[1]
G.R. No. L-58986 April 17, 1989
DANTE Y. GO, petitioner,
vs.
HON. FERNANDO CRUZ, Judge, etc., CITY SHERIFF OF CALOOCAN CITY, and
CALIFORNIA MANUFACTURING CO., INC., respondents.
Remedial Law; Civil Procedure; Dismissal of actions; Loss by plaintiff of the right to cause dismissal of the
action by mere notice is not the filing of defendant’s answer with the court but the service on the plaintiff of
the answer or of a motion for summary judgment; What the filing of pleadings, appearances, motions,
notices, orders and other papers with the court means; Service, meaning of.–––The petitioner is in error.
What marks the loss by a plaintiff of the right to cause dismissal of the action by mere notice is not the filing
of the defendant’s answer with the Court (either personally or by mail) but the service on the plaintiff of said
answer or of a motion for summary judgment. This is the plain and explicit message of the Rules. “The
filing of pleadings, appearances, motions, notices, orders and other papers with the court,” according to
Section 1, Rule 13 of the Rules of Court, means the delivery thereof to the clerk of the court either
personally or by registered mail. Service, on the other hand, signifies delivery of the pleading or other paper
to the parties affected thereby through their counsel of record, unless delivery to the party himself is ordered
by the court, by any of the modes set forth in the Rules, i.e., by personal service, service by mail, or
substituted service.
Same; Same; Same; Same; In case at bar, respondent filed its notice of dismissal of its action in the Manila
court after the filing of plaintiff’s answer but before service thereof.–––Here, California filed its notice of
dismissal of its action in the Manila Court after the filing of Dante Go’s answer but before service thereof.
Thus having acted well within the letter and contemplation of the afore-quoted Section 1 of Rule 17 of the
Rules of Court, its notice ipso facto brought about the dismissal of the action then pending in the Manila
Court, without need of any order or other action by the Presiding Judge. The dismissal was effected without
regard to whatever reasons or motives California might have had for bringing it about, and was, as the same
Section 1, Rule 17 points out, “without prejudice,” the contrary not being otherwise “stated in the notice”
and it being the first time the action was being so dismissed.
Same; Same; Same; Same; No legal obstacle to the institution of the second action in the Caloocan court
based on the same claim; Filing of the complaint invested the Caloocan court with jurisdiction of the subject
matter or nature of the action; Pendency of the first action gives the defendant the right to move for
dismissal of the second action on the ground of litis pendentia.––– There was therefore no legal obstacle to
the institution of the second action in the Caloocan Court of First Instance based on the same claim. The
filing of the complaint invested it with jurisdiction of the subject matter or nature of the action. In truth, and
contrary to what petitioner Dante Go obviously believes, even if the first action were still pending in the
Manila Court, this circumstance would not affect the jurisdiction of the Caloocan Court over the second suit.
The pendency of the first action would merely give the defendant the right to move to dismiss the second
action on the ground of auter action pendant, or litis pendentia.
PETITION for certiorari to review the restraining order issued by the Court of First Instance of Rizal, Br.
12. Cruz, J.
Civil Procedure (dismissal of actions Rule 17)
NARVASA, J.
The dismissal of civil actions is always addressed to the sound judgment and discretion of the
court; this, whether the dismissal is sought after a trial has been completed or otherwise, 1 or
whether it is prayed for by a defending party 2 or by a plaintiff or claimant. 3 There is one instance
however where the dismissal of an action rests exclusively on the will of a plaintiff or claimant, to
prevent which the defending party and even the court itself is powerless, requiring in fact no action
whatever on the part of the court except the acceptance and recording of the causative document.
This is dealt with in Section 1, Rule 17 of the Rules of Court, which reads as follows:
SECTION 1. Dismissal by the plaintiff. — An action may be dismissed by the plaintiff
without order of court by filing a notice of dismissal at any time before service of the
answer or of a motion for summary judgment. Unless otherwise stated in the notice, the
dismissal is without prejudice, except that a notice operates as an adjudication upon the
merits when filed by a plaintiff who has once dismissed in a competent court an action
based on or including the same claim. A class suit shall not be dismissed or compromised
without approval of the court.
It is this provision with which the proceedings at bar are chiefly concerned.
On October 26, 1981, California Manufacturing Co., Inc. (hereinafter, simply, California) brought
an action in the Court of First Instance of Manila against Dante Go, accusing him of unfair
competition. 4 The gravamen of California's complaint was that Dante Go, doing business under
the name and style of "Sugarland International Products," and engaged like California in the
manufacture of spaghetti, macaroni, and other pasta was selling his products in the open market
under the brand name, "Great Italian," in packages which were in colorable and deceitful limitation
of California's containers bearing its own brand, "Royal." Its complaint contained an application for
preliminary injunction commanding Dante Go to immediately cease and desist from the further
manufacture, sale and distribution of said products, and to retrieve those already being offered for
sale. 5
About two weeks later, however, or on November 12, 1981, California filed a notice of dismissal
with the Court reading as follows: 6
COMES NOW the plaintiff in the above-entitled case, through undersigned counsel, and
unto this Honorable Court most respectfully gives notice of dismissal without prejudice
pursuant to Sec. 1, Rule 17 of the Rules of Court.
WHEREFORE, it is respectfully prayed that the above-entitled case be considered
dismissed without prejudice conformably with Sec. 1, Rule 17 of the Rules of Court.
Four days afterwards, or on November 16, 1981, California received by registered mail a copy of
Dante Go's answer with counterclaim dated November 6, 1981, which had been filed with the
Court on November 9, 1981. 7
Page 1 of 30
On November 19, 1981 a fire broke out at the Manila City Hall destroying among others the sala of
Judge Tengco and the records of cases therein kept, including that filed by California against
Dante Go. 8
On December 1, 1981, California filed another complaint asserting the same cause of action
against Dante Go, this time with the Court of First Instance at Caloocan City. 9 This second suit
was docketed as Civil Case No. C-9702 and was assigned to the branch presided over by Judge
Fernando A. Cruz.
On December 3, 1981, Judge Cruz issued an ex parte restraining order directing "the defendant ...
to immediately cease and desist from the further manufacture, sale, promotion and distribution of
spaghetti, macaroni and other pasta products contained in packaging boxes and labels under the
name 'GREAT ITALIAN,' which are similar to or copies of those of the plaintiff, and ... recall ... all
his spaghetti, macaroni and other pasta products using the brand, 'GREAT ITALIAN.'" 10
On the day following the rendition of the restraining order, Dante Go filed the present petition
for certiorari, etc. with this Court praying for its nullification and perpetual inhibition. On December
11, 1981, this Court, in turn issued a writ of preliminary injunction restraining California, Judge
Cruz and the City Sheriff from enforcing or implementing the restraining order of December 3,
1981, and from continuing with the hearing on the application for preliminary injunction in said Civil
Case No. C-9702. The scope of the injunction was subsequently enlarged by this Court's
Resolution of April 14,1982 to include the City Fiscal of Manila, who was thereby restrained from
proceeding with the case of unfair competition filed in his office by California against Dante Go. 11
the dismissal of the action then pending in the Manila Court, without need of any order or other
action by the Presiding Judge. The dismissal was effected without regard to whatever reasons or
motives California might have had for bringing it about, and was, as the same Section 1, Rule 17
points out, "without prejudice," the contrary not being otherwise "stated in the notice" and it being
the first time the action was being so dismissed.
There was therefore no legal obstacle to the institution of the second action in the Caloocan Court
of First Instance based on the same claim. The filing of the complaint invested it with jurisdiction of
the subject matter or nature of the action. In truth, and contrary to what petitioner Dante Go
obviously believes, even if the first action were still pending in the Manila Court, this circumstance
would not affect the jurisdiction of the Caloocan Court over the second suit. The pendency of the
first action would merely give the defendant the right to move to dismiss the second action on the
ground of auter action pendant or litis pendentia. 18
WHEREFORE, the petition is DISMISSED, with costs against petitioner. The temporary restraining
order of December 11, 1981, and the amendatory Resolution of April 14, 1982 are SET ASIDE.

Dante Go's thesis is that the case filed against him by California in the Manila Court remained
pending despite California's notice of dismissal. According to him, since he had already filed his
answer to the complaint before California sought dismissal of the action three (3) days afterwards,
such dismissal was no longer a matter of right and could no longer be effected by mere notice in
accordance with Section 1, Rule 17 of the Rules of Court, but only on plaintiff s motion, and by
order of the Court; hence, the Caloocan Court acted without jurisdiction over the second action
based on the same cause. He also accused California of forum shopping, of selecting a
sympathetic court for a relief which it had failed to obtain from another. 12

The petitioner is in error. What marks the loss by a plaintiff of the right to cause dismissal of the
action by mere notice is not the filing of the defendant's answer with the Court (either personally or
by mail) but the service on the plaintiff of said answer or of a motion for summary judgment. This is
the plain and explicit message of the Rules. 13 "The filing of pleadings, appearances, motions,
notices, orders and other papers with the court," according to Section 1, Rule 13 of the Rules of
Court, means the delivery thereof to the clerk of the court either personally or by registered mail.
Service, on the other hand, signifies delivery of the pleading or other paper to the parties affected
thereby through their counsel of record, unless delivery to the party himself is ordered by the
court, 14 by any of the modes set forth in the Rules, i.e., by personal service, 15 service by
mail, 16 or substituted service. 17

Here, California filed its notice of dismissal of its action in the Manila Court after the filing of Dante
Go's answer but before service thereof. Thus having acted well within the letter and contemplation
of the afore-quoted Section 1 of Rule 17 of the Rules of Court, its notice ipso facto brought about

Civil Procedure (dismissal of actions Rule 17) Page 2 of 30

[2]
G.R. No. L-35989 October 28, 1977
FERMIN JALOVER, petitioner,
vs.
PORFERIO YTORIAGA, CONSOLACION LOPEZ and HON. VENICIO ESCOLIN, in his
capacity as Presiding Judge, Branch V, Court of First Instance of Iloilo, respondents.
Remedial Law; Court of processes; Notices; when a party is represented by counsel, notice of court
processes should be made upon such counsel and notice upon party himself not considered notice in law
unless service upon party is ordered by the court; Court’s dismissal, order of case does not become final
without notice to counsel of record.—It is settled that when a party is represented by counsel, notice should
be made upon the counsel, and notice upon the party himself is not considered notice in law unless service
upon the party is ordered by the court. The term “every written notice” used in Section 2 of Rule 13 includes
noticed decisions or orders. Private respondents’ counsel of record not having been served with notice of the
order dismissing the case, the said order did not become final.
Same; Same; Same; Court processes should be served to counsel of record in the absence of formal
withdrawal of counsel in the case, nor his substitution as such counsel by his clients or his dismissal as
counsel.—Petitioner argues that since private respondents’ counsel of record, Atty. Atol, had been appointed
Chief of the Secret Service of the Iloilo City Police Department, he was not anymore allowed to practice
law, hence, private respondents being no longer represented by counsel, notice to them should be deemed
legally effective. The argument is not valid, for its fails to consider the need of observing a legal formality
before a counsel of record may be considered relieved of his responsibility as such counsel on account of
withdrawal. A lawyer’s withdrawal as counsel must be made in a formal petition filed in the case, and where
no such petition has been accomplished, notice of judgment rendered in the case served on the counsel of
record is, for all legal purposes, notice to the client, the date of receipt of which is considered the starting
point from which the period of appeal prescribed by law shall begin to run. Not having withdrawn formally
as counsel in the case, nor having been substituted by his clients with another lawyer, or dismissed as such
counsel, Atty. Atol was, for all legal purposes, private respondents’ attorney upon whom the court’s
processes should have been served.
Same; Absence of respondent at a hearing not considered failure to prosecute where plaintiffs had already
adduced evidence and rested their case before dismissal of said case and it is respondents’ turn to present
evidence; Can only be construed as waiver to cross-examine witnesses; right to cross-examine witnesses
and/or object to evidence of a party rights that can be waived.—As found by respondent Judge, private
respondents, as plaintiffs, adduced their evidence and rested their case on September 4, 1963, or more than
six years before the dismissal of the case on January 26, 1970. It was, therefore, the turn of petitioner, as
defendant, to present his evidence. In the premises, private respondents could not possibly have failed to
prosecute; they were already past the stage where they could still be charged with such failure. As correctly
held by respondent Judge, private respondents’ absence at the hearing scheduled on January 26, 1970 “can
only be construed as a waiver on their part to cross examine the witnesses that defendants might present at
the continuation of trial and to object to the admissibility of the latter’s evidence.” The right to cross-
examine petitioner’s witnesses and/or object to his evidence is a right that belongs to private respondents
which they can certainly waive. Such waiver could be nothing more than the “intentional relinquishment of
a known right,” and, as such, should not have been taken against private respondents.
Civil Procedure (dismissal of actions Rule 17)
Same; Same; Dismissal; Dismissal of case after parties have presented their evidence and rested their case
does not only mean waiver on their part but a denial of their rights to adduce evidence and to have said
evidence considered by the court.—To dismiss the case after private respondents had submitted their
evidence and rested their case, would not only be to hold said respondents accountable for waiving a right,
but also to deny them one of the cardinal primary rights of a litigant, which is, corollary to the right to
adduce evidence, the right, to have the said evidence considered by the court. The dismissal of the case for
failure to prosecute, when in truth private respondents had already presented their evidence and rested their
case, and, therefore, had duly prosecuted their case, would in effect mean a total disregard by the court of
evidence presented by a party in the regular course of trial and now forming part of the record. The ends of
justice would be better served if, in its deliberate function, the court would consider the said evidence
together with the evidence to be adduced by petitioner.
Same; Relief from judgment available only when judgment or order has become final and executory but not
in a case when an order has not attained finality for failure of service upon counsel of record.—However,
we are of the view that relief from judgment under Rule 38 of the Revised Rules of Court is not the
appropriate remedy. A petition for relief is available only if the judgment or order complained of has already
become final and executory; but here, as earlier noted, the order of January 26, 1970 never attained finality
for the reason that notice therefor was not served upon private respondents’ counsel of record. The petition
for relief may nevertheless be considered as a second motion for reconsideration or a motion for new trial
based on fraud and lack of procedural due process.
ORIGINAL ACTION in the Supreme Court. Certiorari with preliminary injunction.
CASTRO, C.J.:
This is an original action for certiorari, with prayer for a writ of preliminary injunction, asking this
Court to declare null and void the Orders dated August 24, 1972 and November 10, 1972, issued
by the respondent Judge in civil case No. 5429 of the Court of First Instance of Iloilo, Branch V.
On December 27, 1972, a temporary restraining order was issued by this Court.
Sometime in April, 1960, private respondents Porferio Ytoriaga and Consolacion Lopez filed
against Ana Hedriana and petitioner Fermin Jalover a complaint dated April 6, 1960, in the Court
of First Instance of Iloilo (Civil Case No. 5429), alleging, inter alia, that they are owners pro
indiviso of Lot No. 2255 of the Cadastral Survey of Jaro, covered by TCT No. 6738 and containing
an area 8,153 square meters; that the said parcel of land is bounded oil the southwest by the
Salog River; that as of January, 1958, by virtue of the effects of the currant of the river, there was
a increase on its southwestern portion of around 900 square meters; that since before the war, the
plaintiffs have been in continuos possession of the increased portion of the land, which, under the
principle of alluvion, automatically belongs to them; that sometime in January, 1958, the
defendants had the land increase surveyed, placed concrete monuments thereon and took
possession , without the knowledge and consent of the plaintiff and that the defendants, who
destroyed plants standing on the land in question which belong to the plaintiffs, have remained in
ion of the in spite of repeated demands made by the latter for them to return the said possession.
The plaintiffs prayed that they be declared the owners of the increased portion of the land, and
that the defendants be ordered to vacate the premises and restore their possession to the
plaintiffs, to pay the plaintiffs the sum of P147.00 as actual damages, the sum of P300.00 as
attorney's fees, and the sum of P200.00 annually from the time the plaintiffs were deprived of ion
up to the time the said ion shall have been costs restored, and to pay the of suit.
Page 3 of 30
In his answer dated April 21, 1960, petitioner Fermin Jalover, as a defendant, alleged, inter alia,
that his mother and co-defendant, Ana Hedriana, died on July 21, 1959; that the land in question
was formerly a river bed, which, less than 10 years before, was abandoned the natural change in
the course of the waters; that the said land rightfully belongs to the defendant as sole heir of his
mother, who owned the land pursuant to Article 461 of the Civil Code of the Philippines; that it is
not true that the plaintiffs were ever in possession of the land, or that they had made demands
upon the defendant to vacate the land; that the plaintiffs had filed an ejectment suit against the
defendant with the Municipal Court of Iloilo City on March 12, 1958, and the same was decided
against the plaintiffs: and that by virtue of the malicious firing of the complaint, the defendant
suffered damages and had to hire the services of counsel. The defendant prayed the court to
dismiss the complaint with costs against the plaintiffs and to order the plaintiffs to pay the
defendant the sum of P1,000.00 as damages and the sum of P1,000,00 by way of attorney's fees.
Issues having been joined, the case was set for trial. On September 4, 1963, private respondents,
as plaintiffs, formally offered documentary evidence, and upon the admission thereof, they rested
their case; whereupon, continuation of trial was ordered transferred until further assignment. Trial
was postponed many times stretching to a period of more than 6 years, until January 26, 1970,
when the case was called for trial, and then Presiding Judge Ramon Blanco dismissed the case,
for failure of private respondents to appear in court, in an order which reads:
The complaint was filed on April 6, 1960 up to the present the trial of' the case has not
been finished. The counsel of record for the plaintiff is Atty. Amado Atol who since several
years ago has been appointed Chief of the Secret Service of the Iloilo City Police
Department. Plaintiff did not take the necessary steps to engage the service of another
lawyer in lieu of Atty. Atol.
WHEREFORE, for failure to prosecute this case is dismissed it without pronouncement as
to costs .
Two years later, or on January 17, 1972, private respondents' lawyer, Atty. Amado B. Atol, filed a
motion for reconsideration of the order dated January 26, 1970 dismissing the case, alleging that
the said respondents did not fail to prosecute because, during the times that the case was set for
hearing, at least one of said respondents was always present, and the record would show that the
transfers of hearing were all made at the instance of petitioner or his counsel; and, moreover,
private respondents had already finished presenting their evidence. Petitioner opposed the motion
on the ground that the order of dismissal issued two years before was an adjudication on the
merits and had long become final. On June 23, 1972, respondent Judge Venicio Escolin, who
succeeded Judge Blanco in Branch V, issued an order denying the motion for reconsideration on
the ground that the order of dismissal had become final long ago and was beyond the court's
power to amend or change.
Private respondents then filed a Petition for Relief from Judgment dated July 10, 1972, claiming
that the order of dismissal dated January 26, 1970 was void because of lack of due process and
for having been obtained thru fraud, for the petitioner had misrepresented to the court the status of
the case by making Judge Blanco - who was not the Presiding Judge when private respondents
presented their evidence and rested their case in 1963 - believe that trial had not even begun.
Petitioner opposed the petition for relief contending that private respondents were served a copy
of the order of dismissal on February 5, 1970, and, therefore, pursuant to Section 3, Rule 38 of the
Civil Procedure (dismissal of actions Rule 17)
Revised Rules of Court, the petition for relief should have been filed within 60 days from February
5, 1970, and within 6 months from January 26, 1970, when the order was issued; hence, the filing
of the petition was beyond the reglementary period.
The petition for relief was given due course, and on August 24, 1972, respondent Judge issued an
order setting aside the orders dated January 26, 1970 and June 23, 1972, and setting the
continuation of the trial for September 15, 1972. The reasons stated by respondent Judge in
support are: (1) the shows that while respondent Porferio Ytoriaga was furnished with a copy of
the dismissal order dated January 26, 1970, his counsel, Atty. Atol, was never served with a copy
thereof, hence, pursuant to the settled rule that where a party appears by attorney, a notice to the
client and not to his attorney is not a notice of law, the said order of dismissal never became final;
and (2) the order dated January 26, 1970 was without legal basis, considering that private
respondents had already presented their evidence and rested their caw on September 4, 1963,
and the hearing scheduled for January 26, 1970 was for reception of petitioner's evidence;
consequently, the non-appearance of private respondents and their counsel at the said hearing
could not mean failure to prosecute on their part, but may at worst only be construed as a waiver
on private respondents' part of the right to cross-examine the witnesses whom petitioner might
present and to object to the admissibility of petitioner's evidence. Petitioner, in a motion dated
October 16, 1972, moved for a reconsideration of the order dated August 24, 1972, on the
grounds that the court had full authority to issue the order of dismissal, and that the said order,
which had long become final, was beyond the court's power to reconsider. On November 10,
1972, respondent Judge issued an order denying the motion for reconsideration and setting the
continuation of trial for December 12, 1972.
Hence, the present recourse by petitioner.
The main thrust of the petition is that respondent Judge acted without or in excess of jurisdiction or
with grave abuse of discretion in setting aside the orders dated January 26, 1970 and June 23,
1972, because the said orders have long become final and executory, hence, may no longer be
disturbed.
It is uncontroverted that the order of January 26, 1970, dismissing the case for private
respondents' "failure to Prosecute," was served upon private respondents themselves, and not
upon their as attorney of record, Atty. Amado B. Atol, and that there was no court order directing
that the court's processes, particularly the order of January 26, 1970, should be served directly
upon private respondents. It is settled that when a party is represented by counsel, notice should
be made upon the counsel, and notice upon the party himself is not considered notice in law
unless service upon the party is ordered by the court. 1 The term "every written notice" used in
Section 2 of Rule 13 includes notice of decisions or orders. 2 Private respondents' counsel of
record not having been served with notice of the order dismissing the case, the said order did not
become final.
Petitioner argues that since private respondents' counsel of record, Atty. Atol, had been appointed
Chief of the Secret Service of the Iloilo City Police Department, he was not anymore allowed to
practice law, hence, private respondents being no longer represented by counsel, notice to them
should be deemed legally effective. The argument is not valid, for it fails to consider the need of
observing a legal formality before a counsel of record may be considered relieved of his
responsibility as such counsel on account of withdrawal. A lawyer's withdrawal as counsel must be
Page 4 of 30
made in a formal petition filed in the case, and where no such petition has been accomplished,
notice of judgment rendered in the case served on the counsel of record is, for all legal purposes,
notice to the client, the date of receipt of which is considered the starting point from which the
period of appeal prescribed by law shall begin to run 3 Not having withdrawn formally as counsel in
the case, nor having been substituted by his clients with another lawyer, or dismissed as such
counsel, Atty. Atol was, for all legal purposes, private respondents' attorney upon whom the Courts
processes should have been served.

