for the reception of petitioner’s evidence and dispose of the case with
dispatch.
SO ORDERED.

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4. Irene Marcos Araneta v. Court of Appeals, G.R. No. 154096, August (3) the complaint failed to state a cause of action, as there was no allegation
22, 2008 therein that plaintiff, as beneficiary of the purported trust, has accepted the
trust created in her favor.
Facts:
Sometime in 1968 and 1972, Ambassador Roberto S. Benedicto, now Upon Benedicto’s motion, both cases were consolidated.
deceased, and his business associates (Benedicto Group) organized Far East
Managers and Investors, Inc. (FEMII) and Universal Equity Corporation During the preliminary proceedings on their motions to dismiss, Benedicto
(UEC), respectively. and Francisca, by way of bolstering their contentions on improper venue,
presented the Joint Affidavit of Gilmia B. Valdez, Catalino A. Bactat, and
As petitioner Irene Marcos-Araneta would later allege, both corporations Conchita R. Rasco who all attested being employed as household staff at the
were organized pursuant to a contract or arrangement whereby Benedicto, as Marcos’ Mansion in Brgy. Lacub, Batac, Ilocos Norte and that Irene did not
trustor, placed in his name and in the name of his associates, as trustees, the maintain residence in said place as she in fact only visited the mansion
shares of stocks of FEMII and UEC with the obligation to hold those shares twice in 1999; that she did not vote in Batac in the 1998 national elections;
and their fruits in trust and for the benefit of Irene to the extent of 65% of and that she was staying at her husband’s house in Makati City.
such shares.
Against the aforesaid unrebutted joint affidavit, Irene presented her PhP5
Several years after, Irene, through her trustee-husband, Gregorio Ma. Araneta community tax certificate6 (CTC) issued on “11/07/99” in Curimao, Ilocos
III, demanded the reconveyance of said 65% stockholdings, but the Benedicto Norte to support her claimed residency in Batac, Ilocos Norte.
Group refused to oblige.
In the meantime, on May 15, 2000, Benedicto died and was substituted by his
Thus, Irene filed two complaints for conveyance of shares of stock, wife, Julita C. Benedicto, and Francisca.
accounting and receivership before RTC Ilocos Norte against the
Benedicto Group with prayer for TRO. RTC dismissed both complaints stating that these partly constituted “real
actions,” and that Irene did not actually reside in Ilocos Norte, and, therefore,
The first, docketed as Civil Case No. 3341-17, covered the UEC shares and venue was improperly laid.
named Benedicto, his daughter, and at least 20 other individuals as
defendants. The second, docketed as Civil Case No. 3342-17, sought the Pending resolution of her motion for reconsideration with the RTC, Irene
recovery to the extent of 65% of FEMII shares held by Benedicto and the filed on July 17, 2000 a Motion (to Admit Amended Complaint),9
other defendants named therein. attaching therewith a copy of the Amended Complaint10 dated July 14,
2000 in which the names of Daniel Rubio, Orlando G. Reslin, and Jose
Respondent Francisca Benedicto-Paulino,3 Benedicto’s daughter, filed a G. Reslin appeared as additional plaintiffs. As stated in the amended
Motion to Dismiss Civil Case No. 3341-17, followed later by an Amended complaint, the added plaintiffs, all from Ilocos Norte, were Irene’s new
Motion to Dismiss. trustees. Parenthetically, the amended complaint stated practically the same
cause of action but, as couched, sought the reconveyance of the FEMII shares
Benedicto, on the other hand, moved to dismiss4 Civil Case No. 3342-17, only.
adopting in toto the five (5) grounds raised by Francisca in her amended
motion to dismiss. Among these were: On October 9, 2000, RTC denied the MR but deferred action on her
(1) the cases involved an intra-corporate dispute over which the Securities motion to admit amended complaint and the opposition thereto. RTC ruled
and Exchange Commission, not the RTC, has jurisdiction; that:
(2) venue was improperly laid; and

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(1) Pursuant to Section 2, Rule 10 of the Rules of Court,13 Irene may opt to corresponding authorizing Affidavit17 executed by Julita in favor of
file, as a matter of right, an amended complaint. Francisca.
(2) The inclusion of additional plaintiffs, one of whom was a Batac, an Ilocos
Norte resident, in the amended complaint setting out the same cause of action CA reversed the RTC orders and dismissed the amended complaints.
cured the defect of improper venue.
(3) Secs. 2 and 3 of Rule 3 in relation to Sec. 2 of Rule 4 allow the filing of Hence this petition.
the amended complaint in question in the place of residence of any of Irene’s
co-plaintiffs. Issues:
W/N CA erred in:
Respondents filed an MTD against the amended complaint. RTC denied 1. allowing the submission of an affidavit by Julita as sufficient compliance
the MTD and ordered respondents to file their answer to the amended with the requirement on verification and certification of non-forum shopping
complaint. – No, there was substantial compliance.

In said order, the RTC stood pat on its holding on the rule on amendments of 2. ruling on the merits of the trust issue which involves factual and evidentiary
pleadings. And scoffing at the argument about there being no complaint to determination, processes not proper in a petition for certiorari under Rule 65
amend in the first place as of October 9, 2000 (when the RTC granted the of the Rules of Court - Yes, CA erred. Merits of the case cannot be resolved
motion to amend) as the original complaints were dismissed with finality on certiorari under R65.
earlier, i.e., on August 25, 2000 when the court denied Irene’s motion for
reconsideration of the June 29, 2000 order dismissing the original complaints, 3. ruling that the amended complaints in the lower court court should be
the court stated thusly: “there was actually no need to act on Irene’s motion dismissed because, at the time it was filed, there was no more original
to admit, it being her right as plaintiff to amend her complaints absent any complaint to amend – No, admission of the amended complaints was proper
responsive pleading thereto.” Pushing its point, the RTC added the
observation that the filing of the amended complaint on July 17, 2000 ipso 4. ruling that the respondents did not waive improper venue – No, CA
facto superseded the original complaints, the dismissal of which, per the June did not err. Respondent did not waive improper venue.
29, 2000 Order, had not yet become final at the time of the filing of the
amended complaint. 5. ruling that petitioner Irene was not a resident of Batac, Ilocos Norte
and that none of the principal parties are residents of Ilocos Norte – No,
Thereafter, respondents filed their Answer to the amended complaint. But on CA did not err. Irene was not a resident of Batac, Ilocos Norte, as she claimed.
the same day, they went to the CA via R65 questioning the following RTC Also, venue was improperly laid.
orders:
1. admitting the amended complaint
2. denying their MTD of the amended complaint and Held:
3. denying their MR of the second issuance
I.
Inasmuch as the verification portion of the joint petition and the certification
on non-forum shopping bore only Francisca’s signature, the CA required the Verification not Jurisdictional; May be Corrected
joint petitioners “to submit x x x either the written authority of Julita C.
Benedicto to Francisca B. Paulino authorizing the latter to represent her in Verification is, under the Rules, not a jurisdictional but merely a formal
these proceedings, or a supplemental verification and certification duly requirement which the court may motu proprio direct a party to comply with
signed by x x x Julita C. Benedicto.”16 Records show the submission of the or correct, as the case may be. As the Court articulated in Kimberly

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Independent Labor Union for Solidarity, Activism and Nationalism of facts; or when the issue does not call for an examination of the probative
(KILUSAN)-Organized Labor Associations in Line Industries and value of the evidence presented, the truth or falsehood of facts being admitted.
Agriculture (OLALIA) v. Court of Appeals, 528 SCRA 45 (2007): A question of fact obtains when the doubt or difference arises as to the truth
“[V]erification is a formal, not a jurisdictional requisite, as it is mainly or falsehood of facts or when the query invites the calibration of the whole
intended to secure an assurance that the allegations therein made are done in evidence considering mainly the credibility of the witnesses, the existence
good faith or are true and correct and not mere speculation. The Court may and relevancy of specific surrounding circumstances, as well as their relation
order the correction of the pleading, if not verified, or act on the unverified to each other and to the whole, and the probability of the situation.
pleading if the attending circumstances are such that a strict compliance with
the rule may be dispensed with in order that the ends of justice may be The CA overstepped its boundaries when, in disposing of private
served.” Given this consideration, the CA acted within its sound discretion in respondents’ petition for certiorari, it did not confine itself to determining
ordering the submission of proof of Francisca’s authority to sign on Julita’s whether or not lack of jurisdiction or grave abuse of discretion tainted the
behalf and represent her in the proceedings before the appellate court. issuance of the assailed RTC orders, but proceeded to pass on the factual issue
of the existence and enforceability of the asserted trust.
Signature by Any of the Principal Petitioners is Substantial Compliance
In the process, the CA virtually resolved petitioner Irene’s case for
Regarding the certificate of non-forum shopping, the general rule is that all reconveyance on its substantive merits even before evidence on the matter
the petitioners or plaintiffs in a case should sign it. However, as has been could be adduced. Civil Case Nos. 3341-17 and 3342-17 in fact have not even
ruled by the Court, the signature of any of the principal petitioners or principal reached the pre-trial stage. To stress, the nature of the trust allegedly
parties, as Francisca is in this case, would constitute a substantial compliance constituted in Irene’s favor and its enforceability, being evidentiary in nature,
with the rule on verification and certification of non-forum shopping. are best determined by the trial court. The original complaints and the
amended complaint certainly do not even clearly indicate whether the
It cannot be overemphasized that Francisca herself was a principal party in asserted trust is implied or express. To be sure, an express trust differs from
Civil Case No. 3341-17 before the RTC and in the certiorari proceedings the implied variety in terms of the manner of proving its existence. Surely,
before the CA. Besides being an heir of Benedicto, Francisca, with her the onus of factually determining whether the trust allegedly established in
mother, Julita, was substituted for Benedicto in the instant case after his favor of Irene, if one was indeed established, was implied or express properly
demise. And should there exist a commonality of interest among the parties, pertains, at the first instance, to the trial court and not to the appellate court
or where the parties filed the case as a “collective,” raising only one common in a special civil action for certiorari, as here.
cause of action or presenting a common defense, then the signature of one of
the petitioners or complainants, acting as representative, is sufficient In the absence of evidence to prove or disprove the constitution and
compliance. We said so in Cavile v. Heirs of Clarita Cavile, 400 SCRA 255 necessarily the existence of the trust agreement between Irene, on one hand,
(2003). Like Thomas Cavile, Sr. and the other petitioners in Cavile, Francisca and the Benedicto Group, on the other, the appellate court cannot intelligently
and Julita, as petitioners before the CA, had filed their petition as a collective, pass upon the issue of trust. A pronouncement on said issue of trust rooted on
sharing a common interest and having a common single defense to protect speculation and conjecture, if properly challenged, must be struck down. So
their rights over the shares of stocks in question. it must be here.

II. Merits of the Case cannot be Resolved on Certiorari under Rule 65 III. Admission of amended complaint was proper

Whether a determinative question is one of law or of fact depends on the We agree with petitioners and turn to the governing Sec. 2 of Rule 10 of the
nature of the dispute. A question of law exists when the doubt or controversy Rules of Court which provides:
concerns the correct application of law or jurisprudence to a certain given set

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SEC. 2. Amendments as a matter of right.—A party may amend his pleading In the case at bench, Benedicto and Francisca raised at the earliest time
once as a matter of right at any time before a responsive pleading is served or possible, meaning “within the time for but before filing the answer to the
in the case of a reply, at any time within ten (10) days after it is served. complaint,” the matter of improper venue. They would thereafter reiterate and
pursue their objection on venue, first, in their answer to the amended
As the aforequoted provision makes it abundantly clear that the plaintiff may complaints and then in their petition for certiorari before the CA. Any
amend his complaint once as a matter of right, i.e., without leave of court, suggestion, therefore, that Francisca and Benedicto or his substitutes
before any responsive pleading is filed or served. abandoned along the way improper venue as ground to defeat Irene’s claim
before the RTC has to be rejected.
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 V.
purposes of Sec. 2 of Rule 10.
RTC has no jurisdiction on the ground of improper venue
Assayed against the foregoing perspective, the RTC did not err in admitting
petitioners’ amended complaint, Julita and Francisca not having yet answered In a personal action, the plaintiff seeks the recovery of personal property, the
the original complaints when the amended complaint was filed. At that enforcement of a contract, or the recovery of damages. Real actions, on the
precise moment, Irene, by force of said Sec. 2 of Rule 10, had, as a matter of other hand, are those affecting title to or possession of real property, or
right, the option of amending her underlying reconveyance complaints. As interest therein. In accordance with the wordings of Sec. 1 of Rule 4, the
aptly observed by the RTC, Irene’s motion to admit amended complaint was venue of real actions shall be the proper court which has territorial jurisdiction
not even necessary. The Court notes though that the RTC has not offered an over the area wherein the real property involved, or a portion thereof, is
explanation why it saw fit to grant the motion to admit in the first place. 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
It may be argued that the original complaints had been dismissed through the principal defendants resides, or in the case of a non-resident defendant where
June 29, 2000 RTC order. It should be pointed out, however, that the finality he may be found, at the election of the plaintiff.
of such dismissal order had not set in when Irene filed the amended complaint
on July 17, 2000, she having meanwhile seasonably sought reconsideration In the instant case, petitioners are basically asking Benedicto and his Group,
thereof. Irene’ s motion for reconsideration was only resolved on August 25, as defendants a quo, to acknowledge holding in trust Irene’s purported 65%
2000. Thus, when Irene filed the amended complaint on July 17, 2000, the stockownership of UEC and FEMII, inclusive of the fruits of the trust, and to
order of dismissal was not yet final, implying that there was strictly no legal execute in Irene’s favor the necessary conveying deed over the said 65%
impediment to her amending her original complaints.35 shareholdings. In other words, Irene seeks to compel recognition of the trust
arrangement she has with the Benedicto Group.
IV. Respondent did not waive improper venue
The fact that FEMII’s assets include real properties does not materially
Venue essentially concerns a rule of procedure which, in personal actions, is change the nature of the action, for the ownership interest of a stockholder
fixed for the greatest convenience possible of the plaintiff and his witnesses. over corporate assets is only inchoate as the corporation, as a juridical person,
The ground of improperly laid venue must be raised seasonably, else it is solely owns such assets. It is only upon the liquidation of the corporation that
deemed waived. Where the defendant failed to either file a motion to dismiss the stockholders, depending on the type and nature of their stockownership,
on the ground of improper venue or include the same as an affirmative may have a real inchoate right over the corporate assets, but then only to the
defense, he is deemed to have waived his right to object to improper venue. extent of their stockownership.

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The amended complaint is an action in personam, it being a suit against There can be no serious dispute that the real party-in-interest plaintiff is Irene.
Francisca and the late Benedicto (now represented by Julita and Francisca), As self-styled beneficiary of the disputed trust, she stands to be benefited or
on the basis of their alleged personal liability to Irene upon an alleged trust entitled to the avails of the present suit. It is undisputed too that petitioners
constituted in 1968 and/or 1972. Daniel Rubio, Orlando G. Reslin, and Jose G. Reslin, all from Ilocos Norte,
were included as co-plaintiffs in the amended complaint as Irene’s new
They are not actions in rem where the actions are against the real properties designated trustees. As trustees, they can only serve as mere
instead of against persons. We particularly note that possession or title to the representatives of Irene.
real properties of FEMII and UEC is not being disputed, albeit part of the
assets of the corporation happens to be real properties. 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
Interpretation of Secs. 2 and 3 of Rule 3; and Sec. 2 of Rule 4 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
We point out at the outset that Irene, as categorically and peremptorily found basis for determining proper venue.
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 According to the late Justice Jose Y. Feria, “the word ‘principal’ has been
of this case, the factual determination of the trial court and the premises added [in the uniform procedure rule] in order to prevent the plaintiff from
holding it together. choosing the residence of a minor plaintiff or defendant as the venue.”
Eliminate the qualifying term “principal” and the purpose of the Rule would,
Accordingly, Irene cannot, in a personal action, contextually opt for Batac as to borrow from Justice Regalado, “be defeated where a nominal or formal
venue of her reconveyance complaint. As to her, Batac, Ilocos Norte is not party is impleaded in the action since the latter would not have the degree of
what Sec. 2, Rule 4 of the Rules of Court adverts to as the place “where the interest in the subject of the action which would warrant and entail the
plaintiff or any of the principal plaintiffs resides” at the time she filed her desirably active participation expected of litigants in a case.”
amended complaint.
Before the RTC in Batac, in Civil Case Nos. 3341-17 and 3342- 17, Irene
That Irene holds CTC No. 17019451 issued sometime in June 2000 in Batac, stands undisputedly as the principal plaintiff, the real party-in-interest.
Ilocos Norte and in which she indicated her address as Brgy. Lacub, Batac, Following Sec. 2 of Rule 4, the subject civil cases ought to be commenced
Ilocos is really of no moment. Let alone the fact that one can easily secure a and prosecuted at the place where Irene resides.
basic residence certificate practically anytime in any Bureau of Internal
Revenue or treasurer’s office and dictate whatever relevant data one desires Principal Plaintiff not a Resident in Venue of Action
entered, Irene procured CTC No. 17019451 and appended the same to her
motion for reconsideration following the RTC’s pronouncement against her As earlier stated, no less than the RTC in Batac declared Irene as not a
being a resident of Batac. resident of Batac, Ilocos Norte. Withal, that court was an improper venue for
her conveyance action.
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 The Court can concede that Irene’s three co-plaintiffs are all residents of
Sec. 2 of Rule 4. Batac, Ilocos Norte. But it ought to be stressed in this regard that not one of
the three can be considered as principal party-plaintiffs in Civil Case Nos.
Venue is Improperly Laid 3341-17 and 3342-17, included as they were in the amended complaint as
trustees of the principal plaintiff. As trustees, they may be accorded, by virtue
of Sec. 3 of Rule 3, the right to prosecute a suit, but only on behalf of the

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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, the residences of Irene’s
co- plaintiffs cannot be made the basis in determining the venue of the subject
suit. This conclusion becomes all the more forceful considering that Irene
herself initiated and was actively prosecuting her claim against Benedicto, his
heirs, assigns, or associates, virtually rendering the impleading of the trustees
unnecessary.

And this brings us to the final point. Irene was a resident during the period
material of Forbes Park, Makati City. She was not a resident of Brgy. Lacub,
Batac, Ilocos Norte, although jurisprudence44 has it that one can have several
residences, if such were the established fact. The Court will not speculate on
the reason why petitioner Irene, for all the inconvenience and expenses she
and her adversaries would have to endure by a Batac trial, preferred that her
case be heard and decided by the RTC in Batac.

WHEREFORE, the instant petition is hereby DISMISSED.

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5. Heirs of the Late Flaviano Maglasang v. Manila Banking Corporation, restructuring. Nonetheless, the probate court expressly recognized the rights
2013 of respondent under the mortgage and promissory notes executed by the Sps.
Maglasang, specifically, its “right to foreclose the same within the statutory
Facts: period.”20
On June 16, 1975, spouses Flaviano and Salud Maglasang (Sps. Maglasang)
obtained a credit line from respondent5 in the amount of P350,000.00 which In this light, respondent proceeded to extrajudicially foreclose the mortgage
was secured by a real estate mortgage executed over seven of their properties covering the Sps. Maglasang’s properties and emerged as the highest bidder
located in Ormoc City and the Municipality of Kananga, Province of at the public auction for the amount of P350,000.00. The sale took place in
Leyte.8 They availed of their credit line by securing loans in the amounts of Ormoc, Leyte.
P209,790.50 and P139,805.83 on October 24, 1975 and March 15, 1976,
respectively,9 both of which becoming due and demandable within a period There, however, remained a deficiency on Sps. Maglasang’s obligation to
of one year. Further, the parties agreed that the said loans would earn interest respondent. Thus, on June 24, 1981, respondent filed a suit to recover the
at 12% per annum (p.a.) and an additional 4% penalty would be charged upon deficiency amount of P250,601.05 as of May 31, 1981 against the estate of
default.10 Flaviano, his widow Salud and petitioners, docketed as Civil Case No. 1998-
0 before the same CFI, Ormoc.
After Flaviano Maglasang (Flaviano) died intestate on February 14, 1977, his
widow Salud Maglasang (Salud) and their surviving children, herein RTC ruled for respondent bank and ordered petitioners to pay.
petitioners appointed their brother Edgar Maglasang as their attorney-in-fact.
CA affirmed. At the outset, it pointed out that the probate court erred when
Edgar filed a verified petition for letters of administration of the intestate it, through the December 14, 1978 Order, closed and terminated the
estate of Flaviano before the then Court of First Instance of Leyte, Ormoc proceedings in Sp. Proc. No. 1604-0 without first satisfying the claims of the
City, Branch 5 (probate court), docketed as Sp. Proc. No. 1604-0.13 On creditors of the estate — in particular, respondent — in violation of Section
August 9, 1977, the probate court issued an Order14 granting the petition, 1, Rule 90 of the Rules.30 As a consequence, respondent was not able to
thereby appointing Edgar as the administrator15 of Flaviano’s estate. collect from the petitioners and thereby was left with the option of foreclosing
the real estate mortgage.31 Further, the CA held that Section 7, Rule 86 of
In view of the issuance of letters of administration, the probate court, on the Rules does not apply to the present case since the same does not involve
August 30, 1977, issued a Notice to Creditors for the filing of money claims a mortgage made by the administrator over any property belonging to the
against Flaviano’s estate. Accordingly, as one of the creditors of Flaviano, estate of the decedent.32 According to the CA, what should apply is Act No.
respondent notified the probate court of its claim in the amount of 3135 which entitles respondent to claim the deficiency amount after the
P382,753.19 as of October 11, 1978, exclusive of interests and charges. extrajudicial foreclosure of the real estate mortgage of Sps. Maglasang’s
properties.34
During the pendency of the intestate proceedings, Edgar and Oscar were
able to obtain several loans from respondent, secured by promissory notes18 Hence this petition claiming that Rule 86 and not Act No. 3135 applies in this
which they signed. case, and that the extrajudicial foreclosure of the subject properties was null
and void, not having been conducted in the capital (Tacloban) of the Province
In an Order19 dated December 14, 1978 (December 14, 1978 Order), the of Leyte in violation of the stipulations in the real estate mortgage contract.
probate court terminated the proceedings with the surviving heirs executing
an extrajudicial partition of the properties of Flaviano’s estate. The loan Issues:
obligations owed by the estate to respondent, however, remained unsatisfied 1. What law or rule governs? Rule 86 of RoC primarily.
due to respondent’s certification that Flaviano’s account was undergoing a

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2. W/N the extrajudicial foreclosure proceedings violated the venue Anent the third remedy, it must be mentioned that the same includes the
stipulation in the mortgage contract – No. option of extrajudicially foreclosing the mortgage under Act No. 3135, as
availed of by respondent in this case. However, the plain result of adopting
Held: the last mode of foreclosure is that the creditor waives his right to recover any
deficiency from the estate.
I. Rule 86 applies
To obviate any confusion, the Court observes that the operation of Act No.
Claims against deceased persons should be filed during the settlement 3135 does not entirely discount the application of Section 7, Rule 86, or vice-
proceedings of their estate.41 Such proceedings are primarily governed by versa. Rather, the two complement each other within their respective spheres
special rules found under Rules 73 to 90 of the Rules, although rules of operation.
governing ordinary actions may, as far as practicable, apply suppletorily.
On the one hand, Section 7, Rule 86 lays down the options for the secured
Rule 86, §7 generally speaks of “[a] creditor holding a claim against the creditor to claim against the estate and, according to jurisprudence, the
deceased secured by a mortgage or other collateral security” as above- availment of the third option bars him from claiming any deficiency amount.
highlighted, it may be reasonably concluded that the aforementioned section
covers all secured claims, whether by mortgage or any other form of On the other hand, after the third option is chosen, the procedure governing
collateral, which a creditor may enforce against the estate of the de ceased the manner in which the extrajudicial foreclosure should proceed would still
debtor. On the contrary, nowhere from its language can it be fairly deducible be governed by the provisions of Act No. 3135.
that the said section would — as the CA interpreted — narrowly apply only
to mortgages made by the administrator over any property belonging to the Simply put, Section 7, Rule 86 governs the parameters and the extent to which
estate of the decedent. To note, mortgages of estate property executed by the a claim may be advanced against the estate, whereas Act No. 3135 sets out
administrator, are also governed by Rule 89 of the Rules, captioned as “Sales, the specific procedure to be followed when the creditor subsequently chooses
Mortgages, and Other Encumbrances of Property of Decedent.” the third option — specifically, that of extrajudicially foreclosing real
property belonging to the estate. The application of the procedure under Act
Jurisprudence breaks down the rule under Section 7, Rule 86 and explains No. 3135 must be concordant with Section 7, Rule 86 as the latter is a special
that the secured creditor has three remedies/options that he may alternatively rule applicable to claims against the estate, and at the same time, since Section
adopt for the satisfaction of his indebtedness. In particular, he may choose to: 7, Rule 86 does not detail the procedure for extrajudicial foreclosures, the
(a) waive the mortgage and claim the entire debt from the estate of the formalities governing the manner of availing of the third option — such as
mortgagor as an ordinary claim; the place where the application for extrajudicial foreclosure is filed, the
(b) foreclose the mortgage judicially and prove the deficiency as an ordinary requirements of publication and posting and the place of sale — must be
claim; and governed by Act No. 3135.
(c) rely on the mortgage exclusively, or other security and foreclose the same
before it is barred by prescription, without the right to file a claim for any In this case, respondent sought to extrajudicially foreclose the mortgage of
deficiency.45 the properties previously belonging to Sps. Maglasang (and now, their
estates) and, therefore, availed of the third option.
It must, however, be emphasized that these remedies are distinct, independent
and mutually exclusive from each other; thus, the election of one effectively II. The EJD foreclosure proceedings are valid.
bars the exercise of the others.
As a final point, petitioners maintain that the extrajudicial foreclosure of the
subject properties was null and void since the same was conducted in

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violation of the stipulation in the real estate mortgage contract stating that the SO ORDERED.
auction sale should be held in the capital of the province where the properties
are located, i.e., the Province of Leyte.

The Court disagrees.

As may be gleaned from the records, the stipulation under the real estate
mortgage54 executed by Sps. Maglasang which fixed the place of the
foreclosure sale at Tacloban City lacks words of exclusivity which would bar
any other acceptable fora wherein the said sale may be conducted:

“It is hereby agreed that in case of foreclosure of this mortgage under Act
3135, the auction sale shall be held at the capital of the province if the
property is within the territorial jurisdiction of the province concerned, or
shall be held in the city if the property is within the territorial jurisdiction of
the city concerned…”

Case law states that absent such qualifying or restrictive words to indicate the
exclusivity of the agreed forum, the stipulated place should only be as an
additional, not a limiting venue.

As a consequence, the stipulated venue and that provided under Act No. 3135
can be applied alternatively.

In particular, Section 2 of Act No. 3135 allows the foreclosure sale to be done
within the province where the property to be sold is situated, viz.:
SEC. 2. Said sale cannot be made legally outside of the province which the
property sold is situated; and in case the place within said province in which
the sale is to be made is subject to stipulation, such sale shall be made in said
place or in the municipal building of the municipality in which the property
or part thereof is situated.

In this regard, since the auction sale was conducted in Ormoc City, which is
within the territorial jurisdiction of the Province of Leyte, then the Court finds
sufficient compliance with the above-cited requirement.

WHEREFORE, the petition is P ARTL Y GRANTED. The complaint for


the recovery of the deficiency amount after extrajudicial foreclosure filed by
respondent Manila Banking Corporation is hereby DISMISSED. The
extrajudicial foreclosure of the mortgaged properties, however, stands.

