PCGG v.

Dumayas

FACTS:

RA 6260 was enacted creating the Coconut Investment

Company (CIC) to administer the Coconut Investment
Fund (CIF). President Corazon C. Aquino issued Executive
Order Nos. (E.Os.) 1, 2 and 14, as amended by E.O. 14-A, all
Series of 1986. E.O. 1 created the PCGG and provided it with the
tools and processes it may avail of in the recovery efforts; while
E.O. No. 14 conferred on the Sandiganbayan exclusive and
original jurisdiction over ill-gotten wealth cases, Pursuant to
these issuances, the PCGG issued numerous orders of
sequestration. On July 31, 1987, the PCGG instituted before
the Sandiganbayan a recovery suit.

The basic complaint also contained allegations about the

alleged misuse of the coconut levy funds to buy out the majority
of the outstanding shares of stock of San Miguel Corporation
(SMC).

PCGG contends that respondent judge gravely abused his

discretion in not dismissing the petitions for declaratory relief,
which merely aim to re-litigate the issue of ownership already
passed upon by the Sandiganbayan under the Partial Summary
Judgment rendered in Civil Case No. 0033-F. It argues that the
RTC has no jurisdiction over the acts performed by PCGG

1
pursuant to its quasi-judicial functions, particularly those
relating to the issuance of writs of sequestration, and that all
cases involving ill-gotten wealth assets are under the
unquestionable jurisdiction of the Sandiganbayan.

On the issue of jurisdiction, UCPB and COCOLIFE argue that

since they have properly alleged a case for declaratory relief,
jurisdiction over the subject matter lies in the regular courts
such as the RTC of Makati City.

ISSUE:

Whether the RTC has jurisdiction to entertain the prayer for a

writ of declaratory relief filed by the respondents?

RULING:

RTC has no jurisdiction over suits involving the sequestered

coco levy assets and coco levy funds.

Jurisdiction is defined as the power and authority of a court to

hear, try, and decide a case. Jurisdiction over the subject
matter is conferred by the Constitution or by law and is
determined by the allegations of the complaint and the relief
prayed for, regardless of whether the plaintiff is entitled to
recovery upon all or some of the claims prayed for therein.

Under section 2 of the President’s Executive Order No. 14

issued on all cases of the Commission regarding “the Funds,

2
Moneys, Assets, and Properties Illegally Acquired or
Misappropriated by Former President Ferdinand Marcos, Mrs.
Imelda Romualdez Marcos, their Close Relatives, Subordinates,
Business Associates, Dummies, Agents, or Nominees” whether
civil or criminal, are lodged within the “exclusive and original
jurisdiction of the Sandiganbayan” and all incidents arising
from, incidental to, or related to, such cases necessarily
fall likewise under the Sandiganbayan’s exclusive and original
jurisdiction, subject to review on certiorari exclusively by the
Supreme Court.

Respondents’ petitions for declaratory relief filed in the RTC

asserted their claim of ownership over the sequestered CIIF
companies and indirectly the CIIF SMC Block of Shares
Undeniably, these are related to the ill-gotten wealth
cases involving the issue of ownership of the aforesaid
sequestered companies and shares of stock, which have been
tried and decided by the Sandiganbayan. Contrary to
respondents’ contention, the subject matter of their petitions
for declaratory relief is inextricably intertwined with the issue of
ownership judicially settled in the aforementioned appeals from
the Partial Summary Judgments rendered.

3
 ESCOBAL v. GARCHITORENA

FACTS:

Petitioner is a member of Philippine Military Academy (PMA).

On March 16, 1990, the petitioner was conducting surveillance
operations on drug trafficking at the Sa Harong Caf Bar and
Restaurant located along Barlin St., Naga City. He somehow got
involved in a shooting incident, resulting in the death of one
Rodney Rafael N. Nueca. An information was filed against the
petitioner charging him with the crime of murder.

Petitioner filed for a motion to dismiss on the grounds that he

committed the crime charged while in the performance of his
duties hence, Sandiganbayan has jurisdiction over the subject
matter of the case. RTC dismissed the same. Upon
reconsideration by the Petitioner herein, RTC made a volte face
and issued an order reversing and setting aside his order and
cosnequently ordered the transmittal of the case to the
Sandiganbayan.

ISSUE:

Whether Sandiganbayan has jurisdiction over the subject

matter of the case?

RULING:

None.

4
Under the law, even if the offender committed the crime
charged in relation to his office but occupies a position
corresponding to a salary grade below 27, the proper Regional
Trial Court or Municipal Trial Court, as the case may be, shall
have exclusive jurisdiction over the case. In this case, the
petitioner was a Police Senior Inspector, with salary grade 23.
He was charged with homicide punishable by reclusion
temporal. Hence, the RTC had exclusive jurisdiction over the
crime charged conformably to Sections 20 and 32 of Batas
Pambansa Blg. 129, as amended by Section 2 of R.A. No. 7691.

The petitioners contention that R.A. No. 7975 should not be

applied retroactively has no legal basis. It bears stressing that
R.A. No. 7975 is a substantive procedural law which may be
applied retroactively.

5
 HANNAH SERANA v. SANDIGANBAYAN

FACTS:

Serana was a senior student of the University of the Philippines-

Cebu. She was appointed by then President Joseph Estrada on
December 21, 1999 as a student regent of UP, to serve a one-
year term starting January 1, 2000. petitioner, with her siblings
and relatives, registered with the Securities and Exchange
Commission the Office of the Student Regent Foundation, Inc.
(OSRFI)

One of the projects of the OSRFI was the renovation of the

Vinzons Hall Annex.President Estrada gave Fifteen Million
Pesos (P15,000,000.00) to the OSRFI as financial assistance for
the proposed renovatio. The renovation of Vinzons Hall Annex
failed to materialize.The succeeding student regent, Kristine
Clare Bugayong, and Christine Jill De Guzman, Secretary
General of the KASAMA sa U.P., a system-wide alliance of
student councils within the state university, consequently filed a
complaint for Malversation of Public Funds and Property with
the Office of the Ombudsman.

Petitioner moved to quash the information. She claimed that

the Sandiganbayan does not have any jurisdiction over the

6
offense charged or over her person, in her capacity as UP
student regent.

ISSUE:

Whether Sanidganbayan has jurisdiction over crimes involving

Estafa?

RULING:

Sandiganbayan has Jurisdiction over the crimes involving

Estafa. Section 4(B) of P.D. No. 1606 reads:

B. Other offenses or felonies whether simple or complexed

with other crimes committed by the public officials and
employees mentioned in subsection a of this section in
relation to their office.

Evidently, the Sandiganbayan has jurisdiction over other

felonies committed by public officials in relation to their office.
We see no plausible or sensible reason to exclude estafa as one
of the offenses included in Section 4(bB) of P.D. No. 1606.
Plainly, estafa is one of those other felonies. The jurisdiction is
simply subject to the twin requirements that (a) the offense is
committed by public officials and employees mentioned in
Section 4(A) of P.D. No. 1606, as amended, and that (b) the
offense is committed in relation to their office.

7
 DUNCANO v. SANDIGANBAYAN

FACTS:

Petitioner Danilo A. Duncano is, at the time material to the

case, the Regional Director of the Bureau of Internal Revenue
(BIR) with Salary Grade 26 as classified under Republic Act
(R.A.) No. 6758.3 On March 24, 2009,4 the Office of the Special
Prosecutor (OSP), Office of the Ombudsman, filed a criminal
case against him for violation of Section 8, in relation to Section
11 of R.A. No. 6713 allegedly for his failure to disclose in his
Sworn Statement of Assets and Liabilities and Networth (SALN)
for the year 2002. Petitioner filed for a motion to dismiss
asserting that Sandiganbayan has no jurisdiction to try his case
because he is an official of the executive branch occupying the
position of a Regional Director but with a compensation that is
classified as below Salary Grade 27.

ISSUE:

Whether or not Sandiganbayan has jurisdiction to hear and

decide the case of the petitioner despite the fact that his salary
grade is below 27?

RULING:

Yes.

8
Section 4 of R.A. No. 8249, those that fall within the original
jurisdiction of the Sandiganbayan are: (1) officials of the
executive branch with Salary Grade 27 or higher, and (2)
officials specifically enumerated in Section 4 (A) (1) (a) to (g),
regardless of their salary grades. While the first part of Section
4 (A) covers only officials of the executive branch with Salary
Grade 27 and higher, its second part specifically includes other
executive officials whose positions may not be of Salary Grade
27 and higher but who are by express provision of law placed
under the jurisdiction of the Sandiganbayan. Accordingly, those
that are classified as Salary Grade 26 and below may still fall
within the jurisdiction of the Sandiganbayan, provided that they
hold the positions enumerated by the law. In this category, it is
the position held, not the salary grade, which determines the
jurisdiction of the Sandiganbayan. The specific inclusion
constitutes an exception to the general qualification relating to
"officials of the executive branch occupying the positions of
regional director and higher, otherwise classified as Grade ‘27’
and higher, of the Compensation and Position Classification Act
of 1989

9
 DE LIMA v. SANDIGANBAYAN

FACTS:

Petitioner was charged with the violation of RA 9165

Petitioner assails the jurisdiction of the RTC to try hear and
proceed with the case whereby she posits that the Information
charges her not with violation of RA 9165 but with Direct
Bribery-a felony within the exclusive jurisdiction of the
Sandiganbayan given her rank as the former Secretary of
Justice with Salary Grade 31. Also, the Sandiganbayan still has
the exclusive jurisdiction to try the case considering that the
acts. The respondents, on the other hand, maintain that the
RTC has exclusive jurisdiction to try violations of RA 9165,
including the acts described in the Information against the
petitioner. The Sandiganbayan, so the respondents contend,
was specifically created as an anti-graft court. It was never
conferred with the power to try drug-related cases even those
committed by public officials.

ISSUE:Whether the Sandiganbayan has Jurisdiction to try the

case involving violations of RA 9165 committed by a public
officials with a salary grade of 27 and higher or by a public
official whose acts are intimately related to their official
functions?

10
RULING: The exclusive original jurisdiction over violations of
RA 9165 is not transferred to the Sandiganbayan whenever the
accused occupies a position classified as Grade 27 or higher,
regardless of whether the violation is alleged as committed in
relation to office. The power of the Sandiganbayan to sit in
judgment of high-ranking government officials is not
omnipotent. The Sandiganbayan's jurisdiction is circumscribed
by law and its limits are currently defined and prescribed by RA
10660, which amended Presidential Decree No. (PD) 1606.
Sandiganbayan primarily sits as a special anti-graft
courtpursuant to a specific injunction in the 1973
Constitution. Its characterization and continuation as such was
expressly given a constitutional fiat under Section 4, Article XI
of the 1987 Constitution, which states:SECTION 4. The
present anti-graft court known as the Sandiganbayan shall
continue to function and exercise its jurisdiction as now or
hereafter may be provided by law. It should occasion no
surprise, therefore, that the Sandiganbayan is without
jurisdiction to hear drug-related cases. Even Section 4(b) of PD
1606, as amended by RA 10660, touted by the petitioner and
the dissents as a catch all provision, does not operate to strip
the RTCs of its exclusive original jurisdiction over violations of
RA 9165

11
Petitioner City of Manila, , assessed taxes against private
respondents. In addition to the taxes purportedly due from
private respondents pursuant to Section 14, 15, 16, 17 of the
Revised Revenue Code of Manila (RRCM), said assessment
covered the local business taxes petitioners were authorized to
collect under Section 21 of the same Code. Because payment of
the taxes assessed was a precondition for the issuance of their
business permits, private respondents were constrained to pay
the ₱19,316,458.77 assessment under protest.

Private respondents filed a complaint for “Refund or Recovery

of Illegally and/or Erroneously-Collected Local Business Tax,
Prohibition with Prayer to Issue TRO and Writ of Preliminary
Injunction”

The RTC granted private respondents’ application for a writ of

preliminary injunction, and denied petitioner’s Motion for
Reconsideration.

Petitioners then filed a special civil action for certiorari with the
CA. The CA dismissed the petition holding that it has no
jurisdiction over the said petition since the appellate
jurisdiction over private respondents’ complaint for tax refund,
which was filed with the RTC, is vested in the Court of Tax
Appeals (CTA).

12
ISSUE:

Whether or not the CTA has jurisdiction over a special civil

action for certiorari assailing an interlocutory order issued by
the RTC in a local tax case.

RULING:

CTA has jurisdiction.

RA 1125 is the law creating the CTA and giving to the said court
jurisdiction over tax cases.

Later, Republic Act No. 9282 amended RA 1125 by expanding

the jurisdiction of the CTA, enlarging its membership and
elevating its rank to the level of a collegiate court with special
jurisdiction. Section 7 of which provides:

Sec. 7. Jurisdiction. – The CTA shall exercise:

Exclusive appellate jurisdiction to review by appeal, as herein

provided:

Over appeals from the judgments, resolutions or orders of the

Regional Trial Courts in tax collection cases originally decided
by them, in their respective territorial jurisdiction.

It is more in consonance with logic and legal soundness to

conclude that the grant of appellate jurisdiction to the CTA over
tax cases filed in and decided by the RTC carries with it the

13
power to issue a writ of certiorari when necessary in aid of such
appellate jurisdiction. The supervisory power or jurisdiction of
the CTA to issue a writ of certiorari in aid of its appellate
jurisdiction should co-exist with, and be a complement to, its
appellate jurisdiction to review, by appeal, the final orders and
decisions of the RTC.

Based on the foregoing disquisitions, it can be reasonably

concluded that the authority of the CTA to take cognizance of
petitions for certiorari questioning interlocutory orders issued
by the RTC in a local tax case is included in the powers granted
by the Constitution as well as inherent in the exercise of its
appellate jurisdiction

14
 CE CASECNAN WATER v. PROVINCE OF NUEVA
ECIJA

FACTS:

Petitioner received from the Office of the Provincial Assessor a

Notice of Assessment of Real Property dated August 2, 2005,
which indicates that for the years 2002 to 2005, its RPT due
was P248,676,349.60. Petitioner assailed the assessment with
the Nueva Ecija Local Board of Assessment Appeals (Nueva
Ecija LBAA) which dismissed it on January 26, 2006.
Undeterred, petitioner filed a Notice of Appeal with the Nueva
Ecija Central Board of Assessment Appeals (Nueva Ecija
CBAA). During the pendency thereof, respondents collected
from petitioner the RPT due under the said assessment as well
as those pertaining to the years 2006 up to the second quarter
of 2008, totalling P363,703,606.88. Petitioner paid the
assessed RPT under protest. Hence, on September 23, 2008,
petitioner filed with the RTC of San Jose City, Nueva Ecija a
Complaint for injunction and damages with application for
temporary restraining order (TRO) and preliminary injunction
praying to restrain the collection of the 2008 RPT
Reassessmen. RTC denied petitioner's application for writ of
preliminary injunction in its Order. Consequently, petitioner
filed with the CA a Petition for Certiorari.

15
ISSUE:

Whether it is the CTA which has jurisdiction over the subject

matter of the case and not the CA?

RULING:

It is the CTA which has the power to rule on a Petition

for Certiorari assailing an interlocutory order of the RTC
relating to a local tax case.
Jurisdiction over the subject matter is required for a court to act
on any controversy. It is conferred by law and not by the
consent or waiver upon a court. As such, if a court lacks
jurisdiction over an action, it cannot decide the case on the
merits and must dismiss it.
With respect to the CTA, its jurisdiction was expanded and its
rank elevated to that of a collegiate court with special
jurisdiction by virtue of Republic Act No. 9282. This expanded
jurisdiction of the CTA includes its exclusive appellate
jurisdiction to review by appeal the decisions, orders or
resolutions of the RTC in local tax cases originally decided or
resolved by the RTC in the exercise of its original or appellate
jurisdiction.

16
 TOPIC: SHARIÁ’H COURT

LOMONDOT v. BALINDONG

FACTS:

Petitioners filed with the SDC Marawi City a complaint for

recovery of possession and damages with prayer for mandatory
injunction and TRO against respondent. Respondent filed their
answer arguing tgar they rae the owners of the land alleged to
be illegally occupied. Trial then ensued.

SDC rendered a decision and ordered defendant to vacate.

Respondents filed an appeal with the SC. SC dismissed the

appeal as the decision was in accord with the facts and the
applicable law and jurisprudence.

SDC granted the motion for a writ of execution.

SDC issued another Order which held in abeyance the

resolution of the motion for issuance of a writ of demolition and
granted an ocular inspection or actual measurement of
petitioners' 800-sq.-meter land.

SDC issued another Order directing that the writ may no longer
be issued by reason of supervening events which may have
transpired prior to its implementation.

17
SDC issued the assailed Order denying petitioners' motion for
demolition.

Petitioners filed their motion for reconsideration which the SDC

denied in an Order. Undaunted, petitioners filed with the CA-
Cagayan de Oro City a petition for certiorari assailing the
Orders issued by the SDC. CA dismissed the petition for lack of
jurisdiction.

ISSUE:

Whether the CA has appellate jurisdiction over the assailed

decision by the Shariah Court?

RULING:

Yes. In the case of Tomawis v. Hon. Balindong, we stated that:

x x x [t]he Shari’a Appellate Court has yet to be organized with

the appointment of a Presiding Justice and two Associate
Justices. Until such time that the Shari’a Appellate Court shall
have been organized, however, appeals or petitions from final
orders or decisions of the SDC filed with the CA shall be
referred to a Special Division to be organized in any of the CA
stations preferably composed of Muslim CA Justices.
Notably, Tomawis case was decided on March 5, 2010, while
the CA decision was rendered on April 27, 2010. The CA's
reason for dismissing the petition, i.e., the decision came from

18
SDC which the CA has no appellate jurisdiction is erroneous for
failure to follow theTomawis ruling.

19
 MUNICIPALITY OF TANGKAL v. BALINDONG

FACTS:

Private respondents, filed a Complaint with the Shari'a District

Court of Marawi City (Shari'a District Court) against the
petitioner, Municipality of Tangkal, for recovery of possession
and ownership of a parcel of land. The Municipality of Tangkal
filed an Urgent Motion to Dismiss on the ground of improper
venue and lack of jurisdiction. It argued that since it has no
religious affiliation and represents no cultural or ethnic tribe, it
cannot be considered as a Muslim under the Code of Muslim
Personal Laws. Moreover, since the complaint for recovery of
land is a real action, it should have been filed in the appropriate
Regional Trial Court of Lanao del Norte. The Shari'a District
Court denied the Municipality of Tangkal's motion to dismiss. It
held that since the mayor of Tangkal, Abdulazis A.M. Batingolo,
is a Muslim, the case "is an action involving Muslims, hence, the
court has original jurisdiction concurrently with that of
regular/civil courts." It added that venue was properly laid
because the Shari'a District Court has territorial jurisdiction
over the provinces of Lanao del Sur and Lanao del Norte, in
addition to the cities of Marawi and Iligan.

20
ISSUE:

Whether the Shari’a District Court has Jurisdiction over matters

involving real action?

RULING:

Shari’a District Court has no jurisdiction.

The matters over which Shari'a district courts have Jurisdiction

are enumerated in the Code of Muslim Personal Laws,
specifically in Article 143.Consistent with the purpose of the law
to provide for an effective administration and enforcement of
Muslim personal laws among Muslims,it has a catchall
provision granting Shari'a district courts original jurisdiction
over personal and real actions except those for forcible entry
and unlawful detainer.lawred The Shari'a district courts'
jurisdiction over these matters is concurrent with regular civil
courts, i.e., municipal trial courts and regional trial
courts. There is, however, a limit to the general jurisdiction of
Shari'a district courts over matters ordinarily cognizable by
regular courts: such jurisdiction may only be invoked if both
parties are Muslims. If one party is not a Muslim, the action
must be filed before the regular courts.

The complaint below, which is a real action involving title to

and possession of the land situated at Barangay Banisilon,

21
Tangkal, was filed by private respondents before the Shari'a
District Court pursuant to the general jurisdiction conferred by
Article 143(2)(b). In determining whether the Shari'a District
Court has jurisdiction over the case, the threshold question is
whether both parties are Muslims. There is no disagreement
that private respondents, as plaintiffs below, are Muslims. The
only dispute is whether the requirement is satisfied because the
mayor of the defendant municipality is also a Muslim.

When Article 143(2)(b) qualifies the conferment of jurisdiction

to actions "wherein the parties involved are Muslims," the word
"parties" necessarily refers to the real parties in interest. Section
2 of Rule 3 of the Rules of Court defines real parties in interest
as those who stand to be benefited or injured by the judgment
in the suit, or are entitled to the avails of the suit. In this case,
the parties who will be directly benefited or injured are the
private respondents, as real party plaintiffs, and the
Municipality of Tangkal, as the real party defendant.

22
 TOPIC: RESIDUAL JURISDICTION

DBP v. CARPIO

FACTS:

Private respondents as represented by their attorney in fact

filed a complaint for delivery of certificates of title, damages and
attorney’s fees againts petitioner DBP before the RTC.

In their complaint Abad, et al. prayed, among others, for the

issuance of a writ of seizure, pending hearing of the case, for
delivery of their certificates of title they claimed to be
unlawfully detained by DBP and GFSME. As prayed for, the
RTC issued the Writ of Seizure. DBP filed its Omnibus Motion
to Dismiss Complaint and to Quash Writ of Seizure on the
ground of improper venue, among others. RTC granted DBP's
omnibus motion and dismissed the case for improper venue.
DBP filed its Motion for Writ of Execution. the RTC issued the
corresponding Writ of Execution. Due to the non-delivery of the
certificates of title by Abad, et al., DBP filed
its Motion/Application to Call on Plaintiff's Surety Bon.
Praying for the release of the bond issued by CBIC to answer for
the damages it sustained as a result of the failure to return the
228 certificates of title.

23
ISSUE:

Whether the RTC has residual jurisdiction over the subject

matter of the case?

RULING:

The trial court did not reach the residual jurisdiction stage
Residual jurisdiction refers to the authority of the trial court to
issue orders for the protection and preservation of the rights of
the parties which do not involve any matter litigated by the
appeal; to approve compromises; to permit appeals by indigent
litigants; to order execution pending appeal in accordance with
Section 2, Rule 39; and to allow the withdrawal of the appeal,
provided these are done prior to the transmittal of the original
record or the record on appeal, even if the appeal has already
been perfected or despite the approval of the record on
appeal24 or in case of a petition for review under Rule 42, before
the CA gives due course to the petition.25
The "residual jurisdiction" of the trial court is available at a
stage in which the court is normally deemed to have lost
jurisdiction over the case or the subject matter involved in the
appeal. This stage is reached upon the perfection of the appeals
by the parties or upon the approval of the records on appeal,
but prior to the transmittal of the original records or the records

24
on appeal. In either instance, the trial court still retains its so-
called residual jurisdiction to issue protective orders, approve
compromises, permit appeals of indigent litigants, order
execution pending appeal, and allow the withdrawal of the
appeal.
From the foregoing, it is clear that before the trial court can be
said to have residual jurisdiction over a case, a trial on the
merits must have been conducted; the court rendered
judgment; and the aggrieved party appealed therefrom.
In this case, there was no trial on the merits as the case was
dismissed due to improper venue and respondents could not
have appealed the order of dismissal as the same was a
dismissal, without prejudice. Section 1(h), Rule 41 of the
Rules of Civil Procedure states that no appeal may be taken
from an order dismissing an action without prejudice. Indeed,
there is no residual jurisdiction to speak of where no appeal has
even been filed.

25
 TOPIC: PRIMARY JURISDICTION

UNDURAN v. ABERASTURI

FACT:

This is a Motion for Reconsideration and Supplemental Motion

for Reconsideration of the Court’s En Banc Decision dated
October 20, 2015, which the petition was denied and affirmed
the Court of Appeals decision. In the petitioner’s Motion for
Reconsideration, they maintain their contention believing that
it is the National Commission of Indigenous Peoples (NCIP) not
the regular courts, which has jurisdiction over disputes and
controversies involving ancestral domain of the Indigenous
Cultural Communities (ICC’s) and Indigenous Peoples (IP’s)
regardless of the parties involved.

ISSUE:

Whether or not the Regional Trial Court has the

jurisdiction over the disputes and controversies involving the
ancestral domain of the ICC and IP regardless of the parties
involved not the NCIP.

RULING:

Yes. It is the court of general jurisdiction has the power or

authority to hear and decide cases whose subject matter does
not fall within the exclusive original jurisdiction of any court,

26
tribunal or body exercising judicial or quasi-judicial function. In
contrast, a court of limited jurisdiction, or a court acting under
special powers, has only the jurisdiction expressly delegated.
An administrative agency, acting in its quasi-judicial capacity, is
a tribunal of limited jurisdiction which could wield only such
powers that are specifically granted to it by the enabling
statutes. Limited or special jurisdiction is that which is confined
to particular causes or which can be exercised only under
limitations and circumstances prescribed by the statute.

Meanwhile, the NCIP's jurisdiction is limited under

customary laws presents two important issues: first, whether it
is legally possible to punish non-ICCs/IPs with penalties under
customary laws; and second, whether a member of a particular
ICC/IP could be punished in accordance with the customary
laws of another ICC/IP.

Therefore, the Court finds no merit in petitioners'

contention that jurisdiction of the court over the subject matter
of a case is not merely based on the allegations of the complaint
in certain cases where the actual issues are evidenced by
subsequent pleadings. It is well settled that the jurisdiction of
the court cannot be made to depend on the defenses raised by
the defendant in the answer or a motion to dismiss; otherwise,
the question of jurisdiction would depend almost entirely on the
defendant. Suffice it also to state that the Court is unanimous in

27
denying the petition for review on certiorari on the ground that
the CA correctly ruled that the subject matter of the original and
amended complaint based on the allegations therein is within
the jurisdiction of the RTC.

28
 TOPIC: JURISDICTIONAL ESTOPPEL

DUERO v. CA

FACTS:

Sometime in 1988, according to petitioner, private

Eradelentered and occupied petitioner's land covered by Tax
Declaration No. A-16-13-302, located in Baras, San Miguel,
Surigao del Sur. As shown in the tax declaration, the land had
an assessed value of P5,240. Petitioner informed respondent
that the land was his, and requested the latter to vacate the
land. However, despite repeated demands, private respondent
remained steadfast in his refusal to leave the land.

On June 16, 1995, petitioner filed before the RTC a complaint

for Recovery of Possession and Ownership with Damages and
Attorney's Fees against private respondent and two others,
namely, Apolinario and Inocencio Ruena.
Petitioner and the Ruenas executed a compromise agreement,
which became the trial court's basis for a partial judgment
rendered on January 12, 1996. In this agreement, the Ruenas
recognized and bound themselves to respect the ownership and
possession of Duero. Herein private respondent Eradel was not
a party to the agreement, and he was declared in default for
failure to file his answer to the complaint.

29
Petitioner presented his evidence ex parte on February 13, 1996.
On May 8, 1996, judgment was rendered in his favor, and
private respondent was ordered to peacefully vacate and turn
over the lot.

On June 10, 1996, private respondent filed a Motion for New

Trial, alleging that he has been occupying the land as a tenant of
Artemio Laurente, Sr., since 1958. He explained that he turned
over the complaint and summons to Laurente in the honest
belief that as landlord, the latter had a better right to the land
and was responsible to defend any adverse claim on it.
However, the trial court denied the motion for new trial.

Private respondent then filed before the RTC a Petition for

Relief from Judgment, reiterating the same allegation in his
Motion for New Trial. The RTC again denied the Petition.

Private respondent filed a Motion for Reconsideration in which

he alleged that the RTC has no jurisdiction over the case since
the value of the land is only P5,240, which is within the
jurisdiction of the MTC. However, the RTC denied the MR.

Private respondent filed with the Court of Appeals, a petition

for certiorari which the latter granted.

30
ISSUES:

1) Whether or not RTC has jurisdiction over the case

2) WON the private respondent Eradel is estopped from

questioning the jurisdiction of RTC after he has successfully
sought affirmative relief therefrom

RULING:

1) None. The case falls under the jurisdiction of the MTC based
on Republic Act 7691 amending BP 129.

2) No. For estoppel to apply, the action giving rise thereto must
be unequivocal and intentional because, if misapplied, estoppel
may become a tool of injustice.

Private respondent, an unschooled farmer, in the mistaken

belief that since he was merely a tenant of the late Artemio
Laurente Sr., his landlord, gave the summons to a Hipolito
Laurente, one of the surviving heirs of Artemio Sr., who did not
do anything about the summons. For failure to answer the
complaint, private respondent was declared in default.

He then filed a Motion for New Trial in the same court, but such
was denied. He filed before the RTC a Motion for Relief from
Judgment. Again, the same court denied his motion, hence he
moved for reconsideration of the denial. In his Motion for

31
Reconsideration, he raised for the first time the RTC's lack of
jurisdiction. This motion was again denied.

Note that private respondent raised the issue of lack of

jurisdiction, not when the case was already on appeal, but when
the case, was still before the RTC that ruled him in default,
denied his motion for new trial as well as for relief from
judgment, and denied likewise his two motions for
reconsideration

The fundamental rule is that, the lack of jurisdiction of the court

over an action cannot be waived by the parties, or even cured by
their silence, acquiescence or even by their express
consent. Further, a party may assail the jurisdiction of the court
over the action at any stage of the proceedings and even on
appeal. The appellate court did not err in saying that the RTC
should have declared itself barren of jurisdiction over the action

Citing Javier v CA, the Court reiterated: Under the rules, it is

the duty of the court to dismiss an action 'whenever it appears
that the court has no jurisdiction over the subject matter.' (Sec.
2, Rule 9, Rules of Court)

32
 GONZAGA v. CA

FACTS:

Petitioners purchased a parcel of land from private respondent

Lucky Homes, Inc., situated in Iloilo and containing an area of
240 square meters. Said lot was specifically denominated as Lot
No. 19 under a TCT and was mortgaged to the Social Security
System (SSS) as security for their housing loan.

Spouses Petitioners then started the construction of their house,

not on Lot No. 19 but on Lot No. 18, as Lucky Homes Inc
mistakenly identified Lot No. 18 as Lot No. 19. Upon realizing
its error, private respondent informed petitioners of such
mistake but the latter offered to buy Lot No. 18 in order to
widen their premises. Thus, petitioners continued with the
construction of their house.

However, petitioners defaulted in the payment of their housing

loan from SSS. Consequently, Lot No. 19 was foreclosed by SSS
and petitioners’ certificate of title was cancelled and a new one
was issued in the name of SSS.

Sps. Gonzaga then offered to swap Lot Nos. 18 and 19 and

demanded from Lucky Homes that their contract of sale be
reformed and another deed of sale be executed with respect to
Lot No. 18, considering that their house was built therein.

33
However, private respondent refused. This prompted
petitioners to file an action for reformation of contract and
damages with the Regional Trial Court of Iloilo City,

The RTC dismissed the complaint for lack of merit. It held that
when Lot No. 19 was foreclosed and sold at public auction, the
reformation, or the swapping of Lot 18 and Lot 19, was no
longer feasible considering that Sps. Gonzaga were no longer
the owners of Lot 19. Thus, Lucky Homes would be losing Lot
18 without any substitute therefore. Furthermore, the RTC
ruled:

"The logic and common sense of the situation lean heavily in

favor of the defendant. It is evident that what plaintiff had
bought from the defendant is Lot 19 covered by TCT No. 28254
which parcel of land has been properly indicated in the
instruments and not Lot 18 as claimed by the plaintiff. The
contracts being clear and unmistakable, they reflect the true
intention of the parties, besides the plaintiff failed to assail the
contracts on mutual mistake, hence the same need no longer be
reformed.”

A writ of execution was issued. The petitioners filed a motion to

recall said writ on the ground that the RTC lack jurisdiction as
pursuant to PD 957 (The Subdivision and Condominium Buyers
Protective Decree), it was vested in theHousing and Land Use

34
Regulatory Board. Consequently, Sps. Gonzaga filed a new
complaint with the HLURB, and also a petition for annulment
of judgment with the CA, on the ground of lack of jurisdiction.

The CA dismissed the petition, relying on the doctrine of

estoppel laid down in Tijam v. Sibonghanoy.

ISSUE:

Whether or notpetitioners are estopped from questioning the

jurisdiction of the RTC to try the case.

RULING:

Yes. The SC held that the doctrine in Tijam v. Sibonghanoy, as

reiterated in numerous cases, is still controlling. In explaining
the concept of jurisdiction by estoppel, the Court quoted its
decision in said case, to wit:

"It has been held that a party cannot invoke the jurisdiction of a
court to secure affirmative relief against his opponent and, after
obtaining or failing to obtain such relief, repudiate, or question
that same jurisdiction x xxx [T]he question whether the court
had jurisdiction either of the subject matter of the action or of
the parties was not important in such cases because the party is
barred from such conduct not because the judgment or order of
the court is valid and conclusive as an adjudication, but for the

35
reason that such a practice cannot be tolerated–– obviously for
reasons of public policy."

