G.R. No. 113074.
 January 22, 1997.* trial if the ground on which the motion is based does not appear to be indubitable.
ALFRED HAHN, petitioner, vs. COURT OF APPEALS and BAYERISCHE
MOTOREN WERKE AKTIENGESELLSCHAFT (BMW), respondents.
Agency; Words and Phrases; “Agent” and “Broker,” Distinguished.—An
agent receives a commission upon the successful conclusion of a sale. On the other
hand, a broker earns his pay merely by bringing the buyer and the seller together,
even if no sale is eventually made.
Same; The fact that a person invested his own money to put service centers
and showrooms does not necessarily prove that he is not an agent of a car
manufacturer.—As to the service centers and showrooms which he said he had put
up at his own expense, Hahn said that he had to follow BMW specifications as
exclusive dealer of BMW in the Philippines. According to Hahn, BMW periodically
inspected the service centers to see to it that BMW standards were maintained.
Indeed, it would seem from BMW’s letter to Hahn that  trial court’s jurisdiction. It is now settled that, for purposes of having summons
_______________
*
 SECOND DIVISION.
538
538 SUPREME COURT REPORTS ANNOTATED
Hahn vs. Court of Appeals
it was for Hahn’s alleged failure to maintain BMW standards that BMW was
terminating Hahn’s dealership. The fact that Hahn invested his own money to put up
these service centers and showrooms does not necessarily prove that he is not an
agent of BMW. For as already noted, there are facts in the record which suggest that
BMW exercised control over Hahn’s activities as a dealer and made regular
inspections of Hahn’s premises to enforce compliance with BMW standards and
specifications.
Evidence; A mere allegation in a motion to dismiss which has been denied by
the other party should not be cited by the court as if it were a fact.—The Court of
Appeals also found that petitioner Alfred Hahn dealt in other products, and not
exclusively in BMW products, and, on this basis, ruled that Hahn was not an agent of
BMW. This finding is based entirely on allegations of BMW in its motion to dismiss
filed in the trial court and in its petition for certiorari before the Court of Appeals.
But this allegation was denied by Hahn and therefore the Court of Appeals should
not have cited it as if it were the fact.
Foreign Corporations; Motions to Dismiss; Rule 16, §3 of the Rules of Court
authorizes courts to defer the resolution of a motion to dismiss until after the trial if
the ground on which the motion is based does not appear to be indubitable.—It is not
true then that the question whether BMW is doing business could have been resolved
simply by considering the parties’ pleadings. There are genuine issues of facts which
can only be determined on the basis of evidence duly presented. BMW cannot short
circuit the process on the plea that to compel it to go to trial would be to deny its
right not to submit to the jurisdiction of the trial court which precisely it denies. Rule
16, §3 authorizes courts to defer the resolution of a motion to dismiss until after the
Here the record of the case bristles with factual issues and it is not at all clear
whether some allegations correspond to the proof.
Same; Actions; Pleadings and Practice; It is now settled that, for purposes of
having summons served on a foreign corporation in accordance with Rule 14, §14, it
is sufficient that it be alleged in the complaint that the foreign corporation is doing
business in the Philippines.—Anyway, private respondent need not apprehend that
by responding to the summons it would be waiving its objection to the 
539
 
