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EVANGELINE ALDAY, petitioner, vs. FGU INSURANCE CORPORATION, respondent.

[G.R. No. 138822. January 23, 2001]

BATTUNG, Marieflor S.

I. Facts:
FGU Insurance Corporation filed a complaint with the Regional Trial Court of Makati
alleging that petitioner Evangeline K. Alday owed it P114,650.76, representing
unliquidated cash advances, unremitted costs of premiums and other charges incurred
by petitioner in the course of her work as an insurance agent for respondent.Respondent
also prayed for exemplary damages, attorneys fees, and costs of suit. Petitioner filed her
answer and by way of counterclaim, asserted her right for the payment of P104,893.45,
representing direct commissions, profit commissions and contingent bonuses earned
from 1 July 1986 to 7 December 1986, and for accumulated premium reserves amounting
to P500,000.00. In addition, petitioner prayed for attorneys fees, litigation expenses,
moral damages and exemplary damages for the allegedly unfounded action filed by
respondent. Respondent filed a Motion to Strike Out Answer With Compulsory
Counterclaim And To Declare Defendant In Default because petitioners answer was
allegedly filed out of time. However, the trial court denied the motion and similarly rejected
respondents motion for reconsideration. Respondent then filed a motion to dismiss
petitioners counterclaim, contending that the trial court never acquired jurisdiction over
the same because of the non-payment of docket fees by petitioner. In response, petitioner
asked the trial court to declare her counterclaim as exempt from payment of docket fees
since it is compulsory and that respondent be declared in default for having failed to
answer such counterclaim. The trial court granted respondents motion to dismiss
petitioners counterclaim and consequently, denied petitioners motion. The court found
petitioners counterclaim to be merely permissive in nature and held that petitioners failure
to pay docket fees prevented the court from acquiring jurisdiction over the same.The CA
sustained the trial court’s findings.

II. Issue:
1. Whether or not the counterclaim of petitioner is compulsory or permissive
in nature.
2. Whether or not the non-payment of docket fees results in the automatic
dismissal of the case

III. Doctrine:
1. Petitioner’s counterclaim for commissions, bonuses, and accumulated premium
reserves is merely permissive however petitioners claims for damages, allegedly
suffered as a result of the filing by respondent of its complaint, are compulsory.
A compulsory counterclaim is one which, being cognizable by the regular courts of justice,
arises out of or is connected with the transaction or occurrence constituting the subject
matter of the opposing partys claim and does not require for its adjudication the presence
of third parties of whom the court cannot acquire jurisdiction. In Valencia v. Court of
Appeals, this Court capsulized the criteria or tests that may be used in determining
whether a counterclaim is compulsory or permissive, summarized as follows: “1. Are the
issues of fact and law raised by the claim and counterclaim largely the same? 2. Would
res judicata bar a subsequent suit on defendants claim absent the compulsory
counterclaim rule? 3. Will substantially the same evidence support or refute plaintiffs
claim as well as defendants counterclaim?4. Is there any logical relation between the
claim and the counterclaim?”
Another test is applied in the of Quintanilla v. Court of Appeals is, “Is the compelling test
of compulsoriness which requires a logical relationship between the claim and
counterclaim, that is, where conducting separate trials of the respective claims of the
parties would entail a substantial duplication of effort and time by the parties and the
court.” In the present case the evidence required to prove petitioners claims differs from
that needed to establish respondents demands for the recovery of cash accountabilities
from petitioner, such as cash advances and costs of premiums. The recovery of
respondents claims is not contingent or dependent upon establishing petitioners
counterclaim, such that conducting separate trials will not result in the substantial
duplication of the time and effort of the court and the parties. One would search the
records in vain for a logical connection between the parties claims. This conclusion is
further reinforced by petitioners own admissions since she declared in her answer that
respondents cause of action, unlike her own, was not based upon the Special Agents
Contract.

2. No, although the payment of the prescribed docket fees is a jurisdictional


requirement, its non-payment does not result in the automatic dismissal of the case
provided the docket fees are paid within the applicable prescriptive or reglementary
period.
The rule on the payment of filing fees has been laid down by the Court in the case of Sun
Insurance Office, Ltd. v. Hon. Maximiano Asuncion. It is not simply the filing of the
complaint or appropriate initiatory pleading, but the payment of the prescribed docket fee,
that vests a trial court with jurisdiction over the subject-matter or nature of the action.
Where the filing of the initiatory pleading is not accompanied by payment of the docket
fee, the court may allow payment of the fee within a reasonable time but in no case
beyond the applicable prescriptive or reglementary period. The same rule applies to
permissive counterclaims, third-party claims and similar pleadings, which shall not be
considered filed until and unless the filing fee prescribed therefor is paid. The court may
allow payment of said fee within a reasonable time but also in no case beyond its
applicable prescriptive or reglementary period.

KOREA TECHNOLOGIES CO., LTD., petitioner,


vs.
HON. ALBERTO A. LERMA, in his capacity as Presiding Judge of Branch 256 of Regional
Trial Court of Muntinlupa City, and PACIFIC GENERAL STEEL MANUFACTURING
CORPORATION, respondents.
[G.R. No. 143581 January 7, 2008]
DIGEST BY: AUSTRIA, DON RODEL A.

VELASCO, JR., J.:

FACTS:
Korea Technologies Co., Ltd. (Petitioner) and Pacific General Steel Manufacturing Corp.
(Private Respondent) executed a contract whereby Petitioner would set up an LPG Cylinder
Manufacturing Plant in Carmona, Cavite. When Petitioner deposited the checks, these were
dishonored for the reason "PAYMENT STOPPED." Petitioner sent a demand letter to Private
Respondent threatening criminal action in case of nonpayment. Private Respondent replied that
the two checks it issued Petitioner were fully funded but the payments were stopped for that
Petitioner deliver a different brand of hydraulic press from that agreed upon but it had not delivered
several equipment parts already paid for. Private Respondent informed Petitioner that the former
was canceling their Contract.

Petitioner filed a Complaint for Specific Performance against Private Respondent before
the Muntinlupa City Regional Trial Court (RTC). Private Respondent filed its Answer with
Compulsory Counterclaim alleging that Petitioner is liable for damages amounting to PhP
4,500,000 for altering the quantity and lowering the quality of the machineries and equipment.

Petitioners prayer were denied by the RTC. Petitioner filed an Urgent Motion for
Reconsideration before the RTC, it was denied. Petitioner filed before the Court of Appeals (CA)
a petition for certiorari seeking annulment of the RTC Orders and praying for the issuance of writs
of prohibition, mandamus, and preliminary injunction to enjoin the RTC and Private Respondent
from inspecting, dismantling, and transferring the machineries and equipment in the Carmona
plant, and to direct the RTC to enforce the specific agreement on arbitration to resolve the dispute.
The CA rendered the assailed Decision affirming the RTC Orders and dismissing the petition for
certiorari filed by the Petitioner. Hence, the Petitioner filed a Petition for Review on Certiorari
under Rule 45 of the Rules of Court. Petitioner strongly argues that when Private Respondent
filed the counterclaims, it should have paid docket fees and filed a certificate of non-forum
shopping, and that its failure to do so was a fatal defect.

ISSUE:
Whether or not payment of docket fees is required in filing of Compulsory Counterclaim?

RESOLUTION:
NO. We disagree with Petitioner.

The rule that was effective at the time the Answer with Counterclaim was filed is Rules of
Court, Rule 11, Section 8. As aptly ruled by the CA, the counterclaims of Private Respondent were
in accordance with Section 8 of Rule 11, 1997 Revised Rules of Civil Procedure. Sec. 8 on existing
counterclaim or cross-claim states, "A compulsory counterclaim or a cross-claim that a defending
party has at the time he files his answer shall be contained therein."