Furthermore, the Court said that it was petitioners themselves

who invoked the jurisdiction of the court a quo by instituting an
action for reformation of contract against private respondents.
It must be noted that in the proceedings before the trial court,
petitioners vigorously asserted their cause from start to finish.
Not even once did petitioners ever raise the issue of the court’s
jurisdiction during the entire proceedings which lasted for two
years. It was only after the trial court rendered its decision and
issued a writ of execution against them in 1998 did petitioners
first raise the issue of jurisdiction ─ and it was only because
said decision was unfavorable to them. Petitioners thus
effectively waived their right to question the court’s jurisdiction
over the case they themselves filed.

36
MANILA BANK LIFE INSURANCE CORPORATION VS.
EDDY NG KOK WEI

FACTS:

Eddy Ng Kok Wei, respondent, is a Singaporean businessman

who ventured into investing in the Philippines. On November
29, 1988, respondent, in a Letter of Intent addressed to Manila
Bankers Life Insurance Corporation, petitioner, expressed his
intention to purchase a condominium unit at Valle Verde
Terraces.Respondent paid petitioner a reservation fee for the
purchase of condominium unit.

Petitioner, through its President, Mr. Antonio G. Puyat,

executed a Contract to Sell in favor of the respondent.

On October 5, 1990, respondent returned to

the Philippines only to find that his condominium unit was still
unlivable. Exasperated, he was constrained to send petitioner a
letter dated November 21, 1990 demanding payment for the
damages he sustained. But petitioner ignored such demand,
prompting respondent to file with the Regional Trial Court, for
Specific performance.

Meanwhile, during the pendency of the case, respondent finally

accepted the condominium unit and on April 12, 1991,

37
occupied the same. Thus, respondents cause of action has been
limited to his claim for damages.

On appeal, the Court of Appeals, affirmed the ruling of the RTC.

Petitioner filed a motion for reconsideration but was denied by

the Appellate Court

Hence, this petition for review on certiorari. Petitioner

contends that the trial court has no jurisdiction over the instant
case.

ISSUE:

Whether a trial court has jurisdiction over the claims of

damages by the respondent.

RULING:

SECTION 1. In the exercise of its functions to regulate the real

estate trade and business and in addition to its powers provided
for in Presidential Decree No. 957, the National Housing
Authority [now Housing and Land Use Regulatory Board
(HLURB)] shall have exclusive jurisdiction to hear and decide
cases of the following nature:

C. Cases involving specific performance of contractual and

statutory obligations filed by buyers of subdivision lots or

38
condominium units against the owner, developer, dealer,
broker or salesman.

It is the HLURB which has jurisdiction over the instant

case. We have consistently held that complaints for specific
performance with damages by a lot or condominium unit buyer
against the owner or developer falls under the exclusive
jurisdiction of the HLURB.

While it may be true that the trial court is without jurisdiction

over the case, petitioners active participation in the proceedings
estopped it from assailing such lack of it. We have held that it is
an undesirable practice of a party participating in the
proceedings and submitting its case for decision and then
accepting the judgment, only if favorable, and attacking it for
lack of jurisdiction, when adverse.

Here, petitioner failed to raise the question of jurisdiction

before the trial court and the Appellate Court. In effect,
petitioner confirmed and ratified the trial courts jurisdiction
over this case. Certainly, it is now in estoppel and can no longer
question the trial courts jurisdiction.

39
 BOSTON EQUITY INSURANCE INC. v. CA

FACTS: On 24 December 1997, petitioner filed a complaint for

sum of money with a prayer for the issuance of a writ of
preliminary attachment against the spouses Manuel and Lolita
Toledo. Herein respondent filed an Answer dated 19 March
1998 but on 7 May 1998, she filed a Motion for Leave to Admit
Amended Answer in which she alleged that her husband and co-
defendant, Manuel Toledo (Manuel), is already dead.

On 24 September 2004, counsel for herein respondent Toledo

was given a period of fifteen days within which to file a
demurrer to evidence. However, on 7 October 2004, respondent
instead filed a motion to dismiss the complaint, citing stating
that the trial court did not acquire jurisdiction over the person
of Manuel pursuant to Section 5, Rule 86 of the Revised Rules
of Court.

The trial court, denied the motion to dismiss for having been
filed out of time, citing Section 1, Rule 16 of the 1997 Rules of
Court which states that: "Within the time for but before filing
the answer to the complaint or pleading asserting a claim, a
motion to dismiss may be made." Respondent’s motion for
reconsideration of the order of denial was likewise denied on

40
the ground that "defendants’ attack on the jurisdiction of this
Court is now barred by estoppel by laches" since respondent
failed to raise the issue despite several chances to do so.

ISSUE:

1. Whether or not jurisdiction over the person of Manuel Toledo

was acquired.

2. Whether or not there is estoppel by laches.

RULING:

1. No. Jurisdiction over the person of a defendant is acquired

through a valid service of summons; trial court did not acquire
jurisdiction over the person of Manuel Toledo

In the first place, jurisdiction over the person of Manuel was

never acquired by the trial court. A defendant is informed of a
case against him when he receives summons. "Summons is a
writ by which the defendant is notified of the action brought
against him. Service of such writ is the means by which the
court acquires jurisdiction over his person."

In the case at bar, the trial court did not acquire jurisdiction
over the person of Manuhg el since there was no valid service of
summons upon him, precisely because he was already dead

41
even before the complaint against him and his wife was filed in
the trial court. The issues presented in this case are similar to
those in the case of Sarsaba v. Vda. deTe.

2. The concept of jurisdiction has several aspects, namely: (1)

jurisdiction over the subject matter; (2) jurisdiction over the
parties; (3) jurisdiction over the issues of the case; and (4) in
cases involving property, jurisdiction over the res or the thing
which is the subject of the litigation.

The aspect of jurisdiction which may be barred from being

assailed as a result of estoppel by laches is jurisdiction over the
subject matter. Thus, in Tijam, the case relied upon by
petitioner, the issue involved was the authority of the then
Court of First Instance to hear a case for the collection of a sum
of money in the amount of P1,908.00 which amount was, at
that time, within the exclusive original jurisdiction of the
municipal courts.

Here, what respondent was questioning in her motion to

dismiss before the trial court was that court’s jurisdiction over
the person of defendant Manuel. Thus, the principle of estoppel
by laches finds no application in this case.

42
VENANCIO FIGUEROA y CERVANTES vs. PEOPLE OF
THE PHILIPPINES

FACTS:

Petitioner Venancio Figueroa was charged and convicted with

reckless imprudence resulting in homicidebefore the
Branch 18 Regional Trial Court (RTC) in Bulacan. The
petitioner appealed to the Court of Appeals, questioning for the
RTC’s jurisdiction. The CA in affirming the decision of the RTC,
ruled that the principle of estoppel by laches has already
precluded the petitioner from questioning the jurisdiction of the
RTC— the trial went
on for 4 years with the petitioner actively participating therein a
nd without him ever raising the jurisdictional infirmity. The
petitioner, for his part, counters that the lack of jurisdiction of a
court over the subject matter may be raised at any time even for
the first time on appeal. As undue delay is further absent
herein, the principle of laches will not be applicable.

ISSUE:

Whether or not petitioner is may still question the RTC’s

jurisdiction.

43
RULING:

Yes.

Estoppel by laches may be invoked to bar the issue of lack of

jurisdiction only in cases in which the factual milieu is
analogous to that of Tijam v. Sibonghanoy. Laches should be
clearly present for the Sibonghanoy doctrine to be applicable,
that is, lack of jurisdiction must have been raised so belatedly as
to warrant the presumption that the party entitled to assert it
had abandoned or declined to assert it. In Sibonghanoy, the
party invoking lack of jurisdiction did so only after fifteen years
and at a stage when the proceedings had already been elevated
to the CA. Sibonghanoy is an exceptional case because of the
presence of laches.

In the case at bar, the factual settings attendant in Sibonghanoy

are not present. Petitioner Atty. Regalado, after the receipt of
the Court of Appeals resolution finding her guilty of contempt,
promptly filed a Motion for Reconsideration assailing the said
court’s jurisdiction based on procedural infirmity in initiating
the action. Her compliance with the appellate court’s directive
to show cause why she should not be cited for contempt and
filing a single piece of pleading to that effect could not be
considered as an active participation in the judicial proceedings
so as to take the case within the milieu of Sibonghanoy. Rather,

44
it is the natural fear to disobey the mandate of the court that
could lead to dire consequences that impelled her to comply.

The petitioner is in no way estopped by laches in assailing the

jurisdiction of the RTC, considering that he raised
the lack thereof in his appeal before the appellate court. At that
time, no considerable period had yet elapsed for laches to
attach.

45
TOPIC: HIERARCHY OF COURTS

AGAN JR. V. PHIL. INTERNATIONAL AIR TERMINAL

CO. INC

FACTS:

On October 5, 1994, Asias Emerging Dragon Corp. (AEDC)

submitted an unsolicited proposal to the Philippine
Government through the Department of Transportation and
Communication (DOTC) and Manila International Airport
Authority (MIAA) for the construction and development of the
NAIA IPT III under a build-operate-and-transfer arrangement
pursuant to R.A. No. 6957, as amended by R.A. No. 7718 (BOT
Law). In accordance with the BOT Law and its Implementing
Rules and Regulations (Implementing Rules), the DOTC/MIAA
invited the public for submission of competitive and
comparative proposals to the unsolicited proposal of AEDC. On
September 20, 1996 a consortium composed of the Peoples Air
Cargo and Warehousing Co., Inc. (Paircargo), Phil. Air and
Grounds Services, Inc. (PAGS) and Security Bank Corp.
(Security Bank) (collectively, Paircargo Consortium), submitted
their competitive proposal to the Prequalification Bids and
Awards Committee (PBAC).

46
After finding that the Paircargo Consortium submitted a bid
superior to the unsolicited proposal of AEDC and after failure
by AEDC to match the said bid, the DOTC issued the notice of
award for the NAIA IPT III project to the Paircargo Consortium,
which later organized into herein respondent PIATCO. Hence,
on July 12, 1997, the Government, through then DOTC
Secretary Arturo T. Enrile, and PIATCO, through its President,
Henry T. Go, signed the Concession Agreement for the Build-
Operate-and-Transfer Arrangement of the Ninoy Aquino
International Airport Passenger Terminal III (1997 Concession
Agreement). On November 26, 1998, the 1997 Concession
Agreement was superseded by the Amended and Restated
Concession Agreement (ARCA) containing certain revisions and
modifications from the original contract. A series of
supplemental agreements was also entered into by the
Government and PIATCO. The First Supplement was signed on
August 27, 1999, the Second Supplement on September 4,
2000, and the Third Supplement on June 22, 2001 (collectively,
Supplements) (the 1997 Concession Agreement, ARCA and the
Supplements collectively referred to as the PIATCO Contracts).
On September 17, 2002, various petitions were filed before this
Court to annul the 1997 Concession Agreement, the ARCA and
the Supplements and to prohibit the public respondents DOTC
and MIAA from implementing them.

47
In a decision dated May 5, 2003, this Court granted the said
petitions and declared the 1997 Concession Agreement, the
ARCA and the Supplements null and void. Respondent
PIATCO, respondent-Congressmen and respondents-
intervenors seek the reversal of the May 5, 2003 decision and
pray that the petitions be dismissed.

ISSUE:

Whether or not the court has jurisdiction over the case on the
that ground it involves factual questions which the court was
preclude from taking primary jurisdiction over them

RULING:

Yes the court has jurisdiction over them. There is a question of

fact when doubt or difference arises as to the truth or falsity of
the facts alleged. Even a cursory reading of the cases at bar will
show that the Court decided them by interpreting and applying
the Constitution, the BOT Law, its Implementing Rules and
other relevant legal principles on the basis of clearly undisputed
facts. All the operative facts were settled, hence, there is no
need for a trial type determination of their truth or falsity by a
trial court. They involve contractual provisions which are clear
and categorical and need only to be interpreted. The
interpretation of contracts and the determination of whether

48
their provisions violate our laws or contravene any public policy
is a legal issue which this Court may properly pass upon.
Respondents corollary contention that this Court violated the
hierarchy of courts when it entertained the cases at bar must
also fail. The rule on hierarchy of courts in cases falling within
the concurrent jurisdiction of the trial courts and appellate
courts generally applies to cases involving warring factual
allegations. For this reason, litigants are required to repair to
the trial courts at the first instance to determine the truth or
falsity of these contending allegations on the basis of the
evidence of the parties. Cases which depend on disputed facts
for decision cannot be brought immediately before appellate
courts as they are not triers of facts. It goes without saying that
when cases brought before the appellate courts do not involve
factual but legal questions, a strict application of the rule of
hierarchy of courts is not necessary. As the cases at bar merely
concern the construction of the Constitution, the interpretation
of the BOT Law and its Implementing Rules and Regulations on
undisputed contractual provisions and government actions, and
as the cases concern public interest, this Court resolved to take
primary jurisdiction over them. This choice of action follows the
consistent stance of this Court to settle any controversy with a
high public interest component in a single proceeding and to
leave no root or branch that could bear the seeds of future

49
litigation. The suggested remand of the cases at bar to the trial
court will stray away from this policy.

50
 THE LIGA NG MGA BARANGAY NATIONAL vs.
MAYOR JOSE ATIENZA, JR., and THE CITY COUNCIL
OF MANILA

FACTS:

Liga is the national organization of all Phil. barangays pursuant

to the Local government Code. Section 493 of that law provides
that “all other matters not provided for in the law affecting the
internal organization of the leagues of local government units
shall be governed by their respective constitution and by-laws.
The Liga adopted and ratified its own Election Code. However,
the City Council of Manila enacted an ordinance providing for
the election of representatives of the District Chapters in the
City Chapter of Manila and for setting the elections for both
chapters.

The Liga sent respondent Mayor of Manila a letter requesting

him that said ordinance be vetoed considering that it
encroached upon the functions of the Liga through legislation.

The Mayor, however, signed and approved the assailed city

ordinance.

Hence, the Liga filed the instant petition of certiorari under

Rule 65 of the Rules of Court before the SC seeking to nullify
the said ordinance

51
Mayor Atienza and the city council pray for the dismissal of the
petition on the ground that the Liga cannot claim that it has no
other recourse in addressing its grievance other than this
petition for certiorari ; that there are actually 2 cases pending
the RTC of Manila (one is for mandamus; the other, for
declaratory relief) and 3 in the Court of Appeals (1 is for
prohibition; the 2 other cases, for quo warranto), which are all
akin to the present petition in the sense that the relief being
sought therein is the declaration of the invalidity of the subject
ordinance. They argue that the petitioner may ask the RTC or
the Court of Appeals the relief being prayed for before this
Court.

ISSUE:

Whether or not the petition for certiorari before the SC is

improper on the ground that there has been a violation of the
doctrine of hierarchy of courts and that the relief prayed for in
this petition may be first asked from the RTC and the CA

RULING:

Yes. The court sustained the argument of the respondents.

The court ruled that although the instant petition is styled as a

petition for certiorari, in essence, it seeks the declaration by the
SC of the unconstitutionality or illegality of the questioned

52
ordinance and executive order. It, thus, partakes of the nature
of a petition for declaratory relief over which this Court has only
appellate, not original, jurisdiction. As such, this petition must
necessary fail, as this Court does not have original jurisdiction
over a petition for declaratory relief even if only questions of
law are involved.

Even granting arguendo that the present petition is ripe for the
extraordinary writ of certiorari, there is here a clear disregard
of the hierarchy of courts. No special and important reason or
exceptional and compelling circumstance has been adduced by
the petitioner or the intervenor why direct recourse to this
Court should be allowed.

Furthermore, it has been held that the Supreme Court’s

original jurisdiction to issue a writ of certiorari (as well as of
prohibition, mandamus, quo warranto, habeas corpus and
injunction) is not exclusive, but is concurrent with the Regional
Trial Courts and the Court of Appeals in certain cases.

The court cited the case of People v Cuaresma where it was held
that:

this concurrence of jurisdiction is not, however, to be taken as

according to parties seeking any of the writs an absolute,
unrestrained freedom of choice of the court to which

53
application therefore will be directed. There is after all a
hierarchy of courts. That hierarchy is determinative
of the venue of appeals, and also serves as a general
determinant of the appropriate forum for petitions
for the extraordinary writs. A becoming regard of
that judicial hierarchy most certainly indicates that
petitions for the issuance of extraordinary writs
against first level (inferior) courts should be filed
with the Regional Trial Court, and those against the
latter, with the Court of Appeals. A direct invocation
of the Supreme Courts original jurisdiction to issue
these writs should be allowed only when there are
special and important reasons therefor, clearly and
specifically set out in the petition. This is [an] established
policy. It is a policy necessary to prevent inordinate demands
upon the Courts time and attention which are better devoted to
those matters within its exclusive jurisdiction, and to prevent
further over-crowding of the Courts docket.

The court in this case reaffirms the judicial policy that this
Court will not entertain direct resort to it unless the redress
desired cannot be obtained in the appropriate courts, and
exceptional and compelling circumstances justify the availment
of the extraordinary remedy of writ of certiorari, calling for the
exercise of its primary jurisdiction.

54
ST. MARY CRUSADE FOUNDATION INC. v. RIEL,

FACTS:

The petitioner applied for the judicial reconstitution of Original

Certificate of Title (OCT) No. 1609 of the Register of Deeds of
Quezon City, and for the issuance of a new OCT in place thereof,
docketed as L.R.C. Case No. Q-18987 (04), but respondent
Acting Presiding Judge of Branch 85 of the Regional Trial Court
(RTC) in Quezon City dismissed the petition for reconstitution
through the assailed order dated September 12, 2006. The
petitioner alleges that the respondent Judge thereby committed
grave abuse of discretion and unlawful neglect of performance
of an act specifically enjoined upon him. Equally assailed is the
ensuing denial of its motion for reconsideration through the
order dated February 5, 2007. On October 28, 2004, the
petitioner claimed in its petition for reconstitution that the
original copy of OCT No. 1609 had been burnt and lost in the
fire that gutted the Quezon City Register of Deeds in the late
80’s. Initially, respondent Judge gave due course to the petition,
but after the preliminary hearing, he dismissed the petition
under the recommendation by the report of the LRA. The OSG
and UP argued that the petitioner failed to observe the doctrine
of hierarchy of courts, despite the Court of Appeals (CA) having
concurrent jurisdiction with the Court over special civil actions

55
under Rule 65;that the RTC would have gravely erred had it
proceeded on the petition for reconstitution despite the
petitioner not having notified the adjoining owners of the land
or other parties with interest over the land;that the petitioner
had no factual and legal bases for reconstitution due to its
failure to prove the existence and validity of the certificate of
title sought to be reconstituted.

ISSUE:

Whether or not the RTC can dismiss a petition through the

recommendation for dismissal by the LRA.

RULING:

Certiorari, being an extraordinary remedy, is granted only

under the conditions defined by the Rules of Court.

The conditions are that: (1) the respondent tribunal, board or

officer exercising judicial or quasi-judicial functions has acted
without or in excess of its or his jurisdiction, or with grave
abuse of discretion amounting to lack or excess of jurisdiction;
and (2) there is no appeal or any plain, speedy, and adequate
remedy in the ordinary course of law. The petition for certiorari
and mandamus did not show how respondent Judge could have
been guilty of lacking or exceeding his jurisdiction, or could
have gravely abused his discretion amounting to lack or excess

56
of jurisdiction. Under Section 1221 of R.A. 26, the law on the
judicial reconstitution of a Torrens title, the RTC (as the
successor of the Court of First Instance) had the original and
exclusive jurisdiction to act on the petition for judicial
reconstitution of title. Hence, the RTC neither lacked nor
exceeded its authority in acting on and dismissing the petition.
The respondent Judge did not gravely abuse his discretion
amounting to lack or excess of jurisdiction considering that the
petition for reconstitution involved land already registered in
the name of the UP, as confirmed by the LRA. It would be
contrary to law if the petition was granted. Moreover, the
petitioner did not present the duplicate or certified copy of OCT
No. 1609. Thereby, it disobeyed Section 2 and Section 3 of
Republic Act No. 26. A petition for the judicial reconstitution of
a Torrens title must strictly comply with the requirements
prescribed in Republic Act No. 26 otherwise, the petition should
be dismissed.

57
 INTRAMUROS ADMINISTRATION VS. OFFSHORE
CONSTRUCTION DEVELOPMENT COMPANY

FACTS:

In 1998, Intramuros leased certain real properties of the

national government, which it administered to Offshore
Construction. Three (3) properties were subjects of Contracts of
Lease X XX All their lease contracts also made reference to an
August 20, 1998 memorandum of stipulations, which included a
provision for lease renewals every five (5) years upon the
parties' mutual agreement.

Offshore Construction occupied and introduced improvements

in the leased premises. However, Intramuros and the
Department of Tourism halted the projects due to Offshore
Construction's non-conformity with Presidential Decree No.
1616, which required 16th to 19thcenturies' Philippine-Spanish
architecture in the area.[8] Consequently, Offshore Construction
filed a complaint with prayer for preliminary injunction and
temporary restraining order against Intramuros and the
Department of Tourism before the Manila Regional Trial Court.
Eventually, the parties executed a Compromise Agreement x xx
In the Compromise Agreement, the parties affirmed the validity
of the two (2) lease contracts but terminated the one over
Revellin de Recoletos.

58
During the lease period, Offshore Construction failed to pay its
utility bills and rental fees, despite several demand letters
Intramuros filed a Complaint for Ejectment before the Manila
Metropolitan Trial Court

ISSUE:

Whether or not the Metropolitan Trial Court had jurisdiction

over the ejectment complaint filed by Intramuros
Administration?

RULING:

It is settled that the only issue that must be settled in an

ejectment proceeding is physical possession of the property
involved.Specifically, action for unlawful detainer is brought
against a possessor who unlawfully withholds possession after
the termination and expiration of the right to hold possession.

To determine the nature of the action and the jurisdiction of the

court, the allegations in the complaint must be examined. The
jurisdictional facts must be evident on the face of the complaint.

The Metropolitan Trial Court seriously erred in finding that it

did not have jurisdiction over petitioner's complaint because
the parties' situation has allegedly become "more
complicated" than one of lease. Respondent's defense that its

59
relationship with petitioner is one of concession rather than
lease does not determine whether or not the Metropolitan Trial
Court has jurisdiction over petitioner's complaint. The pleas or
theories set up by a defendant in its answer or motion to
dismiss do not affect the court's jurisdiction. In Morta v.
Occidental:

It is axiomatic that what determines the nature of an action as

well as which court has jurisdiction over it, are the allegations in
the complaint and the character of the relief sought.
"Jurisdiction over the subject matter is determined upon the
allegations made in the complaint, irrespective of whether the
plaintiff is entitled to recover upon a claim asserted therein — a
matter resolved only after and as a result of the trial. Neither
can the jurisdiction of the court be made to depend upon the
defenses made by the defendant in his answer or motion to
dismiss. If such were the rule, the question of jurisdiction would
depend almost entirely upon the defendant."

Not even the claim that there is an implied new lease

or tacitareconduccion will remove the Metropolitan Trial
Court's jurisdiction over the complaint. To emphasize, physical
possession, or de facto possession, is the sole issue to be
resolved in ejectment proceedings. Regardless of the claims or
defenses raised by a defendant, a Metropolitan Trial Court has

60
jurisdiction over an ejectment complaint once it has been
shown that the requisite jurisdictional facts have been alleged,
such as in this case. Courts are reminded not to abdicate their
jurisdiction to resolve the issue of physical possession, as there
is a public need to prevent a breach of the peace by requiring
parties to resort to legal means to recover possession of real
property.

61
 BUREAU OF CUSTOMS v. PAULINO Q. GALLEGOS,

FACTS:

Utilizing the funds appropriated by Congress in the General

Appropriations Act (GAA) for calendar year (CY) 2010 and for
CY 2012 for the ASEAN Single Window Protocol, petitioner
BOC, through its procuring entity, petitioner Department of
Budget and Management-Procurement Service (DBM-PS),
issued on October 15, 2014 a Request for Expression of Interest
(RFEI), inviting prospective bidders (consultants) in the
eligibility screening and to be shortlisted for the competitive
bidding of the PNSW 2 project.

After the evaluation and determination of shortlisted bidders,

the DBM-PS Bids and Awards Committee (BAC) issued on April
13, 2015, a Notice of HRB[11] and an Invitation to Negotiate[12] to
private respondent, as the highest bidder.

On April 23, 2015, Commissioner Lina requested for the

discontinuance of the procurement process of the PNSW 2
project, in line with Section 41(c) of Republic Act (R.A.) No.
9184 x xx a provision that grants to the head of the procuring
agency the right to reject bids for justifiable and reasonable
grounds where the award of the contract will not redound to the
benefit of the government.

62
Private respondent moved for reconsiderationbut the same was
denied

This prompted the private respondent to file a Petition

for Certiorari and Mandamuswith Prayer for the Issuance of a
Temporary Restraining Order (TRO) and/or Writ of
Preliminary Prohibitory Injunction (WPPI) and Writ of
Preliminary Mandatory Injunction (WPMI), before the RTC
against the petitioners.

Pending such proceedings, the private respondent likewise

prayed that the RTC restrain the petitioners from withholding
or reducing the appropriation, or returning the appropriation
for the project to the Bureau of Treasury, so as not to render
ineffectual any judgment that may be issued by the RTC.

ISSUE:

Whether Judge Paulino Q. Gallegos (respondent Judge) gravely

abused in his discretion when he issued the omnibus order and
the injunctive writ.

RULING:

The petition fails.

63
Certiorari under Rule 65 inherently requires the filing of a
motion for reconsideration, which is the tangible representation
of the opportunity given to the office to correct itself.The plain
and adequate remedy referred to in Section 1 of Rule 65 is a
motion for reconsideration of the assailed decision, which in
this case, is the RTC's omnibus order. The purpose of the
motion is to enable the court or agency to rectify its mistakes
without the intervention of a higher court. To dispense with this
requirement, there must be a concrete, compelling, and valid
reason for the failure to comply with the requirement.

Here, petitioners maintain that since the petition raises purely

questions of law, their failure to file a motion for
reconsideration is not fatal. Except for this bare allegation,
however, petitioners failed to show sufficient justification for
dispensing with the requirement of a prior motion for
reconsideration. Indeed, "petitioners may not arrogate to
themselves the determination of whether a motion for
reconsideration is necessary or not."

Likewise, the direct filing of this petition in this Court is in

disregard of the doctrine of hierarchy of courts. The
concurrence of jurisdiction among the Supreme Court, CA and
the RTC to issue the writs of certiorari,
prohibition, mandamus, quo warranto, habeas corpus and

64
injunction did not give petitioners the unrestricted freedom of
choice of court forum. Stated differently, although this Court
has concurrent jurisdiction with the CA and the RTC in issuing
the writ of certiorari, direct resort is allowed only when there
are special, extraordinary or compelling reasons that justify the
same.The Court enforces the observance of the hierarchy of
courts in order to free itself from unnecessary, frivolous and
impertinent cases and thus afford time for it to deal with the
more fundamental and more essential tasks that the
Constitution has assigned to it.[31] Absent any showing of any
special, important or compelling reason to justify the direct
filing of the petition will cause the dismissal of the recourse, as
in this case.

Based on the foregoing, it is clear that this petition is

procedurally infirm, and thus, dismissible.

Substantive Aspect

Even if petitioners' direct resort to this Court is allowed, the

dismissal of their petition remains.

For certiorari to lie, it must be shown that the respondent

Judge acted with grave abuse of discretion, or more specifically,
that he exercised his power arbitrarily or despotically when he
issued the omnibus order and the WPI, by reason of passion or

65
personal hostility; and such exercise was so patent and gross as
to amount to an evasion of positive duty, or to a virtual refusal
to perform it or to act in contemplation of law.Petitioners,
however, failed in this respect.

For one thing, the authority to issue writs of certiorari,

prohibition, and mandamus involves the exercise of original
jurisdiction which must be expressly conferred by the
Constitution or by law. Under Section 21 of Batas Pambansa
Bilang 129 (BP 129), otherwise known as The Judiciary
Organization Act of 1980, the RTC had the original jurisdiction
to issue writs of certiorari, prohibition, mandamus, quo
warranto, habeas corpus and injunction which may be
enforced in any part of its respective region.

The purpose of a preliminary injunction under Section 3, Rule

58 of the Rules of Court, is to prevent threatened or continuous
irremediable injury to some of the parties before their claims
can be thoroughly studied and adjudicated." Its sole aim is to
preserve the status quo until the merits of the case can be heard
fully."In Medina v. Greenfield Dev't. Corp., the Court reiterated
the following requisites to be entitled to an injunctive writ. viz:
(1) a right in esse or a clear and unmistakable right to be
protected; (2) a violation of that right; (3) that there is an
urgent and permanent act and urgent necessity for the writ to

66
prevent serious damage.[44]"While a clear showing of the right is
necessary, its existence need not be conclusively established.
Hence, to be entitled to the writ, it is sufficient that the
complainant shows that he has an ostensible right to the final
relief prayed for in his complaint."[45] Here, private respondent
amply justified the grant of the provisional relief it prayed for
before the RTC.

67
 TOPIC: RESIDUAL PREROGATIVE

GEORGE KATON V MANUEL PALANCA, JR.,

FACTS:

On 1963, Petitioner Katon caused the reclassification of

Sombrero Island, Palawan from forest to agricultural land but
never applied for homestead patent.On 1975, Respondent
Palanca was issued Homestead Patent. The other respondent,
Gapilano, Agustin and Fresnillo, also filed for homestead patent
on 1972, 1990 and 1996 respectively.

On 1999, Petitioner Katon assails the validity of the homestead

patents issued in favor of the respondents on the ground that
the same was obtained by fraud.

Respondents filed Motion to Dismiss, which was granted by the

RTC.

CA affirmed RTC’s dismissal pursuant to the appellate court’s

residual prerogative stating that lack of jurisdiction and
prescription had already barred the action for reconveyance.

68
ISSUE:

Whether or not CA is correct in in dismissing a case motu

proprio based on lack of jurisdiction over the subject matter?

RULING:

Yes, Petitioner has confused what the CA adverted to as its

residual prerogatives under Section 1 of Rule 9 of the Rules of
Court with the residual jurisdiction of trial courts over cases
appealed to the CA.

Under Section 1 of Rule 9 of the Rules of Court, defenses and

objections not pleaded either in a motion to dismiss or in the
answer are deemed waived, except when (1) lack of jurisdiction
over the subject matter, (2) litispendentia, (3) res judicata and
(4) prescription are evident from the pleadings or the evidence
on record. In the four excepted instances, the court shall motu
proprio dismiss the claim or action.

On the other hand, residual jurisdiction is embodied in Section

9 of Rule 41 of the Rules of Court, xxx The residual jurisdiction
of trial courts is available at a stage in which the court is
normally deemed to have lost jurisdiction over the case or the
subject matter involved in the appeal. This stage is reached
upon the perfection of the appeals by the parties or upon the
approval of the records on appeal, but prior to the transmittal of

69
the original records or the records on appeal. In either instance,
the trial court still retains its so-called residual jurisdiction to
issue protective orders, approve compromises, permit appeals
of indigent litigants, order execution pending appeal, and allow
the withdrawal of the appeal.

Here, the CA’s motu proprio dismissal of petitioners Complaint

could not have been based, on residual jurisdiction under Rule
41. What the CA referred to as residual prerogatives were the
general residual powers of the courts to dismiss an action motu
proprio upon the grounds mentioned in Section 1 of Rule 9 of
the Rules of Court.

70
 TOPIC: CONCURRENT JURISIDICTION

PAT-OG VS CIVIL SERVICE COMMISSION

FACTS:

Alberto Pat-og, a 3rd year high school teacher of Antadao

National High School in Sagada, Mountain Province, was
conducting his MAPEH class when Robert Bang-on, a second-
year high school student joined his class, who were then
practicing basketball shots. When Alberto ordered the boys to
form two lines, Robert, who thought the order was to form three
lines, inserted himself between the two lines. Alberto then
punched him in the stomach. As a result of the incident, Alberto
was hospitalized.

Bang-on filed an administrative case for Grave Misconduct

against Pat-og, as well as a criminal case for Slight Physical
Injuries. In the administrative case, Pat-og denied punching
Bang-on, claiming he merely stared them down when they
became unruly. In the criminal case, Pat-og was found guilty of
the crime and thus applied for probation.

The Civil Service Commission-Cordillera Administrative

Region, after conducting hearing, found Pat-og liable for Simple
Misconduct and ordered his suspension for six months without
pay. Pat-og appealed the CSC-CAR ruling to the Civil Service

71
Commission, but the latter affirmed with modification the CSC-
CAR ruling, finding him liable for Grave Misconduct and
ordering his dismissal from the service.

It ruled that Pat-og’s conviction in the criminal case, where he

acquiesced, can be admitted as evidence in the administrative
case. Alberto was not denied due process when he was not
afforded opportunity to cross-examine Robert’s witnesses, as
the same is not indispensable in administrative cases.