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6. Aceron v. Spouses Ang, G.R. 186993, August 22, 2012 Aceron as her duly appointed attorney-in-fact to prosecute her claim against
herein defendants. Considering that the address given by Atty. Aceron is in
Facts: Quezon City, hence, being the plaintiff, venue of the action may lie where he
On September 2, 1992, spouses Alan and Em Ang (respondents) obtained resides as provided in Section 2, Rule 4 of the 1997 Rules of Civil Procedure.”
a loan in the amount of Three Hundred Thousand U.S. Dollars
(US$300,000.00) from Theodore and Nancy Ang (petitioners). On even date, CA reversed holding that:
the respondents executed a promissory note5 in favor of the petitioners “the place of residence of the plaintiff’s attorney-in-fact is of no moment
wherein they promised to pay the latter the said amount, with interest at the when it comes to ascertaining the venue of cases filed in behalf of the
rate of ten percent (10%) per annum, upon demand. However, despite principal since what should be considered is the residence of the real parties
repeated demands, the respondents failed to pay the petitioners. in interest, i.e.[,] the plaintiff or the defendant, as the case may be. Residence
is the permanent home―the place to which, whenever absent for business or
Thus, on August 28, 2006, the petitioners sent the respondents a demand letter pleasure, one intends to return.”
asking them to pay their outstanding debt which, at that time, already
amounted to Seven Hundred Nineteen Thousand, Six Hundred Seventy-One Issue:
U.S. Dollars and Twenty-Three Cents (US$719,671.23), inclusive of the ten W/N the court of the place of residence of the attorney in fact Aceron is a
percent (10%) annual interest that had accumulated over the years. proper venue - No
Notwithstanding the receipt of the said demand letter, the respondents still
failed to settle their loan obligation. Held:
No.
On August 6, 2006, the petitioners, who were then residing in Los Angeles,
California, United States of America (USA), executed their respective The petitioners’ complaint should have been filed in the RTC of Bacolod
Special Powers of Attorney in favor of Attorney Eldrige Marvin B. Aceron City, the court of the place where the respondents reside, and not in RTC
(Atty. Aceron) for the purpose of filing an action in court against the of Quezon City.
respondents.
It is a legal truism that the rules on the venue of personal actions are fixed for
On September 15, 2006, Atty. Aceron, in behalf of the petitioners, filed a the convenience of the plaintiffs and their witnesses. Equally settled,
Complaint7 for collection of sum of money with the RTC of QC against however, is the principle that choosing the venue of an action is not left to a
respondents. plaintiff’s caprice; the matter is regulated by the Rules of Court.

Respondents filed an MTD on the grounds of improper venue and The petitioners’ complaint for collection of sum of money against the
prescription.8 Insisting that the venue of the petitioners’ action was respondents is a personal action as it primarily seeks the enforcement of a
improperly laid, the respondents asserted that the complaint against them may contract. The Rules give the plaintiff the option of choosing where to file his
only be filed in the court of the place where either they or the petitioners complaint. He can file it in the place
reside. They averred that they reside in Bacolod City while the petitioners (1) where he himself or any of them resides, or
reside in Los Angeles, California, USA. Thus, the respondents maintain, the (2) where the defendant or any of the defendants resides or may be found.
filing of the complaint against them in the RTC of Quezon City was improper. The plaintiff or the defendant must be residents of the place where the action
has been instituted at the time the action is commenced.
RTC denied the MTD holding that:
“Attached to the complaint is the Special Power of Attorney x x x which If the plaintiff does not reside in the Philippines, the complaint in such case
clearly states that plaintiff Nancy Ang constituted Atty. Eldrige Marvin may only be filed in the court of the place where the defendant resides. In

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Cohen and Cohen v. Benguet Commercial Co., Ltd., 34 Phil. 526 (1916), this The petitioner’s reliance on Section 3, Rule 3 of the Rules of Court to support
Court held that there can be no election as to the venue of the filing of a their conclusion that Atty. Aceron is likewise a party in interest in the case
complaint when the plaintiff has no residence in the Philippines. In such case, below is misplaced.
the complaint may only be filed in the court of the place where the defendant
resides. Nowhere in the rule cited above is it stated or, at the very least implied, that
the representative is likewise deemed as the real party in interest. The said
Here, the petitioners are residents of Los Angeles, California, USA while the rule simply states that, in actions which are allowed to be prosecuted or
respondents reside in Bacolod City. Applying the foregoing principles, the defended by a representative, the beneficiary shall be deemed the real party
petitioners’ complaint against the respondents may only be filed in the RTC in interest and, hence, should be included in the title of the case.
of Bacolod City―the court of the place where the respondents reside. The
petitioners, being residents of Los Angeles, California, USA, are not given Indeed, to construe the express requirement of residence under the rules on
the choice as to the venue of the filing of their complaint. venue as applicable to the attorney-in-fact of the plaintiff would abrogate the
meaning of a “real party in interest”, as defined in Section 2 of Rule 3 of the
Atty. Aceron is not a real party in interest in the case below; thus, his 1997 Rules of Court vis-à-vis Section 3 of the same Rule.28
residence is immaterial to the venue of the filing of the complaint.
At this juncture, it bears stressing that the rules on venue, like the other
Contrary to the petitioners’ claim, Atty. Aceron, despite being the attorney- procedural rules, are designed to insure a just and orderly administration of
in-fact of the petitioners, is not a real party in interest in the case below. justice or the impartial and even-handed determination of every action and
proceeding. Obviously, this objective will not be attained if the plaintiff is
Interest within the meaning of the Rules of Court means material interest given unrestricted freedom to choose the court where he may file his
or an interest in issue to be affected by the decree or judgment of the complaint or petition. The choice of venue should not be left to the plaintiff's
case, as distinguished from mere curiosity about the question involved. A real whim or caprice. He may be impelled by some ulterior motivation in choosing
party in interest is the party who, by the substantive law, has the right sought to file a case in a particular court even if not allowed by the rules on venue.
to be enforced.
WHEREFORE, in consideration of the foregoing disquisitions, the petition
Applying the foregoing rule, it is clear that Atty. Aceron is not a real party in is DENIED. The Decision dated August 28, 2008 and Resolution dated
interest in the case below as he does not stand to be benefited or injured February 20, 2009 rendered by the Court of Appeals in CA-G.R. SP No.
by any judgment therein. He was merely appointed by the petitioners as 101159 are AFFIRMED.
their attorney-in-fact for the limited purpose of filing and prosecuting the SO ORDERED.
complaint against the respondents. Such appointment, however, does not
mean that he is subrogated into the rights of petitioners and ought to be
considered as a real party in interest.

Being merely a representative of the petitioners, Atty. Aceron in his personal


capacity does not have the right to file the complaint below against the
respondents. He may only do so, as what he did, in behalf of the
petitioners―the real parties in interest. To stress, the right sought to be
enforced in the case below belongs to the petitioners and not to Atty. Aceron.
Clearly, an attorney-in-fact is not a real party in interest.27

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VI. Summary Procedure (Rule 5; 1991 Rules on Summary Procedure as abandonment of appeal, which could lead to its dismissal upon failure to
amended) move for its reconsideration. Thus, the RTC erred in denying respondents’
motion for reconsideration on the ground of lack of jurisdiction.
1. Macadangdang v. Gaviola, G.R. No. 156809, March 4, 2009
Finally, the Court of Appeals ruled that while the negligence of counsel binds
Facts: the client, the rule is not without exceptions such as when its application
On 18 January 2000, Atty. Oswaldo Macadangdang (Atty. Macadangdang), would result to outright deprivation of the client’s liberty or property, or when
acting as administrator of the Estate of Felomina G. Macadangdang a client would suffer due to the counsel’s gross or palpable mistake or
(petitioner), filed an action for Unlawful Detainer with Damages against negligence.
respondents Gaviola et al.
MR denied, hence this petition.
Respondents were occupying, by mere tolerance, portions of four parcels of
land in the name of the late Felomina G. Macadangdang in Davao City. Petitioners allege that the Court of Appeals erred when it allowed the filing
of a motion for reconsideration before the RTC. Petitioners allege that the
MTC ruled for petitioner ordering respondents to vacate and pay back-rentals. case stemmed from an unlawful detainer case where the Rules on Summary
Procedure apply. Petitioners allege that under the Rules on Summary
RTC Davao, in an Order dated September 14, 2000, dismissed the appeal Procedure, a motion for reconsideration is a prohibited pleading. Petitioners
for respondents’ failure to file an appeal memorandum. RTC remanded also allege that due to the mandatory character of Section 7(b), Rule 40 of the
the case back to MTC for execution of judgment. 1997 Rules of Civil Procedure, the RTC correctly dismissed the appeal.
Petitioners also pointed out that respondents’ Motion for
On 3 October 2000, respondents filed a Motion for Reconsideration/New Reconsideration/New Trial was neither verified nor accompanied by
Trial. affidavits of merit as required under Section 2, Rule 37 of the 1997 Rules of
Civil Procedure.
In an Order7 dated 16 October 2000, the MTCC ordered the issuance of a
writ of execution after payment of the execution fee. Issue:
1. W/N the filing of an MR/MNT with the RTC is a prohibited pleading - No
In an Order8 dated 30 October 2000, the RTC denied respondents’ motion 2. W/N respondents’ appeal to the RTC should have been dismissed for
for reconsideration. The RTC ruled that it no longer had jurisdiction over the failure to file an appeal memorandum – Yes.
motion after the dismissal of respondent’s appeal.
Held:
On a petition for review, CA reversed RTC and remanded the case back
to RTC. The Court of Appeals ruled that a distinction should be made I.No
between failure to file a notice of appeal within the reglementary period and
failure to file the appeal memorandum within the period granted by the Jurisdiction over forcible entry and unlawful detainer cases falls on the
appellate court. The Court of Appeals ruled that failure to file a notice of MTCs. Since the case before the the MTCC was an unlawful detainer case, it
appeal within the reglementary period would result to failure of the appellate was governed by the Rules on Summary Procedure. The purpose of the Rules
court to obtain jurisdiction over the appealed decision. Thus, the assailed on Summary Procedure is to prevent undue delays in the disposition of cases
decision would become final and executory upon failure to move for and to achieve this, the filing of certain pleadings is prohibited, including the
reconsideration. On the other hand, failure to file the appeal memorandum filing of a motion for reconsideration.
within the period granted by the appellate court would only result to

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However, the motion for reconsideration that petitioners allege to be a client of due process of law, or when the application of the general rule results
prohibited pleading was filed before the RTC acting as an appellate court. in the outright deprivation of one’s property through a technicality.13
The appeal before the RTC is no longer covered by the Rules on Summary
Procedure. The Rules on Summary Procedure apply before the appeal to the In this case, respondents’ counsel advanced this reason for his failure to
RTC. Hence, respondents’ motion for reconsideration filed with the RTC is submit the appeal memorandum:
not a prohibited pleading. “c. That there was a delay in the filing of defendants-appellants[’] appeal
memorandum due to the heavy backlog of legal paperwork piled on the table
II. Yes. of the undersigned counsel, and he realized his failure to submit defendants[’]
appeal memorandum when he received a copy of the dismissal of the case.
Section 7, Rule 40 of the 1997 Rules of Civil Procedure provides: This is to consider that he is the only lawyer in his law office doing a
“Sec. 7. Procedure in the Regional Trial Court.— herculean task.”
(a) Upon receipt of the complete records or the record on appeal, the clerk of
court of the Regional Trial Court shall notify the parties of such fact. We find no reason to exempt respondents from the general rule. The cause of
(b) Within fifteen (15) days from such notice, it shall be the duty of the the delay in the filing of the appeal memorandum, as explained by
appellant to submit a memorandum which shall briefly discuss the errors respondents’ counsel, was not due to gross negligence. It could have been
imputed to the lower court, a copy of which shall be furnished by him to the prevented by respondents’ counsel if he only acted with ordinary diligence
adverse party. Within fifteen (15) days from receipt of the appellant’s and prudence in handling the case. For a claim of gross negligence of counsel
memorandum, the appellee may file his memorandum. Failure of the to prosper, nothing short of clear abandonment of the client’s cause must be
appellant to file a memorandum shall be a ground for dismissal of the shown.15 In one case, the Court ruled that failure to file appellant’s brief can
appeal. Xxx” qualify as simple negligence but it does not amount to gross negligence to
justify the annulment of the proceedings below.16
In this case, the RTC dismissed respondents’ appeal for their failure to file an
appeal memorandum in accordance with Section 7(b), Rule 40 of the 1997 Finally, respondents were not deprived of due process of law. The right to
Rules of Civil Procedure. The Court of Appeals reversed the RTC’s dismissal appeal is not a natural right or a part of due process.17 It is merely a statutory
of the appeal. privilege and may be exercised only in the manner and in accordance with
the provisions of the law.18
The Court of Appeals ruled that while the negligence of counsel binds the
client, the circumstances in this case warrant a departure from this general
rule. The Court of Appeals ruled that respondents’ counsel only realized his WHEREFORE, we GRANT the petition. We SET ASIDE the 26 July 2002
failure to submit the appeal memorandum when he received a copy of the Decision and the 10 December 2002 Resolution of the Court of Appeals in
dismissal of the appeal. The Court of Appeals ruled that exceptions to the CA-G.R. SP No. 62002.
general rule are recognized to accord relief to a client who suffered by reason SO ORDERED.
of the counsel’s gross or palpable mistake or negligence.

We do not agree with the Court of Appeals.

The general rule is that a client is bound by the acts, even mistakes, of his
counsel in the realm of procedural technique.12 There are exceptions to this
rule, such as when the reckless or gross negligence of counsel deprives the

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2. Republic v. Sunvar Reality Development Corporation, G.R. No. On 26 April 2002, less than a year before the expiration of the main lease
194880, June 20, 2012 contract and the sublease agreements, respondent Sunvar wrote to PDAF as
successor of TRCFI. Respondent expressed its desire to exercise the option
Facts: to renew the sublease over the subject property and proposed an increased
Petitioners Republic of the Philippines (Republic) and National Power rental rate and a renewal period of another 25 years.14 On even date, it also
Corporation (NPC) are registered co-owners of several parcels of land wrote to the Office of the President, Department of Environment and Natural
located along Pasong Tamo Extension and Vito Cruz in Makati City. Resources and petitioner NPC. The letters expressed the same desire to renew
the lease over the subject property under the new rental rate and renewal
The main subject matter of the instant Petition is one of these four parcels of period.15
land covered by TCT No. 458365, with an area of approximately 22,294
square meters (hereinafter, the subject property). Eighty percent (80%) of the On 10 May 2002, PDAF informed respondent that the notice of renewal of
subject property is owned by petitioner Republic, while the remaining twenty the lease had already been sent to petitioners, but that it had yet to receive a
percent (20%) belongs to petitioner NPC.2 Petitioners are being represented response.16
in this case by the Privatization Management Office (PMO), which is the
agency tasked with the administration and disposal of government assets.3 Petitioners Republic and NPC notified PDAF of their decision not to renew
Meanwhile, respondent Sunvar Realty Development Corporation the lease contract.
(Sunvar) occupied the subject property by virtue of sublease agreements,
which had in the meantime expired. The Republic reasoned that the parties had earlier agreed to shorten the
corporate life of PDAF and to transfer the latter’s assets to the former for the
On 26 December 1977,4 petitioners leased the four parcels of land, including purpose of selling them to raise funds.22 On 25 June 2002, PDAF duly
the subject property, to the Technology Resource Center Foundation, Inc., informed respondent Sunvar of petitioner Republic’s decision not to renew
(TRCFI) for a period of 25 years beginning 01 January 1978 and ending on the lease and quoted the Memorandum of Senior Deputy Executive Secretary
31 December 2002.5 Under the Contract of Lease (the main lease contract), Flores.23
petitioners granted TRCFI the right to sublease any portion of the four parcels
of land. On 31 December 2002, the main lease contract with PDAF, as well as its
sublease agreements with respondent Sunvar, all expired. Hence, petitioners
Exercising its right, TRCFI consequently subleased a majority of the subject recovered from PDAF all the rights over the subject property and the three
property to respondent Sunvar through several sublease agreements (the other parcels of land. Thereafter, petitioner Republic transferred the subject
sublease agreements).7 property to the PMO for disposition. Nevertheless, respondent Sunvar
continued to occupy the property.
Although these agreements commenced on different dates, all of them
contained common provisions on the terms of the sublease and were On 22 February 2008, or six years after the main lease contract expired,
altogether set to expire on 31 December 2002, the expiration date of TRCFI’s petitioner Republic, through the Office of the Solicitor General (OSG),
main lease contract with petitioners, but subject to renewal at the option of advised respondent Sunvar to completely vacate the subject property within
respondent. thirty (30) days.

In 1987, following a reorganization of the government, TRCFI was dissolved. On 03 February 2009, respondent Sunvar received from respondent OSG a
In its stead, the Philippine Development Alternatives Foundation (PDAF) final notice to vacate within 15 days.27 When the period lapsed, respondent
was created, assuming the functions previously performed by TRCFI.13 Sunvar again refused to vacate the property and continued to occupy it.

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On 23 July 2009, petitioners filed a complaint for unlawful detainer with Hence this R45 petition directly with the Supreme Court raising a pure
the MTC of Makati. question of law.

Respondent filed an MTD arguing that petitioners’ cause of action was more Issue:
properly an accion publiciana, which fell within the jurisdiction of the RTC, W/N the RTC erred in taking cognizance of the R65 before it despite the
and not the MeTC, considering that the petitioners’ supposed dispossession prohibition in the RSP – Yes, it erred.
of the subject property by respondent had already lasted for more than one
year. Held:
Yes, it erred.
MTC denied the MTD and the respondent’s MR. Respondent later on filed
its Answer35 to the Complaint.36 I.
In the instant case, petitioners raise only questions of law with respect to the
Despite the filing of its Answer in the summary proceedings for ejectment, jurisdiction of the RTC to entertain a certiorari petition filed against the
respondent Sunvar filed a Rule 65 Petition for Certiorari with the RTC of interlocutory order of the MeTC in an unlawful detainer suit. At issue in the
Makati City to assail the denial by the MeTC of respondent’s Motion to present case is the correct application of the Rules on Summary Procedure;
Dismiss.37 or, more specifically, whether the RTC violated the Rules when it took
cognizance and granted the certiorari petition against the denial by the MeTC
In answer to the Rule 65 Petition of respondent, petitioners placed in issue of the Motion to Dismiss filed by respondent Sunvar.
the jurisdiction of the RTC and reasoned that the Rules on Summary
Procedure expressly prohibited the filing of a petition for certiorari against Proceeding now to determine that very question of law, the Court finds that
the interlocutory orders of the MeTC.38 Hence, they prayed for the it was erroneous for the RTC to have taken cognizance of the Rule 65 Petition
outright dismissal of the certiorari Petition of respondent Sunvar. of respondent Sunvar, since the Rules on Summary Procedure expressly
prohibit this relief for unfavorable interlocutory orders of the MeTC.
The RTC denied the motion for dismissal and ruled that extraordinary Consequently, the assailed RTC Decision is annulled.
circumstances called for an exception to the general rule on summary
proceedings.39 Petitioners filed a Motion for Reconsideration,40 which was Under the Rules on Summary Procedure, a certiorari petition under Rule 65
subsequently denied by the RTC.41 Hence, the hearing on the certiorari against an interlocutory order issued by the court in a summary proceeding is
Petition of respondent proceeded, and the parties filed their respective a prohibited pleading. The prohibition is plain enough, and its further
Memoranda.42 exposition is unnecessary verbiage. The RTC should have dismissed outright
respondent Sunvar’s Rule 65 Petition, considering that it is a prohibited
In the assailed Order dated 01 December 2010, which discussed the merits of pleading. Petitioners have already alerted the RTC of this legal bar and
the certiorari Petition, the RTC granted the Rule 65 Petition and directed immediately prayed for the dismissal of the certiorari Petition. Yet, the RTC
the MeTC to dismiss the Complaint for Unlawful Detainer for lack of not only refused to dismiss the certiorari Petition, but even proceeded to hear
jurisdiction, holding that the one-year period for the filing of an unlawful the Rule 65 Petition on the merits.
detainer case was reckoned from the expiration of the main lease contract and
the sublease agreements on 31 December 2002. Petitioners should have then Respondent Sunvar’s reliance on Bayog v. Natino56 and Go v. Court of
filed an accion publiciana with the RTC in 2009, instead of an unlawful Appeals57 to justify a certiorari review by the RTC owing to “extraordinary
detainer suit. circumstances” is misplaced. In both cases, there were peculiar and specific
circumstances that justified the filing of the mentioned prohibited pleadings

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under the Revised Rules on Summary Procedure—conditions that are not Under the Rules of Court, lessors against whom possession of any land is
availing in the case of respondent Sunvar. unlawfully withheld after the expiration of the right to hold possession may—
by virtue of any express or implied contract, and within one year after the
In Bayog, the SC held: unlawful deprivation—bring an action in the municipal trial court against the
“Nevertheless, in view of the unusual and peculiar circumstances of this case, person unlawfully withholding possession, for restitution of possession with
unless some form of relief is made available to MAGDATO, the grave damages and costs. Unless otherwise stipulated, the action of the lessor shall
injustice and irreparable injury that visited him through no fault or commence only after a demand to pay or to comply with the conditions of the
negligence on his part will only be perpetuated. Thus, the petition for relief lease and to vacate is made upon the lessee; or after a written notice of that
from judgment which he filed may be allowed or treated, pro hac vice, either demand is served upon the person found on the premises, and the lessee fails
as an exception to the rule, or a regular appeal to the RTC, or even an action to comply therewith within 15 days in the case of land or 5 days in the case
to annul the order (decision) of the MCTC of 20 September 1993.” of buildings.

In Go v. CA, SC held: Delos Reyes v. Odones:


“However, where the assailed interlocutory order is patently erroneous and “The action must be brought up within one year from the date of last
the remedy of appeal would not afford adequate and expeditious relief, the demand, and the issue in the case must be the right to physical possession.”
Court may allow certiorari as a mode of redress.”
Contrary to the reasoning of the RTC,65 the one-year period to file an
Contrary to the assertion of respondent Sunvar, the factual circumstances in unlawful detainer case is not counted from the expiration of the lease contract
these two cases are not comparable with respondents’ situation, and our on 31 December 2002. Indeed, the last demand for petitioners to vacate is
rulings therein are inapplicable to its cause of action in the present suit. As the reckoning period for determining the one-year period in an action for
this Court explained in Bayog, the general rule is that no special civil action unlawful detainer. “Such one year period should be counted from the date of
for certiorari may be filed with a superior court from cases covered by the plaintiff’s last demand on defendant to vacate the real property, because only
Revised Rules on Summary Procedure. upon the lapse of that period does the possession become unlawful.”66

Respondent Sunvar filed a certiorari Petition in an ejectment suit pending In case several demands to vacate are made, the period is reckoned from the
before the MeTC. Worse, the subject matter of the Petition was the denial of date of the last demand.
respondent’s Motion to Dismiss, which was necessarily an interlocutory
order, which is generally not the subject of an appeal. No circumstances WHEREFORE, the Court GRANTS the Petition for Review on Certiorari
similar to the situation of the agricultural tenant-lessee in Bayog are present dated 14 February 2011, filed by petitioners Republic and National Power
to support the relaxation of the general rule in the instant case. Respondent Corporation, which are represented here by the Privatization Management
cannot claim to have been deprived of reasonable opportunities to argue its Office. The assailed Decision dated 01 December 2010 of the Regional Trial
case before a summary judicial proceeding. Court of Makati City, Branch 134, is hereby REVERSED and SET ASIDE.
The Metropolitan Trial Court of Makati City, Branch 63, is DIRECTED to
Respondent Sunvar failed to substantiate its claim of extraordinary proceed with the summary proceedings for the unlawful detainer case in Civil
circumstances that would constrain this Court to apply the exceptions Case No. 98708.
obtaining in Bayog and Go. SO ORDERED.

II.

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3. Banares v. Balising, G.R. No. 132624, March 13, 2000 Barangay Dalig, Antipolo, Rizal stating that the parties appeared before said
body regarding the charges of estafa filed by private respondents against
Facts: petitioners but they failed to reach an amicable settlement with respect
Petitioners Banares et al. were the accused in 16 criminal cases for estafa filed thereto.
by the private respondents. The cases were assigned before the MTC of Rizal.
Petitioners filed a comment and opposition to motion to revive claiming that
After the petitioners were arraigned and entered their plea of not guilty, they the Order of the municipal trial court, dated November 13, 1995 dismissing
filed a Motion to Dismiss the aforementioned cases on the ground that the the cases had long become final and executory; hence, private respondents
filing of the same was premature, in view of the failure of the parties to should have re-filed the cases instead of filing a motion to revive.
undergo conciliation proceedings before the Lupong Tagapamayapa of
Barangay Dalig, Antipolo, Rizal. On March 18, 1996, the municipal trial court issued an Order granting
private respondents’ motion to revive.
Petitioners averred that since they lived in the same barangay as private
respondents, and the amount involved in each of the cases did not exceed Petitioners filed a motion for reconsideration of the aforementioned Order
Two Hundred Pesos (P200.00), the said cases were required under Section which was denied by the municipal trial court.
412 in relation to Section 408 of the Local Government Code of 1991 and
Section 18 of the 1991 Revised Rules on Summary Procedure to be referred Petitioners filed a R65 with the RTC assailing the Order, dated March 18,
to the Lupong Tagapamayapa or Pangkat ng Tagapagkasundo of the 1996 of the municipal trial court. They claimed that the said Order, dated
barangay concerned for conciliation proceedings before being filed in court. November 13, 1995 dismissing the criminal cases against them had long
become final and executory considering that the prosecution did not file any
MTC denied the MTD on the ground that they failed to seasonably invoke motion for reconsideration of said Order.
the non-referral of the cases to the Lupong Tagapamayapa or Pangkat ng
Tagapagkasundo. It added that such failure to invoke non-referral of the case In response thereto, private respondents filed their Comment, arguing that the
to the Lupon amounted to a waiver by petitioners of the right to use the said motion to revive the said cases was in accordance with law, particularly
ground as basis for dismissing the cases. Section 18 of the Revised Rule on Summary Procedure.

Petitioners filed a motion for reconsideration of the aforementioned Order, RTC denied certiorari and the subsequent MR.
claiming that nowhere in the Revised Rules of Court is it stated that the
ground of prematurity shall be deemed waived if not raised seasonably in an Hence this petition directly with the SC raising pure questions of law.
MTD.
Arguments:
On November 13, 1995, the MTC issued an Order dismissing the sixteen Petitioners contend that an order dismissing a case or action without prejudice
criminal cases against petitioners without prejudice, pursuant to Section 18 may attain finality if not appealed within the reglementary period. Hence, if
of the 1991 Revised Rule on Summary Procedure. no motion to revive the case is filed within the reglementary fifteen-day
period within which to appeal or to file a motion for reconsideration of the
More than two months later, on February 26, 1996, private respondents court’s order, the order of dismissal becomes final and the case may only be
through counsel, filed a motion to revive the abovementioned criminal revived by the filing of a new complaint or information. Petitioners further
cases against petitioners, stating that the requirement of referral to the Lupon argue that after the order of dismissal of a case attains finality, the court which
for conciliation had already been complied with. Attached to the motion was issued the same loses jurisdiction thereon and, thus, does not have the
a Certification, dated February 13, 1996 from the Lupong Tagapamayapa of authority to act on any motion of the parties with respect to said case.

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On the other hand, private respondents submit that cases covered by the 1991 the court which rendered it to further amend or revoke. A final judgment or
Revised Rule on Summary Procedure such as the criminal cases against order cannot be modified in any respect, even if the modification sought is
petitioners are not covered by the rule regarding finality of decisions and for the purpose of correcting an erroneous conclusion by the court which
orders under the Revised Rules of Court. They insist that cases dismissed rendered the same.
without prejudice for non-compliance with the requirement of conciliation
before the Lupong Tagapamayapa or Pangkat ng Tagapagkasundo of the After the order of dismissal of a case without prejudice has become final and
barangay concerned may be revived summarily by the filing of a motion to therefore becomes outside the court’s power to amend and modify, a party
revive regardless of the number of days which has lapsed after the dismissal who wishes to reinstate the case has no other remedy but to file a new
of the case. complaint.