At the time Private Respondent filed its Answer incorporating its counterclaims against
Petitioner, it was not liable to pay filing fees for said counterclaims being compulsory in nature.
We stress, however, that effective August 16, 2004 under Sec. 7, Rule 141, as amended by A.M.
No. 04-2-04-SC, docket fees are now required to be paid in compulsory counterclaim or cross-
claims.

DOCTRINE:
Docket fees are now required to be paid in compulsory counterclaim or cross-claims,
effective August 16, 2004 under Sec. 7, Rule 141, as amended by A.M. No. 04-2-04-SC.

LEONIDES MERCADO vs.CA and SMC

G.R. No. 169576 October 17, 2008

Amie Grace Bucalan 2014-0326

Facts:
Mercado had been distributing respondent San Miguel Corporation’s (SMC’s) beer products in
Quiapo, Manila since 1967. In 1991, SMC extended to him a P7.5 million credit line allowing him
to withdraw goods on credit. To secure his purchases, Mercado assigned three China Banking
Corporation (CBC) certificates of deposit amounting to P5 million to SMC and executed a
continuing hold-out agreement.

SMC notified CBC that Mercado failed to pay for the items he withdrew on credit.
Consequently, citing the continuing hold-out agreement, it asked CBC to release the
proceeds of the assigned certificates of deposit. CBC approved SMC’s request and
informed Mercado. Mercado filed an action to annul the continuing hold-out agreement
and deed of assignment in the RTC of Manila. SMC filed its answer with counterclaim
against Mercado.
The trial court rendered a judgment in favour of SMC. Petitioner appealed to the CA,
insisting that Mercado did not default in the payment of his obligations to SMC. The CA,
however, affirmed the RTC’s decision. Thereafter, Mercado passed away and was
substituted by his heirs. Petitioners subsequently filed this petition asserting that the CA
erred in affirming the RTC decision. The said decision was void. SMC’s counterclaim was
permissive in nature. Inasmuch as SMC did not pay docket fees, the RTC never acquired
jurisdiction over the counterclaim.

Issue:

Whether the counterclaim is permissive or compulsory?

Held:

SMC sought to collect the payment for the value of goods Mercado purchased on credit.
Thus, Mercado’s complaint and SMC’s counterclaim both touched the issues of whether
the continuing hold-out agreement and deed of assignment were valid and whether
Mercado had outstanding liabilities to SMC. The same evidence would essentially support
or refute Mercado’s claim and SMC’s counterclaim.
Based on the foregoing, had these issues been tried separately, the efforts of the RTC and the
parties would have had to be duplicated. Clearly, SMC’s counterclaim, being logically related to
Mercado’s claim, was compulsory in nature.Consequently, the payment of docket fees was not
necessary for the RTC to acquire jurisdiction over the subject matter.

Doctrine: A counterclaim that (1) arises out of (or is necessarily connected with) the transaction
or occurrence that is the subject matter of the opposing party’s claim; (2) falls within the jurisdiction
of the court and (3) does not require for its adjudication the presence of third parties over whom
the court cannot acquire jurisdiction, is compulsory.

ALONZO GIPA, IMELDA MARO LLANO, JUANITO LUDOVICE, VIRGILIO GOJIT,


DEMAR BIT ANGCOR, FELIPE MONTALBAN AND DAISY M. PLACER,1 Petitioners,
vs.
SOUTHERN LUZON INSTITUTE as represented by its Vice-President For Operations
and Corporate Secretary, RUBEN G. ASUNCION, Respondent.
G.R. No.177425, June 18, 2014

DIGEST BY: CRUZ, GLEN JOHANNES P.

DEL CASTILLO, J.:

FACTS:
Respondent Southern Luzon Institute (SLI), an educational institution in Bulan, Sorsogon,
filed a Complaint for Recovery of Ownership and Possession with Damages against
petitioners Alonzo Gipa, et al. SLI alleged that it is the absolute owner of a parcel of land
situated in Sorsogon. However, petitioners and their co-defendants who had been
informally occupying a portion of the said property refused to vacate the same despite
demand.

Finding SLI to have proven its ownership of the property, the RTC rendered a Decision in
its favor.

The CA, however, dismissed the appeal since it was not shown that the appellate court
docket fees and other lawful fees were paid. Petitioners and their co-defendants promptly
filed a MR to which they attached a Certification from the RTC that they paid the appeal
fee in the amount of ₱3,000.00. In view of this, the CA granted the said motion and
consequently reinstated the appeal. Subsequently, however, the CA further required
petitioners and their codefendants, to remit within 10 days from notice the amount of
₱30.00 for legal research fund, which apparently was not included in the ₱3,000.00
appeal fee previously paid by them. Copy of the said resolution was received by
petitioners’ counsel.

Despite the lapse of nine months from their counsel’s receipt of the said resolution,
petitioners and their co-defendants, however, failed to comply with the CA’s directive.
Hence, the said court dismissed the appeal. Jurisprudence is replete that the
nonpayment of the docket and other lawful fees within the reglementary period as
provided under Section 4 of Rule 41 of the Revised Rules of [C]ourt is a ground for the
dismissal of an appeal, as provided for under Section 1(c) Rule 50 of the same Rule.

*Initially, petitioners invoke the liberal application of technical rules and contend that the
fact that only the amount of ₱30.00 was not paid justifies relaxation of the same. Later in
their Reply,32 however, petitioners concede that the payment of docket fees is not a mere
technicality. Nevertheless, they point out that while full payment of docket fees is
indispensable in the perfection of an appeal, the same admits of exceptions.33 Their case
falls under one of the exceptions, that is, in the name of substantial justice and fair play.

The CA denied the Motion for Reconsideration. Hence, Petitioners file this Petition for
Review on Certiorari.

ISSUE:
Whether the CA gravely erred in dismissing the appeal filed by the Petitioners for failure
to remit the meager amount of ₱300.00 after having advanced a substantial portion of the
docket fees.

DOCTRINE:
The Petition fails. Payment of the full amount of appellate court docket and lawful fees is
mandatory and jurisdictional. Relaxation of the rule on payment of appeal fee is
unwarranted in this case.

Section 4, Rule 41 of the Rules of Court provides that: Within the period for taking an
appeal, the appellant shall pay to the clerk of court which rendered the judgment or final
order appealed from, the full amount of the appellate court docket and other lawful fees.
Proof of payment of said fees shall be transmitted to the appellate court together with the
original record or the record on appeal.

In Far Corporation v. Magdaluyo, as with other subsequent cases of the same ruling, the
Court explained that the procedural requirement under Section 4 of Rule 41 is not merely
directory, as the payment of the docket and other legal fees within the prescribed period
is both mandatory and jurisdictional. It bears stressing that an appeal is not a right, but a
mere statutory privilege. An ordinary appeal from a decision or final order of the RTC to
the CA must be made within 15 days from notice. And within this period, the full amount
of the appellate court docket and other lawful fees must be paid to the clerk of the court
which rendered the judgment or final order appealed from. The requirement of paying the
full amount of the appellate docket fees within the prescribed period is not a mere
technicality of law or procedure. The payment of docket fees within the prescribed period
is mandatory for the perfection of an appeal. Without such payment, the appeal is not
perfected. The appellate court does not acquire jurisdiction over the subject matter of the
action and the Decision sought to be appealed from becomes final and executory.
Further, under Section 1 (c), Rule 50, an appeal may be dismissed by the CA, on its own
motion or on that of the appellee, on the ground of the non-payment of the docket and
other lawful fees within the reglementary period as provided under Section 4 of Rule 41.
The payment of the full amount of the docket fee is an indispensable step for the
perfection of an appeal. In both original and appellate cases, the court acquires
jurisdiction over the case only upon the payment of the prescribed docket fees.