His act was a wanton transgression of the proper norms of

conduct of a public school teacher. In his motion for
reconsideration, Pat-og raised for the first time the issue of
jurisdiction of the CSC over the case. He argued that his case
should have been referred to and investigated by a committee
first in accordance with the Magna CartaFor School Teachers
provided under RA 4670. However, the CSC denied his motion
for reconsideration, holding he is estopped from challenging the
jurisdiction of the CSC. When Pat-og elevated his case to the
Court of Appeals, the latter affirmed the ruling of the CSC. Pat-
og’s last resort was before the Supreme Court. He argues that he
should not have been dismissed from the service, and the CA
was wrong when it ruled that CSC had jurisdiction over the
case.

72
ISSUE/S:

Whether or not the Civil Service Commission have jurisdiction

over administrative cases involving public school teachers?

RULING:

Yes, the CSC had acquired jurisdiction over administrative cases

involving public school teachers.

In Puse v. Santos-Puse, it was held that the CSC, the

Department of Education (DepEd) and the Board of
Professional Teachers-Professional Regulatory Commission
(PRC) have concurrent jurisdiction over administrative cases
against public school teachers.

Further, the doctrine of concurrent jurisdiction provides

that whenever there is concurrent jurisdiction in several
tribunals, the body that first takes cognizance of the complaint
shall exercise jurisdiction to the exclusion of the others.

In this case, it was CSC which first acquired jurisdiction over

the case because the complaint was filed before it. Thus, it had
the authority to proceed and decide the case to the exclusion of
the DepEd and the Board of Professional Teachers.

73
 TOPIC: ACTIONS INCAPABALE OF PECUNIARY
ESTIMATION

FIRST SARMIENTO PROPERTY HOLDINGS, INC., VS.

PHILIPPINE BANK OF COMMUNICATIONS

FACTS:

First Sarmiento obtained from Philippine Bank of

Communications (PBCOM) which was secured by a real estate
mortgage over 1,076 parcels of land.

On January 2, 2006, PBCOM filed a Petition for Extrajudicial

Foreclosure of Real Estate Mortgage.

On December 29, 2011, Executive Judge granted First

Sarmiento's Urgent Motion to Consider the Value of Subject
Matter of the Complaint as Not Capable of Pecuniary
Estimation, and ruled that First Sarmiento's action for
annulment of real estate mortgage was incapable of pecuniary
estimation.

PBCOM asserted that the Regional Trial Court failed to acquire

jurisdiction over First Sarmiento's Complaint because the
action for annulment of mortgage was a real action; thus, the
filing fees filed should have been based on the fair market value
of the mortgaged properties.

74
PBCOM also pointed out that the Regional Trial Court's
directive to maintain the status quo order beyond 72 hours
constituted an indefinite extension of the temporary restraining
order, a clear contravention of the rules.

Regional Trial Court dismissed the Complaint.

Petitioner reiterates that its Complaint for annulment of real

estate mortgage was an action incapable of pecuniary
estimation because it merely sought to remove the lien on its
properties, not the recovery or reconveyance of the mortgaged
properties.
It states that it never expressly or impliedly sought the
conveyance of the mortgaged properties because it was still the
registered owner of the mortgaged properties when its
Complaint was first presented for filing with the Clerk of Court.

On the other hand, respondent in its Memorandum[51] restates

its stand that petitioner's Complaint involved a real action;
hence, the estimated value of the mortgaged properties should
have been alleged and used as the basis for the computation of
the docket fees.

Respondent claims that the allegations in petitioner's

Complaint reveal the latter's real intention to assert its title and

75
recover the real properties sold at the public auction

ISSUE:

Whether or not the Regional Trial Court obtained jurisdiction

over First Sarmiento Corporation, Inc.'s Complaint for
annulment of real estate mortgage.

HELD:

Rule 45 of the Rules of Court allows for a direct recourse to this

Court by appeal from a judgment, final order, or resolution of
the Regional Trial Court.

Thus, there is no question that a petitioner may file a verified

petition for review directly with this Court if only questions of
law are at issue; however, if both questions of law and of facts
are present, the correct remedy is to file a petition for review
with the Court of Appeals.

x xx

When there is no dispute as to fact, the question of whether the

conclusion drawn therefrom is correct or not, is a question of
law.

76
In the case at bar, the underlying question for this Court's
resolution pertains to jurisdiction, or to be more precise,
whether the Regional Trial Court attained jurisdiction over
petitioner's Complaint with the amount of docket fees paid.

Considering that the issue of jurisdiction is a pure question of

law,petitioner did not err in filing its appeal directly with this
Court pursuant to law and prevailing jurisprudence.

Petitioner contends that its Complaint for annulment of real

estate mortgage has a subject incapable of pecuniary estimation
because it was not intended to recover ownership or possession
of the mortgaged properties sold to respondent during the
auction sale. It insists that it had ownership and possession of
the mortgaged properties when it filed its Complaint; hence, it
never expressly or impliedly sought recovery of their ownership
or possession.

The petition is meritorious.

To determine the nature of an action, whether or not its subject

matter is capable or incapable of pecuniary estimation, the
nature of the principal action or relief sought must be
ascertained. If the principal relief is for the recovery of a sum of
money or real property, then the action is capable of pecuniary

77
estimation. However, if the principal relief sought is not for the
recovery of sum of money or real property, even if a claim over a
sum of money or real property results as a consequence of the
principal relief, the action is incapable of pecuniary estimation.

A careful reading of petitioner's Complaint convinces this Court

that petitioner never prayed for the reconveyance of the
properties foreclosed during the auction sale, or that it ever
asserted its ownership or possession over them. Rather, it
assailed the validity of the loan contract with real estate
mortgage that it entered into with respondent because it
supposedly never received the proceeds of the
P100,000,000.00 loan agreement.

Furthermore, even if it is assumed that the instant case were a

real action and the correct docket fees were not paid by
petitioner, the case should not have been dismissed; instead,
the payment of additional docket fees should have been made a
lien on the judgment award. The records attest that in filing its
complaint, petitioner readily paid the docket fees assessed by
the clerk of court; hence, there was no evidence of bad faith or
intention to defraud the government that would have rightfully
merited the dismissal of the Complaint.

78
TOPIC: ACTIONS; COMMENCEMENT

EVANGELINE ALDAY vs. FGU INSURANCE

CORPORATION

FACTS:

FGU Insurance Corporation filed a complaint with the RTC of

Makati alleging that Alday owed it P114,650.76, representing
unliquidated cash advances, unremitted costs of premiums and
other charges incurred as an insurance agent. Respondent also
prayed for exemplary damages, attorney’s fees, and costs of suit.
Petitioner filed her answer and by way of counterclaim, asserted
her right for the payment of P104,893.45, representing direct
commissions, profit commissions and contingent bonuses and
for accumulated premium reserves amounting to P500,000.00.
In addition, petitioner prayed for attorney’s fees, litigation
expenses, moral damages and exemplary damages for the
allegedly unfounded action filed by respondent.

Respondent filed a Motion to Strike Out Answer With

Compulsory Counterclaim And To Declare Defendant In
Default because petitioners answer was allegedly filed out of
time. However, the trial court denied the motion. A few weeks
later, respondent filed a motion to dismiss petitioners
counterclaim, contending that the trial court never acquired

79
jurisdiction over the same because of the non-payment of
docket fees by petitioner. In response, petitioner asked the trial
court to declare her counterclaim as exempt from payment of
docket fees since it is compulsory and that respondent be
declared in default for having failed to answer such
counterclaim.

The trial court granted the motion to dismiss. The court found
petitioners counterclaim to be merely permissive and held that
petitioners failure to pay docket fees prevented the court from
acquiring jurisdiction over the same. The Court of Appeals
sustained the trial court.

ISSUE:

Whether or not the respondent is estopped from questioning

her non-payment of docket fees because it did not raise this
particular issue when it filed its first motion.

RULING:

Estoppel by laches arises from the negligence or omission to

assert a right within a reasonable time, warranting a
presumption that the party entitled to assert it either has
abandoned or declined to assert it. In the case at bar,
respondent cannot be considered as estopped from assailing the
trial court’s jurisdiction over petitioners counterclaim since this

80
issue was raised by respondent with the trial court itself the
body where the action is pending - even before the presentation
of any evidence by the parties and definitely, way before any
judgment could be rendered by the trial court.

This objection to the CA’s jurisdiction is raised for the first time
before this Court. Although the lack of jurisdiction of a court
may be raised at any stage of the action, a party may be
estopped from raising such questions if he has actively taken
part in the very proceedings which he questions, belatedly
objecting to the court’s jurisdiction in the event that that the
judgment or order subsequently rendered is adverse to him. In
this case, respondent actively took part in the proceedings
before the CA by filing its appellees brief with the same. Its
participation, when taken together with its failure to object to
the jurisdiction during the entire duration of the proceedings
before such court, demonstrates a willingness to abide by the
resolution of the case by such tribunal and accordingly,
respondent is now most decidedly estopped.

81
 KOREA TECHNOLOGIES CO., LTD. v. LERMA

FACTS:

Petitioner Korea Technologies Co., Ltd. (KOGIES) is a Korean

corporation which is engaged in the supply and installation of
Liquefied Petroleum Gas (LPG) Cylinder manufacturing plants,
while private respondent Pacific General Steel Manufacturing
Corp. (PGSMC) is a domestic corporation.

On March 5, 1997, PGSMC and KOGIES executed a Contract

whereby KOGIES would set up an LPG Cylinder Manufacturing
Plant in Carmona, Cavite. The contract was executed in the
Philippines. On April 7, 1997, the parties executed, in Korea, an
Amendment for Contract No. KLP-970301 dated March 5,
1997 amending the terms of payment. The contract and its
amendment stipulated that KOGIES will ship the machinery
and facilities necessary for manufacturing LPG cylinders for
which PGSMC would pay USD 1,224,000. KOGIES would
install and initiate the operation of the plant for which PGSMC
bound itself to pay USD 306,000 upon the plant’s production of
the 11-kg. LPG cylinder samples. Thus, the total contract price
amounted to USD 1,530,000.

On October 14, 1997, PGSMC entered into a Contract of

Lease with Worth Properties, Inc. (Worth) for use of Worth’s

82
5,079-square meter property with a 4,032-square meter
warehouse building to house the LPG manufacturing plant. The
monthly rental was PhP 322,560 commencing on January 1,
1998 with a 10% annual increment clause. Subsequently, the
machineries, equipment, and facilities for the manufacture of
LPG cylinders were shipped, delivered, and installed in the
Carmona plant. PGSMC paid KOGIES USD 1,224,000.

However, gleaned from the Certificate executed by the parties

on January 22, 1998, after the installation of the plant, the
initial operation could not be conducted as PGSMC encountered
financial difficulties affecting the supply of materials, thus
forcing the parties to agree that KOGIES would be deemed to
have completely complied with the terms and conditions of the
March 5, 1997 contract.

For the remaining balance of USD306,000 for the installation

and initial operation of the plant, PGSMC issued two postdated
checks. When KOGIES deposited the checks, these were
dishonored for the reason "PAYMENT STOPPED." PGSMC’S
contentions were KOGIES deliver a different brand of hydraulic
press from that agreed upon and it had not delivered several
equipment parts already paid for. PGSMC replied that the two
checks it issued KOGIES were fully funded but the payments
were stopped for reasons previously made known to KOGIES.

83
On June 1, 1998, PGSMC informed KOGIES that PGSMC was
canceling their Contract on the ground that KOGIES had
altered the quantity and lowered the quality of the machineries
and equipment it delivered to PGSMC, and that PGSMC would
dismantle and transfer the machineries, equipment, and
facilities installed in the Carmona plant. Five days later, PGSMC
a complaint for estafa against Mr.Dae Hyun Kang, President of
KOGIES.

On June 15, 1998, KOGIES wrote PGSMC informing the latter

that PGSMC could not unilaterally rescind their contract nor
dismantle and transfer the machineries and equipment on mere
imagined violations by KOGIES. It also insisted that their
disputes should be settled by arbitration as agreed upon in
Article 15, the arbitration clause of their contract. On July 1,
1998, KOGIES instituted an Application for Arbitration before
the Korean Commercial Arbitration Board (KCAB) in Seoul,
Korea pursuant to Art. 15 of the Contract as amended.

On July 23, 1998, the RTC issued an Order denying the

application for a writ of preliminary injunction, reasoning that
PGSMC had paid KOGIES USD 1,224,000, the value of the
machineries and equipment as shown in the contract such that
KOGIES no longer had proprietary rights over them. And that
Art. 15 of the Contract as amended was invalid as it tended to

84
oust the trial court or any other court jurisdiction over any
dispute that may arise between the parties. KOGIES’ prayer for
an injunctive writ was denied.

PGSMC filed a Motion for Inspection of Things to determine

whether there was indeed alteration of the quantity and
lowering of quality of the machineries and equipment, and
whether these were properly installed. KOGIES opposed the
motion positing that the queries and issues raised in the motion
for inspection fell under the coverage of the arbitration clause in
their contract.

The trial court issued an Order (1) granting PGSMC’s motion for
inspection; (2) denying KOGIES’ motion for reconsideration;
and (3) denying KOGIES’ motion to dismiss. KOGIES filed an
Urgent Motion for Reconsideration. Ten days after, without
waiting for the resolution of its October 2, 1998 urgent motion
for reconsideration, KOGIES filed before the Court of Appeals
(CA) a petition for certiorari.

CA affirmed the RTC Orders and dismissing the petition for

certiorari filed by KOGIES. CA found that the RTC did not
gravely abuse its discretion in issuing the assailed Orders.
Moreover, the CA reasoned that KOGIES’ contention that the
total contract price for USD 1,530,000 was for the whole plant
and had not been fully paid was contrary to the finding of the

85
RTC that PGSMC fully paid the price of USD 1,224,000, which
was for all the machineries and equipment. According to the
CA, this determination by the RTC was a factual finding beyond
the ambit of a petition for certiorari.

On the issue of the validity of the arbitration clause, the CA

agreed with the lower court that an arbitration clause which
provided for a final determination of the legal rights of the
parties to the contract by arbitration was against public policy.

Furthermore, the CA held that the petition for certiorari had

been filed prematurely since KOGIES did not wait for the
resolution of its urgent motion for reconsideration of the RTC
Order which was the plain, speedy, and adequate remedy
available. Hence, this Petition for Review on Certiorari under
Rule 45.

ISSUE:

Whether or not the arbitration clause stated in Article 15 of the

contract is to be deemed null and void?

RULING:

No.

86
Established in this jurisdiction is the rule that the law of the
place where the contract is made governs. Lex loci contractus.
The contract in this case was perfected here in the Philippines.
Therefore, our laws ought to govern. Nonetheless, Art. 2044 of
the Civil Code sanctions the validity of mutually agreed arbitral
clause or the finality and binding effect of an arbitral award.
Art. 2044 provides, "Any stipulation that the arbitrators’ award
or decision shall be final, is valid, without prejudice to Articles
2038, 2039 and 2040.

The arbitration clause was mutually and voluntarily agreed

upon by the parties. It has not been shown to be contrary to any
law, or against morals, good customs, public order, or public
policy. There has been no showing that the parties have not
dealt with each other on equal footing. We find no reason why
the arbitration clause should not be respected and complied
with by both parties

The arbitration clause which stipulates that the arbitration must

be done in Seoul, Korea in accordance with the Commercial
Arbitration Rules of the KCAB, and that the arbitral award is
final and binding, is not contrary to public policy.

Petitioner is correct in its contention that an arbitration clause,

stipulating that the arbitral award is final and binding, does not
oust our courts of jurisdiction as the international arbitral

87
award, the award of which is not absolute and without
exceptions, is still judicially reviewable under certain conditions
provided for by the UNCITRAL Model Law on ICA as applied
and incorporated in RA 9285.

Finally, the RTC has jurisdiction to review foreign arbitral

awards. Sec. 42 in relation to Sec. 45 of RA 9285 designated and
vested the RTC with specific authority and jurisdiction to set
aside, reject, or vacate a foreign arbitral award on grounds
provided under Art. 34(2) of the UNCITRAL Model Law.

88
 Mercado v. Court of Appeals

FACTS:

The pitogo owned by Augusto Mercado which is the son of the

petitioner lent it to Benedicto Lim and lent it to Renato Legaspi
not knowing who really owned the pitogo then Augusto
attempted to get back the pitogo from Renato but he was
stopped by Manuel Jr because of that he aggressively pushed
him then the fight started which leads to Augusto being angered
attack Manuel Jr. and when Manuel Jr. is helpless he cut him
on the right check with a piece of razor.

ISSUE:

Whether or not the petitioner is liable to pay for moral damages

caused by his son and attorney’s fees

HELD:

No. In their cause of action who prays for P5,000.00 covering

the moral damages they allegedly suffered due to their son's
being wounded; and the sum of P3,000.00 as attorney's fees.
"In law mental anguish is restricted, as a rule, to such mental
pain or suffering as arises from an injury or wrong to the person

89
himself, as distinguished from that form of mental suffering
which is the accompaniment of sympathy or sorrow for
another's suffering of which arises from a contemplation of
wrong committed on the person of another. Pursuant to the rule
stated, a husband or wife cannot recover for mental suffering
caused by his or her sympathy for the other's suffering. Nor can
a parent recover for mental distress and anxiety on account of
physical injury sustained by a child or for anxiety for the safety
of his child placed in peril by the negligence of another" (15 Am.
Jur. 597) wherein the plaintiffs are not entitled to attorney’s
fees. For the said moral damages, it is excessive since it was in
the course of an ordinary or common fight between the boys in
a grade school and the wound did not even require
hospitalization nor Mercado was found guilty of any offense
that it was excessive so the court exempt the petitioner from the
payment of moral damages.

90
 PROTON PILIPINAS CORPORATION et al.
v. BANQUE NATIONALE DE PARIS

FACTS:

Petitioner Proton Pilipinas Corporation (Proton) availed credit

facilities of respondent Banque Nationale De Paris (BNP). In
order to assure payment, co-petitioners Automotive
Corporation, Asea One Corporation and
Autocorp Group executed a corporate guarantee.

Proton failed to comply with his obligation to BNP. Thereafter,

BNP demanded the payment of Proton‘s obligation to its co-
petitioners pursuant to corporate guarantee. But the same
remained unheeded. BNP then filed a complaint with the
Regional Trial Court (RTC) against Proton et al. The clerk of
court assessed the docket fee. Proton et al. filed a Motion to
Dismiss on the ground that the court cannot
exercise jurisdiction over the case because BNP did not properly
pay the docket fees. The RTC denied the motion to dismiss. On
appeal, the Court of Appeals denied the motion of Proton et al.
Hence this present petition.

ISSUE:

Whether or not the court does not acquire jurisdiction when

there is an improper payment of docket fees

91
HELD:

The Court rules that it is not simply the filing of the complaint
or appropriate initiatory pleading, but the payment of the
prescribed docket fee that vests a trial court
with jurisdiction over the subject-matter or nature of the action.
Where the filing of the initiatory pleading is not accompanied
by payment of the docket fee, the court may allow payment of
the fee within a reasonable time but in no case beyond the
applicable prescriptive or reglementary period. It also stated
that where the trial court acquires jurisdiction over a claim by
the filing of the appropriate pleading and payment of the
prescribed filing fee but, subsequently, the judgment awards a
claim not specified in the pleading, or if specified the same has
been left for determination by the court, the additional filing fee
therefore shall constitute a lien on the judgment. It shall be the
responsibility of the Clerk of Court or his duly authorized
deputy to enforce said lien and assess and collect the additional
fee.

In the case at bar, BNP merely relied on the assessment made

by the clerk of court which turned out to be incorrect. Under the
circumstances, the clerk of court has the responsibility of
reassessing what respondent must pay within the prescriptive
period, failing which the complaint merits dismissal.

92
RUBY SHELTER BUILDERS REALTY DEVELOPMENT
CORPORATION vs. HON. PABLO FORMARAN III

FACTS:

Petitioner obtained a loan in the total amount

of P95,700,620.00 from respondents Romeo Y. Tan (Tan) and
Roberto L. Obiedo (Obiedo), secured by real estate mortgages
over five parcels of land, all located in Triangulo, Naga City,
covered by Transfer Certificates of Title (TCTs) issued by the
Registry of Deeds for Naga City, in the name of
petitioner. When petitioner was unable to pay the loan when it
became due and demandable, respondents Tan and Obiedo
agreed to an extension of the same.

In a Memorandum of Agreement dated 17 March 2005,

respondents Tan and Obiedo granted petitioner until 31
December 2005 to settle its indebtedness, and condoned the
interests, penalties and surcharges accruing thereon from 1
October 2004 to 31 December 2005 which amounted
to P74,678,647.00. The Memorandum of Agreement required,
in turn, that petitioner execute simultaneously with the said
Memorandum, by way of dacion en pago, Deeds of Absolute
Sale in favor of respondents Tan and Obiedo, covering the same
parcels of land subject of the mortgages.

93
In the event that petitioner is able to redeem any of the afore-
mentioned parcels of land, the Deed of Absolute Sale covering
the said property shall be nullified and have no force and effect;
and respondents Tan and Obiedo shall then return the owners
duplicate of the corresponding TCT to petitioner and also
execute a Deed of Discharge of Mortgage. However, if petitioner
is unable to redeem the parcels of land within the period agreed
upon, respondents Tan and Obiedo could already present the
Deeds of Absolute Sale covering the same to the Office of the
Register of Deeds for Naga City so respondents Tan and Obiedo
could acquire TCTs to the said properties in their names.

The Memorandum of Agreement further provided that should

petitioner contest, judicially or otherwise, any act, transaction,
or event related to or necessarily connected with the said
Memorandum and the Deeds of Absolute Sale involving the five
parcels of land, it would pay respondents Tan and
Obiedo P10,000,000.00 as liquidated damages inclusive of
costs and attorneys fees. Petitioner would likewise pay
respondents Tan and Obiedo the condoned interests,
surcharges and penalties Finally, should a contest arise from
the Memorandum of Agreement, Mr. Ruben Sia (Sia), President
of petitioner corporation, personally assumes, jointly and
severally with petitioner, the latters monetary obligation to
respondent Tan and Obiedo.

94
Pursuant to the Memorandum of Agreement, petitioner,
represented by Mr.Sia, executed separate Deeds of Absolute
Sale, over the five parcels of land, in favor of respondents Tan
and Obiedo. On the blank spaces provided for in the said Deeds,
somebody wrote the 3rd of January 2006 as the date of their
execution. The Deeds were again notarized by respondent Atty.
Reyes also on 3 January 2006.

Without payment having been made by petitioner on 31

December 2005, respondents Tan and Obiedo presented the
Deeds of Absolute Sale dated 3 January 2006 before the
Register of Deeds of Naga City on 8 March 2006, as a result of
which, they were able to secure TCTs over the five parcels of
land in their names.

On 16 March 2006, petitioner filed before the RTC a

Complaint against respondents Tan, Obiedo, and Atty. Reyes,
for declaration of nullity of deeds of sales and damages, with
prayer for the issuance of a writ of preliminary injunction
and/or temporary restraining order (TRO).

CA upheld RTC, saying that the objectives of RSB in filing the

complaint were to cancel the deeds of sale and ultimately, to
recover possession of the same. It is therefore a real action.
Consequently, the additional docket fees that must be paid
cannot be assessed in accordance with Section 7(b). As a real

95
action, Section 7(a) must be applied in the assessment and
payment of the proper docket fee.

ISSUES:

For the purposes of paying the correct amount of docket fees,

whether the annulment of deed of sale involving a real property
is incapable of pecuniary estimation.

RULING:

A real action indisputably involves real property. The docket

fees for a real action would still be determined in accordance
with the value of the real property involved therein; the only
difference is in what constitutes the acceptable value.

In computing the docket fees for cases involving real properties,

the courts, instead of relying on the assessed or estimated value,
would now be using the fair market value of the real
properties (as stated in the Tax Declaration or the Zonal
Valuation of the Bureau of Internal Revenue, whichever is
higher) or, in the absence thereof, the stated value of the same.

It is also important to note that, with the amendments

introduced by A.M. No. 04-2-04-SC, which became effective
on 16 August 2004, the paragraph in Section 7, Rule 141 of the
Rules of Court, pertaining specifically to the basis for

96
computation of docket fees for real actions was deleted. Instead,
Section 7(1) of Rule 141, as amended, provides that in cases
involving real property, the FAIR MARKET value of the
REAL property in litigation STATED IN THE CURRENT TAX
DECLARATION OR CURRENT ZONAL VALUATION OF THE
BUREAU OF INTERNAL REVENUE, WHICH IS HIGHER, OR
IF THERE IS NONE, THE STATED VALUE OF THE
PROPERTY IN LITIGATION shall be the basis for the
computation of the docket fees.

In sum, the Court finds that the true nature of the action
instituted by petitioner against respondents is the recovery of
title to and possession of real property. It is a real action
necessarily involving real property, the docket fees for which
must be computed in accordance with Section 7(1), Rule 141 of
the Rules of Court, as amended. The Court of Appeals,
therefore, did not commit any error in affirming the RTC
Orders requiring petitioner to pay additional docket fees for its
Complaint in Civil Case No. 2006-0030.

The Court does not give much credence to the allegation of

petitioner that if the judgment of the Court of Appeals is
allowed to stand and not rectified, it would result in grave
injustice and irreparable injury to petitioner in view of the
prohibitive amount assessed against it. It is a sweeping

97
assertion which lacks evidentiary support. Undeniably, before
the Court can conclude that the amount of docket fees is indeed
prohibitive for a party, it would have to look into the financial
capacity of said party. It baffles this Court that herein
petitioner, having the capacity to enter into multi-million
transactions, now stalls at paying P720,392.60 additional
docket fees so it could champion before the courts its rights
over the disputed real properties. Moreover, even though the
Court exempts individuals, as indigent or pauper litigants, from
paying docket fees, it has never extended such an exemption to
a corporate entity.

Petition is DENIED

98
 ST. LOUIS UNIVERSITY, INC., petitioner, vs.
EVANGELINE C. COBARRUBIAS

FACTS:

Respondent is an associate professor of the petitioner and an

active member of the union of faculty and employees. The
Collective Bargaining Agreements contained the following
provision that for teaching employees in college who fail the
yearly evaluation, who are retained for three (3) cumulative
years in five (5) years, shall be on forced leave for one (1)
regular semester during which period all benefits due them
shall be suspended. Petitioner placed respondent on forced
leave for failing to achieve the required rating points.
Respondent sought recourse from the CBA’s grievance
machinery, but to no avail. Respondent filed a case with DOLE
but circulation and mediation again failed. The parties
submitted the issues between them for voluntary arbitration
before Voluntary Arbitrator (VA). Respondent argued that the
CA already resolved the forced leave issue in a prior case
between the parties, ruling that the forced leave for teachers
who fail their evaluation for three (3) times within a five-year
period should be coterminous with the CBA in force during the
same five-year period. Petitioner argued that said CA decision is
not yet final. The VA dismissed the complaint. Respondent filed

99
with the CA a petition for review under Rule 43 of the Rules of
Court but failed to pay the filing fees and to attach the material
portion of the records. Motion for reconsideration was filed,
complying with the procedural lapses, and CA reinstated the
petition.

ISSUE:

Whether or not the Court of Appeals erred in reinstating

respondent’s petition despite her failure to appeal (docket) fee
within the reglementary period.

HELD:

Yes. The CA erred in its ruling. Appeal is not a natural right but
a mere statutory privilege, thus, appeal must be made strictly in
accordance with the provision set by law. Rule 43 of the Rules
of Court provides that appeals from the judgment of the VA
shall be taken to the CA, by filing a petition for review within
fifteen (15) days from the receipt of the notice of judgment.
Furthermore, upon the filing of the petition, the petitioner shall
pay to the CA clerk of court the docketing and other lawful fees;
non-compliance with the procedural requirements shall be a
sufficient ground for the petition’s dismissal. Thus, payment in
full of docket fees within the prescribed period is not only
mandatory, but also jurisdictional. It is an essential

100
requirement, without which, the decision appealed from would
become final and executory as if no appeal has been filed. Here,
the docket fees were paid late, and without payment of the full
docket fees, Cobarrubias’ appeal was not perfected within the
reglementary period.

There are, however, recognized exceptions to their strict

observance, such as: (1) most persuasive and weighty reasons;
(2) to relieve a litigant from an injustice not commensurate with
his failure to comply with the prescribed procedure; (3) good
faith of the defaulting party by immediately paying within a
reasonable time from the time of the default; (4) the existence
of special or compelling circumstances; (5) the merits of the
case; (6) a cause not entirely attributable to the fault or
negligence of the party favored by the suspension of the rules;
(7) a lack of any showing that the review sought is merely
frivolous and dilatory; (8) the other party will not be unjustly
prejudiced thereby; (9) fraud, accident, mistake or excusable
negligence without the appellant’s fault; (10) peculiar, legal and
equitable circumstances attendant to each case; (11) in the
name of substantial justice and fair play; (12) importance of the
issues involved; and (13) exercise of sound discretion by the
judge, guided by all the attendant circumstances. Thus, there
should be an effort, on the part of the party invoking liberality,

101
to advance a reasonable or meritorious explanation for his/her
failure to comply with the rules.

102
 GIPA Et al., vs SOUTHERN LUZON INSTITUTE

FACTS:

Respondent Southern Luzon Institute (SLI) filed a

Complaint for Recovery of Ownership and Possession with
Damages against petitioners Gipa et al. SLI sought that
petitioners be ordered to immediately vacate the premises but
petitioners did not heed SLI’s demand as they believed that they
have the right to stay on the said property.

RTC rendered a decision in favor of SLI due to the weight to

SLI’s documentary evidence showing the grant of its
Miscellaneous Sales Application which became the basis for the
issuance of title under its name, and the testimony of the
Supervising Draftsman of the National Housing Authority.

Petitioners appealed but were dismissed by CA for failure to pay

the appellate court docket fees and other lawful fees. Petitioners
filed an MR which was granted by CA but further required to
remit within ten days from notice the amount of P30.00 for
legal research fund. Despite the lapse of nine months from
receipt of the said resolution, petitioners failed to comply with
the CA’s directive. Hence, the said court dismissed the appeal

103
ISSUE:

Whether or not CA erred in dismissing the appeal on the

ground that the petitioner failed to remit the amount of P30.00

HELD:

No. the Petition for Review on Certiorari is DENIED. The

assailed Resolutions of the CA are AFFIRMED.

The Court explained that “payment of the full amount of

appellate court docket and lawful fees is mandatory and
jurisdictional. An ordinary appeal from a decision or final order
of the RTC to the CA must be made within 15 days from notice.
And within this period, the full amount of the appellate court
docket and other lawful fees must be paid to the clerk of the
court which rendered the judgment or final order appealed
from. The payment of docket fees within the prescribed period
is mandatory for the perfection of an appeal. Without such
payment, the appeal is not perfected.

The appellate court does not acquire jurisdiction over the

subject matter of the action and the Decision sought to be
appealed from becomes final and executory.”

104
Here, while petitioners paid a substantial part of the docket
fees, they still failed to pay the full amount thereof since their
payment was short of P30.00.Based on the premise that the
questioned Decision of the RTC has already become final and
executory due to non-perfection of the appeal.

105
 RODGING REYES v. PEOPLE

FACTS:

Petitioner, in a complaint filed by private respondent Salud M.

Gegato, was charged with Grave Threats before the Municipal
Circuit Trial Court (MCTC) of Bayugan and Sibagat, Bayugan,
Agusandel Sur.

The MCTC found petitioner guilty beyond reasonable doubt of

the crime charged.

On appeal, the Regional Trial Court, in its Decision dated April

2, 2007, denied petitioner's appeal but found petitioner guilty
beyond reasonable doubt of the crime of Other Light Threats
under Article 285, par. 2 of the Revised Penal Code, instead of
Grave Threats as originally adjudged by the MCTC.

Petitioner filed a Motion for Reconsideration, and in its

Amended Decision7 dated May 16, 2007, the RTC denied the
motion.

Thus, petitioner filed with the Court of Appeals a Motion for

Extension of Time to File a Petition for Review. However,
instead of filing a petition for review within the 15-day period
allowed by the CA, petitioner filed a second Motion for
Extension of Time asking for another 15 days within which to

106
file his petition for review. After which, petitioner filed his
petition. Thereafter, the CA, in its Resolution dated August 2,
2007, dismissed the petition.

Petitioner filed three (3) successive Motions for

Reconsideration before the CA on August 14, 2007, November
13, 2008, and December 28, 2009.

In its Resolution dated November 23, 2009, the CA granted the

petitioner's second Motion for Reconsideration setting aside its
previous Resolution dated October 17, 2008 and dismissing the
first Motion for Reconsideration dated August 13, 2007. The
CA, in the same Resolution, discussed the other grounds for the
dismissal of the petition as contained in its first Resolution
dated August 2, 2007. Thus, the CA not only denied the first
Motion for Reconsideration dated August 13, 2007 but also
dismissed the Petition for Review filed earlier.

However, as keenly pointed out by the OSG in its

Comment dated January 11, 2011, instead of elevating the
present case before this Court within the period provided under
Rule 45 of the Rules of Court, petitioner opted to file a third
motion for reconsideration, which was filed without leave of
court and notwithstanding the express declaration of the CA
that petitioner's first Motion for Reconsideration dated August

107
13, 2007 was denied and the case already dismissed with
finality.