It will also be noted that, as found by respondent Judge, private respondents, as plaintiffs,
adduced their evidence and rested their case on September 4, 1963, or more than six years
before the dismissal of the case on January 26, 1970. It was, therefore, the turn of petitioner, as
defendant, to present his evidence. In the premises, private respondents court not possibly have
failed to prosecute they were already past the stage where they could still be charged with such
failure. As correctly held by respondent Judge, private respondents' absence at the hearing
scheduled on January 6, 1970 "can only be construed as a waiver on their part to cross-examine
the witnesses that defendants might present at the continuation of trial and to object to the
admissibility of the latter's evidence." The right to cross-examine petitioner's witnesses and/or
object to his evidence is a right that belongs to private respondents which they can certainly waive.
Such waiver could be nothing more than the "intentional relinquishment of a known right," 4 and.
as such, should not have beer taken against private respondents.

To dismiss the case after private respondents had submitted their evidence and rested their case,
would not only be to hold said respondents accountable for waiving a right, but also to deny them
one of the cardinal primary rights of a litigant, which is, corollary to the right to adduce evidence,
the right to have the said evidence considered by the court. 5 The dismissal of the case for failure
to prosecute, when in truth private respondents had already presented their evidence and rested
their case, and, therefore, had duly ,prosecuted their case, would in effect mean a total disregard
by the court of evidence presented by a party in the regular course of trial and now forming part of
the record. The ends of justice would be better served if, in its deliberative function. the court
would consider the said evidence together with the evidence to be adduced by petitioner.

However, we are of the view that relief from judgment under Rule 38 of the Revised Rules of Court
is not the appropriate remedy. A petition for relief is available only if the judgment or order
complained of has already become final and executory; 6 but here, as earlier noted, the order of
January 26, 1970 never attained finality for the reason that notice thereof was not served upon
private respondents' counsel of record. The petition for relief may nevertheless be considered as a
second motion for reconsideration or a motion for new trial based on fraud and lack of procedural
due process.

Under the circumstances of the case, the issuance of the orders now complained of cannot be
said to have been characterized with abuse of discretion.

ACCORDINGLY the instant petition is denied. The temporary restraining order issued by this
Court on December 27, 1972 is hereby dissolved. No costs.

Civil Procedure (dismissal of actions Rule 17) Page 5 of 30

[3]
G.R. No. L-17828 August 31, 1963
LIGAYA MINA, JAIME MINA, SILVINA MINA, FAUSTA MINA,
PABLO MINA and MIGUEL MINA, the minors represented by PILAR LAZO as guardian-ad-
litem, plaintiffs-appellants,
vs.
ANTONIA PACSON, CRISPINO MEDINA and CRESENCIA MINA, defendants-appellees.
Dismissal of actions; Failure to prosecute; Failure to coma ply with order to implead indispensable party.—
Appellants' contention that the dismissal of the complaint in the previous action was "at the indirect instance
of the plaintiffs through inaction or omission," is not supported by the facts of the case, because the order of
the court dismissing the complaint in the first first case contained the warning that should the plaintiffs fail
to comply with its order to implead the surviving -widow of the deceased and other necessary parties, the
case would be dismissed, and it was because of plaintiff s refusal to comply with this express mandate that
the dismissal was ordered. This dismissal was, therefore, justified under Rule 30, Section 3 of the Rules of
Court (Garchitorena, et al. vs. De los Santos, et al., L-17045, June 30, 1962.)
Same; Same; Negligence of client and counsel.—The argument of appellants that the dismissal of the
previous case was due to the negligence of plaintiffs': lawyer for which the plaintiffs-appellants should not
be made to suffer, is not correct, it was not due to the negligence of their counsel alone but that of
themselves also that the required amendment was not made. Besides, even if the failure was due to the
lawyer alone, such failure would not relieve them of the responsibility resulting from the neglect of their
lawyer, for the client is bound by the action of his counsel. (Valerio as. Sec. of Agriculture, L-18587, April
23, 1963, and other cases cited.)
Judgments; Res judicata; Complete identity necessary; Parties not included and matters not raised, in
previous case not barred.— The previous order of dismissal bars the present complaint only as to matters
already presented in the pevious case, like the action for annulment of the deeds of sale as regards the
defendants fendants named therein, but matters not raised and parties not included in the previous case are
not barred, like the action for the recognition of the filiation of the plaintiffs against the defendant widow of
the deceased alleged father.
LABRADOR, J.:
This is an appeal from an order of the Court of First Instance of Nueva Ecija, Hon. Felix Makasiar,
presiding, in its Civil Case No. 3296, entitled "Ligaya Mina, et al., plaintiffs vs. Crispino Medina, et
al., defendants," dismissing the complaint filed in this case. The appellant also appeals against the
order denying the motion for reconsideration of the order of dismissal.
The facts necessary to understand the nature of the issues presented in this appeal, as gleaned
from the pleadings, may be briefly stated as follows: Plaintiffs Ligaya, Jaime, Silvina, Fausta,
Pablo and Miguel, all surnamed Mina, are alleged to be the illegitimate children of the deceased
Joaquin Mina with plaintiff Pilar Lazo from 1933-1958, while married to Antonia Pacson. Joaquin
Mina died in August, 1958, leaving no descendants norascendants except his widow, the
defendant herein Antonia Pacson. On April 9, 1958, Joaquin Mina, then still living, executed a
Civil Procedure (dismissal of actions Rule 17)
deed of absolute sale (Annex "B" to Complaint) of three parcels of land situated in the municipality
of Muñoz, Nueva Ecija, in favor of the defendants Crispino Medina and Cresencia Mina for the
sum of P12,000. On April 15, 1958 again he executed another deed of sale (Annex "C" to
Complaint) of 13 parcels of land covered by 12 transfer certificates of title to the same spouses
Crispino Medina and Cresencia Mina. Both deeds of sale bear the conformity of his wife Antonia
Pacson.
In the complaint filed in the Court of First Instance of Nueva Ecija in the case which originated this
appeal, it is alleged that plaintiffs are illegitimate children of the deceased Joaquin Mina begotten
by him with Pilar Lazo during the period from 1933 to 1958 while Joaquin Mina was lawfully
married to Antonia Pacson; that the plaintiff Pablo Mina is a recognized illegitimate child of the
deceased Joaquin Mina; that Joaquin Mina died intestate leaving no ascendants or descendants,
except his widow Antonia Pacson; that he left various parcels of land enumerated in the complaint
but that on April 9, 1950 the defendants connived and secured from Joaquin Mina, who was ill and
did not know what he was doing, the execution of the two deeds of sale without consideration,
fictitiously and fraudulently, transferring his propertiesto the spouses Crispino Medina and
Cresencia Mina; and that by reason of said acts, defendants have caused moral anguish, anxiety
and embarrassment to plaintiffs, causing them damages amounting to P10,000; that plaintiffs pray
that they be declared recognized illegitimate children of the deceased Joaquin Mina, entitled to
share in the properties left by him as such illegitimate children; that the deeds of sale, Annexes "B"
and "C" be declared fictitious, fraudulent and therefore, null and void; and that defendants be
required to deliver to plaintiffs' possession one-fourth of said properties together with P10,000 for
moral damages.
Upon the filing of the complaint the defendants presented a motion to dismiss the complaint on the
ground of res judicata, alleging that a similar action had previously been presented as Civil Case
No. 3015 in the same court, and by the same parties against Crispino Medina and Cresencia
Mina, in which the same allegations of plaintiffs' status and fraudulent conveyance of the
properties to defendants are alleged, together with a prayer for moral damages in the sum of
P20,000. It appears, however, that in the complaint filed in said Civil Case No. 3015, no prayer is
made for the declaration of the filiation of the plaintiffs in relation or with respect to the deceased
Joaquin Mina.
The motion to dismiss also copied an order of the court issued in said Civil Case No. 3015 which
reads as follows:
Acting on the Motion filed by the defendants on December 22, 1958 for the reconsideration of
the order dated December 8, 1958, and considering that the present action is not only for
annulment of deeds of sale but also for partition (paragraphs 8 and 11 of the complaint and
paragraph 4 of the prayer thereof); that to avoid multiplicity of suits, the complex action to
establish filiation andfor partition or for recovery of inheritance may be brought in the same
case (Lopez v. Lopez, 68 Phil. 227; Escoval vs. Escoval, 48 O.G. 615; Edades vs. Edades, L-
8964, July 31, 1956); and that Antonia Pacson, the surviving widow and the other intestate
heirs of the deceased Joaquin Mina, or necessary parties are not made a party in this case
(Briz v. Briz, 43 Phil. 763), the plaintiffs are hereby directed to amend their complaint within
fifteen (15) days from receipt hereof by including as party defendant the surviving widow of the
deceased Joaquin Mina and other necessary parties.
Page 6 of 30
 Should the plaintiffs fail to comply with this order, this case will be dismissed.
Lastly, another order of the same court dated February 9, 1959 was quoted, the dispositive part of
which reads:
The fifteen-day period granted to the plaintiffs having elapsed without said order having
been complied with, the Court hereby dismisses this case, without pronouncement aa to
costs.
Opposition to the motion to dismiss was presented on behalf of the plaintiffs by their attorney to
which a reply was filed on behalf of the defendants. A rejoinder was also filed after which Judge
Genaro Tan Torres, then presiding over the court, sustained the motion to dismiss in an order
which reads as follows:
After a careful consideration of the joint motion to dismiss of defendants Antonia Pacson and the
spouses Crispino Medina and Cresencia Mina, dated November 11, 1959, the opposition
thereto dated November 24, 1959, and the reply of the defendants to the opposition, dated
December 7, 1959, the Court is of the opinion that said motion to dismiss is well taken; hence
this case is hereby dismissed without costs.
Plaintiffs' motion for time to submit rejoinder, dated December 10, 1959, is hereby denied
because it will only unnecessarily delay the termination of this case.
So ordered.
Cabanatuan City, December 18, 1959.
A motion for the reconsideration of the order of the court dismissing the action having been
denied, the plaintiffs in the present case prosecuted this appeal directly to this Court.
As shown above the question to be resolved is whether or not the order dismissing the previous
Civil Case No. 3015 bars the present civil action No. 3296 of the Court of First Instance of Nueva
Ecija.
In the first error assigned by the appellants in their brief it is argued that the dismissal of the
complaint in the previous action was in fact "at the indirect instance of the plaintiffs through
inaction or omission." We do not find this claim justified by the facts of the case. The order of the
court dismissing the complaint in the first case contains the following warning: "Should the
plaintiffs fail to comply with this order, this case will be dismissed." In the face of this express
warning given in the court's order the dismissal can not be said to have been "at the indirect
instance of the plaintiffs; it was in fact caused by plaintiffs' refusal to comply with the express
mandate contained in the order of dismissal. The dismissal, therefore, was justified under Rule 30,
Section 3 of the Rules of Court, which reads:
SEC. 3. Failure to prosecute. — When plaintiff fails to appear at the time of the trial, or to
prosecute his action for an unreasonable length of time, or to comply with these rules of
Civil Procedure (dismissal of actions Rule 17)
any order of the court, the action may be dismissed upon motion of the defendant or upon
the court's own motion. This dismissal shall have the effect of an adjudication upon the
merits, unless otherwise provided by court.
The above provision of the Rules was invoked in the case, of Garchitorena, et al. vs. De los
Santos, et al., G.R. No. L-17045, June 30, 1962, wherein this Court held:
To order an amendment to a complaint within a certain period in order to implead as party
plaintiff or defendant one who is not a party to the case lies within the discretion of the
Court. And where it appears that the person to be impleaded is an indispensable party,
the party to whom such order is directed has no other choice but to comply with it. His
refusal or failure to comply with the order is a ground for the dismissal of his complaint
pursuant to Section 3, Rule, 30, of the Rules of Court. . . .
Under the second assignment of error it is argued that the dismissal of the previous case was
brought about by the negligence, gross or criminal, of plaintiffs' lawyer for which the plaintiffs-
appellants should not be made to suffer. The argument is not true to fact. The failure to amend
was a result not of the neglect of the lawyer alone but also of the plaintiffs-appellants themselves.
Had the plaintiffs taken even an ordinary interest in the result of the action that they had filed, they
would have been able to secure information from their lawyer that the case had been dismissed
for failure to amend. Upon receipt of such information, plaintiffs could have applied to the court for
relief under Rule 38 of the Rules of Court and could have had the complaint amended as directed
in the order of dismissal. It is not alone negligence of their counsel, therefore, but of themselves
also that the required amendment was not made. But assuming for the sake of argument that the
failure was due to the lawyer alone, such failure would not relieve them of the responsibility
resulting from the neglect of their lawyer, for the client is bound by the action of his counsel. (Isaac
v. Mendoza, G. R. No. L-2830, June 21, 1951; Vivero v. Santos, et al., G. R. No. L-8105, Feb. 28,
1956; Fernandez v. Tan Tiong Tick, G.R. No. L-15877, April 28, 1961; Gordulan v. Gordulan, G.R.
No. L-17722, Oct. 9, 1962; Valerio v. Sec. of Agriculture, G.R. No. L-18587, April 23, 1963.)
In the third assigiament of error it is claimed that there is no complete identity between the parties
in the first case and those in the case at bar. The statement is true because in the previous case
Antonia Pacson was not included as party-defendlant. As a matter of fact the order decided that
Pacson was to be included as party-defendant. As to the latter, therefore, the previous order of
dismissal does not bar the present complaint, not only because she was not made a party but also
because the issue of filiation of the parties-plaintiffs was not raised in the previous case, although
such issue was necessary for the plaintiffs to be able to maintain their right of action. In view of
this fact, the present action should be considered barred in respect to the action for the annulment
of the deeds of sale and as regards the defendants spouses Crispino Medina and Cresencia Mina;
but as to the case for the declaration of the plaintiffs as illegitimate children and heirs of the
deceased Joaquin Mina this latter case is not barred by the previous action as above explained
and may still be prosecuted.
WHEREFORE, the order of dismissal is hereby modified in the sense that the action for the
recognition of the filiation of the plaintiffs should be allowed to continue against the defendant
Antonia Pacson; but the dismissal of the action for the annulment of the deeds of sale is affirmed.
Without costs.
Page 7 of 30
[4]

Actions; Parties; Legal representative takes place of deceased party.—When the trial court is apprised of the
death of a party, it should order, not the amendment of the complaint, but the appearance of the legal
representative of the deceased as provided in section 17, Rule 3 of the Rules of Court. An order to amend the
complaint, before the proper substitution of the deceased parties has been effected, is void. In such a case the
order of the court, dismissing the complaint, for plaintiff’s noncompliance with the order. to amend it, is
likewise void.