Issue: Contrary to private respondents’ claim, the foregoing rule applies not only to
W/N the MTC’s order dismissing the complaints can still be subject to a civil cases but to criminal cases as well. In Jaca vs. Blanco, the Court defined
motion to revive despite the lapse of the reglementary period – No. a provisional dismissal of a criminal case as a dismissal without prejudice to
the reinstatement thereof before the order of dismissal becomes final or to the
Held: subsequent filing of a new information for the offense.
No.
Thus, the RTC erred when it denied the R65 and ruled that the order of the
Petitioners’ contentions are meritorious. MTC dismissing the case without prejudice had not attained finality and
hence, could be reinstated by the mere filing of a motion to revive.
A “final order” issued by a court has been defined as one which disposes of
the subject matter in its entirety or terminates a particular proceeding or II.
action, leaving nothing else to be done but to enforce by execution what has Equally erroneous is private respondents’ contention that the rules regarding
been determined by the court. As distinguished therefrom, an “interlocutory finality of judgments under the Revised Rules of Court do not apply to cases
order” is one which does not dispose of a case completely, but leaves covered by the 1991 Revised Rule on Summary Procedure. Private
something more to be adjudicated upon. respondents claim that Section 18 of the 1991 Revised Rule on Summary
Procedure allows the revival of cases which were dismissed for failure to
This Court has previously held that an order dismissing a case without submit the same to conciliation at the barangay level, as required under
prejudice is a final order if no motion for reconsideration or appeal therefrom Section 412 in relation to Section 408 of the Local Government Code.
is timely filed.
The said provision states:
In Olympia International vs. Court of Appeals, we stated, thus: The dismissal Referral to Lupon.—Cases requiring referral to the Lupon for conciliation
without prejudice of a complaint does not however mean that said dismissal under the provisions of Presidential Decree No. 1508 where there is no
order was any less final. Such Order of dismissal is complete in all details, showing of compliance with such requirement, shall be dismissed without
and though without prejudice, nonetheless finally disposed of the matter. It prejudice, and may be revived only after such requirement shall have been
was not merely an interlocutory order but a final disposition of the complaint. complied’ with. This provision shall not apply to criminal cases where the
accused was arrested without a warrant.
The law grants an aggrieved party a period of 15 days from his receipt of the
court’s decision or order disposing of the action or proceeding to appeal or There is nothing in the aforecited provision which supports private
move to reconsider the same. After the lapse of the fifteen-day period, an respondents’ view. Section 18 merely states that when a case covered by the
order becomes final and executory and is beyond the power or jurisdiction of 1991 Revised Rule on Summary Procedure is dismissed without prejudice for

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non-referral of the issues to the Lupon, the same may be revived only after Lupon prior to the filing of the cases as soon as they received the complaints
the dispute subject of the dismissed case is submitted to barangay conciliation against them, petitioners raised the said ground only after their arraignment.
as required under the Local Government Code. There is no declaration to the
effect that said case may be revived by mere motion even after the fifteen- However, while the trial court committed an error in dismissing the criminal
day period within which to appeal or to file an MR has lapsed. cases against petitioners on the ground that the same were not referred to the
Lupon prior to the filing thereof in court although said ground was raised by
Moreover, the 1991 Revised Rule on Summary Procedure expressly provides them belatedly, the said order may no longer be revoked at present
that the Rules of Court applies suppletorily to cases covered by the former: considering that the same had already become final and executory, and as
earlier stated, may no longer be annulled by the Municipal Trial Court, nor
Sec. 22. Applicability of the regular rules.—The regular procedure prescribed by the Regional Trial Court or this Court.
in the Rules of Court shall apply to the special cases herein provided for in a
suppletory capacity insofar as they are not inconsistent therewith. WHEREFORE, the petition is hereby GRANTED.

A careful examination of Section 18 in relation to Section 22 of the 1991


Revised Rule of Summary Procedure and Rule 40, Section 2 in relation to
Rule 13, Sections 9 and 10, and Rule 36, Section 2 of the 1997 Rules of Civil
Procedure, as amended, leads to no other conclusion than that the rules
regarding finality of judgments also apply to cases covered by the rules
on summary procedure. Nothing in Section 18 of the 1991 Revised Rule
on Summary Procedure conflicts with the prevailing rule that a
judgment or order which is not appealed or made subject of a motion for
reconsideration within the prescribed fifteen-day period attains finality.

To construe Section 18 thereof as allowing the revival of dismissed cases by


mere motion even after the lapse of the period for appealing the same would
prevent the courts from settling justiciable controversies with finality, thereby
undermining the stability of our judicial system.

The Court also finds it necessary to correct the mistaken impression of


petitioners and the municipal trial court that the non-referral of a case for
barangay conciliation as required under the Local Government Code of 1991
may be raised in a motion to dismiss even after the accused has been
arraigned.

It is well-settled that the non-referral of a case for barangay conciliation when


so required under the law is not jurisdictional in nature and may therefore be
deemed waived if not raised seasonably in a motion to dismiss. The Court
notes that although petitioners could have invoked the ground of prematurity
of the causes of action against them due to the failure to submit the dispute to

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4. Angelina Soriente v. Estate of Arsenio Concepcion, G.R. No. 160239, Render Judgment under Section 7, Rule 70 of the 1997 Revised Rules of
November 25, 2009 Civil Procedure for Soriente’s failure to file an Answer to the Complaint.
Petitioner filed an Opposition to the Motion to Render Judgment.8
Facts:
Respondent Nenita Concepcion established that she was the registered In an Order dated December 5, 2001, the trial court denied the Motion to
owner of a lot occupied by petitioner Angelina Soriente in Mandaluyong Render Judgment. It stated that the allegations of the Complaint in Civil Case
City. No. 17973 and 17974 are similar, the only substantial difference being the
time when defendants occupied the subject property allegedly through the
During the lifetime of Arsenio E. Concepcion, who acquired the lot in 1978, tolerance of Arsenio Concepcion. The trial court believed that in signing
he allowed and tolerated the occupancy of the lot by petitioner, who was the Answer filed in Civil Case No. 17974, Soriente intended to adopt the
already staying on the property. Petitioner was allowed to stay on the lot for same as her own, as both defendants Caballero and Soriente had a
free, but on a temporary basis until such time that Concepcion and/or his common defense against plaintiff’s (respondent’s) separate claim against
family needed to develop the lot. them. The trial court denied the Motion to Render Judgment in the interest
of justice and considered that the two cases, including Civil Case No. 17932
After Arsenio E. Concepcion died on December 27, 1989, his family initiated against Severina Sadol, had been consolidated.
steps to develop the lot, but petitioner’s occupancy of the lot prevented them
from pursuing their plan. Pursuant to Section 7 of the 1991 Revised Rule on Summary Procedure, the
trial court set a preliminary conference.
Verbal demands to vacate the lot was made on petitioner. Petitioner pleaded
for time to transfer to another place, but she never left. In the scheduled preliminary conference held on February 18, 2003, only
plaintiff’ s (respondent’s) counsel and defendants Severina Sadol and Alfredo
In June 2000, Elizabeth Concepcion-Dela Cruz, daughter of respondent, filed Caballero were present. Plaintiff’s (respondent’s) counsel submitted a
a complaint for conciliation proceedings before the barangay at the instance secretary’s certificate attesting to the existence of a board resolution
of respondent. However, the parties did not reach a settlement, which resulted authorizing him to enter into a compromise agreement.
in the issuance of a Certificate to File Action5 dated February 17, 2001 by
the Barangay Captain of Barangay Hagdan Bato Itaas, Mandaluyong City. A representative of defendant (petitioner) Angelina Soriente appeared, but
failed to submit a Special Power of Attorney authorizing her to enter into a
Respondent sent petitioner a demand letter dated September 22, 2000 by compromise agreement. Counsel for defendants was not in court, and there
registered mail, demanding that she peacefully surrender the property and was no proof of service on her for the hearing. However, defendants Sadol
extending financial assistance for her relocation. Despite receipt of the and Caballero informed the court that they informed their counsel of the
demand letter, petitioner did not vacate the premises. hearing scheduled that day.

Hence, respondent filed a complaint for unlawful detainer with the MTC In view of the absence of defendant Angelina Soriente or her authorized
of Mandaluyong City (trial court). representative, plaintiff’s (respondent’s) counsel moved that the case be
submitted for decision, and that he be given 15 days within which to submit
It appears from the records of the case that petitioner Soriente, as a defendant his position paper.11
in the lower court, did not file a separate Answer, but affixed her signature
to the Answer filed by defendant Alfredo Caballero in another ejectment In its Order12 dated February 18, 2003, the trial court granted the motion
case, docketed as Civil Case No. 17974, which was filed by respondent of plaintiff’s (respondent’s) counsel and considered the case against
against Caballero. Hence, respondent, through counsel, filed a Motion to

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defendant (petitioner) Angelina Soriente submitted for decision in “SEC. 6. Effect of failure to answer.—Should the defendant fail to answer the
accordance with Section 7 of the Rules on Summary Procedure.13 complaint within the period above provided, the court, motu proprio, or on
motion of the plaintiff, shall render judgment as may be warranted by the
MTC rendered judgment for respondents ordering petitioner to vacate and facts alleged in the complaint and limited to what is prayed for therein:
pay. Provided, however, That the court may in its discretion reduce the amount of
damages and attorney’s fees claimed for being excessive or otherwise
On appeal, RTC affirmed MTC in toto. unconscionable. This is without prejudice to the applicability of Section 4,
Rule 18 of the Rules of Court, if there are two or more defendants.”
Hence this petition with directly with the SC, claiming, among others, that
the RTC erred in holding that Section 7 of the RSP is applicable in this case. Petitioner asserts that considering that the cases against her, defendants
Caballero and Sadol were consolidated, and she and defendant Caballero
Issue: signed and filed one common Answer to the Complaint, thus, pleading a
W/N petitioner Soriante is a sole defendant under §7 of RSP – No. common defense, the trial court should not have rendered judgment on her
case based on Section 7 of the 1991 Revised Rules on Summary Procedure
Held: when she failed to appear in the preliminary conference.
No.
The contention lacks merit.
The Court notes that petitioner raised both questions of fact and law in her
petition. The Court shall resolve only the pertinent questions of law raised. The Court notes that the ejectment case filed by respondent against petitioner
was docketed in the trial court as Civil Case No. 17973, the case against
Lastly, petitioner contends that the lower court erred in deciding this case in Alfredo Caballero was docketed as Civil Case No. 17974, while the case
accordance with Section 7 of the Rules on Summary Procedure, thus: against Severina Sadol was docketed as Civil Case No. 17932. These cases
“SEC. 7. Preliminary conference; appearance of parties.—Not later than were consolidated by the trial court.
thirty (30) days after the last answer is filed, a preliminary conference shall
be held. The rules on pre-trial in ordinary cases shall be applicable to the Under Section 7 of the 1991 Revised Rules on Summary Procedure, if a sole
preliminary conference unless inconsistent with the provisions of this Rule. defendant shall fail to appear in the preliminary conference, the plaintiff shall
be entitled to judgment in accordance with Section 6 of the Rule, that is, the
The failure of the plaintiff to appear in the preliminary conference shall be a court shall render judgment as may be warranted by the facts alleged in the
cause for the dismissal of his complaint. The defendant who appears in the Complaint and limited to what is prayed for therein. However, “[t]his Rule
absence of the plaintiff shall be entitled to judgment on his counterclaim in (Sec. 7) shall not apply where one of two or more defendants sued under a
accordance with Section 6 hereof. All cross-claims shall be dismissed. common cause of action, who had pleaded a common defense, shall appear
at the preliminary conference.”
If a sole defendant shall fail to appear, the plaintiff shall be entitled to
judgment in accordance with Section 6 hereof. This Rule shall not apply Petitioner claims that the preceding provision applies to her as a defendant,
where one of two or more defendants sued under a common cause of since the ejectment cases were consolidated by the trial court, and she and
action who had pleaded a common defense shall appear at the Caballero filed the same Answer to the Complaint; hence, the trial court
preliminary conference.”45 should not have rendered judgment against her when she failed to appear in
the preliminary conference.46
Section 6 of the 1991 Revised Rules on Summary Procedure, which is
referred to by Section 7 above, states:

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The Court holds that the italicized provision above does not apply in the case
of petitioner, since she and Caballero were not co-defendants in the same
case. The ejectment case filed against petitioner was distinct from that of
Caballero, even if the trial court consolidated the cases and, in the interest of
justice, considered the Answer filed by Caballero in Civil Case No. 17974 as
the Answer also of petitioner since she affixed her signature thereto.

Considering that petitioner was sued in a separate case for ejectment from
that of Caballero and Sadol, petitioner’s failure to appear in the preliminary
conference entitled respondent to the rendition of judgment by the trial court
on the ejectment case filed against petitioner, docketed as Civil Case No.
17973, in accordance with Section 7 of the 1991 Revised Rules on Summary
Procedure.

WHEREFORE, the petition is DENIED. The Order dated October 3, 2003 of


the Regional Trial Court of Mandaluyong City, Branch 213, National Capital
Judicial Region in Civil Case No. MC- 03-407-A is AFFIRMED.
No costs. SO ORDERED.

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VII. Pleadings (Rules 6 to 8)
Hence, respondent filed a Complaint for Insurance Loss and Damages
1. Cosco Philippines Shipping v. Kemper Insurance Company, against petitioner before the RTC, docketed as Civil Case No. 99-95561,
G.R. No. 179488, April 23, 2012 entitled Kemper Insurance Company v. Cosco Philippines Shipping, Inc.

Facts: In its Answer5 dated November 29, 1999, petitioner insisted, among others,
Respondent Kemper Insurance Company is a foreign insurance company that respondent had no capacity to sue since it was doing business in the
based in Illinois, United States of America (USA) with no license to engage Philippines without the required license; that the complaint has prescribed
in business in the Philippines, as it is not doing business in the Philippines, and/or is barred by laches; that no timely claim was filed, etc. …
except in isolated transactions; while petitioner is a domestic shipping
company organized in accordance with Philippine laws. Petitioner later filed an MTD contending that the Complaint was filed by
one Atty. Rodolfo A. Lat, who failed to show his authority to sue and sign
In 1998, respondent insured the shipment of imported frozen boneless the corresponding certification against forum shopping. It argued that
beef (owned by Genosi, Inc.), which was loaded at a port in Brisbane, Atty. Lat’s act of signing the certification against forum shopping was a
Australia, for shipment to Genosi, Inc. (the importer- consignee) in the clear violation of Section 5, Rule 7 of the 1997 Rules of Court.
Philippines. However, upon arrival at the Manila port, a portion of the
shipment was rejected by Genosi, Inc. by reason of spoilage arising from the RTC granted the MTD and dismissed the case without prejudice, ruling
alleged temperature fluctuations of petitioner’s reefer containers. that it is mandatory that the certification must be executed by the petitioner
himself, and not by counsel. Since respondent’s counsel did not have a
Thus, Genosi, Inc. filed a claim against both petitioner shipping company Special Power of Attorney (SPA) to act on its behalf, hence, the certification
and respondent Kemper Insurance Company. The claim was referred to against forum shopping executed by said counsel was fatally defective and
McLarens Chartered for investigation, evaluation, and adjustment of the constituted a valid cause for dismissal of the complaint.
claim. After processing the claim documents, McLarens Chartered
recommended a settlement of the claim in the amount of $64,492.58, which On appeal, CA reversed RTC and ruled that the required certificate of non-
Genosi, Inc. (the consignee-insured) accepted. forum shopping is mandatory and that the same must be signed by the
plaintiff or principal party concerned and not by counsel; and in case of
Thereafter, respondent paid the claim of Genosi, Inc. (the insured) in the corporations, the physical act of signing may be performed in behalf of the
amount of $64,492.58. Consequently, Genosi, Inc., through its General corporate entity by specifically authorized individuals. However, the CA
Manager, Avelino S. Mangahas, Jr., executed a Loss and Subrogation pointed out that the factual circumstances of the case warranted the liberal
Receipt3 dated September 22, 1999, stating that Genosi, Inc. received from application of the rules and, as such, ordered the remand of the case to the
respondent the amount of $64,492.58 as the full and final satisfaction trial court for further proceedings.
compromise, and discharges respondent of all claims for losses and expenses
sustained by the property insured, under various policy numbers, due to Hence this petition under R45.
spoilage brought about by machinery breakdown which occurred on October
25, November 7 and 10, and December 5, 14, and 18, 1998; and, in Arguments:
consideration thereof, subrogates respondent to the claims of Genosi, Inc. to Petitioner alleged that respondent failed to submit any board resolution or
the extent of the said amount. secretary’s certificate authorizing Atty. Lat to institute the complaint and
sign the certificate of non-forum shopping on its behalf. Petitioner submits
Respondent then made demands upon petitioner, but the latter failed and that since respondent is a juridical entity, the signatory in the complaint must
refused to pay the said amount. show proof of his or her authority to sign on behalf of the corporation.

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Further, the SPA dated May 11, 2000, submitted by Atty. Lat, which was In Philippine Airlines, Inc. v. Flight Attendants and Stewards Association of
notarized before the Consulate General of Chicago, Illinois, USA, allegedly the Philippines (FASAP), 479 SCRA 605 (2006), we ruled that only
authorizing him to represent respondent in the pre-trial and other stages individuals vested with authority by a valid board resolution may sign the
of the proceedings was signed by one Brent Healy (respondent’s certificate of non-forum shopping on behalf of a corporation. We also
underwriter), who lacks authorization from its board of directors. required proof of such authority to be presented. The petition is subject to
dismissal if a certification was submitted unaccompanied by proof of the
In its Comment, respondent admitted that it failed to attach in the complaint signatory’s authority.
a concrete proof of Atty. Lat’s authority to execute the certificate of non-
forum shopping on its behalf. However, there was subsequent compliance as In the present case, since respondent is a corporation, the certification must
respondent submitted an authenticated SPA empowering Atty. Lat to be executed by an officer or member of the board of directors or by one who
represent it in the pre-trial and all stages of the proceedings. Further, it is duly authorized by a resolution of the board of directors; otherwise, the
averred that petitioner is barred by laches from questioning the purported complaint will have to be dismissed.
defect in respondent’s certificate of non-forum shopping (CONFS).
The lack of certification against forum shopping is generally not curable by
Issue: mere amendment of the complaint, but shall be a cause for the dismissal of
W/N Atty. Lat was properly authorized by respondent to sign the CONFS on the case without prejudice. The same rule applies to certifications against
its behalf – No. forum shopping signed by a person on behalf of a corporation which are
unaccompanied by proof that said signatory is authorized to file the complaint
Held: on behalf of the corporation.
No.
There is no proof that respondent, a private corporation, authorized Atty. Lat,
The petition is meritorious. through a board resolution, to sign the verification and certification against
forum shopping on its behalf. Accordingly, the certification against forum
We have consistently held that the certification against forum shopping must shopping appended to the complaint is fatally defective, and warrants the
be signed by the principal parties. If, for any reason, the principal party cannot dismissal of respondent’s complaint for Insurance Loss and Damages (Civil
sign the petition, the one signing on his behalf must have been duly Case No. 99-95561) against petitioner.
authorized. With respect to a corporation, the certification against forum
shopping may be signed for and on its behalf, by a specifically authorized In Republic v. Coalbrine International Philippines, Inc.,23 the Court cited
lawyer who has personal knowledge of the facts required to be disclosed instances wherein the lack of authority of the person making the certification
in such document. of non-forum shopping was remedied through subsequent compliance by the
parties therein. Thus,
A corporation has no power, except those expressly conferred on it by the “[w]hile there were instances where we have allowed the filing of a
Corporation Code and those that are implied or incidental to its existence. In certification against non-forum shopping by someone on behalf of a
turn, a corporation exercises said powers through its board of directors corporation without the accompanying proof of authority at the time of its
and/or its duly authorized officers and agents. Thus, it has been observed filing, we did so on the basis of a special circumstance or compelling
that the power of a corporation to sue and be sued in any court is lodged reason. Moreover, there was a subsequent compliance by the submission
with the board of directors that exercises its corporate powers. In turn, of the proof of authority attesting to the fact that the person who signed
physical acts of the corporation, like the signing of documents, can be the certification was duly authorized.”
performed only by natural persons duly authorized for the purpose by
corporate by-laws or by a specific act of the board of directors.

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Contrary to the CA’s finding, the Court finds that the circumstances of this the subject matter and the parties. Courts acquire jurisdiction over the
case do not necessitate the relaxation of the rules. There was no proof of plaintiffs upon the filing of the complaint, and to be bound by a decision, a
authority submitted, even belatedly, to show subsequent compliance with the party should first be subjected to the court’s jurisdiction. Clearly, since no
requirement of the law. Neither was there a copy of the board resolution or valid complaint was ever filed with the RTC, Branch 8, Manila, the same did
secretary’s certificate subsequently submitted to the trial court that would not acquire jurisdiction over the person of respondent.
attest to the fact that Atty. Lat was indeed authorized to file said complaint
and sign the verification and certification against forum shopping, nor did Since the court has no jurisdiction over the complaint and respondent,
respondent satisfactorily explain why it failed to comply with the rules. Thus, petitioner is not estopped from challenging the trial court’s jurisdiction, even
there exists no cogent reason for the relaxation of the rule on this matter. at the pre-trial stage of the proceedings. This is so because the issue of
Obedience to the requirements of procedural rules is needed if we are to jurisdiction may be raised at any stage of the proceedings, even on appeal,
expect fair results therefrom, and utter disregard of the rules cannot justly be and is not lost by waiver or by estoppel.29
rationalized by harking on the policy of liberal construction.25
The factual setting attendant in Sibonghanoy is not similar to that of the
Moreover, the SPA dated May 11, 2000, submitted by respondent allegedly present case so as to make it fall under the doctrine of estoppel by laches.
authorizing Atty. Lat to appear on behalf of the corporation, in the pre-trial Here, the trial court’s jurisdiction was questioned by the petitioner during the
and all stages of the proceedings, signed by Brent Healy, was fatally pre-trial stage of the proceedings, and it cannot be said that considerable
defective and had no evidentiary value. It failed to establish Healy’s length of time had elapsed for laches to attach.
authority to act in behalf of respondent, in view of the absence of a
resolution from respondent’s board of directors or secretary’s certificate WHEREFORE, the petition is GRANTED. The Decision and the Resolution
proving the same. Like any other corporate act, the power of Healy to name, of the Court of Appeals, dated March 23, 2007 and September 3, 2007,
constitute, and appoint Atty. Lat as respondent’s attorney-in-fact, with full respectively, in CA-G.R. CV No. 75895 are REVERSED and SET ASIDE.
powers to represent respondent in the proceedings, should have been The Orders of the Regional Trial Court, dated March 22, 2002 and July 9,
evidenced by a board resolution or secretary’s certificate. 2002, respectively, in Civil Case No. 99-95561, are REINSTATED.
SO ORDERED.
Respondent’s allegation that petitioner is estopped by laches from raising the
defect in respondent’s certificate of non- forum shopping does not hold water.

In Tamondong v. Court of Appeals, 444 SCRA 509 (2004), we held that if a


complaint is filed for and in behalf of the plaintiff who is not authorized to
do so, the complaint is not deemed filed. An unauthorized complaint does not
produce any legal effect. Hence, the court should dismiss the complaint on
the ground that it has no jurisdiction over the complaint and the plaintiff.
Accordingly, since Atty. Lat was not duly authorized by respondent to file
the complaint and sign the verification and certification against forum
shopping, the complaint is considered not filed and ineffectual, and, as a
necessary consequence, is dismissible due to lack of jurisdiction.

Jurisdiction is the power with which courts are invested for administering
justice; that is, for hearing and deciding cases. In order for the court to have
authority to dispose of the case on the merits, it must acquire jurisdiction over

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2. Iglesia ni Kristo v. Ponferrada, and Heirs of Santos G.R. No. In their Comment on the motion, plaintiffs averred that the relationship of a
168943, October 27, 2006 co-owner to the other co-owners is fiduciary in character; thus, anyone of
them could effectively act for another for the benefit of the property without
Facts: need for an authorization.
On October 24, 2001, Alicia, Alfredo, Roberto, Enrique and Susan, all
surnamed Santos, and Sonia Santos-Wallin, represented by Enrique G. Consequently, Enrique Santos had the authority to represent the other heirs
Santos, filed a complaint for Quieting of Title and/or Accion as plaintiffs and to sign the verification and certification against forum
Reinvindicatoria before the Regional Trial Court (RTC) of Quezon City shopping.
against the Iglesia Ni Cristo (INC), defendant therein.
In its reply, defendant averred that absent any authority from his co-heirs,
In their complaint, plaintiffs alleged, among others, that they, as heirs, Enrique Santos must implead them as plaintiffs as they are indispensable
derived their title from their predecessor Enrique Santos. parties. In response, plaintiffs aver that a co-owner of a property can execute
an action for quieting of title without impleading the other co-owners.
As gleaned from the caption of the complaint, plaintiffs appear to be the heirs
of Enrique Santos, represented by Enrique G. Santos. The latter signed the RTC issued an Order denying defendant’s motion to dismiss. It declared
Verification and Certificate of Non-Forum Shopping. that since Enrique Santos was one of the heirs, his signature in the verification
and certification constitutes substantial compliance with the Rules. The court
Defendant filed an MTD on the ground, among others, that (1) plaintiffs cited the ruling of this Court in Dar v. Alonzo-Legasto.
failed to faithfully comply with the procedural requirements set forth in
Section 5, Rule 7 of the 1997 Rules of Civil Procedure… On a R65, CA affirmed the RTC. As the Court held in DAR v. Alonzo-
Legasto the certification signed by one with respect to a property over which
Defendant asserted that the case involved more than one plaintiff but the he shares a common interest with the rest of the plaintiffs (respondents herein)
verification and certification against forum shopping incorporated in the substantially complied with the Rules. As to the issue of prescription, the
complaint was signed only by Enrique Santos. appellate court held that the prescriptive period should be reckoned from
1996, when petitioner claimed ownership and barred respondents from
Although the complaint alleges that plaintiffs are represented by Enrique fencing the property.
Santos, there is no showing that he was, indeed, authorized to so represent
the other plaintiffs to file the complaint and7to sign the verification and Hence this appeal.
certification of non-forum shopping. Thus, plaintiffs failed to comply with
Section 5, Rule 7 of the Rules of Court. Issue:
W/N the lone signature of Enrique Santos on the verification and the CONFS
Defendant cited the ruling of this Court in Loquias v. Office of the was sufficient to comply with the rules – Yes.
Ombudsman. Defendant maintained that the complaint is defective in that,
although there is an allegation that Enrique Santos represents the other heirs, Held:
there is nothing in the pleading to show the latter’s authority to that effect; Yes.
the complaint fails to aver with particularity the facts showing the capacity of
defendant corporation to sue and be sued; and the pleading does not state the The purpose of verification is simply to secure an assurance that the
address of plaintiffs. allegations of the petition (or complaint) have been made in good faith; or are
true and correct, not merely speculative. This requirement is simply a
condition affecting the form of pleadings, and noncompliance therewith does

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not necessarily render it fatally defective. Indeed, verification is only a Consequently, as one of the heirs and principal party, the lone signature of
formal, not a jurisdictional requirement. Enrique G. Santos in the verification and certification is sufficient for the
RTC to take cognizance of the case. The commonality of their interest gave
The issue in the present case is not the lack of verification but the sufficiency Enrique G. Santos the authority to inform the RTC on behalf of the other
of one executed by only one of plaintiffs. This Court held in Ateneo de Naga plaintiffs therein that they have not commenced any action or claim involving
University v. Manalo, 458 SCRA 325 (2005), that the verification the same issues in another court or tribunal, and that there is no other pending
requirement is deemed substantially complied with when, as in the action or claim in another court or tribunal involving the same issues. Hence,
present case, only one of the heirs-plaintiffs, who has sufficient the RTC correctly denied the motion to dismiss filed by petitioner.
knowledge and belief to swear to the truth of the allegations in the
petition (complaint), signed the verification attached to it. Such Considering that at stake in the present case is the ownership and possession
verification is deemed sufficient assurance that the matters alleged in the over a prime property in Quezon City, the apparent merit of the substantive
petition have been made in good faith or are true and correct, not merely aspects of the case should be deemed as a special circumstance or compelling
speculative. reason to allow the relaxation of the rule. Time and again, this Court has held
that rules of procedure are established to secure substantial justice.
The same liberality should likewise be applied to the certification against
forum shopping. The general rule is that the certification must be signed by Being instruments for the speedy and efficient administration of justice, they
all plaintiffs in a case and the signature of only one of them is insufficient. may be used to achieve such end, not to derail it. In particular, when a strict
However, the Court has also stressed in a number of cases that the rules on and literal application of the rules on non-forum shopping and verification
forum shopping were designed to promote and facilitate the orderly will result in a patent denial of substantial justice, these may be liberally
administration of justice and thus should not be interpreted with such absolute construed. The ends of justice are better served when cases are determined on
literalness as to subvert its own ultimate and legitimate objective. The rule the merits—after all parties are given full opportunity to ventilate their causes
of substantial compliance may be availed of with respect to the contents and defenses—rather than on technicality or some procedural imperfections.
of the certification. This is because the requirement of strict compliance with
the provisions merely underscores its mandatory nature in that the Anent the issue of the authority of Enrique G. Santos to represent his co-
certification cannot be altogether dispensed with or its requirements heirs/co- plaintiffs, we find no necessity to show such authority. Respondents
completely disregarded. herein are co-owners of the subject property. As such co-owners, each of the
heirs may properly bring an action for ejectment, forcible entry and detainer,
It is noteworthy that in all of the above cases, the Court applied the rule on or any kind of action for the recovery of possession of the subject properties.
substantial compliance because of the commonality of interest of all the Thus, a co-owner may bring such an action, even without joining all the other
parties with respect to the subject of the controversy. co-owners as co-plaintiffs, because the suit is deemed to be instituted for the
benefit of all.
Applying the doctrines laid down in the above cases, we find and so hold that
the CA did not err in affirming the application of the rule on substantial We uphold the validity of the complaint because of the following
compliance. In the instant case, the property involved is a 936-square-meter circumstances:
real property. Both parties have their respective TCTs over the property. (1) the caption of the instant case is Heirs of Enrique Santos v. Iglesia ni
Respondents herein who are plaintiffs in the case below have a common Cristo;
interest over the property being the heirs of the late Enrique Santos, the (2) the opening statement of the complaint states that plaintiffs are the heirs
alleged registered owner of the subject property as shown in one of the TCTs. of Enrique Santos and likewise names the particular heirs of the latter who
As such heirs, they are considered co-owners pro indiviso of the whole instituted the complaint below;
property since no specific portion yet has been adjudicated to any of the heirs.