Here, petitioners concede that payment of the full amount of docket fees within the
prescribed period is not a mere technicality of law or procedure but a jurisdictional
requirement. Nevertheless, they want this Court to relax the application of the rule on the
payment of the appeal fee in the name of substantial justice and equity. The Court is not
persuaded.

RODGING REYES VS. PEOPLE OF THE PHILIPPINES and SALUD M. GEGATO


G.R. No. 193034, July 20, 2015

Cuerdo, April Joy A.

Facts of the Case:

Salud Gegato filed a Complaint against Rodging Reyes for grave threats in the MCTC of Bayugan
and Sibagat, Bayugan, Agusan del Sur. The information stated that Reyes uttered these words
against Gegato: “Salud, stop your rumor against my wife because she will be embarrassed. I’m
warning you, don't mind our lives for I might kill you.” Before arraignment, petitioner filed a Motion
to Quash based on the ground of jurisdiction and that the crime is not Grave Threats under Article
282 of the Revised Penal Code, but Other Light Threats under Article 285, paragraph 2 of the
same Code which was denied by the MCTC. Reyes then filed a Motion to Inhibit the Presiding
Judge on the ground that Gegato is the Court Interpreter of the same court but it was also denied.
The MCTC found Reyes guilty beyond reasonable doubt of the crime charged.
On appeal to the RTC, Reyes was found guilty only of other light threats. Instead of filing an
appeal to the CA within the reglementary period, Reyes filed a Motion for Extension of time twice
which was both denied by the CA. The first was denied for failure to pay the full amount of the
docket fees pursuant to Sec. 1, Rule 42 of the Rules of Court. The second was denied as no
further extension may be granted except for most compelling reason. After the filing of the second
Motion for Extension, Reyes filed this Petition. Accordingly, this petition was noted but dismissed
by the CA among the grounds for its dismissal is failure to pay the complete docket fees. Reyes
filed a Motion for Reconsideration but it was denied for failure of the petitioner to furnish copies
to the Solicitor General and the private respondent. Thus, petitioner filed a Second Motion for
Reconsideration which was also denied by the CA. In this resolution, the CA set aside the first
resolution denying the 1st Motion for Reconsideration but also dismissed the Petition for Review.
In the Third Motion for Reconsideration, the CA resolved to merely note without action the
petitioner's third Motion for Reconsideration, in view of the 23 November 2009 Resolution
dismissing this petition with finality. Now, Reyes insists that the CA erred in favoring procedural
technicalities over his constitutional right to due process.

Issue:

Whether or not the CA ruled correctly in dismissing the petition on the ground of failure to pay the
complete docket fees?

Doctrine:

Yes. Section 1, Rule 42 of the Rules of Court states the need to pay docket fees. The rule is that
payment in full of the docket fees within the prescribed period is mandatory. In Manchester v.
Court of Appeals, it was held that a court acquires jurisdiction over any case only upon the
payment of the prescribed docket fee. The strict application of this rule was, however, relaxed two
(2) years after in the case of Sun Insurance Office, Ltd. v. Asuncion, wherein the Court decreed
that where the initiatory pleading is not accompanied by the payment of the docket fee, the court
may allow payment of the fee within a reasonable period of time, but in no case beyond the
applicable prescriptive or reglementary period. This ruling was made on the premise that the
plaintiff had demonstrated his willingness to abide by the rules by paying the additional docket
fees required.

Thus, in the more recent case of United Overseas Bank v. Ros, the Court explained that where
the party does not deliberately intend to defraud the court in payment of docket fees, and
manifests its willingness to abide by the rules by paying additional docket fees when required by
the court, the liberal doctrine enunciated in Sun Insurance Office, Ltd., and not the strict
regulations set in Manchester, will apply.

Admittedly, this rule is not without recognized qualifications. The Court has declared that in
appealed cases, failure to pay the appellate court docket fee within the prescribed period warrants
only discretionary as opposed to automatic dismissal of the appeal and that the court shall
exercise its power to dismiss in accordance with the tenets of justice and fair play, and with great
deal of circumspection considering all attendant circumstances.
In that connection, the CA, in its discretion, may grant an additional period of fifteen (15) days
only within which to file the petition for review upon proper motion and the payment of the full
amount of the docket and other lawful fees and the deposit for costs before the expiration of the
reglementary period and that no further extension shall be granted except for the most compelling
reason and in no case to exceed fifteen (15) days. Therefore, the grant of any extensions for the
filing of the petition is discretionary and subject to the condition that the full amount of the docket
and lawful fees are paid before the expiration of the reglementary period to file the petition.

It is only when persuasive reasons exist that the Rules may be relaxed to spare a litigant of an
injustice not commensurate with his failure to comply with the prescribed procedure. In the present
case, petitioner failed to convince this Court of the need to relax the rules and the eventual
injustice that he will suffer if his prayer is not granted.

First Sarmiento Property Holdings Inc. v. PBCOM, G.R.No.202836, June 19, 2018
DIMANAHAN, MARIA DEL O.

FACTS: On Jun 19, 2002, First Sarmiento obtained from PBCOM a P40 Million loan,
which was secured by a real estate mortgage over 1,076 parcels of land. Mar 15, 2003,
loan amount increased to P51,200,000.00. Sep 15, 2003, agreement was further
amended when the loan amount was increased to P100 Million. Jan 2, 2006, PBCOM filed
a Petition for Extrajudicial Foreclosure of Real Estate Mortgage. It claimed in its Petition
that it sent First Sarmiento several demand letters, still failed to pay the principal amount
and accrued interest on the loan. Recourse granted to it under the loan agreement. Dec
27, 2011, First Sarmiento attempted to file a Complaint for annulment of real estate
mortgage with the RTC. However, the Clerk of Court refused to accept the Complaint in
the absence of the mortgaged properties' tax declarations, which would be used to assess
the docket fees. December 29, 2011, Executive Judge Francisco et al. of the RTC of
Malolos City, Bulacan, granted First Sarmiento's Urgent Motion to Consider the Value of
Subject Matter of the Complaint as Not Capable of Pecuniary Estimation, and ruled that
the action for annulment of real estate mortgage was incapable of pecuniary estimation.
Dec 29, 2011, the mortgaged properties were auctioned and sold to PBCOM as the
highest bidder. Jan 2, 2012, First Sarmiento filed a Complaint for annulment of real estate
mortgage and its amendments, with prayer for the issuance of temporary restraining order
and preliminary injunction. It paid a filing fee of P5,545.00. First Sarmiento claimed in its
Complaint that it never received the loan proceeds of P100,000,000.00 from PBCOM, yet
the latter still sought the extrajudicial foreclosure of real estate mortgage. It prayed for the
issuance of a temporary restraining order and preliminary injunction to enjoin the Ex-
Officio Sheriff from proceeding with the foreclosure of the real estate mortgage or
registering the certificate of sale in PBCOM's favor with the Registry of Deeds of Bulacan.
That same day, Judge Francisco issued an ex-parte temporary restraining order for 72
hours, enjoining the registration of the certificate of sale. Jan 4, 2012, the RTC directed
the parties to observe the status quo ante. Jan 24, 2012, the Clerk of Court and Ex-Officio
Sheriff of Malolos, Bulacan issued a certificate of sale to PBCOM. In its Opposition,
PBCOM asserted that the Regional Trial Court failed to acquire jurisdiction over First
Sarmiento's Complaint because the action for annulment of mortgage was a real action;
thus, the filing fees filed should have been based on the fair market value of the
mortgaged properties. Also pointed out that the RTC’s directive to maintain the status quo
order beyond 72 hours constituted an indefinite extension of the TRO, a clear
contravention of the rules. Apr 3, 2012, RTC dismissed the Complaint for lack of
jurisdiction: Following ruling in Home Guaranty Corp. v. R. II Builders, Inc. & NHA, cited
by the bank in its Rejoinder, which is the latest jurisprudence on the matter to the effect
that an action for annulment or rescission of contract does not operate to efface the true
objective and nature of the action which is to recover real property, this Court hereby
RESOLVES TO DISMISS the instant case for lack of jurisdiction, plaintiff having failed to
pay the appropriate filing fees.
Jul 25, 2012, RTC denied First Sarmiento's motion for reconsideration. Aug 17, 2012,
First Sarmiento sought direct recourse to this Court with its Petition for Review under Rule
45. It insists that its Complaint for the annulment of real estate mortgage was incapable
of pecuniary estimation.