Same; Res judicata; No res judicata where dismissal of prior case was void.—Where the dismissal of a prior
case was void, such dismissal cannot be pleaded as a bar to a subsequent case reviving the action in the first
case.

Same; Cause of action defined.—A cause of action is an act or omission of one party in violation of the legal
right or rights of the other.

Pleading and practice; When resolution of issue of prescription should be deferred.—The resolution of the
issue of prescription may be deferred until after the case is tried on the merits where the defense pleaded
against said issue is the existence of a trust over the property in dispute.

Civil Procedure (dismissal of actions Rule 17) Page 8 of 30

[5]
G.R. No. L-54287 September 28, 1988
REPUBLIC PLANTERS BANK petitioner,
vs.
HON. CONRADO M. MOLINA, as Presiding Judge, Court of First Instance of Manila, Branch
XX, SARMIENTO EXPORT CORPORATION, SARMIENTO SECURITIES CORPORATION and
FELICIANO SARMIENTO, JR., respondents.
Civil Procedure; Res judicata; In order for the Court to have authority to dispose of the case on the merits,
it must acquire jurisdiction over the subject matter and the parties; A judgment to be considered res
judicata, must be binding and must be rendered by a Court of competent jurisdiction.—In the very order of
dismissal of Civil Case No. 116028, the trial court admitted that it did not acquire jurisdiction over the
persons of private respondents and yet, it held that it was of no moment as to the dismissal of the case. We
disagree. For the court to have authority to dispose of the case on the merits, it must acquire jurisdiction over
the subject matter and the parties. If it did not acquire jurisdiction over the private respondents as parties to
Civil Case No. 116028, it cannot render any binding decision, favorable or adverse to them, or dismiss the
case with prejudice which, in effect, is an adjudication on the merits. The controverted orders in Civil Case
No. 116028 disregarded the fundamental principles of remedial law and the meaning and the effect of
jurisdiction. A judgment, to be considered res judicata, must be binding, and must be rendered by a court of
competent jurisdiction. Otherwise, the judgment is a nullity.
Same; Same; Same; The order of dismissal in Civil Case No. 116028 does not have the effect of an
adjudication on the merits.— The order of dismissal in Civil Case No. 116028 does not have the effect of an
adjudication on the merits of the case because the court that rendered the same did not have the requisite
jurisdiction over the persons of the defendants therein. This being so, it cannot be the basis of res judicata
and it cannot be a bar to a lawful claim. If at all, such a dismissal may be considered as one without
prejudice.
Same; Same; Same; Same; Court finding the two questioned orders to be irregular, improper and were
issued with grave abuse of discretion amounting to excess of jurisdiction.—Trial Courts have the duty to
dispose of controversies after trial on the merits whenever possible. In this case, there are no indications that
petitioner intentionally failed to prosecute the case. The delay could not be attributed to its fault. Petitioner
pursued the case with diligence, but jurisdiction could not be acquired over defendants-private respondents.
The sheriff had not yet submitted his return of the alias summons when the action was precipitately
dismissed by the trial court. These are proven circumstances that negate the action of respondent judge that
the dismissal of Civil Case No. 116028 has the effect of an adjudication upon the merits and constitutes a
bar to the prosecution of Civil Case No. 129829. The court finds that the two questioned orders of the trial
court are irregular, improper, and were issued with grave abuse of discretion amounting to excess of
jurisdiction.
GANCAYCO, J.:
The principal issue raised in this case is whether the trial court committed a grave abuse of
discretion when it ordered Civil Case No. 129829 dismissed on the ground of resjudicata it
appearing that Civil Case No. 116028 was dismissed on May 21, 1979, for failure of petitioner to
Civil Procedure (dismissal of actions Rule 17)
prosecute within a reasonable length of time, although in the said case, the trial court never
acquired jurisdiction over the persons of private respondents.
It is not disputed that both complaints in Civil Case No. 116028 (Branch XXXVI, Manila, Judge
Alfredo C. Florendo) and in Civil Case No. 129829 (Branch XX, Manila, Judge Conrado M. Molina)
were filed by petitioner Republic Planters Bank against private respondent, for the collection of a
sum of money based on a promissory note dated January 26, 1970, in the amount of
P100,000.00.
On May 21, 1979, Judge Alfredo C. Florendo dismissed Civil Case No. 116028 for failure of the
petitioner "to prosecute its case within a reasonable length of time. 1 A motion for reconsideration
of that order was denied on January 15, 1979.2
When Civil Case No. 129829 was filed by petitioner, a motion to dismiss was submitted by private
respondents on the ground that the cause of action is barred by a prior judgment (res judicata) in
Civil Case No. 116028. Private respondents opined that said order was an adjudication upon the
merits. Petitioner opposed the motion to dismiss, claiming that res judicata does not apply
because the summons and complaint in Civil Case No. 116028 were never served upon private
respondents and, as such, the trial court never acquired jurisdiction over private respondents and,
consequently, over the case. Petitioner maintains that the order of dismissal in Civil Case No. 11
6028 never became final as against private respondents.
The trial court (Branch XX), in its order dated May 8, 1980, dismissed the complaint in Civil Case
No. 129829 on the ground that the orders dated May 21, 1979 and June 15, 1979 issued by Judge
Alfredo C. Florendo, dismissing Civil Case No. 116028, had become final. The trial court ruled that
the dismissal of Civil Case No. 116028 had the effect of an adjudication upon the merits, that the
dismissal was with prejudice since the order was unconditional, and that the lack of jurisdiction
over defendants (private respondents) in Civil Case No. 116028 was of no moment. 3
In a motion for reconsideration of the order of May 8, 1980, petitioner reiterated its allegation that
in Civil Case No. 116028, the court did not acquire jurisdiction over private respondents and that at
the time the court ordered its dismissal, a motion for an alias writ of summons was pending
resolution inasmuch as the sheriff had not acted on the same. 4 The motion for reconsideration
was denied by the trial court on June 26, 1980 in Civil Case No. 129829. 5
Petitioner appealed to the Court of Appeals both questioned orders of respondent court in Civil
Case No. 129829. 6But then, petitioner sought a more speedy remedy in questioning said orders
by filing this petition for certiorari before this Court.
Under the foregoing undisputed facts, the Court finds this petition to be impressed with merit.
The questioned orders of the trial court in Civil Case No. 129829 supporting private respondent's
motion to dismiss on the ground of res judicata are without cogent basis. We sustain petitioner's
claim that respondent trial judge acted without or in excess of jurisdiction when he issued said
orders because he thereby traversed the constitutional precept that "no person shall be deprived
of property without due process of law" and that jurisdiction is vitally essential for any order or
adjudication to be binding. Justice cannot be sacrificed for technicality. Originally, the action for
Page 9 of 30
collection of the loan, evidenced by a promissory note, was only for P100,000.00 but petitioner
claims that as of March 5, 1981, the obligation was already P429,219.74. It is a cardinal rule that
no one must be allowed to enrich himself at the expense of another without just cause.

In the very order of dismissal of Civil Case No. 116028, the trial court admitted that it did not
acquire jurisdiction over the persons of private respondents and yet, it held that it was of no
moment as to the dismissal of the case. We disagree. For the court to have authority to dispose of
the case on the merits, it must acquire jurisdiction over the subject matter and the parties. If it did
not acquire jurisdiction over the private respondents as parties to Civil Case No. 116028, it cannot
render any binding decision, favorable or adverse to them, or dismiss the case with prejudice
which, in effect, is an adjudication on the merits.7 The controverted orders in Civil Case No.
116028 disregarded the fundamental principles of remedial law and the meaning and the effect of
jurisdiction. A judgment, to be considered res judicata, must be binding, and must be rendered by
a court of competent jurisdiction. Otherwise, the judgment is a nullity.

The order of dismissal in Civil Case No. 116028 does not have the effect of an adjudication on the
merits of the case because the court that rendered the same did not have the requisite jurisdiction
over the persons of the defendants therein.

This being so, it cannot be the basis of res judicata and it cannot be a bar to a lawful claim. If at all,
such a dismissal may be considered as one without prejudice. 8

Trial courts have the duty to dispose of controversies after trial on the merits whenever possible. In
this case, there are no indications that petitioner intentionally failed to prosecute the case. The
delay could not be attributed to its fault. Petitioner pursued the case with diligence, but jurisdiction
could not be acquired over defendants-private respondents. The sheriff had not yet submitted his
return of the alias summons when the action was precipitately dismissed by the trial court. These
are proven circumstances that negate the action of respondent judge that the dismissal of Civil
Case No. 116028 has the effect of an adjudication upon the merits and constitutes a bar to the
prosecution of Civil Case No. 129829. The court finds that the two questioned orders of the trial
court are irregular, improper, and, were issued with grave abuse of discretion amounting to excess
of jurisdiction.

Petitioner correctly states that its appeal to the Court of Appeals in CA-G.R. No. 67288 pertaining
to the questioned orders of the trial court is not an adequate remedy, because petitioner was not
able to present evidence in the trial court. The sole issue involved in this case is one of jurisdiction,
which is appropriate for resolution by the instant petition.

WHEREFORE, and by reason of the foregoing, the questioned orders dated May 8, 1980 and
June 26, 1980 issued in Civil Case No. 129829 are hereby REVERSED and SET ASIDE. The
records of the case are ordered returned to the trial court for trial and disposition on the merits. No
costs. This decision is immediately executory.

SO ORDERED.

Civil Procedure (dismissal of actions Rule 17) Page 10 of 30

[6]
G.R. No. L-15814 February 28, 1962
IN THE MATTER OF THE ESTATE OF CANDELARIA BENGUAN, deceased.
SUSANA ABAY DE ARROYO, petitioner-appellant,
vs.
FRANCISCO ABAY, CONRADO ABAY, JR., JOSE ABAY and NORMA ABAY, opponents-
appellees.
Dismissal of petition for probate of will for failure to appear; Not adjudication on merits.—The dismissal of
a petition for probate of a will and last testament in a previous special proceedings due to the failure of the
then petitioner and his counsel to appear on the date and time set for the hearing thereof is not an
adjudication on the merits.
Same; Same; Same; Provisions of rules on dismissal not applicable; Reasons.—The provisions of Sections 3
? a nd 4, R 30, and Section 2, Rule 73 of the Rules of Court cannot be made to apply to proceedings for the
probate of wills, because parties interested in the probate of a will for transmission of property rights to them
should not be prejudiced by the act or fault of another and because it is the policy of the state to have such
last wills and testaments submitted to Court for their probate or legalization as shown or indicated by or in
the punishment provided for persons who are in possession of last wills and testaments of deceased persons
and fail or neglect to deliver or present them to Court for probate or to deliver them to the executor named in
the will within twenty days after they know of the death of the testators or within the same period of time
after they know that they were named executors of the will (Sections 2 to 5, Rule 76).
PADILLA, J.:
On 5 January 1956 Susana Abay de Arroyo filed in the Court of First Instance of Negros
Occidental a petition for the probate of the will of her deceased first-degree cousin Candelaria
Benguan (special proceedings No. 3883). On 28 May, the Court ordered that the petition be
published once a week for three consecutive weeks in Civismo, a newspaper of general circulation
in Negros Occidental, setting the date of hearing thereof for the 23rd day of June 1956. On the
date and time set for the hearing of the petition attorney Rolando Medalla, representing some of
the heirs hereinafter referred to as opponents, moved for the postponement of the hearing to give
him time and opportunity to file a written objection to the petition. Whereupon, the hearing was
postponed to 30 June 1956. On 28 June, the opponents filed a motion to dismiss on the ground
that a petition for the probate of the same last will and testament had been dismissed by the same
Court in a previous special proceedings No. 3628 and constitutes a bar to the present proceedings
(No. 3883). On 7 July, the petitioner answered the motion to dismiss. By an order entered on 14
July, the Court dismissed the petition. After considering the motion for reconsideration filed by the
petitioner on 31 July 1956 and the answer thereto filed by the opponents on 3 August 1956, the
Court denied the motion for reconsideration. The petitioner appealed to the Court of Appeals
which certified the appeal to this Court for only questions of law are raised. .1äwphï1.ñët
The previous proceedings invoked by the opponents to bar the present is special proceedings No.
3623 filed in the Court of First Instance of Negros Occidental on 27 September 1955 by one Felix
Abay, a brother of Susana Abay de Arroyo, the herein petitioner and appellant. The last will and
Civil Procedure (dismissal of actions Rule 17)
testament involved therein is the same involved herein. However, upon failure of Felix Abay and
his counsel Pio B. Japitana to appear at the hearing on 5 November 1955, despite due notice, the
Court there dismissed the petition, without stating that it was a dismissal with prejudice. Two
motions for reconsideration were filed, the first on 15 November 1955 and the second on 28
November 1955, but both were denied, the last for lack of merit. .
The issue now hinges on whether or not the petition for the probate of a will filed in this special
proceedings is barred by a previous special proceedings No. 3628, the petition of which was
dismissed for failure of the petitioner and his counsel to appear on the date set for the hearing
thereof. .
The appellant contends that the dismissal of the petition in the previous case (spec. proc. No.
3628) does not bar the present (spec. proc. No. 3883), both for the probate of the same last will
and testament of the late Candelaria Benguan, because the dismissal for failure of the petitioner
and his counsel to appear at the hearing set by the Court was not an adjudication on the merits of
the case and is not res judicata, because the parties in the previous and present proceedings are
not the same. .
The appellant's contention that the dismissal of the petition for probate in the previous special
proceedings due to failure of the then petitioner and his counsel to appear on the date and time
set for the hearing thereof is not an adjudication on the merits must be upheld. In arriving at this
conclusion the Court has not overlooked the provisions of sections 3 and 4, Rule 30, and section
2, Rule 73, of the Rules of Court. The probate of a will may be the concern of one person or
several persons as usually is the case. The fault of one such person may be imputed to him alone
who must suffer the consequences of his act. Such fault cannot be imputed to other persons.
Hence, the failure of Felix Abay and his counsel to appear on the date and time set for the hearing
of the petition for the probate of a will claimed to have been executed by the late Candelaria
Benguan during her lifetime which brought about the dismissal of the petition filed in that special
proceedings (No. 3628) cannot prejudice the right of Susana Abay de Arroyo, the petitioner, in a
subsequent petition filed for the probate of the same will and last testament. So the provisions of
the Rules cited and invoked by the opponents-appellees cannot be made to apply to proceedings
for the probate of wills, because as already stated other parties interested in the probate of a will
for transmission of property rights to them should not be prejudiced by the act or fault of another
and because it is the policy of the State to have such last wills and testaments submitted to Court
for their probate or legalization, as shown or indicated or evidenced by or in the punishment
provided for persons who are in possession of last wills and testaments of deceased persons and
fail or neglect to deliver or present them to Court for probate or to deliver them to the executor
named in the will within twenty days after they know of the death of the testators or within the
same period of time after they know that they were named executors of the will (sections 2 to 5,
Rule 76). The underlying reason for the rule that a dismissal of an action or complaint in a civil
case may be a bar to a subsequent action unless the dismissal is without prejudice is lack of
interest or inaction of the one who brought the action in court by his complaint and for such lack of
interest or inaction he should be made to suffer. .
The order of dismissal appealed from is set aside and the petition for probate of a will filed in
special proceedings No. 3883 remanded to the Court of First Instance of Negros Occidental for
further proceedings as provided for in the Rules of Court, without special pronouncement as to
costs.
Page 11 of 30
[1]
G.R. No. L-40307 April 15, 1988
FILOIL MARKETING CORPORATION (now Petrophil Corporation), plaintiff/appellee,
vs.
DY PAC & CO., INC., defendant/appellant.
Civil Procedure; Pre-trial; No law can compulsorily require litigants to stipulate at pre-trial on the facts
and issues that may possibly crop up in a particular case upon pain of dismissal.— There-is-na-law which
compulsorily requires Utigants to stipulate at pre-trail on the facts and issues that may possibly crop up in a
particular case, upon pain of dismissal of such case. The process of securing admissions whether of facts or
evidence is essentially voluntary, since stipulations of facts, like contracts, bind the parties thereto who are
not allowed to controvert statements made therein. The trial court may, of course, advise and indeed urge the
parties during the pre-trial conference to try to arrive at a stipulation of facts principally for their own
convenience and to simpUfy subsequent proceedings by identifying those facts which are not really
controverted and do not need to be proved.
Same; Same; Same; Courts cannot compel the parties to enter into an agreement upon the facts.—Courts,
however, cannot compel the parties to enter into an agreement upon the facts. Where the parties are unable
to arrive at a stipulation of agreed facts and do not reach an amicable settlement of their controversy, the
court must close the pretrial proceedings and go forward with the trial of the case. The court a quo,
therefore, committed serious or reversible error in dismissing appellant’s appeal from the then City Court of
Manila solely upon the ground that the parties had failed to comply with the court’s Order to submit a
stipulation of facts. The trial court’s desire speedily to dispose of the case which had been pending for
almost four (4) years in that sala is understandable and praiseworthy; but it cannot justify the Order of
dismissal.
FELICIANO, J.:
This case was certified to us by the Court of Appeals in its Resolution dated 20 February 1975, as
one raising only questions of law.
On 19 March 1969, an action for collection of a sum of money with interest was commenced by
plaintiff Filoil Marketing Corporation (now Petrophil Corporation) in the City Court of Manila against
defendant Dy Pac & Co., Inc., alleging that from 1961 to 1965, plaintiff had sold and delivered on
credit petroleum products to defendant, who became indebted to it in the total amount of P
2,123.69; that notwithstanding repeated demands, defendant refused to pay.
In its Answer with Counterclaim, defendant Dy Pac & Co., Inc., admitted the credit transactions
alleged by plaintiff but denied indebtedness, alleging lack of cause of action, payment and
prescription.
At the hearing set on 17 June 1969, neither defendant nor his counsel appeared; plaintiff was
allowed to present its evidence ex parte, and accordingly, the City Court of Manila, Branch 3,
Civil Procedure (Rule 18)
rendered a decision on the same date ordering defendant to pay plaintiff the sum of P2,123.69
plus 6% interest thereon, attorney's fees and costs.
Upon denial of its motion for reconsideration, defendant appealled to the Court of First Instance of
Manila, which appeal was subsequently assigned to Branch 19 thereof.
By 30 January 1973, the lower court, in accordance with Republic Act No. 6031, 1 immediately set
the case for pre-trial, with a warning that no further postponements would be granted.
On 23 March 1973, the lower court issued a pre-trial order, the fun text of which follows:
When this case was called for pre-trial, the parties were duly represented by their
respective counsel. Filoil Marketing was represented also by Mr. Rodolfo Bondoc,
Accountant. Counsel for defendant manifested that he is duly authorized to enter into this
pre-trial and promises to submit said authority within three (3) days from today, as
required by the Rules, otherwise, the Court will not recognize his authority for pre-trial.
The plaintiff duly adopted his exhibits already marked in the lower court and also adopted
the markings in said court. In addition, he asked that the decision in the City Court, found
on page 17 of the records, be marked as Exhibits "F" and that the letter addressed to the
defendant dated February 7, 1968 be marked as Exhibit "G" to "G-". These were all
admitted by the defendant.
Defendant presented as its exhibits, Exhibit "1", a cash voucher dated February 16,1965,
which was admitted by the plaintiff, Exhibits "2" and "3" letters of defendant Filoil
Marketing Corporation, both of which were also admitted by the plaintiff.
The Court finds that this is just a matter of adjustment of accounts by the plaintiff and the
defendant, who are hereby ordered to prepare a stipulation of facts based on their
exhibits already marked and submit the same to the Court within thirty (30) days from
today. It is also ordered that in the stipulation of facts, the parties define the issues to be
resolved by the Court and if they are submitting the case for decision on the basis of their
exhibits. The parties are warned that if they cannot submit the stipulation off acts, the
Court will dismiss the appeal, the case having been filed on August 14, 1969 and up to
the present no trial has been conducted. 2 (Emphasis supplied)
In a subsequent Order dated 24 May 1973, the trial court dismissed defendant's appeal for failure
of the parties to submit the required stipulation of facts and ordered the immediate return of the
records to the City Court for execution.
A subsequent motion to reconsider the order of dismissal having been denied, defendant-
appellant took this appeal to the Court of Appeals, which, as already noted, certified the case to us
as involving only questions of law. This case, without an appellee's brief, was submitted for
decision on 17 March 1975.
Appellant claimed, in its brief, that it was deprived of its day in court and urged that the trial court
erred (a) in dismissing its appeal on the ground that the parties failed to submit a stipulation of
Page 12 of 30
facts and (b) in finding that defendant's counsel had not filed his authority to appear during pre- 3. All pending cases in the Regional Trial Courts (under the former Judiciary Act, the
trial. 3 Courts of First Instance, Circuit Criminal Courts, Juvenile and Domestic Relations Court
and Court of Agrarian Relations) shall remain with the Regional Trial Courts even though
We find merit in this appeal. there may have been a change of jurisdiction provided in Batas Pambansa Blg. 129.