VOL. 266, JANUARY 22, 1997 539
Hahn vs. Court of Appeals
served on a foreign corporation in accordance with Rule 14, §14, it is sufficient that
it be alleged in the complaint that the foreign corporation is doing business in the
Philippines. The court need not go beyond the allegations of the complaint in order
to determine whether it has jurisdiction. A determination that the foreign corporation
is doing business is only tentative and is made only for the purpose of enabling the
local court to acquire jurisdiction over the foreign corporation through service of
summons pursuant to Rule 14, §14. Such determination does not foreclose a contrary
finding should evidence later show that it is not transacting business in the country.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
      Siguion Reyna, Montecillo & Ongsiako for petitioner.
      Castillo, Laman, Tan & Pantaleon for private respondent.
MENDOZA, J.:
This is a petition for review of the decision1 of the Court of Appeals dismissing a
complaint for specific performance which petitioner had filed against private
respondent on the ground that the Regional Trial Court of Quezon City did not
acquire jurisdiction over private respondent, a nonresident foreign corporation, and
of the appellate court's order denying petitioner's motion for reconsideration.
The following are the facts:
Petitioner Alfred Hahn is a Filipino citizen doing business under the name and style
"Hahn-Manila." On the other hand, private respondent Bayerische Motoren Werke
Aktiengesellschaft (BMW) is a nonresident foreign corporation existing under the
laws of the former Federal Republic of Germany, with principal office at Munich,
Germany.
1
On March 7, 1967, petitioner executed in favor of private respondent a "Deed of
Assignment with Special Power of Attorney," which reads in full as follows:
WHEREAS, the ASSIGNOR is the present owner and holder of the BMW
trademark and device in the Philippines which ASSIGNOR uses and has
been using on the products manufactured by ASSIGNEE, and for which
ASSIGNOR is the authorized exclusive Dealer of the ASSIGNEE in the
Philippines, the same being evidenced by certificate of registration issued
by the Director of Patents on 12 December 1963 and is referred to as
Trademark No. 10625;
WHEREAS, the ASSIGNOR has agreed to transfer and consequently
record said transfer of the said BMW trademark and device in favor of the
ASSIGNEE herein with the Philippines Patent Office;
NOW THEREFORE, in view of the foregoing and in consideration of the
stipulations hereunder stated, the ASSIGNOR hereby affirms the said
assignment and transfer in favor of the ASSIGNEE under the following
terms and conditions:
1. The ASSIGNEE shall take appropriate steps against any user other than
ASSIGNOR or infringer of the BMW trademark in the Philippines; for such
purpose, the ASSIGNOR shall inform the ASSIGNEE immediately of any
such use or infringement of the said trademark which comes to his
knowledge and upon such information the ASSIGNOR shall automatically
act as Attorney-In-Fact of the ASSIGNEE for such case, with full power,
authority and responsibility to prosecute unilaterally or in concert with
ASSIGNEE, any such infringer of the subject mark and for purposes hereof
the ASSIGNOR is hereby named and constituted as ASSIGNEE's Attorney-
In-Fact, but any such suit without ASSIGNEE's consent will exclusively be
the responsibility and for the account of the ASSIGNOR,
2. That the ASSIGNOR and the ASSIGNEE shall continue business
relations as has been usual in the past without a formal contract, and for that
purpose, the dealership of ASSIGNOR shall cover the ASSIGNEE's
complete production program with the only limitation that, for the present,
in view of ASSIGNEE's limited production, the latter shall not be able to
supply automobiles to ASSIGNOR.
Per the agreement, the parties "continue[d] business relations as has been usual in the
past without a formal contract." But on February 16, 1993, in a meeting with a BMW
representative and the president of Columbia Motors Corporation (CMC), Jose
Alvarez, petitioner was informed that BMW was arranging to grant the exclusive
dealership of BMW cars and products to CMC, which had expressed interest in
acquiring the same. On February 24, 1993, petitioner received confirmation of the
information from BMW which, in a letter, expressed dissatisfaction with various
aspects of petitioner's business, mentioning among other things, decline in sales,
deteriorating services, and inadequate showroom and warehouse facilities, and
petitioner's alleged failure to comply with the standards for an exclusive BMW
dealer.2 Nonetheless, BMW expressed willingness to continue business relations with
the petitioner on the basis of a "standard BMW importer" contract, otherwise, it said,
if this was not acceptable to petitioner, BMW would have no alternative but to
terminate petitioner's exclusive dealership effective June 30, 1993.
Petitioner protested, claiming that the termination of his exclusive dealership would
be a breach of the Deed of Assignment.3 Hahn insisted that as long as the assignment
of its trademark and device subsisted, he remained BMW's exclusive dealer in the
Philippines because the assignment was made in consideration of the exclusive
dealership. In the same letter petitioner explained that the decline in sales was due to
lower prices offered for BMW cars in the United States and the fact that few
customers returned for repairs and servicing because of the durability of BMW parts
and the efficiency of petitioner's service.
Because of Hahn's insistence on the former business relation, BMW withdrew on
March 26, 1993 its offer of a "standard importer contract" and terminated the
exclusive dealer relationship effective June 30, 1993. 4 At a conference of BMW
Regional Importers held on April 26, 1993 in Singapore, Hahn was surprised to find
Alvarez among those invited from the Asian region. On April 29, 1993, BMW
proposed that Hahn and CMC jointly import and distribute BMW cars and parts.
Hahn found the proposal unacceptable. On May 14, 1993, he filed a complaint for
specific performance and damages against BMW to compel it to continue the
exclusive dealership. Later he filed an amended complaint to include an application
for temporary restraining order and for writs of preliminary, mandatory and
prohibitory injunction to enjoin BMW from terminating his exclusive dealership.
Hahn's amended complaint alleged in pertinent parts:
2. Defendant [BMW] is a foreign corporation doing business in the
Philippines with principal offices at Munich, Germany. It may be served
with summons and other court processes through the Secretary of the
Department of Trade and Industry of the Philippines. . . .
xxx xxx xxx
5. On March 7, 1967, Plaintiff executed in favor of defendant BMW a Deed
of Assignment with Special Power of Attorney covering the trademark and
in consideration thereof, under its first whereas clause, Plaintiff was duly
2
 acknowledged as the "exclusive Dealer of the Assignee in the
Philippines. . . .
xxx xxx xxx
8. From the time the trademark "BMW & DEVICE" was first used by the
Plaintiff in the Philippines up to the present, Plaintiff, through its firm name
"HAHN MANILA" and without any monetary contribution from defendant
BMW, established BMW's goodwill and market presence in the Philippines.
Pursuant thereto, Plaintiff has invested a lot of money and resources in
order to single-handedly compete against other motorcycle and car
companies. . . . Moreover, Plaintiff has built buildings and other
infrastructures such as service centers and showrooms to maintain and
promote the car and products of defendant BMW.
xxx xxx xxx
10. In a letter dated February 24, 1993, defendant BMW advised Plaintiff
that it was willing to maintain with Plaintiff a relationship but only "on the
basis of a standard BMW importer contract as adjusted to reflect the
particular situation in the Philippines" subject to certain conditions,
otherwise, defendant BMW would terminate Plaintiffs exclusive dealership
and any relationship for cause effective June 30, 1993. . . .
xxx xxx xxx
15. The actuations of defendant BMW are in breach of the assignment
agreement between itself and plaintiff since the consideration for the
assignment of the BMW trademark is the continuance of the exclusive
dealership agreement. It thus, follows that the exclusive dealership should
continue for so long as defendant BMW enjoys the use and ownership of
the trademark assigned to it by Plaintiff.
The case was docketed as Civil Case No. Q-93-15933 and raffled to Branch 104 of
the Quezon City Regional Trial Court, which on June 14, 1993 issued a temporary
restraining order. Summons and copies of the complaint and amended complaint
were thereafter served on the private respondent through the Department of Trade
and Industry, pursuant to Rule 14, §14 of the Rules of Court. The order, summons
and copies of the complaint and amended complaint were later sent by the DTI to
BMW via registered mail on June 15, 19935 and received by the latter on June 24,
1993.
On June 17, 1993, without proof of service on BMW, the hearing on the application
for the writ of preliminary injunction proceeded ex parte, with petitioner Hahn
testifying. On June 30, 1993, the trial court issued an order granting the writ of
preliminary injunction upon the filing of a bond of P100,000.00. On July 13, 1993,
following the posting of the required bond, a writ of preliminary injunction was
issued.
On July 1, 1993, BMW moved to dismiss the case, contending that the trial court did
not acquire jurisdiction over it through the service of summons on the Department of
Trade and Industry, because it (BMW) was a foreign corporation and it was not
doing business in the Philippines. It contended that the execution of the Deed of
Assignment was an isolated transaction; that Hahn was not its agent because the
latter undertook to assemble and sell BMW cars and products without the
participation of BMW and sold other products; and that Hahn was an indentor or
middleman transacting business in his own name and for his own account.
Petitioner Alfred Hahn opposed the motion. He argued that BMW was doing
business in the Philippines through him as its agent, as shown by the fact that BMW
invoices and order forms were used to document his transactions; that he gave
warranties as exclusive BMW dealer; that BMW officials periodically inspected
standards of service rendered by him; and that he was described in service booklets
and international publications of BMW as a "BMW Importer" or "BMW Trading
Company" in the Philippines.
The trial court6 deferred resolution of the motion to dismiss until after trial on the
merits for the reason that the grounds advanced by BMW in its motion did not seem
to be indubitable.
Without seeking reconsideration of the aforementioned order, BMW filed a petition
for certiorari with the Court of Appeals alleging that:
I. THE RESPONDENT JUDGE ACTED WITH UNDUE HASTE OR
OTHERWISE INJUDICIOUSLY IN PROCEEDINGS LEADING
TOWARD THE ISSUANCE OF THE WRIT OF PRELIMINARY
INJUNCTION, AND IN PRESCRIBING THE TERMS FOR THE
ISSUANCE THEREOF.
II. THE RESPONDENT JUDGE PATENTLY ERRED IN DEFERRING
RESOLUTION OF THE MOTION TO DISMISS ON THE GROUND OF
LACK OF JURISDICTION, AND THEREBY FAILING TO
IMMEDIATELY DISMISS THE CASE A QUO.
BMW asked for the immediate issuance of a temporary restraining order and, after
hearing, for a writ of preliminary injunction, to enjoin the trial court from proceeding
3
further in Civil Case No. Q-93-15933. Private respondent pointed out that, unless the
trial court's order was set aside, it would be forced to submit to the jurisdiction of the
court by filing its answer or to accept judgment in default, when the very question
was whether the court had jurisdiction over it.
The Court of Appeals enjoined the trial court from hearing petitioner's complaint. On
December 20, 1993, it rendered judgment finding the trial court guilty of grave abuse
of discretion in deferring resolution of the motion to dismiss. It stated:
Going by the pleadings already filed with the respondent court before it
came out with its questioned order of July 26, 1993, we rule and so hold
that petitioner's (BMW) motion to dismiss could be resolved then and there,
and that the respondent judge's deferment of his action thereon until after
trial on the merit constitutes, to our mind, grave abuse of discretion.
xxx xxx xxx
. . . [T]here is not much appreciable disagreement as regards the factual
matters relating to the motion to dismiss. What truly divide (sic) the parties
and to which they greatly differ is the legal conclusions they respectively
draw from such facts, (sic) with Hahn maintaining that on the basis thereof,
BMW is doing business in the Philippines while the latter asserts that it is
not.
Then, after stating that any ruling which the trial court might make on the motion to
dismiss would anyway be elevated to it on appeal, the Court of Appeals itself
resolved the motion. It ruled that BMW was not doing business in the country and,
therefore, jurisdiction over it could not be acquired through service of summons on
the DTI pursuant to Rule 14, §14. 'The court upheld private respondent's contention
that Hahn acted in his own name and for his own account and independently of
BMW, based on Alfred Hahn's allegations that he had invested his own money and
resources in establishing BMW's goodwill in the Philippines and on BMW's claim
that Hahn sold products other than those of BMW. It held that petitioner was a mere
indentor or broker and not an agent through whom private respondent BMW
transacted business in the Philippines. Consequently, the Court of Appeals dismissed
petitioner's complaint against BMW.
Hence, this appeal. Petitioner contends that the Court of Appeals erred (1) in finding
that the trial court gravely abused its discretion in deferring action on the motion to
dismiss and (2) in finding that private respondent BMW is not doing business in the
Philippines and, for this reason, dismissing petitioner's case.
Petitioner's appeal is well taken. Rule 14, §14 provides:
§14. Service upon private foreign corporations. — If the defendant is a
foreign corporation, or a nonresident joint stock company or association,
doing business in the Philippines, service may be made on its resident agent
designated in accordance with law for that purpose, or, if there be no such
agent, on the government official designated by law to that effect, or on any
of its officers or agents within the Philippines. (Emphasis added).
What acts are considered "doing business in the Philippines" are enumerated in §3(d)
of the Foreign Investments Act of 1991 (R.A. No. 7042) as follows:7
d) the phrase "doing business" shall include soliciting orders, service
contracts, opening offices, whether called "liaison" offices or
branches; appointing representatives or distributors domiciled in the
Philippines or who in any calendar year stay in the country for a period or
periods totalling one hundred eighty (180) days or more; participating in the
management, supervision or control of any domestic business, firm, entity
or corporation in the Philippines; and any other act or acts that imply a
continuity of commercial dealings or arrangements, and contemplate to
that extent the performance of acts or works, or the exercise of some of the
functions normally incident to, and in progressive prosecution of,
commercial gain or of the purpose and object of the business organization:
Provided, however, That the phrase "doing business" shall not be deemed to
include mere investment as a shareholder by a foreign entity in domestic
corporations duly registered to do business, and/or the exercise of rights as
such investor; nor having a nominee director or officer to represent its
interests in such corporation; nor appointing a representative or distributor
domiciled in the Philippines which transacts business in its own name and
for its own account. (Emphasis supplied)
Thus, the phrase includes "appointing representatives or distributors in the
Philippines" but not when the representative or distributor "transacts business in its
name and for its own account." In addition, §1(f)(1) of the Rules and Regulations
implementing (IRR) the Omnibus Investment Code of 1987 (E.O. No. 226) provided:
(f) "Doing business" shall be any act or combination of acts, enumerated in
Article 44 of the Code. In particular, "doing business" includes:
(1) . . . A foreign firm which does business through middlemen acting in
their own names, such as indentors, commercial brokers or commission
merchants, shall not be deemed doing business in the Philippines. But such
indentors, commercial brokers or commission merchants shall be the ones
deemed to be doing business in the Philippines.
4
The question is whether petitioner Alfred Hahn is the agent or distributor in the
Philippines of private respondent BMW. If he is, BMW may be considered doing
business in the Philippines and the trial court acquired jurisdiction over it (BMW) by
virtue of the service of summons on the Department of Trade and Industry.
Otherwise, if Hahn is not the agent of BMW but an independent dealer, albeit of
BMW cars and products, BMW, a foreign corporation, is not considered doing
business in the Philippines within the meaning of the Foreign Investments Act of
1991 and the IRR, and the trial court did not acquire jurisdiction over it (BMW).
The Court of Appeals held that petitioner Alfred Hahn acted in his own name and for
his own account and not as agent or distributor in the Philippines of BMW on the
ground that "he alone had contacts with individuals or entities interested in acquiring
BMW vehicles. Independence characterizes Hahn's undertakings, for which reason
he is to be considered, under governing statutes, as doing business." (p. 13) In
support of this conclusion, the appellate court cited the following allegations in
Hahn's amended complaint:
8. From the time the trademark "BMW & DEVICE" was first used by the
Plaintiff in the Philippines up to the present, Plaintiff, through its firm name
"HAHN MANILA" and without any monetary contributions from defendant
BMW, established BMW's goodwill and market presence in the Philippines.
Pursuant thereto, Plaintiff invested a lot of money and resources in order to
single-handedly compete against other motorcycle and car companies. . . .
Moreover, Plaintiff has built buildings and other infrastructures such as
service centers and showrooms to maintain and promote the car and
products of defendant BMW.
As the above quoted allegations of the amended complaint show, however, there is
nothing to support the appellate court's finding that Hahn solicited orders alone and
for his own account and without "interference from, let alone direction of, BMW."
(p. 13) To the contrary, Hahn claimed he took orders for BMW cars and transmitted
them to BMW. Upon receipt of the orders, BMW fixed the downpayment and
pricing charges, notified Hahn of the scheduled production month for the orders, and
reconfirmed the orders by signing and returning to Hahn the acceptance sheets.
Payment was made by the buyer directly to BMW. Title to cars purchased passed
directly to the buyer and Hahn never paid for the purchase price of BMW cars sold in
the Philippines. Hahn was credited with a commission equal to 14% of the purchase
price upon the invoicing of a vehicle order by BMW. Upon confirmation in writing
that the vehicles had been registered in the Philippines and serviced by him, Hahn
received an additional 3% of the full purchase price. Hahn performed after-sale
services, including warranty services, for which he received reimbursement from
BMW. All orders were on invoices and forms of BMW.8
These allegations were substantially admitted by BMW which, in its petition
for certiorari before the Court of Appeals, stated:9
9.4. As soon as the vehicles are fully manufactured and full payment of the
purchase prices are made, the vehicles are shipped to the Philippines. (The
payments may be made by the purchasers or third-persons or even by
Hahn.) The bills of lading are made up in the name of the purchasers, but
Hahn-Manila is therein indicated as the person to be notified.
9.5. It is Hahn who picks up the vehicles from the Philippine ports, for
purposes of conducting pre-delivery inspections. Thereafter, he delivers the
vehicles to the purchasers.
9.6. As soon as BMW invoices the vehicle ordered, Hahn is credited with a
commission of fourteen percent (14%) of the full purchase price thereof,
and as soon as he confirms in writing that the vehicles have been registered
in the Philippines and have been serviced by him, he will receive an
additional three percent (3%) of the full purchase prices as commission.
Contrary to the appellate court's conclusion, this arrangement shows an agency. An
agent receives a commission upon the successful conclusion of a sale. On the other
hand, a broker earns his pay merely by bringing the buyer and the seller together,