ISSUE: Whether the RTC attained jurisdiction over petitioner's Complaint with the amount
of docket fees paid.

DOCTRINE: Yes. To determine the nature of an action, whether or not its subject matter
is capable or incapable of pecuniary estimation, the nature of the principal action or relief
sought must be ascertained. If the principal relief is for the recovery of a sum of money
or real property, then the action is capable of pecuniary estimation. However, if the
principal relief sought is not for the recovery of sum of money or real property, even if a
claim over a sum of money or real property results as a consequence of the principal
relief, the action is incapable of pecuniary estimation. In the case at bar, petitioner
contends that its complaint prayed for the annulment of the real estate mortgage it entered
into with respondent and not for the recovery or reconveyance of the mortgaged
properties because it was still the registered owner when it filed its complaint. The
evidence on record supports petitioner's claim; hence, there was no reason for the
dismissal of its Complaint for lack of jurisdiction. Home Guaranty likewise erred in
dismissing the action because of non-payment of the correct filing fees. Fedman
Development v. Agcaoili reiterated that where the assessed docket fees have been paid
and the assessment turns out to be insufficient, the court still acquires jurisdiction over
the case, subject to payment of the deficiency assessment. The only exception is when
the deficiency in docket fees is accompanied with bad faith and an intention to defraud
the government. It is not disputed that R-II Builders paid the assessed docket fees when
it filed its Complaint, negating bad faith or intent on its part to defraud the government. In
light of the foregoing, this Court reaffirms that the nature of an action is determined by the
principal relief sought in the complaint, irrespective of the other causes of actions that
may also crop up as a consequence of the principal relief prayed for. The contrary rule
espoused in Home Guaranty is thereby set aside.

Section 6 of Act No. 3135, as amended, provides that a property sold through an
extrajudicial sale may be redeemed at any time within the term of one year from and after
the date of the sale. Mahinay v. Dura Tire&Rubber, clarified that "[t]he date of the sale'
referred to in Section 6 is the date the certificate of sale is registered with the Register of
Deeds. This is because the sale of registered land does not 'take effect as a conveyance,
or bind the land' until it is registered." The registration of the certificate of sale is a
mandatory requirement; thus, if the certificate of sale is not registered with the Registry
of Deeds, the property sold at auction is not conveyed to the new owner and the period
of redemption does not begin to run.

In the case at bar, the Ex-Officio Sheriff was restrained from registering the certificate of
sale with the Registry of Deeds and the certificate of sale was only issued to respondent
after the Complaint for annulment of real estate mortgage was filed. Therefore, even if
the properties had already been foreclosed when the Complaint was filed, their
ownership and possession remained with petitioner since the certificate of sale was not
registered with the Registry of Deeds. This supports petitioner's claim that it never
asked for the reconveyance of or asserted its ownership over the mortgaged properties
when it filed its Complaint since it still enjoyed ownership and possession over them.
Considering that petitioner paid the docket fees as computed by the clerk of court, upon
the direction of the Executive Judge, this Court is convinced that the RTC acquired
jurisdiction over the Complaint for annulment of real estate mortgage. Furthermore,
even if it is assumed that the instant case were a real action and the correct docket fees
were not paid by petitioner, the case should not have been dismissed; instead, the
payment of additional docket fees should have been made a lien on the judgment
award. The records attest that in filing its complaint, petitioner readily paid the docket
fees assessed by the clerk of court; hence, there was no evidence of bad faith or
intention to defraud the government that would have rightfully merited the dismissal of
the Complaint

G.R. No. 221062, October 05, 2016


ELIZABETH SY-VARGAS, Petitioner, v. THE ESTATE OF ROLANDO OGSOS, SR.
AND ROLANDO OGSOS, JR., Respondent.
PERLAS-BERNABE, J.:
Case digest by: ESPAÑOLA, ADRIENNE C.
I. Facts of the Case: A contract of lease was entered, covering 5 parcels of agricultural
land in Negros Oriental, between Ogsos, Sr. and the Heirs of Fermina. The Petitioners,
who are among the heirs of Fermina, claimed that the lease rentals from crop year 1994-
1995 to crop year 1998-1999 were not paid. Thus, a complaint was filed before the RTC
in order to recover the unpaid lease rentals. Summons was served in May 2000, but
respondent Ogsos, Jr. only filed a motion to admit answer and answer to the complaint
after more than 2 years, or on December 17, 2002. Thus, petitioner filed an opposition
thereto, and moved to declare respondents in default, which the RTC granted. That a
motion for reconsideration having been denied by the RTC, respondents, then, elevated
the matter via a petition for certiorari to the CA, wherein the CA granted and remanded
the case to the RTC. In respondents' answer, they alleged that obligations were faithfully
complied. And accordingly, respondents filed a counterclaim for these lost profits plus
damages. Respondents moved for the dismissal of the complaint in view of the absence
of the required Certificate of Non-Forum Shopping and the RTC dismissed the case
without prejudice. Then, respondents moved for the hearing of their counterclaim, to
which the RTC required petitioner and Kathryn to submit a comment, but none was filed.
Respondents filed an Ex-Parte Motion to Set Case for Pre-Trial, which was granted by
the RTC. Petitioner and their counsel failed to appear at the pre-trial and to file their pre-
trial brief. Thus, respondents filed a manifestation with motion to present evidence ex-
parte praying that petitioners be declared in default, and that respondents be allowed to
present evidence on their counterclaim ex-parte, which the RTC granted. Petitioners
moved to quash the order, which was, however, denied on the ground that the period to
ask for reconsideration or for the lifting of the order had already lapsed. Petitioners filed
a motion to dismiss respondents' counterclaim arguing that the same were permissive
and that respondents had not paid the appropriate docket fees. However, the RTC denied
the said motion declaring respondents' counterclaim as compulsory; thus, holding that
the payment of the required docket fees was no longer necessary.

II. Issue: WON CA correctly ruled that respondents' counterclaim for damages is
compulsory and not permissive in nature, and thus, no payment of docket fees is required.