There is no law which compulsorily requires litigants to stipulate at pre-trial on the facts and issues By way of example:
that may possibly crop up in a particular case, upon pain of dismissal of such case. The process of
securing admissions whether of facts or evidence is essentially voluntary, since stipulations of a. Cases in the Regional Trial Courts where the amount involved is above P10,000.00 up
facts, like contracts, bind the parties thereto who are not allowed to controvert statements made to P20,000.00 exclusive of interest and costs shall remain therein even though the
therein. The trial court may, of course, advise and indeed urge the parties during the pre-trial jurisdiction of the Metropolitan Trial Courts, the Municipal Trial Courts, and Municipal
conference to try to arrive at a stipulation of facts principally for their own convenience and to Circuit Trial Court has been increased to P20,000.00;
simplify subsequent proceedings by Identifying those facts which are not really controverted and
do not need to be proved. Courts, however, cannot compel the parties to enter into an agreement this case should remain with and be remanded to the Court of First Instance of Manila.
upon the facts. Where the parties are unable to arrive at a stipulation of agreed facts and do not
reach an amicable settlement of their controversy, the court must close the pre-trial proceedings
ACCORDINGLY, the Order dated 24 May 1973 of the Court of First Instance of Manila, dismissing
and go forward with the trial of the case. The court a quo, therefore, committed serious or
the appeal of defendant-appellant, is hereby SET ASIDE. This case is REMANDED to the
reversible error in dismissing appellant's appeal from the then City Court of Manila solely upon the
Regional Trial Court of Manila for trial on the merits. No pronouncement as to costs.
ground that the parties had failed to comply with the court's Order to submit a stipulation of facts.
The trial court's desire speedily to dispose of the case which had been pending for almost four (4)
years in that sala is understandable and praiseworthy; but it cannot justify the Order of dismissal. SO ORDERED.
Defendant's appeal from the decision of the City Court of Manila was entitled to a regular trial;
under Section 45 of Republic Act No. 296 (the Judiciary Act of 1948) as amended by Republic Act
No. 6031, the defendant-appellant was entitled to have its affirmative defenses and counterclaim
passed upon by the Court of First Instance in a trial de novo. It is perhaps noteworthy that
defendant-appellant had never been afforded the benefit of a trial, even by the City Court which
had rendered its judgment on the evidence of the plaintiff submitted ex parte. We hold that the trial
court's Order of 24 May 1973 in effect denied defendant-appellant its right to due process and
must hence be set aside.

Under Section 33 (1) of B.P. Blg. 129, a suit for the collection of a sum of money not exceeding
P20,000.00 would fall within the exclusive original jurisdiction of the Metropolitan Trial Courts,
Municipal Trial Courts and the Municipal Circuit Trial Courts. This case, however, was pending
before the Court of First Instance of Manila on 14 February 1983, while this appeal remained
before this Court where it has been since 17 March 1975.

Applying the Resolution of this Court en banc dated 14 February 1983, which established
guidelines for the distribution of cases pending upon implementation of B.P. Blg. 129 and which
provided in pertinent part as follows:

I. PENDING CASES AS OF FEBRUARY 14, 1983:

General Rule. — All pending cases as of February 14,1983 shall be distributed, by raffle,
among all branches in a multiple sala seat with incumbent judges except as herein
provided:

xxx xxx xxx

Civil Procedure (Rule 18) Page 13 of 30

[2]
G.R. No. 164375 October 12, 2006
RODOLFO PAREDES, TITO ALAGO AND AGRIPINO BAYBAY, SR., petitioners,
vs.
ERNESTO VERANO and COSME HINUNANGAN, respondent.
DECISION
Civil Procedure; Defaults; Appeals; Dismissal of appeals purely on technical grounds is frowned upon and
the rules of procedure ought not to be applied in a very rigid, technical sense, for they are adopted to help
secure, not override, substantial justice, and thereby defeat their very aims.—We do not doubt that under
Section 3, Rule 46 of the 1997 Rules of Civil Procedure, the Court of Appeals has sufficient discretion to
dismiss the petition for failure of petitioner to comply with the requirements enumerated in the section,
including “such material portions of the record as are referred to [in the petition], and other documents
relevant or pertinent thereto.” At the same time, “[d]ismissal of appeals purely on technical grounds is
frowned upon and the rules of procedure ought not to be applied in a very rigid, technical sense, for they are
adopted to help secure, not override, substantial justice, and thereby defeat their very aims.” Thus, the Court
has not hesitated to view Section 3 of Rule 46 with a liberal outlook, ruling for example that it was not
necessary to attach certified true copies of such material portions of the record as referred to therein.
Same; Same; A judgment of default against a defendant who failed to attend pre-trial, or even any defendant
who failed to file an answer, implies a waiver only of their right to be heard and to present evidence to
support their allegations but not all their other rights.—The order of the RTC allowing respondents to
present evidence ex parte was undoubtedly to the detriment of petitioners. Since the RTC would only
consider the evidence presented by respondents, and not that of petitioners, the order strikes at the heart of
the case, disallowing as it does any meaningful defense petitioners could have posed. A judgment of default
against a defendant who failed to attend pre-trial, or even any defendant who failed to file an answer, implies
a waiver only of their right to be heard and to present evidence to support their allegations but not all their
other rights.
Same; Same; Due Process; One manner by which due process is assured is through the faithful adherence
to the procedural rules that govern the behavior of the party-litigants; Under Section 5, Rule 18, the failure
of the plaintiff or defendant to appear during pre-trial authorizes the court to either dismiss the complaint, if
the plaintiff were absent; or to allow the plaintiff to present evidence ex parte, if the defendant were
absent.—The Constitution guarantees that no person shall be deprived of property without due process of
law. One manner by which due process is assured is through the faithful adherence to the procedural rules
that govern the behavior of the party-litigants. The Rules of Court do sanction, on several instances,
penalties for violation of the Rules that causes the termination of an action without a ruling on the merits, or
bars one party from litigating the same while permitting the other to do so. We noted earlier that Section 3,
Rule 46 authorizes the dismissal of an original petition before the Court of Appeals for failure to append
material portions of the record. Pursuant to Section 5, Rule 17, the failure of the plaintiff to appear on the
date of the presentation of his/her evidence in chief on the complaint is ground for the court to dismiss the
complaint, without prejudice to the right of the defendant to prosecute the counterclaim in the same or in a
separate action. And under Section 5, Rule 18, the failure of the plaintiff or defendant to appear during pre-
Civil Procedure (Rule 18)
trial authorizes the court to either dismiss the complaint, if the plaintiff were absent; or to allow the plaintiff
to present evidence ex parte, if the defendant were absent.
Same; Same; Same; A person who is condemned to suffer loss of property without justifying legal basis is
denied due process of law.—The operation of the above-cited provisions may defeat the cause of action or
the defense of the party who violated the procedural rule. Yet it could not be said that any resultant adverse
judgment would contravene the due process clause, as the parties are presumed to have known the governing
rules and the consequences for the violation of such rules. In contrast, the same presumption could not attach
if a party were condemned to the same outcome even if the party did not violate a prescribed rule of
procedure. Any ruling that disposes of an action or precludes a party from presenting evidence in support or
against thereof must have basis in law, and any ruling so intentioned without legal basis is deemed as issued
with grave abuse of discretion. In the end, a person who is condemned to suffer loss of property without
justifying legal basis is denied due process of law.
Same; Same; Same; Nothing in the Rules of Court authorizes a trial judge to allow the plaintiff to present
evidence ex parte on account of the absence during pre-trial of the counsel for defendant.—Nothing in the
Rules of Court authorizes a trial judge to allow the plaintiff to present evidence ex parte on account of the
absence during pre-trial of the counsel for defendant.
Same; Same; Same; What Section 5 penalizes is the failure to appear of either the plaintiff or the defendant,
and not their respective counsel.—Section 4 imposes the duty on litigating parties and their respective
counsel during pre-trial. The provision also provides for the instances where the nonappearance of a party
may be excused. Nothing, however, in Section 4 provides for a sanction should the parties or their respective
counsel be absent during pre-trial. Instead, the penalty is provided for in Section 5. Notably, what Section 5
penalizes is the failure to appear of either the plaintiff or the defendant, and not their respective counsel.
Same; Same; Same; The absence of counsel for defendants at pre-trial does not ipso facto authorize the
judge to declare the defendant as in default and order the presentation of evidence ex parte.—Hence, we
pronounce that the absence of counsel for defendants at pre-trial does not ipso facto authorize the judge to
declare the defendant as in default and order the presentation of evidence ex parte. It bears stressing that
nothing in the Rules of Court sanctions the presentation of evidence ex parte upon instances when counsel
for defendant is absent during pre-trial. The Rules do not countenance stringent construction at the expense
of justice and equity.
Same; Same; Same; Due process dictates that petitioners be deprived of their right to be heard and to
present evidence to support their allegations if, and only if, there exists sufficient basis in fact and in law to
do so.—Due process dictates that petitioners be deprived of their right to be heard and to present evidence to
support their allegations if, and only if, there exists sufficient basis in fact and in law to do so. There being a
manifest lack of such basis in this case, petitioners would be unjustly denied of the opportunity to fully
defend themselves should the Court affirm the questioned orders which were evidently issued by the RTC
with grave abuse of discretion. The better and certainly more prudent course of action in every judicial
proceeding is to hear both sides and decide on the merits rather than dispose of a case on technicalities.
TINGA, J.:
Page 14 of 30
The central issue in this case is whether the absence of the counsel for defendants at the pre-trial,
with all defendants themselves present, is a ground to declare defendants in default and to
authorize plaintiffs to present evidence ex parte.
The relevant facts are uncomplicated.
The protracted legal battle between the parties began with a complaint for the establishment of a
right of way filed by petitioners herein as plaintiffs against respondents as defendants.1 The
complaint, docketed as Civil Case No. 2767 of the Regional Trial Court (RTC) of Maasin City,
Southern Leyte, Branch 24, culminated in a judgment by compromise dated 26 April 1994.2 In the
Compromise Agreement, respondent Cosme Hinunangan granted a two (2) meter-wide right of
way in favor of petitioners in consideration of the amount of P6,000.00 which petitioners agreed to
pay.3
Alleging that petitioners had blocked the passage way in violation of the Compromise Agreement,
on 28 September 1999, respondents filed a complaint for specific performance with damages
against petitioners. It was docketed as Civil Case No. R-3111 also of the RTC of Maasin City,
Southern Leyte, Branch 24.4
In their answer, petitioners denied having violated the Compromise Agreement. They alleged that
like them, respondents were not actual residents of Barangay Tagnipa where the "road right of
way" was established and that respondent Cosme Hinunangan had already sold his only
remaining lot in the vicinity to petitioner Rodolfo Paderes.5
Subsequent to the answer, petitioners filed a motion to dismiss on the ground of lack of cause of
action.6 The trial court, presided by Judge Bethany G. Kapili, denied the motion to
dismiss.7 Petitioners elevated the order of denial to the Court of Appeals and thereafter to this
Court, both to no avail.8
Petitioners asked Judge Kapili to inhibit himself from the case. The judge denied the motion. 9
Pre-trial was initially set for 24 April 2003, but this was reset to 3 June 2003 on motion of
respondents' counsel. But the pre-trial set on 3 June 2003 did not push through either because
none of the parties appeared.
So, pre-trial was reset to 11 November 2003. Petitioner Baybay's counsel moved to reset it to
another date on account of a conflicting hearing. However, petitioner Baybay, who is the father of
the counsel for petitioners, was present in court along with the other defendants, when the case
was called on 11 November 2003. The RTC was informed then of a proposed settlement between
the parties, although respondent Baybay qualified his reaction by telling the court
that he would first have to inform his lawyer and the co-defendants of the said proposal. The RTC
then commented unfavorably on the absence of petitioners' counsel, expressing disappointment
towards his attitude, even making note of the fact that not once had the counsel appeared before
the RTC, even though the case had already reached the Supreme Court over the denial of the
Civil Procedure (Rule 18)
motion to dismiss.10 At the same time, the RTC acceded and reset the pre-trial for 23 January
2004.11
Shortly before the new pre-trial date, counsel for petitioners filed a Manifestation of Willingness to
Settle With Request for Cancellation dated 5 January 2004.12 Apart from manifesting his
willingness to settle the complaint, petitioners' counsel through the Manifestation suggested to the
opposing counsel that he be informed of the terms of the proposed settlement. Correspondingly,
petitioners' counsel requested the cancellation of the 23 January 2004 hearing.
However, the hearing did push through on 23 January 2004. The private respondents and their
counsel were present. So were petitioners Baybay and Paderes, and co-defendant Alago, but not
their counsel.
An order of even date formalized what had transpired during the hearing. The RTC allowed
respondents to present their evidence ex parte, "for failure of the defendants['] counsel to appear
before [the RTC]".13 Petitioners filed a motion for reconsideration, but this was denied by the
RTC.14
Thus, petitioners filed a petition for certiorari with the Court of Appeals, assailing the orders of the
RTC. However, on 28 April 2004, the Court of Appeals dismissed the petition outright,15 for failure
to attach duplicate original copies of the annexes to the petition other than the RTC Orders dated
23 January 2004 and 17 February 2004 (attaching photocopies instead), as well as for failure to
submit such other pleadings relevant and pertinent to the petition. Petitioners filed a Motion for
Reconsideration with Motion to Admit Additional Exhibits, adverting to the documents previously
missing from the petition but attached to the motion.
On 13 July 2004, the Court of Appeals issued a Resolution denying the motion for reconsideration.
In doing so, the Court of Appeals resolved the petition on its merits, as it ruled that "even with the
submission by petitioners of the required pleadings and documents, the instant petition must
nevertheless fail."16 The appellate court quoted extensively from the transcripts of the hearings of
11 November 2003 and 23 January 2004. It conceded that under Section 5, Rule 18 of the 1997
Rules of Civil Procedure, it is the failure of the defendant, and not defendant's counsel, to appear
at the pre-trial that would serve cause to allow plaintiff to present evidence ex parte. Nevertheless,
the Court of Appeals noted that petitioner Baybay had made it clear that he would never enter into
any amicable settlement without the advice of his counsel. Thus, the Court of Appeals concluded
that Judge Kapili's "hands were tied," explaining, thus: "He was held hostage by the blatant display
of arrogance exhibited by petitioner's counsel in assiduously failing to appear before the trial court.
Were he to close his eyes to the reprehensible scheme of Atty. Baybay in delaying the disposition
of the main case, the resulting impassé would only strain further the meager resources of the court
and prejudice the rights of private respondents."17
The Court of Appeals then cited Sps. Ampeloquio, Sr. v. Court of Appeals,18 wherein the Court
held that if every error committed by the trial court were to be a proper object of review by
certiorari, then trial would never come to an end and the appellate court dockets would be clogged
with petitions challenging every interlocutory order of the trial court. It concluded that the acts of
Judge Kapili did not constitute grave abuse of discretion equivalent to lack of jurisdiction.
Page 15 of 30
Finally, the trial court admonished petitioners' counsel to "bear in mind that as an officer of the
court, he is tasked to observe the rules of procedure, not to unduly delay a case and defeat the
ends of justice but to promote respect for the law and legal processes."19
We reverse the trial court and the Court of Appeals.
A preliminary observation. The Court of Appeals had initially dismissed the petition lodged by
petitioners on account of their failure to attach several relevant pleadings, citing Section 3, Rule 46
of the 1997 Rules of Civil Procedure. Before this Court, petitioners devote some effort in arguing
that the Court of Appeals erred in dismissing the petition on that procedural ground, while
respondents in their comment similarly undertook to defend the appellate court's action on that
point. We do not doubt that under Section 3, Rule 46 of the 1997 Rules of Civil Procedure, the
Court of Appeals has sufficient discretion to dismiss the petition for failure of petitioner to comply
with the requirements enumerated in the section, including "such material portions of the record as
are referred to [in the petition], and other documents relevant or pertinent thereto." 20 At the same
time, "[d]ismissal of appeals purely on technical grounds is frowned upon and the rules of
procedure ought not to be applied in a very rigid, technical sense, for they are adopted to help
secure, not override, substantial justice, and thereby defeat their very aims." 21 Thus, the Court has
not hesitated to view Section 3 of Rule 46 with a liberal outlook, ruling for example that it was not
necessary to attach certified true copies of such material portions of the record as referred to
therein.22
The situation in this case bears similarity to that which transpired in Cortez-Estrada v. Heirs of
Samut.23 Therein, the petitioner had failed to attach material documents to her petition before the
Court of Appeals. The Court of Appeals held the petition was dismissible for such procedural
infirmities, yet it nonetheless proceeded to rule against the petitioner on the merits. The Supreme
Court agreed with the appellate court that the petition was procedurally infirm, yet found partial
merit in its arguments and consequently granted partial relief in favor of the petitioner. In this case,
the Court of Appeals, in resolving the motion for reconsideration, proceeded to make a judgment
on the merits. Similarly, this Court finds ample basis to review the decision of the trial court as
affirmed by the appellate court, notwithstanding the procedural flaw that originally accompanied
the petition—a flaw which petitioners did seek to remedy when they belatedly attached the
relevant documents to their motion for reconsideration.
Ultimately, there are important reasons to consider the case on the merits. This case affords the
Court the opportunity to clarify the authority granted to a trial judge in relation to pre-trial
proceedings.
The order of the RTC allowing respondents to present evidence ex parte was undoubtedly to the
detriment of petitioners. Since the RTC would only consider the evidence presented by
respondents, and not that of petitioners, the order strikes at the heart of the case, disallowing as it
does any meaningful defense petitioners could have posed. A judgment of default against a
defendant who failed to attend pre-trial, or even any defendant who failed to file an answer, implies
a waiver only of their right to be heard and to present evidence to support their allegations but not
all their other rights.24
Civil Procedure (Rule 18)
The Constitution guarantees that no person shall be deprived of property without due process of
law. One manner by which due process is assured is through the faithful adherence to the
procedural rules that govern the behavior of the party-litigants. The Rules of Court do sanction, on
several instances, penalties for violation of the Rules that causes the termination of an action
without a ruling on the merits, or bars one party from litigating the same while permitting the other
to do so. We noted earlier that Section 3, Rule 46 authorizes the dismissal of an original petition
before the Court of Appeals for failure to append material portions of the record. Pursuant to
Section 5, Rule 17, the failure of the plaintiff to appear on the date of the presentation of his/her
evidence in chief on the complaint is ground for the court to dismiss the complaint, without
prejudice to the right of the defendant to prosecute the counterclaim in the same or in a separate
action. And under Section 5, Rule 18, the failure of the plaintiff or defendant to appear during pre-
trial authorizes the court to either dismiss the complaint, if the plaintiff were absent; or to allow the
plaintiff to present evidence ex parte, if the defendant were absent.
The operation of the above-cited provisions may defeat the cause of action or the defense of the
party who violated the procedural rule. Yet it could not be said that any resultant adverse judgment
would contravene the due process clause, as the parties are presumed to have known the
governing rules and the consequences for the violation of such rules. In contrast, the same
presumption could not attach if a party were condemned to the same outcome even if the party did
not violate a prescribed rule of procedure. Any ruling that disposes of an action or precludes a
party from presenting evidence in support or against thereof must have basis in law, 25 and any
ruling so intentioned without legal basis is deemed as issued with grave abuse of discretion. 26 In
the end, a person who is condemned to suffer loss of property without justifying legal basis is
denied due process of law.
Simply put, nothing in the Rules of Court authorizes a trial judge to allow the plaintiff to present
evidence ex parte on account of the absence during pre-trial of the counsel for defendant.
Sections 4 and 5 of Rule 18 warrant examination:
SEC. 4. Appearance of Parties. – It shall be the duty of the parties and their counsel to
appear at the pre-trial. The non-appearance of a party may be excused only if a valid
cause is shown therefor or if a representative shall appear in his behalf fully authorized in
writing to enter into an amicable settlement, to submit to alternative modes of dispute
resolution, and to enter into stipulations or admissions of facts and of documents.
SEC. 5. Effect of failure to appear. – The failure of the plaintiff to appear when so required
pursuant to the next preceding section shall be cause for dismissal of the action. The
dismissal shall be with prejudice, unless otherwise ordered by the court. A similar failure
on the part of the defendant shall be cause to allow the plaintiff to present his evidence ex
parte and the court to render judgment on the basis thereof.
Section 4 imposes the duty on litigating parties and their respective counsel during pre-trial. The
provision also provides for the instances where the non-appearance of a party may be excused.
Nothing, however, in Section 4 provides for a sanction should the parties or their respective
counsel be absent during pre-trial. Instead, the penalty is provided for in Section 5. Notably, what
Page 16 of 30
Section 5 penalizes is the failure to appear of either the plaintiff or the defendant, and not their
respective counsel.
Indeed, the Court has not hesitated to affirm the dismissals of complaints or the allowance of
plaintiffs to present evidence ex parte on account of the absence of a party during pre-trial.
In United Coconut Planters Bank v. Magpayo,27 the complaint was dismissed because although
the counsel for complainant was present during the pre-trial hearing, the Court affirmed such
dismissal on account of said counsel's failure to present any special power of attorney authorizing
him to represent the complainant during pre-trial.28 In Jonathan Landoil International Co. v.
Mangudadatu,29 the defendant and its counsel failed to appear during pre-trial, and the
complainants were allowed to present evidence ex parte. After an adverse decision was rendered
against the defendant, it filed a motion for new trial in which it cited the illness of defendant's
counsel as the reason for his non-appearance during pre-trial. While the Court acknowledged that
such argument was not a proper ground for a motion for new trial, it also noted that the
appearance of the defendant during pre-trial was also mandatory, and that the defendant failed to
justify its own absence during pre-trial.30
There are two cases which, at first blush, may seem to affirm the action of the RTC. In the
disbarment case of Miwa v. Medina,31 a lawyer was suspended from the practice for one (1) month
for, among others, failing to appear during pre-trial, thus leading to the declaration of his client, the
defendant, in default. At the same time, the Court in Miwadid take the defendant herself to task for
also failing to appear during pre-trial, observing that "the failure of a party to appear at pre-trial,
given its mandatory character, may cause her to be non-suited or considered as in default."32
In Social Security System v. Chaves,33 the Social Security System (SSS) itself was named as the
defendant in a complaint filed with the RTC of Cagayan de Oro City. The pre-trial brief was filed by
the acting assistant branch manager of the SSS in Cagayan de Oro City, who happened to be a
lawyer and who also entered his appearance as counsel for the SSS. However, said lawyer was
not present during pre-trial, and the SSS was declared in default and the complainants allowed to
present their evidence ex parte. The Court affirmed such order of default, noting other procedural
violations on the part of SSS, such as the fact that the motion for reconsideration to lift the order of
default lacked verification, notice of hearing and affidavit of merit.
Notwithstanding, the Court is not convinced that SSS is ample precedent to affirm an order of
default where even though the defendant was present during pre-trial, defendant's counsel failed
to appear for the same hearing. The Court in SSS did not make any categorical declaration to this
effect. Moreover, it can be observed that in SSS, the counsel himself, the acting assistant branch
manager of the SSS, would have been in addition, the representative of the SSS itself, a juridical
person which can only make an appearance during pre-trial through a natural person as its duly
authorized representative. The Court of Appeals decision upheld in SSS, cited extensively in our
decision therein, expressly affirmed the order of default on the ground that "it is the discretion of
the trial judge to declare a party-defendant as in default for failure to appear at a pre-trial
conference." However, in SSS, neither the Court of Appeals nor this Court expressly laid
relevance to the fact that the counsel himself, as opposed to the defendant, had not attended the
pre-trial.
Upon the other hand, Africa v. Intermediate Appellate Court34 illuminates the proper standard
within which to view the instant petition. It appeared therein that on the day of the pre-trial, counsel
Civil Procedure (Rule 18)
for the defendant (therein petitioner) had arrived ten minutes after the case was called. Within that
ten-minute span, the trial court had issued an order in open court declaring the defendant in
default and authorizing the plaintiff to present its evidence ex parte. A mere two days later, the trial
court rendered judgment in favor of plaintiff. The Court reversed the trial court, holding that the
order of default was issued with grave abuse of discretion. The reasoning of the Court was
grounded primarily on the doctrinal rule that frowned against "the injudicious and often impetuous
issuance of default orders,"35 which led in that case to "a deni[al of the defendant's] basic right to
be heard, even after his counsel had promptly explained the reason for his tardiness at the pre-
trial."36
Still, it would not be proper to consider Africa as the governing precedent herein, influential as it
may be to our disposition. It was not clear from the narration in Africa whether the defendant
himself was absent during the pre-trial, a circumstance which is determinative to this petition.
Moreover, the Court's tone in Africa indicated that it was animated by a liberal philosophy towards
the procedural rule, implying that the trial court's reversed action was nonetheless adherent to the
strict letter of the rule. Whether or not the trial court in Africa acted conformably with the rules
depends upon the presence or absence of the defendant therein during pre-trial. It can no longer
be discerned whether the Court so ruled in Africa notwithstanding the presence or absence of the
defendant therein. It would be disingenuous though to assume, as a means of applying that case
as precedent herein, that the defendant was actually present during the pre-trial in Africa.
Hence, we pronounce that the absence of counsel for defendants at pre-trial does not ipso
facto authorize the judge to declare the defendant as in default and order the presentation of
evidence ex parte. It bears stressing that nothing in the Rules of Court sanctions the presentation
of evidence ex parte upon instances when counsel for defendant is absent during pre-trial. The
Rules do not countenance stringent construction at the expense of justice and equity.37As the
Court has previously enunciated:
We cannot look with favor on a course of action which would place the administration of
justice in a straightjacket for then the result would be a poor kind of justice if there would
be justice at all. Verily, judicial orders, such as the one subject of this petition, are issued
to be obeyed, nonetheless a non-compliance is to be dealt with as the circumstances
attending the case may warrant. What should guide judicial action is the principle
that a party-litigant is to be given the fullest opportunity to establish the merits of
his complaint or defense rather than for him to lose life, liberty or properties on
technicalities.38
Due process dictates that petitioners be deprived of their right to be heard and to present evidence
to support their allegations if, and only if, there exists sufficient basis in fact and in law to do
so.39 There being a manifest lack of such basis in this case, petitioners would be unjustly denied of
the opportunity to fully defend themselves should the Court affirm the questioned orders which
were evidently issued by the RTC with grave abuse of discretion. The better and certainly more
prudent course of action in every judicial proceeding is to hear both sides and decide on the merits
rather than dispose of a case on technicalities.40
While counsel is somewhat to blame for his non-attendance at pre-trial, incidentally the operative
act which gave birth to the controversy at bar, it would be most unfair to penalize petitioners for
what may be the deficiency of their lawyer when the consequent penalty has no basis in law.
Page 17 of 30
Particularly mitigating in the instant case is the fact that the counsel for private respondents
intimated, at an earlier hearing, a possibility of an amicable settlement to the case. Then, counsel
for petitioners submitted a manifestation41 requesting therein that the parties be given ample time
to respectively discuss their proposals and counter-proposals and that the hearing for 23 January
2004 be moved to a later date as may be agreed upon by the parties for submission of their
possible compromise agreement. It may well have been that counsel for petitioners labored under
the false understanding that a compromise agreement was an imminent possibility. The Court
nonetheless notes that counsel was remiss in assuming that his motion to reset the scheduled
hearing would necessarily be granted by the court a quo.