even if no sale is eventually made.
As to the service centers and showrooms which he said he had put up at his own
expense, Hahn said that he had to follow BMW specifications as exclusive dealer of
BMW in the Philippines. According to Hahn, BMW periodically inspected the
service centers to see to it that BMW standards were maintained. Indeed, it would
seem from BMW's letter to Hahn that it was for Hahn's alleged failure to maintain
BMW standards that BMW was terminating Hahn's dealership.
The fact that Hahn invested his own money to put up these service centers and
showrooms does not necessarily prove that he is not an agent of BMW. For as
already noted, there are facts in the record which suggest that BMW exercised
control over Hahn's activities as a dealer and made regular inspections of Hahn's
premises to enforce compliance with BMW standards and specifications. 10 For
example, in its letter to Hahn dated February 23, 1996, BMW stated:
In the last years we have pointed out to you in several discussions and
letters that we have to tackle the Philippine market more professionally and
that we are through your present activities not adequately prepared to cope
with the forthcoming challenges.11
5
In effect, BMW was holding Hahn accountable to it under the 1967 Agreement.
This case fits into the mould of Communications Materials, Inc. v. Court of
Appeals,12 in which the foreign corporation entered into a "Representative
Agreement" and a "Licensing Agreement" with a domestic corporation, by virtue of
which the latter was appointed "exclusive representative" in the Philippines for a
stipulated commission. Pursuant to these contracts, the domestic corporation sold
products exported by the foreign corporation and put up a service center for the
products sold locally. This Court held that these acts constituted doing business in
the Philippines. The arrangement showed that the foreign corporation's purpose was
to penetrate the Philippine market and establish its presence in the Philippines.
In addition, BMW held out private respondent Hahn as its exclusive distributor in the
Philippines, even as it announced in the Asian region that Hahn was the "official
BMW agent" in the Philippines.13
The Court of Appeals also found that petitioner Alfred Hahn dealt in other products,
and not exclusively in BMW products, and, on this basis, ruled that Hahn was not an
agent of BMW. (p. 14) This finding is based entirely on allegations of BMW in its
motion to dismiss filed in the trial court and in its petition for certiorari before the
Court of Appeals.14 But this allegation was denied by Hahn15 and therefore the Court
of Appeals should not have cited it as if it were the fact.
Indeed this is not the only factual issue raised, which should have indicated to the
Court of Appeals the necessity of affirming the trial court's order deferring resolution
of BMW's motion to dismiss. Petitioner alleged that whether or not he is considered
an agent of BMW, the fact is that BMW did business in the Philippines because it
sold cars directly to Philippine buyers. 16 This was denied by BMW, which claimed
that Hahn was not its agent and that, while it was true that it had sold cars to
Philippine buyers, this was done without solicitation on its part.17
It is not true then that the question whether BMW is doing business could have been
resolved simply by considering the parties' pleadings. There are genuine issues of
facts which can only be determined on the basis of evidence duly presented. BMW
cannot short circuit the process on the plea that to compel it to go to trial would be to
deny its right not to submit to the jurisdiction of the trial court which precisely it
denies. Rule 16, §3 authorizes courts to defer the resolution of a motion to dismiss
until after the trial if the ground on which the motion is based does not appear to be
indubitable. Here the record of the case bristles with factual issues and it is not at all
clear whether some allegations correspond to the proof.
Anyway, private respondent need not apprehend that by responding to the summons
it would be waiving its objection to the trial court's jurisdiction. It is now settled that,
for purposes of having summons served on a foreign corporation in accordance with
Rule 14, §14, it is sufficient that it be alleged in the complaint that the foreign
corporation is doing business in the Philippines. The court need not go beyond the
allegations of the complaint in order to determine whether it has Jurisdiction.18 A
determination that the foreign corporation is doing business is only tentative and is
made only for the purpose of enabling the local court to acquire jurisdiction over the
foreign corporation through service of summons pursuant to Rule 14, §14. Such
determination does not foreclose a contrary finding should evidence later show that it
is not transacting business in the country. As this Court has explained:
This is not to say, however, that the petitioner's right to question the
jurisdiction of the court over its person is now to be deemed a foreclosed
matter. If it is true, as Signetics claims, that its only involvement in the
Philippines was through a passive investment in Sigfil, which it even later
disposed of, and that TEAM Pacific is not its agent, then it cannot really be
said to be doing business in the Philippines. It is a defense, however, that
requires the contravention of the allegations of the complaint, as well as a
full ventilation, in effect, of the main merits of the case, which should not
thus be within the province of a mere motion to dismiss. So, also, the issue
posed by the petitioner as to whether a foreign corporation which has done
business in the country, but which has ceased to do business at the time of
the filing of a complaint, can still be made to answer for a cause of action
which accrued while it was doing business, is another matter that would yet
have to await the reception and admission of evidence. Since these points
have seasonably been raised by the petitioner, there should be no real cause
for what may understandably be its apprehension, i.e., that by its
participation during the trial on the merits, it may, absent an invocation of
separate or independent reliefs of its own, be considered to have voluntarily
submitted itself to the court's jurisdiction.19
Far from committing an abuse of discretion, the trial court properly deferred
resolution of the motion to dismiss and thus avoided prematurely deciding a question
which requires a factual basis, with the same result if it had denied the motion and
conditionally assumed jurisdiction. It is the Court of Appeals which, by ruling that
BMW is not doing business on the basis merely of uncertain allegations in the
pleadings, disposed of the whole case with finality and thereby deprived petitioner of
his right to be heard on his cause of action. Nor was there justification for nullifying
the writ of preliminary injunction issued by the trial court. Although the injunction
was issued ex parte, the fact is that BMW was subsequently heard on its defense by
filing a motion to dismiss.
WHEREFORE, the decision of the Court of Appeals is REVERSED and the case is
REMANDED to the trial court for further proceedings. SO ORDERED.
G.R. No. 143723. June 28, 2001.*
6
LITONJUA GROUP OF COMPANIES, EDDIE LITONJUA and DANILO
LITONJUA, petitioners, vs. TERESITA VIGAN, respondent.
Actions; Parties; Only natural or juridical persons or entities authorized by
law may be parties to a civil action and every action must be prosecuted and
defended in the name of the real parties in interest; A generic name used to describe
collectively various companies, unless proven to be with juridical personality,
cannot be a party to a suit.—Petitioners’ argument is meritorious. Only natural or
juridical persons or entities authorized by law may be parties to a civil action and
every action must be prosecuted and defended in the name of the real parties in
interest. Petitioners’ claim that Litonjua Group of Companies is not a legal entity
with juridical personality hence cannot be a party to this suit deserves consideration
since respondent failed to prove otherwise. In fact, respondent Vigan’s own
allegation in her Memorandum supported petitioners’ claim that Litonjua group of
companies does not exist when she stated therein that instead of naming each and
every corporation of the Litonjua family where she had rendered accounting and
payroll works, she simply referred to these corporations as the Litonjua group of
companies, thus, respondent merely used such generic name to describe collectively
the various corporations in which the Litonjua family has business interest.
Considering the non-
_______________
*
 THIRD DIVISION.
195
VOL. 360, JUNE 28, 2001  195  difficulties. The report to work notices sent by petitioners to respondent Vigan was
Litonjua Group of Companies vs. Vigan
existence of the Litonjua group of companies as a juridical entity and petitioner
Eddie Lilonjua’s denial of his connection in any. capacity with the ACT Theater, the
supposed company where Vigan was employed, petitioner Eddie Litonjua should
also be excluded as a party in this case since respondent Vigan failed to prove Eddie
Litonjua’s participation in the instant case. It is respondent Vigan, being the party
asserting a fact, who has the burden of proof as to such fact which however, she
failed to discharge.
Appeals; Evidence; Findings of fact of the Court of Appeals are as a rule
binding upon the Supreme Court, subject to certain exceptions, one of which is when
the factual findings of the Court of Appeals are contrary to those of the trial court
(or administrative body, as the case may be).—The above arguments relate mainly to
the correctness of the factual findings of the Court of Appeals and the award of
damages. This Court has consistently affirmed that the findings of fact of the Court
of Appeals are as a rule binding upon it, subject to certain exceptions, one of which
is when the factual findings of the Court of Appeals are contrary to those of the trial
court (or administrative body, as the case may be). However, it bears emphasizing
that mere disagreement between the Court of Appeals and the trial court as to the
facts of a case does not of itself warrant this Court’s review of the same. It has been
held that the doctrine that the findings of fact made by the Court of Appeals, being
conclusive in nature, are binding on this Court, applies even if the Court of Appeals
was in disagreement with the lower court as to the weight of evidence with a
consequent reversal of its findings of fact, so long as the findings of the Court of
Appeals are borne out by the record or based on substantial evidence.
Labor Law; Illegal Dismissal; Damages; Words and Phrases; As a rule,
moral damages are recoverable only where the dismissal of the employee was
attended by bad faith or fraud or constituted an act oppressive to labor, or was done
in a manner contrary to morals, good customs or public policy; Exemplary damages
awarded to illegally dismissed employee where her dismissal was effected in an
oppressive and malevolent manner; Bad faith involves a state of mind dominated by
ill will or motive.—We likewise affirm respondent court’s award of moral and
exemplary damages to the respondent. As a rule, moral damages are recoverable only
where the dismissal of the employee was attended by bad faith or fraud or constituted
an act oppressive to labor, or was done in a manner contrary to morals, good customs
or public policy. We find that bad faith attended respondent’s dismissal from her
employment. Bad faith involves a state of mind dominated by ill will or motive. It
implies a conscious and inten-
196
196  SUPREME COURT REPORTS ANNOTATED 
Litonjua Group of Companies vs. Vigan
tional design to do a wrongful act for a dishonest purpose or some moral
obliquity. Petitioner Danilo Litonjua showed ill will in treating respondent Vigan in a
very unfair and cruel manner which made her suffer anxieties by reason of such job
just part of the ploy to make it appear that the latter abandoned her work but in
reality, Vigan was barred from entering her work premises. We fully subscribe to
respondent’s position that petitioners’ action was for the purpose of removing her
from her employment. Respondent Vigan is also entitled to exemplary damages as
her dismissal was effected in an oppressive and malevolent manner.
Same; Same; Same; In actions for recovery of wages or where an employee
was forced to litigate and incur expenses to protect his rights and interest, he is
entitled to an award of attorney’s fees.—We also find that there is a basis for the
award of attorney’s fees. It is settled that in actions for recovery of wages or where
an employee was forced to litigate and incur expenses to protect his rights and
interest, he is entitled to an award of attorney’s fees.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
     Alan A. Leynes for petitioners.
     Follosco, Morallos & Herce Law Office for private respondent.
GONZAGA-REYES, J.:
7
In this petition for review on certiorari, petitioners seek to annul and set aside the (1)
decision1 of the respondent Court of Appeals dated March 20, 2000 which reversed
and set aside the decision of the National Labor Relations Commission finding
respondent guilty of abandonment and (2) resolution2 dated June 19, 2000 denying
petitioners’ motion for reconsideration.
The factual backdrop as found by the respondent Court of Appeals is as follows:3
"As to the factual milieu, the contending parties have diametrically opposed
versions. Vigan tells it this way; She was hired by the Litonjua Group of
Companies on February 2, 1979 as telex operator. Later, she was assigned
as accounting and payroll clerk under the supervision of Danilo Litonjua.
She had been performing well until 1995, when Danilo Litonjua who was
already naturally a (sic) very ill-tempered, ill-mouthed and violent
employer, became more so due to business problems. In fact, a complaint
letter (Annex "I", p. 85, rollo) was sent by the Litonjua Employees to the
father and his junior regarding the boorishness of their kin Danilo Litonjua
but apparently the management just glossed over this.1âwphi1.nêt
Danilo Litonjua became particularly angry with Vigan and threw a stapler at
her when she refused to give him money upon the instructions of Eddie
Litonjua. From then on, Danilo Litonjua had been rabid towards her –
berated and bad-mouthed her, calling her a "mental case" "psycho", "sira
ulo", etc. and even threatened to hit her for some petty matters. Danilo
Litonjua even went so far as to lock her up in the comfort room and
preventing others to help her out. Not contented, Danilo Litonjua would
order the security guards to forcibly eject her or prevent her entry in the
office premises whenever he was angry. This occurred twice in July of
1995, first on the 5th then on the 7th. The incidents prompted Vigan to write
Danilo Litonjua letters asking why she was treated so and what was her
fault (Annexes "F", "G" & "K", pp. 82, 83 & 87, rollo). She suspected that
Danilo Litonjua wanted her out for he would not let her inside the office
such that even while abroad he would order the guards by phone to bar her.
She pleaded for forgiveness or at least for explanation but it fell on deaf
ears.
Later, Danilo Litonjua changed tack and charged that Vigan had been
hysterical, emotional and created scenes at the office. He even required her
to secure psychiatric assistance. (Annexes "L" to "N", pp. 88-90, rollo) But
despite proof that she was not suffering from psychosis or organic brain
syndrome as certified to by a Psychiatrist of Danilo Litonjua’s choice
(Annex "H", p. 84, rollo), still she was denied by the guards entry to her
work upon instructions again of Danilo Litonjua. Left with no alternative,
Separation pay (P4,000 x 18) years….=
Vigan filed this case for illegal dismissal, alleging she was receiving a
monthly salary of P8,000.00 at the time she was unlawfully terminated.
The Litonjuas have a different version. They negate the existence of the
Litonjua Group of Companies and the connection of Eduardo Litonjua
thereto. They contend that Vigan was employed by ACT Theater, Inc.,
where Danilo Litonjua is a Director. They dispute the charge of illegal
dismissal for it was Vigan who ceased to report for work despite notices and
likewise contest the P8,000.00 monthly salary alleged by Vigan, claiming it
was merely P6,850.00.
They claim that Vigan was a habitual absentee specially on Tuesdays that
fell within three days before and after the "15th" day and "30th" day of
every month. Her performance had been satisfactory, but then starting
March 15, 1996 she had become emotional, hysterical, uncontrollable and
created disturbances at the office with her crying and shouting for no reason
at all. The incident was repeated on April 3, 1996, May 24, 1996 and on
June 4, 1996. Thus alarmed, on July 24, 1996 Vigan was required by
management to undergo medical and psychological examination at the
company’s expense and naming three doctors to attend to her. Dr. Baltazar
Reyes and Dr. Tony Perlas of the Philippine General Hospital and Dr.
Lourdes Ignacio of the Medical Center Manila. But they claim that Vigan
refused to comply.
On August 2, 1996, Vigan again had another breakdown, hysterical,
shouting and crying as usual for about an hour, and then she just left the
premises without a word. The next day, August 3, 1996, Saturday, she came
to the office and explained she was not feeling well the day before. After
that Vigan went AWOL and did not heed telegram notices from her
employer made on August 26, 1996 and on September 9, 1996 (Annexes
"1" & "2", pp. 108 to 109, rollo). She instead filed the instant suit for illegal
dismissal."
On June 10, 1997, Labor Arbiter Ernesto S. Dinopol rendered his decision4 finding
Vigan diseased and unfit for work under Article 284 of the Labor Code5 and awarded
the corresponding separation pay as follows:6
"WHEREFORE, judgment is hereby rendered ordering respondents
LITONJUA GROUP OF COMPANIES, EDDIE K. LITONJUA and
DANILO LITONJUA to jointly and severally pay complainant TERESITA
Y. VIGAN, the following amounts:
P72,000.00
8
 SO ORDERED."
Proportionate 13th" month pay 4,666.66
(P8,000 x 8 months over 12) …=
Litonjuas filed their motion for reconsideration which was denied in a resolution
dated June 19, 2000.
TOTAL AWARD………. P76,666.66
Petitioners Litonjuas filed the instant petition for review on certiorari alleging the
All other causes of action are DISMISSED for lack of merit." following grounds:

Vigan appealed the decision to the National Labor Relations Commission which I
modified7 the arbiter’s decision by ruling that Art. 284 of the Labor Code is
inapplicable in the instant case but affirmed the legality of the termination of the WHETHER OR NOT "LITONJUA GROUP OF COMPANIES", WHICH
complainant based on her having effectively abandoned her job; the rest of the HAS NO JURIDICAL PERSONALITY, BUT ONLY A GENERIC NAME
decision was affirmed. Vigan moved for a partial reconsideration which was denied TO DESCRIBE THE VARIOUS COMPANIES WHICH THE LITONJUA
in a resolution dated August 7, 1998. FAMILY HAS INTERESTS, CAN BE LEGALLY CONSTRUED AS
RESPONDENT’S EMPLOYER.
Dissatisfied, Vigan filed a petition for certiorari with the respondent Court of
Appeals which rendered its assailed decision dated March 20, 2000 reversing the II
NLRC Resolution. The dispositive portion of the decision reads:8
WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED
"WHEREFORE, premises considered, the assailed NLRC Decision and AS A MATTER OF LAW IN HOLDING THAT RESPONDENT WAS
Resolution are hereby REVERSEDand SET ASIDE. In its stead judgment ILLEGALLY DISMISSED FROM HER EMPLOYMENT, INSTEAD OF
is rendered ordering the respondents LITONJUA GROUP OF AFFIRMING THE DECISION OF THE NATIONAL LABOR
COMPANIES, EDDIE K. LITONJUA and DANILO LITONJUA jointly RELATIONS COMMISSION THAT SHE HAD ABANDONED HER JOB
and severally to: OR THAT OF LABOR ARBITER ERNESTO DINOPOL HOLDING
THAT SHE SHOULD BE SEPARATED ON THE GROUND OF
(a) Reinstate complainant TERESITA Y. VIGAN if she so desires; DISEASE UNDER ARTICLE 284 OF THE LABOR CODE,
CONSIDERING THAT SHE HAS EXHIBITED A PATTERN OF
or PSYCHOLOGICAL AND MENTAL DISTURBANCE WHICH
ADMITTEDLY NO LONGER MADE HER PHYSICALLY FIT TO
WORK.
(b) pay her separation compensation in the sum of P8,000.00
multiplied by her years of service counted from February 2, 1979
up to the time this Decision becomes final; and in either case to III
pay Vigan;
WHETHER OR NOT THE COURT OF APPEALS SERIOUSLY ERRED
(c) full back wages from the time she was illegally dismissed up to AS A MATTER OF LAW IN DIRECTING RESPONDENT’S
the date of the finality of this Decision; REINSTATEMENT AT HER OWN CHOICE OR PAYMENT OF
SEPARATION PAY OF ONE MONTH SALARY FOR EVERY YEAR
OF SERVICE AND BACKWAGES.
(d) moral damages in the amount of P40,000.00;
IV
(e) exemplary damages in the amount of P15,000.00; and

(f) attorney’s fees of P10,000.00.