III. Doctrine: The Court finds that the counterclaim of respondents is permissive in nature.
The four tests to determine whether a counterclaim is compulsory or not are the following,
to wit: (a) Are the issues of fact or law raised by the claim and the counterclaim largely
the same? (b) Would res judicata bar a subsequent suit on defendant's claims, absent
the compulsory counterclaim rule? (c) Will substantially the same evidence support or
refute plaintiff's claim as well as the defendant's counterclaim? and (d) Is there any logical
relation between the claim and the counterclaim, such that the conduct of separate trials
of the respective claims of the parties would entail a substantial duplication of effort and
time by the parties and the court? If these tests result in affirmative answers, the
counterclaim is compulsory.
This is because: (a) the issue in the main case, i.e., whether or not respondents are liable
to pay lease rentals, is entirely different from the issue in the counterclaim, i.e., whether
or not petitioner and Kathryn are liable for damages for taking over the possession of the
leased premises and harvesting and appropriating respondents' crops planted therein;
(b) since petitioner and respondents' respective causes of action arose from completely
different occurrences, the latter would not be barred by res judicata had they opted to
litigate its counterclaim in a separate proceeding; (c) the evidence required to prove
petitioner's claim that respondents failed to pay lease rentals is likewise different from the
evidence required to prove respondents' counterclaim that petitioner and Kathryn are
liable for damages for performing acts in bad faith; and (d) the recovery of petitioner's
claim is not contingent or dependent upon proof of respondents' counterclaim, such that
conducting separate trials will not result in the substantial duplication of the time and effort
of the court and the parties.
In view of the finding that the counterclaim is permissive, and not compulsory as held by
the courts a quo, respondents are required to pay docket fees.
However, it must be clarified that respondents' failure to pay the required docket fees, per
se, should not necessarily lead to the dismissal of their counterclaim. 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 filing of the initiatory pleading
does not automatically cause its dismissal provided that: (a) the fees are paid within a
reasonable period; and (b) there was no intention on the part of the claimant to defraud
the government. Here, respondents cannot be faulted for non-payment of docket fees in
connection with their counterclaim, primarily because as early as November 16, 2006, the
RTC had already found such counterclaim to be compulsory in nature. Such finding was
then upheld in the July 2, 2007 RTC Decision and affirmed on appeal by the CA in its
assailed Decision. As such, the lower courts did not require respondents to pay docket
fees and even proceeded to rule on their entitlement thereto. Verily, respondents' reliance
on the findings of the courts a quo, albeit erroneous, exhibits their good faith in not paying
the docket fees, much more their intention not to defraud the government. Thus, the
counterclaim should not be dismissed for non-payment of docket fees.

CAMASO v. TSM SHIPPING


G.R. No. 223290, November 07, 2016
FACTS:
Camaso signed a contract of employment with respondents TSM Shipping (Phils),
Inc., Utkilen, and Jones Tulod to work as a Second Mate on-board the vessel "M/V
Golfstraum," for a period of six 6 months. On October 18, 2014, he joined his vessel of
assignment and prior to said contract, Camaso claimed to have been working for
respondents for almost five 5 years and boarded (8) of their vessels. Camaso got a
tonsillar cancer where he underwent 8 chemotheraphy sessions but when the
respondents stopped from giving sickwage allowances. Camaso filed an instant complaint
instant complaint for disability benefits, sickwage allowance, reimbursement of medical
and hospital expenses, and other consequential damages before NLRC. Labor Arbiter
ruled in favour of Camaso but NLRC reversed the ruling of LA then dismissed Camaso’s
complaint for lack of merit. Aggrieved, he filed a petition for certiorari before the CA. In a
Resolution dated August 12, 2015, the CA dismissed Camaso's petition "for non-payment
of the required docketing fees as required under Section 3, Rule 46 of the Revised Rules
of Court." Camaso filed a motion for reconsideration arguing that a check was attached
on his petition as a payment for required docket fees but in a resolution of CA, they denied
Camaso’s motion for lack of merit. Citing the presumption of regularity of official duties,
the CA gave credence to the explanation of Myrna D. Almira, Officer-in-Charge of the CA
Receiving Section, that there was no cash, postal money order, or check attached to
Camaso's petition when it was originally filed before the CA. In any event, the CA held
that assuming that a check was indeed attached to the petition, such personal check, i.e.,
Metrobank check dated July 6, 2015 under the personal account of a certain Pedro L.
Linsangan, is not a mode of payment sanctioned by the 2009 Internal Rules of the Court
of Appeals (2009 IRCA), which allows only payment in cash, postal money order, certified,
manager's or cashier's checks payable to the CA.
ISSUE:
Whether or not the CA correctly dismissed Camaso's petition for certiorari before
it for non-payment of docket fees?
DOCTRINE:
The strict application of the rule may be qualified by the following: first, failure to
pay those fees within the reglementary period allows only discretionary, not automatic,
dismissal; second, such power should be used by the court in conjunction with its exercise
of sound discretion in accordance with the tenets of justice and fair play, as well as with
a great deal of circumspection in consideration of all attendant circumstances.
HELD:
No. Here, in this case when Camaso filed his petition through his counsel and via
mail, a Metrobank check dated July 6, 2015 under the account name of Pedro L.
Linsangan was attached thereto to serve as payment of docket fees. Although under
Section 6, Rule VIII of the 2009 IRCA it was not a mode of payment, the attachment of
such personal check shows that Camaso exerted earnest efforts to pay the required
docket fees. Therefore it exhibits good faith and evinces his intention not to defraud the
government. As to the assertion of the Officer-in-Charge of the CA Receiving Section that
there was no check attached to Camaso's petition is clearly belied by the fact that when
it was examined at the Office of the Division Clerk of Court, the check was found to be
still stapled thereto.
The Court deems it appropriate to relax the technical rules of procedure in the
interest of substantial justice and, hence, remands the instant case to the CA for the
resolution of its substantial merits and directed to order Camaso to pay the required
docket fees within a reasonable period of 30 days from notice of such order.

CHINA BANKING CORPORATION, petitioner, vs. MERCEDES M. OLIVER, respondent.

G.R. No. 135796 October 3, 2002

CYRIL ANN Q IRIBERRI

FACTS:
Pangan Lim, Jr. and Mercedes M. Oliver were partners in a rice and palay trading business.
They opened a joint account with China Banking Corporation (Chinabank) at EDSA Balintawak
Branch. They applied for a P17 million loan and offered as collateral a lot situated in Tunasan,
Muntinlupa registered in the name of Oliver. Upon approval of their loan application, Lim and
Oliver executed in favor of Chinabank a promissory note for P16,650,000, as well as a REM on
the property. The mortgage was registered and annotated on the OCT under the custody of the
Registry of Deeds of Makati and on the owners duplicate copy in the banks possession. The
mortgage document showed Mercedes Olivers address to be No. 95 Malakas Street, Diliman,
Quezon City. For brevity, she is hereafter referred to as Oliver One.
Respondent claiming that she is Mercedes M. Oliver with address at No. 40 J.P. Rizal St.,
San Pedro, Laguna, filed an action for annulment of mortgage and cancellation of title with
damages against Chinabank, Register of Deeds Atty. Mila G. Flores, and Deputy Register of
Deeds Atty. Ferdinand P. Ignacio. Respondent, referred to as Oliver Two, claimed that she was
the registered and lawful owner of the land subject of the REM; that the owners duplicate copy of
the title had always been in her possession; and that she did not apply for a loan or surrender her
title to Chinabank. She prayed that: (1) the owners duplicate copy surrendered to Chinabank as
well as the original title with the Registry of Deeds be cancelled; (2) the mortgage be declared null
and void; and (3) the Registry of Deeds be ordered to issue a new and clean title in her name.
Chinabank filed a Motion to Dismiss for lack of cause of action and non-joinder of an
indispensable party, the mortgagor. Judge Perello denied the motion to dismiss on the ground that
the matters alleged were all evidentiary .
Chinabank filed with the CA a petition for certiorari with prayer for the issuance of a writ of
preliminary injunction and/or restraining order to enjoin enforcement of Judge Perello’s order. The
CA directed respondent Oliver Two to file her comment and deferred action on the prayer for the
issuance of the preliminary injunction pending submission of the comment.
Respondent Oliver Two moved to declare petitioner Chinabank in default for failure to file its
answer within the reglementary period. The trial court granted the motion and declared petitioner
in default.
Consequently, petitioner Chinabank filed a supplemental petition seeking annulment of the
CA’s order declaring it in default. It argued that the special civil action for certiorari filed in the
Court of Appeals interrupted the proceedings before the trial court, thereby staying the period for
filing the answer. The CA held that the filing of the special civil action for certiorari with the Court
of Appeals did not interrupt the period to file an answer, there being no temporary restraining order
or writ of preliminary injunction issued.
ISSUES:
1. Whether or not the mortgagor who goes by the name of Mercedes M. Oliver, herein called Oliver
One, is an indispensable party in the civil case.
2. Whether or not Section 7 Rule 3 of the 1997 Rules of Civil Procedure applies in this case.