Be that as it may, there is no clear demonstration that the acts of the counsel of petitioners were
intended to perpetuate delay in the litigation of the case. Assuming arguendo that the trial court
correctly construed the actions of the counsel of petitioners to be dilatory, it cannot be said that the
court was powerless and virtually without recourse but to order the ex parte presentation of
evidence by therein plaintiffs. We are in some sympathy with the judge who was obviously
aggrieved that the case was dragging on for an undue length of time. But even so, there were
other remedies available to the court.

Among the inherent powers of the courts expressly recognized by the Rules include the authority
to enforce order in proceedings before it,42 to compel obedience to its judgments, orders and
processes,43 and to amend and control its process and orders so as to make them conformable to
law and justice.44 Moreover, the Code of Judicial Conduct empowers the courts to judiciously take
or initiate disciplinary measures against lawyers for unprofessional conduct.45 A show cause order
to counsel would have been the more cautious and reasonable course of action to take under the
circumstances then prevailing. In failing to do so, the trial court impetuously deprived petitioners of
the opportunity to meaningfully present an effective defense and to adequately adduce evidence in
support of their contentions.

WHEREFORE, the instant petition is hereby GRANTED and the resolutions of the Court of
Appeals affirming the Orders of the Regional Trial Court in Civil Case No. R-3111 dated 23
January 2004 and 17 February 2004 are REVERSED. No costs.

SO ORDERED.

Civil Procedure (Rule 18) Page 18 of 30

[1]
G.R. No. 94005. April 6, 1993.
LUISA LYON NUÑAL, herein represented by ALBERT NUÑAL, and ANITA NUÑAL
HORMIGOS, petitioners,
vs.
THE COURT OF APPEALS and EMMA LYON DE LEON in her behalf and as guardian ad
litem of the minors HELEN SABARRE and KENNY SABARRE, EDUARDO GUZMAN,
MERCEDEZ LYON TAUPAN, WILFREDO GUZMAN, MALLY LYON ENCARNACION and
DORA LYON DELAS PEÑAS, respondents.
Judgments; A final judgment cannot be modified anymore; Exceptions.—In the case of Manning
International Corporation v. NLRC, We held that “x x x, nothing is more settled in the law than that when a
final judgment becomes executory, it thereby becomes immutable and unalterable. The judgment may no
longer be modified in any respect, even if the modification is meant to correct what is perceived to be an
erroneous conclusion of fact or law, and regardless of whether the modification is attempted to be made by
the Court rendering it or by the highest Court of land. The only recognized exceptions are the correction of
clerical errors or the making of so-called nunc pro tune entries which cause no prejudice to any party, and,
of course, where the judgment is void.” Furthermore, “(a)ny amendment or alteration which substantially
affects a final and executory judgment is null and void for lack of jurisdiction, including the entire
proceedings held for that purpose.”
Same; Actions; Remedy where judgment has become final, for inclusion of a party-heir, is to file an
independent civil suit.—In the case at bar, the decision of the trial court in Civil Case No. 872 has become
final and executory. Thus, upon its finality, the trial judge lost his jurisdiction over the case. Consequently,
any modification that he would make, as in this case, the inclusion of Mary Lyon Martin would be in excess
of his authority. The remedy of Mary Lyon Martin is to file an independent suit against the parties in Civil
Case No. 872 and all other heirs for her share in the subject property, in order that all the parties in interest
can prove their respective claims.
CAMPOS, JR., J.:
This is a petition for review on certiorari of the decision** dated February 22, 1990 of the Court of
Appeals in CA-G.R. CV No. 14889 entitled “Emma Lyon de Leon, et al., plaintiffs-appellees versus
Luisa Lyon Nuñal, now deceased herein represented by Albert Nuñal, et al., defendants-
appellants,” dismissing petitioners’ appeal and affirming the trial court’s order*** dated January 9,
1987 for the inclusion of Mary Lyon Martin as one of the heirs who shall benefit from the partition.
The facts as culled from the records of the case are as follows.
This case originated from a suit docketed as Civil Case No. 872 filed by Emma Lyon de Leon in
her behalf and as guardian ad litem of the minors Helen Sabarre and Kenny Sabarre, Eduardo
Guzman, Mercedes Lyon Taupan, Wilfredo Guzman, Mally Lyon Encarnacion and Dona Lyon de
las Peñas, (herein private respondents) against Luisa Lyon Nuñal, now deceased and herein
represented by her heirs, Albert Nuñal and Anita Nuñal Hormigos (herein petitioners), for partition
and accounting of a parcel of land located in Isabela, Basilan City. Subject parcel of land was
Civil Procedure (Rule 19)
formerly owned by Frank C. Lyon and May Ekstrom Lyon, deceased parents of Helen, Dona,
Luisa, Mary, Frank and William James. Private respondents claimed that said parcel of land,
formerly covered by Transfer Certificate of Title No. 3141 in the name of Frank C. Lyon, has been
in possession of petitioner Luisa Lyon Nuñal since 1946 and that she made no accounting of the
income derived therefrom, despite demands made by private respondents for the partition and
delivery of their shares.
On December 17, 1974, after trial and hearing, the then Court of First Instance (now Regional Trial
court) rendered its judgment in favor of private respondents and ordered the partition of the
property but dismissing private respondents' complaint for accounting. The dispositive portion of
the judgment reads as follows:
"WHEREFORE, judgment is hereby rendered ordering the partition of the land covered by
Transfer Certificate of Title No. 3141 among the plaintiffs and defendant. The parties shall make
partition among themselves by proper instruments of conveyance, subject to the Court's
confirmation, should the parties be unable to agree on the partition, the court shall appoint
commissioners to make the partition, commanding them to set off to such party in interest such
part and proportion of the property as the Court shall direct. Defendant is further ordered to pay
plaintiffs attorney's fees in the sum of P2,000.00." 1
On July 30, 1982, the order of partition was affirmed in toto by the Court of Appeals in CA-G.R.
No. 57265-R. The case was remanded to the court of origin for the ordered partition. 2
On May 17, 1984, an order for the issuance of the writ of execution was issued by the court a quo.
3
On July 17, 1984, Mary Lyon Martin, daughter of the late Frank C. Lyon and Mary Ekstrom Lyon,
assisted by her counsel filed a motion to quash the order of execution with preliminary injunction.
In her motion, she contends that not being a party to the above-entitled case her rights, interests,
ownership and participation over the land should not be affected by a judgment in the said case;
that the order of execution is unenforceable insofar as her share, right, ownership and participation
is concerned, said share not having been brought within the Jurisdiction of the court a quo. She
further invokes Section 12, Rule 69 of the Rules of Court. 4
On June 26, 1985, the trial court issued an order revoking the appointment of the three
commissioners and in lieu thereof, ordered the issuance of a writ of execution. 5
On February 4, 1986, the said court issued an order appointing a Board of Commissioners to
effect the partition of the contested property. 6
On May 28, 1986, the trial court dismissed the motion to quash order of execution with preliminary
injunction filed by Mary Lyon Martin and directed the partition of the property among the original
party plaintiffs and defendants. 7
Page 19 of 30
On September 24, 1986, the Commissioners manifested to the trial court that in view of the fact
that the name of Mary Lyon Martin also appears in the Transfer Certificate of Title, she could
therefore be construed as one of the heirs. A ruling from the trial court was then sought. 8
On September 29, 1986, the lower court issued an order directing the counsel of Emma Lyon de
Leon to furnish the court within five days from receipt thereof all the names the of heirs entitled to
share in the partition of the subject property. 9
On October 1, 1986, the petitioners filed a manifestation praying that the court issue an order
directing the partition of the property in consonance the decision dated December 17, 1974 of the
trial court the order of said court dated May 28, 1986. 10
Without ruling on the manifestation, the lower court issued an order directing the Board of
Commissioners to immediately partition the said property. 11
On January 3, 1987, the private respondents filed motion for clarification as to whether the
partition of property is to be confined merely among the party plaintiffs and defendants, to the
exclusion of Mary Lyon Martin. 12
On January 9, 1987, the lower court issued the assailed order directing the inclusion of Mary Lyon
Martin as co-owner with a share in the partition of the property, to wit:
"After a perusal of the decision of the Court of Appeals CA-G.R. No. 57265-R, where this case
was appealed by the unsatisfied parties, there is a finding that Mary now Mary Lyon Martin is one
of the legitimate children of Frank C. Lyon and Mary Ekstrom. (Page 3 of the decision).
In view of this finding, it would be unfair and unjust if she would be left out in the partition of this
property now undertaking (sic) by the said court appointed commissioners.
WHEREFORE, premises considered, the court appointed commissioners is hereby directed to
include Mary Lyon Martin as co-owner in the said property subject of partition with the
corresponding shares adjudicated to her.
SO ORDERED." 13
Petitioners' motion for reconsideration 14 of the aforesaid order was denied by the trial court. 15
On February 22, 1990 the Court of Appeals rendered its decision dismissing petitioners' appeal,
the dispositive portion of which reads as follows:
"WHEREFORE, premises considered, there being no legal impediment to the inclusion of Mary
Lyon Martin by the court-appointed Board of Commissioners as one of the heirs who shall benefit
from the partition, the instant appeal is DISMISSED for lack of merit.
NO COSTS.
Civil Procedure (Rule 19)
SO ORDERED." 16
Petitioners' motion for reconsideration was denied on June 6, 1990. 17
Petitioners filed this petition for review alleging that the Court of Appeals has decided questions of
substance contrary to law and the applicable decisions of this Court, for the following reasons:
"1.) BY SUSTAINING THE ORDER OF THE REGIONAL TRIAL COURT DIRECTING THE
COURT APPOINTED BOARD OF COMMISSIONERS TO INCLUDE MARY L. MARTIN TO
SHARE IN THE PARTITION OF THE PROPERTY IN LITIGATION DESPITE THE FACT, OVER
WHICH THERE IS NO DISPUTE, THAT SHE HAS NOT LITIGATED EITHER AS A PARTY
PLAINTIFF OR DEFENDANT IN CIVIL CASE NO. 872, IT HAS REFUSED TO RECOGNIZE
THAT THE REGIONAL TRIAL COURT HAS NO JURISDICTION TO AMEND OR MODIFY THE
JUDGMENT IN CIVIL CASE NO. 872 AND THE REGIONAL TRIAL COURT'S ORDER DATED 28
MAY 1986 WHICH HAS BECOME FINAL AND EXECUTORY.
2.) WHEN THE COURT OF APPEALS HAS CATEGORICALLY STATED THAT MARY L.
MARTIN "NEVER LITIGATED AS ONE OF THE PLAINTIFFS IN SAID CASE," AND HER ONLY
PARTICIPATION THEREIN WAS SIMPLY CONFINED "AS A WITNESS FOR DEFENDANT-
SISTER LUISA LY ON NUÑAL," AND TO ALLOW HER TO SHARE IN THE PARTITION THIS
LATE WITHOUT REQUIRING A PROCEEDING WHERE THE PARTIES COULD PROVE THEIR
RESPECTIVE CLAIMS, IS TANTAMOUNT TO DENYING THE NUÑALS OF THEIR RIGHT TO
DUE PROCESS. 18
The crux of this case is whether of not the trial court may order the inclusion of Mary L. Martin as
co-heir entitled to participate in the partition of the property considering that she was neither a
party plaintiff nor a party defendant in Civil Case No. 872 for partition and accounting of the
aforesaid property and that the decision rendered in said case has long become final and
executory.
Petitioners contend that the trial court's decision dated December 14, 1974 in Civil Case No. 872
ordering the partition of the parcel of land covered by Transfer Certificate of Title No. 3141 among
plaintiffs and defendants has long become final and executory. Hence the trial court has no
jurisdiction to issue the questioned Order dated January 9, 1987 ordering the Board of
Commissioners to include Mary Lyon Martin to share in the partition of said property despite the
fact that she was not a party to the said case. Said Order, therefore, resulted in an amendment or
modification of its decision rendered in Civil Case No. 872.
We find merit in the instant petition.
In the ease of Manning International Corporation v. NLRC, 19 We held that ". . ., nothing is more
settled in the law than that when a final judgment becomes executory, it thereby becomes
immutable and unalterable. The judgment may no longer be modified in any respect, even if the
modification is meant to correct what is perceived to be an erroneous conclusion of fact or law,
and regardless of whether the modification is attempted to be made by the Court rendering it or by
the highest Court of land. The only recognized exceptions are the correction of clerical errors or
Page 20 of 30
the making of so-called nunc pro tunc entries which cause no prejudice to any party, and, of
course, where the judgment is void."