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(3) the case involves a property owned by the predecessor-in-interest of
plaintiffs therein; and
(4) the verification signed by Enrique G. Santos clearly states that he is one
of the children of the late Enrique Santos and that he represents the heirs of
said Enrique Santos.

IN LIGHT OF ALL THE FOREGOING, the petition is DENIED. The


decision of the Court of Appeals in CA-G.R. SP No. 72686 is AFFIRMED.
Costs against petitioner.
SO ORDERED.

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3. Vallacar Transit, Inc. v. Jocelyn Catubig, G.R. No. 175512, May Emperado, was the sole negligence of Catubig when he imprudently overtook
30, 2011 another vehicle at a curve and traversed the opposite lane of the road.

Facts: As a special and affirmative defense, petitioner asked for the dismissal of
Petitioner Vallacar is engaged in the business of transportation and the respondent’s complaint for not being verified and/or for failure to state
franchise owner of a Ceres Bulilit bus with Plate No. T-0604-1348. Quirino a cause of action, as there was no allegation that petitioner was negligent in
C. Cabanilla (Cabanilla) is employed as a regular bus driver of petitioner. the selection or supervision of its employee driver.

On January 27, 1994, respondent’s husband, Quintin Catubig, Jr. (Catubig), On January 26, 2000, the RTC promulgated its Decision favoring
was on his way home from Dumaguete City riding in tandem on a motorcycle petitioner holding that the proximate cause of the collision of the bus and
with his employee, Teddy Emperado (Emperado). Catubig was the one motorcycle was the negligence of the driver of the motorcycle, Catubig. The
driving the motorcycle. While approaching a curve at kilometers 59 and 60, RTC, moreover, was convinced through the testimony of Maypa, the
Catubig tried to overtake a slow moving ten-wheeler cargo truck by crossing- Administrative and Personnel Manager of the Dumaguete branch of
over to the opposite lane, which was then being traversed by the Ceres Bulilit petitioner, that petitioner had exercised due diligence in the selection and
bus driven by Cabanilla, headed for the opposite direction. When the two supervision of its employee drivers, including Cabanilla.
vehicles collided, Catubig and Emperado were thrown from the motorcycle.
Catubig died on the spot where he was thrown, while Emperado died while On appeal, CA modified the RTC decision. It held that both Catubig and
being rushed to the hospital. Cabanilla were negligent. Thus, the court ruled that [herein petitioner] is
equally liable for the accident in question which led to the deaths of Quintin
On February 1, 1994, Cabanilla was charged with reckless imprudence Catubig, Jr. and Teddy Emperado and hereby award to the heirs of Quintin
resulting in double homicide in Criminal Case No. M- 15-94 before the Catubig, Jr. the amount [of] P250,000.00 as full compensation for the death
MTC of Negros Occidental. of the latter.

After preliminary investigation, the MCTC issued a Resolution on December Hence this petition.
22, 1994, dismissing the criminal charge against Cabanilla. It found that
Cabanilla was not criminally liable for the deaths of Catubig and Petitioner claims, among others, that respondent’s complaint for damages
Emperado, because there was no negligence, not even contributory, on should be dismissed for the latter’s failure to verify the same. The
Cabanilla’s part. certification against forum shopping attached to the complaint, signed by
respondent, is not a valid substitute for respondent’s verification that she
Thereafter, respondent filed before the RTC on July 19, 1995 a Complaint “has read the pleading and that the allegations therein are true and correct of
for Damages against petitioner, seeking actual, moral, and exemplary her personal knowledge or based on authentic records.”20 Petitioner cited
damages, in the total amount of P484,000.00, for the death of her husband, jurisprudence in which the Court ruled that a pleading lacking proper
Catubig, based on Article 2180, in relation to Article 2176, of the Civil Code. verification is treated as an unsigned pleading, which produces no legal effect
Respondent alleged that petitioner is civilly liable because the latter’s under Section 3, Rule 7 of the Rules of Court.
employee driver, Cabanilla, was reckless and negligent in driving the bus
which collided with Catubig’s motorcycle. Issue:
W/N the failure to verify the complaint in this case warrants the dismissal of
Petitioner, in its Answer with Counterclaim, contended that the proximate the complaint – No.
cause of the vehicular collision, which resulted in the deaths of Catubig and

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Held:
No. Although parties would often submit a joint verification and certificate
against forum shopping, the two are different.
At the outset, we find no procedural defect that would have warranted the
outright dismissal of respondent’s complaint. In Pajuyo v. Court of Appeals,21 we already pointed out that:
“A party’s failure to sign the certification against forum shopping is different
Respondent filed her complaint for damages against petitioner on July 19, from the party’s failure to sign personally the verification. The certificate of
1995, when the 1964 Rules of Court was still in effect. Rule 7, Section 6 of non-forum shopping must be signed by the party, and not by counsel. The
the 1964 Rules of Court provided: certification of counsel renders the petition defective.
“Sec. 6. Verification.—A pleading is verified only by an affidavit stating that
the person verifying has read the pleading and that the allegations thereof are On the other hand, the requirement on verification of a pleading is a formal
true of his own knowledge. and not a jurisdictional requisite. It is intended simply to secure an assurance
Verifications based on “information and belief,” or upon “knowledge, that what are alleged in the pleading are true and correct and not the product
information and belief,” shall be deemed insufficient.” of the imagination or a matter of speculation, and that the pleading is filed in
good faith. The party need not sign the verification. A party’s representative,
On July 1, 1997, the new rules on civil procedure took effect. The foregoing lawyer or any person who personally knows the truth of the facts alleged in
provision was carried on, with a few amendments, as Rule 7, Section 4 of the the pleading may sign the verification.”
1997 Rules of Court.
In the case before us, we stress that as a general rule, a pleading need not be
The same provision was again amended by A.M. No. 00-2-10, which became verified, unless there is a law or rule specifically requiring the same.
effective on May 1, 2000. It now reads: Examples of pleadings that require verification are:
“SEC. 4. Verification.—Except when otherwise specifically required by law (1) all pleadings filed in civil cases under the 1991 Revised Rules on
or rule, pleadings need not be under oath, verified or accompanied by Summary Procedure;
affidavit. (2) petition for review from the Regional Trial Court to the Supreme Court
raising only questions of law under Rule 41, Section 2;
A pleading is verified by an affidavit that the affiant has read the pleading (3) petition for review of the decision of the Regional Trial Court to the Court
and that the allegations therein are true and correct of his personal knowledge of Appeals under Rule 42, Section 1;
or based on authentic records. (4) petition for review from quasi-judicial bodies to the Court of Appeals
under Rule 43, Section 5;
A pleading required to be verified which contains a verification based on (5) petition for review before the Supreme Court under Rule 45, Section 1;
“information and belief” or upon “knowledge, information and belief,” or (6) petition for annulment of judgments or final orders and resolutions under
lacks a proper verification, shall be treated as an unsigned pleading.” Rule 47, Section 4;
(7) complaint for injunction under Rule 58, Section 4;
The 1997 Rules of Court, even prior to its amendment by A.M. No. 00-2-10, (8) application for preliminary injunction or temporary restraining
clearly provides that a pleading lacking proper verification is to be treated as order under Rule 58, Section 4;
an unsigned pleading which produces no legal effect. However, it also just as (9) application for appointment of a receiver under Rule 59, Section 1;
clearly states that “[e]xcept when otherwise specifically required by law (10) application for support pendente lite under Rule 61, Section 1;
or rule, pleadings need not be under oath, verified or accompanied by (11) petition for certiorari against the judgments, final orders or resolutions
affidavit.” No such law or rule specifically requires that respondent’s of constitutional commissions under Rule 64, Section 2;
complaint for damages should have been verified.

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(12) petition for certiorari, prohibition, and mandamus under Rule 65,
Sections 1 to 3;
(13) petition for quo warranto under Rule 66, Section 1;
(14) complaint for expropriation under Rule 67, Section 1;
(15) petition for indirect contempt under Rule 71, Section 4, all from the 1997
Rules of Court;
(16) all complaints or petitions involving intra-corporate controversies
under the Interim Rules of Procedure on Intra-Corporate Controversies;
(17) complaint or petition for rehabilitation and suspension of payment
under the Interim Rules on Corporate Rehabilitation; and
(18) petition for declaration of absolute nullity of void marriages and
annulment of voidable marriages as well as petition for summary
proceedings under the Family Code.

In contrast, all complaints, petitions, applications, and other initiatory


pleadings must be accompanied by a certificate against forum shopping, first
prescribed by Administrative Circular No. 04- 94, which took effect on April
1, 1994, then later on by Rule 7, Section 5 of the 1997 Rules of Court. It is
not disputed herein that respondent’s complaint for damages was
accompanied by such a certificate.

In addition, verification, like in most cases required by the rules of procedure,


is a formal, not jurisdictional, requirement, and mainly intended to secure an
assurance that matters which are alleged are done in good faith or are true and
correct and not of mere speculation. When circumstances warrant, the court
may simply order the correction of unverified pleadings or act on it and waive
strict compliance with the rules in order that the ends of justice may thereby
be served.

WHEREFORE, premises considered, the petition is GRANTED. The


Decision dated November 17, 2005 and Resolution dated November 16, 2006
of the Court Appeals in CA-G.R. CV No. 66815 are SET ASIDE and the
Decision dated January 26, 2000 of the Regional Trial Court, Branch 30 of
Dumaguete City, dismissing Civil Case No. 11360 is REINSTATED.
SO ORDERED.

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4. Korean Technologies v. Alberto Lerma, G.R. No. 143581, altered the quantity and lowered the quality of the machineries and
January 7, 2008 equipment it delivered to PGSMC, and that PGSMC would dismantle and
transfer the machineries, equipment, and facilities installed in the Car-mona
Facts: [sorry long case, just focus on compulsory counterclaim] plant.
Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean corporation
which is engaged in the supply and installation of Liquefied Petroleum Five days later, PGSMC filed before the Office of the Public Prosecutor an
Gas (LPG) Cylinder manufacturing plants, while private respondent Affidavit-Complaint for Estafa dock-eted as I.S. No. 98-03813 against Mr.
Pacific General Steel Manufacturing Corp. (PGSMC) is a domestic Dae Hyun Kang, President of KOGIES.
corporation.
Thus, on July 1, 1998, KOGIES instituted an Application for Arbitration
On March 5, 1997, PGSMC and KOGIES executed a Contract whereby before the Korean Commercial Arbitration Board (KCAB) in Seoul, Korea
KOGIES would set up an LPG Cylinder Manufacturing Plant in pursuant to Art. 15 of the Contract as amended.
Carmona, Cavite. The contract was executed in the Philippines. On April 7,
1997, the parties executed, in Korea, an Amendment for Contract No. KLP- Rem Part
970301 dated March 5, 1997 amending the terms of payment. The contract On July 3, 1998, KOGIES filed a Complaint for Specific Performance
and its amendment stipulated that KOGIES will ship the machinery and against PGSMC before the RTC of Muntinlupa.
facilities necessary for manufacturing LPG cylinders for which PGSMC
would pay USD 1,224,000. KOGIES would install and initiate the operation The RTC granted a temporary restraining order (TRO) on July 4, 1998,
of the plant for which PGSMC bound itself to pay USD 306,000 upon the which was subsequently extended until July 22, 1998. In its complaint,
plant’s production of the 11-kg. LPG cylinder samples. Thus, the total KOGIES alleged that PGSMC had initially admitted that the checks that were
contract price amounted to USD 1,530,000. stopped were not funded but later on claimed that it stopped payment of the
checks for the reason that “their value was not received” as the former
For the remaining balance of USD306,000 for the installation and initial allegedly breached their contract by “altering the quantity and lowering the
operation of the plant, PGSMC issued two postdated checks. quality of the machinery and equipment” installed in the plant and failed to
make the plant operational although it earlier certified to the contrary as
When KOGIES deposited the checks, these were dishonored for the shown in a January 22, 1998 Certificate. Likewise, KOGIES averred that
reason “P A YMENT STOPPED.” Thus, on May 8, 1998, KOGIES sent a PGSMC violated Art. 15 of their Contract, as amended, by unilaterally
demand letter to PGSMC threatening criminal action for violation of Batas rescinding the contract without resorting to arbitration.
Pambansa Blg. 22 in case of nonpayment. On the same date, the wife of
PGSMC’s President faxed a letter dated May 7, 1998 to KOGIES’ President On July 17, 1998, PGSMC filed its Answer with Compulsory
who was then staying at a Makati City hotel. She complained that not only Counterclaim asserting that it had the full right to dismantle and transfer the
did KOGIES deliver a different brand of hydraulic press from that agreed machineries and equipment because it had paid for them in full as stipulated
upon but it had not delivered several equipment parts already paid for. in the contract; that KOGIES was not entitled to the PhP 9,000,000 covered
by the checks for failing to completely install and make the plant operational;
On May 14, 1998, PGSMC replied that the two checks it issued KOGIES and that KOGIES was liable for damages amounting to PhP 4,500,000 for
were fully funded but the payments were stopped for reasons previously made altering the quantity and lowering the quality of the machineries and
known to KOGIES. equipment. Moreover, PGSMC averred that it has already paid PhP 2,257,920
in rent (covering January to July 1998) to Worth and it was not willing to
On June 1, 1998, PGSMC informed KOGIES that PGSMC was canceling further shoulder the cost of renting the premises of the plant considering that
their Contract dated March 5, 1997 on the ground that KOGIES had the LPG cylinder manufacturing plant never became operational.

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an initiatory pleading. For the same reason, the CA said a certificate of non-
RTC denied the application for a writ of preliminary injunction. And forum shopping was also not required.
finally, the RTC held that Art. 15 of the Contract as amended was invalid as
it tended to oust the trial court or any other court jurisdiction over any dispute Hence this petition.
that may arise between the parties.
Issue:
On July 29, 1998, KOGIES filed its Reply to Answer and Answer to W/N CA erred in holding that respondent’s counterclaims are all compulsory
Counterclaim. KOGIES denied it had altered the quantity and lowered the thus there is no need for a CONFS and no need for the payment of docket
quality of the machinery, equipment, and facilities it delivered to the plant. It fees – No, CA did not err.
claimed that it had performed all the undertakings under the contract and had
already produced certified samples of LPG cylinders. It averred that whatever Held:
was unfinished was PGSMC’s fault since it failed to procure raw materials No, CA did not err.
due to lack of funds. KOGIES, relying on Chung Fu Industries (Phils.), Inc.
v. Court of Appeals, insisted that the arbitration clause was without question KOGIES strongly argues that when PGSMC filed the counterclaims, it should
valid. have paid docket fees and filed a certificate of non-forum shopping, and that
its failure to do so was a fatal defect.
After KOGIES filed a Supplemental Memorandum with Motion to
Dismiss answering PGSMC’s memorandum of July 22, 1998 and seeking We disagree with KOGIES.
dismissal of PGSMC’s counter-claims, KOGIES, on August 4, 1998, filed
its Motion for Re-consideration of the July 23, 1998 Order denying its As aptly ruled by the CA, the counterclaims of PGSMC were incorporated in
application for an injunctive writ. its Answer with Compulsory Counter-claim dated July 17, 1998 in
accordance with Section 8 of Rule 11, 1997 Revised Rules of Civil
RTC denied KOGIES’ motion to dismiss PGSMC’s compulsory Procedure, the rule that was effective at the time the Answer with
counterclaims as these counterclaims fell within the requisites of Counterclaim was filed. Sec. 8 on existing counterclaim or cross-claim states,
compulsory counterclaims. “A compulsory counterclaim or a cross-claim that a defending party has at
the time he files his answer shall be contained therein.”
KOGIES filed an urgent MR of the September 21, 1998 RTC Order granting
inspection of the plant and denying dismissal of PGSMC’s compulsory On July 17, 1998, at the time PGSMC filed its Answer incorporating its
counterclaims. counterclaims against KOGIES, it was not liable to pay filing fees for said
counterclaims being compulsory in nature.
Without waiting for the resolution of its October 2, 1998 urgent motion for
reconsideration, KOGIES filed before the Court of Appeals (CA) a We stress, however, that effective August 16, 2004 under Sec. 7, Rule 141,
petition for certiorari seeking annulment of the July 23, 1998 and as amended by A.M. No. 04-2-04-SC, docket fees are now required to be
September 21, 1998 RTC Orders. paid in compulsory counterclaim or cross-claims.

CA affirmed the RTC Orders and dismissed the R65 certiorari filed by As to the failure to submit a certificate of forum shopping, PGSMC’s Answer
KOGIES. The CA held, among others, that, on the issue of nonpayment of is not an initiatory pleading which requires a certification against forum
docket fees and non-attachment of a certificate of non-forum shopping by shopping under Sec. 5 of Rule 7, 1997 Revised Rules of Civil Procedure. It
PGSMC, the counterclaims of PGSMC were compulsory ones and payment is a responsive pleading, hence, the courts a quo did not commit reversible
of docket fees was not required since the Answer with counterclaim was not

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error in denying KOGIES’ motion to dismiss PGSMC’s compulsory
counterclaims.

WHEREFORE, this petition is PARTLY GRANTED, in that:


(1) The May 30, 2000 CA Decision in CA-G.R. SP No. 49249 is REVERSED
and SET ASIDE;
(2) The September 21, 1998 and October 19, 1998 RTC Orders in Civil Case
No. 98-117 are REVERSED and SET ASIDE;
(3) The parties are hereby ORDERED to submit themselves to the arbitration
of their dispute and differences arising from the subject Contract before the
KCAB; and
(4) PGSMC is hereby ALLOWED to dismantle and transfer the equipment
and machineries, if it had not done so, and ORDERED to preserve and
maintain them until the finality of whatever arbitral award is given in the
arbitration proceedings.
No pronouncement as to costs. SO ORDERED.

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5. Filipinas Textile v. Court of Appeals, G.R. No. 119800, Under the trust receipts, Filtex agreed to hold the merchandise in trust for
November 12, 2003 SIHI, with liberty to sell the same for SIHI’s account but without authority to
make any other disposition of the said goods. Filtex likewise agreed to hand
Facts: the proceeds, as soon as received, to SIHI “to apply” against any indebtedness
On December 6, 1985, SIHI instituted a Complaint for the collection of the of the former to the latter. Filtex also agreed to pay SIHI interest at the rate
sum of P3,118,949.75, with interest, penalties, exemplary damages, of 25% per annum from the time of release of the amount to Indo-Phil,
attorney’s fees and costs of suit against herein petitioners Filtex and Texfiber and Polyamide until the same is fully paid, subject to SIHI’s option
Villanueva. to reduce the interest rate. Furthermore, in case of delay in the payment at
maturity of the aggregate amount of the sight drafts negotiated to SIHI, said
In its Complaint, SIHI alleged that sometime in 1983, Filtex applied for amount shall be subject to two percent (2%) per month penalty charge
domestic letters of credit to finance the purchase of various raw materials payable from the date of default until the amount is fully paid.
for its textile business. Finding the application to be in order, SIHI issued on
various dates domestic letters of credit authorizing Indo-Philippine Textile Because of Filtex’s failure to pay its outstanding obligation despite demand,
Mills, Inc. (“Indo-Phil”), Texfiber Corporation (“Texfiber”), and Philippine SIHI filed a Complaint on December 6, 1985 praying that the petitioners be
Polyamide Industrial Corporation (“Polyamide”) “to value” on SIHI such ordered to pay, jointly and severally, the principal amount of P3,118,949.75,
drafts as may be drawn by said corporations against Filtex for an aggregate plus interest and penalties, attorney’s fees, exemplary damages, costs of suit
amount not exceeding P3,737,988.05. and other litigation expenses.

Filtex used these domestic letters of credit to cover its purchase of various In its Answer with Counterclaim, Filtex interposed special and affirmative
textile materials from Indo-Phil, Texfiber and Polyamide. Upon the sale and defenses, i.e., the provisions of the trust receipts, as well as the
delivery of the merchandise, Indo-Phil, Texfiber and Polyamide issued comprehensive surety agreement, do not reflect the true will and intention of
several sight drafts on various dates with an aggregate value of the parties, full payment of the obligation, and lack of cause of action. For his
P3,736,276.71 payable to the order of SIHI, which were duly accepted by part, Villanueva interposed the same special and affirmative defenses and
Filtex. Subsequently, the sight drafts were negotiated to and acquired in due added that the comprehensive surety agreement is null and void and damages
course by SIHI which paid the value thereof to Indo-Phil, Texfiber and and attorney’s fees are not legally demandable. The petitioners, however,
Polyamide for the account of Filtex. failed to specifically deny under oath the genuineness and due execution
of the actionable documents upon which the Complaint was based.
Allegedly by way of inducement upon SIHI to issue the aforesaid domestic
letters of credit and “to value” the sight drafts issued by Indo-Phil, Texfiber RTC ruled for respondent holding Filtex and Villanueva jointly and
and Polyamide, Villanueva executed a comprehensive surety agreement severally liable to SIHI.
on November 9, 1982, whereby he guaranteed, jointly and severally with
Filtex, the full and punctual payment at maturity to SIHI of all the Dissatisfied, Filtex and Villanueva filed an Appeal, primarily contending that
indebtedness of Filtex. The essence of the comprehensive surety agreement they have fully paid their indebtedness to SIHI and asserting that the letters
was that it shall be a continuing surety until such time that the total of credit, sight drafts, trust receipts and comprehensive surety agreement
outstanding obligation of Filtex to SIHI had been fully settled. upon which the Complaint is based are inadmissible in evidence supposedly
because of non-payment of documentary stamp taxes as required by the
In order to ensure the payment of the sight drafts aforementioned, Filtex Internal Revenue Code.
executed and issued to SIHI several trust receipts of various dates, which
were later extended with the issuance of replacement trust receipts all dated
June 22, 1984, covering the merchandise sold.

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On appeal, CA debunked the petitioners’ contention that the letters of credit, We rule in the affirmative.
sight drafts, trust receipts and comprehensive surety agreement are
inadmissible in evidence ruling that the petitioners had “in effect, admitted As correctly noted by the respondent, the Answer with Counterclaim and
the genuineness and due execution of said documents because of their failure Answer, of Filtex and Villanueva, respectively, did not contain any specific
to have their answers placed under oath, the complaint being based on denial under oath of the letters of credit, sight drafts, trust receipts and
actionable documents in line with Section 7, Rule 8 of the Rules of Court.” comprehensive surety agreement upon which SIHI’s Complaint was based,
The appellate court also ruled that there remained an unpaid balance as thus giving rise to the implied admission of the genuineness and due
of January 31, 1989 of P868,881.11 for which Filtex and Villanueva are execution of these documents.
solidarily liable.
Under Sec. 8, Rule 8 of the Rules of Court, when an action or defense is
Hence this petition. founded upon a written instrument, copied in or attached to the corresponding
pleading as provided in the preceding section, the genuineness and due
Petitioners argue, among others, that the CA should not have admitted in execution of the instrument shall be deemed admitted unless the adverse
evidence the letters of credit, sight drafts, trust receipts and comprehensive party, under oath, specifically denies them, and sets forth what he claims to
surety agreement for lack of the requisite documentary stamps thereon. They be the facts.
hypothesized that their implied admission of the genuineness and due
execution of these documents for failure to specifically deny the same under In Benguet Exploration, Inc. vs. Court of Appeals, this Court ruled that the
oath should not be equated with an admission in evidence of the documents admission of the genuineness and due execution of a document means that
and an admission of their obligation. the party whose signature it bears admits
1. that he voluntarily signed the document or it was signed by another for him
Traversing the allegations in the instant petition, SIHI stated in its Comment and with his authority;
that in their respective answers to the complaint, the petitioners expressly 2. that at the time it was signed it was in words and figures exactly as set out
admitted the due execution of the letters of credit, sight drafts and trust in the pleading of the party relying upon it;
receipts and their obligation arising from these documents. Having done so, 3. that the document was delivered; and
they could no longer question the admissibility of these documents. 4. that any formalities required by law, such as a seal, an
Moreover, their allegation of inadmissibility of these documents is acknowledgment, or revenue stamp, which it lacks, are waived by him.
inconsistent with their defense of full payment.
Interestingly, the petitioners questioned the admissibility of these documents
Issue: rather belatedly, at the appeal stage even. Their respective answers to SIHI’s
W/N the documents (letters of credit etc.) are admissible in evidence despite Complaint were silent on this point. The rule is well-settled that points of law,
the absence of documentary stamps thereon as required by the NIRC – Yes. theories, issues and arguments not adequately brought to the attention of the
trial court need not, and ordinarily will not, be considered by a reviewing
Held: court as they cannot be raised for the first time on appeal because this would
Yes. be offensive to the basic rules of fair play, justice and due process.

The threshold issue in this case is whether or not the letters of credit, sight Hence, the petitioners can no longer dispute the admissibility of the letters of
drafts, trust receipts and comprehensive surety agreement are admissible in credit, sight drafts, trust receipts and comprehensive surety agreement.
evidence despite the absence of documentary stamps thereon as required by However, this does not preclude the petitioners from impugning these
the Internal Revenue Code. documents by evidence of fraud, mistake, compromise, payment, statute of
limitations, estoppel and want of consideration.

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This brings us to the petitioners’ contention that they have already fully paid
their obligation to SIHI and have, in fact, overpaid by P415,722.53. This
matter is purely a factual issue. In Fortune Motors (Phils.) Corporation vs.
Court of Appeals, it was held that “the jurisdiction of this Court in cases
brought before it from the Court of Appeals under Rule 45 of the Rules of
Court is limited to reviewing or revising errors of law.”

As a final issue, Villanueva contended that the comprehensive surety


agreement is null and void for lack of consent of Filtex and SIHI. He also
alleged that SIHI materially altered the terms and conditions of the
comprehensive surety agreement by granting Filtex an extension of the period
for payment thereby releasing him from his obligation as surety. We find
these contentions specious.