HELD/ DOCTRINE:
1. Petitioners contention is far from tenable. An indispensable party is a party in interest, without
whom no final determination can be had of an action. It is true that mortgagor Oliver One is a party
in interest, for she will be affected by the outcome of the case. She stands to be benefited in case
the mortgage is declared valid, or injured in case her title is declared fake. However, mortgagor
Oliver Ones absence from the case does not hamper the trial court in resolving the dispute
between respondent Oliver Two and petitioner. A perusal of Oliver Twos allegations in the
complaint below shows that it was for annulment of mortgage due to petitioners negligence in not
determining the actual ownership of the property, resulting in the mortgages annotation on TCT
No. S-50195 in the Registry of Deeds custody. To support said allegations, respondent Oliver Two
had to prove (1) that she is the real Mercedes M. Oliver referred to in the TCT, and (2) that she is
not the same person using that name who entered into a deed of mortgage with the
petitioner. This, respondent Oliver Two can do in her complaint without necessarily impleading the
mortgagor Oliver One. Hence, Oliver One is not an indispensable party in the case filed by Oliver
Two.
In Noceda vs. Court of Appeals, et al., 313 SCRA 504 (1999), we held that a party is not
indispensable to the suit if his interest in the controversy or subject matter is distinct and divisible
from the interest of the other parties and will not necessarily be prejudiced by a judgment which
does complete justice to the parties in court. In this case, Chinabank has interest in the loan which,
however, is distinct and divisible from the mortgagors interest, which involves the land used as
collateral for the loan.
Further, a declaration of the mortgages nullity in this case will not necessarily prejudice
mortgagor Oliver One. The bank still needs to initiate proceedings to go after the mortgagor, who
in turn can raise other defenses pertinent to the two of them. A party is also not indispensable if
his presence would merely permit complete relief between him and those already parties to the
action, or will simply avoid multiple litigation, as in the case of Chinabank and mortgagor Oliver
One. The latters participation in this case will simply enable petitioner Chinabank to make its claim
against her in this case, and hence, avoid the institution of another action. Thus, it was the bank
who should have filed a third-party complaint or other action versus the mortgagor Oliver One.
2. As to the second issue, since mortgagor Oliver One is not an indispensable party, Section 7,
Rule 3 of the 1997 Rules of Civil Procedure, which requires compulsory joinder of indispensable
parties in a case, does not apply. Instead, it is Section 11, Rule 3, that applies. Non-joinder of
parties is not a ground for dismissal of an action. Parties may be added by order of the court,
either on its own initiative or on motion of the parties. A person who is not a party to an action may
be impleaded by the defendant either on the basis of liability to himself or on the ground of direct
liability to the plaintiff.

JUANA COMPLEX I HOMEOWNERS ASSOCIATION, INC. vs. FIL-ESTATE LAND,


INC., G.R. Nos. 152272 and G. R. No. 152397, March 5, 2012

Case digest by: Quevedo, Arrah Svetlana T.

I. Facts of the Case

Juana Complex I Homeowners Association, Inc. (JCHA), together with individual


residents of Juana Complex I and other neighboring subdivisions (collectively referred as
JCHA, et. al.), instituted a complaint for damages, in its own behalf and as a class suit
representing the regular commuters and motorists of Juana Complex I and neighboring
subdivisions who were deprived of the use of La Paz Road, against Fil-Estate Land, Inc.
Accordingly, JCHA, et al. also prayed for the immediate issuance of a Temporary
Restraining Order (TRO) or a writ of preliminary injunction (WPI) to enjoin Fil-Estate from
stopping and intimidating them in their use of La Paz Road.

Fil-Estate filed a motion to dismiss arguing that the complaint failed to state a cause of
action and that it was improperly filed as a class suit. They claim that the excavation of
La Paz Road would not necessarily give rise to a common right or cause of action for
JCHA, et al. against them since each of them has a separate and distinct purpose and
each may be affected differently than the others.

With regard to the issuance of the WPI, Fil-Estate averred that JCHA, et al. failed to show
that they had a clear and unmistakable right to the use of La Paz Road; and further
claimed that La Paz Road was a Torrens registered private road and there was neither a
voluntary nor legal easement constituted over it. The RTC issued an Order granting the
WPI and denied Fil-Estate’s motion to dismiss. Not satisfied, Fil-Estate filed a petition for
certiorari and prohibition to annul RTC’s Order before the CA. The CA annulled the
granting of writ of preliminary injunction but the motion to dismiss was denied. The CA
ordered the remand of the case to the RTC for a full-blown trial on the merits. Hence,
these petitions for review.

II. Issue

Whether or not the complaint was properly filed as a class suit.

III. Resolution

The Court held that the complaint was properly filed as a class suit.

The necessary elements for the maintenance of a class suit are: 1) the subject matter of
controversy is one of common or general interest to many persons; 2) the parties affected
are so numerous that it is impracticable to bring them all to court; and 3) the parties
bringing the class suit are sufficiently numerous or representative of the class and can
fully protect the interests of all concerned.

In this case, the suit is clearly one that benefits all commuters and motorists who use La
Paz Road.

IV. Doctrine

A class suit is applicable when the individuals sought to 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.

MA. ELENA R. DIVINAGRACIA v. CORONACION PARILLA (GR No. 196750, Mar 11,
2015)
FACTS:

During his lifetime, Conrado Nobleza , Sr. Contracted two (2) marriages in which he had several
children. He also had some illegitimate children. He also owned a 313-square meter parcel of land
located in Iloilo City denominated covered by Transfer Certificate of Title (TCT) No. T12255.
According to Santiago Divinigracia, upon Conrado Nobleza, Sr.’s death, majority of the latter’s
heirs sold their respective shares over said property to him for a consideration of Php 447,695.66,
as embodied in a Deed of Extrajudicial Settlement or Adjudication with Deed of Sale 10 dated
November 22, 1989. However, this deed was not signed by the other heirs who did not sell their
respective shares (see table below). Thereafter, the same parties executed a Supplemental Contract
whereby the vendors-heirs and Santiago agreed that out of the aforesaid consideration, only Php
109,807.93 will be paid up front, and that Santiago will only pay the remaining balance of -
337,887.73 upon the partition of the subject land.

HEIRS STATUS OF SHARES


SPOUSE AND OTHER
DESCENDANTS ON RECORD
Cresencio (1st marriage) X SOLD
Conrado Jr. (1st) X SOLD
Mateo Sr. (1st) Felcon, Landelin, Eusela, Giovanni, Mateo SOLD thru Felcon’s
Jr., Tito, and Gaylord representation. However,
no authority from his
siblings
Coronacion (2nd) (respondent) SOLD
X
Celestial (2nd) (respondent) X SOLD
Cecilia (2nd) (Respondent) X SOLD
Celedenio (2nd) X UNSOLD
Ceruleo (2nd) X UNSOLD
Cebeleo Sr. (2ns) Maude (wife); children: Cebeleo Jr. and UNSOLD
Neobel
Rogelio (Illegitimate) X SOLD
Eduardo (Illegitimate) X SOLD
Ricardo (Illegitimate) X SOLD