Furthermore, "(a)ny amendment. or alteration which substantially affects a final and executory
judgment is null and void for lack of jurisdiction, including the entire proceedings held for that
purpose." 20

In the case at bar, the decision of the trial court in Civil Case No. 872 has become final and
executory. Thus, upon its finality, the trial judge lost his jurisdiction over the case. Consequently,
any modification that he would make, as in this case, the inclusion of Mary Lyon Martin would be
in excess of his authority.

The remedy of Mary Lyon Martin is to file an independent suit against the parties in Civil Case No.
872 and all other heirs for her share in the subject property, in order that all the parties in interest
can prove their respective claims.

WHEREFORE, the petition is GRANTED. The Order dated January 9, 1987 of the trial Court as
affirmed by the Court of Appeals is hereby REVERSED and SET ASIDE. The decision of the trial
court dated December 17, 1974 in Civil Case No. 872 is hereby REINSTATED.

SO ORDERED.

Civil Procedure (Rule 19) Page 21 of 30

[2]
G.R. No. 160727 June 26, 2007
UNION BANK OF THE PHILIPPINES, petitioner,
vs.
DANILO L. CONCEPCION, respondent.
DECISION
Corporation Law; Insolvency; Securities and Exchange Commission; Jurisdictions; Albeit jurisdiction over
a petition to declare a corporation in a state of insolvency strictly lies with regular courts, the Securities and
Exchange Commission (SEC) possessed, during the period material, ample power under P.D. No. 902-A, as
amended, to declare a corporation insolvent as an incident of and in continuation of its already acquired
jurisdiction over the petition to be declared in the state of suspension of payments in the two instances
provided in Section 5(d) thereof.— The underlying petition EYCO filed with and over which the SEC
assumed jurisdiction was one for declaration of suspension of payment, appointment of a rehabilitation
receiver/committee, approval of rehabilitation plan with alternative prayer for liquidation and dissolution.
That the SEC, along the way, ordained EYCO’s liquidation and dissolution did not, without more, strip the
SEC of jurisdiction over the liquidation process. Albeit jurisdiction over a petition to declare a corporation
in a state of insolvency strictly lies with regular courts, the SEC possessed, during the period material, ample
power under P.D. No. 902-A, as amended, to declare a corporation insolvent as an incident of and in
continuation of its already acquired jurisdiction over the petition to be declared in the state of suspension of
payments in the two instances provided in Section 5(d) thereof. Said Section 5(d) vests the SEC with
exclusive and original jurisdiction over petitions for suspension of payments which may either be: (a) a
simple petition for suspension of payments based on the provisions of the Insolvency Law,i.e., the
petitioning corporation has sufficient assets to cover all its debts, but foresees the impossibility of meeting
the obligations as they fall due, or (b) a similar petition filed by an insolvent corporation accompanied by a
prayer for the creation of a management committee and/or rehabilitation receiver based on the provisions of
P.D. No. 902-A, as amended by P.D. No. 1758.
Same; Same; Same; R.A. No. 8799; The transfer, effected by R.A. No. 8799, to the Regional Trial Court of
SEC’s jurisdiction defined under Section 5(d) of P.D. 902-A did not divest the SEC of its jurisdiction over a
Petition for Suspension of Payment, given that the SEC had already issued, as early as September 19, 1998,
the suspension order after it found the petition for suspension filed on September 16, 1998 to be sufficient in
form and substance.— The Court is certainly aware of the transfer, effected by R.A. No. 8799, to the RTC of
the SEC’s jurisdiction defined under Section 5(d) of P.D. No. 902-A. Such transfer, however, did not, as the
petitioner and the RTC posit, divest the SEC of its jurisdiction over SEC Case No. 0997-5764, given that it
had already issued, as early as September 19, 1998, the suspension order after it found the petition for
suspension filed on September 16, 1998 to be sufficient in form and substance. Subsection 5.2 of R.A. No.
8799 prescribing the jurisdiction transfer and the rules on transition provides as follows: 5.2. The [Securities
and Exchange] Commission’s jurisdiction over all cases enumerated under Section 5 of [P.D.] No. 902-A is
hereby transferred to the appropriate [RTC]: Provided that the Supreme Court . . . may designate the [RTC]
branches that shall exercise jurisdiction over these cases. x x x The Commission shall retain jurisdiction over
pending suspension of payments/rehabilitation cases filed as of 30 June 2000 until finally disposed. (Words
in bracket and emphasis added.)
Civil Procedure (Rule 19)
Same; Same; Same; Same; Words and Phrases; When the law speaks of “until finally disposed,” the
reference should include the final disposition of the liquidation and dissolution processes since it is within
the power of the SEC by law, or as incident of or in continuation of its already acquired jurisdiction over the
petition for suspension of payment, to order the dissolution/liquidation of a corporation and accordingly
appoint a liquidator; Once jurisdiction attaches, the court cannot be ousted from the case by any subsequent
events, such as a new legislation placing such proceedings under the jurisdiction of another body—the only
recognized exceptions to the rule arise when the statute expressly so provides or when the statute is clearly
intended to apply to actions pending before its enactment.— When the law speaks of “until finally
disposed,” the reference should include the final disposition of the liquidation and dissolution processes
since it is within the power of the SEC by law, or as incident of or in continuation of its already acquired
jurisdiction over the petition for suspension of payment, to order the dissolution/liquidation of a corporation
and accordingly appoint a liquidator. In fine, the continuing exercise of jurisdiction by the SEC over the
liquidation and dissolution of the EYCO Group is warranted. Once jurisdiction attaches, the court cannot be
ousted from the case by any subsequent events, such as a new legislation placing such proceedings under the
jurisdiction of another body. The only recognized exceptions to the rule, which find no sway in the present
case, arise when the statute expressly so provides or when the statute is clearly intended to apply to actions
pending before its enactment.
Actions; Parties; Intervention; Requisites; Words and Phrases; Intervention is a procedure by which a third
person, not originally party to the suit, but claiming an interest in the subject matter, comes into the case, in
order to protect his right or interpose his claim.— Intervention is a procedure by which a third person, not
originally party to the suit, but claiming an interest in the subject matter, comes into the case, in order to
protect his right or interpose his claim. Its main purpose is to settle in one action and by a single judgment
all conflicting claims of or the whole controversy among the persons involved.To warrant intervention under
Rule 19, Section 1 of the Rules of Court, two requisites must concur: (a) the movant has a legal interest in
the matter in litigation, and (b) intervention must not unduly delay or prejudice the adjudication of the rights
of the parties, nor should the claim of the intervenor be capable of being properly decided in a separate
proceeding. The interest, which entitles one to intervene, must involve the matter in litigation and of such
direct and immediate character that the intervenor will either gain or lose by the direct legal operation and
effect of the judgment.
Same; Same; Same; Liquidation; The liquidator is empowered and duty bound to represent the debtor in any
case filed by or against the debtor in any tribunal and bring any action on behalf of the debtor to collect,
recover or preserve any of its assets, or to resist or defend against any claim.—Just like the CA, the Court
has no doubt about the respondent, as the duly-appointed liquidator of EYCO’s remaining assets, having a
legal interest in the matter litigated in Civil Case No. 97-2184. This is particularly true with respect to the
parcels of land covered by the writ of attachment which, in the implementation of the SEC-approved
Liquidation Plan for EYCO, had been conveyed to the respondent in trust for the benefit of creditors,
EYCO’s stockholders and other persons in interest. At the very least, the respondent, as liquidator-trustee, is
so situated as to be affected by the distribution or disposition of the attached properties which were under
threat of being levied on execution and sold at public auction. Respondent would be unfaithful to his trust if
he does take a bona fide effort to intervene in Civil Case No. 97-2184 to thwart the attempt of the petitioner
to collect unpaid loans ahead of other legitimate creditors similarly situated. Under the SEC Rules of
Procedure on Corporate Recovery pursuant to which the SEC appointed the respondent to liquidate the
remaining assets of EYCO, the liquidator is empowered and duty bound to “[R]epresent the debtor . . . in
any case filed by or against the debtor in any tribunal” and “[B]ring any action on behalf of the debtor to
collect, recover or preserve any of its assets, or to resist or defend against any claim.”
Page 22 of 30
Same; Certiorari; While certiorari may not be resorted to when appeal is available as a remedy, the
Supreme Court has allowed the issuance of a writ of certiorari when appeal does not afford a speedy and
adequate remedy in the ordinary course of law.—It is true that certiorari may not be resorted to when appeal
is available as a remedy. However, it is also true that the Court has allowed the issuance of a writ of
certiorari when appeal does not afford a speedy and adequate remedy in the ordinary course of law. As in the
past, the Court has ruled that the availability of an appeal does not foreclose recourse to the ordinary
remedies or certiorari or prohibition where appeal is not adequate, equally beneficial, expeditious and
sufficient. Stated a bit differently, certiorari may be availed of where an appeal would be slow, inadequate
and insufficient. The determination as to what exactly constitutes plain, speedy and adequate remedy rests
on judicial discretion and depends on the particular circumstances of each case.
GARCIA, J.:
In this petition for review under Rule 45 of the Rules of Court, petitioner Union Bank of the
Philippines (Union Bank) assails and seeks the setting aside of the Decision1 dated July 22, 2003
of the Court of Appeals (CA) in CA-G.R. SP No. 75355, as effectively reiterated in its
Resolution2 of November 7, 2003 denying the petitioner’s motion for reconsideration.
The records, which include a copy of this Court’s Decision dated May 19, 1998 in G.R. No. 131729
entitled "Union Bank of the Philippines v. Court of Appeals et al., respondents," 3 yield the following
material facts:
On September 16, 1997, the EYCO Group of Companies 4 (EYCO or EYCO Group) filed with the
Securities and Exchange Commission (SEC) a PETITION5 for the declaration of suspension of
payment, appointment of a rehabilitation receiver/committee and approval of rehabilitation plan
with an alternative prayer for liquidation and dissolution of corporations (Petition for Suspension of
Payment, hereinafter). In it, EYCO depicted the Group’s composite corporations as having a
combined assets that are more than enough to pay off all their debts, but nonetheless unable to
pay them as they fall due. Joining EYCO as co-petitioners were Eulogio Yutingco and two other
individuals holding controlling interests in the composite corporations (collectively, the Yutingcos).
Finding the petition, docketed as SEC Case No. 09-97-5764, to be sufficient in form and
substance, the SEC Hearing Panel, by an order of September 19, 1997, directed the suspension
of all actions, claims and proceedings against EYCO, et al. pending before any court, tribunal,
board or office6 (the Suspension Order). At the same time, the Panel set the petition for hearing.
Meanwhile, a consortium of private banks which had granted credit facilities to EYCO, among
them, Union Bank, convened to map out their collective collection options. The formation of a
management committee (ManCom) to represent the creditor banks was agreed upon in that
meeting.
Subsequently, Union Bank decided to break away from the consortium and, without notifying its
members, filed a slew of civil cases against EYCO, et al. Of relevance is the first, a complaint for a
sum of money instituted on September 23, 1997 before the Regional Trial Court (RTC) of Makati
City, against four (4) members of the EYCO Group and spouses Eulogio and Bee Kuan Yutingco,
as sureties of the corporate obligations, with application for preliminary attachment. This
complaint,7 docketed as Civil Case No. 97-2184, eventually ended up in Branch 148 of the court.
Civil Procedure (Rule 19)
The next day, the Makati RTC issued the desired writ of preliminary attachment, 8 pursuant to
which levy on attachment was annotated on the titles, i.e., TCT Nos. V-481929 and V-4819310 of
the Registry of Deeds of Valenzuela City, of two parcels of land under the name of Nikon Plaza,
Inc. and EYCO Properties, Inc., respectively. Also attached, per herein respondent Danilo L.
Concepcion (Concepcion, for brevity), without denial from the petitioner, is a parcel of land
covered by TCT No. V-49678 of the same registry allegedly held by the Yutingcos in trust for
Nikon Industrial Corporation.11
On October 22, 1997, Union Bank moved, on jurisdictional ground, for the dismissal of SEC Case
No. 09-97-5764. On the same date, EYCO submitted its rehabilitation plan.
In January 1998, the SEC Hearing Panel appointed the regular members of the newly created
ManCom for EYCO.
Meanwhile, Union Bank, without awaiting for the SEC’s ruling on its motion to dismiss SEC Case
No. 09-97-5764, filed with the CA a petition for certiorari to nullify what it tagged as the precipitate
September 19, 1997 SEC suspension order12 and its creation of the ManCom. In the same
petition, docketed as CA-G.R. SP No. 45774, Union Bank alleged that the jurisdiction over the
basic petition for declaration of suspension of payment pertains to the RTC under Act No. 1956, as
amended, or the Insolvency Law.
On December 22, 1997, in CA-G.R. SP No. 45774, the CA rendered judgment declaring Union
Bank guilty of forum shopping and accordingly dismissed its petition for certiorari. This Court, in its
Decision13 dated May 19, 1998 in G.R. No. 131729, in turn affirmed that of the CA, but proceeded
further to declare the SEC as possessed of jurisdiction over EYCO’s petition for suspension of
payments filed pursuant to Section 5(d) of Presidential Decree (P.D.) No. 902-A, but not insofar as
the Yutingcos’ petition was concerned. With respect to the Yutingcos, the Court held that the
SEC’s jurisdiction on matters of suspension of payments is confined only to those initiated by
corporate entities, as the aforecited section does not allow an individual to file, or join in, the
corresponding petition. In line with the rule on misjoinder of parties, the Court directed the SEC to
drop the individual petitioners from the petition for suspension of payment.
Conformably with this Court’s Decision aforementioned, the Makati RTC issued, in Civil Case No.
97-2184, an Order14 dated August 17, 1998 thereunder indefinitely suspending the proceedings in
that collection suit until further orders. The fallo of the RTC’s order reads:
WHEREFORE, … the complaint filed by the plaintiff [Union Bank] against defendant-corporation
[EYCO 4] … is hereby INDEFINITELY SUSPENDED until further Orders from this Court in view of
the existing petition for Suspension of Payment before the [SEC]. On the other hand, the
defendant’s motion to dismiss complaint against the individual-defendants, namely: Spouses
Eulogio and Bee Kuan Yutingco, is hereby DENIED for lack of merit.
Consequently, in order to give defendant-Spouses [Yutingcos] ample time to prepare for whatever
defense they may raise, they are hereby given a new fifteen (15) days period from receipt of this
Order within which to file their answer to the complaint against them.
SO ORDERED. (Words in brackets and emphasis supplied.)
Page 23 of 30
In a related development, the SEC Hearing Panel, over the objection of the consortium of EYCO’s
creditor banks, approved, on December 18, 1998, the rehabilitation plan prepared by the
Strategies and Alliance Corporation for EYCO. The consortium lost no time in appealing to the
SEC en banc the Hearing Panel’s approval order and prayed for the liquidation and dissolution of
EYCO, the appellate recourse docketed as SEC AC No. 649.
On September 14, 1999, the SEC en banc issued in SEC AC No. 649 an order finding for the
consortium, disposing as follows:
WHEREFORE, … the appeal is, as it is hereby granted and the Order dated 18 December 1998 is
set aside. The Petition to be Declared in State of Suspension of Payment is hereby disapproved
and the SAC Plan terminated. Consequently, all committees, conservator/receivers created
pursuant to said Order are dissolved. xxx
The Commission, likewise, orders the liquidation and dissolution of the [EYCO Group]. The case is
hereby remanded to the hearing panel below for that purpose. xxx (Words in brackets and
emphasis supplied.)
Another en banc order15 of March 31, 2001 followed, with the SEC this time appointing respondent
Concepcion to act, vice the dissolved Liquidation Committee, as EYCO Liquidator. Among