At the outset, the Court emphasizes that second and subsequent

motions for reconsideration are, as a general rule, prohibited.
Section 2, Rule 52 of the Rules of Court provides that "no
second motion for reconsideration of a judgment or final
resolution by the same party shall be entertained." The rule
rests on the basic tenet of immutability of judgments. "At some
point, a decision becomes final and executory and,
consequently, all litigations must come to an end."

ISSUE:

Whether or not the Court of Appeals was correct in dismissing

petitioner’s second and third Motion for Reconsideration

HELD:

Yes. The CA did not commit any error when it properly noted
without action the petitioner's third motion for reconsideration
for being a prohibited pleading, as well as merely a reiteration
of his arguments in his first motion for reconsideration.
Therefore, the said motion for reconsideration is a mere scrap
of paper that does not deserve any consideration and the filing
of the same did not toll the running of the prescriptive period
for filing a petition based on Rule 45.

108
It is significant to emphasize that the CA dismissed the petition
due to the following procedural infirmities: (1) it was filed
beyond the reglementary period; (2) petitioner failed to pay the
complete docket fee; (3) the petition failed to indicate a
complete statement of material dates since petitioner did not
mention in the body of the petition when he received the RTC's
Order dated May 16, 2007 denying his Motion for
Reconsideration; and (4) petitioner failed to attach pertinent
documents material in the petition as no copy of the May 16,
2007 Amended Decision was attached to the petition.

109
 ELIZABETH SY-VARGAS v. THE ESTATE OF
ROLANDO OGSOS, SR. AND ROLANDO OGSOS, JR.

FACTS:

On February 10, 1994, Ogsos, Sr. and the Heirs of

FerminaPepico (Fermina), entered into a Contract of
Lease (lease contract) covering five (5) parcels of agricultural
land owned by the latter

Petitioner and Kathryn, who are among the heirs of Fermina,

claimed that the lease rentals from crop year 1994-1995 to crop
year 1998-1999 were not paid. Thus, on April 27, 2000,they
filed a Complaint for Specific Performance and Damages
against respondents, before the RTC,to recover the unpaid lease
rentals. Pertinently, they did not include in their claim the lease
rental for crop year 1999-2000 because respondents had
already abandoned the leased premises since the said crop year.

ISSUE:

Whether or not the CA correctly ruled that: (a) petitioner's

motion for reconsideration was filed out of time; (b)
respondents' counterclaim for damages is compulsory and not
permissive in nature, and thus, no payment of docket fees is
required

110
HELD:

Records bear out that in the assailed October 1, 2015

Resolution, the CA denied petitioner's motion for
reconsideration for being purportedly filed out of time. The CA
explained that since the registry return receipt showed that
petitioner and Kathryn's counsel received the assailed March
14, 2014 Decision, it only had until March 29, 2014 to file a
motion for reconsideration. However, they only filed such
motion on March 31, 2014, thus, rendering the assailed
CADecision final and executory.

Notably, however, the CA failed to take into consideration that

March 29, 2014 fell on a Saturday. In these situations, Section 1,
Rule 22 of the Rules of Court provides that:

Section. 1. How to compute time. - In computing any period of

time prescribed or allowed by these Rules, or by order of the
court, or by any applicable statute, the day of the act or event
from which the designated period of time begins to run is to be
excluded and the date of performance included. If the last day
of the period, as thus computed, falls on a Saturday, a Sunday,
or a legal holiday in the place where the court sits, the time shall
not run until the next working day.

111
Since March 29, 2014 fell on a Saturday, petitioner and Kathryn
were completely justified in filing their motion for
reconsideration on the next working day: Monday, March 31,
2014. Accordingly, the CA should not have considered it filed
out of time, and instead, resolved such motion on the merits. In
such an instance, court procedure dictates that the instant case
be remanded to the CA for resolution on the merits. However,
when there is already enough basis on which a proper
evaluation of the merits may be had - as in this case - the Court
may dispense with the time-consuming procedure of remand in
order to prevent further delays in the disposition of the case and
to better serve the ends of justice. In view of the foregoing as
well as the fact that petitioner prayed for the resolution of the
substantive issues on the merits - the Court finds it appropriate
to resolve the substantive issues of this case.

II. Essentially, the nature of a counterclaim is determinative of

whether or not the counterclaimant is required to pay docket
fees. The rule in permissive counterclaims is that for the trial
court to acquire jurisdiction, the counterclaimant is bound to
pay the prescribed docket fees. On the other hand, the
prevailing rule with respect to compulsory counterclaims is that
no filing fees are required for the trial court to acquire
jurisdiction over the subject matter.

112
In Spouses Mendiola v. CA, the Court had devised tests m
determining whether or not a counterclaim is compulsory or
permissive:

The four tests to determine whether a counterclaim is

compulsory or not are the following, to wit: (a) Are the issues
of fact or law raised by the claim and the counterclaim
largely the same? (b) Would res judicata bar a
subsequent suit on defendant's claims, absent the
compulsory counterclaim rule? (c) Will substantially
the same evidence support or refute plaintiff's claim as
well as the defendant's counterclaim? and (d) Is there
any logical relation between the claim and the
counterclaim, such that the conduct of separate trials
of the respective claims of the parties would entail a
substantial duplication of effort and time by the
parties and the court? Of the four, the one compelling test of
compulsoriness is the logical relation between the claim alleged
in the complaint and that in the counterclaim. Such relationship
exists when conducting separate trials of the respective claims
of the parties would entail substantial duplication of time and
effort by the parties and the court; when the multiple claims
involve the same factual and legal issues; or when the claims are
offshoots of the same basic controversy between the parties. If

113
these tests result in affirmative answers, the
counterclaim is compulsory.

Based on the abovementioned standards, the Court finds that

the counterclaim of respondents is permissive in nature. This is
because: (a) the issue in the main case, i.e., whether or not
respondents are liable to pay lease rentals, is entirely different
from the issue in the counterclaim, i.e., whether or not
petitioner and Kathryn are liable for damages for taking over
the possession of the leased premises and harvesting and
appropriating respondents' crops planted therein; (b) since
petitioner and respondents' respective causes of action arose
from completely different occurrences, the latter would not be
barred by res judicata had they opted to litigate its
counterclaim in a separate proceeding; (c) the evidence
required to prove petitioner's claim that respondents failed to
pay lease rentals is likewise different from the evidence
required to prove respondents' counterclaim that petitioner and
Kathryn are liable for damages for performing acts in bad faith;
and (d) the recovery of petitioner's claim is not contingent or
dependent upon proof of respondents' counterclaim, such that
conducting separate trials will not result in the substantial
duplication of the time and effort of the court and the parties.

In view of the finding that the counterclaim is permissive, and

114
not compulsory as held by the courts a quo, respondents are
required to pay docket fees. However, it must be clarified that
respondents' failure to pay the required docket fees, per se,
should not necessarily lead to the dismissal of their
counterclaim. It has long been settled that while the court
acquires jurisdiction over any case only upon the payment of
the prescribed docket fees, its non-payment at the time of filing
of the initiatory pleading does not automatically cause its
dismissal provided that: (a) the fees are paid within a
reasonable period; and (b) there was no intention on the part of
the claimant to defraud the government.55chanrobleslaw

Here, respondents cannot be faulted for non-payment of docket

fees in connection with their counterclaim, primarily because as
early as November 16, 2006, the RTC had already found such
counterclaim to be compulsory in nature.

115
 WOODROW B. CAMASO v. TSM SHIPPING (PHILS),
INC., UTKILEN, AND/OR JONES TULOD

FACTS:

Camaso alleged that on July 15, 2014, he signed a contract of

employment with respondents TSM to work as a Second Mate
on-board the vessel "M/V Golfstraum," for a period of six (6)
months and with basic monthly salary of US$1,178.00.[4] On
October 18, 2014, he joined his vessel of assignment. Prior to
said contract, Camaso claimed to have been working for
respondents for almost five (5) years and boarded eight (8) of
their vessels.

Sometime in November 2013, Camaso complained of a

noticeable obstruction in his throat which he described as akin
to a "fishbone coupled [with] coughing." By February 2014, his
situation worsened as he developed lymph nodules on his
jawline, prompting him to request for a medical check-up while
in Amsterdam. As Camaso was initially diagnosed with tonsillar
cancer, he was recommended for medical repatriation to
undergo extensive treatment. Upon repatriation to the
Philippines on September 8, 2014, he reported at respondents'
office and was referred to a certain Dr.Nolasco of St. Luke's
Medical Center for testing. After a series of tests, it was

116
confirmed that Camaso was indeed suffering from
tonsillarcancer.Consequently, he underwent eight (8)
chemotherapy sessions and radiation therapy for 35 cycles
which were all paid for by respondents. He likewise received
sickwage allowances from the latter. Thereafter, respondents
refused to shoulder Camaso's medical expenses, thus, forcing
the latter to pay for his treatment. Believing that his sickness
was work-related and that respondents remained silent on their
obligation, Camaso filed the instant complaint for disability
benefits, sickwage allowance, reimbursement of medical and
hospital expenses, and other consequential damages before the
NLRC.

ISSUE:

Whether or not the CA correctly dismissed Camaso's petition

for certiorari before it for nonpayment of docket fees.

HELD:

The petition is meritorious.

Section 3, Rule 46 of the Rules of Court provides that in original
actions filed before the CA, such as a petition for certiorari, the
payment of the corresponding docket fees is required, and that
the failure to comply with the same shall be sufficient ground
for the dismissal of such action, viz.:

117
Section 3. Contents and filing of petition, effect of non-
compliance with requirements. - The petition shall contain the
full names and actual addresses of all the petitioners and
respondents, a concise statement of the matters involved, the
factual background of the case, and the grounds relied upon for
the relief prayed for.

In actions filed under Rule 65, the petition shall further indicate
the material dates showing when notice of the judgment or final
order or resolution subject thereof was received, when a motion
for new trial or reconsideration, if any, was filed and when
notice of the denial thereof was received.

x xxx

The petitioner shall pay the corresponding docket and other

lawful fees to the clerk of court and deposit the amount of
P500.00 for costs at the time of the filing of the petition.

The failure of the petitioner to comply with any of the foregoing

requirements shall be sufficient ground for the dismissal of the
petition.

In Bibiana Farms & Mills, Inc. v. NLRC, the Court nevertheless

explained that while non-payment of docket fees may indeed

118
render an original action dismissible, the rule on payment of
docket fees may be relaxed whenever the attending
circumstances of the case so warrant:

Under the foregoing rule, non-compliance with any of the

requirements shall be a sufficient ground for the dismissal of
the petition. Corollarily, the rule is that a court cannot acquire
jurisdiction over the subject matter of a case, unless the docket
fees are paid. And where the filing of the initiatory pleading is
not accompanied by payment of the docket fees, the court may
allow payment of the fee within a reasonable time but in no case
beyond the applicable prescriptive or reglementary period.

In several cases, however, the Court entertained certain

exceptions due to the peculiar circumstances attendant in these
cases, which warrant a relaxation of the rules on payment of
docket fees. It was held in La Salette College v. Pilotin [463 Phil.
785 (2003)], that the strict application of the rule may be
qualified by the following: first, failure to pay those fees within
the reglementary period allows only discretionary, not
automatic, dismissal; second, such power should be used by the
court in conjunction with its exercise of sound discretion in
accordance with the tenets of justice and fair play, as well as
with a great deal of circumspection in consideration of all
attendant circumstances.

119
Verily, the failure to pay the required docket fees per se should
not necessarily lead to the dismissal of a case. It has long been
settled that while the court acquires jurisdiction over any case
only upon the payment of the prescribed docket fees, its non-
payment at the time of filing of the initiatory pleading does not
automatically cause its dismissal provided that: (a) the fees are
paid within a reasonable period; and (b) there was no intention
on the part of the claimant to defraud the government.

Here, it appears that when Camaso filed his certiorari petition

through his counsel and via mail, a Metrobank check dated July
6, 2015 under the account name of Pedro L. Linsangan was
attached thereto to serve as payment of docket fees. Although
this was not an authorized mode of payment under Section 6,
Rule VIII of the 2009 IRCA, the attachment of such personal
check shows that Camaso exerted earnest efforts to pay the
required docket fees. Clearly, this exhibits good faith and
evinces his intention not to defraud the government. In this
relation, the assertion of the Officer-in-Charge of the CA
Receiving Section that there was no check attached to
Camaso's certiorari petition is clearly belied by the fact that
when it was examined at the Office of the Division Clerk of
Court, the check was found to be still stapled thereto

120
 DYNAMIC BUILDERS VS. PRESBERTO

FACTS:

On December 28, 2005, the Municipality of Valladolid, Negros

Occidental, through its Bids and Awards Committee, published
an invitation to bid for the construction of a 1,050-lineal-meter
rubble concrete seawall along the municipality's shoreline. This
infrastructure venture is known as the "Construction Shoreline
Protection. only the remaining four (4) bidders "were
considered during the opening of the bids. Project."On April 21,
2006, the Bids and Awards Committee issued Resolution No. 7
affirming the award of contract to HLJ Construction and
Enterprise for the construction of the 1,050-lineal-meter
Construction Shoreline Protection Project amounting to
P31,922,420.37. On June 6, 2006, Dynamic Builders lodged a
formal protest with the head of the procuring entity, Mayor
Ricardo P. Presbitero, Jr. (Mayor Presbitero), to set aside the
Bids and Awards Committee decision declaring Dynamic
Builders' bid as not substantially responsive.

Petitioner argues that in Section 58, the "law conferring on the

Supreme Court the sole jurisdiction to issue temporary
restraining orders and injunctions relating to Infrastructure
Project of Government" refers to Republic Act No. 897533 in
relation to Presidential Decree No. 1818. Petitioner then

121
submits that "while R.A. No. 8975 appears to apply only to
national government infrastructure projects . . . the resulting
amendment to P.D. No. 1818 (by virtue of Sections 3 and 9 of
R.A. No. 8975) removing any restriction upon the Honorable
Supreme Court to issue injunctive relief, would similarly apply
to the infrastructure projects . . . subject of, or covered by, P.D.
No. 1818, which would include those infrastructure projects
undertaken for or by local governments." Public respondents
agree that Republic Act No. 8975 only governs national
government projects but disagree insofar as petitioner's
submission that since Republic Act No. 8975 amended
Presidential Decree No. 1818 by removing the restriction on this
court to issue injunctive relief, it now covers local government
projects.

ISSUE:

Whether or not the Dynamic Builders violated the rules against

the splitting of a cause of action.

HELD:

There is nothing in Republic Act No. 8975 or in Presidential

Decree No. 1818 that allows the simultaneous availment of legal
remedies before the Regional Trial Court and this court.
Republic Act No. 8975, even when read with Presidential

122
Decree No. 1818, does not sanction the splitting of a cause of
action in order for a party to avail itself of the ancillary remedy
of a temporary restraining order form this court.

Petitioner’s reading of Republic Act No. 8975’s repealing clause,

such that only this court can issue injunctive relief, fails to
persuade. This court has set limit on the prohibition found on
Presidential Decree No. 1818 by explaining that lower courts ae
not prohibited from enjoining administrative acts when
questions of law exist and the acts do not involve administrative
discretion in technical cases: Although Presidential Decree No.
1818 prohibits any court from issuing injunctions on cases
involving infrastructure projects, the prohibition extends only
to the issuance of injunctions or restraining orders against
administrative acts in controversies involving facts or the
exercise of discretion in technical cases. On issues clearly
outside this dimension and involving questions of law, this
Court declared that courts could not be prevented from
exercising their power to restrain or prohibit administrative
acts. In such cases, let the hammer fall and let it fall hard.

123
 TOPIC: PARTIES TO CIVIL ACTION

Imelda Reluciovs Angelina Mejia Lopez

FACTS:

Private respondent Angelina Mejia Lopez (plaintiff below) filed

a petition for “APPOINTMENT AS SOLE ADMINISTRATRIX
OF CONJUGAL PARTNERSHIP OF PROPERTIES,
FORFEITURE, ETC.,” against defendant Alberto Lopez and
petitioner Imelda Relucio.

In the petition, private-respondent alleged that sometime in

1968, defendant Lopez, who is legally married to the private
respondent, abandoned the latter and their four legitimate
children; that he arrogated unto himself full and exclusive
control and administration of the conjugal properties, spending
and using the same for his sole gain and benefit to the total
exclusion of the private respondent and their four children; that
defendant Lopez, after abandoning his family, maintained an
illicit relationship and cohabited with herein petitioner since
1976.

A Motion to Dismiss the Petition was filed by Relucio on the

ground that Lopez has no cause of action against her.

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Respondent Judge denying petitioner Relucio’s Motion to
Dismiss on the ground that she is impleaded as a necessary or
indispensable party because some of the subject properties are
registered in her name and defendant Lopez, or solely in her
name.

Motion for Reconsideration was denied. The Court of Appeals

likewise denied. Hence this petition.

ISSUE:

Whether petitioner’s inclusion as party defendant is essential

in the proceedings for a complete adjudication of the
controversy.

HELD:

NO. Petitioner is not a real party in interest, nor necessary or

indispensable one. A real party in interest is one who stands to
be benefited or injured by the judgment of the suit. To
determine the real party in interest, the rule requires to review
the elements of a cause of action. The first cause of action is for
judicial appointment of respondent as administratrix of the
conjugal partnership wherein petitioner is a complete stranger
to this cause of action. On the second cause of action is for an
accounting of conjugal partnership “by respondent husband.”,
the petitioner again has nothing to do with this action since it

125
arises from or is an incident of marriage between husband and
wife, and again no cause of action can exist against petitioner on
this ground. At the third cause of action is for the forfeiture of
the husband defendant share in property co-owned by him and
petitioner, but it does not involve the issue of validity of co-
ownership, such cause of action pertains to the husband
defendant and not to the petitioner.

Hence, if petitioner is not a real party in interest, she cannot be

an indispensable party. An indispensable party is one without
whom there can be no final determination of an action. Nor can
petitioner be a necessary party in Special Proceedings M-3630.
A necessary party as one who is not indispensable but who
ought to be joined as party if complete relief is to be accorded
those already parties, or for a complete determination or
settlement of the claim subject of the action.

126
 DE CASTRO VS. COURT OF APPEAL

FACTS:

Appellant De Castros were co-owners of four lots located at

EDSA corner New York and Denver Streets in Cubao, Quezon
City. Appellee Francisco Artigo was authorized by appellants to
act as real estate broker in the sale of these properties for the
amount of P23,000,000.00, five percent (5%) of which will be
given to the agent as commission. Appellee received from
appellants P48,893.76 as commission.

Appellee apparently felt short changed because according to

him, his total commission should be P352,500.00 which is five
percent (5%) of the agreed price of P7,050,000.00 paid by
Times Transit Corporation to appellants for the two (2) lots,
and that it was he who introduced the buyer to appellants and
unceasingly facilitated the negotiation which ultimately led to
the consummation of the sale. Hence, he sued below to collect
the balance of P303,606.24 after having received P48,893.76 in
advance.

The Court of Appeals Ruled in favor of AppelleeArtigo. Hence,

this petition.

127
ISSUE:

Whether or not the case should have been dismissed by the

court for failure to implead parties in interest.

HELD:

No. The De Castros argue that Artigos complaint should have

been dismissed for failure to implead all the co-owners of the
two lots. The De Castros claim that Artigo always knew that the
two lots were co-owned by Constante and Corazon with their
other siblings Jose and Carmela whom Constante merely
represented. The De Castros contend that failure to implead
such indispensable parties is fatal to the complaint since Artigo,
as agent of all the four co-owners, would be paid with funds co-
owned by the four co-owners.

The De Castros contentions are devoid of legal basis.

An indispensable party is one whose interest will be affected by

the courts action in the litigation, and without whom no final
determination of the case can be had. The joinder of
indispensable parties is mandatory and courts cannot proceed
without their presence. Whenever it appears to the court in the
course of a proceeding that an indispensable party has not been
joined, it is the duty of the court to stop the trial and order the
inclusion of such party.

128
However, the rule on mandatory joinder of indispensable
parties is not applicable to the instant case.

The De Castros admit that the other co-owners are solidarily

liable under the contract of agency, citing Article 1915 of the
Civil Code, which reads:

Art. 1915. If two or more persons have appointed an agent for a

common transaction or undertaking, they shall be solidarily
liable to the agent for all the consequences of the agency.

The solidary liability of the four co-owners, however, militates

against the De Castros theory that the other co-owners should
be impleaded as indispensable parties.

Thus, the Court has ruled in Operators Incorporated vs.

American Biscuit Co., Inc. that solidarity does not make a
solidary obligor an indispensable party in a suit filed by the
creditor. Article 1216 of the Civil Code says that the creditor
`may proceed against anyone of the solidary debtors or some or
all of them simultaneously.

129
Victor Orquiola and HonorataOrquiola vs. CA

FACTS:

PuraKalawLedesma was the registered owner of Lot 689,

covered by TCT Nos. 111267 and 111266, in TandangSora, Quezn
City. This parcel of land was adjacent t certain portions f Lot
707 of the Piedad Estates, namely, Lot 707-A and 707-B,
registered in the name of Herminigilda Pedro under TCT Nos.
16951 and 16952, respectively. On October 29, 1964,
Herminigilda sold Lot 707-A and 707-B to Mariano Lising who
then registered both lots and Lot 707-C in the name of M. B.
Lising Realty and subdivided them into smaller lots.

Certain portin of the subdivided lots were sold to third persons

including herein petitioners, spouses Victor and
HonorataOrquiola, who purchased a portion of Lot 707-A, Lot
5, Block 1 of the subdivision plan (LRC), Psd-42965. The parcel
is now #33 Doa Regina St., Regina Vilage, TandangSora,
Quewzn City. The other portions were registered in the name
of the heirs of Pedro, heirs of Lising, and other third persons.

Sometime in 1969, PuraKalawLedesma filed a complaint

docketed as Civil Case No. Q-12918, with the RTC of Quezon
City against Herminigilda Pedro and Mariano Lising for
allegedly encroaching upon Lot 689. During the pendency of

130
the action, TandangSora Development Corporation replaced
PuraKalawLedesma in favor of said Corporation. Trial
continued for three decades.

On august 21, 1991, the trial court finally adjudged defendants

Pedro and Lising jointly and severally liable for encroaching
plaintiffs land.

To prohibit Judge VicencioBaclig of the RTC of Quezon City

from issuing a writ of demolition and the Quezon City sheriff
from implementing the alias writ of execution, petitioners filed
with the CA a petition for Prohibition with prayer for a
restraining order and preliminary injunction n April 17, 1998.
Petitioners alleged that they bought the subject parcel of land in
good faith and for a value, hence, they were parties in interest.
Since they were not impleaded in Civil Case No. Q-12918, the
writ of demolition issued in connection therewith cannot be
enforced against them because to do so would amount to
deprivation f property without due process of law.

The CA dismissed the petition on January 28, 1999. It held that

as buyers and successors-in-interest of Mariano Lising,
petitioners were considered privies who derived their rights
from Lising by virtue of the sale and could be reached by the
execution order in Civil Case No. Q-12918.

131
Hence, this petition.

ISSUE:

WON, the CA erred in holding that the decision in Civil Case

No. Q-12918 can also be enforced against the petitioners even if
they were not impleaded as parties thereto.

HELD:

Yes. As builders in good faith and innocent purchasers for

value, petitioners have rights over the subject property and
hence they are proper parties in interest in any case thereon.
Consequently, private respondents should have impleaded
them in Civil Case No. Q-12918. Since they failed to do so,
petitioners cannot be reached by the decision in said case. N
man shall be affected by any proceeding to which he is a
stranger, and strangers to a case are not bound by any judgment
rendered by the court. In the same manner a writ f execution
can be issued only against a party and not against a party and
not against who did not have his day in court. Only real parties
in interest in an action are bound by the judgment therein and
by writs of execution and demolition issued pursuant thereto.
In Our view, the spouses Victor and HonorataOrquiola have
valid and meritorious cause to resist the demolition of their

132
house on their own title it, which is tantamount to a
deprivation of property without due process of law.

133
 CHINA BANKING CORP. VS. OLIVER

FACTS:

Pangan Lim, Jr. and a Mercedes M. Oliver opened a joint

account in China Banking Corporation. Lim and Oliver applied
for a loan, offering as collateral a lot covered by TCT No. S-
50195 in the name of Oliver. The bank approved the
application. Lim and Oliver executed in favor of Petitioner a
promissory note, as well as a Real Estate Mortgage on the
property.

Respondent claiming that she is Mercedes M. Oliver filed an

action for annulment of mortgage and cancellation of title with
damages against Petitioner. Respondent claimed that she was
the registered and lawful owner of the land subject of the real
estate mortgage; that the owners duplicate copy of the title had
always been in her possession; and that she did not apply for a
loan or surrender her title to Petitioner.

Petitioner moved to dismiss the case for lack of cause of action

and non-joinder of an indispensable party, the mortgagor.

The RTC issued an order denying the motion to dismiss, stating

that the plaintiff having sufficiently averred that defendants
negligently failed to ascertain the genuineness or not of the title

134
of the land mortgaged to it upon the claim of ownership by the
mortgagors.

Petitioner filed with the CA a petition for the issuance of a writ

of preliminary injunction and/or restraining order to enjoin
enforcement of the RTC order and further action on the case.

The CA promulgated the assailed decision, finding no grave

abuse of discretion committed by the RTC in ruling that the
Rules of Court provided the manner of impleading parties to a
case and in suggesting that petitioner file an appropriate action
to bring the mortgagor within the courts jurisdiction. The
appellate court said that Rule 6, Section 11 of the Rules of Court
allows petitioner to file a third-party complaint against the
mortgagor.

ISSUE:

Whether or not the Mortgagor is an indispensable party under

Sec 7, Rule 3 of th Rules of Civil Procedure and must be joined
as a party-defendant.

Whether or not the trial court should dismiss the case when an
indispensable party is not in court.

135
HELD:

The court ruled that Petitioners contention is not tenable. The

court states Sec 7, Rule 3 of the Rules of Procedure and the
definition of an indispensable party;

Sec. 7, Rule 3, 1997 Revised Rules of Court: Compulsory joinder

of indispensable parties. Parties in interest without whom no
final determination can be had of an action shall be joined
either as plaintiffs or defendants.

An indispensable party is a party in interest, without whom no

final determination can be had of an action.

It is true that mortgagor is a party in interest. However,

mortgagor absence from the case does not hamper the trial
court in resolving the dispute between respondent and
petitioner. The Respondent's allegations in the complaintwas
for annulment of mortgage due to petitioners negligence in not
determining the actual ownership of the property, resulting in
the mortgages annotation on TCT No. S-50195 in the Registry
of Deeds custody. To support said allegations, respondent had
to prove (1) that she is the real Mercedes M. Oliver referred to
in the TCT, and (2) that she is not the same person using that
name who entered into a deed of mortgage with the petitioner.
This, respondent can do in her complaint without necessarily

136
impleading the mortgagor. Hence, the mortgagor is not an
indispensable party in the case filed by Respondent.

As to the second issue, since mortgagor is not an indispensable

party, Section 7, Rule 3 of the 1997 Rules of Civil Procedure,
which requires compulsory joinder of indispensable parties in a
case, does not apply. Instead, it is Section 11, Rule 3, that
applies. Non-joinder of parties is not a ground for dismissal of
an action. Parties may be added by order of the court, either on
its own initiative or on motion of the parties.

137
 LOTTEPHILS. CO., INC. V. DE LA CRUZ

FACTS:

Private respondent (petitioner herein) LottePhils., Inc. (Lotte)

is a domestic corporation. Petitioners (respondents herein) are
among those who were hired and assigned to the confectionery
facility operated by private respondent.

On December 14, 1995—7J Maintenance and Janitorial Services

(“7J”) entered into a contract with private respondent to
provide manpower for needed maintenance, utility, janitorial
and other services to the latter. In compliance with the terms
and conditions of the service contract, and to accommodate the
needs of private respondent for personnel/workers to do and
perform “piece works,” petitioners, among others, were hired
and assigned to private respondent as repackers or sealers.

However, either in October, 1999 or on February 9, 2000,

private respondent dispensed with their services allegedly due
to the expiration/termination of the service contract by
respondent with 7J. Unfortunately, petitioners were never
called back to work again.

138
ISSUE:

Whether 7J Maintenance and Janitorial Service was an

indispensable party.

HELD:

Yes. 7J is an indispensable party. It is a party in interest because

it will be affected by the outcome of the case. The Labor Arbiter
and the NLRC found 7J to be solely liable as the employer of
respondents. The Court of Appeals however rendered Lotte
jointly and severally liable with 7J who was not impleaded by
holding that the former is the real employer of respondents.
Plainly, its decision directly affected 7J.

An indispensable party is a party in interest without whom no

final determination can be had of an action, and who shall be
joined either as plaintiffs or defendants. The joinder of
indispensable parties is mandatory. The presence of
indispensable parties is necessary to vest the court with
jurisdiction, which is “the authority to hear and determine a
cause, the right to act in a case.” Thus, without the presence of
indispensable parties to a suit or proceeding, judgment of a
court cannot attain real finality. The absence of an
indispensable party renders all subsequent actions of the court

139
null and void for want of authority to act, not only as to the
absent parties but even as to those present.

140
 CARABEO VS. DINCO

FACTS:

On July 10, 1990, Domingo Carabeo (petitioner) entered into a

contract with Spouses Norberto and Susan Dingco
(respondents) whereby petitioner agreed to sell his rights over a
648 square meter parcel of unregistered land situated in Purok
III, Tugatog, Orani, Bataan to respondents for P38,000. A
payment of P10,000 was deposited upon signing of the
contract, the remaining balance to be paid on September 1990.
However due to a land dispute, the respondents gave petitioner
small sums of money from time to time which totaled P9,100
due to respondents inability to pay in full amount. Despite the
alleged problem over the land, they insisted on petitioners
acceptance of the remaining balance of P18,900 but petitioner
remained firm in his refusal, proffering as reason therefor that
he would register the land first. Sometime in 1994, respondents
learned that the alleged problem over the land had been settled
and that petitioner had caused its registration in his name on
December 21, 1993 under Transfer Certificate of Title No.
161806. They thereupon offered to pay the balance but
petitioner declined, drawing them to file a complaint before the
Katarungan Pambarangay. No settlement was reached,
however, hence, respondent filed a complaint for specific

141
performance before the Regional Trial Court (RTC) of Balanga,
Bataan. Petitioner countered in his Answer to the Complaint
that the sale was void for lack of object certain, the “kasunduan”
not having specified the metes and bounds of the land. In any
event, petitioner alleged that if the validity of the kasunduan is
upheld, respondents failure to comply with their reciprocal
obligation to pay the balance of the purchase price would render
the action premature. For, contrary to respondents claim,
petitioner maintained that they failed to pay the balance of
P28,000 on September 1990 to thus constrain him to accept
installment payments totaling P9,100. The petitioner passed
away after the case was submitted for decision.

ISSUE:

1. Whether the contract was valid.

2. Whether or not the petitioner’s death causes dismissal of the

action filed by the respondents.

HELD:

1. Yes, the contract is valid. Article 1318 of the New Civil Code
expressly provides that there is no contract unless the following
essential requisites concur, to wit: (1) there is consent among
the contracting parties; (2) there is a certain object that is the
subject matter of the contract; and (3) there is a cause or

142
consideration for which the obligation is established. There is
no nullity in the sale even when the “kasunduan “did not specify
the technical boundaries of the property. The requirement that
a sale must have for its object a determinate thing is satisfied as
long as, at the time the contract is entered into, the object of the
sale is capable of being made determinate without the necessity
of a new or further agreement between the parties.

2. It bears noting that trial on the merits was already concluded

before petitioner died. Since the trial court was not informed of
petitioner’s death, it may not be faulted for proceeding to
render judgment without ordering his substitution. Its
judgment is thus valid and binding upon petitioners legal
representatives or successors-in-interest, insofar as his interest
in the property subject of the action is concerned.

143
 JUANA COMPLEX I HOMEOWNERS ASSOCIATION,
INC., et al. vs.FIL-ESTATE LAND, INC.,

FACTS:

Juana Complex I Homeowners Association, Inc. (JCHA),

together with individual residents of Juana Complex I and other
neighboring subdivisions, instituted a complaint for damages,
in its own behalf and as a class suit representing the regular
commuters and motorists of Juana Complex I and neighboring
subdivisions who were deprived of the use of La Paz Road,
against Fil-Estate Land, Inc.

Accordingly, JCHA, et al. also prayed for the immediate

issuance of a Temporary Restraining Order (TRO) or a writ of
preliminary injunction (WPI) to enjoin Fil-Estate, et al. from
stopping and intimidating them in their use of La Paz Road. Fil-
Estate, et al. filed a motion to dismiss arguing that the
complaint failed to state a cause of action and that it was
improperly filed as a class suit.

They claim that the excavation of La Paz Road would not

necessarily give rise to a common right or cause of action for
JCHA, etal. against them since each of them has a separate and
distinct purpose and each may be affected differently than the
others. With regard to the issuance of the WPI, the defendants

144
averred that JCHA, et al. failed to show that they had a clear
and unmistakable right to the use of La Paz Road; and further
claimed that La Paz Road was a torrens registered private road
and there was neither a voluntary nor legal easement
constituted over it.