In the first place, the consent of Filtex to the surety may be assumed from the
fact that Villanueva was the signatory to the sight drafts and trust receipts on
behalf of Filtex. Moreover, in its Answer with Counterclaim, Filtex admitted
the execution of the comprehensive surety agreement with the only
qualification that it was not a means to induce SIHI to issue the domestic
letters of credit. Clearly, had Filtex not consented to the comprehensive surety
agreement, it could have easily objected to its validity and specifically denied
the same. SIHI’s consent to the surety is also understood from the fact that it
demanded payment from both Filtex and Villanueva.

WHEREFORE, premises considered, the petition is DENIED and the


assailed Decision and Resolution of the Court of Appeals concurring with the
decision of the trial court are hereby AFFIRMED. Costs against the
petitioners. SO ORDERED.

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6. Borra et al. v. CA, Hawaiian Phil. Company, September 9, 2013 On appeal, NLRC reversed and reinstated the complaint in RAB Case No.
06-09- 10698-97 and remanded the same for further proceedings.
Facts:
On September 12, 1997, herein petitioners filed with the National Labor On appeal, CA affirmed NLRC.
Relations Commission (NLRC) Regional Arbitration Branch No. VI in
Bacolod City two separate complaints which were docketed as RAB Case On appeal, SC (case entitled Hawaiian Phil. Company v. Borra) affirmed
No. 06-09-10698-97 and RAB Case No. 06- 09-10699-97. CA holding that the RAB Case No. 06-09- 10698-97 was not barred by
res judicata. SC held that
RAB Case No. 06-09-10698-97 was filed against herein private respondent “the two cases in question indeed involved different causes of action. The
alone, while RAB Case No. 06-09-10699-97 impleaded herein private previous case of “Humphrey Perez vs. Hawaiian Philippine Company”
respondent and a certain Fela Contractor as respondents. concerned a money claim and pertained to the years 1987 up until 1995.
During that period, private respondents were engaged by contractor Jose
In RAB Case No. 06-09-10698-97, herein petitioners asked that they be Castillon to work for petitioner at its warehouse. It would appear that the
recognized and confirmed as regular employees of herein private finding of the Labor Arbiter, to the effect that no employer-employee
respondent and further prayed that they be awarded various benefits relationship existed between petitioner and private respondents, was largely
received by regular employees for three (3) years prior to the filing of the predicated on the absence of privity between them.
complaint, while in RAB Case No. 06-09-10699-97, herein petitioners sought
for payment of unpaid wages, holiday pay, allowances, 13th month pay, The complaint for confirmation of employment, however, was filed by
service incentive leave pay, moral and exemplary damages also during the private respondents on 12 September 1997, by which time, Jose Castillon was
three (3) years preceding the filing of the complaint. no longer the contractor.

On October 16, 1997, private respondent filed a Motion to Consolidate the Stated differently, Perez pertains to private respondents’ employment from
abovementioned cases, but the Labor Arbiter in charge of the case denied the 1987 to 1995, while the instant case covers a different (subsequent) period.
said Motion in its Order5 dated October 20, 1997. Moreover, in Perez, the finding that no employer-employee relationship
existed between petitioner and private respondents was premised on absence
On January 9, 1998, private respondent filed a Motion to Dismiss RAB Case of privity between Castillon and petitioner. Consequently, Perez and the
No. 06-09-10698-97 on the ground of res judicata. Private respondent cited instant case involve different subject matters and causes of action.”
an earlier decided case entitled “Humphrey Perez, et al. v. Hawaiian
Philippine Co., et al.” (Perez case) and docketed as RAB Case No. 06-04- In the meantime, on December 21, 1998, the Labor Arbiter rendered a
10169-95, which was an action for recovery of 13th month pay and service Decision in RAB Case No. 06-09-10699-97 holding that there is no
incentive leave pay, and it includes herein petitioners among the employer-employee relation between private respondent and petitioners.
complainants and herein private respondent and one Jose Castillon
(Castillon) as respondents. Private respondent contended that the Perez No appeal was taken from the abovequoted Decision. Thus, the same
case, which has already become final and executory, as no appeal was taken became final and executory.12
therefrom, serves as a bar to the litigation of RAB Case No. 06-09- 10698-
97, because it was ruled therein that petitioners are not employees of private As a consequence of the finality of the Decision in RAB Case No. 06-09-
respondent but of Castillon. 10699-97, herein private respondent again filed a Motion to Dismiss RAB
Case No. 06-09-10698-97 on the ground, among others, of res judicata.
LA granted the MTD and dismissed the complaint. Private respondent contended that the final and executory Decision of the
Labor Arbiter in RAB Case No. 06-09-10699-97, which found no employer-

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employee relations between private respondent and petitioners, serves as a Discussing the concept of res judicata, this Court held in Antonio v. Sayman
bar to the further litigation of RAB Case No. 06-09-10698-97. Vda. de Monje24 that:
“x x x [R]es judicata is defined as “a matter adjudged; a thing judicially acted
LA denied respondent’s MTD. upon or decided; a thing or matter settled by judgment.” According to the
doctrine of res judicata, an existing final judgment or decree rendered on the
On a R65, CA reversed LA ordered the dismissal of the complaint. merits, and without fraud or collusion, by a court of competent jurisdiction,
upon any matter within its jurisdiction, is conclusive of the rights of the
Hence this R65 with the SC. parties or their privies, in all other actions or suits in the same or any other
judicial tribunal of concurrent jurisdiction on the points and matters in issue
Petitioner claims that: in the first suit. To state simply, a final judgment or decree on the merits by
1. this case is not barred by res judicata, and a court of competent jurisdiction is conclusive of the rights of the parties or
2. the respondent was guilty of forum shopping because it filed a motion to their privies in all later suits on all points and matters determined in the
dismiss RAB Case No. 06-09-10698-97 in 1998, and another MTD, both former suit.
MTDs claiming res judicata
The principle of res judicata is applicable by way of (1) “bar by prior
Issue: judgment” and (2) “conclusiveness of judgment.” This Court had occasion to
1. W/N Case No. 06-09-10698-97 is already barred by res judicata RAB Case explain the difference between these two aspects of res judicata as follows:
No. 06-09-10699-97 – Yes.
2. W/N respondent was guilty of forum shopping – No. There is “bar by prior judgment” when, as between the first case where the
judgment was rendered and the second case that is sought to be barred, there
Held: is identity of parties, subject matter, and causes of action. In this instance, the
Yes. judgment in the first case constitutes an absolute bar to the second action.
Otherwise put, the judgment or decree of the court of competent jurisdiction
I. on the merits concludes the litigation between the parties, as well as their
At the outset, the underlying question which has to be resolved in both RAB privies, and constitutes a bar to a new action or suit involving the same cause
Case Nos. 06-09-10698-97 and 06-09-10699-97, before any other issue in of action before the same or other tribunal.
these cases could be determined, is the matter of determining petitioners’ real
employer. Is it Fela Contractor, or is it private respondent? But where there is identity of parties in the first and second cases, but no
identity of causes of action, the first judgment is conclusive only as to those
As earlier mentioned, this issue has already been settled. In the already final matters actually and directly controverted and determined and not as to
and executory decision of the Labor Arbiter in RAB Case No. 06-09-10699- matters merely involved therein. This is the concept of res judicata known as
97, it was ruled therein that no employer-employee relationship exists “conclusiveness of judgment.”
between private respondent and petitioners because the latter’s real employer
is Fela Contractor. Stated differently, any right, fact or matter in issue directly adjudicated
or necessarily involved in the determination of an action before a
Thus, insofar as the question of employer and employee relations between competent court in which judgment is rendered on the merits is
private respondent and petitioners is concerned, the final judgment in RAB conclusively settled by the judgment therein and cannot again be
Case No. 06-09-10699-97 has the effect and authority of res judicata by litigated between the parties and their privies whether or not the claim,
conclusiveness of judgment. demand, purpose, or subject matter of the two actions is the same.

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Stated differently, conclusiveness of judgment finds application when a fact and/or grant the same or substantially the same reliefs, in the process creating
or question has been squarely put in issue, judicially passed upon, and the possibility of conflicting decisions being rendered by the different fora
adjudged in a former suit by a court of competent jurisdiction. The fact upon the same issues.
or question settled by final judgment or order binds the parties to that action
(and persons in privity with them or their successors-in-interest), and Forum-shopping can be committed in three ways:
continues to bind them while the judgment or order remains standing and (1) by filing multiple cases based on the same cause of action and with the
unreversed by proper authority on a timely motion or petition; the same prayer, the previous case not having been resolved yet (where the
conclusively-settled fact or question cannot again be litigated in any future or ground for dismissal is litis pendentia);
other action between the same parties or their privies and successors-in- (2) by filing multiple cases based on the same cause of action and with the
interest, in the same or in any other court of concurrent jurisdiction, either for same prayer, the previous case having been finally resolved (where the
the same or for a different cause of action. Thus, only the identities of parties ground for dismissal is res judicata); and
and issues are required for the operation of the principle of conclusiveness of (3) by filing multiple cases based on the same cause of action but with
judgment.” different prayers (splitting of causes of action, where the ground for dismissal
is also either litis pendentia or res judicata).
Hence, there is no point in determining the main issue raised in RAB Case
No. 06-09-10698-97, i.e., whether petitioners may be considered regular More particularly, the elements of forum-shopping are:
employees of private respondent, because, in the first place, they are not even (a) identity of parties or at least such parties that represent the same interests
employees of the latter. As such, the CA correctly held that the Labor Arbiter in both actions;
committed grave abuse of discretion in denying private respondent’s motion (b) identity of rights asserted and reliefs prayed for, the relief being founded
to dismiss RAB Case No. 06-09-10698-97. on the same facts;
(c) identity of the two preceding particulars, such that any judgment rendered
II. in the other action will, regardless of which party is successful, amount to res
judicata in the action under consideration.”
The question that follows is whether private respondent is guilty of forum
shopping, considering that it already filed a motion to dismiss RAB Case No. In the instant case, there can be no forum shopping, because the grounds
06-09-10698-97 in 1998? The Court answers in the negative. cited by private respondent in its motions to dismiss filed in 1998 and in
the present case are different. In 1998, the motion to dismiss is based on
In Pentacapital Investment Corporation v. Mahinay, 623 SCRA 284 (2010), the argument that the final and executory decision in the Perez case serves as
this Court’s discussion on forum shopping is instructive, to wit: res judicata and, thus, bars the re-litigation of the issue of employer-
“Forum-shopping is the act of a litigant who repetitively availed of several employee relations between private respondent and petitioners. In the instant
judicial remedies in different courts, simultaneously or successively, all case, private respondent again cites res judicata as a ground for its motion to
substantially founded on the same transactions and the same essential dismiss. This time, however, the basis for such ground is not Perez but the
facts and circumstances, and all raising substantially the same issues, final and executory decision in RAB Case No. 06-09-10699- 97. Thus, the
either pending in or already resolved adversely by some other court, to relief prayed for in private respondent’s motion to dismiss subject of the
increase his chances of obtaining a favorable decision if not in one court, then instant case is founded on totally different facts and issues.
in another.
WHEREFORE, the petition is DISMISSED. The assailed Decision and
What is important in determining whether forum-shopping exists is the Resolutions of the Court of Appeals in CA-G.R. SP No. 78729 are
vexation caused the courts and parties-litigants by a party who asks different AFFIRMED.
courts and/or administrative agencies to rule on the same or related causes SO ORDERED.

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7. Sy Tiong v. Sy Chim, G.R. No. 174168, March 30, 2009 at that time were the President/Chairman of the Board and Assistant Treasurer
of the corporation, and that they did not object to the entries in the GIS. Sy
Facts: Tiong Shiou also argued that the issues raised in the pending civil case for
These consolidated petitions involving the same parties, although related, accounting presented a prejudicial question that necessitated the suspension
dwell on different issues. of criminal proceedings.

G.R. No. 174168. [skippable?] On 29 December 2003, the investigating prosecutor issued a resolution
On 30 May 2003, four criminal complaints were filed by Sy Chim and recommending the suspension of the criminal complaints for violation of
Felicidad Chan Sy (Spouses Sy) against Sy Tiong Shiou, et al. before the City the Corporation Code and the dismissal of the criminal complaints for
Prosecutor’s Office of Manila. falsification and perjury against Sy Tiong Shiou.[8] The reviewing
prosecutor approved the resolution. The Spouses Sy moved for the
The cases were later consolidated. Two of the complaints, I.S. Nos. reconsideration of the resolution, but their motion was denied on 14 June
03E-15285 and 03E-15286,[3] were for alleged violation of Section 74 in 2004.[9]
relation to Section 144 of the Corporation Code. In these complaints, the
Spouses Sy averred that they are stockholders and directors of Sy Siy Ho & The Spouses Sy thereupon filed a petition for review with the Department of
Sons, Inc. (the corporation) who asked Sy Tiong Shiou, et al., officers of the Justice (DOJ), which the latter denied in a resolution issued on 02 September
corporation, to allow them to inspect the books and records of the business 2004.[10] Their subsequent motion for reconsideration was likewise denied
on three occasions to no avail. In a letter[4] dated 21 May 2003, Sy Tiong in the resolution of 20 July 2005.
Shiou, et al. denied the request, citing civil and intra-corporate cases pending
in court.[5] On a R65, CA reversed and directed the City Prosecutors Office to file the
appropriate informations against Sy Tiong Shiou, et al. for violation of
In the two other complaints, I.S. No. 03E-15287 and 03E-15288,[6] Sy Tiong Section 74, in relation to Section 144 of the Corporation Code and of Articles
Shiou was charged with falsification under Article 172, in relation to Article 172 and 183 of the RPC. The appellate court ruled that the civil case for
171 of the Revised Penal Code (RPC), and perjury under Article 183 of the accounting and damages cannot be deemed prejudicial to the maintenance or
RPC. According to the Spouses Sy, Sy Tiong Shiou executed under oath the prosecution of a criminal action for violation of the Corporation Code and the
2003 General Information Sheet (GIS) wherein he falsely stated that the RPC since a finding in the civil case that respondents mishandled or
shareholdings of the Spouses Sy had decreased despite the fact that they had misappropriated the funds would not be determinative of their guilt or
not executed any conveyance of their shares.[7] innocence in the criminal complaint.

Sy Tiong Shiou, et al. argued before the prosecutor that the issues involved Hence this petition. On 2 April 2008, the SC ordered the consolidation of
in the civil case for accounting and damages pending before the RTC of G.R. No. 179438 with G.R. No. 174168.
Manila were intimately related to the two criminal complaints filed by the
Spouses Sy against them, and thus constituted a prejudicial question that Issue:
should require the suspension of the criminal complaints. W/N DOJ erred in suspending the hearing charges for violation of the
Corporation Code on the ground of prejudicial question and when it
They also argued that the Spouses Sys request for inspection was premature dismissed the criminal complaints – Yes.
as the latters concern may be properly addressed once an answer is filed in
the civil case. Sy Tiong Shiou, on the other hand, denied the accusations
against him, alleging that before the 2003 GIS was submitted to the Securities Held:
and Exchange Commission (SEC), the same was shown to respondents, who Yes.

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in the falsification and perjury cases, what is material is the veracity of the
As correctly found by the Court of Appeals, the DOJ gravely abused its entries made by Sy Tiong Shiou in the sworn GIS.
discretion when it suspended the hearing of the charges for violation of the
Corporation Code on the ground of prejudicial question and when it
dismissed the criminal complaints.

A prejudicial question comes into play generally in a situation where a civil


action and a criminal action are both pending and there exists in the former
an issue which must be preemptively resolved before the criminal action may
proceed since howsoever the issue raised in the civil action is resolved would
be determinative juris et de jure of the guilt or innocence of the accused in
the criminal case.

The reason behind the principle of prejudicial question is to avoid two


conflicting decisions. It has two essential elements:
(a) the civil action involves an issue similar or intimately related to the issue
raised in the criminal action; and
(b) the resolution of such issue determines whether or not the criminal action
may proceed.

The civil action and the criminal cases do not involve any prejudicial
question.

The civil action for accounting and damages, Civil Case No. 03-106456
pending before the RTC Manila, Branch 46, seeks the issuance of an order
compelling the Spouses Sy to render a full, complete and true accounting of
all the amounts, proceeds and fund paid to, received and earned by the
corporation since 1993 and to restitute it such amounts, proceeds and funds
which the Spouses Sy have misappropriated.

The criminal cases, on the other hand, charge that the Spouses Sy were
illegally prevented from getting inside company premises and from
inspecting company records, and that Sy Tiong Shiou falsified the entries in
the GIS, specifically the Spouses Sys shares in the corporation.

Surely, the civil case presents no prejudicial question to the criminal cases
since a finding that the Spouses Sy mishandled the funds will have no effect
on the determination of guilt in the complaint for violation of Section 74 in
relation to Section 144 of the Corporation Code; the civil case concerns the
validity of Sy Tiong Shiou’s refusal to allow inspection of the records, while

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G.R. No. 179438. Meanwhile, on 1 July 2003, the corporation, through Romer S. Tan, filed its
Amended Complaint for Accounting and Damages[55] against the Spouses
Facts: Sy before the RTC Manila, praying for a complete and true accounting of all
On 3 February 2003, Juanita Tan, corporate treasurer of Sy Siy Ho & the amounts paid to, received and earned by the company since 1993 and for
Sons, Inc. (the corporation), a family corporation doing business under the the restitution of the said amount.[56] The complaint also prayed for a
name and style Guan Yiac Hardware, submitted a letter[46] to the temporary restraining order (TRO) and or preliminary injunction to restrain
corporations Board of Directors (Board) stating that the control, Sy Chim from calling a stockholders meeting on the ground of lack of
supervision and administration of all corporate funds were exercised by authority.
Sy Chim and Felicidad Chan Sy (Spouses Sy), corporate president and
assistant treasurer, respectively. By way of Answer,[57] the Spouses Sy averred that Sy Chim was a mere
figurehead and Felicidad Chan Sy merely performed clerical functions, as it
In the same letter, Juanita Tan disclosed that Felicidad Chan Sy did not make was Sy Tiong Shiou and his spouse, Juanita Tan, who have been authorized
cash deposits to any of the corporations banks from 1 November 2001 to 31 by the corporations by-laws to supervise, control and administer corporate
January 2003, thus the total bank remittances for the past years were less than funds, and as such were the ones responsible for the unaccounted funds. They
reflected in the corporate financial statements, accounting books and records. assailed the meetings called by Sy Tiong Shiou on the grounds that the same
Finally, Juanita Tan sought to be free from any responsibility over all were held without notice to them and without their participation, in violation
corporate funds. of the by-laws. The Spouses Sy also pursued their counter-claim for moral
and exemplary damages and attorneys fees.
The Board granted Juanita Tans request and authorized the employment of
an external auditor to render a complete audit of all the corporate accounting On 9 September 2003, the Spouses Sy filed their Motion for Leave to File
books and records.[47] Consequently, the Board hired the accounting firm Third-Party Complaint, [58] praying that their attached Third Party
Banaria, Banaria & Company. In its Report[48] dated 5 April 2003, the Complaint[59] be allowed and admitted against Sy Tiong Shiou and his
accounting firm attributed to the Spouses Sy P67,117,230.30 as unaccounted spouse. In the said third-party complaint, the Spouses Sy accused Sy Tiong
receipts and disbursements from 1994 to 2002.[49] Shiou and Juanita Tan as directly liable for the corporations claim for
misappropriating corporate funds.
A demand letter[50] was subsequently served on the Spouses Sy on 15 April
2003. On the same date, the children of the Spouses Sy allegedly stole from On 8 October 2003, the RTC granted the motion for leave to file the
the corporation cash, postdated checks and other important documents. After third-party complaint, and forthwith directed the issuance of summons
the incident, the Spouses Sy allegedly transferred residence and ceased against Sy Tiong Shiou and Juanita Tan.[60]
reporting to the corporation. Thereupon, the corporation filed a criminal
complaint for robbery against the Spouses Sy before the City On 16 January 2004, their counsel allegedly discovered that Sy Tiong Shiou
Prosecutors Office of Manila.[51] A search warrant was subsequently and Juanita Tan were not furnished with the copies of several pleadings, as
issued by the Regional Trial Court.[52] well as a court order, which resulted in their having been declared in default
for failure to file their answer to the third-party complaint; thus, they opted
On 26 April 2003, Sy Tiong Shiou, corporate Vice President and General not to file a motion for reconsideration anymore and instead filed a petition
Manager, called a special meeting to be held on 6 May 2003 to fill up the for certiorari before the Court of Appeals.
positions vacated by the Spouses Sy. Sy Tiong Shiou was subsequently
elected as the new president and his wife, Juanita Tan, the new Vice CA granted the R65 and declared that a third-party complaint is not allowed
President.[53] under the Interim Rules of Procedure Governing Intra-Corporate
Controversies Under R.A. No. 8799 (Interim Rules), it not being included in

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the exclusive enumeration of allowed pleadings under Section 2, Rule 2 (5) Motion for postponement and other motions of similar intent, except those
thereof. Moreover, even if such a pleading were allowed, the admission of filed due to clearly compelling reasons. Such motion must be verified and
the third-party complaint against Sy Tiong Shiou and Juanita Tan still would under oath.
have no basis from the facts or the law and jurisprudence.[62] The Court of
Appeals also ruled that the respondent judge committed a manifest error Rule 2, Sec.2. Pleadings allowed. The only pleadings allowed to be filed
amounting to lack of jurisdiction in admitting the third-party complaint and under these Rules are the complaint, answer, compulsory counterclaims or
in summarily declaring Sy Tiong Shiou and Juanita Tan in default for failure cross-claims pleaded in the answer, and the answer to the counterclaims or
to file their answer within the purported reglementary period. The Court of cross-claims.”
Appeals set aside the trial courts 8 October 2003 Order admitting the
third-party complaint, as well as the 19 December 2003 Order, declaring Sy There is a conflict, for while a third-party complaint is not included in the
Tiong Shiou and Juanita Tan in default for failure to file their answer. The allowed pleadings, neither is it among the prohibited ones. Nevertheless, this
trial court was further ordered to dismiss the third-party complaint without conflict may be resolved by following the well-entrenched rule in statutory
prejudice to any action that the corporation may separately file against Sy construction, that every part of the statute must be interpreted with reference
Tiong Shiou and Juanita Tan. to the context, i.e., that every part of the statute must be considered together
with the other parts, and kept subservient to the general intent of the whole
Hence this petition claiming that a third-party complaint is not excluded or enactment.[66]
prohibited by the Interim Rules, and that the Court of Appeals erred in ruling
that their third- party complaint is not actionable because their action is not This spirit and intent can be gleaned from Sec. 3, Rule 1 of the Interim Rules,
in respect of the corporation’s claims. They add that the disallowance of the which reads:
third-party complaint will result in multiplicity of suits. Sec. 3. Construction.These Rules shall be liberally construed in order to
promote their objective of securing a just, summary, speedy and inexpensive
Issue: determination of every action or proceeding.[69]
W/N the third-party complaint should be allowed - Yes
Now, a third-party complaint is a claim that a defending party may, with leave
Held: of court, file against a person not a party to the action, called the third-party
Yes. defendant, for contribution, indemnity, subrogation or any other relief, in
respect of his opponents claim. It is actually a complaint independent of, and
The third-party complaint should be allowed. separate and distinct from the plaintiff’s complaint. In fact, were it not for
Rule 6, Section 11 of the Rules of Court, such third-party complaint would
The conflicting provisions of the Interim Rules of Procedure for have to be filed independently and separately from the original complaint by
Inter-Corporate Controversies read: the defendant against the third-party defendant.
“Rule 1, Sec. 8. Prohibited pleadings. The following pleadings are
prohibited: (1) Motion to dismiss; Jurisprudence is consistent in declaring that the purpose of a third-party
(2) Motion for a bill of particulars; complaint is to avoid circuitry of action and unnecessary proliferation of law
(3) Motion for new trial, or for reconsideration of judgment or order, or for suits and of disposing expeditiously in one litigation all the matters arising
re-opening of trial; from one particular set of facts.[70]
(4) Motion for extension of time to file pleadings, affidavits or any other
paper, except those filed due to clearly compelling reasons. Such motion must It thus appears that the summary nature of the proceedings governed by the
be verified and under oath; and Interim Rules, and the allowance of the filing of third-party complaints is
premised on one objective the expeditious disposition of cases. Moreover,

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following the rule of liberal interpretation found in the Interim Rules, and restitute to the corporation all such amounts, proceeds, and funds which they
taking into consideration the suppletory application of the Rules of Court took and misappropriated for their own use and benefit, to the damage and
under Rule 1, Sec. 2[71] of the Interim Rules, the Court finds that a prejudice of the plaintiff and its stockholders.[74]
third-party complaint is not, and should not be prohibited in
controversies governed by the Interim Rules. The logic and justness of this On the other hand, in the third-party complaint, the Spouses Sy claim that it
conclusion are rendered beyond question when it is considered that Sy Tiong is Sy Tiong Shiou and Juanita Tan who had full and complete control of the
Shiou and Juanita Tan are not complete strangers to the litigation as in fact day-to day operations and complete control and custody of the funds of the
they are the moving spirit behind the filing of the principal complaint for corporation, and hence they are the ones liable for any shortfall or
accounting and damages against the Spouses Sy. unaccounted difference of the corporations cash account. Thus, Sy Tiong
Shiou and Juanita Tan should render a full, complete and true accounting of
The Court also rules that the third-party complaint of the Spouses Sy should all the amounts, proceeds, funds paid to, received and earned by the
be admitted. corporation since 1993, including the amount attributed to the Spouses Sy in
the complaint for accounting and damages. In their prayer, the Spouses Sy
A prerequisite to the exercise of such right is that some substantive basis for moved that Sy Tiong Shiou and Juanita Tan be declared as directly and solely
a third-party claim be found to exist, whether the basis be one of indemnity, liable in respect of the corporations claim for accounting and damages, and
subrogation, contribution or other substantive right. that in the event that they, the Spouses Sy, are adjudged liable to the
corporation, Sy Tiong Shiou and Juanita Tan be ordered to pay all amounts
The bringing of a third-party defendant is proper if he would be liable to the necessary to discharge their liability to the corporation by way of indemnity
plaintiff or to the defendant or both for all or part of the plaintiffs claim or reimbursement.
against the original defendant, although the third-party defendant’s liability
arises out of another transaction. The allegations in the third-party complaint impute direct liability on the part
of Sy Tiong Shiou and Juanita Tan to the corporation for the very same claims
The defendant may implead another as third-party defendant: which the corporation interposed against the Spouses Sy. It is clear therefore
(a) on an allegation of liability of the latter to the defendant for contribution, that the Spouses Sys third-party complaint is in respect of the plaintiff
indemnity, subrogation or any other relief; corporations claims,[75] and thus the allowance of the third-party complaint
(b) on the ground of direct liability of the third-party defendant to the is warranted.
plaintiff; or
(c) the liability of the third-party defendant to both the plaintiff and the WHEREFORE, these cases are resolved as follows:
defendant.[72]
G.R. No. 174168
In determining the sufficiency of the third-party complaint, the allegations in The petition for review is DENIED. The Decision and Resolution of the
the original complaint and the third-party complaint must be examined. A Court of Appeals dated 31 May 2006 and 8 August 2006, respectively, in
third-party complaint must allege facts which prima facie show that the CA-G.R. SP No. 91416 are AFFIRMED. Costs against the petitioners.
defendant is entitled to contribution, indemnity, subrogation or other relief
from the third-party defendant.[73] G.R. No. 179438
The petition is GRANTED. The decision and resolution of the Court of
The complaint alleges that the Spouses Sy, as officers of the corporation, have Appeals dated 26 May 2004 and 29 August 2007, respectively, in CA-G.R.
acted illegally in raiding its corporate funds, hence they are duty bound to SP No. 81897 are SET ASIDE and the Orders of the Regional Trial Court of
render a full, complete and true accounting of all the amounts, proceeds and Manila Branch 46 dated 8 October 2003 and 19 December 2003 are
funds paid to, received and earned by the corporation since 1993 and to REINSTATED.