Concepcion’s first act as such liquidator was to file, on March 8, 2002, in Civil Case No. 97-2184,
a Motion to Intervene and To Admit Motion to Set Aside Order of Attachment 16 (Motion to
Intervene, for brevity). Three days later, Concepcion submitted before the SEC a Liquidation
Plan17 for the EYCO Group.
After due proceedings, the SEC approved, on April 11, 2002, the Concepcion-submitted
Liquidation Plan.18Concepcion’s motion to intervene, however, met a different fate. For, by
Order19 of August 8, 2002, the Makati RTC denied Concepcion’s motion to intervene in Civil Case
No. 97-2184 on the ground of lack of standing to intervene, his appointment as Liquidator being,
according to the court, of doubtful validity. The order, in addition, granted Union Bank’s earlier
motion to declare EYCO in default, and set a date for the ex-parte reception of Union Bank’s
evidence.
Concepcion then moved for reconsideration questioning the basis of the denial of his motion to
intervene. Questioned, too, was the default aspect of the order, Concepcion arguing in this regard
that the collection proceedings were suspended "until further Orders from this Court" 20 and the
RTC of Makati has yet to issue the suspension-lifting order. The Makati RTC denied the motion on
December 16, 2002.
Earlier, however, Union Bank presented evidence ex parte, on the basis of which the Makati RTC
rendered, on December 27, 2002, partial judgment21 ordering EYCO to pay the bank ₱400 million
plus interests and attorney’s fees.
Via a petition for certiorari and prohibition before the CA, Concepcion challenged the RTC’s partial
judgment aforementioned and its earlier order denying the motion to intervene. His recourse was
docketed as CA-G.R. SP No. 75355.
Civil Procedure (Rule 19)
The appellate court eventually issued the herein assailed Decision 22 reversing the Makati RTC’s
impugned issuances and allowing Concepcion to intervene, thus:
WHEREFORE, foregoing premises considered, the petition is GRANTED. The assailed orders
and partial judgment are hereby ANNULLED and SET ASIDE. Public respondent [RTC Judge
Oscar Pimentel, Branch 148, Makati City] is ordered to allow petitioner [Concepcion] to intervene
in Civil Case No. 97-2184.
SO ORDERED.
Following the denial of its motion for reconsideration,23 Union Bank has interposed this petition
ascribing to the CA the following errors:
1. In ruling in favor of respondent Concepcion’s right to intervene in Civil Case No. 97-2184
pending in the lower court despite his lack of legal interest in the matter in litigation.
2. In ruling in favor of respondent Concepcion’s right to intervene in said Civil Case No. 97-2184
despite his lack of legal personality, his appointment by the SEC as liquidator of EYCO being null
and void for lack of jurisdiction; and
3. In giving due course to respondent Concepcion’s petition for certiorari under Rule 65 of the
1997 Rules of Civil Procedure despite its being the improper remedy.
We DENY.
As the Court distinctly notes, the petitioner does not assail the CA’s judgment insofar as it nullified
the RTC’s partial judgment or its default order. As thus couched, the petition particularly sets its
sight on that part of the appellate court’s ruling allowing respondent Concepcion to intervene in
Civil Case No. 97-2184. Of the three errors assigned, the more critical relates to the challenged
validity of the respondent’s appointment by the SEC as liquidator of the EYCO Group, his right to
intervene predicated as it is on his being such liquidator.
It is the petitioner’s posture, following the Makati RTC’s line, that the respondent’s appointment as
liquidator of EYCO was invalid for lack of jurisdiction on the part of SEC to preside, in first place,
over EYCO’s liquidation and dissolution. Pressing on, the petitioner states that EYCO is already
insolvent and insolvency proceedings fall under the jurisdiction of regular courts under the
Insolvency Law (Act No. 1956, as amended) in relation to the pertinent provision of R.A. No. 8799,
otherwise known as the Securities Regulation Code.
We are not persuaded.
As it were, the underlying petition24 EYCO filed with and over which the SEC assumed jurisdiction
was one for declaration of suspension of payment, appointment of a rehabilitation
receiver/committee, approval of rehabilitation plan with alternative prayer for liquidation and
dissolution. That the SEC, along the way, ordained EYCO’s liquidation and dissolution did not,
without more, strip the SEC of jurisdiction over the liquidation process. Albeit jurisdiction over a
Page 24 of 30
petition to declare a corporation in a state of insolvency strictly lies with regular courts, the SEC
possessed, during the period material, ample power under P.D. No. 902-A,25 as amended, to
declare a corporation insolvent as an incident of and in continuation of its already acquired
jurisdiction over the petition to be declared in the state of suspension of payments in the two
instances provided in Section 5(d) thereof.26 Said Section 5(d)27 vests the SEC with exclusive and
original jurisdiction over petitions for suspension of payments which may either be: (a) a simple
petition for suspension of payments based on the provisions of the Insolvency Law, i.e., the
petitioning corporation has sufficient assets to cover all its debts, but foresees the impossibility of
meeting the obligations as they fall due, or (b) a similar petition filed by an insolvent corporation
accompanied by a prayer for the creation of a management committee and/or rehabilitation
receiver based on the provisions of P.D. No. 902-A, as amended by P.D. No. 1758.28
In the case at bench, EYCO’s petition for suspension of payment was, at bottom, a mix of both
situations adverted to above. For, while EYCO, in the said petition, alleged being solvent but
illiquid, it nonetheless pleaded for the constitution of a rehabilitation receiver/committee, with an
alternative prayer for liquidation, if warranted. Clearly then, the SEC has, from the start, jurisdiction
over EYCO’s petition for suspension of payment, such jurisdiction, following Ching, 29 continuing for
purposes of liquidation after it (SEC) declared EYCO insolvent. The SEC appeared to be aware of
the continuity angle as it even ordered the remand to the SEC Hearing Panel of SEC Case No. 09-
97-5764 for purposes of liquidating and dissolving the EYCO Group.
If the SEC contextually retained jurisdiction over the liquidation of EYCO, is it not but logical then
that it has competence to appoint the respondent – or any qualified individual for that matter – as
liquidator?
And lest it be overlooked, the Court had, in G.R. No. 131729, already rejected the petitioner’s
thesis about the SEC’s purported lack of jurisdiction over EYCO’s suspension of payment case
owing to its supervening insolvency. Therein, the Court stated:
We are of course aware of the argument [of] … petitioner [Union Bank] that the petition of [EYCO]
should be entirely dismissed and taken out of the SEC’s jurisdiction on account of the alleged
insolvency of [the latter]. In this regard, petitioner theorizes that [EYCO has] already become
insolvent when [the composite corporations] allegedly disposed of a substantial portion of their
properties … hence suspension of payments with the SEC is not the proper remedy.
Such argument does not persuade us. Petitioner’s allegations of … [EYCO’s] … supposed
insolvency … are hardly of any consequence to the assumption of jurisdiction by the SEC over the
nature or subject matter of the petition for suspension of payments. Aside from the fact that these
allegations are evidentiary in nature …, we have likewise consistently ruled that what determines
the nature of an action, as well as which court or body has jurisdiction over it, are the allegations of
the complaint, or a petition as in this case, and the character of the relief sought. That the merits of
the case after due proceedings are later found to veer away from the claims asserted by EYCO in
its petition, as when it is shown later that it is actually insolvent and may not be entitled to
suspension of payments, does not divest the SEC at all of its jurisdiction already acquired as its
inception …. (Words in brackets and emphasis added.)
Civil Procedure (Rule 19)
The Court is certainly aware of the transfer, effected by R.A. No. 8799, to the RTC of the SEC’s
jurisdiction defined under Section 5(d) of P.D. No. 902-A.30 Such transfer, however, did not, as the
petitioner and the RTC posit, divest the SEC of its jurisdiction over SEC Case No. 09-97-5764,
given that it had already issued, as early as September 19, 1998, the suspension order after it
found the petition for suspension filed on September 16, 1998 to be sufficient in form and
substance. Subsection 5.2 of R.A. No. 8799 prescribing the jurisdiction transfer and the rules on
transition provides as follows:
5.2. The [Securities and Exchange] Commission’s jurisdiction over all cases enumerated under
Section 5 of [P.D.] No. 902-A is hereby transferred to the appropriate [RTC]: Provided that the
Supreme Court … may designate the [RTC] branches that shall exercise jurisdiction over these
cases. xxx The Commission shall retain jurisdiction over pending suspension of
payments/rehabilitation cases filed as of 30 June 2000 until finally disposed. (Words in bracket
and emphasis added.)
EYCO’s petition for suspension for payment was, for all intents and purposes, still pending with the
SEC as of June 30, 2000. Accordingly, the SEC’s jurisdiction thereon, by the express terms of
R.A. No. 8999, still subsists "until [the suspension of payment case and its incidents are] finally
disposed." In the words of the CA:
As held by this Court … Section 5.2 of RA 8799 specifically provided that the SEC shall retain
jurisdiction over pending suspension of payments/rehabilitation cases filed as of June 30, 2000
until finally disposed. The records are clear that the suspension of payment was filed on
September 7, 1998. As such, the petition is still pending with the SEC as of the cut-off date set in
the rules. xxx31
When the law speaks of "until finally disposed," the reference should include the final disposition of
the liquidation and dissolution processes since it is within the power of the SEC by law, 32 or as
incident of or in continuation of its already acquired jurisdiction over the petition for suspension of
payment,33 to order the dissolution/liquidation of a corporation and accordingly appoint a liquidator.
In fine, the continuing exercise of jurisdiction by the SEC over the liquidation and dissolution of the
EYCO Group is warranted. Once jurisdiction attaches, the court cannot be ousted from the case
by any subsequent events, such as a new legislation placing such proceedings under the
jurisdiction of another body. The only recognized exceptions to the rule, which find no sway in the
present case, arise when the statute expressly so provides or when the statute is clearly intended
to apply to actions pending before its enactment.34
Given the above perspective, the Court is at a loss to understand petitioner’s challenge against the
right of the respondent to intervene in Civil Case No. 97-2184, on the postulate that the latter lacks
legal interest in the matter in litigation.
Intervention is a procedure by which a third person, not originally party to the suit, but claiming an
interest in the subject matter, comes into the case, in order to protect his right or interpose his
claim.35 Its main purpose is to settle in one action and by a single judgment all conflicting claims of
or the whole controversy among the persons involved.36 To warrant intervention under Rule 19,
Section 1 of the Rules of Court,37 two requisites must concur: (a) the movant has a legal interest in
the matter in litigation, and (b) intervention must not unduly delay or prejudice the adjudication of
Page 25 of 30
the rights of the parties, nor should the claim of the intervenor be capable of being properly
decided in a separate proceeding. The interest, which entitles one to intervene, must involve the
matter in litigation and of such direct and immediate character38 that the intervenor will either gain
or lose by the direct legal operation and effect of the judgment.39
Just like the CA, the Court has no doubt about the respondent, as the duly-appointed liquidator of
EYCO’s remaining assets, having a legal interest in the matter litigated in Civil Case No. 97-2184.
This is particularly true with respect to the parcels of land covered by the writ of attachment which,
in the implementation of the SEC-approved Liquidation Plan for EYCO, had been conveyed to the
respondent40 in trust for the benefit of creditors, EYCO’s stockholders and other persons in
interest. At the very least, the respondent, as liquidator-trustee, is so situated as to be affected by
the distribution or disposition of the attached properties which were under threat of being levied on
execution and sold at public auction. Respondent would be unfaithful to his trust if he does take a
bona fide effort to intervene in Civil Case No. 97-2184 to thwart the attempt of the petitioner to
collect unpaid loans ahead of other legitimate creditors similarly situated. Under the SEC Rules of
Procedure on Corporate Recovery pursuant to which the SEC appointed the respondent to
liquidate the remaining assets of EYCO, the liquidator is empowered and duty bound to
"[R]epresent the debtor … in any case filed by or against the debtor in any tribunal" and "[B]ring
any action on behalf of the debtor to collect, recover or preserve any of its assets, or to resist or
defend against any claim."41
Any suggestion that allowing intervention would unduly delay the final closure of the collection
case cannot be accepted. Far from unnecessarily prolonging or complicating the case, the desired
intervention, if allowed, would possibly enable the court in one single action and judgment to
protect the collective interests of the creditors of the EYCO Group that are seriously threatened by
the imminent exclusion of certain properties from the pool of assets that should legally, if not
ideally, be equitably distributed among them. Disallowing intervention would pave the way for the
petitioner to seize the proceedings before the Makati RTC to work entirely in its favor. Such course
of action trifles with the entire liquidation process. And any decision rendered therein would
unlikely be left undisturbed by other legitimate but unpaid creditors whose interest in the attached
properties can hardly be disputed.
forgot, however, to include in its formulation settled exceptions to and qualifications of the rule,
even as it glossed over another holding that intervention is merely accessory to the principal action
and, as such, is an interlocutory proceeding dependent on the case between the original parties.42
It is true that certiorari may not be resorted to when appeal is available as a remedy. However, it is
also true that the Court has allowed the issuance of a writ of certiorari when appeal does not afford
a speedy and adequate remedy in the ordinary course of law. As in the past, the Court has ruled
that the availability of an appeal does not foreclose recourse to the ordinary remedies or certiorari
or prohibition where appeal is not adequate, equally beneficial, expeditious and sufficient. 43 Stated
a bit differently, certiorari may be availed of where an appeal would be slow, inadequate and
insufficient. The determination as to what exactly constitutes plain, speedy and adequate remedy
rests on judicial discretion and depends on the particular circumstances of each case.
In the case at bar, the CA did not commit any reversible error in allowing the petition for certiorari
filed by the respondent. As it were, the respondent was able to convince the CA of the urgency of
his cause and that an appeal from the denial of the motion for intervention would not constitute
speedy and adequate remedy, thus necessitating the resort to the extraordinary remedy of
certiorari. And in an instance justifying the invocation of the remedy of certiorari, it would appear
too that the CA found the RTC to have exercised its judicial authority in an oppressive
manner,44 so much so that the CA stated the apt observation that: "In the first place, it [RTC]
should not have taken cognizance of the case when it was notified of the pending petition [for
suspension of payments] before the SEC at the time the complaint was filed."45
Certainly not lost on the Court is an obvious reality: the Makati RTC virtually interfered with and
invalidated the appointment made by the SEC when it has no jurisdiction over the latter.
WHEREFORE, the instant petition is DENIED and the impugned Decision and Resolution of the
Court of Appeals dated July 22, 2003 and November 7, 2003, respectively, are AFFIRMED.
Costs against the petitioner.

Moreover, the claim of the respondent over the attached properties could not possibly be better SO ORDERED.
threshed out in a separate but subsequent proceedings given that he had already secured titles
over them.

The third and last issue turns on the propriety of certiorari as a recourse to the denial of a motion
for intervention. The correct remedy, according to the petitioner, is an appeal under Rule 45 of the
Rules of Court, an order denying intervention being final in character, not merely interlocutory.
Petitioner thus faults the CA for allowing respondent Concepcion’s petition for certiorari under Rule
65 of the Rules as a vehicle to impugn the denial of his motion for intervention. It stresses that the
availability of appeal proscribes recourse to the special civil action of certiorari.

We are not convinced.