However, because of the refusal of the respondents, the non-vendee heirs’ (Maude, Celedenio,
Ceruleo), to partition the aforesaid property and surrender its title, Santiago was not able to have
the same transferred in his name. This prompted Santiago to file a complaint before the Regional
Trial Court of Iloilo City for Judicial Partition and Receivership. For their part, the respondents
maintained that Santiago had no legal right to institute said action nor compel them to surrender
the land’s title because: a) he has not yet paid in full the purchase price; and b) only the legal heirs
of Conrado Sr and Eusela (2nd wife), owners of the disputed property, may validly inherit the
same. On the premise that Santiago, upon the sale of the aforesaid land, became a co-owner over
the same, the RTC ordered the partition of said land between him and the respondents, as well as
the cancellation of the land’s title with the consequent issuance of a new owner’s duplicate
certificate in his favor. However, with regard to Mateo Sr.’s share, the RTC ruled that Santiago
had not acquired the same because Felcon, Mateo Sr.’s son, admitted his lack of authority to bind
his siblings. On Reconsideration of the non-vendee heirs, Santiago was ordered by the RTC to pay
the remaining amount of the purchase price of the subject land.
Aggrieved, the respondents appealed to the Court of Appeals, which, in turn, set aside and
dismissed Santiago’s complaint. It held that Felcon’s siblings, as well as Maude’s children, are
indispensable parties to the judicial partition of the subject land and, thus, their non-inclusion as
defendants in Santiago’s complaint would necessarily result in its dismissal. Aggrieved, the heirs
of Santiago, as represented by petitioner Ma. Elena, moved for reconsideration, which, however,
was denied in a Undaunted, Ma. Elena R. Divinagracia, as administratrix of Santiago’s estate,
instituted the present petition.

ISSUE: Was the dismissal of the complaint by the CA proper?

RULING: No; the CA’s dismissal of Santiago’s complaint for judicial partition is incorrect.
Instead, it should have remanded the case to the RTC for the inclusion of the indispensable parties
who were not impleaded in Santiago’s complaint.

The Supreme Court affirmed the decision of the CA in so far as its decision who the indispensable
parties are in this case are concerned. In this regard, the Court ruled that all the co-heirs and persons
having an interest in the property are indispensable parties. As such, an action for partition will
not lie without the joinder of the said parties. As explained by the Court, an indispensable party is
one whose interest will be affected by the court’s action in the litigation, and without whom no
final determination of the case can be had. The party’s interest in the subject matter of the suit and
in the relief sought are so inextricably intertwined with the other parties’ that his legal presence as
a party to the proceeding is an absolute necessity. In his absence, there cannot be a resolution of
the dispute of the parties before the court which is effective, complete, or equitable. Consequently,
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. Meanwhile,
with regard to actions for partition, Section 1, Rule 69 of the Rules of Court provides that “[a]
person having the right to compel the partition of real estate may do so as provided in this Rule,
setting forth in his complaint the nature and extent of his title and an adequate description of the
real estate of which partition is demanded and joining as defendants all other persons interested
in the property.” Here, facts reveal that as regards Mateo, Sr.’s interest, only Felcon was
impleaded, excluding therefrom his siblings and co-representatives. Similarly, with regard to
Cebeleo, Sr.’s interest, the complaint impleaded his wife, Maude, when pursuant to Article 97235
of the Civil Code, the proper representatives to his interest should have been his children, Cebeleo,
Jr. and Neobel. Verily, Santiago’s omission of the aforesaid heirs renders his complaint for
partition defective. This is so even amidst Santiago’s contention that he had already bought the
interests of the majority of the heirs and, thus, they should no longer be regarded as indispensable
parties deserves no merit. As correctly noted by the CA, in actions for partition, the court cannot
properly issue an order to divide the property, unless it first makes a determination as to the
existence of coownership. The court must initially settle the issue of ownership, which is the first
stage in an action for partition. Therefore, until and unless this issue of co-ownership is definitely
and finally resolved, it would be premature to effect a partition of the disputed properties.

With regard to the CA’s order to dismiss Santiago’s complain on the ground that Santiago failed
to implead all of the indispensable parties, the Supreme Court held that it erred in doing so. The
Court emphasized that the proper remedy is to implead them and not to dismiss the case. Hence,
the correct course of action in the instant case is to order its remand to the RTC for the inclusion
of those indispensable parties who were not impleaded and for the disposition of the case on the
merits.

SUZETTE P. VALDEZ
2014-0365

PACIFIC CONSULTANTS INTERNATIONAL ASIA, INC. and JENS


PETER HENRICHSEN, Petitioners,
vs.
KLAUS K. SCHONFELD, Respondent.
G.R. No. 166920, February 19, 2007
THIRD DIVISION

STATEMENT OF FACTS: Respondent Schonfeld, a Canadian citizen and was a resident


of New Westminster, British Columbia, Canada, had been a consultant in the field of
environmental engineering and water supply and sanitation. Petitioner Pacicon
Philippines, Inc. (PPI), headed by its president, Jens Peter Henrichsen, is a corporation
duly established and incorporated in accordance with the laws of the Philippines. PPI is
a subsidiary of Pacific Consultants International of Japan (PCIJ).

When PCIJ engaged in consultancy services for water and sanitation in the Philippines,
it hired respondent Schonfeld, through Henrichsen, as Sector Manager of PPI for its
Water and Sanitation Department. His salary was paid partly by PPI and PCIJ.

Respondent Schonfeld signed the letter of employment sent by Henrichsen which stated
pertinent information on commencement of employment, remuneration and other
entitlements, and arbitration proceedings. He was accorded the status of a resident alien.
The Department of Labor and Employment approved his application for an Alien
Employment Permit.

Respondent Schonfeld reported for work in Manila and was paid the corresponding
compensation by PPI until Henrichsen informed him that his employment had been
terminated because PCIJ and PPI had not been successful in the water and sanitation
sector in the Philippines. Henrichsen, however, requested respondent Schonfeld to stay
put in his job until such time that he would be able to report on certain projects and discuss
all the opportunities he had developed.

Respondent Schonfeld continued his work with PPI but the latter failed to pay his
remunerations and other entitlements. He filed with PPI several money claims, including
unpaid salary, leave pay, air fare from Manila to Canada, and cost of shipment of goods
to Canada. PPI partially settled his claims but refused to pay the rest. As a result, he filed
a Complaint for Illegal Dismissal against petitioners PPI and Henrichsen with the Labor
Arbiter.
Petitioner Pacicon moved for the dismissal of the complaint on the following grounds: (1)
the Labor Arbiter had no jurisdiction over the subject matter; and (2) venue was improperly
laid. It averred that respondent was a Canadian citizen, a transient expatriate who had
left the Philippines. He was employed and dismissed by PCIJ, a foreign corporation with
principal office in Tokyo, Japan. Since respondents Schonfeld’s cause of action was
based on his letter of employment executed in Tokyo, Japan, under the principle of lex
loci contractus, the complaint should have been filed in Tokyo, Japan. Moreover, under
Section 12 of the General Conditions of Employment appended to the letter of
employment, complainant and PCIJ had agreed that any employment-related dispute
should be brought before the London Court of Arbitration.

Respondent Schonfeld contended that he was employed by PPI to work in


the Philippines under contract separate from his original contract of employment with
PCIJ. He insisted that his employer was PPI, a Philippine-registered corporation; it is
inconsequential that PPI is a wholly-owned subsidiary of PCIJ because the two
corporations have separate and distinct personalities; and he received orders and
instructions from Henrichsen. He further insisted that the principles of forum non
conveniens and lex loci contractus do not apply, and that although he is a Canadian
citizen, Philippine Labor Laws apply in this case.

He added that material allegations of the complaint, not petitioners’ defenses, determine
which quasi-judicial body has jurisdiction. Section 21 of the Arbitration Clause in the
General Conditions of Employment does not provide for an exclusive venue where the
complaint against PPI for violation of the Philippine Labor Laws may be filed.

The Labor Arbiter ruled in favor of the Petitioner Pacicon on the ground that the contract
of employment between respondent and PCIJ was controlling: (a) the Philippines was
only the duty station where respondent Schonfeld was required to work under the General
Conditions of Employment; and, (b) the parties had agreed that any differences regarding
employer-employee relationship should be submitted to the jurisdiction of the court of
arbitration in London, this agreement is controlling.