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8. PTA of St. Matthew Academy v. Metrobank, G.R.No. 176518, Without filing a motion for reconsideration, petitioners assailed the trial
March 2, 2010 court’s Order through a Petition for Certiorari and Prohibition before the
CA. However, said petition was dismissed by the CA for lack of merit. CA
Facts: held that the petitioners should have filed a petition to set aside the sale and
Sometime in 2001, the spouses Denivin Ilagan and Josefina Ilagan (spouses the writ of possession. Also, petitioner should have first filed an MR.
Ilagan) applied for and were granted a loan by the [Metropolitan Bank
and Trust Co.] in the amount of (P4,790,000.00) [secured by] a Real Estate Hence this petition.
Mortgage over several parcels of land.
Petitioners claim, among others, that the respondent’s Petition for the
Upon default, an extrajudicial foreclosure was conducted with [Metropolitan Issuance of the Writ of Possession is void due to the lack of authority to sign
Bank and Trust Co.] being the highest bidder x x x and for which a Certificate the certificate on non-forum shopping attached to the petition.
of Sale was issued in its favor.
Issue:
During the period of redemption, the respondent Bank filed an Ex-Parte W/N the lack of authority to sign the CONFS warranted the denial of
Petition for Issuance of a Writ of Possession docketed as LRC Case No. respondent’s Petition for the Issuance of the Writ of Possession – No.
6438 by posting x x x the required bond which was subsequently approved.
Held:
[On June 30, 2005], the St. Mathew Christian Academy of Tarlac, Inc. filed No.
a Petition for Injunction with Prayer for Restraining Order docketed as
Special Civil Action No. 9793 against the respondent Bank and the Provincial The lack of authority to sign the certificate of non-forum shopping attached
Sheriff of Tarlac. to the Petition for Issuance of Writ of Possession was an insignificant lapse.

On August 16, 2005, the x x x Judge issued a Joint Decision denying the Petitioners further claim that the lack of authority to sign the certificate on
injunction and TRO, and affirming its issuance of the writ of possession. non-forum shopping attached to the Petition for the Issuance of the Writ of
It held that St. Matthew’s cannot be considered a third party because it is Possession rendered the same worthless and should be deemed as non-
practically owned by the mortgagors, spouses Denivin and Josefina Ilagan. existent.16 MBTC asserts otherwise, citing Spouses Arquiza v. Court of
Appeals17 where we held that an application for a writ of possession is a mere
Pending resolution of the motion for reconsideration of the said Joint incident in the registration proceeding which is in substance merely a
Decision, herein petitioners Parents-Teachers Association (PTA) of St. motion,18 and therefore does not require such a certification.
Mathew Christian Academy (SMCA) along with certain teachers and
students of SMCA filed a Motion for Leave to file Petition in Intervention3 Petitioners’ contention lacks basis. In Green Asia Construction and
in Special Civil Action No. 9793, which was granted by the trial court in an Development Corporation v. Court of Appeals,19 where the issue of validity
Order dated November 10, 2005.4 However, in a subsequent Order dated of the Certificate of Non-Forum Shopping was questioned in an application
December 7, 2005, the trial court reversed its earlier Order by ruling that for the issuance of a Writ of Possession, we held that:
petitioners’ intervention would have no bearing on the issuance and “x x x it bears stressing that a certification on non-forum shopping is
implementation of the writ of possession. Thus, it directed that the writ be required only in a complaint or a petition which is an initiatory pleading.
implemented by placing respondent Metropolitan Bank and Trust Company In this case, the subject petition for the issuance of a writ of possession filed
(MBTC) in physical possession of the property.5 by private respondent is not an initiatory pleading. Although private
respondent denominated its pleading as a petition, it is more properly a
motion. What distinguishes a motion from a petition or other pleading is not

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its form or the title given by the party executing it, but its purpose. The
purpose of a motion is not to initiate litigation, but to bring up a matter arising
in the progress of the case where the motion is filed.”

It is not necessary to initiate an original action in order for the purchaser at


an extrajudicial foreclosure of real property to acquire possession. Even if the
application for the writ of possession was denominated as a “petition,” it was
in substance merely a motion. Indeed, any insignificant lapse in the
certification on non-forum shopping filed by the MBTC did not render the
writ irregular. After all, no verification and certification on non-forum
shopping need be attached to the motion.

Hence, it is immaterial that the certification on non-forum shopping in the


MBTC’s petition was signed by its branch head. Such inconsequential
oversight did not render the said petition defective in form.

WHEREFORE, premises considered, the Petition for Review on Certiorari


is DENIED for lack of merit. The temporary restraining order heretofore
issued is hereby LIFTED and SET ASIDE. The Decision of the Court of
Appeals dated November 29, 2006 and its Resolution dated January 29, 2007
are AFFIRMED.
SO ORDERED.

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9. Abbot Laboratories v. Alcaraz, 2013 19, 2005.21 The letter detailed the reasons for Alcaraz’s termination –
particularly, that Alcaraz: (a) did not manage her time effectively; (b) failed
Facts: to gain the trust of her staff and to build an effective rapport with them; (c)
On June 27, 2004, petitioner Abbott Laboratories, Philippines (Abbott) failed to train her staff effectively; and (d) was not able to obtain the
caused the publication in a major broadsheet newspaper of its need for knowledge and ability to make sound judgments on case processing and
a Medical and Regulatory Affairs Manager (Regulatory Affairs article review which were necessary for the proper performance of her
Manager) who would: duties.22
(a) be responsible for drug safety surveillance operations, staffing, and
budget; Rem Part
(b) lead the development and implementation of standard operating
procedures/policies for drug safety surveillance and vigilance; and Alcaraz felt that she was unjustly terminated from her employment and thus,
(c) act as the primary interface with internal and external customers regarding filed a complaint for illegal dismissal and damages against Abbott and its
safety operations and queries.4 officers, namely, Misa, Bernardo, Almazar, Walsh, Terrible, and Feist.24 She
claimed that she should have already been considered as a regular and not a
Alcaraz – who was then a Regulatory Affairs and Information Manager at probationary employee given Abbott’s failure to inform her of the reasonable
Aventis Pasteur Philippines, Incorporated (another pharmaceutical company standards for her regularization upon her engagement as required under
like Abbott) – showed interest and submitted her application on October 4, Article 295 of the Labor Code.
2004.
She claims that while her employment contract stated that she was to be
On February 12, 2005, Alcaraz signed an employment contract which stated, engaged on a probationary status, the same did not indicate the standards on
inter alia, that she was to be placed on probation for a period of six (6) which her regularization would be based.26 She further averred that the
months beginning February 15, 2005 to August 14, 2005. The said contract individual petitioners maliciously connived to illegally dismiss her when: (a)
was also signed by Abbott’s General Manager, petitioner Edwin Feist (Feist). they threatened her with termination; (b) she was ordered not to enter
company premises even if she was still an employee thereof; and (c) they
On May 16, 2005, Alcaraz was called to a meeting with Walsh and Terrible publicly announced that she already resigned in order to humiliate her.27
where she was informed that she failed to meet the regularization standards
for the position of Regulatory Affairs Manager.18 Thereafter, Walsh and LA dismissed Alcaraz’s complaint for lack of merit. The LA rejected
Terrible requested Alcaraz to tender her resignation, else they be forced to Alcaraz’s argument that she was not informed of the reasonable standards to
terminate her services. She was also told that, regardless of her choice, she qualify as a regular employee considering her admissions that she was briefed
should no longer report for work and was asked to surrender her office by Almazar on her work during her pre- employment orientation meeting30
identification cards. She requested to be given one week to decide on the and that she received copies of Abbott’s Code of Conduct and Performance
same, but to no avail.19 Modules which were used for evaluating all types of Abbott employees.31
As Alcaraz was unable to meet the standards set by Abbott as per her
On May 17, 2005, Alcaraz told her administrative assistant, Claude Gonzales performance evaluation, the LA ruled that the termination of her probationary
(Gonzales), that she would be on leave for that day. However, Gonzales told employment was justified.3
her that Walsh and Terrible already announced to the whole Hospira ALSU
staff that Alcaraz already resigned due to health reasons.20 On appeal, NLRC reversed holding that Abbot committed illegal
dismissal. The NLRC reversed the findings of the LA and ruled that there
On May 23, 2005, Walsh, Almazar, and Bernardo personally handed to was no evidence showing that Alcaraz had been apprised of her probationary
Alcaraz a letter stating that her services had been terminated effective May status and the requirements which she should have complied with in order to

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be a regular employee.36 It held that Alcaraz’s receipt of her job description CA’s December 10, 2009 Decision i.e., the decision in the First CA
and Abbott’s Code of Conduct and Performance Modules was not equivalent Petition.53
to her being actually informed of the performance standards upon which she
should have been evaluated on.37 MR denied. She also contends that petitioners have not complied with the certification
requirement under Section 5, Rule 7 of the Rules of Court when they failed
Petitioners filed a R65 certiorari with prayer for TRO (First CA to disclose in the instant R45 petition the filing of the June 16, 2010
petition). Memorandum of Appeal filed before the NLRC.54

While pending, Alcaraz moved for the execution of the NLRC’s Decision Issue:
before the LA, which petitioners strongly opposed. The LA denied the said W/N petitioners are guilty of forum shopping and w/n they violated the
motion in an Order dated July 8, 2008 which was, however, eventually certification requirement under Rule 7 §5 – No and no.
reversed on appeal by the NLRC.42 Due to the foregoing, petitioners filed
another Petition for Certiorari with the CA, docketed as CA G.R. SP No. Held:
111318 (Second CA Petition), assailing the propriety of the execution of the No and no.
NLRC decision.43
At the outset, it is noteworthy to mention that the prohibition against forum
CA dismissed the First CA Petition and affirmed the NLRC’s decision which shopping is different from a violation of the certification requirement under
held that Alcaraz was illegally dismissed. MR denied. Section 5, Rule 7 of the Rules of Court. In Sps. Ong v. CA,55 the Court
explained that:
CA also denied the Second CA Petition and affirmed NLRC’s decision in x x x The distinction between the prohibition against forum shopping and the
ordering the execution of the NLRC’s decision. certification requirement should by now be too elementary to be
misunderstood. To reiterate, compliance with the certification against forum
Petitioners filed an MR. While pending, Alcaraz again moved for the shopping is separate from and independent of the avoidance of the act of
issuance of a writ of execution before the LA. On June 7, 2010, petitioners forum shopping itself. There is a difference in the treatment between failure
received the LA’s order granting Alcaraz’s motion for execution which they to comply with the certification requirement and violation of the prohibition
in turn appealed to the NLRC – through a Memorandum of Appeal dated against forum shopping not only in terms of imposable sanctions but also in
June 16, 2010 (June 16, 2010 Memorandum of Appeal ) – on the ground that the manner of enforcing them. The former constitutes sufficient cause for the
the implementation of the LA’s order would render its motion for dismissal without prejudice [to the filing] of the complaint or initiatory
reconsideration moot and academic.50 pleading upon motion and after hearing, while the latter is a ground for
summary dismissal thereof and for direct contempt. x x x. 56
Meanwhile, CA denied petitioner’s MR of the Second CA Petition. This
attained finality on January 10, 2011 for petitioners’ failure to timely appeal I.
the same.52 Hence, as it stands, only the issues in the First CA petition are As to the first, forum shopping takes place when a litigant files multiple suits
left to be resolved. involving the same parties, either simultaneously or successively, to secure a
favorable judgment. It exists where the elements of litis pendentia are present,
Arguments: namely:
Incidentally, in her Comment dated November 15, 2010, Alcaraz also alleges (a) identity of parties, or at least such parties who represent the same interests
that petitioners were guilty of forum shopping when they filed the Second in both actions;
CA Petition pending the resolution of their motion for reconsideration of the (b) identity of rights asserted and relief prayed for, the relief being founded
on the same facts; and

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(c) the identity with respect to the two preceding particulars in the two (2) Petition – which in fact had already attained finality – the matter of disclosing
cases is such that any judgment that may be rendered in the pending case, the June 16, 2010 Memorandum of Appeal is now moot and academic.
regardless of which party is successful, would amount to res judicata in the
other case.57 WHEREFORE, the petition is GRANTED. The Decision dated December
10, 2009 and Resolution dated June 9, 2010 of the Court of Appeals in CA-
In this case, records show that, except for the element of identity of parties, G.R. SP No. 101045 are hereby REVERSED and SET ASIDE.
the elements of forum shopping do not exist.

Evidently, the First CA Petition was instituted to question the ruling of the
NLRC that Alcaraz was illegally dismissed. On the other hand, the Second
CA Petition pertains to the propriety of the enforcement of the judgment
award pending the resolution of the First CA Petition and the finality of the
decision in the labor dispute between Alcaraz and the petitioners. Based on
the foregoing, a judgment in the Second CA Petition will not constitute res
judicata insofar as the First CA Petition is concerned. Thus, considering that
the two petitions clearly cover different subject matters and causes of action,
there exists no forum shopping.

II.
As to the second, Alcaraz further imputes that the petitioners violated the
certification requirement under Section 5, Rule 7 of the Rules of Court by not
disclosing the fact that it filed the June 16, 2010 Memorandum of Appeal
before the NLRC in the instant petition.

In this regard, Section 5(b), Rule 7 of the Rules of Court requires that a
plaintiff who files a case should provide a complete statement of the present
status of any pending case if the latter involves the same issues as the one that
was filed. If there is no such similar pending case, Section 5(a) of the same
rule provides that the plaintiff is obliged to declare under oath that to the best
of his knowledge, no such other action or claim is pending.

Records show that the issues raised in the instant petition and those in the
June 16, 2010 Memorandum of Appeal filed with the NLRC likewise cover
different subject matters and causes of action. In this case, the validity of
Alcaraz’s dismissal is at issue whereas in the said Memorandum of Appeal,
the propriety of the issuance of a writ of execution was in question. Thus,
given the dissimilar issues, petitioners did not have to disclose in the
present petition the filing of their June 16, 2010 Memorandum of Appeal
with the NLRC. In any event, considering that the issue on the propriety of
the issuance of a writ of execution had been resolved in the Second CA

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10. Permanent Savings Bank v. Velarde, G.R. No. 140608, not bind him and that it did not truly express the real intention of the
September 23, 2004 parties as stated in the defenses.”

Facts: On September 6, 1995, petitioner bank presented its sole witness, Antonio
In a complaint for sum of money filed before the Regional Trial Court of Marquez, the Assistant Department Manager of the Philippine Deposit
Manila (Branch 37), docketed as Civil Case No. 94-71639, petitioner Insurance Corporation (PDIC) and the designated Deputy Liquidator for
Permanent Savings and Loan Bank sought to recover from respondent petitioner bank, who identified the Promissory Note dated September 28,
Mariano Velarde, the sum of P1,000,000.00 plus accrued interests and 1983, the Loan Release Sheet dated September 28, 1983, and the Disclosure
penalties, based on a loan obtained by respondent from petitioner bank, Statement of Loan Credit Transaction.
evidenced by the following:
(1) promissory note dated September 28, 1983; After petitioner bank rested its case, respondent, instead of presenting
(2) loan release sheet dated September 28, 1983; and evidence, filed with leave of court his demurrer to evidence, alleging the
(3) loan disclosure statement dated September 28, 1983. grounds that:
1. plaintiff failed to prove its case by preponderance of evidence
Petitioner bank, represented by its Deputy Liquidator after it was placed 2. the cause of action, concluding arguenti that it exists, is barred by
under liquidation, sent a letter of demand to respondent on July 27, 1988, prescription and/or laches
demanding full payment of the loan. Despite receipt of said demand letter,
respondent failed to settle his 6 account. Another letter of demand was sent RTC granted the demurrer and dismissed the complaint.
on February 22, 1994, and this time, respondent’s counsel replied, stating that
the obligation “is not actually existing but covered by contemporaneous or On appeal, CA affirmed. The appellate court found that petitioner failed to
subsequent agreement between the parties . . .” present any evidence to prove the existence of respondent’s alleged loan
obligations, considering that respondent denied petitioner’s allegations in its
In his Answer, respondent disclaims any liability on the instrument: complaint. It also found that petitioner bank’s cause of action is already
“on the existence of the alleged loan of P1-Million, and the purported barred by prescription.
documents evidencing the same, only the signature appearing at the back of
the promissory note, Annex “A” seems to be that of herein defendant. Hence this petition.

However, as to any liability arising therefrom, the receipt of the said amount Issue:
of P1-Million shows that the amount was received by another person, not the W/N petitioner has established the genuineness, due execution and
herein defendant. Hence, no liability attaches and as further stated in the authenticity of the loan documents – Yes, lower courts erred.
special and affirmative defenses that, assuming the promissory note exists, it
does not bind much less is there the intention by the parties to bind the herein Held:
defendant. In other words, the documents relative to the loan do not express Yes, lower courts erred.
the true intention of the parties.”
The pertinent rule on actionable documents is found in Rule 8, Section 7 of
Respondent’s Answer also contained a denial under oath, which reads: the Rules of Court which provides that when the cause of action is anchored
“I, MARIANO Z. VELARDE, of age, am the defendant in this case, that I on a document, the genuineness or due execution of the instrument shall be
caused the preparation of the complaint and that all the allegations thereat are deemed impliedly admitted unless the defendant, under oath, specifically
true and correct; that the promissory note sued upon, assuming that it denies them, and sets forth what he claims to be the facts.
exists and bears the genuine signature of herein defendant, the same does

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It was the trial court’s opinion that: Respondent’s denials do not constitute an effective specific denial as
“The mere presentation of supposed documents regarding the loan, but absent contemplated by law. In the early case of Songco vs. 27 Sellner, the Court
the testimony of a competent witness to the transaction and the documentary expounded on how to deny the genuineness and due execution of an
evidence, coupled with the denial of liability by the defendant does not suffice actionable document, viz.:
to meet the requisite preponderance of evidence in civil cases. The “. . . This means that the defendant must declare under oath that he did
documents, standing alone, unsupported by independent evidence of their not sign the document or that it is otherwise false or fabricated. Neither
existence, have no legal basis to stand on. They are not competent does the statement of the answer to the effect that the instrument was procured
evidence…” by fraudulent representation raise any issue as to its genuineness or due
execution. On the contrary such a plea is an admission both of the
The Court of Appeals concurred with the trial court’s finding and genuineness and due execution thereof, since it seeks to avoid the instrument
affirmed the dismissal of the complaint, viz.: upon a ground not affecting either.”
“. . . The bank should have presented at least a single witness qualified to
testify on the existence and execution of the documents it relied upon to prove In fact, respondent’s allegations amount to an implied admission of the due
the disputed loan obligations of Velarde. . . . This falls short of the execution and genuineness of the promissory note. The admission of the
requirement that (B)efore any private writing may be received in evidence, its genuineness and due execution of a document means
due execution and authenticity must be proved either: (a) By anyone who saw 1. that the party whose signature it bears admits that he voluntarily signed the
the writing executed; (b) By evidence of the genuineness of the handwriting document or it was signed by another for him and with his authority;
of the maker; or (c) By a subscribing witness. (Rule 132, Sec. 21, Rules of 2. that at the time it was signed it was in words and figures exactly as set out
Court) . . . in the pleading of the party relying upon it;
3. that the document was delivered; and
It is not true, as the Bank claims, that there is no need to prove the loan and 4. that any formalities required by law, such as a seal, an acknowledgment,
its supporting papers as Velarde has already admitted these. Velarde had in or revenue stamp, which it lacks, are waived by him.
fact denied these in his responsive pleading. And consistent with his denial,
he objected to the presentation of Marquez as a witness to identify the Also, it effectively eliminated any defense relating to the authenticity and due
Exhibits of the Bank, and objected to their admission when these were offered execution of the document, e.g., that the document was spurious, counterfeit,
as evidence. Though these were grudgingly admitted anyway, still or of different import on its face as the one executed by the parties; or that
admissibility of evidence should not be equated with weight of evidence…” the signatures appearing thereon were forgeries; or that the signatures were
unauthorized.
A reading of respondent’s Answer, however, shows that respondent did not
specifically deny that he signed the loan documents. What he merely stated Clearly, both the trial court and the Court of Appeals erred in concluding that
in his Answer was that the signature appearing at the back of the promissory respondent specifically denied petitioner’ s allegations regarding the loan
note seems to be his. Respondent also denied any liability on the promissory documents, as respondent’s Answer shows that he failed to specifically deny
note as he allegedly did not receive the amount stated therein, and the25loan under oath the genuineness and due execution of the promissory note and its
documents do not express the true intention of the parties. Respondent concomitant documents. Therefore, respondent is deemed to have admitted
reiterated these allegations in his “denial under oath,” stating that “the the loan documents and acknowledged his obligation with petitioner; and
promissory note sued upon, assuming that it exists and bears the genuine with respondent’s implied admission, it was not necessary for petitioner to
signature of herein defendant, the same does not bind him and that it did not present further evidence to establish the due execution and authenticity of the
truly express the real intention of the parties as stated in the defenses . . .” loan documents sued upon.

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While Section 22, Rule 132 of the Rules of Court requires that private
documents be proved of their due execution and authenticity before they can
be received in evidence, i.e., presentation and examination of witnesses to
testify on this fact; in the present case, there is no need for proof of execution
and authenticity with respect to the loan documents because of respondent’s
implied admission thereof.

Lastly, if a demurrer to evidence is granted but on appeal the order of


dismissal is reversed, the movant shall be deemed to have waived the right to
present evidence. The movant who presents a demurrer to the plaintiff’s
evidence retains the right to present their own evidence, if the trial court
disagrees with them; if the trial court agrees with them, but on appeal, the
appellate court disagrees with both of them and reverses the dismissal order,
the defendants lose the right to present their own evidence. The appellate
court shall, in addition, resolve the case and render judgment on the merits,
inasmuch as a demurrer aims to discourage prolonged litigations. Thus,
respondent may no longer offer proof to establish that he has no liability
under the loan documents sued upon by petitioner.

The promissory note signed and admitted by respondent provides for the loan
amount of P1,000,000.00, to mature on October 13, 1983, with interest at the
rate of 25% per annum. The note also provides for a penalty charge of 24%
per annum of the amount due and unpaid, and 25% attorney’s fees. Hence,
respondent should be held liable for these sums.

WHEREFORE, the petition is GRANTED. The Decisions of the Regional


Trial Court of Manila (Branch 37) dated January 26, 1996, and the Court of
Appeals dated October 27, 1999 are SET ASIDE. Respondent is ordered to
pay One Million Pesos (P1,000,000.00) plus 25% interest and 24% penalty
charge per annum beginning October 13, 1983 until fully paid, and 25% of
the amount due as attorney’s fees.
Costs against respondent.

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11. S.C. Megaworld Construction v. Parada, 2013 the trial court should have dismissed the complaint for failure of the
respondent to implead Genlite Industries as “a proper party in interest”, as
Facts: provided in Section 2 of Rule 3 of the 1997 Rules of Civil Procedure.
S.C. Megaworld Construction and Development Corporation (petitioner) In Section 1(g) of Rule 16 of the Rules of Court, it is also provided that the
bought electrical lighting materials from Genlite Industries, a sole defendant may move to dismiss the suit on the ground that it was not the
proprietorship owned by Engineer Luis U. Parada (respondent), for its ground that it was not brought in the name of or against the real party in
Read-Rite project in Canlubang, Laguna. The petitioner was unable to pay interest, with the effect that the complaint is then deemed to state no cause of
for the above purchase on due date, but blamed it on its failure to collect under action.
its sub-contract with the Enviro Kleen Technologies, Inc. (Enviro Kleen). It
was however able to persuade Enviro Kleen to agree to settle its above CA dismissed the appeal. The CA noted that the petitioner in its answer
purchase, but after paying the respondent P250,000.00 on June 2, 1999,4 below raised only the defense of novation, and that at no stage in the
Enviro Kleen stopped making further payments, leaving an outstanding proceedings did it raise the question of whether the suit was brought in the
balance of P816,627.00. name of the real party in interest. Moreover, the appellate court found from
the sales invoices and receipts that the respondent is the sole proprietor of
It also ignored the various demands of the respondent, who then filed a suit Genlite Industries, and therefore the real party-plaintiff.
in the RTC to collect from the petitioner the said balance, plus damages,
costs and expenses. Said the CA:
“Settled is the rule that litigants cannot raise an issue for the first time on
The petitioner in its answer denied liability, claiming that it was released from appeal as this would contravene the basic rules of fair play and justice.
its indebtedness to the respondent by reason of the novation of their contract,
which, it reasoned, took place when the latter accepted the partial payment of In any event, there is no question that [respondent] Engr. Luis U. Parada is
Enviro Kleen in its behalf, and thereby acquiesced to the substitution of the proprietor of Genlite Industries, as shown on the sales invoice and
Enviro Kleen as the new debtor in the petitioner’s place. delivery receipts. There is also no question that a special power of attorney
was executed by [respondent] Engr. Luis U. Parada in favor of Engr.
RTC ruled for respondent: Leonardo A. Parada authorizing the latter to file a complaint against [the
“WHEREFORE, judgment is hereby rendered for the [respondent]. [The petitioner].”
petitioner] is hereby ordered to pay the [respondent] the following: A. the
sum of [P]816,627.00 representing the principal obligation due; On MR, the petitioner raised for the first time the issue of the validity of
B. the sum equivalent to twenty percent (20%) per month of the principal the verification and certification of non-forum shopping attached to the
obligation due from date of judicial demand until fully paid as and for complaint. CA denied the motion for lack of merit.
interest; and
C. the sum equivalent to twenty[-]five [percent] (25%) of the principal sum Hence this petition claiming that:
due as and for attorney’s fees and other costs of suits. 1. the complaint should have been dismissed outright by the RTC for an
The compulsory counterclaim interposed by the [petitioner] is hereby ordered invalid CONFS, and
dismissed for lack of merit. 2. CA erred in not declaring that there was a novation of the contract between
SO ORDERED.7 (Emphasis supplied)” the parties through substitution of the debtor, which resulted in the release of
the petitioner from its obligation to pay the respondent the amount of its
On appeal to the CA, the petitioner maintained that the trial court erred in purchase.
ruling that no novation of the contract took place through the substitution of
Enviro Kleen as the new debtor. But for the first time, it further argued that Issue:

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W/N the complaint should have been dismissed outright due to an invalid “That I/we am/are the Plaintiff in the above-captioned case;
CONFS – No. That I/we have caused the preparation of this Complaint;
That I/we have read the same and that all the allegations therein are true and
correct to the best of my/our knowledge; x x x x.”
Held:
No. In this petition, the petitioner reiterates its argument before the CA that the
above verification is invalid, since the SPA executed by the respondent did
The petition is devoid of merit. not specifically include an authority for Leonardo to sign the verification and
certification of non-forum shopping, thus rendering the complaint defective
The verification and certification of non-forum shopping in the for violation of §§4 and 5 of Rule 7.
complaint is not a jurisdictional but a formal requirement, and any
objection as to non-compliance therewith should be raised in the The petitioner’s argument is untenable.
proceedings below and not for the first time on appeal.
The petitioner failed to reckon that any objection as to compliance with the
“It is well-settled that no question will be entertained on appeal unless it has requirement of verification in the complaint should have been raised in
been raised in the proceedings below. Points of law, theories, issues and the proceedings below, and not in the appellate court for the first time.
arguments not brought to the attention of the lower court, administrative
agency or quasi-judicial body, need not be considered by a reviewing court, In KILUSAN-OLALIA v. CA, 528 SCRA 45 (2007) it was held that
as they cannot be raised for the first time at that late stage. Basic verification is a formal, not a jurisdictional requisite: We have
considerations of fairness and due process impel this rule. Any issue raised emphasized, time and again, that verification is a formal, not a jurisdictional
for the first time on appeal is barred by estoppel.” requisite, 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
Through a Special Power of Attorney (SPA), the respondent authorized Engr. speculation. The Court may order the correction of the pleading, if not
Leonardo A. Parada (Leonardo), the eldest of his three children, to perform verified, or act on the unverified pleading if the attending circumstances are
the following acts in his behalf: such that a strict compliance with the rule may be dispensed with in order that
a) to file a complaint against the petitioner for sum of money with damages; the ends of justice may be served. Further, in rendering justice, courts have
and always been, as they ought to be, conscientiously guided by the norm that on
b) to testify in the trial thereof and sign all papers and documents related the balance, technicalities take a backseat vis-à-vis substantive rights, and not
thereto, with full powers to enter into stipulation and compromise.15 the other way around.