9
 THE COURT OF APPEALS SERIOUSLY ERRED AS A MATTER OF
LAW IN HOLDING PETITIONERS LIABLE FOR MORAL AND
EXEMPLARY DAMAGES AND ATTORNEY’S FEES.
Anent the first assigned error, petitioners allege that the Litonjua group of companies
cannot be a party to this suit for it is not a legal entity with juridical personality but is
merely a generic name used to describe collectively the various companies in which
the Litonjua family has business interest; that the real employer of respondent Vigan
was the ACT theater Incorporated where Danilo Litonjua is a member of the Board
of Directors while Eddie Litonjua was not connected in any capacity.
Petitioners’ argument is meritorious. Only natural or juridical persons or entities
authorized by law may be parties to a civil action and every action must be
prosecuted and defended in the name of the real parties in interest.9Petitioners’ claim
that Litonjua Group of Companies is not a legal entity with juridical personality
hence cannot be a party to this suit deserves consideration since respondent failed to
prove otherwise. In fact, respondent Vigan’s own allegation in her Memorandum
supported petitioners’ claim that Litonjua group of companies does not exist when
she stated therein that instead of naming each and every corporation of the Litonjua
family where she had rendered accounting and payroll works, she simply referred to
these corporations as the Litonjua group of companies, thus, respondent merely used
such generic name to describe collectively the various corporations in which the
Litonjua family has business interest. Considering the non-existence of the Litonjua
group of companies as a juridical entity and petitioner Eddie Litonjua’s denial of his
connection in any capacity with the ACT Theater, the supposed company where
Vigan was employed, petitioner Eddie Litonjuas should also be excluded as a party
in this case since respondent Vigan failed to prove Eddie Litonjua’s participation in
the instant case. It is respondent Vigan, being the party asserting a fact, who has the
burden of proof as to such fact10 which however, she failed to discharge.
Next, petitioners claim that the complaint for illegal dismissal was prematurely filed
since Vigan was not dismissed, actual or constructive, from her employment as the
records show that despite being absent without official leave since August 5, 1996
and her receipt of two telegram notices sent to her by petitioners on August 26, and
September 9, 1996 for her to report for work, she failed to do so and yet petitioners
had not done any act to dismiss her. Petitioners deny Vigan’s claim that she had been
physically barred from entering the work premises.
Petitioners thus contend that since respondent Vigan was not illegally dismissed
from employment, the respondent court’s order reinstating the latter, awarding her
separation pay equivalent to one month salary per year of service as well as
backwages, damages and attorney’s fees have no factual and legal basis.
We are not persuaded.
The above arguments relate mainly to the correctness of the factual findings of the
Court of Appeals and the award of damages. This Court has consistently affirmed
that the findings of fact of the Court of Appeals are as a rule binding upon it, subject
to certain exceptions, one of which is when the factual findings of the Court of
Appeals are contrary to those of the trial court (or administrative body, as the case
may be).11 However, it bears emphasizing that mere disagreement between the Court
of Appeals and the trial court as to the facts of a case does not of itself warrant this
Court's review of the same. It has been held that the doctrine that the findings of fact
made by the Court of Appeals, being conclusive in nature, are binding on this Court,
applies even if the Court of Appeals was in disagreement with the lower court as to
the weight of evidence with a consequent reversal of its findings of fact, so long as
the findings of the Court of Appeals are borne out by the record or based on
substantial evidence.12
We have gone over the records of this case and found no cogent reason to disagree
with the respondent court’s findings that respondent Vigan did not abandon her job
but was illegally dismissed. Petitioners’ claim that despite two (2) telegram notices
dated August 26 and September 9, 1996 respectively sent to respondent Vigan to
report for work, the latter did not heed the demands and absented herself since
August 5, 1996 was belied by the respondent’s evidence, as it was upon instructions
of petitioner Danilo Litonjua to the guards on duty that she could not enter the
premises of her workplace. In fact, in her letter dated August 30, 1996 addressed to
petitioner Danilo Litonjua, respondent Vigan had complained of petitioner Danilo’s
inhumane treatment in barring her from entering her workplace, to wit:
"Sukdulan na po ang pang-aaping dinaranas ko sa inyo, sir. Since August 5
etc. I was always approached by your guard Batutay and harassed by your
men to vacate my cubicle as per your strict order. Only this August 7 that
you succeeded as you order the door locked for me only. As per our
agreement Aug. 27 at Jollibee (sic) gave me assurance that I willingly
undergo psychiatric test I could freely report for work without intimidating
me, you won’t anymore charge me of insubordination. You won’t disturb
my family anymore, so why do you advice to try to go back Aug. 30 but as
always to be barred by guard Batutay? Sir, with my 18 years of loyal
service, all I need is a little respect. Tao ako sir, hindi hayop. Malaki ang
nawawala sa akin."
Notwithstanding the fact the she was refused entrance to her workplace, respondent
Vigan, to show her earnest desire to report for work, would sneak her way into the
premises and punched her time card but she could not resume work as the guards in
the company gate would prevent her per petitioner Danilo Litonjua’s instructions. It
appears also that respondent Vigan wrote petitioner Danilo a letter dated September
9, 1996 notifying him that per his instructions, she had made an appointment for a
psychiatric test on September 11, 1996 and requested him to make a check payable
10
to Dr. Lourdes Ladrido-Ignacio in the amount of P800.00 consultation fee as they
agreed upon. She underwent a psychiatric examination as a result of which Dr.
Ignacio issued a medical certificate as follows:13
"This is to certify that MISS TERESITA VIGAN has come for psychiatric
evaluation on September 11 and 17, 1996. The psychiatric interview and
mental status examination did not reveal any symptoms of psychosis or
organic brain syndrome. She showed anxiety but this was deemed a realistic
reaction to her present job difficulties."
Respondent’s actuations militate against petitioners’ claim that she did not heed the
notices to return to work and abandoned her job. She had been going to her
workplace to report for work but was prevented from resuming her work upon the
instructions of petitioner Danilo Litonjua. It would be the height of injustice to allow
an employee to claim as a ground for abandonment a situation which he himself had
brought about.14
We fully agree with the respondent court’s ratiocination on the illegality of Vigan’s
dismissal, to wit:15
"The basic issue is whether Vigan’s employment was terminated by illegal
dismissal or by abandonment of work, and We hold that this was a case of
illegal dismissal.
Shopworn is the rule on abandonment that the immediate filing of a case for
illegal dismissal negates the same. Mark that Vigan promptly filed this suit
for illegal dismissal when her attempts to enter the premises of her
workplace became futile and the efforts to bar and eject her became
unmistakable. In the more recent case of Rizada vs. NLRC (G.R. No.
96982, September 21, 1999), the Supreme Court reiterated anew the hoary
rule that:
"To constitute abandonment two elements must concur (1) the
failure to report for work or absence without valid or justifiable
reason, and (2) a clear intention to sever the employer-employee
relationship, with the second element as the more determinative
factor and being manifested by some overt acts. Abandoning one’s
job means the deliberate, unjustified refusal of the employee to
resume his employment and the burden of proof is on the employer
to show a clear and deliberate intent on the part of the employee to
discontinue employment.
Abandonment is a matter of intention and cannot be lightly
inferred, much less legally presumed from certain equivocal acts.
(Shin Industrial v. National Labor Relations Commission, 164
SCRA 8).
An employee who forthwith took steps to protest his dismissal
cannot be said to have abandoned his work." (Toogue v. National
Labor Relations Commission, 238 SCRA 241), as where the
employee immediately filed a complaint for illegal dismissal to
seek reinstatement (Tolong Aqua Culture Corp., et al. V. National
Labor Relations Commission, G.R. 122268, November 12, 1996)
(emphasis supplied).
Note that in the instant case Vigan was even pleading to be allowed to work
but she was prevented by the guards thereat upon the orders of Danilo
Litonjua. These are disclosed by her letters (Annexes "F", "G", "K", "Q",
"R" and "U", pp. 82, 83, 87, 93, 94 & 97, rollo), the entries in her time cards
(Annexes "P", "S", "W" and "X", pp. 92, 95, 99 & 100, rollo) and her
compliance when required to see a psychiatrist (Annex "H", p. 84, rollo).
On the other hand there is complete silence from the Litonjuas on these
matters, including on the collective manifesto of several employees against
Danilo Litonjua and his highhanded ways (Annex "I", p. 85). They chose to
ignore material and telling points. They even alleged that Vigan refused to
comply with their request for her to have medical examination (Comment,
pp. 164-171, rollo and Memorandum for the Respondents, pp. 215-222,
rollo), an unmitigated falsity in the face of clear proofs that she complied
with their directive and was given a clean bill of mental health by a
reputable psychiatrist of their choice.
For emphasis, We shall quote with seeming triteness the dictum laid down
in Mendoza vs. NLRC (supra) regarding the unflinching rule in illegal
dismissal cases:
"that the employer bears the burden of proof. To establish a case of
abandonment, the employer must prove the employees deliberate
and unjustified refusal to resume employment without any
intention of returning. . .
mere absence from work, especially where the employee has been
verbally told not to report, cannot by itself constitute abandonment.
To repeat, the employer has the burden of proving overt acts on the
employee’s part which demonstrate a desire or intention to
abandon her work…"
The NLRC had erred in shifting the onus probandi to Vigan in the charge of
abandonment against her, while the Litonjuas failed to discharge their
11
 burden. Though they may not have verbally told Vigan not to report for
work but the act of ordering the guards not to let her in was just as clear a
notice. Vigan’s plight was akin to that of the truck helper in the case of
Masagana Concrete Products, et al. vs. NLRC (G.R. No. 106916,
September 3, 1999) who was likewise prevented from coming to work.
While there was no formal termination of his services, Mariñas,
was constructively dismissed when he was accused of tampering
the "vale sheet" and prevented from returning to work.
Constructive dismissal does not always involve forthright dismissal
or diminution in rank, compensation, benefit and privileges. For an
act of clear discrimination insensibility or disdain by an employer
may become so unbearable on the part of the employee that it
could foreclose any choice by him except to forego his continued
employment. In this case, Mariñas had to resign from his job
because he was prevented from returning back to work unless he
admitted his mistake in writing and he was not given any
opportunity to contest the charge against him. It is a rule often
repeated that unsubstantiated accusation without anything more are
not synonymous with guilt and unless a clear, valid, just or
authorized ground for dismissing an employee is established by the
employer the dismissal shall be considered unfounded.
Similarly, Vigan was accused of having mental, emotional and physical
disorders (Annex "M", p. 89, rollo), but per medical examination it was
proven that hers was pure anxiety as a realistic reaction to her present job
difficulties. She was charged of habitual absenteeism on Tuesdays that fell
within three days before and after the "15th" day and "30th" day of every
month (Litonjua’s Position Paper, pp. 101-107, rollo). This is preposterous
for how many Tuesdays in a year would fall within three days before and
after the "15th" day and "30th" day of every month? By no extrapolation
can this be habitual absenteeism."
Since respondent Vigan was illegally dismissed from her employment, she is entitled
to: (1) either reinstatement, if viable, or separation pay if reinstatement is no longer
viable, and (2) backwages.16 As correctly disposed by the respondent Court:17
"Thus finding that Vigan was illegally dismissed, she is entitled to the
following:
1) Either reinstatement, if viable, or separation pay if reinstatement is no
longer viable; and 2) Backwages, Backwages and separation pay are distinct
relief given to alleviate the economic damage by an illegally dismissed
employee. Hence, an award of separation pay in lieu of reinstatement does
not bar an award of backwages, computed from the time of illegal
dismissal… up to the date of the finality of the Decision... without
qualification or deduction. Separation pay, equivalent to one month’s salary
for every year of service, is awarded as an alternative to reinstatement when
the latter is no longer an option. Separation pay is computed from the
commencement of employment up to the time of termination, including the
imputed service for which the employee is entitled to backwages, with the
salary rate prevailing at the end of the period of putative service being the
basis for computation (Masagana Concrete Products, et al. vs. NLRC,
supra). In case of a fraction of at least six (6) months in the length of
service, the same shall be considered as one year in computing the
separation pay. With regard to backwages, it meant literal "full backwages"
that is inclusive of allowances and other benefits or their monetary
equivalent computed from the time her compensation was withheld from
her up to the time of her actual reinstatement, if it is still viable or up to the
time the Decision in her favor becomes final – without deducting from back
wages the earning derived elsewhere, if there is any, by Vigan during the
period of her illegal dismissal. (Lopez vs. NLRC, 297 SCRA 508).
In other words, Vigan is entitled to reinstatement, which perhaps is no
longer viable due to the strained relations between the parties, or separation
pay of P8,000.00 for every year of service and backwages of another P8,000
per month reckoned from the time she last received salary from the
Litonjuas up to the date of the finality of this Decision. Mark again that We
allowed the P8,000.00 claim of Vigan as her last salary received for again
the Litonjuas failed to validly refute the same."
We likewise affirm respondent court’s award of moral and exemplary damages to the
respondent. As a rule, moral damages are recoverable only where the dismissal of the
employee was attended by bad faith or fraud or constituted an act oppressive to
labor, or was done in a manner contrary to morals, good customs or public policy.
We find that bad faith attended respondent’s dismissal from her employment. Bad
faith involves a state of mind dominated by ill will or motive. It implies a conscious
and intentional design to do a wrongful act for a dishonest purpose or some moral
obliquity.18 Petitioner Danilo Litonjua showed ill will in treating respondent Vigan in
a very unfair and cruel manner which made her suffer anxieties by reason of such job
difficulties. The report to work notices sent by petitioners to respondent Vigan was
just part of the ploy to make it appear that the latter abandoned her work but in
reality, Vigan was barred from entering her work premises. We fully subscribe to
respondent’s position that petitioners’ action was for the purpose of removing her
from her employment. Respondent Vigan is also entitled to exemplary damages as
her dismissal was effected in an oppressive and malevolent manner. 19
12
We also find that there is a basis for the award of attorney’s fees. It is settled that in
actions for recovery of wages or where an employee was forced to litigate and incur
expenses to protect his rights and interest, he is entitled to an award of attorney’s
fees.20
WHEREFORE, premises considered, the decision of the respondent Court of
Appeals dated March 20, 2000 is hereby AFFIRMED with the MODIFICATION
that Litonjua Group of Companies and Eddie Litonjua are dropped as parties in the
instant case.1âwphi1.nêt
SO ORDERED.
G.R. No. 140746. March 16, 2005.*
PANTRANCO NORTH EXPRESS, INC., and ALEXANDER BUNCAN,
petitioners, vs. STANDARD INSURANCE COMPANY, INC., and MARTINA
GICALE, respondents.
Actions; Pleadings and Practice; Parties; Permissive Joinder of
Parties; Requisites; Where there is a single transaction common to both plaintiffs,
they have the same cause of action against the defendants.—Permissive joinder of
parties requires that: (a) the right to relief arises out of the same transaction or series
of transactions; (b) there is a question of law or fact common to all the plaintiffs or
defendants; and (c) such joinder is not otherwise proscribed by the provisions of the
Rules on jurisdiction and venue. In this case, there is a single transaction common to
all, that is, Pantranco’s bus hitting the rear side of the jeepney. There is also a
common question of fact, that is, whether petitioners are negligent. There being a
single transaction common to both respondents, consequently, they have the same
cause of action against petitioners.
Same; Same; Same; To determine identity of cause of action, it must be
ascertained whether the same evidence which is necessary to
_______________
*
 THIRD DIVISION.
483
VOL. 453, MARCH 16, 2005  483  which is not present here.
Pantranco North Express, Inc. vs. Standard Insurance Company, Inc.
sustain the second cause of action would have been sufficient to authorize a
recovery in the first.—To determine identity of cause of action, it must be
ascertained whether the same evidence which is necessary to sustain the second
cause of action would have been sufficient to authorize a recovery in the first. Here,
had respondents filed separate suits against petitioners, the same evidence would
have been presented to sustain the same cause of action. Thus, the filing by both
respondents of the complaint with the court below is in order. Such joinder of parties
avoids multiplicity of suit and ensures the convenient, speedy and orderly
administration of justice.
Same; Same; Same; Jurisdictions; “Totality Rule”; Under the “totality rule”
“where there are several claims or causes of action between the same or different
parties, embodied in the same complaint, the amount of the demand shall be the
totality of the claims in all the causes of action, irrespective of whether the causes of
action arose out of the same or different transactions.”—Section 5(d), Rule 2 of the
Revised Rules of Court provides: “Sec. 5. Joinder of causes of action.—A party may
in one pleading assert, in the alternative or otherwise, as many causes of action as he
may have against an opposing party, subject to the following conditions: x x x (d)
Where the claims in all the causes of action are principally for recovery of money the
aggregate amount claimed shall be the test of jurisdiction.” The above provision
presupposes that the different causes of action which are joined accrue in favor of the
same plaintiff/s and against the same defendant/s and that no misjoinder of parties is
involved. The issue of whether respondents’ claims shall be lumped together is
determined by paragraph (d) of the above provision. This paragraph embodies the
“totality rule” as exemplified by Section 33 (1) of B.P. Blg. 129 which states, among
others, that “where there are several claims or causes of action between the same or
different parties, embodied in the same complaint, the amount of the demand shall be
the totality of the claims in all the causes of action, irrespective of whether the causes
of action arose out of the same or different transactions.”
Same; Due Process; The essence of due process is simply an opportunity to be
heard, or an opportunity to explain one’s side or an opportunity to seek for a
reconsideration of the action or ruling complained of.—We have consistently held
that the essence of due process is simply an opportunity to be heard, or an
opportunity to ex-
484
484  SUPREME COURT REPORTS ANNOTATED 
Pantranco North Express, Inc. vs. Standard Insurance Company, Inc.
plain one’s side or an opportunity to seek for a reconsideration of the action or
ruling complained of. Petitioner Pantranco filed an answer and participated during
the trial and presentation of respondents’ evidence. It was apprised of the notices of
hearing issued by the trial court. Indeed, it was afforded fair and reasonable
opportunity to explain its side of the controversy. Clearly, it was not denied of its
right to due process. What is frowned upon is the absolute lack of notice and hearing
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
The facts are stated in the opinion of the Court.
     The Government Corporate Counsel for petitioners.
     Oliver C. Ong for respondents.
SANDOVAL-GUTIERREZ, J.:
13
Before us is a petition for review on certiorari assailing the Decision1 dated July 23
1999 and Resolution2 dated November 4, 1999 of the Court of Appeals in CA-G.R.
CV No. 38453, entitled "Standard Insurance Company, Inc., and Martina Gicale vs.
PANTRANCO North Express, Inc., and Alexander Buncan."
In the afternoon of October 28, 1984, Crispin Gicale was driving the passenger
jeepney owned by his mother Martina Gicale, respondent herein. It was then raining.
While driving north bound along the National Highway in Talavera, Nueva Ecija, a
passenger bus, owned by Pantranco North Express, Inc., petitioner, driven by
Alexander Buncan, also a petitioner, was trailing behind. When the two vehicles
were negotiating a curve along the highway, the passenger bus overtook the jeepney.
In so doing, the passenger bus hit the left rear side of the jeepney and sped away.
Crispin reported the incident to the Talavera Police Station and respondent Standard
Insurance Co., Inc. (Standard), insurer of the jeepney. The total cost of the repair
was P21,415.00, but respondent Standard paid only P8,000.00. Martina Gicale
shouldered the balance of P13,415.00.
Thereafter, Standard and Martina, respondents, demanded reimbursement from
petitioners Pantranco and its driver Alexander Buncan, but they refused. This
prompted respondents to file with the Regional Trial Court (RTC), Branch 94,
Manila, a complaint for sum of money.
In their answer, both petitioners specifically denied the allegations in the complaint
and averred that it is the Metropolitan Trial Court, not the RTC, which has
jurisdiction over the case.
On June 5, 1992, the trial court rendered a Decision3 in favor of respondents
Standard and Martina, thus:
"WHEREFORE, and in view of the foregoing considerations, judgment is
hereby rendered in favor of the plaintiffs, Standard Insurance Company and
Martina Gicale, and against defendants Pantranco Bus Company and
Alexander Buncan, ordering the latter to pay as follows:
(1) to pay plaintiff Standard Insurance the amount of P8,000.00 with
interest due thereon from November 27, 1984 until fully paid;
(2) to pay plaintiff Martina Gicale the amount of P13,415.00 with interest
due thereon from October 22, 1984 until fully paid;
(3) to pay the sum of P10,000.00 for attorney’s fees;
(4) to pay the expenses of litigation and the cost of suit.
SO ORDERED."
On appeal, the Court of Appeals, in a Decision4 dated July 23, 1999, affirmed the
trial court’s ruling, holding that:
"The appellants argue that appellee Gicale’s claim of P13,415.00 and
appellee insurance company’s claim of P8,000.00 individually fell under the
exclusive original jurisdiction of the municipal trial court. This is not
correct because under the Totality Rule provided for under Sec. 19, Batas
Pambansa Bilang 129, it is the sum of the two claims that determines the
jurisdictional amount.
xxx
In the case at bench, the total of the two claims is definitely more
than P20,000.00 which at the time of the incident in question was the
jurisdictional amount of the Regional Trial Court.
Appellants contend that there was a misjoinder of parties. Assuming that
there was, under the Rules of Court (Sec. 11, Rule 7) as well as under the
Rules of Civil Procedure (ditto), the same does not affect the jurisdiction of
the court nor is it a ground to dismiss the complaint.
xxx
It does not need perspicacity in logic to see that appellees Gicale’s and
insurance company’s individual claims against appellees (sic) arose from
the same vehicular accident on October 28, 1984 involving appellant
Pantranco’s bus and appellee Gicale’s jeepney. That being the case, there
was a question of fact common to all the parties: Whose fault or negligence
caused the damage to the jeepney?
Appellants submit that they were denied their day in court because the case
was deemed submitted for decision "without even declaring defendants in
default or to have waived the presentation of evidence." This is incorrect. Of
course, the court did not declare defendants in default because that is done
only when the defendant fails to tender an answer within the reglementary
period. When the lower court ordered that the case is deemed submitted for
decision that meant that the defendants were deemed to have waived their
right to present evidence. If they failed to adduce their evidence, they
should blame nobody but themselves. They failed to be present during the
14
 scheduled hearing for the reception of their evidence despite notice and
without any motion or explanation. They did not even file any motion for
reconsideration of the order considering the case submitted for decision.
Finally, contrary to the assertion of the defendant-appellants, the evidence
preponderantly established their liability for quasi-delict under Article 2176
of the Civil Code."
Petitioners filed a motion for reconsideration but was denied by the Appellate Court
in a Resolution dated November 4, 1999.
Hence, this petition for review on certiorari raising the following assignments of
error:
"I
WHETHER OR NOT THE TRIAL COURT HAS JURISDICTION OVER
THE SUBJECT OF THE ACTION CONSIDERING THAT
RESPONDENTS’ RESPECTIVE CAUSE OF ACTION AGAINST
PETITIONERS DID NOT ARISE OUT OF THE SAME TRANSACTION
NOR ARE THERE QUESTIONS OF LAW AND FACTS COMMON TO
BOTH PETITIONERS AND RESPONDENTS.
II
WHETHER OR NOT PETITIONERS ARE LIABLE TO RESPONDENTS
CONSIDERING THAT BASED ON THE EVIDENCE ADDUCED AND
LAW APPLICABLE IN THE CASE AT BAR, RESPONDENTS HAVE
NOT SHOWN ANY RIGHT TO THE RELIEF PRAYED FOR.
III
WHETHER OR NOT PETITIONERS WERE DEPRIVED OF THEIR
RIGHT TO DUE PROCESS."
For their part, respondents contend that their individual claims arose out of the same
vehicular accident and involve a common question of fact and law. Hence, the RTC
has jurisdiction over the case.
I
Petitioners insist that the trial court has no jurisdiction over the case since the cause
of action of each respondent did not arise from the same transaction and that there
are no common questions of law and fact common to both parties. Section 6, Rule 3
of the Revised Rules of Court,5 provides:
"Sec. 6. Permissive joinder of parties. – All persons in whom or against
whom any right to relief in respect to or arising out of the same transaction
or series of transactions is alleged to exist, whether jointly, severally, or in
the alternative, may, except as otherwise provided in these Rules, join as
plaintiffs or be joined as defendants in one complaint, where any question
of law or fact common to all such plaintiffs or to all such defendants may
arise in the action; but the court may make such orders as may be just to
prevent any plaintiff or defendant from being embarrassed or put to expense
in connection with any proceedings in which he may have no interest."
Permissive joinder of parties requires that: (a) the right to relief arises out of the
same transaction or series of transactions; (b) there is a question of law or fact
common to all the plaintiffs or defendants; and (c) such joinder is not otherwise
proscribed by the provisions of the Rules on jurisdiction and venue.6
In this case, there is a single transaction common to all, that is, Pantranco’s bus
hitting the rear side of the jeepney. There is also a common question of fact, that is,
whether petitioners are negligent. There being a single transaction common to both
respondents, consequently, they have the same cause of action against petitioners.
To determine identity of cause of action, it must be ascertained whether the same
evidence which is necessary to sustain the second cause of action would have been
sufficient to authorize a recovery in the first.7 Here, had respondents filed separate
suits against petitioners, the same evidence would have been presented to sustain the
same cause of action. Thus, the filing by both respondents of the complaint with the
court below is in order. Such joinder of parties avoids multiplicity of suit and ensures
the convenient, speedy and orderly administration of justice.
Corollarily, Section 5(d), Rule 2 of the same Rules provides:
"Sec. 5. Joinder of causes of action. – A party may in one pleading assert, in
the alternative or otherwise, as many causes of action as he may have
against an opposing party, subject to the following conditions:
xxx
(d) Where the claims in all the causes of action are principally for recovery
of money the aggregate amount claimed shall be the test of jurisdiction."
15
The above provision presupposes that the different causes of action which are joined
accrue in favor of the same plaintiff/s and against the same defendant/s and that no
misjoinder of parties is involved.8 The issue of whether respondents’ claims shall be
lumped together is determined by paragraph (d) of the above provision. This
paragraph embodies the "totality rule" as exemplified by Section 33 (1) of B.P. Blg.
1299 which states, among others, that "where there are several claims or causes of
action between the same or different parties, embodied in the same complaint, the
amount of the demand shall be the totality of the claims in all the causes of action,
irrespective of whether the causes of action arose out of the same or different
transactions."
As previously stated, respondents’ cause of action against petitioners arose out of the
same transaction. Thus, the amount of the demand shall be the totality of the claims.
Respondent Standard’s claim is P8,000.00, while that of respondent Martina Gicale
is P13,415.00, or a total of P21,415.00. Section 19 of B.P. Blg. 129 provides that the
RTC has "exclusive original jurisdiction over all other cases, in which the demand,
exclusive of interest and cost or the value of the property in controversy, amounts to
more than twenty thousand pesos (P20,000.00)." Clearly, it is the RTC that has
jurisdiction over the instant case. It bears emphasis that when the complaint was
filed, R.A. 7691 expanding the jurisdiction of the Metropolitan, Municipal and
Municipal Circuit Trial Courts had not yet taken effect. It became effective on April
15, 1994.
counsel manifested that his client is willing to settle the case amicably and moved for
another postponement. The trial court granted the motion. On the date of the hearing,
the new counsel manifested that Pantranco’s employees are on strike and moved for
another postponement. On the next hearing, said counsel still failed to appear. Hence,
the trial court considered the case submitted for decision.
We have consistently held that the essence of due process is simply an opportunity to
be heard, or an opportunity to explain one’s side or an opportunity to seek for a
reconsideration of the action or ruling complained of.11
Petitioner Pantranco filed an answer and participated during the trial and presentation
of respondents’ evidence. It was apprised of the notices of hearing issued by the trial
court. Indeed, it was afforded fair and reasonable opportunity to explain its side of
the controversy. Clearly, it was not denied of its right to due process. What is
frowned upon is the absolute lack of notice and hearing which is not present here.
WHEREFORE, the petition is DENIED. The assailed Decision dated July 23 1999
and Resolution dated November 4, 1999 of the Court of Appeals in CA-G.R. CV No.
38453 are hereby AFFIRMED. Costs against petitioners.
SO ORDERED.