ISSUES:

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

RULING:

The necessary elements for the maintenance of a class suit

are:1) the subject matter of controversy is one of common or
general interest to many persons;2) the parties affected are so
numerous that it is impracticable to bring them all to court;
and3) the parties bringing the class suit are sufficiently
numerous or representative of the class and can fully protect
the interests of all concerned.

In this case, the suit is clearly one that benefits all commuters
and motorists who use La Paz Road. “The individuals sought to
be represented by private respondents in the suit are so
numerous that it is impracticable to join them all as parties and
be named individually as plaintiffs in the complaint.

145
 NAVARRO v. ESCOBIDO

FACTS:

Roger Navarro executed a lease agreement, with option to

purchase, with Glenn Go, over two motor vehicles. Glenn Go is
the husband of Karen Go, who owns KARGO ENTERPRISES
(sole proprietorship business). Navarro undertook to pay the
lease by giving checks in the name of KARGO. When such
checks were dishonored due to insufficiency of funds, Karen
filed two cases for replevin and collection of sum of money with
damages against Navarro. In his answer, Navarro alleged that
the two complaints have no cause of action because Karen, who
was not a party to the Lease Agreements with Options to
Purchase. The RTC dismissed the case but ordered Karen to file
a motion for the inclusion of Glenn Go as co-plaintiff since
KARGO ENTERPRISES forms part of the latter two’s conjugal
property. Navarro moved for reconsideration but the same was
denied by the trial court. This prompted him to elevate the case
to the CA. He contends that the RTC committed grave abuse of
discretion when it directed Karen to amend her complaints by
including her husband as co-plaintiff. CA denied Navarro’s
petition and affirmed the RTC’s decision. Aggrieved, Navarro
appealed against such decision before the Supreme Court.
Navarro posits that since it was Karen Go who filed the

146
complaints and not Glenn, she was not a real-party-in-interest
and the complaints must be dismissed for lack of cause of
action.

ISSUE:

Whether or not the complaints lacked cause of action because

the plaintiff, Karen Go, is not a real-party-in-interest.

RULING:

YES, Karen Go is a real-party-in-interest despite the

fact that the lease contracts were executed by her
husband, Glenn. This is because, as husband and wife,
they are co-owners of KARGO ENTERPRISES; hence,
anyone of them may bring an action to recover against
Navarro. This conclusion, according to the Supreme Court,
must be read vis a vis Rule 3, Section 2, of the 1997 Rules of
Civil Procedure, which states that “ a real party in interest is the
party who stands to be benefited or injured by the judgment in
the suit, or the party entitled to the avails of the suit. Unless
otherwise authorized by law or these Rules, every action must
be prosecuted or defended in the name of the real party in
interest”. As the registered owner of the business, Karen is the
party who will directly benefit from or be injured by a judgment
in the present case. Glenn Go’s participation as the creditor in

147
the lease agreements is of no moment. In this regard, the Court
held that since KARGO ENTERPRISES is Karen and Glenn’s
conjugal property, any one or either of them can speak and act
with authority m managing it. Consequently, Karen or Glenn
may bring the present suit against Navarro. Therefore, as held
by the Court, Glenn is not strictly an indispensable party in the
present case.

148
 LAND BANK v. CACAYURAN

FACTS:

The Municipality of Agoo, La Union, authorized Mayor Eriguel

to enter into two loans with the Land Bank. In order to secure
the loans, the Municipality used as collateral, among others, a
portion of the Public Plaza. However, a group of residents, led
by respondent Eduardo M. Cacayuran (Cacayuran), opposed the
redevelopment of the Public Plaza, as well as the funding
therefor thru the Subject Loans, claiming that these were
"highly irregular, violative of the law, and detrimental to public
interests, and will result to wanton desecration of the Public
Plaza. Thus, Cacayuran, invoking his right as a taxpayer, filed a
complaint14 against LBP and various officers of the
Municipality, including Mayor Eriguel (but excluding the
Municipality itself as party-defendant), assailing the validity of
the aforesaid loan agreements and praying that the
commercialization of the Public Plaza be enjoined.

ISSUE:

Whether or not the Municipality should be deemed as an

indispensable party to the instant case, and thus, be ordered
impleaded

RULING:

149
YES. An indispensable party is one whose interest will be
affected by the court's action in the litigation, and without
whom no final determination of the case can be had. The party's
interest in the subject matter of the suit and in the relief sought
are so inextricably intertwined with the other parties' that his
legal presence as a party to the proceeding is an absolute
necessity. In his absence, there cannot be a resolution of the
dispute of the parties before the court which is effective,
complete, or equitable. Thus, the absence of an indispensable
party renders all subsequent actions of the court null and void,
for want of authority to act, not only as to the absent parties but
even as to those present. In this case, a judicious review of the
records reveals that Cacayuran's complaint against LBP and the
municipal officers primarily prays that the commercialization of
the Public Plaza be enjoined and also, that the Subject Loans be
declared null and void for having been unlawfully entered into
by the said officers. However, Cacayuran failed to implead in his
complaint the Municipality, a real party-in-interestand an
indispensable party that stands to be directly affected by any
judicial resolution on the case, considering that: (a) the
contracting parties to the Subject Loans are LBP and the
Municipality; and (b) the Municipality owns the Public Plaza as
well as the improvements constructed thereon, including the
Agoo People's Center. The non-joinder of indispensable
parties is not a ground for the dismissal of an action. At

150
any stage of a judicial proceeding and/or at such times as are
just, parties may be added on the motion of a party or on the
initiative of the tribunal concerned. If the plaintiff refuses to
implead an indispensable party despite the order of the court,
that court may dismiss the complaint for the plaintiffs failure to
comply with the order. The remedy is to implead the non-
party claimed to be indispensable.

The Case is remanded to the RTC and directed to order

Cacayuran to implead all indispendable parties, and proceed
with the resolution of the case on the merits.

151
 DIVINAGRACIA v. PARILLA

FACTS:

Petitioner has purchased the subject land with P447,695.66, in

a Deed of Extrajudicial Settlement or Adjudication with Deed of
Sale, which was, however, not signed by the Respondents who
did not sell their respective shares, The vendor of the land then
executed a Supplemental Contract whereby the vendors and
Petitioner agreed that out of the aforesaid consideration, only
P109,807.93 will be paid up front, and that Petitioner will only
pay the remaining balance of P337,887.73 upon the partition of
the subject land. However, Petitioner was not able to have the
former title of the land cancelled and the deed of extrajudicial
settlement registered because of some of the Respondent's
refusal to surrender the said title. This prompted petitioner to
file a complaint for judicial partition and for receivership but.

Respondents maintained that the Petitioner had no legal right

to file an action for judicial partition nor compel them to
surrender the land title because of the ff. reasons; (1) Petitioner
did not pay the full purchase price of the shares sold to him;
and (2) the subject land is a conjugal asset of the Respondent’s
parents and, thus, only their legitimate issues may inherit.

152
The RTC ordered the partition of the subject land between
Petitioner on the one hand, and Respondents on the other hand
and, consequently, the cancellation of the former land title and
the issuance of a new owner’s duplicate certificate in favor of
Petitioner and the group of Respondents. The RTC found that
through the subject document, Petitioner became a co-owner of
the subject land and has the right to demand the partition of the
same. However, the RTC held that Petitioner did not validly
acquire one of the Respondent's share over the subject land.

On reconsideration of Respondents, the RTC issued an order for

the Petitioner to comply with the provisions of the
Supplemental Contract by paying the amount of P337,887.73
upon the partition of the subject land.

The CA set aside the RTC Rulings and, consequently, dismissed

Petitioner’s complaint for judicial partition. It held that the
respondents, are indispensable parties to the judicial partition
of the subject land and, thus, their non-inclusion as defendants
in Petitioner’s complaint would necessarily result in its
dismissal.

ISSUE:

Whether or not that the Respondents are indispensable parties

to the complaint for judicial partition; and whether or not that

153
said complaint should be dismissed for failure to implead said
omitted heirs.

RULING:

(1) On the first issue, the court ruled that all the co-heirs and
persons having an interest in the property are indispensable
parties; as such, an action for partition will not lie without the
joinder of the said parties.

An indispensable party is one whose interest will be affected by

the court’s action in the litigation, and without whom no final
determination of the case can be had. The party’s interest in the
subject matter of the suit and in the relief sought are so
inextricably intertwined with the other parties’ that his legal
presence as a party to the proceeding is an absolute necessity.
In his absence, there cannot be a resolution of the dispute of the
parties before the court which is effective, complete, or
equitable

Stating Section 1, Rule 69 of the Rules of Court;

SEC. 1.Complaint in action for partition of real estate. – A

person having the right to compel the partition of real estate
may do so as provided in this Rule, setting forth in his
complaint the nature and extent of his title and an adequate
description of the real estate of which partition is demanded

154
and joining as defendants all other persons interested
in the property. (Emphasis and underscoring supplied)

In the instant case, records reveal that the father of the

Petitioner and Respondents has multiple heirs who are entitled
to a pro-indiviso share in the subject land and, whether in their
own capacity or in representation of their direct ascendant,
have vested rights over the subject land and should be
impleaded as indispensable parties in an action for partition.
The Petitioner's complaint shows that only one of the heirs,
excluding therefrom his siblings and co-representatives.

(2) On the second issue, the court held that the CA erred in
ordering the dismissal of the complaint on account of
Petitioner’s failure to implead all the indispensable parties in
his complaint. The court explained that in instances of non-
joinder of indispensable parties, the proper remedy is to
implead them and not to dismiss the case.

Stating Heirs of Mesina vs. Heirs of Fian Sr.;

The non-joinder of indispensable parties is not a ground for

dismissal. At any stage of a judicial proceeding and/or at such
times as are just, parties may be added on the motion of a party
or on the initiative of the tribunal concerned. If the plaintiff
refuses to implead an indispensable party despite the order of

155
the court, that court may dismiss the complaint for the
plaintiff’s failure to comply with the order. The remedy is to
implode those claimed to be indispensable.

156
 ROSARIO ENRIQUEZ VDA. DE SANTIAGO
v. ANTONIO T. VILAR

FACTS:

Spouses Jose C. Zulueta and Soledad Ramos (Spouses Zulueta),

registered owners of several parcels of land covered by Transfer
Certificate of Title (TCT) Nos. 26105, 37177 and 50356 (mother
titles), obtained various loans secured by the mother titles from
the GSIS. The amount of loans, with the accumulated value of
P3,117,000.00 were obtained from September 1956 to October
1957.

When Spouses Zulueta defaulted in their payment, GSIS extra-

judicially foreclosed the mortgages in August 1974 wherein the
latter emerged as the highest bidder. A certificate of sale was
then issued. GSIS, however, consolidated its title on all of the
three mother titles, including the 78 lots which were expressly
excluded from the mortgage contract.

Later, GSIS sold the foreclosed properties to Yorkstown

Development Corporation (YDC).
Thereafter, Spouses Zuluetawere succeeded by Antonio Zulueta
(Antonio), who transferred all his rights and interests in the

157
excluded lots to Eduardo Santiago (Eduardo). Claiming his
rights and interests over the excluded lots, Eduardo, through
his counsel, sent a letter to GSIS for the return of the same.

In May 1990, Antonio, as represented by Eduardo, filed an

Action for Reconveyance of the excluded lots against the GSIS.
Subsequently, Antonio was substituted by Eduardo. Upon
Eduardo's demise, however, he was substituted by his widow,
herein petitioner Rosario.10

RTC ordered GSIS to reconvey to Rosario the excluded lots or to

pay the market value of said lots in case reconveyance is not
possible. The Registry of Deeds of Pasig City was likewise
ordered to cancel the titles covering the excluded lots issued in
the name of GSIS.

On appeal, the CA affirmed the trial court's rulings

GS1S filed a Petition for Certiorari and Prohibition before the

CA ascribing grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of the RTC in denying GSIS'
motion to quash.

158
ISSUE:

Whether or not the CA erred in impleading Vilar as party-

plaintiff in substitution of Rosario.

RULING:

Both Rosario and GSIS claim that Rosario is an indispensable

party in the petition because the same seeks to assail the order
of the RTC which involves its action on Vilar's motion to be
substituted in Rosario's stead as regards the implementation of
the writ of execution.

The Court finds the same to be with merit.

The case stemmed from the action for reconveyance filed by

Eduardo, husband of Rosario. To recall, Eduardo was the
successor-in-interest of Antonio, who is actually the successor-
in-interest of Spouses Zulueta. Spouses Zulueta are the original
owners of the subject parcels of land. Upon the death of the
party-plaintiff Eduardo, Rosario was substituted in his stead.
The case was subsequently decided on December 17, 1997 and
affirmed by this Court in October 28, 2003. An Entry of
Judgment was issued in 2004. In all these incidents, Rosario
was considered as the party-plaintiff.

159
By definition, an indispensable party is a party-in-interest
without whom no final determination can be had of an action,
and who shall be joined either as plaintiffs or defendants.39 It is
a party whose interest will be affected by the court's action in
the litigation.

In the Matter of the Heirship (Intestate Estates) of the Late

Hermogenes Rodriguez, et al. v. Robles, the Court held that:

The joinder of indispensable parties is mandatory. The presence

of indispensable parties is necessary to vest the court with
jurisdiction, which is the authority to hear and determine a
cause, the right to act in a case. Thus, without the presence of
indispensable parties to a suit or proceeding, judgment of a
court cannot attain real finality.

Verily, Rosario is an indispensable party in the petition before

the CA as she is the widow of the original party-plaintiff
Eduardo. The determination of the propriety of the action of the
trial court in merely noting and not granting his motion would
necessarily affect her interest in the subject matter of litigation
as the party-plaintiff.

Accordingly, the Court differs with the CA in ruling that the

160
petition for certiorari filed before it merely delves into the issue
of grave abuse of discretion committed by the lower court.
Guilty of repetition, the final determination of the case would
pry into the right of Rosario as party-plaintiff before the lower
court who is entitled to the proceeds of the judgment award. As
it is, the CA did not actually rule on the issue of grave abuse of
discretion alone as its corollary ruling inquired into the right of
Rosario. In ruling for Vilar's substitution, the right of Rosario as
to the proceeds of the judgment award was thwarted as the CA
effectively ordered that the proceeds pertaining to Rosario be
awarded instead to Vilar.

Likewise, the Court finds merit in Rosario's contention that her

failure to participate in the proceedings before the CA
constitutes a denial of her constitutional right to due process.

Hence, failure to implead Rosario as an indispensable party

rendered all the proceedings before the CA null and void for
want of authority to act.

Moreover, even the basis for the substitution of Vilar as

pronounced by the CA was unfounded. In ruling so, the CA
merely relied on the purported Deeds of Assignment of Rights
executed between Eduardo and Vilar in considering that the
latter is a transferee pendente lite, who can rightfully and

161
legally substitute Rosario as party-plaintiff in the
implementation of a writ of execution.

162
TOPIC: DISTINCTION BETWEEN JURISDICTION AND
VENUE

PACIFIC CONSULTANTS INTERNATIONAL ASIA v

SCHONFELD

FACTS:

Respondent is a Canadian citizen and was a resident of New

Westminster, British Columbia, Canada. He had been a
consultant in the field of environmental engineering and water
supply and sanitation. Pacicon Philippines, Inc. (PPI) is a
corporation duly established and incorporated in accordance
with the laws of the Philippines. The primary purpose of PPI
was to engage in the business of providing specialty and
technical services both in and out of the Philippines. It is a
subsidiary of Pacific Consultants International of Japan (PCIJ).
The president of PPI, Jens Peter Henrichsen, who was also the
director of PCIJ, was based in Tokyo, Japan. Henrichsen
commuted from Japan to Manila and vice versa, as well as in
other countries where PCIJ had business.

On December 5, 2000, respondent filed a Complaint for Illegal

Dismissal against petitioners PPI and Henrichsen with the
Labor Arbiter. In his Complaint, respondent alleged that he was

163
illegally dismissed; PPI had not notified the DOLE of its
decision to close one of its departments, which resulted in his
dismissal; and they failed to notify him that his employment
was terminated after August 4, 1999.

Petitioners filed a Motion to Dismiss the complaint on the

following grounds: (1) the Labor Arbiter had no jurisdiction
over the subject matter; and (2) venue was improperly laid. It
averred that respondent was a Canadian citizen, a transient
expatriate who had left the Philippines. He was employed and
dismissed by PCIJ, a foreign corporation with principal office in
Tokyo, Japan. Since respondents cause of action was based on
his letter of employment executed in Tokyo, Japan dated
January 7, 1998, under the principle of lex loci contractus, the
complaint should have been filed in Tokyo, Japan. Petitioners
claimed that respondent did not offer any justification for filing
his complaint against PPI before the NLRC in the Philippines.
Moreover, under Section 12 of the General Conditions of
Employment appended to the letter of employment dated
January 7, 1998, complainant and PCIJ had agreed that any
employment-related dispute should be brought before the
London Court of Arbitration. Since even the Supreme Court had
already ruled that such an agreement on venue is valid,
Philippine courts have no jurisdiction.

164
ISSUE:

Whether or not the CA is proscribed to review factual issues in

resloving a petition for certiorari.

RULING:

The petition is denied for lack of merit. It must be stressed that

in resolving a petition for certiorari, the CA is not proscribed
from reviewing the evidence on record. Under Section 9 of
Batas Pambansa Blg. 129, as amended by R.A. No. 7902, the CA
is empowered to pass upon the evidence, if and when necessary,
to resolve factual issues. If it appears that the Labor Arbiter and
the NLRC misappreciated the evidence to such an extent as to
compel a contrary conclusion if such evidence had been
properly appreciated, the factual findings of such tribunals
cannot be given great respect and finality.

165
 BIACO v COUNTRYSIDE RURAL BANK

FACTS:

Ernesto Biaco is the husband of petitioner Ma. Teresa

ChavesBiaco. While employed in the Philippine Countryside
Rural Bank (PCRB) as branch manager, Ernesto obtained
several loans from the respondent bank.

As security for the payment of the said loans, Ernesto executed

a real estate mortgage in favor of the bank covering the parcel of
land which the real estate mortgages bore the signatures of the
spouses Biaco.

When Ernesto failed to settle the above-mentioned loans on its

due date, respondent bank through counsel sent him a written
demand, however, proved futile.

Respondent bank filed a complaint for foreclosure of mortgage

against the spouses Ernesto and Teresa Biaco before the RTC of
Misamis Oriental. Summons was served to the spouses Biaco
through Ernesto at his office (Export and Industry Bank). The
RTC ruled against them. As a result, a writ of execution was
served on the spouses.

Petitioner sought the annulment of the Regional Trial Court

decision contending, among others, that the trial court failed to

166
acquire jurisdiction because summons was served on her
through her husband without any explanation as to why
personal service could not be made. The CA affirmed RTC
decision invoking that judicial foreclosure proceedings are
actions quasi in rem. As such, jurisdiction over the person of the
defendant is not essential as long as the court acquires
jurisdiction over the res.

Petitioner further argues that the deficiency judgment is a

personal judgment which should be deemed void for lack of
jurisdiction over her person.

Respondent PCRB filed its Comment, essentially reiterating the

appellate court’s ruling. Respondent avers that service of
summons upon the defendant is not necessary in actions quasi
in rem it being sufficient that the court acquire jurisdiction over
the res. As regards the alleged conspiracy between petitioner’s
husband and the sheriff, respondent counters that this is a new
argument which cannot be raised for the first time in the instant
petition.

ISSUE:

Whether or not the case should be dismissed for lack of

jurisdiction over the person of petitioner.

RULING:

167
No. The Court ruled that the trial court validly try and decide
the case. In a proceeding in rem or quasi in rem, jurisdiction
over the person of the defendant is not a prerequisite to confer
jurisdiction on the court provided that the court acquires
jurisdiction over the res. Jurisdiction over the res is acquired
either (1) by the seizure of the property under legal process,
whereby it is brought into actual custody of the law; or (2) as a
result of the institution of legal proceedings, in which the power
of the court is recognized and made effective.

In this case, the judicial foreclosure proceeding instituted by

respondent PCRB undoubtedly vested the trial court with
jurisdiction over the res. A judicial foreclosure proceeding is an
action quasi in rem. As such, jurisdiction over the person of
petitioner is not required, it being sufficient that the trial court
is vested with jurisdiction over the subject matter.

168
 BPI FAMILY SAVINGS BANK INC.
vs.SPOUSES BENEDICTO & TERESITA YUJUICO

FACTS:

City of Manila filed a complaint for expropriation of five parcels

of land located in Tondo, Manila, owned by the respondents
before the RTC of Manila. Two of the five parcels of lands were
under a First Real Estate Mortgage Contract to Citytrust
Banking Coroporaiton, predecessor in interest of the petitioner.
After the RTC rendered judgment expropriating the lots, the
petitioner filed its Motion to Intervene in Execution with Partial
Opposition to Defendant’s Request to Release, which the RTC
denied. The petitioner then extrajudicially foreclosed the two
lots, and after the public auction, the amount of P18,522,155.42
remained as judgment deficiency, which the petitioners sought
to recover from the respondents by filing a complaint before the
RTC of Makati City (Civil Case No. 03-450). The respondents
moved to dismiss on the ground of res judicata, lack of cause of
cause of action and that plaintiff’s claim had been abandoned,
waived or extinguished. The petitioners opposed the motion.
While the RTC denied the motion to dismiss, the respondents
filed their reply to the petitioner’s comment to the motion to
dismiss, raising for the first time the issue of improper venue.
They aver that the action to recover deficiency judgment should

169
be filed in the RTC of Manila which ruled on the extra-judicial
foreclosure of real estate mortgage, being a supplementary
action to the latter. The RTC denied the respondents’ motion for
reconsideration; on the issue of improper venue, it held that
even if the venue was improperly laid, the respondents failed to
allege it in their motion to dismiss; an action cannot be
dismissed on a ground not alleged in the motion to dismiss eve
if said ground is provided in Rule 16.

On petition for certiorari, the CA reversed the RTC. It ruled

that “a suit for recovery of the deficiency after the foreclosure of
a mortgage is in the nature of a mortgage action because its
purpose is precisely to enforce the mortgage contract; it is upon
a written contract and upon an obligation of the mortgage-
debtor to pay the deficiency which is created by law. As such,
the venue of an action for recovery of deficiency must
necessarily be the same venue as that of the extrajudicial
foreclosure of mortgage.”. Thus the action should have been
filed before the RTC of Manila.

ISSUE:

Whether venue was improperly laid. i.e. The action to recover

deficiency judgment should be filed before the court which
ruled on the extra-judicial foreclosure of real estate mortgage.

170
RULING:

We grant the petition for review on certiorari.

It is basic that the venue of an action depends on whether it is a

real or a personal action. The determinants of whether an action
is of a real or a personal nature have been fixed by the Rules of
Court and relevant jurisprudence. According to Section 1, Rule
4 of the Rules of Court, a real action is one that affects title to or
possession of real property, or an interest therein. Thus, an
action for partition or condemnation of, or foreclosure of
mortgage on, real property is a real action.⁠

The real action is to be commenced and tried in the proper

court having jurisdiction over the area wherein the real
property involved, or a portion thereof, is situated, which
explains why the action is also referred to as a local action. In
contrast, the Rules of Court declares all other actions as
personal actions.⁠2 Such actions may include those brought for
the recovery of personal property, or for the enforcement of
some contract or recovery of damages for its breach, or for the
recovery of damages for the commission of an injury to the
person or property.⁠ The venue of a personal action is the place
where the plaintiff or any of the principal plaintiffs resides, or
where the defendant or any of the principal defendants resides,

171
or in the case of a non-resident defendant where he may be
found, at the election of the plaintiff,⁠4 for which reason the
action is considered a transitory one.

Based on the distinctions between real and personal actions, an

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

It is true that the Court has said in Caltex Philippines, Inc. v.

Intermediate Appellate Court⁠5 that “a suit for the recovery of
the deficiency after the foreclosure of a mortgage is in the
nature of a mortgage action because its purpose is precisely to
enforce the mortgage contract.” However, the CA erred in
holding, upon the authority of Caltex Philippines, Inc., that the
venue of Civil Case No. 03-450 must necessarily be Manila, the
same venue as that of the extrajudicial foreclosure of mortgage.
An examination of Caltex Philippines, Inc. reveals that the
Court was thereby only interpreting the prescriptive period
within which to bring the suit for the recovery of the deficiency
after the foreclosure of the mortgage, and was not at all ruling
therein on the venue of such suit or on the nature of such suit
being either a real or a personal action.

172
Given the foregoing, the petitioner correctly brought Civil Case
No. 03-450 in the Makati RTC because Makati was the place
where the main office of the petitioner was located.

Moreover, the Makati RTC observed, and the observation is

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

We underscore that in civil proceedings, venue is procedural,

not jurisdictional, and may be waived by the defendant if not
seasonably raised either in a motion to dismiss or in the
answer.⁠6 Section 1, Rule 9 of the Rules of Court thus expressly
stipulates that defenses and objections not pleaded either in a
motion to dismiss or in the answer are deemed waived. As it
relates to the place of trial, indeed, venue is meant to provide
convenience to the parties, rather than to restrict their access to
the courts. In other words, unless the defendant seasonably

173
objects, any action may be tried by a court despite its being the
improper venue.

174
 PLANTERS DEVELOPMENT BANK v. SPOUSES
VICTORIANO AND MELANIE RAMOS

FACTS:

In July 2012, Spouses Victoriano and Melanie Ramos (Spouses

Ramos) applied for several credit lines with Planters
Development Bank (PDB) for the construction of a warehouse
in Barangay Santo Tomas, Nueva Ecija. The said application
was approved fsecured by Real Estate Mortgage over properties
owned by the spouses.

Due to financial woes, Spouses Ramos were not able to pay

their obligations as they fell due. They appealed to PDB for the
deferment of debt servicing and requested for a restructuring
scheme but the parties failed to reach an agreement.

On April 23, 2014, PDB filed a Petition for Extra-judicial

Foreclosure of Real Estate Mortgage under Act 3135, as
amended, before the Regional Trial Court. On June 18, 2014,
Spouses Ramos filed a Complaint for Annulment of Real Estate
Mortgages and Promissory Notes, Accounting and Application
of Payments, Injunction with Preliminary Injunction and
Temporary Restraining Order against PDB and its officers.

175
Instead of filing an Answer, PDB filed an Urgent Motion9 to
Dismiss, alleging that the venue of the action was improperly
laid considering that the real estate mortgages signed by the
parties contained a stipulation that any suit arising therefrom
shall be filed in Makati City only. It further noted that the
complaint failed to state a cause of action and must therefore be
dismissed.

The RTC denied the Urgent Motion to Dismiss on the ground

that the venue is improperly laid and the complaint fails to state
a cause of action.

Aggrieved, PDB filed a petition for certiorari with the CA,

imputing grave abuse of discretion on the RTC for denying its
motion to dismiss, despite the fact that the venue was clearly
improperly laid. The CA denied the petition

Unyielding, PDB filed the present petition with this Court,

reiterating its claim that the CA erred in affirming the order of
the RTC, which denied the motion to dismiss despite the
improper venue of the case. It argues that since there is a
stipulation on venue, the same should govern the parties.

176
ISSUE:

Whether or not the stipulation of the parties on venue shall

govern over the parties

RULING:

The petition is meritorious.

Rule 4 of the Rules of Civil Procedure provides the rules on

venue in filing an action

X XXX

the general rules on venue admit of exceptions in Section 4

thereof, i.e., where a specific rule or law provides otherwise, or
when the parties agreed in writing before the filing of the action
on the exclusive venue thereof.

Stipulations on venue, however, may either be permissive or

restrictive. "Written stipulations as to venue may be restrictive
in the sense that the suit may be filed only in the place agreed
upon, or merely permissive in that the parties may file their suit
not only in the place agreed upon but also in the places fixed by
law. As in any other agreement, what is essential is the
ascertainment of the intention of the parties respecting the
matter."21

177
Further, in Unimasters Conglomeration, Inc. v. Court of
Appeals, the Court elaborated, thus:

Since convenience is the raison d'etre of the rules of venue, it is

easy to accept the proposition that normally, venue stipulations
should be deemed permissive merely, and that interpretation
should be adopted which most serves the parties' convenience.
In other words, stipulations designating venues other than
those assigned by Rule 4 should be interpreted as designed to
make it more convenient for the parties to institute actions
arising from or in relation to their agreements; that is to say, as
simply adding to or expanding the venues indicated in said Rule
4.

On the other hand, because restrictive stipulations are in

derogation of this general policy, the language of the parties
must be so clear and categorical as to leave no doubt of their
intention to limit the place or places, or to fix places other than
those indicated in Rule 4, for their actions. x xx.

In view of the predilection to view a stipulation on venue as

merely permissive, the parties must therefore employ words in
the contract that would clearly evince a contrary intention.
In Spouses Lantin v. Judge Lantion,the Court emphasized that

178
"the mere stipulation on the venue of an action is not enough to
preclude parties from bringing a case in other venues. The
parties must be able to show that such stipulation is exclusive.
In the absence of qualifying or restrictive words, the stipulation
should be deemed as merely an agreement on an additional
forum, not as limiting venue to the specified place."

In the instant case, there is an identical stipulation in the real

estate mortgages executed by the parties, pertaining to venue. It
reads as follows:

In the event of suit arising from out of or in connection with this

mortgage and/or the promissory note/s secured by this
mortgage, the parties hereto agree to bring their causes of
action exclusively in the proper court/s of Makati, Metro
Manila, the MORTGAGOR waiving for this purpose any other
venue.26 (Emphasis ours)

In Spouses Lantin, the Court ruled that "the

words exclusively and waiving for this purpose any other
venue are restrictive."27 Therefore, the employment of the
same language in the subject mortgages signifies the clear
intention of the parties to restrict the venue of any action or suit
that may arise out of the mortgage to a particular place, to the
exclusion of all other jurisdictions.

179
In view of the foregoing, the RTC should have granted the
Urgent Motion to Dismiss filed by PDB on the ground that the
venue was improperly laid. The complaint being one for
annulment of real estate mortgages and promissory notes is in
the nature of a personal action, the venue of which may be fixed
by the parties to the contract. In this case, it was agreed that any
suit or action that may arise from the mortgage contracts or the
promissory notes must be filed and tried in Makati only. Not
being contrary to law or public policy, the stipulation on venue,
which PDB and Spouses Ramos freely and willingly agreed
upon, has the force of law between them, and thus, should be
complied with in good faith.

The ruling of the CA renders meaningless the very purpose of

the stipulation on venue. In Unimasters, the Court emphasized:

Parties may by stipulation waive the legal venue and such

waiver is valid and effective being merely a personal privilege,
which is not contrary to public policy or prejudicial to third
persons. It is a general principle that a person may renounce
any right which the law gives unless such renunciation would be
against public policy.

180
In the present case, Spouses Ramos had validly waived their
right to choose the venue for any suit or action arising from the
mortgages or promissory notes when they agreed to the limit
the same to Makati City only and nowhere else. True enough,
the stipulation on the venue was couched in a language showing
the intention of the parties to restrict the filing of any suit or
action to the designated place only. It is crystal clear that the
intention was not just to make the said place an additional
forum or venue but the only jurisdiction where any suit or
action pertaining to the mortgage contracts may be filed. There
being no showing that such waiver was invalid or that the
stipulation on venue was against public policy, the agreement of
the parties should be upheld. It is therefore a grave abuse of
discretion on the part of the RTC to deny the motion to dismiss
filed by PDB on the ground of improper venue, especially when
the said issue had been raised at the most opportune time, that
is, within the time for but before the filing of an answer. The CA
should have given this matter a more serious consideration and
not simply brushed it aside.

181
 TOPIC: KINDS OF PLEADINGS

ALBA V. MALAPAJO
FACTS:
On October 19, 2009, petitioner Arturo C. Alba, Jr., duly
represented by his attorneys-in-fact, Arnulfo B. Alba and
Alexander C. Alba, filed with the RTC of Roxas City, a
Complaint against respondents Raymund D. Malapajo, Ramil
D. Malapajo and the Register of Deeds of Roxas City for
recovery of ownership and/or declaration of nullity or
cancellation of title and damages alleging, among others, that
he was the previous registered owner of a parcel of land situated
in Bolo, Roxas City, covered by TCT No. T-22345; that his title
was subsequently canceled by virtue of a deed of sale he
allegedly executed in favor of respondents Malapajo for a
consideration of P500,000.00; that new TCT No. T-56840 was
issued in the name of respondents Malapajo; that the deed of
sale was a forged document which respondents Malapajo were
the co-authors of.

Respondents Malapajo filed their Answer with

Counterclaim contending that they were innocent purchasers
for value and that the deed was a unilateral document which
was presented to them already prepared and notarized; that
before the sale, petitioner had, on separate occasions, obtained

182
loans from them and their mother which were secured by
separate real estate mortgages covering the subject property;
that the two real estate mortgages had never been discharged.
Respondents counterclaimed for damages and for
reimbursement of petitioner's loan from them plus the agreed
monthly interest in the event that the deed of sale is declared
null and void on the ground of forgery.