Incidentally, the respondent, a widower, died of cardio-pulmonary arrest on Moreover, granting that Leonardo has no personal knowledge of the
January 21, 2009,16 survived by his legitimate children, namely, Leonardo, transaction subject of the complaint below, Section 4 of Rule 7 provides that
Luis, Jr., and Lalaine, all surnamed Parada. They have since substituted him the verification need not be based on the verifier’s personal knowledge
in this petition, per the Resolution of the Supreme Court dated September 2, but even only on authentic records. Sales invoices, statements of accounts,
2009.17 Also, on July 23, 2009, Luis, Jr. and Lalaine Parada executed an SPA receipts and collection letters for the balance of the amount still due to the
authorizing their brother Leonardo to represent them in the instant petition.18 respondent from the petitioner are such records. There is clearly substantial
compliance by the respondent’s attorney-in-fact with the requirement of
In the verification and certification of non-forum shopping attached to the verification.
complaint in Civil Case No. Q01-45212, Leonardo as attorney-in-fact of his
father acknowledged as follows:

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Lastly, it is well-settled that a strict compliance with the rules may be
dispensed with in order that the ends of sub-stantial justice may be served.25 It appears from the recital of facts in the trial court’s decision that the
It is clear that the present controversy must be resolved on its merits, lest for respondent demanded interest of two percent (2%) per month upon the
a technical oversight the respondent should be deprived of what is justly due balance of the purchase price of P816,627.00, from judicial demand until full
him. payment. There is then an obvious clerical error committed in the fallo of the
trial court’s decision, for it incorrectly ordered the defendant therein to pay
A sole proprietorship has no juridical personality separate and distinct from “the sum equivalent to twenty percent (20%) per month of the principal
that of its owner, and need not be impleaded as a party-plaintiff in a civil obligation due from date of judicial demand until fully paid as and for
case. interest.”

On the question of whether Genlite Industries should have been impleaded as A clerical mistake is one which is visible to the eyes or obvious to the
a party-plaintiff, Section 1 of Rule 3 of the Rules of Court provides that only understanding; an error made by a clerk or a transcriber; a mistake in copying
natural or juridical persons or entities authorized by law may be parties in a or writing. The Latin maxims Error placitandi aequitatem non tollit (“A
civil case. Article 44 of the New Civil Code enumerates who are juridical clerical error does not take away equity”), and Error scribentis nocere non
persons: debit (“An error made by a clerk ought not to injure; a clerical error may be
Art. 44. The following are juridical persons: corrected”) are apt in this case. Viewed against the landmark case of Medel
(1) The State and its political subdivisions; v. CA, 299 SCRA 481 (1998), an award of interest of 20% per month on the
(2) Other corporations, institutions and entities for public interest or purpose, amount due is clearly excessive and iniquitous. It could not have been the
created by law; their personality begins as soon as they have been constituted intention of the trial court, not to mention that it is way beyond what the
according to law; plaintiff had prayed for below.
(3) Corporations, partnerships and associations for private interest or purpose
to which the law grants a juridical personality, separate and distinct from that It is settled that other than in the case of judgments which are void ab initio
of each shareholder, partner or member. for lack of jurisdiction, or which are null and void per se, and thus may be
questioned at any time, when a decision is final, even the court which issued
Genlite Industries is merely the DTI- registered trade name or style of the it can no longer alter or modify it, except to correct clerical errors or mistakes.
respondent by which he conducted his business. As such, it does not exist as
a separate entity apart from its owner, and therefore it has no separate juridical The foregoing notwithstanding, of more important consideration in the case
personality to sue or be sued. As the sole proprietor of Genlite Industries, before us is the fact that it is nowhere stated in the trial court’s decision that
there is no question that the respondent is the real party in interest who stood the parties had in fact stipulated an interest on the amount due to the
to be directly benefited or injured by the judgment in the complaint below. respondent. Even granting that there was such an agreement, there is no
There is then no necessity for Genlite Industries to be impleaded as a party- finding by the trial court that the parties stipulated that the outstanding debt
plaintiff, since the complaint was already filed in the name of its proprietor, of the petitioner would be subject to two percent (2%) monthly interest. The
Engr. Luis U. Parada. To heed the petitioner’s sophistic reasoning is to permit most that the decision discloses is that the respondent demanded a monthly
a dubious technicality to frustrate the ends of substantial justice. interest of 2% on the amount outstanding.

Pursuant to Article 2209 of the Civil Code, except as provided under WHEREFORE, premises considered, the Decision dated April 30, 2008 of
Central Bank Circular No. 905, and now under Bangko Sen- tral ng the Court of Appeals in CA-G.R. CV No. 83811 is AFFIRMED with
Pilipinas Circular No. 799, which took effect on July 1, 2013, the MODIFICATION. Petitioner is ordered to pay respondent Engr. Luis A.
respondent may be awarded interest of six percent (6%) of the judgment Parada, represented by Engr. Leonardo A. Parada, the principal amount due
amount by way of actual and compensatory damages. of P816,627.00, plus interest at twelve percent (12%) per annum, reckoned

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from judicial demand until June 30, 2013, and six percent (6%) per annum
from July 1, 2013 until finality hereof, by way of actual and compensatory
damages. Thereafter, the principal amount due as adjusted by interest shall
likewise earn interest at six percent (6%) per annum until fully paid. The
award of attorney’s fees is DELETED. SO ORDERED.

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VIII. Default (Rule 9) Petitioners then filed their Additional Comment on the Motion to Dismiss,
Supplemental Motion to Dismiss and Comment on the Second Supplemental
1. Anuncacion v. Bocanegra, G.R. No. 152496, July 30, 2009 Motion to Dismiss.13

Facts: RTC sustained the respondents and dismissed the complaint for lack of
On September 29, 2000, petitioners filed before the RTC, Manila, a jurisdiction over the persons of respondents as defendants:
complaint for Quieting of Title and Cancellation of TCT No. 122452, “In point is Section 3, Rule 3 of the same Rules, which reads— “Where the
docketed as Civil Case No. 00-98813. 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 complaint averred that defendants (respondents) may be served with the case and shall be deemed to be the real party in interest. A representative
summons and legal processes through Atty. Rogelio G. Pizarro, Jr., with may be a trustee of an express trust, a guardian, an executor or administrator,
office address at 2830 Juan Luna St., Tondo, Manila.6 The summons, or a party authorized by law or these Rules. x x x x”
together with the copies of the complaint, were then served on Atty. Pizarro.
In the case at bar Atty. Pizarro, Jr., has not been shown to be a trustee of an
The record shows that before the filing of the said complaint, Atty. Pizarro express trust, a guardian, or any of the above for the action to be allowed to
wrote a demand letter7 on behalf of respondents and addressed to petitioner be defended by a representative.
German Anunciacion, among others, demanding that they vacate the land
owned by his clients (respondents), who needed the same for their own use. The fact that Atty. Pizarro, Jr., was the lawyer of the defendants in the demand
letters do not per se make him their representative for purposes of the present
On October 27, 2000, respondents, through their counsel, Atty. Norby C. action. To this effect, service on lawyer of defendant is an invalid service of
Caparas, Jr., filed a Motion to Dismiss on the ground that the complaint summons. (Cordova v. Provincial Sheriff of Iloilo, 89 SCRA 59)
stated no cause of action. Petitioners filed their Comment on the Motion to
Dismiss9 on November 6, 2000. Going to the other raised issue, Section 20, Rule 14 of the 1997 Rules of Civil
Procedure provides—
A Supplemental Motion to Dismiss and Reply to the Comment on the “The defendant’s voluntary appearance in the action shall be equivalent to
Motion to Dismiss10 dated November 13, 2000 was filed by respondents, service of summons. The inclusion in a motion to dismiss of other grounds
alleging an additional ground that petitioners failed to pay the required aside from lack of jurisdiction over the person of the defendant shall not be
filing fee. deemed a voluntary appearance.”

The petitioners filed, on November 27, 2000, their Opposition to the The presentation of all objections then available as was done by the movants
Supplemental Motion to Dismiss and Comment to the Reply to the Comment subserves the omnibus motion rule and the concomitant policy against
on the Motion to Dismiss.11 multiplicity of suits.”

Thereafter, respondents filed a Second Supplemental Motion to Dismiss On a R65, CA affirmed RTC. The CA dismissed the petition upon finding
and Manifestation dated November 27, 2000,12 citing the following grounds: that there was no waiver of the ground of lack of jurisdiction on the part of
1.) That the court has no jurisdiction over the person of the defending respondents in the form of voluntary appearance. Applying Section 20, Rule
party. 14 of the 1997 Rules of Civil Procedure, the CA held that although the
2.) That the court has no jurisdiction over the subject matter of the claim. grounds alleged in the two (2) earlier Motion to Dismiss and Supplemental
3.) That the pleading asserting the claim states no cause of action. Motion to Dismiss were lack of cause of action and failure to pay the required
filing fee, the filing of the said motions did not constitute a waiver of the

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ground of lack of jurisdiction on their persons as defendants. The CA then Held:
concluded that there was no voluntary appearance on the part of Yes.
respondents/defendants despite the filing of the aforesaid motions. The CA
also rejected petitioners’ contention that the service made to Atty. Rogelio Respondents, through counsel, filed a motion to dismiss dated October 25,
Pizarro, Jr. was deemed service upon respondents/defendants: 2000,18 with only one ground, i.e., that the pleading asserting the claim
“states no cause of action.”
“First of all, Atty. Rogelio Pizarro cannot be considered as counsel of record
wherein We could apply the jurisprudential rule that notice to counsel is Under this ground, respondents raised the issues quoted hereunder:
notice to client. Atty. Pizarro cannot be deemed counsel on record since I. Defendants19 anchored their complaint on a WRONG Decree of
Defendants were not the one’s who instituted the action, like plaintiffs who Registration;
did the same thru counsel and therefore, obviously the one who signed the II. The Government of the Republic of the Philippines has recognized the
pleadings is the counsel on record. authenticity of TCT No. 122452; and
III. Plaintiffs do NOT have the legal personality to “quiet the title” of the
Sadly, the Motion to Dismiss filed by Private Respondents were signed not subject property.
by Atty. Pizarro but by someone else. How then could Petitioners claim that
Atty. Pizarro represents Private Respondents? Section 20, Rule 14 of the 1997 Rules of Civil Procedure (the Rules) states:
“Sec. 20. Voluntary Appearance.—The defendant’s voluntary appearance in
Secondly, the fact that Atty. Pizarro was the one who wrote and signed the the action shall be equivalent to service of summons. The inclusion in a
August 19, 2000 letter, on behalf of Private Respondents, demanding that motion to dismiss of other grounds aside from lack of jurisdiction over
Petitioners vacate the premises of the former’s land does not fall under the the person of the defendant shall not be deemed a voluntary
substituted service rule. To be sure, Section 7 of Rule 14 of the 1997 Rules, appearance.” (Underscoring ours)
provide thus:
Sec. 7. Substituted Services. — If, for justifiable causes the defendant cannot The filing of the above-mentioned Motion to Dismiss, without invoking the
be served within a reasonable time as provided in the preceding section; lack of jurisdiction over the person of the respondents, is deemed a voluntary
service maybe reflected (a) by leaving copies of the summons at the appearance on the part of the respondents under the aforequoted provision of
defendants’ residence with some person of suitable age and discretion then the Rules. The same conclusion can be drawn from the filing of the
residing therein or (b) by leaving the copies at defendant (sic) office or regular Supplemental Motion to Dismiss and Reply to the Comment on the Motion
place of business with some competent person in charge thereof. to Dismiss dated November 13, 2000 which alleged, as an additional ground
for the dismissal of petitioners’ complaint, the failure of plaintiffs to pay the
In the case at bench, service upon Atty. Pizarro did not fall under the required filing fee again but failed to raise the alleged lack of jurisdiction of
aforequoted rule and therefore cannot qualify as substituted service. Since the the court over the person of the respondents.
service made by Petitioners was defective, the Public Respondent court never
did acquire jurisdiction over the persons of defendants and therefore correctly It was only in respondents’ Second Supplemental Motion to Dismiss dated
ordered the dismissal of the complaint.” November 27, 2000 that respondents for the first time raised the court’s lack
of jurisdiction over their person as defendants on the ground that summons
MR denied. Hence this petition. were allegedly not properly served upon them. The filing of the said Second
Supplemental Motion to Dismiss did not divest the court of its jurisdiction
Issue: over the person of the respondents who had earlier voluntarily appeared
W/N the RTC acquired jurisdiction over the persons of the defendants – Yes. before the trial court by filing their motion to dismiss and the supplemental
motion to dismiss.

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com plaint in order to delay or frustrate the prosecution of the plaintiff’s cause
The dismissal of the complaint on the ground of lack of jurisdiction over the of action.
person of the respondents after they had voluntarily appeared before the trial
court clearly constitutes grave abuse of discretion amounting to lack of Although the CA correctly observed that Atty. Pizarro, as the lawyer of the
jurisdiction or in excess of jurisdiction on the part of the RTC. respondents in the demand letters, does not per se make him their
representative for purposes of the present action, a scrutiny of the record
Quite apart from their voluntary appearance, Motion to Dismiss were clearly shows that the address of Atty. Pizarro and Atty. Norby Caparas, Jr.,
in violation of Rule 15, Section 8 in relation to Rule 9, Section 1 of the Rules. (the counsel who eventually entered his appearance for respondents) is
Rule 15, Section 8 of the Rules provides: the same. This circumstance leads us to believe that respondents’ belated
“Sec. 8. Omnibus motion.—Subject to the provisions of Section 1 of Rule 9, reliance on the purported improper service of summons is a mere
a motion attacking a pleading, order, judgment, or proceeding shall include afterthought, if not a bad faith ploy to avoid answering the complaint.
all objections then available, and all objections not so included shall be
deemed waived.” (emphasis ours) We find it appropriate to cite Philippine American Life & General Insurance
Company v. Breva, 442 SCRA 217 (2004), where this Court held that: The
Rule 9, Section 1, in turn, states: trial court did not commit grave abuse of discretion when it denied the motion
“Sec. 1. Defenses and objections not pleaded.—Defenses and objections not to dismiss filed by the petitioner due to lack of jurisdiction over its person. In
pleaded either in a motion to dismiss or in the answer are deemed waived. denying the motion to dismiss, the CA correctly relied on the ruling in
However, when it appears from the pleadings or the evidence on record that Lingner & Fisher GMBH vs. Intermediate Appellate Court, 125 SCRA 522
the court has no jurisdiction over the subject matter, that there is another (1983), thus: A case should not be dismissed simply because an original
action pending between the same parties for the same cause, or that the action summons was wrongfully served. It should be difficult to conceive, for
is barred by prior judgment or by statute of limitations, the court shall dismiss example, that when a defendant personally appears before a Court
the claim.” (emphasis ours) complaining that he had not been validly summoned, that the case filed
against him should be dismissed. An alias summons can be actually served
Applying the foregoing rules, respondents’ failure to raise the alleged lack of on said defendant”
jurisdiction over their persons in their very first motion to dismiss was fatal
to their cause. They are already deemed to have waived that particular ground In the recent case of Teh vs. Court of Appeals, 401 SCRA 576 (2003), the
for dismissal of the complaint. The trial court plainly abused its discretion petitioner therein also filed a motion to dismiss before filing his answer as
when it dismissed the complaint on the ground of lack of jurisdiction over the defendant in the trial court on the ground of failure to serve the summons on
person of the defendants. Under the Rules, the only grounds the court could him. In that case, the Court agreed with the appellate court’s ruling that there
take cognizance of, even if not pleaded in the motion to dismiss or answer, was no abuse of discretion on the part of the trial court when the latter denied
are: the petitioner’s motion to dismiss the complaint and ordered the issuance of
(a) lack of jurisdiction over the subject matter; an alias summons.
(b) existence of another action pending between the same parties for the same
cause; and A trial court should be cautious before dismissing complaints on the sole
(c) bar by prior judgment or by statute of limitations. ground of improper service of summons considering that it is well within its
discretion to order the issuance and service of alias summons on the correct
We likewise cannot approve the trial court’s act of entertaining supplemental person in the interest of substantial justice. Accordingly, the Court finds that
motions to dismiss which raise grounds that are already deemed waived. To the CA erred in dismissing the petition and affirming the challenged orders
do so would encourage lawyers and litigants to file piecemeal objections to a of the RTC which dismissed the complaint on the ground of lack of
jurisdiction over the person of the respondents who were the defendants.

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2. Martinez v. Republic, G.R. No. 160895, October 30, 2006 property. Accordingly, the LRA manifested that this lot should not have been
adjudicated to Martinez for lack of jurisdiction. This letter was referred by
Facts: the RTC to the Court of Appeals for appropriate action.
On 24 February 1999, petitioner Jose R. Martinez (Martinez) filed a petition
for the registration in his name of three (3) parcels of land included in the On 10 October 2003, CA reversed the RTC and ordered the dismissal of
Cortes, Surigao del Sur Cadastre. the petition for registration. In light of the opposition filed by the OSG, the
appellate court found the evidence presented by Martinez as insufficient to
The case was docketed as Land Registration Case No. N-30 and raffled to the support the registration of the subject lots. The Court of Appeals concluded
Regional Trial Court (RTC) of Surigao del Sur, Branch 27. The Office of that the oral evidence presented by Martinez merely consisted of general
the Solicitor General (OSG) was furnished a copy of the petition. The trial declarations of ownership, without alluding to specific acts of ownership
court set the case for hearing and directed the publication of the performed by him or his predecessors-in-interest. It likewise debunked the
corresponding Notice of Hearing in the Official Gazette. documentary evidence presented by Martinez, adjudging the same as either
inadmissible or ineffective to establish proof of ownership.
On 30 September 1999, the OSG, in behalf of the Republic of the
Philippines, opposed the petition on the grounds that appellee’s possession No motion for reconsideration appears to have been filed with the Court of
was not in accordance with Section 48(b) of Commonwealth Act No. 141; Appeals by Martinez, who instead directly assailed its Decision before this
that his muniments of title were insufficient to prove bona-fide acquisition Court through the present petition.
and possession of the subject parcels; and that the properties formed part of
the public domain and thus not susceptible to private appropriation. Issue:
W/N the OSG could have still appealed the RTC decision after it had been
Despite the opposition filed by the OSG, the RTC issued an order of declared in default – Yes.
general default, even against the Republic of the Philippines, on 29 March
2000. This ensued when during the hearing of even date, no party appeared Held:
before the Court to oppose Martinez’s petition. Afterwards, the trial court Yes.
proceeded to receive Martinez’s oral and documentary evidence in support of
his petition. On 1 August 2000, the RTC rendered a Decision concluding We note at the onset that the OSG does not impute before this Court that the
that Martinez and his predecessors-in-interest had been for over 100 RTC acted improperly in declaring public respondent in default, even though
years in possession characterized as continuous, open, public, and in the an opposition had been filed to Martinez’s petition. Under Section 26 of
concept of an owner. Presidential Decree No. 1529, as amended, the order of default may be issued
“[i]f no person appears and answers within the time allowed.” The RTC
The RTC thus decreed the registration of the three (3) lots in the name of appears to have issued the order of general default simply on the premise that
Martinez. no oppositor appeared before it on the hearing of 29 March 2000. But it
cannot be denied that the OSG had already duly filed its Opposition to
From this Decision, the OSG filed a Notice of Appeal dated 28 August 2000, Martinez’s petition long before the said hearing.
which was approved by the RTC. However, after the records had been
transmitted to the Court of Appeals, the RTC received a letter dated 21 As we held in Director of Lands v. Santiago:
February 2001 from the Land Registration Authority (LRA) stating that only “it was improper for the respondent Judge taking cognizance of such
Lot Nos. 464-A and 464-B were referred to in the Notice of Hearing registration case to declare the oppositor in default simply because he failed
published in the Official Gazette; and that Lot No. 370, Cad No. 597 had been to appear on the day set for the initial hearing…”
deliberately omitted due to the lack of an approved survey plan for that

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Strangely, the OSG did not challenge the propriety of the default order, In all the above instances where the judgment or final order is not appealable,
whether in its appeal before the Court of Appeals or in its petition before this the aggrieved party may file an appropriate special civil action under Rule
Court. It would thus be improper for the Court to make a pronouncement on 65.”
the validity of the default order since the same has not been put into issue.
Nonetheless, we can, with comfort, proceed from same apparent premise of Evidently, the prior warrant that a defaulted defendant had the right to appeal
the OSG that the default order was proper or regular. was removed from Section 2, Rule 41. On the other hand, Section 3 of Rule
9 of the 1997 Rules incorporated the particular effects on the parties of an
The juridical utility of a declaration of default cannot be disputed. By order of default.
forgoing the need for adversarial proceedings, it affords the opportunity for
the speedy resolution of cases even as it penalizes parties who fail to give By 1997, the doctrinal rule concerning the remedies of a party declared in
regard or obedience to the judicial processes. default had evolved into a fairly comprehensive restatement as offered in
Lina v. Court of Appeals:
The extent to which a party in default loses standing in court has been the 1. The defendant in default may, at any time after discovery thereof
subject of considerable jurisprudential debate. and before judgment, file a motion, under oath, to set aside the order
of default on the ground that his failure to answer was due to fraud,
For around thirty-odd years, there was no cause to doubt that a defaulted accident, mistake or excusable neglect, and that he has meritorious
defendant had the right to appeal the adverse decision of the trial court even defenses; (Sec. 3, Rule 18)
without seeking to set aside the order of default. Then, in 1997, the Rules of 2. If the judgment has already been rendered when the defendant
Civil Procedure were amended, providing for a new Section 2, Rule 41. The discovered the default, but before the same has become final and
new provision reads: executory, he may file a motion for new trial under Section 1(a) of
“SECTION 1. Subject of appeal. —An appeal may be taken from a judgment Rule 37;
or final order that completely disposes of the case, or of a particular matter 3. If the defendant discovered the default after the judgment has
therein when declared by these Rules to be appealable. become final and executory, he may file a petition for relief under
Section 2 of Rule 38; and
No appeal may be taken from: 4. He may also appeal from the judgment rendered against him as
(a) An order denying a motion for new trial or reconsideration; contrary to the evidence or to the law, even if no petition to set aside
(b) An order denying a petition for relief or any similar motion seeking relief the order of default has been presented by him. (Sec. 2, Rule 41)
from judgment;
(c) An interlocutory order; The fourth remedy, that of appeal, is anchored on Section 2, Rule 41 of the
(d) An order disallowing or dismissing an appeal; 1964 Rules. Yet even after that provision’s deletion under the 1997 Rules,
(e) An order denying a motion to set aside a judgment by consent, confession the Court did not hesitate to expressly rely again on the Lina doctrine,
or compromise on the ground of fraud, mistake or duress, or any other ground including the pronouncement that a defaulted defendant may appeal from the
vitiating consent; judgment rendered against him.
(f) An order of execution;
(g) A judgment or final order for or against or one or more of several parties Yet even if it were to assume the doubtful proposition that this contested right
or in separate claims, coun terclaims, cross-claims and third-party of appeal finds no anchor in the 1997 Rules, the doctrine still exists, applying
complaints, while the main case is pending, unless the court allows an appeal the principle of stare decisis. Jurisprudence applying the 1997 Rules has
therefrom; and continued to acknowledge the Lina doctrine which embodies this right to
(h) An order dismissing an action without prejudice. appeal as among the remedies of a defendant, and no argument in this petition
persuades the Court to rule otherwise.

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In Rural Bank of Sta. Catalina, Inc. v. Land Bank of the Philippines, 435
SCRA 183 (2004), the Court, through Justice Callejo, Sr., again provided a
comprehensive restatement of the remedies of the defending party declared
in default, which we adopt for purposes of this decision:
“It bears stressing that a defending party declared in default loses his standing
in court and his right to adduce evidence and to present his defense. He,
however, has the right to appeal from the judgment by default and assail said
judgment on the ground, inter alia, that the amount of the judgment is
excessive or is different in kind from that prayed for, or that the plaintiff failed
to prove the material allegations of his complaint, or that the decision is
contrary to law.

Such party declared in default is proscribed from seeking a modification or


reversal of the assailed decision on the basis of the evidence submitted by
him in the Court of Appeals, for if it were otherwise, he would thereby be
allowed to regain his right to adduce evidence, a right which he lost in the
trial court when he was declared in default, and which he failed to have
vacated. In this case, the petitioner sought the modification of the decision of
the trial court based on the evidence submitted by it only in the Court of
Appeals.”

If it cannot be made any clearer, we hold that a defendant party declared in


default retains the right to appeal from the judgment by default on the ground:
1. that the plaintiff failed to prove the material allegations of the complaint,
or
2. that the decision is contrary to law, even without need of the prior filing of
a motion to set aside the order of default.

We reaffirm that the Lim Toco doctrine, denying such right to appeal unless
the order of default has been set aside, was no longer controlling in this
jurisdiction upon the effectivity of the 1964 Rules of Court, and up to this
day.

WHEREFORE, the petition is DISMISSED. Costs against petitioner.


SO ORDERED.

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3. Dico v. Vizcaya Management Corporation, 2013 the possessors-by- succession of Lot No. 1412 (formerly Lot No. 1118)
and Lot No. 489; that VMC had land-grabbed a portion of their Lot No.
Facts: 486 totaling 111,966 square meters allegedly brought about by the expansion
Celso Dico was the registered owner of Lot No. 486 of the Cadiz Cadastre. of Cristina Village Subdivision; and that on May 30, 1964 they had filed free
Lot No. 486 was adjacent to Lot No. 29-B and Lot No. 1412 (formerly Lot patent applications in the Bureau of Lands for Lot No. 1412 and Lot No.
No. 1118-B), both also of the Cadiz Cadastre. Celso and his wife Angeles 489.6 They prayed that the possession of Lot No. 486, Lot No. 1412, and Lot
resided on Lot No. 486 since 1958. No. 489 be restored to them; and that the judgment in Civil Case No. 649 be
annulled.
Respondent Vizcaya Management Corporation (VMC) was the registered
owner under TCT No. T-41835 of Lot No. 29-B, also of the Cadiz Cadastre, Celso died during the pendency of the action, and was substituted by Angeles
comprising an area of 369,606 square meters, more or less.3 VMC derived and their children pursuant to the order of November 22, 1991.
its title to Lot No. 29-B from Eduardo and Cesar, both surnamed Lopez, the
registered owners under TCT No. T-14827, which emanated from TCT No. RTC ruled for petitioners, declared them as the absolute owners and
RT-9933 (16739) in the names of Victoria, Eduardo and Cesar, all surnamed ordered the respondent to vacate the lot.
Lopez. TCT No. RT-9933 (16739) was a transfer from TCT No. T- 14281,
which had been transferred from Original Certificate of Title (OCT) No. CA reversed RTC and declared respondent as the absolute owner holding
21331 in the name of Negros Philippines Lumber Company. that petitioners’ action has already prescribed. According to the CA:
“their complaint filed on May 12, 1986, or about 29 years after the issuance
VMC likewise claimed to be the owner of Lot No. 1412, formerly known of the certificate of title to respondent VMC, indeed came too late. They were
as Lot No. 1118-B, also of the Cadiz Cadastre, containing an area of 85,239 deemed to have discovered the fraud as early as September 20, 1934 when
square meters, more or less, and registered in its name under TCT No. T- TCT No. RT-9933 (16739) of the Lopezes was recorded or on November
41834. 10, 1956 when TCT No. T-41835 of respondent VMC was registered.
Their right to seek reconveyance of a portion of Lot No. 29-B, if it existed at
In 1981, respondent VMC filed against the Dicos a complaint for all, had already prescribed.”
unlawful detainer in the City Court of Cadiz (Civil Case No. 649). On
April 24, 1981, the City Court of Cadiz rendered its decision in favor of Hence this petition.
VMC, ordering the Dicos to demolish the concrete water gate or sluice gate
(locally known as trampahan) located inside Lot No. 1, Block 3 of the The Dicos claim, among others, that prescription could not be used by the CA
Cristina Village Subdivision. Inasmuch as the Dicos did not appeal, the to bar their claim for reconveyance by virtue of VMC’s failure to aver them
decision attained finality. On July 3, 1981, the City Court of Cadiz issued in a motion to dismiss or in the answer.
a writ of execution. On November 11, 1985, a second alias writ of execution
was issued. Issue:
W/N petitioner’s action is barred by prescription despite VMC’s failure to
On May 12, 1986, the Dicos commenced an action for the annulment and aver this defense in a MTD or answer – Yes.
cancellation of the titles of VMC (Civil Case No. 180-C), impleading VMC,
the National Land Titles and Deeds Registration Administration, and the Held:
Director of the Bureau of Lands. Yes.