II

The finding of the trial court, affirmed by the Appellate Court, that petitioners are
negligent and thus liable to respondents, is a factual finding which is binding upon
us, a rule well-established in our jurisprudence. It has been repeatedly held that the
trial court's factual findings, when affirmed by the Appellate Court, are conclusive
and binding upon this Court, if they are not tainted with arbitrariness or oversight of
some fact or circumstance of significance and influence. Petitioners have not
presented sufficient ground to warrant a deviation from this rule.10

III

There is no merit in petitioners’ contention that they were denied due process.
Records show that during the hearing, petitioner Pantranco’s counsel filed two
motions for resetting of trial which were granted by the trial court. Subsequently,
said counsel filed a notice to withdraw. After respondents had presented their
evidence, the trial court, upon petitioners’ motion, reset the hearing to another date.
On this date, Pantranco failed to appear. Thus, the trial court warned Pantranco that
should it fail to appear during the next hearing, the case will be submitted for
resolution on the basis of the evidence presented. Subsequently, Pantranco’s new
16

G.R. No. 162575.  December 15, 2010.*
BEATRIZ SIOK PING TANG, petitioner, vs. SUBIC BAY DISTRIBUTION,
INC., respondent.
Actions; Indispensable Parties; Words and Phrases; An indispensable party is
a party who has such an interest in the controversy or subject matter that a final
adjudication cannot be made, in his absence, without injuring or affecting that
interest, a party who has not only an interest in the subject matter of the controversy,
but also has an interest of such nature that a final 
_______________
* SECOND DIVISION.
458
458 SUPREME COURT REPORTS ANNOTATED
Siok Ping Tang vs. Subic Bay Distribution, Inc.
decree cannot be made without affecting his interest or leaving the controversy
in such a condition that its final determination may be wholly inconsistent with
equity and good conscience.—In Arcelona v. Court of Appeals, 280 SCRA 20
(1997), we stated the nature of indispensable party, thus: An indispensable party is a
party who has such an interest in the controversy or subject matter that a final
adjudication cannot be made, in his absence, without injuring or affecting that
interest, a party who has not only an interest in the subject matter of the controversy,
but also has an interest of such nature that a final decree cannot be made without
affecting his interest or leaving the controversy in such a condition that its final
determination may be wholly inconsistent with equity and good conscience. It has
also been considered that an indispensable party is a person in whose absence there
cannot be a determination between the parties already before the court which is
effective, complete, or equitable. Further, an indispensable party is one who must be
included in an action before it may properly go forward. A person is not an
indispensable party, however, if his interest in the controversy or subject matter is
separable from the interest of the other parties, so that it will not necessarily be
directly or injuriously affected by a decree which does complete justice between
them. Also, a person is not an indispensable party if his presence would merely
permit complete relief between him and those already parties to the action, or if he
has no interest in the subject matter of the action. It is not a sufficient reason to
declare a person to be an indispensable party that his presence will avoid multiple
litigation.
Same; Parties; In filing the petition for certiorari, the petitioner should join as
party defendant with the court or judge, the person interested in sustaining the
proceedings in the court, and it shall be the duty of such person to appear and
defend, both in his own behalf and in behalf of the court or judge affected by the
proceedings.—In filing the petition for certiorari, respondent should join as party
defendant with the court or judge, the person interested in sustaining the proceedings
in the court, and it shall be the duty of such person to appear and defend, both in his
own behalf and in behalf of the court or judge affected by the proceedings. In this
case, there is no doubt that it is only the petitioner who is the person interested in
sustaining the proceedings in court since she was the one who sought for the issuance
of the writ of preliminary injunction to enjoin the banks from releasing funds to
17
respondent. As earlier discussed, the banks are not parties interested in the subject
matter of the petition. Thus, it is only petitioner who should be joined as party
defendant with the judge and who should defend the judge’s issuance of
injunction.459
VOL. 638, DECEMBER 15, 2010 459
Siok Ping Tang vs. Subic Bay Distribution, Inc.
Certiorari; Motion for Reconsideration; A motion for reconsideration is a
condition sine qua non for the filing of a petition for certiorari; Exceptions.—The
settled rule is that a motion for reconsideration is a condition sine qua non for the
filing of a petition for certiorari. Its purpose is to grant an opportunity for the court
to correct any actual or perceived error attributed to it by the re-examination of the
legal and factual circumstances of the case. The rule is, however, circumscribed by
well-defined exceptions, such as (a) where the order is a patent nullity, as where the
court a quohad no jurisdiction; (b) where the questions raised in
the certiorariproceeding have been duly raised and passed upon by the lower court,
or are the same as those raised and passed upon in the lower court; (c) where there is
an urgent necessity for the resolution of the question and any further delay would
prejudice the interests of the Government or of the petitioner or the subject matter of
the action is perishable; (d) where, under the circumstances, a motion for
reconsideration would be useless; (e) where petitioner was deprived of due process
and there is extreme urgency for relief; (f) where, in a criminal case, relief from an
order of arrest is urgent and the granting of such relief by the trial court is
improbable; (g) where the proceedings in the lower court are a nullity for lack of due
process; (h) where the proceedings were ex parte, or in which the petitioner had no
opportunity to object; and (i) where the issue raised is one purely of law or where
public interest is involved.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
   The facts are stated in the opinion of the Court.
  Remberto R. Villanueva for petitioner.
  Siguion Reyna, Montecillo & Ongsiako for respondent.
PERALTA, J.:
Before us is a petition for review on certiorari filed by petitioner Beatriz Siok
Ping Tang seeking to annul and set aside the Decision1
_______________
1 Penned by Associate Justice Eubolo G. Verzola, with Associate Justices
Remedios Salazar-Fernando and Edgardo F. Sundiam, concurring; Rollo, pp. 39-45.
460
460 SUPREME COURT REPORTS ANNOTATED
Siok Ping Tang vs. Subic Bay Distribution, Inc.
dated October 17, 2003 and the Resolution2 dated March 5, 2004 of the Court of
Appeals (CA) in CA-G.R. SP No. 74629.
The antecedent facts are as follows:
Petitioner is doing business under the name and style of Able Transport.
Respondent Subic Bay Distribution, Inc. (SBDI) entered in two Distributorship
Agreements with petitioner and Able Transport in April 2002. Under the
Agreements, respondent, as seller, will sell, deliver or procure to be delivered
petroleum products, and petitioner, as distributor, will purchase, receive and pay for
its purchases from respondent. The two Agreements had a period of one year,
commencing on October 2001 to October 2002, which shall continue on an annual
basis unless terminated by either party upon thirty days written notice to the other
prior to the expiration of the original term or any extension thereof.
Section 6.3 of the Distributorship Agreement provides that respondent may
require petitioner to put up securities, real or personal, or to furnish respondent a
performance bond issued by a bonding company chosen by the latter to secure and
answer for petitioner’s outstanding account, and or faithful performance of her
obligations as contained or arising out of the Agreement. Thus, petitioner applied for
and was granted a credit line by the United Coconut Planters Bank (UCPB),
International Exchange Bank (IEBank), and Security Bank Corporation (SBC).
Petitioner also applied with the Asia United Bank (AUB) an irrevocable domestic
standby letter of credit in favor of respondent. All these banks separately executed
several undertakings setting the terms and conditions governing the drawing of
money by respondent from these banks.
Petitioner allegedly failed to pay her obligations to respondent despite demand,
thus, respondent tried to withdraw from these bank undertakings.
Petitioner then filed with the Regional Trial Court (RTC) of Quezon City
separate petitions3 against the banks for declaration of nul-
_______________
2 Id., at pp. 47-48.
3 Docketed as Civil Case Nos. Q-02-48334 to Q-02-48337.
461
VOL. 638, DECEMBER 15, 2010 461
Siok Ping Tang vs. Subic Bay Distribution, Inc.
lity of the several bank undertakings and domestic letter of credit which they issued
with the application for the issuance of a temporary restraining order (TRO) and writ
of preliminary injunction. The cases were later consolidated and were assigned to
Branch 101. Petitioner asked for the annulment of the bank undertakings/letter of
credit which she signed on the ground that the prevailing market rate at the time of
respondent’s intended drawings with which petitioner will be charged of as interests
and penalties is oppressive, exorbitant, unreasonable and unconscionable rendering it
against public morals and policy; and that to make her automatically liable for
millions of pesos on the bank undertakings, these banks merely required the
submission of a mere certification from the company (respondent) that the customer
(petitioner) has not paid its account (and its statement of account of the client)
without first verifying the truthfulness of the alleged petitioner’s total liability to the
18
drawer thereon. Therefore, such contracts are oppressive, unreasonable and
unconscionable as they would result in her obtaining several millions of liability.
On November 28, 2002, a hearing was conducted for the issuance of the TRO
and the writ of preliminary injunction wherein the petitioner and the bank
representatives were present. On query of the respondent Judge Normandie Pizarro
(Judge Pizarro) to the bank representatives with regard to the eventual issuance of
the TRO, the latter all replied that they will abide by the sound judgment of the court.
The court then issued an Order 4 granting the TRO and requiring petitioner to implead
respondent as an indispensable party and for the latter to submit its position paper on
the matter of the issuance of the injunction. Petitioner and respondent submitted their
respective position papers.
On December 17, 2002, the RTC rendered an Order, 5 the dispositive portion of
which reads:
“ACCORDINGLY, let a Writ of Preliminary Injunction be issued restraining and
enjoining herein Respondent UCPB, IEB, SB and AUB from
_______________
4 Rollo, pp. 149-151.
5 Penned by Judge Normandie B. Pizarro (now Associate Justice of the Court of
Appeals); id., at pp. 285-288.
462
462 SUPREME COURT REPORTS ANNOTATED
Siok Ping Tang vs. Subic Bay Distribution, Inc.
releasing any funds to SBDI, pursuant to the Bank Undertakings and/or Domestic
Standby Letter of Credit until further orders from this Court. Consequently,
Petitioner is hereby DIRECTED to post a bond in the amount of TEN MILLION
PESOS (P10,000,000.00), to answer for whatever damages respondent banks and
SBDI may suffer should this Court finally decide that petitioner was not entitled
thereto.”6
The RTC found that both respondent and petitioner have reasons for the
enforcement or non-enforcement of the bank undertakings, however, as to whether
said reasons were justifiable or not, in view of the attending circumstances, the RTC
said that these can only be determined after a full blown trial. It ruled that the
outright denial of petitioner’s prayer for the issuance of injunction, even if the
evidence warranted the reasonable probability that real injury will occur if the relief
for shall not be granted in favor of petitioner, will not serve the ends of justice.
Respondent filed with the CA a petition for certiorariwith prayer for the issuance
of a TRO and writ of preliminary injunction against respondent Judge Pizarro and
petitioner. Subsequently, petitioner filed her Comment and respondent filed its
Reply.
On July 4, 2003, the CA issued a Resolution 7 granting the TRO prayed for by
respondent after finding that it was apparent that respondent has a legal right under
the bank undertakings issued by UCPB, SBC, and IEBank; and that until those
undertakings were nullified, respondent’s rights under the same should be
maintained.
On July 11, 2003, the CA issued a Supplemental Resolution 8 wherein the
Domestic Standby Letter of Credit issued by AUB was ordered included among the
bank undertakings, to which respondent has a legal right.
On October 17, 2003, the CA rendered its assailed Decision, the decretal portion
of which reads:
_______________
6 Id., at p. 288.
7 Penned by Associate Justice Elvie John S. Asuncion, with Associate Justices
Martin S. Villarama, Jr. (now Associate Justice of the Supreme Court) and Mario L.
Guariña III, concurring; id., at pp. 433-434.
8 Id., at pp. 435-436.
463
VOL. 638, DECEMBER 15, 2010 463
Siok Ping Tang vs. Subic Bay Distribution, Inc.
“WHEREFORE, the petition is hereby GRANTED. The Order dated December
17, 2002 is hereby ANNULLED AND SET ASIDE. The writ of preliminary
injunction issued by the lower court is hereby LIFTED.”9
In so ruling, the CA said that the grant or denial of an injunction rests on the
sound discretion of the RTC which should not be intervened, except in clear cases of
abuse. Nonetheless, the CA continued that the RTC should avoid issuing a writ of
preliminary injunction which would, in effect, dispose of the main case without trial.
It found that petitioner was questioning the validity of the bank undertakings and
letter of credit for being oppressive, unreasonable and unconscionable. However, as
provided under the law, private transactions are presumed to be fair and regular and
that a person takes ordinary care of his concerns. The CA ruled that the RTC’s
issuance of the injunction, which was premised on the abovementioned justification,
would be a virtual acceptance of petitioner’s claim, thus, already a prejudgment of
the main case. It also said that contracts are presumed valid until they are voided by a
court of justice, thus, until such time that petitioner has presented sufficient evidence
to rebut such presumption, her legal right to the writ is doubtful.
As to petitioner’s claim of respondent’s non-filing of a motion for
reconsideration before resorting to a petition for certiorari, the CA said that it is not
a rigid rule, as jurisprudence had said, that when a definite question has been
properly raised, argued and submitted in the RTC and the latter had decided the
question, a motion for reconsideration is no longer necessary before filing a petition
for certiorari. The court found that both parties had fully presented their sides on the
issuance of the writ of preliminary injunction and that the RTC had squarely resolved
the issues presented by both parties. Thus, respondent could not be faulted for not
filing a motion for reconsideration.
In a Resolution dated March 5, 2004, petitioner’s motion for reconsideration was
denied.
19
_______________
9 Id., at p. 45.
464
464 SUPREME COURT REPORTS ANNOTATED
Siok Ping Tang vs. Subic Bay Distribution, Inc.
Hence, this petition, wherein petitioner raises the following assignment of errors:
I. THE HONORABLE COURT OF APPEALS A QUOCOMMITTED A
SERIOUS AND REVERSIBLE ERROR IN GIVING DUE COURSE AND
GRANTING THE PETITION FOR CERTIORARI FILED BY PRIVATE
RESPONDENT SBDI, DESPITE THE FACT THAT THE ORIGINAL PARTIES
IN THE TRIAL COURT, WHO ARE EQUALLY MANDATED BY THE
QUESTIONED ORDER OF THE TRIAL COURT, NAMELY; UCPB, IEBANK,
SBC AND AUB, AS DEFENDANTS IN THE MAIN CASE, WERE NOT
IMPLEADED AS INDISPENSABLE PARTIES IN THE PETITION.
II. THE HONORABLE COURT OF APPEALS A QUOCOMMITTED A
SERIOUS AND REVERSIBLE ERROR IN GIVING DUE COURSE AND
GRANTING PRIVATE RESPONDENT SBDI’S PETITION WHEN THE LATTER
ADMITTEDLY FAILED TO FILE A PRIOR MOTION FOR
RECONSIDERATION BEFORE THE TRIAL COURT, MORESO WHEN
INDISPENSABLE PARTIES WERE NOT IMPLEADED WHICH SHOULD
HAVE RENDERED THE COURT OF APPEALS IN WANT OF JURISDICTION
TO ACT.10
Petitioner claims that the CA decision is void for want of authority of the CA to
act on the petition as the banks should have been impleaded for being indispensable
parties, since they are the original party respondents in the RTC; that the filing with
the CA of respondent’s petition for certiorari emanated from the RTC Order wherein
the banks were the ones against whom the questioned Order was issued; that the
banks are the ones who stand to release hundred millions of pesos which respondent
sought to draw from the questioned bank undertakings and domestic standby letter of
credit through the certiorariproceedings, thus, they should be given an opportunity to
be heard. Petitioner claims that even the CA recognized the banks’ substantial
interest over the subject matter of the case when, despite not being impleaded as
parties in the petition filed by respondent, the CA also notified the banks of its
decision.
Petitioner argues that a petition for certiorari filed without a prior motion for
reconsideration is a premature action and such omission
_______________
10 Id., at p. 21.
465
VOL. 638, DECEMBER 15, 2010 465
Siok Ping Tang vs. Subic Bay Distribution, Inc.
constitutes a fatal infirmity; that respondent explained its omission only when
petitioner already brought the same to the attention of the CA, thus, a mere
afterthought and an attempt to cure the fatal defects of its petition.
In its Comment, respondent contends that the banks which issued the bank
undertakings and letter of credit are not indispensable parties in the petition
for certiorari filed in the CA. Respondent argues that while the RTC preliminarily
resolved the issue of whether or not petitioner was entitled to an injunctive relief, and
the enforcement of any decision granting such would necessarily involve the banks,
the resolution of the issue regarding the injunction does not require the banks’
participation. This is so because on one hand the entitlement or non-entitlement to an
injunction is a matter squarely between petitioner and respondent, the latter being the
party that is ultimately enjoined from benefiting from the banks’ undertakings. On
the other hand, respondent contends that the issue resolved by the CA was whether
or not the RTC gravely abused its discretion in granting the injunctive relief to
respondent; that while the enforcement of any decision enjoining the implementation
of the injunction issued by the RTC would affect the banks, the resolution of whether
there is grave abuse of discretion committed by the RTC does not require the banks’
participation.
Respondent claims that while as a rule, a motion for reconsideration is required
before filing a petition for certiorari, the rule admits of exceptions, which are, among
others: (1) when the issues raised in the certiorariproceedings have been duly raised
and passed upon by the RTC or are the same as those raised and passed upon in the
RTC; (2) there is an urgent necessity and time is of the essence for the resolution of
the issues raised and any further delay would prejudice the interests of the petitioner;
and (3) the issue raised is one purely of law, which are present in respondent’s case.
In her Reply, petitioner claims that the decree that will compel and order the
banks to release any funds to respondent pending the resolution of her petition in the
RTC will have an injurious effect upon her rights and interest. She reiterates her
arguments in her petition.466
466 SUPREME COURT REPORTS ANNOTATED
Siok Ping Tang vs. Subic Bay Distribution, Inc.
Respondent filed a Rejoinder saying that it is misleading for petitioner to allege
that the decree sought by respondent before the CA is directed against the banks; that
even the dispositive portion of the CA decision did not include any express directive
to the banks; that there was nothing in the CA decision which compelled and ordered
the banks to release funds in favor of respondent as the CA decision merely annulled
the RTC Order and lifted the writ of preliminary injunction. Respondent contends
that the banks are not persons interested in sustaining the RTC decision as this was
obvious from the separate answers they filed in the RTC wherein they uniformly
maintained that the bank undertakings/letter of credit are not oppressive,
unreasonable and unconscionable. Respondent avers that petitioner is the only person
interested in upholding the injunction issued by the RTC, since it will enable her to
prevent the banks from releasing funds to respondent. Respondent insists that
20
petitioner’s petition before the RTC and the instant petition have caused and
continues to cause respondent grave and irreparable damage.
Both parties were then required to file their respective memoranda, in which they
complied.
Petitioner’s insistence that the banks are indispensable parties, thus, should have
been impleaded in the petition for certiorari filed by respondent in the CA, is not
persuasive.
In Arcelona v. Court of Appeals,11 we stated the nature of indispensable party,
thus:
“An indispensable party is a party who has such an interest in the controversy or
subject matter that a final adjudication cannot be made, in his absence, without
injuring or affecting that interest, a party who has not only an interest in the subject
matter of the controversy, but also has an interest of such nature that a final decree
cannot be made without affecting his interest or leaving the controversy in such a
condition that its final determination may be wholly inconsistent with equity and
good conscience. It has also been considered that an indispensable party is a person
in whose absence there cannot be a determination between the parties already before
the court which is effective, complete, or equitable. Further, an indispensable party is
one who must be included in an action before it may properly go forward.
_______________
11 345 Phil. 250; 280 SCRA 20 (1997).
467
VOL. 638, DECEMBER 15, 2010 467
Siok Ping Tang vs. Subic Bay Distribution, Inc.
A person is not an indispensable party, however, if his interest in the controversy
or subject matter is separable from the interest of the other parties, so that it will not
necessarily be directly or injuriously affected by a decree which does complete
justice between them. Also, a person is not an indispensable party if his presence
would merely permit complete relief between him and those already parties to the
action, or if he has no interest in the subject matter of the action. It is not a sufficient
reason to declare a person to be an indispensable party that his presence will avoid
multiple litigation.”12
Applying the foregoing, we find that the banks are not indispensable parties in
the petition for certiorari which respondent filed in the CA assailing the RTC Order
dated December 17, 2002. In fact, several circumstances would show that the banks
are not parties interested in the matter of the issuance of the writ of preliminary
injunction, whether in the RTC or in the CA.
First. During the hearing of petitioner’s prayer for the issuance of a TRO, the
RTC, in open court, elicited from the lawyer-representatives of the four banks their
position in the event of the issuance of the TRO, and all these representatives
invariably replied that they will abide and/or submit to the sound judgment of the
court.13
Second. When the RTC issued its Order dated December 17, 2002 granting the
issuance of the writ of preliminary injunction, the banks could have challenged the
same if they believe that they were aggrieved by such issuance. However, they did
not, and such actuations were in consonance with their earlier position that they
would submit to the sound judgment of the RTC.
Third. When respondent filed with the CA the petition for certiorari with prayer
for the issuance of a TRO and writ of preliminary injunction, and a TRO was
subsequently issued, copies of the resolution were also sent 14 to the banks, although
not impleaded, yet the latter took no action to question their non-inclusion in the
petition.
_______________
12 Id., at pp. 269-270; pp. 39-40.
13 Rollo, p. 150.
14 CA Rollo, pp. 155, 158.
468
468 SUPREME COURT REPORTS ANNOTATED
Siok Ping Tang vs. Subic Bay Distribution, Inc.
Notably, the SBC filed an Urgent Motion for Clarification15on whether or not the
issuance of the TRO has the effect of restraining the bank from complying with the
writ of preliminary injunction issued by the RTC or nullifying/rendering ineffectual
the said writ. In fact, SBC even stated that the motion was filed for no other purpose,
except to seek proper guidance on the issue at hand so that whatever action or
position it may take with respect to the CA resolution will be consistent with its term
and purposes.
Fourth. When the CA rendered its assailed Decision nullifying the injunction
issued by the RTC, and copies of the decision were furnished these banks, not one of
these banks ever filed any pleading to assail their non-inclusion in
the certiorari proceedings.
Indeed, the banks have no interest in the issuance of the injunction, but only the
petitioner. The banks’ interests as defendants in the petition for declaration of nullity
of their bank undertakings filed against them by petitioner in the RTC are separable
from the interests of petitioner for the issuance of the injunctive relief.
Moreover, certiorari as a special civil action, is an original action invoking the
original jurisdiction of a court to annul or modify the proceedings of a tribunal, board
or officer exercising judicial or quasi-judicial functions. 16 It is an original and
independent action that is not part of the trial or the proceedings on the complaint
filed before the trial court.17 Section 5, Rule 65 of the Rules of Court provides:
“Section 5. Respondents and costs in certain cases.—When the petition filed
relates to the acts or omissions of a judge, court, quasi-judicial agency, tribunal,
corporation, board, officer or person, the petitioner shall join, as private respondent
or respondents with such public respondent or respondents, the person or persons
interested in sustaining the proceedings in the court; and it shall be the duty of such
private respondents to appear
21
_______________
15 Id., at pp. 161-163.
16 San Miguel Bukid Homeowners Association, Inc. v. City of Mandaluyong,
G.R. No. 153653, October 2, 2009, 602 SCRA 30, 37.
17 Id., citing Tible and Tible Company, Inc. v. Royal Savings and Loan
Association, 550 SCRA 562, 574 (2008), citing Madrigal Transport, Inc. v.
Lapanday Holding Corporation, 436 SCRA 123 (2004).
469
VOL. 638, DECEMBER 15, 2010 469
Siok Ping Tang vs. Subic Bay Distribution, Inc.
and defend, both in his or their own behalf and in behalf of the public respondent or
respondents affected by the proceedings, and the costs awarded in such proceedings
in favor of the petitioner shall be against the private respondents only, and not
against the judge, court, quasi-judicial agency, tribunal, corporation, board, officer or
person impleaded as public respondent or respondents.
x x x x”
Clearly, in filing the petition for certiorari, respondent should join as party
defendant with the court or judge, the person interested in sustaining the proceedings
in the court, and it shall be the duty of such person to appear and defend, both in his
own behalf and in behalf of the court or judge affected by the proceedings. In this
case, there is no doubt that it is only the petitioner who is the person interested in
sustaining the proceedings in court since she was the one who sought for the issuance
of the writ of preliminary injunction to enjoin the banks from releasing funds to
respondent. As earlier discussed, the banks are not parties interested in the subject
matter of the petition. Thus, it is only petitioner who should be joined as party
defendant with the judge and who should defend the judge’s issuance of injunction.
Notably, the dispositive portion of the assailed CA Decision declared the
annulment of the Order dated December 17, 2002 and lifted the writ of preliminary
injunction issued by the RTC. The decision was directed against the order of the
judge. There was no order for the banks to release the funds subject of their
undertakings/letter of credit although such order to lift the injunction would
ultimately result to the release of funds to respondent.
Petitioner contends that respondent filed its petition for certiorari in the CA
without a prior motion for reconsideration, thus, constitutes a fatal infirmity.
We do not agree.
Concededly, the settled rule is that a motion for reconsideration is a
condition sine qua non for the filing of a petition for certiorari.18 Its
_______________
18 Office of the Ombudsman v. Laja, G.R. No. 169241, May, 2 2006, 488 SCRA
574, 580.
470
470 SUPREME COURT REPORTS ANNOTATED
Siok Ping Tang vs. Subic Bay Distribution, Inc.
purpose is to grant an opportunity for the court to correct any actual or perceived
error attributed to it by the re-examination of the legal and factual circumstances of
the case.19 The rule is, however, circumscribed by well-defined exceptions, such as
(a) where the order is a patent nullity, as where the court a quo had no jurisdiction;
(b) where the questions raised in the certiorari proceeding have been duly raised and
passed upon by the lower court, or are the same as those raised and passed upon in
the lower court; (c) where there is an urgent necessity for the resolution of the
question and any further delay would prejudice the interests of the Government or of
the petitioner or the subject matter of the action is perishable; (d) where, under the
circumstances, a motion for reconsideration would be useless; (e) where petitioner
was deprived of due process and there is extreme urgency for relief; (f) where, in a
criminal case, relief from an order of arrest is urgent and the granting of such relief
by the trial court is improbable; (g) where the proceedings in the lower court are a
nullity for lack of due process; (h) where the proceedings were ex parte, or in which
the petitioner had no opportunity to object; and (i) where the issue raised is one
purely of law or where public interest is involved.20
Respondent explained their omission of filing a motion for reconsideration
before resorting to a petition for certiorari based on exceptions (b), (c) and (i). The
CA brushed aside the filing of the motion for reconsideration based on the ground
that the questions raised in the certiorari proceedings have been duly raised and
passed upon by the lower court, or are the same as those raised and passed upon in
the lower court. We agree.
Respondent had filed its position paper in the RTC stating the reasons why the
injunction prayed for by petitioner should not be granted. However, the RTC granted
the injunction. Respondent filed a petition for certiorari with the CA and presented
the same arguments which were already passed upon by the RTC. The RTC already
_______________
19 Id., citing Estate of Salvador Serra Serra v. Heirs of Primitivo Hernaez, 466
SCRA 120, 127 (2005); National Housing Authority v. Court of Appeals, 413 Phil.
58, 64; 360 SCRA 533 (2001).
20 Id.
471
VOL. 638, DECEMBER 15, 2010 471
Siok Ping Tang vs. Subic Bay Distribution, Inc.
had the opportunity to consider and rule on the question of the propriety or
impropriety of the issuance of the injunction. We found no reversible error
committed by the CA for relaxing the rule since respondent’s case falls within the
exceptions.
Petitioner’s reliance on Philippine National Construction Corporation v.
National Labor Relations Commission,21 where we required the filing of a motion for
reconsideration before the filing of a petition for certiorarinotwithstanding
petitioner’s invocation of the recognized exception, i.e., the same questions raised
22
before the public respondent were to be raised before us, is not applicable. In said
case, we ruled that petitioner failed to convince us that his case falls under the
recognized exceptions as the basis was only petitioner’s bare allegation. In this case
before us, the CA found, and to which we agree, that both parties have fully
presented their respective arguments in the RTC on petitioner’s prayer for the
issuance of the writ of preliminary injunction, and that respondent’s argument that
petitioner is not entitled to the injunctive relief had been squarely resolved by the
RTC.
WHEREFORE, the petition is DENIED. The Decision dated October 17, 2003
and the Resolution dated March 5, 2004 of the Court of Appeals, in CA-G.R. SP No.
74629, are hereby AFFIRMED.
SO ORDERED.
Carpio (Chairperson), Nachura, Abad and Mendoza, JJ., concur.
Petition denied, judgment and resolution affirmed.
Notes.—A real party in interest is the party who stands to be benefited or injured
by the judgment of the suit, or the party entitled to the avails of the suit while
indispensable party is a party in interest without whom no final determination can be
had of an action, in contrast to a necessary party which is one who is not
indispensable but who ought to be joined as a party if complete relief is to be
accorded as to those already parties, or for a complete determination or settlement of
the claim subject of the action. (Carandang vs. Heirs of Quirino A. De Guzman, 508
SCRA 469 [2006]) 