Petitioner filed a Reply to Answer and Answer to (Permissive)

Counterclaim stating, among others, that the court had not
acquired jurisdiction over the nature of respondents' permissive
counterclaim; and, that assuming without admitting that the
two real estate mortgages are valid, the rate of 5% per month
uniformly stated therein is unconscionable and must be
reduced. Respondents filed their Rejoinder thereto.

Petitioner filed a Motion to Set the Case for Preliminary

Hearing as if a Motion to Dismiss had been Filed alleging that
respondents’ counterclaims are in the nature of a permissive
counterclaim, thus, there must be payment of docket fees and
filing of a certification against forum shopping; and, that the
supposed loan extended by respondents’ mother to petitioner,
must also be dismissed as respondents are not the real parties-
in-interest. Respondents filed their Opposition thereto.

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The RTC issued an Order denying petitioner's motion finding
that respondents’ counterclaims are compulsory. Petitioner’s
motion for reconsideration was denied in an Order. Petitioner
filed a petition for certiorari with the CA which sought the
annulment of the RTC Orders.CA dismissed the petition
for certiorari. Motion for Reconsideration was likewise
dismissed.

ISSUE:
Whether or not respondents’ counterclaim, i.e., reimbursement
of the loan obtained from them in case the deed of absolute sale
is declared null and void on the ground of forgery, is permissive
in nature which requires the payment of docket fees and a
certification against forum shopping for the trial court to
acquire jurisdiction over the same?

RULING:

No. While the plaintiff claims that his signature on the

instrument is forged, he never questioned the genuineness of
the signatures of his instrumental witnesses, his parents Arturo
P. Alba, Sr. and Norma C. Alba, who signed the said instrument
below the words "SIGNED IN THE PRESENCE OF" and above
the words "Father" and "Mother," respectively. Furthermore,
plaintiff acknowledged in par. 7 of his Complaint that the stated

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consideration in the Deed of Absolute Sale is P500,000.00 and
he never categorically denied having received the same.

Before the plaintiff sold the property to the defendants, he

secured a loan from them in the sum of P600,000.00 payable
on or before November 10, 2008. Prior to this, or as early as
July 25, 2008, the plaintiff also obtained a loan payable on or
before September 6, 2008 from defendants' mother, Alma D.
David. Both loans were evidenced by a Promissory Note and a
Real Estate Mortgage, both of which were executed by plaintiff.
Like the Deed of Absolute Sale, the Real Estate Mortgage is a
unilateral instrument, was signed solely by the plaintiff, and
furthermore, his parents affixed their signatures thereon under
the heading "WITH MY PARENTAL CONSENT", and above the
words, "Father" and "Mother," respectively.

The plaintiff's allegation that his signature on the Deed of

Absolute Sale was forged, and that the defendants are the "co-
authors" of the said forgery, are absolutely false and baseless.

Petitioner seeks to recover the subject property by assailing the

validity of the deed of sale on the subject property which he
allegedly executed in favor of respondents Malapajo on the
ground of forgery. Respondents counterclaimed that, in case the
deed of sale is declared null and void, they be paid the loan

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petitioner obtained from them plus the agreed monthly interest
which was covered by a real estate mortgage on the subject
property executed by petitioner in favor of respondents. There
is a logical relationship between the claim and the counterclaim,
as the counterclaim is connected with the transaction or
occurrence constituting the subject matter of the opposing
party's claim. Notably, the same evidence to sustain
respondents' counterclaim would disprove petitioner's case. In
the event that respondents could convincingly establish that
petitioner actually executed the promissory note and the real
estate mortgage over the subject property in their favor then
petitioner's complaint might fail. Petitioner's claim is so related
logically to respondents' counterclaim, such that conducting
separate trials for the claim and the counterclaim would result
in the substantial duplication of the time and effort of the court
and the parties.

Since respondents' counterclaim is compulsory, it must be set

up in the same action; otherwise, it would be barred forever. If
it is filed concurrently with the main action but in a different
proceeding, it would be abated on the ground of litispendentia;
if filed subsequently, it would meet the same fate on the ground
of res judicata. There is, therefore, no need for respondents to
pay docket fees and to file a certification against forum

186
shopping for the court to acquire jurisdiction over the said
counterclaim.

We agree with the RTC’s disquisition in finding that

respondents’ counterclaim is compulsory.

187
 LIM TECK CHUAN v. UY
FACTS:
Lot 5357 with an area of 33,610 square meters, covered by
Transfer Certificate of Title (TCT) No. T-0500, situated
in Barrio Agus, Lapu-lapu City, Cebu, owned and registered
under the name of Antonio Lim Tanhu was sold to the spouses
Francisco Cabansag and EstrellaCabansag as evidenced by a
Deed of Sale executed on January 8, 1966 but Franciso failed to
transfer the title of the property to their names because of his
work. Until in 1988 it was sold to Serafin for it to be transferred
the spouses attempted to transfer it to their names first but they
failed for the reason that Francisco lost the owner’s copy of TCT
No. T-0500 together with other documents pertaining to the
sale of the subject lot. Then Serafin exert efforts to secure copies
by filing a petition in RTC and after that the Cadastral Court
issued an order directing the Register of Deeds to issue a new
owner’s duplicate copy. However, the said order was recalled
and nullified on the ground that the petitioner filed
an Opposition and/or Motion for Reconsideration with
Manifestation for Special Appearance dated August 22, 1996
alleging that he is one of the six legitimate descendants of
Antonio; and that the original owner’s copy of TCT No. T-0500
was not lost and has always been in his custody and another
person named Henry Lim who was said to be an heir of Antonio
sold the land to Leopolda. With this turn of events, Serafin filed

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on July 25, 1997 a Complaint for quieting of title, surrender of
owner’s copy of certificate of title, declaration of nullity of
affidavit of adjudication and sale, annulment of tax declaration,
and other reliefs with a prayer for preliminary injunction before
the RTC. Leopolda and Serafin entered into amicable
settlement and filed a joint motion to dismiss not involving the
petitioner who is the heir of Antonio and succeeded the said
land and the RTC decided to dismiss the case even though the
petitioner filed a counterclaim.

ISSUE:
Whether or not Lim TeckChuan have valid counterclaim on the
ground that the RTC faults on dismissing the case

RULING:

Yes.
The petitioner’s interests and that of his siblings over the
subject property were vigilantly defended as evidenced by the
numerous and exchange of pleadings made by the parties. It
cannot therefore be denied that the petitioner has certainly
valid defenses and enforceable claims against the respondents
for being dragged into this case. Thus, the petitioner’s
manifestation of his preference to have his counterclaim
prosecuted in the same action is valid and in accordance with

189
Section 2, Rule 17 of the Rules of Court. As what Justice
Regalado expounds on the effects of the amendments to Section
2 and 3 of Rule 17:
2. Under this revised section, where the plaintiff moves for the
dismissal of his complaint to which a counterclaim has been
interposed, the dismissal shall be limited to the complaint. Such
dismissal shall be without prejudice to the right of the
defendant to either prosecute his counterclaim in a separate
action or to have the same resolved in the same action. Should
he opt for the first alternative, the court should render the
corresponding order granting and reserving his right to
prosecute his claim in a separate complaint should he choose to
have his counterclaim disposed of in the same action wherein
the complaint had been dismissed, he must manifest such
preference to the trial court within 15 days from notice to him of
plaintiff’s motion to dismiss. These alternative remedies of the
defendant are available to him regardless of
whether his counterclaim is compulsory or permissive.

The RTC erred when it dismissed the case when the present
rules state that the dismissal shall be limited only to the
complaint. A dismissal of an action is different from a mere
dismissal of the complaint. For this reason, since only the
complaint and not the action is dismissed, the defendant in

190
spite of said dismissal may still prosecute his counterclaim in
the same action.

191
 METROPOLITAN BANK v. CPR PROMOTIONS

FACTS:

CPR Promotions obtained loans from petitioner MBTC. As

security, the spouses Reynoso executed deeds of real estate
mortgage on separate dates. Upon maturity of the loans,
respondents defaulted, prompting MBTC to file a petition for
extra-judicial foreclosure of the real estate mortgages.
Notwithstanding the foreclosure MBTC alleged that there
remained a deficiency balance. Despite petitioner’s repeated
demands, however, respondents failed to settle the alleged
deficiency.

MBTC filed an action for collection of sum of money against

respondents. The RTC ruled in its favor. Respondents moved
for reconsideration of the RTC’s Decision, which was denied.
Aggrieved, respondents elevated the case to the CA. The
appellate court, reversed the decision and granted the
respondents a refund valued at PhP 722,602.22 plus legal
interest of six percent (6%).

The petitioners are alleging that the grant of refund in favor of

respondents is erroneous on the ground that respondents never
set up a counterclaim for refund of any amount

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ISSUE:

Whether or not the CA erred in granting a refund in favor of the

respondents on the ground that they never set up a
counterclaim for refund of any amount

RULING:

Yes. The Court found that respondents were not able to timely
setup their claim for refund. Respondents belatedly raised their
compulsory counterclaim.

In determining whether a counterclaim is compulsory or

permissive, the court has, in several cases, utilized the following
tests: (1) Are the issues of fact or law raised by the claim and the
counterclaim largely the same? (2) Would res judicata bar a
subsequent suit on defendant’s claims, absent the compulsory
counterclaim rule? (3) Will substantially the same evidence
support or refute plaintiff’s claim as well as the defendant’s
counterclaim? (4) Is there any logical relation between the
claim and the counterclaim, such that the conduct of separate
trials of the respective claims of the parties would entail a
substantial duplication of effort and time by the parties and the
court? This test is the “compelling test of compulsoriness.”

Based on the above tests, it is evident that a claim for recovery

of the excess in the bid price vis-à-vis the amount due should be

193
interposed as a compulsory counterclaim in an action for
recovery of a deficiency filed by the mortgagee against the
debtor-mortgagor. First, in both cases, substantially the same
evidence is needed in order to prove their respective claim.
Second, adjudication in favor of one will necessarily bar the
other since these two actions are absolutely incompatible with
each other; a debt cannot be fully paid and partially unpaid at
the same time. Third, these two opposing claims arose from the
same set of transactions. And finally, if these two claims were to
be the subject of separate trials, it would definitely entail a
substantial and needless duplication of effort and time by the
parties and the court, for said actions would involve the same
parties, the same transaction, and the same evidence. The only
difference here would be in the findings of the courts based on
the evidence presented with regard to the issue of whether or
not the bid prices substantially cover the amounts due. Having
determined that a claim for recovery of an excess in the bid
price should be set up in the action for payment of a deficiency
as a compulsory counterclaim, We rule that respondents failed
to timely raise the same. It is elementary that a defending
party’s compulsory counterclaim should be interposed at the
time he files his Answer and that failure to do so shall effectively
bar such claim. As it appears from the records, what
respondents initially claimed herein were moral and exemplary
damages, as well as attorney’s fees. Then, realizing, based on its

194
computation, that it should have sought the recovery of the
excess bid price, respondents set up another counterclaim, this
time in their Appellant’s Brief filed before the CA.
Unfortunately, respondents’ belated assertion proved fatal to
their cause as it did not cure their failure to timely raise such
claim in their Answer. Consequently, respondents’ claim for the
excess, if any, is already barred.

195
 NELSON P. VALDEZ VS. ATTY. ANTOLIN ALLYSON
DABON JR

FACTS:
In his Affidavit-Complaint, dated September 13, 2006, Nelson
averred, among others, that he married Sonia on January 28,
1998 in Paniqui, Tarlac; that Sonia was employed as Court
Stenographer of the CA from 1992 until her resignation on May
15, 2006; that Sonia admitted to have had an adulterous and
immoral relationship with Atty. Dabon, from 2000 to 2006, a
span of more than five years; that he came to know of the
relationship only on April 18, 2006 after receiving an
anonymous text message hinting/stating about the existence of
an illicit affair between the two; and that initially, Sonia denied
the affair but eventually broke down and admitted her sexual
liaison with Atty. Dabon when confronted with a text message
he received from Atty. Jocelyn Dabon.

Sonia narrated that her illicit relationship with Atty. Dabon

started sometime in November 2000 and ended in March 2006
when she, bothered by her conscience, decided to break it off;
that Atty. Dabon relentlessly pursued her for years and even
admitted that he fell in love with her the first time he laid eyes
on her; that on November 13, 2000, Atty. Dabon lured her to
what appeared to be a mere friendly lunch date, managed to put

196
sleep-inducing drug into her food or drink causing her to feel
drowsy and weak and, thereafter, brought her to Victoria Court
Motel where he sexually molested her while she was asleep; that
she opted to keep silent about the incident for fear of its adverse
repercussions of shame and embarrassment to her and her
family; that she pleaded with Atty. Dabon to leave her and
forget what had happened, but the respondent instead taunted
her by laughing at her misery; that since then, Atty. Dabon
succeeded in having repeated carnal knowledge of her once or
twice a week through intimidation and threats; that Atty. Dabon
threatened her that he would tell everyone that she had been
playing around with him, if she would not yield to his lascivious
cravings; and that she suffered in silence for years and
submitted herself to the bestial desires of Atty. Dabon, until she
even thought that she was in love with him.

The Respondent’s Position

First, complainant Nelson had no personal knowledge of the

alleged illicit relationship between him and Sonia. He relied
heavily on the sworn statement of Sonia which was replete with
inconsistencies and incredible and preposterous claims which
defied logic and common sense, thus, revealing the fallacy of the
subject complaint.

197
Nowhere in the administrative complaint of Nelson previously
filed before the CA was there any mention of any sexual assault
he allegedly committed against Sonia or of an adulterous
relationship that was maintained through threats and
intimidation. Surprisingly, such allegations were included in the
present complaint for disbarment. He also pointed out that
Nelson did not attach to his administrative complaint before the
CA the September 13, 2006 Affidavit of Sonia containing grave
imputations against him. Such omissions were indicative that
the serious charges against him were mere concoctions and
afterthoughts designed to attain Nelson's desire to come up
with a graver accusation against him.

He denied Nelson's allegation that he confessed to his wife,

Atty. Joy, his illicit relationship with Sonia. He also denied that
the alleged text messages, quoted by Nelson and Sonia in their
respective affidavits, were sent by him or his wife. All were part
of an elaborate scheme to force him to immediately resign as
Division Clerk of Court from the CA. Lastly, it was not true that
he harassed Sonia through text messages and phone calls. It
was he who was the victim of harassment from Nelson, who
orchestrated a series of events that compelled him to leave the
country earlier than scheduled for fear that an untoward
incident might happen to him.

198
ISSUE:

Whether the respondent’s defense answered the accusation

against him properly.

RULING:

To begin with, the Court notes from the respondent's Comment

that he appeared to be perplexed as to whether or not he would
admit his extramarital liaisons with Sonia. As Investigating
Commissioner Chan stated in his report, Atty. Dabon
interposed a blanket denial of the romantic involvement but at
the same time, he seemed to have tacitly admitted the illicit
affair only that it was not attended by sexual assaults, threats
and intimidations. The Court also observed that he devoted
considerable effort to demonstrate that the affair did not
amount to gross immoral conduct and that no sexual abuse,
threat or intimidation was exerted upon the person of Sonia,
but not once did he squarely deny the affair itself.

In other words, the respondent's denial is a negative pregnant, a

denial coupled with the admission of substantial facts in the
pleading responded to which are not squarely denied. Stated
otherwise, a negative pregnant is a form of negative expression
which carries with it an affirmation or at least an implication of
some kind favorable to the adverse party. Where a fact is alleged

199
with qualifying or modifying language and the words of the
allegation as so qualified or modified are literally denied, it has
been held that the qualifying circumstance alone is denied while
the fact itself is admitted, It is clear from Atty. Dabon's
Comment that his denial only pertained as to the existence of a
forced illicit relationship. Without a categorical denial thereof,
he is deemed to have admitted his consensual affair with Sonia.

Morality in our liberal society today is probably a far cry from

what it used to be.1avvphi1 Notwithstanding this
permissiveness, lawyers, as keepers of public faith, are
burdened with a high degree of social responsibility and, hence,
must handle their personal affairs with greater caution. Indeed,
those who have taken the oath to assist in the dispensation of
justice should be more possessed of the consciousness and the
will to overcome the weakness of the flesh.

In the case at bench, Atty. Dabon's intimate relationship with a

woman other than his wife showed his moral indifference to the
opinion of the good and respectable members of the
community. It manifested his disrespect for the laws on the
sanctity of marriage and for his own marital vow of fidelity. It
showed his utmost moral depravity and low regard for the
fundamental ethics of his profession. Indeed, he has fallen
below the moral bar. Such detestable behavior warrants a

200
disciplinary sanction. Even if not all forms of extramarital
relations are punishable under penal law, sexual relations
outside of marriage are considered disgraceful and immoral as
they manifest deliberate disregard of the sanctity of marriage
and the marital vows protected by the Constitution and
affirmed by our laws.

In the case at bench, Atty. Dabon's misconduct and unrepentant

demeanor clearly showed a serious flaw in his character, his
moral indifference to the sanctity of marriage and marital vows,
and his outright defiance of established norms. All these could
not but put the legal profession in disrepute and place the
integrity of the administration of justice in peril. Accordingly,
the Court finds the need for the imposition of the extreme
administrative penalty of disbarment

Tthe respondent Atty. Antolin Allyson M. Dabon,

Jr. GUILTY of Gross Immorality, the Court
hereby DISBARS him from the practice of law.

201
 REPUBLIC V SANDIGAN BAYAN

FACTS:

This is a petition for certiorari under Rule 65 of the Rules of

Court seeking to (1) set aside the Resolution dated January 31,
2002 issued by the Special First Division of the Sandiganbayan
in Civil Case No. 0141 entitled Republic of the Philippines vs.
Ferdinand E. Marcos, et. al., and (2) reinstate its earlier
decision dated September 19, 2000 which forfeited in favor of
petitioner Republic of the Philippines (Republic) the amount
held in escrow in the Philippine National Bank (PNB) in the
aggregate amount of US$658,175,373.60 as of January 31,
2002.

On December 17, 1991, petitioner Republic, through the

Presidential Commission on Good Government (PCGG),
represented by the Office of the Solicitor General (OSG), filed a
petition for forfeiture before the Sandiganbayan, docketed as
Civil Case No. 0141 entitled Republic of the Philippines vs.
Ferdinand E. Marcos, represented by his Estate/Heirs and
Imelda R. Marcos, pursuant to RA 13791 in relation to
Executive Order Nos. 1,2 2,3 144 and 14-A.5

In said case, petitioner sought the declaration of the aggregate

amount of US$356 million (now estimated to be more than

202
US$658 million inclusive of interest) deposited in escrow in the
PNB, as ill-gotten wealth.

Before the case was set for pre-trial, a General Agreement and
the Supplemental Agreements dated December 28, 1993 were
executed by the Marcos children and then PCGG Chairman
MagtanggolGunigundo for a global settlement of the assets of
the Marcos family. Subsequently, respondent Marcos children
filed a motion dated December 7, 1995 for the approval of said
agreements and for the enforcement thereof. On October 18,
1996, petitioner filed a motion for summary judgment and/or
judgment on the pleadings. Respondent Mrs. Marcos filed her
opposition thereto which was later adopted by respondents
Mrs. Manotoc, Mrs. Araneta and Ferdinand, Jr.

In its resolution dated November 20, 1997, the Sandiganbayan

denied petitioner's motion for summary judgment and/or
judgment on the pleadings on the ground that the motion to
approve the compromise agreement "(took) precedence over
the motion for summary judgment."

Respondent Mrs. Marcos filed a manifestation on May 26, 1998

claiming she was not a party to the motion for approval of the
Compromise Agreement and that she owned 90% of the funds
with the remaining 10% belonging to the Marcos estate.

203
ISSUE:
Whether or not respondents failed to specifically deny each and
every allegation contained in the petition for forfeiture in the
manner required by the rules?
RULING:
Yes.In their answer, respondents failed to specifically deny each
and every allegation contained in the petition for forfeiture in
the manner required by the rules. All they gave were stock
answers like they have no sufficient knowledge or they could
not recall because it happened a long time ago, and, as to Mrs.
Marcos, the funds were lawfully acquired, without stating the
basis of such assertions.

Section 10, Rule 8 of the 1997 Rules of Civil Procedure,

provides: A defendant must specify each material allegation of
fact the truth of which he does not admit and, whenever
practicable, shall set forth the substance of the matters upon
which he relies to support his denial. Where a defendant desires
to deny only a part of an averment, he shall specify so much of it
as is true and material and shall deny the remainder. Where a
defendant is without knowledge or information sufficient to
form a belief as to the truth of a material averment made in the
complaint, he shall so state, and this shall have the effect of a
denial.

204
The purpose of requiring respondents to make a specific denial
is to make them disclose facts which will disprove the
allegations of petitioner at the trial, together with the matters
they rely upon in support of such denial. Our jurisdiction
adheres to this rule to avoid and prevent unnecessary expenses
and waste of time by compelling both parties to lay their cards
on the table, thus reducing the controversy to its true terms. As
explained in Alonso vs. Villamor, A litigation is not a game of
technicalities in which one, more deeply schooled and skilled in
the subtle art of movement and position, entraps and destroys
the other. It is rather a contest in which each contending party
fully and fairly lays before the court the facts in issue and then,
brushing aside as wholly trivial and indecisive all imperfections
of form and technicalities of procedure, asks that justice be
done upon the merits. Lawsuits, unlike duels, are not to be won
by a rapiers thrust.

On the part of Mrs. Marcos, she claimed that the funds were
lawfully acquired. However, she failed to particularly state the
ultimate facts surrounding the lawful manner or mode of
acquisition of the subject funds. Simply put, she merely stated
in her answer with the other respondents that the funds were
lawfully acquired without detailing how exactly these funds
were supposedly acquired legally by them. Even in this case
before us, her assertion that the funds were lawfully acquired

205
remains bare and unaccompanied by any factual support which
can prove, by the presentation of evidence at a hearing, that
indeed the funds were acquired legitimately by the Marcos
family.

Respondents denials in their answer at the Sandiganbayan were

based on their alleged lack of knowledge or information
sufficient to form a belief as to the truth of the allegations of the
petition.

It is true that one of the modes of specific denial under the rules
is a denial through a statement that the defendant is without
knowledge or information sufficient to form a belief as to the
truth of the material averment in the complaint. The question,
however, is whether the kind of denial in respondents answer
qualifies as the specific denial called for by the rules. We do not
think so. In Morales vs. Court of Appeals, this Court ruled that
if an allegation directly and specifically charges a party with
having done, performed or committed a particular act which the
latter did not in fact do, perform or commit, a categorical and
express denial must be made.

Here, despite the serious and specific allegations against them,

the Marcoses responded by simply saying that they had no
knowledge or information sufficient to form a belief as to the

206
truth of such allegations. Such a general, self-serving claim of
ignorance of the facts alleged in the petition for forfeiture was
insufficient to raise an issue. Respondent Marcoses should have
positively stated how it was that they were supposedly ignorant
of the facts alleged.

Also, by qualifying their acquisition of the Swiss bank deposits

as lawful, respondents unwittingly admitted their ownership
thereof. Respondent Mrs. Marcos also admitted ownership of
the Swiss bank deposits by failing to deny under oath the
genuineness and due execution of certain actionable documents
bearing her signature attached to the petition. Section 11, Rule
8 of the 1997 Rules of Civil Procedure provides that material
averments in the complaint shall be deemed admitted when not
specifically denied.

207
 CANELAND VS ALON

FACTS:
Caneland Sugar Corporation (petitioner) filed with RTC a
complaint for injunction, and nullity of mortgage against the
Land Bank of the Philippines (respondent) praying for the
issuance of a temporary restraining order enjoining respondent
and the Sheriff from proceeding with the auction sale of
petitioner’s property.

RTC issued an Order holding in abeyance the auction sale but

re-scheduled the sale for the reason stated in PD 385 which
provides that it shall be mandatory for government financial
institution to foreclose collaterals and/or securities for any
loan, credit accommodations and/or guarantees granted by
them whenever the arrearages on such account, including
accrued interest and other charges amount to at least 20% of
the total outstanding obligation as appearing in the books of
the financial institution. Moreover, no restraining order,
temporary or permanent injunction shall be issued by the
court against any government financial institution in any
action taken by such institution in compliance with the
mandatory foreclosure provided by said law.

208
Petitioner then filed with the CA which rendered a decision
affirming that of the RTC.
ISSUE: Whether or not Caneland made a specific denial as to
the Promissory Notes covered by the security documents?

RULING:

No. Petitioner does not dispute its loan obligation with

respondent. Petitioner’s bone of contention before the RTC is
that the promissory notes are silent as to whether they were
covered by the Mortgage Trust Indenture and Mortgage
Participation on its property covered by TCT No. T-11292. It
does not categorically deny that these promissory notes are
covered by the security documents. These vague assertions are,
in fact, negative pregnants, i.e., denials pregnant with the
admission of the substantial facts in the pleading responded to
which are not squarely denied.
As defined in Republic of the Philippines v. Sandiganbayan,14 a
negative pregnant is a "form of negative expression which
carries with it an affirmation or at least an implication of some
kind favorable to the adverse party. It is a denial pregnant with
an admission of the substantial facts alleged in the pleading.
Where a fact is alleged with qualifying or modifying language
and the words of the allegation as so qualified or modified are

209
literally denied, has been held that the qualifying circumstances
alone are denied while the fact itself is admitted."

Petitioner’s allegations do not make out any justifiable basis for

the granting of any injunctive relief. Even when the mortgagors
were disputing the amount being sought from them, upon the
non-payment of the loan, which was secured by the mortgage,
the mortgaged property is properly subject to a foreclosure sale.
This is in consonance with the doctrine that to authorize a
temporary injunction, the plaintiff must show, at least prima
facie, a right to the final relief.

210
 TOPIC: PARTS OF A PLEADING

PRISCILLA ALMA JOSE v. RAMON C. JAVELLANA,

ET AL.,
FACTS:
On September 8, 1979, Margarita Marquez Alma Jose
(Margarita) sold for consideration of P160,000.00 to
respondent Ramon Javellana by deed of conditional sale two
parcels of land with areas of 3,675 and 20,936 square meters
located in Barangay Mallis, Guiguinto, Bulacan. They agreed
that Javellana would pay P80,000.00 upon the execution of the
deed and the balance of P80,000.00 upon the registration of
the parcels of land under the Torrens System (the registration
being undertaken by Margarita within a reasonable period of
time); and that should Margarita become incapacitated, her son
and attorney-in-fact, Juvenal M. Alma Jose (Juvenal), and her
daughter, petitioner Priscilla M. Alma Jose, would receive the
payment of the balance and proceed with the application for
registration.

After Margarita died and with Juvenal having predeceased

Margarita without issue, the vendor’s undertaking fell on the
shoulders of Priscilla, being Margarita’s sole surviving heir.
However, Priscilla did not comply with the undertaking to cause
the registration of the properties under the Torrens System,

211
and, instead, began to improve the properties by dumping
filling materials therein with the intention of converting the
parcels of land into a residential or industrial
subdivision. Faced with Priscilla’s refusal to comply, Javellana
commenced an action for specific performance, injunction, and
damages against her in the Regional Trial Court in Malolos,
Bulacan (RTC). Javellana prayed for the issuance of a
temporary restraining order or writ of preliminary injunction to
restrain Priscilla from dumping filling materials in
the parcels of land; and that Priscilla be ordered to
institute registration proceedings and then to execute a final
deed of sale in his favor. Priscilla filed a motion to dismiss,
stating that the complaint was already barred by prescription;
and that the complaint did not state a cause of action. The RTC
initially denied Priscilla’s motion to dismiss. However, upon her
motion for reconsideration, the RTC reversed itself and granted
the motion to dismiss.

Javellana moved for reconsideration. The RTC denied the motio

n forreconsideration for lack of any reason to disturb its order.
Accordingly, Javellana filed a notice of appeal. Priscilla
countered that the RTC order was not appealable; that the
appeal was not perfected on time; and that Javellana was
guilty of forum shopping. It appears that pending the appeal,
Javellana also filed a petition for certiorari in the CA to assail

212
the June 24, 1999 and June 21, 2000 orders dismissing his
complaint. The CA dismissed the petition for certiorari. As to
the notice on appeal, the CA reversed and set aside the RTC
decision and remanded the records to the RTC "for further
proceedings in accordance with law." The CA denied the motion
for reconsideration filed by Priscilla
ISSUE:
Whether or not the decision of the RTC, denying the motion of
reconsideration of the order of the dismissal, is a final order and
is appealable.

RULING:

Yes.

First of all, the denial of Javellana’s motion for reconsideration

left nothing more to be done by the RTC because it confirmed
the dismissal of Civil Case No. 79-M-97. It was clearly a final
order, not an interlocutory one. The Court has distinguished
between final and interlocutory orders in Pahila-Garrido v.
Tortogo, thus:

The distinction between a final order and an interlocutory order

is well known. The first disposes of the subject matter in its
entirety or terminates a particular proceeding or action, leaving
nothing more to be done except to enforce by execution what

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the court has determined, but the latter does not completely
dispose of the case but leaves something else to be decided
upon. An interlocutory order deals with preliminary matters
and the trial on the merits is yet to be held and the judgment
rendered. The test to ascertain whether or not an order or a
judgment is interlocutory or final: does the order or judgment
leave something to be done in the trial court with respect to the
merits of the case? If it does, the order or judgment is
interlocutory; otherwise, it is final.

And, secondly, whether an order is final or interlocutory

determines whether appeal is the correct remedy or not. A final
order is appealable, to accord with the final judgment rule
enunciated in Section 1, Rule 41 of the Rules of Court to the
effect that "appeal may be taken from a judgment or final order
that completely disposes of the case, or of a particular matter
therein when declared by these Rules to be appealable;" but the
remedy from an interlocutory one is not an appeal but a special
civil action for certiorari. The explanation for the differentiation
of remedies given in Pahila-Garrido v. Tortogo is apt:

xxx The reason for disallowing an appeal from an interlocutory

order is to avoid multiplicity of appeals in a single action, which
necessarily suspends the hearing and decision on the merits of
the action during the pendency of the appeals. Permitting

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multiple appeals will necessarily delay the trial on the merits of
the case for a considerable length of time, and will compel the
adverse party to incur unnecessary expenses, for one of the
parties may interpose as many appeals as there are incidental
questions raised by him and as there are interlocutory orders
rendered or issued by the lower court. An interlocutory order
may be the subject of an appeal, but only after a judgment has
been rendered, with the ground for appealing the order being
included in the appeal of the judgment itself.

The remedy against an interlocutory order not subject of an

appeal is an appropriate special civil action under Rule 65,
provided that the interlocutory order is rendered without or in
excess of jurisdiction or with grave abuse of discretion. Then is
certiorari under Rule 65 allowed to be resorted to.

Indeed, the Court has held that an appeal from an order

denying a motion for reconsideration of a final order or
judgment is effectively an appeal from the final order or
judgment itself; and has expressly clarified that the prohibition
against appealing an order denying a motion for
reconsideration referred only to a denial of a motion for
reconsideration of an interlocutory order.

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 MEDADO VS. HEIRS OF ANTONIO CONSUING

FACTS:
Sometime in 1996, (Spouses Medado) and the (Estate of
Consing), as represented by Soledad executed Deeds of Sale
with Assumption of Mortgage for the former's acquisition from
the latter of the property in Cadiz City. Records indicate that the
sale included the parcels of land. As part of the deal, Spouses
Medado undertook to assume the estate's loan with Philippine
National Bank (PNB).
After the sale, however, the Estate of Consing offered the
subject lots to the government via the Department of Agrarian
Reform's Voluntary Offer to Sell (VOS) program. On November
22, 2000, the Estate of Consing also instituted with the RTC, of
Bacolod City an action for rescission and damages against
Spouses Medado, PNB and the Register of Deeds of Cadiz City,
due to the alleged failure of the spouses to meet the conditions
in their agreement.
In the meantime the Civil Case for rescission was pending, Land
Bank of the Philippines (LBP) issued in favor of the Estate of
Consing a certificate of deposit of cash and agrarian reform
bonds, as compensation for the lots covered by the VOS.
Spouses Medado feared that LBP would release the full
proceeds thereof to the Estate of Consing. They claimed to be
the ones entitled to the proceeds considering that they had

216
bought the properties through the Deeds of Sale with
Assumption of Mortgage which they and the Estate of Consing
had earlier executed.
On March 9, 2007, the RTC of Cadiz City issued an
Ordergranting Spouses Medado's application for the issuance of
writs of preliminary prohibitory and mandatory injunction.
The heirs of the late Consing questioned the RTC's order via a
petition for certiorari filed with the CA, against Hon. Renato D.
Muez, Presiding Executive Judge, RTC, Branch 60 of Cadiz City,
Spouses Medado, Sheriff IV Balbino B. Germinal of RTC,
Branch 60 of Cadiz City and LBP. They sought, among other
reliefs, the dismissal of the complaint for injunction for
violation of the rules on litispendentia and forum shopping. On
the matter of the absence of a motion for reconsideration of the
trial court's order before resorting to a petition for certiorari,
the heirs explained that the implementation of the questioned
writs through LBP's release of the VOS proceeds' balance to the
sheriff on March 29, 2007, notwithstanding: (a) the pendency
of motions for reconsideration and dissolution of the writs filed
by the heirs, and (b) the fact that the writs were immediately
implemented even if a hearing on the motions was already
scheduled for March 30, 2007, prompted the heirs' withdrawal
of their motions for being already moot and academic. The heirs
argued that their case was within the exceptions to the general

217
rule that a petition under Rule 65 will not lie unless a motion
for reconsideration is first filed before the lower court.
ISSUE:
Whether or not there is a violation of forum shopping by the
filing of the complaint for injunction during the pendency of the
action for rescission and damages.