Petitioner’s statement of the rule on the availability of the extraordinary writ of certiorari under the
premises is impeccable. So too is its citation of supporting jurisprudence. Petitioner conveniently

Civil Procedure (Rule 19) Page 26 of 30

[3]
G.R. No. 182902 October 5, 2011
VIRRA MALL TENANTS ASSOCIATION, INC., Petitioner,
vs.
VIRRA MALL GREENHILLS ASSOCIATION, INC., LOLITA C. REGALADO, ANNIE L. TRIAS,
WILSON GO, PABLO OCHOA, JR., BILL OBAG and GEORGE V. WINTERNITZ, Respondents.
DECISION
Actions; Intervention; What qualifies a person to intervene is his possession of a legal interest in the matter
in litigation or in the success of either of the parties, or an interest against both, or when he is so situated as
to be adversely affected by a distribution or other disposition of property in the custody of the court or an
officer thereof.—In Executive Secretary v. Northeast Freight, 581 SCRA 736 (2009), this Court explained
intervention in this wise: Intervention is not a matter of absolute right but may be permitted by the court
when the applicant shows facts which satisfy the requirements of the statute authorizing intervention. Under
our Rules of Court, what qualifies a person to intervene is his possession of a legal interest in the matter in
litigation or in the success of either of the parties, or an interest against both; or when he is so situated as to
be adversely affected by a distribution or other disposition of property in the custody of the court or an
officer thereof. As regards the legal interest as qualifying factor, this Court has ruled that such interest must
be of a direct and immediate character so that the intervenor will either gain or lose by the direct legal
operation of the judgment. The interest must be actual and material, a concern which is more than mere
curiosity, or academic or sentimental desire; it must not be indirect and contingent, indirect and remote,
conjectural, consequential or collateral. However, notwithstanding the presence of a legal interest,
permission to intervene is subject to the sound discretion of the court, the exercise of which is limited by
considering “whether or not the intervention will unduly delay or prejudice the adjudication of the rights of
the original parties and whether or not the intervenor’s rights may be fully protected in a separate
proceeding.”
Same; Same; Cause of Action; Elements; Words and Phrases; A cause of action is the wrongful act or
omission committed by the defendant in violation of the primary rights of the plaintiff.—A cause of action is
defined as “the act or omission by which a party violates a right of another.” In Shell Philippines v. Jalos,
630 SCRA 399 (2010), this Court expounded on what constitutes a cause of action, to wit: “A cause of
action is the wrongful act or omission committed by the defendant in violation of the primary rights of the
plaintiff. Its elements consist of: (1) a right existing in favor of the plaintiff, (2) a duty on the part of the
defendant to respect the plaintiff’s right, and (3) an act or omission of the defendant in violation of such
right. To sustain a motion to dismiss for lack of cause of action, however, the complaint must show that the
claim for relief does not exist and not only that the claim was defectively stated or is ambiguous, indefinite
or uncertain.”
Same; Same; Intervention is allowed to avoid multiplicity of suits more than on due process
considerations.—Allowing VMTA to intervene in Civil Case No. 69312 finds support in Heirs of Medrano
v. De Vera, 627 SCRA 109 (2010), to wit: “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.” Thus,
although the CA was correct in stating that VMTA could always file a separate case against Ortigas,
Civil Procedure (Rule 19)
allowing VMTA to intervene will facilitate the orderly administration of justice and avoid a multiplicity of
suits. We do not see how delay will be inordinately occasioned by the intervention of VMTA, contrary to the
fear of the CA.
SERENO, J.:
Before us is a Petition for Review of the 21 May 2007 Decision 1 and 14 May 2008 Resolution2 of
the Court of Appeals (CA) dismissing the Complaint-in-Intervention and denying the Motion for
Reconsideration both filed by petitioner.
Ortigas & Company, Limited Partnership (Ortigas) is the owner of the Greenhills Shopping Center
(GSC). On 5 November 1975, Ortigas and Virra Realty Development Corporation (Virra Realty)
entered into a Contract of Lease (First Contract of Lease) over a portion of the GSC. The 25-year
lease was to expire on 15 November 2000. Pursuant thereto, Virra Realty constructed a
commercial building, the Virra Mall Shopping Center (Virra Mall), which was divided into either
units for lease or units whose leasehold rights were sold.3
Thereafter, Virra Realty organized respondent Virra Mall Greenhills Association (VMGA), an
association of all the tenants and leasehold right holders, who managed and operated Virra Mall.
In the First Contract of Lease, VMGA assumed and was subrogated to all the rights, obligations
and liabilities of Virra Realty.4
On 22 November 2000, VMGA, through its president, William Uy (Uy), requested from Ortigas the
renewal of the First Contract of Lease.5
VGMA secured two insurance policies to protect Virra Mall against damage by fire and other
causes. However, these insurance coverages expired simultaneously with the First Contract of
Lease on 15 November 2000.6Subsequently, on 13 March 2001, VGMA acquired new sets of
insurance policies effective 10 January 2001 to 31 December 2001.7
On 5 May 2001, Virra Mall was gutted by fire, requiring substantial repair and restoration. VMGA
thus filed an insurance claim through the insurance broker, respondent Winternitz Associates
Insurance Company, Inc. (Winternitz). Thereafter, the proceeds of the insurance were released to
VMGA.8
On 3 September 2001, Ortigas entered into a Contract of Lease (Second Contract of Lease) with
Uy effective 2 November 2001 to 31 December 2004. On 11 September 2001, the latter assigned
and transferred to petitioner Virra Mall Tenants Association (VMTA) all his rights and interests over
the property.9
On 7 February 2003, Ortigas filed a Complaint for Specific Performance with Damages and Prayer
for Issuance of a Writ of Preliminary Attachment against several defendants, including herein
respondents. It accused them of fraud, misappropriation and conversion of substantial portions of
the insurance proceeds for their own personal use unrelated to the repair and restoration of Virra
Mall. To secure the subject insurance proceeds, Ortigas also sought the issuance of a writ of
preliminary attachment against herein respondents. The case was docketed as Civil Case No.
Page 27 of 30
69312, and raffled to the Regional Trial Court, National Capital Judicial Region, Pasig City, Branch
67 (RTC Br. 67), which issued a Writ of Preliminary Attachment on 12 February 2003. 10
On 17 February 2003, VMTA filed a Complaint-in-Intervention.11 It claimed that as the assignee or
transferee of the rights and obligations of Uy in the Second Contract of Lease, and upon the order
of Ortigas, it had engaged the services of various contractors. These contractors undertook the
restoration of the damaged area of Virra Mall amounting to ₱18,902,497.75. Thus, VMTA sought
the reimbursement of the expenses it had incurred in relation thereto. 12 RTC Br. 67 admitted the
Complaint-in-Intervention in its Order dated 8 January 2004.13
On 5 March 2004, herein respondents moved for the dismissal of the Complaint-in-Intervention on
the ground that it stated no cause of action.14 In its Omnibus Order dated 2 August 2005, RTC Br.
67 denied this Motion to Dismiss.15The trial court based its Decision on the grounds that (a) by
filing the said motion, herein respondents hypothetically admitted the truth of the facts alleged in
the Complaint-in-Intervention, and (b) the test of sufficiency of the facts alleged was whether or not
the court could render a valid judgment as prayed for, accepting as true the exclusive facts set
forth in the Complaint.16 Thus, RTC Br. 67 held that if there are doubts as to the truth of the facts
averred, then the court must not dismiss the Complaint, but instead require an answer and
proceed to trial on the merits.17
On a Rule 65 Petition for Certiorari alleging grave abuse of discretion, the CA reversed the ruling
of RTC Br. 67 and dismissed the Complaint-in-Intervention on the following grounds: (a) VMTA
failed to state a cause of action; (b) VMTA has no legal interest in the matter in litigation; and (c)
the Complaint-in-Intervention would cause a delay in the trial of the action, make the issues more
complicated, prejudice the adjudication of the rights of the parties, stretch the issues, and increase
the breadth of the remedies and relief.18 The relevant portions of the Decision read:
Section 2, Rule 2 of the Rules of Court defines a cause of action as the act or omission by which a
party violates the right of another. Its essential elements are as follows:
1. A right in favor of the plaintiff by whatever means and under whatever law it arises or is
created;
2. An obligation on the part of the named defendant to respect or not to violate such right;
and
3. Act or omission on the part of such defendant in violation of the right of the plaintiff or
constituting a breach of the obligation of the defendant to the plaintiff for which the latter
may maintain an action for recovery of damages or other appropriate relief.
It is, thus, only upon the occurrence of the last element that a cause of action arises, giving the
plaintiff the right to maintain an action in court for recovery of damages or other appropriate relief.
(Swagman Hotels and Travel, Inc. v. Court of Appeals, G.R. No. 161135, April 8, 2005, 455 SCRA
175, 183). If these elements are absent, the complaint is dismissible on the ground of failure to
state a cause of action.
Civil Procedure (Rule 19)
What VMTA actually seeks in filing a complaint-in-intervention is the reimbursement of the cost of
the restoration and rehabilitation of the burned area of the Virra Mall building. And VMTA believes
that such reimbursement must be made from the fire insurance proceeds released to VMGA. Such
position cannot be sustained.
………
Firstly, We find that the complaint-in-intervention fails to state a cause of action against the
petitioners. The material averments of the complaint-in-intervention belie any correlative obligation
on the part of herein petitioners vis-à-vis the legal right of VMTA for reimbursement. The
petitioners are not the proper parties against whom the subject action for reimbursement must be
directed to. On the contrary, since "x x x plaintiff Ortigas, as owner of the building, has ordered
intervenor VMTA to undertake with dispatch the restoration and rehabilitation of the burned area or
section of the Virra Mall buiding x x x" (par. 7 of Complaint-in-Intervention), VMTA’s recourse
would be to file and direct its claim against ORTIGAS who has the obligation to pay for the same.
The complaint-in-intervention is not the proper action for VMTA to enforce its right of
reimbursement. At any rate, VMTA’s rights, if any, can be ventilated and protected in a separate
action. The complaint-in-intervention is therefore dismissible for failure to state a cause of action
against the petitioners.
Secondly, VMTA has no legal interest in the matter in litigation. It is not privy to the Contract of
Lease between ORTIGAS and VMGA. It came into the picture only after the expiration of the said
contract.
Finally, Section 1, Rule 19 of the 1997 Rules of Civil Procedure provides:
Section 1. Who may intervene. A person who has a legal interest in the matter in litigation, or in
the success of either of the parties, or an interest against both, or is so situated as to be adversely
affected by a distribution or other disposition of the property in the custody of the court or of an
offices thereof may, with leave of court, be allowed to intervene in the action. The court shall
consider whether or not the intervention will unduly delay or prejudice the adjudication of the rights
of the original parties, and whether or not the intervenor’s rights may be fully protected in a
separate proceeding.
As a general guide in determining whether a party may intervene, the court shall consider whether
or not the intervention will unduly delay or prejudice the adjudication of the rights of the original
parties, and whether or not the intervenor’s rights may be fully protected in a separate proceeding
(Sec. 2(b), Rule 12; Balane, et al. vs. De Guzman, et al., 20 SCRA 177 [1967]).
The complaint below is primarily on the issue of specific performance. The relief being sought by
the VMTA in its complaint-in-intervention is the reimbursement of expenses incurred by it for the
repair/restoration of the Virra Mall Building. VMTA’s cause of action has a standpoint which is
unique to itself. New, unrelated, and conflicting issues would be raised which do not concern the
petitioners herein, or VMTA as intervenor. Inevitably, the allowance of the intervention will not only
cause delay in the trial of the action, make the issues even more complicated, and stretch the
issues in the action as well as amplify the breadth of the remedies and relief.
Page 28 of 30
Thereafter, VMTA filed a Motion for Reconsideration, which the CA denied in the assailed
Resolution dated 14 May 2008.19 Hence, the instant Petition raising the following issues:
I.
With due respect, the Honorable Court of Appeals committed grave error in declaring that
the complaint in intervention failed to state a cause of action against private respondents
when it declared that the complaint in intervention belies any correlative obligation on the
part of private respondents vis-à-vis the legal right of petitioner for reimbursement.
II.
With due respect, the Honorable Court of Appeals committed grave error in holding that
private respondents are not the proper parties against whom the subject action for
reimbursement must be directed to but recourse would be for petitioner VMTA to file and
direct its claim against OCLP who has the obligation to pay petitioner VMTA since it was
OCLP who has (sic) ordered to undertake the restoration and rehabilitation of the burned
area or section of the Virra Mall Building.
III.
With due respect, the Honorable Court of Appeals similarly committed grave error when it
ruled that the complaint-in-intervention is not the proper action to enforce its right in the
controversy between OCLP and private respondents since the proper remedy is for
petitioner VMTA to ventilate and protect its right in a separate action.20
The determination of whether the CA committed reversible error in dismissing the Complaint-in-
Intervention filed by VMTA boils down to the sole issue of the propriety of this remedy in enforcing
the latter’s rights.
According to VMTA, it has a legal interest in Civil Case No. 69312, which is rooted in the alleged
failure of VMGA to turn over the insurance proceeds for the restoration and rehabilitation of Virra
Mall, in breach of the latter’s contractual obligation to Ortigas. However, the CA ruled against this
position taken by VMTA not only because, in the CA’s view, VMTA’s Complaint-in-Intervention
failed to state a cause of action, but also because it has no legal interest in the matter in litigation.
We rule in favor of VMTA.
Section 1, Rule 19 of the Rules of Court provides:
Who may intervene. – A person who has a legal interest in the matter in litigation, or in the
success of either of the parties, or an interest against both, or is so situated as to be adversely
affected by a distribution or other disposition of property in the custody of the court or of an officer
thereof may, with leave of court, be allowed to intervene in the action. The court shall consider
whether or not the intervention will unduly delay or prejudice the adjudication of the rights of the
original parties, and whether or not the intervenor’s rights may be fully protected in a separate
proceeding.
Civil Procedure (Rule 19)
In Executive Secretary v. Northeast Freight,21 this Court explained intervention in this wise:
Intervention is not a matter of absolute right but may be permitted by the court when the applicant
shows facts which satisfy the requirements of the statute authorizing intervention. Under our Rules
of Court, what qualifies a person to intervene is his possession of a legal interest in the matter in
litigation or in the success of either of the parties, or an interest against both; or when he is so
situated as to be adversely affected by a distribution or other disposition of property in the custody
of the court or an officer thereof. As regards the legal interest as qualifying factor, this Court has
ruled that such interest must be of a direct and immediate character so that the intervenor will
either gain or lose by the direct legal operation of the judgment. The interest must be actual and
material, a concern which is more than mere curiosity, or academic or sentimental desire; it must
not be indirect and contingent, indirect and remote, conjectural, consequential or collateral.
However, notwithstanding the presence of a legal interest, permission to intervene is subject to the
sound discretion of the court, the exercise of which is limited by considering "whether or not the
intervention will unduly delay or prejudice the adjudication of the rights of the original parties and
whether or not the intervenor’s rights may be fully protected in a separate
proceeding."22 (Emphasis supplied.)
Applying the foregoing points to the case at bar, VMTA may be allowed to intervene, and the ruling
of RTC Br. 67 allowing intervention was wrongly reversed by the CA because such a ruling does
not constitute grave abuse of discretion.
VMTA has a cause of action
A cause of action is defined as "the act or omission by which a party violates a right of
another."23 In Shell Philippines v. Jalos,24 this Court expounded on what constitutes a cause of
action, to wit:
A cause of action is the wrongful act or omission committed by the defendant in violation of the
primary rights of the plaintiff. Its elements consist of: (1) a right existing in favor of the plaintiff, (2)
a duty on the part of the defendant to respect the plaintiff’s right, and (3) an act or omission of the
defendant in violation of such right. To sustain a motion to dismiss for lack of cause of action,
however, the complaint must show that the claim for relief does not exist and not only that the
claim was defectively stated or is ambiguous, indefinite or uncertain.25
In the case at bar, VMTA, in its Complaint-in-Intervention, explicitly laid down its cause of action as
follows:26
Pursuant to and by virtue of such claim, defendant VMGA and defendant VMGA Board Members,
impleaded as party defendants herein, received, at various times, from their insurance broker, and
it is in their custody, the insurance proceeds arising out of such claim which, as of January 8,
2003, aggregated P48.6-Million. Having failed to deliver the said proceeds to the real beneficiary
inspite of due notice and demand, plaintiff Ortigas herein instituted the present action against all
the defendants to compel delivery of the said insurance proceeds which are being unlawfully and
illegally withheld by all the defendant VMGA and defendant VMGA Board Members inspite of
written demands made therefor. Worse, a portion of said insurance proceeds, aggregating P8.6-
Page 29 of 30
Million had already been disbursed and misappropriated in breach of trust and fiduciary duty. the Complaint-in-Intervention filed by VMTA is concerned. The Complaint-in-Intervention of VMTA
(Emphasis supplied.) in Civil Case No. 69312 is allowed to proceed before RTC Br. 67.

It is clear from the foregoing allegations that VMTA’s purported right is rooted in its claim that it is SO ORDERED.
the real beneficiary of the insurance proceeds, on the grounds that it had (a) facilitated the repair
and restoration of the insured infrastructure upon the orders of Ortigas, and (b) advanced the
costs thereof. Corollarily, respondents have a duty to reimburse it for its expenses since the
insurance proceeds had already been issued in favor of respondent VMGA, even if the latter was
not rightfully entitled thereto. Finally, the imputed act or omission on the part of respondents that
supposedly violated the right of VMTA was respondent VMGA’s refusal, despite demand, to
release the insurance proceeds it received to reimburse the former for the expenses it had
incurred in relation to the restoration and repair of Virra Mall. Clearly, then, VMTA was able to
establish its cause of action.

VMTA has a legal interest in the matter in litigation

VMTA was also able to show its legal interest in the matter in litigation — VMGA’s insurance
proceeds — considering that it had already advanced the substantial amount of ₱18,902,497.75
for the repair and restoration of Virra Mall. That VMTA seeks reimbursement from Ortigas is
precisely the reason why intervention is proper. The main issue in Civil Case No. 69312 is whether
Ortigas has a contractual right to the insurance proceeds received by VMGA. Thus, the
recoupment by VMTA of the expenses it incurred in the repair of Virra Mall depends on the
success of either party in the main case. VMTA therefore has an undeniable stake in Civil Case
No. 69312 that would warrant its intervention therein.

Further, the issuance to Ortigas of a Writ of Preliminary Attachment against VMGA puts VMTA in a
situation in which it will be adversely affected by a distribution or other disposition of the property
in the custody of the court, pursuant to the said writ.lawphil The prospect of any distribution or
disposition of the attached property will likewise affect VMTA’s claim for reimbursement.

VMTA’s intervention in Civil Case No. 69312 will avoid a multiplicity of suits

Lastly, allowing VMTA to intervene in Civil Case No. 69312 finds support in Heirs of Medrano v.
De Vera,27 to wit:

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.28

Thus, although the CA was correct in stating that VMTA could always file a separate case against
Ortigas, allowing VMTA to intervene will facilitate the orderly administration of justice and avoid a
multiplicity of suits. We do not see how delay will be inordinately occasioned by the intervention of
VMTA, contrary to the fear of the CA.

WHEREFORE, the instant petition is GRANTED. The Decision dated 21 May 2007 and Resolution
dated 14 May 2008 of the CA are hereby REVERSED and SET ASIDE insofar as the dismissal of

Civil Procedure (Rule 19) Page 30 of 30