Said decision was affirmed by the NLRC causing respondent Schonfeld to file a petition
for certiorari under Rule 65 with the CA.

The CA found the petition meritorious on the following grounds:

(a) The four-fold test of determining an employer-employee relationship was complied


with; and,
(b) The parties were not precluded from bringing a case related thereto in other venues.
While there was, indeed, an agreement that issues between the parties were to be
resolved in the London Court of Arbitration, the venue is not exclusive, since there is
no stipulation that the complaint cannot be filed in any other forum other than in
the Philippines.
ISSUE: Whether or not, the Labor Arbiter has jurisdiction over respondent Schonfeld’s
claim despite the fact that he is a foreign national, was hired abroad by a foreign
corporation, executed his employment contract abroad, and had agreed that any dispute
between them "shall be finally settled by the court of arbitration in London”

DOCTRINE: The settled rule on stipulations regarding venue, as held by this Court in the
vintage case of Philippine Banking Corporation v. Tensuan, is that while they are
considered valid and enforceable, venue stipulations in a contract do not, as a rule,
supersede the general rule set forth in Rule 4 of the Revised Rules of Court in the absence
of qualifying or restrictive words. They should be considered merely as an agreement or
additional forum, not as limiting venue to the specified place. They are not exclusive but,
rather permissive. If the intention of the parties were to restrict venue, there must be
accompanying language clearly and categorically expressing their purpose and design
that actions between them be litigated only at the place named by them.

In the instant case, no restrictive words like only, solely, exclusively in this court, in no
other court save, particularly, nowhere else but/except, or words of equal import were
stated in the contract. It cannot be said that the court of arbitration in London is an
exclusive venue to bring forth any complaint arising out of the employment contract.

Petitioners insistence on the application of the principle of forum non conveniens must be
rejected. The bare fact that respondent is a Canadian citizen and was a repatriate does
not warrant the application of the principle for the following reasons:

First. The Labor Code of the Philippines does not include forum non
conveniens as a ground for the dismissal of the complaint.

Second. The propriety of dismissing a case based on this principle requires a


factual determination; hence, it is properly considered as defense.

Third. In Bank of America, NT&SA, Bank of America International, Ltd. v. Court of


Appeals, this Court held that:

xxx [a] Philippine Court may assume jurisdiction over the case if it chooses
to do so; provided, that the following requisites are met: (1) that the
Philippine Court is one to which the parties may conveniently resort to; (2)
that the Philippine Court is in a position to make an intelligent decision as
to the law and the facts; and, (3) that the Philippine Court has or is likely to
have power to enforce its decision. xxx

Admittedly, all the foregoing requisites are present in this case.


BPI FAMILY SAVINGS BANK INC., Petitioner,
vs.
SPOUSES BENEDICTO & TERESITA YUJUICO,Respondents,
G.R. No. 175796 July 22, 2015
Facts: the City of Manila filed a complaint against the respondents for the expropriation
of 5 parcels of land in Tondo, Manila and registered in the name of respondent Teresita
Yujuico. Two of the parcels of land were previously mortgaged to Citytrust Banking
Corporation, the petitioner's predecessor-in-interest, under a First Real Estate Mortgage
Contract. The RTC of Manila rendered its judgment declaring the five parcels of land
expropriated for public use. The judgment became final and executory and was entered
in the book of entries of judgment. The petitioner subsequently filed a Motion to Intervene
in Execution with Partial Opposition to Defendant's Request to Release, but the RTC
denied the motion for having been "filed out of time." Hence, the petitioner decided to
extrajudicially foreclose the mortgage constituted on the two parcels of land subject of the
respondents' loan. After holding the public auction, the sheriff awarded the two lots to the
petitioner as the highest bidder at ₱10, 000, 000.00.

Claiming a deficiency amounting to Pl8, 522155.42, the petitioner sued the respondents
to recover such deficiency in the Makati RTC. The respondents moved to dismiss the
complaint on several grounds, namely: that the suit was barred by res judicata; that the
complaint stated no cause of action; and that the plaintiffs claim had been waived,
abandoned, or extinguished. Which the RTC denied. When respondents moved for
reconsideration, reiterating their grounds earlier made in their motion to dismiss, the
petitioner adopted its comment/opposition to the motion to dismiss.

The respondents then filed their reply, in which they raised for the first time their objection
on the ground of improper venue. They contended that the action for the recovery of the
deficiency, being a supplementary action of the extrajudicial foreclosure proceedings, was
a real action that should have been brought in the Manila RTC because Manila was the
place where the properties were located. The Makati RTC denied the respondents' motion
for reconsideration for its lack of merit; and held on the issue of improper venue that:

It would be improper for this Court to dismiss the plaintiffs complaint on the ground of
improper venue, assuming that the venue is indeed improperly laid, since the said ground
was not raised in the defendant's Motion to Dismiss. On this point, it was held in the case
of Malig, et al. vs. Bush, L 22761, May 31, 1969 that "an action cannot be dismissed on
a ground not alleged in the motion therefore even if said ground, e.g., prescription, is
provided in Rule 16.

Issue: Whether or not the Honorable Court of Appeals’ act of appreciating the additional
ground of improper venue, only raised in the motion for reconsideration filed in the lower
court after it denied respondents’ motion to dismiss is contrary to law and jurisprudence.

Ruling:

We grant the petition for review on certiorari.


It is basic that the venue of an action depends on whether it is a real or a personal action.
The determinants of whether an action is of a real or a personal nature have been fixed
by the Rules of Court and relevant jurisprudence. According to Section 1, Rule 4 of the
Rules of Court, a real action is one that affects title to or possession of real property, or
an interest therein. Thus, an action for partition or condemnation of, or foreclosure of
mortgage on, real property is a real action. The real action is to be commenced and tried
in the proper court having jurisdiction over the area wherein the real property involved, or
a portion thereof, is situated, which explains why the action is also referred to as a local
action. In contrast, the Rules of Court declares all other actions as personal actions. such
actions may include those brought for the recovery of personal property, or for the
enforcement of some contract or recovery of damages for its breach, or for the recovery
of damages for the commission of an injury to the person or property. The venue of a
personal action is the place where the plaintiff or any of the principal plaintiffs resides, or
where the defendant or any of the principal defendants resides, or in the case of a non-
resident defendant where he may be found, at the election of the plaintiff, for which
reason the action is considered a transitory one.

Based on the distinctions between real and personal actions, an action to recover the
deficiency after the extrajudicial foreclosure of the real property mortgage is a personal
action, for it does not affect title to or possession of real property, or any interest therein.

the petitioner correctly brought Civil Case No.03-450 in the Makati RTC because Makati
was the place where the main office of the petitioner was located.

Moreover, the Makati RTC observed, and the observation is correct in our view, that it
would be improper to dismiss Civil Case No. 03-450 on the ground of improper venue,
assuming that the venue had been improperly laid, considering that the respondents had
not raised such ground in their Motion to Dismiss. As earlier indicated, they came to raise
the objection of improper venue for the first time only in their reply to the petitioner's
comment on their Motion for Reconsideration. They did so belatedly.

We underscore that in civil proceedings, venue is procedural, not jurisdictional, and may
be waived by the defendant if not seasonably raised either in a motion to dismiss or in the
answer.25Section 1, Rule 9 of the Rules of Court thus expressly stipulates that defenses
and objections not pleaded either in a motion to dismiss or in the answer are deemed
waived. As it relates to the place of trial, indeed, venue is meant to provide convenience
to the parties, rather than to restrict their access to the courts. 26 In other words, unless
the defendant seasonably objects, any action may be tried by a court despite its being
the improper venue.