RULING:

There is forum shopping when the elements

of litispendentia are present, i.e., between actions pending
before courts, there exist: (1) identity of parties, or at least such
parties as represent the same interests in both actions, (2)
identity of rights asserted and relief prayed for, the relief being
founded on the same facts, and (3) the identity of the two
preceding particulars is such that any judgment rendered in the
other action will, regardless of which party is successful,
amount to res judicata in the action under consideration; said
requisites are also constitutive of the requisites for auter action
pendant or lispendens. Applying the foregoing, there was
clearly a violation of the rule against forum shopping when
Spouses Medado instituted Civil Case No. 797-C for injunction
notwithstanding the pendency of Civil Case for rescission of
contract and damages.

218
All elements of litispendentia are present with the filing of the
two cases. There is no dispute that there is identity of parties
representing the same interests in the two actions, both
involving the estate and heirs of the late Consing on one hand,
and Spouses Medado on the other. The rescission case names
Soledad T. Consing, for herself and as administratrix of the
estate of Antonio Consing as plaintiff, with Spouses Meritus Rey
and Elsa Medado, [PNB] and the Register of Deeds of Cadiz City
as respondents. The injunction case, on the other hand, was
instituted by Spouses Medado, against (LBP) and the Heirs of
the Late Antonio Consing, as represented by
Dra. Soledad Consing. The primary litigants in the two action,
and their interests, are the same.

The two other elements are likewise satisfied. There is an

identity of
rights asserted and reliefs prayed for in the two cases, with the
reliefs being founded on the same set of facts. In both cases, the
parties claim their supposed right as owners of the subject
properties. They all anchor their claim of ownership on the
deeds of absolute sale which they had executed, and the law
applicable thereto. They assert their respective rights, with
Spouses Medado as buyers and the heirs as sellers, based on the
same set of facts that involve the deeds of sale's contents and
their validity. Both actions necessarily involve a ruling on the

219
validity of the same contract as against the same parties. Thus,
the identity of the two cases is such as would render the
decision in the rescission case res judicata in the injunction
case, and vice versa.

220
 COA V. PALER

FACTS:
The Respondent,Celso M. Paler was a Supervising Legislative
Staff Officer II (SG-24) in the Technical Support Service of
Commission on Appointments. On April 8, 2003, he submitted
a request for vacation leave for 74 working days – from August
1, 2003 to November 14, 2003. In a memorandum dated April
22, 2003, Ramon C. Nghuatco, Director III of Technical
Support Service, submitted to the Commission Secretary his
comments / recommendation on Paler's application: Mr. Paler's
Application for Leave may be acted upon depending on the
completion of his work load and submission of the medical
certificate. Since he already had an approved leave from June 9
to July 30, 2003, Paler left for the United States on June 8,
2003, without verifying whether his application for leave (for
August 1 – November 14, 2003) was approved or denied.
In a letter dated September 16, 2003, the Commission
Chairman informed Paler that he was being dropped from the
roll of employee’s effective said date, due to his continuous 30-
day absence without leave and in accordance with Section 63,
Civil CSC Memorandum Circular No. 14, s. 1999. Paler's son
received the letter on September 23, 2003. Paler moved for
reconsideration but this was denied on February 20, 2004, on
the ground that it was filed beyond the 15-day reglementary

221
period. The denial was received by Paler's son on March 18,
2004.
On appeal, the CSC reversed and set aside the Commission
Chairman's decision dated September 16, 2003 per resolution
04-1214 dated November 9, 2004

The COA filed a motion for reconsideration but was denied by

the CSC per resolution No. 050833 dated June 23, 2005. This
constrained petitioner to file with the CA a petition for review
under Rule 43 of the Rules of Court.
Since Paler had in the meantime already reached the
compulsory age of retirement on July 28, 2005 and was no
longer entitled to reinstatement, the CA affirmed with
modification CSC resolution 04-1214 dated November 9, 2004
and resolution No. 050833 dated June 23, 2005.
COA filed a motion for reconsideration but this was denied by
the CA in the assailed resolution dated April 27, 2005. Hence,
this petition. Paler aside from arguing that the CA did not
commit any error in sustaining the CSC resolutions, also assails
COA Secretary Atty. Arturo L. Tiu's authority to file the petition
and sign the verification and certification of non-forum
shopping on behalf of the Commission Chairman.

222
ISSUE:
Whether or not the Commission Secretary Atty. Tiu has the
authority to file the petition and sign the verification and
certification of non-forum shopping in behalf of the
Commission Chairman.

RULING:

No, Commission Secretary Atty. Tiu has no authority to file the

petition and sign the verification and certification of non-forum
shopping in behalf of the Commission Chairman.
According to the SC, Commission on Appointments is a
government entity created by the Constitution and headed by
its Chairman. There was no need for the Chairman himself to
sign the verification. Its representative, lawyer or any person
who personally knew the truth of the facts alleged in the
petition could sign the verification. With regard, however, to the
certification of non-forum shopping, the established rule is that
it must be executed by the plaintiff or any of the principal
parties and not by counsel.
Here, it is Atty. Tiu, the Commission Secretary who filed the
petition and signed the certification of non-forum shopping in
behalf of the Commission Chairman. It should have been valid;
however, there is nothing on record to prove such authority.
Atty. Tiu did not even bother to controvert Paler’s allegation of

223
his lack of authority. Hence, Atty. Tiu has no authority to do
such acts in behalf of the Commission Chairman.

224
 BASAN VS. COCA-COLA BOTTLERS PHILIPPINES

FACTS:
Petitioners Romeo Basan, Danilo Dizon, Jaime L. Tumabiao,
Jr., Roberto DelaRama,Jr., Ricky S. Nicolas, Crispulo D. Donor,
GaloFalguera filed a complaint for illegal dismissal with money
claims against respondent Coca-Cola Bottlers Philippines,
alleging that respondent dismissed them without just cause and
prior written notice required by law.
The Labor arbiter and NLR ruled in favor of Petitioners but the
Court of Appeals reversed the decision.

Petitioners essentially maintain that contrary to the findings of

the CA, they were continuously hired by respondent company to
perform duties necessary and desirable in the usual trade or
business and are, therefore, regular employees. They allege that
if their services had really been engaged for fixed specific
periods, respondent should have at least provided the contracts
of employment evidencing the same.

For its part, respondent contends that the petition should be

denied due course for its verification and certification of non-
forum shopping was signed by only one of the petitioners. It
alleges that even assuming the validity of the same, it should
still be dismissed for the appellate court aptly found that

225
petitioners were fixed-term employees who were hired
intermittently.

ISSUE:
Whether or not the verification and certification of non-forum
shopping is invalid for being signed by only one of the
petitioner?

RULING:

No. On the procedural issue, we hold that while the general rule
is that the verification and certification of non-forum shopping
must be signed by all the petitioners in a case, the signature of
only one of them, petitioner Basan in this case, appearing
thereon may be deemed substantial compliance with the
procedural requirement. Jurisprudence is replete with rulings
that the rule on verification is deemed substantially complied
with when one who has ample knowledge to swear to the truth
of the allegations in the complaint or petition signs the
verification, and when matters alleged in the petition have been
made in good faith or are true and correct. Similarly, this Court
has consistently held that when under reasonable or justifiable
circumstances, as when all the petitioners share a common
interest and invoke a common cause of action or defense, as in
this case, the signature of only one of them in the certification
against forum shopping substantially complies with the

226
certification requirement. Thus, the fact that the petition was
signed only by petitioner Basan does not necessarily result in its
outright dismissal for it is more in accord with substantial
justice to overlook petitioners’ procedural lapses. Indeed, the
application of technical rules of procedure may be relaxed in
labor cases to serve the demand of justice.

227
 ANICETO UY vs.COURT OF APPEALS, MINDANAO
STATION, CAGAYAN DE ORO CITY, CARMENCITA
NAVAL-SAI, REP. BY HER ATTORNEY-INFACT
RODOLFO FLORENTINO

FACTS:
In 1979, private respondent Carmencita Naval-Sai (Naval-Sai)
acquired ownership of a parcel of land described as Lot No. 54-
B (LRC) Psd 39172 and covered by Transfer Certificate of Title
(TCT) No. T-19586 from her brother. The land was later
subdivided, with the corresponding titles issued in Naval-Sai's
name in the Register of Deeds of North Cotabato. Two of these
subdivided lots are the subject of this case.

Subsequently, Naval-Sai sold said subdivided lot to a certain

Bobby Adil on installment, on the condition that the absolute
deed of sale will be executed only upon full payment. Adil failed
to pay the amortization, forcing him to sell his unfinished
building on the property to spouses Francisco and
LouellaOmandac.

Meanwhile, Naval-Sai borrowed money from a certain Grace

Ng. As security, Naval-Sai delivered to Ng TCTs of the said
subdivided lots. Ng, on the other hand, borrowed money from

228
petitioner and also delivered to the latter the two titles to
guarantee payment of the loan.

Sometime thereafter, Naval-Sai learned that petitioner filed a

case for recovery of possession (Civil Case No. 1007) against
Francisco Omandac. Branch 17 of the Regional Trial Court
(RTC) in Kidapawan City ruled in favor of petitioner. Naval-Sai
filed a motion for new trial before the Court of Appeals, arguing
that her signature in the purported deed of sale presented in the
case between her and petitioner was a forgery. Civil Case No.
1007, however, became final and executory in 2001. The
spouses Omandac were ejected from the property and
petitioner gained possession of the same.

In July 1999, Naval-Sai filed a Complaint for Annulment of

Deed with Damages before the same Branch 17 of the RTC in
Kidapawan City against petitioner. The subject of the complaint
was the deed of sale allegedly executed between Naval-Sai and
petitioner involving said subdivided lots. Naval-Sai prayed that
the deed of sale be declared null and void ab initio because the
alleged sale between her and petitioner was a forgery. Naval-Sai
argued that she never sold the lots and that her signature in the
purported deed of sale is spurious.

229
Naval-Sai filed an Amended Complaint dated July 29, 1999. She
asserted that the subject TCTs were already cancelled by virtue
of the deed of sale. Unlike the original complaint, however, the
Amended Complaint was not signed by Naval-Sai, but by her
counsel.

Petitioner now raised special and affirmative defenses of,

among others, non-compliance with the requisite certification
of non-forum shopping and prescription. He asserted that
jurisdiction has never been acquired over the parties and the
subject matter because the certification against forum shopping
in the Amended Complaint was defective, for having been
merely signed by Naval-Sai's counsel.

ISSUE:
Whether or not the CA erred when it ruled that there was
substantial compliance with the requirements on Certification
for Non-Forum Shopping.

RULING:

No, There was substantial compliance with the requirements on

certification against forum shopping.

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A certification against forum shopping is a peculiar and
personal responsibility of the party, an assurance given to the
court or other tribunal that there are no other pending cases
involving basically the same parties, issues and causes of action.
It must be executed by the party-pleader, not by his counsel. If,
however, for reasonable or justifiable reasons, the party-pleader
is unable to sign, he must execute a Special Power of Attorney
(SPA) designating his counsel of record to sign on his behalf.

Here, the original complaint contained a proper verification and

certification against forum shopping duly signed by Naval-Sai
as plaintiff. The verification and certification in the amended
complaint, on the other hand, was only signed by her counsel,
Atty. Norberto L. Ela. Atty. Ela was not authorized to sign on
behalf of Naval-Sai, as in fact, she assigned one Rodolfo
Florentino as agent. The Court of Appeals pointed out that in
the certification in the amended complaint, Atty. Ela specified
that it should be taken and read together with the original
complaint. The Court of Appeals took this as a cautionary move
on the part of Naval-Sai, justifying the relaxation of the rules on
the ground of substantial compliance. We find, however, that
this cautionary move is ineffectual because under the Rules of
Civil Procedure, an amended complaint supersedes the original
complaint.31 For all intents and purposes, therefore, the
original complaint and its verification and certification ceased

231
to exist. This, notwithstanding, we find there was still
substantial compliance with the Rules.

In the case of Far Eastern Shipping Company v. Court of

Appeals, while we said that, strictly, a certification against
forum shopping by counsel is a defective certification, the
verification, signed by petitioner’s counsel in said case, is
substantial compliance because it served the purpose of the
Rules of informing the Court of the pendency of another action
or proceeding involving the same issues. We then explained that
procedural rules are instruments in the speedy and efficient
administration of justice which should be used to achieve such
end and not to derail it.

We also find that the prima facie merits of the case serve as a
special circumstance or a compelling reason to relax the rules
on certification against forum shopping.

We have ruled that the general rule is that non-compliance or a

defect in the certification is not curable by its subsequent
submission or correction. However, there are cases where we
exercised leniency and relaxed the rules on the ground of
substantial compliance, the presence of special circumstances
or compelling reasons. The rules on forum-shopping are
designed to promote and facilitate the orderly administration of

232
justice and "should not be interpreted with such absolute
literalness as to subvert its own ultimate and legitimate
objective or the goal of all rules of procedure— which is to
achieve substantial justice as expeditiously as possible.”

233
 BANDILLON VS. LFUC

FACTS:
Petitioners are truck drivers and employees of Respondent
Corp. They filed a complaint for violation of labor standard laws
before the DOLE Region VI. No violations was found by the
Labor Enforcement Officer, a finding that was upheld on appeal
to the DOLE-VI Regional Director.

The employees filed an appeal with the Secretary of Labor and

Employment who then issued an Order reversing the previous
order of the DOLE-VI Regional Director.
Upon a denial of its motion for reconsideration Respondent
then filed a petition to the CA who then denied the petition and
affirmed the decision of the DOLE Secretary.

The Order complies with the DOLE Secretary's Order which

called for the "appropriate computation of the workers'
individual entitlements."

The DOLE Region VI then issued a Writ of Execution. The writ

directed the enforcement of the Order of the regional director
for LFUC to pay each employee in various forms of unpaid
wages and other pays.

234
After being served with the writ, respondents filed a Petition
with the CA, seeking to set aside the writ of execution.

The CA held that due process was not observed and ordered the
case remanded to the regional director for the reception of
evidence in order to properly compute the monetary claims of
the employees.

The employees filed a motion for reconsideration of the

appellate court's decision but, in the other assailed Resolution
the same was denied prompting the petitioners to this court.

Respondent presented some procedural challenges to the

petition. It reported that a number of the employees did not
sign the SPA for them to be represented in this petition by their
union president and that the employees who died were
allegedly not properly substituted.

ISSUE:
Whether or not that, the concerned employees, by not signing
the SPA authorizing their Petitioner to file the petition, and to
sign the verification and certification against forum shopping
for such purpose which, in turn, rendered the petition defective.

235
RULING:

The court held that the petition cannot be rendered defective

even if the union president was the only one who signed the
verification and certification. Although the respondent claims
that, Sec 5 of Rule 7 of the Rules of Court says that the principal
party must be the one who signs and certifies the pleading.

Section 5.Certification against forum shopping. — The plaintiff

or principal party shall certify under oath in the complaint or
other initiatory pleading asserting a claim for relief…..
The court said that neither the fact that the union president
alone signed the petition's verification and certification against
forum shopping, nor the fact that the SPA authorizing the filing
of the petition was not signed by all petitioners will render the
petition defective, as the court said that the rules must be
interpreted liberally in order to attain justice.

The union president alone signed the verification and

certification against forum shopping as the person authorized in
the SPA to do so. But instead of rendering the petition defective
or invalid. The court ruled that was held in certain instances,
the signature of even just one person out of many petitioners in
the verification and certification against forum shopping can be
deemed enough to meet the requirements of the rules.

236
The SPA is an authorization granted by the employees in favor
of their union president to file the appropriate petition before
the Supreme Court and to sign the petition’s verification and
certification against forum shopping. The employees, who are
the SPA's principals, became the petitioners in the case.

237
PEOPLE OF THE PHILIPPINES, REPRESENTED BY
THE OFFICE OF THE CITY PROSECUTOR,
DEPARTMENT OF JUSTICE, ROXAS CITY VS. JESUS
A. ARROJADO

FACTS:
Jesus Arojado was charged with the crime of murder by the
Office of the City Prosecutor of Roxas City, Capiz, filed a Motion
to Dismiss the Information against him on the ground that the
investigating prosecutor who filed the Information did not
indicate therein the number and date of issue of her Mandatory
Continuing Legal Education Certificate of Compliace, as
required by Bar Matter No. 1922 promulgated by the Court on
June 3, 2008. The Office of the City Prosecutor opposed the
Motion to Dismiss, contending that 1) the Information sought
to be dismissed is sufficient in form and substance; (2) the lack
of proof of MCLE compliance by the prosecutor who prepared
and signed the Information should not prejudice the interest of
the State in filing charges against persons who have violated the
law; and (3) and administrative edict cannot prevail over
substantive or precedural law, by imposing additional
requirements for the sufficiency of a criminal information.

The RTC dismissed the Information without prejudice. The

prosecution’s motion for reconsideration was also denied, hence

238
the People of the Philippines filed a petition for certiorari
and/or mandamus before the Court of Appeals. The CA,
however, dismissed the petition. It held that the prosecution
was not without any recourse other than a petition for
certiorari/mandamus as it may simply re-file the Information
as the dismissal thereof was without prejudice. Thus, the
People of the Philippines represented by the Office of the City
Prosecutor of Roxas City filed the instant petition for review on
certiorari to assail the CA decision.
ISSUE:
Whether or not the Motion to Dismiss the Information was
proper for failure of the Investigating Prosecutor to vindicate
her MCLE Certificate of Compliance as required under Bar
Matter No. 1922.

RULING:

No. The petition lacks merit. Pertinent portions of B.M. No.

1922, provide as follows:

The Court further Resolved, upon the recommendation of the

Committee on Legal Education and Bar Matters, to REQUIRE
practicing members of the bar to INDICATE in all pleadings
filed before the courts or quasi-judicial bodies, the number and
date of issue of their MCLE Certificate of Compliance or

239
Certificate of Exemption, as may be applicable, for the
immediately preceding compliance period. Failure to disclose
the required information would cause the dismissal of the case
and the expunction of the pleadings from the records.

x xx

Section 1, Rule 6 of the Rules of Court, as amended, defines

pleadings as the written statements of the respective claims and
defenses of the parties submitted to the court for appropriate
judgment. Among the pleadings enumerated under Section 2
thereof are the complaint and the answer in a civil suit. On the
other hand, under Section 4, Rule 110 of the same Rules, an
information is defined as an accusation in writing charging a
person with an offense, subscribed by the prosecutor and filed
with the court. In accordance with the above definitions, it is
clear that an information is a pleading since the allegations
therein, which charge a person with an offense, is basically the
same as a complaint in a civil action which alleges a plaintiffs
cause or cause of action. In this respect, the Court quotes with
approval the ruling of the CA on the matter, to wit:

[A]n information is, for all intents and purposes, considered

an initiatory pleading because it is a written statement that
contains the cause of action of a party, which in criminal cases

240
is the State as represented by the prosecutor, against the
accused. Like a pleading, the Information is also filed in court
for appropriate judgment. Undoubtedly then, an Information
falls squarely within the ambit of Bar Matter No. 1922, in
relation to Bar Matter 850.

As to petitioner’s contention that the failure of the

investigating prosecutor to indicate in the subject Information
the number and date of issue of her MCLE Certificate of
Compliance is a mere formal defect and is not a valid ground to
dismiss such Information, suffice it to state that B.M. No. 1922
categorically provides that “failure to disclose the required
information would cause the dismissal of the case and the
expunction of the pleadings from the records.” In this regard,
petitioner must be reminded that it assailed the trial court’s
dismissal of the subject Information via a special civil action for
certiorari filed with the CA. The writ of certiorari is directed
against a tribunal, board or officer exercising judicial or quasi-
judicial functions that acted without or in excess of its or his
jurisdiction or with grave abuse of discretion. Grave abuse of
discretion means such capricious or whimsical exercise of
judgment which is equivalent to lack of jurisdiction. To justify
the issuance of the writ of certiorari, the abuse of discretion
must be grave, as when the power is exercised in an arbitrary or
despotic manner by reason of passion or personal hostility, and

241
it must be so patent and gross as to amount to an evasion of a
positive duty or to a virtual refusal to perform the duty
enjoined, or to act at all, in contemplation of law, as to be
equivalent to having acted without jurisdiction. Since the trial
court’s dismissal of the subject Information was based on a
clear and categorical provision of a rule issued by this Court, the
court a quo could not have committed a capricious or whimsical
exercise of judgment nor did it exercise its discretion in an
arbitrary or despotic manner. Thus, the CA did not commit
error in dismissing petitioner’s petition for certiorari.

The Court is neither persuaded by petitioner’s invocation of

the principle on liberal construction of procedural rules by
arguing that such liberal construction “may be invoked in
situations where there may be some excusable formal deficiency
or error in a pleading, provided that the same does not subvert
the essence of the proceeding and connotes at least a reasonable
attempt at compliance with the Rules.” The prosecution has
never shown any reasonable attempt at compliance with the
rule enunciated under B.M. No. 1922. Even when the motion for
reconsideration of the RTC Order dismissing the subject
Information was filed, the required number and date of issue of
the investigating prosecutor’s MCLE Certificate of Compliance
was still not included nor indicated. Thus, in the instant case,
absent valid and compelling reasons, the requested leniency

242
and liberality in the observance of procedural rules appear to be
an afterthought, hence, cannot be granted.

In any event, to avoid inordinate delays in the disposition of

cases brought about by a counsel’s failure to indicate in his or
her pleadings the number and date of issue of his or her MCLE
Certificate of Compliance, this Court issued an En Bane
Resolution, dated January 14, 2014 which amended B.M. No.
1922 by repealing the phrase “Failure to disclose the required
information would cause the dismissal of the case and the
expunction of the pleadings from the records” and replacing it
with “Failure to disclose the required information would subject
the counsel to appropriate penalty and disciplinary action.”
Thus, under the amendatory Resolution, the failure of a lawyer
to indicate in his or her pleadings the number and date of issue
of his or her MCLE Certificate of Compliance will no longer
result in the dismissal of the case and expunction of the
pleadings from the records. Nonetheless, such failure will
subject the lawyer to the prescribed fine and/or disciplinary
action.

In light of the above amendment, while the same was not yet
in effect at the time that the subject Information was filed, the
more prudent and practical thing that the trial court should
have done in the first place, so as to avoid delay in the

243
disposition of the case, was not to dismiss the Information but
to simply require the investigating prosecutor to indicate
therein the number and date of issue of her MCLE Certificate of
Compliance.

Hence, the petition is denied. The decision and resolution of the

Court of Appeals are affirmed.

244
POWERHOUSE STAFFBUILDERS INTERNATIONAL,
INC.,, v. ROMELIA

FACTS:
Powerhouse hired respondents as operators for its foreign
principal, Catcher Technical Co. Ltd./Catcher Industrial Co.
Ltd. (Catcher), based in Taiwan, each with a monthly salary of
NT$15,840.00 for the duration of two years commencing upon
their arrival at the jobsite. They were deployed on June 2, 2000.
Sometime in February 2001, Catcher informed respondent
employees that they would be reducing their working days due
to low orders and financial difficulties. The respondent
employees were repatriated to the Philippines on March 11,
2001.

On March 22, 2001, respondent employees filed separate

complaints for illegal dismissal, refund of placement fees, moral
and exemplary damages, as well as attorney's fees, against
Powerhouse and Catcher before the Labor Arbiter (LA) which
were later consolidated upon their motion. They alleged that on
March 2, 2001, Catcher informed them that they would all be
repatriated due to low orders of Catcher. Initially, they refused
to be repatriated but they eventually gave in because Catcher
stopped providing them food and they had to live by the
donations/dole outs from sympathetic friends and the

245
church.7 Furthermore, during their employment with Catcher,
the amount of NT$10,000.00 was unjustifiably deducted every
month for eight to nine months from their individual salaries.

On the other hand, Powerhouse maintained that respondent

employees voluntarily gave up their jobs following their
rejection of Catcher's proposal to reduce their working days. It
contended that before their repatriation, each of the
respondents accepted payments by way of settlement, with the
assistance of Labor Attache Romulo Salud.

During the proceedings before the LA, Powerhouse moved to

implead JEJ International Manpower Services (JEJ) as
respondent on account of the alleged transfer to the latter of
Catcher's accreditation.The motion was granted and JEJ
submitted its position paper, arguing that the supposed transfer
of accreditation to it did not affect the joint and solidary liability
of Powerhouse in favor of respondent employees. It averred that
any contract between JEJ and Powerhouse could not be
enforced in the case as it involved no employer-employee
relationship and is therefore outside the jurisdiction of the labor
arbiter.

The LA, in a Decision dated September 27, 2002, ruled in favor

of the respondents, finding the respondent employees'

246
dismissal and/or pretermination of their employment contracts
illegal.

All the parties appealed to the National Labor Relations

Commission (NLRC).

On appeal, the NLRC, in its Decision dated July 31, 2006,

affirmed the LA's Decision with modification.

Powerhouse moved for reconsideration but its motion was

denied by the NLRC in its Resolutiondated May 31, 2007.

Aggrieved, Powerhouse elevated the matter to the CA via a

Petition for Certiorari imputing grave abuse of discretion on
the part of the NLRC in declaring the repatriation of respondent
employees as an act of illegal dismissal, awarding
reimbursement of alleged salary deduction without factual basis
or concrete and direct evidence, ordering the refund of the
placement fees which is subject to the jurisdiction of the POEA,
and dropping JEJ as a party respondent in total disregard of the
POEA rules.

On March 24, 2009, the CA rendered a Decision22 dismissing

Powerhouse's petition.

247
Powerhouse moved for reconsideration of the CA Decision but
the same was denied

ISSUE:

Powerhouse, in questioning the appellate court's ruling, also

calls the attention of this Court to their substantial compliance
with all the procedural requirements in filing their Petition
for Certiorari before the CA and prays for a liberal
interpretation of the rules in the interest of substantial justice.

RULING:

Before going into the substantive merits of the case, we shall

first resolve the procedural issues raised by respondents in their
respective Comments.

In their Comment, respondent employees assert that

Powerhouse failed to show any justifiable reason why it should
be excused from the operation of the rules. Moreover, the CA
actually resolved the petition on the merits but Powerhouse
showed nothing to earn a favorable ruling.

On the other hand, JEJ, in its Comment, avers that Powerhouse

failed to raise as an issue the dismissal of Powerhouse's petition
due to its gross and blatant violations of the requirements of

248
Rule 65. Instead, Powerhouse made assignments of errors, or
what it called "novel questions of law," which is just a ploy to
seek the review of the factual findings of the CA and the NLRC.

The petition in the CA was timely filed.

Section 4, Rule 65 of the 1997 Rules of Civil Procedure, as

amended,provides:

Sec. 4. When and where petition filed. - The petition shall be

filed not later than sixty (60) days from notice of the judgment,
order or resolution. In case a motion for reconsideration or new
trial is timely filed, whether such motion is required or not, the
sixty (60) day period shall be counted from notice of the denial
of said motion.

x xx

In this case, Powerhouse received on June 21, 2007, a copy of

the May 31, 2007 Order of the NLRC denying its motion for
reconsideration.39 Thus, it had 60 days, or until August 20,
2007, to file a petition for certiorari before the CA. However,
since August 20, 2007 was proclaimed by President Arroyo as a
special non-working day pursuant to Proclamation No. 1353,
series of 2007, Powerhouse had until the next working day,
August 21, 2007 to file its petition. The relevant portion of Rule

249
22, Section 1 provides: "x xx If the last day of the period, as thus
computed, falls on a Saturday, a Sunday, or a legal holiday in
the place where the court sits, the time shall not run until the
next working day." Thus, the petition filed on August 21, 2007
was timely filed.

Powerhouse substantially complied with the

requirements of verification and certification against
forum shopping.

In previous cases, we held that the following officials or

employees of the company can sign the verification and
certification without need of a board resolution: (1) the
Chairperson of the Board of Directors; (2) the President of a
corporation; (3) the General Manager or Acting
General Manager; (4) Personnel Officer; and (5) an
Employment Specialist in a labor case. The rationale applied in
these cases is to justify the authority of corporate officers or
representatives of the corporation to sign the verification or
certificate against forum shopping, being "in a position to verify
the truthfulness and correctness of the allegations in the
petition."

In this case, the verification and certification42 attached to the

petition before the CA was signed by William C. Go, the

250
President and General Manager of Powerhouse, one of the
officers enumerated in the foregoing recognized exception.
While the petition was not accompanied by a Secretary's
Certificate, his authority was ratified by the Board in its
Resolution adopted on October 24, 2007. Thus, even if he was
not authorized to execute the Verification and Certification at
the time of the filing of the Petition, the ratification by the board
of directors retroactively confirms and affirms his authority and
gives us more reason to uphold that authority.

251
HEIRS OF JOSEFINA GABRIEL v. SECUNDINA
CEBRERO, CELSO LAVIÑA, AND MANUEL C. CHUA

FACTS:
On January 24, 1991, Segundina Cebrero (Cebrero), through
her attorney-in-fact RemediosMuyot, executed a real estate
mortgage over the subject property located in Sampaloc,
Manila; pursuant to an amicable settlement dated January 11,
1991 entered into by the parties in the case of annulment of
revocation of donation. In the said settlement, Josefina Gabriel
(Gabriel) recognized Cebrero's absolute ownership of the
subject property and relinquished all her claims over the
property in consideration of the payment of P8,000,000.00.

Upon Cebrero's failure to pay the amount within the period of

extension until December 31, 1991, Gabriel filed in 1993 an
action for foreclosure of the real estate mortgage. RTC of Manila
ruled in Gabriel's favor and ordered Cebrero to pay the
P8,000,000.00 and interest, or the subject property shall be
sold at public auction in default of payment.
The sheriff initiated the necessary proceedings for the public
auction sale when no appeal was filed and the decision became
final. On July 12, 1994, Gabriel, being the sole bidder,
purchased Cebrero's undivided share of one-half (1/2) conjugal

252
share, plus her inheritance consisting of one-ninth (1/9) of the
subject property in the amount of P13,690,574.00. However,
Gabriel had not registered the Final Deed of Sale. On November
27, 1996, Eduardo Cañiza (Cañiza),allegedly in behalf of
Gabriel, instituted a Complaint for declaration of nullity of sale
and of the Transfer Certificate of Title (TCT) No. 225341 of the
subject property registered under Progressive, a single
proprietorship represented by its President and Chairman,
respondent Manuel C. Chua (Chua).

In their Answer, respondents alleged that Gabriel has no legal

capacity to sue as she was bedridden and confined at the Makati
Medical Center since 1993. The complaint should be dismissed
because Cañiza signed the verification and certification of the
complaint without proper authority.
On appeal, the CA reversed and set aside the Decision of the
RTC. There was no Special Power of Attorney (SPA) attached to
the complaint to substantiate Cañiza's authority to sign the
complaint and its verification and certification of non-forum
shopping. As the awardee of the foreclosure proceedings,
Gabriel is the real party-in-interest in the case. Since the trial
court never acquired jurisdiction over the complaint, all
proceedings subsequent thereto are considered null and void,
and can never attain finality.

253
ISSUE:
WITH DUE RESPECT, THE HONORABLE COURT OF
APPEALS COMMITTED SERIOUS ERROR OF LAW, WHEN
IT REVERSED AND SET ASIDE THE DECISION, DATED
SEPTEMBER 26, 2013, RENDERED BY THE REGIONAL
TRIAL COURT OF MANILA, BRANCH 52 IN CIVIL CASE NO.
97-81420 AS TO THE VALIDITY OF THE SALE OF TCT NO.
225341 AND DISMISSED THE COMPLAINT DATED
NOVEMBER 27, 1996 ON THE SOLE BASIS OF MERE
TECHNICALITY THAT THE VERIFICATION AND
CERTIFICATION OF NON-FORUM SHOPPING WAS NOT
SUPPORTED WITH THE SPECIAL POWER OF ATTORNEY
OF EDUARDO CAÑIZA.

RULING:

The instant petition is without merit.

Petitioners allege that the Order20 dated June 13, 2007 of the
RTC denying Laviña's motion to set a preliminary hearing on
the affirmative defenses has long attained finality since
respondents did not appeal the same. Respondents are now
estopped from raising the issue on appeal.