G.R. No. 121510. November 23, 1995.*

FABIANA C. VDA. DE SALAZAR, petitioner, vs. COURT OF APPEALS,
PRIMITIVO NEPOMUCENO and EMERENCIANA NEPOMUCENO,
respondents.
Remedial Law; Civil Procedure; Parties; Substitution of heirs is based on the
right to due process accruing to every party in any proceeding.—The need for
substitution of heirs is based on the right to due process accruing to every party in
any proceeding.
Same; Same; Same; Formal substitution of heirs is not necessary when the
heirs themselves voluntarily appeared, participated in the case and presented
evidence in defense of deceased defendant.—We are not unaware of several cases
where we have ruled that a party having died in an action that survives, the trial held
by the court without appearance of the deceased’s legal representative or substitution
of 
_______________
*
 FIRST DIVISION.
306
306  SUPREME COURT REPORTS ANNOTATED 

23
 Vda. de Salazar vs. Court of Appeals
heirs and the judgment rendered after such trial, are null and void because the
court acquired no jurisdiction over the persons of the legal representatives or of the
heirs upon whom the trial and the judgment would be binding. This general rule
notwithstanding, in denying petitioner’s motion for reconsideration, the Court of
Appeals correctly ruled that formal substitution of heirs is not necessary when the
heirs themselves voluntarily appeared, participated in the case and presented
evidence in defense of deceased defendant.
Same; Same; Same; Ejectment; Ejectment being an action involving recovery
of real property is a real action which is not extinguished by the defendant’s death.
—Respondent Court of Appeals also correctly ruled that ejectment, being an action
involving recovery of real property, is a real action which as such, is not
extinguished by the defendant’s death.
Same; Same; Same; Same; An ejectment case survives the death of a party
which death did not extinguish the deceased’s civil personality.—There is no dispute
that an ejectment case survives the death of a party, which death did not extinguish
the deceased’s civil personality. More significantly, a judgment in an ejectment case
is conclusive between the parties and their successors in interest by title subsequent
to the commencement of the action.
PETITION for review of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
     Proceso M. Nacino for petitioner.
     Joselito J. Coloma for private respondents.
HERMOSISIMA, JR., J.:
Where the defendant in an ejectment case dies before the rendition by the trial court
of its decision therein, does the trial court's failure to effectuate a substitution of heirs
before its rendition of judgment render such judgment jurisdictionally infirm?
On July 23, 1970, both private respondents Primitive Nepomuceno and Emerenciana
Nepomuceno filed separate complaints1 with the then Court of Agrarian Relations of
Malolos, Bulacan, for ejectment on the ground of personal cultivation and
conversion of land for useful non-agricultural purposes against petitioner's deceased
husband, Benjamin Salazar. After protracted proceedings in the agrarian court and
then the Regional Trial Court2 spanning from 1970 to 1993, the trial court rendered
its joint decision3 in favor of private respondents. An appeal4 therefrom was
interposed in the name of petitioner's deceased husband on the ground that private
respondents herein failed to satisfy the requirements pertaining to personal
cultivation and conversion of the landholdings into non-agricultural uses. The Court
of Appeals rejected such contention upon finding that the record was replete with
evidence justifying private respondents' assertion of their right of cultivation and
conversion of their landholdings.5
Almost a year after the termination of that appeal, the same trial court decision
subject thereof was once again assailed before the Court of Appeals through a
petition6 for annulment of judgment. Herein petitioner assailed the same trial court
decision as having been rendered by a court that did not have jurisdiction over her
and the other heirs of her deceased husband because notwithstanding the fact that her
husband had already died on October 3, 1991, the trial court still proceeded to render
its decision on August 23, 1993 without effecting the substitution of heirs in
accordance with Section 17, Rule 3, of the Rules of Court thereby depriving her of
her day in court.
Petitioner, not having asserted the matter of fraud or collusion in her petition for
annulment of judgment, the Court of Appeals decided the same on the basis of the
sole issue of non-jurisdiction resulting from the alleged deprivation of petitioner's
right to due process and ruled in favor of the validity of the challenged
decision.7 Petitioner filed a motion for reconsideration of the decision of the
appellate court reiterating the trial court's lack of jurisdiction over the heirs of
petitioner's deceased husband as a consequence of the failure of the trial court to
effectuate a valid substitution of heirs. Said motion was denied in a resolution
promulgated on August 14, 1995. Hence this petition.
The petition is bereft of merit.
The need for substitution of heirs is based on the right to due process accruing to
every party in any proceeding.8The rationale underlying this requirement in case a
party dies during the pendency of proceedings of a nature not extinguished by such
death, is that
. . . the exercise of judicial power to hear and determine a cause
implicitly presupposes in the trial court, amongst other essentials,
jurisdiction over the persons of the parties. That jurisdiction was
inevitably impaired upon the death of the protestee pending the
proceedings below such that unless and until a legal representative
is for him duly named and within the jurisdiction of the trial court,
no adjudication in the cause could have been accorded any validity
or binding effect upon any party, in representation of the deceased,
without trenching upon the fundamental right to a day in court
which is the very essence of the constitutionally enshrined
guarantee of due process.9
We are not unaware of several cases10 where we have ruled that a party
having died in an action that survives, the trial held by the court without
24
appearance of the deceased's legal representative or substitution of heirs and
the judgment rendered after such trial, are null and void because the court
acquired no jurisdiction over the persons of the legal representatives or of
the heirs upon whom the trial and the judgment would be binding. This
general rule notwithstanding, in denying petitioner's motion for
reconsideration, the Court of Appeals correctly ruled that formal
substitution of heirs is not necessary when the heirs themselves voluntarily
appeared, participated in the case and presented evidence in defense of
deceased defendant. Attending the case at bench, after all, are these
particular circumstances which negate petitioner's belated and seemingly
ostensible claim of violation of her rights to due process. We should not
lose sight of the principle underlying the general rule that formal
substitution of heirs must be effectuated for them to be bound by a
subsequent judgment. Such had been the general rule established not
because the rule on substitution of heirs and that on appointment of a legal
representative are jurisdictional requirements per se but because non-
compliance therewith results in the undeniable violation of the right to due
process of those who, though not duly notified of the proceedings, are
substantially affected by the decision rendered therein. Viewing the rule on
substitution of heirs in this light, the Court of Appeals, in the resolution
denying petitioner's motion for reconsideration, thus expounded:
Although the jurisprudential rule is that failure to make the
substitution is a jurisdictional defect, it should be noted that the
purpose of this procedural rule is to comply with due process
requirements. The original party having died, he could not continue
to defend himself in court despite the fact that the action survived
him. For the case to continue, the real party in interest must be
substituted for the deceased. The real party in interest is the one
who would be affected by the judgment. It could be the
administrator or executor or the heirs. In the instant case, the heirs
are the proper substitutes. Substitution gives them the opportunity
to continue the defense for the deceased. Substitution is important
because such opportunity to defend is a requirement to comply
with due process. Such substitution consists of making the proper
changes in the caption of the case which may be called the formal
aspect of it. Such substitution also includes the process of letting
the substitutes know that they shall be bound by any judgment in
the case and that they should therefore actively participate in the
defense of the deceased. This part may be called the substantive
aspect. This is the heart of the procedural rule because this
substantive aspect is the one that truly embodies and gives effect to
the purpose of the rule. It is this court's view that compliance with
the substantive aspect of the rule despite failure to comply with the
formal aspect may be considered substantial compliance. Such is
the situation in the case at bench because the only inference that
could be deduced from the following facts was that there was
active participation of the heirs in the defense of the deceased after
his death:
1. The original lawyer did not stop representing the deceased. It
would be absurd to think that the lawyer would continue to
represent somebody if nobody is paying him his fees. The lawyer
continued to represent him in the litigation before the trial court
which lasted for about two more years. A dead party cannot pay
him any fee. With or without payment of fees, the fact remains that
the said counsel was allowed by the petitioner who was well aware
of the instant litigation to continue appearing as counsel until
August 23, 1993 when the challenged decision was rendered;
2. After the death of the defendant, his wife, who is the petitioner
in the instant case, even testified in the court and declared that her
husband is already deceased. She knew therefore that there was a
litigation against her husband and that somehow her interest and
those of her children were involved;
3. This petition for annulment of judgment was filed only after the
appeal was decided against the defendant on April 3, 1995, more
than one and a half year (sic) after the decision was rendered (even
if we were to give credence to petitioner's manifestation that she
was not aware that an appeal had been made);
4. The Supreme Court has already established that there is such a
thing as jurisdiction by estoppel. This principle was established
even in cases where jurisdiction over the subject matter was being
questioned. In the instant case, only jurisdiction over the person of
the heirs is in issue. Jurisdiction over the person may be acquired
by the court more easily than jurisdiction over the subject matter.
Jurisdiction over the person may be acquired by the simple
appearance of the person in court as did herein petitioner appear;
5. The case cited by the herein petitioner (Ferreria et al. vs.
Manuela Ibarra vda. de Gonzales, et al.) cannot be availed of to
support the said petitioner's contention relative to non-acquisition
of jurisdiction by the court. In that case, Manolita Gonzales was
not served notice and, more importantly, she never appeared in
court, unlike herein petitioner who appeared and even testified
regarding the death of her husband.11
25
 Consequently, we rule that, as in the case at bench, the defendant in an
ejectment case having died before the rendition by the trial court of its
decision therein, its failure to effectuate a formal substitution of heirs before
its rendition of judgment, does not invalidate such judgment where the heirs
themselves appeared before the trial court, participated in the proceedings
therein, and presented evidence in defense of deceased defendant, it
undeniably being evident that the heirs themselves sought their day in court
and exercised their right to due process.
Respondent Court of Appeals also correctly ruled that ejectment, being an action
involving recovery of real property, is a real action which as such, is not
extinguished by the defendant's death.
. . . The question as to whether an action survives or not depends
on the nature of the action and the damage sued for. In the causes
of action which survive, the wrong complained affects primarily
and principally property and property rights, the injuries to the
person being merely incidental, while in the causes of action which
do not survive, the injury complained of is to the person, the
property and rights of property affected being incidental.12
circumstances of this case, the same rule should apply to the
successors-in-interest . . . .15
While it is true that a decision in an action for ejectment is enforceable not only
against the defendant himself but also against members of his family, his relatives,
and his privies who derived their right of possession from the defendant and his
successors-in-interest,16 it had been established that petitioner had, by her own acts,
submitted to the jurisdiction of the trial court. She is now estopped to deny that she
had been heard in defense of her deceased husband in the proceedings therein. As
such, this petition evidently has no leg to stand on.
WHEREFORE, the instant petition is dismissed for lack of merit. Costs against
petitioner.
SO ORDERED.

There is no dispute that an ejectment case survives the death of a party,

which death did not extinguish the deceased's civil personality.13 More
significantly, a judgment in an ejectment case is conclusive between the
parties and their successors in interest by title subsequent to the
commencement of the action.14 Thus, we have held that:

. . . In such a case and considering that the supervening death of

appellant did not extinguish her civil personality, the appellate
court was well within its jurisdiction to proceed as it did with the
case. There is no showing that the appellate court's proceedings in
the case were tainted with irregularities.

It appears that petitioners are heirs of Adela Salindon. In fact, it

was because of this relationship that the petitioners were able to
transfer the title of Adela Salindon over the subject lot to their
names. . . . Considering all this, the appellate decision is binding
and enforceable against the petitioners as successors-in-interest by
title subsequent to the commencement of the action (Section 49 [b]
Rule 39, Rules of Court). Furthermore, . . . judgment in an
ejectment case may be enforced not only against defendants therein
but also against the members of their family, their relatives, or
privies who derive their right of possession from the defendants
(Ariem v. De los Angeles, 49 SCRA 343). Under the
26