On March 12, 1987, the Dicos amended the complaint. They averred, We find and hold that the action of the Dicos for reconveyance was properly
among others, that they were the registered owners of Lot No. 486 and dismissed.

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To start with, the CA’s explanations for reversing the RTC were very And, lastly, the insistence of the Dicos that prescription could not be used by
thorough, well-founded and well-reasoned. the CA to bar their claim for reconveyance by virtue of VMC’s failure to
aver them in a motion to dismiss or in the answer was unwarranted.
We have examined the factual bases of the CA in reaching its decision, and
have found that its aforequoted findings of fact and conclusions were based Although defenses and objections not pleaded in a motion to dismiss or in an
on the evidence presented at the trial. In view of this, the Court accepts the answer are deemed waived, it was really incorrect for the Dicos to insist that
findings of fact and conclusions of the CA, not just because we are not a trier prescription could not be appreciated against them for that reason.
of facts, but, more importantly, because the CA creditably performed its main
task of conducting a thorough review of the evidence and records of the case Their insistence was contrary to Section 1, Rule 9 of the Rules of Court, which
in order to eruditely and carefully address each of the issues raised and argued provides as follows:
by the Dicos. Section 1. Defenses and objections not pleaded.—Defenses and objections
not pleaded either in a motion to dismiss or in the answer are deemed waived.
Secondly, the CA correctly pointed out that under Article 1456 of the Civil However, when it appears from the pleadings or the evidence on record
Code, the person obtaining property through mistake or fraud is considered that the court has no jurisdiction over the subject matter, that there is
by force of law a trustee of an implied trust for the benefit of the person from another action pending between the same parties for the same cause, or
whom the property comes. Under Article 1144, Civil Code, an action upon that the action is barred by a prior judgment or by statute of limitations,
an obligation created by law must be brought within 10 years from the time the court shall dismiss the claim. (2a)
the right of action accrues. Consequently, an action for reconveyance based
on implied or constructive trust prescribes in 10 years. Under the rule, the defenses of lack of jurisdiction over the subject matter,
litis pendentia, res judicata, and prescription of action may be raised at any
Here, the CA observed that even granting that fraud intervened in the issuance stage of the proceedings, even for the first time on appeal, except that the
of the transfer certificates of title, and even assuming that the Dicos had the objection to the lack of jurisdiction over the subject matter may be barred by
personality to demand the reconveyance of the affected property on the basis laches.
of implied or constructive trust, the filing of their complaint for that purpose
only on May 12, 1986 proved too late for them. WHEREFORE, the Court AFFIRMS the decision of the Court of Appeals
promulgated on September 11, 2002; and ORDERS the petitioners to pay the
That observation was correct and in accord with law and jurisprudence. costs of suit.
Verily, the reckoning point for purposes of the Dicos’ demand of SO ORDERED.
reconveyance based on fraud was their discovery of the fraud. Such
discovery was properly pegged on the date of the registration of the
transfer certificates of title in the adverse parties’ names, because
registration was a constructive notice to the whole world.19 The long
period of 29 years that had meanwhile lapsed from the issuance of the
pertinent transfer certificate of title on September 30, 1934 (the date of
recording of TCT No. RT-9933 [16739] in the name of the Lopezes) or on
November 10, 1956 (the date of recording of TCT No. T- 41835 in VMC’s
name) was way beyond the prescriptive period of 10 years.

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4. Heirs of Medrano v. Estanislao De Vera, G.R. No. 165770, On August 29, 2001, Medrano filed an Amended Complaint impleading
August 09, 2010 the widow and children of Antonio Alvarado, in view of the latter’s death.14
Summons upon the amended complaint was served upon the other
Facts: defendants,15 but no longer served upon Pelagia and Estrellita.
This case concerns a 463-square meter parcel of land5 covered by Transfer
Certificate of Title (TCT) No. 41860 in the name of Flaviana De Gracia On April 2, 2002, respondent Estanislao D. De Vera (De Vera) filed an
(Flaviana). Answer with Counterclaim.16 De Vera presented himself as the real party-
in-interest on the ground that some of the named defendants (Faustina,
In 1980, Flaviana died intestate, leaving her half-sisters Hilaria Martin- Pelagia, Francisca, Elena Kongco-Alvarado, Jesus, and Estrellita) had
Paguyo (Hilaria) and Elena Martin-Alvarado (Elena) as her compulsory executed a Deed of Renunciation of Rights in his favor on March 23, 2002.
heirs.
He maintained that the “Tapno Maamoan ti Sangalobongan” that was
In September 1982, Hilaria and Elena, by virtue of a private document executed by the defendants’ predecessors in favor of Medrano was null and
denominated “Tapno Maamoan ti Sangalobongan,”7 waived all their void for want of consideration. Thus, while some children affirmed the
hereditary rights to Flaviana’s land in favor of Francisca Medrano renunciation of their deceased mothers’ rights in the lot in favor of Medrano,
(Medrano). It stated that the waiver was done in favor of Medrano in the other children renounced their hereditary rights in favor of De Vera.
consideration of the expenses that she incurred for Flaviana’s medication,
hospitalization, wake and burial. Medrano filed a Motion to Expunge Answer with Counterclaim of
Estanislao D. De Vera and to Declare Defendants in Default.18 She argued
In the same year, Medrano built her concrete bungalow on the land in that respondent De Vera had no personality to answer the complaint since he
question without any objection from Hilaria and Elena or from their children. was not authorized by the named defendants to answer in their behalf.

When Hilaria and Elena died, some of their children affirmed the contents of RTC disagreed with Medrano’s argument and admitted De Vera’s
the private document executed by their deceased mothers. To that end, they Answer with Counterclaim. The trial court opined that De Vera did not need
executed separate Deeds of Confirmation of Private Document and a special power of attorney from the defendants because he did not answer
Renunciation of Rights in favor of Medrano.8 They likewise affirmed in said the complaint in their behalf. De Vera made a voluntary appearance in the
documents that Medrano had been occupying and possessing the subject case as the transferee of the defendants’ rights to the subject property. The
property as owner since September 1982. trial court further explained that when the presence of other parties is required
for granting complete relief, the court shall order them to be brought in as
Due to the refusal of the other children9 to sign a similar renunciation, defendants. While it was unsure whether De Vera was an indispensable party
Medrano filed a Complaint on April 27, 2001 for quieting of title, to the case, the trial court opined that at the very least he was a necessary
reconveyance, reformation of instrument, and/or partition with damages party for granting complete relief. It thus held that the admission of De Vera’s
against Pelagia M. Paguyo-Diaz (Pelagia), Faustina Paguyo-Asumio Answer with Counterclaim is proper in order to avoid multiplicity of suits.20
(Faustina), Jesus Paguyo (Jesus), Veneranda Paguyo- Abrenica, Emilio a.k.a. In the same Order, the court declared the named defendants in default for
Antonio Alvarado, Francisca Alvarado-Diaz (Francisca) and Estrellita not answering the complaint despite valid service of summons. Thus, it
Alvarado-Cordero (Estrellita). appears that the court a quo treated the named defendants and De Vera as as
distinct and separate parties.
Summons upon the original complaint was duly served upon Pelagia and
Estrellita. Medrano’s response to the aforesaid order was two-fold.

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With regard to the order declaring the named defendants in default, Medrano On September 10, 2003, De Vera filed a Manifestation34 informing the trial
filed on February 13, 2003 a Motion to Set Reception of Evidence Before court of his intention to file a petition for certiorari and mandamus before
the Branch Clerk of Court.21 She argued that she could present evidence ex the CA, pursuant to Rule 41, Section 1, second paragraph and Rule 65 of the
parte against the defaulting defendants on the ground that she presented Rules of Court.
alternative causes of action against them in her complaint. Her cause of action
on the basis of acquisitive prescription can be raised solely against the On October 7, 2003, petitioners filed a Motion for Entry of Judgment and
defaulting original defendants.22 She thus prayed to be allowed to present Execution35 before the trial court. They also filed a Counter-
evidence ex parte with respect to her claim of acquisitive prescription against Manifestation36 to De Vera’s Manifestation. Petitioners insisted that De
the defaulting defendants. Vera, as a transferee pendente lite, was bound by the final judgment or decree
rendered against his transferors. Even assuming that De Vera had a right to
As for the order admitting De Vera’s Answer with Counterclaim, Medrano appeal, the period therefor had already lapsed on August 12, 2003.
filed on February 21, 2003 a Motion for Reconsideration of Order dated
July 30, 2002. She asked the court to order De Vera to file a pleading in- RTC, in its Order37 dated December 10, 2003, maintained that De Vera was
intervention so that he could be properly named as a defendant in the case. not a party to the suit, hence his appeal would not stay the finality and
execution of judgment. Thus the trial court ordered the entry of judgment
In an Order24 dated March 6, 2003, the trial court resolved to grant in Civil Case No. U-7316. The writ of execution was issued on December
Medrano’s Motion to Set Reception of Evidence. It ordered the conduct of 12, 2003.
ex parte presentation of evidence on the same day and the continuation
thereof to proceed on March 10, 2003. Thus, Medrano presented her evidence On a R65 certiorari and mandamus with the CA, he insisted that he
ex parte on the set dates. On March 10, 2003, the case was submitted for stepped into the shoes of the defendants with regard to the subject property
resolution.25 by virtue of the quitclaim that the defendants executed in his favor. Thus, the
trial court should have considered the defendants as properly substituted by
Given the court’s standing order which admitted De Vera’s Answer with De Vera when he filed his Answer. The standing order of the trial court with
Counterclaim, De Vera filed a Motion to Set the Case for Preliminary regard to De Vera at the time that it allowed Medrano to present her evidence
Conference on March 27, 2003.26 The trial court resolved petitioners’ and was to admit De Vera’s Answer with Counterclaim. Thus, De Vera argued
De Vera’s respective pending motions in its March 31, 2003 Order.27 The that it was improper for the trial court to have allowed Medrano to present
trial court granted Medrano’s motion and set aside its Order which her evidence ex parte because it had yet to rule on whether De Vera had
admitted De Vera’s Answer with Counterclaim. Citing Rule 19 of the personality to participate in the proceedings.
Rules of Court, the court ordered De Vera to file a pleading-in-
intervention so that he could be recognized as a party-defendant. As a CA reversed and remanded the case back to RTC to afford De Vera an
necessary consequence to this ruling, the trial court denied De Vera’s opportunity to present his evidence. It held that the RTC gravely abused its
motion to set the case for preliminary conference for prematurity. discretion by allowing Medrano to present her evidence ex parte while De
Vera’s personality to participate in the case still remained unresolved. The
De Vera did not comply with the court’s order despite service upon his premature ex parte presentation of evidence rendered a pleading-in-
lawyer, Atty. Simplicio M. Sevilleja, on April 2, 2003. intervention moot and academic.

RTC ruled for petitioner and declared her the owner of the property. The CA pointed out that the trial court should have exercised its authority to
MR denied. order the substitution of the original defendants instead of requiring De Vera
to file a pleading-in-intervention. This is allowed under Rule 3, Section 19 of

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the Rules of Court. Since a transferee pendente lite is a proper party42 to the having been joined as a party-defendant, and to try the case on the basis of
case, the court can order his outright substitution for the original defendants. the answer De Vera had filed and with De Vera’s participation. As transferee
pendente lite, De Vera may be allowed to join the original defendants under
Hence this petition. Rule 3, Section 19.

Issue: The above provision gives the trial court discretion to allow or disallow the
W/N RTC erred in refusing to allow respondent De Vera to participate in the substitution or joinder by the transferee. Discretion is permitted because, in
case and in requiring him to file a complaint to intervene – Yes, RTC erred. general, the transferee’s interest is deemed by law as adequately represented
CA affirmed. and protected by the participation of his transferors in the case. There may be
no need for the transferee pendente lite to be substituted or joined in the case
Held: because, in legal contemplation, he is not really denied protection as his
Yes, RTC erred. CA affirmed. interest is one and the same as his transferors, who are already parties to the
case.
We sustain the CA’s ruling that the trial court gravely abused its discretion in
refusing to allow De Vera to participate in the case and requiring him to file While the rule allows for discretion, the paramount consideration for the
a motion to intervene. exercise thereof should be the protection of the parties’ interests and their
rights to due process. In the instant case, the circumstances demanded that
The trial court misjudged De Vera’s interest in Civil Case No. U-7316. It held the trial court had already admitted De Vera’s answer when it declared the
that De Vera’s right to participate in the case was independent of the named original defendants in default.
defendants. Because of its ruling that De Vera had an “independent interest,”
the trial court considered his interest as separate from Medrano’s claims As there was a transferee pendente lite whose answer had already been
against the named defendants, and allowed the latter to be tried separately. admitted, the trial court should have tried the case on the basis of that answer,
Thus, it admitted De Vera’s Answer with Counterclaim but declared the based on Rule 9, Section 3 (c):
named defendants in default and allowed the ex parte presentation of “Effect of partial default.—When a pleading asserting a claim states a
evidence by Medrano against the named defendants. common cause of action against several defending parties, some of whom
answer and the others fail to do so, the court shall try the case against all upon
The trial court’s approach is seriously flawed because De Vera’s interest is the answers thus filed and render judgment upon the evidence presented.”
not independent of or severable from the interest of the named defendants.
De Vera is a transferee pendente lite of the named defendants (by virtue of Thus, the default of the original defendants should not result in the ex parte
the Deed of Renunciation of Rights that was executed in his favor during the presentation of evidence because De Vera (a transferee pendente lite who
pendency of Civil Case No. U-7316). His rights were derived from the named may thus be joined as defendant under Rule 3, Section 19) filed the answer.
defendants and, as transferee pendente lite, he would be bound by any The trial court should have tried the case based on De Vera’s answer, which
judgment against his transferors under the rules of res judicata. Thus, De answer is deemed to have been adopted by non-answering defendants.47
Vera’s interest cannot be considered and tried separately from the interest of
the named defendants. To proceed with the ex parte presentation of evidence against the named
defendants after De Vera’s answer had been admitted would not only be a
It was therefore wrong for the trial court to have tried Medrano’s case against violation of Rule 9, Section 3(c), but would also be a gross disregard of De
the named defendants (by allowing Medrano to present evidence ex parte Vera’s right to due process. This is because the ex parte presentation of
against them) after it had already admitted De Vera’s answer. What the trial evidence would not result in a default judgment which would bind not just
court should have done is to treat De Vera (as transferee pendente lite) as the defaulting defendants, but also De Vera, precisely because he is a

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transferee pendente lite.48 This would result in an anomaly wherein De Vera
would by a default judgment even if he filed an answer and expressed a desire
to participate in the case.

We note that under Rule 3, Section 19, the substitution or joinder of the
transferee is “upon motion”, and De Vera did not file any motion for
substitution or joinder. However, this technical flaw may be disregarded for
the fact remains that the court had already admitted his answer and such
answer was on record when the ex parte presentation of evidence was allowed
by the court. Because De Vera’s answer had already admitted, the court
should not have allowed the ex parte presentation of evidence.

We are not persuaded by petitioners’ insistence that De Vera could not have
participated in the case because he did not file a motion to intervene. The
purpose of intervention is to enable a stranger to an action to become a party
in order for him to protect his interest and for the court to settle all conflicting
claims. Intervention is allowed to avoid multiplicity of suits more than on due
process considerations. The intervenor can choose not to participate in the
case and he will not be bound by the judgment.

In this case, De Vera is not a stranger to the action but a transferee pendente
lite. As mentioned, a transferee pendente lite is deemed joined in the pending
action from the moment when the transfer of interest is perfected. His
participation in the case should have been allowed by due process
considerations.

Given the Court’s finding that the ex parte presentation of evidence


constituted a violation of due process rights, the trial court’s judgment by
default cannot bind De Vera. A void judgment cannot attain finality and its
execution has no basis in law. The case should be remanded to the trial court
for trial based on De Vera’s answer and with his participation.

WHEREFORE, the petition is DENIED. The June 25, 2004 Decision of the
Court of Appeals in CA-G.R. SP No. 80053 and its October 6, 2004
Resolution are AFFIRMED.
Cost against petitioners. SO ORDERED.

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5. Aquino v. Aure, G.R. No. 153567, February 18, 2008 “incapable of pecuniary estimation” which properly rests within the original
exclusive jurisdiction of the RTC.
Facts:
The subject of the present controversy is a parcel of land situated in Roxas RTC affirmed the dismissal of the Complaint on the same ground that the
District, Quezon City, with an area of 449 square meters and covered by dispute was not brought before the Barangay Council for conciliation before
Transfer Certificate of Title (TCT) No. 205447 registered with the Registry it was filed in court.
of Deeds of Quezon City (subject property).7
On appeal, CA reversed the MTC and RTC decisions and remanded the
Aure and E.S. Aure Lending Investors, Inc. (Aure Lending) filed a case back to the MTC for further proceedings and a final determination of
Complaint for ejectment against Aquino before the MeTC docketed as the substantive rights of the parties. The appellate court declared that the
Civil Case No. 17450. In their Complaint, Aure and Aure Lending alleged failure of Aure to subject the matter to barangay conciliation is not a
that they acquired the subject property from Aquino and her husband Manuel jurisdictional flaw and it will not affect the sufficiency of Aure’s Complaint
(spouses Aquino) by virtue of a Deed of Sale executed on 4 June 1996. Aure since Aquino failed to seasonably raise such issue in her Answer. The
claimed that after the spouses Aquino received substantial consideration for Court of Appeals further ruled that mere allegation of ownership does not
the sale of the subject property, they refused to vacate the same.9 deprive the MeTC of jurisdiction over the ejectment case for jurisdiction over
the subject matter is conferred by law and is determined by the allegations
In her Answer,10 Aquino countered that the Complaint in Civil Case No. advanced by the plaintiff in his complaint. Hence, mere assertion of
17450 lacks cause of action for Aure and Aure Lending do not have any legal ownership by the defendant in an ejectment case will not oust the MeTC of
right over the subject property. its summary jurisdiction over the same.

Aquino admitted that there was a sale but such was governed by the Hence this petition.
Memorandum of Agreement11 (MOA) signed by Aure. As stated in the
MOA, Aure shall secure a loan from a bank or financial institution in his own Issue:
name using the subject property as collateral and turn over the proceeds W/N non-compliance with barangay conciliation proceedings is a
thereof to the spouses Aquino. However, even after Aure successfully jurisdictional defect that warrants the dismissal of the complaint – No.
secured a loan, the spouses Aquino did not receive the proceeds thereon or
benefited therefrom. Held:
No. CA affirmed.
[During the pre-trial, Aquino pointed out to the MTC that there was non-
compliance with the barangay conciliation requirement.] There is no dispute herein that the present case was never referred to the
Barangay Lupon for conciliation before Aure and Aure Lending instituted
MTC dismissed the complaint for non-compliance with barangay Civil Case No. 17450. In fact, no allegation of such barangay conciliation
conciliation process, among other grounds. The MeTC observed that Aure proceedings was made in Aure and Aure Lending’s Complaint before the
and Aquino are residents of the same barangay but there is no showing that MeTC.
any attempt has been made to settle the case amicably at the barangay level.
The MeTC further observed that Aure Lending was improperly included as The only issue to be resolved is whether non-recourse to the barangay
plaintiff in Civil Case No. 17450 for it did not stand to be injured or benefited conciliation process is a jurisdictional flaw that warrants the dismissal of the
by the suit. Finally, the MeTC ruled that since the question of ownership was ejectment suit filed with the MeTC.
put in issue, the action was converted from a mere detainer suit to one

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Aquino posits that failure to resort to barangay conciliation makes the action In the case at bar, we similarly find that Aquino cannot be allowed to attack
for ejectment premature and, hence, dismissible. She likewise avers that this the jurisdiction of the MeTC over Civil Case No. 17450 after having
objection was timely raised during the pre-trial and even subsequently in submitted herself voluntarily thereto. We have scrupulously examined
her Position Paper submitted to the MeTC. Aquino’s Answer before the MeTC in Civil Case No. 17450 and there is utter
lack of any objection on her part to any deficiency in the complaint which
We do not agree. could oust the MeTC of its jurisdiction.

It is true that the precise technical effect of failure to comply with the We thus quote with approval the disquisition of the Court of Appeals:
requirement of Section 412 of the Local Government Code on barangay “Moreover, the Court takes note that the defendant [Aquino] herself did not
conciliation (previously contained in Section 5 of Presidential Decree No. raise in defense the aforesaid lack of conciliation proceedings in her answer,
1508) is much the same effect produced by non-exhaustion of administrative which raises the exclusive affirmative defense of simulation. By this
remedies—the complaint becomes afflicted with the vice of pre-maturity; and acquiescence, defendant [Aquino] is deemed to have waived such objection.
the controversy there alleged is not ripe for judicial determination. The As held in a case of similar circumstances, the failure of a defendant [Aquino]
complaint becomes vulnerable to a motion to dismiss.22 in an ejectment suit to specifically allege the fact that there was no
compliance with the barangay conciliation procedure constitutes a waiver of
Nevertheless, the conciliation process is not a jurisdictional requirement, that defense. x x x.”
so that non-compliance therewith cannot affect the jurisdiction which the
court has otherwise acquired over the subject matter or over the person By Aquino’s failure to seasonably object to the deficiency in the Complaint,
of the defendant. she is deemed to have already acquiesced or waived any defect attendant
thereto. Consequently, Aquino cannot thereafter move for the dismissal of
As enunciated in the landmark case of Royales v. Intermediate Appellate the ejectment suit for Aure and Aure Lending’s failure to resort to the
Court:24 barangay conciliation process, since she is already precluded from doing so.
“Ordinarily, non-compliance with the condition precedent prescribed by P.D. The fact that Aquino raised such objection during the pre-trial and in her
1508 could affect the sufficiency of the plaintiff's cause of action and make Position Paper is of no moment, for the issue of non-recourse to barangay
his complaint vulnerable to dismissal on ground of lack of cause of action or mediation proceedings should be impleaded in her Answer.
prematurity; but the same would not prevent a court of competent
jurisdiction from exercising its power of adjudication over the case As provided under Section 1, Rule 9 of the 1997 Rules of Civil Procedure:
before it, where the defendants, as in this case, failed to object to such “Section 1. Defenses and objections not pleaded.—Defenses and objections
exercise of jurisdiction in their answer and even during the entire not pleaded either in a motion to dismiss or in the answer are deemed
proceedings a quo. waived. However, when it appears from the pleadings or the evidence on
record that the court has no jurisdiction over the subject matter, that there is
While petitioners could have prevented the trial court from exercising another action pending between the same parties for the same cause, or that
jurisdiction over the case by seasonably taking exception thereto, they instead the action is barred by a prior judgment or by statute of limitations, the court
invoked the very same jurisdiction by filing an answer and seeking shall dismiss the claim.” (Emphasis supplied.)
affirmative relief from it. What is more, they participated in the trial of the
case by cross-examining respondent Planas. Upon this premise, petitioners While the aforequoted provision applies to a pleading (specifically, an
cannot now be allowed belatedly to adopt an inconsistent posture by Answer) or a motion to dismiss, a similar or identical rule is provided for all
attacking the jurisdiction of the court to which they had submitted other motions in Section 8 of Rule 15 of the same Rule which states:
themselves voluntarily. x x x” “Sec. 8. Omnibus Motion.—Subject to the provisions of Section 1 of Rule 9,
a motion attacking a pleading, order, judgment, or proceeding shall include

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all objections then available, and all objections not so included shall be
deemed waived.”

The spirit that surrounds the foregoing statutory norm is to require the party
filing a pleading or motion to raise all available exceptions for relief during
the single opportunity so that single or multiple objections may be avoided.
It is clear and categorical in Section 1, Rule 9 of the Revised Rules of Court
that failure to raise defenses and objections in a motion to dismiss or in an
answer is deemed a waiver thereof; and basic is the rule in statutory
construction that when the law is clear and free from any doubt or ambiguity,
there is no room for construction or interpretation.

As has been our consistent ruling, where the law speaks in clear and
categorical language, there is no occasion for interpretation; there is only
room for application. Thus, although Aquino’s defense of non-compliance
with Presidential Decree No. 1508 is meritorious, procedurally, such defense
is no longer available for failure to plead the same in the Answer as required
by the omnibus motion rule.

Neither could the MeTC dismiss Civil Case No. 17450 motu proprio. The
1997 Rules of Civil Procedure provide only three instances when the court
may motu proprio dismiss the claim, and that is when the pleadings or
evidence on the record show that
(1) the court has no jurisdiction over the subject matter;
(2) there is another cause of action pending between the same parties for the
same cause; or
(3) where the action is barred by a prior judgment or by a statute of
limitations.

Thus, it is clear that a court may not motu proprio dismiss a case on the
ground of failure to comply with the requirement for barangay conciliation,
this ground not being among those mentioned for the dismissal by the trial
court of a case on its own initiative.

WHEREFORE, premises considered, the instant Petition is DENIED. The


Court of Appeals Decision dated 17 October 2001 and its Resolution dated 8
May 2002 in CA-G.R. SP No. 63733 are hereby AFFIRMED. Costs against
the petitioner.
SO ORDERED.

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6. Republic v. Hidalgo, G.R. No. 161657, October 04, 2007 Presidential Security Group [PSG] of the then President Ferdinand E.
Marcos, had forcibly entered [her] residence and ordered [her] to turn over
Facts: to them her ⁄ Copy of TCT No. 118525 ⁄ and compelled her and the members
Sometime in June 1999, Mendoza filed a suit with the RTC of Manila for of her household to vacate the same ⁄; thus, out of fear for their lives, [she]
reconveyance and the corresponding declaration of nullity of a deed of handed her Owner’s Duplicate Certificate Copy of TCT No. 118527 and had
sale and title against the Republic, the Register of Deeds of Manila and one left and/or vacated the subject property.”
Atty. Fidel Vivar. In her complaint, as later amended, docketed as Civil Case
No. 99-94075 and eventually raffled to Branch 35 of the court, Mendoza Mendoza prayed for a judgment ordering, among others, the following:
essentially alleged being the owner of the disputed Arlegui property which “4. Ordering the ⁄ Republic to pay plaintiff [Mendoza] a reasonable
the Republic forcibly dispossessed her of and over which the Register of compensation or rental for the use or occupancy of the subject property in the
Deeds of Manila issued TCT No. 118911 in the name of the Republic. sum of FIVE HUNDRED THOUSAND (P500,000.00) PESOS a month
with a five (5%) per cent yearly increase, plus interest thereon at the
Answering, the Republic set up, among other affirmative defenses, the legal rate, beginning July 1975 until it finally vacates the same;
State’s immunity from suit.
5. Ordering the ⁄ Republic to pay plaintiff’s counsel a sum equivalent to
RTC of Manila, Branch 35, dismissed Mendoza’s complaint. Mendoza’s TWENTY FIVE (25%) PER CENT of the current value of the subject
omnibus MR denied. On a petition for certiorari, however, the CA reversed property and/or whatever amount is recovered under the premises; Further,
the trial court’s assailed orders and remanded the case to the court a quo for plaintiff prays for such other relief, just and equitable under the premises.”
further proceedings. SC affirmed CA’s remand.
On May 21, 2003, the Republic, represented by the OSG, filed a Motion for
On May 5, 2003, Mendoza filed a Motion for Leave of Court to file a Third Extension (With Motion for Cancellation of scheduled pre-trial). In it, the
Amended Complaint with a copy of the intended third amended complaint Republic manifested its inability to simply adopt its previous answer and,
thereto attached. accordingly, asked that it be given a period of 30 days or until June 20, 2003
within which to submit an Answer. June 20, 2003 came and went, but no
RTC, in open court and in the presence of the Republic’s counsel, admitted answer was filed. On July 18, 2003 and again on August 19, 2003, the OSG
the third amended