254
A final judgment or order is one that finally disposes of a case,
leaving nothing more to be done by the Court in respect thereto,
e.g., an adjudication on the merits which, on the basis of the
evidence presented at the trial, declares categorically what the
rights and obligations of the parties are and which party is in
the right; or a judgment or order that dismisses an action on the
ground, for instance, of res judicata or prescription. Conversely,
an order that does not finally dispose of the case, and does not
end the Court's task of adjudicating the parties' contentions and
determining their rights and liabilities as regards each other,
but obviously indicates that other things remain to be done by
the Court, is "interlocutory," e.g., an order denying a motion to
dismiss under Rule 16 of the Rules. Unlike a "final" judgment or
order, which is appealable, an "interlocutory" order may not be
questioned on appeal except only as part of an appeal that may
eventually be taken from the final judgment rendered in the
case.22

The RTC Order dated June 13, 2007 denying the motion to set
hearing on special and affirmative defenses is no doubt
interlocutory for it did not finally dispose of the case but will
proceed with the pre-trial. As such, the said Order is not
appealable, but may be questioned as part of an appeal that may
eventually be taken from the final judgment rendered. Here,
respondents had consistently raised in their Answer and in the

255
appeal before the CA the issue of Cañiza's authority to file the
case on behalf of Gabriel.

Petitioners allege that the verification and certification of the

complaint conforms with the rules since Ca:fiiza, as Gabriel's
attorney-in fact, signed it. Besides, any defect was cured when
he, being one of the heirs, substituted Gabriel when she died
during the pendency of the case before the trial court.

Every action must be presented in the name of the real party-in-

interest.
Here, Gabriel emerged as the highest bidder when a portion of
the subject property was sold on a public auction sale on July
12, 1994 after she foreclosed the real estate mortgage over the·
said property. As the one claiming ownership of the said
property, she is the real party-in-interest in the instant case.

As to the verification and certification of non-forum shopping,

the Court, in Altres, et al. v. Empleo, et al.,23 laid down the
following guidelines:

For the guidance of the bench and bar, the Court restates in
capsule form the jurisprudential pronouncements already
reflected above respecting non-compliance with the
requirements on, or submission of defective, verification and

256
certification against forum shopping:
1) A distinction must be made between non-compliance with
the requirement on or submission of defective verification, and
non compliance with the requirement on or submission of
defective certification against forum shopping.

2) As to verification, non-compliance therewith or a defect

therein does not necessarily render the pleading fatally
defective. The court may order its submission or correction or
act on the pleading if the attending circumstances are such that
strict compliance with the Rule may be dispensed with in order
that the ends of justice may be served thereby.

3) Verification is deemed substantially complied with when one

who has ample knowledge to swear to the truth of the
allegations in the complaint or petition signs the verification,
and when matters alleged in the petition have been made in
good faith or are true and correct.

4) As to certification against forum shopping, non-

compliance therewith or a defect therein, unlike in
verification, is generally not curable by its subsequent
submission or correction thereof, unless there is a
need to relax the Rule on the ground of "substantial
compliance" or presence of "special circumstances or

257
compelling reasons".

5) The certification against forum shopping must be signed

by all the plaintiffs or petitioners in a case; otherwise, those who
did not sign will be dropped as parties to the case. Under
reasonable or justifiable circumstances, however, as when all
the plaintiffs or petitioners share a common interest and invoke
a common cause of action or defense, the signature of only one
of them in the certification against forum shopping
substantially complies with the Rule.

6) Finally, the certification against forum shopping

must be executed by the party-pleader, not by his
counsel. If, however, for reasonable or justifiable
reasons, the party-pleader is unable to sign, he must
execute a Special Power of Attorney designating his
counsel of record to sign on his behalf.24
Section 5,25 Rule 7 of the Rules of Court provides that the
certification against forum shopping must be executed by the
plaintiff or principal party. The reason for this is that the
plaintiff or the principal knows better than anyone, whether a
petition has previously been filed involving the same case or
substantially the same issues.26 If, for any reason, the principal
party cannot sign the petition, the one signing on his behalf
must have been duly authorized.27

258
The complaint filed before the RTC was filed in the name of
Gabriel, however, it was Cañiza who executed the verification
and certification of forum shopping, alleging that he was
Gabriel's attorney-in-fact.
It was held that when an SPA was constituted precisely to
authorize the agent to file and prosecute suits on behalf of the
principal, then it is such agent who has actual and personal
knowledge whether he or she has initiated similar actions or
proceedings before various courts on the same issue on the
principal's behalf, thus, satisfying the requirements for a valid
certification against forum shopping. The rationale behind the
rule that it must be the "petitioner or principal party himself"
who should sign such certification does not apply. Thus, the
rule on the certification against forum shopping has been
properly complied with when it is the agent or attorney-in-fact
who initiated the action on the principal's behalf and who
signed the certification against forum shopping.29

However, there was no duly executed SPA appended to the

complaint to prove Cañiza's supposed authority to file and
prosecute suits on behalf of Gabriel. The Court cannot consider
the mere mention in the December 15, 1993 Decision that he
was Gabriel's attorney-in-fact as evidence that he was indeed
authorized and empowered to initiate the instant action against

259
respondents. There was also no evidence of substantial
compliance with the rules or even an attempt to submit an SPA
after filing of the complaint.

This Court expounded that the complaint filed for and in behalf
of the plaintiff by one who is unauthorized to do so is not
deemed filed. An unauthorized complaint does not produce any
legal effect. Hence, the court should dismiss the complaint on
the ground that it has no jurisdiction over the complaint and
the plaintiff.32

In Palmiano-Salvador v. Rosales,33 the complaint was filed in

the name of respondent Constantino Rosales (Rosales), but one
Rosauro Diaz (Diaz) executed the verification and certification
alleging that he was Rosales' attorney-in-fact when there was no
document attached in the complaint to prove his allegation of
authority. The Court held that since no valid complaint was
filed, the Metropolitan Trial Court of Manila did not acquire
jurisdiction over the case.

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. Courts acquire jurisdiction over the plaintiffs upon
the filing of the complaint, and to be bound by a decision, a
party should first be subjected to the court's jurisdiction.34

260
The substitution of heirs in a case ensures that the deceased
party would continue to be properly represented in the suit
through the duly appointed legal representative of his
estate.35 The purpose behind the rule on substitution is to
apprise the heir or the substitute that he is being brought to the
jurisdiction of the court in lieu of the deceased party by
operation of law.36 It is for the protection of the right of every
party to due process. Proper substitution of heirs is effected for
the trial court to acquire jurisdiction over their persons and to
obviate any future claim by any heir that he or she was not
apprised of the litigation.37 From the foregoing, Cañiza's
subsequent substitution as one of Gabriel's heirs did not cure
the defect in the complaint, i.e., when he signed the verification
and certification against forum shopping without apparent
authority. To reiterate, the trial court acquires jurisdiction over
the plaintiff upon the filing of the complaint. Besides, the
substitution merely ensured that Gabriel's interest would be
properly represented and that her heirs were brought to
jurisdiction of the court.

261
 TOPIC : ALLEGATIONS IN PLEADINGS

FERNANDO V. WESLEYAN

FACTS:
From Jan 9, 2006 until February 2, 2007, the petitioner a
domestic corporation dealing and installing medical equipment
and supplies, made a contract with WUP’s hospital with the
following details: a) MOA dated January 9, 2006 worth
P18,625,000.00 of medical equipment; b) Deed of Undertaking
dated July 5, 2006 for the installation of medical gas pipeline
system worth P8,500,000.00; c) Deed of Undertaking dated
July 27, 2006 for the supply of one unit of Diamond Select Slice
CT and one unit of Diamond Select CV-P costing
P65,000,000.00; and d) Deed of Undertaking dated February
2, 2007 for the supply of furnishings and equipment worth
P32,926,650.00. Petitioner assailed that only P67,357,683.23 of
its total obligation of P123,901,650.00, leaving unpaid the sum
of P54,654,195.54. The claim was later reduced to P50,400,000
and allowed installment payment within 36 months. On May
27, 2009 a letter from WUP’s hospital addressed to the
petitioner raised the argument that the contracts were defective
and rescissible due to economic prejudice or lesion and due to

262
the new administration it is declining to recognize the Feb 11,
2009 agreement for lack of approval by the Board of Trustees. A
demand letter was sent to the respondents but no payment was
made hence, the petitioner filed a complaint for sum of money
in the RTC. The RTCC denied the motion to dismiss filed by the
respondent. A motion for Judgement Base on the Pleadings was
filed by the petitioner stating that the respondent had admitted
the complainant’s material allegations yet they did not tender
any issue as to such allegations although the respondent erred
their denial of material allegations in par. 6, 7, 8, 11, & 12. It was
denied by the RTC. An appeal through certiorari was made

ISSUE:
Whether or not the motion to dismiss based on the
respondent’s cited grounds are sufficient.

RULING:

The respondent qualified its admissions and denials by

subjecting them to its special and affirmative defenses of lack of
jurisdiction over its person, improper venue, litispendentia and
forum shopping was of no consequence because the affirmative
defenses, by their nature, involved matters extrinsic to the
merits of the petitioner’s claim, and thus did not negate the
material averments of the complaint.

263
GO TONG ELECTRICAL SUPPLY CO., INC. AND
GEORGE C. GO V. BPI FAMILY SAVINGS BANK, INC.,
SUBSTITUTED BY PHILIPPINE INVESTMENT ONE
[SPV-AMC], INC.,

FACTS:
Respondent, BPI Family Savings Bank, filed a complaint against
Go Tong Electrical Supply Co., Inc., and its president, George C.
Go, seeking that the latter be held jointly and severally liable to
it for the payment of their loan obligation. It was alleged that
respondents has applied and was granted financial assistance
by the then Bank of South East Asia, subsequently DBS Bank of
the Philippines, Inc. The loan agreement was renewed through
a Credit Agreement. Upon default of Go Tong Electrical Supply
Co, the respondent demanded payment, but to no avail. Hence,
the filing of the complaint.

In their counterclaim, petitioners stated they “specifically deny”

the allegations under the complaint. Specifically of their denial
of the execution of the loan agreement, the Promissory Notes,
and the CSA. During trial respondent presented the Account
Officer handling petitioners’ loan obligation and admitted that
he had no knowledge of how the promissory notes was
prepared, executed, and signed, nor did he witness its singing.

264
To counter respondents’ evidence, Go Tong Electrical’s Finance
Officer was able to pay its loan.

ISSUE:
Whether or not the CA Decision in upholding the genuineness
and due execution of the loan documents.

RULING:

Yes.

The Supreme Court explained that the genuineness and due

execution of the loan documents admitted by the petitioners are
under the parameters of Section 8, Rule 8 of the Rules which
provides:

“SEC. 8.How to contest such documents. — When

an action or defense is founded upon a written
instrument, copied in or attached to the
corresponding pleading as provided in the
preceding Section, the genuineness and due
execution of the instrument shall be deemed
admitted unless the adverse party, under oath,
specifically denies them, and sets forth what he
claims to be the facts; but the requirement of an

265
 oath does not apply when the adverse party does
not appear to be a party to the instrument or
when compliance with an order for an inspection
of the original instrument is refused. (Emphasis
supplied)”

In this case, the petitioners failed to specifically deny

the execution of the Credit Agreement, PN, and CSA
under Section 8, Rule 8 of the Rules of Court. Their
statement, “specifically deny the pertinent allegations
of the Complaint for being self-serving and pure
conclusions intended to suit plaintiffs purposes,” does
not constitute an effective denial as contemplated by
law. A general denial does not become specific by the
use of the word, “specifically.” Neither does it become
so by the simple expedient of coupling the same with a
broad conclusion of law that the allegations contested
are “self-serving” or are intended “to suit plaintiffs
purposes.”

To deny the genuineness and due execution of an

actionable document, the defendant must declare
under oath that he did not sign the document or that it
is otherwise false of fabricated. Neither does the
statement of the answer to the effect that the

266
instrument was procured by fraudulent representation
raise any issue as to its genuineness or due execution.
On the contrary such a plea is an admission both of the
genuineness and due execution thereof, since it seeks to
avoid the instrument upon a ground not affecting
either.

267
BENGUET EXPLORATION INC. VS. CA

FACTS:
Petitioner Benguet Exploration, Inc. (Benguet) chartered
private respondent Seawood Shipping Inc. for the transport of
the former’s cargoes, which are comprised of allegedly
2,243,496 wet metric tons of copper concentrates. When the
cargos were unloaded in Japan, Benguet received a report that
the cargo was 355 metric tons short of the amount stated in the
bill of lading. For this reason, petitioner Benguet made a claim
of the loss to Seawood Shipping and Switzerland Insurance. As
Benguet’s formal demand for the value of the alleged shortage
was refused payment by Seawood, the former filed a complaint
for damages against the latter and the latter’s insurance
company, private respondent Switzerland Insurance. To prove
its case, Benguet presented several documents, namely: a) bill
of lading; b) Certificate of Loading; c) certificate of Weight; and
d) Mates Receipt. It was admitted by the employees of Benguet
that no actual weighing was made and the procedure done was
merely the weighing the trucks before and after unloading the
copper concentrate cargos. For its part, respondent Switzerland
Insurance presented an Export Declaration No. 1131/85 which
stated that the copper concentrates to be transported to Japan
had a gross weight of only 2,050 wet metric tons or 1,845 dry
metric tons, 10 percent more or less. On the other hand,

268
Certified Adjusters, Inc., to which Switzerland Insurance had
referred petitioners claim, prepared a report which showed that
the copper concentrates weighed a total of 2,451.630 wet metric
tons. The Makati RTC dismissed Benguet’s complaint. Upon
appeal, its decision was affirmed by the Court of Appeals and
ruled that Benguet failed to establish loss or shortage of its
cargos. Undaunted, Benguet elevated the case to the Supreme
Court assailing the CA’s decision. It avers that the documents it
presented created a prima facie presumption that such amount
of copper concentrate was true and indeed loaded aboard
Seawood.

ISSUE:
Whether or not the Benguet’s documents, which were allegedly
to have been duly executed created were sufficient to establish
the loss or shortage of its copper concentrate cargos.

RULING:

No.Benguet Exploration Inc., failed to establish the loss or

shortage of its cargos, notwithstanding the due execution of its
bill of lading, Certificate of Loading, Certificate of Weight, and
Mates Receipt. This is so because the respondents were able to
present contrary evidence sufficient to overthrow the
presumption that the amount of copper concentrate was true.

269
The admission of the due execution and genuineness of a
document simply means that the party whose signature it bears
admits that he signed it or that it was signed by another for him
with his authority; that at the time it was signed it was in words
and figures exactly as set out in the pleading of the party relying
upon it; that the document was delivered; and that any formal
requisites required by law, such as a seal, an acknowledgment,
or revenue stamp, which it lacks, are waived by him. It is
nothing more than that the instrument is not spurious,
counterfeit, or of different import on its face from the one
executed.The only object of the rule was to enable a plaintiff to
make out a prima facie, not a conclusive case, and it cannot
preclude a defendant from introducing any defense on the
merits which does not contradict the execution of the
instrument introduced in evidence. As the Court ruled upon the
case, it observed that there is no evidence of the exact amount
of copper concentrates shipped. Thus, whatever presumption of
regularity in the transactions might have risen from the
genuineness and due execution of the Bill of Lading, Certificate
of Weight, Certificate of Loading, and Mates Receipt was
successfully rebutted by the evidence presented by respondent
Switzerland Insurance which showed disparities in the actual
weight of the cargo transported. This fact is compounded by the
admissions made by Lumibao and Cayabyab that they had no
personal knowledge of the actual amount of copper

270
concentrates loaded on the vessel. Consequently, Benguet’s
claim of loss or shortage is placed in serious doubt, there being
no other way of verifying the accuracy of the figures indicated in
their documentary evidence that could confirm the alleged loss.

271
 ASIAN CONSTRUCTION AND DEVELOPMENT
CORPORATION vs CA

FACTS:
Monark Equipment Corporation (MEC) filed a Complaintfor a
sum of money with damages against the Asian Construction and
Development Corporation (ACDC). ACDC filed a motion to file
and admit answer with third-party complaint against Becthel
Overseas Corporation (Becthel). In its answer, ACDC admitted
its indebtedness to MEC but filed a third-party complaint
against Becthel Overseas Corporation (Becthel) claiming that
the latter has not paid for the services rendered by ACDC
resulting to its failure to pay MEC. ACDC prayed that judgment
be rendered in its favor dismissing the complaint and ordering
the third-party defendant (Becthel) to pay. MEC opposed the
motion of ACDC to file a third-party complaint against Becthel
on the ground that the defendant had already admitted its
principal obligation to MEC and that the transaction between it
and ACDC, on the one hand, and between ACDC and Becthel,
on the other, were independent transactions. The trial court
issued a Resolution denying the motion of ACDC for leave to file
a third-party complaint and granting the motion of MEC, which
the trial court considered as a motion for a judgment on the
pleadings. The appellate court sustained the disallowance of the
third-party complaint of ACDC against Becthel on the ground

272
that the transaction between the said parties did not arise out of
the same transaction on which MECs claim was based.

ISSUE:
Whether or not a third-party complaint is proper

RULING:

NO. The bringing of a third-party defendant is proper if he

would be liable to the plaintiff or to the defendant or both for all
or part of the plaintiffs claim against the original defendant,
although the third-party defendants liability arises out of
another transaction. There must be a causal connection
between the claim of the plaintiff in his complaint and a claim
for contribution, indemnity or other relief of the defendant
against the third-party defendant. There is no causal connection
between the claim of the respondent for the rental and the
balance of the purchase price of the equipment and parts sold
and leased to ACDC, and the failure of Becthel to pay the
balance of its account to ACDC after the completion of the
project. Considering that the ACDC admitted its liability for the
principal claim of the MEC in its Answer with Third-Party
Complaint, the trial court did not err in rendering judgment on
the pleadings against it.

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 TOPIC: EFFECT OF FAILURE TO PLEAD

SALVADOR V. RABAJA
FACTS:
The subject property of the dispute isa parcel of land situated at
No. 25, Merryland Village, 375 Jose Rizal Street,Mandaluyong
City covered by Transfer Certificate of Title No. 13426 and
registered in the names of Spouses Salvador. From 1994 until
2002, Spouses Rabajawere leasing an apartment in the subject
lot.

Sometime in July 1998, Spouses Rabaja learned that Spouses

Salvador were looking for a buyer of the subject property.
Petitioner Herminia Salvador personally introduced Gonzales
to them as the administrator of the said property. Spouses
Salvador even handed to Gonzales the owner’s duplicate
certificate of title over the subject property. On July, 3, 1998,
Spouses Rabaja made an initial payment of P48,000.00 to
Gonzales in the presence of Herminia. Gonzales then presented
the Special Power of Attorneyexecuted by Rolando Salvador and
dated July 24, 1998. On the same day, the parties executed the
Contract to Sell which stipulated that for a consideration of
P5,000,000.00, Spouses Salvador sold, transferred and
conveyed in favor of Spouses Rabaja the subject property.
Spouses Rabaja made several payments totalling P950,000.00,

274
which were received by Gonzales pursuant to the SPA provided
earlier as evidenced by the check vouchers signed by Gonzales
and the improvised receipts signed by Herminia.

Sometime in June 1999, however, Spouses Salvador complained

to Spouses Rabaja that they did not receive any payment from
Gonzales. This prompted Spouses Rabaja to suspend further
payment of the purchase price; and as a consequence, they
received a notice to vacate the subject property from Spouses
Salvador for non-payment of rentals.

Thereafter, Spouses Salvador instituted an action for ejectment

against Spouses Rabaja. In turn, Spouses Rabaja filed an action
for rescission of contract against Spouses Salvador and
Gonzales, the subject matter of the present petition. In the
action for ejectment, the MeTC ruled in favor of Spouses
Salvador finding that valid grounds existed for the eviction of
Spouses Rabaja from the subject property and ordering them to
pay back rentals. Spouses Salvador were able to garnish the
amount of P593,400.00 from Spouses Rabaja’s time deposit
account pursuant to a writ of execution issued by the
MeTC. Spouses Rabaja appealed to the Regional Trial Court,
which reversed the MeTC ruling. RTC found that no lease
agreement existed between the parties. Thereafter, Spouses
Salvador filed an appeal with the CA the CA ruled in favor of

275
Spouses Salvador and reinstated the MeTC ruling ejecting
Spouses Rabaja Not having been appealed, the CA’s decision
became final and executory.

The pre-trial conference began but attempts to amicably settle

the case were unsuccessful. It was formally reset to February 4,
2005, but Spouses Salvador and their counsel failed to attend.
Consequently, the RTC issued the pre-trial orderdeclaring
Spouses Salvador in default and allowing Spouses Rabaja to
present their evidence ex parte against Spouses Salvador and
Gonzales to present evidence in her favor. A motion for
reconsideration was filed by Spouses Salvador on the said pre-
trial order beseeching the liberality of the court. The rescission
case was then re-raffled. In the Order by the RTC denied the
motion for reconsideration because Spouses Salvador provided
a flimsy excuse for their non-appearance in the pre-trial
conference. Thereafter, trial proceeded and Spouses Rabaja and
Gonzales presented their respective testimonial and
documentary evidence.

On March 29, 2007, the RTC-Br. 214 rendered a decision in

favor of Spouses Rabaja. Gonzales filed a motion for partial
reconsideration, but it was denied by the RTC in its Order.
Undaunted, Spouses Salvador and Gonzales filed an appeal
before the CA. the CA affirmed the decision of the RTC-Br. 114

276
with modifications. It ruled that the “contract to sell” was
indeed a contract of sale and that Gonzales was armed with an
SPA and was, in fact, introduced to Spouses Rabaja by Spouses
Salvador as the administrator of the property. Spouses Rabaja
could not be blamed if they had transacted with Gonzales.

The CA, however, ruled that Gonzales was not solidarily liable
with Spouses Salvador. The agent must expressly bind himself
or exceed the limit of his authority in order to be solidarily
liable. It was not shown that Gonzales as agent of Spouses
Salvador exceeded her authority or expressly bound herself to
be solidarily liable. Hence, this petition.

ISSUE:
Whether or not there exists a reasonable ground to justify the
failure of Spouses Salvador to attend the pre trail conference
and that the order of default must be lifted.

RULING:

The failure of Spouses Salvador to attend pre-trial conference

warrants the presentation of evidence ex parte by Spouses
Rabaja

On the procedural aspect, the Court reiterates the rule that the

277
failure to attend the pre-trial conference does not result in the
default of an absent party. Under the 1997 Rules of Civil
Procedure, a defendant is only declared in default if he fails to
file his Answer within the reglementary period. On the other
hand, if a defendant fails to attend the pre-trial conference, the
plaintiff can present his evidence ex parte. Sections 4 and 5,
Rule 18 of the Rules of Court provide:

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

278
present his evidence ex parte and the court to render
judgment on the basis thereof.
[Emphasis supplied]

The case of Philippine American Life & General Insurance

Company v. Joseph Enario discussed the difference between
the non-appearance of a defendant in a pre-trial conference and
the declaration of a defendant in default in the present Rules of
Civil Procedure. The decision instructs:

Prior to the 1997 Revised Rules of Civil Procedure, the phrase

"as in default" was initially included in Rule 20 of the old rules,
and which read as follows:

Sec. 2. A party who fails to appear at a pre-trial conference may

be non-suited or considered as in default.

It was, however, amended in the 1997 Revised Rules of Civil

Procedure. Justice Regalado, in his book, REMEDIAL LAW
COMPENDIUM, explained the rationale for the deletion of the
phrase "as in default" in the amended provision, to wit:

1. This is a substantial reproduction of Section 2 of the former

Rule 20 with the change that, instead of defendant being
declared "as in default" by reason of his non-appearance, this

279
section now spells out that the procedure will be to allow the ex
parte presentation of plaintiff’s evidence and the rendition of
judgment on the basis thereof. While actually the procedure
remains the same, the purpose is one of semantical propriety or
terminological accuracy as there were criticisms on the use of
the word "default" in the former provision since that term is
identified with the failure to file a required answer, not
appearance in court.

Still, in the same book, Justice Regalado clarified that while the
order of default no longer obtained, its effects were retained,
thus:

Failure to file a responsive pleading within the reglementary

period, and not failure to appear at the hearing, is the sole
ground for an order of default, except the failure to appear at a
pre-trial conference wherein the effects of a default on the part
of the defendant are followed, that is, the plaintiff shall be
allowed to present evidence ex parte and a judgment based
thereon may be rendered against defendant.

From the foregoing, the failure of a party to appear at the pre-

trial has indeed adverse consequences. If the absent party is the
plaintiff, then his case shall be dismissed. If it is the defendant
who fails to appear, then the plaintiff is allowed to present his

280
evidence ex parte and the court shall render judgment based on
the evidence presented. Thus, the plaintiff is given the privilege
to present his evidence without objection from the defendant,
the likelihood being that the court will decide in favor of the
plaintiff, the defendant having forfeited the opportunity to
rebut or present its own evidence. The stringent application of
the rules on pre-trial is necessitated from the significant role of
the pre-trial stage in the litigation process. Pre-trial is an
answer to the clarion call for the speedy disposition of cases.
Although it was discretionary under the 1940 Rules of Court, it
was made mandatory under the 1964 Rules and the subsequent
amendments in 1997. “The importance of pre-trial in civil
actions cannot be overemphasized.”

There is no dispute that Spouses Salvador and their counsel

failed to attend the pre-trial conference set on February 4, 2005
despite proper notice. Spouses Salvador aver that their non-
attendance was due to the fault of their counsel as he forgot to
update his calendar. This excuse smacks of carelessness, and
indifference to the pre-trial stage. It simply cannot be
considered as a justifiable excuse by the Court. As a result of
their inattentiveness, Spouses Salvador could no longer present
any evidence in their favor. Spouses Rabaja, as plaintiffs, were
properly allowed by the RTC to present evidence ex
parte against Spouses Salvador as defendants. Considering that

281
Gonzales as co-defendant was able to attend the pre-trial
conference, she was allowed to present her evidence. The RTC
could only render judgment based on the evidence presented
during the trial.

The petition is PARTLY GRANTED. The decision of RTC

is MODIFIED.

282
 BANCO DE ORO-EPCI V TANSIPEK

FACTS:
J. O. Construction,Inc. (JOCI), a domestic corporation engaged
in the construction business in Cebu City, filed a complaint
against Philippine Commercial and Industrial Bank (PCIB) in
the Regional Trial Court (RTC) of Makati City. The Complaint
alleges that JOCI entered into a contract with Duty Free
Philippines, Inc. for the construction of a Duty Free Shop in
Mandaue City. As actual construction went on, progress billings
were made. Payments were received by JOCI directly or
through herein respondent John Tansipek, its authorized
collector. Payments received by respondent Tansipek were
initially remitted to JOCI. However, payment through PNB
Check No. 0000302572 in the amount of P4,050,136.51 was not
turned over to JOCI. Instead, respondent Tansipek endorsed
said check and deposited the same to his account in PCIB,
Wilson Branch, Wilson Street, Greenhills, San Juan, Metro
Manila. PCIB allowed the said deposit, despite the fact that the
check was crossed for the deposit to payees account only, and
despite the alleged lack of authority of respondent Tansipek to
endorse said check. PCIB refused to pay JOCI the full amount of
the check despite demands made by the latter. JOCI prayed for
the payment of the amount of the check (P4,050,136.51),
P500,000.00 in attorneys fees, P100,000.00 in expenses,

283
P50,000.00 for costs of suit, and P500,000.00 in exemplary
damages.

PCIB filed a Motion to Dismiss the Complaint on the grounds

that (1) an indispensable party was not impleaded, and (2)
therein plaintiff JOCI had no cause of action against PCIB. The
RTC denied PCIBs Motion to Dismiss.

PCIB filed its answer alleging as defenses that (1) JOCI had
clothed Tansipek with authority to act as its agent, and was
therefore estopped from denying the same; (2) JOCI had no
cause of action against PCIB ; (3) failure to implead Tansipek
rendered the proceedings taken after the filing of the complaint
void; (4) PCIBs act of accepting the deposit was fully justified by
established bank practices; (5) JOCIs claim was barred by
laches; and (6) the damages alleged by JOCI were hypothetical
and speculative. PCIB incorporated in said Answer its
counterclaims for exemplary damages in the amount of
P400,000.00, and litigation expenses and attorneys fees in the
amount of P400,000.00.

PCIB filed a Motion to Admit Amended Third-Party Complaint.

The amendment consisted in the correction of the caption, so

284
that PCIB appeared as Third-Party Plaintiff and Tansipek as
Third-Party Defendant.

Upon Motion, respondent Tansipek was granted time to file his

Answer to the Third-Party Complaint. He was, however,
declared in default for failure to do so. The Motion to
Reconsider the Default Order was denied.

On 18 August 2006, the Court of Appeals issued the assailed

Decision finding that it was an error for the trial court to have
acted on PCIBs motion to declare respondent Tansipek in
default. The Court of Appeals thus remanded the case to the
RTC for further proceedings, to wit:

WHEREFORE, premises considered, the appeal is

GRANTED. The decision relative to the third party
complaint is REVERSED and SET ASIDE. The case
is ordered REMANDED to the trial court for further
proceedings on the third party complaint.

The Court of Appeals denied the Motion for

Reconsideration of PCIB in a Resolution dated 9 January
2008.

285
ISSUE:
WHETHER OR NOT THE COURT OF APPEALS CAN
REVERSE ITS DECISION HANDED DOWN EIGHT YEARS
BEFORE

RULING:

The court held stated that it cannot reverse its decision and
furthermore stating that the dismissal of the Petition for
Certiorari assailing the denial of respondent Tansipeks Motion
constitutes a bar to the retrial of the same issue of default under
the doctrine of the law of the case.

In People v. Pinuila,[9] we held that:

Law of the case has been defined as the opinion

delivered on a former appeal. More specifically, it
means that whatever is once irrevocably established
as the controlling legal rule of decision between the
same parties in the same case continues to be the
law of the case, whether correct on general
principles or not, so long as the facts on which such
decision was predicated continue to be the facts of
the case before the court.

286
It may be stated as a rule of general application
that, where the evidence on a second or succeeding
appeal is substantially the same as that on the first
or preceding appeal, all matters, questions, points,
or issues adjudicated on the prior appeal are the law
of the case on all subsequent appeals and will not be
considered or readjudicated therein.

As a general rule a decision on a prior appeal of the

same case is held to be the law of the case whether
that decision is right or wrong, the remedy of the
party deeming himself aggrieved being to seek a
rehearing.

Questions necessarily involved in the decision on a

former appeal will be regarded as the law of the case
on a subsequent appeal, although the questions are
not expressly treated in the opinion of the court, as
the presumption is that all the facts in the case
bearing on the point decided have received due
consideration whether all or none of them are
mentioned in the opinion.

287
BITTE v JONAS, GR NO. AND DATE

FACTS:
In 1985, Rose Elsa Jonas authorized her mother Andrea
Serrano thru SPA, to sell a property located in Davao City. The
property was mortgaged to Mindanao Development Bank
(MDB). In 1996, Cipriano Serrano (brother of Elsa Jonas, son of
Andrea) offered the property for sale to Spouses Bitte. In the
same year, Jonas revoked the SPA. After the final negotiation,
Elsa Jonas withdrew from the transaction. Spouses Bitte filed a
Complaint for Specific Performance against Jonas, Andrea, and
Cipriano to transfer the title over the property. In 1998, while
the case is pending, Andrea executed a deed of absolute sale in
favor of Spouses Bitte. MDB foreclosed the property for failure
to pay the loan. Spouses Bitte were able to redeem the property,
then sold the same to Spouses Yap. In 1999, Spouses Jonas also
filed a complaint for Annulment of Deed of Absolute Sale
against Spouses Bitte.

The two cases were consolidated in 2001. Spouses Bitte failed to

attend the pre-trial. The counsel for Spouses Bitte withdrew and
a new one entered his appearance and filed a verified motion
for reconsideration. Spouses Bitte once again failed to appear in
the pre-trial and were, thus, declared non-suited. Jonas then
presented her evidence her ex parte.

288
RTC ruled that the sale was valid and directed the Spouses Bitte
to pay the balance. The CA reversed the decision, and rendered
the deed of sale null and void.

Spouses Jonas called the attention of the Court and contended

that since the RTC has declared the Spouses Bitte in default,
they have already lost the legal personality to resort to this
petition before this Court.

ISSUE:
Whether or not the Spouses Bitte have already lost the legal
personality to resort to this petition before this Court, as they
were declared in default by the RTC.

RULING:

No. Spouses Jonas claim that the door to any reliefs for
Spouses Bitte, be it through the motion for reconsideration or
this subject petition, was closed by the finality and immutability
of the RTC declaration of their default. In other words, it is their
stand that the petitioners do not have the right to obtain
recourse from this Court.

Spouses Jonas are mistaken.

289
The rule is that “right to appeal from the judgment by default is
not lost and can be done on grounds that the amount of
judgment is excessive or is different in kind from that prayed
for, or that the plaintiff failed to prove the material allegations
of his complaint, or that the decision is contrary to law.” If a
party who has been declared in default on the basis of the
decision having been issued against the evidence or the law,
that person cannot be denied the remedy and opportunity to
assail the judgment in the appellate court. Despite being
burdened by the circumstances of default, the petitioners may
still use all other remedies available to question not only the
judgment of default but also the judgment on appeal before this
Court. Those remedies necessarily include an appeal by
certiorari under Rule 45 of the Rules of Court.

290