G.R. No. 106795.November 16, 1999.*
STATE INVESTMENT HOUSE, INC., petitioner, vs.COURT OF APPEALS
and ALLIED BANKING CORPORATION, respondents.
Actions; Parties; Substitution of Parties; A transferee pendente lite does not
have to be included or impleaded by name in order to be bound by the judgment.—It
has been held that a transferee pendente lite does not have to be included or
impleaded by name in order to be bound by the judgment because the action or suit
may be continued for or against the original party or the transferor and still be
binding on the transferee.
Same; Same; Same; A transferee pendente lite is a proper party in the case
but it is not an indispensable party.—More specifically, this Court has ruled that a
transferee pendente lite is a proper party in the case but it is not an indispensable
party.
Same; Same; Same; Counterclaims; Foreclosure of Mortgage; An original
plaintiff should continue to be such despite the assignment of its rights, interests,
claims, and causes of action to another person where a counterclaim for damages
filed by the defendant did not arise from the original action but from other acts
personal to the plaintiff.—Respondent court did not err in ruling that SIHI should
continue to be the plaintiff, and Fil-Nippon should be impleaded as co-plaintiff. The
order of the trial court authorizing the substitution of parties failed to take into
account the fact that there is a counterclaim for damages contained in Allied Bank’s
Answer arising from the alleged inimical acts committed by SIHI in manipulating the
operations of CBY that drained the latter’s resources to the prejudice of its creditors.
The counterclaim for damages is severable and independent of SIHI’s cause of action
under the Agreement dated December 28, 1982 entered into by SIHI, CBY and other
creditors of CBY for the restructuring of CBY’s existing obligations. As aptly ruled
by the Court of Appeals, the alleged acts of SIHI that gave rise to the complaint
(counterclaim) for damages do not arise out of the foreclosure of mortgage which is
the subject of C. C. No. 59449.
_________________
*
 THIRD DIVISION.
48
48  SUPREME COURT REPORTS ANNOTATED 
State Investment House, Inc. vs. Court of Appeals
Same; Same; Same; Same; The counterclaim for actual, moral and other
damages should be pursued against the real party-in-interest, which cannot be
discharged from the case over the opposition of the defendant.—It bears emphasis
that Allied claims to be not a party to the Agreement dated December 28, 1982 and
therefore not bound by it. Even assuming that Fil-Nippon agreed to assume all the
obligations of SIHI in the case and not only those arising under the said Agreement,
the assignment cannot bind or prejudice Allied who did not consent to the
assignment. It was improvident for the trial court to discharge SIHI on the basis
alone of the transfer of its interests under the Agreement to Fil-Nippon. The
counterclaim for actual, moral and other damages should be pursued and enforced
against the real party-in-interest, which is SIHI, which cannot be discharged from the
case over the opposition of Allied.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
     Roco, Bunag, Kapunan, Migallos & Jardeleza for petitioner SIHI.
     Ocampo, Quiroz, Mina & Associates for private respondent.
GONZAGA-REYES, J.:
Petitioner State Investment House, Inc. ("SIHI") appeals from the Decision dated
June 11, 1992 and the Resolution dated August 21, 1992 rendered by the Court of
27
Appeals in CA-G.R. SP No. 27142 entitled "Allied Banking Corp. vs. Hon. Martin S.
Villarama, Jr., et al."
SIHI is the plaintiff in Civil Case No. 59449 entitled "State Investment House, Inc.
vs. Cheng Ban Yek Co., Inc. et al.", an action for foreclosure of mortgage.
The antecedents are recited in the questioned decision as follows:
(1) Defendant CBY is a domestic corporation engaged in the
business of manufacturing edible oil bearing the brand "Baguio
Oil", and in the conduct of its business, it has incurred millions of
pesos of obligations with plaintiff SIHI and many other creditors,
including defendant Allied Banking Corporation (ALLIED for
short) who is the creditor of SIHI in the principal amount of P10
million, exclusive of interests, service charges, penalties, and
attorney's fees.
(2) On December 28, 1982, defendant CBY, plaintiff SIHI, and
other creditors of CBY entered into an Agreement for the
restructuring of CBY's existing obligations to its creditors, but
excluding defendant ALLIED and several other creditors who did
not sign said Agreement (pp. 72-72, Rollo).
(3) To secure the prompt and full payment of all amounts owed by
CBY to its creditors who participated in said Agreement and as
required thereunder, the parties thereto executed a Mortgage
Indenture dated December 28, 1982 with CBY and FOUR SEAS
as Mortgagors and SIHI and 15 other creditors of CBY as
mortgagees involving 23 parcels of registered lands and the
improvements therein (pp. 17-19, id.), which Mortgage Indenture
was subsequently modified several times (pp. 19-20, id.).
Moreover, as additional security to said Agreement, the parties also
agreed that the Existing Comprehensive Surety Agreement
previously executed by defendant Alfredo Ching would continue to
subsist and that he would remain jointly and severally liable with
CBY for the payment of the amounts owed by the latter to the
creditors who were parties to the aforesaid Agreement (p. 20, id.).
(4) On June 28, 1986, CBY defaulted in the payment of its
obligations, and in a letter dated August 8, 1988, the CBY
Creditors' Committee, pursuant to the aforesaid Agreement and
Mortgage Indenture, declared all of CBY's obligations due and
payable (p. 24, id.). This letter was followed by a letter dated
August 9, 1989 of plaintiff SIHI likewise declaring all of CBY's
particular obligations to it immediately due and payable (id.). Then
on April 16, 1990, SIHI notified the Creditors' Committee of CBY
that it would institute proceedings for the enforcement of the
remedies granted under the Mortgage Indenture earlier mentioned,
and in a resolution dated April 20, 1990, said Creditors' Committee
authorized SIHI to institute the appropriate foreclosure proceedings
provided that the proceeds of the foreclosure sale would be
distributed and applied to all of CBY's obligations under the terms
of the Agreement previously mentioned (p. 25, id.).
(5) Hence, plaintiff SIHI filed on May 10, 1990, C.C. No. 59559
with the respondent court against CBY, FOUR SEAS, and Alfredo
Ching, and impleading twenty-two (22) other creditors of CBY
including herein petitioner ALLIED, allegedly because they hold
inferior or subordinate mortgage rights to the properties sought to
be foreclosed (pp. 8-28, id.).
(6) On January 31, 1991, defendant ALLIED filed its Answer to
the complaint, denying that its interests in the mortgaged properties
in question are subordinate in right to that of plaintiff SIHI;
alleging that it was not a party to the Agreement attached to the
complaint as Annex "B" and, therefore, not bound by its
provisions; likewise denying that it was a party to the Fourth
Amendatory Agreement also attached to the complaint as its
Annex "S" which it claimed "was never valid, binding and
effective for lack of consent on the part of the other creditors as
shown by the fact that they did not sign the same"; claiming that
defendant CBY owes it the principal amount P10 million,
exclusive of interest, service charges, penalties, and attorney’s
fees; alleging that as defendant CBY's biggest, single, creditor,
plaintiff SIHI "was able to work its way and secure for its
representatives/nominees/designees key positions in defendant
CBY, including but not limited to seats with full voting rights in
defendant CBY's Board of Directors, Executive Committee, and
Creditors' Committee, and that in taking control and management
of CBY's operations, it "committed irregularities, abuses excesses,
and other acts inimical to defendant CBY draining its resources
and driving the latter to the financial quagmire it now faces, to the
prejudice of herein defendant creditors", as a consequence of
which acts, CBY allegedly suffered losses of not less than P50
million or such amount as may be proved at the trial, which losses
it claims represent assets of CBY answerable to its creditors other
than plaintiff SIHI; and that plaintiff should be held liable for such
losses, as well as for defendant ALLIED's moral damages and
attorney's fees which it alleged in its counterclaim (pp. 29-33, id.).
28
 Defendant ALLIED thus prayed for the dismissal of the complaint
or, in the alternative, for plaintiff to be ordered to pay CBY's
creditors including ALLIED the amount of P50 million to be
deducted from the proceeds of the foreclosure sale of the
mortgaged properties in question to be distributed among CBY's
creditors, and that plaintiff be also ordered to pay ALLIED moral
damages and attorney's fees (29-34, id.).
(7) However, on January 31, 1991, plaintiff SIHI, for the
consideration of P33 million, entered into a Deed of Assignment
with FIL-NIPPON transferring to the latter all its rights, interests,
claims, and causes of action arising out of the Agreement
mentioned in and annexed to its complaint in C. C. No. 59449 and
certain promissory notes and mortgages contracts upon which said
civil case was brought, and in which Deed of Assignment FIL-
NIPPON also agreed to assume all the obligations of SIHI as party-
plaintiff in said civil case (pp. 40-44, 64, id.).
(8) Thereafter, FIL-NIPPON filed in C. C. No. 59449 on April 16,
1991 a "Motion for Substitution of Party Plaintiff" in lieu of
plaintiff SIHI (pp. 35-39, id.), which motion was opposed by
defendant ALLIED on the grounds that it has a counterclaim
against SIHI arising from irregularities, excesses, abuses and
inimical acts committed by it in managing defendant CBY; that as
long as said counterclaim has not been finally resolved, the
substitution of plaintiff SIHI would be improper; and that if at all,
FIL-NIPPON can intervene and be a co-plaintiff in C. C. No.
59449 (pp. 45-46, id.).
(9) On July 4, 1991, the respondent court, finding no legal basis for
the objections of ALLIED and another defendant, Producers Bank
of the Philippines, to the motion for substitution of movant Fil-
NIPPON for plaintiff SIHI, granted the motion for substitution (p.
8, id.). and when defendant ALLIED moved for a reconsideration
of said order, it denied the motion for reconsideration on August
22, 1991 (p. 9, id.)." 1
Allied Banking Corp. ("Allied") filed a petition for certiorari in the Court of Appeals
assailing the above mentioned orders of the Regional Trial Court granting Fil-
Nippon's motion for substitution of SIHI as plaintiff in Civil Case No. 59449.
The Court of Appeals granted the petition and ordered SIHI to continue as plaintiff.
The dispositive portion of the decision, now assailed in the instant petition, reads:
WHEREFORE, the instant petition is GRANTED; the respondent
court's orders of July 4, 1991 and August 22, 1991 are hereby SET
ASIDE; and herein private respondent State Investment House,
Inc. (SIHI) shall continue to be the plaintiff in C. C. No. 59449
before the respondent court, with the other private respondent
herein Fil-Nippon Holdings, Inc. (FIL-NIPPON) ordered
impleaded therein as co-plaintiff. 2
In this petition for review on certiorari, SIHI submits the following grounds:
(1)
THE CA ERRED IN FINDING THAT ALLIED'S PERMISSIVE
COUNTERCLAIMS CREATE A DEBTOR-CREDITOR
RELATIONSHIP BETWEEN SIHI AND ALLIED; ALLIED IS
NOT SIHI'S CREDITOR.
(2)
THE CA ERRED IN FINDING THAT A WITNESS WHO MAY
BE CALLED TO TESTIFY HAS A MATERIAL INTEREST IN
CASE AS TO MAKE HIM A PARTY-LITIGANT.
(3)
THE CA ERRED IN NOT FINDING THAT SUBSTITUTION OF
A PARTY-PLAINTIFF PENDENTE LITEIS ALLOWED AND IS
LARGELY A MATTER OF DISCRETION; THE LOWER
COURT DID NOT COMMIT ARBITRARINESS OR GRAVE
ABUSE OF DISCRETION IN ALLOWING THE
SUBSTITUTION. 3
We find no merit in the petition.
The issue is whether respondent court erred in ruling that the substitution of SIHI by
its assignee Fil-Nippon in C. C. No. 59449 is improper.
Respondent court ruled that even without substitution Fil-Nippon, as assignee of all
of SIHI's rights, interests claims and causes of action arising out of the Agreement,
would be bound by any judgment for or against SIHI. Moreover, Allied had a
counterclaim for damages against SIHI of not less than P50 million allegedly caused
by SIHI's taking over the control and management of defendant CBY (Cheng Ban
Yek Co. Inc.) through its men which it had put in key positions in the latter's Board
29
of Directors, Executive Committee and Creditors Committee, and who allegedly
committed gross mismanagement, nepotism, irregularities, abuses, excesses and
other acts inimical to CBY which drained the latter's resources and drove it to the
financial quagmire that now faces it to the prejudice of all its creditors. Such acts of
SIHI do not arise out of the foreclosure of mortgage which is the subject of C. C. No.
59449 but constitute a permissive counterclaim. Moreover, SIHI had no choice but to
actively participate in C. C. No. 59449 in order to defend its assignee Fil-Nippon
against Allied's permissive counterclaim. Finally, Fil-Nippon cannot be substituted
as debtor under said counterclaim without its consent in view of Article 1293 of the
Civil Code which provides that novation which consists in substituting a new debtor
in the place of the original one cannot be made without the consent of the creditor.
It is petitioner's position, in defending the substitution of parties ordered by the trial
court, that Allied is not SIHI's creditor; what Allied admitted is that it is a creditor of
CBY for P10 million. Equally important is that Allied's permissive counterclaim for
damages does not make SIHI a debtor/obligor of Allied, as a counterclaim is not a
source of obligation until a judgment is issued upholding it. Petitioner also submits
that even assuming that SIHI, or its officers or employees, can be compelled to be
witnesses regarding Allied's permissive counterclaim, the same does not justify the
retention of SIHI as party plaintiff below. In fine, petitioner SIHI contends that the
trial court did not commit grave abuse of discretion in allowing the substitution of
parties that should be corrected by certiorari.
On the other hand, respondent Allied submits that the substitution was improper; for
as long as the counterclaim is not finally resolved, the substitution of party plaintiff
despite the objection of private respondent and which may result in the discharge of
the petitioner as original plaintiff, would be improper. If at all, Fil-Nippon can
intervene in the case below and be co-plaintiff with SIHI. Allied also points out that
the counterclaim for damages is based on quasi-delict, which is a legal source of
obligation.
The rule on substitution of parties in case of transfer of interest is found in Section
19, Rule 3, which states:
Sec. 19. Transfer of Interest — In case of any transfer of interest,
the action may be continued by or against the original party, unless
the court upon motion directs the person to whom the interest is
transferred to be substituted in the action or joined with the original
party.
It has been held that a transferee pendente lite does not have to be included or
impleaded by name in order to be bound by the judgment because the action or suit
may be continued for or against the original party or the transferor and still be
binding on the transferee. 4
More specifically , this Court has ruled that a transferee pendente lite is a proper
party in the case but it is not an indispensable party. 5
Respondent court did not err in ruling that SIHI should continue to be the plaintiff,
and Fil-Nippon should be impleaded as co-plaintiff. The order of the trial court
authorizing the substitution of parties failed to take into account the fact that there is
a counterclaim for damages contained in Allied Bank's Answer arising from the
alleged inimical acts committed by SIHI in manipulating the operations of CBY that
drained the latter's resources to the prejudice of its creditors. The counterclaim for
damages is severable and independent of SIHI's cause of action under the Agreement
dated December 28, 1982 entered into by SIHI, CBY and other creditors of CBY for
the restructuring of CBY's existing obligations. As aptly ruled by the Court of
Appeals, the alleged acts of SIHI that gave rise to the complaint (counterclaim) for
damages do not arise out of the foreclosure of mortgage which is the subject of C. C.
No. 59449. Thus —
Upon the other hand, if the substitution of party-plaintiff sought by
FIL-NIPPON is granted, what would happen to petitioner
ALLIED's claim for damages of not less than P50 million in its
answer allegedly caused by plaintiff SIHI's taking over the control
and management of defendant CBY's through its men which it had
put in key positions in the latter's Board of Directors, Executive
Committee, and Creditors' Committee, and who allegedly
committed gross mismanagement, nepotism, irregularities, abuses,
excesses and other acts inimical to defendant CBY which drained
its resources and drove it to the financial quagmire that its faces at
present, to the prejudice of all its creditors? Can petitioner
ALLIED still prove and recover these damages against FIL-
NIPPON if the latter is substituted as party-plaintiff in C. C. No.
59449? We do not think so, for the subject-matter of the Deed of
Assignment between plaintiff SIHI and FIL-NIPPON (see pp. 40-
44, 64, Rollo) are certain credits, rights, claims and interests which
SIHI has against the principal defendants CBY, FOUR SEAS, and
Alfredo Ching in C. C. No. 59449, and its SIHI's right to foreclose
certain mortgages in favor of SIHI and other creditors of CBY
arising out of the agreement between CBY and its creditors,
including SIHI, attached to the complaint in C. C. No. 59449. True
that SIHI's assignee FIL-NIPPON also assumed all the risks
attendant to said civil case and agreed not to have any recourse or
claim against SIHI regardless of the outcome of said case or if it is
prevented for any reason from foreclosing the properties subject-
matter of the case, but such assumption of risk clearly does not
include liability for the purely personal acts of abuses,
irregularities, nepotism, etc. which petitioner ALLIED charged
plaintiff SIHI to have committed while managing and taking over
30
 the control of the business of defendant CBY which acts do not
arise out of the foreclosure of mortgage which is the subject-matter
of C. C. No. 59449, but which constitute, as even private
respondent FIL-NIPPON admitted in its Comment to the instant
petition, a permissive counterclaim in said civil case (p. 61, Rollo).
Respondent FIL-NIPPON, impliedly recognizing that it cannot be
liable for said alleged acts of SIHI, even suggests that after
plaintiff SIHI is dropped from C. C. No. 59449, petitioner
ALLIED can bring original plaintiff SIHI back into said case by
filing a third-party complaint against the latter. But why should
petitioner ALLIED resort to such a run-about process to hold SIHI
liable for the aforementioned alleged personal acts of
mismanagement and abuses while in the control of defendant
CBY, when it has already claimed the damages supposedly arising
from said acts in a permissive counterclaim in its answer to SIHI's
complaint and the Rules allow it to do so? 6
Thus, although Fil-Nippon became an assignee of all of SIHI's rights, interests,
claims, and causes of action arising out of the Agreement, the counterclaim for actual
and moral damages and attorney's fees filed by Allied Bank was in no way
contemplated in the assignment. It was accordingly error to discharge SIHI as
original plaintiff from the case.
The Court of Appeals also correctly pointed out that Fil-Nippon could not be
substituted as debtor of Allied with respect to the counterclaim for damages without
the latter's consent; thus:
But there is yet still another reason why the respondent court
should not have allowed the substitution of plaintiff SIHI's
assignee Fil-Nippon as party-plaintiff in C. C. No. 59449, and it is
petitioner ALLIED's contention, which we find valid and tenable,
that plaintiff SIHI is its debtor/obligor as far as its permissive
counterclaim for damages in its answer is concerned, and that FIL-
NIPPON cannot be substituted as its debtor under said
counterclaim without its consent, in view of Art. 1293 of the Civil
Code of the Philippines providing
that —
Novation which consists in substituting a new
debtor in the place of the original one, may be
made even without the knowledge or against the
will of the latter but not without the consent of
the creditor. . . ." (Emphasis ours)
Private respondent SIHI answers this argument in its Comment to
the instant petition by saying that the above-quoted article finds no
application to this case because Sec. 17.7 of the Agreement which
it and its creditors had executed expressly allows the assignment
which it had made in favor of FIL-NIPPON (p. 67, Rollo). But as
pointed out by petitioner ALLIED in its Reply to SIHI's aforesaid
Comment, it was not a party to the Agreement in question as
shown by the fact that it never signed the same (see p. 82, Rollo);
hence, it is not bound by said Agreement including the provision
therein allowing the parties to assign their respective rights
thereunder. 7
As stated earlier, Fil-Nippon, as transferee of SIHI's interests pendente lite, is not
even an indispensable party in the case.
It bears emphasis that Allied claims to be not a party to the Agreement dated
December 28, 1982 and therefore not bound by it. Even assuming that Fil-Nippon
agreed to assume all the obligations of SIHI in the case and not only those arising
under the said Agreement, the assignment cannot bind or prejudice Allied who did
not consent to the assignment. It was improvident for the trial court to discharge
SIHI on the basis alone of the transfer of its interests under the Agreement to Fil-
Nippon. The counterclaim for actual, moral and other damages should be pursued
and enforced against the real party-in-interest, which is SIHI, which cannot be
discharged from the case over the opposition of Allied.
WHEREFORE, there being no reversible error in the decision and resolution
appealed from, the instant petition is denied.
No pronouncement as to costs.
SO ORDERED.
31
 G.R. No. 186993. August 22, 2012.*
THE ODORE and NANCY ANG, represented by ELDRIGE MARVIN B.
ACERON, petitioners, vs. SPOUSES ALAN and EM ANG, respondents.
Remedial Law; Civil Procedure; Venue; The Rules give the plaintiff the option
of choosing where to file his complaint. He can file it in the place (1) where he
himself or any of them resides, or (2) where the defendant or any of the defendants
resides or may be found. The plaintiff or the defendant must be residents of the place
where the action has been instituted at the time the action is commenced.―It is a
legal truism that the rules on the venue of personal actions are fixed for the
convenience of the plaintiffs and their witnesses. Equally settled, however, is the
principle that choosing the venue of an action is not left to a plaintiff’s caprice; the
matter is regulated by the Rules of Court. The petitioners’ complaint for collection of
sum of money against the respondents is a personal action as it primarily seeks the
enforcement of a contract. The Rules give the plaintiff the option of choosing where
to file his complaint. He can file it in the place (1) where he himself or any of them
resides, or (2) where the defendant or any of the defendants resides or may be found.
The plaintiff or the defendant must be residents of the place where the action has
been instituted at the time the action is commenced.
Same; Same; Same; If the plaintiff does not reside in the Philippines, the
complaint in such case may only be filed in the court of the place where the
defendant resides.―If the plaintiff does not reside in the Philippines, the complaint
in such case may only be filed in the court of the place where the defendant resides.
In Cohen and Cohen v. Benguet Commercial Co., Ltd., 34 Phil. 526 (1916), this
Court held that there can be no election as to the venue of the filing of a complaint
when the plaintiff has no residence in the Philippines. In such case, the complaint
may only be filed in the court of the place where the defendant resides.
_______________
* SECOND DIVISION.
700
700 SUPREME COURT REPORTS ANNOTATED
Ang vs. Ang
Same; Real Party in Interest; A real party in interest is the party who, by the
substantive law, has the right sought to be enforced.―Interest within the meaning of
the Rules of Court means material interest or an interest in issue to be affected by the
decree or judgment of the case, as distinguished from mere curiosity about the
question involved. A real party in interest is the party who, by the substantive law,
has the right sought to be enforced.
Same; Venue; It bears stressing that the rules on venue, like the other
procedural rules, are designed to insure a just and orderly administration of justice
or the impartial and even-handed determination of every action and

32
proceeding.―At this juncture, it bears stressing that the rules on venue, like the other
procedural rules, are designed to insure a just and orderly administration of justice or
the impartial and even-handed determination of every action and proceeding.
Obviously, this objective will not be attained if the plaintiff is given unrestricted
freedom to choose the court where he may file his complaint or petition. The choice
of venue should not be left to the plaintiff's whim or caprice. He may be impelled by
some ulterior motivation in choosing to file a case in a particular court even if not
allowed by the rules on venue.
PETITION for review on certiorari of the decision and resolution of the Court of
Appeals.
   The facts are stated in the opinion of the Court.
  Aceron, Punzalan, Vehemente, Avila & Del Prado Law Offices for petitioners.
  Alfonso B. Manayon for respondents.
REYES, J.:
Before this Court is a petition for review on certiorari
under Rule 45 of the Rules of Court seeking to annul and set aside the
Decision1 dated August 28, 2008 and the Resolu-
_______________
1 Penned by Associate Justice Rebecca De Guia-Salvador, with Associate
Justices Vicente S.E. Veloso and Ricardo R. Rosario, concurring; Rollo, pp. 18-30.
701
VOL. 678, AUGUST 22, 2012 701
Ang vs. Ang
tion2 dated February 20, 2009 rendered by the Court of Appeals (CA) in CA-G.R. SP
No. 101159. The assailed decision annulled and set aside the Orders dated April 12,
20073 and August 27, 20074 issued by the Regional Trial Court (RTC) of Quezon
City, Branch 81 in Civil Case No. Q-06-58834.
The Antecedent Facts
On September 2, 1992, spouses Alan and Em Ang (respondents) obtained a loan
in the amount of Three Hundred Thousand U.S. Dollars (US$300,000.00) from
Theodore and Nancy Ang (petitioners). On even date, the respondents executed a
promissory note5 in favor of the petitioners wherein they promised to pay the latter
the said amount, with interest at the rate of ten percent (10%) per annum, upon
demand. However, despite repeated demands, the respondents failed to pay the
petitioners.
Thus, on August 28, 2006, the petitioners sent the respondents a demand letter
asking them to pay their outstanding debt which, at that time, already amounted to
Seven Hundred Nineteen Thousand, Six Hundred Seventy-One U.S. Dollars and
Twenty-Three Cents (US$719,671.23), inclusive of the ten percent (10%) annual
interest that had accumulated over the years. Notwithstanding the receipt of the said
demand letter, the respondents still failed to settle their loan obligation.
On August 6, 2006, the petitioners, who were then residing in Los Angeles,
California, United States of America (USA), executed their respective Special
Powers of Attorney6 in favor of Attorney Eldrige Marvin B. Aceron (Atty. Aceron)
for the
_______________
2 Id., at p. 108.
3 Under the sala of Presiding Judge Ma. Theresa L. Dela Torre-Yadao; id., at pp.
47-48.
4 Id., at pp. 57-58.
5 Id., at p. 39.
6 Id., at pp. 37-38.
702
702 SUPREME COURT REPORTS ANNOTATED
Ang vs. Ang
purpose of filing an action in court against the respondents. On September 15, 2006,
Atty. Aceron, in behalf of the petitioners, filed a Complaint 7 for collection of sum of
money with the RTC of Quezon City against the respondents. 
On November 21, 2006, the respondents moved for the dismissal of the
complaint filed by the petitioners on the grounds of improper venue and
prescription.8 Insisting that the venue of the petitioners’ action was improperly laid,
the respondents asserted that the complaint against them may only be filed in the
court of the place where either they or the petitioners reside. They averred that they
reside in Bacolod City while the petitioners reside in Los Angeles, California, USA.
Thus, the respondents maintain, the filing of the complaint against them in the RTC
of Quezon City was improper.
The RTC Orders
On April 12, 2007, the RTC of Quezon City issued an Order 9 which, inter alia,
denied the respondents’ motion to dismiss. In ruling against the respondents’ claim
of improper venue, the court explained that:
Attached to the complaint is the Special Power of Attorney x x x which clearly
states that plaintiff Nancy Ang constituted Atty. Eldrige Marvin Aceron as her duly
appointed attorney-in-fact to prosecute her claim against herein defendants.
Considering that the address given by Atty. Aceron is in Quezon City, hence, being
the plaintiff, venue of the action may lie where he resides as provided in Section 2,
Rule 4 of the 1997 Rules of Civil Procedure.10
The respondents sought reconsideration of the RTC Order dated April 12, 2007,
asserting that there is no law which allows the filing of a complaint in the court of
the place where
_______________
7  Id., at pp. 31-36.
8  Id., at pp. 40-45.
9  Id., at pp. 47-48.
33
 10 Id., at p. 47. the case should have been filed in Bacolod City where the defendants, herein
703 petitioners, reside. Since the case was filed in Quezon City, where the representative
VOL. 678, AUGUST 22, 2012 703 of the plaintiffs resides, contrary to Sec. 2 of Rule 4 of the 1997 Rules of Court, the
trial court should have dismissed the case for improper venue.15
Ang vs. Ang
The petitioners sought a reconsideration of the Decision dated August 28, 2008,
the representative, who was appointed as such by the plaintiffs through a Special but it was denied by the CA in its Resolution dated February 20, 2009.16
Power of Attorney, resides.11 Hence, the instant petition.
The respondents’ motion for reconsideration was denied by the RTC of Quezon
City in its Order12 dated August 27, 2007. Issue
The respondents then filed with the CA a petition for certiorari13 alleging in the
main that, pursuant to Section 2, Rule 4 of the Rules of Court, the petitioners’
In the instant petition, the petitioners submit this lone issue for this Court’s
complaint may only be filed in the court of the place where they or the petitioners
resolution:
reside. Considering that the petitioners reside in Los Angeles, California, USA, the
WHETHER OR NOT THE COURT OF APPEALS COMMITTED REVERSIBLE
respondents assert that the complaint below may only be filed in the RTC of Bacolod
ERROR OF LAW WHEN IT RULED THAT THE COMPLAINT MUST BE
City, the court of the place where they reside in the Philippines.
DISMISSED ON THE GROUND THAT VENUE WAS NOT PROPERLY LAID.17
The respondents further claimed that, the petitioners’ grant of Special Power of
Attorney in favor of Atty. Aceron notwithstanding, the said complaint may not be
The Court’s Ruling
filed in the court of the place where Atty. Aceron resides, i.e., RTC of Quezon City.
They explained that Atty. Aceron, being merely a representative of the petitioners, is
The petition is denied.
not the real party in interest in the case below; accordingly, his residence should not
_______________
be considered in determining the proper venue of the said complaint.
15 Id., at p. 27.
16 Id., at p. 108.
The CA Decision
17 Id., at p. 9.
705
On August 28, 2008, the CA rendered the herein Decision, 14 which annulled and
set aside the Orders dated April 12, 2007 and August 27, 2007 of the RTC of Quezon VOL. 678, AUGUST 22, 2012 705
City and, accordingly, directed the dismissal of the complaint filed by the petitioners. Ang vs. Ang
The CA held that the complaint below should have been filed in Bacolod City and Contrary to the CA’s disposition, the petitioners maintain that their complaint for
not in Quezon City. Thus: collection of sum of money against the respondents may be filed in the RTC of
_______________ Quezon City. Invoking Section 3, Rule 3 of the Rules of Court, they insist that Atty.
11 Id., at pp. 50-55. Aceron, being their attorney-in-fact, is deemed a real party in interest in the case
12 Id., at pp. 57-58. below and can prosecute the same before the RTC. Such being the case, the
13 Id., at pp. 60-69. petitioners assert, the said complaint for collection of sum of money may be filed in
14 Id., at pp. 18-30. the court of the place where Atty. Aceron resides, which is the RTC of Quezon City.
704 On the other hand, the respondents in their Comment18assert that the petitioners
704 SUPREME COURT REPORTS ANNOTATED are proscribed from filing their complaint in the RTC of Quezon City. They assert
that the residence of Atty. Aceron, being merely a representative, is immaterial to the
Ang vs. Ang
determination of the venue of the petitioners’ complaint.
As maybe clearly gleaned from the foregoing, the place of residence of the
The petitioners’ complaint
plaintiff’s attorney-in-fact is of no moment when it comes to ascertaining the venue
should have been filed in the 
of cases filed in behalf of the principal since what should be considered is the
RTC of Bacolod City, the
residence of the real parties in interest, i.e.[,] the plaintiff or the defendant, as the
court of the place where the
case may be. Residence is the permanent home―the place to which, whenever
respondents reside, and not
absent for business or pleasure, one intends to return. Residence is vital when dealing
in RTC of Quezon City.
with venue. Plaintiffs, herein private respondents, being residents of Los Angeles,
California, U.S.A., which is beyond the territorial jurisdiction of Philippine courts,
34
 It is a legal truism that the rules on the venue of personal actions are fixed for the 707
convenience of the plaintiffs and their witnesses. Equally settled, however, is the VOL. 678, AUGUST 22, 2012 707
principle that choosing the venue of an action is not left to a plaintiff’s caprice; the
Ang vs. Ang
matter is regulated by the Rules of Court.19
The petitioners’ complaint for collection of sum of money against the and consequently dismissed the petitioners’ complaint against the respondents on the
respondents is a personal action as it primarily seeks the enforcement of a contract. ground of improper venue.
The Rules give the plaintiff the option of choosing where to file his complaint. He In this regard, it bears stressing that the situs for bringing real and personal civil
can actions is fixed by the Rules of Court to attain the greatest convenience possible to
_______________ the litigants and their witnesses by affording them maximum accessibility to the
18 Id., at pp. 130-138. courts.23 And even as the regulation of venue is primarily for the convenience of the
19 Hyatt Elevators and Escalators Corp. v. Goldstar Elevators, Phils., Inc., 510 plaintiff, as attested by the fact that the choice of venue is given to him, it should not
Phil. 467, 476; 473 SCRA 705, 714 (2005). be construed to unduly deprive a resident defendant of the rights conferred upon him
706 by the Rules of Court.24
Atty. Aceron is not a real party 
706 SUPREME COURT REPORTS ANNOTATED in interest in the case below; 
Ang vs. Ang thus, his residence is immate-
file it in the place (1) where he himself or any of them resides, or (2) where the rial to the venue of the filing of
defendant or any of the defendants resides or may be found. The plaintiff or the the complaint.
defendant must be residents of the place where the action has been instituted at the Contrary to the petitioners’ claim, Atty. Aceron, despite being the attorney-in-
time the action is commenced.20 fact of the petitioners, is not a real party in interest in the case below. Section 2, Rule
However, if the plaintiff does not reside in the Philippines, the complaint in such 3 of the Rules of Court reads:
case may only be filed in the court of the place where the defendant resides. Sec. 2. Parties in interest.―A real party in interest is the party who stands
In Cohen and Cohen v. Benguet Commercial Co., Ltd.,21 this Court held that there to be benefited or injured by the judgment in the suit, or the party entitled to
can be no election as to the venue of the filing of a complaint when the plaintiff has the avails of the suit. Unless otherwise authorized by law or these Rules, every
no residence in the Philippines. In such case, the complaint may only be filed in the action must be prosecuted or defended in the name of the real party in interest.
court of the place where the defendant resides. Thus: (Emphasis ours)
Section 377 provides that actions of this character “may be brought in any Interest within the meaning of the Rules of Court means material interest or an
province where the defendant or any necessary party defendant may reside or be interest in issue to be affected by the decree or judgment of the case, as distinguished
found, or in any province where the plaintiff or one of the plaintiffs resides, at the from mere
election of the plaintiff.” The plaintiff in this action has no residence in the _______________
Philippine Islands. Only one of the parties to the action resides here. There can 23 See Koh v. Court of Appeals, 160-A Phil. 1034, 1041; 70 SCRA 298, 304
be, therefore, no election by plaintiff as to the place of trial. It must be in the (1976).
province where the defendant resides. x x x.22 (Emphasis ours) 24 Portillo v. Hon. Reyes and Ramirez, 113 Phil. 288, 290; 3 SCRA 311, 313
Here, the petitioners are residents of Los Angeles, California, USA while the (1961).
respondents reside in Bacolod City. Applying the foregoing principles, the 708
petitioners’ complaint against the respondents may only be filed in the RTC of 708 SUPREME COURT REPORTS ANNOTATED
Bacolod City―the court of the place where the respondents reside. The petitioners,
Ang vs. Ang
being residents of Los Angeles, California, USA, are not given the choice as to the
venue of the filing of their complaint. curiosity about the question involved. 25 A real party in interest is the party who, by
Thus, the CA did not commit any reversible error when it annulled and set aside the substantive law, has the right sought to be enforced. 26
the orders of the RTC of Quezon City Applying the foregoing rule, it is clear that Atty. Aceron is not a real party in
_______________ interest in the case below as he does not stand to be benefited or injured by any
20 Baritua v. CA, 335 Phil. 12, 15-16; 267 SCRA 331, 335 (1997). judgment therein. He was merely appointed by the petitioners as their attorney-in-
21 34 Phil. 526 (1916). fact for the limited purpose of filing and prosecuting the complaint against the
22 Id., at pp. 534-535. respondents. Such appointment, however, does not mean that he is subrogated into
the rights of petitioners and ought to be considered as a real party in interest.
35
 Being merely a representative of the petitioners, Atty. Aceron in his personal
capacity does not have the right to file the complaint below against the respondents.
He may only do so, as what he did, in behalf of the petitioners―the real parties in
interest. To stress, the right sought to be enforced in the case below belongs to the
petitioners and not to Atty. Aceron. Clearly, an attorney-in-fact is not a real party in
interest.27
The petitioner’s reliance on Section 3, Rule 3 of the Rules of Court to support
their conclusion that Atty. Aceron is likewise a party in interest in the case below is
misplaced. Section 3, Rule 3 of the Rules of Court provides that:
Sec. 3. Representatives as parties.―Where the action is allowed to be
prosecuted and defended by a representative or someone acting in a fiduciary
capacity, the beneficiary shall be included in the title of the case and shall be
deemed to be the real property in interest. A representative may be a trustee of an
expert trust, a guardian, an executor or administrator, or a party authorized by law or
these Rules. An agent acting in his own name
_______________
25 Goco v. Court of Appeals, G.R. No. 157449, April 6, 2010, 617 SCRA 397,
405.
26 See Uy v. Court of Appeals, 372 Phil. 743; 314 SCRA 69 (1999).
27 See Filipinas Industrial Corp., et al. v. Hon. San Diego, et al., 132 Phil. 195;
23 SCRA 706 (1968).
709
VOL. 678, AUGUST 22, 2012 709
Ang vs. Ang
and for the benefit of an undisclosed principal may sue or be sued without joining the
principal except when the contract involves things belonging to the principal.
(Emphasis ours)
Nowhere in the rule cited above is it stated or, at the very least implied, that the
representative is likewise deemed as the real party in interest. The said rule simply
states that, in actions which are allowed to be prosecuted or defended by a
representative, the beneficiary shall be deemed the real party in interest and, hence,
should be included in the title of the case.
Indeed, to construe the express requirement of residence under the rules on venue
as applicable to the attorney-in-fact of the plaintiff would abrogate the meaning of a
“real party in interest”, as defined in Section 2 of Rule 3 of the 1997 Rules of
Court vis-à-vis Section 3 of the same Rule.28
On this score, the CA aptly observed that:
As may be unerringly gleaned from the foregoing provisions, there is nothing
therein that expressly allows, much less implies that an action may be filed in the city
or municipality where either a representative or an attorney-in-fact of a real party in
interest resides. Sec. 3 of Rule 3 merely provides that the name or names of the
person or persons being represented must be included in the title of the case and such
person or persons shall be considered the real party in interest. In other words, the
principal remains the true party to the case and not the representative. Under the
plain meaning rule, or verba legis, if a statute is clear, plain and free from ambiguity,
it must be given its literal meaning and applied without interpretation.
x x x.29 (Citation omitted)
At this juncture, it bears stressing that the rules on venue, like the other
procedural rules, are designed to insure a just and orderly administration of justice or
the impartial and
_______________
28 See Pascual v. Pascual, 511 Phil. 700, 707; 475 SCRA 268, 275 (2005).
29 Rollo, pp. 25-26.
710
710 SUPREME COURT REPORTS ANNOTATED
Ang vs. Ang
even-handed determination of every action and proceeding. Obviously, this objective
will not be attained if the plaintiff is given unrestricted freedom to choose the court
where he may file his complaint or petition. The choice of venue should not be left to
the plaintiff's whim or caprice. He may be impelled by some ulterior motivation in
choosing to file a case in a particular court even if not allowed by the rules on
venue.30
WHEREFORE, in consideration of the foregoing disquisitions, the petition is
DENIED. The Decision dated August 28, 2008 and Resolution dated February 20,
2009 rendered by the Court of Appeals in CA-G.R. SP No. 101159 are AFFIRMED.
SO ORDERED.
Carpio (Chairperson), Velasco, Jr.,** Leonardo-De Castro*** and Perez, JJ.,
concur.
Petition denied, judgment and resolution affirmed.
Notes.―The controlling factor in determining venue for cases is the primary
objective for which said cases are filed. (Olympic Mines and Development
Corporation vs. Platinum Group Metals Corporation, 587 SCRA 624 [2009])
In this jurisdiction, we adhere to the principle that the nature of an action is
determined by the allegations in the Complaint itself, rather than by its title or
heading; It is also a settled rule that what determines the venue of a case is the
primary objective for the filing of the case. (Latorre vs. Latorre, 617 SCRA 88
[2010])
――o0o―― 
_______________
30 Supra note 19, at p. 477, citing Sy v. Tyson Enterprises, Inc., 204 Phil.
693,699; 119 SCRA 367, 372 (1982).
**  Additional member per Raffle dated February 6, 2012 viceAssociate Justice
Maria Lourdes P. A. Sereno.
***  Additional member per Special Order No. 1286 dated August 22,
2012 vice Associate Justice Arturo D. Brion.
36